NUVEEN TAX EXEMPT MONEY MARKET FUND INC, DEFS14A, 1999-04-23

NUVEEN TAX EXEMPT MONEY MARKET FUND INC
DEFS14A, 1999-04-23

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<PAGE> 1

SCHEDULE 14A
(RULE 14A-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )

Filed by the Registrant [X]

Filed by a Party other than the Registrant [ ]

Check the appropriate box:

[ ] Preliminary Proxy Statement [ ] CONFIDENTIAL, FOR USE OF THE
COMMISSION ONLY (AS PERMITTED BY RULE 14A-6(E)(2))

[X] Definitive Proxy Statement

[ ] Definitive Additional Materials

[ ] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
NUVEEN TAX-EXEMPT MONEY MARKET FUND, INC.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)

- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)

Payment of Filing Fee (Check the appropriate box):

[X] No fee required

[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.

(1) Title of each class of securities to which transaction applies:

- --------------------------------------------------------------------------------

(2) Aggregate number of securities to which transaction applies:

- --------------------------------------------------------------------------------

(3) Per unit price or other underlying value of transaction computed pursuant to
Exchange Act Rule 0-11 (Set forth the amount on which the filing fee is
calculated and state how it was determined):

- --------------------------------------------------------------------------------

(4) Proposed maximum aggregate value of transaction:

- --------------------------------------------------------------------------------

(5) Total fee paid:

- --------------------------------------------------------------------------------

[ ] Fee paid previously with preliminary materials.

- --------------------------------------------------------------------------------

[ ] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number, or
the Form or Schedule and the date of its filing.

(1) Amount Previously Paid:

- --------------------------------------------------------------------------------

(2) Form, Schedule or Registration Statement No.:

- --------------------------------------------------------------------------------

(3) Filing Party:

- --------------------------------------------------------------------------------

(4) Date Filed:

- --------------------------------------------------------------------------------

Notes:
<PAGE> 2

SCHEDULE 14A
(RULE 14A-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )

Filed by the Registrant [X]

Filed by a Party other than the Registrant [ ]

Check the appropriate box:

[ ] Preliminary Proxy Statement
[ ] CONFIDENTIAL, FOR USE OF THE
COMMISSION ONLY (AS PERMITTED BY RULE 14A-6(E)(2))

[X] Definitive Proxy Statement

[ ] Definitive Additional Materials

[ ] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
NUVEEN TAX-FREE RESERVES, INC.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)

- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)

Payment of Filing Fee (Check the appropriate box):

[X] No fee required

[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.

(1) Title of each class of securities to which transaction applies:

- --------------------------------------------------------------------------------

(2) Aggregate number of securities to which transaction applies:

- --------------------------------------------------------------------------------

(3) Per unit price or other underlying value of transaction computed pursuant to
Exchange Act Rule 0-11 (Set forth the amount on which the filing fee is
calculated and state how it was determined):

- --------------------------------------------------------------------------------

(4) Proposed maximum aggregate value of transaction:

- --------------------------------------------------------------------------------

(5) Total fee paid:

- --------------------------------------------------------------------------------

[ ] Fee paid previously with preliminary materials.

- --------------------------------------------------------------------------------

(1) Amount Previously Paid:

- --------------------------------------------------------------------------------

(2) Form, Schedule or Registration Statement No.:

- --------------------------------------------------------------------------------

(3) Filing Party:

- --------------------------------------------------------------------------------

(4) Date Filed:

- --------------------------------------------------------------------------------

Notes:
<PAGE> 3

SCHEDULE 14A
(RULE 14A-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )

Filed by the Registrant [X]

Filed by a Party other than the Registrant [ ]

Check the appropriate box:

[ ] Preliminary Proxy Statement [ ] CONFIDENTIAL, FOR USE OF THE
COMMISSION ONLY (AS PERMITTED BY RULE 14A-6(E)(2))

[X] Definitive Proxy Statement

[ ] Definitive Additional Materials

[ ] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
NUVEEN TAX-FREE MONEY MARKET FUND, INC.
(Nuveen New York Tax-Free Money Market Fund)
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)

- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)

Payment of Filing Fee (Check the appropriate box):

[X] No fee required

[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.

(1) Title of each class of securities to which transaction applies:

- --------------------------------------------------------------------------------

(2) Aggregate number of securities to which transaction applies:

- --------------------------------------------------------------------------------

(3) Per unit price or other underlying value of transaction computed pursuant to
Exchange Act Rule 0-11 (Set forth the amount on which the filing fee is
calculated and state how it was determined):

- --------------------------------------------------------------------------------

(4) Proposed maximum aggregate value of transaction:

- --------------------------------------------------------------------------------

(5) Total fee paid:

- --------------------------------------------------------------------------------

[ ] Fee paid previously with preliminary materials.

- --------------------------------------------------------------------------------

(1) Amount Previously Paid:

- --------------------------------------------------------------------------------

(2) Form, Schedule or Registration Statement No.:

- --------------------------------------------------------------------------------

(3) Filing Party:

- --------------------------------------------------------------------------------

(4) Date Filed:

- --------------------------------------------------------------------------------

Notes:
<PAGE> 4

SCHEDULE 14A
(RULE 14A-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )

Filed by the Registrant [X]

Filed by a Party other than the Registrant [ ]

Check the appropriate box:

[ ] Preliminary Proxy Statement [ ] CONFIDENTIAL, FOR USE OF THE
COMMISSION ONLY (AS PERMITTED BY RULE 14A-6(E)(2))

[X] Definitive Proxy Statement

[ ] Definitive Additional Materials

[ ] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
NUVEEN CALIFORNIA TAX-FREE FUND, INC.
(Nuveen California Tax-Free Money Market Fund)
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)

- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)

Payment of Filing Fee (Check the appropriate box):

[X] No fee required

[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.

(1) Title of each class of securities to which transaction applies:

- --------------------------------------------------------------------------------

(2) Aggregate number of securities to which transaction applies:

- --------------------------------------------------------------------------------

(3) Per unit price or other underlying value of transaction computed pursuant to
Exchange Act Rule 0-11 (Set forth the amount on which the filing fee is
calculated and state how it was determined):

- --------------------------------------------------------------------------------

(4) Proposed maximum aggregate value of transaction:

- --------------------------------------------------------------------------------

(5) Total fee paid:

- --------------------------------------------------------------------------------

[ ] Fee paid previously with preliminary materials.

- --------------------------------------------------------------------------------

(1) Amount Previously Paid:

- --------------------------------------------------------------------------------

(2) Form, Schedule or Registration Statement No.:

- --------------------------------------------------------------------------------

(3) Filing Party:

- --------------------------------------------------------------------------------

(4) Date Filed:

- --------------------------------------------------------------------------------

Notes:
<PAGE> 5

NUVEEN LOGO

TWO NEW WAYS TO VOTE . . . IT'S EASIER THAN EVER!

In addition to the option of mailing your proxy card, there are now two other
ways to vote your proxy -- by telephone and by computer over the Internet.
Either way will save you time and helps reduce your fund's expenses. It's fast,
convenient, and your vote is immediately confirmed and posted. So, after you
read the enclosed proxy statement, have your proxy cards handy and vote by
telephone or over the Internet!

BY TELEPHONE

Call the toll-free number listed on your proxy card
Enter your 12-digit control number located on the right portion of your proxy
card
Follow the simple recorded instructions

OVER THE INTERNET

Go to www.proxyvote.com
Enter your 12-digit control number located on the right portion of your proxy
card
Follow the simple instructions

If you vote by telephone or over the Internet, you do not need to mail the proxy
card.
<PAGE> 6

NUVEEN LOGO

IMPORTANT INFORMATION FOR
NUVEEN MONEY MARKET FUND SHAREHOLDERS

The Nuveen Tax-Free Reserves, Nuveen Tax-Exempt Money Market Fund, Nuveen
California Tax-Free Money Market Fund and Nuveen New York Tax-Free Money Market
Fund will host a Special Shareholder Meeting on Friday, June 4, 1999, at Nuveen
headquarters in Chicago, Illinois. At the meeting, you will be asked to approve
several important proposals affecting the fund you own.

The first few pages of this booklet summarize the funds' proposals and explain
the proxy process -- including how to cast your vote. Before you vote, please
read the full text of the proxy statement for a more complete understanding of
the proposals.

Q. WHY IS MY FUND CALLING A SPECIAL SHAREHOLDER MEETING?
A. Your fund has called this meeting to obtain your approval for some important
changes related to how the fund operates. These changes are part of Nuveen's
ongoing efforts to enhance the attractiveness and competitiveness of its
mutual funds by streamlining and standardizing with common industry practice
key aspects of the funds, including investment management, compliance and
administrative functions, service fees and corporate structure.

Q. WHAT SPECIFIC CHANGES ARE YOU PROPOSING?
A. We are asking you to (i) approve a new investment management agreement and
(except for the Tax-Exempt Money Market Fund) a new Rule 12b-1 Plan; (ii)
approve amendments to each fund's investment objective and policies; and
(iii) approve the reorganization of each fund into a separate series of a
newly-created Massachusetts business trust. We're also asking you to take
action on two administrative matters: the election to new terms of the seven
directors who currently serve on your fund's Board, and the ratification of
Arthur Andersen as your fund's independent auditor.

Q. HOW WILL THESE CHANGES AFFECT ME?
A. The proposed changes will not affect the day-to-day management of your fund's
portfolio or its investment strategies. These changes are designed to enable
your fund to operate more efficiently by streamlining and standardizing key
aspects of your fund's operation and to conform your fund's fee and expense
levels to industry norms. While several of the changes over time may increase
fund net operating expenses, on balance we believe the changes overall will
help make the fund more attractive to investors and their financial advisers,
increase operating efficiency, and enhance your fund's ability to continue to
offer competitive returns over time.

Q. HOW DO THE NEW AND OLD INVESTMENT MANAGEMENT AGREEMENTS DIFFER?
A. There are two differences between the old and new agreements. First, the new
agreement has a management fee schedule with more fee breakpoints. This means
that the management fees your fund pays will decline more quickly than before
as fund assets grow. Second, the new agreement replaces your fund's current
contractual expense cap with a market-based, discretionary expense cap. This
means that Nuveen will no longer reimburse fund expenses to a
contractually-stipulated level. Instead, Nuveen would be able to use its
discretion when setting reimbursement levels, taking into account such market
factors as a fund's expense ratio relative to its peers and its ability to
offer shareholders competitive returns. As a result, fund net operating
expenses will not increase precipitously if the new agreement is approved. We
believe a market-based expense cap policy provides your fund's adviser
greater flexibility than a contractually-stipulated policy in responding to
market and competitive conditions. If approved, this change initially will
have no impact on fund expenses, because Nuveen will maintain fund net
operating expenses at their current levels at least through December 31,
1999.

Q. HOW ARE YOU CHANGING MY FUND'S INVESTMENT OBJECTIVES AND POLICIES?
A. We are seeking your approval to change the wording but not the substance of
your fund's investment objective; this will have no impact on your fund's
day-to-day portfolio management. We're doing this in order to simplify the
administration of our money market funds by adopting a standardized
formulation of the fund's investment objective.

We're also seeking your approval to eliminate two outdated investment
policies that were originally adopted to comply with now obsolete state
securities laws. The first seeks to limit investment risk by restricting the
fund's ability to invest in securities of "unseasoned" companies with limited
or no long-term track record in business. As a tax-exempt money market fund,
your fund does not invest in companies. Rather, it invests in bonds issued by
state and local governments
<PAGE> 7

and government authorities. For this reason, this policy has not been
relevant to your fund's investment strategy and its elimination would have no
impact on your fund's operation. The second seeks to prevent conflicts of
interest by restricting the fund's ability to invest in securities which fund
officers also own. We believe your fund's Code of Ethics, which restricts the
investment activities of fund management personnel and was adopted pursuant
to SEC rules, is sufficient to prevent potential conflicts of interest.

Q. HOW DO THE NEW AND OLD SERVICE PLANS DIFFER?
A. Currently, service fees (under Rule 12b-1 and non-Rule 12b-1 Plans) are borne
equally by the fund and Nuveen. However, it is standard industry practice for
funds to pay for various services that shareholders receive, either
indirectly through the fund, such as custodian or transfer agency fees, or
directly from authorized dealers, such as 12b-1 service fees. Under the new
Plan, the fund will have full responsibility for paying 12b-1 service fees to
authorized dealers who provide ongoing account service and maintenance to
fund shareholders. While this will increase modestly the fund's gross (before
reimbursements) operating expenses, we believe this is an appropriate expense
for the fund to bear in full. For the Nuveen Tax-Free Reserves Fund, the new
Plan also reduces the maximum service fee paid to authorized dealers from
0.30% to 0.25% in order to conform with NASD limits on such fees.

Note: Nuveen Tax-Exempt Money Market Fund is for institutional investors and
does not and will not have a Rule 12b-1 Plan.

Q. WHAT HAPPENS IF EACH SHARE CLASS OF THE NEW YORK AND CALIFORNIA MONEY MARKET
FUNDS APPROVES THE NEW 12B-1 PLAN?
A. At the same time the new 12b-1 Plan is implemented, Nuveen will also
consolidate the existing three share classes of each fund into a single share
class. The original reasons behind each fund's creation of three different
share classes are no longer relevant. By consolidating share classes, we
expect to be able to operate each fund more efficiently.

Q. WHAT ARE THE BENEFITS OF REORGANIZING MY FUND INTO A MASSACHUSETTS BUSINESS
TRUST?
A. Currently, your fund is organized as either a Minnesota or a Maryland
corporation. Reorganization of your fund into a series of a newly-created
Massachusetts business trust is an administrative change that by itself will
not change your fund's investment objective, policies or operations. By
organizing your fund the same way as all other Nuveen mutual funds, we expect
to be able to operate your fund more efficiently at lower cost.

Q. HAS THE FUNDS' BOARD OF DIRECTORS APPROVED THE PROPOSALS?
A. Yes. The directors of your fund have unanimously agreed that these proposals
are in your best interests and recommends that you vote "FOR" each proposal.

Q. ARE YOU PLANNING ANY ADDITIONAL CHANGES TO THE FUNDS?
A. Yes. We plan to make several additional changes, which do not require prior
shareholder approval, at the same time we implement the proposals described
in this booklet, if approved by shareholders. We plan on changing the name of
Nuveen Tax-Free Reserves to Nuveen Municipal Money Market Fund; changing the
name of Nuveen California Tax-Free Money Market Fund to Nuveen California
Tax-Exempt Money Market Fund; changing the name of Nuveen New York Tax-Free
Money Market Fund to Nuveen New York Tax-Exempt Money Market Fund, and
changing the name of Nuveen Tax-Exempt Money Market Fund to Nuveen
Institutional Tax-Exempt Money Market Fund. We also plan to begin investing
in AMT bonds, whose income is subject to the federal alternative minimum tax,
for all our municipal money market funds except the Nuveen Institutional
Tax-Exempt Money Market Fund. These funds are already permitted to do so, but
have not taken advantage before of the opportunity AMT bonds provide to earn
higher yields. Nuveen Municipal Money Market Fund will be able to invest
without limit in AMT bonds, while our California and New York Tax-Exempt
Money Market Funds will invest up to 20% of their respective net assets in
AMT bonds.

Q. WHO PAYS THE COSTS OF THE SHAREHOLDER MEETING?
A. Each fund will pay a pro-rata portion of the costs of the meeting, including
all costs related to printing, mailing and tabulation of proxies. These are
estimated to be $0.0004 per share. By voting immediately, you can help your
fund avoid the considerable expense of a second proxy solicitation.
<PAGE> 8

Q. DO I NEED TO VOTE?
A. We encourage you to participate in the governance of your fund; your vote
makes a difference. If enough shareholders do not vote, your fund may not
receive enough votes to proceed with the meeting. If this happens, we'll have
to mail proxy materials again, which raises the costs of the meeting for all
shareholders.

Q. HOW DO I VOTE?
A. You may vote in person, by mail, by telephone or over the Internet. To vote
in person, you may attend the special meeting of shareholders which will be
held in the 31st floor conference room of John Nuveen & Co. Incorporated
located at 333 West Wacker Drive, Chicago, Illinois on Friday, June 4, 1999.
To vote by mail, please mark, sign and date the enclosed proxy card(s), and
mail it in the enclosed reply envelope, allowing sufficient time for your
proxy to be received on or before Friday, June 4, 1999. No postage is
required if the proxy is mailed in the United States. To vote by telephone,
call the number indicated on your proxy card, enter the 12-digit control
number found in the right portion of your proxy card, and follow the recorded
instructions, using your proxy card as a guide. To vote over the Internet, go
to www.proxyvote.com, enter the 12-digit control number found on the right
portion of your proxy card, and follow the instructions, using your proxy
card as a guide.

Q. WHOM DO I CALL IF I HAVE QUESTIONS?
A. If you need assistance, or have any questions regarding our proposals or how
to vote, please call your financial adviser. We would also be happy to answer
your questions; you may call us at (800) 257-8787 weekdays between 7:00 a.m.
and 7:00 p.m., Central time.
<PAGE> 9

NUVEEN LOGO
APRIL 19, 1999

NUVEEN TAX-EXEMPT MONEY MARKET FUND, INC.
NUVEEN TAX-FREE RESERVES, INC.
NUVEEN TAX-FREE MONEY MARKET FUND, INC.
(NUVEEN NEW YORK TAX-FREE MONEY MARKET FUND)
NUVEEN CALIFORNIA TAX-FREE FUND, INC.
(NUVEEN CALIFORNIA TAX-FREE MONEY MARKET FUND)

333 WEST WACKER DRIVE
CHICAGO, ILLINOIS 60606

DEAR SHAREHOLDER:

A special shareholder meeting of the Nuveen Tax-Exempt Money Market Fund, Inc.,
Nuveen Tax-Free Reserves, Inc., Nuveen Tax-Free Money Market Fund, Inc. (Nuveen
New York Tax-Free Money Market Fund), and Nuveen California Tax Free Fund, Inc.
(Nuveen California Tax-Free Money Market Fund) (each a "Fund" and, together, the
"Funds") has been scheduled for Friday, June 4, 1999. Shareholders of record as
of the close of business on Tuesday, April 6, 1999, are entitled to vote at the
meeting and any adjournment thereof.

You are, of course, welcome to join us at the meeting, but most shareholders
cast their votes by marking, signing and returning the enclosed proxy card(s).
Whether or not you plan to attend the meeting, we need your vote. By voting
immediately, you can help your fund avoid the considerable expense of a second
proxy solicitation. Please promptly mark, sign, date and return the enclosed
proxy card(s) in the enclosed postage-paid envelope so that the maximum number
of shares are voted. As an alternative to using the enclosed paper proxy card to
vote, you may vote either by telephone or over the Internet.

The attached proxy statement gives you detailed information about each of the
following proposals on which you will be asked to vote:

1. Election of seven Board nominees (voted on separately by shareholders of
each Fund).

2. Approval of a new investment management agreement with Nuveen Advisory
Corp. (voted on separately by shareholders of each Fund).

3. Approval of a new Rule 12b-1 Plan. In addition, for the New York and
California Tax-Free Money Market Funds, approval of a class
consolidation and, as necessary, an implementing amendment to the
Articles of Incorporation (voted on by shareholders of each class of
each Fund, voting separately by Fund and separately by class) (not
applicable to the Nuveen Tax-Exempt Money Market Fund, Inc.).

4. Approval of the reorganization of each Fund into a separate series of
the Nuveen Money Market Trust, a newly-created Massachusetts business
trust, and subsequent dissolution of the Fund (voted on separately by
shareholders of each Fund). In addition, for the Nuveen California
Tax-Free Money Market Fund, approval of an amendment to the Articles of
Incorporation to permit the reorganization to be approved by the
affirmative vote of a majority, rather than two-thirds, of the shares
entitled to vote.

5. Approval of amendments to each Fund's investment objective (voted on
separately by shareholders of the relevant Fund).

6. Approval of the elimination of certain fundamental policies (voted on
separately by shareholders of each Fund, voting separately on each
policy).

7. Ratification of the selection of independent auditors (voted on
separately by shareholders of each Fund).

The enclosed proxy statement describes the proposals in greater detail.
<PAGE> 10

Shareholders also will be asked to take such other action and consider such
other business as may properly come before the meeting or any adjournment
thereof.

THE DIRECTORS OF YOUR FUND'S BOARD HAVE UNANIMOUSLY AGREED THAT THESE PROPOSALS
ARE IN THE BEST INTERESTS OF SHAREHOLDERS AND URGE YOU TO VOTE "FOR" ALL
PROPOSALS.

Your vote is very important. Please do not hesitate to call (800) 257-8787 if
you have any questions about the proposals under consideration. Thank you for
taking the time to consider these important proposals. We appreciate your
continued support and confidence in Nuveen and our family of investments.

