- -------------------------------------------------------------------------------
TAX EXEMPT
PROCEEDS
FUND, INC.
Annual Report
June 30, 1996
- -------------------------------------------------------------------------------
<PAGE>
- -------------------------------------------------------------------------------
TAX EXEMPT PROCEEDS FUND, INC.
STATEMENT OF NET ASSETS
JUNE 30, 1996
===============================================================================
<TABLE>
<CAPTION>
Ratings (a)
---------------
Face Maturity Standard
Amount Date Yield Value Moody's & Poors
------ ---- ----- ----- ------- -----
Other Tax Exempt Investments (11.83%)
- -----------------------------------------------------------------------------------------------------------------------------------
<C> <C> <C> <C> <C> <C> <C>
$ 4,000,000 Milwaukee County, WI Short-Term School Order Note,
RAN - Series 1995B 08/22/96 3.93% $ 4,002,729 MIG-1 SP-1+
3,000,000 San Bernadino, CA TRAN
LOC Toronto-Dominion/Landes Bank Hessen 06/30/97 3.82 3,018,000 MIG-1 SP-1+
8,000,000 State of Maine GO TAN 06/27/97 3.82 8,047,440 MIG-1 SP-1+
5,000,000 State of Michigan GO Notes 09/30/96 3.01 5,011,610 MIG-1 SP-1+
5,000,000 State of Texas, TRAN
Commercial Paper Notes - Series 1995A 08/30/96 4.01 5,005,365 MIG-1 SP-1+
5,000,000 State of Texas, TRAN
Commercial Paper Notes - Series 1995A 08/30/96 3.99 5,005,522 MIG-1 SP-1+
---------- ----------
30,000,000 Total Other Tax Exempt Investments 30,090,666
---------- ----------
<CAPTION>
Other Variable Rate Demand Instruments (c) (62.16%)
- -----------------------------------------------------------------------------------------------------------------------------------
<C> <C> <C> <C> <C> <C> <C>
$ 4,000,000 Alabama HFA (Windscape Project)
LOC Amsouth Bank N.A. 12/01/03 3.50% $ 4,000,000 VMIG-1
4,200,000 Bexar County, TX HFDC (Air Force Village II) - Series 1985B
LOC Rabobank Nederland 03/01/12 3.30 4,200,000 A1+
1,570,000 Bloomington, IL Normal Airport Authority - Series 1995 A 01/01/13 3.40 1,570,000 VMIG-1
4,000,000 Burke County, GA Development Authority PCRB
(Georgia Power Co.) - Second Series 1995 04/01/25 3.70 4,000,000 P1 A1
3,000,000 Charlotte, NC Airport RB - Series 1993A
MBIA Insured 07/01/16 3.30 3,000,000 VMIG-1 A1
8,500,000 Chicago, IL O'Hare International Airport(American Airlines)-Series A
LOC Westdeutsche Landesbank Girozentrale 12/01/17 3.70 8,500,000 P1
3,650,000 City & County of Denver, CO Refunding MHRB
(Cotton Wood Creek Project)
LOC General Electric Capital Corporation 04/15/14 3.65 3,650,000 A1+
6,000,000 City of Baltimore, MD (HM Investments, Ltd.) - Series 1993
LOC Barclays Bank PLC 02/01/00 3.35 6,000,000 A1+
3,000,000 City of Farmington, NM PCRB Arizona Public Service Co.
Series 1994A
LOC Union Bank of Switzerland 05/01/24 3.60 3,000,000 P1 A1+
2,000,000 Clayton County, GA MHRB (Rainwood Development Project)
LOC Bankers Trust Company 05/01/06 3.57 2,000,000 A1+
2,000,000 Columbia, AL PCRB
(Alabama Power Company Project) - Series A 05/01/22 3.70 2,000,000 VMIG-1 A1
</TABLE>
- -------------------------------------------------------------------------------
See Notes to Financial Statements.
<PAGE>
- -------------------------------------------------------------------------------
TAX EXEMPT PROCEEDS FUND, INC.
