<PAGE>
Nuveen
Money Market Funds
Funds
Prospectus/Annual Report
Dependable, tax-free income
to help you keep more of
what you earn.
[PHOTO OF COUPLE APPEARS HERE]
Tax-Exempt
<PAGE>
Contents
1 Dear Shareholder
3 Prospectus
5 Fund Expenses
5 Highlights
8 Financial Highlights
10 Yield
10 The Fund and its Investment Objective
10 Investment Policies
15 Management of the Fund
16 Net asset value
16 Dividends
17 Suitability
17 How to buy Fund Shares
18 Other Shareholder Programs
19 How to redeem Fund Shares
21 Taxes
23 General Information
25 Annual Report Financial Section
26 Portfolio of Investments
33 Statement of Net Assets
34 Statement of Operations
35 Statement of Changes in Net Assets
36 Notes to Financial Statements
39 Financial Highlights
42 Report of Independent Public Accountants
43 Fund Information
<PAGE>
Dear Shareholder
[PHOTO OF It is a pleasure to report to you on the performance
TIMOTHY R. SCHWERTFEGER of the Nuveen Tax-Exempt Money Market Fund for the
APPEARS HERE] year ended February 28, 1997, and to send you an
updated prospectus for the fund. Inside this report
Timothy R. Schwertfeger you will find the fund's financial information,
including the portfolio of investments, statement of
net assets, and financial highlights; located after
the prospectus.
During this 12-month period the fund continued to
achieve its goal of delivering attractive tax-free
income from a portfolio of quality short-term
municipal securities. As of the end of February,
investors were receiving a tax-free yield of 3.02%.
The Nuveen money market funds have done well in
generating tax-fee income for investors while
preserving net asset value stability so critical to
investor confidence. Your money market fund has
continued to deliver safety and liquidity, which is
especially comforting during periods of market
volatility. Money market funds remain a valuable and
convenient investment alternative.
Nuveen prides itself on providing attractive tax-free
income to more than 1.3 million shareholders. Thank
you for your continued confidence in Nuveen and our
family of investments.
Sincerely,
/s/ Timothy R. Schwertfeger
Timothy R. Schwertfeger
Chairman of the Board
April 14, 1997
1
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Nuveen Tax-Exempt
Money Market Fund, Inc.
Prospectus
April 29, 1997
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 29,
1997, 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
3
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Prospectus
<TABLE>
<CAPTION>
<S> <C>
5 Fund expenses
5 Highlights
8 Financial highlights
10 Yield
10 The Fund and its investment objective
10 Investment policies
15 Management of the Fund
16 Net asset value
16 Dividends
17 Suitability
17 How to buy Fund shares
18 Other Shareholder Programs
19 How to redeem Fund shares
21 Taxes
23 General information
</TABLE>
4
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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 28, 1997.
<TABLE>
<CAPTION>
Shareholder transaction expenses
- ------------------------------------------------------------------------
<S> <C>
Sales load imposed on purchases None
Sales load imposed on reinvested dividends None
Redemption fees None
Exchange fees None
- ------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
Annual operating expenses (as a percentage of average daily net assets)
- ------------------------------------------------------------------------
<S> <C>
Management fees .40%
12b-1 fees None
Other operating expenses .04%
Total expenses .44%
</TABLE>
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.
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.
<TABLE>
<CAPTION>
1 Year 3 Years 5 Years 10 Years
- ------------------------------------------------------------------------
<S> <C> <C> <C>
$5 $14 $25 $55
- ------------------------------------------------------------------------
</TABLE>
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.
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
5
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will be maintained. See "Net Asset Value" on page 16 and "The Fund and Its
Investment Objective" on page 10.
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 15.
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 10.
The information set forth above should be read in conjunction with the detailed
information set forth elsewhere in this Prospectus.
6
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Financial Highlights
7
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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.
Selected data for a share outstanding throughout each period is as
follows:
<TABLE>
<CAPTION>
Income from
Investment Operations Less Distributions
-------------------------- ---------------------------
Net
Net realized and Dividends Net Total
asset unrealized from tax- asset return
value Net gain (loss) exempt net Distributions value on net
beginning investment from investment from capital end of asset
of period income investments income gains period value
- -----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Year ended,
2/28/97 $1.000 $.031 $-- $(.031) $-- $1.000 3.11%
2/29/96 1.000 .034 -- (.034) -- 1.000 3.42
2/28/95 1.000 .027 -- (.027) -- 1.000 2.69
2/28/94 1.000 .020 -- (.020) -- 1.000 2.04
2/28/93 1.000 .026 -- (.026) -- 1.000 2.57
10/1/91 to 2/29/92 1.000 .016 -- (.016) -- 1.000 1.56
Year ended,
9/30/91 1.000 .049 -- (.049) -- 1.000 4.85
9/30/90 1.000 .058 -- (.058) -- 1.000 5.75
9/30/89 1.000 .060 -- (.060) -- 1.000 6.00
9/30/88 1.000 .049 -- (.049) -- 1.000 4.89
- -----------------------------------------------------------------------------------------------------------------
*Annualized.
