N-Q

As filed with the Securities and Exchange Commission on May 27, 2011

Investment Company Act File Number 811-5698

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM N-Q

QUARTERLY SCHEDULE OF PORTFOLIO HOLDINGS OF

REGISTERED MANAGEMENT INVESTMENT COMPANY

Tax Exempt Proceeds Fund, Inc.

 (Exact name of registrant as specified in charter)

1411 Broadway

New York, NY  10018

(Address of principal executive offices)           (Zip code)

Christine Manna

c/o Reich & Tang Asset Management, LLC

1411 Broadway

New York, New York 10018

(Name and address of agent for service)

Registrant's telephone number, including area code:  212-830-5200

Date of fiscal year end: June 30

Date of reporting period: March 31, 2011

Item 1: Schedule of Investments

	TAX EXEMPT PROCEED FUND, INC.
	STATEMENT OF NET ASSETS
	MARCH 31, 2011
	(UNAUDITED)
									Rating (a)
				Maturity	Interest			Value		Standard
	Face Amount			Date	Rate			(Note 2)	Moody's	& Poor's
TAX EXEMPT COMMERCIAL PAPER  (4.53%)
$	4,000,000		Long Island Power Authority, NY     LOC State Street Bank & Trust Company	06/08/11	0.30	%	$	4,000,000	P-1	A-1+
	4,000,000		Total Tax Exempt Commercial Paper					4,000,000
TAX EXEMPT GENERAL OBLIGATION NOTES AND BONDS (7.38%)
$	2,250,000		Deerfield Township, OH Various Purpose Park Acquisition BAN – Series 2010	11/08/11	0.65	%	$	2,261,502	MIG-1
	1,125,000		Town of Andover, MA GO BAN	02/24/12	0.60			1,131,549		SP-1+
	1,151,680		Town of Northborough, MA GO BAN	04/27/12	0.70			1,160,778	MIG-1
	1,950,000		Town of South Windsor, CT GO BAN, Issue of 2011	02/21/12	0.60			1,961,247	MIG-1	SP-1+
	6,476,680		Total Tax Exempt General Obligation Notes and Bonds					6,515,076
TAX EXEMPT VARIABLE RATE DEMAND INSTRUMENTS (b)(92.05%)
$	3,000,000		City of Cohasset, MN RB (Minnesota Power & Light Company Project) – Series 1997A LOC LaSalle National Bank N.A.	06/01/20	0.26	%	$	3,000,000		A-1+
	3,750,000		City of New York Fiscal 2004 Series H-4   LOC Bank of New York Mellon	03/01/34	0.19			3,750,000	VMIG-1	A-1+
	1,400,000		City of Newport, KY Kentucky League of Cities Funding Trust Lease Program RB – Series 2002 LOC US Bank, N. A.	04/01/32	0.26			1,400,000	VMIG-1
	2,000,000		City of Santa Clara, CA Subordinated Electric Revenue Bonds  – Series 2008B  LOC Dexia CLF	07/01/27	0.25			2,000,000		A-1
	2,800,000		Colorado Health Facilities Authority HRB (Boulder Community Hospital Project) – Series 2000 LOC JPMorgan Chase Bank, N.A.	10/01/30	0.24			2,800,000	VMIG-1	A-1+
	5,000,000		Columbus, OH Regional Airport Authority Capital Funding RB (Oasbo Expanded Asset Pooled Financing Program) – Series 2006 LOC U.S. Bank N.A.	12/01/36	0.25			5,000,000	VMIG-1
	1,745,000		Connecticut State Development Authority RB (Pierce Memorial Baptist Home, Inc. Project 1999 Refunding Series) LOC LaSalle National Bank N.A.	10/01/28	0.22			1,745,000		A-1+
	4,000,000		Dormitory Authority of the State of New York Blythedale Childrens HRB Series 2009 LOC TD Bank, N.A.	12/01/36	0.25			4,000,000	VMIG-1
	3,000,000		East Baton Rouge Parish, LA PCRB (Exxon Mobile Project)	11/01/19	0.16			3,000,000	P-1	A-1+
	2,000,000		Florida Housing Finance Corporation Multifamily Housing Revenue Refunding Bonds (Charleston Landing Apartments) 2001 Series I-A Guaranteed by Federal Home Loan Mortgage Corporation	07/01/31	0.24			2,000,000		A-1+
	2,250,000		Florida Housing Finance Corporation Multifamily Housing Revenue Refunding Bonds (Island Club Apartments) 2001 Series J-A Guaranteed by Federal Home Loan Mortgage Corporation	07/01/31	0.24			2,250,000		A-1+
	1,425,000		HEFA of the State of Missouri RB Educational Facilities RB (Ranken Technical College) – Series 2007 LOC Northern Trust Company	11/15/31	0.23			1,425,000		A-1+
	3,400,000		Illinois Development Finance Authority RB (Glenwood School For Boys) – Series 1998 LOC Harris Trust & Savings Bank	02/01/33	0.25			3,400,000		A-1+
	2,150,000		Illinois Finance Authority RB (Riverside Health System) - Series 2004 LOC JPMorgan Chase Bank, N.A.	11/15/29	0.24			2,150,000	VMIG-1	A-1+
