<PAGE>
Nuveen
Money Market
Funds
February 28, 1999
- -----------------------------
Annual 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. over the past 12 months ended February 28, 1999. Given the market
volatility of the past year, your Fund's conservative investment approach
provided the financial security and stability you have come to expect from a
Nuveen Money Market Fund.
The Year in Review
The past 12 months were marked by periods of market volatility both at home and
abroad, as the financial crisis that began in Asia spread to emerging markets
and impacted economies around the globe. Investors responded to market
uncertainties by seeking a haven in more conservative investments, such as
municipal bond funds. Finally, to avert a potential domestic credit crunch and
bring some stability to global markets, the Federal Reserve stepped in and eased
short-term interest rates for the first time in almost three years. Between the
end of September and mid-November 1998, three successive rate cuts brought the
federal funds rate to 4.75%.
Throughout 1998, the U.S. economy exhibited more strength than had been
expected. Current conditions indicate that this momentum could continue. One of
the chief factors in achieving today's peaceful coexistence of economic growth
and low inflation has been improved productivity. In the months ahead, we will
continue to watch this and other factors that affect the economy's future,
including corporate earnings reports, wage and employment statistics, the
strength of the U.S. dollar, events in international markets, and any further
interest rate indications from the Federal Reserve. We believe these key
components will influence the outlook for fixed-income markets well into the
next century.
Municipal Bonds: A Compelling Value
During the past year, rising bond prices, spurred in part by demand from
international and conservative investors, drove yields on 30-year Treasuries to
historic lows, even below 5% at times. Over this period, the yield on the Bond
Buyer Revenue Bond Index, an unmanaged index of long-term municipal revenue
bonds, fell seven basis points - from 5.36% to 5.29% - versus the 34-point drop
in Treasury yields. At the end of February 1999, the ratio of long-term
municipal yields compared to 30-year Treasury yields stood at 95%, compared with
the more typical range of 86-87%. Over the past eight months, this ratio reached
as high as 104%. For investors, this meant that quality long-term municipal
bonds offered almost the same yield as Treasury bonds with comparable
maturities - even before the tax advantages of municipal bonds were taken into
account. On an after-tax basis, municipal bonds presented an exceptionally
attractive investment option relative to Treasuries.
In the municipal market, low interest rates and the strong economy combined to
generate high levels of new issuance and a dramatic increase in the refinancing
of existing bonds. Municipal issuance in 1998 reached $284 billion, up 29% over
1997. In terms of total municipal issuance, 1998
1
<PAGE>
"Despite the
financial
turmoil in
other economic
circles, the
Nuveen
Tax-Exempt
Money Market
Fund, Inc. was
able to offer an
attractive short-
term rate."
ranked as the second largest year on record, next to 1993's $292 billion.
Municipal bonds have continued to outperform Treasuries in 1999. There are two
reasons for this. For starters, municipal supply declined 30% in the first
quarter of 1999 when compared to the first quarter of 1998, which made the bonds
that were brought to market very attractive. The second factor involved a drop-
off in demand for Treasuries by foreign investors. As the global economic
turmoil subsided during the first quarter of 1999, so did the interest in the
U.S. Treasury market.
The continued strength of the U.S. economy also produced improvements in the
fundamental health of many municipalities and boosted the overall credit quality
of municipal bonds. In 1998, issues upgraded by Moody's outnumbered downgrades
by a margin of 4 to 1, while the comparable ratio at Standard & Poor's was more
than 2 to 1.
Performance Review
Despite the financial turmoil in other economic circles, the Nuveen Tax-Exempt
Money Market Fund, Inc. was able to offer an attractive short-term rate. The
Fund supplied investors with an annualized tax-free yield of 2.63%, as of
February 28, 1999. This represented a taxable-equivalent yield of 3.81% for
investors in the 31% federal income tax bracket.
Please see your fund's Performance Overview in this report for more information.
Nuveen Expertise is Key
The solid track record of a proven investment manager is one key to taking
advantage of the exceptional values currently available in the municipal market.
The near-record level of municipal issuance in 1998, for example, highlighted
the value of Nuveen's in-depth knowledge of the municipal market, as our
portfolio management teams carefully analyzed the flood of issues to select
those securities best suited to help the funds achieve their investment
objectives.