</TABLE>
8
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Nuveen Tax-Exempt Money Market Fund Prospectus
April 29, 1997
<TABLE>
<CAPTION>
Ratios/Supplemental Data
------------------------------------------
Ratio
of net
Ratio of investment
Net assets expenses income to
end of period to average average
(in thousands) net assets net assets
- --------------------------------------------------------------
<S> <C> <C> <C>
Year ended,
2/28/97 $ 515,403 .44% 3.10%
2/29/96 610,053 .44 3.43
2/28/95 759,244 .44 2.65
2/28/94 975,833 .42 2.04
2/28/93 1,597,014 .40 2.58
10/1/91 to 2/29/92 2,332,021 .39* 3.71*
Year ended,
9/30/91 1,927,583 .38 4.81
9/30/90 1,800,966 .40 5.74
9/30/89 1,756,725 .39 6.02
9/30/88 2,044,479 .39 4.90
- --------------------------------------------------------------
</TABLE>
9
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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 28, 1997, the Fund's yield,
effective yield and taxable equivalent yield (using the maximum federal income
tax rate of 39.6%) were 3.02%, 3.07% and 5.00%, 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) 858-4084.
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.
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.
10
<PAGE>
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.
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 value of the
Fund's shares, the Fund believes that its ability to
- ------
11
<PAGE>
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.
The SEC has recently adopted amendments and proposed further 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 would be required by these amendments, the
Fund will adhere at all times to all requirements of Rule 2a-7.
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 28, 1997, the average maturity of
the Fund's portfolio ranged from 25 to 61 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.
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.
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12
<PAGE>
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.
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 15-45 days).
On such transactions the payment obligation and the interest rate are fixed at
the time the buyer enters into the commitment. The commitment to purchase
securities on a when-issued or delayed delivery basis may involve an element of
risk because the value of the securities is subject to market fluctuation. No
interest accrues to the purchaser prior to settlement of the transaction and at
the time of delivery the market value may be less than cost.
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.
- ------
13
<PAGE>
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 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.
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.
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14
<PAGE>
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.
For the services and facilities furnished by Nuveen Advisory, the Fund has
agreed to pay an annual management fee as follows:
<TABLE>
<CAPTION>
Average daily net asset value of the Fund Management fee
- -----------------------------------------------------------------
<S> <C>
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%
- -----------------------------------------------------------------
</TABLE>
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
28, 1997, the management fee amounted to .40 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 currently serves as investment adviser to 42 open-end funds (the
"Nuveen Mutual Funds") and 52 exchange-traded municipal securities funds (the
"Nuveen Exchange-Traded Funds"). As of the date of this Prospectus, Nuveen
Advisory manages approximately $34 billion in assets held by the Nuveen Mutual
Funds and the Nuveen Exchange-Traded Funds.
Nuveen Advisory is a wholly-owned subsidiary of John Nuveen & Co. Incorporated
("Nuveen"), 333 West Wacker Drive, Chicago, Illinois 60606. Nuveen, the
principal underwriter of the Fund's shares, is sponsor of the Nuveen Tax-Exempt
Unit Trust and Nuveen Unit Trusts, registered unit investment trusts. 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
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15
<PAGE>
invested to date in Nuveen's funds and trusts. Founded in 1898, Nuveen is a
subsidiary of The John Nuveen Company which, in turn, is approximately 78% owned
by The St. Paul Companies, Inc. ("St. Paul"). St. Paul is located in St. Paul,
Minnesota, and is principally engaged in providing property-liability insurance
through subsidiaries.
Net Asset Value
The net asset value of the Fund's shares is determined by The Chase Manhattan
Bank, 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 portfolio securities held by the Fund, plus cash or
other 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 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.
- ------
16
<PAGE>
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:
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.
- ------
17
<PAGE>
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.
Other Shareholder Programs
Exchange Privilege
You may exchange shares of the Fund for shares of any other open-end management
investment company with reciprocal exchange privileges advised by Nuveen
Advisory (the "Nuveen Funds"), provided that the Nuveen Fund into which shares
are to be exchanged is offered in the shareholder's state of residence and that
the shares to be exchanged have been held by the shareholder for a period of at
least 15 days. Shares of Nuveen Funds purchased subject to a front-end sales
charge may be exchanged for shares of the Fund or any other Nuveen Fund at the
next determined net asset value without any front-end sales charge. Shares of
any Nuveen Fund purchased through dividend reinvestment or through reinvestment
of Nuveen UIT distributions (and any dividends thereon) may be exchanged for
shares of the Fund or any other Nuveen Fund without a front-end sales charge.
Exchanges of shares with respect to which no front-end sales charge has been
paid will be made at the public offering price, which may include a front-end
sales charge, unless a front-end sales charge has previously been paid on the
investment represented by the exchanged shares (i.e., the shares to be exchanged
were originally issued in exchange for shares on which a front-end sales charge
was paid), in which case the exchange will be made at net asset value. Because
certain other Nuveen Funds may determine net asset value and therefore honor
purchase or redemption requests on days when the Fund does not (generally,
Martin Luther King's Birthday, Columbus Day and Veteran's Day), exchanges of
shares of one of those funds for shares of the Fund may not be effected on such
days.
The total value of shares being exchanged must at least equal the minimum
investment requirement of the Nuveen Fund into which they are being exchanged.
Exchanges are made based on the relative dollar values of the shares involved in
the exchange, and will be effected by redemption of shares of the Nuveen Fund
held and purchase of the shares of the other Nuveen Fund. For federal income tax
purposes, any such exchange constitures a sale and purchase of shares and may
result in capital gain or loss. Before exercising any exchange, you should
obtain the Prospectus for the Nuveen Fund into which shares are to be exchanged
and read it carefully. If the registration of the account for the Fund you are
purchasing is not exactly the same as that of the fund account from which the
exchange is made, written instructions from all holders of the account from
which the exchange is being made must be received, with signatures guaranteed by
a member of any approved Medallion Guarantee Program or in such other manner as
may be acceptable to the Fund. You may also make exchanges by telephone if a
pre-authorized exchange authorization, as provided on the account Application
Form, is on file with Shareholder Services, Inc., the Fund's
- ------
18
<PAGE>
shareholder service agent. The exchange privilege may be modified or
discontinued at any time.
