<PAGE>
As filed with the Securities and Exchange Commission on April 30, 1996
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-1A
REGISTRATION STATEMENT UNDER THE
SECURITIES ACT OF 1933 [_]
File No. 2-70520
Pre-Effective Amendment No. [_]
--
Post-Effective Amendment No. 17 [X]
--
REGISTRATION STATEMENT UNDER THE
INVESTMENT COMPANY ACT OF 1940 [_]
File No. 811-3134
Amendment No. 17 [X]
--
NUVEEN TAX-EXEMPT MONEY MARKET FUND, INC.
(Exact Name of Registrant as Specified in Charter)
333 West Wacker Drive, Chicago, Illinois 60606
(Address of Principal Executive Offices) (Zip Code)
Registrant's Telephone Number, Including Area Code: (312) 917-7700
James J. Wesolowski, Esq.-Vice President
333 West Wacker Drive
Chicago, Illinois 60606
(Name and Address of Agent for Service)
It is proposed that this filing will become effective (check appropriate box):
[_] Immediately upon filing [_] on (date) pursuant to paragraph (a)(1)
pursuant to paragraph (b)
[X] on April 30, 1996 pursuant [_] 75 days after filing pursuant
to paragraph (b) to paragraph (a)(2)
[_] 60 days after filing [_] on (date) pursuant to paragraph (a)(2)
pursuant to paragraph (a)(1) of Rule 485.
If appropriate, check the following box:
[_]This post-effective amendment designates a new effective date for a previ-
ously filed post-effective amendment.
PURSUANT TO RULE 24F-2 OF THE INVESTMENT COMPANY ACT OF 1940, REGISTRANT HAS
ELECTED TO REGISTER AN INDEFINITE NUMBER OF SHARES. A RULE 24F-2 NOTICE FOR THE
REGISTRANT'S FISCAL YEAR ENDED FEBRUARY 29, 1996, WAS FILED ON OR ABOUT APRIL
22, 1996.
CALCULATION OF REGISTRATION FEE
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PROPOSED PROPOSED
MAXIMUM MAXIMUM AMOUNT OF
TITLE OF SECURITIES AMOUNT BEING OFFERING PRICE AGGREGATE REGISTRATION
BEING REGISTERED REGISTERED PER UNIT OFFERING PRICE FEE*
- ------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Shares of Common Stock, $.01
par
value......................... 987,830,947 $1.00 $987,830,947 $100.00
- ------------------------------------------------------------------------------------------
</TABLE>
- --------------------------------------------------------------------------------
*Registrant has elected to calculate its filing fee in the manner described in
Rule 24e-2 under the Investment Company Act of 1940. The total amount of secu-
rities redeemed during the previous fiscal year was $3,830,078,044. The total
amount of redeemed securities used for reduction pursuant to Rule 24e-2(a) or
Rule 24f-2(c) was $2,842,537,097. The amount of redeemed securities being used
for reduction of the registration fee in this Amendment is $987,540,947.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
NUVEEN TAX-EXEMPT MONEY MARKET FUND, INC.
CONTENTS
OF
POST-EFFECTIVE AMENDMENT NO. 17
TO
REGISTRATION STATEMENT
UNDER THE SECURITIES ACT OF 1933
FILE NO. 2-70520
AND
AMENDMENT NO. 17
TO
REGISTRATION STATEMENT
UNDER THE INVESTMENT COMPANY ACT OF 1940
FILE NO. 811-3134
This Registration Statement comprises the following papers and contents:
The Facing Sheet
Cross-Reference Sheet
Part A--The Prospectus (including the Annual Report to
Shareholders)
Part B--The Statement of Additional Information
Part C--Other Information
Signatures
Index to Exhibits
Exhibits
<PAGE>
NUVEEN TAX-EXEMPT MONEY MARKET FUND, INC.
-----------------
CROSS REFERENCE SHEET
PART A--PROSPECTUS
<TABLE>
<CAPTION>
ITEM IN PART A
OF FORM
N-1A PROSPECTUS LOCATION
- -------------- -------------------
<S> <C>
1..................... Cover Page
2(a).................. Fund Expenses
(b).................. Highlights
(c).................. Highlights
3(a).................. Financial Highlights
(b).................. Not applicable
(c).................. Yield
(d).................. Not applicable
4(a).................. General Information; The Fund and Its Investment
Objective; Investment Policies
(b).................. Investment Policies
(c).................. Investment Policies
5(a).................. Management of the Fund
(b).................. Management of the Fund
(c).................. Not applicable
(d).................. General Information--Custodian, Shareholder Services Agent
and Transfer Agent; Management of the Fund
(e).................. General Information--Custodian, Shareholder Services Agent
and Transfer Agent
(f).................. Not applicable
(g).................. Not applicable
5A.................... Not applicable
6(a).................. General Information--Capital Stock
(b).................. Not applicable
(c).................. Not applicable
(d).................. Not applicable
(e).................. General Information--Investor Inquiries
(f).................. Dividends
(g).................. Taxes
(h).................. Not applicable
7(a).................. Management of the Fund
(b).................. Net Asset Value; How to Buy Fund Shares
(c).................. Not applicable
(d).................. How to Buy Fund Shares
(e).................. Not applicable
(f).................. Not applicable
8(a).................. How to Redeem Fund Shares
(b).................. How to Redeem Fund Shares
(c).................. How to Redeem Fund Shares
(d).................. How to Redeem Fund Shares
9..................... Not applicable
</TABLE>
<PAGE>
PART B--STATEMENT OF ADDITIONAL INFORMATION
<TABLE>
<CAPTION>
ITEM IN PART B
OF FORM LOCATION IN STATEMENT
N-1A OF ADDITIONAL INFORMATION
- -------------- -------------------------
<S> <C>
10..................... Cover Page
11..................... Cover Page
12..................... Not applicable
13..................... Fundamental Policies and Investment Portfolio
14(a).................. Management
(b).................. Management
(c).................. Not applicable
15(a).................. Not applicable
(b).................. Management
(c).................. Management
16(a).................. Investment Adviser and Investment Management
Agreement; Management
(b).................. Investment Adviser and Investment Management Agreement; see
also "Management of the Fund" in the Prospectus
(c).................. Not applicable
(d).................. Not applicable
(e).................. Not applicable
(f).................. Not applicable
(g).................. Not applicable
(h).................. Independent Public Accountants and Custodian
(i).................. Not applicable
17(a).................. Portfolio Transactions
(b).................. Not applicable
(c).................. Portfolio Transactions
(d).................. Not applicable
(e).................. Not applicable
18(a).................. See "General Information--Capital Stock" and "How to Redeem
Fund Shares" in the Prospectus
(b).................. Not applicable
19(a).................. See "How to Buy Fund Shares" in the Prospectus
(b).................. Net Asset Value; Amortized Cost Valuation; Financial
Statements--Statement of Net Assets; see also "Net
Asset Value" in the Prospectus
(c).................. See "How to Redeem Fund Shares--Redemption in Kind"
in the Prospectus
20..................... Tax Matters
21(a).................. See "How to Buy Fund Shares" in the Prospectus; Principal
Underwriter and Distributor
(b).................. Not applicable
(c).................. Not applicable
22(a).................. Yield Information
(b).................. Not applicable
23..................... See Prospectus; Portfolio of Investments; Statement of Net
Assets; Statement of Operations; Statement of Changes in Net
Assets; Report of Independent Public Accountants
</TABLE>
<PAGE>
PART A--PROSPECTUS
NUVEEN TAX-EXEMPT MONEY MARKET FUND, INC.
333 West Wacker Drive
Chicago, Illinois 60606
<PAGE>
Nuveen Tax-Free
Money Market Funds
Dependable tax-free
income for generations
TAX-EXEMPT
MONEY MARKET FUND
[PHOTO OF COUPLE APPEARS HERE]
PROSPECTUS/ANNUAL REPORT
<PAGE>
Nuveen Tax-Exempt Money Market Fund, Inc.
Prospectus
April 30, 1996
Nuveen Tax-Exempt Money Market Fund, Inc. (the "Fund'') is an open-end,
diversified management investment company with the objective of providing as
high a level of current interest income exempt from federal income taxes as is
consistent, in the view of Fund management, with stability of principal and
maintenance of liquidity through investment in a professionally managed
portfolio of high quality, short-term Municipal Obligations. The Fund will value
its portfolio securities at amortized cost and seek to maintain a net asset
value of $1.00 per share.
The Fund is designed as a convenient investment vehicle for institutional
investors with temporary cash balances such as trust departments, trust
companies, and banks acting as agent, adviser, or custodian. It is equally
appropriate for the investment of short-term funds held or managed by
corporations, insurance companies, investment counselors, law firms, broker-
dealers and individuals.
This Prospectus, which should be retained for future reference, sets forth
concisely the information about the Fund that a prospective investor ought to
know before investing. A "Statement of Additional Information" dated April 30,
1996, containing further information about the Fund, has been filed with the
Securities and Exchange Commission, is incorporated by reference into this
Prospectus, and may be obtained without charge from John Nuveen & Co.
Incorporated by calling 800.858.4084.
An investment in the Fund is neither insured nor guaranteed by the U.S.
Government and there can be no assurance that the Fund will be able to maintain
a stable net asset value of $1.00 per share.
Shares of the Fund are not deposits or obligations of, or guaranteed or
endorsed by, any bank and are not federally insured by the Federal Deposit
Insurance Corporation, the Federal Reserve Board or any other agency.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
John Nuveen & Co. Incorporated
For information, call toll-free 800.858.4084
<PAGE>
CONTENTS
Prospectus
----------
1 Prospectus cover page
2 Contents
3 Highlights
4 Fund expenses
6 Financial highlights
8 Yield
8 The Fund and its investment objective
9 Investment policies
14 Management of the Fund
16 Net asset value
16 Dividends
17 Suitability
17 How to buy Fund shares
19 How to redeem Fund shares
21 Taxes
23 General information
Annual Report
-------------
24 Financial statements
40 Report of independent public accountants
2
<PAGE>
HIGHLIGHTS
Nuveen Tax-Exempt Money Market Fund, Inc. (the "Fund") is an open-end, diver-
sified management investment company with the objective of providing, through
investment in a professionally managed portfolio of high quality short-term
Municipal Obligations, as high a level of current interest income exempt from
federal income tax as is consistent, in the view of the Fund's management, with
stability of principal and the maintenance of liquidity. The Fund values its
portfolio at amortized cost and seeks to maintain a net asset value of $1.00 per
share. There is no guarantee that this value will be maintained. See "Net Asset
Value" on page 16 and "The Fund and Its Investment Objective" on page 8.
The Fund intends to qualify, as it has in prior years, for tax treatment as a
regulated investment company and to satisfy conditions that will enable interest
income which is exempt from federal income tax in the hands of the Fund to
retain such tax-exempt status when distributed to the shareholders of the Fund.
Dividends may not be exempt from state or local income taxes. See "Taxes" on
page 21.
How to buy Fund shares
Fund shares may be purchased on days on which the Federal Reserve Bank of Boston
is normally open for business ("business days") at the net asset value next
determined after an order is received together with payment in federal funds.
The minimum initial investment is $25,000. Subsequent investments for the
account of the shareholder must be in amounts of $500 or more. See "How to Buy
Fund Shares" on page 17.
How to redeem Fund shares
Shareholders may redeem shares at net asset value next computed after receipt of
a redemption request in proper form on any business day. There is no redemption
fee. See "How to Redeem Fund Shares" on page 19.
Dividends
The Fund declares dividends daily from its accumulated net income and
distributes the dividends monthly in the form of additional shares or, at the
option of the investor, in cash. See "Dividends" on page 16.
Investment adviser and principal underwriter
John Nuveen & Co. Incorporated ("Nuveen") acts as principal underwriter of the
Fund. Nuveen Advisory Corp. ("Nuveen Advisory"), a wholly-owned subsidiary of
Nuveen, acts as the Fund's investment adviser and receives an annual fee of .4
of 1% of the average daily net asset value of the Fund. The management fee is
reduced to .375 of 1%, .350 of 1% and .325 of 1% of the average daily net asset
value over $500,000,000, $1,000,000,000, and $2,000,000,000, respectively. See
"Management of the Fund" on page 14.
3
<PAGE>
Investments
The Fund invests primarily in municipal money market instruments. The Fund may
from time to time invest a portion of its assets in debt obligations which are
not rated, and variable rate or floating rate obligations. Each of these
investments and practices involves certain risk factors. Investors are urged to
read the descriptions set forth in this Prospectus of these investments and
practices. See "Investment Policies" on page 9.
The information set forth above should be read in conjunction with the detailed
information set forth elsewhere in this Prospectus.
FUND EXPENSES
The following tables illustrate all expenses and fees that a shareholder of the
Fund will incur. The expenses and fees shown are for the fiscal year ended
February 29, 1996.
------------------------------------------------------
Shareholder transaction expenses
------------------------------------------------------
Sales load imposed on purchases None
Sales load imposed on reinvested dividends None
Redemption fees None
Exchange fees None
------------------------------------------------------
------------------------------------------------------
Annual operating expenses
(as a percentage of average daily net assets)
------------------------------------------------------
Management fees .39%
12b-1 fees None
Other operating expenses .05%
Total expenses .44%
------------------------------------------------------
The purpose of the foregoing tables is to help the investor understand all
expenses and fees that an investor in the Fund will bear directly or indirectly.
As discussed under "Management of the Fund," the management fee is reduced or
Nuveen Advisory assumes certain expenses so as to prevent the total expenses of
the Fund in any fiscal year from exceeding .45 of 1% of the average daily net
asset value of the Fund.
4
<PAGE>
The following example illustrates the expenses that an investor would pay on a
$1,000 investment over various time periods assuming (1) a 5% annual rate of
return and (2) redemption at the end of each time period. As noted in the table
above, the Fund charges no redemption fees of any kind.
- -------------------------------------
1 Year 3 Years 5 Years 10 Years
- -------------------------------------
$5 $14 $25 $55
- -------------------------------------
This example should not be considered a representation of past or future
expenses or performance. Actual expenses may be greater or less than those
shown. This example assumes that the percentage amounts listed under Annual
Operating Expenses remain the same in each of the periods.
5
<PAGE>
FINANCIAL HIGHLIGHTS
The following financial information has been derived from the Fund's financial
statements which have been audited by Arthur Andersen LLP, independent public
accountants, as indicated in their report, and should be read in conjunction
with the financial statements and related notes, appearing at the back of this
Prospectus.
NUVEEN TAX-EXEMPT MONEY MARKET FUND, INC.
SELECTED DATA FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD IS AS FOLLOWS:
<TABLE>
<CAPTION>
Income from investment operations Less distributions
--------------------------------- --------------------------
Net
Net asset realized and Dividends Distribution
value Net unrealized gain from net from
beginning investment (loss) from investment capital
of period income investments income gains
- -------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Year ended 2/29
1996 $1.000 $.034 $-- $(.034) $ --
Year ended 2/28,
1995 1.000 .027 -- (.027) --
1994 1.000 .020 -- (.020) --
1993 1.000 .026 -- (.026) --
10/1/91 to
2/29/92 1.000 .016 -- (.016) --
Year ended 9/30,
1991 1.000 .049 -- (.049) --
1990 1.000 .058 -- (.058) --
1989 1.000 .060 -- (.060) --
1988 1.000 .049 -- (.049) --
1987 1.000 .041 -- (.041) --
1986 1.000 .048 -- (.048) --
1985 1.000 .052 -- (.052) --
</TABLE>
*Annualized.
6
<PAGE>
<TABLE>
<CAPTION>
Ratios/Supplemental data
----------------------------------------------
Net Ratio of
asset Total Ratio of net investment
value return on Net assets expenses income
end of net asset end of period to average to average
period value (in thousands) net assets net assets
- -------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------
<C> <C> <C> <C> <C>
$1.000 3.42% $ 610,053 .44% 3.43%
1.000 2.69 759,244 .44 2.65
1.000 2.04 975,833 .42 2.04
1.000 2.57 1,597,014 .40 2.58
1.000 1.56 2,332,021 .39* 3.71*
1.000 4.85 1,927,583 .38 4.81
1.000 5.75 1,800,966 .40 5.74
1.000 6.00 1,756,725 .39 6.02
1.000 4.89 2,044,479 .39 4.90
1.000 4.09 1,927,003 .39 4.09
1.000 4.77 2,472,401 .40 4.71
1.000 5.22 1,913,875 .40 5.18
</TABLE>
7
<PAGE>
YIELD
From time to time the Fund may advertise its "yield," "effective yield" and
"taxable equivalent 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 expressed as a percentage of the investment. "Effective 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 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
equivalent yield quotation will be higher than the yield or the effective yield
quotations. Additional information concerning the Fund's performance figures
appears in the Statement of Additional Information.
