<PAGE>
NUVEEN
Money Market
Funds
Prospectus/Annual Report
Dependable, tax-free income
to help you keep more of
what you earn.
[PHOTO APPEARS HERE]
Tax-Exempt
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Contents
1 Dear Shareholder
3 Prospectus
5 Fund Expenses
5 Highlights
7 Financial Highlights
8 Yield
8 The Fund and its Investment Objective
8 Investment Policies
13 Management of the Fund
14 Net Asset Value
14 Dividends
15 Suitability
15 How to Buy Fund Shares
16 Other Shareholder Programs
17 How to Redeem Fund Shares
19 Taxes
21 General Information
22 Annual Report Financial Section
23 Portfolio of Investments
28 Statement of Net Assets
29 Statement of Operations
30 Statement of Changes in Net Assets
31 Notes to Financial Statements
33 Financial Highlights
34 Report of Independent
Public Accountants
36 Building Better Portfolios
37 Fund Information
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[Photo of Timothy R. Schwertfeger appears here]
Timothy R. Schwertfeger
Chairman of the Board
Wealth takes
a lifetime
to build.
Once achieved,
it should be
preserved.
Dear Shareholder
It is a pleasure to report to you on the performance of the Nuveen Tax-Exempt
Money Market Fund, Inc. for the year ended February 28, 1998, and to send you an
updated prospectus. Inside this report 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 the 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 an annual tax-
free yield of 3.11%, equivalent to a taxable yield of 4.51% for investors in the
31% federal income tax bracket.
MARKET REVIEW
Over the past two years, many financial markets have been unusually strong.
Short-term rates trended higher early in 1997 on expectations that the Federal
Reserve Board would take steps to tighten monetary policy and slow the pace of
economic growth. In March, the Fed raised its target rate for the federal funds
rate by 25 basis points, but then took no further action. Short-term securities
reversed course and yields trended downward for the remainder of the fund's
fiscal year. Still, falling commodity prices kept producer prices in check,
while low import prices - due in part to the weakness in Asian markets - limited
U.S. companies' ability to raise consumer prices. This combination has kept
inflation subdued and the Federal Reserve "on hold."
PORTFOLIO ADJUSTMENTS
During the third quarter of 1997, many short-term buyers seemed reluctant to
extend their average maturities, expecting the Federal Reserve to raise rates.
We were able to take advantage of this temporary demand shortage dur-
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1
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"It's still uncer-
tain whether the
Fed will deem
it necessary to
raise short-term
rates, and if
they hold the
line, money
market rates
should remain
relatively stable
in 1998."
ing the quarter's large new issue period and the fund was able to buy tax-exempt
notes at historically cheap levels. As a result, the fund's average maturity
during the third quarter of 1997 increased somewhat.
Beginning in the fourth quarter of 1997, many Asian countries experienced
economic problems and severe currency devaluations. We continue to watch the
Asian situation - and Japanese banks in particular - for any additional credit
erosions and possible rating changes. During this time, the Nuveen Money Market
Funds, working with Nuveen Research, continued to closely monitor those issues
in the portfolios that were additionally secured by letters of credit from
Japanese banks. As a result, while many other money market funds were
eliminating all Japanese-bank let-ters of credit, the fund maintained its
current positions based on our credit analysis.
SHORT-TERM OUTLOOK
Looking forward, it's likely that upward pressure on wages may ultimately push
inflation up a bit. It's still uncertain whether the Fed will deem it necessary
to raise short-term rates, and if they hold the line, money market rates should
remain relatively stable in 1998.
On behalf of everyone at Nuveen, I thank you for your continued confidence in us
and our family of investments.
Sincerely,
/s/ Timothy R. Schwertfeger
Timothy R. Schwertfeger
Chairman of the Board
April 13, 1998
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2
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Nuveen Tax-Exempt
Money Market Fund, Inc.
Prospectus
April 28, 1998
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 28, 1998, 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
----------
5 Fund Expenses
5 Highlights
7 Financial Highlights
8 Yield
8 The Fund and its Investment Objective
8 Investment Policies
13 Management of the Fund
14 Net Asset Value
14 Dividends
15 Suitability
15 How to Buy Fund Shares
16 Other Shareholder Programs
17 How to Redeem Fund Shares
19 Taxes
21 General Information
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, 1998.
Shareholder transaction expenses
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Sales load imposed on purchases None
Sales load imposed on reinvested dividends None
Redemption fees None
Exchange fees None
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Annual operating expenses (as a percentage of average daily net
assets)
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Management fees .40%
12b-1 fees None
Other operating expenses .04%
Total expenses .44%
The purpose of the foregoing tables is to help the investor
understand all expenses and fees that an investor in the Fund will
bear directly or indirectly. As discussed under "Management of the
Fund," the management fee is reduced or Nuveen Advisory Corp.
("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.
1 Year 3 Years 5 Years 10 Years
------------------------------------------------------------------
$5 $14 $25 $55
------------------------------------------------------------------
This example should not be considered a representation of past or
future expenses or performance. Actual expenses may be greater or
less than those shown. This example assumes that the percentage
amounts listed under Annual Operating Expenses remain the same in
each of the periods.
Highlights
Nuveen Tax-Exempt Money Market Fund, Inc. (the "Fund") is an open-
end, diversified management investment company with the objective
of providing, through investment in a professionally managed
portfolio of high quality short-term Municipal Obligations, as
high a level of current interest income exempt from federal income
tax as is consistent, in the view of the Fund's management, with
stability of principal and the maintenance of liquidity. The Fund
values its portfolio at amortized cost and seeks to maintain a net
asset value of $1.00 per share. There is no guarantee that this
value will be maintained. See "Net Asset Value" on page 14 and
"The Fund and Its Investment Objective" on page 8.
5
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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 19.
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 15.
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 17.
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 14.
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 13.
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 8.
