<PAGE>
As filed with the Securities and Exchange Commission on June 28, 2000
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form N-1A
REGISTRATION STATEMENT UNDER THE
SECURITIES ACT OF 1933
[_]
File No. 333-74835
Pre-Effective Amendment No.
--- [_]
Post-Effective Amendment No. 3
--- [X]
REGISTRATION STATEMENT UNDER THE
INVESTMENT COMPANY ACT OF 1940
[_]
File No. 811-09267
Amendment No. 5
--- [X]
Nuveen Money Market Trust
(Exact Name of Registrant as Specified in Charter)
333 West Wacker Drive, Chicago, 60606
Illinois (Zip Code)
(Address of Principal Executive
Offices)
Registrant's Telephone Number, Including Area Code: (312) 917-7700
Gifford R. Zimmerman, Esq.--Vice With a copy to: Thomas S. Harman,
President and Secretary Esq. Morgan, Lewis & Bockius LLP
333 West Wacker Drive 1800 M Street, N.W. Washington, DC
Chicago, Illinois 60606 20036
(Name and Address of Agent for Service)
Title of Securities Being Registered ... Units of Beneficial Interest
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It is proposed that this filing will become effective (check appropriate box):
[X] Immediately upon filing [_] on (date) pursuant to paragraph (a)(1)
pursuant to paragraph (b)
[_] on (date) pursuant [_] 75 days after filing pursuant
to paragraph (b) to paragraph (a)(2)
[_] 60 days after filing [_] on (date) pursuant to paragraph (a)(2) of
pursuant to paragraph (a)(1) Rule 485.
If appropriate, check the following box:
[_] This post-effective amendment designates a new effective date for a
previously filed post-effective amendment.
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<PAGE>
NUVEEN
Investments
Money Market
Fund
PROSPECTUS JUNE 28, 2000
For investors seeking income, stability and liquidity in a flexible cash
management investment.
INVEST WELL
LOOK AHEAD
LEAVE YOUR MARK(SM)
[PHOTO APPEARS HERE]
The Securities and Exchange Commission has not approved or disapproved these
securities or passed upon the adequacy of this prospectus. Any representation to
the contrary is a criminal offense.
<PAGE>
We have used the icons below throughout this prospectus to make it easy for you
to find the type of information you need.
Investment
Strategy
Risks
Fees, Charges
and Expenses
Shareholder
Instructions
Performance and
Current Portfolio
Information
Table of Contents
Section 1 The Fund
This section provides you with an overview of the fund including investment
objectives and portfolio holdings.
Introduction 1
............................................................................
Nuveen Money Market Fund 2
............................................................................
Section 2 How We Manage Your Money
This section gives you a detailed discussion of our investment and risk
management strategies.
Who Manages the Fund 4
............................................................................
What Securities We Invest In 5
............................................................................
How We Select Investments 5
............................................................................
What the Risks Are and How We Manage Them 6
............................................................................
Section 3 How You Can Buy and Sell Shares
This section provides the information you need to move money into and out of
your account.
What Share Classes We Offer 8
............................................................................
How to Buy Shares 10
............................................................................
Systematic Investing 11
............................................................................
Special Services 11
............................................................................
How to Sell Shares 12
............................................................................
Section 4 General Information
This section summarizes the fund's distribution policies and other general
information.
Dividends, Distributions and Taxes 15
............................................................................
Distribution and Service Plans 16
............................................................................
Net Asset Value 16
............................................................................
Fund Service Providers 17
............................................................................
Section 5 Financial Highlights
This section provides the fund's past financial performance since inception.
18
............................................................................
<PAGE>
June 28, 2000
Section 1 The Fund
Nuveen Money Market Fund
-------------------------------------------------------------------------------
Introduction
-------------------------------------------------------------------------------
This prospectus is intended to provide important information to help you
evaluate whether the Nuveen Money Market Fund may be right for you. Please read
it carefully before investing and keep it for future reference.
-------------------------------------------------------------------------------
NOT FDIC OR GOVERNMENT INSURED MAY LOSE VALUE NO BANK GUARANTEE
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Section 1 The Fund 1
<PAGE>
Nuveen Money Market Fund
-------------------------------------------------------------------------------
Fund Overview
-------------------------------------------------------------------------------
Investment Objective
The fund's investment objective is to provide as high a level of current income
as is consistent with the stability of principal and the maintenance of
liquidity.
How the Fund Pursues Its Objective
The fund invests substantially all of its assets in a diversified portfolio of
high quality money market instruments that the fund's investment adviser
believes present minimal credit risks. The adviser selects money market
instruments based on its assessment of current market interest rates and its
market outlook. The adviser seeks to identify money market instruments with
favorable characteristics the adviser believes are not yet recognized by the
market. These instruments may include U.S. dollar denominated instruments of
foreign issuers.
What are the Risks of Investing in the Fund?
While the fund invests in securities its investment adviser believes present
minimal credit and interest rate risks, the fund is not risk free. The value of
the fund's investments may be adversely affected by changes in prevailing
interest rates or an issuer's credit quality. The fund's investments in U.S.
dollar denominated money market instruments of foreign issuers expose the fund
to different risks than those associated with domestic instruments. The fund's
investment policies are designed to mitigate these risks and maintain a constant
price per share of $1.00, but there can be no guarantee of this. Like any mutual
fund investment, loss of money is a risk of investing. An investment in the fund
is not FDIC or government insured, or a bank deposit.
Is This Fund Right for You?
The fund may be appropriate for you if you seek to:
. Earn regular income on your cash reserves with check-writing privileges;
. Maintain stability of principal;
. Make gradual transfers into stock or bond funds; or
. Lower the overall risk of your investment portfolio.
You should not invest in this fund if you seek to pursue long-term growth of
principal.
-------------------------------------------------------------------------------
How the Fund Has Performed
-------------------------------------------------------------------------------
The fund does not have a performance history for a full calendar year.
Based on the seven-day period ended December 31, 1999, the fund's yield was
4.88%. For the fund's current yield, please call Nuveen at (800) 257-8787.
2 Section 1 The Fund
<PAGE>
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What are the Costs of Investing?
-------------------------------------------------------------------------------
These tables describe the fees and expenses that you may pay if you buy and
hold shares of the fund.
Shareholder Transaction Expenses/1/
Paid Directly From Your Investment
<TABLE>
<CAPTION>
Share Class A B C R/2/
....................................................................
<S> <C> <C> <C> <C>
Maximum Sales Charge Imposed
on Purchases None None None None
....................................................................
Maximum Sales Charge Imposed
on Reinvested Dividends None None None None
....................................................................
Maximum Deferred Sales Charge/3/ None/4/ 5%/5/ 1%/6/ None
....................................................................
Exchange Fees None None None None
....................................................................
</TABLE>
Annual Fund Operating Expenses
Paid From Fund Assets
<TABLE>
<CAPTION>
Share Class A B C R/2/
....................................................................
<S> <C> <C> <C> <C>
Management Fees .45% .45% .45% .45%
....................................................................
12b-1 Distribution and Service Fees .25% 1.00% 1.00% None
....................................................................
Other Expenses 2.99% 2.37% 2.99% 2.07%
....................................................................
Total Annual Fund
Operating Expenses--Gross+ 3.69% 3.82% 4.44% 2.52%
....................................................................
</TABLE>
+ After Expense Reimbursements
.................................................................
Expense Reimbursements (2.79%) (2.17%) (2.79%) (1.87%)
.................................................................
Total Annual Fund
Operating Expense--Net .90% 1.65% 1.65% .65%
.................................................................
Net expenses reflect a voluntary expense limitation by the fund's investment
adviser, that may be modified or discontinued without notice at the adviser's
discretion.
Example
The following example is intended to help you compare the cost of investing in
the fund with the cost of investing in other mutual funds. The example assumes
you invest $10,000 in the fund for the time periods indicated, and then either
redeem or do not redeem all your shares at the end of a period. The example
also assumes that your investment has a 5% return each year and that the fund's
operating expenses remain the same. Your actual costs may be higher or lower.
<TABLE>
<CAPTION>
Redemption No Redemption
Share Class A B C R A B C R
.............................................................................
<S> <C> <C> <C> <C> <C> <C> <C> <C>
1 Year $ 371 $ 771 $ 445 $ 255 $ 371 $ 384 $ 445 $ 255
.............................................................................
3 Years $1,129 $1,465 $1,343 $ 785 $1,129 $1,166 $1,343 $ 785
.............................................................................
5 Years $1,906 $2,070 $2,251 $1,340 $1,906 $1,967 $2,251 $1,340
.............................................................................
10 Years $3,941 $4,025 $4,566 $2,856 $3,941 $4,025 $4,566 $2,856
.............................................................................
</TABLE>
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How the Fund Is Invested (as of 02/29/00)
-------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Portfolio Statistics
<S> <C>
Weighted Average Maturity (Days) 13
.........................................................
Credit Quality/7/
Standard & Poor's Moody's
SP-1+, SP-1, A-1+, A-1 VMIG-1, MIG-1, P-1 85%
.........................................................
NR NR 15%
.........................................................
Sector Diversification (Top 5)
Basic Materials 17%
.........................................................
Financials 16%
.........................................................
Consumer Staples 11%
.........................................................
Healthcare 11%
.........................................................
Consumer Cyclicals 10%
.........................................................
</TABLE>
The Benefits of Money Market Funds
Money market funds often make sense as part of an overall investment plan.
Money market funds offer investors the potential for:
. Attractive returns compared with other short-term cash management
alternatives.
. Stability of principal from the pursuit of maintaining a constant price
per share of $1.00.
Nuveen Money Market funds offer:
. Monthly dividends that can be taken in cash or reinvested in additional
shares or shares of another Nuveen mutual fund.
. Convenient exchange privileges that can be used to reduce your average
cost of investing in stock or bond funds.
1. Authorized dealers and other firms may charge additional fees for
shareholder transactions or for advisory services. Please see their
materials for details.
2. Class R shares may be purchased only under limited circumstances or by
specified classes of investors. See "How You Can Buy and Sell Shares."
3. As a percentage of purchase price or redemption proceeds, whichever is less.
4. Under limited circumstances, Class A shares may bear a 1% contingent
deferred sales charge (CDSC). See "What Share Classes We Offer."
5. Class B shares redeemed within six years of purchase bear a CDSC of 5%
during the first year, 4% during the second and third years, 3% during the
fourth, 2% during the fifth and 1% during the sixth year.
6. Class C shares redeemed within one year of purchase bear a 1% CDSC.
7. Ratings: Using the higher of Standard & Poor's or Moody's rating.
Section 1 The Fund 3
<PAGE>
Section 2 How We Manage Your Money
To help you understand how the fund's assets are managed, this section includes
a detailed discussion of the adviser's investment and risk management
strategies. For a more complete discussion of these matters, please consult the
Statement of Additional Information.
-------------------------------------------------------------------------------
Who Manages the Fund
-------------------------------------------------------------------------------
Nuveen Advisory Corp. ("Nuveen Advisory"), the fund's investment adviser,
together with its advisory affiliate, Nuveen Institutional Advisory Corp., offer
premier advisory and investment management services to a broad range of mutual
fund clients. In the Nuveen family, these advisers are commonly referred to as
Nuveen Investment Management or NIM. Nuveen Advisory is responsible for the
selection and on-going monitoring of the securities in the fund's portfolio,
managing the fund's business affairs and providing certain clerical, bookkeeping
and other administrative services. The NIM advisers are located at 333 West
Wacker Drive, Chicago, IL 60606. For providing these services, Nuveen Advisory
is paid an annual management fee. For the most recent fiscal year, the fund did
not pay a management fee because Nuveen Advisory waived the fee.
The NIM advisers are wholly owned subsidiaries of John Nuveen & Co. Incorporated
("Nuveen"). Founded in 1898, Nuveen has been synonymous with investments that
withstand the test of time. Today we provide managed assets and structured
investment products and services to help financial advisors serve the wealth
management needs of individuals and families. Nuveen manages or oversees $71
billion in assets.
4 Section 2 How We Manage Your Money
<PAGE>
-------------------------------------------------------------------------------
What Securities We Invest In
-------------------------------------------------------------------------------
Money Market Securities
The fund invests in high quality, short-term debt securities, commonly known as
money market instruments. These securities generally include U.S. government
securities and repurchase agreements collateralized by these securities and
government agency securities, bank obligations (including certificates of
deposit and bankers' acceptances), commercial paper, and taxable short-term
municipal bonds, as well as U.S. dollar denominated money market instruments of
foreign issuers and foreign banks.
-------------------------------------------------------------------------------
How We Select Investments
-------------------------------------------------------------------------------
Nuveen Advisory selects money market instruments based on its assessment of
current market interest rates and its market outlook. Portfolio managers are
supported by a team of specialized research analysts who review securities
available for purchase, monitor the continued creditworthiness of the fund's
investments, and analyze economic, political and demographic trends affecting
the money market. We seek to identify money market instruments with favorable
characteristics we believe are not yet recognized by the market. We then select
those higher-yielding and undervalued money market instruments that we believe
represent the most attractive values without adding undue risk. We actively
manage the maturity of the fund and its portfolio to optimally balance the
fund's yield with the fund's exposure to interest rate risk.
Section 2 How We Manage Your Money 5
<PAGE>
An Important Note About Risk
Although each fund's investment policies are intended to minimize interest rate
and credit risk, there can be no guarantee that they will do so.
-------------------------------------------------------------------------------
What the Risks Are and How We Manage Them
-------------------------------------------------------------------------------
Risk is inherent in all investing. Investing in a mutual fund -- even a money
market fund -- involves risk, including the risk that you may receive little or
no return on your investment or even that you may lose part of your investment.
In pursuing its investment objective, the fund assumes investment risk, chiefly
in the form of interest rate and credit risk. The fund tries to limit risk by
restricting the types and maturities of the money market instruments it
purchases, and by diversifying its investment portfolio among issuers and across
different industries. Before investing, you should consider carefully the
following risks that you assume when you invest in the fund.
Credit risk: The fund is subject to credit risk. Credit risk is the risk that an
issuer of a money market instrument will be unable to meet its obligation to
make interest and principal payments due to changing financial or market
conditions. Generally, higher rated fixed-income securities carry less credit
risk than lower rated fixed-income securities.
The fund attempts to mitigate credit risk by investing only in high quality
money market instruments that Nuveen Advisory believes present minimal credit
risks at the time of purchase. High quality instruments are:
. rated in one of the two highest short-term rating categories by at least
two nationally recognized rating services, or
. if only one service has rated the instrument, rated by that service in
one of its two highest short-term rating categories, or
. unrated instruments that Nuveen Advisory judges to be of comparable
quality.
Interest rate risk: Because the fund invests in fixed-income securities, the
fund is subject to interest rate risk. Interest rate risk is the risk that the
value of the fund's portfolio will decline because of rising interest rates.
Interest rate risk is generally lower for shorter-term investments and higher
for longer-term investments.
To mitigate interest rate risk, the fund, under normal market conditions,
maintains an investment portfolio with an overall weighted average maturity of
90 days or less. In addition, the fund limits its investments to money market
instruments with remaining effective maturities of 397 days or less.
Concentration risk: Concentration risk is the risk that economic or other
developments affecting a single industry may cause the value of related money
market instruments to decline.
To mitigate concentration risk, the fund will not invest more than 25% of its
total assets in money market instruments issued or guaranteed by banks unless
Nuveen Advisory believes that the potential returns justify any additional risks
that may arise from doing so. Excluding banks and U.S. government securities,
the fund will not invest more than 25% of its total assets in any one industry.
This policy may not be changed without shareholder approval.
6 Section 2 How We Manage Your Money
<PAGE>
Because the fund may invest without limit in money market instruments issued or
guaranteed by banks (i.e., the banking industry), changes in the banking
industry may cause the value of the securities issued or guaranteed by banks to
decline.
Foreign investment risk: Because the fund invests in U.S. dollar denominated
securities of foreign issuers, the fund is subject to foreign investment risk.
Foreign investments pose distinct risks from domestic investments, such as
adverse political and legal developments, financial and economic instability,
and limited financial information. These investments also may have more limited
liquidity and additional settlement risks.
Insurance: The fund has purchased liability insurance against a decline in the
value of the fund's portfolio caused by the default or bankruptcy of an issuer
whose securities the fund owns. The insurance covers substantially all of the
fund's investments except U.S. government securities. The maximum total coverage
for all Nuveen money market funds is $50 million, with a deductible for each
loss of 0.10% of the fund's net assets. The fund pays the policy's premiums.
Coverage under the policy is subject to certain conditions and may not be
renewable upon expiration. While the policy is intended to provide some
protection against credit risk and to help the fund maintain a constant price
per share of $1.00, there is no guarantee that the insurance will do so.
Section 2 How We Manage Your Money 7
<PAGE>
Section 3 How You Can Buy and Sell Shares
We offer four classes of fund shares, each with a different combination of sales
charges, fees, eligibility requirements and other features. Your financial
advisor can help you determine which class is best for you. We offer a number of
services for your convenience. Please see the Statement of Additional
Information for further details.
-------------------------------------------------------------------------------
What Share Classes We Offer
-------------------------------------------------------------------------------
Class A Shares
You can buy Class A shares at net asset value per share (expected to be $1.00)
without an initial sales charge. Class A shares are subject to an annual
service fee of .25% of the fund's average daily net assets.
Under limited circumstances, Class A shares may bear a 1% Contingent Deferred
Sales Charge (CDSC). You would pay the CDSC only if:
. you purchased Class A shares of the fund by exchanging Class A shares of
another Nuveen mutual fund;
. you originally purchased $1 million or more of Class A shares of the other
Nuveen fund without a sales charge; and
. you sell your Class A shares of this fund within 18 months of when you
purchased the Class A shares of the other Nuveen fund.
The CDSC is based on either your purchase or sale price, whichever is lower. You
do not pay a CDSC on any Class A shares you purchase by reinvesting dividends.
Class B Shares
You may purchase Class B shares only if you are exchanging from Class B shares
of another Nuveen mutual fund or if you plan to make gradual transfers to Class
B shares of a Nuveen stock or bond fund within a two year period. Class B shares
are sold at net asset value per share (expected to be $1.00) without an initial
sales charge. Class B shares are subject to annual distribution and service fees
of 1% of Class B's average daily net assets. These fees reimburse Nuveen for
paying your financial advisor a sales commission as well as an on-going service
fee. Nuveen pays your financial advisor a 4% sales commission at the time of
your purchase, which includes an advance of the first year's service fee.
If you sell your shares within six years of purchase, you will normally have to
pay a CDSC as shown in the schedule below. The CDSC is based on your purchase
or sale price, whichever is lower. You do not pay a CDSC on any Class B shares
you purchase by reinvesting dividends.
Years Since Purchase 0-1 1-2 2-3 3-4 4-5 5-6 Over 6
CDSC 5% 4% 4% 3% 2% 1% None
................................................................................
8 Section 3 How You Can Buy and Sell Shares
<PAGE>
Class B shares automatically convert to Class A shares eight years after you
purchase them so that the distribution fees you pay over the life of your
investment are limited. You will continue to pay an annual service fee on any
converted Class B shares.
Class C Shares
You may purchase Class C shares only if you are exchanging from Class C of
another Nuveen mutual fund or if you plan to make gradual transfers to Class C
shares of a Nuveen stock or bond fund within a two year period. Class C shares
are sold at net asset value per share (expected to be $1.00) without an initial
sales charge. Class C shares are subject to annual distribution and service fees
of 1% of Class C's average daily net assets. These fees reimburse Nuveen for
paying your financial advisor a sales commission as well as an on-going service
fee. Nuveen pays your financial advisor a 1% sales commission at the time of
your purchase, which includes an advance of the first year's distribution and
service fees, and an additional 0.75% sales commission per year thereafter.
If you sell your shares within one year of purchase, you will normally have to
pay a 1% CDSC based on your purchase or sale price, whichever is lower. You do
not pay a CDSC on any Class C shares you purchase by reinvesting dividends.
Class R Shares
You may purchase Class R shares only under certain limited circumstances
described below and in the Statement of Additional Information. Class R shares
are sold at net asset value (expected to be $1.00) without an initial or
contingent deferred sales charge. Class R shares also are not subject to
distribution or service fees.
You are eligible to purchase Class R shares if you are:
. exchanging Class R shares of another Nuveen mutual fund
. a client of certain asset-based fee programs and bank trust departments
. an employee or director of Nuveen, or an immediate family member
. an employee of an authorized dealer or
. a fund officer or trustee
Additional categories of eligible investors for Class R shares are described in
the Statement of Additional Information. More information is available from
your financial advisor or by calling (800) 257-8787. The fund may modify the
eligibility requirements or discontinue eligibility categories at any time.
Section 3 How You Can Buy and Sell Shares 9
<PAGE>
-------------------------------------------------------------------------------
How to Buy Shares
-------------------------------------------------------------------------------
Fund shares may be purchased on any business day, which is any day the Federal
Reserve Bank of Boston is normally open for business. Generally, the Bank is
closed on weekends and national holidays. The fund's net asset value is
determined at 4:00 p.m. Eastern Time on each business day, and on other days
where there is significant trading activity in the fund's shares. If the fund
receives your check (or electronic transfer) before 4:00 p.m. Eastern Time on a
business day, you will receive that day's net asset value. You will begin
earning dividends on your investment the following calendar day. If the fund
receives your check (or electronic transfer) after 4:00 p.m. Eastern Time on a
business day, you will receive the next business day's net asset value and will
begin earning dividends on your investment the following calendar day.
Through a Financial Advisor
You may purchase shares through your financial advisor, who can handle all the
details for you, including opening a new account. Financial advisors also can
help you review your financial needs and formulate long-term investment goals
and objectives. In addition, financial advisors generally can help you develop
a customized financial plan, select investments, and monitor and review your
portfolio on an on-going basis to help assure that your investments continue to
meet your needs as circumstances change. Financial advisors are paid for on-
going investment advice and services either from fund sales charges and fees or
by charging you a separate fee in lieu of a sales charge. If you do not have a
financial advisor, call (800) 257-8787 and Nuveen can refer you to one in your
area.
By Mail
You may open an account and buy shares through the mail by completing the
enclosed application and mailing it along with your check to the fund, c/o
Nuveen Investor Services, P.O. Box 5186, Bowling Green Station, New York, NY
10274-5186. No third party checks will be accepted.
Investment Minimums
Minimum Initial Investments
.............................................................
Regular Accounts $3,000
.............................................................
Traditional/Roth IRAs $1,000
.............................................................
Education IRAs $ 500
.............................................................
Minimum Systematic Investments $ 50
.............................................................
Minimum Subsequent Investments $ 50
.............................................................
The investment minimum may be lower through certain fee-based programs. The fund
may waive or modify the minimum investment requirements at its discretion.
10 Section 3 How You Can Buy and Sell Shares
<PAGE>
-------------------------------------------------------------------------------
Systematic Investing
-------------------------------------------------------------------------------
Systematic investing allows you to make regular investments through automatic
deductions from your bank account, directly from your paycheck or from
exchanging shares from another mutual fund account. The minimum automatic
deduction is $50 per month. There is no charge to participate in the fund's
systematic investment plan. You can stop the deductions at any time by notifying
the fund in writing. To participate in systematic investing, simply complete the
appropriate section of the account application form or submit an Account Update
Form.
From Your Bank Account
You can make systematic investments of $50 or more per month by authorizing us
to draw preauthorized checks on your bank account.
From Your Paycheck
With your employer's consent, you can make systematic investments of $25 or more
per pay period (meeting the monthly minimum of $50) by authorizing your employer
to deduct monies from your paycheck.
Systematic Exchanging
You can make systematic investments by authorizing Nuveen to exchange shares
from one Nuveen mutual fund account into another identically registered Nuveen
account of the same share class.
-------------------------------------------------------------------------------
Special Services
-------------------------------------------------------------------------------
To help make your investing with us easy and efficient, we offer you the
following services at no extra cost.
Exchanging Shares
You may exchange fund shares into an identically registered account at any time
for the same class of another Nuveen mutual fund available in your state. Your
exchange must meet the minimum purchase requirements of the fund into which you
are exchanging. You may have to pay a sales charge when exchanging shares that
you purchased without a sales charge for shares that are sold with a sales
charge. Please see the Statement of Additional Information for details.
The fund may change or cancel its exchange policy at any time upon 60 days'
notice.
Reinstatement Privilege
If you redeem fund shares, you may reinvest all or part of your redemption
proceeds up to one year later without incurring any additional charges. To do
this, you must reinvest in the same share class. If you paid a CDSC when you
sold your shares, Nuveen will refund your CDSC and reinstate your holding period
for purposes of calculating any CDSC charged should you sell your shares again.
You may use this reinstatement privilege only once for any redemption.
Fund Direct(SM)
The Fund Direct Program allows you to link your fund account to your bank
account, transfer money electronically between these accounts, and perform a
variety of account transactions, including purchasing shares by
Section 3 How You Can Buy and Sell Shares 11
<PAGE>
telephone and investing through a systematic investment plan. You also may have
dividends, distributions, redemption payments or systematic withdrawal plan
payments sent directly to your bank account. Your financial advisor can help you
complete the forms for these services, or you can call Nuveen at (800) 257-8787
for copies of the necessary forms.
An Important Note About Telephone Transactions
Although Nuveen Investor Services has certain safeguards and procedures to
confirm the identity of callers, it will not be liable for losses resulting from
following telephone instructions it reasonably believes to be genuine. Also, you
should verify your trade confirmations immediately upon receipt.
-------------------------------------------------------------------------------
How to Sell Shares
-------------------------------------------------------------------------------
You may sell (redeem) your shares on any business day. You will receive the
share price next determined after the fund has received your properly completed
redemption request. If you are selling shares purchased recently with a check,
you will not receive your redemption proceeds until your check has cleared. This
may take up to ten days from your purchase date.
Through Your Financial Advisor
You may sell your shares through your financial advisor who can prepare the
necessary documentation. Your advisor may charge you for this service.
By Telephone
If you have authorized telephone redemption privileges, you can redeem your
shares by calling (800) 257-8787. Telephone redemptions are not available if
you own shares in certificate form and may not exceed $50,000. Checks will only
be issued to you as the shareholder of record and mailed to your address of
record. If you have established Fund Direct privileges, you may have redemption
proceeds transferred electronically to your bank account. We will normally mail
your check the next business day.
By Check
You may request that the fund provides you with redemption checks. These checks
may be made payable to any person in the amount of $500 or more. Simply fill out
the appropriate section of the application form and submit the enclosed
signature card. You must have enough shares in your account to cover the amount
of each check you write or it will be returned. Writing checks from your fund
account does not mean that your account is like a bank checking account. This
check redemption privilege may be modified or terminated at any time.
By Mail
You can sell your shares at any time by sending a written request to the fund,
c/o Nuveen Investor Services, P.O. Box 5186, Bowling Green Station, New York,
NY 10274-5186. Your redemption request must include the following information:
. The fund's name;
. Your name and account number;
. The dollar or share amount you wish to redeem;
. The signature of each owner exactly as it appears on the account;
12 Section 3 How You Can Buy and Sell Shares
<PAGE>
. The name of the person to whom you want your redemption proceeds paid (if
other than to the shareholder of record);
. The address where you want your redemption proceeds sent (if other than the
address of record); and
. Any required signature guarantees.
The fund will normally mail your check the next business day after it receives
your redemption request, but in no event more than seven days after the fund
receives your request.
CDSCs
While the fund does not charge an administrative fee for processing redemptions,
you may be assessed a CDSC. If you own shares subject to a CDSC and shares
without a CDSC, the fund will first redeem the shares that are not subject to a
CDSC and then redeem the shares you have owned for the longest period of time,
unless you ask the fund to redeem your shares in a different order. No CDSC is
imposed on shares you buy through the reinvestment of dividends and capital
gains, if any. The holding period for calculating the applicable CDSC is
determined on a monthly basis and begins on the first day of the month in which
you buy shares. CDSCs are calculated on your purchase price or redemption
proceeds, whichever is lower, then deducted from your redemption proceeds and
paid to Nuveen. CDSCs may be waived under certain special circumstances, as
described in the Statement of Additional Information.
Signature Guarantees
Signature guarantees are required if you are redeeming more than $50,000, you
want the check payable to someone other than the shareholder of record, you
want the check sent to another address, or if the address on the fund's records
has been changed within the last 60 days. Signature guarantees must be obtained
from a bank, brokerage firm or other financial intermediary that is a member of
an approved Medallion Guarantee Program or that is otherwise approved by the
fund. A notary public cannot provide a signature guarantee.
Section 3 How You Can Buy and Sell Shares 13
<PAGE>
An Important Note About Involuntary Redemption
From time to time, the fund may establish minimum account size requirements. The
fund reserves the right to liquidate your account upon 30 days' written notice
if the value of your account falls below an established minimum. The fund
presently has set a minimum account balance of $100 unless you have an active
Nuveen Defined Portfolio reinvestment account. You will not be assessed a CDSC
on an involuntary redemption.
Systematic Withdrawal
If the value of your fund account is at least $10,000, you may participate in
the fund's systematic withdrawal plan. The plan allows you to make regular
withdrawals through automatic deductions from your fund account. The minimum
automatic withdrawal is $50 per month. You may elect to receive payments
monthly, quarterly, semi-annually or annually, and may choose to receive a
check, or have the monies transferred directly to your bank account (see
"Special Services -- Fund Direct" above), paid to a third party or sent payable
to you at an address other than the address on the fund's records. To
participate in the systematic withdrawal plan, simply complete the appropriate
section of the account application or submit an Account Update Form. You should
not participate in the systematic withdrawal plan if you intend to make
concurrent purchases of Class B or Class C shares, as you may unnecessarily pay
a CDSC.
Redemptions In-Kind
The fund generally pays redemption proceeds in cash. Under unusual conditions
that make cash payment unwise and for the protection of existing shareholders,
the fund may pay all or a portion of your redemption proceeds in securities or
other fund assets. Although it is unlikely that your shares would be redeemed
in-kind, you would probably have to pay transaction costs to sell the securities
distributed to you, as well as taxes on any capital gains from that sale.
14 Section 3 How You Can Buy and Sell Shares
<PAGE>
Section 4 General Information
To help you understand the tax implications of investing in the fund, this
section includes important details about how the fund make s distributions to
shareholders. We discuss some other fund policies, as well.
-------------------------------------------------------------------------------
Dividends, Distributions and Taxes
-------------------------------------------------------------------------------
The fund pays dividends monthly and any capital gains annually in December. The
fund declares dividends on each business day to shareholders of record on that
day.
Payment and Reinvestment Options
The fund automatically reinvests your dividends in additional fund shares unless
you request otherwise. You may request to have your dividends paid to you by
check, deposited directly into your bank account, paid to a third party, sent to
an address other than the address on the fund's records, or reinvested in
shares of another Nuveen mutual fund. For more information, contact your
financial advisor or call Nuveen at (800) 257-8787.
Taxes and Tax Reporting
The fund's monthly dividends are taxable as ordinary income. Net short-term
gains are taxable as ordinary income.
Early in each year, you will receive a statement detailing the amount and nature
of all dividends that you were paid during the prior year. If you hold your
investment at the firm where you purchased your fund shares, you will receive
the statement from that firm. If you hold your shares at the fund, Nuveen will
send you the statement. The tax status of your dividends is the same whether you
reinvest your dividends or elect to receive them in cash.
Please note that if you do not furnish the fund with your correct Social
Security number or employer identification number, federal law requires the
fund to withhold federal income tax from your distributions and redemption
proceeds, currently at a rate of 31%.
Please see the Statement of Additional Information and your tax advisor for
more information about taxes.
Section 4 General Information 15
<PAGE>
-------------------------------------------------------------------------------
Distribution and Service Plans
-------------------------------------------------------------------------------
Nuveen serves as the selling agent and distributor of the fund's shares. In this
capacity, Nuveen manages the offering of the fund's shares and is responsible
for all sales and promotional activities, and for providing certain services to
shareholders. The fund has adopted a distribution and service plan in accordance
with Rule 12b-1 under the Investment Company Act of 1940 to reimburse Nuveen
for these services. Rule 12b-1 permits a mutual fund to pay distribution fees
for the sale and distribution of its shares.
See "What Share Classes We Offer" for a description of the distribution and
service fees paid under this plan.
Nuveen receives the distribution fee for Class B and Class C shares primarily
for providing compensation to authorized dealers, including Nuveen, in
connection with the distribution of shares. Because these fees are paid out of
the fund's assets on an on-going basis, over time these fees will increase the
cost of your investment and may cost you more than paying other types of sales
charges. The maximum distribution fee payable under the plan is .75% of the
relevant class' average daily net assets.
Nuveen uses the service fee for Class A, Class B and Class C shares to
compensate financial service firms, including Nuveen, for providing on-going
account services to shareholders. These services may include establishing and
maintaining your accounts, answering your inquiries, and providing other
personal services to you. These fees also compensate Nuveen for other expenses,
including printing and distributing prospectuses to persons other than
shareholders, and preparing, printing, and distributing advertising, sales
literature and reports to shareholders that are used in connection with the
sale of shares. The maximum service fee payable under the plan is .25% of the
relevant class' average daily net assets.
Nuveen periodically undertakes sales promotion programs with authorized dealers
and may pay them the full applicable sales charge as a commission. In addition,
Nuveen may provide support at its own expense to authorized dealers in
connection with sales meetings, seminars, prospecting seminars and other events
at which Nuveen presents its products and services. Under certain circumstances,
Nuveen also will share with authorized dealers up to half the costs of
advertising that features the products and services of both parties. The
Statement of Additional Information contains further information about these
programs.
-------------------------------------------------------------------------------
Net Asset Value
-------------------------------------------------------------------------------
The price you pay and receive for your shares is based on the fund's net asset
value per share, which is determined at 4:00 p.m. Eastern Time on each business
day. Because the fund seeks to maintain a constant price per share of $1.00, the
fund values its portfolio securities using the amortized cost method, which
approximates market value and is described in more detail in the Statement of
Additional Information. There can be no assurance that the fund will be able to
maintain a constant price per share of $1.00.
16 Section 4 General Information
<PAGE>
-------------------------------------------------------------------------------
Fund Service Providers
-------------------------------------------------------------------------------
The custodian of the fund's assets is The Chase Manhattan Bank, 4 New York
Plaza, New York, NY 10004-2413. Chase also provides certain accounting services
to the fund. The fund's transfer, shareholder services and dividend paying
agent, Chase Global Funds Services Company, P.O. Box 5186, New York, NY 10274-
5186, performs bookkeeping, data processing and administrative services for the
maintenance of shareholder accounts.
Section 4 General Information 17
<PAGE>
Section 5 Financial Highlights
The financial highlights table is intended to help you understand a fund's past
financial performance. Certain information reflects financial results for a
single fund share. The total returns in the table represent the rate that an
investor would have earned on an investment in a fund (assuming reinvestment of
all dividends and distributions). This information has been audited by Arthur
Andersen LLP, whose report, along with the fund's financial statements, are
included in the SAI and annual report, which is available upon request.
-------------------------------------------------------------------------------
Nuveen Money Market Fund
-------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Ratios/Supplemental Data
---------------------------------------------
Ratio
Less of Net
Beginning Distributions Ending Ratio of Investment
Net Net from Net Net Ending Expenses Income to
Year Ended Asset Investment Investment Asset Total Net Assets to Average Average
February 28/29, Value Income Income Value Return (000) Net Assets (a) Net Assets (a)
------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Class A (6/99)
2000 (b) $1.00 $.03 $(.03) $ 1.00 3.28% $4,316 .95%* 4.71%*
Class B (6/99)
2000 (b) 1.00 .03 (.03) 1.00 2.74 713 1.70* 4.03*
Class C (6/99)
2000 (b) 1.00 .03 (.03) 1.00 2.74 935 1.70* 4.04*
Class R (6/99)
2000 (b) 1.00 .03 (.03) 1.00 3.46 2,443 .70* 4.74*
------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
* Annualized.
(a) After expense reimbursement by the investment adviser, where applicable.
When custodian fee credits are applied, the Ratios of Expenses to Average
Net Assets for 2000 are .90%*, 1.65%*, 1.65%* and .65%* for classes A, B, C
and R, respectively, and the Ratios of Net Investment Income to Average Net
Assets for 2000 are 4.77%*, 4.09%*, 4.10%* and 4.80%* for classes A, B, C
and R, respectively.
(b) For the period June 10, 1999 (commencement of operations) through
February 29, 2000.
18 Section 5 Financial Highlights
<PAGE>
Nuveen Mutual Funds
Nuveen offers a variety of mutual funds designed to help you reach your
financial goals. The funds below are grouped by investment objectives.
Growth
International Growth Fund
Innovation Fund
Nuveen Rittenhouse Growth Fund
Growth and Income
European Value Fund
Growth and Income Stock Fund
Balanced Stock and Bond Fund
Balanced Municipal and Stock Fund
Dividend and Growth Fund
Income
Income Fund
Floating Rate Fund/1/
Tax-Free Income
National Municipal Bond Funds
High Yield
Long-term
Insured Long-term
Intermediate-term
Limited-term
State Municipal Bond Funds
Arizona
California/2/
Colorado
Connecticut
Florida
Georgia
Kansas
Kentucky
Louisiana
Maryland
Massachusetts/2/
Michigan
Missouri
New Jersey
New Mexico
New York/2/
North Carolina
Ohio
Pennsylvania
Tennessee
Virginia
Wisconsin
Cash Reserves
Money Market Fund
Municipal Money Market Fund
California Tax-Exempt Money Market Fund
New York Tax-Exempt Money Market Fund
Several additional sources of information are available to you. The Statement of
Additional Information ("SAI"), incorporated by reference into this prospectus,
contains detailed information on fund policies and operation. Call Nuveen at
(800) 257-8787 to request a free copy of the SAI or other fund information; or
ask your financial advisor for copies.
You may also obtain this and other fund information directly from the Securities
and Exchange Commission ("SEC"). The SEC may charge a copying fee for this
information. Visit the SEC on-line at http://www.sec.gov or in person at the
SEC's Public Reference Room in Washington, D.C. Call the SEC at (800) SEC-0330
for room hours and operation. You may also request fund information by writing
to the SEC's Public Reference Section, Washington, D.C. 20549. The fund's
Investment Company file number is 811-09267.
1. This is a continuously-offered closed-end interval fund. As such,
redemptions are only available during quarterly repurchase periods. See
fund prospectus for additional information.
2. Long-term and insured long-term portfolios.
NUVEEN
Investments
John Nuveen & Co. Incorporated
333 West Wacker Drive
Chicago, IL 60606-1286
(800) 257-8787
www.nuveen.com
<PAGE>
NUVEEN
Investments
Municipal
Money Market
Funds
PROSPECTUS JUNE 28, 2000
For investors seeking tax-free income, stability and liquidity in a flexible
cash management investment.
INVEST WELL
LOOK AHEAD
LEAVE YOUR MARK/SM/
[PHOTO APPEARS HERE]
California Tax-Exempt Money Market Fund
New York Tax-Exempt Money Market Fund
Municipal Money Market Fund
The Securities and Exchange Commission has not approved or disapproved these
securities or passed upon the adequacy of this prospectus. Any representation to
the contrary is a criminal offense.
<PAGE>
We have used the icons below throughout this prospectus to make it easy for you
to find the type of information you need.
Investment
Strategy
Risks
Fees, Charges
and Expenses
Shareholder
Instructions
Performance and
Current Portfolio
Information
Table of Contents
Section 1 The Funds
This section provides you with an overview of the funds including investment
objectives, portfolio holdings and historical performance information.
Introduction 1
-------------------------------------------------------------------------------
Nuveen California Tax-Exempt Money Market Fund 2
-------------------------------------------------------------------------------
Nuveen New York Tax-Exempt Money Market Fund 4
-------------------------------------------------------------------------------
Nuveen Municipal Money Market Fund 6
-------------------------------------------------------------------------------
Section 2 How We Manage Your Money
This section gives you a detailed discussion of our investment and risk
management strategies.
Who Manages the Funds 8
-------------------------------------------------------------------------------
What Securities We Invest In 8
-------------------------------------------------------------------------------
How We Select Investments 10
-------------------------------------------------------------------------------
What the Risks Are and How We Manage Them 10
-------------------------------------------------------------------------------
Section 3 How You Can Buy and Sell Shares
This section provides the information you need to move money into and out
of your account.
How to Buy Shares 12
-------------------------------------------------------------------------------
Systematic Investing 13
-------------------------------------------------------------------------------
Special Services 13
-------------------------------------------------------------------------------
How to Sell Shares 14
-------------------------------------------------------------------------------
Section 4 General Information
This section summarizes the funds' distribution policies and other general
fund information.
Dividends, Distributions and Taxes 16
-------------------------------------------------------------------------------
Service Plan 17
-------------------------------------------------------------------------------
Net Asset Value 18
-------------------------------------------------------------------------------
Fund Service Providers 18
-------------------------------------------------------------------------------
Section 5 Financial Highlights
This section provides the funds' financial performance for the past five
years. 19
-------------------------------------------------------------------------------
Appendix Additional State Information 22
-------------------------------------------------------------------------------
<PAGE>
June 28, 2000
Section 1 The Funds
Nuveen California Tax-Exempt Money Market Fund
Nuveen New York Tax-Exempt Money Market Fund
Nuveen Municipal Money Market Fund
--------------------------------------------------------------------------------
Introduction
--------------------------------------------------------------------------------
This prospectus is intended to provide important information to help you
evaluate whether one of the Nuveen Mutual Funds listed above may be right for
you. Please read it carefully before investing and keep it for future
reference.
NOT FDIC OR GOVERNMENT INSURED MAY LOSE VALUE NO BANK GUARANTEE
Section 1 The Funds 1
<PAGE>
Nuveen California Tax-Exempt
Money Market Fund
-------------------------------------------------------------------------------
Fund Overview
-------------------------------------------------------------------------------
Investment Objective
The fund's investment objective is to provide as high a level of current income
exempt from both regular federal and California personal income taxes as is
consistent with the stability of principal and the maintenance of liquidity.
How the Fund Pursues Its Objective
The fund invests substantially all of its assets in high quality, California
tax-exempt money market instruments that the fund's investment adviser believes
present minimal credit risks. The adviser selects money market instruments based
on its assessment of current market interest rates and its market outlook. The
adviser seeks to identify money market instruments with favorable
characteristics the adviser believes are not yet recognized by the market.
What are the Risks of Investing in the Fund?
While the fund invests in securities its investment adviser believes present
minimal credit and interest rate risks, the fund is not risk free. The value of
the fund's investments may be adversely affected by changes in prevailing
interest rates, an issuer's credit quality or California's economy. The fund's
investment policies are designed to mitigate these risks and maintain a constant
price per share of $1.00, but there can be no guarantee of this. Like any mutual
fund investment, loss of money is a risk of investing. An investment in the fund
is not FDIC or government insured, or a bank deposit.
Is This Fund Right for You?
The fund may be appropriate for you if you seek to:
. Earn regular income on your cash reserves with check-writing privileges;
. Maintain stability of principal;
. Make gradual transfers into stock or bond funds; or
. Lower the overall risk of your investment portfolio.
You should not invest in this fund if you seek to pursue long-term growth of
principal.
-------------------------------------------------------------------------------
How the Fund Has Performed
-------------------------------------------------------------------------------
The chart and table below illustrate annual fund returns for each of the past
ten years as well as annualized fund and index returns for the one-, five- and
ten-year periods ended December 31, 1999. This information is intended to help
you assess the variability of fund returns over the past ten years (and
consequently, the potential rewards and risks of a fund investment). Past
performance is not necessarily an indication of future performance.
Total Returns
[BAR CHART APPEARS HERE]
<TABLE>
<CAPTION>
Year Annual Returns*
---- ---------------
<S> <C>
1990 5.39%
1991 4.09%
1992 2.44%
1993 1.96%
1994 2.38%
1995 3.44%
1996 2.99%
1997 3.15%
1998 2.97%
1999 2.64%
</TABLE>
*The year-to-date return as of March 31, 2000 was .63%.
During the last ten years ended December 31, 1999, the highest and lowest
quarterly returns were 1.36% and .45%, respectively, for the quarters ended
June 30, 1990 and March 31, 1993.
<PAGE>
<TABLE>
<CAPTION>
Average Annual Total Returns for
the Periods Ended December 31, 1999
-----------------------------------
1 Year 5 Year 10 Year
-----------------------------------
<S> <C> <C> <C>
Nuveen California Tax-
Exempt Money
Market Fund 2.64% 3.04% 3.14%
----------------------------------------------------------
Lipper Index/1/ 2.52% 3.03% 3.14%
</TABLE>
Based on the seven-day period ended December 31, 1999, the fund's yield was
3.58%, and the taxable equivalent yield (using the maximum combined federal and
California income tax rate of 45.0%) was 6.51%. For the fund's current yields,
please call Nuveen at (800) 257-8787.
2 Section 1 The Funds
<PAGE>
--------------------------------------------------------------------------------
What are the Costs of Investing?
--------------------------------------------------------------------------------
These tables describe the fees and expenses that you may pay if you buy and hold
shares of the fund.
Shareholder Transaction Expenses
Paid Directly From Your Investment
---------------------------------------------------
Maximum Sales Charge Imposed
on Purchases None
---------------------------------------------------
Maximum Sales Charge Imposed
on Reinvested Dividends None
---------------------------------------------------
Exchange Fees None
---------------------------------------------------
Annual Fund Operating Expenses/2/
Paid From Fund Assets
Management Fees .40%
----------------------------------------------------
12b-1 Distribution and Service Fees/2/ .25%
----------------------------------------------------
Other Expenses .35%
====================================================
Total Annual Fund Operating Expenses--Gross+ 1.00%
----------------------------------------------------
+ After Expense Reimbursements
Expense Reimbursements (.35%)
Total Annual Fund Operating Expenses--Net .65%
The adviser undertook to reimburse expenses through December 31, 1999 in an
amount necessary to limit total operating expenses to 55%. The adviser
currently is reimbursing expenses at a lower rate, but may modify or
discontinue this at any time. Net operating expenses are likely to be higher
in the current fiscal year.
Example
The following example is intended to help you compare the cost of investing in
the fund with the cost of investing in other mutual funds. The example assumes
you invest $10,000 in the fund for the time periods indicated, and then redeem
all your shares at the end of a period. The example also assumes that your
investment has a 5% return each year and that the fund's operating expenses
remain the same. Your actual costs may be higher or lower.
1 Year $ 102
---------------------------------------------------
3 Years $ 318
---------------------------------------------------
5 Years $ 552
---------------------------------------------------
10 Years $ 1,225
---------------------------------------------------
--------------------------------------------------------------------------------
How the Fund Is Invested (as of 02/29/00)
--------------------------------------------------------------------------------
Portfolio Statistics
Weighted Average Maturity (Days) 32
---------------------------------------------------
Credit Quality/3/
Standard & Poor's Moody's
SP-1+, SP-1, A-1+, A-1 VMIG-1, MIG-1, P-1 88%
----------------------------------------------------
A-2 VMIG-2, MIG-2, P-2 2%
----------------------------------------------------
N/R NR 10%
----------------------------------------------------
Sector Diversification (Top 5)
Tax Obligation/General 18%
----------------------------------------------------
Healthcare 14%
----------------------------------------------------
Utilities 14%
----------------------------------------------------
Tax Obligation/Limited 13%
----------------------------------------------------
Housing/Multifamily 12%
1. Lipper Index returns reflect the performance of funds in the Lipper
California Tax-Exempt Money Market Index. Returns assume reinvestment of
dividends and do not reflect any applicable sales charge.
2. Annual Fund Operating Expenses have been restated to reflect current fees
payable under the 12b-1 Plan.
3. Ratings: Using the higher of Standard & Poor's or Moody's rating.
Section 1 The Funds 3
<PAGE>
Nuveen New York Tax-Exempt Money Market Fund
Fund Overview
Investment Objective
The fund's investment objective is to provide as high a level of current income
exempt from both regular federal and New York personal income taxes as is
consistent with the stability of principal and the maintenance of liquidity.
How the Fund Pursues Its Objective
The Fund invests substantially all of its assets in high quality New York
tax-exempt money market instruments that the fund's investment adviser believes
present minimal credit risks. The adviser selects money market instruments based
on its assessment of current market interest rates and its market outlook. The
adviser seeks to identify money market instruments with favorable
characteristics the adviser believes are not yet recognized by the market.
What are the Risks of Investing in the Fund?
While the fund invests in securities its investment adviser believes present
minimal credit and interest rate risks, the fund is not risk free. The value of
the fund's investments may be adversely affected by changes in prevailing
interest rates, an issuer's credit quality or New York's economy. The fund's
investment policies are designed to mitigate these risks and maintain a constant
price per share of $1.00, but there can be no guarantee of this. Like any mutual
fund investment, loss of money is a risk of investing. An investment in the fund
is not FDIC or government insured, or a bank deposit.
Is This Fund Right for You?
The fund may be appropriate for you if you seek to:
.Earn monthly tax-free income on your cash reserves with check-writing
privileges;
.Maintain stability of principal;
.Make gradual transfers into stock or bond funds; or
.Lower the overall risk of your investment portfolio.
You should not invest in this fund if you seek to pursue long-term growth of
principal.
How the Fund Has Performed
The chart and table below illustrate annual fund returns for each of the past
ten years as well as annualized fund and index returns for the one-, five- and
ten-year periods ended December 31, 1999. This information is intended to help
you assess the variability of fund returns over the past ten years (and
consequently, the potential rewards and risks of a fund investment). Past
performance is not necessarily an indication of future performance.
Total Returns
[BAR CHART APPEARS HERE]
<TABLE>
<CAPTION>
Annual Returns*
<S> <C>
1990 5.19%
1991 3.92%
1992 2.23%
1993 1.62%
1994 2.17%
1995 3.45%
1996 2.92%
1997 3.15%
1998 2.87%
1999 2.68%
</TABLE>
* The year-to-date return as of March 31, 2000 was .70%.
During the last ten years ended December 31, 1999, the highest and lowest
quarterly returns were 1.30% and .34%, respectively, for the quarters ended
June 30, 1990 and March 31, 1993.
<TABLE>
<CAPTION>
Average Annual Total Returns for
the Periods Ended December 31, 1999
-----------------------------------
1 Year 5 Year 10 Year
-----------------------------------
<S> <C> <C> <C>
Nuveen New York
Tax-Exempt Money
Market Fund 2.68% 3.01% 3.02%
----------------------------------------------------------------
Lipper Index/1/ 2.62% 2.95% 3.05%
</TABLE>
Based on the seven-day period ended December 31, 1999, the fund's yield was
3.95%, and the taxable equivalent yield (using the maximum combined federal and
New York income tax rate of 43.5%) was 6.99%. For the fund's current yields,
please call Nuveen at (800) 257-8787.
4 Section 1 The Funds
<PAGE>
--------------------------------------------------------------------------------
What are the Costs of Investing?
--------------------------------------------------------------------------------
These tables describe the fees and expenses that you may pay if you buy and hold
shares of the fund.
Shareholder Transaction Expenses
Paid Directly From Your Investment
------------------------------------------------------
Maximum Sales Charge Imposed
on Purchases None
------------------------------------------------------
Maximum Sales Charge Imposed
on Reinvested Dividends None
------------------------------------------------------
Exchange Fees None
------------------------------------------------------
Annual Fund Operating Expenses/2/
Paid From Fund Assets
------------------------------------------------------
Management Fees .40%
------------------------------------------------------
12b-1 Distribution and Service Fees/2/ .25%
------------------------------------------------------
Other Expenses .31%
------------------------------------------------------
Total Annual Fund Operating Expenses--Gross+ .96%
------------------------------------------------------
+ After Expense Reimbursements
Expense Reimbursements (.32%)
Total Annual Fund Operating Expenses--Net .64%
The adviser undertook to reimburse expenses through December 31, 1999 in an
amount necessary to limit total operating expenses to .55%. The adviser
currently is reimbursing expenses at a lower rate, but may modify or discontinue
this at any time. Net operating expenses are likely to be higher in the current
fiscal year.
Example
The following example is intended to help you compare the cost of investing in
the fund with the cost of investing in other mutual funds. The example assumes
you invest $10,000 in the fund for the time periods indicated, and then redeem
all your shares at the end of a period. The example also assumes that your
investment has a 5% return each year and that the fund's operating expenses
remain the same. Your actual costs may be higher or lower.
-------------------------------------------------------------
1 Year $ 98
-------------------------------------------------------------
3 Years $ 306
-------------------------------------------------------------
5 Years $ 531
-------------------------------------------------------------
10 Years $1,178
-------------------------------------------------------------
--------------------------------------------------------------------------------
How the Fund Is Invested (as of 02/29/00)
--------------------------------------------------------------------------------
Portfolio Statistics
Weighted Average Maturity (Days) 29
-------------------------------------------------------------
Credit Quality/3/
Standard & Poor's Moody's
SP-1+, SP-1, A-1+, A-1 VMIG-1, MIG-1, P-1 82%
-------------------------------------------------------------
A-2 VMIG-2, MIG-2, P-2 9%
-------------------------------------------------------------
N/R N/R 9%
-------------------------------------------------------------
Sector Diversification (Top 5)
-------------------------------------------------------------
Tax Obligation/General 30%
-------------------------------------------------------------
Education and Civic Organizations 17%
-------------------------------------------------------------
Housing/Multifamily 15%
-------------------------------------------------------------
Transportation 9%
-------------------------------------------------------------
Utilities 9%
-------------------------------------------------------------
1. Lipper Index returns reflect the performance of mutual funds in the Lipper
New York Tax-Exempt Money Market Index. Returns assume reinvestment of
dividends and do not reflect any applicable sales charges.
2. Annual Fund Operating Expenses have been restated to reflect current fees
payable under the 12b-1 Plan.
3. Ratings: Using the higher of Standard & Poor's or Moody's rating.
Section 1 The Funds 5
<PAGE>
Nuveen Municipal Money Market Fund
Fund Overview
Investment Objective
The fund's investment objective is to provide as high a level of current income
exempt from regular federal income taxes as is consistent with the stability of
principal and the maintenance of liquidity.
How the Fund Pursues Its Objective
The fund invests substantially all of its assets in a diversified portfolio of
high quality municipal money market instruments that the fund's investment
adviser believes present minimal credit risks. The adviser selects money market
instruments based on its assessment of current market interest rates and its
market outlook. The adviser seeks to identify money market instruments with
favorable characteristics the adviser believes are not yet recognized by the
market.
What are the Risks of Investing in the Fund?
While the fund invests in securities its investment adviser believes present
minimal credit and interest rate risks, the fund is not risk free. The value of
the fund's investments may be adversely affected by changes in prevailing
interest rates or an issuer's credit quality. The fund's investment policies are
designed to mitigate these risks and maintain a constant price per share of
$1.00, but there can be no guarantee of this. Like any mutual fund investment,
loss of money is a risk of investing. An investment in the fund is not FDIC or
government insured, or a bank deposit.
Is This Fund Right for You?
The fund may be appropriate for you if you seek to:
. Earn monthly tax-free income on your cash reserves with check-writing
privileges;
. Maintain stability of principal;
. Make gradual transfers into stock or bond funds; or
. Lower the overall risk of your investment portfolio.
You should not invest in this fund if you seek to pursue long-term growth of
principal.
How the Fund Has Performed
The chart and table below illustrate annual fund returns for each of the past
ten years as well as annualized fund and index returns for the one-, five- and
ten-year periods ended December 31, 1999. This information is intended to help
you assess the variability of fund returns over the past ten years (and
consequently, the potential rewards and risks of a fund investment). Past
performance is not necessarily an indication of future performance.
Total Returns
Annual Returns*
[BAR CHART APPEARS HERE]
1990 5.57%
1991 4.23%
1992 2.55%
1993 1.88%
1994 2.27%
1995 3.32%
1996 2.92%
1997 3.06%
1998 2.96%
1999 2.78%
*The year-to-date return as of March 31, 2000 was .72%.
During the last ten years ended December 31, 1999, the highest and lowest
quarterly returns were 1.40% and .44%, respectively, for the quarters ended
December 31, 1990 and March 31, 1994.
<TABLE>
<CAPTION>
Average Annual Total Returns for
the Periods Ended December 31, 1999
-----------------------------------
1 Year 5 Year 10 Year
-----------------------------------
<S> <C> <C> <C>
Nuveen Municipal
Money Market Fund 2.78% 3.01% 3.15%
-----------------------------------
Lipper Index/1/ 2.81% 3.13% 3.27%
</TABLE>
Based on the seven-day period ended December 31, 1999, the fund's yield was
3.94%, and the taxable equivalent yield (using the maximum federal income tax
rate of 39.6%) was 6.52%. For the fund's current yields, please call Nuveen at
(800) 257-8787.
6 Section 1 The Funds
<PAGE>
--------------------------------------------------------------------------------
What are the Costs of Investing?
--------------------------------------------------------------------------------
These tables describe the fees and expenses that you may pay if you buy and hold
shares of the fund.
Shareholder Transaction Expenses
Paid Directly From Your Investment
<TABLE>
<CAPTION>
--------------------------------------------------
<S> <C>
Maximum Sales Charge Imposed
on Purchases None
--------------------------------------------------
Maximum Sales Charge Imposed
on Reinvested Dividends None
--------------------------------------------------
Exchange Fees None
--------------------------------------------------
</TABLE>
Annual Fund Operating Expenses/2/
Paid From Fund Assets
<TABLE>
<CAPTION>
--------------------------------------------------
<S> <C>
Management Fees .50%
--------------------------------------------------
12b-1 Distribution and Service Fees/2/ .20%
--------------------------------------------------
Other Expenses .40%
--------------------------------------------------
Total Annual Fund Operating Expenses--Gross+ 1.10%
--------------------------------------------------
</TABLE>
+ After Expense Reimbursements
---------------------------------------------------
Expense Reimbursements (.26%)
---------------------------------------------------
Total Annual Fund Operating Expenses--Net .84%
---------------------------------------------------
The adviser undertook to reimburse expenses through December 31, 1999 in an
amount necessary to limit total operating expenses to .75%. The adviser
currently is reimbursing expenses at a lower rate, but may modify or
discontinue this at any time. Net operating expenses are likely to be higher
in the current fiscal year.
Example
The following example is intended to help you compare the cost of investing in
the fund with the cost of investing in other mutual funds. The example assumes
you invest $10,000 in the fund for the time periods indicated, and then redeem
all your shares at the end of a period. The example also assumes that your
investment has a 5% return each year and that the fund's operating expenses
remain the same. Your actual costs may be higher or lower.
1 Year $ 112
----------------
3 Years $ 350
----------------
5 Years $ 606
----------------
10 Years $1,340
----------------
--------------------------------------------------------------------------------
How the Fund Is Invested (as of 02/29/00)
--------------------------------------------------------------------------------
Portfolio Statistics
Weighted Average Maturity (Days) 27
------------------------------------------
Credit Quality/3/
<TABLE>
<CAPTION>
Standard & Poor's Moody's
-----------------------------------------------------
<S> <C> <C>
SP-1+, SP-1, A-1+, A-1 VMIG-1, MIG-1, P-1 63%
-----------------------------------------------------
A-2 VMIG-2, MIG-2, P-2 3%
-----------------------------------------------------
N/R N/R 34%
-----------------------------------------------------
</TABLE>
Sector Diversification (Top 5)
<TABLE>
<CAPTION>
<S> <C>
--------------------------------------
Education and Civic Organizations 11%
--------------------------------------
Long-Term Care 11%
--------------------------------------
Tax Obligation/General 11%
--------------------------------------
Utilities 11%
--------------------------------------
Capital Goods 10%
--------------------------------------
</TABLE>
1. Lipper Index returns reflect the performance of funds in the Lipper Tax
Exempt Money Market Index. Returns assume reinvestment of dividends and do
not reflect any applicable sales charges.
2. Annual Fund Operating Expenses have been restated to reflect current fees
payable under the 12b-1 Plan.
3. Ratings: Using the higher of Standard & Poor's or Moody's rating.
Section 1 The Funds 7
<PAGE>
Section 2 How We Manage Your Money
To help you understand how the funds' assets are managed, this section includes
a detailed discussion of the adviser's investment and risk management
strategies. For a more complete discussion of these matters, please consult the
Statement of Additional Information.
--------------------------------------------------------------------------------
Who Manages the Funds
--------------------------------------------------------------------------------
Nuveen Advisory Corp. ("Nuveen Advisory"), the funds' investment adviser,
together with its advisory affiliate, Nuveen Institutional Advisory Corp., offer
premier advisory and investment management services to a broad range of mutual
fund clients. In the Nuveen family, these advisers are commonly referred to as
Nuveen Investment Management or NIM. Nuveen Advisory is responsible for the
selection and on-going monitoring of the securities in each fund's portfolio,
managing each fund's business affairs and providing certain clerical,
bookkeeping and other administrative services. The NIM advisers are located at
333 West Wacker Drive, Chicago, IL 60606. For providing these services, Nuveen
Advisory is paid an annual management fee. For the most recent fiscal year, each
fund paid the following fees, as a percentage of its average net assets, to
Nuveen Advisory for its services.
<TABLE>
<CAPTION>
Management Fee
--------------
<S> <C>
Nuveen California Tax-Exempt Money Market Fund .05%
Nuveen New York Tax-Exempt Money Market Fund .09%
Nuveen Municipal Money Market Fund .24%
</TABLE>
The NIM advisers are wholly owned subsidiaries of John Nuveen & Co. Incorporated
("Nuveen"). Founded in 1898, Nuveen has been synonymous with investments that
withstand the test of time. Today we provide managed assets and structured
investment products and services to help financial advisors serve the wealth
management needs of individuals and families. Nuveen manages or oversees $71
billion in assets.
--------------------------------------------------------------------------------
What Securities We Invest In
--------------------------------------------------------------------------------
The funds invest in high quality, short-term tax-exempt debt securities,
commonly known as municipal money market securities. Substantially all of the
California and New York funds' investments are from issuers within the States of
California and New York, respectively. Municipal money market securities pay
income that is exempt from regular federal income tax but may be subject to the
federal alternative minimum tax. New York municipal money market securities pay
income that also is exempt from New York state and local personal income taxes.
California municipal
8 Section 2 How We Manage Your Money
<PAGE>
money market securities pay income that is exempt from California state income
tax.
States and local governments, municipalities, agencies and other governmental
units issue municipal money market securities to raise money for various public
purposes, such as building public facilities, refinancing outstanding debt and
financing general operating expenses. These securities include general
obligation bonds, which are backed by the full faith and credit of the issuer
and may be repaid from any revenue source, and revenue bonds, which may be
repaid only from the revenue of a specific facility or source. These securities
also include notes, such as bond anticipation, revenue anticipation,
construction loan and bank notes, and commercial paper.
Credit-Enhanced Investments
Some of each fund's investments may be backed by a letter of credit or other
type of credit enhancements. For example, if an issuer does not have the desired
credit rating, another company may use its higher credit rating to back the
issuer's rating by selling the issuer a letter of credit. Investments backed by
a letter of credit are subject to the risk that the company issuing the letter
of credit will not be able to fulfill its obligations to the fund, or is thought
to be unlikely to be able to do so. This could cause losses to the fund and
affect its share price.
Variable Rate and Floating Rate Demand Notes
We expect variable rate and floating rate securities will constitute a large
portion of each fund's portfolio. These investments may have stated maturities
of more than 397 days, but generally allow the holder to receive payment of
principal plus accrued interest much sooner than this. Because their interest
rates are not fixed, the income a fund earns on these securities generally will
fluctuate with changes in short-term interest rates.
When-Issued and Delayed-Delivery Transactions
Each fund may buy or sell securities on a when-issued or delayed-delivery basis,
paying for or taking delivery of the securities at a later date, normally within
15-45 days of the trade. These transactions involve an element of risk because
the value of the security to be purchased may decline before the settlement
date.
Temporary Strategies
Each fund on a temporary basis may invest in taxable money market securities.
The California and New York funds also may invest in municipal money market
securities whose income is not exempt from that state's state and local personal
income taxes. Taxable money market securities include U.S. government
securities, quality commercial paper or similar fixed-income securities with
remaining maturities of one year or less. Each fund will only do so under
extraordinary circumstances or unusual market conditions. Under these
circumstances, the fund will not be pursuing and may not achieve its investment
objective.
Section 2 How We Manage Your Money 9
<PAGE>
How We Select Investments
Nuveen Advisory selects money market instruments based on its assessment of
current market interest rates and its market outlook. Portfolio managers are
supported by a team of specialized research analysts who review securities
available for purchase, monitor the continued creditworthiness of each fund's
investments, and analyze economic, political and demographic trends affecting
the municipal money market. We seek to identify money market instruments with
favorable characteristics we believe are not yet recognized by the market. We
then select those higher-yielding and undervalued money market instruments that
we believe represent the most attractive values without adding undue risk. We
actively manage the maturity of each fund and its portfolio to optimally balance
the fund's yield with the fund's exposure to interest rate risk.
An Important Note About Risk
Although each fund's investment policies are intended to minimize interest rate
and credit risk, there can be no guarantee that they will do so.
What the Risks Are and How We Manage Them
Risk is inherent in all investing. Investing in a mutual fund -- even a money
market fund -- involves risk, including the risk that you may receive little or
no return on your investment or even that you may lose part of your investment.
In pursuing its investment objective, each fund assumes investment risk, chiefly
in the form of interest rate and credit risk. Each fund tries to limit risk by
restricting the types and maturities of the money market instruments it
purchases, and by diversifying its investment portfolio among issuers and across
different industries. Therefore, before investing, you should consider carefully
the following risks that you assume when you invest in each fund.
Credit risk: Each fund is subject to credit risk. Credit risk is the risk that
an issuer of a money market instrument will be unable to meet its obligation to
make interest and principal payments due to changing financial or market
conditions. Generally, higher rated fixed-income securities carry less credit
risk than lower rated fixed-income securities.
Each fund attempts to mitigate credit risk by investing only in high quality
money market instruments that Nuveen Advisory believes present minimal credit
risks at the time of purchase. High quality instruments are:
. rated in one of the two highest short-term rating categories by at least
two nationally recognized rating services, or
. if only one service has rated the instrument, rated by that service in
one of its two highest short-term rating categories, or
. unrated instruments that Nuveen Advisory judges to be of comparable
quality.
Interest rate risk: Because each fund invests in fixed-income securities, the
fund is subject to interest rate risk. Interest rate risk is the risk that the
value of the fund's portfolio will decline because of rising interest rates.
Interest rate risk is generally lower for shorter-term investments and higher
for longer-term investments.
To mitigate interest rate risk, each fund, under normal market conditions,
maintains an investment portfolio with an overall weighted average maturity of
90 days or less. In addition, each fund limits its investments to
10 Section 2 How We Manage Your Money
<PAGE>
money market instruments with remaining effective maturities of 397 days or
less.
State specific risk: Because the California and New York funds invest primarily
in California and New York municipal money market securities, respectively, each
fund bears investment risk from the economical, political or regulatory changes
that could adversely affect municipal issuers in that state and therefore the
value of the fund's portfolio. See "Appendix--Additional State
Information."
Concentration risk: Concentration risk is the risk that economic or other
developments affecting a single industry may cause the value of related money
market instruments to decline.
To mitigate concentration risk, each fund will not invest more than 25% of its
total assets in any one industry, excluding governmental issuers. Each fund may,
however, invest more than 25% of its assets in a broad segment of the tax-exempt
market, such as instruments issued to fund hospitals, housing or airports, if
Nuveen Advisory believes that the potential returns justify any additional risks
that may arise from doing so. These policies on concentration risk may not be
changed without shareholder approval.
Each fund may invest without limit in securities backed by letters of credit or
other credit enhancements issued by banks and other financial institutions. As a
result, changes in the banking industry may cause the value of securities backed
by these credit enhancements to decline.
Insurance: Each fund has purchased liability insurance against a decline in the
value of the fund's portfolio caused by the default or bankruptcy of an issuer
whose securities the fund owns. The insurance covers substantially all of a
fund's investments except U.S. government securities. The maximum total coverage
for all Nuveen money market funds is $50 million, with a deductible for each
loss of 0.10% of a fund's net assets. Each fund pays the policy's premiums.
Coverage under the policy is subject to certain conditions and may not be
renewable upon expiration. While the policy is intended to provide some
protection against credit risk and to help each fund maintain a constant price
per share of $1.00, there is no guarantee that the insurance will do so.
Section 2 How We Manage Your Money 11
<PAGE>
Section 3 How You Can Buy and Sell Shares
We offer a number of features for your convenience. Please see the Statement of
Additional Information for further details.
-------------------------------------------------------------------------------
How to Buy Shares
-------------------------------------------------------------------------------
Fund shares may be purchased on any business day, which is any day the Federal
Reserve Bank of Boston is normally open for business. Generally, the bank is
closed on weekends and National holidays. Each fund's net asset value is
determined at 4:00 p.m. Eastern Time on each business day, and on other days
where there is significant trading activity in the fund's shares. If a fund
receives your check (or electronic transfer) before 4:00 p.m. Eastern Time on a
business day, you will receive that day's net asset value. You will begin
earning dividends on your investment the following calendar day. If a fund
receives your check (or electronic transfer) after 4:00 p.m. Eastern Time on a
business day, you will receive the next business day's net asset value and will
begin earning dividends on your investment the following calendar day.
Through a Financial Advisor
You may purchase shares through your financial advisor, who can handle all the
details for you, including opening a new account. Financial advisors also can
help you review your financial needs and formulate long-term investment goals
and objectives. In addition, financial advisors generally can help you develop
a customized financial plan, select investments, and monitor and review your
portfolio on an on-going basis to help assure that your investments continue to
meet your needs as circumstances change. Financial advisors are paid for on-
going investment advice and services either from fund sales charges and fees or
by charging you a separate fee in lieu of a sales charge. If you do not have a
financial advisor, call (800) 257-8787 and Nuveen can refer you to one in your
area.
By Mail
You may open an account and buy shares by mail by completing the enclosed
application and mailing it along with your check to: Nuveen Investor Services,
P.O. Box 5186, Bowling Green Station, New York, NY 10274-5186. No third party
checks will be accepted.
Investment Minimums
The minimum initial investment in each Fund is $3,000 ($50 if you establish a
systematic investment plan) and may be lower for accounts opened through
certain fee-based programs. Subsequent investments must be in amounts of $50 or
more. Each fund reserves the right to reject purchase orders and to waive or
increase the minimum investment requirements.
12 Section 3 How You Can Buy and Sell Shares
<PAGE>
-------------------------------------------------------------------------------
Systematic Investing
-------------------------------------------------------------------------------
Systematic investing allows you to make regular investments through automatic
deductions from your bank account, directly from your paycheck or from
exchanging shares from another mutual fund account. The minimum automatic
deduction is $50 per month. There is no charge to participate in each fund's
systematic investment plan. You can stop the deductions at any time by notifying
the fund in writing. To participate in systematic investing, simply complete the
appropriate section of the account application form or submit an Account Update
Form.
From Your Bank Account
You can make systematic investments of $50 or more per month by authorizing us
to draw preauthorized checks on your bank account.
From Your Paycheck
With your employer's consent, you can make systematic investments of $25 or more
per pay period (meeting the monthly minimum of $50) by authorizing your employer
to deduct monies from your paycheck.
Systematic Exchanging
You can make systematic investments by authorizing Nuveen to exchange shares
from one Nuveen mutual fund account into another identically registered Nuveen
account of the same share class.
-------------------------------------------------------------------------------
Special Services
-------------------------------------------------------------------------------
To help make your investing with us easy and efficient, we offer you the
following services at no extra cost.
Exchanging Shares
You may exchange fund shares into an identically registered account at any time
for an appropriate class of another Nuveen mutual fund available in your state.
Your exchange must meet the minimum purchase requirements of the fund into which
you are exchanging. You may have to pay a sales charge when exchanging shares
that you purchased without a sales charge for shares that are sold with a sales
charge. Please consult the Statement of Additional Information for details.
Each fund may change or cancel its exchange policy at any time upon 60 days'
notice.
Fund Direct/SM/
The Fund Direct Program allows you to link your fund account to your bank
account, transfer money electronically between these accounts, and perform a
variety of account transactions, including purchasing shares by telephone and
investing through a systematic investment plan. You also may have dividends,
distributions, redemption payments or systematic withdrawal plan payments sent
directly to your bank account. Your financial advisor can help you complete the
forms for these services, or you can call Nuveen at (800) 257-8787 for copies of
the necessary forms.
Section 3 How You Can Buy and Sell Shares 13
<PAGE>
An Important Note About Telephone Transactions
Although Nuveen Investor Services has certain safeguards and procedures to
confirm the identity of callers, it will not be liable for losses resulting from
following telephone instructions it reasonably believes to be genuine. Also, you
should verify your trade confirmations immediately upon receipt.
--------------------------------------------------------------------------------
How to Sell Shares
--------------------------------------------------------------------------------
You may sell (redeem) your shares on any business day. You will receive the
share price next determined after a fund has received your properly completed
redemption request. If you are selling shares purchased recently with a check,
you will not receive your redemption proceeds until your check has cleared.
This may take up to ten days from your purchase date.
Through Your Financial Advisor
You may sell your shares through your financial advisor who can prepare the
necessary documentation. Your advisor may charge you for this service.
By Telephone
If you have authorized telephone redemption privileges, you can redeem your
shares by calling (800) 257-8787. Telephone redemptions are not available if
you own shares in certificate form and may not exceed $50,000. Checks will only
be issued to you as the shareholder of record and mailed to your address of
record. If you have established Fund Direct privileges, you may have redemption
proceeds transferred electronically to your bank account. We will normally mail
your check the next business day.
By Check
You may request that the funds provide you with redemption checks. These checks
may be made payable to any person in the amount of $500 or more. Simply fill out
the appropriate section of the application form and submit the enclosed
signature card. You must have enough shares in your account to cover the amount
of each check you write or it will be returned. Writing checks from your fund
account does not mean that your account is like a bank checking account. This
check redemption privilege may be modified or terminated at any time.
By Mail
You can sell your shares at any time by sending a written request to the
appropriate fund, c/o Nuveen Investor Services, P.O. Box 5186, Bowling Green
Station, New York, NY 10274-5186. Your redemption request must include the
following information:
. The fund's name;
. Your name and account number;
. The dollar or share amount you wish to redeem;
. The signature of each owner exactly as it appears on the account;
. The name of the person to whom you want your redemption proceeds paid (if
other than to the shareholder of record);
. The address where you want your redemption proceeds sent (if other than the
address of record); and
. Any required signature guarantees (see below).
14 Section 3 How You Can Buy and Sell Shares
<PAGE>
An Important Note About Involuntary Redemption
From time to time, each fund may establish minimum account size requirements.
Each fund reserves the right to liquidate your account upon 30 days' written
notice if the value of your account falls below an established minimum. Each
fund presently has set a minimum account balance of $100 unless you have an
active Nuveen Defined Portfolio reinvestment account.
A fund will normally mail your check the next business day after it receives
your redemption request, but in no event more than seven days after the fund
receives your request.
Signature Guarantees
Signature guarantees are required if you are redeeming more than $50,000, you
want the check payable to someone other than the shareholder of record, you want
the check sent to another address, or if the address on the fund's records has
been changed within the last 60 days. Signature guarantees must be obtained from
a bank, brokerage firm or other financial intermediary that is a member of an
approved Medallion Guarantee Program or that is otherwise approved by the fund.
A notary public cannot provide a signature guarantee.
Systemic Withdrawal
If the value of your fund account is at least $10,000, you may participate in
the fund's systematic withdrawal plan. The plan allows you to make regular
withdrawals through automatic deductions from your fund account. The minimum
automatic withdrawal is $50 per month. You may elect to receive payments
monthly, quarterly, semi-annually or annually, and may choose to receive a
check, or have the monies transferred directly to your bank account (see
"Special Services -- Fund Direct" above), paid to a third party or sent payable
to you at an address other than the address on the fund's records. To
participate in the systematic withdrawal plan, simply complete the appropriate
section of the account application or submit an account update form.
Redemptions In-Kind
The funds generally pay redemption proceeds in cash. Under unusual conditions
that make cash payment unwise and for the protection of existing shareholders,
the funds may pay all or a portion of your redemption proceeds in securities or
other fund assets. Although it is unlikely that your shares would be redeemed
in-kind, you would probably have to pay transaction costs to sell the securities
distributed to you, as well as taxes on any capital gains from that sale.
Section 3 How You Can Buy and Sell Shares 15
<PAGE>
Section 4 General Information
To help you understand the tax implications of investing in the funds, this
section includes important details about how the funds make distributions to
shareholders. We discuss some other fund policies, as well.
--------------------------------------------------------------------------------
Dividends, Distributions and Taxes
--------------------------------------------------------------------------------
The funds pay tax-free dividends monthly. The funds declare dividends on each
business day to shareholders of record on that day.
Payment and Reinvestment Options
The funds automatically reinvest your dividends in additional fund shares unless
you request otherwise. You may request to have your dividends paid to you by
check, deposited directly into your bank account, paid to a third party, sent to
an address other than your address of record, or reinvested in shares of another
Nuveen mutual fund. For more information, contact your financial advisor or call
Nuveen at (800) 257-8787.
Taxes and Tax Reporting
Because each fund invests in municipal money market securities, your regular
monthly dividends will be exempt from regular federal income tax. A portion of
these dividends, however, may be subject to the federal alternative minimum tax.
Because the California and New York funds invest substantially all of their
assets in California and New York municipal money market securities,
respectively, your regular monthly dividends comprised of interest on California
and New York State obligations, respectively, will be exempt from California
personal income tax and New York State and local personal income taxes,
respectively. A portion of the dividends from the Municipal Money Market Fund's
investments may be subject to state and local taxes. Although very unlikely,
each fund may, from time to time, distribute taxable ordinary income or capital
gains.
Early in each year, you will receive a statement detailing the amount and
nature of all dividends that you were paid during the prior year. If you hold
your investment at the firm where you purchased your fund shares, you will
receive the statement from that firm. If you hold your shares directly at the
funds, Nuveen will send you the statement. The tax status of your dividends is
the same whether you reinvest your dividends or elect to receive them in cash.
If you receive social security or railroad retirement benefits, you should
consult your tax advisor about how an investment in the funds may affect the
taxation of your benefits. The State of California does not tax any portion of
these benefits.
Please note that if you do not furnish the funds with your correct Social
Security number or employer identification number, federal law requires
16 Section 4 General Information
<PAGE>
the funds to withhold federal income tax from your distributions and redemption
proceeds, currently at a rate of 31%.
Please consult the Statement of Additional Information and your tax advisor for
more information about taxes.
Taxable Equivalent Yields
The taxable equivalent yield is the current yield you would need to earn on a
taxable investment in order to equal a stated tax-free yield on a municipal
investment. To assist you to more easily compare municipal investments like each
fund with taxable alternative investments, the tables below present the taxable
equivalent yields for a range of hypothetical tax-free yields and tax rates.
Taxable Equivalent Yield--California Fund
Combined Federal and Tax-Exempt Yields
State Tax Rates 2.00% 2.50% 3.00% 3.50% 4.00%
...........................................................
34.5% 3.05% 3.82% 4.58% 5.34% 6.11%
...........................................................
37.5% 3.20% 4.00% 4.80% 5.60% 6.40%
...........................................................
42.0% 3.45% 4.31% 5.17% 6.03% 6.90%
...........................................................
45.0% 3.64% 4.55% 5.45% 6.36% 7.27%
...........................................................
Taxable Equivalent Yield--New York Fund
Combined State and Tax-Exempt Yields
Federal Tax Rates 2.00% 2.50% 3.00% 3.50% 4.00%
...........................................................
33.0% 2.99% 3.73% 4.48% 5.22% 5.97%
...........................................................
35.5% 3.10% 3.88% 4.65% 5.43% 6.20%
...........................................................
40.5% 3.36% 4.20% 5.04% 5.88% 6.72%
...........................................................
43.5% 3.54% 4.42% 5.31% 6.19% 7.08%
...........................................................
Taxable Equivalent Yield--Municipal Fund
Tax-Exempt Yields
Federal Tax Rates 2.00% 2.50% 3.00% 3.50% 4.00%
...........................................................
28.0% 2.78% 3.47% 4.17% 4.86% 5.56%
...........................................................
31.0% 2.90% 3.62% 4.35% 5.07% 5.80%
...........................................................
36.0% 3.13% 3.91% 4.69% 5.47% 6.25%
...........................................................
39.6% 3.31% 4.14% 4.97% 5.79% 6.62%
...........................................................
The yields and tax rates shown above are hypothetical and do not predict your
actual returns or effective tax rate. For more detailed information, see the
Statement of Additional Information or consult your tax advisor.
--------------------------------------------------------------------------------
Service Plan
--------------------------------------------------------------------------------
Nuveen serves as the selling agent and distributor of each fund's shares. In
this capacity, Nuveen manages the offering of each fund's shares and is
responsible for all sales and promotional activities, and for providing certain
services to shareholders. Each fund has adopted a service plan in accordance
with Rule 12b-1 under the Investment Company Act of 1940 to reimburse Nuveen
for these services.
Nuveen uses this fee to compensate authorized dealers, including Nuveen, for
providing on-going account services to shareholders. These services
Section 4 General Information 17
<PAGE>
may include establishing and maintaining your account, answering your questions
and providing other personal services to you. Because these fees are paid out of
each fund's assets on an on-going basis, over time these fees will increase the
cost of your investment. Nuveen may, in its discretion and from its own
resources, pay certain financial service firms additional amounts for services
rendered to shareholders.
The service fee payable under the plan is .25% of the average daily net assets
of serviced accounts for the California Tax-Exempt and New York Tax-Exempt
Money Market Funds.
For the Municipal Money Market Fund, service fees under the plan are paid in
accordance with the following schedule:
Average Daily Net Assets
of Serviced Accounts Fee
-----------------------------------------------------------------
Less than $2 million .10%
.................................................................
$2 million to $5 million .15%
.................................................................
$5 million to $10 million .20%
.................................................................
$10 million and over .25%
.................................................................
--------------------------------------------------------------------------------
Net Asset Value
--------------------------------------------------------------------------------
The price you pay and receive for your shares is based on each fund's net asset
value per share, which is determined at 4:00 p.m. Eastern Time on each business
day. Because each fund seeks to maintain a constant price per share of $1.00,
each fund values its portfolio securities using the amortized cost method, which
approximates market value and is described in more detail in the Statement of
Additional Information. There can be no assurance that a fund will be able to
maintain a constant price per share of $1.00.
--------------------------------------------------------------------------------
Fund Service Providers
--------------------------------------------------------------------------------
The custodian of each fund's assets is The Chase Manhattan Bank, 4 New York
Plaza, New York, NY 10004-2413. Chase also provides certain accounting services
to each fund. Each fund's transfer, shareholder services and dividend paying
agent, Chase Global Funds Services Company, P.O. Box 5186, New York, NY
10274-5186, performs bookkeeping, data processing and administrative services
for the maintenance of shareholder accounts.