Based on the seven-day period ended February 29, 1996, the Fund's yield,
effective yield and taxable equivalent yield (using the maximum federal income
tax rate of 39.6%) were 3.01%, 3.05% and 4.98%, respectively.
This Prospectus may be in use for a full year and it can be expected that during
this period there will be material fluctuations in yield from that quoted above.
For information as to current yields, please call Nuveen at 800.621.7227.
THE FUND AND ITS INVESTMENT OBJECTIVE
The Fund is an open-end, diversified management investment company which has the
objective of providing, through investment in a professionally managed portfolio
of high quality short-term Municipal Obligations (described below), as high a
level of current interest income exempt from federal income tax as is
consistent, in the view of the Fund's management, with stability of principal
and the maintenance of liquidity. The Fund's investment objective is a
fundamental policy of the Fund and may not be changed without the approval of
the holders of a majority of the shares. The Fund values its portfolio
securities at amortized cost and seeks to maintain a constant net asset value of
$1.00 per share. There is risk in all investments and, therefore, there can be
no assurance that the Fund's objective will be achieved.
8
<PAGE>
INVESTMENT POLICIES
In general
The Fund's investment portfolio will consist primarily of short-term Municipal
Obligations which at the time of purchase are eligible for purchase by money
market funds under applicable guidelines of the Securities and Exchange
Commission ("SEC"), and are: (1) bonds rated within the two highest long-term
grades by Moody's Investor Service Inc. ("Moody's")--Aaa or Aa, or by Standard &
Poor's Corporation ("S&P")--AAA or AA respectively, or, in the case of municipal
notes, rated MIG-1 or VMIG-1 by Moody's or SP-1 by S&P, or, in the case of
municipal commercial paper, rated Prime-1 by Moody's or A-1 by S&P; (2) unrated
obligations which, in the opinion of Nuveen Advisory, have credit
characteristics at least equivalent to obligations rated Aa, MIG-1, VMIG-1 or
Prime-1 by Moody's, or AA, SP-1 or A-1 by S&P; or (3) obligations exempt from
federal income tax which at the time of purchase are backed by the full faith
and credit of the U.S. Government as to payment of principal and interest.
The investment portfolio of the Fund will be limited to obligations maturing
within 397 days from the date of acquisition or that have variable or floating
rates of interest (such rates vary with changes in specified market rates or
indices such as a bank prime rate or tax-exempt money market index). The Fund
may invest in such variable and floating rate instruments even if they carry
stated maturities in excess of 397 days, provided that (1) certain conditions
contained in rules issued by the SEC under the Investment Company Act of 1940
are satisfied and (2) they permit the Fund to recover the full principal amount
thereof upon specified notice. The Fund's right to obtain payment on such an
instrument could be adversely affected by events occurring between the date the
Fund elects to tender the instrument and the date proceeds are due.
The ratings of Moody's and S&P represent their opinions as to the quality of
those Municipal Obligations which they undertake to rate. It should be
emphasized, however, that ratings are general and are not absolute standards of
quality. 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. Neither event requires the elimination of such obligation from the Fund's
portfolio, but Nuveen Advisory will consider such an event in its determination
of whether the Fund should continue to hold such obligation. To the extent that
unrated Municipal Obligations may be less liquid, there may be somewhat greater
risks in purchasing unrated Municipal Obligations.
9
<PAGE>
The types of short-term Municipal Obligations in which the Fund may invest
include bond anticipation notes, tax anticipation notes, revenue anticipation
notes, construction loan notes to provide construction financing of specific
projects and bank notes issued by governmental authorities to commercial banks
as evidence of borrowings. Since these short-term securities frequently serve as
interim financing pending receipt of anticipated funds from the issuance of
long-term bonds, tax collections or other anticipated future revenues, a
weakness in an issuer's ability to obtain such funds as anticipated could
adversely affect the issuer's ability to meet its obligations on these short-
term securities.
Because the Fund invests in securities backed by banks and other financial
institutions, changes in the credit quality of these institutions could cause
losses to the Fund and affect its share price.
The Fund has obtained commitments (each, a "Commitment") from MBIA Insurance
Corporation ("MBIA") with respect to certain designated bonds held by the Fund
for which credit support is furnished by one of the banks ("Approved Banks")
approved by MBIA under its established credit approval standards. Under the
terms of a Commitment, if the Fund were to determine that certain adverse
circumstances relating to the financial condition of the Approved Bank had
occurred, the Fund could cause MBIA to issue a "while-in-fund" insurance policy
covering the underlying bonds; after time and subject to further terms and
conditions, the Fund could obtain from MBIA an "insured-to-maturity" insurance
policy as to the covered bonds. Each type of insurance policy would insure
payment of interest on the bonds and payment of principal at maturity. Although
such insurance would not guarantee the market value of the bonds or the value of
the Fund's shares, the Fund believes that its ability to obtain insurance for
such bonds under such adverse circumstances will enable the Fund to hold or
dispose of such bonds at a price at or near their par value.
The Fund intends to remain as fully invested in municipal securities as is
prudent or practical under the circumstances. The Fund to date has not purchased
and has no present intention to purchase "temporary investments," the income
from which is subject to federal income tax. However, the Fund may invest not
more than 20% of its net assets in such temporary investments. Further, during
extraordinary circumstances, the Fund may, for defensive purposes, invest more
than 20% of its net assets in such temporary investments. The Fund will invest
only in temporary investments with remaining maturities of one year or less
which, in the opinion of Nuveen Advisory, are of "high grade" quality.
10
<PAGE>
The SEC has recently adopted amendments to Rule 2a-7 under the Investment
Company Act of 1940. Although these amendments have not yet become effective and
the Fund has not yet amended its amortized cost procedures to implement changes
that will be required by these amendments, the Fund will adhere at all times to
all requirements of Rule 2a-7. In particular, the amended Rule 2a-7 will
prohibit the Fund from investing more than 5% of its assets in securities that
are regarded as "conduit securities" and that are rated second tier under Rule
2a-7 (which could include securities that are rated "first tier" by one or more
but less than all rating agencies and therefore qualify to be held by the Fund
under its investment policies described above); and would prohibit the Fund from
investing more than 1% of its assets in such securities of any one issuer.
Because investments of the Fund will consist of securities with relatively short
maturities, the Fund can expect to have a high portfolio turnover rate. The Fund
will maintain a dollar-weighted average portfolio maturity of not more than 90
days. During the fiscal year ended February 29, 1996, the average maturity of
the Fund's portfolio ranged from 18 to 50 days.
Municipal obligations
Municipal Obligations include debt obligations issued by states, 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 Municipal Obligations 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 facilities. In
addition, certain industrial development bonds and pollution control bonds may
be included within the term Municipal Obligations if the interest paid thereon
qualifies as exempt from federal income tax.
Two principal classifications of 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.
There are, of course, variations in the security of Municipal Obligations, both
within a particular classification and between classifications, depending on
numerous factors.
11
<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
revenues.
Municipal Obligations also include very short-term unsecured, negotiable
promissory notes, issued by states, municipalities, and their agencies, which
are known as "tax-exempt commercial paper" or "municipal paper." Payment of
principal 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 extent
consistent with its investment objective 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,
including 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
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.
12
<PAGE>
The Fund may purchase and sell Municipal 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 transactions normally settle within 30-45 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.
Obligations of issuers of Municipal 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
laws enacted in the future by Congress, state legislatures or referenda
extending 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 Municipal Obligations may be materially affected.
Certain fundamental investment policies
The Fund, as a fundamental policy, may not: (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 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; (3) pledge, mortgage or hypothecate its assets,
except that, to secure permitted borrowings for temporary or emergency purposes,
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; (4) 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; (5) invest more than 5% of its total assets
in securities of unseasoned issuers which, together with their predecessors,
have been in operation for less than three years; (6) 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; or (7) invest more than 25% of its assets in the securities
of issuers in any
13
<PAGE>
single industry; provided, however, that such limitation shall not be applicable
to the purchase of Municipal Obligations and obligations issued or guaranteed by
the U.S. government or its agencies or instrumentalities. For purposes of
applying the limitations of clauses (1) and (5), the "issuer" of a security
shall be deemed to be the entity whose assets and revenues are committed to the
payment of principal and interest on such security, provided that the guarantee
of an instrument will be considered a separate security (subject to certain
exclusions allowed under the Investment Company Act of 1940). The foregoing
restrictions and other limitations discussed herein will apply only at the time
of purchase of securities and will not be considered violated unless an excess
or deficiency occurs or exists immediately after and as a result of an
acquisition of securities.
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.
For a more complete description of the fundamental and non-fundamental
investment policies summarized above and the other fundamental investment
policies applicable to the Fund, see the Statement of Additional Information.
The investment policies specifically identified as fundamental, together with
the Fund's investment objective, cannot be changed without approval by holders
of a "majority of the Fund's outstanding voting shares." As defined by the
Investment Company Act of 1940, this means the vote of (i) 67% or more of the
shares present at a meeting, if the holders of more than 50% of the shares are
present or represented by proxy, or (ii) more than 50% of the shares, whichever
is less.
MANAGEMENT OF THE FUND
The management of the Fund, including general supervision of the duties
performed by Nuveen Advisory under the Investment Management Agreement, is the
responsibility of the Fund's Board of Directors.
Nuveen Advisory acts as the investment adviser for and manages the investment
and reinvestment of the assets of the Fund. Its address is 333 West Wacker
Drive, Chicago, Illinois 60606. Nuveen Advisory also administers the Fund's
business affairs, acts as pricing agent for the Fund, 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
directors or officers of the Fund if elected to such positions.
14
<PAGE>
For the services and facilities furnished by Nuveen Advisory, the Fund has
agreed to pay an annual management fee as follows:
- ----------------------------------------------------------------
Average daily net asset value of the Fund Management fee
- ----------------------------------------------------------------
For the first $500 million .400 of 1%
For the next $500 million .375 of 1%
For the next $1 billion .350 of 1%
For assets over $2 billion. .325 of 1%
All fees and expenses are accrued daily and deducted before payment of dividends
to investors. In addition to the management fee of Nuveen Advisory, the Fund
pays all other costs and expenses of its operations.
The management fee will be reduced or Nuveen Advisory will assume certain Fund
expenses in an amount necessary to prevent the Fund's total expenses (including
Nuveen Advisory's management fee, 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 .45 of 1% of the
average daily net asset value of the Fund. For the fiscal year ended February
29, 1996, the management fee amounted to .39 of 1% of the Fund's average daily
net assets, and total expenses amounted to .44 of 1% of the Fund's average daily
net assets.
Nuveen Advisory was organized in 1976 and since then has exclusively engaged in
the management of municipal securities portfolios. It currently serves as
investment adviser to 21 open-end municipal securities portfolios (the "Nuveen
Mutual Funds") and 53 exchange-traded municipal securities funds (the "Nuveen
Exchange-Traded Funds"). Each of these invests substantially all of its assets
in investment grade quality, tax-free municipal securities. As of the date of
this Prospectus, Nuveen Advisory manages approximately $30 billion in assets
held by the Nuveen Mutual Funds and the Nuveen Exchange-Traded Funds.
15
<PAGE>
Nuveen Advisory is a wholly-owned subsidiary of John Nuveen & Co. Incorporated
("Nuveen"), 333 West Wacker Drive, Chicago, Illinois 60606, the oldest and
largest investment banking firm (based on number of employees) specializing in
the underwriting and distribution of tax-exempt securities. Nuveen, the
principal underwriter of the Fund's shares, is sponsor of the Nuveen Tax-Exempt
Unit Trust, a registered unit investment trust. It is also the principal
underwriter of the Nuveen Mutual Funds, and served as co-managing underwriter
for the shares of the Nuveen Exchange-Traded Funds. Over 1,000,000 individuals
have invested to date in Nuveen's tax exempt funds and trusts. Founded in 1898,
Nuveen is a subsidiary of The John Nuveen Company which, in turn, is
approximately 75% 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.
NET ASSET VALUE
The net asset value of the Fund's shares is determined by The Chase Manhattan
Bank, N.A., the Fund's custodian, at 12:00 noon eastern time on (1) each day on
which the Federal Reserve Bank of Boston is normally open for business (a
"business day") and (2) on any other day during which there is a sufficient
degree of trading in the Fund's portfolio securities such that the current net
asset value of the Fund's shares might be materially affected by changes in the
value of portfolio securities. The net asset value per share will be computed by
dividing the sum of the value of the Fund's total assets, less liabilities, by
the total number of shares outstanding at such time.
The Fund seeks to maintain a net asset value of $1.00 per share. In this
connection, the Fund values its portfolio securities on the basis of their
amortized cost. This method values a security at its cost on the date of
purchase and thereafter assumes a constant amortization to maturity of any
discount or premium, regardless of the impact of fluctuating interest rates on
the market value of the security. For a more complete description of this
valuation method and its effect on existing and prospective shareholders, see
the Statement of Additional Information. There can be no assurance that the Fund
will be able at all times to maintain a net asset value of $1.00 per share.
DIVIDENDS
All of the net income of the Fund is declared on each calendar day as a dividend
on shares entitled to such dividend. Net income of the Fund consists of all
interest income accrued and discount earned on portfolio assets (adjusted for
amortization of premium or discount on securities when required for federal
income tax purposes), plus or minus any realized short-term gains or losses on
portfolio instruments since the previous dividend declaration, less estimated
expenses incurred subsequent to the
16
<PAGE>
previous dividend declaration. It is not expected that realized or unrealized
gains or losses on portfolio instruments will be a meaningful factor in the
computation of the Fund's net income. Dividends are paid monthly and are
reinvested in additional shares of the Fund at net asset value or, at the
shareholder's option, paid in cash. Net realized long-term capital gains, if
any, will be paid not less frequently than annually and reinvested in additional
shares of the Fund at net asset value unless the shareholder has elected to
receive capital gains in cash. The Fund does not anticipate realizing any
significant long-term capital gains or losses.
SUITABILITY
The Fund is designed as a convenient means for institutional investors with
temporary cash balances who seek to obtain income exempt from federal income
taxes. Although the Fund is primarily designed for banks and trust companies
seeking tax-free investment of short-term funds held in accounts for which the
bank or trust company acts in a fiduciary, advisory, agency, custodial or
similar capacity, the Fund is equally appropriate for the tax-free investment of
short-term funds held by corporations, insurance companies, investment
counselors, law firms, investment bankers, brokers, individuals and others.
Because plans qualified under Section 401 of the Internal Revenue Code or other
persons exempt from federal income tax will be unable to benefit from the tax-
exempt nature of the Fund's dividends, the Fund is not generally suitable for
such plans or persons.
HOW TO BUY FUND SHARES
In general
Investors may purchase Fund shares on business days (as defined under "Net Asset
Value") at the net asset value which is next computed after receipt of a proper
purchase order and receipt of payment in federal funds. There are no sales
charges.
Purchase by telephone
To purchase shares of the Fund, first open an account by calling Nuveen on any
business day at 800.858.4084. Information needed to establish the account will
be taken over the telephone. An application form should be completed promptly
and mailed to the Fund. Federal funds should be wired to:
United Missouri Bank of Kansas City, N.A.
ABA #101000695
Nuveen Tax-Exempt Money Market Fund, Inc.
Account No. (see above)
Account Name:
17
<PAGE>
The investor will be required to complete an application and mail it to the Fund
after making the initial telephone purchase. Subsequent investments may be made
by following the same wire transfer procedure.
If an order is received by Nuveen by 12:00 noon, eastern time, and federal funds
are received by United Missouri Bank of Kansas City, N.A. on the same day, the
order is effective that day. Federal funds should be wired as early as possible,
but no later than 3:00 p.m. eastern time, to facilitate crediting to the
shareholder's account on that day.
Purchase by mail
Complete an application form and mail it with a check or Federal Reserve draft
to Nuveen Tax-Exempt Money Market Fund, Inc., c/o Shareholder Services, Inc.,
P.O. Box 5330, Denver, CO 80217-5330. The order becomes effective as soon as the
check or draft is converted to federal funds. This usually occurs one business
day after receipt, but may take longer.
Commencement of dividends
Shares are deemed to have been purchased and are entitled to dividends
commencing on the day the purchase order becomes effective.
Minimum investment
The minimum initial investment is $25,000; subsequent investments must be in
amounts of $500 or more. Institutions are encouraged to open single master
accounts. If, however, an institution wishes to use the Fund's transfer agent's
sub-accounting system, these sub-accounts may be aggregated for the purpose of
meeting the minimum investment.
