As filed with the Securities and Exchange Commission on April 24, 1997
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. 23 [X]
and/or
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 [X]
Amendment No. 19 [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 April 30,1997 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, 1996 on or about
February 28, 1997.
<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 . . . . . . . . Financial Highlights
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. 600 FIFTH AVENUE
PROSPECTUS NEW YORK, NY 10020
(212) 830-5220
- --------------------------------------------------------------------------------
May 1, 1997
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, 1997, 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)
Management Fees 0.80%
Other Expenses 0.42%
Administration Fees 0.20%
Total Fund Operating Expenses 1.22%
<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 $39 $67 $148
</TABLE>
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 figures 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.
FINANCIAL HIGHLIGHTS
The following financial highlights of Reich & Tang Equity Fund, Inc. have
been audited by McGladrey & Pullen, LLP, Independent Certified Public
Accountants, whose report thereon appears in the Statement of Additional
Information.
<TABLE>
<CAPTION>
Year Ended December 31,
-------------------------------------------------------------------------
1996 1995 1994 1993 1992 1991 1990 1989 1988 1987
---- ---- ---- ---- ---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Per Share Operating Performance
(for a share outstanding throughout the year)
Net asset value, beginning of year... $17.73 $15.39 $17.61 $16.92 $15.64 $13.05 $14.24 $14.11 $13.11 $14.50
---------- -------- ------ ------ ------ ----- ------ ------ ----- -----
Income from investment operations:
Net investment income.............. 0.15 0.22 0.24 0.21 0.23 0.36 0.35 0.43 0.44 0.34
Net realized and unrealized
gains (losses) on investments... 2.83 4.10 0.05 2.12 2.31 2.63 (1.18) 2.08 2.53 0.45
---------- -------- ------ ------ ------ ----- ------ ------ ----- -----
Total from investment operations... 2.98 4.32 0.29 2.33 2.54 2.99 (0.83) 2.51 2.97 0.79
---------- -------- ----- ------ ------ ----- ------ ------ ----- ------
Less distributions:
Dividends from net investment income (0.15) (0.22) (0.24) (0.21) (0.23) (0.37) (0.36) (0.45) (0.44) (0.40)
Distributions from net realized gains (2.46) (1.76) (2.27) (1.43) (1.03) (0.03) --- (1.93) (1.53) (1.78)
------ ------- ----- ------ ------ ------ ------- ----- ------ ------
Total distributions................ ( 2.61) (1.98) (2.51) (1.64) (1.26) (0.40) (0.36) (2.38) (1.97) (2.18)
-------- ------- ------ ------- ------ -------- ------- ------ ------- ------
Net asset value, end of year....... $ 18.10 $17.73 $15.39 $17.61 $16.92 $15.64 $13.05 $14.24 $14.11 $13.11
======= ======== ======= ======= ====== ======= ======== ======= ======= ======
Total Return....................... 16.9% 28.2% 1.7% 13.8% 16.3% 23.1% (5.8%) 17.9% 22.8% 5.1%
Ratios/Supplemental Data
Net assets, end of year (000)...... $ 91,300 $112,333 $90,639 $105,181 $92,702 $83,151 $97,085 $111,992 $102,391 $101,650
Ratios to average net assets:
Expenses........................ 1.22%(a) 1.15% 1.17% 1.15% 1.15% 1.14% 1.12% 1.10% 1.11% 1.11%
Net investment income........... 0.79% 1.21% 1.35% 1.15% 1.35% 2.33% 2.56% 2.68% 2.87% 2.07%
Portfolio turnover rate............ 31.70% 27.69% 25.80% 26.69% 27.37% 43.41% 27.48% 47.90% 27.04% 42.53%
Average commission rate paid (per share) $.0455(b)
</TABLE>
(a) Includes expenses paid indirectly, equivalent to .01% of average net assets.
(b) Required by regulations issued in 1995.
<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 auditing
3
<PAGE>
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 directors of the
Fund, may be directors or officers of
5
<PAGE>
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, 1997
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. New England Investment Companies, Inc.
("NEIC"), a Massachusetts corporation, serves as the sole general partner of
NEICLP. Reich & Tang Asset Management L.P. succeeded NEICLP as the Manager of
the Fund.
On August 30, 1996, The New England Mutual Life Insurance Company ("The New
England") and Metropolitan Life Insurance Company ("MetLife") merged, with
MetLife being the continuing company. The Manager remains a wholly-owned
subsidiary of NEICLP, but Reich & Tang Asset Management, Inc., its sole general
partner, is now an indirect subsidiary of MetLife. Also, MetLife New England
Holdings, Inc., a wholly-owned subsidiary of MetLife, owns 51% of the
outstanding limited partnership interest of NEICLP and may be deemed a
"controlling person" of the Manager. Reich & Tang, Inc. owns approximately 16%
of the outstanding partnership units of NEICLP.
MetLife is a mutual life insurance company with assets of $142.2 billion at
March 31, 1996. It is the second largest life insurance company in the United
States in terms of total assets. MetLife provides a wide range of insurance and
investment products and services to individuals and groups and is the leader
among United States life insurance companies in terms of total life insurance in
force, which exceeded $1.2 trillion at March 31, 1996 for MetLife and its
insurance affiliates. MetLife and its affiliates provide insurance or other
financial services to approximately 36 million people worldwide.
NEIC is a holding company offering a broad array of investment styles across a
wide range of asset categories through twelve subsidiaries, divisions and
affiliates offering a wide array of investment styles and products to
institutional clients. Its business units include, AEW Capital Management, L.P.,
Back Bay Advisors, L.P., Graystone Partners, L.P., Harris Associates, L.P.,
Jurika & Voyles, L.P., Loomis, Sayles & Co., L.P., MC Management, L.P., New
England Funds, L.P., New England Funds Management, L.P., Reich & Tang Asset
Management L.P., Vaughan-Nelson, Scarborough & McConnell, L.P. and Westpeak
Investment Advisors, L.P. These affiliates in the aggregate are investment
advisors or managers to 43 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 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 President of the
6
<PAGE>
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 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.)
The merger between The New England and MetLife resulted in an "assignment" of
the Investment Management Contract relating to the Fund. Under the 1940 Act,
such an assignment caused the automatic termination of the agreement. On
November 28, 1995, the Board of Directors, including a majority of the directors
who are not interested persons (as defined in the 1940 Act) of the Fund or the
Manager approved, a new Investment Management Contract effective August 30,
1996, which has a term which extends to December 31, 1997 and may be continued
in force thereafter for successive twelve-month periods beginning each January
1, provided that such continuance is specifically approved annually by majority
vote of the Fund's outstanding voting securities or by its Board of Directors,
and in either
7
<PAGE>
case by a majority of the directors who are not parties to the Investment
Management Contract or interested persons of any such party, by votes cast in
person at a meeting called for the purpose of voting on such matter.
The Investment Management Contract was approved by a majority of the
shareholders of the Fund on March 13, 1996 and contains the same terms and
conditions governing the Manager's investment management responsibilities as the
Fund's previous Investment Management Contract with the Manager, except as to
the date of execution and termination.
The merger and the change in control of the Manager is not expected to have any
impact upon the Manager's performance of its responsibilities and obligations
under the Investment Management Contract.
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 Manager, at its discretion, may voluntarily waive all or
a portion of the administrative services fee.
For the year ended December 31, 1996, the Manager for its services under the
Investment Management Contract received an amount equal to .80% of the Fund's
average daily net assets. For the year ended December 31, 1996, the total
expenses for the Fund, including the management fee and administrative services
fee, were 1.22% 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.
8
<PAGE>
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 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 printing and distributing the
Fund's prospectus to prospective investors and to defray the cost of the
preparation and printing of brochures and other promotional materials, mailings
to prospective stockholders, advertising, and other promotional activities,
including the salaries and/or commissions of sales personnel in connection with
the distribution of the Fund's shares. 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 $55,281 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. Of the total amount paid by the Manager, $9,984 was utilized for broker
assistance payments and $3,098 for Prospectus printing.
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
9
<PAGE>
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
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 (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
10
<PAGE>
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 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
11
<PAGE>
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
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. Any individual can contribute to an IRA equal
to the lesser of $2,000 annually ($2,250 in a spousal account) or 100% of earned
income; such investment must be made in cash. 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 $25,000 or, a married couple filing
a joint return with adjusted gross income above $40,000. Special rules apply in
the case of married individuals living together who file separate returns. The
minimum investment required to open an IRA is $250. Generally, there are
penalties for premature distributions from an IRA before the attainment of age
59 1/2, except in the case of the participant's death or disability and certain
other circumstances.
As a result of the enactment of the Small Business, Health Insurance and Welfare
Reform Acts of 1996 (the "`96 Act"), certain of the foregoing provisions
12
<PAGE>
have been amended. Pertinent provisions of the `96 Act are described below:
Generally. Five year averaging will not apply to distributions after December
31, 1999. Ten year averaging has been preserved in very limited circumstances.
IRAs. Beginning January 1, 1997, a non-working spouse may be eligible to
establish an IRA and contribute up to $2,000, provided the combined income of
both spouses is at least equal to the amount contributed by both spouses to
IRAs.
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 (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 prospectus. 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,
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<PAGE>
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, 1996 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 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.
14
<PAGE>
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 of shares entitled to cast not less than 25% of all the votes
entitled to be cast 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.
15
<PAGE>
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 custodian and transfer
agent 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.
16
<PAGE>
Table of Contents
Table of Fees and Expenses.........................2 REICH & TANG
Financial Highlights...............................2 EQUITY FUND, INC.
Investment Objectives,
Policies and Risks............................3
Investment Restrictions............................5 PROSPECTUS
The Manager........................................5 May 1, 1997
Distribution and Service Plan......................8
Purchase of Shares.................................9
New Stockholders..............................10
Present Stockholders..........................10
Electronic Funds Transfers (EFT),
Pre-Authorized Credit and
Direct Deposit Privilege......................11
Redemption of Shares...............................11
Systematic Withdrawal Plan....................12
Telephone Redemption Privilege................12
Retirement Plans...................................12
Exchange Privilege.................................13
Dividends, Distributions and Taxes.................13
Net Asset Value....................................15
General Information ...............................15
Description of Common Stock....................15
Performance....................................15
Custodian and Transfer Agent...................16
Information for Stockholders...................16
- --------------------------------------------------------------------------------
REICH & TANG 600 Fifth Avenue, New York, NY 10020
EQUITY FUND, INC. (212) 830-5220
================================================================================
STATEMENT OF ADDITIONAL INFORMATION
May 1, 1997
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, 1997 (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. Sell securities short or invest in puts, calls, straddles, spreads or
combinations thereof;
3. Purchase or acquire commodities or commodity contracts;
2
<PAGE>
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, 64*: Chairman 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, 66: Director of the Fund, is a Professor of Business
Administration and Area Chairman of Finance at 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 AEW Commercial Mortgage Securities Fund, Inc., 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, 56: Director of the Fund, is a member of the New York State
Assembly and a partner in The Straniere Law Firm since 1981. His address is 182
Rose Avenue, Staten Island, New York 10306. Mr. Straniere is also a Director of
AEW Commercial Mortgage Securities Fund, Inc., 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, 58: 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 AEW Commercial Mortgage Securities Fund, Inc., 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 and Eclipse Financial Asset Trust..
