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<PAGE> PAGE 8
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<PAGE> PAGE 9
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<PAGE> PAGE 12
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<PAGE> PAGE 13
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<PAGE> PAGE 14
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<PAGE> PAGE 15
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<PAGE> PAGE 17
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025 D000402 0
025 D000403 0
025 D000404 0
025 D000405 0
025 D000406 0
025 D000407 0
025 D000408 0
028 A010400 0
028 A020400 0
028 A030400 0
028 A040400 0
028 B010400 0
028 B020400 0
028 B030400 0
028 B040400 0
028 C010400 0
028 C020400 0
028 C030400 0
028 C040400 0
028 D010400 0
028 D020400 0
028 D030400 0
028 D040400 0
028 E010400 0
028 E020400 0
028 E030400 0
028 E040400 0
028 F010400 0
028 F020400 0
028 F030400 0
028 F040400 0
028 G010400 0
028 G020400 0
028 G030400 0
028 G040400 0
028 H000400 0
030 A000400 0
030 B000400 0.00
030 C000400 0.00
031 A000400 0
031 B000400 0
032 000400 0
<PAGE> PAGE 22
033 000400 0
035 000400 0
036 B000400 0
038 000400 0
042 A000400 0
042 B000400 0
042 C000400 0
042 D000400 0
042 E000400 0
042 F000400 0
042 G000400 0
042 H000400 0
043 000400 0
044 000400 0
045 000400 N
048 000400 0.000
048 A010400 0
048 A020400 0.000
048 B010400 0
048 B020400 0.000
048 C010400 0
048 C020400 0.000
048 D010400 0
048 D020400 0.000
048 E010400 0
048 E020400 0.000
048 F010400 0
048 F020400 0.000
048 G010400 0
048 G020400 0.000
048 H010400 0
048 H020400 0.000
048 I010400 0
048 I020400 0.000
048 J010400 0
048 J020400 0.000
048 K010400 0
048 K020400 0.000
062 A000400 N
062 B000400 0.0
062 C000400 0.0
062 D000400 0.0
062 E000400 0.0
062 F000400 0.0
062 G000400 0.0
062 H000400 0.0
062 I000400 0.0
062 J000400 0.0
062 K000400 0.0
062 L000400 0.0
062 M000400 0.0
<PAGE> PAGE 23
062 N000400 0.0
062 O000400 0.0
062 P000400 0.0
062 Q000400 0.0
062 R000400 0.0
063 A000400 0
063 B000400 0.0
066 A000400 N
067 000400 N
068 A000400 N
068 B000400 N
069 000400 N
070 A010400 N
070 A020400 N
070 B010400 N
070 B020400 N
070 C010400 N
070 C020400 N
070 D010400 N
070 D020400 N
070 E010400 N
070 E020400 N
070 F010400 N
070 F020400 N
070 G010400 N
070 G020400 N
070 H010400 N
070 H020400 N
070 I010400 N
070 I020400 N
070 J010400 N
070 J020400 N
070 K010400 N
070 K020400 N
070 L010400 N
070 L020400 N
070 M010400 N
070 M020400 N
070 N010400 N
070 N020400 N
070 O010400 N
070 O020400 N
070 P010400 N
070 P020400 N
070 Q010400 N
070 Q020400 N
070 R010400 N
070 R020400 N
071 A000400 0
071 B000400 0
071 C000400 0
<PAGE> PAGE 24
071 D000400 0
072 A000400 6
072 B000400 0
072 C000400 0
072 D000400 0
072 E000400 0
072 F000400 0
072 G000400 0
072 H000400 0
072 I000400 0
072 J000400 0
072 K000400 0
072 L000400 0
072 M000400 0
072 N000400 0
072 O000400 0
072 P000400 0
072 Q000400 0
072 R000400 0
072 S000400 0
072 T000400 0
072 U000400 0
072 V000400 0
072 W000400 0
072 X000400 0
072 Y000400 0
072 Z000400 0
072AA000400 0
072BB000400 0
072CC010400 0
072CC020400 0
072DD010400 0
072DD020400 0
072EE000400 0
073 A010400 0.0000
073 A020400 0.0000
073 B000400 0.0000
073 C000400 0.0000
074 A000400 0
074 B000400 0
074 C000400 0
074 D000400 0
074 E000400 0
074 F000400 0
074 G000400 0
074 H000400 0
074 I000400 0
074 J000400 0
074 K000400 0
074 L000400 0
074 M000400 0
<PAGE> PAGE 25
074 N000400 0
074 O000400 0
074 P000400 0
074 Q000400 0
074 R010400 0
074 R020400 0
074 R030400 0
074 R040400 0
074 S000400 0
074 T000400 0
074 U010400 0
074 U020400 0
074 V010400 0.00
074 V020400 0.00
074 W000400 0.0000
074 X000400 0
074 Y000400 0
075 A000400 0
075 B000400 0
076 000400 0.00
035 001900 0
036 B001900 0
SIGNATURE CREIGHTON H. PEET
TITLE TREASURER
REPORT OF INDEPENDENT ACCOUNTANTS
Board of Directors of Cowen Income + Growth Fund, Inc.
