<PAGE>
As filed with the Securities and Exchange Commission on April 27, 1995
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-1A
REGISTRATION STATEMENT UNDER THE
SECURITIES ACT OF 1933
[_]
File No. 2-78736
Pre-Effective Amendment No.--- [_]
Post-Effective Amendment No. 14
--- [X]^
REGISTRATION STATEMENT UNDER THE
INVESTMENT COMPANY ACT OF 1940
[_]
File No. 811-3531
Amendment No. 15
--- [X]^
NUVEEN TAX-FREE RESERVES, INC.
(Exact Name of Registrant as Specified in Charter)
333 West Wacker Drive, Chicago, 60606
Illinois (Zip Code)
(Address of Principal Executive
Offices)
Registrant's Telephone Number, Including Area Code: (312) 917-7700
James J. Wesolowski, Esq.--Vice President and Secretary
333 West Wacker Drive
Chicago, Illinois 60606
(Name and Address of Agent for Service)
It is proposed that this filing will become effective (check appropriate box):
Immediately upon filing pursuant to paragraph (b)
on (date) pursuant to paragraph
[_] [_] (a)(1)
on May 1, 1995 pursuant to paragraph (b)
[X] 75 days after filing pursuant to par-
[_] agraph (a)(2)
60 days after filing pursuant to paragraph (a)(1)
[_] on (date) pursuant to paragraph
[_] (a)(2) of Rule 485.
If appropriate, check the following box:
If appropriate, check the following box:
This post-effective amendment designates a new effective date for a previ-
ously filed post-effective amendment.
[_]This post-effective amendment designates a new effective date for a previ-
[_]ously filed post-effective amendment.
PURSUANT TO RULE 24F-2 OF THE INVESTMENT COMPANY ACT OF 1940, REGISTRANT HAS
ELECTED TO REGISTER AN INDEFINITE NUMBER OF SHARES. A RULE 24F-2 NOTICE FOR THE
REGISTRANT'S FISCAL YEAR ENDED FEBRUARY 28, 1995, WAS FILED ON OR ABOUT APRIL
24, 1995.
CALCULATION OF REGISTRATION FEE
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PROPOSED PROPOSED
AMOUNT MAXIMUM MAXIMUM AMOUNT OF
TITLE OF SECURITIES BEING OFFERING PRICE AGGREGATE REGISTRATION
BEING REGISTERED REGISTERED PER UNIT OFFERING PRICE FEE*
- -------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Shares of Common Stock, $.01 par value.. 99,719,938 $1.00 $99,719,938 $100.00
</TABLE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
*Registrant has elected to calculate its filing fee in the manner described in
Rule 24e-2 under the Investment Company Act of 1940. The total amount of secu-
rities redeemed during the previous fiscal year was $717,393,211. The total
amount of redeemed securities used for reduction pursuant to Rule 24e-2(a) or
Rule 24f-2(c) was $617,963,271. The amount of redeemed securities being used
for reduction of the registration fee in this Amendment is $99,429,940.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
NUVEEN TAX-FREE RESERVES, INC.
CONTENTS
OF
POST-EFFECTIVE AMENDMENT NO. 14
TO
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
FILE NO. 2-78736
AND
AMENDMENT NO. 15
TO
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940
FILE NO. 811-3531
This Registration Statement comprises the following papers and contents:
The Facing Sheet
Table of Contents
Cross-Reference Sheet
Part A--The Prospectus
Part B--The Statement of Additional Information
Copy of Annual Report to Shareholders (the financial
statements from which are incorporated by reference into the
Statement of Additional Information)
Part C--Other Information
Signatures
Index to Exhibits
Exhibits
<PAGE>
NUVEEN TAX-FREE RESERVES, INC.
-----------------
CROSS REFERENCE SHEET
PART A--PROSPECTUS
<TABLE>
<CAPTION>
ITEM IN
PART A
OF FORM N-
1A PROSPECTUS LOCATION
- ---------- -------------------
<S> <C>
1 Cover Page
2(a) Fund Expenses
(b) Highlights
(c) Highlights
3(a) Financial Highlights
(b) Not applicable
(c) Yield
(d) Not applicable
4(a) General Information--Capital Stock; The Fund and Its
Investment Objective; Investment Policies
(b) Investment Policies
(c) Investment Policies
5(a) Management of the Fund
(b) Management of the Fund
(c) Not applicable
(d) General Information--Custodian, Shareholder Services Agent
and Transfer Agent; Management of the Fund
(e) General Information--Custodian, Shareholder Services Agent
and Transfer Agent
(f) Not applicable
(g) Not applicable
5A Not applicable
6(a) General Information--Capital Stock
(b) Not applicable
(c) Not applicable
(d) Not applicable
(e) General Information--Investor Inquiries
(f) Dividends and Taxes
(g) Dividends and Taxes--Tax Matters
(h) Not applicable
7(a) Management of the Fund
(b) Net Asset Value; How to Purchase Fund Shares
(c) How to Purchase Fund Shares
(d) How to Purchase Fund Shares
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
ITEM IN
PART A
OF FORM N-
1A PROSPECTUS LOCATION
- ---------- -------------------
<S> <C>
(e) How to Purchase Fund Shares--Distribution and Service Plan
(f) How to Purchase Fund Shares--Distribution and Service Plan
8(a) How to Redeem Fund Shares
(b) How to Redeem Fund Shares--Regular Redemption Procedure
(c) Not applicable
(d) How to Redeem Fund Shares
9 Not applicable
</TABLE>
<PAGE>
PART B--STATEMENT OF ADDITIONAL INFORMATION
<TABLE>
<CAPTION>
ITEM IN
PART B
OF FORM N- LOCATION IN STATEMENT
1A OF ADDITIONAL INFORMATION
- ---------- -------------------------
<S> <C>
10 Cover Page
11 Cover Page
12 Not applicable
13 Fundamental Policies and Investment Portfolio
14(a) Management
(b) Management
(c) Management
15(a) Not applicable
(b) Not applicable
(c) Management
16(a) Investment Adviser and Investment Management Agreement;
Management
(b) Investment Adviser and Investment Management Agreement; see
also "Management of the Fund" in the Prospectus
(c) Not applicable
(d) Not applicable
(e) Not applicable
(f) Distribution and Service Agreements, see also "How to
Purchase Fund Shares--Distribution and Service Plan" in the
Prospectus
(g) Not applicable
(h) Independent Public Accountants and Custodian
(i) Not applicable
17(a) Portfolio Transactions
(b) Not applicable
(c) Portfolio Transactions
(d) Not applicable
(e) Not applicable
18(a) See "How to Redeem Fund Shares" and "General Information--
Capital Stock" in the Prospectus
(b) Not applicable
19(a) See "How to Purchase Fund Shares" in the Prospectus
(b) Net Asset Value; Financial Statements--Statement of Net
Assets; see also "Net Asset Value" in the Prospectus
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
ITEM IN
PART B
OF FORM N- LOCATION IN STATEMENT
1A OF ADDITIONAL INFORMATION
- ---------- -------------------------
<S> <C>
(c) See "How to Redeem Fund Shares--Redemption in Kind" in the
Prospectus
20 Tax Matters
21(a) Distribution and Service Agreements; see also "How to
Purchase Fund Shares" in the Prospectus
(b) Not applicable
(c) Not applicable
22(a) Yield Information
(b) Not applicable
23 Incorporated by reference to Annual Report
</TABLE>
<PAGE>
PART A--PROSPECTUS
NUVEEN TAX-FREE RESERVES, INC.
333 West Wacker Drive
Chicago, Illinois 60606
<PAGE>
Prospectus
May 1, 1995
NUVEEN TAX-FREE RESERVES, INC.
Nuveen Tax-Free Reserves, Inc. (the "Fund") is an open-end, diversified manage-
ment investment company with the objective of providing through investment in a
professionally managed portfolio of high quality, short-term Municipal Obliga-
tions as high a level of current interest income exempt from federal income tax
as is consistent, in the view of Fund management, with stability of principal
and the maintenance of liquidity. The Fund will value its portfolio securities
at amortized cost and seek to maintain a net asset value of $1.00 per share.
There are no sales or redemption charges. The minimum initial investment is
$1,000. The Fund is designed as a vehicle for direct investment of temporary
cash balances in tax-exempt money market instruments.
This Prospectus, which should be retained for future reference, sets forth con-
cisely the information about the Fund that a prospective investor ought to know
before investing. A "Statement of Additional Information" dated May 1, 1995,
containing further information about the Fund has been filed with the Securi-
ties and Exchange Commission, is incorporated by reference into this Prospec-
tus, and may be obtained without charge from John Nuveen & Co. Incorporated by
calling 800-621-7227.
An investment in the Fund is neither insured nor guaranteed by the U.S. Govern-
ment and there can be no assurance that the Fund will be able to maintain a
stable net asset value of $1.00 per share.
Shares of the Fund are not deposits or obligations of, or guaranteed or en-
dorsed by, any bank and are not federally insured by the Federal Deposit Insur-
ance Corporation, the Federal Reserve Board or any other agency.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE AC-
CURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
JOHN NUVEEN & CO. INCORPORATED
FOR INFORMATION, CALL TOLL-FREE 800-621-7227
1
<PAGE>
CONTENTS
3 Highlights
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4 Fund Expenses
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6 Financial Highlights
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6 Yield
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7 The Fund and Its Investment Objective
- --------------------------------------------------------------------------------
7 Investment Policies
- --------------------------------------------------------------------------------
13 Management of the Fund
- --------------------------------------------------------------------------------
14 Dividends and Taxes
- --------------------------------------------------------------------------------
Net Asset Value
17
- --------------------------------------------------------------------------------
17
How to Purchase Fund Shares
- --------------------------------------------------------------------------------
22 How to Redeem Fund Shares
- --------------------------------------------------------------------------------
25 General Information
- --------------------------------------------------------------------------------
27 Taxable Equivalent Yield Table
- --------------------------------------------------------------------------------
Application Form
29
- --------------------------------------------------------------------------------
Application Instructions
31
- --------------------------------------------------------------------------------
2
<PAGE>
HIGHLIGHTS
Nuveen Tax-Free Reserves, Inc. (the "Fund") is an open-
end, diversified management investment company with the
objective of providing, through investment in a profes-
sionally managed portfolio of high quality short-term
Municipal Obligations, as high a level of current inter-
est income exempt from federal income tax as is consis-
tent, in the view of the Fund's management, with stabil-
ity of principal and the maintenance of liquidity. The
Fund will value its portfolio at amortized cost and seek
to maintain a net asset value of $1.00 per share. There
is no guarantee that this value will be maintained. See
"Net Asset Value" on page 17 and "The Fund and Its In-
vestment Objective" on page 7.
The Fund intends to qualify, as it has in prior years,
for tax treatment as a regulated investment company and
to satisfy conditions that will enable interest income
which is exempt from federal income tax in the hands of
the Fund to retain such tax-exempt status when distrib-
uted to the shareholders of the Fund. Distributions may
not be exempt from state or local income taxes. See
"Dividends and Taxes" on page 14.
HOW TO BUY FUND
SHARES Fund shares may be purchased on days on which the Fed-
eral Reserve Bank of Boston is normally open for busi-
ness ("Business Days") at the net asset value next de-
termined after an order is received together with pay-
ment in federal funds. The minimum initial investment is
$1,000. Subsequent investments for the account of the
shareholder must be in amounts of $100 or more. See "How
to Purchase Fund Shares" on page 17. For further infor-
mation about the Fund or for assistance in opening an
account, please call Nuveen toll-free at 800-621-7227.
HOW TO REDEEM Shareholders may redeem shares at net asset value next
FUND SHARES computed after receipt of a redemption request in proper
form on any Business Day. There is no redemption fee.
See "How to Redeem Fund Shares" on page 22.
DIVIDENDS AND The Fund will declare dividends daily from its accumu-
REINVESTMENT lated net income and distribute the dividends monthly in
the form of additional shares or, at the option of the
investor, in cash. See "Dividends and Taxes" on page 14.
3
<PAGE>
INVESTMENT
ADVISER AND John Nuveen & Co. Incorporated ("Nuveen") acts as prin-
PRINCIPAL cipal underwriter of the Fund. The Fund has a Distribu-
UNDERWRITER tion and Service Plan under which the Fund and Nuveen
pay fees to qualifying organizations for servicing
shareholder accounts. See "How to Purchase Fund Shares--
Distribution and Service Plan" on page 20. Nuveen Advi-
sory Corp. ("Nuveen Advisory"), a wholly-owned subsidi-
ary of Nuveen, is the Fund's investment adviser and re-
ceives an annual management fee ranging from .5 of 1% of
the first $500 million of average daily net assets to
.45 of 1% of average daily net assets over $1 billion.
The management fee will be reduced or Nuveen Advisory
will assume certain Fund expenses in an amount necessary
to prevent the Fund's total expenses (excluding inter-
est, taxes, fees incurred in acquiring and disposing of
portfolio securities and extraordinary expenses) in any
fiscal year from exceeding .75 of 1% of its average
daily net asset value. See "Management of the Fund" on
page 13.
INVESTMENTS
The Fund invests primarily in municipal money market in-
struments. The Fund may from time to time invest a por-
tion of its assets in debt obligations which are not
rated, and variable rate or floating rate obligations.
Investors are urged to read the descriptions of these
investments and practices set forth in this Prospectus.
See "Investment Policies" on page 7.
The information set forth above should be read in con-
junction with the detailed information set forth else-
where in this Prospectus.
FUND EXPENSES
The following tables illustrate all expenses and fees
that a shareholder of the Fund will incur. The expenses
and fees shown are for the fiscal year ended February
28, 1995.
<TABLE>
<CAPTION>
SHAREHOLDER TRANSACTION EXPENSES
------------------------------------------------------------
<S> <C>
Sales Load Imposed on Purchases................................ None
Sales Load Imposed on Reinvested Dividends..................... None
Redemption Fees................................................ None
Exchange Fees.................................................. None
</TABLE>
4
<PAGE>
<TABLE>
<CAPTION>
ANNUAL OPERATING EXPENSES (AS A PERCENTAGE OF AVERAGE DAILY
NET ASSETS)
------------------------------------------------------------
<S> <C>
Management Fees............................................. .50%
12b-1 Fees.................................................. .06%
Other Operating Expenses, After Expense Reimbursements...... .19%
----
Total Expenses, After Expense Reimbursements................ .75%
====
</TABLE>
The purpose of the foregoing tables is to assist you
in understanding all expenses and fees that you
would bear directly or indirectly as an investor in
the Fund.
As discussed under "Management of the Fund" and re-
flected in the tables above, the management fee is
reduced or Nuveen Advisory assumes certain expenses
so as to prevent the total expenses of the Fund in
any fiscal year from exceeding .75 of 1% of average
daily net assets. Without expense reimbursements,
for the fiscal year ended February 28, 1995, other
operating expenses would have been .23 of 1% of the
average daily net assets, and total expenses would
have been .79 of 1% of the average daily net assets.
See "Management of the Fund."
The following example illustrates the expenses that
you would pay on a $1,000 investment over various
time periods assuming (1) a 5% annual rate of return
and (2) redemption at the end of each time period.
As noted in the table above, the Fund charges no re-
demption fees of any kind.
<TABLE>
<CAPTION>
10
1 YEAR 3 YEARS 5 YEARS YEARS
------- ------- ------- -------
<S> <C> <C> <C>
$8 $24 $42 $93
</TABLE>
This example should not be considered a representa-
tion of past or future expenses or performance. Ac-
tual expenses may be greater or less than those
shown. This example assumes that the percentage
amounts listed under Annual Operating Expenses re-
mains the same in each of the periods.
5
<PAGE>
FINANCIAL HIGHLIGHTS
The following financial information has been derived
from the Fund's financial statements, which have been
audited by Arthur Andersen LLP, independent public ac-
countants, as indicated in their report appearing in the
Fund's Annual Report, and should be read in conjunction
with the financial statements and related notes appear-
ing in the Annual Report.
Selected data for a share of Common Stock outstanding
throughout each period is as follows:
<TABLE>
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
INCOME FROM LESS DISTRIBUTIONS NET TOTAL RATIOS/SUPPLEMENTAL
NET ASSET INVESTMENT OPERATIONS ------------------ ASSET RETURN DATA
VALUE --------------- VALUE ON ---------------------
BEGINNING END OF NET
OF PERIOD PERIOD ASSET
<CAPTION> VALUE
NET RATIO OF
REALIZED RATIO OF NET
AND EXPENSES INVESTMENT
UNREALIZED DIVIDENDS DISTRIBUTIONS TO INCOME TO
NET GAIN (LOSS) FROM NET FROM NET ASSETS AVERAGE AVERAGE
INVESTMENT FROM INVESTMENT CAPITAL END OF PERIOD NET NET
INCOME INVESTMENTS INCOME GAINS (IN THOUSANDS) ASSETS ASSETS
- --------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Year
Ended:
2/28/95 $1.000 $.025* $-- $(.025) $-- $1.000 2.46% $351,606 .75%* 2.43%*
2/28/94 1.000 .018* -- (.018) -- 1.000 1.84 404,201 .75* 1.83*
2/28/93 1.000 .023 -- (.023) -- 1.000 2.34 450,746 .74 2.35
5
Months
Ended
2/29/92 1.000 .015 -- (.015) -- 1.000 1.45 477,127 .75+ 3.48+
Year
Ended
:
9/30/91 1.000 .046 -- (.046) -- 1.000 4.57 451,808 .72 4.56
9/30/90 1.000 .055 -- (.055) -- 1.000 5.45 430,206 .73 5.45
9/30/89 1.000 .057 -- (.057) -- 1.000 5.70 390,258 .72 5.69
9/30/88 1.000 .045 -- (.045) -- 1.000 4.52 409,653 .73 4.52
9/30/87 1.000 .039 -- (.039) -- 1.000 3.88 361,044 .73 3.85
9/30/86 1.000 .045* -- (.045) -- 1.000 4.46 272,677 .75* 4.39*
9/30/85 1.000 .050* -- (.050) -- 1.000 4.98 141,762 .75* 4.90*
- --------------------------------------------------------------------------------------------------------------------
</TABLE>
*Reflects the waiver of certain management fees and reimbursement of certain
other expenses by Nuveen Advisory. For additional information about Nuveen
Advisory's fee waivers and expense reimbursement, see note 4 of Notes to Fi-
nancial Statements in the Annual Report.
+Annualized.
YIELD
From time to time, the Fund may advertise its "yield,"
"effective yield" and "taxable equivalent yield." The
Fund's "yield" refers to the rate of income generated by
an investment in the Fund over a specified seven-day pe-
riod, expressed as an annualized figure. "Effective
yield" is calculated similarly except that, when
annualized, the income earned by the investment is as-
sumed to be reinvested. Due to this compounding effect,
the effective yield will be slightly higher than the
yield. Yield figures will fluctuate over time. "Taxable
equivalent yield" is the yield that a taxable investment
would need to generate in order to equal the Fund's
yield on an after-tax basis for an investor in a stated
tax bracket (normally assumed to be the bracket with the
highest marginal tax rate). A taxable
6
<PAGE>
equivalent yield quotation will be higher than the yield
or the effective yield quotations for the Fund. Addi-
tional information concerning performance figures ap-
pears in the Statement of Additional Information.
Based on the seven-day period ended February 28, 1995,
the yield, effective yield and taxable equivalent yield
(using the maximum federal income tax rate of 39.6%) for
the Fund were 3.37%, 3.43% and 5.58%, respectively.
This Prospectus may be in use for a full year and it can
be expected that during this period there will be mate-
rial fluctuations in yield from that quoted above. For
information as to current yields, please call Nuveen at
800-621-7227.
THE FUND AND ITS INVESTMENT OBJECTIVE
The Fund is an open-end, diversified management invest-
ment company which has the objective of providing,
through investment in a professionally managed portfolio
of high quality short-term Municipal Obligations (de-
scribed below), as high a level of current interest in-
come exempt from federal income tax as is consistent, in
the view of the Fund's management, with stability of
principal and the maintenance of liquidity. The Fund's
investment objective is a fundamental policy of the Fund
and may not be changed without the approval of the hold-
ers of a majority of the shares. The Fund values its
portfolio securities at amortized cost and seeks to
maintain a constant net asset value of $1.00 per share.
There is risk in all investments and, therefore, there
can be no assurance that the Fund's objective will be
achieved.
INVESTMENT POLICIES
IN GENERAL The Fund's investment assets will consist primarily of
short-term Municipal Obligations which at the time of
purchase are eligible for purchase by money market funds
under applicable guidelines of the Securities and Ex-
change Commission ("SEC"), and are: (1) bonds rated
within the two highest long-term grades by Moody's In-
vestors Service, Inc. ("Moody's") (Aaa or Aa) or by
Standard & Poor's Corporation ("S&P") (AAA or AA), or,
in the case of municipal notes, rated MIG-1 or VMIG-1 by
Moody's or SP-1 by S&P, or, in the case of municipal
commercial paper, rated Prime-1 by Moody's or A-1 by
S&P; (2) unrated, but which, in the opinion of Nuveen
Advisory, have credit characteristics equivalent to
obliga-
7
<PAGE>
tions rated Aa, MIG-1, VMIG-1 or Prime-1 by Moody's, or
AA, SP-1 or A-1 by S&P; and (3) tax-exempt project notes
which at the time of purchase are secured by the full
faith and credit of the U.S. Government as to payment of
principal and interest. To the extent that unrated Mu-
nicipal Obligations may be less liquid, there may be
somewhat greater risks in purchasing unrated Municipal
Obligations than in purchasing comparable but rated Mu-
nicipal Obligations.
The investment portfolio of the Fund will be limited to
obligations that mature within 397 days from the date of
acquisition or that have variable or floating rates of
interest (which rates vary with changes in specified
market rates or indices such as a bank prime rate or
tax-exempt money market index). The Fund may invest in
such variable and floating rate instruments even if they
carry stated maturities in excess of 397 days, provided
that (1) certain conditions contained in rules and regu-
lations issued by the SEC under the Investment Company
Act of 1940 are satisfied and (2) they carry demand fea-
tures that meet the conditions of applicable SEC rules
and permit the Fund to recover the full principal amount
thereof upon specified notice. The Fund's right to ob-
tain payment on such an instrument could be adversely
affected by events occurring between the date the Fund
elects to tender the instrument and the date proceeds
are due.
The types of short-term Municipal Obligations in which
the Fund may invest include bond anticipation notes, tax
anticipation notes, revenue anticipation notes, con-
struction loan notes issued to provide construction fi-
nancing for specific projects, and bank notes issued by
governmental authorities to commercial banks as evidence
of borrowings. Since these short-term securities fre-
quently serve as interim financing pending receipt of
anticipated funds from the issuance of long-term bonds,
tax collections or other anticipated future revenues, a
weakness in an issuer's ability to obtain such funds as
anticipated could adversely affect the issuer's ability
to meet its obligations on these short-term securities.
The Fund has obtained commitments (each, a "Commitment")
from MBIA Insurance Corporation ("MBIA") with respect to
certain designated bonds held by the Fund for which
credit support is furnished by one of the banks ("Ap-
proved Banks") approved by MBIA under its established
credit approval standards. Under the terms of a Commit-
ment, if the Fund were to determine that certain adverse
circumstances relating to the financial condition of the
Approved Bank had occurred, the Fund could cause MBIA to
issue a "while-in-fund" insurance policy covering the
underlying bonds; after time and subject to further
terms and conditions, the Fund could obtain from MBIA an
"insured-to-maturity" insur
8
<PAGE>
ance policy as to the covered bonds. Each type of insur-
ance policy would insure payment of interest on the
bonds and payment of principal at maturity. Although
such insurance would not guarantee the market value of
the bonds or the value of the Fund's shares, the Fund
believes that its ability to obtain insurance for such
bonds under such adverse circumstances will enable the
Fund to hold or dispose of such bonds at a price at or
near their par value.
The Fund may purchase but to date has not purchased and
has no present intention to purchase "temporary invest-
ments," the income from which is subject to federal in-
come tax. Under ordinary circumstances, the Fund may not
invest more than 20% of its net assets in such temporary
investments. However, during extraordinary circumstances
the Fund may, for defensive purposes, invest more than
20% of its assets in such temporary investments. The
Fund will invest only in temporary investments with re-
maining maturities of 397 days or less which, in the
opinion of Nuveen Advisory, are of "high grade" quality.
The foregoing restrictions and other limitations dis-
cussed herein will apply only at the time of purchase of
securities and will not be considered violated unless an
excess or deficiency occurs or exists immediately after
and as a result of an acquisition of securities.
The SEC has proposed amendments to Rule 2a-7 under the
Investment Company Act of 1940 that would, among other
things, further limit the types of securities eligible
for purchase by tax-exempt money market funds. If these
amendments are adopted, the Fund will make any necessary
adjustments to its portfolio to ensure compliance with
Rule 2a-7.
Because investments of the Fund will consist of securi-
ties with relatively short maturities, the Fund can ex-
pect to have a high portfolio turnover rate. The Fund
will maintain a dollar-weighted average portfolio matu-
rity of not more than 90 days. During the fiscal year
ended February 28, 1995 the average maturity of the
Fund's portfolio ranged from 25 to 70 days.
MUNICIPAL Municipal Obligations include debt obligations issued by
OBLIGATIONS states, cities and local authorities to obtain funds for
various public purposes, including the construction of
such public facilities as airports, bridges, highways,
housing, hospitals, mass transportation, schools,
streets and water and sewer works. Other public purposes
for which Municipal Obligations may be issued include
the refinancing of outstanding obligations, the ob-
taining of funds for general operating expenses and for
loans to other public institutions and facilities. In
addition, certain industrial develop-
9
<PAGE>
ment bonds and pollution control bonds may be included
within the term Municipal Obligations if the interest
paid thereon qualifies as exempt from federal income
tax.
Two principal classifications of Municipal Obligations
are "general obligation" and "revenue" bonds. General
obligation bonds are secured by the issuer's pledge of
its full faith, credit and taxing power for the payment
of principal and interest. Revenue bonds are payable
only from the revenues derived from a particular facil-
ity or class of facilities or, in some cases, from the
proceeds of a special excise or other specific revenue
source. Industrial development and pollution control
bonds are in most cases revenue bonds and do not gener-
ally constitute the pledge of the credit or taxing power
of the issuer of such bonds. There are, of course, vari-
ations in the security of Municipal Obligations, both
within a particular classification and between classifi-
cations, depending on numerous factors.
Municipal Obligations can be further classified between
bonds and notes. Bonds are issued to raise longer-term
capital but, when purchased by the Fund, will have 397
days or less remaining until maturity or will have a
variable or floating rate of interest. These issues may
be either general obligation bonds or revenue bonds.
Notes are short-term instruments with a maturity of two
years or less. Most notes are general obligations of the
issuer and are sold in anticipation of a bond sale, col-
lection of taxes or receipt of other revenues. Payment
of these notes is primarily dependent upon the issuer's
receipt of the anticipated revenues.
Municipal Obligations also include very short-term
unsecured, negotiable promissory notes, issued by
states, municipalities, and their agencies, which are
known as "tax-exempt commercial paper" or "municipal pa-
per." Payment of principal and interest on issues of mu-
nicipal paper may be made from various sources, to the
extent that funds are available therefrom. There is a
limited secondary market for issues of municipal paper.
While these various types of notes as a group represent
the major portion of the tax-exempt note market, other
types of notes are occasionally available in the market-
place and the Fund may invest in such other types of
notes to the extent consistent with its investment ob-
jective and limitations. Such notes may be issued for
different purposes and with different security than
those mentioned above.
10
<PAGE>
The yields on Municipal Obligations are dependent on a
variety of factors, including the condition of the gen-
eral money market and the Municipal Obligation market,
the size of a particular offering, the maturity of the
obligation and the rating of the issue. The ratings of
Moody's and S&P represent their opinions as to the qual-
ity of those Municipal Obligations which they undertake
to rate. It should be emphasized, however, that ratings
are general and are not absolute standards of quality.
Consequently, Municipal Obligations with the same matu-
rity, coupon and rating may have different yields while
obligations of the same maturity and coupon with differ-
ent ratings may have the same yield. The market value of
outstanding Municipal Obligations will vary with changes
in prevailing interest rate levels and as a result of
changing evaluations of the ability of their issuers to
meet interest and principal payments.
The Fund may purchase and sell Municipal Obligations on
a when-issued or delayed delivery basis. When-issued and
delayed delivery transactions arise when securities are
purchased or sold with payment and delivery beyond the
regular settlement date. (When-issued transactions nor-
mally settle within 30-45 days.) On such transactions
the payment obligation and the interest rate are fixed
at the time the buyer enters into the commitment. The
commitment to purchase securities on a when-issued or
delayed delivery basis may involve an element of risk
because the value of the securities is subject to market
fluctuation. No interest accrues tothe purchaser prior
to settlement of the transaction, and at the time of de-
livery the market value may be less than cost.
Obligations of issuers of Municipal Obligations are sub-
ject to the provisions of bankruptcy, insolvency and
other laws affecting the rights and remedies of credi-
tors. In addition, the obligations of such issuers may
become subject to laws enacted in the future by Con-
gress, state legislatures or referenda extending the
time for payment of principal and/or interest, or impos-
ing other constraints upon enforcement of such obliga-
tions or upon municipalities to levy taxes. There is
also the possibility that, as a result of legislation or
other conditions, the power or ability of any issuer to
pay, when due, the principal of and interest on its Mu-
nicipal Obligations may be materially affected.
CERTAIN The Fund, as a fundamental policy, may not: (1) invest
FUNDAMENTAL more than 5% of its total assets in securities of any
INVESTMENT one issuer, excluding the United States government, its
POLICIES agencies and instrumentalities; (2) borrow money, except
from banks for temporary or emergency purposes and then
only in an amount not exceeding (a) 10% of the value of
the Fund's total assets at the time of borrowing or (b)
one-third of the value of the Fund's total
11
<PAGE>
assets including the amount borrowed, in order to meet
redemption requests which might otherwise require the
untimely disposition of securities; (3) pledge, mortgage
or hypothecate its assets, except that, to secure per-
mitted borrowings for temporary or emergency purposes,
it may pledge securities having a market value at the
time of the pledge not exceeding 10% of the value of the
Fund's total assets; (4) make loans, other than by en-
tering into repurchase agreements and through the pur-
chase of Municipal Obligations or temporary investments
in accordance with its investment objective, policies
and limitations; (5) invest more than 5% of its total
assets in securities of unseasoned issuers which, to-
gether with their predecessors have been in operation
for less than three years; (6) invest more than 10% of
its assets in repurchase agreements maturing in more
than seven days, "illiquid" securities (such as non-ne-
gotiable CDs) and securities without readily available
market quotations; or (7) concentrate more than 25% of
its assets in the securities of issuers in any single
industry; provided, however, that such limitation shall
not be applicable to the purchase of Municipal Obliga-
tions issued by governments or political subdivisions of
governments, and obligations issued or guaranteed by the
U.S. Government, its agencies or instrumentalities. For
purposes of applying the policies of clauses (1) and
(5), the "issuer" of a security shall be deemed to be
the entity whose assets and revenues are committed to
the payment of principal and interest on such security,
provided that the guarantee of an instrument will be
considered a separate security (subject to certain ex-
clusions allowed under the Investment Company Act of
1940).
Under the Investment Company Act of 1940, the Fund may
not purchase portfolio securities from any underwriting
syndicate of which Nuveen is a member except under cer-
tain limited conditions set forth in Rule 10f-3.
For a more complete description of the fundamental in-
vestment policies summarized above and the other funda-
mental investment policies applicable to the Fund, see
the Statement of Additional Information. Such fundamen-
tal investment policies, together with the Fund's in-
vestment objective and other fundamental policies, can-
not be changed without approval by holders of a "major-
ity of the Fund's outstanding voting shares." As defined
by the Investment Company Act of 1940, this means the
vote of (i) 67% or more of the shares present at a meet-
ing, if the holders of more than 50% of the shares are
present or represented by proxy, or (ii) more than 50%
of the shares, whichever is less.
12
<PAGE>
MANAGEMENT OF THE FUND
The management of the Fund, including general supervi-
sion of the duties performed by Nuveen Advisory under
the Investment Management Agreement, is the responsibil-
ity of the Fund's Board of Directors.
Nuveen Advisory acts as the investment adviser for and
manages the investment and reinvestment of the assets of
the Fund. Its address is 333 West Wacker Drive, Chicago,
Illinois 60606. Nuveen Advisory also administers the
Fund's business affairs, acts as pricing agent for the
Fund, provides office facilities and equipment and cer-
tain clerical, bookkeeping and administrative services,
and permits any of its officers or employees to serve
without compensation as directors or officers of the
Fund if elected to such positions.
For the services and facilities furnished by Nuveen Ad-
visory, the Fund has agreed to pay an annual management
fee in an amount equal to .5 of 1% of the first $500
million of average daily net assets, .475 of 1% of the
next $500 million, and .45 of 1% of average daily net
assets over $1 billion. All fees and expenses are ac-
crued daily and deducted before payment of dividends to
investors. In addition to the management fee of Nuveen
Advisory, the Fund pays all other costs and expenses of
its operations. Included in the expenses paid by the
Fund is its share of payments under the Distribution and
Service Plan.
The management fee will be reduced or Nuveen Advisory
will assume certain Fund expenses in an amount necessary
to prevent the Fund's total expenses (including Nuveen
Advisory's management fee and its share of payments un-
der the Distribution and Service Plan, but excluding in-
terest, taxes, fees incurred in acquiring and disposing
of portfolio securities and extraordinary expenses) in
any fiscal year from exceeding .75 of 1% of the average
daily net asset value of the Fund. For the fiscal year
ended February 28, 1995, management fees amounted to .50
of 1% of the Fund's average daily net assets, and total
expenses, net of applicable expense reimbursements,
amounted to .75 of 1% of average daily net assets. With-
out expense reimbursements, total expenses for the fis-
cal year ended February 28, 1995 would have been .79 of
1% of the Fund's average daily net assets.
Nuveen Advisory was organized in 1976 and since then has
exclusively engaged in the management of municipal secu-
rities portfolios. It currently serves as investment ad-
viser to 21 open-end municipal securities portfolios
(the "Nuveen Mutual Funds") and 55 exchange-traded mu-
nicipal securities funds (the "Nuveen Exchange-Traded
Funds"). Each of
13
<PAGE>
these invests substantially all of its assets in invest-
ment grade quality, tax-free municipal securities. As of
the date of this Prospectus, Nuveen Advisory manages ap-
proximately $30 billion in assets held by the Nuveen Mu-
tual Funds and the Nuveen Exchange-Traded Funds.
Nuveen Advisory is a wholly-owned subsidiary of John
Nuveen & Co. Incorporated ("Nuveen"), 333 West Wacker
Drive, Chicago, Illinois 60606, the oldest and largest
investment banking firm (based on number of employees)
specializing in the underwriting and distribution of
tax- exempt securities. Nuveen, the principal under-
writer of the Funds' shares, is sponsor of the Nuveen
Tax-Exempt Unit Trust, a registered unit investment
trust. It is also the principal underwriter for the
Nuveen Mutual Funds, and served as co-managing under-
writer for the shares of the Nuveen Exchange-Traded
Funds. Over 1,000,000 individuals have invested to date
in Nuveen's tax-exempt funds and trusts. Founded in
1898, Nuveen is a subsidiary of The John Nuveen Company
which, in turn, is approximately 75% owned by The St.
Paul Companies, Inc. ("St. Paul"). St. Paul is located
in St. Paul, Minnesota, and is principally engaged in
providing property-liability insurance through subsidi-
aries.
DIVIDENDS AND TAXES
DIVIDENDS All of the net income of the Fund is declared on each
calendar day as a dividend on shares entitled to such
dividend. Net income of the Fund consists of all inter-
est income accrued and discount earned on portfolio as-
sets (adjusted for amortization of premium or discount
on securities when required for federal income tax pur-
poses), plus or minus any realized short-term gains or
losses on portfolio instruments since the previous divi-
dend declaration, less estimated expenses incurred sub-
sequent to the previous dividend declaration. It is not
expected that realized or unrealized gains or losses on
portfolio instruments will be a meaningful factor in the
computation of the Fund's net income. Dividends are paid
monthly and are reinvested in additional shares of the
Fund at net asset value or, at the shareholder's option,
paid in cash. Net realized long-term capital gains, if
any, will be paid not less frequently than annually and
reinvested in additional shares of the Fund at net asset
value unless the shareholder has elected to receive cap-
ital gains in cash. The Fund does not anticipate realiz-
ing any significant long-term capital gains or losses.
14
<PAGE>
FEDERAL INCOME
TAX MATTERS The Fund intends to qualify, as it has in prior years,
under Subchapter M of the Internal Revenue Code of 1986,
as amended (the "Code"), for tax treatment as a regu-
lated investment company. In order to qualify for treat-
ment as a regulated investment company, a Fund must sat-
isfy certain requirements relating to the sources of its
income, diversification of its assets and distribution
of its income to shareholders. As a regulated investment
company, a Fund will not be subject to federal income
tax on the portion of its net investment income and net
realized capital gains that is currently distributed to
shareholders. Each fund also intends to satisfy condi-
tions which will enable interest income from Municipal
Obligations, that is exempt from federal income tax in
the hands of the Fund, to retain such tax-exempt status
when distributed to the shareholders of the Fund. Dis-
tributions of interest income on Municipal Obligations
may not be exempt from state or local income taxes.
Distributions by the Fund of net interest income re-
ceived, if any, from taxable temporary investments and
net short-term capital gains, if any, realized by the
Fund will be taxable to shareholders as ordinary income.
So long as the Fund qualifies as a regulated investment
company under the Code, distributions to shareholders
will not qualify for the dividends received deduction
for corporations. If in any year the Fund should fail to
qualify under Subchapter M for tax treatment as a regu-
lated investment company, the Fund would incur a regular
corporate federal income tax upon its taxable income for
that year, and the entire amount of dividends to share-
holders would be taxable to shareholders as ordinary in-
come.
The Code provides that interest on indebtedness incurred
or continued to purchase or carry tax-free investments,
such as shares of the Fund, is not deductible. Under
rules used by the Internal Revenue Service for determin-
ing when borrowed funds are considered used for the pur-
pose of purchasing or carrying particular assets, the
purchase of shares may be considered to have been made
with borrowed funds even though such funds are not di-
rectly traceable to the purchase of shares.
Tax-exempt income is taken into account in calculating
the amount of social security and railroad retirement
benefits that may be subject to federal income tax.
The Fund may invest in the type of private activity
bonds the interest on which is not federally tax-exempt
to persons who are "substantial users" of the facilities
financed by such bonds or who are "related persons" of
such substantial users. Accordingly, the Fund may not be
an appropriate investment for shareholders who are con-
sidered either a "substantial user"
15
<PAGE>
or a "related person" thereof. Such persons should con-
sult their tax advisers before investing in the Fund.
The Fund may invest in private activity bonds, the in-
terest on which is a specific item of tax preference for
purposes of computing the alternative minimum tax on
corporations and individuals. This type of private ac-
tivity bond includes most industrial and housing revenue
bonds. Shareholders whose tax liability is determined
under the alternative minimum tax will be taxed on their
share of the Fund's exempt-interest dividends that were
paid from income earned on these bonds. In addition, the
alternative minimum taxable income for corporations is
increased by 75% of the difference between an alterna-
tive measure of income ("adjusted current earnings") and
the amount otherwise determined to be alternative mini-
mum taxable income. Interest on all Municipal Obliga-
tions, and therefore all distributions by the Fund that
would otherwise be tax exempt, is included in calculat-
ing a corporation's adjusted current earnings.
The Fund is required in certain circumstances to with-
hold 31% of taxable dividends and certain other payments
paid to non-corporate holders of shares who have not
furnished to the Fund their correct taxpayer
identification number (in the case of individuals, their
social security number) and certain certificates, or who
are otherwise subject to back-up withholding.
The foregoing is a general and abbreviated summary of
the provisions of the Code and Treasury Regulations
presently in effect as they directly govern the taxation
of the Fund and its shareholders. These provisions are
subject to change by legislative or administrative ac-
tion, and any such change may be retroactive with re-
spect to Fund transactions. Shareholders are advised to
consult their own tax advisers for more detailed infor-
mation concerning the federal taxation of the Fund and
the federal, state and local tax consequences to its
shareholders.
STATE AND LOCAL The exemption from federal income tax for distributions
TAX ASPECTS of interest income from Municipal Obligations which are
designated exempt interest dividends will not necessar-
ily result in exemption under the income or other tax
laws of any state or local taxing authority. The laws of
the several states and local taxing authorities vary
with respect to the taxation of such distributions, and
shareholders of the Fund are advised to consult their
own tax advisers in that regard.
16
<PAGE>
NET ASSET VALUE
Net asset value of the Fund's shares will be determined
by United States Trust Company of New York, the Fund's
custodian, as of 12:00 noon, eastern time, on each day
on which the Federal Reserve Bank of Boston is normally
open for business (a "Business Day") and as of 12:00
noon, eastern time, on any other day during which there
is a sufficient degree of trading in the Fund's portfo-
lio securities such that the current net asset value of
the Fund's shares might be materially affected by
changes in the value of portfolio securities. The net
asset value per share will be computed by dividing the
sum of the value of the Fund's total assets, less lia-
bilities, by the total number of shares outstanding at
such time.
The Fund seeks to maintain a net asset value of $1.00
per share. In this connection, the Fund values its port-
folio securities on the basis of their amortized cost.
This method values a security at its cost on the date of
purchase and thereafter assumes a constant amortization
to maturity of any discount or premium, regardless of
the impact of fluctuating interest rates on the market
value of the security. For a more complete description
of the amortized cost valuation method and its effect on
existing and prospective shareholders, see the Statement
of Additional Information. There can be no assurance
that the Fund will be able at all times to maintain a
net asset value of $1.00 per share.
HOW TO PURCHASE FUND SHARES
IN GENERAL Fund shares may be purchased on Business Days (as de-
fined under "Net Asset Value") at the net asset value
which is next computed after receipt of an order in
proper form and receipt of payment in federal funds.
Purchases by federal funds are recommended. However,
purchases may also be made by bank wire, Federal Reserve
draft or check. The minimum initial investment is
$1,000. Subsequent investments for the account of the
shareholder must be in amounts of $100 or more. The Fund
has waived the foregoing minimum investment requirements
for holders of certificates of beneficial interest in
the various unit investment trusts sponsored by Nuveen
who are reinvesting distributions from such investment
trusts in the Fund. The Fund reserves the right to re-
ject purchase orders and to waive or increase the mini-
mum investment requirements.
Because Keogh, IRA or other qualified plans or other
persons exempt from federal income tax will be unable to
benefit from the tax-exempt nature of the Fund's divi-
dends, the Fund is not generally suitable for such plans
or persons.
17
<PAGE>
In order to maximize the earnings on its assets, the
Fund strives to be invested as completely as practica-
ble. The Fund is normally required to make settlement in
federal funds for securities purchased. Accordingly, or-
ders for Fund shares may be made, and become effective
on Business Days, as follows:
Purchase By To open an account, call Nuveen toll-free at 800-858-
Telephone 4084 to obtain an account number and instructions. In-
formation concerning the account such as name, address
and social security or tax identification number will be
taken over the telephone. Payments may be made by wire
transfer to the United Missouri Bank of Kansas City,
N.A. as follows:
United Missouri Bank of Kansas City, N.A.
ABA #101000695
Nuveen Tax-Free Reserves, Inc.
Account No. (see above).
Account Name:
You will be required to complete an application and mail
it to the Fund after making the initial telephone pur-
chase. Subsequent investments may be made by following
the same wire transfer procedure.
If an order is received by Nuveen by 12:00 noon, eastern
time, and federal funds are received by United Missouri
Bank of Kansas City, N.A. on the same day by 3:00 p.m.,
eastern time, the order is effective that day. If both
the order and federal funds are not received by the
times specified above, the order will become effective
the following Business Day.
Purchase By Mail
To open an account, complete an application form and
mail it with a check or Federal Reserve draft to Nuveen
Tax-Free Reserves, Inc., P.O. Box 5330, Denver, Colorado
80217-5330. Subsequent investments may be made by mail-
ing a check with the investor's account number to the
above address. The order becomes effective as soon as
the check or draft is converted to federal funds. This
usually occurs one Business Day after receipt, but may
take longer.
Purchase Through To open an account through a bank or a securities broker
a Service or dealer ("service organization"), investors should
Organization send money to that organization for transmission to the
Fund and furnish it with the information required in the
application form. The Fund has a distribution plan pur-
suant to which payments are made to service organiza-
tions which provide assistance in distributing shares or
provide services to shareholders of the Fund. See "Dis-
tribution and Service Plan."
18
<PAGE>
Purchase By
Reinvestment of Unitholders of Nuveen Unit Investment Trusts ("UITs")
Nuveen Unit may purchase shares of the Fund by automatically rein-
Investment Trust vesting distributions from their Nuveen UIT. To obtain
Distributions information on share purchases through investment of
Nuveen UIT distributions, check the applicable box on
the enclosed Application Form or call Nuveen toll-free
at 800-237-0910.
COMMENCEMENT OF Shares are deemed to have been purchased when an order
DIVIDENDS becomes effective and are entitled to dividends commenc-
ing on the day the order becomes effective.
OTHER SHAREHOLDER Automatic Deposit Plan. Once you have established a Fund
OPTIONS account, you may make regular investments in your Fund
in an amount of $25 or more each month by authorizing
Shareholder Services, Inc. to draw preauthorized checks
on your bank account. There is no obligation to continue
payments and you may terminate your participation at any
time at your discretion. No charge is made in connection
with this Plan, and there is no cost to the Funds. To
obtain an application form for the Automatic Deposit
Plan, check the applicable box on the enclosed Applica-
tion Form or call Nuveen toll-free at 800-621-7227.
