<PAGE> 1
- --------------------------------------------------------------------------------
ANNUAL REPORTS SEPTEMBER 30, 1995
COWEN STANDBY RESERVE
FUND, INC.
AND
COWEN STANDBY TAX - EXEMPT
RESERVE FUND, INC.
(LOGO)COWEN & COMPANY
- --------------------------------------------------------------------------------
<PAGE> 2
COWEN STANDBY RESERVE FUND, INC.
COWEN STANDBY TAX-EXEMPT RESERVE FUND, INC.
ANNUAL FINANCIAL STATEMENTS
SEPTEMBER 30, 1995
Chairman's Letter............................................................. 1
Statements of Investments:
Cowen Standby Reserve Fund, Inc. ........................................... 2
Cowen Standby Tax-Exempt Reserve Fund, Inc. ................................ 5
Statements of Assets and Liabilities..........................................17
Statements of Operations......................................................18
Statements of Changes in Net Assets...........................................19
Notes to Combined Financial Statements........................................20
Report of Ernst & Young LLP, Independent Auditors.............................24
<PAGE> 3
CHAIRMAN'S LETTER NOVEMBER 20, 1995
Dear Shareholder:
We are pleased to report that the high portfolio quality and flexibility
shared by the Cowen Standby Reserve Fund and the Cowen Standby Tax-Exempt
Reserve Fund led to competitive yields throughout the twelve months ended
September 30, 1995. On September 29, 1995, the last business day of the period,
the annualized 7-day yields provided by your Funds were 5.09% and 3.44%,
respectively.
As indicated in our last report, the Federal Reserve Board raised interest
rates twice during the first six months of the Funds' fiscal year. Then, in
July, the Fed reversed course on its monetary policy and reduced short-term
interest rates by 1/4 of 1%, citing evidence of a reduction in inflationary
pressures. Contrary to popular expectation, there have been no additional cuts
since July. At the same time, short-term interest rates came down dramatically
by July as evidenced by 1-year Treasury bill rates, which declined by
approximately 180 basis points (100 basis points = one percentage point) and
then moved basically sideways through the end of the fiscal year.
Looking ahead, important fundamental factors lead us to believe that
short-term interest rates will continue to trend still lower, whether it be by
their own momentum or by Federal Reserve Board action. First, current fiscal
policy is restrictive to anything but modest economic growth. Global economic
weakness and an overextended consumer further support this outlook for domestic
growth. Second, the rate of inflation is actually declining, and the recent
stabilization of the U.S. dollar in relation to foreign currencies has reduced
concerns that inflation will become a problem in the near term. In short, the
Federal Reserve Board has achieved the soft economic landing that it sought.
Thus, the likelihood of further short-term interest rate reductions remains
high, with only the timing uncertain.
Based on our anticipation of continued rate reductions, we lengthened the
Cowen Standby Reserve Fund's maturity virtually throughout the last six months
from 28 days on March 31, 1995 to 64 days at the end of September. Our strategy
is to lock in higher yields for our shareholders, before rates decline any
further. We will continue to respond quickly to opportunities that represent
value.
The same general strategy was carried out for the Cowen Standby Tax-Exempt
Reserve Fund, which on March 31, 1995 had a maturity of 43 days, reached a high
of 79 days, and ended on September 30 with a maturity of 61 days. Despite some
scarcity of supply in the municipal marketplace, the Fund has maintained its
high standards of quality. Throughout the annual period, the Fund's portfolio
was composed 100% of investment grade municipal obligations and remained broadly
diversified. As of September 30, the Fund held securities in 37 different
states.
In accordance with the requirements of the Internal Revenue Code, this is to
inform you that 100% of the dividends distributed by the Cowen Standby
Tax-Exempt Reserve Fund, Inc. during its fiscal year ended September 30, 1995
were exempt from Federal personal income taxes. After December 31, 1995 you will
receive a breakdown of income by state during the year.
We appreciate your continued investment in the Cowen Standby Reserve Funds. We
look forward to serving your investment needs with competitive yields,
liquidity, and a high degree of safety well into the future.
Sincerely,
/s/ Joseph M. Cohen
-------------------
Joseph M. Cohen
Chairman
--
1
<PAGE> 4
COWEN STANDBY RESERVE FUND, INC.
STATEMENT OF INVESTMENTS
SEPTEMBER 30, 1995
<TABLE>
<CAPTION>
ANNUALIZED
YIELD ON
DATE
PRINCIPAL DESCRIPTION OF OF
AMOUNT SECURITY PURCHASE VALUE
<S> <C> <C> <C>
COMMERCIAL PAPER - 72.28%
ABN-AMRO NA Finance Inc.
$15,000,000 10-16-1995 5.89 % $14,961,933
BMW U.S. Capital Corp.
15,000,000 10-10-1995 5.85 14,976,083
15,000,000 10-16-1995 5.89 14,961,667
Bausch & Lomb Inc.
19,500,000 10-06-1995 5.85 19,481,345
10,000,000 10-16-1995 5.83 9,974,578
Ciesco
20,000,000 11-09-1995 5.80 19,874,000
Copley Finance
20,000,000 10-02-1995 5.92 19,993,556
20,000,000 10-12-1995 5.92 19,961,333
Corporate Asset Funding Corp.
3,000,000 10-02-1995 6.59 2,998,917
25,000,000 10-13-1995 5.84 24,948,271
Credit Ansaft Bankverain
18,600,000 12-13-1995 5.81 18,383,982
Daimler-Benz Corp.
10,000,000 10-20-1995 5.84 9,968,222
Dresner US Finance
20,000,000 10-03-1995 5.84 19,990,433
16,800,000 10-03-1995 5.83 16,791,978
Fleet Funding Corp.
