<PAGE>
- --------------------------------------------------------------------------------
TAX EXEMPT PROCEEDS FUND, INC.
STATEMENT OF NET ASSETS
JUNE 30, 1998
================================================================================
<TABLE>
<CAPTION>
Ratings (a)
-----------------
Face Maturity Value Standard
Amount Date Yield (Note 1) Moody's & Poor's
------ ---- ----- ------ ------- -------
Other Tax Exempt Investments (18.99%)
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
$ 1,500,000 Alleghany County, PA (South Hills Health System)
LOC PNC Bank 03/31/99 3.67% $ 1,505,419 VMIG-1
4,300,000 City of Philadelphia, PA TRAN - Series A 06/30/99 3.59 4,325,413 MIG-1 SP-1+
2,500,000 County of Essex, NJ BAN 08/07/98 3.89 2,500,755 MIG-1
1,570,000 Cumberland County, PA (United Methodist Homes)
LOC PNC Bank 06/01/99 3.75 1,570,000 VMIG-1
2,500,000 District of Columbia, GO TRAN
LOC Morgan Guaranty/Union Bank of Switzerland 09/30/98 3.82 2,503,775 VMIG-1 SP-1+
2,200,000 Iowa School Cash Anticipation Program (IA School Corp. Warrant Cert.)
FSA Insured 01/28/99 3.50 2,208,597 MIG-1 SP-1+
3,000,000 Kentucky Asset/Liability (General Fund TRAN) 06/25/99 3.52 3,026,490 MIG-1 SP-1+
4,100,000 Michigan Municipal Bond Authority - Series B 07/02/98 3.51 4,100,102 SP-1+
1,000,000 Michigan Municipal Bond Authority - Series C 09/18/98 3.73 1,001,269 SP-1+
5,000,000 Multnomah County, OR School District 06/30/99 3.60 5,028,866 MIG-1 SP-1+
3,256,000 Ohio School District Cash Flow COPS - Series 1998 12/31/98 3.52 3,265,063 VMIG-1
2,500,000 Temple University of the Commonwealth Systems
(Higher Education Funding Obligation) 05/14/99 3.70 2,515,676 SP-1+
2,900,000 University of Cincinnati General Receipts BAN - Series A 03/01/99 3.52 2,904,284 MIG-1 SP-1+
- ------------ -------------
36,326,000 Total Other Tax Exempt Investments 36,455,709
- ------------ -------------
<CAPTION>
Other Variable Rate Demand Instruments (b) (62.06%)
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
$ 3,735,000 Alabama HFA (Windscape Project)
LOC Amsouth Bank N.A. 12/01/03 3.70% $ 3,735,000 VMIG-1
4,500,000 Angelina & Neches River Authority, TX
LOC Credit Suisse First Boston 05/01/14 3.80 4,500,000 P1
1,570,000 Bloomington Normal Airport Authority - Series 1995A 01/01/13 3.55 1,570,000 VMIG-1
3,700,000 Burke County, GA PCRB (Georgia Power Company Plant) 07/01/24 3.90 3,700,000 P1 A1
3,650,000 City & County of Denver, CO Refunding MHRB
(Cottonwood Creek Project)
LOC General Electric Capital Corporation 04/15/14 3.50 3,650,000 A1+
6,000,000 City of Baltimore, MD (HM Investments, Ltd.) - Series 1993
LOC Toronto-Dominion Bank 02/01/00 3.60 6,000,000 A1+
1,700,000 City of Tempe, AZ - Series 1998 07/01/23 3.85 1,700,000 VMIG-1 A1+
2,000,000 Columbia, AL Industrial Development Board PCRB
(Alabama Power Co. Project) - Series A 11/01/21 3.90 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, 1998
================================================================================
<TABLE>
<CAPTION>
Ratings (a)
-----------------
Face Maturity Value Standard
Amount Date Yield (Note 1) Moody's & Poor's
------ ---- ----- ------ ------- -------
Other Variable Rate Demand Instruments (b) (Continued)
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
$ 4,000,000 Connecticut State Development Authority
(CT Light & Power Company Project) - Series 1993A
LOC Deutsche Bank A.G. 09/01/28 3.50% $ 4,000,000 VMIG-1 A1+
4,945,000 Connecticut State Special Tax Obligation RB
(Second Lien Transportation Infrastructure)
LOC Commerzbank A.G. 12/01/10 3.50 4,945,000 P1 A1+
3,000,000 County of Cuyahoga - Series 1997C (Cleveland Clinic) 01/01/16 3.55 3,000,000 VMIG-1 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 3.55 2,800,000 VMIG-1
4,700,000 County of Hamilton, OH Adjustable Rate Hospital Facilities RB - 1997B
MBIA Insured 01/01/18 3.55 4,700,000 VMIG-1 A1+
1,300,000 Delaware County, PA IDA PCRB (Philadelphia Electric Co.)
