<PAGE> 1
- --------------------------------------------------------------------------------
ANNUAL REPORTS NOVEMBER 30, 1996
THE COWEN
FAMILY OF FUNDS
COWEN INCOME+GROWTH FUND, INC.
COWEN FUNDS, INC.
OPPORTUNITY FUND
GOVERNMENT SECURITIES FUND
INTERMEDIATE FIXED INCOME FUND
[COWEN LOGO]
COWEN & COMPANY
- --------------------------------------------------------------------------------
<PAGE> 2
CONTENTS
Chairman's Letter............................................................. 1
Income + Growth Fund.......................................................... 2
Opportunity Fund.............................................................. 5
Intermediate Fixed Income Fund and
Government Securities Fund.................................................... 8
Statements of Investments.....................................................12
Statements of Assets and Liabilities..........................................24
Statements of Operations......................................................26
Statements of Changes in Net Assets...........................................28
Notes to Combined Financial Statements........................................32
Report of Ernst & Young LLP...................................................51
<PAGE> 3
CHAIRMAN'S LETTER JANUARY 21, 1997
TO OUR SHAREHOLDERS:
As we review the market conditions surrounding the Cowen Family of Funds'
fiscal year ended November 30, 1996, we certainly continued to see new highs
being set in the broad stock market averages. For example, the Dow Jones
Industrial Average broke the 6,000 barrier on October 14, less than a year after
clearing 5,000, and then continued to set record highs with increasing
frequency. To date, the current stock market cycle qualifies as the longest bull
market in American economic history. Of course, eclipsing prior peaks is what
markets are supposed to do as they are a reflection of the continued growth of
the U.S. economy.
The first nine months of the Funds' fiscal year were a period of a substantial
sell-off in the bond market, which continued to anticipate rising interest
rates; the last three months, the bond market not only rallied, but rallied
noticeably. The portfolio managers' commentary on the following pages describes
how each met the challenges of the stock and bond markets as well as their
outlook for the coming period.
As you will see, the Cowen Opportunity Fund significantly outperformed the S&P
500 and the Russell 2000 Index, which measures small capitalization stocks. Both
of the fixed income funds closely tracked their Lipper category averages, while
the Cowen Income + Growth Fund lagged the indices. However, the Fund performance
improved noticeably once adjustments were made to the portfolio to reduce
interest rate sensitivity of the Fund's high-quality, dividend-paying
securities. And, we believe it is well positioned to meet its objectives for
fiscal 1997.
The bottom line to this year, perhaps, was a realization that the need for
professional investment management has never been greater. To participate in the
markets with intensive fundamental research resources; to take advantage of
portfolio management expertise that offers both flexibility to make changes as
well as patience to stay the course when appropriate; and to have the discipline
to carry out strategies that have proven their mettle over the long term -- all
compelling reasons to invest in the Cowen Family of Funds.
It is also why we take this opportunity near the beginning of this new
calendar year to renew our commitment to our shareholders; that is, to provide
consistent long-term performance for the Cowen Family of Funds. We appreciate
your continued support.
Sincerely,
/s/ JOSEPH COHEN
-------------------
Joseph M. Cohen
Chairman
<PAGE> 4
COWEN INCOME + GROWTH FUND
Focusing on Yield,
Dividend Growth and Portfolio Quality
Reasonably slow economic growth in the second half of the Income + Growth Fund's
fiscal year, together with benign interest rates and low inflation, created a
healthy environment for stocks, wherein valuations as a whole went higher.
Technology and financial sectors continued to rally, while the bull market kept
roaring. These market conditions rewarded risk-seeking, capital
appreciation-oriented investment approaches, particularly until the July market
correction; not the more conservative, lower-risk strategy of the
Income + Growth Fund. Thus, the Fund's performance lagged in comparison.
Still, we remain true to the Fund's strategy and believe that a transition is
in progress that will favor our style. In our opinion, if the economy either
accelerates or slows substantially, then cyclical, financial, and technology
stocks will be at high risk, and investors with a portion of their portfolio
invested in a vehicle like the Income + Growth Fund will benefit from its
defensive characteristics. We already saw early indications of this in the June
5 - July 16, 1996 period, when there was a significant market correction. During
those months, the Cowen Income + Growth Fund (A Shares) proved not only that
it was able to withstand the correction without market timing and without
shifting into fixed income securities, but also that its strategy placed it,
according to Morningstar, as one of the top five performing U.S. stock funds
for this period.(1)
For the twelve months ending November 30, 1996, the Fund's Class A Shares had
a positive return of 17.86%. This performance compares to the S&P 500 Index's
return of 27.85% and to the Lipper Equity-Income average return of 22.06% for
the same period. The Fund's Class B and Class C shares returned 16.89% and
18.25% respectively, for the period.
INVESTMENT REVIEW
The portfolio's holdings continued to experience improved earnings and cash-flow
growth and above-average dividend growth throughout the fiscal year. More
specifically, since we last reported to you, the Fund has:
- Increased allocation to the energy sector -- We purchased Baker-Hughes,
Burlington Resources, Murphy Oil, Schlumberger, Tidewater and KN Energy. We
purchased Mobil to replace Atlantic Richfield, which was sold upon reaching
our target price, and we reduced the Fund's holding of National Fuel Gas,
because the stock surged nearly 15% during the month of November and began
to achieve our price targets.
- Eliminated exposure to regional banks and telephones -- We sold KeyCorp,
AmSouth Bancorp and National City, the Fund's last positions in the regional
bank group, where we believe both expectations and valuations became too
high. Due to increased competition in the local telephone business, we
eliminated NYNEX and GTE from the portfolio.
- Increased allocation to paper and natural resources sectors -- We purchased
Cyprus Amax and Newmont Mining, both natural resources firms, and Potlatch
and Union Camp, both paper companies -- all at attractive prices. These
companies are relatively low-cost producers, and industry fundamentals
appear to be in the early stages of recovery.
--
2
<PAGE> 5
- Added another REIT to the portfolio -- We added United Dominion Realty,
which operates commercial and residential properties, as we continue to like
the high yields, steady dividend growth, reasonable valuations, tax benefits
and historical inflation hedge characteristics of these real estate
investment trusts.
- Made moves for company specific and tactical reasons -- We bought Lincoln
National, a multiline insurance holding company; RJR Nabisco, a company with
strong consumer brands; and Pharmacia Upjohn, a recently merged worldwide
pharmaceutical and health care company -- all of which were selling at
attractive valuations. We sold Hanson PLC to reduce our exposure to
cyclicals and sold J.C. Penney as its stock had reached the Fund's price
targets. We initiated positions in Heinz and CPC International, two
attractively-priced food companies with strong brand franchises. We also
purchased USX-U.S. Steel Group, the leading U.S. steelmaker. We believe this
company is poised to benefit from improved steel prices and the stock is
trading at low valuation levels.
We also made some subtle adjustments to our stock selection process while
maintaining our high-quality, high-dividend yield criteria. This was done to
enhance the potential for even greater industry diversification, take the sting
out of interest rate fluctuations so prevalent throughout the 1990s, and
heighten our flexibility to gain exposure to fast-growing economic sectors when
attractive opportunities arise and meaningfully reduce exposure to regulated
utilities as market conditions warrant.
LOOKING AHEAD
In short, this annual period was one when the portfolio's holdings were
fundamentally performing well -- growing cash flow, increasing dividends,
etc. -- and yet the market was not rewarding these stocks accordingly. Our long-
standing belief that it is important for any well-diversified equity portfolio
to maintain a significant high-yield, high-quality, low-volatility component
remains unchanged. We further believe that long-term investors who have
maintained or increased their portfolio allocations in this discipline should be
well positioned to reap the competitive rewards in the high-volatility market
and low-interest rate, low-inflation economy we see ahead.
(1) Source: The New York Times, July 16, 1996.
--
3
<PAGE> 6
COMPARISON OF CHANGE IN VALUE OF $10,000
INVESTMENT IN COWEN INCOME + GROWTH FUND, INC.,
CLASS "A" SHARES AND THE S&P 500
[GRAPH]
<TABLE>
<CAPTION>
- ---------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURN***
- ---------------------------------------------------------------
1 YEAR 5 YEAR INCEPTION*
- ------------------- ------------------- -------------------
<S> <C> <C>
12.25% 12.55% 10.25%
- ---------------------------------------------------------------
</TABLE>
** Fund changed fiscal year to one ending on 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 C SHARES
ANNUALIZED RETURN OF THE CLASS:
<TABLE>
<CAPTION>
AVERAGE ANNUAL TOTAL RETURN
----------------------------------------
1 YEAR INCEPTION****
---------------------- -------------
<S> <C> <C>
Class "B" shares***** 11.89% 16.23%
Class "C" shares 18.25% 18.14%
</TABLE>
- ---------------
**** Inception dates of Class "B" shares and Class "C" 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
<PAGE> 7
COWEN OPPORTUNITY FUND
Staying True to Small Cap Value Discipline
During the fiscal year ended November 30, 1996, the Cowen Opportunity Fund
achieved a high level of both absolute and relative performance. The Fund's
Class A Shares had a positive return of 29.63% for the annual period. This
significantly outperformed the S&P 500 Index's return of 27.85% and the Russell
2000 Index's return of 16.56% for the same period. It also outperformed the
Lipper Small Company average of 19.12%. The Fund's Class B and Class C shares
returned 28.67% and 30.17%, respectively, for the period.
INVESTMENT REVIEW
Among the many challenges that value investors face, one of the most important
is the time value of money. In other words, we have to balance price risk with
the time it may take for an individual company to execute positive change. We
want to minimize downside when growth stocks do extremely well, as in 1995, but
we also want to take advantage of the fact that company value is completely
independent of market activity. If the challenge is well met, then in a year
like fiscal 1996 when both the market and individual companies do well, value
investors like the Opportunity Fund are rewarded to a greater degree.
For example, two special situation companies in which the Fund has been
invested for some time rewarded our analysis and patience this fall as they
agreed to be sold to other companies at higher valuations. Chicago Docks and
Canal as well as Kinder-Care were both taken over at nearly double our original
investment cost. We continue to seek attractively valued companies like these
where the time of success may be somewhat uncertain, but where we believe we
have identified solid value and a catalyst for change.
The Fund's investment approach of seeking companies that are undervalued and
poised for superior growth has also resulted in a portfolio at fiscal year end
with a large position in energy and related stocks. In evaluating the universe
of small cap stocks, these energy companies best met the Fund's price-to-asset
value, price-to-cash flow, and potential for renewed growth criteria, which are,
as always, the cornerstone of our bottom-up investment strategy.
It is interesting to note that since the Fund's inception, it has not been
unusual to have large positions in particular sectors, even using a strict
bottom-up strategy that focuses on company specifics, not economic and
market-related forecasts. For example, in the early 1990s, the Fund had a large
position in technology stocks; while in the mid 1990s, it was the financial
services sector. The Fund was able to take profits from both.
Now, we believe many energy companies have particularly attractive investment
fundamentals as a consequence of the sea change that has taken place in the
sector over the last ten years. Specifically:
- - Stock market prices of many energy companies do not even approximate current
commodity pricing valuations. For example, Louisiana Land and Exploration and
Oryx Energy sell at 3-6X cash flow compared to 8-11X for similar companies in
the early 1980s.
- - Company managements no longer count on rising energy prices to achieve their
financial goals. The deep cost cutting, downsizing and restructuring the
sector has undergone created extremely efficient survivors that are able to
grow reserves, reduce debt and expand cash flow. With such consolidation, any
additional
--
5
<PAGE> 8
strength in energy prices leads to dramatic upside.
- - Technological advances have enabled oil service firms to grow reserves, attain
high drilling success rates, reduce the cost of dry holes, increase output and
expand capital spending.
- - The energy sector is out-of-favor and largely ignored by Wall Street. The S&P
500 weighting in energy stocks has declined to only 10% today, compared to 30%
in 1980.