18 Section 4 General Information
<PAGE>
Section 5 Financial Highlights
The financial highlights table is intended to help you understand a fund's
financial performance for the past 5 years. Certain information reflects
financial results for a single fund share. The total returns in the table
represent the rate that an investor would have earned on an investment in a fund
(assuming reinvestment of all dividends and distributions). This information has
been audited by Arthur Andersen LLP, whose report, along with the funds'
financial statements, are included in the SAI and annual report, which is
available upon request.
--------------------------------------------------------------------------------
Nuveen California Tax-Exempt Money Market Fund*
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Ratios/Supplemental Data
------------------------------------------
Less Ratio
Distributions of Net
Beginning Net from Net Ending Ending Ratio of Investment
Net Invest- Invest- Net Net Expenses Income to
Year Ended Asset ment ment Asset Total Assets to Average Average
February 28/29, Value Income Income Value Return (000) Net Assets (a) Net Assets (a)
---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
2000 (b) $1.00 $ .03 $ (.03) $ 1.00 2.65% $ 55,514 .58% 2.58%
1999 1.00 .03 (.03) 1.00 2.81 113,761 .55 2.79
1998 1.00 .03 (.03) 1.00 3.13 86,916 .55 3.12
1997 1.00 .03 (.03) 1.00 2.94 95,306 .55 2.93
1996 1.00 .03 (.03) 1.00 3.32 70,722 .54 3.30
---------------------------------------------------------------------------------------------------------------------------
</TABLE>
* Information included prior to the year ended February 29, 2000, reflects the
financial highlights of the Service Plan series of the Nuveen California
Tax-Free Money Market Fund.
(a) After expense reimbursement from the investment adviser, where applicable.
(b) Information includes the financial highlights of the Service Plan series of
the Nuveen California Tax-Free Money Market Fund through the close of
business on June 25, 1999, and the financial highlights of the Nuveen
California Tax-Exempt Money Market Fund from such date through February 29,
2000.
Section 5 Financial Highlights 19
<PAGE>
--------------------------------------------------------------------------------
Nuveen New York Tax-Exempt Money Market Fund*
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Ratios/Supplemental Data
------------------------------------------
Less Ratio
Distributions of Net
Beginning Net from Net Ending Ending Ratio of Investment
Net Invest- Invest- Net Net Expenses Income to
Year Ended Asset ment ment Asset Total Assets to Average Average
February 28/29, Value Income Income Value Return (000) Net Assets (a) Net Assets (a)
---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
2000 (b) $1.00 $ .03 $ (.03) $ 1.00 2.73% $ 31,646 .58% 2.72%
1999 1.00 .03 (.03) 1.00 2.73 33,107 .55 2.71
1998 1.00 .03 (.03) 1.00 3.10 28,854 .55 3.09
1997 1.00 .03 (.03) 1.00 2.90 26,116 .55 2.89
1996 1.00 .03 (.03) 1.00 3.20 31,631 .55 3.19
---------------------------------------------------------------------------------------------------------------------------
</TABLE>
* Information included prior to the year ended February 29, 2000, reflects
the financial highlights of the Distribution Plan series of the Nuveen New
York Tax-Free Money Market Fund.
(a) After expense reimbursement from the investment adviser, where applicable.
When custodian fee credits are applied, the Ratio of Expenses to Average
Net Assets for 2000 is .57% and the Ratio of Net Investment Income to
Average Net Assets for 2000 is 2.72%.
(b) Information includes the financial highlights of the Distribution Plan
series of the Nuveen New York Tax-Free Money Market Fund prior to the
close of business on June 25, 1999, and the financial highlights of the
Nuveen New York Tax-Exempt Money Market Fund from such date through
February 29, 2000.
20 Section 5 Financial Highlights
<PAGE>
--------------------------------------------------------------------------------
Nuveen Municipal Money Market Fund
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Ratios/Supplemental Data
------------------------------------------
Less Ratio
Distributions of Net
Beginning Net from Net Ending Ending Ratio of Investment
Net Invest- Invest- Net Net Expenses Income to
Year Ended Asset ment ment Asset Total Assets to Average Average
February 28/29, Value Income Income Value Return (000) Net Assets (a) Net Assets (a)
---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
2000 $1.00 $ .03 $ (.03) $ 1.00 2.79% $242,698 .77% 2.79%
1999 1.00 .03 (.03) 1.00 2.85 252,354 .75 2.84
1998 1.00 .03 (.03) 1.00 3.02 270,723 .75 3.02
1997 1.00 .03 (.03) 1.00 2.87 304,087 .75 2.87
1996 1.00 .03 (.03) 1.00 3.23 339,662 .75 3.22
---------------------------------------------------------------------------------------------------------------------------
</TABLE>
(a) After expense reimbursement from the investment adviser, where
applicable.
Section 5 Financial Highlights 21
<PAGE>
Appendix Additional State Information
Because the California and New York funds primarily purchase municipal money
market securities from a specific state, each fund also bears investment risks
from economic, political, or regulatory changes that could adversely affect
municipal money market securities issuers in that state and therefore the value
of the fund's investment portfolio. The following discussion of special state
considerations was obtained from official offering statements of these issuers
and has not been independently verified by the funds. The discussion includes
general state tax information related to an investment in fund shares. Because
tax laws are complex and often change, you should consult your tax advisor about
the state tax consequences of a specific fund investment. See the Statement of
Additional Information for further information.
These factors, among others, may affect tax-exempt issuers' ability to pay their
obligations when due and may adversely impact each fund and its shareholders.
California
During the early 1990's, the State of California experienced significant
financial difficulties (economic recession), which led to a reduction in the
credit ratings assigned to California's general obligation bonds. However, the
State's finances have improved since 1994. Should the financial condition of
California deteriorate again, its credit ratings could be further reduced, and
the market value and marketability of all general obligation bonds issued by
California, its public authorities or local governments could be adversely
affected.
Tax Treatment.
The California fund's regular monthly dividends will not be subject to
California personal income taxes to the extent they are paid out of income
earned on California municipal money market securities or U.S. government
securities. You will be subject to California personal income taxes, however, to
the extent the fund distributes any taxable income or realized capital gains, or
if you sell or exchange shares of the fund and realize capital gain on the
transaction.
The treatment of corporate shareholders of the fund differs from that described
above. Corporate shareholders should refer to the Statement of Additional
Information for more detailed information.
New York
During the early 1990's, the State of New York experienced significant financial
difficulties (economic recession), which led to a reduction in the credit
ratings assigned to New York's general obligation bonds. However,
22 Appendix
<PAGE>
the State's economy has improved, but continues to lag the nation in several
areas, including job growth and unemployment. In addition, many of the State's
agencies and local governments have been experiencing, and continue to
experience financial difficulties. Should the financial condition of New York
deteriorate again, its credit ratings could be further reduced, and the market
value and marketability of all general obligation bonds issued by New York, its
public authorities or local governments could be adversely affected.
Tax Treatment.
The New York fund's regular monthly dividends will not be subject to New York
State or New York City personal income taxes to the extent they are paid out of
income earned on New York municipal money market securities or out of income
earned on obligations of U.S. territories and possessions that is exempt from
federal taxation. The portion of the New York fund's monthly dividends that is
attributable to income earned on other obligations will be subject to the New
York State or the New York City personal income taxes. You also will be subject
to New York State and New York City personal income taxes to the extent the New
York fund distributes any taxable income or realized capital gains, or if you
sell or exchange shares of the New York fund and realize a capital gain on the
transaction.
The treatment of corporate and unincorporated business shareholders of the New
York fund differs from that described above. Corporate shareholders should refer
to the Statement of Additional Information for more detailed information and are
urged to consult their tax advisor.
Appendix 23
<PAGE>
Nuveen Mutual Funds
Nuveen offers a variety of mutual funds designed to help you reach your
financial goals. The funds below are grouped by investment objectives.
Growth
International Growth Fund
Innovation Fund
Nuveen Rittenhouse Growth Fund
Growth and Income
European Value Fund
Growth and Income Stock Fund
Balanced Stock and Bond Fund
Balanced Municipal and Stock Fund
Dividend and Growth Fund
Income
Income Fund
Floating Rate Fund/1/
Tax-Free Income
National Municipal Bond Funds
High Yield
Long-term
Insured Long-term
Intermediate-term
Limited-term
State Municipal Bond Funds
Arizona
California/2/
Colorado
Connecticut
Florida
Georgia
Kansas
Kentucky
Louisiana
Maryland
Massachusetts/2/
Michigan
Missouri
New Jersey
New Mexico
New York/2/
North Carolina
Ohio
Pennsylvania
Tennessee
Virginia
Wisconsin
Cash Reserves
Money Market Fund
Municipal Money Market Fund
California Tax-Exempt Money Market Fund
New York Tax-Exempt Money Market Fund
Several additional sources of information are available to you. The Statement of
Additional Information ("SAI"), incorporated by reference into this prospectus,
contains detailed information on fund policies and operation. Call Nuveen at
(800) 257-8787 to request a free copy of the SAI or other fund information; or
ask your financial advisor for copies.
You may also obtain this and other fund information directly from the Securities
and Exchange Commission ("SEC"). The SEC may charge a copying fee for this
information. Visit the SEC on-line at http://www.sec.gov or in person at the
SEC's Public Reference Room in Washington, D.C. Call the SEC at (800) SEC-0330
for room hours and operation. You may also request fund information by writing
to the SEC's Public Reference Section, Washington, D.C. 20549. The California
Tax-Exempt Money Market Fund's and New York Tax-Exempt Money Market Fund's
Investment Company file number is 811-09267. The Municipal Money Market Fund's
Investment Company file number is 811-03531.
1. This is a continuously-offered closed-end interval fund. As such, redemptions
are only available during quarterly repurchase periods. See fund prospectus
for additional information.
2. Long-term and insured long-term portfolios.
NUVEEN
Investments
John Nuveen & Co. Incorporated
333 West Wacker Drive
Chicago, IL 60606-1286
(800) 257-8787
www.nuveen.com
<PAGE>
NUVEEN
Investments
Institutional
Tax-Exempt
Money Market
Fund
PROSPECTUS JUNE 28, 2000
For investors seeking tax-free income, stability and liquidity in a flexible
cash management investment.
INVEST WELL
LOOK AHEAD
LEAVE YOUR MARK(SM)
[PHOTO APPEARS HERE]
The Securities and Exchange Commission has not approved or disapproved these
securities or passed upon the adequacy of this prospectus. Any representation to
the contrary is a criminal offense.
<PAGE>
We have used the icons below throughout this prospectus to make it easy for you
to find the type of information you need.
Investment
Strategy
Risks
Fees, Charges
and Expenses
Shareholder
Instructions
Performance and
Current Portfolio
Information
Table of Contents
Section 1 The Fund
This section provides you with an overview of the fund including investment
objectives, portfolio holdings and historical performance information.
Introduction 1
............................................................................
Nuveen Institutional Tax-Exempt Money Market Fund 2
............................................................................
Section 2 How We Manage Your Money
This section gives you a detailed discussion of our investment and risk
management strategies.
Who Manages the Fund 4
............................................................................
What Securities We Invest In 5
............................................................................
How We Select Investments 6
............................................................................
What the Risks Are and How We Manage Them 6
............................................................................
Section 3 How You Can Buy and Sell Shares
This section provides the information you need to move money into and out of
your account.
How to Buy Shares 8
............................................................................
Special Services 8
............................................................................
How to Sell Shares 9
............................................................................
Section 4 General Information
This section summarizes the fund's distribution policies and other general
information.
Dividends, Distributions and Taxes 10
............................................................................
Net Asset Value 11
............................................................................
Fund Service Providers 11
............................................................................
Section 5 Financial Highlights
This section provides the fund's financial performance for the past
five years. 12
............................................................................
<PAGE>
June 28, 2000
Section 1 The Fund
Nuveen Institutional Tax-Exempt Money Market Fund
-----------------------------------------------------------------------------
Introduction
-----------------------------------------------------------------------------
This prospectus is intended to provide important information to help you
evaluate whether the Nuveen Institutional Tax-Exempt Money Market Fund may be
right for you. Please read it carefully before investing and keep it for future
reference.
-----------------------------------------------------------------------------
NOT FDIC OR GOVERNMENT INSURED MAY LOSE VALUE NO BANK GUARANTEE
-----------------------------------------------------------------------------
Section 1 The Fund 1
<PAGE>
Nuveen Institutional Tax-Exempt
Money Market Fund
--------------------------------------------------------------------------------
Fund Overview
--------------------------------------------------------------------------------
Investment Objective
The fund's investment objective is to provide as high a level of current income
exempt from federal income taxes as is consistent with the stability of
principal and the maintenance of liquidity.
How the Fund Pursues Its Objective
The fund invests substantially all of its assets in a diversified portfolio of
high quality, tax-exempt money market instruments that the fund's investment
adviser believes present minimal credit risks. The adviser selects money market
instruments based on its assessment of current market interest rates and its
market outlook. The adviser seeks to identify money market instruments with
favorable characteristics the adviser believes are not yet recognized by the
market.
What are the Risks of Investing in the Fund?
While the fund invests in securities its investment adviser believes present
minimal credit and interest rate risks, the fund is not risk free. The value of
the fund's investments may be adversely affected by changes in prevailing
interest rates or an issuer's credit quality. The fund's investment policies are
designed to mitigate these risks and maintain a constant price per share of
$1.00, but there can be no guarantee of this. Like any mutual fund investment,
loss of money is a risk of investing. An investment in the fund is not FDIC or
government insured, or a bank deposit.
Is This Fund Right for You?
The fund may be appropriate for you if you are an institutional investor and
seek to:
. Invest short-term funds in a tax-exempt investment;
. Earn monthly tax-free income on your cash reserves with check-writing
privileges;
. Maintain stability of principal; or
. Make gradual transfers into stock or bond funds.
You should not invest in this fund if you seek to pursue long-term growth of
principal.
--------------------------------------------------------------------------------
How the Fund Has Performed
--------------------------------------------------------------------------------
The chart and table below illustrate annual fund returns for each of the past
ten years as well as annualized fund and index returns for the one-, five-, and
ten-year periods ended December 31, 1999. This information is intended to help
you assess the variability of fund returns over the past ten years (and
consequently, the potential rewards and risks of a fund investment). Past
performance is not necessarily an indication of future performance.
Total Returns
[BAR CHART APPEARS HERE]
1990 5.87%
1991 4.51%
1992 2.80%
1993 2.07%
1994 2.49%
1995 3.51%
1996 3.17%
1997 3.31%
1998 3.20%
1999 2.95%
*The year-to-date return as of March 31, 2000 was .77%.
During the last ten years ended December 31, 1999, the highest and lowest
quarterly returns were 1.48% and .47%, respectively, for the quarters ended
December 31, 1990 and March 31, 1994.
Average Annual Total Returns for
the Periods Ended December 31, 1999
...................................
1 Year 5 Year 10 Year
-----------------------------------
Nuveen Institutional
Tax-Exempt Money
Market Fund 2.95% 3.23% 3.38%
--------------------------------------------------------------------
Lipper Index/1/ 3.02% 3.29% 3.41%
Based on the seven-day period ended December 31, 1999, the fund's yield was
4.19%, and the taxable equivalent yield (using the maximum federal income tax
rate of 39.6%) was 6.94%. For the fund's current yields, please call Nuveen at
(800) 257-8787.
2 Section 1 The Fund
<PAGE>
--------------------------------------------------------------------------------
What are the Costs of Investing?
--------------------------------------------------------------------------------
These tables describe the fees and expenses that you may pay if you buy and hold
shares of the fund.
Shareholder Transaction Expenses
<TABLE>
Paid Directly From Your Investment
.................................................................
<S> <C>
Maximum Sales Charge Imposed
on Purchases None
.................................................................
Maximum Sales Charge Imposed
on Reinvested Dividends None
.................................................................
Exchange Fees None
.................................................................
</TABLE>
Annual Fund Operating Expenses
Paid From Fund Assets
.................................................................
Management Fees .39%
.................................................................
12b-1 Distribution and Service Fees None
.................................................................
Other Expenses .18%
.................................................................
Total Annual Fund Operating Expenses--Gross+ .57%
.................................................................
+ After Expense Reimbursements
........................................................
Expense Reimbursements (.11%)
........................................................
Total Annual Fund Operating Expenses--Net .46%
........................................................
The adviser undertook to reimburse expenses through December
31, 1999 in an amount necessary to limit total operating
expenses to .45%. The adviser currently is reimbursing
expenses at a lower rate, but may modify or discontinue this
at any time. Net operating expenses are likely to be higher
in the current fiscal year.
Example
The following example is intended to help you compare the cost of investing in
the fund with the cost of investing in other mutual funds. The example assumes
you invest $10,000 in the fund for the time periods indicated, and then redeem
all your shares at the end of a period. The example also assumes that your
investment has a 5% return each year and that the fund's operating expenses
remain the same. Your actual costs may be higher or lower.
<TABLE>
<S> <C>
.................................................................
1 Year $ 58
.................................................................
3 Years $183
.................................................................
5 Years $318
.................................................................
10 Years $714
.................................................................
</TABLE>
--------------------------------------------------------------------------------
How the Fund Is Invested (as of 02/29/00)
--------------------------------------------------------------------------------
Portfolio Statistics
Weighted Average Maturity (Days) 40
.................................................................
Credit Quality/2/
<TABLE>
<CAPTION>
Standard & Poor's Moody's
.................................................................
<S> <C> <C>
SP-1+, SP-1, A-1+, A-1 VMIG-1, MIG-1, P-1 92%
.................................................................
A-2 VMIG-2, MIG-2, P-2 5%
.................................................................
N/R NR 3%
.................................................................
</TABLE>
Sector Diversification (Top 5)
<TABLE>
<S> <C>
Healthcare 25%
.................................................................
Long-Term Care 23%
.................................................................
Tax Obligation/General 21%
.................................................................
Education and Civic Organizations 8%
.................................................................
Housing/Multifamily 7%
.................................................................
</TABLE>
1. Lipper Index returns reflect the performance of funds in the Lipper
Institutional Tax-Exempt Money Market Index. Returns assume reinvestment of
dividends and do not reflect any applicable sales charge.
2. Ratings: Using the higher of Standard & Poor's or Moody's rating.
Section 1 The Fund 3
<PAGE>
--------------------------------------------------------------------------------
Section 2 How We Manage Your Money
--------------------------------------------------------------------------------
To help you understand how the fund's assets are managed, this section includes
a detailed discussion of the adviser's investment and risk management
strategies. For a more complete discussion of these matters, please consult the
Statement of Additional Information.
Who Manages the Fund
Nuveen Advisory Corp. ("Nuveen Advisory"), the fund's investment adviser,
together with its advisory affiliate, Nuveen Institutional Advisory Corp., offer
premier advisory and investment management services to a broad range of mutual
fund clients. In the Nuveen family, these advisers are commonly referred to as
Nuveen Investment Management or NIM. Nuveen Advisory is responsible for the
selection and on-going monitoring of the securities in the fund's portfolio,
managing the fund's business affairs and providing certain clerical, bookkeeping
and other administrative services. The NIM advisers are located at 333 West
Wacker Drive, Chicago, IL 60606. For providing these services, Nuveen Advisory
is paid an annual management fee. For the most recent fiscal year, the fund paid
.28% of its average net assets to Nuveen Advisory for its services.
The NIM advisers are wholly owned subsidiaries of John Nuveen & Co. Incorporated
("Nuveen"). Founded in 1898, Nuveen has been synonymous with investments that
withstand the test of time. Today we provide managed assets and structured
investment products and services to help financial advisors serve the wealth
management needs of individuals and families. Nuveen manages or oversees $71
billion in assets.
4 Section 2 How We Manage Your Money
<PAGE>
--------------------------------------------------------------------------------
What Securities We Invest In
--------------------------------------------------------------------------------
Tax-Exempt Money Market Securities
The fund invests in high quality, short-term tax-exempt debt securities,
commonly known as municipal money market securities. Municipal money market
securities pay income that is exempt from regular federal income tax but may be
subject to the federal alternative minimum tax.
States and local governments, municipalities, agencies and other governmental
units issue municipal money market securities to raise money for various public
purposes, such as building public facilities, refinancing outstanding debt and
financing general operating expenses. These securities include general
obligation bonds, which are backed by the full faith and credit of the issuer
and may be repaid from any revenue source, and revenue bonds, which may be
repaid only from the revenue of a specific facility or source. Tax-exempt
instruments also include notes, such as bond anticipation, revenue anticipation,
construction loan and bank notes, and commercial paper.
Credit-Enhanced Investments
Some of the fund's investments may be backed by a letter of credit or other type
of credit enhancement. For example, if an issuer does not have the desired
credit rating, another company may use its higher credit rating to back the
issuer's rating by selling the issuer a letter of credit. Investments backed by
a letter of credit are subject to the risk that the company issuing the letter
of credit will not be able to fulfill its obligation to the fund, or is thought
to be unlikely to be able to do so. This could cause losses to the fund and
affect its share price.
Variable Rate and Floating Rate Demand Notes
We expect variable rate and floating rate securities will comprise a large
portion of the fund's portfolio. These investments may have stated maturities of
more than 397 days, but generally allow the holder to receive payment of
principal plus accrued interest much sooner than this. Because their interest
rates are not fixed, the income earned by the fund on these securities generally
will fluctuate with changes in short-term interest rates.
When-Issued and Delayed-Delivery Transactions
The fund may buy or sell securities on a when-issued or delayed-delivery basis,
paying for or taking delivery of the securities at a later date, normally within
15-45 days of the trade. These transactions involve an element of risk because
the value of the security to be purchased may decline before the settlement
date.
Temporary Strategies
The fund on a temporary basis may invest in taxable money market securities.
Taxable money market securities include U.S. government securities, quality
commercial paper or similar fixed-income securities with remaining maturities of
one year or less. The fund will only do so under extraordinary circumstances or
unusual market conditions. Under these circumstances, the fund will not be
pursuing and may not achieve its investment objective.
Section 2 How We Manage Your Money 5
<PAGE>
--------------------------------------------------------------------------------
How We Select Investments
--------------------------------------------------------------------------------
Nuveen Advisory selects money market instruments based on its assessment of
current market interest rates and its market outlook. Portfolio managers are
supported by a team of specialized research analysts who review securities
available for purchase, monitor the continued creditworthiness of the fund's
investments, and analyze economic, political and demographic trends affecting
the municipal money market. We seek to identify money market instruments with
favorable characteristics we believe are not yet recognized by the market. We
then select those higher-yielding and undervalued money market instruments that
we believe represent the most attractive values without adding undue risk. We
actively manage the maturity of the fund and its portfolio to optimally balance
the fund's yield with the fund's exposure to interest rate risk.
An Important Note About Risk
Although the fund's investment policies are intended to minimize interest rate
and credit risk, there can be no guarantee that they will do so.
--------------------------------------------------------------------------------
What the Risks Are and How We Manage Them
--------------------------------------------------------------------------------
Risk is inherent in all investing. Investing in a mutual fund -- even a money
market fund -- involves risk, including the risk that you may receive little or
no return on your investment or even that you may lose part or all of your
investment. In pursuing its investment objective, the fund assumes investment
risk, chiefly in the form of interest rate and credit risk. The fund tries to
limit risk by restricting the types and maturities of the money market
instruments it purchases, and by diversifying its investment portfolio among
issuers and across different industries. Therefore, before investing, you should
consider carefully the following risks that you assume when you invest in the
fund.
Credit risk: The fund is subject to credit risk. Credit risk is the risk that an
issuer of a money market instrument will be unable to meet its obligation to
make interest and principal payments due to changing financial or market
conditions. Generally, higher rated fixed-income securities carry less credit
risk than lower rated fixed-income securities.
The fund attempts to mitigate credit risk by investing only in high quality
money market instruments that Nuveen Advisory believes present minimal credit
risks at the time of purchase. High quality instruments are:
. rated in one of the two highest short-term rating categories by at least
two nationally recognized rating services, or
. if only one service has rated the instrument, rated by that service in one
of its two highest short-term rating categories, or
. unrated instruments that Nuveen Advisory judges to be of comparable
quality.
Interest rate risk: Because the fund invests in fixed-income securities, the
fund is subject to interest rate risk. Interest rate risk is the risk that the
value of the fund's portfolio will decline because of rising interest rates.
Interest rate risk is generally lower for shorter-term investments and higher
for longer-term investments.
To mitigate interest rate risk, the fund, under normal market conditions,
maintains an investment portfolio with an overall weighted average maturity of
90 days or less. In addition, the fund limits its investments to
6 Section 2 How We Manage Your Money
<PAGE>
money market instruments with remaining effective maturities of 397 days or
less.
Concentration risk: Concentration risk is the risk that economic or other
developments affecting a single industry may cause the value of related money
market instruments to decline.
To mitigate concentration risk, the fund will not invest more than 25% of its
assets in any one industry, excluding governmental issuers. The fund may,
however, invest more than 25% of its assets in a broad segment of the tax-exempt
market, such as instruments issued to fund hospitals, housing or airports, if
Nuveen Advisory believes that the potential returns justify any additional risks
that may arise from doing so. These policies on concentration risk may not be
changed without shareholder approval.
The fund may invest without limit in securities backed by letters of credit or
other credit enhancements issued by banks and other financial institutions. As a
result, changes in the banking industry may cause the value of securities backed
by these credit enhancements to decline.
Insurance: The fund has purchased liability insurance against a decline in the
value of the fund's portfolio caused by the default or bankruptcy of an issuer
whose securities the fund owns. The insurance covers substantially all of the
fund's investments except U.S. government securities. The maximum total coverage
for all Nuveen money market funds is $50 million, with a deductible for each
loss of 0.10% of the fund's net assets. The fund pays the policy's premiums.
Coverage under the policy is subject to certain conditions and may not be
renewable upon expiration. While the policy is intended to provide some
protection against credit risk and to help the fund maintain a constant price
per share of $1.00, there is no guarantee that the insurance will do so.
Section 2 How We Manage Your Money 7
<PAGE>
Section 3 How You Can Buy and Sell Shares
We offer a number of features for your convenience. Please see the Statement of
Additional Information for further details.
--------------------------------------------------------------------------------
How to Buy Shares
--------------------------------------------------------------------------------
Fund shares may be purchased at net asset value on any business day, which is
any day the Federal Reserve Bank of Boston is normally open for business.
Generally, the bank is closed on weekends and national holidays. The fund's net
asset value is determined at 12:00 noon Eastern Time on each business day, and
on other days where there is significant trading activity in the fund's shares.
If the fund receives your order in proper form before 12:00 noon Eastern Time
and the fund's custodian receives federal funds from you before 3:00 p.m.,
Eastern Time, you will receive the dividend declared and net asset value
computed on that day. These orders can be placed by calling (800) 858-4084.
Otherwise, you will receive the next business day's dividend and net asset
value.
By Mail
You may open an account and buy shares through the mail by completing the
enclosed application and mailing it along with your check to the fund, c/o
Nuveen Investor Services, P.O. Box 5186, Bowling Green Station, New York, NY
10274-5186. No third party checks will be accepted.
Minimum Investments
The minimum initial investment is $25,000. Subsequent investments for your
account must be in amounts of $500 or more. The fund reserves the right to
reject purchase orders and to waive or increase the minimum investment
requirements.
--------------------------------------------------------------------------------
Special Services
--------------------------------------------------------------------------------
To help make your investing with us easy and efficient, we offer you the
following service at no extra cost.
Exchanging Shares
You may exchange fund shares into an identically registered account at any time
for the appropriate class of another Nuveen mutual fund available in your state.
Your exchange must meet the minimum purchase requirements of the fund into which
you are exchanging. You may have to pay a sales charge when exchanging shares
that you purchased without a sales charge for shares that are sold with a sales
charge. Please consult the Statement of Additional Information for details.
The fund may change or cancel its exchange policy at any time on 60 days'
notice.
8 Section 3 How You Can Buy and Sell Shares
<PAGE>
An Important Note About Telephone Transactions
Although Nuveen Investor Services has certain safeguards and procedures to
confirm the identity of callers, it will not be liable for losses resulting from
following telephone instructions it reasonably believes to be genuine. Also, you
should verify your trade confirmations immediately upon receipt.
An Important Note About Involuntary Redemption
From time to time, the fund may establish minimum account size requirements. The
fund reserves the right to liquidate your account upon 60 days' written notice
if the value of your account falls below an established minimum. The fund
presently has set a minimum account balance of $5,000.
--------------------------------------------------------------------------------
How to Sell Shares
--------------------------------------------------------------------------------
You may sell (redeem) your shares on any business day. You will receive the
share price next determined after the fund has received your properly completed
redemption request. If you are selling shares purchased recently with a check,
you will not receive your redemption proceeds until your check has cleared. This
may take up to ten days from your purchase date.
By Telephone
If you have authorized telephone redemption privileges, you can redeem your
shares by calling (800) 257-8787. Telephone redemptions are not available if you
own shares in certificate form and may not exceed $50,000. Checks will only be
issued to you as the shareholder of record and mailed to your address of record.
We will normally mail your check the next business day.
By Mail
You can sell your shares at any time by sending a written request to the fund,
c/o Nuveen Investor Services, P.O. Box 5186, Bowling Green Station, New York, NY
10274-5186. Your redemption request must include the following information:
. The fund's name;
. Your name and account number;
. The dollar or share amount you wish to redeem;
. The signature of each owner exactly as it appears on the account;
. The name of the person to whom you want your redemption proceeds paid (if
other than to the shareholder of record);
. The address where you want your redemption proceeds sent (if other than the
address of record); and
. Any required signature guarantees (see below).
The fund will normally mail your check the next business day after it receives
your redemption request, but in no event more than seven days after the fund
receives your request.
Signature Guarantees
Signature guarantees are required if you are redeeming more than $50,000, you
want the check payable to someone other than the shareholder of record, you want
the check sent to another address, or if the address on the fund's records has
been changed within the last 60 days. Signature guarantees must be obtained from
a bank, brokerage firm or other financial intermediary that is a member of an
approved Medallion Guarantee Program or that is otherwise approved by the fund.
A notary public cannot provide a signature guarantee.
Redemptions In-Kind
The fund generally pays redemption proceeds in cash. Under unusual conditions
that make cash payment unwise and for the protection of existing shareholders,
the fund may pay all or a portion of your redemption proceeds in securities of
other fund assets. Although it is unlikely that your shares would be redeemed
in-kind, you would probably have to pay transaction costs to sell the securities
distributed to you, as well as taxes on any capital gains from that sale.
Section 3 How You Can Buy and Sell Shares 9
<PAGE>
Section 4 General Information
To help you understand the tax implications of investing in the fund, this
section includes important details about how the fund makes distributions to
shareholders. We discuss some other fund policies, as well.
--------------------------------------------------------------------------------
Dividends, Distributions and Taxes
--------------------------------------------------------------------------------
The fund pays tax-free dividends monthly. The fund declares dividends on each
business day to shareholders of record on that day.
Payment and Reinvestment Options
The fund automatically reinvests your dividends in additional fund shares unless
you request otherwise. You may request to have your dividends paid to you by
check, deposited directly into your bank account, paid to a third party, sent to
an address other than the address on the fund's records, or reinvested in shares
of another Nuveen mutual fund. For more information, contact your financial
advisor or call Nuveen at (800) 257-8787.
Taxes and Tax Reporting
Because the fund invests in municipal money market securities, your regular
monthly dividends will be exempt from regular federal income tax. A portion of
these dividends, however, may be subject to state and local taxes or the federal
alternative minimum tax. Although very unlikely, the fund may, from time to
time, distribute taxable ordinary income or capital gains.
Early in each year, you will receive a statement detailing the amount and nature
of all dividends that you were paid during the prior year. If you hold your
investment at the firm where you purchased your fund shares, you will receive
the statement from that firm. If you hold your shares directly at the fund,
Nuveen will send you the statement. The tax status of your dividends is the same
whether you reinvest your dividends or elect to receive them in cash.
If you receive social security or railroad retirement benefits, you should
consult your tax advisor about how an investment in the fund may affect the
federal taxation of your benefits.
Please note that if you do not furnish the fund with your correct Social
Security number or employer identification number, federal law requires the fund
to withhold federal income tax from your distributions and redemption proceeds,
currently at a rate of 31%.
Please consult the Statement of Additional Information and your tax advisor for
more information about taxes.
10 Section 4 General Information
<PAGE>
Taxable Equivalent Yields
The taxable equivalent yield is the current yield you would need to earn on a
taxable investment in order to equal a stated tax-free yield on a municipal
investment. To assist you to more easily compare municipal investments like the
fund's with taxable alternative investments, the table below presents the
taxable equivalent yields for a range of hypothetical tax-free yields and tax
rates.
<TABLE>
<CAPTION>
Taxable Equivalent Yield
Tax-Exempt Yields
Federal Tax Rates 2.00% 2.50% 3.00% 3.50% 4.00%
------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
28.0% 2.78% 3.47% 4.17% 4.86% 5.56%
------------------------------------------------------------------------
31.0% 2.90% 3.62% 4.35% 5.07% 5.80%
------------------------------------------------------------------------
36.0% 3.13% 3.91% 4.69% 5.47% 6.25%
------------------------------------------------------------------------
39.6% 3.31% 4.14% 4.97% 5.79% 6.62%
------------------------------------------------------------------------
</TABLE>
The yields and tax rates shown above are hypothetical and do not predict your
actual returns or effective tax rate. For more detailed information, see the
Statement of Additional Information or consult your tax advisor.
--------------------------------------------------------------------------------
Net Asset Value
--------------------------------------------------------------------------------
The price you pay and receive for your shares is based on the fund's net asset
value per share, which is determined at 12:00 noon Eastern Time on each business
day. Because the fund seeks to maintain a constant price per share of $1.00, the
fund values its portfolio securities using the amortized cost method, which
approximates market value and is described in more detail in the Statement of
Additional Information. There can be no assurance that the fund will be able to
maintain a constant price per share of $1.00.
--------------------------------------------------------------------------------
Fund Service Providers
--------------------------------------------------------------------------------
The custodian of the fund's assets is The Chase Manhattan Bank, 4 New York
Plaza, New York, NY 10004-2413. Chase also provides certain accounting services
to the fund. The fund's transfer, shareholder services and dividend paying
agent, Chase Global Funds Services Company, P.O. Box 5186, New York, NY 10274-
5186, performs bookkeeping, data processing and administrative services for the
maintenance of shareholder accounts.
Section 4 General Information 11
<PAGE>
Section 5 Financial Highlights
The financial highlights table is intended to help you understand a
fund's financial performance for the past 5 years. Certain
information reflects financial results for a single fund share. The
total returns in the table represent the rate that an investor would
have earned on an investment in a fund (assuming reinvestment of all
dividends and distributions). This information has been audited by
Arthur Andersen LLP, whose report, along with the fund's financial
statements, are included in the SAI and annual report, which is
available upon request.
-------------------------------------------------------------------------------
Nuveen Institutional Tax-Exempt Money Market Fund*
-------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Ratios/Supplemental Data
---------------------------------------------
Ratio
Less of Net
Beginning Distributions Ending Ratio of Investment
Net Net from Net Net Ending Expenses Income to
Year Ended Asset Investment Investment Asset Total Net Assets to Average Average
February 28/29, Value Income Income Value Return (000) Net Assets (a) Net Assets (a)
-------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
2000 (b) $ 1.00 $ .03 $ (.03) $ 1.00 2.97% $ 235,325 .46% 2.95%
1999 1.00 .03 (.03) 1.00 3.07 345,633 .45 3.06
1998 1.00 .03 (.03) 1.00 3.27 473,502 .44 3.26
1997 1.00 .03 (.03) 1.00 3.11 515,403 .44 3.10
1996 1.00 .03 (.03) 1.00 3.42 610,053 .44 3.43
=========================================================================================================================
</TABLE>
* Information included prior to the year ended February 29, 2000, reflects the
financial highlights of Nuveen Tax-Exempt Money Market Fund, Inc.
(a) After expense reimbursement from the investment adviser, where applicable.
(b) Information includes the financial highlights of the Nuveen Tax-Exempt Money
Market Fund, Inc. through the close of business on June 25, 1999, and the
financial highlights of the Nuveen Institutional Tax-Exempt Money Market
Fund from such date through February 29, 2000.
12 Section 5 Financial Highlights
<PAGE>
Nuveen Mutual Funds
Nuveen offers a variety of mutual funds designed to help you reach your
financial goals. The funds below are grouped by investment objectives.
Growth
International Growth Fund
Innovation Fund
Nuveen Rittenhouse Growth Fund
Growth and Income
European Value Fund
Growth and Income Stock Fund
Balanced Stock and Bond Fund
Balanced Municipal and Stock Fund
Dividend and Growth Fund
Income
Income Fund
Floating Rate Fund/1/
Tax-Free Income
National Municipal Bond Funds
High Yield
Long-term
Insured Long-term
Intermediate-term
Limited-term
State Municipal Bond Funds
Arizona Louisiana North Carolina
California/2/ Maryland Ohio
Colorado Massachusetts/2/ Pennsylvania
Connecticut Michigan Tennessee
Florida Missouri Virginia
Georgia New Jersey Wisconsin
Kansas New Mexico
Kentucky New York/2/
Cash Reserves
Money Market Fund
Municipal Money Market Fund
California Tax-Exempt Money Market Fund
New York Tax-Exempt Money Market Fund
Several additional sources of information are available to you. The Statement of
Additional Information ("SAI"), incorporated by reference into this prospectus,
contains detailed information on fund policies and operation. Call Nuveen at
(800) 257-8787 to request a free copy of the SAI or other fund information; or
ask your financial advisor for copies.
You may also obtain this and other fund information directly from the Securities
and Exchange Commission ("SEC"). The SEC may charge a copying fee for this
information. Visit the SEC on-line at http://www.sec.gov or in person at the
SEC's Public Reference Room in Washington, D.C. Call the SEC at (800) SEC-0330
for room hours and operation. You may also request fund information by writing
to the SEC's Public Reference Section, Washington, D.C. 20549. The fund's
Investment Company file number is 811-09267.
1. This is a continuously-offered closed-end interval fund. As such, redemptions
are only available during quarterly repurchase periods. See fund prospectus
for additional information.
2. Long-term and insured long-term portfolios.
NUVEEN
Investments
John Nuveen & Co. Incorporated
333 West Wacker Drive
Chicago, IL 60606-1286
(800) 257-8787
www.nuveen.com
<PAGE>
[NUVEEN LOGO APPEARS HERE]
Statement of Additional Information
June 28, 2000
Nuveen Money Market Trust
333 West Wacker Drive
Chicago, Illinois 60606
Nuveen Money Market Trust
NUVEEN MONEY MARKET FUND
This Statement of Additional Information is not a prospectus. This Statement of
Additional Information should be read in conjunction with the Prospectus of the
Nuveen Money Market Fund dated June 28, 2000. The Prospectus may be obtained
without charge from certain securities representatives, banks, and other
financial institutions that have entered into sales agreements with John Nuveen
& Co. Incorporated, or from the Fund by mailing a written request to the Fund,
c/o John Nuveen & Co. Incorporated ("Nuveen"), 333 West Wacker Drive, Chicago,
Illinois 60606 or by calling (800) 257-8787.
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
Investment Policies and Investment Portfolio S-2
------------------------------------------------------------
Management S-6
------------------------------------------------------------
Investment Adviser and Investment Management Agreement S-12
------------------------------------------------------------
Portfolio Transactions S-13
------------------------------------------------------------
Net Asset Value S-13
------------------------------------------------------------
Tax Matters S-15
------------------------------------------------------------
Performance Information S-17
------------------------------------------------------------
Additional Information About Purchases and Sales S-18
------------------------------------------------------------
Distribution and Service Plan S-23
------------------------------------------------------------
Other Information Regarding Fund Shares S-24
------------------------------------------------------------
</TABLE>
Principal Underwriter Investment Adviser Independent Public Accountants
John Nuveen & Co. Nuveen Advisory for the Fund
Incorporated Corp., Subsidiary Arthur Andersen LLP
of John Nuveen & 33 West Monroe Street
Chicago: Co. Incorporated Chicago, Illinois 60603
333 West Wacker Drive 333 West Wacker Drive
Chicago, Illinois 60606 Chicago, Illinois
(312) 917-7700 60606
Custodian Transfer and Dividend
New York: The Chase Manhattan Disbursing Agent
10 East 50th Street Bank Chase Global Funds
New York, New York 10022 4 New York Plaza Services Company
(212) 207-2000 New York, New York P.O. Box 5186
10004 New York, New York 10274
The audited financial statements for the Fund's most recent fiscal year appear
in the Fund's Annual Report. The Annual Report accompanies this Statement of
Additional Information.
<PAGE>
INVESTMENT POLICIES AND INVESTMENT PORTFOLIO
Fundamental Policies
The Fund's investment objective and certain fundamental investment policies are
described in the Prospectus. The Fund, as a fundamental policy, may not,
without the approval of the holders of a majority of the shares:
(1) Invest more than 5% of its total assets in securities of any one
issuer, excluding the United States government, its agencies and
instrumentalities.
(2) Borrow money, except from banks for temporary or emergency purposes
and not for investment purposes and then only in an amount not exceeding
(a) 10% of the value of its total assets at the time of borrowing or (b)
one-third of the value of the Fund's total assets including the amount
borrowed, in order to meet redemption requests which might otherwise
require the untimely disposition of securities. While any such borrowings
exceed 5% of the Fund's total assets, no additional purchases of investment
securities will be made by the Fund. If due to market fluctuations or other
reasons, the value of the Fund's assets falls below 300% of its borrowings,
the Fund will reduce its borrowings within 3 days. To do this, the Fund may
have to sell a portion of its investments at a time when it may be
disadvantageous to do so.
(3) Issue senior securities as defined in the Investment Company Act of
1940, except to the extent such issuance might be involved with respect to
borrowings described under item (1) above.
(4) Underwrite any issue of securities, except to the extent that the
purchase or sale of securities in accordance with its investment objective,
policies and limitations, may be deemed to be an underwriting.
(5) Purchase or sell real estate, but this shall not prevent the Fund
from investing in securities secured by real estate or interests therein or
foreclosing upon and selling such security.
(6) Purchase or sell commodities or commodities contracts or oil, gas or
other mineral exploration or development programs.
(7) Make loans, other than by entering into repurchase agreements and
through the purchase of securities or temporary investments in accordance
with its investment objective, policies and limitations.
(8) Make short sales of securities or purchase any securities on margin,
except for such short-term credits as are necessary for the clearance of
transactions.
(9) Invest more than 25% of its total assets in securities of issuers in
any one industry; provided, however, that such limitations shall not be
applicable to the banking industry and obligations issued or guaranteed by
the U.S. government, its agencies or instrumentalities.
In addition, the Fund, as a non-fundamental policy, may not invest more than
10% of its net assets in "illiquid" securities, including repurchase agreements
maturing in more than seven days.
For the purpose of applying the limitations set forth in paragraph (1) above,
an issuer shall be deemed the sole issuer of a security when its assets and
revenues are separate from other governmental entities and its securities are
backed only by its assets and revenues. Similarly, in the case of a non-
governmental user, such as an industrial corporation or a privately owned or
operated hospital, if the security is backed only by the assets and revenues of
the non-governmental user, then such non-governmental user would be deemed to
be the sole issuer. Where a security is also backed by the enforceable
obligation of a superior or unrelated governmental entity or
S-2
<PAGE>
other entity (other than a bond insurer), it shall also be included in the
computation of securities owned that are issued by such governmental or other
entity.
Where a security is guaranteed by a governmental entity or some other facility,
such as a bank guarantee or letter of credit, such a guarantee or letter of
credit would be considered a separate security and would be treated as an issue
of such government, other entity or bank. Where a security is insured by bond
insurance, it shall not be considered a security issued or guaranteed by the
insurer; instead the issuer of such security will be determined in accordance
with the principles set forth above. The foregoing restrictions do not limit
the percentage of the Fund's assets that may be invested in securities insured
by any single insurer. It is a fundamental policy of the Fund, which cannot be
changed without the approval of the holders of a majority of shares of such
Fund, that the Fund will not hold securities of a single bank, including
securities backed by a letter of credit of such bank, if such holdings would
exceed 10% of the total assets of the Fund.
The foregoing restrictions and limitations, as well as the Fund's policies as
to ratings of fund investments, will apply only at the time of purchase of
securities, and the percentage limitations will not be considered violated
unless an excess or deficiency occurs or exists immediately after and as a
result of an acquisition of securities, unless otherwise indicated.
The foregoing fundamental investment policies, together with the investment
objective of the Fund, cannot be changed without approval by holders of a
"majority of the Fund's outstanding voting shares." As defined in the
Investment Company Act of 1940, this means the vote of (i) 67% or more of the
Fund's shares present at a meeting, if the holders of more than 50% of the
Fund's shares are present or represented by proxy, or (ii) more than 50% of the
Fund's shares, whichever is less.
General Information
The Nuveen Money Market Trust (the "Trust") is an open-end management series
investment company organized as a Massachusetts business trust on January 15,
1999. The Fund is an open-end, diversified management investment company
organized as a series of the Trust. The Trust is an open-end management series
company under SEC Rule 18f-2. The Fund is a separate series issuing its own
shares and has four classes of shares: Class A, Class B, Class C and Class R.
The Trust currently has four series. Certain matters under the Investment
Company Act of 1940 which must be submitted to a vote of the holders of the
outstanding voting securities of a series company shall not be deemed to have
been effectively acted upon unless approved by the holders of a majority of the
outstanding voting securities of each series affected by such matter.
The Trust is an entity of the type commonly known as a "Massachusetts business
trust." Under Massachusetts law, shareholders of a trust may, under certain
circumstances, be held personally liable as partners for its obligations.
However, the Declaration of Trust contains an express disclaimer of shareholder
liability for acts or obligations of the Trust and requires that notice of this
disclaimer be given in each agreement, obligation or instrument entered into or
executed by the Trust or the Trustees. The Declaration of Trust further
provides for indemnification out of the assets and property of the Trust for
all loss and expense of any shareholder personally liable for the obligations
of the Trust. Thus, the risk of a shareholder incurring financial loss on
account of shareholder liability is limited to circumstances in which both
inadequate insurance existed and the Trust itself were unable to meet its
obligations. The Trust believes the likelihood of these circumstances is
remote.
Portfolio Securities
As described in the Prospectus, the Fund invests primarily in money market
instruments issued by banks, corporations and governments.
S-3
<PAGE>
U.S. Government Direct Obligations are issued by the United States Treasury and
include bills, notes and bonds.
--Treasury bills are issued with maturities of up to one year. They are
issued in bearer form, are sold on a discount basis and are payable at
par value at maturity.
--Treasury notes are longer-term interest bearing obligations with
original maturities of one to seven years.
--Treasury bonds are longer-term interest-bearing obligations with
original maturities from five to thirty years.
U.S. Government Agencies Securities--Certain federal agencies have been
established as instrumentalities of the United States Government to supervise
and finance certain types of activities. These agencies include, but are not
limited to, the Bank for Cooperatives, Federal Land Banks, Federal Intermediate
Credit Banks, Federal Home Loan Banks, Federal National Mortgage Association,
Government National Mortgage Association, Export-Import Bank of the United
States, and Tennessee Valley Authority. Issues of these agencies, while not
direct obligations of the United States Government, are either backed by the
full faith and credit of the United States or are guaranteed by the Treasury or
supported by the issuing agencies' right to borrow from the Treasury. There can
be no assurance that the United States government itself will pay interest and
principal on securities as to which it is not legally so obligated.
Certificates of Deposit (CDs)--A certificate of deposit is a negotiable
interest bearing instrument with a specific maturity. CDs are issued by banks
in exchange for the deposit of funds and normally can be traded in the
secondary market, prior to maturity. The Fund will only invest in U.S. dollar
denominated CDs issued by U.S. banks with assets of $1 billion or more.
Commercial Paper--Commercial paper is the term used to designate unsecured
short-term promissory notes issued by corporations. Maturities on these issues
vary from a few days to nine months. Commercial paper may be purchased from
U.S. corporations.
Other Corporate Obligations--The Fund may purchase notes, bonds and debentures
issued by corporations if at the time of purchase there is less than 397 days
remaining until maturity or if they carry a variable or floating rate of
interest.
Repurchase Agreements--A repurchase agreement is a contractual agreement
whereby the seller of securities agrees to repurchase the same security at a
specified price on a future date agreed upon by the parties. The agreed upon
repurchase price determines the yield during the Fund's holding period.
Repurchase agreements are considered to be loans collateralized by the
underlying security that is the subject of the repurchase contract. The Fund
will only enter into repurchase agreements with dealers, domestic banks or
recognized financial institutions that in the opinion of the Fund's investment
adviser, Nuveen Advisory Corp. ("Nuveen Advisory") present minimal credit risk.
The risk to the Fund is limited to the ability of the issuer to pay the agreed-
upon repurchase price on the delivery date; however, although the value of the
underlying collateral at the time the transaction is entered into always equals
or exceeds the agreed-upon repurchase price, if the value of the collateral
declines there is a risk of loss of both principal and interest. In the event
of default, the collateral may be sold but the Fund might incur a loss if the
value of the collateral declines, and might incur disposition costs or
experience delays in connection with liquidating the collateral. In addition,
if bankruptcy proceedings are commenced with respect to the seller of the
security, realization upon the collateral by the Fund may be delayed or
limited. Nuveen Advisory will monitor the value of collateral at the time the
transaction is entered into and at all times subsequent during the term of the
repurchase agreement in an effort to determine that the value always equals or
exceeds the agreed upon price. In the event the value of the collateral
declined below the repurchase price,
S-4
<PAGE>
Nuveen Advisory will demand additional collateral from the issuer to increase
the value of the collateral to at least that of the repurchase price. The Fund
will not invest more than 10% of its net assets in repurchase agreements
maturing in more than seven days.
Asset-Backed Securities--The Fund may purchase notes, bonds and debentures that
are backed by assets such as credit card, automobile, corporate loan
receivables, consumer loan receivables, retail installment loans, or
participations in pools of leases. At the time of purchase, these securities
must have 397 days or less remaining until maturity. Credit support for these
securities may be based on the underlying assets and/or provided through credit
enhancements by a third party. The values of these securities are sensitive to
changes quality of the underlying collateral, the credit strength of the credit
enhancements, changes in interest rates, and at times the financial condition
of the issuer. Principal payments on these securities may be provided through a
third party liquidity support facility.
Credit and Liquidity Supports--These may be employed by issuers or sellers of
securities to reduce the credit risk of the security, or to provide a means of
funding the payment of principal and/or interest on the security upon maturity
or upon the owner's exercise of its right to tender the security. Credit
supports include letters of credit, insurance and guarantees provided by
domestic or foreign entities. Liquidity supports include puts, demand features,
lines of credit and standby bond purchase agreements. Most of these
arrangements essentially substitute the credit of the support provider for that
of the issuer of (or assets standing behind) the underlying security.
Variable and Floating Rate Instruments--Certain money market instruments may
carry variable or floating rates of interest. Such instruments bear interest at
rates which are not fixed, but which vary with changes in specified market
rates or indices, such as a bank prime rate or tax-exempt money market index.
Variable rate notes are adjusted to current interest rate levels at certain
specified times, such as every 30 days, as set forth in the instrument. A
floating rate note adjusts automatically whenever there is a change in its base
interest rate adjustor, e.g., a change in the prime lending rate or specified
interest rate indices. Typically such instruments carry demand features
permitting the Fund to recover the full principal amount thereof upon specified
notice.
Defensive Investment Strategies
The Fund may hold up to 100% of its assets in cash as a temporary defensive
measure in response to adverse market conditions or to provide liquidity.
During these periods, the average maturity of the Fund's investment portfolio
may fluctuate.
S-5
<PAGE>
MANAGEMENT
The management of the Trust, including general supervision of the duties
performed for the Funds under the Investment Management Agreement, is the
responsibility of its Board of Trustees. The Trust currently has seven
trustees, one of whom is an "interested person" (as the term "interested
person" is defined in the Investment Company Act of 1940) and six of whom are
"disinterested persons." The names and business addresses of the trustees and
officers of the Trust and their principal occupations and other affiliations
during the past five years are set forth below, with those trustees who are
"interested persons" of the Trust indicated by an asterisk.
<TABLE>
------------------------------------------------------------------------------------
<CAPTION>
Date of Positions and Principal Occupations
Name and Address Birth Offices with Fund During Past Five Years
------------------------------------------------------------------------------------
<C> <C> <C> <S>
Timothy R. Schwertfeger* 3/28/49 Chairman of the Board Chairman since July 1,
333 West Wacker Drive and President 1996 of The John Nuveen
Chicago, IL 60606 Trustee Company, John Nuveen &
Co. Incorporated, Nuveen
Advisory Corp. and
Nuveen Institutional
Advisory Corp., prior
thereto Executive Vice
President and Director
of The John Nuveen
Company and John Nuveen
& Co. Incorporated;
Director of Nuveen
Advisory Corp. (since
1992) and Nuveen
Institutional Advisory
Corp.; Chairman and
Director (since January
1997) of Nuveen Asset
Management, Inc.;
Director (since 1996) of
Institutional Capital
Corporation; Chairman
and Director of
Rittenhouse Financial
Services Inc. (since
1999); Chief Executive
Officer (since September
1999) of Nuveen Senior
Loan Asset Management
Inc.
------------------------------------------------------------------------------------
Robert P. Bremner 8/22/40 Trustee Private Investor and
3725 Huntington Street, N.W. Management Consultant.
Washington, D.C. 20015
------------------------------------------------------------------------------------
Lawrence H. Brown 7/29/34 Trustee Retired (August 1989) as
201 Michigan Avenue Senior Vice President of
Highwood, IL 60040 The Northern Trust
Company
------------------------------------------------------------------------------------
Anne E. Impellizzeri 1/26/33 Trustee President and Chief
3 West 29th Street Executive Officer of
New York, NY 10001 Blanton-Peale Institutes
of Religion and Health
(since December 1990).
------------------------------------------------------------------------------------
Peter R. Sawers 4/3/33 Trustee Adjunct Professor of
22 The Landmark Business and Economics,
Northfield, IL 60093 University of Dubuque,
Iowa; Adjunct Professor,
Lake Forest Graduate
School of Management,
Lake Forest, Illinois.
------------------------------------------------------------------------------------
William J. Schneider 9/24/44 Trustee Senior Partner and Chief
4000 Miller-Valentine Ct. Operating Officer,
P.O. Box 744 Miller-Valentine
Dayton, OH 45401 Partners; Vice
President, Miller-
Valentine Group, a
development and contract
company; Member
Community Advisory
Board, National City
Bank, Dayton, Ohio.
</TABLE>
--------------------------------------------------------------------------------
S-6
<PAGE>
<TABLE>
--------------------------------------------------------------------------------------
<CAPTION>
Date of Positions and Principal Occupations
Name and Address Birth Offices with Fund During Past Five Years
--------------------------------------------------------------------------------------
<C> <C> <C> <S>
Judith M. Stockdale 12/29/47 Trustee Executive Director,
35 E. Wacker Drive Gaylord and Dorothy
Suite 2600 Donnelley Foundation
Chicago, IL 60601 (since 1994); prior
thereto, Executive
Director, Great Lakes
Protection Fund (from
1990 to 1994).
--------------------------------------------------------------------------------
Alan G. Berkshire 12/28/60 Vice President and Senior Vice President
333 West Wacker Drive Assistant Secretary and General Counsel
Chicago, IL 60606 (since September 1997)
and Secretary (since May
1998) of The John Nuveen
Company, John Nuveen &
Co. Incorporated, Nuveen
Advisory Corp. and
Nuveen Institutional
Advisory Corp., Senior
Vice President and
Secretary (since
September 1999) of
Nuveen Senior Loan Asset
Management Inc.; prior
thereto, Partner in the
law firm of Kirkland &
Ellis.
--------------------------------------------------------------------------------
Peter H. D'Arrigo 11/28/67 Vice President and Vice President of John
333 West Wacker Drive Treasurer Nuveen & Co.
Chicago, IL 60606 Incorporated (since
January 1999), prior
thereto. Assistant Vice
President (from January
1997); formerly,
Associate of John Nuveen
& Co. Incorporated; Vice
President and Treasurer
(since September 1999)
of Nuveen Senior Loan
Asset Management Inc.;
Chartered Financial
Analyst.
--------------------------------------------------------------------------------
Michael S. Davern 6/26/57 Vice President Vice President of Nuveen
333 West Wacker Drive Advisory Corp. (since
Chicago, IL 60606 January 1997); prior
thereto, Vice President
and Portfolio Manager of
Flagship Financial.
--------------------------------------------------------------------------------------
Lorna C. Ferguson 10/24/45 Vice President Vice President of John
333 West Wacker Drive Nuveen & Co.
Chicago, IL 60606 Incorporated; Vice
President (since January
1998) of Nuveen Advisory
Corp. and Nuveen
Institutional Advisory
Corp.
--------------------------------------------------------------------------------------
William M. Fitzgerald 3/2/64 Vice President Vice President of Nuveen
333 West Wacker Drive Advisory Corp. (since
Chicago, IL 60606 December 1995);
Assistant Vice President
of Nuveen Advisory Corp.
(from September 1992 to
December 1995), prior
thereto, Assistant
Portfolio Manager of
Nuveen Advisory Corp.
--------------------------------------------------------------------------------------
Stephen D. Foy 5/31/54 Vice President and Controller Vice President of John
333 West Wacker Drive Nuveen & Co.
Chicago, IL 60606 Incorporated and (since
May 1998) The John
Nuveen Company, Vice
President (since
September 1999) of
Nuveen Senior Loan Asset
Management Inc.,
Certified Public
Accountant.
--------------------------------------------------------------------------------------
J. Thomas Futrell 7/5/55 Vice President Vice President of Nuveen
333 West Wacker Drive Advisory Corp.;
Chicago, IL 60606 Chartered Financial
Analyst.
</TABLE>
--------------------------------------------------------------------------------
S-7
<PAGE>
<TABLE>
-------------------------------------------------------------------------------
<CAPTION>
Date of Positions and Principal Occupations
Name and Address Birth Offices with Fund During Past Five Years
-------------------------------------------------------------------------------
<C> <C> <C> <S>
Richard A. Huber 3/26/63 Vice President Vice President of Nuveen
333 West Wacker Drive Institutional Advisory
Chicago, IL 60606 Corp. (since March 1998)
and Nuveen Advisory Corp.
(since January 1997);
prior thereto, Vice
President and Portfolio
Manager of Flagship
Financial, Inc.
-------------------------------------------------------------------------------
Steven J. Krupa 8/21/57 Vice President Vice President of Nuveen
333 West Wacker Drive Advisory Corp.
Chicago, IL 60606
-------------------------------------------------------------------------------
Larry W. Martin 7/27/51 Vice President and Vice President, Assistant
333 West Wacker Drive Assistant Secretary Secretary and Assistant
Chicago, IL 60606 General Counsel of John
Nuveen & Co. Incorporated;
Vice President and
Assistant Secretary of
Nuveen Advisory Corp.;
Vice President and
Assistant Secretary of
Nuveen Institutional
Advisory Corp.; Assistant
Secretary of The John
Nuveen Company and (since
January 1997) Nuveen Asset
Management Inc.; Vice
President and Assistant
Secretary (since September
1999) of Nuveen Senior
Loan Asset Management Inc.
-------------------------------------------------------------------------------
Edward F. Neild, IV 7/7/65 Vice President Vice President (since
333 West Wacker Drive September 1996),
Chicago, IL 60606 previously Assistant Vice
President (since December
1993) of Nuveen Advisory
Corp., Portfolio Manager
prior thereto; Vice
President (since September
1996), previously
Assistant Vice President
(since May 1995) of Nuveen
Institutional Advisory
Corp., Portfolio Manager
prior thereto; Chartered
Financial Analyst.
-------------------------------------------------------------------------------
Stephen S. Peterson 9/20/57 Vice President Vice President (since
333 West Wacker Drive September 1997),
Chicago, IL 60606 previously Assistant Vice
President (since September
1996), Portfolio Manager
prior thereto of Nuveen
Advisory Corp., Chartered
Financial Analyst.
-------------------------------------------------------------------------------
Thomas C. Spalding, Jr. 7/31/51 Vice President Vice President of Nuveen
333 West Wacker Drive Advisory Corp. and Nuveen
Chicago, IL 60606 Institutional Advisory
Corp.; Chartered Financial
Analyst.
-------------------------------------------------------------------------------
Gifford R. Zimmerman 9/9/56 Vice President and Vice President, Assistant
333 West Wacker Drive Secretary Secretary and Associate
Chicago, IL 60606 General Counsel formerly
Assistant General Counsel
of John Nuveen & Co.
Incorporated; Vice
President and Assistant
Secretary of Nuveen
Advisory Corp. and Nuveen
Institutional Advisory
Corp.; Vice President and
Assistant Secretary of The
John Nuveen Company; Vice
President and Assistant
Secretary (since September
1999) of Nuveen Senior
Loan Asset Management
Inc.; Chartered Financial
Analyst.
</TABLE>
--------------------------------------------------------------------------------
Timothy R. Schwertfeger and Peter R. Sawers serve as members of the Executive
Committee of the Board of Trustees. The Executive Committee, which meets
between regular meetings of the Board of Trustees, is authorized to exercise
all of the powers of the Board of Trustees.
S-8
<PAGE>
The trustees of the Trust are directors or trustees, as the case may be, of 37
Nuveen open-end funds and 54 Nuveen closed-end funds advised by Nuveen Advisory
Corp. Mr. Schwertfeger is a director or trustee, as the case may be, of 13
Nuveen open-end funds and closed-end funds advised by Nuveen Institutional
Advisory Corp. and two funds advised by Nuveen Senior Loan Asset Management.
None of the independent trustees has ever been a director, officer, or employee
of, or a consultant to, Nuveen Advisory, Nuveen or their affiliates.
The following table sets forth compensation paid by the Trust to each of the
trustees of the Trust and the total compensation paid to each trustee during
the fiscal year ended February 29, 2000. The Trust has no retirement or pension
plans. The officers and trustees affiliated with Nuveen serve without any
compensation from the Trust.
<TABLE>
<CAPTION>
Aggregate Total Compensation From
Compensation Trust and Fund Complex
Name of Trustee from the Fund(1) paid to the Trustees(2)
--------------- ---------------- -----------------------
<S> <C> <C>
Robert P. Bremner................ $13 $72,000
Lawrence H. Brown................ $13 $78,750
Anne E. Impellizzeri............. $13 $72,000
Peter R. Sawers.................. $13 $74,500
William S. Schneider............. $13 $72,000
Judith M. Stockdale.............. $13 $72,000
</TABLE>
--------
(1) The compensation paid (but not including amounts deferred) to the
independent trustees for the fiscal year ended February 29, 2000 for
services to the Fund.
(2) Based on the compensation paid (including any amounts deferred) to the
independent trustees for the fiscal year ended February 29, 2000 for
services to the open-end and closed-end funds advised by NAC.
Each trustee who is not affiliated with NAC receives a $60,000 annual retainer
for serving as a director or trustee of all funds for which NAC serves as
investment adviser or manager and a $1,000 fee per day plus expenses for
attendance at all meetings held on a day on which a regularly scheduled Board
meeting is held, a $1,000 fee per day plus expenses for attendance in person or
a $500 fee per day plus expenses for attendance by telephone at a meeting held
on a day which no regular Board meeting is held and a $250 fee per day plus
expenses for attendance in person or by telephone at a meeting of the Executive
Committee held solely to declare dividends. The annual retainer, fees and
expenses are allocated among the funds for which NAC serves as investment
adviser or manager on the basis of relative net asset sizes. The Trust requires
no employees other than its officers, all of whom are compensated by NAC or
Nuveen.
The John Nuveen Company (JNC) maintains charitable contributions programs to
encourage the active support and involvement of individuals in the civic
activities of their community. These programs include a matching contributions
program and a direct contributions program. The independent trustees of the
funds managed by NAC are eligible to participate in the charitable
contributions program of JNC. Under the matching program, JNC will match the
personal contributions of a trustee to Section 501(c)(3) organizations up to an
aggregate maximum amount of $10,000 during any calendar year. Under its direct
(non-matching) program, JNC makes contributions to qualifying Section 501(c)(3)
organizations, as approved by the Corporate Contributions Committee of JNC. The
independent trustees are also eligible to submit proposals to the committee
requesting that contributions be made under this program to Section 501(c)(3)
organizations identified by the trustee, in an aggregate amount not to exceed
$5,000 during any calendar year. Any contribution made by JNC under the direct
program is made solely at the discretion of the Corporate Contributions
Committee.
The officers and trustees of each Fund, in the aggregate, own less than 1% of
the shares of the Fund.
S-9
<PAGE>
The following table sets forth the percentage ownership of each person, who as
of May 31, 2000, owns of record, or is known by Registrant to own of record or
beneficially 5% or more of any class of the Fund's shares.
<TABLE>
<CAPTION>
Percentage
Name of Fund and Class Name and Address of Owner of Ownership
---------------------- ------------------------- ------------
<S> <C> <C>
Nuveen Money Market Fund Class A Bill Foster 37.65%
Shares ........................... By Bill Foster
426 S Jefferson Ave
Springfield, MO 65806-2316
Painewebber for the Benefit of 14.18
Grace Elizabeth McCowan Foley
2 Lockwood Drive
Old Greenwich, CT 06870-1901
Matthew F. Hanley 11.08
149 Wheeler Circle Apt. 231
Stoughton, MA 02072-1360
Anthony J. Minichiello 9.58
John A. Minichiello
8 Lenglen Road
Newton, MA 02458
Ramon V. Canent 6.71
4320 Wornall Rd Ste 55
Kansas City, MO 64111-3210
Nuveen Money Market Fund Class B Anne W. Ricci 13.98
Shares............................ 4504 Tyrone Ave.
Sherman Oaks, CA 91423
First Clearing Corporation 13.68
AC 4388-6151
Jean P. Hudson JTWROS
1605 Cobblestone Parkway
Monroe, NC 28100-5624
Nicholas J. Sfakianos 12.84
Sfakianos Tr
6 Elphin Ct 202
Timonium, MD 21093
Fiserv Securities Inc. 12.33
FAO 25218352
One Commerce Square
2005 Market Street Suite 1200
Philadelphia, PA 19103
</TABLE>
S-10
<PAGE>
<TABLE>
<CAPTION>
Percentage
Name of Fund and Class Name and Address of Owner of Ownership
---------------------- ------------------------- ------------
<S> <C> <C>
Edward D. Jones & CO FAO 6.94%
Milan Purvis & EDJ 748-01732-1-5
P.O. Box 2500
Maryland Heights, MO 63043-8500
Painewebber of the Benefit of 5.19
Marena Migliaccio
723 Moss Farm Rd
Cheshire, CT 06410
Nuveen Money Market Fund Class C Donaldson Lufkin Jenrette 44.10
Shares.......................... Securities Corporation Inc.
PO Box 2052
Jersey City, NJ 07303-9998
Painewebber for the Benefit of 27.38
John N. Fellin
464 Hoyt Farm Rd
New Canaan, CT 06840-5050
First Clearing Corporation 8.33
AC 4650-6566
13909 Carrollwood Village Run
Tampa, FL 33624-2431
The John Nuveen Company 5.75
Seed Money
Attn: Darlene Cramer
333 W. Wacker Dr.
Chicago, IL 60606
John A. Depaola 5.62
Melani Galante
PO Box 9000 PMB 1360
Quartzsite, AZ 85346
Nuveen Money Market Fund Class R The John Nuveen Company 70.46
Shares.......................... Seed Money
Attn: Darlene Cramer
333 W. Wacker Dr.
Chicago, IL 60606
Melville R. Millett 6.34
FBO Melville R. Millett
UA SEP 01 92
21 Poinsettia Dr
Debray, FL 32713
Steven L. Mathison and 5.33
Sue M. Mathison
2135 S. 6th Ct.
West Des Moines, IA 50265-8319
</TABLE>
S-11
<PAGE>
INVESTMENT ADVISER AND INVESTMENT MANAGEMENT AGREEMENT
Nuveen Advisory acts as investment adviser for and manages the investment and
reinvestment of the assets of the Fund. Nuveen Advisory also administers the
Trust's business affairs, provides office facilities and equipment and certain
clerical, bookkeeping and administrative services, and permits any of its
officers or employees to serve without compensation as trustees or officers of
the Trust if elected to such positions. See "Who Manages the Fund" in the
Prospectus.
Pursuant to an investment management agreement between Nuveen Advisory and the
Trust, the Fund has agreed to pay an annual management fee at the rates set
forth below, which are based on the Fund's average daily net assets:
<TABLE>
<CAPTION>
Average Daily Net Assets Management Fee
------------------------------------------
<S> <C>
For the first $125 million .4500 of 1%
For the next $125 million .4375 of 1%
For the next $250 million .4250 of 1%
For the next $500 million .4125 of 1%
For the next $1 billion .4000 of 1%
For assets over $2 billion .3750 of 1%
</TABLE>
Nuveen Advisory has agreed to waive all or a portion of its management fee or
reimburse certain expenses of the Fund in order to prevent total operating
expenses (including Nuveen Advisory's fee, but excluding interest, taxes, fees
incurred in acquiring and disposing of portfolio securities, any 12b-1 or
service fees and, to the extent permitted, extraordinary expenses) in any
fiscal year from exceeding .65 of 1% of average daily net assets of any class
of shares of the Fund. Nuveen may modify or discontinue these waivers and
reimbursements at any time.
For the last fiscal year, the Fund paid net management fees to Nuveen Advisory
as follows:
<TABLE>
<CAPTION>
Fee Waivers and Expense
Reimbursements from
Management Fees Net of Expense Nuveen Advisory
Reimbursement Paid to Nuveen Advisory for The Year
For The Year Ended Ended
------------------------------------- ----------------
2/29/00 2/29/00
------- -------
<C> <S>
-- $73,628
</TABLE>
Nuveen Advisory is a wholly owned subsidiary of John Nuveen & Co. Incorporated
("Nuveen"), the Fund's principal underwriter. Nuveen is sponsor of the Nuveen
Defined Portfolios, registered unit investment trusts, is the principal
underwriter for the Nuveen Mutual Funds, and has served as co-managing
underwriter for the shares of the Nuveen Exchanged-Traded Funds. Over 1,300,000
individuals have invested to date in Nuveen's funds and trusts. Founded in
1898, Nuveen and its affiliates manage or oversee more than $70 billion in
assets in a variety of products. Nuveen is a subsidiary of The John Nuveen
Company which, in turn, is approximately 78% owned by The St. Paul Companies,
Inc. ("St. Paul"). St. Paul is located in St. Paul, Minnesota and is
principally engaged in providing property-liability insurance through
subsidiaries.
The Fund, the other Nuveen funds, Nuveen Advisory, and other related entities
have adopted a code of ethics which essentially prohibits all Nuveen fund
management personnel, including Nuveen fund portfolio managers, from engaging
in personal investments which compete or interfere with, or attempt to take
advantage of, the Fund's anticipated or actual portfolio transactions, and is
designed to assure that the interests of Fund shareholders are placed before
the interests of Nuveen personnel in connection with personal investment
transactions.
S-12
<PAGE>
PORTFOLIO TRANSACTIONS
Nuveen Advisory, in effecting purchases and sales of portfolio securities for
the account of the Fund, will place orders in such manner as, in the opinion of
management, will offer the best price and market for the execution of each
transaction. Portfolio securities will normally be purchased directly from an
underwriter or in the over-the-counter market from the principal dealers in
such securities, unless it appears that a better price or execution may be
obtained elsewhere. Portfolio securities will not be purchased from Nuveen or
its affiliates except in compliance with the Investment Company Act of 1940.
The Fund expects that all portfolio transactions will be effected on a
principal (as opposed to an agency) basis and, accordingly, do not expect to
pay any brokerage commissions. Purchases from underwriters will include a
commission or concession paid by the issuer to the underwriter, and purchases
from dealers will include the spread between the bid and asked price. Given the
best price and execution obtainable, it will be the practice of the Fund to
select dealers which, in addition, furnish research information (primarily
credit analyses of issuers and general economic reports) and statistical and
other services to Nuveen Advisory. It is not possible to place a dollar value
on information and statistical and other services received from dealers. Since
it is only supplementary to Nuveen Advisory's own research efforts, the receipt
of research information is not expected to reduce significantly Nuveen
Advisory's expenses. While Nuveen Advisory will be primarily responsible for
the placement of the business of the Fund, the policies and practices of Nuveen
Advisory in this regard must be consistent with the foregoing and will, at all
times, be subject to review by the Board of Trustees.
Nuveen Advisory reserves the right to, and does, manage other investment
accounts and investment companies for other clients, which may have investment
objectives similar to the Fund. Subject to applicable laws and regulations,
Nuveen Advisory will attempt to allocate equitably portfolio transactions among
the Fund and the portfolios of its other clients purchasing or selling
securities whenever decisions are made to purchase or sell securities by the
Fund and one or more of such other clients simultaneously. In making such
allocations the main factors to be considered will be the respective investment
objectives of the Fund and such other clients, the relative size of portfolio
holdings of the same or comparable securities, the availability of cash for
investment by the Fund and such other clients, the size of investment
commitments generally held by the Fund and such other clients and opinions of
the persons responsible for recommending investments to the Fund and such other
clients. While this procedure could have a detrimental effect on the price or
amount of the securities available to a Fund from time to time, it is the
opinion of the Board of Trustees that the benefits available from Nuveen
Advisory's organization will outweigh any disadvantage that may arise from
exposure to simultaneous transactions.
Under the Investment Company Act of 1940, the Fund may not purchase portfolio
securities from any underwriting syndicate of which Nuveen is a member except
under certain limited conditions set forth in Rule 10f-3. The Rule sets forth
requirements relating to, among other things, the terms of an issue of money
market instruments purchased by the Fund, the amount of instruments which may
be purchased in any one issue. In addition, purchases of securities made
pursuant to the terms of the Rule must be approved at least quarterly by the
Board of Trustees, including a majority of the trustees who are not interested
persons of the Fund.
NET ASSET VALUE
As stated in the Prospectus, the net asset value of the shares of the Fund will
be determined separately for each class of the Fund's shares by The Chase
Manhattan Bank, the Fund's custodian, as of 4:00 p.m. Eastern Time, (1) on each
day on which the Federal Reserve Bank of Boston is normally open and (2) on any
day during which there is sufficient degree of trading in the Fund's portfolio
securities that the current net asset value of the
S-13
<PAGE>
Fund's shares might be materially affected by such changes in the value of the
portfolio securities. The Federal Reserve Bank of Boston is not open and the
Fund will similarly not be open on New Year's Day, Martin Luther King's
Birthday, Washington's Birthday, Good Friday, Memorial Day, Independence Day,
Labor Day, Columbus Day, Veteran's Day, Thanksgiving Day and Christmas Day. It
is possible that changing circumstances during the year will result in addition
or deletions to the above lists. The net asset value per share will be computed
by dividing the value of the portfolio securities held by the Fund, plus cash
or other assets, less liabilities, by the total number of shares outstanding at
such time.
As stated in the Prospectus, the Fund will seek to maintain a net asset value
of $1.00 per share. In this connection, the Fund values its portfolio
securities at their amortized cost, as permitted by the Securities and Exchange
Commission (the "Commission") under Rule 2a-7 under the Investment Company Act
of 1940. This method does not take into account unrealized securities gains or
losses. It involves valuing an instrument at its cost on the date of purchase
and thereafter assuming a constant amortization to maturity of any discount or
premium. While this method provides certainty in valuation, it may result in
periods during which the value of an investment, as determined by amortized
cost, is higher or lower than the price the Fund would receive if it sold the
instrument. During periods of declining interest rates, the daily yield on
shares of the Fund may tend to be higher than a like computation made by a fund
with identical investments utilizing a method of valuation based upon market
prices and estimates of market prices for all of its portfolio instruments.
Thus, if the use of the amortized cost method by the Fund resulted in a lower
aggregate portfolio value on a particular day, a prospective investor in the
Fund would be able to obtain a somewhat higher yield than would result from an
investment in a fund utilizing solely market values, and existing investors in
the Fund would receive less investment income. The converse would apply in a
period of rising interest rates.
The Fund, as a condition to the use of amortized cost and the maintenance of
its per share net asset value of $1.00, must maintain a dollar-weighted average
portfolio maturity of 90 days or less, only purchase instruments having
remaining maturities of 397 days or less, and invest only in securities
determined to be of high quality with minimal credit risks. The Fund may invest
in variable and floating rate instruments even if they carry stated maturities
in excess of 397 days, upon certain conditions contained in rules and
regulations issued by the Securities and Exchange Commission under the
Investment Company Act of 1940, but will do so only if there is a secondary
market for such instruments or if they carry demand features, permissible under
rules of the Commission for money market funds, to recover the full principal
amount thereof upon specified notice at par, or both.
The Board of Trustees, pursuant to Rule 2a-7, has established procedures
designed to stabilize, to the extent reasonably possible, the Fund's price per
share as computed for the purpose of sales and redemptions at $1.00. Such
procedures will include review of the Fund's portfolio holdings by the Board of
Trustees, at such intervals as it may deem appropriate, to determine whether
the net asset value calculated by using available market quotations or market
equivalents deviates from $1.00 per share based on amortized cost. Market
quotations and market equivalents used in such review may be obtained from a
pricing agent approved by the Board of Trustees. The Board has selected Nuveen
Advisory to act as pricing agent, but in the future may select an independent
pricing service to perform this function. In serving as pricing agent, Nuveen
Advisory will follow guidelines adopted by the Board, and the Board will
monitor Nuveen Advisory to see that the guidelines are followed. The pricing
agent will value the Fund's investment based on methods which include
consideration of yield or prices of municipal obligations of comparable
quality, coupon, maturity, and type; indications as to values from dealers; and
general market conditions. The pricing agent may employ electronic data
processing techniques and/or a matrix system to determine valuations. The
extent of any deviation between the Fund's net asset value based on the pricing
agent's market valuation and $1.00 per share based on amortized cost will be
examined by the Board of Trustees. If such deviation exceeds 1/2 of 1%, the
Board of Trustees will promptly
S-14
<PAGE>
consider what action, if any, will be initiated. In the event the Board of
Trustees determines that a deviation exists which may result in material
dilution or other unfair results to investors or existing shareholders, it has
agreed to take such corrective action as it regards as necessary and
appropriate, including the sale of portfolio instruments prior to maturity to
realize capital gains or losses or to shorten average portfolio maturity;
withholding dividends or payment of distributions from capital or capital
gains; redemption of shares in kind; or establishing a net asset value per
share by using available market quotations.
TAX MATTERS
Federal Income Tax Matters
The following discussion of federal income tax matters is based upon the advice
of Morgan, Lewis & Bockius LLP, counsel to the Trust.
The Fund intends to qualify under Subchapter M of the Internal Revenue Code of
1986, as amended (the "Code") for tax treatment as a regulated investment
company. In order to qualify as a regulated investment company, the Fund must
satisfy certain requirements relating to the source of its income,
diversification of its assets, and distributions of its income to shareholders.
First, the Fund must derive at least 90% of its annual gross income (including
tax-exempt interest) from dividends, interest, payments with respect to
securities loans, gains from the sale or other disposition of stock or
securities, foreign currencies or other income (including but not limited to
gains from options and futures) derived with respect to its business of
investing in such stock or securities (the "90% gross income test"). Second,
the Fund must diversify its holdings so that, at the close of each quarter of
its taxable year, (i) at least 50% of the value of its total assets is
comprised of cash, cash items, United States government securities, securities
of other regulated investment companies and other securities limited in respect
of any one issuer to an amount not greater in value than 5% of the value of the
Fund's total assets and to not more than 10% of the outstanding voting
securities of such issuer, and (ii) not more than 25% of the value of the total
assets is invested in the securities of any one issuer (other than United
States government securities and securities of other regulated investment
companies) or two or more issuers controlled by the Fund and engaged in the
same, similar or related trades or businesses.
As a regulated investment company, the Fund will not be subject to federal
income tax on any portion of its net income currently distributed to
shareholders in any taxable year for which it distributes at least 90% of the
sum of (i) its "investment company taxable income" (which includes dividends,
taxable interest, taxable original issue discount and market discount income,
income from securities lending, net short-term capital gain in excess of long-
term capital loss, and any other taxable income other than "net capital gain"
(as defined below) and is reduced by deductible expenses) and (ii) any net tax-
exempt interest (the excess of its gross tax-exempt interest income over
certain disallowed deductions).
Distributions by the Fund of net interest received from its investments and net
short-term capital gains realized by a Fund, if any, will be taxable to
shareholders as ordinary income whether received in cash or additional shares.
Any net long-term capital gains realized by the Fund and distributed to
shareholders in cash or additional shares, will be taxable to shareholders as
long-term capital gains regardless of the length of time investors have owned
shares of the Fund. Distributions by the Fund that do not constitute a dividend
will be treated as a return of capital to the extent of (and in reduction of)
the shareholder's tax basis in his or her shares. Any excess will be treated as
gain from the sale of his or her shares, as discussed below. Because the Fund's
investment income consists primarily of interest, none of its dividends are
expected to qualify under the Internal Revenue Code for the dividends received
deductions for corporations.
Although the Fund does not seek to realize capital gains, the Fund may realize
and distribute capital gains from time to time as a result of the Fund's normal
investment activities. In December, the Fund distributes any gains
S-15
<PAGE>
realized over the preceding year. Net long-term capital gains are taxable as
long-term capital gains regardless of how long you have owned your shares.
Early in each year, you will receive a statement detailing the amount and
nature of all capital gains that you were paid during the year.
Although dividends generally will be treated as distributed when paid,
dividends declared in October, November or December, payable to shareholders of
record on a specified date in one of those months and paid during the following
January, will be treated as having been distributed by the Fund (and received
by the shareholders) on December 31.
The redemption or exchange of the shares of the Fund is not expected to result
in capital gain or loss to the shareholders because the Fund's net asset value
is expected to remain constant at $1.00 per share. To the extent that the
Fund's net asset value is greater or less than $1.00 per share, redemptions or
exchanges may result in capital gain or loss to the shareholder.
In order to avoid a 4% federal excise tax, the Fund must distribute or be
deemed to have distributed by December 31 of each calendar year at least 98% of
its taxable ordinary income for such year, at least 98% of the excess of its
realized capital gains over its realized capital losses (generally computed on
the basis of the one-year period ending on October 31 of such year) and 100% of
any taxable ordinary income and the excess of realized capital gains over
realized capital losses for the prior year that was not distributed during such
year and on which the Fund paid no federal income tax. For purposes of the
excise tax, a regulated investment company may reduce its capital gain net
income (but not below its net capital gain) by the amount of any net ordinary
loss for the calendar year. The Fund intends to make timely distributions in
compliance with these requirements and consequently it is anticipated that they
generally will not be required to pay the excise tax.
If in any year the Fund should fail to qualify under Subchapter M for tax
treatment as a regulated investment company, the Fund would incur a regular
corporate federal income tax upon its income for that year and distributions to
its shareholders would be taxable to shareholders as ordinary dividend income
for federal income tax purposes to the extent of the Fund's available earnings
and profits.
The Fund is required in certain circumstances to withhold 31% of taxable
dividends and certain other payments paid to non-corporate holders of shares
who have not furnished to the Fund their correct taxpayer identification number
(in the case of individuals, their social security number) and certain
certifications, or who are otherwise subject to backup withholding.