	2,800,000		Iowa Higher Education Loan Authority Private College Facility RB (University of Dubuque Project) – Series 2007 LOC Northern Trust Company	04/01/35	0.23			2,800,000		A-1+
	1,200,000		Irvine Ranch Water District Consolidate Series 1995 GO of Improvement District Nos. 105, 140, 240, and 250  LOC State Street Bank & Trust Company	01/01/21	0.17			1,200,000	VMIG-1	A-1+
	2,000,000		Jackson County, MS Port Facility Refunding RB (Chevron U.S.A. Inc. Project) – Series 1993	06/01/23	0.19			2,000,000	P-1
	1,100,000		Long Island Power Authority, NY (Electric System) - Series 1B LOC State Street Bank & Trust Company	05/01/33	0.18			1,100,000	VMIG-1	A-1+
	2,000,000		Marion County, FL IDA Multifamily Housing Revenue Refunding Bonds (Chambrel at Pinecastle Project) – Series 2002 Guaranteed by Federal National Mortgage Association	11/15/32	0.25			2,000,000		A-1+
	6,000,000		Maryland Health and Higher Educational Facilities Authority RB (University of Maryland Medical System Issue) – Series 2007A LOC Wachovia Bank, N.A.	07/01/34	0.22			6,000,000	VMIG-1	A-1+
	645,000		New Canaan, CT Housing Authority RB (The Village at Waveny Care Center Project) – Series 2002 LOC Bank of America, N.A.	01/01/22	0.25			645,000		A-1+
	1,800,000		New Jersey Health Care Facilities Financing Authority RB (Saint Barnabas Health Care System Issue) – Series 2001A LOC JP Morgan Chase Bank, N.A.	07/01/31	0.22			1,800,000	VMIG-1	A-1+
	900,000		New Ulm, MN Hospital Refunding RB (Health Central Systems Project) – Series 1985 LOC Wells Fargo Bank, N.A.	08/01/14	0.29			900,000		A-1+
	1,600,000		New York City, NY GO Bonds Fiscal 2004 Sub-Series H-7 LOC KBC Bank, N.A.	03/01/34	0.20			1,600,000	VMIG-1	A-1
	1,000,000		New York City, NY Series 1994 A-5   LOC KBC Bank, N.A.	08/01/16	0.21			1,000,000	VMIG-1	A-1+
	2,000,000		New York State HFA RB  (Historic Front Street Housing RB) – Series 2003A LOC Landesbank Hessen Thuringen Girozentrale	11/01/36	0.23			2,000,000	VMIG-1
	1,000,000		Sarasota county, FL Continuing Care Retirement Community Revenue Refunding Bonds (The Glenridge on Palmer Ranch, Inc. Project) – Series 2006 LOC Bank of Scotland	06/01/36	0.23			1,000,000	VMIG-1
	1,400,000		State of California (Kindergarten University Public Education Facilities RB), CA – Series 2004-B3 LOC Citibank, N.A.	05/01/34	0.16			1,400,000	VMIG-1	A-1+
	3,500,000		State of Connecticut HEFA RB (Yale University Issue) – Series V-2	07/01/36	0.15			3,500,000	VMIG-1	A-1+
	150,000		State of Connecticut HEFA RB (Charlotte Hungerford Hospital Issue) – Series 1998C LOC Bank of America, N.A.	07/01/13	0.26			150,000	VMIG-1
	1,000,000		State of Connecticut HEFA RB (Yale-New Haven Hospital Issue) – Series K-2 LOC JPMorgan Chase Bank, N.A.	07/01/25	0.21			1,000,000	VMIG-1	A-1+
	300,000		State of Connecticut HEFA RB Mulberry Gardens Issue, Series E LOC Bank of America, N.A.	07/01/36	0.26			300,000		A-1+
	4,000,000		The City of New York GO Fiscal 2004 Subseries A-3  LOC BNP Paribas	08/01/31	0.22			4,000,000	VMIG-1	A-1+
	5,000,000		The City of New York, NY GO Bonds Fiscal 2006 Sub-Series H-2 LOC Dexia CLF	01/01/36	0.27			5,000,000	VMIG-1	A-1+
	1,000,000		The City of New York, NY GO Bonds Fiscal 2008 Sub-Series J-8 LOC Landesbank Baden – Wurttemberg	08/01/21	0.28			1,000,000	VMIG-1	A-1
	1,000,000		Triborough Bridge and Tunnel Authority RB (MTA Bridges and Tunnels) - Series 2001B  LOC State Street Bank & Trust Company	01/01/32	0.20			1,000,000	VMIG-1	A-1+
	2,000,000		Turlock Irrigation District, CA COP (Capital Improvements and Refunding Project) 2001 Series A  LOC Societe Generale	01/01/31	0.20			2,000,000		A-1+
	81,315,000		Total Tax Exempt Variable Rate Demand Instruments					81,315,000
			Total Investments (103.96%)
			(Cost $91,830,076 †)				$	91,830,076
			Liabilities in Excess of Cash and Other Assets (-3.96%)					(3,497,127)
			Net Assets (100.00%) 88,334,952 shares outstanding				$	88,332,949
