<PAGE>
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REICH & TANG
EQUITY FUND, INC. 600 FIFTH AVENUE, NEW YORK, N.Y. 10020
(212) 830-5200
================================================================================
Dear Shareholder:
We are pleased to present the semi-annual report of Reich & Tang Equity Fund,
Inc. for the period ended June 30, 1999.
The Equity Fund's net asset value per share on June 30, 1999 was $16.15 as
compared to $14.56 at December 31, 1998. The Fund registered an increase of
11.0% during the first six months of the year, after adjusting for dividend
payments of $0.01 per share. The Fund held 40 companies, with the top ten
holdings accounting for 35.6% of total net assets. Equity investments comprised
85.22% of total portfolio assets on June 30, 1999. The Fund had 536
shareholders.
We look forward to continuing to serve your equity investment needs.
Sincerely,
\s\Richard E. Smith III
Richard E. Smith III
Chairman
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REICH & TANG EQUITY FUND, INC.
STATEMENT OF NET ASSETS
JUNE 30, 1999
(UNAUDITED)
================================================================================
<TABLE>
<CAPTION>
Value
Shares (Note 1)
------ ------
Common Stocks (85.22%)
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Apparel (4.87%)
Fruit of the Loom, Inc.* 87,000 $ 848,250
Jones Apparel Group Inc.* 44,808 1,537,475
---------------
2,385,725
---------------
Auto Original Equipment (0.79%)
OEA Inc. * 43,500 386,062
---------------
Business Equipment & Supplies (4.71%)
Reynolds & Reynolds 99,000 2,307,937
---------------
Business Services (1.97%)
Modis Professional Services* 70,000 962,500
---------------
Chemicals (1.69%)
International Specialty Products* 81,000 825,187
---------------
Computer and Computer Services (1.47%)
Policy Management Systems* 24,000 720,000
---------------
Consumer Durables (5.37%)
Harman International 39,000 1,716,000
U.S. Industries 54,000 918,000
---------------
2,634,000
---------------
Consumer Non-Durables (5.84%)
Blyth Industries* 33,000 1,134,375
Lancaster Colony Corporation 50,000 1,725,000
---------------
2,859,375
---------------
Converted Paper Products (3.62%)
Sonoco Products Company 44,500 1,332,219
Wausau-Monsinee Paper Corp. 24,600 442,800
---------------
1,775,019
---------------
Diversified Manufacturing (2.89%)
GenCorp 56,000 1,414,000
---------------
Drugs (1.49%)
Rexall Sundown* 60,000 729,375
---------------
Electrical Equipment (1.06%)
Magnetek Inc.* 49,000 517,562
---------------
</TABLE>
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See Notes to Financial Statements.
<PAGE>
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================================================================================
<TABLE>
<CAPTION>
Value
Shares (Note 1)
------ ------
Common Stocks (Continued)
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Electronic Components (2.59%)
General Semiconductor Inc.* 139,000 $ 1,268,375
-------------
Food Processing (2.03%)
Universal Foods Corp. 47,000 992,875
-------------
Grocery (1.77%)
Food Lion, Inc. Class A 73,000 866,875
-------------
Homebuilding (2.13%)
Walter Industries* 80,700 1,044,056
-------------
Industrial Equipment (7.22%)
Roper Industries Inc. 55,000 1,760,000
Varian Inc.* 58,000 781,188
Varian Semiconductor Equipment* 58,000 993,250
-------------
3,534,438
-------------
Industrial Products (5.49%)
Albany International 20,000 415,000
Kaydon Corporation 9,700 326,162
Mueller Industries* 39,000 1,323,562
Thermo Electron Corporation* 31,000 621,938
-------------
2,686,662
-------------
Industrial Services (6.03%)
Harsco Corp. 60,000 1,920,000
UNOVA Inc. * 65,000 1,031,875
-------------
2,951,875
-------------
Insurance (Prop/Casualty) (1.52%)
Trenwick Group Inc. 30,200 744,619
-------------
Lodging and Entertainment (1.07%)
Fairfield Communities* 32,500 524,063
-------------
Medical Equipment (4.42%)
STERIS Corporation* 36,000 697,500
Varian Medical Systems 58,000 1,464,500
-------------
2,162,000
-------------
Packaging & Containers (2.67%)
Ball Corporation 31,000 1,309,750
-------------
</TABLE>
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See Notes to Financial Statements.