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
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>
Operating performance Less distributions Ratios/Supplemental data
---------------------- ------------------------ --------------------------------------
Net
realized Ratio
Net and Dividends Net Total of net
asset unrealized from tax- asset return Ratio of investment
value Net gain (loss) exempt net Distributions value on net Net assets expenses income to
Year ended beginning investment from investment from capital end of asset end of period to average average
February 28/29, of period income investments income gains period value (a) (in thousands) net assets net assets
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1998 $1.00 $.03 $ -- $(.03) $ -- $1.00 3.27% $ 473,502 .44% 3.26%
1997 1.00 .03 -- (.03) -- 1.00 3.11 515,403 .44 3.10
1996 1.00 .03 -- (.03) -- 1.00 3.42 610,053 .44 3.43
1995 1.00 .03 -- (.03) -- 1.00 2.69 759,244 .44 2.65
1994 1.00 .02 -- (.02) -- 1.00 2.04 975,833 .42 2.04
1993 1.00 .03 -- (.03) -- 1.00 2.57 1,597,014 .40 2.58
1992 (b) 1.00 .02 -- (.02) -- 1.00 1.56 2,332,021 .39* 3.71*
1991 (c) 1.00 .05 -- (.05) -- 1.00 4.85 1,927,583 .38 4.81
1990 (c) 1.00 .06 -- (.06) -- 1.00 5.75 1,800,966 .40 5.74
1989 (c) 1.00 .06 -- (.06) -- 1.00 6.00 1,756,725 .39 6.02
====================================================================================================================================
</TABLE>
* Annualized.
(a) Total returns are calculated on net asset value and are not
annualized.
(b) For the five months ended February 29.
(c) For the fiscal year ended September 30.
7
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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, 1998, the Fund's
yield, effective yield and taxable equivalent yield (using the
maximum federal income tax rate of 39.6%) were 3.11%, 3.16% and
5.15%, 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.
8
<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
9
<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, 1998, the average maturity of the
Fund's portfolio ranged from 24 to 51 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.
10
<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.
11
<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.
12
<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:
Average daily net asset value Management fee
------------------------------------------------------------------
For the first $500 million .400 of 1%
For the next $500 million .375 of 1
For the next $1 billion .350 of 1
For net assets over $2 billion .325 of 1
------------------------------------------------------------------
All fees and expenses are accrued daily and deducted before
payment of dividends to investors. In addition to the management
fee of Nuveen Advisory, the Fund pays all other costs and expenses
of its operations.
The management fee will be reduced or Nuveen Advisory will assume
certain Fund expenses in an amount necessary to prevent the Fund's
total expenses (including Nuveen Advisory's management fee, but
excluding interest, taxes, fees incurred in acquiring and
disposing of portfolio securities and, to the extent permitted,
extraordinary expenses) in any fiscal year from exceeding .45 of
1% of the average daily net asset value of the Fund. For the
fiscal year ended February 28, 1998, 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 $36 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
13
<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.
14
<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.
15
<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 (the "Nuveen Funds"), into an identically registered
account provided that the Nuveen Fund into which shares are to be
exchanged is offered in the shareholder's state of residence and
that the shares to be exchanged have been held by the shareholder
for a period of at least 15 days. 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 constitutes a sale and
purchase of shares and may result in capital gain or loss. Before
exercising any exchange, you should obtain the Prospectus for the
Nuveen Fund into which shares are to be exchanged and read it
carefully. If the registration of the account for the Fund you are
purchasing is not exactly the same as that of the fund account
from which the exchange is made, written instructions from all
holders of the account from which the exchange is being made must
be received, with signatures guaranteed by a member of any
approved Medallion Guarantee Program or in such other manner as
may be acceptable to the Fund. You may also make exchanges by
telephone if a pre-authorized exchange authorization, as provided
on the account Application Form, is on file with Shareholder
Services, Inc., the Fund's shareholder service agent. The exchange
privilege may be modified or discontinued at any time.
16
<PAGE>
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.
The Fund has authorized one or more brokers to accept on its
behalf purchase and redemption orders. Such brokers are authorized
to designate other intermediaries to accept purchase and
redemption orders on the Fund's behalf. The Fund will be deemed to
have received a purchase or redemption order when an authorized
broker or, if applicable, a broker's authorized designee accepts
the order. Customer orders received by such broker (or their
designee) will be priced at the Fund's net asset value next
computed after they are accepted by an authorized broker (or their
designee). Orders accepted by an authorized broker (or their
designee) before the close of regular trading on the New York
Stock Exchange will receive that day's share price; orders
accepted after the close of trading will receive the next business
day's share price.
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.
17
<PAGE>
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 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.
18
<PAGE>
Redemption in Kind
The Fund has committed to pay in cash all redemption requests made
by each shareholder during any 90 day period up to the lesser of
$250,000 or 1% of the net asset value of the Fund at the beginning
of such period. This commitment is irrevocable without the prior
approval of the SEC and is a fundamental policy of the Fund which
may not be changed without shareholder approval. In the case of
redemption requests in excess of such amounts, the Board of
Directors reserves the right to have the Fund make payment in
whole or in part in securities or other assets of the Fund in case
of an emergency or any time a cash distribution would impair the
liquidity of the Fund to the detriment of the existing
shareholders. In this event, the securities would be valued in the
same manner as the portfolio of the Fund is valued. If the
recipient were to sell such securities, he or she would incur
brokerage charges.
Other Practices
The Fund may suspend the right of redemption or delay payment more
than seven days (a) during any period when the New York Stock
Exchange is closed (other than 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
invest-
19
<PAGE>
ment 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 purchase of shares may be considered to
have been made with borrowed funds even though such funds are not
directly traceable to the purchase of shares.
Tax-exempt income is taken into account in calculating the amount
of social security and railroad retirement benefits that may be
subject to federal income tax.
The Fund may invest in the type of private activity bonds the
interest on which is not federally tax-exempt to persons who are
"substantial users" of the facilities financed by such bonds or
who are "related persons" of such substantial users. Accordingly,
the Fund may not be an appropriate investment for shareholders who
are considered either a "substantial user" or a "related person"
thereof. Such persons should consult their tax advisers before
investing in the Fund.
