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REICH & TANG
EQUITY FUND, INC.
Semi-Annual Report
June 30, 1996
(Unaudited)
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<PAGE>
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REICH & TANG 600 FIFTH AVENUE, NEW YORK, N.Y. 10020
EQUITY FUND, INC. (212) 830-5200
===============================================================================
Dear Shareholder,
We are pleased to present the semi-annual report of Reich & Tang Equity Fund,
Inc. for the period ended June 30, 1996.
The Equity Fund's net asset value per share on June 30,1996 was $19.39 as
compared to $17.73 at December 31, 1995. The Fund registered an increase of 9.8%
during the first-half year, after adjusting for dividend payments of $0.077 per
share. The Fund held 44 companies, with the top ten holdings accounting for
37.2% of total net assets. Equity investments comprised 99.66% of the $111.3
million comprising total portfolio assets on June 30, 1996. The Fund had 852
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, 1996
(UNAUDITED)
===============================================================================
<TABLE>
<CAPTION>
Value
Shares (Note 1)
------ ------
Common Stocks (99.66%)
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Aerospace/Defense (2.76%)
Sundstrand Corporation 84,000 $ 3,076,500
--------------
Agriculture (2.59%)
Pioneer Hi-Bred International, Inc. 54,500 2,881,687
--------------
Apparel (2.75%)
Fruit of the Loom, Inc.* 62,000 1,581,000
Lands' End, Inc. 60,000 1,485,000
--------------
3,066,000
--------------
Auto Parts - Replacements (1.54%)
Federal - Mogul Corporation 93,000 1,708,875
--------------
Banking/Financial Services (1.08%)
Marshall & Ilsley Corporation 43,500 1,207,125
--------------
Chemical (Specialty) (3.54%)
Great Lakes Chemical Corporation 46,000 2,863,500
Hercules Incorporated 19,500 1,077,375
--------------
3,940,875
--------------
Commercial Services (8.51%)
Deluxe Corporation 98,000 3,479,000
Equifax Inc. 47,500 1,246,875
Manpower Inc. 30,500 1,197,125
Rollins Inc. 151,000 3,548,500
--------------
9,471,500
--------------
Consumer Products (1.68%)
Sunbeam Corporation 127,000 1,873,250
--------------
Converted Paper Products (4.32%)
Sonoco Products Company 135,500 3,844,812
Wausau Paper Mills 49,000 967,750
--------------
4,812,562
--------------
Drugs (3.88%)
Allergan Inc. 110,000 4,317,500
--------------
Energy (7.48%)
Equitable Resources, Inc. 90,000 2,542,500
Kerr-McGee Corporation 76,000 4,626,500
Union Texas Petroleum Holdings, Inc. 59,500 1,160,250
--------------
8,329,250
--------------
</TABLE>
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See Notes to Financial Statements.
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<TABLE>
<CAPTION>
Value
Shares (Note 1)
------ ------
Common Stocks (Continued)
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Food Processing (3.06%)
Universal Foods Corp. 92,500 $ 3,410,938
--------------
Grocery (2.04%)
Food Lion, Inc. Class A 286,000 2,270,125
--------------
Imaging (3.03%)
Polaroid Corp. 74,000 3,376,250
--------------
Industrial Products (21.88%)
Albany International Corp. Class A 126,500 2,862,063
AlliedSignal Inc. 39,000 2,227,875
Corning Incorporated 155,000 5,948,125
Dexter Corporation (The) 50,000 1,487,500
Snap-On Tools Corp. 70,000 3,316,250
Teleflex Inc. 65,500 3,127,625
Tyco International 42,000 1,711,500
Varian Associates 71,000 3,674,250
--------------
24,355,188
--------------
Industrial Services (4.47%)
Harsco Corp. 74,000 4,976,500
--------------
Insurance (Prop/Casualty)(4.78%)
UNUM Corporation 58,000 3,610,500
Zurich Reinsurance Centre Holdings, Inc. 54,300 1,710,450
--------------
5,320,950
--------------
Medical Supplies (7.06%)
Becton, Dickinson & Co. 25,000 2,006,250
St. Jude Medical Inc.* 80,000 2,680,000
STERIS Corp.* 54,924 1,757,568
West Co., Inc. 47,000 1,410,000
--------------
7,853,818
--------------
Newspaper (2.93%)
Lee Enterprises, Inc. 138,000 3,260,250
--------------
Office Equipment & Supplies (2.00%)
Pitney Bowes, Inc. 46,500 2,220,375
--------------
Packaging and Containers (1.67%)
Ball Corporation 64,500 1,854,375
--------------
</TABLE>
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See Notes to Financial Statements.
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REICH & TANG EQUITY FUND, INC.