STATEMENT OF NET ASSETS (CONTINUED)
JUNE 30, 1996
===============================================================================
<TABLE>
<CAPTION>
Ratings (a)
---------------
Face Maturity Standard
Amount Date Yield Value Moody's & Poors
------ ---- ----- ----- ------- -----
Other Variable Rate Demand Instruments (c) (Continued)
- -----------------------------------------------------------------------------------------------------------------------------------
<C> <C> <C> <C> <C> <C> <C>
$ 6,000,000 Connecticut State Development Authority
(CT Light & Power Co. Project) - Series 1993A
LOC Deutsche Bank A.G. 09/01/28 3.35% $6,000,000 VMIG-1 A1+
3,000,000 Connecticut State Development Authority
(Corporation for Independent Living Project)
LOC Chemical Bank 07/01/15 3.35 3,000,000 VMIG-1
2,000,000 Connecticut State Special Tax Obligation RB
(Second Lien Transportation Infrastructure)
LOC Commerzbank A.G. 12/01/10 3.20 2,000,000 VMIG-1 A1+
2,800,000 County of Franklin, OH Hospital Facilities RB
(Lutheran Senior City, Inc. Project) - Series 1994
LOC National Bank of Detroit 05/01/15 3.45 2,800,000 VMIG-1
7,150,000 DeKalb County, GA Refunding MHRB - Series 1988
(Wood Hills Apartment Project)
LOC Bank of Montreal 12/01/07 3.45 7,150,000 A1+
4,500,000 Geisinger Authority, PA Health System RB
(Geisinger Health System) - Series 1992B 07/01/22 3.60 4,500,000 A1+
1,500,000 Georgetown, KY Educational Institution Improvement
(Georgetown College)
LOC PNC Bank N.A. 06/01/04 3.55 1,500,000 VMIG-1
1,100,000 Greensboro, NC (Greensboro Coliseum) - Series A 12/01/15 3.30 1,100,000 A1+
2,000,000 Harris County, TX HFDC (Methodist Hospital) 12/01/25 3.70 2,000,000 A1+
5,000,000 Harris County, TX Toll Road - Series H
SBPA Morgan Guaranty Trust Co. (b) 08/01/20 3.35 5,000,000 VMIG-1 A1+
2,285,000 Homewood, AL Educational Building Authority
(Samford University)
LOC Amsouth Bank N.A. 12/01/13 3.45 2,285,000 VMIG-1
8,800,000 Idaho Health Facilities Authority (Holy Cross Health System) 12/01/23 3.35 8,800,000 VMIG-1 A1+
3,300,000 Illinois Educational Facilities Authority RB
(Chicago Children's Museum) - Series 1994
LOC National Bank of Detroit 02/01/28 3.35 3,300,000 VMIG-1 A1+
2,000,000 Illinois Health Facilities Authority RB
(Northwestern Memorial Department) - Series 1995 08/15/25 3.65 2,000,000 VMIG-1 A1+
1,000,000 Illinois Health Facilities Authority RB (Resurrection Health Care System)
LOC First National Bank of Chicago/Commerica Bank/
Lasalle National Bank/National Bank of Detroit 05/01/11 3.70 1,000,000 VMIG-1
</TABLE>
- -------------------------------------------------------------------------------
See Notes to Financial Statements.
<PAGE>
- -------------------------------------------------------------------------------
===============================================================================
<TABLE>
<CAPTION>
Ratings (a)
---------------
Face Maturity Standard
Amount Date Yield Value Moody's & Poors
------ ---- ----- ----- ------- -----
Other Variable Rate Demand Instruments (c) (Continued)
- -----------------------------------------------------------------------------------------------------------------------------------
<C> <C> <C> <C> <C> <C> <C>
$ 2,500,000 Indiana Hospital Facilities Authority
(Rehabilitation Hospital of Indiana)
LOC National Bank of Detroit 11/01/20 3.40% $ 2,500,000 VMIG-1
3,100,000 Jacksonville, FL IDRB
(University of Florida Health Science Center) - Series 1989
LOC Barnett Bank of Jacksonville 07/01/19 3.70 3,100,000 VMIG-1
2,500,000 Maryland State IDA RB (Johnson Controls Incorporation) 12/01/03 3.55 2,500,000 VMIG-1 A1
7,250,000 Michigan State Hospital Financial Authority RB
(Chelsea Community Hospital)
LOC Comerica Bank 11/15/19 3.30 7,250,000 VMIG-1
10,800,000 Michigan State Strategic Fund Limited Obligation RB
(Detroit Edison Company Project)
LOC Barclays Bank PLC 09/01/30 3.60 10,800,000 P1 A1+
3,800,000 Michigan State Strategic Fund PCRB
(Consumers Power Company Project) - Series 1993A
LOC Canadian Imperial Bank of Commerce 06/15/10 3.60 3,800,000 A1+
1,200,000 Missouri HEFA RB (Washington University)
SBPA Morgan Guaranty Trust Co. (b) 09/01/09 3.35 1,200,000 VMIG-1 A1+
