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TAX EXEMPT
PROCEEDS
FUND, INC.
Annual Report
June 30, 1995
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<PAGE>
1
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TAX EXEMPT PROCEEDS FUND, INC.
STATEMENT OF NET ASSETS
JUNE 30, 1995
===============================================================================
<TABLE>
<CAPTION>
Ratings (a)
-----------------
Face Maturity Value Standard
Amount Date Yield (Note 1) Moody's & Poors
------ ---- ----- -------- ------- -----
Other Tax Exempt Investments (10.23%)
-----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
$ 5,000,000 City of Houston, TX TRAN - Series 1995 06/27/96 3.64% $ 5,037,750 MIG-1 SP-1+
5,000,000 Colorado State TRAN - Series A 06/27/96 4.50 5,037,600 SP-1+
6,700,000 Essex County New Jersey TAN - Series C
LOC National Westminster Bank USA 11/22/95 3.50 6,718,165 MIG-1
5,000,000 State of Michigan GO Notes 09/29/95 4.02 5,010,782 MIG-1 SP-1+
---------- ----------
21,700,000 Total Other Tax Exempt Investments 21,804,297
---------- ----------
Other Variable Rate Demand Instruments (c) (74.52%)
-----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
$ 4,000,000 Alabama Housing Finance Authority (Windscape Project)
LOC Amsouth Bank N.A. 12/01/03 4.30% $ 4,000,000 VMIG-1
4,280,000 Bexar County, TX HFDC
(Air Force Village II) - Series 1985B
LOC Rabobank 03/01/12 4.00 4,280,000 A1+
1,570,000 Bloomington Normal Airport Authority - Series 1995 01/01/13 4.20 1,570,000 VMIG-1
3,000,000 Brunswick & Glynn County, GA Development Authority
(Jekyll Development Assoc.) - Series 1985
LOC Banque Indosuez 12/01/15 4.25 3,000,000 VMIG-1 A1+
8,700,000 Carlton, WI PCRB
(Wisconsin Power & Light Company) - Project B 09/01/05 4.65 8,700,000 P1 A1+
5,400,000 Chicago, IL O'Hare International Airport
(American Airlines) - Series A
LOC West Deutsche Landesbank 12/01/17 4.50 5,400,000 P1
3,650,000 City & County of Denver, CO Refunding MHRB
(Cotton Wood Creek Project)
LOC General Electric Capital Corp. 04/15/14 4.00 3,650,000 A1+
2,000,000 Clayton County, GA MHRB
(Rainwood Development)
LOC Bankers Trust Company 05/01/06 4.37 2,000,000 A1+
2,800,000 County of Franklin, OH
Hospital Facilities (Lutheran Senior City, Inc.) RB - Series 1994
LOC National Bank of Detroit 05/01/15 4.15 2,800,000 VMIG-1
4,000,000 Dade County, FL IDA
(Florida Power & Light) - Series 1993 06/01/21 4.20 4,000,000 VMIG-1 A1
7,150,000 Dekalb County, GA Refunding MHRB - Series 1988
LOC Bank of Montreal 12/01/07 3.90 7,150,000 A1+
6,300,000 District of Columbia GO - Series 1992
LOC Toronto Dominion 10/01/07 4.40 6,300,000 VMIG-1 A1+
</TABLE>
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See Notes to Financial Statements.
<PAGE>
2
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TAX EXEMPT PROCEEDS FUND, INC.
