<PAGE>
SEMI-ANNUAL REPORTS (UNAUDITED) MAY 31, 2000
THE SG COWEN
FAMILY OF FUNDS
SG COWEN INCOME + GROWTH FUND, INC.
SG COWEN OPPORTUNITY FUND
SG COWEN GOVERNMENT SECURITIES FUND
SG COWEN INTERMEDIATE FIXED INCOME FUND
SG COWEN LARGE CAP VALUE FUND
[LOGO] [LOGO]
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CONTENTS
(UNAUDITED)
<TABLE>
<S> <C>
Chairman's Letter .......................................... 1
SG Cowen Income + Growth Fund, Inc. ........................ 2
SG Cowen Opportunity Fund .................................. 4
SG Cowen Intermediate Fixed Income Fund and
SG Cowen Government Securities Fund ........................ 6
SG Cowen Large Cap Value Fund .............................. 8
Statements of Investments .................................. 10
Statements of Assets and Liabilities ....................... 24
Statements of Operations ................................... 26
Statements of Changes in Net Assets ........................ 28
Notes to Financial Statements .............................. 33
</TABLE>
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CHAIRMAN'S LETTER JULY 11, 2000
TO OUR SHAREHOLDERS:
We are pleased to report that every SG Cowen fund outperformed its benchmark
during the six-month period ended May 31, 2000.
On the equity side, the SG Cowen Income + Growth Class A shares handily beat
the S&P 500 Index, a measure of large-cap blue-chip stocks. The SG Cowen
Opportunity Fund Class A shares completely overwhelmed the Russell 2000 Index, a
benchmark of small cap investing. And the SG Cowen Large Cap Value Fund easily
outperformed the Russell 1000 Value Index return. In fixed income, both of our
bond funds produced better returns than their benchmarks, primarily due to our
heavy concentration in U.S. Treasury securities, the best performing
fixed-income asset class.
The first reporting period of the new millennium was a topsy-turvy mixture of
surging growth stocks followed by a massive sell-off in technology and a return
to value investing. In bonds, long-term yields declined partly due to an
unprecedented buyback in U.S. Treasury securities while the Federal Reserve
Board steadily increased short-term rates. Despite the Fed's efforts, the U.S.
economy continued to boom, with a slowdown only becoming evident in recent
weeks.
Amidst this unusual environment, we have remained true to our investment
disciplines. We are gratified that our investment styles and strategies produced
superior results during the period.
On the following pages, the portfolio managers provide commentary that
analyzes fund performance while providing an outlook for the rest of 2000. These
discussions are followed by data including a list of portfolio holdings in each
fund as of May 31, 2000.
Thank you for your continuing confidence in the SG Cowen Family of Funds.
Sincerely,
Philippe H. Collas
Chairman
1
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SG COWEN INCOME + GROWTH FUND
NASDAQ's magic spell was finally broken on March 10, 2000, when investors
shifted out of technology stocks with slim or no profits and redeployed their
funds into value stocks where corporate earnings are strong. Our focus on energy
and insurance companies was rewarded, and we were virtually untouched by the
meltdown in Internet and biotechnology shares.
PERFORMANCE
For the six months ended May 31, 2000, the total return for the SG Cowen Income
+ Growth Class A shares was 16.18%. In comparison, the Standard & Poor's 500
Index return was 2.90% for the same period. The Fund's Class B and Class I
shares returned 15.78% and 16.47%, respectively, for the fiscal period.
After reaching an all-time high in March, the NASDAQ and other
momentum-oriented stocks began a steep descent while the type of value-oriented
stocks that we buy began to perform much better. The Fund's best performing
sector was energy, where oil service firms such as Baker Hughes and Halliburton
accelerated early in the period. The next tier included exploration and
production companies such as Apache and Burlington Resources. These stocks were
purchased at very low price/cash flow multiples, and thus provided the portfolio
with strong appreciation to the point where we decided that the positions should
be trimmed.
Another strong performing group was insurance, primarily property/casualty
that has seen firmer pricing for insurance products in recent months. For
several years, the industry has suffered from lower and lower rates due to
fierce competition. However, that competition is beginning to wane, allowing
leading companies such as Chubb to raise prices on their insurance products. St.
Paul Companies is another property/casualty insurer whose stock price was
weighted down due to difficulties assimilating a recent merger. However, the
stock has rallied as the company, which has a significant presence in asset
management with its majority ownership of The John Nuveen Co., worked through
these challenges while posting strong earnings. Hartford Financial Services
Group, a stock we purchased in February, nearly doubled by the end of the period
due to the improved outlook for property/casualty insurance. All of these
insurance concerns have seen their stock prices rise sharply despite rising
interest rates, which is typically a negative factor since insurance companies
hold significant bond portfolios.
However, we continue to be bearish on another interest-rate sensitive group,
the banking industry, where we currently have no exposure. Although banks are
generating historically high returns on equity, a slowing economy would likely
crimp these results. Using price/book value as a measure, bank valuation levels
are very high when viewed over the past fifteen years. In addition, we are not
confident that banks have made adequate reserves for loan losses, calling into
question their true balance sheet strength.
Similarly, we sold all of our real estate investment trust shares because we
believe that a weakening economy does not bode well for the overbuilt apartment,
office and shopping mall markets. REIT valuation levels are high when viewed
over the past 20 years, and would plummet if managements were forced to cut
dividends in an economic downturn.
The proceeds were invested in out-of-favor food stocks such as Bestfoods,
which was subsequently acquired by Unilever, thus doubling the stock in two
months. Bestfoods is among the largest U.S. consumer foods companies with brands
such as Hellman's Mayonaise and Skippy Peanut Butter. Prior to the Unilever
acquisition, Bestfoods' stock price languished despite the strong brand names,
good profit margins and excellent management team.
2
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Other additions include defense/aerospace stocks such as Raytheon, which we
believe should benefit from increases in defense spending after a decade of
declines. Prior to our purchase, shares of Raytheon fell from the mid-70s to the
low 20s, even though the company's cash flow remained strong. Defense companies
have operated in a distressed environment for the past decade and should benefit
from pledges by both major presidential candidates to boost the defense budget.
We also added exposure to electric utilities and natural gas stocks, many of
which are selling at less than 10 times earnings while offering strong
dividends.
Although many of the portfolio's holdings already offer dividends that are
higher than the S&P 500 Index, we also own companies that have the potential to
grow their dividends faster than the market. Occasionally, we add a company that
does not pay a dividend. An example would include Watson Pharmaceuticals, a
generic drug company which doesn't currently pay a dividend but certainly could
pay one if it so chose.
As of May 31, 2000, the SG Cowen Income + Growth Fund dividend yield was 3.0%.
In comparison, the S&P 500 Index dividend yield was 1.2% at that date.
LOOKING FORWARD
Despite its recent outperformance vs. the S&P 500 Index, the portfolio's
valuation characteristics continue to be favorable. As of May 31, 2000, the
Fund's price-earnings ratio on expected calendar year 2000 earnings was
approximately 13, a discount to the S&P 500 Index earnings multiple of nearly
27. Meanwhile, the companies held in the Fund had an expected five-year
normalized earnings growth rate of about 7%, while the S&P 500 growth rate is
expected to be 6%. As already indicated, the Fund's 3.0% dividend yield is
significantly higher than the Index, which was 1.2%.
Investors who have become accustomed to 25% annual returns in the stock market
are likely to be disappointed this year. In such an environment of more modest
stock market performance, value portfolios tend to provide rewarding relative
returns.
PAUL D. HOUK, CFA
INVESTMENT OFFICER
3
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SG COWEN OPPORTUNITY FUND
Small-cap stocks continued to outperform large caps, a trend that began early in
1999. Even so, small caps remain attractively valued as measured by price/
earnings, price/sales and price to cash flow. In addition, value made a comeback
during the six-months ended May 31, 2000, as investors finally stopped
indiscriminately buying dot.coms in favor of companies with real earnings and
intrinsic value.
PERFORMANCE
For the six months ended May 31, 2000, the total return for the SG Cowen
Opportunity Fund Class A shares was 30.87%. The Fund outperformed the Russell
2000 Index return of 5.49% as well as the S&P 500 Index return of 2.90%. The
Fund's Class B and Class I shares returned 30.43% and 31.09%, respectively, for
the fiscal period.
Our process and strategy is to seek companies that are selling at attractive
valuations. We then look for potential catalysts that can bring companies to
life, such as new management, products or technology. Our research team analyzes
a company's fundamental strength, preferring those with improved balance sheets
and cash flows, growing market share and experienced management with significant
stock ownership. This investment philosophy and process that we call "The Search
For Companies Poised For Growth" has been in place since 1986 and implemented in
the SG Cowen Opportunity Fund since its inception in 1988.
A major factor in the Fund's superior performance was its build-up of energy
shares 18 months ago when most investors shunned them. During the six-month
period, our continued overweight in these companies boosted performance as the
major Russell energy sector performed very well. In particular, exploration and
production companies in the portfolio such as Santa Fe Snyder and Ocean Energy
and drillers such as Global Marine and Rowan Companies all rose between 50% and
100%. OPEC's decision to constrain oil prices in a range of $22 to $28 combined
with little non-OPEC supply growth and continued worldwide demand is giving
confidence to investors of the sustainability of earnings and cash flow growth.
Although the portfolio benefited from its overweight in energy, we began to
take selected profits as the period came to a close. In those particular stocks,
their valuations in relation to the price of oil and gas no longer appeared as
undervalued. A year ago, we made the case that many of these companies were
inexpensive relative to oil and gas prices, which were also low. However, now
that oil and gas prices are in a more normal range, a number of companies began
to reach valuation levels approaching our sell targets.
We reinvested some of the proceeds into property/casualty insurance companies
such as Mutual Risk Management, St. Paul Companies and insurance broker Arthur
J. Gallagher. The stocks are inexpensive, industry rate increases are coming and
there is a good potential for merger transactions. In addition, we have
purchased some small banks, such as BancWest in Hawaii. With Asia's economies
picking up as well as demand for Hawaii real estate increasing from wealthy
technology entrepreneurs in California and Seattle, Hawaii's economy is
strengthening.
Aside from these purchases, however, the Fund's underweight in financial
services during the period was generally beneficial to performance, as the
Russell financial services sector performed poorly. Most financial services
companies could not withstand the Federal Reserve Board's continuing attempt to
slow the U.S. economy by raising short-term interest rates. At May 31, 2000,
however, it appeared that the economy was indeed slowing and that the Fed's
actions were near completion.
4
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In contrast, another industry dependent on government decision-making,
defense/aerospace, became more attractive as federal outlays for defense
spending stopped declining. Indeed, both major presidential candidates have
vowed to boost defense spending in coming years. That's timely for an industry
that has operated in a difficult environment for much of the 1990s. As a result,
there have been write-offs and restructuring in the industry, which is now in a
position to take advantage of improving fundamentals. While the big project
nature of the industry often makes it difficult to achieve consistent quarterly
earnings, we believe that the companies are attractively positioned to take
advantage of the improving environment.
Government oversight and reimbursement have long been problems for health care
stocks. Yet, we believe that we have assembled an attractive portfolio of
companies in a wide variety of sectors such as Mid Atlantic Medical Services
(HMOs), Health South (rehabilitation services), Acuson (ultrasound technology),
Quorum Health (hospitals) as well as a package of biotechnology stocks that were
purchased after the major correction earlier in the year. In addition, having
generally avoided the NASDAQ sell-off, we used the market weakness to buy shares
in profitable technology and Internet-related companies with sufficient cash on
hand and a strong market position.
As always, our bottom-up approach generates dozens of attractively valued
small cap companies in unique fields. One example is Edison Schools, the
nation's largest private operator of public schools. The company contracts with
local school districts to assume educational and operational responsibility for
individual schools in return for per-pupil funding that generally matches other
public schools in the area. The company, which currently serves about 38,000
students in 79 schools throughout the country, has been able to increase test
scores among children in some of the more difficult public school districts.
Although they haven't yet demonstrated lasting performance, longer-term holdings
such as Reader's Digest and Calgon Carbon continue to appear attractive.
Reader's Digest is in the midst of a restructuring that we believe is likely to
unlock value for current shareholders or for an acquirer while Calgon Carbon, a
leading company specializing in water purification, we believe is very
attractively valued, and its business is beginning to improve.
LOOKING FORWARD
Historically, small cap outperformance tends to last for many years. The last
two waves lasted nine years between 1975 and 1983 and four years from 1991
through 1994. The stock market has shown an affinity for leadership and trends;
small cap leadership has become the most recent trend and we believe that it
will continue. After years of pessimism, we believe the drumbeat of negativity
in small cap value is finally behind us.
WILLIAM R. CHURCH, CFA
SENIOR INVESTMENT OFFICER
5
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SG COWEN INTERMEDIATE FIXED INCOME FUND
SG COWEN GOVERNMENT SECURITIES FUND
For much of the period under review, an unusual pattern emerged: long-term
interest rates were falling while the Federal Reserve Board aggressively
increased short-term rates. Indeed, by May 31, 2000, the 30-year U.S. Treasury
bond at 6.01% was yielding significantly less than the federal funds rate,
6.50%. Fixed income managers who paid less attention to the Fed and more
attention to the yield curve outperformed their benchmarks. Nevertheless, the
decline in longer-term yields occurred after yields had risen sharply between
December 1 and mid-January, dragging down returns for the six-month period.
PERFORMANCE
For the six months ended May 31, 2000, the total return for the SG Cowen
Intermediate Fixed Income Fund's Class A shares was 1.17%. In comparison, its
benchmark, the Lehman Brothers Intermediate Government/Corporate Index, an
unmanaged benchmark of intermediate government and corporate bonds, reflected a
return of 1.10%. The Fund's Class B and Class I shares returned 1.05% and 1.29%,
respectively, for the fiscal period.
The total return for the SG Cowen Government Securities Fund's Class A shares
was 2.26% for the six-month period. In comparison, its unmanaged benchmark, the
Lehman Brothers Aggregate Index, reflected a 1.38% return. The Fund's Class I
shares returned 2.27%.
The six-month period was unusual because yields rose on securities with
maturities shorter than ten years, but actually fell on longer-term bonds. For
example, the two-year U.S. Treasury note yield rose from 6.03% on December 1,
1999 to 6.67% on May 31, 2000. Meanwhile, the 30-year U.S. Treasury bond
declined in yield from 6.30% to 6.01% over the same period.
Yields on shorter-maturity notes rose in concert with Federal Reserve Board
action. The Fed boosted short-term rates three times for a total of one
percentage point to 6.50% in an effort to slow down the economy and ease
inflationary pressures. During the fourth quarter of 1999 and the first quarter
of 2000, the Gross Domestic Product rose at an annual rate of 7.3% and 5.4%,
respectively, growth rates that would normally increase the likelihood of higher
inflation.
Inflation concerns mounted, as the price of oil rose from $22 in December to
about $30 by May 31, 2000. During April, the Consumer Price Index reflected an
inflation rate of 3.7%, although it fell to a rate of 3.1% in May. The
unemployment rate fell below 4% in April, which suggests an extremely tight job
market and potential wage pressures.
