<PAGE>
SEMI-ANNUAL REPORTS (Unaudited) MARCH 31, 1999
SG COWEN STANDBY RESERVE
FUND, INC.
AND
SG COWEN STANDBY TAX-EXEMPT
RESERVE FUND, INC.
<TABLE>
<S> <C>
[LOGO] [LOGO]
</TABLE>
<PAGE>
SG COWEN STANDBY RESERVE FUND, INC.
SG COWEN STANDBY TAX-EXEMPT RESERVE FUND, INC.
SEMI-ANNUAL FINANCIAL STATEMENTS
MARCH 31, 1999
(UNAUDITED)
<TABLE>
<S> <C>
Chairman's Letter ...................................... 1
Statements of Investments:
SG Cowen Standby Reserve Fund, Inc. .................. 3
SG Cowen Standby Tax-Exempt Reserve Fund, Inc. ....... 7
Statements of Assets and Liabilities ................... 20
Statements of Operations ............................... 21
Statements of Changes in Net Assets .................... 22
Notes to Financial Statements .......................... 23
</TABLE>
<PAGE>
CHAIRMAN'S LETTER MAY 7, 1999
DEAR SHAREHOLDER:
We are pleased to report that the SG Cowen Standby Reserve Fund and the SG
Cowen Standby Tax-Exempt Reserve Fund produced yields that were competitive with
their peer groups throughout the semi-annual period ended March 31, 1999. As of
that date, the annualized 7-day yields were 4.43% and 2.39%, respectively. In
comparison, the IBC Taxable First Tier Index and the IBC Tax-Free Fund Index,
which represent peer group averages, reflected 7-day returns of 4.22% and 2.45%,
respectively.
MARKET ACTIVITY
The Federal Reserve Board was very active in the beginning of the six-month
period, lowering the federal funds rate--the rate banks charge each other for
overnight loans--from 5.50% to 4.75%. As late as December, the prevailing
expectation was for continued interest rate reductions in the first quarter of
1999 to combat what was thought to be a slowing U.S. economy.
Instead, growth remained robust with U.S. GDP growth in the fourth quarter
reaching 6.1%. Housing activity remained strong, labor markets remained tight,
consumer confidence continued high and inflation remained under control. The
first quarter of 1999 was similarly strong, with GDP growth at 4.5%. In short,
the six-month period reflected a booming economy and no inflation. As a result,
the Fed has remained on the sidelines since November. The debate has now shifted
to whether the Fed will need to raise interest rates to slow down the economy.
INVESTMENT REVIEW
Recognizing that investors use money market funds for safety and liquidity, we
manage both funds in a very conservative manner. The SG Cowen Standby Reserve
Fund invests in high-rated categories of commercial paper, certificates of
deposit and floating rate notes. The SG Cowen Standby Tax-Exempt Reserve Fund
invests in top-rated tax-exempt and floating rate notes. We do not search for
higher returns by sacrificing quality.
We attempt to enhance returns by shortening and lengthening the funds'
maturities at opportune times. For instance, during the fall, the funds' average
maturity was often shorter than the index. We believed that after the Fed had
lowered interest rates three times, further reductions were unlikely. As it
became evident that the economy was stronger than expected, interest rates rose,
and having a shorter maturity allowed us to reinvest, attaining higher yields.
In the second half of the period, we extended the portfolios when interest rates
appeared to be peaking, locking in higher rates.
While both funds are managed according to expectations regarding interest
rates and Fed policy, the SG Cowen Standby Tax-Exempt Reserve Fund involves
additional factors such as the liquidity needs of investors. For instance, by
the end of March, we shortened the portfolio's average maturity in preparation
for cash outflows that occur during tax season. At March 31, 1999, the SG Cowen
Standby Tax-Exempt Reserve Fund's average maturity was 37 days, compared to 41
days for its index. On that date, the SG Cowen Standby Reserve Fund's average
maturity was 71 days, compared to 65 days for its index.
1
<PAGE>
LOOKING AHEAD
Despite the strong U.S. economy, we do not see significant signs of above
average inflation on the horizon. March payrolls increased by only 46,000 jobs,
compared to an average increase of 219,000 over the past six months. In addition
to weaker employment gains, wage gains are also slowing. Absent inflation, we
expect the Federal Reserve Board to continue their neutral bias. Another reason
not to raise rates is that the Fed also has to be concerned about not
jeopardizing fragile global economies. As a result, we will continue to manage
the portfolios with an emphasis on longer than average maturities unless market
conditions change, prompting us to re-evaluate and then alter the portfolio
accordingly.
As always, we appreciate your investment in the SG Cowen Standby Reserve
Funds. We look forward to serving your investment needs in the future.
Sincerely,
/s/ Joseph M. Cohen
Joseph M. Cohen
Chairman
2
<PAGE>
SG COWEN STANDBY RESERVE FUND, INC.
STATEMENT OF INVESTMENTS
MARCH 31, 1999
(UNAUDITED)
<TABLE>
<CAPTION>
PRINCIPAL DESCRIPTION OF ANNUALIZED VALUE
AMOUNT SECURITY YIELD ON
DATE
OF PURCHASE
<C> <S> <C> <C>
COMMERCIAL PAPER - 74.36%
Akzo Nobel, Inc.
$25,000,000 04-30-1999 5.22% $ 24,898,500
40,000,000 05-06-1999 5.15 39,806,722
American Express Co.
25,000,000 04-01-1999 4.89 25,000,000
AT & T Corp.
38,000,000 05-05-1999 4.92 37,827,016
Associates Corp. of North America
34,800,000 04-01-1999 5.09 34,800,000
Banc One Corp.
30,000,000 08-18-1999 5.01 29,439,367
BMW U.S. Capital Corp.
30,000,000 05-03-1999 4.92 29,872,267
BTR Dunlop Finance, Inc.
30,000,000 04-26-1999 4.93 29,900,000
30,000,000 05-21-1999 4.95 29,798,333
Bear Stearns Companies, Inc.
18,500,000 07-29-1999 5.02 18,202,798
Cargill Global Finance, Inc.
30,000,000 04-08-1999 5.11 29,971,067
DaimlerChrysler North American Holding Corp.
35,000,000 07-15-1999 4.92 34,516,125
Deere & Co.
40,000,000 04-01-1999 4.92 40,000,000
Deutsche Bank
49,000,000 04-06-1999 4.92 48,967,265
Ford Motor Credit Co.
30,000,000 05-25-1999 4.83 30,000,000
28,000,000 06-14-1999 4.89 28,000,000
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
3
<PAGE>
SG COWEN STANDBY RESERVE FUND, INC.