<PAGE>
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REICH & TANG EQUITY FUND, INC.
STATEMENT OF NET ASSETS (CONTINUED)
JUNE 30, 1999
(UNAUDITED)
================================================================================
<TABLE>
<CAPTION>
Value
Shares (Note 1)
------ ------
Common Stocks (Continued)
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Precision Instruments (2.82%)
Snap-On Tools Inc. 13,000 $ 470,438
Teleflex Inc. 21,000 912,188
--------------
1,382,626
--------------
Refrigeration Systems (5.53%)
Hussmann International 24,000 397,500
York International Corp. 54,000 2,311,875
--------------
2,709,375
--------------
Steel (General) (2.68%)
Allegheny Teledyne, Inc. 58,000 1,312,250
--------------
Textiles (1.48%)
Burlington Industries Inc.* 80,000 725,000
--------------
Total Common Stocks (Cost $33,773,455) $ 41,731,581
--------------
<CAPTION>
Face
Amount
------
Short-Term Investments (11.48%)
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Repurchase Agreements (11.48%)
Morgan (J.P.) Securities Inc., 4.75%, due 07/01/99
(Collateralized by $5,990,000, FHLB Discounted Note, 5.823%, due 05/06/09) $ 5,619,000 $ 5,619,000
--------------
Total Short-Term Investments (Cost $5,619,000) $ 5,619,000
--------------
Total Investments (96.70%) (Cost $39,392,455+) 47,350,581
Cash And Other Assets, Net of Liabilities (3.30%) 1,617,004
--------------
Net Assets (100.00%) 3,031,711 shares outstanding (Note 3) $ 48,967,585
==============
Net asset value, offering and redemption price per share $ 16.15
==============
</TABLE>
* Non-income producing.
+ Aggregate cost for federal income tax purposes is identical. Aggregate
unrealized appreciation and depreciation, based on cost for federal income
tax purposes, are $8,689,403 and $731,277 respectively.
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See Notes to Financial Statements.
<PAGE>
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REICH & TANG EQUITY FUND, INC.
STATEMENT OF OPERATIONS
SIX MONTHS ENDED JUNE 30, 1999
(UNAUDITED)
================================================================================
<TABLE>
<CAPTION>
INVESTMENT INCOME
<S> <C>
Income:
Dividends........................................................................... $ 258,840
Interest............................................................................ 47,952
---------------
Total income.................................................................. 306,792
---------------
Expenses: (Note 2)
Investment management fee........................................................... 187,482
Administration fee.................................................................. 46,870
Distribution expenses............................................................... 4,687
Custodian fees...................................................................... 5,080
Shareholder servicing and related shareholder expenses.............................. 15,467
Legal, compliance and filing fees................................................... 18,754
Audit and accounting................................................................ 17,964
Directors' fees and expenses........................................................ 6,025
Other............................................................................... 1,444
---------------
Total expenses................................................................ 303,773
Less: Fees waived (Note 2).......................................................... ( 37,761)
Expenses paid indirectly (Note 2)............................................. ( 607)
---------------
Net expenses.................................................................. 265,405
---------------
Net investment income.................................................................. 41,387
---------------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS
Net realized gain on investments....................................................... 8,505,949
Net unrealized depreciation of investments............................................. ( 4,218,952)
---------------
Net gain on investments....................................................... 4,286,997
---------------
Increase (decrease) in net assets from operations....................................... $ 4,328,384
===============
</TABLE>
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See Notes to Financial Statements.
<PAGE>
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REICH & TANG EQUITY FUND, INC.
STATEMENTS OF CHANGES IN NET ASSETS
================================================================================
<TABLE>
<CAPTION>
Six Months
Ended Year
June 30, 1999 Ended
(Unaudited) December 31, 1998
--------- -----------------
INCREASE (DECREASE) IN NET ASSETS
<S> <C> <C>
Operations:
Net investment income..................................................... $ 41,387 $ 214,767
Net realized gain on investments.......................................... 8,505,949 9,882,217
Net change in unrealized appreciation (depreciation) of investments....... ( 4,218,952) ( 9,072,161)
--------------- ---------------
Increase in net assets from operations.................................... 4,328,384 1,024,823
Distributions from:
Net investment income..................................................... ( 31,944) ( 214,919)
Net realized gain on investments.......................................... -- ( 9,882,217)
In excess of net realized gain............................................ -- ( 168,629)
Capital share transactions (Note 3)......................................... ( 11,944,831) ( 22,696,457)
--------------- ---------------
Total increase (decrease)................................................. ( 7,648,391) ( 31,937,399)
Net Assets:
Beginning of period....................................................... 56,615,976 88,553,375
--------------- ---------------
End of period (including undistributed net investment income
of $9,443 and $0, respectively)....................................... $ 48,967,585 $ 56,615,976
=============== ===============
</TABLE>
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See Notes to Financial Statements.
