As filed with the Securities and Exchange Commission on April 30, 1999
Registration No. 2-94184
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. 26 [X]
and/or
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 [X]
Amendment No. 22 [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) 829-5200
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)
[X] immediately upon filing pursuant to paragraph (b)
[ ] on (date) 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.
If appropriate, check the following box:
[ ] this post-effective amendment designates a new effective date
for a previously filed post-effective amendment.
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600 FIFTH AVENUE
NEW YORK, NY 10020
(212) 830-5220
[GRAPHIC OMITTED]
REICH & TANG
EQUITY FUND, INC.
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Prospectus
May 3, 1999
A mutual fund whose investment objective is to seek growth of capital.
Investments will be made based upon their potential for capital appreciation.
Current income is a secondary objective.
The Securities and Exchange Commission has not approved or disapproved these
securities or passed upon the adequacy of this prospectus. Any representation to
the contrary is a criminal offense.
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TABLE OF CONTENTS
2 Risk/Return Summary: Investments, Risks, 7 Management, Organization and Capital Structure
and Performance 7 Shareholder Information
4 Fee Table 14 Tax Consequences
5 Investment Objectives, Principal Investment 15 Distribution Arrangements
Strategies and Related Risks 17 Financial Highlights
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I. RISK/RETURN SUMMARY: INVESTMENTS, RISKS, AND PERFORMANCE
Investment Objectives
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The Fund seeks growth of capital. Investments will be made based upon their
potential for capital appreciation. Current income is a secondary objective.
There is no assurance that the Fund will achieve its investment objectives.
Principal Investment Strategies
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The Fund's investment philosophy is to invest in the equity securities of
companies which, based on fundamental research, management believes are
undervalued.
The Fund intends to achieve its investment objectives by investing
primarily in a diversified portfolio of domestic equity securities.
Under normal circumstances, the Fund will have substantially all of its
assets (more than 65%) invested in equity securities, including common stocks,
securities convertible into common stocks and rights or warrants to subscribe
for or purchase common stocks. At times, the Fund may also invest up to 35% of
its total assets in debt securities and preferred stocks offering a significant
opportunity for price appreciation.
Principal Risks
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o As with all equity investments, it is possible to lose money by investing in
the Fund.
o Since the Fund primarily contains common stocks of domestic issuers, an
investment in the Fund should be made with an understanding of the risks
inherent in an investment in common stocks, including a susceptibility to
general stock market movements and volatile changes in value.
o The value of the Fund's shares and the securities held by the Fund can
each decline in value.
o This Fund is intended for investors who seek long-term capital growth and
are willing to tolerate short-term fluctuations in price in order to
achieve this objective.
Risk/Return Bar Chart
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The following bar chart and table may assist you in your decision to invest
in the Fund. The bar chart shows the change in the average annual returns of the
Fund over the last 10 calendar years. The table shows how the average annual
returns for the last 1, 5 and 10 year periods and since inception compare with
that of the S&P 500 Index. While analyzing this information, please note that
the Fund's past performance is not an indicator of how the Fund will perform in
the future.
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Reich & Tang Equity Fund, Inc.(1)(2)(3)
[GRAPHIC OMITTED]
Calendar Year End % Total Return
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1989 17.87%
1990 -5.83%
1991 23.05%
1992 16.34%
1993 13.81%
1994 1.70%
1995 28.16%
1996 16.87%
1997 13.77%
1998 2.57%
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(1) As of March 31, 1999, the Fund had a year-to-date return of 10.44%
(2) The Fund's highest quarterly return was 21.99% for the quarter ended
December 31, 1998; the lowest quarterly return was -19.80% for the quarter
ended September 30, 1998.
(3) Participating Organizations may charge a fee to investors for purchasing
and redeeming shares. Therefore, the net return to such investors may be
less than if they had invested in the Fund directly.
Average Annual Total Returns - For the periods ended December 31, 1998
Reich & Tang Equity Fund, Inc.
One Year 2.57%
Five Years 12.19%
Ten Years 12.38%
Average Annual Total Returns
since Inception (January 4, 1985) 14.39%
Standard and Poor's 500 Index
One Year 28.58%
Five Years 24.06%
Ten Years 19.21%
Average Annual Total Returns
since January 4, 1985 18.93%
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FEE TABLE
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This table describes the fees and expenses that you may pay if you buy and hold
shares of the Fund.
Annual Fund Operating Expenses
(expenses that are deducted from Fund assets)
Management Fees.............................. 0.80%
Distribution and Service (12b-1) Fees........ 0.01%
Other Expenses............................... 0.38%
Administration Fees....................... 0.20%
Total Annual Fund Operating Expenses......... 1.19%
Example
This Example is intended to help you compare the cost of investing in the Fund
with the cost of investing in other equity funds.
Assume that you invest $10,000 in the Fund for the time periods indicated and
then redeem all of your shares at the end of those periods. Also assume that
your investment has a 5% return each year and that the Fund's operating expenses
remain the same. Although your actual costs may be higher or lower, based on
these assumptions your costs would be:
1 year 3 years 5 years 10 years
$121 $378 $654 $1,443
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II. INVESTMENT OBJECTIVES, PRINCIPAL INVESTMENT STRATEGIES AND RELATED RISKS
Investment Objectives
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The Fund is a diversified management investment company whose investment
objective is to seek growth of capital. Investments will be made based upon
their potential for capital appreciation. Current income is a secondary
objective.
The Fund's investment objective of growth of capital is fundamental and may
only be changed upon the approval of the holders of a majority of the
outstanding shares of the Fund that would be affected by such a change.
Principal Investment Strategies
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The Fund's investment philosophy is to invest in equity securities of
companies which, based on fundamental research, management believes are
undervalued. Within this basic framework, the policy of the Fund will emphasize
flexibility in arranging its portfolio to seek the desired results. Consistent
with this philosophy, the Fund will invest primarily in a diversified portfolio
of domestic equity securities.
The Fund may invest in both listed and unlisted equity securities.
Under normal circumstances, the Fund will have substantially all of its
assets (more than 65%) invested in equity securities, including common stocks,
securities convertible into common stocks and rights or warrants to subscribe
for or purchase common stocks. At times, the Fund may also invest up to 35% of
its assets in debt securities and preferred stocks which offer significant
opportunities for price appreciation.
The Fund may enter into repurchase agreements with Federal Reserve member
banks or "primary dealers" (as designated by the Federal Reserve Bank of New
York) in U.S. government securities. A repurchase agreement is an instrument
under which an investor purchases a U.S. government security from a vendor, and
the vendor agrees to repurchase the security at the same price, plus interest at
a specified rate.
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 of continuous operations.
Defensive Position
The Fund may take a temporary defensive position and invest in securities
that are inconsistent with its principal investment strategies when the Manager
determines that adverse market, economic, political, or other conditions warrant
such a position. Pursuant to this policy, the Fund may invest temporarily
without limit in investment grade debt securities, preferred stocks,or money
market instruments.
The Fund will not necessarily dispose of a security that falls below
investment grade unless the Manager determines that the security is
inconsistent with the Fund's investment objectives.
Money market instruments purchased for this purpose include U.S. Government
obligations, high quality commercial paper and certificates of deposit and
bankers' acceptances issued by domestic banks having more than $1 billion in
total assets.
Buy/Sell Decisions
Critical factors which will be considered in the selection of securities
include (i) the values of individual securities relative to other investment
alternatives, (ii) trends in the variables that determine corporate profits,
corporate cash flow, balance sheet changes, management capability and practices,
and (iii) the economic and political outlook.
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
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potential deterioration of the issuer's earning power which the Fund believes
may adversely affect the price of its securities.
Portfolio Turnover
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.) 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 turnover rate of the Fund for the
fiscal year ended December 31,1998 was 45.79%.
Risks
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Risks inherent in an investment in common stocks include those associated
with the right to receive payments from the issuer of the common stock. Holders
of common stocks have a right to receive dividends only when and if declared by
the issuer's board of directors. Moreover, common stocks do not represent an
obligation of the issuer. Therefore, common stocks do not offer any assurance of
income or provide the degree of protection of debt securities. The issuance of
debt securities or even preferred stock by an issuer will create prior claims
for payment of principal, interest and dividends which can adversely affect the
ability of the issuer to pay dividends on its common stock or the economic
interest of holders of common stock with respect to assets of the issuer upon
liquidation or bankruptcy.
Common stocks are also especially susceptible to general stock market
movements and to volatile changes in value as market confidence in and
perceptions of the issuers change. These perceptions are based on unpredictable
factors including expectations regarding government, economic, monetary and
fiscal policies, inflation and interest rates, economic expansion or
contraction, and global or regional political, economic or banking crises. The
value of the Fund's shares and the securities held by the Fund can each decline
in value and the loss of money is a risk of investing in the Fund.
There are also risks to an investor if the Fund invests in low or below
investment grade debt securities. These securities may have speculative
characteristics and changes in economic condition 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 securities.
If a vendor defaults on its repurchase obligation pursuant to a repurchase
agreement, 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 losses of
principal and income, in selling the collateral.
As the Year 2000 approaches, an issue has emerged regarding how existing
application software programs and operating systems can accommodate this date
value. Failure to adequately address this issue could have potentially serious
repercussions. The Manager is in the process of working with the Fund's service
providers to prepare for the Year 2000. Based on information currently
available, the Manager does not expect that the Fund will incur material costs
to be year 2000 compliant. Although the Manager does not anticipate that the
Year 2000 issue will have a material impact on the Fund's ability to provide
service at current levels, there can be no assurance that steps taken in
preparation for the Year 2000 will be sufficient to avoid an adverse impact on
the Fund. The Year 2000 problem may also adversely affect issuers of the
securities contained in the Fund, to varying degrees based upon various factors,
and thus may have a corresponding adverse effect on the Fund's performance. The
Manager is unable to predict what effect, if any, the Year 2000 problem will
have on such issuers.
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III. MANAGEMENT, ORGANIZATION AND CAPITAL STRUCTURE
The Fund's investment adviser is Reich & Tang Asset Management L.P. (the
"Manager"). The Manager's principal business office is located at 600 Fifth
Avenue, New York, NY 10020. As of March 31, 1999, the Manager was the investment
manager, advisor or supervisor with respect to assets aggregating in excess of
$13.2 billion. The Manager has been an investment adviser since 1970 and
currently is manager of seventeen other registered investment companies and also
advises pension trusts, profit-sharing trusts and endowments.
Steven M. Wilson, J. Dennis Delafield, Charles Neuhauser, Vincent
Sellecchia and Glenn Sussman are responsible for the day-to-day investment
management of the Fund.