STATEMENT OF INVESTMENTS - (CONTINUED)
MARCH 31, 1999
(UNAUDITED)
<TABLE>
<CAPTION>
PRINCIPAL DESCRIPTION OF ANNUALIZED VALUE
AMOUNT SECURITY YIELD ON
DATE
OF PURCHASE
<C> <S> <C> <C>
General Electric Capital Corp.
$35,000,000 04-19-1999 4.94% $ 34,915,475
30,000,000 08-23-1999 5.00 30,000,000
General Motors Acceptance Corp.
25,000,000 04-14-1999 4.86 25,000,000
30,000,000 05-20-1999 4.87 30,000,000
Gillette Co.
50,000,000 04-01-1999 5.10 50,000,000
Goldman Sachs & Co.
16,000,000 05-12-1999 4.96 15,911,622
Household Finance Corp.
30,000,000 04-01-1999 4.95 30,000,000
30,000,000 04-05-1999 4.93 30,000,000
International Business Machines Corp.
26,000,000 04-06-1999 4.89 25,982,667
Johnson & Johnson
32,000,000 04-28-1999 4.88 31,885,760
Koch Industries
50,000,000 04-01-1999 5.09 50,000,000
Merrill Lynch & Co., Inc.
40,000,000 06-07-1999 5.05 39,638,200
JP Morgan & Co., Inc.
30,000,000 07-15-1999 5.01 29,578,250
Prudential Funding Corp.
32,000,000 04-07-1999 4.95 31,974,080
32,000,000 05-27-1999 4.90 31,763,058
Sears Roebuck Acceptance Corp.
34,000,000 04-15-1999 4.96 33,935,608
45,000,000 06-17-1999 4.98 45,000,000
Sigma Finance Corp.
28,000,000 05-19-1999 5.03 27,816,693
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
4
<PAGE>
SG COWEN STANDBY RESERVE FUND, INC.
STATEMENT OF INVESTMENTS - (CONTINUED)
MARCH 31, 1999
(UNAUDITED)
<TABLE>
<CAPTION>
PRINCIPAL DESCRIPTION OF ANNUALIZED VALUE
AMOUNT SECURITY YIELD ON
DATE
OF PURCHASE
<C> <S> <C> <C>
TransAmerica Finance Corp.
$20,000,000 05-21-1999 4.93% $ 19,867,222
Walt Disney Co.
40,000,000 06-17-1999 4.96 39,587,621
----------------
Total Commercial Paper
(Cost $1,163,855,716) $ 1,163,855,716
----------------
FLOATING RATE NOTES - 9.26%
Abbey National Treasury
30,000,000 06-15-1999 4.7738 (a) $ 29,993,221
American Express Centurion Bank
25,000,000 08-27-1999 4.8819 (a) 25,000,000
Bear Stearns Companies, Inc.
30,000,000 03-30-2000 4.9700 (b) 30,000,000
NationsBank Corp.
30,000,000 07-02-1999 4.9900 (b) 30,001,590
Norwest Corp.
30,000,000 09-20-1999 4.9500 (b) 30,000,000
----------------
Total Floating Rate Notes
(Cost $144,994,811) $ 144,994,811
----------------
MEDIUM TERM NOTES - 1.72%
International Business Machines Co.
27,000,000 06-04-1999 5.60 $ 26,995,060
----------------
Total Medium Term Notes
(Cost $26,995,060) $ 26,995,060
----------------
US GOVERNMENT AGENCY NOTES - 2.56%
Federal Home Loan Bank
40,000,000 03-03-2000 5.07 $ 40,000,000
----------------
Total US Government Agency Notes
(Cost $40,000,000) $ 40,000,000
----------------
YANKEE CERTIFICATES OF DEPOSIT - 11.88%
Credit Agricole Indosuez
14,000,000 04-16-1999 5.48 $ 14,000,731
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
5
<PAGE>
SG COWEN STANDBY RESERVE FUND, INC.
STATEMENT OF INVESTMENTS - (CONTINUED)
MARCH 31, 1999
(UNAUDITED)
<TABLE>
<CAPTION>
PRINCIPAL DESCRIPTION OF ANNUALIZED VALUE
AMOUNT SECURITY YIELD ON
DATE
OF PURCHASE
<C> <S> <C> <C>
National Bank of Canada
$40,000,000 03-23-2000 5.23% $ 40,000,000
Rabobank
40,000,000 07-30-1999 5.70 39,992,437
Toronto Dominion
30,000,000 06-17-1999 4.93 30,000,000
Union Bank of Switzerland
30,000,000 02-23-2000 5.105 29,990,912
32,000,000 02-29-2000 5.20 31,997,181
----------------
Total Yankee Certificates of Deposit
(Cost $185,981,261) $ 185,981,261
----------------
</TABLE>
<TABLE>
<C> <S> <C> <C> <C>
TOTAL INVESTMENTS
(Cost $1,561,826,848).................... 99.78% 1,561,826,848
Cash and receivables, less payables
(net).................................... 0.22% 3,414,972
------------ ----------------
Net Assets............................... 100.00% $ 1,565,241,820
------------ ----------------
------------ ----------------
</TABLE>
- -------------
Notes:
(a) - 1 Month Libor rate instruments reflect rate as of 03-31-1999
(b) - 3 Month Libor rate instruments reflect rate as of 03-31-1999
SEE NOTES TO FINANCIAL STATEMENTS
6
<PAGE>
SG COWEN STANDBY TAX-EXEMPT RESERVE FUND, INC.
STATEMENT OF INVESTMENTS
MARCH 31, 1999
(UNAUDITED)
<TABLE>
<CAPTION>
PRINCIPAL DESCRIPTION OF BOND ANNUALIZED VALUE
AMOUNT YIELD ON DATE
OF PURCHASE
<C> <S> <C> <C>
$ 300,000 Alabama Special Care Facility
Montgomery Hospital Floating Rate
Demand Note Series 1985
(7-Day Put, 7-Day Change)
04-01-2015 3.05%# $ 300,000
2,085,000 Alaska State Industrial Development Authority Lot
6
(7-Day Put, 7-Day Change)
07-01-2001 3.10# 2,085,000
2,000,000 Alaska State Housing Financing Corporation
Series C, Floating Rate Demand Note
(7-Day Put, 7-Day Change)
06-01-2026 3.05# 2,000,000
1,000,000 Allegheny County, PA Industrial Development
Authority
Pollution Control Revenue Bonds, Series C
(Daily Put, Daily Change)
07-01-2027 3.15# 1,000,000
2,500,000 Beaver County, PA Pollution Control Revenue Bonds
Duquesne Light Co. Project 1994
(Mandatory Put 04-13-1999)
10-01-2029 3.00 2,500,000
1,750,000 City of Belleville, IL Industrial Development
Revenue Refunding Bonds,
(Wetterau Inc. Project), Series 1991
(7-Day Put, 7-Day Change)
12-01-2008 3.15# 1,750,000
600,000 Bexar County, TX Housing Finance Corporation Park
Hill Project Series 88-B
(7-Day Put, 7-Day Change)
06-01-2005 3.15# 600,000
1,100,000 Billings, MT Industrial Development Revenue
Adjustable Tender Notes
(7-Day Put, 7-Day Change)
12-01-2014 2.95# 1,100,000
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
7
<PAGE>
SG COWEN STANDBY TAX-EXEMPT RESERVE FUND, INC.