- - Numerous factors argue for energy prices to trend higher. Among them, U.S.
consumption of oil is up, while our production has fallen. The reserve life of
natural gas in the U.S. is under 8 years, as compared to 12.5 years in 1984.
These trends came together in 1996. Slightly cooler weather, full pipeline
capacity from Canada, burgeoning energy demands from Asia and tighter supply
coming out of the MidEast all led to increasing prices. Late in 1995, the U.S.
Government passed the most favorable piece of energy legislation in a decade to
encourage redevelopment of U.S. energy reserves. All of the energy companies in
the Fund's portfolio are benefiting from these developments.
Again, having built the portfolio one stock at a time, each company stands on
its own fundamentals. However, we believe that if Jack Copeland, in his article
"Oil Woes" (International Economics, July/August 1996) or the article "Asia's
Empty Gas Tank" (Journal of Foreign Affairs) are close to correct, then energy
soon will be as important a portfolio component as it was in the late 1970s and
early 1980s. Conversely, there are other sectors where we consider the stocks
fully priced, or where Wall Street has what we believe to be excessive
expectations for earnings growth. Thus, the Fund is underweighted in the
financial services and technology sectors.
LOOKING AHEAD
Technology continues to be the fastest growing sector in the U.S. So, while the
Fund remains underweighted at this time, we are once again finding attractive
valuations in certain software companies where new managements and new products
are combining to drive earnings to a higher level.
We are also beginning to find many attractively valued stocks in the health
and managed care areas. For example, generic drug companies should benefit from
the increasing drive to lower pharmaceutical costs. Certain HMOs whose stock
market capitalization is but 50% of the company's revenues would benefit from
increasing volumes over coming years. And finally, biotechnology, device and
services companies that can document outcomes and are cost efficient are being
added to the Fund's portfolio.
Our outlook for the next six months is that while the U.S. economy is
certainly slowing, it should continue to show modest growth through the fourth
calendar quarter and into 1997. The economy may even accelerate if there is a
pro-growth policy in the White House.
Our intensive, fundamental research continues to find good value and exciting
company-specific opportunities. We believe the small cap sector as a whole
remains undervalued based on relative price-to-earnings (p/e), price-to-book,
price-to-sales, and p/e to growth rates on a historical basis. We remain
committed to our investment discipline and long-term investment outlook as we
seek rewards from investing in the small cap marketplace.
--
6
<PAGE> 9
COMPARISON OF CHANGE IN VALUE OF $10,000
INVESTMENT IN COWEN OPPORTUNITY FUND,
CLASS "A" SHARES AND THE S&P 500
[GRAPH]
<TABLE>
<CAPTION>
- -----------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURN**
- -----------------------------------------------------------------
1 YEAR 5 YEAR INCEPTION*
- ------------------- ------------------- -------------------
<S> <C> <C>
23.51% 16.85% 15.58%
- -----------------------------------------------------------------
</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 C SHARES
ANNUALIZED RETURN OF THE CLASS:
<TABLE>
<CAPTION>
AVERAGE ANNUAL TOTAL
RETURN
----------------------
1 YEAR INCEPTION***
------ -----------
<S> <C> <C>
Class "B" shares**** 23.67% 15.00%
Class "C" shares 30.17% 16.63%
</TABLE>
- ---------------
*** Inception dates of Class "B" shares and Class "C" 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> 10
COWEN INTERMEDIATE FIXED INCOME FUND
COWEN GOVERNMENT SECURITIES FUND
Shifting Maturity to Combat Interest Rate Volatility
During a fiscal year characterized by dramatic directional changes in interest
rates, it was the flexibility to adjust maturity and sector weightings that was
key to competitive performance for both the Cowen Intermediate Fixed Income Fund
and Cowen Government Securities Fund for the twelve months ended November 30,
1996. Perhaps more significantly, the conservative disciplines and high quality
investment criteria also added a degree of stability to both funds.
The annual return of the Intermediate Fixed Income Fund's Class A shares was
5.21%. This tracked the Lipper Intermediate Investment Grade average return of
5.38%, but slightly underperformed its benchmark, the Lehman Brothers
Intermediate Government/Corporate Index, which had a return of 5.83%. The Fund's
Class B and Class C shares returned 4.96% and 5.46% respectively for the period.
The annual return of the Government Securities Fund's Class A shares was 4.34%.
While this underperformed the Lehman Brothers Aggregate Index, which had a
return of 6.07%, it closely tracked the Lipper U.S. General Government average
return of 4.38%. The Fund's Class C shares returned 4.48% for the period.
INVESTMENT REVIEW
Interest rates were higher at the end of the fiscal year than at the beginning,
with yields on 5-year U.S. Treasury Notes increasing by more than 0.34% over the
twelve months ending November 30. The bulk of that increase, however, took place
during the first six months, even with Federal Reserve Board cuts in short-term
interest rates in December and January. When it first became clear in February
that the economy was strengthening rather than weakening, as supported by higher
than anticipated employment figures and consumer spending rates -- and then by a
Gross Domestic Product of nearly 5% in the second calendar quarter -- interest
rates went up. The result was a bond market sell-off, where securities are sold
in great numbers under pressure to avoid further declines in prices.
By the third calendar quarter, the economy showed signs of moderation with the
Gross Domestic Product (GDP) around 2%, inflation staying in check and
employment figures lower. The Federal Reserve Board decided in September to
leave interest rates unchanged and the market reacted positively. But the major
catalyst for a dramatic sea change in investor psychology came in late October
when Employment Cost Index figures were released, indicating that the then
dominant concern over rising wages was simply unfounded. Bond market fears were
soothed and interest rates declined significantly. The market also responded
favorably to the November elections, which reaffirmed the balance of power
between the President and Congress. In all, over the course of the last three
months of the Funds' fiscal year, the bond market rallied strongly, with yields
on 5-year Treasury Notes decreasing by more than 0.90%.
Our primary strategy during the first half of the Funds' fiscal year, then,
was to adopt a slightly defensive posture by shortening average maturity. In the
second half of the fiscal year, we took different paths with the two Funds. To
capture the benefits of the late rally, we lengthened the average maturity of
the Intermediate Fixed Income Fund over the six months from 4.5 years to 5.0
years as of November 30. We did not change
--
8
<PAGE> 11
sector allocation dramatically and we maintained the high quality profile of the
portfolio. As of November 30, the Fund was 52% in U.S. Treasury Securities, 25%
in investment grade corporate securities and 23% in GNMAs and FNMAs. We
continued to avoid collateralized mortgage obligations (CMOs) and the use of
derivatives completely.
In the Government Securities Fund, we shortened the average maturity in the
second half of the fiscal year, as we had done during the first six months, in
order to meet the Fund's need for liquidity. The Fund's average maturity went
from 7.8 years at the end of May to 6.8 years at the end of November, and its
average duration from 4.7 years to 4.4 years over the same period. As
anticipated in our last report, we increased the Fund's exposure to the mortgage
sector. Mortgage-backed securities continue to offer higher yields and less
volatility than Treasuries. As of November 30, the Fund was 48% invested in U.S.
Treasuries and 52% in GNMAs and FNMAs.
LOOKING AHEAD
We believe that while there may be some short-term fluctuations in interest
rates, currently there is an underlying positive foundation for the bond market
of moderate growth with low inflation. We anticipate that inflation will remain
near 3% and that economic growth, as measured by GDP, will likely be between 2%
to 2.5% for 1997.
Another factor underpinning the U.S. bond market is that U.S. interest rates
are currently among the highest of the major industrialized nations. This makes
our bond market attractive to global investors, especially the Japanese. Japan
is a nation of savers. And with Japanese interest rates near 2% and our rates 6%
or higher -- despite much speculation to the contrary -- we believe they are
likely to continue to be a significant buyer of the U.S. bond market.
Our strategy in both Funds is to maintain our active yet conservative
disciplines, high quality investments and an attractive risk/return profile.
--
9
<PAGE> 12
COMPARISON OF CHANGE IN VALUE OF $10,000
INVESTMENT IN COWEN INTERMEDIATE FIXED INCOME FUND
IN CLASS "A" SHARES AND THE
LEHMAN INTERMEDIATE GOVERNMENT/CORPORATE INDEX
[GRAPH]
<TABLE>
<CAPTION>
- ---------------------------------------------------
AVERAGE ANNUAL TOTAL RETURN**
- ---------------------------------------------------
1 YEAR INCEPTION*
- ------------------------ ------------------------
<S> <C>
2.78% 5.24%
- ---------------------------------------------------
</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 C SHARES
ANNUALIZED RETURN OF THE CLASS:
<TABLE>
<CAPTION>
AVERAGE ANNUAL TOTAL
RETURN
----------------------
1 YEAR INCEPTION***
------ -----------
<S> <C> <C>
Class "B" shares**** 1.96% 7.31%
Class "C" shares 5.46% 8.11%
</TABLE>
- ---------------
*** Inception dates of Class "B" shares and Class "C" 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> 13
COMPARISON OF CHANGE IN VALUE OF $10,000
INVESTMENT IN COWEN GOVERNMENT SECURITIES FUND,
CLASS "A" SHARES AND THE LEHMAN AGGREGATE INDEX
[GRAPH]
<TABLE>
<CAPTION>
- ---------------------------------------------------
AVERAGE ANNUAL TOTAL RETURN**
- ---------------------------------------------------
1 YEAR INCEPTION*
- ------------------------ ------------------------
<S> <C>
(.61%) 4.61%
- ---------------------------------------------------
</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 C SHARES
ANNUALIZED RETURN OF THE CLASS:
<TABLE>
<CAPTION>
AVERAGE ANNUAL TOTAL RETURN
-------------------------------------
1 YEAR INCEPTION***
--------------------- -----------
<S> <C> <C>
Class "C" shares 4.48% 8.30%
</TABLE>
- ---------------
*** Inception date of Class "C" 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> 14
COWEN INCOME + GROWTH FUND, INC.
STATEMENT OF INVESTMENTS
NOVEMBER 30, 1996
<TABLE>
<CAPTION>
SHARES DESCRIPTION VALUE
<C> <S> <C>
COMMON STOCKS -- 97.7% of total portfolio
CONSUMER PRODUCTS -- 3.2%
50,000 Tambrands, Inc. $ 2,137,500
------------
ELECTRICAL UTILITIES -- 12.2%
80,000 Baltimore Gas & Electric 2,230,000
75,000 Central & South West Corp. 2,006,250
65,000 Scana Corp. 1,771,250
65,000 Western Resources, Inc. 2,055,625
------------
8,063,125
------------
FOOD PROCESSING -- 6.5%
9,000 CPC International 749,250
30,000 Heinz (H.J.), Co. 1,136,250
75,000 RJR Nabisco Holdings 2,400,000
------------
4,285,500
------------
INSURANCE -- 4.6%
15,000 Lincoln National Corp. 808,125
65,000 Ohio Casualty Corp. 2,210,000
------------
3,018,125
------------
LUMBER & PAPER -- 2.2%
17,000 Potlatch Corp. 752,250
14,000 Union Camp Corp. 687,750
------------
1,440,000
------------
NATURAL GAS DISTRIBUTORS -- 18.7%
70,000 Brooklyn Union Gas Co. 2,187,500
35,000 Consolidated Natural Gas 1,999,375
60,000 Equitable Resources Inc. 1,830,000
68,000 MCN Corp. 1,955,000
32,000 National Fuel Gas Co. 1,364,000
48,000 Piedmont Natural Gas Co. 1,206,000
70,000 Utilicorp United Inc. 1,881,250
------------
12,423,125
------------
</TABLE>
See notes to combined financial statements
--
12
<PAGE> 15
COWEN INCOME + GROWTH FUND, INC.