20,000,000 10-25-1995 5.88 19,920,000
Ford Motor Credit Co.
20,000,000 12-11-1995 5.80 19,774,400
Gillette Co.
25,000,000 10-02-1995 6.58 24,990,972
Hanson Finance U.K.
15,000,000 10-10-1995 5.85 14,976,208
10,000,000 10-19-1995 5.81 9,970,181
Merrill Lynch
27,000,000 10-02-1995 5.86 26,991,405
15,000,000 12-08-1995 5.79 14,838,138
</TABLE>
See notes to combined financial statements
--
2
<PAGE> 5
COWEN STANDBY RESERVE FUND, INC.
STATEMENT OF INVESTMENTS - (continued)
SEPTEMBER 30, 1995
<TABLE>
<CAPTION>
ANNUALIZED
YIELD ON
DATE
PRINCIPAL DESCRIPTION OF OF
AMOUNT SECURITY PURCHASE VALUE
<C> <S> <C> <C>
COMMERCIAL PAPER - (CONTINUED)
Morgan Stanley Group
$25,000,000 10-05-1995 5.82 % $ 24,980,104
NYNEX Corp.
25,000,000 10-16-1995 5.85 24,936,111
PHH Corporation
30,000,000 10-13-1995 5.84 29,937,925
Philip Morris Capital Corp.
22,000,000 11-03-1995 5.83 21,881,567
Renault Credit International
20,000,000 12-15-1995 5.83 19,760,600
Rockwell International
25,000,000 12-12-1995 5.79 24,718,645
Sharp Electronics
10,000,000 10-20-1995 5.88 9,968,056
10,000,000 12-22-1995 5.83 9,869,736
5,000,000 02-02-1996 5.83 4,902,431
Svenska Handelsbanken
15,000,000 11-08-1995 5.84 14,907,700
15,000,000 01-11-1996 5.83 14,757,950
Sweden, Kingdom of
20,000,000 12-22-1995 5.80 19,740,394
Three Rivers Funding Corp.
20,000,000 10-20-1995 5.89 19,935,778
Union Bank of Switzerland
30,000,000 10-02-1995 6.09 29,990,000
Vattentall Treasury AB
15,000,000 10-20-1995 5.86 14,952,500
-------------
Total Commercial Paper
(Cost $643,967,099) $643,967,099
-------------
EURO-DOLLAR DEPOSITS - 2.25%
ABN-AMRO
20,000,000 11-15-1995 5.72 20,000,253
-------------
Total Euro-Dollar Deposits
(Cost $20,000,253) $ 20,000,253
-------------
</TABLE>
See notes to combined financial statements
--
3
<PAGE> 6
COWEN STANDBY RESERVE FUND, INC.
STATEMENT OF INVESTMENTS - (continued)
SEPTEMBER 30, 1995
<TABLE>
<CAPTION>
ANNUALIZED
YIELD ON
DATE
PRINCIPAL DESCRIPTION OF OF
AMOUNT SECURITY PURCHASE VALUE
<C> <S> <C> <C>
FLOATING RATE NOTES - 8.42%
Bankers Trust
$10,000,000 04-26-1996 6.37 %(a) $ 10,000,000
Bear Stearns
20,000,000 08-28-1996 5.92109 (c) 20,000,000
J.P. Morgan Delaware Inc.
25,000,000 04-08-1996 6.28 (a) 24,992,453
PNC Bank of Pittsburgh
20,000,000 03-14-1996 6.07 (b) 19,999,954
-------------
Total Floating Rate Notes
(Cost $74,992,407) $ 74,992,407
-------------
YANKEE CERTIFICATES OF DEPOSIT - 16.95%
Bank of Montreal
22,000,000 10-06-1995 5.75 $ 22,000,006
Banque National De Paris
20,000,000 08-19-1996 6.06 20,000,000
5,000,000 09-11-1996 6.05 5,000,000
Bayerische Vereinsbank
30,000,000 07-12-1996 5.90 30,000,000
Canadian Imperial Bank
20,000,000 11-06-1995 5.75 20,000,000
20,000,000 08-14-1996 6.06 20,000,000
Midland Bank N.Y.
20,000,000 09-18-1996 6.10 20,000,000
Societe Generale
14,000,000 08-12-1996 6.07 14,000,000
-------------
Total Yankee Certificates of Deposit
(Cost $151,000,006) $151,000,006
-------------
TOTAL INVESTMENTS
(Cost $889,959,765)............. 99.90% $889,959,765
Cash and Receivables,
Less Payables (net)............. 0.10% 927,803
------ -------------
Net Assets...................... 100.00% $890,887,568
====== =============
</TABLE>
Notes:
(a) -- Variable rate instruments reflect rate as of 09/30/1995
(b) -- Libor rate instrument reflects rate as of 09/14/1995
(c) -- Libor rate instrument reflects rate as of 09/28/1995
See notes to combined financial statements
--
4
<PAGE> 7
COWEN STANDBY TAX-EXEMPT RESERVE FUND, INC.