STATEMENT OF INVESTMENTS - (CONTINUED)
MARCH 31, 1999
(UNAUDITED)
<TABLE>
<CAPTION>
PRINCIPAL DESCRIPTION OF BOND ANNUALIZED VALUE
AMOUNT YIELD ON DATE
OF PURCHASE
<C> <S> <C> <C>
$ 1,500,000 Birmingham, AL General Obligation Refunding Bonds
Series B
04-01-1999 3.60% $ 1,500,000
3,000,000 Central Lake County, IL General Obligation Water
Utility Improvement District
(Pre-refunded to 08-01-1999 @ 100)
02-01-2019 3.35 3,039,048
2,645,000 Chelan County, WA Public Utility District Number 1
Conservation Revenue Bonds, Chelan Hydro Series A
(7-Day Put, 7-Day Change)
06-01-2015 2.95# 2,645,000
2,000,000 Claiborne County, MS Pollution Control Revenue
Bonds
National Rural Electric/Southern Mississippi
Electric Power Association, Series 1985G-2
(Mandatory Put 06-24-1999)
12-01-2015 3.20 2,000,000
800,000 Clarksville, TN Public Building Authority
Pooled Financial Series
(7-Day Put, 7-Day Change)
12-01-2000 2.90# 800,000
2,000,000 Connecticut Health and Education Facilities
Revenue Notes, Yale University Series S
(Mandatory Put 04-07-1999)
07-01-2027 2.60 2,000,000
2,400,000 Converse County, WY Pollution Control Revenue
Bonds
Pacific Corporation Project 88
(Mandatory Put 04-05-1999)
01-01-2014 2.70 2,400,000
2,100,000 Cornell Township, MI Economic Development
Corporation
Industrial Development Revenue Bonds, Series 1990
(Mandatory Put 07-21-1999)
03-01-2015 3.10 2,100,000
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
8
<PAGE>
SG COWEN STANDBY TAX-EXEMPT RESERVE FUND, INC.
STATEMENT OF INVESTMENTS - (CONTINUED)
MARCH 31, 1999
(UNAUDITED)
<TABLE>
<CAPTION>
PRINCIPAL DESCRIPTION OF BOND ANNUALIZED VALUE
AMOUNT YIELD ON DATE
OF PURCHASE
<C> <S> <C> <C>
$ 800,000 DeKalb Private Hospital Authority, Georgia,
(Egleston Children's Hospital at Emory University,
Inc. Project) Revenue Anticipation Certificates
Series 1994A
(7-Day Put, 7-Day Change)
03-01-2024 2.90%# $ 800,000
2,000,000 Delaware State Economic Development Authority
Industrial Development Revenue Bonds Delmarva
Power & Light Co Gas Facilities Project C
(7-Day Put, 7-Day Change)
10-01-2028 3.20# 2,000,000
3,200,000 Delaware Valley, PA Regional Finance Authority
Local Government Revenue Bonds Series A
(7-Day Put, 7-Day Change)
12-01-2017 2.95# 3,200,000
1,000,000 District of Columbia, Revenue Bonds,
The American University Issue, Series 1985A
(7-Day Put, 7-Day Change)
10-01-2015 3.00# 1,000,000
1,095,000 District of Columbia, Revenue Bonds,
The American University Issue, Series 1986A
(7-Day Put, 7-Day Change)
12-01-2015 3.00# 1,095,000
1,230,000 Florida Housing Finance Agency-Reference
Multi-Family Housing EEE Carlton Project
(7-Day Put, 7-Day Change)
12-01-2008 3.00# 1,230,000
1,000,000 Gillette, WY Campbell County Pollution Control
Revenue Bonds, Pacificorp Project
(Mandatory Put 05-03-1999)
01-01-2018 2.65 1,000,000
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
9
<PAGE>
SG COWEN STANDBY TAX-EXEMPT RESERVE FUND, INC.
STATEMENT OF INVESTMENTS - (CONTINUED)
MARCH 31, 1999
(UNAUDITED)
<TABLE>
<CAPTION>
PRINCIPAL DESCRIPTION OF BOND ANNUALIZED VALUE
AMOUNT YIELD ON DATE
OF PURCHASE
<C> <S> <C> <C>
$ 1,000,000 Gillette, WY Campbell County Pollution Control
Revenue Bonds, Pacificorp Project
(Mandatory Put 06-01-1999)
01-01-2018 2.75% $ 1,000,000
1,000,000 Greensboro, NC General Obligation Note
Public Improvements-Sewer Project, Series B
(7-Day Put, 7-Day Change)
04-01-2007 2.95# 1,000,000
3,500,000 Gwinnett County, GA Hospital Revenue Bonds
Hospital System Project B
(7-Day Put, 7-Day Change)
09-01-2027 3.075# 3,500,000
3,000,000 Harris County, TX Health Facilities Development
Corp. Revenue Bonds Series Children's B2
(7-Day Put, 7-Day Change)
10-01-2019 3.05# 3,000,000
2,000,000 Harris County, TX Industrial Development Authority
BayTank Houston, Inc. Project
(7-Day Put, 7-Day Change)
02-01-2020 3.00# 2,000,000
1,200,000 Hartford, CT General Obligation Bonds, Public
School Improvements
11-15-1999 3.05 1,221,604
1,000,000 Hillsborough County, FL Aviation Authority Revenue
Bonds, Tampa International Airport Project Series
B
(Pre-refunded to 10-01-1999 @ 102)
10-01-2019 3.365 1,027,385
2,000,000 Honolulu, HI City and County Tax-Exempt Commercial
Paper
04-08-1999 2.85 2,000,000
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
10
<PAGE>
SG COWEN STANDBY TAX-EXEMPT RESERVE FUND, INC.
