<PAGE>
NUVEEN
MONEY MARKET
FUNDS
August 31, 1998
SEMIANNUAL REPORT
DEPENDABLE, TAX-FREE INCOME
TO HELP YOU KEEP MORE OF
WHAT YOU EARN.
[PHOTO APPEARS HERE]
RESERVES
CALIFORNIA
MASSACHUSETTS
NEW YORK
<PAGE>
DEAR SHAREHOLDERS
[Photo of Timothy R. Schwertfeger Appears Here]
Wealth takes a lifetime to build. Once achieved, it should be preserved
Dear Shareholder
I am pleased to report on the performance of your Nuveen tax-free money market
fund for the six-month period ended August 31, 1998. During a period that saw
significant volatility in the financial markets as a whole, your fund continued
to provide a haven for investors seeking to retain the assets they've built over
a lifetime.
MARKET REVIEW
The past year has been one of ups and downs for the markets, in large part due
to the aftershocks of the financial crisis in Asia. For many investors, the
response to that market uncertainty was a rush to more conservative investments
a "flight to quality." As a result, yields in the municipal bond market
continued to fall.
The near-term decline in interest rates was partially the result of expectations
that the financial troubles in Asia would restrain the prices of imported goods
and reduce foreign demand for U.S. products and services, thus keeping inflation
at a moderate level. Those expectations were largely fulfilled, as the Consumer
Price Index rose just .93% for the six month period ended August 31, 1998, among
its lowest levels in years.
While rates on long-term municipal bonds did not fall to the historic lows that
the 30-year Treasury bond did, they remained low enough to command a large
percentage of new issuance volume over the past year. As a result, short-term
municipal investors faced relatively low supply, except in certain individual
states, making good values more difficult to find.
Overall, we foresee continued strong demand for U.S. bonds, especially until the
Asian crisis and its ripple effects in the world economy have subsided. Over the
near term, that should keep bond prices high and rates relatively low, helping
to prolong the U.S. economic expansion. In the coming months, we will continue
to watch several key factors that could influence the tone of the fixed-income
markets, including the demand for goods and services, the availability of
qualified employees, and indications from the Federal Reserve.
-----
1
<PAGE>
"The funds proved able to offer competitive tax-free income, while maintaining
the outstanding credit quality and liquidity that are their hallmarks."
PERFORMANCE REVIEW
Despite generally tight supply in the short-term municipal market, the Nuveen
Money Market Funds posted attractive returns while helping investors preserve
capital in volatile markets.
As of August 31, 1998, investors were receiving seven-day annualized tax-free
yields that ranged from 2.72% to 2.88%, which are equivalent to yields of 4.17%
to 4.60% on an after-tax basis for investors in the 31% federal and applicable
state income tax bracket.
PORTFOLIO ADJUSTMENTS
High demand in the short-term market and declining yields made this segment of
the municipal bond market challenging. Competition for short-term paper caused
rates that were already low to drop even lower. Supply and demand factors made
it harder to find attractive values as short term interest rates fell.
Despite the past year's demanding market, the funds proved able to offer
competitive tax-free income, while maintaining the outstanding credit quality
and liquidity that are their hallmarks.
EXPERTISE MAKES THE DIFFERENCE
Many investors choose the Nuveen tax-free money market funds because of their
emphasis on stability of principal and competitive short-term yields. But behind
that combination of performance and protection is more than 100 years of
experience in the municipal markets. Our experience is evidenced through
capabilities like Nuveen's unparalleled municipal market research, which
identifies opportunities in the markets that are undiscovered or overlooked by
other investors.
In volatile markets, that expertise can make a world of difference. Combined
with our full family of equity, balanced, and tax-free investments, it can
provide you with the diversification and disciplined investment approach you
need to bring balance to your overall investment strategy. I encourage you to
talk with your financial adviser about Nuveen's growing range of investments, or
call (800) 257-8787 for a prospectus detailing all charges and expenses. Be sure
to read it carefully before you invest. On behalf of everyone at Nuveen, we
appreciate the opportunity to help you reach your financial goals.
Sincerely,
/s/ Timothy R. Schwertfeger
---------------------------
Timothy R. Schwertfeger
Chairman of the Board
October 15, 1998
-----
2
<PAGE>
NUVEEN TAX-FREE RESERVES, INC.