STEVEN W. DUFF, 43: 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., Cortland Trust, 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. Mr. Duff is also
President and a Trustee of Florida Daily Municipal Income Fund, Institutional
Daily Income Fund and Pennsylvania Daily Municipal Income Fund, and President
and Chief Executive Officer of Tax Exempt Proceeds Fund, Inc.
3
<PAGE>
STEVEN M. WILSON, 37: 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, 49: Vice President and Secretary of the Fund has been 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 AEW Commercial Mortgage Securities Fund, Inc.,
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, 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.and a Vice President and
Secretary of Delafield Fund, Inc., Institutional Daily Income Fund and Short
Term Income Fund, Inc.
MOLLY FLEWHARTY, 46: Vice President of the Fund has been 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, 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.
LESLEY M. JONES, 48: Vice President of the Fund has been 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, 40: Vice President of the Fund has been 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,
Short Term Income Fund, Inc. and Tax Exempt Proceeds Fund, Inc.
RICHARD De SANCTIS, 40: 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. Mr. De Sanctis is also
Treasurer of AEW Commercial Mortgage Securities, Inc., 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, Short Term Income Fund, Inc. and Tax Exempt Proceeds
Fund, Inc. and 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 relating to
attendance at such meetings. Directors who are affiliated with the Manager do
not receive compensation from the Fund.
4
<PAGE>
The Fund paid an aggregate remuneration of $12,000 to its Directors with respect
to the period ended December 31, 1996, 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, $4,000.00 0
Director 0 $52,125 (12 Funds)
Robert Straniere, $4,000.00 0
Director 0 $52,125 (12 Funds)
Yung Wong, $4,000.00 0
Director 0 $52,125 (12 Funds)
* The total compensation paid to such persons by the Fund and Fund Complex for
the fiscal year ending December 31, 1996 (and, with respect to certain of
the funds in the Fund Complex, estimated to be paid during the fiscal year
ending December 31, 1996). 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, 1997 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
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 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. New England Investment Companies, Inc.
("NEIC"), a Massachusetts corporation, serves as the sole general partner of
NEICLP. Reich & Tang Asset Management L.P. succeeded NEICLP as the Manager of
the Fund.
On August 30, 1996, The New England Mutual Life Insurance Company ("The New
England") and Metropolitan Life Insurance Company ("MetLife") merged, with
MetLife being the continuing company. The Manager remains a wholly-owned
subsidiary of NEICLP, but Reich & Tang Asset Management, Inc., its sole general
partner, is now an indirect subsidiary of MetLife. Also, MetLife new England
Holdings, Inc., a wholly-owned subsidiary of MetLife, owns approximately 51% of
the outstanding limited partnership interest of NEICLP and may be deemed
5
<PAGE>
a "controlling person" of the Manager. Reich & Tang, Inc. owns approximately 16%
of the outstanding partnership units of NEICLP.
MetLife is a mutual life insurance company with assets of $142.2 billion at
March 31, 1996. It is the second largest life insurance company in the United
States in terms of total assets. MetLife provides a wide range of insurance and
investment products and services to individuals and groups and is the leader
among United States life insurance companies in terms of total life insurance in
force, which exceeded $1.2 trillion at March 31, 1996 for MetLife and its
insurance affiliates. MetLife and its affiliates provide insurance or other
financial services to approximately 36 million people worldwide.
NEIC is a holding company offering a broad array of investment styles across a
wide range of asset categories through eleven subsidiaries, divisions and
affiliates offering a wide array of investment styles and products to
institutional clients. Its business units include, AEW Capital Management, L.P.,
Back Bay Advisors, L.P., Graystone Partners, L.P., Harris Associates, L.P.,
Loomis, Sayles & Co., L.P., MC Management, L.P., New England Funds, L.P., New
England Funds Management L.P., Reich & Tang Asset Management, L.P.,
Vaughan-Nelson, Scarborough & McConnell L.P. and Westpeak Investment Advisors,
L.P. These affiliates in the aggregate are investment advisors or managers to 43
other registered investment companies.
The merger between the New England and MetLife resulted in an "assignment" of
the Investment Management Contract relating to the Fund. Under the 1940 Act,
such an assignment caused the automatic termination of this agreement. On
November 28, 1995, the Board of Directors, including a majority of the directors
who are not interested persons (as defined in the 1940 Act) of the Fund or the
Manager, approved a new Investment Management Contract effect August 30, 1996,
which has a term which extends to December 31, 1997 and may be continued in
force thereafter for successive twelve-month periods beginning each January 1,
provided that such continuance is specifically approved annually by majority
vote of the Fund's outstanding voting securities or by its Board of Directors,
and in either case by a majority of the directors who are not parties to the
Investment Management Contract or interest persons of any such party, by votes
cast in person at a meeting called for the purpose of voting on such matter.
The Investment Management Contract was approved by a majority of the
shareholders of the Fund on March 13, 1996 and contains the same terms and
conditions governing the Manager's investment management responsibilities as the
Fund's previous Investment Management Contract with the Manager, except as to
the date of execution and termination.
The merger and the change in control of the Manager is not expected to have any
impact upon the Manager's performance of its responsibilities and obligations
under the Investment Management Contract.
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 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.
6
<PAGE>
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, 1994, 1995 and 1996, the Manager received
investment management fees of $ 749,912, $839,005 and $888,522 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, 1994,
1995 and 1996, the Manager received an administrative services fee of $187,478,
$209,771 and $222,130, respectively.
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 3, 19965
and shall continue in effect until December 31, 1997. 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
7
<PAGE>
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. 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, and any appropriate estimated payments
are made to it on a monthly basis. No such reimbursement was required for the
year ended December 31, 1996. As a result of the recent passage of the National
Securities Markets Improvement Act of 1996, all state expense limitations have
been eliminated at this time.
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
8
<PAGE>
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, 1996, 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 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, 1994, 1995 and 1996, the Fund paid a total
of $71,681, $77,970 and $95,366 respectively, in brokerage commissions, $30,195,
$22,919 and $23,623, respectively, of which was paid to the Distributor. During
the years ended December 31, 1994, 1995 and 1996, the brokerage commissions paid
to the Distributor represented approximately 42.12%%29.39% and 24.77%,
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 60.37%, 47.46% and 42.83%, 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, 1995 and 1996 was 27.69%, and 31.70%, 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, 1997 there were 4,938,788 shares of the Fund's common stock
outstanding. As of March 31, 1997, the amount of shares owned by all officers
and directors of the Fund, as a group, was less than 1%
9
<PAGE>
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, 1997:
Nature of
Name and Address % of Shares Ownership
NEIC Master Retirement Trust. 8.91 Record
399 Boylston Street
Boston, MA. 02116-3305
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, 1996 was 16.9%.
The Fund's average annual compounded total return for the five year period ended
December 31, 1996 was 15.05%. The Fund's average annual compounded total return
from January 4, 1985 (inception) to December 31, 1996 was 15.48%.
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.
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
10
<PAGE>
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 custodian and transfer
agent 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, 1996 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, 1996 by correspondence with the custodian and brokers.
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, 1996, 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.
\s\McGladrey & Pullen,LLP
New York, New York
February 10, 1997
12
<PAGE>
- --------------------------------------------------------------------------------
REICH & TANG EQUITY FUND, INC.
STATEMENT OF NET ASSETS
DECEMBER 31, 1996
================================================================================
<TABLE>
<CAPTION>
Value
Shares (Note 1)
------ --------
Common Stocks (96.42%)
- -----------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Aerospace/Defense (3.10%)
Sundstrand Corporation 66,500 $ 2,826,250
--------------
Agriculture (2.45%)
Pioneer Hi-Bred International, Inc. 32,000 2,240,000
--------------
Apparel (2.24%)
Fruit of the Loom, Inc.* 49,100 1,859,662
Land's End, Inc.* 7,000 185,500
--------------
2,045,162
--------------
Auto Parts - Replacements (2.43%)
Federal - Mogul Corporation 100,700 2,215,400
--------------
Telecommunications Equipment (1.45%)
General Instruments Corporation* 61,300 1,325,612
--------------
Chemical (Specialty) (3.24%)
Great Lakes Chemical Corporation 44,300 2,071,025
Hercules Incorporated 20,500 886,625
--------------
2,957,650
--------------
Commercial Services (11.45%)
Deluxe Corporation 104,900 3,435,475
Equifax Inc. 35,600 1,090,250
Manpower Inc. 84,300 2,739,750
Rollins Inc. 159,500 3,190,000
--------------
10,455,475
--------------
Computer and Computer Services (.86%)
Policy Management Systems* 17,000 784,125
--------------
Converted Paper Products (4.18%)
Sonoco Products Company 107,200 2,773,800
Wausau Paper Mills 56,600 1,047,100
--------------
3,820,900
--------------
Drugs (2.95%)
Allergan Inc. 75,600 2,693,250
--------------
Energy (4.74%)
Kerr-McGee Corporation 60,100 4,327,200
--------------
</TABLE>
- --------------------------------------------------------------------------------
See Notes to Financial Statements.
13
<PAGE>
- --------------------------------------------------------------------------------
REICH & TANG EQUITY FUND, INC.
STATEMENT OF NET ASSETS (CONTINUED)
DECEMBER 31, 1996
================================================================================
<TABLE>
<CAPTION>
Value
Shares (Note 1)
------ --------
Common Stocks (Continued)
- ----------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Food Processing (3.08%)
Universal Foods Corp. 79,900 $ 2,816,475
-------------
Grocery (1.02%)
Food Lion, Inc. Class A 94,900 928,241
-------------
Imaging (3.24%)
Polaroid Corp. 67,900 2,953,650
-------------
Industrial Products (21.44%)
Albany International Corp. Class A 100,200 2,317,125
AlliedSignal Inc. 26,100 1,748,700
Corning Incorporated 99,200 4,588,000
Dexter Corporation (The) 27,700 882,938
Snap-On Tools Corp. 83,100 2,960,438
Teleflex Inc. 51,800 2,700,075
Tyco International 22,500 1,189,687
Varian Associates 62,700 3,189,862
-------------
19,576,825
-------------
Industrial Services (4.39%)
Harsco Corp. 58,500 4,007,250
-------------
Insurance (Prop/Casualty) (4.15%)
UNUM Corporation 33,900 2,449,275
Zurich Reinsurance Centre Holdings, Inc. 42,900 1,340,625
-------------
3,789,900
-------------
Medical Supplies & Equipment (7.33%)
Becton, Dickinson & Co. 3,900 169,163
St. Jude Medical Inc.* 84,000 3,580,500
STERIS Corporation* 43,424 1,888,944
West Co., Inc. 37,200 1,050,900
-------------
6,689,507
-------------
Newspaper (2.78%)
Lee Enterprises, Inc. 109,200 2,538,900
-------------
Office Equipment & Supplies (1.04%)
Pitney Bowes, Inc. 17,500 953,750
-------------
</TABLE>
- --------------------------------------------------------------------------------
See Notes to Financial Statements.