Meanwhile, the U.S. Treasury announced a $30 billion buyback of 30-year bonds
to be completed by the end of the year to reflect the federal budget surplus. As
a result of this increased demand and likely diminished supply, Treasury bond
prices rose and yields fell. Consequently, the yield spread offered on
non-Treasury securities such as federal agency or investment-grade corporate
widened considerably during the period. Still, the bond market performed
reasonably well between January and May, despite continued Fed action and rising
oil prices.
Our emphasis on U.S. Treasury bonds benefited both portfolios since this was
the best performing sector compared to corporate and mortgage debt. On
November 30, 1999, 61% of the SG Cowen Government Securities Fund was invested
in Treasury securities, while 39% was invested in mortgage-backed securities. As
of May 31, 2000, those percentages were virtually unchanged, when the mix was
59%/41%. In addition, the fund's duration was about 5.5 years, which is longer
than the Lehman Brothers Aggregate Bond Index. This emphasis on maintaining a
longer duration in a falling yield environment for long-term bonds was a
positive factor in the fund's performance.
6
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As of November 30, 1999, 58% of the SG Cowen Intermediate Fixed Income Fund
was invested in Treasury securities, while 23% was invested in mortgages and 19%
was invested in corporate preferred stock and debt . By May 31, 2000, 56% of the
fund's assets was invested in U.S. government securities, while 23% was invested
in mortgages and 21% was invested in the preferred stock and debt of such high
quality companies as Citigroup, Ford Motor Credit, Merrill Lynch and Paine
Webber. The fund's duration, at 5.0 years, was longer than its benchmark, the
Lehman Brothers Intermediate Government/Corporate Index, which stood at 3.5
years. Again, being longer than the benchmark was advantageous during the
period.
The corporate bond sector lagged the bond market in terms of performance.
During the period, yield spreads against U.S. Treasury bonds nearly doubled. A
Double A-rated 10-year industrial corporate bond was yielding 1.60 percentage
points more than a comparable Treasury bond at May 31, 2000. That's a wider
yield spread than what existed during the Persian Gulf War recession in
1990-1991. We believe that yields are extremely attractive at current levels,
even allowing for the potential of slower economic growth.
LOOKING FORWARD
We continue to believe that both funds are positioned properly for the current
economic environment. We believe that the Fed will be successful in achieving a
soft landing for the economy, meaning slower economic growth with a reduced
threat of inflation. Already, we have seen a slowdown in the growth of retail
sales and the housing sector, which gives us confidence that a slowdown is at
hand. In addition, we expect that any wealth effect from the stock market would
be less pronounced. A soft landing in which economic growth averages about 3.5%
annually would provide an environment that would enable interest rates to move
lower and provide significant returns above the rate of inflation from fixed
income securities.
ALAN E. KOEPPLIN
INVESTMENT OFFICER
7
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SG COWEN LARGE CAP VALUE FUND
In Cole Porter's beautiful song "Begin the Beguine" the writer tries not to
stoke a burning ember of a memorable romance back to a flame. But the semi-
annual report period ended May 31, 2000 may signal the re-ignition of an almost
forgotten romance with value managers. Although the growth style of equity
management still prevailed for the period, trouncing the value indices for the
first three months, the torch may be changing hands as evidenced by every
Russell value index beating its growth counterpart during March, April and May
of 2000.
PERFORMANCE
For the six months ended May 31, 2000, the total return for the SG Cowen Large
Cap Value Fund was 8.45%. The Fund outperformed the Russell 1000 Value Index
return of -0.84% as well as the S&P 500 Index return of 2.90%. The Fund's
Class B and Class I shares returned 8.04% and 9.41%, respectively, for the
fiscal period.
Generally, the Fund outperformed due to strong stock selection rather than
sector weightings. The one exception was energy, where earlier in the period the
portfolio weighting was at its maximum 2x the S&P 500 Index weighting. Two
energy holdings, Weatherford International and TransOcean Sedco, rose 76% and
75%, respectively, in an environment of rising oil prices. In recent weeks, we
have trimmed our energy holdings, as we expect oil prices to decline to a more
moderate level.
Because the six-month period was generally characterized by rising interest
rates, the utility sector performed particularly well, as investors become
attracted to higher yielding stocks as well as fixed-income securities. We have
also pared back our holdings in this area, as signs of a slowing U.S. economy
take pressure off the Federal Reserve Board to continue to raise rates.
We took advantage of the decline in the basic material sector by adding two
special situations, Potash Corp. and US Steel. Both of these companies are
selling at historic price-to-cash flow lows. New management at Potash and a
potential change in the corporate structure at US Steel, along with increasing
cyclical earnings power, could be the catalysts for future price appreciation.
Our discipline is to invest in large capitalization stocks that meet one or
more of five valuation criteria. These valuation criteria are relative to the
overall market as measured by the S&P 500 Index. Overall, the portfolio has a
price-book, price-sales, price-earnings, and price-cash flow that is less than
overall stock market and a dividend yield that approximates the S&P 500 Index.
We use quantitative screens based on these five criteria, but the second part
of our analysis is using fundamental research to find a catalyst that's going to
change the dynamic and allow that value to be realized. For instance, our
investment in US Airways Group reflected our view that the stock was very
undervalued compared to its peers. But it was also due to two perceived
catalysts: new management and the amicable settlement of machinist and flight
attendant contracts. In May, UAL, parent of United Airlines, offered US Airways
a 120% premium buyout offer.
Unfortunately, not all of our holdings performed well during the period. AT&T,
which met four of our five criteria, was hampered by the general sell-off in
telecommunications and Internet stocks as investors shifted from growth to
value. In addition, retailers have not fared well in a rising interest rate
environment, as investors believed that consumers would be derailed by higher
borrowing costs. Our holding in Mattel has been hampered by the company's
expensive acquisition in The Learning Company which may have to be sold for less
than its purchase price. However, the company, which is still the largest toy
8
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maker in the U.S. with world-wide Barbie, Hot Wheels and Fischer Price
franchises, has vowed to refocus its efforts on its main toy business.
Other recent purchases and sales include:
- BANK ONE. After surprising Wall Street with disappointing earnings for
several quarters, the company recently hired a highly respected management
team from Citigroup. Although there may be one or two more quarters of
charge-offs that the company will have to take to clear up its credit card
business, Bank One has focused on the problem and is cutting back on lower
quality credits. We see Bank One as an attractive turnaround story.
- QUAKER OATS. Between the time of purchase on December 21, 1999 and
May 31, the stock rose nearly 20%. In addition to meeting our valuation
criteria at the time of purchase, we believed that the growth catalyst
would be the company's introduction of a new Gatorade product this summer.
The stock has also been propelled by industry consolidation.
- ULTRAMAR DIAMOND SHAMROCK. Management of this U.S. refining and marketing
company has clearly articulated new cost-cutting and profitability targets
paving the way for $300 million in savings over the next three years. In
the meantime, there is evidence that refining margins should increase
significantly over the next six months, boosting stock performance.
- UNITED HEALTHCARE. Concerns over government regulations setting stringent
limits for Medicare payments placed downward pressure on all health
management organizations. United Healthcare has already limited its
Medicare exposure and increased its emphasis on cost cutting and better
service. Rate increases in commercial premiums are flowing to the bottom
line and United's systems are a model for the industry.
- SAP AG. One of the largest software companies in the world providing data
warehouse management solutions ran up in price with the technology sector
move. SAP still meets two valuation criteria, thus only a partial sale was
executed with a realized gain of nearly 100%.
- 3COM. Anticipation of the partial spin off of its Palm Pilot division
accelerated the stock price beyond all five of our valuation criteria. The
position was sold completely with a realized gain of nearly 130%.
LOOKING FORWARD
As of May 31, 2000, the portfolio's valuation criteria: price-book, price-sales,
price-earnings, and price-cash flow ratios are all less than the overall stock
market with a dividend yield that approximates the S&P 500 Index. We believe
that the current market volatility has created many investment opportunities
that will continue to propel performance in the future. Although there may be
some give and take, valuation analysis and strong stock selection skills are
back in favor. We are excited about the Fund's prospects and thank you for your
continued support.
DIANE E. JAFFEE, CFA
INVESTMENT OFFICER
9
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SG COWEN INCOME + GROWTH FUND, INC.
STATEMENT OF INVESTMENTS
MAY 31, 2000
(UNAUDITED)
<TABLE>
<CAPTION>
SHARES DESCRIPTION VALUE
<C> <S> <C>
COMMON STOCKS - 97.0% OF TOTAL PORTFOLIO
BASIC INDUSTRY - 7.0%
28,000 Air Products & Chemicals Co. $ 969,500
40,000 Crown Cork & Seal Co., Inc. 685,000
92,000 RPM, Inc./Ohio 897,000
-----------
2,551,500
-----------
CONSUMER DISCRETIONARY - 7.6%
12,000 Albertson's Inc. 439,500
32,000 Mattel, Inc. 434,000
35,000 Newell Rubbermaid, Inc. 918,750
19,000 Nordstrom, Inc. 477,375
28,000 Penney, JC, Inc. 507,500
-----------
2,777,125
-----------
FOODS - 15.0%
11,000 Bestfoods, Inc. 709,500
10,000 Campbell Soup Co. 310,000
31,000 Dean Foods Co. 941,625
9,000 General Mills, Inc. 357,188
International Flavors &
22,000 Fragrances, Inc. 748,000
30,000 Interstate Bakeries 435,000
15,000 McCormick & Co., Inc. 487,500
43,000 Sara Lee Corp. 774,000
72,000 Tyson Foods, Inc. 711,000
-----------
5,473,813
-----------
HEALTH CARE - 5.3%
14,000 Bristol-Myers Squibb Co. 770,875
105,000 Humana, Inc.* 590,625
13,000 Watson Pharmaceuticals, Inc.* 573,625
-----------
1,935,125
-----------
INSURANCE - 23.8%
630 Berkshire Hathaway, Inc., B * 1,188,180
15,000 Chubb Corp. 1,050,000
9,000 Hartford Financial Services, Inc. 532,125
26,000 Safeco Corp. 638,625
40,000 St. Paul Companies, Inc. 1,500,000
32,000 Torchmark Corp. 870,000
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
10
<PAGE>
SG COWEN INCOME + GROWTH FUND, INC.
STATEMENT OF INVESTMENTS - (CONTINUED)
MAY 31, 2000
(UNAUDITED)
<TABLE>
<CAPTION>
SHARES DESCRIPTION VALUE
<C> <S> <C>
INSURANCE - (CONTINUED)
65,000 Unumprovident Corp. $ 1,474,687
24,000 XL Capital, Ltd. 1,428,000
-----------
8,681,617
-----------
OIL & GAS EQUIPMENT & SERVICES - 4.7%
15,000 Baker Hughes, Inc. 543,750
15,000 Halliburton Co. 765,000
10,000 Tidewater, Inc. 388,750
-----------
1,697,500
-----------
OIL & GAS EXPLORATION - 10.9%
13,000 Apache Corp. 791,375
17,000 Burlington Resources, Inc. 777,750
18,000 Texaco, Inc. 1,033,875
24,000 Union Pacific Resources 568,500
30,000 USX - Marathon Group 815,625
-----------
3,987,125
-----------
TECHNOLOGY/AEROSPACE DEFENSE - 8.5%
46,000 Lockheed Martin Corp. 1,127,000
15,000 Northrop Grumman Corp. 1,149,375
35,000 Raytheon Co., Class B 820,312
-----------
3,096,687
-----------
UTILITIES - 14.2%
35,000 CMS Energy Corp. 796,250
19,000 Carolina Power & Light Co. 653,125
26,000 Cinergy Corp. 692,250
28,000 Keyspan Energy Corp. 854,000
11,359 SCANA Corp. 293,914
39,000 Sempra Corp. 733,688
18,000 Teco Energy Inc. 385,875
40,000 Utilicorp United, Inc. 785,000
-----------
5,194,102
-----------
TOTAL COMMON STOCKS
(Cost $30,326,906) 35,394,594
-----------
</TABLE>
<TABLE>
<C> <S> <C>
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
11
<PAGE>
SG COWEN INCOME + GROWTH FUND, INC.