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.
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.
Telephone Redemption by Check
Unless you have declined telephone redemption privileges, you may sell fund
shares by calling (800) 858-4084. Your redemption must not exceed $50,000 and
you may not redeem by telephone shares held in certificate form. Checks will be
issued only to the shareholder on record and mailed to the address on
record.
Telephone Redemption by Fedwire
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
- ------
19
<PAGE>
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 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 val-
- ------
20
<PAGE>
ued 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 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.
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 pur-
- ------
21
<PAGE>
chase 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 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.
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22
<PAGE>
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, 4 New York
Plaza, New York, New York 10004. 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.
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23
<PAGE>
Annual Report Financial Section
<TABLE>
<CAPTION>
Contents
<C> <S>
26 Portfolio of Investments
33 Statement of Net Assets
34 Statement of Operations
35 Statement of Changes in Net Assets
36 Notes to Financial Statements
39 Financial Highlights
42 Report of Independent Public Accountants
</TABLE>
======
25
<PAGE>
<TABLE>
Portfolio of Investments
Tax--Exempt
Principal Amortized
Amount Description Ratings* Costs
- -----------------------------------------------------------------------------------------------------------------------
<C> <S> <C> <C>
Alabama -- 4.4%
$5,935,000 Boaz Industrial Development Board (Parker-Hannifin Corporation Aa-2 $ 5,935,000
Project), Variable Rate Demand Bonds, 3.350%, 9/01/12+
8,000,000 The Educational Building Authority of the City of Homewood, VMIG-1 8,000,000
Educational Facilities Revenue Bonds (Samford University Series 1996),
Variable Rate Demand Notes, 3.450%, 12/01/21+
4,000,000 Marshall County Special Obligation School Refunding Warrants, A-1+ 4,000,000
Series 1994, Variable Rate Demand Bonds, 3.350%, 2/01/12+
4,900,000 McIntosh Industrial Development Board, Pollution Control Revenue A-1+ 4,900,000
(Ciba-Geigy Corporation), Variable Rate Demand Bonds,
3.500%, 7/01/04+
- -----------------------------------------------------------------------------------------------------------------------
Arizona -- 8.5%
7,500,000 Apache County Industrial Development Authority VMIG-1 7,500,000
(Tucson Electric Power Co.) Series B, Variable Rate
Demand Bonds, 3.300%, 12/15/18+
9,380,000 Maricopa County, Arizona Pollution Control Corporation, A-1+ 9,380,000
Pollution Control Revenue Refunding Bonds
(Arizona Public Service Company Palo Verde Project),
1994 Series F, Variable Rate Demand Bonds, 3.450%, 5/01/29+
2,300,000 Maricopa County, Arizona Pollution Control Corporation, A-1+ 2,300,000
Pollution Control Revenue Refunding Bonds
(Arizona Public Service Company Palo Verde Project),
1994 Series B, Variable Rate Demand Bonds, 3.450%, 5/01/29+
3,500,000 Arizona School District Tax Anticipation Note Financing Program, SP-1+ 3,511,470
Tempe Elementary School District No. 3 of Maricopa County, Arizona,
Series 1996C, 4.350%, 7/30/97
5,000,000 Arizona School District Tax Anticipation Note Financing Program, SP-1+ 5,016,385
Peoria Unified School District No. 11 of Maricopa County, Arizona,
Series 1996C, 4.350%, 7/30/97
10,000,000 Arizona School District Tax Anticipation Note Financing Program, SP-1+ 10,016,052
Paradise Valley Unified School District No. 69 of
Maricopa County, Arizona, 4.400%, 7/31/97
6,400,000 Sunset Ranch Certificate Trust Certificates of Participation, VMIG-1 6,400,000
1991 Series A, Variable Rate Demand Bonds, 3.250%, 12/01/27+
- -----------------------------------------------------------------------------------------------------------------------
Arkansas -- 0.6%
3,100,000 Arkansas Hospital Equipment Finance Authority VMIG-1 3,100,000
(Washington Regional Medical Center),
Variable Rate Demand Bonds, 3.350%, 10/01/98+
26
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Nuveen Municipal Money Market Fund
February 28, 1997 Annual Report
Principal Amortized
Amount Description Ratings* Cost
<S> <C> <C> <C>
- -----------------------------------------------------------------------------------------------------------------------
California -- 2.4%
$ 3,000,000 State of California 1996-97 Revenue Anticipation Notes, 4.500%, 6/30/97 MIG-1 $ 3,012,153
9,400,000 Regional Airports Improvement Corporation Facilities, Sublease Revenue A-1+ 9,400,000
Bonds, Issue of 1985, Lax Two Corporation (Los Angeles International
Airport), Variable Rate Demand Bonds, 3.500%, 12/01/25+
- -----------------------------------------------------------------------------------------------------------------------
Connecticut -- 2.9%
15,000,000 Connecticut State Special Assessment Unemployment Compensation VMIG-1 15,000,000