STATEMENT OF INVESTMENTS - (CONTINUED)
MARCH 31, 1999
(UNAUDITED)
<TABLE>
<CAPTION>
PRINCIPAL DESCRIPTION OF BOND ANNUALIZED VALUE
AMOUNT YIELD ON DATE
OF PURCHASE
<C> <S> <C> <C>
$ 400,000 Illinois St. Health Facility Authority Hospital
Revenue Bonds, Decatur Memorial Hospital Project A
(7-Day Put, 7-Day Change)
11-15-2024 3.075%# $ 400,000
1,000,000 Illinois State Sales Tax Revenue Bonds, Series K
(Pre-refunded to 06-15-1999 @ 102)
06-15-2019 3.00 1,028,004
1,000,000 Illinois State Sales Tax Revenue Bonds, Series Y
06-15-1999 2.95 1,004,184
2,000,000 Indian River County, FL Hospital District Revenue
Bonds Sunhealth Network Project 1990
(Mandatory Put 05-03-1999)
10-01-2024 2.70 2,000,000
3,000,000 Indiana Municipal Power Agency, Power Supply
System Revenue Bonds, Series A
(7-Day Put, 7-Day Change)
01-01-2018 2.95# 3,000,000
4,000,000 Intermountain Power Agency of Utah, Electric Light
and Power Improvements, Power Supply Revenue Bonds
Series 1985-E
(Mandatory Put 05-07-1999)
07-18-2019 2.65 4,000,000
3,000,000 Jefferson County, KY Pollution Control Revenue
Bonds Louisville Gas and Electric Co. Project A
(Mandatory Put 06-16-1999)
09-01-2017 2.80 3,000,000
5,000,000 Jefferson Parish, LA Hospital Service District
#001 Hospital Revenue Bonds, Jefferson Medical
Center
(7-Day Put, 7-Day Change)
01-01-2026 3.00# 5,000,000
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
11
<PAGE>
SG COWEN STANDBY TAX-EXEMPT RESERVE FUND, INC.
STATEMENT OF INVESTMENTS - (CONTINUED)
MARCH 31, 1999
(UNAUDITED)
<TABLE>
<CAPTION>
PRINCIPAL DESCRIPTION OF BOND ANNUALIZED VALUE
AMOUNT YIELD ON DATE
OF PURCHASE
<C> <S> <C> <C>
$ 2,185,000 Jordan, UT School District General Obligation
Refunding Bonds, School Improvements
06-15-1999 3.65% $ 2,186,512
3,000,000 King County, WA Sewer System Revenue Notes Series
A, Commercial Paper
05-13-1999 2.80 3,000,000
2,700,000 La Cygne, KS Environmental Improvement Revenue
Notes, Kansas City Power and Light Co. Project
(7-Day Put, 7-Day Change)
03-01-2015 3.15# 2,700,000
4,000,000 Lincoln County, WY Pollution Control Revenue Bonds
Pacificorp Project
(Mandatory Put 05-03-1999)
01-01-2016 2.70 4,000,000
3,200,000 Long Island, NY Power Authority, New York Electric
Systems Revenue Bonds,
Sub-Series 3
06-16-1999 2.70 3,200,000
3,000,000 Long Island, NY Power Authority, New York Electric
Systems Revenue Bonds,
Sub-Series 6
(Daily Put, Daily Change)
05-01-2033 3.00# 3,000,000
900,000 Louisiana Public Facilities Authority, Hospital
Revenue CP Program
(7-Day Put, 7-Day Change)
12-01-2000 3.00# 900,000
900,000 Louisiana Public Facilities Authority Revenue
Bonds-Sister of Charity Project Series E
(7-Day Put, 7-Day Change)
07-01-2023 3.075# 900,000
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
12
<PAGE>
SG COWEN STANDBY TAX-EXEMPT RESERVE FUND, INC.
STATEMENT OF INVESTMENTS - (CONTINUED)
MARCH 31, 1999
(UNAUDITED)
<TABLE>
<CAPTION>
PRINCIPAL DESCRIPTION OF BOND ANNUALIZED VALUE
AMOUNT YIELD ON DATE
OF PURCHASE
<C> <S> <C> <C>
$ 4,000,000 Louisiana Public Facilities Authority
Multi Family Housing Revenue Bonds,
(Willis Knighton Medical Center Project)
Series 1988
(7-Day Put, 7-Day Change)
09-01-2023 3.10%# $ 4,000,000
1,200,000 Lynchburgh, VA Industrial Development
Authority Hospital Revenue Bonds,
(VHA Mid-Atlantic States, Inc. Capital Asset
Financing Project), Series 1985D
(7-Day Put, 7-Day Change)
12-01-2025 3.15# 1,200,000
2,500,000 Maricopa County, AZ Pollution Control Revenue
Bonds Palo Verde Project Series G
(Mandatory Put 04-12-1999)
12-01-2009 3.85 2,500,000
4,200,000 Maryland State Health and Higher Education
Facilities Authority Revenue Notes
(7-Day Put, 7-Day Change)
04-01-2035 3.05# 4,200,000
650,000 Mason County, KY Pollution Control Revenue Bonds
Kentucky Power-National Rural Electric Project B-1
(7-Day Put, 7-Day Change)
10-15-2014 3.05# 650,000
1,000,000 Massachusetts State General Obligation Series D
(Pre-refunded to 10-01-1999 @ 102)
10-01-2009 3.00 1,039,397
115,000 Michigan State Hospital Finance
Authority Revenue Bonds, Hospital Equipment Loan
Program
(7-Day Put, 7-Day Change)
06-01-2001 2.90# 115,000
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
13
<PAGE>
SG COWEN STANDBY TAX-EXEMPT RESERVE FUND, INC.
STATEMENT OF INVESTMENTS - (CONTINUED)
MARCH 31, 1999
(UNAUDITED)
<TABLE>
<CAPTION>
PRINCIPAL DESCRIPTION OF BOND ANNUALIZED VALUE
AMOUNT YIELD ON DATE
OF PURCHASE
<C> <S> <C> <C>
$ 1,100,000 Michigan State Hospital Finance Authority
Revenue Bonds, Hospital Equipment Loan Program
(7-Day Put, 7-Day Change)
12-01-2023 3.15%# $ 1,100,000
1,000,000 Missouri State Environmental Improvement and
Energy Research Authority, Pollution Control
Revenue Bonds Union Electric Project Series A
10-01-1999 3.45 1,016,354
600,000 Missouri State Environmental Improvement and
Energy Research Authority, Pollution Control
Revenue Bonds National Rural Utilities Project
(7-Day Put, 7-Day Change)
12-15-2003 3.05# 600,000
3,000,000 Moffat County, CO Pollution Control Revenue Bonds
Colorado-Ute Electric Authority Project
(7-Day Put, 7-Day Change)
07-01-2010 3.05# 3,000,000
1,000,000 Montgomery County, PA Higher Education Authority
United Hospital District Revenue Bonds
(Pre-refunded to 11-01-1999 @ 100)
11-01-2013 3.00 1,025,831
4,665,000 Montgomery, AL Special Care Facilities Authority
Alabama VHA Series G
(7-Day Put, 7-Day Change)
12-01-2030 3.15# 4,665,000
2,000,000 Municipal Electric Authority of Georgia, Revenue
Bonds Project One, Series 1994 D
(7-Day Put, 7-Day Change)
01-01-2022 3.05# 2,000,000
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
14
<PAGE>
SG COWEN STANDBY TAX-EXEMPT RESERVE FUND, INC.