Very truly yours,
/s/ TIMOTHY R. SCHWERTFEGER
Timothy R. Schwertfeger
Chairman of the Board of Directors
<PAGE> 11

NUVEEN LOGO

APRIL 19, 1999

333 WEST WACKER DRIVE
CHICAGO, ILLINOIS 60606

NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
TO BE HELD ON JUNE 4, 1999

Notice is hereby given that a Special Meeting of Shareholders of each of the
above-referenced funds (each a "Fund" and, together, the "Funds") will be held
in the 31st floor conference room of John Nuveen & Co. Incorporated, the Funds'
distributor ("Nuveen"), 333 West Wacker Drive, Chicago, Illinois, on Friday,
June 4, 1999 at 10:00 a.m., Central time. Shareholders of record as of the close
of business on April 6, 1999, for each Fund are entitled to notice of the
meeting and are eligible to vote. At the meeting, the shareholders will be asked
to consider and act on the following proposals:

1. Election of seven Board nominees (voted on separately by shareholders
of each Fund).

2. Approval of a new investment management agreement with Nuveen
Advisory Corp. (voted on separately by shareholders of each Fund).

4. Approval of the reorganization of each Fund into a separate series of
the Nuveen Money Market Trust, a newly-created Massachusetts business
trust, and subsequent dissolution of the Fund (voted on separately by
shareholders of each Fund). In addition, for the Nuveen California
Tax-Free Money Market Fund, approval of an amendment to the Articles
of Incorporation to permit the reorganization to be approved by the
affirmative vote of a majority, rather than two-thirds, of the shares
entitled to vote.

5. Approval of amendments to each Fund's investment objective (voted on
separately by shareholders of the relevant Fund).

6. Approval of the elimination of certain fundamental policies (voted on
separately by shareholders of each Fund, voting separately on each
policy).

7. Ratification of the selection of independent auditors (voted on
separately by shareholders of each Fund).

Shareholders also will be asked to take such other action and consider such
other business as may properly come before the meeting or any adjournment
thereof.

On your proxy card(s), you may vote "FOR," or "WITHHOLD" authority to vote for
(i.e., vote against), all of the Board nominees in Proposal 1 by checking a
single box, or you may vote "FOR," or "WITHHOLD" authority to vote for, each
individual nominee. For Proposals 2 - 7, you may vote "FOR," "AGAINST," or
"ABSTAIN" on these proposals as a group by checking a single box, or you may
vote "FOR" or "AGAINST" or "ABSTAIN" on each proposal individually. In
accordance with their own discretion, the persons designated as proxies are
authorized to vote on such other business as may properly come before the
meeting.
<PAGE> 12

All shareholders are cordially invited to attend the meeting. In order to avoid
delay and additional expense for your Fund, and to assure that your shares are
represented, please vote as promptly as possible, whether or not you plan to
attend the meeting. You may vote by mail, telephone or over the Internet. To
vote by mail, please mark, sign, date and mail the enclosed proxy card. No
postage is required if mailed in the United States. To vote by telephone, please
call the toll-free number located on your proxy card, enter the 12-digit control
number found on the right portion of your proxy card, and follow the recorded
instructions, using your proxy card as a guide. To vote over the Internet, go to
www.proxyvote.com, enter the 12-digit control number found on the right portion
of your proxy card, and follow the instructions, using your proxy card as a
guide.

By Order of each Board of Directors

Gifford R. Zimmerman
Vice President and Secretary
<PAGE> 13

NUVEEN LOGO

APRIL 19, 1999

333 WEST WACKER DRIVE
CHICAGO, ILLINOIS 60606

JOINT PROXY STATEMENT

This Joint Proxy Statement is furnished in connection with the solicitation of
proxies by the Board of Directors (each a "Board") of each of the Nuveen
Tax-Exempt Money Market Fund, Inc. (the "Tax-Exempt Fund"); Nuveen Tax-Free
Reserves, Inc. (the "Tax-Free Fund"); Nuveen New York Tax-Free Money Market
Fund, (the "New York Fund") a series of Nuveen Tax-Free Money Market Fund, Inc.;
and Nuveen California Tax-Free Money Market Fund (the "California Fund"), a
series of Nuveen California Tax-Free Fund, Inc. (each a "Fund" and, together,
the "Funds"), to be voted at a special meeting of shareholders of each Fund, to
be held on Friday, June 4, 1999, at the 31st floor conference room of John
Nuveen & Co. Inc., the Funds' distributor ("Nuveen"), 333 West Wacker Drive,
Chicago, Illinois, and at any and all adjournments thereof. This proxy statement
and proxy card(s) are first being mailed to shareholders on or about April 20,
1999.

The primary purposes of the meeting are to ask shareholders to: (i) elect seven
nominees to the Board; (ii) approve a new investment management agreement and
(except for the Tax-Exempt Fund) a new Rule 12b-1 Plan; (iii) approve amendments
to each Fund's investment objective and fundamental policies; and (iv) approve
the reorganization of each Fund into a separate series of a newly-created
Massachusetts business trust.

Please vote as promptly as possible. The following voting instructions are
intended for shareholders who hold their shares with a Fund. If you hold shares
with your brokerage firm, contact the fund or your financial adviser for
information on how to vote. You may vote by mail, telephone or over the
Internet. To vote by mail, please mark, sign and date the enclosed proxy
card(s), and mail it in the enclosed reply envelope, allowing sufficient time
for your proxy to be received on or before Friday, June 4, 1999. No postage is
required if the proxy is mailed in the United States. To vote by telephone, call
the toll-free number located on your proxy card, enter the 12-digit control
number found on the right portion of your proxy card, and follow the recorded
instructions, using your proxy card as a guide. To vote over the Internet, go to
www.proxyvote.com, enter the 12-digit control number found on the right portion
of your proxy card, and follow the instructions, using your proxy card as a
guide. If your proxy is properly voted, the shares represented by the proxy card
will be voted at the meeting in accordance with your instructions. If no
instructions are specified, however, your shares will be voted "FOR" each
proposal listed below.

The shareholders of each Fund are entitled to vote on Proposals 1, 2 and 4-7.
The shareholders of each Fund, except the Tax-Exempt Fund, are entitled to vote
on Proposal 3, with the New York and California Funds voting separately by
class. With respect to Proposal 5, shareholders are entitled to vote on the
investment objective of their respective Fund of which they are shareholders.

<TABLE>
<CAPTION>
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PROPOSAL Shareholders Entitled to Vote
- ------------------------------------------------------------------------------------------------------
<S> <C>
Proposal 1 -- Election of Board Nominees Shareholders of each Fund, voting separately by
Fund.
Proposal 2 -- Approval of Investment Management Shareholders of each Fund, voting separately by
Agreement Fund.
Proposal 3 -- Approval of Rule 12b-1 Plan. In Shareholders of each Fund, voting separately by
addition, for the California and New Fund and separately by class. Not applicable to
York Funds, Class Consolidation, and the Tax-Exempt Fund.
as necessary, an Implementing
Amendment to Articles of
Incorporation
Proposal 4 -- Approval of Plan and Agreement of Shareholders of each Fund, voting separately by
Reorganization. In addition, for the Fund.
California Fund, approval of an
amendment to the Articles of
Incorporation to permit the
reorganization to be approved by the
affirmative vote of a majority,
rather than two-thirds, of the
shares entitled to vote.
Proposal 5 -- Approval of Amendments to Investment Shareholders of each Fund voting separately on the
Objectives investment objective of that Fund.
</TABLE>

1
<PAGE> 14

Shareholders of record at the close of business on April 6, 1999 are entitled to
vote at the meeting. Each whole share entitles the holder of record to one vote,
and each fractional share held entitles the holder of record to a proportionate
fractional vote, on each matter to be acted upon at the meeting. Shares of each
Fund entitled to vote at the meeting that are represented by properly executed
proxies will, unless such proxies have been revoked, be voted in accordance with
the instructions indicated on the proxies. Proxies may be revoked at any time
before the meeting date by filing a written notice of revocation, voting a
subsequent proxy, or attending the meeting and voting in person.

Shareholders may vote "FOR," or "WITHHOLD" authority to vote for (i.e., vote
against), all of the Board nominees in Proposal 1 by checking a single box, or
you may vote "FOR," or "WITHHOLD" authority to vote for, each individual
nominee. For Proposals 2-7 you may vote "FOR" or "AGAINST" these proposals as a
group by checking a single box, or you may vote"FOR" or "AGAINST" each proposal
individually.

The table below shows the approximate number of shareholders of each Fund (or
for each class of shares of each Fund) solicited by this proxy statement.

<TABLE>
<CAPTION>
- --------------------------------------------------
SHARES
FUND OUTSTANDING
- --------------------------------------------------
<S> <C>
Tax-Exempt Fund 386,887,021
Tax-Free Fund 257,228,038
New York Fund
-- Institutional Series 16,666
-- Distribution Plan Series 33,139,517
-- Service Plan Series 1,257,956
California Fund
-- Institutional Series 3,054,853
-- Distribution Plan Series 59,675,765
-- Service Plan Series 16,668,046
- --------------------------------------------------
</TABLE>

2
<PAGE> 15

INTRODUCTION

This meeting is being called to ask shareholders to consider and vote on a
number of proposals relating to various operational aspects of the Nuveen Money
Market Funds. Together, the proposals are a part of Nuveen's efforts to
streamline and standardize with common industry practice key aspects of its
mutual funds, including investment management, compliance and administrative
functions, as well as corporate structure. As money market funds, the Funds have
similar investment objectives and policies and are subject to substantially
similar compliance requirements. The proposals are designed to capitalize on
these similarities and create greater consistency and uniformity among the Funds
as well as Nuveen's other mutual funds. If approved, we believe that these
proposals will enable the Funds to operate efficiently over time and thereby
enhance the Funds' attractiveness to investors and advisers.

Currently, the Funds are organized as separate corporate entities, either as
Maryland or Minnesota corporations. Under the proposed plan of reorganization
(Proposal 4), the Funds would reorganize into the Nuveen Money Market Trust, a
newly-created Massachusetts business trust, and each Fund would exist as a
separate series of the Trust. As a separate series of a Massachusetts business
trust, each Fund would retain, among other things, its own shareholders and
portfolio investments, as well as the ability to enter into agreements and
business arrangements separate and apart from the other Funds, if needed.

Proposals 1-3 and 5-7 relate to various aspects of Fund operations. The results
of the shareholder vote on these proposals will be implemented regardless of
whether the plan of reorganization (Proposal 4) is approved. In other words,
depending on the outcome of the vote on the plan of reorganization, each Fund
will implement the results of Proposals 1-3 and 5-7 in its current structure, as
a Maryland or Minnesota corporation, or in its new structure, as a series of the
Nuveen Money Market Trust.

3
<PAGE> 16

PROPOSAL 1. CONSIDERATION AND ELECTION OF BOARD NOMINEES.
(BY EACH FUND)

At the meeting, shareholders of each Fund will be asked to consider and elect
seven Board nominees. The persons named in the accompanying proxy card(s)
intend, in the absence of contrary instructions, to vote all proxies on behalf
of shareholders "FOR" the election of Messrs. Robert P. Bremner, Lawrence H.
Brown, Peter R. Sawers, William J. Schneider and Timothy R. Schwertfeger, and
Mmes. Anne E. Impellizzeri and Judith M. Stockdale.

Each nominee is a current Board member. Mr. Schwertfeger is considered to be an
"interested person" of each Fund, as that term is defined under the Investment
Company Act of 1940 (the "1940 Act"). The other nominees are not "interested
persons" of any Fund and, as such, are called "independent" nominees or
directors. Each Board and its Nominating Committee recommends that shareholders
vote "FOR" the election of the nominees.

The proposal to elect the nominees is being presented for shareholder approval
pursuant to requirements under the 1940 Act. Under the 1940 Act, Board members
may not fill vacancies unless at least two-thirds of the members holding office
after such vacancies are filled have been elected by the shareholders. This
proposal, if approved, will provide the Board members with operating flexibility
by making it possible for the Boards to fill vacancies that may occur in the
future.

Each nominee has consented to being named in this proxy statement and to serve
as a Board member, if elected. However, if any nominee is not available for
election at the time of the meeting, the proxies may be voted for such other
person(s) as shall be determined by the persons acting under the proxies in
their discretion. The Funds know of no reason why any nominee would be unable or
unwilling to serve as a Board member if elected.

The term of each person elected as a Board member will begin on the date that
the results of this special meeting are implemented until the next meeting held
for the purpose of electing Board members or until his or her successor is
elected and duly qualified.

Upon each nominee's election and qualification, the seven nominees listed below
will constitute each Fund's entire Board, until such time as the Board may vote
to appoint additional members or to change or alter the constitution of the
Board. There currently is a vacancy on each Board. No candidate has been
selected to fill this vacancy. Proxies cannot be voted for a greater number of
persons than the number of nominees named in this proxy statement.

GENERAL INFORMATION ABOUT THE NOMINEES

The following table lists each nominee who is standing for election and the
nominee's age, business experience during the past five years and other board
memberships, the year in which the nominee was first elected or appointed to the
Board and the nominee's Fund shareholdings as of March 15, 1999. As of that
date, the nominees as a group beneficially owned an aggregate of less than 1% of
the shares of each Fund, and the directors and officers as a group beneficially
owned an aggregate of less than 1% of the shares of each Fund.

<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------------
TOTAL SHARES BENEFICIALLY
YEAR FIRST ELECTED OR FUND SHARES OWNED OF OTHER FUNDS
NAME, AGE, FIVE-YEAR BUSINESS APPOINTED A BOARD BENEFICIALLY IN THE NUVEEN FAMILY
EXPERIENCE AND DIRECTORSHIPS(1) MEMBER OWNED OF FUNDS
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Robert P. Bremner, 58, private investor and In 1997 for all Funds 0 12,349(2)
management consultant
Lawrence H. Brown, 64, retired in August 1989 In 1993 for all Funds 0 7,265(3)
as Senior Vice President of The Northern
Trust Company (banking and trust industry)
Anne E. Impellizzeri, 66, Executive Director In 1994 for all Funds 0 3,221
(since 1998) of Manitoga (center for Russell
Wright's design/home and landscape); formerly
President and Chief Executive Officer of
Blanton-Peale Institute (a training and
counseling organization)
Peter R. Sawers, 66, Adjunct Professor of In 1991 for all Funds 958(4) 12,108
Business and Economics, University of
Dubuque, Iowa; Adjunct Professor, Lake Forest
Graduate School of Management, Lake Forest,
Illinois; Chartered Financial Analyst;
Certified Management Consultant
William J. Schneider, 54, Senior partner and In 1997 for all Funds 0 39,008
Chief Operating Officer, Miller-Valentine
Partners; Vice President, Miller-Valentine
Group (Commercial real estate); Member
Community Advisory Board, National City Bank,
Dayton, Ohio
</TABLE>

4
<PAGE> 17

<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------------
TOTAL SHARES BENEFICIALLY
YEAR FIRST ELECTED OR FUND SHARES OWNED OF OTHER FUNDS
NAME, AGE, FIVE-YEAR BUSINESS APPOINTED A BOARD BENEFICIALLY IN THE NUVEEN FAMILY
EXPERIENCE AND DIRECTORSHIPS(1) MEMBER OWNED OF FUNDS
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
*Timothy R. Schwertfeger, 50, Chairman of the In 1994 for all Funds 567,472(4) 227,111(5)
Board of the Funds (since July 1996); Trustee
and President of the Funds advised by Nuveen
Institutional Advisory Corp. (since July
1996); Chairman (since July 1996), Director,
and previously Executive Vice President, of
The John Nuveen Company, John Nuveen & Co.
Incorporated, Nuveen Advisory Corp. and
Nuveen Institutional Advisory Corp; Director
(since 1996) of Institutional Capital
Corporation; Chairman and Director of Nuveen
Asset Management, Inc.; Chairman and Director
of Rittenhouse Financial Services Inc. (since
1999)
Judith M. Stockdale, 51, Executive Director In 1997 for all Funds 0 0
(since 1994) of the Gaylord and Dorothy
Donnelley Foundation, (a private family
foundation); Executive Director of the Great
Lakes Protection Fund (from 1990 to 1994)
- ---------------------------------------------------------------------------------------------------------------------------
</TABLE>

* Mr. Schwertfeger is an interested person of each Fund due to his association
with Nuveen Advisory Corp., the Funds' investment manager, John Nuveen & Co.
Incorporated, the Funds' principal underwriter and distributor, and their
affiliates.

(1) Nominees may be contacted by writing to 333 West Wacker Drive, Chicago,
Illinois 60606.

(2) Represents shares owned by Mr. Bremner's spouse. Mr. Bremner disclaims
beneficial ownership of these shares.

(3) All of Mr. Brown's shares are held in a revocable trust.

(4) Mr. Sawers holds shares of the Tax-Free Fund. Mr. Schwertfeger holds shares
of the Tax-Exempt Fund jointly with his spouse.

(5) Includes shares held by Mr. Schwertfeger in Nuveen's 401(K)/Profit Sharing
Plan.

In January 1999, options on the common stock of The John Nuveen Company in the
amount of 220,000 shares were granted to Timothy R. Schwertfeger. The options
granted to Mr. Schwertfeger have an exercise price of $30.00 per share and
remain outstanding until February 2006.

BOARD MEMBERSHIP ON OTHER NUVEEN FUNDS

As of April 6, 1999, the nominees were board members of 32 Nuveen open-end
funds, excluding these Funds, and 52 Nuveen closed-end funds, each of which is
managed by Nuveen Advisory Corp. In addition, as of April 6, 1999, Mr.
Schwertfeger was a board member of six open-end and five closed-end funds, each
of which is managed by Nuveen Institutional Advisory Corp., an affiliate of
Nuveen Advisory.

BOARD MEETINGS AND COMMITTEES

The Boards held four regular and two special meetings during the Funds' last
fiscal year. Each Board member attended at least 75% of all meetings, including
committee meetings.

Committees

Executive Committees. Each Board has an Executive Committee. Each Executive
Committee, which may meet between regular meetings of the Board, is authorized
to exercise all of the powers of and to act in the place and stead of the Board
to the full extent permitted by the Fund's charter and by-laws; provided that
the scope of the powers of the Executive Committee, unless otherwise
specifically authorized by the full Board, shall be limited to (i) emergency
matters where assembling the full Board in a timely manner is impracticable (and
in which event management would take all reasonable steps to quickly notify the
individual Board members of the actions taken by the Executive Committee), or
(ii) matters of an administrative or ministerial nature.

The current members of each Executive Committee are Peter R. Sawers (current
director and nominee) and Timothy R. Schwertfeger (Chairman of the Board and of
the Executive Committee). No Executive Committee meetings were held during the
Funds' last fiscal year.

Dividend Committees. Each Board has a Dividend Committee. Each Dividend
Committee is authorized to declare distributions on the Fund's shares including,
but not limited to, regular and special dividends, capital gains and ordinary
income distributions.

The current members of each Dividend Committee are Timothy R. Schwertfeger
(Chairman of the Board and of the Dividend Committee) and Lawrence H. Brown
(current director and nominee). No Dividend Committee meetings were held during
the Funds' last fiscal year.

5
<PAGE> 18

Audit Committees. Each Board has an Audit Committee. Each Audit Committee
advises the Board regarding the appointment of the Fund's independent
accountants and meets with the Fund's financial officers to review the conduct
of accounting and internal controls. Based on this review, it is authorized to
make recommendations to the Board.

The current members of each Audit Committee are Robert P. Bremner, Lawrence H.
Brown, Anne E. Impellizzeri, Peter R. Sawers (Chairman of the Audit Committee),
William J. Schneider and Judith M. Stockdale, each a current, independent
director and nominee. The Audit Committee of each Fund held two meetings during
its last fiscal year.

Nominating Committees. Each Board has a Nominating Committee. The Nominating
Committee identifies and recommends individuals to be nominated for election as
independent directors. No policy or procedure has been established regarding to
the recommendation of Board nominees by shareholders.

The members of each Nominating Committee are Robert P. Bremner, Lawrence H.
Brown (Chairman of the Nominating Committee), Anne E. Impellizzeri, Peter R.
Sawers, William J. Schneider and Judith M. Stockdale, each a current,
independent director and nominee. The Nominating Committee of each Fund held one
meeting during its last fiscal year.

COMPENSATION OF BOARD MEMBERS

Board members who are interested persons of a Fund due to their affiliation with
John Nuveen & Co. Incorporated ("Nuveen"), the Funds' principal underwriter and
distributor, or Nuveen Advisory Corp. ("Nuveen Advisory"), the Funds' investment
manager, serve on the Board without any compensation from the Funds. Each
independent director receives from each Fund an aggregate annual retainer, plus
reimbursement for reasonable out-of-pocket expenses incurred in connection with
attendance at board and committee meetings. Specifically, independent directors
receive:

- - a $60,000 annual retainer for serving as a board member of all open-end and
exchange-traded funds sponsored by Nuveen and managed by Nuveen Advisory;

- - a $1,000 fee per day plus expenses for attendance at all meetings held on a
day on which a regularly scheduled Board meeting is held;

- - a $1,000 fee per day plus expenses for attendance in person or a $500 fee per
day plus expenses for attendance by telephone at all meetings held on a day on
which no regular Board meeting is scheduled to be held; and

- - a $250 fee per day plus expenses for attendance in person or by telephone at a
meeting of the dividend or executive committee.

The annual retainer, fees and expenses are allocated among the funds managed by
Nuveen Advisory on the basis of relative net asset size.

