<PAGE>
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[GRAPHIC OMITTED]
EQUITY FUND, INC. 600 FIFTH AVENUE, NEW YORK, N.Y. 10020
(212) 830-5200
================================================================================
January 30, 1998
Dear Shareholder:
Nineteen ninety-seven was an exceptional year for the financial markets, marking
another year of spectacular gains for both the equity and fixed income markets.
The Reich & Tang Equity Fund generated a good absolute gain, providing a total
return of 13.8%. The Fund's net asset value on December 31, 1997 was $17.25 per
share after accounting for a quarterly distribution of $3.2467 per share,
comprised of $0.0187 in current dividends, $0.4450 in short-term capital gains,
and $2.7830 in long-term capital gains. The portfolio ended the year with
positions in 45 companies. The top fifteen holdings accounted for 52.8% of
assets. Your portfolio owned a number of companies that performed very well last
year, including Pitney Bowes, Nellcor Puritan Bennett, Policy Management
Systems, Teleflex, Dexter, The Limited, Sonoco Products, Lee Enterprises and
Ball Corp., whose stocks recorded gains ranging from about 30% to over 80%.
Looking forward, we believe that holdings such as Varian, Camco, Nine West,
Allergan, Polaroid, BMC Industries, Millipore, Fruit of the Loom, Kerr McGee,
Corning, York International and St. Jude Medical will be among the key driver's
to the Fund's 1998 performance. Some of these companies are discussed in the
enclosed thesis entitled "When Losers Become Winners". Meanwhile, we are
maintaining a relatively low risk investment profile as measured by the
high-quality characteristics of the individual businesses and the discount
valuations accorded the stocks in the portfolio, as shown in the company
valuation profile later in this review.
Relative performance lagged the major market indices, as the majority of
individual stocks in the market far under-performed the weighted indices, which
were driven primarily by the largest capitalization stocks. This period of
under-performance contrasts sharply with the superior relative returns generated
from 1992 through 1994, a time when the major market indices made only modest
gains. Last year, as in the previous two years, the large cap, high
price/earnings (P/E) growth stocks far outperformed the mid-to-small
capitalization value sector of the market. Over 50% of the movement in the S&P
500 index in 1997 was accounted for by only 33 stocks, all in the largest
capitalization quintile! The smallest of these 33 stocks had a market cap of
over $33 billion, the largest over $240 billion. Your portfolio's median market
cap is approximately $2.0 billion. At the same time, the financial, technology
and communication service sectors produced outsized gains. In keeping with our
low-risk investment style, we had under-weighted these sectors due to their
inherently higher volatility and higher-risk business profiles. This strategy
obviously penalized relative performance. Without abandoning our normal emphasis
on risk avoidance, we are taking a hard look at individual stock selection with
an eye toward better exploiting important secular trends in the economy.
Certainly, mid-and-small capitalization stocks are presently valued cheaply
compared to most of the "well known" large cap companies, and since we normally
buy these stocks "on the bad news", the positions are established at deeply
discounted valuations.
The key to long-term out-performance remains staying true to one's investment
style, picking the right stocks and then sticking with those stocks even in
periods when they lag. Our "fishing pond" and focus remains in the mid-to-small
capitalization area, on companies with market caps ranging from about $500
million to $5 billion. This market sector has historically generated above
average returns. Here, individual company fundamentals
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<PAGE>
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and their business dynamics are well positioned to once again generate superior
gains, and our specific focus on high quality companies will ultimately provide
superior returns while exposing investors to minimum risk over a full investment
cycle. Today, these stocks are valued cheaply relative to most of the larger
capitalization issues, and we are having an opportunity to build significant
investment positions at very attractive prices. Historically, a number of our
best performing stocks have initially produced disappointing returns, penalizing
portfolio performance for the first year or two, and they then produced outsized
gains for a protracted period of time. Some of our more recent investments which
generated substantial gains, though no longer held in the portfolio, include
Becton Dickinson, American Cyanamid, Pioneer Hi-Bred, Minerals Technology,
Ecolab, Medtronic, Morton International, Dover Corp., Equifax and Tyco
International, which were all initially purchased on bad news. Patience pays.