STATEMENT OF NET ASSETS (CONTINUED)
JUNE 30, 1995
===============================================================================
<TABLE>
<CAPTION>
Ratings (a)
-----------------
Face Maturity Value Standard
Amount Date Yield (Note 1) Moody's & Poors
------ ---- ----- -------- ------- -----
Other Variable Rate Demand Instruments (Continued)
-----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
$ 1,700,000 Georgetown, KY Educational Institution Improvement
(Georgetown College)
LOC Citizen's Fidelity Bank & Trust Company 06/01/04 4.25% $ 1,700,000 VMIG-1 A1+
10,000,000 Greenville, SC Hospital System Hospital Facilities
RB - Series B 05/01/23 4.50 10,000,000 A1+
10,000,000 Harris County, TX HFDC
(Methodist Hospital) 12/01/25 4.50 10,000,000 A1+
2,355,000 Homewood, AL Educational Building Authority
(Samford University)
LOC Amsouth Bank N.A. 12/01/13 4.20 2,355,000 VMIG-1
4,420,000 Housing Opportunities Commission of Montgomery County
(Mongomery County, MD) MHRB
LOC General Electric Capital Corp. 11/01/07 4.15 4,420,000 A1+
1,900,000 Houston, TX - Series 1992B
SBPA - Morgan Guarantee Trust Co. (b) 04/01/98 4.00 1,900,000 A1+
3,300,000 Illinois Educational Facilities Authority
(Chicago Childrens Museum) - Series 1994
LOC National Bank of Detroit 02/01/28 4.10 3,300,000 VMIG-1 A1+
8,500,000 Illinois Health Facilities Authority RB
(Resurrection Health Care System)
LOC First National Bank of Chicago/Comerica Bank/
Lasalle National Bank/National Bank of Detroit 05/01/11 4.65 8,500,000 VMIG-1
5,000,000 Illinois Health Facilities Authority RB
(Resurrection Health Care System)
LOC First National Bank of Chicago/Comerica Bank
Lasalle National Bank/National Bank of Detroit 05/01/11 4.35 5,000,000 VMIG-1
4,200,000 Jacksonville, FL IDRB
(Univ. of Florida Health Science Center) - Series 1989
LOC Barnett Bank of Jacksonville 07/01/19 4.50 4,200,000 VMIG-1
2,500,000 Maryland State IDA Economic Development RB
(Johnson Controls Inc.) 12/01/03 4.25 2,500,000 VMIG-1 A1
3,200,000 Michigan Strategic Fund PCRB
(Consumer Power Company Project) - Series 1988
LOC Union Bank of Switzerland 04/15/18 4.25 3,200,000 P1
1,200,000 Michigan Strategic Fund Limited Obligation Refunding RB
(Consumers Power Company Project)
LOC Canadian Imperial Bank of Commerce ` 06/01/10 4.55 1,200,000 A1+
</TABLE>
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See Notes to Financial Statemetns.
<PAGE>
3
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TAX EXEMPT PROCEEDS FUND, INC.
STATEMENT OF NET ASSETS (CONTINUED)
JUNE 30, 1995
===============================================================================
<TABLE>
<CAPTION>
Ratings (a)
-----------------
Face Maturity Value Standard
Amount Date Yield (Note 1) Moody's & Poors
------ ---- ----- -------- ------- -----
Other Variable Rate Demand Instruments (Continued)
-----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
$ 2,100,000 Missouri Health & Education Facility (Washington University)
SBPA - Morgan Guarantee Trust Co. (b) 09/01/09 4.00% $ 2,100,000 VMIG-1 A1+
14,300,000 Monroe County, MI EDC (Detroit Edison) - Series CC
LOC Barclays Bank PLC 10/01/24 4.55 14,300,000 VMIG-1
4,500,000 North Central, TX HFDC
(Methodist Hospital of Dallas) - Series 1985B
MBIA Insured 10/01/15 4.50 4,500,000 A1
7,700,000 Pitkin County, CO IDRB
(Aspen Skiing Co. Proj.) - Series B
LOC First National Bank of Chicago 04/01/16 4.65 7,700,000 A1
5,000,000 Roanoke, VA IDA (Roanoke Memorial Hospital)
LOC Morgan Guaranty 07/01/17 4.50 5,000,000 VMIG-1 A1+
5,000,000 State of Kansas Department of Transportation
Highway RB - Series 1994B 09/01/14 4.15 5,000,000 VMIG-1 A1+
9,100,000 Town of Parrish, AL Industrial Development Board
PCRB (Alabama Power Co. Project) 06/01/15 4.35 9,100,000 VMIG-1 SP-1