Effective January 1, 1999, the Board of the Tax-Exempt Fund adopted a Deferred
Compensation Plan for independent Board members. Under the Plan, an independent
Board member may elect to defer all or a portion of the compensation earned for
their service to certain participating Nuveen funds, including the Tax-Exempt
Fund. Independent Board members may defer fees for any calendar quarter by
electing to do so before the beginning of the calendar quarter in which the
member wishes to begin deferral.

The table below shows, for each independent director, the aggregate compensation
paid by each Fund for the fiscal year ended February 28, 1999 and the total
compensation that all Nuveen funds paid to each independent Board member during
the calendar year ended December 31, 1998.

AGGREGATE COMPENSATION FROM THE:

<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------
TOTAL COMPENSATION FROM
THE NUVEEN
NAME OF BOARD MEMBER TAX-EXEMPT FUND TAX-FREE FUND NEW YORK FUND CALIFORNIA FUND FAMILY OF FUNDS
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Robert P. Bremner $1,043.97 $807.06 $190.08 $596.58 $71,500.00
Lawrence H. Brown $1,133.51 $873.38 $198.51 $642.40 $79,000.00
Anne E. Impellizzeri $1,043.97 $807.06 $190.08 $596.58 $71,500.00
Peter R. Sawers $1,043.97 $807.06 $190.08 $596.58 $72,000.00
William J. Schneider $1,043.97 $807.06 $190.08 $596.58 $71,500.00
Judith M. Stockdale $1,043.97 $807.06 $190.08 $596.58 $72,000.00
- ----------------------------------------------------------------------------------------------------------------------
</TABLE>

6
<PAGE> 19

EXECUTIVE OFFICERS

Each Fund has the same executive officers. The following table sets forth
information as of April 6, 1999, with respect to each executive officer of the
Funds, other than executive officers who are Board members. Fund officers
receive no compensation from the Funds. Officers who are employees of Nuveen
Advisory or its affiliates may be considered to have received indirect
compensation. The term of office of all officers expires annually in July.

<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------
NAME+ AGE POSITION WITH FUNDS Business Experience and Principal Occupation*
- -----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Alan G. Berkshire 38 Vice President and Asst. Vice President and General Counsel (since
Secretary since 1998 September 1997) and Secretary (since May 1998) of
The John Nuveen Company, John Nuveen & Co.
Incorporated, Nuveen Advisory Corp. and Nuveen
Institutional Advisory Corp.; prior thereto,
partner in the law firm of Kirkland & Ellis.
Peter H. D'Arrigo 31 Vice President and Vice President of John Nuveen & Co. Incorporated
Treasurer since 1999 (since January 1999), prior thereto, Assistant
Vice President (from January 1997); formerly,
Associate of John Nuveen & Co. Incorporated;
Chartered Financial Analyst.
Michael S. Davern 41 Vice President since 1997 Vice President of Nuveen Advisory Corp. (since
January 1997); prior thereto, Vice President and
Portfolio Manager of Flagship Financial, Inc.
(from September 1991 to January 1997).
Lorna C. Ferguson 53 Vice President since 1998 Vice President of John Nuveen & Co. Incorporated;
Vice President of Nuveen Advisory Corp. and
Nuveen Institutional Advisory Corp. (since
January 1998).
William M. Fitzgerald 35 Vice President since 1996 Vice President of Nuveen Advisory Corp. (since
December 1995); prior thereto, Assistant Vice
President of Nuveen Advisory Corp. (from
September 1992 to December 1995); Chartered
Financial Analyst.
Stephen D. Foy 44 Vice President and Vice President of John Nuveen & Co. Incorporated
Controller since 1998 and (since May 1998) The John Nuveen Company;
Certified Public Accountant.
J. Thomas Futrell 43 Vice President since 1991 Vice President of Nuveen Advisory Corp.;
Chartered Financial Analyst.
Richard A. Huber 36 Vice President since 1997 Vice President of Nuveen Institutional Advisory
Corp. (since March 1998) and Nuveen Advisory
Corp. (since January 1997); prior thereto, Vice
President and Portfolio Manager of Flagship
Financial, Inc.
Steven J. Krupa 41 Vice President since 1990 Vice President of Nuveen Advisory Corp.
Larry W. Martin 47 Vice President since 1993 Vice President, Assistant Secretary and Assistant
and Asst. Secretary since General Counsel of John Nuveen & Co.
1988 Incorporated; Vice President and Assistant
Secretary of Nuveen Advisory Corp. and Nuveen
Institutional Advisory Corp.; Assistant Secretary
of The John Nuveen Company and (since January
1997) Nuveen Asset Management Inc.
Edward F. Neild, IV 33 Vice President since 1996 Vice President of Nuveen Advisory Corp. and
Nuveen Institutional Advisory Corp. (since
September 1996); prior thereto, Assistant Vice
President of Nuveen Advisory Corp. (from December
1993 to September 1996) and Nuveen Institutional
Advisory Corp. (from May 1995 to September 1996);
Chartered Financial Analyst.
Stephen S. Peterson 41 Vice President since 1997 Vice President (since September 1997), Assistant
Vice President (from September 1996 to September
1997), and Portfolio Manager prior thereto, of
Nuveen Advisory Corp.; Chartered Financial
Analyst.
Stuart W. Rogers 42 Vice President since 1997 Vice President of John Nuveen & Co. Incorporated.
Thomas C. Spalding, Jr. 47 Vice President since 1980 Vice President of Nuveen Advisory Corp. and
Nuveen Institutional Advisory Corp.; Chartered
Financial Analyst.
William S. Swanson 33 Vice President since 1998 Vice President of John Nuveen & Co. Incorporated
(since October 1997); Assistant Vice President
(from September 1996 to October 1997) and,
formerly, Associate; Chartered Financial Analyst.
</TABLE>

7
<PAGE> 20

+ Address: 333 West Wacker Drive, Chicago, Illinois 60606.

* The Funds' investment manager is Nuveen Advisory Corp. The Funds' principal
underwriter and distributor is John Nuveen & Co. Incorporated. Nuveen Advisory
Corp. is a wholly-owned subsidiary of John Nuveen & Co. Incorporated. John
Nuveen & Co. is a subsidiary of The John Nuveen Company, which is
majority-owned by The St. Paul Companies, Inc.

As of March 15, 1999, Board members and executive officers of the Funds
beneficially owned 376,293 common shares of the other funds in the Nuveen Family
of Funds that are advised by Nuveen Advisory or Nuveen Institutional Advisory
Corp. (includes shares held by the executive officers in Nuveen's 401(k)/profit
sharing plan).

BOARD APPROVAL AND CONSIDERATIONS

At a joint meeting of the Boards of Directors of the Funds held on February 1-2,
1999, the directors voted to recommend that shareholders of each Fund elect the
nominees to their respective Boards. After due consideration, each Board of
Directors, including all independent directors, unanimously approved each
nominee to serve as a member of each Board, subject to shareholder approval. In
considering the nominees for election as Board members, the Boards took into
account the qualifications of each nominee, each nominee's performance as a
current director, the Nominating Committees' recommendation for nomination, and
the concern for the continued efficient conduct of Fund business.

SHAREHOLDER APPROVAL

For the New York Fund, the election of a nominee requires the vote of a majority
of the shares present and entitled to vote at a meeting in which a quorum is
present voting "FOR" the election of the nominee. For the other Funds, the
election of a nominee requires the vote of a majority of all the votes cast at a
meeting at which a quorum is present voting "FOR" the election of the nominee.

The persons named in the accompanying proxy card intend, in the absence of
contrary instructions, to vote all proxies "FOR" the election of the nominees.
You may vote "FOR," or "WITHHOLD" authority to vote for (i.e., vote against),
all of the Board nominees, or may vote "FOR," or "WITHHOLD" authority to vote
for, each individual nominee. If you give no voting instructions, your shares
will be voted "FOR" all nominees named herein.

IMPACT OF THIS VOTE ON THE PROPOSED REORGANIZATION

At the meeting, shareholders will be asked to vote on a proposal (Proposal 4) to
reorganize each Fund into a separate series of the Nuveen Money Market Trust, a
newly-created Massachusetts business trust (the "Trust"). The results of the
shareholder vote on the proposal to elect the nominees will determine which
nominees will serve as Board members of the Trust. If shareholders approve the
election of the nominees and approve the reorganization, the nominees will serve
on the Board of Trustees of the Trust. Should shareholders approve the election
of nominees, but disapprove the reorganization, the nominees will serve on the
Board of Directors of the Fund, in its current corporate structure. Each
nominee's interested or independent status as a Fund director will not change as
a result of the reorganization.

THE DIRECTORS UNANIMOUSLY RECOMMEND THAT SHAREHOLDERS VOTE "FOR" THE ELECTION OF
THE NOMINEES.

PROPOSAL 2. TO APPROVE A NEW INVESTMENT MANAGEMENT AGREEMENT
WITH NUVEEN ADVISORY CORP. (BY EACH FUND)

At the meeting, shareholders of each Fund will be asked to vote separately
regarding the approval of a new management agreement with Nuveen Advisory.
Nuveen Advisory serves as each Fund's investment manager and, as such, manages
the investment of each Fund's assets. Nuveen Advisory also is responsible for
administering each Fund's business affairs, providing office facilities,
equipment and certain clerical, bookkeeping and administrative services.

The current and proposed agreements do not differ with respect to Nuveen
Advisory's responsibilities and duties as each Fund's investment manager. The
primary differences between the agreements relate to management fee structures
and expense reimbursement policies. Under each current agreement, the investment
management fee is calculated using breakpoints, which provide for lower advisory
fees as Fund assets grow. The breakpoint schedule in the proposed management
agreement is accelerated, resulting in management fees decreasing more rapidly
than in the current breakpoint

8
<PAGE> 21

schedule. Further, under the current agreement, Nuveen Advisory is contractually
obligated to reimburse certain expenses of each Fund so that the Fund's total
expenses in any fiscal year do not exceed a specific percentage of its average
daily net asset value. This type of reimbursement is called an "expense cap."
Under the proposed agreement, Nuveen Advisory would no longer be required to
reimburse expenses at a contractually-stipulated level. Instead, Nuveen Advisory
would be able to use its discretion when setting reimbursement levels, taking
into account such market factors as a Fund's expense ratio relative to its peers
and the Fund's ability to offer shareholders competitive returns. As a result,
fund net operating expenses will not change precipitously if the proposed
agreement is approved. As a transitional measure, Nuveen Advisory has agreed to
continue to limit expenses at least through December 31, 1999 so that total fund
operating expenses do not exceed the current contractual expense caps (see
"Details About the Current Investment Management Agreement" below).

The table below shows the fees that Nuveen Advisory is entitled to receive from
each Fund under the current and proposed management agreements (based on percent
of average daily net assets):

<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------
TAX-FREE FUND TAX-EXEMPT, NEW YORK AND CALIFORNIA FUNDS
ASSETS UNDER ----------------------------------------- -----------------------------------------
MANAGEMENT CURRENT PROPOSED CHANGE CURRENT PROPOSED Change
- --------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
First $125M .5000% .5000% .0% .4000% .4000% .0%
Next $125M .5000% .4875% -.0125% .4000% .3875% -.0125%
Next $250M .4750% .4750% .0% .3750% .3750% .0%
Next $500M .4750% .4625% -.0125% .3750% .3625% -.0125%
Next $1B .4500% .4500% .0% .3500% .3500% .0%
Over $2B .4500% .4250% -.0250% .3500% .3250% -.0250%
- --------------------------------------------------------------------------------------------------------------------
</TABLE>

DETAILS ABOUT THE CURRENT INVESTMENT MANAGEMENT AGREEMENT

Nuveen Advisory has served as each Fund's investment manager since its
inception. The current agreement was last approved by shareholders on April 23,
1992. The current agreements are dated as follows:

<TABLE>
<CAPTION>
- --------------------------------------------------------------
Date of Agreement
- --------------------------------------------------------------
<S> <C>
Tax-Exempt Fund May 1, 1988
Tax-Free Fund May 1, 1988
New York Fund July 30, 1986
California Fund April 27, 1992, effective May 1, 1992
- --------------------------------------------------------------
</TABLE>

The New York Fund amended its investment management agreement on April 30, 1990
for the purpose of revising the provisions on terminating the agreement. This
amendment was approved by all Board members, including the independent Board
members, at a meeting held on April 28, 1990. The California Fund's investment
management agreement was amended on April 21, 1993, to be effective August 1,
1993, for the purpose of reducing the fees paid by series other than the
California Fund to Nuveen Advisory under the agreement. This amendment was
approved by all Board members, including the independent Board members, at a
meeting held on April 21, 1993. Each Fund's Board, including a majority of the
independent Board members, most recently approved the continuation of each
Fund's current agreement on May 5, 1998.

Under the current management agreement, Nuveen Advisory is contractually
obligated to waive management fees or reimburse certain Fund expenses so that
each Fund's total expenses in any fiscal year do not exceed the following
percentage of its average daily net asset value:

<TABLE>
<CAPTION>
- -------------------------------------------------
CONTRACTUAL
FUND Expense Cap
- -------------------------------------------------
<S> <C>
Tax-Free Fund .75%
Tax-Exempt Fund .45%
California Fund .55%
New York Fund .55%
- -------------------------------------------------
</TABLE>

The current agreement will continue in effect until August 1, 1999, unless and
until terminated by either party as provided in the agreement (the agreement may
be terminated by the Board, or, with respect to any Fund, by a vote of a
majority of the outstanding voting securities of that Fund, accompanied by
appropriate notice). The agreement will continue in force from year to year
after August 1, 1999, but only as long as such continuance is specifically
approved, at least annually, in the manner required by the 1940 Act. Under the
1940 Act, the continuance of advisory agreements must be approved annually by a
majority of Board members, including a majority of independent Board members.

9
<PAGE> 22

DETAILS ABOUT THE PROPOSED INVESTMENT MANAGEMENT AGREEMENT

A copy of the form of proposed management agreement is found in Annex A. Under
the proposed agreement, Nuveen Advisory would no longer be required to reimburse
expenses at a contractually-stipulated level. Instead, Nuveen Advisory would be
able to use its discretion when setting reimbursement levels, taking into
account such market factors as a Fund's expense ratio relative to its peers and
the Fund's ability to offer shareholders competitive returns. As a result, fund
net operating expenses will not change precipitously if the proposed agreement
is approved. As a transitional measure, Nuveen Advisory has agreed to continue
to limit expenses at least through December 31, 1999 so that total fund
operating expenses do not exceed the current contractual expense caps (see
"Details About the Current Investment Management Agreement" below). If approved
by shareholders, the proposed agreement will commence on June 25, 1999 and
continue in effect until August 1, 2000, unless and until terminated by either
party as provided in the agreement. The agreement may be terminated by the
Board, or, with respect to any Fund, by a vote of a majority of the outstanding
voting securities of that Fund, accompanied by appropriate notice. The agreement
will continue in force from year to year after August 1, 2000, but only as long
as such continuance is specifically approved, at least annually, in the manner
required by the 1940 Act.

COMPARISON OF THE CURRENT AND PROPOSED INVESTMENT MANAGEMENT AGREEMENTS

Investment Management Responsibilities. The proposed and current management
agreements are the same with respect to Nuveen Advisory's responsibilities and
duties as each Fund's investment manager. Under both agreements, Nuveen Advisory
is responsible for managing the investment and reinvestment of each Fund's
assets. Nuveen Advisory also is responsible under both agreements for
administering each Fund's business affairs, providing office facilities,
equipment and certain clerical, bookkeeping and administrative services.

Investment Management Fees. The primary differences between the agreements
relate to fee structures and expense reimbursement policies. Under the current
agreement, the investment management fee is calculated using breakpoints, which
provide for lower fees as Fund assets grow. The breakpoint schedule in the
proposed management agreement is accelerated, resulting in management fees
decreasing more rapidly than in the current breakpoint schedule (see table
earlier in this section comparing current and proposed management fee
schedules).

Under the current agreement, Nuveen Advisory is contractually obligated to cap
expenses by reimbursing certain expenses of each Fund so that the Fund's total
expenses in any fiscal year do not exceed a specific percentage of its average
daily net asset value. Under the proposed agreement, Nuveen Advisory will no
longer be required to reimburse expenses at a contractually stipulated level. As
a transitional measure, Nuveen Advisory has agreed to continue to limit expenses
at least through December 31, 1999 so that total fund operating expenses do not
exceed the current contractual expense caps (see "Details About the Current
Investment Management Agreement" above). After December 31, 1999, Nuveen
Advisory may choose to continue, modify or discontinue the voluntary expense cap
in its sole discretion. When determining reimbursement levels, Nuveen Advisory
will evaluate, among other considerations, each Fund's expense ratio relative to
its peers, and its ability to avoid a precipitous increase in fund net operating
expenses and to continue to offer competitive yields.

Each Fund is responsible for the payment of all other costs and expenses of its
operations and general administrative expenses, including payments under any
Rule 12b-1 plan, a portion of which are retained by Nuveen, the Fund's principal
underwriter and an affiliate of Nuveen Advisory, and paid in turn to authorized
dealers (see Proposal 3 for more information about 12b-1 payments).

Comparative Fee and Cost Information. The operating expense tables below are
intended to help you compare the Funds' fees for the fiscal year ended February
28, 1999 with those that would have been paid had the proposed management
agreement and, as applicable, 12b-1 Plan (see Proposal 3) been in effect during
the same period (pro forma). Fees and expenses are paid from Fund assets, and
are shown as a percentage of average net assets, unless noted otherwise.

Following each operating expense table are hypothetical cost examples intended
to help you compare the current cost of investing in a Fund over the time
periods indicated below with the cost had the proposed management agreement and,
as applicable, 12b-1 Plan been in effect during the same periods (pro forma).
The example assumes you invest $10,000 in a Fund for the time periods indicated,
and then redeem all your shares at the end of a period. The example also assumes
that your investment has a 5% return each year and that Fund operating expenses
remain the same as those shown above. Actual returns and costs may be higher or
lower.

10
<PAGE> 23

TAX-EXEMPT FUND

<TABLE>
<CAPTION>
- ----------------------------------------------------------
ANNUAL FUND
OPERATING EXPENSES
--------------------
CURRENT PRO FORMA
- ----------------------------------------------------------
<S> <C> <C>
Management Fees .40% .38%
12b-1 Distribution/Service Fees None None
Other Expenses .05% .05%
------- ---------
Total Operating Expenses .45% .43%
- ----------------------------------------------------------
</TABLE>

For the fiscal year ended February 28, 1999, the Tax-Exempt Fund paid $1.427
million in management fees, and, on a pro forma basis under the proposed
management agreement, would have paid $1.376 million, a change of -3.61%.

<TABLE>
<CAPTION>
- ----------------------------------------------------------
EXAMPLE
--------------------
CURRENT PRO FORMA
- ----------------------------------------------------------
<S> <C> <C>
1 Year $ 46 $ 44
3 Years $144 $138
5 Years $252 $241
10 Years $567 $542
- ----------------------------------------------------------
</TABLE>

TAX-FREE FUND

<TABLE>
<CAPTION>
- ----------------------------------------------------------
ANNUAL FUND
OPERATING EXPENSES
--------------------
CURRENT PRO FORMA
- ----------------------------------------------------------
<S> <C> <C>
Management Fees .50% .49%
12b-1 Distribution/Service Fees .04% .09%(2)
Other Expenses .26% .26%
------- ---------
Total Gross Operating Expenses(1) .80% .84%(3)
- ----------------------------------------------------------
(1) Expense Reimbursements -.05% -.09%
Total Net Operating Expenses .75% .75%
</TABLE>

Current Net Operating Expenses reflect reimbursements made pursuant to the
Fund's contractually-stipulated expense cap. Pro Forma Net Operating Expenses
reflect the undertaking of the Fund's adviser to continue reimbursements at
the contractually-stipulated level at least through December 31, 1999.
Thereafter, reimbursements may vary or be discontinued at the discretion of
the Fund's adviser, as described under "Comparison of Current and Proposed
Investments Management Agreements" above.

(2) During the next fiscal year, the number of authorized dealers is
anticipated to increase, and Nuveen will begin retaining 12b-1 fees on
accounts with no authorized dealer for which Nuveen provides on-going
shareholder account services. As a result, the 12b-1 fees paid to
authorized dealers are expected to increase to 0.20% of the Fund's average
daily net assets. Had these changes occurred at the start of the Fund's
last fiscal year, 12b-1 fees and total operating expenses would have been
0.09% and 0.85%, respectively, for the fiscal year ended February 28, 1999;
0.09% and 0.84%, respectively, under the proposed management agreement;
0.20% and 0.96%, respectively, under the proposed 12b-1 Plan; and 0.20% and
0.95%, respectively, under the proposed management agreement and 12b-1
Plan.

(3) Under the proposed management agreement alone, total operating expenses
would be 0.79%; under the proposed 12b-1 Plan alone, total operating
expenses would be 0.85%.

For the fiscal year ended February 28, 1999, the Tax-Free Fund paid $1.279
million in management fees, and, on a pro forma basis under the proposed
management agreement, would have paid $1.262 million, a change of -1.32%.