As a result of the dichotomy in the market last year, many of the portfolio
holdings are currently selling at "bargain" prices, both absolutely and relative
to the broad market. We have enclosed a profile of the top holdings in the
portfolio, which clearly demonstrates the discount valuation accorded these
companies. These companies also appear well positioned fundamentally for the
year ahead. We believe that the less well known smaller stocks should outperform
once the capital markets begin to establish a clearer understanding of the
financial and economic implications of the Asian currency realignments. At
present, the fear of the unknown simply limits the short-term appeal of small-
and mid-cap opportunities. Ironically, it is the most liquid multinational
companies that are likely to be most negatively affected by the turmoil in Asia.
Fundamental factors favoring small-and mid-caps include a more favorable
earnings outlook, historically depressed valuations, and muted investor
sentiment. We'll discuss some of the mid-and small-cap portfolio holdings in
detail shortly. Valuation data on the top holdings follow:
<TABLE>
<CAPTION>
PROFILE OF TOP FIFTEEN POSITIONS
--------------------------------
Net Debt to Ent. Value/ P/EBITDA VAL/
Total Capital EBITDA98 P/E 98 P/BV 98 98 SALES 98 P/GCF 98 P/Sales 98
------------- ---------- ------- ------- -------- -------- -------- ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Portfolio Weighted
Average 26% 7.5X 15.6X 2.6X 6.8X 1.4X 9.8X 1.3X
S&P 400 35% 9.8 21.3 4.1 8.6 1.6 11.6 1.4
A review of the S&P 500 index's performance by quintile shows that the bottom
two quintiles, where we invest, appreciated only about 9% on average as compared
to a 38% gain for the largest quintile! Over time, we believe that this
disparity will be corrected, and, as in the past, mid-to-small capitalization
stocks will once again outperform.
<CAPTION>
TABLE 3
-------
Capitalization Quintiles Percent of 1997
($ Billions) Index Performance
---------- ----- -----------
<S> <C> <C> <C> <C>
18.1 to 240.1 66.2 +38.4
9.2 to 18.0 16.8 +30.0
5.4 to 9.1 9.4 +28.6
2.8 to 5.4 5.3 +14.1
0.3 to 2.7 2.3 + 3.0
</TABLE>
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<PAGE>
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The real strength in the weighted S&P 500 index was in the top two quintiles,
where those well-known, large capitalization companies such as General Electric,
Merck, Texaco, Gillette, International Business Machines, and other
high-multiple, blue-chip stocks reside, as shown in Table 3. As noted earlier,
just 33 large cap stocks accounted for about 50% of the S&P 500's 33.3% gain
last year.
On December 31, 1997 Robert F. Hoerle resigned as Chairman of the Reich & Tang
Equity Fund. Mr. Hoerle will continue to manage part of the assets of the Fund
along with Mr. Wilson and the other analyst/managers at Reich & Tang.
Consequently, there will be no change in the management of the Fund's assets. We
thank Mr. Hoerle for his years of service as Chairman. Mr. Richard E. Smith, III
replaces Mr. Hoerle as Chairman of the Fund. Mr. Smith is President & Chief
Executive Officer of the Reich & Tang Capital Management Group.
Sincerely,
/s/Richard E. Smith III
Richard E. Smith III
Chairman
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Comparison of change in value of $10,000 investment in the
Reich & Tang Equity Fund, Inc. and the S&P 500 Index.
REICH & TANG EQUITY FUND, INC.
Performance Comparison Chart
The chart below represents the omitted graph.
<TABLE>
<CAPTION>
REICH & TANG EQUITY FUND, INC.