14
<PAGE>
- --------------------------------------------------------------------------------
REICH & TANG EQUITY FUND, INC.
STATEMENT OF NET ASSETS (CONTINUED)
DECEMBER 31, 1996
================================================================================
<TABLE>
<CAPTION>
Value
Shares (Note 1)
------ --------
Common Stocks (Continued)
- -----------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Packaging and Containers (2.15%)
Ball Corporation 75,600 $ 1,965,600
-------------
Publishing (1.45%)
Reader's Digest Association 32,800 1,320,200
-------------
Retail Store (1.59%)
The Limited, Inc. 79,005 1,451,717
-------------
Steel (General) (1.43%)
Allegheny Teledyne, Inc. 57,000 1,311,000
-------------
Toy/School Supplies (2.24%)
Hasbro, Inc. 52,600 2,044,825
-------------
Total Common Stocks (Cost $64,409,139) 88,038,864
-------------
<CAPTION>
Face
Amount
------
Short-Term Investments (5.73%)
- -----------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Repurchase Agreements (5.73%)
Morgan (J.P.) Securities Inc., 6.65%, due 01/02/97
(Collateralized by $5,481,000, 6.25%,
U.S. Treasury Bonds, due 08/15/23) $5,228,000 5,228,000
-------------
Total Short-Term Investments (Cost $5,228,000) 5,228,000
-------------
Total Investments (102.15%) (Cost $69,637,139 +) 93,266,864
Liabilities in Excess of Cash and Other Assets (-2.15%) ( 1,966,410)
-------------
Net Assets (100.00%) 5,044,178 shares outstanding (Note 3) $ 91,300,454
=============
Net asset value, offering and redemption price per share $ 18.10
=============
</TABLE>
* Non-income producing.
+ Aggregate cost for federal income tax purposes is $69,644,418. Aggregate
unrealized appreciation and depreciation are, based on cost for Federal
income tax purposes, $24,809,345 and $1,186,899 respectively.
- --------------------------------------------------------------------------------
See Notes to Financial Statements.
15
<PAGE>
- --------------------------------------------------------------------------------
REICH & TANG EQUITY FUND, INC.
STATEMENT OF OPERATIONS
YEAR ENDED DECEMBER 31, 1996
================================================================================
<TABLE>
<CAPTION>
INVESTMENT INCOME
<S> <C>
Income:
Dividends...................................................................... $ 1,905,747
Interest....................................................................... 312,923
---------------
Total income............................................................. 2,218,670
---------------
Expenses: (Note 2)
Investment management fee...................................................... 888,522
Administration fee............................................................. 222,130
Distribution expenses.......................................................... 55,281
Custodian fees................................................................. 18,452
Shareholder servicing and related shareholder expenses......................... 79,429
Legal, compliance and filing fees.............................................. 22,925
Audit and accounting........................................................... 51,240
Directors' fees and expenses................................................... 10,830
Other.......................................................................... 4,694
---------------
Total expenses................................................................. 1,353,503
Expenses paid indirectly....................................................... ( 9,762)
---------------
Net expenses................................................................... 1,343,741
---------------
Net investment income.............................................................. 874,929
---------------
<CAPTION>
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS
Net realized gain on investments................................................... 22,512,273
Net unrealized depreciation of investments......................................... ( 5,800,512)
--------------
Net gain on investments........................................................ 16,711,761
--------------
Increase in net assets from operations............................................. $ 17,586,690
==============
</TABLE>
- --------------------------------------------------------------------------------
See Notes to Financial Statements.
16
<PAGE>
- --------------------------------------------------------------------------------
REICH & TANG EQUITY FUND, INC.
STATEMENTS OF CHANGES IN NET ASSETS
YEARS ENDED DECEMBER 31, 1996 AND 1995
================================================================================
<TABLE>
<CAPTION>
1996 1995
------------ ------------
INCREASE (DECREASE) IN NET ASSETS
<S> <C> <C>
Operations:
Net investment income................................................... $ 874,929 $ 1,271,598
Net realized gain on investments........................................ 22,512,273 10,086,724
Change in unrealized appreciation (depreciation) of investments......... ( 5,800,512) 14,343,018
------------- ------------
Increase in net assets from operations.................................. 17,586,690 25,701,340
Distributions from:
Net investment income................................................... ( 874,270) ( 1,271,598)
Return of capital....................................................... ( 728) ---
Net realized gain on investments........................................ ( 13,865,880) ( 10,086,724)
In excess of net realized gain.......................................... -- ( 659)
Capital share transactions (Note 3)........................................ ( 23,878,019) 7,351,166
-------------- ------------
Total increase (decrease)............................................... ( 21,032,207) 21,693,525
Net Assets:
Beginning of year....................................................... 112,332,661 90,639,136
--------------- ------------
End of year............................................................. $ 91,300,454 $ 112,332,661
=============== ============
</TABLE>
- --------------------------------------------------------------------------------
17
<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.
- --------------------------------------------------------------------------------
18
<PAGE>
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 year to Reich & Tang Distributors L.P.
amounted to $23,623.
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 $9,762. Included under
the same caption are fees of $36,849 paid to Reich & Tang Services, L.P. an
affiliate of the Manager as servicing agent for the Fund.
3. Capital Stock
At December 31, 1996 100,000,000 shares of $.001 par value stock were authorized
and capital paid in amounted to $67,678,008. Transactions in capital stock were
as follows:
<TABLE>
<CAPTION>
Year Ended Year Ended
December 31, 1996 December 31, 1995
------------------------------- --------------------------------
Shares Amount Shares Amount
------------ ----------- ------------ -----------
<S> <C> <C> <C> <C>
Sold........................................ 3,234,560 $61,060,226 5,901,454 $ 94,756,038
Issued on reinvestment of dividends......... 604,573 10,976,919 611,044 10,838,908
Redeemed.................................... ( 5,130,715) ( 95,915,164) ( 6,067,405) ( 98,243,780)
------------ ------------- ----------- -----------
Net increase (decrease)..................... ( 1,291,582) ( $23,878,019) 445,093 $ 7,351,166
============ ============= =========== ===========
</TABLE>
4. Investment Transactions
Purchases and sales of investment securities, other than U.S. Government direct
and agency obligations and short-term investments, totaled $32,918,486 and
$68,889,773, respectively. Accumulated undistributed net realized losses at
December 31, 1996 amounted to $7,279. Included in proceeds of sale is
$23,194,428 representing the value of securities disposed of in payment of a
redemption in-kind resulting in a realized gain of $8,527,238.
5. Selected Financial Information
Reference is made to page 2 of the Prospectus for the Selected Financial
Information
- --------------------------------------------------------------------------------
19
<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, 1996;
Statement of Operations for year ended December 31, 1996; Statement
ofChanges in Net Assets for years ended December 31, 1996 and 1995;
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).
(1.1) Amendment to the Articles of Incorporation filed herein.
(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 herein.
(6) Distribution Agreement between the Registrant and Reich & Tang
Distributors L.P. filed herein.
(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) Distribution and Service Plan pursuant to Rule 12b-1 under
the Investment Company Act of 1940.
(15.2) Distribution Agreement between the Registrant and Reich &
Tang Distributors L.P. (filed as Exhibit 6 herein.)
(15.3) Administrative Services Contract between the Registrant and Reich &
Tang Asset Management L.P. filed herein
(16) Not Applicable
(17) Financial Data Schedule filed herein (For EDGAR purposes only).
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, 1997:
(1) (2)
Title of Class Number of Record
Holders
Common Stock, par value
$ .001 per share 753
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 L.P., August
Associates L.P., Reich & Tang Minutus L.P. Tucek Partners, L.P., Reich & Tand
Minutus II L.P. and Reich & Tang Equity 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 the TNE Fund Group and the Zenith Funds.
G. Neil Ryland, Executive Vice President, Treasurer and Chief Financial Officer
of 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. 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 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
C-3
<PAGE>
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., Cortland
Trust, 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 AEW Commercial Mortgage Securities, Inc.,
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 AEW
Commercial Mortgage Securities, Inc., 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 Executive Vice President
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 24th day of
April, 1997.
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 4/24/97
(2) Principal Financial and
Accounting Officer:
/s/Richard DeSanctis
Richard De Sanctis Treasurer 4/24/97
(3) Majority of Directors:
/s/Robert F.Hoerle 4/24/97
Robert F. Hoerle
W. Giles Mellon (Director)
Robert Straniere (Director)
Yung Wong (Director)
By: /s/Robert F. Hoerle 4/ /97
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.
ARTICLES OF AMENDMENT
OF
REICH & TANG EQUITY FUND, INC.
Reich & Tang Equity Fund, Inc., a Maryland Corporation having its principal
office in the State of Maryland in the City of Baltimore (hereinafter called the
"Corporation"), the total number of shares of stock of all classes and series
which the Corporation presently has authority to issue is 100,000,000 shares of
capital stock (par value $.001 per share), amounting in aggregate par value to
$100,000, certifies to the Department of Assessments and Taxation of Maryland
that:
FIRST: The charter of the Corporation is hereby amended as follows:
1. Article FIFTH of the charter of the Corporation is hereby amended by
striking out Article FIFTH and inserting in lieu thereof the following:
(a) The total number of shares of stock of all classes and series which
the Corporation has authority to issue is 100,000,000 shares of
capital stock (par value $.001 per share), amounting in aggregate par
value to $100,000. All of such shares are classified as "Common
Stock". The Board of Directors may classify or reclassify any unissued
shares of capital stock (whether or not such shares have been
previously classified or reclassified) from time to time by setting or
changing in any one or more respects the preferences, conversion or
other rights, voting powers, restrictions, limitations as to
dividends, qualifications, or terms or conditions of redemption of
such shares of stock.
(b) Unless otherwise prohibited by law, so long as the Corporation is
registered as an open-end company under the Investment Company Act,
the Board of Directors shall have the power and authority, without the
approval of the holders of any outstanding shares, to increase or
decrease the number of shares of capital stock or the number of shares
of capital stock of any class or series that the Corporation has
authority to issue.