The Fund may invest in private activity bonds, the interest on
which is a specific item of tax preference for purposes of
computing the alternative minimum tax on corporations and
individuals. This type of private activity bond includes most
industrial and housing revenue bonds. Shareholders whose tax
liability is determined under the alternative minimum tax will be
taxed on their share of the Fund's exempt-interest dividends that
were paid from income earned on these bonds. In addition, the
alternative minimum taxable income for corporations is increased
by 75% of the difference between an alternative measure of income
("adjusted current earnings") and the amount otherwise determined
to be alternative minimum taxable income. Interest on all
Municipal Obligations, and therefore all distributions by the Fund
that would otherwise be tax-exempt, is included in calculating a
corporation's adjusted current earnings.
The Fund is required in certain circumstances to withhold 31% of
taxable dividends and certain other payments paid to non-corporate
holders of shares who have not furnished to the Fund their correct
taxpayer identification number (in the case of individuals, their
social security number) and certain certificates, or who are
otherwise subject to back-up withholding.
The foregoing is a general and abbreviated summary of the
provisions of the Code and Treasury Regulations presently in
effect as they directly govern the taxation of the Fund and its
shareholders. These provisions are subject to change by
legislative or 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.
20
<PAGE>
State and Local Tax Aspects
The exemption from federal income tax for distributions of
interest income from Municipal Obligations which are designated
exempt interest dividends will not necessarily result in exemption
under the income or other tax laws of any state or local taxing
authority. The laws of the several states and local taxing
authorities vary with respect to the taxation of such
distributions, and shareholders of the Fund are advised to consult
their own tax advisers in that regard.
General Information
Investor Inquiries
Investor inquiries may be made directly of the Fund in writing or
by calling Nuveen, the Fund's distributor (nationwide (800) 858-
4084).
Custodian, Shareholder Services Agent and Transfer Agent
The custodian of the Fund's assets is The Chase Manhattan Bank, 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.
Nuveen Advisory and the transfer agent rely on computer systems to
manage the fund's investments, process shareholder transactions
and provide shareholder account maintenance. Because of the way
computers historically have stored dates, some of these systems
currently may not be able to correctly process activity occurring
in the year 2000. Nuveen Advisory is working with the fund's
service providers to adapt their systems to address this "year
2000 issue." Nuveen Advisory and the fund expect the necessary
work to be completed no later than December 1999, although we can
make no assurance with respect to the systems of the fund's
service providers.
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 provide 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.
21
<PAGE>
NUVEEN TAX-EXEMPT MONEY MARKET FUND, INC.
ANNUAL REPORT FINANCIAL SECTION
FEBRUARY 28, 1998
CONTENTS
23 Portfolio of Investments
28 Statement of Net Assets
29 Statement of Operations
30 Statement of Changes in Net Assets
31 Notes to Financial Statements
33 Financial Highlights
34 Report of Independent Public Accountants
____
22
<PAGE>
<TABLE>
<CAPTION>
Portfolio of Investments
February 28, 1998
Nuveen Tax-Exempt Money Market Fund, Inc.
Principal Amortized
Amount Description Ratings* Cost
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Alabama - 2.1%
$ 5,935,000 Boaz Industrial Development Board (Parker-Hannifin Corporation Project),
Variable Rate Demand Bonds, 3.500%, 9/01/12+ Aa-2 $ 5,935,000
3,955,000 Marshall County, Special Obligation School Refunding Warrants, Series 1994,
Variable Rate Demand Bonds, 3.450%, 2/01/12+ A-1+ 3,955,000
- ---------------------------------------------------------------------------------------------------------------------------
Arizona - 2.1%
5,000,000 Apache County Industrial Development, Pollution Control Revenue (Tucson
Electric), Series C, Variable Rate Demand Bonds, 3.400%, 12/15/18+ VMIG-1 5,000,000
5,000,000 Arizona School District, Financing Program, Paradise Valley Unified School
District No. 69 of Maricopa County, Arizona, Tax Anticipation Note,
4.600%, 6/30/98 SP-1+ 5,013,001
- ---------------------------------------------------------------------------------------------------------------------------
Connecticut - 3.2%
15,000,000 Connecticut State Special Assessment Unemployment Compensation Advance Fund
Revenue Bonds, Series 1993C, Commercial Paper, 3.900%, 7/01/98 VMIG-1 15,000,000
- ---------------------------------------------------------------------------------------------------------------------------
District of Columbia - 3.7%
6,200,000 District of Columbia General Obligation, Series 1992A-3, Variable Rate Demand
Bonds, 3.700%, 10/01/07+ VMIG-1 6,200,000
7,200,000 District of Columbia General Obligation, Series 1992A-4, Variable Rate Demand
Bonds, 3.700%, 10/01/07+ VMIG-1 7,200,000
4,200,000 District of Columbia General Obligation, Series 1992A-2, Variable Rate Demand
Bonds, 3.700%, 10/01/07+ VMIG-1 4,200,000
- ---------------------------------------------------------------------------------------------------------------------------
Florida - 8.4%
18,000,000 Florida Housing Finance Agency, Multi-Family, 1985 Series D (Kings Colony),
Variable Rate Demand Bonds, 3.500%, 8/01/06+ VMIG-1 18,000,000
6,955,000 Gulf Breeze, Series 1995 A (Florida Municipal Bond Fund), Variable Rate Demand
Bonds, 3.500%, 3/31/21+ A-1 6,955,000
3,000,000 Jacksonville Health Facilities Authority (River Garden Project), Variable
Rate Demand Bonds, 3.350%, 2/01/18+ A-1 3,000,000
5,800,000 Miami Health Facilities Authority (Miami Jewish Home and Hospital for the
Aged, Inc.), Series 1992, Variable Rate Demand Bonds, 3.500%, 3/01/12+ Aa-3 5,800,000
2,200,000 Palm Beach County Health Facility Authority (Pooled Hospital Loan Program),
Series 1985, Commercial Paper, 3.250%, 4/07/98 VMIG-1 2,200,000
4,000,000 The University Athletic Association, Inc., Capital Improvement Revenue Bonds,
Series 1990, Variable Rate Demand Bonds, 3.650%, 2/01/20+ VMIG-1 4,000,000
- ---------------------------------------------------------------------------------------------------------------------------
Georgia - 10.3%
5,000,000 Municipal Gas Authority of Georgia, Gas Revenue Bonds (Southern Portfolio I A-1+ 5,000,000
Project), Series D, Commercial Paper, 3.300%, 5/07/98
7,215,000 Housing Authority of Clayton County, Tax-Exempt Adjustable Mode, Multifamily
Housing Revenue Refunding Bonds, Series 1996 (BS Partners LP Project),
3.400%, 9/01/26+ Aa-2 7,215,000
8,000,000 Cobb County School District (Georgia), Short-Term Notes, Series 1998, 4.000%,
12/31/98 MIG-1 8,032,533
3,000,000 Columbia Elderly Authority, Residential Care Facilities, Revenue Bonds
(Augusta Resource Center on Aging Inc.), Variable Rate Demand Bonds,
3.500%, 1/01/21+ Aa-3 3,000,000
</TABLE>
____
23
<PAGE>
<TABLE>
<CAPTION>
Portfolio of Investments
February 28, 1998
Nuveen Tax-Exempt Money Market Fund, Inc.