Performance Comparison Chart
INCEPTION S&P 500 R&T Equity
<S> <C> <C>
01/09/85 10,000.00 10,000.00
12/31/85 13,374.30 13,766.20
12/31/86 15,876.30 15,783.30
12/31/87 16,708.50 16,590.00
12/31/88 19,470.20 20,378.60
12/31/89 25,641.10 24,019.50
12/31/90 24,848.40 22,618.60
12/31/91 32,406.00 27,832.00
12/31/92 34,870.00 32,380.20
12/31/93 38,380.40 36,851.20
12/31/94 38,887.00 37,477.00
12/31/95 53,500.00 48,029.00
12/31/96 65,784.00 56,132.00
12/31/97 87,732.00 63,860.00
</TABLE>
- ---------------------------- ------------- ------------------------------------
Average Annual Returns
- ---------------------------- ------------- ------------------------------------
Since
One Year Five-Year 1/9/1985
------------- ---------------- -------------------
Reich & Tang Equity Fund 13.77% 14.55% 15.36%
S & P 500 Index 33.36% 20.27% 18.22%
- ---------------------------- ------------- ---------------- -------------------
Past performance is not predictive of future performance.
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<PAGE>
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REICH & TANG EQUITY FUND, INC.
STATEMENT OF NET ASSETS
DECEMBER 31, 1997
================================================================================
<TABLE>
<CAPTION>
Value
Shares (Note 1)
------ ------
Common Stocks (98.07%)
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Aerospace/Defense (2.62%)
Sundstrand Corporation 46,000 $ 2,317,250
--------------
Agriculture (1.11%)
Freeport McMoRan Sulphur Inc.* 6,233 73,238
IMC Global Inc. 26,550 869,512
IMC Global Inc. - Warrants* 9,833 38,103
--------------
980,853
Auto Original Equipment (0.98%) --------------
OEA Inc. 30,000 868,125
--------------
Auto Parts - Replacements (3.68%)
Federal - Mogul Corporation 80,500 3,260,250
--------------
Business Services (1.90%)
Olsten Corp. 112,000 1,680,000
--------------
Chemical (Specialty) (2.47%)
Great Lakes Chemical Corporation 12,000 538,500
Hercules Incorporated 33,000 1,652,062
--------------
2,190,562
Commercial Services (8.26%) --------------
Deluxe Corporation 70,000 2,415,000
Manpower Inc. 64,000 2,256,000
Rollins Inc. 130,000 2,640,625
--------------
7,311,625
Computer and Computer Services (2.83%) --------------
Policy Management Systems* 36,000 2,504,250
--------------
Converted Paper Products (7.17%)
Reynolds and Reynolds 80,800 1,489,750
Sonoco Products Company 107,200 3,718,500
Wausau-Mosinee Paper Corp. 56,600 1,139,075
--------------
6,347,325
Drugs (3.14%) --------------
Allergan Inc. 83,000 2,785,688
--------------
Electronics (1.03%)
General Semiconductor Inc.* 79,000 913,438
--------------
Energy (3.61%)
Kerr-McGee Corporation 50,500 3,197,281
--------------
</TABLE>
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See Notes to Financial Statements.
<PAGE>
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REICH & TANG EQUITY FUND, INC.
STATEMENT OF NET ASSETS (CONTINUED)
DECEMBER 31, 1997
================================================================================
<TABLE>
<CAPTION>
Value
Shares (Note 1)
------ ------
Common Stocks (Continued)
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Food Processing (2.05%)
Universal Foods Corp. 43,000 $ 1,816,750
-------------
Grocery (1.30%)
Food Lion, Inc. Class A 136,500 1,151,719
-------------
Imaging (4.10%)
Polaroid Corp. 74,500 3,627,219
-------------
Industrial Products (6.10%)
Albany International Corp. 90,200 2,074,600
BMC Industries Inc. 49,000 790,125
Corning Incorporated 56,500 2,097,563
Dexter Corporation (The) 10,300 444,831
-------------
5,407,119
-------------
Industrial Services (3.09%)
Harsco Corp. 63,500 2,738,438
-------------
Insurance (Prop/Casualty) (2.03%)
UNUM Corporation 33,000 1,794,375
-------------
Machinery (1.88%)
York International Corp. 42,000 1,661,625
-------------
Medical Supplies & Equipment (4.93%)
St. Jude Medical Inc.* 114,000 3,477,000
STERIS Corporation* 18,500 892,625
-------------
4,369,625
-------------
Newspaper (3.53%)
Lee Enterprises, Inc. 105,700 3,124,756
-------------
Office Equipment & Supplies (1.78%)
Pitney Bowes, Inc. 17,500 1,573,906
-------------
Packaging & Containers (2.22%)
Ball Corporation 55,600 1,963,375
-------------
</TABLE>
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See Notes to Financial Statements.