Payroll Direct Deposit Plan. Once you have established a
Fund account, you may, with your employer's permission,
make regular investments in Fund shares of $25 or more
per pay period by authorizing your employer to deduct
this amount automatically from your paycheck. There is
no obligation to continue payments and you may terminate
your participation at any time at your discretion. No
charge is made for this Plan, and there is no cost to
the Funds. To obtain an application form for the Payroll
Direct Deposit Plan, check the applicable box on the en-
closed Application Form or call Nuveen toll-free at 800-
621-7227.
Exchange Privilege. A shareholder may exchange shares of
the Fund for shares of any other open-end management in-
vestment company with reciprocal exchange privileges ad-
vised by Nuveen Advisory (the "Nuveen Funds"), provided
that the Nuveen Fund into which shares are to be ex-
changed is offered in the shareholder's state of resi-
dence and that the shares to be exchanged have been held
by the shareholder for a period of at least 15 days.
Shares of Nuveen Funds purchased subject to a front-end
sales charge may be exchanged for shares of the Fund or
any other Nuveen Fund at the next determined net asset
value without any front-end sales charge. Shares of any
Nuveen Fund purchased through dividend reinvestment or
through reinvestment of Nuveen Tax-Exempt Unit Trust
distributions (and any dividends thereon) may be ex-
changed for shares of
19
<PAGE>
the Fund or any other Nuveen Fund without a front-end
sales charge. Exchanges of shares with respect to which
no front-end sales charge has been paid will be made at
the public offering price, which may include a front-end
sales charge, unless a front-end sales charge has previ-
ously been paid on the investment represented by the ex-
changed shares (i.e., the shares to be exchanged were
originally issued in exchange for shares on which a
front-end sales charge was paid), in which case the ex-
change will be made at net asset value. Because certain
other Nuveen Funds may determine net asset value and
therefore honor purchase or redemption requests on days
when the Fund does not (generally, Martin Luther King's
Birthday, Columbus Day and Veterans Day), exchanges of
shares of one of the funds for shares of the Fund may
not be effected on such days.
The total value of shares being exchanged must at least
equal the minimum investment requirement of the Nuveen
Fund into which they are being exchanged. Exchanges are
made based on the relative dollar values of the shares
involved in the exchange, and will be effected by re-
demption of shares of the Nuveen Fund held and purchase
of the shares of the other Nuveen Fund. For federal in-
come tax purposes, any such exchange constitutes a sale
and purchase of shares and may result in capital gain or
loss. Before exercising any exchange, you should obtain
the Prospectus for the Nuveen Fund into which shares are
to be exchanged and read it carefully. If the registra-
tion of the account for the Fund you are purchasing is
not exactly the same as that of the fund account from
which the exchange is made, written instructions from
all holders of the account from which the exchange is
being made must be received, with signatures guaranteed
by a member of an approved Medallion Guarantee Program
or in such other manner as may be acceptable to the
Fund. You may also make exchanges by telephone if a pre-
authorized exchange authorization, as provided on the
account Application Form, is on file with Shareholder
Services, Inc., the Fund's shareholder service agent.
The exchange privilege may be modified or discontinued
at any time.
DISTRIBUTION AND The Fund has adopted a Distribution and Service Plan
SERVICE PLAN (the "Plan") pursuant to Rule 12b-1 under the 1940 Act,
pursuant to which the Fund and Nuveen pay fees to serv-
ice organizations for services rendered in the distribu-
tion of shares of the Fund or the servicing of share-
holder accounts. Such services may include, among other
things, establishing and maintaining shareholder ac-
counts; processing purchase and redemption transactions;
arranging for bank wires; performing sub-accounting; an-
swering shareholder inquiries and such other services as
Nuveen may request. Nuveen will enter into Service
Agreements with organizations who ren-
20
<PAGE>
der such services. Service payments to such organiza-
tions in annual amounts ranging from .1 of 1% to .2 of
1% of daily average assets of serviced accounts up to
$10 million and .3 of 1% for such assets over $10 mil-
lion, a portion of which will be paid by the Fund.
Nuveen may, in its discretion, pay from its own re-
sources to a service organization satisfying certain
criteria an additional amount not to exceed in the case
of a given service organization the greater of (a) .05
of 1% per year based on average assets of accounts serv-
iced, or (b) the amount by which the payment, if based
on .30 of 1% of average assets of accounts serviced,
would have exceeded the actual amount of the payment un-
der the above rates. Expenses that are incurred under
the Plan in a given fiscal year but not reimbursed by
the Fund in that year are not carried over to future
years.
The Plan continues in effect from year to year so long
as its continuance is approved at least annually by a
vote of the Board of Directors and a vote of the non-in-
terested directors. The Plan may not be amended to in-
crease materially the cost which the Fund may bear under
the Plan without the approval of the non-interested di-
rectors and the shareholders, and any other material
amendments of the Plan must be approved by the non-in-
terested directors. Nuveen also distributes the Nuveen
Tax-Exempt Money Market Fund, Inc., a fund with similar
investment objectives in which investments can be made.
The Nuveen Tax-Exempt Money Market Fund, Inc. does not
pay a distribution fee from its assets; however, invest-
ors purchasing that fund must meet a higher minimum in-
vestment requirement.
ADDITIONAL As transfer agent for the Fund, Shareholder Services,
INFORMATION Inc., maintains an account for each shareholder of rec-
ord. In the interest of economy and convenience, share
certificates are not issued unless specifically re-
quested by writing the Fund. No certificates are issued
for fractional shares.
Dealers are encouraged to open single master accounts.
However, some dealers may wish to use the shareholder
service agent's sub-accounting system to minimize their
internal recordkeeping requirements. A dealer or other
investor requesting shareholder service or accounting
other than the master account or sub-accounting service
offered by the Fund will be required to enter into a
separate agreement with the agent for these services for
a fee to be determined in accordance with the level of
services to be furnished.
Banks and other organizations through which investors
may purchase Fund shares may impose charges in connec-
tion with purchase orders. Investors should contact
their institutions directly to determine what charges,
if any, may be imposed.
21
<PAGE>
Subject to the rules and regulations of the SEC, the
Fund reserves the right to suspend the continuous offer-
ing of its shares at any time, but such suspension shall
not affect the shareholder's right of redemption as de-
scribed below. The Fund reserves the right to reject any
purchase order and to waive or increase minimum invest-
ment requirements.
HOW TO REDEEM FUND SHARES
IN GENERAL
Upon receipt of a proper redemption request on a Busi-
ness Day, the Fund will redeem its shares at their next
determined net asset value. You may use the telephone
redemption, check redemption or written redemption pro-
cedures. The redemption method employed will determine
when funds will be available to you. Where the shares to
be redeemed have been purchased by check within 15 days
prior to the date the redemption request is received,
the Fund will not mail the redemption proceeds until the
check received for the purchase has cleared, which may
take up to 15 days. There is no delay when the shares
being redeemed were purchased by wiring federal funds.
TELEPHONE REDEMPTIONRedemption requests with respect to shares held in non-
certificate form may be made by calling Nuveen at 800-
858-4084. Shareholders redeeming by telephone must have
elected this option on the account application form and
have returned the form to Shareholder Services, Inc.,
before telephone redemption requests can be accepted.
Telephone redemptions payable by wire are limited to re-
demptions of $1,000 or more. If a redemption request is
received by 12:00 noon, eastern time, the shares to be
redeemed do not earn income on the day the request is
received, but proceeds are ordinarily wired on the same
day to the commercial bank account designated on the
shareholder's application form. Proceeds of telephone
redemptions of shares will be transferred by Federal Re-
serve wire only to the commercial bank account specified
by the shareholder on the application form.
If the redemption request is received after 12:00 noon,
eastern time, the shares to be redeemed earn income on
the day the request is received and proceeds are ordi-
narily wired the next Business Day. The Fund reserves
the right to charge a fee of approximately $5 for the
cost of wire trans-
22
<PAGE>
ferred redemptions. The amount and terms of this fee are
subject to change.
In order to establish multiple accounts, or to change
the account or accounts designated to receive redemption
proceeds, a written request specifying the change must
be sent to Nuveen. This request must be signed by each
shareholder with each signature guaranteed by a member
of an approved Medallion Guarantee Program, or in such
other manner as may be acceptable to the Fund. Further
documentation may be required from corporations, execu-
tors, trustees or personal representatives.
The Fund reserves the right to refuse a telephone re-
demption and, at its option, may limit the timing,
amount or frequency of these redemptions. This procedure
may be modified or terminated at any time, on 30 days'
notice, by the Fund. The Fund, Shareholder Service, Inc.
and Nuveen will not be liable for following telephone
instructions reasonably believed to be genuine. The Fund
employs procedures reasonably designed to confirm that
telephone instructions are genuine. These procedures in-
clude recording all telephone instructions and requiring
up to three forms of identification prior to acting upon
a caller's instructions. If the Fund does not follow
reasonable procedures for protecting shareholders
against loss on telephone transactions, it may be liable
for any losses due to unauthorized or fraudulent tele-
phone instructions.
CHECK REDEMPTION Shareholders may request that the Fund provide them with
drafts ("Redemption Checks") drawn on the Fund's ac-
count. Shares for which stock certificates have been is-
sued will not be available for redemption by the use of
Redemption Checks. Redemption Checks may be made payable
to the order of any person in an amount of $500 or more,
and dividends are earned until the Redemption Check
clears. Redemption Checks clear through the United Mis-
souri Bank of Kansas City, N.A. (the "Bank") and are
subject to the same rules and regulations that the Bank
applies to checking accounts.
When a Redemption Check is presented, a sufficient num-
ber of full and fractional shares in the shareholder's
account will be redeemed to cover the amount of the Re-
demption Check. There must be sufficient shares in the
shareholder's account to cover the amount of each Re-
demption Check written or the check will be returned.
Checks should not be used to close an account. Share-
holders wishing to use Redemption Checks must complete
the appropriate section of the application form and sub-
mit the enclosed signature card.
23
<PAGE>
This check redemption privilege may be modified or ter-
minated at any time by the Fund or the Bank. The check
redemption feature does not constitute a bank checking
account.
WRITTEN
REDEMPTION You may redeem shares by sending a written request for
redemption directly to the Fund, c/o Shareholder Servic-
es, Inc., P.O. Box 5330, Denver, Colorado 80217-5330,
accompanied by duly endorsed certificates, if issued.
Requests for redemption and share certificates, if is-
sued, must be signed by each shareholder and, if the re-
demption proceeds exceed $25,000 or are payable other
than to the shareholder of record at the address of rec-
ord (which address may not have been changed in the pre-
ceding 60 days), the signature must be guaranteed by a
member of an approved Medallion Guarantee Program or in
such other manner as may be acceptable to the Fund. Un-
der normal circumstances payment will be made by check
and mailed within one Business Day (and in no event more
than seven days) after receipt of a redemption request
in proper form.
REDEMPTION Fund shareholders may also redeem shares through their
THROUGH SERVICE accounts with service organizations in accordance with
ORGANIZATIONS procedures established by each such service organiza-
tion. The Fund has no redemption charge, but service or-
ganizations may impose transaction fees or other charges
relating to the redemption of Fund shares. Individual
shareholders should determine from their service organi-
zations the procedures and charges, if any, that govern
redemptions.
AUTOMATIC
WITHDRAWAL PLAN If you own shares currently worth at least $10,000, you
may establish an Automatic Withdrawal Plan by completing
an application form for the Plan. You may obtain an ap-
plication form by checking the applicable box on the en-
closed Application Form or by calling Nuveen toll-free
at 800-621-7227. The Plan permits you to request peri-
odic withdrawals on a monthly, quarterly, semi-annual or
annual basis in an amount of $50 or more. All shares of
the Fund you own will be accumulated in the Plan, with a
sufficient number of shares being redeemed periodically
to meet the requested withdrawal payments. Depending
upon the size of the payments requested under the Plan,
redemptions for the purpose of making such payments may
reduce or even exhaust your account. Withdrawals under
this Plan should not, therefore, be considered a yield
on investment. An Automatic Withdrawal Plan may be ter-
minated at any time by you or the Fund. To obtain an ap-
plication form for the Automatic With
24
<PAGE>
drawal Plan, check the applicable box on the enclosed
Application Form or call Nuveen toll-free at
800-621-7227.
REDEMPTION IN The Fund has committed to pay in cash all redemption re-
KIND quests made by each shareholder during any 90 day period
up to the lesser of $250,000 or 1% of the net asset
value of the Fund at the beginning of such period. This
commitment is irrevocable without the prior approval of
the SEC and is a fundamental policy of the Fund which
may not be changed without shareholder approval. In the
case of redemption requests in excess of such amounts,
the Board of Directors reserves the right to have the
Fund make payment in whole or in part in securities or
other assets of the Fund in case of an emergency or any
time a cash distribution would impair the liquidity of
the Fund to the detriment of the existing shareholders.
In this event, the securities would be valued in the
same manner as the portfolio of the Fund is valued. If
the recipient were to sell such securities, he or she
would incur brokerage charges.
OTHER PRACTICES The Fund may suspend the right of redemption or delay
payment more than seven days (a) during any period when
the New York Stock Exchange is closed (other than cus-
tomary weekend and holiday closings), (b) when trading
in the markets the Fund normally utilizes is restricted,
or an emergency exists as determined by the SEC so that
disposal of the Fund's investments or determination of
its net asset value is not reasonably practicable, or
(c) for such other periods as the SEC by order may per-
mit for protection of the shareholders of the Fund.
GENERAL INFORMATION
Investor Inquiries. Investor inquiries may be made
through any participating service organization (see "How
to Purchase Fund Shares--Distribution and Service Plan"
on page 20), directly of the Fund in writing or by call-
ing John Nuveen & Co. Incorporated, the Fund's distribu-
tor at 800-621-7227.
Custodian, Shareholder Services Agent and Transfer
Agent. The Custodian of the Fund's assets is United
States Trust Company of New York, 114 West 47th Street,
New York, New York 10036. The Chase Manhattan Bank,
N.A., 1 Chase Manhattan Plaza, New York, NY 10081, has
agreed to become successor to U.S. Trust, as Custodian
and Fund Accountant. The succession is presently sched-
uled for July 1, 1995. No changes in the Fund's adminis-
tration or in the amount of fees and expenses paid by
the
25
<PAGE>
Fund for these services will result, and no action by
shareholders will be required. Shareholder Services,
Inc., P.O. Box 5330, Denver Colorado 80217-5330 is the
transfer, shareholder services and dividend paying agent
for the Fund and performs bookkeeping, data processing
and administrative services incident to the maintenance
of shareholder accounts.
Capital Stock. The Fund was incorporated in Maryland on
July 6, 1982. Its authorized capital stock consists of a
single class of 2,000,000,000 shares of common stock,
$.01 par value. All shares have equal non- cumulative
voting rights and equal rights with respect to dividends
declared by the Fund and assets upon liquidation. Shares
are fully paid and non-assessable when issued and have
no pre-emptive, conversion or exchange rights.
26
<PAGE>
TAXABLE EQUIVALENT YIELD TABLES
The following tables show the effects for individuals of
federal income taxes on what you would have to earn on a
taxable investment to equal a given tax-free yield.
These tables are for illustrative purposes only and are
not intended to predict the actual return you might earn
on a Fund investment. The Fund occasionally may adver-
tise its performance in similar tables using other cur-
rent tax rates than those shown here. The tax rates used
in these tables have been rounded to the nearest one-
half of one percent. They are based upon published 1995
marginal federal tax rates and do not take into account
changes in tax rates that are proposed from time to
time. They reflect the current federal tax limitations
on itemized deductions and personal exemptions, which
may raise the effective tax rate and taxable equivalent
yield for taxpayers above certain income levels. The tax
rates shown here may be higher or lower than your actual
tax rate.
MARGINAL TAX<TABLE>
RATES <CAPTION>
Federal Federal TAX-EXEMPT YIELD
Taxable Adjusted Federal 2.00% 2.50% 3.00% 3.50% 4.00% 4.50% 5.00%
Income Gross Income Tax
(1,000's) (1,000's) Rate TAXABLE EQUIVALENT YIELD
-------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
$ 0-39.0 $ 0-114.7 15.0% 2.35 2.94 3.53 4.12 4.71 5.29 5.88
-------------------------------------------------------------------------
39.0-94.3 0-114.7 28.0 2.78 3.47 4.17 4.86 5.56 6.25 6.94
-------------------------------------------------------------------------
114.7-172.1 29.0 2.82 3.52 4.23 4.93 5.63 6.34 7.04
-------------------------------------------------------------------------
94.3-143.6 0-114.7 31.0 2.90 3.62 4.35 5.07 5.80 6.52 7.25
-------------------------------------------------------------------------
114.7-172.1 32.0 2.94 3.68 4.41 5.15 5.88 6.62 7.35
-------------------------------------------------------------------------
172.1-294.6 34.5 3.05 3.82 4.58 5.34 6.11 6.87 7.63
-------------------------------------------------------------------------
143.6-256.5 114.7-172.1 37.0 3.17 3.97 4.76 5.56 6.35 7.14 7.94
-------------------------------------------------------------------------
172.1-294.6 40.0 3.33 4.17 5.00 5.83 6.67 7.50 8.33
-------------------------------------------------------------------------
Over 294.6 37.0 3.17 3.97 4.76 5.56 6.35 7.14 7.94
-------------------------------------------------------------------------
Over 256.5 172.1-294.6 44.0 3.59 4.46 5.36 6.25 7.14 8.04 8.93
-------------------------------------------------------------------------
Over 294.6 41.0 3.39 4.24 5.08 5.93 6.78 7.63 8.47
</TABLE>
FOR JOINT
TAXPAYERS WITH
FOUR PERSONAL
EXEMPTIONS
27
<PAGE>
MARGINAL TAX<TABLE>
RATES <CAPTION>
Federal Federal TAX-EXEMPT YIELD
Taxable Adjusted Federal 2.00% 2.50% 3.00% 3.50% 4.00% 4.50% 5.00%
Income Gross Income Tax
(1,000's) (1,000's) Rate TAXABLE EQUIVALENT YIELD
-------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
$ 0-23.4 $ 0-114.7 15.0% 2.35 2.94 3.53 4.12 4.71 5.29 5.88
-------------------------------------------------------------------------
23.4-56.6 0-114.7 28.0 2.78 3.47 4.17 4.86 5.56 6.25 6.94
-------------------------------------------------------------------------
56.6-118.0 0-114.7 31.0 2.90 3.62 4.35 5.07 5.80 6.52 7.25
-------------------------------------------------------------------------
114.7-237.2 32.5 2.96 3.70 4.44 5.19 5.93 6.67 7.41
-------------------------------------------------------------------------
118.0-256.5 114.7-237.2 38.0 3.23 4.03 4.84 5.65 6.45 7.26 8.06
-------------------------------------------------------------------------
Over 237.2 37.0 3.17 3.97 4.76 5.56 6.35 7.14 7.94
-------------------------------------------------------------------------
Over 256.5 Over 237.2 41.0 3.39 4.24 5.08 5.93 6.78 7.63 8.47
</TABLE>
FOR SINGLE
TAXPAYERS WITH
ONE PERSONAL
EXEMPTION
28
<PAGE>
NUVEEN TAX-FREE RESERVES, INC.
APPLICATION FORM
Mail completed Application Form to: If you prefer to wire funds to open an
Nuveen Tax-Free Reserves, Inc. account, or need any assistance in
P.O. Box 5330 completing this form, call Nuveen
Denver, CO 80217-5330 toll-free 800-621-7227.
- --------------------------------------------------------------------------------
1. ACCOUNT REGISTRATION Print neatly or type.
[_] Individual[_] Joint[_] Custodian
[_] Gift to a Minor Under Uniform
Gift to Minors Act of (State) ________________________________________________
[_] Trust dated______________________________, 19_______________________________
Individual or Joint Account
Last Name, First, Initial
------------------------------------------------------------------------------
Social Security Number
----
------------------------------------------------------------------------------
Joint Tenant (if any)
------------------------------------------------------------------------------
Custodian, Gift to a Minor, or Trust Account
Custodian's Name, or Name of Trustee
------------------------------------------------------------------------------
Trust's Taxpayer I.D. No.
--
------------------------------------------------------------------------------
Minor's Name (only one for a Gift), or Name of Trust
------------------------------------------------------------------------------
Minor's Social Security No.
----
------------------------------------------------------------------------------
Mailing Address and Telephone Number
Street Address
------------------------------------------------------------------------------
City State Zip Code
------------------------------------------------------------------------------
Telephone Number (include Area Code)
( )
------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
2. DISTRIBUTIONS
[_] Pay monthly dividends by check
[_] Pay capital gains distributions by check
3. NAME AND ADDRESS OF SECURITIES REPRESENTATIVE
Name of Securities Representative
------------------------------------------------------------------------------
Firm Name
------------------------------------------------------------------------------
Street Address
------------------------------------------------------------------------------
City State Zip Code
------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
4. INITIAL INVESTMENT
(Minimum initial investment is $1,000.)
[_] Enclosed is my check in the amount of $ made payable to Nuveen
Tax-Free Reserves, Inc.
[_] Funds in the amount of $ were wired to United Missouri Bank of
Kansas City for my account No. in the Fund. (Please call Nuveen
at 800-858-4084 to obtain an account number before wiring funds.)
- --------------------------------------------------------------------------------
5. SIGNATURE(S) Sign exactly as name or names appear above in Section 1,
Account Registration. Sign in blue or black ink.
I certify that I have received and read the current Fund prospectus. Under
penalties of perjury, I certify (1) that the number shown on this Application
Form is my correct Social Security or Taxpayer Identification Number, and (2)
that the IRS has not notified me that I am presently subject to backup
withholding. (Line out clause (2) if you are subject to backup withholding.)
Individual or Joint Account Signature(s):
Individual Date
------------------------------------------------------------------------------
Joint Tenant (if applicable) Date
------------------------------------------------------------------------------
Custodian or Trustee Signature:
BY: Date
------------------------------------------------------------------------------
See reverse side for Optional Fund Services.
29
<PAGE>
OPTIONAL FUND SERVICES
6. OPTIONAL FUND SERVICES
Please send me application materials for these optional fund services
described in the prospectus:
[_] Automatic Deposit Plan
[_] Automatic Withdrawal Plan
[_] Payroll Direct Deposit Plan
[_] UIT Reinvestment Plan
7. TELEPHONE REDEMPTION BY WIRE AUTHORIZATION Select only one of the following,
either Option A or B.
[_] OPTION A Wire proceeds to my personal commercial bank account. Attach a
voided check and complete only the section below.
Your Bank Account Name
------------------------------------------------------------------------------
Your Bank Account Number Bank's Routing Code
------------------------------------------------------------------------------
Name of Bank
------------------------------------------------------------------------------
Bank's Street Address
------------------------------------------------------------------------------
City State Zip Code
------------------------------------------------------------------------------
Bank's Telephone Number (include Area Code)
( )
------------------------------------------------------------------------------
[_] OPTION B Wire proceeds to my securities representative firm's commercial
bank account.
Your Account Name
------------------------------------------------------------------------------
Your Account Number
------------------------------------------------------------------------------
Name of Securities Representative
------------------------------------------------------------------------------
Firm's Street Address
------------------------------------------------------------------------------
City State Zip Code
------------------------------------------------------------------------------
Firm's Telephone Number (include Area Code)
( )
------------------------------------------------------------------------------
To be completed by the securities representative if Option B above is
selected.
Name of Bank of Securities Representative Firm
------------------------------------------------------------------------------
Name of Branch Bank's Routing Code
------------------------------------------------------------------------------
Bank's Account Number
------------------------------------------------------------------------------
Bank's Street Address
------------------------------------------------------------------------------
City State Zip Code
------------------------------------------------------------------------------
Securities Representative's Signature Date
------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
8. TELEPHONE REDEMPTION BY CHECK AUTHORIZATION
[_] I hereby authorize the Fund and its agents to honor telephone instructions
from me or any person to redeem shares worth $25,000 or less from my account
and send those proceeds by check payable to me at my address of record,
subject to the terms and conditions in the prospectus and the Instructions and
Explanations section for this option.
- --------------------------------------------------------------------------------
9. CHECK REDEMPTION AUTHORIZATION
[_] By checking this box, you authorize drafts drawn on the Fund to be honored
and the redemption of a sufficient number of Fund shares to pay such draft.
Read the Instructions and Explanation carefully before completing this section
and return the completed signature card with this application form.
[_] either owner
Joint Accounts: are required to sign redemption checks.
or
Check
[_] all owners
whether
- --------------------------------------------------------------------------------
10. TELEPHONE EXCHANGE AUTHORIZATION
Check the box below to elect this option.
[_] I hereby authorize telephone exchanges from the Fund into other Nuveen
open-end mutual funds subject to the terms and conditions in the Fund
prospectus and the Instructions and Explanations section for this option.
- --------------------------------------------------------------------------------
30
<PAGE>
APPLICATION FORM--INSTRUCTIONS AND EXPLANATIONS
1 ACCOUNT Check the box that describes the type of account you are
REGISTRATION opening, and complete all required information which
applies to your account type. This information will be
used to establish your account; therefore, provide the
requested information precisely as you wish it to appear
on our records. Registration for two or more persons
will be as joint tenants with right of survivorship
unless noted otherwise. In the case of a Gift to a Minor
account, you may only indicate one minor's name and
Social Security Number. For a Custodian or Trust
account, provide the Taxpayer Identification or Social
Security Number of the appropriate entity.
2 DISTRIBUTIONS Since open-end mutual funds pay monthly dividends, you
have a choice of reinvesting dividend payments into
additional shares, or you may receive monthly checks.
Indicate how you want the monthly dividends from the
Fund distributed. If no choice is indicated, dividends
will be reinvested automatically into additional shares.
Also, capital gains distributions, if any, will be
reinvested automatically in additional shares unless you
elect to receive them by check.
3 NAME AND We urge you to supply the name and address of your
ADDRESS OF securities representative. By providing this
SECURITIES information, your securities representative will receive
REPRESENTATIVE duplicate copies of your Fund statements, and therefore
may be apprised of the status of your investments.
4 INITIAL Minimum initial investment is $1,000. Enclose a check
INVESTMENT with your completed, signed application. Your check
should be in the amount specified and made payable to
the Fund named.
You may also arrange to invest in the Fund through your
securities representative. (See the Fund prospectus
under "How to Purchase Fund Shares" for more complete
information.)
If you are opening an account to automatically reinvest
the distributions of your Nuveen Tax Exempt Unit Trust
holdings and do not wish to make a direct investment at
this time, leave this section blank.
5 SIGNATURE(S) This application must be signed by all registered
account owners exactly as names appear in Section 1,
under Account Registration, except if the account is
registered as a Custodian, Gift to a Minor, or Trust
account. In such cases, the appropriate person (e.g.,
trustee, custodian) should sign the Application Form.
By signing the Application Form you certify that you
have power and authority to establish this account and
select the privileges requested. You also release Nuveen
Tax-Free Reserves, Inc., Shareholder Services, Inc.
("SSI"), John Nuveen & Co. Incorporated, United Missouri
Bank of Kansas City, N.A. and their agents and
representatives from all liability and agree to
indemnify each of them from any and all losses, damages
or costs for acting in good faith in accordance with
instructions believed to be genuine. With respect to the
options identified on items #7, #8, and #10 of this
application, you understand that the Fund, SSI and
Nuveen will not be liable for following telephone
instructions reasonably believed to be genuine. You also
understand that the Fund employs procedures reasonably
designed to confirm that telephone instructions are
genuine and, if these procedures are not followed, the
Fund may be liable for any losses due to unauthorized or
fraudulent telephone instructions. You agree that the
authorization herein shall continue until SSI receives
written notice of a change or modification signed by all
owners. This account is subject to the terms of the
Fund's prospectus, as amended from time to time, and
subject to acceptance by the Fund in Chicago, Illinois,
and to the laws of Illinois. All terms shall be binding
upon the heirs, representatives and assigns of the
account owners.
31
<PAGE>
6 OPTIONAL FUND Read the prospectus for a description of these optional
SERVICES fund services.
7 TELEPHONE The telephone redemption option gives you quick and
REDEMPTION BY convenient access to your money. By electing this
WIRE option, you are authorizing SSI, and John Nuveen & Co.
AUTHORIZATION Incorporated to honor telephone, telegraphic or other
instructions, without signature guarantee, from any
person for the redemption of shares of the Fund (minimum
$1,000), provided that proceeds are transmitted to
either your personal checking, NOW or money market
account at a commercial bank, or in your name to the
commercial bank account of your securities
representative firm.
Option A. By checking this box and completing the
requested information, you elect to have all redemption
proceeds wired to your personal checking, NOW or money
market account at a commercial bank. Attach a check
marked void.
Option B. By checking this box and completing the
requested information, you elect to have all redemption
proceeds wired in your name to your broker/investment
adviser firm's commercial bank account. A representative
of that firm must complete and sign the second part of
subsection B.
8 TELEPHONE By electing this option, you are authorizing Shareholder
REDEMPTION BY Services, Inc. and John Nuveen & Co. Incorporated to
CHECK honor telephone requests from any person for redemption
AUTHORIZATION of Fund shares in the amount of $25,000 or less,
provided that a check in the amount of such proceeds is
made payable to you and sent to your address of record,
which address has been the address of record for the
prior 60 days.
9 CHECK Redemption Checks--The following terms and conditions
REDEMPTION apply to the Redemption Check privilege:
AUTHORIZATION
A. Checks must be on forms provided by the Fund and for a
minimum of $500 or they will not be honored. Checks are
authorizations to redeem Fund shares and are payable
through the United Missouri Bank of Kansas City, N.A.
(the "Bank").
B. Check forms will not be issued until a completed
signature card is received by the Fund.
C. Checks requiring redemption of shares held for 15 days
or less that were not purchased by "wire transfer" of
federal funds or for which there are insufficient
shares to cover payment will not be honored.
D. Unless one signer is authorized on the Account
Application form and signature card, each check must be
signed by all account owners or it will not be honored.
If SSI receives written notice by either owner of a
revocation of the authorization to sign individually,
all account owners will be required to sign Redemption
Checks. Checks must be signed exactly as registered.
E. The privilege is subject to the Fund's and the Bank's
rules and regulations, and applicable governmental
regulations, as amended from time to time.
F. The Fund may refuse to honor checks and may refuse to
effect redemptions to pay checks whenever the right of
redemption has been suspended or postponed, or whenever
the account is otherwise impaired.
G. The account owner agrees to examine confirmations and
cancelled checks and to notify SSI of any unauthorized
or missing signature or endorsement or alteration on
the check or error on the confirmation within 30 days
after mailing to owner. Failure to do so shall preclude
any claim against the Fund, the Bank, SSI or their
representatives and agents by reason of any
unauthorized or missing signature or endorsement,
alteration, error or forgery of any kind.
10 TELEPHONE By electing this option, you are authorizing SSI and
EXCHANGE John Nuveen & Co. Incorporated to honor telephone
AUTHORIZATION requests from any person for the redemption of Fund
shares, provided that the proceeds of such redemption
are used to purchase shares of another Nuveen open-end
mutual fund and such shares are registered exactly the
same as this account.
32
<PAGE>
Principal Underwriter Investment Adviser Transfer and Shareholder
John Nuveen & Co. Nuveen Advisory Corp., Services Agent
Incorporated Subsidiary of John Shareholder Services,
Investment Bankers Nuveen & Co. Inc.
Incorporated P.O. Box 5330
Chicago: 333 West Wacker Drive Denver, Colorado 80217-
333 West Wacker Drive Chicago, Illinois 5330
60606
Chicago, Illinois 60606
312.917.7700 Independent Public
Custodian Accountants for the Fund
New York: United States Trust
Company of New York Arthur Andersen LLP
10 East 50th Street 33 West Monroe Street
New York, New York 10022 114 West 47th Street Chicago, Illinois 60603
212.207.2000 New York, New York
10036
<PAGE>
PART B--STATEMENT OF ADDITIONAL INFORMATION
NUVEEN TAX-FREE RESERVES, INC.
333 West Wacker Drive
Chicago, Illinois 60606
<PAGE>
Statement of Additional Information
May 1, 1995
Nuveen Tax-Free Reserves, Inc.
333 West Wacker Drive
Chicago, Illinois 60606
NUVEEN TAX-FREE RESERVES, INC.
Nuveen Tax-Free Reserves, Inc. (the "Fund") is an open-end diversified manage-
ment investment company. This Statement of Additional Information is not a pro-
spectus. A prospectus may be obtained from certain securities brokers and other
service organizations that have entered into service agreements with the Fund
or from John Nuveen & Co. Incorporated, 333 West Wacker Drive, Chicago, Illi-
nois 60606. This Statement of Additional Information relates to, and should be
read in conjunction with, the Prospectus dated May 1, 1995.
<TABLE>
<S> <C>
Table of Contents Page
- ------------------------------------------------------------
Fundamental Policies and Investment Portfolio 2
- ------------------------------------------------------------
Management 9
- ------------------------------------------------------------
Investment Adviser and Investment Management Agreement 12
- ------------------------------------------------------------
Portfolio Transactions 13
- ------------------------------------------------------------
Net Asset Value 14
- ------------------------------------------------------------
Tax Matters 16
- ------------------------------------------------------------
Distribution and Service Agreements 19
- ------------------------------------------------------------
Yield Information 21
- ------------------------------------------------------------
Independent Public Accountants and Custodian 24
- ------------------------------------------------------------
</TABLE>
The audited financial statements for the fiscal year ended February 28, 1995
appearing in the Fund's Annual Report are incorporated herein by reference. The
Annual Report accompanies this Statement of Additional Information.
Principal Underwriter Investment Adviser Transfer and Shareholder
John Nuveen & Co. Incorporated Services Agent
Nuveen Advisory Corp.,
Subsidiary of John
Nuveen & Co.
Incorporated
Shareholder Services,
Chicago: Inc.
333 West Wacker Drive P.O. Box 5330
Chicago, Illinois 60606 333 West Wacker Drive Denver, Colorado 80217-
312.917.7700 Chicago, Illinois 5330
60606
New York: Independent Public
10 East 50th Street Custodian Accountants
New York, New York 10022 United States Trust for the Fund
212.207.2000 Company of New York Arthur Andersen LLP
114 West 47th Street 33 West Monroe Street
New York, New York Chicago, Illinois 60603
10036
<PAGE>
FUNDAMENTAL POLICIES AND INVESTMENT PORTFOLIO
FUNDAMENTAL POLICIES
The Fund's investment objective and certain fundamental policies are described
in the Prospectus. The Fund, as a fundamental policy, may not, without the ap-
proval of the holders of a majority of the shares:
(1) Invest in securities other than Municipal Obligations and temporary in-
vestments as those terms are defined in the Prospectus;
(2) Invest more than 5% of its total assets in securities of any one issuer,
excluding the United States government, its agencies and instrumentalities;
(3) Borrow money, except for temporary or emergency purposes and not for in-
vestment purposes and then only in an amount not exceeding (a) 10% of the
value of the Fund's total assets at the time of borrowing or (b) one-third of
the value of the Fund's total assets including the amount borrowed in order to
meet redemption requests which might otherwise require the untimely disposi-
tion of securities. While any such borrowings exceed 5% of total assets, no
additional purchases of investment securities will be made by the Fund. If due
to market fluctuations or other reasons the value of the Fund's assets fall
below 300% of its borrowings, the Fund will reduce its borrowings within 3
business days. To do this, the Fund may have to sell a portion of its invest-
ments at a time when it may be disadvantageous to do so;
(4) Pledge, mortgage or hypothecate its assets, except that, to secure
borrowings permitted by subparagraph (3) above, it may pledge securities hav-
ing a market value at the time of pledge not exceeding 10% of the value of the
Fund's total assets;
(5) Issue senior securities as defined in the Investment Company Act of 1940
except to the extent such issuance might be involved with respect to
borrowings described under item (3) above;
(6) Underwrite any issue of securities, except to the extent that the purchase
of Municipal Obligations in accordance with the Fund's investment objective,
policies, and limitations, may be deemed to be an underwriting;
(7) Purchase or sell real estate, but this shall not prevent the Fund from in-
vesting in Municipal Obligations secured by real estate or interests therein
or foreclosing upon and selling such security;
(8) Purchase or sell commodities or commodities contracts or oil, gas or other
mineral exploration or development programs;
(9) Make loans, other than by entering into repurchase agreements and through
the purchase of Municipal Obligations or temporary investments in accordance
with its investment objective, policies and limitations;
(10) Make short sales of securities or purchase any securities on margin, ex-
cept for such short-term credits as are necessary for the clearance of trans-
actions;
(11) Write or purchase put or call options, except to the extent that the pur-
chase of a stand-by commitment may be considered the purchase of a put;
(12) Invest more than 5% of its total assets in securities of unseasoned is-
suers which, together with their predecessors, have been in operation for less
than three years;
2
<PAGE>
(13) Concentrate more than 25% of its assets in the securities of issuers in
any single industry; provided, however, that such limitations shall not be ap-
plicable on the purchase of Municipal Obligations issued by governments or po-
litical subdivisions of governments, and obligations issued or guaranteed by
the U.S. Government, its agencies or instrumentalities;
(14) Invest more than 10% of its assets in repurchase agreements maturing in
more than seven days, "illiquid" securities (such as non-negotiable CDs) and
securities without readily available market quotations;
(15) 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. ("Nuveen Advisory"), who indi-
vidually own beneficially more than 1/2 of 1% of the outstanding securities of
such issuer, together own beneficially more than 5% of such outstanding securi-
ties.
For the purpose of applying the limitations set forth in paragraphs (2) and
(12) above, the issuer shall be deemed a separate issuer when its assets and
revenues are separate from other governmental entities and its securities are
backed only by its assets and revenues. Similarly, in the case of a non-govern-
mental user, such as an industrial corporation or a privately owned or operated
hospital, if the security is backed only by the assets and revenues of the non-
governmental user then such non-governmental user would be deemed to be the
sole issuer. Where a security is also backed by the enforceable obligation of a
superior or unrelated governmental entity or other entity (other than a bond
insurer) it shall be included in the computation of securities owned that are
issued by such governmental entity or other entity.
If, however, a security is guaranteed by a governmental entity or some other
entity (other than a bond insurer), such as a bank guarantee or letter of cred-
it, such a guarantee or letter or credit would be considered a separate secu-
rity and would be treated as an issue of such government, other entity or bank.
The Fund's present policy, which is not a fundamental policy, is that it will
not hold securities of a single bank, including securities backed by a letter
of credit of such bank, if such holdings would exceed 10% of the total assets
of the Fund.
The foregoing fundamental investment policies, together with the Fund's invest-
ment objective and other fundamental policies, cannot be changed without ap-
proval by holders of a "majority of the Fund's outstanding voting shares." As
defined in the Investment Company Act of 1940, this means the vote of (i) 67%
or more of the shares present at a meeting, if the holders of more than 50% of
the shares are present or represented by proxy, or (ii) more than 50% of the
shares, whichever is less. The foregoing restrictions and limitations will ap-
ply only at the time of purchase or securities and will not be considered vio-
lated unless an excess of deficiency occurs or exists immediately after and as
a result of an acquisition of securities, unless otherwise indicated.
PORTFOLIO SECURITIES
As described in the Prospectus, the Fund will invest primarily in a diversified
portfolio of Municipal Obligations consisting of money market instruments is-
sued by governmental authorities. In general, Municipal Obligations include
debt obligations issued to obtain funds for various public purposes,
3
<PAGE>
including construction of a wide range of public facilities. Industrial devel-
opment bonds and pollution control bonds that are issued by or on behalf of
public authorities to finance various privately-operated facilities are in-
cluded within the term Municipal Obligations if the interest paid thereon is
exempt from federal income tax.
The following is a more complete description of certain short-term Municipal
Obligations in which the Fund may invest:
Bond Anticipation Notes (BANs) are usually general obligations of state and lo-
cal governmental issuers which are sold to obtain interim financing for pro-
jects that will eventually be funded through the sale of long-term debt obliga-
tions or bonds. The ability of an issuer to meet its obligations on its BANs is
primarily dependent on the issuer's access to the long-term municipal bond mar-
ket and the likelihood that the proceeds of such bond sales will be used to pay
the principal and interest on the BANs.
Tax Anticipation Notes (TANs) are issued by state and local governments to fi-
nance the current operations of such governments. Repayment is generally to be
derived from specific future tax revenues. TANs are usually general obligations
of the issuer. A weakness in an issuer's capacity to raise taxes due to, among
other things, a decline in its tax base or a rise in delinquencies, could ad-
versely affect the issuer's ability to meet its obligations on outstanding
TANs.
Revenue Anticipation Notes (RANs) are issued by governments or governmental
bodies with the expectation that future revenues from a designated source will
be used to repay the notes. In general they also constitute general obligations
of the issuer. A decline in the receipt of projected revenues, such as antici-
pated revenues from another level of government, could adversely affect an is-
suer's ability to meet its obligations on outstanding RANs. In addition, the
possibility that the revenues would, when received, be used to meet other obli-
gations could affect the ability of the issuer to pay the principal and inter-
est on RANs.
Construction Loan Notes are issued to provide construction financing for spe-
cific projects. Frequently, these notes are redeemed with funds obtained from
the Federal Housing Administration.
Bank Notes are notes issued by local governmental bodies and agencies such as
those described above to commercial banks as evidence of borrowings. The pur-
poses for which the notes are issued are varied but they are frequently issued
to meet short-term working-capital or capital-project needs. These notes may
have risks similar to the risks associated with TANs and RANs.
Variable and Floating Rate Instruments. Certain Municipal Obligations, certain
instruments issued, guaranteed or sponsored by the U.S. government or its agen-
cies, and certain debt instruments issued by domestic banks or corporations,
may carry variable or floating rates of interest. Such instruments bear inter-
est at rates which are not fixed, but which vary with changes in specified mar-
ket rates or indices, such as a bank prime rate or tax-exempt money market in-
dex. Variable rate notes are adjusted to current interest rate levels at cer-
tain specified times, such as every 30 days, as set forth in the instrument. A
floating rate note adjusts automatically whenever there is a change in its base
interest rate adjustor, e.g., a change in the prime lending rate or specified
interest rate indices. Typically such instruments carry demand features permit-
ting the Fund to recover the full principal amount thereof upon specified
notice.
4
<PAGE>
One form of variable or floating rate instrument consists of an underlying
fixed rate municipal bond that is subject to a third party demand feature or
"tender option." The holder of the bond would pay a "tender fee" to the third
party tender option provider, the amount of which would be periodically ad-
justed so that the bond/tender option combination would reasonably be expected
to have a market value that approximates the par value of the bond. This
bond/tender option combination would therefore be functionally equivalent to
ordinary variable or floating rate obligations as described above, and the Fund
may purchase such obligations subject to certain conditions specified by the
Securities and Exchange Commission.
The Fund's right to obtain payment at par on a demand instrument upon demand
could be adversely affected by events occurring between the date the Fund
elects to tender the instrument and the date proceeds are due. Nuveen Advisory
will monitor on an ongoing basis the pricing, quality and liquidity of such in-
struments and will similarly monitor the ability of an obligor under the demand
arrangement, including demand obligors as to instruments supported by bank let-
ters of credit or guarantees, to pay principal and interest on demand. Although
the ultimate maturity of such variable rate obligations may exceed one year,
the Fund will treat the maturity of each variable rate demand obligation, for
purposes of computing its dollar-weighted average portfolio maturity, as the
longer of (i) the notice period required before the Fund is entitled to payment
of the principal amount through demand, or (ii) the period remaining until the
next interest rate adjustment.
The Fund may also obtain standby commitments with respect to Municipal Obliga-
tions. Under a standby commitment (often referred to as a put), the party issu-
ing the commitment agrees to purchase at the Fund's option the Municipal Obli-
gation at an agreed-upon price on certain dates or within a specific period.
Since the value of a standby commitment depends in part upon the ability of the
issuing party to meet its purchase obligations thereunder, the Fund will enter
into standby commitments only with parties which have been evaluated by Nuveen
Advisory and, in the opinion of Nuveen Advisory, present minimal credit risks.
The amount payable to the Fund upon its exercise of a standby commitment would
be (1) the acquisition cost of the Municipal Obligations (excluding any accrued
interest that the Fund paid on acquisition), less any amortized market premium
or plus any amortized market or original during the period the Fund owned the
security, plus (2) all interest accrued on the security since the last interest
payment date during the period the security was owned by the Fund. The Fund's
right to exercise standby commitments held by it will be unconditional and un-
qualified. The acquisition of a standby commitment will not affect the valua-
tion of the underlying security, which will continue to be valued in accordance
with the amortized cost method. The standby commitment itself will be valued at
zero in determining net asset value. The Fund may purchase standby commitments
for cash or pay a higher price for portfolio securities which are acquired sub-
ject to such a commitment (thus reducing the yield to maturity otherwise avail-
able for the same securities). The maturity of a Municipal Obligation purchased
by the Fund will not be considered shortened by any standby commitment to which
such security is subject. Although the Fund rights under a standby commitment
would not be transferable, the Fund could sell Municipal Obligations which were
subject to a standby commitment to a third party at any time.