<TABLE>
<CAPTION>
- -------------------------------------------------------------
EXAMPLE
-----------------------
CURRENT PRO FORMA(1)
- -------------------------------------------------------------
<S> <C> <C>
1 Year $ 82 $ 86
3 Years $255 $ 268
5 Years $444 $ 466
10 Years $990 $1,037
- -------------------------------------------------------------
</TABLE>

(1) Under the proposed management agreement alone, costs would have been: 1
Year, $81; 3 Years, $252; 5 Years, $439; and 10 Years, $978. Under the
proposed 12b-1 Plan alone, costs would have been : 1 Year, $87; 3 Years,
$271; 5 Years, $471; and 10 Years, $1,049.

11
<PAGE> 24

NEW YORK FUND

<TABLE>
<CAPTION>
ANNUAL FUND OPERATING EXPENSES
---------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------
CURRENT PRO FORMA
---------------------------------------------- ---------
INSTITUTIONAL DISTRIBUTION PLAN SERVICE PLAN ALL SHARE
SERIES SERIES SERIES CLASSES
- -------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Management Fees .40% .40% .40% .40%
12b-1 Distribution/Service Fees None .03% None .06%(2)
Other Expenses .61% .29% .34% .29%
Service Fees None None .10% None
------------- ----------------- ------------ ---------
Total Gross Operating Expenses(1) 1.01% .72% .74% .75%
- -------------------------------------------------------------------------------------------------------------
(1) Expense Reimbursements -.46% -.17% -.19% -.20%
Total Net Operating Expenses .55% .55% .55% .55%
</TABLE>

(2) During the next fiscal year, the number of authorized dealers is
anticipated to increase, and Nuveen will begin retaining 12b-1 and service
fees on accounts with no authorized dealer for which Nuveen provides
on-going shareholder account services. As a result, annual 12b-1 and
service fees paid to authorized dealers are each expected to increase to
0.25% of the Fund's average daily net assets. Had these changes occurred at
the start of the Fund's last fiscal year, service fees (12b-1 and
non-12b-1) and total gross operating expenses for the fiscal year ended
February 28, 1999 would have been: none and 1.01%, respectively, for the
Institutional series; 0.13% and 0.82%, respectively, for the Distribution
Plan series; and 0.13% and 0.78%, respectively, for the Service Plan
series. The corresponding pro forma 12b-1 service fees and total gross
operating expenses for each share class would have been: 0.13% and 0.82%,
respectively, under the proposed management agreement; 0.25% and 0.94%,
respectively, under the proposed 12b-1 Plan; and 0.25% and 0.94%,
respectively, under the proposed management agreement and 12b-1 Plan.

For the fiscal year ended February 28, 1999, the Institutional, Distribution
Plan and Service Plan series paid $67, $123,000 and $8,000 in management fees,
respectively (total of $131,067) and, on a pro forma basis under the proposed
management agreement, would have paid the same amounts.

<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------
EXAMPLE
---------------------------------------------------------
CURRENT PRO FORMA
---------------------------------------------- ---------
INSTITUTIONAL DISTRIBUTION PLAN SERVICE PLAN ALL SHARE
SERIES SERIES SERIES CLASSES
- -------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
1 Year $ 103 $ 74 $ 76 $ 77
3 Years $ 322 $230 $237 $240
5 Years $ 558 $401 $411 $417
10 Years $1,236 $894 $918 $930
- -------------------------------------------------------------------------------------------------------------
</TABLE>

CALIFORNIA FUND

<TABLE>
<CAPTION>
ANNUAL FUND OPERATING EXPENSES
---------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------
CURRENT PRO FORMA
---------------------------------------------- ---------
INSTITUTIONAL DISTRIBUTION PLAN SERVICE PLAN ALL SHARE
SERIES SERIES SERIES CLASSES
- -------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Management Fees .40% .40% .40% .39%
12b-1 Distribution/Service Fees None .04% None .16%(2)
Other Expenses .04% .19% .19% .10%
Service Fees None None .12% None
------------- ----------------- ------------ ---------
Total Gross Operating Expenses(1) .44% .63% .59% .65%(3)
- -------------------------------------------------------------------------------------------------------------
(1) Expense Reimbursements None -.08% -.04% -.10%
Total Net Operating Expenses .44% .55% .55% .55%
</TABLE>

Current Net Operating Expenses reflect reimbursements made pursuant to the
Fund's contractually-stipulated expense cap. Pro Forma Net Operating
Expenses reflect the undertaking of the Fund's adviser to continue
reimbursements at the contractually-stipulated level at least through
December 31, 1999. Thereafter, reimbursements may vary or be discontinued at
the discretion of the Fund's adviser, as described under "Comparison of
Current and Proposed Investments Management Agreements" above.

(2) During the next fiscal year, the number of authorized dealers is
anticipated to increase, and Nuveen will begin retaining 12b-1 and service
fees on accounts with no authorized dealer for which Nuveen provides
on-going shareholder account services. As a result, annual 12b-1 and
service fees paid to authorized dealers are each expected to increase to
0.25% of the Fund's average daily net assets. Had these changes occurred at
the start of the Fund's last fiscal year, service fees (12b-1 and
non-12b-1) and total gross operating expenses for the fiscal year ended
February 28, 1999 would have been: none and 0.44%, respectively, for the
Institutional series; 0.13% and 0.72%, respectively, for the Distribution
Plan series; and 0.13% and 0.60%, respectively, for the Service Plan
series. The corresponding pro forma 12b-1 service fees and total gross
operating expenses for each share class would have been: 0.13% and 0.62%,
respectively, under the proposed management agreement; 0.25% and 0.75%,
respectively, under the proposed 12b-1 Plan; and 0.25% and 0.74%,
respectively, under the proposed management agreement and 12b-1 Plan.

(3) Under the proposed management agreement alone, total operating expenses
would be .43%, .62% and .58%, respectively for the Institutional,
Distribution Plan and Service Plan series. Under the proposed 12b-1 Plan
alone, total operating expenses would be 0.66%.

12
<PAGE> 25

For the fiscal year ended February 28, 1999, the Institutional, Distribution
Plan and Service Plan series paid $89,000, $232,000 and $398,000 (total of
$719,000) in management fees, and, on a pro forma basis under the proposed
management agreement, would have paid $87,000, $228,000 and $392,000 (total of
$707,000), respectively, with a change of -1.64%.

<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------
EXAMPLE
------------------------------------------------------------
CURRENT PRO FORMA(1)
---------------------------------------------- ------------
INSTITUTIONAL DISTRIBUTION PLAN SERVICE PLAN ALL SHARE
SERIES SERIES SERIES CLASSES
- ----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
1 Year $ 45 $ 64 $ 60 $ 66
3 Years $141 $202 $189 $208
5 Years $246 $351 $329 $362
10 Years $555 $786 $738 $810
- ----------------------------------------------------------------------------------------------------------------
</TABLE>

(1) Under the proposed management agreement alone, costs would have been: for
the Institutional series, 1 Year, $44; 3 Years, $138; 5 Years, $241; and 10
Years, $542; for the Distribution Plan series, 1 Year, $63; 3 Years, $199; 5
Years, $346; and 10 Years, $774; for the Service Plan series, 1 Year, $59; 3
Years, $186; 5 Years, $324; and 10 Years, $726. Under the proposed 12b-1
Plan alone, costs would have been: 1 Year, $67; 3 Years, $211; 5 Years,
$368; and 10 Years, $822.

Limitations of Liability. The agreements have the same provisions regarding the
circumstances under which Nuveen Advisory may be liable to a Fund. Under both
agreements, Nuveen Advisory is not liable to any Fund or Fund shareholder for
acts or omissions in connection with its services rendered under the agreement,
including any error of judgment, mistake of law or any loss arising out of any
investment, except for liability resulting from Nuveen Advisory's willful
misfeasance, bad faith, gross negligence or reckless disregard of its duties
under the agreement, and except to the extent specified in Section 36(b) of the
1940 Act regarding a loss resulting from the breach of fiduciary duty with
respect to receipt of compensation for services.

GENERAL INFORMATION ABOUT NUVEEN ADVISORY

Nuveen Advisory is located at 333 West Wacker Drive, Chicago, Illinois 60606. As
of March 31, 1999, Nuveen Advisory had approximately $37 billion of assets under
management. Mr. Timothy R. Schwertfeger serves as Chairman of the Board, Chief
Executive Officer and director of Nuveen Advisory. Mr. John P. Amboian serves as
Executive Vice President, Chief Financial Officer and director of Nuveen
Advisory.

Nuveen Advisory is a wholly-owned subsidiary of Nuveen. Nuveen is located at 333
West Wacker Drive, Chicago, Illinois 60606. Nuveen is the Funds' distributor and
principal underwriter, receives payments under the Rule 12b-1 and Service Plans,
and pays such monies to authorized dealers, as described in Proposal 3 below.

BOARD APPROVAL AND CONSIDERATIONS

At a joint meeting of the Boards of Directors of the Funds held on February 1-2,
1999, the directors voted to recommend that shareholders of each Fund approve
the proposed investment management agreement. After due consideration, each
Board of Directors, including all directors who are "independent" and who have
no direct or indirect financial interests in the operation of the proposed
management agreement or in any agreements related thereto, unanimously approved
the proposed investment management agreement, subject to shareholder approval.
At the meeting, the Boards concluded that the terms of the proposed agreement
are fair and reasonable, and in the best interest of shareholders. In
considering the terms of the proposed management agreement, the Boards took into
account a number of factors, but focused in particular on economies of scale and
the level of management fees for similar mutual funds. The directors also
considered the range of services provided to the Funds by Nuveen Advisory, each
Fund's performance record, Nuveen Advisory's agreement to implement a voluntary
expense cap at least through December 31, 1999, and Nuveen Advisory's
description of the basis on which it may voluntarily reimburse Fund expenses
after December 31, 1999.

SHAREHOLDER APPROVAL

For each Fund, approval of this proposal requires the affirmative vote of a
"majority of the outstanding voting securities" of the Fund. The term "majority
of the outstanding voting securities," as defined in the 1940 Act, means the
affirmative vote of the lesser of (1) 67% of the voting securities of the Fund
present at the meeting if more than 50% of the outstanding shares of the Fund
are present in person or by proxy or (2) more than 50% of the outstanding shares
of the Fund.

The persons named in the accompanying proxy card intend, in the absence of
contrary instructions, to vote all proxies "FOR" the approval of the proposed
management agreement. You may vote "FOR" or "AGAINST" the approval of the
agreement, or may "ABSTAIN" from voting on this proposal. If you give no voting
instructions, your shares will be voted "FOR" the approval of the proposed
management agreement.

13
<PAGE> 26

IMPACT OF THIS VOTE ON THE REORGANIZATION

At the meeting, shareholders will be asked to vote on a proposal to reorganize
each Fund into a separate series of the Nuveen Money Market Trust, a
newly-created Massachusetts business trust (see Proposal 4). The results of the
shareholder vote on the approval of the proposed management agreement will
determine the terms of the management agreement between the Trust and Nuveen
Advisory. If shareholders of a Fund approve the proposed management agreement
and approve the reorganization, the proposed management agreement will be
executed by the Trust, on behalf of that Fund, and Nuveen Advisory, with the
terms and fee arrangements discussed herein. Should shareholders of a Fund
approve the proposed management agreement, but disapprove the reorganization,
the proposed management agreement will be executed by Nuveen Advisory and the
Fund, in its current corporate structure. If shareholders of a Fund disapprove
the proposed management agreement, but approve the reorganization, Nuveen
Advisory and the Trust, on behalf of the Fund, will execute a management
agreement with the same terms and fee arrangements as the current management
agreement.

THE DIRECTORS UNANIMOUSLY RECOMMEND THAT SHAREHOLDERS VOTE "FOR" THE APPROVAL OF
THE PROPOSED INVESTMENT MANAGEMENT AGREEMENT.

PROPOSAL 3. TO APPROVE A NEW RULE 12B-1 PLAN. IN ADDITION, FOR THE NEW YORK AND
CALIFORNIA FUNDS, A CONSOLIDATION OF CLASSES AND, AS NECESSARY, AN
IMPLEMENTING AMENDMENT TO THE ARTICLES OF INCORPORATION. (BY EACH
FUND EXCEPT THE TAX-EXEMPT FUND)

At the meeting, shareholders of each Fund, except the Tax-Exempt Fund, will be
asked to approve a new Rule 12b-1 Plan. Shareholders of the New York and
California Funds also will be asked to approve the consolidation of the
Institutional, Distribution Plan and Service Plan series into a single share
class. Under the proposed Plan, each Fund pays a fee to reimburse Nuveen, the
Funds' principal underwriter and distributor, for compensating authorized
dealers of record, including Nuveen, for providing ongoing services to the Fund
or its shareholders. Nuveen may pay additional amounts to such firms from its
own resources at its discretion, and may retain any portion of the 12b-1 fees
not paid to such firms.

The proposed Plan is intended to enable each Fund to better serve the growing
and changing needs of shareholders and their financial advisers, to provide the
level of services shareholders have come to expect from the Funds, and to induce
financial service firms to provide important services to Fund shareholders. In
addition, it is expected that standardizing the Funds' current distribution and
servicing arrangements with Nuveen's other mutual funds will simplify compliance
efforts and streamline operational processes, and will enable the Funds to
achieve certain management efficiencies, without decreasing the level or quality
of services currently provided to shareholders.

BOARD APPROVAL AND CONSIDERATIONS

At a joint meeting of the Boards of Directors of the Funds held on February 1-2,
1999, the directors voted to recommend that shareholders of each Fund, with
shareholders of each class voting separately, approve the proposed Rule 12b-1
Plan. After due consideration, each Board of Directors, including all directors
who are "independent" and who have no direct or indirect financial interest in
the operation of the proposed Plan or in any agreements related thereto,
unanimously approved the proposed Rule 12b-1 Plan, subject to shareholder
approval.

At the meeting, the Boards concluded that the expenditures under the proposed
Plan are reasonable and that there is a reasonable likelihood that the Plan
would benefit the Tax-Free, New York and California Funds, and each current
class thereof. The Boards considered several factors in approving the proposed
Plan, including the appropriateness of the Funds paying the entire amount of
payments for the provision of ongoing account maintenance services to existing
shareholders. The Boards believe that the Plan would enable the Funds to better
service the growing and changing needs of shareholders and their financial
advisers, facilitate distribution of Fund shares, and help maintain the
attractiveness of the Fund to, and its ability to sell shares through,
authorized dealers when compared to other mutual funds that have implemented
similar distribution and service arrangements. The Boards also considered the
nature and the approximate amount of the expenditures expected to be paid under
the Plan, and the effect of the Plan on existing shareholders.

THE DIRECTORS UNANIMOUSLY RECOMMEND THAT SHAREHOLDERS VOTE "FOR" THE APPROVAL OF
THIS PROPOSAL.

PROPOSAL 3.A. APPROVAL OF A NEW RULE 12B-1 PLAN. (BY THE TAX-FREE FUND ONLY)

The Current Plan. The Fund originally adopted its Rule 12b-1 Plan on February 1,
1987, and amended the Plan on February 24, 1993. Under the current Plan, the
Fund and Nuveen pay authorized dealers for services rendered in the distribution
of shares or for the servicing of shareholder accounts according to the schedule
below. Such services may include establishing and maintaining shareholder
accounts, processing purchase and redemption orders, arranging for bank

14
<PAGE> 27

wires and answering shareholder inquiries. The fees paid under the current Plan
are paid one-half by the Fund and one-half by Nuveen. Nuveen may, at its
discretion and from its own resources, pay certain authorized dealers additional
amounts for services rendered to shareholders. The Board approved the current
Plan on July 23, 1998.

The Proposed Plan. Under the proposed Plan, the Fund will pay Nuveen an annual
12b-1 fee according to the schedule below. Nuveen will pay this fee to
authorized dealers of record, including Nuveen, for providing ongoing services
to the Fund and its shareholders. These services generally include those
described under the current 12b-1 Plan. Unlike the current Plan, the Fund would
pay the entire amount of the fees under the proposed 12b-1 Plan. Nonetheless,
Nuveen may, in its discretion and from its own resources, pay certain authorized
dealers additional amounts for services rendered to shareholders.

Comparative Fee Information. Please refer to the Tax-Free Fund's Annual
Operating Expenses table and Example on page 11 to compare the 12b-1 service
fees (as a percentage of the Fund's average daily net assets) paid during the
fiscal year ended February 28, 1999 with those that would have been paid on a
pro forma basis under the proposed Plan. For the fiscal year ended February 28,
1999, the Tax-Free Fund paid $115,000 in 12b-1 service fees.

During the next fiscal year, the number of selling firms who are authorized
dealers is anticipated to increase and Nuveen will begin retaining 12b-1 fees on
accounts with no authorized dealer. As a result, the annual service fees paid to
authorized dealers are expected to increase to 0.20% of the Fund's average daily
net assets. Had these changes occurred at the start of the Fund's last fiscal
year, under the current Plan, the Fund would have paid $511,000 in 12b-1 fees.

The 12b-1 fee under the current and proposed Plans are computed as follows:

<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------
CURRENT 12B-1 FEE PROPOSED 12B-1 FEE
(PAID ONE-HALF BY THE FUND (PAID ENTIRELY BY
NET ASSETS OF SERVICED ACCOUNTS AND ONE-HALF BY NUVEEN) THE FUND)
- -----------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Less than $2 million .10% .10%
$2 million to $5 million .15% .15%
$5 million to $10 million .20% .20%
$10 million and over .30% .25%
- -----------------------------------------------------------------------------------------------------------------
</TABLE>

SHAREHOLDER APPROVAL

Approval of this proposal requires the affirmative vote of a "majority of the
outstanding voting securities" of the Fund. The term "majority of the
outstanding voting securities," as defined in the 1940 Act, means the
affirmative vote of the lesser of (1) 67% of the voting securities of the Fund
present at the meeting if more than 50% of the outstanding shares of the Fund
are present in person or by proxy or (2) more than 50% of the outstanding shares
of the Fund.

The persons named in the accompanying proxy card intend, in the absence of
contrary instructions, to vote all proxies "FOR" the approval of the proposed
Rule 12b-1 Plan. You may vote "FOR" or "AGAINST" the approval of the Plan, or
may "ABSTAIN" from voting on this proposal. If you give no voting instructions,
your shares will be voted "FOR" the approval of the proposed Plan.

IMPACT OF THIS VOTE ON THE PROPOSED REORGANIZATION

At the meeting, shareholders will be asked to vote on a proposal to reorganize
each Fund into a separate series of the Nuveen Money Market Trust, a
newly-created Massachusetts business trust (see Proposal 4). The results of the
shareholder vote on the proposal to approve the Rule 12b-1 Plan will determine
the terms of the Fund's Rule 12b-1 Plan as a series of the Trust. If
shareholders approve the proposed Plan and approve the reorganization, the
proposed Plan will be implemented by the Trust, on behalf of the Fund. Should
shareholders of the Fund approve the proposed Plan, but disapprove the
reorganization, the proposed Plan will be implemented by the Fund in its current
structure as a Maryland corporation. If shareholders disapprove the proposed
Plan, the Board of Directors may take such additional action as it deems
appropriate, including soliciting shareholder approval again, continuing the
current 12b-1 Plan, or terminating the Plan.

PROPOSAL 3.B. APPROVAL OF A NEW RULE 12B-1 PLAN, CONSOLIDATION OF THE
INSTITUTIONAL, DISTRIBUTION PLAN AND SERVICE PLAN SERIES, AND, AS
NECESSARY, AN IMPLEMENTING AMENDMENT TO THE ARTICLES OF
INCORPORATION. (BY EACH CLASS OF THE NEW YORK FUND, VOTING
SEPARATELY)

The proposed Rule 12b-1 Plan applies to all shareholders, including shareholders
of the Fund's Institutional series who do not currently pay 12b-1 or service
fees. If the proposed 12b-1 Plan is approved by all classes, there will be no
differences between the Distribution Plan, Service Plan and Institutional
series. Accordingly, shareholders of each class of the Fund are being asked to
approve the consolidation of each class into a single share class of the Fund,
which would incur the proposed 12b-1 fees. In the event that shareholders
disapprove the reorganization (Proposal 4), shareholders of each class of the
Fund are being asked to approve an implementing amendment to the Articles of
Incorporation to consolidate the classes.

15
<PAGE> 28

The Current Plans. The New York Fund has three classes of shares: Distribution
Plan series, Service Plan series, and Institutional series. The current 12b-1
Plan applies to the Fund's Distribution Plan series only. The Fund's Service
Plan series pays service fees pursuant to a Service Plan that has the same
economic terms as, but is not, a Rule 12b-1 plan. Currently, shareholders of the
Institutional series do not pay any 12b-1 or service fees.

Under the current 12b-1 Plan for the Distribution Plan series, the Fund and
Nuveen pay authorized dealers of record for services rendered in the
distribution of shares. Under the current Service Plan for Service Plan series,
the Fund and Nuveen pay authorized dealers for servicing the accounts of Service
Plan series shareholders. Under both types of Plans, services may include
establishing and maintaining shareholder accounts, processing purchase and
redemption orders, arranging for bank wires and answering shareholder inquiries.
Payments under the current Plans are made at the rate of .25% per year of the
average daily net assets of serviced accounts. These amounts are paid one-half
by the Fund and one-half by Nuveen. Under the current Plans, Nuveen may, at its
discretion and from its own resources, pay authorized dealers an additional
amount not exceeding .05% per year based on the average net assets of accounts
serviced thereby.