Principal Amortized
Amount Description Ratings* Cost
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Georgia - continued
$ 4,800,000 Housing Authority of the County of DeKalb, Georgia, Multifamily Housing
Revenue Bonds (Crow Wood Arbor Associates, Limited Project), Series 1985Q,
Variable Rate Demand Bonds, 3.500%, 12/01/07+ A-1+ $ 4,800,000
10,705,000 Housing Authority of the County of Dekalb, Georgia, Multifamily Housing Revenue
Refunding Bonds (Lenox Pointe Project), Series 1996A, Variable Rate
Demand Bonds, 3.450%, 11/01/23+ P-1 10,705,000
10,000,000 Municipal Electric Authority of Georgia, Commercial Paper, Program General
Resolution Project, Bond Anticipation Note, Series A & B, 3.500%, 5/28/98 A-1+ 10,000,000
- ---------------------------------------------------------------------------------------------------------------------------
Illinois - 4.4%
10,000,000 City of Chicago, General Obligation Tender Notes, Series 1998, 3.550%, 2/04/99 SP-1+ 10,000,000
Decatur Water Revenue Bonds, Series 1985 (New South Water Treatment),
Commercial Paper:
5,700,000 3.800%, 5/13/98 VMIG-1 5,700,000
5,000,000 3.650%, 4/22/98 VMIG-1 5,000,000
- ---------------------------------------------------------------------------------------------------------------------------
Kansas - 1.3%
6,000,000 Manhattan Industrial Development Board (Parker-Hannifin Corporation), Variable
Rate Demand Bonds, 3.500%, 9/01/09+ Aa-2 6,000,000
- ---------------------------------------------------------------------------------------------------------------------------
Kentucky - 3.2%
15,000,000 Louisville and Jefferson County, Metropolitan Sewer District, Sewer and
Drainage System, Subordinated Revenue Notes, Series 1997A, 3.500%,
4/14/98 SP-1 15,000,000
- ---------------------------------------------------------------------------------------------------------------------------
Louisiana - 1.0%
4,800,000 New Orleans Aviation Board, Series 1993B, Variable Rate Demand Bonds,
3.550%, 8/01/16+ VMIG-1 4,800,000
- ---------------------------------------------------------------------------------------------------------------------------
Michigan - 5.4%
7,000,000 Michigan Strategic Fund, Limited Obligation Refunding Revenue Bonds
(The Detroit Edison Company Pollution Control Bonds Project),
Series 1995CC, Variable Rate Demand Bonds, 3.700%, 9/01/30+ A-1+ 7,000,000
11,800,000 Detroit Downtown Development Authority (Millender Center Project), Variable
Rate Demand Bonds, 4.200%, 12/01/10+ VMIG-1 11,800,000
7,000,000 The School District of the City of Kalamazoo, County of Kalamazoo,
State of Michigan, 1997 State Aid Notes (Limited Tax General
Obligation), 4.000%, 4/15/98 SP-1+ 7,002,525
- ---------------------------------------------------------------------------------------------------------------------------
Minnesota - 4.1%
5,000,000 Bloomington Port Authority, Tax Increment Revenue Refunding Bonds (Mall of
America Project), Series 1995A, Variable Rate Demand Bonds, 3.450%, 2/01/13+ VMIG-1 5,000,000
6,920,000 Minneapolis/St. Paul Housing and Redevelopment Authority, Health Care
(Children's Health Care), Series 1995, Variable Rate Demand Bonds,
3.850%, 8/15/25+ SP-1+ 6,920,000
7,500,000 St. Paul Housing and Redevelopment Authority, Parking Revenue Bonds,
Series 1995B, Variable Rate Demand Bonds, 3.550%, 8/01/17+ VMIG-1 7,500,000
- ---------------------------------------------------------------------------------------------------------------------------
Missouri - 7.5%
5,500,000 Health and Educational Facilities Authority of the State of Missouri, Health
Facilities Revenue Bonds (Bethesda Barclay), Series 1996A, Variable
Rate Demand Bonds, 3.950%, 8/15/26+ VMIG-1 5,500,000
</TABLE>
____
24
<PAGE>
<TABLE>
<CAPTION>
Portfolio of Investments
February 28, 1998
Nuveen Tax-Exempt Money Market Fund, Inc.