			†  Aggregate cost for federal income tax purposes is identical.  All securities are valued at amortized cost and as a result, there is no unrealized appreciation and depreciation.
	FOOTNOTES:
	(a)		Unless the securities are assigned their own ratings, the ratings are those of the bank whose letter of credit guarantees the issue. All letters of credit are irrevocable and direct pay covering both principal and interest. In addition, certain issuers may 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)		Securities payable on demand at par including accrued interest (usually with one or seven days notice) and where indicated are unconditionally secured as to principal and interest by a bank letter of credit. The interest rates are adjustable and are based on bank prime rates or other interest rate adjustment indices. The rate shown is the rate in effect at the date of this statement.
	KEY:
	BAN	=	Bond Anticipation Note
	COP	=	Certificate of Participation
	GO	=	General Obligation
	HEFA	=	Health and Educational Facilities Authority
	HFA	=	Housing Finance Authority
	HRB	=	Hospital Revenue Bond
	IDA	=	Industrial Development Authority
	LOC	=	Letter of Credit
	MTA	=	Metropolitan Transportation Authority
	PCRB	=	Pollution Control Revenue Bond
	RB	=	Revenue Bond
Note 1 - Valuation of Securities
			Investments are valued at amortized cost, which approximates market value.  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.
			Under the provisions of GAAP, fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date under current market conditions.  GAAP establishes a hierarchy that prioritizes the inputs to valuation methods giving the highest priority to readily available unadjusted quotes prices in an active market for identical assets (Level 1) and the lowest priority to significant unobservable inputs (Level 3) generally when market prices are not readily available or are unreliable.  Based on the valuation inputs, the securities or other investments are tiered into one of three levels.  Changes in valuation methods may result in transfers in or out of an investment’s assigned level:
			Level 1 –  prices are determined using quoted prices in an active market for identical assets.
			Level 2 – prices are determined using other significant observable inputs.  Observable inputs are inputs that the other market participants may use in pricing a security.  These may include quoted prices for similar securities, interest rates, prepayment speeds, credit risk and others.
			Level 3 – prices are determined using significant unobservable inputs.  In situations where quoted prices or observable inputs are unavailable (for example, when there is little or no market activity for an investment at the end of the period), unobservable inputs may be used.  Unobservable inputs reflect the Fund’s own assumptions about the factors market participants would use in determining fair value of the securities or instruments and would be based on the best available information.
			The following is a summary of the tiered valuation input levels, as of the end of the reporting period, March 31, 2011.  The level assigned to the securities valuations may not be an indication of the risk or liquidity associated with investing in those securities.  Money market securities may be valued using amortized cost, in accordance with the 1940 Act. Generally, amortized cost approximates the current fair value of a security, but as the value is not obtained from a quoted price in an active market, such securities are reflected as a Level 2.
				Debt securities issued by states of the United States and political subdivisions of the states
			Quoted prices in active markets for identical assets (Level 1)	-
			Significant other observable inputs (Level 2)	91,830,076
			Significant unobservable inputs (Level 3)	-
			Total	91,830,076
			For the period ended March 31, 2011, there were no Level 1 and Level 3 investments.