STATEMENT OF INVESTMENTS - (CONTINUED)
MARCH 31, 1999
(UNAUDITED)
<TABLE>
<CAPTION>
PRINCIPAL DESCRIPTION OF BOND ANNUALIZED VALUE
AMOUNT YIELD ON DATE
OF PURCHASE
<C> <S> <C> <C>
$ 3,000,000 Nassau County, NY Bond Anticipation Notes, Series
A
08-17-1999 3.04% $ 3,006,545
2,000,000 New Hampshire Higher Education Facility Authority,
Veterans Housing Authority Revenue Bonds Series E
(7-Day Put, 7-Day Change)
12-01-2025 3.15# 2,000,000
1,000,000 New Jersey State Educational Facilities Authority
Revenue Bonds, Union City College Project B
(Pre-refunded to 07-01-1999 @ 102)
07-01-2009 3.20 1,029,744
350,000 New Mexico State Hospital Equipment Revenue Bonds
(7-Day Put, 7-Day Change)
05-01-2009 3.00# 350,000
3,000,000 North Carolina Educational Facilities Finance
Agency Revenue Bonds, Elon College Project
(7-Day Put, 7-Day Change)
01-01-2021 2.90# 3,000,000
2,400,000 Ohio State Water Development Authority Pollution
Control Revenue Bonds, State Match Series
06-01-1999 3.60 2,403,891
2,400,000 Orange County, FL Health Facilities Authority
Revenue Bonds, Pooled Hospital Loan Program,
Series 1985
(Mandatory Put 06-16-1999)
12-01-2025 3.00 2,400,000
2,000,000 Otero County, CO Industrial Development Authority
Citizens Utilities Refunding Bonds
(Mandatory Put 05-12-1999)
08-01-2020 2.70 2,000,000
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
15
<PAGE>
SG COWEN STANDBY TAX-EXEMPT RESERVE FUND, INC.
STATEMENT OF INVESTMENTS - (CONTINUED)
MARCH 31, 1999
(UNAUDITED)
<TABLE>
<CAPTION>
PRINCIPAL DESCRIPTION OF BOND ANNUALIZED VALUE
AMOUNT YIELD ON DATE
OF PURCHASE
<C> <S> <C> <C>
$ 1,085,000 Pendleton County, KY Multi-County Leasing Program
Revenue Bonds
(Mandatory Put 05-07-1999)
03-01-2019 2.75% $ 1,085,000
2,300,000 Peninsula Ports, VA Port Authority Revenue Bonds
Dominion Coal Terminal Project A
(Mandatory Put 06-01-1999)
07-01-2016 2.70 2,300,000
1,400,000 Pennsylvania State Higher Educational Facilities
Authority Revenue Bonds, Thomas Jefferson
University Project A
(Pre-refunded to 08-15-1999 @ 100)
08-15-1999 3.42 1,412,112
1,000,000 Person County, NC Industrial Facilities and
Pollution Control Finance Authority
Revenue-Carolina Power and Light Project Series A
(7-day Put, 7-day Change)
11-01-2019 3.10# 1,000,000
1,000,000 Port Townsend, WA Industrial Development Authority
Port Townsend Paper Corp. Project A
(7-day Put, 7-day Change)
03-01-2009 3.00# 1,000,000
1,305,000 Portland, OR General Obligation Revenue Bonds
Series B
06-01-1999 3.63 1,305,779
1,000,000 Regents of the University of Michigan, Tax-Exempt
Commercial Paper Notes, Series A
05-12-1999 2.70 1,000,000
1,850,000 Reno, NV General Obligation Bonds
(Pre-refunded to 04-01-1999 @ 102)
04-01-2002 3.20 1,887,000
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
16
<PAGE>
SG COWEN STANDBY TAX-EXEMPT RESERVE FUND, INC.
STATEMENT OF INVESTMENTS - (CONTINUED)
MARCH 31, 1999
(UNAUDITED)
<TABLE>
<CAPTION>
PRINCIPAL DESCRIPTION OF BOND ANNUALIZED VALUE
AMOUNT YIELD ON DATE
OF PURCHASE
<C> <S> <C> <C>
$ 2,000,000 Rhode Island State General Obligation Notes Series
B
(Pre-refunded to 10-15-1999 @ 102)
10-15-2001 3.051% $ 2,077,848
3,000,000 Rockport, IN Pollution Control Revenue Notes
Indiana-Michigan Power Company-Project B
(7-Day Put, 7-Day Change)
06-01-2025 3.00# 3,000,000
1,000,000 Saint Claire County, AL, Industrial Development
Revenue Bonds (National Cement Company, Inc.
Project)
(7-Day Put, 7-Day Change)
03-01-2005 3.10# 1,000,000
1,600,000 Seattle, WA Municipal Light & Power Revenue Bonds
(7-Day Put, 7-Day Change)
11-01-2018 3.05# 1,600,000
500,000 Seattle, WA Water System Revenue Bonds
(7-Day Put, 7-Day Change)
09-01-2025 3.05# 500,000
1,900,000 Port of Seattle, Washington, General Obligation
Bonds
(7-Day Put, 7-Day Change)
01-01-2005 3.05# 1,900,000
3,440,000 Port of Seattle, Washington, General Obligation
Bonds Series A
04-06-1999 2.70 3,440,000
1,000,000 City of Sheridan, AR Industrial Development
Revenue Bonds, (H.H. Robertson Co. Project),
Series 1988A
(7-Day Put, 7-Day Change)
08-01-2014 3.15# 1,000,000
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
17
<PAGE>
SG COWEN STANDBY TAX-EXEMPT RESERVE FUND, INC.