PERFORMANCE OVERVIEW
AS OF AUGUST 31, 1998
- -----------------------------------------------------------
Portfolio Statistics
- -----------------------------------------------------------
Inception Date 11/82
- -----------------------------------------------------------
Net Assets ($000) $254,688
- -----------------------------------------------------------
Average Weighted Maturity (days) 46
- -----------------------------------------------------------
- -----------------------------------------------------------
Tax-Free Yields
- -----------------------------------------------------------
SEC 7-Day Yield 2.88%
- -----------------------------------------------------------
SEC 30-Day Yield 2.87%
- -----------------------------------------------------------
- -----------------------------------------------------------
Taxable Equivalent
- -----------------------------------------------------------
Federal Income Tax Rate 31.00%
- -----------------------------------------------------------
SEC 7-Day Yield 4.17%
- -----------------------------------------------------------
SEC 30-Day Yield 4.16%
- -----------------------------------------------------------
- -----------------------------------------------------------
Diversification (as a % of total investments)
- -----------------------------------------------------------
Tax Obligation (General) 18%
- -----------------------------------------------------------
Health Care 16%
- -----------------------------------------------------------
Utilities 16%
- -----------------------------------------------------------
Long Term Care 10%
- -----------------------------------------------------------
Industrial (Other) 8%
- -----------------------------------------------------------
Education and Civic Organizations 6%
- -----------------------------------------------------------
Water and Sewer 6%
- -----------------------------------------------------------
Tax Obligation (Limited) 6%
- -----------------------------------------------------------
Basic Materials 5%
- -----------------------------------------------------------
Capital Goods 4%
- -----------------------------------------------------------
Consumer Cyclicals 4%
- -----------------------------------------------------------
Housing (Multifamily) 1%
- -----------------------------------------------------------
NUVEEN CALIFORNIA
TAX-FREE MONEY MARKET FUND
PERFORMANCE OVERVIEW
AS OF AUGUST 31, 1998
- -----------------------------------------------------------
Portfolio Statistics
- -----------------------------------------------------------
Inception Date 3/86
- -----------------------------------------------------------
Net Assets ($000) $148,962
- -----------------------------------------------------------
Average Weighted Maturity (days) 47
- -----------------------------------------------------------
- -----------------------------------------------------------
Tax-Free Yields
- -----------------------------------------------------------
SEC 7-Day Yield 2.88%
- -----------------------------------------------------------
SEC 30-Day Yield 2.66%
- -----------------------------------------------------------
- -----------------------------------------------------------
Taxable Equivalent
- -----------------------------------------------------------
Federal and State Income Tax Rate 37.40%
- -----------------------------------------------------------
SEC 7-Day Yield 4.60%
- -----------------------------------------------------------
SEC 30-Day Yield 4.25%
- -----------------------------------------------------------
- -----------------------------------------------------------
Diversification (as a % of total investments)
- -----------------------------------------------------------
Tax Obligation (General) 24%
- -----------------------------------------------------------
Health Care 18%
- -----------------------------------------------------------
Tax Obligation (Limited) 17%
- -----------------------------------------------------------
Water and Sewer 16%
- -----------------------------------------------------------
Housing (Multifamily) 15%
- -----------------------------------------------------------
Consumer Staples 5%
- -----------------------------------------------------------
Transportation 2%
- -----------------------------------------------------------
Utilities 3%
- -----------------------------------------------------------
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3
<PAGE>
NUVEEN MASSACHUSETTS
TAX-FREE MONEY MARKET FUND
PERFORMANCE OVERVIEW
AS OF AUGUST 31, 1998
- -----------------------------------------------------------
Portfolio Statistics
- -----------------------------------------------------------
Inception Date 2/87
- -----------------------------------------------------------
Net Assets ($000) $39,544
- -----------------------------------------------------------
Average Weighted Maturity (days) 36
- -----------------------------------------------------------
- -----------------------------------------------------------
Tax-Free Yields
- -----------------------------------------------------------
SEC 7-Day Yield 2.72%
- -----------------------------------------------------------
SEC 30-Day Yield 2.74%
- -----------------------------------------------------------
- -----------------------------------------------------------
Taxable Equivalent
- -----------------------------------------------------------
Federal and State Income Tax Rate 39.30%
- -----------------------------------------------------------
SEC 7-Day Yield 4.48%
- -----------------------------------------------------------
SEC 30-Day Yield 4.51%
- -----------------------------------------------------------
- -----------------------------------------------------------
Diversification (as a % of total investments)
- -----------------------------------------------------------
Tax Obligation (General) 27%
- -----------------------------------------------------------
Education and Civic Organizations 24%
- -----------------------------------------------------------
Health Care 23%
- -----------------------------------------------------------
Housing (Multi-family) 11%
- -----------------------------------------------------------
Long Term Care 5%
- -----------------------------------------------------------
Water and Sewer 5%
- -----------------------------------------------------------
Utilities 3%
- -----------------------------------------------------------
Tax Obligation (Limited) 2%
- -----------------------------------------------------------
NUVEEN NEW YORK
TAX-FREE MONEY FUND
PERFORMANCE OVERVIEW
AS OF AUGUST 31, 1998
- -----------------------------------------------------------
Portfolio Statistics
- -----------------------------------------------------------
Inception Date 2/87
- -----------------------------------------------------------
Net Assets ($000) $33,368
- -----------------------------------------------------------
Average Weighted Maturity (days) 25
- -----------------------------------------------------------
- -----------------------------------------------------------
Tax-Free Yields
- -----------------------------------------------------------
SEC 7-Day Yield 2.73%
- -----------------------------------------------------------
SEC 30-Day Yield 2.67%
- -----------------------------------------------------------
- -----------------------------------------------------------
Taxable Equivalent
- -----------------------------------------------------------
Federal and State Income Tax Rate 35.70%
- -----------------------------------------------------------
SEC 7-Day Yield 4.25%
- -----------------------------------------------------------
SEC 30-Day Yield 4.15%
- -----------------------------------------------------------
- -----------------------------------------------------------
Diversification (as a % of total investments)
- -----------------------------------------------------------
Tax Obligation (General) 23%
- -----------------------------------------------------------
Education and Civic Organizations 16%
- -----------------------------------------------------------
Tax Obligation (Limited) 12%
- -----------------------------------------------------------
Utilities 12%
- -----------------------------------------------------------
Consumer Cyclicals 8%
- -----------------------------------------------------------
Long Term Care 6%
- -----------------------------------------------------------
Financials 3%
- -----------------------------------------------------------
Health Care 5%
- -----------------------------------------------------------
Housing (Multifamily) 6%
- -----------------------------------------------------------
Industrial (Other) 3%
- -----------------------------------------------------------
Water and Sewer 6%
- -----------------------------------------------------------
-----
4
<PAGE>
PORTFOLIO OF INVESTMENTS
NUVEEN TAX-FREE RESERVES, INC.