Item 2:              Controls and Procedures

(a) The registrant’s Principal Executive Officer and Principal Financial Officer have evaluated the design and operation of the registrant's disclosure controls and procedures within 90 days of this filing and have concluded that the registrant’s disclosure controls and procedures were effective in ensuring that information required to be disclosed by the registrant in this Form N-Q was recorded, processed, summarized and reported on a timely basis.

(b)   There were no changes in the registrant's internal controls over financial reporting that occurred during the registrant’slast fiscal quarter that have materially affected, or are reasonably likely to affect, the registrant’s internal controls over financial reporting.

Item 3:              Exhibits

Certifications of Principal Executive Officer and Principal Financial Officer, under Rule 30a-2(a) of the Investment Company Act of 1940.

EX-99.CERT

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

(Registrant) Tax Exempt Proceeds Fund, Inc.

By (Signature and Title)*   /s/ Christine Manna                                                                           

                                     Christine Manna, Secretary

Date: May 27, 2011

Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.

By (Signature and Title)* /s/ Michael P. Lydon                                                                           

           Michael P. Lydon, President

Date: May 27, 2011

By (Signature and Title)*  /s/ Esther Cheung                                                                               

                                              Esther Cheung, Treasurer and Assistant Secretary

Date: May 27, 2011

* Print the name and title of each signing officer under his or her signature.

EX-99.CERT

CERTIFICATIONS

I, Michael P. Lydon, certify that:

1.	I have reviewed this report on Form N-Q of Tax Exempt Proceeds Fund, Inc.;
2.	Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.	Based on my knowledge, the schedules of investments included in this report fairly present in all material respects the investments of the registrant as of the end of the fiscal quarter for which the report is filed;
4.	The registrant’s other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Rule 30a-3(c) under the Investment Company Act of 1940) and internal control over financial reporting (as defined in Rule 30a-3(d) under the Investment Company Act of 1940 for the registrant and have:
(a)	designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
(b)	designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
(c)	evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of a date within 90 days prior to the filing date of this report based on such evaluation; and
(d)	disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
5.	The registrant’s other certifying officers and I have disclosed to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
(a)	all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize, and report financial information; and
(b)	any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: May 27, 2011

/s/ Michael P. Lydon                                                            

Michael P. Lydon

President

EX-99.CERT

CERTIFICATIONS

I, Esther Cheung, certify that:

1.	have reviewed this report on Form N-Q of Tax Exempt Proceeds Fund, Inc.;
2.	Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.	Based on my knowledge, the schedules of investments included in this report fairly present in all material respects the investments of the registrant as of the end of the fiscal quarter for which the report is filed;
4.	The registrant’s other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Rule 30a-3(c) under the Investment Company Act of 1940) and internal control over financial reporting (as defined in Rule 30a-3(d) under the Investment Company Act of 1940 for the registrant and have:
(a)	designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
(b)	designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
(c)	evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of a date within 90 days prior to the filing date of this report based on such evaluation; and
(d)	disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
5.	The registrant’s other certifying officers and I have disclosed to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
(a)	all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize, and report financial information; and
(b)	any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: May 27, 2011

/s/ Esther Cheung                                                                          

Esther Cheung

Treasurer and Assistant Secretary