<PAGE>
- --------------------------------------------------------------------------------
TAX EXEMPT PROCEEDS FUND, INC.
STATEMENT OF NET ASSETS
JUNE 30, 1999
================================================================================
<TABLE>
<CAPTION>
Ratings (a)
-----------------
Face Maturity Value Standard
Amount Date Yield (Note 1) Moody's & Poor's
------ ---- ----- ------ ------- -------
Other Tax Exempt Investments (24.29%)
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
$ 3,000,000 Allegheny County Port Authority 06/30/00 3.23% $ 3,020,850 MIG-1
1,500,000 Georgia State HFA RB (Single Family Mortgage) 10/01/99 3.20 1,500,000 A1+
3,000,000 Iowa School Cash Anticipation (Corp. Warrant)
Insured by Financial Security Assurance 06/23/00 3.24 3,021,862 MIG-1 SP-1+
2,000,000 Indiana Bond Advanced Funding - Series 1999A-2 01/19/00 2.94 2,005,716 MIG-1 SP-1+
3,000,000 Kenosha, WI UFSD TRAN 10/29/99 3.00 3,000,000 MIG-1
3,000,000 Kentucky Assets/Liability Commissions TRAN 06/28/00 3.32 3,025,170 MIG-1 SP-1+
2,000,000 Kentucky Interlocal School Transportation TRAN 06/30/00 3.44 2,009,620 MIG-1 SP-1+
3,000,000 Maryland State Community Development 01/14/00 3.05 3,000,000 MIG-1
3,000,000 Michigan Municipal Bond Authority - Series C
LOC Bank of Nova Scotia 08/27/99 3.53 3,003,026 SP-1+
1,000,000 Michigan Municipal Bond Authority - Notes Series A-1 06/30/00 3.37 1,005,490 SP-1+
1,400,000 Missouri Rural Water Finance Corporation
(Public Project Construction) 11/15/99 3.11 1,406,379 MIG-1
3,000,000 Municipality of Anchorage, AK General Obligation TAN 01/04/00 2.91 3,011,929 MIG-1 SP-1+
2,000,000 Passaic Valley, NJ Water Commission Revenue System Notes - Series A
LOC PNC Bank, N.A. 11/16/99 3.09 2,006,337 P1 A1
10,000,000 Puerto Rico Commonwealth TRAN 07/30/99 2.82 10,005,153 MIG-1 SP-1+
2,107,000 University of Cincinnati General Receipts BAN - Series A 12/21/99 2.99 2,109,223 MIG-1 SP-1+
2,900,000 University of Cincinnati General Receipts BAN - Series A 03/01/00 2.88 2,903,944 MIG-1 SP-1+
------------ --------------
45,907,000 Total Other Tax Exempt Investments 46,034,699
------------ --------------
<CAPTION>
Other Variable Rate Demand Instruments (59.66%)
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
$ 1,470,000 Bloomington, IL Normal Airport Authority - Series 1995A 01/01/13 3.70% $ 1,470,000 VMIG-1
3,800,000 California Independent System (CA State Economic Development)
LOC Bank of America 04/01/08 3.05 3,800,000 VMIG-1 A1+
2,975,000 Capital Realty Investment MHRB COPS
LOC Swiss Bank 12/01/04 3.76 2,975,000 VMIG-1 A1+
3,400,000 Carlton, WI PCRB (Wisconsin Power & Light) 09/01/05 3.45 3,400,000 P1 A1+
3,650,000 City & County of Denver, CO Refunding MHRB
(Cottonwood Creek Project)
LOC General Electric Capital Corporation 04/15/14 3.60 3,650,000 A1+
3,000,000 City of Baltimore, MD (HM Investments, Ltd.) - Series 1993
LOC Toronto-Dominion Bank 02/01/00 3.55 3,000,000 A1+
</TABLE>
- --------------------------------------------------------------------------------
See Notes to Financial Statements.