As a further enhancement to our management capabilities, Nuveen has
assembled a strong group of investment managers experts in their particular
areas of the market to provide investors with the advantage of their experience
and insights. In addition to Nuveen Advisory Services for tax-free investing,
you and your adviser can rely on Institutional Capital Corporation for value-
oriented equity investing and Rittenhouse Financial Services, Inc. for growth-
oriented equity investing. For more information on these funds, contact your
financial adviser for a prospectus, or call Nuveen at (800) 621-7227. Please
read the prospectus carefully before you invest or send money.
We encourage you to talk with your financial adviser about Nuveen's expanding
array of investments and the ways they can help you establish a diversified
portfolio designed to build and sustain long-term financial security. We are
grateful for the confidence you have placed in us and are dedicated to
maintaining your trust in the years ahead.
Sincerely,
/s/ Timothy R. Schwertfeger
Timothy R. Schwertfeger
Chairman of the Board
April 15, 1999
2
<PAGE>
Nuveen Tax-Exempt Money Market Fund, Inc.
Performance Overview
As of February 28, 1999
- ---------------------------------------------------------------------------
Portfolio Statistics
- ---------------------------------------------------------------------------
Inception Date 3/81
Net Assets ($000) $345,633
Average Weighted Maturity (days) 43
- ---------------------------------------------------------------------------
- ---------------------------------------------------------------------------
Tax-Free Yields
- ---------------------------------------------------------------------------
SEC 7-Day Yield 2.63%
SEC 30-Day Yield 2.40%
- ---------------------------------------------------------------------------
- ---------------------------------------------------------------------------
Taxable-Equipment (based on a federal income tax rate of 31%)
- ---------------------------------------------------------------------------
SEC 7-Day Yield 3.81%
SEC 30-Day Yield 3.48%
- ---------------------------------------------------------------------------
- ---------------------------------------------------------------------------
Diversification (as a % of total investments)
- ---------------------------------------------------------------------------
Tax Obligation/General 15%
Long-Term Care 15%
Healthcare 14%
Tax Obligation/Limited 14%
Utilities 10%
Education and Civic Organizations 10%
Transportation 8%
Housing/Multifamily 8%
Financials 4%
Water and Sewer 2%
- ---------------------------------------------------------------------------
100%
- ---------------------------------------------------------------------------
- ---------------------------------------------------------------------------
1998-1999 Index Comparison
- ---------------------------------------------------------------------------
IBC Donoghue Institutional
Nuveen Tax-Exempt Money Market Tax-Exempt Money Market
Fund 30-Day Yield Fund Average
2/98 2.98 3.00
3/98 3.01 3.03
4/98 3.43 3.44
5/98 3.16 3.18
6/98 3.31 3.28
7/98 3.18 3.14
8/98 3.06 3.06
9/98 3.2 3.17
10/98 3.03 3.00
11/98 2.96 2.94
12/98 2.97 2.94
1/99 2.74 2.74
2/99 2.40 2.41
==IBC Donoghue Institutional Tax-Exempt Money Market Fund Average
==Nuveen Tax-Exempt Money Market Fund 30-Day Yield
Past performance is not predictive of future performance.
- -----
3
<PAGE>
Portfolio of Investments
Nuveen Tax-Exempt Money Market Fund, Inc.