The New York Fund adopted its Rule 12b-1 and Service Plan on October 30, 1986.
The Board approved the current Plans on July 23, 1998.

The Proposed Plan. The proposed Plan applies to all shares of the Fund,
including shareholders of the Institutional series. If the proposed Plan is
approved by all classes, there will be no differences between the Distribution
Plan, Service Plan and Institutional series and, accordingly, shareholders of
each class are being asked to approve the consolidation of their class into a
single share class of the Fund, which would incur the proposed 12b-1 fees.

Under the proposed Plan, the Fund will pay an annual 12b-1 fee of .25% of the
Fund's average daily net assets to reimburse Nuveen for compensating authorized
dealers, including Nuveen, for providing ongoing services to shareholders. Such
services generally include those described above. Unlike the current Plan, the
Fund would pay the entire amount of the 12b-1 fees. Nonetheless, Nuveen may, in
its discretion and from its own resources, pay certain firms additional amounts
for services rendered to shareholders.

Comparative Fee Information. Please refer to the New York Fund's Annual
Operating Expenses table and Example on page 12 to compare 12b-1 and service
fees (as a percentage of the Fund's average daily net assets) paid during the
fiscal year ended February 28, 1999 with those that would have been paid on a
pro forma basis under the proposed Plan. For the fiscal year ended February 28,
1999, the Distribution Plan series paid $8,000 in 12b-1 fees and the Service
Plan series paid $2,000 in service fees (total of $10,000).

During the next fiscal year, the number of authorized dealers is anticipated to
increase, and Nuveen will begin retaining 12b-1 fees on accounts with no
authorized dealer for which Nuveen provides on-going shareholder account
services. As a result, annual service fees paid to authorized dealers are
expected to increase 0.25% of the Fund's average daily net assets. Had these
changes occurred at the start of the Fund's last fiscal year, the Distribution
Plan series would have paid $77,000 in 12b-1 fees, and the Service Plan series
would have paid $4,900 in service fees (total of $81,900), during the fiscal
year ended February 28, 1999.

SHAREHOLDER APPROVAL AND IMPACT ON THE REORGANIZATION

Votes Required to Approve This Proposal. Approval of the proposed 12b-1 Plan for
each class of the New York Fund requires the approval of that share class. For
each class, approval of this proposal requires the affirmative vote of a
"majority of the outstanding voting securities" of the class. The term "majority
of the outstanding voting securities," as defined in the 1940 Act, means the
affirmative vote of the lesser of (1) 67% of the voting securities of the class
present at the meeting if more than 50% of the outstanding shares of the class
are present in person or by proxy or (2) more than 50% of the outstanding shares
of the class. If the Fund disapproves the reorganization (Proposal 4) and, as a
result, an implementing amendment to the Articles of Incorporation is required
to consolidate the classes, approval of this proposal further requires the
affirmative vote of a majority of the outstanding shares of each class, voting
separately.

The persons named in the accompanying proxy card intend, in the absence of
contrary instructions, to vote all proxies "FOR" the approval of this proposal.
You may vote "FOR" or "AGAINST" this proposal, or may "ABSTAIN" from voting on
this proposal. If you give no voting instructions, your shares will be voted
"FOR" the approval of this proposal.

Impact of Approving the New 12b-1 Plan. If each class of the Fund approves the
proposed 12b-1 Plan, then the Institutional, Distribution Plan and Service Plan
series will be consolidated into a single share class of the Fund, subject to
the terms of the proposed Plan. Further, if the Fund approves the reorganization
(Proposal 4), the proposed Plan will be implemented by the Trust, on behalf of
the Fund.

If each class of the Fund approves this proposal and the Fund disapproves the
reorganization, the proposed Plan will be implemented by the Fund in its current
corporate structure and the three classes will be consolidated into a single
share class of the Fund. In this case, Proposal 3.B. also requests shareholder
approval of an implementing amendment to the Articles of Incorporation to
consolidate the classes.

16
<PAGE> 29

Failure to Approve the New 12b-1 Plan. If each class disapproves the proposed
12b-1 Plan, the classes will not be consolidated and the Board may take such
additional action as it deems appropriate, including soliciting shareholder
approval again, or continuing or terminating the current Plans.

If the largest class of the Fund disapproves the proposed 12b-1 Plan and both of
the smaller classes approve the Plan, the Fund will retain the terms of the
current Plan for the largest class (and may cease selling shares of that class),
implement the proposed Plan for the approving classes and consolidate the
approving classes. In this case, Proposal 3.B. also requests shareholder
approval of an implementing amendment to the Articles of Incorporation to
consolidate the classes. If the largest class and one of the smaller classes
disapprove the proposed Plan, the Board may take such additional action as it
deems appropriate, including soliciting shareholder approval again, or
continuing or terminating the current Plan for that class; or seeking to
terminate and liquidate the class.

Further, if the Fund approves the reorganization, these actions will be
implemented by the Trust, on behalf of the Fund. Should the Fund disapprove the
reorganization, these actions will be implemented by the Fund, on behalf of each
class thereof, in its current corporate structure.

If (i) the largest class of the Fund approves the proposed Plan; (ii) one or
both of the other share classes disapprove the proposed Plan; and (iii) the Fund
approves the reorganization, then the disapproving class or classes will be
terminated by the Trust and the Fund will implement the proposed Plan. Should
the Fund disapprove the reorganization, then the Board may take such additional
action as it deems appropriate, including soliciting shareholder approval again;
continuing or terminating the current 12b-1 Plan for the disapproving class or
classes; or seeking to terminate and liquidate the disapproving class or
classes.

PROPOSAL 3.C. APPROVAL OF A NEW RULE 12B-1 PLAN, CONSOLIDATION OF THE
INSTITUTIONAL, DISTRIBUTION PLAN AND SERVICE PLAN SERIES, AND, AS
NECESSARY, AN IMPLEMENTING AMENDMENT TO THE ARTICLES OF
INCORPORATION. (BY EACH CLASS OF THE CALIFORNIA FUND, VOTING
SEPARATELY)

The Current Plans. The California Fund has three classes of shares: Distribution
Plan series, Service Plan series, and Institutional series. The current 12b-1
Plan applies to the Fund's Distribution Plan series only. The Fund's Service
Plan series pays service fees pursuant to a Service Plan that has the same
economic terms as, but is not, a Rule 12b-1 plan. Currently, shareholders of the
Institutional series do not pay any 12b-1 or service fees.

The California Fund adopted its Rule 12b-1 and Service Plan on December 2, 1985,
and revised each on August 29, 1991. The Board approved the current Plans on
July 23, 1998.

Under the proposed Plan, the Fund will pay an annual 12b-1 fee of .25% of the
Fund's average daily net assets to reimburse Nuveen for compensating authorized
dealers, including Nuveen, for providing ongoing services to shareholders. Such
services generally include those described above. Unlike the current Plan, the
Fund would pay the entire amount of the 12b-1 fees. Nonetheless, Nuveen may, at
its discretion and from its own resources, pay certain firms additional amounts
for services rendered to shareholders.

Comparative Fee Information. Please refer to the California Fund's Annual
Operating Expenses table and Example on page 12 to compare the 12b-1 and service
fees (as a percentage of the Fund's average daily net assets) paid during the

17
<PAGE> 30

fiscal year ended February 28, 1999 with those that would have been paid on a
pro forma basis under the proposed Plan. For the fiscal year ended February 28,
1999, the Distribution Plan series paid $23,000 in 12b-1 fees and the Service
Plan series paid $116,000 in service fees (total of $139,000).

During the next fiscal year, the number of authorized dealers is anticipated to
increase, and Nuveen will begin retaining 12b-1 fees on accounts with no
authorized dealer for which Nuveen provides on-going shareholder account
services. As a result, annual service fees paid to authorized dealers are
expected to increase 0.25% of the Fund's average daily net assets. Had these
changes occurred at the start of the Fund's last fiscal year, the Distribution
Plan series would have paid $145,000 in 12b-1 fees, and the Service Plan series
would have paid $249,000 in service fees (total of $394,000), during the fiscal
year ended February 28, 1999.

SHAREHOLDER APPROVAL AND IMPACT ON THE REORGANIZATION

Votes Required to Approve This Proposal. Approval of the proposed 12b-1 Plan for
each class of the California Fund requires the approval of that share class. For
each class, approval of this proposal requires the affirmative vote of a
"majority of the outstanding voting securities" of the class. The term "majority
of the outstanding voting securities," as defined in the 1940 Act, means the
affirmative vote of the lesser of (1) 67% of the voting securities of the class
present at the meeting if more than 50% of the outstanding shares of the class
are present in person or by proxy or (2) more than 50% of the outstanding shares
of the class. If the Fund disapproves the reorganization and, as a result, an
implementing amendment to the Articles of Incorporation is required to
consolidate the classes, approval of this proposal further requires, the
affirmative vote of a majority of the outstanding shares of each class, voting
separately.

Approving the New 12b-1 Plan. If each class of the Fund approves this proposal,
then the Institutional, Distribution Plan and Service Plan series will be
consolidated into a single share class of the Fund, subject to the terms of the
proposed Plan. Further, if the Fund approves the reorganization (Proposal 4),
the proposed Plan will be implemented by the Trust, on behalf of the Fund.

If each class of a Fund approves this proposal and the Fund disapproves the
reorganization, the proposed Plan will be implemented by the Fund in its current
corporate structure and the three classes will be consolidated into a single
share class of the Fund. In this case, Proposal 3.C. also requests shareholder
approval of an implementing amendment to the Articles of Incorporation to
consolidate the classes.

Failure to Approve the New 12b-1 Plan. If any class of the Fund disapproves the
proposed 12b-1 Plan, the Board may take such additional action regarding the
disapproving class or classes as it deems appropriate, including soliciting
shareholder approval again; continuing or terminating the current Plan(s) for
the disapproving class or classes; or terminating and liquidating the
disapproving class or classes. If two classes approve the proposed 12b-1 Plan,
the classes will be consolidated into a single share class, which would incur
the new Rule 12b-1 service fees. In this case, if the Fund disapproves the
reorganization, Proposal 3.C. also requests shareholder approval of an
implementing amendment to the Articles of Incorporation to consolidate the
classes. If one class approves the proposed 12b-1 Plan, the proposed Plan will
be implemented by the Fund on behalf of the approving class in its current
corporate structure or as a series of the Trust.

PROPOSAL 4. TO APPROVE A PLAN AND AGREEMENT OF REORGANIZATION. (BY EACH FUND)

At the meeting, shareholders of each Fund will be asked to vote separately
regarding the approval of the reorganization of each Fund into a separate series
of the Nuveen Money Market Trust, a newly-created Massachusetts business trust.
The table below shows the current corporate structure of the Funds, and the
proposed organizational structure after the reorganization:

<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------
BEFORE: After:
- --------------------------------------------------------------------------------------------------------
<S> <C>
Nuveen Tax-Exempt Money Market Fund, Inc., a Nuveen Institutional Tax-Exempt Money Market Fund,
Maryland corporation a series of the Trust.
Nuveen Tax-Free Reserves, Inc., a Maryland Nuveen Municipal Money Market Fund, a series of
corporation the Trust.
Nuveen New York Tax-Free Money Market Fund, a Nuveen New York Tax-Exempt Money Market Fund, a
series of Nuveen Tax-Free Money Market Fund, series of the Trust.
Inc., a Minnesota corporation
Nuveen California Tax-Free Money Market Fund, a Nuveen California Tax-Exempt Money Market Fund, a
series of Nuveen California Tax-Free Fund, Inc., series of the Trust.
a Maryland corporation
- --------------------------------------------------------------------------------------------------------
</TABLE>

18
<PAGE> 31

Under the Plan and Agreement of Reorganization, each Fund will be reorganized
into a separate series of the Trust. Each shareholder of the Fund will receive a
number of shares of the series of the Trust, including any fractional shares,
equal in value and number to the shareholder's Fund shares. Subsequently, each
Fund will be dissolved and the outstanding shares of each Fund will be canceled.
In other words, a Fund shareholder will receive the same pro rata interest in
the series of the Trust as the shareholder had in the Fund immediately prior to
the reorganization.

For the California Fund, this proposal also requests shareholder approval of an
amendment to the Articles of Incorporation ("Articles"), which would add a new
provision allowing certain corporate actions by the California Fund, such as
approval of the reorganization into a series of a Massachusetts business trust
and the related termination of the Fund, to be authorized by the vote of a
majority of the shares entitled to vote rather than by a vote of two-thirds of
such shares otherwise required by Maryland law (the amendment is attached as
Annex C).

The Funds, as new series of the Trust, will be identical to the Funds as they
currently exist, except that the results of the shareholder votes on Proposals
1-3 and 5-7 will be implemented in the new structure. In other words, the new
series will operate in the same manner and with the same investment objectives
and policies as the Fund, after giving effect to the results of the shareholder
votes on Proposals 1-3 and 5-7. If a Fund does not approve the reorganization,
that Fund will retain its current corporate structure. The Trust's address will
be the same as the Funds' current address: 333 West Wacker Drive, Chicago,
Illinois 60606.

WHAT IS THE PURPOSE OF THE REORGANIZATION?

The purpose of the reorganization is to create management efficiencies and
economies of scale by standardizing and consolidating the organizational
structures of the Funds. The reorganization is expected to foster efficiency by
providing for a uniform set of charter documents, shareholder purchase options
and shareholder account privileges. In addition, the reorganization is designed
to capitalize on the greater operational flexibility afforded to business trusts
under Massachusetts law as compared with Maryland and Minnesota corporations.
The increased coordination of documents and policies will help to promote
operational efficiencies, allocate work flows and allow for greater flexibility
for future change, all of which are expected to benefit the Funds and their
shareholders.

COMPARISON OF THE TRUST AND THE FUNDS.

Shareholder Liability. Each Fund is currently organized as a Minnesota or
Maryland corporation. Under Minnesota and Maryland corporate law, shareholders
are generally not liable for the obligations of the corporation. The Trust is
organized as a business trust under the laws of the Commonwealth of
Massachusetts. Although under Massachusetts law shareholders of a Massachusetts
business trust could, under limited circumstances, be held personally liable for
the obligations of the trust, the Trust's Declaration of Trust contains an
express disclaimer of shareholder liability. In addition, under the Declaration
of Trust, the Trust will indemnify a shareholder for his or her losses and
expenses should the shareholder be held personally liable for the obligations of
the Trust. AS A RESULT, THE LIKELIHOOD THAT A SHAREHOLDER WOULD BE HELD
PERSONALLY LIABLE FOR THE OBLIGATIONS OF THE TRUST IS EXTREMELY REMOTE.

Board Member Liability. Generally, the obligations of the Trust or a Fund, in
its current corporate structure, are not binding upon board members
individually, but only upon the assets and property of the Trust or Fund.
Although board members generally are not liable for errors arising from proper
exercise of their business judgment, nothing would protect a board member
against any liability arising from willful misfeasance, bad faith, gross
negligence or reckless disregard of the duties involved in the conduct of his or
her office.

Differences in the Voting Rights of Shareholders. The voting rights of
shareholders under the Declaration of Trust and Massachusetts law are
substantially similar to those under the Articles of Incorporation of each Fund
and Maryland or Minnesota law, except in the following instances:

Meetings Called By Shareholders The Declaration of Trust provides that a
shareholder meeting may be called upon the written request of shareholders
owning at least one-tenth of the outstanding shares entitled to vote. Under
the Funds' current corporate structure, a shareholder meeting must be
called at the written request of stockholders entitled to cast at least 25%
(10% for the New York Fund) of all the votes entitled to be cast at the
meeting.

Quorums Under the Declaration of Trust, 30% of the shares entitled to vote
at a meeting constitutes a quorum. Currently, for the New York Fund, the
holders of a majority of voting power of shares entitled to vote at a
meeting constitute a quorum. For the other Funds, the presence in person or
by proxy of stockholders entitled to cast a majority of all of the votes
entitled to be cast at a meeting constitutes a quorum.

Removal of Board Members The Declaration of Trust provides that board
members generally may be removed only for cause and then only by a vote of
66 2/3% of the remaining trustees or of the outstanding shares. Currently,
any one or more of the directors may be removed, either with or without
cause, by the vote of the stockholders holding a majority of all the votes
entitled to be cast for the election of directors.

19
<PAGE> 32

Termination/Dissolution Under the Declaration of Trust, the Trust (or a
series) can be terminated by (i) the Board of Trustees, upon written notice
to the shareholders, without a vote of the shareholders of the Trust (or
series); (ii) the affirmative vote of a majority of the outstanding voting
securities of the Trust (or a series), when termination is recommended by
the Board of Trustees; or (iii) by affirmative vote of 66 2/3% of the
outstanding shares of the Trust (or series). The New York Fund may be
terminated by the affirmative vote of a majority of the outstanding shares
of each class of the Fund, but to dissolve the corporation, an affirmative
vote of a majority of the voting power of shares entitled to vote is
required. For the Tax-Free and Tax-Exempt Funds, Maryland law requires the
affirmative vote of two-thirds of all the votes entitled to be cast on the
matter to dissolve the corporation or to terminate a Fund. The California
Fund may be terminated by the affirmative vote of a majority of the
outstanding shares of the Fund, but, currently, to dissolve the
corporation, an affirmative vote of two-thirds of all the votes entitled to
be cast on the matter is required.

Election of Board Members Under the Declaration of Trust, trustees may be
elected by a plurality of the shares present and entitled to vote at a
meeting at which a quorum is present. Currently, for the New York Fund, the
election of a director requires a vote of a majority of the shares present
and entitled to vote at a meeting in which a quorum is present. For the
other Funds, the election of a director requires the vote of a majority of
all the votes cast at a meeting at which a quorum is present.

Amendments to Charter The Declaration of Trust (other than the provisions
set forth in Article V of the Declaration of Trust which requires the
affirmative vote of the holders of at least 66 2/3% of the outstanding
shares of the Trust) may be amended by the vote of a majority of trustees
with the consent of shareholders holding more than 50% of the shares
entitled to vote or, under limited circumstances, by the vote of a majority
of the trustees without shareholder approval. Under the Articles of
Incorporation of the Tax-Free and Tax-Exempt Funds, an amendment to the
Articles of Incorporation requires the affirmative vote of two-thirds of
all the votes entitled to be cast on the matter. Under the Articles of
Incorporation of the New York and California Funds, an amendment to the
Articles of Incorporation requires the affirmative vote of a majority of
the outstanding shares of the Fund (or the affected class).

DETAILS ABOUT THE REORGANIZATION

Under the Plan and Agreement of Reorganization, on the date of effectiveness of
the reorganization: (i) each Fund will transfer all its assets to a separate
series of the Nuveen Money Market Trust, a newly-created Massachusetts business
trust, in exchange for the same number and value of shares (of the same class,
if applicable) of the series as there are currently outstanding shares of the
Fund (and class, if applicable) and the assumption by the series of all of the
liabilities of each Fund; (ii) distribution by the Fund to each shareholder of
that Fund of a number of shares of the series (and of the same class, if
applicable), including any fractional shares, equal in value and number to such
shareholder's Fund shares; and (iii) the subsequent dissolution of each Fund and
cancellation of the outstanding shares of each Fund. A Fund shareholder will
therefore receive the same pro rata interest in the series of the Trust as of
the effective time of the reorganization as the shareholder had in the Fund
immediately prior to the reorganization. The new series will then operate in the
same manner and with the same investment objectives and policies of the Fund,
after giving effect to the results of the shareholder votes on Proposals 1-3 and
5-7. If approved by shareholders, it is expected that the reorganization will be
effective on June 25, but may occur at a different time. Confirmations of the
shares of the series issued in exchange for shares of a Fund will not be sent to
shareholders because the number and value of shares held by a shareholder will
not be changed by the reorganization. It will not be necessary for a shareholder
holding certificates of Fund shares to exchange those certificates for new
certificates representing shares of the corresponding series following the
reorganization. Certificates for shares of a Fund issued prior to the
reorganization will represent shares of the same class, if applicable, of the
series after the reorganization.

FEDERAL INCOME TAX CONSEQUENCES OF THE REORGANIZATION

It is anticipated that the transactions contemplated by the reorganization will
be tax-free for federal income tax purposes. Each Fund has received an opinion
of Morgan, Lewis & Bockius LLP, fund counsel, that under the Internal Revenue
Code of 1986 the reorganization of the Fund into a separate series of the Trust
pursuant to the reorganization will not give rise to the recognition of income,
deductions, gain or loss for federal income tax purposes to the Fund or its
shareholders. A shareholder's adjusted basis for tax purposes in shares of the
new series after the reorganization will be the same as his or her adjusted
basis for tax purposes in the shares of the Fund immediately before the
reorganization. The holding period of the shares of the new series received by
the shareholders of that Fund will include the holding period of shares of the
Fund exchanged therefor, provided that at the time of the exchange the shares of
the Fund were held as capital assets. The opinion from Morgan, Lewis & Bockius
LLP will be made available for inspection and copying at the principal executive
offices of the Funds to any Fund shareholder who so requests.