5
<PAGE>
WHEN-ISSUED SECURITIES
As described under "Investment Policies--Municipal Obligations" in the Pro-
spectus, the Fund may purchase and sell Municipal Obligations on a when-issued
or delayed delivery basis. When-issued and delayed delivery transactions arise
when securities are purchased or sold with payment and delivery beyond the
regular settlement date. (When-issued transactions normally settle within 30-
45 days.) On such transactions the payment obligation and the interest rate
are fixed at the time the buyer enters into the commitment. The commitment to
purchase securities on a when-issued or delayed delivery basis may involve an
element of risk because the value of the securities is subject to market fluc-
tuation, no interest accrues to the purchaser prior to settlement of the
transaction, and at the time of delivery the market value may be less than
cost. At the time the Fund makes the commitment to purchase a Municipal Obli-
gation on a when-issued or delayed delivery basis, it will record the transac-
tion and reflect the amount due and the value of the security in determining
its net asset value. Likewise, at the time the Fund makes the commitment to
sell a Municipal Obligation on a delayed delivery basis, it will record the
transaction and include the proceeds to be received in determining its net as-
set value; accordingly, any fluctuations in the value of the Municipal Obliga-
tion sold pursuant to a delayed delivery commitment are ignored in calculating
net asset value so long as the commitment remains in effect. The Fund will
maintain designated readily marketable assets at least equal in value to com-
mitments to purchase when-issued or delayed delivery securities, such assets
to be segregated by the custodian specifically for the settlement of such com-
mitments. The Fund will only make commitments to purchase Municipal Obliga-
tions on a when-issued or delayed delivery basis with the intention of actu-
ally acquiring the securities, but the Fund reserves the right to sell these
securities before the settlement date if it is deemed advisable. If a when-is-
sued security is sold before delivery any gain or loss would not be tax-ex-
empt.
TEMPORARY INVESTMENTS
The Prospectus discusses briefly the Fund's ability to invest a portion of its
assets on a temporary basis or for defensive purposes in taxable "temporary
investments." As stated in the Prospectus, the Fund to date has not invested
in and has no present intention of investing in such temporary investments. In
any event, temporary investments will not exceed 20% of the Fund's assets ex-
cept when made for defensive purposes. The Fund will invest only in temporary
investments which, in the opinion of Nuveen Advisory, are of "high grade"
quality and have remaining maturities of 397 days or less. Temporary invest-
ments include obligations of the United States Government, its agencies or in-
strumentalities; debt securities of issuers having, at the time of purchase, a
quality rating within the two highest grades by either Moody's Investors Serv-
ice, Inc. ("Moody's") or Standard & Poor's Corporation ("S&P") (Aaa or Aa, or
AAA or AA, respectively); commercial paper rated in the highest grade by ei-
ther of such rating services (Prime-1 or A-1, respectively); certificates of
deposit of domestic banks with assets of $1 billion or more; and Municipal Ob-
ligations and U.S. government obligations subject to short-term repurchase
agreements.
6
<PAGE>
Subject to the foregoing limitations, the Fund may invest in the following tem-
porary investments:
U.S. Government Direct Obligations--issued by the United States Treasury and
include bills, notes, and bonds.
- --Treasury bills are issued with maturities of up to one year. They are issued
in bearer form, are sold on a discount basis and are payable at par value at
maturity.
- --Treasury notes are longer-term interest-bearing obligations with original ma-
turities of one to seven years.
- --Treasury bonds are longer-term interest-bearing obligations with original ma-
turities from five to thirty years.
U.S. Government Agencies Securities--Certain federal agencies have been estab-
lished as instrumentalities of the United States government to supervise and
finance certain types of activities. These agencies include, but are not lim-
ited to the Bank for Cooperatives, Federal Land Banks, Federal Intermediate
Credit Banks, Federal Home Loan Banks, Federal National Mortgage Association,
Government National Mortgage Association, Export-Import Bank of the United
States and Tennessee Valley Authority. Issues of these agencies, while not di-
rect obligations of the United States government, are either backed by the full
faith and credit of the United States or are guaranteed by the Treasury or sup-
ported by the issuing agencies' right to borrow from the Treasury. There can be
no assurance that the United States government itself will pay interest and
principal on securities as to which it is not so legally obligated.
Certificates of Deposit (CDs)--A certificate of deposit is a negotiable inter-
est-bearing instrument with a specific maturity. CDs are issued by banks in ex-
change for the deposit of funds and normally can be traded in the secondary
market, prior to maturity. The Fund will only invest in U.S. dollar denominated
CDs issued by U.S. banks with assets of $1 billion or more.
Commercial Paper--Commercial paper is the term used to designate unsecured
short-term promissory notes issued by corporations. Maturities on these issues
vary from a few days to nine months. Commercial paper may be purchased from
U.S. corporations.
Other Corporate Obligations--The Fund may purchase notes, bonds and debentures
issued by corporations if at the time of purchase there is less than 397 days
remaining until maturity or if they carry a variable or floating rate of inter-
est.
Repurchase Agreements--A repurchase agreement is a contractual agreement
whereby the seller of securities (U.S. government or Municipal Obligations)
agrees to repurchase the same security at a specified price on a future date
agreed upon by the parties. The agreed upon repurchase price determines the
yield during the Fund's holding period. Repurchase agreements are considered to
be loans collateralized by the underlying security that is the subject of the
repurchase contract. The Fund will only enter into repurchase agreements with
dealers, domestic banks or recognized financial institutions that in the opin-
ion of Nuveen Advisory represent minimal credit risk. The risk to the Fund is
limited to the ability of the issuer to pay the agreed upon repurchase price on
the delivery date; however, although the value of the underlying collateral at
the time the transaction is entered into always equals or exceeds the agreed
upon repurchase price, if the value of the collateral declines there is a risk
of loss of
7
<PAGE>
both principal and interest. In the event of default, the collateral may be
sold but the Fund might incur a loss if the value of the collateral declines,
and might incur disposition costs or experience delays in connection with liq-
uidating the collateral. In addition, if bankruptcy proceedings are commenced
with respect to the seller of the security realization upon the collateral by
the Fund may be delayed or limited. Nuveen Advisory will monitor the value of
the collateral at the time the transaction is entered into and at all times
subsequent during the term of the repurchase agreement in an effort to deter-
mine that the value always equals or exceeds the agreed upon repurchase price.
In the event the value of the collateral declines below the repurchase price,
Nuveen Advisory will demand additional collateral from the issuer to increase
the value of the collateral to at least that of the repurchase price.
Variable and Floating Rate Instruments--See description on page 4.
RATINGS OF INVESTMENTS
The two highest ratings of Moody's for Municipal Obligations are Aaa and Aa.
Municipal Obligations rated Aaa are judged to be of the "best quality." The
rating of Aa is assigned to Municipal Obligations which are of "high quality by
all standards," but as to which margins of protection or other elements make
long-term risks appear somewhat larger than in Aaa rated Municipal Obligations.
The Aaa and Aa rated Municipal Obligations comprise what are generally known as
"high grade bonds." Moody's bond rating symbols may contain numerical modifiers
of a generic rating classification. The modifier 1 indicates that the bond
ranks at the high end of its category; the modifier 2 indicates a mid-range
ranking; and the modifier 3 indicates that the issue ranks in the lower end of
its generic rating category.
The two highest ratings of S&P for Municipal Obligations are AAA and AA. Munic-
ipal Obligations rated AAA have an extremely strong capacity to pay principal
and interest. The rating of AA indicates that capacity to pay principal and in-
terest is very strong and such bonds differ from AAA issues only in small de-
gree.
The highest rating of Moody's and S&P for federally tax-exempt short-term loans
and notes is VMIG-1 or MIG-1 and SP-1, respectively. Obligations designated
VMIG-1 or MIG-1 are the best quality, enjoying strong protection from estab-
lished cash flows of funds for their servicing or from established and broad-
based access to the market for refinancing, or both. The designation SP-1 indi-
cates a very strong or strong capacity to pay principal and interest.
The Fund's ability to purchase commercial paper of tax-exempt and corporate is-
suers is limited to commercial paper rated Prime-1 by Moody's or A-1 by S&P.
The rating Prime-1 (P-1) is the highest commercial paper rating assigned by
Moody's. Issuers rated P-1 have a superior capacity for repayment of short-term
obligations normally evidenced by the following characteristics: leading market
positions in well-established industries; high rates of return on funds em-
ployed; conservative capitalization structures with moderate reliance on debt
and ample asset protection; broad margins in earnings cover age of fixed finan-
cial charges and high internal cash generation; well-established access to a
range of financial markets and assured sources of alternative liquidity. The
designation A-1 indicates that the degree of safety regarding timely payment is
very strong.
8
<PAGE>
Subsequent to its purchase by the Fund, an issue may cease to be rated or its
rating may be reduced below the minimum required for purchase by the Fund. Nei-
ther event requires the elimination of such obligation from the Fund's portfo-
lio, but Nuveen Advisory will consider such an event in its determination of
whether the Fund should continue to hold such obligation.
MANAGEMENT
The management of the Fund, including general supervision of the duties per-
formed by Nuveen Advisory under the Investment Management Agreement, is the re-
sponsibility of its Board of Directors. There are seven directors of the Fund,
two of whom are "interested persons" (as the term "interested persons" is de-
fined in the Investment Company Act of 1940) and five of whom are "disinterest-
ed" persons. The names and business addresses of the directors and officers of
the Fund and their ages and principal occupations and other affiliations during
the past five years are set forth below, with those directors who are "inter-
ested persons" of the Fund indicated by an asterisk.
<TABLE>
- -------------------------------------------------------------------------------------
<CAPTION>
POSITIONS AND
OFFICES WITH PRINCIPAL OCCUPATIONS
NAME AND ADDRESS AGE FUND DURING PAST FIVE YEARS
- -------------------------------------------------------------------------------------
<C> <C> <C> <S>
Richard J. Franke* 63 Chairman of the Chairman of the Board, Director and for-
333 West Wacker Board and Direc- merly President of John Nuveen & Co. In-
Drive tor corporated; Chairman of the Board and Di-
Chicago, IL 60606 rector, formerly President, of Nuveen Ad-
visory Corp.; Chairman of the Board and
Director of Nuveen Institutional Advisory
Corp. (since April 1990); Certified Finan-
cial Planner.
- -------------------------------------------------------------------------------------
Timothy R. 46 President and Executive Vice President and Director of
Schwertfeger* Director The John Nuveen Company (since March 1992)
333 West Wacker and John Nuveen & Co. Incorporated; Direc-
Drive tor of Nuveen Advisory Corp. (since 1992)
Chicago, IL 60606 and Nuveen Institutional Advisory Corp.
(since 1992).
- -------------------------------------------------------------------------------------
Lawrence H. Brown 60 Director Retired (August 1989) as Senior Vice Pres-
201 Michigan Avenue ident of The Northern Trust Company.
Highwood, IL 60040
- -------------------------------------------------------------------------------------
Anne E. Impellizerri 62 Director President and Chief Executive Officer of
3 West 29th Street Blanton-Peale, Institutes of Religion and
New York, NY 10001 Health (since December 1990); prior there-
to, Vice President of New York City Part-
nership (from 1987 to 1990).
- -------------------------------------------------------------------------------------
John E. O'Toole 66 Director Retired (January 1994) as President of the
666 Third Avenue American Association of Advertising Agen-
New York, NY 10017 cies, Inc.; Retired (December 1985) as
Chairman of the Board of Foote, Cone &
Belding Communications, Inc.
</TABLE>
- --------------------------------------------------------------------------------
9
<PAGE>
<TABLE>
- ----------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------
<CAPTION>
POSITIONS AND PRINCIPAL OCCUPATIONS
NAME AND ADDRESS AGE OFFICES WITH FUND DURING PAST FIVE YEARS
- ----------------------------------------------------------------------------------------
<C> <C> <C> <S>
Margaret K. Rosen- 68 Director Helen Ross Professor of Social Welfare
heim Policy, School of Social Service Adminis-
969 East 60th Street tration, University of Chicago.
Chicago, IL 60637
- ----------------------------------------------------------------------------------------
Peter R. Sawers 62 Director Adjunct Professor of Business and Econom-
22 The Landmark ics, University of Dubuque, Iowa (since
Northfield, IL 60093 January 1991); Adjunct Professor, Lake
Forest Graduate School of Management, Lake
Forest, Illinois (since January 1992);
prior thereto, Executive Director, Towers
Perrin Australia (management consultant)
(1990); prior thereto (from 1986), Vice
President and Manager of Cresap, a divi-
sion of Towers Perrin; Chartered Financial
Analyst; Certified Management Consultant.
- ----------------------------------------------------------------------------------------
Kathleen M. Flanagan 47 Vice President Vice President of John Nuveen & Co. Incor-
333 West Wacker porated
Drive
Chicago, IL 60605
- ----------------------------------------------------------------------------------------
J. Thomas Futrell 39 Vice President Vice President of Nuveen Advisory Corp.
333 West Wacker (since February 1991); prior thereto,
Drive Assistant Vice President of Nuveen
Chicago, IL 60606 Advisory Corp. (from August 1988 to
February 1991); Chartered Financial
Analyst.
- ----------------------------------------------------------------------------------------
Steven J. Krupa 37 Vice President Vice President of Nuveen Advisory Corp.
333 West Wacker (since October 1990); prior thereto, Vice
Drive President of John Nuveen & Co. Incorpo-
Chicago, IL 60606 rated (from January 1989 to October 1990).
- ----------------------------------------------------------------------------------------
Anna R. Kucinskis 49 Vice President Vice President of John Nuveen & Co. Incor-
333 West Wacker porated.
Drive
Chicago, IL 60606
- ----------------------------------------------------------------------------------------
Larry W. Martin 43 Vice President and Vice President (since September 1992), As-
333 West Wacker Assistant Secre- sistant Secretary and Assistant General
Drive tary Counsel of John Nuveen & Co. Incorporated;
Chicago, IL 60606 Vice President (since May 1993) and Assis-
tant Secretary of Nuveen Advisory Corp.;
Vice President (since May 1993) and Assis-
tant Secretary (since January 1992) of
Nuveen Institutional Advisory Corp.; As-
sistant Secretary of The John Nuveen Com-
pany (since February 1993).
- ----------------------------------------------------------------------------------------
O. Walter Renfftlen 55 Vice President and Vice President and Controller of The John
333 West Wacker Controller Nuveen Company (since March 1992), John
Drive Nuveen & Co. Incorporated, Nuveen Advisory
Chicago, IL 60606 Corp. and Nuveen Institutional Advisory
Corp. (since April 1990).
- ----------------------------------------------------------------------------------------
Thomas C. Spalding, 43 Vice President Vice President of Nuveen Advisory Corp.
Jr. and Nuveen Institutional Advisory Corp.
333 West Wacker (since April 1990); Chartered Financial
Drive Analyst.
Chicago, IL 60606
</TABLE>
10
<PAGE>
<TABLE>
- -----------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------
<CAPTION>
POSITIONS AND PRINCIPAL OCCUPATIONS
NAME AND ADDRESS AGE OFFICES WITH FUND DURING PAST FIVE YEARS
- -----------------------------------------------------------------------------------------
<C> <C> <C> <S>
H. William Stabenow 60 Vice President and Vice President and Treasurer of The John
333 West Wacker Treasurer Nuveen Company (since March 1992), John
Drive Nuveen & Co. Incorporated, Nuveen Advisory
Chicago, IL 60606 Corp. and Nuveen Institutional Advisory
Corp. (since January 1992).
- -----------------------------------------------------------------------------------------
George P. Thermos 63 Vice President Vice President of John Nuveen & Co. Incor-
333 West Wacker porated.
Drive
Chicago, IL 60606
- -----------------------------------------------------------------------------------------
James J. Wesolowski 44 Vice President and Vice President, General Counsel and Secre-
333 West Wacker Secretary tary of The John Nuveen Company (since
Drive March 1992), John Nuveen & Co. Incorporat-
Chicago, IL 60606 ed, Nuveen Advisory Corp. and Nuveen In-
stitutional Advisory Corp. (since April
1990).
- -----------------------------------------------------------------------------------------
Gifford R. Zimmerman 38 Vice President and Vice President (since September 1992), As-
333 West Wacker Assistant Secretary sistant Secretary and Assistant General
Drive Counsel of John Nuveen & Co. Incorporated;
Chicago, IL 60606 Vice President (since May 1993) and Assis-
tant Secretary of Nuveen Advisory Corp.;
Vice President (since May 1993) and Assis-
tant Secretary (since January 1992) of
Nuveen Institutional Advisory Corp.
</TABLE>
- --------------------------------------------------------------------------------
Richard J. Franke, Timothy R. Schwertfeger and Margaret K. Rosenheim serve as
members of the Executive Committee of the Board of Directors. The Executive
Committee, which meets between regular meetings of the Board of Directors, is
authorized to exercise all of the powers of the Board of Directors.
The directors of the Fund are also directors, or trustees, as the case may be,
of the 20 other Nuveen open-end portfolios and 55 Nuveen closed-end funds.
The following table sets forth compensation paid by Nuveen Tax-Free Reserves,
Inc. during the fiscal year ended February 28, 1995 to each of the directors.
Nuveen Tax-Free Reserves, Inc. has no retirement or pension plans. The officers
and directors affiliated with Nuveen serve without any compensation from the
Nuveen Tax-Free Reserves, Inc.
<TABLE>
<CAPTION>
TOTAL COMPENSATION
AGGREGATE FROM THE FUND AND
COMPENSATION FUND COMPLEX PAID
NAME OF DIRECTOR FROM THE FUND TO DIRECTORS(1)
- --------------------------------------------------------------------------------
<S> <C> <C>
Richard J. Franke.............................. $ 0 $ 0
Timothy R. Schwertfeger........................ 0 0
Lawrence H. Brown.............................. 673 56,500
Anne E. Impellizzeri........................... 522 48,750
John O'Toole................................... 673 56,000
Margaret K. Rosenheim.......................... 985(2) 64,404(3)
Peter R. Sawers................................ 673 56,000
</TABLE>
11
<PAGE>
- --------
(1) The directors of the Nuveen Tax-Free Reserves, Inc. are directors or
trustees, as the case may be, of 21 Nuveen open-end funds and 55 Nuveen
closed-end funds.
(2) Includes $270 in interest earned on deferred compensation from prior
years.
(3) Includes $1,404 in interest earned on deferred compensation from prior
years.
Directors who are not affiliated with Nuveen or Nuveen Advisory will receive a
$45,000 annual retainer for serving as a director of all funds for which
Nuveen Advisory serves as investment adviser and a $1,000 fee per day plus ex-
penses 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 atten-
dance in person or a $500 fee per day plus expenses for attendance by tele-
phone at a meeting held on a day on which no regular board meeting is held and
a $250 fee per day plus expenses for attendance in person or by telephone at a
meeting of the Executive Committee. The annual retainer, fees and expenses
will be allocated among the funds on the basis of relative net assets. The
Fund requires no employees other than its officers, all of whom are compen-
sated by Nuveen.
On April 17, 1995, the officers and directors of the Fund as a group owned
less than 1% of the outstanding shares of the Fund. On April 17, 1995, Elaine
D. Sammons, 4242 Lomo Alto Dr., Dallas, TX owned of record 37,981,928.960
(11.16%) shares of the Fund.
INVESTMENT ADVISER AND INVESTMENT MANAGEMENT AGREEMENT
Nuveen Advisory acts as investment adviser for the Fund and in such capacity
manages the investment and reinvestment of the assets of the Fund. Nuveen Ad-
visory also administers the Fund's business affairs, provides office facili-
ties and equipment and certain clerical, bookkeeping and administrative serv-
ices, and permits any of its officers or employees to serve without compensa-
tion as directors or officers of the Fund if elected to such positions. See
"Management of the Fund" in the Prospectus.
Nuveen Advisory is paid an annual management fee in an amount equal to .5 of
1% of the first $500 million of average daily net assets, .475 of 1% of the
next $500 million, and .45 of 1% of average daily net assets over $1 billion.
The management fee will be reduced or Nuveen Advisory will assume certain Fund
expenses in an amount necessary to prevent the Fund's total expenses in any
fiscal year from exceeding .75 of 1% of the average daily net asset value of
the Fund. The net management fee for the fiscal year ended February 28, 1995
amounted to $1,669,835, after giving effect to fee waivers and expense reim-
bursements of $134,463. The net management fees for the fiscal years ended
February 28, 1994 and 1993, amounted to $1,893,196 and $2,274,918, respective-
ly. As discussed in the Prospectus, subject to the expense limitations of the
Investment Management Agreement, the Fund is responsible for payment of cer-
tain of the costs and expenses of its operations, including its share of pay-
ments under the Distribution and Service Plan.
Nuveen Advisory is a wholly-owned subsidiary of John Nuveen & Co. Incorporated
("Nuveen"), the Fund's principal underwriter. Founded in 1898, Nuveen is the
oldest and largest investment banking firm specializing in the underwriting
and distribution of tax-exempt securities and maintains the largest research
department in the investment banking community devoted exclusively to the
analysis of municipal securities. In 1961, Nuveen began sponsoring the Nuveen
Tax-Exempt Unit Trust and since
12
<PAGE>
that time has issued more than $34 billion in tax-exempt unit trusts, including
over $12 billion in tax-exempt insured unit trusts. In addition, the Nuveen
open-end and closed-end funds held approximately $30 billion in tax-exempt se-
curities under management as of the date of this Statement. Over 1,000,000 in-
dividuals have invested to date in Nuveen's tax-exempt funds and trusts. Nuveen
is a subsidiary of The John Nuveen Company which, in turn, is approximately 75%
owned by The St. Paul Companies, Inc. ("St. Paul"). St. Paul is located in St.
Paul, Minnesota and is principally engaged in providing property-liability in-
surance through subsidiaries.
Nuveen Advisory's portfolio managers call upon the resources of Nuveen's Re-
search Department, the largest in the investment banking industry devoted ex-
clusively to tax-exempt securities. Nuveen's Research Department was selected
in 1994 by Research & Ratings Review, a municipal industry publication, as one
of the top four research teams in the municipal industry, based on an extensive
industry-wide poll of more than 1,000 portfolio managers, department heads and
bond buyers. The Nuveen Research Department reviews more than $100 billion in
tax-exempt bonds every year.
The Fund, the other Nuveen funds, Nuveen Advisory, and other related entities
have adopted a code of ethics which essentially prohibits all Nuveen fund man-
agement personnel, including Nuveen fund portfolio managers, from engaging in
personal investments which compete or interfere with, or attempt to take advan-
tage of, a Fund's anticipated or actual portfolio transactions, and is designed
to assure that the interest of Fund shareholders are placed before the interest
of Nuveen personnel in connection with personal investment transactions.
PORTFOLIO TRANSACTIONS
Nuveen Advisory, in effecting purchases and sales of portfolio securities for
the account of the Fund, will place orders in such manner as, in the opinion of
management, will offer the best price and market for the execution of each
transaction. Portfolio securities will normally be purchased directly from an
underwriter or in the over-the-counter market from the principal dealers in
such securities, unless it appears that a better price or execution may be ob-
tained elsewhere. Portfolio securities will not be purchased from Nuveen or its
affiliates except in compliance with the Investment Company Act of 1940.
The Fund since its inception has effected all portfolio transactions on a prin-
cipal (as opposed to an agency) basis and, accordingly, has not paid any bro-
kerage commissions.
Purchases from underwriters include a commission or concession paid by the is-
suer to the underwriter, and purchases from dealers include the spread between
the bid and asked price. Given the best price and execution obtainable, it is
the practice of the Fund to select dealers which, in addition, furnish research
information (primarily credit analyses of issuers) and statistical and other
services to Nuveen Advisory. It is not possible to place a dollar value on in-
formation and statistical and other services received from dealers. Since it is
only supplementary to Nuveen Advisory's own research efforts, the receipt of
research information is not expected to reduce significantly Nuveen Advisory's
expenses. Any
13
<PAGE>
research benefits obtained are available to all of Nuveen Advisory's other cli-
ents. While Nuveen Advisory will be primarily responsible for the placement of
the Fund's business, the policies and practices of Nuveen Advisory in this re-
gard must be consistent with the foregoing and will, at all times, be subject
to review by the Board of Directors of the Fund.
Nuveen Advisory reserves the right to, and does, manage other investment ac-
counts and investment companies or other clients which may have investment ob-
jectives similar to the Fund. Subject to applicable laws and regulations,
Nuveen Advisory will attempt to allocate equitably portfolio transactions among
the Fund and the portfolios of its other clients purchasing securities whenever
decisions are made to purchase or sell securities by the Fund and one or more
of such other clients simultaneously. In making such allocations the main fac-
tors to be considered will be the respective investment objectives of the Fund
and such other clients, the relative size of portfolio holdings of the same or
comparable securities, the availability of cash for investment by the Fund and
such other clients, the size of investment commitments generally held by the
Fund and such other clients and opinions of the persons responsible for recom-
mending investments to the Fund and such other clients. While this procedure
could have a detrimental effect on the price or amount of the securities avail-
able to the Fund from time to time, it is the opinion of the Fund's Board of
Directors that the benefits available from Nuveen Advisory's organization will
outweigh any disadvantage that may arise from exposure to simultaneous transac-
tions.
Under the Investment Company Act of 1940, the Fund may not purchase portfolio
securities from any underwriting syndicate of which Nuveen is a member except
under certain limited conditions set forth in Rule 10f-3. The Rule sets forth
requirements relating to, among other things, the terms of an issue of Munici-
pal Obligations purchased by the Fund, the amount of Municipal Obligations
which may be purchased in any one issue and the assets of the Fund which may be
invested in a particular issue. In addition, purchases of securities made pur-
suant to the terms of the Rule must be approved at least quarterly by the Board
of Directors of the Fund, including a majority of the members thereof who are
not interested persons of the Fund.
NET ASSET VALUE
As stated in the Prospectus, the net asset value of the shares of the Fund will
be determined by United States Trust Company of New York, the Fund's custodian,
as of 12:00 noon eastern time on each day on which the Federal Reserve Bank of
Boston is normally open and as of 12:00 noon eastern time on any other day dur-
ing which there is sufficient degree of trading in the Fund's portfolio securi-
ties that the current net asset value of the Fund shares might be materially
affected by such changes in the value of the portfolio securities. The Federal
Reserve Bank of Boston is not open for business on New Year's Day, Martin Lu-
ther King's Birthday, Washington's Birthday, Memorial Day, Independence Day,
Labor Day, Columbus Day, Veteran's Day, Thanksgiving Day and Christmas Day. The
net asset value per share will be computed by dividing the value of the Fund's
total assets, less liabilities, by the total number of shares outstanding at
such time.
14
<PAGE>
The Fund will seek to maintain a net asset value of $1.00 per share. In this
connection, the Fund intends to value its portfolio securities at their amor-
tized cost, as permitted by Rule 2a-7 under the Investment Company Act of 1940.
This method does not take into account unrealized securities gains or losses.
It involves valuing an instrument at its cost and thereafter assuming a con-
stant amortization to maturity of any discount or premium. While this method
provides certainty in valuation, it may result in periods during which the
value of an investment, as determined by amortized cost, is higher or lower
than the price the Fund would receive if it sold the instrument. During periods
of declining interest rates, the daily yield on shares of the Fund may tend to
be higher than a like computation made by a fund with identical investments
utilizing a method of valuation based upon market prices and estimates of mar-
ket prices for all of its portfolio instruments. Thus, if the use of the amor-
tized cost method by the Fund resulted in a lower aggregate portfolio value on
a particular day, a prospective investor in the Fund would be able to obtain a
somewhat higher yield than would result from an investment in a Fund utilizing
solely market values, and existing investors in the Fund would receive less in-
vestment income. The converse would apply in a period of rising interest rates.
The Fund, as a condition to the use of amortized cost and the maintenance of
its per share net asset value of $1.00, must maintain a dollar-weighted average
portfolio maturity of 90 days or less, only purchase instruments having remain-
ing maturities of 397 days or less and invest only in securities determined to
be of high quality with minimal credit risks. The Fund may invest in variable
and floating rate instruments even if they carry stated maturities in excess of
397 days, upon certain conditions contained in rules and regulations issued by
the Securities and Exchange Commission (the "Commission") under the Investment
Company Act of 1940, but will do so only if there is a secondary market for
such instruments or if they carry demand features, permissible under rules of
the Commission for money market funds, to recover the full principal amount
thereof upon specified notice at par, or both.
The Board of Directors, pursuant to the requirements of Rule 2a-7, has estab-
lished procedures designed to stabilize, to the extent reasonably possible, the
Fund's price per share as computed for the purpose of sales and redemptions at
$1.00. Such procedures will include review of the Fund's portfolio holdings by
the Board of Directors, at such intervals as it may deem appropriate, to deter-
mine whether the net asset value calculated by using available market quota-
tions or market equivalents deviates from $1.00 per share based on amortized
cost. Market quotations and market equivalents used in such review may be ob-
tained from a pricing agent approved by the Board of Directors. The Board has
selected Nuveen Advisory to act as pricing agent, but in the future may select
an independent pricing service to perform this function. In serving as pricing
agent, Nuveen Advisory will follow guidelines adopted by the Board, and the
Board will monitor Nuveen Advisory to see that the guidelines are followed. The
pricing agent will value the Fund's investments based on methods which include
consideration of: yield or prices of municipal obligations of comparable quali-
ty, coupon, maturity, and type; indications as to values from dealers; and gen-
eral market conditions. The pricing agent may employ electronic data processing
techniques and/or a matrix system to determine valuations. The extent of any
deviation between the Fund's net asset value based on the pricing agent's mar-
ket valuation and $1.00 per share based on amortized cost will be examined by
the Board of Directors. If such deviation exceeds 1/2 of 1%, the Board of Di-
rectors will promptly consider what action, if any, will be initiated. In the
event the Board of Directors determines that a deviation exists which may re-
sult in material
15
<PAGE>
dilution or other unfair results to investors or existing shareholders, they
have agreed to take such corrective action as they regard as necessary and ap-
propriate, including the sale of portfolio instruments prior to maturity to re-
alize capital gains or losses or to shorten average portfolio maturity; with-
holding dividends or payments of distributions from capital or capital gains;
redemption of shares in kind; or establishing a net asset value per share by
using available market quotations.
TAX MATTERS
FEDERAL INCOME TAX MATTERS
The following discussion of federal income tax matters is based upon the advice
of Fried, Frank, Harris, Shriver and Jacobson, Washington, D.C., counsel to the
Fund.
As described in the Prospectus, the Fund intends to qualify, as it has in prior
years, under Subchapter M of the Internal Revenue Code of 1986, as amended,
(the "Code"), for tax treatment as a regulated investment company. In order to
qualify as a regulated investment company, the Fund must satisfy certain
requirements relating to the source of its income, diversification of its
assets, and distributions of its income to shareholders. First, the Fund must
derive at least 90% of its annual gross income (including tax-exempt interest)
from dividends, interest, payments with respect to securities loans, gains from
the sale or other disposition of stock or securities, foreign currencies or
other income (including but not limited to gains from options and futures)
derived with respect to its business of investing in such stock or securities
(the "90% gross income test"). Second, the Fund must derive less than 30% of
its annual gross income from the sale or other disposition of any of the
following which was held for less then three months: (i) stock or securities
and (ii) certain options, futures, or forward contracts (the "short-short
test"). Third, the Fund must diversify its holdings so that, at the close of
each quarter of its taxable year, (i) at least 50% of the value of its total
assets is comprised of cash, cash items, United States Government securities,
securities of other regulated investment companies and other securities limited
in respect of any one issuer to an amount not greater in value than 5% of the
value of the Fund's total assets and to not more than 10% of the outstanding
voting securities of such issuer, and (ii) not more than 25% of the value of
the total assets it invested in the securities of any one issuer (other than
United States Government securities and securities of other regulated
investment companies) or two or more issuers controlled by the Fund and engaged
in the same, similar or related trades or businesses.
As a regulated investment company, a fund will not be subject to U.S. federal
income tax in any taxable year for which it distributes at least 90% of its
"investment company taxable income" (which includes dividends, taxable inter-
est, taxable original issue discount and market discount income, income from
securities lending, net short-term capital gain in excess of long-term capital
loss, and any other taxable income other than "net capital gain" (as defined
below) and is reduced by deductible expenses) and at least 90% of the excess of
its gross tax-exempt interest income over certain disallowed deductions ("net
tax-exempt interest").
The Fund also intends to satisfy conditions (including requirements as to the
proportion of its assets invested in Municipal Obligations) which will enable
it to designate distributions from the interest
16
<PAGE>
income generated by its investment in Municipal Obligations, which is exempt
from regular federal income tax when received by the Fund, as Exempt Interest
Dividends. Shareholders receiving Exempt Interest Dividends will not be subject
to federal income tax on the amount of such dividends.
Distributions by the Fund of net interest income received from certain taxable
temporary investments (such as certificates of deposit, commercial paper and
obligations of the United States Government, its agencies and
instrumentalities) and net short-term capital gains realized by the Fund, if
any, will be taxable to shareholders as ordinary income whether received in
cash or additional shares. If the Fund purchases a Municipal Obligation at a
market discount, any gain realized by the Fund upon the sale or redemption of
the Municipal Obligation will be treated as taxable interest income to the
extent such gain does not exceed the market discount, and any gain realized in
excess of the market discount will be treated as capital gains. Any net long-
term capital gains realized by the Fund and distributed to
shareholders in cash or in additional shares will be taxable to shareholders as
long-term capital gains regardless of the length of time investors have owned
shares of the Fund. The Fund does not expect to realize significant long-term
capital gains. Because the taxable portion of the Fund's investment income con-
sists primarily of interest, none of its dividends, whether or not treated as
exempt-interest dividends, is expected to qualify under the Internal Revenue
Code for the dividends received deductions for corporations.
If the Fund has both tax-exempt and taxable interest income, it will use the
"actual earned method" for determining the designated percentage that is tax-
able income and designate the use of such method within 60 days after the end
of the Fund's taxable year. Under this method the ratio of (a) taxable income
earned during the period for which a distribution was made, to (b) total income
earned during the period, determines the percentage of the distribution desig-
nated taxable. The percentage of income, if any, designated as taxable under
this method will vary from distribution to distribution.
Although dividends generally will be treated as distributed when paid, divi-
dends declared in October, November or December, payable to shareholders of
record on a specified date in one of those months and paid during the following
January, will be treated as having been distributed by the Fund (and received
by the shareholders) on December 31.
The redemption or exchange of the shares of the Fund is not expected to result
in capital gain or loss to the shareholders because the Fund's net asset value
is expected to remain constant at $1.00 per share. To the extent that the
Fund's net asset value is greater or lesser than $1.00 per share, redemptions
or exchanges may result in capital gain or loss to the shareholder.
In order to avoid a 4% federal excise tax, the Fund must distribute or be
deemed to have distributed by December 31 of each calendar year at least 98% of
its taxable ordinary income for such year, at least
98% of the excess of its realized capital gains over its realized capital
losses (generally computed on the basis of the one-year period ending on Octo-
ber 31 of such year) and 100% of any taxable ordinary income and the excess of
realized capital gains over realized capital losses for the prior year that was
not distributed during such year and on which the Fund paid no federal income
tax. The Fund intends to make timely distributions in compliance with these re-
quirements and consequently it is anticipated that it generally will not be re-
quired to pay the excise tax.
17
<PAGE>
If in any year the Fund should fail to qualify under Subchapter M for tax
treatment as a regulated investment company, the Fund would incur a regular
corporate federal income tax upon its income for that year, other than interest
income from Municipal Obligations, and distributions to its shareholders out of
net interest income from Municipal Obligations or other investments, or out of
net capital gains, would be taxable to shareholders as ordinary dividend income
for federal income tax purposes to the extent of the Fund's available earnings
and profits.
Among the requirements that the Fund must meet in order to qualify under
Subchapter M in any year is that less than 30% of its gross income must be de-
rived from the sale or other disposition of securities held for less than three
months.
As stated in the Prospectus under "Dividends and Taxes--Federal Income Tax Mat-
ters," the Fund may invest in the type of private activity bonds the interest
on which is not federally tax-exempt to persons who are "substantial users" of
the facilities financed by such bonds or "related persons" of such "substantial
users." Accordingly, the Fund may not be an appropriate investment for share-
holders who are considered either a "substantial user" or a "related person"
within the meaning of the Code. In general, a "substantial user" of a facility
financed from the proceeds of private activity bonds includes a "non-exempt
person who regularly uses a part of such facility in his trade or business."
"Related persons" are in general defined to include persons among whom there
exists a relationship, either by family or business, which would result in a
disallowance of losses in transactions among them under various provisions of
the Code (or if they are members of the same controlled group of corporations
under the Code). For certain private activity bonds, this includes a partner-
ship and each of its partners (including their spouses and minor children) and
an S corporation and each of its shareholders (and their spouses and minor
children). Various combinations of these relationships may also constitute "re-
lated persons" under the Code. The foregoing is not a complete statement of all
of the provisions of the Code covering the definitions of "substantial user"
and "related person." For additional information, investors should consult
their tax advisers before investing in the Fund.
Federal tax law imposes an alternative minimum tax with respect to both corpo-
rations and individuals. Interest on certain Municipal Obligations, such as
bonds issued to make loans for housing purposes or to private entities (but not
for certain tax-exempt organizations such as universities and non-profit hospi-
tals), is included as an item of tax preference in determining the amount of a
taxpayer's alternative minimum taxable income. To the extent that the Fund re-
ceives income from Municipal Obligations subject to the alternative minimum
tax, a portion of the dividends paid by it, although otherwise exempt from fed-
eral income tax, will be taxable to shareholders to the extent that their tax
liability is determined under the alternative minimum tax regime. The Fund will
annually supply shareholders with a report indicating the percentage of Fund
income attributable to Municipal Obligations subject to the federal alternative
minimum tax.
In addition, the alternative minimum taxable income for corporations is in-
creased by 75% of the difference between an alternative measure of income ("ad-
justed current earnings") and the amount otherwise determined to be the alter-
native minimum taxable income. Interest on all Municipal Obligations, and
therefore all distributions by the Fund that would otherwise be tax-exempt, is
included in calculating the alternative measures of a corporation's taxable in-
come.
18
<PAGE>
Individuals whose "modified income" exceeds a base amount will be subject to
Federal income tax on up to one-half of their social security or railroad re-
tirement benefits. Modified income currently includes adjusted gross income,
one-half of social security benefits and tax-exempt interest, including exempt-
interest dividends from the Fund. Individuals whose modified income exceeds
certain base amounts are required to include in gross income up to 85% of their
social security benefits.
The Code provides that interest on indebtedness incurred or continued to pur-
chase or carry shares of the Fund is not deductible. Under rules used by the
IRS for determining when borrowed funds are considered used for the purpose of
purchasing or carrying particular assets, the purchase of shares of a Fund may
be considered to have been made with borrowed funds even though such funds are
not directly traceable to the purchase of shares.
The Fund is required in certain circumstances to withhold 31% of taxable divi-
dends and certain other payments paid to non-corporate holders of shares who
have not furnished to the Fund their correct taxpayer identification number (in
the case of individuals, their social security number) and certain certifi-
cates, or who are otherwise subject to back-up withholding.
The foregoing is a general and abbreviated summary of the provisions of the
Code and Treasury Regulations presently in effect as they directly govern the
taxation of the Fund and its shareholders. For complete provisions, reference
should be made to the pertinent Code sections and Treasury Regulations. The
Code and Treasury Regulations are subject to change by legislative or adminis-
trative action, and any such change may be retroactive with respect to Fund
transactions. Shareholders are advised to consult their own tax advisers for
more detailed information concerning the federal taxation of the Fund and the
income tax consequences to its shareholders.
State and Local Tax Aspects. The exemption from federal income tax for distri-
butions of interest income from Municipal Obligations which are designated ex-
empt interest dividends will not necessarily result in exemption under the in-
come or other tax laws of any state or local taxing authority. The laws of the
several states and local taxing authorities vary with respect to the taxation
of such distributions, and shareholders of the Fund are advised to consult
their own tax advisers in that regard.
DISTRIBUTION AND SERVICE AGREEMENTS
Pursuant to a Distribution Agreement with the Fund, Nuveen acts as the distrib-
utor or principal underwriter of Fund shares. Shares of the Fund are offered on
a continuous basis at net asset value without a sales charge. Under this Agree-
ment, Nuveen will pay sales and promotion expenses in connection with the of-
fering of Fund shares, including the cost of printing and distributing prospec-
tuses (except expenses of preparing, printing and distributing prospectuses to
existing shareholders and governmental agencies) and advertising and sales lit-
erature expense. Expenses incurred in registering the Fund and its shares under
federal and state securities laws will be paid by the Fund.
As discussed in the Prospectus under "Distribution and Service Plan," the Fund
has adopted a Distribution and Service Plan (the "Plan") in accordance with
Rule 12b-1 (the "Rule") of the Investment Company Act of 1940. The Plan was
adopted and has been renewed by vote of the Board of Directors
19
<PAGE>
of the Fund, and of the directors who are not interested persons of the Fund
and have no direct or indirect financial interest in the operation of the Plan
or in any agreements related to the Plan, cast in person at meetings called for
the purpose of voting on such Plan. Under the Plan, the Fund and Nuveen pay
fees to service organizations for services rendered in the distribution of
shares of the Fund or the servicing of shareholder accounts. Nuveen will enter
into Service Agreements with organizations who render such services. Service
payments to such organizations will be made in accordance with the following
schedule:
<TABLE>
<CAPTION>
DAILY AVERAGE ASSETS OF PAYMENT ON AN
SERVICED ACCOUNTS ANNUALIZED BASIS
- -----------------------------------------
<S> <C>
$0-$2 Million .10 of 1%
$2-$5 Million .15 of 1%
$5-$10 Million .20 of 1%
$10 Million and Over .30 of 1%
</TABLE>
Payment of the above fees are split evenly between Nuveen and the Fund and thus
the maximum the Fund would pay on an annualized basis is .15 of 1%. Nuveen may,
in its discretion, pay from its own resources to a service organization satis-
fying certain criteria an additional amount not to exceed in the case of a
given service organization the greater of (a) .05 of 1% per year based on aver-
age assets of accounts serviced, or (b) the amount by which the payment, if
based on .30 of 1% of average assets of accounts serviced, would have exceeded
the actual amount of the payment under the above schedule. For the fiscal year
ended February 28, 1995, the Fund paid fees to service organizations under the
Plan in the amount of $209,800.
Under the Plan, the Controller or Treasurer of the Fund will report quarterly
to the Board of Directors for its review amounts expended for distribution
services. The Plan, the Service Agreements and the Distribution Agreement may
be terminated at any time, without the payment of any penalty, by a vote of a
majority of the directors who are not "interested persons" and who have no di-
rect or indirect financial interest in the Plan or any related agreements or by
vote of a majority of the outstanding voting securities of the Fund. The Plan
may be renewed from year to year if approved at least annually by a vote of the
Board of Directors and a vote of the non-interested directors who have no di-
rect or indirect financial interest in the Plan or the related service agree-
ments cast in person at a meeting called for the purpose of voting on the Plan.
The Plan may be continued only if the Directors who vote to approve such con-
tinuance conclude, in the exercise of reasonable business judgment and in light
of
their fiduciary duties under applicable law, that there is a reasonable likeli-
hood that the Plan will benefit the Fund and its shareholders. The Plan is in-
tended to benefit the Fund by promoting the sale of Fund shares, which in turn
leads to economies of scale and helps assure the continued viability of the
Fund. The Plan may not be amended to increase materially the cost which the
Fund may bear under the Plan without shareholder approval, and any other mate-
rial amendments of the Plan must be approved by the non-interested directors by
a vote cast in person at a meeting called for the purpose of considering such
amendments. During the continuance of the Plan, as required by the Rule, the
selection and nomination of the non-interested directors of the Fund will be
committed to the discretion of the non-interested directors then in office.
20
<PAGE>
No director of the Fund and no "interested" person of the Fund has any direct
or indirect financial interest in the Plan or any agreement related to the
Plan. Services provided to the Fund by organizations receiving payments under
the Plan are described in "How to Purchase Fund Shares--Distribution and Serv-
ice Plan" in the Prospectus.
Shareholders should note that when a Fund dividend check has been returned to
the sender by the post office after repeated mailings, the shareholder account
will thereafter be registered for automatic reinvestment of dividends and thus
the dividend check and future dividend checks will be reinvested in additional
Fund shares. Shareholders are reminded that they need to advise the Funds
promptly in writing of any change in address.
The Glass-Steagall Act and other applicable laws, among other things, may
limit banks from engaging in the business of underwriting, selling or distrib-
uting securities. Since the only functions of banks who may be engaged as
service organizations is to perform administrative shareholder servicing func-
tions, the Fund believes that such laws should not preclude a bank from acting
as a service organization. However, future changes in either federal or state
statutes or regulations relating to the permissible activities of banks and
their subsidiaries or affiliates, as well as judicial or administrative deci-
sions or interpretations of statutes or regulations, could prevent a bank from
continuing to perform all or a part of its shareholder servicing activities.
If a bank were prohibited from so acting, its shareholder customers would be
permitted to remain shareholders of the Fund and alternative means for contin-
uing the servicing of such shareholders would be sought.
To help advisers and investors better understand and more efficiently use an
investment in the Fund to reach their investment goals, the Fund and its spon-
sor, Nuveen, may advertise and create specific investment programs and sys-
tems. For example, such activities may include presenting information on how
to use an investment in the Fund, alone or in combination with an investment
in other mutual funds or unit investment trusts sponsored by Nuveen, to accu-
mulate assets for future education needs or periodic payments such as insur-
ance premiums. The Fund and its sponsor may produce software or additional
sales literature to promote the advantages of using the Fund to meet these and
other specific investor needs.
YIELD INFORMATION
As explained in the Prospectus, the historical performance may be expressed in
terms of "yield," "effective yield" or "taxable equivalent yield." The Fund's
yield and effective yield for the seven-day period ended February 28, 1995
were 3.37% and 3.43%, respectively. These various measures of performance are
described below.
The Fund's yield is computed in accordance with a standard method prescribed
by rules of the Securities and Exchange Commission. Under that method, current
yield is based on a seven-day period and is computed as follows: The Fund's
net investment income per share for the period is divided by the price per
share (expected to remain constant at $1.00) at the beginning of the period,
the result (the "base period return") is divided by 7 and multiplied by 365,
and the resulting figure is carried to the nearest hundredth of one percent.
For the purpose of this calculation, the Fund's net investment in-
21
<PAGE>
come per share includes its accrued interest income plus or minus amortized
purchase discount or premium less accrued expenses, but does not include real-
ized capital gains or losses or unrealized appreciation or depreciation of in-
vestments.