<PAGE>
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================================================================================
<TABLE>
<CAPTION>
Value
Shares (Note 1)
------ ------
Common Stocks (Continued)
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Precision Instruments (12.96%)
Millipore Corporation 12,500 $ 424,218
Snap-On Tools Corp. 85,000 3,708,125
Teleflex Inc. 101,000 3,812,750
Varian Associates 69,900 3,534,318
------------
11,479,411
------------
Retail Store (3.44%)
Nine West Group Inc.* 81,500 2,113,906
The Limited, Inc. 36,500 930,750
------------
3,044,656
------------
Steel (General) (1.74%)
Allegheny Teledyne, Inc. 59,500 1,539,563
------------
Telecommunications Equipment (3.10%)
Commscope Inc.* 101,000 1,357,187
Nextlevel Systems Inc.* 77,500 1,385,313
------------
2,742,500
------------
Textile - Apparel (4.24%)
Fruit of the Loom, Inc.* 84,000 2,152,500
Shaw Industries 138,000 1,604,250
------------
3,756,750
------------
Toy/School Supplies (0.78%)
Hasbro, Inc. 22,000 693,000
------------
Total Common Stocks (Cost $65,592,195) $ 86,841,434
------------
<CAPTION>
Face
Amount
------
Short-Term Investments (2.36%)
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Repurchase Agreements (2.36%)
Morgan (J.P.) Securities Inc., 6.30%, due 01/02/98 (Collateralized by $1,493,000,
U.S. Treasury Bond, 9.875%, due 11/15/15) $2,091,000 $ 2,091,000
------------
Total Short-Term Investments (Cost $2,091,000) $ 2,091,000
------------
Total Investments (100.43%) (Cost $67,683,195+) 88,932,434
Liabilities in Excess of Cash and Other Assets (-0.43%) ( 379,059)
------------
Net Assets (100.00%) 5,132,894 shares outstanding (Note 3) $ 88,553,375
============
Net asset value, offering and redemption price per share $ 17.25
============
* Non-income producing.
+ Aggregate cost for federal income tax purposes is $67,686,874. Aggregate unrealized appreciation
and depreciation are, based on cost for Federal income tax purposes, $24,021,121 and $2,775,561
respectively.
</TABLE>
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See Notes to Financial Statements.
<PAGE>
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REICH & TANG EQUITY FUND, INC.
STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1997
================================================================================
<TABLE>
<CAPTION>
INVESTMENT INCOME
<S> <C>
Income:
Dividends...................................................................... $ 1,438,920
Interest....................................................................... 197,658
---------------
Total income............................................................. 1,636,578
---------------
Expenses: (Note 2)
Investment management fee...................................................... 740,385
Administration fee............................................................. 185,096
Distribution expenses.......................................................... 46,274
Custodian fees................................................................. 16,639
Shareholder servicing and related shareholder expenses......................... 59,754
Legal, compliance and filing fees.............................................. 16,672
Audit and accounting........................................................... 43,978
Directors' fees and expenses................................................... 12,268
Other.......................................................................... 4,213
---------------
Total expenses................................................................. 1,125,279
Expenses paid indirectly....................................................... ( 5,209)
---------------
Net expenses................................................................... 1,120,070
---------------
Net investment income.............................................................. 516,508
---------------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS
Net realized gain on investments................................................... 4,165,978
Net unrealized depreciation of investments......................................... ( 2,380,486)
---------------
Net gain on investments........................................................ 11,785,492
---------------
Increase in net assets from operations............................................. $ 12,302,000
===============
</TABLE>
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See Notes to Financial Statements.
<PAGE>
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REICH & TANG EQUITY FUND, INC.