Advance Fund Revenue Bonds, Series 1993C,Variable Rate Demand
Bonds, 3.900%, 11/15/01+, (Mandatory put 7/01/97)
- -----------------------------------------------------------------------------------------------------------------------
District of Columbia -- 3.0%
3,000,000 District of Columbia General Obligation General Fund Recovery Bonds, VMIG-1 3,000,000
Series 1991B, Variable Rate Demand Bonds, 3.500%, 6/01/03+
2,000,000 District of Columbia General Obligation Series 1992A-6, Variable Rate VMIG-1 2,000,000
Demand Bonds, 3.550%, 10/01/07+
7,000,000 District of Columbia General Obligation Series 1992A-5, Variable Rate VMIG-1 7,000,000
Demand Bonds, 3.550%, 10/01/07+
3,400,000 District of Columbia General Obligation Series 1992A-2, Variable Rate VMIG-1 3,400,000
Demand Bonds, 3.550%, 10/01/07+
- -----------------------------------------------------------------------------------------------------------------------
Florida -- 5.9%
17,000,000 Florida Housing Finance Agency, Multi-Family 1985 Series D VMIG-1 17,000,000
(Kings Colony), Variable Rate Demand Bonds, 3.350%, 8/01/06+
7,000,000 Gulf Breeze Series 1995 A (Florida Municipal Bond Fund), Variable A-1 7,000,000
Rate Demand Bonds, 3.350%, 3/31/21+
6,200,000 Miami Health Facilities Authority (Miami Jewish Home and Aa-3 6,200,000
Hospital for the Aged, Inc.) Series 1992, Variable Rate Demand
Bonds, 3.350%, 3/01/12+
- -----------------------------------------------------------------------------------------------------------------------
Georgia -- 4.7%
7,215,000 Housing Authority of Clayton County, Tax-Exempt Adjustable Mode Aa-2 7,215,000
Multifamily Housing Revenue Refunding Bonds, Series 1996
(BS Partners LP Project), Variable Rate Demand Bonds,
3.350%, 9/01/26+
3,000,000 Columbia Elderly Authority, Residential Care Facilities Revenue Bonds Aa-3 3,000,000
(Augusta Resource Center on Aging Inc.),
Variable Rate Demand Bonds, 3.350%, 1/01/21+
10,705,000 Housing Authority of the County of DeKalb, Georgia, Multifamily Housing P-1 10,705,000
Revenue Refunding Bonds (Lenox Pointe Project), Series 1996A, Variable
</TABLE> Rate Demand Bonds, 3.350%, 11/01/23+
27
<PAGE>
<TABLE>
<CAPTION>
Portfolio of Investments -- continued
Tax--Exempt
Principal Amortized
Amount Description Ratings* Costs
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Georgia -- continued
$ 3,200,000 Fulco Hospital Authority (St. Joseph's Hospital of Atlanta) 1989 Revenue VMIG-1 $ 3,200,000
Anticipation Certificates, Commercial Paper, 3.400%, 5/08/97
- -----------------------------------------------------------------------------------------------------------------------
Illinois -- 1.4%
5,000,000 Illinois Development Finance Authority (Jewish Charities) Fiscal 1996- A-1+ 5,000,000
1997B, Variable Rate Demand Notes, 3.350%, 6/30/97
2,000,000 City of Chicago, Chicago-O'Hare International Airport, Special Facility P-1 2,000,000
Revenue Bonds (American Airlines, Inc. Project), Series 1983C, Variable
Rate Demand Bonds, 3.450%, 12/01/17+
- -----------------------------------------------------------------------------------------------------------------------
Kansas -- 1.2%
6,000,000 Manhattan Industrial Development Board (Parker-Hannifin Corporation), Aa-2 6,000,000
Variable Rate Demand Bonds, 3.350%, 9/01/09+
- -----------------------------------------------------------------------------------------------------------------------
Kentucky -- 3.5%
3,000,000 Kentucky Governmental Agencies, 1996 Cash Flow Borrowing Program, N/R 3,001,420
Certificates of Participation, Tax and Revenue Anticipation Notes,
4.300%, 6/30/97
15,000,000 Louisville and Jefferson County Metropolitan Sewer District 1996A, SP-1 15,000,000
Variable Rate Demand Bonds, 3.350%, 3/27/97
- -----------------------------------------------------------------------------------------------------------------------
Louisiana -- 2.1%
7,000,000 Louisiana Public Facilities Authority (Schwegmann Westside Expressway A-2 7,000,000
Project) Industrial Development Revenue, Variable Rate Demand Bonds,
3.550%, 12/01/12+
4,000,000 Hammond Industrial Development Board (Schwegmann Westside A-2 4,000,000
Expressway Project), Variable Rate Demand Bonds, 3.550%, 11/01/14+
- -----------------------------------------------------------------------------------------------------------------------
Maryland -- 4.6%
14,000,000 Maryland Economic Development Corporation, Adjustable Rate Pooled A-1+ 14,000,000
Financing (Maryland Municipal Bond Fund) Series 1995, Variable Rate
Demand Bonds, 3.300%, 6/01/20+
9,940,000 Maryland Industrial Development (Baltimore International Culinary A-1 9,940,000
College), Variable Rate Demand Bonds, 3.550%, 5/01/24+
- -----------------------------------------------------------------------------------------------------------------------
Massachusetts -- 2.4%
12,600,000 The Commonwealth of Massachusetts, Dedicated Income Tax Bonds, VMIG-1 12,600,000
Fiscal Recovery Loan, Act of 1990, Series B, Variable Rate Demand
Bonds, 3.400%, 12/01/97
====
28
</TABLE>
<PAGE>
Nuveen Municipal Money Market Fund
February 28, 1997 Annual Report
<TABLE>
<CAPTION>
Principal Amortized
Amount Description Ratings* Cost