(c) Any series of Common Stock shall be referred to herein individually as
a "Series" and collectively, together with any further series from
time to time established, as the "Series".
(d) The following is a description of the preferences, conversion and
other rights, voting powers, restrictions, limitations as to
dividends, qualifications, and terms and conditions of redemption of
the shares of any additional Series of Common Stock of the Corporation
(unless provided otherwise by the Board of Directors with respect to
any such additional Series at the time it is established and
designated):
<PAGE>
(1) Asset Belonging to Series. All consideration received by the
Corporation from the issue or sale of shares of a particular Series,
together with all assets in which such consideration is invested or
reinvested, all income, earnings, profits and proceeds thereof,
including any proceeds derived from the sale, exchange or liquidation
of such assets, and any funds or payments derived from any investment
or reinvestment of such proceeds in whatever form the same may be,
shall irrevocably belong to that Series for all purposes, subject only
to the rights of creditors, and shall be so recorded upon the books of
account of the Corporation. Such consideration, assets, income,
earnings, profits and proceeds, together with any General Items
allocated to that Series as provided in the following sentence, are
herein referred to collectively as "assets belonging to" that Series.
In the event that there are any assets, income, earnings, profits or
proceeds which are not readily identifiable as belonging to any
particular Series (collectively, "General Items"), such General Items
shall be allocated by or under the supervision of the Board of
Directors to and among any one or more of the Series established and
designated from time to time in such manner and on such basis as the
Board of Directors, in its sole discretion, deems fair and equitable;
and any General Items so allocated to a particular Series shall belong
to that Series. Each such allocation by the Board of Directors shall
be conclusive and binding for all purposes.
(2) Liabilities of Series. The assets belonging to each particular Series
shall be charged with the liabilities of the Corporation in respect of
that Series and all expenses, costs, charges and reserves attributable
to that Series, and any general liabilities, expenses, costs, charges
or reserves of the Corporation which are not readily identifiable as
pertaining to any particular Series, shall be allocated and charged by
or under the supervision of the Board of Directors to and among any
one or more of the Series established and designated from time to time
in such manner and on such basis as the Board of Directors, in its
sole discretion, deems fair and equitable. The liabilities, expenses,
costs, charges and reserves allocated and so charged to a Series are
herein referred to collectively as "liabilities of" that Series. Each
allocation of liabilities, expenses, costs, charges and reserves by or
under the supervision of the Board of Directors shall be conclusive
and binding for all purposes.
(3) Dividends and Distributions. Dividends and capital gains distributions
on shares of a particular Series may be paid with such frequency, in
such form and in such amount as the Board of Directors may
<PAGE>
determine by resolution adopted from time to time, or pursuant to a
standing resolution or resolutions adopted only once or with such
frequency as the Board of Directors may determine, after providing for
actual and accrued liabilities of that Series. All dividends on shares
of a particular Series shall be paid only out of the income belonging
to that Series and all capital gains distributions on shares of a
particular Series shall be paid only out of the capital gains
belonging to that Series. All dividends and distributions on shares of
a particular Series shall be distributed pro rata to the holders of
that Series in proportion to the number of shares of that Series held
by such holders at the date and time of record established for the
payment of such dividends or distributions, except that in connection
with any dividend or distribution program or procedure, the Board of
Directors may determine that no dividend or distribution shall be
payable on shares as to which the stockholder's purchase order and/or
payment have not been received by the time or times established by the
Board of Directors under such program or procedure.
Dividends and distributions may be paid in cash, property or
additional shares of the same or another Series, or a combination
thereof, as determined by the Board of Directors or pursuant to any
program that the Board of Directors may have in effect at the time for
the election by stockholders of the form in which dividends or
distributions are to be paid. Any such dividend or distribution paid
in shares shall be paid at the current net asset value thereof.
(4) Voting. On each matter submitted to a vote of the stockholders, each
holder of shares shall be entitled to one vote for each share standing
in his name on the books of the Corporation, irrespective of the
Series thereof, and all shares of all Series shall vote as a single
class ("Single Class Voting"); provided, however, that (i) as to any
matter with respect to which a separate vote of any Series is required
by the Investment Company Act or by the Maryland General Corporation
Law, such requirement as to a separate vote by that Series shall apply
in lieu of Single Class Voting; (ii) in the event that the separate
vote requirement referred to in clause (i) above applies with respect
to one or more Series, then, subject to clause (iii) below, the shares
of all other Series shall vote as a single class; and (iii) as to any
matter which does not affect the interest of a particular Series,
including liquidation of another Series as described in subsection (7)
below, only the holders of shares of the one or more affected Series
shall be entitled to vote.
<PAGE>
(5) Redemption by Stockholders. Each holder of shares of a particular
Series shall have the right at such times as may be permitted by the
Corporation to require the Corporation to redeem all or any part of
his shares of that Series, at a redemption price per share equal to
the net asset value per share of that Series next determined after the
shares are properly tendered for redemption, less such redemption fee
or sales charge, if any, as may be established from time to time by
the Board of Directors in its sole discretion. Payment of the
redemption price shall be in cash; provided, however, that if the
Board of Directors determines, which determination shall be
conclusive, that conditions exist which make payment wholly in cash
unwise or undesirable, the Corporation may, to the extent and in the
manner permitted by the Investment Company Act, make payment wholly or
partly in securities or other assets belonging to the Series of which
the shares being redeemed are a part, at the value of such securities
or assets used in such determination of net asset value.
Payment by the Corporation for shares of stock of the Corporation
surrendered to it for redemption shall be made by the Corporation
within such period from surrender as may be required under the
Investment Company Act and the rules and regulations thereunder.
Notwithstanding the foregoing, the Corporation may postpone payment of
the redemption price and may suspend the right of the holders of
shares of any Series to require the Corporation to redeem shares of
that Series during any period or at any time when and to the extent
permissible under the Investment Company Act.
(6) Redemption by Corporation. The Board of Directors may cause the
Corporation to redeem at their net asset value the shares of any
Series held in an account having, because of redemptions or exchanges,
a net asset value on the date of the notice of redemption less than
the Minimum Amount, as defined below, in that Series specified by the
Board of Directors from time to time in its sole discretion, provided
that at least 30 days prior written notice of the proposed redemption
has been given to the holder of any such account by first class mail,
postage prepaid, at the address contained in the books and records of
the Corporation and such holder has been given an opportunity to
purchase the required value of additional shares.
(i) the term "Minimum Amount" when used herein shall mean One Thousand
Dollars ($1,000) unless otherwise fixed by the Board of Directors from
time to time, provided that the Minimum Amount may not in any event
exceed Twenty-Five Thousand Dollars ($25,000). The Board of Directors
may establish differing Minimum
<PAGE>
Amounts for each class and series of the Corporation's stock and for
holders of shares of each such class and series of stock based on such
criteria as the Board of Directors may deem appropriate.
(ii) the Corporation shall be entitled but not required to redeem shares of
stock from any stockholder or stockholders, as provided in this
subsection (6), to the extent and at such times as the Board of
Directors shall, in its absolute discretion, determine to be necessary
or advisable to prevent the Corporation from qualifying as a "personal
holding company", within the meaning of the Internal Revenue Code of
1986, as amended from time to time.
(7) Liquidation. In the event of the liquidation of a particular Series,
the stockholders of the Series that is being liquidated shall be
entitled to receive, as a class, when and as declared by the Board of
Directors, the excess of the assets belonging to that Series over the
liabilities of that Series. The holders of shares of any particular
Series shall not be entitled thereby to any distribution upon
liquidation of any other Series. The assets so distributable to the
stockholders of any particular Series shall be distributed among such
stockholders in proportion to the number of shares of that Series held
by them and recorded on the books of the Corporation. The liquidation
of any particular Series in which there are shares then outstanding
may be authorized by vote of a majority of the Board of Directors then
in office, subject to the approval of a majority of the outstanding
voting securities of that Series, as defined in the Investment Company
Act, and without the vote of the holders of shares of any other
Series. The liquidation of a particular Series may be accomplished, in
whole or in part, by the transfer of assets of such Series to another
Series or by the exchange of shares of Series for the shares of
another Series.
(8) Net Asset Value Per Share. The net asset value per share of any Series
shall be the quotient obtained by dividing the value of the net assets
of that Series (being the value of the assets belonging to that Series
less the liabilities of that Series) by the total number of shares of
that Series outstanding, all as determined by or under the direction
of the Board of Directors in accordance with generally accepted
accounting principles and the Investment Company Act. Subject to the
applicable provisions of the Investment Company Act, the Board of
Directors, in its sole discretion, may prescribe and shall set forth
in the By-Laws of the Corporation or in a duly adopted resolution of
the Board of Directors such bases and times for determining the value
of the assets belonging to, and the net asset value per share of
outstanding
<PAGE>
shares of, each Series, or the net income attributable to such shares,
as the Board of Directors deems necessary or desirable. The Board of
Directors shall have full discretion, to the extent not inconsistent
with the Maryland General Corporation Law and the Investment Company
Act, to determine which item shall be treated as income and which
items as capital and whether any item of expense shall be charged to
income or capital. Each such determination and allocation shall be
conclusive and binding for all purposes.
The Board of Directors may determine to maintain the net asset value
per share of any Series at a designated constant dollar amount and in
connection therewith may adopt procedures not inconsistent with the
Investment Company Act for the continuing declaration of income
attributable to that Series as dividends and for the handling of any
losses attributable to that Series. Such procedures may provide that
in the event of any loss, each stockholder shall be deemed to have
contributed to the capital of the Corporation attributable to that
Series his pro rata portion of the total number of shares required to
be canceled in order to permit the net asset value per share of that
Series to be maintained, after reflecting such loss, at the designated
constant dollar amount. Each stockholder of the Corporation shall be
deemed to have agreed, by his investment in any Series with respect to
which the Board of Directors shall have adopted any such procedure, to
make the contribution referred to in the preceding sentence in the
event of any such loss.
(9) Equality. All shares of each particular Series shall represent an
equal proportionate interest in the assets belonging to that Series
(subject to the liabilities of that Series), and each share of any
particular Series shall be equal to each other share of that Series.
The Board of Directors may from time to time divide or combine the
shares of any particular Series into a greater or lesser number of
shares of that Series without thereby changing the proportionate
interest in the assets belonging to that Series or in any way
affecting the rights of holders of shares of any other Series.
(10) Conversion or Exchange Rights. Subject to compliance with the
requirements of the Investment Company Act, the Board of Directors
shall have the authority to provide that holders of shares of any
Series shall have the right to convert or exchange said shares into
shares of one or more other Series of shares in accordance with such
requirements and procedures as may be established by the Board of
Directors.