STATEMENT OF INVESTMENTS -- (continued)
NOVEMBER 30, 1996
<TABLE>
<CAPTION>
SHARES DESCRIPTION VALUE
<C> <S> <C>
COMMON STOCKS -- (Continued)
OIL, GAS, MINING SERVICES --16.5%
45,000 Baker Hughes, Inc. $ 1,648,125
30,000 Burlington Resources 1,590,000
90,000 Cyprus Amax Minerals, Co. 2,227,500
40,000 KN Energy 1,625,000
28,000 Newmont Mining Corp. 1,340,500
10,000 Schlumberger Ltd. 1,040,000
33,000 Tidewater, Inc. 1,443,750
------------
10,914,875
------------
PETROLEUM -- 14.9%
25,000 Exxon Corp. 2,365,625
16,000 Mobil Corp. 1,936,000
27,000 Murphy Oil Corp. 1,377,000
22,000 Shell Transport & Trading Co. ADR 2,194,500
20,000 Texaco Inc 1,982,500
------------
9,855,625
------------
PHARMACEUTICALS -- 1.6%
27,000 Pharmacia & Upjohn, Inc. 1,042,875
------------
PUBLISHING -- 2.8%
50,000 Readers Digest Association 1,881,250
------------
REAL ESTATE INVESTMENT TRUSTS -- 8.9%
50,000 Kimco Realty Corp. 1,456,250
85,000 New Plan Realty Investment Trust 1,955,000
50,000 United Dominion Realty Trust 737,500
45,000 Weingarten Realty Investment Trust 1,760,625
------------
5,909,375
------------
STEEL PRODUCTION -- 2.7%
60,000 USX-US Steel Group, Inc. 1,807,500
------------
</TABLE>
See notes to combined financial statements
--
13
<PAGE> 16
COWEN INCOME + GROWTH FUND, INC.
STATEMENT OF INVESTMENTS -- (continued)
NOVEMBER 30, 1996
<TABLE>
<CAPTION>
SHARES DESCRIPTION VALUE
<C> <S> <C>
COMMON STOCKS -- (Continued)
TOBACCO -- 2.9%
40,000 American Brands, Inc. $ 1,910,000
------------
TOTAL COMMON STOCKS (Cost $55,996,537) 64,688,875
------------
PRINCIPAL
AMOUNT
SHORT TERM INVESTMENTS -- 2.3%
$1,500,000 Associates Capital Corp., 5.45%, 12/06/1996
(Cost $1,500,000) 1,500,000
------------
TOTAL INVESTMENTS -- 100.0%
(Cost $57,496,537) $ 66,188,875
============
</TABLE>
See notes to combined financial statements
--
14
<PAGE> 17
COWEN OPPORTUNITY FUND
STATEMENT OF INVESTMENTS
NOVEMBER 30, 1996
<TABLE>
<CAPTION>
SHARES DESCRIPTION VALUE
<C> <S> <C>
COMMON STOCKS -- 93.0% of total portfolio
OIL/GAS PRODUCTION/EXPLORATION -- 25.4%
11,000 Ashland Inc. $ 528,000
404,700 Canadian 88 Energy* 1,799,266
21,100 Denbury Resources Inc.* 303,313
24,200 Devon Energy Corp. 877,250
223,800 Enserch Exploration Inc.* 2,545,725
54,700 HS Resources Inc.* 929,900
35,300 Louisiana Land & Exploration 2,109,175
50,000 Mesa Exploration Inc.* 256,250
155,800 Oryx Energy Co.* 3,232,850
103,500 Parker & Parsley Petroleum* 3,415,500
154,300 Rigel Energy Co.* 1,692,149
172,100 Santa Fe Energy Resources* 2,495,450
35,000 Seagull Energy Corp.* 800,625
20,000 Texas Meridian Resources* 332,500
27,500 United Meridian Corp.* 1,402,500
41,000 USX-Marathon Group 937,876
------------
23,658,329
------------
OIL/GAS SERVICE -- 18.6%
8,500 Baker Hughes Inc. 311,313
22,900 BJ Services Co.* 1,093,475
31,500 Dreco Energy Services LTD* 1,299,375
11,100 Energy Ventures, Inc.* 545,288
25,000 Global Marine Inc.* 487,500
56,000 McDermott International 994,000
50,300 Nabors Industries Inc.* 974,563
106,800 Oceaneering International* 1,775,550
50,600 Offshore Logistics* 1,012,000
78,200 Parker Drilling* 733,125
34,100 Petroleum Geo Services-ADR* 1,278,750
38,400 Pool Energy Services Company* 566,400
65,900 Pride Petroleum Services Inc.* 1,194,438
68,300 Rowan Companies Inc.* 1,613,588
14,100 Smith International Inc.* 576,338
21,200 Tidewater Inc. 927,500
53,500 Varco International Inc.* 1,223,813
26,200 Weatherford International* 799,100
------------
17,406,116
------------
</TABLE>
See notes to combined financial statements
--
15
<PAGE> 18
COWEN OPPORTUNITY FUND
STATEMENT OF INVESTMENTS -- (continued)
NOVEMBER 30, 1996
<TABLE>
<CAPTION>
SHARES DESCRIPTION VALUE
<C> <S> <C>
COMMON STOCKS -- (Continued)
METALS & MINING -- 13.8%
21,000 Agrico Eagle Mines LTD $ 288,750
89,100 Amax Gold Inc.* 534,600
73,900 Armco Inc.* 332,550
20,000 Ashland Coal Inc. 515,000
160,000 Canyon Resources Corp.* 410,000
48,700 Cyprus Amax Minerals Co. 1,205,325
60,000 Echo Bay Mines LTD* 371,250
55,200 Homestake Mining 834,900
14,500 Inland Steel Industries 270,063
55,800 LTV Steel Corp. 599,850
32,300 National Steel-Class B* 302,813
5,000 Newmont Gold Company 231,875
18,500 Newmont Mining Corp. 885,688
60,000 Northwest Pipe Company* 930,000
28,300 Oregon Steel Mills Inc. 484,638
70,000 Pegasus Gold Inc.* 656,250
10,700 Pittston Minerals Group 141,775
121,600 Santa Fe Pacific Gold Co.* 1,398,400
135,200 TVX Gold Inc.* 946,400
30,000 WHX Corporation* 281,250
69,000 Zeigler Coal 1,267,875
------------
12,889,252
------------
CONSUMER SERVICES -- 7.8%
43,900 Berlitz International Inc.* 845,075
20,000 CUC International Inc.* 527,500
30,000 Fuji Photo Film 940,711
72,200 Kinder Care Learning Center* 1,434,975
112,000 Mitsubishi Heavy Industries 914,888
69,000 Sotheby's Holdings Class A 1,216,125
12,300 Stewart Enterprises Inc. 415,125
20,000 Tetra Technologies* 509,375
26,300 York Group Inc.* 486,550
------------
7,290,324
------------
</TABLE>
See notes to combined financial statements
--
16
<PAGE> 19
COWEN OPPORTUNITY FUND
STATEMENT OF INVESTMENTS -- (continued)
NOVEMBER 30, 1996
<TABLE>
<CAPTION>
SHARES DESCRIPTION VALUE
<C> <S> <C>
COMMON STOCKS -- (Continued)
SOFTWARE/COMPUTER SERVICES -- 5.2%
11,000 Barra Inc.* $ 286,000
15,000 Borland International* 120,938
32,700 Evans & Sutherland Computer Corp.* 842,025
19,000 Farallon Communications* 223,250
40,200 Gerber Scientific Inc. 623,100
24,100 Hyperion Software Corp.* 521,163
10,600 Informix* 251,750
88,900 Intergraph Corp.* 811,213
13,000 Konami Co. LTD 444,180
43,000 Platinum Software Corp.* 559,000
10,000 Symantec Corp.* 148,750
------------
4,831,369
------------
BUILDING CONSTRUCTION -- 3.6%
160,300 Dravo Corp.* 2,123,975
79,000 Fortress Group Inc.* 493,750
53,400 Hovnanian Enterprises* 313,725
14,500 USG Corp.* 453,125
------------
3,384,575
------------
ELECTRONIC/TELECOMMUNICATIONS -- 3.1%
9,300 BE Aerospace Inc.* 214,481
35,000 Comcast Corp.-Special 586,250
12,000 Echostar Communications* 321,000
76,200 Lo-Jack Corporation* 714,375
6,500 Nintendo Corp. 459,595
20,000 Quad Systems Corp.* 205,000
200,000 Varitronix International 371,184
------------
2,871,885
------------
FINANCIAL SERVICES -- 2.9%
46,900 American Banknote Corp.* 228,638
47,300 Downey Financial Corp. 1,359,875
2,400 Liberty Bankcorp Inc./Oklahoma 98,700
3,700 Liberty Bankcorp Inc./Delaware 88,568
54,000 Nomura Securities 910,671
------------
2,686,452
------------
</TABLE>
See notes to combined financial statements
--
17
<PAGE> 20
COWEN OPPORTUNITY FUND
STATEMENT OF INVESTMENTS -- (continued)
NOVEMBER 30, 1996
<TABLE>
<CAPTION>
SHARES DESCRIPTION VALUE
<C> <S> <C>
COMMON STOCKS -- (Continued)
HEALTHCARE SERVICES -- 2.2%
22,900 Magellan Health Services* $ 478,038
20,000 Morrison Health Care Inc. 285,000
70,000 Rehabcare Corp.* 1,251,250
------------
2,014,288
------------
PHARMACEUTICALS -- 2.0%
45,800 Alpharma Inc. 583,950
37,300 Carter-Wallace Inc. 582,813
35,700 Mylan Labs 526,575
11,100 Sepracor Inc.* 184,538
------------
1,877,876
------------
RETAILERS -- 1.8%
65,000 CML Group Inc. 260,000
5,000 Roberds Inc.* 48,125
39,900 Williams-Sonoma Inc.* 1,386,525
------------
1,694,650
------------
TRANSPORTATION/TRUCK LEASING -- 1.7%
16,400 Covenant Transport Inc.* 250,100
26,800 Simon Transportation Services* 412,050
21,900 Smithway Motor Express* 194,363
63,100 Transport Corp. of America* 694,100
------------
1,550,613
------------
RESTAURANTS/FOOD PRODUCTS -- 1.5%
25,000 Brinker International Inc.* 462,500
40,000 Chiquita Brands International* 530,000
21,300 Hudson Foods Inc. 388,725
------------
1,381,225
------------
AGRICULTURAL -- .9%
32,300 Agco Corp. 900,363
------------
PAPER PRODUCTS -- .9%
9,200 Albany Internatioanl Corp. 203,550
45,000 Stone Container Corp.* 691,875
------------
895,425
------------
</TABLE>
See notes to combined financial statements
--
18
<PAGE> 21
COWEN OPPORTUNITY FUND
STATEMENT OF INVESTMENTS -- (continued)
NOVEMBER 30, 1996
<TABLE>
<CAPTION>
SHARES DESCRIPTION VALUE
<C> <S> <C>
COMMON STOCKS -- (Continued)
ENVIRONMENTAL -- .7%
25,600 Calgon Carbon Corp. $ 297,600
190,000 IFC Kaiser International Inc.* 356,250
------------
653,850
------------
MEDICAL SUPPLIES/SERVICES -- .5%
27,300 Mid Atlantic Medical Services* 320,775
10,900 Physicians Health Services* 163,500
------------
484,275
------------
REAL ESTATE -- .2%
39,800 Atlantic Gulf Communities* 184,069
------------
COMPUTER -- .1%
64,700 Concurrent Computer Corp.* 131,422
------------
TOTAL COMMON STOCKS (Cost $75,040,244) 86,786,358
------------
PRINCIPAL
AMOUNT
SHORT TERM INVESTMENTS -- 7.0%
of total portfolio
$3,500,000 Exxon Asset Management, 5.26% 12/2/96 3,500,000
3,000,000 G.E. Capital Corp., 5.36% 12/4/96 3,000,000
------------
TOTAL SHORT TERM INVESTMENTS
(Cost $6,500,000) 6,500,000
------------
TOTAL INVESTMENTS (Cost $81,540,244) $ 93,286,358
============
</TABLE>
- ---------------
* Non-income producing security
See notes to combined financial statements
--
19
<PAGE> 22
COWEN GOVERNMENT SECURITIES FUND
STATEMENT OF INVESTMENTS
NOVEMBER 30, 1996
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT DESCRIPTION VALUE
<C> <S> <C>
MORTGAGE-BACKED SECURITIES -- 52.5%
FEDERAL NATIONAL MORTGAGE ASS'N (FNMA) CERTIFICATES:
$192,939 9.000%, 02/01/15 $ 204,634
725,924 7.000%, 12/01/24 723,201
55,950 9.000%, 02/01/25 59,324
GOVERNMENT NATIONAL MORTGAGE ASS'N (GNMA)
CERTIFICATES:
47,097 8.000%, 05/15/02 48,768
15,994 10.000%, 04/15/16 17,650
9,420 10.000%, 07/15/17 10,393
10,455 10.000%, 11/15/17 11,534
10,179 9.000%, 05/15/21 10,923
13,753 9.500%, 11/15/21 14,959
114,608 9.500%, 03/20/25 123,310
178,366 8.000%, 05/15/25 183,994
-----------
TOTAL MORTGAGE-BACKED SECURITIES
(Cost $1,387,571) 1,408,690
-----------
U.S. TREASURY OBLIGATIONS -- 47.5%
200,000 U.S. Treasury Notes, 5.875%, 06/30/00 200,750
550,000 U.S. Treasury Notes, 6.250%, 10/31/01 559,367
500,000 U.S. Treasury Notes, 6.500%, 10/15/06 516,405
-----------
TOTAL U.S. TREASURY OBLIGATIONS
(Cost $1,264,606) 1,276,522
-----------
TOTAL INVESTMENTS (Cost $2,652,177) $ 2,685,212
===========
</TABLE>
