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Reich & Tang
EQUITY FUND, INC.
Semi-Annual Report
June 30, 1995
(Unaudited)
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1
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Reich & Tang 600 FIFTH AVENUE, NEW YORK, N.Y. 10020
EQUITY FUND, INC. (212) 830-5200
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Dear Shareholder,
We are pleased to present the semi-annual report of Reich & Tang Equity Fund,
Inc. for the period ended June 30, 1995.
The Equity Fund's net asset value per share on June 30,1995 was $17.91 as
compared to $15.39 at December 31, 1994. The Fund registered an increase of
17.1% during the first-half year, after adjusting for dividend payments of $0.11
per share. The Fund's performance compared favorably to the major market
indices, in the first half of 1995. The Fund held 45 companies, with the top ten
holdings accounting for 37.2% of total net assets. Equity investments comprised
95% of the $106.4 million comprising total portfolio assets on June 30, 1995.
The Fund had 779 shareholders.
We look forward to continuing to serve your equity investment needs.
Sincerely,
/s/ Robert F. Hoerle
Robert F. Hoerle
President
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REICH & TANG EQUITY FUND, INC.
STATEMENT OF NET ASSETS
JUNE 30, 1995
(UNAUDITED)
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<TABLE>
<CAPTION>
Value
Shares (Note 1)
------ ------
Common Stocks (94.96%)
-----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Aerospace/Defense (2.56%)
Sundstrand Corporation 45,600 $ 2,724,600
---------
2,724,600
---------
Agriculture (3.55%)
Pioneer Hi-Bred International, Inc. 90,000 3,780,000
---------
3,780,000
---------
Apparel (2.71%)
Land's End, Inc.* 84,900 1,379,625
Fruit of the Loom, Inc.* 71,000 1,499,875
---------
2,879,500
---------
Banking/Financial Services (1.69%)
Marshall & Ilsley Corporation 79,500 1,798,688
---------
1,798,688
---------
Chemical (Specialty) (7.26%)
Great Lakes Chemical Corporation 65,000 3,916,250
Hercules Incorporated 30,000 1,462,500
Lubrizol Corporation (The) 66,500 2,352,438
---------
7,731,188
---------
Consumer Products (3.77%)
Avon Products, Inc. 30,000 2,010,000
Bausch & Lomb Incorporated 21,500 892,250
Sunbeam Corporation 80,000 1,110,000
---------
4,012,250
---------
Converted Paper Products (4.64%)
Sonoco Products Company 199,500 4,937,625
---------
4,937,625
---------
Electronics (1.11%)
Polaroid Corp. 29,000 1,181,750
---------
1,181,750
---------
Energy (7.10%)
Equitable Resources, Inc. 114,750 3,313,406
Kerr-McGee Corporation 70,000 3,753,750
Union Texas Petroleum Holdings, Inc. 23,000 485,875
---------
7,553,031
---------
Food Processing (3.70%)
Flowers Industries, Inc. 52,000 1,027,000
Universal Foods Corp. 90,000 2,913,750
---------
3,940,750
---------
</TABLE>
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See Notes to Financial Statements.
<PAGE>
3
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<TABLE>
<CAPTION>
Value
Shares (Note 1)
------ ------
Common Stocks (Continued)
-----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Industrial Products (18.79%)
Albany International Corp. Class A 118,700 $ 2,833,962
Allied-Signal Inc. 43,500 1,935,750
Corning Incorporated 104,500 3,422,375
Dexter Corporation (The) 86,500 2,043,562
Dover Corporation 8,000 582,000
Harsco Corp. 80,000 4,220,000
Minerals Technologies Inc. 16,000 576,000
Snap-On Tools Corp. 70,000 2,712,500
Teleflex Inc. 39,000 1,677,000
----------
20,003,149
----------
Industrial Services (5.08%)
Deluxe Corporation 111,800 3,703,375
Equifax Inc. 51,200 1,708,800
----------
5,412,175
----------
Insurance (Prop/Casualty)(9.45%)
AMBAC Indemnity Corporation 60,500 2,427,562
PennCorp Financial Group 68,500 1,267,250
UNUM Corporation 102,500 4,804,688
Zurich Reinsurance Centre Holdings, Inc.* 54,300 1,554,338
----------
10,053,838
----------
Medical Supplies (7.48%)
AMSCO International, Inc.* 134,200 1,862,025
Allergan Inc. 95,500 2,590,437
Becton, Dickinson & Co. 60,300 3,512,475
----------
7,964,937
----------
Newspaper (2.47%)
Lee Enterprises, Inc. 69,000 2,630,625
----------
2,630,625
----------
Office Equipment & Supplies (4.36%)
Herman Miller, Inc. 100,000 2,475,000
Pitney Bowes, Inc. 56,400 2,164,350
----------
4,639,350
----------
Protective Services (0.34%)
Rollins Inc. 15,000 360,000
----------
360,000
----------
</TABLE>
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See Notes to Financial Statements.