August 31, 1998
<TABLE>
<CAPTION>
PRINCIPAL AMORTIZED
AMOUNT DESCRIPTION RATINGS* COST
- -------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
ALABAMA - 0.6%
$1,500,000 Citronelle Industrial Development Board, Tax Exempt Adjustable Aa-2 $1,500,000
Mode Refunding Pollution Control Revenue (AKZO Chemicals),
Variable Rate Demand Bonds, Series 1992, 3.450%, 2/01/04+
- -------------------------------------------------------------------------------------------------------------------------------
ARIZONA - 5.5%
5,900,000 Maricopa County, Arizona, Pollution Control Corporation, A-1+ 5,900,000
Pollution Control Revenue Refunding Bonds (Arizona Public
Service A-1+ 5,900,000 Company -Palo Verde Project), 1994
Series F, Variable Rate Demand Bonds, 3.350%, 5/01/29+
8,000,000 Mesa Municipal Development Corporation, Special Tax Bonds - VMIG-1 8,000,000
Series 1985, Variable Rate Demand Bonds, 3.700%, 1/01/08+
- -------------------------------------------------------------------------------------------------------------------------------
CALIFORNIA - 2.4%
3,000,000 California School Cash Reserve Program Authority, 1998 Pool VMIG-1 3,018,290
Bonds, Series A, Commercial Paper, 4.500%, 7/02/99
3,000,000 Orange County Irvine Coast Assessment District #88-1, Variable VMIG-1 3,000,000
Rate Demand Bonds, 3.150%, 9/02/18+
- -------------------------------------------------------------------------------------------------------------------------------
COLORADO - 3.2%
5,000,000 Fort Morgan Water Works and Distribution Enterprise, Water A-1+ 5,000,000
Revenue Bonds, Series 1997, Variable Rate Demand Bonds,
3.350%, 12/01/17+
3,100,000 South Denver Metropolitan District, City and County of Denver, VMIG-1 3,100,000
Colorado, General Obligation Bonds, Series 1985, Variable Rate
Demand Bonds, 3.700%, 12/01/05+ (Optional put 11/30/98)
- -------------------------------------------------------------------------------------------------------------------------------
DISTRICT OF COLUMBIA - 1.9%
4,900,000 District of Columbia General Obligation Bonds, Series 1992A-2, VMIG-1 4,900,000
Variable Rate Demand Bonds, 3.450%, 10/01/07+
- -------------------------------------------------------------------------------------------------------------------------------
FLORIDA - 4.7%
3,100,000 Pasco County Housing Finance Authority, Multi-Family Housing VMIG-1 3,100,000
Revenue Bonds (Carlton Arms of Magnolia Valley Project), Series
1985, Variable Rate Demand Bonds, 3.425%, 12/01/07+
4,800,000 Sarasota County Public Hospital District, Sarasota Memorial A-1+ 4,800,000
Hospital Project, Series S, Commercial Paper, 3.500%, 11/18/98
4,000,000 Sunshine State Governmental Financing Communication, Commercial VMIG-1 4,000,000
Paper, 3.600%, 10/09/98
- -------------------------------------------------------------------------------------------------------------------------------
HAWAII - 0.4%
900,000 Department of Budget and Finance of the State of Hawaii, Special A-1 900,000
Purpose Floating Rate Demand Revenue Bonds
(Adventist Health System-West), Series 1984, Variable Rate
Demand Bonds, 3.900%, 9/01/99+
- -------------------------------------------------------------------------------------------------------------------------------
ILLINOIS - 19.3%
5,500,000 Illinois Health Facilities Authority, Series 1997 (Victory VMIG-1 5,500,000
Health Services), Variable Rate Demand Bonds, 3.550%,
2/15/16+
7,000,000 Illinois Development Finance Authority, Pollution Control P-1 7,000,000
Revenue Bonds (Diamond-Star Motors Corporation Project),
Series 1985, Commercial Paper, 3.450%, 9/24/98
2,500,000 Illinois Development Finance Authority, Radiological Society of A-1+ 2,500,000
North America, Series 1997, Variable Rate Demand Bonds,
3.400%, 6/01/17+
6,000,000 Illinois Educational Facilities Authority, Adjustable Demand VMIG-1 6,000,000
Revenue Bonds, Shedd Aquarium Society, Series 1987B,
Commercial Paper, 3.700%, 7/20/99 3,000,000
3,000,000 City of Chicago, General Obligation 5,000,000 Notes, Series 1997, MIG-1 3,000,000
3.550%, 10/29/98
5,000,000 City of Chicago, General Obligation 5,730,000 Notes, Series 1998, SP-1+ 5,000,000
3.550%, 2/04/99
5,730,000 City of Chicago, Variable Rate Demand Revenue Bonds, De La Salle A-1+ 5,730,000
Institute Project, 3.350%, 4/01/27+
10,700,000 Decatur (New South Water Treatment), 1985 Water Revenue Updates, VMIG-1 10,700,000
Commercial Paper, 4.200%, 9/11/98
</TABLE>
-----
5
<PAGE>
PORTFOLIO OF INVESTMENTS (UNAUDITED)
NUVEEN TAX-FREE RESERVES, INC. (continued)
August 31, 1998
<TABLE>
<CAPTION>
PRINCIPAL AMORTIZED
AMOUNT DESCRIPTION RATINGS* COST
- -----------------------------------------------------------------------------------------------------------------------------------
ILLINOIS (continued)
<S> <C> <C>
$2,100,000 City of Macomb, Illinois, Adjustable Rate Capital Improvement Revenue Bonds, Series 1996 N/R $ 2,100,000
(Wesley Village Project), Variable Rate Demand Bonds, 3.450%, 8/01/17+
