SUPPLEMENT TO THE PROSPECTUS AND
STATEMENT OF ADDITIONAL INFORMATION
of
SG COWEN STANDBY RESERVE FUND, INC.
(Formerly, "Cowen Standby Reserve Fund, Inc." / Each
dated February 1, 1998)
SG COWEN STANDBY TAX-EXEMPT RESERVE FUND, INC.
(Formerly, "Cowen Standby Tax-Exempt Reserve Fund,
Inc." / Each dated February 1, 1998)
__________________________________
Until July 1, 1998, Cowen & Co. ("Cowen") served as
investment manager and principal underwriter to the
above-referenced Funds (the "Funds"). On July 1, 1998,
Cowen's business was combined with Societe Generale
Securities Corporation ("SGSC"), a subsidiary of
Societe Generale ("SG"), to form SG Cowen Securities
Corporation ("SG Cowen") (the "Acquisition"). SG, a
leading international commercial and investment bank
established in 1864, has a global network of offices in
over 80 countries. Since July 1, 1998, SG Cowen has
served as the new investment manager to the Funds, with
the existing investment management personnel of Cowen
continuing to provide investment management services to
the Funds, and Funds Distributors, Inc. has served as
the new principal underwriter to the Funds. SG Cowen
is also a selected dealer of the Funds' shares.
Additionally, effective as of July 1, 1998, the names
of the Funds have been changed, as indicated above, in
order to reflect the Funds' new management by SG Cowen.
Each of the management agreements between Cowen and the
Funds provided for automatic termination in the event
of its "assignment," which included consummation of the
Acquisition. Accordingly, new management agreements
between SG Cowen and each Fund (the "New Agreements"),
identical in material respects with the prior
management agreements, were approved by the Board of
Directors of each Fund (the "Boards") at a meeting held
on May 21, 1998. The Boards also approved the
selection of Funds Distributors, Inc. as principal
underwriter to the Funds. On June 16, 1998, Cowen and
SGSC were granted an exemptive order by the Securities
and Exchange Commission (the "Order") pursuant to which
the New Agreements were permitted to be implemented
without shareholder approval beginning on July 1, 1998
and continuing, for a period of up to 150 days, through
the date on which each of the New Agreements are
approved or disapproved by the respective shareholders
of the Funds. Under the terms of the Order, SG Cowen
is allowed to receive advisory fees pursuant to the New
Agreements, provided that such fees are held in escrow
pending shareholder approval of the New Agreements. A
special meeting of shareholders to consider approval of
the New Agreements is intended to be held on or about
September 17, 1998. There can be no assurance that the
New Agreements will be approved by the Funds'
respective shareholders. If a New Agreement is not
approved, the escrowed fees accrued thereunder will be
returned to the applicable Fund and the Fund's Board of
Directors will consider other appropriate action.
SG Cowen Standby Reserve Fund (the "Standby Fund")
Only. On May 21, 1998, the Board of Directors of the
Standby Fund approved a proposal to effectively lower
the investment management fee rate payable by the Fund.
As such, effective as of June 1, 1998, the investment
management fee rate payable by the Standby Fund was
changed from an annual rate of .50% of the daily net
assets of the Fund to an annual rate of .50% of assets
not in excess $1.5 billion, .475% of assets over $1.5
billion but not in excess of $2.5 billion, and .45% of
assets over $2.5 billion.
July 1, 1998