STATEMENT OF INVESTMENTS - (CONTINUED)
MAY 31, 2000
(UNAUDITED)
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT DESCRIPTION VALUE
<C> <S> <C>
SHORT-TERM INVESTMENTS - 3.0%
$400,000 American Express, 6.53%, 6/7/00 $ 400,000
General Motors Acceptance Corp., 6.55%,
700,000 6/6/00 700,000
-----------
Total Short-Term Investments
(Cost $1,100,000) 1,100,000
-----------
TOTAL INVESTMENTS
(Cost $31,426,906) $36,494,594
===========
</TABLE>
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* Non-income producing security
SEE NOTES TO FINANCIAL STATEMENTS
12
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SG COWEN OPPORTUNITY FUND
STATEMENT OF INVESTMENTS
MAY 31, 2000
(UNAUDITED)
<TABLE>
<CAPTION>
SHARES DESCRIPTION VALUE
<C> <S> <C>
COMMON STOCKS - 93.9% OF TOTAL PORTFOLIO
AEROSPACE/DEFENSE - 5.9%
6,900 Herley Industries Inc.* $ 110,831
3,600 Litton Industries Inc.* 154,575
12,000 Lockheed Martin Corp 294,000
33,500 Newport News Shipbuilding 1,107,594
7,800 Raytheon Co. 182,813
14,200 Teledyne Technologies, Inc.* 206,788
-----------
2,056,601
-----------
AGRICULTURAL/FARM EQUIPMENT - 4.2%
20,000 AGCO Corp. 250,000
17,400 CNH Global 206,625
11,000 Delta Pine and Land Co. 236,500
17,200 IMC Global Inc. 264,450
7,400 Lindsay Manufacturing Co 138,750
6,100 Potash Corp. of Saskatchewan 353,038
-----------
1,449,363
-----------
BUILDING CONSTRUCTION - 1.5%
33,800 Miller Building Systems* 192,237
14,200 Olin Corp 221,875
4,400 Texas Industries 126,225
-----------
540,337
-----------
CONSUMER DISCRETIONARY - 3.2%
27,900 Edison Schools, Inc.* 578,925
2,000 Media General, Inc. 101,500
21,600 Pennzoil - Quaker State Co. 237,600
5,800 Readers Digest Association 196,475
-----------
1,114,500
-----------
ENVIRONMENTAL - 3.0%
157,300 Calgon Corporation 1,032,281
-----------
FINANCIAL SERVICES - 5.1%
6,500 Bancwest Corp. 121,469
7,000 Fidelity National Financial 108,500
40,000 Fremont General Corp. 175,000
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
13
<PAGE>
SG COWEN OPPORTUNITY FUND
STATEMENT OF INVESTMENTS - (CONTINUED)
MAY 31, 2000
(UNAUDITED)
<TABLE>
<CAPTION>
SHARES DESCRIPTION VALUE
<C> <S> <C>
FINANCIAL SERVICES - (CONTINUED)
4,100 Arthur J. Gallagher & Co. $ 158,619
29,300 Mutual Risk Management 494,438
7,000 National Commerce Bancorporation 133,000
3,000 Renaissancere Holdings, Ltd. 129,938
11,800 St. Paul Companies 442,500
-----------
1,763,464
-----------
FOODS - 0.6%
11,200 Flowers Industries, Inc. 202,300
-----------
HEALTH CARE - 12.7%
44,100 Acuson Corp.* 540,225
2,000 Bard C R Inc. 91,250
41,600 Beverly Eenterprises Inc.* 124,800
10,400 Carter, Wallace, Inc. 208,000
5,000 Connectics Corp.* 42,500
19,300 Coventry Health Care, Inc.* 229,188
18,300 Genta Inc.* 128,672
11,500 Genzyme Molecular Oncology* 126,500
48,200 Healthsouth Rehabilitation Corp.* 310,288
1,400 Ilex Oncology Inc.* 34,912
39,900 Manor Care Inc.* 281,794
161,400 Mid Atlantic Medical Services* 1,997,325
6,800 Quorum Health Group, Inc.* 65,662
6,400 St. Jude Medical Inc.* 230,000
-----------
4,411,116
-----------
METALS & MINING - 8.4%
5,000 Anglogold Limited 97,813
10,000 Arch Coal Inc 75,000
136,900 Battle Mountain Gold Co. 265,244
45,300 Birmingham Steel Corp. 175,538
15,000 Franco Nevada Mining Corp.* 181,705
107,300 Homestake Mining 724,275
27,400 Kaiser Aluminum Corp.* 121,588
80,800 LTV Corp. 212,100
21,200 Newmont Mining Corp. 488,925
30,900 Placer Dome, Inc. 254,925
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
14
<PAGE>
SG COWEN OPPORTUNITY FUND
STATEMENT OF INVESTMENTS - (CONTINUED)
MAY 31, 2000
(UNAUDITED)
<TABLE>
<CAPTION>
SHARES DESCRIPTION VALUE
<C> <S> <C>
METALS & MINING - (CONTINUED)
17,900 Teck Corp. $ 123,650
9,300 USX - US Steel Group, Inc. 209,831
-----------
2,930,594
-----------
OIL & GAS EQUIPMENT & SVCS - 15.1%
4,000 Coflex IP 233,000
7,000 Global Marine, Inc.* 198,188
2,900 Marine Drilling Co., Inc.* 83,375
3,000 Nabors Industries, Inc.* 129,000
55,700 Oceaneering Int'l Inc.* 1,086,150
13,400 Offshore Logistics* 189,275
17,600 Petroleum Geo Services* 335,500
4,000 Precision Drilling Corp.* 154,000
13,700 Pride Int'l, Inc.* 348,494
4,000 Rowan Companies, Inc.* 124,250
7,400 Santa Fe International 287,212
17,000 Tetra Technologies* 219,938
20,000 Tidewater, Inc. 777,500
55,000 Trico Marine Services, Inc.* 532,812
19,000 Veritas* 524,875
-----------
5,223,569
-----------
OIL & GAS EXPLORATION - 18.3%
14,000 Basin Exploration, Inc.* 231,875
7,000 Cabot Oil and Gas Corp. 174,563
2,000 Devon Energy Corp. 119,625
14,300 Evergreen Research, Inc.* 393,250
38,000 Forest Oil Corp.* 605,625
65,000 Grey Wolf, Inc.* 325,000
25,000 Gulf Canada Res, Ltd.* 128,125
6,000 HS Resources, Inc.* 201,375
4,200 Noble Affiliates, Inc. 165,112
24,000 Nuevo Energy Co.* 463,500
68,840 Ocean Energy, Inc.* 1,032,600
6,000 Pennaco Energy, Inc.* 91,500
80,800 Pioneer Natural Res 1,206,950
94,985 Santa Fe Snyder Corp.* 1,199,186
-----------
6,338,286
-----------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
15
<PAGE>
SG COWEN OPPORTUNITY FUND
STATEMENT OF INVESTMENTS - (CONTINUED)
MAY 31, 2000
(UNAUDITED)
<TABLE>
<CAPTION>
SHARES DESCRIPTION VALUE
<C> <S> <C>
RETAILERS - 2.5%
14,200 Claire's Stores, Inc. $ 287,550
6,700 Michael Stores, Inc.* 286,844
29,500 Transworld Entertainment* 295,000
-----------
869,394
-----------
TECHNOLOGY - 8.1%
8,900 Artisoft, Inc.* 92,338
13,400 Ceridian Corporation* 323,275
22,500 Diebold Inc. 682,031
2,500 Entrust Technologies, Inc.* 121,875
28,500 Evans And Sutherland Comp Cp.* 228,000
5,700 Firepond Inc.* 96,900
6,200 IXL Enterprises, Inc.* 117,800
14,600 Information Resources* 73,000
27,800 Maxtor Corp.* 290,162
3,800 Paradyne Networks Inc.* 106,875
4,400 Purchasepro.Com, Inc.* 93,569
2,400 Research In Motion Ltd.* 77,250
2,900 Rhythms Netconnections Inc.* 47,850
2,600 Selectica Inc.* 115,538
7,700 Sensormatic Electronics Corp. 120,794
8,800 Tanning Technology Corp.* 124,300
2,100 USinternetworking Inc.* 37,669
7,000 Ziff Davis Inc.* 68,250
-----------
2,817,476
-----------
TRANSPORT/TRUCKING/SHIPBUILDING - 2.0%
10,300 Kirby Corporation* 227,888
31,000 Stolt Comex Seaway, S.A.* 457,250
-----------
685,138
-----------
UTILITIES - 3.3%
7,700 Keyspan Corp. 234,850
19,800 MCN Energy 451,688
9,400 Teco Energy, Inc. 201,512
11,200 Western Gas Resources, Inc. 254,100
-----------
1,142,150
-----------
TOTAL COMMON STOCKS
(Cost $28,504,153) 32,576,569
-----------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
16
<PAGE>
SG COWEN OPPORTUNITY FUND
STATEMENT OF INVESTMENTS - (CONTINUED)
MAY 31, 2000
(UNAUDITED)
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT DESCRIPTION VALUE
<C> <S> <C>
SHORT TERM INVESTMENTS - 6.1%
$700,000 American Express Corp., 6.53%, 6/7/00 $ 700,000
General Motors Acceptance Corp., 6.55%,
600,000 6/6/00 600,000
800,000 Prudential Funding Inc., 6.39%, 6/1/00 800,000
-----------
Total Short Term Investments
(Cost $2,100,000) 2,100,000
-----------
TOTAL INVESTMENTS
(Cost $30,604,153) $34,676,569
===========
</TABLE>
-------------
* Non Income Producing Security
SEE NOTES TO FINANCIAL STATEMENTS
17
<PAGE>
SG COWEN GOVERNMENT SECURITIES FUND
STATEMENT OF INVESTMENTS
MAY 31, 2000
(UNAUDITED)
<TABLE>
<CAPTION>
PRINCIPAL DESCRIPTION VALUE
AMOUNT
<C> <S> <C>
MORTGAGE-BACKED SECURITIES - 41.2% OF
TOTAL PORTFOLIO
Federal Home Loan Mortgage Corporation
(FHLMC) Certificates:
$ 29,799 8.00%, 08/01/07 $ 29,697
46,367 8.00%, 02/01/09 46,111
78,819 8.50%, 01/01/10 79,385
Federal National Mortgage Assn. (FNMA)
Certificates:
139,596 11.00%, 04/01/05 146,716
53,315 9.00%, 02/01/15 54,653
Government National Mortgage Assn.
(GNMA) Certificates:
7,783 8.00%, 05/15/02 7,799
3,143 10.00%, 04/15/16 3,339
2,886 10.00%, 07/15/17 3,075
2,449 10.00%, 11/15/17 2,609
2,928 9.00%, 05/15/21 3,031
4,461 9.50%, 11/15/21 4,679
16,562 9.50%, 03/20/25 16,847
51,930 8.00%, 05/15/25 52,077
----------
Total Mortgage-Backed Securities 450,018
----------
U.S. TREASURY OBLIGATIONS - 58.8%
U.S. Treasury Notes & Bonds
20,000 5.50%, 08/31/01 19,687
200,000 5.625%, 02/15/06 191,250
100,000 6.125%, 08/15/07 97,844
150,000 5.50%, 02/15/08 141,305
200,000 6.00%, 02/15/26 192,062
----------
Total U.S. Treasury Notes & Bonds 642,148
----------
TOTAL INVESTMENTS
(Cost $1,125,535) $1,092,166
==========
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
18
<PAGE>
SG COWEN INTERMEDIATE FIXED INCOME FUND
STATEMENT OF INVESTMENTS
MAY 31, 2000
(UNAUDITED)
<TABLE>
<CAPTION>
SHARES DESCRIPTION VALUE
<C> <S> <C>
CUMULATIVE PREFERRED STOCK - 19.1% OF
TOTAL PORTFOLIO
20,000 Citigroup Capital 6.850%, 01/22/38 $ 416,250
10,000 Merrill Lynch TOPRS 7.750%, 12/31/36 233,125
Paine Webber Group Capital Trust II,
10,000 8.080%, 03/01/37 222,500
----------
Total Cumulative Preferred Stock 871,875
----------
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT
<C> <S> <C>
CORPORATE DEBT - 2.0%
$100,000 Ford Motor Credit, 6.25%, 12/08/05 92,140
----------
MORTGAGE-BACKED SECURITIES - 23.3%
Federal National Mortgage Assn. (FNMA)
Certificates:
33,940 9.000%, 02/01/02 34,130
444,231 7.000%, 01/01/08 434,894
40,611 9.000%, 05/01/09 41,136
48,652 9.500%, 03/01/10 50,836
71,711 7.500%, 09/01/10 70,949
158,225 7.500%, 04/01/11 156,675
20,537 9.000%, 04/01/15 21,053
43,287 9.500%, 07/01/22 45,261
Federal Home Loan Mortgage Corporation
(FHLMC) Certificates:
61,609 8.000%, 01/01/08 61,269
Government National Mortgage Assn.
(GNMA) Certificates:
23,969 8.000%, 06/15/01 24,017
21,933 9.000%, 12/15/16 22,776
16,450 10.000%, 12/15/18 17,524
16,250 8.500%, 10/15/21 16,565
34,168 8.000%, 06/15/22 34,371
29,792 8.000%, 06/15/27 29,849
----------
Total Mortgage-Backed Securities 1,061,305
----------
U.S. TREASURY OBLIGATIONS - 55.6%
U.S. Treasury Notes & Bonds
400,000 6.000%, 07/31/02 394,124
100,000 5.750%, 11/30/02 97,734
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
19
<PAGE>
SG COWEN INTERMEDIATE FIXED INCOME FUND
STATEMENT OF INVESTMENTS - (CONTINUED)
MAY 31, 2000
(UNAUDITED)
<TABLE>
<CAPTION>
PRINCIPAL DESCRIPTION VALUE
AMOUNT
<C> <S> <C>
U.S. TREASURY NOTES & BONDS -
(CONTINUED)
$300,000 6.250%, 02/15/03 $ 296,436
400,000 5.750%, 08/15/03 389,312
100,000 6.500%, 5/15/05 99,687
400,000 5.875%, 11/15/05 387,312
500,000 5.625%, 02/15/06 478,125
150,000 6.500%, 10/15/06 149,508
250,000 6.125%, 08/15/07 244,610
----------
Total U.S. Treasury Notes & Bonds 2,536,848
----------
TOTAL INVESTMENTS
(Cost $4,790,085) $4,562,168
==========
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
20
<PAGE>
SG COWEN LARGE CAP VALUE FUND
STATEMENT OF INVESTMENTS
MAY 31, 2000
(UNAUDITED)
<TABLE>
<CAPTION>
SHARES DESCRIPTION VALUE
<C> <S> <C>
COMMON STOCKS - 100.0% OF TOTAL
PORTFOLIO
AEROSPACE - 3.7%
4,400 United Technologies, Inc. $ 265,925
----------
BASIC INDUSTRY - 1.8%
5,700 USX-US Steel Group, Inc. 128,606
----------
BUILDING MATERIALS - 2.0%
5,690 York International, Inc. 148,651
----------
CHEMICALS - 2.9%
3,700 Potash Corp. of Saskatchewan 214,138
----------
CONSUMER DURABLES - 12.8%
3,500 Eastman Kodak, Inc. 209,125
11,100 Readers Digest Association 376,012
6,600 Scholastic Corp.* 351,038
----------
936,175
----------
CONSUMER NON-DURABLES - 6.3%
6,400 Avon Products, Inc. 264,400
2,600 Quaker Oats Co. 191,263
----------
455,663
----------
ENERGY - 11.6%
3,700 Baker Hughes, Inc. 134,125
8,800 Conoco, Inc. Class A 235,400
3,500 Grant Prideco., Inc.* 81,387
2,600 Transocean Sedco Forex, Inc. 127,888
6,400 Ultramatar Diamond Shamrock Co. 166,000
2,300 Weatherford Int'l Inc. 99,065
----------
843,865
----------
FINANCIAL SERVICES - 6.7%
4,000 Bank of America Corp. 222,250
3,200 Banc One Corp. 106,000
2,720 Federal National Mortgage Association 163,540
----------
491,790
----------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
21
<PAGE>
SG COWEN LARGE CAP VALUE FUND
STATEMENT OF INVESTMENTS - (CONTINUED)
MAY 31, 2000
(UNAUDITED)
<TABLE>
<CAPTION>
SHARES DESCRIPTION VALUE
<C> <S> <C>
HEALTH CARE SERVICES/HMO - 5.2%
6,800 HCA- Healthcare Co. $ 183,600
2,600 United Healthcare 193,863
----------
377,463
----------
INSURANCE - 9.3%
6,900 Allstate Corp. 182,850
2,200 American Int'l Group, Inc. 247,637
3,500 Chubb Corp. 245,000
----------
675,487
----------
MACHINERY - 0.9%
2,000 Cummins Engine Co. 65,125
----------
PHARMACEUTICALS/SUPPLIES - 6.2%
2,400 Baxter Int'l Inc. 159,600
1,300 Genzyme Corp.* 73,856
2,830 Mylan Labs, Inc. 75,879
4,000 St. Jude Medical Inc.* 143,750
----------
453,085
----------
RETAIL - 6.9%
1,900 Federated Department Stores* 73,150
22,900 Mattel, Inc. 310,581
7,500 Toys R Us Inc.* 118,125
----------
501,856
----------
TECHNOLOGY - 15.4%
9,200 Compaq Computers 241,500
3,700 Computer Associates 190,550
5,000 NCR Corp.* 210,937
2,300 SAP AG-Spons ADR 98,612
2,700 Seagate Technology* 156,600
4,700 Unisys, Inc.* 127,488
11,400 Ziff Davis, Inc.* 96,188
----------
1,121,875
----------
TELECOMMUNICATIONS - 3.1%
6,600 A T & T Corp. 228,938
----------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
22
<PAGE>
SG COWEN LARGE CAP VALUE FUND
STATEMENT OF INVESTMENTS - (CONTINUED)
MAY 31, 2000
(UNAUDITED)
<TABLE>
<CAPTION>
SHARES DESCRIPTION VALUE
<C> <S> <C>
TRANSPORTATION - 1.4%
2,500 US Airways Group, Inc.* $ 106,250
----------
UTILITIES - 3.8%
3,900 Cinergy Corp. 103,837
3,400 El Paso Energy Corp. 175,100
----------
278,937
----------
TOTAL COMMON STOCKS
(Cost $6,855,701) $7,293,829
==========
</TABLE>
-------------
* Non-income producing security
SEE NOTES TO FINANCIAL STATEMENTS
23
<PAGE>
STATEMENTS OF ASSETS AND LIABILITIES
MAY 31, 2000
(UNAUDITED)
<TABLE>