February 28, 1999
<TABLE>
<CAPTION>
Principal Amortized
Amount Description Ratings* Cost
- ----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Arizona - 0.7%
$ 2,500,000 Maricopa County, Arizona, Pollution Control Corporation, Pollution Control A-1+ $2,500,000
Revenue Refunding Bonds (Arizona Public Service Company - Palo Verde Project),
1994 Series C, Variable Rate Demand Bonds, 3.250%, 5/01/29+
- ----------------------------------------------------------------------------------------------------------------------------
California - 2.3%
2,800,000 California Health Facilities Financing Authority (Sutter/CHS), Insured Revenue, VMIG-1 2,800,000
Series 1996B, Variable Rate Demand Bonds, 3.100%, 7/01/12+
5,000,000 Student Education Loan Marketing Corporation (A Nonprofit Public Benefit VMIG-1 5,000,000
Corporation Organized Under the Laws of the State of California), Student Loan
Revenue Refunding Bonds, Series 1993A, Variable Rate Demand Bonds, 3.050%, 11/01/02+
- ----------------------------------------------------------------------------------------------------------------------------
Colorado - 0.4%
1,300,000 Pitikin County Industrial Development, Revenue Refunding (Aspen Skiing A-1+ 1,300,000
Company Project), Series 1994A, Variable Rate Demand Bonds, 3.250%, 4/01/16+
- ----------------------------------------------------------------------------------------------------------------------------
Connecticut - 2.9%
10,000,000 Connecticut State Special Assessment Unemployment Compensation Advance VMIG-1 10,000,000
Fund, Revenue Bonds, Series 1993C, Commercial Paper, 3.600%, 7/01/99
- ----------------------------------------------------------------------------------------------------------------------------
District of Columbia - 3.3%
6,640,000 District of Columbia (Washington, D.C.), General Obligation General Fund VMIG-1 6,640,000
Recovery Bonds, Series 1991B, Variable Rate Demand Bonds, 3.350%, 6/01/03+
1,300,000 District of Columbia (Washington, D.C.), General Obligation, Series VMIG-1 1,300,000
1992A-3, Variable Rate Demand Bonds, 3.350%, 10/01/07+
1,900,000 District of Columbia (Washington, D.C.), General Obligation, Series VMIG-1 1,900,000
1992A-6, Variable Rate Demand Bonds, 3.350%, 10/01/07+
1,400,000 District of Columbia (Washington, D.C.), General Obligation, Series VMIG-1 1,400,000
1992A-4, Variable Rate Demand Bonds, 3.350%, 10/01/07+
- ----------------------------------------------------------------------------------------------------------------------------
Florida - 11.9%
9,000,000 Florida Housing Finance Agency, Multifamily Housing Revenue, Series 1985D VMIG-1 9,000,000
(Kings Colony Project), Variable Rate Demand Bonds, 3.000%, 8/01/06+
6,640,000 Gulf Breeze, Series 1995 A (Florida Municipal Bond Fund), Variable Rate A-1 6,640,000
Demand Bonds, 3.000%, 3/31/21+
5,400,000 Miami Health Facilities Authority (Miami Jewish Home and Hospital for the Aa-3 5,400,000
Aged, Inc.), Series 1992, Variable Rate Demand Bonds, 3.000%, 3/01/12+
2,300,000 Palm Beach County Health Facility Authority, Pooled Hospital, Series 85, VMIG-1 2,300,000
Commercial Paper, 2.800%, 3/04/99
7,600,000 Pinellas County (Florida) Educational Facilities Authority, Independent VMIG-1 7,600,000
Higher Education Pool, Series of 1985, Commercial Paper, 2.900%, 3/12/99
10,000,000 The University Athletic Association, Inc. (Florida), Capital Improvement VMIG-1 10,000,000
Revenue Bonds, Series 1990, Variable Rate Demand Bonds, 3.250%, 2/01/20+
- ----------------------------------------------------------------------------------------------------------------------------
Georgia - 5.9%
7,215,000 Housing Authority of Clayton County, Tax Exempt Adjustable Mode, Aa-2 7,215,000
Multifamily Housing Revenue Refunding Bonds, Series 1996 (BS Partners LP
Project), Variable Rate Demand Bonds, 2.950%, 9/01/26+
2,600,000 Columbia (Georgia) Elderly Authority, Residential Care Facilities Revenue Aa-3 2,600,000
Bonds (Augusta Resource Center on Aging Inc.), Series 1994, Variable Rate Demand
Bonds, 3.000%, 1/01/21+
10,705,000 Housing Authority of the County of DeKalb, Georgia, Multifamily Housing VMIG-1 10,705,000