Principal Amortized
Amount Description Ratings* Cost
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Missouri - continued
$ 2,400,000 Health and Educational Facilities Authority of the State of Missouri,
Educational Facilities, St. Louis University, Series 1985, Readily
Adjustable Tax Exempt Securities, Adjustable Rate Demand Bonds,
3.750%, 12/01/05+ VMIG-1 $ 2,400,000
3,355,000 State Environmental Improvement and Energy Resources Authority of the
State of Missouri, Unit Priced Demand Adjustable Pollution Control
Revenue Bonds, Series 1985 A (Union Electric Company), Commercial Paper,
3.550%, 5/27/98 VMIG-1 3,355,000
3,800,000 The Industrial Development Authority of the County of Jackson, State of
Missouri, Recreational Facilities Revenue Bonds (YMCA of Greater Kansas
City Project), Series 1996A, Variable Rate Demand Bonds, 3.950%, A-1 3,800,000
12,000,000 The City of St. Louis, Missouri, Tax and Revenue Anticipation Notes, Payable
from the General Revenue Fund, Series 1997, 4.500%, 6/30/98 MIG-1 12,024,892
8,300,000 St. Louis Land Clearance Redevelopment Authority, Parking Facility Revenue
Refunding Bonds, Series 1996, Variable Rate demand Bonds, 4.100%, 9/01/19+ VMIG-1 8,300,000
- ---------------------------------------------------------------------------------------------------------------------------
Nebraska - 0.9%
4,405,000 Scotts Bluff County Hospital Authority, Elderly Residential Facility (West
Village), GNMA, Variable Rate Demand Bonds, 4.000%, 12/01/31+ A-2 4,405,000
- ---------------------------------------------------------------------------------------------------------------------------
North Carolina - 4.2%
4,100,000 North Carolina Eastern Municipal Power Agency, Power System Revenue,
Series 1988 B, Commercial Paper, 3.400%, 6/11/98 A-1+ 4,100,000
North Carolina Eastern Municipal Power Agency, Commercial Paper (Tax-Exempt):
8,000,000 3.500%, 4/07/98 A-1+ 8,000,000
8,000,000 3.300%, 5/14/98 A-1+ 8,000,000
- ---------------------------------------------------------------------------------------------------------------------------
Ohio - 5.0%
4,000,000 Ohio School Districts, 1998 Cash Flow Borrowing Program, Certificates of
Participation, General Obligation Notes, Series A, 4.120%, 12/31/98 MIG-1 4,018,557
9,800,000 Cuyahoga County, University Hospital of Cleveland, Series 1985, Variable Rate
Demand Bonds, 3.850%, 1/01/16+ VMIG-1 9,800,000
5,000,000 County of Hamilton, Ohio, Hospital Facilities, Series 1997A (Children's
Hospital Medical Center), Variable Rate Demand Bonds, 3.550%, 5/15/17+ VMIG-1 5,000,000
5,000,000 County of Lucas, Ohio, Multi-Mode Variable Rate Demand Facilities Improvement
Revenue Bonds, Series 1997, (The Toledo Zoological Society Project), Variable
Rate Demand Bonds, 3.450%, 10/01/05+ VMIG-1 5,000,000
- ---------------------------------------------------------------------------------------------------------------------------
Oregon - 1.3%
6,200,000 Port of Morrow (Portland G. E. Company Boardman Project), Variable Rate Demand
Bonds, 4.000%, 10/01/13+ VMIG-1 6,200,000
- ---------------------------------------------------------------------------------------------------------------------------
Pennsylvania - 5.3%
10,000,000 Port Authority of Allegheny County (Commonwealth of Pennsylvania), Grant
Anticipation Notes, Series A of 1997, 3.850%, 6/30/98 MIG-1 10,000,000
10,000,000 Dauphin County General Authority, Series of 1997 (Education and Health Loan
Program), Variable Rate Demand Bonds, 3.460%, 11/01/17+ VMIG-1 10,000,000
</TABLE>
____
25
<PAGE>
<TABLE>
<CAPTION>
Portfolio of Investments
February 28, 1998
Nuveen Tax-Exempt Money Market Fund, Inc.
Principal Amortized
Amount Description Ratings* Cost
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Pennsylvania - continued
$ 3,210,000 Montgomery County Higher Education and Health Authority, Series 1995
(Philadephia Presbytery Homes, Inc), Variable Rate Demand Bonds,
3.450%, 7/01/25+ VMIG-1 $ 3,210,000
2,000,000 City of Philadelphia Tax and Revenue Anticipation Notes, Series A of
1997-1998, 4.500%, 6/30/98 MIG-1 2,003,186
- ---------------------------------------------------------------------------------------------------------------------------
South Dakota - 2.5%
11,935,000 South Dakota Health and Education Facility (McKennan Hospital), Series 1994,
Variable Rate Demand Bonds, 3.450%, 7/01/14+ VMIG-1 11,935,000
- ---------------------------------------------------------------------------------------------------------------------------
Tennessee - 5.7%
15,000,000 The Public Building Authority of the City of Clarksville, Tennessee, Adjustable
Rate Pooled Financing Revenue Bonds, Series 1994 (Tennessee Municipal Bond
Fund), Variable Rate Demand Bonds, 3.450%, 6/01/24+ A-1+ 15,000,000
4,175,000 Loudon Water and Sewer Revenue Refunding Bonds, Series 1996, Variable Rate
Demand Bonds, 3.500%, 9/01/06+ Aa-2 4,175,000
8,000,000 The Public Building Authority of The County of Montgomery, Tennessee,
Adjustable Rate Pooled Financing Revenue Bonds, Series 1996 (Montgomery
County Loan), 3.450%, 7/01/19+ P-1 8,000,000
- ---------------------------------------------------------------------------------------------------------------------------
Texas - 2.6%
2,800,000 Texas Health Facilities Development Corporation (North Texas Pooled Health
Program), Variable Rate Demand Bonds, 3.650%, 5/31/25+ VMIG-1 2,800,000
9,400,000 City of Austin, Texas (Travis and Williamson Counties), Combined Utility
Systems, Commercial Paper, Series A, 3.500%, 6/11/98 A-1+ 9,400,000
- ---------------------------------------------------------------------------------------------------------------------------
Washington - 6.6%
7,000,000 Washington Health Care Facilities Authority, Variable Rate Demand Revenue
Bonds, Series 1997 (Sunnyside Community Hospital Association, Sunnyside),
3.300%, 10/01/17+ Aa-2 7,000,000
10,745,000 Washington State Housing Finance Commission, Variable Rate Demand Nonprofit