STATEMENT OF INVESTMENTS - (CONTINUED)
MARCH 31, 1999
(UNAUDITED)
<TABLE>
<CAPTION>
PRINCIPAL DESCRIPTION OF BOND ANNUALIZED VALUE
AMOUNT YIELD ON DATE
OF PURCHASE
<C> <S> <C> <C>
$ 3,740,000 Sunshine State, FL Government Finance Commission
Revenue Bonds, Series 1986
(Mandatory Put 04-05-1999)
07-01-2016 2.65% $ 3,740,000
1,705,000 Tarrant County, TX Housing Finance Corporation
Revenue Bonds, Multi-Family Housing-SF Apartments
(7-Day Put, 7-Day Change)
11-01-2017 3.05# 1,705,000
650,000 Texas Higher Education Authority, Inc. Series B
(7-Day Put, 7-Day Change)
12-01-2025 3.00# 650,000
1,500,000 University of Delaware Housing and Dining System
Revenue Bonds, School Improvements
11-01-1999 3.15 1,532,193
1,000,000 University of Medicine and Dentistry of New Jersey
Series C, College Improvements
(Pre-refunded to 12-01-1999 @ 102)
12-01-2001 3.13 1,044,834
1,200,000 University of North Carolina School of Medicine
and Ambulatory Care Clinic Revenue Bonds
(7-Day Put, 7-Day Change)
07-01-2012 3.05# 1,200,000
900,000 Wake County, NC Industrial Facilities Pollution
Control Revenue Bonds, Carolina Power & Light
Project A
(Mandatory Put 04-07-1999)
06-15-2014 2.90 900,000
3,270,000 Washington State Housing Finance Commission
Multi-Family Mortgage Revenue Refunding Bonds B
(7-Day Put, 7-Day Change)
10-01-2020 2.95# 3,270,000
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
18
<PAGE>
SG COWEN STANDBY TAX-EXEMPT RESERVE FUND, INC.
STATEMENT OF INVESTMENTS - (CONTINUED)
MARCH 31, 1999
(UNAUDITED)
<TABLE>
<CAPTION>
PRINCIPAL DESCRIPTION OF BOND ANNUALIZED VALUE
AMOUNT YIELD ON DATE
OF PURCHASE
<C> <S> <C> <C>
$ 1,000,000 Washington State General Obligation Revenue Bonds
(Pre-refunded to 05-01-1999 @ 100)
05-01-2006 3.36% $ 1,003,144
2,700,000 West Orange, FL Memorial Hospital Tax District
Revenue Bonds, Health Hospital and Nursing Home
Improvements Series A-1
(Mandatory Put 04-26-1999)
02-01-2022 2.60 2,700,000
3,500,000 Wisconsin Health & Educational Facilities
Authority
Revenue ACES, Health Care Project A
(7-Day Put, 7-Day Change)
01-01-2027 3.075# 3,500,000
1,325,000 Wisconsin State General Obligation Bonds Series
97-B
04-01-1999 2.80 1,325,000
2,546,000 Wisconsin State Transportation Revenue Notes
Series 1997-A
08-13-1999 3.05 2,546,000
-------------
</TABLE>
<TABLE>
<C> <S> <C> <C> <C>
TOTAL INVESTMENTS
(Cost $186,137,409)...................... 98.61% 186,137,409
Cash and receivables, less payables
(net).................................... 1.39% 2,627,508
------- -------------
Net Assets............................... 100.00% $188,764,917
------- -------------
------- -------------
</TABLE>
- -------------
Note: # - Variable Rate Instruments Reflect Rate As Of 3-31-1999
93.9% of the investment values above are supported by Letters of Credit,
guarantees, or other credit enhancements.
SEE NOTES TO FINANCIAL STATEMENTS
19
<PAGE>
STATEMENTS OF ASSETS AND LIABILITIES
MARCH 31, 1999
(UNAUDITED)
<TABLE>
<CAPTION>
SG COWEN STANDBY
SG COWEN STANDBY TAX-EXEMPT
RESERVE FUND, RESERVE FUND,
INC. INC.
<S> <C> <C>
ASSETS
Investments in securities,
at value - Note A (1) $1,561,826,848 $186,137,409
Cash 1,749,808 1,803,180
Interest receivable 5,278,402 1,090,381
Prepaid expenses 85,099 35,584
----------------- -----------------
TOTAL ASSETS 1,568,940,157 189,066,554
----------------- -----------------
LIABILITIES
Due to investment manager -
Note B 714,373 69,551
Accrued expenses 494,469 68,793
Dividends payable 2,489,495 163,293
----------------- -----------------
TOTAL LIABILITIES 3,698,337 301,637
----------------- -----------------
NET ASSETS $1,565,241,820 $188,764,917
----------------- -----------------
----------------- -----------------
Represented By:
Paid-in capital $1,566,992,582 $188,783,459
Accumulated net realized
loss on investments (1,750,762) (18,542)
----------------- -----------------
NET ASSETS AT VALUE,
applicable to 1,566,992,582
outstanding shares of $.01
par value Common Stock for
SRF and 188,783,459
outstanding shares of $.001
par value Common Stock for
STE (2,000,000,000 and
1,000,000,000 shares
authorized for SRF and STE,
respectively) $1,565,241,820 $188,764,917
----------------- -----------------
----------------- -----------------
Offering and redemption price
per share $ 1.00 $ 1.00
----------------- -----------------
----------------- -----------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
20
<PAGE>
STATEMENTS OF OPERATIONS
SIX MONTHS ENDED MARCH 31, 1999
(UNAUDITED)
<TABLE>
<CAPTION>
SG COWEN STANDBY
SG COWEN STANDBY TAX-EXEMPT
RESERVE FUND, INC. RESERVE FUND, INC.
<S> <C> <C>
INVESTMENT INCOME
Interest income $40,936,151 $3,184,517
------------------- ----------
EXPENSES
Investment management fee -
Note B 3,914,361 517,472
Shareholder servicing costs
and custodian fee 608,269 60,543
Federal and State
registration fees 74,830 22,538
Professional fees 28,717 23,414
Directors' fees and expenses
- Note B 12,465 12,465
Prospectus and shareholders'
reports 67,136 21,638
Miscellaneous 37,018 5,440
------------------- ----------
Total Expenses 4,742,796 663,510
Less: Investment
management fee
waived - Note B - 103,494
------------------- ----------
Net Expenses 4,742,796 560,016
------------------- ----------
Investment Income - net 36,193,355 2,624,501
Net realized (loss) on
investments (36,936) -
------------------- ----------
Net Increase in Net Assets
Resulting from Operations $36,156,419 $2,624,501
------------------- ----------
------------------- ----------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
21
<PAGE>
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
SG COWEN STANDBY
SG COWEN STANDBY TAX-EXEMPT
RESERVE FUND, INC. RESERVE FUND, INC.
--------------------------------- -----------------------------
SIX MONTHS SIX MONTHS
ENDED YEAR ENDED YEAR
MARCH 31, ENDED MARCH 31, ENDED
1999 SEPTEMBER 30, 1999 SEPTEMBER 30,
(UNAUDITED) 1998 (UNAUDITED) 1998
<S> <C> <C> <C> <C>
OPERATIONS
Investment income - net $ 36,193,355 $ 72,957,433 $ 2,624,501 $ 6,044,314
Net realized (loss) on investments (36,936) (18,949) - -
--------------- --------------- ------------- -------------
Net increase in net assets resulting
from operations 36,156,419 72,938,484 2,624,501 6,044,314
DIVIDENDS TO
SHAREHOLDERS FROM
Investment income - net (36,193,355) (72,957,433) (2,624,501) (6,044,314)
COMMON STOCK
TRANSACTIONS
(NET) - NOTE C 89,639,793 138,191,127 (29,299,273) 30,851,116
--------------- --------------- ------------- -------------
Total increase in net assets 89,602,857 138,172,178 (29,299,273) 30,851,116
NET ASSETS
Beginning of period 1,475,638,963 1,337,466,785 218,064,190 187,213,074
--------------- --------------- ------------- -------------
End of period $1,565,241,820 $1,475,638,963 $188,764,917 $218,064,190
--------------- --------------- ------------- -------------
--------------- --------------- ------------- -------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
22
<PAGE>
SG COWEN STANDBY RESERVE FUND, INC. AND
SG COWEN STANDBY TAX-EXEMPT RESERVE FUND, INC.