<CAPTION>
INCOME + GROWTH OPPORTUNITY
FUND FUND
<S> <C> <C>
ASSETS
Investments in securities,
at value -
(Cost $31,426,906,
$30,604,153, $1,125,535,
$4,790,085 and
$6,855,701, respectively
- see statements) $36,494,594 $34,676,569
Cash 143,018 155,981
Receivables:
SG Cowen Asset Management,
Inc. - -
Subscriptions to Common
Stock 42,556 2,838
Investment Securities sold - 898,447
Dividends and interest 70,888 19,380
Prepaid expenses 17,668 21,619
Deferred organization
expenses - Note I (E) - -
----------- -----------
TOTAL ASSETS 36,768,724 35,774,834
----------- -----------
LIABILITIES
Payables:
SG Cowen Asset Management,
Inc. 32,314 36,547
Redemptions of Common
Stock 170,256 5,406
Investment Securities
purchased - 740,789
Dividends Note I (C) - -
Accrued expenses and other
liabilities 38,851 46,988
----------- -----------
TOTAL LIABILITIES 241,421 829,730
----------- -----------
NET ASSETS $36,527,303 $34,945,104
=========== ===========
Net Assets consist of:
Paid-in capital $29,623,449 $35,472,914
Accumulated undistributed
net investment income
(loss) 133,030 -
Accumulated net realized
gain (loss) on
investments 1,703,136 (4,600,226)
Net unrealized appreciation
(depreciation) on
investments 5,067,688 4,072,416
----------- -----------
NET ASSETS $36,527,303 $34,945,104
=========== ===========
Class A
Net assets $33,714,913 $21,182,268
Outstanding shares of common
stock, ($.001 par value) 2,741,105 1,358,021
Net asset value per share $ 12.30 $ 15.60
Maximum offering price per
share $ 12.91 $ 16.38
Class B
Net assets $ 1,619,973 $ 4,850,142
Outstanding shares of common
stock, ($.001 par value) 132,566 330,953
Net asset value per share $ 12.22 $ 14.66
Class I
Net assets $ 1,192,417 $ 8,912,694
Outstanding shares of common
stock, ($.001 par value) 96,452 557,773
Net asset value per share $ 12.36 $ 15.98
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
24
<PAGE>
<TABLE>
<CAPTION>
GOVERNMENT INTERMEDIATE FIXED LARGE CAP
SECURITIES FUND INCOME FUND VALUE FUND
<S><C> <C> <C>
$1,092,166 $4,562,168 $7,293,829
24,163 75,805 190,690
3,933 3,525 4,262
- 2,995 -
17,185 3,310 61,627
15,924 47,744 13,258
14,871 14,961 24,266
- - 55,613
---------- ---------- ----------
1,168,242 4,710,508 7,643,545
---------- ---------- ----------
- - -
46 - -
- - 105,640
1,024 5,309 -
12,807 18,134 29,460
---------- ---------- ----------
13,877 23,443 135,100
---------- ---------- ----------
$1,154,365 $4,687,065 $7,508,445
========== ========== ==========
$1,214,964 $5,052,054 $7,716,147
(680) - 5,512
(26,550) (137,072) (651,342)
(33,369) (227,917) 438,128
---------- ---------- ----------
$1,154,365 $4,687,065 $7,508,445
========== ========== ==========
$1,127,350 $4,414,185 $7,269,809
126,642 492,688 659,348
$ 8.90 $ 8.96 $ 11.03
$ 9.34 $ 9.18 $ 11.58
- $ 171,214 $ 169,233
- 18,973 15,343
- $ 9.02 $ 11.03
$ 27,015 $ 101,666 $ 69,403
3,001 11,386 6,256
$ 9.00 $ 8.93 $ 11.09
</TABLE>
25
<PAGE>
STATEMENTS OF OPERATIONS
SIX MONTHS ENDED MAY 31, 2000
(UNAUDITED)
<TABLE>
<CAPTION>
INCOME + GROWTH OPPORTUNITY
FUND FUND
<S> <C> <C>
INVESTMENT INCOME
Dividend income $ 413,148 $ 119,838
Interest income 60,508 16,967
---------- ----------
Total Income 473,656 136,805
---------- ----------
EXPENSES
Investment management fee - Note 2(A) 126,476 151,768
Service fee - Class A - Note 2(C) 38,180 25,186
Service and Distribution fees - Class B - Note 2(C) 8,179 23,134
Professional fees 9,999 9,999
Shareholder servicing fees
Class A 11,576 11,205
Class B 994 3,090
Class I 639 2,030
Directors' fees and expenses - Note 2(D) 10,109 10,109
Federal and State registration fees 13,441 12,970
Prospectus and shareholders' reports 11,999 17,500
Custodian fees 3,288 1,472
Amortization of organization expenses - Note 1(E) - -
Bookkeeping Fees - -
Miscellaneous 1,519 1,354
---------- ----------
Total Expenses 236,399 269,817
Less: Expenses waived and absorbed - Note 2(A, C, and
D) - -
---------- ----------
Net Expenses 236,399 269,817
---------- ----------
Net Investment Income (Loss) 237,257 (133,012)
---------- ----------
Realized and Unrealized Gain (Loss) on investments - Note 3:
Net realized gain (loss) on investments 2,039,890 5,186,626
Net unrealized appreciation (depreciation) on
investments 2,467,433 3,890,200
---------- ----------
Net Realized and Unrealized Gain (Loss) on Investments 4,507,323 9,076,826
---------- ----------
Net Increase in Net Assets resulting from Operations $4,744,580 $8,943,814
========== ==========
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
26
<PAGE>
<TABLE>
<CAPTION>
GOVERNMENT INTERMEDIATE LARGE CAP
SECURITIES FUND FIXED INCOME FUND VALUE FUND
<S> <C> <C> <C>
INVESTMENT INCOME
Dividend income $ - $ 39,772 $ 65,528
Interest income 47,377 131,110 7,035
-------- --------- ---------
Total Income 47,377 170,882 72,563
-------- --------- ---------
EXPENSES
Investment management fee - Note 2(A) 4,239 12,624 29,875
Service fee - Class A - Note 2(C) 1,643 5,881 9,407
Service and Distribution fees - Class B - Note 2(C) - 506 881
Professional fees 8,500 8,500 9,000
Shareholder servicing fees
Class A 881 2,530 6,816
Class B - 552 499
Class I 266 646 1,344
Directors' fees and expenses - Note 2(D) 10,033 10,111 10,109
Federal and State registration fees 12,039 12,110 12,891
Prospectus and shareholders' reports 2,500 4,249 9,999
Custodian fees 663 2,901 3,103
Amortization of organization expenses - Note 1(E) - - 10,799
Bookkeeping Fees - - 3,123
Miscellaneous 130 319 538
-------- --------- ---------
Total Expenses 40,894 60,929 108,384
Less: Expenses waived and absorbed - Note 2(A, C, and
D) (38,068) (44,439) (59,457)
-------- --------- ---------
Net Expenses 2,826 16,490 48,927
-------- --------- ---------
Net Investment Income (Loss) 44,551 154,392 23,636
-------- --------- ---------
Realized and Unrealized Gain (Loss) on investments - Note 3:
Net realized gain (loss) on investments (26,604) (70,215) (379,391)
Net unrealized appreciation (depreciation) on
investments 14,877 (34,640) 951,918
-------- --------- ---------
Net Realized and Unrealized Gain (Loss) on Investments (11,727) (104,855) 572,527
-------- --------- ---------
Net Increase in Net Assets resulting from Operations $ 32,824 $ 49,537 $ 596,163
======== ========= =========
</TABLE>
27
<PAGE>
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
INCOME + GROWTH FUND
------------------------------------
SIX MONTHS
ENDED YEAR
MAY 31, ENDED
2000 NOVEMBER 30,
(UNAUDITED) 1999
<S> <C> <C>
OPERATIONS:
Net investment income $ 237,257 $ 1,015,812
Net realized gain on investments 2,039,890 1,500,534
Net unrealized appreciation (depreciation) on
investments 2,467,433 (2,939,529)
----------- ------------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING
FROM OPERATIONS 4,744,580 (423,183)
----------- ------------
DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income
Class A (300,923) (901,584)
Class B (7,919) (32,590)
Class I (33,792) (133,858)
Net realized gains on investments
Class A (1,474,549) (2,550,390)
Class B (81,386) (150,273)
Class I (192,434) (334,097)
----------- ------------
TOTAL DISTRIBUTIONS TO SHAREHOLDERS (2,091,003) (4,102,792)
----------- ------------
COMMON STOCK TRANSACTIONS - NOTE 4
Proceeds from shares sold 1,327,233 931,213
Net asset value of shares issued in
reinvestments of distributions 1,982,149 3,912,420
Cost of shares redeemed (9,879,692) (13,147,008)
----------- ------------
NET DECREASE IN NET ASSETS FROM COMMON STOCK
TRANSACTIONS (6,570,310) (8,303,375)
----------- ------------
TOTAL DECREASE IN NET ASSETS (3,916,733) (12,829,350)
NET ASSETS:
Beginning of period 40,444,036 53,273,386
----------- ------------
End of period $36,527,303 $ 40,444,036
=========== ============
Undistributed net investment income $ 133,030 $ 162,338
=========== ============
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
28
<PAGE>
STATEMENTS OF CHANGES IN NET ASSETS - (CONTINUED)
<TABLE>
<CAPTION>
OPPORTUNITY FUND
----------------------------
SIX MONTHS
ENDED YEAR
MAY 31, ENDED
2000 NOVEMBER 30,
(UNAUDITED) 1999
<S> <C> <C>
OPERATIONS:
Net investment loss $ (133,012) $ (262,742)
Net realized gain (loss) on investments 5,186,626 (5,881,274)
Net unrealized appreciation on investments 3,890,200 12,787,227
----------- ------------
NET INCREASE IN NET ASSETS RESULTING FROM
OPERATIONS 8,943,814 6,643,211
----------- ------------
DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net realized gains on investments
Class A - -
Class B - -
Class I - -
----------- ------------
TOTAL DISTRIBUTIONS TO SHAREHOLDERS - -
----------- ------------
COMMON STOCK TRANSACTIONS - NOTE 4
Proceeds from shares sold 1,130,450 5,021,001
Net asset value of shares issued in
reinvestments of distributions - -
Cost of shares redeemed (8,863,382) (31,122,508)
----------- ------------
NET DECREASE IN NET ASSETS FROM COMMON STOCK
TRANSACTIONS (7,732,932) (26,101,507)
----------- ------------
TOTAL INCREASE (DECREASE) IN NET ASSETS 1,210,882 (19,458,296)
NET ASSETS:
Beginning of period 33,734,222 53,192,518
----------- ------------
End of period $34,945,104 $ 33,734,222
=========== ============
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
29
<PAGE>
STATEMENTS OF CHANGES IN NET ASSETS - (CONTINUED)
<TABLE>
<CAPTION>
GOVERNMENT
SECURITIES FUND
----------------------------
SIX MONTHS
ENDED YEAR
MAY 31, ENDED
2000 NOVEMBER 30,
(UNAUDITED) 1999
<S> <C> <C>
OPERATIONS:
Net investment income $ 44,551 $ 92,974
Net realized gain (loss) on investments (26,604) 24,932
Net unrealized appreciation (depreciation) on
investments 14,877 (138,314)
----------- -----------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING
FROM OPERATIONS 32,824 (20,408)
----------- -----------
DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income
Class A (41,463) (85,424)
Class I (3,088) (7,550)
Net realized gains on investments
Class A (21,057) (37,726)
Class I (1,842) (3,070)
----------- -----------
TOTAL DISTRIBUTIONS TO SHAREHOLDERS (67,450) (133,770)
----------- -----------
COMMON STOCK TRANSACTIONS - NOTE 4
Proceeds from shares sold 2,263 119,779
Net asset value of shares issued in
reinvestments of distributions 57,887 115,860
Cost of shares redeemed (410,689) (211,173)
----------- -----------
NET INCREASE (DECREASE) IN NET ASSETS FROM
COMMON STOCK TRANSACTIONS (350,539) 24,466
----------- -----------
TOTAL DECREASE IN NET ASSETS (385,165) (129,712)
NET ASSETS:
Beginning of period 1,539,530 1,669,242
----------- -----------
End of period $ 1,154,365 $ 1,539,530
=========== ===========
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
30
<PAGE>
STATEMENTS OF CHANGES IN NET ASSETS - (CONTINUED)
<TABLE>
<CAPTION>
INTERMEDIATE FIXED
INCOME FUND
----------------------------
SIX MONTHS
ENDED YEAR
MAY 31, ENDED
2000 NOVEMBER 30,
(UNAUDITED) 1999
<S> <C> <C>
OPERATIONS:
Net investment income $ 154,392 $ 395,882
Net realized gain (loss) on investments (70,215) 31,217
Net unrealized depreciation on investments (34,640) (508,655)
----------- -----------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING
FROM OPERATIONS 49,537 (81,556)
----------- -----------
DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income
Class A (143,677) (361,697)
Class B (6,139) (19,407)
Class I (4,576) (15,855)
----------- -----------
TOTAL DISTRIBUTIONS TO SHAREHOLDERS (154,392) (396,959)
----------- -----------
COMMON STOCK TRANSACTIONS - NOTE 4
Proceeds from shares sold 21,503 241,825
Net asset value of shares issued in
reinvestments of distributions 112,080 329,450
Cost of shares redeemed (1,133,919) (2,999,112)
----------- -----------
NET DECREASE IN NET ASSETS FROM COMMON STOCK
TRANSACTIONS (1,000,336) (2,427,837)
----------- -----------
TOTAL DECREASE IN NET ASSETS (1,105,191) (2,906,352)
NET ASSETS:
Beginning of period 5,792,256 8,698,608
----------- -----------
End of period $ 4,687,065 $ 5,792,256
=========== ===========
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
31
<PAGE>
STATEMENTS OF CHANGES IN NET ASSETS - (CONTINUED)
<TABLE>
<CAPTION>
LARGE CAP
VALUE FUND
----------------------------------
PERIOD FROM
SIX MONTHS JANUARY 2, 1998
ENDED (COMMENCEMENT
MAY 31, OF OPERATIONS)
2000 TO NOVEMBER 30,
(UNAUDITED) 1999
<S> <C> <C>
OPERATIONS:
Net investment income $ 23,636 $ 119,675
Net realized loss on investments (379,391) (233,080)
Net unrealized appreciation on investments 951,918 1,134,859
----------- -----------
NET INCREASE IN NET ASSETS RESULTING FROM
OPERATIONS 596,163 1,021,454
----------- -----------
DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income
Class A (22,339) (112,922)
Class B (19) (480)
Class I (3,593) (16,916)
----------- -----------
TOTAL DISTRIBUTIONS TO SHAREHOLDERS (25,951) (130,318)
----------- -----------
COMMON STOCK TRANSACTIONS - NOTE 4
Proceeds from shares sold 160,522 912,613
Net asset value of shares issued in
reinvestments of distributions 25,866 129,888
Cost of shares redeemed (3,050,305) (5,491,773)
----------- -----------
NET DECREASE IN NET ASSETS FROM COMMON STOCK
TRANSACTIONS (2,863,917) (4,449,272)
----------- -----------
TOTAL DECREASE IN NET ASSETS (2,293,705) (3,558,136)
NET ASSETS:
Beginning of period 9,802,150 13,360,286
----------- -----------
End of period $ 7,508,445 $ 9,802,150
=========== ===========
Undistributed net investment income $ 5,512 $ 7,826
=========== ===========
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
32
<PAGE>
SG COWEN FUNDS
NOTES TO FINANCIAL STATEMENTS
(UNAUDITED)
NOTE 1 - SIGNIFICANT ACCOUNTING POLICIES: SG Cowen Income + Growth Fund, Inc.
