As filed with the Securities and Exchange Commission on April 26, 1996
Securities Act File No. 2-94184
Investment Company File No. 811-4148
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 [X]
Pre-Effective Amendment No. [ ]
Post-Effective Amendment No. 22 [X]
and/or
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 [X]
Amendment No. 18 [X]
REICH & TANG EQUITY FUND, INC.
(Exact Name of Registrant as Specified in Charter)
600 Fifth Avenue, New York, New York 10020
(Address of Principal Executive Office) (Zip Code)
Registrant's Telephone Number, including Area Code: (212) 830-5200
Bernadette N. Finn
c/o Reich & Tang Asset Management L.P.
600 Fifth Avenue
New York, New York 10020
(Name and address of agent for service)
Copy to: Michael R. Rosella, Esq.
Battle Fowler LLP
75 East 55th Street
New York, New York 10022
(212) 856-6858
It is proposed that this filing will become effective (check appropriate box)
[ ] immediately upon filing pursuant to paragraph (b)
[X] on May 1,1996 pursuant to paragraph (b)
[ ] 60 days after filing pursuant to paragraph (a)
[ ] on (date) pursuant to paragraph (a) of Rule 485
[ ] 75 days after filing pursuant to paragraph (a)(2)
[ ] on (date) pursuant to paragraph (a)(2) of Rule 485.
The Registrant has registered an indefinite number of securities under the
Securities Act of 1933 pursuant to Section 24(f) under the Investment Company
Act of 1940, as amended, and Rule 24f-2 thereunder, and the Registrant filed a
Rule 24f-2 Notice for its fiscal year ended December 31, 1995 on or about
February 29, 1996.
<PAGE>
CROSS REFERENCE SHEET
(as required by Rule 404 (c))
Part A Location in Prospectus
Item No. (Caption)
1. Cover Page. . . . . . . . . . . . . . . . . Cover Page
2. Synopsis. . . . . . . . . . . . . . . . . . Table of Fees and Expenses
3. Condensed Financial Information . . . . . . Selected Financial Information
4. General Description of Registrant . . . . . Investment Objective, Policies
and Risks; Investment
Restrictions; General Information
5. Management of the Fund. . . . . . . . . . . The Manager
5A. Management's Discussion
of Fund Performance. . . . . . . . . . . . The Manager
6. Capital Stock and Other Securities. . . . . General Information; Dividends,
Distributions and Taxes
7. Purchase of Securities Being Offered. . . . Purchase of Shares
8. Redemption or Repurchase. . . . . . . . . . Redemption of Shares
9. Pending Legal Proceedings . . . . . . . . . Not Applicable
<PAGE>
Part B Caption in Statement of
Item No. Additional Information
PART B
10. Cover Page. . . . . . . . . . . . . . . . . Cover Page
11. Table of Contents . . . . . . . . . . . . . Cover Page
12. General Information and Management; Investment
History . . . . . . . . . . . . . . . . . . Management Contract
13. Investment Objectives and Policies. . . . . Investment Policies;
Investment Restrictions
14. Management of the Fund. . . . . . . . . . . Management; Investment
Management Contract
15. Control Persons and Principal Management; Description
Holders of Securities . . . . . . . . . . . of Common Stock
16. Investment Advisory and Other Services. . . Management; Investment
Management Contract
17. Brokerage Allocation. . . . . . . . . . . . Portfolio Transactions
18. Capital Stock and Other Securities. . . . . Net Asset Value
19. Purchase, Redemption and Pricing Redemption of Shares;
of Securities Being Offered . . . . . . . . Net Asset Value
20. Tax Status. . . . . . . . . . . . . . . . . Not Applicable
21. Underwriters. . . . . . . . . . . . . . . . Distribution and Service Plan
22. Calculation of Performance Data . . . . . . Performance
23. Financial Statements. . . . . . . . . . . . Independent Auditor's Report;
Financial Statements
<PAGE>
- --------------------------------------------------------------------------------
Reich & Tang Equity Fund, Inc.
Reich & Tang Government Securities Trust
Delafield Fund, Inc.
(collectively the "Funds" and individually the "Fund")
600 Fifth Avenue, New York, NY 10020
(212) 830-5200
================================================================================
SUPPLEMENT DATED OCTOBER 12, 1995
Reich & Tang Asset Management L.P., the Fund's investment advisor, is a
wholly-owned subsidiary of New England Investment Companies, L.P. ("NEIC"). New
England Mutual Life Insurance Company ("The New England") owns NEIC's sole
general partner and a majority of the limited partnership interest in NEIC. The
New England and Metropolitan Life Insurance Company ("MetLife") have entered
into an agreement to merge, with MetLife to be the survivor of the merger. The
merger is conditioned upon, among other things, approval by the policyholders of
The New England and MetLife and receipt of certain regulatory approvals. The
merger is not expected to occur until after December 31, 1995.
The merger of The New England into MetLife will constitute an "assignment" of
the existing investment advisory agreement relating to the Fund. Under the
Investment Company Act of 1940, such an "assignment" will result in the
automatic termination of the investment advisory agreement, effective at the
time of the merger. Prior to the merger, shareholders of the Fund will be asked
to approve a 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. A proxy statement describing the new agreement will be sent
to shareholders of the Fund prior to their being asked to vote on the new
agreement.
<PAGE>
- --------------------------------------------------------------------------------
600 FIFTH AVENUE
REICH & TANG NEW YORK, NY 10020
EQUITY FUND, INC. (212) 830-5220
================================================================================
PROSPECTUS
May 1, 1996
Reich & Tang Equity Fund, Inc. (the "Fund") is a no-load, open-end diversified
management investment company. The Fund's investment objective is to seek growth
of capital and investments will be made based upon their potential for capital
growth. The Fund's investment philosophy is that of investment in equity
securities of companies which, based on fundamental research, the management of
the Fund believes to be undervalued. Current income will be secondary to the
objective of capital growth.
Reich & Tang Asset Management L.P. acts as manager of the Fund and Reich & Tang
Distributors L.P. acts as distributor of the Fund's shares. Reich & Tang Asset
Management L.P. is a registered investment advisor. Reich & Tang Distributors
L.P. is a registered broker-dealer and member of the National Association of
Securities Dealers, Inc.
This Prospectus sets forth concisely the information a prospective investor
should know before investing in the Fund. A Statement of Additional Information
dated May 1, 1996, containing additional and more detailed information about the
Fund (the "Statement of Additional Information"), has been filed with the
Securities and Exchange Commission and is hereby incorporated by reference into
this Prospectus. It is available without charge and can be obtained by writing
or calling the Fund at the address and telephone number set forth above.
Shares in the Fund are not deposits or obligations of, or guaranteed or endorsed
by, any bank, and the shares are not federally insured by the Federal Deposit
Insurance Corporation, the Federal Reserve Board, or any other agency.
THIS PROSPECTUS SHOULD BE READ AND RETAINED BY INVESTORS FOR FUTURE REFERENCE.
________________________________________________________________________________
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
________________________________________________________________________________
<PAGE>
<TABLE>
<CAPTION>
TABLE OF FEES AND EXPENSES
Annual Fund Operating Expenses
(as a percentage of average net assets)
<S> <C> <C>
Management Fees 0.80%
Other Expenses 0.35%
Administration Fees 0.20% _____
Total Fund Operating Expenses 1.15%
<S> <C> <C> <C> <C>
Example 1 year 3 years 5 years 10 years
- ------- ------ ------- ------- --------
You would pay the following expenses on a $1,000
investment, assuming 5% annual return (cumulative
through the end of each year): $12 $37 $63 $140
The purpose of the above table is to assist an investor in understanding the
various costs and expenses that an investor in the Fund will bear directly or
indirectly. For a further discussion of these fees see "The Manager" and
"Distribution and Service Plan" herein. The fiqures reflected in the example
should not be considered as a representation of past or future expenses. Actual
expenses may be greater or lesser than those shown above.
</TABLE>
________________________________________________________________________________
<TABLE>
<CAPTION>
SELECTED FINANCIAL INFORMATION
The following selected financial information of Reich & Tang Equity Fund, Inc.
has been audited by McGladrey & Pullen, LLP, Independent Certified Public
Accountants, whose report thereon appears in the Statement of Additional
Information.
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Year Ended December 31,
1995 1994 1993 1992 1991 1990 1989 1988 1987 1986
---- ---- ---- ---- ---- ---- ---- ---- ---- ----
Per Share Operating Performance:
(for a share outstanding
throughout the period)
Net asset value, beginning of period $15.39 $17.61 $16.92 $15.64 $13.05 $14.24 $14.11 $13.11 $14.50 $13.44
----- ----- ----- ----- ----- ------ ------ ----- ----- -----
Income from investment operations:
Net investment income......... 0.22 0.24 0.21 0.23 0.36 0.35 0.43 0.44 0.34 0.35
Net realized and unrealized
gains (losses) on investments 4.10 .05 2.12 2.31 2.63 (1.18) 2.08 2.53 0.45 1.62
----- ----- ----- ----- ----- ------ ------ ----- ----- -----
Total from investment operations 4.32 .29 2.33 2.54 2.99 (0.83) 2.51 2.97 0.79 1.97
----- ----- ----- ----- ----- ------ ------ ----- ------ -----
Less distributions:
Dividends from net investment income (0.22) (.24) (0.21) (0.23) (0.37) (0.36) (0.45) (0.44) (0.40) (0.28)
Dividends from net realized
gains on investments...... (1.76) (2.27) (1.43) (1.03) (0.03) --- (1.93) (1.53) (1.78) (0.63)
Total distributions........... (1.98) (2.51) (1.64) (1.26) (0.40) (0.36) (2.38) (1.97) (2.18) (0.91)
Net asset value, end of period $17.73 $15.39 $17.61 $16.92 $15.64 $13.05 $14.24 $14.11 $13.11 $14.50
Total Return.................. 28.2% 1.7% 13.8% 16.3% 23.1% (5.8%) 17.9% 22.8% 5.1% 14.7%
Ratios/Supplemental Data
Net assets, end of period
(000's omitted)............... $112,333 $90,639 $105,181 $92,702 $83,151 $97,085 $111,992 $102,391 $101,650 $110,516
Ratios to average net assets:
Expenses.................. 1.15% 1.17% 1.15% 1.15% 1.14% 1.12% 1.10% 1.11% 1.11% 1.21%
Net investment income..... 1.21% 1.35% 1.15% 1.35% 2.33% 2.56% 2.68% 2.87% 2.07% 2.51%
Portfolio turnover rate....... 27.69% 25.80% 26.69% 27.37% 43.41% 27.48% 47.90% 27.04% 42.53% 34.57%
</TABLE>
2
<PAGE>
INVESTMENT OBJECTIVES,
POLICIES AND RISKS
The investment objective of the Fund is to seek growth of capital and
investments will be made based upon their potential for capital appreciation.
Therefore, current income will be secondary to the objective of capital growth.
The Fund's investment objective of capital growth is fundamental and may not be
changed without stockholder approval.
There obviously can be no assurance that the Fund's investment objective will be
achieved. The nature of the Fund's investment objective and policies may involve
a somewhat greater degree of short-term risk than would be present under other
investment approaches.
The Fund will under normal circumstances have substantially all of its assets
(i.e., more than 65%) invested in a diversified portfolio of equity securities
(common stocks or securities convertible into common stocks or rights or
warrants to subscribe for or purchase common stocks). The Fund at times may also
invest not more than 35% of its total assets in debt securities and preferred
stocks offering a significant opportunity for price appreciation. When the
Manager determines that adverse conditions warrant, the Fund may take a
defensive position and invest temporarily without limit in investment grade debt
securities or preferred stocks or in money market instruments. Low investment
grade debt securities may have speculative characteristics and changes in
economic conditions or other circumstances are more likely to lead to a weakened
capacity to make principal and interest payments than is the case with other
debt security. The Fund will not necessarily dispose of a security that falls
below investment grade based upon the Manager's determination as to whether
retention of such a security is consistent with the Fund's investment
objectives. Money market instruments for this purpose include obligations issued
or guaranteed by the U.S. government, its agencies or instrumentalities
(including such obligations subject to repurchase agreements), commercial paper
rated in the highest grade by any nationally recognized rating agency and
certificates of deposit and bankers' acceptances issued by domestic banks having
total assets in excess of one billion dollars. A repurchase agreement is an
instrument under which an investor (e.g., the Fund) purchases a U.S. government
security from a vendor, with an agreement by the vendor to repurchase the
security at the same price, plus interest at a specified rate. Repurchase
agreements may be entered into with member banks of the Federal Reserve System
or "primary dealers" (as designated by the Federal Reserve Bank of New York) in
U.S. government securities. Repurchase agreements usually have a short duration,
often less than one week. In the event that a vendor defaulted on its repurchase
obligation, the Fund might suffer a loss to the extent that the proceeds from
the sale of the collateral were less than the repurchase price. If the vendor
becomes bankrupt, the Fund might be delayed, or may incur costs or possible
losses of principal and income, in selling the collateral.
The Fund will invest in both listed and unlisted securities and in foreign as
well as domestic securities. While the Fund has no present intention of
investing any significant portion of its assets in foreign securities, it
reserves the right to invest in foreign securities if purchase thereof at the
time of purchase would not cause more than 15% of the value of the Fund's total
assets to be invested in foreign securities. Investments in foreign securities
involve certain risk considerations which are not typically associated with
investments in domestic securities. These considerations include changes in
exchange rates and exchange control regulation, political and social
instability, expropriation, less liquid markets and less available information
than are generally the case in the United States, less government supervision of
exchanges and brokers and issuers, lack of uniform accounting and
3
<PAGE>
auditing standards and greater price volatility. See Statement of Additional
Information, "Investment Policies."
The Fund may invest in warrants which entitle the holder to buy equity
securities at a specific price for a specific period of time. The Fund will not,
however, purchase any warrant if, as a result of such purchase, 5% or more of
the Fund's total assets would be invested in warrants. Included within that
amount, but not to exceed 2% of the value of the Fund's total assets, may be
warrants which are not listed on the New York Stock or American Stock Exchange.
Warrants acquired by the Fund in units or attached to securities may be deemed
to be without value. The Fund will not invest more than 5% of its total assets
in securities of issuers which together with their predecessors have a record of
less than three years continuous operations.
The Fund may invest in restricted securities and in other assets having no ready
market if such purchases at the time thereof would not cause more than 10% of
the value of the Fund's net assets to be invested in all such restricted or not
readily marketable assets. Restricted securities may be sold only in privately
negotiated transactions, in a public offering with respect to which a
registration statement is in effect under the Securities Act of 1933 or pursuant
to Rule 144 promulgated under such Act. Where registration is required, the Fund
may be obligated to pay all or part of the registration expense, and a
considerable period may elapse between the time of the decision to sell and the
time the Fund may be permitted to sell a security under an effective
registration statement. If during such a period adverse market conditions were
to develop, the Fund might obtain a less favorable price than prevailed when it
decided to sell. Restricted securities will be valued in such manner as the
Board of Directors of the Fund in good faith deems appropriate to reflect their
fair market value.