Revenue Bonds, (Emerald Heights Project), Series 1990, Variable Rate
Demand Bonds, 3.700%, 1/01/21+ A-1 10,745,000
4,400,000 Washington State Housing Finance Commission, Nonprofit Revenue Bonds (Panorama
City Project), 1997 Refunding Bonds, Variable Rate Demand Bonds,
3.700%, 1/01/27+ VMIG-1 4,400,000
9,000,000 Washington Student Loan Agency, Series 1984A, Variable Rate Demand Bonds,
3.725%, 1/01/01+ VMIG-1 9,000,000
- ---------------------------------------------------------------------------------------------------------------------------
Wisconsin - 5.7%
10,000,000 State of Wisconsin, Operating Notes of 1997, Series 2, 4.500%, 6/15/98 MIG-1 10,021,792
6,500,000 Wisconsin Health and Educational Facilities Authority, Series 1988A
(Alexian Village of Milwaukee), Commercial Paper, 3.800%, 5/11/98 VMIG-1 6,500,000
1,505,000 School District of Delavan-Darien, Rock and Walworth Counties, Wisconsin,
Bond Anticipation Notes, 4.150%, 4/15/98 MIG-1 1,505,434
1,500,000 Germantown School District, Washington County, Wisconsin, Bond Anticipation
Notes, 4.250%, 4/01/98 MIG-1 1,500,271
3,725,000 River Falls Commercial Development Revenue Refunding (Erdeco Partnership
Project), Variable Rate Demand Bonds, 3.560%, 11/01/13+ Aa-2 3,725,000
3,600,000 Village of Whitefish Bay, Milwaukee County, Wisconsin, General Obligation
Capital Improvement Bonds, Tax and Revenue Anticipation Promissory
Notes, 4.100%, 6/17/98 N/R 3,602,698
</TABLE>
____
26
<PAGE>
<TABLE>
<CAPTION>
Portfolio of Investments
February 28, 1998
Nuveen Tax-Exempt Money Market Fund, Inc.
Principal Amortized
Amount Description Ratings* Cost
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Wyoming - 1.9%
Lincoln County Pollution Control Revenue Refunding (Pacificorp Project),
Series 1991, Commercial Paper:
$ 5,300,000 3.550%, 4/06/98 VMIG-1 $ 5,300,000
3,500,000 3.300%, 5/06/98 VMIG-1 3,500,000
- ---------------------------------------------------------------------------------------------------------------------------
$466,040,000 Total Investments - 98.4% 466,159,889
- ---------------------------------------------------------------------------------------------------------------------------
Other Assets Less Liabilities - 1.6% 7,341,830
------------------------------------------------------------------------------------------------------------
Net Assets - 100% $473,501,719
------------------------------------------------------------------------------------------------------------
</TABLE>
* Ratings (not covered by the report of independent public accountants): Using
the higher of Standard &Poor's or Moody's rating.
N/R - Investment is not rated.
+ The security has a maturity of more than one year, but has variable rate and
demand features which qualify it as a short-term security. The rate disclosed
is that currently in effect. This rate changes periodically based on market
conditions or a specified market index. See accompanying notes to financial
statements.
____
27
<PAGE>
<TABLE>
<CAPTION>
STATEMENT OF NET ASSETS
FEBRUARY 28, 1998
NUVEEN TAX-EXEMPT MONEY MARKET FUND, INC.
- -------------------------------------------------------------------------------------------
<S> <C>
ASSETS
Investments in short-term municipal securities, at amortized cost, which
approximates market value (note 1) $466,159,889
Cash 4,170,442
Receivables:
Interest 2,545,296
Investments sold 1,935,328
Other assets 17,258
- -------------------------------------------------------------------------------------------
Total assets 474,828,213
- -------------------------------------------------------------------------------------------
LIABILITIES
Accrued expenses:
Management fees (note 3) 149,941
Other 60,360
Dividends payable 1,116,193
- -------------------------------------------------------------------------------------------
Total liabilities 1,326,494
- -------------------------------------------------------------------------------------------
Net assets applicable to shares outstanding (note 4) $473,501,719
- -------------------------------------------------------------------------------------------
Shares outstanding 473,501,719
- -------------------------------------------------------------------------------------------
Net asset value, offering and redemption price per share
(net assets divided by shares outstanding) $1.00
- -------------------------------------------------------------------------------------------
</TABLE>
See accompanying notes to financial statements.
___
28
<PAGE>
<TABLE>
<CAPTION>
STATEMENT OF OPERATIONS
YEAR ENDED FEBRUARY 28, 1998
NUVEEN TAX-EXEMPT MONEY MARKET FUND, INC.
- ----------------------------------------------------------------------------------------
<S> <C>
INVESTMENT INCOME
Tax-exempt interest income (note 1) $18,509,473
- ---------------------------------------------------------------------------------------
EXPENSES
Management fees (note 3) 1,993,848
Shareholders' servicing agent fees and expenses 22,289
Custodian's fees and expenses 73,374
Directors' fees and expenses (note 3) 8,593
Professional fees 42,468
Shareholders' reports - printing and mailing expenses 4,886
Federal and state registration fees 35,510
Other expenses 39,609
- ---------------------------------------------------------------------------------------
Total expenses 2,220,577
- ---------------------------------------------------------------------------------------
Net investment income 16,288,896
Net realized gain (loss) from investment transactions (notes 1 and 2) (2,131)
- ---------------------------------------------------------------------------------------
Net increase in net assets from operations $16,286,765
- ---------------------------------------------------------------------------------------
</TABLE>
See accompanying notes to financial statements.
___
29
<PAGE>
<TABLE>
<CAPTION>
STATEMENT OF CHANGES IN NET ASSETS
NUVEEN TAX-EXEMPT MONEY MARKET FUND, INC.