Additional information
As transfer agent for the Fund, Shareholder Services, Inc. ("SSI") maintains an
account for each shareholder of record. In the interest of economy and
convenience, share certificates are not issued unless specifically requested by
writing the Fund. No certificates are issued for fractional shares.
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.
To assist those institutions performing their own sub-accounting, same day
information 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.
18
<PAGE>
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.
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 minimum
investment requirements.
HOW TO REDEEM FUND SHARES
In general
Upon receipt of a proper redemption request on a business day the Fund will
redeem its shares at their next determined net asset value. The Fund reserves
the right not to honor redemption requests where the shares to be redeemed have
been purchased by check within 15 days prior to the date the redemption request
is received. There is no delay when shares being redeemed were purchased by
wiring federal funds and thus purchase by this method is strongly recommended.
Redemption requests may be made by calling Nuveen at 800.858.4084. Shareholders
wishing to redeem by telephone must have elected this option on an account
application form and have returned the form to Nuveen before telephone
redemption requests can be accepted. If a redemption request is received by
Nuveen by 12:00 noon, eastern time, the proceeds are ordinarily wired on the
same day to the commercial bank account designated on the shareholder's
application form. The shares redeemed do not earn income on the day the proceeds
are wired. If the redemption request is received by Nuveen after 12:00 noon,
eastern time, the shares to be redeemed earn income on the day the request is
received and proceeds are ordinarily wired the next business day. The Fund
reserves the right to charge a fee of approximately $5 for the cost of wire
transferred redemptions of less than $5,000. The amount and terms of this fee
are subject to change. Telephone redemption is not available to redeem shares
for which share certificates have been issued.
Proceeds of telephone redemption of shares will be transferred by Federal
Reserve wire only to the commercial bank account specified on the shareholder's
application form. In order to establish multiple accounts, or to change the
account or accounts designated to receive wire redemption proceeds, a written
request specifying the change must be sent to Nuveen. This request must be
signed by each shareholder with each signature guaranteed by a member of an
approved Medallion Guarantee Program, or in such other manner as may be
acceptable to the Fund. Further
19
<PAGE>
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, SSI and Nuveen will not be liable for following telephone instructions
reasonably believed to be genuine. The Fund employs procedures reasonably
designed to confirm that telephone instructions are genuine. These procedures
include recording all telephone instructions and requiring up to three forms of
identification prior to acting upon a caller's instructions. If the Fund does
not follow reasonable procedures for protecting shareholders against loss on
telephone transactions, it may be liable for any losses due to unauthorized or
fraudulent telephone instructions.
Written redemption
Shareholders may redeem their shares by sending a written request for redemption
directly to the Fund, accompanied by duly endorsed certificates, if issued.
Requests for redemption and share certificates, if issued, must be signed by
each shareholder and, if the redemption proceeds exceed $50,000 or are payable
other than to the shareholder of record at the address of record (which address
may not have been changed in the preceding 30 days), the signatures must be
guaranteed by a member of an approved Medallion Guarantee Program, or in such
other manner as may be acceptable to the Fund. Under normal circumstances
payment will be made by check and mailed within one business day (and in no
event more than seven days) after receipt of a redemption request in proper
form.
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 reserves
the right to have the Fund make payment in whole or in part in securities 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 existing
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 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
20
<PAGE>
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 reserves the right to redeem any account with a balance of $5,000 or
less. Shareholders will be notified that the value of their account is less than
$5,000 and will be allowed 60 days to make additional share purchases before the
redemption is processed.
Banks and other organizations through which investors may redeem shares of the
Fund may impose charges for redemption. Shareholders should contact such
institutions directly regarding any such charges.
TAXES
Federal income tax matters
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 for treatment as a regulated
investment company, the Fund must satisfy certain requirements relating to the
sources of its income, diversification of its assets and distribution of its
income to shareholders. As a regulated investment company, the Fund will not be
subject to federal income tax on the portion of its net investment income and
net realized capital gains that is currently distributed to shareholders. The
fund also intends to satisfy conditions which will enable interest income from
Municipal Obligations that is exempt from federal income tax in the hands of the
Fund, to retain such tax-exempt status when distributed to the shareholders of
the Fund. Distributions of interest income on Municipal Obligations may not be
exempt from state or local income taxes.
Distributions by the Fund of net interest income received, if any, from
temporary investments and net short-term capital gains, if any, realized by the
Fund, will be taxable to shareholders as ordinary income. As long as the Fund
qualifies as a regulated investment company under the Code, distributions to
shareholders will not qualify for the dividends received deduction for
corporations. 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 taxable income for that year, and
the entire amount of distributions to shareholders would be taxable to
shareholders as ordinary income.
21
<PAGE>
The Code provides that interest on indebtedness incurred or continued to
purchase or carry tax-free investments, such as shares of the Fund, is not
deductible. Under rules used by the Internal Revenue Service for determining
when borrowed funds are considered used for the purpose of purchasing or
carrying particular assets, the purchase of shares may be considered to have
been made with borrowed funds even though such funds are not directly traceable
to the purchase of shares.
Tax-exempt income is taken into account in calculating the amount of social
security and railroad retirement benefits that may be subject to federal income
tax.
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 who are "related persons" of such
substantial users. Accordingly, the Fund may not be an appropriate investment
for shareholders who are considered either a "substantial user" or a "related
person" thereof. Such persons should consult their tax advisers before investing
in the Fund.
The Fund may invest in private activity bonds, the interest on which is a
specific item of tax preference for purposes of computing the alternative
minimum tax on corporations and individuals. This type of private activity bond
includes most industrial and housing revenue bonds. Shareholders whose tax
liability is determined under the alternative minimum tax will be taxed on their
share of the Fund's exempt-interest dividends that were paid from income earned
on these bonds. In addition, the alternative minimum taxable income for
corporations is increased by 75% of the difference between an alternative
measure of income ("adjusted current earnings") and the amount otherwise
determined to be alternative minimum taxable income. Interest on all Municipal
Obligations, and therefore all distributions by the Fund that would otherwise be
tax-exempt, is included in calculating a corporation's adjusted current
earnings.
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 certificates,
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. These provisions are subject to
change by legislative or
22
<PAGE>
administrative 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 federal, state and local tax consequences to its shareholders.
State and local tax aspects
The exemption from federal income tax for distributions of interest income from
Municipal Obligations 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 taxation of such distributions, and
shareholders of the Fund are advised to consult their own tax advisers in that
regard.
GENERAL INFORMATION
Investor inquiries
Investor inquiries may be made directly of the Fund in writing or by calling
Nuveen, the Fund's distributor (nationwide 800.858.4084).
Custodian, shareholder services agent and transfer agent
The custodian of the Fund's assets is The Chase Manhattan Bank, N.A., 770
Broadway, New York, New York 10003. The custodian performs custodial fund
accounting and portfolio accounting services. SSI, P.O. Box 5330, Denver,
Colorado 80217-5330, is the transfer, shareholder services and dividend paying
agent for the Fund and performs bookkeeping, data processing and administrative
services incidental to the maintenance of shareholder accounts.
Capital stock
The Fund was incorporated in Maryland on November 19, 1980. Its authorized
capital stock consists of a single class of 5,000,000,000 shares of common
stock, $.01 par value. All shares have equal non-cumulative voting rights and
equal rights with respect to dividends declared by the Fund and assets upon
liquidation. Shares are fully paid and non-assessable when issued and have no
pre-emptive, conversion or exchange rights.
Independent public accountants
Arthur Andersen LLP, independent public accountants, 33 West Monroe Street,
Chicago, Illinois 60603 have been selected as auditors for the Fund. In addition
to audit services, Arthur Andersen LLP provides consultation and assistance on
accounting, internal control, tax and related matters. The financial statements
of the Fund which follow and the information set forth under "Financial
Highlights" have been audited by Arthur Andersen LLP as indicated in their
report with respect thereto, and are included in reliance upon the authority of
said firm as experts in giving said report.
23
<PAGE>
<TABLE>
<CAPTION>
PORTFOLIO OF INVESTMENTS TAX-EXEMPT MONEY MARKET FUND ANNUAL REPORT
FEBRUARY 29, 1996
NUVEEN TAX-EXEMPT MONEY MARKET FUND, INC.
- -------------------------------------------------------------------------------------------------------------------------
PRINCIPAL AMORTIZED
AMOUNT DESCRIPTION RATINGS* COST
- -------------------------------------------------------------------------------------------------------------------------
<C> <S> <C> <C>
ALABAMA - 3.8%
$13,000,000 Birmingham Medical Clinic Board (University of Alabama Health
Services Foundation), Variable Rate Demand Bonds,
3.550%, 12/01/26+ A-1+ $13,000,000
5,935,000 Boaz Industrial Development Board (Parker-Hannifin Corporation
Project), Variable Rate Demand Bonds, 3.300%, 9/01/12+ Aa-2 5,935,000
4,000,000 Marshall County Special Obligation, School Refunding Warrants,
Series 1994, Variable Rate Demand Bonds, 3.350%, 2/01/12+ A-1+ 4,000,000
- -------------------------------------------------------------------------------------------------------------------------
ARIZONA - 3.4%
11,000,000 Apache County Industrial Development, Pollution Control (Tucson
Electric), Variable Rate Demand Bonds, 3.450%, 10/01/21+ VMIG-1 11,000,000
5,000,000 Maricopa County Union High School District No. 205 (Glendale),
Series 1995-C, Tax Anticipation Notes, 4.300%, 7/31/96 SP-1+ 5,016,295
5,000,000 Maricopa County Union High School District No. 210 (Phoenix),
Series 1995-A, Tax Anticipation Notes, 4.450%, 7/31/96 SP-1+ 5,009,018
- -------------------------------------------------------------------------------------------------------------------------
ARKANSAS - 0.4%
2,200,000 Arkansas Hospital Equipment Finance Authority (Washington Regional
Medical Center), Variable Rate Demand Bonds, 3.350%, 10/01/98+ VMIG-1 2,200,000
- -------------------------------------------------------------------------------------------------------------------------
CALIFORNIA - 3.1%
9,500,000 California State Revenue Anticipation Warrants, Series C Notes,
5.750%, 4/25/96 Aaa 9,534,324
9,200,000 Fremont Multi-Family Housing (Mission Wells Project), Series 1985E,
Variable Rate Demand Bonds, 3.450%, 9/01/07+ A-1 9,200,000
- -------------------------------------------------------------------------------------------------------------------------
CONNECTICUT - 3.8%
23,000,000 Connecticut State Special Assessment Unemployment Compensation,
Advance Fund Revenue Bonds, Series 1993C, 3.900%, 11/15/01
(Mandatory Put 7/01/96) VMIG-1 23,000,000
- -------------------------------------------------------------------------------------------------------------------------
DISTRICT OF COLUMBIA - 2.7%
7,600,000 District of Columbia General Obligation, Series 1991B-2, Variable Rate
Demand Bonds, 3.550%, 6/01/03+ A-1+ 7,600,000
8,700,000 District of Columbia General Obligation, Series 1991B-3, Variable Rate
Demand Bonds, 3.550%, 6/01/03+ A-1+ 8,700,000
- -------------------------------------------------------------------------------------------------------------------------
FLORIDA - 4.6%
6,700,000 Hialeah Hospital Revenue Refunding, Series 1989 (Hialeah
Hospital Inc.), Variable Rate Demand Bonds, 3.500%, 2/01/14+ VMIG-1 6,700,000
6,600,000 Miami Health Facilities Authority (Miami Jewish Home and Hospital
for the Aged, Inc.), Series 1992, Variable Rate Demand Bonds,
3.300%, 3/01/12+ Aa-3 6,600,000
- -------------------------------------------------------------------------------------------------------------------------
</TABLE>
24
<PAGE>
<TABLE>
<CAPTION>
TAX-EXEMPT MONEY MARKET FUND ANNUAL REPORT
FEBRUARY 29, 1996
- -------------------------------------------------------------------------------------------------------------------------
PRINCIPAL AMORTIZED
AMOUNT DESCRIPTION RATINGS* COST
- -------------------------------------------------------------------------------------------------------------------------
<C> <S> <C> <C>
FLORIDA (CONTINUED)
$15,000,000 Sunshine State Governmental Financing, Commercial Paper,
3.200%, 3/15/96 VMIG-1 $15,000,000
- -------------------------------------------------------------------------------------------------------------------------
GEORGIA - 5.7%
4,050,000 Georgia General Obligation, Refunding Bonds, Series 1993-E,
3.500%, 7/01/96 Aaa 4,050,000
18,000,000 Columbia Elderly Authority, Residential Care Facilities
(Augusta Resource Center on Aging Inc.), Variable Rate
Demand Bonds, 3.300%, 1/01/21+ Aa-3 18,000,000
13,000,000 Fulton County Housing Authority, Multi-Family Housing, Revenue
Refunding (Spring Creek Crossing Project), Variable Rate Demand
Bonds, 3.350%, 10/01/24+ A-1+ 13,000,000
- -------------------------------------------------------------------------------------------------------------------------
IDAHO - 0.5%
3,250,000 Idaho Tax Anticipation Notes, Series 1995, 4.500%, 6/27/96 MIG-1 3,263,709
- -------------------------------------------------------------------------------------------------------------------------
ILLINOIS - 7.5%
10,400,000 Illinois Development Finance Authority, Pollution Control (Diamond-
Star Motors Corporation), Variable Rate Demand Bonds,
3.550%, 12/01/08+ P-1 10,400,000
5,000,000 Illinois Development Finance Authority (Chicago Symphony
Orchestra Project), Variable Rate Demand Bonds, 3.450%, 12/01/28+ VMIG-1 5,000,000
4,000,000 Illinois Health Facilities Authority (Combined Central Health and
Northwest Community Hospital), Variable Rate Demand Bonds,
3.400%, 10/01/15+ VMIG-1 4,000,000
10,100,000 Chicago O'Hare International Airport (American Airlines), Series 83C,
Variable Rate Demand Bonds, 3.550%, 12/01/17+ P-1 10,100,000
8,000,000 Chicago O'Hare International Airport (American Airlines), Series 83D,
Variable Rate Demand Bonds, 3.550%, 12/01/17+ P-1 8,000,000
8,000,000 Chicago O'Hare International Airport (American Airlines), Series 83A,
Variable Rate Demand Bonds, 3.450%, 12/01/17+ P-1 8,000,000
- -------------------------------------------------------------------------------------------------------------------------
INDIANA - 1.0%
6,000,000 Washington Township Metropolitan School District, Temporary Loan
Warrants, 1996 First Series General Funds, 4.000%, 6/28/96 N/R 6,010,613
- -------------------------------------------------------------------------------------------------------------------------
IOWA - 1.2%
7,500,000 Iowa School Corporations, Warrant Certificates, Series 1995-96A
Notes, 4.750%, 6/28/96 MIG-1 7,536,572
- -------------------------------------------------------------------------------------------------------------------------
KANSAS - 1.0%
6,000,000 Manhattan Industrial Development Board (Parker-Hannifin Corporation),
Variable Rate Demand Bonds, 3.300%, 9/01/09+ Aa-2 6,000,000
- -------------------------------------------------------------------------------------------------------------------------