See notes to combined financial statements
--
20
<PAGE> 23
COWEN INTERMEDIATE FIXED INCOME FUND
STATEMENT OF INVESTMENTS
NOVEMBER 30, 1996
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT DESCRIPTION VALUE
<C> <S> <C>
CORPORATE NOTES -- 24.9%
$1,000,000 Ford Motor Credit 6.125%, 01/09/06 $ 960,830
500,000 International Paper 9.700%, 03/15/00 549,865
500,000 Philip Morris Cos. INC 6.375%, 02/01/06 480,505
500,000 Sears Roebuck Acceptance 6.900%, 08/01/03 511,360
1,000,000 Smith Barney Holdings 7.000%, 05/15/00 1,023,620
------------
TOTAL CORPORATE NOTES
(Cost $3,494,105) 3,526,180
------------
MORTGAGE-BACKED SECURITIES -- 23.3%
FEDERAL NATIONAL MORTGAGE ASS'N (FNMA)
CERTIFICATES:
106,467 9.000%, 05/01/09 112,083
91,731 9.500%, 03/01/10 99,527
191,126 7.500%, 09/01/10 195,396
929,818 7.000%, 11/01/10 938,725
120,991 9.000%, 04/01/15 128,325
123,515 9.500%, 07/01/22 134,013
126,683 9.000%, 02/01/25 134,324
GOVERNMENT NATIONAL MORTGAGE ASS'N (GNMA)
CERTIFICATES:
139,292 8.000%, 06/15/01 144,152
51,025 9.000%, 12/15/16 54,947
57,269 10.000%, 12/15/18 63,157
44,057 8.500%, 10/15/21 46,507
73,198 8.000%, 06/15/22 75,989
328,180 8.000%, 02/15/23 340,073
804,664 8.000%, 11/15/24 830,808
------------
TOTAL MORTGAGE-BACKED SECURITIES
(Cost $3,269,159) 3,298,026
------------
</TABLE>
See notes to combined financial statements
--
21
<PAGE> 24
COWEN INTERMEDIATE FIXED INCOME FUND
STATEMENT OF INVESTMENTS -- (continued)
NOVEMBER 30, 1996
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT DESCRIPTION VALUE
<C> <S> <C>
U.S. TREASURY NOTES -- 51.8%
$1,100,000 8.875%, 02/15/99 $ 1,172,875
400,000 6.000%, 08/15/99 403,312
700,000 7.125%, 09/30/99 726,033
1,375,000 7.750%, 01/31/00 1,454,282
1,000,000 7.125%, 02/29/00 1,040,620
1,000,000 6.250%, 10/31/01 1,017,030
1,000,000 6.250%, 02/15/03 1,017,810
200,000 6.875%, 05/15/06 211,374
300,000 6.500%, 10/15/06 309,843
------------
TOTAL U.S. TREASURY NOTES
(Cost $7,319,025) 7,353,179
------------
TOTAL INVESTMENTS (Cost $14,082,289) $ 14,177,385
============
</TABLE>
See notes to combined financial statements
--
22
<PAGE> 25
(This page intentionally left blank)
--
23
<PAGE> 26
STATEMENTS OF ASSETS AND LIABILITIES
NOVEMBER 30, 1996
<TABLE>
<CAPTION>
INCOME + GROWTH
FUND
<S> <C>
ASSETS:
Investments in securities, at value (cost $57,496,537, $81,540,244,
$2,652,177 and $14,082,289, respectively -- see statements) $ 66,188,875
Cash 72,806
Receivables:
Cowen & Company --
Subscriptions to Common Stock 8,152
Investment securities sold 425,724
Dividends and interest 234,327
Prepaid expenses, etc. 26,392
Deferred organization expenses -- Note 1(E) --
----------------
TOTAL ASSETS 66,956,276
----------------
LIABILITIES:
Payables:
Custodian --
Cowen & Company 44,027
Redemptions of Common Stock 43,306
Dividends -- Note 1(C) --
Investment securities purchased --
Accrued expenses and other liabilities 53,104
----------------
TOTAL LIABILITIES 140,437
----------------
NET ASSETS $ 66,815,839
================
NET ASSETS consist of:
Paid-in Capital $ 49,758,985
Accumulated undistributed net investment income 276,408
Accumulated net realized gain (loss) on investments 8,088,108
Net unrealized appreciation (depreciation) on investments 8,692,338
----------------
NET ASSETS $ 66,815,839
================
CLASS A
Net assets $ 52,501,721
Outstanding shares of common stock, ($.001 par value) 3,646,078
Net asset value per share $ 14.40
Maximum offering price per share $ 15.12
CLASS B
Net assets $ 2,581,112
Outstanding shares of common stock, ($.001 par value) 180,342
Net asset value and offering price per share $ 14.31
CLASS C
Net assets $ 11,733,006
Outstanding shares of common stock, ($.001 par value) 812,104
Net asset value and offering price per share $ 14.45
</TABLE>
See notes to combined financial statements
--
24
<PAGE> 27
<TABLE>
<CAPTION>
GOVERNMENT INTERMEDIATE FIXED
OPPORTUNITY FUND SECURITIES FUND INCOME FUND
<S> <C> <C> <C>
$ 93,286,358 $ 2,685,212 $ 14,177,385
-- 3,847 43,672
-- 6,087 1,031
32,547 903 1,297
2,065,001 -- --
42,160 20,701 202,394
23,363 20,922 22,112
-- 15,535 15,719
------------ ----------- -------------
95,449,429 2,753,207 14,463,610
------------ ----------- -------------
1,534,348 -- --
70,893 -- --
167,548 11 22,182
-- 728 7,002
482,274 -- --
82,275 29,086 35,003
------------ ----------- -------------
2,337,338 29,825 64,187
------------ ----------- -------------
$ 93,112,091 $ 2,723,382 $ 14,399,423
============ =========== =============
$ 70,060,702 $ 2,702,118 $ 14,454,632
-- -- --
11,305,275 (11,771) (150,305)
11,746,114 33,035 95,096
------------ ----------- -------------
$ 93,112,091 $ 2,723,382 $ 14,399,423
============ =========== =============
$ 43,949,516 $ 2,630,831 $ 11,884,719
2,645,412 274,236 1,255,067
$ 16.61 $ 9.59 $ 9.47
$ 17.44 $ 10.07 $ 9.70
$ 8,793,846 $ -- $ 769,362
541,742 -- 80,639
$ 16.23 $ -- $ 9.54
$ 40,368,729 $ 92,551 $ 1,745,342
2,407,308 9,532 184,979
$ 16.77 $ 9.71 $ 9.44
</TABLE>
--
25
<PAGE> 28
STATEMENTS OF OPERATIONS
YEAR ENDED NOVEMBER 30, 1996
<TABLE>
<CAPTION>
INCOME + GROWTH
FUND
<S> <C>
INVESTMENT INCOME:
Dividend income $ 3,123,593
Interest income 120,867
-----------------
TOTAL INCOME 3,244,460
-----------------
EXPENSES:
Investment management fee -- Note 2(A) 506,210
Service fee -- Class A -- Note 2(C) 125,649
Service and Distribution fees -- Class B -- Note 2(C) 21,608
Professional fees 37,398
Shareholder servicing fees
Class A 61,769
Class B 3,671
Class C 6,391
Directors' fees and expenses -- Note 2(D) 22,203
Federal and state registration fees 46,894
Prospectus and shareholders' reports 51,092
Custodian fees 18,638
Amortization of organization expenses -- Note 1(E) --
Miscellaneous 5,295
-----------------
TOTAL EXPENSES 906,818
Less: expenses waived and absorbed --
Notes 2(A, C and D) (104,136)
-----------------
NET EXPENSES 802,682
-----------------
Net Investment Income (loss) 2,441,778
-----------------
Realized and Unrealized Gain (Loss) on Investments --
Note 3:
Net realized gain (loss) on investments 8,408,735
Net unrealized appreciation (depreciation) on
investments (48,607)
-----------------
Net Realized and Unrealized Gain (Loss) on Investments 8,360,128
-----------------
Net Increase in Net Assets Resulting from Operations $10,801,906
=================
</TABLE>
See notes to combined financial statements
--
26
<PAGE> 29
<TABLE>
<CAPTION>
GOVERNMENT INTERMEDIATE FIXED
OPPORTUNITY FUND SECURITIES FUND INCOME FUND
<S> <C> <C> <C>
$ 315,018 $ -- $ --
380,872 240,846 1,165,874
--------------- -------------- ---------------
695,890 240,846 1,165,874
--------------- -------------- ---------------
672,125 20,428 80,767
99,793 8,231 33,421
74,751 293 3,914
33,495 19,856 21,361
68,941 5,911 21,342
15,092 204 687
11,391 427 1,265
20,998 20,998 20,998
44,599 31,127 37,006
30,295 8,051 9,356
32,246 3,959 8,683
-- 13,841 14,016
6,081 664 1,710
--------------- -------------- ---------------
1,109,807 133,990 254,526
(116,626) (122,145) (162,102)
--------------- -------------- ---------------
993,181 11,845 92,424
--------------- -------------- ---------------
(297,291) 229,001 1,073,450
--------------- -------------- ---------------
11,722,237 (5,078) (151,102)
8,236,515 (96,320) (288,658)
--------------- -------------- ---------------
19,958,752 (101,398) (439,760)
--------------- -------------- ---------------
$ 19,661,461 $ 127,603 $ 633,690
=============== ============== ===============
</TABLE>
--
27
<PAGE> 30
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
INCOME + GROWTH FUND
------------------------------
YEAR ENDED
NOVEMBER 30,
------------------------------
1996 1995
------------ -----------
<S> <C> <C>
OPERATIONS:
Net investment income $ 2,441,778 $2,199,784
Net realized gain on investments 8,408,735 2,758,033
Net unrealized appreciation (depreciation)
on investments (48,607) 8,290,131
----------- -----------
NET INCREASE IN NET ASSETS RESULTING
FROM OPERATIONS 10,801,906 13,247,948
----------- -----------
DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income
Class A (1,959,683) (1,595,862)
Class B (68,567) (27,580)
Class C (625,281) (326,848)
Net realized gains on investments
Class A (1,843,725) --
Class B (55,281) --
Class C (722,597) --
----------- -----------
TOTAL DISTRIBUTIONS TO SHAREHOLDERS (5,275,134) (1,950,290)
----------- -----------
COMMON STOCK TRANSACTIONS -- NOTE 4
Proceeds from shares sold 12,200,391 25,694,218
Net asset value of shares issued in
reinvestments of distributions 4,990,142 1,811,615
Cost of shares redeemed (25,962,378) (7,156,525)
----------- -----------
NET INCREASE (DECREASE) IN NET ASSETS
FROM COMMON STOCK TRANSACTIONS (8,771,845) 20,349,308
----------- -----------
TOTAL INCREASE (DECREASE)
IN NET ASSETS (3,245,073) 31,646,966
NET ASSETS:
Beginning of year 70,060,912 38,413,946
----------- -----------
End of year $66,815,839 $70,060,912
=========== ===========
Undistributed net investment income $ 276,408 $ 488,161
=========== ===========
</TABLE>
See notes to combined financial statements
--
28
<PAGE> 31
STATEMENTS OF CHANGES IN NET ASSETS -- (continued)
<TABLE>
<CAPTION>
OPPORTUNITY FUND
------------------------------
YEAR ENDED
NOVEMBER 30,
------------------------------
1996 1995
------------ -----------
<S> <C> <C>
OPERATIONS:
Net investment loss $ (297,291) $ (143,285)
Net realized gain on investments 11,722,237 1,687,515
Net unrealized appreciation
on investments 8,236,515 2,189,742
----------- ------------
NET INCREASE IN NET ASSETS RESULTING
FROM OPERATIONS 19,661,461 3,733,972
----------- ------------
DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income
Class A -- --
Class B -- --
Class C -- --
Net realized gains on investments
Class A (911,398) (2,076,944)
Class B (154,675) (140,465)
Class C (450,538) (495,100)
----------- ------------
TOTAL DISTRIBUTIONS TO SHAREHOLDERS (1,516,611) (2,712,509)
----------- ------------
COMMON STOCK TRANSACTIONS -- NOTE 4
Proceeds from shares sold 27,354,999 26,834,498
Net asset value of shares issued in
reinvestments of distributions 1,490,968 2,659,316
Cost of shares redeemed (18,321,441) (10,917,159)