The Fund's effective yield is calculated by taking the base period return (com-
puted as described above) and calculating the effect of assumed compounding.
The formula for effective yield is: (base period return + 1) 365/7 - 1.
The Fund's taxable equivalent yield is computed by dividing that portion of the
Fund's yield which is tax-exempt by 1 minus the stated federal income tax rate
and adding the result to that portion, if any, of the yield of the Fund that is
not tax-exempt.
The Fund's yield will fluctuate, and the publication of annualized yield quota-
tions is not a representation of what an investment in the Fund will actually
yield for any given future period. Actual yields will depend not only on
changes in interest rates on money market instruments during the period in
question, but also on such matters as the expenses of the Fund.
In reports or other communications to shareholders or in advertising and sales
literature, the Fund may compare its performance to that of other money market
mutual funds tracked by Lipper Analytical Services, Inc. ("Lipper"), by
Donoghue's Money Fund Report ("Donoghue's") or similar services or by financial
publications such as Barron's, Changing Times, Forbes and Money Magazine. Per-
formance comparisons by these indexes, services or publications may rank mutual
funds over different periods of time by means of aggregate, average, year-by-
year or other types of performance figures. Lipper performance calculations in-
clude the reinvestment of all capital gain and income dividends for the periods
covered by the calculations. As reported by Donoghue's, all investment results
represent total return (annualized results for the period net of management
fees and expenses) and one year investment results are effective annual yields
assuming reinvestment of dividends.
A comparison of tax-exempt and taxable equivalent yields is one element to con-
sider in making an investment decision. The Fund may from time to time in its
advertising and sales materials compare its then current yields as of a recent
date with the yields on taxable investments such as corporate or U.S. Govern-
ment bonds and bank CDs or money market accounts, each of which has investment
characteristics that may differ from those of the Fund. U.S. Government bonds,
for example, are backed by the full faith and credit of the U.S. Government,
and bank CDs and money market accounts are generally shorter term investments
insured by an agency of the federal government. Bank money market accounts and
money market funds provide stability of principal but pay interest at rates
which vary with the condition of the short-term taxable debt market.
22
<PAGE>
The following table shows the effects for individuals of federal income taxes
on the amount that those subject to a given tax rate would have to put into a
tax-free investment in order to generate the same after-tax income as a taxable
investment.*
Read down to find the amount of a tax-free investment at the specified rate
that would provide the same after-tax income as a $50,000 taxable invest-
ment at the stated taxable rate.
<TABLE>
<CAPTION>
2.00% 2.50% 3.00% 3.50% 4.00% 4.50% 5.00%
TAXABLE TAX-FREE TAX-FREE TAX-FREE TAX-FREE TAX-FREE TAX-FREE TAX-FREE
- -----------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
3.00% $ 51,750 $41,400 $34,500 $29,571 $25,875 $23,000 $20,700
- -----------------------------------------------------------------------
4.00% $ 69,000 $55,200 $46,000 $39,429 $34,500 $30,667 $27,600
- -----------------------------------------------------------------------
5.00% $ 86,250 $69,000 $57,500 $49,286 $43,125 $38,333 $34,500
- -----------------------------------------------------------------------
6.00% $103,500 $82,800 $69,000 $59,143 $51,750 $46,000 $41,400
- -----------------------------------------------------------------------
7.00% $120,750 $96,600 $80,500 $69,000 $60,375 $53,667 $48,300
- -----------------------------------------------------------------------
</TABLE>
*The dollar amounts in the table reflect a 31% federal income tax rate.
The table is for illustrative purposes only and is not intended to predict the
actual return you might earn on your investment. The Fund occasionally may ad-
vertise its performance in similar tables using a different current tax rate
than that shown here. The tax rate shown here may be higher or lower than your
actual tax rate; a higher tax rate would tend to make the dollar amounts in the
table lower, while a lower tax rate would make the amounts higher. You should
consult your tax adviser to determine your actual tax rate.
23
<PAGE>
INDEPENDENT PUBLIC ACCOUNTANTS AND CUSTODIAN
Arthur Andersen LLP, independent public accountants, 33 West Monroe Street,
Chicago, Illinois 60603 have been selected as auditors for the Fund. In addi-
tion to audit services, Arthur Andersen LLP provides consultation and assis-
tance on accounting, internal control, tax and related matters. The financial
statements of the Fund incorporated by reference elsewhere in this Statement of
Additional Information and the information set forth under "Financial High-
lights" in the Prospectus have been audited by Arthur Andersen LLP as indicated
in their report with respect thereto, and are included in reliance upon the au-
thority of said firm as experts in giving said report.
The custodian of the Fund's assets is United States Trust Company of New York,
114 West 47th Street, New York, New York 10036. The custodian performs custodi-
al, fund accounting and portfolio accounting services. The Chase Manhattan
Bank, N.A., 1 Chase Manhattan Plaza, New York, NY 10081 has agreed to become
successor to U.S. Trust Company of New York, as custodian and fund accountant.
The succession is presently scheduled for July 1, 1995. No changes in the
Fund's administration or in the amount of fees and expenses paid by the Fund
for those services will result, and no action by shareholders will be required.
24
<PAGE>
[NUVEEN LOGO APPEARS HERE]
Nuveen Tax-Free
Money Market Funds
Dependable tax-free
income for generations
NUVEEN TAX-FREE RESERVES, INC.
NUVEEN CALIFORNIA TAX-FREE
MONEY MARKET FUND
NUVEEN MASSACHUSETTS TAX-FREE
MONEY MARKET FUND
NUVEEN NEW YORK TAX-FREE
MONEY MARKET FUND
[PHOTO OF COUPLE APPEARS HERE]
ANNUAL REPORT/FEBRUARY 28, 1995
<PAGE>
CONTENTS
3 Dear shareholder
5 Answering your questions
7 Fund performance
9 Portfolio of investments
21 Statement of net assets
22 Statement of operations
26 Statement of changes in net assets
33 Notes to financial statements
38 Financial highlights
46 Report of independent auditors
<PAGE>
Dear
shareholder
[PHOTO OF RICHARD J. FRANKE APPEARS HERE]
"Providing secure
income remains
our top priority"
The objective of the Nuveen Tax-Free Money Market Funds is to provide as high a
level of current tax-free income as is consistent with stability of principal
and the maintenance of liquidity. It is a pleasure to report that for the year
ended February 28, 1995, Nuveen's Tax-Free Money Market Funds met their
objectives, providing yields that compared favorably with those available from
both tax-exempt and taxable short-term alternatives.
The 7-day annualized yield for the funds covered in this report ranged from
3.33% to 3.51% on February 28. To equal these yields, an investor in the 36%
federal income tax bracket would need to earn at least 5.20% on taxable
alternatives.
Since February 1994, the Federal Reserve Board raised interest rates seven
times to fend off future inflation. As a result, the funds' yields increased
more than 70% over the course of the year. In this environment, we continue to
look for opportunities to capture attractive yields in different market sectors
and over many types of municipal securities, including tax-free variable rate
demand notes, tax and revenue anticipation notes, commercial paper, and selected
certificates of participation. The benefits of this type of diversification
combine with share
3
<PAGE>
price stability, daily liquidity, and investment convenience to make Nuveen Tax-
Free Money Market Funds some of the best vehicles conservative, tax-conscious
investors can find for their short-term funds.
Our approach to investing has provided more than one million Nuveen investors
with the tax-free income they need to help realize their dreams and goals and to
improve the quality of their lives year after year. We are confident that it
will continue to do so in the future.
We appreciate your trust in our family of funds, and we look forward to helping
you meet your tax-free investment objectives in the future.
Sincerely,
[SIGNATURE OF RICHARD J. FRANKE]
Richard J. Franke
Chairman of the Board
April 17, 1995
4
<PAGE>
Answering your
questions
We spoke recently with Tom
Spalding, head of Nuveen's portfo-
lio management team, and asked
him about developments in the
municipal market and the outlook
for Nuveen's tax-free funds.
How did the Federal
Reserve Board's moves
to raise short-term
interest rates affect
the performance of
the funds?
The Fed's moves certainly affected our money market funds' performance over the
past year. Yields have moved up significantly, which is good news for income-
oriented investors.
By raising short-term interest rates aggressively in recent months, the
Federal Reserve has demonstrated its commitment to fighting inflation, which
should be good news for all municipal investors. As long as inflation-the
primary factor affecting investment values-remains under control, the
fundamentals for strong municipal performance are in place.
5
<PAGE>
[PHOTO OF TOM SPALDING APPEARS HERE]
Tom Spalding, head
of Nuveen's portfolio
management team,
answers investors'
questions on develop-
ments in the
municipal market.
A number of fund
managers have
encountered problems
recently related to
the use of derivative
securities. Do you use
derivatives in your
portfolios?
Over the last year, participants in the financial services industry, including
securities dealers, underwriters and investment advisers, received much
attention in the press relating to the use of certain types of derivative
financial instruments in the management of portfolios, including those of mutual
funds. There are many different types of derivative investments available in the
market today, including those derivatives whose market values respond to
interest rate changes with greater volatility than do others. In general,
derivatives used to speculate on the future course of interest rates pose the
greatest risk, while derivatives used for hedging purposes present less risk
and, if used properly, can often reduce the probability of loss (while
sacrificing upside potential). Synthetic money market securities generally
present no greater risk to investors than ordinary money market securities.
Although the Funds are authorized to invest in such financial instruments, and
may do so in the future, they did not make any such investments during the
fiscal year ended February 28, 1995, other than a limited amount of synthetic
money market securities.
6
<PAGE>
NUVEEN TAX-FREE
RESERVES, INC.
Tax-Free Reserves
Shareholders in this Fund enjoyed attractive tax-free dividends over the past 12
months. During the fiscal year, the Fund's 7-day annualized yield rose from
1.88% to 3.37%.
[BAR GRAPH APPEARS HERE]
Tax Free Reserves
Year to Date
Summary
Fiscal 1995
Date Dividend
- -----------------
3/94 .0015
4/94 .0015
5/94 .0019
6/94 .0017
7/94 .0017
8/94 .0020
9/94 .0021
10/94 .0021
11/94 .0023
12/94 .0028
1/95 .0025
2/95 .0025
FUND HIGHLIGHTS 2/28/95
Current 7-day SEC yield on NAV 3.37%
Taxable-equivalent yield on NAV* 5.27%
Federal tax rate 36.0%
Total net assets ($000) $351,606
The dividend history used in this chart constitutes past performance and does
not necessarily predict the future dividends of the Fund.
*An investor subject to the indicated federal income tax rate would need to
receive this return from a fully taxable investment to equal the stated 7-day
annualized yield on NAV.
NUVEEN CALIFORNIA TAX-FREE
MONEY MARKET FUND
California
Shareholders in this Fund enjoyed attractive tax-free dividends over the past 12
months. During the fiscal year, the Fund's 7-day annualized yield rose from
2.01% to 3.51%.
[BAR GRAPH APPEARS HERE]
California Money Market
Year to Date
Summary
Fiscal 1995
Date Dividend
- -----------------
3/94 $0.0016
4/94 $0.0016
5/94 $0.0020
6/94 $0.0018
7/94 $0.0019
8/94 $0.0021
9/94 $0.0022
10/94 $0.0022
11/94 $0.0024
12/94 $0.0031
1/95 $0.0027
2/95 $0.0026
FUND HIGHLIGHTS 2/28/95
Current 7-day SEC yield on NAV 3.51%
Taxable-equivalent yield on NAV* 6.10%
Combined state and federal tax rate 42.5%
Total net assets ($000) $159,701
The dividend history used in this chart constitutes past performance and does
not necessarily predict the future dividends of the Fund.
* An investor subject to the indicated state and federal income tax rate would
need to receive this return from a fully taxable investment to equal the stated
7-day annualized yield on NAV.
7
<PAGE>
NUVEEN MASSACHUSETTS TAX-FREE
MONEY MARKET FUND
Massachusetts
Shareholders in this Fund enjoyed attractive tax-free dividends over the past 12
months. During the fiscal year, the Fund's 7-day annualized yield rose from
1.85% to 3.36%.
[BAR GRAPH APPEARS HERE]
Massachusetts Money Market
Year-to Date Summary
Fiscal 1995
Date Dividend
- -----------------
3/94 $0.0015
4/94 $0.0016
5/94 $0.0020
6/94 $0.0018
7/94 $0.0017
8/94 $0.0021
9/94 $0.0022
10/94 $0.0022
11/94 $0.0024
12/94 $0.0029
1/95 $0.0025
2/95 $0.0025
FUND HIGHLIGHTS 2/28/95
Current 7-day SEC yield on NAV 3.36%
Taxable-equivalent yield on NAV* 5.95%
Combined state and federal tax rate 43.5%
Total net assets ($000) $53,004
The dividend history used in this chart constitutes past performance and does
not necessarily predict the future dividends of the Fund.
*An investor subject to the indicated state and federal income tax rate would
need to receive this return from a fully taxable investment to equal the stated
7-day annualized yield on NAV.
NUVEEN NEW YORK TAX-FREE
MONEY MARKET FUND
New York
Shareholders in this Fund enjoyed attractive tax-free dividends over the past 12
months. During the fiscal year, the Fund's 7-day annualized yield rose from
1.77% to 3.33%.
[BAR GRAPH APPEARS HERE]
New York Money Market
Year to Date
Summary
Fiscal 1995
Date Dividend
- -----------------
3/94 $0.0013
4/94 $0.0015
5/94 $0.0018
6/94 $0.0015
7/94 $0.0015
8/94 $0.0019
9/94 $0.0021
10/94 $0.0021
11/94 $0.0023
12/94 $0.0028
1/95 $0.0023
2/95 $0.0025
FUND HIGHLIGHTS 2/28/95
Current 7-day SEC yield on NAV 3.33%
Taxable-equivalent yield on NAV* 5.89%
Combined state and federal tax rate 43.5%
Total net assets ($000) $30,454
The dividend history used in this chart constitutes past performance and does
not necessarily predict the future dividends of the Fund.
* An investor subject to the indicated state and federal income tax rate would
need to receive this return from a fully taxable investment to equal the stated
7-day annualized yield on NAV.
8
<PAGE>
NUVEEN TAX-FREE MONEY MARKET FUNDS ANNUAL REPORT
PORTFOLIO OF INVESTMENTS
FEBRUARY 28, 1995
NUVEEN TAX-FREE RESERVES, INC.
<TABLE>
<CAPTION>
PRINCIPAL AMORTIZED
AMOUNT DESCRIPTION RATINGS* COST
- -------------------------------------------------------------------------------
<C> <S> <C> <C>
ALABAMA - 2.0%
$ 7,215,000 Anniston Industrial Development Board
(Union Foundry Company), Variable Rate
Demand Bonds, 4.200%, 6/01/05+ VMIG-1 $ 7,215,000
- -------------------------------------------------------------------------------
ARIZONA - 3.9%
4,000,000 Coconino County School District No. 1
(Flagstaff Unified School District-
Series 1994B), Tax Anticipation Notes,
5.000%, 7/28/95 SP-1+ 4,011,973
6,700,000 Maricopa County Pollution Control
Corporation (Arizona Public Service
Company, Palo Verde Project), Variable
Rate Demand Bonds, 3.900%, 5/01/29+ P-1 6,700,000
2,900,000 Mesa, Arizona Municipal Development
Corporation, Special Tax Bonds, Series
1985, Commercial Paper, 4.100%, 4/03/95 VMIG-1 2,900,000
- -------------------------------------------------------------------------------
ARKANSAS - 4.0%
3,100,000 Arkansas Hospital Equipment Finance
Authority (Washington Regional Medical
Center), Variable Rate Demand Bonds,
4.350%, 10/01/98+ VMIG-1 3,100,000
11,000,000 University of Arkansas--Board of Trustees
(UAMS Campus-Series 1994), Variable Rate
Demand Bonds, 4.100%, 12/01/19+ VMIG-1 11,000,000
- -------------------------------------------------------------------------------
CALIFORNIA - 3.1%
5,800,000 California Health Facilities Financing
Authority (St. Francis Memorial
Hospital), Series 1993B, Variable Rate
Demand Bonds,
3.750%, 11/01/19+ P-1 5,800,000
5,000,000 Kings County Board of Education, 1994-95,
Tax Anticipation Notes, 4.250%, 7/28/95 SP-1+ 5,008,818
- -------------------------------------------------------------------------------
DELAWARE - 1.6%
5,600,000 Delaware Economic Development Authority,
Industrial Development (Noramco of
Delaware, Inc.), Series 1984, Variable
Rate Demand Bonds, 4.500%, 12/01/14+ N/R 5,600,000
- -------------------------------------------------------------------------------
DISTRICT OF COLUMBIA - 0.8%
3,000,000 District of Columbia General Obligation,
General Fund Recovery, Variable Rate
Demand Bonds, 4.500%, 6/01/03+ A-1+ 3,000,000
- -------------------------------------------------------------------------------
FLORIDA - 3.9%
7,500,000 Dade County Water and Sewer System,
Series 1994, Variable Rate Demand Bonds,
3.950%, 10/05/22+ VMIG-1 7,500,000
3,000,000 Hialeah Hospital Refunding, Series 1989
(Hialeah Hospital Inc.), Variable Rate
Demand Bonds, 4.350%, 2/01/14+ VMIG-1 3,000,000
3,100,000 Pasco Multi-Family Housing, Carlton Arms
of Magnolia Valley, Series 1985,
Variable Rate Demand Bonds, 4.250%,
12/01/07+ VMIG-1 3,100,000
</TABLE>
9
<PAGE>
PORTFOLIO OF INVESTMENTS
NUVEEN TAX-FREE RESERVES, INC.--CONTINUED
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT DESCRIPTION RATINGS* AMORTIZED COST
- -------------------------------------------------------------------------------
<C> <S> <C> <C>
GEORGIA - 5.6%
$ 6,500,000 Burke County Development Authority,
Pollution Control (Oglethorpe Power
Company), Adjustable Tender Bonds,
4.050%, 4/06/95 VMIG-1 $ 6,500,000
6,200,000 Fulton County Hospital Authority,
Anticipation Certificates,
Commercial Paper, 3.900%, 3/02/95 VMIG-1 6,200,000
7,000,000 Fulton County, Georgia Hospital
Authority, Anticipation Certificates
(St. Joseph's Hospital of Atlanta
Project), Commercial Paper, 4.125%,
5/31/95 VMIG-1 7,000,000
- -------------------------------------------------------------------------------
HAWAII - 1.2%
4,200,000 Hawaii Department of Budget and
Finance, Special Purpose (Adventist
Health System), Variable Rate Demand
Bonds, 4.150%, 9/01/99+ A-1 4,200,000
- -------------------------------------------------------------------------------
ILLINOIS - 12.2%
10,000,000 Illinois Development Finance
Authority (Chicago Symphony
Orchestra Project), Variable Rate
Demand Bonds, 4.100%, 12/01/28+ VMIG-1 10,000,000
4,985,000 Illinois Educational Facilities
Authority, The Art Institute of
Chicago, Series 1987, Variable Rate
Demand Bonds, 4.150%, 3/01/27+ MIG-1 4,985,000
11,400,000 Illinois Health Facilities Authority
(Victory Health Services Project),
Series 1991, 4.150%, 12/01/11
(Optional Put 3/29/95) VMIG-1 11,400,000
2,500,000 Chicago O'Hare International Airport
(American Airlines), Variable Rate
Demand Bonds, 3.950%, 12/01/17+ VMIG-1 2,500,000
Decatur Water Bonds (New South Water
Treatment), Series 1985, Commercial
Paper:
2,200,000 3.800%, 3/03/95 VMIG-1 2,200,000
3,300,000 4.150%, 4/04/95 VMIG-1 3,300,000
4,000,000 4.350%, 5/08/95 VMIG-1 4,000,000
4,600,000 4.125%, 5/11/95 VMIG-1 4,600,000
- -------------------------------------------------------------------------------
INDIANA - 3.3%
6,000,000 Indianapolis Economic Development
(Yellow Freight System),
5.500%, 1/15/10 (Mandatory Put
1/15/96) N/R 6,000,000
5,500,000 Fort Wayne Economic Development
(Georgetown Place Venture Project),
Variable Rate Demand Bonds, 4.000%,
12/01/15+ A-1+ 5,500,000
- -------------------------------------------------------------------------------
IOWA - 2.2%
2,500,000 Iowa School Corporation, Warrant
Certificates, Series A 1994,
Municipal Note, 4.250%, 7/17/95 MIG-1 2,505,917
2,900,000 Eddyville Pollution Control
(Heartland Lysine Inc.), Variable
Rate Demand Bonds, 4.600%, 11/01/03+ N/R 2,900,000
2,200,000 Mount Vernon Private College (Cornell
College Project), Series 1985,
Variable Rate Demand Bonds, 4.300%,
10/01/15+ VMIG-1 2,200,000
</TABLE>
10
<PAGE>
NUVEEN TAX-FREE MONEY MARKET FUNDS ANNUAL REPORT
FEBRUARY 28, 1995
<TABLE>
<CAPTION>
PRINCIPAL AMORTIZED
AMOUNT DESCRIPTION RATINGS* COST
- -------------------------------------------------------------------------------
<C> <S> <C> <C>
KENTUCKY - 6.8%
$ 9,005,000 Hancock County Industrial Development
(Southwire Company Project), Variable
Rate Demand Bonds, 4.250%, 7/01/10+ N/R $ 9,005,000
14,800,000 Perry County Health Care System
(Appalachian Regional Hospital, Inc.
Project), Series 1984, Variable Rate
Demand Bonds,
4.150%, 8/01/14+ VMIG-1 14,800,000
- -------------------------------------------------------------------------------
LOUISIANA - 3.6%
6,000,000 Louisiana Offshore Terminal Authority,
Variable Rate Demand Bonds, 3.900%,
9/01/06+ A-1+ 6,000,000
6,500,000 Louisiana Recovery District, Sales Tax,
Variable Rate Demand Bonds, 3.750%,
7/01/98+ VMIG-1 6,500,000
- -------------------------------------------------------------------------------
MASSACHUSETTS - 4.5%
2,300,000 Massachusetts Bay Transportation
Authority, Series A, Commercial Paper,
3.700%, 3/08/95 A-1+ 2,300,000
3,000,000 Massachusetts Dedicated Income Tax,
Variable Rate Demand Bonds, 3.650%,
6/01/95 VMIG-1 3,000,000
4,000,000 Massachusetts Health and Educational
Facilities Authority (Harvard
University), Variable Rate Demand Bonds,
3.750%, 2/01/16+ VMIG-1 4,000,000
1,000,000 Massachusetts Health and Educational
Facilities Authority (M.I.T. Project),
Variable Rate Demand Bonds, 3.850%,
7/01/21+ VMIG-1 1,000,000
2,400,000 Massachusetts Industrial Finance Agency
(Nova Realty Trust 1994 Refunding),
Variable Rate Demand Bonds, 4.100%,
12/01/02+ P-1 2,400,000
3,000,000 Massachusetts General Obligation Notes,
1994, Series A,
5.000%, 6/15/95 MIG-1 3,006,794
- -------------------------------------------------------------------------------
MICHIGAN - 4.6%
7,100,000 Michigan Job Development Authority,
Limited Obligation (Frankenmuth Bavarian
Inn), Variable Rate Demand Bonds,
4.300%, 9/01/15+ A-1 7,100,000
7,500,000 Detroit City School District, Wayne
County State School Aid Notes (Limited
Tax, General Obligation), Series 1994,
5.000%, 5/01/95 SP-1+ 7,512,887
1,650,000 Warren Economic Development Corporation,
Limited Obligation (The Prince Company--
Michigan Division), Variable Rate Demand
Bonds, 4.400%, 11/01/99+ P-1 1,650,000
- -------------------------------------------------------------------------------
MINNESOTA - 4.4%
6,410,000 Bloomington Commercial Development (94th
Street Associates), Variable Rate Demand
Bonds, 4.150%, 12/01/15+ A-1+ 6,410,000
6,430,000 Bloomington Commercial Development (James
Avenue Associates Project), Variable
Rate Demand Bonds, 4.150%, 12/01/15+ A-1+ 6,430,000
2,600,000 St. Paul Housing and Redevelopment
Authority, District Heating, Variable
Rate Demand Bonds, 4.250%, 12/01/12+ A-1 2,600,000
</TABLE>
11
<PAGE>
PORTFOLIO OF INVESTMENTS
NUVEEN TAX-FREE RESERVES, INC.--CONTINUED
<TABLE>
<CAPTION>
PRINCIPAL AMORTIZED
AMOUNT DESCRIPTION RATINGS* COST
- -------------------------------------------------------------------------------
<C> <S> <C> <C>
MISSOURI - 0.8%
$ 2,840,000 Independence Industrial Development
Authority, Industrial Revenue Bonds,
Series 1994 (Resthaven Project),
Variable Rate Demand Bonds, 4.150%,
2/01/25+ A-1+ $ 2,840,000
- -------------------------------------------------------------------------------
NEW HAMPSHIRE - 0.8%
2,900,000 Merrimack County Tax Anticipation Notes,
5.240%, 12/29/95 N/R 2,911,123
- -------------------------------------------------------------------------------
NEW YORK - 3.1%
New York City General Obligation,
Variable Rate Demand Bonds:
7,000,000 3.950%, 2/01/20+ VMIG-1 7,000,000
2,700,000 3.950%, 2/01/21+ VMIG-1 2,700,000
1,100,000 3.950%, 2/01/22+ VMIG-1 1,100,000
- -------------------------------------------------------------------------------
NORTH CAROLINA - 1.4%
5,100,000 North Carolina Medical Care Commission,
Hospital Pooled Financing, Variable Rate
Demand Bonds, 3.900%, 10/01/13+ VMIG-1 5,100,000
- -------------------------------------------------------------------------------
OHIO - 7.9%
9,600,000 Centerville Health Care (Bethany Lutheran
Village), Variable Rate Demand Bonds,
4.000%, 5/01/08+ VMIG-1 9,600,000
3,500,000 Centerville Health Care (Bethany Lutheran
Village Continuing Care Facilities
Expansion Project), Variable Rate Demand
Bonds,
4.000%, 11/01/13+ VMIG-1 3,500,000
3,000,000 Cincinnati and Hamilton County Port
Authority (Kenwood Office Associates),
Variable Rate Demand Bonds, 3.900%,
9/01/25+ A-1 3,000,000
2,795,000 Clermont County Economic Development
(Clermont Hills County Project),
Commercial Paper, 4.100%, 5/01/95 N/R 2,795,000
2,700,000 Cuyahoga County--University Hospital of
Cleveland, Series 1985, Variable Rate
Demand Bonds, 3.750%, 1/01/16+ VMIG-1 2,700,000
3,900,000 Franklin County Hospital Facilities
(Traditions at Mill Run), Floating Rate
Demand Bonds, 4.350%, 11/01/14+ N/R 3,900,000
2,200,000 Franklin County (Rickenbacker Holdings,
Inc. Project), Variable Rate Demand
Bonds, 4.200%, 12/01/10+ N/R 2,200,000
- -------------------------------------------------------------------------------
PENNSYLVANIA - 1.6%
3,000,000 Pennsylvania Tax Anticipation Notes,
First Series of 1994-1995, 4.750%,
6/30/95 MIG-1 3,007,246
1,100,000 Chartiers Valley Industrial and
Commercial Development Authority
(Universal Auto), Variable Rate Demand
Bonds, 4.140%, 8/01/00+ N/R 1,100,000
1,400,000 Delaware County Industrial Development
Authority, Airport Facility (UPS),
Variable Rate Demand Bonds, 3.750%,
12/01/15+ A-1+ 1,400,000
</TABLE>
12
<PAGE>
NUVEEN TAX-FREE MONEY MARKET FUNDS ANNUAL REPORT
FEBRUARY 28, 1995
<TABLE>
<CAPTION>
PRINCIPAL AMORTIZED
AMOUNT DESCRIPTION RATINGS* COST
- -------------------------------------------------------------------------------
<C> <S> <C> <C>
TENNESSEE - 1.7%
$ 6,100,000 Roane County Industrial Development Board
(Fortofil Fiber), Variable Rate Demand
Bonds, 4.000%, 12/15/12+ N/R $ 6,100,000
- -------------------------------------------------------------------------------
TEXAS - 4.6%
4,000,000 Texas Tax Anticipation Notes, 5.000%,
8/31/95 MIG-1 4,016,516
4,500,000 Angelina and Neches River Authority,
Industrial Development Corp., Solid
Waste (Teec Int. Temple Inland), Series
1984E, Variable Rate Demand Bonds,
3.900%, 5/01/14+ VMIG-1 4,500,000
4,800,000 Lufkin Health Facilities Development
Corporation (Memorial Medical Center of
East Texas), Variable Rate Demand Bonds,
4.300%, 1/01/18+ A-1 4,800,000
3,000,000 Plano Health Facilities Development
Corporation, Children's and Presbyterian
Health Care, Commercial Paper, 3.700%,
3/01/95 VMIG-1 3,000,000
- -------------------------------------------------------------------------------
UTAH - 2.2%
Emery County Pollution Control, Refunding
Bonds (Pacificorp Project), Series 1991,
Commercial Paper:
4,100,000 3.750%, 3/07/95 A-1+ 4,100,000
3,700,000 3.750%, 3/13/95 A-1+ 3,700,000
- -------------------------------------------------------------------------------
VIRGINIA - 1.7%
2,600,000 Norfolk Industrial Development Authority
(Norfolk, Virginia Beach, Portsmouth),
Industrial Development Bonds, Variable
Rate Demand Bonds, 5.850%, 11/01/04+ N/R 2,600,000
3,300,000 Richmond Industrial Development Authority
(Richmond MSA), Variable Rate Demand
Bonds, 5.850%, 11/01/04+ N/R 3,300,000
- -------------------------------------------------------------------------------
WASHINGTON - 5.2%
5,500,000 Washington Health Care Facilities
Authority (Adventist Health System
West/Walla Walla General), Variable Rate
Demand Bonds, 4.390%, 9/01/09+ A-1 5,500,000
3,300,000 Washington Housing Finance Commission
(Crista Ministries Project), Series
1991B, Variable Rate Demand Bonds,
4.150%, 7/01/11+ VMIG-1 3,300,000
5,415,000 Washington Housing Finance Commission
(YMCA of Greater Seattle Program),
Variable Rate Demand Bonds, 3.950%,
7/01/11+ VMIG-1 5,415,000
4,040,000 Yakima County Public Corporation (Jeld-
Wen Inc.), Variable Rate Demand Bonds,
4.150%, 5/01/01+ VMIG-1 4,040,000
- -------------------------------------------------------------------------------
WISCONSIN - 1.6%
5,500,000 Milwaukee Housing Authority (Yankee Hill
Apartments), Variable Rate Demand Bonds,
3.850%, 12/01/09+ A-1 5,500,000
</TABLE>
13
<PAGE>
PORTFOLIO OF INVESTMENTS
NUVEEN TAX-FREE RESERVES, INC.--CONTINUED
<TABLE>
<CAPTION>
PRINCIPAL AMORTIZED
AMOUNT DESCRIPTION RATINGS* COST
- -----------------------------------------------------------------------------
<C> <S> <C> <C>
WYOMING - 0.3%
$ 1,200,000 Sweetwater County Pollution Control
(Pacificorp), Variable Rate Demand
Bonds, 3.850%, 12/01/14+ A-1+ $ 1,200,000
- -----------------------------------------------------------------------------
$353,485,000 Total Investments - 100.6% 353,566,274
- -------------------
------------------------------------------------------------------
Other Assets Less Liabilities - (0.6)% (1,959,877)
- -----------------------------------------------------------------------------
Net Assets - 100% $351,606,397
</TABLE>
- --------------------------------------------------------------------------------
* Ratings (not covered by the report of independent public accountants): Using
the higher of Standard & Poor's or Moody's rating.
N/R - Investment is not rated.
+ The security has a maturity of more than one year, but has variable rate and
demand features which qualify it as a short-term security. The rate disclosed
is that currently in effect. This rate changes periodically based on market
conditions or a specified market index.
See accompanying notes to financial statements.
14
<PAGE>
NUVEEN MONEY MARKET VALUE FUNDS ANNUAL REPORT
FEBRUARY 28, 1995
NUVEEN CALIFORNIA MONEY MARKET FUND
<TABLE>
<CAPTION>
PRINCIPAL AMORTIZED
AMOUNT DESCRIPTION RATINGS* COST
- -------------------------------------------------------------------------------
<C> <S> <C> <C>
$ 3,000,000 California Health Facilities Authority
(St. Joseph Health System), Series A,
Variable Rate Demand Bonds, 3.700%,
7/01/13+ VMIG-1 $ 3,000,000
2,900,000 California Health Facilities Authority,
Pooled Loan Program, Variable Rate
Demand Bonds, 4.050%, 6/01/07+ VMIG-1 2,900,000
6,000,000 California Health Facilities Authority
(St. Francis Memorial Hospital), Series
1993B, Variable Rate Demand Bonds,
3.750%, 11/01/19+ P-1 6,000,000
8,000,000 California Pollution Control Finance
Authority (Pacific Gas and Electric),
Series D 1988, Commercial Paper, 4.050%,
4/11/95 A-1 8,000,000
California Pollution Control Finance
Authority (Shell Oil Company), Variable
Rate Demand Bonds:
4,000,000 3.700%, 11/01/00+ VMIG-1 4,000,000
1,000,000 3.700%, 10/01/11+ VMIG-1 1,000,000
4,000,000 California Pollution Control Finance
Authority, Pollution Control (Exxon
Project), Variable Rate Demand Bonds,
3.800%, 12/01/12+ A-1+ 4,000,000
3,000,000 California School Cash Reserve Program
Authority, 1994 Pool Bonds, Series A
Notes, 4.500%, 7/05/95 MIG-1 3,007,478
6,000,000 California 1994-1995 Anticipation
Floating Index Notes, Series B, Variable
Rate Demand Bonds, 4.140%, 6/28/95 MIG-1 6,000,000
5,500,000 California Statewide Community
Development Authority, Certificates of
Participation, Series 1993, Variable
Rate Demand Bonds,
3.600%, 12/01/18+ A-1+ 5,500,000
3,000,000 Hayward Housing Authority (Huntwood
Terrace), Multi-Family Mortgage, Series
1993A, Variable Rate Demand Bonds,
4.150%, 3/01/27+ A-1 3,000,000
5,000,000 Kern Community College District,
Certificates of Participation, Series
1995, Variable Rate Demand Bonds,
4.300%, 1/01/25+ A-1 5,000,000
3,000,000 Kings County Board of Education, 1994-
1995, Tax Anticipation Notes, 4.250%,
7/28/95 SP-1+ 3,005,291
3,000,000 Long Beach, 1994-1995 Tax Anticipation
Notes, 4.750%, 9/20/95 MIG-1 3,010,407
3,000,000 Los Angeles County, 1994-1995 Tax
Anticipation Notes,
4.500%, 6/30/95 MIG-1 3,006,201
6,000,000 Los Angeles County Metropolitan
Transportation Authority, Commercial
Paper, 4.300%, 4/11/95 P-1 6,000,000
7,400,000 Oakland Capital Improvement Project,
Certificates of Participation, Variable
Rate Demand Bonds, 4.400%, 12/01/15+ N/R 7,400,000
4,900,000 Orange County Apartment Development
(Monarch Bay Apartments Project),
Variable Rate Demand Bonds, 5.300%,
10/01/07+ A-1+ 4,900,000
3,800,000 Orange County (Robinson Ranch Apartments
Project), Variable Rate Demand Bonds,
5.250%, 11/01/08+ VMIG-1 3,800,000
5,000,000 Orange County Apartment Development
(Niguel Summit), Variable Rate Demand
Bonds, 4.250%, 11/01/09+ VMIG-1 5,000,000
3,000,000 Riverside County, Tax Anticipation Notes,
4.250%, 6/30/95 MIG-1 3,006,233
3,000,000 Riverside County School Financing
Authority, School Districts Anticipation
Notes, Series 1994-1995, 4.500%, 7/07/95 MIG-1 3,006,563
5,000,000 Sacramento Municipal Utility District,
Series G, Commercial Paper, 4.200%,
3/09/95 P-1 5,000,000
</TABLE>
15
<PAGE>
PORTFOLIO OF INVESTMENTS
NUVEEN CALIFORNIA MONEY MARKET FUND--CONTINUED
<TABLE>
<CAPTION>
PRINCIPAL AMORTIZED
AMOUNT DESCRIPTION RATINGS* COST
- -------------------------------------------------------------------------------
<C> <S> <C> <C>
$ 5,000,000 Sacramento County Certificates of
Participation (Administration and
Courthouse Project), Variable Rate
Demand Bonds,
3.700%, 6/01/20+ VMIG-1 $ 5,000,000
5,000,000 San Bernardino County Transportation
Authority, Limited Tax Bonds, Series
1994A, Variable Rate Demand Bonds,
4.100%, 3/01/10+ VMIG-1 5,000,000
3,000,000 San Diego Housing Authority, Multi-Family
Housing, Series 1993-A (Carmel Del Mar
Apartments), Variable Rate Demand Bonds,
4.000%, 12/01/15+ A-1 3,000,000
5,300,000 San Diego County Regional Transportation
Commission, Second Senior Tax, Series
1994, Variable Rate Demand Bonds,
3.900%, 4/01/08+ VMIG-1 5,300,000
7,000,000 San Francisco City and County Housing
(Bayside Village), Variable Rate Demand
Bonds, 3.900%, 12/01/05+ VMIG-1 7,000,000
7,000,000 San Dimas Industrial Development Bonds
(Bausch and Lomb Incorporated), Variable
Rate Demand Bonds, 5.150%, 12/01/15+ N/R 7,000,000
5,300,000 Santa Ana Health Facilities Authority
(Town and Country), Variable Rate Demand
Bonds, 3.600%, 10/01/20+ A-1 5,300,000
2,700,000 Santa Clara County Transit District,
Refunding Equipment Trust Certificates,
Variable Rate Demand Bonds, 3.850%,
6/01/15+ VMIG-1 2,700,000
6,400,000 Torrance Hospital (Little Company of Mary
Hospital--Torrance Memorial Hospital),
Variable Rate Demand Bonds,
4.150%, 2/01/22+ A-1 6,400,000
7,000,000 Vista Community Development Commission,
Bond Anticipation Notes, Series 1992,
Commercial Paper, 4.500%, 11/01/95 A-1 7,000,000
- -------------------------------------------------------------------------------
$152,200,000 Total Investments - 95.3% 152,242,173
- -------------------
--------------------------------------------------------------------
Other Assets Less Liabilities - 4.7% 7,459,313
- -------------------------------------------------------------------------------
Net Assets - 100% $159,701,486
</TABLE>
- --------------------------------------------------------------------------------
* Ratings (not covered by the report of independent public accountants): Using
the higher of Standard & Poor's or Moody's rating.
N/R - Investment is not rated.
+ The security has a maturity of more than one year, but has variable rate and
demand features which qualify it as a short-term security. The rate disclosed
is that currently in effect. This rate changes periodically based on market
conditions or a specified market index.
See accompanying notes to financial statements.
16
<PAGE>
NUVEEN TAX-FREE MONEY MARKET FUNDS ANNUAL REPORT
FEBRUARY 28, 1995
NUVEEN MASSACHUSETTS MONEY MARKET FUND
<TABLE>
<CAPTION>
PRINCIPAL AMORTIZED
AMOUNT DESCRIPTION RATINGS* COST
- -------------------------------------------------------------------------------
<C> <S> <C> <C>
Massachusetts Bay Transportation Authority,
Commercial Paper,
Series A:
$ 2,400,000 3.700%, 3/01/95 A-1+ $ 2,400,000
2,600,000 3.700%, 3/08/95 A-1+ 2,600,000
2,000,000 Massachusetts General Obligation Notes,
1994 Series A,
5.000%, 6/15/95 MIG-1 2,004,644
1,490,000 Massachusetts Health and Educational
Facilities Authority (Newbury College),
Variable Rate Demand Bonds, 3.900%,
11/01/18+ N/R 1,490,000
Massachusetts Health and Educational
Facilities Authority (Capital Asset
Program), Variable Rate Demand Bonds:
1,900,000 3.900%, 1/01/35+ VMIG-1 1,900,000
1,400,000 3.800%, 1/01/35+ VMIG-1 1,400,000
1,500,000 Massachusetts Health and Educational
Facilities Authority (Brigham and Women's
Hospital), Variable Rate Demand Bonds,
3.700%, 7/01/17+ VMIG-1 1,500,000
1,500,000 Massachusetts Industrial Finance Agency
(Jencoat/Levy Realty Trust), Variable Rate
Demand Bonds, 4.660%, 10/06/99+ N/R 1,500,000
1,000,000 Massachusetts Industrial Finance Agency
(Nova Realty Trust 1994 Refunding),
Variable Rate Demand Bonds, 4.100%,
12/01/02+ P-1 1,000,000
1,000,000 Massachusetts Industrial Finance Agency,
Pollution Control (New England Power
Company), Commercial Paper, 4.150%,
5/05/95 P-1 1,000,000
3,000,000 Massachusetts Industrial Finance Agency,
Pollution Control (New England Power
Company), Commercial Paper, 3.850%,
3/06/95 P-1 3,000,000
2,100,000 Massachusetts Industrial Finance Agency
(Holyoke Water Power Company Project),
Variable Rate Demand Bonds, 3.750%,
5/01/22+ VMIG-1 2,100,000
1,000,000 Massachusetts Industrial Finance Agency,
Resource Recovery (Ogden Haverhill),
Variable Rate Demand Bonds, 3.700%,
12/01/06+ VMIG-1 1,000,000
1,900,000 Massachusetts Industrial Finance Agency
(Williston Northampton School Issue),
Series A, Variable Rate Demand Bonds,
3.900%, 4/01/10+ N/R 1,900,000
2,000,000 Massachusetts Industrial Finance Agency
(WGBH Educational Foundation Project),
Variable Rate Demand Bonds,
4.200%, 10/01/09+ VMIG-1 2,000,000
1,000,000 Massachusetts Industrial Finance Agency
(New England Deaconess Association
Project), Series 1993B, Variable Rate
Demand Bonds, 3.700%, 4/01/23+ MIG-1 1,000,000
1,500,000 Massachusetts Housing Finance Authority,
Single Family Housing, Series 35, Variable
Rate Demand Bonds, 3.750%, 6/01/17+ VMIG-1 1,500,000
1,000,000 Boston General Obligation, Tax Anticipation
Notes, 5.000%, 8/01/95 Aaa 1,004,061
665,000 Boston Water and Sewer Commission, Series
1985A, Variable Rate Demand Bonds, 4.000%,
11/01/14+ VMIG-1 665,000
500,000 Boston Water and Sewer Commission, 1994
Series A, General Revenue Bonds (Senior
Series), Variable Rate Demand Bonds,
3.650%, 11/01/24+ VMIG-1 500,000
800,000 Holyoke Pollution Control (Holyoke Water
Power Company Project), Series 1988,
Variable Rate Demand Bonds, 3.750%,
11/01/13+ A-1+ 800,000
</TABLE>
17
<PAGE>
PORTFOLIO OF INVESTMENTS
NUVEEN MASSACHUSETTS MONEY MARKET FUND--CONTINUED
<TABLE>
<CAPTION>
PRINCIPAL AMORTIZED
AMOUNT DESCRIPTION RATINGS* VALUE
- -------------------------------------------------------------------------------
<C> <S> <C> <C>
$ 1,950,000 Hopkinton Bond Anticipation Notes, 4.000%,
7/06/95 N/R $ 1,952,471
1,300,000 New Bedford Industrial Development (Cliftex
Corporation), Series 1989, Variable Rate
Demand Bonds, 4.660%, 10/01/97+ N/R 1,300,000
625,000 Newton General Obligation, Limited Tax
Anticipation Notes, Series 1994, 5.200%,
4/15/95 Aaa 626,467
2,000,000 Pioneer Valley Transit Authority,
Anticipation Notes,
4.100%, 8/11/95 N/R 2,002,149
1,500,000 Reading Anticipation Notes, 4.020%, 7/14/95 N/R 1,500,211
1,000,000 Sudbury Anticipation Notes, 3.570%, 3/28/95 N/R 1,000,028
960,000 Waltham Anticipation Notes, 4.000%, 8/25/95 N/R 960,595
2,900,000 Woods Hole, Martha's Vineyard and Nantucket
Steamship Authority, Anticipation Notes,
4.000%, 4/28/95 N/R 2,900,359
3,200,000 Puerto Rico Highway/Transportation
Authority, Series X, Variable Rate Demand
Bonds, 3.500%, 7/01/99+ VMIG-1 3,200,000
3,300,000 Puerto Rico Industrial Medical Educational
and Environmental Authority (Inter-
American University of Puerto Rico),
Commercial Paper, 3.700%, 4/04/95 VMIG-1 3,300,000
700,000 Puerto Rico Industrial Medical Educational
and Environmental Authority (Ana G. Mendez
Educational Foundation), Commercial Paper,
3.750%, 4/10/95 A-1+ 700,000
- -------------------------------------------------------------------------------
$51,690,000 Total Investments - 97.6% 51,705,985
- -------------------------------------------------------------------------------
- -------------------
Other Assets Less Liabilities - 2.4% 1,298,307
- -------------------------------------------------------------------------------
Net Assets - 100% $53,004,292
</TABLE>
- --------------------------------------------------------------------------------
* Ratings (not covered by the report of independent public accountants): Using
the higher of Standard & Poor's or Moody's rating.
N/R - Investment is not rated.
+ The security has a maturity of more than one year, but has variable rate and
demand features which qualify it as a short-term security. The rate disclosed
is that currently in effect. This rate changes periodically based on market
conditions or a specified market index.
See accompanying notes to financial statements.