NOTES TO FINANCIAL STATEMENTS
(UNAUDITED)
NOTE A - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
GENERAL. SG Cowen Standby Reserve Fund, Inc. (SRF) and SG Cowen Standby
Tax-Exempt Reserve Fund, Inc. (STE) are each separately registered under the
Investment Company Act of 1940, as amended ("Act"), as diversified, open-end
management companies. Until July 1, 1998, Cowen & Co. ("Cowen") served as
investment manager and principal underwriter to the above-referenced Funds (the
"Funds"). On July 1, 1998, Cowen's business was combined with Societe Generale
Securities Corporation ("SGSC"), a subsidiary of Societe Generale ("SG"), to
form SG Cowen Securities Corporation ("SG Cowen"). SG, a leading international
commercial and investment bank established in 1864, has a global network of
offices in over 80 countries. Since July 1, 1998, SG Cowen has served as the new
investment manager to the Funds, with the existing investment management
personnel of SG Cowen continuing to provide investment management services to
the Funds, and Funds Distributor, Inc. has served as the new principal
underwriter to the Funds. SG Cowen is also a selected dealer of the Funds'
shares. Additionally, effective as of July 1, 1998, the names of the Funds were
changed, as indicated above, in order to reflect the Funds' new management by SG
Cowen. It is each Fund's policy to maintain a continuous net asset value per
share of $1.00; each Fund has adopted certain investment portfolio valuation and
dividend and distribution policies to enable it to do so.
The Funds' financial statements are prepared in accordance with generally
accepted accounting principles which may require the use of management estimates
and assumptions. Actual results could differ from those estimates.
(1) PORTFOLIO VALUATION: Each Fund values its investments at amortized cost,
which has been determined by the Board of Directors of each Fund to represent
the fair value of each Fund's investments.
(2) 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. Interest income,
including amortization of premiums and discounts, is recorded on the accrual
basis. Cost of investments represents amortized cost.
(3) DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS: It is the policy of each Fund
to declare dividends from net investment income on each business day; such
dividends are paid through the business day preceding the next to last Friday of
the month except for December. In December, income dividends will be paid
through the last business day of the month. Distributions from net realized
capital gains, if any, are declared and paid annually after the end of the
fiscal year in which earned. To the extent that net realized capital gains can
be offset by capital loss carryovers, it is the policy of each Fund not to
distribute such gains.
(4) 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 March 31, 1999, the aggregate cost of investments for Federal income tax
purposes was substantially the same as the cost for financial reporting purposes
(see the Statements of Investments).
At September 30, 1998, SRF and STE had unused capital loss carryovers of
approximately $1,714,000 and $19,000, respectively, available for Federal income
tax purposes to be applied against future securities profits, if any. If not
applied, the carryovers expire in fiscal 2001 and 2006, and in fiscal 2000, 2001
and 2002, respectively.
23
<PAGE>
SG COWEN STANDBY RESERVE FUND, INC. AND
SG COWEN STANDBY TAX-EXEMPT RESERVE FUND, INC.
NOTES TO FINANCIAL STATEMENTS - (CONTINUED)
(UNAUDITED)
NOTE B - INVESTMENT MANAGEMENT FEE AND OTHER TRANSACTIONS WITH AFFILIATES: Fees
paid by each Fund to SG Cowen pursuant to the provisions of Investment
Management Agreements are payable monthly, based on an annual rate of .50 of 1%,
of the average daily value of that Fund's net assets. Effective as of June 1,
1998, the fee for SRF was reduced to .475% on net assets between $1.5 Billion
and $2.5 Billion, and .45% on net assets above $2.5 Billion. The Agreements
further provide that if the aggregate expenses of either Fund, exclusive of
interest, taxes, brokerage and, with the prior written consent of the necessary
state securities commissions, extraordinary expenses, exceed the expense
limitation of any state having jurisdiction over that Fund, SG Cowen will
reimburse the Fund for such excess. There was no expense reimbursement required
for either Fund for the period ended March 31, 1999, however, SG Cowen has
waived $103,494 of its investment management fee from STE during such year.
Directors who are not officers, directors, partners, stockholders or employees
of SG Cowen or its affiliates receive from each Fund a fee of $3,000 per annum
plus $500 per meeting attended and $375 for each audit committee attended and
reimbursement for travel and out-of-pocket expenses.
NOTE C - COMMON STOCK TRANSACTIONS: At March 31, 1999, there were 2 billion
shares of $.01 par value Common Stock for SRF and 1 billion shares of $.001 par
value Common Stock of STE authorized.
Transactions in Common Stock were all at $1.00 per share and are summarized as
follows (000's omitted):
<TABLE>
<CAPTION>
SRF
-----------------------------------------------------
SIX MONTHS YEAR
ENDED ENDED
MARCH 31, 1999 SEPTEMBER 30, 1998
<S> <C> <C>
Shares sold $ 3,759,404 $ 6,868,735
Dividends reinvested 36,329 69,445
----------- -----------
3,795,733 6,938,180
Shares redeemed 3,706,093 (6,799,989)
----------- -----------
Net increase $ 89,640 $ 138,191
----------- -----------
----------- -----------
</TABLE>
<TABLE>
<CAPTION>
STE
-----------------------------------------------------
SIX MONTHS YEAR
ENDED ENDED
MARCH 31, 1999 SEPTEMBER 30, 1998
<S> <C> <C>
Shares sold $ 365,338 $ 858,302
Dividends reinvested 2,717 5,793
---------- ----------
368,055 864,095
Shares redeemed (397,354) (833,244)
---------- ----------
Net increase (decrease) $ (29,299) $ 30,851
---------- ----------
---------- ----------
</TABLE>
24
<PAGE>
SG COWEN STANDBY RESERVE FUND, INC. AND
SG COWEN STANDBY TAX-EXEMPT RESERVE FUND, INC.
