<PAGE>
NUVEEN
Money Market
Funds
August 31, 1998
Semiannual Report
Dependable, tax-free income
to help you keep more of
what you earn.
[PHOTO APPEARS HERE]
Tax-Exempt
<PAGE>
Dear Shareholder
[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.
I am pleased to report on the performance of the Nuveen Tax-Exempt Money Market
Fund, Inc. for the six-month period ended August 31, 1998. During a period that
saw significant volatility in the financial markets as a whole, your fund
continued to provide a haven for investors seeking to retain the assets they've
built over a lifetime.
Market Review
The past year has been one of ups and downs for the markets, in large part due
to the aftershocks of the financial crisis in Asia. For many investors, the
response to that market uncertainty was a rush to more conservative
investments--a "flight to quality". As a result, yields in the municipal bond
market continued to fall.
The near-term decline in interest rates was partially the result of expectations
that the financial troubles in Asia would restrain the prices of imported goods
and reduce foreign demand for U.S. products and services, thus keeping inflation
at a moderate level. Those expectations were largely fulfilled, as the Consumer
Price Index rose just .93% for the six months ended August 31, 1998, among its
lowest levels in years.
While rates on long-term municipal bonds did not fall to the historic lows that
the 30-year Treasury bond did, they remained low enough to command a large
percentage of new issuance volume over the past year. As a result, short-term
municipal investors faced relatively low supply, except in certain individual
states, making good values more difficult to find.
Overall, we foresee continued strong demand for U.S. bonds, especially until the
Asian crisis and its ripple effects in the world economy have subsided. Over the
near term, that should keep bond prices high and rates relatively low, helping
to prolong the U.S. economic expansion. In the coming months, we will continue
to watch several key factors that could influence the tone of the fixed-income
markets, including the demand for goods and services, the availability of
qualified employees, and indications from the Federal Reserve.
1
<PAGE>
"The fund proved able to offer competitive tax-free income, while maintaining
the outstanding credit quality and liquidity that are its hallmarks."
Performance Review
Despite generally tight supply in the short-term municipal market, the Nuveen
Tax-Exempt Money Market Fund, Inc. posted attractive returns while helping
investors preserve capital in volatile markets.
As of August 31, investors were receiving an annualized tax-free yield of 3.09%,
which is equivalent to a yield of 4.48% on an after-tax basis for investors in
the 31% federal income tax bracket.
Portfolio Adjustments
High demand in the short-term market and declining yields made this segment of
the municipal bond market challenging. Competition for short-term paper caused
rates that were already low to drop even lower. Supply and demand factors made
it harder to find attractive values as short term interest rates fell.
Despite the past year's demanding market, the fund proved able to offer
competitive tax-free income, while maintaining the outstanding credit quality
and liquidity that are its hallmarks.
Expertise Makes the Difference
Many investors choose the Nuveen Tax-Exempt Money Market Fund, Inc. because of
its emphasis on stability of principal and competitive short-term yields. But
behind that combination of performance and protection is more than 100 years of
experience in the municipal markets. Our experience is evidenced through
capabilities like Nuveen's unparalleled municipal market research, which
identifies opportunities in the markets that are undiscovered or overlooked by
other investors.
In volatile markets, that expertise can make a world of difference. Combined
with our full family of equity, balanced, and tax-free investments, it can
provide you the diversification and disciplined investment approach you need to
bring balance to your overall investment strategy. I encourage you to talk with
your financial adviser about Nuveen's growing range of investments, or call
(800) 257-8787 for a prospectus detailing all charges and expenses. Be sure to
read it carefully before you invest. On behalf of everyone at Nuveen, we
appreciate the opportunity to help you reach your financial goals.
Sincerely,
/s/ Timothy R. Schwertfeger
Timothy R. Schwertfeger
Chairman of the Board
October 15, 1998
2
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Nuveen Tax-Exempt Money Market Fund, Inc.
