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<PAGE>
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REICH & TANG 600 Fifth Avenue, New York, N.Y. 10020
EQUITY FUND, INC. (212) 830-5200
===============================================================================
Dear Shareholder:
We are pleased to present the semi-annual report of Reich & Tang Equity Fund,
Inc. for the period ended June 30, 1997.
The Equity Fund's net asset value per share on June 30, 1997 was $20.05 as
compared to $18.10 at December 31, 1996. The Fund registered an increase of
11.2% during the first-half year, after adjusting for dividend payments of
$0.066 per share. The Fund held 41 companies, with the top ten holdings
accounting for 37.0% of total net assets. Equity investments comprised 95.31% of
total portfolio assets on June 30, 1997. The Fund had 773 shareholders.
We look forward to continuing to serve your equity investment needs.
Sincerely,
\s\Robert F. Hoerle
Robert F. Hoerle
President
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<PAGE>
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REICH & TANG EQUITY FUND, INC.
STATEMENT OF NET ASSETS
JUNE 30, 1997
(UNAUDITED)
===============================================================================
<TABLE>
<CAPTION>
Value
Shares (Note 1)
------ --------
Common Stocks (95.31%)
- -----------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Aerospace/Defense (2.67%)
Sundstrand Corporation 46,000 $ 2,567,375
-------------
Agriculture (3.18%)
Freeport McMoRan, Inc. 29,500 851,813
Pioneer Hi-Bred International, Inc. 27,500 2,200,000
-------------
3,051,813
-------------
Apparel (1.97%)
Fruit of the Loom, Inc.* 61,000 1,891,000
-------------
Auto Parts - Replacements (3.21%)
Federal - Mogul Corporation 88,000 3,080,000
-------------
Banking Services (0.97%)
Olsten Corp. 48,000 933,000
-------------
Chemical (Specialty) (2.30%)
Great Lakes Chemical Corporation 12,000 628,500
Hercules Incorporated 33,000 1,579,875
-------------
2,208,375
-------------
Commercial Services (10.59%)
Deluxe Corporation 112,000 3,822,000
Manpower Inc. 70,500 3,137,250
Rollins Inc. 159,500 3,209,937
-------------
10,169,187
-------------
Computer and Computer Services (1.54%)
Policy Management Systems* 31,500 1,480,500
-------------
Converted Paper Products (4.51%)
Sonoco Products Company 107,200 3,262,900
Wausau Paper Mills 56,600 1,068,325
-------------
4,331,225
-------------
Drugs (2.75%)
Allergan Inc. 83,000 2,640,438
-------------
Electronics (1.12%)
BMC Industries Inc. 31,500 1,078,875
-------------
Energy (3.33%)
Kerr-McGee Corporation 50,500 3,200,437
-------------
</TABLE>
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See Notes to Financial Statements.
<PAGE>
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===============================================================================
<TABLE>
<CAPTION>
Value
Shares (Note 1)
------ --------
Common Stocks (Continued)
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<S> <C> <C>
Food Processing (3.02%)
Universal Foods Corp. 76,100 $ 2,901,313
-------------
Grocery (0.96%)
Food Lion, Inc. Class A 128,500 919,578
-------------
Imaging (3.93%)
Polaroid Corp. 68,000 3,774,000
-------------
Industrial Products (19.05%)
Albany International Corp. Class A 100,200 2,254,500
AlliedSignal Inc. 11,500 966,000
Corning Incorporated 63,500 3,532,187
Dexter Corporation (The) 27,700 886,400
Snap-On Tools Corp. 92,000 3,622,500
Teleflex Inc. 103,600 3,237,500
Varian Associates 69,900 3,792,075
-------------
18,291,162
-------------
Industrial Services (3.68%)
Harsco Corp. 87,300 3,535,650
-------------
Insurance (Prop/Casualty)(1.88%)
UNUM Corporation 43,000 1,806,000
-------------
Medical Supplies & Equipment (8.66%)
Nellcor Puritan Bennett, Inc.* 77,500 1,404,688
St. Jude Medical Inc.* 95,500 3,724,500
STERIS Corporation* 66,500 2,485,437
West Co., Inc. 24,500 701,313
-------------
8,315,938
-------------
Newspaper (3.10%)
Lee Enterprises, Inc. 112,700 2,972,462
-------------
Office Equipment & Supplies (1.27%)
Pitney Bowes, Inc. 17,500 1,216,250
-------------
Packaging & Containers (2.37%)
Ball Corporation 75,600 2,272,725
-------------
</TABLE>
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See Notes to Financial Statements.