----------- -----------
158,825,000 Total Other Variable Rate Demand Instruments 158,825,000
----------- -----------
<CAPTION>
Put Bonds (4.51%)
-----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
$ 5,000,000 Connecticut State Special Assessment Unemployment
Compensation Advance Fund RB
FGIC Insured
SBPA - FGIC Securities Purchase, Inc. (b) 07/01/95 3.85% $ 5,000,000 VMIG-1 A1+
2,235,000 Vermont State Educational & Health Building Finance Agency
(Middlebury College Project A)
CA - Tokai Bank (b) 05/01/96 4.35 2,235,000 A1+
2,370,000 Vermont State Educational & Health Building Finance Agency
(Middlebury College)
CA - Tokai Bank (b) 11/01/95 4.15 2,370,000 A1+
---------- ----------
9,605,000 Total Put Bonds 9,605,000
---------- ----------
<CAPTION>
Tax Exempt Commercial Paper (15.13%)
-----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
$ 5,000,000 Burke County, GA (Oglethorpe Power Corp.) - Project A
LOC Credit Suisse 07/13/95 4.00% $ 5,000,000 P1 A1+
5,300,000 Burlington, KS PCRB
(Kansas City Power & Light Co.) - Project A
LOC Toronto-Dominion Bank 09/06/95 4.20 5,300,000 P1 A1+
3,000,000 Intermountain Power Agency Variable Rate
Refunding RB - Series 1985 F
SBPA - Industrial Bank of Japan (b) 07/14/95 3.00 3,000,000 VMIG-1 A1
</TABLE>
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See Notes to Financial Statements.
<PAGE>
4
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TAX EXEMPT PROCEEDS FUND, INC.
STATEMENT OF NET ASSETS (CONTINUED)
JUNE 30, 1995
===============================================================================
<TABLE>
<CAPTION>
Ratings (a)
-----------------
Face Maturity Value Standard
Amount Date Yield (Note 1) Moody's & Poors
------ ---- ----- -------- ------- -----
Tax Exempt Commercial Paper (Continued)
-----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
$ 1,650,000 Maricopa County, AZ Pollution Control Corp.
(Southern California Edison) - Series 85B 07/12/95 4.20% $ 1,650,000 P1 A1
3,200,000 Maricopa County, AZ Pollution Control Corp.
(Southern California Edison) - Series 85C 07/06/95 4.00 3,200,000 P1 A1
3,700,000 Maricopa County, AZ Pollution Control Corp.
(Southern California Edison) - Series 85G 07/19/95 4.20 3,700,000 P1 A1+
3,400,000 Rochester, MN Health Care Facility
(Mayo Foundation-Mayo Medical Center) - Series C
SBPA - Credit Suisse (b) 07/10/95 2.60 3,400,000 A1+
7,000,000 Sunshine State Governmental Financing
Commission RB 08/10/95 3.45 7,000,000 VMIG-1
------------ -------------
32,250,000 Total Tax Exempt Commercial Paper 32,250,000
------------ -------------
Total Investments (104.39%) (Cost $222,484,297+) 222,484,297
Liabilities In Excess of Cash and Other Assets (4.39%) ( 9,351,988)
-------------
Net Assets (100.00%), 213,134,490 Shares Outstanding (Note 3) $ 213,132,309
=============
Net Asset Value, offering and redemption price per share $ 1.00
=============
+ Aggregate cost for federal income tax purpose is
identical.
FOOTNOTES:
(a) Unless the variable rate demand instruments are assigned their own ratings,
the ratings are those of the holding company of the bank whose letter of
credit guarantees the issue or the insurance company who insures the issue.
All letters of credit and insurance are irrevocable and direct pay covering
both principal and interest.
(b) Certain issuers have either a line of credit, a liquidity facility, a
standby purchase agreement or some other financing mechanism to ensure the
remarketing of the securities. This is not a guarantee and does not serve
to insure or collateralize the issue.
(c) Interest rates are adjustable on a daily, weekly, or monthly basis. The
rate shown is the rate in effect at the date of this statement.