</TABLE>
25
<PAGE>
<TABLE>
<CAPTION>
PORTFOLIO OF INVESTMENTS
NUVEEN TAX-EXEMPT MONEY MARKET FUND, INC.--Continued
- -------------------------------------------------------------------------------------------------------------------------
PRINCIPAL AMORTIZED
AMOUNT DESCRIPTION RATINGS* COST
- -------------------------------------------------------------------------------------------------------------------------
<C> <S> <C> <C>
KENTUCKY - 1.9%
$11,500,000 Louisville and Jefferson County Sewer and Drainage System,
Subordinated Revenue, Series 1995B, Variable Rate Demand
Bonds, 3.500%, 3/01/96 A-1 $11,500,000
- -------------------------------------------------------------------------------------------------------------------------
LOUISIANA - 3.8%
10,000,000 Louisiana Public Facilities Authority (Willis Knighton Medical Center),
Series 1995, Variable Rate Demand Bonds, 3.250%, 9/01/25+ VMIG-1 10,000,000
7,000,000 Louisiana Public Facilities Authority, Industrial Development
(Schwegmann Westside Expressway Project), Variable Rate
Demand Bonds, 3.450%, 12/01/12+ A-1 7,000,000
2,300,000 Ascension Parish Pollution Control (BASF Wyandotte Corporation),
Variable Rate Demand Bonds, 3.550%, 12/01/05+ P-1 2,300,000
4,000,000 Hammond Industrial Development Board (Schwegmann Westside
Expressway Project), Variable Rate Demand Bonds, 3.450%, 11/01/14+ A-1 4,000,000
- -------------------------------------------------------------------------------------------------------------------------
MARYLAND - 5.6%
14,000,000 Maryland Economic Development Corporation, Pooled Financing
(Maryland Municipal Bond Fund), Series 1995,
Variable Rate Demand Bonds, 3.400%, 6/01/20+ A-1 14,000,000
10,000,000 Maryland Health and Higher Educational Facility Authority (Helix
Hospitals), Series A, Variable Rate Demand Bonds, 3.400%, 7/01/26+ A-1 10,000,000
10,010,000 Maryland Industrial Development (Baltimore International Culinary
College), Variable Rate Demand Bonds, 3.700%, 5/01/24+ A-1 10,010,000
- -------------------------------------------------------------------------------------------------------------------------
MASSACHUSETTS - 3.7%
3,000,000 Massachusetts Health and Educational Facilities Authority (Capital
Asset Program), Variable Rate Demand Bonds, 3.700%, 1/01/35+ VMIG-1 3,000,000
19,400,000 Massachusetts Industrial Finance Agency (Showa Women's Institute-
Boston), Revenue Refunding, Variable Rate Demand Bonds,
3.600%, 3/15/04+ VMIG-1 19,400,000
- -------------------------------------------------------------------------------------------------------------------------
MICHIGAN - 4.1%
10,000,000 Michigan General Obligation Notes, 4.000%, 9/30/96 MIG-1 10,048,645
11,800,000 Detroit Downtown Development Authority (Millender Center Project),
Variable Rate Demand Bonds, 3.350%, 12/01/10+ VMIG-1 11,800,000
3,300,000 Monroe County Economic Development Corporation, Pollution
Control (The Detroit Edison Company), Variable Rate Demand Bonds,
3.350%, 10/01/24+ VMIG-1 3,300,000
- -------------------------------------------------------------------------------------------------------------------------
</TABLE>
26
<PAGE>
<TABLE>
<CAPTION>
TAX-EXEMPT MONEY MARKET FUND ANNUAL REPORT
FEBRUARY 29, 1996
- -------------------------------------------------------------------------------------------------------------------------
PRINCIPAL AMORTIZED
AMOUNT DESCRIPTION RATINGS* COST
- -------------------------------------------------------------------------------------------------------------------------
<C> <S> <C> <C>
MINNESOTA - 4.4%
$ 5,000,000 Bloomington Port Authority, Tax Increment Revenue Refunding
(Mall of America Project), Series 1995A, Variable Rate
Demand Bonds, 3.400%, 2/01/13+ VMIG-1 $5,000,000
14,200,000 Minneapolis Community Development Agency, Riverplace
Project (Pinnacle Apartments), Variable Rate Demand Bonds,
3.600%, 2/01/12+ VMIG-1 14,200,000
7,500,000 St. Paul Housing and Redevelopment Authority, Parking Revenue
Bonds, Series 1995B, Variable Rate Demand Bonds,
3.350%, 8/01/17+ VMIG-1 7,500,000
- -------------------------------------------------------------------------------------------------------------------------
MISSOURI - 1.3%
8,100,000 St. Louis Land Clearance Redevelopment Authority, Parking Facility,
Series 1989, 4.200%, 9/15/19 (Mandatory Put 3/15/96) VMIG-1 8,100,000
- -------------------------------------------------------------------------------------------------------------------------
NEBRASKA - 0.7%
4,455,000 Scotts Bluff County Hospital Authority, Elderly Residential Facility,
GNMA (West Village), Variable Rate Demand Bonds,
3.600%, 12/01/31+ A-1 4,455,000
- -------------------------------------------------------------------------------------------------------------------------
NEW YORK - 0.6%
3,700,000 New York City Fiscal 1994 Series A-10, Variable Rate Demand Bonds,
3.450%, 8/01/16+ VMIG-1 3,700,000
- -------------------------------------------------------------------------------------------------------------------------
NORTH CAROLINA - 1.8%
7,000,000 North Carolina Medical Care Commission, Hospital Pooled Financing
(Duke University Hospital), Variable Rate Demand Bonds,
3.450%, 10/01/20+ VMIG-1 7,000,000
4,000,000 Mecklenburg County (The Young Men's Christian Association of
Greater Charlotte), Variable Rate Demand Bonds, 3.400%, 2/01/16+ A-1+ 4,000,000
- -------------------------------------------------------------------------------------------------------------------------
OHIO - 2.1%
4,000,000 Dayton Special Facilities Revenue, 1993 Series F (Emery Air
Freight Corp.), Variable Rate Demand Bonds, 3.500%, 10/01/09+ VMIG-1 4,000,000
1,100,000 University of Cincinnati General Receipts, Bond Anticipation Notes,
Series K1, 5.000%, 3/21/96 MIG-1 1,100,202
7,500,000 Upper Arlington City School District, School Building Improvement
Notes, 4.200%, 4/11/96 MIG-1 7,504,558
- -------------------------------------------------------------------------------------------------------------------------
OKLAHOMA - 1.1%
6,850,000 Holdenville Industrial Development Authority, Correctional Facility,
Series 1995, Variable Rate Demand Bonds, 3.350%, 7/01/15+ VMIG-1 6,850,000
- -------------------------------------------------------------------------------------------------------------------------
</TABLE>
27
<PAGE>
<TABLE>
<CAPTION>
PORTFOLIO OF INVESTMENTS
NUVEEN TAX-EXEMPT MONEY MARKET FUND, INC.--CONTINUED
- -------------------------------------------------------------------------------------------------------------------------
PRINCIPAL AMORTIZED
AMOUNT DESCRIPTION RATINGS* COST
- -------------------------------------------------------------------------------------------------------------------------
<C> <S> <C> <C>
OREGON - 0.8%
$ 2,000,000 Oregon Veteran Welfare, Variable Rate Demand Bonds,
3.200%, 12/01/18+ VMIG-1 $ 2,000,000
2,700,000 Port of Morrow (Portland G. E. Company Boardman Project),
Variable Rate Demand Bonds, 3.500%, 10/01/13+ VMIG-1 2,700,000
- -------------------------------------------------------------------------------------------------------------------------
PENNSYLVANIA - 2.1%
3,380,000 Montgomery County Higher Education and Health Authority,
Series 1995 (Philadelphia Presbytery Homes, Inc.), Variable Rate
Demand Bonds, 3.400%, 7/01/25+ VMIG-1 3,380,000
4,000,000 Philadelphia Tax and Revenue Anticipation Notes, Series 1995-1996A,
4.500%, 6/27/96 MIG-1 4,012,980
5,345,000 Washington County Authority, Higher Education Pooled Equipment
Lease, Series 1985A, Variable Rate Demand Bonds,
3.450%, 11/01/05+ VMIG-1 5,345,000
- -------------------------------------------------------------------------------------------------------------------------
SOUTH CAROLINA - 1.5%
9,100,000 South Carolina Jobs Economic Development Authority (St. Francis
Hospital), Variable Rate Demand Bonds, 3.400%, 7/01/22+ VMIG-1 9,100,000
- -------------------------------------------------------------------------------------------------------------------------
SOUTH DAKOTA - 0.8%
5,000,000 South Dakota Health and Education Facility (McKennan Hospital),
Series 1994, Variable Rate Demand Bonds, 3.400%, 7/01/14+ VMIG-1 5,000,000
- -------------------------------------------------------------------------------------------------------------------------
TENNESSEE - 3.5%
16,300,000 Clarksville Public Building Authority, Pooled Financing, Series 1994,
Variable Rate Demand Bonds, 3.400%, 6/01/24+ A-1 16,300,000
5,000,000 Clarksville Public Building Authority, Pooled Financing, Series 1995,
Variable Rate Demand Bonds, 3.400%, 10/01/25+ A-1 5,000,000
- -------------------------------------------------------------------------------------------------------------------------
TEXAS - 7.8%
10,000,000 Texas Tax and Revenue Anticipation Notes, Series 1995A,
4.750%, 8/30/96 MIG-1 10,031,100
6,500,000 Angelina and Neches River Authority, Solid Waste Disposal,
Series 1984D, Variable Rate Demand Bonds, 3.500%, 5/01/14+ P-1 6,500,000
5,200,000 Angelina and Neches River Authority, Solid Waste Disposal,
Series 1984B, Variable Rate Demand Bonds, 3.500%, 5/01/14+ P-1 5,200,000
2,200,000 Harris County Health Facility (Institute for Research), Variable Rate
Demand Bonds, 3.400%, 10/01/17+ VMIG-1 2,200,000
6,000,000 North Central Texas Health Facilities Development Corporation
(Presbyterian Medical Center), Variable Rate Demand Bonds,
3.500%, 12/01/15+ VMIG-1 6,000,000
13,300,000 North Central Texas Health Facilities Development Corporation
(Methodist Hospitals of Dallas), Variable Rate Demand Bonds,
3.550%, 10/01/15+ A-1 13,300,000
- -------------------------------------------------------------------------------------------------------------------------
</TABLE>
28
<PAGE>
<TABLE>
<CAPTION>
TAX-EXEMPT MONEY MARKET FUND ANNUAL REPORT
FEBRUARY 29, 1996
- -------------------------------------------------------------------------------------------------------------------------
PRINCIPAL AMORTIZED
AMOUNT DESCRIPTION RATINGS* COST
- -------------------------------------------------------------------------------------------------------------------------
<C> <S> <C> <C>
TEXAS (CONTINUED)
$ 4,900,000 Plano Health Facilities Development Corporation, Hospital Revenue
Bonds (Children's & Presbyterian Health Care), Commercial Paper,
3.500%, 3/05/96 VMIG-1 $4,900,000
- -------------------------------------------------------------------------------------------------------------------------
UTAH - 1.3%
8,200,000 Intermountain Power Agency, Power Supply Revenue, Series 1985-E,
Commercial Paper, 3.150%, 6/10/96 VMIG-1 8,200,000
- -------------------------------------------------------------------------------------------------------------------------
VIRGINIA - 3.7%
4,200,000 Fairfax County Industrial Development Authority (Inova Health System
Hospitals Project), Series 1993B, Commercial Paper,
3.300%, 3/07/96 VMIG-1 4,200,000
8,100,000 Henrico County Industrial Development Authority, Health Facility
Revenue, Series 1994 (The Hermitage at Cedarfield), Variable Rate
Demand Bonds, 3.500%, 5/01/24+ VMIG-1 8,100,000
10,000,000 Loudoun County Industrial Development Authority, Residential Care
Facility (Falcons Landing Project), Series 1994-B, Variable Rate
Demand Bonds, 3.400%, 11/01/24+ VMIG-1 10,000,000
- -------------------------------------------------------------------------------------------------------------------------
WASHINGTON - 4.7%
17,545,000 Washington State Housing Finance Commission (Emerald Heights
Project), Variable Rate Demand Bonds, 3.450%, 1/01/21+ A-1 17,545,000
2,000,000 Washington State Housing Finance Commission (YMCA of Greater
Seattle Program), Variable Rate Demand Bonds, 3.450%, 7/01/11+ VMIG-1 2,000,000
9,000,000 Washington Student Loan Agency, Series 1984A, Variable Rate
Demand Bonds, 3.400%, 1/01/01+ VMIG-1 9,000,000
- -------------------------------------------------------------------------------------------------------------------------
WEST VIRGINIA - 2.3%
13,810,000 West Virginia Housing Development Fund, Interim Financing Notes,
1996 Series A, 3.450%, 3/01/96 N/R 13,810,000
- -------------------------------------------------------------------------------------------------------------------------
WISCONSIN - 1.4%
1,200,000 Carlton Pollution Control, Series 1991B (Wisconsin Power and
Light), Variable Rate Demand Bonds, 3.500%, 9/01/05+ VMIG-1 1,200,000
3,400,000 La Crosse School District Tax and Revenue Anticipation Notes,
4.500%, 8/30/96 N/R 3,411,504
- -------------------------------------------------------------------------------------------------------------------------
</TABLE>
29
<PAGE>
<TABLE>
<CAPTION>
PORTFOLIO OF INVESTMENTS
NUVEEN TAX-EXEMPT MONEY MARKET FUND, INC.--CONTINUED
- -------------------------------------------------------------------------------------------------------------------------
PRINCIPAL AMORTIZED
AMOUNT DESCRIPTION RATINGS* COST
- -------------------------------------------------------------------------------------------------------------------------
<C> <S> <C> <C>
$ 3,875,000 River Falls Commercial Development, Revenue Refunding (Erdeco
Partnership Project), Variable Rate Demand Bonds,
4.125%, 11/01/13+ Aa-3 $ 3,875,000
- -------------------------------------------------------------------------------------------------------------------------
$607,705,000 Total Investments - 99.7% 607,934,520
==============-----------------------------------------------------------------------------------------------------------
Other Assets Less Liabilities - 0.3% 2,118,887
- -------------------------------------------------------------------------------------------------------------------------
Net Assets - 100% $610,053,407
=========================================================================================================================
</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
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.
30
<PAGE>
STATEMENT OF NET ASSETS TAX-EXEMPT MONEY MARKET FUND ANNUAL REPORT
FEBRUARY 29, 1996
<TABLE>
<CAPTION>
ASSETS
<S> <C>
Investments in short-term municipal securities,
at amortized cost (note 1) $607,934,520
Cash 249,130
Receivables:
Interest 3,230,364
Investments sold 415,000
Other assets 39,486
------------
Total assets 611,868,500
------------
LIABILITIES
Accrued expenses:
Management fees (note 3) 194,410
Other 158,876
Dividends payable 1,461,807
------------
Total liabilities 1,815,093
------------
Net assets applicable to shares outstanding (note 4) $610,053,407
============
Shares outstanding 610,053,407
============
Net asset value, offering and redemption price per share
(net assets divided by shares outstanding) $ 1.00
============
</TABLE>
See accompanying notes to financial statements.
31
<PAGE>
STATEMENT OF OPERATIONS
Year ended February 29, 1996
NUVEEN TAX-EXEMPT MONEY MARKET FUND, INC.
<TABLE>
<CAPTION>
INVESTMENT INCOME
<S> <C>
Tax-exempt interest income (note 1) $26,015,847
-----------
Expenses:
Management fees (note 3) 2,645,505
Shareholders' servicing agent fees and expenses 16,809
Custodian's fees and expenses 130,317
Directors' fees and expenses (note 3) 391
Professional fees 45,721
Shareholders' reports--printing and mailing expenses 59,939
Federal and state registration fees 3,439
Other expenses 60,946
-----------
Total expenses 2,963,067
-----------
Net investment income 23,052,780
Net realized gain from investment transactions 9,200
-----------
Net increase in net assets from operations $23,061,980
===========
</TABLE>
See accompanying notes to financial statements.
32
<PAGE>
STATEMENT OF CHANGES IN NET ASSETS TAX-EXEMPT MONEY MARKET FUND ANNUAL REPORT
FEBRUARY 29, 1996
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------
Year ended Year ended
2/29/96 2/28/95
- ----------------------------------------------------------------------------------------------
<S> <C> <C>
OPERATIONS
Net investment income $ 23,052,780 $ 21,878,612
Net realized gain (loss) from investment transactions 9,200 (30,535)
---------------- ----------------
Net increase in net assets from operations 23,061,980 21,848,077
---------------- ----------------
DISTRIBUTIONS TO SHAREHOLDERS (note 1) (23,061,980) (21,848,077)
---------------- ----------------
COMMON SHARE TRANSACTIONS
(at constant net asset value of $1 per share) (note 1)
Net proceeds from sale of shares 3,673,148,811 5,126,352,054
Net asset value of shares issued to shareholders due
to reinvestment of distributions from net
investment income and from net realized gains
from investment transactions 7,738,987 5,501,313
---------------- ----------------
3,680,887,798 5,131,853,367
Cost of shares redeemed (3,830,078,044) (5,348,442,330)
---------------- ----------------
Net increase (decrease) in net assets derived from
Common share transactions (149,190,246) (216,588,963)
Net assets at the beginning of year 759,243,653 975,832,616
---------------- ----------------
Net assets at the end of the year $ 610,053,407 $ 759,243,653
================ ================
- ----------------------------------------------------------------------------------------------
</TABLE>
See accompanying notes to financial statements.
33
<PAGE>
NOTES TO FINANCIAL STATEMENTS
NUVEEN TAX-EXEMPT MONEY MARKET FUND, INC.
1. GENERAL INFORMATION AND SIGNIFICANT ACCOUNTING POLICIES
The Nuveen Tax-Exempt Money Market Fund, Inc. (the "Fund") is registered under
the Investment Company Act of 1940 as an open-end, diversified management
investment company. The following is a summary of significant accounting
policies followed by the Fund in the preparation of its financial statements in
accordance with generally accepted accounting principles.
