<PAGE>
ANNUAL REPORTS NOVEMBER 30, 1999
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
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<S> <C>
[LOGO] [LOGO]
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CONTENTS
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<S> <C>
Chairman's Letter .......................................... 1
SG Cowen Income + Growth Fund, Inc. ........................ 2
SG Cowen Opportunity Fund .................................. 5
SG Cowen Intermediate Fixed Income Fund and
SG Cowen Government Securities Fund ........................ 8
SG Cowen Large Cap Value Fund .............................. 12
Statements of Investments .................................. 15
Statements of Assets and Liabilities ....................... 28
Statements of Operations ................................... 30
Statements of Changes in Net Assets ........................ 32
Notes to Financial Statements .............................. 37
Independent Auditors' Report ............................... 58
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<PAGE>
CHAIRMAN'S LETTER
January 11, 2000
TO OUR SHAREHOLDERS:
Ten years ago, the U.S. economy was in a recession while the nation braced for
a conflict in the Persian Gulf. Today, the nation is at peace, the economy is
booming and American business is a model of productivity. During the decade of
the 1990s, the stock market produced very strong returns, and the SG Cowen
Family of Funds has participated in that prosperity.
In 1999, the stock market had another excellent year, although investors were
focused narrowly on high-growth areas such as technology and telecommunications.
While the SG Cowen Family of Funds benefited from this trend to some extent, our
equity strategy focuses on value and growth at reasonable valuations, and we
have chosen to stick to this discipline. Over time, our investment strategy has
been rewarding and we believe that it will continue to be successful into the
new millennium.
We are pleased to report that SG Cowen Opportunity Fund outperformed its
benchmark during the fiscal year having prospered from investing in energy,
health care and technology.
Although the 1990s were generally a bull market for bonds, there were two
years, 1994 and 1999, when returns were slightly negative. During 1999, the
Federal Reserve Board raised short-term interest rates three times, while
long-term bond yields increased more than a full percentage point, thus creating
an imposing environment for fixed-income securities. However, we believe that at
their current yields, bonds are very attractive.
On the following pages, the portfolio managers' commentary analyzes fund
performance and provides an outlook for 2000. Thank you for your continued
confidence and support.
Sincerely,
/s/ Joseph M. Cohen
Joseph M. Cohen
Chairman
<PAGE>
SG COWEN INCOME + GROWTH FUND
VALUE REMAINS ATTRACTIVE, BUT OUT OF FAVOR
For the fourth straight year, growth and technology continued to lead the stock
market. Although value stocks staged a brief rally during the spring of 1999, it
was short lived. Instead, the stock market became increasingly narrow as the
year progressed, leaving scores of strong companies selling at extremely
attractive valuations.
PERFORMANCE
For the fiscal year ended November 30, 1999, the total cumulative return for the
SG Cowen Income + Growth Class A shares was -1.12%. In comparison, the Lipper
Equity-Income Index return was 5.55% for the same period, while the Standard &
Poor's 500 Index was up 20.89%. The Fund's Class B and Class I shares returned
- -1.89% and -0.92%, respectively, for the fiscal period.
During 1999, the ten largest companies in the S&P 500 Index contributed about
half of the S&P 500 Index's advance. Eight of the top ten were in some way
related to technology or the Internet. The continued money flow into technology
has often come at the expense of value funds and the broader market. Indeed, the
Russell 1000 Growth Index rose about 32% during the period while the Russell
Value Index was up only about 11%.
Mindful of the market's current preferences, we continue to find attractively
priced deep value stocks that pay dividends; that sell at low multiples of
price-to-earnings, price-to-cash flow and price-to-value; and whose business
fundamentals are strong. On the other hand, we believe that many large-cap
technology stocks--despite representing many excellent and innovative
companies--are selling at unreasonably high valuations. Even just a modest
correction in technology would benefit many other sectors of the stock market.
Currently, the portfolio's four largest sectors are consumer nondurables such
as pharmaceuticals and health care, energy, financial services including banks
and real estate investment trusts, and utilities.
The best performing sector of the four has been energy, particularly the
exploration and production area. As energy shares rallied, we began to reduce
exposure to the sector. However, energy remains a significant presence in the
portfolio. Shares of Anadarko Petroleum, Apache Corp., Schlumberger, and Texaco
moved up sharply as energy prices soared. Union Pacific Resources and Western
Gas, two companies with exposure to natural gas prices, have been weak due to
the unusually warm temperatures this past fall, but that can change as easily as
the weather.
In banking, the portfolio had some notable successes, including JP Morgan, a
money center bank benefiting from the improving global economy, and First
Security Corp of Salt Lake City, which was acquired by Zion Bancorp at a
substantial price premium. Generally speaking, however, the bank
sector--particularly regional banks that don't benefit from the upturn in the
global markets--performed poorly in 1999, partly due to the rising interest rate
environment and some high-profile profit shortfalls. Nevertheless, we believe
that legislation ending Glass-Steagall, the Depression-era law that limited
mergers among banks, brokerages and insurance companies, will lead to a new wave
of consolidation. In anticipation of this new merger activity, we have created a
package of highly attractive regional banks in the portfolio, such as Republic
Security Financial in Florida, the largest independent bank in a very attractive
economy.
Earlier in 1999, we made significant additions to our holdings in the
pharmaceutical industry, including companies such as Bristol-Myers, Schering-
Plough and Warner-Lambert. These stocks had languished for much of 1999, as
investors feared the
2
<PAGE>
impact of possible Medicare expansion into the prescription drug industry.
However, after a lackluster summer, the drug stocks rallied on the news that
Warner-Lambert was in the midst of a takeover battle. We believe that this
skirmish could be the first salvo in what is likely to be significant
consolidation in the pharmaceutical industry over the next few years.
In the electric utility area, we bought two stocks whose positive performance
is noteworthy. SCANA, the holding company for South Carolina Electric & Gas,
owns a portfolio of investments in the telecommunications area. Illinova,
formerly Illinois Power, has performed well since it announced its merger with
Dynegy, a Texas energy company, and it received approval to sell its costly
nuclear plant. Although electric utilities, as an interest-sensitive group, have
struggled during the year, the group provides downside protection to the
portfolio.
Two major sales were noteworthy during the year. The first was RJ Reynolds,
which split into RJR Tobacco and Nabisco Group Holdings. After the split was
completed, we sold our position in the tobacco company, but we continue to hold
Nabisco, the cookie company. Nabisco is selling at a steep discount because
investors are concerned that RJR Tobacco's legal liabilities will attach to
Nabisco, a concern that we don't share to the same degree. Another major sale
during the fiscal year was Dupont, which we sold prior to the spinoff of Conoco,
a large oil company, because we believed that investors were overvaluing Dupont
on a standalone basis.
LOOKING FORWARD
We believe that the portfolio's valuation characteristics are increasingly
favorable compared to the S&P 500 Index. On November 30, 1999, the Fund's
price-earnings ratio on expected calendar year 2000 earnings was approximately
20x, a meaningful discount to the S&P earnings multiple of nearly 30x.
Meanwhile, the companies held in the Fund had an expected earnings growth rate
of about 20%, reasonably close to the S&P expected growth rate of 24%. Finally,
the Fund's 3.1% dividend yield was substantially higher than the Index, which at
fiscal year end stood at 1.2%.
The value segment of the market is being overlooked for now. While it is easy
to understand the attraction of technology, there comes a point where the price
paid for the earnings stream and earnings growth doesn't make sense. On the
other hand, there are many wonderful companies selling at extremely cheap
valuations that are likely to be rewarding to patient investors.
3
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COMPARISON OF CHANGE IN VALUE OF $10,000
INVESTMENT IN SG COWEN INCOME + GROWTH FUND, INC.,
CLASS A SHARES AND THE S&P 500
AND THE LIPPER EQUITY INCOME FUND INDEX
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
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<CAPTION>
SG COWEN INCOME S & P 500 LIPPER EQUITY
+ GROWTH INCOME
FUND, INC. FUND
INDEX
<S> <C> <C> <C> <C>
7/31/89 $10,000 $10,000 $10,000
7/31/90 $9,648 $10,650 $10,048
7/31/91 $10,749 $12,009 $11,204
7/31/92 $12,736 $13,545 $12,904
7/31/93 $13,939 $14,727 $14,670
7/31/94 $13,979 $15,492 $15,399
11/30/94 * $13,583 $15,499 $15,108
11/30/95 $17,590 $21,221 $19,290
11/30/96 $20,732 $27,165 $23,469
11/30/97 $24,714 $34,283 $28,981
11/30/98 $25,697 $42,422 $32,321
11/30/99 $25,411 $51,283 $34,115
$ in thousands
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<CAPTION>
AVERAGE ANNUAL TOTAL RETURN**
- ----------------------------------------------------------------------------
1 YEAR 5 YEAR 10 YEAR
<S> <C> <C>
-5.85% 12.25% 9.36%
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* FUND CHANGED FISCAL YEAR TO NOVEMBER 30.
** INCLUDES INITIAL MAXIMUM SALES CHARGE OF 4.75%.
PERFORMANCE OF OTHER CLASSES WILL BE GREATER THAN OR LESS THAN THE LINE
SHOWN BASED ON THE DIFFERENCES IN LOADS AND FEES PAID BY SHAREHOLDERS
INVESTING IN THE DIFFERENT CLASSES.
CLASS B AND CLASS I SHARES
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<CAPTION>
AVERAGE ANNUAL TOTAL RETURN
------------------------------------------------------------
1 YEAR 5 YEAR
INCEPTION***
<S> <C> <C> <C>
Class B shares**** -6.80% 12.20% 10.97%
Class I shares -.92% 13.67% 12.15%
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*** Inception dates of Class "B" shares and Class "I" shares are May 17, 1994
and May 9, 1994 respectively.
**** After deduction of Contingent Deferred Sales Charge.
All performance figures assume reinvestment of dividends and capital gains.
Past performance is not predictive of future results.
4
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SG COWEN OPPORTUNITY FUND
SMALL-CAP STOCKS COME ON STRONGER
From 1995 through 1998, small-cap stocks underperformed large caps, and the
disparity in valuation between the two groups had widened considerably. But the
fiscal year ending November 30, 1999 saw small-cap stocks begin to come on
strong, particularly in the latter months. Although growth continued to
outperform value, being small was less of a handicap.
PERFORMANCE
For the fiscal year ended November 30, 1999, the total cumulative return for the
SG Cowen Opportunity Class A shares was 18.61%. In contrast, the unmanaged
Russell 2000 Index generated a total return of 15.82% for the same period, while
the Standard & Poor's 500 Index was up 20.89%. The Fund's Class B and Class I
shares returned 17.70% and 19.04%, respectively, for the fiscal period.
Our 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.
A good example of the rewards of adhering to our long-held and time-tested
discipline was our emphasis on energy stocks a year ago during a period in which
most investors shunned them. We had conviction that the $10 per barrel oil
prices were unsustainable, and that recessions in oil-producing countries such
as Saudi Arabia and Venezuela would force them to cut back production to boost
prices. In addition, the largest international oil companies were stepping back
from expensive exploration and production projects and merging to cut costs. We
also believed that Asia's economic problems were temporary and that the Federal
Reserve Board and other major central banks would be successful in creating new
liquidity. Our calm and patience were rewarded. We believe that energy stocks
are still only reflecting $14 oil and that there continues to be significant
upside potential.
In addition to energy, health care has been an important source of
performance. Although health care as a group has been a difficult area in 1999,
our research uncovered a number of very interesting companies in the health care
industry whose stock price performances were very strong during the fiscal year.
Coincidentally, all three--COR Therapeutics, CV Therapeutics and Zoll Medical
Corp.--focus on heart ailments. COR Therapeutics and CV Therapeutics are
biotechnology companies engaged in the discovery, development and
commercialization of pharmaceutical products for the treatment and prevention of
cardiovascular diseases. Zoll Medical designs, manufactures and markets
non-invasive cardiac resuscitation devices, external pacemaker/ defibrillators,
disposable electrodes, mobile ECG Systems and software that automates patient
records.
In technology, our investments in the Internet, cellular telephones, computer
hardware and software performed very well and in line with those sectors of the
market. As hard as it may seem, it is still possible to find value in the
overheated technology and telecommunications sectors.
The Fund's underweight in financial services proved to be a major asset to
performance, because the group generated a negative return during the fiscal
year.
5
<PAGE>
LOOKING FORWARD
We believe that the portfolio contains a wide range of attractively valued
companies in a variety of industries. Examples include Newport News
Shipbuilding, a defense contractor likely to benefit from increases in U.S.
defense spending; Calgon Carbon, a technological leader in water purification
with accelerating earnings; and Mid Atlantic Medical, a successful HMO in a
desirable geographical market.
We believe that the portfolio's valuation characteristics remain favorable
compared to the S&P 500 Index. For example, on November 30, 1999, the Fund's P/E
ratio on expected calendar year 2000 earnings was 15 compared to the S&P 500,
which was 30, and the Nasdaq, which was more than 100. Meanwhile the portfolio's
expected earnings growth rate was 27% compared to 12% for the S&P 500 Index and
25% for the Nasdaq.
As the world's economies continue to heal, investors are less concerned about
liquidity and more likely to examine investment opportunities other than
large-cap U.S. stocks. What we believe they will find is that one of the world's
best investments is the U.S. small-cap sector, which is trading at historically
low valuations with excellent growth prospects.
