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<PAGE> PAGE 2
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SIGNATURE CREIGHTON H. PEET
TITLE TREASURER
Report of Independent Auditors
To the Shareholders and Board of Directors of Cowen Standby
Reserve Fund, Inc.
In planning and performing our audit of the financial statements
of Cowen Standby Reserve Fund, Inc. for the year ended September
30, 1997, 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, not to provide assurance on the internal control.
The management of Cowen Standby Reserve Fund, 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 to an 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 irregularities 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 the internal control would not necessarily
disclose all matters in the 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 internal control components does not reduce to a relatively
low level the risk that errors or irregularities 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 the internal
control and its operation, including controls for safeguarding
securities, that we consider to be material weaknesses as defined
above at September 30, 1997.
This report is intended solely for the information and use of the
board of directors and management of Cowen Standby Reserve Fund,
Inc. and the Securities and Exchange Commission.
ERNST & YOUNG LLP
New York, New York
October 31, 1997