YEAR ENDED YEAR ENDED
2/28/98 2/28/97
- ------------------------------------------------------------------------------------
<S> <C> <C>
OPERATIONS
Net investment income $16,288,896 $16,624,557
Net realized gain (loss) from investment transactions
(notes 1 and 2) (2,131) 21,201
- -------------------------------------------------------------------------------------
Net increase in net assets from operations 16,286,765 16,645,758
- -------------------------------------------------------------------------------------
DISTRIBUTIONS TO SHAREHOLDERS (NOTE 1) (16,286,765) (16,645,758)
- -------------------------------------------------------------------------------------
SHARE TRANSACTIONS
(at constant net asset value of $1 per share)
(note 1)
Net proceeds from sale of shares 2,020,884,303 2,793,785,234
Net proceeds from shares issued to shareholders
due to reinvestment of distributions 6,718,107 6,431,423
- -------------------------------------------------------------------------------------
2,027,602,410 2,800,216,657
- -------------------------------------------------------------------------------------
Cost of shares redeemed (2,069,503,749) (2,894,867,006)
- -------------------------------------------------------------------------------------
Net increase (decrease) in net assets
from share transactions (41,901,339) (94,650,349)
Net assets at the beginning of year 515,403,058 610,053,407
- -------------------------------------------------------------------------------------
Net assets at the end of year $473,501,719 $515,403,058
- -------------------------------------------------------------------------------------
</TABLE>
See accompanying notes to financial statements.
___
30
<PAGE>
Notes to Financial Statements
February 28, 1998
Nuveen Tax-Exempt Money Market Fund, Inc.
1. General Information and Significant Accounting Policies
The Nuveen Tax-Exempt Money Market Fund, Inc. (the "Fund") is registered under
the Investment Company Act of 1940 as an open-end, diversified management
investment company. The following is a summary of significant accounting
policies followed by the Fund in the preparation of its financial statements in
accordance with generally accepted accounting principles.
Securities Valuation
The Fund invests in short-term municipal securities maturing within one year
from the date of acquisition. Securities with a maturity of more than one year
in all cases have variable rate and demand features qualifying them as short-
term securities and are 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, 1998, the dollar-weighted average life was 44 days).
Securities Transactions
Securities transactions are recorded on a trade date basis. Realized gains and
losses from such transactions are determined on the specific identification
method. Securities purchased or sold on a when-issued or delayed delivery basis
may have extended settlement periods. Any securities so purchased are subject to
market fluctuation during this period. The Fund has instructed the custodian to
segregate assets in a separate account with a current value at least equal to
the amount of the when-issued and delayed delivery purchase commitments. At
February 28, 1998, there were no such outstanding purchase commitments.
Interest Income
Interest income is determined on the basis of interest accrued, adjusted for
amortization of premiums and accretion of discounts.
Dividends and Distributions to Shareholders
Tax-exempt net investment income, 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 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, 1998, have been
designated Exempt Interest Dividends. Net realized capital gain distributions,
if any, are subject to federal taxation.
Insurance Commitments
The Fund has obtained commitments (each a "Commitment") from Municipal Bond
Investors Assurance Corporation ("MBIA") with respect to certain designated
bonds held by the Fund for which credit support is furnished by banks ("Approved
Banks") approved by MBIA under its established credit approval standards. Under
the terms of a Commitment, if the Fund were to determine that certain adverse
circumstances relating to the financial condition of the Approved 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, 1998.
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.
------
31
<PAGE>
Notes to Financial Statements - continued
February 28, 1998
Nuveen Tax-Exempt Money Market Fund, Inc.
2. Securities Transactions
Purchases and sales (including maturities) of investments in short-term
municipal securities during the fiscal year ended February 28, 1998, aggregated
$1,543,700,587 and $1,590,684,150, respectively.
At February 28, 1998, the cost of investments owned for federal income tax
purposes 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 John Nuveen & Co. Incorporated, 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>
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 those of 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 or its affiliates.
4. Composition of Net Assets
At February 28, 1998, the Fund had 5 billion shares of $.01 par value stock
authorized. Net assets consisted of $473,501,719 paid-in capital.
5. Investment Composition
At February 28, 1998, the revenue sources by municipal purpose, expressed as a
percent of total investments, were as follows:
<TABLE>
<CAPTION>
<S> <C>
- ----------------------------------------------------------------------------
Utilities 15%
Tax Obligation/General 14
Health Care 13
Tax Obligation/Limited 11
Long Term Care 9
Housing/Multifamily 9
Water and Sewer 6
Education and Civic Organizations 5
Transportation 4
Financials 3
Capital Goods 3
Other 8
- ----------------------------------------------------------------------------
100%
- ----------------------------------------------------------------------------
</TABLE>
At February 28, 1998, 89% 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.
-----
32
<PAGE>
Financial Highlights
Nuveen Tax-Exempt Money Market Fund, Inc.
Selected data for a share outstanding throughout
each period is as follows:
<TABLE>
<CAPTION>
Operating performance Less distributions
--------------------- ------------------
Net
realized
Net and Dividends Net
asset unrealized from tax- asset
value Net gain (loss) exempt net Distributions value
Year ended beginning investment from investment from capital end of
February 28/29, of period income investments income gains period
- ---------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
1998 $1.00 $.03 $ -- $(.03) $ -- $1.00
1997 1.00 .03 -- (.03) -- 1.00
1996 1.00 .03 -- (.03) -- 1.00
1995 1.00 .03 -- (.03) -- 1.00
1994 1.00 .02 -- (.02) -- 1.00
1993 1.00 .03 -- (.03) -- 1.00
1992 (b) 1.00 .02 -- (.02) -- 1.00
1991 (c) 1.00 .05 -- (.05) -- 1.00
1990 (c) 1.00 .06 -- (.06) -- 1.00
1989 (c) 1.00 .06 -- (.06) -- 1.00
- ---------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
Ratios/Supplemental data
------------------------
Ratio
Total of net
return Ratio of investment
on net Net assets expenses income to
Year ended asset end of period to average average
February 28/29, value(a) (in thousands) net assets net assets
- ---------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
1998 3.27% $ 473,502 .44% 3.26%
1997 3.11 515,403 .44 3.10
1996 3.42 610,053 .44 3.43
1995 2.69 759,244 .44 2.65
1994 2.04 975,833 .42 2.04
1993 2.57 1,597,014 .40 2.58
1992 (b) 1.56 2,332,021 .39* 3.71*
1991 (c) 4.85 1,927,583 .38 4.81
1990 (c) 5.75 1,800,966 .40 5.74
1989 (c) 6.00 1,756,725 .39 6.02
- ---------------------------------------------------------------------------------------------
</TABLE>
* Annualized.