6
<PAGE>
COMPARISON OF CHANGE IN VALUE OF $10,000
INVESTMENT IN SG COWEN OPPORTUNITY FUND,
CLASS A SHARES AND THE S&P 500 AND THE RUSSELL 2000
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
SG COWEN S&P 500 RUSSELL
OPPORTUNITY 2000
FUND
<S> <C> <C> <C>
11/30/89 $10,000 $10,000 $10,000
11/30/90 $10,241 $9,651 $7,774
11/30/91 $13,983 $11,612 $11,264
11/30/92 $16,128 $13,749 $13,922
11/30/93 $20,884 $15,136 $16,560
11/30/94 $22,874 $15,343 $16,377
11/30/95 $24,683 $21,006 $21,043
11/30/96 $31,973 $26,891 $24,518
11/30/97 $36,307 $33,937 $29,765
11/30/98 $27,270 $41,994 $27,794
11/30/99 $32,346 $50,766 $32,191
$ in thousands
</TABLE>
<TABLE>
<CAPTION>
AVERAGE ANNUAL TOTAL RETURN*
- ----------------------------------------------------------------------------
1 YEAR 5 YEAR 10 YEAR
<S> <C> <C>
12.99% 6.13% 11.91%
</TABLE>
PERFORMANCE OF OTHER CLASSES WILL BE GREATER THAN OR LESS THAN THE LINE SHOWN
BASED ON THE DIFFERENCES IN LOADS AND FEES PAID BY SHAREHOLDERS INVESTING IN
THE DIFFERENT CLASSES.
* INCLUDES INITIAL MAXIMUM SALES CHARGE OF 4.75%.
CLASS B AND CLASS I SHARES
<TABLE>
<CAPTION>
AVERAGE ANNUAL TOTAL RETURN
------------------------------------------------------------
1 YEAR 5 YEAR INCEPTION**
<S> <C> <C> <C>
Class B shares*** 12.70% 5.98% 6.65%
Class I shares 19.04% 7.54% 7.72%
</TABLE>
- -------------
**INCEPTION DATES OF CLASS "B" SHARES AND CLASS "I" SHARES ARE MAY 17, 1994 AND
MAY 9, 1994, RESPECTIVELY.
***AFTER DEDUCTION OF CONTINGENT DEFERRED SALES CHARGE.
ALL PERFORMANCE FIGURES ASSUME REINVESTMENT OF DIVIDENDS AND CAPITAL GAINS.
PAST PERFORMANCE IS NOT PREDICTIVE OF FUTURE RESULTS.
7
<PAGE>
SG COWEN INTERMEDIATE FIXED INCOME FUND
SG COWEN GOVERNMENT SECURITIES FUND
A BEAR MARKET TO CLOSE OUT THE CENTURY
Fiscal 1999 was a mirror image of fiscal 1998. Instead of a global economic
crisis, 1999 was characterized by a global recovery. Instead of plummeting
interest rates, 1999 was a year of steadily rising rates. Instead of the Federal
Reserve Board cutting short-term interest rates three times, the Fed boosted
rates by the same amount in 1999. The bull market for bonds in 1998 became a
bear market in 1999.
PERFORMANCE
For the fiscal year ending November 30, 1999, the total annual return of the SG
Cowen Intermediate Fixed Income Fund's Class A shares was -1.35%. In comparison,
its benchmark, the Lehman Brothers Intermediate Government/Corporate Index, an
unmanaged benchmark of intermediate government and corporate bonds, reflected a
return of 1.06%. The Fund's Class B and Class I shares returned -1.65% and
- -1.11%, respectively.
The total annual return for the SG Cowen Government Securities Fund's Class A
shares was -1.17% for the fiscal year. In comparison, its unmanaged benchmark,
the Lehman Brothers Aggregate Index, reflected a flat return. The Fund's Class I
shares returned -1.30%.
LONG-TERM BULL/SHORT-TERM BEAR
Believing that the economy would moderate, our strategy during the year was to
maintain a longer duration compared to our benchmarks in anticipation of lower
interest rates. That strategy worked to our advantage when performance is viewed
over a different time frame. In its August 7th, 1999 edition, THE WALL STREET
JOURNAL listed the SG Cowen Government Securities Fund fourth among its top 15
government bond fund performers for the year ended July 31, 1999 as tracked by
Lipper Inc.
However, the U.S. economy continued to boom, energy prices soared and
inflation inched upward to about 2.5% in 1999. As a result, interest rates
generally rose during the entire period, and that's the primary reason that the
Funds underperformed their benchmarks. On November 30, 1998, the 30-year
Treasury bond was yielding 5.07%. One year later, on November 30, 1999, it
yielded 6.30%.
As the year progressed, we continued to shorten duration to approach the
benchmarks, but the effort was not timely enough to match benchmark performance.
In fixed-income portfolios, duration decisions are a major determinant of
relative performance.
SLEEPING SOUNDLY
The portfolios' credit quality remains very high. On November 30, 1998, 72% of
the SG Cowen Government Securities Fund was invested in government notes and
bonds, with the balance, 28%, in mortgages. That compares to 61% in government
securities and 39% in mortgages on November 30, 1999. The increase in mortgage
securities was a positive factor in performance.
As of November 30, 1998, 64% of the SG Cowen Intermediate Fixed Income Fund
was invested in U.S. governments, while 13% was invested in mortgages and 22%
was invested in corporates. One year later, on November 30, 1999, 58% of the
Fund was invested in governments, while 23% was invested in mortgages and 19%
was invested in preferred stock and debt in such high-quality companies as
Citigroup, McDonalds and Merrill Lynch.
MORTGAGES BOOST INCOME
Mortgage securities were a positive factor in performance. In a rising
interest-rate environment,
8
<PAGE>
mortgages are much less likely to be refinanced, resulting in the portfolio
receiving a higher income stream for longer periods.
Our focus has been premium mortgages that pay a higher coupon, some as high as
10%. The majority of mortgage securities in the portfolio are issued by the
Government National Mortgage Association. Ginnie Maes are insured by the U.S.
government, and have an unconditional guarantee of the timely payment of both
principal and interest. The securities are actually a collection of mortgages
issued to homeowners. Other mortgage securities are issued by the Federal
National Mortgage Association, or Fannie Mae. These bonds are guaranteed by that
federal agency rather than the U.S. government, and thus offer a slightly higher
yield.
LOOKING FORWARD
The bear market for bonds started in November of 1998. We believed that by the
summer of 1999, the rising interest rate environment would have run its course.
Instead, the economy continued strong. Oil prices moved closer to $30 than $10.
Given this scenario, interest rates were not likely to fall.
Nevertheless, we believe that the long-term bull market for bonds is still in
tact. Since 1984, interest rates have trended downward while bond prices have
risen. This 15-year trend has been interrupted twice--in 1994 and in 1999--with
the bull market resuming the following year. Although our duration position is
much closer to neutral, the Federal Reserve Board has raised rates three times,
which should have a dampening effect on economic growth. As a result, we will
continue to keep a longer time frame in mind in managing the Funds.
9
<PAGE>
COMPARISON OF CHANGE IN VALUE OF $10,000
INVESTMENT IN SG COWEN INTERMEDIATE FIXED INCOME FUND,
CLASS A SHARES AND THE
LEHMAN INTERMEDIATE GOVERNMENT/CORPORATE INDEX
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
SG COWEN LEHMAN INTERMEDIATE
INTERMEDIATE GOV'ERNMENT/CORPORATE
FIXED INCOME FUND INDEX
<S> <C> <C>
1/20/93 $10,000 $10,000
11/30/93 $10,316 $10,720
11/30/94 $10,133 $10,521
11/30/95 $11,575 $12,051
11/30/96 $12,178 $12,620
11/30/97 $13,087 $13,419
11/30/98 $14,182 $14,609
11/30/99 $14,327 $14,773
$ in
thousands
</TABLE>
<TABLE>
<CAPTION>
AVERAGE ANNUAL TOTAL RETURN**
- -----------------------------------------------------------------------------------------
1 YEAR 5 YEAR INCEPTION*
<S> <C> <C>
-3.71% 6.15% 5.02%
</TABLE>
PERFORMANCE OF OTHER CLASSES WILL BE GREATER THAN OR LESS THAN THE LINE SHOWN
BASED ON THE DIFFERENCES IN LOADS AND FEES PAID BY SHAREHOLDERS INVESTING IN
THE DIFFERENT CLASSES.
** INCLUDES INITIAL MAXIMUM SALES CHARGE OF 2.35%.
CLASS B AND CLASS I SHARES
<TABLE>
<CAPTION>
AVERAGE ANNUAL TOTAL RETURN
-----------------------------------------------------------------
1 YEAR 5 YEAR INCEPTION***
<S> <C> <C> <C>
Class B shares**** -4.60% 6.26% 5.89%
Class I shares -1.11% 6.91% 6.36%
</TABLE>
- -------------
***INCEPTION DATES OF CLASS "B" SHARES AND CLASS "I" SHARES ARE JULY 12, 1994
AND JULY 11, 1994, RESPECTIVELY.
****AFTER DEDUCTION OF CONTINGENT DEFERRED SALES CHARGE.
ALL PERFORMANCE FIGURES ASSUME REINVESTMENT OF DIVIDENDS AND CAPITAL GAINS.
PAST PERFORMANCE IS NOT PREDICTIVE OF FUTURE RESULTS.
10
<PAGE>
COMPARISON OF CHANGE IN VALUE OF $10,000
INVESTMENT IN SG COWEN GOVERNMENT SECURITIES FUND,
CLASS A SHARES AND THE LEHMAN AGGREGATE INDEX
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
SG COWEN LEHMAN
GOVERNMENT AGGREGATE
SECURITIES FUND INDEX
<S> <C> <C> <C>
1/20/93 * $10,000 $10,000
11/30/93 $10,228 $10,799
11/30/94 $9,896 $10,470
11/30/95 $11,404 $12,317
11/30/96 $11,899 $12,884
11/30/97 $12,801 $13,857
11/30/98 $14,090 $15,166
11/30/99 $14,616 $15,160
$ in
thousands
</TABLE>
<TABLE>
<CAPTION>
AVERAGE ANNUAL TOTAL RETURN**
- -----------------------------------------------------------------------------------------
1 YEAR 5 YEAR INCEPTION*
<S> <C> <C>
-5.86% 6.03% 4.94%
</TABLE>
PERFORMANCE OF OTHER CLASSES WILL BE GREATER THAN OR LESS THAN THE LINE SHOWN
BASED ON THE DIFFERENCES IN LOADS AND FEES PAID BY SHAREHOLDERS INVESTING IN
THE DIFFERENT CLASSES.
** INCLUDES INITIAL MAXIMUM SALES CHARGE OF 4.75%.
CLASS I SHARES
<TABLE>
<CAPTION>
AVERAGE ANNUAL TOTAL RETURN
-----------------------------------------------------------------
1 YEAR 5 YEAR INCEPTION***
<S> <C> <C> <C>
Class I shares -1.30% 7.29% 6.62%
</TABLE>
- -------------
***INCEPTION DATE OF CLASS I SHARES IS JULY 11, 1994.
ALL PERFORMANCE FIGURES ASSUME REINVESTMENT OF DIVIDENDS AND CAPITAL GAINS.
PAST PERFORMANCE IS NOT PREDICTIVE OF FUTURE RESULTS.
11
<PAGE>
SG COWEN LARGE CAP VALUE FUND
In a classic sketch from "Monty Python and the Holy Grail," the Black Plague has
devastated Europe and a man with a cart calls for people to "Bring out your
dead!" so he can haul them away. However, one trussed up victim is not "quite
dead yet" and even proclaims he is feeling better. Unfortunately, no one
believes him. This is how traditional value managers felt for most of 1999.
However, we believe value is alive and due for a recovery in 2000.
PERFORMANCE
For the fiscal year ended November 30, 1999, the total cumulative return for the
SG Cowen Large Cap Value Fund Class A shares was 8.14%. The Fund underperformed
the Russell 1000 Value Index total return of 10.47% for the same period, while
lagging the Standard & Poor's 500 Index gain of 20.89%. The Fund's Class B and
Class I shares returned 7.41% and 8.27%, respectively, for the fiscal period.
For a brief period in the spring, value stocks showed signs of life when the
U.S. economy exhibited a healthy but not excessive growth rate. Inflation
appeared under control and the Federal Reserve Board was taking a neutral
stance. However, by the summer, millennium fever caught on and investors rode
the momentum of technology and telecommunications shares into record valuations,
ignoring many other areas of the market.
Compared to the S&P 500 Index, the Fund's underweighting in technology and
overweighting in interest-rate sensitive groups such as banks, insurance
companies and utilities adversely affected performance. Yields on the 30-year
Treasury bond rose more than one full percentage point during the year, causing
interest-sensitive stocks to underperform. Even energy shares, where the
underlying oil commodity doubled, produced returns of only 14%, less than the
S&P 500 Index performance during this time frame. Meanwhile, the technology
sector gained nearly 70% in value during the fiscal year.
The Fund's discipline is to invest in medium- to large-capitalization stocks
that meet one or more 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 the market and a dividend yield that approximates the S&P 500 Index. While
our sector weightings dampened performance, strong stock selection boosted
overall returns.
The following areas were noteworthy for their strong performance:
TELECOMMUNICATIONS. Although many technology names did not meet our
valuation guidelines, the Fund held two strongly performing telecommunication
names. Sprint and GTE advanced 92% and 21%, respectively.