Within this basic framework, the policy of the Fund will emphasize flexibility
in arranging its portfolio to seek the desired results. The Fund's investment
philosophy is that of investment in equity securities of companies which, based
on fundamental research, the management of the Fund believes to be undervalued.
Critical factors which will be considered in the selection of securities will
include the values of individual securities relative to other investment
alternatives, trends in the determinants of corporate profits, corporate cash
flow, balance sheet changes, management capability and practices, and the
economic and political outlook. Generally speaking, disposal of a security will
be based upon factors such as (i) increases in the price level of the security
or of securities generally which the Fund believes reflect earnings growth too
far in advance, (ii) changes in the relative opportunities offered by various
securities and (iii) actual or potential deterioration of the issuer's earning
power which the Fund believes may adversely affect the price of its securities.
Turnover will be influenced by sound investment practices, the Fund's investment
objective, and the need of funds for the redemption of the Fund's shares.
The Fund will not seek to realize profits by anticipating short-term market
movements and intends to purchase securities for long-term capital appreciation
under ordinary circumstances. While the rate of portfolio turnover will not be a
limiting factor when the investment advisor deems changes appropriate, it is
anticipated that given the Fund's investment objectives, its annual portfolio
turnover should not generally exceed 75%. (A portfolio turnover rate of 75%
would occur, for example, if three-fourths of the stocks in the Fund's portfolio
were replaced in a period of one year.)
The Fund's investment policies (unlike its investment objective) are not
fundamental and may
4
<PAGE>
be changed by the Fund's Board of Directors without stockholder approval.
INVESTMENT RESTRICTIONS
The Fund has adopted certain investment restrictions which may not be changed
without the approval of the Fund's stockholders. Briefly, these restrictions
provide that the Fund may not:
1. Purchase the securities of any one issuer, other than the U.S. government
or any of its agencies or instrumentalities, if immediately after such
purchase more than 5% of the value of its total assets would be invested in
such issuer or the Fund would own more than 10% of the outstanding voting
securities of such issuer, except that up to 25% of the value of the Fund's
total assets may be invested without regard to such 5% and 10% limitations;
2. Invest more than 25% of the value of its total assets in any particular
industry;
3. Purchase securities on margin, but it may obtain such short-term credits
from banks as may be necessary for the clearance of purchases and sales of
securities;
4. Make loans of its assets to any person, except for the purchase of debt
securities as discussed under "Investment Objectives, Policies and Risks"
herein;
5. Borrow money except for (i) the short-term credits from banks referred to
in paragraph 3 above and (ii) borrowings from banks for temporary or
emergency purposes, including the meeting of redemption requests which
might require the untimely disposition of securities. Borrowing in the
aggregate may not exceed 15%, and borrowing for purposes other than meeting
redemptions may not exceed 5%, of the value of the Fund's total assets
(including the amount borrowed) less liabilities (not including the amount
borrowed) at the time the borrowing is made. Outstanding borrowings in
excess of 5% of the value of the Fund's total assets will be repaid before
any subsequent investments are made;
6. Mortgage, pledge or hypothecate any of its assets, except as may be
necessary in connection with permissible borrowings mentioned in paragraph
5 above;
7. Purchase the securities of any other investment company, except by purchase
in the open market where to the best information of the Fund no commission
or profit to a sponsor or dealer (other than the customary broker's
commission) results from such purchase, or except when such purchase is
part of a merger, consolidation or acquisition of assets; and
8. Act as an underwriter of securities of other issuers, except that the Fund
may acquire restricted or not readily marketable securities under
circumstances where, if such securities were sold, the Fund might be deemed
to be an underwriter for purposes of the Securities Act of 1933. The Fund
will not, however, invest more than 10% of the value of its net assets in
restricted securities and not readily marketable securities.
If a percentage restriction is adhered to at the time an investment is made, a
later change in percentage resulting from changes in the value of the Fund's
portfolio securities will not be considered a violation of the Fund's policies
or restrictions.
THE MANAGER
The Fund's Board of Directors, which is responsible for the overall management
and supervision of the Fund, has employed Reich & Tang Asset Management L.P.
(the "Manager") to serve as investment manager of the Fund. The Manager provides
persons satisfactory to the Fund's Board of Directors to serve as officers of
the Fund. Such officers, as well as certain other employees and
5
<PAGE>
directors of the Fund, may be directors or officers of Reich & Tang Asset
Management, Inc., the sole general partner of the Manager, or employees of the
Manager or its affiliates. Due to the services performed by the Manager, the
Fund currently has no employees and its officers are not required to devote
full-time to the affairs of the Fund. The Statement of Additional Information
contains general background information regarding each director and principal
officer of the Fund.
The Manager is a Delaware limited partnership with its principal office at 600
Fifth Avenue, New York, New York 10020. The Manager was at March 31, 1996
investment manager, advisor or supervisor with respect to assets aggregating in
excess of $9.7 billion. The Manager acts as manager or administrator of fifteen
other registered investment companies and also advises pension trusts,
profit-sharing trusts and endowments.
New England Investment Companies, L.P. ("NEICLP") is the limited partner and
owner of a 99.5% interest in the newly created limited partnership, Reich & Tang
Asset Management L.P., the Manager. Reich & Tang Asset Management, Inc. (a
wholly-owned subsidiary of NEICLP) is the general partner and owner of the
remaining .5% interest of the Manager. Reich & Tang Asset Management L.P. has
succeeded NEICLP as the Manager of the Fund.
New England Investment Companies, Inc. ("NEIC"), a Massachusetts corporation,
serves as the sole general partner of NEICLP. The New England Mutual Life
Insurance Company ("The New England") owns approximately 68.1% of the total
partnership units outstanding of NEICLP, and Reich & Tang, Inc., owns
approximately 22.8% of the outstanding partnership units of NEICLP.
In addition, NEIC is a wholly-owned subsidiary of The New England which may be
deemed a "controlling person" of the Manager. NEIC is a holding company offering
a broad array of investment styles across a wide range of asset categories
through ten investment advisory/ management affiliates and two distribution
subsidiaries. These include Loomis, Sayles & Company, L.P., Copley Real Estate
Advisors, Inc., Back Bay Advisors, L.P., Marlborough Capital Advisors, L.P.,
Westpeak Investment Advisors, L.P., Draycott Partners, Ltd., TNE Investment
Services, L.P., New England Investment Associates, Inc., Harris Associates, and
an affiliate, Capital Growth Management Limited Partnership. These affiliates in
the aggregate are investment advisors or managers to 42 other registered
investment companies.
Robert F. Hoerle and Steven M. Wilson are primarily responsible for the
day-to-day investment management of the Fund. Mr. Hoerle is Chairman, President
and a Director of the Fund and is a Managing Director of the Capital Management
Division of the Manager, with which he has been associated since September 1993.
From July 1989 to September 1993, Mr. Hoerle was Chairman of the Board, a
Director and an officer of Reich & Tang, Inc. with which he was associated with
from February 1971 to September 1993. Mr. Wilson is a Senior Vice President of
the Fund and is a Senior Vice President of the Capital Management Division of
the Manager, with which he has been associated since September 1993. From August
1990 to September 1993, Mr. Wilson was a Senior Vice President of Reich & Tang,
Inc. with which he was associated with from July 1986 to September 1993. The
Fund's annual report contains information regarding the Fund's performance and
will be provided, without charge, upon request.
Pursuant to the Investment Management Contract, the Manager is responsible for
the investment management of the Fund's assets, including the responsibility for
making investment decisions and placing orders for the purchase and sale of the
Fund's investments with the issuers or with brokers or dealers selected by it in
its discretion. Subject to
6
<PAGE>
the Fund's policy of seeking the most favorable commission and the best price on
each transaction, the Manager may effect transactions in the Fund's portfolio
securities through Reich & Tang Distributors L.P. (the "Distributor"). In
addition, consistent with the Rules of Fair Practice of the National Association
of Securities Dealers, Inc., and subject to seeking best execution, the Manager
may consider sales of shares of the Fund as a factor in the selection of brokers
to execute portfolio transactions for the Fund. The Manager also furnishes to
the Board of Directors periodic reports on the composition of the Fund's
portfolio securities.
The Manager may, from time to time, make recommendations which result in the
purchase or sale of a particular security by its other clients simultaneously
with the Fund. If transactions on behalf of more than one client during the same
period increase the demand for securities being purchased or the supply of
securities being sold, there may be an adverse effect on price. It is the policy
of the Manager to allocate advisory recommendations and the placing of orders in
a manner which is deemed equitable by the Manager to the accounts involved,
including the Fund. When two or more of the clients of the Manager, including
the Fund, are purchasing the same security in a given day from the same
broker-dealer, such transactions may be averaged as to price.
For its services under the Investment Management Contract, the Manager receives
from the Fund a fee, payable monthly, at the annual rate of .80% of the Fund's
average daily net assets (the "Management Fee"). The rate of the advisory fee to
be paid by the Fund is higher than the rate paid by most similar registered
investment companies. In addition to management services with respect to the
purchase and sale of securities, the fee includes compensation for overall
management of the Fund. Pursuant to a distribution and service plan, the Manager
may use the management fee for distribution purposes including defraying the
costs of performing stockholder servicing functions on behalf of the Fund,
compensating others, including banks, broker-dealers and other organizations
whose customers or clients are Fund stockholders for providing assistance in
distributing the Fund's shares and defraying the costs of other promotional
activities. (See "Distribution and Service Plan" herein.)
For its services under the Administrative Services Contract, the Manager
receives a fee equal to .20% per annum of the Fund's average daily net assets.
Any portion of the total fees received by the Manager may be used to provide
shareholder services and for distribution of Fund shares. (See "Distribution and
Service Plan" herein.)
Pursuant to the Administrative Services Contract for the Fund, the Manager
performs clerical, accounting supervision and related office service functions
for the Fund and provides the Fund the personnel to (i) supervise the
performance of bookkeeping and related services by Investors Fiduciary Trust
Company, the Fund's bookkeeping agent, (ii) prepare reports to and filings with
regulatory authorities and (iii) perform such other non-advisory services as the
Fund may from time to time request of the Manager. The personnel rendering those
services, who may act as officers of the Fund, may be employees of the Manager
or its affiliates. The Fund pays the Manager the costs of such personnel at
rates which must be agreed upon between the Fund and the Manager and provided
that no payments shall be made for any services performed by any officer of the
general partner of the Manager or its affiliates. The amounts of such
reimbursements must be agreed upon between the Fund and the Manager. The
Manager, at its discretion, may voluntarily waive all or a portion of the
administrative services fee.
For the year ended December 31, 1995, the Manager for its services under the
Investment Management Contract received an amount equal to
7
<PAGE>
1.0% of the Fund's average daily net assets. For the year ended December 31,
1995, the total expenses for the Fund, including the management fee and
administrative services fee, were 1.15% of the Fund's average daily net assets.
DISTRIBUTION AND SERVICE PLAN
Rule 12b-1 (the "Rule") under the Investment Company Act of 1940 ("1940 Act"),
regulates the circumstances under which an investment company may, directly or
indirectly, bear the expenses of distributing its shares. The Rule defines
distribution expenses to include the cost of "any activity which is primarily
intended to result in the sale of [fund] shares." The Rule provides, among other
things, that an investment company may bear distribution expenses only pursuant
to a plan adopted in accordance with the Rule. Because certain proposed
expenditures, described below, by the Fund, the Manager and the Distributor may
be deemed to involve payment of distribution expenses by the Fund, the Fund's
Board of Directors has adopted a distribution and service plan (the "Plan") and,
pursuant to the Plan, the Fund and the Distributor have entered into a
Distribution Agreement and the Fund and the Manager have entered into the
Investment Management Contract.
Reich & Tang Asset Management, Inc. serves as the sole general partner for both
Reich & Tang Asset Management L.P. and Reich & Tang Distributors L.P., and Reich
& Tang Asset Management L.P. serves as the sole limited partner of the
Distributor.
Under the Distribution Agreement, the Distributor serves as distributor of the
Fund's shares and, for the nominal consideration of $1 per year and as agent for
the Fund, will solicit orders for the purchase of the Fund's shares, provided
that any orders will not be binding on the Fund until accepted by the Fund as
principal.
The Investment Management Contract includes provisions allowing the Manager to
defray the cost of, or compensate other persons, including banks, broker-dealers
and other organizations whose customers or clients are Fund stockholders
("Intermediaries"), for performing stockholder, administrative and accounting
services to the Fund. Under the Investment Management Contract, the Manager may
also compensate the foregoing persons and organizations for providing assistance
in distributing the Fund's shares. The Investment Management Contract further
contemplates that the Manager may compensate sales personnel and pay for the
preparation and printing of brochures and other promotional materials, mailings
to prospective stockholders, advertising and other activities in connection with
the distribution of the Fund's shares. The Manager is not subject to any
percentage limitation with respect to the amounts it may expend for the
activities described in this paragraph.
The Glass-Steagall Act and other applicable laws and regulations prohibit banks
and other depository institutions from engaging in the business of underwriting,
selling or distributing most types of securities. However, in the opinion of the
Manager based on the advice of counsel, these laws and regulations do not
prohibit such depository institutions from providing other services for
investment companies such as the stockholder servicing and related
administrative functions referred to above. The Fund's Board of Directors will
consider appropriate modifications to the Fund's operations, including
discontinuance of any payments then being made under the Plan to banks and other
depository institutions, in the event of any future change in such laws or
regulations which may affect the ability of such institutions to provide the
above-mentioned services. It is not anticipated that the discontinuance of
payments to such an institution would result in loss to stockholders or change
in the Fund's net asset value. In addition, state securities laws on this issue
may differ from
8
<PAGE>
the interpretations of Federal law expressed herein and banks and financial
institutions may be required to register as dealers pursuant to state law.
Under the Plan, the Manager may make payments in connection with the
distribution of the Fund's shares from the Management Fee received from the
Fund, from the Manager's revenues (which may include management or advisory fees
received from other investment companies) and past profits. The Manager, in its
sole discretion, will determine the amount of its payments made pursuant to the
Plan, but no such payment will increase the amount which the Fund is required to
pay to the Manager for any fiscal year under the Investment Management Contract.
Under the Plan, the Fund may pay the costs of preparing and printing the Fund's
prospectus, statement of additional information and subscription order form and
of delivering them to existing and prospective stockholders of the Fund. The
payments made by the Fund for the expenses referred to in this paragraph will
not exceed in any year .05% of the Fund's average daily net assets for the year.
For the year ended December 31, 1996, the Fund incurred $7,610 in expenses
pursuant to the Plan. During such year, the Manager spent pursuant to the Plan
an amount equal to 0.01% of the average daily net assets of the Fund for the
year.
PURCHASE OF SHARES
Shares of the Fund are offered at the next determined net asset value without
any sales charge by the Distributor as an investment vehicle for individuals,
institutions, fiduciaries and retirement plans. Prospectuses, sales material and
applications can be obtained from the Distributor.