The foregoing is a general and abbreviated summary of the provisions of the
Code and Treasury Regulations presently in effect as they directly govern the
taxation of the Fund and its shareholders. For complete provisions, reference
should be made to the pertinent Code sections and Treasury Regulations. The
Code and Treasury Regulations are subject to change by legislative or
administrative action, and any such change may be retroactive with respect to
Fund transactions. Shareholders are advised to consult their own tax advisors
for more detailed information concerning the federal taxation of the Fund and
the income tax consequences to its shareholders.
State Tax Matters
The discussion of tax treatment is based on the assumptions that the Fund will
qualify under Subchapter M of the Code as a regulated investment company and as
a qualified investment fund under applicable state law, and that the Fund will
distribute all interest and dividends it receives to its shareholders.
Investment income received by the Fund on direct U.S. Government obligations
may be exempt from tax at the state level, depending on the state, when
received by a shareholder as income dividends from the Fund provided certain
state specific conditions are satisfied. Shareholders generally will be
required to include capital gain distributions in their income for state tax
purposes. Investors should consult a tax advisor for more detailed information
about state taxes to which they may be subject.
S-16
<PAGE>
PERFORMANCE INFORMATION
The historical performance of the Fund may be expressed in terms of "yield" or
"effective yield." These measures of performance are described below.
Yield is computed in accordance with a standard method prescribed by rules of
the Securities and Exchange Commission. Under that method, current yield is
based on a seven-day period and is computed as follows: the Fund's net
investment income per share for the period is divided by the price per share
(expected to remain constant at $1.00) at the beginning of the period, the
result (the "base period return") is divided by 7 and multiplied by 365, and
the resulting figure is carried to the nearest hundredth of one percent. For
the purpose of this calculation, the Fund's net investment income per share
includes its accrued interest income plus or minus amortized purchase discount
or premium less accrued expenses, but does not include realized capital gains
or losses or unrealized appreciation or depreciation of investments.
The Fund's effective yield is calculated by taking the base period return
(computed as described above) and calculating the effect of assumed
compounding. The formula for effective yield is: (base period return +
1)/365///7/-1. Based on the seven-day period ended February 29, 2000, the yield
and effective yield was 4.68% and 4.79%, respectively.
The Fund's yield will fluctuate, and the publication of annualized yield
quotations is not a representation of what an investment in the Fund will
actually yield for any given future period. Actual yields will depend not only
on changes in interest rates on money market instruments during the period in
question, but also on such matters as the Fund's expenses.
In reports or other communications to shareholders or in advertising and sales
literature, the Fund may compare its performance to that of other money market
mutual funds tracked by Lipper Analytical Services, Inc. ("Lipper"), by
Donoghue's Money Fund Report ("Donoghue's") or similar services or by financial
publications such as Barron's, Changing Times, Forbes and Money Magazine.
Performance comparisons by these indexes, services or publications may rank
mutual funds over different periods of time by means of aggregate, average,
year-by-year or other types performance figures. Lipper ranks mutual funds by
overall performance, investment objectives, and assets and assumes the
reinvestment of dividends for the period covered. Donoghue's ranks investment
results according to total return (annualized results net of management fees
and expenses) and presents one year results as effective annual yields assuming
reinvestment of dividends. Any given performance quotation or performance
comparison should not be considered as representative of the Fund's performance
for any future period.
S-17
<PAGE>
ADDITIONAL INFORMATION ABOUT PURCHASES AND SALES
As described in the Prospectus, the Fund provides you with alternative ways of
purchasing Fund shares based upon your individual investment needs and
preferences.
Each share class of the Fund represents an interest in the same portfolio of
investments. Each share class is identical in all respects except that each
class bears its own class expenses, including distribution and administration
expenses, and each class has exclusive voting rights with respect to any
distribution or service plan applicable to its shares. As a result of the
differences in the expenses borne by each class of shares, net income per
share, dividends per share and net asset value per share will vary among the
Fund's share classes.
Shareholders of each class will share expenses proportionately for services
that are received equally by all shareholders. A particular class of shares
will bear only those expenses that are directly attributable to that class,
where the type or amount of services received by a class varies from one class
to another. For example, class-specific expenses generally will include
distribution and service fees.
The minimum initial investment is $3,000 per share class, and may be lower for
accounts opened through fee-based programs for which the program sponsor has
established a single master account with the fund's transfer agent and performs
all sub-accounting services related to that account.
Class B Shares automatically convert to Class A Shares eight years after
purchase. The purpose of the conversion is to limit the distribution fees you
pay over the life of your investment. All conversions are done at net asset
value without the imposition of any sales load, fee, or other charge, so that
the value of each shareholder's account immediately before conversion will be
the same as the value of the account immediately after conversion. Class B
Shares acquired through reinvestment of distributions convert into Class A
Shares based on the date of the initial purchase to which such shares relate.
For this purpose, Class B Shares acquired through reinvestment of distributions
are attributed to particular purchases of Class B Shares in accordance with
such procedures as the Board of Trustees may determine from time to time. Class
B Shares that are converted to Class A Shares remain subject to an annual
service fee that is identical in amount for both Class B Shares and Class A
Shares. Any conversion of Class B Shares into Class A Shares is subject to the
continuing availability of an opinion of counsel or a private letter ruling
from the Internal Revenue Service to the effect that the conversion of shares
would not constitute a taxable event under federal income tax law. Conversion
of Class B Shares into Class A Shares might be suspended if such an opinion or
ruling were no longer available.
Class R Share Purchase Eligibility. Class R Shares are available for purchases
of $10 million or more and for purchases using dividends and capital gains
distributions on Class R Shares. Class R Shares also are available for the
following categories of investors:
. officers, trustees and former trustees of the Nuveen and Flagship Funds
and their immediate family members or trustees/directors of any fund,
sponsored by Nuveen, any parent company of Nuveen and subsidiaries
thereof and their immediate family members;
. bona fide, full-time and retired employees of Nuveen, any parent company
of Nuveen, and subsidiaries thereof, or their immediate family members;
. officers, directors or bona fide employees of any investment advisory
partner of Nuveen that provides sub-advisory services for a Nuveen
product, or their immediate family members;
. any person who, for at least 90 days, has been an officer, director or
bona fide employee of any authorized dealer, or their immediate family
members;
S-18
<PAGE>
. officers and directors of bank holding companies that make Fund shares
available directly or through subsidiaries or bank affiliates, or their
immediate family members;
. bank or broker-affiliated trust departments investing funds over which
they exercise exclusive discretionary investment authority and that are
held in a fiduciary, agency, advisory, custodial or similar capacity;
. investors purchasing on a periodic fee, asset-based fee or no transaction
fee basis through a broker-dealer sponsored mutual fund purchase program;
. clients of investment advisors, financial planners or other financial
intermediaries that charge periodic or asset-based fees for their
services.
. Any shares purchased by investors falling within any of the first five
categories listed above must be acquired for investment purposes and on
the condition that they will not be transferred or resold except through
redemption by the fund.
In addition, purchasers of Nuveen Defined Portfolios may reinvest their
distributions from such Defined Portfolios in Class R Shares, if, before
September 6, 1994, such purchasers has elected to reinvest distributions in
Nuveen Fund shares (before June 13, 1995 for Nuveen Municipal Bond Fund
shares). Shareholders may exchange their Class R Shares of any Nuveen Fund into
Class R Shares of any other Nuveen Fund.
The categories of eligible investors may be modified or discontinued by the
Fund at any time upon prior written notice to shareholders of the Fund.
For more information about the purchase of Class R Shares, or to obtain the
required application forms, call Nuveen toll-free at (800) 257-8787.
Reduction or Elimination of Contingent Deferred Sales Charge
In the case of Class B Shares redeemed within six years of purchase, a CDSC is
imposed, beginning at 5% for redemptions within the first year, declining to 4%
for redemptions within years two and three, and declining by 1% each year
thereafter until disappearing after the sixth year. Class C Shares are redeemed
at net asset value, without any CDSC, except that a CDSC of 1% is imposed upon
redemption of Class C Shares that are redeemed within 12 months of purchase.
Under limited circumstances, Class A Shares may be subject to a 1% CDSC, as
described in the Prospectus.
In determining whether a CDSC is payable, the Fund will first redeem shares not
subject to any charge, and then will redeem shares held for the longest period,
unless the shareholder specifies another order. No CDSC is charged on shares
purchased as a result of automatic reinvestment of dividends or capital gains
paid. In addition, no CDSC will be charged on exchanges of shares into another
Nuveen mutual fund or a Nuveen money market fund. The holding period is
calculated on a monthly basis and begins the first day of the month in which
the order for investment is received. The CDSC is calculated based on the lower
of the redeemed shares' cost or net asset value at the time of the redemption
and is deducted from the redemption proceeds. Nuveen receives the amount of any
CDSC shareholders pay. If shares subject to a CDSC are exchanged for shares of
a Nuveen money market fund, the CDSC would be imposed on the subsequent
redemption of those money market shares, and the period during which the
shareholder holds the money market fund shares would be counted in determining
the remaining duration of the CDSC. The Fund may elect not to so count the
period during which the shareholder held the money market fund shares, in which
event the amount of any applicable CDSC would be reduced in accordance with
applicable rules by the amount of any 12b-1 plan payments to which those money
market funds shares may be subject.
S-19
<PAGE>
The CDSC may be waived or reduced under the following five special
circumstances: 1) redemptions within one year following the death or
disability, as defined in Section 72(m)(7) of the Internal Revenue Code of
1986, as amended, of a shareholder; 2) in connection with the exercise of a
reinstatement privilege whereby the proceeds of a redemption of the Fund's
shares subject to a sales charge are reinvested in shares of certain Nuveen
mutual funds within a specified number of days; 3) in connection with the
exercise of the Fund's right to redeem all shares in an account that does not
maintain a certain minimum balance or that the applicable board has determined
may have material adverse consequences to the shareholders of such Fund; and 4)
redemptions made pursuant to the Fund's systematic withdrawal plan, up to 1%
monthly, 3% quarterly, 6% semiannually or 12% annually of an account's net
asset value depending on the frequency of the plan as designated by the
shareholder; and 5) redemptions of Class B or Class C Shares if the proceeds
are transferred to an account managed by another Nuveen Adviser and the adviser
refunds the advanced service and distribution fees to Nuveen. If the Fund
waives or reduces the CDSC, such waiver or reduction would be uniformly applied
to all Fund shares in the particular category. In waiving or reducing a CDSC,
the Fund will comply with the requirements of Rule 22d-1 of the Investment
Company Act of 1940.
Exchange Privileges
You may exchange shares of the Fund for the appropriate class of shares of any
other open-end management investment company with reciprocal exchange
privileges advised by Nuveen Advisory or Nuveen Institutional Advisory (the
"Nuveen Funds"), into an identically registered account, provided that the
Nuveen Fund into which shares are to be exchanged is offered in the
shareholder's state of residence and that the shares to be exchanged have been
held by the shareholder for a period of at least 15 days. You may exchange fund
shares by calling (800) 257-8787 or by mailing your written request to our
Transfer Agent. Shares of Nuveen Funds purchased subject to a front-end sales
charge may be exchanged for shares of the fund or any other Nuveen Fund at the
next determined net asset value without any front-end sales charge. No CDSC
otherwise applicable will be assessed on an exchange, and the holding period of
your investment will be carried over to the new fund for purposes of
determining any future CDSC. You may exchange Class B shares for shares of a
Nuveen money market fund. Shares of any Nuveen Fund purchased through dividend
reinvestment or through reinvestment of Nuveen Defined Portfolio distributions
(and any dividends thereon) may be exchanged for Class A shares of any Nuveen
Fund without a front-end sales charge. Exchanges of shares with respect to
which no front-end sales charge has been paid will be made at the public
offering price, which may include a front-end sales charge, unless a front-end
sales charge has previously been paid on the investment represented by the
exchanged shares (i.e., the shares to be exchanged were originally issued in
exchange for shares on which a front-end sales charge was paid), in which case
the exchange will be made at net asset value. Because certain other Nuveen
Funds may determine net asset value and therefore honor purchase or redemption
requests on days when the Fund does not (generally, Martin Luther King's
Birthday, Columbus Day and Veterans Day), exchanges of shares of one of those
funds for shares of the fund may not be effected on such days.
The total value of shares being exchanged must at least equal the minimum
investment requirement of the Nuveen Fund into which they are being exchanged.
Exchanges are made based on the relative dollar values of the shares involved
in the exchange, and will be effected by redemption of shares of the Nuveen
Fund held and purchase of the shares of the other Nuveen Fund. For federal
income tax purposes, any such exchange constitutes a sale and purchase of
shares and may result in capital gain or loss. Before exercising any exchange,
you should obtain the Prospectus for the Nuveen Fund into which shares are to
be exchanged and read it carefully. If the registration of the account for the
Fund you are purchasing is not exactly the same as that of the Fund account
from which the exchange is made, written instructions from all holders of the
account from which the exchange is being made must be received, with signatures
guaranteed by a member of an approved Medallion Guarantee Program or in such
other manner as may be acceptable to the Fund. The exchange
S-20
<PAGE>
privilege may be modified or discontinued at any time. If you do not wish to
have telephone exchange privileges, you must indicate this in the "Telephone
Services" section of your Account Application or otherwise notify the Fund in
writing of your desire.
Additional Information
An account will be maintained for each shareholder of record in the fund by our
Transfer Agent. Share certificates will be issued only upon written request of
the shareholder to our Transfer Agent. No certificates are issued for
fractional shares. The Fund reserves the right to reject any purchase order and
to waive or increase minimum investment requirements.
Confirmations of each purchase and redemption order as well as monthly
statements are sent to every shareholder. Master accounts also receive a
monthly summary report setting forth the share balance and dividends earned for
the month for each sub-account established under that master account.
A change in registration or transfer of shares held in the name of a
broker/dealer can only be effected by an order in good form from the
broker/dealer acting on behalf of the investor. Broker/dealers are encouraged
to open single master accounts. However, some broker/dealers may wish to use
our Transfer Agent's sub-accounting system to minimize their internal
recordkeeping requirements. A broker/dealer or other investor requesting
shareholder servicing or accounting other than the master account or
subaccounting service offered by the fund will be required to enter into a
separate agreement with the agent for these services for a fee to be determined
in accordance with the level of services to be furnished.
Banks and other organizations through which investors may purchase shares of
the Fund may impose charges in connection with purchase orders. Investors
should contact their institutions directly to determine what charges, if any,
may be imposed.
A fee of 1% of the current market value of any shares represented by a
certificate will be charged if the certificate is lost, stolen, or destroyed.
The fee is paid to Seaboard Surety Company for issuance of the lost, stolen, or
destroyed certificate.
Subject to the SEC rules, the Fund reserves the right to suspend the continuous
offering of the shares at any time, but such suspension shall not affect the
shareholder's right of redemption as described below. The Fund also reserves
the right to reject any purchase order and to waive or increase minimum
investment requirements.
Telephone Redemption via Fund DirectSM
To redeem shares held in non-certificate form by telephone with the redemption
proceeds paid via Fund Direct-Electronic Funds Transfer, you must complete the
Telephone Services section of the enclosed Application Form and return it to
Nuveen or our Transfer Agent. If you did not authorize Telephone Redemption via
Fund Direct when you opened your account, you may do so by sending a written
request to the Fund signed by each account owner with signatures guaranteed by
a member of an approved Medallion Guarantee Program or in such other manner as
may be acceptable to the fund. Proceeds of share redemptions made by Fund
Direct will be transferred only to the commercial bank account specified by the
shareholder. Redemption proceeds may be delayed one additional business day if
the Federal Reserve Bank of Boston or the Federal Reserve Bank of New York is
closed on the day the redemption proceeds would ordinarily be wired.
You may make Fund Direct redemption requests by calling Nuveen at (800) 257-
8787. If a telephone redemption request is received prior to 4:00 p.m. Eastern
Time, the shares to be redeemed earn income on the day the request is made, and
the redemption is effected on the following business day. For redemption
requests received after 4:00 p.m. Eastern Time, the shares to be redeemed earn
income through the following business
S-21
<PAGE>
day, and the redemption is effected on the second business day following the
request. For all redemptions, you will typically receive your funds within
three business days after your redemption is effected.
How to Change Authorized Redemption Instructions
In order to establish multiple accounts, or to change the account or accounts
designated to receive redemption proceeds, a written request specifying the
change must be sent to Nuveen. This request must be signed by each account
owner with signatures guaranteed by a member of an approved Medallion Guarantee
Program or in such other manner as may be acceptable to the Fund. Further
documentation may be required from corporations, executors, trustees or
personal representatives.
The Fund reserves the right to refuse a telephone redemption and, at its
option, may limit the timing, amount or frequency of these redemptions. This
procedure may be modified or terminated at any time, on 30 days' notice, by the
fund. The Fund, the transfer agent and Nuveen will not be liable for following
telephone instructions reasonably believed to be genuine.
Redemption in Kind
The Fund expects to pay in cash all redemption requests made by each
shareholder during any 90 day period up to the lesser of $250,000 or 1% of the
net asset value of the fund at the beginning of such period. In the case of
redemption requests in excess of such amounts, the Fund may make payment in
whole or in part in securities or other assets of the Fund. In this event, the
securities would be valued in the same manner as the portfolio of the fund is
valued. If the recipient were to sell such securities, he or she would incur
brokerage charges.
Other Practices
The Fund may encourage registered representatives and their firms to help
apportion their assets among bonds, stocks and cash, and may seek to
participate in programs that recommend a portion of their assets be invested in
money market instruments.
The Fund may suspend the right of redemption or delay payment more than seven
days (a) during any period when the New York Stock Exchange is closed (other
than customary weekend and holiday closings), (b) when trading in the markets
the Fund normally utilizes is restricted, or an emergency exists as determined
by the SEC so that disposal of the Fund's investments or determination of its
net asset value is not reasonably practicable, or (c) for such other periods as
the SEC by order may permit for protection of the shareholders of the Fund.
The Fund has authorized certain brokers and firms to accept purchase and
redemption orders on its behalf. The Fund will consider an order to be
"received" when such a broker or firm accepts the order from its customer.
In addition to the types of compensation to dealers to promote sales of Fund
shares that are described in the prospectus, Nuveen may from time to time make
additional reallowances only to certain authorized dealers who sell or are
expected to sell certain minimum amounts of shares of the Nuveen mutual funds
during specified time periods.
S-22
<PAGE>
DISTRIBUTION AND SERVICE PLAN
The Fund has adopted a plan (the "Plan") pursuant to Rule 12b-1 under the
Investment Company Act of 1940, which provides that Class B Shares and Class C
Shares are subject to an annual distribution fee, and that Class A Shares,
Class B Shares and Class C Shares are subject to an annual service fee. Class R
Shares are not subject to either distribution or service fees.
The distribution fee applicable to Class B and Class C Shares under the Fund's
Plan is payable to compensate Nuveen for services and expenses incurred in
connection with the distribution of Class B and Class C Shares, respectively.
These expenses include payments to Authorized Dealers, including Nuveen, who
are brokers of record with respect to the Class B and Class C Shares, as well
as, without limitation, expenses of printing and distributing prospectuses to
persons other than shareholders of the Fund, expenses of preparing, printing
and distributing advertising and sales literature and reports to shareholders
used in connection with the sale of Class B and Class C Shares, certain other
expenses associated with the distribution of Class B and Class C Shares, and
any distribution-related expenses that may be authorized from time to time by
the Board of Trustees. Nuveen may retain any unused portions of the
distribution fee.
The service fee applicable to Class A Shares, Class B Shares and Class C Shares
under the Fund's Plan is payable to Authorized Dealers in connection with the
provision of ongoing account services to shareholders. Nuveen may retain
portions of the service fee not paid to Dealers.
The Fund may spend up to .25 of 1% per year of the average daily net assets of
Class A Shares as a service fee under the Plan applicable to Class A Shares.
The Fund may spend up to .75 of 1% per year of the average daily net assets of
Class B Shares as a distribution fee and up to .25 of 1% per year of the
average daily net assets of Class B Shares as a service fee under the Plan
applicable to Class B Shares. The Fund may spend up to .75 of 1% per year of
the average daily net assets of Class C Shares as a distribution fee and up to
.25 of 1% per year of the average daily net assets of Class C Shares as a
service fee under the Plan applicable to Class C Shares.
For the fiscal year ended February 29, 2000, 100% of the service fees and
distribution fees were paid out as compensation to Authorized Dealers.
<TABLE>
<CAPTION>
Compensation Paid to
Authorized Dealers for
end of Fiscal 2000
----------------------
<S> <C>
Nuveen Money Market Fund
Class A.............................................. $2,959
Class B.............................................. $2,996
Class C.............................................. $2,582
</TABLE>
Under the Fund's Plan, the Fund will report quarterly to the Board of Trustees
for its review all amounts expended per class of shares under the Plan. The
Board believes that there is a reasonable likelihood that the Plan will benefit
the Fund and its shareholders. The Plan may be terminated at any time with
respect to any class of shares, without the payment of any penalty, by a vote
of a majority of the trustees who are not "interested persons" and who have no
direct or indirect financial interest in the Plan or by vote of a majority of
the outstanding voting securities of such class. The Plan may be renewed from
year to year if approved by a vote of the Board of Trustees and a vote of the
non-interested trustees who have no direct or indirect financial interest in
the Plan cast in person at a meeting called for the purpose of voting on the
Plan. The Plan may be continued only if the trustees who vote to approve such
continuance conclude, in the exercise of reasonable business judgment and in
light of their fiduciary duties under applicable law, that there is a
reasonable likelihood that the Plan will benefit the Fund and its shareholders.
The Plan may not be amended to increase materially the cost which a class of
shares may bear under the Plan without the approval of the shareholders of the
affected
S-23
<PAGE>
class, and any other material amendments of the Plan must be approved by the
non-interested trustees by a vote cast in person at a meeting called for the
purpose of considering such amendments. During the continuance of the Plan, the
selection and nomination of the non-interested trustees of the Trust will be
committed to the discretion of the non-interested trustees then in office.
No trustee of the Fund and no "interested" person of the Fund has any direct or
indirect financial interest in the Plan or any agreement related to the Plan.
OTHER INFORMATION REGARDING FUND SHARES
Shareholders should note that when a fund dividend check has been returned to
the sender by the post office after repeated mailings, the shareholder account
will thereafter be registered for automatic reinvestment of dividends and thus
the dividend check and future dividend checks will be reinvested in additional
Fund shares. Shareholders are reminded that they need to advise the Funds
promptly in writing of any change in address.
The Glass-Steagall Act and other applicable laws, among other things, may limit
banks from engaging in the business of underwriting, selling or distributing
securities. Since the only functions of banks who may be engaged as service
organizations is to perform administrative shareholder servicing functions, the
fund believes that such laws should not preclude a bank from acting as a
service organization. However, future changes in either federal or state
statutes or regulations relating to the permissible activities of banks and
their subsidiaries or affiliates, as well as judicial or administrative
decisions or interpretations of statutes or regulations, could prevent a bank
from continuing to perform all or a part of its shareholder servicing
activities. If a bank were prohibited from so acting, its shareholder customers
would be permitted to remain shareholders of the Fund and alternative means for
continuing the servicing of such shareholders would be sought.
Nuveen serves as the principal underwriter of the shares of the Fund pursuant
to a "best efforts" arrangement as provided by a distribution agreement with
the Fund, dated February 1, 1999 ("Distribution Agreement"). Pursuant to the
Distribution Agreement, the Fund appointed Nuveen to be its agent for the
distribution of the Fund's shares on a continuous offering basis. Nuveen sells
shares to or through brokers, dealers, banks or other qualified financial
intermediaries (collectively referred to as "Dealers"), or others, in a manner
consistent with the then effective registration statement of the Trust.
Pursuant to the Distribution Agreement, Nuveen, at its own expense, finances
certain activities incident to the sale and distribution of the Fund's shares,
including printing and distributing of prospectuses and statements of
additional information to other than existing shareholders, the printing and
distributing of sales literature, advertising and payment of compensation and
giving of concessions to Dealers. Nuveen also receives compensation pursuant to
a distribution plan adopted by the Trust pursuant to Rule 12b-1 and described
herein under "Distribution and Service Plan." Nuveen receives any CDSCs imposed
on redemptions of shares.
To help advisors and investors better understand and more efficiently use an
investment in the Fund to reach their investment goals, the Fund and its
sponsor, Nuveen, may advertise and create specific investment programs and
systems. For example, such activities may include presenting information on how
to use an investment in the Fund, alone or in combination with an investment in
other mutual funds or unit investment trusts sponsored by Nuveen, to accumulate
assets for future education needs or periodic payments such as insurance
premiums. The Fund and its sponsor may produce software or additional sales
literature to promote the advantages of using the Fund to meet these and other
specific investor needs.
FINANCIAL STATEMENTS
The audited financial statements for the Fund's most recent fiscal year appear
in the Fund's Annual Report. The Annual Report accompanies this Statement of
Additional Information.
S-24
<PAGE>
Statement of Additional Information
June 28, 2000
Nuveen Money Market Trust
333 West Wacker Drive
Chicago, Illinois 60606
Nuveen Money Market Trust
NUVEEN CALIFORNIA TAX-EXEMPT MONEY MARKET FUND
This Statement of Additional Information is not a prospectus. This Statement of
Additional Information should be read in conjunction with the Prospectus of the
Nuveen California Tax-Exempt Money Market Fund (the "Fund") dated June 28,
2000. The Prospectus may be obtained without charge from certain securities
representatives, banks, and other financial institutions that have entered into
sales agreements with John Nuveen & Co. Incorporated, or from the Fund by mail-
ing a written request to the Fund, c/o. John Nuveen & Co. Incorporated
("Nuveen"), 333 West Wacker Drive, Chicago, Illinois 60606 or by calling (800)
257-8787.
<TABLE>
<S> <C>
Table of Contents Page
------------------------------------------------------------
Investment Policies and Investment Portfolio S-2
------------------------------------------------------------
Management S-19
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Investment Adviser and Investment Management Agreement S-23
------------------------------------------------------------
Portfolio Transactions S-24
------------------------------------------------------------
Net Asset Value S-25
------------------------------------------------------------
Tax Matters S-27
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Performance Information S-31
------------------------------------------------------------
Additional Information About Purchases and Sales S-35
------------------------------------------------------------
Service Plan S-38
------------------------------------------------------------
Other Information Regarding Fund Shares S-39
------------------------------------------------------------
Financial Statements S-40
------------------------------------------------------------
</TABLE>
Investment Adviser Independent Public
Principal Underwriter Nuveen Advisory Accountants
John Nuveen & Co. Corp., for the Fund
Incorporated Subsidiary of John Arthur Andersen LLP
Nuveen & 33 West Monroe Street
Chicago: Co. Incorporated Chicago, Illinois
333 West Wacker Drive 333 West Wacker Drive 60603
Chicago, Illinois Chicago, Illinois
60606 60606 Transfer and Dividend
(312) 917-7700 Disbursing Agent
Custodian Chase Global Funds
New York: The Chase Manhattan Services Company
10 East 50th Street Bank P.O. Box 5186
New York, New York 4 New York Plaza New York, NY 10274
10022 New York, New York 10004
(212) 207-2000
The audited financial statements for the Fund's most recent fiscal year appear
in the Fund's Annual Report. The Annual Report accompanies this Statement of
Additional Information.
<PAGE>
INVESTMENT POLICIES AND INVESTMENT PORTFOLIO
Fundamental Policies
The investment objective and certain fundamental investment policies of the
Fund are described in the Prospectus. The Fund, as a fundamental policy, may
not, without the approval of the holders of a majority of the shares of the
Fund:
(1) Invest in securities other than Municipal Obligations and temporary invest-
ments, as those terms are defined in the Prospectus, and in standby commitments
with respect to Municipal Obligations. Municipal Obligations are municipal
bonds that pay interest that is exempt from regular federal, state and, in some
cases local income taxes;
(2) Invest more than 5% of its total assets in securities of any one issuer,
except that this limitation shall not apply to securities of the United States
government, its agencies and instrumentalities or to the investment of 25% of
such Fund's assets;
(3) Borrow money, except from banks for temporary or emergency purposes and not
for investment purposes and then only in an amount not exceeding (a) 10% of the
value of its total assets at the time of borrowing or (b) one-third of the
value of the Fund's total assets including the amount borrowed, in order to
meet redemption requests which might otherwise require the untimely disposition
of securities. While any such borrowings exceed 5% of such Fund's total assets,
no additional purchases of investment securities will be made by such Fund. If
due to market fluctuations or other reasons, the value of the Fund's assets
falls below 300% of its borrowings, the Fund will reduce its borrowings within
3 business days. To do this, the Fund may have to sell a portion of its invest-
ments at a time when it may be disadvantageous to do so;
(4) Pledge, mortgage or hypothecate its assets, except that, to secure
borrowings permitted by subparagraph (3) above, it may pledge securities having
a market value at the time of pledge not exceeding 10% of the value of the
Fund's total assets;
(5) Issue senior securities as defined in the Investment Company Act of 1940,
except to the extent such issuance might be involved with respect to borrowings
described under item (3) above.
(6) Underwrite any issue of securities, except to the extent that the purchase
of Municipal Obligations in accordance with its investment objective, policies
and limitations, may be deemed to be an underwriting;
(7) Purchase or sell real estate, but this shall not prevent the Fund from in-
vesting in Municipal Obligations secured by real estate or interests therein or
foreclosing upon and selling such security;
(8) Purchase or sell commodities or commodities contracts or oil, gas or other
mineral exploration or development programs.
(9) Make loans, other than by entering into repurchase agreements and through
the purchase of Municipal Obligations or temporary investments in accordance
with its investment objective, policies and limitations;
(10) Make short sales of securities or purchase any securities on margin, ex-
cept for such short-term credits as are necessary for the clearance of transac-
tions;
(11) Write or purchase put or call options, except to the extent that the pur-
chase of a stand-by commitment may be considered the purchase of a put.
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(12) Invest more than 25% of its total assets in securities of issuers in any
one industry; provided, however, that such limitations shall not be applicable
to Municipal Obligations issued by governments or political subdivisions of
governments, and obligations issued or guaranteed by the U.S. Government, its
agencies or instrumentalities;
(13) Invest more than 10% of its total assets in repurchase agreements maturing
in more than seven days, "illiquid" securities (such as non-negotiable CDs) and
securities without readily available market quotations;
For the purpose of applying the limitations set forth in paragraph (2) above,
an issuer shall be deemed the sole issuer of a security when its assets and
revenues are separate from other governmental entities and its securities are
backed only by its assets and revenues. Similarly, in the case of a non-govern-
mental user, such as an industrial corporation or a privately owned or operated
hospital, if the security is backed only by the assets and revenues of the non-
governmental user, then such non-governmental user would be deemed to be the
sole issuer. Where a security is also backed by the enforceable obligation of a
superior or unrelated governmental entity or other entity (other than a bond
insurer), it shall also be included in the computation of securities owned that
are issued by such governmental or other entity.
Where a security is guaranteed by a governmental entity or some other facility,
such as a bank guarantee or letter of credit, such a guarantee or letter of
credit would be considered a separate security and would be treated as an issue
of such government, other entity or bank. Where a security is insured by bond
insurance, it shall not be considered a security issued or guaranteed by the
insurer; instead the issuer of such security will be determined in accordance
with the principles set forth above. The foregoing restrictions do not limit
the percentage of the Fund's assets that may be invested in securities insured
by any single insurer. It is a fundamental policy of the Fund, which cannot be
changed without the approval of the holders of a majority of shares of such
Fund, that the Fund will not hold securities of a single bank, including secu-
rities backed by a letter of credit of such bank, if such holdings would exceed
10% of the total assets of the Fund.
The foregoing restrictions and limitations, as well as the Fund's policies as
to ratings of fund investments, will apply only at the time of purchase of se-
curities, and the percentage limitations will not be considered violated unless
an excess or deficiency occurs or exists immediately after and as a result of
an acquisition of securities, unless otherwise indicated.
The foregoing fundamental investment policies, together with the investment ob-
jective of the Fund, cannot be changed without approval by holders of a "major-
ity of the Fund's outstanding voting shares." As defined in the Investment Com-
pany Act of 1940, this means the vote of (i) 67% or more of the Fund's shares
present at a meeting, if the holders of more than 50% of the Fund's shares are
present or represented by proxy, or (ii) more than 50% of the Fund's shares,
whichever is less.
General Information
The Nuveen Money Market Trust (the "Trust") is an open-end management series
investment company organized as a Massachusetts business trust on January 15,
1999. The Fund (formerly, the Nuveen California Tax-Free Money Market Fund, the
Fund's predecessor and a series of the Nuveen California Tax-Free
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Fund, Inc.) is an open-end, diversified management investment company organized
as a series of the Trust. The Trust is an open-end management series company
under SEC Rule 18f-2. The Fund is a separate series issuing its own shares. The
Trust currently has four series. Certain matters under the Investment Company
Act of 1940 which must be submitted to a vote of the holders of the outstanding
voting securities of a series company shall not be deemed to have been effec-
tively acted upon unless approved by the holders of a majority of the outstand-
ing voting securities of each series affected by such matter.
The Trust is an entity of the type commonly known as a "Massachusetts business
trust." Under Massachusetts law, shareholders of a trust may, under certain
circumstances, be held personally liable as partners for its obligations. How-
ever, the Declaration of Trust contains an express disclaimer of shareholder
liability for acts or obligations of the Trust and requires that notice of this
disclaimer be given in each agreement, obligation or instrument entered into or
executed by the Trust or the Trustees. The Declaration of Trust further pro-
vides for indemnification out of the assets and property of the Trust for all
loss and expense of any shareholder personally liable for the obligations of
the Trust. Thus, the risk of a shareholder incurring financial loss on account
of shareholder liability is limited to circumstances in which both inadequate
insurance existed and the Trust itself were unable to meet its obligations. The
Trust believes the likelihood of these circumstances is remote.
Fund shares represent an interest in the same portfolio of investments of the
Fund. Fund shares have equal rights as to voting, redemption, dividends and
liquidation, and have exclusive voting rights with respect to any applicable
distribution or service plan. There are no conversion, preemptive or other sub-
scription rights. The Board of Trustees of the Fund have the right to establish
additional series and classes of shares in the future, to change those series
or classes and to determine the preferences, voting powers, rights and privi-
leges thereof.
Portfolio Securities
The various securities in which the Fund intends to invest are described in the
Prospectus. The following is a more complete description of certain securities
in which the Fund may invest:
Municipal Obligations.
The Fund invests in debt obligations issued by the State of California, and
California cities and local authorities to obtain funds for various public pur-
poses, such as airports, highways, housing, hospitals, mass transportation, wa-
ter and sewer works, and include industrial development bonds and pollution
control bonds. The two principal classifications of these securities (sometimes
called Municipal Obligations) are "general obligation" and "revenue" bonds.
General obligation bonds are secured by the issuer's pledge of its full faith,
credit and taxing power for the payment of principal and interest. Revenue
bonds are payable only from the revenues derived from a particular facility or
class of facilities or, in some cases, from the proceeds of a special excise or
other specific revenue source. Industrial development and pollution control
bonds are in most cases revenue bonds and do not generally constitute the
pledge of the credit or taxing power of the issuer of such bonds.
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Notes are short-term instruments with a maturity of two years or less. Most
notes are general obligations of the issuer and are sold in anticipation of a
bond sale, collection of taxes or receipt of other revenues. Payment of these
notes is primarily dependent upon the issuer's receipt of the anticipated reve-
nues. Other notes, include construction loan notes issued to provide construc-
tion financing for specific projects and bank notes issued by local governmen-
tal bodies and agencies to commercial banks as evidence of borrowings.
Municipal Obligations also include very short-term unsecured, negotiable prom-
issory notes, issued by states, municipalities, and their agencies which are
known as "tax-exempt commercial paper" or "municipal commercial paper." Payment
of principal and interest on issues or municipal commercial paper may be made
from various sources, to the extent the funds are available therefrom. There is
a limited secondary market for issues of municipal commercial paper.
While these various types of notes as a group represent the major portion of
the tax-exempt note market, other types of notes are occasionally available in
the marketplace and the Fund may invest in such other types of notes to the ex-
tent permitted under its investment policies and limitations. Such notes may be
issued for different purposes and with different security than those mentioned
above.
The yields on Municipal Obligations are dependent on a variety of factors, in-
cluding the condition of the general money market and the Municipal Obligation
market, the size of a particular offering, the maturity of the obligation and
the rating of the issue. The ratings of Moody's, S&P and Fitch represent their
opinions as to the quality of the Municipal Obligations which they undertake to
rate. It should be emphasized, however, that ratings are general and are not
absolute standards of quality. Consequently, Municipal Obligations with the
same maturity, coupon and rating may have different yields while obligations of
the same maturity and coupon with different ratings may have the same yield.
The market value of outstanding Municipal Obligations will vary with changes in
prevailing interest rate levels and as a result of changing evaluations of the
ability of their issuers to meet interest and principal payments.
California Municipal Obligations are issued by the State of California and cit-
ies and local authorities in the State of California, and bear interest that,
in the opinion of bond counsel to the issuer, is exempt from federal and Cali-
fornia income taxes, although such interest may be subject to the Federal al-
ternative minimum tax. The Fund will invest primarily in California Municipal
Obligations that are issued by the State of California and cities and local au-
thorities in the State of California, except that the Fund may invest not more
than 10% of its net assets in Municipal Obligations issued by United States
possessions or territories, which also bear interest that is exempt from regu-
lar federal as well as California personal income taxes.
The Fund may not invest more than 10% of its net assets in California Municipal
Obligations issued within certain U.S. possessions or territories.
Bond Anticipation Notes (BANs) are usually general obligations of state and lo-
cal governmental issuers which are sold to obtain interim financing for pro-
jects that will eventually be funded through the sale of long-term debt obliga-
tions or bonds. The ability of an issuer to meet its obligations on its BANs is
primarily dependent on the issuer's access to the long-term municipal bond mar-
ket and the likelihood that the proceeds of such bond sales will be used to pay
the principal and interest on the BANs.
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Tax Anticipation Notes (TANs) are issued by state and local governments to fi-
nance the current operations of such governments. Repayment is generally to be
derived from specific future tax revenues. TANs are usually general obligations
of the issuer. A weakness in an issuer's capacity to raise taxes due to, among
other things, a decline in its tax base or a rise in delinquencies, could ad-
versely affect the issuer's ability to meet its obligations on outstanding
TANs.
Revenue Anticipation Notes (RANs) are issued by governments or governmental
bodies with the expectation that future revenues from a designated source will
be used to repay the notes. In general, they also constitute general obliga-
tions of the issuer. A decline in the receipt of projected revenues, such as
anticipated revenues from another level of government, could adversely affect
an issuer's ability to meet its obligations on outstanding RANs. In addition,
the possibility that the revenues would, when received, be used to meet other
obligations could affect the ability of the issuer to pay the principal and in-
terest on RANs.
Construction Loan Notes are issued to provide construction financing for spe-
cific projects. Frequently, these notes are redeemed with funds obtained from
the Federal Housing Administration.
Bank Notes are notes issued by local governmental bodies and agencies such as
those described above to commercial banks as evidence of borrowings. The pur-
poses for which the notes are issued are varied but they are frequently issued
to meet short-term working-capital or capital-project needs. These notes may
have risks similar to the risks associated with TANs and RANs.
Industrial Development Bonds (IDBs) and Pollution Control Bonds (PCBs) are is-
sued by or on behalf of public authorities to finance various privately-rated
facilities. Typically these bonds are included within the term Municipal Obli-
gation if the interest paid thereon is exempt from federal income tax.
Tax-Exempt Commercial Paper (Municipal Paper) represents very short-term
unsecured, negotiable promissory notes, issued by states, municipalities and
their agencies. Payment of principal and interest on issues of municipal paper
may be made from various sources, to the extent the funds are available there-
from. Maturities of municipal paper generally will be shorter than the maturi-
ties of TANs, BANs or RANs. There is a limited secondary market for issues of
municipal paper.
Variable and Floating Rate Instruments-certain money market instruments may
carry variable or floating rates of interest. Such instruments bear interest at
rates which are not fixed, but which vary with changes in specified market
rates or indices, such as a bank prime rate or a tax-exempt money market index.
Variable rate notes are adjusted to current interest rate levels at certain
specified times, such as every 30 days, as set forth in the instrument. A
floating rate note adjusts automatically whenever there is a change in its base
interest rate adjustor, e.g., a change in the prime lending rate on specified
interest rate indices. Typically such instruments carry demand features permit-
ting the Money Market Fund to redeem at par upon specified notice.
One form of variable or floating rate instrument consists of an underlying
fixed rate municipal bond that is subject to a third party demand feature or
"tender option." The holder of the bond would pay a "tender fee" to the third
party tender option provider, the amount of which would be periodically ad-
justed so that the bond/tender option combination would reasonably be expected
to have a market
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value that approximates the par value of the bond. This bond/tender option com-
bination would therefore be functionally equivalent to ordinary variable or
floating rate obligations as described above, and the Fund may purchase such
obligations subject to certain conditions specified by the Securities and Ex-
change Commission.
The Fund's right to obtain payment at par on a demand instrument upon demand
could be affected by events occurring between the date the Fund elects to re-
deem the instrument and the date redemption proceeds are due which affect the
ability of the issuer to pay the instrument at par value. The Adviser will mon-
itor on an ongoing basis the pricing, quality and liquidity of such instruments
and will similarly monitor the ability of an issuer of a demand instrument, in-
cluding those supported by bank letters of credit or guarantees, to pay princi-
pal and interest on demand. Although the ultimate maturity of such variable
rate obligations may exceed 397 days, the Fund will treat the maturity of each
variable rate demand obligation, for purposes of computing its dollar weighted
average fund maturity, as the longer of (i) the notice period required before
the Fund is entitled to payment of the principal amount through demand, or (ii)
the period remaining until the next interest rate adjustment.
The Fund may also obtain standby commitments with respect to Municipal Obliga-
tions. Under a standby commitment (often referred to as a put), the party issu-
ing the commitment agrees to purchase at the Fund's option the Municipal Obli-
gation at an agreed-upon price on certain dates or within a specific period.
Since the value of a standby commitment depends in part upon the ability of the
issuing party to meet its purchase obligations thereunder, the Fund will enter
into standby commitments only with parties which have been evaluated by Nuveen
Advisory and, in the opinion of Nuveen Advisory, present minimal credit risks.
The amount payable to the Fund upon its exercise of a standby commitment would
be (1) the acquisition cost of the Municipal Obligations (excluding any accrued
interest that the Fund paid on acquisition), less any amortized market premium
or plus any amortized market or original issue discount during the period the
Fund owned the security, plus (2) all interest accrued on the security since
the last interest payment date during the period the security was owned by the
Fund. The Fund's right to exercise standby commitments held by it will be un-
conditional and unqualified. The acquisition of a standby commitment will not
affect the valuation of the underlying security, which will continue to be val-
ued in accordance with the amortized cost method. The standby commitment itself
will be valued at zero in determining net asset value. The Fund may purchase
standby commitments for cash or pay a higher price for fund securities which
are acquired subject to such a commitment (thus reducing the yield to maturity
otherwise available for the same securities). The maturity of a Municipal Obli-
gation purchased by the Fund will not be considered shortened by any standby
commitment to which such security is subject. Although the Fund's rights under
a standby commitment would not be transferable, the Fund could sell Municipal
Obligations which were subject to a standby commitment to a third party at any
time.
When-Issued or Delayed-Delivery Securities
The Fund may purchase and sell securities on a when-issued or delayed-delivery
basis. When-issued and delayed-delivery transactions arise when securities are
purchased or sold with payment and delivery beyond the regular settlement date
(when-issued transactions normally settle within 15-45 days). On such transac-
tions the payment obligation and the interest rate are fixed at the time the
buyer enters into the commitment. The commitment to purchase securities on a
when-issued or delayed-delivery basis
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may involve an element of risk because the value of the securities is subject
to market fluctuation, no interest accrues to the purchaser prior to settlement
of the transaction, and at the time of delivery the market value may be less
than cost. At the time the Fund makes the commitment to purchase a Municipal
Obligation on a when-issued or delayed-delivery basis, it will record the
transaction and reflect the amount due and the value of the security in deter-
mining its net asset value. Likewise, at the time the Fund makes the commitment
to sell a Municipal Obligation on a delayed-delivery basis, it will record the
transaction and include the proceeds to be received in determining its net as-
set value; accordingly, any fluctuations in the value of the Municipal Obliga-
tion sold pursuant to a delayed-delivery commitment are ignored in calculating
net asset value so long as the commitment remains in effect. The Fund will also
maintain designated readily marketable assets at least equal in value to com-
mitments to purchase when-issued or delayed-delivery securities, such assets to
be segregated by the Custodian specifically for the settlement of such commit-
ments. The Fund will only make commitments to purchase Municipal Obligations on
a when-issued or delayed-delivery basis with the intention of actually acquir-
ing the securities, but the Fund reserves the right to sell these securities
before the settlement date if it is deemed advisable. If a when-issued security
is sold before delivery any gain or loss would not be tax-exempt. The Fund com-
monly engages in when-issued transactions in order to purchase or sell newly-
issued Municipal Obligations, and may engage in delayed-delivery transactions
in order to manage its operations more effectively.
Special Considerations Relating to California Securities
Except to the extent the Fund invests in temporary investments, the Fund will
invest substantially all of its assets in California Municipal Obligations. The
Fund is therefore susceptible to political, economic or regulatory factors af-
fecting issuers of California Municipal Obligations.
These include the possible adverse effects of certain California constitutional
amendments, legislative measures, voter initiatives and other matters that are
described below. The following information provides only a brief summary of the
complex factors affecting the financial situation in California (the "State")
and is derived from sources that are generally available to investors and is
believed to be accurate. No independent verification has been made of the accu-
racy or completeness of any of the following information. It is based in part
on information obtained from various State and local agencies in California or
contained in Official Statements for various California Municipal Obligations.
During the early 1990's, California experienced significant financial difficul-
ties, which reduced its credit standing, but the State's finances have improved
considerably since 1994. The ratings of certain related debt of other issuers
for which California has an outstanding lease purchase, guarantee or other con-
tractual obligation (such as for state-insured hospital bonds) are generally
linked directly to California's rating. Should the financial condition of Cali-
fornia deteriorate again, its credit ratings could be further reduced, and the
market value and marketability of all outstanding notes and bonds issued by
California, its public authorities or local governments could be adversely af-
fected.
Economic Overview
Total personal income in the State increased by 6.5% during 1999 to an esti-
mated $969 billion, which accounts for almost 13% of all personal income in the
nation. Total employment is over 16 million, the majority of which is in the
service, trade and manufacturing sectors.
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Unemployment has declined dramatically from its 10% recession peak and through
the first quarter of this year, the State's 4.7% unemployment rate is at a 30-
year low. Economic indicators show a steady and strong recovery underway in
California since the start of 1994, particularly in export-related industries,
services, electronics, entertainment and tourism. The recovery in export-re-
lated industries has been dampened somewhat by the economic crisis in Asia, but
has been offset by gains in the construction and service sectors.
California's vital high-tech sector, including computer programming and
Internet-related industries remained stable during 1999. The majority of the
nation's supercomputing and Internet research/development continues to occur in
California's Silicon Valley. According to one report, California start-up com-
panies receive approximately 40% of all U.S. venture capital, which is the
largest infusion of capital within any state in the nation. Furthermore, an-
other recent study revealed that over a three year period beginning in 1997,
State residents received approximately $68 billion of gains on the exercise of
employee stock options from initial public offerings (IPO) alone. Consequently,
the recent success of the technology sector within the US stock market, has
also been a major stimulus in the recent resurgence of the California economy
in recent years.
Constitutional Limitations on Taxes, Other Charges and Appropriations
Limitation on Property Taxes. Certain California Municipal Obligations may be
obligations of issuers which rely in whole or in part, directly or indirectly,
on ad valorem property taxes as a source of revenue. The taxing powers of Cali-
fornia local governments and districts are limited by Article XIIIA of the
California Constitution, enacted by the voters in 1978 and commonly known as
"Proposition 13." Briefly, Article XIIIA limits to 1% of full cash value the
rate of ad valorem property taxes on real property and generally restricts the
reassessment of property to 2% per year, except upon new construction or change
of ownership (subject to a number of exemptions). Taxing entities may, however,
raise ad valorem taxes above the 1% limit to pay debt service on voter-approved
bonded indebtedness.
Under Article XIIIA, the basic 1% ad valorem tax levy is applied against the
assessed value of property as of the owner's date of acquisition (or as of
March 1, 1975, if acquired earlier), subject to certain adjustments. This sys-
tem has resulted in widely varying amounts of tax on similarly situated proper-
ties. Several lawsuits have been filed challenging the acquisition-based as-
sessment system of Proposition 13, but it was upheld by the U.S. Supreme Court
in 1992.
Article XIIIA prohibits local governments from raising revenues through ad va-
lorem property taxes above the 1% limit; it also requires voters of any govern-
mental unit to give two-thirds approval to levy any "special tax." Court deci-
sions, however, allowed a non-voter approved levy of "general taxes" which were
not dedicated to a specific use.
Limitation on Other Taxes, Fees and Charges. On November 5, 1996, the voters of
the State approved Proposition 218, called the "Right to Vote on Taxes Act."
Proposition 218 added Articles XIIIC and XIIID to the State Constitution, which
contain a number of provisions affecting the ability of local agencies to levy
and collect both existing and future taxes, assessments, fees and charges.
Article XIIIC requires that all new or increased local taxes be submitted to
the electorate before they become effective. Taxes for general governmental
purposes require a majority vote and taxes for specific
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purposes require a two-thirds vote. Further, any general purpose tax which was
imposed, extended or increased without voter approval after December 31, 1994
must be approved by a majority vote within two years.
Article XIIID contains several new provisions making it generally more diffi-
cult for local agencies to levy and maintain "assessments" for municipal serv-
ices and programs. Article XIIID also contains several new provisions affect-
ing "fees" and "charges," defined for purposes of Article XIIID to mean "any
levy other than an ad valorem tax, a special tax, or an assessment, imposed by
a local government upon a parcel or upon a person as an incident of property
ownership, including a user fee or charge for a property related service." All
new and existing property related fees and charges must conform to require-
ments prohibiting, among other things, fees and charges which generate reve-
nues exceeding the funds required to provide the property related service or
are used for unrelated purposes. There are new notice, hearing and protest
procedures for levying or increasing property related fees and charges, and,
except for fees or charges for sewer, water and refuse collection services (or
fees for electrical and gas service, which are not treated as "property relat-
ed" for purposes of Article XIIID), no property related fee or charge may be
imposed or increased without majority approval by the property owners subject
to the fee or charge or, at the option of the local agency, two-thirds voter
approval by the electorate residing in the affected area.
In addition to the provisions described above, Article XIIIC removes limita-
tions on the initiative power in matters of local taxes, assessments, fees and
charges. Consequently, local voters could, by future initiative, repeal, re-
duce or prohibit the future imposition or increase of any local tax, assess-
ment, fee or charge. It is unclear how this right of local initiative may be
used in cases where taxes or charges have been or will be specifically pledged
to secure debt issues.
The interpretation and application of Proposition 218 will ultimately be de-
termined by the courts with respect to a number of matters, and it is not pos-
sible at this time to predict with certainty the outcome of such determina-
tions. Proposition 218 is generally viewed as restricting the fiscal flexibil-
ity of local governments, and for this reason, some ratings of California cit-
ies and counties have been, and others may be, reduced.
Appropriations Limits. The State and its local governments are subject to an
annual "appropriations limit" imposed by Article XIIIB of the California Con-
stitution, enacted by the voters in 1979 and significantly amended by Proposi-
tions 98 and 111 in 1988 and 1990, respectively. Article XIIIB prohibits the
State or any covered local government from spending "appropriations subject to
limitation" in excess of the appropriations limit imposed. "Appropriations
subject to limitation" are authorizations to spend "proceeds of taxes," which
consist of tax revenues and certain other funds, including proceeds from regu-
latory licenses, user charges or other fees, to the extent that such proceeds
exceed the cost of providing the product or service, but "proceeds of taxes"
exclude most State subventions to local governments. No limit is imposed on
appropriations of funds which are not "proceeds of taxes," such as reasonable
user charges or fees, and certain other non-tax funds, including bond pro-
ceeds.
Among the expenditures not included in the Article XIIIB appropriations limit
are (1) the debt service cost of bonds issued or authorized prior to January
1, 1979, or subsequently authorized by the voters,
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(2) appropriations arising from certain emergencies declared by the Governor,
(3) appropriations for certain capital outlay projects, (4) appropriations by
the State of post-1989 increases in gasoline taxes and vehicle weight fees, and
(5) appropriations made in certain cases of emergency.
The appropriations limit for each year is adjusted annually to reflect changes
in cost of living and population, and any transfers of service responsibilities
between government units. The definitions for such adjustments were liberalized
in 1990 to follow more closely growth in the State's economy.
"Excess" revenues are measured over a two year cycle. Local governments must
return any excess to taxpayers by rate reductions. The State must refund 50% of
any excess, with the other 50% paid to schools and community colleges. With
more liberal annual adjustment factors since 1988, and depressed revenues since
1990 because of the recession, few governments are currently operating near
their spending limits, but this condition may change over time. Local govern-
ments may by voter approval exceed their spending limits for up to four years.
During fiscal year 1986-87, State receipts from proceeds of taxes exceeded its
appropriations limit by $1.1 billion, which was returned to taxpayers. Since
that year, appropriations subject to limitation have been under the State lim-
it. State appropriations were $4.0 billion under the limit for fiscal year
1997-98.
Because of the complex nature of Articles XIIIA, XIIIB, XIIIC and XIIID of the
California Constitution, the ambiguities and possible inconsistencies in their
terms, and the impossibility of predicting future appropriations or changes in
population and cost of living, and the probability of continuing legal chal-
lenges, it is not currently possible to determine fully the impact of these Ar-
ticles on California Municipal Obligations or on the ability of the State or
local governments to pay debt service on such California Municipal Obligations.
It is not possible, at the present time, to predict the outcome of any pending
litigation with respect to the ultimate scope, impact or constitutionality of
these Articles, or the impact of any such determinations upon State agencies or
local governments, or upon their ability to pay debt service on their obliga-
tions. Future initiatives or legislative changes in laws or the California Con-
stitution may also affect the ability of the State or local issuers to repay
their obligations.
Obligations of the State of California
Under the California Constitution, debt service on outstanding general obliga-
tion bonds is the second charge to the General Fund after support of the public
school system and public institutions of higher education. As of June 30, 1999,
the State had outstanding approximately $16 billion of long-term general obli-
gation bonds and $6.1 billion of lease-purchase debt supported by the State
General Fund. The State also had about $10.8 billion of authorized and unissued
general obligation bonds.
Recent Financial Results
The principal sources of General Fund revenues in 1997-98 were the California
personal income tax (53% of total revenues), the sales and use tax (33%) and
bank and corporation taxes (9%). The State maintains a Special Fund for Eco-
nomic Uncertainties (the "SFEU"), derived from General Fund revenues, as a re-
serve to meet cash needs of the General Fund, but which is required to be re-
plenished as soon as sufficient revenues are available. According to the Gover-
nor's May Budget Revision, California's robust economy is projected to propel
the State's General Fund balance to $3.1 billion by the end of fiscal year
2000-2001, $1.8 billion of which will be allocated to the SFEU.
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General. Throughout the 1980's, State spending increased rapidly as the State
population and economy also grew rapidly, including increased spending for
many assistance programs to local governments, which were constrained by Prop-
osition 13 and other laws. The largest State program is assistance to local
public school districts. In 1988, an initiative (Proposition 98) was enacted
which (subject to suspension by a two-thirds vote of the Legislature and the
Governor) guarantees local school districts and community college districts a
minimum share of State General Fund revenues (currently about 35%).
Since the start of the 1990-91 fiscal year, the State has faced adverse eco-
nomic, fiscal, and budget conditions. The economic recession seriously af-
fected State tax revenues. It also caused increased expenditures for health
and welfare programs. Since the start of the 1990-91 fiscal year, the State
has faced adverse economic, fiscal and budget conditions. The economic reces-
sion seriously affected State tax revenues. It also caused increased expendi-
tures for health and welfare programs. As a result of the strengthening State
economy, General Fund revenue growth is now outpacing the costs associated
with many of the larger programs supported by the General Fund. However, the
State will face additional challenges in coming years by the expected need to
substantially increase capital and operating funds for State infrastructure
needs, as well as corrections resulting from a "Three Strikes" law enacted in
1994.
Recent Budgets. As a result of these factors, among others, from the late
1980's until 1992-93, the State had a period of nearly chronic budget imbal-
ance, with expenditures exceeding revenues in four out of six years, and the
State accumulated and sustained a budget deficit in the budget reserve, the
SFEU, approaching $2.8 billion at its peak as of June 30, 1993. Starting in
the 1990-91 Fiscal Year and for each year thereafter, each budget required
multibillion dollar actions to bring projected revenues and expenditures into
balance and to close large "budget gaps" which were identified. The Legisla-
ture and Governor eventually agreed on a number of different steps to produce
Budget Acts in the Years 1991-92 to 1995-96 (although not all of these actions
were taken in each year):
. significant cuts in health and welfare program expenditures;
. transfers of program responsibilities and some funding sources from the
State to local governments, coupled with some reduction in mandates on lo-
cal governments;
. transfer of about $3.6 billion in annual local property tax revenues from
cities, counties, redevelopment agencies and some other districts to local
school districts, thereby reducing State funding for schools;
. reduction in growth of support for higher education programs, coupled with
increases in student fees;
. revenue increases (particularly in the 1992-92 Fiscal Year budget), most of
which were for a short duration;
. increased reliance on aid from the federal government to offset the costs
of incarcerating, educating and providing health and welfare services to
undocumented aliens (although these efforts have produced much less federal
aid than the State Administration had requested); and
. various one-time adjustment and accounting changes.
S-12
<PAGE>
Despite these budget actions, the effects of the recession led to large unan-
ticipated deficits in the SFEU, as compared to projected positive balances. By
the start of the 1993-94 Fiscal Year, the accumulated deficit was so large
(almost $2.8 billion) that it was impractical to budget to retire it in one
year. Therefore, a two-year program was implemented, using the issuance of
revenue anticipation warrants to carry a portion of the deficit over the end
of the fiscal year. When the economy failed to recover sufficiently in 1993-
94, a second two-year plan was implemented in 1994-95, to carry the final re-
tirement of the deficit into 1995-96.
The combination of stringent budget actions cutting State expenditures, and
the turnaround of the economy by late 1993, finally led to the restoration of
positive financial results. While General Fund revenues and expenditures were
essentially equal in FY 1992-93 (following two years of excess expenditures
over revenues), the General Fund had positive operating results in FY 1993-94,
1994-95, and 1995-96 which have reduced the accumulated budget deficit to
about $70 million as of June 30, 1996.
The accumulated budget deficits in the early 1990's, together with other fac-
tors such as the disbursement of funds to local school districts "borrowed"
from future fiscal years and hence not shown in the annual budget, resulted in
a significant reduction in the State's cash resources available to pay its on-
going obligations. When the Legislature and the Governor failed to adopt a
budget for the 1992-93 Fiscal Year by July 1, 1992, which would have allowed
the State to carry out its normal annual cash flow borrowing to replenish its
cash reserves, the State Controller was forced to issue approximately $3.8
billion of registered warrants ("IOUs") over a 2-month period to pay a variety
of obligations representing prior years' or continuing appropriations, and
mandates from court orders.
The State's cash condition became so serious that from late spring 1992 until
1995, the State had to rely on the issuance of short term notes which matured
in a subsequent fiscal year to finance its ongoing deficit, and pay current
obligations. With the repayment of the last of these deficit notes in April,
1996, the State does not plan to rely further on external borrowing across
fiscal years, but will continue its normal cash flow borrowings during a fis-
cal year.
Proposed 2000-2001 Budget. On January 10, 2000, the Governor released his pro-
posed budget for FY 2000-2001. Based on the Governor's May revision, General
Fund revenues (including transfers) are projected to be $73.8 billion and pro-
posed expenditures to be $78.2 billion, to leave a budget reserve in the SFEU
of $1.8 billion at June 30, 2001. The Governor proposed further programs em-
phasizing education, public safety, economic development and transportation
needs within the State.
Although the State's strong economy is producing record revenues for the State
government, the State's budget continues to be under stress from mandated
spending on education, a rising prison population, and social needs of a grow-
ing population with many immigrants. These factors, which limit State spending
growth, also put pressure on local governments. There can be no assurances
that, if economic conditions weaken, or other factors intercede, the State
will not experience budget gaps in the future.
S-13
<PAGE>
Bond Rating
The ratings on California's long-term general obligation bonds were reduced in
the early 1990s from "AAA" levels that had existed prior to the recession. How-
ever, in August 1999, Standard & Poor's upgraded its rating on California's GO
debt to AA- from A+. Fitch soon followed by upgrading its rating to AA from AA-
, earlier this year. As of June 1, 2000, Moody's maintained its Aa3 rating,
however the rating agency's outlook has been changed to Positive from Stable.
These ratings reflect the State's credit quality only, and do not indicate the
creditworthiness of other tax-exempt securities in which the Fund may invest.
Furthermore, there can be no assurance that the State of California will main-
tain its current credit ratings.
Legal Proceedings
The State is involved in certain legal proceedings (described in the State's
recent financial statements) that, if decided against the State, may require
the State to make significant future expenditures or may substantially impair
revenues. Trial courts have recently entered tentative decisions or injunctions
which would overturn several parts of the State's recent budget compromises.
The matters covered by these lawsuits include the property tax shift from coun-
ties to school districts, the Controller's ability to make payments without a
State budget and various other issues. All of these cases are subject to fur-
ther proceedings and appeals, and if California eventually loses, the final
remedies may not have to be implemented in one year.
Obligations of Other Issuers
Other Issuers of California Municipal Obligations
There are a number of state agencies, instrumentalities and political subdivi-
sions of the State that issue Municipal Obligations, some of which may be con-
duit revenue obligations payable from payments from private borrowers. These
entities are subject to various economic risks and uncertainties, and the
credit quality of the securities issued by them may vary considerably from the
credit quality of obligations backed by the full faith and credit of the State.
State Assistance. Property tax revenues received by local governments declined
more than 50% following the passage of Proposition 13. Subsequently, the Cali-
fornia Legislature enacted measures to provide for the redistribution of the
State's General Fund surplus to local agencies, the reallocation of certain
State revenues to local agencies and the assumption of certain governmental
functions by the State to assist municipal issuers to raise revenues. Total lo-
cal assistance from the State's General Fund was budgeted at approximately 75%
of General Fund expenditures in recent years, including the effect of imple-
menting reductions in certain aid programs. To reduce State General Fund sup-
port for school districts, the 1992-93 and 1993-94 Budget Acts caused local
governments to transfer $3.9 billion of property tax revenues to school dis-
tricts, representing a loss of the post-Proposition 13 "bailout" aid. Local
governments have in return received greater revenues and greater flexibility to
operate health and welfare programs. To the extent the State should be con-
strained by its Article XIIIB appropriations limit, or its obligation to con-
form to Proposition 98, or other fiscal considerations, the absolute level, or
the rate of growth, of State assistance to local governments may continue to be
reduced. Any such reductions in State aid could compound the serious fiscal
constraints already experienced by many local governments, particularly coun-
ties.
S-14
<PAGE>
Counties and cities may face further budgetary pressures as a result of changes
in welfare and public assistance programs, which were to be enacted by June,
1997 in order to comply with federal welfare reform law. It is not yet known
what the overall impact will be on local government finances.
Assessment Bonds. California Municipal Obligations which are assessment bonds
may be adversely affected by a general decline in real estate values or a slow-
down in real estate sales activity. In many cases, such bonds are secured by
land which is undeveloped at the time of issuance but anticipated to be devel-
oped within a few years after issuance. In the event of such reduction or slow-
down, such development may not occur or may be delayed, thereby increasing the
risk of a default on the bonds. Because the special assessments or taxes secur-
ing these bonds are not the personal liability of the owners of the property
assessed, the lien on the property is the only security for the bonds. More-
over, in most cases the issuer of these bonds is not required to make payments
on the bonds in the event of delinquency in the payment of assessments or tax-
es, except from amounts, if any, in a reserve fund established for the bonds.
California Long Term Lease Obligations. Based on a series of court decisions,
certain long-term lease obligations, though typically payable from the General
Fund of the State or a municipality, are not considered "indebtedness" requir-
ing voter approval. Such leases, however, are subject to "abatement" in the
event the facility being leased is unavailable for beneficial use and occupancy
by the municipality during the term of the lease. Abatement is not a default,
and there may be no remedies available to the holders of the certificates evi-
dencing the lease obligation in the event abatement occurs. The most common
cases of abatement are failure to complete construction of the facility before
the end of the period during which lease payments have been capitalized and un-
insured casualty losses to the facility (e.g., due to earthquake). In the event
abatement occurs with respect to a lease obligation, lease payments may be in-
terrupted (if all available insurance proceeds and reserves are exhausted) and
the certificates may not be paid when due. Litigation is brought from time to
time challenging the constitutionality of such lease arrangements.
Other Considerations
The repayment of industrial development securities secured by real property may
be affected by California laws limiting foreclosure rights of creditors. Secu-
rities backed by healthcare and hospital revenues may be affected by changes in
State regulations governing cost reimbursements to health care providers under
Medi-Cal (the State's Medicaid program), including risks related to the policy
of awarding exclusive contracts to certain hospitals.
Limitations on ad valorem property taxes may particularly affect "tax alloca-
tion" bonds issued by California redevelopment agencies. Such bonds are secured
solely by the increase in assessed valuation of a redevelopment project area
after the start of redevelopment activity. In the event that assessed values in
the redevelopment project decline (e.g., because of a major natural disaster
such as an earthquake), the tax increment revenue may be insufficient to make
principal and interest payments on these bonds. Both Moody's and S&P suspended
ratings on California tax allocation bonds after the enactment of Articles
XIIIA and XIIIB, and only resumed such ratings on a selective basis.
S-15
<PAGE>
Proposition 87, approved by California voters in 1988, requires that all reve-
nues produced by a tax rate increase go directly to the taxing entity which in-
creased such tax rate to repay that entity's general obligation indebtedness.
As a result, redevelopment agencies (which, typically, are the issuers of tax
allocation securities) no longer receive an increase in tax increment when
taxes on property in the project area are increased to repay voter-approved
bonded indebtedness.
The effect of these various constitutional and statutory changes upon the abil-
ity of California municipal securities issuers to pay interest and principal on
their obligations remains unclear. Furthermore, other measures affecting the
taxing or spending authority of California or its political subdivisions may be
approved or enacted in the future. Legislation has been or may be introduced
which would modify existing taxes or other revenue-raising measures or which
either would further limit or, alternatively, would increase the abilities of
state and local governments to impose new taxes or increase existing taxes.
Presently, it is not possible to predict the extent to which any such legisla-
tion will be enacted. Nor is it possible to determine the impact of any such
legislation on California Municipal Obligations in which the Fund may invest,
future allocations of state revenues to local governments or the abilities of
state or local governments to pay the interest on, or repay the principal of,
such California Municipal Obligations.
Substantially all of California is within an active geologic region subject to
major seismic activity. Northern California in 1989 and Southern California in
1994 experienced major earthquakes causing billions of dollars in damages. The
federal government provided more than $13 billion in aid for both earthquakes,
and neither event is expected to have any long-term negative economic impact.
Any California Municipal Obligation in the Fund could be affected by an inter-
ruption of revenues because of damaged facilities, or, consequently, income tax
deductions for casualty losses or property tax assessment reductions. Compensa-
tory financial assistance could be constrained by the inability of (i) an is-
suer obtaining earthquake insurance coverage at reasonable rates; (ii) an in-
surer performing on its contracts of insurance in the event of widespread loss-
es; or (iii) the federal or State government appropriating sufficient funds
within their respective budget limitations.
Taxable Investments
Taxable investments (sometimes called "Temporary Investments") include obliga-
tions of the United States Government, its agencies or instrumentalities; debt
securities of issuers having, at the time of purchase, a quality rating within
the two highest grades by either Moody's Investors Service, Inc. ("Moody's"),
Standard and Poor's Corporation ("S&P") or Fitch (Aaa or Aa, AAA or AA, or AAA
or AA, respectively); commercial paper rated in the highest grade by either
Moody's or S&P (Prime-1 or A-1, respectively); certificates of deposit of do-
mestic banks with assets of $1 billion or more; and municipal securities and
U.S. Government obligations subject to short-term repurchase agreements.
Subject to the limitation described in the Prospectus, the Fund may invest in
the following taxable investments:
U.S. Government Direct Obligations--issued by the United States Treasury and
include bills, notes and bonds.
S-16
<PAGE>
-- Treasury bills are issued with maturities of up to one year. They are is-
sued in bearer form, are sold on a discount basis and are payable at par value
at maturity.
-- Treasury notes are longer-term interest-bearing obligations with original
maturities of one to seven years.
-- Treasury bonds are longer-term interest-bearing obligations with original
maturities from five to thirty years.
U.S. Government Agencies Securities--Certain federal agencies have been estab-
lished as instrumentalities of the United States Government to supervise and
finance certain types of activities. These agencies include, but are not lim-
ited to, the Bank for Cooperatives, Federal Land Bank, Federal Intermediate
Credit Banks, Federal Home Loan Banks, Federal National Mortgage Association,
Government National Mortgage Association, Export-Import Bank of the United
States and Tennessee Valley Authority. Issues of these agencies, while not di-
rect obligations of the United States Government, are either backed by the
full faith and credit of the United States or are guaranteed by the Treasury
or supported by the issuing agencies' right to borrow from the Treasury. There
can be no assurance that the United States Government itself will pay interest
and principal on securities as to which it is not so legally obligated.
Certificates of Deposits (CDs)--A certificate of deposit is a negotiable in-
terest-bearing instrument with a specific maturity. CDs are issued by banks in
exchange for the deposit of funds and normally can be traded in the secondary
market, prior to maturity. The Fund will only invest in U.S. dollar denomi-
nated CDs issued by U.S. banks with assets of $1 billion or more.
Commercial Paper--Commercial paper is the term used to designate unsecured
short-term promissory notes issued by corporations. Maturities on these issues
vary from a few to 397 days. Commercial paper may be purchased from U.S. cor-
porations.
Other Corporate Obligations--The Fund may purchase notes, bonds and debentures
issued by corporations if at the time of purchase there is less than 397 days
remaining until maturity or if they carry a variable or floating rate of in-
terest.
Repurchase Agreements--A repurchase agreement is a contractual agreement
whereby the seller of securities agrees to repurchase the same security at a
specified price on a future date agreed upon by the parties. The agreed upon
repurchase price determines the yield during the Fund's holding period. Repur-
chase agreements are considered to be loans collateralized by the underlying
security that is the subject of the repurchase contract. The Fund will only
enter into repurchase agreements with dealers, domestic banks or recognized
financial institutions that in the opinion of Nuveen Advisory present minimal
credit risk. The risk to the Fund is limited to the ability of the Issuer to
pay the agreed-upon repurchase price on the delivery date; however, although
the value of the underlying collateral at the time the transaction is entered
into always equals or exceeds the agreed-upon repurchase price, if the value
of the collateral declines there is a risk of loss of both principal and in-
terest. In the event of default, the collateral may be sold but the Fund might
incur a loss if the value of the collateral declines, and might incur disposi-
tion costs or experience delays in connection with liquidating the collateral.
In addition, if bankruptcy proceedings are commenced with respect to the
seller of the security, realization upon the collateral by the Fund may be de-
layed or limited. Nuveen Advisory will monitor the value of the collateral at
the time the transaction is entered into and at all times subsequent during
the term of the
S-17
<PAGE>
repurchase agreement in an effort to determine that the value always equals or
exceeds the agreed-upon repurchase price. In the event the value of the collat-
eral declines below the repurchase price, Nuveen Advisory will demand addi-
tional collateral from the issuer to increase the value of the collateral to at
least that of the repurchase price.
Ratings of Investments
The two highest ratings of Moody's for municipal securities are Aaa and Aa. Mu-
nicipal securities rated Aaa are judged to be of the "best quality." The rating
of Aa is assigned to municipal securities which are of "high quality by all
standards," but as to which margins of protection or other elements make long-
term risks appear somewhat larger than in Aaa rated municipal securities. The
Aaa and Aa rated municipal securities comprise what are generally known as
"high grade bonds." Moody's bond rating symbols may contain numerical modifiers
of a generic rating classification. The modifier 1 indicates that the bond
ranks at the high end of its category; the modifier 2 indicates a mid-range
ranking, and the modifier 3 indicates that the issue ranks in the lower end of
its generic rating category.
The two highest ratings of S&P for municipal securities are AAA and AA. Munici-
pal securities rated AAA have an extremely strong capacity to pay principal and
interest. The rating of AA indicates that capacity to pay principal and inter-
est is very strong and such bonds differ from AAA issues only in small degree.
The two highest ratings of Fitch are AAA and AA. Municipal Securities rated AAA
have an exceptionally strong ability to pay principal and interest. The rating
of AA indicates that capacity to pay principal and interest is very strong, al-
though not quite as strong as bonds rated AAA.
The two highest ratings of Moody's and S&P for federally tax-exempt short-term
loans and notes are MIG-1 and MIG-2, or VMIG-1 and VMIG-2 in the case of vari-
able instruments, and SP-1 and SP-2, respectively. Obligations designated MIG-1
or VMIG-1 are the best quality enjoying strong protection from established cash
flows of funds for their servicing or from established and broad-based access
to the market for refinancing, or both. Obligations designated as MIG-2 or
VMIG-2 are high quality obligations with ample margins of protection. The des-
ignation SP-1 indicates a very strong or strong capacity to pay principal and
interest while the designation SP-2 denotes a satisfactory capacity to pay
principal and interest.
The Fund's ability to purchase commercial paper of tax-exempt and corporate is-
suers is limited to commercial paper rated highly by nationally recognized sta-
tistical rating organizations. Issuers rated in the highest category generally
have a superior capacity for repayment of short-term obligations normally evi-
denced by the following characteristics: leading market positions in well-es-
tablished industries; high rates of return of funds employed; conservative cap-
italization structures with moderate reliance on debt and ample asset protec-
tion; board margins in earnings coverage of fixed financial charges and high
internal cash generation; well-established access to a range of financial mar-
kets and assured sources of alternative liquidity. Issuers rated in the second
highest category have a strong capacity for repayment of short-term promissory
obligations.
Subsequent to its purchase by the Fund, an issue may cease to be rated or its
rating may be reduced below the minimum required for purchase by the Fund. Nei-
ther event requires the elimination of such obligations from the Fund, but
Nuveen Advisory will consider such an event in its determination of whether the
Fund should continue to hold such obligation.
S-18
<PAGE>
MANAGEMENT
The management of the Trust, including general supervision of the duties per-
formed for the Funds under the Investment Management Agreement, is the respon-
sibility of its Board of Trustees. The Trust currently has seven trustees, one
of whom is an "interested person" (as the term "interested person" is defined
in the Investment Company Act of 1940) and six of whom are "disinterested per-
sons." The names and business addresses of the trustees and officers of the
Trust and their principal occupations and other affiliations during the past
five years are set forth below, with those trustees who are "interested per-
sons" of the Trust indicated by an asterisk.
<TABLE>
------------------------------------------------------------------------------------
<CAPTION>
Date of Positions and Principal Occupations
Name and Address Birth Offices with Fund During Past Five Years
------------------------------------------------------------------------------------
<C> <C> <C> <S>
Timothy R. Schwertfeger* 3/28/49 Chairman of the Board Chairman since July 1,
333 West Wacker Drive and President 1996 of The John Nuveen
Chicago, IL 60606 Trustee Company, John Nuveen &
Co. Incorporated, Nuveen
Advisory Corp. and
Nuveen Institutional
Advisory Corp., prior
thereto Executive Vice
President and Director
of The John Nuveen
Company and John Nuveen
& Co. Incorporated;
Director of Nuveen
Advisory Corp. (since
1992) and Nuveen
Institutional Advisory
Corp.; Chairman and
Director (since January
1997) of Nuveen Asset
Management, Inc.;
Director (since 1996) of
Institutional Capital
Corporation; Chairman
and Director of
Rittenhouse Financial
Services Inc. (since
1999); Chief Executive
Officer (since September
1999) of Nuveen Senior
Loan Asset Management
Inc.
------------------------------------------------------------------------------------
Robert P. Bremner 8/22/40 Trustee Private Investor and
3725 Huntington Street, N.W. Management Consultant.
Washington, D.C. 20015
------------------------------------------------------------------------------------
Lawrence H. Brown 7/29/34 Trustee Retired (August 1989) as
201 Michigan Avenue Senior Vice President of
Highwood, IL 60040 The Northern Trust
Company
------------------------------------------------------------------------------------
Anne E. Impellizzeri 1/26/33 Trustee President and Chief
3 West 29th Street Executive Officer of
New York, NY 10001 Blanton-Peale Institutes
of Religion and Health
(since December 1990).
------------------------------------------------------------------------------------
Peter R. Sawers 4/3/33 Trustee Adjunct Professor of
22 The Landmark Business and Economics,
Northfield, IL 60093 University of Dubuque,
Iowa; Adjunct Professor,
Lake Forest Graduate
School of Management,
Lake Forest, Illinois.
------------------------------------------------------------------------------------
William J. Schneider 9/24/44 Trustee Senior Partner and Chief
4000 Miller-Valentine Ct. Operating Officer,
P.O. Box 744 Miller-Valentine
Dayton, OH 45401 Partners; Vice
President, Miller-
Valentine Group, a
development and contract
company; Member
Community Advisory
Board, National City
Bank, Dayton, Ohio.
</TABLE>
--------------------------------------------------------------------------------
S-19
<PAGE>
<TABLE>
--------------------------------------------------------------------------------------
<CAPTION>
Date of Positions and Principal Occupations
Name and Address Birth Offices with Fund During Past Five Years
--------------------------------------------------------------------------------------
<C> <C> <C> <S>
Judith M. Stockdale 12/29/47 Trustee Executive Director,
35 E. Wacker Drive Gaylord and Dorothy
Suite 2600 Donnelley Foundation
Chicago, IL 60601 (since 1994); prior
thereto, Executive
Director, Great Lakes
Protection Fund (from
1990 to 1994).
--------------------------------------------------------------------------------
Alan G. Berkshire 12/28/60 Vice President and Senior Vice President
333 West Wacker Drive Assistant Secretary and General Counsel
Chicago, IL 60606 (since September 1997)
and Secretary (since May
1998) of The John Nuveen
Company, John Nuveen &
Co. Incorporated, Nuveen
Advisory Corp. and
Nuveen Institutional
Advisory Corp., Senior
Vice President and
Secretary (since
September 1999) of
Nuveen Senior Loan Asset
Management Inc.; prior
thereto, Partner in the
law firm of Kirkland &
Ellis.
--------------------------------------------------------------------------------
Peter H. D'Arrigo 11/28/67 Vice President and Vice President of John
333 West Wacker Drive Treasurer Nuveen & Co.
Chicago, IL 60606 Incorporated (since
January 1999), prior
thereto. Assistant Vice
President (from January
1997); formerly,
Associate of John Nuveen
& Co. Incorporated; Vice
President and Treasurer
(since September 1999)
of Nuveen Senior Loan
Asset Management Inc.;
Chartered Financial
Analyst.
--------------------------------------------------------------------------------
Michael S. Davern 6/26/57 Vice President Vice President of Nuveen
333 West Wacker Drive Advisory Corp. (since
Chicago, IL 60606 January 1997); prior
thereto, Vice President
and Portfolio Manager of
Flagship Financial.
--------------------------------------------------------------------------------------
Lorna C. Ferguson 10/24/45 Vice President Vice President of John
333 West Wacker Drive Nuveen & Co.
Chicago, IL 60606 Incorporated; Vice
President (since January
1998) of Nuveen Advisory
Corp. and Nuveen
Institutional Advisory
Corp.
--------------------------------------------------------------------------------------
William M. Fitzgerald 3/2/64 Vice President Vice President of Nuveen
333 West Wacker Drive Advisory Corp. (since
Chicago, IL 60606 December 1995);
Assistant Vice President
of Nuveen Advisory Corp.
(from September 1992 to
December 1995), prior
thereto, Assistant
Portfolio Manager of
Nuveen Advisory Corp.
--------------------------------------------------------------------------------------
Stephen D. Foy 5/31/54 Vice President and Controller Vice President of John
333 West Wacker Drive Nuveen & Co.
Chicago, IL 60606 Incorporated and (since
May 1998) The John
Nuveen Company, Vice
President (since
September 1999) of
Nuveen Senior Loan Asset
Management Inc.,
Certified Public
Accountant.
--------------------------------------------------------------------------------------
J. Thomas Futrell 7/5/55 Vice President Vice President of Nuveen
333 West Wacker Drive Advisory Corp.;
Chicago, IL 60606 Chartered Financial
Analyst
--------------------------------------------------------------------------------------
Richard A. Huber 3/26/63 Vice President Vice President of Nuveen
333 West Wacker Drive Institutional Advisory
Chicago, IL 60606 Corp. (since March 1998)
and Nuveen Advisory
Corp. (since January
1997); prior thereto,
Vice President and
Portfolio Manager of
Flagship Financial, Inc.
</TABLE>
--------------------------------------------------------------------------------
S-20
<PAGE>
<TABLE>
-------------------------------------------------------------------------------
<CAPTION>
Date of Positions and Principal Occupations
Name and Address Birth Offices with Fund During Past Five Years
-------------------------------------------------------------------------------
<C> <C> <C> <S>
Steven J. Krupa 8/21/57 Vice President Vice President of Nuveen
333 West Wacker Drive Advisory Corp.
Chicago, IL 60606
-------------------------------------------------------------------------------
Larry W. Martin 7/27/51 Vice President and Vice President, Assistant
333 West Wacker Drive Assistant Secretary Secretary and Assistant
Chicago, IL 60606 General Counsel of John
Nuveen & Co. Incorporated;
Vice President and
Assistant Secretary of
Nuveen Advisory Corp.;
Vice President and
Assistant Secretary of
Nuveen Institutional
Advisory Corp.; Assistant
Secretary of The John
Nuveen Company and (since
January 1997) Nuveen Asset
Management Inc.; Vice
President and Assistant
Secretary (since September
1999) of Nuveen Senior
Loan Asset Management Inc.
-------------------------------------------------------------------------------
Edward F. Neild, IV 7/7/65 Vice President Vice President (since
333 West Wacker Drive September 1996),
Chicago, IL 60606 previously Assistant Vice
President (since December
1993) of Nuveen Advisory
Corp., Portfolio Manager
prior thereto; Vice
President (since September
1996), previously
Assistant Vice President
(since May 1995) of Nuveen
Institutional Advisory
Corp., Portfolio Manager
prior thereto; Chartered
Financial Analyst.
-------------------------------------------------------------------------------
Stephen S. Peterson 9/20/57 Vice President Vice President (since
333 West Wacker Drive September 1997),
Chicago, IL 60606 previously Assistant Vice
President (since September
1996), Portfolio Manager
prior thereto of Nuveen
Advisory Corp., Chartered
Financial Analyst.