<PAGE>
(e) The Board of Directors may, from time to time and without stockholder
action, classify shares of a particular Series into one or more
additional classes of that Series, the voting, dividend, liquidation
and other rights of which shall differ from the classes of common
stock of that Series to the extent provided in Articles Supplementary
for such additional class, such Articles to be filed for record with
the appropriate authorities of the State of Maryland. Each class so
created shall consist, until further changed, of the lesser of (x) the
number of shares classified in Section (c) of this Article FIFTH or
(y) the number of shares that could be issued by issuing all of the
shares of that Series currently or hereafter classified less the total
number of shares of all classes of such Series then issued and
outstanding. Any class of a Series of Common Stock shall be referred
to herein individually as a "Class" and collectively, together with
any further class or classes of such Series from time to time
established, as the "Classes".
(f) All Classes of a particular Series of Common Stock of the Corporation
shall represent the same interest in the Corporation and have
identical voting, dividend, liquidation and other rights with any
other shares of Common Stock of that Series; provided, however, that
notwithstanding anything in the charter of the Corporation to the
contrary:
(1) Any class of shares may be subject to such sales loads,
contingent deferred sales charges, Rule 12b-1 fees,
administrative fees, service fees, or other fees, however
designated, in such amounts as may be established by the Board of
Directors from time to time in accordance with the Investment
Company Act.
(2) Expenses related solely to a particular Class of a Series
(including, without limitation, distribution expenses under a
Rule 12b-1 plan and administrative expenses under an
administration or service agreement, plan or other arrangement,
however designated) shall be borne by that Class and shall be
appropriately reflected (in the manner determined by the Board of
Directors) in the net asset value, dividends, distributions and
liquidation rights of the shares of that Class.
(3) As to any matter with respect to which a separate vote of any
Class of a Series is required by the Investment Company Act or by
the Maryland General Corporation Law (including, without
limitation, approval of any plan, agreement or other arrangement
referred to in subsection (2) above), such requirement as to a
separate vote by that Class shall apply in lieu of Single Class
Voting, and if permitted by the Investment Company Act or the
Maryland General Corporation Law, the Classes of more than one
Series shall vote together as a single class on any such matter
which shall have the same effect on each such Class. As to any
matter which does not affect the interest of a particular Class
of a Series, only the holders of shares of the affected Classes
of that Series shall be entitled to vote.
<PAGE>
(g) The Corporation may issue and sell fractions of shares of capital
stock having pro rata all the rights of full shares, including,
without limitation, the right to vote and to receive dividends, and
wherever the words "share" or "shares" are used in the charter or
By-Laws of the Corporation, they shall be deemed to include fractions
of shares where the context does not clearly indicate that only full
shares are intended.
(h) The Corporation shall not be obligated to issue certificates
representing shares of any Class or Series of capital stock. At the
time of issue or transfer of shares without certificates, the
Corporation shall provide the stockholder with such information as may
be required under the Maryland General Corporation Law.
(i) No holder of any shares of stock of the Corporation shall be entitled
as of right to subscribe for, purchase, or otherwise acquire any such
shares which the Corporation shall issue or propose to issue; and any
and all of the shares of stock of the Corporation, whether now or
hereafter authorized, may be issued, or may be reissued or transferred
if the same have been reacquired and have treasury status, by the
Board of Directors to such persons, firms, corporations and
associations, and for such lawful consideration, and on such terms, as
Board of Directors in its discretion may determine, without first
offering same, or any thereof, to any said holder.
(j) All persons who shall acquire stock or other securities of the
Corporation shall acquire the same subject to the provisions of these
Articles of Incorporation, as from time to time amended."
2. Article SEVENTH subsection (a)(ii) of the charter of the Corporation is
hereby amended by striking out the language on line two which states "of any
class of the Corporation's stock" and inserting in lieu thereof the following:
"of any class or series of the Corporation's stock"
3. Article SEVENTH subsection (a)(ii) of the charter of the Corporation is
hereby amended by changing line seven to read "as the Board of Directors shall
determine, provided that the consideration per share to be received by the
Corporation shall be not less than the greater of the net asset value per share
of that class of stock at such time computed in accordance with Article FIFTH
hereof or the par value thereof."
<PAGE>
4. The charter of the Corporation is hereby amended by striking out Article
EIGHTH and inserting in lieu thereof the following:
EIGHTH(1) The Corporation shall indemnify (i) its currently acting and former
directors and officers, whether serving the Corporation or at its
request any other entity, to the fullest extent required or permitted
by the General Laws of the State of Maryland now or hereafter in
force, including the advance of expenses under the procedures and to
the fullest extent permitted by law, and (ii) other employees and
agents to such extent as shall be authorized by the Board of Directors
or the By-Laws and as permitted by law. Nothing contained herein shall
be construed to protect any director or officer of the Corporation
against any liability to the Corporation or its security holders to
which he would otherwise be subject by reason of willful misfeasance,
bad faith, gross negligence, or reckless disregard of the duties
involved in the conduct of his office. The foregoing rights of
indemnification shall not be exclusive of any other rights to which
those seeking indemnification may be entitled. The Board of Directors
may take such action as is necessary to carry out these
indemnification provisions and is expressly empowered to adopt,
approve and amend from time to time such by-laws, resolutions or
contracts implementing such provisions or such indemnification
arrangements as may be permitted by law. No amendment of the charter
of the Corporation or repeal of any of its provisions shall limit or
eliminate the right of indemnification provided hereunder with respect
to acts or omissions occurring prior to such amendment or repeal.
(2) To the fullest extent permitted by Maryland statutory or decisional
law, as amended or interpreted, and the Investment Company Act, no
director or officer of the Corporation shall be personally liable to
the Corporation or its stockholders for money damages; provided,
however, that nothing herein shall be construed to protect any
director or officer of the Corporation against any liability to the
Corporation or its security holders to which he would otherwise be
subject by reason of willful misfeasance, bad faith, gross negligence,
or reckless disregard of the duties involved in the conduct of his
office. No amendment of the charter of the Corporation or repeal of
any of its provisions shall limit or eliminate the limitation of
liability provided to directors and officers hereunder with respect to
any act or omission occurring prior to such amendment or repeal."
5. The charter of the Corporation is hereby amended by striking out Article
NINTH (as the language therein is already contained in new Article FIFTH of
these Articles of Amendment).
<PAGE>
SECOND: The amendments of the charter of the Corporation as herein set
forth have been duly advised by the Board of Directors and approved by the
stockholders of the Corporation.
IN WITNESS WHEREOF, Reich & Tang Equity Fund, Inc. has caused these
presents to be signed in its name and on its behalf by its President or one of
its Vice Presidents and attested by its Secretary or one of its Assistant
Secretaries, on December
, 1993.
REICH & TANG EQUITY FUND, INC.
By:
William Berkowitz President
Attest:
Bernadette N. Finn
Secretary
INVESTMENT MANAGEMENT CONTRACT
REICH & TANG EQUITY FUND, INC.
the "Fund"
New York, New York
___________, 1996
Reich & Tang Asset Management L.P.
600 Fifth Avenue
New York, New York 10022
Gentlemen:
We herewith confirm our agreement with you as follows:
1. We propose to engage in the business of investing and reinvesting our
assets in securities of the type, and in accordance with the limitations,
specified in our Articles of Incorporation, By-Laws and Registration Statement
filed with the Securities and Exchange Commission under the Investment Company
Act of 1940 (the "1940 Act") and the Securities Act of 1933, including the
Prospectus forming a part thereof (the "Registration Statement"), all as from
time to time in effect, and in such manner and to such extent as may from time
to time be authorized by our Board of Directors. We enclose copies of the
documents listed above and will furnish you such amendments thereto as may be
made from time to time.
2. (a) We hereby employ you to manage the investment and reinvestment of
our assets as above specified, and, without limiting the generality of the
foregoing, to provide the investment management services specified below.
(b) Subject to the general control of our Board of Directors, you will make
decisions with respect to all purchases and sales of the portfolio securities.
To carry out such decisions, you are hereby authorized, as our agent and
attorney-in-fact for our account and at our risk and in our name, to place
orders for the investment and reinvestment of our assets. In all purchases,
sales and other transactions in our portfolio securities you are authorized to
exercise full discretion and act for us in the same manner and with the same
force and effect as the Fund itself might or could do with respect to such
purchases, sales or other transactions, as well as with respect to all other
things necessary or incidental to the furtherance or conduct of such purchases,
sales or other transactions.
<PAGE>
(c) You will report to our Board of Directors at each meeting thereof all
changes in our portfolio since your prior report, and will also keep us in touch
with important developments affecting our portfolio and, on your initiative,
will furnish us from time to time with such information as you may believe
appropriate for this purpose, whether concerning the individual entities whose
securities are included in our portfolio, the activities in which such entities
engage, Federal income tax policies applicable to our investments, or the
conditions prevailing in the money market or the economy generally. You will
also furnish us with such statistical and analytical information with respect to
our portfolio securities as you may believe appropriate or as we may reasonably
request. In making such purchases and sales of our portfolio securities, you
will comply with the policies set from time to time by our Board of Directors as
well as the limitations imposed by our Articles of Incorporation and by the
provisions of the Internal Revenue Code and the 1940 Act relating to regulated
investment companies and the limitations contained in the Registration
Statement.
(d) It is understood that you will from time to time employ, subcontract
with or otherwise associate with yourself, entirely at your expense, such
persons as you believe to be particularly fitted to assist you in the execution
of your duties hereunder.
(e) You or your affiliates will also furnish us, at your own expense, such
investment advisory supervision and assistance as you may believe appropriate or
as we may reasonably request subject to the requirements of any regulatory
authority to which you may be subject. You and your affiliates will also pay the
expenses of promoting the sale of our shares (other than the costs of preparing,
printing and filing our registration statement, printing copies of the
prospectus contained therein and complying with other applicable regulatory
requirements), except to the extent that we are permitted to bear such expenses
under a plan adopted pursuant to Rule 12b-1 under the 1940 Act or a similar
rule.
3. In addition to the foregoing, we hereby employ you, pursuant to the
Distribution Plan dated December 19, 1984, as amended, adopted by us in
accordance with Rule 12b-1 under the Act, as the same may be amended from time
to time, to provide the services listed below.
(a) You will perform, or arrange for others to perform, including
organizations whose customers or clients are stockholders of our corporation
("Intermediaries"), all stockholder servicing and related administrative
functions which we do not perform or arrange for others to perform and which are
not required to be performed by our transfer agent. You may make
<PAGE>
payments from time to time from your own resources, which may include the fee
received under this agreement, the Administrative Services Agreement advisory or
other fees received from other investment companies, and past profits, for the
following purposes:
(i) to defray the costs of, and to compensate others, including
Intermediaries, for performing stockholder servicing and related
administrative functions on our behalf;
(ii) for so long as you remain our Manager and Reich & Tang Distributors
L.P. remains a distributor of our shares pursuant to a distribution
agreement, to compensate Intermediaries for providing assistance in
distributing our shares; and
(iii)for so long as you remain our Manager and Reich & Tang Distributors
L.P. remains a distributor of our shares pursuant to a distribution
agreement, to defray the cost of the preparation and printing of
brochures and other promotional materials, mailings to prospective
stockholders, advertising, and other promotional activities, including
the salaries of sales personnel, in connection with the distribution
of our shares.