----------- ------------
NET INCREASE IN NET ASSETS FROM COMMON
STOCK TRANSACTIONS 10,524,526 18,576,655
----------- ------------
TOTAL INCREASE IN NET ASSETS 28,669,376 19,598,118
NET ASSETS:
Beginning of year 64,442,715 44,844,597
----------- ------------
End of year $93,112,091 $64,442,715
=========== ============
</TABLE>
See notes to combined financial statements
--
29
<PAGE> 32
STATEMENTS OF CHANGES IN NET ASSETS -- (continued)
<TABLE>
<CAPTION>
GOVERNMENT
SECURITIES FUND
----------------------------
YEAR ENDED NOVEMBER 30,
----------------------------
1996 1995
----------- ----------
<S> <C> <C>
OPERATIONS:
Net investment income $ 229,001 $ 215,872
Net realized gain (loss) on investments (5,078) 28,835
Net unrealized appreciation (depreciation)
on investments (96,320) 180,135
---------- ----------
NET INCREASE IN NET ASSETS RESULTING
FROM OPERATIONS 127,603 424,842
---------- ----------
DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income
Class A (221,638) (206,111)
Class B (1,751) (7,476)
Class C (5,612) (2,285)
---------- ----------
TOTAL DISTRIBUTIONS TO SHAREHOLDERS (229,001) (215,872)
---------- ----------
COMMON STOCK TRANSACTIONS -- NOTE 4
Proceeds from shares sold 308,567 3,823,786
Net asset value of shares issued in
reinvestments of distributions 205,999 192,488
Cost of shares redeemed (1,833,196) (642,884)
---------- ----------
NET INCREASE (DECREASE) IN NET ASSETS
FROM COMMON STOCK TRANSACTIONS (1,318,630) 3,373,390
---------- ----------
TOTAL INCREASE (DECREASE) IN NET
ASSETS (1,420,028) 3,582,360
NET ASSETS:
Beginning of year 4,143,410 561,050
---------- ----------
End of year $2,723,382 $4,143,410
========== ==========
</TABLE>
See notes to combined financial statements
--
30
<PAGE> 33
STATEMENTS OF CHANGES IN NET ASSETS -- (continued)
<TABLE>
<CAPTION>
INTERMEDIATE FIXED
INCOME FUND
-----------------------------
YEAR ENDED
NOVEMBER 30,
-----------------------------
1996 1995
----------- -----------
<S> <C> <C>
OPERATIONS:
Net investment income $1,073,450 $ 836,318
Net realized gain (loss) on investments (151,102) 238,072
Net unrealized appreciation (depreciation)
on investments (288,658) 475,634
----------- ----------
NET INCREASE IN NET ASSETS RESULTING
FROM OPERATIONS 633,690 1,550,024
----------- ----------
DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income
Class A (885,315) (708,617)
Class B (50,276) (29,694)
Class C (137,858) (98,007)
Net realized gains on investments
Class A (140,232) --
Class B (5,359) --
Class C (17,397) --
----------- ----------
TOTAL DISTRIBUTIONS TO SHAREHOLDERS (1,236,437) (836,318)
----------- ----------
COMMON STOCK TRANSACTIONS -- NOTE 4
Proceeds from shares sold 6,747,241 14,174,490
Net asset value of shares issued in
reinvestments of dividends 1,056,981 744,437
Cost of shares redeemed (9,917,773) (2,230,224)
----------- ----------
NET INCREASE (DECREASE) IN NET ASSETS
FROM COMMON STOCK TRANSACTIONS (2,113,551) 12,688,703
----------- ----------
TOTAL INCREASE (DECREASE) IN NET
ASSETS (2,716,298) 13,402,409
NET ASSETS:
Beginning of Year 17,115,721 3,713,312
----------- ----------
End of Year $14,399,423 $17,115,721
=========== ==========
</TABLE>
See notes to combined financial statements
--
31
<PAGE> 34
COWEN FUNDS
NOTES TO COMBINED FINANCIAL STATEMENTS
NOTE 1 - SIGNIFICANT ACCOUNTING POLICIES: Cowen Income + Growth Fund, Inc.
("CIG") and Cowen Funds, Inc. (collectively "the Funds") are registered under
the Investment Company Act of 1940 ("Act") as diversified open-end management
companies. Cowen Funds, Inc. operates as a series company currently issuing
common stock representing its portfolios designated as the Cowen Intermediate
Fixed Income Fund ("CIFIF"), Cowen Government Securities Fund, formerly known as
Cowen Tradition Fixed Income Fund ("CGSF"), and Cowen Opportunity Fund ("COF").
Cowen & Company ("Cowen") acts as the investment manager and distributor of each
of the Funds' shares. These combined financial statements together with the
notes thereto, consist of CIG, COF, CIFIF and CGSF. The Funds' financial
statements are prepared in accordance with generally accepted accounting
principals 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 and COF 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, 1996, CGSF and CIFIF had unused capital loss carryovers of
approximately $12,000 and $150,000, respectively, available for Federal income
tax purposes to be applied against future securities profits, if any. If not
applied, the carryovers expire $6,800 in fiscal 2002 and $155,200 in fiscal
2004.
(E) Deferred organization expenses: Organization expenses paid by CGSF and
CIFIF are being amortized to operations from January 20, 1993, 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 Cowen in connection with the organization of each 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 of
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
--
32
<PAGE> 35
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, 1996, COF
reclassified $297,291 from accumulated undistributed net investment loss to
accumulated net realized gain on investments. Net investment loss, net realized
gains, and net assets were not affected by this change.
(G) Options Transactions: When the 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 Cowen pursuant to the
provisions of Investment Management Agreements ("Agreements") are payable
monthly, based on an annual rate of .75%, .90%, .50% and .60% for CIG, COF,
CIFIF and CGSF, respectively, of the average daily value of each Fund's net
assets. Since May 9, 1994, Cowen has voluntarily reimbursed the CIG's expenses
in an amount equal to an annual rate of .20% through August 31, 1995, of .18%
from that date through March 31, 1996 and of .14% thereafter, of the average
daily value of its net assets, and the COF's expenses in an amount equal to an
annual rate of .22% through March 31, 1996 and of .13% thereafter, of the
average daily value of its net assets.
With respect to CGSF and CIFIF, through July 11, 1994, Cowen waived all of
each Fund's Investment Management Fee and has agreed to pay all of each Fund's
expenses. From July 11, 1994 through March 31, 1995, Cowen continued to waive
all of each Fund's Investment Management Fee and to pay all of each Fund's
expenses. With respect to CGSF, Cowen voluntarily waived its investment
management fee and service fee and absorbed all other expenses, except for .25%
through March 31, 1996 and .40% thereafter of other expenses and .50% of the
Class B distribution fee. The directors' fees are being waived by directors.
With respect to CIFIF, Cowen voluntarily waived its investment management fee
and absorbed all other expenses, except for .25% through March 31, 1996 and .40%
thereafter of other expenses and its service and distribution fees. The
directors' fees are being waived by directors.
Cowen has agreed to maintain these fee and expense reimbursement arrangements
for each Fund through March 31, 1997 (see "Shareholder Servicing and
Distribution Plan" later in this note).
(B) In acting as distributor during the year ended November 30, 1996, Cowen
earned $63,534, $77,114, $10,254 and $30,206 of commissions on sales of the
shares of CIG, COF, CGSF and CIFIF, respectively.
(C) Shareholder Servicing and Distribution Plans (the "Plan"): Cowen 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
--
33
<PAGE> 36
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 by Cowen to provide compensation for ongoing servicing and/or maintenance
of shareholder accounts with the Funds. Compensation is paid by Cowen to
persons, including Cowen employees, 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 Cowen a monthly
distribution fee at the annual rate of .75% for CIG, COF and CGSF and of .25%
for CIFIF of the Funds' average daily net assets attributable to Class B shares.
The distribution fee is used by Cowen 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 Cowen 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 Cowen, and the payments may exceed
expenses actually incurred by 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 Cowen and
amounts it receives under the Plan.
(D) Directors who are not officers, directors, partners, stockholders or
employees of Cowen or its affiliates receive from each Fund a fee of $3,000 per
annum plus $500 per meeting attended and reimbursement for travel and out-
of-pocket expenses; however the Directors have agreed to waive their fees from
CGSF and CIFIF until such time as 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 period ended
November 30, 1996, was as follows:
<TABLE>
<CAPTION>
CIG COF CGSF CIFIF
---------------------------------------------------------------
<S> <C> <C> <C> <C>
Purchases $ 51,654,236 $ 136,002,923 $ 3,628,585 $ 17,499,477
- -----------------------------------------------------------------------------
Sales $ 62,230,665 $ 124,880,355 $ 4,627,576 $ 19,011,441
- -----------------------------------------------------------------------------
</TABLE>
In addition, the following table summarizes CIG's covered call option
transactions for the year ended November 30, 1996:
<TABLE>
<CAPTION>
COVERED CALL
OPTIONS TERMINATED
-------------------
NET
NUMBER OF PREMIUMS REALIZED
CONTRACTS RECEIVED COST GAIN
--------- -------- -------- ---------
<S> <C> <C> <C> <C>
COVERED CALL OPTIONS
WRITTEN:
Contracts outstanding
December 1, 1995....... -- --
Contracts written....... 1,530 $327,539
--------- --------
CONTRACTS TERMINATED:
Closed................. 280 $ 62,298 $42,700 $19,598
Exercised.............. 555 119,171 * --
Expired................ 695 146,070 -- 146,070
--------- -------- -------- ---------
Total contracts
terminated.......... 1,530 $327,539 $42,700 $165,668
========= ========== ======== =========
Contracts outstanding
November 30, 1996...... -- --
========= ==========
</TABLE>
* Included in proceeds from securities sold.
At November 30, 1996, the cost of investments for Federal tax purposes was
substantially the same as the cost for financial reporting purposes (see the
Statements of Investments).