<PAGE>
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REICH & TANG EQUITY FUND, INC.
STATEMENT OF NET ASSETS (CONTINUED)
JUNE 30, 1997
(UNAUDITED)
===============================================================================
<TABLE>
<CAPTION>
Value
Shares (Note 1)
------ --------
Common Stocks (Continued)
- -----------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Retail Store (1.98%)
The Limited, Inc. 94,000 $ 1,903,500
-------------
Shoes (2.25%)
Nine West Group Inc.* 56,500 2,157,594
-------------
Steel (General) (1.38%)
Allegheny Teledyne, Inc. 49,000 1,323,000
-------------
Telecommunications Equipment (2.02%)
General Instrument Corporation* 77,500 1,937,500
-------------
Toy/School Supplies (1.62%)
Hasbro, Inc. 54,750 1,553,531
-------------
Total Common Stocks (Cost $64,370,804) $ 91,512,428
-------------
<CAPTION>
Face
Amount
------
Short-Term Investments (4.94%)
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<S> <C> <C>
Repurchase Agreements (4.94%)
Morgan (J.P.) Securities Inc., 5.95%, due 07/01/97
(Collateralized by $4,754,000, 5.88%
U.S. Treasury Notes, due 02/28/99) $4,745,000 $ 4,745,000
-------------
Total Short-Term Investments (Cost $4,745,000) $ 4,745,000
-------------
Total Investments (100.25%) (Cost $69,115,804+) 96,257,428
Liabilities in Excess of Cash and Other Assets (-0.25%) ( 241,692)
-------------
Net Assets (100.00%) 4,787,813 shares outstanding (Note 3) $ 96,015,736
=============
Net asset value, offering and redemption price per share $ 20.05
=============
</TABLE>
* Non-income producing.
+ Aggregate cost for federal income tax purposes is $69,120,082. Aggregate
unrealized appreciation and depreciation, based on cost for federal income
tax purposes, are $27,871,436 and $734,090 respectively.
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See Notes to Financial Statements.
<PAGE>
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REICH & TANG EQUITY FUND, INC.
STATEMENT OF OPERATIONS
SIX MONTHS ENDED JUNE 30, 1997
(UNAUDITED)
===============================================================================
<TABLE>
<CAPTION>
INVESTMENT INCOME
<S> <C>
Income:
Dividends........................................................................... $ 740,207
Interest............................................................................ 105,965
---------------
Total income................................................................... 846,172
---------------
Expenses: (Note 2)
Investment management fee........................................................... 357,616
Administration fee.................................................................. 89,404
Distribution expenses............................................................... 22,351
Custodian fees...................................................................... 6,280
Shareholder servicing and related shareholder expenses.............................. 30,612
Legal, compliance and filing fees................................................... 8,756
Audit and accounting................................................................ 22,670
Directors' fees and expenses........................................................ 6,000
Other............................................................................... 1,523
---------------
Total expenses...................................................................... 545,212
Expenses paid indirectly............................................................ ( 4,708)
---------------
Net expenses........................................................................ 540,504
---------------
Net investment income.................................................................. 305,668
---------------
<CAPTION>
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS
Net realized gain on investments....................................................... 5,866,791
Net unrealized appreciation of investments............................................. 3,511,899
---------------
Net gain on investments....................................................... 9,378,690
---------------
Increase (decrease) in net assets from operations...................................... $ 9,684,358
===============
</TABLE>
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See Notes to Financial Statements.
<PAGE>
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REICH & TANG EQUITY FUND, INC.