Messrs Wilson, Delafield and Sellecchia are Managing Directors of the
Capital Management Group. Mr. Wilson has been Managing Director and Chief
Investment Officer of the Capital Management Division of the Manager since July
1998. He was formerly Senior Vice President of the Capital Management Division
of the Manager with which he was associated since September 1986. Mr. Delafield
and Mr. Sellecchia are Managing Directors of the Delafield Asset Management
Division of the Manager, with which they have been associated since September
1993. Messrs Neuhauser and Sussman are Analysts/ Managers of the Capital
Management Division of the Manager. Mr. Neuhauser has been an Analyst/Manager
since October, 1998, and he was a Senior Vice President with Investment
Counselors of Maryland, from August 1991 until September 1998. Mr. Sussman has
been an Analyst/Manager since March 1997, and was a Vice President at Richter
Asset Management from July 1988 until March 1997.
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. Pursuant to the Investment Management Contract, the Fund
pays the Manager a fee equal to .80% per annum of the Fund's average daily net
assets for managing the Fund's investment portfolio and performing related
services. Effective February 1, 1999 through July 31, 1999, the Manager will
waive a portion of its Management Fee equal to .20% of the average daily net
assets of the Fund.
Pursuant to the Administrative Services Contract, the Manager performs
clerical, accounting supervision and office service functions for the Fund. The
Manager provides the Fund with the personnel to perform all other clerical and
accounting type functions not performed by the Manager. For its services under
the Administrative Services Contract, the Fund pays the Manager a fee equal to
.20% per annum of the Fund's average daily net assets.
The Manager, at its discretion, may voluntarily waive all or a portion of
the Investment Management Fee and the Administrative Services Fee. Any portion
of the total fees received by the Manager may be used to provide shareholder
services and for distribution of Fund shares.
IV. SHAREHOLDER INFORMATION
The Fund sells and redeems its shares on a continuing basis at their net
asset value and does not impose a charge for either sales or redemptions. All
transactions in Fund shares are effected through the Fund's transfer agent who
accepts orders for purchases and redemptions from Participating Organizations
and from investors directly.
Pricing of Fund Shares
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The Fund determines the net asset value of the shares as of 4:00 p.m., New
York City time, on each Fund Business Day. Fund Business Day means weekdays
(Monday through Friday) except days on which the New York Stock Exchange is
closed for trading (e.g. national holidays). The net asset value is computed 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 total number of shares
outstanding.
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Portfolio securities for which market quotations are readily available are
valued at 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 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.
Shares are issued as of the first determination of the Fund's net asset
value per share made after acceptance of the investor's purchase order. In order
to maximize earnings on its portfolio, the Fund normally has its assets as fully
invested as is practicable. Many securities in which the Fund invests require
the immediate settlement in funds of Federal Reserve member banks on deposit at
a Federal Reserve Bank (commonly known as "Federal Funds"). The Fund reserves
the right to reject any purchase order for its shares.
Certificates for Fund shares will not be issued to an investor.
Shares are issued as of 4:00 p.m., New York City time, on any Fund Business
Day on which an order for the shares and accompanying Federal Funds are received
by the Fund's transfer agent before 4:00 p.m., New York City time. Fund shares
begin accruing income on the day after the shares are issued to an investor.
Purchase of Fund Shares
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Investors who have accounts with Participating Organizations may invest in
the Fund through their Participating Organizations in accordance with the
procedures established by the Participating Organization. "Participating
Organizations" are securities brokers, banks and financial institutions or other
industry professionals or organizations which have entered into shareholder
servicing agreements with the Distributor with respect to investment of their
customer accounts in the Fund. All other investors, and investors who have
accounts with Participating Organizations but do not wish to invest in the Fund
through them, may invest in the Fund directly.
The minimum initial investment in the Fund is (i) $1,000 for purchases
through Participating Organizations this may be satisfied by initial investments
aggregating $1,000 by a Participating Organization on behalf of their customers
whose initial investments are less than $1,000; (ii) $1,000 for securities
brokers, financial institutions and other industry professionals that are not
Participating Organizations and (iii) $5,000 for all other investors. Initial
investments may be made in any amount in excess of the applicable minimums. The
minimum amount for subsequent investments is $100 unless the investor is a
client of a Participating Organization whose clients have made aggregate
subsequent investments of $100; except that the minimum initial investment for
an Individual Retirement Account is $250.
Each shareholder, except certain shareholders who invest through accounts
at Participating Organizations ("Participant Investors"), will receive from the
Fund a personalized monthly statement listing (i) the total number of Fund
shares owned as of the statement closing date, (ii) purchase and redemptions of
Fund shares and (iii) the dividends paid on Fund shares (including dividends
paid in cash or reinvested in additional Fund shares).
Investments Through Participating Organizations
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Participant Investors may, if they wish, invest in the Fund through the
Participating Organizations with which they have accounts. When instructed by
its customer to purchase or redeem Fund shares, the Participating Organization,
on behalf of the customer, transmits to the Fund's transfer agent a purchase or
redemption order, and in the case of a purchase order, payment for the shares
being purchased.
Participating Organizations may confirm to their customers who are
shareholders in the Fund each purchase and redemption of Fund shares for the
customers' accounts. Also, Participating Organizations may send their customers
periodic account statements showing the total number of Fund shares owned by
each customer as of the
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statement closing date, purchases and redemptions of Fund shares by each
customer during the period covered by the statement and the income earned by
Fund shares of each customer during the statement period (including dividends
paid in cash or reinvested in additional Fund shares). Participant Investors
whose Participating Organizations have not undertaken to provide such statements
will receive them from the Fund directly.
Participating Organizations may charge Participant Investors a fee in
connection with their use of specialized purchase and redemption procedures. In
addition, Participating Organizations offering purchase and redemption
procedures similar to those offered to shareholders who invest in the Fund
directly, may impose charges, limitations, minimums and restrictions in addition
to or different from those applicable to shareholders who invest in the Fund
directly. Accordingly, the net yield to investors who invest through
Participating Organizations may be less than by investing in the Fund directly.
A Participant Investor should read this Prospectus in conjunction with the
materials provided by the Participating Organization describing the procedures
under which Fund shares may be purchased and redeemed through the Participating
Organization.
In the case of qualified Participating Organizations, orders received by
the Fund's transfer agent before 4:00 p.m., New York City time, on a Fund
Business Day, without accompanying Federal Funds will result in the issuance of
shares on that day only if the Federal Funds required in connection with the
orders are received by the Fund's transfer agent before 4:00 p.m., New York City
time, on that day. Orders for which Federal Funds are received after 4:00 p.m.,
New York City time, will result in share issuance the following Fund Business
Day. Participating Organizations are responsible for instituting procedures to
insure that purchase orders by their respective clients are processed
expeditiously.
Initial Direct Purchases of Shares
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Investors who wish to invest in the Fund directly may obtain a current
prospectus and the subscription order form necessary to open an account by
telephoning the Fund at the following numbers:
Within New York 212-830-5220
Outside New York (TOLL FREE) 800-221-3079
Mail
Investors may send a check made payable to "Reich & Tang Equity Fund, Inc."
along with a completed subscription order form to:
Reich & Tang Equity Fund, Inc.
Reich & Tang Funds
600 Fifth Avenue-8th Floor
New York, New York 10020
Checks are accepted subject to collection at full value in United States
currency.
Bank Wire
To purchase shares of the Fund using the wire system for transmittal of
money among banks, investors should first obtain a new account number by
telephoning the Fund at 212-830-5220 (within New York) or at 800-221-3079
(outside New York) and then instruct a member commercial bank to wire money
immediately to:
Investors Fiduciary Trust Company
ABA # 101003621
Reich & Tang Funds
DDA # 890752-955-4 For Reich & Tang Equity Fund, Inc.
Account of (Investor's Name)
Account #
SS#/Tax ID#
The investor should then promptly complete and mail the subscription order
form.
Investors planning to wire funds should instruct their bank early in the
day so the wire transfer can be accomplished the same day. There may be a charge
by the investor's bank for transmitting the money by bank wire, and there also
may be a charge for use of Federal Funds.
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The Fund does not charge investors in the Fund for its receipt of wire
transfers. Payment in the form of a "bank wire" received prior to 4:00 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 - 8th Floor
New York, New York 10020
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,
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.
Subsequent Purchases of Shares
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Subsequent purchases can be made by personal delivery or by bank wire, as
indicated above, or by mailing a check to:
Reich & Tang Equity Fund, Inc.
Mutual Funds Group
P.O. Box 13232
Newark, New Jersey 07101-3232
All payments should clearly indicate the shareholder's account number.
Provided that the information on the subscription form on file with the
Fund is still applicable, a shareholder may reopen an account without filing a
new subscription order form at any time during the year the shareholder's
account is closed or during the following calendar year.
Redemption of Shares
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A redemption is effected immediately following, and at a price determined
in accordance with, the next determination of net asset value per share upon
receipt by the Fund's transfer agent of the redemption order (and any supporting
documentation which it may require). Normally, payment for redeemed shares is
made on the same Fund Business Day the redemption is effected, provided the
redemption request is received prior to 4:00 p.m., New York City time. However,
redemption payments will not be effected unless the check (including a certified
or cashier's check) used for investment has been cleared for payment by the
investor's bank, which could take up to 15 days after investment.
A shareholder's original subscription order form permits the shareholder to
redeem by written request and to elect one or more of the additional redemption
procedures described below. A shareholder may only change the instructions
indicated on his original subscription order form by transmitting a written
direction to the Fund's transfer agent. Requests to institute or change any of
the additional redemption procedures will require a signature guarantee.
When a signature guarantee is called for, the shareholder should have
"Signature Guaranteed" stamped under his signature. It should be signed and
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.
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Written Requests
Shareholders may make a redemption in any amount by sending a written
request to the Fund addressed to:
Reich & Tang Equity Fund, Inc.
c/o Reich & Tang Funds
600 Fifth Avenue-8th Floor
New York, New York 10020
All previously issued certificates submitted for redemption must be
endorsed by the shareholder and all written requests for redemption must be
signed by the shareholder, in each case with signature guaranteed.
Normally the redemption proceeds are paid by check and mailed to the
shareholder of record.