LOC Toronto-Dominion Bank 08/01/16 3.75 1,300,000 P1 A1+
7,150,000 DeKalb County, GA Refunding MHRB - Series 1988
(Wood Hills Apartment Project)
LOC Bank of Montreal 12/01/07 3.60 7,150,000 A1+
2,000,000 Erie County Hospital Authority
(Hamot Health Foundation) - Series 1998 05/15/20 3.90 2,000,000 VMIG-1
1,300,000 Georgetown, KY Educational Institution Improvement RB
(Georgetown College)
LOC PNC Bank, N.A. 06/01/04 3.60 1,300,000 VMIG-1
5,300,000 Harris County, TX Health Facilities Hospital RB
(Memorial Hospital Systems)
MBIA Insured 06/01/24 3.40 5,300,000 VMIG-1 A1+
8,800,000 Idaho HEFA (Holy Cross Health System) 12/01/23 3.75 8,800,000 VMIG-1 A1+
3,300,000 Illinois Educational Facilities Authority
(Chicago Children's Museum) - Series 1994
LOC National Bank of Detroit 02/01/28 3.50 3,300,000 VMIG-1 A1+
5,000,000 Illinois HEFA (Northwestern Memorial Hospital) 08/15/25 3.80 5,000,000 VMIG-1 A1+
2,400,000 Indiana HEFA (Rehabilitation Hospital of Indiana)
LOC National Bank of Detroit 11/01/20 3.50 2,400,000 VMIG-1
2,500,000 Maryland State IDA Economic Development RB
(Johnson Control Incorporation) 12/01/03 3.70 2,500,000 VMIG-1
6,650,000 Michigan State Hospital Financial Authority Revenue
(Chelsea Community Hospital)
LOC Comerica Bank 11/15/19 3.50 6,650,000 VMIG-1
</TABLE>
- --------------------------------------------------------------------------------
See Notes to Financial Statements.
<PAGE>
- --------------------------------------------------------------------------------
================================================================================
<TABLE>
<CAPTION>
Ratings (a)
-----------------
Face Maturity Value Standard
Amount Date Yield (Note 1) Moody's & Poor's
------ ---- ----- ------ ------- -------
Other Variable Rate Demand Instruments (b) (Continued)
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
$ 1,200,000 Michigan Strategic Fund Limited Obligation
(Detroit Edison Co.) - Series CC
LOC Barclays Bank 09/01/30 3.80% $ 1,200,000 P1 A1+
3,060,000 Missouri Health & Educational Facilities (Washington University) 09/01/10 3.50 3,060,000 VMIG-1 A1+
4,420,000 Montgomery County, MD Housing Opportunities Commission MHRB
LOC General Electric Capital Corporation 11/01/07 3.70 4,420,000 A1+
3,920,000 New Hampshire Education & Health Facility Hospital RB - Series 1995
LOC Bank of Scotland 09/01/05 3.80 3,920,000 VMIG-1
2,075,000 New Hampshire HEFA RB (Alice Peck Day Memorial Hospital)
LOC Corestates Bank, N.A. 11/01/05 3.50 2,075,000 VMIG-1
3,000,000 New Jersey EDA Series 1998
(Foreign Trade Zone Venture)
LOC Morgan Guaranty Trust Company 12/01/07 3.50 3,000,000 A1+
3,300,000 North Carolina Educational Facilities
(Duke University) - Series 1991 B 12/01/21 3.45 3,300,000 VMIG-1 A1+
1,500,000 North Carolina Medcare Commission Hospital RB
(Pooled Equipment Financing Program)
MBIA Insured 12/01/25 3.25 1,500,000 VMIG-1 A1+
1,100,000 Pitkin County, CO IDRB (Aspen Skiing Company Project)
LOC First National Bank of Chicago 04/01/16 3.80 1,100,000 A1+
900,000 Reading, PA (York County General Authority)
AMBAC Insured 09/01/26 3.60 900,000 A1+
1,700,000 Roanoke, VA IDA Hospital RB (Carilion Health Systems) 07/01/27 4.00 1,700,000 VMIG-1 A1+
1,000,000 York County, PA IDA PCRB (Philadelphia Electric Company)
LOC Toronto-Dominion Bank 08/01/16 3.75 1,000,000 P1 A1+
- ------------ -------------
119,175,000 Total Other Variable Rate Demand Instruments 119,175,000
- ------------ -------------
<CAPTION>
Put Bonds (8.70%)
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
$ 1,200,000 City of Philadelphia, PA Water & Waste Bonds
AMBAC Insured 08/05/98 3.82% $ 1,200,000 VMIG-1 A1+
7,500,000 Connecticut State Special Assessment Unemployment
Compensation Advance Fund RB - Series 1993C
FGIC Insured 07/01/98 3.90 7,500,000 VMIG-1 A1+
2,000,000 Intermountain Power Authority Power Supply RB - Series E
AMBAC Insured 09/15/98 3.45 2,000,000 VMIG-1 A1+
6,010,000 Vermont State Educational & Health Building Finance Agency
(Middlebury College) 11/01/98 3.80 6,010,000 A1+
- ------------ -------------
16,710,000 Total Put Bonds 16,710,000
- ------------ -------------
</TABLE>
- --------------------------------------------------------------------------------
See Notes to Financial Statements.