- -----------------------------------------------------------------------------------------------------------------------
<C> <S> <C> <C>
Michigan -- 6.2%
$ 1,200,000 Michigan State Strategic Fund Pollution Control (Consumers Power P-1 $ 1,200,000
Company), Variable Rate Demand Bonds, 3.450%, 4/15/18+
7,000,000 Detroit City School District Wayne County State School Aid Notes SP-1+ 7,006,231
(Limited Tax General Obligation), Series 1996, 4.500%, 5/01/97
11,800,000 Detroit Downtown Development Authority (Millender Center Project), VMIG-1 11,800,000
Variable Rate Demand Bonds, 3.500%, 12/01/10+
12,000,000 Regents of The University of Michigan, Hospital Revenue Bonds, Series VMIG-1 12,000,000
1995A, Adjustable Rate Demand Bonds, 3.500%, 12/01/27+
- -----------------------------------------------------------------------------------------------------------------------
Minnesota -- 2.4%
5,000,000 Bloomington Port Authority, Tax Increment Revenue Refunding Bonds VMIG-1 5,000,000
(Mall of America Project) Series 1995A, Variable Rate Demand
Bonds, 3.350%, 2/01/13+
7,500,000 St. Paul Housing and Redevelopment Authority, Parking Revenue VMIG-1 7,500,000
Bonds, Series 1995B, Variable Rate Demand Bonds, 3.430%, 8/01/17+
- -----------------------------------------------------------------------------------------------------------------------
Missouri -- 6.2%
7,000,000 Health and Educational Facilities Authority of the State of Missouri, A-1+ 7,000,000
Health Facilities Revenue Bonds (St. Francis' Medical Center),
Series 1996A, Variable Rate Demand Bonds, 3.400%, 6/01/26+
1,450,000 Health and Educational Facilities Authority of the State of Missouri, VMIG-1 1,450,000
Educational Facilities Revenue Bonds (Drury College),
Series 1996A, Variable Rate Demand Bonds, 3.450%, 8/15/21+
10,700,000 Missouri Health and Educational Facilities Authority, Health Facilities A-1+ 10,700,000
Revenue Bonds (SSM Health Care Project), Series 1995B, Variable
Rate Demand Obligations, 3.300%, 6/01/22+
3,500,000 Kansas City Industrial Development (Research Health System), Variable VMIG-1 3,500,000
Rate Demand Bonds, 3.500%, 4/15/15+
1,100,000 Kansas City Industrial Development Authority (Research Health System), VMIG-1 1,100,000
Variable Rate Demand Bonds, 3.500%, 10/15/15+
8,300,000 St. Louis Land Clearance Redevelopment Authority, Parking Facility VMIG-1 8,300,000
Revenue Refunding Bonds, Series 1996, Variable Rate Demand Bonds,
3.600%, 9/01/19+
- -----------------------------------------------------------------------------------------------------------------------
Nebraska -- 0.9%
4,430,000 Scotts Bluff County Hospital Authority, Elderly Residential Facility (West A-1 4,430,000
Village), GNMA, Variable Rate Demand Bonds, 3.500%, 12/01/31+
29
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Portfolio of Investments -- continued
Tax--Exempt
Principal Amortized
Amount Description Ratings* Costs
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Nevada -- 1.9%
$ 10,000,000 Clark County Airport System, Refunding Revenue Bonds, Series 1993A, VMIG-1 $ 10,000,000
Variable Rate Demand Bonds, 3.250%, 7/01/12+
- -----------------------------------------------------------------------------------------------------------------------
New York -- 1.4%
7,000,000 New York City Commercial Paper, Series J-3, 3.350%, 3/17/97 A-1+ 7,000,000
- -----------------------------------------------------------------------------------------------------------------------
North Carolina -- 1.7%
9,000,000 North Carolina Eastern Municipal Power Agency, Power System A-1+ 9,000,000
Revenue, Series 1988B, Commercial Paper, 3.500%, 4/10/97
- -----------------------------------------------------------------------------------------------------------------------
Ohio -- 3.7%
10,000,000 Ohio School Districts, 1996 Cash Flow Borrowing Program, Certificates MIG-1 10,016,875
of Participation, Revenue Anticipation Notes of Certain Ohio School
Districts, Series B, 4.530%, 6/30/97
5,000,000 Dublin City School District, Franklin, Delaware and Union Counties, MIG-1 5,006,798
Ohio, School Building Construction and Improvement Notes, Series
1996 (General Obligation -- Unlimited Tax), 4.000%, 6/10/97
4,000,000 University of Cincinnati General Receipt Bond Anticipation Notes, MIG-1 4,000,906
Series S1, 3.750%, 3/20/97
- -----------------------------------------------------------------------------------------------------------------------
Oregon -- 1.6%
8,000,000 Port of Morrow (Portland G.E. Company Boardman Project), Variable Rate VMIG-1 8,000,000
Demand Bonds, 3.500%, 10/01/13+
- -----------------------------------------------------------------------------------------------------------------------
Pennsylvania -- 3.6%
1,635,000 Allegheny County Hospital Development Authority (Presbyterian- VMIG-1 1,635,000
University Health System), Variable Rate Demand Bonds,
3.350%, 3/01/18+
3,370,000 Montgomery County Higher Education and Health Authority, Series VMIG-1 3,370,000
1995 (Philadelphia Presbytery Homes, Inc.), Variable Rate Demand
Bonds, 3.350%, 7/01/25+
8,000,000 City of Philadelphia, Pennsylvania, General Obligation Bonds, Series VMIG-1 8,000,000