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4
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REICH & TANG EQUITY FUND, INC.
STATEMENT OF NET ASSETS (CONTINUED)
JUNE 30, 1995
(UNAUDITED)
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<TABLE>
<CAPTION>
Value
Shares (Note 1)
------ ------
Common Stocks (Continued)
-----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Retail Store (4.86%)
The Limited, Inc. 120,000 $ 2,640,000
Woolworth Corporation 90,000 1,361,250
Food Lion, Inc. Class A 200,000 1,175,000
-----------
5,176,250
-----------
Toy/School Supplies (4.04%)
Hasbro, Inc. 110,000 3,492,500
Jostens, Inc. 38,000 807,500
-----------
4,300,000
-----------
Total Common Stocks (Cost $77,462,496) $ 101,079,706
-----------
</TABLE>
<TABLE>
<CAPTION>
Face Value
Amount (Note 1)
------ ------
<S> <C> <C>
Short-Term Investments (4.19%)
Repurchase Agreements (4.19%)
Morgan (J.P.) Securities Inc., 5.80%, due 07/03/95
(Collateralized by $4,548,912
U.S. Treasury Notes, 6.180%, due 05/31/97) 4,458,000 $ 4,458,000
------------
Total Short-Term Investments (Cost $4,458,000) $ 4,458,000
------------
Total Investments (99.15%) (Cost $81,920,496+) 105,537,706
Cash and Other Assets in Excess of Liabilities (0.85%) 906,932
------------
Net Assets (100.00%) 5,941,835 shares outstanding (Note 3) $ 106,444,638
============
Net asset value, offering and redemption price per share $ 17.91
============
* Non-income producing.
+ Aggregate cost for federal income tax purposes is $82,046,929. Aggregate
unrealized appreciation and depreciation, based on cost for federal income tax
purposes, are $24,608,102 and $1,117,325 respectively.
</TABLE>
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See Notes to Financial Statements.
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5
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REICH & TANG EQUITY FUND, INC.
STATEMENT OF OPERATIONS
SIX MONTHS ENDED JUNE 30, 1995
(UNAUDITED)
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<TABLE>
<CAPTION>
INVESTMENT INCOME
<S> <C>
Income:
Dividends...................................................................... $ 1,043,322
Interest....................................................................... 221,751
----------
Total income............................................................. 1,265,073
----------
Expenses: (Note 2)
Investment management fee...................................................... 408,390
Administration fee............................................................. 102,097
Custodian, shareholder servicing and related shareholder expenses.............. 43,633
Legal, compliance and filing fees.............................................. 17,835
Audit and accounting........................................................... 9,500
Directors' fees and expenses................................................... 6,126
Other.......................................................................... 462
----------
Total expenses................................................................. 588,043
----------
Net investment income.............................................................. 677,030
----------
</TABLE>
<TABLE>
<CAPTION>
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS
<S> <C>
Net realized gain (loss) on investments............................................ 6,695,003
Net unrealized appreciation(depreciation) of investments........................... 8,529,991
----------
Net gain (loss) on investments...................................... 15,224,994
----------
Increase (decrease) in net assets from operations.................................. $ 15,902,024
==========
</TABLE>
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See Notes to Financial statements.
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6
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REICH & TANG EQUITY FUND, INC.