("CIG"), SG Cowen Funds, Inc. and SG Cowen Series Funds, Inc. (collectively "the
Funds") are registered under the Investment Company Act of 1940 ("Act") as
diversified open-end management companies. SG Cowen Funds, Inc. operates as a
series company currently issuing common stock representing its portfolios
designated as the SG Cowen Intermediate Fixed Income Fund ("CIFIF"), SG Cowen
Government Securities Fund ("CGSF"), and SG Cowen Opportunity Fund ("COF"). SG
Cowen Series Funds, Inc. operates as a series company currently issuing common
stock representing its portfolio designated as the SG Cowen Large Cap Value Fund
("LgCapValue"). Until July 1, 1998, Cowen & Co. ("Cowen") served as investment
manager and principal underwriter to the above-referenced Funds (the "Funds").
On July 1, 1998, Cowen's business was combined with Societe Generale Securities
Corporation ("SGSC"), a subsidiary of Societe Generale ("SG"), to form SG Cowen
Securities Corporation ("SG Cowen"). SG, a leading international commercial and
investment bank established in 1864, has a global network of offices in over 80
countries. From July 1, 1998 through December 31, 1999 SG Cowen through its SG
Cowen Asset Management Division served as the investment manager to the Funds,
with the existing investment management personnel of Cowen continuing to provide
investment management services to the Funds. In January 2000 as a result of an
internal reorganiztion, the SG Cowen Asset Management Division of SG Cowen was
transferred to SG Cowen Asset Management, Inc. ("SGCAM"). All officers and
employees engaged in providing investment advisory services to the Funds with SG
Cowen became officers and employees of SGCAM. Since July 1, 1998 Funds
Distributor, Inc. has served as principal underwriter to the Funds. SG Cowen is
also a selected dealer of the Funds' shares. Additionally, effective as of
July 1, 1998, the names of the Funds were changed, as indicated above, in order
to reflect the Funds' new management. These combined financial statements
together with the notes thereto, consist of CIG, COF, CIFIF, CGSF and
LgCapValue. The Funds' financial statements are prepared in accordance with
generally accepted accounting principles which may require the use of management
estimates and assumptions. Actual results could differ from these estimates.
(A) PORTFOLIO VALUATION: Securities whose principal market is on an exchange
are valued at the last sales price on the exchange or, in the absence of
currently reported sales on the exchange, at the most recent bid price in the
over-the-counter market or, in the absence of a recent bid price, the bid
equivalent as obtained from one or more of the major market makers for the
securities to be valued. Securities traded principally in the over-the-counter
market are valued at the most recent bid price. Short-term investments are
carried at amortized cost, which approximates value.
(B) SECURITIES TRANSACTIONS AND INVESTMENT INCOME: Securities transactions are
recorded on a trade date basis. Realized gain and loss from securities
transactions are recorded on the identified cost basis. Dividend income is
recognized on the ex-dividend date and interest income, including amortization
of discount on investments, is recognized on the accrual basis.
(C) DIVIDENDS TO SHAREHOLDERS: Dividends for CIG, COF, and LgCapValue are
recorded on the ex-dividend date. Dividends for CGSF and CIFIF are earned on
settled shares daily and paid monthly. To the extent that net realized capital
gain can be offset by capital loss carryovers, if any, it is the policy of each
Fund not to distribute such gain.
(D) FEDERAL INCOME TAXES: It is the policy of each Fund to continue to qualify
as a regulated investment company, if such qualification is in the best
interests of its shareholders, by complying with the provisions available to
certain investment companies, as defined in applicable sections of the Internal
Revenue Code, and
33
<PAGE>
SG COWEN FUNDS
NOTES TO FINANCIAL STATEMENTS - (CONTINUED)
(UNAUDITED)
NOTE 1 - (CONTINUED)
to make distributions of taxable income sufficient to relieve it from all, or
substantially all, Federal income taxes.
At November 30, 1999, COF, CIFIF and LgCapValue had unused capital loss
carryovers of approximately $3,800,000, $67,000 and $267,000, respectively,
available for Federal income tax purposes to be applied against future
securities profits, if any. If not applied, the carryovers expire in fiscal 2006
($2,200,000) and fiscal 2007 ($1,600,000) in fiscal 2005 ($67,000), and in
fiscal 2006 ($34,000) and fiscal 2007 ($233,000), respectively.
(E) DEFERRED ORGANIZATION EXPENSES: Organization expenses paid by LgCapValue
are being amortized to operations from January 2, 1998, the date operations
commenced, over the period during which it is expected that a benefit will be
realized, not to exceed five years. In the event that any of the initial shares
purchased by SG Cowen in connection with the organization of the Fund are
redeemed by any holder thereof prior to the amortization of such expenses,
redemption proceeds will be reduced by a pro rata portion of any unamortized
organizational expenses in the same proportion as the number of initial shares
being redeemed bears to the number of initial shares outstanding at the time or
redemption.
(F) Dividends from net investment income and distributions from realized gains
from investment transactions are determined in accordance with Federal income
tax regulations, which may differ from investment income and realized gains
determined under generally accepted accounting principles. These "book/tax"
differences are either considered temporary or permanent in nature. To the
extent these differences are permanent in nature, such amounts are reclassified
within the capital accounts based on their federal tax-basis treatment;
temporary differences do not require reclassification. Dividends and
distributions which exceed net investment income and net realized capital gains
for financial reporting purposes, but not for tax purposes are reported as
dividends in excess of net investment income or distributions in excess of net
realized capital gains. To the extent they exceed net investment income and net
realized capital gains for tax purposes, they are reported as distributions of
paid-in capital. As of May 31, 2000, COF reclassified $133,012 from accumulated
undistributed net investment loss to paid-in capital. Net investment loss, net
realized gains, and net assets were not affected by this change.
(G) OPTIONS TRANSACTIONS: When a Fund writes an option, the premium received
by the Fund is recorded as a liability and is subsequently adjusted to the
current market value of the option written. Premiums received from writing
options which expire unexercised are recorded by the Fund on the expiration date
as realized gains from options written. The difference between the premium and
the amount paid on effecting a closing purchase transaction, including brokerage
commissions, is also treated as a realized gain, or if the premium is less than
the amount paid for the closing purchase transaction, as a realized loss. If a
call option is exercised, the premium is added to the proceeds from the sale of
the underlying security in determining whether the Fund has realized a gain or
loss.
NOTE 2 - INVESTMENT MANAGEMENT FEES AND OTHER TRANSACTIONS WITH
AFFILIATES: (A) INVESTMENT MANAGEMENT FEE: Fees paid by the Funds to SGCAM
pursuant to the provisions of Investment Management Agreements ("Agreements")
are payable monthly, based on an annual rate of .75%, .90%, .50%, .60% and .75%
for CIG, COF, CIFIF, CGSF and LgCapValue, respectively, of the average daily
value of each Fund's net assets.
With respect to LgCapValue, SGCAM has voluntarily reimbursed all expenses,
other than Investment Management Fee and distribution fees, in excess of .22% of
the average daily value of its net assets since its inception.
34
<PAGE>
SG COWEN FUNDS
NOTES TO FINANCIAL STATEMENTS - (CONTINUED)
(UNAUDITED)
NOTE 2 - (CONTINUED)
With respect to CGSF and CIFIF, SGCAM has voluntarily waived its Investment
Management Fee for the period from December 1, 1996 through May 31, 2000. With
respect to CGSF, SGCAM is voluntarily absorbing all other expenses, except for
.40% of other expenses and .50% of the Class B distribution fee. With respect to
CIFIF, SG Cowen is voluntarily absorbing all other expenses, except for .40% of
other expenses and its service and distribution fees. The directors fees are
being waived by directors of both Funds.
SG Cowen has agreed to maintain these fee and expense reimbursement
arrangements for CGSF, CIFIF and LgCapValue through March 31, 2001 (see
"Shareholder Servicing and Distribution Plan" later in this note).
(B) During the six months ended May 31, 2000, SG earned $1,923, $1,526, $22,
$176 and $487 of commissions on sales of the shares of CIG, COF, CGSF, CIFIF and
LgCapValue, respectively.
(C) SHAREHOLDER SERVICING AND DISTRIBUTION PLANS (THE "PLAN"): SG Cowen (until
June 30, 1998 and Funds Distributor Inc. after that date) is paid monthly fees
by each of the Funds in connection with (1) the servicing of shareholder
accounts in Class A and Class B shares and (2) providing distribution related
services in respect of Class B shares. A monthly service fee, authorized
pursuant to the Plan adopted by each of the Funds pursuant to Rule 12b-1 under
the Investment Company Act of 1940, as amended (the "1940 Act"), is calculated
at the annual rate of .25% of the value of the average daily net assets of the
Fund attributable to each of Class A and Class B shares and is used to provide
compensation for ongoing servicing and/or maintenance of shareholder accounts
with the Funds. Compensation is paid to persons who respond to inquiries of
shareholders of a Fund regarding their ownership of shares or their accounts
with the Fund or who provide other similar services not otherwise required to be
provided by the Fund's investment advisor, transfer agent or other agent of the
Fund.
In addition, pursuant to the Plan, the Funds pay to SG Cowen (until June 30,
1998 and Funds Distributor, Inc. after that date) a monthly distribution fee at
the annual rate of .75% for CIG, COF, CGSF and LgCapValue and of .25% for CIFIF
of the Funds' average daily net assets attributable to Class B shares. The
distribution fee is used to provide (1) initial and ongoing sales compensation
to its registered representatives or those of other broker-dealers that enter
into selected dealer agreements with SG Cowen Funds in respect of sales of Class
B shares; (2) costs of printing and distributing the Funds' Prospectus,
Statement of Additional Information and sales literature to prospective
investors in Class B shares; (3) costs associated with any advertising relating
to Class B shares; and (4) payments to, and expenses of, persons who provide
support services in connection with the distribution of Class B shares.
Payments under the Plan are not tied exclusively to the service and/or
distribution expenses actually incurred by SGCAM, and the payments may exceed
expenses actually incurred by SGCAM. The Board of Directors evaluates the
appropriateness of the Plan and its payment terms on a continuing basis and in
doing so considers all relevant factors, including expenses borne by SGCAM and
amounts it receives under the Plan.
(D) Directors who are not officers, directors, partners, stockholders or
employees of SGCAM or its affiliates receive from each Fund a fee of $3,000 per
annum plus $500 per meeting attended and $375 for each audit committee meeting
attended and reimbursement for travel and out-of-pocket expenses; however the
Directors have agreed to waive their fees from CGSF and CIFIF until such time as
SGCAM ceases to waive its Investment Management Fee.
35
<PAGE>
SG COWEN FUNDS
NOTES TO FINANCIAL STATEMENTS - (CONTINUED)
(UNAUDITED)
NOTE 3 - SECURITIES TRANSACTIONS: The aggregate amount of purchases and sales of
investment securities, excluding short-term securities, during the six months
ended May 31, 2000, was as follows:
<TABLE>
<CAPTION>
CIG COF CGSF
-----------------------------------------------------------
<S> <C> <C> <C>
Purchases $21,354,132 $22,140,515 $ 99,031
-----------------------------------------------------------
Sales $28,923,633 $31,543,268 $480,687
-----------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
CIFIF LGCAP VALUE
--------------------------------------------------
<S> <C> <C>
Purchases $ 346,984 $4,226,725
--------------------------------------------------
Sales $1,423,515 $7,171,262
--------------------------------------------------
</TABLE>
At May 31, 2000, the cost of investments for Federal tax purposes was
substantially the same as the cost for financial reporting purposes (see the
Statements of Investments), except that due to wash sale transactions, the cost
of investments for COF was approximately $36,400,000.
At May 31, 2000, accumulated net unrealized appreciation (depreciation) on
investments was as follows:
<TABLE>
<CAPTION>
CIG COF CGSF
---------------------------------------------------------
<S> <C> <C> <C>
Gross Unrealized
Appreciation $7,290,924 $6,026,514 $ 161
Gross Unrealized
Depreciation 2,223,236 1,954,098 33,530
---------------------------------------------------------
Net $5,067,688 $4,072,416 $(33,369)
---------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
CIFIF LGCAP VALUE
-------------------------------------------------
<S> <C> <C>
Gross Unrealized
Appreciation $ 454 $920,579
Gross Unrealized
Depreciation 228,371 482,451
-------------------------------------------------
Net $(227,917) $438,128
-------------------------------------------------
</TABLE>
36
<PAGE>
SG COWEN FUNDS
NOTES TO FINANCIAL STATEMENTS - (CONTINUED)
(UNAUDITED)
NOTE 4 - COMMON STOCK TRANSACTIONS: At May 31, 2000, there were authorized 250
million shares, $.001 par value, of each class of each Fund's Common Stock.
Transactions in the Funds' Common Stock were as follows:
SG COWEN INCOME + GROWTH FUND, INC.