Performance Overview
As of August 31, 1998
<TABLE>
<CAPTION>
<S> <C>
Portfolio Statistics
Inception Date 3/81
- -----------------------------------------------------
Net Assets ($000) $333,145
- -----------------------------------------------------
Average Weighted Maturity (days) 40
- -----------------------------------------------------
Tax-Free Yields
SEC 7-Day Yield 3.09%
- -----------------------------------------------------
SEC 30-Day Yield 3.06%
- -----------------------------------------------------
Taxable Equivalent
Federal Income Tax Rate 31.00%
- -----------------------------------------------------
SEC 7-Day Yield 4.48%
- -----------------------------------------------------
SEC 30-Day Yield 4.43%
- -----------------------------------------------------
Diversification (as a % of total investments)
Health Care 23%
- -----------------------------------------------------
Tax Obligation (General) 18%
- -----------------------------------------------------
Tax Obligation (Limited) 15%
- -----------------------------------------------------
Housing (Multifamily) 13%
- -----------------------------------------------------
Long Term Care 11%
- -----------------------------------------------------
Transportation 7%
- -----------------------------------------------------
Utilities 4%
- -----------------------------------------------------
Financials 4%
- -----------------------------------------------------
Education and Civic Organizations 3%
- -----------------------------------------------------
Water and Sewer 2%
- -----------------------------------------------------
</TABLE>
3
<PAGE>
Portfolio of Investments (Unaudited)
Nuveen Tax-Exempt Money Market Fund, Inc.
August 31, 1998
<TABLE>
<CAPTION>
Principal Amortized
Amount Description Ratings* Cost
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Arizona -- 2.9%
$ 2,200,000 Maricopa County, Arizona, Pollution Control Corporation, Pollution Control A-1+ $ 2,200,000
Revenue Refunding Bonds (Arizona Public Service Company Palo Verde Project),
1994 Series B, Variable Rate Demand Bonds, 3.300%, 5/01/29+
7,470,000 Sunset Ranch Certificate Trust, Variable Rate Certificates of Participation, VMIG-1 7,470,000
1991 Series A, 3.350%, 12/01/27+
- ----------------------------------------------------------------------------------------------------------------------------------
Arkansas -- 0.6%
2,000,000 Little Rock School District of Pulaski County, Arkansas, Tax and Revenue MIG-1 2,003,862
Anticipation Promissory Notes, Series 1998, 4.250%, 12/30/98
- ----------------------------------------------------------------------------------------------------------------------------------
Connecticut -- 3.0%
10,000,000 Connecticut State Special Assessment Unemployment Compensation Advance Fund VMIG-1 10,000,000
Revenue Bonds, Series 1993C, Commercial Paper, 3.600%, 7/01/99
- ----------------------------------------------------------------------------------------------------------------------------------
District of Columbia -- 3.8%
1,540,000 District of Columbia General Obligation, General Fund Recovery Bonds, VMIG-1 1,540,000
Series 1991B-1, Variable Rate Demand Bonds, 3.400%, 6/01/03+
4,400,000 District of Columbia General Obligation, General Fund Recovery Bonds, VMIG-1 4,400,000
Series 1991B-2, Variable Rate Demand Bonds, 3.400%, 6/01/03+
1,500,000 District of Columbia General Obligation, Series 1992A-3, Variable Rate VMIG-1 1,500,000
Demand Bonds, 3.450%, 10/01/07+
2,400,000 District of Columbia General Obligation, Series 1992A-6, Variable Rate VMIG-1 2,400,000
Demand Bonds, 3.450%, 10/01/07+
2,700,000 District of Columbia General Obligation, Series 1992A-4, Variable Rate VMIG-1 2,700,000
Demand Bonds, 3.450%, 10/01/07+
- ----------------------------------------------------------------------------------------------------------------------------------
Florida -- 13.0%
13,000,000 Florida Housing Finance Agency, Multi-Family Housing, 1985 Series D VMIG-1 13,000,000
(Kings Colony), Variable Rate Demand Bonds, 3.300%, 8/01/06+