STATEMENTS OF CHANGES IN NET ASSETS
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<TABLE>
<CAPTION>
Six Months
Ended Year
June 30, 1995 Ended
(Unaudited) December 31, 1994
--------- -----------------
INCREASE (DECREASE) IN NET ASSETS
Operations:
<S> <C> <C>
Net investment income...................................................$ 677,030 $ 1,263,024
Net realized gain (loss) on investments................................. 6,695,003 11,723,466
Change in unrealized appreciation (depreciation) of investments......... 8,529,991 ( 11,304,004)
------------ ------------
Increase (decrease) in net assets from operations....................... 15,902,024 1,682,486
Distributions from:
Net investment income................................................... ( 681,731) ( 1,263,024)
Return of Capital....................................................... --- ( 1,234)
Net realized gains on investments....................................... --- ( 11,723,466)
In excess of net realized gains......................................... --- ( 107,955)
Capital share transactions (Note 3)....................................... 585,209 ( 3,128,833)
----------- ------------
Total increase (decrease)............................................... 15,805,502 ( 14,542,026)
Net Assets:
Beginning of period..................................................... 90,639,136 105,181,162
----------- ------------
End of period...........................................................$ 106,444,638 $ 90,639,136
=========== ============
</TABLE>
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See Notes to Financial Statements.
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REICH & TANG EQUITY FUND, INC.
NOTES TO FINANCIAL STATEMENTS
(UNAUDITED)
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1. Summary of Accounting Policies
Reich & Tang Equity Fund, Inc. is a no-load, diversified, open-end management
investment company registered under the Investment Company Act of 1940. Its
financial statements are prepared in accordance with generally accepted
accounting principles for investment companies as follows:
a) Valuation of Securities -
Securities traded on a national securities exchange or admitted to trading
on the National Association of Securities Dealers Inc. Automated Quotations
National List are valued at the last reported sales price on the last
business day of the fiscal period. Common stocks for which no sale was
reported on that date and over-the-counter securities, are valued at the
mean between the last reported bid and asked prices. United States
Government obligations and other debt instruments having sixty days or less
remaining until maturity are stated at amortized cost. Debt instruments
having a remaining maturity of more than sixty days will be valued at the
highest bid price obtained from a dealer maintaining an active market in
that security or on the basis of prices obtained from a pricing service
approved as reliable by the Board of Directors. All other investment
assets, including restricted and not readily marketable securities, are
valued in such manner as the Board of Directors in good faith deems
appropriate to reflect their fair market value.
b) Federal Income Taxes -
It is the Fund's policy to comply with the requirements of the Internal
Revenue Code applicable to regulated investment companies and to distribute
all of its taxable income to its shareholders. Therefore, no provision for
federal income tax is required.
c) General -
Securities transactions are recorded on the trade date basis. Interest
income is accrued as earned and dividend income is recorded on the
ex-dividend date. Realized gains and losses from securities transactions
are recorded on the identified cost basis. Dividends and capital gain
distributions to shareholders, which are determined in accordance with
income tax regulations, are recorded on the ex-dividend date. Distributions
which exceed net realized capital gains for financial reporting purposes
but not for tax purposes are reported as distributions in excess of net
realized gains. It is the Fund's policy to take possession of securities as
collateral under repurchase agreements and to determine on a daily basis
that the value of such securities plus accrued interest are sufficient to
cover the value of the repurchase agreements.
2. Investment Management Fees and Other Transactions with Affiliates
Under the Investment Management Contract, the Fund pays an investment management
fee to Reich & Tang Asset Management, L.P. ("The Manager") equal to .80% of the
Fund's average daily net assets. The Manager is required to reimburse the Fund
for its expenses (exclusive of interest, taxes, brokerage, and extraordinary
expenses) to the
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REICH & TANG EQUITY FUND, INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
(UNAUDITED)
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2. Investment Management Fees and Other Transactions with Affiliates (Continued)
extent that such expenses, including the management fee, for any fiscal year
exceed 2 1/2% of the first $30 million of its average net assets, 2% of the next
$70 million of its average net assets and 1 1/2% of its average net assets in
excess of $100 million. No such reimbursement was required for the period ended
June 30, 1995.
The Fund has adopted a Distribution Plan and, pursuant to the Plan, has entered
into a Distribution Agreement with the Manager. There were no expenses borne by
the Fund pursuant to the Distribution Plan.
Pursuant to an Administrative Services Agreement, the Fund pays to the Manager
an annual fee of .20% of the Fund's average daily net assets.