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 traded and 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, 1996, the dollar-weighted average life was 26 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 be settled a month or more after the transaction date. The 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 its purchase commitments. At
February 29, 1996, there were no such 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, adjusted for realized short-term gains and losses on
investment transactions, 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.
Federal income taxes
The Fund intends to comply with requirements of the Internal Revenue Code
applicable to regulated investment companies by distributing all of its net
investment income, including any net realized gains from investments, to
shareholders. 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. All income
dividends paid during the year ended February 29, 1996, have been designated
Exempt Interest Dividends.
34
<PAGE>
TAX-EXEMPT MONEY MARKET FUND ANNUAL REPORT
FEBRUARY 29, 1996
Insurance commitments
The Fund has obtained commitments (each a "Commitment") from Municipal Bond
Investors Assurance Corporation ("MBIA") with respect to certain designated
bonds held by the Fund for which credit support is furnished by banks ("Approved
Banks") approved by MBIA under its established credit approval standards. Under
the terms of a Commitment, if the Fund were to determine that certain adverse
circumstances relating to the financial condition of the Approved Bank had
occurred, the Fund could cause MBIA to issue a "while-in-fund" insurance policy
covering the underlying bonds; after time and subject to further terms and
conditions, the Fund could obtain from MBIA an "insured-to-maturity" insurance
policy as to the covered bonds. Each type of insurance policy would insure
payment of interest on the bonds and payment of principal at maturity. Although
such insurance would not guarantee the market value of the bonds or the value of
the Fund's shares, the Fund believes that its ability to obtain insurance for
such bonds under such adverse circumstances will enable the Fund to hold or
dispose of such bonds at a price at or near their par value.
Derivative financial instruments
In October 1994, the Financial Accounting Standards Board (FASB) issued
Statement of Financial Accounting Standards No. 119 Disclosure about Derivative
Financial Instruments and Fair Value of Financial Instruments which prescribes
disclosure requirements for transactions in certain derivative financial
instruments including future, 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 year ended February 29, 1996,
other than occasional purchases of high quality synthetic money market
securities.
Use of estimates
The preparation of financial statements in conformity with generally accepted
accounting principles 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 the operations during the reporting period.
2. SECURITIES TRANSACTIONS
Purchases and sales (including maturities) of investment securities during the
year ended February 29, 1996, aggregated $3,029,599,463 and $3,184,303,742,
respectively.
For federal income tax purposes, the cost of investments owned at February 29,
1996, was the same as the cost for financial reporting purposes.
35
<PAGE>
NOTES TO FINANCIAL STATEMENTS
NUVEEN TAX-EXEMPT MONEY MARKET FUND, INC.
3. 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 to the Adviser an annual management fee, payable monthly, as follows:
<TABLE>
<CAPTION>
AVERAGE DAILY NET ASSET VALUE MANAGEMENT FEE
- -------------------------------------------------------
<S> <C>
For the first $500,000,000 .400 of 1%
For the next $500,000,000 .375 of 1
For the next $1,000,000,000 .350 of 1
For net assets over $2,000,000,000 .325 of 1
- -------------------------------------------------------
</TABLE>
The management fee is reduced by, or the Adviser assumes certain Fund expenses
in an amount necessary to prevent the Fund's total expenses (including the
Adviser's fee, 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 .45 of 1% of the average daily net
asset value of the Fund.
The management fee referred to above compensates the Adviser for overall
investment advisory and administrative services, and general office facilities.
The Fund pays no compensation directly to its directors who are affiliated with
the Adviser or to its officers, all of whom receive remuneration for their
services to the Fund from the Adviser.
4. COMPOSITION OF NET ASSETS
At February 29, 1996, the Fund had 5 billion shares of $.01 par value common
stock authorized. Net assets consisted of $610,053,407 capital paid in.
36
<PAGE>
TAX-EXEMPT MONEY MARKET FUND ANNUAL REPORT
FEBRUARY 29, 1996
5. INVESTMENT COMPOSITION
The Fund invests in municipal securities which include general obligation and
revenue bonds. At February 29, 1996, the revenue sources by municipal purpose,
expressed as a percent of total investments, were as follows:
<TABLE>
<CAPTION>
Revenue Bonds:
<S> <C>
Health Care Facilities 27%
Pollution Control Facilities 19
Housing Facilities 8
Educational Facilities 7
Transportation 3
Lease Rental Facilities 2
Water/Sewer Facilities 2
Other 13
General Obligation Bonds 19
---
100%
===
</TABLE>
At February 29, 1996, 88% of the investments owned by the Fund have credit
enhancements (letters of credit, guarantees or insurance) issued by a third
party domestic or foreign banks or other institutions.
For additional information regarding each investment security, refer to the
Portfolio of Investments.
37
<PAGE>
FINANCIAL HIGHLIGHTS
NUVEEN TAX-EXEMPT MONEY MARKET FUND, INC.
SELECTED DATA FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD IS AS FOLLOWS:
<TABLE>
<CAPTION>
Income from investment operations Less distributions
-----------------------------------------------------------------------
Net
Net asset realized and Dividends Distribution
value Net unrealized gain from net from
beginning investment (loss) from investment capital
of period income investments income gains
-------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Year ended 2/29
1996 $1.000 $.034 $-- $(.034) $--
Year ended 2/28,
1995 1.000 .027 -- (.027) --
1994 1.000 .020 -- (.020) --
1993 1.000 .026 -- (.026) --
10/1/91 to
2/29/92 1.000 .016 -- (.016) --
Year ended 9/30,
1991 1.000 .049 -- (.049) --
1990 1.000 .058 -- (.058) --
1989 1.000 .060 -- (.060) --
1988 1.000 .049 -- (.049) --
1987 1.000 .041 -- (.041) --
1986 1.000 .048 -- (.048) --
1985 1.000 .052 -- (.052) --
</TABLE>
*Annualized.
38
<PAGE>
TAX-EXEMPT MONEY MARKET FUND ANNUAL REPORT
FEBRUARY 29, 1996
<TABLE>
<CAPTION>
Ratios/Supplemental data
--------------------------------------------------
Net Ratio of
asset Total Ratio of net investment
value return on Net assets expenses income
end of net asset end of period to average to average
period value (in thousands) net assets net assets
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
$1.000 3.42% $ 610,053 .44% 3.43%
1.000 2.69 759,244 .44 2.65
1.000 2.04 975,833 .42 2.04
1.000 2.57 1,597,014 .40 2.58
1.000 1.56 2,332,021 .39* 3.71*
1.000 4.85 1,927,583 .38 4.81
1.000 5.75 1,800,966 .40 5.74
1.000 6.00 1,756,725 .39 6.02
1.000 4.89 2,044,479 .39 4.90
1.000 4.09 1,927,003 .39 4.09
1.000 4.77 2,472,401 .40 4.71
1.000 5.22 1,913,875 .40 5.18
- --------------------------------------------------------------------------------
</TABLE>
39
<PAGE>
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Board of Directors and Shareholders of
Nuveen Tax-Exempt Money Market Fund, Inc.:
We have audited the accompanying statement of net assets of Nuveen Tax-Exempt
Money Market Fund, Inc. (a Maryland corporation), including the portfolio of
investments, as of February 29, 1996, and the related statements of operations
for the year then ended, the statements of changes in net assets for each of the
two years in the period 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 generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of securities owned as of
February 29, 1996, by correspondence with the custodian and brokers. An audit
also includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the net assets of the Nuveen
Tax-Exempt Money Market Fund, Inc. as of February 29, 1996, the results of its
operations for the year then ended, the changes in its net assets for each of
the two years in the period then ended and the financial highlights for the
periods indicated thereon in conformity with generally accepted accounting
principles.
ARTHUR ANDERSEN LLP
Chicago, Illinois
April 8, 1996
40
<PAGE>
Your
investment
partners
[PHOTO OF PAINTING APPEARS HERE]
For nearly 100 years,
Nuveen has earned its
reputation as a tax-free income
specialist by focusing on
municipal bonds
Since 1898, John Nuveen & Co. Incorporated has worked to bring together the
various participants in the municipal bond industry and build strong
partnerships that benefit all concerned. Investors, financial advisers,
municipal officials, investment bankers--Nuveen believes that forging
relationships within these groups based on trust and value is the key to
successful investing.
As the oldest and largest municipal bond specialist in the United States,
Nuveen's investment bankers work with issuers to understand and meet their needs
in structuring and selling their bond issues.
Nuveen also works closely with financial advisers around the country, including
brokerage firms, banks, insurance companies, and independent financial planners,
to bring the benefits of tax-free investing to you. These advisers are experts
at identifying your needs and recommending the best solutions for your
situation. Together we make a powerful team, helping you create a successful
investment plan that meets your needs today and in the future.
[NUVEEN LOGO]
John Nuveen & Co. Incorporated
333 West Wacker Drive
Chicago, Illinois 60606-1286
OEF4-APR96
<PAGE>
PART B--STATEMENT OF ADDITIONAL INFORMATION
NUVEEN TAX-EXEMPT MONEY MARKET FUND, INC.
333 West Wacker Drive
Chicago, Illinois 60606
<PAGE>
Statement of Additional Information
April 30, 1996
Nuveen Tax-Exempt Money Market Fund, Inc.
333 West Wacker Drive
Chicago, Illinois 60606
NUVEEN TAX-EXEMPT MONEY MARKET FUND, INC.
Nuveen Tax-Exempt Money Market Fund, Inc. (the "Fund") is an open-end,
diversified management investment company. This Statement of Additional
Information is not a prospectus. A prospectus may be obtained from the Fund's
distributor, John Nuveen & Co. Incorporated, 333 West Wacker Drive, Chicago,
Illinois 60606. This Statement of Additional Information relates to, and should
be read in conjunction with, the Prospectus dated April 30, 1996.
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Table of Contents Page
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Fundamental Policies and Investment Portfolio 2
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Management 9
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Investment Adviser and Investment Management Agreement 12
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Portfolio Transactions 13
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Net Asset Value 14
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Amortized Cost Valuation 14
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Tax Matters 16
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Principal Underwriter and Distributor 19
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Yield Information 20
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Independent Public Accountants and Custodian 21
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Principal Underwriter Investment Adviser Transfer and Shareholder
John Nuveen & Co. Incorporated Nuveen Advisory Corp., Services Agent
Subsidiary of Shareholder Services, Inc.
Chicago: John Nuveen & Co. Incorporated P.O. Box 5330
333 West Wacker Drive 333 West Wacker Drive Denver, Colorado 80217-5330
Chicago, Illinois 60606 Chicago, Illinois 60606
312.917.7700 Independent Public Accountants
Custodian for the Fund
New York: The Chase Manhattan Bank, N.A. Arthur Andersen LLP
10 East 50th Street 770 Broadway 33 West Monroe Street
New York, New York 10022 New York, New York 10003 Chicago, Illinois 60603
212.207.2000
</TABLE>
<PAGE>
FUNDAMENTAL 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
investments as those terms are defined in the Prospectus;
(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 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 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
investing 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, except
for such short term credits as are necessary for the clearance of transactions;
(11) Invest more than 5% of its total assets in securities of unseasoned issuers
which, together with their predecessors, have been in operation for less than
three years;
2
<PAGE>
(12) Invest more than 25% of its assets in the securities of issuers in any
single industry; provided, however, that such limitations shall not be
applicable to the purchase of Municipal Obligations and obligations issued or
guaranteed by the U.S. government, its agencies or instrumentalities;
(13) Purchase or retain the securities of any issuer other than the securities
of the Fund if, to the Fund's knowledge, those directors of the Fund, or those
officers and directors of Nuveen Advisory Corp. ("Nuveen Advisory"), who
individually own beneficially more than 1/2 of 1% of the outstanding securities
of such issuer, together own beneficially more than 5% of such outstanding
securities.
For the purpose of applying the limitations set forth in paragraphs (2) and (11)
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
computation of securities owned that are issued by such governmental entity or
other entity.
If, however, a security is guaranteed by a governmental entity or some other
entity (other than a bond insurer), 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. The Fund's present policy, which is not a fundamental policy, is that it
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 fundamental investment policies, together with the Fund's
investment objective, and other fundamental policies, 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 shares present at a meeting, if the holders of more than 50% of the
shares are present or represented by proxy, or (ii) more than 50% of the shares,
whichever is less. The foregoing restrictions and limitations will apply only at
the time of purchase of securities and 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.
Portfolio Securities
As described in the Prospectus, the Fund invests primarily in a diversified
portfolio of Municipal Obligations consisting of money market instruments issued
by governmental authorities. In general, Municipal Obligations include debt
obligations issued to obtain funds for various public purposes, including
construction of a wide range of public facilities. Industrial development bonds
and pollution control bonds that are issued by or on behalf of public
authorities to finance various privately-operated facilities are included within
the term Municipal Obligations if the interest paid thereon is exempt from
federal income tax.
3
<PAGE>
The following is a more complete description of certain short-term Municipal
Obligations in which the Fund may invest:
Bond Anticipation Notes (BANs) are usually general obligations of state and
local governmental issuers which are sold to obtain interim financing for
projects that will eventually be funded through the sale of long-term debt
obligations 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 market 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
finance 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
adversely 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
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
interest on RANs.
Construction Loan Notes are issued to provide construction financing for
specific 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.
Variable and Floating Rate Instruments-Certain Municipal Obligations, certain
instruments issued, guaranteed or sponsored by the U.S. government or its
agencies, and certain debt instruments issued by domestic banks or corporations,
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.
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
4
<PAGE>
"tender fee" to the third party tender option provider, the amount of which
would be periodically 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. 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 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 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 the
demand arrangement, 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 standby commitments with respect to Municipal
Obligations. Under a standby 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 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
unconditional and unqualified. The acquisition of a standby commitment will not
affect the valuation of the underlying security, which will continue to be
valued 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 maturity otherwise available for the same securities). The maturity of
a Municipal 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.
5
<PAGE>
When-issued Securities
As described under "Investment Policies of the Portfolio-Municipal Obligations"
in the Prospectus, the Fund may purchase and sell Municipal 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 transactions normally
settle within 30-45 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 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.
Temporary Investments
The Prospectus discusses briefly the Fund's ability to invest a portion of its
assets on a temporary basis or for defensive purposes in taxable "temporary
investments." As stated in the Prospectus, the Fund has not invested in and has
no present intention to invest in such temporary investments. In any event,
temporary investments will not exceed 20% of the Fund's assets except when made
for defensive purposes. The Fund will invest only in temporary investments
which, in the opinion of Nuveen Advisory, are of "high grade" quality and have
remaining maturities of one year or less. Temporary investments include
obligations 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") or Standard & Poor's Corporation ("S&P") (Aaa or Aa, or AAA or AA,
respectively); commercial paper rated in the highest grade by either of such
rating services (Prime-1 or A-1, respectively); certificates of deposit of
domestic 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 foregoing limitations, the Fund may invest in the following
temporary investments:
U.S. Government Direct Obligations are issued by the United States Treasury and
include bills, notes, and bonds.
6
<PAGE>
- --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
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 so legally 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 (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 opinion 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 declines,
and might incur disposition costs or experience delays in connection with liq-
7
<PAGE>
uidating 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
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 increase the value
of the collateral to at least that of the repurchase price.
Variable and Floating Rate Instruments-See description on page 4.
Ratings of Investments
The two highest ratings of Moody's for Municipal Obligations are Aaa and Aa.
Municipal Obligations rated Aaa are judged to be of the "best quality." The
rating of Aa is assigned to Municipal Obligations 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 Obligations.
The Aaa and Aa rated Municipal Obligations 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 Obligations are AAA and AA.
Municipal Obligations rated AAA have an extremely strong capacity to pay
principal and interest. The rating of AA indicates that capacity to pay
principal and interest is very strong and such bonds differ from AAA issues only
in small degree.
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
established cash flows for their servicing or from established and broad-based
access 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
issuers 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
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. The
designation A-1 indicates that the degree of safety regarding timely payment is
very strong.
8
<PAGE>
MANAGEMENT
The management of the Fund, including general supervision of the duties
performed by Nuveen Advisory under the Investment Management Agreement, is the
responsibility of its Board of Directors. There are six directors of the Fund,
two of whom are "interested persons" (as the term "interested persons" is
defined in the Investment Company Act of 1940) and four of whom are
"disinterested persons." The names and business addresses of the directors and
officers of the Fund and their principal occupations and other affiliations
during the past five years are set forth below, with those directors who are
"interested persons" of the Fund indicated by an asterisk.