-------------------------------------------------------------------------------
Thomas C. Spalding, Jr. 7/31/51 Vice President Vice President of Nuveen
333 West Wacker Drive Advisory Corp. and Nuveen
Chicago, IL 60606 Institutional Advisory
Corp.; Chartered Financial
Analyst.
-------------------------------------------------------------------------------
Gifford R. Zimmerman 9/9/56 Vice President and Vice President, Assistant
333 West Wacker Drive Secretary Secretary and Associate
Chicago, IL 60606 General Counsel formerly
Assistant General Counsel
of John Nuveen & Co.
Incorporated; Vice
President and Assistant
Secretary of Nuveen
Advisory Corp. and Nuveen
Institutional Advisory
Corp.; Vice President and
Assistant Secretary of The
John Nuveen Company; Vice
President and Assistant
Secretary (since September
1999) of Nuveen Senior
Loan Asset Management
Inc.; Chartered Financial
Analyst.
</TABLE>
--------------------------------------------------------------------------------
Timothy R. Schwertfeger and Peter R. Sawers serve as members of the Executive
Committee of the Board of Trustees. The Executive Committee, which meets be-
tween regular meetings of the Board of Trustees, is authorized to exercise all
of the powers of the Board of Trustees.
The trustees of the Trust are directors or trustees, as the case may be, of 37
Nuveen open-end funds and 54 Nuveen closed-end funds advised by Nuveen Advisory
Corp. Mr. Schwertfeger is a director or trustee, as the case may be, of 13
Nuveen open-end funds and closed-end funds advised by Nuveen Institutional Ad-
visory Corp. and two funds advised by Nuveen Senior Loan Asset Management. None
of the independent trustees has ever been a director, officer, or employee of,
or a consultant to, Nuveen Advisory, Nuveen or their affiliates.
S-21
<PAGE>
The following table sets forth compensation paid by the Trust to each of the
trustees of the Trust and the total compensation paid to each trustee during
the fiscal year ended February 29, 2000. The Trust has no retirement or pension
plans. The officers and trustees affiliated with Nuveen serve without any com-
pensation from the Trust.
<TABLE>
<CAPTION>
Total Compensation
Aggregate From Trust and
Compensation Fund Complex paid
Name of Trustee from the Fund(1) to the Trustees(2)
--------------- ---------------- ------------------
<S> <C> <C>
Robert P. Bremner..................... $308 $72,000
Lawrence H. Brown..................... $333 $78,750
Anne E. Impellizzeri.................. $308 $72,000
Peter R. Sawers....................... $310 $74,500
William S. Schneider.................. $308 $72,000
Judith M. Stockdale................... $308 $72,000
</TABLE>
--------
(1) The compensation paid (but not including amounts deferred) to the indepen-
dent trustees for the fiscal year ended February 29, 2000 for services to
the Fund.
(2) Based on the compensation paid (including any amounts deferred) to the in-
dependent trustees for the fiscal year ended February 29, 2000 for services
to the open-end and closed-end funds advised by NAC.
Each trustee who is not affiliated with NAC receives a $60,000 annual retainer
for serving as a director or trustee of all funds for which NAC serves as in-
vestment adviser or manager and a $1,000 fee per day plus expenses for atten-
dance at all meetings held on a day on which a regularly scheduled Board meet-
ing is held, a $1,000 fee per day plus expenses for attendance in person or a
$500 fee per day plus expenses for attendance by telephone at a meeting held on
a day which no regular Board meeting is held and a $250 fee per day plus ex-
penses for attendance in person or by telephone at a meeting of the Executive
Committee held solely to declare dividends. The annual retainer, fees and ex-
penses are allocated among the funds for which NAC serves as investment adviser
or manager on the basis of relative net asset sizes. The Trust requires no em-
ployees other than its officers, all of whom are compensated by NAC or Nuveen.
The John Nuveen Company (JNC) maintains charitable contributions programs to
encourage the active support and involvement of individuals in the civic activ-
ities of their community. These programs include a matching contributions pro-
gram and a direct contributions program. The independent trustees of the funds
managed by NAC are eligible to participate in the charitable contributions pro-
gram of JNC. Under the matching program, JNC will match the personal contribu-
tions of a trustee to Section 501(c)(3) organizations up to an aggregate maxi-
mum amount of $10,000 during any calendar year. Under its direct (non-matching)
program, JNC makes contributions to qualifying Section 501(c)(3) organizations,
as approved by the Corporate Contributions Committee of JNC. The independent
trustees are also eligible to submit proposals to the committee requesting that
contributions be made under this program to Section 501(c)(3) organizations
identified by the trustee, in an aggregate amount not to exceed $5,000 during
any calendar year. Any contribution made by JNC under the direct program is
made solely at the discretion of the Corporate Contributions Committee.
S-22
<PAGE>
The officers and trustees of each Fund, in the aggregate, own less than 1% of
the shares of the Fund.
The following table sets forth the percentage ownership of each person, who, as
of May 31, 2000, is known by the Fund to own of record or beneficially 5% or
more of the Fund's shares.
<TABLE>
<CAPTION>
Percentage
of
Name of Fund Name and Address of Owner Ownership
--------------------------------------------------------------------------------
<C> <S> <C>
Nuveen California Tax-Exempt Eileen B. Geller...................... 9.38%
Money Market Fund Andrew D. Geller TRS
Geller Family Trust
3297 Woodbine St.
Los Angeles, CA 90064-4836
Chase Manhattan Bank.................. 5.09%
1211 Avenue of the Americas
New York, NY 10036-8701
</TABLE>
INVESTMENT ADVISER AND INVESTMENT MANAGEMENT AGREEMENT
Nuveen Advisory acts as investment adviser for and manages the investment and
reinvestment of the Fund's assets. Nuveen Advisory also administers the Trust's
business affairs, provides office facilities and equipment and certain cleri-
cal, bookkeeping and administrative services, and permits any of its officers
or employees to serve without compensation as trustees or officers of the Trust
if elected to such positions. See "Who Manages the Fund" in the Prospectus.
Pursuant to an investment management agreement between Nuveen Advisory and the
Trust, the Fund has agreed to pay annual management fees at the rates set forth
below, which are based on the Fund's average daily net assets:
<TABLE>
<CAPTION>
Average Daily Net Assets Management Fee
------------------------------------------
<S> <C>
For the first $125 million 0.4000 of 1%
For the next $125 million 0.3875 of 1%
For the next $250 million 0.3750 of 1%
For the next $500 million 0.3625 of 1%
For the next $1 billion 0.3500 of 1%
For assets over $2 billion 0.3250 of 1%
</TABLE>
Through December 31, 1999, Nuveen Advisory had undertaken to reimburse Fund
expenses in an amount necessary to limit total operating expenses to .55 of 1%
of the Fund's daily net assets. Thereafter, Nuveen Advisory may chose to
modify, continue or discontinue these reimbursements at its sole discretion.
Before June 25, 1999, Nuveen Advisory's annual management fees were calculated
at the rates set forth below, which are based on the Fund's average daily net
assets:
<TABLE>
<CAPTION>
Average Daily Net Assets Management Fee
------------------------------------------
<S> <C>
For the first $500 million .4000 of 1%
For the next $500 million .3750 of 1%
For assets over $1 billion .3500 of 1%
</TABLE>
S-23
<PAGE>
For the periods before June 25, 1999, Nuveen Advisory had agreed to waive all
or a portion of its management fee or reimburse certain expenses of the Fund in
order to prevent total operating expenses (including Nuveen Advisory's manage-
ment fee, but excluding interest, taxes, fees incurred in acquiring and dispos-
ing of portfolio securities, any asset-based distribution or service fees and,
to the extent permitted, extraordinary expenses) in any fiscal year from ex-
ceeding .55 of 1% of the average daily net assets of the Fund. Nuveen Advisory
could also voluntarily agree to reimburse additional expenses from time to
time, which could be terminated at any time in its discretion. For the last
three fiscal years, the Fund, as its predecessor, paid net management fees to
Nuveen Advisory as follows:
<TABLE>
<CAPTION>
Management Fees Net of
Expense Fee Waivers and Expense
Reimbursement Paid to Reimbursements from
Nuveen Advisory for the Nuveen Advisory for the
Year Ended Year Ended
------------------------- ------------------------
2/28/98 2/28/99 2/29/00 2/28/98 2/28/99 2/29/00
-----------------------------------
-------------------------------
<S> <C> <C> <C> <C> <C> <C>
$539,739 $633,107 $17,545 $82,256 $85,867 $131,921
</TABLE>
Nuveen Advisory is a wholly owned subsidiary of John Nuveen & Co. Incorporated
("Nuveen"), the Fund's principal underwriter. Nuveen is sponsor of the Nuveen
Defined Portfolios, registered unit investment trusts, is principal underwriter
for the Nuveen Mutual Funds, and has served as co-managing underwriter for the
shares of the Nuveen Exchange-Traded Funds. Over 1,300,000 individuals have in-
vested to date in Nuveen's funds and trusts. Founded in 1898, Nuveen brings
over a century of expertise to the municipal bond market. Overall, Nuveen and
its affiliates manage or oversee more than $70 billion in assets in a variety
of products. Nuveen is a subsidiary of The John Nuveen Company which, in turn,
is approximately 78% owned by The St. Paul Companies, Inc. ("St. Paul"). St.
Paul is located in St. Paul, Minnesota, and is principally engaged in providing
property-liability insurance through subsidiaries.
Nuveen Advisory's portfolio managers call upon the resources of Nuveen's Re-
search Department. The Nuveen Research Department reviews more than $100 bil-
lion in municipal bonds every year.
The Fund, the other Nuveen Funds, Nuveen Advisory, and other related entities
have adopted a code of ethics which essentially prohibits all Nuveen Fund man-
agement personnel, including Nuveen Fund portfolio managers, from engaging in
personal investments which compete or interfere with, or attempt to take advan-
tage of, the Fund's anticipated or actual portfolio transactions, and is de-
signed to assure that the interest of Fund shareholders are placed before the
interest of Nuveen personnel in connection with personal investment transac-
tions.
PORTFOLIO TRANSACTIONS
Nuveen Advisory, in effecting purchases and sales of portfolio securities for
the account of the Fund, will place orders in such manner as, in the opinion of
management, will offer the best price and market for the execution of each
transaction. Portfolio securities will normally be purchased directly from an
underwriter or in the over-the-counter market from the principal dealers in
such securities, unless it
S-24
<PAGE>
appears that a better price or execution may be obtained elsewhere. Portfolio
securities will not be purchased from Nuveen or its affiliates except in com-
pliance with the Investment Company Act of 1940.
The Fund expects that all portfolio transactions will be effected on a princi-
pal (as opposed to an agency) basis and, accordingly, do not expect to pay any
brokerage commissions.
Purchases from underwriters will include a commission or concession paid by
the issuer to the underwriter, and purchases from dealers will include the
spread between the bid and asked price. Given the best price and execution ob-
tainable, it will be the practice of the Fund to select dealers which, in ad-
dition, furnish research information (primarily credit analyses of issuers and
general economic reports) and statistical and other services to Nuveen Adviso-
ry. It is not possible to place a dollar value on information and statistical
and other services received from dealers. Since it is only supplementary to
Nuveen Advisory's own research efforts, the receipt of research information is
not expected to reduce significantly Nuveen Advisory's expenses. While Nuveen
Advisory will be primarily responsible for the placement of the business of
the Fund, the policies and practices of Nuveen Advisory in this regard must be
consistent with the foregoing and will, at all times, be subject to review by
the Board of Trustees.
Nuveen Advisory reserves the right to, and does, manage other investment ac-
counts and investment companies for other clients, which may have investment
objectives similar to the Fund. Subject to applicable laws and regulations,
Nuveen Advisory will attempt to allocate equitably portfolio transactions
among the Fund and the portfolios of its other clients purchasing or selling
securities whenever decisions are made to purchase or sell securities by the
Fund and one or more of such other clients simultaneously. In making such al-
locations the main factors to be considered will be the respective investment
objectives of the Fund and such other clients, the relative size of portfolio
holdings of the same or comparable securities, the availability of cash for
investment by the Fund and such other
clients, the size of investment commitments generally held by the Fund and
such other clients and
opinions of the persons responsible for recommending investments to the Fund
and such other clients.
While this procedure could have a detrimental effect on the price or amount of
the securities available to the Fund from time to time, it is the opinion of
the Board of Trustees that the benefits available from Nuveen Advisory's or-
ganization will outweigh any disadvantage that may arise from exposure to si-
multaneous transactions.
Under the Investment Company Act of 1940, the Fund may not purchase portfolio
securities from any underwriting syndicate of which Nuveen is a member except
under certain limited conditions set forth in Rule 10f-3. The Rule sets forth
requirements relating to, among other things, the type of securities purchased
by the Fund and the amount of securities which may be purchased in any one is-
sue. In addition, purchases of securities made pursuant to the terms of the
Rule must be approved at least quarterly by the Board of Trustees, including a
majority of the trustees who are not interested persons of the Fund.
NET ASSET VALUE
As stated in the Prospectus, the net asset value of the shares of the Fund
will be determined by The Chase Manhattan Bank, the Fund's custodian, as of
4:00 p.m., Eastern Time, (1) on each day on which
S-25
<PAGE>
the Federal Reserve Bank of Boston is normally open and (2) on any day during
which there is sufficient degree of trading in the Fund's portfolio securities
that the current net asset value of the Fund's shares might be materially af-
fected by such changes in the value of the portfolio securities. The Federal
Reserve Bank of Boston is not open and the Fund will similarly not be open on
New Year's Day, Martin Luther King's Birthday, Washington's Birthday, Good Fri-
day, Memorial Day, Independence Day, Labor Day, Columbus Day, Veteran's Day,
Thanksgiving Day and Christmas Day. It is possible that changing circumstances
during the year will result in addition or deletions to the above lists. The
net asset value per share will be computed by dividing the value of the portfo-
lio securities held by the Fund, plus cash or other assets, less liabilities,
by the total number of shares outstanding at such time.
As stated in the Prospectus, the Fund will seek to maintain a net asset value
of $1.00 per share. In this connection, the Fund values its portfolio securi-
ties at their amortized cost, as permitted by the Securities and Exchange Com-
mission (the "Commission") under Rule 2a-7 under the Investment Company Act of
1940. This method does not take into account unrealized securities gains or
losses. It involves valuing an instrument at its cost on the date of purchase
and thereafter assuming a constant amortization to maturity of any discount or
premium. While this method provides certainty in valuation, it may result in
periods during which the value of an investment, as determined by amortized
cost, is higher or lower than the price the Fund would receive if it sold the
instrument. During periods of declining interest rates, the daily yield on
shares of the Fund may tend to be higher than a like computation made by a fund
with identical investments utilizing a method of valuation based upon market
prices and estimates of market prices for all of its portfolio instruments.
Thus, if the use of the amortized cost method by the Fund resulted in a lower
aggregate portfolio value on a particular day, a prospective investor in the
Fund would be able to obtain a somewhat higher yield than would result from an
investment in a fund utilizing solely market values, and existing investors in
the Fund would receive less investment income. The converse would apply in a
period of rising interest rates.
The Fund, as a condition to the use of amortized cost and the maintenance of
its per share net asset value of $1.00, must maintain a dollar-weighted average
portfolio maturity of 90 days or less, only purchase instruments having remain-
ing maturities of 397 days or less, and invest only in securities determined to
be of high quality with minimal credit risks. The Fund may invest in variable
and floating rate instruments even if they carry stated maturities in excess of
397 days, upon certain conditions contained in rules and regulations issued by
the Securities and Exchange Commission under the Investment Company Act of
1940, but will do so only if there is a secondary market for such instruments
or if they carry demand features, permissible under rules of the Commission for
money market funds, to recover the full principal amount thereof upon specified
notice at par, or both.
The Board of Trustees, pursuant to Rule 2a-7, has established procedures de-
signed to stabilize, to the extent reasonably possible, the Fund's price per
share as computed for the purpose of sales and redemptions at $1.00. Such pro-
cedures will include review of the Fund's portfolio holdings by the Board of
Trustees, at such intervals as it may deem appropriate, to determine whether
the net asset value calculated by using available market quotations or market
equivalents deviates from $1.00 per share based on amortized cost. Market quo-
tations and market equivalents used in such review may be obtained from a pric-
ing agent approved by the Board of Trustees. The Board has selected Nuveen Ad-
visory to act as pricing agent, but in the future may select an independent
pricing service to perform this function. In serving as pricing agent, Nuveen
Advisory will follow guidelines adopted by the Board, and the Board
S-26
<PAGE>
will monitor Nuveen Advisory to see that the guidelines are followed. The pric-
ing agent will value the Fund's investment based on methods which include con-
sideration of yield or prices of municipal obligations of comparable quality,
coupon, maturity, and type; indications as to values from dealers; and general
market conditions. The pricing agent may employ electronic data processing
techniques and/or a matrix system to determine valuations. The extent of any
deviation between the Fund's net asset value based on the pricing agent's mar-
ket valuation and $1.00 per share based on amortized cost will be examined by
the Board of Trustees. If such deviation exceeds 1/2 of 1%, the Board of Trust-
ees will promptly consider what action, if any, will be initiated. In the event
the Board of Trustees determines that a deviation exists which may result in
material dilution or other unfair results to investors or existing sharehold-
ers, it has agreed to take such corrective action as it regards as necessary
and appropriate, including the sale of portfolio instruments prior to maturity
to realize capital gains or losses or to shorten average portfolio maturity;
withholding dividends or payment of distributions from capital or capital
gains; redemption of shares in kind; or establishing a net asset value per
share by using available market quotations.
TAX MATTERS
Federal Income Tax Matters
The following discussion of federal income tax matters is based upon the advice
of Morgan, Lewis & Bockius LLP, counsel to the Trust.
The Fund intends to qualify, as it has in prior years, under Subchapter M of
the Internal Revenue Code of 1986, as amended (the "Code") for tax treatment as
a regulated investment company. In order to qualify as a regulated investment
company, the Fund must satisfy certain requirements relating to the source of
its income, diversification of its assets, and distributions of its income to
shareholders. First, the Fund must derive at least 90% of its annual gross in-
come (including tax-exempt interest) from dividends, interest, payments with
respect to securities loans, gains from the sale or other disposition of stock
or securities, foreign currencies or other income (including but not limited to
gains from options and futures) derived with respect to its business of invest-
ing in such stock or securities (the "90% gross income test"). Second, the Fund
must diversify its holdings so that, at the close of each quarter of its tax-
able year, (i) at least 50% of the value of its total assets is comprised of
cash, cash items, United States Government securities, securities of other reg-
ulated investment companies and other securities limited in respect of any one
issuer to an amount not greater in value than 5% of the value of the Fund's to-
tal assets and to not more than 10% of the outstanding voting securities of
such issuer, and (ii) not more than 25% of the value of its total assets is in-
vested in the securities of any one issuer (other than United States Government
securities and securities of other regulated investment companies) or two or
more issuers controlled by the Fund and engaged in the same, similar or related
trades or businesses.
As a regulated investment company, the Fund will not be subject to federal in-
come tax on the portion of its net income currently distributed to shareholders
in any taxable year for which it distributes at least 90% of the sum of (i) its
"investment company taxable income" (which includes dividends, taxable inter-
est, taxable original issue discount and market discount income, income from
securities lending, net short-term capital gain in excess of long-term capital
loss, and any other taxable income other than "net
S-27
<PAGE>
capital gain" (the excess of its net long-term capital gains over its net
short-term capital loss) and is reduced by deductible expenses) and (ii) its
"net tax-exempt interest" (the excess of its gross tax-exempt interest income
over certain disallowed deductions).
The Fund also intends to satisfy conditions that will enable it to designate
certain distributions as exempt-interest dividends. Shareholders receiving ex-
empt-interest dividends will not be subject to regular federal income tax on
the amount of such dividends.
Distributions by the Fund of net interest received from certain taxable invest-
ments (such as certificates of deposit, commercial paper and obligations of the
United States Government, its agencies and instrumentalities) and net short-
term capital gains realized by the Fund, if any, will be taxable to sharehold-
ers as ordinary income whether received in cash or additional shares. If the
Fund purchases a security at a market discount, any gain realized by the Fund
upon sale or redemption of the securities will be treated as a taxable interest
income to the extent such gain does not exceed the market discount, and any
gain realized in excess of the market discount will be treated as a capital
gain. Any net long-term capital gains realized by the Fund and distributed to
shareholders in cash or in additional shares will be taxable to shareholders as
long-term capital gains regardless of the length of time investors have owned
shares of the Fund. The Fund does not expect to realize significant long-term
capital gains. Because the taxable portion of the Fund's investment income con-
sists primarily of interest, none of its dividends, whether or not treated as
exempt-interest dividends, is expected to qualify under the Internal Revenue
Code for the dividends received deductions for corporations.
Capital gains are taxable to shareholders either as ordinary income or as long-
term capital gains, depending on how long the Fund owned the investment. Early
in each year, you will receive a statement detailing the amount and nature of
all capital gains that you were paid during the prior year.
In the very unlikely event that the fund realizes capital gains or ordinary in-
come subject to regular federal income tax, it will pay any capital gains or
other taxable distributions annually in December.
If the Fund has both tax-exempt and taxable income, it will use the "average
annual" method for determining the designated percentage that is taxable income
and designate the use of such method within 60 days after the end of the Fund's
taxable year. Under this method, one designated percentage is applied uniformly
to all distributions made during the Fund's taxable year. The percentage of in-
come designated as tax-exempt for any particular distribution may be substan-
tially different from the percentage of the Fund's income that was tax-exempt
during the period covered by the distribution.
Although dividends generally will be treated as distributed when paid, divi-
dends declared in October, November or December, payable to shareholders of
record on a specified date in one of those months and paid during the following
January, will be treated as having been distributed by the Fund (and received
by the shareholders) on December 31.
The redemption or exchange of the shares of the Fund is not expected to result
in capital gain or loss to the shareholders because the Fund's net asset value
is expected to remain constant at $1.00 per share. To the extent that the
Fund's net asset value is greater or lesser than $1.00 per share, redemptions
or exchanges may result in capital gain or loss to the shareholder.
S-28
<PAGE>
In order to avoid a 4% federal excise tax, the Fund must distribute or be
deemed to have distributed by December 31 of each calendar year at least 98% of
its taxable ordinary income for such year, at least 98% of the excess of its
realized capital gains over its realized capital losses (generally computed on
the basis of the one-year period ending on October 31 of such year) and 100% of
any taxable ordinary income and the excess of realized capital gains over real-
ized capital losses for the period year that was not distributed during such
year and on which the Fund paid no federal income tax. The Fund intends to make
timely distributions in compliance with these requirements and consequently it
is anticipated that it generally will not be required to pay the excise tax.
If in any year the Fund should fail to qualify under Subchapter M for tax
treatment as a regulated investment company, the Fund would incur a regular
corporate federal income tax upon its income for that year (other than interest
income from tax-exempt securities), and distributions to its shareholders out
of net interest income from tax-exempt securities or other investments, or out
of net capital gains, would be taxable to shareholders as ordinary dividend in-
come for federal income tax purposes to the extent of the Fund's available
earnings and profits.
The Fund may invest in the type of private activity bonds the interest on which
is not federally tax-exempt to persons who are "substantial users" of the fa-
cilities financed by such bonds or "related persons" of such "substantial us-
ers." Accordingly, the Funds may not be appropriate investments for a share-
holder who is considered either a "substantial user" or a "related person"
within the meaning of the Code. In general, a "substantial user" of a facility
financed from the proceeds of private activity bonds includes a "non-exempt
person who regularly uses a part of such facility in his trade or business."
"Related persons" are in general defined to include persons among whom there
exists a relationship either by family or business, which would result in a
disallowance of losses in transactions among them under various provisions of
the Code (or if they are members of the same controlled group of corporations
under the Code). This includes a partnership and each of its partners (includ-
ing their spouses and minor children) and an S corporation and each of its
shareholders (and their spouses and minor children). Various combinations of
these relationships may also constitute "related persons" under the Code. For
additional information, investors should consult their tax advisors before in-
vesting in the Fund.
Federal tax law imposes an alternative minimum tax with respect to both corpo-
rations and individuals. Interest on certain securities, such as bonds issued
to make loans for housing purposes or to private entities (but not for certain
tax-exempt organizations such as universities and non-profit hospitals), is in-
cluded as an item of tax preference in determining the amount of a taxpayer's
alternative minimum taxable income. To the extent that the Fund receives income
from securities subject to the alternative minimum tax, a portion of the divi-
dends paid by it, although otherwise exempt from federal income tax, will be
taxable to shareholders to the extent that their tax liability is determined
under the alternative minimum tax regime. The Fund will annually supply share-
holders with a report indicating the percentage of the Fund income attributable
to securities subject to the federal alternative minimum tax.
In addition, the alternative minimum taxable income for corporations is in-
creased by 75% of the difference between an alternative measure of income ("ad-
justed current earnings") and the amount otherwise determined to be the alter-
native minimum taxable income. Interest on all securities, and therefore all
distributions by the Fund that would otherwise be tax exempt, is included in
calculating a corporation's adjusted current earnings.
S-29
<PAGE>
Individuals whose provisional income exceeds a base amount will be subject to
Federal income tax on up to one-half of their social security or railroad re-
tirement benefits. Provisional income currently includes adjusted gross income,
one-half of social security benefits and tax-exempt interest, including exempt-
interest dividends from the Fund. Individuals whose modified income exceeds an
adjusted base amount are required to include in gross income up to 85% of their
social security or railroad benefits.
The Code provides that interest on indebtedness incurred or continued to pur-
chase or carry shares of any Fund is not deductible. Under rules used by the
IRS for determining when borrowed funds are considered used for the purpose of
purchasing or carrying particular assets, the purchase of shares of the Fund
may be considered to have been made with borrowed funds even though such funds
are not directly traceable to the purchase of shares.
The Fund is required in certain circumstances to withhold 31% of taxable divi-
dends and certain other payments paid to non-corporate holders of shares who
have not furnished to the Fund their correct taxpayer identification number (in
the case of individuals, their social security number) and certain certifica-
tions, or who are otherwise subject to back-up withholding.
The foregoing is a general and abbreviated summary of the provisions of the
Code and Treasury Regulations presently in effect as they directly govern the
taxation of the Fund and their shareholders. For complete provisions, reference
should be made to the pertinent Code sections and Treasury Regulations. The
Code and Treasury Regulations are subject to change by legislative or adminis-
trative action, and any such change may be retroactive with respect to Fund
transactions. Shareholders are advised to consult their own tax advisors for
more detailed information concerning the federal taxation of the Fund and the
income tax consequences to their shareholders.
State Tax Matters
The following is based upon the advice of Morgan, Lewis & Bockius LLP, counsel
to the Fund, and assumes that the Fund will be qualified as a regulated invest-
ment company under Subchapter M of the Code and will be qualified thereunder to
pay exempt interest dividends.
Individual shareholders of the Fund who are subject to California personal in-
come taxation will not be required to include in their California gross income
dividends which (1) are attributable to interest on any obligation of Califor-
nia or its political subdivisions or to interest on obligations of the United
States, its territories, possessions or instrumentalities that are exempt from
state taxation under federal law, and (2) are designated by the Fund as Cali-
fornia exempt-interest dividends in a written notice mailed to shareholders not
later than 60 days after the close of the Fund's taxable year. Gain or loss, if
any, resulting from an exchange or redemption of shares will be recognized in
the year of the exchange or redemption. Present California law taxes both long-
term and short-term capital gains on the exchange or redemption of shares at
rates applicable to ordinary income. Interest on indebtedness incurred or con-
tinued by a shareholder in connection with the purchase of shares of the Fund
will not be deductible for California personal income tax purposes. California
has an alternative minimum tax similar to the federal alternative minimum tax.
However, the California alternative minimum tax does not include tax-exempt in-
terest as an item of tax preference.
S-30
<PAGE>
The Fund will not be subject to California franchise or corporate income tax on
interest income or net capital gain distributed to the shareholders.
No California ad valorem taxes apply to the shares of the Fund.
The foregoing is a general, abbreviated summary of certain of the provisions of
the California Revenue and Taxation Code presently in effect as it directly
governs the taxation of shareholders of the Fund. These provisions are subject
to change by legislative or administrative action, and any such change may be
retroactive with respect to Fund transactions. Shareholders are advised to con-
sult with their own tax advisors for more detailed information concerning Cali-
fornia tax matters.
PERFORMANCE INFORMATION
The historical performance of the Fund may be expressed in terms of "yield,"
"effective yield" or "taxable equivalent yield." The "yield" of the Fund refers
to the rate of income generated by an investment in the series over a specified
seven-day period, expressed as an annualized figure. "Effective yield" is cal-
culated similarly except that, when annualized, the income earned by the in-
vestment is assumed to be reinvested. Due to this compounding effect, the ef-
fective yield will be slightly higher than the yield. "Taxable equivalent
yield" is the yield that a taxable investment would need to generate in order
to equal the series' yield on an after-tax basis for an investor in a stated
bracket) often the bracket with the highest marginal tax rate). A taxable
equivalent yield quotation for a given series will be higher than the yield or
the effective yield quotation for the series. The yield figures will fluctuate
over time. A comparison of tax-exempt and taxable equivalent yields is one ele-
ment to consider in making an investment decision. The Fund may from time to
time in its advertising and sales materials compare the then current yield as
of the most recent quarter of the Fund with the yield on taxable investments
such as corporate or U.S. Government bonds, bank CDs and money market accounts
or money market funds, each of which has investment characteristics that may
differ from those of the Fund. U.S. Government bonds, for example, are backed
by the full faith and credit of the U.S. Government and bank CDs and money mar-
ket accounts are insured by an agency of the federal government. Bank money
market accounts and money market funds provide stability of principal, but pay
interest at rates that vary with the condition of the short-term taxable debt
market. The investment characteristics of the Fund are described more fully
elsewhere in this Prospecuts.
Any given performance quotation or performance comparison for the Fund is based
on historical earnings and should not be considered as representative of the
performance of the Fund for any future period.
Yield is computed in accordance with a standard method prescribed by rules of
the Securities and Exchange Commission. Under that method, current yield is
based on a seven-day period and is computed as follows: the series' net invest-
ment income per share for the period is divided by the price per share (ex-
pected to remain constant at $1.00) at the beginning of the period, the result
(the "base period return") is divided by seven and multiplied by 365, and the
resulting figure is carried to the nearest hundredth of one percent. For the
purpose of this calculation, the series' net investment income per share in-
cludes its accrued interest income plus or minus amortized purchase discount or
premium less accrued expenses, but does not include realized capital gains or
losses or unrealized appreciation or depreciation of investments.
S-31
<PAGE>
Effective yield is calculated by taking the base period return (computed as de-
scribed above) and calculating the effect of assumed compounding. The formula
for effective yield is: (base period return +1) 365/7 -1. Based on the seven-
day period ended February 29, 2000, the yield and effective yield was 2.34% and
2.37%, respectively.
Taxable equivalent yield is computed by dividing that portion of the Fund's
yield which is tax-exempt by 1 minus the stated combined federal and state in-
come tax rate and adding the result to that portion, if any, of the yield of
the fund that is not tax-exempt. Based upon (1) a combined 2000 federal and
California income tax of 45.0%, and (2) the yield for the fund as described
above for the seven-day period ended February 29, 2000, the taxable equivalent
yield for the Fund for that period was 4.25%.
The Fund's yield will fluctuate, and the publication of annualized yield quota-
tions is not a representation of what an investment in the Fund will actually
yield for any given future period. Actual yields will depend not only on
changes in interest rates on money market instruments during the period in
question, but also on such matters as the Fund's expenses.
In reports or other communications to shareholders or in advertising and sales
literature, the fund may compare its performance to that of other money market
mutual funds tracked by Lipper Analytical Services, Inc. ("Lipper"), by
Donoghue's Money fund Report ("Donoghue's") or similar services or by financial
publications such as Barron's, Changing Times, Forbes and Money Magazine. Per-
formance comparisons by these indexes, services or publications may rank mutual
funds over different periods of time by means of aggregate, average, year-by-
year or other types of performance figures. Lipper performance calculations in-
clude the reinvestment of all capital gain and income dividends for the periods
covered by the calculations. As reported by Donoghue's all investment results
represent total return (annualized results for the period net of management
fees and expenses) and one year investment results are effective annual yields
assuming reinvestment of dividends.
A comparison of tax-exempt and taxable equivalent yields is one element to con-
sider in making an investment decision. The Fund may from time to time in its
advertising and sales materials compare its then current yields as of a recent
date with the yields on taxable investments such as corporate or U.S. Govern-
ment bonds and bank CDs or money market accounts, each of which has investment
characteristics that may differ from those of the Fund. U.S. Government bonds,
for example, are backed by the full faith and credit of the U.S. Government,
and bank CDs and money market accounts are generally shorter term investments
insured by an agency of the federal government. Bank money market accounts and
money market funds provide stability of principal but pay interest at rates
which vary with the condition of the short-time taxable debt market.
S-32
<PAGE>
The following table shows the effects for individuals of federal income taxes
on the amount that those subject to a given tax rate would have to put into a
tax-free investment in order to generate the same after-tax income as a taxable
investment.*
Read down to find the amount of a tax-free investment at the specified rate
that would provide the same after-tax income as a $50,000 taxable invest-
ment at the stated taxable rate.
<TABLE>
<CAPTION>
3.00% 3.50% 4.00% 4.50% 5.00% 5.50% 6.00% 6.50%
1.50% 2.00% 2.50% Tax- Tax- Tax- Tax- Tax- Tax- Tax- Tax-
Taxable Tax-Free Tax-Free Tax-Free Free Free Free Free Free Free Free Free
------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
2.00% $ 46,000 $ 34,500 $ 27,600 $23,000 $19,714 $17,250 $15,333 $13,800 $12,545 $11,500 $10,615
------------------------------------------------------------------------------------------------------
2.50% $ 57,500 $ 43,125 $ 34,500 $28,750 $24,643 $21,563 $19,167 $17,250 $15,682 $14,375 $13,269
------------------------------------------------------------------------------------------------------
3.00% $ 69,000 $ 51,750 $ 41,400 $34,500 $29,571 $25,875 $23,000 $20,700 $18,818 $17,250 $15,923
------------------------------------------------------------------------------------------------------
3.50% $ 80,500 $ 60,375 $ 48,300 $40,250 $34,500 $30,188 $26,833 $24,150 $21,955 $20,125 $18,262
------------------------------------------------------------------------------------------------------
4.00% $ 92,000 $ 69,000 $ 55,200 $46,000 $39,429 $34,500 $30,667 $27,600 $25,091 $23,000 $21,231
------------------------------------------------------------------------------------------------------
4.50% $103,500 $ 77,625 $ 62,100 $51,750 $44,357 $38,813 $34,500 $31,050 $28,227 $25,875 $23,884
------------------------------------------------------------------------------------------------------
5.00% $115,000 $ 86,250 $ 69,000 $57,500 $49,286 $43,125 $38,333 $34,500 $31,364 $28,750 $26,538
------------------------------------------------------------------------------------------------------
5.50% $126,500 $ 94,875 $ 75,900 $63,250 $54,214 $47,437 $42,167 $37,950 $34,500 $31,625 $29,192
------------------------------------------------------------------------------------------------------
6.00% $138,000 $103,500 $ 82,800 $69,000 $59,143 $51,750 $46,000 $41,400 $37,636 $34,500 $31,846
------------------------------------------------------------------------------------------------------
6.50% $149,500 $112,125 $ 89,700 $74,750 $64,071 $56,062 $49,833 $44,850 $40,773 $37,375 $34,500
------------------------------------------------------------------------------------------------------
7.00% $161,000 $120,750 $ 96,600 $80,500 $69,000 $60,375 $53,667 $48,300 $43,909 $40,250 $37,154
------------------------------------------------------------------------------------------------------
7.50% $172,500 $129,375 $103,500 $86,250 $73,929 $64,688 $57,500 $51,750 $47,045 $43,125 $39,808
------------------------------------------------------------------------------------------------------
8.00% $184,000 $138,000 $110,400 $92,000 $78,857 $69,000 $61,333 $55,200 $50,182 $46,000 $42,462
------------------------------------------------------------------------------------------------------
</TABLE>
*The dollar amounts in the table reflect a 31% federal income tax rate.
This table is for illustrative purposes only and is not intended to predict the
actual return you might earn on your investment. The Fund occasionally may ad-
vertise its performance in similar tables using a different current tax rate
than that shown here. The tax rate shown here may be higher or lower than your
actual tax rate; a higher tax rate would tend to make the dollar amounts in the
table lower, while a lower tax rate would make the amounts higher. You should
consult your tax adviser to determine your actual tax rate.
Taxable Equivalent Yield Tables
The following tables show the combined effects for individuals of federal and
state income taxes on:
. what you would have to earn on a taxable investment to equal a given tax-
free yield; and
. the amount that those subject to a given combined tax rate would have to
put into a tax-free investment in order to generate the same after-tax in-
come as a taxable investment.
These tables are for illustrative purposes only and are not intended to predict
the actual return you might earn on a fund investment. The Fund occasionally
may advertise its performance in similar tables using other current combined
tax rates than those shown here. The combined tax rates used in these tables
have been rounded to the nearest one-half of one percent. They are based upon
published 2000 marginal federal tax rates and marginal state tax rates cur-
rently available and scheduled to be in effect,
S-33
<PAGE>
and do not take into account changes in tax rates that are proposed from time
to time. A taxpayer's marginal tax rate is affected by both his taxable income
and his adjusted gross income. The table assumes that federal taxable income is
equal to state income subject to tax, and for cases in which more than one
state rate falls within a federal bracket, the highest state rate corresponding
to the highest income within that federal bracket is used. The tables assume
taxpayers are not subject to any alternative minimum taxes and deduct any state
income taxes paid on their federal income tax returns. Unless noted otherwise,
the tables do not reflect any local taxes or any taxes other than personal in-
come taxes. They also reflect the effect of the current federal tax limitations
on itemized deductions and personal exemptions, which were designed to phase
out certain benefits of these deductions for higher income taxpayers. These
limitations are subject to certain maximums, which depend on the number of ex-
emptions claimed and the total amount of the taxpayer's itemized deductions.
For example, the limitation on itemized deductions will not cause a taxpayer to
lose more than 80% of his allowable itemized deductions, with certain excep-
tions. The combined tax rates shown here may be higher or lower than your ac-
tual combined tax rate. A higher combined tax rate would tend to make the dol-
lar amounts in the third table lower, while a lower combined tax rate would
make the amounts higher. You should consult your tax adviser to determine your
actual combined tax rate.
Combined federal and California state marginal tax rates for joint taxpayers
with four personal exemptions.
<TABLE>
<CAPTION>
Tax-Free Yield
Federal Combined 2.00% 2.50% 3.00% 3.50% 4.00% 4.50% 5.00% 5.50%
Federal Adjusted State and
Taxable Gross Federal -----------------------------------------------
Income Income Tax Rate** Taxable Equivalent Yield
--------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
$ 0-
43,850 $ 0-128,950 20.0% 2.50 3.13 3.75 4.38 5.00 5.63 6.25 6.88
43,850-
105,950 0-128,950 34.5 3.05 3.82 4.58 5.34 6.11 6.87 7.63 8.40
128,950-193,400 35.5 3.10 3.88 4.65 5.43 6.20 6.98 7.75 8.53
105,950-
161,450 0-128,950 37.5 3.20 4.00 4.80 5.60 6.40 7.20 8.00 8.80
128,950-193,400 38.5 3.25 4.07 4.88 5.69 6.50 7.32 8.13 8.94
193,400-239,630 41.0 3.39 4.24 5.08 5.93 6.78 7.63 8.47 9.32
239,630-269,630 42.0 3.45 4.31 5.17 6.03 6.90 7.76 8.62 9.48
269,630-315,900 41.5 3.42 4.27 5.13 5.98 6.84 7.69 8.55 9.40
161,450-
288,350 128,950-193,400 43.0 3.51 4.39 5.26 6.14 7.02 7.89 8.77 9.65
193,400-239,630 46.0 3.70 4.63 5.56 6.48 7.41 8.33 9.26 10.19
239,630-269,630 47.0 3.77 4.72 5.66 6.60 7.55 8.49 9.43 10.39
269,630-315,900 46.5 3.74 4.67 5.61 6.54 7.48 8.41 9.35 10.28
315,900-332,130 43.5 3.54 4.42 5.31 6.19 7.08 7.96 8.85 9.73
Over 332,130 43.5 3.54 4.42 5.31 6.19 7.08 7.96 8.85 9.73
Over
288,350 193,400-239,630 49.5 3.96 4.95 5.94 6.93 7.92 8.91 9.90 10.89
239,630-269,630 50.5 4.04 5.05 6.06 7.07 8.08 9.09 10.10 11.11
269,630-315,900 50.0 4.00 5.00 6.00 7.00 8.00 9.00 10.00 11.00
315,900-332,130 47.0 3.77 4.72 5.66 6.60 7.55 8.49 9.43 10.38
Over 332,130 46.5 3.74 4.67 5.61 6.54 7.48 8.41 9.35 10.28
</TABLE>
--------------------------------------------------------------------------------
S-34
<PAGE>
Combined federal and California marginal tax rates for single taxpayers with
one personal exemption.
<TABLE>
<CAPTION>
Tax-Free Yield
Federal Combined 2.00% 2.50% 3.00% 3.50% 4.00% 4.50% 5.00% 5.50%
Federal Adjusted State and
Taxable Gross Federal -----------------------------------------------
Income Income Tax Rate** Taxable Equivalent Yield
--------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
$ 0-
26,250 $ 0-119,810 20.0% 2.50 3.13 3.75 4.38 5.00 5.63 6.25 6.88
26,250-
63,550 0-119,810 34.5 3.05 3.82 4.58 5.34 6.11 6.87 7.63 8.40
63,550-
132,600 0-119,810 37.5 3.20 4.00 4.80 5.60 6.40 7.20 8.00 8.80
119,810-128,950 38.0 3.23 4.03 4.84 5.65 6.45 7.26 8.06 8.87
128,950-149,810 39.5 3.31 4.13 4.96 5.79 6.61 7.44 8.26 9.09
149,810-251,450 39.5 3.31 4.13 4.96 5.79 6.61 7.44 8.26 9.09
132,600-
288,350 128,950-149,810 44.0 3.57 4.46 5.36 6.25 7.14 8.04 8.93 9.82
149,810-251,450 44.0 3.57 4.46 5.36 6.25 7.14 8.04 8.93 9.82
Over 251,450 43.5 3.54 4.42 5.31 6.19 7.08 7.96 8.85 9.73
Over
288,350 Over 251,450 46.5 3.74 4.67 5.61 6.54 7.48 8.41 9.35 10.28
</TABLE>
--------------------------------------------------------------------------------
For an equal after-tax return, your tax-free investment may be less.*
<TABLE>
<CAPTION>
For an after-tax
return equal to Your tax-free investment may be less*
that provided by a 2.0% 2.5% 3.0% 3.5% 4.0% 4.5% 5.0%
------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
$50,000 in a 4%
taxable investment $ 62,500 $ 50,000 $41,667 $35,714 $31,250 $27,778 $25,000
$50,000 in a 5%
taxable investment 78,125 62,500 52,083 44,643 39,063 34,722 31,250
$50,000 in a 6%
taxable investment 93,750 75,000 62,500 53,571 46,875 41,667 37,500
$50,000 in a 7%
taxable investment 109,375 87,500 72,917 62,500 54,688 48,611 43,750
$50,000 in a 8%
taxable investment 125,000 100,000 83,333 71,429 62,500 55,556 50,000
</TABLE>
--------------------------------------------------------------------------------
* Dollar amounts in the table reflect a 37.5% combined federal and state tax
rate.
** The State tax brackets are those for 2000.
For example, $50,000 in a 6% taxable investment earns the same after-tax return
as $37,500 in a 5% tax-free Nuveen investment.
ADDITIONAL INFORMATION ABOUT PURCHASES AND SALES
Exchange Privileges
You may exchange shares of the Fund for the appropriate class of shares of any
other open-end management investment company with reciprocal exchange privi-
leges advised by Nuveen Advisory or Nuveen Institutional Advisory (the "Nuveen
Funds"), into an identically registered account, provided that the Nuveen Fund
into which shares are to be exchanged is offered in the shareholder's state of
residence and that the shares to be exchanged have been held by the shareholder
for a period of at least 15 days. You may exchange Fund shares by calling (800)
257-8787 or by mailing your written request to our Transfer Agent. Shares of
Nuveen Funds purchased subject to a front-end sales charge may be exchanged for
shares of the Fund or any other Nuveen Fund at the next determined net asset
value without any front-end sales charge. No CDSC otherwise applicable will be
assessed on an exchange, and the holding period of your investment will be car-
ried over to the new fund for purposes of determining any future CDSC. You may
exchange Class B shares for shares of a Nuveen money market fund. Shares of any
Nuveen Fund purchased through dividend reinvestment or through reinvestment of
Nuveen Defined Portfolio distributions (and any dividends thereon) may be ex-
changed for Class A shares of any Nuveen Fund without a front-end sales charge.
Exchanges of shares with respect to which no front-end sales charge has been
paid will be made at the public offering price, which may include a front-end
sales charge, unless a
S-35
<PAGE>
front-end sales charge has previously been paid on the investment represented
by the exchanged shares (i.e., the shares to be exchanged were originally is-
sued in exchange for shares on which a front-end sales charge was paid), in
which case the exchange will be made at net asset value. Because certain other
Nuveen Funds may determine net asset value and therefore honor purchase or re-
demption requests on days when the fund does not (generally, Martin Luther
King's Birthday, Columbus Day and Veterans Day), exchanges of shares of one of
those funds for shares of the fund may not be effected on such days.
The total value of shares being exchanged must at least equal the minimum in-
vestment requirement of the Nuveen Fund into which they are being exchanged.
Exchanges are made based on the relative dollar values of the shares involved
in the exchange, and will be effected by redemption of shares of the Nuveen
Fund held and purchase of the shares of the other Nuveen Fund. For federal in-
come tax purposes, any such exchange constitutes a sale and purchase of shares
and may result in capital gain or loss. Before exercising any exchange, you
should obtain the Prospectus for the Nuveen Fund into which shares are to be
exchanged and read it carefully. If the registration of the account for the
fund you are purchasing is not exactly the same as that of the fund account
from which the exchange is made, written instructions from all holders of the
account from which the exchange is being made must be received, with signatures
guaranteed by a member of an approved Medallion Guarantee Program or in such
other manner as may be acceptable to the Fund. The exchange privilege may be
modified or discontinued at any time. If you do not wish to have telephone ex-
change privileges, you must indicate this in the "Telephone Services" section
of your Account Application or otherwise notify the Fund in writing of your
desire.
Additional Information
An account will be maintained for each shareholder of record in the Fund by our
Transfer Agent. Share certificates will be issued only upon written request of
the shareholder to our Transfer Agent. No certificates are issued for frac-
tional shares. The Fund reserves the right to reject any purchase order and to
waive or increase minimum investment requirements.
Confirmations of each purchase and redemption order as well as monthly state-
ments are sent to every shareholder. Master accounts also receive a monthly
summary report setting forth the share balance and dividends earned for the
month for each sub-account established under that master account.
A change in registration or transfer of shares held in the name of a
broker/dealer can only be effected by an order in good form from the
broker/dealer acting on behalf of the investor. Broker/dealers are encouraged
to open single master accounts. However, some broker/dealers may wish to use
our Transfer Agent's sub-accounting system to minimize their internal record-
keeping requirements. A broker/dealer or other investor requesting shareholder
servicing or accounting other than the master account or subaccounting service
offered by the Fund will be required to enter into a separate agreement with
the agent for these services for a fee to be determined in accordance with the
level of services to be furnished.
Banks and other organizations through which investors may purchase shares of
the Fund may impose charges in connection with purchase orders. Investors
should contact their institutions directly to determine what charges, if any,
may be imposed.
S-36
<PAGE>
A fee of 1% of the current market value of any shares represented by a certifi-
cate will be charged if the certificate is lost, stolen, or destroyed. The fee
is paid to Seaboard Surety Company for issuance of the lost, stolen or de-
stroyed certificate.
Subject to the rules of the SEC, the Fund reserves the right to suspend the
continuous offering of the shares at any time, but such suspension shall not
affect the shareholder's right of redemption as described below. The Fund also
reserves the right to reject any purchase order and to waive or increase mini-
mum investment requirements.
Telephone Redemption via Fund DirectSM
To redeem shares held in non-certificate form by telephone with the redemption
proceeds paid via Fund Direct-Electronic Funds Transfer, you must complete the
Telephone Services section of the enclosed Application Form and return it to
Nuveen or our Transfer Agent. If you did not authorize Telephone Redemption via
Fund Direct when you opened your account, you may do so by sending a written
request to the Fund signed by each account owner with signatures guaranteed by
a member of an approved Medallion Guarantee Program or in such other manner as
may be acceptable to the Fund. Proceeds of share redemptions made by Fund Di-
rect will be transferred only to the commercial bank account specified by the
shareholder. Redemption proceeds may be delayed one additional business day if
the Federal Reserve Bank of Boston or the Federal Reserve Bank of New York is
closed on the day the redemption proceeds would ordinarily be wired.
You may make Fund Direct redemption requests by calling Nuveen at (800) 257-
8787. If a telephone redemption request is received prior to 4:00 p.m. Eastern
Time, the shares to be redeemed earn income on the day the request is made, and
the redemption is effected on the following business day. For redemption re-
quests received after 4:00 p.m. Eastern Time, the shares to be redeemed earn
income through the following business day, and the redemption is effected on
the second business day following the request. For all redemptions, you will
typically receive your funds within three business days after your redemption
is effected.
How to Change Authorized Redemption Instructions
In order to establish multiple accounts, or to change the account or accounts
designated to receive redemption proceeds, a written request specifying the
change must be sent to Nuveen. This request must be signed by each account
owner with signatures guaranteed by a member of an approved Medallion Guarantee
Program or in such other manner as may be acceptable to the Fund. Further docu-
mentation may be required from corporations, executors, trustees or personal
representatives.
The Fund reserves the right to refuse a telephone redemption and, at its op-
tion, may limit the timing, amount or frequency of these redemptions. This pro-
cedure may be modified or terminated at any time, on 30 days' notice, by the
Fund. The Fund, the transfer agent and Nuveen will not be liable for following
telephone instructions reasonably believed to be genuine.
S-37
<PAGE>
Redemption in Kind
The Fund has committed to pay in cash all redemption requests made by each
shareholder during any 90 day period up to the lesser of $250,000 or 1% of the
net asset value of the Fund at the beginning of such period. This commitment is
irrevocable without the prior approval of the SEC and is a fundamental policy
of the Fund which may not be changed without shareholder approval. In the case
of redemption requests in excess of such amounts, the Board of Trustees re-
serves the right to have the Fund make payment in whole or in part in securi-
ties or other assets of the Fund in case of an emergency or any time a cash
distribution would impair the liquidity of the Fund to the detriment of the ex-
isting shareholders. In this event, the securities would be valued in the same
manner as the portfolio of the Fund is valued. If the recipient were to sell
such securities, he or she would incur brokerage charges.
Other Practices
The Fund may encourage registered representatives and their firms to help ap-
portion their assets among bonds, stocks and cash, and may seek to participate
in programs that recommend a portion of their assets be invested in money mar-
ket instruments.
The Fund may suspend the right of redemption or delay payment more than seven
days (a) during any period when the New York Stock Exchange is closed (other
than customary weekend and holiday closings), (b) when trading in the markets
the Fund normally utilizes is restricted, or an emergency exists as determined
by the SEC so that disposal of the Fund's investments or determination of its
net asset value is not reasonably practicable, or (c) for such other periods as
the SEC by order may permit for protection of the shareholders of the Fund.
The Fund has authorized certain brokers and firms to accept purchase and re-
demption orders on its behalf. The Fund will consider an order to be "received"
when such a broker or firm accepts the order from its customer.
In addition to the types of compensation to dealers to promote sales of Fund
shares that are described in the prospectus, Nuveen may from time to time make
additional reallowances only to certain authorized dealers who sell or are ex-
pected to sell certain minimum amounts of shares of the Nuveen Mutual Funds
during specified time periods.
SERVICE PLAN
The Fund had adopted a Service Plan Pursuant to Rule 12b-1 under the 1940 Act.
The Plan was adopted by the Board of Trustees, including a majority of trustees
who are not interested persons and who have no direct or indirect financial in-
terest in the Plan, and approved by shareholders.
Under the Plan, the Fund pays an annual fee of .25% of the average daily net
assets of serviced accounts to reimburse Nuveen for compensating authorized
dealers, including Nuveen for providing ongoing services to shareholders. Such
services generally include establishing and maintaining shareholder accounts,
processing purchase and redemption orders, arranging for bank wires and answer-
ing shareholder inquiries. Under the Plan, the Fund pays the entire amount of
the fees. Nuveen may, at its discretion and from its own resources, pay certain
firms additional amounts for services rendered to shareholders.
S-38
<PAGE>
Under the Plan, the Controller of the Fund will report quarterly to the Board
of Trustees for its review of amounts expended for services rendered under the
Plan. The Plan may be terminated at any time, without the payment of any pen-
alty, by a vote of a majority of the trustees who are not "interested persons"
and who have no direct or indirect financial interest in the Plan or by vote
of a majority of the outstanding voting securities of the applicable series of
the Fund. The Plan may be renewed from year to year if approved by a vote of
the Board of Trustees and a vote of the non-interested directors who have no
direct or indirect financial interest in the Plan cast in person at a meeting
called for the purpose of voting on the Plan. The Plan may be continued only
if the directors who vote to approve such continuance conclude, in the exer-
cise of reasonable business judgment and in light of their fiduciary duties
under applicable law, that there is a reasonable likelihood that the Plan will
benefit such series of the Fund and its shareholders. The Plan is intended to
benefit the fund by promoting the sale of fund shares, which in turn leads to
economies of scale and helps assure the continued viability of the Fund. The
Plan may not be amended to increase materially the cost which the Fund may
bear under the Plan without the approval of the shareholders. Any other mate-
rial amendments of the Plan must be approved by the non-interested trustees by
a vote cast in person at a meeting called for the purpose of considering such
amendments. During the continuance of the Plan, as required by the Rule, the
selection and nomination of the non-interested trustees of the Fund will be
committed to the discretion of the non- interested trustees then in office.
Nuveen's compensation under the Plan is not based on Nuveen's expenses in-
curred in providing services to shareholders.
For the fiscal year ended February 29, 2000, the Fund, and its predecessor,
paid 12b-1 fees in the amount of $68,137.
No trustee nor any "interested" person of the Fund has any direct or indirect
financial interest in the Plan or any agreement related to the Plan.
OTHER INFORMATION REGARDING SHARES OF FUND
Shareholders should note that when a Fund dividend check has been returned to
the sender by the post office after repeated mailings, the shareholder account
will thereafter be registered for automatic reinvestment of dividends and thus
the dividend check and future dividend checks will be reinvested in additional
Fund shares. Shareholders are reminded that they need to advise the Fund
promptly in writing of any change in address.
The Glass-Steagall Act and other applicable laws, among other things, may
limit banks from engaging in the business of underwriting, selling or distrib-
uting securities. Since the only functions of banks who may be engaged as
Service Organizations is to perform administrative shareholder servicing func-
tions, Nuveen California Tax-Free Fund, Inc. believes that such laws should
not preclude a bank from acting as a Service Organization. However, future
changes in either federal or state statutes or regulations relating to the
permissible activities of banks and their subsidiaries or affiliates, as well
as judicial or administrative decisions or interpretations of statutes or reg-
ulations, could prevent a bank from continuing to perform all or a part of its
shareholder servicing activities. If a bank were prohibited from so acting,
its shareholder customers would be permitted to remain shareholders of the
Fund and alternative means for continuing the servicing of such shareholders
would be sought.
S-39
<PAGE>
Nuveen serves as the principal underwriter of the shares of the Fund pursuant
to a "best efforts" arrangement as provided by a distribution agreement with
the Fund, dated February 1, 1999 ("Distribution Agreement"). Pursuant to the
Distribution Agreement, the Fund appointed Nuveen to be its agent for the dis-
tribution of the Fund's shares on a continuous offering basis. Nuveen sells
shares to or through brokers, dealers, banks or other qualified financial in-
termediaries (collectively referred to as "Dealers"), or others, in a manner
consistent with the Fund's then effective registration statement. Pursuant to
the Distribution Agreement, Nuveen, at its own expense, finances certain ac-
tivities incident to the sale and distribution of the Fund's shares, including
printing and distributing of prospectuses and statements of additional infor-
mation to other than existing shareholders, the printing and distributing of
sales literature, advertising and payment of compensation and giving of con-
cessions to dealers. Expenses incurred in registering the Fund and its shares
under federal and state securities laws are paid by the Fund.
FINANCIAL STATEMENTS
The audited financial statements for the Fund's most recent fiscal year appear
in the Fund's Annual Report. The Annual Report accompanies this Statement of
Additional Information.
S-40
<PAGE>
Statement of Additional
June 28, 2000
Nuveen Money Market Trust
333 West Wacker Drive
Chicago, Illinois 60606
Nuveen Money Market Trust
NUVEEN NEW YORK TAX-EXEMPT MONEY MARKET FUND Company
This Statement of Additional Information is not a prospectus. This Statement of
Additional Information should be read in conjunction with the Prospectus of the
Nuveen New York Tax-Exempt Money Market Fund dated June 28, 2000. The Prospectus
may be obtained without charge from certain securities representatives, banks,
and other financial institutions that have entered into sales agreements with
John Nuveen & Co. Incorporated, or from the Fund by mailing a written request to
the Fund, c/o. John Nuveen & Co. Incorporated ("Nuveen"), 333 West Wacker Drive,
Chicago, Illinois 60606 or by calling (800) 257-8787.
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Table of Contents Page
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Investment Policies and Investment Portfolio S-2
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Management S-16
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Investment Adviser and Investment Management Agreement S-21
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Portfolio Transactions S-23
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Net Asset Value S-24
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Tax Matters S-25
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Performance Information S-29
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Additional Information About Purchases and Sales S-35
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Service Plan S-38
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Other Information Regarding Fund Shares S-39
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Financial Statements S-40
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Principal Underwriter Investment Adviser Independent Public Accountants
John Nuveen & Co. Nuveen Advisory for the Fund
Incorporated Corp., Subsidiary Arthur Andersen LLP
of John Nuveen & 33 West Monroe Street
Chicago: Co. Incorporated Chicago, Illinois 60603
333 West Wacker Drive 333 West Wacker
Chicago, Illinois 60606 Drive
(312) 917-7700 Chicago, Illinois
60606
New York: Transfer and Dividend
10 East 50th Street Disbursing Agent
New York, New York 10022 Custodian Chase Global Funds Services
(212) 207-2000 The Chase Manhattan Company
Bank P.O. Box 5186
4 New York Plaza New York, NY 10274
New York, New York
10004
The audited financial statements for the Fund's most recent fiscal year appear
in the Fund's Annual Report. The Annual Report accompanies this Statement of
Additional Information.
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INVESTMENT POLICIES AND INVESTMENT PORTFOLIO
Fundamental Policies
The investment objective and certain fundamental policies of the Fund are de-
scribed in the Prospectus. The Fund, as a fundamental policy, may not, without
the approval of the holders of a majority of the shares of the Fund:
(1) Invest in securities other than Municipal Obligations and temporary in-
vestments, as those terms are defined in the Prospectus, and stand-by commit-
ments with respect to Municipal Obligations purchased by the Fund; Municipal
Obligations are municipal bonds that pay interest that is exempt from regular
federal, state and, in some cases local income taxes.
(2) Invest more than 5% of its total assets in securities of any one issuer,
except that this limitation shall not apply to securities of the United States
government, its agencies and instrumentalities or to the investment of 25% of
the Fund's assets;
(3) Borrow money, except from banks for temporary or emergency purposes and
not for investment purposes and then only in an amount not exceeding (a) 10%
of the value of its total assets at the time of borrowing or (b) one-third of
the value of the Fund's total assets including the amount borrowed, in order
to meet redemption requests which might otherwise require the untimely dispo-
sition of securities. While any such borrowings exceed 5% of the Fund's total
assets, no additional purchases of investment securities will be made by the
Fund. If due to market fluctuations or other reasons, the value of the Fund's
assets falls below 300% of its borrowings, the Fund will reduce its borrowings
within 3 business days. To do this, the Fund may have to sell a portion of its
investments at a time when it may be disadvantageous to do so;
(4) Pledge, mortgage or hypothecate its assets, except that, to secure
borrowings permitted by subparagraph (3) above, it may pledge securities hav-
ing a market value at the time of pledge not exceeding 10% of the value of the
Fund's total assets;
(5) Issue senior securities as defined in the Investment Company Act of 1940,
except to the extent such issuance might be involved with respect to
borrowings described under item (3) above;
(6) Underwrite any issue of securities, except to the extent that the purchase
of Municipal Obligations in accordance with its investment objective, policies
and limitations, may be deemed to be an underwriting;
(7) Purchase or sell real estate, but this shall not prevent the Fund from in-
vesting in Municipal Obligations secured by real estate or interests therein
or foreclosing upon and selling such security;
(8) Purchase or sell commodities or commodities contracts or oil, gas or other
mineral exploration or development programs;
(9) Make loans, other than by entering into repurchase agreements and through
the purchase of Municipal Obligations or temporary investments in accordance
with its investment objective, policies and limitations;
(10) Make short sales of securities or purchase any securities on margin, ex-
cept for such short-term credits as are necessary for the clearance of trans-
actions;
(11) Write or purchase put or call options, except to the extent that the pur-
chase of a stand-by commitment may be considered the purchase of a put;
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(12) Invest more than 25% of its total assets in securities of issuers in any
one industry; provided, however, that such limitations shall not be applicable
to Municipal Obligations issued by governments or political subdivisions of
governments, and obligations issued or guaranteed by the U.S. Government, its
agencies or instrumentalities;
(13) Invest more than 10% of its assets in repurchase agreements maturing in
more than seven days, "illiquid" securities (such as non-negotiable CDs) and
securities without readily available market quotations.
For the purpose of applying the limitations set forth in paragraph (2) above, an
issuer shall be deemed a separate issuer when its assets and revenues are
separate from other governmental entities and its securities are backed only by
its assets and revenues. Similarly, in the case of a non-governmental issuer,
such as an industrial corporation or a privately owned or operated hospital, if
the security is backed only by the assets and revenues of the non-governmental
user then such non-governmental user would be deemed to be the sole issuer.
Where a security is also backed by the enforceable obligation of a superior or
unrelated governmental entity (other than a bond insurer) it shall be included
in the computation of securities owned that are issued by such superior
governmental entity or other entity.
Where a security is guaranteed by a governmental entity or some other facility,
such as a bank guarantee or letter of credit, such a guarantee or letter of
credit would be considered a separate security and would be treated as an issue
of such government, other entity or bank. Where a security is insured by bond
insurance, it shall not be considered a security issued or guaranteed by the
insurer; instead the issuer of such security will be determined in accordance
with the principles set forth above. The foregoing restrictions do not limit the
percentage of the Fund's assets that may be invested in securities insured by
any single insurer. It is a fundamental policy of the Fund, which cannot be
changed without the approval of the holders of a majority of shares of such
Fund, that the Fund will not hold securities of a single bank, including
securities backed by a letter of credit of such bank, if such holdings would
exceed 10% of the total assets of the Fund.
The foregoing restrictions and limitations, as well as the Fund's policies as to
ratings of fund investments, will apply only at the time of purchase of
securities, and the percentage limitations will not be considered violated
unless an excess or deficiency occurs or exists immediately after and as a
result of an acquisition of securities, unless otherwise indicated.
The foregoing fundamental investment policies, together with the investment
objective of the Fund, cannot be changed without approval by holders of a
"majority of the Fund's outstanding voting shares." As defined in the Investment
Company Act of 1940, this means the vote of (i) 67% or more of the Fund's shares
present at a meeting, if the holders of more than 50% of the Fund's shares are
present or represented by proxy, or (ii) more than 50% of the Fund's shares,
whichever is less.
General Information
The Nuveen Money Market Trust (the "Trust") is an open-end management series
investment company organized as a Massachusetts business trust on January 15,
1999. The Fund (formerly, the Nuveen New York Tax-Free Money Market Fund, the
Fund's predecessor and a series of the Nuveen Tax-Free Money Market Fund,
Inc.) is an open-end, diversified management investment company orga-
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nized as a series of the Trust. The Trust is an open-end management series com-
pany under SEC Rule 18f-2. The Fund is a separate series issuing its own
shares. The Trust currently has four series. Certain matters under the Invest-
ment Company Act of 1940 which must be submitted to a vote of the holders of
the outstanding voting securities of a series company shall not be deemed to
have been effectively acted upon unless approved by the holders of a majority
of the outstanding voting securities of each series affected by such matter.
The Trust is an entity of the type commonly known as a "Massachusetts business
trust." Under Massachusetts law, shareholders of a trust may, under certain
circumstances, be held personally liable as partners for its obligations. How-
ever, the Declaration of Trust contains an express disclaimer of shareholder
liability for acts or obligations of the Trust and requires that notice of this
disclaimer be given in each agreement, obligation or instrument entered into or
executed by the Trust or the Trustees. The Declaration of Trust further pro-
vides for indemnification out of the assets and property of the Trust for all
loss and expense of any shareholder personally liable for the obligations of
the Trust. Thus, the risk of a shareholder incurring financial loss on account
of shareholder liability is limited to circumstances in which both inadequate
insurance existed and the Trust itself were unable to meet its obligations. The
Trust believes the likelihood of these circumstances is remote.
Fund Shares represent an interest in the same portfolio of investments of the
Fund. Fund Shares have equal rights as to voting, redemption, dividends and
liquidation, and have exclusive voting rights with respect to any applicable
distribution or service plan. There are no conversion, preemptive or other sub-
scription rights. The Board of Trustees of the Fund have the right to establish
additional series and classes of shares in the future, to change those series
or classes and to determine the preferences, voting powers, rights and privi-
leges thereof.
Portfolio Securities
The various securities in which the Fund intends to invest are described in the
Prospectus. The following is a more complete description of certain short-term
Municipal Obligations in which the Fund may invest:
Municipal Obligations.
The Fund invests in debt obligations issued by New York State, its cities and
local authorities to obtain funds for various public purposes, including the
construction of such public facilities as airports, bridges, highways, housing,
hospitals, mass transportation, schools, streets and water and sewer works.
Other public purposes for which these securities may be issued include the re-
financing of outstanding obligations, the obtaining of funds for general oper-
ating expenses and for loans to other public institutions and facilities. In
addition, the Fund may invest in certain industrial development bonds and pol-
lution control bonds in which the Fund will primarily invest are issued by New
York State and cities and local authorities in New York or are issued by pos-
sessions of the United States within Section 103(c) of the Internal Revenue
Code (such as Puerto Rico).
Two principal classifications of municipal securities are "general obligation"
and "revenue" bonds. General obligation bonds are secured by the issuer's
pledge of its full faith, credit and taxing power for the payment of principal
and interest. Revenue bonds are payable only from the revenues derived from a
particular facility or class of facilities or, in some cases, from the proceeds
of a special excise or other
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specific revenue source. Industrial development and pollution control bonds are
in most cases revenue bonds and do not generally constitute the pledge of the
credit or taxing power of the issuer of such bonds.
Municipal securities can be further classified between bonds and notes. Bonds
are issued to raise longer-term capital but, when purchased by the Fund, will
have 397 days or less remaining until maturity or will have a variable or
floating rate of interest (see below). These issues may be either general obli-
gation bonds or revenue bonds.
Notes are short-term instruments with a maturity of two years or less. Most
notes are general obligations of the issuer and are sold in anticipation of a
bond sale, collection of taxes or receipt of other revenues. Payment of these
notes is primarily dependent upon the issuer's receipt of the anticipated reve-
nues.
Municipal securities also include very short-term unsecured, negotiable promis-
sory notes, issued by states, municipalities, and their agencies which are
known as "tax-exempt commercial paper" or "municipal paper." Payment of princi-
pal and interest on issues of municipal paper may be made from various sources,
to the extent that funds are available therefrom. There is a limited secondary
market for issues of municipal paper.
While these various types of notes as a group represent the major portion of
the tax-exempt note market, other types of notes are occasionally available in
the marketplace, and the Funds may invest in such other types of notes to the
extent consistent with their investment objectives and limitations. Such notes
may be issued for different purposes and with different security than those
mentioned above.
The yields on municipal securities are dependent on a variety of factors, in-
cluding the condition of the general money market and the municipal securities
market, the size of a particular offering, the maturity of the obligation and
the rating of the issue. The ratings of Moody's, S&P and Fitch represent their
opinions as to the quality of the municipal securities which they undertake to
rate. It should be emphasized, however, that ratings are general and are not
absolute standards of quality. Consequently, municipal securities with the same
maturity, coupon and rating may have different yields while obligations of the
same maturity and coupon with different ratings may have the same yield. The
market value of outstanding municipal securities will vary with changes in pre-
vailing interest rate levels and as a result of changing evaluations of the
ability of their issuers to meet interest and principal payments.
Obligations of issuers of debt obligations are subject to the provisions of
bankruptcy, insolvency and other laws affecting the rights and remedies of
creditors. In addition, the obligations of such issuers may become subject to
the laws enacted in the future by Congress, state legislatures or referenda ex-
tending the time for payment of principal and/or interest, or imposing other
constraints upon enforcement of such obligations or upon municipalities to levy
taxes. There is also the possibility that, as a result of legislation or other
conditions, the power or ability of any issuer to pay, when due, the principal
of and interest on its obligations may be materially affected.
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Bond Anticipation Notes (BANs) are usually general obligations of state and lo-
cal governmental issuers which are sold to obtain interim financing for pro-
jects that will eventually be funded through the sale of long-term debt obliga-
tions or bonds. The ability of an issuer to meet its obligations on its BANs is
primarily dependent on the issuer's access to the long-term municipal bond mar-
ket and the likelihood that the proceeds of such bond sales will be used to pay
the principal and interest on the BANs.
Tax Anticipation Notes (TANs) are issued by state and local governments to fi-
nance the current operations of such governments. Repayment is generally to be
derived from specific future tax revenues. TANs are usually general obligations
of the issuer. A weakness in an issuer's capacity to raise taxes due to, among
other things, a decline in its tax base or a rise in delinquencies could ad-
versely affect the issuer's ability to meet its obligations on outstanding
TANs.
Revenue Anticipation Notes (RANs) are issued by governments or governmental
bodies with the expectation that future revenues from a designated source will
be used to repay the notes. In general, they also constitute general obliga-
tions of the issuer. A decline in the receipt of projected revenues, such as
anticipated revenues from another level of government, could adversely affect
an issuer's ability to meet its obligations on outstanding RANs. In addition,
the possibility that the revenues would, when received, be used to meet other
obligations could affect the ability of the issuer to pay the principal and in-
terest on RANs.
Construction Loan Notes are issued to provide construction financing for spe-
cific projects. Frequently, these notes are redeemed with funds obtained from
the Federal Housing Administration.
Bank Notes are notes issued by local governmental bodies and agencies such as
those described above to commercial banks as evidence of borrowings. The pur-
poses for which the notes are issued are varied but they are frequently issued
to meet short-term working-capital or capital-project needs. These notes may
have risks similar to the risks associated with TANs and RANs.
Industrial Development Bonds (IDBs) and Pollution Control Bonds (PCBs) are is-
sued by or on behalf of public authorities to finance various privately-rated
facilities. These bonds are included within the term municipal security if the
interest paid thereon is exempt from federal income tax.
Variable and Floating Rate Instruments Certain money market instruments may
carry variable or floating rates of interest. Such instruments bear interest at
rates which are not fixed, but which vary with changes in specified market
rates or indices, such as a bank prime rate or a tax-exempt money market index.
Variable rate notes are adjusted to current interest rate levels at certain
specified times, such as every 30 days, as set forth in the instrument. A
floating rate note adjusts automatically whenever there is a change in its base
interest rate adjustor, e.g., a change in the prime lending rate or specified
interest rate indices. Typically such instruments carry demand features permit-
ting the Funds to recover the full principal amount thereof upon specified no-
tice.
One form of variable or floating rate instrument consists of an underlying
fixed rate municipal bond that is subject to a third party demand feature or
"tender option." The holder of the bond would pay a "tender fee" to the third
party tender option provider, the amount of which would be periodically
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adjusted so that the bond/tender option combination would reasonably be expected
to have a market value that approximates the par value of the bond. This
bond/tender option combination would therefore be functionally equivalent to
ordinary variable or floating rate obligations as described above, and the Fund
may purchase such obligations subject to certain conditions specified by the
Securities and Exchange Commission.
The Fund's right to obtain payment at par on a demand instrument upon demand
could be adversely affected by events occurring between the date the Fund elects
to tender the instrument and the date the proceeds are due. Nuveen Advisory will
monitor on an ongoing basis the pricing, quality and liquidity of such
instruments and will similarly monitor the ability of an obligor under a demand
instrument, including demand obligors as to instruments supported by bank
letters of credit or guarantees, to pay principal and interest on demand.
Although the ultimate maturity of such variable rate obligations may exceed one
year, the Fund will treat the maturity of each variable rate demand obligation,
for purposes of computing its dollar-weighted average portfolio maturity, as the
longer of (i) the notice period required before the Fund is entitled to payment
of the principal amount through demand, or (ii) the period remaining until the
next interest rate adjustment.
The Fund may also obtain stand-by commitments with respect to Municipal
Obligations. Under a stand-by commitment (often referred to as a put), the party
issuing the commitment agrees to purchase at the Fund's option the Municipal
Obligation at an agreed-upon price on certain dates or within a specific period.
Since the value of a stand-by commitment depends in part upon the ability of the
issuing party to meet its purchase obligations thereunder, the Fund will enter
into stand-by commitments only with parties which have been evaluated by Nuveen
Advisory and, in the opinion of Nuveen Advisory, present minimal credit risks.
The amount payable to the Fund upon its exercise of a stand-by commitment would
be (1) the acquisition cost of the Municipal Obligations (excluding any accrued
interest that the Fund paid on acquisition), less any amortized market premium
or plus any amortized market or original issue discount during the period the
Fund owned the security, plus (2) all interest accrued on the security since the
last interest payment date during the period the security was owned by the Fund.
The Fund's right to exercise stand-by commitments held by it will be
unconditional and unqualified. The acquisition of a stand-by commitment will not
affect the valuation of the underlying security, which will continue to be
valued in accordance with the amortized cost method. The stand-by commitment
itself will be valued at zero in determining net asset value. The Fund may
purchase stand-by commitments for cash or pay a higher price for portfolio
securities which are acquired subject to such a commitment (thus reducing the
yield to maturity otherwise available for the same securities). The maturity of
a Municipal Obligation purchased by the Fund will not be considered shortened by
any stand-by commitment to which such security is subject. Although a Fund's
rights under a stand-by commitment would not be transferable, the Fund could
sell Municipal Obligations which were subject to a stand-by commitment to a
third party at any time.
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When-Issued or Delayed-Delivery Securities
The Fund may purchase and sell securities on a when-issued or delayed-delivery
basis. When-issued and delayed-delivery transactions arise when securities are
purchased or sold with payment and delivery beyond the regular settlement date
(when-issued transactions normally settle within 15-45 days). On such
transactions the payment obligation and the interest rate are fixed at the time
the buyer enters into the commitment. The commitment to purchase securities on a
when-issued or delayed-delivery basis may involve an element of risk because the
value of the securities is subject to market fluctuation, no interest accrues to
the purchaser prior to settlement of the transaction, and at the time of
delivery the market value may be less than cost. At the time the Fund makes the
commitment to purchase a Municipal Obligation on a when-issued or delayed-
delivery basis, it will record the transaction and reflect the amount due and
the value of the security in determining its net asset value. Likewise, at the
time the Fund makes the commitment to sell a Municipal Obligation on a delayed-
delivery basis, it will record the transaction and include the proceeds to be
received in determining its net asset value; accordingly, any fluctuations in
the value of the Municipal Obligation sold pursuant to a delayed-delivery
commitment are ignored in calculating net asset value so long as the commitment
remains in effect. The Fund will also maintain designated readily marketable
assets at least equal in value to commitments to purchase when-issued or
delayed-delivery securities, such assets to be segregated by the Custodian
specifically for the settlement of such commitments. The Fund will only make
commitments to purchase Municipal Obligations on a when-issued or delayed-
delivery basis with the intention of actually acquiring the securities, but the
Fund reserves the right to sell these securities before the settlement date if
it is deemed advisable. If a when-issued security is sold before delivery any
gain or loss would not be tax-exempt. The Fund commonly engages in when-issued
transactions in order to purchase or sell newly-issued Municipal Obligations,
and may engage in delayed-delivery transactions in order to manage its
operations more effectively.
Special Considerations Relating to New York Securities
Except to the extent the Fund invests in temporary investments, the Fund will
invest substantially all of its assets in New York Municipal Obligations. The
Fund is therefore susceptible to political, economic or regulatory factors
affecting New York State and governmental bodies within New York State. The
following information provides only a brief summary of the complex factors
affecting the political, economic, regulatory and financial environment in New
York and is derived from sources that are generally available to investors and
is believed to be accurate. It is based on information drawn from official
statements and prospectuses issued by, and other information reported by, the
State of New York (the "State"), by its various public bodies (the "Agencies"),
and by other entities located within the State, including the City of New York
(the "City"), in connection with the issuance of their respective securities.
There can be no assurance that current or future statewide or regional economic
difficulties, and the resulting impact on State or local government finances
generally, will not adversely affect the market value of New York securities
held by the Fund or the ability of particular obligors to make timely payments
of debt service on (or relating to) those obligations.
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(1) The State: New York State's economy has improved, but continues to lag the
nation in several areas, including job growth and unemployment. The recent
success of the financial sector in New York State has led to a 21% increase in
personal income since 1995, although the State continues to slightly lag the
national average. However, New York State remains one of the wealthier states in
the nation. Per capita personal income was $33,946 in 1999 and the 1999
unemployment rate was 5.2%.
Overall, the economies of the State, and particularly of New York City, have
benefited from the strong results in the financial sector. This sector is,
however, more volatile than some of the other employment sectors. As a result,
because the State and City economies remain more reliant on the financial
industry than is the national economy, both the State and City remain
susceptible to downturns in that industry, which could cause adverse changes in
wage and employment levels. In addition, the benefits of the expansion in this
sector have not been distributed evenly across the population in New York City;
the income gap between the highest and lowest wage earners in the City has
widened to one of the largest gaps in the nation.
Improvement in the upstate economies has not been as pronounced as in downstate
areas, like New York City, because many upstate communities have not
participated as fully in the recent economic expansion. Population and
employment growth levels in the upstate counties have been minimal and have not
approached averages of downstate counties. Employment losses in the
manufacturing sector continue to constrain both population and employment growth
in upstate areas.
Indebtedness. As of March 31, 1999, the total amount of State general obligation
debt stood at $4.6 billion. The State's general obligation debt is voter
approved.
In June 1990, legislation was enacted creating the New York Local Government
Assistance Corporation ("LGAC"), a public benefit corporation empowered to issue
long-term obligations to fund certain payments to local governments
traditionally funded through the State's annual seasonal borrowing. LGAC is
authorized to issue up to $4.7 billion in bonds plus amounts necessary to fund a
capital reserve, costs of issuance and, in certain cases, capitalized interest.
Any issuance of bonds by the LGAC in the future will be for refunding purposes
only.
Financing of capital programs by other public authorities of the State is also
obtained from lease-purchase and contractual-obligation financing arrangements
(non-voter approved), the debt service for which is paid from State
appropriations. As of March 31, 1999, there were $24.0 billion of such other
financing arrangements outstanding and additional financings of this nature by
public authorities including LGAC. In addition, certain agencies had issued and
have outstanding approximately $628 million of "moral obligation financings" as
of March 31, 1999, which are to be repaid from project revenues. There has never
been a default on moral obligation debt of the State.
State Budget: As of June 1, 2000, the State had not yet adopted a budget for
its 2001 fiscal year, which began on April 1, 2000. The date of adoption cannot
be determined.
The State has not approved its annual budget in a timely manner in several
years. To provide for the payment of debt service and to prevent the disruption
of essential services, the State has established
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procedures for approving necessary funding for key services without a budget in
place. Because of the history of late budgets, these procedures have become
fairly institutionalized and have enabled the State to continue operations
without significant disruption.
State Debt Ratings. As of June 1, 2000, the State's general obligation bonds
were rated A2, A, and A+ by Moody's, Standard & Poor's, and Fitch respectively.
These ratings reflect the State's credit quality only, and do not indicate the
creditworthiness of other tax-exempt securities in which the Fund may invest.
Furthermore, it cannot be assumed that New York State will maintain its current
credit ratings.
(2) The City and the Municipal Assistance Corporation ("MAC"): The City accounts
for approximately 40% of the State's population and personal income, and the
City's financial health affects the State in numerous ways.
Economic activity in the City has experienced periods of growth and recession
and can be expected to experience periods of growth and recession in the future.
Changes in the economic activity in the City, particularly employment, per
capita personal income and retail sales, may have an impact on the City.
Overall, the City's economic improvement improved in fiscal year 1998. Much of
the increase can be traced to the performance of the financial industry, but the
City's economy also produced gains in the retail trade sector, the hotel and
tourism industry, and business services, with private sector employment higher
than previously forecasted.
In response to the City's fiscal crisis in 1975, the State took a number of
steps to assist the City in returning to fiscal stability. Among other actions,
the State Legislature (i) created MAC to assist with long-term financing for
the City's short-term debt and other cash requirements and (ii) created the
State Financial Control Board (the "Control Board") to review and approve the
City's budgets and four-year financial plans (the financial plans also apply to
certain City-related public agencies).
Pursuant to State law, the City prepares a four-year annual financial plan,
which is reviewed and revised on a quarterly basis and which includes the City's
capital, revenue and expense projections. The City is required to submit its
financial plans to review bodies, including the Control Board. If the City were
to experience certain adverse financial circumstances, including the occurrence
or the substantial likelihood and the imminence of the occurrence of an annual
operating deficit of more than $100 million or the loss of access to the public
credit markets to satisfy the City's capital and seasonal financial
requirements, the Control Board would be required by State law to exercise
certain powers, including prior approval of City financial plans, proposed
borrowings and certain contracts.
The City depends on the State for State aid both to enable the City to balance
its budget and to meet its cash requirements. If the State experiences revenue
shortfalls or spending increases beyond its projections, such developments
could result in reductions in projected State aid to the City. In addition,
there can be no assurance that State budgets for future fiscal years will be
adopted by the April 1 statutory deadline and that there will not be adverse
effects on the City's cash flow and additional City expenditures as a result of
such delays.
Indebtedness. New York City and related organizations issue debt to fund capital
and other improvements in the City.