20
<PAGE> 33

BOARD APPROVAL AND CONSIDERATIONS

At a joint meeting of the Boards of Directors of the Funds held on February 1-2,
1999, the directors voted to recommend that shareholders approve the proposed
reorganization. After due consideration, each Board of Directors, including all
independent directors, unanimously approved the reorganization, subject to
shareholder approval. At the meeting, the Boards considered the management
efficiencies and economies of scale that are expected to result from
standardizing and consolidating the organizational structures of the Funds and
providing for a uniform set of charter documents, shareholder purchase options
and shareholder account privileges, and the greater flexibility afforded to a
business trust under Massachusetts law as compared with a corporation under
Maryland and Minnesota laws. In addition, the Boards considered the expected
operational efficiencies resulting from the increased coordination of documents
and policies, allocation of work flows and greater flexibility for future
change. The Boards believe that, for all of the above reasons, the Funds are
expected to benefit from the reorganization. In consideration of the foregoing,
each Board, including a majority of independent directors, found that the
reorganization is in the best interests of each Fund and its shareholders, and
that there will be no dilution of the interests of a Fund's shareholders as a
result of the reorganization.

SHAREHOLDER APPROVAL

For the New York Fund, approval of this proposal requires the affirmative vote
of a majority of the voting power of shares of the Fund entitled to vote. For
the Tax-Exempt and Tax-Free Funds, approval of this proposal requires the vote
of two-thirds of all votes entitled to be cast on the matter. For the California
Fund, approval of the reorganization, which first includes an amendment to the
Articles of Incorporation to lower the necessary vote, requires approval by the
affirmative vote of a majority of the shares entitled to vote. If a majority of
the outstanding shares of the California Fund are voted in favor of this
proposal, appropriate Articles of Amendment will immediately be filed with the
State of Maryland while the meeting is in progress so that the amendment would
be effective before the time at the shareholders' meeting when the
reorganization will be considered and voted upon. Thus, approving this proposal
will allow approval of the reorganization by a majority, rather than two-thirds,
of the shares entitled to vote on this proposal.

IMPACT OF THE PREVIOUS PROPOSALS ON THE REORGANIZATION

If the reorganization is approved, each series of the Trust will operate in the
same manner and with the same investment objectives and policies of each Fund,
after giving effect to the results of the shareholder votes on Proposals 1-3 and
5-7. In other words, the results of the shareholder votes on Proposals 1-3 and
5-7 will determine the composition of the Board of Trustees of the Trust, the
terms of the management agreement between the Trust, on behalf of each Fund, and
Nuveen Advisory, each Fund's distribution arrangements, and the investment
objective and policies of each Fund and the independent auditor for each Fund.
If shareholders approve the reorganization, the results of the shareholder votes
on Proposals 1-3 and 5-7 will be implemented for each Fund, as a separate series
of the Trust.

RELATED NAME CHANGES

Generally. If shareholders of a Fund disapprove the reorganization, the Board
expects to amend the Fund's name, which does not require shareholder approval.
The current and revised names are listed below:

<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------
CURRENT NAME Revised Name in Current Corporation
- -------------------------------------------------------------------------------------------------------
<S> <C>
Nuveen Tax-Exempt Money Market Fund, Inc. Nuveen Institutional Tax-Exempt Money Market Fund,
Inc.
Nuveen Tax-Free Reserves, Inc. Nuveen Municipal Money Market Fund, Inc.
Nuveen New York Tax-Free Money Market Fund, a
series of Nuveen Tax-Free Money Market Fund, Inc. Nuveen New York Tax-Exempt Money Market Fund, a
series of Nuveen Tax-Free Money Market Fund, Inc.
Nuveen California Tax-Free Money Market Fund, a
series of Nuveen California Tax-Free Fund, Inc. Nuveen California Tax-Exempt Money Market Fund, a
series of Nuveen California Tax-Exempt Money
Market Fund, Inc.
- -------------------------------------------------------------------------------------------------------
</TABLE>

THE DIRECTORS UNANIMOUSLY RECOMMEND THAT SHAREHOLDERS VOTE "FOR" THE APPROVAL OF
THE REORGANIZATION.

21
<PAGE> 34

PROPOSAL 5. TO APPROVE CHANGES TO THE FUND'S INVESTMENT OBJECTIVE. (BY EACH
FUND)

At the meeting, shareholders of each Fund will be asked to approve amendments to
that Fund's investment objective. The primary purpose of this proposal is to
conform each Fund's investment objective to a standardized form, without
changing the substance of the objective. This will simplify the administration
of Nuveen's money market funds by adopting a standardized formulation of the
funds' investment objectives.

As part of the proposed standardization of language, each Fund's investment
objective (except the Tax-Exempt Fund) adds the word "regular" when referring to
income exempt from federal income taxes. The purpose of changing "federal income
taxes" to "regular federal income taxes" is to clarify that the New York and
California Funds may invest up to 20% of their respective net assets and the
Tax-Free Fund may invest an unlimited amount of its assets in securities the
income from which is subject to federal alternative minimum taxes ("AMT bonds").
Since the Tax-Free Fund may invest without limit in AMT bonds, the tax liability
from Fund dividends for those shareholders subject to the federal alternative
minimum tax may increase. Reflecting the Tax-Free Fund's level of investments in
AMT Bonds, the Board of Directors approved changing the name of the Tax-Free
Fund to the Municipal Money Market Fund. This change does not require
shareholder approval. The New York and California Funds expect that they may
invest up to the 20% limitation of their respective net assets in AMT bonds.
Currently, the Tax-Exempt Fund does not plan to invest in any securities the
income from which is subject to federal alternative minimum taxes.

BOARD APPROVAL AND CONSIDERATIONS

At a joint meeting of the Boards of Directors of the Funds held on February 1-2,
1999, the directors voted to recommend that shareholders approve the proposed
amendment to each Fund's investment objective. After due consideration, each
Board of Directors, including all independent directors, unanimously approved
the amendment to each Fund's investment objective, subject to shareholder
approval. With respect to each Fund (except the Tax-Exempt Fund), the Boards
considered Nuveen Advisory's plans to increase the Fund's investments in
securities whose income may be subject to federal alternative minimum taxes and
which generally bear higher yields than comparable securities not subject to
these taxes. The Boards also considered Nuveen Advisory's representation that
increasing a Fund's investments in such securities would likely enhance
performance, increase the Fund's ability to raise assets and achieve economies
of scale. The Boards concluded that the proposed amendment to each Fund's
investment objective would standardize and simplify the Fund's objective, while
permitting the Fund to increase its investment in certain, potentially
higher-yielding securities. The Boards believe that the amendment to each Fund's
investment objective is in the best interest of the Fund and its shareholders.

SHAREHOLDER APPROVAL

Approval of this proposal for a Fund requires the affirmative vote of a
"majority of the outstanding voting securities" of the Fund. The term "majority
of the outstanding voting securities," as defined in the 1940 Act, means the
affirmative vote of the lesser of (1) 67% of the voting securities of the Fund
present at the meeting if more than 50% of the outstanding shares of the Fund
are present in person or by proxy or (2) more than 50% of the outstanding shares
of the Fund.

The persons named in the accompanying proxy card intend, in the absence of
contrary instructions, to vote all proxies "FOR" the approval of the proposed
amendment to the Fund's investment objective. You may vote "FOR" or "AGAINST"
the approval of the amendment, or may "ABSTAIN" from voting on this proposal. If
you give no voting instructions, your shares will be voted "FOR" the approval of
the amendment to the Fund's investment objective.

If this proposal is approved, each Fund's amended investment objective may not
be changed without the prior approval of the shareholders of that Fund.

THE DIRECTORS UNANIMOUSLY RECOMMEND THAT SHAREHOLDERS OF EACH FUND VOTE "FOR"
THE AMENDMENT TO ITS INVESTMENT OBJECTIVE.

PROPOSAL 5.A. APPROVAL TO AMEND THE TAX-EXEMPT FUND'S INVESTMENT OBJECTIVE.
(BY THE TAX-EXEMPT FUND ONLY)

At the meeting, only shareholders of the Tax-Exempt Fund will be asked to vote
on the following amendment to the Fund's investment objective. The investment
objective is currently stated as follows:

providing, as high a level of current interest income exempt from federal
income taxes as is consistent, in the view of the Fund management, with
stability of principal and the maintenance of liquidity through investment
in a professionally managed portfolio of high quality, short-term Municipal
Obligations.

Subject to shareholder approval, the Fund's investment objective will be revised
to read:

to provide as high a level of current income exempt from federal income
taxes as is consistent with the stability of principal and the maintenance
of liquidity.

22
<PAGE> 35

PROPOSAL 5.B. APPROVAL TO AMEND THE TAX-FREE FUND'S INVESTMENT OBJECTIVE.
(BY THE TAX-FREE FUND ONLY)

At the meeting, only shareholders of the Tax-Free Fund will be asked to vote on
the following amendment to the Fund's investment objective. The investment
objective is currently stated as follows:

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 management, with stability of principal and the
maintenance of liquidity.

Subject to shareholder approval, the Fund's investment objective will be revised
to read:

to provide as high a level of current income exempt from regular federal
income taxes as is consistent with the stability of principal and the
maintenance of liquidity.

PROPOSAL 5.C. APPROVAL TO AMEND THE NEW YORK FUND'S INVESTMENT OBJECTIVE.
(BY THE NEW YORK FUND ONLY)

At the meeting, only shareholders of the New York Fund will be asked to vote on
the following amendment to the Fund's investment objective. The investment
objective is currently stated as follows:

providing, through investment in high quality short term Municipal
Obligations, as high a level of current interest income exempt from both
federal and New York income taxes as is consistent, in the view of the
Fund's management, with the stability of principal and the maintenance of
liquidity.

Subject to shareholder approval, the Fund's investment objective will be revised
to read:

to provide as high a level of current income exempt from both regular
federal and New York personal income taxes as is consistent with the
stability of principal and the maintenance of liquidity.

PROPOSAL 5.D. APPROVAL TO AMEND THE CALIFORNIA FUND'S INVESTMENT OBJECTIVE.
(BY THE CALIFORNIA FUND ONLY)

At the meeting, only shareholders of the California Fund will be asked to vote
on the following amendment to the Fund's investment objective. The investment
objective is currently stated as follows:

providing, through investment in a professionally managed portfolio of
California Municipal Obligations, as high a level of current interest
income exempt from both federal and California income taxes as is
consistent with its investment policies and with preservation of capital.

Subject to shareholder approval, the Fund's investment objective will be revised
to read:

to provide as high a level of current income exempt from both regular
federal and California personal income taxes as is consistent with the
stability of principal and the maintenance of liquidity.

IMPACT OF THIS VOTE ON THE PROPOSED REORGANIZATION

At the meeting, shareholders will be asked to vote on a proposal to reorganize
each Fund into a separate series of the Nuveen Money Market Trust, a
newly-created Massachusetts business trust (see Proposal 4). The results of the
shareholder vote on the proposal to approve amendments to Fund investment
objectives will determine the investment objective of each Fund as a series of
the Trust. If shareholders of a Fund approve the proposed amendment to the
Fund's objective and approve the reorganization, the Fund will have the amended
investment objective as a series of the Trust. Should shareholders of a Fund
approve the proposed amendment to the Fund's objective, but disapprove the
reorganization, the Fund will have the amended investment objective in its
current corporate structure. If shareholders of a Fund disapprove the proposed
amendment to the Fund's investment objective, but approve the reorganization,
the Fund will have its current investment objective as a series of the Trust.

PROPOSAL 6. TO APPROVE THE ELIMINATION OF TWO FUNDAMENTAL POLICIES.
(BY EACH FUND)

At the meeting, shareholders of each Fund will be asked to vote separately
regarding the elimination of two fundamental investment policies that were
originally adopted to comply with now obsolete state securities laws. The first
seeks to limit investment risk by restricting the fund's ability to invest in
securities of "unseasoned" companies with limited or no long-term track record
in business. As a tax-exempt money market fund, your fund does not invest in
companies. Rather, it invests in bonds issued by state and local governments and
government authorities. For this reason, this policy has not been relevant to
your fund's investment strategy and its elimination would have no impact on your
fund's operation. The second

23
<PAGE> 36

seeks to prevent conflicts of interest by restricting the fund's ability to
invest in securities which fund officers also own. We believe your fund's Code
of Ethics, which restricts the investment activities of fund management
personnel and was adopted pursuant to SEC rules, is sufficient to prevent
potential conflicts of interest.

Nuveen Advisory believes that because these policies are no longer mandatory
under state securities laws and they have no real impact on portfolio
composition, their elimination will simplify each Fund's compliance efforts.

SHAREHOLDER APPROVAL

The persons named in the accompanying proxy card intend, in the absence of
contrary instructions, to vote all proxies "FOR" the approval of the elimination
of the Fund's fundamental investment policies discussed herein. You may vote
"FOR" or "AGAINST" the approval of this proposal, or may "ABSTAIN" from voting
on the proposal. If you give no voting instructions, your shares will be voted
"FOR" the approval of the elimination of the Fund's fundamental policies
discussed herein.

PROPOSAL 6.A. ELIMINATING EACH FUND'S FUNDAMENTAL INVESTMENT POLICY REGARDING
INVESTMENTS IN SECURITIES OF UNSEASONED ISSUERS.

At the meeting, shareholders of each Fund will be asked to vote separately
regarding the elimination of each Fund's fundamental investment policy with
respect to investing in securities of "unseasoned" issuers. The policy is
currently stated as follows:

[A Fund may not] 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.

Upon shareholder approval, this policy will be eliminated.

The original purpose of this policy was to comply with certain state regulatory
requirements, which have since been eliminated. This particular state regulation
was intended to limit the risks associated with investing in companies that have
no proven long-term track record in business or whose prospects are uncertain.
As a tax-exempt money market fund, your fund does not invest in companies.
Rather, it invests in debt securities issued by state and local governments and
government authorities. For this reason, this policy has not been relevant to
your fund's investment strategy and its elimination would have no impact on your
fund's operation.

As a result, the policy regarding "unseasoned" issuers has not materially
affected the way in which the Funds' assets have been managed in the past.
Nonetheless, it has remained a fundamental policy of each Fund and, as such,
requires each Fund to continuously monitor its compliance with the policy. In
addition, the Funds have other fundamental policies and are subject to the
detailed guidelines and requirements of Rule 2a-7 under the 1940 Act, each of
which is designed to limit risk. The elimination of this policy is not expected
to materially affect the way in which the Funds are managed or the way in which
securities or instruments are selected for the Funds. Because it is no longer
necessary for the Funds to comply with this policy, the Boards believe that the
Funds would benefit from the increased management efficiency and streamlined
compliance efforts that would likely result from its elimination.

BOARD APPROVAL AND CONSIDERATIONS

At a joint meeting of the Boards of Directors of the Funds held on February 1-2,
1999, the directors voted to recommend that shareholders approve the proposed
elimination of the fundamental policy regarding investing in "unseasoned"
issuers. After due consideration, each Board of Directors, including all
independent directors, unanimously approved the elimination of this policy,
subject to shareholder approval. At the meeting, the Boards considered the way
in which each Fund's assets are managed, the compliance burdens of retaining the
policy, and the additional policies and regulatory requirements that serve to
reduce the risks to which the Funds are subject. The Boards concluded that the
proposed elimination of the policy regarding "unseasoned" issuers would
standardize and simplify the Funds' policies, without significantly altering the
way in which each Fund would be managed or the way in which securities would be
selected for the Funds. The Boards believe that eliminating the policy would not
increase the risks to which the Funds are subject. The Boards believe that the
elimination of the fundamental policy regarding investing in "unseasoned"
issuers is in the best interests of the Funds and their shareholders.

THE DIRECTORS UNANIMOUSLY RECOMMEND THAT SHAREHOLDERS VOTE "FOR" PROPOSAL 6.A.

24
<PAGE> 37

PROPOSAL 6.B. ELIMINATING EACH FUND'S FUNDAMENTAL INVESTMENT POLICY
REGARDING INVESTING IN ISSUERS IN WHICH MANAGEMENT OF THE FUND OR
NUVEEN ADVISORY HAS INVESTED.

At the meeting, shareholders of each Fund will be asked to vote separately
regarding the elimination of each Fund's fundamental investment policy with
respect to investing in issuers in which Fund management or Nuveen Advisory has
invested. The policy is currently stated as follows:

[A Fund may not] purchase or retain the securities of any issuer other than
the securities of the Fund if, to the Fund's knowledge, those directors of
the Fund or those officers and directors of Nuveen Advisory Corp., who
individually own beneficially more than 1/2 of 1% of the outstanding
securities of each issuer, together own beneficially more than 5% of such
outstanding securities.

Upon shareholder approval, this policy will be eliminated.

The original purpose of this policy was to comply with certain state regulatory
requirements which have since been eliminated. This particular state regulation
was designed to address potential conflicts of interest that may arise where a
mutual fund, and its directors, investment adviser or its affiliates, invest in
the same issuer.

The Funds, Nuveen Advisory and other related entities have adopted pursuant to
SEC rules a Code of Ethics which essentially prohibits Fund directors and
officers, those of Nuveen Advisory, and other fund management personnel from
engaging in personal investments which compete or interfere with, or attempt to
take advantage of, a Fund's anticipated or actual portfolio transactions. The
Code of Ethics is designed to assure that the interest of Fund shareholders is
placed before the interest of Fund directors and officers and Nuveen Advisory
personnel in connection with personal investment transactions, and seeks to
prevent the conflicts of interests that this policy sought to address.

BOARD APPROVAL AND CONSIDERATIONS

At a joint meeting of the Boards of Directors of the Funds held on February 1-2,
1999, the directors voted to recommend that shareholders approve the proposed
elimination of the fundamental policy regarding investing in issuers in which
management of the Fund or Nuveen Advisory has invested. After due consideration,
each Board of Directors, including all independent directors, unanimously
approved the elimination of this policy, subject to shareholder approval. At the
meeting, the Boards considered the prohibitions and policies in the Code of
Ethics discussed above and its ability to place the interest of Fund
shareholders before those that may be in a position to take advantage of a Fund,
and the relevant restrictions of and fiduciary duties prescribed by the 1940
Act, the Investment Advisers Act of 1940 and state law. The Boards concluded
that the proposed elimination of this policy would standardize and simplify the
Funds' policies, without significantly altering the way in which each Fund would
be managed or the way in which securities were selected for the Funds and
without exposing the Funds to increased risks resulting from actual or potential
conflicts of interest. The Boards believe that the elimination of this
fundamental policy is in the best interest of the Funds and their shareholders.

THE DIRECTORS UNANIMOUSLY RECOMMEND THAT SHAREHOLDERS VOTE "FOR" PROPOSAL 6.B.

IMPACT OF THIS VOTE ON THE REORGANIZATION

At the meeting, shareholders will be asked to vote on a proposal to reorganize
each Fund into a separate series of the Nuveen Money Market Trust, a
newly-created Massachusetts business trust (see Proposal 4). The results of the
shareholder vote on the proposal to eliminate these fundamental policies will
determine whether the Fund retains those policies as a series of the Trust. If
shareholders of a Fund approve the elimination of a policy and approve the
reorganization, the Fund will not have the investment policy as a series of the
Trust. Should shareholders of a Fund approve the elimination of a policy, but
disapprove the reorganization, the policy will be eliminated as a fundamental
policy of the Fund, as it exists in its current corporate structure. If
shareholders of a Fund disapprove the elimination of a policy, but approve the
reorganization, the Fund will retain the fundamental policy, as a series of the
Trust.

PROPOSAL 7. TO RATIFY THE SELECTION OF ARTHUR ANDERSEN LLP
AS INDEPENDENT AUDITORS. (BY EACH FUND)

At the meeting, shareholders of each Fund will be asked to vote separately on
the proposal to ratify the selection of Arthur Andersen LLP as the Fund's
independent auditors. The members of each Fund's Board who are not "interested
persons" of that Fund have unanimously selected Arthur Andersen LLP, independent
public accountants, as independent auditors, to audit the books and records of
that Fund for the fiscal year ending February 28, 2000. Arthur Andersen LLP has
served as each Fund's independent auditors since that Fund was organized. Arthur
Andersen LLP has informed the Funds that it has no direct or indirect financial
interest in the Funds, except as independent auditor. The selection of Arthur
Andersen LLP as independent auditors of each Fund is being submitted to the
shareholders for ratification. Each Fund's Audit Committee

25
<PAGE> 38

recommended to the Board that Arthur Andersen LLP be selected as independent
auditors. Representatives of Arthur Andersen LLP are not expected to be present
at the meeting, but will be available should questions arise.

BOARD APPROVAL AND CONSIDERATIONS

At a joint meeting of the Boards of Directors of the Funds held on February 1-2,
1999, the directors voted to select Arthur Andersen LLP as independent auditors
of each Fund and recommend that shareholders ratify the selection. At the
meeting, the Boards considered the recommendation of the Audit Committee and
Arthur Andersen LLP's past performance as independent auditors of the Funds.

SHAREHOLDER APPROVAL

For the New York Fund, approval of this proposal requires the vote of a majority
of the shares present and entitled to vote at a meeting in which a quorum is
present. For the other Funds, approval of this proposal requires the vote of a
majority of all the votes cast at a meeting at which a quorum is present.