STATEMENTS OF CHANGES IN NET ASSETS
===============================================================================
<TABLE>
<CAPTION>
Six Months
Ended Year
June 30, 1997 Ended
(Unaudited) December 31, 1996
----------- -----------------
INCREASE (DECREASE) IN NET ASSETS
<S> <C> <C>
Operations:
Net investment income................................................... $ 305,668 $ 874,929
Net realized gain on investments........................................ 5,866,791 22,512,273
Change in unrealized appreciation (depreciation) of investments......... 3,511,899 ( 5,800,512)
------------ -----------
Increase in net assets from operations.................................. 9,684,358 17,586,690
Distributions from:
Net investment income................................................... ( 318,947) ( 874,270)
Return of capital....................................................... -- ( 728)
Net realized gain on investments........................................ -- ( 13,865,880)
Capital share transactions (Note 3)........................................ ( 4,650,129) ( 23,878,019)
------------ -----------
Total increase (decrease)............................................... 4,715,282 ( 21,032,207)
Net Assets:
Beginning of period..................................................... 91,300,454 112,332,661
------------ -----------
End of period (including undistributed (distribution in excess of)
net investment income of ($13,279) & $0, respectively)................ $ 96,015,736 $ 91,300,454
============ ===========
</TABLE>
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See Notes to Financial Statements.
<PAGE>
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REICH & TANG EQUITY FUND, INC.
NOTES TO FINANCIAL STATEMENTS
(UNAUDITED)
================================================================================
1. Summary of Accounting Policies.
Reich & Tang Equity Fund, Inc. is a no-load, diversified, open-end management
investment company registered under the Investment Company Act of 1940. The
investment objective of the Fund is to seek growth of capital by investing
primarily in equity securities which management of the Fund believes to be
undervalued. Its financial statements are prepared in accordance with generally
accepted accounting principles for investment companies as follows:
a) Valuation of Securities -
Securities traded on a national securities exchange or admitted to trading
on the National Association of Securities Dealers Inc. Automated Quotations
National List are valued at the last reported sales price on the last
business day of the fiscal period. Common stocks for which no sale was
reported on that date and over-the-counter securities, are valued at the
mean between the last reported bid and asked prices. United States
Government obligations and other debt instruments having sixty days or less
remaining until maturity are stated at amortized cost. Debt instruments
having a remaining maturity of more than sixty days will be valued at the
highest bid price obtained from a dealer maintaining an active market in
that security or on the basis of prices obtained from a pricing service
approved as reliable by the Board of Directors. All other investment
assets, including restricted and not readily marketable securities, are
valued in such manner as the Board of Directors in good faith deems
appropriate to reflect their fair market value.
b) Federal Income Taxes -
It is the Fund's policy to comply with the requirements of the Internal
Revenue Code applicable to regulated investment companies and to distribute
all of its taxable income to its shareholders. Therefore, no provision for
federal income tax is required.
c) Use of Estimates -
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that effect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the
financial statements and the reported amounts of increases and decreases in
net assets from operations during the reporting period. Actual results
could differ from those estimates.
d) General -
Securities transactions are recorded on the trade date basis. Interest
income is accrued as earned and dividend income is recorded on the
ex-dividend date. Realized gains and losses from securities transactions
are recorded on the identified cost basis. Dividends and capital gain
distributions to shareholders, which are determined in accordance with
income tax regulations, are recorded on the ex-dividend date. Distributions
which exceed net realized capital gains for financial reporting purposes
but not for tax purposes are reported as distributions in excess of net
realized gains. It is the Fund's policy to take possession of securities as
collateral under repurchase agreements and to determine on a daily basis
that the value of such securities plus accrued interest are sufficient to
cover the value of the repurchase agreements.
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<PAGE>
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REICH & TANG EQUITY FUND, INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
(UNAUDITED)
================================================================================
2. Investment Management Fees and Other Transactions with Affiliates.
Under the Investment Management Contract, the Fund pays an investment management
fee to Reich & Tang Asset Management, L.P. ("The Manager") equal to .80% of the
Fund's average daily net assets.
Pursuant to an Administrative Services Agreement, the Fund pays to the Manager
an annual fee of .20% of the Fund's average daily net assets.
Pursuant to a Distribution and Service Plan adopted under securities and
Exchange Commission Rule 12b-1, the Fund may pay certain costs associated with
the distribution of the Fund's shares subject to a limit of 0.05% of the Fund's
average net assets.
Brokerage commissions paid during the period to Reich & Tang Distributors L.P.
amounted to $12,533.
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 caption "Shareholder servicing
and related shareholder expenses" are expense offsets of $4,708. Included under
the same caption are fees of $22,533 paid to Reich & Tang Services, L.P. an
affiliate of the Manager as servicing agent for the Fund.