STATEMENT OF INVESTMENTS
SEPTEMBER 30, 1995
<TABLE>
<CAPTION>
ANNUALIZED
YIELD ON
DATE
PRINCIPAL OF
AMOUNT DESCRIPTION OF BOND PURCHASE VALUE
<C> <S> <C> <C>
$1,800,000 Adams County, CO, Industrial Development
Authority
Revenue Notes--City View Park Project
(7-Day Put, 7-Day Change)
12-01-2015 4.35% # $1,800,000
600,000 Alabama Special Care Facility
Montgomery Hospital Floating Rate Demand
Note
Series 1985
(7-Day Put, 7-Day Change)
04-01-2015 4.25 # 600,000
2,295,000 Alaska State Industrial Development
Authority
Lot 6
(7-Day Put, 7-Day Change)
07-01-2001 4.70 # 2,295,000
1,000,000 Alaska State Housing Financing Corporation
Series C, Floating Rate Demand Note
(7-Day Put, 7-Day Change)
06-01-2026 4.35 # 1,000,000
50,000 Allegheny County, PA, Hospital Development
Authority Health Revenue Bonds,
(Presbyterian University Health System,
Inc.) Series 1990B
(Daily Put, 7-Day Change)
03-01-2020 4.40 # 50,000
1,000,000 Allegheny County, PA, Hospital Development
Authority Health Revenue Bonds,
(Harmarville Rehabilitation Center Project)
Series 1994
(7-Day Put, 7-Day Change)
07-01-2007 4.50 # 1,000,000
2,000,000 Anchorage, AK, Hospital Revenue Bonds
(Sisters Providence Project)
(Pre-refunded to 10-01-1995 @ 102)
10-01-2005 4.30 2,040,278
</TABLE>
See notes to combined financial statements
--
5
<PAGE> 8
COWEN STANDBY TAX-EXEMPT RESERVE FUND, INC.
STATEMENT OF INVESTMENTS -- (continued)
SEPTEMBER 30, 1995
<TABLE>
<CAPTION>
ANNUALIZED
YIELD
ON
DATE
PRINCIPAL OF
AMOUNT DESCRIPTION OF BOND PURCHASE VALUE
<C> <S> <C> <C>
$1,200,000 Arizona Health Facilities Authority Revenue
Bonds
(7-Day Put, 7-Day Change)
10-01-2015 4.30% # $1,200,000
700,000 Arizona State Transportation Board
Highway Revenue Bonds
(Pre-refunded to 7-01-1996 @ 102)
07-01-2001 3.95 734,196
1,300,000 City of Asheville, NC, Certificates of
Participation, Series 1993A
(7-Day Put, 7-Day Change)
07-01-2003 4.30 # 1,300,000
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 4.50 # 1,750,000
1,000,000 Brazos River, TX, Pollution Control Revenue
Bonds
(Mandatory Put 11-09-1995)
10-01-1999 3.30 1,000,000
985,000 Bristol County, VA, Industrial Development
Authority Revenue Bonds, (Bristol Health Care
Center Inc. Project)
(7-Day Put, Monthly Change)
06-01-2010 3.95 # 985,000
3,000,000 Burke County, GA, Development Authority
Pollution Control Revenue Bonds--Oglethorpe
Project
Georgia Power Company
11-09-1995 3.45 3,000,000
500,000 Burke County, GA, Development Authority
Pollution Control Revenue Bonds--Vogtle
Project
Georgia Power Company
(Daily Put, Daily Change)
07-01-2004 4.75 # 500,000
</TABLE>
See notes to combined financial statements
--
6
<PAGE> 9
COWEN STANDBY TAX-EXEMPT RESERVE FUND, INC.
STATEMENT OF INVESTMENTS -- (continued)
SEPTEMBER 30, 1995
<TABLE>
<CAPTION>
ANNUALIZED
YIELD
ON
DATE
PRINCIPAL OF
AMOUNT DESCRIPTION OF BOND PURCHASE VALUE
<C> <S> <C> <C>
$1,000,000 Burlington County, KS, Pollution Control
Revenue Bonds
Kansas City Power and Light, Series B
(Mandatory Put 10-06-1995)
09-01-2015 3.45% $1,000,000
1,300,000 Burlington County, KS, Pollution Control
Revenue Bonds
Kansas City Power and Light, Series B
(Mandatory Put 11-06-1995)
09-01-2015 3.70 1,300,000
1,500,000 Burlington County, KS, Pollution Control
Revenue Bonds
Kansas City Power and Light, Series B
(Mandatory Put 10-11-1995)
10-01-2017 3.10 1,500,000
745,000 Chicago, IL, Park District General Obligation
Bond
(Pre-refunded to 01-01-1996 @ 100)
01-01-2000 4.50 755,499
1,100,000 Clark County, NV, Airport Improvement Revenue
Bond Series A-1
(7-Day Put, 7-Day Change)
07-01-2025 4.30 # 1,100,000
1,435,000 Clayton County, GA, Housing Finance Authority
Ten Oaks Apartments, Series F
(7-Day Put, 7-Day Change)
01-01-2021 4.30 # 1,435,000
400,000 Columbus City, IN, Economic Development
Refunding & Improvement Bonds (Interstate
Bakeries Corporation Project), Series 1985
(7-Day Put, 7-Day Change)
12-01-1995 4.30 # 400,000
1,000,000 Columbus, OH, General Obligation Bond
05-01-1996 3.60 1,019,359
</TABLE>
See notes to combined financial statements
--
7
<PAGE> 10
COWEN STANDBY TAX-EXEMPT RESERVE FUND, INC.