1990, Commercial Paper, 3.500%, 4/07/97
5,345,000 Washington County Authority, Higher Education Pooled Equipment VMIG-1 5,345,000
Lease Revenue Bonds, Series 1985A, Variable Rate Demand Bonds,
3.350%, 11/01/05+
- -----------------------------------------------------------------------------------------------------------------------
South Dakota -- 2.3%
11,935,000 South Dakota Health and Education Facility (McKennan Hospital), Series VMIG-1 11,935,000
1994, Variable Rate Demand Revenue Bonds, 3.350%, 7/01/14+
=====
30
</TABLE>
<PAGE>
Nuveen Municipal Money Market Fund
February 28, 1997 Annual Report
<TABLE>
<CAPTION>
Principal Amortized
Amount Description Ratings* Cost
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Tennessee -- 5.6%
$16,000,000 The Public Building Authority of the City of Clarksville, Tennessee, A-1+ $16,000,000
Adjustable Rate Pooled Financing Revenue Bonds, Series 1994
(Tennessee Municipal Bond Fund), Variable Rate Demand Bonds,
3.300%, 6/01/24+
4,675,000 Loudon Water and Sewer Revenue Refunding Bonds, Series 1996, Aa-2 4,675,000
Variable Rate Demand Bonds, 3.350%, 9/01/06+
8,000,000 The Public Building Authority of the County of Montgomery, Tennessee, P-1 8,000,000
Adjustable Rate Pooled Financing Revenue Bonds, Series 1996
(Montgomery County Loan), 3.300%, 7/01/19+
- -----------------------------------------------------------------------------------------------------------------------
Texas -- 5.8%
6,000,000 State of Texas Tax and Revenue Anticipation Notes, Series 1996, MIG-1 6,035,810
4.750%, 8/29/97
3,000,000 Texas Health Facilities Development Corporation (North Texas Pooled VMIG-1 3,000,000
Health Program), Variable Rate Demand Bonds, 3.350%, 5/31/25+
1,700,000 Angelina and Neches River Authority, Solid Waste Disposal, Variable P-1 1,700,000
Rate Demand Bonds, 3.450%, 5/01/14+
2,700,000 Guadalupe-Blanco River Authority, Pollution Control Revenue Refunding VMIG-1 2,700,000
Bonds (Central Power and Light Company Project), Series 1995,
Variable Rate Demand Bonds, 3.500%, 11/01/15+
8,400,000 North Central Texas Health Facilities Development Corporation, Hospital A-1 8,400,000
Revenue Bonds, Series 1985-B (Methodist Hospitals of Dallas),
Variable Rate Demand Bonds, 3.450%, 10/01/15+
4,900,000 Plano Health Facilities Development Corporation, Unit Priced Demand VMIG-1 4,900,000
Adjustable Hospital Revenue Bonds (Children's and Presbyterian
Healthcare Center of North Texas Project), Commercial Paper,
3.500%, 5/27/97
3,350,000 Sabine River Authority of Texas, Collateralized Pollution Control Revenue VMIG-1 3,350,000
Refunding Bonds (Texas Utilities Electric Company Project), Series
1996A, Variable Rate Demand Bonds, 3.500%, 3/01/26+
- -----------------------------------------------------------------------------------------------------------------------
Washington -- 5.0%
13,745,000 Washington State Housing Finance Commission, Nonprofit Revenue A-1 13,745,000
Bonds (Emerald Heights Project), Series 1990, Variable Rate Demand
Bonds, 3.450%, 1/01/21+
3,200,000 Spokane County, Washington, Current Expense Fund Tax Anticipation N/R 3,200,000
Notes, Series 1996A, 4.000%, 6/30/97
9,000,000 Washington Student Loan Agency, Series 1984A, Variable Rate Demand VMIG-1 9,000,000
Bonds, 3.550%, 1/01/01+
</TABLE>
=====
31
<PAGE>
<TABLE>
<CAPTION>
Portfolio of Investments -- continued
Tax--Exempt
Principal Amortized
Amount Description Ratings* Costs
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Wisconsin -- 3.7%
$ 1,000,000 Wisconsin Health and Educational Facilities Authority, Series 1996B A-1 $ 1,000,000
(Riverview Hospital Association Wisconsin Rapids), Variable Rate
Demand Bonds, 3.500%, 10/01/26+
4,000,000 Beaver Dam Unified School District Dodge County, Wisconsin, Bond MIG-1 4,004,620
Anticipation Notes, 3.850%, 10/14/97
10,000,000 Milwaukee Short-Term School Order Notes, Series 1996B, Revenue MIG-1 10,033,114
Anticipation Notes, 4.250%, 8/21/97
3,805,000 River Falls Commercial Development Revenue Refunding (Erdeco Aa-2 3,805,000
Partnership Project), Variable Rate Demand Bonds,
3.430%, 11/01/13+
- -----------------------------------------------------------------------------------------------------------------------
$513,415,000 Total Investments -- 99.6% 513,576,834
- -----------------------------------------------------------------------------------------------------------------------
Other Assets Less Liabilities -- 0.4% 1,826,224
-------------------------------------------------------------------------------------------------------
Net Assets -- 100% $515,403,058
=======================================================================================================
. Ratings (not covered by the report of independent public accountants): Using
the higher of Standard & Poor's or Moody's rating.
N/R--Investment is not rated.
+ The security has a maturity of more than one year, but has
variable rate and demand features which qualify it as a short-
term security. The rate disclosed is that currently in effect.
This rate changes periodically based on market conditions or a
specified market index.
</TABLE>
32
See accompanying notes to financial statements.