The minimum for an initial investment is $5,000, except that the minimum initial
investment for an Individual Retirement Account is $250. There is no minimum for
subsequent investments. All purchase payments will be invested in full and
fractional shares. The Fund or the Distributor is authorized to reject any
purchase order.
For each stockholder of record, the Fund's transfer agent establishes an open
account to which all shares purchased are credited, together with any dividends
and capital gain distributions which are paid in additional shares. (See
"Dividends, Distributions and Taxes" herein.) Although most stockholders elect
not to receive stock certificates, certificates for full shares can be obtained
on specific written request to the Transfer Agent. No certificates are issued
for fractional shares.
If an investor purchases or redeems shares of the Fund through an investment
dealer, bank or other institution, that institution may impose charges for its
services; these charges would reduce the investor's yield or return. An investor
may purchase or redeem shares of the Fund directly from the Fund's Distributor
or its Transfer Agent without any such charges.
New Stockholders
Mail
To purchase shares of the Fund send a check made payable to "Reich & Tang Equity
Fund, Inc." and a completed subscription order form to the Fund at the following
address:
Reich & Tang Equity Fund, Inc.
Reich & Tang Funds
600 Fifth Avenue - 8th Floor
New York, New York 10020
Checks are accepted subject to collection at full face value in United States
currency.
Bank Wire
To purchase shares of the Fund using the wire system for transmittal of money
among banks, an investor should first telephone the Fund at 212-830-5220 (within
New York State) or at 800-221-3079
9
<PAGE>
(outside New York State) to obtain a new account number. The investor should
then instruct a member commercial bank to wire funds to:
Investors Fiduciary Trust Company
ABA #101003621
DDA #890752-953-8
For Reich & Tang Equity Fund, Inc.
Account of (Investor's Name)___________
Fund Account #0239_____________________
SS#/Tax ID#____________________________
Then promptly complete and mail the subscription order form. There may be a
charge by your bank for transmitting the money by bank wire. The Fund does not
charge investors in the Fund for the receipt of wire transfers. If you are
planning to wire funds, it is suggested that you instruct your bank early in the
day so the wire transfer can be accomplished the same day. Payment in the form
of a "bank wire" received prior to 4 p.m., New York City time, on a Fund
Business Day will be treated as a Federal Funds payment received on that day.
Personal Delivery
Deliver a check made payable to "Reich & Tang Equity Fund, Inc." along with a
completed subscription order form to:
Reich & Tang Mutual Funds
600 Fifth Avenue - 9th Floor
New York, New York 10020
Present Stockholders
Subsequent purchases can be made by personal delivery or bank wire, as indicated
above, or by mailing a check to the Fund at:
Reich & Tang Equity Fund, Inc.
Mutual Funds Group
P.O. Box 13232
Newark, New Jersey 07101-3232
The stockholder's account number should be clearly indicated.
Electronic Funds Transfers (EFT),
Pre-authorized Credit
and Direct Deposit Privilege
You may purchase shares of the Fund (minimum of $100) by having salary, dividend
payments, interest payments or any other payments designated by you, or by
having federal salary, social security, or certain veteran's, military or other
payments from the federal government, automatically deposited into your Fund
account. You can also have money debited from your checking account. To enroll
in any one of these programs, you must file with the Fund a completed EFT
Application, Pre-authorized Credit Application, or a Direct Deposit Sign-Up Form
for each type of payment that you desire to include in the Privilege. The
appropriate form may be obtained from your broker or the Fund. You may elect at
any time to terminate your participation by notifying in writing the appropriate
depositing entity and/or federal agency. Death or legal incapacity will
automatically terminate your participation in the Privilege. Further, the Fund
may terminate your participation upon 30 days' notice to you.
REDEMPTION OF SHARES
Stockholders may make a redemption in any amount by sending a written request to
the Fund, accompanied by any certificate that may have been issued to the
stockholder, addressed to:
Reich & Tang Funds
600 Fifth Avenue - 8th Floor
New York, New York 10020
Upon receipt by the Fund of a redemption request in proper form, shares of the
Fund will be redeemed at their next determined net asset value. (See "Net Asset
Value" herein.)
The request must specify the name of the Fund, the dollar amount or number of
shares to be redeemed, and the account number. The request must be signed in
exactly the same way the account is registered (if there is more than one owner
of the
10
<PAGE>
shares, all must sign) and, if any, certificates are included in the request,
presentation of such certificates properly endorsed. In all cases, all the
signatures on a redemption request and/or certificates must be guaranteed by an
eligible guarantor institution which includes a domestic bank, a domestic
savings and loan institution, a domestic credit union, a member bank of the
Federal Reserve System or a member firm of a national securities exchange;
pursuant to the Fund's Transfer Agent's standards and procedures (guarantees by
notaries public are not acceptable). Further documentation, such as copies of
corporate resolutions and instruments of authority, may be requested from
corporations, administrators, executors, personal representatives, trustees or
custodians to evidence the authority of the person or entity making the
redemption request.
Checks for redemption proceeds normally will be mailed within seven days, but
will not be mailed until all checks (including a certified or cashier's check)
in payment for the purchase of the shares to be redeemed have been cleared,
currently considered by the Fund to occur up to 15 days after investment. Unless
other instructions are given in proper form, a check for the proceeds of a
redemption will be sent to the stockholder's address of record and generally
will be mailed within seven days after receipt of the request.
The Fund may suspend the right of redemption and postpone the date of payment
for more than seven days during any period when (i) trading on the New York
Stock Exchange is restricted or the Exchange is closed, other than customary
weekend and holiday closings, (ii) the Securities and Exchange Commission has by
order permitted such suspension or (iii) an emergency, as defined by rules of
the Securities and Exchange Commission, exists making disposal of portfolio
investments or determination of the value of the net assets of the Fund not
reasonably practicable.
The proceeds of a redemption may be more or less than the amount invested and,
therefore, a redemption may result in a gain or loss for Federal income tax
purposes.
To be in a position to eliminate excessive expenses, the Fund reserves the right
to redeem upon not less than 30 days' notice all shares of the Fund in an
account (other than an IRA) which has a value below $500 not due to market
movement or the Fund may impose a monthly service charge of $10 on such
accounts. However, a stockholder will be allowed to make additional investments
prior to the date fixed for redemption to avoid liquidation of the account.
Systematic Withdrawal Plan
Any stockholder who owns shares of the Fund with an aggregate value of $10,000
or more may establish a Systematic Withdrawal Plan under which he offers to sell
to the Fund at net asset value the number of full and fractional shares which
will produce the monthly or quarterly payments specified (minimum $50.00 per
payment). Depending on the amounts withdrawn, systematic withdrawals may deplete
the investor's principal. Investors contemplating participation in this plan
should consult their tax advisors.
Stockholders wishing to utilize this plan may do so by completing an application
which may be obtained by writing or calling the Fund. No additional charge to
the stockholder is made for this service.
Telephone Redemption Privilege
The Fund accepts telephone requests for redemption from stockholders who elect
this option. Telephone requests for redemption may not exceed the sum of $25,000
per request per day. The proceeds of a telephone redemption will be sent to the
stockholder at his address or to his bank account as set forth in the
subscription order form or in a subsequent signature guaranteed written
11
<PAGE>
authorization. The Fund may accept telephone redemption instructions from any
person with respect to accounts of stockholders who elect this service, and thus
stockholders risk possible loss of dividends in the event of a telephone
redemption not authorized by them. The Fund will employ reasonable procedures to
confirm that telephone redemption instructions are genuine, and will require
that stockholders electing such option provide a form of personal
identification. The failure by the Fund to employ such procedures may cause the
Fund to be liable for the losses incurred by investors due to telephone
redemptions based upon unauthorized or fraudulent instructions.
RETIREMENT PLANS
The Fund has available a form of individual retirement account ("IRA") for
investment in the Fund's shares. Individuals earning compensation, including
earnings from self-employment, generally may make IRA contributions of up to
$2,000 annually. However, the deductibility of an individual's IRA contribution
may be reduced or eliminated if the individual or, in the case of a married
individual, either the individual or the individual's spouse, is an active
participant in an employer-sponsored retirement plan. Thus, in the case of an
active participant, the deduction will not be available for an individual with
adjusted gross income above $35,000, a married couple filing a joint return with
adjusted gross income above $50,000 and a married individual filing separately
with adjusted gross income above $10,000. In addition, an individual with a
non-working spouse may establish a separate IRA for the spouse and annually
contribute a total of up to $2,250 to the two IRAs, provided that no more than
$2,000 may be contributed to the IRA of either spouse. The minimum investment
required to open an IRA is $250.
Withdrawals from an IRA, other than that portion, if any, of the withdrawal
considered to be a return of the investor's non-deductible IRA contribution, are
taxed as ordinary income when received. Such withdrawals may be made without
penalty after the participant reaches age 591/2, and must commence shortly after
age 701/2. Withdrawals before age 591/2 or the failure to commence withdrawals
on a timely basis after age 70 may involve the payment of certain penalties.
Fund shares may also be a suitable investment for assets of other types of
qualified pension or profit-sharing plans, including cash or deferred or salary
reduction "401(k) plans" which give participants the right to defer portions of
their compensation for investment on a tax-deferred basis until distributions
are made from the plans.
Persons desiring information concerning investments by IRAs and other retirement
plans should write or telephone the Fund.
EXCHANGE PRIVILEGE
Stockholders of the Fund are entitled to exchange some or all of their shares in
the Fund for shares of certain other investment companies which retain Reich &
Tang Asset Management L.P. as investment advisor or manager and which
participate in the exchange privilege program with the Fund. Currently the
exchange privilege program has been established between the Fund and California
Daily Tax Free Income Fund, Inc., Connecticut Daily Tax Free Income Fund, Inc.,
Daily Tax Free Income Fund, Inc., Florida Daily Municipal Income Fund, Michigan
Daily Tax Free Income Fund, Inc., New Jersey Daily Municipal Income Fund, Inc.,
New York Daily Tax Free Income Fund, Inc., North Carolina Daily Municipal Income
Fund, Inc., Pennsylvania Daily Municipal Income Fund and Short Term Income Fund,
Inc. In the future, the exchange privilege program may be extended to other
investment companies which retain Reich & Tang Asset Management L.P. as
investment advisor or manager. An exchange of shares in the Fund pursuant to the
exchange privilege is, in effect, a redemption of Fund shares
12
<PAGE>
(at net asset value) followed by the purchase of shares of the investment
company into which the exchange is made (at net asset value) and may result in a
stockholder realizing a taxable gain or loss for Federal income tax purposes.
There is no charge for the exchange privilege or limitation as to frequency of
exchanges. The minimum amount for an exchange is $1,000, except that
stockholders who are establishing a new account with an investment company
through the exchange privilege must insure that a sufficient number of shares
are exchanged to meet the minimum initial investment required for the investment
company into which the exchange is being made. The exchange privilege is
available to stockholders resident in any state in which shares of the
investment company being acquired may legally be sold. Before making an
exchange, the investor should review the current prospectus of the investment
company into which the exchange is being made. Prospectuses may be obtained by
contacting the Distributor at the address or telephone number listed on the
cover of this Instructions for exchange may be made in writing to the Transfer
Agent at the appropriate address listed herein or, for stockholders who have
elected that option, by telephone. The Fund reserves the right to reject any
exchange request and may modify or terminate the exchange privilege at any time.
DIVIDENDS, DISTRIBUTIONS AND TAXES
Each dividend and capital gains distribution, if any, declared by the Fund on
its outstanding shares will, at the election of each stockholder, be paid in
cash or in additional shares of common stock of the Fund having an aggregate net
asset value as of the payment date of such dividend or distribution equal to the
cash amount of such dividend or distribution. Election to receive dividends and
distributions in cash or shares is made at the time shares are subscribed for
and may be changed by notifying the Fund in writing at any time prior to the
record date for a particular dividend or distribution. If the stockholder makes
no election the Fund will make the distribution in shares. There is no sales or
other charge in connection with the reinvestment of dividends and capital gains
distributions.
While it is the intention of the Fund to distribute to its stockholders
substantially all of each fiscal year's net income and net realized capital
gains, if any, the amount and time of any such dividend or distribution must
necessarily depend upon the realization by the Fund of income and capital gains
from investments. Dividends will normally be paid quarterly. Capital gains
distributions, if any, will be made at least annually and usually at the end of
the Fund's fiscal year. There is no fixed dividend rate, and there can be no
assurance that the Fund will pay any dividends or realize any capital gains.
The Fund qualified for the fiscal year ended December 31, 1995 and intends for
each year thereafter to qualify for tax treatment as a "regulated investment
company" under the Internal Revenue Code of 1986, as amended. Qualification as a
regulated investment company relieves the Fund of Federal income tax on that
part of its net ordinary income and net realized capital gains which it pays out
to its stockholders. Dividends out of net ordinary income and distributions of
net short-term capital gains are taxable to the recipient stockholders as
ordinary income and are eligible, in the case of corporate stockholders, for the
dividends-received deduction to the extent that the Fund's income is derived
from qualifying dividends received by the Fund from domestic corporations. A
corporation's dividends-received deduction will be disallowed unless the
corporation holds shares in the Fund at least 46 days. Furthermore, a
corporation's dividends-received deduction will be disallowed to the extent a
corporation's investment in shares of the Fund is financed with indebtedness.
The excess of net long-term capital gains over the net short-term capital losses
realized and
13
<PAGE>
distributed by the Fund to its stockholders as capital gains distributions are
taxable to the stockholders as long-term capital gains, irrespective of the
length of time a stockholder may have held his stock. Such long-term capital
gains distributions are not eligible for the dividends-received deduction
referred to above. If a stockholder held shares six months or less and during
that period received a distribution taxable to such stockholder as long-term
capital gain, any loss realized on the sale of such shares during such six-month
period would be a long-term capital loss to the extent of such distribution.
Any dividend or distribution received by a stockholder on shares of the Fund
shortly after the purchase of such shares by such stockholder will have the
effect of reducing the net asset value of such shares by the amount of such
dividend or distribution. Furthermore, such dividend or distribution, although
in effect a return of capital, is subject to applicable taxes to the extent that
the investor is subject to such taxes regardless of the length of time the
investor may have held the stock.
The Fund is required by Federal law to withhold 31% of reportable payments
(which may include dividends, capital gains distributions and redemptions) paid
to stockholders who have not complied with IRS regulations. In connection with
this withholding requirement, a stockholder will be asked to certify on his
application that the social security or tax identification number provided is
correct and that the stockholder is not subject to 31% backup withholding for
previous underreporting to the IRS.
NET ASSET VALUE
The Fund determines the net asset value per share of the Fund as of 4:00 p.m.,
New York City time, by dividing the value of the Fund's net assets (i.e., the
value of its securities and other assets less its liabilities, including
expenses payable or accrued but excluding capital stock and surplus) by the
number of shares outstanding at the time the determination is made. The Fund
determines its net asset value on each Fund Business Day. Fund Business Day for
this purpose means weekdays (Monday through Friday) except customary national
business holidays and Good Friday. Purchases and redemptions will be effected at
the time of determination of net asset value next following the receipt of any
purchase or redemption order in proper form. (See "Purchase of Shares" and
"Redemption of Shares" herein.)