6,000,000 Capital Projects Finance Authority, Variable Rate Demand Revenue Bonds A-1+ 6,000,000
(Florida Hospital Association Capital Projects Loan Program), Series 1998A,
3.250%, 6/01/28+
6,640,000 Gulf Breeze, Series 1995 A (Florida Municipal Bond Fund), Variable Rate A-1 6,640,000
Demand Bonds, 3.300%, 3/31/21+
5,800,000 Miami Health Facilities Authority (Miami Jewish Home and Hospital for the Aa-3 5,800,000
Aged, Inc.), Series 1992, Variable Rate Demand Bonds, 3.350%, 3/01/12+
2,200,000 Orange County Health Facility Authority (Pooled Hospital Loan Program), VMIG-1 2,200,000
Series 1985, Commercial Paper, 3.500%, 10/01/98
5,500,000 Palm Beach County Health Facility Authority (Pooled Hospital Loan Program), VMIG-1 5,500,000
Series 1985, Commercial Paper, 3.400%, 9/09/98
4,300,000 Sunshine State Governmental Financing Commission Revenue Bonds, Series 1986 VMIG-1 4,300,000
(Money Market Municipals), Commercial Paper, 3.600%, 9/08/98
- ----------------------------------------------------------------------------------------------------------------------------------
Georgia -- 13.8%
4,790,000 Georgia Municipal Gas Authority (Southern Portfolio I Project), Series D, A-1+ 4,790,000
Gas Revenue, Commercial Paper, 3.400%, 10/31/98
10,585,000 Chatham County, Tax Anticipation Notes, Series 1998, 4.125%, 12/31/98 N/R 10,602,135
7,215,000 Housing Authority of Clayton County, Tax Exempt Adjustable Mode, Multifamily Aa-2 7,215,000
Housing Revenue Refunding Bonds, Series 1996 (BS Partners LP Project), Variable
Rate Demand Bonds, 3.350%, 9/01/26+
2,700,000 Columbia Elderly Authority, Residential Care Facilities Revenue Bonds (Augusta Aa-3 2,700,000
Resource Center on Aging Inc.), Variable Rate Demand Bonds, 3.350%, 1/01/21+
4,800,000 Housing Authority of the County of DeKalb, Georgia, Multifamily Housing Revenue A-1+ 4,800,000
Bonds (Crow Wood Arbor Associates, Ltd. Project), Series 1985Q, Variable Rate
Demand Bonds, 3.350%, 12/01/07+
10,705,000 Housing Authority of the County of DeKalb, Georgia, Multifamily Housing Revenue VMIG-1 10,705,000
Refunding Bonds (Lenox Pointe Project), Series 1996A, Variable Rate Demand
Bonds, 3.400%, 11/01/23+
</TABLE>
4
<PAGE>
<TABLE>
<CAPTION>
Portfolio of Investments (Unaudited)
Nuveen Tax-Exempt Money Market Fund, Inc. (continued)
August 31, 1998
Principal Amortized
Amount Description Ratings* Cost
___________________________________________________________________________________________________________________________
Georgia (continued)
<S> <C> <C> <C>
$ 5,000,000 Residential Care Facility for the Elderly Authority of Fulton County (Georgia), A-1+ $ 5,000,000
Variable Rate Demand Bonds, Refunding Revenue Bonds (Lenbrook Square
Foundation, Inc. Project), Series 1996, 3.300%, 1/01/18+
___________________________________________________________________________________________________________________________
Illinois--5.4%
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:
5,000,000 4.200%, 9/14/98 VMIG-1 5,000,000
3,000,000 4.200%, 9/15/98 VMIG-1 3,000,000
___________________________________________________________________________________________________________________________
Indiana--2.3%
7,800,000 Washington Township Metropolitan School District of Marion County, General N/R 7,811,425
Obligation, Temporary Loan Warrants, 1998 Second Series, 4.000%, 12/31/98
___________________________________________________________________________________________________________________________
Kansas--0.3%
1,000,000 Kansas Development Finance Authority, Insured Variable Rate Demand Revenue VMIG-1 1,000,000
Bond (Stormont-Vail Healthcare, Inc), Series 1998M, 3.350%, 11/15/23+
___________________________________________________________________________________________________________________________
Louisiana--1.6%
5,200,000 New Orleans Aviation Board, Series 1993B, Variable Rate Demand Bonds, VMIG-1 5,200,000
3.300%, 8/01/16+
___________________________________________________________________________________________________________________________
Michigan--4.1%