<TABLE>
<CAPTION>
SIX MONTHS ENDED MAY 31, 2000
-------------------------------------------------------------------------
CLASS A CLASS B CLASS I
----------------------- --------------------- -----------------------
SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT
--------- ----------- --------- --------- --------- -----------
<S> <C> <C> <C> <C> <C> <C>
Shares Sold 76,358 $ 872,463 1,963 $ 20,844 38,167 $ 433,926
Dividends Reinvested 167,175 1,678,496 8,302 82,895 21,918 220,758
-------- ----------- ------- --------- -------- -----------
243,533 2,550,959 10,265 103,739 60,085 654,684
Shares Redeemed (544,231) (5,652,262) (44,764) (475,813) (360,355) (3,751,617)
-------- ----------- ------- --------- -------- -----------
Net Decrease (300,698) $(3,101,303) (34,499) $(372,074) (300,270) $(3,096,933)
======== =========== ======= ========= ======== ===========
</TABLE>
<TABLE>
<CAPTION>
YEAR ENDED NOVEMBER 30, 1999
--------------------------------------------------------------------------
CLASS A CLASS B CLASS I
------------------------ --------------------- -----------------------
SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT
--------- ------------ --------- --------- --------- -----------
<S> <C> <C> <C> <C> <C> <C>
Shares Sold 13,646 $ 157,562 4,188 $ 48,607 62,387 $ 725,044
Dividends Reinvested 288,602 3,288,339 15,539 175,522 39,214 448,559
-------- ------------ ------- --------- -------- -----------
302,248 3,445,901 19,727 224,129 101,601 1,173,603
Shares Redeemed (879,515) (10,182,257) (74,020) (852,426) (182,861) (2,112,325)
-------- ------------ ------- --------- -------- -----------
Net Decrease (577,267) $ (6,736,356) (54,293) $(628,297) (81,260) $ (938,722)
======== ============ ======= ========= ======== ===========
</TABLE>
37
<PAGE>
SG COWEN FUNDS
NOTES TO FINANCIAL STATEMENTS - (CONTINUED)
(UNAUDITED)
NOTE 4 - (CONTINUED)
SG COWEN OPPORTUNITY FUND
<TABLE>
<CAPTION>
SIX MONTHS ENDED MAY 31, 2000
---------------------------------------------------------------------------
CLASS A CLASS B CLASS I
----------------------- ----------------------- -----------------------
SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT
--------- ----------- --------- ----------- --------- -----------
<S> <C> <C> <C> <C> <C> <C>
Shares Sold 18,082 $ 226,476 5,423 $ 66,346 59,526 $ 837,628
Dividends Reinvested - - - - - -
-------- ----------- ------- ----------- -------- -----------
18,082 226,476 5,423 66,346 59,526 837,628
Shares Redeemed (320,466) (4,265,905) (84,270) (1,051,574) (267,745) (3,545,903)
-------- ----------- ------- ----------- -------- -----------
Net Decrease (302,384) $(4,039,429) (78,847) $ (985,228) (208,219) $(2,708,275)
======== =========== ======= =========== ======== ===========
</TABLE>
<TABLE>
<CAPTION>
YEAR ENDED NOVEMBER 30, 1999
-------------------------------------------------------------------------------
CLASS A CLASS B CLASS I
------------------------- ----------------------- -------------------------
SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT
---------- ------------ --------- ----------- ---------- ------------
<S> <C> <C> <C> <C> <C> <C>
Shares Sold 23,861 $ 270,670 1,099 $ 13,036 412,300 $ 4,737,295
Dividends Reinvested - - - - - -
---------- ------------ -------- ----------- ---------- ------------
23,861 270,670 1,099 13,036 412,300 4,737,295
Shares Redeemed (1,148,066) (11,896,032) (236,357) (2,325,681) (1,506,131) (16,900,795)
---------- ------------ -------- ----------- ---------- ------------
Net Decrease (1,124,205) $(11,625,362) (235,258) $(2,312,645) (1,093,831) $(12,163,500)
========== ============ ======== =========== ========== ============
</TABLE>
38
<PAGE>
SG COWEN FUNDS
NOTES TO FINANCIAL STATEMENTS - (CONTINUED)
(UNAUDITED)
NOTE 4 - (CONTINUED)
SG COWEN GOVERNMENT SECURITIES FUND
<TABLE>
<CAPTION>
SIX MONTHS ENDED MAY 31, 2000
---------------------------------------------------------------------
CLASS A CLASS B CLASS I
--------------------- --------------------- ---------------------
SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT
--------- --------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C>
Shares Sold 35 $ 315 - - 211 $ 1,948
Dividends Reinvested 6,102 54,357 - - 392 3,530
------- --------- ------- -------- ------- --------
6,137 54,672 - - 603 5,478
Shares Redeemed (34,883) (312,210) - - (10,936) (98,479)
------- --------- ------- -------- ------- --------
Net Decrease (28,746) $(257,538) - - (10,333) $(93,001)
======= ========= ======= ======== ======= ========
</TABLE>
<TABLE>
<CAPTION>
YEAR ENDED NOVEMBER 30, 1999
---------------------------------------------------------------------
CLASS A CLASS B CLASS I
--------------------- --------------------- ---------------------
SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT
--------- --------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C>
Shares Sold 6,106 $ 58,287 - - 6,447 $ 61,492
Dividends Reinvested 11,330 107,639 - - 858 8,221
------- --------- ------- -------- ------ --------
17,436 165,926 - - 7,305 69,713
Shares Redeemed (15,780) (149,475) - - (6,472) (61,698)
------- --------- ------- -------- ------ --------
Net Increase 1,656 $ 16,451 - - 833 $ 8,015
======= ========= ======= ======== ====== ========
</TABLE>
39
<PAGE>
SG COWEN FUNDS
NOTES TO FINANCIAL STATEMENTS - (CONTINUED)
(UNAUDITED)
NOTE 4 - (CONTINUED)
SG COWEN INTERMEDIATE FIXED INCOME FUND
<TABLE>
<CAPTION>
SIX MONTHS ENDED MAY 31, 2000
---------------------------------------------------------------------
CLASS A CLASS B CLASS I
--------------------- --------------------- ---------------------
SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT
--------- --------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C>
Shares Sold 2,270 $ 20,476 - - 114 $ 1,027
Dividends Reinvested 11,338 101,462 676 6,095 507 4,523
------- --------- ------- --------- ------- --------
13,608 121,938 676 6,095 621 5,550
Shares Redeemed (96,258) (864,479) (19,759) (177,947) (10,215) (91,493)
------- --------- ------- --------- ------- --------
Net Decrease (82,650) $(742,541) (19,083) $(171,852) (9,594) $(85,943)
======= ========= ======= ========= ======= ========
</TABLE>
<TABLE>
<CAPTION>
YEAR ENDED NOVEMBER 30, 1999
-----------------------------------------------------------------------
CLASS A CLASS B CLASS I
----------------------- --------------------- ---------------------
SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT
--------- ----------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C>
Shares Sold 11,475 $ 110,945 6,800 $ 63,439 7,161 $ 67,441
Dividends Reinvested 31,360 296,909 1,842 17,535 1,587 15,006
-------- ----------- ------- --------- ------- ---------
42,835 407,854 8,642 80,974 8,748 82,447
Shares Redeemed (250,427) (2,390,018) (30,464) (298,236) (32,514) (310,858)
-------- ----------- ------- --------- ------- ---------
Net Decrease (207,592) $(1,982,164) (21,822) $(217,262) (23,766) $(228,411)
======== =========== ======= ========= ======= =========
</TABLE>
40
<PAGE>
SG COWEN FUNDS
NOTES TO FINANCIAL STATEMENTS - (CONTINUED)
(UNAUDITED)
NOTE 4 - (CONTINUED)
SG COWEN LARGE CAP VALUE FUND
<TABLE>
<CAPTION>
SIX MONTHS ENDED MAY 31, 2000
-------------------------------------------------------------------------
CLASS A CLASS B CLASS I
----------------------- --------------------- -----------------------
SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT
--------- ----------- --------- --------- --------- -----------
<S> <C> <C> <C> <C> <C> <C>
Shares Sold 783 $ 8,007 1,403 $ 14,250 13,743 $ 138,265
Dividends Reinvested 2,193 22,256 2 19 354 3,591
-------- ----------- ------ -------- -------- -----------
2,976 30,263 1,405 14,269 14,097 141,856
Shares Redeemed (161,675) (1,642,512) (5,132) (49,945) (131,766) (1,357,848)
-------- ----------- ------ -------- -------- -----------
Net Decrease (158,699) $(1,612,249) (3,727) $(35,676) (117,669) $(1,215,992)
======== =========== ====== ======== ======== ===========
</TABLE>
<TABLE>
<CAPTION>
PERIOD ENDED NOVEMBER 30, 1999
-----------------------------------------------------------------------
CLASS A CLASS B CLASS I
----------------------- --------------------- ---------------------
SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT
--------- ----------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C>
Shares Sold 11,507 $ 120,124 3,542 $ 32,116 75,303 $ 760,373
Dividends Reinvested 11,197 112,494 49 480 1,665 16,914
-------- ----------- ------ -------- ------- ---------
22,704 232,618 3,591 32,596 76,968 777,287
Shares Redeemed (467,958) (4,714,975) (1,717) (17,290) (73,896) (759,508)
-------- ----------- ------ -------- ------- ---------
Net Increase (Decrease) (445,254) $(4,482,357) 1,874 $ 15,306 3,072 $ 17,779
======== =========== ====== ======== ======= =========
</TABLE>
41
<PAGE>
SG COWEN FUNDS
NOTES TO FINANCIAL STATEMENTS - (CONTINUED)
(UNAUDITED)
NOTE 5 - FINANCIAL HIGHLIGHTS: Selected data for a share of Common Stock
outstanding throughout each period:
<TABLE>
<CAPTION>
SG COWEN INCOME + GROWTH FUND, INC. - CLASS A
--------------------------------------------------------------
SIX MONTHS
ENDED YEAR ENDED NOVEMBER 30,
MAY 31, ------------------------------------------------
2000 1999 1998 1997 1996 1995
------------ -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
(UNAUDITED)
NET ASSET VALUE
Beginning of Period $ 11.22 $ 12.34 $ 14.55 $ 14.40 $ 13.19 $ 10.62
------- ------- ------- ------- ------- -------
INCOME FROM INVESTMENT OPERATIONS
Investment Income - Net 0.08 0.26 0.29 0.36 0.48 0.51
Net Realized and Unrealized Gains (Losses) on
Investments 1.60 (0.39) 0.19 1.97 1.74 2.54
------- ------- ------- ------- ------- -------
Net from Investment Operations 1.68 (0.13) 0.48 2.33 2.22 3.05
------- ------- ------- ------- ------- -------
LESS DISTRIBUTIONS:
Dividends from Net Investment Income (0.10) (0.27) (0.30) (0.36) (0.52) (0.48)
Distributions from Net Realized Gains on
Investments (0.50) (0.72) (2.39) (1.82) (0.49) -
------- ------- ------- ------- ------- -------
Total Distributions (0.60) (0.99) (2.69) (2.18) (1.01) (0.48)
------- ------- ------- ------- ------- -------
NET ASSET VALUE
End of Period $ 12.30 $ 11.22 $ 12.34 $ 14.55 $ 14.40 $ 13.19
======= ======= ======= ======= ======= =======
Total Return(5) 16.18%(3) (1.12)% 3.98% 19.21% 17.86% 29.50%
RATIOS / SUPPLEMENTARY DATA
Net Assets (000 omitted) $33,715 $34,116 $44,643 $55,383 $52,502 $49,298
Ratio of Expenses to Average Net Assets 0.69%(3) 1.33% 1.20% 1.21% 1.24% 1.31%
Ratio of Investment Income - Net to Average Net
Assets 0.73%(3) 2.18% 2.22% 2.65% 3.56% 4.29%
Decrease Reflected on Above Ratios Due to
Expense Reimbursements/ Waivers - - 0.05% 0.14% 0.15% 0.19%
Portfolio Turnover Rate 64%(3) 71% 62% 75% 79% 72%
</TABLE>
42
<PAGE>
SG COWEN FUNDS
NOTES TO FINANCIAL STATEMENTS - (CONTINUED)
(UNAUDITED)
NOTE 5 - (continued)
<TABLE>
<CAPTION>
SG COWEN INCOME + GROWTH FUND, INC. - CLASS B
--------------------------------------------------------------
SIX MONTHS
ENDED YEAR ENDED NOVEMBER 30,
MAY 31, ------------------------------------------------
2000 1999 1998 1997 1996 1995
------------ -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
(UNAUDITED)
NET ASSET VALUE
Beginning of Period $11.13 $12.24 $14.46 $14.31 $13.14 $10.58
------ ------ ------ ------ ------ ------
INCOME FROM INVESTMENT OPERATIONS
Investment Income - Net 0.02 0.15 0.17 0.27 0.37 0.42
Net Realized and Unrealized Gains (Losses) on
Investments 1.62 (0.37) 0.20 1.95 1.73 2.54
------ ------ ------ ------ ------ ------
Net from Investment Operations 1.64 (0.22) 0.37 2.22 2.10 2.96
------ ------ ------ ------ ------ ------
LESS DISTRIBUTIONS:
Dividends from Net Investment Income (0.05) (0.17) (0.20) (0.25) (0.44) (0.40)
Distributions from Net Realized Gains on
Investments (0.50) (0.72) (2.39) (1.82) (0.49) -
------ ------ ------ ------ ------ ------
Total Distributions (0.55) (0.89) (2.59) (2.07) (0.93) (0.40)
------ ------ ------ ------ ------ ------
NET ASSET VALUE
End of Period 12.22 $11.13 $12.24 $14.46 $14.31 $13.14
====== ====== ====== ====== ====== ======
Total Return(5) 15.78%(3) (1.89)% 3.11% 18.34% 16.89% 28.49%
RATIOS / SUPPLEMENTARY DATA
Net Assets (000 omitted) $1,620 $1,860 $2,711 $4,478 $2,581 $1,453
Ratio of Expenses to Average Net Assets 1.09%(3) 2.14% 1.97% 1.99% 2.04% 2.07%
Ratio of Investment Income - Net to Average Net
Assets 0.31%(3) 1.38% 1.43% 1.84% 2.76% 3.44%
Decrease Reflected on Above Ratios Due to
Expense Reimbursements/Waivers - - 0.06% 0.14% 0.15% 0.19%
Portfolio Turnover Rate 64%(3) 71% 62% 75% 79% 72%
</TABLE>
43
<PAGE>
SG COWEN FUNDS
NOTES TO FINANCIAL STATEMENTS - (CONTINUED)
(UNAUDITED)
NOTE 5 - (continued)
<TABLE>
<CAPTION>
SG COWEN INCOME + GROWTH FUND, INC. - CLASS I
-------------------------------------------------------
SIX MONTHS
ENDED YEAR ENDED NOVEMBER 30,
MAY 31, -------------------------------------------
2000 1999 1998 1997 1996 1995
---------- ------ -------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C>
(UNAUDITED)
NET ASSET VALUE
Beginning of Period $11.26 $12.39 $14.61 $ 14.45 $ 13.23 $ 10.62
------ ------ ------ ------- ------- -------
INCOME FROM INVESTMENT OPERATIONS
Investment Income - Net 0.35 0.31 0.35 0.41 0.58 0.52
Net Realized and Unrealized Gains (Losses) on
Investments 1.37 (0.42) 0.16 1.97 1.69 2.59
------ ------ ------ ------- ------- -------
Net from Investment Operations 1.72 (0.11) 0.51 2.38 2.27 3.11
------ ------ ------ ------- ------- -------
LESS DISTRIBUTIONS:
Dividends from Net Investment Income (0.12) (0.30) (0.34) (0.40) (0.56) (0.50)
Distributions from Net Realized Gains on
Investments (0.50) (0.72) (2.39) (1.82) (0.49) -
------ ------ ------ ------- ------- -------
Total Distributions (0.62) (1.02) (2.73) (2.22) (1.05) (0.50)
------ ------ ------ ------- ------- -------
NET ASSET VALUE
End of Period $12.36 $11.26 $12.39 $ 14.61 $ 14.45 $ 13.23
====== ====== ====== ======= ======= =======
Total Return(5) 16.47%(3) (0.92)% 4.22% 19.57% 18.25% 29.99%
RATIOS / SUPPLEMENTARY DATA
Net Assets (000 omitted) $1,192 $4,468 $5,920 $10,444 $11,733 $19,309
Ratio of Expenses to Average Net Assets 0.56%(3) 1.06% 0.91% 1.05% 0.90% 0.96%
Ratio of Investment Income - Net to Average Net
Assets 0.70%(3) 2.45% 2.50% 2.98% 3.90% 4.66%
Decrease Reflected on Above Ratios Due to
Expense Reimbursements/ Waivers - - 0.06% 0.14% 0.16% 0.19%
Portfolio Turnover Rate 64%(3) 71% 62% 75% 79% 72%
</TABLE>
44
<PAGE>
SG COWEN FUNDS
NOTES TO FINANCIAL STATEMENTS - (CONTINUED)
(UNAUDITED)
NOTE 5 - (continued)
<TABLE>
<CAPTION>
SG COWEN OPPORTUNITY FUND - CLASS A
-------------------------------------------------------------------
SIX MONTHS
ENDED YEAR ENDED NOVEMBER 30,
MAY 31, ----------------------------------------------------
2000 1999 1998 1997 1996 1995
------------ -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
(UNAUDITED)
NET ASSET VALUE
Beginning of Period $ 11.92 $ 10.05 $ 16.47 $ 16.61 $ 13.13 $ 12.98
------- ------- ------- ------- ------- -------
INCOME FROM INVESTMENT OPERATIONS
Investment Income (Loss) - Net (2) (0.05) (0.07) (0.08) (0.08) (0.07) (0.04)
Net Realized and Unrealized Gains (Losses) on
Investments 3.73 1.94 (3.40) 2.00 3.86 0.97
------- ------- ------- ------- ------- -------
Net from Investment Operations 3.68 1.87 (3.48) 1.92 3.79 0.93
------- ------- ------- ------- ------- -------
LESS DISTRIBUTIONS:
Dividends from Net Investment Income - - - - - -
Distributions from Net Realized Gains on
Investments - - (2.94) (2.06) (0.31) (0.78)
------- ------- ------- ------- ------- -------
Total Distributions - - (2.94) (2.06) (0.31) (0.78)
------- ------- ------- ------- ------- -------
NET ASSET VALUE
End of Period $ 15.60 $ 11.92 $ 10.05 $ 16.47 $ 16.61 $ 13.13
======= ======= ======= ======= ======= =======
Total Return(5) 30.87%(3) 18.61% (24.89)% 13.55% 29.63% 7.91%
RATIOS / SUPPLEMENTARY DATA
Net Assets (000 omitted) $21,182 $19,787 $27,978 $54,809 $43,950 $38,724
Ratio of Expenses to Average Net Assets 0.79%(3) 1.59% 1.46% 1.38% 1.39% 1.43%
Ratio of Investment Loss - Net to Average Net
Assets (0.38)%(3) (0.67)% (0.67)% (0.53)% (0.46)% (0.28)%
Decrease Reflected on Above Ratios Due to
Expense Reimbursements/ Waivers - - 0.01% 0.06% 0.16% 0.22%
Portfolio Turnover Rate 67%(3) 150% 124% 159% 182% 148%
</TABLE>
45
<PAGE>
SG COWEN FUNDS
NOTES TO FINANCIAL STATEMENTS - (CONTINUED)
(UNAUDITED)
NOTE 5 - (continued)
<TABLE>
<CAPTION>
SG COWEN OPPORTUNITY FUND - CLASS B
-------------------------------------------------------------
SIX MONTHS
ENDED YEAR ENDED NOVEMBER 30,
MAY 31, ------------------------------------------------
2000 1999 1998 1997 1996 1995
---------- ------- ------- -------- ------- -------
<S> <C> <C> <C> <C> <C> <C>
(UNAUDITED)
NET ASSET VALUE
Beginning of Period $11.24 $ 9.55 $15.92 $ 16.23 $12.93 $12.91
------ ------ ------ ------- ------ ------
INCOME FROM INVESTMENT OPERATIONS
Investment Income (Loss) - Net(2) (0.10) (0.15) (0.18) (0.20) (0.18) (0.14)
Net Realized and Unrealized Gains (Losses) on
Investments 3.52 1.84 (3.25) 1.95 3.79 0.94
------ ------ ------ ------- ------ ------
Net from Investment Operations 3.42 1.69 (3.43) 1.75 3.61 0.80
------ ------ ------ ------- ------ ------
LESS DISTRIBUTIONS:
Dividends from Net Investment Income - - - - - -
Distributions from Net Realized Gains on
Investments - - (2.94) (2.06) (0.31) (0.78)
------ ------ ------ ------- ------ ------
Total Distributions - - (2.94) (2.06) (0.31) (0.78)
------ ------ ------ ------- ------ ------
NET ASSET VALUE
End of Period $14.66 $11.24 $ 9.55 $ 15.92 $16.23 $12.93
====== ====== ====== ======= ====== ======
Total Return(5) 30.43%(3) 17.70% (25.56)% 12.72% 28.67% 6.97%
RATIOS / SUPPLEMENTARY DATA
Net Assets (000 omitted) $4,850 $4,608 $6,163 $10,629 $8,794 $6,455
Ratio of Expenses to Average Net Assets 1.17%(3) 2.37% 2.26% 2.15% 2.17% 2.19%
Ratio of Investment Loss - Net to Average Net
Assets (0.77)%(3) (1.45)% (1.47)% (1.31)% (1.24)% (1.06)%
Decrease Reflected on Above Ratios Due to
Expense Reimbursements/Waivers - - 0.01% 0.06% 0.16% 0.22%
Portfolio Turnover Rate 67%(3) 150% 124% 159% 182% 148%
</TABLE>
46
<PAGE>
SG COWEN FUNDS
NOTES TO FINANCIAL STATEMENTS - (CONTINUED)
(UNAUDITED)
NOTE 5 - (continued)
<TABLE>
<CAPTION>
SG COWEN OPPORTUNITY FUND - CLASS I
-------------------------------------------------------------------
SIX MONTHS
ENDED YEAR ENDED NOVEMBER 30,
MAY 31, ----------------------------------------------------
2000 1999 1998 1997 1996 1995
------------ -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
(UNAUDITED)
NET ASSET VALUE
Beginning of Period $12.19 $10.24 $ 16.69 $ 16.77 $ 13.20 $ 12.99
------ ------ ------- ------- ------- -------
INCOME FROM INVESTMENT OPERATIONS
Investment Income (Loss) - Net(2) (0.03) (0.04) (0.04) (0.03) (0.01) 0.01
Net Realized and Unrealized Gains (Losses) on
Investments 3.82 1.99 (3.47) 2.01 3.89 0.98
------ ------ ------- ------- ------- -------
Net from Investment Operations 3.79 1.95 (3.51) 1.98 3.88 0.99
------ ------ ------- ------- ------- -------
LESS DISTRIBUTIONS:
Dividends from Net Investment Income - - - - - -
Distributions from Net Realized Gains on
Investments - - (2.94) (2.06) (0.31) (0.78)
------ ------ ------- ------- ------- -------
Total Distributions - - (2.94) (2.06) (0.31) (0.78)
------ ------ ------- ------- ------- -------
NET ASSET VALUE
End of Period $15.98 $12.19 $ 10.24 $ 16.69 $ 16.77 $ 13.20
====== ====== ======= ======= ======= =======
Total Return(5) 31.09%(3) 19.04% (24.71)% 13.82% 30.17% 8.40%
RATIOS / SUPPLEMENTARY DATA
Net Assets (000 omitted) $8,913 $9,339 $19,051 $52,944 $40,369 $19,264
Ratio of Expenses to Average Net Assets 0.63%(3) 1.27% 1.14% 1.02% 1.01% 1.03%
Ratio of Investment Income (Loss) - Net Assets (0.22)%(3) (0.35)% (0.34)% (0.19)% (0.07)% 0.11%
Decrease Reflected on Above Ratios Due to
Expense Reimbursements/ Waivers - - 0.01% 0.06% 0.15% 0.22%
Portfolio Turnover Rate 67%(3) 150% 124% 159% 182% 148%
</TABLE>
47
<PAGE>
SG COWEN FUNDS
NOTES TO FINANCIAL STATEMENTS - (CONTINUED)
(UNAUDITED)
NOTE 5 - (continued)
<TABLE>
<CAPTION>
SG COWEN GOVERNMENT SECURITIES FUND -
CLASS A
-----------------------------------------------------------
SIX MONTHS
ENDED YEAR ENDED NOVEMBER 30,
MAY 31, -------------------------------------------
2000 1999 1998 1997 1996 1995
-------------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C>
(UNAUDITED)
NET ASSET VALUE
Beginning of Period $ 9.12 $10.03 $ 9.58 $ 9.59 $ 9.83 $ 9.17
------ ------ ------ ------ ------ ------
INCOME FROM INVESTMENT OPERATIONS
Investment Income - Net 0.28 0.55 0.55 0.61 0.64 0.69
Net Realized and Unrealized Gains (Losses) on
Investments (0.08) (0.66) 0.48 (0.01) (0.24) 0.66
------ ------ ------ ------ ------ ------
Net from Investment Operations 0.20 (0.11) 1.03 0.60 0.40 1.35
------ ------ ------ ------ ------ ------
LESS DISTRIBUTIONS:
Dividends from Net Investment Income (0.28) (0.55) (0.55) (0.61) (0.64) (0.69)
Distributions from Net Realized Gains on
Investments (0.14) (0.25) (0.03) - - -
------ ------ ------ ------ ------ ------
Total Distributions (0.42) (0.80) (0.58) (0.61) (0.64) (0.69)
------ ------ ------ ------ ------ ------
NET ASSET VALUE
End of Period $ 8.90 $ 9.12 $10.03 $ 9.58 $ 9.59 $ 9.83
====== ====== ====== ====== ====== ======
Total Return(5) 2.26%(3) (1.17)% 11.13% 6.55% 4.34% 15.23%
RATIOS / SUPPLEMENTARY DATA
Net Assets (000 omitted) $1,127 $1,417 $1,542 $3,433 $2,631 $3,945
Ratio of Expenses to Average Net Assets 0.20%(3) 0.40% 0.40% 0.40% 0.34% 0.22%
Ratio of Investment Income - Net to Average Net
Assets 3.16%(3) 5.85% 5.71% 6.47% 6.72% 7.08%
Decrease Reflected on Above Ratios Due to:
Investment Management and Service Fees Waived 0.43%(3) 0.85% 0.85% 0.85% 0.85% 0.85%
Other Expenses Waived or Absorbed 2.26%(3) 5.31% 2.62% 2.70% 2.72% 3.63%
Portfolio Turnover Rate 7%(3) 53% 69% 184% 107% 289%
</TABLE>
48
<PAGE>
SG COWEN FUNDS
NOTES TO FINANCIAL STATEMENTS - (CONTINUED)
(UNAUDITED)
NOTE 5 - (continued)
<TABLE>
<CAPTION>
SG COWEN GOVERNMENT SECURITIES FUND --
CLASS I
--------------------------------------------------------
SIX MONTHS
ENDED YEAR ENDED NOVEMBER 30,
MAY 31, -------------------------------------------
2000 1999 1998 1997 1996 1995
----------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C>
(UNAUDITED)
NET ASSET VALUE
Beginning of Period $ 9.22 $10.15 $ 9.70 $ 9.71 $ 9.94 $ 9.17
------ ------ ------ ------ ------ ------
INCOME FROM INVESTMENT OPERATIONS
Investment Income - Net 0.29 0.56 0.56 0.62 0.65 0.70
Net Realized and Unrealized Gains (Losses) on
Investments (0.08) (0.68) 0.48 (0.01) (0.23) 0.77
------ ------ ------ ------ ------ ------
Net from Investment Operations 0.21 (0.12) 1.04 0.61 0.42 1.47
------ ------ ------ ------ ------ ------
LESS DISTRIBUTIONS:
Dividends from Net Investment Income (0.29) (0.56) (0.56) (0.62) (0.65) (0.70)
Distributions from Net Realized Gains on
Investments (0.14) (0.25) (0.03) - - -
------ ------ ------ ------ ------ ------
Total Distributions (0.43) (0.81) (0.59) (0.62) (0.65) (0.70)
------ ------ ------ ------ ------ ------
NET ASSET VALUE
End of Period $ 9.00 $ 9.22 $10.15 $ 9.70 $ 9.71 $ 9.94
====== ====== ====== ====== ====== ======
Total Return(5) 2.27%(3) (1.30)% 11.04% 6.55% 4.48% 16.52%
RATIOS / SUPPLEMENTARY DATA
Net Assets (000 omitted) $ 27 $ 123 $ 127 $ 63 $ 93 $ 45
Ratio of Expenses to Average Net Assets 0.20%(3) 0.40% 0.40% 0.40% 0.36% 0.20%