<PAGE>
- --------------------------------------------------------------------------------
TAX EXEMPT PROCEEDS FUND, INC.
STATEMENT OF NET ASSETS (CONTINUED)
JUNE 30, 1999
================================================================================
<TABLE>
<CAPTION>
Ratings (a)
-----------------
Face Maturity Value Standard
Amount Date Yield (Note 1) Moody's & Poor's
------ ---- ----- ------ ------- -------
Other Variable Rate Demand Instruments (Continued)
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
$ 5,000,000 City of Burlington, KS Power and Light 09/01/15 3.60% $ 5,000,000 VMIG-1 A1
1,200,000 City of Philadelphia, PA
Insured by AMBAC Indemnity Corp. 08/01/27 3.30 1,200,000 VMIG-1 A1+
2,000,000 Columbia, AL Industrial Development Board PCRB
(Alabama Power Company Project) - Series A 11/01/21 3.45 2,000,000 VMIG-1 A1+
4,475,000 Connecticut State Special Tax (Transportation Infrastructure)
LOC Commerzbank, A.G. 12/01/10 3.45 4,475,000 P1 A1+
2,800,000 County of Cuyahoga, OH Hospital RB
(Cleveland Clinic) - Series 1997C 01/01/16 3.50 2,800,000 VMIG-1 A1+
4,900,000 County of Hamilton, OH Hospital Facilities RB - Series 1997B
Insured by MBIA Insurance Corp. 01/01/18 3.35 4,900,000 VMIG-1 A1+
200,000 DeKalb County, GA Development Authority IDRB (Pet Inc. Project)
LOC Credit Suisse First Boston 02/01/04 3.65 200,000 P1
6,900,000 DeKalb County, GA Housing Authority
LOC Bank of Montreal 12/01/07 3.50 6,900,000 A1+
700,000 Delaware County, PA Regional Finance Authority Local Government RB
LOC Credit Suisse First Boston 12/01/18 3.50 700,000 VMIG-1 A1+
100,000 Delta County, MI EDA (Mead Escanaba) - Series D
LOC Credit Suisse First Boston 12/01/23 3.45 100,000 P1
1,200,000 Georgetown, KY Educational Institution Improvement RB
(Georgetown College)
LOC PNC Bank, N.A. 06/01/04 3.65 1,200,000 VMIG-1
2,400,000 Greystone RB Certificate
(Variable Senior Certificates of Beneficial Ownership)
LOC Credit Suisse First Boston 05/01/28 3.78 2,400,000 VMIG-1 A1+
3,600,000 Illinois Development Finance Authority RB (Glenwood School for Boys)
LOC Harris Trust 02/01/33 3.65 3,600,000 A1+
3,300,000 Illinois Educational Facilities Authority
(Chicago Children's Museum) - Series 1994
LOC National Bank of Detroit 02/01/28 3.65 3,300,000 VMIG-1 A1+
1,000,000 Illinois HFA (Resurrection Health Care System) 05/01/11 3.45 1,000,000 VMIG-1
2,400,000 Indiana HEFA (Rehabilitation Hospital of Indiana)
LOC National Bank of Detroit 11/01/20 3.30 2,400,000 VMIG-1
2,100,000 Kansas City, KS (PQ Corporation-Kansas City Project)
LOC Bank of New York 08/01/15 3.55 2,100,000 VMIG-1
2,000,000 Kentucky EDFA (Pooled Hospital Loan Program)
LOC Capital Reinsurance 08/01/18 3.55 2,000,000 A1+
</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 (Continued)
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
$ 695,000 Lancaster, PA Higher Education
LOC Chase Manhattan Bank, N.A. 04/15/27 3.72% $ 695,000 VMIG-1 A-1
2,000,000 Maricopa County, AZ PCRB (Arizona Public Service) - Series 1985C
LOC Bank of America 05/01/29 3.40 2,000,000 P1 A1+
2,500,000 Maryland State IDA Economic Development RB
(Johnson Control Inc.) 12/01/03 4.00 2,500,000 VMIG-1 A2
1,500,000 Michigan Strategic Fund Ltd. (Detroit Edison Co.)