<PAGE>
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REICH & TANG EQUITY FUND, INC.
NOTES TO FINANCIAL STATEMENTS
(UNAUDITED)
================================================================================
1. Summary of Accounting Policies.
Reich & Tang Equity Fund, Inc. is a no-load, diversified, open-end management
investment company registered under the Investment Company Act of 1940. The
investment objective of the Fund is to seek growth of capital by investing
primarily in equity securities which management of the Fund believes to be
undervalued. Its financial statements are prepared in accordance with generally
accepted accounting principles for investment companies as follows:
a) Valuation of Securities -
Securities traded on a national securities exchange or admitted to trading
on the National Association of Securities Dealers Inc. Automated Quotations
National List are valued at the last reported sales price on the last
business day of the fiscal period. Common stocks for which no sale was
reported on that date and over-the-counter securities, are valued at the
mean between the last reported bid and asked prices. United States
Government obligations and other debt instruments having sixty days or less
remaining until maturity are stated at amortized cost. Debt instruments
having a remaining maturity of more than sixty days will be valued at the
highest bid price obtained from a dealer maintaining an active market in
that security or on the basis of prices obtained from a pricing service
approved as reliable by the Board of Directors. All other investment
assets, including restricted and not readily marketable securities, are
valued in such manner as the Board of Directors in good faith deems
appropriate to reflect their fair market value.
b) Federal Income Taxes -
It is the Fund's policy to comply with the requirements of the Internal
Revenue Code applicable to regulated investment companies and to distribute
all of its taxable income to its shareholders. Therefore, no provision for
federal income tax is required.
c) Use of Estimates -
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that effect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the
financial statements and the reported amounts of increases and decreases in
net assets from operations during the reporting period. Actual results
could differ from those estimates.
d) General -
Securities transactions are recorded on the trade date basis. Interest
income is accrued as earned and dividend income is recorded on the
ex-dividend date. Realized gains and losses from securities transactions
are recorded on the identified cost basis. Dividends and capital gain
distributions to shareholders, which are determined in accordance with
income tax regulations, are recorded on the ex-dividend date. Distributions
which exceed net realized capital gains for financial reporting purposes
but not for tax purposes are reported as distributions in excess of net
realized gains and are primarily due to differing treatments for referral
of wash sales. It is the Fund's policy to take possession of securities as
collateral under repurchase agreements and to determine on a daily basis
that the value of such securities plus accrued interest are sufficient to
cover the value of the repurchase agreements.
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<PAGE>
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REICH & TANG EQUITY FUND, INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
(UNAUDITED)
================================================================================
2. Investment Management Fees and Other Transactions with Affiliates.
Under the Investment Management Contract, the Fund pays an investment management
fee to Reich & Tang Asset Management, L.P. ("The Manager") equal to .80% of the
Fund's average daily net assets. Effective February 1, 1999 through July 31,
1999, the Manager has voluntarily agreed to reduce its fee to .60% of the Fund's
average daily net assets.
During the period ended June 30, 1999, the Manager voluntarily waived management
fees of $37,761.
Pursuant to an Administrative Services Agreement, the Fund pays to the Manager
an annual fee of .20% of the Fund's average daily net assets.
Pursuant to a Distribution and Service Plan adopted under securities and
Exchange Commission Rule 12b-1, the Fund may pay certain costs associated with
the distribution of the Fund's shares subject to a limit of 0.05% of the Fund's
average net assets.
Brokerage commissions paid during the period to Reich & Tang Distributors, Inc.
amounted to $13,940.
Fees are paid to Directors who are unaffiliated with the Manager on the basis of
$2,000 per annum plus $500 per meeting attended.
Included in the statement of operations under the caption "Shareholder servicing
and related shareholder expenses" are fees of $11,813 paid to Reich & Tang
Services, Inc. an affiliate of the Manager as servicing agent for the Fund.
Included under the same caption are expense offsets of $607.