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New York City general obligation debt: The State Constitution requires the City
to pledge its full faith and credit for the payment of principal and interest
on City term and serial bonds and guaranteed debt. The City's ability to issue
general obligation debt is limited by the New York State Constitution to 10% of
the average of five years' full valuations of taxable real estate.
Municipal Assistance Corporation: Created in 1975, MAC is empowered to issue
and sell bonds and notes and also provides certain oversight of the City's fi-
nancial activities. MAC has no taxing power. All outstanding bonds issued by
MAC are general obligations of MAC and do not constitute a debt of the City or
the State. Neither the City nor a credit of the City has any claim to MAC's
revenues and assets. MAC bonds are paid from certain sales and compensating use
taxes, the stock transfer tax and certain per capita aid subject in each case
to appropriation by the State Legislature. Net collections of taxes and per
capita aid are returned to the City by the State after MAC debt service re-
quirements are met. MAC has issued all of its debt authorization. Any issuance
of bonds by MAC in the future will be for refunding purposes only.
New York City Municipal Water Finance Authority: Established in 1985, the New
York City Municipal Water Finance Authority (MWFA) issues debt to finance the
cost of capital improvements to the City's water distribution and sewage col-
lection system. Bonds issued by the MWFA are paid from water and sewer fees and
charges.
New York City Transitional Finance Authority: The New York Transitional Finance
Authority (TFA) was created in March 1997 to assist the City in funding its
capital program.
Absent creation of this authority, the City would have faced limitations on its
general obligation borrowing capacity after 1998 under the State's Constitu-
tion. TFA was authorized to issue debt in an aggregate principal amount of $7.5
billion. TFA has no taxing power. All outstanding bonds issued by TFA are gen-
eral obligations of TFA and do not constitute debt of either the City or the
State. Neither the City nor a creditor of the City has any claim to TFA's reve-
nues and assets. TFA bonds are secured by a primary lien on the City's personal
income tax receipts as well as a secondary lien on sales tax receipts. Sales
taxes are only available to TFA after such amounts required by MAC are deducted
and if the amounts of personal income tax revenues fall below statutorily spec-
ified coverage levels. Net collections of taxes not required by TFA are paid to
the City by TFA.
New York City Tobacco Settlement Asset Securitization Corporation: The New York
City Tobacco Settlement Asset Securitization Corporation ("TSASC") was created
in November 1999 to further assist the City in funding its capital programs.
TSASC is a special-purpose, bankruptcy-remote, non-for-profit corporation au-
thorized to issue debt in an aggregate principal amount of $2.5 billion. TSASC
has no taxing power. Bonds, which are issued by TSASC, are secured by Tobacco
Settlement Revenues arising out of the Master Settlement Agreement between 46
states and the participating cigarette manufacturers. The program was struc-
tured such that forecasted revenues are in excess of annual debt service re-
quirements, with the residual flowing back to New York City for the financing
of various capital projects. Bonds issued by TSASC are not debt of the State of
New York or the City. Furthermore, neither the revenues nor the taxing power of
New York State or the City is pledged towards debt service payments.
S-11
<PAGE>
As of June 30, 1999, the City had $27.4 billion in general obligation debt out-
standing. Related City issuers--MAC, TFA, and MWFA--had $3.8 billion, $4.15
billion, and $9.37 billion in revenue bonds outstanding, respectively. As of
June 1, 2000, $709 million in TSASC debt was outstanding.
Debt Ratings: As of June 1, 2000, Moody's, Standard & Poor's and Fitch rated
the City's general obligation bonds A3, A-, and A, respectively. In addition,
the agencies have rated New York City MAC obligations Aa3, AA, and AA, respec-
tively. TFA obligations are rated Aa3, AA+, and AA+, respectively. TSASC obli-
gations have been assigned ratings of Aa3, A, and A+, with higher ratings as-
signed to short and/or intermediate maturity ranges of the unique bond issue.
In May 2000, Standard & Poor's, as well as Fitch, upgraded their ratings on
MWFA obligations to AA, citing the Authority's enhanced legal and structural
features, which provide extra protection for bondholders in case of default. As
of June 1, 2000, Moody's has affirmed its Aa3 rating on MWFA obligations.
These ratings reflect the City's credit quality only, and do not indicate the
creditworthiness of other tax-exempt securities in which the Fund may invest.
Furthermore, there can be no assurance that these issuers will maintain their
current credit ratings.
The City is a defendant in a significant number of lawsuits and is subject to
numerous claims and investigations, including, but not limited to, actions com-
menced and claims asserted against the City arising out of alleged constitu-
tional violations, torts, breaches of contracts, and other violations of law
and condemnation proceedings. While the ultimate outcome and fiscal impact, if
any, on the proceedings and claims are not currently predictable, adverse de-
terminations in certain of them might have a material adverse effect upon the
City's ability to carry out its financial plan. As of June 30, 1999, the City
estimated its potential future liability on outstanding claims to be $3.5
billion.
(3) The State Agencies: Certain Agencies of the State have faced substantial
financial difficulties which could adversely affect the ability of such Agen-
cies to make payments of interest on, and principal amounts of, their respec-
tive bonds. The difficulties have in certain instances caused the State (under
so-called "moral obligation" provisions, which are non-binding statutory provi-
sions for State appropriations to maintain various debt service reserve funds)
to appropriate funds on behalf of the Agencies.
Failure of the State to appropriate necessary amounts or to take other action
to permit those Agencies having financial difficulties to meet their obliga-
tions could result in a default by one or more of the Agencies. Such default,
if it were to occur, would be likely to have a significant adverse affect on
investor confidence in, and therefore the market price of, obligations of the
defaulting Agencies. In addition, any default in payment on any general obliga-
tion of any Agency whose bonds contain a moral obligation provision could con-
stitute a failure of certain conditions that must be satisfied in connection
with Federal guarantees of City and MAC obligations and could thus jeopardize
the City's long-term financing plans.
As of March 31, 1999, the State reported that its public benefit corporations
had an aggregate of $47.8 billion of outstanding debt, some of which was State-
supported and State-related debt.
(4) State Litigation: The State is a defendant in numerous legal proceedings
pertaining to matters incidental to the performance of routine governmental op-
erations. Such litigation includes, but is not limited to, claims asserted
against the State arising from alleged torts, alleged breaches of contracts,
S-12
<PAGE>
condemnation proceedings and other alleged violations of State and Federal
laws. Included in the State's outstanding litigation are a number of cases
challenging the Legality or the adequacy of a variety of significant social
welfare programs primarily involving the State's Medicaid and mental health
programs. Adverse judgments in these matters generally could result in injunc-
tive relief coupled with prospective changes in patient care which could re-
quire substantial increased financing of the litigated programs in the future.
(5) Other Municipalities: Municipalities and school districts have engaged in
substantial short-term and long-term borrowings. Certain localities have expe-
rienced financial problems in the past and have required additional State as-
sistance. Such requests could occur again in the future, which could impact the
State's financial position. The State has some oversight authority over some of
these localities; State law requires the Comptroller to review and make recom-
mendations concerning the budgets of those local government units other than
New York City authorized by State law to issue debt to finance deficits during
the period that such deficit financing is outstanding.
Fiscal difficulties experienced by the City of Yonkers ("Yonkers") resulted in
the creation of the Emergency Financial Control Board for the City of Yonkers
(the "Yonkers Board" or EFCB) by the State in 1984. Consequently, the State of
New York supervised the financial affairs of the City by requiring that finan-
cial plans be submitted to the EFCB on an annual basis. However, in July 1998,
the EFCB voted itself out of existence after the determination that Yonkers had
met the financial conditions to end the emergency period.
In December 1995, in reaction to continuing financial problems, the Troy Munic-
ipal Assistance Corp., which was created in 1995, imposed a 1996 budget plan
upon Troy, New York. A similar municipal assistance corporation has also been
established for Newburgh, and is expected to remain in existence until 2004. In
addition, several other New York cities, including Utica, Rome, Schenectady,
Syracuse and Niagara Falls have faced budget deficits, as federal and state aid
and local tax revenues have declined while government expenses have increased.
The financial problems being experienced by the State's smaller urban centers
can place additional strains upon the State's financial condition.
Ongoing budgetary difficulties experienced by Nassau County ("Nassau") resulted
in the State's appointment of National Association of Securities Dealers (NASD)
Chairman and CEO, Frank Zarb as special advisor to the County in March of 2000.
Pending legislative approval from Nassau, the State and Mr. Zarb have proposed
a plan that would create the Nassau Interim Finance Authority (NIFA). NIFA
would serve as a temporary financing mechanism which would aid Nassau in re-
structuring its excessive amount of outstanding debt, as well as provide an es-
timated $100 million of transitional aid from the State over a 5-year period.
However, state assistance is contingent on Nassau officials implementing budget
balancing actions to close its current budget gap, as well as the adoption of a
balanced four-year financial plan during 2000. The County's financial difficul-
ties have contributed to several downgrades to the its general obligation debt.
On February 17, 2000, Moody's downgraded the County's general obligation bonds
to Baa2 from Baa3, citing the County's ongoing budgetary concerns. Moody's also
placed a negative outlook on Nassau's debt obligations. In addition, Standard &
Poor's has placed the County's general obligation bond rating on negative
creditwatch and has stated that the County's failure to resolve its current
budget gap and the lack of a long-term financial plan that addresses the
County's ongoing fiscal troubles will likely result in a downgrade, possibly to
below investment grade.
S-13
<PAGE>
Certain proposed Federal expenditure reductions could reduce, or in some cases
eliminate, Federal funding of some local programs and accordingly might impose
substantial increased expenditure requirements on affected localities to in-
crease local revenues to sustain those expenditures.
If the State, New York City or any of the Agencies were to suffer serious fi-
nancial difficulties jeopardizing their respective access to the public credit
markets, the marketability of notes and bonds issued by localities within the
State, including notes or bonds in the Fund, could be adversely affected. Lo-
calities also face anticipated and potential problems resulting from certain
pending litigation, judicial decisions, and long-range economic trends. The
longer-range potential problems of declining urban population, increasing ex-
penditures, and other economic trends could adversely affect certain locali-
ties and require increasing State assistance in the future.
(6) Other Issuers of New York Municipal Obligations. There are a number of
other state agencies, instrumentalities and political subdivisions of the
State that issue Municipal Obligations, some of which may be conduit revenue
obligations payable from payments from private borrowers. These entities are
subject to various economic risks and uncertainties, and the credit quality of
the securities issued by them may vary considerably from the credit quality of
obligations backed by the State.
Taxable Investments
Taxable investments (sometimes called "Temporary Investments") include obliga-
tions of the United States Government, its agencies or instrumentalities; debt
securities of issuers having, at the time of purchase, a quality rating within
the two highest grades by either Moody's Investors Service, Inc. ("Moody's"),
Standard and Poor's Corporation ("S&P") or Fitch (Aaa or Aa, AAA or AA, or AAA
or AA, respectively); commercial paper rated in the highest grade by either
Moody's or S&P (Prime-1 or A-1, respectively); certificates of deposit of do-
mestic banks with assets of $1 billion or more; and municipal securities and
U.S. Government obligations subject to short-term repurchase agreements.
Subject to the limitations described in the prospectus, the Funds may invest
in the following taxable investments:
U.S. Government Direct Obligations--issued by the United States Treasury and
include bills, notes and bonds.
--Treasury bills are issued with maturities of up to one year. They are is-
sued in bearer form, are sold on a discount basis and are payable at par
value at maturity.
--Treasury notes are longer-term interest-bearing obligations with original
maturities of one to seven years.
--Treasury bonds are longer-term interest-bearing obligations with original
maturities from five to thirty years.
U.S. Government Agencies Securities--Certain federal agencies have been estab-
lished as instrumentalities of the United States Government to supervise and
finance certain types of activities. These agencies include, but are not lim-
ited to, the Bank for Cooperatives, Federal Land Banks, Federal Intermediate
S-14
<PAGE>
Credit Banks, Federal Home Loan Banks, Federal National Mortgage Association,
Government National Mortgage Association, Export-Import Bank of the United
States and Tennessee Valley Authority. Issues of these agencies, while not di-
rect obligations of the United States Government, are either backed by the
full faith and credit of the United States or are guaranteed by the Treasury
or supported by the issuing agencies' right to borrow from the Treasury. There
can be no assurance that the United States Government itself will pay interest
and principal on securities as to which it is not so legally obligated.
Certificates of Deposit (CDs)--A certificate of deposit is a negotiable inter-
est-bearing instrument with a specific maturity. CDs are issued by banks in
exchange for the deposit of funds and normally can be traded in the secondary
market, prior to maturity. The Funds will only invest in U.S. dollar denomi-
nated CDs issued by U.S. banks with assets of $1 billion or more.
Commercial Paper--Commercial paper is the term used to designate unsecured
short-term promissory notes issued by corporations. Maturities on these issues
vary from a few to 397 days. Commercial paper may be purchased from U.S. cor-
porations.
Other Corporate Obligations--The Funds may purchase notes, bonds and deben-
tures issued by corporations if at the time of purchase there is less than 397
days remaining until maturity or if they carry a variable or floating rate of
interest.
Repurchase Agreements--A repurchase agreement is a contractual agreement
whereby the seller of securities agrees to repurchase the same security at a
specified price on a future date agreed upon by the parties. The agreed upon
repurchase price determines the yield during the Fund's holding period. Repur-
chase agreements are considered to be loans collateralized by the underlying
security that is the subject of the repurchase contract. The Funds will only
enter into repurchase agreements with dealers, domestic banks or recognized
financial institutions that in the opinion of Nuveen Advisory present minimal
credit risk. The risk to the Funds is limited to the ability of the issuer to
pay the agreed-upon repurchase price on the delivery date; however, although
the value of the underlying collateral at the time the transaction is entered
into always equals or exceeds the agreed-upon repurchase price, if the value
of the collateral declines there is a risk of loss of both principal and in-
terest. In the event of default, the collateral may be sold but the Funds
might incur a loss if the value of the collateral declines, and might incur
disposition costs or experience delays in connection with liquidating the col-
lateral. In addition, if bankruptcy proceedings are commenced with respect to
the seller of the security, realization upon the collateral by the Funds may
be delayed or limited. Nuveen Advisory will monitor the value of the collat-
eral at the time the transaction is entered into and at all times subsequent
during the term of the repurchase agreement in an effort to determine that the
value always equals or exceeds the agreed-upon repurchase price. In the event
the value of the collateral declines below the repurchase price, Nuveen Advi-
sory will demand additional collateral from the issuer to increase the value
of the collateral to at least that of the repurchase price.
Ratings of Investments
The two highest ratings of Moody's for municipal securities are Aaa and Aa.
Municipal securities rated Aaa are judged to be of the "best quality." The
rating of Aa is assigned to municipal securities which are of "high quality by
all standards," but as to which margins of protection or other elements make
long-term risks appear somewhat larger than in Aaa rated municipal securities.
The Aaa and Aa rated municipal securities comprise what are generally known as
"high grade bonds." Moody's bond rating
S-15
<PAGE>
symbols may contain numerical modifiers of a generic rating classification. The
modifier 1 indicates that the bond ranks at the high end of its category; the
modifier 2 indicates a mid-range ranking; and the modifier 3 indicates that the
issue ranks in the lower end of its generic rating category.
The two highest ratings of S&P for municipal securities are AAA and AA. Munici-
pal securities rated AAA have an extremely strong capacity to pay principal and
interest. The rating of AA indicates that capacity to pay principal and inter-
est is very strong and such bonds differ from AAA issues only in small degree.
The two highest ratings of Fith for municipal securities are AAA and AA. Munic-
ipal securities rated AAA have an exceptionally strong capacity to pay princi-
pal and interest. The rating of AA indicates that capacity to pay principal and
interest is very strong, although not quite as strong as bonds rated AAA.
The two highest ratings of Moody's and S&P for federally tax-exempt short-term
loans and notes are MIG-1 and MIG-2, or VMIG-1 and VMIG-2 in the case of vari-
able instruments, and SP-1 and SP-2, respectively. Obligations designated MIG-1
or VMIG-1 are the best quality enjoying strong protection from established cash
flows of funds for their servicing or from established and broad-based access
to the market for refinancing, or both. Obligations designated as MIG-2 or
VMIG-2 are high quality obligations with ample margins of protection. The des-
ignation SP-1 indicates a very strong or strong capacity to pay principal and
interest while the designation SP-2 denotes a satisfactory capacity to pay
principal and interest.
The Fund's ability to purchase commercial paper of tax-exempt and corporate is-
suers is limited to
commercial paper rated highly by nationally recognized statistical rating orga-
nizations. Issuers rated in the highest category generally have a superior ca-
pacity for repayment of short-term obligations normally evidenced by the fol-
lowing characteristics: leading market positions in well-established indus-
tries; high rates of return on funds employed; conservative capitalization
structures with moderate reliance on debt and ample asset protection; broad
margins in earnings coverage of fixed financial charges and high internal cash
generation; well-established access to a range of financial markets and assured
sources of alternative liquidity. Issuers rated in the second highest category
have a strong capacity for repayment of short-term promissory obligations.
Subsequent to its purchase by the Fund, an issue may cease to be rated or its
rating may be reduced below the minimum required for purchase by the Fund. Nei-
ther event requires the elimination of such obligations from the Fund, but
Nuveen Advisory will consider such an event in its determination of whether the
Fund should continue to hold such obligation.
MANAGEMENT
The management of the Trust, including general supervision of the duties per-
formed for the Funds under the Investment Management Agreement, is the respon-
sibility of its Board of Trustees. The Trust currently has seven trustees, one
of whom is an "interested person" (as the term "interested person" is defined
in the Investment Company Act of 1940) and six of whom are "disinterested per-
sons." The names and business addresses of the trustees and officers of the
Trust and their principal occupations and other affiliations during the past
five years are set forth below, with those trustees who are "interested per-
sons" of the Trust indicated by an asterisk.
S-16
<PAGE>
<TABLE>
-------------------------------------------------------------------------------------
<CAPTION>
Date of Positions and Principal Occupations
Name and Address Birth Offices with Fund During Past Five Years
-------------------------------------------------------------------------------------
<C> <C> <C> <S>
Timothy R. Schwertfeger* 3/28/49 Chairman of the Board Chairman since July 1,
333 West Wacker Drive and President 1996 of The John Nuveen
Chicago, IL 60606 Trustee Company, John Nuveen &
Co. Incorporated, Nuveen
Advisory Corp. and
Nuveen Institutional
Advisory Corp., prior
thereto Executive Vice
President and Director
of The John Nuveen
Company and John Nuveen
& Co. Incorporated;
Director of Nuveen
Advisory Corp. (since
1992) and Nuveen
Institutional Advisory
Corp.; Chairman and
Director (since January
1997) of Nuveen Asset
Management, Inc.;
Director (since 1996) of
Institutional Capital
Corporation; Chairman
and Director of
Rittenhouse Financial
Services Inc. (since
1999); Chief Executive
Officer (since September
1999) of Nuveen Senior
Loan Asset Management
Inc.
-------------------------------------------------------------------------------------
Robert P. Bremner 8/22/40 Trustee Private Investor and
3725 Huntington Street, N.W. Management Consultant.
Washington, D.C. 20015
-------------------------------------------------------------------------------------
Lawrence H. Brown 7/29/34 Trustee Retired (August 1989) as
201 Michigan Avenue Senior Vice President of
Highwood, IL 60040 The Northern Trust
Company
-------------------------------------------------------------------------------------
Anne E. Impellizzeri 1/26/33 Trustee President and Chief
3 West 29th Street Executive Officer of
New York, NY 10001 Blanton-Peale Institutes
of Religion and Health
(since December 1990).
-------------------------------------------------------------------------------------
Peter R. Sawers 4/3/33 Trustee Adjunct Professor of
22 The Landmark Business and Economics,
Northfield, IL 60093 University of Dubuque,
Iowa; Adjunct Professor,
Lake Forest Graduate
School of Management,
Lake Forest, Illinois.
-------------------------------------------------------------------------------------
William J. Schneider 9/24/44 Trustee Senior Partner and Chief
4000 Miller-Valentine Ct. Operating Officer,
P.O. Box 744 Miller-Valentine
Dayton, OH 45401 Partners; Vice
President, Miller-
Valentine Group, a
development and contract
company; Member
Community Advisory
Board, National City
Bank, Dayton, Ohio.
-------------------------------------------------------------------------------------
Judith M. Stockdale 12/29/47 Trustee Executive Director,
35 E. Wacker Drive Gaylord and Dorothy
Suite 2600 Donnelley Foundation
Chicago, IL 60601 (since 1994); prior
thereto, Executive
Director, Great Lakes
Protection Fund (from
1990 to 1994).
</TABLE>
--------------------------------------------------------------------------------
S-17
<PAGE>
<TABLE>
--------------------------------------------------------------------------------------
<CAPTION>
Date of Positions and Principal Occupations
Name and Address Birth Offices with Fund During Past Five Years
--------------------------------------------------------------------------------------
<C> <C> <C> <S>
Alan G. Berkshire 12/28/60 Vice President and Senior Vice President
333 West Wacker Drive Assistant Secretary and General Counsel
Chicago, IL 60606 (since September 1997)
and Secretary (since May
1998) of The John Nuveen
Company, John Nuveen &
Co. Incorporated, Nuveen
Advisory Corp. and
Nuveen Institutional
Advisory Corp., Senior
Vice President and
Secretary (since
September 1999) of
Nuveen Senior Loan Asset
Management Inc.; prior
thereto, Partner in the
law firm of Kirkland &
Ellis.
--------------------------------------------------------------------------------
Peter H. D'Arrigo 11/28/67 Vice President and Vice President of John
333 West Wacker Drive Treasurer Nuveen & Co.
Chicago, IL 60606 Incorporated (since
January 1999), prior
thereto. Assistant Vice
President (from January
1997); formerly,
Associate of John Nuveen
& Co. Incorporated; Vice
President and Treasurer
(since September 1999)
of Nuveen Senior Loan
Asset Management Inc.;
Chartered Financial
Analyst.
--------------------------------------------------------------------------------
Michael S. Davern 6/26/57 Vice President Vice President of Nuveen
333 West Wacker Drive Advisory Corp. (since
Chicago, IL 60606 January 1997); prior
thereto, Vice President
and Portfolio Manager of
Flagship Financial.
--------------------------------------------------------------------------------------
Lorna C. Ferguson 10/24/45 Vice President Vice President of John
333 West Wacker Drive Nuveen & Co.
Chicago, IL 60606 Incorporated; Vice
President (since January
1998) of Nuveen Advisory
Corp. and Nuveen
Institutional Advisory
Corp.
--------------------------------------------------------------------------------------
William M. Fitzgerald 3/2/64 Vice President Vice President of Nuveen
333 West Wacker Drive Advisory Corp. (since
Chicago, IL 60606 December 1995);
Assistant Vice President
of Nuveen Advisory Corp.
(from September 1992 to
December 1995), prior
thereto, Assistant
Portfolio Manager of
Nuveen Advisory Corp.
--------------------------------------------------------------------------------------
Stephen D. Foy 5/31/54 Vice President and Controller Vice President of John
333 West Wacker Drive Nuveen & Co.
Chicago, IL 60606 Incorporated and (since
May 1998) The John
Nuveen Company, Vice
President (since
September 1999) of
Nuveen Senior Loan Asset
Management Inc.,
Certified Public
Accountant.
--------------------------------------------------------------------------------------
J. Thomas Futrell 7/5/55 Vice President Vice President of Nuveen
333 West Wacker Drive Advisory Corp.;
Chicago, IL 60606 Chartered Financial
Analyst.
--------------------------------------------------------------------------------------
Richard A. Huber 3/26/63 Vice President Vice President of Nuveen
333 West Wacker Drive Institutional Advisory
Chicago, IL 60606 Corp. (since March 1998)
and Nuveen Advisory
Corp. (since January
1997); prior thereto,
Vice President and
Portfolio Manager of
Flagship Financial, Inc.
</TABLE>
--------------------------------------------------------------------------------
S-18
<PAGE>
<TABLE>
-------------------------------------------------------------------------------
<CAPTION>
Date of Positions and Principal Occupations
Name and Address Birth Offices with Fund During Past Five Years
-------------------------------------------------------------------------------
<C> <C> <C> <S>
Steven J. Krupa 8/21/57 Vice President Vice President of Nuveen
333 West Wacker Drive Advisory Corp.
Chicago, IL 60606
-------------------------------------------------------------------------------
Larry W. Martin 7/27/51 Vice President and Vice President, Assistant
333 West Wacker Drive Assistant Secretary Secretary and Assistant
Chicago, IL 60606 General Counsel of John
Nuveen & Co. Incorporated;
Vice President and
Assistant Secretary of
Nuveen Advisory Corp.;
Vice President and
Assistant Secretary of
Nuveen Institutional
Advisory Corp.; Assistant
Secretary of The John
Nuveen Company and (since
January 1997) Nuveen Asset
Management Inc.; Vice
President and Assistant
Secretary (since September
1999) of Nuveen Senior
Loan Asset Management Inc.
-------------------------------------------------------------------------------
Edward F. Neild, IV 7/7/65 Vice President Vice President (since
333 West Wacker Drive September 1996),
Chicago, IL 60606 previously Assistant Vice
President (since December
1993) of Nuveen Advisory
Corp., Portfolio Manager
prior thereto; Vice
President (since September
1996), previously
Assistant Vice President
(since May 1995) of Nuveen
Institutional Advisory
Corp., Portfolio Manager
prior thereto; Chartered
Financial Analyst.
-------------------------------------------------------------------------------
Stephen S. Peterson 9/20/57 Vice President Vice President (since
333 West Wacker Drive September 1997),
Chicago, IL 60606 previously Assistant Vice
President (since September
1996), Portfolio Manager
prior thereto of Nuveen
Advisory Corp., Chartered
Financial Analyst.
-------------------------------------------------------------------------------
Thomas C. Spalding, Jr. 7/31/51 Vice President Vice President of Nuveen
333 West Wacker Drive Advisory Corp. and Nuveen
Chicago, IL 60606 Institutional Advisory
Corp.; Chartered Financial
Analyst.
-------------------------------------------------------------------------------
Gifford R. Zimmerman 9/9/56 Vice President and Vice President, Assistant
333 West Wacker Drive Secretary Secretary and Associate
Chicago, IL 60606 General Counsel formerly
Assistant General Counsel
of John Nuveen & Co.
Incorporated; Vice
President and Assistant
Secretary of Nuveen
Advisory Corp. and Nuveen
Institutional Advisory
Corp.; Vice President and
Assistant Secretary of The
John Nuveen Company; Vice
President and Assistant
Secretary (since September
1999) of Nuveen Senior
Loan Asset Management
Inc.; Chartered Financial
Analyst.
</TABLE>
--------------------------------------------------------------------------------
Timothy R. Schwertfeger and Peter R. Sawers serve as members of the Executive
Committee of the Board of Trustees. The Executive Committee, which meets be-
tween regular meetings of the Board of Trustees, is authorized to exercise all
of the powers of the Board of Trustees.
The trustees of the Trust are directors or trustees, as the case may be, of 37
Nuveen open-end funds and 54 Nuveen closed-end funds advised by Nuveen Advisory
Corp. Mr. Schwertfeger is a director or trustee, as the case may be, of 13
Nuveen open-end funds and closed-end funds advised by Nuveen Institutional Ad-
visory Corp. and two funds advised by Nuveen Senior Loan Asset Management. None
of the independent trustees has ever been a director, officer, or employee of,
or a consultant to, Nuveen Advisory, Nuveen or their affiliates.
S-19
<PAGE>
The following table sets forth compensation paid by the Trust to each of the
trustees of the Trust and the total compensation paid to each trustee during
the fiscal year ended February 29, 2000. The Trust has no retirement or pension
plans. The officers and trustees affiliated with Nuveen serve without any com-
pensation from the Trust.
<TABLE>
<CAPTION>
Total Compensation
Aggregate From Trust
Compensation and Fund Complex paid
Name of Trustee from the Fund(1) to the Trustees(2)
--------------- ---------------- ---------------------
<S> <C> <C>
Robert P. Bremner.................. $109 $72,000
Lawrence H. Brown.................. $118 $78,750
Anne E. Impellizzeri............... $109 $72,000
Peter R. Sawers.................... $110 $74,500
William S. Schneider............... $109 $72,000
Judith M. Stockdale................ $109 $72,000
</TABLE>
--------
(1) The compensation paid (but not including amounts deferred) to the indepen-
dent trustees for the fiscal year ended February 29, 2000 for services to
the Fund.
(2) Based on the compensation paid (including any amounts deferred) to the in-
dependent trustees for the fiscal year ended February 29, 2000 for services
to the open-end and closed-end funds advised by NAC.
Each trustee who is not affiliated with NAC receives a $60,000 annual retainer
for serving as a director or trustee of all funds for which NAC serves as in-
vestment adviser or manager and a $1,000 fee per day plus expenses for atten-
dance at all meetings held on a day on which a regularly scheduled Board meet-
ing is held, a $1,000 fee per day plus expenses for attendance in person or a
$500 fee per day plus expenses for attendance by telephone at a meeting held on
a day which no regular Board meeting is held and a $250 fee per day plus ex-
penses for attendance in person or by telephone at a meeting of the Executive
Committee held solely to declare dividends. The annual retainer, fees and ex-
penses are allocated among the funds for which NAC serves as investment adviser
or manager on the basis of relative net asset sizes. The Trust requires no em-
ployees other than its officers, all of whom are compensated by NAC or Nuveen.
The John Nuveen Company (JNC) maintains charitable contributions programs to
encourage the active support and involvement of individuals in the civic activ-
ities of their community. These programs include a matching contributions pro-
gram and a direct contributions program. The independent trustees of the funds
managed by NAC are eligible to participate in the charitable contributions pro-
gram of JNC. Under the matching program, JNC will match the personal contribu-
tions of a trustee to Section 501(c)(3) organizations up to an aggregate maxi-
mum amount of $10,000 during any calendar year. Under its direct (non-matching)
program, JNC makes contributions to qualifying Section 501(c)(3) organizations,
as approved by the Corporate Contributions Committee of JNC. The independent
trustees are also eligible to submit proposals to the committee requesting that
contributions be made under this program to Section 501(c)(3) organizations
identified by the trustee, in an aggregate amount not to exceed $5,000 during
any calendar year. Any contribution made by JNC under the direct program is
made solely at the discretion of the Corporate Contributions Committee.
The officers and trustees of each Fund, in the aggregate, own less than 1% of
the shares of the Fund.
S-20
<PAGE>
The following table sets forth the percentage ownership of each person, who, as
of May 31, 2000, is known by the Fund to own of record or beneficially 5% or
more of the Fund's shares.
<TABLE>
<CAPTION>
Percentage of
Name of Fund Name and Address of Owner Ownership
--------------------------------------------------------------------------------
<C> <S> <C>
Nuveen New York Tax-Exempt Sandra Bass.......................... 16.13%
Money Market Fund 47 Deer Park Rd.
Great Neck, NY 11024-2138
Estate of Edith Atlas................ 14.54%
Exec Sandra Bass
Exec Morton Bass
185 Great Neck Rd.
Great Neck, NY 11021-3312
Morton Bass.......................... 10.13%
47 Deer Park Rd.
Great Neck, NY 11024-2138
</TABLE>
INVESTMENT ADVISER AND INVESTMENT MANAGEMENT AGREEMENT
Nuveen Advisory acts as investment adviser for the Fund and in such capacity
manages the investment and reinvestment of the Fund's assets. Nuveen Advisory
also administers the Trust's business affairs, provides office facilities and
equipment and certain clerical, bookkeeping and administrative services, and
permits any of its officers or employees to serve without compensation as
trustees or officers of the Trust if elected to such positions. See "Who Man-
ages the Fund" in the Prospectus.
Pursuant to an investment management agreement between Nuveen Advisory and the
Trust, the Fund has agreed to pay annual management fees at the rate set forth
below, which are based on the Fund's average daily net assets:
<TABLE>
<CAPTION>
Average Daily Net Assets Management Fee
----------------------------------------
<S> <C>
First $125M 0.4000 of 1%
Next $125M 0.3875 of 1%
Next $250M 0.3750 of 1%
Next $500M 0.3625 of 1%
Next $1B 0.3500 of 1%
Over $2B 0.3250 of 1%
</TABLE>
Through December 31, 1999, Nuveen Advisory had undertaken to reimburse Fund ex-
penses in an amount necessary to limit total operating expenses to .55 of 1% of
the Fund's daily net assets. Thereafter, Nuveen Advisory may choose to modify,
continue or discontinue these reimbursements at its sole discretion.
S-21
<PAGE>
Before June 25, 1999, Nuveen Advisory's annual management fees were calculated
at the rates set forth below, which are based on the Fund's average daily net
assets:
<TABLE>
<CAPTION>
Average Daily Net Assets Management Fee
------------------------------------------
<S> <C>
For the first $500 million .400 of 1%
For the next $500 million .375 of 1%
For assets over $1 billion .350 of 1%
</TABLE>
For the periods before June 25, 1999, Nuveen Advisory had agreed to waive all
or a portion of its management fee or reimburse certain expenses of the Fund in
order to prevent total operating expenses (including Nuveen Advisory's manage-
ment fee, but excluding interest, taxes, fees incurred in acquiring and dispos-
ing of portfolio securities, any asset-based distribution or service fees and,
to the extent permitted, extraordinary expenses) in any fiscal year from ex-
ceeding .55 of 1% of the average daily net assets of the Fund. Nuveen Advisory
could also voluntarily agree to reimburse additional expenses from time to
time, which could be terminated at any time in its discretion. For the last
three fiscal years, the Fund, as its predecessor, paid net management fees to
Nuveen Advisory as follows:
<TABLE>
<S> <C> <C> <C> <C> <C>
Management Fees Fee Waivers and
Net of Expense Reimbursement Expense Reimbursements from
Paid to Nuveen Advisory for the Nuveen Advisory for
Year Ended the Year Ended
---------------------------------------- --------------------------------------------
2/28/98 2/28/99 2/29/00 2/28/98 2/28/99 2/29/00
-------- ------- ------- ------- ------- -------
$15,559 $76,485 $29,067 $95,248 $54,959 $101,182
</TABLE>
Nuveen Advisory is a wholly-owned subsidiary of John Nuveen & Co. Incorporated
("Nuveen"), the Funds' principal underwriter. Nuveen is sponsor of the Nuveen
Defined Portfolios, registered unit investment trusts, is principal underwriter
for the Nuveen Mutual Funds, and has served as co-managing underwriter for the
shares of the Nuveen Exchange-Traded Funds. Over 1,300,000 individuals have in-
vested to date in Nuveen's funds and trusts. Founded 1898, Nuveen brings over a
century of expertise to the municipal bond market. Overall, Nuveen and its af-
filiates manage or oversee more than $70 billion in assets in a variety of
products. Nuveen is a subsidiary of The John Nuveen Company which, in turn, is
approximately 78% owned by The St. Paul Companies, Inc. ("St. Paul"). St. Paul
is located in St. Paul, Minnesota, and is principally engaged in providing
property-liability insurance through subsidiaries.
Nuveen Advisory's portfolio managers call upon the resources of Nuveen's Re-
search Department. The Nuveen Research Department reviews more than $100 bil-
lion in municipal bonds every year.
The Fund, the other Nuveen funds, Nuveen Advisory, and other related entities
have adopted a code of ethics which essentially prohibits all Nuveen fund man-
agement personnel, including Nuveen fund portfolio managers, from engaging in
personal investments which compete or interfere with, or attempt to take advan-
tage of, the Fund's anticipated or actual portfolio transactions, and is de-
signed to assure that the interest of Fund shareholders are placed before the
interest of Nuveen personnel in connection with personal investment transac-
tions.
S-22
<PAGE>
PORTFOLIO TRANSACTIONS
Nuveen Advisory, in effecting purchases and sales of portfolio securities for
the account of the Fund, will place orders in such manner as, in the opinion of
management, will offer the best price and market for the execution of each
transaction. Portfolio securities will normally be purchased directly from an
underwriter or in the over-the-counter market from the principal dealers in
such securities, unless it appears that a better price or execution may be ob-
tained elsewhere. Portfolio securities will not be purchased from Nuveen or its
affiliates except in compliance with the Investment Company Act of 1940.
The Fund expects that all portfolio transactions will be effected on a princi-
pal (as opposed to an agency) basis and, accordingly, do not expect to pay any
brokerage commissions.
Purchases from underwriters will include a commission or concession paid by the
issuer to the underwriter, and purchases from dealers will include the spread
between the bid and asked price. Given the best price and execution obtainable,
it will be the practice of the Fund to select dealers which, in addition, fur-
nish research information (primarily credit analyses of issuers) and statisti-
cal and other services to Nuveen Advisory. It is not possible to place a dollar
value on information and statistical and other services received from dealers.
Since it is only supplementary to Nuveen Advisory's own research efforts, the
receipt of research information is not expected to reduce significantly Nuveen
Advisory's expenses. Any research benefits obtained are available to all of
Nuveen Advisory's other clients. While Nuveen Advisory will be primarily re-
sponsible for the placement of the business of the Funds, the policies and
practices of Nuveen Advisory in this regard must be consistent with the forego-
ing and will, at all times, be subject to review by the Board of Trustees.
Nuveen Advisory reserves the right to, and does, manage other investment ac-
counts and investment companies or other clients which may have investment ob-
jectives similar to the Fund. Subject to applicable laws and regulations,
Nuveen Advisory will attempt to allocate equitably portfolio transactions among
the Fund and the portfolios of its other clients purchasing securities whenever
decisions are made to purchase or sell securities by the Fund and one or more
of such other clients simultaneously. In making such allocations the main fac-
tors to be considered will be the respective investment objectives of the Fund
and such other clients, the relative size of portfolio holdings of the same or
comparable securities, the availability of cash for investment by the Fund and
such other clients, the size of investment commitments generally held by the
Fund and such other clients and opinions of the persons responsible for recom-
mending investments to the Fund and such other clients.
While this procedure could have a detrimental effect on the price or amount of
the securities available to the Fund from time to time, it is the opinion of
the Fund's Board of Trustees that the benefits available from Nuveen Advisory's
organization outweigh any disadvantage that may arise from exposure to simulta-
neous transactions.
Under the Investment Company Act of 1940, the Fund may not purchase portfolio
securities from any underwriting syndicate of which Nuveen is a member except
under certain limited conditions set forth in Rule 10f-3. The Rule sets forth
requirements relating to, among other things, the type of securities purchased
by the Fund and the amount of securities which may be purchased in any one is-
sue. In addition, purchases of securities made pursuant to the terms of the
Rule must be approved at least quarterly by the Board of Trustees, including a
majority of the members thereof who are not interested persons of the Fund.
S-23
<PAGE>
NET ASSET VALUE
As stated in the Prospectus, the net asset value of the shares of the Fund will
be determined by The Chase Manhattan Bank, the Fund's custodian, as of 4:00
p.m., Eastern Time, (1) on each day on which the Federal Reserve Bank of Boston
is normally open and (2) on any day during which there is sufficient degree of
trading in the Fund's portfolio securities that the current net asset value of
the Fund's shares might be materially affected by such changes in the value of
the portfolio securities. The Federal Reserve Bank of Boston is not open and
the Fund will similarly not be open on New Year's Day, Martin Luther King's
Birthday, Washington's Birthday, Good Friday, Memorial Day, Independence Day,
Labor Day, Columbus Day, Veteran's Day, Thanksgiving Day and Christmas Day. It
is possible that changing circumstances during the year will result in addition
or deletions to the above lists. The net asset value per share will be computed
by dividing the value of the portfolio securities held by the Fund, plus cash
or other assets, less liabilities, by the total number of shares outstanding at
such time.
As stated in the Prospectus, the Fund will seek to maintain a net asset value
of $1.00 per share. In this connection, the Fund values its portfolio securi-
ties at their amortized cost, as permitted by the Securities and Exchange Com-
mission (the "Commission") under Rule 2a-7 under the Investment Company Act of
1940. This method does not take into account unrealized securities gains or
losses. It involves valuing an instrument at its cost on the date of purchase
and thereafter assuming a constant amortization to maturity of any discount or
premium. While this method provides certainty in valuation, it may result in
periods during which the value of an investment, as determined by amortized
cost, is higher or lower than the price the Fund would receive if it sold the
instrument. During periods of declining interest rates, the daily yield on
shares of the Fund may tend to be higher than a like computation made by a fund
with identical investments utilizing a method of valuation based upon market
prices and estimates of market prices for all of its portfolio instruments.
Thus, if the use of the amortized cost method by the Fund resulted in a lower
aggregate portfolio value on a particular day, a prospective investor in the
Fund would be able to obtain a somewhat higher yield than would result from an
investment in a fund utilizing solely market values, and existing investors in
the Fund would receive less investment income. The converse would apply in a
period of rising interest rates.
The Fund, as a condition to the use of amortized cost and the maintenance of
its per share net asset value of $1.00, must maintain a dollar-weighted average
portfolio maturity of 90 days or less, only purchase instruments having remain-
ing maturities of 397 days or less, and invest only in securities determined to
be of high quality with minimal credit risks. The Fund may invest in variable
and floating rate instruments even if they carry stated maturities in excess of
397 days, upon certain conditions contained in rules and regulations issued by
the Securities and Exchange Commission under the Investment Company Act of
1940, but will do so only if there is a secondary market for such instruments
or if they carry demand features, permissible under rules of the Commission for
money market funds, to recover the full principal amount thereof upon specified
notice at par, or both.
The Board of Trustees, pursuant to Rule 2a-7, has established procedures de-
signed to stabilize, to the extent reasonably possible, the Fund's price per
share as computed for the purpose of sales and redemptions at $1.00. Such pro-
cedures will include review of the Fund's portfolio holdings by the Board of
Trustees, at such intervals as it may deem appropriate, to determine whether
the net asset value calculated by using available market quotations or market
equivalents deviates from $1.00 per share based
S-24
<PAGE>
on amortized cost. Market quotations and market equivalents used in such review
may be obtained from a pricing agent approved by the Board of Trustees. The
Board has selected Nuveen Advisory to act as pricing agent, but in the future
may select an independent pricing service to perform this function. In serving
as pricing agent, Nuveen Advisory will follow guidelines adopted by the Board,
and the Board will monitor Nuveen Advisory to see that the guidelines are fol-
lowed. The pricing agent will value the Fund's investment based on methods
which include consideration of yield or prices of municipal obligations of com-
parable quality, coupon, maturity, and type; indications as to values from
dealers; and general market conditions. The pricing agent may employ electronic
data processing techniques and/or a matrix system to determine valuations. The
extent of any deviation between the Fund's net asset value based on the pricing
agent's market valuation and $1.00 per share based on amortized cost will be
examined by the Board of Trustees. If such deviation exceeds 1/2 of 1%, the
Board of Trustees will promptly consider what action, if any, will be initiat-
ed. In the event the Board of Trustees determines that a deviation exists which
may result in material dilution or other unfair results to investors or exist-
ing shareholders, it has agreed to take such corrective action as it regards as
necessary and appropriate, including the sale of portfolio instruments prior to
maturity to realize capital gains or losses or to shorten average portfolio ma-
turity; withholding dividends or payment of distributions from capital gains;
redemption of shares in kind; or establishing a net asset value per share by
using available market quotations.
TAX MATTERS
Federal Income Tax Matters
The following discussion of federal income tax matters is based upon the advice
of Morgan, Lewis & Bockius LLP, counsel to the Trust.
The Fund intends to qualify, as it has in prior years, under Subchapter M of
the Internal Revenue Code of 1986 (the "Code") for tax treatment as a regulated
investment company. In order to qualify as regulated investment company, the
Fund must satisfy certain requirements relating to the source of its income,
diversification of its assets, and distributions of its income to shareholders.
First, the Fund must derive at least 90% of its annual gross income (including
tax-exempt interest) from dividends, interest, payments with respect to securi-
ties loans, gains from the sale or other disposition of stock or securities,
foreign currencies or other income (including but not limited to gains from op-
tions and futures) derived with respect to its business of investing in such
stock or securities (the "90% gross income test"). Second, the Fund must diver-
sify its holdings so that, at the close of each quarter of its taxable year,
(i) at least 50% of the value of its total assets is comprised of cash, cash
items, United States Government securities, securities of other regulated in-
vestment companies and other securities limited in respect of any one issuer to
an amount not greater in value than 5% of the value of the Fund's total assets
and to not more than 10% of the outstanding voting securities of such issuer,
and (ii) not more than 25% of the value of the total assets is invested in the
securities of any one issuer (other than United States Government securities
and securities of other regulated investment companies) or two or more issuers
controlled by a Fund and engaged in the same, similar or related trades or
businesses.
As a regulated investment company, the Fund will not be subject to federal in-
come tax on the portion of its net investment income and net realized capital
gains that is currently distributed to shareholders
S-25
<PAGE>
in any taxable year for which the Fund distributes at least 90% of the sum of
(i) its "investment company taxable income" (which includes dividends, taxable
interest, taxable original issue discount and market discount income, income
from securities lending, net short-term capital gain in excess of long-term
capital loss, and any other taxable income other than "net capital gain" (the
excess of its net long-term capital gain over its short-term capital loss) and
is reduced by deductible expenses) and (ii) its "net tax-exempt interest" (the
excess of its gross tax-exempt interest income over certain disallowed deduc-
tions).
The Fund also intends to satisfy conditions which will enable it to designate
certain distributions as exempt interest dividends. Shareholders receiving ex-
empt interest dividends will not be subject to regular federal income tax on
the amount of such dividends.
Distributions by the Fund of net interest income received from certain taxable
investments (such as certificates of deposit, commercial paper and obligations
of the United States Government, its agencies and instrumentalities) and net
short-term capital gains realized by the Fund, if any, will be taxable to
shareholders as ordinary income whether received in cash or additional shares.
If the Fund purchases a security at a market discount, any gain realized by the
Fund upon sale or redemption of the security will be treated as taxable inter-
est income to the extent such gain does not exceed the market discount, and any
gain realized in excess of the market discount will be treated as a capital
gain. Any net long-term capital gains realized by the Fund and distributed to
shareholders in cash or additional shares will be taxable to shareholders as
long-term capital gains regardless of the length of time investors have owned
shares of the Fund. The Fund does not expect to realize significant long-term
capital gains. Because the taxable portion of the Fund's investment income con-
sists primarily of interest, none of its dividends, whether or not treated as
exempt-interest dividends, is expected to qualify under the Internal Revenue
Code for the dividends received deductions for corporations.
Capital gains are taxable to shareholders either as ordinary income or as long-
term capital gains, depending on how long the fund owned the investment. Early
in each year, you will receive a statement detailing the amount and nature of
all capital gains that you were paid during the prior year.
In the very unlikely event that the fund realizes capital gains or ordinary in-
come subject to regular federal income tax, it will pay any capital gains or
other taxable distributions annually in December.
If the Fund has both tax-exempt and taxable income, it will use the "average
annual" method for determining the designated percentage that is taxable income
and designate the use of such method within 60 days after the end of the Fund's
taxable year. Under this method, one designated percentage is applied uniformly
to all distributions made during the Fund's taxable year. The percentage of in-
come designated as tax-exempt for any particular distribution may be substan-
tially different from the percentage of the Fund's income that was tax-exempt
during the period covered by the distribution.
Although dividends generally will be treated as distributed when paid, divi-
dends declared in October, November or December, payable to shareholders of
record on a specified date in one of those months and paid during the following
January, will be treated as having been distributed by the Fund (and received
by the shareholders) on December 31.
S-26
<PAGE>
The redemption or exchange of the shares of the Fund is not expected to result
in capital gain or loss to the shareholders because the Fund's net asset value
is expected to remain constant at $1.00 per share. To the extent that the
Fund's net asset value is greater or lesser than $1.00 per share, redemptions
or exchanges may result in capital gain or loss to the shareholder.
In order to avoid a 4% federal excise tax, the Fund must distribute or be
deemed to have distributed by December 31 of each calendar year at least 98% of
its taxable ordinary income for such year, at least 98% of the excess of its
realized capital gains over its realized capital losses (generally computed on
the basis of the one-year period ending on October 31 of such year) and 100% of
any taxable ordinary income and the excess of realized capital gains over real-
ized capital losses for the prior year that was not distributed during such
year and on which the Fund paid no federal income tax. The Fund intends to make
timely distributions in compliance with these requirements and consequently it
is anticipated that they generally will not be required to pay the excise tax.
If in any year the Fund should fail to qualify under Subchapter M for tax
treatment as a regulated investment company, the Fund would incur a regular
corporate federal income tax upon its income for that year, (other than inter-
est income from tax-exempt securities) and distributions to its shareholders
out of net interest income from tax-exempt securities or other investments, or
out of net capital gains, would be taxable to shareholders as ordinary dividend
income for federal income tax purposes to the extent of the Fund's available
earnings and profits.
The Fund may invest in the type of private activity bonds the interest on which
is not federally tax-exempt to persons who are "substantial users" of the fa-
cilities financed by such bonds or "related persons" of such "substantial us-
ers." Accordingly, the Funds may not be appropriate investments for sharehold-
ers who are considered either a "substantial user" or a "related person" within
the meaning of the Code. In general, a "substantial user" of a facility fi-
nanced from the proceeds of private activity bonds includes a "non-exempt per-
son who regularly uses a part of such facility in his trade or business." "Re-
lated persons" are in general defined to include persons among whom there ex-
ists a relationship either by family or business, which would result in a dis-
allowance of losses in transactions among them under various provisions of the
Code (or if they are members of the same controlled group of corporations under
the Code). This includes a partnership and each of its partners (including
their spouses and minor children) and an S corporation and each of its share-
holders (and their spouses and minor children). Various combinations of these
relationships may also constitute "related persons" under the Code. For addi-
tional information, investors should consult their tax advisers before invest-
ing in the Fund.
Federal tax law imposes an alternative minimum tax with respect to both corpo-
rations and individuals. Interest on certain securities, such as bonds issued
to make loans for housing purposes or to private entities (but not for certain
tax-exempt organizations such as universities and non-profit hospitals), is in-
cluded as an item of tax preference in determining the amount of a taxpayer's
alternative minimum taxable income. To the extent that the Fund receives income
from securities subject to the alternative minimum tax, a portion of the divi-
dends paid by it, although otherwise exempt from federal income tax, will be
taxable to shareholders to the extent that their tax liability is determined
under the alternative minimum tax regime. The Fund will annually supply share-
holders with a report indicating the percentage of the Fund income attributable
to securities subject to the federal alternative minimum tax.
S-27
<PAGE>
In addition, the alternative minimum taxable income for corporations is in-
creased by 75% of the difference between an alternative measure of income ("ad-
justed current earnings") and the amount otherwise determined to be the alter-
native minimum taxable income. Interest on all securities, and therefore all
distributions by the Fund that would otherwise be tax exempt, is included in
calculating a corporation's adjusted current earnings.
Individuals whose provisional income exceeds a base amount will be subject to
Federal income tax on up to one-half of their social security or railroad re-
tirement benefits. Provisional income currently includes adjusted gross income,
one-half of social security benefits and tax-exempt interest, including exempt-
interest dividends from the Fund. Individuals whose modified income exceeds the
adjusted base amount are required to include in gross income up to 85% of their
social security or railroad retirement benefits.
The Code provides that interest on indebtedness incurred or continued to pur-
chase or carry shares of any Fund is not deductible. Under rules used by the
IRS for determining when borrowed funds are considered used for the purpose of
purchasing or carrying particular assets, the purchase of shares of the Fund
may be considered to have been made with borrowed funds even though such funds
are not directly traceable to the purchase of shares.
The Fund is required in certain circumstances to withhold 31% of taxable divi-
dends and certain other payments paid to non-corporate holders of shares who
have not furnished to the Fund their correct taxpayer identification number (in
the case of individuals, their social security number) and certain certifi-
cates, or who are otherwise subject to back-up withholding.
The foregoing is a general and abbreviated summary of the provisions of the
Code and Treasury Regulations presently in effect as they directly govern the
taxation of the Fund and their shareholders. For complete provisions, reference
should be made to the pertinent Code sections and Treasury Regulations. The
Code and Treasury Regulations are subject to change by legislative or adminis-
trative action, and any such change may be retroactive with respect to transac-
tions of the Fund. Shareholders are advised to consult their own tax advisers
for more detailed information concerning the federal taxation of the Fund and
the income tax consequences to their shareholders.
State Tax Matters
The following is based upon the advice of Morgan, Lewis & Bockius LLP, counsel
to the Fund, and assumes that the Fund will be qualified as a regulated invest-
ment company under Subchapter M of the Code and will be qualified thereunder to
pay exempt interest dividends.
Individual shareholders of the Fund who are subject to New York State and/or
New York City personal income taxation will not be required to include in their
New York adjusted gross income that portion of their dividends which (1) are
attributable to interest on any obligations of New York or its political subdi-
visions or to interest on obligations of the United States, its territories,
possessions or instrumentalities that are exempt from state taxation under fed-
eral law, and (2) are designated by the Fund as New York exempt-interest divi-
dends in a written notice to shareholders not later than 60 days
S-28
<PAGE>
after the close of the Fund's taxable year. Dividends which are not designated
as New York exempt-interest dividends will be included in New York adjusted
gross income as ordinary income. Distributions to individual shareholders of
dividends derived from interest that does not qualify as exempt-interest divi-
dends (as determined for federal income tax purposes), distributions of ex-
empt-interest dividends (as determined for federal income tax purposes) which
are derived from interest on municipal obligations issued by governmental au-
thorities in states other than New York State, and distributions derived from
interest earned on federal obligations will be included in their New York ad-
justed gross income as ordinary income.
Distributions to individual shareholders of capital gain dividends (as deter-
mined for federal income tax purposes) will be included in their New York ad-
justed gross income as capital gains. Distributions to individual shareholders
of the New York Fund of dividends derived from any net income received from
taxable temporary investments and any net realized short-term capital gains
will be included in their New York adjusted gross income as ordinary income.
Present New York law taxes long-term capital gains at the rates applicable to
ordinary income.
Gain or loss, if any, resulting from an exchange or redemption of shares of
the New York Fund that is recognized by individual shareholders of the New
York Fund for federal income tax purposes will be recognized for purposes of
New York State and/or New York City personal income taxation.
Generally, corporate shareholders which are subject to New York State fran-
chise taxation (or New York City general corporation taxation) will be taxed
upon their entire net income, business and investment capital, or at a flat
rate minimum tax. Entire net income will include dividends received from the
Fund, as well as any gain or loss recognized from an exchange or redemption of
Fund shares that is recognized for federal income tax purposes. Investment
capital will include the corporate shareholder's shares of the Fund.
Fund shares will be exempt from local property taxes in New York State and New
York City, but will be includible in the New York gross estate of a deceased
individual holder who is a resident of New York for purposes of the New York
Estate Tax.
The foregoing is a general and abbreviated summary of some of the important
state tax provisions of designated states presently in effect as they directly
govern the taxation of the Funds or their shareholders. The foregoing state
tax information assumes that each Fund qualifies as a regulated investment
company for federal income tax purposes under subchapter M of the Code, and
that the amounts so designated by each Fund to its shareholders qualify as
"exempt-interest dividends" under Section 852(b)(5) of the Code. These state
provisions are subject to change by legislative or administrative action, and
any such change may be retroactive with respect to transactions of the Funds.
Shareholders of the Funds are advised to consult their own tax advisers in
that regard.
PERFORMANCE INFORMATION
The historical performance of the Fund may be expressed in terms of "yield,"
"effective yield" or "taxable equivalent yield." The "yield " of the Fund re-
fers to the rate of income generated by an investment in the series over a
specified seven-day period, expressed as an annualized figure. "Effective
S-29
<PAGE>
yield" is calculated similarly except that, when annualized, the income earned
by the investment is assumed to be reinvested. Due to this compounding effect,
the effective yield will be slightly higher than the yield. "Taxable equivalent
yield" is the yield that a taxable investment would need to generate in order
to equal the series' yield on an after-tax basis for an investor in a stated
bracket) often the bracket with the highest marginal tax rate). A taxable
equivalent yield quotation for a given series will be higher than the yield or
the effective yield quotation for the series. The yield figures will fluctuate
over time. A comparison of tax-exempt and taxable equivalent yields is one ele-
ment to consider in making an investment decision. The Fund may from time to
time in its advertising and sales materials compare the then current yield as
of the most recent quarter of the Fund with the yield on taxable investments
such as corporate or U.S. Government bonds, bank CDs and money market accounts
or money market funds, each of which has investment characteristics that may
differ from those of the Fund. U.S. Government bonds, for example, are backed
by the full faith and credit of the U.S. Government and bank CDs and money mar-
ket accounts are insured by an agency of the federal government. Bank money
market accounts and money market funds provide stability of principal, but pay
interest at rates that vary with the condition of the short-term taxable debt
market. The investment characteristics of the Fund are described more fully
elsewhere in this Prospectus.
Any given performance quotation or performance comparison for the fund is based
on historical earnings and should not be considered as representative of the
performance of the fund for any future period.
Yield is computed in accordance with a standard method prescribed by rules of
the Securities and Exchange Commission. Under that method, current yield is
based on a seven-day period and is computed as follows: the series' net invest-
ment income per share for the period is divided by the price per share (ex-
pected to remain constant at $1.00) at the beginning of the period, the result
(the "base period return") is divided by seven and multiplied by 365, and the
resulting figure is carried to the nearest hundredth of one percent. For the
purpose of this calculation, the series' net investment income per share in-
cludes its accrued interest income plus or minus amortized purchase discount or
premium less accrued expenses, but does not include realized capital gains or
losses or unrealized appreciation or depreciation of investments.
Effective yield is calculated by taking the base period return (computed as de-
scribed above) and calculating the effect of assumed compounding. The formula
for effective yield is: (base period return +1) 365/7 -1. Based on the seven-
day period ended February 29, 2000, the yield and effective yield was 2.99% and
3.04%, respectively.
Taxable equivalent yield is computed by dividing that portion of the fund's
yield which is tax-exempt by 1 minus the stated combined federal and state in-
come tax rate and adding the result to that portion, if any, of the yield of
the fund that is not tax-exempt. Based upon (1) a combined 2000 federal and New
York income tax of 43.5%, and (2) the yield for the fund as described above for
the seven-day period ended February 29, 2000, the taxable equivalent yield for
the fund for that period was 5.29%.
The Fund's yield will fluctuate, and the publication of annualized yield quota-
tions is not a representation of what an investment in the Fund will actually
yield for any given future period. Actual yields will depend not only on
changes in interest rates on money market instruments during the period in
question, but also on such matters as the Fund's expenses.
S-30
<PAGE>
In reports or other communications to shareholders or in advertising and sales
literature, the fund may compare its performance to that of other money market
mutual funds tracked by Lipper Analytical Services, Inc. ("Lipper"), by
Donoghue's Money fund Report ("Donoghue's") or similar services or by financial
publications such as Barron's, Changing Times, Forbes and Money Magazine. Per-
formance comparisons by these indexes, services or publications may rank mutual
funds over different periods of time by means of aggregate, average, year-by-
year or other types of performance figures. Lipper performance calculations in-
clude the reinvestment of all capital gain and income dividends for the periods
covered by the calculations. As reported by Donoghue's all investment results
represent total return (annualized results for the period net of management
fees and expenses) and one year investment results are effective annual yields
assuming reinvestment of dividends.
A comparison of tax-exempt and taxable equivalent yields is one element to con-
sider in making an investment decision. The Fund may from time to time in its
advertising and sales materials compare its then current yields as of a recent
date with the yields on taxable investments such as corporate or U.S. Govern-
ment bonds and bank CDs or money market accounts, each of which has investment
characteristics that may differ from those of the Fund. U.S. Government bonds,
for example, are backed by the full faith and credit of the U.S. Government,
and bank CDs and money market accounts are generally shorter term investments
insured by an agency of the federal government. Bank money market accounts and
money market funds provide stability of principal but pay interest at rates
which vary with the condition of the short-time taxable debt market.
The following tables show the effects for individuals of federal income taxes
on the amount that those subject to a given tax rate would have to put into a
tax-free investment in order to generate the same after-tax income as a taxable
investment.*
Read down to find the amount of a tax-free investment at the specified rate
that would provide the same after-tax income as a $50,000 taxable invest-
ment at the stated taxable rate.
<TABLE>
<CAPTION>
2.50% 3.00% 3.50% 4.00% 4.50% 5.00%
2.00% Tax- Tax- Tax- Tax- Tax- Tax-
Taxable Tax-Free Free Free Free Free Free Free
---------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
3.00% $ 51,750 $41,400 $34,500 $29,571 $25,875 $23,000 $20,700
---------------------------------------------------------------------
4.00% $ 69,000 $55,200 $46,000 $39,429 $34,500 $30,667 $27,600
---------------------------------------------------------------------
5.00% $ 86,250 $69,000 $57,500 $49,286 $43,125 $38,333 $34,500
---------------------------------------------------------------------
6.00% $103,500 $82,800 $69,000 $59,143 $51,750 $46,000 $41,400
---------------------------------------------------------------------
7.00% $120,750 $96,600 $80,500 $69,000 $60,375 $53,667 $48,300
---------------------------------------------------------------------
</TABLE>
*The dollar amounts in the table reflect a 31% federal income tax rate.
This table is for illustrative purposes only and is not intended to predict the
actual return you might earn on your investment. The Fund occasionally may ad-
vertise its performance in similar tables using a different current tax rate
than that shown here. The tax rate shown here may be higher or lower than your
actual tax rate; a higher tax rate would tend to make the dollar amounts in the
table lower, while a lower tax rate would make the amounts higher. You should
consult your tax adviser to determine your actual tax rate.
S-31
<PAGE>
Taxable Equivalent Yield Tables
The following tables show the combined effects for individuals of federal,
state and local income taxes on:
. what you would have to earn on a taxable investment to equal a given tax-
free yield; and
. the amount that those subject to a given combined tax rate would have to put
into a tax-free investment in order to generate the same after-tax income as
a taxable investment.
These tables are for illustrative purposes only and are not intended to predict
the actual return you might earn on a Fund investment. The Fund occasionally
may advertise their performance in similar tables using other current combined
tax rates than those shown here. The combined tax rates used in these tables
have been rounded to the nearest one-half of one percent. They are based upon
published 2000 marginal federal tax rates and marginal state tax rates cur-
rently available and scheduled to be in effect, and do not take into account
changes in tax rates that are proposed from time to time. A taxpayer's marginal
tax rate is affected by both his taxable income and his adjusted gross income.
The table assumes that federal taxable income is equal to state income subject
to tax, and for cases in which more than one state rate falls within a federal
bracket, the highest state rate corresponding to the highest income within that
federal bracket is used. The tables assume taxpayers are not subject to any al-
ternative minimum taxes and deduct any state income taxes paid on their federal
income tax returns. Unless noted otherwise, the tables do not reflect any local
taxes or any taxes other than personal income taxes. They also reflect the ef-
fect of the current federal tax limitations on itemized deductions and personal
exemptions, which were designed to phase out certain benefits of these deduc-
tions for higher income taxpayers. These limitations are subject to certain
maximums, which depend on the number of exemptions claimed and the total amount
of the taxpayer's itemized deductions. For example, the limitation on itemized
deductions will not cause a taxpayer to lose more than 80% of his allowable
itemized deductions with certain exceptions. The combined tax rates shown here
may be higher or lower than your actual combined tax rate.
Combined federal and New York state marginal tax rates for joint taxpayers with
four personal exemptions
<TABLE>
<CAPTION>
Federal Combined Tax-Free Yield
Federal Adjusted State and 2.00% 2.50% 3.00% 3.50% 4.00% 4.50% 5.00%
Taxable Gross Federal ---- ---- ---- ---- ---- ---- ----
Income Income Tax Rate** Taxable Equivalent Yield
-----------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
$ 0- 43,850 $ 0-100,000 21.0% 2.53 3.16 3.80 4.43 5.06 5.70 6.33
100,000-128,950 22.0 2.56 3.21 3.85 4.49 5.13 5.77 6.41
43,850-105,950 0-100,000 33.0 2.99 3.73 4.48 5.22 5.97 6.72 7.46
100,000-128,950 34.0 3.03 3.79 4.55 5.30 6.06 6.82 7.58
128,950-150,000 35.0 3.08 3.85 4.62 5.38 6.15 6.92 7.69
150,000-193,400 34.0 3.03 3.79 4.55 5.30 6.06 6.82 7.58
105,950-161,450 0-100,000 35.5 3.10 3.88 4.65 5.43 6.20 6.98 7.75
100,000-128,950 37.0 3.17 3.97 4.76 5.56 6.35 7.14 7.94
128,950-150,000 38.0 3.23 4.03 4.84 5.65 6.45 7.26 8.06
150,000-193,400 36.5 3.15 3.94 4.72 5.51 6.30 7.09 7.87
193,400-315,900 39.5 3.31 4.13 4.96 5.79 6.61 7.44 8.26
161,450-288,350 128,950-150,000 42.5 3.48 4.35 5.22 6.09 6.96 7.83 8.70
150,000-193,400 41.5 3.42 4.27 5.13 5.98 6.84 7.69 8.55
193,400-315,900 44.5 3.60 4.50 5.41 6.31 7.21 8.11 9.01
Over 315,900 41.5 3.42 4.27 5.13 5.98 6.84 7.69 8.55
Over 288,350 193,400-315,900 48.5 3.88 4.85 5.83 6.80 7.77 8.74 9.71
Over 315,900 45.0 3.64 4.55 5.45 6.36 7.27 8.18 9.09
-----------------------------------------------------------------------------------------
</TABLE>
S-32
<PAGE>
Combined federal and New York state marginal tax rates for single taxpayers
with one personal exemption
<TABLE>
<CAPTION>
Federal
Federal Adjusted Combined Tax-Free Yield
Taxable Gross State and 2.00% 2.50% 3.00% 3.50% 4.00% 4.50% 5.00%
Income Income Federal ---- ---- ---- ---- ---- ---- ----
(1,000's) (1,000's) Tax Rate** Taxable Equivalent Yield
-----------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
$ 0-26,250 $ 0-100,000 21.0% 2.53 3.16 3.80 4.43 5.06 5.70 6.33
100,000-128,950 21.5 2.55 3.18 3.82 4.46 5.10 5.73 6.37
26,250-63,550 0-100,000 33.0 2.99 3.73 4.48 5.22 5.97 6.72 7.46
100,000-128,950 33.5 3.01 3.76 4.51 5.26 6.02 6.77 7.52
63,550-132,600 0-100,000 33.5 3.10 3.88 4.65 5.43 6.20 6.98 7.75
100,000-128,950 36.5 3.15 3.94 4.72 5.51 6.30 7.09 7.87
128,950-150,000 38.0 3.23 4.03 4.84 5.65 6.45 7.26 8.06
150,000-251,450 37.5 3.20 4.00 4.80 5.60 6.40 7.20 8.00
132,600-288,350 128-950-150,000 43.0 3.51 4.39 5.26 6.14 7.02 7.89 8.77
150,000-251,450 42.5 3.48 4.35 5.22 6.09 6.96 7.83 8.70
Over 251,450 41.5 3.42 4.27 5.13 5.98 6.84 7.69 8.55
Over 288,350 Over 251,450 45.0 3.64 4.55 5.45 6.36 7.27 8.18 9.09
-----------------------------------------------------------------------------------------
</TABLE>
** The table reflects the New York State supplemental income tax based upon a
taxpayer's New York State taxable income and New York State adjusted gross
income. This supplemental tax results in an increased marginal state income
tax rate to the extent a taxpayer's New York State adjusted gross income
ranges between $100,000 and $150,000. Although the table does reflect the ef-
fect of the state limitation on itemized deductions that corresponds to the
federal limitation, it does not reflect additional limitations under which a
New York taxpayer could lose up to an additional 50 percent of his otherwise
allowable itemized deductions, because the effect of this limitation varies
according to the particular amount of his itemized deductions. The applica-
tion of this limit may result in a higher tax rate than indicated in the ta-
ble for joint taxpayers with a New York adjusted gross income of $200,000 to
$250,000 or $475,000 to $525,000 or single taxpayers with a New York adjusted
gross income of $100,000 to $150,000 or $475,000 to $525,000. The table as-
sumes that a taxpayer's New York adjusted gross income equals his federal ad-
justed gross income. The table does not reflect the treatment of various
state and city tax credits that could affect the tax rate of particular New
York taxpayers.
S-33
<PAGE>
Combined federal, New York state and New York City marginal tax rates for joint
taxpayers with four personal exemptions
<TABLE>
<CAPTION>
Federal Combined Tax-Free Yield
Federal Adjusted State and 2.00% 2.50% 3.00% 3.50% 4.00% 4.50% 5.00%
Taxable Gross Federal ---- ---- ---- ---- ---- ---- -----
Income Income Tax Rate** Taxable Equivalent Yield
-----------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
$ 0-
43,850 $ 0-100,000 24.0% 2.63 3.29 3.95 4.61 5.26 5.92 6.58
100,000-128,950 25.5 2.68 3.36 4.03 4.70 5.37 6.04 6.71
43,850-
105,950 0-100,000 35.5 3.10 3.88 4.65 5.43 6.20 6.98 7.75
100,000-128,950 37.0 3.17 3.97 4.76 5.56 6.35 7.14 7.94
128,950-150,000 38.0 3.23 4.03 4.84 5.65 6.45 7.26 8.06
150,000-193,400 36.5 3.15 3.94 4.72 5.51 6.30 7.09 7.87
105,950-
161,450 0-100,000 38.5 3.25 4.07 4.88 5.69 6.50 7.32 8.13
100,000-128,950 39.5 3.31 4.13 4.96 5.79 6.61 7.44 8.26
128,950-150,000 40.5 3.36 4.20 5.04 5.88 6.72 7.56 8.40
150,000-193,400 39.5 3.31 4.13 4.96 5.79 6.61 7.44 8.26
193,400-315,900 42.0 3.45 4.31 5.17 6.03 6.90 7.76 8.62
161,450-
288,350 128,950-150,000 45.0 3.64 4.55 5.45 6.36 7.27 8.18 9.09
150,000-193,400 44.0 3.57 4.46 5.36 6.25 7.14 8.04 8.93
193,400-315,900 47.0 3.77 4.72 5.66 6.60 7.55 8.49 9.43
Over 315,900 44.0 3.57 4.46 5.36 6.25 7.14 8.04 8.93
Over
288,350 193,400-315,900 50.5 4.04 5.05 6.06 7.07 8.08 9.09 10.10
Over 315,900 47.5 3.81 4.76 5.71 6.67 7.62 8.57 9.52
-----------------------------------------------------------------------------------
</TABLE>
Combined federal, New York state and New York City marginal tax rates for sin-
gle taxpayers with one personal exemption
<TABLE>
<CAPTION>
Federal Combined Tax-Free Yield
Federal Adjusted State and 2.00% 2.50% 3.00% 3.50% 4.00% 4.50% 5.00%
Taxable Gross Federal ---- ---- ---- ---- ---- ---- ----
Income Income Tax Rate** Taxable Equivalent Yield
-----------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
$ 0- 26,250 $ 0-100,000 24.0% 2.63 3.29 3.95 4.61 5.26 5.92 6.58
100,000-128,950 24.5 2.65 3.31 3.97 4.64 5.30 5.96 6.62
26,250- 63,550 0-100,000 35.5 3.10 3.88 4.65 5.43 6.20 6.98 7.75
100,000-128,950 36.0 3.13 3.91 4.69 5.47 6.25 7.03 7.81
63,550-132,600 0-100,000 38.5 3.25 4.07 4.88 5.69 6.50 7.32 8.13
100,000-128,950 39.0 3.28 4.10 4.92 5.74 6.56 7.38 8.20
128,950-150,000 40.5 3.36 4.20 5.04 5.88 6.72 7.56 8.40
150,000-251,450 40.0 3.33 4.17 5.00 5.83 6.67 7.50 8.33
132,600-288,350 128,950-150,000 45.0 3.64 4.55 5.45 6.36 7.27 8.18 9.09
150,000-251,450 44.5 3.60 4.50 5.41 6.31 7.21 8.11 9.01
Over 251,450 44.0 3.57 4.46 5.36 6.25 7.14 8.04 8.93
Over 288,350 Over 251,450 47.5 3.81 4.76 5.71 6.67 7.62 8.57 9.52
-----------------------------------------------------------------------------------------
</TABLE>
S-34
<PAGE>
<TABLE>
<CAPTION>
For an after-tax return
equal to that provided by Your tax-free investment may be less*
a 2.0% 2.5% 3.0% 3.5% 4.0% 4.5% 5.0%
---------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
$50,000 in a 3% taxable
investment $ 48,000 $38,400 $32,000 $27,429 $24,000 $21,333 $19,200
$50,000 in a 4% taxable
investment 64,000 51,200 42,667 36,571 32,000 28,444 25,600
$50,000 in a 5% taxable
investment 80,000 64,000 53,333 45,714 40,000 35,556 32,000
$50,000 in a 6% taxable
investment 96,000 76,800 64,000 54,857 48,000 42,667 38,400
$50,000 in a 7% taxable
investment 112,000 89,600 74,667 64,000 56,000 49,778 44,800
---------------------------------------------------------------------------------------------
</TABLE>
*The dollar amounts in the table reflect a 36.0% combined federal and state tax
rate.
For example, $50,000 in a 5% taxable investment earns the same after-tax return
as $45,714 in a 3.5% tax-free Nuveen investment.
ADDITIONAL INFORMATION ABOUT PURCHASES AND SALES
Exchange Privileges
You may exchange shares of the Fund for the appropriate class of shares of any
other open-end management investment company with reciprocal exchange privi-
leges advised by Nuveen Advisory or Nuveen Institutional Advisory (the "Nuveen
Funds"), into an identically registered account, provided that the Nuveen Fund
into which shares are to be exchanged is offered in the shareholder's state of
residence and that the shares to be exchanged have been held by the shareholder
for a period of at least 15 days. You may exchange Fund shares by calling (800)
257-8787 or by mailing your written request to our Transfer Agent. Shares of
Nuveen Funds purchased subject to a front-end sales charge may be exchanged for
shares of the Fund or any other Nuveen Fund at the next determined net asset
value without any front-end sales charge. No CDSC otherwise applicable will be
assessed on an exchange, and the holding period of your investment will be car-
ried over to the new fund for purposes of determining any future CDSC. You may
exchange Class B shares for shares of a Nuveen money market fund. Shares of any
Nuveen Fund purchased through dividend reinvestment or through reinvestment of
Nuveen Defined Portfolio distributions (and any dividends thereon) may be ex-
changed for Class A shares of any Nuveen Fund without a front-end sales charge.
Exchanges of shares with respect to which no front-end sales charge has been
paid will be made at the public offering price, which may include a front-end
sales charge, unless a front-end sales charge has previously been paid on the
investment represented by the exchanged shares (i.e., the shares to be ex-
changed were originally issued in exchange for shares on which a front-end
sales charge was paid), in which case the exchange will be made at net asset
value. Because certain other Nuveen Funds may determine net asset value and
therefore honor purchase or redemption requests on days when the Fund does not
(generally, Martin Luther King's Birthday, Columbus Day and Veterans Day), ex-
changes of shares of one of those funds for shares of the fund may not be ef-
fected on such days.
The total value of shares being exchanged must at least equal the minimum in-
vestment requirement of the Nuveen Fund into which they are being exchanged.
Exchanges are made based on the relative dollar values of the shares involved
in the exchange, and will be effected by redemption of shares of the Nuveen
Fund held and purchase of the shares of the other Nuveen Fund. For federal in-
come tax purposes, any such exchange constitutes a sale and purchase of shares
and may result in capital gain or loss. Before exercising any exchange, you
should obtain the Prospectus for the Nuveen Fund into which shares are to be
exchanged and read it carefully. If the registration of the account for the
Fund you are purchasing is not exactly the same as that of the Fund account
from which the exchange is made, written instructions from all holders of the
account from which the exchange is being made must be received, with signatures
guaranteed by a member of an approved Medallion Guarantee Program or in such
other manner as may be acceptable to the Fund. The exchange privilege may be
modified or
S-35
<PAGE>
discontinued at any time. If you do not wish to have telephone exchange privi-
leges, you must indicate this in the "Telephone Services" section of your Ac-
count Application or otherwise notify the Fund in writing of your desire.
Additional Information
An account will be maintained for each shareholder of record in the Fund by our
Transfer Agent. Share certificates will be issued only upon written request of
the shareholder to our Transfer Agent. No certificates are issued for frac-
tional shares. The Fund reserves the right to reject any purchase order and to
waive or increase minimum investment requirements.
Confirmations of each purchase and redemption order as well as monthly state-
ments are sent to every shareholder. Master accounts also receive a monthly
summary report setting forth the share balance and dividends earned for the
month for each sub-account established under that master account.
A change in registration or transfer of shares held in the name of a
broker/dealer can only be effected by an order in good form from the
broker/dealer acting on behalf of the investor. Broker/dealers are encouraged
to open single master accounts. However, some broker/dealers may wish to use
our Transfer Agent's sub-accounting system to minimize their internal record-
keeping requirements. A broker/dealer or other investor requesting shareholder
servicing or accounting other than the master account or subaccounting service
offered by the Fund will be required to enter into a separate agreement with
the agent for these services for a fee to be determined in accordance with the
level of services to be furnished.
Banks and other organizations through which investors may purchase shares of
the Fund may impose charges in connection with purchase orders. Investors
should contact their institutions directly to determine what charges, if any,
may be imposed.
A fee of 1% of the current market value of any shares represented by a certifi-
cate will be charged if the certificate is lost, stolen, or destroyed. The fee
is paid to Seaboard Surety Company for issuance of the lost, stolen, or de-
stroyed certificate.
Subject to the rules of the SEC, the Fund reserves the right to suspend the
continuous offering of the shares at any time, but such suspension shall not
affect the shareholder's right of redemption as described below. The Fund also
reserves the right to reject any purchase order and to waive or increase mini-
mum investment requirements.
Telephone Redemption via Fund Directsm
To redeem shares held in non-certificate form by telephone with the redemption
proceeds paid via Fund Direct-Electronic Funds Transfer, you must complete the
Telephone Services section of the enclosed Application Form and return it to
Nuveen or our Transfer Agent. If you did not authorize Telephone Redemption via
Fund Direct when you opened your account, you may do so by sending a written
request to the Fund signed by each account owner with signatures guaranteed by
a member of an approved Medallion Guarantee Program or in such other manner as
may be acceptable to the Fund.
S-36
<PAGE>
Proceeds of share redemptions made by Fund Direct will be transferred only to
the commercial bank account specified by the shareholder. Redemption proceeds
may be delayed one additional business day if the Federal Reserve Bank of Bos-
ton or the Federal Reserve Bank of New York is closed on the day the redemption
proceeds would ordinarily be wired.
You may make Fund Direct redemption requests by calling Nuveen at (800) 257-
8787. If a telephone redemption request is received prior to 4:00 p.m. Eastern
Time, the shares to be redeemed earn income on the day the request is made, and
the redemption is effected on the following business day. For redemption re-
quests received after 4:00 p.m. Eastern Time, the shares to be redeemed earn
income through the following business day, and the redemption is effected on
the second business day following the request. For all redemptions, you will
typically receive your Funds within three business days after your redemption
is effected.
How to Change Authorized Redemption Instructions
In order to establish multiple accounts, or to change the account or accounts
designated to receive redemption proceeds, a written request specifying the
change must be sent to Nuveen. This request must be signed by each account
owner with signatures guaranteed by a member of an approved Medallion Guarantee
Program or in such other manner as may be acceptable to the fund. Further docu-
mentation may be required from corporations, executors, trustees or personal
representatives.
The Fund reserves the right to refuse a telephone redemption and, at its op-
tion, may limit the timing, amount or frequency of these redemptions. This pro-
cedure may be modified or terminated at any time, on 30 days' notice, by the
Fund. The Fund, the transfer agent and Nuveen will not be liable for following
telephone instructions reasonably believed to be genuine.
Redemption in Kind
The Fund has committed to pay in cash all redemption requests made by each
shareholder during any 90 day period up to the lesser of $250,000 or 1% of the
net asset value of the fund at the beginning of such period. This commitment is
irrevocable without the prior approval of the SEC and is a fundamental policy
of the Fund which may not be changed without shareholder approval. In the case
of redemption requests in excess of such amounts, the Board of Trustees re-
serves the right to have the Fund make payment in whole or in part in securi-
ties or other assets of the Fund in case of an emergency or any time a cash
distribution would impair the liquidity of the Fund to the detriment of the ex-
isting shareholders. In this event, the securities would be valued in the same
manner as the portfolio of the Fund is valued. If the recipient were to sell
such securities, he or she would incur brokerage charges.
Other Practices
The Fund may encourage registered representatives and their firms to help ap-
portion their assets among bonds, stock and cash, and may seek to participate
in programs that recommend a portion of their assets be invested in money mar-
ket instruments.
S-37
<PAGE>
The Fund may suspend the right of redemption or delay payment more than seven
days (a) during any period when the New York Stock Exchange is closed (other
than customary weekend and holiday closings), (b) when trading in the markets
the Fund normally utilizes is restricted, or an emergency exists as determined
by the SEC so that disposal of the Fund's investments or determination of its
net asset value is not reasonably practicable, or (c) for such other periods as
the SEC by order may permit for protection of the shareholders of the Fund.
The Fund has authorized certain brokers and firms to accept purchase and re-
demption orders on its behalf. The Fund will consider an order to be "received"
when such a broker or firm accepts the order from its customer.
In addition to the types of compensation to dealers to promote sales of Fund
shares that are described in the prospectus, Nuveen may from time to time make
additional reallowances only to certain authorized dealers who sell or are ex-
pected to sell certain minimum amounts of shares of the Nuveen Mutual Funds
during specified time periods.
SERVICE PLAN
The Fund has adopted a Service Plan Pursuant to Rule 12b-1 under the 1940 Act.
The Plan was adopted by the Board of Trustees, including a majority of direc-
tors who are not interested persons and who have no direct or indirect finan-
cial interest in the Plan, and approved by shareholders.
Under the Plan, the Fund pays an annual fee of .25% of the average daily net
assets of serviced accounts to reimburse Nuveen for compensating authorized
dealers, including Nuveen, for providing ongoing services to shareholders. Such
services generally include establishing and maintaining shareholder accounts,
processing purchase and redemption orders, arranging for bank wires and answer-
ing shareholder inquiries. Under the Plan, the Fund pays the entire amount of
the fees. Nuveen may, in its discretion and from its own resources, pay certain
firms additional amounts for services rendered to shareholders.
Under the Plan, the Controller of the Fund will report quarterly to the Board
of Trustees for its review amounts expended for services rendered under the
Plan. The Plan may be terminated at any time, without the payment of any penal-
ty, by a vote of a majority of the trustees who are not "interested persons"
and who have no direct or indirect financial interest in the Plan or by vote of
a majority of the outstanding voting securities of the applicable series of
each Fund. The Plan may be renewed from year to year if approved by a vote of
the Board of Trustees and a vote of the non-interested trustees who have no di-
rect or indirect financial interest in the Plan cast in person at a meeting
called for the purpose of voting on the Plan. The Plan may be continued only if
the trustees who vote to approve such continuance conclude, in the exercise of
reasonable business judgment and in light of their fiduciary duties under ap-
plicable law, that there is a reasonable likelihood that the Plan will benefit
the Fund and its shareholders. The Plan is intended to benefit the Fund by pro-
moting the sale of Fund shares, which in turn leads to economies of scale and
helps assure the continued viability of the Fund. The Plan may not be amended
to increase materially the cost which the Fund may bear under the Plan without
the approval of the shareholders. Any other material amendments of the Plan
must be approved by the non-
S-38
<PAGE>
interested trustees by a vote cast in person at a meeting called for the pur-
pose of considering such amendments. During the continuance of the Plan, the
selection and nomination of the non-interested trustees of the Fund will be
committed to the discretion of the non-interested trustees then in office.