LOC Barclays Bank 09/01/30 3.45 1,500,000 P1 A1+
1,500,000 Michigan Strategic Fund PCRB (Consumer's Power Co. Project)
LOC Canadian Imperial Bank of Commerce 06/15/10 3.45 1,500,000 A1+
2,860,000 Missouri HEFA (Washington University) 09/01/10 3.45 2,860,000 VMIG-1 A1+
4,420,000 Montgomery County, MD Housing Opportunities Commission MHRB
(Oakwood-Gainesburg)
Guaranteed by Freddie Mac 11/01/07 3.50 4,420,000 A1+
1,925,000 New Hampshire HEFA RB (Alice Peck Day Memorial Hospital)
LOC Corestates Bank, N.A. 11/01/05 3.55 1,925,000 VMIG-1
4,000,000 North Carolina Medical Care Commission Pooled - Series 1985
Insured by MBIA Insurance Corp. 12/01/25 3.50 4,000,000 VMIG-1 A1+
3,000,000 North Central Texas Health Facility (Methodist Hospitals of Dallas)
Insured by MBIA Insurance Corp. 10/01/15 3.45 3,000,000 A1+
5,300,000 Ohio Air Quality Development (Series B Cincinnati Gas & Electric)
LOC Morgan Guaranty Trust Company 12/01/15 3.50 5,300,000 A1+
3,000,000 Ohio Air Quality Development Authority
LOC Canadian Imperial Bank of Commerce 09/01/30 3.35 3,000,000 VMIG-1 A1+
1,800,000 Pennsylvania State Turnpike Commission 06/01/28 3.45 1,800,000 VMIG-1 A1+
1,000,000 Raleigh Durham, NC Airport Authority (American Airlines 1995A)
LOC NationsBank/Bank of America 11/01/15 3.45 1,000,000 A1+
900,000 Reading, PA (York County General Authority)
Insured by AMBAC Indemnity Corp. 09/01/26 3.75 900,000 A1+
1,700,000 Roanoke, VA IDA Hospital RB (Carilion Health Systems) 07/01/27 3.60 1,700,000 VMIG-1 A1+
1,100,000 Roanoke, VA IDA Hospital RB (Carilion Health Systems) 07/01/27 3.50 1,100,000 VMIG-1 A1+
1,900,000 Salt Lake City, UT PCRB
(Service Station Holdings - British Petroleum Oil) 02/01/08 3.40 1,900,000 P1 A1+
500,000 University of Michigan Medical Service Plan 12/01/21 3.45 500,000 VMIG-1 A1+
4,000,000 Wake County, NC Industrial Facilities (Carolina Power & Light Co.)
LOC Wachovia Bank, N.A. 05/01/15 3.30 4,000,000 P1 A1+
</TABLE>
- --------------------------------------------------------------------------------
See Notes to Financial Statements.
<PAGE>
- --------------------------------------------------------------------------------
TAX EXEMPT PROCEEDS FUND, INC.