18
<PAGE>
NUVEEN TAX-FREE MONEY MARKET FUNDS ANNUAL REPORT
FEBRUARY 28, 1995
NUVEEN NEW YORK MONEY MARKET FUND
<TABLE>
<CAPTION>
PRINCIPAL AMORTIZED
AMOUNT DESCRIPTION RATINGS* COST
- ------------------------------------------------------------------------------
<C> <S> <C> <C>
$ 1,500,000 New York State Energy Research and
Development Authority (Niagara Power
Corporation), Variable Rate Demand Bonds,
4.100%, 7/01/15+ A-1+ $ 1,500,000
1,000,000 New York State Energy Research and
Development Authority (Central Hudson Gas
and Electric), Variable Rate Demand
Bonds,
3.750%, 11/01/20+ VMIG-1 1,000,000
400,000 New York State Energy Research and
Development Authority, Pollution Control
(New York State Electric and Gas Corp.),
Series 1994C, Commercial Paper, 3.875%,
4/06/95 VMIG-1 400,000
1,000,000 New York State Energy Research and
Development Authority (New York State
Electric and Gas Company), 1985 Series D,
Commercial Paper, 4.000%, 4/07/95 A-1+ 1,000,000
2,000,000 New York State Housing Finance Agency
(Normandie Court), Variable Rate Demand
Bonds, 3.900%, 5/15/15+ VMIG-1 2,000,000
195,000 New York State Job Development Authority,
Series 1984E, Variable Rate Demand Bonds,
3.800%, 3/01/99+ MIG-1 195,000
260,000 New York State Job Development Authority,
Series 1984C, Variable Rate Demand Bonds,
3.800%, 3/01/99+ MIG-1 260,000
1,300,000 New York State Local Government Assistance
Corporation,
Series 1994B, Variable Rate Demand Bonds,
3.750%, 4/01/23+ VMIG-1 1,300,000
800,000 New York State Medical Care Facilities
Finance Agency (Lenox Hill Hospital),
Variable Rate Demand Bonds, 3.800%,
11/01/08+ VMIG-1 800,000
1,700,000 New York State Medical Care Facilities
Finance Agency (Children's Hospital of
Buffalo), Variable Rate Demand Bonds,
4.000%, 11/01/05+ VMIG-1 1,700,000
1,000,000 Dormitory Authority of the State of New
York, Oxford University Press (Letter of
Credit Secured), Series 1993, Variable
Rate Demand Bonds, 3.950%, 7/01/23+ VMIG-1 1,000,000
700,000 Dormitory Authority of the State of New
York (Sloan-Kettering Cancer Center),
Commercial Paper, 4.200%, 4/03/95 P-1 700,000
600,000 Dormitory Authority of the State of New
York (Sloan-Kettering Cancer Center),
Series 1989C, Commercial Paper, 4.000%,
4/04/95 P-1 600,000
500,000 Dormitory Authority of the State of New
York, Commercial Paper, 4.200%, 5/12/95 P-1 500,000
1,000,000 Erie County Anticipation Notes 1994,
4.750%, 8/15/95 MIG-1 1,003,300
1,000,000 Erie County Water Authority, Variable Rate
Demand Bonds, Water Works System, 3.750%,
12/01/16+ VMIG-1 1,000,000
1,000,000 Hastings-on-Hudson Union Free School
District, Anticipation (Renewal) Notes,
4.490%, 7/26/95 N/R 1,000,755
500,000 Ithaca City School District, Anticipation
Notes, 4.500%, 6/29/95 N/R 500,397
1,000,000 Monroe County Bond Anticipation Notes,
Series C, Unlimited Tax General
Obligation, 5.000%, 6/09/95 N/R 1,001,539
200,000 New York City General Obligation, Variable
Rate Demand Bonds, 3.950%, 2/01/21+ VMIG-1 200,000
</TABLE>
19
<PAGE>
PORTFOLIO OF INVESTMENTS
NUVEEN NEW YORK MONEY MARKET FUND--CONTINUED
<TABLE>
<CAPTION>
PRINCIPAL AMORTIZED
AMOUNT DESCRIPTION RATINGS* COST
- -------------------------------------------------------------------------------
<C> <S> <C> <C>
$ 900,000 New York City General Obligation, 1994 B-4,
Variable Rate Demand Bonds, 4.000%,
8/15/22+ VMIG-1 $ 900,000
300,000 New York City Housing Development
Corporation (Columbus Gardens Project),
Variable Rate Demand Bonds, 3.900%,
2/01/07+ A-1 300,000
800,000 New York City Industrial Development Agency
(LaGuardia Associates Project), Variable
Rate Demand Bonds, 3.800%, 12/01/15+ A-1 800,000
1,000,000 New York City Municipal Water Finance
Authority, Variable Rate Demand Bonds,
3.900%, 6/15/22+ VMIG-1 1,000,000
300,000 New York City Municipal Water Finance
Authority, Commercial Paper, 3.550%,
3/02/95 SP-1+ 300,000
1,500,000 New York City Housing Development
Corporation (Upper Fifth Avenue Project),
Variable Rate Demand Bonds, 3.750%,
1/01/16+ VMIG-1 1,500,000
1,000,000 New York City Housing Development, Variable
Rate Demand Bonds, 3.800%, 8/01/15+ VMIG-1 1,000,000
700,000 New York City Trust for Cultural Resources
(Guggenheim Foundation), Variable Rate
Demand Bonds, 3.600%, 12/01/15+ VMIG-1 700,000
975,000 St. Lawrence County Industrial Development
Agency, Pollution Control (Reynolds
Metals), Variable Rate Demand Bonds,
3.900%, 12/01/07+ P-1 975,000
1,000,000 Suffolk County, Tax Anticipation Notes,
1994 (RA Series II),
4.500%, 9/14/95 MIG-1 1,002,173
800,000 Syracuse Industrial Development Agency,
Civic Facility (Syracuse University),
Variable Rate Demand Bonds, 3.600%,
3/01/23+ SP-1+ 800,000
1,300,000 Triborough Bridge and Tunnel Authority,
Special Obligation, Variable Rate Demand
Bonds, Series 1994 (1994 Resolution),
3.750%, 1/01/24+ MIG-1 1,300,000
1,300,000 Yonkers Industrial Development Agency,
Series 1989, Civic Facility, Variable Rate
Demand Bonds, 3.950%, 7/01/19+ VMIG-1 1,300,000
700,000 Yonkers Industrial Development Agency,
Civic Facility, Variable Rate Demand
Bonds, 3.950%, 7/01/21+ VMIG-1 700,000
- -------------------------------------------------------------------------------
$30,230,000 Total Investments - 99.3% 30,238,164
- -------------------------------------------------------------------------------
- -------------------
Other Assets Less Liabilities - 0.7% 216,248
- -------------------------------------------------------------------------------
Net Assets - 100% $30,454,412
- -------------------------------------------------------------------------------
</TABLE>
* Ratings (not covered by the report of independent public accountants): Using
the higher of Standard & Poor's or Moody's rating.
N/R - Investment is not rated.
+ The security has a maturity of more than one year, but has variable rate and
demand features which qualify it as a short-term security. The rate disclosed
is that currently in effect. This rate changes periodically based on market
conditions or a specified market index.
See accompanying notes to financial statements.
20
<PAGE>
NUVEEN TAX-FREE MONEY MARKET FUNDS ANNUAL REPORT
STATEMENT OF NET ASSETS
FEBRUARY 28, 1995
<TABLE>
<CAPTION>
RESERVES CA MA NY
- -------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
ASSETS
Investments in short-term
municipal securities, at
amortized cost (note 1) $353,566,274 $152,242,173 $51,705,985 $30,238,164
Cash 2,564,607 1,890,126 156,904 105,894
Receivables:
Interest 1,952,900 1,321,573 357,437 155,401
Investments sold 215,000 4,800,000 1,000,000 45,000
Other assets 16,636 16,836 11,419 7,920
------------ ------------ ----------- -----------
Total assets 358,315,417 160,270,708 53,231,745 30,552,379
------------ ------------ ----------- -----------
LIABILITIES
Payable for investments
purchased 5,500,000 -- -- --
Accrued expenses:
Management fees (note 4) 132,043 47,935 18,678 9,479
Other 212,629 110,148 57,749 12,078
Dividends payable 864,348 411,139 151,026 76,410
------------ ------------ ----------- -----------
Total liabilities 6,709,020 569,222 227,453 97,967
------------ ------------ ----------- -----------
Net assets applicable to
shares outstanding
(note 3) $351,606,397 $159,701,486 $53,004,292 $30,454,412
------------ ------------ ----------- -----------
Shares outstanding:
Service Plan series -- 41,771,918 27,731,552 640,073
Distribution Plan series -- 67,157,179 24,237,180 29,797,672
Institutional series -- 50,772,389 1,035,560 16,667
------------ ------------ ----------- -----------
Total shares outstanding 351,606,397 159,701,486 53,004,292 30,454,412
------------ ------------ ----------- -----------
Net asset value, offering
and redemption price per
share (net assets divided
by shares outstanding) $ 1.00 $ 1.00 $ 1.00 $ 1.00
------------ ------------ ----------- -----------
</TABLE>
See accompanying notes to financial statements.
21
<PAGE>
STATEMENT OF OPERATIONS
Year ended February 28, 1995
<TABLE>
<CAPTION>
RESERVES
- -------------------------------------------------------
<S> <C>
INVESTMENT INCOME
Interest income (note 1) $11,501,656
-----------
Expenses:
Management fees (note 4) 1,804,298
12b-1 expense (note 4) 209,800
Shareholders' servicing agent fees and
expenses 555,046
Custodian's fees and expenses 79,594
Directors' fees and expenses (note 4) 4,567
Professional fees 19,724
Shareholders' reports--printing and
mailing expenses 78,982
Federal and state registration fees 59,459
Other expenses 29,474
-----------
Total expenses before expense
reimbursement 2,840,944
Expense reimbursement from investment
adviser (note 4) (134,463)
-----------
Net expenses 2,706,481
-----------
Net investment income 8,795,175
Net gain (loss) from investment
transactions --
-----------
Net increase in net assets from
operations $ 8,795,175
-----------
</TABLE>
See accompanying notes to financial statements.
22
<PAGE>
NUVEEN MONEY MARKET VALUE FUNDS ANNUAL REPORT
FEBRUARY 28, 1995
<TABLE>
<CAPTION>
CALIFORNIA MONEY MARKET
-----------------------------------------
Service Distribution Institutional
Plan series Plan series series Total
- -------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
INVESTMENT INCOME
Interest income (note 1) $3,280,577 $2,204,557 $1,598,756 $7,083,890
---------- ---------- ---------- ----------
Expenses:
Management fees (note
4) 477,352 282,337 199,287 958,976
12b-1 expense (note 4) 142,699 62,026 -- 204,725
Shareholders' servicing
agent fees and
expenses 5,676 41,107 428 47,211
Custodian's fees and
expenses 71,107 30,696 24,347 126,150
Directors' fees and
expenses (note 4) 925 1,229 807 2,961
Professional fees 6,187 5,399 4,356 15,942
Shareholders' reports--
printing and mailing
expenses 4,621 26,914 96 31,631
Federal and state
registration fees -- -- -- --
Other expenses 2,160 3,611 3,335 9,106
---------- ---------- ---------- ----------
Total expenses before
expense reimbursement 710,727 453,319 232,656 1,396,702
Expense reimbursement
from investment
adviser (note 4) (58,837) (63,409) -- (122,246)
---------- ---------- ---------- ----------
Net expenses 651,890 389,910 232,656 1,274,456
---------- ---------- ---------- ----------
Net investment income 2,628,687 1,814,647 1,366,100 5,809,434
Net gain (loss) from
investment transactions (11,576) (4,489) (2,299) (18,364)
---------- ---------- ---------- ----------
Net increase in net
assets from operations $2,617,111 $1,810,158 $1,363,801 $5,791,070
---------- ---------- ---------- ----------
</TABLE>
See accompanying notes to financial statements.
23
<PAGE>
STATEMENT OF OPERATIONS
Year ended February 28, 1995
<TABLE>
<CAPTION>
MASSACHUSETTS MONEY MARKET
-----------------------------------------
Service Distribution Institutional
Plan series Plan series series Total
- -------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
INVESTMENT INCOME
Interest income (note 1) $1,226,072 $850,576 $119,585 $2,196,233
---------- -------- -------- ----------
Expenses:
Management fees (note
4) 158,079 109,619 15,413 283,111
12b-1 expense (note 4) 46,919 22,886 -- 69,805
Shareholders' servicing
agent fees and
expenses 612 28,337 135 29,084
Custodian's fees and
expenses 24,311 15,504 1,394 41,209
Directors' fees and
expenses (note 4) 901 599 75 1,575
Professional fees 6,927 5,570 611 13,108
Shareholders' reports--
printing and mailing
expenses 2,378 39,650 196 42,224
Federal and state
registration fees 853 588 108 1,549
Other expenses 931 623 63 1,617
---------- -------- -------- ----------
Total expenses before
expense reimbursement 241,911 223,376 17,995 483,282
Expense reimbursement
from investment
adviser (note 4) (23,741) (72,562) -- (96,303)
---------- -------- -------- ----------
Net expenses 218,170 150,814 17,995 386,979
---------- -------- -------- ----------
Net investment income 1,007,902 699,762 101,590 1,809,254
Net gain (loss) from
investment transactions (1,430) (1,013) (60) (2,503)
---------- -------- -------- ----------
Net increase in net
assets from operations $1,006,472 $698,749 $101,530 $1,806,751
---------- -------- -------- ----------
</TABLE>
See accompanying notes to financial statements.
24
<PAGE>
NUVEEN TAX-FREE MONEY MARKET FUNDS ANNUAL REPORT FEBRUARY 28, 1995
<TABLE>
<CAPTION>
NEW YORK MONEY MARKET
-----------------------------------------
Service Distribution Institutional
Plan series Plan series series Total
- -------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
INVESTMENT INCOME
Interest income (note 1) $20,960 $852,805 $473 $874,238
------- -------- ---- --------
Expenses:
Management fees (note 4) 2,864 116,536 64 119,464
12b-1 expense (note 4) 266 12,446 -- 12,712
Shareholders' servicing
agent fees and expenses 1,601 31,442 32 33,075
Custodian's fees and
expenses 817 34,316 227 35,360
Directors' fees and
expenses (note 4) 57 1,798 1 1,856
Professional fees 338 10,923 6 11,267
Shareholders' reports--
printing and mailing
expenses 856 20,472 5 21,333
Federal and state
registration fees -- -- -- --
Other expenses 24 989 10 1,023
------- -------- ---- --------
Total expenses before
expense reimbursement 6,823 228,922 345 236,090
Expense reimbursement from
investment adviser (note
4) (2,920) (68,631) (257) (71,808)
------- -------- ---- --------
Net expenses 3,903 160,291 88 164,282
------- -------- ---- --------
Net investment income 17,057 692,514 385 709,956
Net gain (loss) from
investment transactions -- -- -- --
------- -------- ---- --------
Net increase in net assets
from operations $17,057 $692,514 $385 $709,956
------- -------- ---- --------
</TABLE>
See accompanying notes to financial statements.
25
<PAGE>
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
RESERVES
---------------------------------
Year ended Year ended
2/28/95 2/28/94
- -------------------------------------------------------------------------------
<S> <C> <C>
OPERATIONS
Net investment income $ 8,795,175 $ 7,830,250
Net realized gain (loss) from investment
transactions -- --
------------ ------------
Net increase in net assets from operations 8,795,175 7,830,250
------------ ------------
DISTRIBUTIONS TO SHAREHOLDERS (note 1) (8,795,175) (7,830,250)
------------ ------------
COMMON SHARE TRANSACTIONS (at constant net asset
value of $1 per share) (note 1)
Net proceeds from sales of shares 657,011,312 766,196,962
Net asset value of shares issued to shareholders
due to reinvestment of distributions from net
investment income and from net realized gains
from investment transactions 7,787,100 6,943,302
------------ ------------
664,798,412 773,140,264
Cost of shares redeemed (717,393,211) (819,685,408)
------------ ------------
Net increase (decrease) in net assets derived
from Common share transactions (52,594,799) (46,545,144)
Net assets at the beginning of year 404,201,196 450,746,340
------------ ------------
Net assets at the end of year $351,606,397 $404,201,196
------------ ------------
</TABLE>
See accompanying notes to financial statements.
26
<PAGE>
NUVEEN TAX-FREE MONEY MARKET FUNDS ANNUAL REPORT
FEBRUARY 28, 1995
<TABLE>
----------------------------------------------
<CAPTION>
CALIFORNIA MONEY MARKET
----------------------------------------------
Year ended February 28, 1995
----------------------------------------------
Service Distribution Institutional
Plan series Plan series series Total
- ------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
OPERATIONS
Net investment income $ 2,628,687 $ 1,814,647 $ 1,366,100 $ 5,809,434
Net realized gain (loss)
from investment
transactions (11,576) (4,489) (2,299) (18,364)
------------ ------------ ------------ ------------
Net increase in net
assets from operations 2,617,111 1,810,158 1,363,801 5,791,070
------------ ------------ ------------ ------------
DISTRIBUTIONS TO
SHAREHOLDERS (note 1) (2,617,111) (1,810,158) (1,363,801) (5,791,070)
------------ ------------ ------------ ------------
COMMON SHARE
TRANSACTIONS (at
constant net asset
value of $1 per share)
(note 1)
Net proceeds from sale
of shares 208,318,412 113,315,156 247,997,081 569,630,649
Net asset value of
shares issued to
shareholders due to
reinvestment of
distributions from net
investment income and
from net realized gains
from investment
transactions 2,983,786 1,322,451 7,041 4,313,278
------------ ------------ ------------ ------------
211,302,198 114,637,607 248,004,122 573,943,927
Cost of shares redeemed (584,768,062) (119,860,860) (229,530,966) (934,159,888)
------------ ------------ ------------ ------------
Net increase (decrease)
in net assets derived
from Common share
transactions (373,465,864) (5,223,253) 18,473,156 (360,215,961)
Net assets at the
beginning of year 415,237,782 72,380,432 32,299,233 519,917,447
------------ ------------ ------------ ------------
Net assets at the end of
year $ 41,771,918 $ 67,157,179 $ 50,772,389 $159,701,486
------------ ------------ ------------ ------------
</TABLE>
See accompanying notes to financial statements.
27
<PAGE>
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
CALIFORNIA MONEY MARKET
----------------------------------------------
Year ended February 28, 1994
----------------------------------------------
Service Distribution Institutional
Plan series Plan series series Total
- ------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
OPERATIONS
Net investment income $ 8,697,661 $ 1,401,096 $ 708,239 $ 10,806,996
Net realized gain (loss)
from investment
transactions 993 161 76 1,230
------------ ------------ ------------ ------------
Net increase in net
assets from operations 8,698,654 1,401,257 708,315 10,808,226
------------ ------------ ------------ ------------
DISTRIBUTIONS TO
SHAREHOLDERS (note 1) (8,698,654) (1,401,257) (708,315) (10,808,226)
------------ ------------ ------------ ------------
COMMON SHARE
TRANSACTIONS (at
constant net asset
value of $1 per share)
(note 1)
Net proceeds from sale
of shares 593,317,833 109,131,190 231,831,775 934,280,798
Net asset value of
shares issued to
shareholders due to
reinvestment of
distributions from net
investment
income and from net
realized gains from
investment
transactions 8,711,394 1,055,257 7,218 9,773,869
------------ ------------ ------------ ------------
602,029,227 110,186,447 231,838,993 944,054,667
Cost of shares redeemed (656,603,608) (118,457,991) (223,695,990) (998,757,589)
------------ ------------ ------------ ------------
Net increase (decrease)
in net assets derived
from Common share
transactions (54,574,381) (8,271,544) 8,143,003 (54,702,922)
Net assets at the
beginning of year 469,812,163 80,651,976 24,156,230 574,620,369
------------ ------------ ------------ ------------
Net assets at the end of
year $415,237,782 $72,380,432 $32,299,233 $519,917,447
------------ ------------ ------------ ------------
</TABLE>
See accompanying notes to financial statements.
28
<PAGE>
NUVEEN TAX-FREE MONEY MARKET FUNDS ANNUAL REPORT
FEBRUARY 28, 1995
<TABLE>
<CAPTION>
MASSACHUSETTS MONEY MARKET
---------------------------------------------
Year ended February 28, 1995
---------------------------------------------
Service Distribution Institutional
Plan series Plan series series Total
- -----------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
OPERATIONS
Net investment income $ 1,007,902 $ 699,762 $ 101,590 $ 1,809,254
Net realized gain (loss)
from investment
transactions (1,430) (1,013) (60) (2,503)
------------ ----------- ----------- ------------
Net increase in net
assets from operations 1,006,472 698,749 101,530 1,806,751
------------ ----------- ----------- ------------
DISTRIBUTIONS TO
SHAREHOLDERS (note 1) (1,006,472) (698,749) (101,530) (1,806,751)
------------ ----------- ----------- ------------
COMMON SHARE
TRANSACTIONS (at
constant net asset
value of $1 per share)
(note 1)
Net proceeds from sale
of shares 126,292,160 26,877,207 10,226,869 163,396,236
Net asset value of
shares issued to
shareholders due to
reinvestment of
distributions from net
investment
income and from net
realized gains from
investment
transactions 982,397 655,827 5,596 1,643,820
------------ ----------- ----------- ------------
127,274,557 27,533,034 10,232,465 165,040,056
Cost of shares redeemed (138,119,127) (31,068,859) (12,602,539) (181,790,525)
------------ ----------- ----------- ------------
Net increase (decrease)
in net assets derived
from Common share
transactions (10,844,570) (3,535,825) (2,370,074) (16,750,469)
Net assets at the
beginning of year 38,576,122 27,773,005 3,405,634 69,754,761
------------ ----------- ----------- ------------
Net assets at the end of
year $ 27,731,552 $24,237,180 $ 1,035,560 $ 53,004,292
------------ ----------- ----------- ------------
</TABLE>
See accompanying notes to financial statements.
29
<PAGE>
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
MASSACHUSETTS MONEY MARKET
---------------------------------------------
Year ended February 28, 1994
---------------------------------------------
Service Distribution Institutional
Plan series Plan series series Total
- -----------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
OPERATIONS
Net investment income $ 814,885 $ 495,675 $ 78,218 $ 1,388,778
Net realized gain (loss)
from investment
transactions 15 9 2 26
------------ ----------- ---------- ------------
Net increase in net
assets from operations 814,900 495,684 78,220 1,388,804
------------ ----------- ---------- ------------
DISTRIBUTIONS TO SHARE-
HOLDERS (note 1) (814,900) (495,684) (78,220) (1,388,804)
------------ ----------- ---------- ------------
COMMON SHARE TRANSAC-
TIONS (at constant net
asset value of $1 per
share) (note 1)
Net proceeds from sale
of shares 176,973,990 29,011,727 5,412,804 211,398,521
Net asset value of
shares issued to
shareholders due to
reinvestment of
distributions from net
investment income and
from net realized gains
from investment
transactions 806,029 486,759 -- 1,292,788
------------ ----------- ---------- ------------
177,780,019 29,498,486 5,412,804 212,691,309
Cost of shares redeemed (179,417,504) (29,718,817) (7,332,647) (216,468,968)
------------ ----------- ---------- ------------
Net increase (decrease)
in net assets derived
from Common share
transactions (1,637,485) (220,331) (1,919,843) (3,777,659)
Net assets at the
beginning of year 40,213,607 27,993,336 5,325,477 73,532,420
------------ ----------- ---------- ------------
Net assets at the end of
year $ 38,576,122 $27,773,005 $3,405,634 $ 69,754,761
------------ ----------- ---------- ------------
</TABLE>
See accompanying notes to financial statements.
30
<PAGE>
NUVEEN TAX-FREE MONEY MARKET FUNDS ANNUAL REPORT
FEBRUARY 28, 1995
<TABLE>
<CAPTION>
NEW YORK MONEY MARKET
-------------------------------------------
Year ended February 28, 1995
-------------------------------------------
Service Distribution Institutional
Plan series Plan series series Total
- ---------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
OPERATIONS
Net investment income $ 17,057 $ 692,514 $ 385 $ 709,956
Net realized gain (loss)
from investment
transactions -- -- -- --
---------- ----------- ------- -----------
Net increase in net
assets from operations 17,057 692,514 385 709,956
---------- ----------- ------- -----------
DISTRIBUTIONS TO
SHAREHOLDERS (note 1) (17,057) (692,514) (385) (709,956)
---------- ----------- ------- -----------
COMMON SHARE
TRANSACTIONS (at
constant net asset
value of $1 per share)
(note 1)
Net proceeds from sale
of shares 1,126,675 16,626,815 -- 17,753,490
Net asset value of
shares issued to
shareholders due to
reinvestment of
distributions from net
investment
income and from net
realized gains from
investment
transactions 15,591 626,707 -- 642,298
---------- ----------- ------- -----------
1,142,266 17,253,522 -- 18,395,788
Cost of shares redeemed (1,058,955) (15,341,900) -- (16,400,855)
---------- ----------- ------- -----------
Net increase (decrease)
in net assets derived
from Common share
transactions 83,311 1,911,622 -- 1,994,933
Net assets at the
beginning of year 556,762 27,886,050 16,667 28,459,479
---------- ----------- ------- -----------
Net assets at the end of
year $ 640,073 $29,797,672 $16,667 $30,454,412
---------- ----------- ------- -----------
</TABLE>
See accompanying notes to financial statements.
31
<PAGE>
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
NEW YORK MONEY MARKET
------------------------------------------
Year ended February 28, 1994
------------------------------------------
Service Distribution Institutional
Plan series Plan series series Total
- --------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
OPERATIONS
Net investment income $ 7,985 $ 503,453 $ 273 $ 511,711
Net realized gain (loss)
from investment
transactions -- -- -- --
-------- ----------- ------- -----------
Net increase in net
assets from operations 7,985 503,453 273 511,711
-------- ----------- ------- -----------
DISTRIBUTIONS TO
SHAREHOLDERS (note 1) (7,985) (503,453) (273) (511,711)
-------- ----------- ------- -----------
COMMON SHARE
TRANSACTIONS (at
constant net asset
value of $1 per share)
(note 1)
Net proceeds from sales
of shares 837,650 17,150,608 -- 17,988,258
Net asset value of
shares issued to
shareholders due to
reinvestment of
distributions from net
investment
income and from net
realized gains from
investment
transactions 7,546 483,621 -- 491,167
-------- ----------- ------- -----------
845,196 17,634,229 -- 18,479,425
Cost of shares redeemed (817,370) (24,575,123) -- (25,392,493)
-------- ----------- ------- -----------
Net increase (decrease)
in net assets derived
from Common share
transactions 27,826 (6,940,894) -- (6,913,068)
Net assets at the
beginning of year 528,936 34,826,944 16,667 35,372,547
-------- ----------- ------- -----------
Net assets at the end of
year $556,762 $27,886,050 $16,667 $28,459,479
-------- ----------- ------- -----------
</TABLE>
See accompanying notes to financial statements.
32
<PAGE>
NUVEEN TAX-FREE MONEY MARKET FUNDS ANNUAL REPORT
NOTES TO FINANCIAL STATEMENTS
FEBRUARY 28, 1995
1. GENERAL INFORMATION AND SIGNIFICANT ACCOUNTING POLICIES
At February 28, 1995, the money market Funds (the "Funds")
covered in this report are Nuveen Tax-Free Reserves, Inc., a
nationally diversified Fund, Nuveen California Tax-Free Fund,
Inc. (comprised of the Nuveen California Tax-Free Money
Market Fund) and Nuveen Tax-Free Money Market Fund, Inc.
(comprised of the Nuveen Massachusetts and New York Tax-Free
Money Market Funds).
The Funds are registered under the Investment Company Act of
1940 as open-end, diversified management investment
companies.
Each Fund invests in tax-exempt money market instruments.
Shares of the state Funds are issued in three series: (1) the
"Service Plan" series intended for purchase by or through
banks and other organizations who have agreed to perform
certain services for their customers who are shareholders of
this series of the Fund, (2) the "Distribution Plan" series
intended for purchase by or through securities dealers who
have agreed to perform distribution and administrative
services for their customers who are shareholders of this
series of the Fund and (3) the "Institutional" series
intended for purchase by trustees, bank trust departments and
investment bankers or advisers.
Each Fund issues its own shares, at net asset value which
the Fund will seek to maintain at $1.00 per share without
sales charge.
The following is a summary of significant accounting
policies followed by the Funds in the preparation of their
financial statements in accordance with generally accepted
accounting principles.
Securities Investments in each of the Funds consist of short-term
Valuation municipal securities maturing within one year from the date
of acquisition. Securities with a maturity of more than one
year in all cases have variable rate and demand features
qualifying them as short-term securities and are traded and
valued at amortized costs. On a dollar-weighted basis, the
average maturity of all such securities must be 90 days or
less (at February 28, 1995, the dollar-weighted average life
was 29 days for Reserves, 36 days for California Money
Market, 41 days for Massachusetts Money Market and 30 days
for New York Money Market).
Securities Securities transactions are recorded on a trade date basis.
Transactions Realized gains and losses from such transactions are
determined on the specific identification method. Securities
purchased or sold on a when-issued or delayed delivery basis
may be settled a month or more after the transaction date.
The securities so purchased are subject to market fluctuation
during this period. The Funds have instructed the custodian
to segregate assets in a separate account with a current
value at least equal
33
<PAGE>
NOTES TO FINANCIAL STATEMENTS
to the amount of their purchase commitments. At February 28,
1995, there were no such purchase commitments in any of the
Funds.
Interest Income Interest income is determined on the basis of interest
accrued, adjusted for premium amortized and discount earned.
Dividends and Net investment income, adjusted for realized short-term gains
Distributions and losses on investment transactions, is declared as a
to Shareholders dividend to shareholders of record as of the close of each
business day and payment is made or reinvestment is credited
to shareholder accounts after month-end.
Federal Income Each Fund is a separate taxpayer for federal income tax
Taxes purposes and intends to comply with the requirements of the
Internal Revenue Code applicable to regulated investment
companies by distributing all of its income to shareholders.
Therefore, no federal income tax provision is required.
Furthermore, each Fund intends to satisfy conditions which
will enable interest from municipal securities, which is
exempt from regular federal and designated state income taxes
for the California, Massachusetts and New York Money Market
Funds, to retain such tax-exempt status when distributed to
the shareholders of the Funds. All income dividends paid
during the year ended February 28, 1995, have been designated
Exempt Interest Dividends.
Insurance The Funds have obtained commitments (each, a "Commitment")
Commitments from Municipal Bond Investors Assurance Corporation ("MBIA")
with respect to certain designated bonds held by the Funds
for which credit support is furnished by banks ("Approved
Banks") approved by MBIA under its established credit
approval standards. Under the terms of a Commitment, if a
Fund were to determine that certain adverse circumstances
relating to the financial condition of an Approved Bank had
occurred, the Fund could cause MBIA to issue a "while-in-
fund" insurance policy covering the underlying bonds; after
time and subject to further terms and conditions, the Fund
could obtain from MBIA an "insured-to-maturity" insurance
policy as to the covered bonds. Each type of insurance policy
would insure payment of interest on the bonds and payment of
principal at maturity. Although such insurance would not
guarantee the market value of the bonds or the value of the
Funds' shares, the Funds believe that their ability to obtain
insurance for such bonds under such adverse circumstances
will enable the Funds to hold or dispose of such bonds at a
price at or near their par value.
34
<PAGE>
NUVEEN TAX-FREE MONEY MARKET FUNDS ANNUAL REPORT
FEBRUARY 28, 1995
Derivative In October 1994, the Financial Accounting Standards Board
Financial (FASB) issued Statement of Financial Accounting Standards No.
Instruments 119 Disclosure about Derivative Financial Instruments and
Fair Value of Financial Instruments which prescribes
disclosure requirements for transactions in certain
derivative financial instruments including futures, forward,
swap, and option contracts, and other financial instruments
with similar characteristics. Although the Funds are
authorized to invest in such financial instruments, and may
do so in the future, they did not make any such investments
during the fiscal year ended February 28, 1995, other than
occasional purchases of high quality synthetic money market
securities.
2. SECURITIES TRANSACTIONS
Purchases and sales (including maturities) of investment
securities during the year ended February 28, 1995, were as
follows:
<TABLE>
<CAPTION>
RESERVES CA MA NY
- --------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Purchases $847,362,455 $518,839,920 $213,588,033 $37,825,720
Sales and maturities 894,725,000 881,582,950 230,435,040 35,805,000
------------ ------------ ------------ -----------
</TABLE>
At February 28, 1995, the cost of investments owned for
federal income tax purposes was the same as the cost for
financial reporting purposes for all Funds.
3. COMPOSITION OF NET ASSETS
At February 28, 1995, the Funds had common stock authorized
at $.01 par value per share. The composition of net assets as
well as the number of authorized shares were as follows:
<TABLE>
<CAPTION>
RESERVES CA MA NY
- ---------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Capital paid in:
Service Plan series $ -- $ 41,771,918 $ 27,731,552 $ 640,073
Distribution Plan se-
ries -- 67,157,179 24,237,180 29,797,672
Institutional series -- 50,772,389 1,035,560 16,667
------------- ------------- ------------- -------------
Total $ 351,606,397 $ 159,701,486 $ 53,004,292 $ 30,454,412
------------- ------------- ------------- -------------
Authorized shares 2,000,000,000 2,350,000,000 2,500,000,000 2,500,000,000
------------- ------------- ------------- -------------
</TABLE>
35
<PAGE>
NOTES TO FINANCIAL STATEMENTS
4. MANAGEMENT FEE AND OTHER TRANSACTIONS WITH AFFILIATES
Under the Funds' investment management agreements with Nuveen
Advisory Corp. (the "Adviser"), a wholly owned subsidiary of
The John Nuveen Company, each Fund pays to the Adviser an
annual management fee, payable monthly, at the rates set
forth below which are based upon the average daily net asset
value of each Fund:
<TABLE>
<CAPTION>
MANAGEMENT FEES
- -------------------------------------------------------------------
AVERAGE DAILY NET ASSET VALUE RESERVES CA, MA, NY
- -------------------------------------------------------------------
<S> <C> <C>
For the first $500,000,000 .5 of 1% .4 of 1%
For the next $500,000,000 .475 of 1 .375 of 1
For net assets over $1,000,000,000 .45 of 1 .35 of 1
</TABLE>
Also, pursuant to a distribution agreement with the Funds,
Nuveen is the distributor or principal underwriter of Fund
shares and pays sales and promotion expenses in connection
with the offering of Fund shares. The Funds have adopted a
Distribution Plan pursuant to Rule 12b-1 of the Investment
Company Act of 1940 and a Service Plan pursuant to which the
Funds and Nuveen pay, in equal amounts, fees to securities
dealers and service organizations for services rendered in
the distribution of shares of the Funds or the servicing of
shareholder accounts. For Reserves, total service payments to
such securities dealers and organizations on an annualized
basis range from .1 of 1% to .2 of 1% of the average daily
net asset value of serviced accounts up to $10 million and .3
of 1% for such assets over $10 million. For the California,
Massachusetts and New York Money Market Funds, total service
payments to such securities dealers and organizations are .25
of 1% per year of the average daily net asset value of
serviced accounts.
The management fee referred to above is reduced by, or the
Adviser assumes certain expenses of each Fund, in an amount
necessary to prevent the total expenses of each Fund
(including the management fee and each Fund's share of
service payments under the Distribution and Service Plans,
but excluding interest, taxes, fees incurred in acquiring and
disposing of portfolio securities and, to the extent
permitted, extraordinary expenses) in any fiscal year from
exceeding .75 of 1% of the average daily net asset value of
Reserves, and .55 of 1% of the average daily net asset value
of the California, Massachusetts and New York Money Market
Funds.
36
<PAGE>
NUVEEN TAX-FREE MONEY MARKET FUNDS ANNUAL REPORT
FEBRUARY 28, 1995
The management fee compensates the Adviser for overall
investment advisory and administrative services, and general
office facilities. The Funds pay no compensation directly to
their directors who are affiliated with the Adviser or to
their officers, all of whom receive remuneration for their
services to the Funds from the Adviser.
5. INVESTMENT COMPOSITION
Each Fund invests in municipal securities which include
general obligation, escrowed and revenue bonds. At February
28, 1995, the revenue sources by municipal purpose for these
investments, expressed as a percent of total investments,
were as follows:
<TABLE>
<CAPTION>
RESERVES CA MA NY
- --------------------------------------------------------
<S> <C> <C> <C> <C>
Revenue bonds:
Pollution control facilities 27% 16% 23% 30%
Health care facilities 28 15 11 13
Housing facilities 4 18 3 16
Lease rental facilities 2 17 -- --
Educational facilities 7 -- 14 4
Water/Sewer facilities 6 -- 2 8
Transportation 3 -- -- 4
Electric facilities -- 3 -- --
Other revenue 9 17 10 8
General obligation bonds 14 14 37 17
- --------------------------------------------------------
100% 100% 100% 100%
--- --- --- ---
</TABLE>
In addition, certain temporary investments in short-term
municipal securities have credit enhancements (letters of
credit, guarantees or insurance) issued by third party
domestic or foreign banks or other institutions (91% for
Reserves, 83% for California, 68% for Massachusetts and 87%
for New York).
For additional information regarding each investment
security, refer to the Portfolio of Investments.
37
<PAGE>
FINANCIAL HIGHLIGHTS
SELECTED DATA FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD IS AS FOLLOWS:
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Income from investment
operations Less distributions
--------------------------------------------------------------------
Net realized
and
Net asset unrealized Dividends
value Net gain (loss) from net Distributions
beginning investment from investment from
of period income investments income capital gains
- ---------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
RESERVES
- ---------------------------------------------------------------------------------------------
Year ended
2/28/95 $1.000 $.025* $-- $(.025) $--
2/28/94 1.000 .018* -- (.018) --
2/28/93 1.000 .023 -- (.023) --
5 months ended 2/29/92 1.000 .015 -- (.015) --
Year ended
9/30/91 1.000 .046 -- (.046) --
9/30/90 1.000 .055 -- (.055) --
9/30/89 1.000 .057 -- (.057) --
9/30/88 1.000 .045 -- (.045) --
9/30/87 1.000 .039 -- (.039) --
9/30/86 1.000 .045* -- (.045) --
9/30/85 1.000 .050* -- (.050) --
- ---------------------------------------------------------------------------------------------
</TABLE>
See notes on page 44.
38
<PAGE>
NUVEEN TAX-FREE MONEY MARKET FUNDS ANNUAL REPORT
FEBRUARY 28, 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Ratios/Supplemental data
-------------------------------------------
Net
asset Total return Ratio of net
value on Net assets Ratio of investment income
end of net asset end of period expenses to average to average
period value (in thousands) net assets net assets
- --------------------------------------------------------------------------
<S> <C> <C> <C> <C>
- --------------------------------------------------------------------------
$1.000 2.46% $351,606 .75%* 2.43%*
1.000 1.84 404,201 .75* 1.83*
1.000 2.34 450,746 .74 2.35
1.000 1.45 477,127 .75+ 3.48+
1.000 4.57 451,808 .72 4.56
1.000 5.45 430,206 .73 5.45
1.000 5.70 390,258 .72 5.69
1.000 4.52 409,653 .73 4.52
1.000 3.88 361,044 .73 3.85
1.000 4.46 272,677 .75* 4.39*
1.000 4.98 141,762 .75* 4.90*
- --------------------------------------------------------------------------
</TABLE>
39
<PAGE>
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Income from investment
operations Less distributions
--------------------------------------------------------
Net
realized
and
Net asset unrealized Dividends
value Net gain (loss) from net Distributions
beginning investment from investment from
of period income investments income capital gains
- -------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
CA**
- -------------------------------------------------------------------------------------
Year ended
2/28/95
Service Plan series $1.000 $.026* $-- $(.026) $--
Distribution Plan se-
ries 1.000 .026* -- (.026) --
Institutional series 1.000 .027 -- (.027) --
Year ended
2/28/94
Service Plan series 1.000 .019 -- (.019) --
Distribution Plan se-
ries 1.000 .019* -- (.019) --
Institutional series 1.000 .021 -- (.021) --
Year ended
2/28/93
Service Plan series 1.000 .023* -- (.023) --
Distribution Plan se-
ries 1.000 .023* -- (.023) --
Institutional series 1.000 .024 -- (.024) --
8 months ended
2/29/92
Service Plan series 1.000 .024* -- (.024) --
Distribution Plan se-
ries 1.000 .024* -- (.024) --
Institutional series 1.000 .025 -- (.025) --
Year ended
6/30/91
Service Plan series 1.000 .047* -- (.047) --
Distribution Plan se-
ries 1.000 .047* -- (.047) --
Institutional series 1.000 .048 -- (.048) --
Year ended
6/30/90++ 1.000 .054* -- (.054) --
6/30/89++ 1.000 .056* -- (.056) --
6/30/88++ 1.000 .043* -- (.043) --
6/30/87++ 1.000 .039* -- (.039) --
3/27/86 to
6/30/86++ 1.000 .011* -- (.011) --
- -------------------------------------------------------------------------------------
</TABLE>
See notes on page 44.
40
<PAGE>
NUVEEN TAX-FREE MONEY MARKET FUNDS ANNUAL REPORT
FEBRUARY 28, 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Ratios/Supplemental data
----------------------------------------------
Net asset Total return Ratio of net
value on Net assets Ratio of investment income
end of net asset end of period expenses to average to average
period value (in thousands) net assets net assets
- -----------------------------------------------------------------------------
<S> <C> <C> <C> <C>
- -----------------------------------------------------------------------------
$1.000 2.59% $ 41,772 .55%* 2.19%*
1.000 2.60 67,157 .55* 2.56*
1.000 2.69 50,772 .47 2.74
1.000 1.94 415,238 .53 1.94
1.000 1.92 72,380 .55* 1.92*
1.000 2.07 32,299 .41 2.06
1.000 2.28 469,812 .55* 2.26*
1.000 2.29 80,652 .55* 2.26*
1.000 2.36 24,156 .47 2.33
1.000 2.39 478,886 .55*+ 3.54*+
1.000 2.39 91,670 .55*+ 3.54*+
1.000 2.45 18,334 .45+ 3.64+
1.000 4.70 431,590 .55* 4.67*
1.000 4.70 90,031 .55* 4.67*
1.000 4.80 22,342 .45 4.77
1.000 5.37 452,465 .55* 5.38*
1.000 5.62 362,927 .55* 5.70*
1.000 4.28 207,897 .55* 4.31*
1.000 3.90 284,956 .50* 3.92*
1.000 1.10 80,871 .05*+ 4.16*+
- -----------------------------------------------------------------------------
</TABLE>
41
<PAGE>
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Income from investment
operations Less distributions
--------------------------------------------------------
Net
realized
and
Net asset unrealized Dividends
value Net gain (loss) from net Distributions
beginning investment from investment from
of period income investments income capital gains
- -------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
MA***
- -------------------------------------------------------------------------------------
Year ended
2/28/95
Service Plan series $1.000 $.025* $-- $(.025) $--
Distribution Plan se-
ries 1.000 .025* -- (.025) --
Institutional series 1.000 .026 -- (.026) --
Year ended
2/28/94
Service Plan series 1.000 .018* -- (.018) --
Distribution Plan se-
ries 1.000 .017* -- (.017) --
Institutional series 1.000 .018 -- (.018) --
Year ended
2/28/93
Service Plan series 1.000 .023* -- (.023) --
Distribution Plan se-
ries 1.000 .023* -- (.023) --
Institutional series 1.000 .023* -- (.023) --
10 months ended
2/29/92
Service Plan series 1.000 .032* -- (.032) --
Distribution Plan se-
ries 1.000 .032* -- (.032) --
Institutional series 1.000 .032 -- (.032) --
Year ended
4/30/91
Service Plan series 1.000 .053* -- (.053) --
Distribution Plan se-
ries 1.000 .053* -- (.053) --
Institutional series 1.000 .053* -- (.053) --
Year ended
4/30/90++ 1.000 .057* -- (.057) --
4/30/89++ 1.000 .050* -- (.050) --
4/30/88++ 1.000 .043* -- (.043) --
12/10/86 to
4/30/87++ 1.000 .016* -- (.016) --
- -------------------------------------------------------------------------------------
</TABLE>
See notes on page 44.
42
<PAGE>
NUVEEN TAX-FREE MONEY MARKET FUNDS ANNUAL REPORT
FEBRUARY 28, 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Ratios/Supplemental data
-------------------------------------------
Net
asset Total return Ratio of net
value on Net assets Ratio of investment income
end of net asset end of period expenses to average to average
period value (in thousands) net assets net assets
- --------------------------------------------------------------------------
<S> <C> <C> <C> <C>
- --------------------------------------------------------------------------
$1.000 2.53% $27,732 .55%* 2.55%*
1.000 2.53 24,237 .55* 2.55*
1.000 2.61 1,036 .47 2.63
1.000 1.77 38,576 .52* 1.91*
1.000 1.74 27,773 .55* 1.88*
1.000 1.80 3,406 .49 1.93
1.000 2.33 40,214 .55* 2.34*
1.000 2.33 27,993 .55* 2.34*
1.000 2.34 5,325 .55* 2.34*
1.000 3.22 61,476 .55*+ 3.80*+
1.000 3.22 34,509 .55*+ 3.80*+
1.000 3.24 8,917 .53+ 3.82+
1.000 5.30 37,979 .55* 5.25*
1.000 5.30 33,809 .55* 5.25*
1.000 5.30 14,973 .54* 5.26*
1.000 5.70 53,631 .55* 5.67*
1.000 5.00 31,319 .55* 5.18*
1.000 4.29 35,614 .48* 4.30*
1.000 1.60 12,371 .06*+ 4.36*+
- --------------------------------------------------------------------------
</TABLE>
43
<PAGE>
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Income from investment
operations Less distributions
-------------------------------------------------------
Net
realized
and
Net asset unrealized Dividends
value Net gain (loss) from net Distributions
beginning investment from investment from
of period income investments income capital gains
- ------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
NY***
- ------------------------------------------------------------------------------------
Year ended
2/28/95
Service Plan series $1.000 $.024* $-- $(.024) $--
Distribution Plan
series 1.000 .024* -- (.024) --
Institutional series 1.000 .023* -- (.023) --
Year ended
2/28/94
Service Plan series 1.000 .015* -- (.015) --
Distribution Plan
series 1.000 .015* -- (.015) --
Institutional series 1.000 .015* -- (.015) --
Year ended
2/28/93
Service Plan series 1.000 .020* -- (.020) --
Distribution Plan
series 1.000 .020* -- (.020) --
Institutional series 1.000 .020* -- (.020) --
10 months ended
2/29/92
Service Plan series 1.000 .029* -- (.029) --
Distribution Plan
series 1.000 .029* -- (.029) --
Institutional series 1.000 .030* -- (.030) --
Year ended
4/30/91
Service Plan series 1.000 .047* -- (.047) --
Distribution Plan
series 1.000 .047* -- (.047) --
Institutional series 1.000 .047* -- (.047) --
Year ended --
4/30/90++ 1.000 .054* -- (.054) --
4/30/89++ 1.000 .050* -- (.050) --
4/30/88++ 1.000 .041* -- (.041) --
12/10/86 to
4/30/87++ 1.000 .015* -- (.015) --
- ------------------------------------------------------------------------------------
</TABLE>
* Reflects the waiver of certain management fees and reimbursement of certain
other expenses by the Adviser. See note 4 of Notes to Financial Statements.