</TABLE>
<TABLE>
<CAPTION>
KEY:
<S> <C> <C> <C> <C> <C>
CA = Credit Agreement MHRB = Multifamily Housing Revenue Bonds
EDC = Economic Development Corporation PCRB = Pollution Control Revenue Bond
GO = General Obligation RB = Revenue Bond
HFDC = Health Facilities Development Corporation SBPA = Standby Purchase Agreement
IDA = Industrial Development Authority Revenue Bond TAN = Tax Anticipation Note
IDRB = Industrial Development Revenue Bond TRAN = Tax and Revenue Anticipation Note
LOC = Letter of Credit
</TABLE>
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See Notes to Financial Statements.
<PAGE>
5
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TAX EXEMPT PROCEEDS FUND, INC.
STATEMENT OF OPERATIONS
YEAR ENDED JUNE 30, 1995
===============================================================================
<TABLE>
<CAPTION>
INVESTMENT INCOME
<S> <C>
Interest income.......................................................................... $ 5,901,833
Expenses (Note 2)........................................................................ ( 652,164)
-------------
Net investment income.................................................................... 5,249,669
-------------
REALIZED LOSS ON INVESTMENTS
Net realized loss on investments............................................................ ( 221)
-------------
Net increase in net assets from operations.................................................. $ 5,249,448
=============
</TABLE>
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See Notes to Financial Statements.
<PAGE>
6
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TAX EXEMPT PROCEEDS FUND, INC.
STATEMENTS OF CHANGES IN NET ASSETS
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<TABLE>
<CAPTION>
Year Year
Ended Ended
June 30, 1995 June 30, 1994
------------- -------------
INCREASE (DECREASE) IN NET ASSETS
Operations:
<S> <C> <C>
Net investment income......................................... $ 5,249,669 $ 2,817,411
Net realized loss on investments............................. ( 221) ( 1,626)
------------ ------------
Net increase in net assets from operations.................... 5,249,448 2,815,785
Dividends to shareholders from net investment income.............. ( 5,249,669) ( 2,817,411)
Net increase from capital share transactions (Note 3)............. 79,205,497 698,679
------------ ------------
Total increase in net assets.............................. 79,205,276 697,053
Net assets:
Beginning of year............................................. 133,927,033 133,229,980
------------ ------------
End of year................................................... $213,132,309 $133,927,033
============ ============
</TABLE>
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See Notes to Financial Statments.
<PAGE>
7
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TAX EXEMPT PROCEEDS FUND, INC.
NOTES TO FINANCIAL STATEMENTS
===============================================================================
1. Summary of Accounting Policies.
Tax Exempt Proceeds Fund, Inc. is a no-load, diversified, open-end management
investment company registered under the Investment Company Act of 1940. Its
financial statements are prepared in accordance with generally accepted
accounting principles for investment companies as follows: Page 7
a) Valuation of Securities -
Investments are valued at amortized cost. Under this valuation method, a
portfolio instrument is valued at cost and any discount or premium is
amortized on a constant basis to the maturity of the instrument. The
maturity of variable rate demand instruments is deemed to be the longer of
the period required before the Fund is entitled to receive payment of the
principal amount or the period remaining until the next interest rate
adjustment.
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 tax exempt and taxable income, if any, to its shareholders.
Therefore, no provision for federal income tax is required. At June 30,
1995, the Fund had a capital loss carry-forward to $2,181 available to
offset future capital gains expiring through June 30, 2001.
c) Dividends and Distributions -
Dividends from investment income (excluding capital gains and losses, if
any, and amortization of market discount) are declared daily and paid
monthly. Distributions of net capital gains, if any, realized on sales of
investments are made after the close of the Fund's fiscal year, as declared
by the Fund's Board of Directors.
d) General -
Securities transactions are recorded on a trade date basis. Interest income
is accrued as earned. Realized gains and losses from securities
transactions are recorded on the identified cost basis.
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) at the annual rate of
.40 of 1% per annum of the Fund's average daily net assets up to $250 million;
.35 of 1% per annum of the average daily net assets between $250 million and
$500 million; and .30 of 1% per annum of the average daily net assets over $500
million. The Management Contract also provides that the Manager will bear the
cost of, or reimburse the Fund for, all other expenses of the Fund. Therefore,
the fee payable under the Management Contract will be the only expense of the
Fund.
Pursuant to a Distribution Plan adopted under Securities and Exchange Commission
Rule 12b-1, the Fund and the Manager have entered into a Distribution Agreement.