Checks
By making the appropriate election on their subscription order form,
shareholders may request a supply of checks which may be used to effect
redemptions from the Class of shares of the Fund in which they invest. The
checks, which will be issued in the shareholder's name, are drawn on a special
account maintained by the Fund with the Fund's agent bank. Checks may be drawn
in any amount of $250 or more. When a check is presented to the Fund's agent
bank, it instructs the Fund's transfer agent to redeem a sufficient number of
full and fractional shares in the shareholder's account to cover the amount of
the check. The use of a check to make a withdrawal enables a shareholder in the
Fund to receive dividends on the shares to be redeemed up to the Fund Business
Day on which the check clears. Checks provided by the Fund may not be certified.
Fund shares purchased by check may not be redeemed by check until the check has
cleared, which can take up to 15 days following the date of purchase.
There is no charge to the shareholder for checks provided by the Fund. The
Fund reserves the right to impose a charge or impose a different minimum check
amount in the future, if the Board of Directors determines that doing so is in
the best interests of the Fund and its shareholders.
Shareholders electing the checking option are subject to the procedures,
rules and regulations of the Fund's agent bank governing checking accounts.
Checks drawn on a jointly owned account may, at the shareholder's election,
require only one signature. Checks in amounts exceeding the value of the
shareholder's account at the time the check is presented for payment will not be
honored. Since the dollar value of the account changes daily, the total value of
the account may not be determined in advance and the account may not be entirely
redeemed by check. In addition, the Fund reserves the right to charge the
shareholder's account a fee up to $20 for checks not honored as a result of an
insufficient account value, a check deemed not negotiable because it has been
held longer than six months, an unsigned check and/or a post-dated check. The
Fund reserves the right to terminate or modify the check redemption procedure at
any time or to impose additional fees following notification to the Fund's
shareholders.
Corporations and other entities electing the checking option are required
to furnish a certified resolution or other evidence of authorization in
accordance with the Fund's normal practices. Individuals and joint tenants are
not required to furnish any supporting documentation. Appropriate authorization
forms will be sent by the Fund or its agents to corporations and other
shareholders who select this option. As soon as the authorization forms are
filed in good order with the Fund's agent bank, it will provide the shareholder
with a supply of checks.
Telephone
The Fund accepts telephone requests for redemption from shareholders who
elect this option on their subscription order form. Telephone requests for
redemptions may not exceed $25,000 per request per day. The proceeds of a
telephone redemption may be sent to the shareholders at their addresses or to
their bank accounts, both as set forth in the subscription order form or in a
subsequent written authorization. The Fund may accept telephone redemption
instructions from any person with respect to accounts of shareholders who elect
this service and thus such shareholders
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risk possible loss of principal and interest 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 shareholders electing such option provide a form of personal
identification. Failure by the Fund to employ such reasonable procedures may
cause the Fund to be liable for the losses incurred by investors due to
unauthorized or fraudulent telephone redemptions.
A shareholder making a telephone withdrawal should call the Fund at
212-830-5220; outside New York at 800-221-3079, and state: (i) the name of the
shareholder appearing on the Fund's records; (ii) the shareholder's account
number with the Fund; (iii) the amount to be withdrawn; (iv) whether such amount
is to be forwarded to the shareholder's designated bank account or address; and
(v) the name of the person requesting the redemption. Usually the proceeds are
sent to the designated bank account or address on the same Fund Business Day the
redemption is effected, provided the redemption request is received before 4:00
p.m., New York City time. If the redemption request is received after such time,
proceeds are sent the next Fund Business Day. The Fund reserves the right to
terminate or modify the telephone redemption service in whole or in part at any
time and will notify shareholders accordingly.
There is no redemption charge, no minimum period of investment, no minimum
amount for a redemption, and no restriction on frequency of withdrawals.
Proceeds of redemptions are paid by check. Unless other instructions are given
in proper form to the Fund's transfer agent, a check for the proceeds of a
redemption will be sent to the shareholders' address of record. If a shareholder
elects to redeem all the shares of the Fund he owns, all dividends accrued to
the date of such redemption will be paid to the shareholder along with the
proceeds of the redemption.
The right of redemption may not be suspended or the date of payment upon
redemption postponed for more than seven days after the shares are tendered for
redemption, except for any period during which the New York Stock Exchange, Inc.
is closed (other than customary weekend and holiday closings) or during which
the SEC determines that trading thereon is restricted. Additional exceptions
include any period during which an emergency (as determined by the SEC) exists
as a result of which disposal by the Fund of its portfolio securities is not
reasonably practicable or as a result of which it is not reasonably practicable
for the Fund fairly to determine the value of its net assets, or for such other
period as the SEC may by order permit for the protection of the shareholders of
the Fund.
The Fund has reserved the right to redeem the shares of any shareholder
(other than those in an IRA) if the net asset value of all the remaining shares
in the shareholder's or his Participating Organization's account after a
withdrawal is less than $500. Written notice of a proposed mandatory redemption
will be given at least 30 days in advance to any shareholder whose account is to
be redeemed or the Fund may impose a monthly service charge of $10 on such
accounts. For Participant Investor accounts, notice of a proposed mandatory
redemption will be given only to the appropriate Participating Organization. The
Participating Organization will be responsible for notifying the Participant
Investor of the proposed mandatory redemption. During the notice period, a
shareholder or Participating Organization who receives such a notice may avoid
mandatory redemption by purchasing sufficient additional shares to increase his
total net asset value to the minimum amount.
Specified Amount Automatic
Withdrawal Plan
- --------------------------------------------------------------------------------
Shareholders may elect to withdraw shares and receive payment from the Fund
of a specified amount of $50 or more automatically on a monthly or quarterly
basis. The monthly or quarterly withdrawal payments of the specified amount are
made by the Fund on the 23rd day of the month. Whenever such 23rd day of a month
is not a Fund Business Day, the payment date is the Fund Business Day preceding
the 23rd day of the month. In order to make a payment, a number of shares equal
in aggregate net asset value to the
12
<PAGE>
payment amount are redeemed at their net asset value on the Fund Business Day
immediately preceding the date of payment. To the extent that the redemptions to
make plan payments exceed the number of shares purchased through reinvestment of
dividends and distributions, the redemptions reduce the number of shares
purchased on original investment, and may ultimately liquidate a shareholder's
investment.
The election to receive automatic withdrawal payments may be made at the
time of the original subscription by so indicating on the subscription order
form. The election may also be made, changed or terminated at any later time by
sending a signature guaranteed written request to the transfer agent. Because
the withdrawal plan involves the redemption of Fund shares, such withdrawals may
constitute taxable events to the shareholder.
Dividends and Distributions
- --------------------------------------------------------------------------------
Each dividend and capital gains distribution, if any, declared by the Fund
on its outstanding shares will, at the election of each stockholder, be paid in
cash or in additional shares of common stock of the Fund having an aggregate net
asset value as of the payment date of such dividend or distribution equal to the
cash amount of such dividend or distribution. Election to receive dividends and
distributions in cash or shares is made at the time shares are subscribed for
and may be changed by notifying the Fund in writing at any time prior to the
record date for a particular dividend or distribution. If the stockholder makes
no election the Fund will make the distribution in shares. There is no sales or
other charge in connection with the reinvestment of dividends and capital gains
distributions.
While it is the intention of the Fund to distribute to its stockholders
substantially all of each fiscal year's net income and net realized capital
gains, if any, the amount and time of any such dividend or distribution must
necessarily depend upon the realization by the Fund of income and capital gains
from investments. Dividends will normally be paid quarterly. Capital gains
distributions, if any, will be made at least annually and usually at the end of
the Fund's fiscal year. There is no fixed dividend rate, and there can be no
assurance that the Fund will pay any dividends or realize any capital gains.
Retirement Plans
- --------------------------------------------------------------------------------
The Fund has available a form of individual retirement account ("IRA") for
investment in the Fund's shares. In general, an individual can make an annual
contribution to an IRA in an amount equal to the lesser of $2000 or 100% of the
individual's earned income. In addition, in the case of a married couple filing
a joint return, annual IRA contributions of up to $2000 can generally be made
for each spouse, as long as the combined compensation of both spouses is at
least equal to the contributed amounts. IRA contributions can, in general, be
made to either traditional deductible IRAs, traditional non-deductible IRAs or
non-deductible Roth IRAs, a new type of IRA established by the Taxpayer Relief
Act of 1997. Contributions to a Roth IRA are not deductible, but qualified
distributions from a Roth IRA are not includable in income or subject to the
additional ten-percent tax on early withdrawals, if deemed a qualified
distribution. A "qualified distribution" is a distribution that is made after
the end of the five taxable year period beginning with the first taxable year in
which the individual made a contribution to a Roth IRA, and which is made on or
after the date in which the individual attains an age of 59 1/2 , on or after
the death of the individual or is attributable to the disability of the
individual, or is a distribution for specified first-time home buyer expenses or
certain education expenses.
Contributions to traditional deductible IRAs and Roth IRAs may be limited
based on adjusted gross income levels. The ability of a person who is an active
participant in an employer sponsored retirement plan to make deductible
contributions to a regular IRA is phased out based on the individual's adjusted
gross incomes. For 1998, the phase out occurs over a range of adjusted gross
incomes from $50,000 to $60,000 on a joint return and $30,000 to $40,000 on a
single return. The phase out range for a married individual who is not an active
participant but whose spouse is an active participant is between $150,000 and
$160,000.
13
<PAGE>
The maximum annual contribution that can be made to a Roth IRA is also
subject to phase out rules that apply to married individuals filing joint
returns when adjusted gross income is between $150,000 and $160,000 and to
single individuals when adjusted gross income is between $95,000 and $110,000.
For both traditional deductible IRAs and Roth IRAs, the phase out range for
married individuals filing separate returns is from $0 to $10,000. 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 including first-time home buyer expenses and certain education
expenses.
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 "Section 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
- --------------------------------------------------------------------------------
Shareholders 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 adviser 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., 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., 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 adviser or manager.
There is no charge for the exchange privilege or limitation as to frequency of
exchange. The minimum amount for an exchange is $1,000. However, shareholders
who are establishing a new account with an investment company through the
exchange privilege must ensure 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. Each Fund's Shares are exchanged at their
respective net asset values.
The exchange privilege provides shareholders of the Fund with a convenient
method to shift their investment among different investment companies when they
feel such a shift is desirable. The exchange privilege is available to
shareholders 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 to be made.
Instructions for exchanges may be made by sending a signature guaranteed
written request to:
Reich & Tang Equity Fund, Inc.
c/o Reich & Tang Funds
600 Fifth Avenue-8th Floor
New York, New York 10020
or, for shareholders who have elected that option, by telephoning the Fund
at 212-830-5220 (within New York) or 800-221-3079 (outside New York). The Fund
reserves the right to reject any exchange request and may modify or terminate
the exchange privilege at any time.