2,000,000 Michigan State Full Faith and Credit General Obligation Notes, 4.500%, MIG-1 2,001,221
9/30/98
11,800,000 Detroit Downtown Development Authority (Millender Center Project), VMIG-1 11,800,000
Variable Rate Demand Bonds, 4.100%, 12/01/10+
___________________________________________________________________________________________________________________________
Minnesota--4.4%
5,000,000 Bloomington Port Authority, Tax Increment Revenue Refunding Bonds VMIG-1 5,000,000
(Mall of America Project), Series 1995A, Variable Rate Demand
Bonds, 3.300%, 2/01/13+
2,445,000 Minneapolis/St. Paul Housing and Redevelopment Authority, Health Care SP-1+ 2,445,000
(Children's Health Care), Series 1995, Variable Rate Demand Bonds,
3.350%, 8/15/25+
7,355,000 St. Paul Housing and Redevelopment Authority, Parking Revenue Bonds, VMIG-1 7,355,000
Series 1995B, Variable Rate Demand Bonds, 3.300%, 8/01/17+
___________________________________________________________________________________________________________________________
Missouri--9.6%
8,000,000 Health and Educational Facilities Authority of the State of Missouri, A-1+ 8,000,000
Variable Rate Demand Bonds, Health Facilities Revenue Bonds
(St. Francis' Medical Center), Series 1996A, 3.300%, 6/01/26+
4,000,000 Health and Educational Facilities Authority of the State of Missouri, VMIG-1 4,000,000
Variable Rate Demand Bonds, Health Facilities Revenue Bonds
(Bethesda Barclay), Series 1996A, 3.300%, 8/15/26+
2,300,000 Health and Educational Facilities Authority of the State of Missouri, VMIG-1 2,300,000
Variable Rate Demand Bonds, Educational Facilities Revenue Bonds
(Drury College), Series 1996A, 3.450%, 8/15/21+
3,355,000 State Environmental Improvement and Energy Resources Authority of the VMIG-1 3,355,000
State of Missouri, Unit Priced Demand Adjustable Pollution Control
Revenue Bonds, Series 1985 A (Union Electric Company), Commercial Paper,
3.500%, 10/14/98
6,000,000 The City of St. Louis, Missouri, Tax and Revenue Anticipation Notes, MIG-1 6,041,168
Series 1998, 4.500%, 6/30/99
8,300,000 St. Louis Land Clearance Redevelopment Authority, Parking Facility Revenue VMIG-1 8,300,000
Refunding Bonds, Series 1996, Variable Rate Demand Bonds, 4.000%, 9/01/19+
___________________________________________________________________________________________________________________________
Nebraska--1.3%
4,405,000 Scotts Bluff County Hospital Authority, 1 Elderly Residential Facility-GNMA A-2 4,405,000
(West Village), Variable Rate Demand Bonds, 4.200%, 12/01/31+
____________________________________________________________________________________________________________________________
North Carolina--1.5%
4,100,000 North Carolina Eastern Municipal Power Agency, Power System Revenue Bonds, A-1+ 4,100,000
Series 1988 B, Commercial Paper, 3.400%, 11/17/98
1,000,000 Raleigh-Durham Airport Authority, Special Facilities Refunding Revenue Bonds A-1+ 1,000,000
(American Airlines Project), Series 95A Variable Rate Demand Bonds, 3.350%,
11/01/05+
</TABLE>
5
<PAGE>
<TABLE>
<CAPTION>
Principal Amortized
Amount Description Ratings* Cost
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Ohio - 4.4%
$ 4,000,000 Ohio School Districts, 1998 Cash Flow Borrowing Program, Certificates of MIG-1 $ 4,007,362
Participation, Series A, 4.120%, 12/31/98
5,800,000 Cuyahoga County, University Hospital of Cleveland, Series 1985, Variable Rate VMIG-2 5,800,000
Demand Bonds, 3.900%, 1/01/16+
5,000,000 County of Hamilton, Ohio, Variable Rate Hospital Facilities Revenue Bonds, VMIG-1 5,000,000
Series 1997A (Children's Hospital Medical Center), 3.300%, 5/15/17+
- -----------------------------------------------------------------------------------------------------------------------------------
Oklahoma - 1.5%
5,000,000 Oklahoma City Industrial and Cultural Facilities (SSM Health Care), Series 1998B, A-1+ 5,000,000
Variable Rate Demand Revenue Bonds, 3.400%, 6/01/19+
- -----------------------------------------------------------------------------------------------------------------------------------