The Fund's Board of Directors has adopted the plan in case certain expenses of
the Fund are deemed to constitute indirect payments by the Fund for distribution
expenses.
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<PAGE>
8
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TAX EXEMPT PROCEEDS FUND, INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
===============================================================================
3. Capital Stock.
At June 30, 1995, 20,000,000,000 shares of $.001 par value stock were authorized
and capital paid in amounted to $213,134,490. Transactions in capital stock, all
at $1.00 per share, were as follows:
<TABLE>
<CAPTION>
Year Year
Ended Ended
June 30, 1995 June 30, 1994
-------------- -------------
<S> <C> <C>
Sold...................................... 577,528,829 407,129,706
Issued on reinvestment of dividends....... 1,823,879 1,261,918
Redeemed.................................. ( 500,147,211) (407,692,945)
----------- -----------
Net increase.............................. 79,205,497 698,679
=========== ===========
</TABLE>
At June 30, 1995, the Fund had an accumulated net realized loss of $2,181.
4. Liabilities.
<TABLE>
<CAPTION>
At June 30, 1995, the Fund had the following liabilities:
<S> <C>
Payables for securities purchased......... $ 10,077,809
Accrued management fee.................... 64,954
Dividends payable......................... 389,350
--------------
Total liabilities..................... 10,532,113
==============
</TABLE>
5. Financial Highlights.
<TABLE>
<CAPTION>
Year Ended June 30,
----------------------------------------------------------------------------
1995 1994 1993 1992 1991
------ ------ ------ ------ ------
Per Share Operating Performance:
(for a share outstanding throughout the period)
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of year $1.00 $1.00 $1.00 $1.00 $1.00
------ ------ ------ ------ ------
Income from investment operations:
Net investment income........ 0.032 0.021 0.022 0.035 0.049
Less distributions:
Dividends from net investment income 0.032 0.021 0.022 0.035 0.049
------ ------ ------ ------ ------
Net asset value, end of year.... $1.00 $1.00 $1.00 $1.00 $1.00
====== ====== ====== ====== ======
Total Return.................... 3.22% 2.14% 2.27% 3.52% 4.97%
Ratios/Supplemental Data
Net assets, end of period (000). $213,134 $133,927 $133,230 $135,123 $127,707
Ratios to average net assets:
Expenses.................... 0.40% 0.40% 0.40% 0.40% 0.40%
Net investment income....... 3.22% 2.13% 2.25% 3.48% 4.85%
</TABLE>
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<PAGE>
9
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TAX EXEMPT PROCEEDS FUND, INC.
REPORT OF INDEPENDENT ACCOUNTANTS
===============================================================================
The Board of Directors and Shareholders
Tax Exempt Proceeds Fund, Inc.
We have audited the accompanying statement of net assets of Tax Exempt Proceeds
Fund, Inc. as of June 30, 1995 and the related statement of operations for the
year then ended, the statement of changes in net assets for each of the two
years in the period then ended and the financial highlights for each of the five
years in the period then ended. These financial statements and financial
highlights are the responsibility of the Fund's management. Our responsibility
is to express an opinion on these financial statements and financial highlights
based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of securities owned as of June
30, 1995 by correspondence with the custodian and brokers. An audit also
includes assessing the accounting principles used and significant estimates made
by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of Tax
Exempt Proceeds Fund, Inc. as of June 30, 1995, the results of its operations
for the year then ended, the changes in its net assets for each of the two years
in the period then ended, and the financial highlights for each of the five
years in the period then ended, in conformity with generally accepted accounting
principles.
/S/ Coopers & Lybrand L.L.P.
New York, New York
July 21, 1995
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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.
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Tax Exempt Proceeds Fund, Inc.
600 Fifth Avenue
New York, New York 10020
Manager
Reich & Tang Asset Management, L.P.
600 Fifth Avenue
New York, New York 10020
Custodian
Investors Fiduciary Trust Company
127 West 10th Street
Kansas City, Missouri 64105
Transfer Agent &
Dividend Disbursing Agent
DST Systems, Inc.
210 West 10th Street
Kansas City, Missouri 64105
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