Revenue Refunding Bonds (Lenox Pointe Project), Series 1996A, Variable
Rate Demand Bonds, 3.000%, 11/01/23+
- ----------------------------------------------------------------------------------------------------------------------------
Illinois - 3.3%
3,300,000 City of Chicago, Illinois, General Obligation Tender Notes, Series 1998, SP-1+ 3,300,000
2.850%, 10/28/99
</TABLE>
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4
<PAGE>
Portfolio of Investments
Nuveen Tax-Exempt Money Market Fund, Inc. (continued)
February 28, 1999
<TABLE>
<CAPTION>
Principal Amortized
Amount Description Ratings* Cost
- ----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Illinois (continued)
$ 8,000,000 Decatur (Illinois), Water Revenue Bonds, Series 1985 (New South Water VMIG-1 $ 8,000,000
Treatment), Commercial Paper, 3.950%, 3/16/99
- ----------------------------------------------------------------------------------------------------------------------------
Indiana - 4.7%
6,200,000 Fort Wayne, Indiana, Economic Development Revenue, Series 1998 (St. Anne A-1+ 6,200,000
Home and Retirement), Variable Rate Demand Bonds, 3.050%, 9/01/23+
2,600,000 City of Rockport, Indiana, Pollution Control Revenue Refunding Bonds (AEP A-1 2,600,000
Generating Company Project), Series 1995B, Variable Rate Demand Bonds,
3.200%, 7/01/25+
7,500,000 Tippecanoe School Corporation (Indiana), Temporary Loan Warrants, Series N/R 7,518,227
1999, 3.500%, 12/30/99
- ----------------------------------------------------------------------------------------------------------------------------
Kansas - 2.3%
2,900,000 Kansas State Development Finance Authority, Health Facilities Revenue VMIG-1 2,900,000
Bonds, Series 1998M (Stormont-Vail Regional Medical Center), Variable
Rate Demand Bonds, 3.400%, 11/15/23+
5,200,000 City of Olathe, Kansas, General Obligation Temporary Notes, Series 1998B, MIG-1 5,203,316
3.250%, 6/01/99
- ----------------------------------------------------------------------------------------------------------------------------
Kentucky - 2.2%
7,765,000 Kentucky Development Finance Authority (Presbyterian Homes and Services VMIG-1 7,765,000
Project), Series 1998A, Variable Rate Demand Bonds, 3.070%, 11/01/18+
- ----------------------------------------------------------------------------------------------------------------------------
Louisiana - 1.5%
5,200,000 New Orleans (Louisiana) Aviation Board, Series 1993B, Variable Rate Demand VMIG-1 5,200,000
Bonds, 3.000%, 8/01/16+
- ----------------------------------------------------------------------------------------------------------------------------
Michigan - 5.5%
7,100,000 Michigan Strategic Fund, Adjustable Rate Demand Limited Obligation A-1+ 7,100,000
Refunding Revenue Bonds (The Detroit Edison Company Pollution Control
Bonds Project), Series 1995CC, 3.250%, 9/01/30+
11,800,000 Detroit Downtown Development Authority (Millender Center Project), Series A-1 11,800,000
1988, Variable Rate Demand Revenue Bonds, 3.050%, 12/01/10+
- ----------------------------------------------------------------------------------------------------------------------------
Minnesota - 3.6%
5,000,000 Bloomington Port Authority, Minnesota, Tax Increment Revenue Refunding VMIG-1 5,000,000
Bonds (Mall of America Project), Series 1995A, Variable Rate Demand Bonds,
3.000%, 2/01/13+
7,355,000 St. Paul Housing and Redevelopment Authority, Parking Revenue Bonds, Series VMIG-1 7,355,000
1995B, Variable Rate Demand Bonds, 3.050%, 8/01/17+
- ----------------------------------------------------------------------------------------------------------------------------
Missouri - 6.6%
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, 3.500%, 8/15/26+
4,355,000 State Environmental Improvement and Energy Resources Authority of the State VMIG-1 4,355,000
of Missouri, Pollution Control Revenue Bonds, Series 1985 A (Union Electric
Company), Commercial Paper, 2.950%, 6/14/99
6,000,000 The City of St. Louis, Missouri, Tax and Revenue Anticipation Notes, Series MIG-1 6,016,494
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, 3.700%, 9/01/19+
- ----------------------------------------------------------------------------------------------------------------------------