STATEMENT OF INVESTMENTS -- (continued)
SEPTEMBER 30, 1995
<TABLE>
<CAPTION>
ANNUALIZED
YIELD
ON
DATE
PRINCIPAL OF
AMOUNT DESCRIPTION OF BOND PURCHASE VALUE
<C> <S> <C> <C>
$ 650,000 Connecticut State, Second Lien Special Tax
Obligation Bonds, Transportation
Infrastructure
Purpose, Series 1
(7-Day Put, 7-Day Change)
12-01-2010 4.20% # $ 650,000
5,000,000 State of Connecticut, Special Assessment
Unemployment Compensation Advance Fund
Revenue Bonds, (Connecticut Unemployment
Revenue Bonds) 1993 Series C
07-01-1996 3.90 5,000,000
800,000 De Kalb 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 4.30 # 800,000
1,000,000 Delaware County, PA, Industrial Development
Authority Philadelphia Electric Series A
(Mandatory Put 11-06-1995)
12-01-2012 3.70 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 4.35 # 1,095,000
1,000,000 District of Columbia, Revenue Bonds,
Reference Series B
(Pre-refunded to 06-01-1996 @ 102)
06-01-2004 3.85 1,044,861
3,200,000 District of Columbia, Revenue Bonds,
(George Washington University), Series 1985
(7-Day Put, 7-Day Change)
03-01-2006 4.40 # 3,200,000
</TABLE>
See notes to combined financial statements
--
8
<PAGE> 11
COWEN STANDBY TAX-EXEMPT RESERVE FUND, INC.
STATEMENT OF INVESTMENTS -- (continued)
SEPTEMBER 30, 1995
<TABLE>
<CAPTION>
ANNUALIZED
YIELD
ON
DATE
PRINCIPAL OF
AMOUNT DESCRIPTION OF BOND PURCHASE VALUE
<C> <S> <C> <C>
$2,000,000 Durham, NC, Certificates of
Participation--Series A
(7-Day Put, 7-Day Change)
07-01-2007) 4.30% # $2,000,000
3,200,000 Florida Housing Finance Agency--Reference
Multi-Family Hillsboro, Series D
(7-Day Put, 7-Day Change)
12-01-2009 4.75 # 3,200,000
1,000,000 Foothill/Eastern Transverse Corridor Agency,
California Toll Road Series C
(7-Day Put, 7-Day Change)
01-02-2035 4.15 # 1,000,000
2,000,000 Golden Valley, MN, Industrial Development
Authority (Unicare Homes)
(7-Day Put, 7-Day Change)
09-01-2014 4.10 # 2,000,000
100,000 Hillsborough County, FL, Industrial
Development Authority Pollution Control
Revenue Refunding Bonds, (Tampa Electric
Company, Gannon Coal Conversion Project)
(Daily Put, Daily Change)
05-15-2018 4.50 # 100,000
1,300,000 Honolulu, HI, County and City,
Revenue Bonds
10-06-1995 3.40 1,300,000
1,400,000 Illinois Health Facility Authority Hospital
Revenue Bonds, (Sisters of Charity Project),
Series 1985
(7-Day Put, 7-Day Change)
12-01-2014 4.25 # 1,400,000
300,000 Illinois Health Facility Authority Hospital
Revenue Bonds, (Sisters of Charity Project),
Series E
(7-Day Put, 7-Day Change)
12-01-2015 4.25 # 300,000
1,500,000 Illinois State Toll Highway Authority
Highway Priority Revenue Bonds, Series B
(7-Day Put, 7-Day Change)
01-01-2010 4.30 # 1,500,000
</TABLE>
See notes to combined financial statements
--
9
<PAGE> 12
COWEN STANDBY TAX-EXEMPT RESERVE FUND, INC.
STATEMENT OF INVESTMENTS -- (continued)
SEPTEMBER 30, 1995
<TABLE>
<CAPTION>
ANNUALIZED
YIELD
ON
DATE
PRINCIPAL OF
AMOUNT DESCRIPTION OF BOND PURCHASE VALUE
<S> <C> <C> <C>
$500,000 Illinois State General Obligation Bonds
(Pre-refunded to 06-01-1996 @ 102)
06-01-1998 3.95% $ 520,628
1,000,000 Illinois State General Obligation Bonds
02-01-1996 3.60 1,006,247
2,000,000 City of Indianapolis, IN, Multi-Family Housing
Revenue Refunding Bonds, (Canal Square
Project)
(7-Day Put, 7-Day Change)
12-01-2015 4.25 # 2,000,000
1,000,000 Intermountain Power Agency Utah, Special
Obligation Second Series
07-01-1996 4.00 1,021,840
500,000 Kansas City, MO, Municipal Assistance
Corporation
Revenue Bonds, Leasehold, Citywide
Infrastructure--B
03-01-1996 4.30 500,899
200,000 Loudoun County, VA, Industrial Development
Agency
(Daily Put, Daily Change)
09-01-2015 4.60 # 200,000
500,000 Louisa, VA, Industrial Development Corporation
Virginia Electric and Power Project
(Mandatory Put 10-05-1995)
12-01-2015 3.85 500,000
500,000 Louisiana Public Facilities Authority Revenue
Bonds--College & University Equipment and
Capital Series A
(7-Day Put, 7-Day Change)
09-01-2010 4.30 # 500,000
4,200,000 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 4.40 # 4,200,000
</TABLE>
See notes to combined financial statements
--
10
<PAGE> 13
COWEN STANDBY TAX-EXEMPT RESERVE FUND, INC.