--
34
<PAGE> 37
At November 30, 1996, accumulated net unrealized appreciation (depreciation)
on investments was as follows:
<TABLE>
<CAPTION>
CIG COF CGSF CIFIF
-------------------------------------------------------------
<S> <C> <C> <C> <C>
Gross
Unrealized
Appreciation $ 9,050,956 $ 15,020,003 $ 33,035 $ 134,340
Gross
Unrealized
Depreciation 358,618 3,273,889 -- 39,244
- ------------------------------------------------------------------------
Net $ 8,692,338 $ 11,746,114 $ 33,035 $ 95,096
- ------------------------------------------------------------------------
</TABLE>
NOTE 4 - COMMON STOCK TRANSACTIONS: At November 30, 1996, 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:
COWEN INCOME + GROWTH FUND
<TABLE>
<CAPTION>
YEAR ENDED NOVEMBER 30, 1996
-------------------------------------------------------------------------------
CLASS A CLASS B CLASS C
------------------------ --------------------- --------------------------
SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT
--------- ----------- ------- ---------- ---------- ------------
<S> <C> <C> <C> <C> <C> <C>
Shares Sold 323,430 $ 4,240,149 84,994 $1,114,910 519,587 $ 6,845,332
Dividends Reinvested 273,319 3,559,882 9,145 118,830 100,573 1,311,430
--------- ----------- ------- ---------- ---------- ------------
596,749 7,800,031 94,139 1,233,740 620,160 8,156,762
Shares Redeemed (686,981) (9,077,987) (24,372) (318,947) (1,267,397) (16,565,444)
--------- ----------- ------- ---------- ---------- ------------
Net Increase (Decrease) (90,232) $(1,277,956) 69,767 $ 914,793 (647,237) $ (8,408,682)
========= =========== ======== ========== ========== =============
<CAPTION>
YEAR ENDED NOVEMBER 30, 1995
-------------------------------------------------------------------------------
CLASS A CLASS B CLASS C
------------------------ --------------------- --------------------------
SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT
--------- ----------- ------- ---------- ---------- ------------
<S> <C> <C> <C> <C> <C> <C>
Shares Sold 1,060,509 $12,228,736 98,162 $1,137,116 976,780 $ 12,328,366
Dividends Reinvested 127,170 1,462,254 2,287 26,830 28,022 322,531
--------- ----------- ------- ---------- ---------- ------------
1,187,679 13,690,990 100,449 1,163,946 1,004,802 12,650,897
Shares Redeemed (475,701) (5,554,055) (16,349) (204,964) (113,006) (1,397,506)
--------- ----------- ------- ---------- ---------- ------------
Net Increase 711,978 $ 8,136,935 84,100 $ 958,982 891,796 $ 11,253,391
========= =========== ======== ========== ========== =============
</TABLE>
--
35
<PAGE> 38
COWEN OPPORTUNITY FUND
<TABLE>
<CAPTION>
FOR YEAR ENDED NOVEMBER 30, 1996
----------------------------------------------------------------------------
CLASS A CLASS B CLASS C
----------------------- --------------------- ------------------------
SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT
-------- ----------- ------- ---------- --------- -----------
<S> <C> <C> <C> <C> <C> <C>
Shares Sold 307,594 $ 4,456,116 102,767 $1,463,700 1,457,942 $21,435,183
Dividends Reinvested 69,163 895,655 11,962 152,511 33,954 442,416
-------- ----------- ------- ---------- --------- -----------
376,757 5,351,771 114,729 1,616,211 1,491,896 21,877,599
Shares Redeemed (679,963) (9,608,731) (72,025) (1,007,199) (543,685) (7,705,512)
-------- ----------- ------- ---------- --------- -----------
Net Increase (Decrease) (303,206) $(4,256,960) 42,704 $ 609,012 948,211 $14,172,087
========= =========== ======== ========== ========= ===========
<CAPTION>
YEAR ENDED NOVEMBER 30, 1995
----------------------------------------------------------------------------
CLASS A CLASS B CLASS C
----------------------- --------------------- ------------------------
SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT
-------- ----------- ------- ---------- --------- -----------
<S> <C> <C> <C> <C> <C> <C>
Shares Sold 612,055 $ 7,910,141 390,219 $4,909,991 1,067,202 $14,014,366
Dividends Reinvested 173,680 2,028,580 12,026 139,672 42,007 491,064
-------- ----------- ------- ---------- --------- -----------
785,735 9,938,721 402,245 5,049,663 1,109,209 14,505,430
Shares Redeemed (494,999) (6,302,236) (74,159) (956,514) (277,716) (3,658,409)
-------- ----------- ------- ---------- --------- -----------
Net Increase 290,736 $ 3,636,485 328,086 $4,093,149 831,493 $10,847,021
========= =========== ======== ========== ========= ===========
</TABLE>
--
36
<PAGE> 39
COWEN GOVERNMENT SECURITIES FUND
<TABLE>
<CAPTION>
YEAR ENDED NOVEMBER 30, 1996
--------------------------------------------------------------------
CLASS A CLASS B CLASS C
----------------------- -------------------- -----------------
SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT
-------- ----------- ------- --------- ------ -------
<S> <C> <C> <C> <C> <C> <C>
Shares Sold 23,793 $ 226,905 -- $ -- 8,386 $81,662
Dividends Reinvested 20,988 199,947 46 462 583 5,590
-------- ----------- ------- --------- ------ -------
44,781 426,852 46 462 8,969 87,252
Shares Redeemed (172,053) (1,640,548) (15,360) (154,719) (3,980) (37,929)
-------- ----------- ------- --------- ------ -------
Net (Decrease) (127,272) $(1,213,696) (15,314) $(154,257) 4,989 $49,323
========= =========== ======== ========== ======== =========
<CAPTION>
YEAR ENDED NOVEMBER 30, 1995
--------------------------------------------------------------------
CLASS A CLASS B CLASS C
----------------------- -------------------- -----------------
SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT
-------- ----------- ------- --------- ------ -------
<S> <C> <C> <C> <C> <C> <C>
Shares Sold 396,002 $ 3,717,273 8,201 $ 78,977 2,890 $27,536
Dividends Reinvested 19,120 183,534 687 6,676 235 2,278
-------- ----------- ------- --------- ------ -------
415,122 3,900,807 8,888 85,653 3,125 29,814
Shares Redeemed (66,867) (642,735) -- -- (15) (149)
-------- ----------- ------- --------- ------ -------
Net Increase 348,255 $ 3,258,072 8,888 $ 85,653 3,110 $29,665
========= =========== ======== ========== ======== =========
</TABLE>
--
37
<PAGE> 40
COWEN INTERMEDIATE FIXED INCOME FUND
<TABLE>
<CAPTION>
YEAR ENDED NOVEMBER 30, 1996
-------------------------------------------------------------------------
CLASS A CLASS B CLASS C
------------------------ ------------------- ----------------------
SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT
--------- ----------- ------- -------- -------- ----------
<S> <C> <C> <C> <C> <C> <C>
Shares Sold 564,602 $ 5,378,480 29,055 $282,806 114,335 $1,085,955
Dividends
Reinvested 93,189 880,449 3,251 30,724 15,529 145,808
--------- ----------- ------- -------- -------- ----------
657,791 6,258,929 32,306 313,530 129,864 1,231,763
Shares Redeemed (913,933) (8,525,965) (10,626) (99,472) (138,370) (1,292,336)
--------- ----------- ------- -------- -------- ----------
Net Increase
(Decrease) (256,142) $(2,267,036) 21,680 $214,058 (8,506) $ (60,573)
========= =========== ======= ======== ======== ==========
<CAPTION>
YEAR ENDED NOVEMBER 30, 1995
-------------------------------------------------------------------------
CLASS A CLASS B CLASS C
------------------------ ------------------- ----------------------
SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT
--------- ----------- ------- -------- -------- ----------
<S> <C> <C> <C> <C> <C> <C>
Shares Sold 1,351,821 $12,669,301 24,311 $232,218 136,346 $1,272,971
Dividends
Reinvested 66,831 637,786 1,809 17,211 9,435 89,440
--------- ----------- ------- -------- -------- ----------
1,418,652 13,307,087 26,120 249,429 145,781 1,362,411
Shares Redeemed (218,287) (2,080,755) (1,246) (11,898) (14,385) (137,571)
--------- ----------- ------- -------- -------- ----------
Net Increase 1,200,365 $11,226,332 24,874 $237,531 131,396 $1,224,840
========= =========== ======= ======== ======== ==========
</TABLE>
--
38
<PAGE> 41
NOTE 5 - FINANCIAL HIGHLIGHTS: Selected data for a share of Common Stock
outstanding throughout each period:
<TABLE>
<CAPTION>
COWEN INCOME + GROWTH FUND -- CLASS A
----------------------------------------------------------------------------------------
YEAR ENDED FOUR
NOVEMBER 30, MONTHS YEAR ENDED JULY 31,
----------------------- ENDED ---------------------------------------
1996 1995 11/30/94 1994 1993 1992
------- ------- -------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE,
Beginning of Period $ 13.19 $ 10.62 $ 11.06 $ 12.97 $ 12.85 $ 11.30
------- ------- -------- ------- ------- -------
INCOME FROM INVESTMENT OPERATIONS
Investment Income -- Net 0.48 0.51 0.19 0.52 0.48 0.46
Net Realized and Unrealized Gains
(Losses) on Investments 1.74 2.54 (0.50) (0.44) 0.68 1.57
------- ------- -------- ------- ------- -------
Net from Investment Operations 2.22 3.05 (0.31) 0.08 1.16 2.03
------- ------- -------- ------- ------- -------
LESS DISTRIBUTIONS:
Dividends from Net Investment
Income (0.52) (0.48) (0.13) (0.52) (0.49) (0.48)
Distributions from Net Realized
Gains on Investments (0.49) -- -- (1.47) (0.55) --
------- ------- -------- ------- ------- -------
Total Distributions (1.01) (0.48) (0.13) (1.99) (1.04) (0.48)
------- ------- -------- ------- ------- -------
NET ASSET VALUE,
End of Period $ 14.40 $ 13.19 $ 10.62 $ 11.06 $ 12.97 $ 12.85
======== ======== ======== ======== ======== ========
Total Return(5) 17.86% 29.50% (8.50%)(2) 0.28% 9.45% 18.49%
RATIOS/SUPPLEMENTARY DATA
Net Assets (000 omitted) $52,502 $49,298 $32,104 $34,722 $35,016 $32,956
Ratio of Expenses to Average
Net Assets 1.24% 1.31% 0.47%(3) 1.26% 1.33% 2.02%
Ratio of Investment Income -- Net
to Average Net Assets 3.56% 4.29% 1.65%(3) 4.32% 3.74% 3.84%
Decrease Reflected on Above Ratios
Due to Expense
Reimbursements/Waivers 0.15% 0.19% 0.07%(3) 0.04% -- --
Portfolio Turnover Rate 79% 72% 31% 76% 62% 73%