Nebraska - 1.3%
4,380,000 Scotts Bluff County Hospital Authority (Nebraska), Elderly Residential A-2 4,380,000
Facility Refunding Revenue Bonds (Regional West Village Project), Variable
Rate Demand Bonds, 4.350%, 12/01/31+
- ----------------------------------------------------------------------------------------------------------------------------
Nevada - 1.7%
5,725,000 Clark County (Nevada), Airport System Improvement Refunding Revenue Bonds, VMIG-1 5,725,000
Series 1993A, Variable Rate Demand Bonds, 2.950%, 7/01/12+
- ----------------------------------------------------------------------------------------------------------------------------
New Mexico - 0.7%
2,500,000 State of New Mexico, Tax and Revenue Anticipation Notes, Series 1998-99, MIG-1 2,506,290
3.750%, 6/30/99
- ----------------------------------------------------------------------------------------------------------------------------
North Carolina - 2.6%
7,300,000 North Carolina Eastern Municipal Power Agency, Power System Revenue, Series A-1+ 7,300,000
1988B, Commercial Paper, 2.900%, 4/07/99
1,600,000 Raleigh-Durham Airport Authority, Special Facilities Refunding Revenue A-1+ 1,600,000
Bonds (American Airlines, Inc. Project), Series 1995A-1, Variable Rate
Demand Bonds, 3.300%, 11/01/05+
</TABLE>
-----
5
<PAGE>
<TABLE>
<CAPTION>
Principal Amortized
Amount Description Ratings* Cost
- ----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Ohio - 2.6%
$ 2,000,000 Butler County, Ohio, Limited Tax General Obligation Anticipation Notes, MIG-1 $ 2,000,391
3.500%, 3/19/99
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), 2.950%, 5/15/17+
2,000,000 University of Cincinnati (Ohio), General Receipts Bond Anticipation Notes, MIG-1 2,002,646
1998 Series AE, 3.260%, 8/18/99
- ----------------------------------------------------------------------------------------------------------------------------
Oklahoma - 1.4%
5,000,000 Oklahoma City Industrial and Cultural Facilities Trust, Variable Rate A-1+ 5,000,000
Demand Revenue Bonds (SSM Health Care), Series 1998B, 2.750%, 6/01/19+
- ----------------------------------------------------------------------------------------------------------------------------
Pennsylvania - 9.2%
2,000,000 County of Allegheny, Pennsylvania, Industrial Development Authority, VMIG-1 2,000,000
Revenue Bonds, Series 1997A (Longwood at Oakmont, Inc. Project), Variable
Rate Demand Revenue Bonds, 3.350%, 7/01/27+
10,000,000 Dauphin County General Authority, Variable Rate Demand Revenue Bonds, VMIG-1 10,000,000
Series of 1997 (Education and Health Loan Program), 3.000%, 11/01/17+
10,500,000 Lancaster County (Pennsylvania) Hospital Authority, Series 1998B (Willow A-1 10,500,000
Valley Lakes Manor), Variable Rate Demand Bonds, 3.000%, 12/01/18+
3,650,000 Philadelphia Authority for Industrial Development (Horizon House, Inc. VMIG-1 3,650,000
Project), Variable Rate Revenue Bonds, Series 1998, 3.000%, 6/01/13+
3,250,000 Philadelphia Authority for Industrial Development (The Academy of Music of Aa-3 3,250,000
Philadelphia), Variable Rate Revenue Bonds, Series 1998, 3.000%, 8/01/18+
2,500,000 Washington County (Pennsylvania) Industrial Development Authority, A-1 2,500,000
Industrial Development Revenue Refunding Bonds, Series 1991 (Wetterau
Finance Company Project), Variable Rate Demand Bonds, 3.000%, 11/01/14+
- ----------------------------------------------------------------------------------------------------------------------------
South Dakota - 3.4%
11,860,000 South Dakota Health and Educational Facilities Authority (McKennan VMIG-1 11,860,000
Hospital), Series 1994, Variable Rate Demand Revenue Bonds, 3.000%,
7/01/14+
- ----------------------------------------------------------------------------------------------------------------------------
Tennessee - 3.2%
1,000,000 Chattanooga-Hamilton Counties Hospital Authority, Hospital Revenue and A-1+ 1,000,000
Refunding Bonds (Erlanger Medical Center), Series 1987, Variable Rate Demand
Bonds, 3.250%, 10/01/17+
4,100,000 The Public Building Authority of the City of Clarksville, Tennessee, A-1+ 4,100,000
Adjustable Rate Pooled Financing Revenue Bonds, Series 1994 (Tennessee