ENERGY. Our holding in Noble Drilling, which provides offshore drilling and
diversified services for the oil & gas industry, was up more than 140% during
the fiscal year, dramatically outperforming the energy sector. The company's
experienced management was able to cut costs in advance of the downward pricing
environment of late 1998. When oil prices rose sharply in 1999, the company
produced positive earnings surprises for Wall Street in each of the last three
quarters.
SPECIALTY RETAILING. Nine West, the nation's largest retailer of women's
shoes, doubled in price when it was acquired by Jones of New York, a woman's
apparel company. Retailers are a traditionally cyclical business and their
attractive valuations seem to be discounting cannibalism from the Internet and
the possibility of an economic slowdown. However, retailers who use the Internet
to their advantage and provide quality merchandise to their customer base are
likely to see their share prices rebound.
ELECTRONICS. Honeywell, a major electronics supplier to the aerospace
industry, saw its stock lag
12
<PAGE>
early in the fiscal year as the Asian economic crisis depressed aircraft sales.
Later in the year, we sold the stock at more than a 60% gain when it was
acquired by Allied-Signal.
Although we will continue to put new candidates for the portfolio through a
rigorous valuation screening process, we are widening the pool of available
candidates to reflect trends in the marketplace. The S&P 500 Index is composed
of 10 major economic sectors; our discipline is not to overweight any economic
sector by more than a factor of two or underweight it by less than half. If a
sector is overvalued in our opinion, we will redouble our analytical efforts and
invest in companies that are relatively attractive versus their peers and/or
historical trends. However, every holding at the time of purchase must still
meet one or more of our five valuation criteria.
Recent purchases include:
AT&T. In our opinion, AT&T shares are attractively valued. Besides meeting
all five of our valuation criteria, AT&T has greatly expanded its reach into the
consumer's home, not only through its traditional copper lines, but also cable
via its acquisition of TCI a year ago and through its entry into wireless
communications activities.
COLUMBIA HCA. The nation's largest hospital chain operates in a depressed
industry that is heavily regulated by the federal government where cost
consciousness and efficiency are a must in order to be profitable. Columbia HCA
management has completed the first phase of its restructuring program and is now
undertaking a $1 billion share buy-back program. In the meantime, there is
evidence that the hospital industry is now poised to exert pricing power in the
marketplace.
3COM. The company provides networking equipment, wireless and cable modems,
and personal computing devices with its wholly owned Palm Pilot division, which
it plans to spin off into a separate company to unlock shareholder value. The
company meets two of our five valuation criteria, which is a rarity in the
high-flying technology arena.
SCHOLASTIC CORP. This publishing company has the exclusive U.S. rights to
the Harry Potter series of children's books, the best selling hard cover
children's name in 30 years. The company also is a major licensee for Pokemon.
With tremendous cash flows and an excellent consumer franchise selling at less
than one times sales, we believe the stock is attractively valued.
LOOKING FORWARD
Historical analysis shows that performance comes in waves. While it certainly
feels like growth never underperforms, the opposite is more often the case. This
year, we saw that by adhering to our discipline we outperformed most true value
managers although we lagged the value indexes. We believe that the portfolio is
poised to deliver strong results when, inevitably, investors once again place a
premium on earnings, cash flow, sales and book value.
13
<PAGE>
COMPARISON OF CHANGE IN VALUE OF $10,000
INVESTMENT IN SG COWEN LARGE CAP VALUE FUND,
CLASS A SHARES AND THE S&P 500 AND THE RUSSELL 1000 VALUE
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
SG COWEN
LARGE CAP RUSSELL
VALUE S & P 500 1000 VALUE
<S> <C> <C> <C>
1/2/98 $10,000 $10,000 $10,000
11/30/98 $9,135 $12,168 $11,182
11/30/99 $10,373 $14,710 $12,353
$ in
thousands
</TABLE>
<TABLE>
<CAPTION>
AVERAGE ANNUAL TOTAL RETURN**
- ----------------------------------------------------------
1 YEAR INCEPTION*
<S> <C>
2.95% -0.63%
</TABLE>
PERFORMANCE OF OTHER CLASSES WILL BE GREATER THAN OR LESS THAN THE LINE SHOWN
BASED ON THE DIFFERENCES IN LOADS AND FEES PAID BY SHAREHOLDERS INVESTING IN
THE DIFFERENT CLASSES.
** INCLUDES INITIAL MAXIMUM SALES CHARGE OF 4.75%.
CLASS B AND CLASS I SHARES
<TABLE>
<CAPTION>
AVERAGE ANNUAL TOTAL RETURN
------------------------------------------
1 YEAR INCEPTION*
<S> <C> <C>
Class B shares*** 2.41% -7.23%
Class I shares 8.27% 3.54%
</TABLE>
- -------------
*INCEPTION DATES OF CLASS A, CLASS B SHARES AND CLASS I SHARES ARE JANUARY 2,
1998, APRIL 16, 1998 AND JANUARY 30, 1998, RESPECTIVELY.
***AFTER DEDUCTION OF CONTINGENT DEFERRED SALES CHARGE.
ALL PERFORMANCE FIGURES ASSUME REINVESTMENT OF DIVIDENDS AND CAPITAL GAINS.
PAST PERFORMANCE IS NOT PREDICTIVE OF FUTURE RESULTS.
14
<PAGE>
SG COWEN INCOME + GROWTH FUND, INC.
STATEMENT OF INVESTMENTS
NOVEMBER 30, 1999
<TABLE>
<CAPTION>
SHARES DESCRIPTION VALUE
<C> <S> <C>
COMMON STOCKS - 90.4% OF TOTAL PORTFOLIO
CHEMICALS - 4.7%
33,000 Lubrizol Corp. $ 903,375
92,000 RPM, Inc./Ohio 1,081,000
-----------
1,984,375
-----------
CONSUMER PRODUCTS - 3.8%
32,000 Mattel, Inc. 458,000
35,000 Newell Rubbermaid, Inc. 1,148,437
-----------
1,606,437
-----------
DIVERSIFIED MANUFACTURING - 3.9%
14,000 Allied Signal, Inc. 837,375
50,000 Engelhard Corp. 840,625
-----------
1,678,000
-----------
ENERGY - 20.5%
26,000 Anadarko Petroleum Corp. 783,250
14,000 Apache Corp. 501,375
20,000 Baker Hughes, Inc. 505,000
33,000 Coastal Corp. 1,163,250
30,000 Halliburton Co. 1,160,625
10,000 Murphy Oil Corp. 565,000
16,000 Schlumberger Ltd 961,000
20,000 Texaco, Inc. 1,218,751
25,000 Tidewater, Inc. 798,437
40,000 Union Pacific Resources 522,500
40,000 Western Gas Resources, Inc. 565,625
-----------
8,744,813
-----------
FINANCIAL SERVICES - 17.9%
25,000 Banc One Corp. 881,250
14,000 Bank of America Corp. 819,000
30,000 Mellon Bank Corp. 1,093,125
6,000 J.P. Morgan 789,000
62,000 North Fork Bancorp. 1,247,751
60,000 Ohio Casualty Corp. 924,375
110,000 Republic Security Financial Corp. 883,438
30,000 Summit Bancorp 978,750
-----------
7,616,689
-----------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
15
<PAGE>
SG COWEN INCOME + GROWTH FUND, INC.
STATEMENT OF INVESTMENTS - (CONTINUED)
NOVEMBER 30, 1999
<TABLE>
<CAPTION>
SHARES DESCRIPTION VALUE
<C> <S> <C>
FOOD - 6.4%
10,000 Campbell Soup Co. $ 446,250
31,000 Dean Foods Co. 1,230,311
30,000 Interstate Bakeries 528,750
45,000 Nabisco Group Holdings 520,312
-----------
2,725,623
-----------
PHARMACEUTICALS/HEALTH CARE - 8.4%
14,000 Bristol-Myers Squibb Co. 1,022,875
11,000 Pharmacia & Upjohn, Inc. 601,563
19,000 Schering-Plough Corp. 971,375
11,000 Warner-Lambert Company 986,562
-----------
3,582,375
-----------
REAL ESTATE INVESTMENT TRUSTS - 3.8%
14,000 Kimco Realty Corp. 465,500
70,000 United Dominion Realty Trust 756,875
11,000 Weingarten Realty Investment Trust 413,187
-----------
1,635,562
-----------
RETAIL - 1.6%
20,000 Sears Roebuck & Co. 683,750
-----------
STEEL - 2.1%
35,000 USX-US Steel Group, Inc. 885,938
-----------
TELEPHONE/COMMUNICATIONS - 2.9%
17,000 GTE Corp. 1,241,000
-----------
TRANSPORTATION - 0.8%
15,000 Norfolk Southern Corp. 320,625
-----------
UTILITIES - 13.6%
33,000 Cinergy Corp. 835,313
30,000 Illinova Corp. 963,750
18,000 Keyspan Energy Corp. 462,375
50,000 Kinder Morgan, Inc. 1,015,625
49,000 MCN Energy 1,221,938
18,000 SCANA Corp. 488,250
40,000 Utilicorp United, Inc. 805,000
-----------
5,792,251
-----------
Total Common Stocks
(Cost $35,897,183) $38,497,438
-----------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
16
<PAGE>
SG COWEN INCOME + GROWTH FUND, INC.
STATEMENT OF INVESTMENTS - (CONTINUED)
NOVEMBER 30, 1999
<TABLE>
<CAPTION>
PRINCIPAL DESCRIPTION VALUE
AMOUNT
<C> <S> <C>
SHORT-TERM INVESTMENTS - 9.6%
$ 1,400,000 American Express, 5.49%, 12/03/99 $ 1,400,000
1,300,000 General Electric Corp., 5.50%, 12/07/99 1,300,000
1,400,000 General Motors Acceptance Corp., 5.46%, 12/01/99 1,400,000
-----------
Total Short-term Investments
(Cost $4,100,000) $ 4,100,000
-----------
TOTAL INVESTMENTS
(Cost $39,997,183) $42,597,438
===========
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
17
<PAGE>
SG COWEN OPPORTUNITY FUND
STATEMENT OF INVESTMENTS
NOVEMBER 30, 1999
<TABLE>
<CAPTION>
SHARES DESCRIPTION VALUE
<C> <S> <C>
COMMON STOCKS - 97.1% OF TOTAL PORTFOLIO
AGRICULTURAL/FARM EQUIPMENT - 2.9%
13,800 Agrium Inc. $ 114,713
20,000 CNH Global* 273,750
18,300 IMC Global 295,088
6,600 Potash Corp. 292,050
-----------
975,601
-----------
BUILDING CONSTRUCTION - 2.3%
36,000 Miller Building Systems* 198,000
15,200 Olin Corp 272,650
9,900 Stone And Webster, Inc. 162,112
4,400 Texas Industries 159,500
-----------
792,262
-----------
CONSUMER DISCRETIONARY - 3.4%
16,200 Lo-Jack Corporation* 125,550
35,800 Reader's Digest 1,038,200
-----------
1,163,750
-----------
ENVIRONMENTAL - 3.8%
133,600 Calgon Corporation 818,300
40,225 Safety Kleen* 472,644
-----------
1,290,944
-----------
FINANCIAL SERVICES - 2.2%
9,700 Horace Mann Education Corp. 212,794
8,500 Motor Club America* 82,875
4,600 Mutual Risk Management* 70,438
12,800 St. Paul Companies 386,400
-----------
752,507
-----------
HEALTH CARE SERVICES/HMOS - 3.9%
31,300 Coventry Health Care* 179,975
141,400 Mid Atlantic Medical* 1,131,200
-----------
1,311,175
-----------
MEDICAL SUPPLIES/SERVICES - 2.7%
10,000 Connectics Corp.* 67,500
8,300 Mentor Corp. 194,013
2,800 Quest Diagnostics, Inc.* 85,225
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
18
<PAGE>
SG COWEN OPPORTUNITY FUND
STATEMENT OF INVESTMENTS - (CONTINUED)
NOVEMBER 30, 1999
<TABLE>
<CAPTION>
SHARES DESCRIPTION VALUE
<C> <S> <C>
MEDICAL SUPPLIES/SERVICES - (CONTINUED)
13,300 Sangstat Medical Corp.* $ 313,381
3,700 Universal Health Services* 121,869
4,200 Zoll Medical* 144,375
-----------
926,363
-----------
METALS & MINING - 14.8%
5,000 Anglogold Limited, ADR* 128,437
113,900 Battle Mountain Gold 284,750
25,700 Bethlehem Steel* 160,625
53,100 Birmingham Steel 384,975
28,900 Hecla Mining Co.* 59,606
115,300 Homestake Mining 951,225
44,800 Kaiser Aluminum* 296,800
70,000 Kinross Gold* 140,000
77,500 Ltv Steel 271,250
11,900 National Steel 69,169
45,200 Newmont Mining 1,070,675
19,880 Phelps Dodge Corp. 1,033,760
17,900 Teck Corp. 157,869
-----------
5,009,141
-----------
OIL & GAS EQUIPMENT & SERVICES - 25.0%
4,000 BJ Services* 139,500
4,000 Coflex IP 161,500
60,700 Global Marine* 929,469
49,700 Marine Drilling* 838,688
26,100 Nabors* 693,281
14,400 Offshore Logistics* 142,200
19,300 Petroleum Geo Services* 301,563
15,400 Precision Drilling* 331,100
81,700 Pride Int'l* 1,174,438
10,000 R & B Falcon Corp. * 123,750
20,000 Rowan Companies* 342,500
24,400 Santa Fe International 556,625
4,000 Seitel* 27,000
2,000 Smith Int'l 79,750
15,000 Superior Energy Services* 97,500
20,000 Tidewater, Inc. 638,750
15,000 Transocean Offshore, Inc. 422,812
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
19
<PAGE>
SG COWEN OPPORTUNITY FUND
STATEMENT OF INVESTMENTS - (CONTINUED)
NOVEMBER 30, 1999
<TABLE>
<CAPTION>
SHARES DESCRIPTION VALUE
<C> <S> <C>
OIL & GAS EQUIPMENT & SERVICES - (CONTINUED)
70,000 Trico Marine Services, Inc.* $ 516,250
16,800 UTI Energy* 340,200
12,000 Veritas* 174,750
13,000 Weatherford International. Inc.* 454,188
-----------
8,485,814
-----------
OIL & GAS EXPLORATION - 17.8%
5,000 Basin Exploration* 88,438