STATEMENT OF INVESTMENTS -- (continued)
SEPTEMBER 30, 1995
<TABLE>
<CAPTION>
ANNUALIZED
YIELD
ON
DATE
PRINCIPAL OF
AMOUNT DESCRIPTION OF BOND PURCHASE VALUE
<C> <S> <C> <C>
$ 100,000 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 4.20% # $ 100,000
100,000 Lynchburgh, VA, Industrial Development
Authority Hospital Revenue Bonds, (VHA
Mid-Atlantic States, Inc. Capital Asset
Financing Project), Series 1985E (7-Day Put,
7-Day Change)
12-01-2025 4.20 # 100,000
2,000,000 Maricopa County, AZ, Pollution Control Revenue
Bonds Southern California Edison Series G
(Mandatory Put 10-17-1995)
12-01-2009 3.85 2,000,000
900,000 Michigan State Hospital Finance Authority
Revenue Bonds, (Chelsea Community Hospital)
Series 1991 (7-Day Put, 7-Day Change)
12-01-2011 4.15 # 900,000
915,000 Michigan State Hospital Finance Authority
Revenue Bonds, Hospital Equipment Loan Program
(7-Day Put, 7-Day Change)
06-01-2001 4.35 # 915,000
500,000 Michigan State Hospital Finance Authority
Revenue Bonds (State Hospital Equipment Loan
Program Bonds) Series 1989
(7-Day Put, 7-Day Change)
11-01-1999 4.15 # 500,000
1,500,000 Missouri State Environmental Improvement and
Energy Series A
(Mandatory Put 10-16-1995)
06-01-2015 3.85 1,500,000
</TABLE>
See notes to combined financial statements
--
11
<PAGE> 14
COWEN STANDBY TAX-EXEMPT RESERVE FUND, INC.
STATEMENT OF INVESTMENTS -- (continued)
SEPTEMBER 30, 1995
<TABLE>
<CAPTION>
ANNUALIZED
YIELD
ON
DATE
PRINCIPAL OF
AMOUNT DESCRIPTION OF BOND PURCHASE VALUE
<C> <S> <C> <C>
$1,000,000 Municipal Electric Authority of Georgia,
Revenue Bonds Series A
(Mandatory Put 10-05-1995)
01-01-2009 3.85% $1,000,000
1,050,000 Nevada State Highway Improvement Motor Vehicle
Fuel Tax Bonds
04-01-1996 4.30 1,052,284
1,100,000 New Brighton, MN, Industrial Development
Authority Revenue Bonds, Unicare Home Inc.
Project
(7-Day Put, 7-Day Change)
12-01-2014 4.40 # 1,100,000
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 4.20 # 2,000,000
900,000 New Mexico State Hospital Equipment
Revenue Bonds
(7-Day Put, 7-Day Change)
05-01-2009 4.35 # 900,000
3,500,000 New Orleans, LA, Aviation Revenue Bonds,
Series 1993B
(7-Day Put, 7-Day Change)
08-01-2016 4.40 # 3,500,000
1,500,000 New York, NY, Revenue Anticipation Note Series
B
06-28-1996 3.97 1,508,295
900,000 North Carolina Eastern Municipal Power
Authority Power System Revenue Bonds Refunding
Series 1986A
(Pre-refunded to 01/01/1996 @ 103)
01-01-2001) 4.45 933,648
2,000,000 Ocean County, NJ, General Obligation Unlimited
Notes
06-28-1996 3.65 2,005,008
</TABLE>
See notes to combined financial statements
--
12
<PAGE> 15
COWEN STANDBY TAX-EXEMPT RESERVE FUND, INC.
STATEMENT OF INVESTMENTS -- (continued)
SEPTEMBER 30, 1995
<TABLE>
<CAPTION>
ANNUALIZED
YIELD
ON
DATE
PRINCIPAL OF
AMOUNT DESCRIPTION OF BOND PURCHASE VALUE
<C> <S> <C> <C>
$2,500,000 Orange County, FL, Health Facilities Authority
Pooled Hospital Loan Series 85
(Mandatory Put 11-13-1995)
12-01-2025 3.50% $2,500,000
1,000,000 Pennsylvania State General Obligation
Unlimited Notes Second Series A
10-01-1995 3.55 1,000,091
1,000,000 Philadelphia, PA, General Obligation Unlimited
Notes (Pre-refunded to 02-15-1996 @ 102)
02-15-1999 3.70 1,035,482
680,000 Philadelphia, PA, Hospital and Higher
Education Hospital Revenue Bonds
01-01-1996 4.00 680,000
2,000,000 Rhode Island Tax Anticipation Notes
General Obligation Unlimited Bonds
06-28-1996 3.65 2,012,191
3,000,000 Rockport, IN, Pollution Control Revenue Notes
Indiana-Michigan Power Company-Project B
(7-Day Put, 7-Day Change)
06-01-2025 4.50 # 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 4.40 # 1,000,000
2,000,000 San Francisco, CA, Combined School District
Tax Revenue Anticipation Notes
07-25-1996 3.90 2,009,421
1,205,000 St. Louis, MO, Industrial Development
Authority Multi-Family Housing (Cedar Run
Apts. Project)
(7-Day Put, 7-Day Change)
02-01-2007 4.65 # 1,205,000
3,000,000 Port of Seattle, Washington, General
Obligation Bonds
(7-Day Put, 7-Day Change)
01-01-2005 4.25 # 3,000,000
</TABLE>
See notes to combined financial statements
--
13
<PAGE> 16
COWEN STANDBY TAX-EXEMPT RESERVE FUND, INC.
STATEMENT OF INVESTMENTS -- (continued)
SEPTEMBER 30, 1995
<TABLE>
<CAPTION>
ANNUALIZED
YIELD
ON
DATE
PRINCIPAL OF
AMOUNT DESCRIPTION OF BOND PURCHASE VALUE
<C> <S> <C> <C>
$1,000,000 City of Sheridan, AR, Industrial Development
Revenue Bonds, (H.H. Robertson Co. Project),
Series 1988A
(7-Day Put, 7-Day Change)
08-01-1998 4.50% # $1,000,000
100,000 South Carolina Jobs Economic Development
Authority, Industrial Development Revenue
Bonds, Series 1987A
(Daily Put, 7-Day Change)
11-01-2007 4.50 # 100,000
1,220,000 Southern California Public Power Authority
Southern Transmission Project
(Pre-refunded to 07-01-1996 @ 103)
07-01-2018 3.95 1,290,421
2,000,000 Stratford, CT, General Obligation Notes
10-18-1995 4.30 2,000,188
1,305,000 Tennessee State General Obligation Note Series
A
03-01-1996 3.65 1,312,230
2,600,000 Texas A & M University Permanent University
Fund Series B
(Mandatory Put 11-14-1995)
07-01-2017 3.30 2,600,000
1,300,000 Texas A & M University Permanent University
Fund Series B
(Mandatory Put 10-24-1995)
07-01-2017 3.70 1,300,000
1,000,000 Texas Higher Education Authority, Inc. Series
B
(7-Day Put, 7-Day Change)
12-01-2025 4.30 # 1,000,000
1,000,000 Texas Hospital Equipment Financing Authority
Revenue Bonds
(7-Day Put, 7-Day Change)
04-07-2005 4.50 # 1,000,000
</TABLE>
See notes to combined financial statements
--
14
<PAGE> 17
COWEN STANDBY TAX-EXEMPT RESERVE FUND, INC.