Portfolio securities for which market quotations are readily available are
valued at market value. All other investment assets of the Fund are valued in
such manner as the Board of Directors of the Fund in good faith deems
appropriate to reflect their fair value.
GENERAL INFORMATION
Description of Common Stock
The Fund was incorporated in Maryland on October 15, 1984. The authorized
capital stock of the Fund consists of one hundred million shares of common stock
having a par value of one-tenth of one cent ($.001) per share. Each share has
equal dividend, distribution, liquidation and voting rights. There are no
conversion or preemptive rights in connection with any shares of the Fund. All
shares when issued in accordance with the terms of the offering will be fully
paid and non-assessable.
As a general matter, the Fund will not hold annual or other meetings of the
Fund's stockholders. This is because the By-laws of the Fund provide for annual
meetings only (a) for the election of directors, (b) for approval of revised
investment advisory contracts with respect to a particular class or series of
stock, (c) for approval of revisions to the Fund's distribution agreement with
respect to a particular class or series of stock, and (d) upon the written
request of holders or shares entitled to cast not less than 25% of all the votes
entitled to be cast
14
<PAGE>
at such meeting. Annual and other meetings may be required with respect to such
additional matters relating to the Fund as may be required by the 1940 Act
including the removal of Fund director(s) and communication among stockholders,
any registration of the Fund with the Securities and Exchange Commission or any
state, or as the Directors may consider necessary or desirable. Each Director
serves until the next meeting of the stockholders called for the purpose of
considering the election or reelection of such Director or of a successor to
such Director, and until the election and qualification of his or her successor,
elected at such a meeting, or until such Director sooner dies, resigns, retires
or is removed by the vote of the stockholders.
Performance
From time to time the Fund may distribute sales literature or publish
advertisements containing "total return" quotations for the Fund. Such sales
literature or advertisements will disclose the Fund's average annual compounded
total return for the Fund's last one year period, five year period and the
period since the Fund's inception, and may include total return information for
other periods. The Fund's total return for each period is computed, through use
of a formula prescribed by the Securities and Exchange Commission, by finding
the average annual compounded rates of return over the period that would equate
an assumed initial amount invested to the value of the investment at the end of
the period. For purposes of computing total return, income dividends and capital
gains distributions paid on shares of the Fund are assumed to have been
reinvested when received.
Custodian and Transfer Agent
Investors Fiduciary Trust Company, 127 West 10th Street, Kansas City, Missouri
64105, is the custodian for the Fund's cash and securities. Reich & Tang
Services L.P., 600 Fifth Avenue, New York, New York 10020, is the transfer agent
and dividend agent for the shares of the Fund. The Fund's transfer agent and
custodian do not assist in and are not responsible for investment decisions
involving assets of the Fund.
Information for Stockholders
All stockholder inquiries should be directed to Reich & Tang Equity Fund, Inc.,
600 Fifth Avenue, New York, New York 10020 (telephone: 212-830-5220 or outside
New York State 800-221-3079).
The Fund sends to all its stockholders semi-annual unaudited and annual audited
reports, including a list of investment securities held.
For further information with respect to the Fund and the shares offered hereby,
reference is made to the Fund's Registration Statement filed with the Securities
and Exchange Commission, including the exhibits thereto. The Registration
Statement and the exhibits thereto may be examined at the Securities and
Exchange Commission and copies thereof may be obtained upon payment of certain
duplicating fees.
15
<PAGE>
TABLE OF CONTENTS
Table of Fees and Expenses.......................2
Selected Financial Information...................2
Investments Objectives,
Policies and Risks..........................3
Investment Restrictions..........................5
The Manager......................................5
Distribution and Service Plan....................8 REICH & TANG
Purchase of Shares...............................9 EQUITY FUND, INC.
New Stockholders............................9
Present Stockholders........................10
Electronic Funds Transfers (EFT),
Pre-authorized Credit
and Direct Deposit Privilege................10
Redemption of Shares.............................10
Systematic Withdrawal Plan..................11
Telephone Redemption Privilege..............11 PROSPECTUS
Retirement Plans.................................12 MAY 1, 1996
Exchange Privilege...............................12
Dividends, Distributions and Taxes...............13
Net Asset Value..................................14
General Information .............................14
Description of Common Stock..................14
Performance..................................15
Custodian and Transfer Agent.................15
Information for Stockholders.................15
<PAGE>
- --------------------------------------------------------------------------------
REICH & TANG 600 FIFTH AVENUE, NEW YORK, NY 10020
EQUITY FUND, INC. (212) 830-5220
================================================================================
STATEMENT OF ADDITIONAL INFORMATION
May 1, 1996
Reich & Tang Equity Fund, Inc. (the "Fund") is a no-load, open-end diversified
management investment company. The Fund's investment objective is to seek growth
of capital and investments will be made based upon their potential for capital
growth. Current income will be secondary to the objective of capital growth.
This Statement of Additional Information is not a prospectus and is only
authorized for distribution when preceded or accompanied by the Fund's
prospectus dated May 1, 1996 (the "Prospectus"). This Statement of Additional
Information contains additional and more detailed information than that set
forth in the Prospectus and should be read in conjunction with the Prospectus,
additional copies of which may be obtained without charge by either writing or
telephoning the Fund at the address or telephone number set forth above.
<TABLE>
<CAPTION>
Table of Contents
<S> <C> <C> <C>
Investment Policies.................................2 Redemption of Shares......................................9
Investment Restrictions.............................2 Description of Common Stock...............................9
Management..........................................3 Performance...............................................10
Compensation table .................................5 Net Asset Value...........................................10
Investment Management Contract......................5 Counsel, Auditors, Custodian
Distribution and Service Plan.......................7 and Transfer Agent.....................................11
Expenses of the Fund................................7 Independent Auditor's Report..............................12
Portfolio Transactions..............................8 Finacial Statements.......................................13
</TABLE>
<PAGE>
INVESTMENT POLICIES
Warrants
The Fund may invest in warrants which entitle the holder to buy equity
securities at a specific price for a specific period of time. Warrants may be
considered more speculative than certain other types of investments in that they
do not entitle a holder to dividends or voting rights with respect to the
securities which may be purchased nor do they represent any rights in the assets
of the issuing company. Also, the value of a warrant does not necessarily change
with the value of the underlying securities and a warrant ceases to have value
if it is not exercised prior to the expiration date.
Foreign Securities
Investments may be made in both domestic and foreign companies. While the Fund
has no present intention to invest any significant portion of its assets in
foreign securities, it reserves the right to invest not more than 15% of the
value of its total assets (at the time of purchase and after giving effect
thereto) in the securities of foreign issuers and obligors.
Investments in foreign companies involve certain considerations which are not
typically associated with investing in domestic companies. An investment may be
affected by changes in currency rates and in exchange control regulations. There
may be less publicly available information about a foreign company than about a
domestic company. Foreign companies are not generally subject to uniform
accounting, auditing and financial reporting standards comparable to those
applicable to domestic companies. Foreign stock markets have substantially less
volume than the New York Stock Exchange and securities of some foreign companies
may be less liquid and more volatile than securities of comparable domestic
companies. There is generally less government regulation of stock exchanges,
brokers and listed companies than in the United States. In addition, with
respect to certain foreign countries, there is a possibility of expropriation or
confiscatory taxation, political or social instability or diplomatic
developments which could affect investments in those countries. Individual
foreign economies may differ favorably or unfavorably from the United States'
economy in such respects as growth of gross national product, rate of inflation,
capital reinvestment, resource self-sufficiency and balance of payments
position.
Repurchase Agreements
When the Fund enters into a repurchase agreement, it requires the continual
maintenance of collateral (to be held by the Fund's custodian in a segregated
account) in an amount equal to, or in excess of, the vendor's repurchase
agreement commitment. The underlying securities are ordinarily U.S. Treasury or
other government obligations or high quality money market instruments. In the
event that a vendor defaulted on its repurchase obligation, the Fund might
suffer a loss to the extent that the proceeds from the sale of the collateral
were less than the repurchase price. If the vendor becomes bankrupt, the Fund
might be delayed, or may incur costs or possible losses of principal and income,
in selling the collateral. Repurchase agreements may be entered into with member
banks of the Federal Reserve System or "primary dealers" (as designated by the
Federal Reserve Bank of New York) in U.S. Government securities.
Other Matters
In addition, for purposes of complying with the securities regulations of
certain states, the Fund has adopted the following additional investment
restriction, which may be changed by the Fund's Board of Directors without
stockholder approval. The Fund may not purchase or retain the securities of any
issuer if the officers or directors of the Fund or Reich & Tang Asset
Management, Inc., the general partner of the Fund's advisor, owning beneficially
more than 1/2 of 1% of the securities together own beneficially more than 5% of
such securities.
INVESTMENT RESTRICTIONS
The Fund has adopted the following investment restrictions which are in addition
to those described in the Prospectus. Under the following restrictions, which
may not be changed without the approval of the Fund's stockholders, the Fund may
not:
1. Purchase or otherwise acquire interests in real estate, real estate
mortgage loans or interests in oil, gas or other mineral exploration or
development programs;
2
<PAGE>
2. Sell securities short or invest in puts, calls, straddles, spreads or
combinations thereof;
3. Purchase or acquire commodities or commodity contracts;
4. Issue senior securities, except insofar as the Fund may be deemed to have
issued a senior security in connection with any permitted borrowing;
5. Participate on a joint or a joint and several basis in any securities
trading account; and
6. Invest in companies for the purpose of exercising control.
MANAGEMENT
Directors and Officers
The directors and executive officers of the Fund, and their principal
occupations for the past five years, are listed below. The address of each such
person, unless otherwise indicated, is 600 Fifth Avenue, New York, New York
10020. Directors deemed to be "interested persons" of the Fund for the purposes
of the Investment Company Act of 1940 (the "1940 Act"), as amended are indicated
by an asterisk.
ROBERT F. HOERLE, 63*: Chairman, President and a Director of the Fund, is
Managing Director of the Capital Management Division of the Manager since
September 1993. Mr. Hoerle was formerly Executive Vice President and Chairman of
Reich & Tang, Inc. with which he was associated with from February 1971 to
September 1993.
W. GILES MELLON, 65: Director of the Fund, is a Professor of Business
Administration and Area Chairman of Finance in the Graduate School of Business
Administration, Rutgers University with which he has been associated since 1966.
His address is 92 New Street, Newark, New Jersey 07102. Dr. Mellon is also a
Director of California Daily Tax Free Income Fund, Inc., Connecticut Daily Tax
Free Income Fund, Inc., Daily Tax Free Income Fund, Inc., Delafield Fund, Inc.,
Michigan Daily Tax Free Income Fund, Inc., New Jersey Daily Municipal Income
Fund, Inc., North Carolina Daily Municipal Income Fund, Inc. and Short Term
Income Fund, Inc. and a Trustee of Florida Daily Municipal Income Fund,
Institutional Daily Income Fund and Pennsylvania Daily Municipal Income Fund.
ROBERT STRANIERE, 55: Director of the Fund, is a member of the New York State
Assembly and a partner in the law firm of Straniere and Straniere since 1981.
His address is 182 Rose Avenue, Staten Island, New York 10306. Mr. Straniere is
also a Director of California Daily Tax Free Income Fund, Inc., Connecticut
Daily Tax Free Income Fund, Inc., Daily Tax Free Income Fund, Inc., Delafield
Fund, Inc., LifeCycle Funds Inc., Michigan Daily Tax Free Income Fund, Inc., New
Jersey Daily Municipal Income Fund, Inc., North Carolina Daily Municipal Income
Fund, Inc. and Short Term Income Fund, Inc. and a Trustee of Florida Daily
Municipal Income Fund, Institutional Daily Income Fund and Pennsylvania Daily
Municipal Income Fund.
YUNG WONG, 57: Director of the Fund, was Director of Shaw Investment Management
(UK) Limited from 1994 to October 1995 and formerly a General Partner of Abacus
Partners Limited Partnership (a general partner of a venture capital investment
firm) from 1984 to 1994. His address is 29 Alden Road, Greenwich, Connecticut
06831. Dr. Wong is a Director of Republic Telecom Systems Corporation (a
provider of telecommunications equipment) since January 1989 and of TelWatch,
Inc. (a provider of network management software) since August 1989. Dr. Wong is
also a Director of California Daily Tax Free Income Fund, Inc., Connecticut
Daily Tax Free Income Fund, Inc., Daily Tax Free Income Fund, Inc., Delafield
Fund, Inc., Michigan Daily Tax Free Income Fund, Inc., New Jersey Daily
Municipal Income Fund, Inc., North Carolina Daily Municipal Income Fund, Inc.
and Short Term Income Fund, Inc. and a Trustee of Florida Daily Municipal Income
Fund, Institutional Daily Income Fund and Pennsylvania Daily Municipal Income
Fund.
STEVEN W. DUFF, 42: Executive Vice President of the Fund, has been President of
the Mutual Funds division of the Manager since September 1994. Mr. Duff was
formerly Director of Mutual Fund Administration at NationsBank which he was
associated with from June 1981 to August 1994. Mr. Duff is also President and a
Director of California Daily Tax Free Income Fund, Inc., Connecticut Daily Tax
Free Income Fund, Inc., Daily Tax Free Income Fund, Inc., New Jersey Daily
Municipal Income Fund, Inc., North Carolina Daily Municipal Income Fund, Inc.
and Short Term Income Fund, Inc. Mr. Duff is also President and a Trustee of
Florida Daily Municipal Income Fund, Institutional Daily Income Fund and
Pennsylvania Daily Municipal Income Fund,
3
<PAGE>
President of Cortand Trust, Inc., Michigan Daily Tax Free Income Fund, Inc. and
New York Daily Tax Free Income Fund, Inc. and President and Chief Executive
Officer of Tax Exempt Proceeds Fund, Inc.
STEVEN M. WILSON, 36: Senior Vice President of the Fund, is Senior Vice
President of the Capital Management Division of the Manager since September
1993. Mr. Wilson was formerly Senior Vice President of Reich & Tang, Inc. with
which he was associated with from July 1986 to September 1993.
BERNADETTE N. FINN, 48: Vice President and Secretary of the Fund, Vice President
of the Mutual Funds division of the Manager since September 1993. Ms. Finn was
formerly Vice President and Assistant Secretary of Reich & Tang, Inc. with which
she was associated with from September 1970 to September 1993. Ms. Finn is also
Secretary of California Daily Tax Free Income Fund, Inc., Connecticut Daily Tax
Free Income Fund, Inc., Cortland Trust, Inc., Daily Tax Free Income Fund, Inc.,
Florida Daily Municipal Income Fund, Lebenthal Funds, Inc., Michigan Daily Tax
Free Income Fund, Inc., New Jersey Daily Municipal Income Fund, Inc., New York
Daily Tax Free Income Fund, Inc., North Carolina Daily Municipal Income Fund,
Inc., Pennsylvania Daily Municipal Income Fund and Tax Exempt Proceeds Fund,
Inc., a Vice President and Secretary of Delafield Fund, Inc., Institutional
Daily Income Fund and Short Term Income Fund, Inc.