STATEMENT OF NET ASSETS (CONTINUED)
JUNE 30, 1999
================================================================================
<TABLE>
<CAPTION>
Ratings (a)
-----------------
Face Maturity Value Standard
Amount Date Yield (Note 1) Moody's & Poor's
------ ---- ----- ------ ------- -------
Other Variable Rate Demand Instruments (Continued)
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
$ 1,400,000 Wisconsin Health & Educational Facility (Alverno College Project)
LOC Allied Irish Bank 11/01/17 3.65% $ 1,400,000 VMIG-1
1,500,000 York County, PA IDA PCRB (Philadelphia Electric Company)
LOC Toronto-Dominion Bank 08/01/16 3.40 1,500,000 P1 A1+
------------ --------------
113,070,000 Total Other Variable Rate Demand Instruments 113,070,000
------------ --------------
<CAPTION>
Put Bonds (10.37%)
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
$ 7,500,000 Connecticut State Special Assessment Unemployment Compensation
Advance Fund RB - Series 1993C
Insured by FGIC 07/01/99 3.60% $ 7,500,000 VMIG-1 A1+
1,500,000 Intermountain Power Authority Power Supply RB - Series E
Insured by AMBAC Indemnity Corp. 09/15/99 3.10 1,500,000 VMIG-1 A1+
2,000,000 Summit County, OH 06/01/00 3.15 2,010,671 MIG1 SP1+
6,950,000 Vermont State Educational & Health Building Finance Agency
(Middlebury College) 11/01/99 3.10 6,950,000 A1+
1,700,000 Vermont State Educational & Health Building Finance Agency
(Middlebury College) 05/01/00 3.15 1,700,000 A1+
------------ --------------
19,650,000 Total Put Bonds 19,660,671
------------ --------------
<CAPTION>
Tax Exempt Commercial Paper (10.02%)
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
$ 2,000,000 City of Rochester, Minnesota (Mayo Foundation) 09/09/99 3.15% $ 2,000,000 A1+
2,000,000 Illinois HFA RB (Rush-Presbyterian St. Luke's)
LOC Northern Trust 07/01/99 3.15 2,000,000 VMIG-1 A1+
3,000,000 Illinois HFA RB (Rush-Presbyterian St. Luke's)
LOC Northern Trust 02/16/00 3.20 3,000,000 VMIG-1 A1+
5,000,000 Intermountain Power Agency Power Supply RB - Series 1985 F
Insured by AMBAC Indemnity Corp. 07/22/99 3.15 5,000,000 VMIG-1 A1+
2,000,000 Maricopa County, AZ PCRB (Southern California Edison Company) 08/18/99 3.10 2,000,000 P1 A-1
5,000,000 Norfolk, VA Airport Authority
LOC First Union National Bank 03/07/00 3.40 5,000,000 P1 A-1
------------ --------------
19,000,000 Total Tax Exempt Commercial Paper $ 19,000,000
------------ --------------
Total Investments (104.34%) (Cost $197,765,370+) 197,765,370
Liabilities in Excess of Cash and Other Assets (-4.34%) ( 8,229,546)
--------------
Net Assets (100.00%) 189,540,474 Shares Outstanding (Note 3) $ 189,535,824
==============
Net Asset Value, offering and redemption price per share $ 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>
BAN = Bond Anticipation Note IDA = Industrial Development Authority
COPS = Certificate of Participations IDRB = Industrial Development Revenue Bond
EDA = Economic Development Authority LOC = Letter of Credit
EDFA = Economic Development Finance Authority MHRB = Multifamily Housing Revenue Bond
FSA = Financial Security Assurance PCRB = Pollution Control Revenue Bond
FGIC = Financial Guarantee Insurance Company RB = Revenue Bond
HFA = Housing Finance Authority UFSD = Unified School District
HEFA = Health and Education Facilities Authority TAN = Tax Anticipation Note
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, 1999
================================================================================
<TABLE>
<CAPTION>
INVESTMENT INCOME
<S> <C>
Interest income............................................................................. $ 6,364,103
Expenses (Note 2)........................................................................... ( 774,901)
-------------
Net investment income....................................................................... 5,589,202
<CAPTION>
REALIZED GAIN (LOSS) ON INVESTMENTS
<S> <C>
Net realized gain (loss) on investments..................................................... 49
-------------
Net increase in net assets from operations.................................................. $ 5,589,251
=============
</TABLE>
- --------------------------------------------------------------------------------
See Notes to Financial Statements.
<PAGE>
- --------------------------------------------------------------------------------
TAX EXEMPT PROCEEDS FUND, INC.