** Effective for the fiscal year ending June 30, 1991, and thereafter, the Fund
has presented the above per share data by series.
*** Effective for the fiscal year ending April 30, 1991, and thereafter, the
Fund has presented the above per share data by series.
+ Annualized.
++ Represents combined per share data and ratios for the Service Plan,
Distribution Plan and Institutional series.
44
<PAGE>
NUVEEN TAX-FREE MONEY MARKET FUNDS ANNUAL REPORT
FEBRUARY 28, 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Ratios/Supplemental data
--------------------------------------------
Net
asset Total return Ratio of net
value on Net assets Ratio of investment income
end of net asset end of period expenses to average to average
period value (in thousands) net assets net assets
- ---------------------------------------------------------------------------
<S> <C> <C> <C> <C>
- ---------------------------------------------------------------------------
$1.000 2.36% $ 640 .55%* 2.38%*
1.000 2.37 29,798 .55* 2.38*
1.000 2.28 17 .55* 2.38*
1.000 1.51 557 .55* 1.63*
1.000 1.51 27,886 .55* 1.63*
1.000 1.51 17 .55* 1.63*
1.000 2.02 529 .55* 2.04*
1.000 2.02 34,827 .55* 2.04*
1.000 2.02 17 .55* 2.19*
1.000 2.94 1,934 .55*+ 3.51*+
1.000 2.94 45,259 .55*+ 3.51*+
1.000 2.97 17 .55*+ 3.51*+
1.000 4.73 1,653 .55* 4.72*
1.000 4.73 41,446 .55* 4.72*
1.000 4.73 17 .55* 4.72*
1.000 5.36 41,602 .55* 5.34*
1.000 4.95 30,262 .55* 5.05*
1.000 4.10 17,016 .50* 4.07*
1.000 1.50 4,134 .05*+ 4.20*+
- ---------------------------------------------------------------------------
</TABLE>
45
<PAGE>
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Board of Directors and Shareholders of
Nuveen Tax-Free Reserves,
Nuveen California Tax-Free Fund, Inc.,
Nuveen Tax-Free Money Market Fund, Inc.:
We have audited the accompanying statements of net assets of
NUVEEN TAX-FREE RESERVES (a Maryland corporation), NUVEEN
CALIFORNIA TAX-FREE FUND, INC. (comprised of Nuveen
California Tax-Free Money Market Fund) (a Maryland
corporation) and NUVEEN TAX-FREE MONEY MARKET FUND, INC.
(comprised of Nuveen Massachusetts and New York Tax-Free
Money Market Funds) (a Minnesota corporation), including the
portfolios of investments, as of February 28, 1995, and the
related statements of operations for the year then ended, the
statements of changes in net assets for each of the two years
in the period then ended and the financial highlights for the
periods indicated thereon. These financial statements and
financial highlights are the responsibility of the Funds'
management. Our responsibility is to express an opinion on
these financial statements and financial highlights based on
our audits.
We conducted our audits in accordance with generally
accepted auditing standards. Those standards require that we
plan and perform the audit to obtain reasonable assurance
about whether the financial statements and financial
highlights are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the
amounts and disclosures in the financial statements. Our
procedures included confirmation of securities owned as of
February 28, 1995, by correspondence with the custodian and
brokers. As to securities purchased but not received, we
requested confirmation from brokers and, when replies were
not received, we carried out other alternative auditing
procedures. An audit also includes assessing the accounting
principles used and significant estimates made by management,
as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable
basis for our opinion.
In our opinion, the financial statements and financial
highlights referred to above present fairly, in all material
respects, the net assets of each of the respective funds
constituting Nuveen Tax-Free Reserves, Nuveen California Tax-
Free Fund, Inc. and Nuveen Tax-Free Money Market Fund, Inc.
as of February 28, 1995, the results of their operations for
the year then ended, the changes in their net assets for each
of the two years in the period then ended, and the financial
highlights for the periods indicated thereon in conformity
with generally accepted accounting principles.
ARTHUR ANDERSEN LLP
Chicago, Illinois,
April 3, 1995
46
<PAGE>
The
human bond
[PHOTO OF BOOK APPEARS HERE]
At John Nuveen & Co.
Incorporated, where our
tax-free municipal bonds have
helped people live their
dreams for nearly 100
years, we still believe our strongest
bond is human./TM/
For almost a century, John Nuveen & Company has concentrated its resources and
expertise on one area: municipal bonds. We are the oldest and largest investment
banking firm specializing exclusively in municipal securities, and we strive to
be the best.
We maintain a sharp focus on the needs of prudent investors and their
families, offer investments of quality, and then work to make them better by
seeking out opportunity. We hold to a dedicated belief in the importance of
research. And we sustain a commitment to sound financial management through
value investing.
Our hope is that by providing quality investments we may foster opportunity
for our investors. Through careful research, attention to detail, and our
philosophy of managing for long-term value, we hope to provide our shareholders
with the attractive level of income they need to achieve their personal goals
and aspirations.
These are the things that matter most, and it's why we say that, at Nuveen, our
strongest bond is human.
[LOGO OF NUVEEN]
John Nuveen & Co. Incorporated
333 West Wacker Drive
Chicago, Illinois 60606-1286
<PAGE>
PART C--OTHER INFORMATION
NUVEEN TAX-FREE RESERVES, INC.
333 West Wacker Drive
Chicago, Illinois 60606
<PAGE>
PART C--OTHER INFORMATION
ITEM 24: FINANCIAL STATEMENTS AND EXHIBITS.
(a) Financial Statements:
Financial information included in the Prospectus:
Financial Highlights
Included in the Statement of Additional Information through incorporation
by reference to the Registrant's Annual Report:
Portfolio of Investments, February 28, 1995
Statement of Net Assets, February 28, 1995
Statement of Operations, Year Ended February 28, 1995
Statements of Changes in Net Assets, Years Ended February 28, 1995 and
February 28, 1994
Report of Independent Public Accountants, dated April 3, 1995
(b) Exhibits
<TABLE>
<C> <S>
1. Articles of Incorporation of Registrant, as amended and as
currently in effect. Filed as Exhibit 1 to Registrant's
Registration Statement on Form N-1A (File No. 2-78736) and are
incorporated herein by reference thereto.
2. By-Laws of Registrant as currently in effect. Filed as Exhibit 2
to Registrant's Registration Statement on Form N-1A (File No. 2-
78736) and are incorporated herein by reference thereto.
3. Not applicable.
4. Specimen certificate of shares of Capital Stock of Registrant.
Filed as Exhibit 4 to Registrant's Registration Statement on Form
N-1A (File No. 2-78736) and is incorporated herein by reference
thereto.
5(a). Investment Management Agreement between Registrant and Nuveen
Advisory Corp. dated May 1, 1988.
5(b). Renewal, dated July 14, 1994, of Investment Management Agreement.
6(a). Distribution Agreement between Registrant and John Nuveen & Co.
Incorporated, dated August 2, 1982. Filed as Exhibit 6 to
Registrant's Registration Statement on Form N-1A (File No. 2-
78736) and is incorporated herein by reference thereto.
6(b). Renewal, dated July 29, 1994, of Distribution Agreement.
7. Not applicable.
8. Custody Agreement, dated October 1, 1993, between Registrant and
United States Trust Company of New York. Filed as Exhibit 8 to
Post-Effective Amendment No. 13 to Registrant's Registration
Statement on Form N-1A (File No. 2-78736) and is incorporated
herein by reference thereto.
</TABLE>
C-1
<PAGE>
<TABLE>
<C> <S>
9. Transfer Agency Agreement between Registrant and Shareholder
Services, Inc. dated December 19, 1994.
10(a). Opinion of Fried, Frank, Harris, Shriver & Jacobson, dated April
26, 1995.
10(b). Opinon of Venable, Baetjer and Howard, LLP, dated April 26, 1995.
11. Consent of Independent Public Accountants.
12. Not applicable.
13. Not applicable.
14. Not applicable.
15. Distribution and Service Plan and related form of Service Agreement
under the Registrant's 12b-1 Plan was filed as Exhibit 15 to
Registrant's Registration Statement on Form N-1A (File No. 2-78736)
and is incorporated by reference herein.
16. Schedule of Computation of Yield Figures.
17. Financial Data Schedule.
18. Not applicable.
99(a). Agreement for a Money Market Fund Insurance Program. Filed as
Exhibit 18 to Post-Effective Amendment No. 8 to Registrant's
Registration Statement on Form N-1A (File No. 2-78736) and is
incorporated by reference thereto.
99(b). Certified copy of resolution of Board of Directors authorizing the
signing of the names of officers and directors on the registration
statement pursuant to power of attorney.
99(c). Original Powers of Attorney for all Registrant's Directors
authorizing, among others, James J. Wesolowski and Gifford R.
Zimmerman to execute the Registration Statement.
99(d). Code of Ethics and Reporting Requirements.
</TABLE>
ITEM 25: PERSONS CONTROLLED BY OR UNDER COMMON CONTROL WITH REGISTRANT
Not applicable.
ITEM 26: NUMBER OF HOLDERS OF SECURITIES
As of April 17, 1995:
<TABLE>
<CAPTION>
TITLE OF CLASS NUMBER OF RECORD HOLDERS
-------------- ------------------------
<S> <C>
Common Stock ($.01 par value).................... 18,225
</TABLE>
C-2
<PAGE>
ITEM 27: INDEMNIFICATION
Section 2-418 of the General Corporation Law of Maryland provides for Indemni-
fication of officers and directors. Article NINTH of the Articles of Incorpo-
ration of Registrant provides as follows:
NINTH: To the maximum extent permitted by the General Corporation Law of
the State of Maryland, as from time to time amended, the Corporation shall
indemnify its currently acting and its former directors, officers, employ-
ees and agents, and those persons who, at the request of the Corporation
serve or have served another corporation, partnership, joint venture, trust
or other enterprise in one or more such capacities. The indemnification
provided for herein shall not be deemed exclusive of any other rights to
which those seeking indemnification may otherwise be entitled.
Expenses (including attorneys' fees) incurred in defending a civil or crim-
inal action, suit or proceeding (including costs connected with the prepa-
ration of a settlement) may be paid by the Corporation in advance of the
final disposition of such action, suit or proceeding, if authorized by the
Board of Directors in the specific case, upon receipt of an undertaking by
or on behalf of the director, officer, employee or agent to repay that
amount of the advance which exceeds the amount which it is ultimately de-
termined that he is entitled to receive from the Corporation by reason of
indemnification as authorized herein; provided, however, that prior to mak-
ing any such advance at least one of the following conditions shall have
been met: (1) the indemnitee shall provide a security for his undertaking,
(2) the Corporation shall be insured against losses arising by reason of
any lawful advances, or (3) a majority of a quorum of the disinterested,
non-party directors of the Corporation, or an independent legal counsel in
a written opinion, shall determine, based on a review of readily available
facts, that there is reason to believe that the indemnitee ultimately will
be found and entitled to indemnification.
Nothing in these Articles of Incorporation or in the By-Laws shall be
deemed to protect or provide indemnification to any director or officer of
the Corporation against any liability to the Corporation or to its security
holders to which he would otherwise be subject by reason of willful misfea-
sance, bad faith, gross negligence or reckless disregard of the duties in-
volved in the conduct of his office ("disabling conduct"), and the Corpora-
tion shall not indemnify any of its officers or directors against any lia-
bility to the Corporation or to its security holders unless a determination
shall have been made in the manner provided hereafter that such liability
has not arisen from such officer's or director's disabling conduct. A de-
termination that an officer or director is entitled to indemnification
shall have been properly made if it is based upon (1) a final decision on
the merits by a court or other body before whom the proceeding was brought
that the person to be indemnified ("indemnitee") was not liable by reason
of disabling conduct or, (2) in the absence of such a decision, a reason-
able determination, based upon a review of the facts, that the indemnitee
was not liable by reason of disabling conduct, by (a) the vote of a major-
ity of a quorum of directors who are neither "interested persons" of the
Corporation as defined in the Investment Company Act of 1940 nor parties to
the proceeding, or (b) an independent legal counsel in a written opinion.
-----------------
Insofar as indemnification for liabilities arising under the Securities Act of
1933 may be permitted to the officers, directors or controlling persons of the
Registrant pursuant to the Articles of Incorporation of the Registrant or oth-
erwise, the Registrant has been advised that in the opinion of the Securities
C-3
<PAGE>
and Exchange Commission such indemnification is against public policy as ex-
pressed in the Act and is, therefore, unenforceable. In the event that a claim
for indemnification against such liabilities (other than the payment by the
Registrant of expenses incurred or paid by an officer or director or control-
ling person of the Registrant in the successful defense of any action, suit or
proceeding) is asserted by such officer, director or controlling persons in
connection with the securities being registered, the Registrant will, unless in
the opinion of its counsel the matter has been settled by controlling prece-
dent, submit to a court of appropriate jurisdiction the question of whether
such indemnification by it is against public policy as expressed in the Act and
will be governed by the final adjudication of such issue.
The directors and officers of the Registrant (and of the other management in-
vestment companies for which Nuveen Advisory serves as investment adviser) are
covered by an Investment Trust Errors and Omissions policy in the aggregate
amount of $20,000,000 (with a maximum deductible of $500,000) against liability
and expenses of claims of wrongful acts arising out of their position with the
Registrant (and such other companies), except for matters which involve willful
acts, bad faith, gross negligence and willful disregard of duty (i.e., where
the insured did not act in good faith for a purpose he or she reasonably be-
lieved to be in the best interest of the applicable investment company or where
he or she had reasonable cause to believe this conduct was unlawful).
ITEM 28: BUSINESS AND OTHER CONNECTIONS OF INVESTMENT ADVISER
Nuveen Advisory Corp. serves as investment adviser to the following open-end
management type investment companies: Nuveen Municipal Bond Fund, Inc., Nuveen
Tax-Exempt Money Market Fund, Inc., Nuveen Tax-Free Reserves, Inc., Nuveen Cal-
ifornia Tax-Free Fund, Inc., Nuveen Tax-Free Bond Fund, Inc., Nuveen Insured
Tax-Free Bond Fund, Inc., Nuveen Tax-Free Money Market Fund, Inc. and Nuveen
Multistate Tax-Free Trust. It also serves as investment adviser to the follow-
ing closed-end management investment companies: Nuveen Municipal Value Fund,
Inc., Nuveen California Municipal Value Fund, Inc., Nuveen New York Municipal
Value Fund, Inc., Nuveen Municipal Income Fund, Inc., Nuveen California Munici-
pal Income Fund, Inc., Nuveen New York Municipal Income Fund, Inc., Nuveen Pre-
mium Income Municipal Fund, Inc., Nuveen Performance Plus Municipal Fund, Inc.,
Nuveen California Performance Plus Municipal Fund, Inc., Nuveen New York Per-
formance Plus Municipal Fund, Inc., Nuveen Municipal Advantage Fund, Inc.,
Nuveen Municipal Market Opportunity Fund, Inc., Nuveen California Municipal
Market Opportunity Fund, Inc., Nuveen Investment Quality Municipal Fund, Inc.,
Nuveen California Investment Quality Municipal Fund, Inc., Nuveen New York In-
vestment Quality Municipal Fund, Inc., Nuveen Insured Quality Municipal Fund,
Inc., Nuveen Florida Investment Quality Municipal Fund, Nuveen New Jersey In-
vestment Quality Municipal Fund, Inc., Nuveen Pennsylvania Investment Quality
Municipal Fund, Nuveen Select Quality Municipal Fund, Inc., Nuveen California
Select Quality Municipal Fund, Inc., Nuveen New York Select Quality Municipal
Fund, Inc., Nuveen Quality Income Municipal Fund, Inc., Nuveen Insured Munici-
pal Opportunity Fund, Inc., Nuveen Florida Quality Income Municipal Fund,
Nuveen Michigan Quality Income Municipal Fund, Inc., Nuveen Ohio Quality Income
Municipal Fund, Inc., Nuveen Texas Quality Income Municipal Fund, Nuveen Cali-
fornia Quality Income Municipal Fund, Inc., Nuveen New York Quality Income Mu-
nicipal Fund, Inc., Nuveen Premier Municipal Income Fund, Inc., Nuveen Premier
Insured Municipal Income Fund, Inc., Nuveen Premium Income Municipal Fund 2,
C-4
<PAGE>
Inc., Nuveen Insured California Premium Income Municipal Fund, Inc., Nuveen In-
sured New York Premium Income Municipal Fund, Inc., Nuveen Select Maturities
Municipal Fund, Nuveen Arizona Premium Income Municipal Fund, Inc., Nuveen In-
sured Florida Premium Income Municipal Fund, Nuveen Michigan Premium Income Mu-
nicipal Fund, Inc., Nuveen New Jersey Premium Income Municipal Fund, Inc.,
Nuveen Insured Premium Income Municipal Fund, Inc., Nuveen Premium Income Mu-
nicipal Fund 4, Inc., Nuveen Insured California Premium Income Municipal Fund
2, Inc., Nuveen Pennsylvania Premium Income Municipal Fund 2, Nuveen Maryland
Premium Income Municipal Fund, Nuveen Massachusetts Premium Income Municipal
Fund, Nuveen Virginia Premium Income Municipal Fund, Nuveen Washington Premium
Income Municipal Fund, Nuveen Connecticut Premium Income Municipal Fund, Nuveen
Georgia Premium Income Municipal Fund, Nuveen Missouri Premium Income Municipal
Fund, Nuveen North Carolina Premium Income Municipal Fund, Nuveen California
Premium Income Municipal Fund and Nuveen Insured Premium Income Municipal Fund
2. Nuveen Advisory Corp. has no other clients or business at the present time.
The principal business address for all of these investment companies is 333
West Wacker Drive, Chicago, Illinois 60606.
For a description of other business, profession, vocation or employment of a
substantial nature in which any director or officer, other than Donald E. Sveen
and Anthony T. Dean, of the investment adviser has engaged during the last two
years for his account or in the capacity of director, officer, employee, part-
ner or trustee, see the descriptions under "Management" in the Statement of Ad-
ditional Information.
Donald E. Sveen is President and Director, formerly Executive Vice President,
of Nuveen Advisory Corp., the investment adviser. Mr. Sveen has, during the
last two years, been President, Director and formerly Executive Vice President
of John Nuveen & Co. Incorporated; and President and Director of Nuveen Insti-
tutional Advisory Corp. Anthony T. Dean is Director of Nuveen Advisory Corp.,
the investment adviser. Mr. Dean has, during the last two years, been Executive
Vice President and Director of John Nuveen Company and John Nuveen & Co. Incor-
porated; and Director of Nuveen Institutional Advisory Corp.
ITEM 29: PRINCIPAL UNDERWRITERS
(a) John Nuveen & Co. Incorporated ("Nuveen") acts as principal underwriter of
the Nuveen Municipal Bond Fund, Inc., Nuveen Tax-Exempt Money Market Fund,
Inc., Nuveen Tax-Free Reserves, Inc., Nuveen California Tax-Free Fund, Inc.,
Nuveen Tax-Free Bond Fund, Inc., Nuveen Insured Tax-Free Bond Fund, Inc.,
Nuveen Tax-Free Money Market Fund, Inc. and Nuveen Multistate Tax-Free Trust,
all open-end management investment companies. Nuveen also acts as depositor and
principal underwriter of the Nuveen Tax-Exempt Unit Trust, a registered unit
investment trust. Nuveen has also served as a co-managing underwriter of the
shares of Nuveen Municipal Value Fund, Inc., Nuveen California Municipal Value
Fund, Inc., Nuveen New York Municipal Value Fund, Inc., Nuveen Municipal Income
Fund, Inc., Nuveen California Municipal Income Fund, Inc., Nuveen New York Mu-
nicipal Income Fund, Inc., Nuveen Premium Income Municipal Fund, Inc., Nuveen
Performance Plus Municipal Fund, Inc., Nuveen California Performance Plus Mu-
nicipal Fund, Inc., Nuveen New York Performance Plus Municipal Fund, Inc.,
Nuveen Municipal Advantage Fund, Inc., Nuveen Municipal Market Opportunity
Fund, Inc., Nuveen California Municipal Market Opportunity Fund, Inc., Nuveen
C-5
<PAGE>
Investment Quality Municipal Fund, Inc., Nuveen California Investment Quality
Municipal Fund, Inc., Nuveen New York Investment Quality Municipal Fund, Inc.,
Nuveen Insured Quality Municipal Fund, Inc., Nuveen Florida Investment Quality
Municipal Fund, Nuveen New Jersey Investment Quality Municipal Fund, Inc.,
Nuveen Pennsylvania Investment Quality Municipal Fund, Nuveen Select Quality
Municipal Fund, Inc., Nuveen California Select Quality Municipal Fund, Inc.,
Nuveen New York Select Quality Municipal Fund, Inc., Nuveen Quality Income Mu-
nicipal Fund, Inc., Nuveen Insured Municipal Opportunity Fund, Inc., Nuveen
Florida Quality Income Municipal Fund, Nuveen Michigan Quality Income Munici-
pal Fund, Inc., Nuveen Ohio Quality Income Municipal Fund, Inc., Nuveen Texas
Quality Income Municipal Fund, Nuveen California Quality Income Municipal
Fund, Inc., Nuveen New York Quality Income Municipal Fund, Inc., Nuveen Pre-
mier Municipal Income Fund, Inc., Nuveen Premier Insured Municipal Income
Fund, Inc., Nuveen Select Tax-Free Income Portfolio, Nuveen Premium Income Mu-
nicipal Fund 2, Inc., Nuveen Insured California Premium Income Municipal Fund,
Inc., Nuveen Insured New York Premium Income Municipal Fund, Inc., Nuveen Se-
lect Maturities Municipal Fund, Nuveen Arizona Premium Income Municipal Fund,
Inc., Nuveen Insured Florida Premium Income Municipal Fund, Nuveen Michigan
Premium Income Municipal Fund, Inc., Nuveen New Jersey Premium Income Munici-
pal Fund, Inc., Nuveen Insured Premium Income Municipal Fund, Inc., Nuveen
Premium Income Municipal Fund 4, Inc., Nuveen Insured California Premium In-
come Municipal Fund 2, Inc., Nuveen Pennsylvania Premium Income Municipal Fund
2, Nuveen Maryland Premium Income Municipal Fund, Nuveen Massachusetts Premium
Income Municipal Fund, Nuveen Virginia Premium Income Municipal Fund, Nuveen
Washington Premium Income Municipal Fund, Nuveen Connecticut Premium Income
Municipal Fund, Nuveen Georgia Premium Income Municipal Fund, Nuveen Missouri
Premium Income Municipal Fund, Nuveen North Carolina Premium Income Municipal
Fund, Nuveen California Premium Income Municipal Fund, Nuveen Insured Premium
Income Municipal Fund 2, Nuveen Select Tax-Free Income Portfolio 2, Nuveen In-
sured California Select Tax-Free Income Portfolio, Nuveen Insured New York Se-
lect Tax-Free Income Portfolio and Nuveen Select Tax-Free Income Portfolio 3.
(b)
<TABLE>
<CAPTION>
NAME AND PRINCIPAL POSITIONS AND OFFICES POSITIONS AND OFFICES
BUSINESS ADDRESS WITH UNDERWRITER WITH REGISTRANT
- --------------------------------------------------------------------------------
<S> <C> <C>
Richard J. Franke Chairman of the Board, Chairman of the Board
333 West Wacker Drive Chief Executive and Director
Chicago, IL 60606 Officer and Director
Donald E. Sveen President, Chief Operating None
333 West Wacker Drive Officer and Director
Chicago, IL 60606
Anthony T. Dean Executive Vice President None
333 West Wacker Drive and Director
Chicago, IL 60606
Timothy R. Schwertfeger Executive Vice President President and Director
333 West Wacker Drive and Director
Chicago, IL 60606
</TABLE>
C-6
<PAGE>
<TABLE>
<S> <C> <C>
William Adams IV Vice President None
333 West Wacker Drive
Chicago, IL 60606
Kathleen M. Flanagan Vice President Vice President
333 West Wacker Drive
Chicago, IL 60606
Stephen D. Foy Vice President None
333 West Wacker Drive
Chicago, IL 60606
Robert D. Freeland Vice President None
333 West Wacker Drive
Chicago, IL 60606
Michael G. Gaffney Vice President None
333 West Wacker Drive
Chicago, IL 60606
James W. Gratehouse Vice President None
333 West Wacker Drive
Chicago, IL 60606
Paul E. Greenawalt Vice President None
333 West Wacker Drive
Chicago, IL 60606
Anna R. Kucinskis Vice President Vice President
333 West Wacker Drive
Chicago, IL 60606
Robert B. Kuppenheimer Vice President None
333 West Wacker Drive
Chicago, IL 60606
Larry W. Martin Vice President and Vice President and
333 West Wacker Drive Assistant Secretary Assistant Secretary
Chicago, IL 60606
Thomas C. Muntz Vice President None
333 West Wacker Drive
Chicago, IL 60606
O. Walter Renfftlen Vice President and Vice President and
333 West Wacker Drive Controller Controller
Chicago, IL 60606
</TABLE>
C-7
<PAGE>
<TABLE>
<S> <C> <C>
Stuart W. Rogers Vice President None
333 West Wacker Drive
Chicago, IL 60606
Bradford W. Shaw, Jr. Vice President None
333 West Wacker Drive
Chicago, IL 60606
H. William Stabenow Vice President and Vice President and
333 West Wacker Drive Treasurer Treasurer
Chicago, IL 60606
George P. Thermos Vice President Vice President
333 West Wacker Drive
Chicago, IL 60606
James J. Wesolowski Vice President, General Vice President and
333 West Wacker Drive Counsel and Secretary Secretary
Chicago, IL 60606
Paul C. Williams Vice President None
333 West Wacker Drive
Chicago, IL 60606
Gifford R. Zimmerman Vice President and Vice President and
333 West Wacker Drive Assistant Secretary Assistant Secretary
Chicago, IL 60606
</TABLE>
(c) Not applicable.
ITEM 30: LOCATION OF ACCOUNT AND RECORDS
Nuveen Advisory Corp., 333 West Wacker Drive, Chicago, Illinois 60606, main-
tains Articles of Incorporation, By-Laws, minutes of directors and shareholder
meetings, contracts and all advisory material of the investment adviser.
United States Trust Company of New York, 114 West 47th Street, New York, New
York 10036, maintains all general and subsidiary ledgers, journals, trial bal-
ances, records of all portfolio purchases and sales, and all other required
records not maintained by Nuveen Advisory Corp., or Shareholder Services, Inc.
Shareholder Services, Inc., P.O. Box 5330, Denver, Colorado 80217-5330 main-
tains all the required records in its capacity as transfer, dividend paying,
and shareholder service agent for the Registrant.
C-8
<PAGE>
ITEM 31: MANAGEMENT SERVICES
Not applicable.
ITEM 32: UNDERTAKINGS
Not applicable.
C-9
<PAGE>
SIGNATURES
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933 AND THE INVESTMENT
COMPANY ACT OF 1940 THE REGISTRANT CERTIFIES THAT THIS REGISTRATION STATEMENT
MEETS ALL THE REQUIREMENTS FOR EFFECTIVENESS UNDER PARAGRAPH (B) OF RULE 485
UNDER THE SECURITIES ACT OF 1933 AND HAS DULY CAUSED THIS REGISTRATION STATE-
MENT TO BE SIGNED ON ITS BEHALF BY THE UNDERSIGNED, THEREUNTO DULY AUTHORIZED,
IN THIS CITY OF CHICAGO, AND STATE OF ILLINOIS, ON THE 27TH DAY OF APRIL,
1995.
NUVEEN TAX-FREE RESERVES, INC.
/s/ Gifford R. Zimmerman
--------------------------------------
Gifford R. Zimmerman, Vice President
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THIS REGISTRATION
STATEMENT HAS BEEN SIGNED BELOW BY THE FOLLOWING PERSONS IN THE CAPACITIES AND
ON THE DATE INDICATED.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<S> <C> <C>
/s/ O. Walter Renfftlen
- -------------------------------
O. Walter Renfftlen Vice President and April 27, 1995
Controller (Principal
Financial and
Accounting Officer)
Richard J. Franke Chairman of the Board
and Director (Principal
Executive Officer)
Lawrence H. Brown Director
Anne E. Impellizzeri Director
John E. O'Toole Director
Margaret K. Rosenheim Director /s/ Gifford R.
Peter R. Sawers Director Zimmerman
Timothy R. Schwertfeger President and Director
By_________________________
Gifford R. Zimmerman
</TABLE> Attorney-in-Fact
April 27, 1995
AN ORIGINAL POWER OF ATTORNEY AUTHORIZING, AMONG OTHERS, JAMES J. WESOLOWSKI
AND GIFFORD R. ZIMMERMAN TO EXECUTE THIS REGISTRATION STATEMENT, AND AMEND-
MENTS THERETO, FOR EACH OF THE OFFICERS AND DIRECTORS OF REGISTRANT ON WHOSE
BEHALF THIS REGISTRATION STATEMENT IS FILED, HAS BEEN EXECUTED AND FILED WITH
THE SECURITIES AND EXCHANGE COMMISSION.
C-10
<PAGE>
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
SEQUENTIALLY
EXHIBIT NUMBERED
NUMBER EXHIBIT PAGE
------- ------- ------------
<C> <S> <C>
5(a). Investment Management Agreement between Registrant
and Nuveen Advisory Corp. dated May 1, 1988.
Renewal, dated July 14, 1994, of Investment
5(b). Management Agreement.
Renewal, dated July 29, 1994, of Distribution
6(b). Agreement.
9. Transfer Agency Agreement between Registrant and
Shareholder Services, Inc. dated December 19, 1994.
Opinion of Fried, Frank, Harris, Shriver & Jacobson,
10(a). dated April 26, 1995.
Opinion of Venable, Baetjer and Howard, LLP, dated
10(b). April 26, 1995.
11. Consent of Independent Public Accountants.
16. Schedule of Computation of Yield Figures.
17. Financial Data Schedule.
99(b). Certified copy of resolution of Board of Directors
authorizing the signing of the names of directors and
officers on the Registration Statement pursuant to
power of attorney.
99(c). Original Power of Attorney for all of Registrant's
Directors authorizing, among others, James J.
Wesolowski and Gifford R. Zimmerman to execute the
Registration Statement.
99(d). Code of Ethics and Reporting Requirements.
</TABLE>
<PAGE>
Exhibit 5(a)
INVESTMENT MANAGEMENT AGREEMENT
-------------------------------
AGREEMENT made this 1st day of May, 1988, by and between NUVEEN TAX-FREE
RESERVES, INC., a Maryland 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 its 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 instructions with respect to
securities investments as set forth in the Fund's Registration Statement under
the Securities Act of 1933 and the Investment Company Act of 1940 covering the
Fund's shares of Common Stock, including the Prospectus 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.
<PAGE>
-2-
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 transfer agent and shareholder service agent) for the
Fund, to permit any of its officers or employees to serve without compensation
as directors 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.
2. For the services and facilities described in Section 1, the Fund will
pay to the Adviser, at the end of each calendar month, an investment management
fee computed at an annual rate of .50 of 1% of the average daily net assets of
the Fund for the first $500 million in net assets, .475 of 1% of average daily
net assets in excess of $500 million but not more than $1 billion, and .45 of 1%
of average daily net assets in excess of $1 billion. 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 is
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.
<PAGE>
-3-
3. In addition to the services and facilities described in Section 1 the
Adviser shall assume and pay to the extent hereafter provided: (a) any expenses
for services rendered by a custodian for the safekeeping of the Fund's
securities or other property, for keeping its books of account, for calculating
the net asset value of the Fund as provided in the Articles of Incorporation of
the Fund, and any other charges of the custodian; (b) the cost and expenses of
the Fund's operations, including compensation of the directors, transfer,
dividend disbursing and shareholder service agent expenses, legal fees, expenses
of independent accountants, costs of share certificates, expenses of preparing,
printing and distributing reports to shareholders and governmental agencies, and
all fees payable to Federal, State, or other governmental agencies on account of
the registration of securities issued by the Fund, filing of corporate documents
or otherwise; and (c) any amounts due from the Fund as its share of service
payments made pursuant to the Fund's Distribution and Service Plan.
Notwithstanding the foregoing, the Adviser shall not be obligated to assume or
pay interest, taxes, fees incurred in acquiring and disposing of portfolio
securities or extraordinary expenses of the Fund. The Fund shall not incur any
obligation for management or administrative expenses which the Fund intends the
Adviser to assume and pay hereunder without first obtaining the written approval
of the Adviser.
<PAGE>
-4-
The foregoing enumerated expenses are hereby assumed by the Adviser
to the extent they, together with the Adviser's fee payable hereunder (but
excluding interest, taxes, fees incurred in acquiring and disposing of portfolio
securities and extraordinary expenses), exceed during any fiscal year .75 of 1%
of the Fund's average net assets for such year; to the extent they do not exceed
such percentage, such expenses shall be properly chargeable to the Fund. If, at
the end of any month, the expenses of the Fund properly chargeable to the income
account on a year-to-date basis shall exceed the appropriate percentage of
average net assets, the payment to the Adviser for that month shall be reduced
and, if necessary, the Adviser shall assume and pay expenses pursuant hereto so
that the total year-to-date net expense will not exceed such percentage. As of
the end of the Fund's fiscal year, the foregoing computation and assumption of
expenses shall be readjusted, if necessary, so that the expenses assumed and
paid by the Adviser, if any, are such, and the aggregate compensation payable to
the Adviser for the year, (otherwise equal to the percentages set forth in
Section 2 hereof of the average net asset value as determined and described
herein throughout the fiscal year) is diminished as may be necessary, so that
the total amount of expenses borne by the Fund shall not exceed the applicable
expense limitation.
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.
<PAGE>
-5-
The Adviser shall arrange for officers or employees of the Adviser to
serve, without compensation from the Fund, as directors, 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.
4. 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.
5. 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.
<PAGE>
-6-
6. The Adviser reserves the right to and does manage other investment
accounts and funds, including those with investment objectives similar to the
Fund. Securities considered as investments for the Fund may also be appropriate
for such 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 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.
7. This Agreement shall continue in effect until May 1, 1987, 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.
<PAGE>
-7-
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 shares of Common Stock 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 shares of Common Stock 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.
8. 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.
9. 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
<PAGE>
-8-
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.
10. 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 TAX-FREE RESERVES, INC.
By: /s/ James J. Wesolowski
------------------------------------
Vice President
Attest: /s/ Larry W. Martin
--------------------------------
NUVEEN ADVISORY CORP.
By: /s/ Paul R. Daniels
------------------------------------
Vice President
Attest: /s/ Larry W. Martin
--------------------------------
<PAGE>
Exhibit 5(b)
NUVEEN TAX-FREE RESERVES, INC.
RENEWAL OF INVESTMENT MANAGEMENT AGREEMENT
------------------------------------------
This Agreement made this 14th day of July, 1994 by and between Nuveen Tax-Free
Reserves, Inc., a Maryland corporation (the "Fund"), and Nuveen Advisory Corp.,
a Delaware corporation (the "Adviser");
WHEREAS, the parties hereto are the contracting parties under that certain
Investment Management Agreement (the "Agreement") pursuant to which the Adviser
furnishes investment management and other services to the Fund; and
WHEREAS, the Agreement terminates August 1, 1994 unless continued in the manner
required by the Investment Company Act of 1940; and
WHEREAS, the Board of Directors, at a meeting called for the purpose of
reviewing the Agreement, have approved the Agreement and its continuance until
August 1, 1995 in the manner required by the Investment Company Act of 1940.
NOW THEREFORE, in consideration of the mutual covenants contained in the
Agreement the parties hereto do hereby continue the Agreement in effect until
August 1, 1995 and ratify and confirm the Agreement in all respects.
NUVEEN TAX-FREE RESERVES, INC.
By: /s/ Gifford R. Zimmerman
-------------------------------------
Vice President
ATTEST:
/s/ Karen L. Healy
- -----------------------------------
Assistant Secretary
NUVEEN ADVISORY CORP.
By: /s/ James J. Wesolowski
-------------------------------------
Vice President
ATTEST:
/s/ Larry Martin
- -----------------------------------
Assistant Secretary
<PAGE>
Exhibit 6(b)
Renewal of Distribution Agreement
---------------------------------
This Agreement made this 29th day of July, 1994 by and between Nuveen Tax-Free
Reserves Inc., a Maryland corporation (the "Fund"), and John Nuveen & Co.
Incorporated, a Delaware corporation (the "Underwriter");
WHEREAS, the parties hereto are the contracting parties under that certain
Distribution Agreement (the "Agreement") pursuant to which the Underwriter
acts as agent for the distribution of shares of the Fund; and
WHEREAS, the Agreement terminates August 1, 1994 unless continued in the manner
required by the Investment Company Act of 1940; and
WHEREAS, in connection with the implementation of its Flexible Pricing
Structure, the form of the Dealer Distribution Agreement attached as an Exhibit
has been revised; and
WHEREAS, the Board of Directors of the Fund, at a meeting called for the purpose
of reviewing the Agreement has approved the Agreement with the revised form of
Dealer Distribution Agreement as an Exhibit, and its continuance until August 1,
1995 in the manner required by the Investment Company Act of 1940;
NOW THEREFORE, in consideration of the mutual covenants contained in the
Agreement the parties hereto do hereby continue the Agreement in effect until
August 1, 1995 and ratify and confirm the Agreement with the revised form of
Dealer Distribution Agreement as an Exhibit, in all respects.
NUVEEN TAX-FREE RESERVES, INC.
By: /S/ GIFFORD R. ZIMMERMAN
-------------------------------------
Vice President
ATTEST:
/S/ MORRISON C. WARREN
- -----------------------------------
Assistant Secretary
JOHN NUVEEN & CO. INCORPORATED
By: /S/ JAMES J. WESOLOWSKI
-------------------------------------
Vice President
ATTEST:
/S/ LARRY MARTIN
- -----------------------------------
Assistant Secretary
<PAGE>
Exhibit 9
NUVEEN TAX-FREE RESERVES, INC.
TRANSFER AGENCY AGREEMENT
-------------------------
This Agreement is made as of the 19th day of December, 1994, between Nuveen
Tax-Free Reserves, Inc., a corporation organized and existing under the laws of
the State of Maryland having its principal office and place of business at 333
West Wacker Drive, Chicago, Illinois 60606 (hereinafter referred to as the
"Fund"), and SHAREHOLDER SERVICES, INC., a Colorado corporation having its place
of business at 3410 South Galena Street, Denver, Colorado 80231 (hereinafter
referred to as the "Transfer Agent").
In consideration of the mutual promises hereinafter set forth, the parties
hereto covenant and agree as follows:
ARTICLE 1
DEFINITIONS
Whenever used in this Agreement, the following words and phrases shall have
the following meanings:
1.1. "Approved Institution" shall mean a broker-dealer, broker, bank or
other entity named in a Certificate, as hereinafter defined, and having
account(s) in the Fund, or the Distributor or an agent it appoints, in each case
acting on behalf of the Fund for the benefit of its clients. From time to time
the Fund may amend a previously delivered Certificate by delivering to the
Transfer Agent a Certificate naming an additional entity as an Approved
Institution or deleting any entity named as an Approved Institution in a
previously delivered Certificate.
1.2. "Business Day" shall mean each day on which the New York Stock
Exchange is open for trading.
1.3. "Certificate" shall mean any notice, instruction, or other instrument
in writing, authorized or required by this Agreement to be given to the Transfer
Agent by the Fund and which is signed by any Officer, as hereinafter defined,
and actually received by the Transfer Agent. "Certificate" shall also include
any notice submitted to the Transfer Agent by electronic or telephone
transmission, reasonably believed by the Transfer Agent to be genuine and to
have been properly made, signed or authorized by an Officer.
1.4. "Computer Tape" shall mean any computer/electromagnetic tape or
transmission transmitted by an Approved Institution, via a remote terminal or
other similar link, into a data processing, storage, or collection system or
similar system (the "System"), located on the Transfer Agent's premises. For
purposes of Section 5.1, such Computer Tape shall be deemed to have been
furnished at such times as are agreed upon from time to time by the Transfer
Agent and Fund only if the information reflected thereon was input into the
system at such times as are agreed upon from time to time by the Transfer Agent
and the Fund.
1.5. "Custodian" shall mean, with respect to the Fund, U.S. Trust Company of
New York, as custodian under the terms and conditions of the Custody Agreement
between the Custodian and the Fund, or any successor(s) to such Custodian
performing similar functions for or on behalf of the Fund.
1.6. "Direct Accounts" means accounts registered in the name(s) of
shareholders other than Approved Institutions.
1.7. "Distributor" shall mean John Nuveen & Co. Incorporated (hereinafter
referred to as "Nuveen & Co."), as distributor under the terms and conditions of
the Distributor's Contract between the Fund and Nuveen & Co., wherein Nuveen &
Co. has the right to sell shares of the Fund to investors against orders
therefor at net asset value, or any successor(s) to Nuveen & Co. performing a
similar function for or on behalf of the Fund.
<PAGE>
1.8. "Effective Date" shall mean December 19, 1994.
1.9. "Series" shall mean each individual portfolio of the Fund, each being a
separate portfolio of securities and other assets, interests in which are
represented by a separate series of the Fund's shares, and such terms shall
include any other such portfolio that may be created for which the Transfer
Agent agrees to act as transfer agent pursuant to Article 10 of this Agreement.
1.10. "Officer" shall mean the Fund's Chairman of the Board, President,
Secretary, Treasurer, and any other person duly authorized by the Board of
Directors of the Fund to execute or give any Certificate on behalf of the Fund
and named in the Certificate annexed hereto as Appendix A, as such Certificate
may be amended from time to time.
1.11. "Prospectus" shall mean the most current Fund prospectus and
statement of additional information relating to the Shares, actually received
by the Transfer Agent from the Fund.
1.12. "Shares" shall mean full or fractional shares comprising all or any
part of each series representing the beneficial interest in the Fund and shall
include, to the extent applicable, shares designated as comprising any and all
classes of any series of the Fund.
ARTICLE 2
APPOINTMENT OF TRANSFER AGENT
2.1. The Fund hereby constitutes and appoints the Transfer Agent as transfer
agent of all the Shares of the Fund and as dividend disbursing agent for the
Fund during the term of this Agreement.
2.2. The Transfer Agent hereby accepts appointment as transfer agent and
dividend disbursing agent and agrees on and after the Effective Date to perform
the duties hereinafter set forth.
2.3. In connection with such appointment, upon or prior to executing this
Agreement the Fund shall deliver to the Transfer Agent such of the following as
have not already been furnished to the Transfer Agent:
(a) A copy of the Articles of Incorporation of the Fund and all Amendments
thereto certified by the Secretary of the Fund;
(b) A copy of the By-Laws of the Fund certified by the Secretary of the
Fund;
(c) A Certificate signed by the Secretary of the Fund specifying the names
and specimen signatures of the Officers of the Fund;
(d) Specimen Share certificate for Shares of each series of the Fund in the
forms approved by the Board of Directors of the Fund together with a certificate
signed by the Secretary of the Fund as to such approval;
(e) Copies of the most recently filed Post-Effective Amendment to the Fund's
Registration Statement, filed with the Securities and Exchange Commission under
the Securities Act of 1933, as amended, and under the Investment Company Act of
1940, as amended, together with any applications for exemptive relief from any
of the provisions of such laws filed by the Fund and the record of any formal
action of the Securities and Exchange Commission with respect to all such
applications; and
(f) Opinion of Counsel for the Fund to the effect that (1) the authorized
shares of the Fund consists of __________ shares of common stock of $0.01 par
value, divided into multiple classes, (2) the issue and sale of the Fund's
authorized but unissued Shares have been duly authorized under Maryland law, (3)
the outstanding Shares are validly issued, fully paid and non-assessable and (4)
upon the issue and sale of any authorized and unissued shares and upon receipt
of the authorized consideration therefor in an amount not less than either the
Shares' net asset value or par
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value, if any, established and in force at the time of their sale, the Fund
Shares so issued will be validly issued, fully paid and non-assessable.