The persons named in the accompanying proxy card intend, in the absence of
contrary instructions, to vote all proxies "FOR" the approval of this proposal.
You may vote "FOR" or "AGAINST" the approval of this proposal, or may "ABSTAIN"
from voting on the proposal. If you give no voting instructions, your shares
will be voted "FOR" this proposal.

THE DIRECTORS UNANIMOUSLY RECOMMEND THAT SHAREHOLDERS VOTE "FOR" PROPOSAL 7.

[This Space Intentionally Left Blank. Please Proceed To The Following Page.]

26
<PAGE> 39

OTHER INFORMATION

QUORUM. A quorum of shareholders is required to take action at the meeting. For
the New York Fund, the holders of a majority of voting power of shares entitled
to vote at a meeting constitute a quorum. For each of the other Funds, the
presence in person or by proxy of stockholders entitled to cast a majority of
all of the votes entitled to be cast at a meeting constitutes a quorum. The
inspectors of election will determine whether a quorum is present at the
meeting.

REQUIRED VOTE. The following chart shows the required vote for each proposal.

<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------
PROPOSAL Required Vote
- ----------------------------------------------------------------------------------------------------------------
<S> <C> <C>
1. Election of Board nominees. For the New York Fund: a majority of the shares present
and entitled to vote at a meeting in which a quorum is
present. For the other Funds: a majority of all the votes
cast at a meeting at which a quorum is present.
2. Approval of a new investment management The lesser of (i) 67% of the shares of the Fund present
agreement. at the meeting, if more than 50% of the outstanding
shares of the Fund are present in person or by proxy or
(ii) more than 50% of the outstanding shares of the Fund.
3. Approval of a new 12b-1 Plan. In addition, The lesser of (i) 67% of the shares of the class present
for the New York and California Funds, at the meeting, if more than 50% of the outstanding
approval of consolidation and, as necessary, shares of the class are present in person or by proxy or
an implementing amendment to Articles of (ii) more than 50% of the outstanding shares of the
Incorporation. class. For the New York and California Funds, if an
amendment to Articles of Incorporation is required, the
approval of this proposal requires the affirmative vote
of a majority of the outstanding shares of each class,
voting separately.
4. Approval of the Plan and Agreement of For the New York Fund: the affirmative vote of a majority
Reorganization. For the California Fund, of the voting power of shares of the Fund entitled to
approval of amendment to Articles of vote. For the Tax-Free and Tax- Exempt Funds: the
Incorporation to lower the required vote for affirmative vote of two-thirds of all votes entitled to
the approval of the Plan and Agreement of be cast on the matter. For the California Fund, the
Reorganization. amendment to the Articles requires the affirmative vote
of a majority of the outstanding shares of the Fund; the
approval of the Plan and Agreement of Reorganization,
after the amendment to the Articles, requires the
affirmative vote of a majority of the shares entitled to
vote.
5. Approval of Amendments to investment The lesser of (i) 67% of the shares of the Fund present
objective at the meeting, if more than 50% of the outstanding
shares of the Fund are present in person or by proxy or
(ii) more than 50% of the outstanding shares of the Fund.
6. Elimination of two fundamental investment The lesser of (i) 67% of the shares of the Fund present
policies. at the meeting, if more than 50% of the outstanding
shares of the Fund are present in person or by proxy or
(ii) more than 50% of the outstanding shares of the Fund.
7. Ratification of the selection of the For the New York Fund: a majority of the shares present
independent auditors. and entitled to vote at a meeting in which a quorum is
present. For the other Funds: a majority of all the votes
cast at a meeting at which a quorum is present.
- ----------------------------------------------------------------------------------------------------------------
</TABLE>

Abstentions and broker non-votes will be counted as present for purposes of
determining whether a quorum is present. If a proposal must be approved by a
percentage of votes cast on the proposal, abstentions and broker non-votes will
not be counted as "votes cast" on the proposal and will have no effect on the
result of the vote. If the proposal must be approved by a percentage of shares
present at the meeting or of the Fund's outstanding shares, abstentions and
broker non-votes will have the effect of votes against the proposal. "Broker
non-votes" occur where: (i) shares are held by brokers or nominees, typically in
"street name;" (ii) instructions have not been received from the beneficial
owners or persons entitled to vote; and (iii) the broker or nominee does not
have discretionary voting power on a particular matter.

ADJOURNMENT. If, by the time scheduled for the meeting, a quorum of shareholders
is not present or if a quorum is present but sufficient votes in favor of any of
the proposals are not received, the persons named as proxies may propose one or
more adjournments of the meeting to permit further soliciting of proxies from
shareholders. For each Fund, any such adjournment will require the affirmative
vote of a majority of the shares of the Fund present and entitled to vote at the
session of the meeting to be adjourned, even though less than a quorum is
present. The persons named as proxies will vote in favor of any such adjournment
if they determine that such adjournment and additional solicitation are
reasonable and in the interest of the shareholders. In addition to the
solicitation of proxies by mail, directors and officers of each Fund may solicit
proxies in person or by telephone, telegraph, telefacsimile, or other electronic
means. Persons holding shares as nominees will, on request, be reimbursed for
their reasonable expenses in sending solicitation materials to their principals.

SHAREHOLDER PROPOSALS. The Funds are not required to hold annual shareholder
meetings, but each will hold special meetings as required or deemed desirable.
Since the Funds do not hold regular meetings of shareholders, the anticipated

27
<PAGE> 40

date of the next special shareholder meeting cannot be provided. Any shareholder
proposal that may properly be included in the proxy solicitation material for a
special shareholder meeting should be sent to the attention of the Fund's
secretary, 333 West Wacker Drive, Chicago, Illinois 60606 no later than four
months prior to the date this Joint Proxy Statement is mailed to shareholders.

EXPENSES OF PROXY SOLICITATION. The cost of preparing, printing and mailing the
enclosed proxy, accompanying notice and proxy statement, and all other costs in
connection with the solicitation of proxies, will be paid by the Funds pro rata
based on the number of shareholder accounts. Additional solicitations may be
made by letter, telephone or telegraph by officers of each Fund, by officers or
employees of John Nuveen & Co. Incorporated or Nuveen Advisory Corp., or by
dealers and their representatives. D.F. King & Co. Inc. will assist in the
solicitation of proxies at a total estimated cost of $10,000 plus reasonable
expenses.

ANNUAL REPORT DELIVERY. Annual reports are sent to shareholders of record of
each Fund following such Fund's fiscal year end. Each Fund will furnish, without
charge, a copy of its most recent annual report and most recent Semi-Annual
Report succeeding such Annual Report, if any, on request. Such written or oral
request may be directed to a Fund at 333 West Wacker Drive, Chicago, Illinois
60606 or by calling (800) 257-8787.

5% SHAREHOLDERS. A list of persons who were, as of April 6, 1999, record owners
or, to the knowledge of the Funds, beneficial owners of 5% or more of the shares
of each Fund is attached hereto as Annex D.

GENERAL INFORMATION ABOUT NUVEEN

Nuveen has sponsored or underwritten more than $60 billion of investment company
securities. Nuveen and its affiliates have more than $50 billion in assets under
management. Over 1,300,000 individuals have invested to date in Nuveen
investment products. 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 at 385 Washington Street, St. Paul,
Minnesota 55102 and is principally engaged in providing property-liability
insurance through subsidiaries.

During the fiscal year ended February 28, 1999, the Tax-Free Fund paid 12b-1
fees to NationsBanc Investments, Inc. in the amount of $70,097; the Service Plan
series of the New York Fund paid service fees to Piper Jaffrey, Inc. in the
amount of $6,520; and the Service Plan series of the California Fund paid
service fees to the Republic Bank of California in the amount of $278,102.

OTHER MATTERS TO COME BEFORE THE MEETING

The Boards are not aware of any matters that will be presented for action at the
meetings other than the matters set forth herein. Should any other matters
requiring a vote of shareholders arise, the proxy in the accompanying form will
confer upon the person or persons entitled to vote the shares represented by
such proxy the discretionary authority to vote matters in accordance with their
best judgment.

Whether or not you plan to attend the meeting, please vote promptly.

By order of each Board of Directors
Gifford R. Zimmerman
Vice President and Secretary

28
<PAGE> 41

ANNEX A

FORM OF
INVESTMENT MANAGEMENT AGREEMENT

AGREEMENT made as of the day of [ ], 1999, by and between NUVEEN
[ ], a [ ] corporation (the "Fund"), and NUVEEN ADVISORY CORP., a
Delaware corporation (the "Adviser").

WITNESSETH

In consideration of the mutual covenants hereinafter contained, it is hereby
agreed by and between the parties hereto as follows:

1. The Fund hereby employs the Adviser to act as the investment adviser for, and
to manage the investment and reinvestment of the assets of the Fund in
accordance with the Fund's investment objective and policies and limitations,
and to administer the Fund's affairs to the extent requested by and subject to
the supervision of the Board of Directors of the Fund for the period and upon
the terms herein set forth. The investment of such assets shall be subject to
the Fund's policies, restrictions and limitations with respect to securities
investments as set forth in the Fund's registration statement on Form N-1A under
the Securities Act of 1933 and the Investment Company Act of 1940 covering the
Fund's shares of common stock, including the Prospectus and Statement of
Additional Information forming a part thereof, all as filed with the Securities
and Exchange Commission and as from time to time amended, and all applicable
laws and the regulations of the Securities and Exchange Commission relating to
the management of registered open-end, diversified management investment
companies.

The Adviser accepts such employment and agrees during such period to render such
services, to furnish office facilities and equipment and clerical, bookkeeping
and administrative services (other than such services, if any, provided by the
Fund's custodian, transfer agent and shareholder service agent, and the like)
for the Fund, to permit any of its officers or employees to serve without
compensation as trustees or officers of the Fund if elected to such positions,
and to assume the obligations herein set forth for the compensation herein
provided. The Adviser shall, for all purposes herein provided, be deemed to be
an independent contractor and, unless otherwise expressly provided or
authorized, shall have no authority to act for nor represent the Fund in any
way, nor otherwise be deemed an agent of the Fund.

For the services and facilities described in Section 1, the Fund will pay to the
Adviser at the end of each month for the services and facilities described in
Section 1, an investment management fee computed at an annual rate of:

(For the Tax-Exempt, New York and California Funds) (For the Tax-Free
Fund)

<TABLE>
<CAPTION>
- ---------------------------------------------------------- ----------------------------------------------------------
RATE NET ASSETS RATE NET ASSETS
- ---------------------------------------------------------- ----------------------------------------------------------
<S> <C> <C> <C>
.4000% For the first $125 million .5000% For the first $125 million
.3875% For the next $125 million .4875% For the next $125 million
.3750% For the next $250 million .4750% For the next $250 million
.3625% For the next $500 million .4625% For the next $500 million
.3500% For the next $1 billion .4500% For the next $1 billion
.3250% For assets over $2 billion .4250% For assets over $2 billion
- ---------------------------------------------------------- ----------------------------------------------------------
</TABLE>

For the month and year in which this Agreement becomes effective, or terminates,
there shall be an appropriate proration on the basis of the number of days that
the Agreement shall have been in effect, during the month and year,
respectively. The services of the Adviser to the Fund under this Agreement are
not to be deemed exclusive, and the Adviser shall be free to render similar
services or other services to others so long as its services hereunder are not
impaired thereby.

The net asset value of the Fund shall be calculated as provided in the Articles
of Incorporation of the Fund. On each day when net asset value is not
calculated, the net asset value of a share of common stock of the Fund shall be
deemed to be the net asset value of such share as of the close of business on
the last day on which such calculation was made for the purpose of the foregoing
computations.

3. Regardless of any of the above provisions, the Adviser guarantees that the
total expenses of the Fund in any fiscal year, exclusive of taxes, interest,
brokerage commissions, and extraordinary expenses such as litigation costs,
shall not exceed, and the Adviser undertakes to pay or refund to the Fund any
amount up to but not greater than the aggregate fees received by the Adviser
under this Agreement for such fiscal year, the limitation imposed by any
jurisdiction in which the Fund continues to offer and sell shares after
exceeding such limitation.

4. The Adviser shall arrange for officers or employees of the Adviser to serve,
without compensation from the Fund, as trustees, officers or agents of the Fund,
if duly elected or appointed to such positions, and subject to their individual
consent and to any limitations imposed by law.

A-1
<PAGE> 42

5. Subject to applicable statutes and regulations, it is understood that
officers, directors, or agents of the Fund are, or may be, interested in the
Adviser as officers, directors, agents, shareholders or otherwise, and that the
officers, directors, shareholders and agents of the Adviser may be interested in
the Fund otherwise than as directors, officers or agents.

6. The Adviser shall not be liable for any loss sustained by reason of the
purchase, sale or retention of any security, whether or not such purchase, sale
or retention shall have been based upon the investigation and research made by
any other individual, firm or corporation, if such recommendation shall have
been selected with due care and in good faith, except loss resulting from
willful misfeasance, bad faith, or gross negligence on the part of the Adviser
in the performance of its obligations and duties, or by reason of its reckless
disregard of its obligations and duties under this Agreement.

7. The Adviser currently manages other investment accounts and funds, including
those with investment objectives similar to the Fund, and reserves the right to
manage other such accounts and funds in the future. Securities considered as
investments for the Fund may also be appropriate for other investment accounts
and funds that may be managed by the Adviser. Subject to applicable laws and
regulations, the Adviser will attempt to allocate equitably portfolio
transactions among the Fund and the portfolios of its other investment accounts
and funds purchasing or selling securities whenever decisions are made to
purchase or sell securities by the Fund and one or more of such other accounts
or funds simultaneously. In making such allocations, the main factors to be
considered by the Adviser will be the respective investment objectives of the
Fund and such other accounts and funds, the relative size of portfolio holdings
of the same or comparable securities, the availability of cash for investment by
the Fund and such other accounts and funds, the size of investment commitments
generally held by the Fund and such accounts and funds, and the opinions of the
persons responsible for recommending investments to the Fund and such other
accounts and funds.

8. This Agreement shall continue in effect until August 1, 2000, unless and
until terminated by either party as hereinafter provided, and shall continue in
force from year to year thereafter, but only as long as such continuance is
specifically approved, at least annually, in the manner required by the
Investment Company Act of 1940.

This Agreement shall automatically terminate in the event of its assignment, and
may be terminated at any time without the payment of any penalty by the Fund or
by the Adviser upon sixty (60) days' written notice to the other party. The Fund
may effect termination by action of the Board of Directors, or, by vote of a
majority of the outstanding voting securities of the Fund, accompanied by
appropriate notice.

This Agreement may be terminated, at any time, without the payment of any
penalty, by the Board of Directors of the Fund, or, by vote of a majority of the
outstanding voting securities of the Fund, in the event that it shall have been
established by a court of competent jurisdiction that the Adviser, or any
officer or director of the Adviser, has taken any action which results in a
breach of the covenants of the Adviser set forth herein.

Termination of this Agreement shall not affect the right of the Adviser to
receive payments on any unpaid balance of the compensation, described in Section
2, earned prior to such termination.

9. If any provision of this Agreement shall be held or made invalid by a court
decision, statute, rule, or otherwise, the remainder shall not be thereby
affected.

10. The Adviser and its affiliates reserve the right to grant, at any time, the
use of the name "Nuveen" or any approximation or abbreviation thereof, to any
other investment company or business enterprise. Upon termination of this
Agreement by either party, or by its terms, the Fund shall thereafter refrain
from using any name of the Fund which includes "Nuveen" or any approximation or
abbreviation thereof, or is sufficiently similar to such name as to be likely to
cause confusion with such name, and shall not allude in any public statement or
advertisement to the former association.

11. Any notice under this Agreement shall be in writing, addressed and delivered
or mailed, postage prepaid, to the other party at such address as such other
party may designate for receipt of such notice.

IN WITNESS WHEREOF, the Fund and the Adviser have caused this Agreement to be
executed on the day and year above written.

NUVEEN [NAME OF FUND] NUVEEN ADVISORY CORP.
by: --------------------------- by: ---------------------------
Vice President Vice President
Attest: ----------------------- Attest: -----------------------
Assistant Secretary Assistant Secretary
</TABLE>

A-2
<PAGE> 43

ANNEX B

NUVEEN TAX-FREE RESERVES, INC.
NUVEEN TAX-FREE MONEY MARKET FUND, INC.
(NUVEEN NEW YORK TAX-FREE MONEY MARKET FUND)
NUVEEN CALIFORNIA TAX-FREE FUND, INC.
(NUVEEN CALIFORNIA TAX-FREE MONEY MARKET FUND)

12B-1 SERVICE PLAN

Pursuant to the provisions of Rule 12b-1 under the Investment Company Act of
1940 (the "Act"), this 12b-1 Service Plan (the "Plan") has been adopted for
Nuveen Tax-Free Reserves, Inc., Nuveen Tax-Free Money Market Fund, Inc., on
behalf of its Nuveen New York Tax-Free Money Market Fund series and Nuveen
California Tax-Free Fund, Inc., on behalf of its Nuveen California Tax-Free
Money Market Fund series (each collectively referred to as a "Fund" herein) by
the members of the Fund's Board of Directors (the "Board"), including the Board
members who are not "interested persons" of the Fund and who have no direct or
indirect financial interest in the operation of the Plan or in any agreements
related to the Plan (the "Qualified Board Members") at a meeting called for the
purpose of voting on this Plan.

1. Compensation. Each Fund will pay to John Nuveen & Co. Incorporated ("Nuveen")
at the end of each calendar month a service fee computed at the annual rates set
forth below. Nuveen shall compensate various financial service firms ("Firms")
that appear as the dealer of record as to shares of the Fund (which may include
Nuveen), in accordance with the provisions of the Fund's Service Agreement (the
"Service Agreement"), for providing ongoing services to the Fund or its
shareholders. Such services shall include establishing and maintaining
shareholder accounts; processing purchase, redemption and exchange transactions;
performing sub-accounting services; providing information or answering
shareholders' inquiries as to the Fund, their shares of the Fund, or their
overall investment portfolio; promoting sale of shares of the Fund; and other
similar services. In its discretion, Nuveen may pay, out of its own resources,
additional compensation or concessions to Firms satisfying certain criteria, in
such amounts as Nuveen may determine from time to time. The service fee paid by
the Fund shall be based upon average daily net assets of the Fund. For the month
in which this Plan becomes effective or terminates, there shall be an
appropriate proration of the service fee set forth in this Paragraph 1 on the
basis of the number of days that the Plan and any agreements related to the Plan
are in effect during the month.

Fees applicable to Nuveen California Tax-Free Money Market Fund and Nuveen New
York Tax-Free Money Market Fund. Each such Fund shall pay 12b-1 service fees to
Nuveen as described above at an annual rate of .25% of average daily net assets.

b. Fees applicable to Nuveen Tax-Free Reserves, Inc. The Fund shall pay 12b-1
service fees to Nuveen based on the annual percentage of the average daily net
assets of the Fund in each dealer's account, as follows:

<TABLE>
<CAPTION>
NET ASSETS SERVICE FEE
- ----------------------------------------------
<S> <C>
Less than $2 million .10%
$2 million to $5 million .15%
$5 million to $10 million .20%
$10 million and over .25%
- ----------------------------------------------
</TABLE>

2. Periodic Reporting. Nuveen shall prepare for the Board on a quarterly basis
reports complying with the requirements of Rule 12b-1 showing 12b-1 fees paid by
the Funds and amounts paid to the various Firms, and such other information as
from time to time shall be reasonably requested by the Board.

3. Continuance. This Plan shall continue in effect indefinitely, provided that
such continuance is approved at least annually by a vote of a majority of the
Board, and of the Qualified Board Members, cast in person at a meeting called
for such purpose or by vote of at least a majority of the outstanding voting
securities of the affected Fund.

4. Termination. This Plan may be terminated at any time without penalty with
respect to a Fund by vote of a majority of the Qualified Board Members or by
vote of the majority of the outstanding voting securities of the Fund.

5. Amendment. This Plan may not be amended to increase materially the amount to
be paid to Nuveen by a Fund for services with respect to the Fund without the
vote of a majority of the outstanding voting securities of the Fund. All
material amendments to this Plan must in any event be approved by a vote of a
majority of the Board, and of the Qualified Board Members, cast in person at a
meeting called for such purpose.

6. Selection of Non-Interested Board Members. So long as this Plan is in effect,
the selection and nomination of those Board members who are not interested
persons of the Fund will be committed to the discretion of Board members who are
not themselves interested persons.

B-1
<PAGE> 44

7. Recordkeeping. The Fund will preserve copies of this Plan, the Service
Agreement, and all reports made pursuant to Paragraph 2 above for a period of
not less than six (6) years from the date of this Plan, the Service Agreement,
or any such report, as the case may be, the first two (2) years in an easily
accessible place.

8. Limitation of Liability. Any obligation of a Fund hereunder shall be binding
only upon the assets of the Fund and shall not be binding on any Board member,
officer, employee, agent, or shareholder of the Fund. Neither the authorization
of any action by the Board members or shareholders of the Fund nor the adoption
of the Plan on behalf of the Fund shall impose any liability upon any Board
member or upon any shareholder.

9. Definitions. The terms "interested person" and "vote of a majority of the
outstanding voting securities" shall have the meanings set forth in the Act and
the rules and regulations thereunder.