You will in your sole discretion determine the amount of any payments made by
you pursuant to this agreement, and you may from time to time in your sole
discretion increase or decrease the amount of those payments; provided, however,
that no such payment will increase the amount which we are required to pay to
you for any fiscal year under either this agreement or the Administrative
Services Agreement in effect for that year or an investment management contract
between you and us in effect for that year, or otherwise.
4. We agree, subject to the limitations described below, to be responsible
for, and hereby assume the obligation for payment of, all our expenses,
including: (a) brokerage and commission expenses, (b) Federal, state or local
taxes, including issue and transfer taxes incurred by or levied on us, (c)
commitment fees and certain insurance premiums, (d) interest charges on
borrowings, (e) charges and expenses of our custodian, (f) charges, expenses and
payments relating to the issuance, redemption, transfer and dividend disbursing
functions for us, (g) recurring and nonrecurring legal and accounting expenses,
including those of the bookkeeping agent, (h) telecommunications expenses, (i)
the costs of organizing and maintaining our existence as a corporation, (j)
compensation, including directors' fees, of any of our directors, officers or
employees who are not your officers or officers of your affiliates, and costs of
other personnel providing clerical, accounting
<PAGE>
supervision and other office services to us as we may request, (k) costs of
stockholders' services including, charges and expenses of persons providing
confirmations of transactions in our shares, periodic statements to
stockholders, and recordkeeping and stockholders' services, (l) costs of
stockholders' reports, proxy solicitations, and corporate meetings, (m) fees and
expenses of registering our shares under the appropriate Federal securities laws
and of qualifying such shares under applicable state securities laws, including
expenses attendant upon the initial registration and qualification of such
shares and attendant upon renewals of, or amendments to, those registrations and
qualifications, (n) expenses of preparing, printing and delivering our
prospectus to existing stockholders and of printing stockholder application
forms for stockholder accounts, (o) payment of the fees and expenses provided
for herein, under the Administrative Services Agreement and Distribution
Agreement, and (p) any other distribution or promotional expenses contemplated
by an effective plan adopted by us pursuant to Rule 12b-1 under the Act. Our
obligation for the foregoing expenses is limited by your agreement to be
responsible, while this Agreement is in effect, for any amount by which our
annual operating expenses (excluding taxes, brokerage, interest and
extraordinary expenses) exceed the limits on investment company expenses
prescribed by any state in which our shares are qualified for sale.
5. We will expect of you, and you will give us the benefit of, your best
judgment and efforts in rendering these services to us, and we agree as an
inducement to your undertaking these services that you will not be liable
hereunder for any mistake of judgment or for any other cause, provided that
nothing herein shall protect you against any liability to us or to our security
holders by reason of willful misfeasance, bad faith or gross negligence in the
performance of your duties hereunder, or by reason of your reckless disregard of
your obligations and duties hereunder.
6. In consideration of the foregoing we will pay you a fee at the annual
rate of .80 of 1% of the Fund's average daily net assets. Your fee will be
accrued by us daily, and will be payable on the last day of each calendar month
for services performed hereunder during that month or on such other schedule as
you shall request of us in writing. You may use any portion of this fee for
distribution of our shares, or for making servicing payments to organizations
whose customers or clients are our shareholders. You may waive your right to any
fee to which you are entitled hereunder, provided such waiver is delivered to us
in writing. Any reimbursement of our expenses, to which we may become entitled
pursuant to paragraph 4 hereof, will be paid to us at the same time as we pay
you.
<PAGE>
7. This Agreement will become effective on the date hereof and shall
continue in effect until _______________ and thereafter for successive
twelve-month periods (computed from each ____________), provided that such
continuation is specifically approved at least annually by our Board of
Directors or by a majority vote of the holders of our outstanding voting
securities, as defined in the 1940 Act and the rules thereunder, and, in either
case, by a majority of those of our directors who are neither party to this
Agreement nor, other than by their service as directors of the corporation,
interested persons, as defined in the 1940 Act and the rules thereunder, of any
such person who is party to this Agreement. Upon the effectiveness of this
Agreement, it shall supersede all previous agreements between us covering the
subject matter hereof. This Agreement may be terminated at any time, without the
payment of any penalty, by vote of a majority of our outstanding voting
securities, as defined in the 1940 Act and the rules thereunder, or by a vote of
a majority of our entire Board of Directors, on sixty days' written notice to
you, or by you on sixty days' written notice to us.
8. This Agreement may not be transferred, assigned, sold or in any manner
hypothecated or pledged by you and this agreement shall terminate automatically
in the event of any such transfer, assignment, sale, hypothecation or pledge by
you. The terms "transfer", "assignment" and "sale" as used in this paragraph
shall have the meanings ascribed thereto by governing law and in applicable
rules or regulations of the Securities and Exchange Commission.
9. Except to the extent necessary to perform your obligations hereunder,
nothing herein shall be deemed to limit or restrict your right, or the right of
any of your employees or the officers and directors of Reich & Tang Asset
Management, Inc., your general partner, who may also be a director, officer or
employee of ours, or of a person affiliated with us, as defined in the 1940 Act,
to engage in any other business or to devote time and attention to the
management or other aspects of any other business, whether of a similar or
dissimilar nature, or to render services of any kind to any other corporation,
firm, individual or association.
<PAGE>
If the foregoing is in accordance with your understanding, will you kindly so
indicate by signing and returning to us the enclosed copy hereof.
Very truly yours,
REICH & TANG EQUITY FUND, INC.
By:
ACCEPTED: ___________, 1996
REICH & TANG ASSET MANAGEMENT L.P.
By: REICH & TANG ASSET MANAGEMENT, INC., General Partner
By: ___________________________________
DISTRIBUTION AGREEMENT
REICH & TANG EQUITY FUND, INC.
the "Fund"
600 Fifth Avenue
New York, New York 10020
________________, 1996
Reich & Tang Distributors L.P.
600 Fifth Avenue
New York, New York 10020
Ladies and Gentlemen:
1. In consideration of the agreements on your part herein contained and of
the payment by us to you of a fee of $1 per year and on the terms and conditions
set forth herein, on behalf of our Fund, we have agreed that you shall be, for
the period of this agreement, a distributor, as our agent, for the unsold
portion of such number of shares of our common stock, $.001 par value per share,
as may be effectively registered from time to time under the Securities Act of
1933, as amended (the "1933 Act"). This agreement is being entered into pursuant
to the Distribution and Service Plan (the "Plan") adopted by us in accordance
with Rule 12b-1 under the Investment Company Act of 1940, as amended (the "1940
Act").
2. We hereby agree that you will act as our agent, and hereby appoint you
our agent, to offer, and to solicit offers to subscribe to, the unsold balance
of shares of our common stock as shall then be effectively registered under the
Act. All subscriptions for shares of our common stock obtained by you shall be
directed to us for acceptance and shall not be binding on us until accepted by
us. You shall have no authority to make binding subscriptions on our behalf. We
reserve the right to sell shares of our common stock through other
distributorsor directly to investors through subscriptions received by us at our
principal office in New York, New York. The right given to you under this
agreement shall not apply to shares of our common stock issued in connection
with (a) the merger or consolidation of any other investment company with us,
(b) our acquisition by purchase or otherwise of all or substantially all of the
assets or stock of any other investment company, or (c) the reinvestment in
shares of our common stock by our stockholders of dividends or other
distributions or any other offering by us of securities to our stockholders.
<PAGE>
3. You will use your best efforts to obtain subscriptions to shares of our
common stock upon the terms and conditions contained herein and in our
Prospectus, as in effect from time to time. You will send to us promptly all
subscriptions placed with you. We shall furnish you from time to time, for use
in connection with the offering of shares of our common stock, such other
information with respect to us and shares of our common stock as you may
reasonably request. We shall supply you with such copies of our Registration
Statement and Prospectus, as in effect from time to time, as you may request.
Except as we may authorize in writing, you are not authorized to give any
information or to make any representation that is not contained in the
Registration Statement or Prospectus, as then in effect. You may use employees,
agents and other persons, at your cost and expense, to assist you in carrying
out your obligations hereunder, but no such employee, agent or other person
shall be deemed to be our agent or have any rights under this agreement. You may
sell our shares to or through qualified brokers, dealers and financial
institutions under selling and servicing agreements provided that no dealer,
financial institution or other person shall be appointed or authorized to act as
our agent without our written consent. You will arrange for organizations whose
customers or clients are shareholders of our corporation ("Participating
Organizations") to enter into agreements with you for the performance of
shareholder servicing and related administrative functions not performed by you
or the Transfer Agent. Pursuant to our Shareholder Servicing Agreement with you,
you may make payments to Participating Organizations for performing shareholder
servicing and related administrative functions. Such payments will be made only
pursuant to written agreements approved in form and substance by our Board of
Directors to be entered into by you and the Participating Organizations. It is
recognized that we shall have no obligation or liability to you or any
Participating Organization for any such payments under the agreements with
Participating Organizations. Our obligation is solely to make payments to you
under the Shareholder Servicing Agreement and to the Manager under the
Investment Management Contract and the Administrative Services Contract. All
sales of our shares effected through you will be made in compliance with all
applicable federal securities laws and regulations and the Constitution, rules
and regulations of the National Association of Securities Dealers, Inc.
("NASD").
4. We reserve the right to suspend the offering of shares of our common
stock at any time, in the absolute discretion of our Board of Directors, and
upon notice of such suspension you shall cease to offer shares of our common
stock hereunder.
5. Both of us will cooperate with each other in taking such action as may
be necessary to qualify shares of our
<PAGE>
common stock for sale under the securities laws of such states as we may
designate, provided, that you shall not be required to register as a
broker-dealer or file a consent to service of process in any such state where
you are not now so registered. Pursuant to the Investment Management Contract in
effect between us and the Manager, we will pay all fees and expenses of
registering shares of our common stock under the Act and of qualification of
shares of our common stock, and to the extent necessary, our qualification under
applicable state securities laws. You will pay all expenses relating to your
broker-dealer qualification.