33,800 Bellweather Exploration* 164,775
4,800 Cabot Oil and Gas Corp. 73,500
8,700 Devon Energy 306,675
119,899 EEX Corporation* 314,737
26,900 Forest Oil* 307,669
214,000 Grey Wolf, Inc.* 588,500
30,000 Gulf Canada Res, Ltd.* 105,000
27,100 HS Resources* 350,606
22,800 Newpark Resources* 136,800
32,100 Nuevo Energy* 495,544
131,040 Ocean Energy* 999,180
11,600 Pennaco Energy, Inc.* 111,650
77,800 Pioneer Natural Res 646,712
154,685 Santa Fe Snyder* 1,237,480
8,200 Spinnaker Exploration Co.* 120,950
-----------
6,048,216
-----------
PAPER - 0.5%
4,700 Boise Cascade 162,738
-----------
RETAILERS - 3.6%
4,000 Barnes & Noble* 98,250
5,800 Borders Group, Inc.* 89,900
14,000 Claires Stores 303,625
14,700 Michael Stores* 461,212
63,000 Roberds, Inc.* 63,000
39,400 Stage Stores* 125,588
36,900 The Sports Authority* 78,412
-----------
1,219,987
-----------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
20
<PAGE>
SG COWEN OPPORTUNITY FUND
STATEMENT OF INVESTMENTS - (CONTINUED)
NOVEMBER 30, 1999
<TABLE>
<CAPTION>
SHARES DESCRIPTION VALUE
<C> <S> <C>
TECHNOLOGY/SOFTWARE - 2.9%
5,000 Entrust Technologies, Inc.* $ 180,312
4,100 Fatbrain.com, Inc.* 136,837
36,500 Mentor Graphics* 328,500
22,000 Santa Cruz Operation* 328,625
-----------
974,274
-----------
TECHNOLOGY/HARDWARE - 2.7%
3,600 Moog, Inc. - Class A * 94,500
63,700 Oceaneering International* 828,100
-----------
922,600
-----------
TELECOMMUNICATIONS - 0.5%
25,000 SCC Communications* 160,938
-----------
TRANSPORT/TRUCKING/SHIPBUILDING - 5.5%
7,100 Kirby Corporation* 130,462
33,300 Newport News Shipbuilding 1,098,900
24,000 Stolt Comex Seaway, S.A.* 282,000
27,300 Transport Corp. Of America* 354,900
-----------
1,866,262
-----------
UTILITIES - 2.5%
19,800 MCN Energy 493,762
30,600 Western Gas Resources 346,162
-----------
839,924
-----------
Total Common Stocks
(Cost $32,720,280) $32,902,496
-----------
<CAPTION>
PRINCIPAL
AMOUNT
<C> <S> <C>
SHORT TERM INVESTMENTS - 2.9%
$1,000,000 American Express Corp., 5.60%, 12/06/1999 1,000,000
-----------
Total Short Term Investments
(Cost $1,000,000) $ 1,000,000
-----------
TOTAL INVESTMENTS
(Cost $33,720,280) $33,902,496
===========
</TABLE>
- -------------
<TABLE>
<C> <S>
* Non-income producing security
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
21
<PAGE>
SG COWEN GOVERNMENT SECURITIES FUND
STATEMENT OF INVESTMENTS
NOVEMBER 30, 1999
<TABLE>
<CAPTION>
PRINCIPAL DESCRIPTION VALUE
AMOUNT
<C> <S> <C>
MORTGAGE-BACKED SECURITIES - 38.9% OF TOTAL PORTFOLIO
Federal Home Loan Mortgage Corporation (FHLMC) Certificates:
$ 34,257 8.00%, 08/01/07 $ 34,568
61,587 8.00%, 02/01/09 62,249
100,756 8.50%, 01/01/10 103,495
Federal National Mortgage Ass'n (FNMA) Certificates:
194,072 11.00%, 04/01/05 205,200
54,546 9.00%, 02/01/15 56,973
Government National Mortgage Ass'n (GNMA) Certificates:
11,603 8.00%, 05/15/02 11,694
3,393 10.00%, 04/15/16 3,656
2,916 10.00%, 07/15/17 3,151
2,473 10.00%, 11/15/17 2,673
3,213 9.00%, 05/15/21 3,386
4,698 9.50%, 11/15/21 4,996
20,711 9.50%, 03/20/25 21,384
60,509 8.00%, 05/15/25 61,530
----------
Total Mortgage-Backed Securities $ 574,955
----------
U.S. TREASURY OBLIGATIONS - 61.1%
U.S. Treasury Notes & Bonds
50,000 5.00%, 04/30/01 49,375
20,000 5.50%, 08/31/01 19,831
100,000 5.50%, 03/31/03 98,219
200,000 4.25%, 11/15/03 187,282
200,000 5.625%, 02/15/06 194,000
150,000 5.50%, 02/15/08 142,829
200,000 6.00%, 02/15/26 187,374
U.S. Government Zero Coupon Strips
100,000 0.00%, 02/15/21 24,898
----------
Total U.S. Treasury Obligations $ 903,808
----------
TOTAL INVESTMENTS
(Cost $1,527,009) $1,478,763
==========
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
22
<PAGE>
SG COWEN INTERMEDIATE FIXED INCOME FUND
STATEMENT OF INVESTMENTS
NOVEMBER 30, 1999
<TABLE>
<CAPTION>
SHARES DESCRIPTION VALUE
<C> <S> <C>
CUMULATIVE PREFERRED STOCK - 18.1% OF TOTAL PORTFOLIO
20,000 Citigroup Capital 6.850%, 01/22/38 $ 420,000
6,100 McDonalds Corp. 7.500%, 09/30/36 148,306
10,000 Merrill Lynch TOPRS 7.750%, 12/31/36 240,000
10,000 Paine Webber Group Capital Trust II, 8.080%, 03/01/37 231,250
----------
Total Cumulative Preferred Stock $1,039,556
----------
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT
<C> <S> <C>
CORPORATE DEBT - 1.7%
$100,000 Ford Motor Credit, 6.25%, 12/08/05 $ 95,601
----------
MORTGAGE-BACKED SECURITIES - 22.5%
Federal National Mortgage Ass'n (FNMA) Certificates:
50,324 9.000%, 02/01/02 50,878
530,433 7.000%, 01/01/08 528,609
46,171 9.000%, 05/01/09 47,336
51,157 9.500%, 03/01/10 54,115
77,655 7.500%, 09/01/10 78,432
191,407 7.500%, 04/01/11 193,254
20,867 9.000%, 04/01/15 21,791
50,047 9.500%, 07/01/22 53,052
Federal Home Loan Mortgage Corporation (FHLMC) Certificates:
86,279 8.000%, 01/01/08 87,207
Government National Mortgage Ass'n (GNMA) Certificates:
34,364 8.000%, 06/15/01 34,545
26,137 9.000%, 12/15/16 27,591
16,627 10.000%, 12/15/18 17,982
24,303 8.500%, 10/15/21 25,177
35,050 8.000%, 06/15/22 35,718
32,123 8.000%, 06/15/27 32,646
----------
Total Mortgage-Backed Securities $1,288,333
----------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
23
<PAGE>
SG COWEN INTERMEDIATE FIXED INCOME FUND
STATEMENT OF INVESTMENTS - (CONTINUED)
NOVEMBER 30, 1999
<TABLE>
<CAPTION>
PRINCIPAL DESCRIPTION VALUE
AMOUNT
<C> <S> <C>
U.S. TREASURY OBLIGATIONS - 57.7%
U.S. Treasury Notes & Bonds
$ 85,000 5.000%, 04/30/01 $ 83,938
400,000 6.000%, 07/31/02 399,747
200,000 5.750%, 11/30/02 198,344
450,000 6.250%, 02/15/03 451,827
400,000 5.750%, 08/15/03 395,124
650,000 5.875%, 11/15/05 639,438
500,000 5.625%, 02/15/06 485,000
400,000 6.500%, 10/15/06 404,624
270,000 5.500%, 02/15/08 257,091
----------
Total U.S. Treasury Notes & Bonds $3,315,133
----------
TOTAL INVESTMENTS
(Cost $5,931,780) $5,738,623
==========
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
24
<PAGE>
SG COWEN LARGE CAP VALUE FUND
STATEMENT OF INVESTMENTS
NOVEMBER 30, 1999
<TABLE>
<CAPTION>
SHARES DESCRIPTION VALUE
<C> <S> <C>
COMMON STOCKS - 100% OF TOTAL PORTFOLIO
AUTO PARTS - .7%
2,570 Dana Corporation $ 71,318
----------
BUILDING MATERIALS - 1.2%
5,290 York International 118,033
----------
CHEMICALS - 1.6%
992 Du Pont (E.I.) De Nemours 58,962
6,160 IMC Global Inc. 99,330
----------
158,292
----------
CONSUMER DISCRETIONARY - 8.8%
13,200 Readers Digest Assoc. 382,800
8,500 Scholastic Corp.* 466,438
----------
849,238
----------
ENERGY-EQUIPMENT & SERVICES - 12.1%
9,200 Noble Drilling Corp. 256,450
22,000 R & B Falcon Corp. 272,250
5,340 Tidewater, Inc. 170,546
4,600 Transocean Offshore, Inc. 129,663
9,800 Weatherford Int'l Inc. 342,402
----------
1,171,311
----------
FINANCIAL SERVICES - 12.7%
6,200 Bank Of America Corp. 362,700
5,520 Federal National Mortgage Association 367,770
7,500 Fleetboston Financial Corp. 283,594
4,270 Keycorp 115,290
3,760 National City Corp. 93,765
----------
1,223,119
----------
HEALTH CARE SERVICES/HMO - 2.3%
8,000 Columbia HCA Healthcare Corp. 218,000
----------
INSURANCE - 5.5%
6,900 Allstate Corp 180,694
5,288 Conseco, Inc. 107,082
4,970 MBIA Inc. 248,500
----------
536,276
----------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
25
<PAGE>
SG COWEN LARGE CAP VALUE FUND
STATEMENT OF INVESTMENTS - (CONTINUED)
NOVEMBER 30, 1999
<TABLE>
<CAPTION>
SHARES DESCRIPTION VALUE
<C> <S> <C>
MEDICAL SERVICES AND SUPPLIES - 3.3%
10,930 Mylan Labs, Inc. $ 257,538
2,500 USX-US Steel Group 63,281
----------
320,819
----------
OIL & GAS (DOMESTIC & INTERNATIONAL) - 5.1%
8,200 Burlington Resources 275,725
4,800 Conoco, Inc. - Class A 126,300
12,400 Ocean Energy, Inc. * 94,550
----------
496,575
----------
RETAIL - 8.2%
3,600 Federated Department Stores * 169,425
12,300 Mattel, Inc. 176,044
18,700 Saks Inc.* 327,250
6,860 Toys R Us Inc * 120,050
----------
792,769
----------
TECHNOLOGY - 14.8%
11,300 Compaq Computers 276,144
4,500 SAP AG-SPONS ADR* 151,031
7,700 Three Com Corp.* 306,556
11,100 Unisys, Inc.* 319,125
5,800 Xerox 156,963
11,400 Ziff Davis, Inc.* 210,188
----------
1,420,007
----------
TELECOMMUNICATIONS - 7.3%
6,600 AT&T Corp. 368,775
3,700 Bell Atlantic Corp. 234,256
1,500 Sprint Corp 104,062
----------
707,093
----------
TOBACCO - 2.6%
9,650 Philip Morris Cos Inc 253,916
----------
TRANSPORTATION - 3.5%
4,200 CSX Corp. 149,363
6,600 US Airways Group, Inc.* 184,388
----------
333,751
----------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
26
<PAGE>
SG COWEN LARGE CAP VALUE FUND
STATEMENT OF INVESTMENTS - (CONTINUED)
NOVEMBER 30, 1999
<TABLE>
<CAPTION>
SHARES DESCRIPTION VALUE
<C> <S> <C>
UTILITIES - 10.3%
9,950 Cinergy Corp. $ 251,859
6,250 Consolidated Natural Gas 400,781
6,100 El Paso Energy Corp. 234,850
3,430 New Century Energies, Inc. 107,831
----------
995,321
----------
TOTAL COMMON STOCKS
(Cost $10,179,628) $9,665,838
==========
</TABLE>
- -------------
<TABLE>
<C> <S>
* Non-income producing security
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
27
<PAGE>
STATEMENTS OF ASSETS AND LIABILITIES
NOVEMBER 30, 1999
<TABLE>
<CAPTION>
INCOME + GROWTH OPPORTUNITY
FUND FUND
<S> <C> <C>
ASSETS
Investments in securities, at value -
(Cost $39,997,183, $33,720,280, $1,527,009,
$5,931,780 and $10,179,628, respectively -
see statements) $42,597,438 $33,902,496
Cash 8,458 136,677
Receivables:
SG Cowen Securities Corporation - -
Fund shares sold 183 380
Investment Securities sold - 128,673
Dividends and interest 113,172 24,789
Prepaid expenses 13,715 9,306
Deferred organization expenses -
Note I (E) - -
----------- -----------
TOTAL ASSETS 42,732,966 34,202,321
----------- -----------
LIABILITIES
Payables:
SG Cowen Securities Corporation 37,038 36,047
Fund shares purchased 183,373 110,506
Investment securities purchased 2,017,744 266,499
Dividends - Note I (C) - -
Accrued expenses and other liabilities 50,775 55,047
----------- -----------
TOTAL LIABILITIES 2,288,930 468,099
----------- -----------
NET ASSETS $40,444,036 $33,734,222
=========== ===========
Net Assets consist of:
Paid-in capital $36,502,058 $43,409,397
Accumulated undistributed net investment
income 162,338 -
Accumulated net realized gain (loss) on
investments 1,179,385 (9,857,391)
Net unrealized appreciation (depreciation) on
investments 2,600,255 182,216
----------- -----------
NET ASSETS $40,444,036 $33,734,222
=========== ===========
Class A
Net Assets $34,115,792 $19,787,286
Outstanding shares of common stock, ($.001 par
value) 3,041,803 1,660,405
Net asset value per share $ 11.22 $ 11.92
Maximum offering price per share $ 11.78 $ 12.51
Class B
Net assets $ 1,859,842 $ 4,607,974
Outstanding shares of common stock, ($.001 par
value) 167,065 409,799
Net asset value per share $ 11.13 $ 11.24
Class I
Net assets $ 4,468,402 $ 9,338,962
Outstanding shares of common stock, ($.001 par
value) 396,722 765,992
Net asset value per share $ 11.26 $ 12.19
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
28
<PAGE>
<TABLE>
<CAPTION>
GOVERNMENT INTERMEDIATE FIXED LARGE CAP
SECURITIES FUND INCOME FUND VALUE FUND
<S> <C> <C> <C>
$1,478,763 $5,738,623 $ 9,665,838
47,048 52,392 247,905
6,730 3,918 5,341
- - 1,716
5,442 239,879 -
16,748 54,534 10,758
7,565 8,360 7,476
- - 66,412
---------- ---------- -----------
1,562,296 6,097,706 10,005,446
---------- ---------- -----------
- - -
2,511 276,359 53,619
- - 115,450
1,052 5,163 -
19,203 23,928 34,227
---------- ---------- -----------
22,766 305,450 203,296
---------- ---------- -----------
$1,539,530 $5,792,256 $ 9,802,150
========== ========== ===========
$1,565,366 $6,050,645 $10,580,065
- - 7,826
22,410 (65,232) (271,951)
(48,246) (193,157) (513,790)
---------- ---------- -----------
$1,539,530 $5,792,256 $ 9,802,150
========== ========== ===========
$1,416,605 $5,251,496 $ 8,343,011
155,388 575,339 818,047
$ 9.12 $ 9.13 $ 10.20
$ 9.57 $ 9.35 $ 10.71
- $ 349,916 $ 194,754
- 38,056 19,070
- $ 9.19 $ 10.21
$ 122,925 $ 190,844 $ 1,264,385
13,334 20,981 123,925
$ 9.22 $ 9.10 $ 10.20
</TABLE>
29
<PAGE>
Statements of Operations
Year Ended November 30, 1999