Ratio of Investment Income - Net to Average Net
Assets 3.14%(3) 5.86% 5.60% 6.49% 6.75% 7.12%
Decrease Reflected on Above Ratios Due to:
Investment Management Fees Waived 0.30%(3) 0.60% 0.60% 0.60% 0.60% 0.60%
Other Expenses Waived or Absorbed 2.43%(3) 5.63% 3.66% 3.06% 3.14% 5.14%
Portfolio Turnover Rate 7%(3) 53% 69% 184% 107% 289%
</TABLE>
49
<PAGE>
SG COWEN FUNDS
NOTES TO FINANCIAL STATEMENTS - (CONTINUED)
(UNAUDITED)
NOTE 5 - (continued)
<TABLE>
<CAPTION>
SG COWEN INTERMEDIATE FIXED INCOME FUND -
CLASS A
-------------------------------------------------------------
SIX MONTHS
ENDED YEAR ENDED NOVEMBER 30,
MAY 31, ------------------------------------------------
2000 1999 1998 1997 1996 1995
----------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
(UNAUDITED)
NET ASSET VALUE
Beginning of Period $ 9.13 $ 9.80 $ 9.47 $ 9.47 $ 9.71 $ 9.12
------ ------ ------ ------ ------- -------
INCOME FROM INVESTMENT OPERATIONS
Investment Income - Net 0.27 0.54 0.53 0.59 0.63 0.67
Net Realized and Unrealized Gains (Losses) on
Investments (0.17) (0.67) 0.33 - (0.15) 0.59
------ ------ ------ ------ ------- -------
Net from Investment Operations (0.10) (0.13) 0.86 0.59 0.48 1.26
------ ------ ------ ------ ------- -------
LESS DISTRIBUTIONS:
Dividends from Net Investment Income (0.27) (0.54) (0.53) (0.59) (0.63) (0.67)
Distributions from Net Realized Gains on
Investments - - - - (0.09) -
------ ------ ------ ------ ------- -------
Total Distributions (0.27) (0.54) (0.53) (0.59) (0.72) (0.67)
------ ------ ------ ------ ------- -------
NET ASSET VALUE
End of Period $ 8.96 $ 9.13 $ 9.80 $ 9.47 $ 9.47 $ 9.71
====== ====== ====== ====== ======= =======
Total Return(5) 1.17%(3) (1.35)% 9.38% 6.47% 5.21% 14.22%
RATIOS / SUPPLEMENTARY DATA
Net Assets (000 omitted) $4,414 $5,251 $7,671 $9,341 $11,885 $14,667
Ratio of Expenses to Average Net Assets 0.33%(3) 0.65% 0.65% 0.65% 0.59% 0.47%
Ratio of Investment Income - Net to Average Net
Assets 3.06%(3) 5.72% 5.58% 6.29% 6.61% 6.90%
Decrease Reflected on Above Ratios Due to:
Investment Management and Service Fees Waived 0.25%(3) 0.50% 0.50% 0.50% 0.50% 0.50%
Other Expenses Waived or Absorbed 0.61%(3) 1.05% 0.51% 0.60% 0.52% 0.86%
Portfolio Turnover Rate 7%(3) 15% 64% 92% 110% 264%
</TABLE>
50
<PAGE>
SG COWEN FUNDS
NOTES TO FINANCIAL STATEMENTS - (CONTINUED)
(UNAUDITED)
NOTE 5 - (continued)
<TABLE>
<CAPTION>
SG COWEN INTERMEDIATE FIXED INCOME FUND -
CLASS B
---------------------------------------------------
SIX MONTHS
ENDED YEAR ENDED NOVEMBER 30,
MAY 31, --------------------------------------
2000 1999 1998 1997 1996 1995
----------- ------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C> <C>
(UNAUDITED)
NET ASSET VALUE
Beginning of Period $ 9.19 $9.87 $9.54 $9.54 $9.78 $ 9.17
------ ------ ------ ------ ------ ------
INCOME FROM INVESTMENT OPERATIONS
Investment Income - Net 0.26 0.52 0.51 0.53 0.61 0.65
Net Realized and Unrealized Gains (Losses) on
Investments (0.17) (0.68) 0.33 - (0.15) 0.61
------ ------ ------ ------ ------ ------
Net from Investment Operations 0.09 (0.16) 0.84 0.53 0.46 1.26
------ ------ ------ ------ ------ ------
LESS DISTRIBUTIONS:
Dividends from Net Investment Income (0.26) (0.52) (0.51) (0.53) (0.61) (0.65)
Distributions from Net Realized Gains on
Investments - - - - (0.09) -
------ ------ ------ ------ ------ ------
Total Distributions (0.26) (0.52) (0.51) (0.53) (0.70) (0.65)
------ ------ ------ ------ ------ ------
NET ASSET VALUE
End of Period $ 9.02 $9.19 $9.87 $9.54 $9.54 $ 9.78
====== ====== ====== ====== ====== ======
Total Return(5) 1.05%(3) (1.65)% 9.07% 6.21% 4.96% 14.12%
RATIOS / SUPPLEMENTARY DATA
Net Assets (000 omitted) $ 171 $ 350 $ 591 $ 630 $ 769 $ 577
Ratio of Expenses to Average Net Assets 0.45%(3) 0.90% 0.90% 0.90% 0.85% 0.68%
Ratio of Investment Income - Net to Average Net
Assets 3.04%(3) 5.54% 5.33% 6.03% 6.40% 6.79%
Decrease Reflected on Above Ratios Due to:
Investment Management, Service and
Distribution Fees Waived 0.25%(3) 0.50% 0.50% 0.50% 0.50% 0.50%
Other Expenses Waived or Absorbed 0.81%(3) 1.13% 0.52% 0.54% 0.54% 0.46%
Portfolio Turnover Rate 7%(3) 15% 64% 92% 110% 264%
</TABLE>
51
<PAGE>
SG COWEN FUNDS
NOTES TO FINANCIAL STATEMENTS - (CONTINUED)
(UNAUDITED)
NOTE 5 - (continued)
<TABLE>
<CAPTION>
SG COWEN INTERMEDIATE FIXED INCOME FUND -
CLASS I
--------------------------------------------------------
SIX MONTHS
ENDED YEAR ENDED NOVEMBER 30,
MAY 31, -------------------------------------------
2000 1999 1998 1997 1996 1995
----------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C>
(UNAUDITED)
NET ASSET VALUE
Beginning of Period $ 9.10 $ 9.77 $ 9.44 $ 9.44 $ 9.68 $ 9.10
------ ------ ------ ------ ------ ------
INCOME FROM INVESTMENT OPERATIONS
Investment Income - Net 0.28 0.57 0.55 0.61 0.65 0.69
Net Realized and Unrealized Gains (Losses) on
Investments (0.17) (0.67) 0.33 - (0.15) 0.58
------ ------ ------ ------ ------ ------
Net from Investment Operations 0.11 (0.10) 0.88 0.61 0.50 1.27
------ ------ ------ ------ ------ ------
LESS DISTRIBUTIONS:
Dividends from Net Investment Income (0.28) (0.57) (0.55) (0.61) (0.65) (0.69)
Distributions from Net Realized Gains on
Investments - - - - (0.09) -
------ ------ ------ ------ ------ ------
Total Distributions (0.28) (0.57) (0.55) (0.61) (0.74) (0.69)
------ ------ ------ ------ ------ ------
NET ASSET VALUE
End of Period $ 8.93 $ 9.10 $ 9.77 $ 9.44 $ 9.44 $ 9.68
====== ====== ====== ====== ====== ======
Total Return(5) 1.29%(3) (1.11)% 9.65% 6.74% 5.46% 14.41%
RATIOS / SUPPLEMENTARY DATA
Net Assets (000 omitted) $ 102 $ 191 $ 437 $ 701 $1,745 $1,872
Ratio of Expenses to Average Net Assets 0.20%(3) 0.40% 0.40% 0.40% 0.35% 0.20%
Ratio of Investment Income - Net to Average Net
Assets 3.21%(3) 5.96% 5.87% 6.63% 6.87% 7.23%
Decrease Reflected on Above Ratios Due to:
Investment Management Fee Waived 0.25%(3) 0.50% 0.50% 0.50% 0.50% 0.50%
Other Expenses Waived or Absorbed 1.00%(3) 1.18% 0.51% 0.50% 0.42% 0.97%
Portfolio Turnover Rate 7%(3) 15% 64% 92% 110% 264%
</TABLE>
52
<PAGE>
SG COWEN FUNDS
NOTES TO FINANCIAL STATEMENTS - (CONTINUED)
(UNAUDITED)
NOTE 5 - (continued)
<TABLE>
<CAPTION>
SG COWEN
LARGE CAP VALUE FUND - CLASS A
-------------------------------------------
PERIOD FROM
1/2/98
YEAR (COMMENCEMENT
SIX MONTHS ENDED OF OPERATIONS)
ENDED NOVEMBER 30, THROUGH
MAY 31, 2000 1999 11/30/98
------------ ------------- --------------
<S> <C> <C> <C>
(UNAUDITED)
NET ASSET VALUE
Beginning of Period $10.20 $ 9.53 $ 10.00
------ ------ -------
INCOME FROM INVESTMENT OPERATIONS
Investment Income - Net 0.03 0.10 0.08
Net Realized and Unrealized Gains (Losses) on
Investments 0.83 0.67 (0.49)
------ ------ -------
Net from Investment Operations 0.86 0.77 (0.41)
------ ------ -------
LESS DISTRIBUTIONS:
Dividends from Net Investment Income (0.03) (0.10) (0.06)
Distributions from Net Realized Gains on
Investments - - -
------ ------ -------
Total Distributions (0.03) (0.10) (0.06)
------ ------ -------
NET ASSET VALUE
End of Period $11.03 $10.20 $ 9.53
====== ====== =======
Total Return(5) 8.45%(3) 8.14%(2) (4.08)%(3)
RATIOS / SUPPLEMENTARY DATA
Net Assets (000 omitted) $7,270 $8,343 $12,044
Ratio of Expenses to Average Net Assets 0.61%(3) 1.22% 1.11%(3)
Ratio of Investment Income - Net to Average Net
Assets 0.29%(3) 0.96% 0.85%(3)
Decrease Reflected on Above Ratios Due to
Expense Reimbursements/Waivers 0.73%(3) 1.19% 0.66%(3)
Portfolio Turnover Rate 7%(3) 52% 67%(3)
</TABLE>
53
<PAGE>
SG COWEN FUNDS
NOTES TO FINANCIAL STATEMENTS - (CONTINUED)
(UNAUDITED)
NOTE 5 - (continued)
<TABLE>
<CAPTION>
SG COWEN
LARGE CAP VALUE FUND - CLASS B
----------------------------------------
PERIOD
YEAR FROM
SIX MONTHS ENDED 4/17/98(4)
ENDED NOVEMBER 30, THROUGH
MAY 31, 2000 1999 11/30/98
------------- ------------- ----------
<S> <C> <C> <C>
(UNAUDITED)
NET ASSET VALUE
Beginning of Period $10.21 $ 9.53 $11.11(1)
------ ------ ------
INCOME FROM INVESTMENT OPERATIONS
Investment Income (Loss) - Net (0.01) 0.01 0.01
Net Realized and Unrealized Gains (Losses) on
Investments 0.83 0.70 (1.58)
------ ------ ------
Net from Investment Operations 0.82 0.71 (1.57)
------ ------ ------
LESS DISTRIBUTIONS:
Dividends from Net Investment Income - (0.03) (0.01)
Distributions from Net Realized Gains on
Investments - - -
------ ------ ------
Total Distributions - (0.03) (0.01)
------ ------ ------
NET ASSET VALUE
End of Period $11.03 $10.21 $ 9.53
====== ====== ======
Total Return(5) 8.04%(3) 7.41% (14.15)%(3)
RATIOS / SUPPLEMENTARY DATA
Net Assets (000 omitted) $ 169 $ 195 $ 164
Ratio of Expenses to Average Net Assets 0.99%(3) 1.97% 1.23%(3)
Ratio of Investment Income (Loss) - Net to
Average Net Assets (0.08)%(3) 0.18% 0.10%(3)
Decrease Reflected on Above Ratios Due to
Expense Reimbursements/Waivers 0.92%(3) 1.34% 0.53%(3)
Portfolio Turnover Rate 7%(3) 52% 67%(3)
</TABLE>
54
<PAGE>
SG COWEN FUNDS
NOTES TO FINANCIAL STATEMENTS - (CONTINUED)
(UNAUDITED)
NOTE 5 - (continued)
<TABLE>
<CAPTION>
SG COWEN
LARGE CAP VALUE FUND - CLASS I
--------------------------------------
PERIOD
YEAR FROM
SIX MONTHS ENDED 2/2/98(4)
ENDED NOVEMBER 30, THROUGH
MAY 31, 2000 1999 11/30/98
------------ ------------- ---------
<S> <C> <C> <C>
(UNAUDITED)
NET ASSET VALUE
Beginning of Period $10.20 $ 9.54 $ 9.77(1)
------ ------ ------
INCOME FROM INVESTMENT OPERATIONS
Investment Income - Net 0.06 0.12 0.10
Net Realized and Unrealized Gains (Losses) on
Investments 0.89 0.67 (0.25)
------ ------ ------
Net from Investment Operations 0.95 0.79 (0.15)
------ ------ ------
LESS DISTRIBUTIONS:
Dividends from Net Investment Income (0.06) (0.13) (0.08)
Distributions from Net Realized Gains on
Investments - - -
------ ------ ------
Total Distributions (0.06) (0.13) (0.08)
------ ------ ------
NET ASSET VALUE
End of Period $11.09 $10.20 $ 9.54
====== ====== ======
Total Return(5) 9.41%(3) 8.27% (1.56)%(3)
RATIOS / SUPPLEMENTARY DATA
Net Assets (000 omitted) $ 69 $1,264 $1,153
Ratio of Expenses to Average Net Assets 0.49%(3) 0.97% 0.80%(3)
Ratio of Investment Income - Net to Average Net
Assets 0.79%(3) 1.17% 1.01%(3)
Decrease Reflected on Above Ratios Due to
Expense Reimbursements/Waivers 1.02%(3) 1.18% 0.55%(3)
Portfolio Turnover Rate 7%(3) 52% 67%(3)
</TABLE>
-------------
(1) Based upon the Class A Net Asset Value on the day prior to commencement of
distribution
(2) Based upon average shares outstanding
(3) Not Annualized
(4) Commencement of Distribution
(5) Exclusive of Sales Charges
55
<PAGE>
SG COWEN FAMILY OF FUNDS
560 Lexington Ave.
New York, NY 10022
DIRECTORS
<TABLE>
<S> <C> <C>
PHILIPPE H. COLLAS, Chairman
JAMES H. CAREY DR. MARTIN J. GRUBER BURTON J. WEISS
</TABLE>
OFFICERS
PHILIPPE H. COLLAS, CHAIRMAN OF THE BOARD OF DIRECTORS
HOAN NGUYEN-QUANG, PRESIDENT AND CHIEF EXECUTIVE OFFICER
WILLIAM R. CHURCH, VICE PRESIDENT AND SENIOR INVESTMENT OFFICER
PAUL D. HOUK, INVESTMENT OFFICER(1)
DIANE E. JAFFEE, INVESTMENT OFFICER(2)
ALAN E. KOEPPLIN, INVESTMENT OFFICER(3)
GORDON G. IFILL, ASSISTANT INVESTMENT OFFICER(3)
PHILIP J. BAFUNDO, TREASURER AND CHIEF FINANCIAL OFFICER
RODD M. BAXTER, SECRETARY
IRWOOD SCHLACKMAN, CONTROLLER
<TABLE>
<S> <C>
INVESTMENT ADVISER CUSTODIAN
SG Cowen Asset Management, Inc. State Street Bank and Trust Co.
560 Lexington Ave. P.O. Box 419111
New York, NY 10022 Kansas City, MO 64141
DISTRIBUTOR TRANSFER AGENT
Funds Distributor, Inc. DST Systems, Inc.
60 State Street, Suite 1300 210 West 10th Street
Boston, MA 02109 Kansas City, MO 64105
LEGAL COUNSEL INDEPENDENT AUDITORS
Willkie Farr & Gallagher KPMG LLP
787 Seventh Avenue 757 Third Avenue
New York, NY 10019 New York, NY 10017
</TABLE>
------------
(1) SG Cowen Income + Growth
(2) SG Cowen Large Cap Value
(3) SG Cowen Intermediate Fixed Income and SG Cowen Government Securities
COW SEMI-ANN 5/00