STATEMENTS OF CHANGES IN NET ASSETS
YEARS ENDED DECEMBER 31, 1997 AND 1996
================================================================================
<TABLE>
<CAPTION>
1997 1996
------------ ------------
INCREASE (DECREASE) IN NET ASSETS
<S> <C> <C>
Operations:
Net investment income................................................... $ 516,508 $ 874,929
Net realized gain on investments........................................ 14,165,978 22,512,273
Change in unrealized appreciation (depreciation) of investments......... ( 2,380,486) ( 5,800,512)
------------ ------------
Increase in net assets from operations.................................. 12,302,000 17,586,690
Distributions from:
Net investment income................................................... ( 516,546) ( 874,270)
Return of capital....................................................... -- ( 728)
Net realized gain on investments........................................ ( 14,163,425) ( 13,865,880)
Capital share transactions (Note 3)........................................ ( 369,108) ( 23,878,019)
------------ ------------
Total increase (decrease)............................................... ( 2,747,079) ( 21,032,207)
Net Assets:
Beginning of year....................................................... 91,300,454 112,332,661
------------ ------------
End of year ............................................................ $ 88,553,375 $ 91,300,454
============ ============
</TABLE>
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See Notes to Financial Statements.
<PAGE>
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REICH & TANG EQUITY FUND, INC.
NOTES TO FINANCIAL STATEMENTS
================================================================================
1. Summary of Accounting Policies
Reich & Tang Equity Fund, Inc. is a no-load, diversified, open-end management
investment company registered under the Investment Company Act of 1940. The
investment objective of the Fund is to seek growth of capital by investing
primarily in equity securities which management of the Fund believes to be
undervalued. Its financial statements are prepared in accordance with generally
accepted accounting principles for investment companies as follows:
a) Valuation of Securities -
Securities traded on a national securities exchange or admitted to trading
on the National Association of Securities Dealers Inc. Automated Quotations
National List are valued at the last reported sales price on the last
business day of the fiscal period. Common stocks for which no sale was
reported on that date and over-the-counter securities, are valued at the
mean between the last reported bid and asked prices. United States
Government obligations and other debt instruments having sixty days or less
remaining until maturity are stated at amortized cost. Debt instruments
having a remaining maturity of more than sixty days will be valued at the
highest bid price obtained from a dealer maintaining an active market in
that security or on the basis of prices obtained from a pricing service
approved as reliable by the Board of Directors. All other investment
assets, including restricted and not readily marketable securities, are
valued in such manner as the Board of Directors in good faith deems
appropriate to reflect their fair market value.
b) Federal Income Taxes -
It is the Fund's policy to comply with the requirements of the Internal
Revenue Code applicable to regulated investment companies and to distribute
all of its taxable income to its shareholders. Therefore, no provision for
federal income tax is required.
c) Use of Estimates -
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that effect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the
financial statements and the reported amounts of increases and decreases in
net assets from operations during the reporting period. Actual results
could differ from those estimates.
d) General -
Securities transactions are recorded on the trade date basis. Interest
income is accrued as earned and dividend income is recorded on the
ex-dividend date. Realized gains and losses from securities transactions
are recorded on the identified cost basis. Dividends and capital gain
distributions to shareholders, which are determined in accordance with
income tax regulations, are recorded on the ex-dividend date. Distributions
which exceed net realized capital gains for financial reporting purposes
but not for tax purposes are reported as distributions in excess of net
realized gains. It is the Fund's policy to take possession of securities as
collateral under repurchase agreements and to determine on a daily basis
that the value of such securities plus accrued interest are sufficient to
cover the value of the repurchase agreements.
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================================================================================
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 $25,226.
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 $5,209. Included under
the same caption are fees of $46,260 paid to Reich & Tang Services, L.P. an
affiliate of the Manager as servicing agent for the Fund.
3. Capital Stock
At December 31, 1997 100,000,000 shares of $.001 par value stock were authorized
and capital paid in amounted to $67,307,815. Transactions in capital stock were
as follows:
<TABLE>
<CAPTION>
Year Ended Year Ended
December 31, 1997 December 31, 1996
-------------------------------- --------------------------------
Shares Amount Shares Amount
------------- ------------- ------------- -------------
<S> <C> <C> <C> <C>
Sold........................................ 3,012,372 $57,159,466 3,234,560 $61,060,226
Issued on reinvestment of dividends......... 767,092 13,280,049 604,573 10,976,919
Redeemed.................................... ( 3,690,748) ( 70,808,623) ( 5,130,715) ( 95,915,164)
------------- ------------- ------------- -------------
Net increase (decrease)..................... 88,716 ($ 369,108) ( 1,291,582) ($ 23,878,019)
============= ============= ============= =============
</TABLE>
4. Investment Transactions
Purchases and sales of investment securities, other than U.S. Government direct
and agency obligations and short-term investments, totaled $26,180,327 and
$39,163,248, respectively. Accumulated undistributed net realized losses at
December 31, 1997 amounted to $3,679.