5,000,000 Monroe County, GA Development Authority PCRB
(Georgia Power Company) - First Series 1995 07/01/25 3.70 5,000,000 P1 A1
4,420,000 Montgomery County, MD
Housing Opportunities Commission MHRB
LOC General Electric Capital Corporation 11/01/07 3.50 4,420,000 A1+
4,630,000 New Hampshire HEFA
RB - Franklin Regional Hospital Association
LOC Bank of Ireland 09/01/05 3.65 4,630,000 VMIG-1
2,200,000 New Hampshire HEFA RB (Alice Peck Day Memorial Hospital)
LOC Corestates Bank, N.A. 11/01/05 3.55 2,200,000 VMIG-1
2,000,000 Pennsylvania Higher Education Facilities Authority
(Carnegie Mellon University) - Series 1995C 11/01/29 3.70 2,000,000 A1+
5,990,000 Pitkin County, CO IDRB (Aspen Skiing Company Project) - Series B
LOC First National Bank of Chicago 04/01/16 3.70 5,990,000 A1
5,000,000 State of Kansas Department of Transportation Highway RB
Series 1994B 09/01/14 3.30 5,000,000 VMIG-1 A1+
3,300,000 Union County, NJ PCFA (Exxon Project) - Series 1994 07/01/33 2.90 3,300,000 P1 A1+
- ----------- -----------
158,045,000 Total Other Variable Rate Demand Instruments 158,045,000
- ----------- -----------
</TABLE>
- -------------------------------------------------------------------------------
See Notes to Financial Statements.
<PAGE>
- -------------------------------------------------------------------------------
TAX EXEMPT PROCEEDS FUND, INC.
STATEMENT OF NET ASSETS (CONTINUED)
JUNE 30, 1996
===============================================================================
<TABLE>
<CAPTION>
Ratings (a)
---------------
Face Maturity Standard
Amount Date Yield Value Moody's & Poors
------ ---- ----- ----- ------- -----
Put Bonds (8.50%)
- -----------------------------------------------------------------------------------------------------------------------------------
<C> <C> <C> <C> <C> <C> <C>
$ 3,000,000 City of Chicago GO - Series 1995A
LOC Morgan Guaranty Trust Company 10/31/96 3.65% $ 3,000,000 VMIG-1 A1+
7,500,000 Connecticut State Special Assessment Unemployment
Compensation Advance Fund RB - Series 1993C
SBPA - FGIC Securities Purchase, Inc. (b) 07/01/97 3.90 7,500,000 VMIG-1 A1+
5,000,000 Intermountain Power Agency RB - Series 1985F
LOC Morgan Guaranty Trust Company 06/16/97 3.93 5,000,000 VMIG-1 A1+
6,105,000 Vermont State Educational & Health Building Finance Agency
(Middlebury College) 11/01/96 3.80 6,105,000 A1+
- ----------- ----------
21,605,000 Total Put Bonds 21,605,000
- ----------- ----------
<CAPTION>
Tax Exempt Commercial Paper (22.05%)
- -----------------------------------------------------------------------------------------------------------------------------------
<C> <C> <C> <C> <C> <C> <C>
$ 5,000,000 Burke County, GA (Oglethorpe Power Corporation) - Series 1992A
LOC Credit Suisse 08/15/96 3.60% $ 5,000,000 P1 A1+
5,000,000 Burke County, GA (Oglethorpe Power Corporation) - Project A
LOC Credit Suisse 08/19/96 3.50 5,000,000 P1 A1+
5,300,000 Burlington, KS PCRB Refunding & Improvement Revenue Bonds
(Kansas City Power and Light Co. Project)
LOC Toronto-Dominion Bank 07/10/96 3.15 5,300,000 A1+
5,000,000 City of New York, NY GO Bonds Fiscal 1996 - Series J-2
LOC Commerzbank A.G. 09/17/96 3.50 5,000,000 VMIG-1 A1+
3,000,000 Intermountain Power Agency Variable Rate
Refunding RB - Series 1985F
LOC Swiss Bank Corp. 10/09/96 3.60 3,000,000 VMIG-1 A1+
10,000,000 Intermountain Power Agency Variable Rate
Revenue & Refunding Bonds, 1985 - Series E
LOC Swiss Bank Corp. 08/06/96 3.60 10,000,000 VMIG-1 A1+
1,650,000 Maricopa County, AZ Pollution Control Coporation
(Southern California Edison) - Series 1985B 07/11/96 3.10 1,650,000 P1 A1
3,500,000 Maricopa County, AZ Pollution Control Coporation
(Southern California Edison ) - Series 1985C 07/16/96 3.40 3,500,000 P1 A1
3,700,000 Maricopa County, AZ Pollution Control Coporation
(Southern California Edison) - Series 1985G 07/18/96 3.40 3,700,000 P1 A1
1,500,000 Mashantucket (Western) Pequot Tribe - Series 1996
LOC Bank of America 09/05/96 3.40 1,500,000 P1 A1+
</TABLE>
- -------------------------------------------------------------------------------
See Notes to Financial Statements.