1,770,000 Village of Oak Park, Illinois, Variable Rate Demand Revenue Bonds N/R 1,770,000
(Lone Tree Area Girl Scout Council, Inc. Project), Series 1997, 3.450%, 11/01/17+
- -----------------------------------------------------------------------------------------------------------------------------------
INDIANA - 2.0%
5,000,000 Washington Township Metropolitan School District of Marion County, General Obligation N/R 5,007,324
Temporary Loan Warrants, 1998 Second Series, 4.000%, 12/31/98
- -----------------------------------------------------------------------------------------------------------------------------------
IOWA - 1.1%
2,900,000 City of Eddyville, Iowa, Industrial Development Revenue Bonds (Heartland Lysine, Inc. Project), N/R 2,900,000
Series 1985, Variable Rate Demand Bonds, 3.550%, 11/01/03+
- -----------------------------------------------------------------------------------------------------------------------------------
KENTUCKY - 3.5%
9,005,000 Hancock County, Kentucky, Industrial Building Revenue Refunding Bonds N/R 9,005,000
(Southwire Company Project), Series 1990, Variable Rate Demand Bonds, 3.450%, 7/01/10+
- -----------------------------------------------------------------------------------------------------------------------------------
LOUISIANA - 3.7%
8,000,000 Ascension Parish Pollution Control (BASF Wyandotte Corporation), P-1 8,000,000
Variable Rate Demand Bonds, 3.750%, 12/01/05+
1,410,000 Kentwood Industrial Development Refunding Revenue, Suntory Water Group Inc., Aa-2 1,410,000
Variable Rate Demand Bonds, 3.450%, 8/01/12+
- -----------------------------------------------------------------------------------------------------------------------------------
MICHIGAN - 6.4%
3,500,000 Michigan State Full Faith and Credit General Obligation Notes, 4.500%, 9/30/98 MIG-1 3,502,300
7,100,000 Michigan Job Development Authority, Limited Obligation Revenue Bonds (Frankenmuth Bavarian A-1 7,100,000
Inn Motor Lodge Project), Series A, Variable Rate Demand Bonds, 3.900%, 9/01/15+
5,000,000 Detroit City School District, Wayne County, Michigan, State Aid School Notes, SP-1+ 5,034,013
Series 98, 4.500%, 7/01/99
735,000 The Economic Development Corporation of the City of Warren, MaComb County, Michigan,
Floating Rate Limited Obligation Revenue Bonds (The Prince Company, Inc., Michigan Division
Project, Series A, Variable Rate Demand Bonds, 3.800%, 11/01/99+ P-1 735,000
- -----------------------------------------------------------------------------------------------------------------------------------
MINNESOTA - 2.0%
5,125,000 City of Bloomington, Minnesota, Floating Rate Demand Commercial Revenue Bonds
(James Avenue Associates Project), Series 1985, Variable Rate Demand Bonds, 3.300%, 12/01/15+ A-1+ 5,125,000
- -----------------------------------------------------------------------------------------------------------------------------------
MISSOURI - 4.9%
4,600,000 Health and Educational Facilities Authority of the State of Missouri, Variable Rate Demand
Revenue Bonds, Health Facilities Revenue Bonds (Bethesda Barclay),
Series 1996A, 3.300%, 8/15/26+ VMIG-1 4,600,000
8,000,000 State Environmental Improvement and Energy Resources Authority of the State of Missouri,
Unit Priced Demand AdjustablePollution Control Revenue Bonds, Series 1985 A
(Union Electric Company), Commercial Paper, 3.500%, 10/16/98 VMIG-1 8,000,000
- -----------------------------------------------------------------------------------------------------------------------------------
NEW HAMPSHIRE - 2.7%
6,800,000 New Hampshire Higher Educational and Health Facilities Authority, Hunt Community Issue, A-1 6,800,000
Series 1996 Variable Rate Demand Bonds, 3.400%, 5/01/26+
- -----------------------------------------------------------------------------------------------------------------------------------
NORTHCAROLINA - 1.2%
3,000,000 The Wake County Industrial Facilities and Pollution Control Financing Authority, VMIG-1 3,000,000
Pollution Control Refunding Bonds (Carolina Power and Light Company Project),
Series 1985C, Commercial Paper, 3.300%, 9/07/98
- -----------------------------------------------------------------------------------------------------------------------------------
OHIO - 8.9%
2,555,000 Ohio School Districts, 1998 Cash Flow Borrowing Program, Certificates of Participation, MIG-1 2,559,703
Series A, 4.120%, 12/31/98
7,800,000 Centerville Health Care Revenue Bonds (Bethany Lutheran Village Continuing Care VMIG-1 7,800,000
Facilities Expansion Project), Variable Rate Demand Bonds, 3.350%, 5/01/08+
</TABLE>
-----
6
<PAGE>
<TABLE>
<CAPTION>
PRINCIPAL AMORTIZED
AMOUNT DESCRIPTION RATINGS* COST
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
OHIO (continued)
$ 3,600,000 Cuyahoga County, University Hospital of Cleveland, Series 1985, Variable
Rate Demand Bonds, 3.900%, 1/01/16+ VMIG-2 $3,600,000
5,120,000 County of Erie, Ohio, Adjustable Rate Demand Health Care Facilities Revenue Bonds