10. Severability; Separate Action. In any provision of this Plan shall be held
or made invalid by a court decision, rule or otherwise, the remainder of this
Plan shall not be affected thereby. Action shall be taken separately for the
Series or Class as the Act or the rules thereunder so require.

Adopted:

B-2
<PAGE> 45

ANNEX C

Proposed Amendment to the California Fund's Articles of Incorporation to add an
additional paragraph in Article SIXTH, paragraph (a) (v) of the Articles of
Incorporation as follows:

"Notwithstanding any provision of law requiring any action to be taken or
authorized by the affirmative vote of the holders of a greater proportion of the
votes of the Nuveen California Tax-Free Money Market Fund common shares of the
Corporation (and of the Series of shares comprising such Class) (as used below
in this paragraph, the "California Tax-Free Money Market Fund Shares"), such
action shall be effective and valid if taken or authorized by the affirmative
vote of a majority of the votes of the California Tax-Free Money Market Fund
Shares entitled to be cast thereon."

C-1
<PAGE> 46

[This Page Intentionally Left Blank. Please Proceed To The Following Page.]
<PAGE> 47

ANNEX D

As of April 6, 1999, the following persons were the only persons who were record
owners or, to the knowledge of the Funds, beneficial owners of 5% or more of the
shares of a Fund (or, if applicable, a class thereof). The Funds believe that
most of these shares were held in accounts for the fiduciary, agency or
custodial customers of the persons listed below.

<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------
NAME AND ADDRESS PERCENTAGE OF
FUND OF SHAREHOLDER NUMBER OF SHARES FUND SHARES
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
TAX-EXEMPT FUND Maril & Co. 45,825,659.34 12.90%
FBO First Hawaiian Bank
C/O Marshall & Ilsley Bank
Attn: ACM 14th Floor
1000 N Water Street
Milwaukee, WI 53202
National City Bank 33,585,079.25 9.44%
Trust OP Tax-Exempt MMKT FD
Attn: Mike Russo
Third Floor North Annex
4100 W 150th Street
Cleveland, OH 44135-1304
JC Bradford & Co. 22,907,673.93 6.45%
Money Funds Operations
Attn: Deborah Hombuckle
330 Commerce Street
Nashville, TN 37201-1805
First Source Bank 21,320,101.11 6.00%
Attn: Jan Coob
100 N Michigan Street
South Bend, IN 46601-1610
TAX-FREE FUND Elaine D. Sammons 14,129,052.71 5.53%
4242 Lomo Alto Drive
Dallas, TX 75219-1538
NEW YORK FUND
Institutional Series Nuveen Advisory Corp Inc. 16,666.67 100%
Attn: Darlene Cramer
333 West Wacker Drive Floor 34
Chicago, IL 60606-1220
Distribution Plan Series Sandra Bass 6,074,295.16 15.31%
47 Deer Park Road
Great Neck, NY 11024-2138
Estate of Edith Atlas 4,532,534,78 13.67%
Exec Sandra Bass
Exec Morton Bass
185 Great Neck Road
Great Neck, NY 11021-331
Morton Bass 3,156,552.27 9.52%
47 Deer Park Road
Great Neck, NY 11024-2138
Service Plan Series Kendall A. Smith 780,293.81 62.03%
Kathryn M. Smith
JT TEN
10 Rockledge Place
Mahopac, NY 10541-3137
Henry Epstein 153,116.91 12.17%
and Bella Epstein
JT TEN
189 Lindberg Avenue
Oceanside, NY 11572-5507
</TABLE>

D-1
<PAGE> 48

<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------
NAME AND ADDRESS PERCENTAGE OF
FUND OF SHAREHOLDER NUMBER OF SHARES FUND SHARES
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
CALIFORNIA FUND
Institutional Series Swiss Bank Corporation 1,777,062.41 58.49%
Attn: Kenneth Anderson SBT-32-B
10 E 50th Street UBST-14-A ST
New York, NY 10022-6831
Lauer & Company 623,247.02 20.51%
C/O The Glenmede Trust CO 1
Liberty PL
1650 Market Street STE 1200
Philadelphia, PA 18103-7301
Arrowhead Trust Inc 276,094.3 9.09%
Attn: April Eden
P.O. Box 736
San Bernardino, CA 92402-0735
Viro & Co 222,000 7.31%
225 E. Colorado Boulevard
Pasadena, CA 91101-1903
Distribution Plan Series Andrew D. Geller 5,450,829.93 9.04%
Geller Family Trust
3297 Woodbine Street
Los Angeles, CA 90064-4836
Service Plan Series Chase Manhattan Bank 8,271,739.56 47.73%
1211 Avenue of the Americas
New York, NY 10036-8701
Thurston Family Trust 1,443,056.94 8.33%
C/O Perry & Neidorf
9720 Wilshire Boulevard PL 3
Beverly Hills, CA 90212-2015
John C. Downing 1,044,968.82 6.03%
John C. Downing Trust
790 Neptune Avenue
Encinitas, CA 92024-2060
Swiss Bank Corporation 987,239.37 5.70%
Attn: Kenneth Anderson SBT 32B
10 E 50th Street UBST-14A
New York, NY 10022-6831
- -------------------------------------------------------------------------------------------------------------------
</TABLE>

D-2
<PAGE> 49

NUVXX699
<PAGE> 50

NUVEEN

NUVEEN TAX-EXEMPT MONEY MARKET FUND, INC.
SPECIAL MEETING OF SHAREHOLDERS

PROXY SOLICITED BY THE BOARD OF DIRECTORS FOR
THE SPECIAL MEETING OF SHAREHOLDERS, JUNE 4, 1999

A special meeting of shareholders will be held Friday, June 4, 1999, at 10:00
a.m., Central Time, in the 31st floor conference room of John Nuveen & Co.
Incorporated, 333 W. Wacker Drive, Chicago, Illinois. At this meeting, you will
be asked to vote on the proposals described in the attached proxy statement. The
undersigned hereby appoints Timothy R. Schwertfeger, Alan G. Berkshire, Larry W.
Martin and Gifford R. Zimmerman, and each of them, with full power of
substitution, proxies for the undersigned to represent and vote the shares of
the undersigned at the Special Meeting of Shareholders of Nuveen Tax-Exempt
Money Market Fund, Inc. (the "Fund") to be held on June 4, 1999, or any
adjournment or adjournments thereof.

THE BOARD OF DIRECTORS HAS UNANIMOUSLY AGREED THAT THESE PROPOSALS ARE IN THE
BEST INTERESTS OF SHAREHOLDERS AND URGES YOU TO VOTE IN FAVOR OF THE PROPOSALS.

You are encouraged to specify your choices by marking the appropriate boxes. If
you do not mark any boxes, your proxy will be voted "FOR" all of the proposals.
Please mark, sign, date and return this proxy card promptly using the enclosed
envelope if you are not voting by telephone or over the Internet.

TO VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK AS FOLLOWS:

WHETHER OR NOT YOU PLAN TO JOIN US AT THE MEETING, PLEASE COMPLETE, DATE AND
SIGN YOUR PROXY CARD AND RETURN IT IN THE ENCLOSED ENVELOPE SO THAT YOUR VOTE
WILL BE COUNTED. AS AN ALTERNATIVE, PLEASE CONSIDER VOTING BY TELEPHONE OR OVER
THE INTERNET. SEE THE ENCLOSED INSERT FOR FURTHER INSTRUCTIONS ON VOTING BY
PHONE OR OVER THE INTERNET.

68
<PAGE> 51
THIS PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED.

Vote on Directors (PROPOSAL 1). ELECTION OF NOMINEES TO THE BOARD

/ / FOR All
/ / WITHHOLD All
/ / FOR All Except

To withhold authority to vote for an individual nominee, mark the box "FOR All
Except" and write the nominee's number on the line below.

[01] Robert P. Bremner [02] Lawrence H. Brown [03] Anne E. Impellizzeri

[04] Peter R. Sawers [05] William J. Schneider [06] Timothy R. Schwertfeger

[07] Judith M. Stockdale
---------------------
- --------------------------------------------------------------------------------

If you wish to vote "FOR" or "AGAINST" FOR AGAINST ABSTAIN
ALL of the proposals listed below, or
if you wish to "ABSTAIN" from voting / / / / / /
on ALL such proposals, please mark the
appropriate box to the right:

If you mark a box to the right, you do
NOT need to vote on the individual
proposals listed below. If you mark
both a box to the right and the proposals
below, the proxies will use the voting
instructions indicated below for each
proposal.

FOR AGAINST ABSTAIN
Vote on Proposals (2-7)

2. APPROVAL OF NEW INVESTMENT
MANAGEMENT AGREEMENT. / / / / / /

3. (NOT APPLICABLE TO TAX-FREE FUND)

4. APPROVAL OF PLAN AND
AGREEMENT OF REORGANIZATION. / / / / / /

5. APPROVAL OF AMENDMENTS TO
THE FUND'S INVESTMENT OBJECTIVE. / / / / / /

6. APPROVAL OF THE ELIMINATION
OF TWO OF THE FUND'S FUNDAMENTAL

69
<PAGE> 52

INVESTMENT POLICIES.

A) UNSEASONED ISSUERS / / / / / /

B) LIMITATION ON OWNERSHIP
OF SECURITIES / / / / / /

7. TO RATIFY THE SELECTION OF
ARTHUR ANDERSEN LLP AS
INDEPENDENT AUDITORS. / / / / / /

In their discretion, the proxies are authorized to vote upon such other business
as may properly come before the special meeting.

The shares to which this proxy relates will be voted as specified. If no
specification is made, such shares will be voted "FOR" the election of nominees
to the Board and "FOR" the proposals set forth on this proxy.

PLEASE BE SURE TO SIGN AND DATE THIS PROXY IF YOU ARE NOT VOTING BY PHONE OR
OVER THE INTERNET.

NOTE: Please sign your name exactly as it appears on this proxy. If shares are
held jointly, each holder must sign the proxy. If you are signing on behalf of
an estate, trust or corporation, please state your title or capacity.

Shareholder sign here _________________ Date _________

Co-owner sign here __________________ Date ___________

70
<PAGE> 53

NUVEEN

NUVEEN TAX-FREE RESERVES, INC.
SPECIAL MEETING OF SHAREHOLDERS

PROXY SOLICITED BY THE BOARD OF DIRECTORS FOR
THE SPECIAL MEETING OF SHAREHOLDERS, JUNE 4, 1999

A special meeting of shareholders will be held Friday, June 4, 1999, at 10:00
a.m., Central Time, in the 31st floor conference room of John Nuveen & Co.
Incorporated, 333 W. Wacker Drive, Chicago, Illinois. At this meeting, you will
be asked to vote on the proposals described in the attached proxy statement. The
undersigned hereby appoints Timothy R. Schwertfeger, Alan G. Berkshire, Larry W.
Martin and Gifford R. Zimmerman, and each of them, with full power of
substitution, proxies for the undersigned to represent and vote the shares of
the undersigned at the Special Meeting of Shareholders of Nuveen Tax-Free
Reserves, Inc. (the "Fund") to be held on June 4, 1999, or any adjournment or
adjournments thereof.

THE BOARD OF DIRECTORS HAS UNANIMOUSLY AGREED THAT THESE PROPOSALS ARE IN THE
BEST INTERESTS OF SHAREHOLDERS AND URGES YOU TO VOTE IN FAVOR OF THE PROPOSALS.

TO VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK AS FOLLOWS:

72
<PAGE> 54
THIS PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED.

Vote on Directors (PROPOSAL 1). ELECTION OF NOMINEES TO THE BOARD

/ / FOR All
/ / WITHHOLD All
/ / FOR All Except

To withhold authority to vote for an individual nominee, mark the box "FOR All
Except" and write the nominee's number on the line below.

[01] Robert P. Bremner [02] Lawrence H. Brown [03] Anne E. Impellizzeri

[04] Peter R. Sawers [05] William J. Schneider [06] Timothy R. Schwertfeger

[07] Judith M. Stockdale
---------------------
- --------------------------------------------------------------------------------

FOR AGAINST ABSTAIN
Vote on Proposals (2-7)

2. APPROVAL OF NEW INVESTMENT
MANAGEMENT AGREEMENT. / / / / / /

3. APPROVAL OF THE NEW RULE
12B-1 PLAN. / / / / / /

4. APPROVAL OF PLAN AND
AGREEMENT OF REORGANIZATION. / / / / / /

5. APPROVAL OF AMENDMENTS TO
THE FUND'S INVESTMENT OBJECTIVE. / / / / / /

6. APPROVAL OF THE ELIMINATION
OF TWO OF THE FUND'S FUNDAMENTAL

73
<PAGE> 55

INVESTMENT POLICIES.

A) UNSEASONED ISSUERS / / / / / /

B) LIMITATION ON OWNERSHIP
OF SECURITIES / / / / / /

7. TO RATIFY THE SELECTION OF
ARTHUR ANDERSEN LLP AS
INDEPENDENT AUDITORS. / / / / / /

In their discretion, the proxies are authorized to vote upon such other business
as may properly come before the special meeting.

PLEASE BE SURE TO SIGN AND DATE THIS PROXY IF YOU ARE NOT VOTING BY PHONE OR
OVER THE INTERNET.

Shareholder sign here _________________ Date _________

Co-owner sign here __________________ Date ___________

74
<PAGE> 56

NUVEEN

NUVEEN TAX-FREE MONEY MARKET FUND, INC.
(NUVEEN NEW YORK TAX-FREE MONEY MARKET FUND)
SPECIAL MEETING OF SHAREHOLDERS

PROXY SOLICITED BY THE BOARD OF DIRECTORS FOR
THE SPECIAL MEETING OF SHAREHOLDERS, JUNE 4, 1999

A special meeting of shareholders will be held Friday, June 4, 1999, at 10:00
a.m., Central Time, in the 31st floor conference room of John Nuveen & Co.
Incorporated, 333 W. Wacker Drive, Chicago, Illinois. At this meeting, you will
be asked to vote on the proposals described in the attached proxy statement. The
undersigned hereby appoints Timothy R. Schwertfeger, Alan G. Berkshire, Larry W.
Martin and Gifford R. Zimmerman, and each of them, with full power of
substitution, proxies for the undersigned to represent and vote the shares of
the undersigned at the Special Meeting of Shareholders of Nuveen Tax-Free Money
Market Fund, Inc. (Nuveen New York Tax-Free Money Market Fund) (the "Fund") to
be held on June 4, 1999, or any adjournment or adjournments thereof.

THE BOARD OF DIRECTORS HAS UNANIMOUSLY AGREED THAT THESE PROPOSALS ARE IN THE
BEST INTERESTS OF SHAREHOLDERS AND URGES YOU TO VOTE IN FAVOR OF THE PROPOSALS.

TO VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK AS FOLLOWS:

76
<PAGE> 57

THIS PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED.

Vote on Directors (PROPOSAL 1) ELECTION OF NOMINEES TO THE BOARD

/ / FOR All
/ / WITHHOLD All
/ / FOR ALL Except

To withhold authority to vote for an individual nominee, mark the box
"FOR All Except" and write the nominee's number on the line below.

[01] Robert P. Bremner [02] Lawrence H. Brown [03] Anne E. Impellizzeri

[04] Peter R. Sawers [05] William J. Schneider [06] Timothy R. Schwertfeger

[07] Judith M. Stockdale
---------------------
- --------------------------------------------------------------------------------

If you wish to vote "FOR" or "AGAINST"
ALL of the proposals listed below, or
if you wish to "ABSTAIN" from voting FOR AGAINST ABSTAIN
on ALL such proposals, please mark the
appropriate box to the right:
/ / / / / /
If you mark a box to the right, you do
NOT need to vote on the individual
proposals listed below. If you mark
both a box to the right and the proposals
below, the proxies will use the voting
instructions indicated below for each
proposal.

FOR AGAINST ABSTAIN
Vote on Proposals (2-7)

PROPOSAL 2. APPROVAL OF NEW INVESTMENT
MANAGEMENT AGREEMENT. / / / / / /

PROPOSAL 3. APPROVAL OF THE NEW RULE
12B-1 PLAN, CLASS CONSOLIDATION
AND, AS NECESSARY, IMPLEMENTING
AN AMENDMENT TO ARTICLES OF
INCORPORATION / / / / / /

PROPOSAL 4. APPROVAL OF PLAN AND
AGREEMENT OF REORGANIZATION. / / / / / /

PROPOSAL 5. APPROVAL OF AMENDMENTS TO
THE FUND'S INVESTMENT OBJECTIVE. / / / / / /

77
<PAGE> 58

6. APPROVAL OF THE ELIMINATION
OF TWO OF THE FUND'S FUNDAMENTAL
INVESTMENT POLICIES.

A) UNSEASONED ISSUERS / / / / / /

B) LIMITATION ON OWNERSHIP
OF SECURITIES / / / / / /

7. TO RATIFY THE SELECTION OF
ARTHUR ANDERSEN LLP AS
INDEPENDENT AUDITORS. / / / / / /

In their discretion, the proxies are authorized to vote upon such other business
as may properly come before the special meeting.

PLEASE BE SURE TO SIGN AND DATE THIS PROXY IF YOU ARE NOT VOTING BY PHONE OR
OVER THE INTERNET.

Shareholder sign here _________________ Date _________

Co-owner sign here __________________ Date ___________

78
<PAGE> 59

NUVEEN

NUVEEN CALIFORNIA TAX-FREE FUND, INC.
(NUVEEN CALIFORNIA TAX-FREE MONEY MARKET FUND)
SPECIAL MEETING OF SHAREHOLDERS

PROXY SOLICITED BY THE BOARD OF DIRECTORS FOR
THE SPECIAL MEETING OF SHAREHOLDERS, JUNE 4, 1999

A special meeting of shareholders will be held Friday, June 4, 1999, at 10:00
a.m., Central Time, in the 31st floor conference room of John Nuveen & Co.
Incorporated, 333 W. Wacker Drive, Chicago, Illinois. At this meeting, you will
be asked to vote on the proposals described in the attached proxy statement. The
undersigned hereby appoints Timothy R. Schwertfeger, Alan G. Berkshire, Larry W.
Martin and Gifford R. Zimmerman, and each of them, with full power of
substitution, proxies for the undersigned to represent and vote the shares of
the undersigned at the Special Meeting of Shareholders of Nuveen California
Tax-Free Fund, Inc. (Nuveen California Tax-Free Money Market Fund) (the "Fund")
to be held on June 4, 1999, or any adjournment or adjournments thereof.

THE BOARD OF DIRECTORS HAS UNANIMOUSLY AGREED THAT THESE PROPOSALS ARE IN THE
BEST INTERESTS OF SHAREHOLDERS AND URGES YOU TO VOTE IN FAVOR OF THE PROPOSALS.

TO VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK AS FOLLOWS:

80
<PAGE> 60

THIS PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED.

Vote on Directors (PROPOSAL 1) ELECTION OF NOMINEES TO THE BOARD

/ / FOR All
/ / WITHHOLD All
/ / FOR All Except

To withhold authority to vote for an individual nominee, mark the box
"FOR All Except" and write the nominee's number on the line below.

[01] Robert P. Bremner [02] Lawrence H. Brown [03] Anne E. Impellizzeri

[04] Peter R. Sawers [05] William J. Schneider [06] Timothy R. Schwertfeger

[07] Judith M. Stockdale
---------------------
- --------------------------------------------------------------------------------

If you wish to vote "FOR" or "AGAINST"
ALL of the proposals listed below, or FOR AGAINST ABSTAIN
if you wish to "ABSTAIN" from voting
on ALL such proposals, please mark the
appropriate box to the right: / / / / / /

FOR AGAINST ABSTAIN
Vote on Proposals (2-7)

2. APPROVAL OF NEW INVESTMENT
MANAGEMENT AGREEMENT. / / / / / /

3. APPROVAL OF THE NEW RULE
12B-1 PLAN, CLASS CONSOLIDATION
AND, AS NECESSARY, IMPLEMENTING
AN AMENDMENT TO ARTICLES OF
INCORPORATION / / / / / /

4. APPROVAL OF PLAN AND
AGREEMENT OF REORGANIZATION, AND
APPROVAL OF AMENDMENT TO ARTICLES
TO LOWER REQUIRED VOTE. / / / / / /

81
<PAGE> 61

5. APPROVAL OF AMENDMENTS TO
THE FUND'S INVESTMENT OBJECTIVE. / / / / / /

6. APPROVAL OF THE ELIMINATION
OF TWO OF THE FUND'S FUNDAMENTAL
INVESTMENT POLICIES.

A) UNSEASONED ISSUERS / / / / / /

B) LIMITATION ON OWNERSHIP
OF SECURITIES / / / / / /

7. TO RATIFY THE SELECTION OF
ARTHUR ANDERSEN LLP AS
INDEPENDENT AUDITORS. / / / / / /

In their discretion, the proxies are authorized to vote upon such other business
as may properly come before the special meeting.

PLEASE BE SURE TO SIGN AND DATE THIS PROXY IF YOU ARE NOT VOTING BY PHONE OR
OVER THE INTERNET.

Shareholder sign here _________________ Date _________

Co-owner sign here __________________ Date ___________