Pennsylvania - 8.4%
3,100,000 Allegheny County Hospital Development Authority (Allegheny County, Pennsylvania), VMIG-1 3,100,000
Health Center Revenue Bonds, Series 1990 A (Presbyterian-University Health
System, Inc.), Variable Rate Demand Bonds, 3.350%, 3/01/20+
10,000,000 Dauphin County General Authority, Variable Rate Demand Revenue Bonds, Series of VMIG-1 10,000,000
1997 (Education and Health Loan Program), 3.300%, 11/01/17+
7,000,000 Lancaster County Hospital Authority, Health Center Revenue Bonds, Series B 1998 A-1 7,000,000
(Willow Valley Lakes Manor Project), Variable Rate Demand Bonds,
3.300%, 12/01/18+
3,650,000 Philadelphia Authority for Industrial Development (Horizon House, Inc. Project), VMIG-1 3,650,000
Variable Rate Revenue Bonds, Series 1998, 3.350%, 6/01/13+
4,400,000 South Fork Municipal Authority, Adjustable Rate Hospital Revenue Bonds, Series A-1+ 4,400,000
1998A (Conemaugh Health System Project), 3.250%, 7/01/28+
- -----------------------------------------------------------------------------------------------------------------------------------
South Dakota - 3.6%
11,860,000 South Dakota Health and Educational Facility (McKennan Hospital), Series 1994, VMIG-1 11,860,000
Variable Rate Demand Revenue Bonds, 3.300%, 7/01/14+
- -----------------------------------------------------------------------------------------------------------------------------------
Tennessee - 3.0%
4,100,000 The Public Building Authority of the City of Clarksville, Tennessee, Adjustable A-1+ 4,100,000
Rate Pooled Financing Revenue Bonds, Series 1994 (Tennessee Municipal Bond Fund),
Variable Rate Demand Bonds, 3.300%, 6/01/24+
6,000,000 Montgomery County Public Building Authority (Tennessee County Loan Pool), MIG-1 6,000,000
Adjustable Rate Pooled Financing, Series 1997, 3.350%, 11/01/27+
- -----------------------------------------------------------------------------------------------------------------------------------
Texas - 1.4%
2,500,000 Texas Health Facilities Development Corporation (North Texas Pooled Health VMIG-1 2,500,000
Program), Variable Rate Demand Bonds, 3.500%, 5/31/25+
2,000,000 Harris County Health Facilities Development Corporation, Hospital Revenue Bonds, VMIG-1 2,000,000
Series 1997B (Memorial Hospital System Project), Variable Rate Demand Bonds,
3.150%, 6/01/24+
- -----------------------------------------------------------------------------------------------------------------------------------
Utah - 1.1%
3,500,000 Utah County, Utah, Tax and Revenue Anticipation Notes, Series 1998, 4.000%, N/R 3,504,184
12/31/98
- -----------------------------------------------------------------------------------------------------------------------------------
Virginia - 0.5%
1,500,000 Industrial Development Authority of the County of Henrico, Virginia, Health VMIG-1 1,500,000
Facility Revenue Bonds (The Hermitage at Cedarfield), Series 1994, Variable
Rate Demand Bonds, 3.400%, 5/01/24+
- -----------------------------------------------------------------------------------------------------------------------------------
Washington - 3.3%
2,000,000 Washington State Housing Finance Commission, Nonprofit Revenue Bonds (Panorama VMIG-1 2,000,000
City Project), 1997 Refunding Bonds, Variable Rate Demand Bonds,
3.750%, 1/01/27+
9,000,000 Washington Student Loan Agency, Series 1984A, Variable Rate Demand Bonds, VMIG-1 9,000,000
3.950%, 1/01/01+
</TABLE>
-----
6
<PAGE>
Portfolio of Investments (Unaudited)
Nuveen Tax-Exempt Money Market Fund, Inc. (continued)
August 31, 1998
<TABLE>
<CAPTION>
Principal Amortized
Amount Description Ratings* Cost
- ------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Wisconsin - 3.2%
$ 5,500,000 Wisconsin Health and Educational Facilities Authority, Series 1988A (Alexian VMIG-1 $ 5,500,000
Village of Milwaukee), Commercial Paper, 4.200%, 9/03/98
5,000,000 Madison Metropolitan School District, Tax and Revenue Anticipation Promissory N/R 5,008,150
Note, 4.000%, 2/23/99
- ------------------------------------------------------------------------------------------------------------------------