STATEMENT OF INVESTMENTS -- (continued)
SEPTEMBER 30, 1995
<TABLE>
<CAPTION>
ANNUALIZED
YIELD
ON
DATE
PRINCIPAL OF
AMOUNT DESCRIPTION OF BOND PURCHASE VALUE
<C> <S> <C> <C>
$ 500,000 United Nations Development Corporation, Public
Benefit Corp. Phase 2 and 3
(Pre-refunded to 07-01-1996 @ 102)
07-01-2026 3.95% $ 524,007
1,000,000 Vermont Health & Education Buildings Financing
Agency, Hospital Revenue Bonds (VHA of New
England Capital Asset Finance Program), Series
1985G
(7-Day Put, 7-Day Change)
12-01-2025 4.20 # 1,000,000
1,000,000 Wake County, NC, Industrial Facility Pollution
Control Finance Authority, Revenue Bonds,
(Carolina Power & Light Co. Project) Series
1985A
(7-Day Put, 7-Day Change)
05-01-2015 4.25 # 1,000,000
2,000,000 Washington County, PA, Lease Revenue Bonds,
(Higher Education Pooled Equipment Leasing
Program), Series 1985A
(7-Day Put, 7-Day Change)
11-01-2005 4.40 # 2,000,000
1,900,000 West Orange, TX, Memorial Hospital District
Revenue Bonds
(Mandatory Put 10-23-1995)
02-01-2022 3.85 1,900,000
1,500,000 West Orange, TX, Memorial Hospital District
Revenue Bonds
(Mandatory Put 10-18-1995)
02-01-2022 3.85 1,500,000
500,000 Wisconsin State Clean Water Revenue Bonds
Series 1
06-01-1996 3.75 506,660
</TABLE>
See notes to combined financial statements
--
15
<PAGE> 18
COWEN STANDBY TAX-EXEMPT RESERVE FUND, INC.
STATEMENT OF INVESTMENTS -- (continued)
SEPTEMBER 30, 1995
<TABLE>
<CAPTION>
ANNUALIZED
YIELD
ON
DATE
PRINCIPAL OF
AMOUNT DESCRIPTION OF BOND PURCHASE VALUE
<C> <S> <C> <C>
$ 500,000 Wisconsin State Health Facilities Revenue
Bonds Madison General Hospital
(Pre-refunded to 12-01-1995 @ 102)
12-01-2000 4.15% $ 513,828
1,000,000 York County, SC, Pollution Control Revenue
Note North Carolina Electric Power Project
84N-3 (Optional Put 03-15-1996)
09-15-2014 3.75 1,000,000
-------------
TOTAL INVESTMENTS
(Cost $122,807,561)................... 100.22% $122,807,561
Payables, less cash and receivables
(net)................................. (.22)% (271,441)
---- -------------
Net Assets............................ 100.00% $122,536,120
==== =============
</TABLE>
- ---------------
Notes: #-Variable Rate Instruments Reflect Rate as of 09-30-1995
86.74% of the investment values above are supported by Letters of Credit,
guarantees or other credit enhancements.
See notes to combined financial statements
--
16
<PAGE> 19
STATEMENTS OF ASSETS AND LIABILITIES
SEPTEMBER 30, 1995
<TABLE>
<CAPTION>
COWEN STANDBY
COWEN STANDBY TAX-EXEMPT
RESERVE FUND, INC. RESERVE FUND, INC.
<S> <C> <C>
ASSETS
Investments in securities, at value - Note
A(1) $889,959,765 $122,807,561
Cash 935,220 478,727
Interest receivable 1,587,368 943,137
Prepaid expenses 1,188 794
------------ ------------
TOTAL ASSETS 892,483,541 124,230,219
------------ ------------
LIABILITIES
359,478 40,711
Due to investment manager - Note B
-- 1,508,295
Payable for investment securities purchased
239,415 51,137
Accrued expenses
Dividends payable 997,080 93,956
------------ ------------
TOTAL LIABILITIES 1,595,973 1,694,099
------------ ------------
NET ASSETS $890,887,568 $122,536,120
============ ============
Represented By:
Paid-in capital $892,729,637 $122,554,806
Accumulated net realized loss on investments (1,842,069) (18,686)
------------ ------------
NET ASSETS AT VALUE, applicable to 892,729,637
outstanding shares of $.01 par value Common
Stock for SRF and 122,554,806 outstanding
shares of $.001 par value Common Stock for STE
(1,000,000,000 shares authorized for each
fund) $890,887,568 $122,536,120
============ ============
Offering and redemption price per share $ 1.00 $ 1.00
============ ============
</TABLE>
See notes to combined financial statements
--
17
<PAGE> 20
STATEMENTS OF OPERATIONS
YEAR ENDED SEPTEMBER 30, 1995
<TABLE>
<CAPTION>
COWEN STANDBY
COWEN STANDBY TAX-EXEMPT
RESERVE FUND, INC. RESERVE FUND, INC.