Average Commission Rate Paid(8) $ .0612
</TABLE>
--
39
<PAGE> 42
NOTE 5 -- (CONTINUED)
<TABLE>
<CAPTION>
COWEN INCOME + GROWTH FUND -- CLASS B
-------------------------------------------------------
YEAR ENDED NOVEMBER FOUR PERIOD FROM
30, MONTHS 5/17/94(4)
-------------------- ENDED THROUGH
1996 1995 11/30/94 7/31/94
------ ------ -------- -----------
<S> <C> <C> <C> <C>
NET ASSET VALUE,
Beginning of Period $13.14 $10.58 $11.04 $ 10.85(1)
------ ------ -------- -----------
INCOME FROM INVESTMENT OPERATIONS
Investment Income -- Net 0.37 0.42 0.16 0.09
Net Realized and Unrealized Gains
(Losses) on Investments 1.73 2.54 (0.50) 0.20
------ ------ -------- -----------
Net from Investment Operations 2.10 2.96 (0.34) 0.29
------ ------ -------- -----------
LESS DISTRIBUTIONS:
Dividends from Net Investment Income (0.44) (0.40) (0.12) (0.10)
Distributions from Net Realized Gains on
Investments (0.49) -- -- --
------ ------ -------- -----------
Total Distributions (0.93) (0.40) (0.12) (0.10)
------ ------ -------- -----------
NET ASSET VALUE,
End of Period $14.31 $13.14 $10.58 $ 11.04
======= ======= ============= ==============
Total Return(5) 16.89% 28.49% (9.33%)(2) 13.19%(2)
RATIOS/SUPPLEMENTARY DATA
Net Assets (000 omitted) $2.581 $1,453 $ 280 $ 56
Ratio of Expenses to Average Net Assets 2.04% 2.07% 0.75%(3) 0.57%(3)
Ratio of Investment Income -- Net to
Average Net Assets 2.76% 3.44% 1.31%(3) 0.45%(3)
Decrease Reflected on Above Ratios Due to
Expense Reimbursements/Waivers 0.15% 0.19% 0.07%(3) 0.04%(3)
Portfolio Turnover Rate 79% 72% 31% 76%
Average Commission Rate Paid(8) $.0612
</TABLE>
--
40
<PAGE> 43
NOTE 5 -- (CONTINUED)
<TABLE>
<CAPTION>
COWEN INCOME + GROWTH FUND -- CLASS C
---------------------------------------------------------
YEAR ENDED FOUR PERIOD FROM
NOVEMBER 30, MONTHS 5/19/94(4)
---------------------- ENDED THROUGH
1996 1995 11/30/94 7/31/94
------- ------- -------- -----------
<S> <C> <C> <C> <C>
NET ASSET VALUE,
Beginning of Period $ 13.23 $ 10.62 $11.06 $ 10.91(1)
------- ------- -------- -----------
INCOME FROM INVESTMENT OPERATIONS
Investment Income -- Net 0.58 0.52 0.20 0.10
Net Realized and Unrealized Gains
(Losses) on Investments 1.69 2.59 (0.50) 0.16
------- ------- -------- -----------
Net from Investment Operations 2.27 3.11 (0.30) 0.26
------- ------- -------- -----------
LESS DISTRIBUTIONS:
Dividends from Net Investment Income (0.56) (0.50) (0.14) (0.11)
Distributions from Net Realized Gains on
Investments (0.49) -- -- --
------- ------- -------- -----------
Total Distributions (1.05) (0.50) (0.14) (0.11)
------- ------- -------- -----------
NET ASSET VALUE,
End of Period $ 14.45 $ 13.23 $10.62 $ 11.06
======= ======= ============= ==============
Total Return(5) 18.25% 29.99% (8.37%)(2) 10.63%(2)
RATIOS/SUPPLEMENTARY DATA
Net Assets (000 omitted) $11,733 $19,309 $6,029 $ 4,988
Ratio of Expenses to Average Net Assets 0.90% 0.96% 0.40%(3) 0.28%(3)
Ratio of Investment Income -- Net to
Average Net Assets 3.90% 4.66% 1.68%(3) 1.13%(3)
Decrease Reflected on Above Ratios Due
to Expense Reimbursements/Waivers 0.16% 0.19% 0.07%(3) 0.05%(3)
Portfolio Turnover Rate 79% 72% 31% 76%
Average Commission Rate Paid(8) $ .0612
</TABLE>
--
41
<PAGE> 44
NOTE 5 -- (CONTINUED)
<TABLE>
<CAPTION>
COWEN OPPORTUNITY FUND -- CLASS A
-------------------------------------------------------------------
YEAR ENDED NOVEMBER 30,
-------------------------------------------------------------------
1996 1995 1994 1993 1992
------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C>
NET ASSET VALUE,
Beginning of Period $ 13.13 $ 12.98 $ 16.06 $ 14.92 $ 14.72
------- ------- ------- ------- -------
INCOME FROM INVESTMENT OPERATIONS:
Investment Income (Loss) -- Net(6) (0.07) (0.04) (0.09) (0.16) (0.20)
Net Realized and Unrealized Gains (Losses)
on Investments 3.86 0.97 1.22 3.79 2.22
------- ------- ------- ------- -------
Net from Investment Operations 3.79 0.93 1.13 3.63 2.02
------- ------- ------- ------- -------
LESS DISTRIBUTIONS:
Dividends from Net Investment Income -- -- -- -- --
Distributions from Net Realized Gains on
Investments (0.31) (0.78) (4.21) (2.49) (1.82)
------- ------- ------- ------- -------
Total Distributions (0.31) (0.78) (4.21) (2.49) (1.82)
------- ------- ------- ------- -------
NET ASSET VALUE,
End of Period $ 16.61 $ 13.13 $ 12.98 $ 16.06 $ 14.92
======= ======= ======= ======= =======
Total Return(5) 29.63% 7.91% 9.53% 29.48% 15.33%
RATIOS/SUPPLEMENTARY DATA
Net Assets (000 Omitted) $43,950 $38,724 $34,487 $19,147 $13,547
Ratio of Expenses to Average Net Assets 1.39% 1.43% 1.47% 1.63% 2.52%
Ratio of Investment Loss -- Net to Average
Net Assets (0.46%) (0.28%) (0.66%) (1.10%) (1.43%)
Decrease Reflected on Above Ratios Due to
Expense Reimbursements/Waivers 0.16% 0.22% 0.14% -- --
Portfolio Turnover Rate 182% 148% 152% 167% 145%
Average Commission Rate Paid(8) $ .0575
</TABLE>
--
42
<PAGE> 45
NOTE 5 -- (CONTINUED)
<TABLE>
<CAPTION>
COWEN OPPORTUNITY FUND -- CLASS B
-------------------------------------------
YEAR ENDED NOVEMBER PERIOD FROM
30, 5/17/94(4)
---------------------- THROUGH
1996 1995 11/30/94
------ ------ -----------
<S> <C> <C> <C>
NET ASSET VALUE,
Beginning of Period $12.93 $12.91 $ 12.18(1)
------ ------ -----------
INCOME FROM INVESTMENT OPERATIONS:
Investment Income (Loss) -- Net(6) (0.18) (0.14) (0.09)
Net Realized and Unrealized Gains (Losses) on Investments 3.79 0.94 0.82
------ ------ -----------
Net from Investment Operations 3.61 0.80 0.73
------ ------ -----------
LESS DISTRIBUTIONS:
Dividends from Net Investment Income -- -- --
Distributions from Net Realized Gains on Investments (0.31) (0.78) --
------ ------ -----------
Total Distributions (0.31) (0.78) --
------ ------ -----------
NET ASSET VALUE,
End of Period $16.23 $12.93 $ 12.91
======= ======= ==============
Total Return(5) 28.67% 6.97% 11.04%(2)
RATIOS/SUPPLEMENTARY DATA
Net Assets (000 Omitted) $8,794 $6,455 $ 2,207
Ratio of Expenses to Average Net Assets 2.17% 2.19% 1.32%(3)
Ratio of Investment Loss -- Net to Average Net Assets (1.24%) (1.06%) (0.83%)(3)
Decrease Reflected on Above Ratios Due to Expense
Reimbursements/Waivers 0.16% 0.22% 0.12%(3)
Portfolio Turnover Rate 182% 148% 152%
Average Commission Rate Paid(8) $.0575
</TABLE>
--
43
<PAGE> 46
NOTE 5 -- (CONTINUED)
<TABLE>
<CAPTION>
COWEN OPPORTUNITY FUND -- CLASS C
---------------------------------------------
PERIOD FROM
YEAR ENDED NOVEMBER 30, 5/9/94(4)
------------------------ THROUGH
1996 1995 11/30/94
------- ------- -----------
<S> <C> <C> <C>
NET ASSET VALUE,
Beginning of Period $ 13.20 $ 12.99 $ 12.36(1)
------- ------- -----------
INCOME FROM INVESTMENT OPERATIONS:
Investment Income (Loss) -- Net(6) (0.01) 0.01 (0.03)
Net Realized and Unrealized Gains (Losses) on Investments 3.89 0.98 0.66
------- ------- -----------
Net from Investment Operations 3.88 0.99 0.63
------- ------- -----------
LESS DISTRIBUTIONS:
Dividends from Net Investment Income -- -- --
Distributions from Net Realized Gains on Investments (0.31) (0.78) --
------- ------- -----------
Total Distributions (0.31) (0.78) --
------- ------- -----------
NET ASSET VALUE,
End of Period $ 16.77 $ 13.20 $ 12.99
======= ======= ==============
Total Return(5) 30.17% 8.40% 9.04%(2)
RATIOS/SUPPLEMENTARY DATA
Net Assets (000 Omitted) $40,369 $19,264 $ 8,151
Ratio of Expenses to Average Net Assets 1.01% 1.03% 0.75%(3)
Ratio of Investment Income (Loss) --
Net Assets (0.07%) 0.11% (0.26%)(3)
Decrease Reflected on Above Ratios Due to Expense
Reimbursements/Waivers 0.15% 0.22% 0.13%(3)
Portfolio Turnover Rate 182% 148% 152%
Average Commission Rate Paid(8) $ .0575
</TABLE>
--
44
<PAGE> 47
NOTE 5 -- (CONTINUED)
<TABLE>
<CAPTION>
COWEN GOVERNMENT
SECURITIES FUND -- CLASS A
--------------------------------------------------------
PERIOD FROM
1/20/93
YEAR ENDED (COMMENCEMENT
NOVEMBER 30, OF OPERATIONS)
---------------------------------- THROUGH
1996 1995 1994 11/30/93
------ ------ ------ --------------
<S> <C> <C> <C> <C>
NET ASSET VALUE,
Beginning of Period $ 9.83 $9.17 $10.11 $ 9.77
------ ------ ------ ------
INCOME FROM INVESTMENT OPERATIONS:
Investment Income -- Net 0.64 0.69 0.52 0.41
Net Realized and Unrealized Gains (Losses)
on Investments (0.24) 0.66 (0.84) 0.30
------ ------ ------ ------
Net from Investment Operations 0.40 1.35 (0.32) 0.71
------ ------ ------ ------
LESS DISTRIBUTIONS:
Dividends from Net Investment Income (0.64) (0.69) (0.56) (0.37)
Distributions from Net Realized Gains on
Investments -- -- (0.06) --
------ ------ ------ ------
Total Distributions (0.64) (0.69) (0.62) (0.37)
------ ------ ------ ------
NET ASSET VALUE,
End of Period $ 9.59 $9.83 $9.17 $10.11
======= ======= ======= ===========
Total Return(5) 4.34% 15.23% (3.24%) 8.49%(2)
RATIOS/SUPPLEMENTARY DATA
Net Assets (000 Omitted) $2,631 $3,945 $ 488 $ 547
Ratio of Expenses to Average Net Assets 0.34% 0.22% -- --
Ratio of Investment Income -- Net to
Average Net Assets 6.72% 7.08% 5.24% 5.06%(3)
Decrease Reflected on Above Ratios Due to:
Investment Management and Service Fees
Waived by Cowen 0.85% 0.85% 0.78% 0.75%(3)
Other Expenses Waived or Absorbed 2.72% 3.63% 11.85% 16.94%(3)
Portfolio Turnover Rate 107% 289% 210% 122%
</TABLE>
--
45
<PAGE> 48
NOTE 5 -- (CONTINUED)
<TABLE>
<CAPTION>
COWEN GOVERNMENT
SECURITIES FUND -- CLASS B
-------------------------------------
YEAR ENDED NOVEMBER PERIOD FROM
30, 7/15/94(4)
-------------------- THROUGH
1996(7) 1995 11/30/94
------ ------ -----------
<S> <C> <C> <C>
NET ASSET VALUE,
Beginning of Period $10.01 $9.28 $9.52(1)
------ ------ -----
INCOME FROM INVESTMENT OPERATIONS:
Investment Income -- Net 0.14 0.63 0.20
Net Realized and Unrealized Gains (Losses) on Investments 0.10 0.73 (0.24)
------ ------ -----