<PAGE>
Statement of Net Assets Nuveen Municipal Money Market Fund
February 28, 1997 February 28, 1997 Annual Report
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------
<S> <C>
Assets
Investments in short-term municipal securities, at amortized cost (note 1) $513,576,834
Receivables:
Interest 2,982,175
Investments sold 430,000
Other assets 19,375
- --------------------------------------------------------------------------------------------------------
Total assets 517,008,384
- --------------------------------------------------------------------------------------------------------
Liabilities
Cash overdraft 175,596
Accrued expenses:
Management fees (note 3) 157,550
Other 96,628
Dividends payable 1,175,552
- --------------------------------------------------------------------------------------------------------
Total liabilities 1,605,326
- --------------------------------------------------------------------------------------------------------
Net assets applicable to shares outstanding (note 4) $515,403,058
========================================================================================================
Shares outstanding 515,403,058
========================================================================================================
Net asset value, offering and redemption
price per share (net assets divided by shares outstanding) $ 1.00
========================================================================================================
</TABLE>
=====
33 See accompanying notes to financial statements.
<PAGE>
Statement of Operations
Year ended February 28, 1997
<TABLE>
<CAPTION>
<S> <C>
- -------------------------------------------------------------------------------
Investment Income
Tax-exempt interest income (note 1) $18,993,553
- -------------------------------------------------------------------------------
Expenses
Management fees (note 3) 2,136,925
Shareholders' servicing agent fees and expenses 21,713
Custodian's fees and expenses 110,419
Directors' fees and expenses (note 3) 6,220
Professional fees 24,588
Shareholders' reports -- printing and mailing expenses 47,577
Federal and state registration fees 3,235
Other expenses 18,319
- -------------------------------------------------------------------------------
Total expenses 2,368,996
- -------------------------------------------------------------------------------
Net investment income 16,624,557
Net realized gain from investment transactions (notes 1 and 2) 21,201
- -------------------------------------------------------------------------------
Net increase in net assets from operations $16,645,758
===============================================================================
</TABLE>
=====
34 See accompanying notes to financial statements.
<PAGE>
<TABLE>
<CAPTION>
Nuveen Municipal Money Market Fund
February 28, 1997 Annual Report
Statement of Changes in Net Assets
Year ended 2/28/97 Year ended 2/29/96
- ---------------------------------------------------------------------------------------------------------
<S> <C> <C>
Operations
Net investment income $ 16,624,557 $ 23,052,780
Net realized gain from investment transactions (notes 1 and 2) 21,201 9,200
- ---------------------------------------------------------------------------------------------------------
Net increase in net assets from operations 16,645,758 23,061,980
- ---------------------------------------------------------------------------------------------------------
Distributions To Shareholders (Note 1) (16,645,758) (23,061,980)
- ---------------------------------------------------------------------------------------------------------
Share Transactions
(at a constant net asset value of $1 per share) (note 1)
Net proceeds from sale of shares 2,793,785,234 3,673,148,811
Net proceeds from shares issued to shareholders
due to reinvestment of distributions 6,431,423 7,738,987
- ---------------------------------------------------------------------------------------------------------
2,800,216,657 3,680,887,798
- ---------------------------------------------------------------------------------------------------------
Cost of shares redeemed (2,894,867,006) (3,830,078,044)
- ---------------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets from share transactions (94,650,349) (149,190,246)
Net assets at the beginning of the year 610,053,407 759,243,653
- ---------------------------------------------------------------------------------------------------------
Net assets at the end of the year $ 515,403,058 $ 610,053,407
=========================================================================================================
======
35 See accompanying notes to financial statements.
</TABLE>
<PAGE>
Notes to Financial Statements
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 28, 1997, the dollar-weighted average life was 30 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. Any securities so
purchased are subject to market fluctuation during this period. The Fund has
instructed the custodian to segregate assets in a separate account with a
current value at least equal to the amount of its purchase commitments. At
February 28, 1997, 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
Tax-exempt 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 the requirements of the Internal Revenue Code
applicable to regulated investment companies and to distribute to shareholders
all of its tax-exempt net investment income, including any net realized capital
gains from investment transactions. Therefore, no federal income tax provision
is required. Furthermore, the Fund intends to satisfy conditions which will
enable interest from municipal securities, which is exempt from regular federal
income tax, to retain such tax-exempt status when distributed to shareholders of
the Fund. All income dividends paid during the fiscal year ended February 28,
1997, have been designated Exempt Interest Dividends.
=====
36
<PAGE>
Nuveen Municipal Money Market Fund
February 28, 1997 Annual Report
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 conditions of the Approved Banks 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
The Fund may invest in certain derivative financial instruments including
futures, forward, swap, and option contracts, and other financial instruments
with similar characteristics. Although the Fund is authorized to invest in such
financial instruments, and may do so in the future, it did not make any such
investments during the fiscal year ended February 28, 1997.
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 operations during the reporting period.
2. SECURITIES TRANSACTIONS
Purchases and sales (including maturities) of investment securities during the
fiscal year ended February 28, 1997, aggregated $2,137,344,449 and
$2,231,082,075, respectively.
For Federal income tax purposes, the cost of investments owned at February 28,
1997, was the same as the cost for financial reporting purposes.
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
an annual management fee, payable monthly, as follows:
<TABLE>
<CAPTION>
Average daily net asset value Management fee
- ------------------------------------------------------------------------
<S> <C>
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 net assets over $2 billion .325 of 1
- ---------------------------------------------------------------------
</TABLE>
=====
37
<PAGE>
Notes to Financial Statements -- continued
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 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 28, 1997, the Fund had 5 billion shares of $.01 par value stock
authorized. Net assets consisted of $515,403,058 paid-in capital.