Brokerage commissions paid during the period to New England Investment
Companies, L.P. amounted to $8,321.
Fees are paid to Directors who are unaffiliated with the Manager on the basis of
$2,000 per annum plus $500 per meeting attended.
3. Capital Stock
At June 30, 1995 100,000,000 shares of $.001 par value stock were authorized and
capital paid in amounted to $76,263,560. Transactions in capital stock were as
follows:
<TABLE>
<CAPTION>
Six Months Ended Year Ended
June 30, 1995 December 31, 1994
------------------------------ -------------------------------
Shares Amount Shares Amount
------------ ----------- ------------ -------------
<S> <C> <C> <C> <C>
Sold........................................ 2,879,777 $48,619,756 6,479,849 $ 114,659,362
Issued on reinvestment of dividends......... 36,400 633,547 800,793 12,430,834
Redeemed.................................... ( 2,865,009) (48,668,094) ( 7,361,171) (130,219,029)
------------ ----------- ----------- -------------
Net increase (decrease)..................... ( 51,168) $ 585,209 ( 80,529) $( 3,128,833)
============ =========== =========== =============
</TABLE>
4. Investment Transactions
Purchases and sales of investment securities, other than U.S. Government direct
and agency obligations and short-term investments, totaled $13,553,335 and
$13,555,086, respectively. Accumulated undistributed net realized gains at June
30, 1995 amounted to $6,568,569.
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5. Selected Financial Information
<TABLE>
<CAPTION>
Year Ended December 31,
----------------------------------------------
Six Months
Ended
June 30, 1995 1994 1993 1992 1991 1990
------------- ---- ---- ---- ---- ----
Per Share Operating Performance
(for a share outstanding throughout the period)
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period $ 15.39 $ 17.61 $ 16.92 $ 15.64 $ 13.05 $ 14.24
----- ----- ----- ----- ----- -----
Income from investment operations:
Net investment income.......... 0.11 0.24 0.21 0.23 0.36 0.35
Net realized and unrealized
gains (losses) on investments.. 2.52 0.05 2.12 2.31 2.63 ( 1.18)
---- ---- ---- ---- ---- -----
Total from investment operations 2.63 0.29 2.33 2.54 2.99 ( 0.83)
---- ---- ---- ---- ---- -----
Less distributions:
Dividends from net investment income ( 0.11) ( 0.24) ( 0.21) ( 0.23) ( 0.37) ( 0.36)
Distributions from net realized gains -- ( 2.27) ( 1.43) ( 1.03) ( 0.03) ( -- )
---- ---- ---- ---- ---- ----
Total distributions............ ( 0.11) ( 2.51) ( 1.64) ( 1.26) ( 0.40) ( 0.36)
----- ----- ----- ----- ----- -----
Net asset value, end of period. $ 17.91 $ 15.39 $ 17.61 $ 16.92 $ 15.64 $ 13.05
===== ===== ===== ===== ===== =====
Total Return................... 17.1%+ 1.7% 13.8% 16.3% 23.1% ( 5.8%)
Ratios/Supplemental Data
Net assets, end of period (000) $106,445 $90,639 $105,181 $92,702 $83,151 $97,085
Ratios to average net assets:
Expenses..................... 1.15%* 1.17% 1.15% 1.15% 1.14% 1.12%
Net investment income........ 1.33%* 1.35% 1.15% 1.35% 2.33% 2.56%
Portfolio turnover rate........ 14.37% 25.80% 26.69% 27.37% 43.41% 27.48%
* Annualized
+ Not Annualized
</TABLE>
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10
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This report is submitted for the general information of the shareholders of the
Fund. It is not authorized for distribution to prospective investors in the Fund
unless preceded or accompanied by an effective prospectus, which includes
information regarding the Fund's objectives and policies, experience of its
management, marketability of shares, and other information.
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Reich & Tang Equity Fund, Inc.
600 Fifth Avenue
New York, New York 10020
Manager
Reich & Tang Asset Management, L.P.
600 Fifth Avenue
New York, New York 10020
Custodian, Transfer Agent &
Dividend Disbursing Agent
Investors Fiduciary Trust Company
127 West 10th Street
Kansas City, Missouri 64105