<PAGE>
- --------------------------------------------------------------------------------
TAX EXEMPT PROCEEDS FUND, INC.
STATEMENT OF NET ASSETS (CONTINUED)
JUNE 30, 1998
================================================================================
<TABLE>
<CAPTION>
Ratings (a)
-----------------
Face Maturity Value Standard
Amount Date Yield (Note 1) Moody's & Poor's
------ ---- ----- ------ ------- -------
Tax Exempt Commercial Paper (15.94%)
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
$ 2,000,000 Development Authority of Burke County GA
(Ogelthorpe Power) - Series 1998B
AMBAC Insured 07/06/98 3.40% $ 2,000,000 MIG1 A1+
5,300,000 City of Burlington, KS PCRB
(Kansas City Light & Power Company) - Series 1987A
LOC Toronto-Dominion Bank 07/23/98 3.45 5,300,000 A1+
2,800,000 City of Burlington, KS PCRB
(Kansas City Power & Light Company) - Series B
LOC Deutsche Bank A.G. 07/22/98 3.75 2,800,000 P1 A1+
2,000,000 State of Connecticut Special Assessment
LOC Credit Agriole/Credit Belique 09/09/98 3.50 2,000,000 P1 A1+
10,000,000 Intermountain Power Agency Power Supply RB - Series 1985 F
AMBAC Insured 09/10/98 3.45 10,000,000 VMIG-1 A1+
3,100,000 Intermountain Power Agency Power Supply RB - Series 1985 F
AMBAC Insured 08/19/98 3.60 3,100,000 VMIG-1 A1+
2,000,000 Maricopa County, AZ Pollution Control Corp.
(Southern Cal. Edison Co.) 07/23/98 3.70 2,000,000 P1 A1
3,400,000 Rochester, MN Health Care Mayo Foundation
(Mayo Med Center) - Series C 07/20/98 3.50 3,400,000 P1 A1+
- ------------ -------------
30,600,000 Total Tax Exempt Commercial Paper 30,600,000
- ------------ -------------
Total Investments (105.69%) (Cost $202,940,709+) 202,940,709
Liabilities in Excess of Cash and Other Assets (-5.69%) ( 10,924,902)
-------------
Net Assets (100.00%) 192,020,506 Shares Outstanding (Note 3) $ 192,015,807
=============
Net Assets Value, offering and redemption price per shares $ 1.00
=============
+ Aggregate cost for Federal income tax purposes is identical.
</TABLE>
- --------------------------------------------------------------------------------
See Notes to Financial Statements.
<PAGE>
- --------------------------------------------------------------------------------
================================================================================
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. 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.
(b) 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:
<S> <C> <C> <C> <C> <C>
AMBAC = American Municipal Bond Assurance IDA = Industrial Development Authority
BAN = Bond Anticipation Note IDRB = Industrial Development Revenue Bond
COPS = Certificates of Participations LOC = Letter of Credit
EDA = Economic Development Authority MBIA = Municipal Bond Insurance Association
FSA = Financial Securities Assurance MHRB = Multifamily Housing Revenue Bond
FGIC = Financial Guaranteed Insurance Company PCRB = Pollution Control Revenue Bond
GO = General Obligation RAN = Revenue Anticipation Note
HFA = Housing Finance Authority RB = Revenue Bond
HEFA = Health and Education Facilities Authority 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, 1998
================================================================================
<TABLE>
<CAPTION>
INVESTMENT INCOME
<S> <C>
Interest income.......................................................... $ 7,473,708
Expenses (Note 2)........................................................ ( 817,240)
-------------
Net investment income.................................................... 6,656,468
REALIZED GAIN (LOSS) ON INVESTMENTS
Net realized gain (loss) on investments.................................. ( 1,453)
-------------
Net increase in net assets from operations............................... $ 6,655,015
=============
</TABLE>
- --------------------------------------------------------------------------------
See Notes to Financial Statements.