Nuveen's compensation under the Plan is not based on Nuveen's expense incurred
in providing services to shareholders.
No trustee nor any interested person of the Fund has any direct or indirect fi-
nancial interest in the Plan or any agreement related to the Plan.
For the fiscal year ended February 29, 2000, the Fund, and its predecessor,
paid 12b-1 fees in the amount of $58,581.
OTHER INFORMATION REGARDING SHARES OF THE FUND
Shareholders should note that when a Fund dividend check has been returned to
the sender by the post office after repeated mailings, the shareholder account
will thereafter be registered for automatic reinvestment of dividends and thus
the dividend check and future dividend checks will be reinvested in additional
Fund shares. Shareholders are reminded that they need to advise the Fund
promptly in writing of any change in address.
The Glass-Steagall Act and other applicable laws, among other things, may limit
banks from engaging in the business of underwriting, selling or distributing
securities. Since the only functions of banks who may be engaged as financial
service firms is to perform administrative shareholder servicing functions, the
Fund believes that such laws should not preclude a bank from performing share-
holder services. However, future changes in either federal or state statutes or
regulations relating to the permissible activities of banks and their subsidi-
aries or affiliates, as well as judicial or administrative decisions or inter-
pretations of statutes or regulations, could prevent a bank from continuing to
perform all or a part of its shareholder servicing activities. If a bank were
prohibited from providing services to shareholders, its shareholder customers
would be permitted to remain shareholders and alternative means for continuing
the servicing of such shareholders would be sought.
Nuveen serves as the principal underwriter of the shares of the Fund pursuant
to a "best efforts" arrangement as provided by a distribution agreement with
the Fund, dated February 1, 1999 ("Distribution Agreement"). Pursuant to the
Distribution Agreement, the Fund appointed Nuveen to be its agent for the dis-
tribution of the Fund's shares on a continuous offering basis. Nuveen sells
shares to or through brokers, dealers, banks or other qualified financial in-
termediaries (collectively referred to as "Dealers"), or others, in a manner
consistent with the Fund's then effective registration statement. Pursuant to
the Distribution Agreement, Nuveen, at its own expense, finances certain activ-
ities incident to the sale and distribution of the Fund's shares, including
printing and distributing of prospectuses and statements of additional informa-
tion to other than existing shareholders, the printing and distributing of
sales literature, advertising and payment of compensation and giving of conces-
sions to dealers. Expenses incurred in registering the Fund and its shares un-
der federal and state securities laws are paid by the Fund.
S-39
<PAGE>
FINANCIAL STATEMENTS
The audited financial statements for the Fund's most recent fiscal year appear
in the Fund's Annual Report. The Annual Report accompanies this Statement of
Additional Information.
S-40
<PAGE>
Statement of Additional Information
June 28, 2000
Nuveen Money Market Trust
333 West Wacker Drive
Chicago, Illinois 60606
Nuveen Money Market Trust
NUVEEN INSTITUTIONAL TAX-EXEMPT MONEY MARKET FUND
This Statement of Additional Information is not a prospectus. This Statement of
Additional Information should be read in conjunction with the Prospectus of the
Nuveen Institutional Tax-Exempt Money Market Fund dated June 28, 2000. The Pro-
spectus may be obtained without charge from certain securities representatives,
banks, and other financial institutions that have entered into sales agreements
with John Nuveen & Co. Incorporated, or from the Fund by mailing a written re-
quest to the Fund, c/o. John Nuveen & Co. Incorporated ("Nuveen"), 333 West
Wacker Drive, Chicago, Illinois 60606 or by calling (800) 257-8787.
<TABLE>
<S> <C>
Table of Contents Page
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Investment Policies and Investment Portfolio S-2
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Management S-11
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Investment Adviser and Investment Management Agreement S-16
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Portfolio Transactions S-17
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Net Asset Value S-18
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Tax Matters S-20
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Performance Information S-23
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Additional Information About Purchases and Sales S-25
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Other Information Regarding Shares of the Fund S-27
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Financial Statements S-28
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</TABLE>
Investment Adviser Independent Public
Principal Underwriter Nuveen Advisory Corp., Accountants
John Nuveen & Co. Subsidiary of for the Fund
Incorporated John Nuveen & Co. Arthur Andersen LLP
Incorporated 33 West Monroe Street
Chicago: 333 West Wacker Drive Chicago, Illinois 60603
333 West Wacker Drive Chicago, Illinois 60606
Chicago, Illinois 60606 Transfer and Dividend
(312) 917-7700 Custodian Disbursing Agent Chase
Global Funds Services
Company
The Chase Manhattan Bank
New York: 4 New York Plaza
10 East 50th Street New York, New York 10004 P.O. Box 5186
New York, New York 10022 New York, New York 10274
(212) 207-2000
The audited financial statements for the Fund's most recent fiscal year appear
in the Fund's Annual Report. The Annual Report accompanies this Statement of
Additional Information.
<PAGE>
INVESTMENT POLICIES AND INVESTMENT PORTFOLIO
Fundamental Policies
The Fund's investment objective and certain fundamental policies are described
in the Prospectus. The Fund, as a fundamental policy, may not:
(1) Invest in securities other than Municipal Obligations and temporary in-
vestments as those terms are defined in the Prospectus. Municipal Obligations
are municipal bonds that pay interest that is exempt from regular federal, and
in some cases state and local income taxes;
(2) Invest more than 5% of its total assets in securities of any one issuer,
excluding the United States government, its agencies and instrumentalities;
(3) Borrow money, except from banks for temporary or emergency purposes and
not for investment purposes and then only in an amount not exceeding (a) 10%
of the value of the Fund's total assets at the time of borrowing or (b) one-
third of the value of the Fund's total assets including the amount borrowed in
order to meet redemption requests which might otherwise require the untimely
disposition of securities. While any such borrowings are outstanding, no net
purchases of investment securities will be made by the Fund. If due to market
fluctuations or other reasons the value of the Fund's assets falls below 300%
of its borrowings, the Fund will reduce its borrowings within 3 business days.
To do this, the Fund may have to sell a portion of its investments at a time
when it may be disadvantageous to do so;
(4) Pledge, mortgage or hypothecate its assets, except that, to secure
borrowings permitted by subparagraph (3) above, it may pledge securities hav-
ing a market value at the time of pledge not exceeding 10% of the value of the
Fund's total assets;
(5) Issue senior securities as defined in the Investment Company Act of 1940
except to the extent such issuance might be involved with respect to
borrowings described under item (3) above;
(6) Underwrite any issue of securities, except to the extent that the purchase
of Municipal Obligations in accordance with the Fund's investment objective,
policies, and limitations, may be deemed to be an underwriting;
(7) Purchase or sell real estate, but this shall not prevent the Fund from in-
vesting in Municipal Obligations secured by real estate or interests therein;
(8) Purchase or sell commodities or commodities contracts or oil, gas or other
mineral exploration or development programs;
(9) Make loans, other than by entering into repurchase agreements and through
the purchase of Municipal Obligations or temporary investments in accordance
with its investment objective, policies and limitations;
(10) Make short sales of securities or purchase any securities on margin, ex-
cept for such short term credits as are necessary for the clearance of trans-
actions;
S-2
<PAGE>
(11) Invest more than 25% of its assets in the securities of issuers in any
single industry; provided, however, that such limitations shall not be applica-
ble to the purchase of Municipal Obligations and obligations issued or guaran-
teed by the U.S. government, its agencies or instrumentalities;
For the purpose of applying the limitations set forth in paragraph (2) above,
an issuer shall be deemed a separate issuer when its assets and revenues are
separate from other governmental entities and its securities are backed only by
its assets and revenues. Similarly, in the case of a non-governmental user,
such as an industrial corporation or a privately owned or operated hospital, if
the security is backed only by the assets and revenues of the non-governmental
user then such non-governmental user would be deemed to be the sole issuer.
Where a security is also backed by the enforceable obligations of a superior or
unrelated governmental entity or other entity it shall be included in the com-
putation of securities owned that are issued by such governmental entity or
other entity.
Where a security is guaranteed by a governmental entity or some other facility,
such as a bank guarantee or letter of credit, such a guarantee or letter of
credit would be considered a separate security and would be treated as an issue
of such government, other entity or bank. Where a security is insured by bond
insurance, it shall not be considered a security issued or guaranteed by the
insurer; instead the issuer of such security will be determined in accordance
with the principles set forth above. The foregoing restrictions do not limit
the percentage of the Fund's assets that may be invested in securities insured
by any single insurer. It is a fundamental policy of the Fund, which cannot be
changed without the approval of the holders of a majority of shares of such
Fund, that the Fund will not hold securities of a single bank, including secu-
rities backed by a letter of credit of such bank, if such holdings would exceed
10% of the total assets of the Fund.
The foregoing restrictions and limitations, as well as the Fund's policies as
to ratings of fund investments, will apply only at the time of purchase of se-
curities, and the percentage limitations will not be considered violated unless
an excess or deficiency occurs or exists immediately after and as a result of
an acquisition of securities, unless otherwise indicated.
The foregoing fundamental investment policies, together with the investment ob-
jective of the Fund, cannot be changed without approval by holders of a "major-
ity of the Fund's outstanding voting shares." As defined in the Investment Com-
pany Act of 1940, this means the vote of (i) 67% or more of the Fund's shares
present at a meeting, if the holders of more than 50% of the Fund's shares are
present or represented by proxy, or (ii) more than 50% of the Fund's shares,
whichever is less.
General Information
The Nuveen Money Market Trust (the "Trust") is an open-end management series
investment company organized as a Massachusetts business trust on January 15,
1999. The Fund (formerly, the Nuveen Tax-Exempt Money Market Fund, Inc. is an
open-end, diversified management investment company organized as a series of
the Trust. The Trust is an open-end management series company under SEC Rule
18f-2. The Fund is a separate series issuing its own shares. The Trust cur-
rently has four series. Certain matters under the Investment Company Act of
1940 which must be submitted to a vote of the holders of the outstanding voting
securities of a series company shall not be deemed to have
S-3
<PAGE>
been effectively acted upon unless approved by the holders of a majority of
the outstanding voting securities of each series affected by such matter.
The Trust is an entity of the type commonly known as a "Massachusetts business
trust." Under Massachusetts law, shareholders of a trust may, under certain
circumstances, be held personally liable as partners for its obligations. How-
ever, the Declaration of Trust contains an express disclaimer of shareholder
liability for acts or obligations of the Trust and requires that notice of
this disclaimer be given in each agreement, obligation or instrument entered
into or executed by the Trust or the Trustees. The Declaration of Trust fur-
ther provides for indemnification out of the assets and property of the Trust
for all loss and expense of any shareholder personally liable for the obliga-
tions of the Trust. Thus, the risk of a shareholder incurring financial loss
on account of shareholder liability is limited to circumstances in which both
inadequate insurance existed and the Trust itself were unable to meet its ob-
ligations. The Trust believes the likelihood of these circumstances is remote.
Fund Shares represent an interest in the same portfolio of investments of the
Fund. Fund Shares have equal rights as to voting, redemption, dividends and
liquidaton, and have exclusive voting rights with respect to any applicable
distribution or service plan. There are no conversion, preemptive or other
subscription rights. The Board of Trustees of the Fund have the right to es-
tablish additional series and classes of shares in the future, to change those
series or classes and to determine the preferences, voting powers, rights and
privileges thereof.
Portfolio Securities
The various securities in which the Fund intends to invest are described in
the Prospectus. The following is a more complete description of certain secu-
rities in which the Fund may invest:
Municipal Obligations. The Fund invests in debt obligations issued by states,
cities and local authorities to obtain funds for various public purposes, in-
cluding the construction of such public facilities as airports, bridges, high-
ways, housing, hospitals, mass transportation, schools, streets and water and
sewer works. Other public purposes for which these securities may be issued
include the refinancing of outstanding obligations, the obtaining of funds for
general operating expenses and for loans to other public institutions and fa-
cilities. In addition, the Fund may invest in certain industrial development
bonds and pollution control bonds.
Two principal classifications of these securities (some called Municipal Obli-
gations) are "general obligation" and "revenue" bonds. General obligation
bonds are secured by the issuer's pledge of its full faith, credit and taxing
power for the payment of principal and interest. Revenue bonds are payable
only from the revenues derived from a particular facility or class of facili-
ties or, in some cases, from the proceeds of a special excise or other spe-
cific revenue source. Industrial development and pollution control bonds are
in most cases revenue bonds and do not generally constitute the pledge of the
credit or taxing power of the issuer of such bonds.
S-4
<PAGE>
Municipal Obligations can be further classified between bonds and notes. Bonds
are issued to raise longer-term capital but, when purchased by the Fund, will
have 397 days or less remaining until maturity or will have a variable or
floating rate of interest. These issues may be either general obligation bonds
or revenue bonds.
Notes are short-term instruments with a maturity of two years or less. Most
notes are general obligations of the issuer and are sold in anticipation of a
bond sale, collection of taxes or receipt of other revenues. Payment of these
notes is primarily dependent upon the issuer's receipt of the anticipated reve-
nues.
Municipal Obligations also include very short-term unsecured, negotiable prom-
issory notes, issued by states, municipalities, and their agencies, which are
known as "tax-exempt commercial paper" or "municipal paper." Payment of princi-
pal and interest on issues of municipal paper may be made from various sources,
to the extent that funds are available therefrom. There is a limited secondary
market for issues of municipal paper.
While these various types of notes as a group represent the major portion of
the tax-exempt note market, other types of notes are occasionally available in
the marketplace and the Fund may invest in such other types of notes to the ex-
tent consistent with its investment objective and limitations. Such notes may
be issued for different purposes and with different security than those men-
tioned above.
The yields on Municipal Obligations are dependent on a variety of factors, in-
cluding the condition of the general money market and the Municipal Obligation
market, the size of a particular offering, the maturity of the obligation and
the rating of the issue. Consequently, Municipal Obligations with the same ma-
turity, coupon and rating may have different yields while obligations of the
same maturity and coupon with different ratings may have the same yield. The
market value of outstanding Municipal Obligations will vary with changes in
prevailing interest rate levels and as a result of changing evaluations of the
ability of their issuers to meet interest and principal payments.
Obligations of issuers of debt securities are subject to the provisions of
bankruptcy, insolvency, and other laws affecting the rights and remedies of
creditors. In addition, the obligations of such issuers may become subject to
laws enacted in the future by Congress, state legislatures or referenda ex-
tending the time for payment of principal and/or interest, or imposing other
constraints upon enforcement of such obligations or upon municipalities to levy
taxes. There is also the possibility that, as a result of legislation or other
conditions, the power or ability of any issuer to pay, when due, the principal
of and interest on its debt securities may be materially affected.
Bond Anticipation Notes (BANs) are usually general obligations of state and lo-
cal governmental issuers which are sold to obtain interim financing for pro-
jects that will eventually be funded through the sale of long-term debt obliga-
tions or bonds. The ability of an issuer to meet its obligations on its BANs is
primarily dependent on the issuer's access to the long-term municipal bond mar-
ket and the likelihood that the proceeds of such bond sales will be used to pay
the principal and interest on the BANs.
S-5
<PAGE>
Tax Anticipation Notes (TANs) are issued by state and local governments to fi-
nance the current operations of such governments. Repayment is generally to be
derived from specific future tax revenues. TANs are usually general obligations
of the issuer. A weakness in an issuer's capacity to raise taxes due to, among
other things, a decline in its tax base or a rise in delinquencies, could ad-
versely affect the issuer's ability to meet its obligations on outstanding
TANs.
Revenue Anticipation Notes (RANs) are issued by governments or governmental
bodies with the expectation that future revenues from a designated source will
be used to repay the notes. In general they also constitute general obligations
of the issuer. A decline in the receipt of projected revenues, such as antici-
pated revenues from another level of government, could adversely affect an is-
suer's ability to meet its obligations on outstanding RANs. In addition, the
possibility that the revenues would, when received, be used to meet other obli-
gations could affect the ability of the issuer to pay the principal and inter-
est on RANs.
Construction Loan Notes are issued to provide construction financing for spe-
cific projects. Frequently, these notes are redeemed with funds obtained from
the Federal Housing Administration.
Bank Notes are notes issued by local governmental bodies and agencies as those
described above to commercial banks as evidence of borrowings. The purposes for
which the notes are issued are varied but they are frequently issued to meet
short-term working capital or capital-project needs. These notes may have risks
similar to the risks associated with TANs and RANs.
Industrial Development Bonds (IDBs) and Pollution Control Bonds (PCBs) are is-
sued by or on behalf of public authorities to finance various privately-rated
facilities. Typically the interest paid on these bonds is included within the
term municipal obligation if the interest paid thereon is exempt from federal
income tax.
Variable and Floating Rate Instruments--Certain money market instruments may
carry variable or floating rates of interest. Such instruments bear interest at
rates which are not fixed, but which vary with changes in specified market
rates or indices, such as a bank prime rate or tax-exempt money market index.
Variable rate notes are adjusted to current interest rate levels at certain
specified times, such as every 30 days, as set forth in the instrument. A
floating rate note adjusts automatically whenever there is a change in its base
interest rate adjustor, e.g., a change in the prime lending rate or specified
interest rate indices. Typically such instruments carry demand features permit-
ting the Fund to recover the full principal amount thereof upon specified no-
tice.
One form of variable or floating rate instrument consists of an underlying
fixed rate municipal bond that is subject to a third party demand feature or
"tender option." The holder of the bond would pay a "tender fee" to the third
party tender option provider, the amount of which would be periodically ad-
justed so that the bond/tender option combination would reasonably be expected
to have a market value that approximates the par value of the bond. The
bond/tender option combination would therefore be functionally equivalent to
ordinary variable or floating rate obligations as described above, and the Fund
may purchase such obligation subject to certain conditions specified by the Se-
curities and Exchange Commission.
S-6
<PAGE>
The Fund's right to obtain payment at par on a demand instrument upon demand
could be adversely affected by events occurring between the date the Fund
elects to tender the instrument and the date proceeds are due. Nuveen Advisory
will monitor on an ongoing basis the pricing, quality and liquidity of such in-
struments and will similarly monitor the ability of an obligor under the demand
arrangement, including demand obligors as to instruments supported by bank let-
ters of credit or guarantees, to pay principal and interest on demand. Although
the ultimate maturity of such variable rate obligations may exceed one year,
the Fund will treat the maturity of each variable rate demand obligation, for
purposes of computing its dollar-weighted average portfolio maturity, as the
longer of (i) the notice period required before the Fund is entitled to payment
of the principal amount through demand, or (ii) the period remaining until the
next interest rate adjustment.
The Fund may also obtain standby commitments with respect to Municipal Obliga-
tions. Under a standby commitment (often referred to as a put), the party issu-
ing the commitment agrees to purchase at the Fund's option the Municipal Obli-
gation at an agreed-upon price on certain dates or within a specific period.
Since the value of a standby commitment depends in part upon the ability of the
issuing party to meet its purchase obligations thereunder, the Fund will enter
into standby commitments only with parties which have been evaluated by Nuveen
Advisory and, in the opinion of Nuveen Advisory, present minimal credit risks.
The amount payable to the Fund upon its exercise of a standby commitment would
be (1) the acquisition cost of the Municipal Obligations (excluding any accrued
interest that the Fund paid on acquisition), less any amortized market premium
or plus any amortized market or original issue discount during the period the
Fund owned the security, plus (2) all interest accrued on the security since
the last interest payment date during the period the security was owned by the
Fund. The Fund's right to exercise standby commitments held by it will be un-
conditional and unqualified. The acquisition of a standby commitment will not
affect the valuation of the underlying security, which will continue to be val-
ued in accordance with the amortized cost method. The standby commitment itself
will be valued at zero in determining net asset value. The Fund may purchase
standby commitments for cash or pay a higher price for portfolio securities
which are acquired subject to such a commitment (thus reducing the yield to ma-
turity otherwise available for the same securities). The maturity of a Munici-
pal Obligation purchased by the Fund will not be considered shortened by any
standby commitment to which such security is subject. Although the Fund's
rights under a standby commitment would not be transferable, the Fund could
sell Municipal Obligations which were subject to a standby commitment to a
third party at any time.
When-Issued or Delayed-Delivery Securities--The Fund may purchase and sell Mu-
nicipal Obligations on a when-issued or delayed-delivery basis. When-issued and
delayed-delivery transactions arise when securities are purchased or sold with
payment and delivery beyond the regular settlement date. (When-issued transac-
tions normally settle within 30-45 days.) On such transactions the payment ob-
ligation and the interest rate are fixed at the time the buyer enters into the
commitment. The commitment to purchase securities on a when-issued or delayed-
delivery basis may involve an element of risk because the value of the securi-
ties is subject to market fluctuation, no interest accrues to the purchaser
prior to settlement of the transaction, and at the time of delivery the market
value may be less than cost. At the time the Fund makes the commitment to pur-
chase a Municipal Obligation on a when-issued or
S-7
<PAGE>
delayed-delivery basis, it will record the transaction and reflect the amount
due and the value of the security in determining its net asset value. Like-
wise, at the time the Fund makes the commitment to sell a Municipal Obligation
on a delayed-delivery basis, it will record the transaction and include the
proceeds to be received in determining its net asset value; accordingly, any
fluctuations in the value of the Municipal Obligation sold pursuant to a de-
layed-delivery commitment are ignored in calculating net asset value so long
as the commitment remains in effect. The Fund will maintain designated readily
marketable assets at least equal in value to commitments to purchase when-is-
sued or delayed-delivery securities, such assets to be segregated by the Cus-
todian specifically for the settlement of such commitments. The Fund will only
make commitments to purchase Municipal Obligations on a when-issued or de-
layed- delivery basis with the intention of actually acquiring the securities,
but the Fund reserves the right to sell these securities before the settlement
date if it is deemed advisable. If a when-issued security is sold before de-
livery any gain or loss would not be tax-exempt.
Taxable Investments
Taxable investments (sometimes called "Temporary Investments") include obliga-
tions of the United States Government, its agencies or instrumentalities; debt
securities of issuers having, at the time of purchase, a quality rating within
the two highest grades by either Moody's Investors Service, Inc. ("Moody's"),
Standard & Poor's Corporation ("S&P") or Fitch (Aaa or Aa, AAA or AA, or AAA
or AA, respectively); commercial paper rated in the highest grade by either
Moody's or S&P (Prime-1 or A-1, respectively); certificates of deposit of do-
mestic banks with assets of $1 billion or more; and Municipal Obligations and
U.S. government obligations subject to short-term repurchase agreements.
Subject to the limitations described in the Prospectus, the Fund may invest in
the following taxable investments:
U.S. Government Direct Obligations are issued by the United States Treasury
and include bills, notes, and bonds.
--Treasury bills are issued with maturities of up to one year. They are issued
in bearer form, are sold on a discount basis and are payable at par value at
maturity.
--Treasury notes are longer-term interest-bearing obligations with original
maturities of one to seven years.
--Treasury bonds are longer-term interest-bearing obligations with original
maturities of five to thirty years.
U.S. Government Agencies Securities--Certain federal agencies have been estab-
lished as instrumentalities of the United States government to supervise and
finance certain types of activities. These agencies include, but are not lim-
ited to, the Bank for Cooperatives, Federal Land Banks, Federal Intermediate
Credit Banks, Federal Home Loan Banks, Federal National Mortgage Association,
Government National Mortgage Association, Export-Import Bank of the United
States and Tennessee Valley Authority. Issues of these agencies, while not di-
rect obligations of the United States government, are either backed by the
full faith and credit of the United States or are guaranteed by the Treasury
or supported by the issuing agencies' right to borrow from the Treasury. There
can be no assurance that the United
S-8
<PAGE>
States government itself will pay interest and principal on securities as to
which it is not so legally obligated.
Certificates of Deposit (CDs)--A certificate of deposit is a negotiable inter-
est-bearing instrument with a specific maturity. CDs are issued by banks in ex-
change for the deposit of funds and normally can be traded in the secondary
market, prior to maturity. The Fund will only invest in U.S. dollar denominated
CDs issued by U.S. banks with assets of $1 billion or more.
Commercial Paper--Commercial paper is the term used to designate unsecured
short-term promissory notes issued by corporations. Maturities on these issues
vary from a few to 397 days. Commercial paper may be purchased from U.S. corpo-
rations.
Other Corporate Obligations--The Fund may purchase notes, bonds and debentures
issued by corporations if at the time of purchase there is less than 397 days
remaining until maturity or if they carry a variable or floating rate of inter-
est.
Repurchase Agreements--A repurchase agreement is a contractual agreement
whereby the seller of securities (U.S. government or Municipal Obligations)
agrees to repurchase the same security at a specified price on a future date
agreed upon by the parties. The agreed upon repurchase price determines the
yield during the Fund's holding period. Repurchase agreements are considered to
be loans collateralized by the underlying security that is the subject of the
repurchase contract. The Fund will only enter into repurchase agreements with
dealers, domestic banks or recognized financial institutions that in the opin-
ion of Nuveen Advisory represent minimal credit risk. The risk to the Fund is
limited to the ability of the issuer to pay the agreed upon repurchase price on
the delivery date; however, although the value of the underlying collateral at
the time the transaction is entered into always equals or exceeds the agreed
upon repurchase price, if the value of the collateral declines, there is a risk
of loss of both principal and interest. In the event of default, the collateral
may be sold but the Fund might incur a loss if the value of the collateral de-
clines, and might incur disposition costs or experience delays in connection
with liquidating the collateral. In addition, if bankruptcy proceedings are
commenced with respect to the seller of the security, realization upon the col-
lateral by the Fund may be delayed or limited. Nuveen Advisory will monitor the
value of the collateral at the time the transaction is entered into and at all
times subsequent during the term of the repurchase agreement in an effort to
determine that the value always equals or exceeds the agreed upon repurchase
price. In the event the value of the collateral declines below the repurchase
price, Nuveen Advisory will demand additional collateral from the issuer to in-
crease the value of the collateral to at least that of the repurchase price.
Ratings of Investments
The two highest ratings of Moody's for municipal securities are Aaa and Aa. Mu-
nicipal securities rated Aaa are judged to be of the "best quality." The rating
of Aa is assigned to municipal securities which are of "high quality by all
standards," but as to which margins of protection or other elements make long-
term risks appear somewhat larger than in Aaa rated municipal securities. The
Aaa and Aa rated municipal securities comprise what are generally known as
"high grade bonds." Moody's bond rating symbols may contain numerical modifiers
of a generic rating classification. The modifier 1 indicates that
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<PAGE>
the bond ranks at the high end of its category; the modifier 2 indicates a mid-
range ranking; and the modifier 3 indicates that the issue ranks in the lower
end of its generic rating category.
The two highest ratings of S&P for municipal securities are AAA and AA. Munici-
pal securities rated AAA have an extremely strong capacity to pay principal and
interest. The rating of AA indicates that capacity to pay principal and inter-
est is very strong and such bonds differ from AAA issues only in small degree.
The two highest ratings of Fitch for municipal securities are AAA and AA. Mu-
nicipal Securities rated AAA have an exceptionally strong capacity to pay prin-
cipal and interest. The rating of AA indicates that capacity to pay principal
and interest is very strong, although not quite as strong as bonds rated AAA.
The highest rating of Moody's and S&P for federally tax-exempt short-term loans
and notes is VMIG-1 or MIG-1 and SP-1, respectively. Obligations designated
VMIG-1 and MIG-1 are the best quality, enjoying strong protection from estab-
lished cash flows for their servicing or from established and broad-based ac-
cess to the market for refinancing, or both. The designation SP-1 indicates a
very strong or strong capacity to pay principal and interest.
The Fund's ability to purchase commercial paper of tax-exempt and corporate is-
suers is limited to commercial paper rated Prime-1 by Moody's or A-1 by S&P.
The rating Prime-1 (P-1) is the highest commercial paper rating assigned by
Moody's. Issuers rated P-1 have a superior capacity for repayment of short-term
obligations normally evidenced by the following characteristics: leading market
positions in well-established industries; high rates of return on funds em-
ployed; conservative capitalization structures with moderate reliance on debt
and ample asset protection; broad margins in earnings coverage of fixed finan-
cial charges and high internal cash generation; well-established access to a
range of financial markets and assured sources of alternative liquidity. The
designation A-1 indicates that the degree of safety regarding timely payment is
very strong.
Subsequent to its purchase by the Fund, an issue may cease to be rated or its
rating may be reduced below the minimum required for purchase by the Fund. Nei-
ther event requires the elimination of such obligations from the Fund, but
Nuveen Advisory will consider such an event in its determination of whether the
Fund should continue to hold such obligation.
S-10
<PAGE>
MANAGEMENT
The management of the Trust, including general supervision of the duties
performed for the Funds under the Investment Management Agreement, is the
responsibility of its Board of Trustees. The Trust currently has seven trustees,
one of whom is an "interested person" (as the term "interested person" is
defined in the Investment Company Act of 1940) and six of whom are
"disinterested persons." The names and business addresses of the trustees and
officers of the Trust and their principal occupations and other affiliations
during the past five years are set forth below, with those trustees who are
"interested persons" of the Trust indicated by an asterisk.
<TABLE>
------------------------------------------------------------------------------------
<CAPTION>
Date of Positions and Principal Occupations
Name and Address Birth Offices with Fund During Past Five Years
------------------------------------------------------------------------------------
<C> <C> <C> <S>
Timothy R. Schwertfeger* 3/28/49 Chairman of the Board Chairman since July 1,
333 West Wacker Drive and President 1996 of The John Nuveen
Chicago, IL 60606 Trustee Company, John Nuveen &
Co. Incorporated, Nuveen
Advisory Corp. and
Nuveen Institutional
Advisory Corp., prior
thereto Executive Vice
President and Director
of The John Nuveen
Company and John Nuveen
& Co. Incorporated;
Director of Nuveen
Advisory Corp. (since
1992) and Nuveen
Institutional Advisory
Corp.; Chairman and
Director (since January
1997) of Nuveen Asset
Management, Inc.;
Director (since 1996) of
Institutional Capital
Corporation; Chairman
and Director of
Rittenhouse Financial
Services Inc. (since
1999); Chief Executive
Officer (since September
1999) of Nuveen Senior
Loan Asset Management
Inc.
------------------------------------------------------------------------------------
Robert P. Bremner 8/22/40 Trustee Private Investor and
3725 Huntington Street, N.W. Management Consultant.
Washington, D.C. 20015
------------------------------------------------------------------------------------
Lawrence H. Brown 7/29/34 Trustee Retired (August 1989) as
201 Michigan Avenue Senior Vice President of
Highwood, IL 60040 The Northern Trust
Company
------------------------------------------------------------------------------------
Anne E. Impellizzeri 1/26/33 Trustee President and Chief
3 West 29th Street Executive Officer of
New York, NY 10001 Blanton-Peale Institutes
of Religion and Health
(since December 1990).
------------------------------------------------------------------------------------
Peter R. Sawers 4/3/33 Trustee Adjunct Professor of
22 The Landmark Business and Economics,
Northfield, IL 60093 University of Dubuque,
Iowa; Adjunct Professor,
Lake Forest Graduate
School of Management,
Lake Forest, Illinois.
------------------------------------------------------------------------------------
William J. Schneider 9/24/44 Trustee Senior Partner and Chief
4000 Miller-Valentine Ct. Operating Officer,
P.O. Box 744 Miller-Valentine
Dayton, OH 45401 Partners; Vice
President, Miller-
Valentine Group, a
development and contract
company; Member
Community Advisory
Board, National City
Bank, Dayton, Ohio.
------------------------------------------------------------------------------------
</TABLE>
S-11
<PAGE>
<TABLE>
--------------------------------------------------------------------------------------
<CAPTION>
Date of Positions and Principal Occupations
Name and Address Birth Offices with Fund During Past Five Years
--------------------------------------------------------------------------------------
<C> <C> <C> <S>
Judith M. Stockdale 12/29/47 Trustee Executive Director,
35 E. Wacker Drive Gaylord and Dorothy
Suite 2600 Donnelley Foundation
Chicago, IL 60601 (since 1994); prior
thereto, Executive
Director, Great Lakes
Protection Fund (from
1990 to 1994).
--------------------------------------------------------------------------------
Alan G. Berkshire 12/28/60 Vice President and Senior Vice President
333 West Wacker Drive Assistant Secretary and General Counsel
Chicago, IL 60606 (since September 1997)
and Secretary (since May
1998) of The John Nuveen
Company, John Nuveen &
Co. Incorporated, Nuveen
Advisory Corp. and
Nuveen Institutional
Advisory Corp., Senior
Vice President and
Secretary (since
September 1999) of
Nuveen Senior Loan Asset
Management Inc.; prior
thereto, Partner in the
law firm of Kirkland &
Ellis.
--------------------------------------------------------------------------------
Peter H. D'Arrigo 11/28/67 Vice President and Vice President of John
333 West Wacker Drive Treasurer Nuveen & Co.
Chicago, IL 60606 Incorporated (since
January 1999), prior
thereto. Assistant Vice
President (from January
1997); formerly,
Associate of John Nuveen
& Co. Incorporated; Vice
President and Treasurer
(since September 1999)
of Nuveen Senior Loan
Asset Management Inc.;
Chartered Financial
Analyst.
--------------------------------------------------------------------------------
Michael S. Davern 6/26/57 Vice President Vice President of Nuveen
333 West Wacker Drive Advisory Corp. (since
Chicago, IL 60606 January 1997); prior
thereto, Vice President
and Portfolio Manager of
Flagship Financial.
--------------------------------------------------------------------------------------
Lorna C. Ferguson 10/24/45 Vice President Vice President of John
333 West Wacker Drive Nuveen & Co.
Chicago, IL 60606 Incorporated; Vice
President (since January
1998) of Nuveen Advisory
Corp. and Nuveen
Institutional Advisory
Corp.
--------------------------------------------------------------------------------------
William M. Fitzgerald 3/2/64 Vice President Vice President of Nuveen
333 West Wacker Drive Advisory Corp. (since
Chicago, IL 60606 December 1995);
Assistant Vice President
of Nuveen Advisory Corp.
(from September 1992 to
December 1995), prior
thereto, Assistant
Portfolio Manager of
Nuveen Advisory Corp.
--------------------------------------------------------------------------------------
Stephen D. Foy 5/31/54 Vice President and Controller Vice President of John
333 West Wacker Drive Nuveen & Co.
Chicago, IL 60606 Incorporated and (since
May 1998) The John
Nuveen Company, Vice
President (since
September 1999) of
Nuveen Senior Loan Asset
Management Inc.,
Certified Public
Accountant.
--------------------------------------------------------------------------------------
J. Thomas Futrell 7/5/55 Vice President Vice President of Nuveen
333 West Wacker Drive Advisory Corp.;
Chicago, IL 60606 Chartered Financial
Analyst.
</TABLE>
--------------------------------------------------------------------------------
S-12
<PAGE>
<TABLE>
-------------------------------------------------------------------------------
<CAPTION>
Date of Positions and Principal Occupations
Name and Address Birth Offices with Fund During Past Five Years
-------------------------------------------------------------------------------
<C> <C> <C> <S>
Richard A. Huber 3/26/63 Vice President Vice President of Nuveen
333 West Wacker Drive Institutional Advisory
Chicago, IL 60606 Corp. (since March 1998)
and Nuveen Advisory Corp.
(since January 1997);
prior thereto, Vice
President and Portfolio
Manager of Flagship
Financial, Inc.
-------------------------------------------------------------------------------
Steven J. Krupa 8/21/57 Vice President Vice President of Nuveen
333 West Wacker Drive Advisory Corp.
Chicago, IL 60606
-------------------------------------------------------------------------------
Larry W. Martin 7/27/51 Vice President and Vice President, Assistant
333 West Wacker Drive Assistant Secretary Secretary and Assistant
Chicago, IL 60606 General Counsel of John
Nuveen & Co. Incorporated;
Vice President and
Assistant Secretary of
Nuveen Advisory Corp.;
Vice President and
Assistant Secretary of
Nuveen Institutional
Advisory Corp.; Assistant
Secretary of The John
Nuveen Company and (since
January 1997) Nuveen Asset
Management Inc.; Vice
President and Assistant
Secretary (since September
1999) of Nuveen Senior
Loan Asset Management Inc.
-------------------------------------------------------------------------------
Edward F. Neild, IV 7/7/65 Vice President Vice President (since
333 West Wacker Drive September 1996),
Chicago, IL 60606 previously Assistant Vice
President (since December
1993) of Nuveen Advisory
Corp., Portfolio Manager
prior thereto; Vice
President (since September
1996), previously
Assistant Vice President
(since May 1995) of Nuveen
Institutional Advisory
Corp., Portfolio Manager
prior thereto; Chartered
Financial Analyst.
-------------------------------------------------------------------------------
Stephen S. Peterson 9/20/57 Vice President Vice President (since
333 West Wacker Drive September 1997),
Chicago, IL 60606 previously Assistant Vice
President (since September
1996), Portfolio Manager
prior thereto of Nuveen
Advisory Corp., Chartered
Financial Analyst.
-------------------------------------------------------------------------------
Thomas C. Spalding, Jr. 7/31/51 Vice President Vice President of Nuveen
333 West Wacker Drive Advisory Corp. and Nuveen
Chicago, IL 60606 Institutional Advisory
Corp.; Chartered Financial
Analyst.
-------------------------------------------------------------------------------
Gifford R. Zimmerman 9/9/56 Vice President and Vice President, Assistant
333 West Wacker Drive Secretary Secretary and Associate
Chicago, IL 60606 General Counsel formerly
Assistant General Counsel
of John Nuveen & Co.
Incorporated; Vice
President and Assistant
Secretary of Nuveen
Advisory Corp. and Nuveen
Institutional Advisory
Corp.; Vice President and
Assistant Secretary of The
John Nuveen Company; Vice
President and Assistant
Secretary (since September
1999) of Nuveen Senior
Loan Asset Management
Inc.; Chartered Financial
Analyst.
</TABLE>
--------------------------------------------------------------------------------
Timothy R. Schwertfeger and Peter R. Sawers serve as members of the Executive
Committee of the Board of Trustees. The Executive Committee, which meets be-
tween regular meetings of the Board of Trustees, is authorized to exercise all
of the powers of the Board of Trustees.
S-13
<PAGE>
The trustees of the Trust are directors or trustees, as the case may be, of 37
Nuveen open-end funds and 54 Nuveen closed-end funds advised by Nuveen Advisory
Corp. Mr. Schwertfeger is a director or trustee, as the case may be, of 13
Nuveen open-end funds and closed-end funds advised by Nuveen Institutional Ad-
visory Corp. and two funds advised by Nuveen Senior Loan Asset Management. None
of the independent trustees has ever been a director, officer, or employee of,
or a consultant to, Nuveen Advisory, Nuveen or their affiliates.
The following table sets forth compensation paid by the Trust to each of the
trustees of the Trust and the total compensation paid to each trustee during
the fiscal year ended February 29, 2000. The Trust has no retirement or pension
plans. The officers and trustees affiliated with Nuveen serve without any com-
pensation from the Trust.
<TABLE>
<CAPTION>
Deferred Total Compensation
Aggregate Compensation From Trust and
Name of Trustee Compensation Payable from Fund Complex Paid
--------------- from the Fund(1) the Fund(2) to the Trustees(3)
---------------- ------------ ------------------
<S> <C> <C> <C>
Robert P. Bremner....... $ 835 $ 146 $44,000
Lawrence H. Brown....... $1,058 $ -- $44,000
Anne E. Impellizzeri.... $ -- $1,019 $44,000
Peter R. Sawers......... $ -- $ 975 $45,600
William S. Schneider.... $ -- $1,008 $44,000
Judith M. Stockdale..... $ 737 $ 252 $44,000
</TABLE>
--------
(1) The compensation paid (but not including amounts deferred) to the indepen-
dent trustees for the fiscal year ended February 29, 2000 for services to
the Fund.
(2) Pursuant to a deferred compensation agreement with the Trust, deferred
amounts are treated as though an equivalent dollar amount has been invested
in shares of one or more eligible Nuveen Funds. The amounts provided are
the total deferred fees (including the return from the assumed investment
in the eligible Nuveen Funds) payable from the Trust.
(3) Based on the compensation paid (including any amounts deferred) to the in-
dependent trustees for the fiscal year ended February 29, 2000 for services
to the open-end and closed-end funds advised by NAC.
Each trustee who is not affiliated with NAC receives a $60,000 annual retainer
for serving as a director or trustee of all funds for which NAC serves as in-
vestment adviser or manager and a $1,000 fee per day plus expenses for atten-
dance at all meetings held on a day on which a regularly scheduled Board meet-
ing is held, a $1,000 fee per day plus expenses for attendance in person or a
$500 fee per day plus expenses for attendance by telephone at a meeting held on
a day which no regular Board meeting is held and a $250 fee per day plus ex-
penses for attendance in person or by telephone at a meeting of the Executive
Committee held solely to declare dividends. The annual retainer, fees and ex-
penses are allocated among the funds for which NAC serves as investment adviser
or manager on the basis of relative net asset sizes. The Trust requires no em-
ployees other than its officers, all of whom are compensated by NAC or Nuveen.
The John Nuveen Company (JNC) maintains charitable contributions programs to
encourage the active support and involvement of individuals in the civic activ-
ities of their community. These programs include a matching contributions pro-
gram and a direct contributions program. The independent
S-14
<PAGE>
trustees of the funds managed by NAC are eligible to participate in the chari-
table contributions program of JNC. Under the matching program, JNC will match
the personal contributions of a trustee to Section 501(c)(3) organizations up
to an aggregate maximum amount of $10,000 during any calendar year. Under its
direct (non-matching) program, JNC makes contributions to qualifying Section
501(c)(3) organizations, as approved by the Corporate Contributions Committee
of JNC. The independent trustees are also eligible to submit proposals to the
committee requesting that contributions be made under this program to Section
501(c)(3) organizations identified by the trustee, in an aggregate amount not
to exceed $5,000 during any calendar year. Any contribution made by JNC under
the direct program is made solely at the discretion of the Corporate Contribu-
tions Committee.
The officers and trustees of each Fund, in the aggregate, own less than 1% of
the shares of the Fund.
The following table sets forth the percentage of ownership of each person who,
as of May 31, 2000, owns of record or is known by the Fund to own of record 5%
or more of the Fund. The Fund believes that none of these shares are owned ben-
eficially, but are held as agent for various accounts which are the beneficial
owners.
<TABLE>
<CAPTION>
Percentage of
Name of Fund Name and Address of Owner Ownership
-----------------------------------------------------------------------------
<S> <C> <C>
Nuveen Institutional Tax-
Exempt JC Bradford & Co.............. 6.40%
Money Market Fund Money Funds Operations
Attn: Deborah Hornbuckle
330 Commerce St.
Nashville, TN 37201-1805
Chase Manhattan Bank.......... 5.31%
One Chase Manhattan Plaza 16th
Grand Central, NY 10017
</TABLE>
S-15
<PAGE>
INVESTMENT ADVISER AND INVESTMENT MANAGEMENT AGREEMENT
Nuveen Advisory acts as investment adviser for the Fund and in such capacity
manages the investment and reinvestment of the assets of the Fund. Nuveen Ad-
visory also administers the Trust's business affairs, provides office facili-
ties and equipment and certain clerical, bookkeeping and administrative serv-
ices, and permits any of its officers or employees to serve without compensa-
tion as trustees or officers of the Trust if elected to such positions. See
"Who Manages the Fund" in the Prospectus.
Pursuant to an investment management agreement between Nuveen Advisory and the
Trust, the Fund has agreed to pay annual management fees at the rates set
forth below, which are based on the Fund's average daily net assets:
<TABLE>
<CAPTION>
Average
Daily Net
Assets Management Fee
---------------------------
<S> <C>
First $125M .4000 of 1%
Next $125M .3875 of 1%
Next $250M .3750 of 1%
Next $500M .3625 of 1%
Next $1B .3500 of 1%
Over $2B .3250 of 1%
</TABLE>
Through December 31, 1999, Nuveen Advisory had undertaken to reimburse Fund
expenses in an amount necessary to limit total operating expenses to .45 of 1%
of the Fund's daily net assets. Thereafter, Nuveen Advisory may chose to modi-
fy, continue or discontinue these reimbursements at its sole discretion.
Before June 25, 1999, Nuveen Advisory's annual management fees were calculated
at the rates set forth below, which are based on the Fund's average daily net
assets:
<TABLE>
<CAPTION>
Average Daily Net Assets Management Fees
-------------------------------------------
<S> <C>
For the first $500 million .4000 of 1%
For the next $500 million .3750 of 1%
For assets over $1 billion .3500 of 1%
For assets over $2 billion .3250 of 1%
</TABLE>
For periods before June 25, 1999, Nuveen Advisory had agreed to waive all or a
portion of its management fee or reimburse certain expenses of the Fund in or-
der to prevent total operating expenses (including Nuveen Advisory's manage-
ment fee, but excluding interest, taxes, fees incurred in acquiring and dis-
posing of portfolio securities, any asset-based distribution or service fees
and, to the extent permitted, extraordinary expenses) in any fiscal year from
exceeding .45 of 1% of the average daily net asset value of the Fund. Nuveen
Advisory could also voluntarily agree to reimburse additional expenses from
time to time, which could be terminated at any time in its discretion. For the
last three fiscal years, the Fund, and its predecessor, paid management fees
to Nuveen Advisory as follows:
<TABLE>
<CAPTION>
Management Fees Net
of Expense Reimbursement Fee Waivers and Expense
Paid to Nuveen Advisory Reimbursement from Nuveen
for the Year Ended Advisory for the Year Ended
------------------------------------------- --------------------------------------------
2/28/98 2/28/99 2/29/00 2/28/98 2/28/99 2/29/00
---------- ---------- -------- ------- ------- --------
<S> <C> <C> <C> <C> <C>
$1,993,848 $1,427,491 $878,492 $-- $-- $331,411
</TABLE>
S-16
<PAGE>
Nuveen Advisory is a wholly-owned subsidiary of John Nuveen & Co. Incorporated
("Nuveen"), the Fund's principal underwriter. Nuveen is sponsor of the Nuveen
Defined Portfolios, registered unit investment trusts, is principal underwriter
for the Nuveen Mutual Funds, and has served as co-managing underwriter for the
shares of the Nuveen Exchange-Traded Funds. Over 1,300,000 individuals have in-
vested to date in Nuveen's funds and trusts. Founded in 1898, Nuveen brings
over a century of expertise to the municipal bond market. Overall, Nuveen and
its affiliates manage or oversee more than $70 billion in assets in a variety
of products. Nuveen is a subsidiary of The John Nuveen Company which, in turn,
is approximately 78% owned by The St. Paul Companies, Inc. ("St. Paul"). St.
Paul is located in St. Paul, Minnesota, and is principally engaged in providing
property-liability insurance through subsidiaries.
Nuveen Advisory's portfolio managers call upon the resources of Nuveen's Re-
search Department. The Nuveen Research Department reviews more than $100 bil-
lion in municipal bonds every year.
The Fund, the other Nuveen funds, Nuveen Advisory, and other related entities
have adopted a code of ethics which essentially prohibits all Nuveen fund man-
agement personnel, including Nuveen fund portfolio managers, from engaging in
personal investments which compete or interfere with, or attempt to take advan-
tage of, the Fund's anticipated or actual portfolio transactions, and is de-
signed to assure that the interest of Fund shareholders is placed before the
interest of Nuveen personnel in connection with personal investment transac-
tions.
PORTFOLIO TRANSACTIONS
Nuveen Advisory, in effecting purchases and sales of portfolio securities for
the account of the Fund, will place orders in such manner as, in the opinion of
management, will offer the best price and market for the execution of each
transaction. Portfolio securities will normally be purchased directly from an
underwriter or in the over-the-counter market from the principal dealers in
such securities, unless it appears that a better price or execution may be ob-
tained elsewhere. Portfolio securities will not be purchased from Nuveen or its
affiliates except in compliance with the Investment Company Act of 1940.
The Fund since its inception has effected all portfolio transactions on a prin-
cipal (as opposed to an agency) basis and, accordingly, has not paid any bro-
kerage commissions.
Purchases from underwriters include a commission or concession paid by the is-
suer to the underwriter, and purchases from dealers include the spread between
the bid and asked price. Given the best price and execution obtainable, it is
the practice of the Fund to select dealers which, in addition, furnish research
information (primarily credit analyses of issuers) and statistical and other
services to Nuveen Advisory. It is not possible to place a dollar value on in-
formation and statistical and other services received from dealers. Since it is
only supplementary to Nuveen Advisory's own research efforts, the receipt of
research information is not expected to reduce significantly Nuveen Advisory's
expenses. Any research benefits obtained are available to all Nuveen Advisory's
other clients. While Nuveen Advisory will be primarily responsible for the
placement of the Fund's business, the policies and practices of Nuveen Advisory
in this regard must be consistent with the foregoing and will, at all times, be
subject to review by the Board of Trustees of the Fund.
S-17
<PAGE>
Nuveen Advisory reserves the right to, and does, manage other investment ac-
counts and investment companies for other clients which may have investment ob-
jectives similar to the Fund. Subject to applicable laws and regulations,
Nuveen Advisory will attempt to allocate equitably portfolio transactions among
the Fund and the portfolios of its other clients purchasing securities whenever
decisions are made to purchase or sell securities by the Fund and one or more
of such other clients simultaneously. In making such allocations the main fac-
tors to be considered will be the respective investment objectives of the Fund
and such other clients, the relative size of portfolio holdings of the same or
comparable securities, the availability of cash for investment by the Fund and
such other clients, the size of investment commitments generally held by the
Fund and such other clients and opinions of the persons responsible for recom-
mending investments to the Fund and such other clients.
While this procedure could have a detrimental effect on the price or amount of
the securities available to the Fund from time to time, it is the opinion of
the Fund's Board of Trustees that the benefits available from Nuveen Advisory's
organization will outweigh any disadvantage that may arise from exposure to si-
multaneous transactions.
Under the Investment Company Act of 1940, the Fund may not purchase portfolio
securities from any underwriting syndicate of which Nuveen is a member except
under certain limited conditions set forth in Rule 10f-3. The Rule sets forth
requirements relating to, among other things, the type of securities purchased
by the Fund and the amount of securities which may be purchased in any one is-
sue. In addition, purchases of securities made pursuant to the terms of the
Rule must be approved at least quarterly by the Board of Trustees of the Fund,
including a majority of the members thereof who are not interested persons of
the Fund.
NET ASSET VALUE
As stated in the Prospectus, the net asset value of the shares of the Fund will
be determined by The Chase Manhattan Bank, the Fund's custodian, as of 12:00
noon, Eastern Time, (1) on each day on which the Federal Reserve Bank of Boston
is normally open and (2) on any day during which there is sufficient degree of
trading in the Fund's portfolio securities that the current net asset value of
the Fund's shares might be materially affected by such changes in the value of
the portfolio securities. The Federal Reserve Bank of Boston is not open and
the Fund will similarly not be open on New Year's Day, Martin Luther King's
Birthday, Washington's Birthday, Good Friday, Memorial Day, Independence Day,
Labor Day, Columbus Day, Veteran's Day, Thanksgiving Day and Christmas Day. It
is possible that changing circumstances during the year will result in addition
or deletions to the above lists. The net asset value per share will be computed
by dividing the value of the portfolio securities held by the Fund, plus cash
or other assets, less liabilities, by the total number of shares outstanding at
such time.
As stated in the Prospectus, the Fund will seek to maintain a net asset value
of $1.00 per share. In this connection, the Fund values its portfolio securi-
ties at their amortized cost, as permitted by the Securities and Exchange Com-
mission (the "Commission") under Rule 2a-7 under the Investment Company Act of
1940. This method does not take into account unrealized securities gains or
losses. It involves
S-18
<PAGE>
valuing an instrument at its cost on the date of purchase and thereafter assum-
ing a constant amortization to maturity of any discount or premium. While this
method provides certainty in valuation, it may result in periods during which
the value of an investment, as determined by amortized cost, is higher or lower
than the price the Fund would receive if it sold the instrument. During periods
of declining interest rates, the daily yield on shares of the Fund may tend to
be higher than a like computation made by a fund with identical investments
utilizing a method of valuation based upon market prices and estimates of mar-
ket prices for all of its portfolio instruments. Thus, if the use of the amor-
tized cost method by the Fund resulted in a lower aggregate portfolio value on
a particular day, a prospective investor in the Fund would be able to obtain a
somewhat higher yield than would result from an investment in a fund utilizing
solely market values, and existing investors in the Fund would receive less in-
vestment income. The converse would apply in a period of rising interest rates.
The Fund, as a condition to the use of amortized cost and the maintenance of
its per share net asset value of $1.00, must maintain a dollar-weighted average
portfolio maturity of 90 days or less, only purchase instruments having remain-
ing maturities of 397 days or less, and invest only in securities determined to
be of high quality with minimal credit risks. The Fund may invest in variable
and floating rate instruments even if they carry stated maturities in excess of
397 days, upon certain conditions contained in rules and regulations issued by
the Securities and Exchange Commission under the Investment Company Act of
1940, but will do so only if there is a secondary market for such instruments
or if they carry demand features, permissible under rules of the Commission for
money market funds, to recover the full principal amount thereof upon specified
notice at par, or both.
The Board of Trustees, pursuant to Rule 2a-7, has established procedures de-
signed to stabilize, to the extent reasonably possible, the Fund's price per
share as computed for the purpose of sales and redemptions at $1.00. Such pro-
cedures will include review of the Fund's portfolio holdings by the Board of
Trustees, at such intervals as it may deem appropriate, to determine whether
the net asset value calculated by using available market quotations or market
equivalents deviates from $1.00 per share based on amortized cost. Market quo-
tations and market equivalents used in such review may be obtained from a pric-
ing agent approved by the Board of Trustees. The Board has selected Nuveen Ad-
visory to act as pricing agent, but in the future may select an independent
pricing service to perform this function. In serving as pricing agent, Nuveen
Advisory will follow guidelines adopted by the Board, and the Board will moni-
tor Nuveen Advisory to see that the guidelines are followed. The pricing agent
will value the Fund's investment based on methods which include consideration
of yield or prices of municipal obligations of comparable quality, coupon, ma-
turity, and type; indications as to values from dealers; and general market
conditions. The pricing agent may employ electronic data processing techniques
and/or a matrix system to determine valuations. The extent of any deviation be-
tween the Fund's net asset value based on the pricing agent's market valuation
and $1.00 per share based on amortized cost will be examined by the Board of
Trustees. If such deviation exceeds 1/2 of 1%, the Board of Trustees will
promptly consider what action, if any, will be initiated. In the event the
Board of Trustees determines that a deviation exists which may result in mate-
rial dilution or other unfair results to investors or existing shareholders, it
has agreed to take such corrective action as it regards as necessary and appro-
priate, including the sale of portfolio instruments prior to maturity to real-
ize capital gains or losses or to shorten average portfolio maturity; withhold-
ing dividends or payment of distributions from capital or capital gains; re-
demption of shares in kind; or establishing a net asset value per share by us-
ing available market quotations.
S-19
<PAGE>
TAX MATTERS
Federal Income Tax Matters
The following discussion of federal income tax matters is based upon the advice
of Morgan, Lewis, & Bockius LLP, counsel to the Trust.
The Fund intends to qualify, as it has in prior years, under Subchapter M of
the Internal Revenue Code of 1986, as amended, (the "Code"), for tax treatment
as a regulated investment company. In order to qualify as a regulated invest-
ment company, the Fund must satisfy certain requirements relating to the source
of its income, diversification of its assets, and distributions of its income
to shareholders. First, the Fund must derive at least 90% of its annual gross
income (including tax-exempt interest) from dividends, interest, payments with
respect to securities loans, gains from the sale or other disposition of stock
or securities, foreign currencies or other income (including but not limited to
gains from options and futures) derived with respect to its business of invest-
ing in such stock or securities (the "90% gross income test"). Second, the Fund
must diversify its holdings so that, at the close of each quarter of its tax-
able year, (i) at least 50% of the value of its total assets is comprised of
cash, cash items, United States Government securities, securities of other reg-
ulated investment companies and other securities limited in respect of any one
issuer to an amount not greater in value than 5% of the value of the Fund's to-
tal assets and to not more than 10% of the outstanding voting securities of
such issuer, and (ii) not more than 25% of the value of the total assets it in-
vested in the securities of any one issuer (other than United States Government
securities and securities of other regulated investment companies) or two or
more issuers controlled by the Fund and engaged in the same, similar or related
trades or businesses.
As a regulated investment company, the Fund will not be subject to federal in-
come tax on any portion of its net income currently distributed to shareholders
in any taxable year for which it distributes at least 90% of the sum of (i) its
"investment company taxable income" (which includes dividends, taxable inter-
est, taxable original issue discount and market discount income, income from
securities lending, net short-term capital gain in excess of long-term capital
loss, and any other taxable income other than "net capital gain" (the excess of
its net long-term capital gain over its net short-term capital loss) and is re-
duced by deductible expenses) and (ii) its "net tax-exempt interest" (the ex-
cess of its gross tax-exempt interest income over certain disallowed deduc-
tions).
The Fund also intends to satisfy conditions which will enable it to designate
certain distributions, as Exempt Interest Dividends. Shareholders receiving Ex-
empt Interest Dividends will not be subject to regular federal income tax on
the amount of such dividends.
Distributions by the Fund of net interest income received from certain taxable
investments (such as certificates of deposit, commercial paper and obligations
of the United States Government, its agencies and instrumentalities) and net
short-term capital gains realized by the Fund, if any, will be taxable to
shareholders as ordinary income whether received in cash or additional shares.
If the Fund purchases a security at a market discount, any gain realized by the
Fund upon the sale or redemption of the security will be treated as taxable in-
terest income to the extent such gain does not exceed the market discount, and
any gain realized in excess of the market discount will be treated as a capital
gain. Any
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net long-term capital gains realized by the Fund and distributed to sharehold-
ers in cash or in additional shares will be taxable to shareholders as long-
term capital gains regardless of the length of time investors have owned shares
of the Fund. The Fund does not expect to realize significant long-term capital
gains. Because the taxable portion of the Fund's investment income consists
primarily of interest, none of its dividends, whether or not treated as exempt-
interest dividends, is expected to qualify under the Internal Revenue Code for
the dividends received deductions for corporations.
Capital gains are taxable to shareholders either as ordinary income or as long-
term capital gains, depending on how long the Fund owned the investment. Early
in each year, you will receive a statement detailing the amount and nature of
all capital gains that you were paid during the prior year.
In the very unlikely event that the Fund realizes capital gains or taxable in-
come subject to regular federal income tax, it will pay any capital gains or
other distributions in December.
If the Fund has both tax-exempt and taxable income, it will use the "average
annual" method for determining the designated percentage that is taxable income
and designate the use of such method within 60 days after the end of the Fund's
taxable year. Under this method, one designated percentage is applied uniformly
to all distributions made during the Fund's taxable year. The percentage of in-
come designated as tax-exempt for any particular distribution may be substan-
tially different from the percentage of the Fund's income that was tax-exempt
during the period covered by the distribution.
Although dividends generally will be treated as distributed when paid, divi-
dends declared in October, November or December, payable to shareholders of
record on a specified date in one of those months and paid during the following
January, will be treated as having been distributed by the Fund (and received
by the shareholders) on December 31.
The redemption or exchange of the shares of the Fund is not expected to result
in capital gain or loss to the shareholders because the Fund's net asset value
is expected to remain constant at $1.00 per share. To the extent that the
Fund's net asset value is greater or lesser than $1.00 per share, redemptions
or exchanges may result in capital gain or loss to the shareholder.
In order to avoid a 4% federal excise tax, the Fund must distribute or be
deemed to have distributed by December 31 of each calendar year at least 98% of
its taxable ordinary income for such year, at least 98% of the excess of its
realized capital gains over its realized capital losses (generally computed on
the basis of the one-year period ending on October 31 of such year) and 100% of
any taxable ordinary income and the excess of realized capital gains over real-
ized capital losses for the prior year that was not distributed during such
year and on which the Fund paid no federal income tax. The Fund intends to make
timely distributions in compliance with these requirements and consequently it
is anticipated that it generally will not be required to pay the excise tax.
If in any year the Fund should fail to qualify under Subchapter M for tax
treatment as a regulated investment company, the Fund would incur a regular
corporate federal income tax upon its income for that year, other than interest
income from tax-exempt securities, and distributions to its shareholders out of
net interest income from tax-exempt securities or other investments, or out of
net capital gains, would be taxable to shareholders as ordinary dividend income
for federal income tax purposes to the extent of the Fund's available earnings
and profits.
S-21
<PAGE>
The Fund may invest in the type of private activity bonds, the interest on
which is not federally tax-exempt to persons who are "substantial users" of the
facilities financed by such bonds or "related persons" of such "substantial us-
ers." Accordingly, the Fund may not be an appropriate investment for sharehold-
ers who are considered either a "substantial user" or a "related person" within
the meaning of the Code. In general, a "substantial user" of a facility fi-
nanced from the proceeds of private activity bonds includes a "non-exempt per-
son who regularly uses a part of such facility in his trade or business." "Re-
lated persons" are in general defined to include persons among whom there ex-
ists a relationship, either by family or business, which would result in a dis-
allowance of losses in transactions among them under various provisions of the
Code (or if they are members of the same controlled group of corporations under
the Code). This includes a partnership and each of its partners (including
their spouses and minor children) and an S corporation and each of its share-
holders (and their spouses and minor children). Various combinations of these
relationships may also constitute "related persons" under the Code. For addi-
tional information, investors should consult their tax advisors before invest-
ing in the Fund.
Federal tax law imposes an alternative minimum tax with respect to both corpo-
rations and individuals. Interest on certain securities, such as bonds issued
to make loans for housing purposes or to private entities (but not for certain
tax-exempt organizations such as universities and non-profit hospitals), is in-
cluded as an item of tax preference in determining the amount of a taxpayer's
alternative minimum taxable income. To the extent that the Fund receives income
from securities subject to the alternative minimum tax, a portion of the divi-
dends paid by it, although otherwise exempt from federal income tax, will be
taxable to shareholders to the extent that their tax liability is determined
under the alternative minimum tax regime. The Fund will annually supply share-
holders with a report indicating the percentage of Fund income attributable to
securities subject to the federal alternative minimum tax.
In addition, the alternative minimum taxable income for corporations is in-
creased by 75% of the difference between an alternative measure of income ("ad-
justed current earnings") and the amount otherwise determined to be the alter-
native minimum taxable income. Interest on all securities, and therefore all
distributions by the Fund that would otherwise be tax-exempt, is included in
calculating a corporation's adjusted current earnings.
Individuals whose provisional income exceeds a base amount will be subject to
federal income tax on up to one-half of their social security or railroad re-
tirement benefits. Provisional income currently includes adjusted gross income,
one-half of social security benefits and tax-exempt interest, including exempt-
interest dividends from the Fund. Individuals whose modified income exceeds the
adjusted base amount are required to include in gross income up to 85% of their
social security or railroad retirement benefits.
The Code provides that interest on indebtedness incurred or continued to pur-
chase or carry shares of the Fund is not deductible. Under rules used by the
IRS for determining when borrowed funds are considered used for the purpose of
purchasing or carrying particular assets, the purchase of shares of a Fund may
be considered to have been made with borrowed funds even though such funds are
not directly traceable to the purchase of shares.
S-22
<PAGE>
The Fund is required in certain circumstances to withhold 31% of taxable divi-
dends and certain other payments paid to non-corporate holders of shares who
have not furnished to the Fund their correct taxpayer identification number (in
the case of individuals, their social security number) and certain certifi-
cates, or who are otherwise subject to back-up withholding.
The foregoing is a general and abbreviated summary of the provisions of the
Code and Treasury Regulations presently in effect as they directly govern the
taxation of the Fund and its shareholders. For complete provisions, reference
should be made to the pertinent Code sections and Treasury Regulations. The
Code and Treasury Regulations are subject to change by legislative or adminis-
trative action, and any such change may be retroactive with respect to Fund
transactions. Shareholders are advised to consult their own tax advisers for
more detailed information concerning the federal taxation of the Fund and the
income tax consequences to its shareholders.
State Tax Matters
The following is based on the advice of Morgan, Lewis & Bockius LLP, counsel to
the Fund, and assumes that the Fund will be qualified as a regulated investment
company under Subchapter M of the Code and will be qualified thereunder to pay
exempt interest dividends.
The exemption from federal income tax for distributions which are designated
Exempt Interest Dividends will not necessarily result in exemption under the
income or other tax laws of any state or local taxing authority. The laws of
the several states and local taxing authorities vary with respect to the taxa-
tion of such distributions, and shareholders of the Fund are advised to consult
their own tax advisors in that regard.
PERFORMANCE INFORMATION
The historical performance of the Fund may be expressed in terms of "yield" or
"effective yield." The "yield" of the Fund is based on the income generated by
an investment in the Fund over a seven day period. The income is then
annualized, i.e. the amount of the income generated by the investment during
that week is assumed to be generated each week over a 52-week period and is ex-
pressed as a percentage of the investment. "Effective yield" is calculated sim-
ilarly except that, when annualized, the income earned by the investment is as-
sumed to be reinvested. Due to this compounding effect, the effective yield
will be slightly higher than the yield. "Taxable equivalent yield" is the yield
that a taxable investment would need to generate in order to equal the Fund's
yield on an after-tax basis for an investor in a stated tax bracket (normally
assumed to be the bracket with the highest marginal tax rate). A taxable equiv-
alent yield quotation will be higher than the yield or the effective yield quo-
tations. The Fund's yield and effective yield for the seven-day period ended
February 29, 2000 were 3.31% and 3.36%, respectively. These measures of perfor-
mance are described below.
Yield is computed in accordance with a standard method prescribed by rules of
the Securities and Exchange Commission. Under that method, current yield is
based on a seven-day period and is computed as follows: the Fund's net invest-
ment income per share for the period is divided by the price per
S-23
<PAGE>
share (expected to remain constant at $1.00) at the beginning of the period,
the result (the "base period return") is divided by 7 and multiplied by 365,
and the resulting figure is carried to the nearest hundredth of one percent.
For the purpose of this calculation, the Fund's net investment income per share
includes its accrued interest income plus or minus amortized purchase discount
or premium less accrued expenses, but does not include realized capital gains
or losses or unrealized appreciation or depreciation of investments.
The Fund's effective yield is calculated by taking the base period return (com-
puted as described above) and calculating the effect of assumed compounding.
The formula for effective yield is: (base period return + 1)/365///7/-1.
Taxable equivalent yield is computed by dividing that portion of the Fund's
yield which is tax-exempt by 1 minus the stated federal income tax rate and
adding the result to that portion, if any, of the yield of the Fund that is not
tax-exempt. Based upon (1) a 2000 federal income tax of 39.6%, and (2) the
yield for the Fund as described above for the seven-day period ended February
29, 2000, the taxable equivalent yield for the Fund for that period was 5.48%.
The Fund's yield will fluctuate, and the publication of annualized yield quota-
tions is not a representation of what an investment in the Fund will actually
yield for any given future period. Actual yields will depend not only on
changes in interest rates on money market instruments during the period in
question, but also on such matters as the Fund's expenses.
In reports or other communications to shareholders or in advertising and sales
literature, the Fund may compare its performance to that of other money market
mutual funds tracked by Lipper Analytical Services, Inc. ("Lipper"), by
Donoghue's Money Fund Report ("Donoghue's") or similar services or by financial
publications such as Barron's, Changing Times, Forbes and Money Magazine. Per-
formance comparisons by these indexes, services or publications may rank mutual
funds over different periods of time by means of aggregate, average, year-by-
year or other types of performance figures. Lipper ranks mutual funds by over-
all performance, investment objectives, and assets and assumes the reinvestment
of dividends for the period covered. Donoghue's ranks investment results ac-
cording to total return (annualized results net of management fees and ex-
penses) and presents one year results as effective annual yields assuming rein-
vestment of dividends. Any given performance quotation or performance compari-
son should not be considered as representative of the Fund's performance for
any future period.
A comparison of tax-exempt and taxable equivalent yields is one element to con-
sider in making an investment decision. The Fund may from time to time in its
advertising and sales materials compare its then current yields as of a recent
date with the yields on taxable investments such as corporate or U.S. Govern-
ment bonds and bank CDs or money market accounts, each of which has investment
characteristics that may differ from those of the Fund. U.S. Government bonds,
for example, are backed by the full faith and credit of the U.S. Government,
and bank CDs and money market accounts are insured by an agency of the federal
government.
S-24
<PAGE>
The following table shows the effects for individuals of federal income taxes
on the amount that those subject to a given tax rate would have to put into a
tax-free investment in order to generate the same after-tax income as a taxable
investment.*
Read down to find the amount of a tax-free investment at the specified rate
that would provide the same after-tax income as a $50,000 taxable invest-
ment at the stated taxable rate.
<TABLE>
<CAPTION>
2.00% 2.50% 3.00% 3.50% 4.00% 4.50% 5.00%
Taxable Tax-Free Tax-Free Tax-Free Tax-Free Tax-Free Tax-Free Tax-Free
--------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
3.00% $ 51,750 $41,400 $34,500 $29,571 $25,875 $23,000 $20,700
--------------------------------------------------------------------------
4.00% $ 69,000 $55,200 $46,000 $39,429 $34,500 $30,667 $27,600
--------------------------------------------------------------------------
5.00% $ 86,250 $69,000 $57,500 $49,286 $43,125 $38,333 $34,500
--------------------------------------------------------------------------
6.00% $103,500 $82,800 $69,000 $59,143 $51,750 $46,000 $41,400
--------------------------------------------------------------------------
7.00% $120,750 $96,600 $80,500 $69,000 $60,375 $53,667 $48,300
</TABLE>
*The dollar amounts in the table reflect a 31% federal income tax rate.
This table is for illustrative purposes only and is not intended to predict the
actual return you might earn on your investment. The Fund occasionally may ad-
vertise its performance in similar tables using a different current tax rate
than that shown here. The tax rate shown here may be higher or lower than your
actual tax rate; a higher tax rate would tend to make the dollar amounts in the
table lower, while a lower tax rate would make the amounts higher. You should
consult your tax advisor to determine your actual tax rate.
ADDITIONAL INFORMATION ABOUT PURCHASESAND SALES
Exchange Privileges
You may exchange shares of the Fund for shares of any other open-end management
investment company with reciprocal exchange privileges (the "Nuveen Funds"),
into an identically registered account provided that the Nuveen Fund into which
shares are to be exchanged is offered in the shareholder's state of residence
and that the shares to be exchanged have been held by the shareholder for a pe-
riod of at least 15 days. Shares of Nuveen Funds purchased subject to a front-
end sales charge may be exchanged for shares of the Fund or any other Nuveen
Fund at the next determined net asset value without any front-end sales charge.
Shares of any Nuveen Fund purchased through dividend reinvestment or through
reinvestment of Nuveen Defined Portfolio distributions (and any dividends
thereon) may be exchanged for shares of the Fund or any other Nuveen Fund with-
out a front-end sales charge. Exchanges of shares with respect to which no
front-end sales charge has been paid will be made at the public offering price,
which may include a front-end sales charge, unless a front-end sales charge has
previously been paid on the investment represented by the exchanged shares
(i.e., the shares to be exchanged were originally issued in exchange for shares
on which a front-end sales charge was paid), in which case the exchange will be
made at net asset value. Because certain other Nuveen Funds may determine net
asset value and therefore honor purchase or redemption requests on days when
the Fund
S-25
<PAGE>
does not (generally, Martin Luther King's Birthday, Columbus Day and Veteran's
Day), exchanges of shares of one of those funds for shares of the Fund may not
be affected on such days.
The total value of shares being exchanged must at least equal the minimum in-
vestment requirement of the Nuveen Fund into which they are being exchanged.
Exchanges are made based on the relative dollar values of the shares involved
in the exchange, and will be effected by redemption of shares of the Nuveen
Fund held and purchase of the shares of the other Nuveen Fund. For federal in-
come tax purposes, any such exchange constitutes a sale and purchase of shares
and may result in capital gain or loss. Before exercising any exchange, you
should obtain the Prospectus for the Nuveen Fund into which shares are to be
exchanged and read it carefully. If the registration of the account for the
Fund you are purchasing is not exactly the same as that of the Fund account
from which the exchange is made, written instructions from all holders of the
account from which the exchange is being made must be received, with signatures
guaranteed by a member of any approved Medallion Guarantee Program or in such
other manner as may be acceptable to the Fund. You may also make exchanges by
telephone if a pre-authorized exchange authorization, as provided on the ac-
count Application Form, is on file with Chase Global Funds Services Company,
the Fund's shareholder service agent. The exchange privilege may be modified or
discontinued at any time.
Additional Information
An account will be maintained for each shareholder of record in the Fund by our
Transfer Agent. Share certificates will be issued only upon written request of
the shareholder to our Transfer Agent. No certificates are issued for frac-
tional shares. The Fund reserves the right to reject any purchase order and to
waive or increase minimum investment requirements.
Confirmations of each purchase and redemption order as well as monthly state-
ments are sent to every shareholder. Master accounts also receive a monthly
summary report setting forth the share balance and dividends earned for the
month for each sub-account established under that master account.
To assist those institutions performing their own sub-accounting, same day in-
formation as to the Fund's daily per share income to seven decimal places and
the one-day yield to four decimal places are normally available by 3:30 p.m.,
Eastern Time.
A change in registration or transfer of shares held in the name of a
broker/dealer can only be effected by an order in good form from the
broker/dealer acting on behalf of the investor. Broker/dealers are encouraged
to open single master accounts. However, some broker/dealers may wish to use
our Transfer Agent's sub-accounting system to minimize their internal record-
keeping requirements. A broker/dealer or other investor requesting shareholder
servicing or accounting other than the master account or subaccounting service
offered by the Fund will be required to enter into a separate agreement with
the agent for these services for a fee to be determined in accordance with the
level of services to be furnished.
Banks and other organizations through which investors may purchase shares of
the Fund may impose charges in connection with purchase orders. Investors
should contact their institutions directly to determine what charges, if any,
may be imposed.
S-26
<PAGE>
A fee of 1% of the current market value of any shares represented by a certifi-
cate will be charged if the certificate is lost, stolen, or destroyed. The fee
is paid to Seaboard Surety Company for issuance of the lost, stolen, or de-
stroyed certificate.
Subject to the rules of the SEC, the Fund reserves the right to suspend the
continuous offering of the shares at any time, but such suspension shall not
affect the shareholder's right of redemption as described below. The Fund also
reserves the right to reject any purchase order and to waive or increase mini-
mum investment requirements.
Redemption in Kind
The Fund has committed to pay in cash all redemption requests made by each
shareholder during any 90 day period up to the lesser of $250,000 or 1% of the
net asset value of the Fund at the beginning of such period. This commitment is
irrevocable without the prior approval of the SEC and is a fundamental policy
of the Fund which may not be changed without shareholder approval. In the case
of redemption requests in excess of such amounts, the Board of Directors re-
serves the right to have the Fund make payment in whole or in part in securi-
ties or other assets of the Fund in case of an emergency or any time a cash
distribution would impair the liquidity of the Fund to the detriment of the ex-
isting shareholders. In this event, the securities would be valued in the same
manner as the portfolio of the Fund is valued. If the recipient were to sell
such securities, he or she would incur brokerage charges.
Other Practices
The Fund may encourage registered representatives and their firms to help ap-
portion their assets among bonds, stocks and cash, and may seek to participate
in programs that recommend a portion of their assets be invested in money mar-
ket instruments.
The Fund may suspend the right of redemption or delay payment more than seven
days (a) during any period when the New York Stock Exchange is closed (other
than customary weekend and holiday closings), (b) when trading in the markets
the Fund normally utilizes is restricted, or an emergency exists as determined
by the SEC so that disposal of the Fund's investments or determination of its
net asset value is not reasonably practicable, or (c) for such other periods as
the SEC by order may permit for protection of the shareholders of the Fund.
The Fund has authorized certain brokers and firms to accept purchase and re-
demption orders on its behalf. The Fund will consider an order to be "received"
when such a broker or firm accepts the order from its customer.
In addition to the types of compensation to dealers to promote sales of Fund
shares that are described in the prospectus, Nuveen may from time to time make
additional reallowances only to certain authorized dealers who sell or are ex-
pected to sell certain minimum amounts of shares of the Nuveen Mutual Funds
during specified time periods.
OTHER INFORMATION REGARDING SHARES OF THE FUND
Shareholders should note that when a Fund dividend check has been returned to
the sender by the post office after repeated mailings, the shareholder account
will thereafter be registered for automatic rein-
S-27
<PAGE>
vestment of dividends and thus the dividend check and future dividend checks
will be reinvested in additional Fund shares. Shareholders are reminded that
they need to advise the Funds promptly in writing of any change in address.
The Glass-Steagall Act and other applicable laws, among other things, may limit
banks from engaging in the business of underwriting, selling or distributing
securities. Since the only functions of banks who may be engaged as service or-
ganizations is to perform administrative shareholder servicing functions, the
Fund believes that such laws should not preclude a bank from acting as a serv-
ice organization. However, future changes in either federal or state statutes
or regulations relating to the permissible activities of banks and their sub-
sidiaries or affiliates, as well as judicial or administrative decisions or in-
terpretations of statutes or regulations, could prevent a bank from continuing
to perform all or a part of its shareholder servicing activities. If a bank
were prohibited from so acting, its shareholder customers would be permitted to
remain shareholders of the Fund and alternative means for continuing the ser-
vicing of such shareholders would be sought.
Nuveen serves as the principal underwriter of the shares of the Fund pursuant
to a "best efforts" arrangement as provided by a distribution agreement with
the Fund, dated February 1, 1999 ("Distribution Agreement"). Pursuant to the
Distribution Agreement, the Fund appointed Nuveen to be its agent for the dis-
tribution of the Fund's shares on a continuous offering basis. Nuveen sells
shares to or through brokers, dealers, banks or other qualified financial in-
termediaries (collectively referred to as "Dealers"), or others, in a manner
consistent with the Funds then effective registration statement. Pursuant to
the Distribution Agreement, Nuveen, at its own expense, finances certain activ-
ities incident to the sale and distribution of the Fund's shares, including
printing and distributing of prospectuses and statements of additional informa-
tion to other than existing shareholders, the printing and distributing of
sales literature, advertising and payment of compensation and giving of conces-
sions to dealers. Expenses incurred in registering the Fund and its shares un-
der federal and state securities laws are paid by the Fund.
To help advisors and investors better understand and more efficiently use an
investment in the Fund to reach their investment goals, the Fund and its spon-
sor, Nuveen, may advertise and create specific investment programs and systems.
For example, such activities may include presenting information on how to use
an investment in the Fund, alone or in combination with an investment in other
mutual Funds or unit investment trusts sponsored by Nuveen, to accumulate as-
sets for future education needs or periodic payments such as insurance premi-
ums. The Fund and its sponsor may produce software or additional sales litera-
ture to promote the advantages of using the Fund to meet these and other spe-
cific investor needs.
FINANCIAL STATEMENTS
The audited financial statements for the Fund's most recent fiscal year appear
in the Fund's Annual Report. The Annual Report accompanies this Statement of
Additional Information.
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MAI-EX 6-00
<PAGE>
ANNUAL REPORT February 29, 2000
NUVEEN
Investments
NUVEEN
MONEY MARKET
FUNDS
Money Market Fund
[Photo Appears Here]
<PAGE>
Contents
1 Dear Shareholder
3 Nuveen Money Market Fund Spotlight
4 Portfolio of Investments
6 Statement of Net Assets
6 Statement of Operations
7 Statement of Changes in Net Assets
8 Notes to Financial Statements
11 Financial Highlights
12 Report of Independent Public Accountants
13 Fund Information
<PAGE>
DEAR
Shareholder,
[Photo of Timothy R. Schwertfeger Appears Here]
Timothy R. Schwertfeger
Chairman of the Board
"We are dedicated to helping you and your financial advisor develop a family
wealth management strategy unique to you and your goals and values."
Setting financial goals is an important first step toward building wealth. At
Nuveen Investments, we believe those goals should not be considered ends in
themselves. Rather, you and your financial advisor's focus should be on
realizing your life's dreams--the things that matter most to you and how you can
make them happen--or make them better.
Through a well-crafted financial plan, you have the chance to shape future
generations--to broaden your sphere of influence--to leave your legacy.
As you develop that plan, you'll want to consider the different ways your
success can benefit others. You may find that you want to create a new set of
goals to achieve this. Working with your financial advisor, you have the ability
to make those dreams a reality--for yourself and future generations.
A Trusted Resource As you face some of the most important, lasting decisions you
and your family will make, you'll want to draw upon the support, counsel and
objectivity of a trusted advisor. That's because your financial advisor has the
expertise and access to other professionals who can help you make informed
choices--choices that affect not only your loved ones today, but those your
legacy will touch in the future.
Your financial advisor can provide sound financial insight, an
integrated approach to your investments and can serve as a knowledgeable friend
with your family's best interest at heart.
Family Wealth Management Too often, family wealth management is thought of in
one dimension--as the stewardship of your household's financial resources. At
Nuveen Investments, we think of family wealth management as the map to help you
reach your financial, and your life's, destinations. It's a multi-faceted
strategy to plan for not just your needs, but the needs of future generations.
We are dedicated to helping you and your financial advisor develop a
family wealth management strategy unique to you and your goals and values.
The Economic Environment You may be reading this report at the suggestion of
your financial advisor. I want to briefly report on the economic environment in
which your Nuveen investment performed.
The end of your fund's fiscal period, February 29, 2000, was an
important day in our nation's economic life. It marked the 107th month of
continued economic expansion, the longest period of expansion in history. The
only period to rival that length was the 106-month expansion from February 1961
to December 1969, a period known best for its military conflicts, domestic
unrest and soaring inflation.
That was then; this is now.
ANNUAL REPORT page 1
<PAGE>
Nuveen is dedicated to providing investors access to a team of highly
experienced investment managers, each overseeing portfolios within their
specific areas of expertise. This select group of asset management firms directs
the investment activities of the Nuveen Mutual Funds. Nuveen has chosen them for
their rigorously disciplined investment approaches and their focus on consistent
long-term performance.
Drawing on decades of experience and specialized knowledge, these skilled asset
managers have earned reputations for excellence in their fields of expertise,
whether it is blue-chip growth stocks, large-cap value stocks, bonds or
international securities.