(a) Total returns are calculated on net asset value and are not
annualized.
(b) For the five months ended February 29.
(c) For the fiscal year ended September 30.
- -----
33
<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 the Nuveen Tax-
Exempt Money Market Fund, Inc. (a Maryland corporation), including the portfolio
of investments, as of February 28, 1998, 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, 1998, 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, 1998, 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 15, 1998
- ------
34
<PAGE>
- ------
35
<PAGE>
Building Better Portfolios with Nuveen
Reducing the impact of taxes and moderating risk are
important goals for many risk-sensitive investors seeking to
build better portfolios. For these investors, a tax-
efficient, risk-resistant investment portfolio often forms
the foundation of a carefully crafted financial plan for
building and sustaining wealth. Nuveen is committed to
providing investors and their financial advisers with a range
of products and investment tools to help build better
portfolios.
Nuveen Family Mutual Funds
of Mutual Funds
Nuveen offers a Nuveen Mutual Funds offer investors access to the Nuveen
variety of funds family of premier advisers, including Nuveen Advisory Corp.,
designed to help Institutional Capital Corp. and Rittenhouse Financial
you reach your Services. Our equity, balanced and income funds seek to
financial goals. provide consistent performance, time-tested strategies to
Growth reduce risk and experienced, professional management.
Nuveen Rittenhouse
Growth Fund Private Asset Management
Growth and Income
Growth and Rittenhouse Financial Services and Nuveen Asset Management
Income Stock Fund offer comprehensive, customized investment management
Balanced Stock solutions to investors with assets of $250,000 or more. A
and Bond Fund range of actively managed growth, balanced and municipal
Balanced Municipal income-oriented portfolios are available, all based upon a
and Stock Fund disciplined investment philosophy.
Tax-Free Income
National Funds Unit Trusts
Long-Term
Insured Nuveen Unit Trusts are fixed portfolios of quality securities
Intermediate-Term that are a convenient, attractive alternative to purchasing
Limited Term individual securities. They provide low-cost diversification
State Funds to reduce risk, experienced, professional security selection
Alabama and surveillance, and daily liquidity at that day's net asset
Arizona value for quick access to your assets.
California
Colorado Exchange-Traded Funds
Connecticut
Florida Nuveen Exchange-Traded Funds offer investors actively managed
Georgia portfolios of investment-grade quality municipal bonds. The
Kansas fund shares are listed and traded on the New York and
Kentucky American stock exchanges. Exchange-traded funds provide the
Louisiana investment convenience, price visibility and liquidity of
Maryland common stocks.
Massachusetts
Michigan MuniPreferred(R)
Missouri
New Jersey Nuveen MuniPreferred offers investors a AAA-rated investment
New Mexico with an attractive tax-free yield for the cash reserves
New York portion of an investment portfolio. MuniPreferred shares are
North Carolina backed 2-to-1 by the long-term portfolios of Nuveen dual-
Ohio class exchange-traded funds and are available for national as
Pennsylvania well as a wide variety of state-specific portfolios.
South Carolina
Tennessee
Virginia
Wisconsin
___
36
<PAGE>
Fund Information
Board of Directors Custodian
Robert P. Bremner The Chase Manhattan Bank
Lawrence H. Brown 4 New York Plaza
Anthony T. Dean New York, NY 10004-2413
Anne E. Impellizzeri (800) 257-8787
Peter R. Sawers
William J. Schneider Transfer Agent,
Timothy R. Schwertfeger Shareholder Services and
Judith M. Stockdale Dividend Disbursing Agent
Shareholder Services, Inc.
Fund Manager Nuveen Investor Services
Nuveen Advisory Corp. P.O. Box 5330
333 West Wacker Drive Denver, CO 80217-5330
Chicago, IL 60606 (800) 621-7227
Legal Counsel
Fried, Frank, Harris,
Shriver & Jacobson
Washington, D.C.
Public Accountants
Arthur Andersen LLP
Chicago, IL
___
37
<PAGE>
Serving Investors for Generations
[PHOTO OF JOHN NUVEEN, SR. APPEARS HERE]
Since our founding in 1898, John Nuveen & Co. has been synonymous with
investments that withstand the test of time. Today, we offer a broad range of
investments designed for risk-sensitive individuals seeking to build and sustain
wealth. In fact, more than 1.3 million investors have trusted Nuveen to help
them maintain the lifestyle they currently enjoy.
The cornerstone of Nuveen's investment philosophy is a commitment to disciplined
long-term investment strategies focused on providing consistent, attractive
performance over time - with moderated risk. We emphasize quality securities
carefully chosen through in-depth research, and we follow those securities
closely over time to ensure that they continue to meet our exacting standards.
Whether your focus is long-term growth, dependable current income or sustaining
accumulated wealth, Nuveen offers a wide variety of products and services to
help meet your unique circumstances and financial planning needs. Our equity,
balanced, and income funds, along with our unit trusts and private asset
management, can form the foundation of a tax-efficient and risk-resistant
portfolio.
Talk with your financial adviser to learn more about how Nuveen investment
products and services can help you build and sustain your long-term financial
security. Or call us at (800) 621-7227 for more information, including a
prospectus where applicable. Please read that information carefully before you
invest.
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