<PAGE>
- -------------------------------------------------------------------------------
===============================================================================
<TABLE>
<CAPTION>
Ratings (a)
---------------
Face Maturity Standard
Amount Date Yield Value Moody's & Poors
------ ---- ----- ----- ------- -----
Tax Exempt Commercial Paper (Continued)
- ----------------------------------------------------------------------------------------------------------------------------------
<C> <C> <C> <C> <C>
$ 3,400,000 Rochester, MN Health Care Facility
(Mayo Foundation - Mayo Medical Center) - Series 1992C 10/09/96 3.50% $ 3,400,000 P1 A1+
2,000,000 State of Texas, TRAN
Commercial Paper Notes - Series 1995B 08/20/96 3.65 2,000,000 P1 A1+
7,000,000 Sunshine State Government Finance Commission RB - Series 1986
LOC Union Bank of Switzerland / Morgan Guaranty/
National Westminster 07/16/96 3.45 7,000,000 VMIG-1
---------- -----------
56,050,000 Total Tax Exempt Commercial Paper 56,050,000
---------- -----------
Total Investments (104.54%)(Cost $265,790,666+) 265,790,666
Liabilities in Excess of Cash and Other Assets (-4.54%) ( 11,539,469)
-----------
Net Assets (100.00%) 254,253,378 Shares Outstanding (Note 3) $254,251,197
-----------
Net Asset Value, offering and redemption price per share $ 1.00
===========
+ Aggregate cost for federal income tax purposes is identical.
</TABLE>
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>
<CAPTION>
KEY:
<C> <C> <C> <C> <C> <C>
GO = General Obligation MHRB = Multifamily Housing Revenue Bond
HEFA = Health and Education Facilities Authority PCFA = Pollution Control Finance Authority
HFA = Housing Finance Authority PCRB = Pollution Control Revenue Bond
HFDC = Health Facilities Development Corporation RAN = Revenue Anticipation Note
IDA = Industrial Development Authority RB = Revenue Bond
IDRB = Industrial Development Revenue Bond SBPA = Standby Purchase Agreement
LOC = Letter of Credit TAN = Tax Anticipation Note
MBIA = Municipal Bond Insurance Association TRAN = Tax and Revenue Anticipation Note
</TABLE>
- -------------------------------------------------------------------------------
See Notes to Financial Statements.
<PAGE>
- -------------------------------------------------------------------------------
TAX EXEMPT PROCEEDS FUND, INC.
STATEMENT OF OPERATIONS
YEAR ENDED JUNE 30, 1996
===============================================================================
<TABLE>
<CAPTION>
INVESTMENT INCOME
<C> <C>
Interest income............................................................................. $ 8,686,501
Expenses (Note 2)........................................................................... ( 949,618)
------------
Net investment income....................................................................... 7,736,883
============
</TABLE>
<TABLE>
<CAPTION>
REALIZED GAIN (LOSS) ON INVESTMENTS
<C> <C>
Net realized gain (loss) on investments..................................................... -0-
------------
Net increase in net assets from operations.................................................. $ 7,736,883
============
</TABLE>
- -------------------------------------------------------------------------------
See Notes to Financial Statements.
<PAGE>
- -------------------------------------------------------------------------------
TAX EXEMPT PROCEEDS FUND, INC.
STATEMENT OF CHANGES IN NET ASSETS
===============================================================================
<TABLE>
<CAPTION>
Year Year
Ended Ended
June 30, 1996 June 30, 1995
------------- -------------
INCREASE (DECREASE) IN NET ASSETS
<C> <C> <C>
Operations:
Net investment income......................................... $ 7,736,883 $ 5,249,669
Net realized gain (loss) on investments....................... -0- ( 221)
------------- --------------
Net increase in net assets from operations.................... 7,736,883 5,249,448
Dividends to shareholders from net investment income.............. ( 7,736,883) ( 5,249,669)
Net increase from capital share transactions (Note 3)............. 41,118,888 79,205,497
------------- --------------
Total increase in net assets.............................. 41,118,888 79,205,276
Net assets:
Beginning of year............................................. 213,132,309 133,927,033
------------- --------------
End of year................................................... $254,251,197 $213,132,309
============= ==============
</TABLE>
- -------------------------------------------------------------------------------
See Notes to Financial Statements.