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POSITIONS AND PRINCIPAL OCCUPATIONS
NAME AND ADDRESS AGE OFFICES WITH FUND DURING PAST FIVE YEARS
<S> <C> <C> <C>
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Richard J. Franke* 64 Chairman of the Chairman of the Board, Director and formerly President of John Nuveen & Co.
333 West Wacker Drive Board and Director Incorporated; Chairman of the Board and Director, formerly President, of
Chicago, IL 60606 Nuveen Advisory Corp.; Chairman of the Board and Director of Nuveen Insti-
tutional Advisory Corp. (since April 1990); Certified Financial Planner.
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Timothy R. Schwertfeger* 47 President and Executive Vice President and Director of The John Nuveen Company (since
333 West Wacker Drive Director March 1992) and John Nuveen & Co. Incorporated; Director of Nuveen
Chicago, IL 60606 Advisory Corp. (since 1992) and Nuveen Institutional Advisory Corp.
(since 1992).
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Lawrence H. Brown 61 Director Retired (August 1989) as Senior Vice President of The Northern Trust
201 Michigan Avenue Company
Highwood, IL 60040
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Anne E. Impellizerri 63 Director President and Chief Executive Officer of Blanton-Peale, Institutes of
3 West 29th Street Religion and Health (since December 1990); prior thereto, Vice President
New York, NY 10001 of New York City Partnership (from 1987 to 1990).
- -----------------------------------------------------------------------------------------------------------------------------------
Margaret K. Rosenheim 69 Director Helen Ross Professor of Social Welfare Policy, School of Social Service
969 East 60th Street Administration, University of Chicago.
Chicago, IL 60637
- -----------------------------------------------------------------------------------------------------------------------------------
Peter R. Sawers 63 Director Adjunct Professor of Business and Economics, University of Dubuque, Iowa
22 The Landmark (since January 1991); Adjunct Professor, Lake Forest Graduate School
Northfield, IL 60093 of Management, Lake Forest, Illinois (since January 1992); prior thereto,
Executive Director, Towers Perrin Australia (management consultant);
Chartered Financial Analyst; Certified Management Consultant.
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Kathleen M. Flanagan 48 Vice President Vice President of John Nuveen & Co. Incorporated
333 West Wacker Drive
Chicago, IL 60606
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</TABLE>
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<S> <C> <C> <C>
POSITIONS AND PRINCIPAL OCCUPATIONS
NAME AND ADDRESS AGE OFFICES WITH FUND DURING PAST FIVE YEARS
- -----------------------------------------------------------------------------------------------------------------------
William M. Fitzgerald 32 Vice President Vice President of Nuveen Advisory Corp. (since December
333 West Wacker Drive 1995); Assistant Vice President of Nuveen Advisory Corp.
Chicago, IL 60606 (from September 1992 to December 1995), prior thereto
Assistant Portfolio Manager of Nuveen Advisory Corp.
(from June 1988 to September 1992).
- -----------------------------------------------------------------------------------------------------------------------
J. Thomas Futrell 40 Vice President Vice President of Nuveen Advisory Corp. (since February
333 West Wacker Drive 1991); prior thereto, Assistant Vice President of Nuveen
Chicago, IL 60606 Advisory Corp. (from August 1988 to February 1991).
- -----------------------------------------------------------------------------------------------------------------------
Steven J. Krupa 38 Vice President Vice President of Nuveen Advisory Corp. (since October
333 West Wacker Drive 1990); prior thereto, Vice President of John Nuveen & Co.
Chicago, IL 60606 Incorporated (from January 1989 to October 1990).
- -----------------------------------------------------------------------------------------------------------------------
Anna R. Kucinskis 50 Vice President Vice President of John Nuveen & Co. Incorporated.
333 West Wacker Drive
Chicago, IL 60606
- -----------------------------------------------------------------------------------------------------------------------
Larry W. Martin 44 Vice President and Vice President (since September 1992), Assistant Secretary
333 West Wacker Drive Assistant Secretary and Assistant General Counsel of John Nuveen & Co.
Chicago, IL 60606 Incorporated; Vice President (since May 1993) and Assistant
Secretary of Nuveen Advisory Corp.; Vice President (since
May 1993) and Assistant Secretary (since January 1992) of
Nuveen Institutional Advisory Corp.; Assistant Secretary
of The John Nuveen Company (since February 1993).
- -----------------------------------------------------------------------------------------------------------------------
O. Walter Renfftlen 56 Vice President and Vice President and Controller of The John Nuveen Company
333 West Wacker Drive Controller (since March 1992), John Nuveen & Co. Incorporated,
Chicago, IL 60606 Nuveen Advisory Corp. and Nuveen Institutional Advisory
Corp. (since April 1990).
- -----------------------------------------------------------------------------------------------------------------------
Thomas C. Spalding, Jr. 44 Vice President Vice President of Nuveen Advisory Corp. and Nuveen
333 West Wacker Drive Institutional Advisory Corp. (since April 1990); Chartered
Chicago, IL 60606 Financial Analyst.
- -----------------------------------------------------------------------------------------------------------------------
H. William Stabenow 61 Vice President and Vice President and Treasurer of The John Nuveen Company
333 West Wacker Drive Treasurer (since March 1992), John Nuveen & Co. Incorporated,
Chicago, IL 60606 Nuveen Advisory Corp. and Nuveen Institutional Advisory
Corp. (since January 1992).
- -----------------------------------------------------------------------------------------------------------------------
James J. Wesolowski 45 Vice President and Vice President, General Counsel and Secretary of The John
333 West Wacker Drive Secretary Nuveen Company (since March 1992), John Nuveen & Co.
Chicago, IL 60606 Incorporated, Nuveen Advisory Corp. and Nuveen
Institutional Advisory Corp. (since April 1990).
- -----------------------------------------------------------------------------------------------------------------------
</TABLE>
10
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<TABLE>
<CAPTION>
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POSITIONS AND PRINCIPAL OCCUPATIONS
NAME AND ADDRESS AGE OFFICES WITH FUND DURING PAST FIVE YEARS
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Gifford R. Zimmerman 39 Vice President and Vice President (since September 1992), Assistant Secretary
333 West Wacker Drive Assistant Secretary and Assistant General Counsel of John Nuveen & Co.
Chicago, IL 60606 Incorporated; Vice President (since May 1993) and Assistant
Secretary of Nuveen Advisory Corp.; Vice President (since
May 1993) and Assistant Secretary (since January 1992) of
Nuveen Institutional Advisory Corp.
- -----------------------------------------------------------------------------------------------------------------------
</TABLE>
Richard J. Franke, Timothy R. Schwertfeger and Margaret K. Rosenheim serve as
members of the Executive Committee of the Board of Directors. The Executive
Committee, which meets between regular meetings of the Board of Directors, is
authorized to exercise all of the powers of the Board of Directors.
The directors of the Fund are also directors, or trustees, as the case may be,
of the 20 other Nuveen open-end portfolios and 53 Nuveen closed-end funds.
The following table sets forth compensation paid by the Nuveen Tax-Exempt Money
Market Fund, Inc. during the fiscal year ended February 29, 1996 to each of the
directors. The Nuveen Tax-Exempt Money Market Fund, Inc. has no retirement or
pension plans. The officers and directors affiliated with Nuveen serve without
any compensation from the Nuveen Tax-Exempt Money Market Fund, Inc.
<TABLE>
<CAPTION>
TOTAL COMPENSATION
AGGREGATE FROM THE FUND
COMPENSATION AND FUND COMPLEX
NAME OF DIRECTOR FROM THE FUND PAID TO DIRECTORS
- ----------------------------------------------------------------------------------
<S> <C> <C>
Richard J. Franke ...................... $ 0 $ 0
Timothy R. Schwertfeger ................ 0 0
Lawrence H. Brown ...................... 1,302 55,500
Anne E. Impellizzeri ................... 1,302 57,000
John O'Toole ........................... 960 47,000
Margaret K. Rosenheim .................. 1,572(1) 62,322(2)
Peter R. Sawers ........................ 1,302 55,500
(1) Includes $178 in interest earned on deferred compensation from prior years.
(2) Includes $1,572 in interest earned on deferred compensation from prior years.
</TABLE>
Directors who are not affiliated with Nuveen or Nuveen Advisory will receive a
$45,000 annual retainer for serving as a director of all funds for which Nuveen
Advisory serves as investment adviser 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 on 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. The annual retainer, fees and expenses will be allocated among the
funds on the basis of relative net assets. The Fund requires no employees other
than its officers, all of whom are compensated by Nuveen.
11
<PAGE>
On April 8, 1996, the officers and directors of the Fund as a group owned less
than 1% of the outstanding shares of the Fund. On April 8, 1996, The Chase
Manhattan Bank, N.A., 2 Chase Plaza, Security Controlling Dept., New York, NY;
JC Bradford & Co., Money Funds Operations, 330 Commerce Street, Nashville, TN;
National City Bank, Trust OP Tax Exempt Market Fund, 4100 W. 150th Street,
Cleveland, OH; First Hawaiian Bank FIDAC, Trust Investments, P.O. Box 3200,
Honolulu, HI; and Bank of America NT & SA, Common Trust Funds Unit #8329, P.O.
Box 3577, Los Angeles, CA owned of record 138,725,286 shares (23.88%),
41,942,531.58 shares (7.22%), 31,957,741.71 shares (5.5%), 31,730,463.64 shares
(5.46%) and 30,063,019.79 (5.17%) shares of he Fund, respectively. The Fund
believes that none of the shares owned by these entities are owned beneficially,
but are held as agent for various accounts which are the beneficial owners.
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
Advisory also administers the Fund'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 directors or officers of the Fund if elected to such positions.
See "Management of the Fund" in the Prospectus.
Nuveen Advisory is paid an annual management fee in an amount equal to .4 of 1%
of the first $500 million of average daily net assets, .375 of 1% of the next
$500 million, .35 of 1% of the next $1 billion, and .325 of 1% of average daily
net assets over $2 billion. The management fee will be reduced or Nuveen
Advisory will assume certain Fund expenses in an amount necessary to prevent the
Fund's total expenses in any fiscal year from exceeding .45 of 1% of the average
daily net asset value of the Fund. The management fee for fiscal years ended
February 29, 1996, February 28, 1995 and 1994 amounted to $2,645,505, $3,225,810
and $4,898,235, respectively. As discussed in the Prospectus, subject to the
expense limitations of the Investment Management Agreement, the Fund is
responsible for payment of certain of the costs and expenses of its
operations.
Nuveen Advisory is a wholly-owned subsidiary of John Nuveen & Co. Incorporated
("Nuveen"), the Fund's principal underwriter. Founded in 1898, Nuveen is the
oldest and largest investment banking firm specializing in the underwriting and
distribution of tax-exempt securities and maintains the largest research
department in the investment banking community devoted exclusively to the
analysis of municipal securities. In 1961, Nuveen began sponsoring the Nuveen
Tax-Exempt Unit Trust and since that time has issued more than $36 billion in
tax-exempt unit trusts, including over $12 billion in tax-exempt insured unit
trusts. In addition, the Nuveen open-end and closed-end funds held approximately
$31 billion in tax-exempt securities under management as of the date of this
Statement. Over 1,000,000 individuals have invested to date in Nuveen's tax-
exempt funds and trusts. Nuveen is a subsidiary of The John Nuveen Company
which, in turn, is approximately 75% 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.
12
<PAGE>
Nuveen Advisory's portfolio managers call upon the resources of Nuveen's
Research Department, the largest in the investment banking industry devoted
exclusively to tax-exempt securities. Nuveen's Research Department was selected
in 1995 by Research & Ratings Review, a municipal industry publication, as one
of the leading research teams in the municipal industry, based on an extensive
industry-wide poll of portfolio managers, department heads and bond buyers. The
Nuveen Research Department reviews more than $100 billion in tax-exempt 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
management personnel, including Nuveen fund portfolio managers, from engaging in
personal investments which compete or interfere with, or attempt to take
advantage of, a Fund's anticipated or actual portfolio transactions, and is
designed to assure that the interest of Fund shareholders is placed before the
interest of Nuveen personnel in connection with personal investment
transactions.
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 since its inception has effected all portfolio transactions on a
principal (as opposed to an agency) basis and, accordingly, has not paid any
brokerage commissions. Purchases from underwriters include a commission or
concession paid by the issuer 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 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 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 Directors
of the Fund.
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 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,
13
<PAGE>
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
Fund's Board of Directors 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 Municipal
Obligations purchased by the Fund, the amount of Municipal Obligations which may
be pur-chased in any one issue and the assets of the Fund which may be invested
in a particular issue. In addition, purchases of securities made pursuant to the
terms of the Rule must be approved at least quarterly by the Board of Directors
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, N.A., 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 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 Fund's total assets, less liabilities, by
the total number of shares outstanding at such time.
AMORTIZED COST VALUATION
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
14
<PAGE>
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 Directors, 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
Directors, 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 Directors. 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
Directors. If such deviation exceeds 1/2 of 1%, the Board of Directors will
promptly consider what action, if any, will be initiated. In the event the Board
of Directors 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.
15
<PAGE>
TAX MATTERS
FEDERAL INCOME TAX MATTERS
The following discussion of federal income tax matters is based upon the advice
of Fried, Frank, Harris, Shriver and Jacobson, Washington, D.C., counsel to the
Fund.
As described in the Prospectus, 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 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 derive less than 30% of its
annual gross income from the sale or other disposition of any of the following
which was held for less then three months: (i) stock or securities and (ii)
certain options, futures, or forward contracts (the "short-short test"). Third,
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 it
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 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) 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 (including requirements as to the
proportion of its assets invested in Municipal Obligations) which will enable it
to designate distributions from the interest income generated by its investment
in Municipal Obligations, which is exempt from regular federal income tax when
received by the Fund, as Exempt Interest Dividends. Shareholders receiving
Exempt Interest Dividends will not be subject to federal income tax on the
amount of such dividends.
Distributions by the Fund of net interest income received from certain taxable
temporary 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 tax-
16
<PAGE>
able to shareholders as ordinary income whether received in cash or additional
shares. If the Fund purchases a Municipal Obligation at a market discount, any
gain realized by the Fund upon the sale or redemption of the Municipal
Obligation will be treated as 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 capital gains. 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.
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
income designated as tax-exempt for any particular distribution may be
substantially 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, 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 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
realized 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 Municipal Obligations, and distributions to its shareholders out of
net interest income from Municipal Obligations 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.
17
<PAGE>
Among the requirements that the Fund must meet in order to qualify under
Subchapter M in any year is that less than 30% of its gross income must be
derived from the sale or other disposition of securities held for less than
three months.
As stated in the Prospectus under "Taxes," 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 users." Accordingly, the Fund may not be
an appropriate investment for shareholders 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 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). For
certain private activity bonds, this includes a partnership and each of its
partners (including 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. The foregoing is not a complete statement of all of the provisions of
the Code covering the definitions of "substantial user" and "related person."
For additional information, investors should consult their tax advisers before
investing in the Fund.
Federal tax law imposes an alternative minimum tax with respect to both
corporations and individuals. Interest on certain Municipal Obligations, 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 included 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 Municipal Obligations subject to the alternative minimum
tax, a portion of the dividends 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 shareholders with a report indicating the percentage of Fund
income attributable to Municipal Obligations subject to the federal alternative
minimum tax.
In addition, the alternative minimum taxable income for corporations is
increased by 75% of the difference between an alternative measure of income
("adjusted current earnings") and the amount otherwise determined to be the
alternative minimum taxable income. Interest on all Municipal Obligations, and
therefore all distributions by the Fund that would otherwise be tax-exempt, is
included in calculating the alternative measures of a corporation's taxable
income.
Individuals whose "modified income" exceeds a base amount will be subject to
Federal income tax on up to one-half of their social security or railroad
retirement benefits. Modified income currently includes
18
<PAGE>
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 benefits.
The Code provides that interest on indebtedness incurred or continued to
purchase 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.
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 certificates,
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 administrative
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 and Local Tax Aspects. The exemption from federal income tax for
distributions of interest income from Municipal Obligations 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 taxation of
such distributions, and shareholders of the Fund are advised to consult their
own tax advisers in that regard.
PRINCIPAL UNDERWRITER AND DISTRIBUTOR
Nuveen acts as the principal underwriter or distributor of Fund shares. Shares
of the Fund are offered on a continuous basis at net asset value without a sales
charge. Nuveen has agreed to pay sales and promotion expenses in connection with
the offering of Fund shares, including the cost of printing and distributing
prospectuses (except expenses of preparing, printing and distributing
prospectuses to existing shareholders and governmental agencies) and advertising
and sales literature expense. Expenses incurred in registering the Fund and its
shares under federal and state securities laws will be paid by the Fund.