6. We represent to you that our Registration Statement and Prospectus have
been carefully prepared to date in conformity with the requirements of the 1933
Act and the 1940 Act and the rules and regulations of the Securities and
Exchange Commission (the "SEC") thereunder. We represent and warrant to you, as
of the date hereof, that our Registration Statement and Prospectus contain all
statements required to be stated therein in accordance with the 1933 Act and the
1940 Act and the SEC's rules and regulations thereunder; that all statements of
fact contained therein are or will be true and correct at the time indicated or
the effective date as the case may be; and that neither our Registration
Statement nor our Prospectus, when they shall become effective or be authorized
for use, will include an untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary to make the statements
therein not misleading to a purchaser of shares of our common stock. We will
from time to time file such amendment or amendments to our Registration
Statement and Prospectus as, in the light of future development, shall, in the
opinion of our counsel, be necessary in order to have our Registration Statement
and Prospectus at all times contain all material facts required to be stated
therein or necessary to make any statements therein not misleading to a
purchaser of shares of our common stock. If we shall not file such amendment or
amendments within fifteen days after our receipt of a written request from you
to do so, you may, at your option, terminate this agreement immediately. We will
not file any amendment to our Registration Statement or Prospectus without
giving you reasonable notice thereof in advance; provided, however, that nothing
in this agreement shall in any way limit our right to file such amendments to
our Registration Statement or Prospectus, of whatever character, as we may deem
advisable, such right being in all respects absolute and unconditional. We
represent and warrant to you that any amendment to our Registration Statement or
Prospectus hereafter filed by us will be carefully prepared in conformity within
the requirements of the 1933 Act and the 1940 Act and the SEC's rules and
regulations thereunder and will, when it becomes effective, contain all
statements required to be stated therein in accordance with the 1933 Act and the
1940 Act and the SEC's rules and regulations thereunder; that all statements of
fact contained
<PAGE>
therein will, when the same shall become effective, be true and correct; and
that no such amendment, when it becomes effective, will include an untrue
statement of a material fact or omit to state a material fact required to be
stated therein or necessary to make the statements therein not misleading to a
purchaser of our shares.
7. We agree to indemnify, defend and hold you, and any person who controls
you within the meaning of Section 15 of the 1933 Act, free and harmless from and
against any and all claims, liabilities and expenses (including the cost of
investigating or defending such claims, demands or liabilities and any counsel
fees incurred in connection therewith) which you or any such controlling person
may incur, under the 1933 Act or the 1940 Act, or under common law or otherwise,
arising out of or based upon any alleged untrue statement of a material fact
contained in our Registration Statement or Prospectus in effect from time to
time or arising out of or based upon any alleged omission to state a material
fact required to be stated in either of them or necessary to make the statements
in either of them not misleading; provided, however, that in no event shall
anything herein contained be so construed as to protect you against any
liability to us or our security holders to which you would otherwise be subject
by reason of willful misfeasance, bad faith, or gross negligence in the
performance of your duties, or by reason of your reckless disregard of your
obligations and duties under this agreement. Our agreement to indemnify you and
any such controlling person is expressly conditioned upon our being notified of
any action brought against you or any such controlling person, such notification
to be given by letter or by telegram addressed to us at our principal office in
New York, New York, and sent to us by the person against whom such action is
brought within ten days after the summons or other first legal process shall
have been served. The failure so to notify us of any such action shall not
relieve us from any liability which we may have to the person against whom such
action is brought other than on account of our indemnity agreement contained in
this paragraph 7. We will be entitled to assume the defense of any suit brought
to enforce any such claim, and to retain counsel of good standing chosen by us
and approved by you. In the event we do elect to assume the defense of any such
suit and retain counsel of good standing approved by you, the defendant or
defendants in such suit shall bear the fees and expenses of any additional
counsel retained by any of them; but in case we do not elect to assume the
defense of any such suit, or in case you, in good faith, do not approve of
counsel chosen by us, we will reimburse you or the controlling person or persons
named as defendant or defendants in such suit, for the fees and expenses of any
counsel retained by you or them. Our indemnification agreement contained in this
paragraph 7 and our representations and warranties in this agreement shall
remain in full force and effect regardless of any investigation made by or on
behalf of
<PAGE>
you or any controlling person and shall survive the sale of any shares of our
common stock made pursuant to subscriptions obtained by you. This agreement of
indemnity will inure exclusively to your benefit, to the benefit of your
successors and assigns, and to the benefit of any of your controlling persons
and their successors and assigns. We agree promptly to notify you of the
commencement of any litigation or proceeding against us in connection with the
issue and sale of any shares of our common stock.
8. You agree to indemnify, defend and hold us, our several officers and
directors, and any person who controls us within the meaning of Section 15 of
the 1933 Act, free and harmless from and against any and all claims, demands,
liabilities, and expenses (including the cost of investigating or defending such
claims, demands or liabilities and any reasonable counsel fees incurred in
connection therewith) which we, our officers or directors, or any such
controlling person may incur under the 1933 Act or under common law or
otherwise, but only to the extent that such liability or expense incurred by us,
our officers or directors or such controlling person shall arise out of or be
based upon any alleged untrue statement of a material fact contained in
information furnished in writing by you to us for use in our Registration
Statement or Prospectus as in effect from time to time, or shall arise out of or
be based upon any alleged omission to state a material fact in connection with
such information required to be stated in the Registration Statement or
Prospectus or necessary to make such information not misleading. Your agreement
to indemnify us, our officers and directors, and any such controlling person is
expressly conditioned upon your being notified of any action brought against us,
our officers or directors or any such controlling person, such notification to
be given by letter or telegram addressed to you at your principal office in New
York, New York, and sent to you by the person against whom such action is
brought, within ten days after the summons or other first legal process shall
have been served. You shall have a right to control the defense of such action,
with counsel of your own choosing, satisfactory to us, if such action is based
solely upon such alleged misstatement or omission on your part, and in any other
event you and we, our officers or directors or such controlling person shall
each have the right to participate in the defense or preparation of the defense
of any such action. The failure so to notify you of any such action shall not
relieve you from any liability which you may have to us, to our officers or
directors, or to such controlling person other than on account of your indemnity
agreement contained in this paragraph 8.
9. We agree to advise you immediately:
<PAGE>
a. of any request by the SEC for amendments to our Registration Statement or
Prospectus or for additional information,
b. of the issuance by the SEC of any stop order suspending the effectiveness
of our Registration Statement or Prospectus or the initiation of any
proceedings for that purpose,
c. of the happening of any material event which makes untrue any statement
made in our Registration Statement or Prospectus or which requires the
making of a change in either of them in order to make the statements
therein not misleading, and
d. of all action of the SEC with respect to any amendments to our Registration
Statement or Prospectus.
10. This agreement will become effective on the date hereof and will remain
in effect thereafter for successive twelve-month periods (computed from each
____________), provided that such continuation is specifically approved at least
annually by vote of our Board of Directors and of a majority of those of our
directors who are not interested persons (as defined in the 1940 Act) and have
no direct or indirect financial interest in the operation of the Plan or in any
agreements related to the Plan, cast in person at a meeting called for the
purpose of voting on this agreement. This agreement may be terminated at any
time, without the payment of any penalty, (i) by vote of a majority of our
entire Board of Directors, and by a vote of a majority of our Directors who are
not interested persons (as defined in the 1940 Act) and who have no direct or
indirect financial interest in the operation of the Plan or in any agreement
related to the Plan, or (ii) by vote of a majority of our outstanding voting
securities, as defined in the Act, on sixty days' written notice to you, or by
you on sixty days' written notice to us.
11. This Agreement may not be transferred, assigned, sold or in any manner
hypothecated or pledged by you and this Agreement shall terminate automatically
in the event of any such transfer, assignment, sale, hypothecation or pledge by
you. The terms "transfer", "assignment" and "sale" as used in this paragraph
shall have the meanings ascribed thereto by governing law and in applicable
rules or regulations of the SEC thereunder.
12. Except to the extent necessary to perform your obligations hereunder,
nothing herein shall be deemed to limit or restrict your right, the right of any
of your employees or the right of any officers or directors of Reich & Tang
Asset Management, Inc., your general partner, who may also be a director,
officer or employee of ours, or of a person affiliated with us, as defined in
the 1940 Act, to engage in any other business or to devote time and attention to
the management or
<PAGE>
other aspects of any other business, whether of a similar or dissimilar nature,
or to render services of any kind to another corporation, firm, individual or
association.
If the foregoing is in accordance with your understanding, will you kindly
so indicate by signing and returning to us the enclosed copy hereof.
Very truly yours,
REICH & TANG EQUITY FUND, INC.
By
Accepted: _______________, 1996
REICH & TANG DISTRIBUTORS L.P.
By: REICH & TANG ASSET MANAGEMENT, INC.,
as General Partner
By: ____________________________
REICH & TANG EQUITY FUND, INC.
Distribution and Service Plan Pursuant to Rule
12b-1 Under the Investment Company Act of 1940
This Distribution and Service Plan (the "Plan") is hereby amended to
reflect that Reich & Tang Asset Management, Inc. has succeeded as sole general
partner of Reich & Tang Distributors L.P. (the "Distributor") and Reich & Tang
Asset Management L.P. has succeeded as sole limited partner of the Distributor.
The Board of Directors of the Fund has approved unanimously this amendment to
the Plan and has authorized the Fund to re-execute the Distribution Agreement
with the Distributor to reflect the foregoing. The Plan is hereby amended in its
entirety as set forth herein and as authorized under Section 8 of the previous
Plan.
The Plan is adopted by Reich & Tang Equity Fund, Inc. (the "Fund") in
accordance with the provisions of Rule 12b-1 under the Investment Company Act of
1940 (the "Act").
The Plan
1. The Fund and the Distributor, have entered into a Distribution
Agreement, in a form satisfactory to the Fund's Board of Directors, under which
the Distributor will act as distributor of the Fund's shares. Pursuant to the
Distribution Agreement, the Distributor, as agent of the Fund, will solicit
orders for the purchase of the Fund's shares, provided that any subscriptions
and orders for the purchase of the Fund's shares
<PAGE>
will not be binding on the Fund until accepted by the Fund as principal.
2. The Fund and the Manager have entered into an Investment Management
Contract, in a form satisfactory to the Fund's Board of Director's under which
the Manager may make payments from time to time from the management fee received
by the Manager from the Fund, from the Manager's revenues (which may include
management or advisory fees received from other investment companies) and past
profits for the following purposes:
(i) to defray the costs of, and to compensate others, 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;
(ii) to compensate Intermediaries for providing assistance in distributing
the Fund's Shares; and
(iii)to pay the cost of the preparation and printing of brochures and
other promotional materials, mailings to prospective stockholders,
advertising, and other promotional activities, including salaries
and/or commissions of sales personnel of the Distributor and other
persons, in connection with the distribution of the Fund's shares.