MOLLY FLEWHARTY, 45: Vice President of the Fund, Vice President of the Mutual
Funds division of the Manager since September 1993. Ms. Flewharty was formerly
Vice President of Reich & Tang, Inc. with which she was associated with from
December 1977 to September 1993. Ms. Flewharty is also a Vice President of
California Daily Tax Free Income Fund, Inc., Connecticut Daily Tax Free Income
Fund, Inc., Cortland Trust, Inc., Daily Tax Free Income Fund, Inc., Delafield
Fund, Inc., Florida Daily Municipal Income Fund, Institutional Daily Income
Fund, Lebenthal Funds, Inc., Michigan Daily Tax Free Income Fund, Inc., New
Jersey Daily Municipal Income Fund, Inc., New York Daily Tax Free Income Fund,
Inc., North Carolina Daily Municipal Income Fund, Inc., Pennsylvania Daily
Municipal Income Fund and Short Term Income Fund, Inc.
LESLEY M. JONES, 47: Vice President of the Fund, Senior Vice President of the
Mutual Funds division of the Manager since September 1993. Ms. Jones was
formerly Senior Vice President of Reich & Tang, Inc. with which she was
associated with from April 1973 to September 1993. Ms. Jones is also a Vice
President of California Daily Tax Free Income Fund, Inc., Connecticut Daily Tax
Free Income Fund, Inc., Daily Tax Free Income Fund, Inc., Delafield Fund, Inc.,
Florida Daily Municipal Income Fund, Institutional Daily Income Fund, Michigan
Daily Tax Free Income Fund, Inc., New Jersey Daily Municipal Income Fund, Inc.,
New York Daily Tax Free Income Fund, Inc., North Carolina Daily Municipal Income
Fund, Inc., Pennsylvania Daily Municipal Income Fund and Short Term Income Fund,
Inc.
DANA E. MESSINA, 39: Vice President of the Fund, Executive Vice President of the
Mutual Funds division of the Manager since January 1995 and was Vice President
from September 1993 to January 1995. Ms. Messina was formerly Vice President of
Reich & Tang, Inc. with which she was associated with from December 1980 to
September 1993. Ms. Messina is also Vice President of California Daily Tax Free
Income Fund, Inc., Connecticut Daily Tax Free Income Fund, Inc., Cortland Trust,
Inc., Daily Tax Free Income Fund, Inc., Delafield Fund, Inc., Florida Daily
Municipal Income Fund, Institutional Daily Income Fund, Michigan Daily Tax Free
Income Fund, Inc., New Jersey Daily Municipal Income Fund, Inc., New York Daily
Tax Free Income Fund, Inc., North Carolina Daily Municipal Income Fund, Inc.,
Pennsylvania Daily Municipal Income Fund and Short Term Income Fund, Inc. and
Tax Exempt Proceeds Fund, Inc.
RICHARD De SANCTIS, 39: Treasurer of the Fund, is Vice President and Treasurer
of the Manager since September 1993. Mr. De Sanctis was formerly Controller of
Reich & Tang, Inc. from January 1991 to September 1993 and Vice President and
Treasurer of Cortland Financial Group, Inc., and Vice President of Cortland
Distributors, Inc. from 1989 to December 1990. Mr. De Sanctis is also Treasurer
of California Daily Tax Free Income Fund, Inc., Connecticut Daily Tax Free
Income Fund, Inc., Daily Tax Free Income Fund, Inc., Delafield Fund, Inc.,
Florida Daily Municipal Income Fund, Institutional Daily Income Fund, Lebenthal
Funds, Inc. Michigan Daily Tax Free Income Fund, Inc., New Jersey Daily
Municipal Income Fund, Inc., New York Daily Tax Free Income Fund, Inc., North
Carolina Daily Municipal Income Fund, Inc., Pennsylvania Daily Municipal Income
Fund Short Term Income Fund, Inc. and Tax Exempt Proceeds Fund, Inc. and is Vice
President and Treasurer of Cortland Trust, Inc.
Directors of the Fund not affiliated with the Manager receive from the Fund an
annual retainer of $2,000 and a fee of $500 for each Board of Directors meeting
attended and are reimbursed for all out-of-pocket expenses
4
<PAGE>
relating to attendance at such meetings. Directors who are affiliated with the
Manager do not receive compensation from the Fund.
The Fund paid an aggregate remuneration of $13,500 to its Directors with respect
to the period ended December 31, 1995, all of which consisted of aggregate
director's fees paid to the three disinterested directors, pursuant to the terms
of the Investment Management Contract. See Compensation Table below.
<TABLE>
<CAPTION>
COMPENSATION TABLE
<S> <C> <C> <C> <C>
(1) (2) (3) (4) (5)
Name of Person, Aggregate Compensation Pension or Retirement Estimated Annual Total Compensation
Position from Registrant for Benefits Accrued as Part Benefits upon from Fund and Fund
Fiscal Year of Fund Expenses Retirement Complex Paid to
Directors*
W. Giles Mellon, $4,500.00 0
Director 0 $56,750 (14 Funds)
Robert Straniere, $4,500.00 0
Director 0 $56,750 (14 Funds)
Yung Wong, $4,500.00 0
Director 0 $56,750 (14 Funds)
* The total compensation paid to such persons by the Fund and Fund Complex for
the fiscal year ending December 31, 1995 (and, with respect to certain of
the funds in the Fund Complex, estimated to be paid during the fiscal year
ending December 31, 1995). The parenthetical number represents the number of
investment companies (including the Fund) from which such person receives
compensation that are considered part of the same Fund complex as the Fund,
because, among other things, they have a common investment advisor.
</TABLE>
INVESTMENT MANAGEMENT CONTRACT
Pursuant to its Investment Management Contract with the Fund, Reich & Tang Asset
Management L.P. (the "Manager") is responsible for the investment management of
the Fund's assets, including the responsibility for making investment decisions
and placing orders for the purchase and sale of the Fund's investments directly
with the issuers or with brokers or dealers selected by it in its discretion.
(See "Portfolio Transactions" herein.) The Manager also furnishes to the Board
of Directors periodic reports on the investment performance of the Fund.
The Investment Manager for the Fund is Reich & Tang Asset Management L.P., a
Delaware limited partnership with principal offices at 600 Fifth Avenue, New
York, New York 10020 (the "Manager"). The Manager was at March 31, 1996 manager,
advisor or supervisor with respect to assets aggregating in excess of $9.7
billion. In addition to the Fund, the Manager's advisory clients include, among
others, California Daily Tax Free Income Fund, Inc., Connecticut Daily Tax Free
Income Fund, Inc., Cortland Trust, Inc., Daily Tax Free Income Fund, Inc.,
Delafield Fund, Inc., Florida Daily Municipal Income Fund, Institutional Daily
Income Fund, Michigan Daily Tax Free Income Fund, Inc., New Jersey Daily
Municipal Income Fund, Inc., New York Daily Tax Free Income Fund, Inc., North
Carolina Daily Municipal Income Fund, Inc., Pennsylvania Daily Municipal Income
Fund, Short Term Income Fund, Inc. and Tax Exempt Proceeds Fund, Inc. The
Manager also advises pension trusts, profit-sharing trusts and endowments.
New England Investment Companies, L.P. ("NEICLP") is the limited partner and
owner of a 99.5% interest in the newly created limited partnership, Reich & Tang
Asset Management L.P., the Manager. Reich & Tang Asset Management, Inc. (a
wholly-owned subsidiary of NEICLP) is the general partner and owner of the
remaining .5% interest of the Manager. Reich & Tang Asset Management L.P. has
succeeded NEICLP as the Manager of the Fund.
New England Investment Companies, Inc. ("NEIC"), a Massachusetts corporation,
serves as the sole general partner of NEICLP. The New England Mutual Life
Insurance Company ("The New England") owns approximately 68.1% of the total
partnership units outstanding of NEICLP, and Reich & Tang, Inc., owns
approximately 22.8% of the outstanding partnership units of NEICLP. In addition,
NEIC is a wholly-owned
5
<PAGE>
subsidiary of The New England which may be deemed a "controlling person" of the
Manager. NEIC is a holding company offering a broad array of investment styles
across a wide range of asset categories through ten investment
advisory/management affiliates and two distribution subsidiaries. These include
Loomis, Sayles & Company, L.P., Copley Real Estate Advisors, Inc., Westpeak
Investment Advisors, L.P., Draycott Partners, Ltd., TNE Investment Services,
L.P., New England Investment Associates, Inc. Harris Associates, and an
affiliate, and Capital Growth Management Limited Partnership. These affiliates
in the aggregate are investment advisors or managers of 42 other registered
investment companies.
Pursuant to the Investment Management Contract, the Manager manages the Fund's
portfolio of securities and makes decisions with respect to the purchase and
sale of investments, subject to the general control of the Board of Directors of
the Fund.
The Manager provides persons satisfactory to the Board of Directors of the Fund
to serve as officers of the Fund. Such officers, as well as certain other
employees and directors of the Fund, may be directors or officers of Reich &
Tang Asset Management, Inc. the sole general partner of the Manager, or
employees of the Manager or its affiliates.
The Investment Management Contract was most recently approved by the Board of
Directors, including a majority of directors who are not interested persons (as
defined in the 1940 Act), of the Fund or the Manager, on April 8, 1996. The
Investment Management Contract was approved by a majority of the Fund's
shareholders at the meeting held on July 21, 1993.
The Investment Management Contract will continue in effect until December 31,
1996, and may be continued in force thereafter for successive twelve-month
periods beginning each January 1 provided that continuance is specifically
approved annually by the Fund's Board of Directors or by vote of the
stockholders, and in either case by a majority of the directors who are not
parties to the Investment Management Contract or interested persons of any such
party, by vote cast in person at a meeting called for the purpose of voting on
the Investment Management Contract.
The Investment Management Contract is terminable without penalty by the Fund on
sixty days' written notice when authorized either by majority vote of its
outstanding voting shares or by a vote of a majority of its Board of Directors,
or by the Manager on sixty days' written notice, and will automatically
terminate in the event of its assignment. The Management Contract provides that
in the absence of willful misfeasance, bad faith or gross negligence on the part
of the Manager, or of reckless disregard of its obligations thereunder, the
Manager shall not be liable for any action or failure to act in accordance with
its duties thereunder.
For its services under the Investment Management Contract, the Manager receives
from the Fund a fee, payable monthly, at the annual rate of .80% of the Fund's
average daily net assets. In addition to management services with respect to the
purchase and sale of securities, the fee includes compensation for overall
management of the Fund and for distributing the Fund's shares. For the Fund's
fiscal years ended December 31, 1993, 1994 and 1995, the Manager received
investment management fees of $961,193, $749,912 and $839,005 respectively.
Pursuant to the Administrative Services Contract with the Fund, the Manager
performs clerical, accounting supervision, office service and related functions
for the Fund and provides the Fund with personnel to (i) supervise the
performance of accounting related services by Investors Fiduciary Trust Company,
the Fund's bookkeeping or recordkeeping agent, (ii) prepare reports to and
filings with regulatory authorities and (iii) perform such other services as the
Fund may from time to time request of the Manager. The personnel rendering such
services may be employees of the Manager, of its affiliates or of other
organizations. For its services under the Administrative Services Contract, the
Manager receives from the Fund a fee equal to .20% per annum of the Fund's
average daily net assets. For the Fund's fiscal years ended December 31, 1993,
1994 and 1995, the Manager received an administrative services fee of $65,184,
$187,478 and $209,771, respectively.
The Manager now acts as investment manager or advisor for other persons and
entities and may under the Investment Management Contract act as investment
manager, administrator or advisor to other registered investment companies. At
present, the Manager is investment manager or advisor to fifteen other
registered investment companies including California Daily Tax Free Income Fund,
Inc., Connecticut Daily Tax Free Income Fund, Inc., Cortland Trust, Inc., Daily
Tax Free Income Fund, Inc., Delafield Fund, Inc., Florida Daily
6
<PAGE>
Municipal Income Fund, Institutional Daily Income Fund, Michigan Daily Tax Free
Income Fund, Inc., New Jersey Daily Municipal Income Fund, Inc., New York Daily
Tax Free Income Fund, Inc., North Carolina Daily Municipal Income Fund, Inc.,
Pennsylvania Daily Municipal Income Fund, Short Term Income Fund, Inc. and Tax
Exempt Proceeds Fund, Inc. The Manager also advises pension trusts, profit
sharing trusts and endowments.
DISTRIBUTION AND SERVICE PLAN
The Fund's Distribution and Service Plan (the "Plan") provides that all written
agreements relating to the Plan entered into between either the Fund and the
Manager, Reich & Tang Distributors L.P. (the "Distributor") and organizations
whose customers or clients are Fund stockholders ("Intermediaries") must be in a
form satisfactory to the Fund's Board of Directors. Pursuant to the Plan, the
Fund has entered into a Distribution Agreement with the Distributor.
Reich & Tang Asset Management, Inc. serves as the sole general partner for both
Reich & Tang Asset Management L.P. and Reich & Tang Distributors L.P., and Reich
& Tang Asset Management L.P. serves as the sole limited partner of the
Distributor.
The Plan requires the Fund and the Manager to prepare, at least quarterly,
written reports setting forth all amounts expended for distribution purposes by
the Fund and the Manager pursuant to the Plan and identifying the distribution
activities for which those expenditures were made. Such distribution activities
included the printing of prospectuses and subscription order forms and
promotional brochures and related promotional expenses. See "Investment
Management Contract" herein for information regarding fee arrangements and
termination provisions under the Investment Management Contract.
The Plan provides that it will continue in effect for successive annual periods
provided that it must be approved by a vote of at least a majority of the
outstanding voting securities of the Fund and by a majority of the Board of
Directors, including those directors who are not "interested persons" of the
Fund (as defined in the 1940 Act) and who have no direct or indirect financial
interest in the Plan. The Plan must be approved at least annually by the Board
of Directors in the manner described in the foregoing sentence and may be
terminated at any time by a vote of a majority of the outstanding voting
securities of the Fund or a majority of those directors who are not "interested
persons" and who have no direct or indirect financial interest in the Plan. The
Plan was most recently approved by the Board of Directors on October 6, 1995 and
shall continue in effect until December 31, 1996. The Plan was approved by the
shareholders of the Fund at their first meeting held on April 29, 1986.
The Plan further provides that it may not be amended to increase materially the
costs which may be incurred by the Fund for distribution pursuant to the Plan
without stockholder approval, and that all material amendments of the Plan must
be approved by a majority of the Board of Directors, including those who are not
"interested persons" of the Fund and who have no direct or indirect financial
interest in the Plan.
While the Plan is in effect, the selection and nomination of directors who are
not "interested persons" of the Fund (as defined in the 1940 Act) is committed
to the discretion of the directors who are not "interested persons" of the Fund.
The Distribution Agreement between the Fund and the Distributor provides that it
shall terminate automatically in the event of its assignment.