STATEMENTS OF CHANGES IN NET ASSETS
YEARS ENDED JUNE 30, 1999 AND 1998
================================================================================
<TABLE>
<CAPTION>
Year Year
Ended Ended
June 30, 1999 June 30, 1998
------------- -------------
INCREASE (DECREASE) IN NET ASSETS
<S> <C> <C>
Operations:
Net investment income............................................ $ 5,589,202 $ 6,656,468
Net realized gain (loss) on investments.......................... 49 ( 1,453)
--------------- ---------------
Net increase in net assets from operations....................... 5,589,251 6,655,015
Dividends to shareholders from net investment income................ ( 5,589,202) ( 6,656,468)
Net increase (decrease) from capital share transactions (Note 3) ( 2,480,032) ( 7,032,901)
--------------- ---------------
Total increase (decrease) in net assets...................... ( 2,479,983) ( 7,034,354)
Net assets:
Beginning of year................................................ 192,015,807 199,050,161
--------------- ---------------
End of year...................................................... $ 189,535,824 $ 192,015,807
=============== ===============
</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, 1999, 20,000,000,000 shares of $.001 par value stock were authorized
and paid in capital amounted to $189,540,474. Transactions in capital stock, all
at $1.00 per share, were as follows:
<TABLE>
<CAPTION>
Year Ended Year Ended
June 30, 1999 June 30, 1998
------------- -------------
<S> <C> <C>
Sold...................................... 550,776,547 439,480,605
Issued on reinvestment of dividends....... 1,686,931 2,022,495
Redeemed.................................. ( 554,943,510) ( 448,536,001)
------------- -------------
Net increase (decrease)................... ( 2,480,032) ( 7,032,901)
============= =============
<CAPTION>
4. Liabilities
At June 30, 1999, the Fund had the following liabilities:
<S> <C>
Payables for securities purchases......... $ 9,061,130
Accrued management fee.................... 63,515
Dividends payable......................... 316,217
--------------
Total liabilities....................... $ 9,440,862
==============
</TABLE>
5. Sales of Securities
Accumulated undistributed realized losses at June 30, 1999 amounted to $4,650.
This amount represents tax basis capital losses which may be carried forward to
offset future gains. Such losses expire through June 30, 2007.
- --------------------------------------------------------------------------------
<PAGE>
- --------------------------------------------------------------------------------
TAX EXEMPT PROCEEDS FUND, INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
================================================================================
<TABLE>
<CAPTION>
6. Financial Highlights
Year Ended June 30,
-----------------------------------------------------------------------
1999 1998 1997 1996 1995
--------- --------- --------- --------- ---------
<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................... 0.029 0.033 0.032 0.033 0.032
Less distributions:
Dividends from net investment income ( 0.029) ( 0.033) ( 0.032) ( 0.033) ( 0.032)
--------- --------- --------- --------- ---------
Net asset value, end of year.............. $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
========= ========= ========= ========= =========
Total Return.............................. 2.92% 3.31% 3.23% 3.31% 3.22%
Ratios/Supplemental Data
Net assets, end of year (000)............. $ 189,536 $ 192,016 $ 199,050 $ 254,251 $ 213,134
Ratios to average net assets:
Expenses................................ 0.40% 0.40% 0.40% 0.40% 0.40%
Net investment income................... 2.89% 3.26% 3.18% 3.26% 3.22%
</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, 1999 and the related statement of operations for the
year then ended and the statements of changes in net assets and the financial
highlights for each of the two 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. 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 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, 1999 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, 1999, the results of its operations,
the changes in its net assets and the financial highlights for the periods
indicated in conformity with generally accepted accounting principles.
\s\McGladrey & Pullen, LLP
New York, New York
July 23, 1999
- --------------------------------------------------------------------------------
<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, Inc.
600 Fifth Avenue
New York, New York 10020
TEPA699
- --------------------------------------------------------------------------------
<PAGE>
- --------------------------------------------------------------------------------
TAX EXEMPT
PROCEEDS
FUND, INC.
Annual Report
June 30, 1999
- --------------------------------------------------------------------------------
<PAGE>