<TABLE>
<CAPTION>
INCOME + GROWTH OPPORTUNITY
FUND FUND
<S> <C> <C>
INVESTMENT INCOME
Dividend Income $ 1,613,863 $ 255,200
Interest Income 29,404 105,416
----------- ------------
Total Income 1,643,267 360,616
----------- ------------
EXPENSES
Investment management fee - Note 2(A) 350,834 353,263
Service fee - Class A - Note 2(C) 98,271 53,905
Service and Distribution fees - Class B - Note 2(C) 22,559 51,723
Professional fees 22,456 19,188
Shareholder servicing fees
Class A 29,133 27,360
Class B 2,851 7,970
Class I 2,583 5,325
Directors' fees and expenses - Note 2(D) 25,915 25,883
Federal and State registration fees 27,353 23,075
Prospectus and shareholders' reports 36,780 34,786
Custodian fees 4,427 14,510
Amortization of organization expenses - Note 1(E) - -
Bookkeeping Fees - -
Miscellaneous 4,293 6,370
----------- ------------
Total Expenses 627,455 623,358
Less: Expenses waived and absorbed - Note 2(A, C, and
D) - -
----------- ------------
Net Expenses 627,455 623,358
----------- ------------
Net Investment Income (loss) 1,015,812 (262,742)
----------- ------------
Realized and Unrealized Gain (Loss) on investments - Note 3:
Net realized gain (loss) on investments 1,500,534 (5,881,274)
Net Unrealized appreciation (depreciation) on
investments (2,939,529) 12,787,227
----------- ------------
Net Realized and Unrealized Gain (Loss) on Investments (1,438,995) 6,905,953
----------- ------------
Net Increase (Decrease) in Net Assets resulting from
Operations $ (423,183) $ 6,643,211
=========== ============
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
30
<PAGE>
<TABLE>
<CAPTION>
GOVERNMENT INTERMEDIATE LARGE CAP
SECURITIES FUND FIXED INCOME FUND VALUE FUND
<S> <C> <C> <C>
INVESTMENT INCOME
Dividend Income $ - $ 106,980 $ 262,845
Interest Income 99,331 334,121 5,301
--------- --------- ----------
Total Income 99,331 441,101 268,146
--------- --------- ----------
EXPENSES
Investment management fee - Note 2(A) 9,535 34,623 92,483
Service fee - Class A - Note 2(C) 3,651 15,776 26,792
Service and Distribution fees - Class B - Note 2(C) - 1,745 2,068
Professional fees 15,776 15,966 19,020
Shareholder servicing fees
Class A 2,217 7,753 13,184
Class B - 732 498
Class I 662 750 1,355
Directors' fees and expenses - Note 2(D) 24,510 24,510 23,999
Federal and State registration fees 27,783 27,463 35,434
Prospectus and shareholders' reports 17,013 19,468 40,060
Custodian fees 2,792 4,000 -
Amortization of organization expenses - Note 1(E) - - 21,539
Bookkeeping Fees - - 16,093
Miscellaneous 329 842 1,927
--------- --------- ----------
Total Expenses 104,268 153,628 294,452
Less: Expenses waived and absorbed - Note 2(A, C, and
D) (97,911) (108,409) (145,981)
--------- --------- ----------
Net Expenses 6,357 45,219 148,471
--------- --------- ----------
Net Investment Income (loss) 92,974 395,882 119,675
--------- --------- ----------
Realized and Unrealized Gain (Loss) on investments - Note 3:
Net realized gain (loss) on investments 24,932 31,217 (233,080)
Net Unrealized appreciation (depreciation) on
investments (138,314) (508,655) 1,134,859
--------- --------- ----------
Net Realized and Unrealized Gain (Loss) on Investments (113,382) (477,438) 901,779
--------- --------- ----------
Net Increase (Decrease) in Net Assets resulting from
Operations $ (20,408) $ (81,556) $1,021,454
========= ========= ==========
</TABLE>
31
<PAGE>
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
INCOME + GROWTH
FUND
----------------------------------------------------
YEAR ENDED
NOVEMBER 30,
1999 1998
<S> <C> <C>
OPERATIONS:
Net investment income $ 1,015,812 $ 1,389,104
Net realized gain on investments 1,500,534 3,036,017
Net unrealized depreciation on investments (2,939,529) (2,004,575)
------------ ------------
NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM OPERATIONS (423,183) 2,420,546
------------ ------------
DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income
Class A (901,584) (1,180,546)
Class B (32,590) (62,786)
Class I (133,858) (215,316)
Net realized gains on investments
Class A (2,550,390) (9,027,631)
Class B (150,273) (739,839)
Class I (334,097) (1,694,332)
------------ ------------
TOTAL DISTRIBUTIONS TO SHAREHOLDERS (4,102,792) (12,920,450)
------------ ------------
COMMON STOCK TRANSACTIONS - NOTE 4
Proceeds from shares sold 931,213 2,185,781
Net asset value of shares issued in
reinvestments of distributions 3,912,420 12,156,461
Cost of shares redeemed (13,147,008) (20,874,108)
------------ ------------
NET DECREASE IN NET ASSETS FROM COMMON STOCK
TRANSACTIONS (8,303,375) (6,531,866)
------------ ------------
TOTAL DECREASE IN NET ASSETS (12,829,350) (17,031,770)
NET ASSETS:
Beginning of year 53,273,386 70,305,156
------------ ------------
End of year $ 40,444,036 $ 53,273,386
============ ============
Undistributed net investment income $ 162,338 $ 214,558
============ ============
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
32
<PAGE>
STATEMENTS OF CHANGES IN NET ASSETS - (CONTINUED)
<TABLE>
<CAPTION>
OPPORTUNITY FUND
----------------------------------------------------
YEAR ENDED
NOVEMBER 30,
1999 1998
<S> <C> <C>
OPERATIONS:
Net investment loss $ (262,742) $ (536,186)
Net realized loss on investments (5,881,274) (3,542,215)
Net unrealized appreciation (depreciation)
on investments 12,787,227 (17,068,140)
------------ ------------
NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM OPERATIONS 6,643,211 (21,146,541)
------------ ------------
DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net realized gains on investments
Class A - (9,734,658)
Class B - (1,954,564)
Class I - (9,241,687)
------------ ------------
TOTAL DISTRIBUTIONS TO SHAREHOLDERS - (20,930,909)
------------ ------------
COMMON STOCK TRANSACTIONS - NOTE 4
Proceeds from shares sold 5,021,001 12,413,889
Net asset value of shares issued in
reinvestments of distributions - 20,168,020
Cost of shares redeemed (31,122,508) (55,694,070)
------------ ------------
NET DECREASE IN NET ASSETS FROM COMMON STOCK
TRANSACTIONS (26,101,507) (23,112,161)
------------ ------------
TOTAL DECREASE IN NET ASSETS (19,458,296) (65,189,611)
NET ASSETS:
Beginning of year 53,192,518 118,382,129
------------ ------------
End of year $ 33,734,222 $ 53,192,518
============ ============
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
33
<PAGE>
STATEMENTS OF CHANGES IN NET ASSETS - (CONTINUED)
<TABLE>
<CAPTION>
GOVERNMENT
SECURITIES FUND
----------------------------------------------------
YEAR ENDED
NOVEMBER 30,
1999 1998
<S> <C> <C>
OPERATIONS:
Net investment income $ 92,974 $ 146,315
Net realized gain on investments 24,932 38,276
Net unrealized appreciation (depreciation)
on investments (138,314) 72,883
---------- -----------
NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM OPERATIONS (20,408) 257,474
---------- -----------
DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income
Class A (85,424) (142,150)
Class I (7,550) (4,165)
Net realized gains on investments
Class A (37,726) (10,775)
Class I (3,070) (197)
---------- -----------
TOTAL DISTRIBUTIONS TO SHAREHOLDERS (133,770) (157,287)
---------- -----------
COMMON STOCK TRANSACTIONS - NOTE 4
Proceeds from shares sold 119,779 105,815
Net asset value of shares issued in
reinvestments of distributions 115,860 144,861
Cost of shares redeemed (211,173) (2,178,322)
---------- -----------
NET INCREASE (DECREASE) IN NET ASSETS FROM
COMMON STOCK TRANSACTIONS 24,466 (1,927,646)
---------- -----------
TOTAL DECREASE IN NET ASSETS (129,712) (1,827,459)
NET ASSETS:
Beginning of year 1,669,242 3,496,701
---------- -----------
End of year $1,539,530 $ 1,669,242
========== ===========
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
34
<PAGE>
STATEMENTS OF CHANGES IN NET ASSETS - (CONTINUED)
<TABLE>
<CAPTION>
INTERMEDIATE FIXED
INCOME FUND
----------------------------------------------------
YEAR ENDED
NOVEMBER 30,
1999 1998
<S> <C> <C>
OPERATIONS:
Net investment income $ 395,882 $ 556,609
Net realized gain on investments 31,217 162,727
Net unrealized appreciation (depreciation)
on investments (508,655) 179,663
----------- -----------
NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM OPERATIONS (81,556) 898,999
----------- -----------
DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income
Class A (361,697) (485,699)
Class B (19,407) (30,785)
Class I (15,855) (40,125)
----------- -----------
TOTAL DISTRIBUTIONS TO SHAREHOLDERS (396,959) (556,609)
----------- -----------
COMMON STOCK TRANSACTIONS - NOTE 4
Proceeds from shares sold 241,825 814,243
Net asset value of shares issued in
reinvestments of distributions 329,450 469,619
Cost of shares redeemed (2,999,112) (3,599,456)
----------- -----------
NET DECREASE IN NET ASSETS FROM COMMON STOCK
TRANSACTIONS (2,427,837) (2,315,594)
----------- -----------
TOTAL DECREASE IN NET ASSETS (2,906,352) (1,973,204)
NET ASSETS:
Beginning of year 8,698,608 10,671,812
----------- -----------
End of year $ 5,792,256 $ 8,698,608
=========== ===========
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
35
<PAGE>
STATEMENTS OF CHANGES IN NET ASSETS - (CONTINUED)
<TABLE>
<CAPTION>
LARGE CAP
VALUE FUND
---------------------------------------------------------
PERIOD FROM
JANUARY 2, 1998
YEAR (COMMENCEMENT
ENDED OF OPERATIONS)
NOVEMBER 30, TO NOVEMBER 30,
1999 1998
<S> <C> <C>
OPERATIONS:
Net investment income $ 119,675 $ 105,345
Net realized loss on investments (233,080) (38,871)
Net unrealized appreciation (depreciation)
on investments 1,134,859 (1,648,649)
------------ ------------
NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM OPERATIONS 1,021,454 (1,582,175)
------------ ------------
DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income
Class A (112,922) (78,185)
Class B (480) (109)
Class I (16,916) (8,582)
------------ ------------
TOTAL DISTRIBUTIONS TO SHAREHOLDERS (130,318) (86,876)
------------ ------------
COMMON STOCK TRANSACTIONS - NOTE 4
Proceeds from shares sold 912,613 17,852,421
Net asset value of shares issued in
reinvestments of distributions 129,888 86,029
Cost of shares redeemed (5,491,773) (2,909,113)
------------ ------------
NET INCREASE (DECREASE) IN NET ASSETS FROM
COMMON STOCK TRANSACTIONS (4,449,272) 15,029,337
------------ ------------
TOTAL INCREASE (DECREASE) IN NET ASSETS (3,558,136) 13,360,286
NET ASSETS:
Beginning of period 13,360,286 -
------------ ------------
End of period $ 9,802,150 $ 13,360,286
============ ============
Undistributed net investment income $ 7,826 $ 18,469
============ ============
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
36
<PAGE>
SG COWEN FUNDS
NOTES TO FINANCIAL STATEMENTS
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. Since July 1, 1998, SG Cowen has served as the new investment manager
to the Funds, with the existing investment management personnel of SG Cowen
continuing to provide investment management services to the Funds, and Funds
Distributor Inc. has served as the new 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 have been changed, as indicated above,
in order to reflect the Funds' new management by SG Cowen. 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 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,
37
<PAGE>
SG COWEN FUNDS
NOTES TO FINANCIAL STATEMENTS - (CONTINUED)
NOTE 1 - (CONTINUED)
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 November 30, 1999, COF reclassified $262,742 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 SG Cowen
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. SG Cowen has voluntarily reimbursed the CIG's
expenses in an amount equal to an annual rate of .14% from December 1, 1996
through March 31, 1998, of the average daily value of its net assets, and the
COF's expenses in an amount equal to an annual rate of .13% from December 1,
1996 through March 31, 1997 and .03% from April 1, 1997 through March 31, 1998.