Municipal Bond Fund), Variable Rate Demand Bonds, 2.950%, 6/01/24+
6,000,000 Montgomery County Public Building Authority, Pooled Financing Revenue Bonds MIG-1 6,000,000
(Tennessee County Loan Pool), Series 1997, Variable Rate Demand Bonds,
2.950%, 11/01/27+
- ----------------------------------------------------------------------------------------------------------------------------
Texas - 5.8%
8,000,000 State of Texas, Commercial Paper, Series B, 2.950%, 7/16/99 A-1+ 8,000,000
9,500,000 State of Texas, Series 1998, Tax and Revenue Anticipation Notes, 4.500%, MIG-1 9,572,141
8/31/99
2,500,000 Texas Health Facilities Development Corporation (North Texas Pooled Health VMIG-1 2,500,000
Program), Variable Rate Demand Bonds, Series 1985A, 3.200%, 5/31/25+
- ----------------------------------------------------------------------------------------------------------------------------
Utah - 0.7%
2,555,000 Davis County, Utah, Solid Waste Management and Energy Recovery Revenue Aaa 2,556,760
Refunding Notes (Special Service District), Series 1999, 3.250%, 6/15/99
- ----------------------------------------------------------------------------------------------------------------------------
Washington - 3.9%
4,985,000 Washington Economic Development Authority, Variable Rate Demand Economic MIG-1 4,985,000
Development Bonds, Series 1998H (Pioneer Human Services Project), 3.450%,
9/01/18+
4,720,000 Washington Public Power Supply System, Nuclear Project No. 3, Refunding VMIG-1 4,720,000
Revenue Bonds, Series 1993-A3, Variable Rate Demand Bonds, 2.850%, 7/01/18+
3,850,000 Washington State Housing Finance Commission, Nonprofit Revenue Bonds A-1 3,850,000
(Emerald Heights Project), Series 1990, Variable Rate Demand Bonds, 3.250%,
1/01/21+
</TABLE>
-----
6
<PAGE>
<TABLE>
<CAPTION>
Principal Amortized
Amount Description Ratings* Cost
- ----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Wisconsin - 4.8%
$ 5,500,000 Wisconsin Health and Educational Facilities Authority, Series 1988A VMIG-1 $ 5,500,000
(Alexian Village of Milwaukee), Commercial Paper, 4.050%, 3/09/99
5,000,000 Sheboygan Area School District (Wisconsin), Tax and Revenue Anticipation N/R 5,005,342
Promissory Notes, Series 1998, 3.600%, 8/31/99
3,540,000 Waupaca School District (Wisconsin), Portage, Waupaca, and Waushara MIG-1 3,543,505
Counties, Bond Anticipation Notes, Series 1999, 3.200%, 12/01/99 (WI)
2,400,000 Whitefish Bay School District (Wisconsin), Tax and Revenue Anticipation N/R 2,402,560
Promissory Note, Series 1998, 3.900%, 6/23/99
- ----------------------------------------------------------------------------------------------------------------------------
Wyoming - 1.1%
2,500,000 Sweetwater County, Wyoming, Pollution Control Revenue Bonds (Pacificorp A-1+ 2,500,000
Project), Series 1984, Variable Rate Demand Bonds, 3.200%, 12/01/14+
1,400,000 Uinta County Amoco Project, Series 1998, Pollution Control Revenue Bonds, VMIG-1 1,400,000
Variable Rate Demand Bonds, 3.150%, 7/01/26+
- ----------------------------------------------------------------------------------------------------------------------------
$343,690,000 Total Investments -- 99.5% 343,822,672
- ----------------------------------------------------------------------------------------------------------------------------
Other Assets Less Liabilities -- 0.5% 1,810,758
- ----------------------------------------------------------------------------------------------------------------------------
Net Assets 100% $345,633,430
=============================================================================================================
</TABLE>
* Ratings (not covered by the report of independent public
accountants): Using the higher of Standard & Poor's or
Moody's rating.
N/R Investment is not rated.
+ The security has a maturity of more than one year, but has
variable rate and demand features which qualify it as a
short-term security. The rate disclosed is that currently in
effect. This rate changes periodically based on market
conditions or a specified market index.
(WI) Security purchased on a when-issued basis (note 1).
See accompanying notes to financial statements.