Net from Investment Operations 0.24 1.36 (0.04)
------ ------ -----
LESS DISTRIBUTIONS:
Dividends from Net Investment Income (0.14) (0.63) (0.20)
Distributions from Net Realized Gains on Investments -- -- --
------ ------ -----
Total Distributions (0.14) (0.63) (0.20)
------ ------ -----
NET ASSET VALUE,
End of Period -- (7) $10.01 $9.28
======= ======= ==============
Total Return(5) 2.37%(7) 15.09% (1.27%)(2)
RATIOS/SUPPLEMENTARY DATA
Net Assets (000 Omitted) -- $ 153 $ 60
Ratio of Expenses to Average Net Assets 0.16%(3) 0.75% 0.28%(3)
Ratio of Investment Income -- Net to Average Net Assets 1.24%(3) 6.62% 2.02%(3)
Decrease Reflected on Above Ratios Due to:
Investment Management, Service and Distribution Fees
Waived by Cowen 0.22%(3) 1.10% 0.30%(3)
Other Expenses Waived or Absorbed 0.60%(3) 5.29% 6.05%(3)
Portfolio Turnover Rate 107% 289% 210%
</TABLE>
--
46
<PAGE> 49
NOTE 5 -- (CONTINUED)
<TABLE>
<CAPTION>
COWEN GOVERNMENT
SECURITIES FUND -- CLASS C
--------------------------------------
YEAR ENDED NOVEMBER PERIOD FROM
30, 7/11/94(4)
------------------- THROUGH
1996 1995 11/30/94
------ ----- -----------
<S> <C> <C> <C>
NET ASSET VALUE,
Beginning of Period $9.94 $9.17 $9.45(1)
------ ----- -----
INCOME FROM INVESTMENT OPERATIONS:
Investment Income -- Net 0.65 0.70 0.22
Net Realized and Unrealized Gains (Losses) on Investments (0.23) 0.77 (0.28)
------ ----- -----
Net from Investment Operations 0.42 1.47 (0.06)
------ ----- -----
LESS DISTRIBUTIONS:
Dividends from Net Investment Income (0.65) (0.70) (0.22)
Distributions from Net Realized Gains on Investments -- -- --
------ ----- -----
Total Distributions (0.65) (0.70) (0.22)
------ ----- -----
NET ASSET VALUE,
End of Period $9.71 $9.94 $9.17
======= ======= ==============
Total Return(5) 4.48% 16.52% (1.57%)(2)
RATIOS/SUPPLEMENTARY DATA
Net Assets (000 Omitted) $ 93 $ 45 $ 13
Ratio of Expenses to Average Net Assets 0.36% 0.20% --
Ratio of Investment Income -- Net to Average Net Assets 6.75% 7.12% 2.42%(3)
Decrease Reflected on Above Ratios Due to:
Investment Management Fees Waived by Cowen 0.60% 0.60% 0.24%(3)
Other Expenses Waived or Absorbed 3.14% 5.14% 6.26%(3)
Portfolio Turnover Rate 107% 289% 210%
</TABLE>
--
47
<PAGE> 50
NOTE 5 -- (CONTINUED)
<TABLE>
<CAPTION>
COWEN INTERMEDIATE
FIXED INCOME FUND -- CLASS A
-----------------------------------------------------------
PERIOD FROM
1/20/93
YEAR ENDED (COMMENCEMENT
NOVEMBER 30, OF OPERATIONS)
------------------------------------ THROUGH
1996 1995 1994 11/30/93
------- ------- ------ ---------------
<S> <C> <C> <C> <C>
NET ASSET VALUE,
Beginning of Period $ 9.71 $ 9.12 $9.95 $ 9.77
------- ------- ------ ------
INCOME FROM INVESTMENT OPERATIONS:
Investment Income -- Net 0.63 0.67 0.51 0.40
Net Realized and Unrealized Gains (Losses)
on Investments (0.15) 0.59 (0.68) 0.14
------- ------- ------ ------
Net from Investment Operations 0.48 1.26 (0.17) 0.54
------- ------- ------ ------
LESS DISTRIBUTIONS:
Dividends from Net Investment Income (0.63) (0.67) (0.53) (0.36)
Distributions from Net Realized Gains on
Investments (0.09) -- (0.13) --
------- ------- ------ ------
Total Distributions (0.72) (0.67) (0.66) (0.36)
------- ------- ------ ------
NET ASSET VALUE,
End of Period $ 9.47 $ 9.71 $9.12 $ 9.95
======= ======= ======= ====================
Total Return(5) 5.21% 14.22% (1.77%) 6.50%(2)
RATIOS/SUPPLEMENTARY DATA
Net Assets (000 Omitted) $11,885 $14,667 $2,836 $ 1,167
Ratio of Expenses to Average Net Assets 0.59% 0.47% 0.12% --
Ratio of Investment Income -- Net to Average
Net Assets 6.61% 6.90% 5.41% 4.93%(3)
Decrease Reflected on Above Ratios Due to:
Investment Management and Service Fees
Waived by Cowen 0.50% 0.50% 0.63% 0.75%(3)
Other Expenses Waived or Absorbed 0.52% 0.86% 3.43% 4.45%(3)
Portfolio Turnover Rate 110% 264% 159% 143%
</TABLE>
--
48
<PAGE> 51
NOTE 5 -- (CONTINUED)
<TABLE>
<CAPTION>
COWEN INTERMEDIATE FIXED
INCOME FUND -- CLASS B
---------------------------------------
YEAR ENDED PERIOD FROM
NOVEMBER 30, 7/12/94(4)
-------------------- THROUGH
1996 1995 11/30/94
------ ------ -----------
<S> <C> <C> <C>
NET ASSET VALUE,
Beginning of Period $9.78 $9.17 $ 9.32(1)
------ ------ -----------
INCOME FROM INVESTMENT OPERATIONS:
Investment Income -- Net 0.61 0.65 0.20
Net Realized and Unrealized Gains (Losses) on Investments (0.15) 0.61 (0.15)
------ ------ -----------
Net from Investment Operations 0.46 1.26 0.05
------ ------ -----------
LESS DISTRIBUTIONS:
Dividends from Net Investment Income (0.61) (0.65) (0.20)
Distributions from Net Realized Gains on Investments (0.09) -- --
------ ------ -----------
Total Distributions (0.70) (0.65) (0.20)
------ ------ -----------
NET ASSET VALUE,
End of Period $9.54 $9.78 $ 9.17
======= ======= ==============
Total Return(5) 4.96% 14.12% 1.25%(2)
RATIOS/SUPPLEMENTARY DATA
Net Assets (000 Omitted) $ 769 $ 577 $ 313
Ratio of Expenses to Average Net Assets 0.85% 0.68% 0.19%(3)
Ratio of Investment Income -- Net to Average Net Assets 6.40% 6.79% 2.15%(3)
Decrease Reflected on Above Ratios Due to:
Investment Management, Service and Distribution Fees Waived
by Cowen 0.50% 0.50% 0.18%(3)
Other Expenses Waived or Absorbed 0.46% 1.25% 1.37%(3)
Portfolio Turnover Rate 110% 264% 159%
</TABLE>
--
49
<PAGE> 52
NOTE 5 -- (CONTINUED)
<TABLE>
<CAPTION>
COWEN INTERMEDIATE FIXED
INCOME FUND -- CLASS C
-----------------------------------------
YEAR ENDED PERIOD FROM
NOVEMBER 30, 7/11/94(4)
---------------------- THROUGH
1996 1995 11/30/94
------ -------- -----------
<S> <C> <C> <C>
NET ASSET VALUE,
Beginning of Period $9.68 $ 9.10 $ 9.34(1)
------ -------- -----------
INCOME FROM INVESTMENT OPERATIONS:
Investment Income -- Net 0.65 0.69 0.23
Net Realized and Unrealized Gains (Losses) on
Investments (0.15) 0.58 (0.24)
------ -------- -----------
Net from Investment Operations 0.50 1.27 (0.01)
------ -------- -----------
LESS DISTRIBUTIONS:
Dividends from Net Investment Income (0.65) (0.69) (0.23)
Distributions from Net Realized Gains on Investments (0.09) -- --
------ -------- -----------
Total Distributions (0.74) (0.69) (0.23)
------ -------- -----------
NET ASSET VALUE,
End of Period $9.44 $ 9.68 $ 9.10
======= ============= ==============
Total Return(5) 5.46% 14.41% (0.36%)(2)
RATIOS/SUPPLEMENTARY DATA
Net Assets (000 Omitted) $1,745 $1,872 $ 565
Ratio of Expenses to Average Net Assets 0.35% 0.20% --
Ratio of Investment Income -- Net to Average Net
Assets 6.87% 7.23% 1.98%(3)
Decrease Reflected on Above Ratios Due to:
Investment Management Fee Waived by Cowen 0.50% 0.50% 0.16%(3)
Other Expenses Waived or Absorbed 0.42% 0.97% 1.87%(3)
Portfolio Turnover Rate 110% 264% 159%
</TABLE>
- ---------------
(1) Based upon the Class A Net Asset Value on the day prior to commencement of
distribution
(2) Annualized
(3) Not Annualized
(4) Commencement of Distribution
(5) Exclusive of Sales Charges
(6) Based upon average shares outstanding
(7) For the period from December 1, 1995 to February 12, 1996, the day on which
all outstanding shares were presented for redemption.
(8) Disclosure required for years beginning after September 1, 1995.
--
50
<PAGE> 53
REPORT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS
Stockholders and Boards of Directors
Cowen Income + Growth Fund, Inc. and
Cowen Funds, Inc.
We have audited the accompanying statements of assets and liabilities,
including the statements of investments, of Cowen Income + Growth Fund, Inc. and
Cowen Funds, Inc. (comprising, respectively, Cowen Opportunity Fund, Cowen
Intermediate Fixed Income Fund and Cowen Government Securities Fund) as of
November 30, 1996, and the related statements of operations for the year then
ended, the statements of changes in net assets for each of the two years in the
period then ended and the financial highlights (see Note 5) for each of the
periods indicated therein. 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.
We conducted our audits in accordance with generally accepted auditing
standards. These standards require that we plan and perform the audits 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, 1996, by correspondence with the custodian and brokers. 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 Cowen
Income + Growth Fund, Inc. and each of the respective portfolios constituting
Cowen Funds, Inc. at November 30, 1996, the results of their operations for the
year then ended, the changes in their net assets for each of the two years in
the period then ended and the financial highlights for each of the indicated
periods, in conformity with generally accepted accounting principles.
/s/ ERNST & YOUNG LLP
New York, New York
January 3, 1997
--
51
<PAGE> 54
(This page intentionally left blank)
--
52
<PAGE> 55
COWEN FAMILY OF FUNDS
Financial Square
New York, NY 10005-3597
DIRECTORS
Joseph M. Cohen, Chairman
James H. Carey
Dr. Peter P. Gil
Dr. Martin J. Gruber
Burton J. Weiss
OFFICERS
Joseph M. Cohen, Chairman of the Board of Directors and Chief Executive Officer
David R. Sarns, President
William Church, Vice President and Senior Investment Officer
Creighton H. Peet, Vice President, Treasurer, Chief Financial Officer and Senior
Investment Officer
William Rechter, Senior Investment Officer(1)
Alan Koepplin, Investment Officer(2)
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
& DISTRIBUTOR & TRANSFER AGENT
Cowen & Company Investors Fiduciary Trust Co.
Financial Square P.O. Box 419111
New York, NY 10005 Kansas City, MO 64141
LEGAL COUNSEL INDEPENDENT AUDITORS
Willkie Farr & Gallagher Ernst & Young LLP
One Citicorp Center 787 Seventh Avenue
153 East 53rd Street New York, NY 10019
New York, NY 10022
</TABLE>
- ---------------
(1) Cowen Income + Growth and Cowen Opportunity
(2) Cowen Intermediate Fixed Income and Cowen Government Securities
(3) Cowen Income + Growth COW/ANN 11/96