Nuveen's income-oriented funds feature portfolio management by Nuveen Investment
Advisory Services (NIAS). NIAS follows a disciplined, research-driven investment
approach to uncover income securities that combine exceptional relative value
with above-average return potential. Drawing upon 300 combined years of
investment experience, the Nuveen team of portfolio managers and research
analysts offers:
. A commitment to exhaustive research
. An active, value-oriented investment style
. The unmatched presence and trading leverage of a market leader.
The vigilant inflationary watch of Federal Reserve Chairman Alan
Greenspan, the growth of the Internet and other technology-related developments
and the globalization of the economy are three reasons for continued economic
health.
In their battle to keep inflation at bay, Greenspan's Fed raised
interest rates on February 2, 2000, and again on March 21, 2000. The latest
increase marked the fifth time the Fed has raised the federal funds rate--the
interest that banks charge each other on overnight loans--since June 1999.
Over the short term, the inflation threat has meant increased price
fluctuations in the equity markets. Part of that is due to the fact that
investors and the various markets have been watching--and reacting to--every
announcement concerning economic statistics.
Longer term, we believe there's still faith in the emerging paradigm,
which holds that improvements in productivity enable us to have both economic
growth and low inflation at the same time. The 1960's 106-month expansion that I
noted earlier was fueled by government spending. Today's economy has been fueled
by consumer spending and improved productivity.
Performance Review Your fund's assets are invested in a diversified
portfolio of high-quality money market instruments that the management team
believes present minimal credit risks. I'm pleased to report that despite market
volatility, the Nuveen Money Market Fund continued to provide investors with
attractive short-term rates. As of February 29, 2000, Nuveen Money Market Fund
offered investors a 7-day yield of 4.68%. Please see the Fund Spotlight in this
report for more information.
In Closing We believe the potential presence of inflation and price
swings in the markets reinforce the importance of working with an advisor,
staying focused on the long term and adhering to your financial plan. With a
sound plan in place, you may be better positioned to weather the markets' ups
and downs. As you pursue your life's dreams, your financial advisor can serve as
a valuable resource in helping you keep market events in perspective while you
focus on your overall financial plan.
For more information on any Nuveen investment, including a prospectus,
contact your financial advisor. Or call Nuveen at (800) 621-7227 or visit our
Internet site at www.nuveen.com. Please read the prospectus carefully before you
invest or send money.
Since 1898, Nuveen has been synonymous with investments that stand the
test of time. We are committed to maintaining that reputation and working with
financial advisors to provide investment solutions that help individuals achieve
their lives dreams. Thank you for your continued confidence.
Sincerely,
/s/ Timothy R. Schwertfeger
Timothy R. Schwertfeger
Chairman of the Board
April 14, 2000
ANNUAL REPORT page 2
<PAGE>
NUVEEN MONEY MARKET FUND
Fund Spotlight as of February 29, 2000
Portfolio Statistics
Inception Date 6/99
---------------------------------------
Net Assets $8.4 million
---------------------------------------
Average Weighted Maturity 13.08 days
---------------------------------------
Yields
SEC 7-Day Yield 4.68%
---------------------------------------
SEC 30-Day Yield 4.83%
---------------------------------------
Diversification (as a % of market value)
Basic Materials 17%
---------------------------------------
Financials 16%
---------------------------------------
Consumer Staples 11%
---------------------------------------
Healthcare 11%
---------------------------------------
Consumer Cyclicals 10%
---------------------------------------
Utilities 9%
---------------------------------------
Capital Goods 7%
---------------------------------------
Industrial (Other) 4%
---------------------------------------
Long-Term Care 4%
---------------------------------------
Technology 4%
---------------------------------------
Transportation 4%
---------------------------------------
Education and Civic Organizations 2%
---------------------------------------
Housing (Multifamily) 1%
---------------------------------------
Past performance is no guarantee of future results.
An investment in the fund is not insured or guaranteed by the Federal Deposit
Insurance Corporation or any other government agency. Although the fund seeks to
preserve the value of an investment in the fund at $1.00 per share, it is
possible to lose money by investing in the fund.
Terms To Know
SEC Yield A standardized calculation that the Securities and Exchange Commission
requires mutual funds to use when advertising rates of income return. This
standardized rate ensures that investors are comparing "apples to apples" when
comparing advertisements from different mutual fund companies.
ANNUAL REPORT page 3
<PAGE>
Portfolio of Investments
Nuveen Money Market Fund
February 29, 2000
<TABLE>
<CAPTION>
Principal Amortized
Amount (000) Description Ratings* Cost
--------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
CERTIFICATES of DEPOSIT - 0.6%
$ 50 MBNA America Bank, N.A., 5.400%, 6/16/00 N/R $ 49,923
=================---------------------------------------------------------------------------------------------------------
COMMERCIAL PAPER - 61.2%
$ 150 Allmerica Financial Corporation, 0.000%, 3/09/00 A-1 149,804
300 Allstate Corporation, 0.000%, 3/06/00 A-1 299,760
300 AT&T Corporation, 0.000%, 3/02/00 A-1+ 299,952
300 Coca-Cola Company, 0.000%, 5/01/00 A-1 297,031
300 Emerson Electric Company, 0.000%, 3/02/00 A-1+ 299,952
300 Ford Motor Credit Corporation, 0.000%, 4/06/00 A-1 298,263
300 Gillette Company, 0.000%, 3/17/00 A-1+ 299,234
200 Hasbro Incorporated, 0.000%, 3/10/00 A-1 199,713
300 MDU Resources, 0.000%, 3/08/00 A-1 299,663
300 Merrill Lynch, 0.000%, 3/10/00 A-1+ 299,573
300 MetLife Funding, 0.000%, 3/27/00 A-1+ 298,760
300 Motorola, Inc., 0.000%, 3/31/00 A-1 298,568
300 Pfizer Inc., 0.000%, 3/03/00 A-1+ 299,905
150 Southwestern Public Service Company, 0.000%, 3/28/00 A-1 149,346
300 Toyota Motor Credit Corporation, 0.000%, 3/23/00 A-1+ 298,952
300 United Parcel Service, 0.000%, 3/31/00 A-1+ 298,575
150 University of Chicago, 0.000%, 3/09/00 A-1+ 149,809
300 Walt Disney Company, 0.000%, 3/10/00 A-1 299,575
300 W.W. Grainger Corporation, 0.000%, 3/08/00 A-1+ 299,663
--------------------------------------------------------------------------------------------------------------------------
$5,150 Total Commercial Paper 5,136,098
=================---------------------------------------------------------------------------------------------------------
TAXABLE MUNICIPAL BONDS - 29.7%
Florida - 1.2%
$ 100 Florida Housing Finance Authority, Taxable Affordable Housing Guarantee VMIG-1 100,000
Revenue Bonds, Variable Rate Demand Bonds, Series 1993A, 6.000%,
1/01/34+ (Mandatory put 3/02/00)
--------------------------------------------------------------------------------------------------------------------------
Louisiana - 17.8%
1,500 Ascension Parish Pollution Control (BASF Wyandotte Corporation), Variable Rate P-1 1,500,000
Demand Bonds, 3.900%, 12/01/05+
--------------------------------------------------------------------------------------------------------------------------
Minnesota - 3.6%
300 Port Authority of the City of Saint Paul, Minnesota, Variable Rate Demand A-1 300,000
Bonds, Industrial Development Revenue Bonds (Ideal Printers Project),
Series 1999B, 6.050%, 4/01/11+
--------------------------------------------------------------------------------------------------------------------------
New York - 7.1%
300 Genessee Memorial Hospital Association, Taxable Adjustable Rate Notes, Series N/R 300,000
1997, 6.140%, 2/01/17+
300 Oswego County Industrial Development Agency (New York), Civic Facility N/R 300,000
Revenue, Series 1999B (O.H. Properties), Variable Rate Demand Bonds,
6.140%, 6/01/24+
--------------------------------------------------------------------------------------------------------------------------
$2,500 Total Taxable Municipal Bonds 2,500,000
=================---------------------------------------------------------------------------------------------------------
</TABLE>
4
<PAGE>
<TABLE>
<CAPTION>
Principal Amortized
Amount (000) Description Ratings* Cost
------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
TAXABLE CORPORATE NOTES - 7.1%
$ 300 Budd Office Building Associates Limited Partnership, Taxable Adjustable Rate N/R $ 300,000
Notes, Series 1997, 6.140%, 10/01/47+
300 Fairborn Christel Manor, Inc., Floating Rate Demand Taxable Notes, Series N/R 300,000
1995, 6.140%, 6/01/10+
------------------------------------------------------------------------------------------------------------------------------------
$ 600 Total Taxable Corporate Notes 600,000
============------------------------------------------------------------------------------------------------------------------------
$8,300 Total Investments - 98.6% 8,286,021
============------------------------------------------------------------------------------------------------------------------------
Other Assets Less Liabilities - 1.4% 120,812
-------------------------------------------------------------------------------------------------------
Net Assets - 100% $8,406,833
=======================================================================================================
</TABLE>
* Ratings (not covered by the report of independent public accountants):
Using the higher of Standard & Poor's or Moody's rating.
N/R Investment is not rated.
+ The security has a maturity of more than one year, but has variable rate
and demand features which qualify it as a short-term security. The rate
disclosed is that currently in effect. This rate changes periodically
based on market conditions or a specified market index.
See accompanying notes to financial statements.
5
<PAGE>
Statement of Net Assets
Nuveen Money Market Fund
February 29, 2000
<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------------------------------------------
<S> <C>
Assets
Investments in short-term securities, at amortized cost, which approximates market value $8,286,021
Cash 103,259
Receivables:
Fund manager 44,989
Interest 21,513
Other assets 92
------------------------------------------------------------------------------------------------------------------------------------
Total assets 8,455,874
------------------------------------------------------------------------------------------------------------------------------------
Liabilities
Accrued expenses:
12b-1 fees 8,130
Other 18,392
Dividends payable 22,519
------------------------------------------------------------------------------------------------------------------------------------
Total liabilities 49,041
------------------------------------------------------------------------------------------------------------------------------------
Net assets applicable to shares outstanding $8,406,833
====================================================================================================================================
Shares outstanding:
Class A 4,315,822
Class B 713,458
Class C 934,847
Class R 2,442,706
------------------------------------------------------------------------------------------------------------------------------------
Total shares outstanding 8,406,833
------------------------------------------------------------------------------------------------------------------------------------
Net asset value, offering and redemption price per share (net assets divided by shares outstanding) $ 1.00
====================================================================================================================================
Statement of Operations
Nuveen Money Market Fund
For the period June 10, 1999 (commencement of operations) through February 29, 2000
------------------------------------------------------------------------------------------------------------------------------------
Investment Income $ 182,717
------------------------------------------------------------------------------------------------------------------------------------
Expenses
Management fees 14,713
12b-1 service fees - Class A 2,959
12b-1 distribution and service fees - Class B 2,996
12b-1 distribution and service fees - Class C 2,582
Shareholders' servicing agent fees and expenses 1,034
Custodian's fees and expenses 33,698
Trustees' fees and expenses 69
Professional fees 6,169
Shareholders' reports - printing and mailing expenses 6,511
Federal and state registration fees 34,417
Other expenses 106
------------------------------------------------------------------------------------------------------------------------------------
Total expenses before custodian fee credit and expense reimbursement 105,254
Custodian fee credit (1,836)
Expense reimbursement (73,628)
------------------------------------------------------------------------------------------------------------------------------------
Net expenses 29,790
------------------------------------------------------------------------------------------------------------------------------------
Net investment income 152,927
Net gain from investment transactions -
------------------------------------------------------------------------------------------------------------------------------------
Net increase in net assets from operations $ 152,927
====================================================================================================================================
</TABLE>
See accompanying notes to financial statements.
6
<PAGE>
Statement of Changes in Net Assets
Nuveen Money Market Fund
For the period June 10, 1999 (commencement of operations) through February 29,
2000
<TABLE>
<CAPTION>
<S> <C>
------------------------------------------------------------------------------------------------------------------------------------
Operations
Net investment income $ 152,927
Net realized gain from investment transactions -
------------------------------------------------------------------------------------------------------------------------------------
Net increase in net assets from operations 152,927
------------------------------------------------------------------------------------------------------------------------------------
Distributions to Shareholders
From undistributed net investment income:
Class A (56,592)
Class B (12,275)
Class C (10,617)
Class R (73,443)
------------------------------------------------------------------------------------------------------------------------------------
Decrease in net assets from distributions to shareholders (152,927)
------------------------------------------------------------------------------------------------------------------------------------
Share Transactions
(at constant net asset value of $1 per share)
Net proceeds from sale of shares 13,607,662
Net proceeds from shares issued to shareholders due to reinvestment of distributions 56,984
------------------------------------------------------------------------------------------------------------------------------------
13,664,646
Cost of shares redeemed (5,357,813)
------------------------------------------------------------------------------------------------------------------------------------
Net increase in net assets from share transactions 8,306,833
Net assets at the beginning of period 100,000
------------------------------------------------------------------------------------------------------------------------------------
Net assets at the end of period $ 8,406,833
====================================================================================================================================
</TABLE>
See accompanying notes to financial statements.
7
<PAGE>
Notes to Financial Statements
1. General Information and Significant Accounting Policies
The Nuveen Money Market Fund (the "Fund") is a series of the Nuveen Money Market
Trust (the "Trust") which was organized as a Massachusetts business trust on
January 15, 1999. The Trust (and each series within the Trust) is an open-end,
diversified management investment company registered under the Investment
Company Act of 1940.
The Fund invests substantially all of its assets in a diversified portfolio of
high quality money market instruments for current income, the stability of
principal and the maintenance of liquidity.
The following is a summary of significant accounting policies followed by the
Fund in the preparation of its financial statements in accordance with
accounting principles generally accepted in the United States.
Securities Valuation
The Fund invests in short-term securities maturing within one year from the date
of acquisition. Securities with a maturity of more than one year in all cases
have variable rate and demand features qualifying them as short-term securities
and are valued at amortized cost. On a dollar-weighted basis, the average
maturity of all such securities must be 90 days or less (at February 29, 2000,
the dollar-weighted average life was 13.08 days).
Securities Transactions
Securities transactions are recorded on a trade date basis. Realized gains and
losses from such transactions are determined on the specific identification
method. Securities purchased or sold on a when-issued or delayed delivery basis
may have extended settlement periods. Any securities so purchased are subject to
market fluctuation during this period. The Fund has instructed the custodian to
segregate assets in a separate account with a current value at least equal to
the amount of the when-issued and delayed delivery purchase commitments. At
February 29, 2000, the Fund had no such outstanding purchase commitments.
Interest Income
Interest income is determined on the basis of interest accrued, adjusted for
amortization of premiums and accretion of discounts.
Dividends and Distributions to Shareholders
Net investment income is declared as a dividend to shareholders of record as of
the close of each business day and payment is made or reinvestment is credited
to shareholder accounts after month-end. Net realized capital gains from
investment transactions, if any, are declared and distributed to shareholders
annually. Furthermore, capital gains are distributed only to the extent they
exceed available capital loss carryforwards.
Federal Income Taxes
The Fund intends to distribute all net ordinary taxable income and net realized
capital gains from investment transactions, if any, and to otherwise comply with
the requirements of Subchapter M of the Internal Revenue Code applicable to
regulated investment companies. Therefore, no federal tax provision is required.
Flexible Sales Charge Program
The Fund offers Class A, B, C and R Shares. Class A Shares incur an annual 12b-1
service fee and under limited circumstances may be subject to a contingent
deferred sales charge ("CDSC"). Class B Shares incur annual 12b-1 distribution
and service fees. An investor purchasing Class B Shares agrees to pay a CDSC of
up to 5% depending upon the length of time the shares are held by the investor
(CDSC is reduced to 0% at the end of six years). Class B Shares convert to Class
A Shares eight years after purchase. Class C Shares incur annual 12b-1
distribution and service fees. An investor purchasing Class C Shares agrees to
pay a CDSC of 1% if Class C Shares are redeemed within one year of purchase.
Class R Shares are not subject to any sales charge or 12b-1 distribution or
service fees. Class R Shares are available only under limited circumstances or
by specified classes of shareholders.
Insurance
The Fund has purchased liability insurance to protect against a decline in the
value of securities held in the Fund's portfolio caused by the default of
securities owned by the Fund. The insurance covers substantially all of the
Fund's investments except U.S. Government securities. The maximum total coverage
for all Nuveen money market funds is $50 million, with certain deductibles for
each loss. The Fund pays the policy premiums. Coverage under the policy is
subject to certain conditions and may not be renewable upon expiration. While
the policy is intended to provide some protection against credit risk and to
help the Fund maintain a constant price per share of $1.00, there is no
guarantee that the insurance will do so.
8
<PAGE>
Derivative Financial Instruments
The Fund may invest in certain derivative financial instruments including
futures, forward, swap, and option contracts, and other financial instruments
with similar characteristics. Although the Fund is authorized to invest in such
financial instruments, and may do so in the future, it did not make any such
investments during the period June 10, 1999 (commencement of operations) through
February 29, 2000.
Custodian Fee Credit
The Fund has an agreement with the custodian bank whereby the custodian fees and
expenses are reduced by credits earned on the Fund's cash on deposit with the
bank. Such deposit arrangements are an alternative to overnight investments.
Use of Estimates
The preparation of financial statements in conformity with accounting principles
generally accepted in the United States requires management to make estimates
and assumptions that affect the reported amounts of 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 may differ from those estimates.
2. Fund Shares
Transactions in Fund shares were as follows:
-------------------------------------------------------------------------------
Shares sold:
Class A $ 6,806,544
Class B 1,880,840
Class C 2,466,518
Class R 2,453,760
Shares issued to shareholders due to reinvestment of distributions:
Class A 40,650
Class B 7,514
Class C 7,829
Class R 991
-------------------------------------------------------------------------------
13,664,646
-------------------------------------------------------------------------------
Shares redeemed:
Class A (2,556,372)
Class B (1,199,896)
Class C (1,564,500)
Class R (37,045)
-------------------------------------------------------------------------------
(5,357,813)
-------------------------------------------------------------------------------
Net increase $ 8,306,833
===============================================================================
3. Securities Transactions
Purchases and sales (including maturities) of investments in short-term
securities during the period June 10, 1999 (commencement of operations) through
February 29, 2000, aggregated $43,975,468 and $35,827,000, respectively.
At February 29, 2000, the cost of investments owned for federal income tax
purposes was the same as the cost for financial reporting purposes.
4. Management Fee and Other Transactions with Affiliates
Under the Fund's investment management agreement with Nuveen Advisory Corp. (the
"Adviser"), a wholly owned subsidiary of The John Nuveen Company, the Fund pays
an annual management fee, payable monthly, which is based upon the average daily
net assets of the Fund as follows:
Average Daily Net Assets Management Fee
------------------------------------------------------------------
For the first $125 million .4500 of 1%
For the next $125 million .4375 of 1
For the next $250 million .4250 of 1
For the next $500 million .4125 of 1
For the next $1 billion .4000 of 1
For assets over $2 billion .3750 of 1
==================================================================
The management fee is reduced by, or the Adviser assumes certain Fund expenses
in an amount necessary to prevent the Fund's total operating expenses (including
the management fee, but excluding interest, taxes, fees incurred in acquiring
and disposing of portfolio securities, any 12b-1 distribution or service fees
and, to the extent permitted, extraordinary expenses) from exceeding .65 of 1%
of the average daily net assets of the Fund. The Adviser may modify or
discontinue these waivers and reimbursements at any time.
9
<PAGE>
Notes to Financial Statements (continued)
The management fee compensates the Adviser for overall investment advisory and
administrative services, and general office facilities. The Fund pays no
compensation directly to those of its Trustees who are affiliated with the
Adviser or to its officers, all of whom receive remuneration for their services
to the Fund from the Adviser or its affiliates.
5. Composition of Net Assets
At February 29, 2000, the Fund had an unlimited number of $.01 par value stock
authorized. Net assets consisted of $8,406,833 paid-in capital.
6. Investment Composition
At February 29, 2000, the revenue sources by purpose, expressed as a percent of
total investments, were as follows:
------------------------------------------------------------------
Basic Materials 17%
Capital Goods 7
Consumer Cyclicals 10
Consumer Staples 11
Education and Civic Organizations 2
Financials 16
Health Care 11
Housing/Multifamily 1
Industrial/Other 4
Long-Term Care 4
Technology 4
Transportation 4
Utilities 9
------------------------------------------------------------------
100%
==================================================================
For additional information regarding each investment security, refer to the
Portfolio of Investments.
10
<PAGE>
Financial Highlights
Selected data for a share outstanding throughout the period June 10, 1999
(commencement of operations) through February 29, 2000:
<TABLE>
<CAPTION>
Ratios/Supplemental Data
-----------------------------------------------------------
Before Credit/ After
Reimbursement Reimbursement (a)
--------------------- -----------------------
Ratio Ratio
Less of Net of Net
Beginning Distributions Ratio of Investment Ratio of Investment
Net Net from Net Ending Ending Expenses Income Expenses Income
Year Ended Asset Investment Investment Net Asset Total Net Assets to Average to Average to Average to Average
February 28/29, Value Income Income Value Return (000) Net Assets Net Assets Net Assets Net Assets
------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Class A (6/99)
2000 (c) $ 1.00 $ .03 $ (.03) $ 1.00 3.28% $ 4,316 3.69%* 1.98%* .95%* 4.71%*
Class B (6/99)
2000 (c) 1.00 .03 (.03) 1.00 2.74 713 3.82* 1.91* 1.70* 4.03*
Class C (6/99)
2000 (c) 1.00 .03 (.03) 1.00 2.74 935 4.44* 1.31* 1.70* 4.04*
Class R (6/99)
2000 (c) 1.00 .03 (.03) 1.00 3.46 2,443 2.52* 2.93* .70* 4.74*
====================================================================================================================================
</TABLE>
<TABLE>
<CAPTION>
After Credit/
Reimbursement (b)
-----------------------
Ratio
of Net
Ratio of Investment
Expenses Income to
Year Ended to Average Average
February 28/29, Net Assets Net Assets
-----------------------------------------------
<S> <C> <C>
class A (6/99)
2000 (c) .90%* 4.77%*
Class B (6/99)
2000 (c) 1.65* 4.09*
Class C (6/99)
2000 (c) 1.65* 4.10*
Class R (6/99)
2000 (c) .65* 4.80*
===============================================
</TABLE>
* Annualized
(a) After expense reimbursement from the investment adviser, where
applicable.
(b) After custodian fee credit and expense reimbursement, where applicable.
(c) For the period June 10, 1999 (commencement of operations) through
February 29, 2000.
11
<PAGE>
Report of Independent Public Accountants
To the Board of Trustees and Shareholders of
Nuveen Money Market Fund
We have audited the accompanying statement of net assets of the Nuveen Money
Market Fund (a series of the Nuveen Money Market Trust) (a Massachusetts
business trust) including the portfolio of investments, as of February 29, 2000,
and the related statement of operations, the statement of changes in net assets
and the financial highlights for the period indicated thereon. 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 audit in accordance with auditing standards generally accepted
in the United States. Those standards require that we plan and perform the
audit to obtain reasonable assurance about whether the 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 February 29,
2000, by correspondence with the custodian. 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 net assets of the Nuveen
Money Market Fund as of February 29, 2000, the results of its operations, the
changes in its net assets and the financial highlights for the period indicated
thereon in conformity with accounting principles generally accepted in the
United States.
ARTHUR ANDERSEN LLP
Chicago, Illinois
April 14, 2000
12
<PAGE>
Fund Information
Board of Trustees
Robert P. Bremner
Lawrence H. Brown
Anne E. Impellizzeri
Peter R. Sawers
William J. Schneider
Timothy R. Schwertfeger
Judith M. Stockdale
Fund Manager
Nuveen Advisory Corp.
333 West Wacker Drive
Chicago, IL 60606
Transfer Agent and Shareholder Services
Chase Global Funds Services
73 Tremont Street
Boston, MA 02108
(800) 257-8787
Legal Counsel
Morgan, Lewis &
Bockius LLP
Washington, D.C.
Independent Public Accountants
Arthur Andersen LLP
Chicago, IL
13
<PAGE>
SERVING INVESTORS
FOR GENERATIONS
[Photo of John Nuveen, Sr. Appears Here]
John Nuveen, Sr.
A 100-Year Tradition of Quality Investments
Since 1898, John Nuveen & Co. Incorporated has been synonymous with investments
that withstand the test of time. In fact, more than 1.3 million investors have
trusted Nuveen to help them build and sustain the wealth of a lifetime.
Whether your focus is long-term growth, dependable income or sustaining
accumulated wealth, Nuveen offers a wide variety of investments and services to
help meet your unique circumstances and financial planning needs. We can help
you build a better, well-diversified portfolio.
Call Your Financial Adviser Today
To find out how the Nuveen Innovation Fund might round out your investment
portfolio, contact your financial adviser today. Or call Nuveen at
(800) 257.8787 for more information. Ask your adviser or call for a prospectus
which details risks, fees and expenses. Please read the prospectus carefully
before you invest.
NUVEEN
Investments
John Nuveen & Co. Incorporated
333 West Wacker Drive
Chicago, IL 60606-1286
www.nuveen.com
<PAGE>
ANNUAL REPORT February 29, 2000
NUVEEN
Investments
NUVEEN
MONEY MARKET
FUNDS
[PHOTO APPEARS HERE]
Municipal
California Tax-Exempt
New York Tax-Exempt
<PAGE>
Contents
1 Dear Shareholder
3 Nuveen Money Market Funds Spotlight
4 Portfolio of Investments
12 Statement of Net Assets
13 Statement of Operations
14 Statement of Changes in Net Assets
17 Notes to Financial Statements
21 Financial Highlights
22 Report of Independent Public Accountants
23 Shareholder Meeting Report
25 Fund Information
<PAGE>
DEAR
Shareholder,
Setting financial goals is an important first step toward building wealth. At
Nuveen Investments, we believe those goals should not be considered ends in
themselves. Rather, you and your financial advisor's focus should be on
realizing your life's dreams - the things that matter most to you and how you
can make them happen - or make them better.
Through a well-crafted financial plan, you have the chance to shape future
generations - to broaden your sphere of influence - to leave your legacy.
As you develop that plan, you'll want to consider the different ways your
success can benefit others. You may find that you want to create a new set of
goals to achieve this. Working with your financial advisor, you have the ability
to make those dreams a reality - for yourself and future generations.
A Trusted Resource As you face some of the most important, lasting decisions
you and your family will make, you'll want to draw upon the support, counsel and
objectivity of a trusted advisor. That's because your financial advisor has the
expertise and access to other professionals who can help you make informed
choices - choices that affect not only your loved ones today, but those your
legacy will touch in the future.
Your financial advisor can provide sound financial insight, an integrated
approach to your investments and can serve as a knowledgeable friend with your
family's best interest at heart.
Family Wealth Management Too often, family wealth management is thought of in
one dimension - as the stewardship of your household's financial resources. At
Nuveen Investments, we think of family wealth management as the map to help you
reach your financial, and your life's, destinations. It's a multi-faceted
strategy to plan for not just your needs, but the needs of future generations.
We are dedicated to helping you and your financial advisor develop a family
wealth management strategy unique to you and your goals and values.
The Economic Environment You may be reading this report at the suggestion of
your financial advisor. I want to briefly report on the economic environment in
which your Nuveen investment performed.
The end of your fund's fiscal period, February 29, 2000, was an important
day in our nation's economic life. It marked the 107th month of continued
economic expansion, the longest period of expansion in history. The only period
to rival that length was the 106-month expansion from February 1961 to December
1969, a period known best for its military conflicts, domestic unrest and
soaring inflation.
That was then; this is now.
The vigilant inflationary watch of Federal Reserve Chairman Alan Greenspan,
the growth of the Internet and other technology-related developments and the
globalization of the economy are three reasons for continued economic health.
[PHOTO OF TIMOTHY R. SCHWERTFEGER APPEARS HERE]
Timothy R. Schwertfeger
Chairman of the Board
"We are dedicated to helping you and your financial advisor develop a family
wealth management strategy unique to you and your goals and values."
ANNUAL REPORT page 1
<PAGE>
In their battle to keep inflation at bay, Greenspan's Fed raised interest
rates on February 2, 2000 and again on March 21, 2000. The latest increase
marked the fifth time the Fed has raised the federal funds rate - the interest
that banks charge each other on overnight loans - since June 1999.
Over the short term, the inflation threat has meant increased price
fluctuations in the equity markets. Part of that is due to the fact that
investors and the various markets have been watching -- and reacting to -- every
announcement concerning economic statistics.
Longer term, there's still faith in the emerging paradigm, which holds that
improvements in productivity enable us to have both economic growth and low
inflation at the same time. The 1960's 106-month expansion that I noted earlier
was fueled by government spending. Today's economy has been fueled by consumer
spending and improved productivity.
Performance Review I'm pleased to report that despite market volatility,
Nuveen's municipal money market funds continued to provide investors with
attractive short-term rates. As of February 29, 2000, Nuveen Municipal Money
Market Fund offered investors a 7-day tax-free yield of 3.01%, which represented
a taxable-equivalent yield of 4.36% for investors in the 31% federal income tax
bracket. The tax-free 7-day yields for the two state money market funds were
2.99% for New York and 2.34% for California. The taxable-equivalent yield for
New York was 4.64% for investors in the 35.5% combined federal and state income
tax bracket. The taxable-equivalent yield for California was 3.74% for investors
in the 37.5% combined federal and state income tax bracket. Please see the Fund
Spotlight in this report for more information.
In Closing We believe the potential presence of inflation and price swings in
the markets reinforce the importance of working with an advisor, staying focused
on the long term and adhering to your financial plan. With a sound plan in
place, you may be better positioned to weather the markets' ups and downs. As
you pursue your life's dreams, your financial advisor can serve as a valuable
resource in helping you keep short-term market events in perspective while you
focus on your overall financial plan.
For more information on any Nuveen investment, including a prospectus,
contact your financial advisor. Or call Nuveen at (800) 621-7227 or visit our
Internet site at www.nuveen.com. Please read the prospectus carefully before you
invest or send money.
Since 1898, Nuveen has been synonymous with investments that stand the test
of time. We are committed to maintaining that reputation and working with
financial advisors to provide investment solutions that help individuals achieve
their lives dreams. Thank you for your continued confidence.
Sincerely,
/s/Tim Schwertfeger
Timothy R. Schwertfeger
Chairman of the Board
April 14, 2000
Nuveen is dedicated to providing investors access to a team of highly
experienced investment managers, each overseeing portfolios within their
specific areas of expertise. This select group of asset management firms directs
the investment activities of the Nuveen Mutual Funds. Nuveen has chosen them for
their rigorously disciplined investment approaches and their focus on consistent
long-term performance.
Drawing on decades of experience and specialized knowledge, these skilled asset
managers have earned reputations for excellence in their fields of expertise,
whether it is blue-chip growth stocks, large-cap value stocks, bonds or
international securities.
Nuveen's income-oriented funds feature portfolio management by Nuveen Investment
Advisory Services (NIAS). NIAS follows a disciplined, research-driven investment
approach to uncover income securities that combine exceptional relative value
with above-average return potential. Drawing upon 300 combined years of
investment experience, the Nuveen team of portfolio managers and research
analysts offers:
. A commitment to exhaustive research
. An active, value-oriented investment style
. The unmatched presence and trading leverage of a market leader.
ANNUAL REPORT page 2
<PAGE>
Terms To Know
SEC Yield A standardized calculation that the Securities and Exchange
Commission requires mutual funds to use when advertising rates of income return.
This standardized rate ensures that investors are comparing "apples to apples"
when comparing advertisements from different mutual fund companies.
Taxable Equivalent Yield The yield that would have to be earned on a security
to pay as much, after tax, as what is earned from a tax-exempt bond.
Past performance is no guarantee of future results.
An investment in the fund is not insured or guaranteed by the Federal Deposit
Insurance Corporation or any other government agency.
Although the fund serves to preserve the value of an investment in the fund at
$1.00 per share, it is possible to lose money by investing in the fund.
Fund Spotlight as of February 29, 2000
NUVEEN MUNICIPAL MONEY MARKET FUND
<TABLE>
<CAPTION>
Portfolio Statistics
<S> <C>
Inception Date 11/82
-----------------------------------------------------------------
Net Assets $242.7 million
-----------------------------------------------------------------
Average Weighted Maturity 27.37 days
-----------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
Tax-Free Yields
<S> <C>
SEC 7-Day Yield 3.01%
-----------------------------------------------------------------
SEC 30-Day Yield 2.80%
-----------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
Taxable Equivalent
(based on a federal income tax rate of 31%)
<S> <C>
SEC 7-Day Yield 4.36%
-----------------------------------------------------------------
SEC 30-Day Yield 4.06%
-----------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
Diversification (as a % of market value)
<S> <C>
Education and Civic Organizations 11%
-----------------------------------------------------------------
Long-Term Care 11%
-----------------------------------------------------------------
Tax Obligation (General) 11%
-----------------------------------------------------------------
Utilities 11%
-----------------------------------------------------------------
Capital Goods 10%
-----------------------------------------------------------------
Healthcare 10%
-----------------------------------------------------------------
Housing (Multifamily) 10%
-----------------------------------------------------------------
Industrial/Other 9%
-----------------------------------------------------------------
Basic Material 8%
-----------------------------------------------------------------
Consumer Cyclicals 5%
-----------------------------------------------------------------
Consumer Staples 2%
-----------------------------------------------------------------
Tax Obligation (Limited) 1%
-----------------------------------------------------------------
Transportation 1%
-----------------------------------------------------------------
</TABLE>
NUVEEN CALIFORNIA TAX-EXEMPT MONEY MARKET FUND
<TABLE>
<CAPTION>
Portfolio Statistics
<S> <C>
Inception Date 3/86
-----------------------------------------------------------------
Net Assets $55.5 million
-----------------------------------------------------------------
Average Weighted Maturity 31.52 days
-----------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
Tax-Free Yields
<S> <C>
SEC 7-Day Yield 2.34%
-----------------------------------------------------------------
SEC 30-Day Yield 2.20%
-----------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
Taxable Equivalent
(based on a combined federal and state income tax rate of 37.5%)
<S> <C>
SEC 7-Day Yield 3.74%
-----------------------------------------------------------------
SEC 30-Day Yield 3.52%
-----------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
Diversification (as a % of market value)
<S> <C>
Tax Obligation (General) 18%
-----------------------------------------------------------------
Healthcare 14%
-----------------------------------------------------------------
Utilities 14%
-----------------------------------------------------------------
Tax Obligation (Limited) 13%
-----------------------------------------------------------------
Housing (Multifamily) 12%
-----------------------------------------------------------------
Transportation 9%
-----------------------------------------------------------------
Water and Sewer 6%
-----------------------------------------------------------------
Capital Goods 5%
-----------------------------------------------------------------
Consumer Staples 5%
-----------------------------------------------------------------
Industrial (Other) 4%
-----------------------------------------------------------------
</TABLE>
NUVEEN NEW YORK TAX-EXEMPT MONEY MARKET FUND
<TABLE>
<CAPTION>
Portfolio Statistics
<S> <C>
Inception Date 2/87
-----------------------------------------------------------------
Net Assets $31.6 million
-----------------------------------------------------------------
Average Weighted Maturity 29.01 days
-----------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
Tax-Free Yields
<S> <C>
SEC 7-Day Yield 2.99%
-----------------------------------------------------------------
SEC 30-Day Yield 2.73%
-----------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
Taxable Equivalent
(based on a combined federal and state income tax rate of 35.5%)
<S> <C>
SEC 7-Day Yield 4.64%
-----------------------------------------------------------------
SEC 30-Day Yield 4.23%
-----------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
Diversification (as a % of market value)
<S> <C>
Tax Obligation (General) 30%
-----------------------------------------------------------------
Education and Civic Organizations 17%
-----------------------------------------------------------------
Housing (Multifamily) 15%
-----------------------------------------------------------------
Transportation 9%
-----------------------------------------------------------------
Utilities 9%
-----------------------------------------------------------------
Healthcare 7%
-----------------------------------------------------------------
Long-Term Care 6%
-----------------------------------------------------------------
Consumer Cyclicals 3%
-----------------------------------------------------------------
Industrial (Other) 2%
-----------------------------------------------------------------
Water and Sewer 2%
-----------------------------------------------------------------
</TABLE>
ANNUAL REPORT page 3
<PAGE>
Portfolio of Investments
Nuveen Municipal Money Market Fund
February 29, 2000
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Principal Amortized
Amount (000) Description Ratings* Cost
-----------------------------------------------------------------------------------------------------------------------------------
Alabama - 1.5%
$ 1,500 Industrial Development Board of the City of Citronelle, Alabama, Pollution Control Aa-2 $ 1,500,000
Revenue Bonds, Series 1992 Refunding (Akzo Chemicals Inc. Project), Variable Rate
Demand Bonds, 4.050%, 2/01/04+
2,250 Jefferson County, Alabama, Public Improvement Warrants, Series 1988 (Briarwood N/R 2,250,000
Presbyterian Church Project), Variable Rate Demand Bonds, 4.278%, 5/01/08+
-----------------------------------------------------------------------------------------------------------------------------------
Arizona - 1.4%
3,300 Maricopa County Pollution Control Corporation, Pollution Control Revenue Refunding A-1+ 3,300,000
Bonds (Arizona Public Service Company - Palo Verde Project), 1994 Series A, Variable
Rate Demand Bonds, 3.750%, 5/01/29+
-----------------------------------------------------------------------------------------------------------------------------------
Florida - 2.8%
3,100 Pasco County Housing Finance Authority, Multi-Family Housing Revenue Bonds (Carlton Arms VMIG-1 3,100,000
of Magnolia Valley Project), Series 1985, Variable Rate Demand Bonds, 3.975%, 12/01/07+
3,800 Sarasota County Public Hospital District, Sarasota Memorial Hospital Project, Commercial A-1+ 3,800,000
Paper Notes, 3.350%, 3/13/00
-----------------------------------------------------------------------------------------------------------------------------------
Illinois - 10.5%
7,000 Illinois Development Finance Authority, Pollution Control Revenue Bonds (Diamond-Star P-1 7,000,000
Motors Corporation Project), Series 1985, Variable Rate Demand Bonds, 4.800%, 12/01/08+
6,000 Illinois Educational Facilities Authority, Shedd Aquarium Society, Series 1987B, VMIG-1 6,000,000
Commercial Paper, 3.450%, 7/18/00
3,300 Illinois Health Facilities Authority, Healthcorp Affiliates, Series 1990 (Central VMIG-1 3,300,000
Du Page Hospital Association), Variable Rate Demand Revenue Bonds, 3.900%, 11/01/20+
5,430 City of Chicago, Illinois, Revenue Bonds (De La Salle Institute Project), Series 1997, A-1+ 5,430,000
Variable Rate Demand Bonds, 3.950%, 4/01/27+
1,065 County of Lake, Illinois, Variable Rate Demand Industrial Development Revenue Bonds, N/R 1,065,000
Series 1996A (Lake County Press, Inc. Project), 4.000%, 4/01/16+ (Alternative Minimum
Tax)
1,550 City of McHenry, Illinois, Variable Rate Demand Multifamily Housing Revenue Refunding N/R 1,550,000
Bonds (Westside Crest Apartments Project), Series 1996A, 4.000%, 3/01/21+ (Alternative
Minimum Tax)
1,000 City of McHenry, Illinois, Variable Rate Demand Multifamily Housing Revenue Refunding N/R 1,000,000
Bonds (Fawn Ridge Apartments Project), Series 1998, 4.000%, 12/01/24+ (Alternative
Minimum Tax)
-----------------------------------------------------------------------------------------------------------------------------------
Indiana - 3.1%
3,615 City of Lawrence, Indiana, Adjustable Rate Economic Development Revenue Bonds, Series 1998 A-1+ 3,615,000
(Lawrence Affordable Housing, LLC Project), Variable Rate Demand Bonds, 3.950%, 9/01/28+
(Alternative Minimum Tax)
4,000 Tippecanoe School Corporation, Indiana, Temporary Loan Warrants, 4.750%, 12/29/00 N/R 4,014,333
-----------------------------------------------------------------------------------------------------------------------------------
Iowa - 6.6%
8,800 Iowa Finance Authority, Solid Waste Disposal Revenue (Cedar River Paper Company), Variable A-1+ 8,800,000
Rate Demand Bonds, Series 1995A, 3.950%, 5/01/25+ (Alternative Minimum Tax)
4,400 Iowa Higher Education Loan Authority, Private College Variable Rate Demand Revenue Bonds N/R 4,400,000
(Maharishi University Project), Series 1999, 3.900%, 3/01/29+
2,900 City of Eddyville, Iowa, Industrial Development Revenue Bonds (Heartland Lysine, Inc. N/R 2,900,000
Project), Series 1985, Variable Rate Demand Bonds, 4.300%, 11/01/03+
-----------------------------------------------------------------------------------------------------------------------------------
Kansas - 2.9%
2,100 Kansas Development Finance Authority, Revenue Bonds (Village Shalom Obligated Group), A-1+ 2,100,000
Series 1998BB, Variable Rate Demand Bonds, 3.850%, 11/15/28+
5,000 City of Olathe, Kansas, Recreational Facilities Revenue, Series 1999B (YMCA of Kansas VMIG-1 5,000,000
City Project), Variable Rate Demand Bonds, 4.000%, 11/01/14+
</TABLE>
4
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Principal Amortized
Amount (000) Description Ratings* Cost
-----------------------------------------------------------------------------------------------------------------------------------
Kentucky - 6.8%
$ 1,600 Carroll County Collateralized Solid Waste Disposal Facilities (Kentucky Utilities VMIG-1 $ 1,600,000
Company Project), Variable Rate Demand Bonds, Series 1994A, 3.950%, 11/01/24+
(Alternative Minimum Tax)
3,100 City of Covington, Kentucky, Industrial Building Revenue Bonds, Series 1999 (Baptist N/R 3,100,000
Convalescent Center Project), Variable Rate Demand Bonds, 3.860%, 4/01/19+
9,005 Hancock County, Kentucky, Industrial Building Revenue Refunding Bonds (Southwire Company N/R 9,005,000
Project), Series 1990, Variable Rate Demand Bonds, 4.100%, 7/01/10+
2,825 City of Wilmore, Kentucky, Adjustable Rate Demand Housing Facilities Revenue Bonds, Series N/R 2,825,000
1999 (United Methodist Retirement Community, Inc. Project), 4.060%, 11/01/26+
-----------------------------------------------------------------------------------------------------------------------------------
Louisiana - 0.6%
1,410 Kentwood, Louisiana, Industrial Development Adjustable Rate Demand Revenue Bonds, Series Aa-2 1,410,000
1993 Refunding (Suntory Water Group Inc.), 4.050%, 8/01/12+
-----------------------------------------------------------------------------------------------------------------------------------
Massachusetts - 1.9%
4,548 Town of Milton, Massachusetts, Bond Anticipation Notes, 4.500%, 8/16/00 N/R 4,557,041
-----------------------------------------------------------------------------------------------------------------------------------
Michigan - 3.5%
7,100 Michigan Job Development Authority, Limited Obligation Revenue Bonds (Frankenmuth A-1 7,100,000
Bavarian Inn Motor Lodge Project), Series A, Variable Rate Demand Bonds, 4.000%,
9/01/15+
1,375 Michigan Strategic Fund, Variable Rate Demand Limited Obligation Revenue Bonds, Series 2000 N/R 1,375,000
(Fastco Industries, Inc. Project), 4.000%, 1/01/16+ (Alternative Minimum Tax)
-----------------------------------------------------------------------------------------------------------------------------------
Minnesota - 2.0%
4,825 City of Bloomington, Minnesota, Floating Rate Demand Commercial Revenue Bonds (James A-1+ 4,825,000
Avenue Associates Project), Series 1985, Variable Rate Demand Bonds, 3.950%, 12/01/15+
-----------------------------------------------------------------------------------------------------------------------------------
Missouri - 8.6%
2,000 Health and Educational Facilities Authority of the State of Missouri, Variable Rate A-1+ 2,000,000
Demand Bonds, Health Facilities Revenue Bonds (St. Francis' Medical Center), Series
1996A, 3.900%, 6/01/26+
4,600 Health and Educational Facilities Authority of the State of Missouri, Variable Rate VMIG-1 4,600,000
Demand Bonds, Health Facilities Revenue Bonds (Bethesda Barclay), Series 1996A, 4.000%,
8/15/26+
2,150 Health and Educational Facilities Authority of the State of Missouri, School District SP-1+ 2,155,690
Advance Funding, Series 1999L, Windsor C-1 School District, 4.250%, 9/19/00
8,000 State Environmental Improvement and Energy Resources Authority of Missouri, Unit Priced VMIG-1 8,000,000
Demand Adjustable Pollution Control Revenue Bonds, Series 1985A (Union Electric
Company), Commercial Paper, 3.250%, 3/07/00
4,000 The Industrial Development Authority of the County of Jackson, State of Missouri, VMIG-1 4,000,000
Variable Rate Demand Recreational Facilities Revenue Bonds (YMCA of Greater Kansas
City Project), Series 1996A, 4.000%, 11/01/16+
-----------------------------------------------------------------------------------------------------------------------------------
Montana - 2.1%
5,000 Forsyth, Montana, Pollution Control Revenue Bonds (Pacificorp Colstrip), Variable N/R 5,000,000
Rate Demand Bonds, Series 1986, 3.950%, 12/01/16+ (Alternative Minimum Tax)
-----------------------------------------------------------------------------------------------------------------------------------
New Hampshire - 2.1%
5,000 New Hampshire Higher Educational and Health Facilities Authority, Revenue Bonds, Hunt A-1 5,000,000
Community Issue, Series 1996, Variable Rate Demand Bonds, 3.900%, 5/01/26+
-----------------------------------------------------------------------------------------------------------------------------------
New Jersey - 0.5%
1,150 New Jersey Economic Development Authority, Economic Development Bonds (AJV Holdings, N/R 1,150,000
L.L.C. - 1999 Project), Variable Rate Demand Bonds, 4.000%, 12/01/14+ (Alternative
Minimum Tax)
-----------------------------------------------------------------------------------------------------------------------------------
Ohio - 14.2%
1,000 Ohio Housing Finance Agency, Residential Mortgage Revenue Notes (Mortgage Backed MIG-1 1,000,000
Securities Program), 2000 Series A-2, 4.050%, 9/01/00 (Alternative Minimum Tax)
2,500 Avon Local School District, Lorain County, Bond Anticipation Notes, Series 1999, N/R 2,504,543
School Improvement Bonds (General Unlimited Tax), 4.640%, 6/15/00
</TABLE>
5
<PAGE>
Portfolio of Investments
Nuveen Municipal Money Market Fund (continued)
February 29, 2000
<TABLE>
<CAPTION>
Principal Amortized
Amount (000) Description Ratings* Cost
-----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Ohio (continued)
$ 7,000 Cuyahoga County, Ohio, Multifamily Revenue Bonds (National Terminal Apartments Project), A-1 $ 7,000,000
Series 1999A, Variable Rate Demand Bonds, 4.010%, 7/01/29+
5,005 County of Erie, Ohio, Adjustable Rate Demand Health Care Facilities Revenue Bonds (The VMIG-1 5,005,000
Commons of Providence Project), Series 1996 B, Variable Rate Demand Bonds, 3.960%,
10/01/21+
3,300 Fairborn City School District, Greene County, Bond Anticipation Notes, Series 1999, N/R 3,306,879
School Improvement Bonds (General Unlimited Tax), 4.400%, 9/14/00
3,315 County of Franklin, Ohio, Floating Rate Demand Hospital Financing Revenue Bonds, Series N/R 3,315,000
1993 (Traditions at Mill Run Project), Variable Rate Demand Bonds, 4.040%, 11/01/14+
3,000 Kings Local School District, Ohio, Bond Anticipation Notes, Series 1999, 4.190%, 3/01/00 N/R 3,000,000
6,500 Lorain County, Ohio, Industrial Development Multiple Mode Revenue Bonds (Skill Tools N/R 6,500,000
Project), Variable Rate Demand Bonds, Series 1999, 4.100%, 8/01/14+ (Alternative Minimum
Tax)
2,610 City of Parma, Ohio, Adjustable Rate Industrial Development Revenue Bonds, Series 1999 (FDC N/R 2,610,000
Realty Project), Variable Rate Demand Bonds, 4.060%, 12/01/19+ (Alternative Minimum Tax)
-----------------------------------------------------------------------------------------------------------------------------------
Oregon - 1.2%
3,000 Multnomah County School District 1J, Portland (Oregon), Series 1999, Tax and Revenue MIG-1 3,004,803
Anticipation Notes, 4.000%, 6/30/00
-----------------------------------------------------------------------------------------------------------------------------------
Pennsylvania - 2.1%
2,175 Butler County Industrial Development Authority (Pennsylvania), Industrial Development N/R 2,175,000
Revenue Bonds (Wise Business Forms Project), Series 1997, Variable Rate Demand Bonds,
3.960%, 8/01/18+
3,000 Philadelphia School District, Tax and Revenue Anticipation Notes, Series 1999, 4.000%, MIG-1 3,005,266
6/30/00
-----------------------------------------------------------------------------------------------------------------------------------
Tennessee - 1.6%
4,000 The Industrial Development Board of the City of Memphis and County of Shelby, Tennessee, N/R 4,000,000
Industrial Development Refunding Revenue Bonds, Series 1999 (Techno Steel Corp.) (Tomen
Corporation Guarantor), Variable Rate Demand Bonds, 4.140%, 10/01/11+ (Alternative Minimum
Tax)
-----------------------------------------------------------------------------------------------------------------------------------
Texas - 8.0%
7,000 Brownsville, Texas, Utilities System, Commercial Paper Notes, Series A, 3.800%, 4/14/00 A-1+ 7,000,000
2,000 Brownsville, Texas, Utilities System, Commercial Paper Notes, Series A, 3.550%, 5/19/00 A-1+ 2,000,000
7,900 Midlothian Industrial Development Corporation, Exempt Facilities Revenue Bonds (Texas VMIG-1 7,900,000
Industries, Inc. Project), Variable Rate Demand Bonds, Series 1999, 3.950%, 5/01/29+
(Alternative Minimum Tax)
2,500 Sabine River Authority of Texas, Collateralized Pollution Control, Variable Rate Demand A-1+ 2,500,000
Bonds (Texas Utilities Electric Company), 3.900%, 4/01/30+ (Alternative Minimum Tax)
-----------------------------------------------------------------------------------------------------------------------------------
Vermont - 1.3%
3,195 Vermont Economic Development Authority, Variable Rate Demand Revenue Bonds (Vermont Pure N/R 3,195,000
Springs, Inc. Project), 1999 Series A, 4.000%, 1/01/20+ (Alternative Minimum Tax)
-----------------------------------------------------------------------------------------------------------------------------------
Virginia - 0.9%
2,235 Virginia Small Business Financing Authority, Variable Rate Demand Industrial Development N/R 2,235,000
Revenue Bonds, Series 1999 (Coral Graphic Services of Virginia, Inc. Project), 4.000%,
11/01/06+ (Alternative Minimum Tax)
-----------------------------------------------------------------------------------------------------------------------------------
Washington - 7.6%
4,400 Washington Health Care Facilities Authority, Variable Rate Demand Revenue Bonds, Series A-2 4,400,000
1984 (Adventist Health System-West/Walla Walla General Hospital), 3.710%, 9/01/09+
1,720 Washington State Housing Finance Commission, Variable Rate Demand Multifamily Revenue A-1 1,720,000
Bonds (LTC Properties, Inc. Project), Series 1995, 4.100%, 12/01/15+ (Alternative
Minimum Tax)
1,775 Washington State Housing Finance Commission, Variable Rate Demand Multifamily Revenue A-1 1,775,000
Bonds (Summer Ridge Apartments Project), Series 1999A, 4.150%, 12/02/29+ (Alternative
Minimum Tax)
5,000 Washington State Housing Finance Commission, Multifamily Revenue Bonds, Series 1999A A-1 5,000,000
(Regency Park Apartments Project), Variable Rate Demand Bonds, 4.150%, 10/01/29+
(Alternative Minimum Tax)
</TABLE>
6
<PAGE>
<TABLE>
<CAPTION>
Principal Amortized
Amount (000) Description Ratings* Cost
-----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Washington (continued)
$ 2,500 Lake Tapps Parkway Properties, Washington, Special Revenue Bonds, Series 1999B, VMIG-1 $ 2,500,000
Variable Rate Demand Bonds, 3.900%, 12/01/19+
3,000 Port Benton Economic Development Corporation, Washington, Solid Waste Revenue N/R 3,000,000
Bonds, Series 1999B (ATG Inc. Project), Variable Rate Demand Bonds, 4.000%,
11/01/14+ (Alternative Minimum Tax)
-----------------------------------------------------------------------------------------------------------------------------------
Wisconsin - 6.0%
7,600 Wisconsin Health and Educational Facilities Authority, Commercial Paper (Alexian VMIG-1 7,600,000
Village of Milwaukee, Inc.-Refinancing), Series 1988A, 3.600%, 3/28/00
3,000 Wisconsin Health and Educational Facilities Authority, Adjustable Put Option Revenue A-1 3,000,000
Bonds, Series 1997 (Froedtert Memorial Lutheran Hospital Trust), 3.980%, 4/01/27+
2,910 City of Milwaukee, Wisconsin, Variable Rate Demand Industrial Development Revenue N/R 2,910,000
Bonds, Series 1998 (Midwest Express Airlines, Inc. Project), 4.050%, 8/01/30+
(Alternative Minimum Tax)
1,150 City of New Berlin, Wisconsin, Adjustable Rate Industrial Development Revenue Bonds, N/R 1,150,000
Series 1992 (Wenninger Project), 4.000%, 4/01/07+ (Alternative Minimum Tax)
-----------------------------------------------------------------------------------------------------------------------------------
$242,088 Total Investments - 99.8% 242,138,555
============-----------------------------------------------------------------------------------------------------------------------
Other Assets Less Liabilities - 0.2% 559,931
--------------------------------------------------------------------------------------------------------------------
Net Assets - 100% $242,698,486
====================================================================================================================
</TABLE>
* Ratings (not covered by the report of independent public accountants):
Using the higher of Standard & Poor's or Moody's rating.
N/R Investment is not rated.
+ The security has a maturity of more than one year, but has variable rate
and demand features which qualify it as a short-term security. The rate
disclosed is that currently in effect. This rate changes periodically
based on market conditions or a specified market index.
See accompanying notes to financial statements.
7
<PAGE>
Portfolio of Investments
Nuveen California Tax-Exempt Money Market Fund
February 29, 2000
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Principal Amortized
Amount (000) Description Ratings* Cost
-----------------------------------------------------------------------------------------------------------------------------------
Capital Goods - 5.4%
$ 3,000 California Pollution Control Financing Authority, Solid Waste Disposal, Series VMIG-1 $ 3,000,000
1994A (Western Waste Industries), Variable Rate Demand Revenue Bonds, 2.750%,
10/01/06+ (Alternative Minimum Tax)
-----------------------------------------------------------------------------------------------------------------------------------
Consumer Staples - 5.4%
3,000 San Dimas Industrial Development Revenue Bonds (Bausch & Lomb Incorporated), Series N/R 3,000,000
1985, Variable Rate Demand Bonds, 4.050%, 12/01/15+
-----------------------------------------------------------------------------------------------------------------------------------
Health Care - 13.5%
2,500 California Health Facilities Financing Authority, Hospital Revenue Bonds, Series 1998A VMIG-1 2,500,000
(Adventist Health System West), Variable Rate Demand Bonds, 3.200%, 9/01/28+
2,500 California Health Facilities Authority (St. Joseph Health System), Series 1991B, Variable VMIG-1 2,500,000
Rate Demand Bonds, 3.200%, 7/01/09+
2,500 The City of Newport Beach (Orange County, California), Series 1992 (Hoag Memorial VMIG-1 2,500,000
Presbyterian Hospital), Variable Rate Demand Bonds, 3.250%, 10/01/22+
-----------------------------------------------------------------------------------------------------------------------------------
Housing/Multifamily - 11.8%
2,570 City of Chico, California, Multifamily Housing Revenue Refunding Bonds, Series 1995A N/R 2,570,000
(Sycamore Glen Project), Variable Rate Demand Bonds, 4.150%, 4/07/14+
1,000 Los Angeles Community Redevelopment Agency, Multifamily Housing Revenue, Series 1985 VMIG-2 1,000,000
(Skyline at South Park Apartments - Phase II), Variable Rate Demand Bonds, 5.550%,
12/01/05+
3,000 Housing Authority of the County of Santa Cruz, Variable Rate Demand Bonds, Multifamily A-1+ 3,000,000
Housing Revenue Bonds (Paloma del Mar Apartments), 1992 Issue A, 2.850%, 6/01/22+
(Alternative Minimum Tax)
-----------------------------------------------------------------------------------------------------------------------------------
Industrial/Other - 3.7%
2,030 Industrial Development Authority of the County of Riverside, California, Variable A-1+ 2,030,000
Rate Demand Bonds, Industrial Development Revenue Bonds, Series 1997 (Merrick Engineering,
Inc. Project), 3.000%, 3/01/27+ (Alternative Minimum Tax)
-----------------------------------------------------------------------------------------------------------------------------------
Tax Obligation/General - 18.3%
2,000 State of California, Commercial Paper Notes, General Obligation, 3.000%, 3/10/00 A-1+ 2,000,000
2,400 Hillsborough City School District (County of San Mateo, California), 1999 Tax and Revenue SP-1+ 2,409,011
Anticipation Notes, 4.250%, 8/30/00
2,000 Millbrae School District (County of Mateo, California), Tax and Revenue Anticipation SP-1+ 2,003,832
Notes, Series 1999, 4.000%, 6/30/00
2,500 City of Ontario (County of San Bernardino, California), 1999 Tax and Revenue Anticipation SP-1+ 2,504,633
Notes, 4.000%, 6/30/00
1,250 San Carlos School District (County of San Mateo, California), 1999 Tax and Revenue SP-1+ 1,252,397
Anticipation Notes, 4.000%, 6/30/00
-----------------------------------------------------------------------------------------------------------------------------------
Tax Obligation/Limited - 12.6%
2,000 Hacienda La Puente Unified School District, Certificates of Participation, Adult Education VMIG-1 2,000,000
Facility Financing Project, Series 1999, Variable Rate Demand Obligations, 2.550%,
10/01/09+
2,000 Orange County Improvement Bond Act of 1915, Irvine Coast Assessment District No. 88-1, VMIG-1 2,000,000
Limited Obligation Improvement, Variable Rate Demand Bonds, 3.200%, 9/02/18+
3,000 San Joaquin County Transportation Authority, Sales Tax Revenue, Commercial Paper Notes, A-1+ 3,000,000
3.150%, 3/16/00
</TABLE>
8
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Principal Amortized
Amount (000) Description Ratings* Cost
-----------------------------------------------------------------------------------------------------------------------------------
Transportation - 9.1%
$ 2,000 San Diego Unified Port District, Subordinate Airport Revenue (Lindberg Field), A-1+ $ 2,000,000
Series B, Commercial Paper Notes, 2.800%, 3/06/00
3,025 San Francisco Airport Commission, Commercial Paper Notes, 3.300%, 4/04/00 A-1+ 3,025,000
-----------------------------------------------------------------------------------------------------------------------------------
Utilities - 13.5%
2,500 California Pollution Control Financing Authority, Pollution Control Refunding Revenue A-1+ 2,500,000
Bonds (Pacific Gas and Electric Company), 1997 Series B, Variable Rate Demand Bonds,
3.150%, 11/01/26+ (Alternative Minimum Tax)
2,500 Los Angeles Department of Water and Power, Electric Plant, Commercial Paper Notes, A-1+ 2,500,000
2.750%, 4/13/00
2,500 Sacramento Municipal Utility District, Commercial Paper Notes, 2.650%, 5/12/00 VMIG-1 2,500,000
-----------------------------------------------------------------------------------------------------------------------------------
Water and Sewer - 6.1%
3,360 Hillsborough (California), Certificates of Participation, Water and Sewer System Project, A-1 3,360,000
Series 1995A, Variable Rate Demand Bonds, 3.850%, 6/01/15+
-----------------------------------------------------------------------------------------------------------------------------------
$55,135 Total Investments - 99.4% 55,154,873
===============--------------------------------------------------------------------------------------------------------------------
Other Assets Less Liabilities - 0.6% 358,805
--------------------------------------------------------------------------------------------------------------------
Net Assets - 100% $55,513,678
====================================================================================================================
</TABLE>
* Ratings (not covered by the report of independent public accountants):
Using the higher of Standard & Poor's or Moody's rating.
N/R Investment is not rated.
+ The security has a maturity of more than one year, but has variable rate
and demand features which qualify it as a short-term security. The rate
disclosed is that currently in effect. This rate changes periodically
based on market conditions or a specified market index.
See accompanying notes to financial statements.
9
<PAGE>
Portfolio of Investments
Nuveen New York Tax-Exempt Money Market Fund
February 29, 2000
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Principal Amortized
Amount (000) Description Ratings* Cost
-----------------------------------------------------------------------------------------------------------------------------------
Consumer Cyclicals - 3.2%
$ 1,000 Dutchess County Industrial Development Agency, Industrial Development Revenue Bonds A-1 $ 1,000,000
(Toys "R" Us - NYTEX Inc. Facility), Series 1984, Variable Rate Demand Bonds, 3.975%,
11/01/19+
-----------------------------------------------------------------------------------------------------------------------------------
Education and Civic Organizations - 17.4%
1,300 Dormitory Authority of the State of New York, New York Founding Charitable Corporation VMIG-1 1,300,000
Revenue Bonds, Series 1997, Variable Rate Demand Bonds, 3.750%, 7/01/12+
1,400 Madison County Industrial Development Agency (New York), Civic Facility Revenue, Series A-2 1,400,000
1999 (Cazenovia College), Variable Rate Demand Bonds, 4.100%, 6/01/19+
1,400 County of Monroe Industrial Development Agency, New York, Variable Rate Demand Revenue VMIG-1 1,400,000
Bonds (CHF - Rochester, L.L.C. - Rochester Institute of Technology Project), Series
1999A, 3.850%, 6/01/29+
1,400 New York City Industrial Development Agency, Revenue Bonds, Series 1989, Audubon Society, A-1+ 1,400,000
Variable Demand Revenue Bonds, 3.700%, 12/01/14+
-----------------------------------------------------------------------------------------------------------------------------------
Health Care - 7.6%
1,000 New York State Dormitory Authority, Sloan Kettering Cancer Center, Series 1989C, Variable VMIG-1 1,000,000
Rate Demand Revenue Bonds, 3.700%, 7/01/19+
1,400 New York State Housing Finance Agency, The Hospital for Special Surgery, Series 1985A, HSS VMIG-1 1,400,000
Properties Corporation, Variable Rate Demand Bonds, 3.800%, 11/01/10+
-----------------------------------------------------------------------------------------------------------------------------------
Housing/Multifamily - 15.2%
1,000 New York City Housing Development Corporation, Multifamily Rental Housing Revenue Bonds A-1+ 1,000,000
(Brittany Development), 1999 Series A, Variable Rate Demand Bonds, 3.800%, 6/15/29+
(Alternative Minimum Tax)
1,000 New York City Housing Development Corporation, Multifamily Rental Housing Revenue Bonds A-1+ 1,000,000
(One Columbus Place Development), 1998 Series A, Variable Rate Demand Bonds, 3.800%,
11/15/28+ (Alternative Minimum Tax)
1,400 New York State Housing Finance Agency, Housing Revenue, Series 1995A (East 84th Street), VMIG-1 1,400,000
Variable Rate Demand Bonds, 3.800%, 11/01/28+ (Alternative Minimum Tax)
1,400 New York City Housing Development Corporation (Upper Fifth Avenue Project), Variable VMIG-1 1,400,000
Rate Demand Bonds, 3.800%, 1/01/16+
-----------------------------------------------------------------------------------------------------------------------------------
Industrial/Other - 2.5%
800 Guilderland Industrial Development Agency, Variable Rate Demand Revenue Bonds (Northeastern P-1 800,000
Industrial Park Project), Series 1993A, 3.800%, 12/01/08+
-----------------------------------------------------------------------------------------------------------------------------------
Long-Term Care - 6.6%
700 New York State Dormitory Authority, Revenue Bonds, Series 1995 (Beverwyck Inc.), Variable VMIG-1 700,000
Rate Demand Bonds, 3.850%, 7/01/25+
1,400 County of Otsego Industrial Development Agency (New York), Civic Facility Revenue Bonds A-2 1,400,000
(St. James Retirement Community Project - Letter of Credit Secured), Series 1998A,
Variable Rate Demand Bonds, 3.800%, 8/01/28+
-----------------------------------------------------------------------------------------------------------------------------------
Tax Obligation/General - 31.3%
1,400 State of New York, General Obligation Environmental Quality, Commercial Paper Notes, A-1+ 1,400,000
Series 1997A, 3.500%, 3/09/00
1,400 Town of Hempstead, Nassau County, New York, Bond Anticipation Notes, Series 1999D, N/R 1,401,550
4.250%, 5/09/00
1,000 Mahopac Central School District, Putnam County, Bond Anticipation Notes, Series 2000A, A-1 1,002,450
4.500%, 9/01/00 (WI)
</TABLE>
10
<PAGE>
<TABLE>
<CAPTION>
Principal Amortized
Amount (000) Description Ratings* Cost
-----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Tax Obligation/General (continued)
$ 1,300 City of New York, General Obligation Bonds, Fiscal 1995 Series B, Variable Rate Demand VMIG-1 $ 1,300,000
Bonds, 3.750%, 8/15/05+
1,400 City of New York, General Obligation Bonds, Variable Rate Demand Bonds, Fiscal 1996 VMIG-1 1,400,000
Series J - Subseries J3, 3.800%, 2/15/16+
1,000 Patchogue-Medford Union Free School District, Suffolk County, New York, Tax MIG-1 1,001,533
Anticipation Notes for 1999-2000, 4.250%, 6/28/00
1,400 County of Schenectady, New York, Bond Anticipation Notes, Series 1999A, 4.25%, 3/22/00 N/R 1,400,359
1,000 County of Westchester, New York, General Obligation Serial Bonds, 1997 Series D, 4.625%, Aaa 1,005,312
11/15/00
-----------------------------------------------------------------------------------------------------------------------------------
Transportation - 9.2%
1,400 Metropolitan Transit Authority, New York, Transit Facilities, Commercial Paper Notes, A-1+ 1,400,000
3.700%, 6/09/00
700 The Port Authority of New York and New Jersey, Versatile Structure Obligations, Series A-1+ 700,000
2, Variable Rate Demand Bonds, 3.750%, 5/01/19+
800 The Port Authority of New York and New Jersey, Versatile Structure Obligations, Series VMIG-1 800,000
4, Variable Rate Demand Bonds, 3.850%, 4/01/24+ (Alternative Minimum Tax)
-----------------------------------------------------------------------------------------------------------------------------------
Utilities - 8.8%
1,400 New York State Energy Research and Development Authority (Niagara Mohawk Power P-1 1,400,000
Corporation), Pollution Control Revenue, Variable Rate Demand Bonds, Series 1986A,
3.800%, 12/01/26+ (Alternative Minimum Tax)
1,400 Long Island Power Authority (New York), Electric System Revenue Bonds, Series 6 of 1998, VMIG-1 1,400,000
Subordinate Lien, Variable Rate Demand Obligations, 3.700%, 5/01/33+
-----------------------------------------------------------------------------------------------------------------------------------
Water and Sewer - 1.6%
500 New York City Municipal Water Finance Authority, Water and Sewer System Revenue Bonds, VMIG-1 500,000
Fiscal 1996 Series A, Variable Rate Demand Bonds, 3.900%, 6/15/25+
-----------------------------------------------------------------------------------------------------------------------------------
$32,700 Total Investments - 103.4% 32,711,204
============-----------------------------------------------------------------------------------------------------------------------
Other Assets Less Liabilities - (3.4)% (1,065,028)
--------------------------------------------------------------------------------------------------------------------
Net Assets - 100% $31,646,176
====================================================================================================================
</TABLE>
* Ratings (not covered by the report of independent public
accountants): Using the higher of Standard & Poor's or Moody's
rating.
N/R Investment is not rated.
+ The security has a maturity of more than one year, but has
variable rate and demand features which qualify it as a short-
term security. The rate disclosed is that currently in effect.
This rate changes periodically based on market conditions or a
specified market index.
(WI) Security purchased on a when-issued basis (note 1).
See accompanying notes to financial statements.
11
<PAGE>
Statement of Net Assets
February 29, 2000
<TABLE>
<CAPTION>
Municipal California New York
-----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Assets
Investments in short-term municipal securities, at amortized cost, which approximates
market value $242,138,555 $55,154,873 $32,711,204
Cash -- 47,340 --
Receivables:
Fund manager 438,199 32,887 14,553
Interest 1,118,694 303,375 143,104
Investments sold 100,000 175,000 --
Other assets 1,625 181 274
-----------------------------------------------------------------------------------------------------------------------------------
Total assets 243,797,073 55,713,656 32,869,135
-----------------------------------------------------------------------------------------------------------------------------------
Liabilities
Cash overdraft 142,667 -- 78,753
Payable for investments purchased -- -- 1,002,450
Accrued expenses:
12b-1 fees 185,713 58,063 31,886
Other 241,475 47,497 41,118
Dividends payable 528,732 94,418 68,752
-----------------------------------------------------------------------------------------------------------------------------------
Total liabilities 1,098,587 199,978 1,222,959
-----------------------------------------------------------------------------------------------------------------------------------
Net assets applicable to shares outstanding $242,698,486 $55,513,678 $31,646,176
-----------------------------------------------------------------------------------------------------------------------------------
Shares outstanding 242,698,486 55,513,678 31,646,176
-----------------------------------------------------------------------------------------------------------------------------------
Net asset value, offering and redemption price per share (net assets divided
by shares outstanding) $ 1.00 $ 1.00 $ 1.00
-----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
See accompanying notes to financial statements.
12
<PAGE>
Statement of Operations
Year Ended February 29, 2000
<TABLE>
<CAPTION>
Municipal California* New York**
---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Investment Income $8,909,172 $1,192,029 $1,072,749
---------------------------------------------------------------------------------------------------------------------------
Expenses
Management fees 1,241,259 149,466 130,249
12b-1 fees 333,532 68,137 58,581
Shareholders' servicing agent fees and expenses 600,091 29,337 43,546
Custodian's fees and expenses 57,687 24,461 21,277
Trustees' fees and expenses 4,800 157 178
Professional fees 110,931 29,323 18,140
Shareholders' reports - printing and mailing expenses 156,292 29,859 10,470
Federal and state registration fees 22,954 3,460 188
Portfolio insurance expense 25,832 2,489 2,330
Other expenses 27,589 14,997 3,926
---------------------------------------------------------------------------------------------------------------------------
Total expenses before custodian fee credit and expense reimbursement 2,580,967 351,686 288,885
Custodian fee credit (1,418) (1,321) (1,291)
Expense reimbursement (657,154) (131,921) (101,182)
---------------------------------------------------------------------------------------------------------------------------
Net expenses 1,922,395 218,444 186,412
---------------------------------------------------------------------------------------------------------------------------
Net investment income 6,986,777 973,585 886,337
Net realized gain from investment transactions -- -- --
---------------------------------------------------------------------------------------------------------------------------
Net increase in net assets from operations $6,986,777 $ 973,585 $ 886,337
---------------------------------------------------------------------------------------------------------------------------
</TABLE>
* California includes the operations of the Service Plan series of the Nuveen
California Tax-Free Money Market Fund through the close of business on June 25,
1999, and the operations of the Nuveen California Tax-Exempt Money Market Fund
from such date through February 29, 2000.
**New York includes the operations of the Distribution Plan series of the Nuveen
New York Tax-Free Money Market Fund through the close of business on June 25,
1999, and the operations of the Nuveen New York Tax-Exempt Money Market Fund
from such date through February 29, 2000.
See accompanying notes to financial statements.
13
<PAGE>
Statement of Changes in Net Assets
<TABLE>
<CAPTION>
Municipal
----------------------------------------------------------------------------------------------------------------------
Year Ended Year Ended
2/29/00 2/28/99
<S> <C> <C>
----------------------------------------------------------------------------------------------------------------------
Operations
Net investment income $ 6,986,777 $ 7,273,829
Net realized gain from investment transactions -- --
----------------------------------------------------------------------------------------------------------------------
Net increase in net assets from operations 6,986,777 7,273,829
----------------------------------------------------------------------------------------------------------------------
Distributions to Shareholders (6,986,777) (7,273,829)
----------------------------------------------------------------------------------------------------------------------
Common Share Transactions
(at constant net asset value of $1 per share)
Net proceeds from sale of shares 163,405,512 159,407,682
Net proceeds from shares issued to shareholders due to reinvestment of distributions 6,413,805 6,997,731
----------------------------------------------------------------------------------------------------------------------
169,819,317 166,405,413
Cost of shares redeemed (179,474,987) (184,774,094)
----------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets from share transactions (9,655,670) (18,368,681)
Net assets at the beginning of year 252,354,156 270,722,837
----------------------------------------------------------------------------------------------------------------------
Net assets at the end of year $ 242,698,486 $ 252,354,156
----------------------------------------------------------------------------------------------------------------------
</TABLE>
See accompanying notes to financial statements.
14
<PAGE>
<TABLE>
<CAPTION>
California
--------------------------------------------------------------------------------
Year Ended 2/29/00*
--------------------------------------------------------------------------------
<S> <C>
Operations
Net investment income $ 973,585
Net realized gain from investment transactions --
--------------------------------------------------------------------------------
Net increase in net assets from operations 973,585
--------------------------------------------------------------------------------
Distributions to Shareholders (973,585)
--------------------------------------------------------------------------------
Common Share Transactions
(at constant net asset value of $1 per share)
Net proceeds from shares issued in the reorganization
of Nuveen California Tax-Free Money Market Fund
Institutional Series 3,634,486
Net proceeds from sale of shares 103,596,018
Net proceeds from shares issued to shareholders
due to reinvestment of distributions 615,227
--------------------------------------------------------------------------------
107,845,731
Cost of shares redeemed (166,093,543)
--------------------------------------------------------------------------------
Net increase (decrease) in net assets from share transactions (58,247,812)
Net assets at the beginning of year 113,761,490
--------------------------------------------------------------------------------
Net assets at the end of year $ 55,513,678
--------------------------------------------------------------------------------
</TABLE>
*The year ended February 29, 2000, information includes the change in net assets
of the Service Plan series of the Nuveen California Tax-Free Money Market Fund
through June 25, 1999, and the changes in net assets of the Nuveen California
Tax-Exempt Money Market Fund from such date through February 29, 2000.
<TABLE>
<CAPTION>
California
--------------------------------------------------------------------------------
Year Ended 2/28/99
--------------------------------------------------------------------------------
Service Plan
Series
--------------------------------------------------------------------------------
<S> <C>
Operations
Net investment income $ 2,778,800
Net realized gain from investment transactions --
--------------------------------------------------------------------------------
Net increase in net assets from operations 2,778,800
--------------------------------------------------------------------------------
Distributions to Shareholders (2,778,800)
--------------------------------------------------------------------------------
Common Share Transactions
(at constant net asset value of $1 per share)
Net proceeds from sale of shares 295,788,047
Net proceeds from shares issued to shareholders
due to reinvestment of distributions 2,604,802
--------------------------------------------------------------------------------
298,392,849
Cost of shares redeemed (271,546,956)
--------------------------------------------------------------------------------
Net increase in net assets from share transactions 26,845,893
Net assets at the beginning of year 86,915,597
--------------------------------------------------------------------------------
Net assets at the end of year $ 113,761,490
--------------------------------------------------------------------------------
</TABLE>
See accompanying notes to financial statements.
15
<PAGE>
Statement of Changes in Net Assets (continued)
<TABLE>
<CAPTION>
New York
--------------------------------------------------------------------------------
Year Ended 2/29/00*
--------------------------------------------------------------------------------
<S> <C>
Operations
Net investment income $ 886,337
Net realized gain from investment transactions --
--------------------------------------------------------------------------------
Net increase in net assets from operations 886,337
--------------------------------------------------------------------------------
Distributions to Shareholders (886,337)
--------------------------------------------------------------------------------
Common Share Transactions
(at constant net asset value of $1 per share)
Net proceeds from shares issued in the reorganization of
Nuveen New York Tax-Free Money Market Fund
Service Plan series 1,473,077
Net proceeds from shares issued in the reorganization of
Nuveen New York Tax-Free Money Market Fund
Institutional series 16,667
Net proceeds from sale of shares 40,147,717
Net proceeds from shares issued to shareholders
due to reinvestment of distributions 832,491
--------------------------------------------------------------------------------
42,469,952
Cost of shares redeemed (43,930,385)
--------------------------------------------------------------------------------
Net increase in net assets from share transactions (1,460,433)
Net assets at the beginning of year 33,106,609
--------------------------------------------------------------------------------
Net assets at the end of year $ 31,646,176
--------------------------------------------------------------------------------
</TABLE>
*The year ended February 29, 2000, information includes the changes in net
assets of the Distribution Plan series of the Nuveen New York Tax-Free Money
Market Fund through June 25, 1999, and the changes in net assets of the Nuveen
New York Tax-Exempt Money Market Fund from such date through February 29, 2000.
<TABLE>
<CAPTION>
New York
--------------------------------------------------------------------------------
<S> <C>
Year Ended 2/28/99
--------------------------------------------------------------------------------
Distribution Plan
Series
--------------------------------------------------------------------------------
Operations
Net investment income $ 835,048
Net realized gain from investment transactions --
--------------------------------------------------------------------------------
Net increase in net assets from operations 835,048
--------------------------------------------------------------------------------
Distributions to Shareholders (835,048)
--------------------------------------------------------------------------------
Common Share Transactions
(at constant net asset value of $1 per share)
Net proceeds from sale of shares 16,651,466
Net proceeds from shares issued to shareholders
due to reinvestment of distributions 810,058
--------------------------------------------------------------------------------
17,461,524
Cost of shares redeemed (13,209,032)
--------------------------------------------------------------------------------
Net increase in net assets from share transactions 4,252,492
Net assets at the beginning of year 28,854,117
--------------------------------------------------------------------------------
Net assets at the end of year $ 33,106,609
--------------------------------------------------------------------------------
</TABLE>
See accompanying notes to financial statements.
16
<PAGE>
Notes to Financial Statements
1. General Information and Significant Accounting Policies
The money market funds (the "Funds") covered in this report are Nuveen Municipal
Money Market Fund ("Municipal"), formerly, Nuveen Tax-Free Reserves, Inc.,
Nuveen California Tax-Exempt Money Market Fund ("California"), formerly, Nuveen
California Tax-Free Money Market Fund and Nuveen New York Tax-Exempt Money
Market Fund ("New York"), formerly, Nuveen New York Tax-Free Money Market Fund.
Nuveen California Tax-Free Money Market Fund and Nuveen New York Tax-Free Money
Market Fund were reorganized after the close of business on June 25, 1999, as
previously approved by shareholders. As part of the reorganization of the Nuveen
California Tax-Free Money Market Fund, the Service Plan series and the
Institutional series were consolidated and renamed Class A in California. As
part of the reorganization of the Nuveen New York Tax-Free Money Market Fund,
the Service Plan series, the Distribution Plan series and the Institutional
series were consolidated into New York.
Municipal is an open-end, diversified management company incorporated as a
Maryland corporation on July 6, 1982. California and New York are each a series
of the Nuveen Money Market Trust, an open-end management series investment
company organized as a Massachusetts business trust on January 15, 1999.
Each Fund invests substantially all of its assets in a diversified portfolio of
high quality, tax-exempt money market instruments for current income, the
stability of principal, and the maintenance of liquidity.
Each Fund issues its own shares at net asset value, which the Fund will seek to
maintain at $1.00 per share, without a sales charge.
The following is a summary of significant accounting policies followed by the
Funds in the preparation of their financial statements in accordance with
accounting principles generally accepted in the United States.
Securities Valuation
Each Fund invests in short-term municipal securities maturing within one year
from the date of acquisition. Securities with a maturity of more than one year
in all cases have variable rate and demand features qualifying them as short-
term securities and are valued at amortized cost. On a dollar-weighted basis,
the average maturity of all such securities must be 90 days or less (at February
29, 2000, the dollar-weighted average life was 27.37 days for Municipal, 31.52
days for California, and 29.01 days for New York).
Securities Transactions
Securities transactions are recorded on a trade date basis. Realized gains and
losses from such transactions are determined on the specific identification
method. Securities purchased or sold on a when-issued or delayed delivery basis
may have extended settlement periods. Any securities so purchased are subject to
market fluctuation during this period. The Funds have instructed the custodian
to segregate assets in a separate account with a current value at least equal to
the amount of the when-issued and delayed delivery purchase commitments. At
February 29, 2000, New York had an outstanding when-issued purchase commitment
of $1,002,450. There were no such outstanding purchase commitments in either
Municipal or California.
Investment Income
Interest income is determined on the basis of interest accrued, adjusted for
amortization of premiums and accretion of discounts.
Dividends and Distributions to Shareholders
Tax-exempt net investment income is declared as a dividend to shareholders of
record as of the close of each business day and payment is made or reinvestment
is credited to shareholder accounts after month-end. The Fund may also
distribute, from time to time, net ordinary taxable income and/or capital gains.
Income Taxes
Each Fund is a separate taxpayer for federal income tax purposes. Each Fund
intends to distribute all of its tax-exempt net investment income, taxable
ordinary income and/or net realized capital gains from investment transactions,
if any, and to otherwise comply with the requirements of Subchapter M of the
Internal Revenue Code applicable to regulated investment companies. Therefore,
no federal income tax provision is required. Furthermore, each Fund intends to
satisfy conditions which will enable interest from municipal securities, which
is exempt from regular federal income tax and designated state income taxes for
the California and New York Funds, to retain such tax-exempt status when
distributed to the shareholders of the Funds. All income dividends paid during
the fiscal year ended February 29, 2000, have been designated Exempt Interest
Dividends. Net ordinary taxable income and net realized capital gain
distributions, if any, are subject to federal taxation.
17
<PAGE>
Notes to Financial Statements (continued)
12b-1 Plan
Effective after the close of business on June 25, 1999, each Fund pays a fee to
reimburse John Nuveen & Co., Incorporated ("Nuveen"), a wholly owned subsidiary
of the John Nuveen Company, the Funds' principal underwriter and distributor,
for compensating authorized dealers of record, including Nuveen, for providing
ongoing services to the Fund or its shareholders. Nuveen may pay additional
amounts to such firms from its own resources at its discretion, and may retain
any portion of the 12b-1 fees not paid to such firms.
Insurance Commitments
Effective April 1, 1999, the Funds purchased liability insurance to protect
against a decline in the value of securities held in the Funds' portfolio caused
by the default of securities owned by the Funds. This policy replaces a similar
insurance policy from MBIA Insurance Corp. The insurance covers substantially
all of the Funds' investments except U.S. Government securities. The maximum
total coverage for all Nuveen money market funds is $50 million, with certain
deductibles for each loss. The Funds pay the policy premiums. Coverage under the
policy is subject to certain conditions and may not be renewable upon
expiration. While the policy is intended to provide some protection against
credit risk and to help the Funds maintain a constant price per share of $1.00,
there is no guarantee that the insurance will do so.