$326,415,000 Total Investments - 98.0% 326,509,507
============------------------------------------------------------------------------------------------------------------
Other Assets Less Liabilities - 2.0% 6,635,435
-------------------------------------------------------------------------------------------------------
Net Assets - 100% $333,144,942
=======================================================================================================
</TABLE>
* Ratings: Using the higher of Standard & Poor's or Moody's rating.
N/R Investment is not rated.
+ The security has a maturity of more than one year, but has variable rate
and demand features which qualify it as a short-term security. The rate
disclosed is that currently in effect. This rate changes periodically based
on market conditions or a specified market index.
See accompanying notes to financial statements.
7
<PAGE>
Statement of Net Assets (Unaudited)
August 31, 1998
<TABLE>
<CAPTION>
<S> <C>
- ---------------------------------------------------------------------------------------------------------------------------
Assets
Investments in short-term municipal securities, at amortized cost, which approximates market value (note 1) $326,509,507
Cash 4,904,038
Receivables:
Interest 2,198,678
Investments sold 500,000
Other assets 84,777
- ---------------------------------------------------------------------------------------------------------------------------
Total assets 334,197,000
- ---------------------------------------------------------------------------------------------------------------------------
Liabilities
Accrued expenses:
Management fees (note 3) 115,932
Other 47,478
Dividends payable 888,648
- ---------------------------------------------------------------------------------------------------------------------------
Total liabilities 1,052,058
- ---------------------------------------------------------------------------------------------------------------------------
Net assets applicable to shares outstanding (note 4) $333,144,942
===========================================================================================================================
Shares outstanding 333,144,942
===========================================================================================================================
Net asset value, offering and redemption price per share (net assets divided by shares outstanding) $ 1.00
===========================================================================================================================
</TABLE>
Statement of Operations (Unaudited)
Six Months Ended August 31, 1998
<TABLE>
<CAPTION>
<S> <C>
- ---------------------------------------------------------------------------------------------------------------------------
Investment Income (note 1) $ 6,759,205
- ---------------------------------------------------------------------------------------------------------------------------
Expenses
Management fees (note 3) 738,285
Shareholders' servicing agent fees and expenses 9,307
Custodian's fees and expenses 32,753
Directors' fees and expenses (note 3) 4,301
Professional fees 3,064
Shareholders' reports -- printing and mailing expenses 4,761
Federal and state registration fees 14,446
Other expenses 18,198
- ---------------------------------------------------------------------------------------------------------------------------
Total expenses 825,115
- ---------------------------------------------------------------------------------------------------------------------------
Net investment income 5,934,090
Net realized gain (loss) from investment transactions (notes 1 and 2) (14,687)
- ---------------------------------------------------------------------------------------------------------------------------
Net increase in net assets from operations $ 5,919,403
===========================================================================================================================
</TABLE>
See accompanying notes to financial statements.