-----
7
<PAGE>
Statement of Net Assets
February 28, 1999
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C>
Assets
Investments in short-term municipal securities, at amortized cost, which approximates market value (note 1) $343,822,672
Cash 1,537,626
Receivables:
Interest 1,390,482
Investments sold 3,125,000
Other assets 86,996
- ---------------------------------------------------------------------------------------------------------------------------
Total assets 349,962,776
- ---------------------------------------------------------------------------------------------------------------------------
Liabilities
Payable for investments purchased 3,543,505
Accrued expenses:
Management fees (note 3) 110,358
Other 26,634
Dividends payable 648,849
- ---------------------------------------------------------------------------------------------------------------------------
Total liabilities 4,329,346
- ---------------------------------------------------------------------------------------------------------------------------
Net assets applicable to shares outstanding (note 4) $345,633,430
===========================================================================================================================
Shares outstanding 345,633,430
===========================================================================================================================
Net asset value, offering and redemption price per share (net assets divided by shares outstanding) $ 1.00
===========================================================================================================================
Statement of Operations
Year Ended February 28, 1999
- ---------------------------------------------------------------------------------------------------------------------------
Investment Income (note 1) $ 12,512,413
- ---------------------------------------------------------------------------------------------------------------------------
Expenses
Management fees (note 3) 1,427,491
Shareholders' servicing agent fees and expenses 17,244
Custodian's fees and expenses 64,953
Directors' fees and expenses (note 3) 8,435
Professional fees 12,863
Shareholders' reports -- printing and mailing expenses 1,844
Federal and state registration fees 25,247
Other expenses 33,752
- ---------------------------------------------------------------------------------------------------------------------------
Total expenses 1,591,829
- ---------------------------------------------------------------------------------------------------------------------------
Net investment income 10,920,584
- ---------------------------------------------------------------------------------------------------------------------------
Net increase in net assets from operations $ 10,920,584
===========================================================================================================================
</TABLE>
See accompanying notes to financial statements.
-----
8
<PAGE>
Statement of Changes in Net Assets
<TABLE>
<CAPTION>
Year Ended Year Ended
2/28/99 2/28/98
- ------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Operations
Net investment income $ 10,920,584 $ 16,286,765
- ------------------------------------------------------------------------------------------------------------------
Net increase in net assets from operations 10,920,584 16,286,765
- ------------------------------------------------------------------------------------------------------------------
Distributions to Shareholders (note 1) (10,920,584) (16,286,765)
- ------------------------------------------------------------------------------------------------------------------
Share Transactions
(at constant net asset value of $1 per share) (note 1)
Net proceeds from sale of shares 1,894,910,826 2,020,884,303
Net proceeds from shares issued to shareholders due to reinvestment
of distributions 5,680,509 6,718,107
- ------------------------------------------------------------------------------------------------------------------
1,900,591,335 2,027,602,410
Cost of shares redeemed (2,028,459,624) (2,069,503,749)
- ------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets from share transactions (127,868,289) (41,901,339)
Net assets at the beginning of year 473,501,719 515,403,058
- ------------------------------------------------------------------------------------------------------------------
Net assets at the end of year $ 345,633,430 $ 473,501,719
==================================================================================================================
</TABLE>
See accompanying notes to financial statements.
- -----
9
<PAGE>
Notes to Financial Statements
1. General Information and Significant Accounting Policies
The Nuveen Tax-Exempt Money Market Fund, Inc. (the "Fund") is registered under
the Investment Company Act of 1940 as an open-end, diversified management
investment company. The following is a summary of significant accounting
policies followed by the Fund in the preparation of its financial statements in
accordance with generally accepted accounting principles.
Securities Valuation
The Fund invests in short-term municipal securities maturing within one year
from the date of acquisition. Securities with a maturity of more than one year
in all cases have variable rate and demand features qualifying them as short-
term securities and are 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, 1999, the dollar-weighted average life was 43 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, 1999, the Fund had an outstanding when-issued purchase commitment
of $3,543,505.
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, 1999, have been
designated Exempt Interest Dividends. Net realized capital gain distributions,
if any, are subject to federal taxation.
Insurance Commitments
Commitments have been obtained (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.
Effective April 1, 1999, the Fund purchased liability insurance to protect
against a decline in the value of securities held in the Fund's Portfolio of
Investments caused by the default of securities owned by the Fund. This policy
replaces the similar insurance policy from MBIA Insurance Corp. described above.
The insurance covers substantially all of the Fund's investments except U.S.
government securities. The maximum total coverage for all Nuveen money market
funds is $50 million, with certain deductibles for each loss. The Fund pays the
policy premiums. Coverage under the policy is subject to certain conditions and
may not be renewable upon expiration. While the policy is intended to provide
some protection against credit risk and to help the Fund maintain a constant
price per share of $1.00, there is no guarantee that the insurance will do so.