(The Commons of Providence Project), Series 1996 B, Variable Rate Demand Bonds,
3.410%, 10/01/21+ VMIG-1 5,120,000
3,570,000 County of Franklin, Ohio, Floating Rate Demand Hospital Financing Revenue Bonds,
Series 1993 (Traditions at Mill Run Project), Variable Rate Demand Bonds, 3.380%,
11/01/14+ N/R 3,570,000
- ----------------------------------------------------------------------------------------------------------------------------------
PENNSYLVANIA - 5.6%
2,250,000 Butler County Industrial Development Authority (Pennsylvania), Industrial
Development Revenue Bonds (Wise Business Forms, Incorporated Project),
Variable Rate Demand Bonds, Series 1997, 3.360%, 8/01/18+ N/R 2,250,000
7,000,000 Dauphin County General Authority (Pennsylvania), Variable Rate Demand Revenue Bonds
(AllHealth Pooled Financing Program), Series A of 1997, 3.350%, 10/01/27+ A-1+ 7,000,000
5,000,000 Philadelphia Tax and Revenue Anticipation Notes, Series 1998-99A, 4.250%, 6/30/99 MIG-1 5,024,517
- ----------------------------------------------------------------------------------------------------------------------------------
TENNESSEE - 1.4%
3,500,000 The Industrial Development Board of the County of Jackson, Tennessee, Variable Rate
Industrial Development Demand Revenue Bonds (Esselte Project), Series 1985B,
Variable Rate Demand Bonds, 3.450%, 8/01/15+ N/R 3,500,000
- ----------------------------------------------------------------------------------------------------------------------------------
TEXAS - 6.4%
3,835,000 Austin Travis and Williamson Counties Combined Utilities Corporation, Commercial
Paper, 3.550%, 9/04/98 A-1+ 3,835,000
8,500,000 Brownsville Utility System, Commercial Paper, Series A, 3.500%, 11/13/98 A-1+ 8,500,000
3,900,000 Sabine River Authority of Texas, Collateralized Pollution Control Revenue Refunding
Bonds (Texas Utilities Electric Company Project), Series 1996A,
Variable Rate Demand Bonds, 3.300%, 3/01/26+ VMIG-1 3,900,000
- ----------------------------------------------------------------------------------------------------------------------------------
UTAH - 3.6%
3,500,000 Utah County Tax and Revenue Anticipation Notes, Series 1998, 4.000%, 12/31/98 N/R 3,505,810
2,000,000 Davis County Tax and Revenue Anticipation Notes, Series 1998, 4.250%, 12/31/98 N/R 2,003,222
3,550,000 West Valley City Industrial Development (Johnson Matthey Project), Variable Rate
Demand Bonds, 3.450%. 12/01/11+ N/R 3,550,000
- ----------------------------------------------------------------------------------------------------------------------------------
VIRGINIA - 2.3%
2,600,000 The Industrial Development Authority of the City of Norfolk, Floating Rate Industrial
Development Revenue Bonds (Norfolk-Virginia Beach-Portsmouth MSA Limited Partnership
Project), Variable Rate Demand Bonds, 5.525%, 11/01/04+ N/R 2,600,000
3,300,000 The Industrial Development Authority of the City of Richmond, Floating Rate Industrial
Development Revenue Bonds (Richmond MSA Limited Partnership Project),
Variable Rate Demand Bonds, 5.525%, 11/01/04+ N/R 3,300,000
- ----------------------------------------------------------------------------------------------------------------------------------
WASHINGTON - 1.8%
4,700,000 Washington Health Care Facilities Authority, Variable Rate Demand Revenue Bonds,
Series 1984 (Adventist Health System-West/Walla Walla General Hospital),
3.900%, 9/01/09+ A-1 4,700,000
- ----------------------------------------------------------------------------------------------------------------------------------
WISCONSIN - 3.5%
6,000,000 Wisconsin Health and Educational Facilities Authority, Alexian Village of Milwaukee,
Inc. Refinancing, Series 1988A, Commercial Paper, 4.200%, 9/17/98 VMIG-1 6,000,000
3,000,000 Wisconsin Health and Educational Facilities Authority, Adjustable Rate Put Option
Revenue Bonds, Froedtert Memorial Lutheran Hospital, Variable Rate Demand Bonds,
3.300%, 4/01/27+ A-1 3,000,000
- ----------------------------------------------------------------------------------------------------------------------------------
$251,955,000 Total Investments - 99.0% 252,055,179
- ----------------------------------------------------------------------------------------------------------------------------------
Other Assets Less Liabilities - 1.0% 2,633,144
--------------------------------------------------------------------------------------------------------------
Net Assets - 100% $254,688,323
--------------------------------------------------------------------------------------------------------------
</TABLE>
* Ratings: Using the higher of Standard & Poor's or
Moody's rating.
N/R Investment is not rated.
+ The security has a maturity of more than one year, but
has variable rate and demand features which qualify it
as a short-term security. The rate disclosed is that
currently in effect. This rate changes periodically
based on market conditions or a specified market index.
See accompanying notes to financial statements.