3. Capital Stock.
At June 30, 1999 100,000,000 shares of $.001 par value stock were authorized and
capital paid in amounted to $32,666,115. Transactions in capital stock were as
follows:
<TABLE>
<CAPTION>
Six Months Ended Year Ended
June 30, 1999 December 31, 1998
------------------------------ -------------------------------
Shares Amount Shares Amount
------------- -------------- -------------- --------------
<S> <C> <C> <C> <C>
Sold................................ 1,777,547 $ 25,483,991 3,023,076 $ 51,191,834
Issued on reinvestment of dividends. 2,190 28,475 603,572 8,811,830
Redeemed............................ ( 2,637,600) ( 37,457,297) ( 4,869,968) ( 82,700,121)
------------ -------------- ------------ -------------
Net increase (decrease)............. ( 857,863) ($ 11,944,831) ( 1,243,320) ($ 22,696,457)
============ ============== ============ =============
</TABLE>
4. Investment Transactions.
Purchases and sales of investment securities, other than short-term investments,
totaled $12,019,318 and $27,374,477, respectively. Accumulated undistributed net
realized gains at June 30, 1999 amounted to $8,333,901.
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<PAGE>
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================================================================================
<TABLE>
<CAPTION>
5. Financial Highlights.
Six Months Year Ended December 31,
Ended -----------------------------------------------------------------
June 30, 1999 1998 1997 1996 1995 1994
------------- --------- --------- --------- --------- ----------
<S> <C> <C> <C> <C> <C> <C>
Per Share Operating Performance
(for a share outstanding throughout the period)
Net asset value, beginning of period..... $ 14.56 $ 17.25 $ 18.10 $ 17.73 $ 15.39 $ 17.61
-------- -------- -------- -------- -------- --------
Income from investment operations:
Net investment income.................... 0.01 0.05 0.11 0.15 0.22 0.24
Net realized and unrealized
gains (losses) on investments......... 1.59 0.39 2.38 2.83 4.10 0.05
-------- -------- -------- -------- -------- --------
Total from investment operations......... 1.60 0.44 2.49 2.98 4.32 0.29
-------- -------- -------- -------- -------- --------
Less distributions:
Dividends from net investment income..... ( 0.01) ( 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...................... ( 0.01) ( 3.13) ( 3.34) ( 2.61) ( 1.98) ( 2.51)
-------- -------- -------- -------- -------- --------
Net asset value, end of period........... $ 16.15 $ 14.56 $ 17.25 $ 18.10 $ 17.73 $ 15.39
======== ======== ========= ======== ======== ========
Total Return............................. 11.0%(a) 2.6% 13.8% 16.9% 28.2% 1.7%
Ratios/Supplemental Data
Net assets, end of period (000).......... $ 48,968 $ 56,616 $ 88,553 $ 91,300 $ 112,333 $ 90,639
Ratios to average net assets:
Expenses (net of fees waived)+........ 1.14%* 1.19% 1.21% 1.22% 1.15% 1.17%
Net investment income................. 0.18%* 0.29% 0.56% 0.79% 1.21% 1.35%
Management fees waived................ 0.16%* -- -- -- -- --
Expenses paid indrectly............... -- -- 0.01% 0.01% -- --
Portfolio turnover rate.................. 26.46% 45.79% 29.59% 31.70% 27.69% 25.80%
(a) Unannualized
* Annualized
+ Includes expenses paid indirectly
</TABLE>
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<PAGE>
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- -----------------------------------------------------
This report is submitted for the general
information of the shareholders of the Fund. It is
not authorized for distribution to prospective
investors in the Fund unless preceded or
accompanied by an effective prospectus, which
includes information regarding the Fund"s
objectives and policies, experience of its
management, marketability of shares, and other
information.
- ----------------------------------------------------
Reich & Tang Equity Fund, Inc.
600 Fifth Avenue
New York, New York 10020
Manager
Reich & Tang Asset Management, L.P.
600 Fifth Avenue
New York, New York 10020
Custodian
Investors Fiduciary Trust Company
801 Pennsylvania
Kansas City, Missouri 64105
Transfer Agent &
Dividend Disbursing Agent
Reich & Tang Services L.P.
600 Fifth Avenue
New York, New York 10020
RTEF699S
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<PAGE>
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REICH & TANG
EQUITY FUND, INC.
Semi-Annual Report
June 30, 1999
(Unaudited)
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<PAGE>