2.4. The Fund shall either (a) furnish the Transfer Agent with sufficient
supplies of blank Share certificates in the form approved from time to time by
Board of Directors of the Fund, and from time to time will renew such supplies
upon request of the Transfer Agent, or (b) authorize the Transfer Agent to
itself create laser-printed Share certificates in the form approved by the Board
of Directors of the Fund. Any such blank Share certificates shall be properly
signed, by facsimile or otherwise, by authorized Officers and, if required,
shall bear the seal of the Fund or a facsimile thereof. Notwithstanding the
death, resignation or removal of any Officer authorized to sign such Share
certificates, the Transfer Agent may continue to countersign and issue Share
certificates bearing such Officer's signature until otherwise directed by the
Fund. The Fund agrees to indemnify and exonerate, save and hold the Transfer
Agent harmless, from and against any and all claims or demands that may be
asserted against the Transfer Agent with respect to the genuineness of any Share
certificate supplied to the Transfer Agent by the Fund pursuant to this
Agreement.
ARTICLE 3
AUTHORIZATION AND ISSUANCE OF SHARES
3.1. The Transfer Agent shall maintain records of accounts evidencing
ownership of Shares as provided in this Agreement and in the Fund's Prospectus
and, subject to the terms and conditions of this Agreement, when requested shall
countersign, record, issue, and deliver certificates for Shares both upon
original issue and transfer. Evidence of the ownership of Shares shall be
maintained on the Transfer Agent's records in book (uncertificated) form, or, if
requested by an Approved Institution (or the Distributor or its agent acting on
behalf of such Approved Institution) or shareholder, Share certificates shall be
issued, subject to the provisions of Article 5 hereof, to evidence the ownership
of Shares.
3.2. Prior to the issuance of any Shares pursuant to Share splits and prior
to any reduction in the number of Shares outstanding, the Fund shall deliver the
following documents to the Transfer Agent:
(a) A copy of the resolution(s) adopted by the Board of Directors of the
Fund and/or the shareholders of the relevant Fund, certified by the Secretary of
the Fund, authorizing such issuance of additional Shares of such Fund or such
reduction, as the case may be;
(b) In the case of the issuance of Shares, an opinion of counsel for the
Fund with respect to matters set forth in Section 2.3(f) hereof as to such
shares; and
(c) Such additional documents as the Transfer Agent may reasonably request.
ARTICLE 4
RECAPITALIZATION OR CAPITAL ADJUSTMENT
4.1. In the case of any Share split, recapitalization or other capital
adjustment, the Transfer Agent will, in the case of accounts represented by
uncertificated Shares, cause the account records to be adjusted, as necessary,
to reflect the number of Shares held for the account of each such shareholder as
a result of such adjustment, or, in the case of Shares represented by
certificates, will, if so instructed by the Fund, issue revised Share
certificates in exchange for, or upon transfer of, outstanding share
certificates in the old form, in either case upon receiving:
(a) A Certificate authorizing the issuance of revised Share certificates
and any other action required to be taken by the Transfer Agent in connection
with any such split, recapitalization or other capital adjustment;
(b) A copy of any amendment to the Articles of Incorporation of the Fund,
certified by the Secretary of the Fund, with respect to the adjustment;
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(c) Specimen Share certificates in the revised form approved by the Board
of Directors of the Fund;
(d) An opinion of counsel for the Fund with respect to the matters set
forth in Article 2, Section 2.3(f) hereof as to such Shares; and
(e) Such additional documents as the Transfer Agent may reasonably request.
4.2. The Fund shall either (a) furnish the Transfer Agent with a sufficient
supply of blank Share certificates in any new form authorized in connection with
any such Share split, recapitalization or other capital adjustment, and from
time to time will replenish such supply upon the request of the Transfer Agent,
or (b) authorize the Transfer Agent itself to create laser-printed Share
certificates in the form approved by the Board of Directors of the Fund. Any
such blank Share certificates shall be properly signed by authorized Officers
and, if required, shall bear the Fund's seal or facsimile thereof.
ARTICLE 5
ISSUANCE, REDEMPTION, AND TRANSFER OF SHARES
5.1. (a) On each Business Day, the Transfer Agent shall accept, at such
times as are agreed upon from time to time by the Transfer Agent and the Fund,
(i) purchase orders received by the Transfer Agent directly from an Approved
Institution (or the Distributor or its agent acting on behalf of such Approved
Institution) or an individual investor, (ii) redemption requests either
received from a shareholder, whether or not an Approved Institution (or the
Distributor or its agent acting on behalf of such Approved Institution), or
contained in a Certificate, and (iii) requests for exchanges of Shares of the
Fund for Shares of another fund received from a shareholder, whether or not an
Approved Institution (or the Distributor or its agent acting on behalf of such
Approved Institution), or contained in a Certificate, provided that (1) such
purchase order, exchange request or redemption request, as the case may be, is
in conformity with the Fund's purchase, exchange, and redemption procedures, as
applicable, described in the Prospectus, and (2) if such type of purchase order,
exchange request, or redemption request is not described in the Prospectus in
effect upon the commencement date of the Agreement, the Transfer Agent has
agreed to accept and act as to such order or request. Upon receipt on any
Business Day of any check drawn or endorsed to the Transfer Agent, the Fund, or
the Distributor for the purchase of Shares, or any payment made by Automated
Clearing House or Federal Funds wire, the Transfer Agent shall deposit such
check or payment in the bank account established by the Fund or the Distributor
for the collection of such amounts and shall wire such amounts to the Fund's
Custodian on the next Business Day. The Transfer Agent shall have no
responsibility hereunder for the Fund's compliance with states securities
registration laws ("Blue Sky laws") relating to such purchase orders, except to
the extent that the Transfer Agent will maintain records in a manner that will
enable the Fund to monitor the total number of Shares of the Fund sold in each
state and shall provide the Fund reports as to such sales as specified in
Appendix B to this Agreement.
(b) On each Business Day, the Transfer Agent shall also accept, at such
times as are agreed upon from time to time by the Transfer Agent and the Fund, a
Computer Tape consistent in all respects with the Transfer Agent's tape layout
package, as amended from time to time, which is reasonably believed by the
Transfer Agent to be furnished by or on behalf of any Approved Institution,
setting forth data as to purchases, redemptions and exchanges of Shares
irrespective of whether payment of the purchase price accompanies such Computer
Tape. The Transfer Agent may rely on the data on such Computer Tapes as
accurate, and shall not be responsible hereunder for errors in such Computer
Tapes furnished to it hereunder, unless caused solely by the Transfer Agent's
own negligence, bad faith or willful misconduct.
(c) On each Business Day, the Fund shall provide or cause to be provided to
the Transfer Agent, at such time as the parties hereto shall agree, the net
asset value per share for the Fund and such other information as the Transfer
Agent may reasonably request.
5.2. On the Business Day following each Business Day, at such time as the
Transfer Agent and the Fund shall agree, an authorized employee of the Transfer
Agent shall confirm the following information by summary sheet
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transmitted by electronic or other electromagnetic means to an authorized
employee or agent of the Fund (or by such other form as shall be agreed upon
from time to time by the Fund and the Transfer Agent):
(a) The total dollar amount to be applied toward the purchase of Shares of
the Fund and the number of Shares of the Fund purchased on such prior Business
Day, computed by aggregating the amounts so specified in (i) the purchase orders
received by the Transfer Agent on such prior Business Day from individual
investors and (ii) all Computer Tapes described in Section 5.1(b) timely
received by the Transfer Agent with respect to such prior Business Day;
(b) The total dollar value and number of Shares of the Fund redeemed on such
prior Business Day, computed by aggregating the amounts so specified in (i) the
redemption requests received by the Transfer Agent directly on the preceding
Business Day from shareholders, and (ii) all Computer Tapes described in Section
5.1(b) relating to such prior Business Day; and
(c) The total dollar value and number of Shares of the Fund to be exchanged
for Shares of another fund and the number of shares of such other fund to be
issued in such exchanges on such prior Business Day, and the total dollar value
and number of shares of the Fund to be issued in exchange for shares of another
fund on such prior business day (if not included in 5.2(a) above), all computed
by aggregating the amounts represented by any exchange requests received
directly by the Transfer Agent from shareholders and the amounts specified in
all Computer Tapes described in Section 5.1(b) relating to such prior Business
Day.
5.3. As to each Business Day, the Transfer Agent will (on a day on which
banks in Chicago, Illinois, and New York, New York are open for business but in
any event on or prior to the fifth Business Day following such Business Day)
advise the Distributor of the amount of cash necessary to be wired to the
appropriate Custodian, representing purchase orders for the Fund's Shares
received by the Transfer Agent as to such Business Day, as set forth in Section
5.1 above. As to each Business Day, the Transfer Agent will advise the Fund of
the amount of cash representing exchange orders received by the Transfer Agent
as to such Business Day, such advice to be given on the next Business Day.
5.4. As to each Business Day, the Transfer Agent shall issue to, and redeem
from, the accounts specified in a purchase order, redemption request, or
exchange request received by the Transfer Agent in proper form in accordance
with the Prospectus and, when required by the Prospectus, properly endorsed by
the record owner thereof with the record owner's or owners' signatures(s)
guaranteed by a U.S. commercial bank or U.S. trust company, a member of a
national securities exchange, or shall issue to, and /or redeem from, the
accounts specified in a Computer Tape received by the Transfer Agent from an
Approved Institution, the appropriate number of full and fractional Shares based
on the net asset value per Share of the relevant series of the Fund specified in
an advice received as to such Business Day from the Fund. Notwithstanding the
foregoing, if a redemption specified in a redemption request received directly
by the Transfer Agent or in a Computer Tape is for a dollar value of Shares in
excess of the dollar value of uncertificated Shares in the specified account
plus the dollar value of certificated Shares in the specified account for which
the Transfer Agent has received the tender of a Share certificate or
certificates in proper form as described above, the Transfer Agent shall not
effect such redemption in whole or part. In such case involving a Computer Tape,
the Transfer Agent shall orally or by electronic or other electromagnetic means
advise both the Fund and the Approved Institution (or the Distributor or its
agent if acting on behalf of such Approved Institution) which supplied such
Computer Tape of such discrepancy. In such case involving a direct shareholder,
the Transfer Agent shall, within five (5) business days, notify such shareholder
directly, orally, or in writing.
5.5. The Transfer Agent shall, as of each Business Day specified in a
Certificate described in Section 6.1, issue Shares of the Fund, based on the net
asset value per Share of the Fund specified in an advice received from the Fund
as to such Business Day, in connection with a reinvestment of a dividend or
distribution on Shares of the Fund.
5.6. On each Business Day, the Transfer Agent shall advise the Fund by
computer/electromagnetic tape specifying, with respect to the immediately
preceding Business Day: the total number of Shares of the Fund (including
fractional Shares) issued and outstanding at the opening of business on such
day; the total number of Shares of the Fund
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sold on such day, pursuant to Section 5.2; the total number of Shares in the
Fund redeemed or exchanged on such day; the total number of Shares of the Fund,
if any, sold on such day pursuant to preceding Section 5.4, and the total number
of Shares of the Fund issued and outstanding at the close of business on such
day. Unless the Fund or its agent shall advise the Transfer Agent of any error
in the information contained in such computer/electromagnetic tape (the "Initial
Tape") prior to the transmission of the next computer/electromagnetic tape by
the Transfer Agent, the Transfer Agent shall be deemed to have fulfilled its
responsibilities hereunder with respect to the accuracy of the data on
subsequent computer/electromagnetic tapes submitted to the Fund that are based
in whole or in part upon any inaccurate data from the Initial Tape.
5.7. In connection with each purchase, exchange and redemption of Shares
other than pursuant to a Computer Tape submitted by an Approved Institution (or
by the Distributor or its agent acting on behalf of such Approved Institution),
the Transfer Agent shall send to the shareholder such statements as are
described in the Prospectus or as otherwise reasonably instructed in writing by
the Fund. If the Prospectus indicates that certificates for Shares are
available, and if specifically requested in writing by any shareholder, or if
otherwise required hereunder, the Transfer Agent will countersign, issue and
mail to such shareholder, at the address set forth in the records of the
Transfer Agent, a Share certificate for any full Shares requested.
5.8. In computing the redemption proceeds to be paid to any shareholder or
to an account for an Approved Institution, the Transfer Agent shall first
compute the amount of any withholding for federal income taxes for which the
Transfer Agent has the responsibility under this Agreement to calculate such
withholding, in such manner as the Fund and the Transfer Agent shall agree from
time to time in conformity with instructions provided by the Fund to the
Transfer Agent. The Transfer Agent shall also compute any withholding for
federal income taxes for which the Transfer Agent has such responsibility at the
time of any exchange of a Fund's shares for another fund's shares. In the case
of a redemption of Shares directly by a shareholder of record and not by means
of a Computer Tape submitted by an Approved Institution (or by the Distributor
or its agent acting on behalf of such Approved Institution), upon deposit of
moneys in a redemption account by the relevant Custodian against which the
Transfer Agent is authorized by the Fund to draw checks in connection with a
redemption of Shares of the Fund, the Transfer Agent shall cancel the redeemed
Shares and after making appropriate deduction for any withholding of taxes
required of it by this Agreement or applicable law, make payment of (i) the
redemption proceeds to the order of the shareholder, and (ii) any tax withheld
to the Internal Revenue Service, in accordance with the Fund's redemption and
payment procedures described in the Prospectus or as otherwise reasonably
described in a written instruction from the Fund. In the case of an exchange of
Shares directly by a shareholder of record and not by means of a Computer Tape
submitted by an Approved Institution (or by the Distributor or its agent acting
on behalf of such Approved Institution), upon deposit of moneys in an account by
the relevant Custodian against which the Transfer Agent is authorized by the
Fund to draw checks in connection with an exchange of Shares of the Fund, the
Transfer Agent shall cancel the exchanged Shares, and withhold and pay taxes
required under this Agreement and applicable law. In the case of a redemption of
Shares pursuant to a Computer Tape, the Transfer Agent shall, on the next
Business Day, send the Fund a Computer Tape setting forth the amount of
redemption proceeds due each Approved Institution. If such Approved Institution
(or the Distributor or its agent acting on behalf of such Approved Institution)
has previously furnished the Transfer Agent withholding instructions with
respect to such redemption or any exchange of Shares pursuant to a Computer
Tape, the Transfer Agent shall include in the Computer Tape furnished to the
Fund information as to the amount of such withholding.
5.9. The Transfer Agent shall not be required to issue Shares of any
Portfolio of the Fund (other than with respect to the reinvestment of dividends
or distributions on shares owned by an existing shareholder if so stated in the
certificate) after it has received a Certificate stating that the sale of Shares
of that Portfolio of the Fund has been suspended or discontinued.
5.10. The Transfer Agent shall not be responsible for the payment of the
original issue or other taxes required to be paid by the Fund in connection with
the issuance of any Shares.
5.11. The Transfer Agent shall not be responsible for issuing or effecting
any "stop transfer" or other similar order or restriction on any Shares held in
the name of an Approved Institution. In the case of Shares registered in the
name of a shareholder other than an Approved Institution as to
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which a "stop transfer" or other similar order or restriction applies, the
Transfer Agent will adhere to the terms of such stop transfer or similar order,
except that it may rely on a Certificate to effect a redemption, exchange or
transfer of such Shares, notwithstanding such stop order or restriction.
5.12. The Transfer Agent shall accept (a) a Computer Tape which is furnished
by or on behalf of any Approved Institution (or the Distributor or its agent
acting on behalf of such Approved Institution) and represented to be
instructions with respect to the transfer of Shares from one account of such
Approved Institution to another such account, and (b) as to Shares standing
directly in the name of a shareholder other than an Approved Institution,
transfer instructions in proper form in accordance with the Fund's Prospectus
and the Transfer Agent's rules described herein, and shall effect the transfer
specified in said Computer Tape or transfer instructions, provided that any
necessary documents or Share certificates have been tendered to the Transfer
Agent.
5.13. (a) Except as otherwise provided in sub-paragraph (b) of this Section
5.13 and in Section 5.14, Shares will be transferred, exchanged or redeemed
other than pursuant to Computer Tapes from an Approved Institution (or the
Distributor or its agent acting on behalf of such Approved Institution) upon
presentation to the Transfer Agent of endorsed Share certificates or, in the
case of uncertificated Shares, instructions endorsed in proper form in
accordance with the Prospectus as stated in Section 5.4, accompanied by such
documents as the Transfer Agent reasonably deems necessary to evidence the
authority of the person making such transfer, exchange or redemption, and
bearing satisfactory evidence of the payment of transfer taxes. In the case of
small estates, where no administration is contemplated, the Transfer Agent may,
when furnished with an appropriate small estates affidavit under applicable law
or with a surety bond, and without further approval of the Fund, transfer or
redeem Shares registered in the name of a decedent if the current market value
of the Shares being redeemed or transferred does not exceed such amount as may
from time to time be prescribed by the applicable state statutes and
regulations. The Transfer Agent reserves the right to refuse to transfer,
exchange or redeem Shares until it is reasonably satisfied that the endorsement
on the Share certificate or instructions is valid and genuine, and for that
purpose it will require, unless otherwise instructed by an Officer, a signature
guarantee as stated in Section 5.4 of this Agreement. The Transfer Agent also
reserves the right to refuse to transfer, exchange or redeem Shares until it is
reasonably satisfied that the requested transfer, exchange, or redemption is
legally authorized, or until it is reasonably satisfied that there is no basis
to any claims adverse to such transfer, exchange or redemption. The Transfer
Agent may, in effecting transfers, exchanges and redemptions of Shares, rely
upon those provisions of the Uniform Act for the Simplification of Fiduciary
Security Transfers or the Uniform Commercial Code, as the same may be amended
from time to time, applicable to the transfer of securities.
(b) Notwithstanding the foregoing or any other provision contained in this
Agreement to the contrary, the Transfer Agent shall be fully protected by the
Fund in requiring any instructions, documents, assurances, endorsements or
guarantees, including, without limitation, any signature guarantees, in
connection with a redemption, exchange or transfer of Shares whenever the
Transfer Agent reasonably believes that requiring the same would be consistent
with the transfer, exchange and redemption procedures described in the
Prospectus, or in any instructions or certificates provided to the Transfer
Agent by the Fund.
5.14. Notwithstanding any provision contained in this Agreement to the
contrary, the Transfer Agent shall not be expected to require, as a condition to
any transfer, redemption or exchange of any Shares pursuant to a Computer Tape,
any documents, including, without limitation, any documents of the kind
described in Section 5.13(a) to evidence the authority of the person requesting
the transfer, exchange or redemption and/or the payment of any transfer taxes,
and shall be fully protected in acting in accordance with the applicable
provisions of this Agreement.
5.15. Nothing contained in this Agreement shall constitute any agreement or
representation by the Transfer Agent to permit, or to agree to permit, any
Approved Institution to input information into the System, although the Transfer
Agent may, with the Fund's written permission, permit access to the System by an
Approved Institution to retrieve data or information as to such Approved
Institution's accounts.
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ARTICLE 6
DIVIDENDS AND DISTRIBUTIONS
6.1. The Fund shall furnish to the Transfer Agent a Certificate either
(i) setting forth with respect to the Fund the date of the declaration of a
dividend or distribution, the date of accrual or payment thereof, as the case
may be, the record date as of which shareholders entitled to payment or accrual,
as the case may be, shall be determined, the amount per Share of such dividend
or distribution for the Fund, the payment date on which all previously accrued
and unpaid dividends are to be paid, and the total amount, if any, payable by
the Transfer Agent with respect to such dividend or distribution on such payment
date, or (ii) stating that the declaration of dividends and distributions shall
be on a daily or other periodic basis and containing information of the type set
forth in subsection (i) hereof.
6.2. Upon the payment date specified in the relevant Certificate, the
Transfer Agent shall, in the case of a cash dividend or distribution, advise the
Fund (by telephone or other electronic transmission) of the amount of cash
necessary to make the payment of the dividend or distribution to the
shareholders of record as of such payment date, including the amounts to be paid
to Approved Institutions. The Fund shall be responsible for having the
appropriate Custodian transfer a sufficient amount of cash to a dividend
disbursement account maintained by the Fund against which the Transfer Agent
shall cause checks to be drawn to the order of such shareholders or Approved
Institutions in payment of the dividend. The Transfer Agent shall not be liable
for any improper payments made in accordance with a Certificate described in
Section 6.1. If the Transfer Agent shall not receive from the appropriate
Custodian sufficient cash to make payments of any cash dividend or distribution
to shareholders of the Fund as of the record date, the Transfer Agent may, upon
notifying the Fund, withhold payment to all shareholders of record as of the
record date until sufficient cash is provided to the Transfer Agent unless
otherwise instructed by the Fund by a Certificate and acceptable to the Transfer
Agent. In the case of dividends or distributions reinvested in additional Shares
of a series of the Fund, the Transfer Agent shall follow the procedures set
forth in Section 5.5.
6.3. The Transfer Agent shall in no way be responsible for the determination
of the rate or form of dividends or capital gain distributions due shareholders.
6.4. The Transfer Agent shall upon request of the Fund file such appropriate
information returns concerning the payment of dividends and capital gain
distributions and redemptions with the proper Federal, state and local
authorities as are required by law to be filed by the Fund but shall in no way
be responsible for the collection or withholding of taxes due on such dividends
or distributions or on redemption proceeds due shareholders, except and only to
the extent required of it by applicable law for accounts of shareholders other
than Approved Institutions. If any amount is to be withheld from any dividend
or distribution paid to, or exchange or redemption proceeds or other cash
distribution from, the account of an Approved Institution, such Approved
Institution (or the Distributor or its agent acting on behalf of such Approved
Institution) may advise the Transfer Agent of the amount to be withheld
therefrom, and if such advice is provided in a timely manner to the Transfer
Agent, the Transfer Agent will provide a separate check for such amount to the
Approved Institution, which shall be responsible for the proper application of
such withheld amounts.
ARTICLE 7
CONCERNING THE FUND
7.1. The Fund shall promptly deliver to the Transfer Agent written notice of
any change in the Officers authorized to sign or give Share certificates or
Certificates, together with a specimen signature of each new Officer.
7.2. It shall be the sole responsibility of the Fund to deliver to the
Transfer Agent in a timely manner the Fund's currently effective Prospectus,
copies of any exemptive relief obtained by the Fund under applicable securities
laws and copies of any amendments to the Fund's Articles of Incorporation,
By-Laws and any other documents to be furnished by the Fund under this Agreement
to enable the Transfer Agent to carry out its duties hereunder, and, for
purposes of this Agreement, the Transfer Agent shall not be deemed to have
notice of any information contained in such
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Prospectus, exemptive relief or other document until it is actually received by
the Transfer Agent.
ARTICLE 8
CONCERNING THE TRANSFER AGENT
8.1. Subject to the standard of care set forth in Section 8.4, the Transfer
Agent shall not be liable and shall be fully protected in acting upon and in
compliance with any Computer Tape, Certificate, oral instructions, writing or
document reasonably believed by it to be genuine and to have been signed (in the
case of written instructions or documents) or made by the proper person or
persons and shall not be held to have any notice of any change of authority of
any person until receipt of written notice thereof from the Fund or such person.
Subject to the standard of care set forth in Section 8.4, the Transfer Agent
shall be similarly protected in processing Share certificates which it
reasonably believes to bear the proper manual or facsimile signatures of the
Officers of the Fund and the proper countersignature of the Transfer Agent or
any prior transfer agent.
8.2. The Transfer Agent covenants that it shall carry out its
responsibilities under this Agreement in accordance and compliance with the
provisions of applicable laws and regulations governing its operation as a
transfer agent.
8.3. The Transfer Agent shall keep and maintain on behalf of the Fund such
records which the Fund or the Transfer Agent is, or may be, required to keep and
maintain pursuant to any applicable statutes, rules and regulations, including
without limitation Rule 31a-1 under the Investment Company Act of 1940, relating
to the maintenance of records in connection with the services to be provided
hereunder. The Transfer Agent agrees to make such records available for
inspection by the Fund at reasonable times and otherwise to keep confidential
all records and other information relative to the Fund and its shareholders,
except when the Transfer Agent reasonably believes it has been (i) requested to
divulge such information by duly-constituted authorities or court process; (ii)
or requested by a shareholder with respect to information concerning an account
as to which such shareholder has either a legal or beneficial interest; or (iii)
when requested by the Fund, the shareholder, or the dealer of record as to such
account.
8.4. (a) The Transfer Agent shall not be liable for any loss or damage,
including, without limitation, attorneys' fees, expenses and court costs,
resulting from the Transfer Agent's actions or omissions to act under or in
connection with this Agreement and its duties and responsibilities hereunder,
except for any loss or damage arising out of its own failure to act in good
faith, or its negligence or willful misfeasance.
(b) The Transfer Agent shall, provided such coverage is readily available to
the Transfer Agent at reasonable rates and upon reasonable terms and conditions,
maintain an insurance policy or surety bond, in the face amount of $10 million
per covered transaction against losses suffered by the Transfer Agent in excess
of the policy deductibles arising from errors and omissions on the part of the
Transfer Agent in carrying out its responsibilities under this Agreement and
other agreements. The Transfer Agent shall upon request, furnish promptly to the
Fund copies of all insurance policies maintained pursuant to this Section 8.4(b)
that have not previously been furnished to the Fund.
(c) Any costs or losses incurred by the Fund for the processing of any
purchase, redemption, exchange or other share transactions at a price per share
other than the price per share applicable to the effective date of the
transaction (the foregoing being generally referred to herein as "as of"
transactions) will be handled in the following manner:
1. For each calendar year, if all "as of" transactions for the year,
taken in the aggregate, result in a net loss to the Fund ("net
loss"), Transfer Agent will reimburse the Fund for such net loss,
except to the extent that such net loss may be offset by application
of a "net benefit" to the Fund carried over from prior calendar
years pursuant to sub-paragraph 2 immediately below.
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2. For each calendar year, if all "as of" transactions for the year,
taken in the aggregate, result in a net benefit to the Fund ("net
benefit"), the Fund shall not reimburse the Transfer Agent for the
amount of such net benefit; however, any "net benefit" for any
calendar year may be used to offset, in whole or in part, any "net
loss" suffered by the Fund in any future calendar year so as to
reduce the amount by which the Transfer Agent shall be required to
reimburse the Fund for such "net loss" in such year pursuant to sub-
paragraph 1 immediately above.
3. Any "net loss" for which the Transfer Agent reimburses the Fund in
any calendar year shall not be carried over into future years so as
to offset any "net benefit" in such future years.
8.5. The Fund shall indemnify and exonerate, save and hold harmless the
Transfer Agent and its officers, directors, employees and agents (hereinafter
the Transfer Agent and such persons are referred to as "Indemnitees") from and
against any and all liabilities or losses arising from claims or demands
(whether with or without basis in fact or law), and from any and all expenses
(including, without limitation, reasonable attorney's fees, expenses and court
costs associated with defending against such claims and demands,) of any nature
which any Indemnitee may sustain or incur or which may be asserted against any
Indemnitee by any person arising out of or in any manner related to any action
taken or omitted to be taken by the Transfer Agent in good faith and without
negligence or willful misconduct in reasonable reliance upon (i) any provision
of this Agreement; (ii) the Prospectus; (iii) any instruction or order
including, without limitation, any Computer Tape reasonably believed by the
Transfer Agent to have been received from an Approved Institution (or the
Distributor or its agent acting on behalf of such Approved Institution);
(iv) any instrument or order reasonably believed by the Transfer Agent to be
genuine and to be signed, countersigned or executed by any duly authorized
Officer; (v) any Certificate or other instructions of an Officer; (vi) any
opinion of legal counsel for the Fund; (vii) any records or data supplied by the
Fund's prior transfer agent; or (viii) any order of any court, arbitration panel
or other judicial entity.
8.6. At any time the Transfer Agent may apply to an Officer of the Fund for
written instructions with respect to any matters arising in connection with the
Transfer Agent's duties and obligations under this Agreement, and the Transfer
Agent shall not be liable for any action taken or omitted by it in good faith
and without negligence or willful misconduct in accordance with such written
instructions. The Transfer Agent may consult with counsel to the Fund, at the
expense of the Fund and shall be fully protected with respect to anything done
or omitted by it in good faith and without negligence or willful misfeasance in
accordance with the advice or opinion of counsel of the Fund. Such application
by the Transfer Agent for written instructions from an Officer of the Fund may,
at the option of the Transfer Agent, set forth in writing any action proposed
to be taken or omitted by the Transfer Agent with respect to its duties or
obligations under this Agreement and the date on and/or after which such action
shall be taken, and the Transfer Agent shall not be liable (other than for its
bad faith, negligence or willful misfeasance) for any action taken or omitted
in accordance with a proposal included in any such application on or after the
date specified therein unless, prior to taking or omitting any such action, the
Transfer Agent has received written instructions in response to such application
specifying the action to be taken or omitted.
8.7. Any report, confirmation or other document furnished to the Fund or to
an Approved Institution as part of the Transfer Agent's responsibilities under
this Agreement shall be deemed final and conclusive on the 8th Business Day
after such report, confirmation or document has been furnished to the Fund or
Approved Institution, as the case may be, and the Transfer Agent shall not be
liable to the Fund or such Approved Institution under this Agreement as to any
error or omission in such report, confirmation or document that is not reported
to the Transfer Agent within such 7-day period.
8.8. The Transfer Agent shall deliver Share certificates by courier or by
certified or registered mail to the shareholder's address in the records of the
Transfer Agent. The Transfer Agent shall advise the Fund of any Share
certificates returned as undeliverable after being transmitted by courier or
mailed as herein provided for.
8.9 The Transfer Agent may issue new Share certificates in place of Share
certificates represented to have
-10-
<PAGE>
been lost, stolen, or destroyed upon receiving instructions satisfactory to the
Transfer Agent. If the Transfer Agent receives written notification from the
owner of the lost, destroyed, or stolen Share certificate within a reasonable
time after the owner has notice of such loss, destruction or theft, the Transfer
Agent shall issue a replacement Share certificate upon receipt of an affidavit
or affidavits of loss or nonreceipt and an indemnity agreement executed by the
registered owner or his legal representative, and supported (a) in the case of a
certificate having a value at the time of replacement of less than $100, by a
fixed penalty surety bond for twice the then-current market value of Shares
represented by said certificate, (b) in the case of a certificate having a value
at time of replacement of $100 or more, by an open penalty bond, in form
satisfactory to the Transfer Agent, or (c) by such other documentation or
reasonable assurances in a particular case as may be set forth in a Certificate.
If the Fund receives such written notification from the owner of the lost,
destroyed or stolen Share certificate within a reasonable time after the owner
has notice of it, the Fund shall promptly notify the Transfer Agent. The
Transfer Agent may issue new Share certificates in exchange for, and upon
surrender of, mutilated Share certificates.
8.10. The Transfer Agent will supply shareholder lists to the Fund from time
to time upon receiving a request therefor from an Officer of the Fund.
8.11. At the request of an Officer, the Transfer Agent will address and mail
such appropriate notices to shareholders as the Fund may direct, at the Fund's
expense.
8.12. Notwithstanding any of the foregoing provisions of this Agreement, the
Transfer Agent shall be under no duty or obligation to inquire into, and shall
not be liable for:
(a) The legality of the issue or sale of any Shares, the sufficiency
of the amount to be received therefor, or the authority of an Approved
Institution or of the Fund, as the case may be, to request such sale or
issuance;
(b) The legality of a transfer, exchange or redemption of any Shares
by an Approved Institution, the propriety of the amount to be paid therefor, or
the authority of an Approved Institution to request such transfer, exchange or
redemption;
(c) The legality of the declaration of any dividend or capital gains
distribution by the Fund, or the legality of the issue of any Shares in payment
of any Share dividend or distribution; or
(d) The legality of any recapitalization or readjustment of the
Shares.
8.13. The Transfer Agent shall be entitled to receive, and the Fund hereby
agrees to pay to the Transfer Agent for its performance hereunder, including its
performance of the duties and functions set forth in Appendix B hereto, (i) its
reasonable out-of-pocket expenses (including without limitation legal expenses,
court costs, and attorney's fees, associated with litigation or arbitration,)
incurred in connection with this Agreement and its performance hereunder and
(ii) such compensation as is specified in Appendix C hereto as such fees may be
amended from time to time by agreement in writing by the Transfer Agent and the
Fund.
8.14. The Transfer Agent shall have no duties or responsibilities whatsoever
except such duties and responsibilities as are specifically set forth in this
Agreement, and no covenant or obligation shall be implied in this Agreement
against the Transfer Agent.
8.15. The Transfer Agent shall indemnify and exonerate, save and hold
harmless the Fund, and its officers, directors, employees and agents, from and
against any and all liabilities or losses arising from claims and demands
(whether with or without basis in fact or law), and from any and all expenses
(including, without limitation, reasonable attorney's fees, expenses and court
costs), of any nature which the Fund or any officer, director, employee or agent
may sustain or incur or which may be asserted against them by any person arising
out of or in any manner related to the Transfer Agent's failure to comply with
the terms of this Agreement or which arise out of the Transfer Agent's
negligence or willful misconduct provided, however, that the Transfer Agent
shall not indemnify and exonerate, save and hold harmless, the Fund, its
officers, directors, employees, and agents for anything arising out of or in any
manner related
-11-
<PAGE>
to the Fund's failure to comply with the terms of this Agreement or which arises
out of the Fund's, or any officer's, director's, employee's, or agent's (other
than the Transfer Agent) negligence or willful misconduct.
ARTICLE 9
TERMINATION
9.1. The initial term of this Agreement shall commence on the Effective Date
and shall continue through June 30, 1996 (which period shall be referred to
herein as the "Initial Term") unless earlier terminated pursuant to Section
9.2. Thereafter, unless terminated by either party at the end of the Initial
Term upon at least 90 days' prior written notice, this Agreement shall continue
from day to day thereafter (such period shall be referred to as the "Renewal
Term"), until either of the parties hereto terminates this Agreement by giving
at least 6 months' prior written notice to the other party, whereupon this
Agreement shall terminate automatically upon the expiration of the 6-month
period specified in the written notice. In the event such notice of termination
is given by the Fund, it shall be accompanied by a copy of a resolution of the
Board of Directors of the Fund, certified by the Secretary or any Assistant
Secretary, electing to terminate this Agreement. The Fund shall, on or before
the termination date, deliver to the Transfer Agent a copy of a resolution of
the Board of Directors of the Fund certified by the Secretary or any Assistant
Secretary designating a successor transfer agent or transfer agents. In the
absence of such designation by the Fund, the Transfer Agent may designate a
successor transfer agent. If the Fund fails to designate a successor transfer
agent and if the Transfer Agent is unable to find a successor transfer agent,
the Fund shall, upon the date specified for termination of this Agreement and
delivery of the records maintained hereunder, be deemed to be its own transfer
agent and the Transfer Agent shall thereby be relieved of all duties and
responsibilities pursuant to this Agreement.
9.2. Notwithstanding Section 9.1 hereof, this Agreement may be terminated at
any time by the Fund upon not less than 60 days' written notice from the Fund to
the Transfer Agent notifying the Transfer Agent: (i) if the Fund's Board of
Directors, including a majority of the Directors who are not "interested
persons" (as that term is defined in the Investment Company Act of 1940), upon
completion of the procedures set forth below have reasonably made a specific
finding that the Transfer Agent has failed on a continuing basis to perform its
duties pursuant to this Agreement in a satisfactory manner consistent with then
current industry standards and practices or (ii) if there is instituted or
pending any action or proceeding by or before any court or governmental,
administrative or regulatory agency against or involving the parties hereto,
their affiliates, the Directors of the Fund or any of them and challenging the
making of this Agreement or alleging that any material term of the Agreement is
contrary to law or any governmental agency has threatened in writing to commence
such an action or proceeding. Prior to any termination pursuant to clause (i),
the Board of Directors of the Fund shall provide the Transfer Agent with a
written statement of the specific aspects of the Transfer Agent's performance of
its duties that are unsatisfactory, the specific incident or incidents giving
rise to the Board of Directors' conclusion and any written material that the
Board of Directors relied upon in making such a determination. The Transfer
Agent shall have 30 days to respond to such written statement. If no response is
made, or if, after reasonable consideration of the response of the Transfer
Agent, such response is unsatisfactory to the Board of Directors of the Fund,
then the Board of Directors of the Fund may terminate the Agreement pursuant to
clause (i) hereof. For purposes of making a finding as contemplated by clause
(i) above, and without limiting the generality of such clause (i), the Transfer
Agent shall, absent unusual circumstances, be presumed to have failed on a
continuing basis to perform its duties pursuant to this Agreement in a
satisfactory manner consistent with the industry standards and practices
prevailing on the date of this Agreement if any of the following should occur:
(1) The Transfer Agent, through its fault, is unable (more than once in a
twelve-month period) to process daily activity for any two successive Business
Days and to confirm information generated by such activity by the fourth
Business Day following the later of such two Business Days. (For example,
assuming no holidays, daily activity on a Monday and Tuesday is not confirmed by
the following Monday.)
(2) The Transfer Agent, through its fault, is unable (more than two times in
any twelve-month period) to provide system access to personnel of an Approved
Institution for six hours between 9:00 a.m. and 5:00 p.m. Chicago time on three
successive Business Days.
-12-
<PAGE>
(3) The Transfer Agent, through its fault, is unable (more than twice in any
one year) to create and mail dividend checks within four Business Days after the
Fund's payable date (assuming that the required information has been furnished
to the Transfer Agent on the record date).
(4) The Transfer Agent, through its fault, is unable to instruct various
financial institutions on daily money movements from and to the Fund's Custodian
for two successive Business Days by the fourth Business Day following the later
of such two Business Days. (For this purpose, instructions based on reasonable
estimates are treated as fulfilling the Transfer Agent's obligations hereunder.)
(5) The Transfer Agent, through its fault, is unable (more than twice in any
twelve-month period) to transmit dividend activity to an Approved Institution
within five Business Days from the Fund's payable date.
For purposes of the foregoing, an event described in any of the foregoing
clauses 1 through 5 shall be deemed not to have occurred if the Transfer Agent's
inability to perform is a result directly or indirectly of faulty or inadequate
performance by service providers including but not limited to telephone
companies, pricing services, John Nuveen & Co. Incorporated, Approved
Institutions, and banks other than the Transfer Agent and its agents and
employees or a result directly or indirectly of other events out of the Transfer
Agent's reasonable control. Also for the purpose of the foregoing, if the
Transfer Agent processes transactions or instructions (as the case may be) as
required hereunder within the time periods indicated but more than 10% of the
transactions, checks or instructions, as the case may be, are inaccurate in any
material respect and are not corrected within the requisite time, then the
Transfer Agent shall be deemed to have been unable to perform the relevant
service within the requisite time.
9.3. In the event of termination of this Agreement, the Transfer Agent will
facilitate transfer of the records maintained by it hereunder and cooperate with
such successor transfer agent as may be designated pursuant to the provisions of
Section 9.1 hereof with respect to delivery of such records and assumption by
such successor transfer agent of its duties. In the event the Fund or the
Transfer Agent terminates the Transfer Agency Agreement at any time, the Fund
shall be responsible for the payment of fees and expenses of the Transfer Agent
relating to the conversion to the new Transfer Agent.
ARTICLE 10
ADDITIONAL SERIES
10.1. In the event that the Fund establishes one or more series in addition
to any series named herein with respect to which it desires to have the Transfer
Agent render services as Transfer Agent under the terms hereof, it shall so
notify the Transfer Agent in writing at least 60 days in advance of the sale of
Shares of such series and shall deliver to the Transfer Agent the documents
listed in Section 2.3 with respect to such series. Unless the Transfer Agent
declines in writing within a reasonable time to provide such services, the
Shares of such series shall be subject to this Agreement.
ARTICLE 11
MISCELLANEOUS
11.1. The Fund agrees that prior to effecting any change in the Prospectus
which would increase or alter the duties or obligations of the Transfer Agent
hereunder, it shall advise the Transfer Agent of such proposed change at least
30 days prior to the intended date of the same, and shall proceed with such
change only if it shall have received the written consent of the Transfer Agent
thereto, and shall have received and agreed to the schedule of charges, if any,
specified by the Transfer Agent as necessary to effect such change.
11.2. Any notice or other instrument in writing, authorized or required by
this Agreement to be given to the Fund shall be sufficiently given if addressed
to the Fund and mailed or delivered to it at its office at 333 West Wacker
Drive, Chicago, Illinois 60606, Attention: Mr. Stuart W. Rogers, or at such
other place as the Fund may from time to time designate in writing.
-13-
<PAGE>
11.3. Any notice or other instrument in writing, authorized or required by
this Agreement to be given to the Transfer Agent shall be sufficiently given if
addressed to the Transfer Agent, Attention: President, and mailed or delivered
to it at its office at 3410 South Galena Street, Denver, Colorado 80231, with a
copy to be sent to Andrew J. Donouhe at Oppenheimer Management Corporation, Two
World Trade Center, New York, New York 10048, or at such other place as the
Transfer Agent may from time to time designate in writing.
11.4. This Agreement may not be amended or modified in any manner except by
a written agreement executed by both parties.
11.5. This Agreement shall extend to and shall be binding upon the parties
hereto, and their respective successors and assigns; provided, however, that
this Agreement shall not be assignable by the Fund or the Transfer Agent without
the written consent of the other party. A change in ownership of the Transfer
Agent as a result of an internal reorganization of the Transfer Agent, its
parent corporation or affiliates shall not be deemed to be an "assignment"
hereunder. A change in "control" (as defined under the Investment Company Act of
1940) of the Transfer Agent's parent corporation shall not be deemed an
"assignment" hereunder. A sale of a controlling interest in the capital stock or
of all or substantially all of the assets of the Transfer Agent to a third party
unaffiliated with the Transfer Agent or its parent corporation shall be deemed
an "assignment" hereunder.
11.6. This Agreement shall be governed by and construed in accordance with
the laws of the State of Colorado as applicable to agreements to be wholly
performed in that state.
11.7. This Agreement may be executed in any number of counterparts each of
which shall be deemed to be an original; but such counterparts shall, together,
constitute only one instrument.
11.8. The provisions of this Agreement are intended to benefit only the
Transfer Agent and the Fund, and no rights shall be granted to any other person
by virtue of this Agreement.
11.9. Neither the Fund nor the Transfer Agent will be liable or responsible
hereunder for delays or errors by reason of circumstances reasonably beyond its
control, including, without limitation, acts of civil or military authority,
national emergencies, labor difficulties, fire, mechanical breakdown, flood,
catastrophe, acts of God, insurrection, war, riots, or failure of
transportation, communication or power supply.
11.10. The Fund shall establish and maintain such bank accounts, with such
bank or banks as are selected by the Fund, as are necessary so that the Transfer
Agent may perform the services to be provided hereunder. To the extent that
performance of such services shall require the Transfer Agent directly to
disburse amounts for payments of dividends, redemption proceeds or other
purposes, the Fund shall provide such bank or banks with all instructions and
authorizations necessary to evidence the Transfer Agent's authority to effect
such transactions.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their respective officers, thereunto duly authorized, as of the
day and year first above written.
Attest: NUVEEN TAX-FREE RESERVES, INC.
/s/ Gifford R. Zimmerman VP By: /s/ Anna Kucinskis V.P.
- ----------------------------------- ---------------------------------
Name Title Name Title
Attest: SHAREHOLDER SERVICES, INC.
/s/ Rhonda Dixon-Gunner VP By: /s/ Barbara Hennigar
- ----------------------------------- ---------------------------------
Name Title Barbara Hennigar
President
-14-
<PAGE>
NUVEEN TAX-FREE RESERVES, INC.
TRANSFER AGENCY AGREEMENT
APPENDIX A
OFFICER'S CERTIFICATE
I, , the Secretary of Nuveen Tax-Free Reserves,
Inc., a Maryland corporation (the "Fund"), do hereby certify that:
The following individuals have been duly authorized by the Directors of the
Fund in conformity with the Fund's Articles of Incorporation and By-Laws to
execute any Certificate, instruction, notice or other instrument, including an
amendment to Appendix B to this Agreement, or to give oral instructions on
behalf of the Fund, and the signatures set forth opposite their respective names
are their true and correct signatures.
Name Title Signature
- ---- ----- ---------
Chairman
- ----------------------------- ------------------------------
President
- ----------------------------- ------------------------------
Secretary
- ----------------------------- ------------------------------
Trustee
- ----------------------------- ------------------------------
Vice President
- ----------------------------- ------------------------------
- ----------------------------- --------------- ------------------------------
- ----------------------------- --------------- ------------------------------
- ----------------------------- --------------- ------------------------------
- ----------------------------- --------------- ------------------------------
- ----------------------------- --------------- ------------------------------
- ----------------------------- --------------- ------------------------------
, Secretary
------------------
Name
<PAGE>
NUVEEN TAX-FREE RESERVES, INC.
TRANSFER AGENCY AGREEMENT
APPENDIX B
TRANSFER AGENT SERVICES
<TABLE>
<CAPTION>
Service: SSI will:
- -------- ---------
<C> <S>
New Account Set-Ups Process new sales applications. Place telephone calls to account
representatives as needed to clarify instructions for new account
set-ups.
Purchasers - New and Subsequent Process mailed-in, lockbox, bank wire, list billing, ACH, and
telephone payments as received. Coordinate and balance UIT
reinvestment payments.
Transfers Negotiate and process all transfer requests.
Exchanges - Mail and Telephone Negotiate and process exchange requests. Record telephone
exchange requests.
Redemptions - Mail and Telephone Negotiate and process redemption requests. Record telephone
redemption requests.
Wire Order Purchases and Redemptions Process wire order purchases and redemptions for 5-day
delayed settlement accepted on recorded telephone lines and via
NSCC FUND/SERV. Process purchases and redemptions for
same-day wire settlement.
Account Maintenance Process all written and telephone maintenance.
(Address Changes, Dividend) For address changes, prepare and mail a notice
Option Changes, Name Changes, of the address change to the former address.
Broker or Dealer Changes, etc.)
Certificate Issuances Issue certificates as requested by shareholders.
Telephone Services Provide efficient handling of all incoming shareholder and
broker/dealer telephone calls. Provide timely problem
resolution for all servicing calls.