Tax Consequences
- --------------------------------------------------------------------------------
The Fund qualified for the fiscal year ended December 31, 1998 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 net
ordinary
14
<PAGE>
income and net realized capital gains paid out to its stockholders.
Distributions of net ordinary income and net short-term capital gains are
taxable to stockholders as ordinary income. Some corporate stockholders will be
entitled to the dividends-received deduction to the extent that the Fund's
income is derived from qualifying dividends 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 net short-term capital
losses realized and distributed by the Fund as capital gains distributions is
taxable to stockholders as long-term capital gains, irrespective of the length
of time a stockholder may have held its stock. Long-term capital gains
distributions are not eligible for the dividends-received deduction referred to
above. If a stockholder that sells shares held for six months or less received a
distribution taxable as long-term capital gain, any loss realized on the sale of
the shares would be a long-term capital loss to the extent of the distribution.
Any dividend or distribution received by a stockholder shortly after the
purchase of shares of the Fund will reduce the net asset value of the shares by
the amount of the dividend or distribution. Furthermore, the dividend or
distribution is subject to tax even though they are, in effect, a return of
capital.
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 by certifying on its
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.
The redemption of shares may result in the investor's receipt of more or
less than the investor paid for its shares and, thus, in a taxable gain or loss
to the investor.
An exchange pursuant to the exchange privilege is treated for Federal
income tax purposes as a sale on which a shareholder may realize a taxable gain
or loss.
V. DISTRIBUTION ARRANGEMENTS
Rule 12b-1 Fees
- --------------------------------------------------------------------------------
Investors do not pay a sales charge to purchase shares of the Fund.
However, the Fund pays fees in connection with the distribution of shares and
for services provided to its shareholders. The Fund pays these fees from its
assets on an ongoing basis and therefore, over time, the payment of these fees
will increase the cost of your investment and may cost you more than paying
other types of sales charges.
Pursuant to Rule 12b-1 under the 1940 Act, the SEC requires that an
investment company which bears any direct or indirect expense of distributing
its shares must do so only in accordance with a plan permitted by Rule 12b-1.
The Fund's Board of Directors has adopted a distribution and service plan (the
"Plan") and, pursuant to the Plan, the Fund and Reich & Tang Distributors, Inc.
(the "Distributor") have entered into a Distribution Agreement and the Fund and
the Manager have entered into the Investment Management Contract.
Under the Distribution Agreement, the Distributor serves as distributor of
the Fund's shares. For nominal consideration (i.e., $1.00) and as agent for the
Fund, the Distributor solicits orders for the purchase of the Fund's shares,
provided that any orders will not be binding on the Fund until accepted by the
Fund as principal.
The Investment Management Contract includes provisions allowing the Manager
to defray the cost of, or compensate other persons, including banks,
broker-dealers and other organizations whose customers or clients are Fund
stockholders ("Intermediaries"), for performing stockholder, administrative and
accounting services to the Fund. Under the Investment Management Contract, the
Manager may also compensate the foregoing persons and organizations for
providing assistance in
15
<PAGE>
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.
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.
16
<PAGE>
VI. FINANCIAL HIGHLIGHTS
This financial highlights table is intended to help you understand the Fund's
financial performance for the past 5 years. Certain information reflects
financial results for a single Fund share. The total returns in the table
represent the rate that an investor would have earned [or lost] on an investment
in the Fund (assuming reinvestment of all dividends and distributions). This
information has been audited by McGladrey and Pullen, LLP, whose report, along
with the Fund's financial statements, is included in the annual report, which is
available upon request.
Year Ended December 31,
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
1998 1997 1996 1995 1994
---- ---- ---- ---- ----
Per Share Operating Performance
(for a share outstanding throughout the year)
Net asset value, beginning of year. $ 17.25 $ 18.10 $ 17.73 $ 15.39 $ 17.61
---------- ---------- --------- ---------- ----------
Income from investment operations:
Net investment income.............. 0.05 0.11 0.15 0.22 0.24
Net realized and unrealized
gains (losses) on investments... 0.39 2.38 2.83 4.10 0.05
---------- ---------- --------- ---------- ----------
Total from investment operations... 0.44 2.49 2.98 4.32 0.29
---------- ---------- --------- ---------- ----------
Less distributions:
Dividends from net investment income ( 0.05) ( 0.11) ( 0.15) ( 0.22) ( 0.24)
Distributions from net realized gains ( 3.03) ( 3.23) ( 2.46) ( 1.76) ( 2.27)
In excess of net realized gain..... ( 0.05) -- -- -- --
---------- --------- --------- -------- -------------
Total distributions................ ( 3.13) ( 3.34) ( 2.61) ( 1.98) ( 2.51)
---------- ---------- --------- ---------- ----------
Net asset value, end of year....... $ 14.56 $ 17.25 $ 18.10 $ 17.73 $ 15.39
========== ========== ========= ========== ==========
Total Return....................... 2.6% 13.8% 16.9% 28.2% 1.7%
Ratios/Supplemental Data
Net assets, end of year (000)...... $ 56,616 $ 88,553 $ 91,300 $ 112,333 $ 90,639
Ratios to average net assets:
Expenses........................ 1.19% 1.21%(a) 1.22%(a) 1.15% 1.17%
Net investment income........... 0.29% 0.56% 0.79% 1.21% 1.35%
Portfolio turnover rate............ 45.79% 29.59% 31.70% 27.69% 25.80%
(a) Includes expenses paid indirectly, equivalent to .01% of average net assets.
</TABLE>
17
<PAGE>
A Statement of Additional Information (SAI) dated
May 3, 1999, and the Fund's Annual and Semi-Annual
Reports include additional information about the
Fund and its investments and are incorporated by
reference into this prospectus. In the Fund's Annual Report
you will find a discussion of the market conditions
and investment strategies that significantly
affected the Fund's performance during its last fiscal
year. You may obtain the SAI, the Annual and Semi-Annual
Reports and material incorporated by reference without REICH & TANG
charge by calling the Fund at 1-800-221-3079. EQUITY FUNDS, INC.
To request other information, please call your
financial intermediary or the Fund.
=================================================
=================================================
PROSPECTUS
A current SAI has been filed with the May 3, 1999
Securities and Exchange Commission. You may
visit the Securities and Exchange Commission's
Internet website (www.sec.gov) to view the
SAI, material incorporated by reference and
other information. These materials can also
be reviewed and copied at the Commission's
Public Reference Room in Washington D.C.
Information on the operation of Reich & Tang Distributors, Inc.
the Public Reference Room may be 600 Fifth Avenue
obtained by calling the Commission New York, NY 10020
at 1-800-SEC-0330. In addition, (212) 830-5220
copies of these materials may be obtained,
upon payment of a duplicating fee, by
writing the Public Reference Section of
the Commission, Washington, D.C.
20549-6009.
811-4148
RTE599P
<PAGE>
================================================================================
REICH & TANG 600 Fifth Avenue, New York, NY 10020
EQUITY FUND, INC. (212) 830-5220
STATEMENT OF ADDITIONAL INFORMATION
May 3, 1999
RELATING TO THE REICH & TANG EQUITY FUND, INC.
PROSPECTUS DATED MAY 3, 1999
This Statement of Additional Information (SAI) is not a Prospectus. The SAI
expands upon and supplements the information contained in the current Prospectus
of Reich & Tang Equity Fund, Inc. (the "Fund"), dated May 3, 1999 and should be
read in conjunction with the Fund's Prospectus.
A Prospectus may be obtained from any Participating Organization or by writing
or calling the Fund toll-free at 1-(800) 221-3079. The Financial Statements of
the Fund have been incorporated by reference to the Fund's Annual Report. The
Annual Report is available, without charge, upon request by calling the
toll-free number provided.
This Statement of Additional Information is incorporated by reference into the
Fund's Prospectus in its entirety.
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Table of Contents
- ---------------------------------------------------------------------------------------------------------------
Fund History.........................................2 Brokerage Allocation and Other Practices...........8
Description of the Fund and its Investments and Capital Stock and Other Securities.................9
Risks............................................. 2 Purchase, Redemption and Pricing Shares............9
Management of the Fund...............................3 Taxation of the Fund..............................14
Control Persons and Principal Holders of Underwriters......................................15
Securities.......................................... 5 Calculation of Performance Data...................15
Investment Advisory and Other Services...............5 Financial Statements..............................16
</TABLE>
<PAGE>
I. FUND HISTORY
The Fund was incorporated on October 15, 1984 in the state of Maryland.
II. DESCRIPTION OF THE FUND AND ITS INVESTMENTS AND RISKS
The Fund is an open-end, diversified management investment company. The Fund's
investment objective is to seek long-term growth of capital. Current income is a
secondary objective. No assurance can be given that these objectives will be
achieved. Although not principal strategies, the Manager may enter into the
following types of transactions or invest in the following types of instruments
as part of its investment strategies.
(i) 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.
The Fund will not purchase any warrant if, as a result of such purchase, 5% or
more of the Fund's total assets are 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 or American Stock Exchanges.
(ii) 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.
(iii) Restricted Securities
The Fund may invest in restricted securities and in other assets having no ready
market if such purchases at the time thereof do 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.
(iv) 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 fundamental investment restrictions. They may
not be changed unless approved by a majority of the outstanding shares "of each
series of the Fund's shares that would be affected by such a change." The
2
<PAGE>
term "majority of the outstanding shares" of the Fund means the vote of the
lesser of (i) 67% or more of the shares of the Fund present at a meeting, if the
holders of more than 50% of the outstanding shares of the Fund are present or
represented by proxy, or (ii) more than 50% of the outstanding shares of the
Fund. 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.
9. Purchase or otherwise acquire interests in real estate, real estate
mortgage loans or interests in oil, gas or other mineral exploration or
development programs;
10. Sell securities short or invest in puts, calls, straddles, spreads or
combinations thereof;
11. Purchase or acquire commodities or commodity contracts;
12. Issue senior securities, except insofar as the Fund may be deemed to have
issued a senior security in connection with any permitted borrowing;
13. Participate on a joint or a joint and several basis in any securities
trading account; and
14. Invest in companies for the purpose of exercising control.
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.
III. MANAGEMENT OF THE FUND
The Fund's Board of Directors, which is responsible for the overall management
and supervision of the Fund, has employed 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 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 their full-time to the affairs of the Fund.
The Directors and Executive Officers of the Fund, and their principal
occupations during the past five years, are set forth below. Unless otherwise
specified, the address of each of the following persons 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.