EXPENSES OF THE FUND
The Manager has agreed to reimburse the Fund for its expenses (exclusive of
interest, taxes, brokerage and extraordinary expenses) which in any year exceed
the limits prescribed by any state in which the Fund's shares are qualified for
sale. The Fund's expenses for distribution purposes pursuant to the Plan,
described above, are included within such expenses only to the extent required
by the state with the most restrictive expense limitation in which the Fund's
shares are qualified for sale. The Fund may elect not to qualify its shares for
sale in every state. The Fund believes that currently the most restrictive
expense ratio limitation imposed by any state is 21/2% of the first $30 million
of the Fund's average net assets, 2% of the next $70 million of its average net
assets and 11/2% of its average net assets in excess of $100 million. For the
purpose of this limitation, expenses shall include the fee payable to the
Manager and the amortization of organization expenses. For the purpose of this
obligation to reimburse expenses, the Fund's annual expenses are estimated and
accrued daily,
7
<PAGE>
and any appropriate estimated payments are made to it on a monthly basis. No
such reimbursement was required for the year ended December 31, 1995.
Subject to the Manager's obligations to pay for services performed by officers
of the Manager or its affiliates and for investment management services and
certain distribution and promotional expenses and to reimburse the Fund for its
excess expenses as described above, under the Investment Management Contract the
Fund has assumed responsibility for payment of all of its other expenses,
including (a) brokerage and commission expenses, (b) Federal, state and local
taxes, including issue and transfer taxes incurred by or levied on the Fund, (c)
commitment fees and certain insurance premiums, (d) interest charges on
borrowings, (e) charges and expenses of the Fund's custodian, (f) charges and
expenses of persons performing issuance, redemption, transfer and dividend
disbursing functions for the Fund, (g) recurring and nonrecurring legal and
accounting expenses, including the Fund's cost of the bookkeeping agent for the
determination of net asset value per share and the maintenance of portfolio and
general accounting records, (h) telecommunication expenses, (i) costs of
organizing and maintaining the Fund's existence as a corporation, (j)
compensation, including directors' fees, of any of the Fund's directors,
officers or employees who are not officers of Reich & Tang Asset Management,
Inc., the general partner of the Manager, and costs of other personnel providing
services to the Fund, (k) costs of stockholders' services including charges and
expenses of persons providing confirmations of transactions in Fund shares,
periodic statements to stockholders, and recordkeeping and stockholder services,
(l) costs of stockholders' reports, proxy solicitations, and corporate meetings,
(m) fees and expenses of registering the Fund's shares under the appropriate
Federal securities laws and of qualifying those shares under applicable state
securities laws, including expenses attendant upon the initial registration and
qualifications of the Fund's shares and attendant upon renewals of, or
amendments to, those registrations and qualifications, (n) expenses of preparing
and printing the Fund's prospectuses and statements of additional information
and of delivering them to stockholders of the Fund, (o) payment of fees and
expenses provided for in the Investment Management Contract, Administrative
Services Agreement and Distribution Agreement and (p) any other distribution or
promotional expenses pursuant to a distribution and service plan.
PORTFOLIO TRANSACTIONS
The Manager makes the Fund's portfolio decisions and determines the broker to be
used in each specific transaction with the objective of negotiating a
combination of the most favorable commission and the best price obtainable on
each transaction (generally defined as best execution). When consistent with the
objective of obtaining best execution, brokerage may be directed to persons or
firms supplying investment information to the Manager or portfolio transactions
may be effected by the Manager. Neither the Fund nor the Manager has entered
into agreements or understandings with any brokers regarding the placement of
securities transactions because of research services they provide. To the extent
that such persons or firms supply investment information to the Manager for use
in rendering investment advice to the Fund, such information may be supplied at
no cost to the Manager and, therefore, may have the effect of reducing the
expenses of the Manager in rendering advice to the Fund. While it is impossible
to place an actual dollar value on such investment information, its receipt by
the Manager probably does not reduce the overall expenses of the Manager to any
material extent. Consistent with the Rules of Fair Practice of the National
Association of Securities Dealers, Inc., and subject to seeking best execution,
the Manager may consider sales of shares of the Fund as a factor in the
selection of brokers to execute portfolio transactions for the Fund.
The investment information provided to the Manager is of the type described in
Section 28(e) of the Securities Exchange Act of 1934 and is designed to augment
the Manager's own internal research and investment strategy capabilities.
Research services furnished by brokers through which the Fund effects securities
transactions are used by the Manager in carrying out its investment management
responsibilities with respect to all its clients' accounts. There may be
occasions where the transaction cost charged by a broker may be greater than
that which another broker may charge if the Manager determines in good faith
that the amount of such transaction cost is reasonable in relation to the value
of brokerage and research services provided by the executing broker. During the
year ended December 31, 1995, the Manager did not place any portfolio
transactions for the Fund with firms supplying investment information to the
Manager.
The Fund may deal in some instances in securities which are not listed on a
national securities exchange but are traded in the over-the-counter market. It
may also purchase listed securities through the third market. Where transactions
are executed in the over-the-counter market or third market, the Fund will seek
to deal with the
8
<PAGE>
primary market makers; but when necessary in order to obtain best execution, it
will utilize the services of others. In all cases the Fund will attempt to
negotiate best execution.
The Distributor may from time to time effect transactions in the Fund's
portfolio securities. In such instances, the placement of orders with the
Distributor would be consistent with the Fund's objective of obtaining best
execution. With respect to orders placed with the Distributor for execution on a
national securities exchange, commissions received must conform to Section
17(e)(2)(A) of the 1940 Act and Rule 17e-1 thereunder, which permit an
affiliated person of a registered investment company (such as the Fund) to
receive brokerage commissions from such registered investment company provided
that such commissions are reasonable and fair compared to commissions received
by other brokers in connection with comparable transactions involving similar
securities during a comparable period of time. In addition, pursuant to Section
11(a) of the Securities Exchange Act of 1934, the Distributor is restricted as
to the nature and extent of the brokerage services it may perform for the Fund.
The Securities and Exchange Commission has adopted rules under Section 11(a)
which permit a distributor to a registered investment company to receive
compensation for effecting, on a national securities exchange, transactions in
portfolio securities of such investment company, including causing such
transactions to be transmitted, executed, cleared and settled and arranging for
unaffiliated brokers to execute such transactions. To the extent permitted by
such rules, the Distributor may receive compensation relating to transactions in
portfolio securities of the Fund provided that the Fund enters into a written
agreement, as required by such rules, with the Distributor authorizing it to
retain compensation for such services. Transactions in portfolio securities
placed with the Distributor which are executed on a national securities exchange
must be effected in accordance with procedures adopted by the Board of Directors
of the Fund pursuant to Rule 17e-1.
During the years ended December 31, 1993, 1994 and 1995, the Fund paid a total
of $39,973, $71,681 and $77,970 respectively, in brokerage commissions, $32,683,
$30,195 and $22,919, respectively, of which was paid to the Manager. During the
years ended December 31, 1993, 1994 and 1995, the brokerage commissions paid to
the Manager represented approximately 81.76%, 42.12% and 29.39%, respectively,
of the total brokerage commissions paid by the Fund during such years and were
paid on account of transactions having an aggregate dollar value equal to
approximately and 90.56%, 60.37% and 47.46%, respectively, of the aggregate
dollar value of all portfolio transactions of the Fund during such years for
which commissions were paid. The Fund's portfolio turnover rate for the years
ended December 31, 1994 and 1995 was 25.80%, and 27.69%, respectively.
REDEMPTION OF SHARES
Payment of the redemption price for shares redeemed may be made either in cash
or in portfolio securities (selected in the discretion of the Board of Directors
of the Fund and taken at their value used in determining the Fund's net asset
value per share as described under "Net Asset Value" herein), or partly in cash
and partly in portfolio securities. However, payments will be made wholly in
cash unless the Board of Directors believes that economic conditions exist which
would make such a practice detrimental to the best interests of the Fund. If
payment for shares redeemed is made wholly or partly in portfolio securities,
brokerage costs may be incurred by the investor in converting the securities to
cash. The Fund will not distribute in kind portfolio securities that are not
readily marketable. The Fund has filed a formal election with the Securities and
Exchange Commission pursuant to which the Fund will only effect a redemption in
portfolio securities where the particular stockholder of record is redeeming
more than $250,000 or 1% of the Fund's total net assets, whichever is less,
during any 90-day period. In the opinion of the Fund's management, however, the
amount of a redemption request would have to be significantly greater than
$250,000 or 1% of total net assets before a redemption wholly or partly in
portfolio securities was made.
DESCRIPTION OF COMMON STOCK
On March 31, 1996 there were 6,117,386 shares of the Fund's common stock
outstanding. As of March 31, 1996, the amount of shares owned by all officers
and directors of the Fund, as a group, was less than 1% of the outstanding
shares of the Fund. Set forth below is certain information as to persons who
owned 5% or more of the Fund's outstanding common stock as of March 31, 1996:
9
<PAGE>
Nature of
Name and Address % of Shares Ownership
Patterson & Co. 19.01 Record
PNB Personal Trust Company
P.O. Box 7829
Philadelphia, Pennsylvania 19101
Maritime Overseas 07.51 Record
Corporate Pension Plan
511 Fifth Avenue
New York, New York 10017
NEIC Master Retirement Trust 06.29 Record
399 Boylston Street
Boston, Massachusetts 02116
PERFORMANCE
From time to time the Fund may distribute sales literature or publish
advertisements containing "total return" quotations for the Fund. Such sales
literature or advertisements will disclose the Fund's average annual compounded
total return for the Fund's last one year period, five year period and the
period since the Fund's inception, and may include total return information for
other periods. The Fund's total return for each period is computed by finding,
through the use of a formula prescribed by the Securities and Exchange
Commission, the average annual compounded rates of return over the period that
would equate an assumed initial amount invested to the value of such investment
at the end of the period. For purposes of computing total return, income
dividends and capital gains distributions paid on shares of the Fund are assumed
to have been reinvested when received.
The Fund's total return for the twelve months ended December 31, 1995 was 28.2%.
The Fund's average annual compounded total return for the five year period ended
December 31, 1995 was 16.25%. The Fund's average annual compounded total return
from January 4, 1985 (inception) to December 31, 1995 was 15.37%.
The Fund's total return is not fixed and will fluctuate in response to
prevailing market conditions or as a function of the type and quality of the
securities in the Fund's portfolio and the Fund's expenses. Total return
information is useful in reviewing the Fund's performance but such information
may not provide a basis for comparison with bank deposits or other investments
which pay a fixed return for a stated period of time. An investor's principal
invested in the Fund is not fixed and will fluctuate in response to prevailing
market conditions.
NET ASSET VALUE
The Fund does not determine its net asset value per share on the following
holidays: New Year's Day, President's Day, Good Friday, Memorial Day,
Independence Day, Labor Day, Thanksgiving and Christmas.
For purposes of determining the Fund's net asset value per share, readily
marketable portfolio securities listed on the New York Stock Exchange are
valued, except as indicated below, at the last sale price reflected on the
consolidated tape at the close of the New York Stock Exchange on the business
day as of which such value is being determined. If there has been no sale on
such day, the securities are valued at the mean of the closing bid and asked
prices on such day. If no bid or asked prices are quoted on such day, then the
security is valued by such method as the Board of Directors shall determine in
good faith to reflect its fair market value. Readily marketable securities not
listed on the New York Stock Exchange but listed on other national securities
exchanges or admitted to trading on the National Association of Securities
Dealers Automated Quotations, Inc. ("NASDAQ") National List are valued in like
manner. Portfolio securities traded on more than one national securities
exchange are valued at the last sale price on the business day as of which such
value is being determined as reflected on the tape at the close of the exchange
representing the principal market for such securities.
Readily marketable securities traded in the over-the-counter market, including
listed securities whose primary market is believed by the Manager to be
over-the-counter but excluding securities admitted to trading on the NASDAQ
National List, are valued at the mean of the current bid and asked prices as
reported by NASDAQ or, in the case of securities not quoted by NASDAQ, the
National Quotation Bureau or such other comparable sources as the Board of
Directors deems appropriate to reflect their fair market value.
10
<PAGE>
U.S. Government obligations and other debt instruments having sixty days or less
remaining until maturity are stated at amortized cost. 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.
COUNSEL, AUDITORS, CUSTODIAN AND TRANSFER AGENT
Legal matters in connection with the issuance of shares of stock of the Fund are
passed upon by Battle Fowler LLP, 75 East 55th Street, New York, New York 10022.
Venable, Baetjer and Howard, Baltimore, Maryland, has provided an opinion for
matters relating to Maryland law.
McGladrey & Pullen, LLP, 555 Fifth Avenue, New York, New York 10017, independent
certified public accountants, have been selected to audit the financial
statements of the Fund.
Investors Fiduciary Trust Company, 127 West 10th Street, Kansas City, Missouri
64105, is the custodian for the Fund's cash and securities. Reich & Tang
Services L.P., 600 Fifth Avenue, New York, New York 10020 is the transfer agent
and dividend agent for the shares of the Fund. The Fund's transfer agent and
custodian do not assist in and are not responsible for investment decisions
involving assets of the Fund.
11
<PAGE>
- -------------------------------------------------------------------------------
REICH & TANG EQUITY FUND, INC.
INDEPENDENT AUDITOR'S REPORT
===============================================================================
The Board of Directors and Shareholders
Reich & Tang Equity Fund, Inc.
We have audited the accompanying statement of net assets of Reich & Tang Equity
Fund, Inc. as of December 31, 1995 and the related statement of operations for
the year then ended, the statement of changes in net assets for each of the two
years in the period then ended, and the selected financial information for each
of the five years in the period then ended. These financial statements and
selected financial information are the responsibility of the Fund's management.
Our responsibility is to express an opinion on these financial statements and
selected financial information based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and selected
financial information 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 December 31, 1995 by correspondence with the custodian. 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 selected financial information
referred to above present fairly, in all material respects, the financial
position of Reich & Tang Equity Fund, Inc. as of December 31, 1995, the results
of its operations, the changes in its net assets and the selected financial
information for the periods indicated, in conformity with generally accepted
accounting principles.
McGladrey & Pullen, LLP
New York, New York
January 26, 1996
12
<PAGE>
- --------------------------------------------------------------------------------
================================================================================
Comparison of change in value of $10,000 investment in the
Reich & Tang Equity Fund and the S&P 500 Index.
The chart below represents the omitted graph.
<TABLE>
<CAPTION>
REICH & TANG EQUITY FUND, INC.
Performance Comparison Chart
INCEPTION S&P 500 R&T Equity
<C> <C> <C>
01/09/85 10,000.00 10,000.00
12/31/95 13,374.30 13,766.20
12/31/86 15,876.30 15,783.30
12/31/87 16,708.50 16,590.00
12/31/88 19,470.20 20,378.60
12/31/89 25,641.10 24,019.50
12/31/90 24,848.40 22,618.60
12/31/91 32,240.00 27,832.00
12/31/92 34,870.00 32,380.20
12/31/93 38,380.40 36,851.20
12/31/94 38,887.00 37,477.00
12/31/95 53,500.00 48,029.00
</TABLE>
<TABLE>
<CAPTION>
Average Annual Return
One Year Five Year Since
1/9/1985
<S> <C> <C> <C>
Reich & Tang Equity Fund 28.16% 16.25% 15.37%
S & P 500 37.58% 16.58% 16.51%
</TABLE>
13
<PAGE>
- -------------------------------------------------------------------------------
REICH & TANG EQUITY FUND, INC.