With respect to LgCapValue, SG Cowen 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.
38
<PAGE>
SG COWEN FUNDS
NOTES TO FINANCIAL STATEMENTS - (CONTINUED)
NOTE 2 - (CONTINUED)
With respect to CGSF and CIFIF, SG Cowen has voluntarily waived its Investment
Management Fee for the period from December 1, 1996 through November 30, 1999.
With respect to CGSF, SG Cowen 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, 2000 (see
"Shareholder Servicing and Distribution Plan" later in this note).
(B) In acting as a selected dealer during the year ended November 30, 1999, SG
Cowen earned $2,960, $4,288, $2,450, $81 and $1,845 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 SG Cowen, and the payments may exceed
expenses actually incurred by SG Cowen. 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 SG Cowen
and amounts it receives under the Plan.
(D) Directors who are not officers, directors, partners, stockholders or
employees of SG Cowen 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;
39
<PAGE>
SG COWEN FUNDS
NOTES TO FINANCIAL STATEMENTS - (CONTINUED)
NOTE 2 - (CONTINUED)
however the Directors have agreed to waive their fees from CGSF and CIFIF until
such time as SG Cowen ceases to waive its Investment Management Fee.
NOTE 3 - SECURITIES TRANSACTIONS: The aggregate amount of purchases and sales of
investment securities, excluding short-term securities, during the year ended
November 30, 1999, was as follows:
<TABLE>
<CAPTION>
CIG COF CGSF
- -----------------------------------------------------------
<S> <C> <C> <C>
Purchases $32,392,201 $56,907,035 $849,641
- -----------------------------------------------------------
Sales $40,410,486 $83,961,994 $820,868
- -----------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
CIFIF LGCAP VALUE
- --------------------------------------------------
<S> <C> <C>
Purchases $1,015,346 $ 6,254,775
- --------------------------------------------------
Sales $3,340,413 $10,086,277
- --------------------------------------------------
</TABLE>
At November 30, 1999, 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 $39,700,000.
At November 30, 1999, accumulated net unrealized appreciation (depreciation)
on investments was as follows:
<TABLE>
<CAPTION>
CIG COF CGSF
- ---------------------------------------------------------
<S> <C> <C> <C>
Gross Unrealized
Appreciation $4,759,297 $3,968,050 $ 1,569
Gross Unrealized
Depreciation 2,159,042 3,785,834 49,815
- ---------------------------------------------------------
Net $2,600,255 $ 182,216 $(48,246)
- ---------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
CIFIF LGCAP VALUE
- -------------------------------------------------
<S> <C> <C>
Gross Unrealized
Appreciation $ 1,172 $ 932,286
Gross Unrealized
Depreciation 194,329 1,446,076
- -------------------------------------------------
Net $(193,157) $ (513,790)
- -------------------------------------------------
</TABLE>
40
<PAGE>
SG COWEN FUNDS
NOTES TO FINANCIAL STATEMENTS - (CONTINUED)
NOTE 4 - COMMON STOCK TRANSACTIONS: At November 30, 1999, 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>
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>
<TABLE>
<CAPTION>
YEAR ENDED NOVEMBER 30, 1998
------------------------------------------------------------------------------
CLASS A CLASS B CLASS I
-------------------------- ----------------------- -----------------------
SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT
----------- ------------ --------- ----------- --------- -----------
<S> <C> <C> <C> <C> <C> <C>
Shares Sold 66,898 $ 842,445 11,942 $ 148,973 95,443 $ 1,194,363
Dividends Reinvested 797,851 9,628,793 64,869 778,531 144,276 1,749,137
----------- ------------ --------- ----------- --------- -----------
864,749 10,471,238 76,811 927,504 239,719 2,943,500
Shares Redeemed (1,051,071) (12,860,553) (165,009) (2,038,404) (476,482) (5,975,151)
----------- ------------ --------- ----------- --------- -----------
Net Decrease (186,322) $ (2,389,315) (88,198) $(1,110,900) (236,763) $(3,031,651)
=========== ============ ========= =========== ========= ===========
</TABLE>
41
<PAGE>
SG COWEN FUNDS
NOTES TO FINANCIAL STATEMENTS - (CONTINUED)
NOTE 4 - (CONTINUED)
SG COWEN OPPORTUNITY FUND
<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>
<TABLE>
<CAPTION>
YEAR ENDED NOVEMBER 30, 1998
---------------------------------------------------------------------------------
CLASS A CLASS B CLASS I
-------------------------- ----------------------- --------------------------
SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT
----------- ------------ --------- ----------- ----------- ------------
<S> <C> <C> <C> <C> <C> <C>
Shares Sold 105,810 $ 1,273,618 25,685 $ 318,364 823,633 $ 10,821,907
Dividends Reinvested 715,467 9,107,891 155,170 1,893,068 708,428 9,167,061
----------- ------------ --------- ----------- ----------- ------------
821,277 10,381,509 180,855 2,211,432 1,532,061 19,988,968
Shares Redeemed (1,364,015) (16,830,066) (203,541) (2,378,860) (2,844,314) (36,485,144)
----------- ------------ --------- ----------- ----------- ------------
Net Decrease (542,738) $ (6,448,557) (22,686) $ (167,428) (1,312,253) $(16,496,176)
=========== ============ ========= =========== =========== ============
</TABLE>
42
<PAGE>
SG COWEN FUNDS
NOTES TO FINANCIAL STATEMENTS - (CONTINUED)
NOTE 4 - (CONTINUED)
SG COWEN GOVERNMENT SECURITIES FUND
<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>
<TABLE>
<CAPTION>
YEAR ENDED NOVEMBER 30, 1998
-----------------------------------------------------------------------
CLASS A CLASS B CLASS I
----------------------- --------------------- ---------------------
SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT
--------- ----------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C>
Shares Sold 4,447 $ 43,248 - - 6,269 $62,567
Dividends Reinvested 14,460 140,506 - - 439 4,355
--------- ----------- --------- --------- ------ -------
18,907 183,754 - - 6,708 66,922
Shares Redeemed (223,565) (2,171,094) - - (742) (7,228)
--------- ----------- --------- --------- ------ -------
Net Increase (Decrease) (204,658) $(1,987,340) - - 5,966 $59,694
========= =========== ========= ========= ====== =======
</TABLE>
43
<PAGE>
SG COWEN FUNDS
NOTES TO FINANCIAL STATEMENTS - (CONTINUED)
NOTE 4 - (CONTINUED)
SG COWEN INTERMEDIATE FIXED INCOME FUND
<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>
<TABLE>
<CAPTION>
YEAR ENDED NOVEMBER 30, 1998
-----------------------------------------------------------------------
CLASS A CLASS B CLASS I
----------------------- --------------------- ---------------------
SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT
--------- ----------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C>
Shares Sold 62,313 $ 596,958 9,711 $ 93,993 13,024 $ 123,292
Dividends Reinvested 43,194 415,034 1,781 17,249 3,905 37,336
--------- ----------- -------- --------- -------- ---------
105,507 1,011,992 11,492 111,242 16,929 160,628
Shares Redeemed (308,574) (2,985,623) (17,594) (168,968) (46,397) (444,865)
--------- ----------- -------- --------- -------- ---------
Net Decrease (203,067) $(1,973,631) (6,102) $(57,726) (29,468) $(284,237)
========= =========== ======== ========= ======== =========
</TABLE>
44
<PAGE>
SG COWEN FUNDS
NOTES TO FINANCIAL STATEMENTS - (CONTINUED)
NOTE 4 - (CONTINUED)
SG COWEN LARGE CAP VALUE FUND
<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 11,507 $ 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>
<TABLE>
<CAPTION>
PERIOD ENDED NOVEMBER 30, 1998
-------------------------------------------------------------------------
CLASS A CLASS B CLASS I
------------------------ --------------------- ----------------------
SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT
---------- ----------- --------- --------- --------- ----------
<S> <C> <C> <C> <C> <C> <C>
Shares Sold 1,506,814 $16,004,343 25,536 $260,462 152,955 $1,587,616
Dividends Reinvested 8,038 77,339 12 109 880 8,581
---------- ----------- ------- -------- -------- ----------
1,514,852 16,081,682 25,548 260,571 153,835 1,596,197
Shares Redeemed (251,551) (2,493,403) (8,352) (83,023) (32,982) (332,687)
---------- ----------- ------- -------- -------- ----------
Net Increase 1,263,301 $13,588,279 17,196 $177,548 120,853 $1,263,510
========== =========== ======= ======== ======== ==========
</TABLE>
45
<PAGE>
SG COWEN FUNDS
NOTES TO FINANCIAL STATEMENTS - (CONTINUED)
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
----------------------------------------------------
YEAR ENDED NOVEMBER 30,
----------------------------------------------------
1999 1998 1997 1996 1995
-------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
NET ASSET VALUE
Beginning of Year $ 12.34 $ 14.55 $ 14.40 $ 13.19 $ 10.62
------- ------- ------- ------- -------
INCOME FROM INVESTMENT OPERATIONS
Investment Income - Net 0.26 0.29 0.36 0.48 0.51
Net Realized and Unrealized Gains (Losses) on
Investments (0.39) 0.19 1.97 1.74 2.54
------- ------- ------- ------- -------
Net from Investment Operations (0.13) 0.48 2.33 2.22 3.05
------- ------- ------- ------- -------
LESS DISTRIBUTIONS:
Dividends from Net Investment Income (0.27) (0.30) (0.36) (0.52) (0.48)
Distributions from Net Realized Gains on
Investments (0.72) (2.39) (1.82) (0.49) -
------- ------- ------- ------- -------
Total Distributions (0.99) (2.69) (2.18) (1.01) (0.48)
------- ------- ------- ------- -------
NET ASSET VALUE
End of Year $ 11.22 $ 12.34 $ 14.55 $ 14.40 $ 13.19
======= ======= ======= ======= =======
Total Return(5) (1.12)% 3.98% 19.21% 17.86% 29.50%
RATIOS / SUPPLEMENTARY DATA
Net Assets (000 omitted) $34,116 $44,643 $55,383 $52,502 $49,298
Ratio of Expenses to Average Net Assets 1.33% 1.20% 1.21% 1.24% 1.31%
Ratio of Investment Income - Net to Average Net
Assets 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 71% 62% 75% 79% 72%
</TABLE>
46
<PAGE>
SG COWEN FUNDS
NOTES TO FINANCIAL STATEMENTS - (CONTINUED)
NOTE 5 - (continued)
<TABLE>
<CAPTION>
SG COWEN INCOME + GROWTH
FUND, INC. - CLASS B
----------------------------------------------------
YEAR ENDED NOVEMBER 30,
----------------------------------------------------
1999 1998 1997 1996 1995
-------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
NET ASSET VALUE
Beginning of Year $12.24 $14.46 $14.31 $13.14 $10.58