3
<PAGE>
RICHARD E. SMITH, III, 49*: Director and Chairman of the Fund, has been
President and Chief Executive Officer of the Capital Management Division of the
Manager with which he has been associated since May 1994. Mr. Smith was formerly
Executive Vice President of Rhode Island Hospital Trust which he was associated
with from March 1993 to May 1994.
Dr. W. GILES MELLON, 68: Director of the Fund, is Professor of Business
Administration in the Graduate School of Management, Rutgers University with
which he has been associated since 1966. His address is Rutgers University
Graduate School of Management, 92 New Street, Newark, New Jersey 07102. Dr.
Mellon is also a Director/Trustee of 15 other funds in the Reich & Tang Fund
Complex.
ROBERT STRANIERE, 58: Director of the Fund, has been 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/Trustee of 15 other funds in the Reich & Tang Fund Complex, and a
Director of Life Cycle Mutual Funds, Inc.
Dr. YUNG WONG, 60: 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 has been 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/Trustee of 15 other funds in the Reich & Tang Fund
Complex, and a Trustee of Eclipse Financial Asset Trust.
STEVEN M. WILSON, 39: President of the Fund, has been Managing Director and
Chief Investment Officer of the Capital Management Division of the Manager since
July 1998. Mr. Wilson was formerly Senior Vice President of the Capital
Management Division of the Manager with which he was associated since September
1986.
STEVEN W. DUFF, 45: 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 from June 1981 to August 1994. Mr. Duff is also President and a
Director/Trustee of 14 funds in the Reich & Tang Fund Complex, President of Back
Bay Funds, Inc., Director of Pax World Money Market Fund, Inc., and President
and Chief Executive Officer of Tax Exempt Proceeds Fund, Inc.
BERNADETTE N. FINN, 51: 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 Vice President and Secretary of 4 additional funds, and a Secretary
of 14 funds in the Reich & Tang Fund Complex.
MOLLY FLEWHARTY, 48: 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
17 other funds in the Reich & Tang Fund Complex.
LESLEY M. JONES, 50: 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 from April 1973 to September 1993. Ms. Jones is also a Vice President
of 13 other funds in the Reich & Tang Complex.
DANA E. MESSINA, 42: 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 from December
1980 to September 1993. Ms. Messina is also Vice President of 14 other funds in
the Reich & Tang Fund Complex.
RICHARD De SANCTIS, 42: Treasurer of the Fund, has been 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 17 other funds in the Reich & Tang Fund Complex,
and is Vice President and Treasurer of Cortland Trust, Inc.
ROSANNE D. HOLTZER, 34: Assistant Treasurer of the Fund, has been Vice President
of the Mutual Funds division of the Manager since December 1997. Ms. Holtzer was
formerly Manager of Fund Accounting for the Manager with which she was
associated since June 1986. She is also Assistant Treasurer of 18 other funds in
the Reich & Tang Fund Complex.
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.
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The Fund paid an aggregate remuneration of $12,000 to its Directors with respect
to the period ended December 31, 1998, 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.
Compensation Table
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
(1) (2) (3) (4) (5)
Name of Person, Aggregate Compensation Pension or Retirement Total Compensation from
Position from Registrant for Benefits Accrued as Estimated Annual Fund and Fund
Fiscal Year Part of Fund Expenses Benefits upon Retirement Complex Paid to Directors*
Dr. W. Giles Mellon, $4,000.00 0 0 $58,000 (16 Funds)
Director
Robert Straniere, $4,000.00 0 0 $58,000 (16 Funds)
Director
Dr. Yung Wong, $4,000.00 0 0 $58,000 (16 Funds)
Director
</TABLE>
* The total compensation paid to such persons by the Fund and Fund Complex for
the fiscal year ending December 31, 1998. 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.
IV. CONTROL PERSONS AND PRINCIPAL HOLDERS OF SECURITIES
On March 31, 1999 there were 3,240,927 shares of the Fund's common stock
outstanding. As of March 31, 1999, the amount of shares owned by all officers
and directors of the Fund, as a group, was less than 1% of the outstanding
shares of the Fund. Set forth below is certain information as to persons who
owned 5% or more of the Fund's outstanding common stock as of March 31, 1999:
Nature of
Name and Address % of Shares Ownership
Chase Manhattan Bank TTEE
MetLife Def Cont Group
770 Broadway
New York, NY 10003-9522 10.13% Record
Investors Fiduciary Trust Co.
Custodian for the Rollover IRA of Oscar L. Tang
600 Fifth Avenue - 8th Floor
New York, NY 10020-2302 6.75% Record and
Beneficial
John L. Dowling
Cushman & Wakefield
51 West 52nd Street
New York, NY 10019-6119 6.29% Record and
Beneficial
Peter M. Butler Trustee U/A DTD
First National Bank Building
332 Minnesota Street
St. Paul, MN 55101 5.02% Record
V. INVESTMENT ADVISORY AND OTHER SERVICES
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
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<PAGE>
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, 1999 manager,
advisor or supervisor with respect to assets aggregating in excess of $13.2
billion. The Manager acts as manager or administrator of seventeen other
investment companies and also advises pension trusts, profit sharing trusts and
endowments.
Effective January 1, 1998, NEIC Operating Partnership, L.P. ("NEICOP") was the
limited partner and owner of a 99.5% interest in the Manager replacing New
England Investment Companies, L.P. ("NEICLP") as the limited partner and owner
of such interest in the Manager due to a restructuring by New England Investment
Companies, Inc. ("NEIC"). Subsequently, effective March 31, 1998, Nvest
Companies, L.P. ("Nvest Companies") due to a change in name of NEICOP, replaces
NEICOP as the limited partner and owner of a 99.5% interest in the Manager.
Reich & Tang Asset Management, Inc. (an indirect wholly-owned subsidiary of
Nvest Companies) is the sole general partner and owner of the remaining 0.5%
interest of the Manager. Nvest Corporation, a Massachusetts Corporation
(formerly known as New England Investment Companies, Inc.), serves as the
managing general partner of Nvest Companies.
Reich & Tang Asset Management, Inc. is an indirect subsidiary of Metropolitan
Life Insurance Company ("MetLife"). Also, MetLife directly or indirectly owns
approximately 47% of the outstanding partnership interests of Nvest Companies
and may be deemed a "controlling person" of the Manager. Reich & Tang, Inc.
owns, directly and indirectly, approximately 13% of the outstanding partnership
interests of Nvest Companies.
MetLife is a mutual life insurance company with assets of $330.6 billion at
December 31, 1997. 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 $1.7 trillion at December 31, 1997 for MetLife and its insurance
affiliates. MetLife and its affiliates provide insurance or other financial
services to approximately 36 million people worldwide.
Nvest Companies is a holding company offering a broad array of investment styles
across a wide range of asset categories through thirteen subsidiaries, division
and affiliates offering a wide array of investment styles and products to
institutional clients. Its business units, in addition to the manager, include
Back Bay Advisors, L.P., Capital Growth Management, Limited Partnership,
Greystone partners, L.P., Harris Associates, L.P., Jurika & Voyles, L.P.,
Loomis, Sayles & Company, L.P., Nvest Associates, Inc., Snyder Capital
Management, L.P., Vaughan, Nelson, Scarborough & McCullough, L.P., and Westpeak
Investment Advisors, L.P. These affiliates in the aggregate are investment
advisors or managers to 80 other registered investment companies.
Steven M. Wilson, J. Dennis Delafield, Charles Neuhauser, Vincent Sellecchia and
Glenn Sussman are responsible for the day-to-day investment management of the
Fund.
Messrs Wilson, Delafield and Sellecchia are Managing Directors of the Capital
Management Group. Mr. Wilson has been Managing Director and Chief Investment
Officer of the Capital Management Division of the Manager since July 1998. He
was formerly Senior Vice President of the Capital Management Division of the
Manager with which he was associated since September 1993. Mr. Delafield and Mr.
Sellecchia are Managing Directors of the Delafield Asset Management Division of
the Manager, with which they have been associated since September 1993. Messrs
Neuhauser and Sussman are Analysts/Managers of the Capital Management Division
of the Manager. Mr. Neuhauser has been an Analyst/Manager since October, 1998,
and was a Senior Vice President with Investment Counselors of Maryland, from
August 1991 until September 1998. Mr. Sussman has been an Analyst/Manager since
March 1997, and was formerly a Vice President at Richter Asset Management from
July 1988 until March 1997.
The Investment Management Contract has been extended to December 31, 1999 and is
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.
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.
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<PAGE>
The Investment Management Contract is terminable without penalty by the Fund on
sixty days' written notice when authorized either by majority vote of its
outstanding voting shares or by a vote of a majority of its Board of Directors,
or by the Manager on sixty days' written notice, and will automatically
terminate in the event of its assignment. The Management Contract provides that
in the absence of willful misfeasance, bad faith or gross negligence on the part
of the Manager, or of reckless disregard of its obligations thereunder, the
Manager shall not be liable for any action or failure to act in accordance with
its duties thereunder.
For its services under the Investment Management Contract, the Manager receives
from the Fund a fee, payable monthly, at the annual rate of .80% of the Fund's
average daily net assets. In addition to management services with respect to the
purchase and sale of securities, the fee includes compensation for overall
management of the Fund and for distributing the Fund's shares. For the Fund's
fiscal years ended December 31, 1998, 1997 and 1996, the Manager received
investment management fees of $586,073, $740,385 and $888,522 respectively.
Effective February 1, 1999 through July 31, 1999, the Manager will waive a
portion of its Management Fee equal to .20% of the average daily net assets of
the Fund.
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, 1998,
1997 and 1996, the Manager received an administrative services fee of $146,518,
$185,096 and $222,130, respectively.
Expense Limitation
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, 1998. As a result of the 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.
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, Inc. (the "Distributor") and organizations
whose
7
<PAGE>
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 Reich
& Tang Asset Management L.P.
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 provided that it would be continued in effect until December 31, 1998
and it has been extended through December 31, 1999. Thereafter, it is continued
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 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.
Custodian and Transfer Agent
Investors Fiduciary Trust Company, 801 Pennsylvania, Kansas City, Missouri
64105, is custodian for the Fund's cash and securities. Reich & Tang Services,
Inc., an affiliate of the Fund's Manager, located at 600 Fifth Avenue, New York,
NY 10020, is transfer agent and dividend agent for the shares of the Fund. The
custodian and transfer agents do not assist in, and are not responsible for,
investment decisions involving assets of the Fund.
Counsel and Auditors
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 as auditors for the Fund.