-----
7
<PAGE>
PORTFOLIO OF INVESTMENTS (UNAUDITED)
NUVEEN MASSACHUSETTS TAX-FREE MONEY MARKET FUND
August 31, 1998
<TABLE>
<CAPTION>
PRINCIPAL AMORTIZED
AMOUNT DESCRIPTION RATINGS* COST
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
CONSUMER STAPLES - 4.7%
$ 7,000,000 San Dimas Industrial Development Bonds (Bausch & Lomb Incorporated), Variable Rate
Demand Bonds, 3.550%, 12/01/15+N/R $ 7,000,000
- ------------------------------------------------------------------------------------------------------------------------------------
HEALTH CARE - 17.1%
3,800,000 California Health Facilities Financing Authority, Insured Revenue Bonds (Sutter/CHS), VMIG-1 3,800,000
Variable Rate Demand Bonds, 3.150%, 7/01/22+
5,000,000 California Health Facilities Financing Authority, Refunding Revenue Bonds (St. Joseph VMIG-1 5,000,000
Health System), Series 1985B, Variable Rate Demand Bonds, 3.150%, 7/01/13+
3,700,000 California Statewide Community Development Authority, Certificates of Participation VMIG-1 3,700,000
(Sutter Health Obligation Group), Variable Rate Demand Bonds, 3.350%, 7/01/15+
5,000,000 Tri-Modal, Variable Rate, Revenue Refunding Certificates of Participation (House Ear A-1+ 5,000,000
Institute), 1993 Series A, Variable Rate Demand Bonds, 3.150%, 12/01/18+
5,000,000 Torrance Hospital (Little Company of Mary Hospital - Torrance Memorial Hospital), Variable A-1+ 5,000,000
Rate Demand Bonds, 2.700%, 2/01/22+
3,000,000 Washington Township Hospital District, 1984 Issue A, Variable Rate Demand Bonds, 3.500%, VMIG-2 3,000,000
1/01/16+
- ------------------------------------------------------------------------------------------------------------------------------------
HOUSING/MULTIFAMILY - 14.1%
2,740,000 Chico Multifamily Housing (Sycamore Glen Project), Variable Rate Refunding Bonds, Series N/R 2,740,000
1995, Variable Rate Demand Bonds, 3.600%, 4/07/14+
3,000,000 Hayward Housing Authority, Multifamily Mortgage Revenue Refunding, Series 1993A (Huntwood A-2 3,000,000
Terrace), Variable Rate Demand Bonds, 4.200%, 3/01/27+
4,000,000 Los Angeles Community Redevelopment Agency (South Park Apartments), Variable Rate Demand VMIG-2 4,000,000
Bonds, 3.400%, 12/01/05+
4,696,000 City of Los Angeles (Studio Colony Project), Variable Rate Demand Bonds, Multifamily Housing VMIG-2 4,696,000
Revenue, 3.500%, 5/01/07+
5,500,000 County of Los Angeles, Variable Rate Demand Bonds, Multifamily Mortgage Revenue, 1984 Issue A-1+ 5,500,000
A, 2.500%, 7/01/14+
1,150,000 San Bernardino Multifamily Housing (Castle Park Apartments), Variable Rate Demand Bonds, VMIG-1 1,150,000
3.550%, 11/01/05+
- ------------------------------------------------------------------------------------------------------------------------------------
TAX OBLIGATION/GENERAL - 22.7%
3,000,000 California School Cash Reserve Program Authority, 1998 Pool Bonds, Series A, 4.500%, MIG-1 3,018,290
7/02/99
4,665,000 California Statewide Community Development Authority, 1997 Tax and Revenue Anticipation MIG-1 4,668,827
Notes, 4.750%, 9/30/98
3,000,000 County of Alameda, California, 1998 and 1999 Tax and Revenue Anticipation Notes, 4.500%, MIG-1 3,023,126
7/07/99
2,700,000 Elk Grove Unified School District, Sacramento County, California, 1998 Tax and Revenue SP-1+ 2,719,399
Anticipation Notes, 4.500%, 6/30/99
2,000,000 Riverside County School Financing Authority, 1997-98 Revenue Anticipation Notes, School MIG-1 2,001,386
Districts Financing Program, 4.500%, 10/01/98
5,000,000 Sacramento City Financing Authority, Bond Anticipation Notes, State of California, MIG-1 5,000,000
California EPA Building, 1998 Series A, 3.550%, 12/15/98
4,000,000 Sacramento County, 1997 Tax and Revenue Anticipation Notes, 4.500%, 9/30/98 MIG-1 4,002,213
4,401,000 San Diego County, Teeter Obligation Tax-Exempt Commercial Paper, Series B-1, 3.250%, P-1 4,401,000
10/30/98
5,000,000 South Coast Local Education Agencies, Pooled Tax and Revenue Anticipation Notes, Series SP-1+ 5,037,128
1998A, 4.500%, 6/30/99
- ------------------------------------------------------------------------------------------------------------------------------------
TAX OBLIGATION/LIMITED - 15.7%
5,000,000 Los Angeles County Metropolitan Transportation Authority, Second Subordinate Sales Tax A-1 5,000,000
Revenue, Commercial Paper, 2.900%, 9/04/98
5,000,000 Los Angeles County, Capital Assets Leasing Corporation, Lease Revenue, Tax-Exempt Commercial A-1+ 5,000,000
Tax Obligation/Limited (continued)
</TABLE>
-----
8
<PAGE>
<TABLE>
<CAPTION>
PRINCIPAL AMORTIZED
AMOUNT DESCRIPTION RATINGS* COST
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
TAX OBLIGATION/LIMITED (continued)
$1,900,000 Oakland, California, Certificates of Participation Capital Improvement Project, N/R $ 1,900,000
Variable Rate Demand Bonds, 3.050%, 12/01/15+
1,000,000 Orange County, Irvine Coast Assessment District #88-1, Variable Rate Demand Bonds, VMIG-1 1,000,000
3.150%, 9/02/18+
2,500,000 Riverside County, Teeter Obligation Tax-Exempt Commercial Paper, Series B, 3.050%, A-1+ 2,500,000
10/08/98