8
<PAGE>
Statement of Changes in Net Assets (Unaudited)
<TABLE>
<CAPTION>
Six Months Ended Year Ended
August 31, 1998 2/28/98
- ------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Operations
Net investment income $ 5,934,090 $ 16,288,896
Net realized gain (loss) from investment transactions (notes 1 and 2) (14,687) (2,131)
- ------------------------------------------------------------------------------------------------------------------
Net increase in net assets from operations 5,919,403 16,286,765
- ------------------------------------------------------------------------------------------------------------------
Distributions to Shareholders (note 1) (5,919,403) (16,286,765)
- ------------------------------------------------------------------------------------------------------------------
Share Transactions
(at constant net asset value of $1 per share) (note 1)
Net proceeds from sale of shares 995,993,596 2,020,884,303
Net proceeds from shares issued to shareholders due to reinvestment
of distributions 3,192,197 6,718,107
- ------------------------------------------------------------------------------------------------------------------
999,185,793 2,027,602,410
- ------------------------------------------------------------------------------------------------------------------
Cost of shares redeemed (1,139,542,570) (2,069,503,749)
- ------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets from share transactions (140,356,777) (41,901,339)
Net assets at the beginning of period 473,501,719 515,403,058
- ------------------------------------------------------------------------------------------------------------------
Net assets at the end of period $ 333,144,942 $ 473,501,719
==================================================================================================================
</TABLE>
See accompanying notes to financial statements.
======
9
<PAGE>
Notes to Financial Statements (Unaudited)
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 August
31, 1998, the dollar-weighted average life was 40 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
August 31, 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. 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 six months ended August 31, 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. Actual results could differ
from those estimates.
10
<PAGE>
Notes to Financial Statements (Unaudited) (continued)
2. Securities Transactions
Purchases and sales (including maturities) of investments in short-term
municipal securities during the six months ended August 31, 1998, aggregated
$678,732,411 and $818,191,080, respectively.
At August 31, 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 August 31, 1998, the Fund had 5 billion shares of $.01 par value stock
authorized. Net assets consisted of $333,144,942 paid-in capital.
5. Investment Composition
At August 31, 1998, the revenue sources by municipal purpose, expressed as a
percent of total investments, were as follows:
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------
<S> <C>
Education and Civic Organizations 3%
Financials 4
Health Care 23
Housing/Multifamily 13
Long Term Care 11
Tax Obligation/General 18
Tax Obligation/Limited 15
Transportation 7
Utilities 4
Water and Sewer 2
- ------------------------------------------------------------------------------
100%
==============================================================================
</TABLE>
At August 31, 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.
11
<PAGE>
Financial Highlights (Unaudited)
<TABLE>
<CAPTION>
Selected data for a share outstanding throughout each period is as follows:
Investment Operations Less Distributions Ratios/Supplemental Data
--------------------- ------------------ ------------------------------------
Ratio
of Net
Beginning Net Ending Ratio of Investment
Net Net Realized/ Net Net Ending Expenses Income to
Year Ended Asset Investment Unrealized Investment Capital Asset Total Net Assets to Average Average
February 28/29, Value Income Gain (Loss) Income Gains Value Return (a) (000) Net Assets Net Assets
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1999 (b) $1.00 $.02 $ -- $ (.02) $ -- $1.00 1.50% $333,145 .45%* 3.21%*
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
</TABLE>
* Annualized.
(a) Total returns are calculated on net asset value and are not annualized.
(b) For the six months ended August 31, 1998.
12
<PAGE>
Building a Better Portfolio
Can Make You a Successful Investor
Nuveen Family of Mutual Funds
Nuveen offers a variety of funds designed to help you reach your financial
goals.