3. Capital Stock.
At June 30, 1997 100,000,000 shares of $.001 par value stock were authorized and
capital paid in amounted to $63,027,879. Transactions in capital stock were as
follows:
<TABLE>
<CAPTION>
Six Months Ended Year Ended
June 30, 1997 December 31, 1996
----------------------------- ---------------------------
Shares Amount Shares Amount
------------- -------------- ---------- ----------
<S> <C> <C> <C> <C>
Sold................................ 2,008,855 $36,736,627 3,234,560 $ 61,060,226
Issued on reinvestment of dividends. 164,219 2,985,898 604,573 10,976,919
Redeemed............................ ( 2,429,439) ( 44,372,654) ( 5,130,715) ( 95,915,164)
------------ -------------- ----------- ------------
Net increase (decrease)............. ( 256,365) ( $ 4,650,129) ( 1,291,582) ($ 23,878,019)
============ ============== =========== ============
</TABLE>
4. Investment Transactions.
Purchases and sales of investment securities, other than U.S. Government direct
and agency obligations and short-term investments, totaled $11,533,601 and
$17,403,665, respectively. Accumulated undistributed net realized gains at June
30, 1997 amounted to $5,859,512.
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<PAGE>
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================================================================================
5. Financial Highlights.
<TABLE>
<CAPTION>
Six Months
Ended Year Ended December 31,
------------------------------------------------------------------
June 30, 1997 1996 1995 1994 1993 1992
------------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
Per Share Operating Performance
(for a share outstanding throughout the period)
Net asset value, beginning of period...... $ 18.10 $ 17.73 $ 15.39 $ 17.61 $ 16.92 $ 15.64
-------- -------- -------- -------- -------- --------
Income from investment operations:
Net investment income..................... 0.07 0.15 0.22 0.24 0.21 0.23
Net realized and unrealized
gains (losses) on investments......... 1.95 2.83 4.10 0.05 2.12 2.31
-------- -------- -------- -------- -------- --------
Total from investment operations.......... 2.02 2.98 4.32 0.29 2.33 2.54
-------- -------- -------- -------- -------- --------
Less distributions:
Dividends from net investment income...... ( 0.07) ( 0.15) ( 0.22) ( 0.24) ( 0.21) ( 0.23)
Distributions from net realized gains..... ( -- ) ( 2.46) ( 1.76) ( 2.27) ( 1.43) ( 1.03)
-------- -------- -------- -------- -------- --------
Total distributions....................... ( 0.07) ( 2.61) ( 1.98) ( 2.51) ( 1.64) ( 1.26)
-------- -------- -------- -------- -------- --------
Net asset value, end of period............ $ 20.05 $ 18.10 $ 17.73 $ 15.39 $ 17.61 $ 16.92
======== ======== ======== ======== ======== ========
Total Return.............................. 11.2%(d) 16.9% 28.2% 1.7% 13.8% 16.3%
Ratios/Supplemental Data
Net assets, end of period (000)........... $ 96,016 $ 91,300 $112,333 $ 90,639 $ 105,181 $92,702
Ratios to average net assets:
Expenses................................ 1.22%(a)(b) 1.22%(b) 1.15% 1.17% 1.15% 1.15%
Net investment income................... 0.68%(a) 0.79% 1.21% 1.35% 1.15% 1.35%
Portfolio turnover rate................... 13.36% 31.70% 27.69% 25.80% 26.69% 27.37%
Average commission rate paid (per share) $ .0392(c) $ .0455(c) -- -- -- --
</TABLE>
(a) Annualized
(b) Includes expenses paid indirectly, equivalent to .01% of average net assets.
(c) Required by regulations issued in 1995.
(d) Not annualized
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<PAGE>
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This report is submitted for the general
information of the shareholders of the Fund. It is
not authorized for distribution to prospective
investors in the Fund unless preceded or
accompanied by an effective prospectus, which
includes information regarding the Fund's
objectives and policies, experience of its
management, marketability of shares, and other
information.
- -----------------------------------------------------
Reich & Tang Equity Fund, Inc.
600 Fifth Avenue
New York, New York 10020
Manager
Reich & Tang Asset Management L.P.
600 Fifth Avenue
New York, New York 10020
Custodian
Investors Fiduciary Trust Company
127 West 10th Street
Kansas City, Missouri 64105
Transfer Agent &
Dividend Disbursing Agent
Reich & Tang Services L.P.
600 Fifth Avenue
New York, New York 10020
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<PAGE>
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REICH & TANG
EQUITY FUND, INC.
Semi-Annual Report
June 30, 1997
(Unaudited)
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