------ ------ ------ ------ ------
INCOME FROM INVESTMENT OPERATIONS
Investment Income - Net 0.15 0.17 0.27 0.37 0.42
Net Realized and Unrealized Gains (Losses) on
Investments (0.37) 0.20 1.95 1.73 2.54
------ ------ ------ ------ ------
Net from Investment Operations (0.22) 0.37 2.22 2.10 2.96
------ ------ ------ ------ ------
LESS DISTRIBUTIONS:
Dividends from Net Investment Income (0.17) (0.20) (0.25) (0.44) (0.40)
Distributions from Net Realized Gains on Investments (0.72) (2.39) (1.82) (0.49) -
------ ------ ------ ------ ------
Total Distributions (0.89) (2.59) (2.07) (0.93) (0.40)
------ ------ ------ ------ ------
NET ASSET VALUE
End of Year $11.13 $12.24 $14.46 $14.31 $13.14
====== ====== ====== ====== ======
Total Return(5) (1.89)% 3.11% 18.34% 16.89% 28.49%
RATIOS / SUPPLEMENTARY DATA
Net Assets (000 omitted) $1,860 $2,711 $4,478 $2,581 $1,453
Ratio of Expenses to Average Net Assets 2.14% 1.97% 1.99% 2.04% 2.07%
Ratio of Investment Income - Net to Average Net Assets 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 71% 62% 75% 79% 72%
</TABLE>
47
<PAGE>
SG COWEN FUNDS
NOTES TO FINANCIAL STATEMENTS - (CONTINUED)
NOTE 5 - (continued)
<TABLE>
SG COWEN INCOME + GROWTH FUND, INC. - CLASS I
----------------------------------------------------
YEAR ENDED NOVEMBER 30,
----------------------------------------------------
1999 1998 1997 1996 1995
-------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
NET ASSET VALUE
Beginning of Year $12.39 $14.61 $ 14.45 $ 13.23 $ 10.62
------ ------ ------- ------- -------
INCOME FROM INVESTMENT OPERATIONS
Investment Income - Net 0.31 0.35 0.41 0.58 0.52
Net Realized and Unrealized Gains (Losses) on
Investments (0.42) 0.16 1.97 1.69 2.59
------ ------ ------- ------- -------
Net from Investment Operations (0.11) 0.51 2.38 2.27 3.11
------ ------ ------- ------- -------
LESS DISTRIBUTIONS:
Dividends from Net Investment Income (0.30) (0.34) (0.40) (0.56) (0.50)
Distributions from Net Realized Gains on
Investments (0.72) (2.39) (1.82) (0.49) -
------ ------ ------- ------- -------
Total Distributions (1.02) (2.73) (2.22) (1.05) (0.50)
------ ------ ------- ------- -------
NET ASSET VALUE
End of Year $11.26 $12.39 $ 14.61 $ 14.45 $ 13.23
====== ====== ======= ======= =======
Total Return(5) (0.92)% 4.22% 19.57% 18.25% 29.99%
RATIOS / SUPPLEMENTARY DATA
Net Assets (000 omitted) $4,468 $5,920 $10,444 $11,733 $19,309
Ratio of Expenses to Average Net Assets 1.06% 0.91% 1.05% 0.90% 0.96%
Ratio of Investment Income - Net to Average Net
Assets 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 71% 62% 75% 79% 72%
</TABLE>
48
<PAGE>
SG COWEN FUNDS
NOTES TO FINANCIAL STATEMENTS - (CONTINUED)
NOTE 5 - (continued)
<TABLE>
<CAPTION>
SG COWEN OPPORTUNITY FUND -
CLASS A
----------------------------------------------------
YEAR ENDED NOVEMBER 30,
----------------------------------------------------
1999 1998 1997 1996 1995
-------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
NET ASSET VALUE
Beginning of Year $ 10.05 $ 16.47 $ 16.61 $ 13.13 $ 12.98
------- ------- ------- ------- -------
INCOME FROM INVESTMENT OPERATIONS
Investment Income (Loss) - Net (2) (0.07) (0.08) (0.08) (0.07) (0.04)
Net Realized and Unrealized Gains (Losses) on
Investments 1.94 (3.40) 2.00 3.86 0.97
------- ------- ------- ------- -------
Net from Investment Operations 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 Year $ 11.92 $ 10.05 $ 16.47 $ 16.61 $ 13.13
======= ======= ======= ======= =======
Total Return(5) 18.61% (24.89)% 13.55% 29.63% 7.91%
RATIOS / SUPPLEMENTARY DATA
Net Assets (000 omitted) $19,787 $27,978 $54,809 $43,950 $38,724
Ratio of Expenses to Average Net Assets 1.59% 1.46% 1.38% 1.39% 1.43%
Ratio of Investment Loss - Net to Average Net
Assets (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 150% 124% 159% 182% 148%
</TABLE>
49
<PAGE>
SG COWEN FUNDS
NOTES TO FINANCIAL STATEMENTS - (CONTINUED)
NOTE 5 - (continued)
<TABLE>
<CAPTION>
SG COWEN OPPORTUNITY FUND -
CLASS B
----------------------------------------------------
YEAR ENDED NOVEMBER 30,
----------------------------------------------------
1999 1998 1997 1996 1995
-------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
NET ASSET VALUE
Beginning of Year $ 9.55 $15.92 $ 16.23 $12.93 $12.91
------ ------ ------- ------ ------
INCOME FROM INVESTMENT OPERATIONS
Investment Income (Loss) - Net(2) (0.15) (0.18) (0.20) (0.18) (0.14)
Net Realized and Unrealized Gains (Losses) on
Investments 1.84 (3.25) 1.95 3.79 0.94
------ ------ ------- ------ ------
Net from Investment Operations 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 Year $11.24 $ 9.55 $ 15.92 $16.23 $12.93
====== ====== ======= ====== ======
Total Return(5) 17.70% (25.56)% 12.72% 28.67% 6.97%
RATIOS / SUPPLEMENTARY DATA
Net Assets (000 omitted) $4,608 $6,163 $10,629 $8,794 $6,455
Ratio of Expenses to Average Net Assets 2.37% 2.26% 2.15% 2.17% 2.19%
Ratio of Investment Loss - Net to Average Net Assets (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 150% 124% 159% 182% 148%
</TABLE>
50
<PAGE>
SG COWEN FUNDS
NOTES TO FINANCIAL STATEMENTS - (CONTINUED)
NOTE 5 - (continued)
<TABLE>
<CAPTION>
SG COWEN OPPORTUNITY FUND -
CLASS I
----------------------------------------------------
YEAR ENDED NOVEMBER 30,
----------------------------------------------------
1999 1998 1997 1996 1995
-------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
NET ASSET VALUE
Beginning of Year $10.24 $ 16.69 $ 16.77 $ 13.20 $ 12.99
------ ------- ------- ------- -------
INCOME FROM INVESTMENT OPERATIONS
Investment Income (Loss) - Net(2) (0.04) (0.04) (0.03) (0.01) 0.01
Net Realized and Unrealized Gains (Losses) on
Investments 1.99 (3.47) 2.01 3.89 0.98
------ ------- ------- ------- -------
Net from Investment Operations 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 Year $12.19 $ 10.24 $ 16.69 $ 16.77 $ 13.20
====== ======= ======= ======= =======
Total Return(5) 19.04% (24.71)% 13.82% 30.17% 8.40%
RATIOS / SUPPLEMENTARY DATA
Net Assets (000 omitted) $9,339 $19,051 $52,944 $40,369 $19,264
Ratio of Expenses to Average Net Assets 1.27% 1.14% 1.02% 1.01% 1.03%
Ratio of Investment Income (Loss) - Net Assets (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 150% 124% 159% 182% 148%
</TABLE>
51
<PAGE>
SG COWEN FUNDS
NOTES TO FINANCIAL STATEMENTS - (CONTINUED)
NOTE 5 - (continued)
<TABLE>
<CAPTION>
SG COWEN GOVERNMENT
SECURITIES FUND - CLASS A
----------------------------------------------------
YEAR ENDED NOVEMBER 30,
----------------------------------------------------
1999 1998 1997 1996 1995
-------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
NET ASSET VALUE
Beginning of Year $10.03 $ 9.58 $ 9.59 $ 9.83 $ 9.17
------ ------ ------ ------ ------
INCOME FROM INVESTMENT OPERATIONS
Investment Income - Net 0.55 0.55 0.61 0.64 0.69
Net Realized and Unrealized Gains (Losses) on
Investments (0.66) 0.48 (0.01) (0.24) 0.66
------ ------ ------ ------ ------
Net from Investment Operations (0.11) 1.03 0.60 0.40 1.35
------ ------ ------ ------ ------
LESS DISTRIBUTIONS:
Dividends from Net Investment Income (0.55) (0.55) (0.61) (0.64) (0.69)
Distributions from Net Realized Gains on Investments (0.25) (0.03) - - -
------ ------ ------ ------ ------
Total Distributions (0.80) (0.58) (0.61) (0.64) (0.69)
------ ------ ------ ------ ------
NET ASSET VALUE
End of Year $ 9.12 $10.03 $ 9.58 $ 9.59 $ 9.83
====== ====== ====== ====== ======
Total Return(5) (1.17)% 11.13% 6.55% 4.34% 15.23%
RATIOS / SUPPLEMENTARY DATA
Net Assets (000 Omitted) $1,417 $1,542 $3,433 $2,631 $3,945
Ratio of Expenses to Average Net Assets 0.40% 0.40% 0.40% 0.34% 0.22%
Ratio of Investment Income - Net to Average Net Assets 5.85% 5.71% 6.47% 6.72% 7.08%
Decrease Reflected on Above Ratios Due to:
Investment Management and Service Fees Waived 0.85% 0.85% 0.85% 0.85% 0.85%
Other Expenses Waived or Absorbed 5.31% 2.62% 2.70% 2.72% 3.63%
Portfolio Turnover Rate 53% 69% 184% 107% 289%
</TABLE>
52
<PAGE>
SG COWEN FUNDS
NOTES TO FINANCIAL STATEMENTS - (CONTINUED)
NOTE 5 - (continued)
<TABLE>
<CAPTION>
SG COWEN GOVERNMENT
SECURITIES FUND -- CLASS I
----------------------------------------------------
YEAR ENDED NOVEMBER 30,
----------------------------------------------------
1999 1998 1997 1996 1995
-------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
NET ASSET VALUE
Beginning of Year $10.15 $ 9.70 $ 9.71 $ 9.94 $ 9.17
------ ------ ------ ------ ------
INCOME FROM INVESTMENT OPERATIONS
Investment Income - Net 0.56 0.56 0.62 0.65 0.70
Net Realized and Unrealized Gains (Losses) on
Investments (0.68) 0.48 (0.01) (0.23) 0.77
------ ------ ------ ------ ------
Net from Investment Operations (0.12) 1.04 0.61 0.42 1.47
------ ------ ------ ------ ------
LESS DISTRIBUTIONS:
Dividends from Net Investment Income (0.56) (0.56) (0.62) (0.65) (0.70)
Distributions from Net Realized Gains on Investments (0.25) (0.03) - - -
------ ------ ------ ------ ------
Total Distributions (0.81) (0.59) (0.62) (0.65) (0.70)
------ ------ ------ ------ ------
NET ASSET VALUE
End of Year $ 9.22 $10.15 $ 9.70 $ 9.71 $ 9.94
====== ====== ====== ====== ======
Total Return(5) (1.30)% 11.04% 6.55% 4.48% 16.52%
RATIOS / SUPPLEMENTARY DATA
Net Assets (000 omitted) $ 123 $ 127 $ 63 $ 93 $ 45
Ratio of Expenses to Average Net Assets 0.40% 0.40% 0.40% 0.36% 0.20%
Ratio of Investment Income - Net to Average Net Assets 5.86% 5.60% 6.49% 6.75% 7.12%
Decrease Reflected on Above Ratios Due to:
Investment Management Fees Waived 0.60% 0.60% 0.60% 0.60% 0.60%
Other Expenses Waived or Absorbed 5.63% 3.66% 3.06% 3.14% 5.14%
Portfolio Turnover Rate 53% 69% 184% 107% 289%
</TABLE>
53
<PAGE>
SG COWEN FUNDS
NOTES TO FINANCIAL STATEMENTS - (CONTINUED)
NOTE 5 - (continued)
<TABLE>
<CAPTION>
SG COWEN INTERMEDIATE FIXED
INCOME FUND - CLASS A
----------------------------------------------------
YEAR ENDED NOVEMBER 30,
----------------------------------------------------
1999 1998 1997 1996 1995
-------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
NET ASSET VALUE
Beginning of Year $ 9.80 $ 9.47 $ 9.47 $ 9.71 $ 9.12
------ ------ ------ ------- -------
INCOME FROM INVESTMENT OPERATIONS
Investment Income - Net 0.54 0.53 0.59 0.63 0.67
Net Realized and Unrealized Gains (Losses) on
Investments (0.67) 0.33 - (0.15) 0.59
------ ------ ------ ------- -------