<PAGE>
- --------------------------------------------------------------------------------
TAX EXEMPT PROCEEDS FUND, INC.
STATEMENTS OF CHANGES IN NET ASSETS
================================================================================
<TABLE>
<CAPTION>
Year Year
Ended Ended
June 30, 1998 June 30, 1997
--------------- ---------------
INCREASE (DECREASE) IN NET ASSETS
<S> <C> <C>
Operations:
Net investment income............................................ $ 6,656,468 $ 7,275,840
Net realized gain (loss) on investments.......................... ( 1,453) ( 1,065)
-------------- --------------
Net increase in net assets from operations....................... 6,655,015 7,274,775
Dividends to shareholders from net investment income................ ( 6,656,468) ( 7,275,840)
Net increase (decrease) from capital share transactions (Note 3) ( 7,032,901) ( 55,199,971)
-------------- --------------
Total increase (decrease) in net assets...................... ( 7,034,354) ( 55,201,036)
Net assets:
Beginning of year................................................ 199,050,161 254,251,197
-------------- --------------
End of year...................................................... $ 192,015,807 $ 199,050,161
============== ==============
</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.
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 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)
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, 1998, 20,000,000,000 shares of $.001 par value stock were authorized
and paid in capital amounted to $192,020,506. Transactions in capital stock, all
at $1.00 per share, were as follows:
<TABLE>
<CAPTION>
Year Ended Year Ended
June 30, 1998 June 30, 1997
------------- -------------
<S> <C> <C>
Sold...................................... 439,480,605 395,065,691
Issued on reinvestment of dividends....... 2,022,495 2,142,906
Redeemed.................................. ( 448,536,001) ( 452,408,568)
------------- -------------
Net increase (decrease)................... ( 7,032,901) ( 55,199,971)
============= =============
4. Liabilities
At June 30, 1998, the Fund had the following liabilities:
Payables for securities purchases......... $ 12,380,769
Accrued management fee.................... 63,836
Dividends payable......................... 348,186
-------------
Total liabilities....................... $ 12,792,791
=============
</TABLE>
5. Sales of Securities.
Accumulated undistributed realized losses at June 30, 1998 amounted to $4,699.
This amount represents tax basis capital losses which may be carried forward to
offset future gains. Such losses expire on June 30, 2006.
- --------------------------------------------------------------------------------
<PAGE>
- --------------------------------------------------------------------------------
TAX EXEMPT PROCEEDS FUND, INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
================================================================================
6. Financial Highlights
<TABLE>
<CAPTION>
Year Ended June 30,
--------------------------------------------------------------------
1998 1997 1996 1995 1994
-------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
Per Share Operating Performance:
(for a share outstanding throughout the year)
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 0.033 0.032 0.021
Less distributions:
Dividends from net investment income.... 0.033 0.032 0.033 0.032 0.021
-------- -------- -------- -------- --------
Net asset value, end of year.............. $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
======== ======== ======== ======== ========
Total Return.............................. 3.31% 3.23% 3.31% 3.22% 2.14%
Ratios/Supplemental Data
Net assets, end of year (000)............. $192,016 $199,050 $254,251 $213,134 $133,927
Ratios to average net assets:
Expenses................................ 0.40% 0.40% 0.40% 0.40% 0.40%
Net investment income................... 3.26% 3.18% 3.26% 3.22% 2.13%
</TABLE>
- --------------------------------------------------------------------------------
<PAGE>
- --------------------------------------------------------------------------------
TAX EXEMPT PROCEEDS FUND, INC.
INDEPENDENT AUDITOR'S REPORT
================================================================================
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, 1998 and the related statement of operations,
statement of changes in net assets and the financial highlights for the year
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
audit. The statement of changes in net assets for the year ended June 30, 1997,
and the financial highlights for all years prior to July 1, 1997, were audited
by other auditors whose report, dated July 31, 1997, expressed an unqualified
opinion on those statements.
We conducted our audit 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, 1998 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 audit provides 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, 1998, the results of its operations,
the changes in its net assets and the financial highlights for the year then
ended in conformity with generally accepted accounting principles.
[GRAPHIC OMITTED]
New York, New York
July 23, 1998
- --------------------------------------------------------------------------------
<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
801 Pennsylvania
Kansas City, Missouri 64105
Transfer Agent &
Dividend Disbursing Agent
Reich & Tang Services L.P.
600 Fifth Avenue
New York, New York 10020
- --------------------------------------------------------------------------------
<PAGE>
- --------------------------------------------------------------------------------
TAX EXEMPT
PROCEEDS
FUND, INC.
Annual Report
June 30, 1998
- --------------------------------------------------------------------------------
<PAGE>