VI. BROKERAGE ALLOCATION AND OTHER PRACTICES
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 the best price and execution available, 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
8
<PAGE>
where the transaction cost charged by a broker may be greater than that which
another broker may charge if the Manager determines in good faith that the
amount of such transaction cost is reasonable in relation to the value of
brokerage and research services provided by the executing broker. During the
year ended December 31, 1998, 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, 1998, 1997 and 1996, the Fund paid a total
of $ 189,081, $81,019 and $95,366, respectively, in brokerage commissions, $
27,866, $25,226 and $23,623, respectively, of which was paid to the Distributor.
During the years ended December 31, 1998, 1997 and 1996, the brokerage
commissions paid to the Distributor represented approximately 14.74%, 31.14%,
and 24.77%, respectively, of the total brokerage commissions paid by the Fund
during such years and were paid on account of transactions having an aggregate
dollar value equal to approximately 28.31%, 49.58%, and 42.83%, respectively, of
the aggregate dollar value of all portfolio transactions of the Fund during such
years for which commissions were paid. The Fund's portfolio turnover rate for
the years ended December 31, 1998 and 1997 was 45.79% and 29.59%, respectively.
VII. CAPITAL STOCK AND OTHER SECURITIES
The authorized capital stock of the Fund consists of one hundred million shares
of common stock having a par value of one-tenth of one cent ($.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 shareholders 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 SEC 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.
VIII PURCHASE, REDEMPTION AND PRICING SHARES
Pricing of Fund Shares
The Fund determines the net asset value of the shares as of 4:00 p.m., New York
City time, on each Fund Business Day. Fund Business Day means weekdays (Monday
through Friday) except days on which the New York Stock Exchange is closed for
trading (e.g. national holidays). The net asset value is computed by dividing
the value of the Fund's net assets
9
<PAGE>
(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 total number of shares outstanding.
Portfolio securities for which market quotations are readily available are
valued at 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 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.
Shares are issued as of the first determination of the Fund's net asset value
per share made after acceptance of the investor's purchase order. In order to
maximize earnings on its portfolio, the Fund normally has its assets as fully
invested as is practicable. Many securities in which the Fund invests require
the immediate settlement in funds of Federal Reserve member banks on deposit at
a Federal Reserve Bank (commonly known as "Federal Funds"). The Fund reserves
the right to reject any purchase order for its shares. Certificates for Fund
shares will not be issued to an investor.
Shares are issued as of 4:00 p.m., New York City time, on any Fund Business Day
on which an order for the shares and accompanying Federal Funds are received by
the Fund's transfer agent before 4:00 p.m., New York City time. Fund shares
begin accruing income on the day after the shares are issued to an investor.
Purchase of Fund Shares
Investors who have accounts with Participating Organizations may invest in the
Fund through their Participating Organizations in accordance with the procedures
established by the Participating Organization. "Participating Organizations" are
securities brokers, banks and financial institutions or other industry
professionals or organizations which have entered into shareholder servicing
agreements with the Distributor with respect to investment of their customer
accounts in the Fund. All other investors, and investors who have accounts with
Participating Organizations but do not wish to invest in the Fund through them,
may invest in the Fund directly.
The minimum initial investment in the Fund for both classes of shares is (i)
$1,000 for purchases through Participating Organizations - this may be satisfied
by initial investments aggregating $1,000 by a Participating Organization on
behalf of their customers whose initial investments are less than $1,000; (ii)
$1,000 for securities brokers, financial institutions and other industry
professionals that are not Participating Organizations and (iii) $5,000 for all
other investors. Initial investments may be made in any amount in excess of the
applicable minimums. The minimum amount for subsequent investments is $100
unless the investor is a client of a Participating Organization whose clients
have made aggregate subsequent investments of $100; except that the minimum
initial investment for an IRA is $250.
Each shareholder, except certain Participant Investors, will receive from the
Fund a personalized monthly statement listing (i) the total number of Fund
shares owned as of the statement closing date, (ii) purchase and redemptions of
Fund shares and (iii) the dividends paid on Fund shares (including dividends
paid in cash or reinvested in additional Fund shares).
Investments Through Participating Organizations
Participant Investors may, if they wish, invest in the Fund through the
Participating Organizations with which they have accounts. When instructed by
its customer to purchase or redeem Fund shares, the Participating Organization,
on behalf of the customer, transmits to the Fund's transfer agent a purchase or
redemption order, and in the case of a purchase order, payment for the shares
being purchased.
Participating Organizations may confirm to their customers who are shareholders
in the Fund each purchase and redemption of Fund shares for the customers'
accounts. Also, Participating Organizations may send their customers periodic
account statements showing the total number of Fund shares owned by each
customer as of the statement closing date, purchases and redemptions of Fund
shares by each customer during the period covered by the statement and the
income earned by Fund shares of each customer during the statement period
(including dividends paid in cash or reinvested in additional Fund shares).
Participant Investors whose Participating Organizations have not undertaken to
provide such statements will receive them from the Fund directly.
Participating Organizations may charge Participant Investors a fee in connection
with their use of specialized purchase and redemption procedures. In addition,
Participating Organizations offering purchase and redemption procedures similar
to those offered to shareholders who invest in the Fund directly, may impose
charges, limitations, minimums and restrictions in addition to or different from
those applicable to shareholders who invest in the Fund directly. Accordingly,
the net yield to investors who invest through Participating Organizations may be
less than by investing in the Fund directly. A Participant Investor should read
this Prospectus in conjunction with the materials provided by the Participating
Organization describing the procedures under which Fund shares may be purchased
and redeemed through the Participating Organization.
In the case of qualified Participating Organizations, orders received by the
Fund's transfer agent before 4:00 p.m., New York City time, on a Fund Business
Day, without accompanying Federal Funds will result in the issuance of shares on
that day only if the Federal Funds required in connection with the orders are
received by the Fund's transfer agent before 4:00 p.m., New York City time, on
that day. Orders for which Federal Funds are received after 4:00 p.m., New York
City time, will
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result in share issuance the following Fund Business Day. Participating
Organizations are responsible for instituting procedures to insure that purchase
orders by their respective clients are processed expeditiously.
Initial Direct Purchases of Shares
Investors who wish to invest in the Fund directly may obtain a current
prospectus and the subscription order form necessary to open an account by
telephoning the Fund at the following numbers:
Within New York 212-830-5220
Outside New York (TOLL FREE) 800-221-3079
Mail
Investors may send a check made payable to "Reich & Tang Equity Fund, Inc."
along with a completed subscription order form to:
Reich & Tang Equity Fund, Inc.
Reich & Tang Funds
600 Fifth Avenue-8th Floor
New York, New York 10020
Checks are accepted subject to collection at full value in United States
currency.
Bank Wire
To purchase shares of the Fund using the wire system for transmittal of money
among banks, investors should first obtain a new account number by telephoning
the Fund at 212-830-5220 (within New York) or at 800-221-3079 (outside New York)
and then instruct a member commercial bank to wire money immediately to:
Investors Fiduciary Trust Company
ABA # 101003621
Reich & Tang Funds
DDA # 890752-955-4
For Reich & Tang Equity Fund, Inc.
Account of (Investor's Name)
Account #
SS#/Tax ID#
The investor should then promptly complete and mail the subscription order form.
Investors planning to wire funds should instruct their bank early in the day so
the wire transfer can be accomplished on the same day. There may be a charge by
the investor's bank for transmitting the money by bank wire, and there also may
be a charge for use of Federal Funds. The Fund does not charge investors in the
Fund for its receipt of wire transfers. Payment in the form of a "bank wire"
received prior to 4:00 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 - 8th Floor
New York, New York 10020
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, 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.
11
<PAGE>
Subsequent Purchases of Shares
Subsequent purchases can be made by personal delivery or by bank wire, as
indicated above, or by mailing a check to:
Reich & Tang Equity Fund, Inc.
Mutual Funds Group
P.O. Box 13232
Newark, New Jersey 07101-3232
There is a $100 minimum for subsequent purchases of shares. All payments should
clearly indicate the shareholder's account number.
Provided that the information on the subscription form on file with the Fund is
still applicable, a shareholder may reopen an account without filing a new
subscription order form at any time during the year the shareholder's account is
closed or during the following calendar year.
Redemption of Shares
A redemption is effected immediately following, and at a price determined in
accordance with, the next determination of net asset value per share upon
receipt by the Fund's transfer agent of the redemption order (and any supporting
documentation which it may require). Normally, payment for redeemed shares is
made on the same Fund Business Day the redemption is effected, provided the
redemption request is received prior to 4:00 p.m., New York City time. However,
redemption payments will not be effected unless the check (including a certified
or cashier's check) used for investment has been cleared for payment by the
investor's bank, which could take up to 15 days after investment. Shares
redeemed are not entitled to participate in dividends declared on the day a
redemption becomes effective.
A shareholder's original subscription order form permits the shareholder to
redeem by written request and to elect one or more of the additional redemption
procedures described below. A shareholder may only change the instructions
indicated on his original subscription order form by transmitting a written
direction to the Fund's transfer agent. Requests to institute or change any of
the additional redemption procedures will require a signature guarantee.
When a signature guarantee is called for, the shareholder should have "Signature
Guaranteed" stamped under his signature. It should be signed and 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.
Written Requests
Shareholders may make a redemption in any amount by sending a written request to
the Fund addressed to:
Reich & Tang Equity Fund, Inc.
c/o Reich & Tang Funds
600 Fifth Avenue-8th Floor
New York, New York 10020
All previously issued certificates submitted for redemption must be endorsed by
the shareholder and all written requests for redemption must be signed by the
shareholder, in each case with signature guaranteed.
Normally the redemption proceeds are paid by check and mailed to the shareholder
of record.
Telephone
The Fund accepts telephone requests for redemption from shareholders who elect
this option on their subscription order form. Telephone requests for redemption
may not exceed $25,000 per request per day. The proceeds of a telephone
redemption may be sent to the shareholders at their addresses or to their bank
accounts, both as set forth in the subscription order form or in a subsequent
written authorization. The Fund may accept telephone redemption instructions
from any person with respect to accounts of shareholders who elect this service
and thus such shareholders risk possible loss of principal and interest 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 shareholders electing such option provide a form
of personal identification. Failure by the Fund to employ such reasonable
procedures may cause the Fund to be liable for the losses incurred by investors
due to unauthorized or fraudulent telephone redemptions.