NOTES TO FINANCIAL STATEMENTS - (CONTINUED)
(UNAUDITED)
NOTE D - FINANCIAL HIGHLIGHTS: Selected data for a share of Common Stock
outstanding throughout each period:
<TABLE>
<CAPTION>
SRF
-------------------------------------------------------------------
SIX MONTHS
ENDED YEAR ENDED SEPTEMBER 30,
MARCH 31, -------------------------------------------------------------------
1999 1998 1997 1996 1995 1994
----------- ----------- ----------- ----------- ----------- -----------
(UNAUDITED)
<S> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE
Beginning of Period $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
INCOME FROM INVESTMENT OPERATIONS
Net Investment Income 0.02 0.05 0.05 0.05 0.05 0.03
LESS DISTRIBUTIONS
Dividends from Net Investment Income (0.02) (0.05) (0.05) (0.05) (0.05) (0.03)
----------- ----------- ----------- ----------- ----------- -----------
NET ASSET VALUE
End of Period $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
----------- ----------- ----------- ----------- ----------- -----------
----------- ----------- ----------- ----------- ----------- -----------
Total Return 4.65%(1) 5.13% 4.98% 4.97% 5.23% 3.14%
RATIOS / SUPPLEMENTAL DATA
Net Assets (000 omitted) $1,565,242 $ 1,475,639 $ 1,337,467 $ 1,101,944 $ 890,888 $ 692,609
Ratio of Expenses to Average Net
Assets 0.60%(1) 0.65% 0.69% 0.71% 0.71% 0.64%
Ratio of Net Investment Income to
Average Net Assets 4.61%(1) 5.03% 4.89% 4.89% 5.13% 3.11%
</TABLE>
25
<PAGE>
SG COWEN STANDBY RESERVE FUND, INC. AND
SG COWEN STANDBY TAX-EXEMPT RESERVE FUND, INC.
NOTES TO FINANCIAL STATEMENTS - (CONTINUED)
(UNAUDITED)
NOTE D - (continued)
<TABLE>
<CAPTION>
STE
--------------------------------------------------------------
SIX MONTHS
ENDED YEAR ENDED SEPTEMBER 30,
MARCH 31, --------------------------------------------------------------
1999 1998 1997 1996 1995 1994
------------ ---------- ---------- ---------- ---------- ----------
(UNAUDITED)
<S> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE
Beginning of Period $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
INCOME FROM INVESTMENT OPERATIONS
Net Investment Income 0.01 0.03 0.03 0.03 0.03 0.02
LESS DISTRIBUTIONS
Dividends from Net Investment Income (0.01) (0.03) (0.03) (0.03) (0.03) (0.02)
------------ ---------- ---------- ---------- ---------- ----------
NET ASSET VALUE
End of Period $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
------------ ---------- ---------- ---------- ---------- ----------
------------ ---------- ---------- ---------- ---------- ----------
Total Return 2.55%(1) 3.10% 3.11% 3.07% 3.19% 2.11%
RATIOS / SUPPLEMENTAL DATA
Net Assets (000 omitted) $ 188,765 $ 218,064 $ 187,213 $ 171,055 $ 122,536 $ 120,704
Ratio of Expenses to Average Net
Assets* 0.54%(1) 0.54% 0.56% 0.59% 0.61% 0.58%
Ratio of Net Investment Income to
Average Net Assets* 2.54%(1) 3.06% 3.07% 3.01% 3.14% 2.03%
INVESTMENT ADVISORY FEES WAIVED
Amount $ 103,494 $ 197,675 $ 181,100 $ 156,993 $ 124,784 $ 130,483
Ratio to Average Net Assets 0.10%(1) 0.10% 0.10% 0.10% 0.10% 0.10%
</TABLE>
* NET OF WAIVER
- -------------
(1) ANNUALIZED
NOTE E - ADDITIONAL INFORMATION - CHANGE IN INDEPENDENT AUDITOR:
On May 5, 1999, based upon the recommendation of the Audit Committees of the
Funds, the Boards of Directors determined not to retain Ernst & Young LLP as the
Funds' independent auditor and voted to appoint KPMG LLP. During the Funds' two
most recent fiscal years, Ernst & Young LLP audit reports contained no adverse
opinion or disclaimer of opinion; nor were the reports qualified or modified as
to
26
<PAGE>
SG COWEN STANDBY RESERVE FUND, INC. AND
SG COWEN STANDBY TAX-EXEMPT RESERVE FUND, INC.
NOTES TO FINANCIAL STATEMENTS - (CONTINUED)
(UNAUDITED)
uncertainty, audit scope, or accounting principles. Further, during this same
period there were no disagreements with Ernst & Young LLP on any matter of
accounting principles or practices, financial statement disclosure, or auditing
scope or procedure, which disagreements, if not resolved to the satisfaction of
Ernst & Young LLP, would have caused them to make reference to the subject
matter of such disagreements in connection with their audit reports. The Funds
have requested Ernst & Young LLP to provide a letter to the Securities and
Exchange Commission stating whether Ernst & Young LLP agrees with the foregoing
statements, and to provide the Funds with a copy of such letter. A copy of this
letter is available upon request by calling the Fund at 1-800-262-7116.
27
<PAGE>
SG COWEN STANDBY RESERVE FUND, INC.
AND
SG COWEN STANDBY TAX-EXEMPT RESERVE FUND, INC.
Financial Square
New York, NY 10005
DIRECTORS
<TABLE>
<S> <C>
JOSEPH M. COHEN, Chairman
JAMES H. CAREY DR. MARTIN J. GRUBER
DR. PETER P. GIL BURTON J. WEISS
</TABLE>
OFFICERS
JOSEPH M. COHEN, CHAIRMAN OF THE BOARD OF DIRECTORS AND CHIEF EXECUTIVE OFFICER
DAVID R. SARNS, PRESIDENT
CREIGHTON H. PEET, SENIOR INVESTMENT OFFICER, TREASURER AND CHIEF FINANCIAL
OFFICER
RODD M. BAXTER, SECRETARY
ALAN E. KOEPPLIN, INVESTMENT OFFICER
GORDON G. IFILL, ASSISTANT INVESTMENT OFFICER
IRWOOD SCHLACKMAN, CONTROLLER
<TABLE>
<S> <C>
INVESTMENT ADVISER CUSTODIAN
SG Cowen Securities Corporation Investors Fiduciary
Financial Square Trust Co.
New York, NY 10005 P.O. Box 419111
Kansas City, MO 64141
DISTRIBUTOR TRANSFER AGENT
Funds Distributor, Inc. DST, Inc.
60 State Street, Suite 1300 210 West 10th Street
Boston, MA 02109 Kansas City, MO 64105
LEGAL COUNSEL INDEPENDENT AUDITORS
Willkie Farr & Gallagher KPMG LLP
787 Seventh Avenue 757 Third Avenue
New York, NY 10019 New York, NY 10017
</TABLE>
CMB-RSRV-SEMI