<S> <C> <C>
INVESTMENT INCOME
Interest income $46,048,279 $4,696,411
----------- ----------
EXPENSES
Investment management fee - Note B 3,924,438 623,981
Shareholder servicing costs and custodian fee 1,362,780 140,220
Federal and State registration fees 75,131 37,220
Professional fees 46,015 46,497
Directors' fees and expenses - Note B 20,897 20,918
Prospectus and shareholders' reports 65,634 4,796
Miscellaneous 75,238 14,370
----------- ----------
Total Expenses 5,570,133 888,002
Less: Investment management fee
waived - Note B -- (124,784)
----------- ----------
Net Expenses 5,570,133 763,218
----------- ----------
Investment Income - net 40,478,146 3,933,193
Net realized gain on investments 141,897 --
----------- ----------
Net Increase in Net Assets Resulting From
Operations $40,620,043 $3,933,193
=========== ==========
</TABLE>
See notes to combined financial statements
--
18
<PAGE> 21
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
COWEN STANDBY
COWEN STANDBY TAX-EXEMPT
RESERVE FUND, INC. RESERVE FUND, INC.
------------------------------- -------------------------------
YEAR ENDED SEPTEMBER 30,
-------------------------------------------------------------------
1995 1994 1995 1994
------------- ------------- ------------- -------------
<S> <C> <C> <C> <C>
OPERATIONS
Investment income - net $ 40,478,146 $ 22,398,337 $ 3,933,193 $ 2,645,497
Net realized gain (loss) on
investments 141,897 (14,493) -- (5,385)
------------ ------------ ------------ ------------
Net increase in net assets
resulting from operations 40,620,043 22,383,844 3,933,193 2,640,112
DIVIDENDS TO SHAREHOLDERS
FROM
Investment income - net (40,478,146) (22,398,337) (3,933,193) (2,645,497)
COMMON STOCK TRANSACTIONS
(NET) - NOTE C 198,136,691 9,969,342 1,832,138 4,091,605
CONTRIBUTIONS BY INVESTMENT
ADVISOR - NOTE B -- 275,000 -- --
------------ ------------ ------------ ------------
Total increase in net
assets 198,278,588 10,229,849 1,832,138 4,086,220
NET ASSETS
Beginning of year 692,608,980 682,379,131 120,703,982 116,617,762
------------ ------------ ------------ ------------
End of year $890,887,568 $692,608,980 $122,536,120 $120,703,982
============ ============ ============ ============
</TABLE>
See notes to combined financial statements
--
19
<PAGE> 22
COWEN STANDBY RESERVE FUND, INC. AND
COWEN STANDBY TAX-EXEMPT RESERVE FUND, INC.
NOTES TO COMBINED FINANCIAL STATEMENTS
NOTE A - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES: General: Cowen Standby
Reserve Fund, Inc. (SRF) and 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. Cowen & Company
("Cowen") serves as each company's Investment Manager and acts as the exclusive
distributor of each company's shares, which are sold without a sales charge. It
is each company's policy to maintain a continuous net asset value per share of
$1.00; each company has adopted certain investment portfolio valuation and
dividend and distribution policies to enable it to do so.
(1) Portfolio valuation: Each company values its investments at amortized
cost, which has been determined by the Board of Directors of each company to
represent the fair value of each company'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
company 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 company not to
distribute such gains.
(4) Federal income taxes: It is the policy of each company 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 September 30, 1995, 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, 1995, SRF and STE had unused capital loss carryovers of
approximately $1,842,000 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 2000, 2001 and 2002.
NOTE B - INVESTMENT MANAGEMENT FEE AND OTHER TRANSACTIONS WITH AFFILIATES: Fees
paid by each company to 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 company's net assets. The Agreements further
provide that if the aggregate expenses of either company, 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 company, Cowen will reimburse the
company for such excess. The only state expense limitation applicable currently
requires reimbursement of expenses in any year that such expenses exceed 2 1/2%
of the first $30 million of average net assets, 2% of
--
20
<PAGE> 23
COWEN STANDBY RESERVE FUND, INC. AND
COWEN STANDBY TAX-EXEMPT RESERVE FUND, INC.
NOTES TO COMBINED FINANCIAL STATEMENTS - (continued)
the next $70 million of average net assets, and 1 1/2% of average net assets in
excess of $100 million, provided that in no event shall the amount of expense
reimbursement required be greater than the investment advisory fee. There was no
expense reimbursement required for either company for the year ended September
30, 1995, however, Cowen has waived $124,784 of its Investment Management Fee
from STE during such period. During the year ended September 30, 1994, Cowen
contributed $275,000 to SRF for trading losses incurred during the year ended
September 30, 1993.
Directors who are not officers, directors, partners, stockholders or employees
of Cowen or its affiliates receive from each company a fee of $3,000 per annum
plus $500 per meeting attended and reimbursement for travel and out-of-pocket
expenses.