STATEMENT OF NET ASSETS (CONTINUED)
JUNE 30, 1996
(UNAUDITED)
===============================================================================
<TABLE>
<CAPTION>
Value
Shares (Note 1)
------ ------
Common Stocks (Continued)
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Retail Store (2.94%)
The Limited, Inc. 99,805 $ 2,145,808
Woolworth Corporation* 50,000 1,125,000
--------------
3,270,808
--------------
Steel (General) (1.00%)
Allegheny Ludlum Corporation 59,000 1,113,625
--------------
Toy/School Supplies (2.67%)
Hasbro, Inc. 83,000 2,967,250
--------------
Total Common Stocks (Cost $78,420,985) $ 110,935,576
--------------
</TABLE>
<TABLE>
<CAPTION>
Face
Amount
------
Short-Term Investments (1.83%)
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<S> <C> <C>
Repurchase Agreements (1.83%)
Morgan (J.P.) Securities Inc., 5.42%, due 07/01/96
(Collateralized by $2,074,884, 7.50%
U.S. Treasury Notes, due 11/15/01) $2,034,000 $ 2,034,000
--------------
Total Short-Term Investments (Cost $2,034,000) $ 2,034,000
--------------
Total Investments (101.49%) (Cost $80,454,985+) 112,969,576
Liabilities in Excess of Cash and Other Assets (-1.49%) ( 1,663,499)
--------------
Net Assets (100.00%) 5,741,645 shares outstanding (Note 3) $ 111,306,077
==============
Net asset value, offering and redemption price per share $ 19.39
==============
* Non-income producing.
+ Aggregate cost for federal income tax purposes is $80,468,664. Aggregate
unrealized appreciation and depreciation, based on cost for federal income
tax purposes, are $33,060,622 and $559,710 respectively.
</TABLE>
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See Notes to Financial Statements.
<PAGE>
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REICH & TANG EQUITY FUND, INC.
STATEMENT OF OPERATIONS
SIX MONTHS ENDED JUNE 30, 1996
(UNAUDITED)
===============================================================================
<TABLE>
<CAPTION>
INVESTMENT INCOME
<C> <C>
Income:
Dividends........................................................................... $ 964,618
Interest............................................................................ 178,993
---------------
Total income................................................................... 1,143,611
---------------
Expenses: (Note 2)
Investment management fee........................................................... $ 448,543
Administration fee.................................................................. 112,135
Distribution expenses............................................................... 28,034
Custodian fees...................................................................... 10,402
Shareholder servicing and related shareholder expenses.............................. 31,500
Legal, compliance and filing fees................................................... 15,886
Audit and accounting................................................................ 30,226
Directors' fees and expenses........................................................ 4,710
Other............................................................................... 137
---------------
Total expenses...................................................................... 681,573
Expenses paid indirectly............................................................ ( 3,775)
---------------
Net expenses........................................................................ 677,798
---------------
Net investment income................................................................... 465,813
---------------
</TABLE>
<TABLE>
<CAPTION>
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS
<C> <C>
Net realized gain on investments........................................................ 6,965,436
Net unrealized appreciation of investments.............................................. 3,084,354
---------------
Net gain on investments........................................................ 10,049,790
---------------
Increase (decrease) in net assets from operations....................................... $ 10,515,603
===============
</TABLE>
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See Notes to Financial Statements.
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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, 1996 Ended
(Unaudited) December 31, 1995
--------- -----------------
INCREASE (DECREASE) IN NET ASSETS
Operations:
<C> <C> <C>
Net investment income...................................................$ 465,813 $ 1,271,598
Net realized gain on investments........................................ 6,965,436 10,086,724
Change in unrealized appreciation (depreciation) of investments......... 3,084,354 14,343,018
-------------- ----------------
Increase in net assets from operations.................................. 10,515,603 25,701,340
Distributions from:
Net investment income...................................................( 447,121) ( 1,271,598)
Net realized gain on investments........................................ -- ( 10,086,724)
In excess of net realized gain.......................................... -- ( 659)
Capital share transactions (Note 3).......................................( 11,095,066) 7,351,166
-------------- ----------------
Total increase (decrease)...............................................( 1,026,584) 21,693,525
Net Assets:
Beginning of period..................................................... 112,332,661 90,636,136
-------------- ----------------
End of period (including undistributed net investment income of
$18,692 & $0, respectively)..........................................$ 111,306,077 $ 112,332,661
============== ================
</TABLE>
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See Notes to Financial Statements.
<PAGE>
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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. The
investment objective of the Fund is to seek growth of capital by investing
primarily in equity securities which management of the Fund believes to be
undervalued. 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) Use of Estimates -
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that effect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the
financial statements and the reported amounts of increases and decreases in
net assets from operations during the reporting period. Actual results
could differ from those estimates.
d) 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.
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REICH & TANG EQUITY FUND, INC.
NOTES TO FINANCIAL STATEMENTS
(UNAUDITED)
===============================================================================
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 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, 1996.
The Manager is a wholly-owned subsidiary of New England Companies, L.P.