19
<PAGE>
YIELD INFORMATION
As explained in the Prospectus, the historical performance of the Fund may be
expressed in terms of "yield" or "effective yield." The Fund's yield and
effective yield for the seven-day period ended February 29, 1996 were 3.01% and
3.05%, respectively. 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.
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 of 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.
A comparison of tax-exempt and taxable equivalent yields is one element to
consider 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. Government
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.
20
<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 investment
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
advertise 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.
INDEPENDENT PUBLIC ACCOUNTANTS AND CUSTODIAN
Arthur Andersen LLP independent public accountants, 33 West Monroe Street,
Chicago, Illinois 60603 have been selected as auditors for the Fund. In addition
to audit services, Arthur Andersen LLP provides consultation and assistance on
accounting, internal control, tax and related matters. The financial statements
of the Fund and the information set forth under "Financial Highlights" are
included in the Prospectus and have been audited by Arthur Andersen LLP as
indicated in their report with respect thereto, and are included in reliance
upon the authority of said firm as experts in giving said report.
The custodian of the Fund's assets is The Chase Manhattan Bank, N.A., 770
Broadway, New York, NY 10003.
21
<PAGE>
PART C--OTHER INFORMATION
NUVEEN TAX-EXEMPT MONEY MARKET FUND, INC.
333 West Wacker Drive
Chicago, Illinois 60606
<PAGE>
PART C--OTHER INFORMATION
ITEM 24: FINANCIAL STATEMENTS AND EXHIBITS.
(a) Financial Statements:
Financial information included in the Prospectus:
Financial Highlights
Portfolio of Investments, February 29, 1996
Statement of Net Assets, February 29, 1996
Statement of Operations, Year Ended February 29, 1996
Statements of Changes in Net Assets, Years Ended February 29, 1996 and
February 28, 1995
Report of Independent Public Accountants, dated April 8, 1996
(b) Exhibits
<TABLE>
<S> <C>
1. Articles of Incorporation of Registrant, as amended and as currently in effect.
Filed as Exhibit 1 to Post-Effective Amendment No. 5 to Registrant's Registra-
tion Statement on Form N-1A (File No. 2-70520) and are incorporated herein by
reference thereto.
2. By-Laws of Registrant as currently in effect. Filed as Exhibit 2 to Post-Effec-
tive Amendment No. 9 to Registrant's Statement on Form N-1A (File No. 2-70520)
and are incorporated herein by reference thereto.
3. Not applicable.
4. Specimen certificate of shares of Capital Stock of Registrant. Filed as Exhibit
4 to Post-Effective Amendment No. 11 to Registrant's Registration Statement on
Form N-1A (File No. 2-70520) and is incorporated herein by reference thereto.
5(a). Investment Management Agreement between Registrant and Nuveen Advisory Corp.
dated May 1, 1988. Filed as Exhibit 5(a) to Post-Effective Amendment No. 16 to
Registrant's Registration Statement on Form N-1A (File No. 2-70520) and is in-
corporated herein by reference thereto.
(b). Renewal, dated July 27, 1995, of Investment Management Agreement.
6(a). Distribution Agreement between Registrant and John Nuveen & Co. Incorporated,
dated April 30, 1982. Filed as Exhibit 6(a) to Post-Effective Amendment No. 9 to
Registrant's Registration Statement on Form N-1A (File No. 2-70520) and is in-
corporated herein by reference thereto.
(b). Renewal, dated July 27, 1995, of Distribution Agreement.
7. Not applicable.
8(a). Custody Agreement, dated October 1, 1993, between Registrant and United States
Trust Company of New York. Filed as Exhibit 8(a) to Post-Effective Amendment No.
15 to Registrant's Registration Statement on Form N-1A (File No. 2-70520) and is
incorporated herein by reference thereto.
</TABLE>
C-1
<PAGE>
<TABLE>
<S> <C>
8(b) Letter evidencing assignment of U.S. Trust Company of New York's rights and re-
sponsibilities under the Custody Agreement to The Chase Manhattan Bank, N.A.
9. Transfer Agency Agreement between Registrant and Shareholder Services, Inc.
dated December 19, 1994. Filed as Exhibit 9 to Post-Effective Amendment No. 16
to Registrant's Registration Statement on Form N-1A (File No. 2-70520) and is
incorporated herein by reference thereto.
10. Opinion of Fried, Frank, Harris, Shriver & Jacobson.
11. Consent of Independent Public Accountants.
12. Not applicable.
13. Not applicable.
14. Not applicable.
15. Not applicable.
16. Schedule of Computation of Yield Figures.
17. Financial Data Schedule.
18. Not applicable.
99(a). Agreement for a Money Market Fund Insurance Program. Filed as Exhibit 18 to
Post-Effective Amendment No. 8 to Registrant's Registration Statement on Form N-
1A (File No. 2-70520) and is incorporated herein by reference thereto.
99(b). Certified copy of resolution of Board of Directors authorizing the signing of
the names of directors and officers on the registration statement pursuant to
power of attorney.
99(c). Original Powers of Attorney for all of Registrant's Directors authorizing, among
others, James J. Wesolowski and Gifford R. Zimmerman to execute the Registration
Statement. Filed as Exhibit 99(c) to Post-Effective Amendment No. 16 to Regis-
trant's Registration Statement on Form N-1A (File No. 2-70520) and is incorpo-
rated herein by reference thereto.
99(d). Code of Ethics and Reporting Requirements. Filed as Exhibit 99(d) to Post-Effec-
tive Amendment No. 16 to Registrant's Registration Statement on Form N-1A (File
No. 2-70520) and is incorporated herein by reference thereto.
</TABLE>
ITEM 25: PERSONS CONTROLLED BY OR UNDER COMMON CONTROL WITH REGISTRANT
Not applicable.
ITEM 26: NUMBER OF HOLDERS OF SECURITIES
As of April 8, 1996:
<TABLE>
<CAPTION>
TITLE OF CLASS NUMBER OF RECORD HOLDERS
-------------- ------------------------
<S> <C>
Common Stock ($.01 par value).................... 1,438
</TABLE>
C-2
<PAGE>
ITEM 27: INDEMNIFICATION
Section 2-418 of the General Corporation Law of Maryland provides for indemni-
fication of officers and directors. Article NINTH of the Articles of Incorpo-
ration of Registrant provides as follows:
NINTH: To the maximum extent permitted by the General Corporation Law of
the State of Maryland, as from time to time amended, the Corporation shall
indemnify its currently acting and its former directors, officers, employ-
ees and agents, and those persons who, at the request of the Corporation
serve or have served another corporation, partnership, joint venture, trust
or other enterprise in one or more such capacities. The indemnification
provided for herein shall not be deemed exclusive of any other rights to
which those seeking indemnification may otherwise be entitled.
Expenses (including attorneys' fees) incurred in defending a civil or crim-
inal action, suit or proceeding (including costs connected with the prepa-
ration of a settlement) may be paid by the Corporation in advance of the
final disposition of such action, suit or proceeding, if authorized by the
Board of Directors in the specific case, upon receipt of an undertaking by
or on behalf of the director, officer, employee or agent to repay that
amount of the advance which exceeds the amount which it is ultimately de-
termined that he is entitled to receive from the Corporation by reason of
indemnification as authorized herein; provided, however, that prior to mak-
ing any such advance at least one of the following conditions shall have
been met: (1) the indemnitee shall provide a security for his undertaking,
(2) the Corporation shall be insured against losses arising by reason of
any lawful advances, or (3) a majority of a quorum of the disinterested,
non-party directors of the Corporation, or an independent legal counsel in
written opinion, shall determine, based on a review of readily available
facts, that there is reason to believe that the indemnitee ultimately will
be found and entitled to indemnification.
Nothing in these Articles of Incorporation or in the By-Laws shall be
deemed to protect or provide indemnification to any director or officer of
the Corporation against any liability to the Corporation or to its security
holders to which he would otherwise be subject by reason of willful misfea-
sance, bad faith, gross negligence or reckless disregard of the duties in-
volved in the conduct of his office ("disabling conduct"), and the Corpora-
tion shall not indemnify any of its officers or directors against any lia-
bility to the Corporation or to its security holders unless a determination
shall have been made in the manner provided hereafter that such liability
has not arisen from such officer's or director's disabling conduct. A de-
termination that an officer or director is entitled to indemnification
shall have been properly made if it is based upon (1) a final decision on
the merits by a court or other body before whom the proceeding was brought
that the person to be indemnified ("indemnitee") was not liable by reason
of disabling conduct or, (2) in the absence of such a decision, a reason-
able determination, based upon a review of the facts, that the indemnitee
was not liable by reason of disabling conduct, by (a) the vote of a major-
ity of a quorum of directors who are neither "interested persons" of the
Corporation as defined in the Investment Company Act of 1940 nor parties to
the proceeding, or (b) an independent legal counsel in a written opinion.
-----------------
Insofar as indemnification for liabilities arising under the Securities Act of
1933 may be permitted to the officers, directors or controlling persons of the
Registrant pursuant to the Articles of Incorporation of the Registrant or
otherwise, the Registrant has been advised that in the opinion of the
Securities
C-3
<PAGE>
and Exchange Commission such indemnification is against public policy as
expressed in the Act 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 or director or
controlling person of the Registrant in the successful defense of any action,
suit or proceeding) is asserted by such officer, director 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 of
whether such indemnification by it is against public policy as expressed in the
Act and will be governed by the final adjudication of such issue.
The directors and officers of the Registrant (and of the other management
investment companies for which Nuveen Advisory Corp. serves as investment
adviser) are covered by an Investment Trust Errors and Omissions policy in the
aggregate amount of $20,000,000 (with a maximum deductible of $500,000) against
liability and expenses of claims of wrongful acts arising out of their position
with the Registrant (and such other companies), except for matters which
involve 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 applicable investment
company or where he or she had reasonable cause to believe this conduct was
unlawful).
ITEM 28: BUSINESS AND OTHER CONNECTIONS OF INVESTMENT ADVISER
Nuveen Advisory Corp. serves as investment adviser to the following open-end
management type investment companies: Nuveen Municipal Bond Fund, Nuveen Tax-
Exempt Money Market Fund, Inc., Nuveen Tax-Free Reserves, Inc., Nuveen
California Tax-Free Fund, Inc., Nuveen Tax-Free Bond Fund, Inc., Nuveen Insured
Tax-Free Bond Fund, Inc., Nuveen Tax-Free Money Market Fund, Inc. and Nuveen
Multistate Tax-Free Trust. It also serves as investment adviser to the
following closed-end management 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 Insured California Premium Income Municipal Fund, Inc.,
Nuveen Insured New York Premium Income Municipal Fund, Inc., Nuveen Select
C-4
<PAGE>
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 Insured 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, Nuveen Maryland
Premium Income Municipal Fund, Nuveen Massachusetts Premium Income Municipal
Fund, Nuveen Virginia Premium Income Municipal Fund, Nuveen Washington 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 and Nuveen Insured Premium Income Municipal Fund
2. 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 Donald E. Sveen
and Anthony T. Dean, of the investment adviser has engaged during the last two
years for his account or in the capacity of director, officer, employee, part-
ner or trustee, see the descriptions under "Management" in the Statement of Ad-
ditional Information.
Donald E. Sveen is President and Director, formerly Executive Vice President,
of Nuveen Advisory Corp., the investment adviser. Mr. Sveen has, during the
last two years, been President, Director and formerly Executive Vice President
of John Nuveen & Co. Incorporated; and President and Director of Nuveen Insti-
tutional Advisory Corp. Anthony T. Dean is Director of Nuveen Advisory Corp.,
the investment adviser. Mr. Dean has, during the last two years, been Executive
Vice President and Director of The John Nuveen Company and John Nuveen & Co.
Incorporated; and Director of Nuveen Institutional Advisory Corp.
ITEM 29: PRINCIPAL UNDERWRITERS
(a) John Nuveen & Co. Incorporated ("Nuveen") acts as principal underwriter of
the Nuveen Municipal Bond Fund, Nuveen Tax-Exempt Money Market Fund, Inc.,
Nuveen Tax-Free Reserves, Inc., Nuveen California Tax-Free Fund, Inc., Nuveen
Tax-Free Bond Fund, Inc., Nuveen Insured Tax-Free Bond Fund, Inc., Nuveen Tax-
Free Money Market Fund, Inc. and Nuveen Multistate Tax-Free Trust, all open-end
management investment companies. Nuveen also acts as depositor and principal
underwriter of the Nuveen Tax-Exempt Unit Trust, a registered unit investment
trust. Nuveen has also served or is serving as a co-managing underwriter of the
shares of 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
C-5
<PAGE>
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 Select Tax-
Free Income Portfolio, Nuveen Premium Income Municipal Fund 2, Inc., Nuveen
Insured California Premium Income Municipal Fund, Inc., 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 Insured
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, Nuveen Maryland Premium Income
Municipal Fund, Nuveen Massachusetts Premium Income Municipal Fund, Nuveen
Virginia Premium Income Municipal Fund, Nuveen Washington 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 Select Tax-Free Income Portfolio 2, Nuveen Insured California Select
Tax-Free Income Portfolio, Nuveen Insured New York Select Tax-Free Income
Portfolio and Nuveen Select Tax-Free Income Portfolio 3.
(b)
<TABLE>
<CAPTION>
NAME AND PRINCIPAL POSITIONS AND OFFICES POSITIONS AND OFFICES
BUSINESS ADDRESS WITH UNDERWRITER WITH REGISTRANT
- --------------------------------------------------------------------------------
<S> <C> <C>
Richard J. Franke Chairman of the Board, Chairman of the Board
333 West Wacker Drive Chief Executive and Director
Chicago, IL 60606 Officer and Director
Donald E. Sveen President, Chief Operating None
333 West Wacker Drive Officer and Director
Chicago, IL 60606
Anthony T. Dean Executive Vice President None
333 West Wacker Drive and Director
Chicago, IL 60606
</TABLE>
C-6
<PAGE>
<TABLE>
<CAPTION>
NAME AND PRINCIPAL POSITIONS AND OFFICES POSITIONS AND OFFICES
BUSINESS ADDRESS WITH UNDERWRITER WITH REGISTRANT
- --------------------------------------------------------------------------------
<S> <C> <C>
John P. Amboian Executive Vice President None
333 West Wacker Drive and Chief Financial Officer
Chicago, IL 60606
Timothy R. Schwertfeger Executive Vice President President and Director
333 West Wacker Drive and Director
Chicago, IL 60606
William Adams IV Vice President None
333 West Wacker Drive
Chicago, IL 60606
Clifton L. Fenton Vice President None
333 West Wacker Drive
Chicago, IL 60606
Kathleen M. Flanagan Vice President Vice President
333 West Wacker Drive Chica-
go, IL 60606
Stephen D. Foy Vice President None
333 West Wacker Drive
Chicago, IL 60606
Robert D. Freeland Vice President None
333 West Wacker Drive
Chicago, Illinois 60606
Michael G. Gaffney Vice President None
333 West Wacker Drive
Chicago, IL 60606
Anna R. Kucinskis Vice President Vice President
333 West Wacker Drive
Chicago, IL 60606
Robert B. Kuppenheimer Vice President None
333 West Wacker Drive
Chicago, IL 60606
Larry W. Martin Vice President and Vice President and
333 West Wacker Drive Assistant Secretary Assistant Secretary
Chicago, Illinois 60606
Thomas C. Muntz Vice President None
333 West Wacker Drive
Chicago, IL 60606
</TABLE>
C-7
<PAGE>
<TABLE>
<CAPTION>
NAME AND PRINCIPAL POSITIONS AND OFFICES POSITIONS AND OFFICES
BUSINESS ADDRESS WITH UNDERWRITER WITH REGISTRANT
- -----------------------------------------------------------------------------------
<S> <C> <C>
O. Walter Renfftlen Vice President and Vice President and
333 West Wacker Drive Controller Controller
Chicago, IL 60606
Stuart W. Rogers Vice President None
333 West Wacker Drive
Chicago, IL 60606
Bradford W. Shaw, Jr. Vice President None
333 West Wacker Drive
Chicago, IL 60606
H. William Stabenow Vice President and Vice President and
333 West Wacker Drive Treasurer Treasurer
Chicago, IL 60606
James J. Wesolowski Vice President, General Vice President and
333 West Wacker Drive Counsel and Secretary Secretary
Chicago, IL 60606
Paul C. Williams Vice President None
333 West Wacker Drive
Chicago, IL 60606
Gifford R. Zimmerman Vice President and Vice President and
333 West Wacker Drive Assistant Secretary Assistant Secretary
Chicago, IL 60606
</TABLE>
(c) Not applicable.