Growth
Nuveen Rittenhouse Growth Fund
Growth and Income
European Value Fund
Growth and Income Stock Fund
Balanced Stock and Bond Fund
Balanced Municipal and Stock Fund
Tax-Free Income
National Funds
Long-Term
Insured
Intermediate-Term
Limited-Term
State Funds
Arizona
California
Colorado
Connecticut
Florida
Georgia
Kansas
Kentucky
Louisiana
Maryland
Massachusetts
Michigan
Missouri
New Jersey
New Mexico
New York
North Carolina
Ohio
Pennsylvania
Tennessee
Virginia
Wisconsin
Successful investors know that a well-diversified portfolio -- one that balances
different types of investments, levels of risk, and tax management -- can be the
foundation for building and sustaining wealth. That's why Nuveen offers you and
your financial adviser a wide range of quality investments that can help you
build a better portfolio in the pursuit of your financial goals.
Mutual Funds
Nuveen offers a family of equity, balanced, and municipal bond funds featuring
Premier Advisers/SM/ including Institutional Capital Corporation, Rittenhouse
Financial Services, and Nuveen Advisory Corp. Each brings a specialized
expertise in a particular investment style or asset class, time-tested
investment strategies, and a focus on consistent, long-term performance. With
Nuveen's Premier Adviser funds, you have all the advantages of a family of funds
plus the benefits of specialized investment expertise.
Private Asset Management
Rittenhouse Financial Services and Nuveen Asset Management offer comprehensive,
customized investment management solutions to investors with assets of $250,000
or more to invest. A range of actively managed growth, balanced, and municipal
income-oriented portfolios are available, all based upon a disciplined
investment philosophy.
Defined Portfolios
Nuveen Defined Portfolios are fixed portfolios of quality securities that are a
convenient, attractive alternative to purchasing individual securities. They
provide low-cost diversification to reduce risk, while also offering
experienced, professional security selection and surveillance. In addition,
Nuveen Defined Portfolios provide daily liquidity at that day's net asset value
for quick access to your assets.
Exchange-Traded Funds
Nuveen Exchange-Traded Funds offer investors actively managed portfolios of
investment-grade quality municipal bonds. The fund shares are listed and traded
on the New York and American stock exchanges. Exchange-traded funds provide the
investment convenience, price visibility and liquidity of common stocks.
MuniPreferred/(R)/
Nuveen MuniPreferred offers investors a AAA rated investment with an attractive
tax-free yield for the cash reserves portion of an investment portfolio.
MuniPreferred shares are backed 2-to-1 by the long-term portfolios of Nuveen
dual-class exchange-traded funds and are available for national as well as a
wide variety of state-specific portfolios.
13
<PAGE>
Fund Information
Board of Directors
Robert P. Bremner
Lawrence H. Brown
Anthony T. Dean
Anne E. Impellizzeri
Peter R. Sawers
William J. Schneider
Timothy R. Schwertfeger
Judith M. Stockdale
Fund Manager
Nuveen Advisory Corp.
333 West Wacker Drive
Chicago, IL 60606
Transfer Agent and
Shareholder Services
The Chase Manhattan Bank
4 New York Plaza
New York, NY 10004-2413
(800) 257-8787
Legal Counsel
Morgan, Lewis &
Bockius LLP
Washington, D.C.
Independent Public Accountants
Arthur Andersen LLP
Chicago, IL
14
<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
quality investments designed for individuals seeking to build and sustain
wealth. In fact, more than 1.3 million investors have trusted Nuveen to help
them pursue their financial goals.
The cornerstone of Nuveen's investment philosophy is a commitment to disciplined
long-term investment strategies focused on providing consistent, attractive
performance over time. 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 investments and services to
help meet your unique circumstances and financial planning needs. Our equity,
balanced, and tax-free income funds, along with our defined portfolios and
private asset management, can help you build a better, well-diversified
portfolio.
Talk with your financial adviser to learn more about how Nuveen investment
products and services can help you. Or call us at (800) 257-8787 for more
information, including a prospectus where applicable. Please read that
information carefully before investing.
NUVEEN
1898 - 1998
Our Second Century
helping investors sustain the wealth of a lifetime./SM/
John Nuveen & Co. Incorporated
333 West Wacker Drive
Chicago, IL 60616-1286
www.nuveen.com