STATEMENT OF NET ASSETS
DECEMBER 31, 1995
===============================================================================
<TABLE>
<CAPTION>
Value
Shares (Note 1)
------ ------
Common Stocks (95.52%)
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Aerospace/Defense (2.86%)
Sundstrand Corporation 45,600 $ 3,209,100
----------------
Agriculture (3.86%)
Pioneer Hi-Bred International, Inc. 78,000 4,338,750
----------------
Apparel (3.14%)
Land's End, Inc.* 84,900 1,156,763
Fruit of the Loom, Inc.* 97,300 2,371,687
----------------
3,528,450
----------------
Banking/Financial Services (1.59%)
Marshall & Ilsley Corporation 68,500 1,781,000
----------------
Business Services & Products (.98%)
West Co. Inc. 47,000 1,104,500
----------------
Chemical (Specialty) (6.69%)
Great Lakes Chemical Corporation 65,000 4,680,000
Hercules Incorporated 25,500 1,437,563
Lubrizol Corporation (The) 50,000 1,393,750
----------------
7,511,313
----------------
Consumer Products (2.89%)
Avon Products, Inc. 15,000 1,130,625
Bausch & Lomb Incorporated 21,500 851,938
Sunbeam Corporation 83,000 1,265,750
---------------
3,248,313
---------------
Converted Paper Products (3.95%)
Sonoco Products Company 169,000 4,436,250
---------------
Electronics (1.50%)
Polaroid Corp. 35,600 1,686,550
---------------
Energy (8.52%)
Equitable Resources, Inc. 114,750 3,585,937
Kerr-McGee Corporation 76,100 4,832,350
Union Texas Petroleum Holdings, Inc. 59,500 1,152,813
--------------
9,571,100
--------------
</TABLE>
- -------------------------------------------------------------------------------
See Notes to Financial Statements.
14
<PAGE>
- -------------------------------------------------------------------------------
REICH & TANG EQUITY FUND, INC.
STATEMENT OF NET ASSETS (CONTINUED)
DECEMBER 31, 1995
===============================================================================
<TABLE>
<CAPTION>
Value
Shares (Note 1)
------ ------
Common Stocks (Continued)
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Food Processing (2.96%)
Universal Foods Corp. 82,800 $ 3,322,350
---------------
Industrial Products (19.02%)
Albany International Corp. Class A 126,500 2,292,812
Allied-Signal Inc. 43,500 2,066,250
Corning Incorporated 155,000 4,960,000
Dexter Corporation (The) 70,700 1,670,288
Harsco Corp. 74,000 4,301,250
Snap-On Tools Corp. 70,000 3,167,500
Teleflex Inc. 42,000 1,722,000
Varian Associates 24,800 1,184,200
---------------
21,364,300
---------------
Industrial Services (3.63%)
Deluxe Corporation 98,000 2,842,000
Equifax Inc. 58,000 1,239,750
---------------
4,081,750
---------------
Insurance (Prop/Casualty)(6.57%)
AMBAC Indemnity Corporation 16,500 773,438
PennCorp Financial Group 27,500 807,812
UNUM Corporation 75,500 4,152,500
Zurich Reinsurance Centre Holdings, Inc. 54,300 1,649,362
---------------
7,383,112
---------------
Medical Supplies (8.79%)
AMSCO International, Inc.* 119,400 1,776,075
Allergan Inc. 110,000 3,575,000
Becton, Dickinson & Co. 60,300 4,522,500
---------------
9,873,575
---------------
Newspaper (2.83%)
Lee Enterprises, Inc. 138,000 3,174,000
---------------
Office Equipment & Supplies (3.39%)
Herman Miller, Inc. 29,000 870,000
Pitney Bowes, Inc. 62,500 2,937,500
---------------
3,807,500
---------------
Protective Services (2.97%)
Rollins Inc. 151,000 3,340,875
---------------
</TABLE>
- -------------------------------------------------------------------------------
See Notes to Financial Statements.
15
<PAGE>
- -------------------------------------------------------------------------------
REICH & TANG EQUITY FUND, INC.
STATEMENT OF NET ASSETS (CONTINUED)
DECEMBER 31, 1995
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Value
Shares (Note 1)
------ ------
Common Stocks (Continued)
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Retail Store (5.37%)
The Limited, Inc. 183,500 $ 3,188,312
Woolworth Corporation 90,000 1,170,000
Food Lion, Inc. Class A 292,000 1,669,890
--------------
6,028,202
--------------
Toy/School Supplies (4.01%)
Hasbro, Inc. 145,400 4,507,400
--------------
Total Common Stocks (Cost $77,868,153) 107,298,390
--------------
</TABLE>
<TABLE>
<CAPTION>
Face
Amount
Short-Term Investments (4.11%)
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Repurchase Agreements (4.11%)
Morgan (J.P.) Securities Inc., 5.80%, due 01/02/96
(Collateralized by $4,305,000
U.S. Treasury Notes, 9.00%, due 05/15/98) $4,612,000 4,612,000
---------------
Total Short-Term Investments (Cost $4,612,000) 4,612,000
---------------
Total Investments (99.63%) (Cost $82,480,153+) 111,910,390
Cash and Other Assets, Net of Liabilities (.37%) 422,271
---------------
Net Assets (100.00%) 6,335,760 shares outstanding $ 112,332,661
===============
Net asset value, offering and redemption price per share $ 17.73
===============
* Non-income producing.
+ Aggregate cost for federal income tax purposes is $82,606,586. Aggregate
unrealized appreciation and depreciation are, based on cost for Federal
income tax purposes, $30,507,706 and $1,203,902 respectively.
</TABLE>
- -------------------------------------------------------------------------------
See Notes to Financial Statements.
16
<PAGE>
- -------------------------------------------------------------------------------
REICH & TANG EQUITY FUND, INC.
STATEMENT OF OPERATIONS
YEAR ENDED DECEMBER 31, 1995
===============================================================================
<TABLE>
<CAPTION>
INVESTMENT INCOME
Income:
Dividends...................................................................... $ 2,072,646
Interest....................................................................... 411,477
---------------
Total income............................................................. 2,484,123
---------------
Expenses: (Note 2)
Investment management fee...................................................... 839,005
Administration fee............................................................. 209,771
Distribution expenses.......................................................... 7,610
Custodian fees................................................................. 13,941
Shareholder servicing and related shareholder expenses......................... 69,764
Legal, compliance and filing fees.............................................. 24,358
Audit and accounting........................................................... 35,002
Directors' fees and expenses................................................... 13,770
Other.......................................................................... 3,895
---------------
Total expenses................................................................. 1,217,116
Expenses paid indirectly....................................................... ( 4,591)
---------------
Net expenses................................................................... 1,212,525
---------------
Net investment income.............................................................. 1,271,598
---------------
<CAPTION>
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS
<S> <C>
Net realized gain on investments................................................... 10,086,724
Net unrealized appreciation of investments......................................... 14,343,018
---------------
Net gain on investments............................................. 24,429,742
---------------
Increase in net assets from operations............................................. $ 25,701,340
===============
</TABLE>
- -------------------------------------------------------------------------------
See Notes to Financial Statements.
17
<PAGE>
- -------------------------------------------------------------------------------
REICH & TANG EQUITY FUND, INC.
STATEMENTS OF CHANGES IN NET ASSETS
YEARS ENDED DECEMBER 31, 1995 AND 1994
===============================================================================
<TABLE>
<CAPTION>
1995 1994
----------------- ------------------
INCREASE (DECREASE) IN NET ASSETS
Operations:
<S> <C> <C>
Net investment income.................................................. $ 1,271,598 $ 1,263,024
Net realized gain on investments....................................... 10,086,724 11,723,466
Change in unrealized appreciation (depreciation) of investments........ 14,343,018 ( 11,304,004)
----------------- ----------------
Increase in net assets from operations................................. 25,701,340 1,682,486
Distributions from:
Net investment income.................................................. ( 1,271,598) ( 1,263,024)
Return of capital...................................................... --- ( 1,234)
Net realized gain on investments....................................... ( 10,086,724) ( 11,723,466)
In excess of net realized gain......................................... ( 659) ( 107,955)
Capital share transactions (Note 3).................................... 7,351,166 ( 3,128,833)
---------------- ----------------
Total increase (decrease).............................................. 21,693,525 ( 14,542,026)
Net Assets:
Beginning of year................................................ 90,639,136 105,181,162
---------------- ----------------
End of year...................................................... $ 112,332,661 $ 90,639,136
================ ================
</TABLE>
- -------------------------------------------------------------------------------
See Notes to Financial Statements.
18
<PAGE>
- -------------------------------------------------------------------------------
REICH & TANG EQUITY FUND, INC.
NOTES TO FINANCIAL STATEMENTS
===============================================================================
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.
- -------------------------------------------------------------------------------
19
<PAGE>
- -------------------------------------------------------------------------------
REICH & TANG EQUITY FUND, INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
- -------------------------------------------------------------------------------
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 year ended December 31, 1995.
The Manager is a wholly-owned subsidiary of New England Investment 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 year to Reich & Tang Distributors L.P.
amounted to $22,919.
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
$4,591.
3. Capital Stock
At December 31, 1995 100,000,000 shares of $.001 par value stock were authorized
and capital paid in amounted to $83,029,517. Transactions in capital stock were
as follows:
<TABLE>
<CAPTION>
Year Ended Year Ended
December 31, 1995 December 31, 1994
----------------------------- ------------------------------
Shares Amount Shares Amount
---------- ------------- ---------- -------------
<S> <C> <C> <C> <C>
Sold........................................ 5,901,454 $94,756,038 6,479,849 $114,659,362
Issued on reinvestment of dividends......... 611,044 10,838,908 800,793 12,430,834
Redeemed.................................... (6,067,405) ( 98,243,780) ( 7,361,171) ( 130,219,029)
---------- ------------- ---------- ------------
Net increase (decrease)..................... 445,093 $ 7,351,166 ( 80,529) ($ 3,128,833)
========== ============= ========== ============
</TABLE>
- -------------------------------------------------------------------------------
20
<PAGE>
- -------------------------------------------------------------------------------
REICH & TANG EQUITY FUND, INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
===============================================================================
4. Investment Transactions
Purchases and sales of investment securities, other than U.S. Government direct
and agency obligations and short-term investments, totaled $27,188,720 and
$29,821,803, respectively. Accumulated undistributed net realized losses at
December 31, 1995 amounted to $127,093.
5. Selected Financial Information
Reference is made to page 2 of the Prospectus for Selected Financial
Information.
- -------------------------------------------------------------------------------
21
<PAGE>
PART C
OTHER INFORMATION
ITEM 24. Financial Statements and Exhibits.
(a) Financial Statements.
Included in Prospectus: Selected Financial Information.
Included in the Statement of Additional Information: Independent
Auditor's Report; Statement of Net Assets at December 31, 1995;
Statement of Operations for year ended December 31, 1995; Statement of
Changes in Net Assets for years ended December 31, 1995 and 1994; Notes
to Financial Statements.
(b) Exhibits:
(1) Articles of Incorporation of Registrant (filed as Exhibit 1 to
Registration Statement on Form N-1A (File Nos. 2-94184 and 811-4148)
and incorporated herein by reference).
(2) By-Laws of Registrant (filed as Exhibit 2 to Registration Statement on
Form N-1A (File Nos. 2-94184 and 811-4148) and incorporated herein by
reference).
(3) None.
(4) Form of certificate for shares of the common stock of Registrant
(filed as Exhibit 4 to Registration Statement on Form N-1A (File Nos.
2-94184 and 811-4148) and incorporated herein by reference).
(5) Investment Management Contract between the Registrant and Reich & Tang
Asset Management L.P. (filed as Exhibit 5 to Post-Effective Amendment
No. 17 to Registration Statement on Form N-1A (File Nos. 2-94184 and
811-4148) and incorporated herein by reference).
(6) Distribution Agreement between the Registrant and Reich & Tang
Distributors L.P.
(7) None.
(8) (a)Custody Agreement between the Registrant and Investors Fiduciary
Trust Company (filed as Exhibit 8(a) to Post-Effective Amendment No.
20 to Registration Statement on Form N-1A) (file Nos. 2-94184 and
811-4148) and incorporated herein by reference).
(b)Transfer Agency Agreement between the Registrant and Investors
Financial Services Company (filed as Exhibit 8(b) to Post-Effective
Amendment No. 13 to Registration Statement on Form N-1A) (file Nos.
2-94184 and 811-4148) and incorporated herein by reference).
(9) None.
(10) (a)Opinion of Messrs. Seward & Kissel (filed as Exhibit 10(a) to Pre-
Effective Amendment No. 1 to Registration Statement on Form N-1A
(File Nos. 2-94184 and 811-4148) and incorporated herein by
reference).
C-1
<PAGE>
(b)Opinion of Messrs. Venable, Baetjer and Howard (filed as Exhibit
10(b) to Pre-Effective Amendment No. 1 to Registration Statement on
Form N-1A (File Nos. 2-94184 and 811-4148) and incorporated herein
by reference).
(11) Consent of Independent Auditors filed as Exhibit 11 herein.
(12) None.
(13) Investment representation letter of Reich & Tang, Inc. as initial
purchaser of shares of stock of Registrant (filed as Exhibit 13 to
Pre-Effective Amendment No. 1 to Registration Statement on Form N-1A
(File No. 2-94184) and incorporated herein by reference).
(14) None.
(15.1) Rule 12b-1 Plan of Registrant (filed as Exhibit 15 to Post-Effective
Amendment No. 5 to Registration Statement on Form N-1A (File Nos.
2-94184 and 811-4148) and incorporated herein by reference).
(15.2) Administrative Services Agreement between the Registrant and Reich &
Tang Asset Management L.P. (filed as Exhibit 15.2 to Post-Effective
Amendment No. 17 to Registration Statement on Form N-1A (File Nos.
2-94184 and 811-4148) and incorporated herein by reference).
(16) Not Applicable
Other Exhibits: Powers of Attorney of Messrs. Reich, Hoerle, Mellon,
Straniere and Wong (filed as Other Exhibits to Pre-Effective Amendment No. 1 to
Registration Statement on Form N-1A (File Nos. 2-94184 and 811-4148) and
incorporated herein by reference). Powers of Attorney of Messrs. Hoerle, Mellon,
Straniere, Wong and Flavin (filed as Other Exhibits to Post-Effective Amendment
No. 11 to Registration Statement on Form N-1A (File Nos. 2-94184 and 811-4148)
and incorporated herein by reference).
ITEM 25. Persons Controlled by or under Common Control with Registrant.
No such persons.
ITEM 26. Number of Holders of Securities.