8,000,000 San Joaquin County Transportation Authority, Sales Tax Revenue, Commercial Paper A-1+ 8,000,000
(Limited Tax Bonds), 3.300%, 10/07/98
- ------------------------------------------------------------------------------------------------------------------------------------
TRANSPORTATION - 2.1%
3,065,000 San Francisco Airport Commission, San Francisco International Airport, Subordinate A-1+ 3,065,000
Commercial Paper, Series B, 3.200%, 9/03/98
- ------------------------------------------------------------------------------------------------------------------------------------
UTILITIES - 3.4%
5,000,000 Sacramento Municipal Utility District, Commercial Paper, 2.850%, 9/04/98 VMIG-1 5,000,000
- ------------------------------------------------------------------------------------------------------------------------------------
WATER AND SEWER - 15.2%
4,500,000 Hillsborough Certificates of Participation, Water and Sewer System Project, Series A-1 4,500,000
1995A, Variable Rate Demand Bonds, 3.900%, 6/01/15+
1,900,000 Los Angeles Wastewater System, Commercial Paper, 3.200%, 11/10/98 VMIG-1 1,900,000
6,400,000 Monterey County Financing Authority (Reclamation and Distribution Project), Series VMIG-2 6,400,000
1995A, Variable Rate Demand Bonds, 3.750%, 9/01/36+
4,050,000 San Diego County, Rincon Del Diablo Municipal Water District, Rincon Public Facilities VMIG-2 4,050,000
Corporation, Commercial Paper, 5.000%,11/01/98
5,800,000 Santa Paula Financing Authority, Lease Revenue Bonds, Series 1996, Water System A-2 5,800,000
Acquisition Project, Variable Rate Demand Bonds, 4.050%, 2/01/26+
- ------------------------------------------------------------------------------------------------------------------------------------
$141,467,000 Total Investments - 95.0% 141,572,369
- ------------------------------------------------------------------------------------------------------------------------------------
Other Assets Less Liabilities - 5.0% 7,389,710
--------------------------------------------------------------------------------------------------------------------
Net Assets - 100% $ 148,962,079
--------------------------------------------------------------------------------------------------------------------
</TABLE>
* Ratings: Using the higher of Standard & Poor's or Moody's
rating.
N/R Investment is not rated.
+ The security has a maturity of more than one year, but has
variable rate and demand features which qualify it as a short-
term security. The rate disclosed is that currently in effect.
This rate changes periodically based on market conditions or a
specified market index.
See accompanying notes to financial statements.
----
9
<PAGE>
PORTFOLIO OF INVESTMENTS (UNAUDITED)
NUVEEN MASSACHUSETTS TAX-FREE MONEY MARKET FUND
August 31, 1998
<TABLE>
<CAPTION>
PRINCIPAL AMORTIZED
AMOUNT DESCRIPTION RATINGS* COST
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
EDUCATION AND CIVIC ORGANIZATIONS - 24.2%
$ 1,075,000 Massachusetts Health and Educational Facilities Authority (Harvard University),
Variable Rate Demand Bonds, 3.100% 8/01/17+ VMIG-1 $1,075,000
1,100,000 Massachusetts Health and Educational Facilities Authority (Wellesley College),
Series E, Variable Rate Demand Bonds, 3.000%, 7/01/22+ VMIG-1 1,100,000
1,700,000 Massachusetts Health and Educational Facilities Authority, Amherst College
Issue, Series F, Variable Rate Demand Bonds, 3.020%, 11/01/26+ VMIG-1 1,700,000
1,700,000 Massachusetts Industrial Finance Agency (Showa Women's Institute Boston,
Inc. - 1994 Project), Variable Rate Demand Bonds, 3.250%, 3/15/04+ VMIG-1 1,700,000
1,000,000 Massachusetts Industrial Finance Agency (Emerson College Issue), Series
1995, Variable Rate Demand Bonds, 3.150%, 1/01/15+ N/R 1,000,000
1,000,000 Massachusetts Industrial Finance Agency, Variable Rate Demand Bonds
(Massachusetts Society for the Prevention of Cruelty to Animals Issue -
Series 1997), 3.200%, 8/01/27+ A-1 1,000,000
1,000,000 Massachusetts Industrial Finance Agency, Variable Rate Demand Revenue Bonds
(Gordon College Issue), Series 1997, 3.150%, 12/01/27+ A-1+ 1,000,000
1,000,000 Massachusetts Industrial Finance Agency, Variable Rate Demand Bonds (Eastern
Nazarene College Issue), Series 1997, 3.150%, 10/01/27+ A-1+ 1,000,000
- ----------------------------------------------------------------------------------------------------------------------------------
HEALTH CARE - 22.8%
1,500,000 Massachusetts Health and Educational Facilities Authority, Variable Rate Demand
Bond, Capital Asset Program Issue, Series A, 3.150%, 1/01/01+ VMIG-1 1,500,000
1,100,000 Massachusetts Health and Educational Facilities Authority, Series G-1, Capital
Asset Program, Variable Rate Demand Bonds, 3.000%, 1/01/19+ VMIG-1 1,100,000
2,000,000 Massachusetts Health and Educational Facilities Authority, Capital Asset
Program, Variable Rate Demand Bonds, 3.200%, 1/01/35+ VMIG-1 2,000,000
1,500,000 Massachusetts Health and Educational Facilities Authority (Brinham and
Women's Hospital), Variable Rate Demand Bonds, 3.050%, 7/01/17+ VMIG-1 1,500,000