A shareholder making a telephone withdrawal should call the Fund at
212-830-5220; outside New York at 800-221-3079, and state: (i) the name of the
shareholder appearing on the Fund's records; (ii) the shareholder's account
number with the Fund; (iii) the amount to be withdrawn; (iv) whether such amount
is to be forwarded to the shareholder's designated bank account or address; and
(v) the name of the person requesting the redemption. Usually the proceeds are
sent to the designated bank account or address on the same Fund Business Day the
redemption is effected, provided the redemption
12
<PAGE>
request is received before 12 noon, New York City time. Proceeds are sent the
next Fund Business Day if the redemption request is received after 12 noon, New
York City time. The Fund reserves the right to terminate or modify the telephone
redemption service in whole or in part at any time and will notify shareholders
accordingly.
There is no redemption charge, no minimum period of investment, no minimum
amount for a redemption, and no restriction on frequency of withdrawals.
Proceeds of redemptions are paid by check. Unless other instructions are given
in proper form to the Fund's transfer agent, a check for the proceeds of a
redemption will be sent to the shareholders' address of record. If a shareholder
elects to redeem all the shares of the Fund he owns, all dividends accrued to
the date of such redemption will be paid to the shareholder along with the
proceeds of the redemption.
The right of redemption may not be suspended or the date of payment upon
redemption postponed for more than seven days after the shares are tendered for
redemption, except for any period during which the New York Stock Exchange, Inc.
is closed (other than customary weekend and holiday closings) or during which
the SEC determines that trading thereon is restricted. Additional exceptions
include any period during which an emergency (as determined by the SEC) exists
as a result of which disposal by the Fund of its portfolio securities is not
reasonably practicable or as a result of which it is not reasonably practicable
for the Fund fairly to determine the value of its net assets, or for such other
period as the SEC may by order permit for the protection of the shareholders of
the Fund.
The Fund has reserved the right to redeem the shares of any shareholder (other
than those in an IRA) if the net asset value of all the remaining shares in the
shareholder's or his Participating Organization's account after a withdrawal is
less than $500. Written notice of a proposed mandatory redemption will be given
at least 30 days in advance to any shareholder whose account is to be redeemed
or the Fund may impose a monthly service charge of $10 on such accounts. For
Participant Investor accounts, notice of a proposed mandatory redemption will be
given only to the appropriate Participating Organization. The Participating
Organization will be responsible for notifying the Participant Investor of the
proposed mandatory redemption. During the notice period, a shareholder or
Participating Organization who receives such a notice may avoid mandatory
redemption by purchasing sufficient additional shares to increase his total net
asset value to the minimum amount.
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.
Net Asset Value
The Fund does not determine its net asset value per share on the following
holidays: New Year's Day, Martin Luther King, Jr. Day, Presidents' 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.
13
<PAGE>
U.S. Government obligations and other debt instruments having sixty days or less
remaining until maturity are stated at amortized cost. All other investment
assets, including restricted and not readily marketable securities, are valued
in such manner as the Board of Directors in good faith deems appropriate to
reflect their fair market value.
IX. TAXATION OF THE FUND
The Fund intends to continue to qualify to be treated as a regulated investment
company under Subchapter M of the Internal Revenue Code of 1986, as amended (the
"Code"). To qualify as a regulated investment company, the Fund must distribute
to shareholders at least 90% of its investment company taxable income (which
includes, among other items, dividends, taxable interest and the excess of net
short-term capital gains over net long-term capital losses), and meet certain
diversification of assets, source of income, and other requirements. By meeting
these requirements, the Fund generally will not be subject to Federal income tax
on investment company taxable income and net capital gains (the excess of net
long-term capital gains over net short-term capital losses) designated by the
Fund as capital gain dividends and distributed to shareholders. In determining
the amount of net capital gains to be distributed, any capital loss carryover
from prior years will be applied against capital gains to reduce the amount of
distributions paid. If the Fund does not meet all of these requirements, it will
be taxed as an ordinary corporation and distributions will generally be taxed to
shareholders as ordinary income.
Amounts, other than tax-exempt interest, not distributed on a timely basis in
accordance with a calendar year distribution requirement may be subject to a
nondeductible 4% of excise tax. To prevent imposition of the excise tax, the
Fund must distribute for the calendar year an amount equal to the sum of (1) at
least 98% of its ordinary income (excluding any capital gains or losses) for the
calendar year, (2) at least 98% of the excess of its capital gains over capital
losses (adjusted for certain losses) for the one-year period ending December 31
of such year, and (3) all ordinary income and capital gain net income (adjusted
for certain ordinary losses) for previous years that were not distributed during
such years.
Distributions of investment company taxable income generally are taxable to
shareholders as ordinary income. Distributions from the Fund may be eligible for
the dividends-received deduction available to corporations other than S
Corporations. However, any dividends received by the Fund that are attributable
to foreign corporations will not be eligible for the dividends-received
deduction, since that deduction is generally available only with respect to
dividends paid by domestic corporations. In addition, the dividends-received
deduction will be disallowed for shareholders who do not hold their shares in
the Fund for at least 45 days during the 90 day period beginning 45 days before
a share in the Fund becomes ex dividend with respect to such dividend and will
be disallowed with respect to an investment in the Fund that is debt financed.
Distributions of net capital gains, if any, designated by the Fund as capital
gain dividends are taxable to shareholders as long-term capital gains,
regardless of the length of time the Fund's shares have been held by the
shareholder. All distributions are taxable to the shareholder whether reinvested
in additional shares or received in cash. Shareholders will be notified annually
as to the Federal tax status of distributions.
Investors should be careful to consider the tax implications of buying shares
just prior to a distribution by the Fund. The price of shares purchased at that
time includes the amount of the forthcoming distribution. Distributions by the
Fund reduce the net asset value of the Fund's shares, and if a distribution
reduces the net asset value below a stockholder's cost basis, such distribution,
nevertheless, would be taxable to the shareholder as ordinary income or capital
gain as described above, even though, from an investment standpoint, it may
constitute a partial return of capital.
Upon the taxable disposition (including a sale or redemption) of shares of the
Fund, a shareholder may realize a gain or loss depending upon its basis in the
shares. Such gain or loss will be treated as capital gain or loss if the shares
are capital assets in the shareholder's hands. Such gain or loss will be
long-term or short-term, generally depending upon the shareholder's holding
period for the shares. Non-corporate shareholders are subject to tax at a
maximum rate of 20% on capital gains resulting from the disposition of shares
held for more than 12 months (10% if the taxpayer is, and would be after
accounting for such gains, subject to the 15% tax bracket for ordinary income).
However, a loss realized by a shareholder on the disposition of Fund shares with
respect to which capital gains dividends have been paid will, to the extent of
such capital gain dividends, also be treated as long-term capital loss if such
shares have been held by the shareholder for six months or less. Further, a loss
realized on a disposition will be disallowed to the extent the shares disposed
of are replaced (whether by reinvestment of distributions or otherwise) within a
period of 61 days beginning 30 days before and ending 30 days after the shares
are disposed of. In such a case, the basis of the shares acquired will be
adjusted to reflect the disallowed loss. Shareholders receiving distributions in
the form of additional shares will have a cost basis for Federal income tax
purposes in each share received equal to the net asset value of a share of the
Fund on the reinvestment date.
Under certain circumstances, the sales charge incurred in acquiring shares of
the Fund may not be taken into account in determining the gain or loss on the
disposition of those shares. This rule applies where shares of the Fund are
exchanged within 90 days after the date they were purchased and new shares of
the Fund are acquired without sales charge or at a reduced sales charge. In that
case, the gain or loss recognized on the exchange will be determined by
excluding from the
14
<PAGE>
tax basis of the shares exchanged all or a portion of the sales charge incurred
in acquiring those shares. This exclusion applies to the extent that the
otherwise applicable sales charge with respect to the newly acquired shares is
reduced as a result of having incurred the sales charge initially. Instead, the
portion of the sales charge affected by this rule will be treated as a sales
charge paid for the new shares.
Gains or losses attributable to fluctuations in exchange rates resulting from
transactions in a foreign currency generally are treated as ordinary income or
ordinary loss. These gains or losses may increase, decrease, or eliminate the
amount of the Fund's investment company taxable income to be distributed to its
shareholders as ordinary income.
Income received by the Fund from sources within foreign countries may be subject
to withholding and other similar income taxes imposed by the foreign country.
The Fund does not expect to be eligible to elect to allow shareholders to claim
such foreign taxes or a credit against their U.S. tax liability.
The Fund is required to report to the IRS all distributions to shareholders
except in the case of certain exempt shareholders. Distributions by the Fund
(other than distributions to exempt shareholders) are generally subject to
backup withholding of Federal income tax at a rate of 31% if (1) the shareholder
fails to furnish the Funds with and to certify the shareholder's correct
taxpayer identification number or social security number, (2) the IRS notifies
the Fund or a shareholder that the shareholder has failed to report properly
certain interest and dividend income to the IRS and to respond to notices to
that effect, or (3) when required to do so, the shareholder fails to certify
that he or she is not subject to backup withholding. If the withholding
provisions are applicable, any such distributions (whether reinvested in
additional shares or taken in cash) will be reduced by the amounts required to
be withheld.
The foregoing discussion relates only to Federal income tax law as applicable to
U.S. persons (i.e., U.S. citizens and residents and U.S. domestic corporations,
partnerships, trusts and estates). Distributions by the Fund also may be subject
to state and local taxes, and the treatment of distributions under state and
local income tax laws may differ from the Federal income tax treatment.
Shareholders should consult their tax advisors with respect to particular
questions of Federal, state and local taxation. Shareholders who are not U.S.
persons should consult their tax advisors regarding U.S. foreign tax
consequences of ownership of shares of the Fund, including the likelihood that
distributions to them would be subject to withholding of U.S. tax at a rate of
30% (or at a lower rate under a tax treaty).
UNDERWRITERS
The Fund sells and redeems its shares on a continuing basis at their net asset
value and does not impose a sales charge. The Distributor does not receive an
underwriting commission. In effecting sales of Fund shares under the
Distribution Agreement, the Distributor, for nominal consideration (i.e., $1.00)
and as agent for the Fund, will solicit orders for the purchase of the Fund's
shares, provided that any subscriptions and orders will not be binding on the
Fund until accepted by the Fund as principal.
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. In the opinion of the Manager,
however, 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 shareholder 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 shareholders 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 ad dealers pursuant to
state law.
CALCULATION OF PERFORMANCE DATA
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, 1998 was 2.57%.
The Fund's average annual compounded total return for the five year period ended
December 31, 1998 was 12.19%. The Fund's average annual compounded total return
from January 4, 1985 (inception) to December 31, 1998 was 14.39%.