("NEIC"). On August 16, 1995, New England Mutual Life Insurance Company ("The
New England"), the owner of NEIC's general partner and a majority owner of the
limited partnership interest in NEIC, entered into an agreement to merge with
Metropolitan Life Insurance Company ("MetLife"), with MetLife to be the survivor
of the merger. The merger is subject to several conditions, including the
required approval, by shareholders of the Fund of a proposed new investment
advisory agreement, intended to take effect at the time of the merger. The new
agreement will be substantially similar to the existing agreement.
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.
Pursuant to a Distribution and Service Plan adopted under securities and
Exchange Commission Rule 12b-1, the Fund may pay certain costs associated with
the distribution of the Fund's shares subject to a limit of 0.05% of the Fund's
average net assets.
Brokerage commissions paid during the period to Reich & Tang Distributors L.P.
amounted to $11,097.
Fees are paid to Directors who are unaffiliated with the Manager on the basis of
$2,000 per annum plus $500 per meeting attended.
Included in the statement of operations under the captions "Custodian Fees" and
"Shareholder servicing and related shareholder expenses" are expense offsets of
$3,775.
3. Capital Stock
At June 30, 1996 100,000,000 shares of $.001 par value stock were authorized and
capital paid in amounted to $71,934,451. Transactions in capital stock were as
follows:
<TABLE>
<CAPTION>
Six Months Ended Year Ended
June 30, 1996 December 31, 1995
----------------------------- -------------------------------
Shares Amount Shares Amount
------------- -------------- ------------ --------------
<C> <C> <C> <C> <C>
Sold.................................... 1,654,616 $ 30,653,559 5,901,454 $ 94,756,038
Issued on reinvestment of dividends..... 22,100 419,103 611,044 10,838,908
Redeemed................................ ( 2,270,831) ( 42,167,728) ( 6,067,405) ( 98,243,780)
------------ ------------- ------------ --------------
Net increase (decrease)................. ( 594,115) ($ 11,095,066) 445,093 $ 7,351,166
============= ============= ============ ==============
</TABLE>
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<PAGE>
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4. Investment Transactions
Purchases and sales of investment securities, other than U.S. Government direct
and agency obligations and short-term investments, totaled $25,029,433 and
$18,616,829, respectively. Accumulated undistributed net realized gains at June
30, 1996 amounted to $6,838,343.
5. Selected Financial Information
<TABLE>
<CAPTION>
Six Months
Ended Year Ended December 31,
----------------------------------------------------------------
June 30, 1996 1995 1994 1993 1992 1991
------------- ---------- ---------- --------- --------- -------
Per Share Operating Performance
(for a share outstanding throughout the period)
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period $ 17.73 $ 15.39 $ 17.61 $ 16.92 $ 15.64 $13.05
-------- --------- --------- -------- -------- --------
Income from investment operations:
Net investment income.......... 0.08 0.22 0.24 0.21 0.23 0.36
Net realized and unrealized
gains (losses) on investments 1.66 4.10 0.05 2.12 2.31 $ 2.63
---------- --------- --------- --------- --------- --------
Total from investment operations 1.74 4.32 0.29 2.33 2.54 2.99
---------- --------- --------- --------- --------- ---------
Less distributions:
Dividends from net investment income ( 0.08) ( 0.22) ( 0.24) ( 0.21) ( 0.23) ( 0.37)
Distributions from net realized gains ( -- ) ( 1.76) ( 2.27) ( 1.43) ( 1.03) ( 0.03)
---------- --------- --------- -------- -------- -------
Total distributions............ ( 0.08) ( 1.98) ( 2.51) ( 1.64) ( 1.26) ( 0.40)
---------- --------- --------- -------- -------- -------
Net asset value, end of period. $ 19.39 $ 17.73 $ 15.39 $ 17.61 $ 16.92 $ 15.64
========== ========= ========= ======== ======== =======
Total Return................... 9.8%+ 28.2% 1.7% 13.8% 16.3% 23.1%
Ratios/Supplemental Data
Net assets, end of period (000) $ 111,306 $ 112,333 $ 90,639 $ 105,181 $ 92,702 $ 83,151
Ratios to average net assets:
Expenses..................... 1.22%*^^ 1.15% 1.17% 1.15% 1.15% 1.14%
Net investment income........ 0.83%* 1.21% 1.35% 1.15% 1.35% 2.33%
Portfolio turnover rate........ 17.47% 27.69% 25.80% 26.69% 27.37% 43.41%
Average commission rate paid (per share) $ .0255++ -- -- -- -- --
* Annualized
^^ Includes expense offsets.
+ Not Annualized
++ Required by regulations issued in 1995.
</TABLE>
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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
Investors Fiduciary Trust Company
127 West 10th Street
Kansas City, Missouri 64105
Transfer Agent &
Dividend Disbursing Agent
Reich & Tang Services L.P.
600 Fifth Avenue
New York, New York 10020
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