<PAGE>
- -------------------------------------------------------------------------------
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. This
Fund is a short term, tax exempt money market fund. Its financial statements are
prepared in accordance with generally accepted accounting principles for
investment companies as follows:
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,
1996, the Fund had a capital loss carryforward of $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) 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.
e) 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.
- -------------------------------------------------------------------------------
<PAGE>
- -------------------------------------------------------------------------------
===============================================================================
2. Investment Management Fees and Other Transactions with Affiliates.
(Continued)
The Manager is a wholly-owned subsidiary of New England Investment Companies,
L.P. ("NEIC"). On August 16, 1995, New England Mutual Life Insurance Company
("The New England"), the owner of NEIC's general partner and a majority owner of
the limited partnership interest in NEIC, entered into an agreement to merge
with Metropolitan Life Insurance Company ("MetLife"), with MetLife to be the
survivor of the merger. The merger is subject to several conditions, including
the required approval, by shareholders of the Fund of a proposed new investment
advisory agreement, intended to take effect at the time of the merger. The new
agreement will be substantially similar to the existing agreement.
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.
3. Capital Stock.
At June 30, 1996, 20,000,000,000 shares of $.001 par value stock were authorized
and capital paid in amounted to $254,253,378. Transactions in capital stock, all
at $1.00 per share, were as follows:
<TABLE>
<CAPTION>
Year Ended Year Ended
June 30, 1996 June 30, 1995
------------- -------------
<S> <C> <C>
Sold.................................... 524,691,635 577,528,829
Issued on reinvestment of dividends..... 2,123,017 1,823,879
Redeemed................................ ( 485,695,764) ( 500,147,211)
------------- -------------
Net increase............................ 41,118,888 79,205,497
============= =============
At June 30, 1996, the Fund had an accumulated net realized loss of $2,181.
</TABLE>
4. Liabilities.
<TABLE>
<CAPTION>
At June 30, 1996, the Fund had the following liabilities:
<C> <C>
Payable for securities purchased........ $ 13,565,440
Accrued management fee.................. 84,830
Dividends payable....................... 435,673
---------------
Total liabilities...................... $ 14,085,943
===============
</TABLE>
- -------------------------------------------------------------------------------
<PAGE>
- -------------------------------------------------------------------------------
TAX EXEMPT PROCEEDS FUND, INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
===============================================================================
5. Financial Highlights.
<TABLE>
<CAPTION>
Year Ended June 30,
---------------------------------------------------------------------
1996 1995 1994 1993 1992
-------- -------- -------- -------- --------
Per Share Operating Performance:
(for a share outstanding throughout the year)
<C> <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................ 0.033 0.032 0.021 0.022 0.035
Less distributions:
Dividends from net investment income. 0.033 0.032 0.021 0.022 0.035
-------- -------- -------- -------- --------
Net asset value, end of year............ $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
======== ======== ======== ======== ========
Total Return............................ 3.31% 3.22% 2.14% 2.27% 3.52%
Ratios/Supplemental Data
Net assets, end of year (000)........... $254,251 $ 213,134 $ 133,927 $133,230 $ 135,123
Ratios to average net assets:
Expenses.............................. 0.40% 0.40% 0.40% 0.40% 0.40%
Net investment income................. 3.26% 3.22% 2.13% 2.25% 3.48%
</TABLE>
- -------------------------------------------------------------------------------
<PAGE>
- -------------------------------------------------------------------------------
TAX EXEMPT PROCEEDS FUND, INC.
REPORT OF INDEPENDENT ACCOUNTANTS
===============================================================================
To The Board of Directors and Shareholders of
Tax Exempt Proceeds Fund, Inc.
We have audited the accompanying statement of net assets of Tax Exempt Proceeds
Fund, Inc. as of June 30, 1996 and the related statement of operations for the
year then ended, the statement of changes in net assets for each of the two
years in the period then ended and the 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, 1996 by correspondence with the custodian and brokers. An audit also
includes assessing the accounting principles used and significant estimates made
by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of Tax
Exempt Proceeds Fund, Inc. as of June 30, 1996, 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 22, 1996
- -------------------------------------------------------------------------------
<PAGE>
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
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.
- -------------------------------------------------------------------------------
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
Reich & Tang Services L.P.
600 Fifth Avenue
New York, New York 10020
- -------------------------------------------------------------------------------