Corresponding with Shareholders Respond to all shareholder and broker/dealer written
and Broker/Dealers inquiries. Document all correspondence affecting
shareholder accounts on the Shareholder Accounting
System.
Shareholder Confirms Prepare and mail confirmations of daily account
(Daily/Monthly/Quarterly activity. Prepare and mail monthly, quarterly, and
Annual) annual confirmations as directed by the fund.
Dealer Confirms Prepare and mail weekly dealer confirmations listing activity on
client accounts.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Service: SSI will:
- -------- ---------
<C> <S>
Distribution Disbursements Prepare and mail cash distribution checks. Process reinvested
distributions.
Commission Statements Provide bimonthly commission statements listing each purchase
and the portion of the sales charge paid to the broker/dealer.
Commission Checks Provide bimonthly commission checks to broker/dealers.
Daily Transmission of Reports Transmit daily transaction activity reports, balancing reports,
and sales information via telephone lines to a printer at Nuveen.
Fund Summary Sheets Prepare daily reports that summarize by type of transaction all
capital stock activity for each fund.
Sales Reporting Provide daily, weekly, monthly, quarterly, and annual reports of
sales information.
12b-1 Reporting Complete 12b-1 processing including calculating the 12b-1
payment amounts and sending checks to the broker/dealer home
offices. Provide a listing broken down by sales representative
within each branch.
Invalid Taxpayer Identification Mail Forms W-9 as required to validate taxpayer
Number Solicitation and identification numbers; institute backup withholding
Backup Withholding as required by IRS regulations, and timely send all notices.
Regulatory Reporting Compute, prepare, and mail all necessary reports to
shareholders, federal, and/or state authorities (Forms 1099-DIV,
1099-B, and 1042S).
Front-End Microfilming of Documents Front-end film all incoming documents.
Cost Basis Reporting Provide cost basis information to shareholders annually for use
in determining capital gains and losses.
Blue Sky Reporting Provide monthly report of purchases and redemptions by state.
Financial Report Mailings Provide mail handling for 2 financial reports per fund per year to
Nuveen shareholders.
Prospectus Mailings Provide mail handling for 1 prospectus per fund per year to
Nuveen shareholders.
Proxy Solicitation and Tabulation Perform 1 proxy solicitation and tabulation per fund per
year.
</TABLE>
<PAGE>
NUVEEN TAX-FREE RESERVES, INC.
TRANSFER AGENCY AGREEMENT
APPENDIX C
FEE SCHEDULE
The Transfer Agent will provide the transfer agent services listed on Appendix B
for the Fund at the rates set forth below:
Annual Transfer Agent Fees:
- ---------------------------
Annual-Per-Account Fees*
First 20,000 Accounts** $22.00 per account
Next 30,000 Accounts** $20.00 per account
Over 50,000 Accounts** $19.00 per account
Out-of-Pocket Expenses:
- -----------------------
Out-of-pocket expenses may be incurred by either the Fund or the Transfer Agent
and are not included in the annual Transfer Agent Fees. Those out-of-pocket
expenses directly incurred by the Transfer Agent will be billed to the Fund on a
monthly basis. These out-of-pocket expenses include, but are not limited to,
the printing of forms, envelopes, postage for the shareholder mailings,
equipment and system access costs, microfilm, telephone line and usage charges,
overnight express mail charges, check signature plates and stamps, and
programmer/analyst and testing technician time beyond that agreed to in
writing. Bank charges and earnings credit will be billed directly to the Fund by
United Missouri Bank (or other banks). The Transfer Agent may require the prior
payment of anticipated out-of-pocket expenses, from time to time.
Conversion Costs:
- -----------------
The Transfer Agent shall be responsible for its costs and expenses relating to
the initial conversion. The Fund shall be responsible for its costs and
expenses, including but not limited to the charges of the former transfer agent.
*Payable on a monthly basis for each account in existence at the end of the
month.
**The determination of the number of accounts for purposes of determining the
per account fee shall be based on all Nuveen Funds using the same fee schedule
and shall be allocated on a Fund by Fund basis in a manner determined by the
Transfer Agent based on the number of accounts in each fund.
These fees are valid for three years after which they are subject to change,
from time to time.
The Transfer Agent shall, from time to time, but no more frequently than
monthly, send an invoice to the Fund itemizing the compensation and expense
reimbursement. The Fund shall pay such invoice (except to the extent that the
amount thereof is in dispute) by wire not later than 30 days after receipt of
the invoice.
<PAGE>
[LETTERHEAD OF FRIED, FRANK, HARRIS,
SHRIVER & JACOBSON]
EXHIBIT 10(a)
April 26, 1995
(202) 639-7065
Nuveen Tax-Free Reserves, Inc.
333 West Wacker Drive
Chicago, Illinois 60606
RE: REGISTRATION STATEMENT ON FORM N-1A
UNDER THE SECURITIES ACT OF 1933
(FILE NO. 2-78736)
-----------------------------------
Ladies and Gentlemen:
We have acted as counsel to Nuveen Tax-Free Reserves, Inc., a Maryland
corporation (the "Fund"), in connection with the above-referenced Registration
Statement on Form N-1A (as amended, the "Registration Statement") which relates
to the Fund's shares of common stock, par value $.01 (the "Shares"). This
opinion is being delivered to you in connection with the Fund's filing of Post-
Effective Amendment No. 14 to the Registration Statement (the "Amendment") with
the Securities and Exchange Commission pursuant to Rule 485(b) of the Securities
Act of 1933 (the "1933 Act"). With your permission, all assumptions and
statements of reliance herein have been made without any independent
investigation or verification on our part except to the extent otherwise
expressly stated, and we express no opinion with respect to the subject matter
or accuracy of such assumptions or items relied upon.
In connection with this opinion, we have reviewed, among other things,
executed copies of the following documents:
(a) a certificate of the Maryland State Department of Assessments and
Taxation (the "Department") as to the existence and good standing of
the Fund;
(b) copies, certified by the Department, of the Fund's Charter and of all
amendments and all supplements thereto (the "Charter");
(c) a certificate executed by Karen L. Healy, the Assistant Secretary of
the Fund, certifying as to, and attaching copies of, the Fund's
Charter and By-Laws, as amended (the "By-Laws"), and certain
resolutions adopted by the Board of Directors of the Fund authorizing
the issuance of the Shares; and
<PAGE>
Nuveen Tax-Free Reserves, Inc.
April 26, 1995
Page 2
(d) a printer's proof, dated April 26, 1995, of the Amendment.
In our capacity as counsel to the Fund, we have examined the originals, or
certified, conformed or reproduced copies, of all records, agreements,
instruments and documents as we have deemed relevant or necessary as the basis
for the opinion hereinafter expressed. In all such examinations, we have assumed
the legal capacity of all natural persons executing documents, the genuineness
of all signatures, the authenticity of all original or certified copies, and the
conformity to original or certified copies of all copies submitted to us as
conformed or reproduced copies. As to various questions of fact relevant to such
opinion, we have relied upon, and assume the accuracy of, certificates and oral
or written statements of public officials and officers or representatives of the
Fund. We have assumed that the Amendment, as filed with the Securities and
Exchange Commission, will be in substantially the form of the printer's proof
referred to in paragraph (d) above.
Based upon, and subject to, the limitations set forth herein, we are of the
opinion that the Shares, when issued and sold in accordance with the Fund's
Charter and for the consideration described in the Registration Statement, will
be legally issued, fully paid and nonassessable under the laws of the State of
Maryland.
The opinion expressed herein is limited to the laws of the State of
Maryland. As to matters of Maryland law covered thereby, we have relied solely
upon the opinion of Venable, Baetjer and Howard, LLP, addressed to us and dated
April 26, 1995.
We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement. In giving this consent, we do not admit that we are in
the category of persons whose consent is required under Section 7 of the 1933
Act.
Very truly yours,
FRIED, FRANK, HARRIS, SHRIVER & JACOBSON
By: /S/ THOMAS S. HARMAN
________________________________________
Thomas S. Harman
<PAGE>
[LETTERHEAD OF VENABLE,
BAETJER AND HOWARD, LLP]
Exhibit 10(b)
April 26, 1995
Fried, Frank, Harris, Shriver & Jacobson
1001 Pennsylvania Avenue, N.W.
Suite 800
Washington, DC 20004-2505
Re: Nuveen Tax-Free Reserves, Inc.
------------------------------
Ladies and Gentlemen:
We have acted as special Maryland counsel to Nuveen Tax-Free Reserves,
Inc., a Maryland corporation (the "Company"), in connection with the issuance of
shares (the "Shares") of its common stock, par value $.01 per share.
We have examined the Company's Charter and Bylaws and the prospectus
with respect to the Shares included in Post-Effective Amendment No. 14 to the
Company's Registration Statement on Form N-1A, File Nos. 2-78736 and 811-3531
(the "Registration Statement"), substantially in the form in which it is to
become effective (the "Prospectus"). We have further examined and relied upon a
certificate of the Maryland State Department of Assessments and Taxation to the
effect that the Company is duly incorporated and existing under the laws of the
State of Maryland and is in good standing and duly authorized to transact
business in the State of Maryland.
We have also examined and relied upon such corporate records of the
Company and other documents and certificates with respect to factual matters as
we have deemed necessary to render the opinion expressed herein. We have
assumed, without independent verification, the genuineness of all
<PAGE>
Fried, Frank, Harris, Shriver & Jacobson
April 26, 1995
Page 2
signatures, the authenticity of all documents submitted to us as originals, and
the conformity with originals of all documents submitted to us as copies.
Based on such examination, we are of the opinion that:
1. The Company is validly existing as a corporation in good standing
under the laws of the State of Maryland.
2. The Shares of the Company's common stock to be offered for sale
pursuant to the Prospectus are, to the extent of the number of
Shares authorized to be issued by the Company in its Charter, duly
authorized, and, when sold, issued and paid for as contemplated by
the Prospectus, such shares will have been validly and legally
issued and will be fully paid and nonassessable.
This letter expresses our opinion with respect to the Maryland General
Corporation Law governing matters such as the authorization and issuance of
stock. It does not extend to the securities or "blue sky" laws of Maryland, to
federal securities laws or to other laws.
You may rely upon this opinion in rendering your opinion to the Company to
be filed with Post-Effective Amendment No. 14 to the Registration Statement. We
consent to the filing of this opinion as an exhibit to the Registration
Statement.
Very truly yours,
/s/ Venable, Baetjer and Howard, LLP
<PAGE>
Exhibit 11
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
-----------------------------------------
As independent public accountants, we hereby consent to the use of our report
dated April 3, 1995, and to all references to our firm included in or made a
part of this registration statement of Nuveen Tax-Free Reserves, Inc.
ARTHUR ANDERSEN LLP
Chicago, Illinois,
April 24, 1995
<PAGE>
EXHIBIT 16
SCHEDULE OF COMPUTATION OF YIELD FIGURES
I. CURRENT YIELD a. Current Yield is calculated as follows:
i. Net investment income per share
for the seven-day period
------------------------------ = Base Period Return
Value of account at beginning
of seven-day period
ii. Base Period Return X 365/7 = Current Yield
b.Calculation of Current Yield for seven-day period
ended February 28, 1995:
.0006461 365
( -------- ) X --- = 3.37%
1.00 7 =====
II. EFFECTIVE
YIELD a. Effective Yield is calculated as follows:
(Base Period Return + 1) 365/7 - 1 = Effective Yield
b. Calculation of Effective Yield for seven-day period
ended February 28, 1995:
365/7
.0006461
[ ( -------- ) + 1 ] - 1 = 3.43%
1.00 =====
III. TAXABLE a. The Taxable Equivalent Yield formula is as follows:
EQUIVALENT Tax Exempt Yield
YIELD ----------------------------
(1 - federal income tax rate)
b.Based on a maximum Federal income tax rate of 39.6%,
the Taxable Equivalent Yield for the seven-day period
ended February 28, 1995 is as follows:
3.37%
-------- = 5.58%
1 - .396 =====
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<LEGEND> THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM
THE FORM N-SAR AND THE FINANCIAL STATEMENTS AND IS QUALIFIED IN ITS
ENTIRETY BY REFERENCES TO SUCH DOCUMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> FEB-28-1995
<PERIOD-START> MAR-01-1994
<PERIOD-END> FEB-28-1995
<INVESTMENTS-AT-COST> 353566
<INVESTMENTS-AT-VALUE> 353536
<RECEIVABLES> 2168
<ASSETS-OTHER> 2581
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 358315
<PAYABLE-FOR-SECURITIES> 5500
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 1209
<TOTAL-LIABILITIES> 6709
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 351606
<SHARES-COMMON-STOCK> 351606
<SHARES-COMMON-PRIOR> 404201
<ACCUMULATED-NII-CURRENT> 8795
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 0
<NET-ASSETS> 351606
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 11502
<OTHER-INCOME> 0
<EXPENSES-NET> 2707
<NET-INVESTMENT-INCOME> 8795
<REALIZED-GAINS-CURRENT> 0
<APPREC-INCREASE-CURRENT> 0
<NET-CHANGE-FROM-OPS> 8795
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 8795
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 657011
<NUMBER-OF-SHARES-REDEEMED> 717393
<SHARES-REINVESTED> 7787
<NET-CHANGE-IN-ASSETS> (52595)
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 1804
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 2841
<AVERAGE-NET-ASSETS> 361788
<PER-SHARE-NAV-BEGIN> 1.00
<PER-SHARE-NII> .024
<PER-SHARE-GAIN-APPREC> 0
<PER-SHARE-DIVIDEND> (.024)
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 1.00
<EXPENSE-RATIO> .75
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<PAGE>
EXHIBIT 99(b)
Certified Resolution
--------------------
The undersigned, James J. Wesolowski, hereby certifies, on behalf of Nuveen
Tax-Free Reserves, Inc. (the "Fund"), (1) that he is the duly elected,
qualified and acting Secretary of the Fund, and that as such Secretary he has
custody of its corporate books and records, (2) that attached to this
Certificate is a true and correct copy of a resolution duly adopted by the Board
of Directors of the Fund at a meeting held on February 14, 1995, and (3) that
said resolution has not been amended or rescinded and remains in full force and
effect.
April 25, 1995
/s/ James J. Wesolowski
------------------------------
James J. Wesolowski, Secretary
<PAGE>
RESOLVED, that each member of the Board and officer of the Fund who may be
required to execute the Registration Statement on Form N-1A, or any amendment or
amendments thereto, be, and each of them hereby is, authorized to execute a
power of attorney appointing Richard J. Franke, Timothy R. Schwertfeger, James
J. Wesolowski, Larry W. Martin, Gifford R. Zimmerman, and Thomas S. Harman, and
each of them, his true and lawful attorneys-in-fact and agents, with full power
of substitution and resubstitution, for him and in his name, place and stead, in
any and all capacities, to sign the Registration Statement and any and all
amendments thereto and to file the same, with all exhibits thereto, and other
documents in connection therewith, with the Securities and Exchange Commission,
granting unto said attorneys-in-fact and agents, and each of them, full power
and authority to do and perform each and every act and thing requisite or
necessary to be done in and about the premises, as fully to all intents and
purposes as he might or could do in person, and ratifying and confirming all
that said attorneys-in-fact and agents or any of them, or their or his
substitute or substitutes, may lawfully do or cause to be done by virtue
thereof.
<PAGE>
Exhibit 99(c)
NUVEEN TAX-FREE RESERVES, INC.
-----------------
POWER OF ATTORNEY
-----------------
KNOW ALL MEN BY THESE PRESENTS, that the undersigned, a director of the above-
referenced organization, hereby constitutes and appoints RICHARD J. FRANKE,
TIMOTHY R. SCHWERTFEGER, JAMES J. WESOLOWSKI, LARRY W. MARTIN, GIFFORD R.
ZIMMERMAN, and THOMAS S. HARMAN, and each of them (with full power to each of
them to act alone) his true and lawful attorney-in-fact and agent, for him on
his behalf and in his name, place and stead, in any and all capacities, to sign,
execute and affix his seal thereto and file one or more Registration Statements
on Form N-1A under the Securities Act of 1933 and the Investment Company Act of
1940, including any amendment or amendments thereto, with all exhibits, and any
and all other documents required to be filed with any regulatory authority,
federal or state, relating to the registration thereof, or the issuance of
shares thereof, without limitation, granting unto said attorneys, and each of
them, full power and authority to do and perform each and every act and thing
requisite and necessary to be done in and about the premises in order to
effectuate the same as fully to all intents and purposes as he might or could do
if personally present, hereby ratifying and confirming all that said attorneys-
in-fact and agents, or any of them, may lawfully do or cause to be done by
virtue hereof.
IN WITNESS WHEREOF, the undersigned director of the above-referenced
organization has hereunto set his hand this 14th day of February, 1995.
/s/ Richard J. Franke
---------------------
Richard J. Franke
STATE OF ILLINOIS )
)SS
COUNTY OF COOK )
On this 14th day of February, 1995, personally appeared before me, a Notary
Public in and for said County and State, the person named above who is known to
me to be the person whose name and signature is affixed to the foregoing Power
of Attorney and who acknowledged the same to be his voluntary act and deed for
the intent and purposes therein set forth.
-------------------------------
"OFFICIAL SEAL"
Virginia L. Corcoran
(SEAL) Notary Public, State of /s/ Virginia L. Corcoran
Illinois -------------------------
My Commission Expires 10/26/97 Notary Public
-------------------------------
My Commission Expires: 10/26/97
<PAGE>
NUVEEN TAX-FREE RESERVES, INC.
-----------------
POWER OF ATTORNEY
-----------------
KNOW ALL MEN BY THESE PRESENTS, that the undersigned, a director of the above-
referenced organization, hereby constitutes and appoints RICHARD J. FRANKE,
TIMOTHY R. SCHWERTFEGER, JAMES J. WESOLOWSKI, LARRY W. MARTIN, GIFFORD R.
ZIMMERMAN, and THOMAS S. HARMAN, and each of them (with full power to each of
them to act alone) his true and lawful attorney-in-fact and agent, for him on
his behalf and in his name, place and stead, in any and all capacities, to sign,
execute and affix his seal thereto and file one or more Registration Statements
on Form N-1A under the Securities Act of 1933 and the Investment Company Act of
1940, including any amendment or amendments thereto, with all exhibits, and any
and all other documents required to be filed with any regulatory authority,
federal or state, relating to the registration thereof, or the issuance of
shares thereof, without limitation, granting unto said attorneys, and each of
them, full power and authority to do and perform each and every act and thing
requisite and necessary to be done in and about the premises in order to
effectuate the same as fully to all intents and purposes as he might or could do
if personally present, hereby ratifying and confirming all that said attorneys-
in-fact and agents, or any of them, may lawfully do or cause to be done by
virtue hereof.
IN WITNESS WHEREOF, the undersigned director of the above-referenced
organization has hereunto set his hand this 14th day of February, 1995.
/s/ Lawrence H. Brown
---------------------
Lawrence H. Brown
STATE OF ILLINOIS )
)SS
COUNTY OF COOK )
On this 14th day of February, 1995, personally appeared before me, a Notary
Public in and for said County and State, the person named above who is known to
me to be the person whose name and signature is affixed to the foregoing Power
of Attorney and who acknowledged the same to be his voluntary act and deed for
the intent and purposes therein set forth.
-------------------------------
"OFFICIAL SEAL"
Virginia L. Corcoran
(SEAL) Notary Public, State of /s/ Virginia L. Corcoran
Illinois -------------------------
My Commission Expires 10/26/97 Notary Public
-------------------------------
My Commission Expires: 10/26/97
<PAGE>
NUVEEN TAX-FREE RESERVES, INC.
-----------------
POWER OF ATTORNEY
-----------------
KNOW ALL MEN BY THESE PRESENTS, that the undersigned, a director of the above-
referenced organization, hereby constitutes and appoints RICHARD J. FRANKE,
TIMOTHY R. SCHWERTFEGER, JAMES J. WESOLOWSKI, LARRY W. MARTIN, GIFFORD R.
ZIMMERMAN, and THOMAS S. HARMAN, and each of them (with full power to each of
them to act alone) her true and lawful attorney-in-fact and agent, for him on
her behalf and in her name, place and stead, in any and all capacities, to sign,
execute and affix her seal thereto and file one or more Registration Statements
on Form N-1A under the Securities Act of 1933 and the Investment Company Act of
1940, including any amendment or amendments thereto, with all exhibits, and any
and all other documents required to be filed with any regulatory authority,
federal or state, relating to the registration thereof, or the issuance of
shares thereof, without limitation, granting unto said attorneys, and each of
them, full power and authority to do and perform each and every act and thing
requisite and necessary to be done in and about the premises in order to
effectuate the same as fully to all intents and purposes as he might or could do
if personally present, hereby ratifying and confirming all that said attorneys-
in-fact and agents, or any of them, may lawfully do or cause to be done by
virtue hereof.
IN WITNESS WHEREOF, the undersigned director of the above-referenced
organization has hereunto set her hand this 14th day of February, 1995.
/s/ Anne E. Impellizzeri
------------------------
Anne E. Impellizzeri
STATE OF ILLINOIS )
)SS
COUNTY OF COOK )
On this 14th day of February, 1995, personally appeared before me, a Notary
Public in and for said County and State, the person named above who is known to
me to be the person whose name and signature is affixed to the foregoing Power
of Attorney and who acknowledged the same to be her voluntary act and deed for
the intent and purposes therein set forth.
-------------------------------
"OFFICIAL SEAL"
Virginia L. Corcoran
(SEAL) Notary Public, State of /s/ Virginia L. Corcoran
Illinois -------------------------
My Commission Expires 10/26/97 Notary Public
-------------------------------
My Commission Expires: 10/26/97
<PAGE>
NUVEEN TAX-FREE RESERVES, INC.
-----------------
POWER OF ATTORNEY
-----------------
KNOW ALL MEN BY THESE PRESENTS, that the undersigned, a director of the above-
referenced organization, hereby constitutes and appoints RICHARD J. FRANKE,
TIMOTHY R. SCHWERTFEGER, JAMES J. WESOLOWSKI, LARRY W. MARTIN, GIFFORD R.
ZIMMERMAN, and THOMAS S. HARMAN, and each of them (with full power to each of
them to act alone) his true and lawful attorney-in-fact and agent, for him on
his behalf and in his name, place and stead, in any and all capacities, to sign,
execute and affix his seal thereto and file one or more Registration Statements
on Form N-1A under the Securities Act of 1933 and the Investment Company Act of
1940, including any amendment or amendments thereto, with all exhibits, and any
and all other documents required to be filed with any regulatory authority,
federal or state, relating to the registration thereof, or the issuance of
shares thereof, without limitation, granting unto said attorneys, and each of
them, full power and authority to do and perform each and every act and thing
requisite and necessary to be done in and about the premises in order to
effectuate the same as fully to all intents and purposes as he might or could do
if personally present, hereby ratifying and confirming all that said attorneys-
in-fact and agents, or any of them, may lawfully do or cause to be done by
virtue hereof.
IN WITNESS WHEREOF, the undersigned director of the above-referenced
organization has hereunto set his hand this 14th day of February, 1995.
/s/ John E. O'Toole
------------------------
John E. O'Toole
STATE OF ILLINOIS )
)SS
COUNTY OF COOK )
On this 14th day of February, 1995, personally appeared before me, a Notary
Public in and for said County and State, the person named above who is known to
me to be the person whose name and signature is affixed to the foregoing Power
of Attorney and who acknowledged the same to be his voluntary act and deed for
the intent and purposes therein set forth.
-------------------------------
"OFFICIAL SEAL"
Virginia L. Corcoran
(SEAL) Notary Public, State of /s/ Virginia L. Corcoran
Illinois -------------------------
My Commission Expires 10/26/97 Notary Public
-------------------------------
My Commission Expires: 10/26/97
<PAGE>
NUVEEN TAX-FREE RESERVES, INC.
-----------------
POWER OF ATTORNEY
-----------------
KNOW ALL MEN BY THESE PRESENTS, that the undersigned, a director of the above-
referenced organization, hereby constitutes and appoints RICHARD J. FRANKE,
TIMOTHY R. SCHWERTFEGER, JAMES J. WESOLOWSKI, LARRY W. MARTIN, GIFFORD R.
ZIMMERMAN, and THOMAS S. HARMAN, and each of them (with full power to each of
them to act alone) her true and lawful attorney-in-fact and agent, for him on
her behalf and in her name, place and stead, in any and all capacities, to sign,
execute and affix her seal thereto and file one or more Registration Statements
on Form N-1A under the Securities Act of 1933 and the Investment Company Act of
1940, including any amendment or amendments thereto, with all exhibits, and any
and all other documents required to be filed with any regulatory authority,
federal or state, relating to the registration thereof, or the issuance of
shares thereof, without limitation, granting unto said attorneys, and each of
them, full power and authority to do and perform each and every act and thing
requisite and necessary to be done in and about the premises in order to
effectuate the same as fully to all intents and purposes as he might or could do
if personally present, hereby ratifying and confirming all that said attorneys-
in-fact and agents, or any of them, may lawfully do or cause to be done by
virtue hereof.
IN WITNESS WHEREOF, the undersigned director of the above-referenced
organization has hereunto set her hand this 14th day of February, 1995.
/s/ Margaret K. Rosenheim
-------------------------
Margaret K. Rosenheim
STATE OF ILLINOIS )
)SS
COUNTY OF COOK )
On this 14th day of February, 1995, personally appeared before me, a Notary
Public in and for said County and State, the person named above who is known to
me to be the person whose name and signature is affixed to the foregoing Power
of Attorney and who acknowledged the same to be her voluntary act and deed for
the intent and purposes therein set forth.
-------------------------------
"OFFICIAL SEAL"
Virginia L. Corcoran
(SEAL) Notary Public, State of /s/ Virginia L. Corcoran
Illinois -------------------------
My Commission Expires 10/26/97 Notary Public
-------------------------------
My Commission Expires: 10/26/97
<PAGE>
NUVEEN TAX-FREE RESERVES, INC.
-----------------
POWER OF ATTORNEY
-----------------
KNOW ALL MEN BY THESE PRESENTS, that the undersigned, a director of the above-
referenced organization, hereby constitutes and appoints RICHARD J. FRANKE,
TIMOTHY R. SCHWERTFEGER, JAMES J. WESOLOWSKI, LARRY W. MARTIN, GIFFORD R.
ZIMMERMAN, and THOMAS S. HARMAN, and each of them (with full power to each of
them to act alone) his true and lawful attorney-in-fact and agent, for him on
his behalf and in his name, place and stead, in any and all capacities, to sign,
execute and affix his seal thereto and file one or more Registration Statements
on Form N-1A under the Securities Act of 1933 and the Investment Company Act of
1940, including any amendment or amendments thereto, with all exhibits, and any
and all other documents required to be filed with any regulatory authority,
federal or state, relating to the registration thereof, or the issuance of
shares thereof, without limitation, granting unto said attorneys, and each of
them, full power and authority to do and perform each and every act and thing
requisite and necessary to be done in and about the premises in order to
effectuate the same as fully to all intents and purposes as he might or could do
if personally present, hereby ratifying and confirming all that said attorneys-
in-fact and agents, or any of them, may lawfully do or cause to be done by
virtue hereof.
IN WITNESS WHEREOF, the undersigned director of the above-referenced
organization has hereunto set his hand this 14th day of February, 1995.
/s/ Peter R. Sawers
------------------------
Peter R. Sawers
STATE OF ILLINOIS )
)SS
COUNTY OF COOK )
On this 14th day of February, 1995, personally appeared before me, a Notary
Public in and for said County and State, the person named above who is known to
me to be the person whose name and signature is affixed to the foregoing Power
of Attorney and who acknowledged the same to be his voluntary act and deed for
the intent and purposes therein set forth.
-------------------------------
"OFFICIAL SEAL"
Virginia L. Corcoran
(SEAL) Notary Public, State of /s/ Virginia L. Corcoran
Illinois -------------------------
My Commission Expires 10/26/97 Notary Public
-------------------------------
My Commission Expires: 10/26/97
<PAGE>
NUVEEN TAX-FREE RESERVES, INC.
-----------------
POWER OF ATTORNEY
-----------------
KNOW ALL MEN BY THESE PRESENTS, that the undersigned, a director of the above-
referenced organization, hereby constitutes and appoints RICHARD J. FRANKE,
TIMOTHY R. SCHWERTFEGER, JAMES J. WESOLOWSKI, LARRY W. MARTIN, GIFFORD R.
ZIMMERMAN, and THOMAS S. HARMAN, and each of them (with full power to each of
them to act alone) his true and lawful attorney-in-fact and agent, for him on
his behalf and in his name, place and stead, in any and all capacities, to sign,
execute and affix his seal thereto and file one or more Registration Statements
on Form N-1A under the Securities Act of 1933 and the Investment Company Act of
1940, including any amendment or amendments thereto, with all exhibits, and any
and all other documents required to be filed with any regulatory authority,
federal or state, relating to the registration thereof, or the issuance of
shares thereof, without limitation, granting unto said attorneys, and each of
them, full power and authority to do and perform each and every act and thing
requisite and necessary to be done in and about the premises in order to
effectuate the same as fully to all intents and purposes as he might or could do
if personally present, hereby ratifying and confirming all that said attorneys-
in-fact and agents, or any of them, may lawfully do or cause to be done by
virtue hereof.
IN WITNESS WHEREOF, the undersigned director of the above-referenced
organization has hereunto set his hand this 14th day of February, 1995.
/s/ Timothy R. Schwertfeger
---------------------------
Timothy R. Schwertfeger
STATE OF ILLINOIS )
)SS
COUNTY OF COOK )
On this 14th day of February, 1995, personally appeared before me, a Notary
Public in and for said County and State, the person named above who is known to
me to be the person whose name and signature is affixed to the foregoing Power
of Attorney and who acknowledged the same to be his voluntary act and deed for
the intent and purposes therein set forth.
-------------------------------
"OFFICIAL SEAL"
Virginia L. Corcoran
(SEAL) Notary Public, State of /s/ Virginia L. Corcoran
Illinois -------------------------
My Commission Expires 10/26/97 Notary Public
-------------------------------
My Commission Expires: 10/26/97
<PAGE>
EXHIBIT 99(c)
NUVEEN TAX-EXEMPT UNIT TRUSTS
NUVEEN TAX-EXEMPT MUTUAL FUNDS
NUVEEN MUNICIPAL EXCHANGE-TRADED FUNDS
NUVEEN ADVISORY CORP.
NUVEEN INSTITUTIONAL ADVISORY CORP.
JOHN NUVEEN & CO. INCORPORATED
THE JOHN NUVEEN COMPANY
______________________________
Standards and Procedures
Regarding
Conflicts of Interest
______________________________
Code of Ethics
And
Reporting Requirements
The Securities and Exchange Commission, in Investment Company Act Release No.
ll42l, has adopted Rule l7j-l "to provide guidance to investment companies as to
the minimum standards of conduct appropriate for persons who have access to
information regarding the purchase and sale of portfolio securities by
investment companies." The Rule requires registered investment companies, their
investment advisers and their principal underwriters to adopt codes of ethics
and reporting requirements to guard against violations of the standards set
forth in the Rule and the principles provided below and to establish guidelines
for the conduct of persons who (1) may obtain information concerning securities
held by or considered for purchase or sale by any series of the Nuveen Tax-
Exempt Unit Trusts (the "Trusts") or by any of the registered management
investment companies (the "Funds") or non-management investment company clients
("Clients") to which Nuveen Advisory Corp. or Nuveen Institutional Advisory
Corp. act as investment advisers or (2) who may make any recommendation or
participate in the determination of which recommendation shall be made
concerning the purchase or sale of any securities by a Trust, Fund or Client.
This Code of Ethics (the "Code") consists of six sections -- 1. Statement of
General Principles; 2. Definitions; 3. Exempted Transactions; 4. Prohibitions;
5. Reporting Requirements; and 6. Sanctions.
I. Statement of General Principles
The Code is based upon the principle that the officers, directors and
employees of a Fund, Nuveen Advisory Corp., Nuveen Institutional Advisory
Corp., John Nuveen & Co. Incorporated and The John Nuveen Company owe a
fiduciary duty to, among others, the unitholders and shareholders of the
Trusts and Funds and the Clients, to conduct their personal securities
transactions in a manner which does not interfere with Trust, Fund or
Client portfolio transactions or otherwise take unfair advantage of their
relationship to the Trusts, Funds or Clients. In accordance with this
general principle, persons covered by the Code must: (1) place the
interests of unitholders and shareholders of the Trusts and Funds and the
<PAGE>
2
Clients first; (2) execute personal securities transactions in compliance
with the Code; (3) avoid any actual or potential conflict of interest and
any abuse of their positions of trust and responsibility; and (4) not take
inappropriate advantage of their positions. It bears emphasis that
technical compliance with the Code's procedures will not automatically
insulate from scrutiny trades which show a pattern of abuse of the
individual's fiduciary duties to the Trust, Fund or Client.
II. Definitions
As used herein:
(l) "Access person" shall mean any director, officer or advisory person of
any Fund or of Nuveen Advisory Corp. or Nuveen Institutional Advisory
Corp.
A list of persons deemed to be access persons is attached as Exhibit
A.
(2) "Advisory person" shall mean:
(a) Any employee of a Fund, of Nuveen Advisory Corp., of Nuveen
Institutional Advisory Corp. or of John Nuveen & Co. Incorporated
who, in connection with his or her regular functions or duties,
makes, participates in, or obtains information regarding the
purchase or sale of securities by a Trust, Fund or Client or whose
functions relate to the making of any recommendations with respect
to such purchases or sales; and
(b) Any director or officer of John Nuveen & Co. Incorporated or The
John Nuveen Company who in the ordinary course of business makes,
participates in or obtains information regarding the purchase or
sale of securities for a Trust, Fund or Client or recommendations
made with regard to the purchase or sale of a security by a Trust,
Fund or Client, or whose functions or duties relate to the making
of any recommendation to a Trust, Fund or Client regarding the
purchase or sale of securities.
(3) A security is "being considered for purchase or sale" when a
recommendation to purchase or sell a security has been made and
communicated and, with respect to the person making the
recommendation, when such person considers making such recommendation.
<PAGE>
3
(4) A person will be deemed to be the "beneficial owner" of securities:
(a) held in his or her own name or the name of his or her spouse and
their minor children;
(b) held in a trust
(i) of which such person is trustee and the trustee or members
of his or her immediate family have a vested interest in
the income of the trust,
(ii) in which such person has a vested beneficial interest, or
(iii) of which such person is settlor and which the settlor has
the power to revoke without consent of the beneficiaries; a
person will not be deemed to be the beneficial owner of
securities held in the portfolio of a registered investment
company solely by reason of his or her ownership of shares
or units of such registered investment company;
(c) held in any other name if by reason of any contract,
understanding, relationship, agreement or other arrangement such
person obtains benefits substantially equivalent to those of
ownership (e.g. the right to income from and the right to
exercise a controlling influence over the purchase or sale of
such securities) or would otherwise be deemed to beneficially own
such security for purposes of determining whether such person
would be subject to the provisions of Section l6 of the
Securities Exchange Act of l934 and the rules and regulations
thereunder, except that the determination of direct or indirect
beneficial ownership shall apply to all securities which an
access person has or acquires.
A person will not be deemed to be the beneficial owner of
securities held in the portfolio of a registered investment
company solely by reason of his or her ownership of shares or
units of such registered investment company.
(5) "Security" shall mean any stock, bond, debenture, evidence of
indebtedness or in general any other instrument defined to be a
security in Section 2(a)(36) of the Investment Company Act of l940
except that it shall not include securities issued by the Government
of the United States, short term debt securities which are "government
securities" within the meaning of Section 2(a)(16) of the Investment
Company Act of 1940, bankers' acceptances, bank certificates of
deposit, commercial paper and shares of registered open-end investment
companies.
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4
(6) "Purchase or sale of a security" shall include any transaction in
which a beneficial interest in a security is acquired or disposed of,
including but not limited to the writing of an option to purchase or
sell a security.
(7) "Control" shall have the same meaning as set forth in Section 2(a) (9)
of the Investment Company Act of 1940.
(8) "Investment personnel" shall mean any employee of a Fund, Nuveen
Advisory Corp. or Nuveen Institutional Advisory Corp. who acts as a
portfolio manager or as an analyst or trader who provides information
or advice to the portfolio manager or who helps execute the portfolio
manager's decisions. A list of investment personnel is attached as
Exhibit B.
(9) "Portfolio manager" shall mean any employee of a Fund, Nuveen Advisory
Corp. or Nuveen Institutional Advisory Corp. who is entrusted with the
direct responsibility and authority to make investment decisions
affecting a Trust, Fund or Client. A list of portfolio managers is
attached as Exhibit C.
III. Exempted Transactions
The prohibitions of Section IV of this Code shall not apply to:
(1) Purchases or sales affecting any account over which the party involved
has no direct or indirect influence or control;
(2) Purchases or sales of securities which are not:
(a) acquired in a private placement;
(b) shares of The John Nuveen Company;
(c) municipal securities; or
(d) shares of Nuveen-sponsored exchange-traded funds.
(3) Purchases or sales which are non-volitional on the part of either the
party involved or a Trust, Fund or Client;
(4) Purchases which are part of an automatic dividend reinvestment plan.
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5
(5) Purchases effected upon the exercise of rights issued by an issuer pro
rata to all holders of a class of its securities, to the extent such
rights were acquired from such issuer, and sales of such rights so
acquired.
IV. Prohibitions
(l) Unless such transaction is exempted above or is previously cleared in
the manner described in paragraph (9) below, no access person shall
purchase or sell the following securities for his or her own account
or for any account in which he or she has any beneficial ownership:
(a) securities offered in a private placement;
(b) shares of The John Nuveen Company;
(c) municipal securities; or
(d) shares of a Nuveen-sponsored exchange-traded fund.
The purchase of securities identified in paragraph (1)(a) by
investment personnel must also comply with paragraph (4) below.
(2) No access person shall execute a securities transaction on a day
during which a Trust, Fund or Client has a pending "buy" or "sell"
order in that same security until that order is executed or withdrawn.
Trades made in violation of this prohibition should be unwound or, if
that is impractical, any profits realized must be disgorged to a
charitable organization.
(3) Investment personnel shall not purchase any securities in an initial
public offering except an offering of securities issued by municipal
or United States government entities.
(4) Unless such transaction is previously approved in the manner described
in paragraph (10) below and the criteria set forth in that paragraph
are followed, investment personnel shall not purchase any security in
a private placement.
(5) Investment personnel shall not profit in the purchase and sale, or
sale and purchase, of the same (or equivalent) security within 60
calendar days if such security is a municipal security or shares
issued by a Nuveen-sponsored exchange-traded fund. Trades made in
violation of this prohibition should be unwound or, if that is
impractical, any profits realized must be disgorged to a charitable
organization.
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6
(6) Investment personnel shall not accept any gift or other thing of more
than de minimis value from any person or entity that does business
with or on behalf of a Trust, Fund or Client. For purposes of this
prohibition the term "de minimis value" shall have the same meaning
expressed in the National Association of Securities Dealers, Inc.
Rules of Fair Practice.
(7) Unless such service is previously cleared in the manner described in
paragraph (11) below and the criteria set forth in that paragraph are
followed, investment personnel shall not serve as board members or
other decision-makers for entities that issue municipal securities.
(8) No portfolio manager of a Trust, Fund or Client shall purchase or sell
any security within seven calendar days before or after the Fund or
Client he surveys or manages trades or considers to purchase or sell
such security. Trades made in violation of this prohibition should be
unwound or, if that is impractical, any profits realized must be
disgorged to a charitable organization.
(9) An access person may request clearance of a transaction otherwise
prohibited by paragraph (1) above prior to the placement of any order
in connection therewith by submitting a written request for clearance
to the Chairman or President of John Nuveen & Co. Incorporated or his
designee, with a copy to the Legal Department. Such request shall
state the title and principal amount of the security proposed to be
purchased or sold, the nature of the transaction, the price at which
the transaction is proposed to be effected, and the name of the
broker, dealer or bank with or through whom the transaction is
proposed to be effected. No such transaction may be effected without
the prior clearance of the transaction and the price by the Chairman
or President or his designee. Employee transaction tickets must bear
initials showing such clearance before processing. Preclearance shall
be valid for three days. Transactions may be cleared by the Chairman
or President or his designee only if such officer determines that the
potential harm to any Trust, Fund or Client is highly remote or non-
existent because such transaction would be very unlikely to affect a
highly institutional market, or because it clearly is not related
economically to the securities to be purchased, sold or held by any
Trust, Fund or Client.
(10) Investment personnel may request approval of a transaction otherwise
prohibited by paragraph (4) above prior to the placement of any order
in connection therewith by submitting a written request for approval
to the Chairman or President of John Nuveen & Co. Incorporated or his
designee, with a copy to the Legal Department. Such request shall
state the title and principal amount of the security proposed to be
purchased or sold, the nature of the transaction, the price at which
the transaction is proposed to be effected, and the name of the
broker, dealer or bank with or through
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7
whom the transaction is proposed to be effected. No such transaction
may be effected without the prior approval of the transaction and the
price by the Chairman or President or his designee. Employee
transaction tickets must bear initials showing such approval before
processing. Any approval shall be valid for three days. Transactions
may be approved by the Chairman or President or his designee only if
such officer takes into account, among other factors, whether the
investment opportunity should be reserved for a Trust, Fund or Client
and any shareholders or unitholders affected, and whether the
opportunity is being offered to an individual by virtue of his or her
position. In addition, Investment personnel who receive authorization
to purchase securities in a private placement have an affirmative duty
to disclose that position to the Chairman or President or his designee
if he or she plays a role in a Trust's, Fund's or Client's subsequent
investment decision regarding the same issuer. Once such disclosure is
made, the Chairman or President or his designee shall assemble a
commission of investment personnel with no personal interest in the
issuer involved to independently review the Trust's, Fund's or
Client's investment decision.
(11) Investment Personnel may request clearance of service otherwise
prohibited by paragraph (7) above, prior to acceptance of any such
position, by submitting a written request for clearance to the
Chairman or President of John Nuveen & Co. Incorporated or his
designee, with a copy to the Legal Department. Such request shall
state the position sought, the reason service is desired and any
possible conflicts of interest known at the time of the request. No
such position may be accepted without the prior clearance by the
Chairman or President or his designee. Service may be cleared by the
Chairman or President or his designee only if such officer determines
that service in that capacity would be consistent with the interests
of the Trusts, Funds or Clients and any shareholders or unitholders
affected. In addition, Investment personnel who receive authorization
to serve in such a capacity must be isolated through "Chinese Wall"
procedures from those making investment decisions regarding securities
issued by the entity involved.
V. Reporting Requirements
(l) Every access person (other than directors of a Fund who are not
"interested persons" of such Fund) shall report to the Legal
Department of John Nuveen & Co. Incorporated details of each
transaction by reason of which he or she acquires any direct or
indirect beneficial ownership of any security. Notwithstanding the
foregoing, an access person need not make a report pursuant hereto
where such report would duplicate information recorded pursuant to
Rules 204-2(a)(l2) or 204-2(a)(l3) under the Investment Advisers Act
of l940. In addition to the reporting requirement expressed above,
every access person (including directors who are not "interested
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8
persons") shall direct his or her broker or brokers to supply to the
Legal Department, on a timely basis, duplicate copies of confirmations
of all securities transactions and copies of periodic statements for
all securities accounts involving securities in which such access
person acquires or foregoes direct or indirect beneficial ownership.
(2) Every director of a Fund who is not an "interested person" of such
Fund shall be required to report the details of each transaction with
respect to which such director knew or, in the ordinary course of
fulfilling his or her official duties as a director of the Fund,
should have known that during the 15 day period immediately preceding
or after the date of the transaction in a security by the director
such security is or was purchased or sold by the Fund or such purchase
or sale by the Fund is or was considered by the Fund or its investment
adviser.
(3) Every report required to be made pursuant to paragraphs 1 and 2 of
this Section (other than duplicate copies of confirmations and
periodic statements) shall be made not later than l0 days after the
end of the calendar quarter in which the transaction to which the
report relates was effected, and shall contain the following
information:
(a) the date of the transaction, the title and the number of shares,
or principal amount of each security involved;
(b) the nature of the transaction (i.e., purchase, sale or any other
type of acquisition or disposition);
(c) the price at which the transaction was effected; and
(d) the name of the broker, dealer or bank with or through whom the
transaction was effected.
Any such report may contain a statement that the report shall not be
construed as an admission by the person making such report that he or
she has any direct or indirect beneficial ownership in the security to
which the report relates.
(4) The reporting requirements established pursuant to paragraphs 1 and 2
of this Section (other than duplicate copies of confirmations and
periodic statements) shall apply only to transactions by an access
person in securities in which such access person has, or by reason of
such transaction acquires, any direct or indirect beneficial ownership
in the security.
(5) Investment personnel shall disclose to the General Counsel of John
Nuveen & Co. Incorporated all personal securities holdings within 10
days of commencement of employment as an investment person and shall
continue to disclose such holdings on an annual basis.
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9
VI. Sanctions
Upon discovery of a violation of this Code, any Fund, Nuveen Advisory
Corp., Nuveen Institutional Advisory Corp., John Nuveen & Co.
Incorporated or The John Nuveen Company may impose such sanctions as
it deems appropriate, including, inter alia, a letter of censure or
suspension or termination of the employment of the violator. All
material violations of this Code and any sanctions imposed with
respect thereto shall be reported periodically to the board of
directors of the management investment company with respect to
securities of which the violation occurred, or to the Executive
Committee of John Nuveen & Co. Incorporated if the violation was with
respect to securities of any series of the Nuveen Tax-Exempt Unit
Trusts, or to the board of directors of Nuveen Institutional Advisory
Corp. or Nuveen Advisory Corp. with respect to securities of non-
management investment company clients advised by these entities.
Revised October 1994