Net from Investment Operations (0.13) 0.86 0.59 0.48 1.26
------ ------ ------ ------- -------
LESS DISTRIBUTIONS:
Dividends from Net Investment Income (0.54) (0.53) (0.59) (0.63) (0.67)
Distributions from Net Realized Gains on Investments -- - - (0.09) -
------ ------ ------ ------- -------
Total Distributions (0.54) (0.53) (0.59) (0.72) (0.67)
------ ------ ------ ------- -------
NET ASSET VALUE
End of Year $ 9.13 $ 9.80 $ 9.47 $ 9.47 $ 9.71
====== ====== ====== ======= =======
Total Return(5) (1.35)% 9.38% 6.47% 5.21% 14.22%
RATIOS / SUPPLEMENTARY DATA
Net Assets (000 omitted) $5,251 $7,671 $9,341 $11,885 $14,667
Ratio of Expenses to Average Net Assets 0.65% 0.65% 0.65% 0.59% 0.47%
Ratio of Investment Income - Net to Average Net
Assets 5.72% 5.58% 6.29% 6.61% 6.90%
Decrease Reflected on Above Ratios Due to:
Investment Management and Service Fees Waived 0.50% 0.50% 0.50% 0.50% 0.50%
Other Expenses Waived or Absorbed 1.05% 0.51% 0.60% 0.52% 0.86%
Portfolio Turnover Rate 15% 64% 92% 110% 264%
</TABLE>
54
<PAGE>
SG COWEN FUNDS
NOTES TO FINANCIAL STATEMENTS - (CONTINUED)
NOTE 5 - (continued)
<TABLE>
<CAPTION>
SG COWEN INTERMEDIATE FIXED
INCOME FUND - CLASS B
----------------------------------------------------
YEAR ENDED NOVEMBER 30,
----------------------------------------------------
1999 1998 1997 1996 1995
-------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
NET ASSET VALUE
Beginning of Year $ 9.87 $ 9.54 $ 9.54 $ 9.78 $ 9.17
------ ------ ------ ------ ------
INCOME FROM INVESTMENT OPERATIONS
Investment Income - Net 0.52 0.51 0.53 0.61 0.65
Net Realized and Unrealized Gains (Losses) on
Investments (0.68) 0.33 - (0.15) 0.61
------ ------ ------ ------ ------
Net from Investment Operations (0.16) 0.84 0.53 0.46 1.26
------ ------ ------ ------ ------
LESS DISTRIBUTIONS:
Dividends from Net Investment Income (0.52) (0.51) (0.53) (0.61) (0.65)
Distributions from Net Realized Gains on Investments - - - (0.09) -
------ ------ ------ ------ ------
Total Distributions (0.52) (0.51) (0.53) (0.70) (0.65)
------ ------ ------ ------ ------
NET ASSET VALUE
End of Year $ 9.19 $ 9.87 $ 9.54 $ 9.54 $ 9.78
====== ====== ====== ====== ======
Total Return(5) (1.65)% 9.07% 6.21% 4.96% 14.12%
RATIOS / SUPPLEMENTARY DATA
Net Assets (000 omitted) $ 350 $ 591 $ 630 $ 769 $ 577
Ratio of Expenses to Average Net Assets 0.90% 0.90% 0.90% 0.85% 0.68%
Ratio of Investment Income - Net to Average Net Assets 5.54% 5.33% 6.03% 6.40% 6.79%
Decrease Reflected on Above Ratios Due to:
Investment Management, Service and Distribution Fees
Waived 0.50% 0.50% 0.50% 0.50% 0.50%
Other Expenses Waived or Absorbed 1.13% 0.52% 0.54% 0.54% 0.46%
Portfolio Turnover Rate 15% 64% 92% 110% 264%
</TABLE>
55
<PAGE>
SG COWEN FUNDS
NOTES TO FINANCIAL STATEMENTS - (CONTINUED)
NOTE 5 - (continued)
<TABLE>
<CAPTION>
SG COWEN INTERMEDIATE FIXED
INCOME FUND - CLASS I
----------------------------------------------------
YEAR ENDED NOVEMBER 30,
----------------------------------------------------
1999 1998 1997 1996 1995
-------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
NET ASSET VALUE
Beginning of Year $ 9.77 $ 9.44 $ 9.44 $ 9.68 $ 9.10
------ ------ ------ ------ ------
INCOME FROM INVESTMENT OPERATIONS
Investment Income - Net 0.57 0.55 0.61 0.65 0.69
Net Realized and Unrealized Gains (Losses) on
Investments (0.67) 0.33 - (0.15) 0.58
------ ------ ------ ------ ------
Net from Investment Operations (0.10) 0.88 0.61 0.50 1.27
------ ------ ------ ------ ------
LESS DISTRIBUTIONS:
Dividends from Net Investment Income (0.57) (0.55) (0.61) (0.65) (0.69)
Distributions from Net Realized Gains on Investments - - - (0.09) -
------ ------ ------ ------ ------
Total Distributions (0.57) (0.55) (0.61) (0.74) (0.69)
------ ------ ------ ------ ------
NET ASSET VALUE
End of Year $ 9.10 $ 9.77 $ 9.44 $ 9.44 $ 9.68
====== ====== ====== ====== ======
Total Return(5) (1.11)% 9.65% 6.74% 5.46% 14.41%
RATIOS / SUPPLEMENTARY DATA
Net Assets (000 omitted) $ 191 $ 437 $ 701 $1,745 $1,872
Ratio of Expenses to Average Net Assets 0.40% 0.40% 0.40% 0.35% 0.20%
Ratio of Investment Income - Net to Average Net Assets 5.96% 5.87% 6.63% 6.87% 7.23%
Decrease Reflected on Above Ratios Due to:
Investment Management Fee Waived 0.50% 0.50% 0.50% 0.50% 0.50%
Other Expenses Waived or Absorbed 1.18% 0.51% 0.50% 0.42% 0.97%
Portfolio Turnover Rate 15% 64% 92% 110% 264%
</TABLE>
56
<PAGE>
SG COWEN FUNDS
NOTES TO FINANCIAL STATEMENTS - (CONTINUED)
NOTE 5 - (continued)
<TABLE>
<CAPTION>
SG COWEN
LARGE CAP VALUE FUND
--------------------------------------------------------------------------
CLASS A CLASS B
---------------------------------------- -------------------------------
PERIOD FROM
1/2/98 PERIOD
YEAR (COMMENCEMENT YEAR FROM
ENDED OF OPERATIONS) ENDED 4/17/98(4)
NOVEMBER 30, THROUGH NOVEMBER 30, THROUGH
1999 11/30/98 1999 11/30/98
----------------- -------------------- ----------------- -----------
<S> <C> <C> <C> <C>
NET ASSET VALUE
Beginning of Period $ 9.53 $ 10.00 $ 9.53 $11.11(1)
------ ------- ------ ------
INCOME FROM INVESTMENT
OPERATIONS
Investment Income - Net 0.10 0.08 0.01 0.01
Net Realized and
Unrealized Gains
(Losses) on
Investments 0.67 (0.49) 0.70 (1.58)
------ ------- ------ ------
Net from Investment
Operations 0.77 (0.41) 0.71 (1.57)
------ ------- ------ ------
LESS DISTRIBUTIONS:
Dividends from Net
Investment Income (0.10) (0.06) (0.03) (0.01)
Distributions from Net
Realized Gains on
Investments - - - -
------ ------- ------ ------
Total Distributions (0.10) (0.06) (0.03) (0.01)
------ ------- ------ ------
NET ASSET VALUE
End of Period $10.20 $ 9.53 $10.21 $ 9.53
====== ======= ====== ======
Total Return(5) 8.14%(2) (4.08)%(3) 7.41% (14.15)%(3)
RATIOS / SUPPLEMENTARY
DATA
Net Assets (000
omitted) $8,343 $12,044 $ 195 $ 164
Ratio of Expenses to
Average Net Assets 1.22% 1.11%(3) 1.97% 1.23%(3)
Ratio of Investment
Income - Net to
Average Net Assets 0.96% 0.85%(3) 0.18% 0.10%(3)
Decrease Reflected on
Above Ratios Due to
Expense
Reimbursements/
Waivers 1.19% 0.66%(3) 1.34% 0.53%(3)
Portfolio Turnover Rate 52% 67%(3) 52% 67%(3)
<CAPTION>
SG COWEN
LARGE CAP VALUE FUND
-------------------------------
CLASS I
-------------------------------
PERIOD
YEAR FROM
ENDED 2/2/98(4)
NOVEMBER 30, THROUGH
1999 11/30/98
----------------- -----------
<S> <C> <C>
NET ASSET VALUE
Beginning of Period $ 9.54 $ 9.77(1)
------ ------
INCOME FROM INVESTMENT
OPERATIONS
Investment Income - Net 0.12 0.10
Net Realized and
Unrealized Gains
(Losses) on
Investments 0.67 (0.25)
------ ------
Net from Investment
Operations 0.79 (0.15)
------ ------
LESS DISTRIBUTIONS:
Dividends from Net
Investment Income (0.13) (0.08)
Distributions from Net
Realized Gains on
Investments - -
------ ------
Total Distributions (0.13) (0.08)
------ ------
NET ASSET VALUE
End of Period $10.20 $ 9.54
====== ======
Total Return(5) 8.27% (1.56)%(3)
RATIOS / SUPPLEMENTARY
DATA
Net Assets (000
omitted) $1,264 $1,153
Ratio of Expenses to
Average Net Assets 0.97% 0.80%(3)
Ratio of Investment
Income - Net to
Average Net Assets 1.17% 1.01%(3)
Decrease Reflected on
Above Ratios Due to
Expense
Reimbursements/
Waivers 1.18% 0.55%(3)
Portfolio Turnover Rate 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
57
<PAGE>
INDEPENDENT AUDITORS' REPORT
THE BOARD OF DIRECTORS AND SHAREHOLDERS
SG COWEN INCOME + GROWTH FUND, INC. AND
SG COWEN FUNDS, INC. AND SG COWEN SERIES FUNDS, INC.
We have audited the accompanying statements of assets and liabilities
including the statements of investments, of SG Cowen Income + Growth Fund, Inc.,
SG Cowen Opportunity Fund, SG Cowen Government Securities Fund, SG Cowen
Intermediate Fixed Income Fund and SG Cowen Large Cap Value Fund (the Funds) as
of November 30, 1999, and the related statements of operations, statements of
changes in net assets and financial highlights for the year then ended. These
financial statements and financial highlights are the responsibility of the
Funds' management. Our responsibility is to express an opinion on these
financial statements and financial highlights based on our audits. The
statements of changes in net assets for the year ended November 30, 1998 and
financial highlights for each of the years in the four-year period ended
November 30, 1998 were audited by other auditors whose report thereon dated
January 8, 1999, expressed an unqualified opinion on those financial statements
and financial highlights.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of securities owned as of
November 30, 1999, by correspondence with the custodian. As to securities
purchased or sold but not yet received or delivered, we performed other
appropriate auditing procedures. An audit also includes assessing the accounting
principles used and significant estimates made by management, as well as
evaluating the overall financial statement presentation. We believe that our
audits provide a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of the
Funds as of November 30, 1999, the results of their operations, the changes in
their net assets, and their financial highlights for the year then ended, in
conformity with generally accepted accounting principles.
[LOGO]
New York, New York
January 14, 2000
58
<PAGE>
SG COWEN FAMILY OF FUNDS
560 Lexington Ave.
New York, NY 10022
DIRECTORS
<TABLE>
<S> <C> <C>
JOSEPH M. COHEN, Chairman
JAMES H. CAREY DR. MARTIN J. GRUBER BURTON J. WEISS
</TABLE>
OFFICERS
JOSEPH M. COHEN, CHAIRMAN OF THE BOARD OF DIRECTORS
HOAN NGUYEN-QUANG, PRESIDENT AND CHIEF EXECUTIVE OFFICER
PHILIP J. BAFUNDO, TREASURER AND CHIEF FINANCIAL OFFICER
WILLIAM CHURCH, SENIOR INVESTMENT OFFICER
CREIGHTON H. PEET, SENIOR INVESTMENT OFFICER
WILLIAM RECHTER, SENIOR INVESTMENT OFFICER(1)
ALAN KOEPPLIN, INVESTMENT OFFICER(2)
DIANE JAFFEE, INVESTMENT OFFICER(4)
PAUL D. HOUK, INVESTMENT OFFICER(3)
GORDON G. IFILL, ASSISTANT INVESTMENT OFFICER(2)
RODD M. BAXTER, SECRETARY
IRWOOD SCHLACKMAN, CONTROLLER
<TABLE>
<S> <C>
INVESTMENT ADVISER CUSTODIAN
SG Cowen Securities Corporation Investors Fiduciary Trust Co.
560 Lexington Ave. P.O. Box 419111
New York, NY 10022 Kansas City, MO 64141
DISTRIBUTOR TRANSFER AGENT
Funds Distributor, Inc. DST, 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 and SG Cowen Opportunity
(2) SG Cowen Intermediate Fixed Income and SG Cowen Government Securities
(3) SG Cowen Income + Growth
(4) SG Cowen Large Cap Value COW ANN 11/99