ITEM 30: LOCATION OF ACCOUNTS AND RECORDS
Nuveen Advisory Corp., 333 West Wacker Drive, Chicago, Illinois 60606,
maintains Articles of Incorporation, By-Laws, minutes of directors and
shareholder meetings, contracts and all advisory material of the investment
adviser.
The Chase Manhattan Bank, N.A., 770 Broadway, New York, NY 10003, maintains all
general and subsidiary ledgers, journals, trial balances, records of all
portfolio purchases and sales, and all other required records not maintained by
Nuveen Advisory Corp. or Shareholder Services, Inc.
C-8
<PAGE>
Shareholder Services, Inc., P.O. Box 5330, Denver, Colorado 80217-5330,
maintains all the required records in its capacity as transfer, dividend
paying, and shareholder services agent for the Registrant.
ITEM 31: MANAGEMENT SERVICES
Not applicable.
ITEM 32: UNDERTAKINGS
(a) Not applicable.
(b) Not applicable.
(c) Not applicable.
C-9
<PAGE>
SIGNATURES
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933 AND THE INVESTMENT
COMPANY ACT OF 1940 THE REGISTRANT CERTIFIES THAT IT MEETS ALL REQUIREMENTS
FOR EFFECTIVENESS OF THIS REGISTRATION STATEMENT PURSUANT TO RULE 485(B) UNDER
THE SECURITIES ACT OF 1933 AND HAS DULY CAUSED THIS REGISTRATION STATEMENT TO
BE SIGNED ON ITS BEHALF BY THE UNDERSIGNED, THEREUNTO DULY AUTHORIZED, IN THIS
CITY OF CHICAGO, AND STATE OF ILLINOIS, ON THE 30TH DAY OF APRIL, 1996.
NUVEEN TAX-EXEMPT MONEY MARKET FUND,
INC.
/s/ Gifford R. Zimmerman
--------------------------------------
Gifford R. Zimmerman, Vice President
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THIS REGISTRATION
STATEMENT HAS BEEN SIGNED BELOW BY THE FOLLOWING PERSONS IN THE CAPACITIES AND
ON THE DATE INDICATED.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<S> <C> <C>
/s/ O. Walter Renfftlen
- -------------------------------
O. Walter Renfftlen Vice President and April 30, 1996
Controller (Principal
Financial and
Accounting Officer)
Richard J. Franke Chairman of the Board )
and Director (Principal )
Executive Officer) )
) /s/ Gifford R. Zimmerman
Lawrence H. Brown Director ) By_________________________
} Gifford R. Zimmerman
Anne E. Impellizzeri Director ) Attorney-in-Fact
)
Margaret K. Rosenheim Director ) April 30, 1996
)
Peter R. Sawers Director )
Timothy R. Schwertfeger President and Director
</TABLE>
AN ORIGINAL POWER OF ATTORNEY AUTHORIZING, AMONG OTHERS, JAMES J. WESOLOWSKI
AND GIFFORD R. ZIMMERMAN TO EXECUTE THIS REGISTRATION STATEMENT, AND AMEND-
MENTS THERETO, FOR EACH OF THE OFFICERS AND DIRECTORS OF REGISTRANT ON WHOSE
BEHALF THIS REGISTRATION STATEMENT IS FILED, HAS BEEN EXECUTED AND FILED WITH
THE SECURITIES AND EXCHANGE COMMISSION.
<PAGE>
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
SEQUENTIALLY
EXHIBIT NUMBERED
NUMBER EXHIBIT PAGE
------- ------- ------------
<C> <S> <C>
5(b). Renewal, dated July 27, 1995, of Investment Manage-
ment Agreement.
6(b). Renewal, dated July 27, 1995, of Distribution Agree-
ment.
8(b). Letter evidencing assignment of U.S. Trust Company of
New York's rights and responsibilities under the Cus-
tody Agreement to The Chase Manhattan Bank, N.A.
10. Opinion of Fried, Frank, Harris, Shriver & Jacobson.
11. Consent of Independent Public Accountants.
16. Schedule of Computation of Yield Figures.
17. Financial Data Schedule.
99(b). Certified copy of resolution of Board of Directors
authorizing the signing of the names of directors and
officers on the Registration Statement pursuant to
power of attorney.
</TABLE>
<PAGE>
Exhibit 5(b)
NUVEEN TAX-EXEMPT MONEY MARKET FUND, INC.
RENEWAL OF INVESTMENT MANAGEMENT AGREEMENT
------------------------------------------
This Agreement made this 27th day of July, 1995 and between Nuveen Tax-Exempt
Money Market Fund, Inc., a Maryland corporation (the "Fund"), and Nuveen
Advisory Corp., a Delaware corporation (the "Adviser");
WHEREAS, the parties hereto are the contracting parties under that certain
Investment Management Agreement (the "Agreement") pursuant to which the Adviser
furnishes investment management and other services to the Fund; and
WHEREAS, the Agreement terminates August 1, 1995 unless continued in the manner
required by the Investment Company Act of 1940; and
WHEREAS, the Board of Directors, at a meeting called for the purpose of
reviewing the Agreement, have approved the Agreement and its continuance until
August 1, 1996 in the manner required by the Investment Company Act of 1940.
NOW THEREFORE, in consideration of the mutual covenants contained in the
Agreement the parties hereto do hereby continue the Agreement in effect until
August 1, 1996 and ratify and confirm the Agreement in all respects.
NUVEEN TAX-EXEMPT MONEY
MARKET FUND, INC.
By: /s/ Gifford R. Zimmerman
------------------------------
Vice President
ATTEST:
/s/ Morrison C. Warren
----------------------------
Assistant Secretary
NUVEEN ADVISORY CORP.
By: /s/ J. Thomas Futrell
------------------------------
Vice President
ATTEST:
/s/ Larry Martin
----------------------------
Assistant Secretary
<PAGE>
Exhibit 6(b)
Renewal of Distribution Agreement
---------------------------------
This Agreement made this 27th day of July, 1995 by and between Nuveen Tax-Exempt
Money Market Fund, Inc., a Maryland corporation (the "Fund"), and John Nuveen &
Co. Incorporated, a Delaware corporation (the "Underwriter");
WHEREAS, the Agreement terminates August 1, 1995 unless continued in the manner
required by the Investment Company Act of 1940;
WHEREAS, the parties hereto are the contracting parties under that certain
Distribution Agreement (the "Agreement") pursuant to which the Underwriter
acts as agent for the distribution of shares of the Fund; and
WHEREAS, in connection with the implementation of its Flexible Pricing
Structure, the form of the Dealer Distribution Agreement attached as an Exhibit
has been revised; and
WHEREAS, the Board of Directors of the Fund, at a meeting called for the purpose
of reviewing the Agreement has approved the Agreement with the revised form of
Dealer Distribution Agreement as an Exhibit, and its continuance until August 1,
1996 in the manner required by the Investment Company Act of 1940;
NOW THEREFORE, in consideration of the mutual covenants contained in the
Agreement the parties hereto do hereby continue the Agreement in effect until
August 1, 1996 and ratify and confirm the Agreement with the revised form of
Dealer Distribution Agreement as an Exhibit, in all respects.
NUVEEN TAX-EXEMPT MONEY MARKET FUND, INC.
By: /s/ Larry Martin
-------------------------------------
Vice President
ATTEST:
/s/ Morrison C. Warren
--------------------------------
Assistant Secretary
JOHN NUVEEN & CO. INCORPORATED
By: /s/ Kenneth C. Dunn
-------------------------------------
Vice President
ATTEST:
/s/ Gifford R. Zimmerman
--------------------------------
Assistant Secretary
<PAGE>
Exhibit 8b
----------
The Chase Manhattan Bank, N.A.
770 Broadway
New York, New York 10003-9598
[LOGO OF CHASE MANHATTAN BANK]
April 16, 1996
Mr. Giff Zimmerman
John Nuveen & Co. Incorporated
333 West Wacker Drive
Chicago, IL 60606
Dear Giff:
On September 2, 1995, The United States Trust Company of New York (UST) was
merged into Chase Manhattan Bank, N.A. (Chase). As a result of this transaction,
Chase succeeded by operation of law, all rights and responsibilities of UST
under all Transfer Agency, Custodian and Fund Accounting agreements between US
Trust and John Nuveen & Co.'s managed investment companies.
Sincerely,
/s/ Andrew M. Massa
Andrew M. Massa
Vice President
<PAGE>
Exhibit 10
[LETTERHEAD OF FRIED, FRANK, HARRIS, SHRIVER & JACOBSON]
April 24, 1996
WRITER'S DIRECT LINE
(202) 639-7065
Nuveen Tax-Exempt Money Market Fund, Inc.
333 West Wacker Drive
Chicago, Illinois 60606
RE: Registration Statement on Form N-1A
Under the Securities Act of 1933
(File No. 2-70520)
-----------------------------------
Ladies and Gentlemen:
We have acted as counsel to Nuveen Tax-Exempt Money Market Fund, Inc., a
Maryland corporation (the "Fund"), in connection with the above-referenced
Registration Statement on Form N-1A (as amended, the "Registration Statement")
which relates to the Fund's shares of common stock, par value $.01 (the
"Shares"). This opinion is being delivered to you in connection with the Fund's
filing of Post-Effective Amendment No. 17 to the Registration Statement (the
"Amendment") with the Securities and Exchange Commission pursuant to Rule 485(b)
of the Securities Act of 1933 (the "1933 Act"). With your permission, all
assumptions and statements of reliance herein have been made without any
independent investigation or verification on our part except to the extent
otherwise expressly stated, and we express no opinion with respect to the
subject matter or accuracy of such assumptions or items relied upon.
In connection with this opinion, we have reviewed, among other things,
executed copies of the following documents:
(a) a certificate of the Maryland State Department of Assessments and
Taxation (the "Department") as to the existence and good standing
of the Fund;
(b) copies, certified by the Department, of the Fund's Articles of
Incorporation and of all amendments and all supplements thereto
(the "Charter");
(c) a certificate executed by Karen L. Healy, the Assistant Secretary
of the Fund, certifying as to, and attaching copies of, the Fund's
Charter and By-Laws, as amended (the "By-Laws"), and certain
resolutions adopted by the Board of Directors of the Fund
authorizing the issuance of the Shares; and
(d) a printer's proof, dated April 24, 1996, of the Amendment.
<PAGE>
[SECOND PAGE LETTERHEAD OF FRIED, FRANK, HARRIS, SHRIVER & JACOBSON]
Nuveen Tax-Exempt Money Market Fund, Inc.
April 24, 1996
Page 2
In our capacity as counsel to the Fund, we have examined the originals, or
certified, conformed or reproduced copies, of all records, agreements,
instruments and documents as we have deemed relevant or necessary as the basis
for the opinion hereinafter expressed. In all such examinations, we have
assumed the legal capacity of all natural persons executing documents, the
genuineness of all signatures, the authenticity of all original or certified
copies, and the conformity to original or certified copies of all copies
submitted to us as conformed or reproduced copies. As to various questions of
fact relevant to such opinion, we have relied upon, and assume the accuracy of,
certificates and oral or written statements of public officials and officers or
representatives of the Fund. We have assumed that the Amendment, as filed with
the Securities and Exchange Commission, will be in substantially the form of
the printer's proof referred to in paragraph (d) above.
Based upon, and subject to, the limitations set forth herein, we are of the
opinion that the Shares, when issued and sold in accordance with the Fund's
Charter and for the consideration described in the Registration Statement, will
be legally issued, fully paid and nonassessable under the laws of the State of
Maryland.
We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement. In giving this consent, we do not admit that we are in
the category of persons whose consent is required under Section 7 of the 1933
Act.
Very truly yours,
FRIED, FRANK, HARRIS, SHRIVER & JACOBSON
By: /S/ Thomas S. Harman
__________________________________
Thomas S. Harman
<PAGE>
Exhibit 11
ARTHUR ANDERSEN LLP
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
-----------------------------------------
As independent public accountants, we hereby consent to the use of our report
dated April 8, 1996, and to all references to our firm included in or made a
part of this registration statement of Nuveen Tax-Exempt Money Market Fund, Inc.
/s/ ARTHUR ANDERSEN LLP
------------------------
ARTHUR ANDERSEN LLP
Chicago, Illinois,
April 19, 1996
<PAGE>
EXHIBIT 16
SCHEDULE OF COMPUTATION OF YIELD FIGURES
I. Current Yield
a. Current Yield is calculated as follows:
i. Net investment income per share for the seven
day period
------------------------------------------------- = Base Period Return
Value of account at beginning of seven-day pe-
riod
ii. Base Period Return X 365/7 = Current Yield
b. Calculation of Current Yield for seven-day period ended February 29,
1996:
.000577 365
( ------- ) X --- = 3.01%
1.00 7
II. Effective Yield
a. Effective Yield is calculated as follows:
(Base Period Return + 1) 365/7 - 1 = Effective Yield
b. Calculation of Effective Yield for seven-day period ended February 29,
1996:
365/7
.000577
[ ( ------- ) + 1 ] - 1 = 3.05%
1.00
III. Taxable Equivalent Yield
a. The Taxable Equivalent Yield formula is as follows:
Tax Exempt Yield
-----------------------------
(1 - federal income tax rate)
b. Based on a maximum Federal income tax rate of 39.6%, the Taxable Equiva-
lent Yield for the seven-day period ended February 29, 1996 is as follows:
3.01%
------- = 4.98%
1 - .396
1
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<LEGEND> This schedule contains summary Financial Information extracted from
the Form N-SAR and the financial statements and is qualified in its entirety to
such documents.
</LEGEND>
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> FEB-29-1996
<PERIOD-START> MAR-01-1995
<PERIOD-END> FEB-29-1996
<INVESTMENTS-AT-COST> 607,935
<INVESTMENTS-AT-VALUE> 607,935
<RECEIVABLES> 3,645
<ASSETS-OTHER> 289
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 611,869
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 1,816
<TOTAL-LIABILITIES> 1,816
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 610,053
<SHARES-COMMON-STOCK> 610,053
<SHARES-COMMON-PRIOR> 759,244
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 0
<NET-ASSETS> 610,053
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 26,016
<OTHER-INCOME> 0
<EXPENSES-NET> 2,963
<NET-INVESTMENT-INCOME> 23,053
<REALIZED-GAINS-CURRENT> 9
<APPREC-INCREASE-CURRENT> 0
<NET-CHANGE-FROM-OPS> 23,062
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 23,062
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 3,673,149
<NUMBER-OF-SHARES-REDEEMED> 3,830,079
<SHARES-REINVESTED> 7,739
<NET-CHANGE-IN-ASSETS> (149,190)
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 2,646
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 2,963
<AVERAGE-NET-ASSETS> 671,713
<PER-SHARE-NAV-BEGIN> 1.00
<PER-SHARE-NII> .034
<PER-SHARE-GAIN-APPREC> 0
<PER-SHARE-DIVIDEND> .034
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 1.00
<EXPENSE-RATIO> .44
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<PAGE>
EXHIBIT 99(b)
Certified Resolution
--------------------
The undersigned, James J. Wesolowski, hereby certifies, on behalf of Nuveen
Tax-Exempt Money Market Fund, Inc. (the "Fund"), (1) that he is the duly
elected, qualified and acting Secretary of the Fund, and that as such Secretary
he has custody of its corporate books and records, (2) that attached to this
Certificate is a true and correct copy of a resolution duly adopted by the Board
of Directors of the Fund at a meeting held on January 21, 1996, and (3) that
said resolution has not been amended or rescinded and remains in full force and
effect.
April 15, 1996
/s/ James J. Wesolowski
------------------------------
James J. Wesolowski, Secretary
<PAGE>
RESOLVED, that each member of the Board and officer of the Fund who may be
required to execute the Registration Statement on Form N-1A, or any amendment or
amendments thereto, be, and each of them hereby is, authorized to execute a
power of attorney appointing Richard J. Franke, Timothy R. Schwertfeger, James
J. Wesolowski, Larry W. Martin, Gifford R. Zimmerman, and Thomas S. Harman, and
each of them, his true and lawful attorneys-in-fact and agents, with full power
of substitution and resubstitution, for him and in his name, place and stead, in
any and all capacities, to sign the Registration Statement and any and all
amendments thereto and to file the same, with all exhibits thereto, and other
documents in connection therewith, with the Securities and Exchange Commission,
granting unto said attorneys-in-fact and agents, and each of them, full power
and authority to do and perform each and every act and thing requisite or
necessary to be done in and about the premises, as fully to all intents and
purposes as he might or could do in person, and ratifying and confirming all
that said attorneys-in-fact and agents or any of them, or their or his
substitute or substitutes, may lawfully do or cause to be done by virtue
thereof.