Board of Directors of Cowen Funds, Inc.
Board of Directors of SG Cowen Series Funds, Inc.
SG Cowen Securities Corporation
We have examined the accompanying description of the multiple distribution
system of SG Cowen Securities Corporation (the "Advisor") for calculating
the
net asset value and dividends and distributions with respect to the
allocation of income and expenses to the three classes of shares of the SG
Cowen Group of Funds listed on Exhibit I (the "Funds"). Our examination
included procedures to obtain reasonable assurance about whether (1) the
accompanying description presents fairly, in all material respects, the
aspects of the Advisor's policies and procedures that may be relevant to the
Funds' internal control, (2) the internal control policies and procedures
included in the description were suitably designed to achieve the control
objectives specified in the description if those policies and procedures were
complied with satisfactorily, and the Funds' organization applied the
internal control policies and procedures contemplated in the design of the
Advisor's policies and procedures, and (3) such policies and procedures were
in existence as of November 30, 1998. The control objectives were specified
by the Advisor. Our examination was performed in accordance with standards
established by the American Institute of Certified Public Accountants and
included those procedures we considered necessary in the circumstances to
obtain a reasonable basis for rendering our opinion.
In our opinion, the accompanying description of the aforementioned multiple
distribution system presents fairly, in all material respects, the relevant
aspects of the Advisor's policies and procedures that had been placed in
operation as of November 30, 1998. Also, in our opinion, the policies and
procedures, as described, are suitably designed to provide reasonable
assurance that the specified control objectives would be achieved if the
described policies and procedures were complied with satisfactorily.
In addition to the procedures we considered necessary to render our
opinion as
expressed in the previous paragraph, we applied tests to specific policies
and procedures, listed in the attached description, to obtain evidence about
their effectiveness in meeting the specific control objectives described in
the attached description of the system, during the period from December 1,
1997 to November 30, 1998. The specific policies and procedures and the
nature, timing, extent, and resultsof the tests are listed in the attached
description. In our opinion, the policies and procedures that were tested,
as described in the attached description, were operating with sufficient
effectiveness to provide reasonable, but not absolute, assurance that the
specific control objectives specified in the attached description were
achieved during the period from December 1, 1997 to November 30, 1998
However, the scope of our engagement did not include tests to determine
whether specific control objectives not listed in the attached description
were achieved; accordingly, we express no opinion on the achievement of
control objectives not included in the attached description.
The description of policies and procedures at the Advisor is as of
November 30,
1998, and information about tests of operating effectiveness of specified
policies and procedures covers the period from December 1, 1997 to November
30, 1998. Any projection of such information to the future is subject
to the
risk that, because of change, the description may no longer portray
the system
in existence. The potential effectiveness of specific policies and
procedures at the Advisor is subject to inherent limitations and,
accordingly, errors or fraud may occur and not be detected. Furthermore,
the projection of any conclusions, based on our findings, to future periods
is subject to the risk that changes may alter the validity of such
conclusions.
This report is intended solely for the use by the Board of Directors of the
Funds and management of the Advisor, and the Securities and Exchange
Commission and is not intended to and should not be by anyone other them
these specified parties.
ERNST & YOUNG LLP
New York, New York
January 8, 1999
Report of Independent Auditors
To the Shareholders and Board of Directors of
SG Cowen Funds, Inc.
In planning and performing our audit of the financial statements of SG Cowen
Funds, Inc. (comprising, respectively, SG Cowen Opportunity Fund, SG Cowen
Intermediate Fixed Income Fund and SG Cowen Government Securities Fund) for
the year ended November 30, 1998, we considered its internal control
including control activities for safeguarding securities, in order to
determine our auditing procedures for the purpose of expressing our opinion
on the financial statements and to comply with the requirements of Form
N-SAR, and not to provide assurance on the internal control.