The Investment Management Contract further provides that the Manager will
in its sole discretion determine the amount of the foregoing payments made
pursuant to this Plan and that the
<PAGE>
Manager is not subject to any percentage limitation with respect to the amounts
it may expend for the activities described in this paragraph, but that 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.
3. The Fund will defray the cost of preparing, printing and delivering the
Fund's prospectus to existing and new stockholders of the Fund and preparing and
printing subscription application forms for stockholder accounts.
4. Payments by the Distributor or Manager to Intermediaries as set forth
herein are subject to compliance by them with the terms of written agreements in
a form satisfactory to the Fund's Board of Directors to be entered into between
the Distributor and the Intermediaries.
5. The Fund and the Distributor will prepare and furnish to the Fund's
Board of Directors, at least quarterly, written reports setting forth all
amounts expended for servicing and distribution purposes by the Fund,
theDistributor and the Manager, pursuant to the Plan and identifying the
servicing and distribution activities for which such expenditures were made.
6. The Plan became effective upon approval by (i) a majority of the
outstanding voting securities of the Fund (as defined in the Act), and (ii) a
majority of the Board of Directors of the Fund, including a majority of the
Directors who are not interested persons (as defined in the Act) of the Fund and
who have no direct or indirect financial interest in the
<PAGE>
operation of the Plan or in any agreement entered into in connection with the
Plan, pursuant to a vote cast in person at a meeting called for the purpose of
voting on the approval of the Plan.
7. The Plan will remain in effect until ______________ unless earlier
terminated in accordance with its terms, and thereafter may continue in effect
for successive annual periods if approved each year in the manner described in
clause (ii) of paragraph 6 hereof.
8. The Plan may be amended at any time with the approval of the Board of
Directors of the Fund, provided that (i) any material amendments of the terms of
the Plan will be effective only upon approval as provided in clause (ii) of
paragraph 6 hereof, and (ii) any amendment which increases materially the amount
which may be spent by the Fund pursuant to the Plan will be effective only upon
the additional approval as provided in clause (i) of paragraph 6 hereof.
9. The Plan may be terminated without penalty at any time (i) by a vote of
the majority of the entire Board of Directors of the Fund and by a vote of a
majority of the Directors of the Fund who are not interested persons (as defined
in the Act) of the Fund and who have no direct or indirect financial interest in
the operation of the Plan or in any agreement related to the Plan, or (ii) by a
vote of a majority of the outstanding voting securities of the Fund (as defined
in the Act).
ADMINISTRATIVE SERVICES CONTRACT
REICH & TANG EQUITY FUND, INC.
the "Fund"
New York, New York
, 1995
Reich & Tang Asset Management L.P.
600 Fifth Avenue
New York, New York 10022
Gentlemen:
We herewith confirm our agreement with you as follows:
1. We propose to engage in the business of investing and reinvesting our
assets in securities of the type, and in accordance with the limitations,
specified in our Amended Articles of Incorporation, By-Laws and Registration
Statement filed with the Securities and Exchange Commission underthe Investment
Company Act of 1940 (the "1940 Act") and the Securities Act of 1933, including
the Prospectus forming a part thereof (the "Registration Statement"), all as
from time to time in effect, and in such manner and to such extent as may from
time to time be authorized by our Board of Directors. We enclose copies of the
documents listed above and will furnish you such amendments thereto as may be
made from time to time.
2. a. We hereby employ you as our administrator (the "Administrator") to
provide all management and administrative services reasonably necessary for our
operation, other than those services you provide to us pursuant to the
Investment Management Contract. The services to be provided by you shall include
but not be limited to those enumerated on Exhibit A hereto. The personnel
providing these services may be your employees or employees of your affiliates
or of other organizations. You shall make periodic reports to the Fund's Board
of Directors in the performance of your obligations under this Agreement and the
execution of your duties hereunder is subject to the general control of the
Board of Directors.
b. It is understood that you will from time to time employ, subcontract
with or otherwise associate with yourself, entirely at your expense, such
persons as you believe to be particularly fitted to assist you in the execution
of your duties hereunder. While this agreement is in effect, you or persons
affiliated with you, other than us ("your affiliates"),
<PAGE>
will provide persons satisfactory to our Board of Directors to be elected or
appointed officers or employees of the Fund. These shall be a president, a
secretary, a treasurer, and such additional officers and employees as may
reasonably be necessary for the conduct of our business.
c. You or your affiliates will also provide persons, who may be our
officers, to (i) supervise the performance of bookkeeping and related services
and calculation of net asset value and yield by our bookkeeping agent and (ii)
prepare reports to and the filings with regulatory authorities, and (iii)
perform such clerical, other office and shareholder services for us as we may
from time to time request of you. Such personnel may be your employees or
employees of your affiliates or of other organizations. Notwithstanding the
preceding, you shall not be required to perform any accounting services not
expressly provided for herein.
d. You or your affiliates will also furnish us such administrative and
management supervision and assistance and such office facilities as you may
believe appropriate or as we may reasonably request subject to the requirements
of any regulatory authority to which you may be subject. You or your affiliates
will also pay the expenses of promoting the sale of our shares (other than the
costs of preparing, printing and filing our Registration Statement, printing
copies of the prospectus contained therein and complying with other applicable
regulatory requirements), except to the extent that we are permitted to bear
such expenses under a plan adopted pursuant to Rule 12b-1 under the 1940 Act or
a similar rule.
3. We will expect of you, and you will give us the benefit of, your best
judgment and efforts in rendering these services to us, and we agree as an
inducement to your undertaking these services that you will not be liable
hereunder for any mistake of judgment or for any other cause, provided that
nothing herein shall protect you against any liability to us or to our security
holders by reason of willful misfeasance, bad faith or gross negligence in the
performance of your duties hereunder, or by reason of your reckless disregard of
your obligations and duties hereunder.
4. In consideration of the foregoing we will pay you a fee of .20% of the
Fund's average daily net assets. Your fee will be accrued by us daily, and will
be payable on the last day of each calendar month for services performed
hereunder during that month or on such other schedule as we may agree in
writing. You may use any portion of this fee for distribution of our shares, or
for making servicing payments to organizations whose customers or clients are
our shareholders. You may waive your right to any fee to which you are entitled
hereunder, provided such waiver is delivered to us in writing.
<PAGE>
5. This Agreement will become effective on the date hereof and shall
continue in effect until and thereafter for successive twelve-month periods
(computed from each ), provided that such continuation is specifically approved
at least annually by our Board of Directors and by a majority of those of our
directors who are neither party to this Agreement nor, other than by their
service as directors of the corporation, interested persons, as defined in the
1940 Act, of any such person who is party to this Agreement. This Agreement may
be terminated at any time, without the payment of any penalty, by vote of a
majority of our outstanding voting securities, as defined in the 1940 Act, or by
a vote of a majority of our entire Board of Directors on sixty days' written
notice to you, or by you on sixty days' written notice to us.
6. This Agreement may not be transferred, assigned, sold or in any manner
hypothecated or pledged by you and this Agreement shall terminate automatically
in the event of any such transfer, assignment, sale, hypothecation or pledge by
you. The terms "transfer", "assignment" and "sale" as used in this paragraph
shall have the meanings ascribed thereto by governing law and in applicable
rules or regulations of the Securities and Exchange Commission.
7. Except to the extent necessary to perform your obligations hereunder,
nothing herein shall be deemed to limit or restrict your right, or the right of
any of your officers, directors or employees who may also be a director, officer
or employee of ours, or of a person affiliated with us, as defined in the Act,
to engage in any other business or to devote time and attention to the
management or other aspects of any other business, whether of a similar or
dissimilar nature, or to render services of any kind to any other corporation,
firm, individual or association.
8. This Agreement shall be construed in accordance with the laws of the
State of New York and the applicable provisions of the 1940 Act.
<PAGE>
If the foregoing is in accordance with your understanding, will you kindly
so indicate by signing and returning to us the enclosed copy hereof.
Very truly yours,
REICH & TANG EQUITY FUND, INC.
By:
ACCEPTED: , 1995
REICH & TANG ASSET MANAGEMENT L.P.
By: REICH & TANG ASSET MANAGEMENT, INC., General Partner
By:
334726.1
Exhibit A
Administration Services To Be Performed
By Reich & Tang Asset Management L.P.
Administration Services
1. In conjunction with Fund counsel, prepare and file all Post-Effective
Amendments to the Registration Statement, all state and federal tax
returns and all other required regulatory filings.
2. In conjunction with Fund counsel, prepare and file all Blue Sky
filings, reports and renewals.
3. Coordinate, but not pay for, required Fidelity Bond and Directors and
Officers Insurance (if any) and monitor their compliance with
Investment Company Act.
4. Coordinate the preparation and distribution of all materials for
Directors, including the agenda for meetings and all exhibits thereto,
and actual and projected quarterly summaries.
5. Coordinate the activities of the Fund's Manager, Custodian, Legal
Counsel and Independent Accountants.
6. Prepare and file all periodic reports to shareholders and proxies and
provide support for shareholder meetings.
7. Monitor daily and periodic compliance with respect to all requirements
and restrictions of the Investment Company Act, the Internal Revenue
Code and the Prospectus.
8. Monitor daily the Fund's bookkeeping services agent's calculation of
all income and expense accruals, sales and redemptions of capital
shares outstanding.
9. Evaluate expenses, project future expenses, and process payments of
expenses.
10. Monitor and evaluate performance of accounting and accounting related
services by Fund's bookkeeping services agent. Nothing herein shall be
construed to require you to perform any accounting services not
expressly provided for in this Agreement.
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 February 10, 1997, on the
financial statements referred to therein in Post-Effective Amendment No. 23 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 16, 1997
<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-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> DEC-31-1996
<PERIOD-TYPE> YEAR
<INVESTMENTS-AT-COST> 69637139
<INVESTMENTS-AT-VALUE> 93266864
<RECEIVABLES> 615428
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 93882292
<PAYABLE-FOR-SECURITIES> 512084
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 2069754
<TOTAL-LIABILITIES> 2581838
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 67678008
<SHARES-COMMON-STOCK> 5044178
<SHARES-COMMON-PRIOR> 6335760
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<REALIZED-GAINS-CURRENT> 22512273
<APPREC-INCREASE-CURRENT> (5800512)
<NET-CHANGE-FROM-OPS> 17586690
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 874270
<DISTRIBUTIONS-OF-GAINS> 13865880
<DISTRIBUTIONS-OTHER> 728
<NUMBER-OF-SHARES-SOLD> 3234560
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<SHARES-REINVESTED> 604573
<NET-CHANGE-IN-ASSETS> (21032207)
<ACCUMULATED-NII-PRIOR> 0
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<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 1353503
<AVERAGE-NET-ASSETS> 109767787
<PER-SHARE-NAV-BEGIN> 17.73
<PER-SHARE-NII> .15
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</TABLE>