NOTE C - COMMON STOCK TRANSACTIONS: At September 30, 1995, there were 1 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
---------------------------------------------
YEAR ENDED YEAR ENDED
SEPTEMBER 30, 1995 SEPTEMBER 30, 1994
<S> <C> <C>
Shares sold $ 3,546,994 $ 2,928,037
Dividends reinvested 38,739 21,416
----------- -----------
3,585,733 2,949,453
Shares redeemed (3,387,596) (2,939,484)
----------- -----------
Net increase $ 198,137 $ 9,969
=========== ===========
</TABLE>
<TABLE>
<CAPTION>
STE
---------------------------------------------
YEAR ENDED YEAR ENDED
SEPTEMBER 30, 1995 SEPTEMBER 30, 1994
<S> <C> <C>
Shares sold $ 620,723 $ 580,725
Dividends reinvested 3,765 2,536
----------- -----------
624,488 583,261
Shares redeemed (622,656) (579,169)
----------- -----------
Net increase $ 1,832 $ 4,092
=========== ===========
</TABLE>
--
21
<PAGE> 24
COWEN STANDBY RESERVE FUND, INC. AND
COWEN STANDBY TAX-EXEMPT RESERVE FUND, INC.
NOTES TO COMBINED FINANCIAL STATEMENTS - (continued)
NOTE D - FINANCIAL HIGHLIGHTS: Selected data for a share of Common Stock
outstanding throughout each year:
<TABLE>
<CAPTION>
SRF
-------------------------------------------------------------
YEAR ENDED SEPTEMBER 30,
-------------------------------------------------------------
1995 1994 1993 1992 1991
--------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C>
NET ASSET VALUE
Beginning of Year $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
INCOME FROM INVESTMENT OPERATIONS
Net Investment Income 0.05 0.03 0.03 0.04 0.06
LESS DISTRIBUTIONS
Dividends from Net Investment Income (0.05) (0.03) (0.03) (0.04) (0.06)
--------- --------- --------- --------- ---------
NET ASSET VALUE
End of Year $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
========= ========= ========= ========= =========
Total Return 5.23% 3.14% 3.07% 4.16% 6.33%
RATIOS/SUPPLEMENTAL DATA
Net Assets (000 omitted) $890,888 $692,609 $682,379 $667,366 $605,212
Ratio of Expenses to Average Net Assets 0.71% 0.64% 0.68% 0.70% 0.71%
Ratio of Net Investment Income to Average Net
Assets 5.13% 3.11% 3.00% 4.06% 6.15%
</TABLE>
--
22
<PAGE> 25
COWEN STANDBY RESERVE FUND, INC. AND
COWEN STANDBY TAX-EXEMPT RESERVE FUND, INC.
NOTES TO COMBINED FINANCIAL STATEMENTS - (continued)
NOTE D - (continued)
<TABLE>
<CAPTION>
STE
-------------------------------------------------------------
YEAR ENDED SEPTEMBER 30,
-------------------------------------------------------------
1995 1994 1993 1992 1991
--------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C>
NET ASSET VALUE
Beginning of Year $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
INCOME FROM INVESTMENT OPERATIONS
Net Investment Income 0.03 0.02 0.02 0.03 0.04
LESS DISTRIBUTIONS
Dividends from Net Investment Income (0.03) (0.02) (0.02) (0.03) (0.04)
-------- -------- -------- -------- --------
NET ASSET VALUE
End of Year $ 1.00 $ 1.00 $ 1.00 $ 1.00 $1.00
======== ======== ======== ======== ========
Total Return 3.19% 2.11% 2.03% 2.97% 4.50%
RATIOS/SUPPLEMENTAL DATA
Net Assets (000 omitted) $122,536 $120,704 $116,618 $118,389 $107,838
Ratio of Expenses to Average Net Assets 0.61% 0.58% 0.62% 0.61% 0.60%
Ratio of Net Investment Income to Average Net
Assets 3.14% 2.03% 1.99% 2.87% 4.37%
INVESTMENT ADVISORY FEES WAIVED
Amount $124,784 $130,483 $119,582 $130,414 $105,431
Ratio to Average Net Assets 0.10% 0.10% 0.10% 0.10% 0.10%
</TABLE>
--
23
<PAGE> 26
REPORT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS
Stockholders and Boards of Directors
Cowen Standby Reserve Fund, Inc. and
Cowen Standby Tax-Exempt Reserve Fund, Inc.
We have audited the accompanying statements of assets and liabilities of Cowen
Standby Reserve Fund, Inc. and Cowen Standby Tax-Exempt Reserve Fund, Inc.,
including the statements of investments, as of September 30, 1995, 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 D) for each of the five years in the period then
ended. These financial statements and financial highlights are the
responsibility of each Company's 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. Those standards require that we plan and perform these 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
September 30, 1995, by correspondence with the custodian and a broker. 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
Standby Reserve Fund, Inc. and Cowen Standby Tax-Exempt Reserve Fund, Inc. at
September 30, 1995, 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 five years in the period then
ended, in conformity with generally accepted accounting principles.
ERNST & YOUNG LLP
New York, New York
October 27, 1995
--
24
<PAGE> 27
COWEN STANDBY RESERVE FUND, INC.
AND
COWEN STANDBY TAX-EXEMPT RESERVE FUND, INC.
Financial Square
New York, NY 10005
DIRECTORS
Joseph M. Cohen, Chairman
James H. Carey
Dr. Peter P. Gil
Dr. Martin J. Gruber
Gerald P. Kaminsky
Creighton H. Peet
Burton J. Weiss
OFFICERS
Joseph M. Cohen, Chairman of the Board of Directors and Chief Executive Officer
David R. Sarns, President
Lawrence S. Leibowitz, Vice President and Assistant Secretary
Creighton H. Peet, Treasurer and Chief Financial Officer
Rodd M. Baxter, Secretary
Gerald P. Kaminsky, Senior Investment Officer
Alan E. Koepplin, Investment Officer
Gordon G. Ifill, Assistant Investment Officer
Irwood Schlackman, Controller
<TABLE>
<S> <C>
INVESTMENT ADVISER CUSTODIAN
& DISTRIBUTOR & TRANSFER AGENT
Cowen & Company Investors Fiduciary Trust Company
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>
CMB-RSRV