15
<PAGE>
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.
XII. FINANCIAL STATEMENTS
The audited financial statements for the Fund for the fiscal year ended December
31, 1998 and the report thereon of McGladrey & Pullen, LLP are herein
incorporated by reference to the Fund's Annual Report. The Annual Report is
available upon request and without charge.
16
<PAGE>
PART C
OTHER INFORMATION
ITEM 23. Exhibits
(a) 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).
(a.1) Amendment to the Articles of Incorporation, (filed with Post Effective
Amendment No. 24 to said Registration Statement filed on April 30, 1998
and incorporated by reference).
(b) 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).
(c) 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).
(d) Form of Investment Management Contract between the Registrant and Reich &
Tang Asset Management L.P. (filed with Post Effective Amendment No. 24 to
said Registration Statement filed on April 30, 1998 and incorporated by
reference).
(e) Form of Distribution Agreement between the Registrant and Reich & Tang
Distributors, Inc. (filed with Post Effective Amendment No. 24 to said
Registration Statement filed on April 30, 1998 and incorporated by
reference).
(f) None.
(g) 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).
(g.1) 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).
(h) None.
(i) 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).
(i.1) 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).
(j) Consent of Independent Auditors.
(k) Audited Financial Statements for fiscal year ended December 31, 1998
(filed with Annual Report).
(l) 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).
(m) Form of Distribution and Service Plan pursuant to Rule 12b-1 under the
Investment Company Act of 1940 (filed with Post-Effective Amendment No.
24 to said Registration Statement filed on April 30, 1998 and
incorporated by reference).
(m.1) Form of Distribution Agreement between the Registrant and Reich & Tang
Distributors, Inc. (filed as Exhibit (e) above.)
(m.2) Administrative Services Contract between the Registrant and Reich & Tang
Asset Management, Inc.(filed with Post Effective Amendment No. 24 to said
Registration Statement filed on April 30, 1998 and incorporated by
reference).
(n) Financial Data Schedule (for Edgar filing only ).
(o) Not applicable.
(p) Power of Attorney (filed with Post-Effective Amendment No. 24 to said
Registration Statement filed on April 30, 1998 and incorporated by
reference).
(p.1) 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).
(p.2) 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).
C-1
<PAGE>
ITEM 24. Persons Controlled by or under Common Control with Registrant.
None.
ITEM 25. Indemnification.
Registrant incorporates herein by reference the response to Item 27 of
Registration Statement filed with the Commission on November 6, 1984.
ITEM 26. Business and Other Connections of Investment Adviser.
The description of Reich & Tang Asset Management L.P. under the caption
"Management, Organization and Capital Structure" in the Prospectus, and
"Investment Advisory and Other Services" in the Statement of Additional
Information of the Registration Statement is incorporated herein by reference.
The Registrant's investment adviser, Reich & Tang Asset Management L.P. is a
registered investment adviser. 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, Georgia Daily
Municipal Income Fund, Inc., 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., Pax World Money Market Fund, Inc., Pennsylvania Daily Municipal Income
Fund, Short Term Income Fund, Inc., Tax Exempt Proceeds Fund, Inc., and Virginia
Daily Municipal Income Fund, Inc., registered investment companies whose
addresses are 600 Fifth Avenue, New York, New York 10020, which invest
principally in money market instruments; Delafield Fund, Inc. and Reich & Tang
Equity Fund, Inc. are registered investment companies whose address is 600 Fifth
Avenue, New York, New York 10020, which invests principally in equity
securities. In addition, RTAMLP is the sole general partner of Alpha Associates
L.P., August Associates L.P., Reich & Tang Minutus I, L.P., Reich & Tang Minutus
II, L.P., Reich & Tang Equity Partners L.P., Reich & Tang Micro Cap L.P., Reich
& Tang Concentrated Portfolio L.P. and Tucek Partners L.P., private investment
partnerships organized as limited partnerships.
Peter S. Voss, President, Chief Executive Officer and a Director of Nvest
Corporation (Formerly New England Investment Companies, Inc.) since October
1992, Chairman of the Board of Nvest Corporation 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 Nvest Corporation'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. Neal Ryland, Executive Vice President, Treasurer and Chief
Financial Officer 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 Nvest Corporation since December 1989, Senior
Vice President and Associate General Counsel of The New England from 1984 until
December 1992, and Secretary of Westpeak and Draycott and the Treasurer of Nvest
Corporation. Lorraine C. Hysler has been Secretary of RTAM since July 1994,
Assistant Secretary 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 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 Back Bay Funds, Inc., California Daily Tax
Free Income Fund, Inc., Connecticut Daily Tax Free Income Fund, Inc., Daily Tax
Free Income Fund, Inc., Georgia Daily Municipal 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., Pax World Money Market Fund, Inc., Short Term Income Fund, Inc. and
Virginia Daily Municipal 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 Back Bay Funds, 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.,
Georgia Daily Municipal 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., Pax World Money Market Fund, Inc.,
Pennsylvania Daily Municipal Income Fund, Tax Exempt Proceeds Fund,
C-2
<PAGE>
Inc., and Virginia Daily Municipal Income Fund, Inc. a Vice President and
Secretary of Reich & Tang Equity Fund, Inc., and Short Term Income Fund, Inc.
Richard DeSanctis has been Treasurer of RTAM since July 1994, Assistant
Treasurer 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. DeSanctis joined Reich & Tang, Inc. in December 1990 and
served as Controller of Reich & Tang, Inc., from January 1991 to September 1993.
Mr. DeSanctis was Vice President and Treasurer of Cortland Financial Group, Inc.
and Vice President of Cortland Distributors, Inc. from 1989 to December 1990.
Mr. DeSanctis is also Treasurer of Back Bay Funds, Inc., California Daily Tax
Free Income Fund, Inc., Connecticut Daily Tax Free Income Fund, Inc., Daily Tax
Free Income Fund, Inc., Delafield Fund, Inc., Georgia Daily Municipal Income
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.,
Pax World Money Market Fund, Inc., Pennsylvania Daily Municipal Income Fund,
Reich & Tang Equity Fund, Inc., Short Term Income Fund, Inc., Tax Exempt
Proceeds Fund, Inc. and Virginia Daily Municipal Income Fund, Inc., and is Vice
President and Treasurer of Cortland Trust, Inc. Richard I. Weiner has been Vice
President of RTAM since July 1994, has been Vice President of Nvest Corporation
since September 1993, Vice President of the Capital Management Group of NEIC
from September 1993 until July 1994, Vice President of Reich & Tang Asset
Management L.P. Capital Management Group since July 1994. Mr. Weiner joined
Reich & Tang, Inc. in August 1970 and has served as a Vice President since
September 1982. Rosanne D. Holtzer has been Vice President of the Mutual Funds
division of the Manager since December 1997. Ms. Holtzer was formerly Manager of
Fund Accounting for the Manager with which she was associated with from June
1986. She is also Assistant Treasurer of Back Bay Funds, Inc., Connecticut Daily
Tax Free Income Fund, Inc., Daily Tax Free Income Fund, Inc., Delafield Fund,
Inc., Florida Daily Municipal Income Fund, Georgia Daily Municipal Income Fund,
Inc., 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. Pax World
Money Market Fund, Inc., Pennsylvania Daily Municipal Income Fund, Short Term
Income Fund, Inc., Tax Exempt Proceeds Fund, Inc. and Virginia Daily Municipal
Income Fund, Inc. and is Vice President and Assistant Treasurer of Cortland
Trust, Inc.
Item 27. Principal Underwriters.
(a) Reich & Tang Distributors, Inc. is also distributor for Back Bay
Funds, Inc., 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, Georgia Daily
Municipal Income 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., Pax World Money Market Fund, Inc., Pennsylvania Daily Municipal
Income Fund, Short Term Income Fund, Inc., Tax Exempt Proceeds Fund, Inc. and
Virginia Daily Municipal Income Fund, Inc.
(b) The following are the directors and officers of Reich & Tang
Distributors, Inc. 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
10020.
Positions and Offices Positions and Offices
Name with the Distributor with the Registrant
Peter S. Voss Director None
G. Neal Ryland Director None
Edward N. Wadsworth Executive Officer None
Richard E. Smith III President Chairman
Peter DeMarco Executive Vice President None
Steven W. Duff Director Executive Vice President
Bernadette N. Finn Vice President Vice President & Secretary
Lorraine C. Hysler Secretary None
Richard De Sanctis Treasurer Treasurer
Richard I. Weiner Vice President None
(c) Not applicable.
ITEM 28. Location of Accounts and Records.
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, and at the offices of Investors Fiduciary
Trust Company, 801 Pennsylvania Avenue, Kansas City, Missouri 64105, the
Registrant's Custodian, and Reich & Tang Services, Inc., 600 Fifth Avenue, New
York, New York 10020, the Registrant's transfer agent and dividend disbursing
agent.
ITEM 29. Management Services.
Not applicable.
ITEM 30. 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-3
<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 30th day of
April, 1999.
REICH & TANG EQUITY FUND, INC.
By:/s/ STEVEN WILSON
Steven Wilson
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/ STEVEN WILSON
Steven Wilson President 4/30/99
(2) Principal Financial and
Accounting Officer:
/s/ RICHARD DESANCTIS`
Richard DeSanctis Treasurer 4/30/99
(3) Majority of Directors:
Dr. W. Giles Mellon (Director)
Robert Straniere (Director)
Dr. Yung Wong (Director)
/s/ RICHARD E. SMITH III
By: Richard E. Smith III 4/30/99
Attorney-in-fact*
* Powers of Attorney of Messrs. Mellon, Straniere and Wong filed with
Post-Effective Amendment No. 24 to said Registration Statement filed on
April 29, 1998 and incorporated herein by reference.
EXHIBIT j
McGLADREY & PULLEN, L.L.P. RSM
-------------------------- ---
Certified Public Accountants & Consultants international
CONSENT OF INDEPENDENT AUDITORS
We consent to the use of our report dated January 29, 1999, on the
financial statements of Reich & Tang Equity Fund, Inc. referred to therein,
which is incorporated by reference in Post-Effective Amendment No. 26 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 "Financial Highlights" and in the Statement of Additional Information
under the captions "Counsel and Auditors" and "Financial Statements".
\s\McGladrey & Pullen, LLP
New York, New York
April 22, 1999
<TABLE> <S> <C>
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<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
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<CIK> 0000756916
<NAME> Reich & Tang Equity Fund, Inc.
<S> <C>
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1998
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