Derivative Financial Instruments
The Funds may invest in transactions in certain derivative financial
instruments, including futures, forward, swap, and option contracts, and other
financial instruments with similar characteristics. Although the Funds are
authorized to invest in such financial instruments, and may do so in the future,
they did not make any such investments during the fiscal year ended February 29,
2000.
Custodian Fee Credit
Each Fund has an agreement with the custodian bank whereby the custodian fees
and expenses are reduced by credits earned on each Fund's cash on deposit with
the bank. Such deposit arrangements are an alternative to overnight investments.
Use of Estimates
The preparation of financial statements in conformity with accounting principles
generally accepted in the United States requires management to make estimates
and assumptions that affect the reported amounts of 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 may differ from those estimates.
2. Securities Transactions
Purchases and sales (including maturities) of investments in short-term
municipal securities during the fiscal year ended February 29, 2000, were as
follows:
<TABLE>
<CAPTION>
Municipal California* New York**
<S> <C> <C> <C>
----------------------------------------------------------------
Purchases $712,414,542 $277,036,747 $78,781,139
Sales 721,330,000 396,669,150 81,280,000
----------------------------------------------------------------
</TABLE>
*The securities transactions include the purchases and sales (including
maturities) of the Nuveen California Tax-Free Money Market Fund through the
close of business on June 25, 1999, and the purchases and sales (including
maturities) of the Nuveen California Tax-Exempt Money Market Fund from such date
through February 29, 2000.
**The securities transactions include the purchases and sales (including
maturities) of the Nuveen New York Tax-Free Money Market Fund through the close
of business on June 25, 1999, and the purchases and sales (including maturities)
of the Nuveen New York Tax-Exempt Money Market Fund from such date through
February 29, 2000.
At February 29, 2000, the cost of investments owned for federal income tax
purposes was the same as the cost for financial reporting purposes for each
Fund.
At February 29, 2000, California had unused capital loss carryforwards of
$25,566 available for federal income tax purposes to be applied against future
capital gains if any. If not applied, $18,364 of the carryforwards will expire
in the year 2003 and $7,202 will expire in the year 2008.
3. Composition of Net Assets
At February 29, 2000, the Funds had common stock authorized of $.01 par value
per share. The composition of net assets as well as the number of authorized
shares were as follows:
<TABLE>
<CAPTION>
Municipal California New York
<S> <C> <C> <C>
--------------------------------------------------------------------------------
Capital paid in $ 242,698,486 $55,539,244 $31,646,176
Accumulated net realized gain (loss)
from investment transactions -- (25,566) --
--------------------------------------------------------------------------------
Net assets $ 242,698,486 $55,513,678 $31,646,176
--------------------------------------------------------------------------------
Authorized shares 2,000,000,000 Unlimited Unlimited
--------------------------------------------------------------------------------
</TABLE>
18
<PAGE>
4. Management Fees and Other Transactions with Affiliates
Prior to the close of business on June 25, 1999, under the Funds' investment
management agreement with Nuveen Advisory Corp. (the "Adviser"), a wholly owned
subsidiary of The John Nuveen Company, each Fund pays an annual management fee,
payable monthly, at the rates set forth below which are based upon the average
daily net assets of each Fund as follows:
<TABLE>
<CAPTION>
Management Fees
-------------------------
Average Daily Net Assets Municipal CA, NY
----------------------------------------------------------
<S> <C> <C>
For the first $500 million .500 of 1% .400 of 1%
For the next $500 million .475 of 1 .375 of 1
For net assets over $1 billion .450 of 1 .350 of 1
----------------------------------------------------------
</TABLE>
Prior to the close of business on June 25, 1999, pursuant to the management
agreements, the Adviser was obligated to reduce the management fee or assume
certain expenses of each Fund, in an amount necessary to prevent the total
expenses of each Fund (including the management fee and each Fund's share of
service payments under the Distribution and Service Plans, but excluding
interest, taxes, fees incurred in acquiring and disposing of portfolio
securities and, to the extent permitted, extraordinary expenses) in any fiscal
year from exceeding .75 of 1% of the average daily net assets of Municipal, and
.55 of 1% of the average daily net assets of California and New York.
Effective after the close of business on June 25, 1999, as approved by
shareholders, the management fee was as follows:
<TABLE>
<CAPTION>
Management Fees
--------------------------
Average Daily Net Assets Municipal CA, NY
------------------------------------------------------------
<S> <C> <C>
For the first $125 million .5000 of 1% .4000 of 1%
For the next $125 million .4875 of 1 .3875 of 1
For the next $250 million .4750 of 1 .3750 of 1
For the next $500 million .4625 of 1 .3625 of 1
For the next $1 billion .4500 of 1 .3500 of 1
For net assets over $2 billion .4250 of 1 .3250 of 1
------------------------------------------------------------
</TABLE>
Although not obligated to do so pursuant to the new advisory agreements, the
Adviser may for limited periods of time voluntarily agree to reimburse certain
expenses of the Funds and has agreed to limit the total operating expenses of
the Funds to .75 of 1% of the average daily net assets of Municipal and .55 of
1% of the average daily net assets of California and New York through December
31, 1999.
The management fee compensates the Adviser for overall investment advisory and
administrative services, and general office facilities. The Funds pay no
compensation directly to those of its Directors/Trustees who are affiliated with
the Adviser or to their officers, all of whom receive remuneration for their
services to the Funds from the Adviser or its affiliates.
19
<PAGE>
Notes to Financial Statements (continued)
5. Investment Composition
At February 29, 2000, the revenue sources by municipal purpose, expressed as a
percent of total investments, were as follows:
<TABLE>
<CAPTION>
Municipal California New York
-----------------------------------------------------------------------
<S> <C> <C> <C>
Basic Materials 8% --% --%
Capital Goods 10 5 --
Consumer Cyclicals 5 -- 3
Consumer Staples 2 5 --
Education and Civic Organizations 11 -- 17
Health Care 10 14 7
Housing/Multifamily 10 12 15
Industrial/Other 9 4 2
Long-Term Care 11 -- 6
Tax Obligation/General 11 18 30
Tax Obligation/Limited 1 13 --
Transportation 1 9 9
Utilities 11 14 9
Water and Sewer -- 6 2
-----------------------------------------------------------------------
100% 100% 100%
-----------------------------------------------------------------------
</TABLE>
At February 29, 2000, certain investments in short-term municipal securities
have credit enhancements (letters of credit, guarantees or insurance) issued by
third party domestic or foreign banks or other institutions (90% for Municipal,
85% for California, and 82% for New York).
For additional information regarding each investment security, refer to the
Portfolio of Investments.
20
<PAGE>
Financial Highlights
Selected data for a share outstanding throughout each period:
<TABLE>
<CAPTION>
Ratios/Supplemental Data
-------------------------------------------------------------------------
Before Credit/ After After Credit/
Reimbursement Reimbursement(a) Reimbursement(b)
--------------------- ------------------ --------------------
MUNICIPAL Ratio of Ratio Ratio of Ratio Ratio of Ratio
Less Expenses of Net Expenses of Net Expenses of Net
Year Beginning Distributions Ending Ending to Investment to Investment to Investment
Ending Net Net from Net Net Net Average Income to Average Income Average Income to
February Asset Investment Investment Asset Total Assets Net Average Net to Average Net Average
28/29, Value Income Income Value Return (000) Assets Net Assets Assets Net Assets Assets Net Assets
------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
2000 $1.00 $.03 $(.03) $1.00 2.79% $242,698 1.03% 2.53% .77% 2.79% .77% 2.79%
1999 1.00 .03 (.03) 1.00 2.85 252,354 .80 2.79 .75 2.84 .75 2.84
1998 1.00 .03 (.03) 1.00 3.02 270,723 .81 2.96 .75 3.02 .75 3.02
1997 1.00 .03 (.03) 1.00 2.87 304,087 .80 2.82 .75 2.87 .75 2.87
1996 1.00 .03 (.03) 1.00 3.23 339,662 .79 3.18 .75 3.22 .75 3.22
------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
(a) After expense reimbursement from the investment adviser, where applicable.
(b) After custodian fee credit and expense reimbursement, where applicable.
<TABLE>
<CAPTION>
Ratios/Supplemental Data
-------------------------------------------------------------------------
Before Credit/ After After Credit/
Reimbursement Reimbursement(a) Reimbursement(b)
--------------------- ------------------ --------------------
CALIFORNIA* Ratio of Ratio Ratio of Ratio Ratio of Ratio
Less Expenses of Net Expenses of Net Expenses of Net
Year Beginning Distributions Ending Ending to Investment to Investment to Investment
Ending Net Net from Net Net Net Average Income to Average Income Average Income to
February Asset Investment Investment Asset Total Assets Net Average Net to Average Net Average
28/29, Value Income Income Value Return (000) Assets Net Assets Assets Net Assets Assets Net Assets
------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
2000(c) $1.00 $.03 $(.03) $1.00 2.65% $ 55,514 .93% 2.23% .58% 2.58% .58% 2.58%
1999 1.00 .03 (.03) 1.00 2.81 113,761 .59 2.75 .55 2.79 .55 2.79
1998 1.00 .03 (.03) 1.00 3.13 86,916 .58 3.09 .55 3.12 .55 3.12
1997 1.00 .03 (.03) 1.00 2.94 95,306 .59 2.89 .55 2.93 .55 2.93
1996 1.00 .03 (.03) 1.00 3.32 70,722 .56 3.28 .54 3.30 .54 3.30
------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
* Information included prior to the year ended February 29, 2000, reflects the
financial highlights of the Service Plan series of the Nuveen California Tax-
Free Money Market Fund.
(a) After expense reimbursement from the investment adviser, where applicable.
(b) After custodian fee credit and expense reimbursement, where applicable.
(c) Information includes the financial highlights of the Service Plan series of
the Nuveen California Tax-Free Money Market Fund through the close of
business on June 25, 1999, and the financial highlights of the Nuveen
California Tax-Exempt Money Market Fund from such date through February 29,
2000.
<TABLE>
<CAPTION>
Ratios/Supplemental Data
-------------------------------------------------------------------------
Before Credit/ After After Credit/
Reimbursement Reimbursement(a) Reimbursement(b)
--------------------- ------------------ --------------------
NEW YORK* Ratio of Ratio Ratio of Ratio Ratio of Ratio
Less Expenses of Net Expenses of Net Expenses of Net
Year Beginning Distributions Ending Ending to Investment to Investment to Investment
Ending Net Net from Net Net Net Average Income to Average Income Average Income to
February Asset Investment Investment Asset Total Assets Net Average Net to Average Net Average
28/29, Value Income Income Value Return (000) Assets Net Assets Assets Net Assets Assets Net Assets
------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
2000(c) $1.00 $.03 $(.03) $1.00 2.73% $ 31,646 .89% 2.41% .58% 2.72% .57% 2.72%
1999 1.00 .03 (.03) 1.00 2.73 33,107 .72 2.54 .55 2.71 .55 2.71
1998 1.00 .03 (.03) 1.00 3.10 28,854 .89 2.75 .55 3.09 .55 3.09
1997 1.00 .03 (.03) 1.00 2.90 26,116 .92 2.52 .55 2.89 .55 2.89
1996 1.00 .03 (.03) 1.00 3.20 31,631 .94 2.80 .55 3.19 .55 3.19
</TABLE>
* Information included prior to the year ended February 29, 2000, reflects the
financial highlights of the Distribution Plan series of the Nuveen New York Tax-
Free Money Market Fund.
(a) After expense reimbursement from the investment adviser, where applicable.
(b) After custodian fee credit and expense reimbursement, where applicable.
(c) Information includes the financial highlights of the Distribution Plan
series of the Nuveen New York Tax-Free Money Market Fund prior to the close
of business on June 25, 1999, and the financial highlights of the Nuveen
New York Tax-Exempt Money Market Fund from such date through February 29,
2000.
21
<PAGE>
Report of Independent Public Accountants
To the Board of Directors/Trustees and Shareholders of
Nuveen Municipal Money Market Fund
Nuveen California Tax-Exempt Money Market Fund
Nuveen New York Tax-Exempt Money Market Fund:
We have audited the accompanying statements of net assets of Nuveen Municipal
Money Market Fund (a Maryland Corporation), Nuveen California Tax-Exempt Money
Market Fund and Nuveen New York Tax-Exempt Money Market Fund (each a series of
the Nuveen Money Market Trust) (a Massachusetts business Trust), including the
portfolios of investments, as of February 29, 2000, and the related statements
of operations for the year then ended, the statements of changes in net assets
for each of the two years then ended and the financial highlights for the
periods indicated thereon. These financial statements and financial highlights
are the responsibility of the Funds' 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 auditing standards generally accepted
in the United States. 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 February 29, 2000, by correspondence with the custodian and brokers.
As to securities purchased but not received, we requested confirmation from
brokers, and when replies were not received, we carried out alternative auditing
procedures. 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 net assets of each of the
respective funds constituting the Nuveen Municipal Money Markey Fund, Nuveen
California Tax-Exempt Money Market Fund and Nuveen New York Tax-Exempt Money
Market Fund as of February 29, 2000, the results of their operations for the
year then ended, the changes in their net assets for each of the two years then
ended, and the financial highlights for the periods indicated thereon in
conformity with accounting principles generally accepted in the United States.
ARTHUR ANDERSEN LLP
Chicago, Illinois
April 14, 2000
22
<PAGE>
Shareholder Meeting Report
A special shareholder meeting was held in Chicago, Illinois on June 4, 1999
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Municipal California New York
--------------------------------------------------------------------------------
Approval of the Directors/Trustees
was reached as follows:
Robert P. Bremner
For 147,093,944 59,113,169 15,194,075
Withhold 4,061,638 1,919,061 316,066
--------------------------------------------------------------------------------
Total 151,155,582 61,032,230 15,510,141
--------------------------------------------------------------------------------
Lawrence H. Brown
For 147,131,185 59,113,169 15,194,264
Withhold 4,024,397 1,919,061 315,877
--------------------------------------------------------------------------------
Total 151,155,582 61,032,230 15,510,141
--------------------------------------------------------------------------------
Anne E. Impellizzeri
For 147,131,185 59,113,169 15,194,264
Withhold 4,024,397 1,919,061 315,877
--------------------------------------------------------------------------------
Total 151,155,582 61,032,230 15,510,141
--------------------------------------------------------------------------------
Peter R. Sawers
For 147,131,185 59,113,169 15,194,264
Withhold 4,024,397 1,919,061 315,877
--------------------------------------------------------------------------------
Total 151,155,582 61,032,230 15,510,141
--------------------------------------------------------------------------------
William J. Schneider
For 147,131,185 59,113,169 15,194,264
Withhold 4,024,397 1,919,061 315,877
--------------------------------------------------------------------------------
Total 151,155,582 61,032,230 15,510,141
--------------------------------------------------------------------------------
Timothy R. Schwertfeger
For 147,131,185 59,113,169 15,194,264
Withhold 4,024,397 1,919,061 315,877
--------------------------------------------------------------------------------
Total 151,155,582 61,032,230 15,510,141
--------------------------------------------------------------------------------
Judith M. Stockdale
For 147,131,185 59,113,169 15,194,264
Withhold 4,024,397 1,919,061 315,877
--------------------------------------------------------------------------------
Total 151,155,582 61,032,230 15,510,141
--------------------------------------------------------------------------------
Ratification of auditors was reached
as follows:
For 138,560,834 53,840,864 14,799,429
Against 3,174,394 3,063,841 130,944
Abstain 9,420,354 4,127,525 579,768
--------------------------------------------------------------------------------
Total 151,155,582 61,032,230 15,510,141
--------------------------------------------------------------------------------
Approval of new investment management
agreement:
For 129,260,136 46,178,389 13,977,012
Against 7,871,753 10,782,780 587,586
Abstain 10,220,629 4,057,102 841,070
Broker Non-Vote 3,803,064 13,959 104,473
--------------------------------------------------------------------------------
Total 151,155,582 61,032,230 15,510,141
--------------------------------------------------------------------------------
</TABLE>
23
<PAGE>
Shareholder Meeting Report (continued)
<TABLE>
<CAPTION>
Municipal California New York
--------------------------------------------------------------------------------
<S> <C> <C> <C>
Approval of new Rule 12B-1 plan:
Service Plan Service Plan
Series Series
------------- ------------
For 123,428,990 12,791,022 875,823
Against 11,925,115 1,679,673 40,695
Abstain 11,998,412 -- 177,290
Broker Non-Vote 3,803,065 12,626 49,075
--------------------------------------------------------------------------------
Total 151,155,582 14,483,321 1,142,883
--------------------------------------------------------------------------------
Distribution Distribution
Plan Series Plan Series
------------- ------------
For -- 27,367,030 12,920,231
Against -- 11,959,853 598,979
Abstain -- 4,339,386 775,982
Broker Non-Vote -- 1,331 55,399
--------------------------------------------------------------------------------
Total -- 43,667,600 14,350,591
--------------------------------------------------------------------------------
Institutional Institutional
Plan Series Plan Series
---------------------------
For -- 2,650,287 16,666
Against -- 231,022 --
Abstain -- -- --
Broker Non-Vote -- -- --
--------------------------------------------------------------------------------
Total -- 2,881,309 16,666
--------------------------------------------------------------------------------
Approval of plan and agreement of
reorganization:
For 128,915,984 42,905,192 13,357,820
Against 7,097,985 13,833,850 1,166,721
Abstain 11,338,548 4,279,231 881,127
Broker Non-Vote 3,803,065 13,957 104,473
--------------------------------------------------------------------------------
Total 151,155,582 61,032,230 15,510,141
--------------------------------------------------------------------------------
Approval of amendments to the Fund's
investment objective:
For 129,579,240 44,422,103 14,087,953
Against 6,980,755 11,996,643 621,629
Abstain 10,792,522 4,599,527 696,086
Broker Non-Vote 3,803,065 13,957 104,473
--------------------------------------------------------------------------------
Total 151,155,582 61,032,230 15,510,141
--------------------------------------------------------------------------------
Approval of elimination of the Fund's
fundamental investment policy on
unseasoned issuers:
For 126,900,773 44,732,732 13,431,154
Against 8,204,172 11,366,647 1,240,027
Abstain 12,247,572 4,918,894 734,487
Broker Non-Vote 3,803,065 13,957 104,473
--------------------------------------------------------------------------------
Total 151,155,582 61,032,230 15,510,141
--------------------------------------------------------------------------------
Approval of elimination of the Fund's
fundamental investment policy on
limitation on ownership of
securities:
For 126,807,484 45,973,400 13,371,249
Against 8,197,706 10,302,634 1,340,496
Abstain 12,347,327 4,742,239 693,923
Broker Non-Vote 3,803,065 13,957 104,473
--------------------------------------------------------------------------------
Total 151,155,582 61,032,230 15,510,141
--------------------------------------------------------------------------------
</TABLE>
24
<PAGE>
Fund Information
Board of Directors/Trustees
Robert P. Bremner
Lawrence H. Brown
Anne E. Impellizzeri
Peter R. Sawers
William J. Schneider
Timothy R. Schwertfeger
Judith M. Stockdale
Fund Manager
Nuveen Advisory Corp.
333 West Wacker Drive
Chicago, IL 60606
Transfer Agent and Shareholder Services
Chase Global Funds Services
73 Tremont Street
Boston, MA 02108
(800) 257-8787
Legal Counsel
Morgan, Lewis & Bockius LLP
Washington, D.C.
Independent Public Accountants
Arthur Andersen LLP
Chicago, IL
25
<PAGE>
John Nuveen, Sr.
[PHOTO APPEARS HERE]
SERVING
INVESTORS
FOR GENERATIONS
A 100-Year Tradition of Quality Investments
Since 1898, John Nuveen & Co. Incorporated has been synonymous with investments
that withstand the test of time. In fact, more than 1.3 million investors have
trusted Nuveen to help them build and sustain the wealth of a lifetime.
Whether your focus is long-term growth, dependable income or sustaining
accumulated wealth, Nuveen offers a wide variety of investments and services to
help meet your unique circumstances and financial planning needs. We can help
you build a better, well-diversified portfolio.
Call Your Financial Adviser Today
To find out how the Nuveen Innovation Fund might round out your investment
portfolio, contact your financial adviser today. Or call Nuveen at (800)
257-8787 for more information. Ask your adviser or call for a prospectus which
details risks, fees and expenses. Please read the prospectus carefully before
you invest.
NUVEEN
Investments
John Nuveen & Co. Incorporated
333 West Wacker Drive
Chicago, IL 60606-1286
www.nuveen.com
<PAGE>
ANNUAL REPORT February 29, 2000
NUVEEN INVESTMENTS
NUVEEN
MONEY MARKET
FUNDS
Institutional Tax-Exempt
[PHOTO APPEARS HERE]
<PAGE>
Fund Information
Board of Trustees
Robert P. Bremner
Lawrence H. Brown
Anne E. Impellizzeri
Peter R. Sawers
William J. Schneider
Timothy R. Schwertfeger
Judith M. Stockdale
Fund Manager
Nuveen Advisory Corp.
333 West Wacker Drive
Chicago, IL 60606
Transfer Agent and
Shareholder Services
Chase Global Funds Services Company
73 Tremont Street
Boston, MA 02108
(800) 257-8787
Legal Counsel
Morgan, Lewis &
Bockius LLP
Washington, D.C.
Independent Public Accountants
Arthur Andersen LLP
Chicago, IL
Contents
1 Dear Shareholder
3 Nuveen Institutional Tax-Exempt
Money Market Fund Spotlight
4 Portfolio of Investments
7 Statement of Net Assets
7 Statement of Operations
8 Statement of Changes in Net Assets
9 Notes to Financial Statements
12 Financial Highlights
13 Report of Independent Public Accountants
Shareholder Meeting Report
A special shareholder meeting was held in Chicago, Illinois on June 4, 1999
<TABLE>
<CAPTION>
-----------------------------------------------------
Approval of the Trustees was reached as follows:
=====================================================
<S> <C>
Robert P. Bremner
For 290,212,736
Withhold 1,508,694
-----------------------------------------------------
Total 291,721,430
=====================================================
Lawrence H. Brown
For 290,267,176
Withhold 1,454,254
-----------------------------------------------------
Total 291,721,430
=====================================================
Anne E. Impellizzeri
For 290,267,176
Withhold 1,454,254
-----------------------------------------------------
Total 291,721,430
=====================================================
Peter R. Sawers
For 290,267,176
Withhold 1,454,254
-----------------------------------------------------
Total 291,721,430
=====================================================
William J. Schneider
For 290,267,176
Withhold 1,454,254
-----------------------------------------------------
Total 291,721,430
=====================================================
Timothy R. Schwertfeger
For 290,267,176
Withhold 1,454,254
-----------------------------------------------------
Total 291,721,430
=====================================================
Judith M. Stockdale
For 290,267,176
Withhold 1,454,254
-----------------------------------------------------
Total 291,721,430
=====================================================
Ratification of auditors was reached as follows:
For 281,738,543
Against 5,286,351
Abstain 4,696,536
-----------------------------------------------------
Total 291,721,430
=====================================================
Approval of new investment management agreement:
For 246,931,226
Against 16,024,921
Abstain 6,514,227
Broker Non-Vote 22,251,056
-----------------------------------------------------
Total 291,721,430
=====================================================
Approval of plan and agreement of reorganization:
For 287,068,431
Against 14,426,701
Abstain 6,166,102
Broker Non-Vote 22,251,056
-----------------------------------------------------
Total 329,912,290
=====================================================
Approval of amendments to the Fund's investment
objective:
For 255,671,676
Against 6,917,244
Abstain 6,881,453
Broker Non-Vote 22,251,057
-----------------------------------------------------
Total 291,721,430
=====================================================
Approval of elimination of the Fund's fundamental
investment policy on unseasoned issues:
For 225,969,446
Against 39,481,838
Abstain 4,019,091
Broker Non-Vote 22,251,057
-----------------------------------------------------
Total 291,721,430
=====================================================
Approval of elimination of the Fund's fundamental
investment policy on limitations on ownership of
securities:
For 260,470,013
Against 4,510,347
Abstain 4,490,013
Broker Non-Vote 22,251,057
-----------------------------------------------------
Total 291,721,430
=====================================================
</TABLE>
<PAGE>
DEAR
Shareholder,
[Photo of Timothy R. Schwertfeger appears here]
Timothy R. Schwertfeger
Chairman of the Board
Setting financial goals is an important first step toward building wealth. At
Nuveen Investments, we believe those goals should not be considered ends in
themselves. Rather, you and your financial advisor's focus should be on
realizing your life's dreams -- the things that matter most to you and how you
can make them happen -- or make them better.
Through a well-crafted financial plan, you have the chance to shape future
generations -- to broaden your sphere of influence -- to leave your legacy.
As you develop that plan, you'll want to consider the different ways your
success can benefit others. You may find that you want to create a new set of
goals to achieve this. Working with your financial advisor, you have the ability
to make those dreams a reality -- for yourself and future generations.
A Trusted Resource As you face some of the most important, lasting decisions
you and your family will make, you'll want to draw upon the support, counsel and
objectivity of a trusted advisor. That's because your financial advisor has the
expertise and access to other professionals who can help you make informed
choices -- choices that affect not only your loved ones today, but those your
legacy will touch in the future.
Your financial advisor can provide sound financial insight, an integrated
approach to your investments and can serve as a knowledgeable friend with your
family's best interest at heart.
We are dedicated to helping you and your financial advisor develop a family
wealth management strategy unique to you and your goals and values.
Family Wealth Management Too often, family wealth management is thought of in
one dimension--as the stewardship of your household's financial resources. At
Nuveen Investments, we think of family wealth management as the map to help you
reach your financial, and your life's, destinations. It's a multi-faceted
strategy to plan for not just your needs, but the needs of future generations.
The Economic Environment You may be reading this report at the suggestion of
your financial advisor. I want to briefly report on the economic environment in
which your Nuveen investment performed.
The end of your fund's fiscal period, February 29, 2000, was an important
day in our nation's economic life. It marked the 107th month of continued
economic expansion, the longest period of expansion in history. The only period
to rival that length was the 106-month expansion from February 1961 to December
1969, a peri-
"We are dedicated to helping you and your financial advisor develop a family
wealth management strategy unique to you and your goals and values."
ANNUAL REPORT page 1
<PAGE>
Nuveen is dedicated to providing investors access to a team of highly
experienced investment managers, each overseeing portfolios within their
specific areas of expertise. This select group of asset management firms directs
the investment activities of the Nuveen Mutual Funds. Nuveen has chosen them for
their rigorously disciplined investment approaches and their focus on consistent
long-term performance.
Drawing on decades of experience and specialized knowledge, these skilled asset
managers have earned reputations for excellence in their fields of expertise,
whether it is blue-chip growth stocks, large-cap value stocks, bonds or
international securities.
Nuveen's income-oriented funds feature portfolio management by Nuveen Investment
Advisory Services (NIAS). NIAS follows a disciplined, research-driven investment
approach to uncover income securities that combine exceptional relative value
with above-average return potential. Drawing upon 300 combined years of
investment experience, the Nuveen team of portfolio managers and research
analysts offers:
. A commitment to exhaustive research
. An active, value-oriented investment style
. The unmatched presence and trading leverage of a market leader.
od known best for its military conflicts, domestic unrest and soaring inflation.
That was then; this is now.
The vigilant inflationary watch of Federal Reserve Chairman Alan Greenspan,
the growth of the Internet and other technology-related developments and the
globalization of the economy are three reasons for continued economic health.
In their battle to keep inflation at bay, Greenspan's Fed raised interest
rates on February 2, 2000, and again on March 21, 2000. The latest increase
marked the fifth time the Fed has raised the federal funds rate -- the interest
that banks charge each other on overnight loans -- since June 1999.
Over the short term, the inflation threat has meant increased price
fluctuations in the equity markets. Part of that is due to the fact that
investors and the various markets have been watching -- and reacting to -- every
announcement concerning economic statistics.
Longer term, we believe there's still faith in the emerging paradigm, which
holds that improvements in productivity enable us to have both economic growth
and low inflation at the same time. The 1960's 106-month expansion that I noted
earlier was fueled by government spending. Today's economy has been fueled by
consumer spending and improved productivity.
Performance Review I'm pleased to report that despite market volatility, the
Nuveen Institutional Tax-Exempt Money Market Fund continued to provide investors
with attractive short-term rates. As of February 29, 2000, the fund offered
investors a 7-day tax-free yield of 3.31%, which represented a taxable-
equivalent yield of 4.80% for investors in the 31% federal income tax bracket.
Please see the Fund Spotlight in this report for more information.
In Closing We believe the potential presence of inflation and price swings in
the markets reinforce the importance of working with an advisor, staying focused
on the long term and adhering to your financial plan. With a sound plan in
place, you may be better positioned to weather the markets' ups and downs. As
you pursue your life's dreams, your financial advisor can serve as a valuable
resource in helping you keep market events in perspective while you focus on
your overall financial plan.
For more information on any Nuveen investment, including a prospectus,
contact your financial advisor. Or call Nuveen at (800) 621-7227 or visit our
Internet site at www.nuveen.com. Please read the prospectus carefully before you
invest or send money.
Since 1898, Nuveen has been synonymous with investments that stand the test
of time. We are committed to maintaining that reputation and working with
financial advisors to provide investment solutions that help individuals achieve
their lives dreams. Thank you for your continued confidence.
Sincerely,
/s/ Timothy R. Schwertfeger
Timothy R. Schwertfeger
Chairman of the Board
April 14, 2000
ANNUAL REPORT page 2
<PAGE>
NUVEEN INSTITUTIONAL TAX-EXEMPT MONEY MARKET FUND
Fund Spotlight as of February 29, 2000
Portfolio Statistics
Inception Date 3/81
-------------------------------------------
Net Assets $235.3 million
-------------------------------------------
Average Weighted Maturity 39.6 days
-------------------------------------------
Tax-Free Yields
SEC 7-Day Yield 3.31%
-------------------------------------------
SEC 30-Day Yield 3.09%
-------------------------------------------
Taxable Equivalent
(based on a federal income tax rate of 31%)
SEC 7-Day Yield 4.80%
-------------------------------------------
SEC 30-Day Yield 4.48%
-------------------------------------------
Diversification (as a % of market value)
Health Care 25%
-------------------------------------------
Long-Term Care 23%
-------------------------------------------
Tax Obligation (General) 21%
-------------------------------------------
Education and Civic Organizations 8%
-------------------------------------------
Housing (Multifamily) 7%
-------------------------------------------
Financials 5%
-------------------------------------------
Transportation 5%
-------------------------------------------
Utilities 3%
-------------------------------------------
Tax Obligation (Limited) 2%
-------------------------------------------
Other 1%
-------------------------------------------
Past performance is no guarantee of future results.
An investment in the fund is not insured or guaranteed by the Federal Deposit
Insurance Corporation or any other government agency. Although the fund serves
to preserve the value of an investment in the fund at $1.00 per share, it is
possible to lose money by investing in the fund.
Terms To Know
SEC Yield A standardized calculation that the Securities and Exchange Commission
requires mutual funds to use when advertising rates of income return. This
standardized rate ensures that investors are comparing "apples to apples" when
comparing advertisements from different mutual fund companies.
Taxable Equivalent Yield The yield that would have to be earned on a security to
pay as much, after tax, as what is earned from a tax-exempt bond.
ANNUAL REPORT page 3
<PAGE>
Portfolio of Investments
Nuveen Institutional Tax-Exempt Money Market Fund
February 29, 2000
<TABLE>
<CAPTION>
Principal Amortized
Amount (000) Description Ratings* Cost
------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Alabama - 0.8%
$ 2,000 Dallas County Housing Development Corporation, Housing Development Revenue, Series 1999, A-1 $ 2,000,000
Variable Rate Demand Bonds, 4.060%, 7/01/19+
------------------------------------------------------------------------------------------------------------------------------------
Arizona - 1.9%
4,500 Rancho Ladera Certificates Trust, Variable Rate Certificates of Participation, 1999 Series VMIG-1 4,500,000
A (Interests in Industrial Development Authority of the City of Phoenix, Arizona),
Multifamily Housing Revenue Bonds, Series 1997, 4.050%, 10/01/08+
------------------------------------------------------------------------------------------------------------------------------------
District of Columbia - 3.8%
2,700 District of Columbia (Washington, D.C.) General Obligation Bonds, Variable Rate VMIG-1 2,700,000
Demand Revenue Bonds, Series 1992A-3, 3.900%, 10/01/07+
4,650 District of Columbia (Washington, D.C.) General Obligation Bonds, Variable Rate VMIG-1 4,650,000
Demand Revenue Bonds, Series 1992A-6, 3.900%, 10/01/07+
1,700 District of Columbia (Washington, D.C.) General Obligation Bonds, Variable Rate VMIG-1 1,700,000
Demand Revenue Bonds, Series 1992A-4, 3.900%, 10/01/07+
------------------------------------------------------------------------------------------------------------------------------------
Florida - 2.1%
5,000 Miami Health Facilities Authority (Miami Jewish Home and Hospital for the Aged, Aa-3 5,000,000
Inc.), Series 1992, Variable Rate Demand Bonds, 3.950%, 3/01/12+
------------------------------------------------------------------------------------------------------------------------------------
Georgia - 5.5%
2,300 Columbia Elderly Authority, Residential Care Facilities Revenue Bonds (Augusta Resource Aa-3 2,300,000
Center on Aging, Inc.), Variable Rate Demand Bonds, Series 1994, 3.950%, 1/01/21+
10,705 Housing Authority of the County of DeKalb, Georgia, Multifamily Housing Revenue VMIG-1 10,705,000
Refunding Bonds (Lenox Pointe Project), Series 1996A, Variable Rate Demand Bonds,
4.000%, 11/01/23+
------------------------------------------------------------------------------------------------------------------------------------
Illinois - 2.5%
5,970 Illinois Educational Facilities Authority, Cultural Pool, Series 1985, Variable VMIG-1 5,970,000
Rate Demand Revenue Bonds, 3.800%, 12/01/25+
------------------------------------------------------------------------------------------------------------------------------------
Indiana - 4.3%
6,200 Fort Wayne, Indiana, Economic Development Revenue Bonds, Variable Rate Demand A-1+ 6,200,000
Bonds, Series 1998 (St. Anne Home and Retirement), 3.990%, 9/01/23+
4,000 Tippecanoe School Corporation, Indiana, Temporary Loan Warrants, 4.750%, 12/29/00 N/R 4,014,333
------------------------------------------------------------------------------------------------------------------------------------
Iowa - 2.1%
5,000 Iowa Finance Authority (Burlington Medical Center), Series 1997, Variable Rate A-1 5,000,000
Demand Revenue Bonds, 3.950%, 6/01/27+
------------------------------------------------------------------------------------------------------------------------------------
Kansas - 2.3%
1,400 Kansas State Development Finance Authority, Health Facilities Revenue Bonds, Series 1998M VMIG-1 1,400,000
(Stormont-Vail Regional Medical Center), Variable Rate Demand Bonds, 3.900%, 11/15/23+
4,000 City of Wamego, Kansas, Pollution Control Refunding Revenue Bonds (UtiliCorp United, A-1 4,000,000
Inc. Project), Series 1996, Variable Rate Demand Bonds, 3.850%, 3/01/26+
------------------------------------------------------------------------------------------------------------------------------------
Kentucky - 4.5%
3,000 Kentucky Asset/Liability Commission, General Fund Tax and Revenue Anticipation Notes, MIG-1 3,002,623
1999 Series A, 4.250%, 6/28/00
7,580 Kentucky Development Finance Authority (Presbyterian Homes and Services Project), VMIG-1 7,580,000
Variable Rate Demand Bonds, Series 1988A, 4.010%, 11/01/18+
</TABLE>
4
<PAGE>
<TABLE>
<CAPTION>
Principal Amortized
Amount (000) Description Ratings* Cost
------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Louisiana - 2.1%
$ 5,000 New Orleans Aviation Board, Revenue Bonds, Series 1993B, Variable Rate Demand Bonds, VMIG-1 $ 5,000,000
3.900%, 8/01/16+
------------------------------------------------------------------------------------------------------------------------------------
Michigan - 6.3%
11,800 Detroit Downtown Development Authority (Millender Center Project), Series 1988, A-1 11,800,000
Variable Rate Demand Revenue Bonds, 4.100%, 12/01/10+
3,100 Farmington Hills Hospital Finance Authority (Botsford General Hospital), Series VMIG-1 3,100,000
1991B, Variable Rate Demand Bonds, 3.900%, 2/15/16+
------------------------------------------------------------------------------------------------------------------------------------
Minnesota - 8.1%
4,400 Bloomington Port Authority, Minnesota, Special Tax Revenue Refunding Bonds (Mall VMIG-1 4,400,000
of America Project), Series 1999B, Variable Rate Demand Bonds, 3.950%, 2/01/13+
1,480 City of Cohasset, Minnesota, Variable Rate Demand Revenue Refunding Bonds (Minnesota A-1+ 1,480,000
Power and Light Company Project), Series 1997A, 3.850%, 6/01/20+
2,000 City of Cohasset, Minnesota, Variable Rate Demand Revenue Refunding Bonds (Minnesota A-1+ 2,000,000
Power and Light Company Project), Series 1997D, 3.850%, 12/01/07+
4,000 Minneapolis/St. Paul Housing and Redevelopment Authority (Children's Health Care), SP-1+ 4,000,000
Series 1995, Variable Rate Demand Bonds, 3.900%, 8/15/25+
7,195 St. Paul Housing and Redevelopment Authority, Parking Revenue Bonds, Series VMIG-1 7,195,000
1995B, Variable Rate Demand Bonds, 3.950%, 8/01/17+
------------------------------------------------------------------------------------------------------------------------------------
Missouri - 4.4%
4,000 Health and Educational Facilities Authority of the State of Missouri, Variable Rate VMIG-1 4,000,000
Demand Bonds, Health Facilities Revenue Bonds (Bethesda Barclay), Series 1996A,
4.000%, 8/15/26+
2,600 The Industrial Development Authority of the City of Independence, Missouri, A-1+ 2,600,000
Variable Rate Demand Industrial Development Revenue Bonds (The Groves and Graceland
College Nursing Arts Center Projects), Series 1997A, 3.850%, 11/01/27+
3,700 Kansas City Industrial Development (Research Health System), Variable Rate Demand VMIG-1 3,700,000
Bonds, 3.900%, 4/15/15+
------------------------------------------------------------------------------------------------------------------------------------
Nebraska - 1.9%
4,355 Scotts Bluff County Hospital Authority, Elderly Residential Facility Refunding A-1 4,355,000
Revenue (Regional West Village Project), Variable Rate Demand Bonds, 3.900%, 12/01/31+
------------------------------------------------------------------------------------------------------------------------------------
Ohio - 2.1%
5,000 County of Hamilton, Ohio, Variable Rate Demand Bonds, Hospital Facilities Revenue VMIG-1 5,000,000
Bonds, Series 1997A (Children's Hospital Medical Center), 3.900%, 5/15/17+
------------------------------------------------------------------------------------------------------------------------------------
Oregon - 3.0%
7,000 Multnomah County School District 1J, Portland (Oregon), 1999 Tax and Revenue MIG-1 7,011,206
Anticipation Notes, 4.000%, 6/30/00
------------------------------------------------------------------------------------------------------------------------------------
Pennsylvania - 17.2%
4,000 Allegheny County Hospital Development Authority (Allegheny County, Pennsylvania), VMIG-1 4,000,000
Health Center Revenue Bonds, Series 1990C (Presbyterian-University Health System,
Inc.), Variable Rate Demand Bonds, 3.950%, 3/01/20+
1,630 Allegheny County Industrial Development Authority (Longwood at Oakmont, Inc. VMIG-1 1,630,000
Project), Series 1997B, Variable Rate Demand Revenue Bonds, 3.850%, 7/01/27+
1,500 Allegheny County Industrial Development Authority (Longwood at Oakmont, Inc. VMIG-1 1,500,000
Project), Series 1997C, Variable Rate Demand Revenue Bonds, 3.850%, 7/01/27+
4,000 Allegheny County Industrial Development Authority, Zoological Society of Pittsburgh, A-1 4,004,863
Adjustable Rate Demand Revenue Bonds, Series A of 1999, 4.000%, 6/01/19+ (Mandatory
put 6/01/00)
9,900 Dauphin County General Authority, Variable Rate Demand Revenue Bonds, Series of 1997 VMIG-1 9,900,000
(Education and Health Loan Program), 3.940%, 11/01/17+
</TABLE>
5
<PAGE>
Portfolio of Investments
Nuveen Institutional Tax-Exempt Money Market Fund (continued)
February 29, 2000
<TABLE>
<CAPTION>
Principal Amortized
Amount (000) Description Ratings* Cost
------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Pennsylvania (continued)
$ 12,500 Lancaster County Hospital Authority, Series 1998B, Variable Rate Demand Revenue Bonds A-1 $ 12,500,000
(Willow Valley Lakes Manor), 3.940%, 12/01/18+
3,440 Philadelphia Authority for Industrial Development (Horizon House, Inc. Project), VMIG-1 3,440,000
Variable Rate Demand Revenue Bonds, Series 1998, 3.950%, 6/01/13+
3,250 Philadelphia Authority for Industrial Development (The Academy of Music of Aa-3 3,250,000
Philadelphia), Variable Rate Demand Revenue Bonds, Series 1998, 3.950%, 8/01/18+
------------------------------------------------------------------------------------------------------------------------------------
South Dakota - 5.0%
11,780 South Dakota Health and Educational Facilities Authority (McKennan Hospital), VMIG-1 11,780,000
Series 1994, Variable Rate Demand Revenue Bonds, 3.950%, 7/01/14+
------------------------------------------------------------------------------------------------------------------------------------
Tennessee - 0.8%
1,900 Chattanooga-Hamilton Counties Hospital Authority, Hospital Revenue and Refunding A-1+ 1,900,000
Bonds (Erlanger Medical Center), Series 1987, Variable Rate Demand Bonds, 3.850%,
10/01/17+
------------------------------------------------------------------------------------------------------------------------------------
Texas - 5.1%
10,000 State of Texas, Tax and Revenue Anticipation Notes, Series 1999-2000A, 4.500%, 8/31/00 MIG-1 10,031,408
1,900 Texas Health Facilities Development Corporation (North Texas Pooled Health Program), VMIG-1 1,900,000
Variable Rate Demand Bonds, Series 1985A, 4.100%, 5/31/25+
------------------------------------------------------------------------------------------------------------------------------------
Washington - 2.5%
1,500 Washington State Housing Finance Commission, Variable Rate Demand Nonprofit A-1 1,500,000
Revenue Bonds (Emerald Heights Project), Series 1990, 3.850%, 1/01/21+
2,800 Washington State Housing Finance Commission, Nonprofit Revenue Bonds (Panorama VMIG-1 2,800,000
City Project), Series 1997, Refunding Bonds, Variable Rate Demand Bonds, 3.950%,
1/01/27+
1,620 Washington State Housing Finance Commission, Nonprofit Revenue Bonds (YMCA of VMIG-1 1,620,000
Snohomish County Program), Series 1994, Variable Rate Demand Bonds, 3.950%, 8/01/19+
------------------------------------------------------------------------------------------------------------------------------------
Wisconsin - 10.8%
7,200 Wisconsin Health and Educational Facilities Authority, Series 1988A (Alexian VMIG-1 7,200,000
Village of Milwaukee), Commercial Paper, 3.800%, 5/08/00
3,000 Cedarburg School District, Series 1999, Tax and Revenue Anticipation Notes, N/R 3,003,766
4.150%, 9/08/00
4,400 Clinton Community School District, Rock and Walworth Counties, Wisconsin, Bond MIG-1 4,403,413
Anticipation Notes, 4.250%, 10/16/00
3,515 Monroe School District of Green County, Bond Anticipation Notes, Series 1999, MIG-1 3,518,542
4.400%, 6/12/00
7,000 Oshkosh Area School District, Wisconsin, Series 1999, Tax and Revenue MIG-1 7,009,702
Promissory Notes, 4.000%, 8/23/00
------------------------------------------------------------------------------------------------------------------------------------
$233,170 Total Investments - 99.1% 233,254,856
==============----------------------------------------------------------------------------------------------------------------------
Other Assets Less Liabilities - 0.9% 2,070,175
-------------------------------------------------------------------------------------------------------------------
Net Assets - 100% $235,325,031
===================================================================================================================
</TABLE>
* Ratings (not covered by the report of independent public accountants):
Using the higher of Standard & Poor's or Moody's rating.
N/R Investment is not rated.
+ The security has a maturity of more than one year, but has variable rate
and demand features which qualify it as a short-term security. The rate
disclosed is that currently in effect. This rate changes periodically based
on market conditions or a specified market index.
See accompanying notes to financial statements.
6
<PAGE>
Statement of Net Assets
Nuveen Institutional Tax-Exempt Money Market Fund
February 29, 2000
<TABLE>
<S> <C>
-------------------------------------------------------------------------------------------------------------------
Assets
Investments in short-term municipal securities, at amortized cost, which approximates market value $233,254,856
Cash 805,817
Receivables:
Fund manager 122,236
Interest 1,330,285
Investments sold 500,000
Other assets 9,590
-------------------------------------------------------------------------------------------------------------------
Total assets 236,022,784
-------------------------------------------------------------------------------------------------------------------
Liabilities
Other accrued expenses 70,222
Dividends payable 627,531
-------------------------------------------------------------------------------------------------------------------
Total liabilities 697,753
-------------------------------------------------------------------------------------------------------------------
Net assets applicable to shares outstanding $235,325,031
===================================================================================================================
Shares outstanding 235,325,031
===================================================================================================================
Net asset value, offering and redemption price per share (net assets divided by shares outstanding) $ 1.00
===================================================================================================================
</TABLE>
Statement of Operations*
Nuveen Institutional Tax-Exempt Money Market Fund
Year ended February 29, 2000
<TABLE>
<S> <C>
-------------------------------------------------------------------------------------------------------------------
Investment Income $ 10,478,824
-------------------------------------------------------------------------------------------------------------------
Expenses
Management fees 1,209,903
Shareholders' servicing agent fees and expenses 105,068
Custodian's fees and expenses 98,466
Trustees' fees and expenses 7,394
Professional fees 138,159
Shareholders' reports - printing and mailing expenses 39,135
Federal and state registration fees 57,141
Portfolio insurance expense 31,076
Other expenses 54,608
-------------------------------------------------------------------------------------------------------------------
Total expenses before custodian fee credit and expense reimbursement 1,740,950
Custodian fee credit (3,968)
Expense reimbursement (331,411)
-------------------------------------------------------------------------------------------------------------------
Net expenses 1,405,571
-------------------------------------------------------------------------------------------------------------------
Net investment income 9,073,253
Net realized gain (loss) from investment transactions (1,772)
-------------------------------------------------------------------------------------------------------------------
Net increase in net assets from operations $ 9,071,481
===================================================================================================================
</TABLE>
* The statement includes the operations of the Nuveen Tax-Exempt Money Market
Fund, Inc. through the close of business on June 25, 1999, and the operations
of the Nuveen Institutional Tax-Exempt Money Market Fund from such date
through February 29, 2000.
See accompanying notes to financial statements.
7
<PAGE>
Statement of Changes in Net Assets
Nuveen Institutional Tax-Exempt Money Market Fund
<TABLE>
<CAPTION>
Year Ended Year Ended
2/29/00* 2/28/99
-------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Operations
Net investment income $ 9,073,253 $ 10,920,584
Net realized gain (loss) from investment transactions (1,772) --
-------------------------------------------------------------------------------------------------------------------------
Net increase in net assets from operations 9,071,481 10,920,584
-------------------------------------------------------------------------------------------------------------------------
Distributions to Shareholders (9,073,253) (10,920,584)
-------------------------------------------------------------------------------------------------------------------------
Share Transactions (at constant net asset value of $1 per share)
Net proceeds from sale of shares 1,482,836,758 1,894,910,826
Net proceeds from shares issued to shareholders due to reinvestment of distributions 4,987,456 5,680,509
-------------------------------------------------------------------------------------------------------------------------
1,487,824,214 1,900,591,335
Cost of shares redeemed (1,598,130,841) (2,028,459,624)
-------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets from share transactions (110,306,627) (127,868,289)
-------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets (110,308,399) (127,868,289)
Net assets at the beginning of year 345,633,430 473,501,719
-------------------------------------------------------------------------------------------------------------------------
Net assets at the end of year $ 235,325,031 $ 345,633,430
=========================================================================================================================
</TABLE>
* Year ended February 29, 2000, includes the changes in net assets of the
Nuveen Tax-Exempt Money Market Fund, Inc. through the close of business on
June 25, 1999, and the changes in net assets of the Nuveen Institutional
Tax-Exempt Money Market Fund from such date through February 29, 2000.
See accompanying notes to financial statements.
8
<PAGE>
Notes to Financial Statements
1. General Information and Significant Accounting Policies
The Nuveen Institutional Tax-Exempt Money Market Fund (the "Fund") formerly, the
Nuveen Tax-Exempt Money Market Fund, Inc., is a series of the Nuveen Money
Market Trust (the "Trust") which was organized as a Massachusetts business trust
on January 15, 1999. Nuveen Tax-Exempt Money Market Fund, Inc. was reorganized
effective after the close of business on June 25, 1999, as previously approved
by shareholders. The Trust (and each series within the Trust) is registered
under the Investment Company Act of 1940 as an open-end, management investment
company.
The Fund invests substantially all of its assets in a diversified portfolio of
high quality, tax-exempt money market instruments for current income, the
stability of principal, and the maintenance of liquidity.
The following is a summary of significant accounting policies followed by the
Fund in the preparation of its financial statements in accordance with
accounting principles generally accepted in the United States.
Securities Valuation
The Fund invests in short-term municipal securities maturing within one year
from the date of acquisition. Securities with a maturity of more than one year
in all cases have variable rate and demand features qualifying them as short-
term securities and are valued at amortized cost. On a dollar-weighted basis,
the average maturity of all such securities must be 90 days or less (at February
29, 2000, the dollar-weighted average life was 39.6 days).
Securities Transactions
Securities transactions are recorded on a trade date basis. Realized gains and
losses from such transactions are determined on the specific identification
method. Securities purchased or sold on a when-issued or delayed delivery basis
may have extended settlement periods. Any securities so purchased are subject to
market fluctuation during this period. The Fund has instructed the custodian to
segregate assets in a separate account with a current value at least equal to
the amount of the when-issued and delayed delivery purchase commitments. At
February 29, 2000, the Fund had no such outstanding purchase commitments.
Interest Income
Interest income is determined on the basis of interest accrued, adjusted for
amortization of premiums and accretion of discounts.
Dividends and Distributions to Shareholders
Tax-exempt net investment income is declared as a dividend to shareholders of
record as of the close of each business day and payment is made or reinvestment
is credited to shareholder accounts after month-end. The Fund may also
distribute, from time to time, net ordinary taxable income and/or capital gains.
Federal Income Taxes
The Fund intends to distribute all of its tax-exempt net investment income,
taxable ordinary income and/or net realized capital gains from investment
transactions, if any, and to otherwise comply with the requirements of
Subchapter M of the Internal Revenue Code applicable to regulated investment
companies. Therefore, no federal income tax provision is required. Furthermore,
the Fund intends to satisfy conditions which will enable interest from municipal
securities, which is exempt from regular federal income tax, to retain such tax-
exempt status when distributed to shareholders of the Fund. All income dividends
paid during the fiscal year ended February 29, 2000, have been designated Exempt
Interest Dividends. Net ordinary taxable income and net realized capital gain
distributions, if any, are subject to federal taxation.
Insurance Commitments
Effective April 1, 1999, the Fund purchased liability insurance to protect
against a decline in the value of securities held in the Fund's portfolio caused
by the default of securities owned by the Fund. This policy replaces a similar
insurance policy from MBIA Insurance Corp. The insurance covers substantially
all of the Fund's investments except U.S. Government securities. The maximum
total coverage for all Nuveen money market funds is $50 million, with certain
deductibles for each loss. The Fund pays the policy premiums. Coverage under the
policy is subject to certain conditions and may not be renewable upon
expiration. While the policy is intended to provide some protection against
credit risk and to help the Fund maintain a constant price per share of $1.00,
there is no guarantee that the insurance will do so.
9
<PAGE>
Notes to Financial Statements (continued)
Derivative Financial Instruments
The Fund may invest in certain derivative financial instruments including
futures, forward, swap, and option contracts, and other financial instruments
with similar characteristics. Although the Fund is authorized to invest in such
financial instruments, and may do so in the future, it did not make any such
investments during the fiscal year ended February 29, 2000.
Custodian Fee Credit
The Fund has an agreement with the custodian bank whereby the custodian fees and
expenses are reduced by credits earned on the Fund's cash on deposit with the
bank. Such deposit arrangements are an alternative to overnight investments.
Use of Estimates
The preparation of financial statements in conformity with accounting principles
generally accepted in the United States requires management to make estimates
and assumptions that affect the reported amounts of 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 may differ from those estimates.
2. Securities Transactions
Purchases and sales (including maturities) of investments in short-term
municipal securities during the fiscal year ended February 29, 2000, aggregated
$1,293,857,568 and $1,404,148,000, respectively. The securities transactions
include the purchases and sales (including maturities) of the Nuveen Tax-Exempt
Money Market Fund, Inc. through June 25, 1999, and the purchases and sales
(including maturities) of the Nuveen Institutional Tax-Exempt Money Market Fund
from such date through February 29, 2000.
At February 29, 2000, the cost of investments owned for federal income tax
purposes was the same as the cost for financial reporting purposes.
At February 29, 2000, the Fund had unused capital loss carryforwards of $44,203
available for federal income tax purposes to be applied against future capital
gains, if any. If not applied, $3,287 of the carryforwards will expire in the
year 2002, $15,535 will expire in the year 2003, $5,800 will expire in the year
2004, $17,809 will expire in the year 2007 and $1,772 will expire in the year
2008.
3. Management Fee and Other Transactions with Affiliates
For the periods prior to the close of business on June 25, 1999, under the
Fund's investment management agreement with Nuveen Advisory Corp. (the
"Adviser"), a wholly owned subsidiary of The John Nuveen Company, the Fund paid
an annual management fee, payable monthly, which was based upon the average
daily net assets of the Fund as follows:
<TABLE>
<CAPTION>
Average Daily Net Assets Management Fee
--------------------------------------------------------------------------------
<S> <C>
For the first $500 million .4000 of 1%
For the next $500 million .3750 of 1
For the next $1 billion .3500 of 1
For net assets over $2 billion .3250 of 1
================================================================================
</TABLE>
For the periods prior to the close of business on June 25, 1999, pursuant to the
management agreement, the Adviser was obligated to reduce the management fee or
assume certain Fund expenses in an amount necessary to prevent the Fund's total
expenses (including the management fee, but excluding interest, taxes, fees
incurred in acquiring and disposing of portfolio securities and, to the extent
permitted, extraordinary expenses) from exceeding .45 of 1% of the average daily
net assets of the Fund.
Effective after the close of business on June 25, 1999, as approved by the
shareholders on June 4, 1999, the management fee was as follows:
<TABLE>
<CAPTION>
Average Daily Net Assets Management Fee
--------------------------------------------------------------------------------
<S> <C>
For the first $125 million .4000 of 1%
For the next $125 million .3875 of 1
For the next $250 million .3750 of 1
For the next $500 million .3625 of 1
For the next $1 billion .3500 of 1
For net assets over $2 billion .3250 of 1
================================================================================
</TABLE>
Although not obligated to do so pursuant to the new advisory agreement, the
adviser may for limited periods of time voluntarily agree to reimburse certain
expenses of the Fund and had agreed to limit the total operating expenses of the
Fund to .45 of 1% of the average daily net assets through December 31, 1999.
The management fee compensates the Adviser for overall investment advisory and
administrative services, and general office facilities. The Fund pays no
compensation directly to those of its Trustees who are affiliated with the
Adviser or to its officers, all of whom receive remuneration for their services
to the Fund from the Adviser or its affiliates.
10
<PAGE>
4. Composition of Net Assets
At February 29, 2000, the Fund had an unlimited number of $.01 par value stock
authorized. Net assets consisted of $235,369,234 paid-in capital and $44,203 of
accumulated net realized loss from investment transactions.
5. Investment Composition
At February 29, 2000, the revenue sources by municipal purpose, expressed as a
percent of total investments, were as follows:
<TABLE>
--------------------------------------------------------------------------------
<S> <C>
Education and Civic Organizations 8%
Financials 5
Health Care 25
Housing/Multifamily 7
Long-Term Care 23
Tax Obligation/General 21
Tax Obligation/Limited 2
Transportation 5
Utilities 3
Other 1
--------------------------------------------------------------------------------
100%
================================================================================
</TABLE>
At February 29, 2000, 80% of the investments owned by the Fund have credit
enhancements (letters of credit, guarantees or insurance) issued by third party
domestic or foreign banks or other institutions.
For additional information regarding each investment security, refer to the
Portfolio of Investments.
11
<PAGE>
Financial Highlights
Selected data for a share outstanding throughout each period:
Nuveen Institutional Tax-Exempt Money Market Fund*
<TABLE>
<CAPTION>
Less
Beginning Distributions
Net Net from Net Ending
Year Ended Asset Investment Investment Net Asset Total
February 28/29, Value Income Income Value Return
--------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
2000 (c) $1.00 $.03 $(.03) $1.00 2.97%
1999 1.00 .03 (.03) 1.00 3.07
1998 1.00 .03 (.03) 1.00 3.27
1997 1.00 .03 (.03) 1.00 3.11
1996 1.00 .03 (.03) 1.00 3.42
============================================================================================
</TABLE>
<TABLE>
<CAPTION>
Ratios/Supplemental Data
-----------------------------------------------------------------------------------------------------
Before Credit/ After After Credit/
Reimbursement Reimbursement (a) Reimbursement (b)
------------------------- ------------------------- -------------------------
Ratio Ratio Ratio
of Net of Net of Net
Ratio of Investment Ratio of Investment Ratio of Investment
Ending Expenses Income Expenses Income Expenses Income to
Year Ended Net Assets to Average to Average to Average to Average to Average Average
February 28/29, (000) Net Assets Net Assets Net Assets Net Assets Net Assets Net Assets
------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
2000 (c) $235,325 .57% 2.84% .46% 2.95% .46% 2.95%
1999 345,633 .45 3.06 .45 3.06 .45 3.06
1998 473,502 .44 3.26 .44 3.26 .44 3.26
1997 515,403 .44 3.10 .44 3.10 .44 3.10
1996 610,053 .44 3.43 .44 3.43 .44 3.43
========================================================================================================================
</TABLE>
* Information included prior to the year ended February 29, 2000, reflects the
financial highlights of Nuveen Tax-Exempt Money Market Fund, Inc.
(a) After expense reimbursement from the investment adviser, where applicable.
(b) After custodian fee credit and expense reimbursement, where applicable.
(c) Information includes the financial highlights of the Nuveen Tax-Exempt Money
Market Fund, Inc. through the close of business on June 25, 1999, and the
financial highlights of the Nuveen Institutional Tax-Exempt Money Market
Fund from such date through February 29, 2000.
12
<PAGE>
Report of Independent Public Accountants
To the Board of Trustees and Shareholders of
Nuveen Institutional Tax-Exempt Money Market Fund
We have audited the accompanying statement of net assets of the Nuveen
Institutional Tax-Exempt Money Market Fund (a Massachusetts business trust)
including the portfolio of investments, as of February 29, 2000, and the related
statement of operations for the year then ended, the statement of changes in net
assets for each of the two years then ended and the financial highlights for the
periods indicated thereon. 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 auditing standards generally accepted
in the United States. Those standards require that we plan and perform the audit
to obtain reasonable assurance about whether the 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 February 29, 2000, by
correspondence with the custodian. 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 net assets of the Nuveen
Institutional Tax-Exempt Money Market Fund as of February 29, 2000, the results
of its operations for the year then ended, the changes in its net assets for
each of the two years then ended and the financial highlights for the periods
indicated thereon in conformity with accounting principles generally accepted in
the United States.
ARTHUR ANDERSEN LLP
Chicago, Illinois
April 14, 2000
13
<PAGE>
SERVING INVESTORS
FOR GENERATIONS
[PHOTO OF JOHN NUVEEN, SR. APPEARS HERE]
John Nuveen, Sr.
A 100-Year Tradition of Quality Investments
Since 1898, John Nuveen & Co. Incorporated has been synonymous with investments
that withstand the test of time. In fact, more than 1.3 million investors have
trusted Nuveen to help them build and sustain the wealth of a lifetime.
Whether your focus is long-term growth, dependable income or sustaining
accumulated wealth, Nuveen offers a wide variety of investments and services to
help meet your unique circumstances and financial planning needs. We can help
you build a better, well-diversified portfolio.
Call Your Financial Adviser Today
To find out how the Nuveen Innovation Fund might round out your investment
portfolio, contact your financial adviser today. Or call Nuveen at (800)
257.8787 for more information. Ask your adviser or call for a prospectus which
details risks, fees and expenses. Please read the prospectus carefully before
you invest.
NUVEEN INVESTMENTS
John Nuveen & Co. Incorporated
333 West Wacker Drive
Chicago, IL 60606-1286
www.nuveen.com
<PAGE>
PART C: OTHER INFORMATION
Item 23. Exhibits:
(a) Declaration of Trust of Registrant. Filed as exhibit (a) to the
Initial Registration Statement on Form N-1A, dated March 22, 1999 and
incorporated by reference thereto.
(b) By-Laws of Registrant. Filed as exhibit (b) to the Initial
Registration Statement on Form N-1A, dated March 22, 1999 and incorporated
by reference thereto.
(c) Not applicable.
(d) Form of Investment Management Agreement. Filed as exhibit (d) to Pre-
Effective Amendment No. 2, dated June 9, 1999 and incorporated by reference
thereto.
(d)(1) Renewal, dated June 1, 2000, of Investment Management Agreement.
(e) Distribution Agreement between Registrant and John Nuveen & Co.
Incorporated dated February 1, 1999.
(f) Not applicable.
(g) Custodian Agreement. Filed as exhibit (g) to Pre-Effective Amendment
No. 2, dated June 9, 1999 and incorporated by reference thereto.
(h) Transfer Agency Agreement. Filed as exhibit (h) to Pre-Effective
Amendment No. 2, dated June 9, 1999 and incorporated by reference thereto.
(h)(1) Service Plan. Filed as exhibit (h)(1) to Post-Effective Amendment
No. 2, dated July 6, 1999 and incorporated by reference thereto.
(i) Opinion of Morgan, Lewis & Bockius LLP.
(j) Consent of Independent Public Accountants.
(k) Not applicable.
(l) Form of Subscription Agreement. Filed as exhibit (l) to Pre-Effective
Amendment No. 2, dated June 9, 1999 and incorporated by reference thereto.
(m) Plan of Distribution. Filed as exhibit (m) to Post-Effective
Amendment No. 2, dated July 6, 1999 and incorporated by reference thereto.
(n) Not applicable.
(o) Multi-Class Plan. Filed as exhibit (o) to Pre-Effective Amendment No.
2, dated June 9, 1999 and incorporated by reference thereto.
(o)(1) Addendum to Multiple Class Plan. Filed as exhibit (o)(1) to Post-
Effective Amendment No. 2, dated July 6, 1999 and incorporated by reference
thereto.
99(a) Powers of Attorney of Registrant.
99(b) Certified copy of Resolution of Board of Trustees authorizing the
signing of the names of trustees and officers on the Registrant's
Registration Statement pursuant to Power of Attorney.
99(c) Code of Ethics and Reporting Requirements.
99(p). Form of Money Market Fund Insurance Program. Filed as exhibit
99(p) to Post-Effective Amendment No. 1, dated June 25, 1999 and
incorporated by reference thereto.
Item 24. Persons Controlled by or Under Common Control with Registrant:
Not applicable.
Item 25. Indemnification:
Section 4 of Article XII of Registrant's Declaration of Trust provides as
follows:
Subject to the exceptions and limitations contained in this Section 4, every
person who is, a Trustee, officer, employee or agent of the Trust including
persons who serve at the request of the Trust as directors, trustees, officers,
employees or agents of another organization in which the Trust has an interest
as a shareholder, creditor or otherwise (hereinafter referred to as a "Covered
Person"), shall be indemnified by the Trust to the fullest extent permitted by
law against liability and against all expenses reasonably incurred or paid by
him in connection with any claim, action, suit or proceeding in which he
becomes involved as a party or otherwise by virtue of his being or having been
a Trustee, director, officer, employee or agent and against amounts paid or
incurred by him in settlement thereof.
<PAGE>
No indemnification shall be provided hereunder to a Covered Person:
(a) against any liability to the Trust or its Shareholders by reason of a
final adjudication by the courts or other body before which the proceeding
was brought that he engaged in willful misfeasance, bad faith, gross
negligence or reckless disregard of the duties involved in the conduct of
his office;
(b) with respect to any matter as to which he shall have been finally
adjudicated not to have acted in good faith in the reasonable belief that
his action was in the best interests of the Trust; or
(c) in the event of a settlement or other disposition not involving a
final adjudication (as provided in paragraph (a) or (b)) and resulting in a
payment by a Covered Person, unless there has been wither a determination
that such Covered Person did not engage in willful misfeasance, bad faith,
gross negligence or reckless disregard of the duties involved in the
conduct of his office by the court or other approving the settlement or
other disposition or a reasonable determination, based on a review of
readily available facts (as opposed to a full trial-type inquiry), that he
did not engage in such conduct:
(i) by a vote of a majority of the Disinterested Trustees acting on
the matter (provided that a majority of the Disinterested Trustees then
in office act on the matter); or
(ii) by written opinion of the independent legal counsel.
The rights of indemnification herein provided may be insured against by
policies maintained by the Trust, shall be severable, shall not affect any
other rights to which any Covered Person may now or hereafter be entitled,
shall continue as to a person who has ceased to be such a Covered Person and
shall inure to the benefit of the heirs, executors and administrators of such a
person. Nothing contained herein shall affect any rights to indemnification to
which Trust personnel other than Covered Persons may be entitled by contract
otherwise under law.
Expenses of preparation and presentation of a defense to any claim, action,
suit or proceeding subject to a claim for indemnification under Section 4 shall
be advanced by the Trust prior to final disposition thereof upon receipt of an
undertaking by or on behalf of the recipient to repay such amount if it is
ultimately determined that he is not entitled to indemnification under this
Section 4, provided that either:
(a) such undertaking is secured by a surety bond or some other
appropriate security or the Trust shall be insured against losses arising
out of any such advances; or
(b) a majority of the Disinterested Trustees acting on the matter
(provided that a majority of the Disinterested Trustees then in office act
on the matter) or independent legal counsel in a written opinion shall
determine, based upon a review of the readily available facts (as opposed
to a full trial-type inquiry), that there is reason to believe that the
recipient ultimately will be found entitled to indemnification.
As used in this Section 4, a "Disinterested Trustee" is one (x) who is not an
Interested Person of the Trust (including, as such Disinterested Trustee,
anyone who has been exempted from being an Interested Person by any rule,
regulation or order of the Commission), and (y) against whom none of such
actions, suits or other proceedings or another action, suit or other proceeding
on the same or similar groundings is then or has been pending.
As used in this Section 4, the words "claim," "action," "suit" or
"proceeding" shall apply to all claims, actions, suits, proceeding (civil,
criminal, administrative or other, including appeals), actual or threatened;
and the word "liability" and "expenses" shall include without limitation,
attorney's fees, costs, judgments, amounts paid in settlement, fines, penalties
and other liabilities.
The trustees and officers of the Registrant are covered by an Investment
Trust Errors and Omission policy in the aggregate amount of $20,000,000 (with a
maximum deductible of $500,000) against liability and expenses of claims if
wrongful acts arising out of their position with the Registrant, except for
matters which involved willful acts, bad faith, gross negligence and willful
disregard of duty (i.e., where the insured did not act in good faith for a
purpose he or she reasonably believed to be in the best interest of the
registrant or where he or she shall have had reasonable cause to believe this
conduct was unlawful).
Insofar as indemnification for liabilities arising under the Securities Act
of 1933 may be permitted to the Trustees, officers and controlling persons of
the Registrant pursuant to the Declaration of Trust or otherwise, the
ii
<PAGE>
Registrant has been advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as expressed in the
Securities Act of 1933 and is, therefore, unenforceable. In the event that a
claim for indemnification against such liabilities (other than the payment by
the Registrant of expenses incurred or paid by an officer, trustee or
controlling person of the Registrant in the successful defense of any action,
suit or proceeding) is asserted by such officer, trustee or controlling person
in connection with the securities being registered, the Registrant will, unless
in the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question whether
such indemnification by it is against public policy as expressed in the
Securities Act of 1933 and will be governed by the final adjudication of such
issue.
Item 26. Business and Other Connections of Investment Adviser:
Nuveen Advisory Corp. serves as investment adviser to the following open-end
management type investment companies: Nuveen Flagship Multistate Trust I,
Nuveen Multistate Trust II, Nuveen Flagship Multistate Trust III, Nuveen
Flagship Multistate Trust IV, Nuveen Flagship Municipal Trust, Nuveen Taxable
Funds Inc., Nuveen Municipal Money Market Fund, Inc., and Nuveen Money Market
Trust. It also serves as investment adviser to the following closed-end
management type investment companies: Nuveen Municipal Value Fund, Inc., Nuveen
California Municipal Value Fund, Inc., Nuveen New York Municipal Value Fund,
Inc., Nuveen Municipal Income Fund, Inc., Nuveen Premium Income Municipal Fund,
Inc., Nuveen Performance Plus Municipal Fund, Inc., Nuveen California
Performance Plus Municipal Fund, Nuveen New York Performance Plus Municipal
Fund, Inc., Nuveen Municipal Advantage Fund, Inc., Nuveen Municipal Market
Opportunity Fund, Inc., Nuveen California Municipal Market Opportunity Fund,
Inc., Nuveen Investment Quality Municipal Fund, Inc., Nuveen California
Investment Quality Municipal Fund, Inc., Nuveen New York Investment Quality
Municipal Fund, Inc., Nuveen Insured Quality Municipal Fund, Inc., Nuveen
Florida Investment Quality Municipal Fund, Nuveen New Jersey Investment Quality
Municipal Fund, Inc., Nuveen Pennsylvania Investment Quality Municipal Fund,
Inc., Nuveen Select Quality Municipal Fund, Inc., Nuveen California Select
Quality Municipal Fund, Inc., Nuveen New York Select Quality Municipal Fund,
Inc., Nuveen Quality Income Municipal Fund, Inc., Nuveen Insured Municipal
Opportunity Fund, Inc., Nuveen Florida Quality Income Municipal Fund, Nuveen
Michigan Quality Income Municipal Fund, Inc., Nuveen Ohio Quality Income
Municipal Fund, Inc., Nuveen Texas Income Municipal Fund, Inc., Nuveen
California Quality Income Municipal Fund, Inc., Nuveen New York Quality Income
Fund, Inc., Nuveen Premier Municipal Income Fund, Inc., Nuveen Premier Insured
Municipal Income Fund, Inc., Nuveen Premium Income Municipal Fund 2, Inc.,
Nuveen Insured California Premium Income Municipal Fund, Nuveen Insured New
York Premium Income Municipal Fund, Inc., Nuveen Select Maturities Municipal
Fund, Nuveen Arizona Premium Income Municipal Fund, Inc., Nuveen Insured
Florida Premium Income Municipal Fund, Nuveen Michigan Premium Income Municipal
Fund, Inc., Nuveen New Jersey Premium Income Municipal Fund, Inc., Nuveen
Premium Income Municipal Fund 4, Inc., Nuveen Insured California Premium Income
Municipal Fund 2, Inc., Nuveen Pennsylvania Premium Income Municipal Fund 2,
Inc., Nuveen Maryland Premium Income Municipal Fund, Nuveen Massachusetts
Premium Income Municipal Fund, Nuveen Virginia Premium Income Municipal Fund,
Nuveen Connecticut Premium Income Municipal Fund, Nuveen Georgia Premium Income
Municipal Fund, Nuveen Missouri Premium Income Municipal Fund, Nuveen North
Carolina Premium Income Municipal Fund, Nuveen California Premium Income
Municipal Fund, Nuveen Insured Premium Income Municipal Fund 2, Nuveen Dividend
Advantage Municipal Fund, Nuveen California Dividend Advantage Municipal Fund
and Nuveen New York Dividend Advantage Municipal Fund. Nuveen Advisory Corp.
has no other clients or business at the present time. The principal business
address for all of these investment companies is 333 West Wacker Drive,
Chicago, Illinois 60606.
For a description of other business, profession, vocation or employment of a
substantial nature in which any director or officer, other than John P.
Amboian, of the investment adviser has engaged during the last two years for
his account or in the capacity of director, officer, employee, partner or
trustee, see the description under "Management" in the Statement of Additional
Information.
John P. Amboian is President, formerly Executive Vice-President and Chief
Financial Officer, and Director of Nuveen Advisory Corp., the investment
adviser. Mr. Amboian has, during the last two years, been President, formerly
Executive Vice-President and Chief Financial Officer of John Nuveen & Co.
Incorporated, the John Nuveen Company and Nuveen Institutional Advisory Corp.;
Executive Vice President of Rittenhouse Financial Services, Inc. and President
and Chief Operating Officer of Nuveen Senior Loan Asset Management Inc.
iii
<PAGE>
Item 27. Principal Underwriters:
(a) John Nuveen & Co., Incorporated ("Nuveen") acts as principal underwriter
to the following open-end management type investment companies: Nuveen Flagship
Multistate Trust I, Nuveen Multistate Trust II, Nuveen Flagship Multistate
Trust III, Nuveen Flagship Multistate Trust IV, Nuveen Flagship Municipal
Trust, Nuveen Money Market Trust, Nuveen Municipal Money Market Fund, Inc.,
Nuveen Taxable Funds Inc., Nuveen Investment Trust and Nuveen Investment Trust
II and III. Nuveen also acts as depositor and principal underwriter of the
Nuveen Tax-Exempt Unit Trust and Nuveen Unit Trusts, registered unit investment
trusts. Nuveen has also served or is serving as co-managing underwriter to the
following closed-end management type investment companies: Nuveen Municipal
Value Fund, Inc., Nuveen California Municipal Value Fund, Inc., Nuveen New York
Municipal Value Fund, Inc., Nuveen Municipal Income Fund, Inc., Nuveen Premium
Income Municipal Fund, Inc., Nuveen Performance Plus Municipal Fund, Inc.,
Nuveen California Performance Plus Municipal Fund, Inc., Nuveen New York
Performance Plus Municipal Fund, Inc., Nuveen Municipal Advantage Fund, Inc.,
Nuveen Municipal Market Opportunity Fund, Inc., Nuveen California Municipal
Market Opportunity Fund, Inc., Nuveen Investment Quality Municipal Fund, Inc.,
Nuveen California Investment Quality Municipal Fund, Inc., Nuveen New York
Investment Quality Municipal Fund, Inc., Nuveen Insured Quality Municipal Fund,
Inc., Nuveen Florida Investment Quality Municipal Fund, Nuveen New Jersey
Investment Quality Municipal Fund, Inc., Nuveen Pennsylvania Investment Quality
Municipal Fund, Nuveen Select Quality Municipal Fund, Inc., Nuveen California
Select Quality Municipal Fund, Inc., Nuveen New York Select Quality Municipal
Fund, Inc., Nuveen Quality Income Municipal Fund, Inc., Nuveen Insured
Municipal Opportunity Fund, Inc., Nuveen Florida Quality Income Municipal Fund,
Nuveen Michigan Quality Income Municipal Fund, Inc., Nuveen Ohio Quality Income
Municipal Fund, Inc., Nuveen Texas Quality Income Municipal Fund, Nuveen
California Quality Income Municipal Fund, Inc., Nuveen New York Quality Income
Municipal Fund, Inc., Nuveen Premier Municipal Income Fund, Inc., Nuveen
Premier Insured Municipal Income Fund, Inc., Nuveen Premium Income Municipal
Fund 2, Inc., Nuveen Arizona Premium Income Municipal Fund, Inc., Nuveen
Insured California Premium Income Municipal Fund, Inc., Nuveen Insured Florida
Premium Income Municipal Fund, Nuveen Insured New York Premium Income Municipal
Fund, Inc., Nuveen Select Maturities Municipal Fund, Nuveen Michigan Premium
Income Municipal Fund, Inc., Nuveen New Jersey Premium Income Municipal Fund,
Inc., Nuveen Premium Income Municipal Fund 4, Inc., Nuveen Insured California
Premium Income Municipal Fund 2, Inc., Nuveen Pennsylvania Premium Income
Municipal Fund 2, Inc., Nuveen Maryland Premium Income Municipal Fund, Nuveen
Virginia Premium Income Municipal Fund, Nuveen Connecticut Premium Income
Municipal Fund, Nuveen Georgia Premium Income Municipal Fund, Nuveen Missouri
Premium Income Municipal Fund, Nuveen Massachusetts Premium Income Municipal
Fund, Nuveen North Carolina Premium Income Municipal Fund, Nuveen California
Premium Income Municipal Fund, Nuveen Insured Premium Income Municipal Fund,
Nuveen Select Tax-Free Income Portfolio, Nuveen Select Tax-Free Income
Portfolio 2, Nuveen Insured California Select Tax-Free Income Portfolio, Nuveen
Insured New York Select Tax-Free Income Portfolio, Nuveen Select Tax-Free
Income Portfolio 3, Nuveen Dividend Advantage Municipal Fund, Nuveen California
Dividend Advantage Municipal Fund, Nuveen New York Dividend Advantage Municipal
Fund, Nuveen Floating Rate Fund and Nuveen Senior Income Fund.
(b)
<TABLE>
<CAPTION>
Name and
Principal
Business Positions and Offices Positions and Offices
Address with Underwriter with Registrant*
--------------------------------------------------------------------------
<S> <C> <C>
Timothy R. Chairman of the Board, Chief Chairman of the Board,
Schwertfeger Executive Officer and Director President and Trustee
333 West
Wacker Drive
Chicago, IL
60606
John P. President and Director None
Amboian
333 West
Wacker Drive
Chicago, IL
60606
William Executive Vice President None
Adams IV
333 West
Wacker Drive
Chicago, IL
60606
Alan G. Senior Vice President and Vice President and Assistant
Berkshire Secretary Secretary
333 West
Wacker Drive
Chicago, IL
60606
</TABLE>
iv
<PAGE>
<TABLE>
<CAPTION>
Name and Principal Positions and Offices Positions and Offices
Business Address with Underwriter with Registrant
----------------------------------------------------------------------------------------
<S> <C> <C>
Robert K. Burke Vice President None
333 West Wacker Drive
Chicago, IL 60606
Peter H. D'Arrigo Vice President and None
333 West Wacker Drive Treasurer
Chicago, IL 60606
Kathleen M. Flanagan Vice President None
333 West Wacker Drive
Chicago, IL 60606
Stephen D. Foy Vice President Vice President and Controller
333 West Wacker Drive
Chicago, IL 60606
Benjamin T. Fulton Vice President None
333 West Wacker Drive
Chicago, IL 60606
Richard D. Hughes Executive Vice President None
Two Radnor Corporate Center
Radnor, PA 19087
Anna R. Kucinskis Vice President None
333 West Wacker Drive
Chicago, IL 60606
Robert B. Kuppenheimer Vice President None
1990 MacArthur Blvd.
Irvine, CA 92612
Larry W. Martin Vice President and Assistant Vice President and Assistant
333 West Wacker Drive Secretary Secretary
Chicago, IL 60606
Thomas C. Muntz Vice President None
333 West Wacker Drive
Chicago, IL 60606
Paul C. Williams Vice President None
333 West Wacker Drive
Chicago, IL 60606
Margaret E. Wilson Senior Vice President and None
333 West Wacker Drive Corporate Controller
Chicago, IL 60606
Gifford R. Zimmerman Vice President and Assistant Vice President and Secretary
333 West Wacker Drive Secretary
Chicago, IL 60606
</TABLE>
v
<PAGE>
Item 28. Location of Accounts and Records.
Nuveen Advisory Corp., 333 West Wacker Drive, Chicago, Illinois 60606,
maintains the Declaration of Trust, By-Laws, minutes of trustees and
shareholder meetings and contracts of the Registrant and all advisory material
of the investment adviser.
The Chase Manhattan Bank, 4 New York Plaza, New York, New York 10004
maintains all general and subsidiary ledgers, journals, trial balances, records
of all portfolio purchases and sales, and all other records not maintained by
Nuveen Advisory Corp. or Chase Global Funds Services Company.
Chase Global Funds Services Company, 73 Tremont Street, Boston,
Massachusetts, mainains all the required records in its capacity as transfer,
dividend paying and shareholder service agent for the Fund.
Item 29. Management Services:
Not applicable.
Item 30. Undertakings:
Not applicable.
vi
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended, and
the Investment Company Act of 1940, as amended, the Registrant certifies that
it meets all of the requirements for effectiveness of this Registration
Statement pursuant to Rule 485(b) under the Securities Act of 1933 and has
duly caused this Post-Effective Amendment No. 3 to Registration Statement No.
333-74835 to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Chicago, State of Illinois on the 28th day of June,
2000.
NUVEEN MONEY MARKET TRUST
/s/ Gifford R. Zimmerman
-----------------------------------------
Gifford R. Zimmerman, Vice President
Pursuant to the requirements of the Securities Act of 1933, this amendment to
the Registration Statement has been signed below by the following persons in
the capacities and on the date indicated.
<TABLE>
<CAPTION>
Signature Title Date
--------- ----- ----
<C> <C> <S>
/s/ Stephen D. Foy
-------------------------------
Stephen D. Foy Vice President and June 28, 2000
Controller (Principal
Financial and
Accounting Officer)
Timothy R. Schwertfeger Chairman of the Board,
President and Trustee
(Principal Executive
Officer)
Robert P. Bremner Trustee
Lawrence H. Brown Trustee
Anne E. Impellizzeri Trustee
Peter R. Sawers Trustee
William J. Schneider Trustee
Judith M. Stockdale Trustee
</TABLE>
/s/ Gifford R. Zimmerman
By____________________________
Gifford R. Zimmerman
Attorney-in-Fact
June 28, 2000
An original power of attorney authorizing, among others, Gifford R. Zimmerman
to execute this Registration Statement, and Amendments thereto, for each of
the other officers and trustees of the Registrant has been executed and is an
Exhibit to this Registration Statement.
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
Name Exhibit
---- -------
<S> <C>
Renewal, dated June 1, 2000, of Investment Management Agreement....... (d)(1)
Distribution Agreement dated February 1, 1999......................... (e)
Opinion of Morgan, Lewis & Bockius LLP................................ (i)
Consent of Independent Public Accountants............................. (j)
Powers of Attorney.................................................... 99(a)
Certified copy of Resolution of Board of Trustees authorizing the
signing of the names of trustees and officers on the Registration
Statement pursuant to power of attorney.............................. 99(b)
Code of Ethics and Reporting Requirements............................. 99(c)
</TABLE>