5. INVESTMENT COMPOSITION
The Fund invests in municipal securities which include general obligation and
revenue bonds. At February 28, 1997, the revenue sources by municipal purpose,
expressed as a percent of total investments, were as follows:
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------
<S> <C>
Revenue Bonds:
Health Care Facilities 20%
Pollution Control Facilities 19
Housing Facilities 8
Educational Facilities 6
Transportation 5
Water/Sewer Facilities 4
Electrical Utilities 2
Lease Rental Facilities 1
Other 16
General Obligation Bonds 19
- ---------------------------------------------------------------------
100%
=====================================================================
</TABLE>
At February 28, 1997, 86% of the investments owned by the Fund have credit
enhancements (letters of credit, guarantees or insurance) issued by third party
domestic or foreign banks or other institutions (see note 1).
For additional information regarding each investment security, refer to the
Portfolio of Investments.
=====
38
<PAGE>
Financial Highlights
39
<PAGE>
FINANCIAL HIGHLIGHTS
Selected data for a share outstanding throughout each period is
as follows:
<TABLE>
<CAPTION>
Income from
Investment Operations Less Distributions
--------------------- ------------------
Net
Net realized and Dividends Net Total
asset unrealized from tax- asset return
value Net gain (loss) exempt net Distributions value on net
beginning investment from investment from capital end of asset
of period income investments income gains period value
- -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Year ended,
2/28/97 $1.000 $.031 $ -- $(.031) $ -- $1.000 3.11%
2/29/96 1.000 .034 -- (.034) -- 1.000 3.42
2/28/95 1.000 .027 -- (.027) -- 1.000 2.69
2/28/94 1.000 .020 -- (.020) -- 1.000 2.04
2/28/93 1.000 .026 -- (.026) -- 1.000 2.57
10/1/91 to 2/29/92 1.000 .016 -- (.016) -- 1.000 1.56
Year ended,
9/30/91 1.000 .049 -- (.049) -- 1.000 4.85
9/30/90 1.000 .058 -- (.058) -- 1.000 5.75
9/30/89 1.000 .060 -- (.060) -- 1.000 6.00
9/30/88 1.000 .049 -- (.049) -- 1.000 4.89
- -------------------------------------------------------------------------------------------------------------------------
*Annualized.
</TABLE>
40
<PAGE>
Nuveen Municipal Money Market Fund
February 28, 1997 Annual Report
<TABLE>
<CAPTION>
Ratios/Supplemental Data
- -----------------------------------------------
Ratio
of net
Ratio of investment
Net assets expenses income to
end of period to average average
(in thousands) net assets net assets
- -----------------------------------------------
<S> <C> <C>
$ 515,403 .44% 3.10%
610,053 .44 3.43
759,244 .44 2.65
975,833 .42 2.04
1,597,014 .40 2.58
2,332,021 .39* 3.71*
1,927,583 .38 4.81
1,800,966 .40 5.74
1,756,725 .39 6.02
2,044,479 .39 4.90
- -----------------------------------------------
</TABLE>
41
<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 28, 1997, 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 Funds' management. Our responsibility is to express an
opinion on these financial statements and financial highlights based on our
audits.
We conducted our audits in accordance with 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 28, 1997, by correspondence with the custodian. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the net assets of the Nuveen
Tax-Exempt Money Market Fund, Inc. as of February 28, 1997, 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 11, 1997
42
<PAGE>
Fund Information
Board of Directors
Robert P. Bremner
Lawrence H. Brown
Anthony T. Dean
Anne E. Impellizzeri
Margaret K. Rosenheim
Peter R. Sawers
William J. Schneider
Timothy R. Schwertfeger
Fund Manager
Nuveen Advisory Corp.
333 West Wacker Drive
Chicago, IL 60606
Custodian
The Chase Manhattan Bank
4 New York Plaza
New York, NY 10004-2413
Transfer Agent,
Shareholder Services and
Dividend Disbursing Agent
Shareholder Services, Inc.
Nuveen Investor Services
P.O. Box 5330
Denver, CO 80217-5330
(800) 621-7227
Legal Counsel
Fried, Frank, Harris, Shriver
& Jacobson
Washington, DC
Public Accountants
Arthur Andersen LLP
Chicago, Illinois
43
<PAGE>
Serving Investors
for Generations
[PHOTO OF Since our founding in 1898, John Nuveen & Co. has been
JOHN NUVEEN, SR. synonymous with investments that withstand the test of time.
APPEARS HERE] Today, we offer a broad range of investments designed for
mature investors whose portfolios are the principal source of
John Nuveen, Sr. their ongoing financial security. More than 1.3 million
investors have entrusted Nuveen to help them maintain the
lifestyle they currently enjoy.
A value investing approach -- purchasing securities of strong
companies and communities that represent good long-term
value -- is the cornerstone of Nuveen's investment
philosophy. It is a careful, long-term strategy that offers
the potential for attractive returns with moderated risk.
Successful value investing begins with in-depth research and
a discerning eye for marketplace opportunity. Nuveen's team
of investment professionals is backed by the discipline,
resources and expertise of almost a century of investment
experience, including one of the most recognized research
departments in the industry.
To meet the unique circumstances and financial planning needs
of mature investors, Nuveen offers a wide array of taxable
and tax-free investment products -- including equity and
fixed-income mutual funds, unit trusts, exchange-traded
funds, individual managed account services, and cash
management products.
NUVEEN
John Nuveen & Co. Incorporated
333 West Wacker Drive
Chicago, IL 60606-1286
(800) 621-7227