The management of SG Cowen Funds, Inc. is responsible for establishing and
maintaining internal control. In fulfilling this responsibility, estimates
and judgments by management are required to assess the expected benefits and
related costs of controls. Generally, controls that are relevant audit
pertain to the entity's objective of preparing financial statements for
external purposes that are fairly presented in conformity with generally
accepted accounting principles. Those controls include the safeguarding of
assets against unauthorized acquisition, use or disposition.
Because of inherent limitations in internal control, errors or fraud may
occur
and not be detected. Also, projection of any evaluation of internal control
to future periods is subject to the risk that it may become inadequate
because of changes in conditions or that the effectiveness of the design and
operation may deteriorate.
Our consideration of internal control would not necessarily disclose all
matters in internal control that might be material weaknesses under
standards
established by the American Institute of Certified Public Accountants. A
material weakness is a condition in which the design or operation of one or
more of the specific internal control components does not reduce to a
relatively low level the risk that errors or fraud in amounts that would be
material in relation to the financial statements being audited may occur and
not be detected within a timely period by employees in the normal course of
performing their assigned functions. However, we noted no matters involving
internal control and its operation, including controls for safeguarding
securities, that we consider to be material weaknesses as defined above at
November 30, 1998.
This report is intended solely for the information and use of the board of
directors and management of SG Cowen Funds, Inc. and the Securities and
Exchange Commission and is not intended to be and should not be used by
anyone other than these specified parties.
ERNST & YOUNG LLP
January 8, 1999to an
SG COWEN OPPORTUNITY FUND
TRANSACTIONS EFFECTED PURSUANT TO RULE 10f-3
QUARTER ENDED: 9-30-98
Name of Security:USEC Inc.
Registration under Securities Act of 1933?
10f-3(a)(1)(i)
Yes
Time of Acquisition 10f-3(a)(2)
- - - Date Acquired
- - - Date First Offered
Trade:7/22/98 Settle:7/28/98
7/'22/98
Reasonableness of Spread [lOf-3(b)]
- - - Offering Price Per Share
- - - Amount of Spread: Gross Spread
Selling Concession
- - - Spread (%)
$14.25
$.42
$.25
1.75%
Evidence of Reasonableness of Spread
(contemporaneous similar offering)
Name of Issue
- - - Date of Offering
- - - Spread
Electronics Boutique 7/27/98
4.0%
Issuer in Continuous Operation at Least Three Years?
[lOf-3(c)]
Yes
Amount Purchased by Fund [lOf-3(d)] - Total Shares
Offered Purchase Price per Share Total Shares
Purchased Total Purchase Price Percentage of
Offering Purchased Any Shares Purchased by Other
Funds in Family?
- - -
Percentage of Fund Assets Invested [lOf-3(e)]
100 million shares
$14.25
25,000 shares
$356,250
Less than 0.1%
No
Less than 1%
From Whom Purchased [10f-3(f)}
- - - Selling Dealers(s)
- - - Syndicate Manager(s)
Morgan Stanley
Morgan Stanley/Merrill Lynch
SG COWEN OPPORTVNI TY E\JND
TRANSACTIONS EFE1LCTED PURSUANT TO RUM 10f-3
QUARTER ENDED: 9/30/98
Name of Security: NorthEast Optic Network,Inc.
Registration under Securities Act of 1933?
10f-3(a)(1)(i)
Yes
Time of Acquisition 10f-3(a)(2)
- - - Date Acquired
- - - Date First Offered
Trade:7/30/98 Settle: 8/5/98
7/30/98
Reasonableness of Spread [lOf-3(b)]
- - - Offering Price Per Share
- - - Amount of Spread: Gross Spread
Selling Concession
- - - Spread (%)
$12
$.84
$.51
4.25%
Evidence of Reasonableness of Spread
(contemporaneous similar offering) - Name of Issue -
Date of Offering - Spread
Global Vacation Group
7/31/98
4.0%
Issuer in Continuous Operation at Least Three Years?
[lOf-3 (c)]
Yes
Amount Purchased by Fund [lOf-3 (d)] - Total Shares
Offered - Purchase Price per Share - Total Shares
Purchased - Total Purchase Price
Percentage of Offering Purchased
. .
- - - Any Shares Purchased by Other Funds in Familv?
Percentage of Fund Assets Invested
[lOf-3(e)] ~
From Whom Purchased [lOf-3(f)]
- - - Selling Dealers(s)
- - - Syndicate Manager(s)
4.5 million shares
$12
1,000 shares $12,000 Less than 0.1% No
Less than 1%
.CS First Boston
CS First Boston