The following information is furnished as of March 31, 1996:
(1) (2)
Number of Record
Title of Class Holders
Common Stock, par value
$ .001 per share 838
ITEM 27. Indemnification
Registrant incorporates herein by reference the response to Item 27 of
Registration Statement filed with the Commission on November 6, 1984.
C-2
<PAGE>
ITEM 28. Business and Other Connections of Investment Adviser.
The description of Reich & Tang Asset Management L.P. under the captions
"The Manager" in the Prospectus and "Management and Investment Management
Contract" in the Statement of Additional Information constituting Parts A and B,
respectively, of this Post-Effective Amendment Number 20 to Registrant's
Registration Statement are incorporated herein by reference.
New England Mutual Life Insurance Company, ("The New England") of which New
England Investment Companies, Inc. ("NEIC") is an indirect wholly-owned
subsidiary, owns approximately 68.1% of the outstanding partnership units of New
England Investment Companies, L.P., ("NEICLP") and Reich & Tang, Inc. owns
approximately 22.8% of the outstanding partnership units of NEICLP. NEICLP is
the limited partner and owner of a 99.5% interest in Reich & Tang Asset
Management L.P. Reich & Tang Asset Management, Inc. serves as the sole general
partner and owner of the remaining .5% interest of Reich & Tang Asset Management
L.P. and serves as the sole general partner of Reich & Tang Distributors L.P.
Reich & Tang Asset Management L.P. serves as the sole limited partner of the
Distributor.
Registrant's investment advisor, Reich & Tang Asset Management L.P., is a
registered investment advisor. Reich & Tang Asset Management L.P.'s investment
advisory clients include California Daily Tax Free Income Fund, Inc.,
Connecticut Daily Tax Free Income Fund, Inc., Cortland Trust, Inc., Daily Tax
Free Income Fund, Inc., Florida Daily Municipal Income Fund, Institutional Daily
Income Fund, Michigan Daily Tax Free Income Fund, Inc., New Jersey Daily
Municipal Income Fund, Inc., New York Daily Tax Free Income Fund, Inc., North
Carolina Daily Municipal Income Fund, Inc., Pennsylvania Daily Municipal Income
Fund, Short Term Income Fund, Inc. and Tax Exempt Proceeds Fund, Inc.,
registered investment companies investing principally in money market
instruments, whose addresses are 600 Fifth Avenue, New York, New York 10020,
Delafield Fund, Inc. and Reich & Tang Equity Fund, Inc., registered investment
companies investing primarily in equity securities, whose addresses are 600
Fifth Avenue, New York, New York 10020. In addition, Reich & Tang Asset
Management L.P. is the sole general partner of Alpha Associates, August
Associates, Reich & Tang Minutus L.P. and Tucek Partners, L.P., private
investment partnerships organized as limited partnerships.
Peter S. Voss, President, Chief Executive Officer and a Director of NEIC
since October 1992, Chairman of the Board of NEIC since December 1992, Group
Executive Vice President, Bank of America, responsible for the global asset
management private banking businesses, from April 1992 to October 1992,
Executive Vice President of Security Pacific Bank, and Chief Executive Officer
of Security Pacific Hoare Govett Companies a wholly-owned subsidiary of Security
Pacific Corporation, from April 1988 to April 1992, Director of The New England
since March 1993, Chairman of the Board of Directors of NEIC's subsidiaries
other than Loomis, Sayles & Company, L.P. ("Loomis") and Back Bay Advisors, L.P.
("Back Bay"), where he serves as a Director, and Chairman of the Board of
Trustees of all of the mutual funds in G. Neil Ryland, Executive Vice President,
Treasurer and Chief Financial Officer NEIC since July 1993, Executive Vice
President and Chief Financial Officer of The Boston Company, a diversified
financial services company, from March 1989 until July 1993, from September 1985
to December 1988, Mr. Ryland was employed by Kenner Parker Toys, Inc. as Senior
Vice President and Chief Financial Officer. Edward N. Wadsworth, Executive Vice
President, General Counsel, Clerk and Secretary of NEIC since December 1989,
Senior Vice President and Associate General Counsel of The New England from 1984
until December 1992, and Secretary of Westpeak and Draycott and the Treasurer of
NEIC. Lorraine C. Hysler has been Secretary of RTAM since July 1994, Assistant
Secretary of NEIC since September 1993, Vice President of the Mutual Funds Group
of NEICLP from September 1993 until July 1994, and Vice President of Reich &
Tang
C-3
<PAGE>
Mutual Funds since July 1994. Ms. Hysler joined Reich & Tang, Inc. in May 1977
and served as Secretary from April 1987 until September 1993. Richard E. Smith,
III has been a Director of RTAM since July 1994, President and Chief Operating
Officer of the Capital Management Group of NEICLP from May 1994 until July 1994,
President and Chief Operating Officer of the Reich & Tang Capital Management
Group since July 1994, Executive Vice President and Director of Rhode Island
Hospital Trust from March 1993 to May 1994, President, Chief Executive Officer
and Director of USF&G Review Management Corp. from January 1988 until September
1992. Steven W. Duff has been a Director of RTAM since October 1994, President
and Chief Executive Officer of Reich & Tang Mutual Funds since August 1994,
Senior Vice President of NationsBank from June 1981 until August 1994, Mr. Duff
is President and a Director of California Daily Tax Free Income Fund, Inc.,
Connecticut Daily Tax Free Income Fund, Inc., Daily Tax Free Income Fund, Inc.,
Michigan Daily Tax Free Income Fund, Inc., New Jersey Daily Municipal Income
Fund, Inc., New York Daily Tax Free Income Fund, Inc., North Carolina Daily
Municipal Income Fund, Inc. and Short Term Income Fund, Inc., President and
Trustee of Institutional Daily Municipal Income Fund, Pennsylvania Daily
Municipal Income Fund, President and Chief Executive Officer of Tax Exempt
Proceeds Fund, Inc., and Executive Vice President of Reich & Tang Equity Fund,
Inc. Bernadette N. Finn has been Vice President/Compliance of RTAM since July
1994, Vice President of Mutual Funds Division of NEICLP from September 1993
until July 1994, Vice President of Reich & Tang Mutual Funds since July 1994.
Ms. Finn joined Reich & Tang, Inc. in September 1970 and served as Vice
President from September 1982 until May 1987 and as Vice President and Assistant
Secretary from May 1987 until September 1993. Ms. Finn is also Secretary of
California Daily Tax Free Income Fund, Inc., Connecticut Daily Tax Free Income
Fund, Inc., Cortland Trust, Inc., Delafield Fund, Inc., Daily Tax Free Income
Fund, Inc., Institutional Daily Municipal Income Fund, Michigan Daily Tax Free
Income Funds, Inc., New Jersey Daily Municipal Income Fund, Inc., New York Daily
Tax Free Income Fund, Inc., North Carolina Daily Municipal Income Fund, Inc.,
Pennsylvania Daily Municipal Income Fund and Tax Exempt Proceeds Fund, Inc., a
Vice President and Secretary of Reich & Tang Equity Fund, Inc. and Short Term
Income Fund, Inc. Richard De Sanctis has been Treasurer of RTAM since July 1994,
Assistant Treasurer of NEIC since September 1993 and Treasurer of the Mutual
Funds Group of NEICLP from September 1993 until July 1994, Treasurer of the
Reich & Tang Mutual Funds since July 1994. Mr. De Sanctis joined Reich & Tang,
Inc. in December 1990 and served as Controller of Reich & Tang, Inc., from
January 1991 to September 1993. Mr. De Sanctis was Vice President and Treasurer
of Cortland Financial Group, Inc. and Vice President of Cortland Distributors,
Inc. from 1989 to December 1990. Mr. De Sanctis is also Treasurer of California
Daily Tax Free Income Fund, Inc., Connecticut Daily Tax Free Income Fund, Inc.,
Daily Tax Free Income Fund, Inc., Delafield Fund, Inc., Institutional Daily
Municipal Income Fund, Michigan Daily Tax Free Income Fund, Inc., New Jersey
Daily Municipal Income Fund, Inc., New York Daily Tax Free Income Fund, Inc.,
North Carolina Daily Municipal Income Fund, Inc., Pennsylvania Daily Municipal
Income Fund, Reich & Tang Equity Fund, Inc., Short Term Income Fund, Inc. and
Tax Exempt Proceeds Fund, Inc. and is Vice President and Treasurer of Cortland
Trust, Inc.
C-4
<PAGE>
ITEM 29. Principal Underwriters.
(a) Reich & Tang Distributors L.P., the Registrant's distributor, is also
distributor for California Daily Tax Free Income Fund, Inc., Connecticut Daily
Tax Free Income Fund, Inc., Cortland Trust, Inc., Daily Tax Free Income Fund,
Inc., Delafield Fund, Inc., Florida Daily Municipal Income Fund, Institutional
Daily Income Fund, Michigan Daily Tax Free Income fund, Inc., New Jersey Daily
Municipal Income Fund, Inc., New York Daily Tax Free Income Fund, Inc., North
Carolina Daily Municipal Income Fund, Inc., Pennsylvania Daily Municipal Income
Fund, Short Term Income Fund, Inc. and Tax Exempt Proceeds Fund, Inc.
(b) The following are the directors and officers of Reich & Tang Asset
Management Inc., the general partner of Reich & Tang Distributors L.P. Reich &
Tang Distributors L.P. does not have any officers. The principal business
address of Messrs. Voss, Ryland, and Wadsworth is 399 Boylston Street, Boston,
Massachusetts 02116. For all other persons, the principal business address is
600 Fifth Avenue, New York, New York 10022.
Positions and Offices
With the General Partner Positions and Offices
Name of the Distributor With Registrant
Peter S. Voss President and Director None
G. Neal Ryland Director None
Edward N. Wadsworth Clerk None
Richard E. Smith III Director None
Steven W. Duff Director None
Bernadette N. Finn Vice President - Compliance Secretary
Lorraine C. Hysler Secretary None
Richard De Sanctis Vice President and Treasurer Treasurer
(c) Not applicable.
ITEM 30. Location of Accounts and Records.
The majority of the accounts, books and other documents required to be
maintained by Section 31(a) of the Investment Company Act of 1940 and the Rules
thereunder are maintained at the offices of Reich & Tang Asset Management L.P.,
600 Fifth Avenue, New York, New York 10020 (see "The Manager" in the
Prospectus). Additional records are maintained at the offices of Investors
Fiduciary Trust Company, 127 West 10th Street, Kansas City, Missouri 64105, the
Registrant's Custodian, and Reich & Tang Services L.P., 600 Fifth Avenue, New
York, New York 10020, the Registrant's transfer agent and dividend disbursing
agent.
ITEM 31. Management Services.
Not applicable.
ITEM 32. Undertakings.
The Registrant undertakes to furnish each person to whom a prospectus is
delivered with a copy of the Registrant's annual report, as supplemented, when
available, upon request, without charge.
C-5
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and the
Investment Company Act of 1940, as amended, the Registrant certifies that it
meets all of the requirements for effectiveness of this Post-Effective Amendment
to its Registration Statement pursuant to Rule 485(b) under the Securities Act
of 1933 and has duly caused this Post-Effective Amendment to its Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of New York and State of New York, on the 15th day of
April, 1996.
REICH & TANG EQUITY FUND, INC.
By: /s/Robert F. Hoerle
Robert F. Hoerle
President
Pursuant to the requirements of the Securities Act of 1933, this
Post-Effective Amendment to the Registrant's Registration Statement has been
signed below by the following persons in the capacities and on the date
indicated.
SIGNATURE TITLE DATE
(1) Principal Executive Officer:
/s/Robert F. Hoerle
Robert F. Hoerle President 4/15/96
(2) Principal Financial and
Accounting Officer:
/s/Richard DeSanctis
Richard De Sanctis Treasurer 4/15/96
(3) Majority of Directors:
W. Giles Mellon Director)
Robert Straniere Director)
Yung Wong Director)
By: /s/Robert F. Hoerle 4/15/96
Robert F. Hoerle
Attorney-in-fact*
* Powers of Attorney of Messrs. Hoerle, Mellon, Straniere, Wong and Flavin
filed as Other Exhibits to Post-Effective Amendment No. 11 to Registration
Statement on Form N-1A (File Nos. 2-94184 and 811-4148) and incorporated
herein by reference.
EXHIBIT 11
McGLADREY & PULLEN L.L.P.
Certified Public Accountants & Consultants
CONSENT OF INDEPENDENT AUDITORS
We hereby consent to the use of our report dated January 26, 1996, on the
financial statements referred to therein in Post-Effective Amendment No. 22 to
the Registration Statement on Form N-1A, File No. 2-94184 of Reich & Tang Equity
Fund, Inc., as filed with the Securities and Exchange Commission.
We also consent to the reference to our Firm in the Prospectus under the
caption "Selected Financial Information" and in the Statement of Additional
Information under the caption "Counsel and Auditors."
/s/McGLADREY & PULLEN, LLP
McGladrey & Pullen, LLP
New York, New York
April 15, 1996
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND> The schedule contains summary financial information
extracted from the financial statements and supporting
schedules as of the end of the most current period and is
qualified in its entirety by reference to such financial
statements.
</LEGEND>
<CIK> 0000756916
<NAME> Reich & Tang Equity Fund, Inc.
<S> <C>
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> JAN-01-1994
<PERIOD-END> DEC-31-1995
<PERIOD-TYPE> YEAR
<INVESTMENTS-AT-COST> 82480153
<INVESTMENTS-AT-VALUE> 111910390
<RECEIVABLES> 1217574
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 340
<TOTAL-ASSETS> 113128304
<PAYABLE-FOR-SECURITIES> 165671
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 629972
<TOTAL-LIABILITIES> 795643
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 83030751
<SHARES-COMMON-STOCK> 6335760
<SHARES-COMMON-PRIOR> 5890667
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 127860
<OVERDISTRIBUTION-GAINS> 659
<ACCUM-APPREC-OR-DEPREC> 29430237
<NET-ASSETS> 112332661
<DIVIDEND-INCOME> 2072646
<INTEREST-INCOME> 411477
<OTHER-INCOME> 0
<EXPENSES-NET> 1212525
<NET-INVESTMENT-INCOME> 1271598
<REALIZED-GAINS-CURRENT> 10086724
<APPREC-INCREASE-CURRENT> 14343018
<NET-CHANGE-FROM-OPS> 25701340
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 1271598
<DISTRIBUTIONS-OF-GAINS> 10087383
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 6439360
<NUMBER-OF-SHARES-REDEEMED> 73138
<SHARES-REINVESTED> 6067405
<NET-CHANGE-IN-ASSETS> 21693525
<ACCUMULATED-NII-PRIOR> 467
<ACCUMULATED-GAINS-PRIOR> (127200)
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 839005
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 1212525
<AVERAGE-NET-ASSETS> 104892280
<PER-SHARE-NAV-BEGIN> 15.39
<PER-SHARE-NII> .22
<PER-SHARE-GAIN-APPREC> 4.10
<PER-SHARE-DIVIDEND> .22
<PER-SHARE-DISTRIBUTIONS> 1.76
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 17.73
<EXPENSE-RATIO> 1.15
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