- -----
10
<PAGE>
Notes to Financial Statements (continued)
Derivative Financial Instruments
The Fund may invest in certain derivative financial instruments including
futures, forward, swap, and option contracts, and other financial instruments
with similar characteristics. Although the Fund is authorized to invest in such
financial instruments, and may do so in the future, it did not make any such
investments during the fiscal year ended February 28, 1999.
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 may differ
from those estimates.
2. Securities Transactions
Purchases and sales (including maturities) of investments in short-term
municipal securities during the fiscal year ended February 28, 1999, aggregated
$1,374,943,276 and $1,496,961,080, respectively.
At February 28, 1999, 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 The John Nuveen Company, the Fund pays
an annual management fee, payable monthly, as follows:
<TABLE>
<CAPTION>
Average Daily Net Asset Value Management Fee
- -----------------------------------------------------------------------------
<S> <C>
For the first $500 million .400 of 1%
For the next $500 million .375 of 1
For the next $1 billion .350 of 1
For net assets over $2 billion .325 of 1
=============================================================================
</TABLE>
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
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.
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, 1999, the Fund had 5 billion shares of $.01 par value stock
authorized. Net assets consisted of $345,633,430 paid-in capital.
5. Investment Composition
At February 28, 1999, the revenue sources by municipal purpose, expressed as a
percent of total investments, were as follows:
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------
<S> <C>
Education and Civic Organizations 10%
Financials 4
Health Care 14
Housing/Multifamily 8
Long-Term Care 15
Tax Obligation/General 15
Tax Obligation/Limited 14
Transportation 8
Utilities 10
Water and Sewer 2
- -----------------------------------------------------------------------------
100%
=============================================================================
</TABLE>
At February 28, 1999, 84% 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
Selected data for a share outstanding throughout each period is as
follows:
<TABLE>
<CAPTION>
Ratios/Supplemental Data
-------------------------------
Ratio
Less of Net
Beginning Distributions Ending Ratio of Investment
Net Net from Net Net Ending Expenses Income to
Year Ended Asset Investment Investment Asset Total Net Assets to Average Average
February 28/29, Value Income Income Value Return (000) Net Assets Net Assets
- ----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
1999 $1.00 $.03 $(.03) $1.00 3.07% $345,633 .45% 3.06%
1998 1.00 .03 (.03) 1.00 3.27 473,502 .44 3.26
1997 1.00 .03 (.03) 1.00 3.11 515,403 .44 3.10
1996 1.00 .03 (.03) 1.00 3.42 610,053 .44 3.43
1995 1.00 .03 (.03) 1.00 2.69 759,244 .44 2.65
================================================================================================================
</TABLE>
12
<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, 1999, and the related statement of operations
for the year then ended, the statements of changes in net assets for each of the
two years then ended and the financial highlights for the periods indicated
thereon. These financial statements and financial highlights are the
responsibility of the Fund's management. Our responsibility is to express an
opinion on these financial statements and financial highlights based on our
audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial 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, 1999, by correspondence with
the custodian and brokers. As to securities purchased but not received, we
requested confirmation from brokers, and when replies were not received, we
carried out alternative auditing procedures. An audit also includes assessing
the accounting principles used and significant estimates made by management, as
well as evaluating the overall financial statement presentation. We believe that
our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the net assets of the Nuveen
Tax-Exempt Money Market Fund, Inc. as of February 28, 1999, the results of its
operations for the year then ended, the changes in its net assets for each of
the two years then ended and the financial highlights for the periods indicated
thereon in conformity with generally accepted accounting principles.
ARTHUR ANDERSEN LLP
Chicago, Illinois
April 12, 1999
13
<PAGE>
Fund Information
Board of Directors
Robert P. Bremner
Lawrence H. Brown
Anne E. Impellizzeri
Peter R. Sawers
William J. Schneider
Timothy R. Schwertfeger
Judith M. Stockdale
Fund Manager
Nuveen Advisory Corp.
333 West Wacker Drive
Chicago, IL 60606
Transfer Agent and
Shareholder Services
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]
John Nuveen, Sr.
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
John Nuveen & Co. Incorporated
333 West Wacker Drive
Chicago, IL 60606-1286
www.nuveen.com
MAN-2-2-99