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REICH & TANG EQUITY FUND, INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
================================================================================
5. Financial Highlights
<TABLE>
<CAPTION>
Year Ended December 31,
-------------------------------------------------------------------------
1997 1996 1995 1994 1993
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
Per Share Operating Performance
(for a share outstanding throughout the year)
Net asset value, beginning of year..... $ 18.10 $ 17.73 $ 15.39 $ 17.61 $ 16.92
---------- ---------- --------- ---------- ----------
Income from investment operations:
Net investment income.................. 0.11 0.15 0.22 0.24 0.21
Net realized and unrealized
gains (losses) on investments........ 2.38 2.83 4.10 0.05 2.12
---------- ---------- --------- ---------- ----------
Total from investment operations....... 2.49 2.98 4.32 0.29 2.33
---------- ---------- --------- ---------- ----------
Less distributions:
Dividends from net investment income... ( 0.11) ( 0.15) ( 0.22) ( 0.24) ( 0.21)
Distributions from net realized gains.. ( 3.23) ( 2.46) ( 1.76) ( 2.27) ( 1.43)
---------- ---------- --------- ---------- ----------
Total distributions.................... ( 3.34) ( 2.61) ( 1.98) ( 2.51) ( 1.64)
---------- ---------- --------- ---------- ----------
Net asset value, end of year........... $ 17.25 $ 18.10 $ 17.73 $ 15.39 $ 17.61
========== ========== ========= ========== ==========
Total Return........................... 13.8% 16.9% 28.2% 1.7% 13.8%
Ratios/Supplemental Data
Net assets, end of year (000).......... $ 88,553 $ 91,300 $ 112,333 $ 90,639 $ 105,181
Ratios to average net assets:
Expenses............................ 1.21%(a) 1.22%(a) 1.15% 1.17% 1.15%
Net investment income............... .56% 0.79% 1.21% 1.35% 1.15%
Portfolio turnover rate................ 29.59% 31.70% 27.69% 25.80% 26.69%
Average commission rate paid (per share) $ .0431(b) $ .0455(b) -- -- --
</TABLE>
(a) Includes expenses paid indirectly, equivalent to .01% of average net assets.
(b) Required by regulations issued in 1995.
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<PAGE>
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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, 1997 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 financial highlights for each of the
five years in the period then ended. These financial statements and financial
highligths are the responsibility of the Fund's management. Our responsibility
is to express an opinion on these financial statements and financial highlights
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 financial
highlights 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, 1997 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 financial highlights referred to
above present fairly, in all material respects, the financial position of Reich
& Tang Equity Fund, Inc. as of December 31, 1997, the results of its operations,
the changes in its net assets and the financial highlights for the periods
indicated, in conformity with generally accepted accounting principles.
\s\McGladrey & Pullen, LLP
New York, New York
January 23, 1998
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<PAGE>
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- -----------------------------------------------------
This report is submitted for the general
information of the shareholders of the Fund. It is
not authorized for distribution to prospective
investors in the Fund unless preceded or
accompanied by an effective prospectus, which
includes information regarding the Fund's
objectives and policies, experience of its
management, marketability of shares, and other
information.
- -----------------------------------------------------
Reich & Tang Equity Fund, Inc.
600 Fifth Avenue
New York, New York 10020
Manager
Reich & Tang Asset Management L.P.
600 Fifth Avenue
New York, New York 10020
Custodian, Transfer Agent &
Dividend Disbursing Agent
Investors Fiduciary Trust Company
801 Pennsylvania
Kansas City, Missouri 64105
- -------------------------------------------------------------------------------
<PAGE>
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REICH & TANG
EQUITY FUND, INC.
Annual Report
December 31, 1997
- -------------------------------------------------------------------------------
<PAGE>