1,000,000 Massachusetts Health and Educational Facilities Authority, Variable Rate
Demand Bonds, Newton-Wellesley Hospital Issue, Series F, 3.020%, 7/01/25+ A-1+ 1,000,000
1,900,000 Massachusetts Health and Educational Facilities Authority, Variable Rate Demand
Bonds, Partners Healthcare System, Series P, 3.150%, 7/01/27+ VMIG-1 1,900,000
- ----------------------------------------------------------------------------------------------------------------------------------
HOUSING/MULTI-FAMILY - 11.1%
2,000,000 Massachusetts Housing Finance Agency, Multifamily Refunding Revenue Bonds, 1995
Series A (Harbor Point), Variable Rate Demand Bonds, 3.100%, 12/01/25+ VMIG-1 2,000,000
1,375,000 Massachusetts Industrial Finance Agency, Chestnut House Apartments (FHA
Insurance), Variable Rate Demand Bonds, 3.300%, 8/01/26+ A-2 1,375,000
1,000,000 Massachusetts Industrial Finance Agency (Lower Mills Associates, LP), Series
1995, Variable Rate Demand Bonds, 3.150%, 12/01/20+ N/R 1,000,000
- ----------------------------------------------------------------------------------------------------------------------------------
LONG TERM CARE - 4.8%
1,900,000 Massachusetts Industrial Finance Agency (Goddard House - Series 1995), Variable
Rate Demand Bonds, 3.100%, 11/01/25+ A-1 1,900,000
- ----------------------------------------------------------------------------------------------------------------------------------
TAX OBLIGATION/GENERAL - 26.6%
1,200,000 Massachusetts Bay Transportation Authority, Commercial Paper, Series C,
3.450%, 10/22/98 A-1+ 1,200,000
1,000,000 Massachusetts Bay Transportation Authority, General Transportation, Series 1984A,
Commercial Paper, 3.500%, 3/01/99 (WI) VMIG-1 1,000,000
</TABLE>
See accompanying notes to financial statements.
----
10
<PAGE>
<TABLE>
<CAPTION>
PRINCIPAL AMORTIZED
AMOUNT DESCRIPTION RATINGS* COST
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
TAX OBLIGATION/GENERAL (continued)
$ 1,000,000 Town of Barnstable, Massachusetts, Bond Anticipation Notes, 4.250%, 10/23/98 N/R $ 1,000,548
1,000,000 Farmingham General Obligation Unlimited Tax Note, 4.000%, 2/05/99 N/R 1,001,535
1,180,000 Frontier Regional School District, General Obligation Notes, 4.000%, 6/15/99 Aaa 1,182,251
1,500,000 Town of Holliston, Massachusetts, Bonds Anticipation Notes, 4.000%, 9/23/98 N/R 1,500,311
1,645,000 City of Northampton, Massachusetts, General Obligation Notes, 4.000%, 12/22/98 N/R 1,646,955
1,000,000 Town of Weston, Massachusetts, Bond Anticipation Notes, 4.000%, 9/30/98 N/R 1,000,232
1,000,000 Town of Weymouth, Massachusetts, Bond Anticipation Notes, 4.125%, 11/05/98 N/R 1,000,506
- ----------------------------------------------------------------------------------------------------------------------------------
TAX OBLIGATION/LIMITED - 2.5%
1,000,000 Puerto Rico Highway and Transportation Authority, Transportation Revenue Bonds,
Series A, Variable Rate Demand Bonds, 2.750%, 7/01/28+ VMIG-1 1,000,000
- ----------------------------------------------------------------------------------------------------------------------------------
UTILITIES - 2.5%
1,000,000 Massachusetts Municipal Wholesale Electric Company, Series A, Commercial Paper,
3.600%, 9/08/98 A-1 1,000,000
- ----------------------------------------------------------------------------------------------------------------------------------
WATER AND SEWER - 4.8%
1,900,000 Massachusetts Water Resources Authority, Series 1994, Commercial Paper, 3.400%,
11/05/98 A-1+ 1,900,000
- ----------------------------------------------------------------------------------------------------------------------------------
$39,275,000 Total Investments - 99.3% 39,282,338
- ----------------------------------------------------------------------------------------------------------------------------------
Other Assets Less Liabilities - 0.7% 261,634
--------------------------------------------------------------------------------------------------------------
Net Assets - 100% $39,543,972
--------------------------------------------------------------------------------------------------------------
</TABLE>
* Ratings: Using the higher of Standard & Poor's or Moody's rating.
N/R Investment is not rated.
+ The security has a maturity of more than one year, but has variable rate
and demand features which qualify it as a short-term security. The rate
disclosed is that currently in effect. This rate changes periodically based
on market conditions or a specified market index.
(WI) Security purchased on a when-issued basis (note 1).
See accompanying notes to financial statements.
----
11
<PAGE>
PORTFOLIO OF INVESTMENTS (UNAUDITED)
NUVEEN NEW YORK TAX-FREE MONEY MARKET FUND
August 31, 1998
<TABLE>
<CAPTION>
PRINCIPAL AMORTIZED
AMOUNT DESCRIPTION RATINGS* COST
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
CONSUMER CYLICAL - 7.8%
$ 1,100,000 New York State Environmental Facility Corporation, Series 1987A, Revenue
Refunding Bonds (General Electric), Variable Rate Demand Bonds, 3.450%, 7/01/19+ A-1+ $ 1,100,000
1,000,000 Dutchess County Industrial Development Agency, Industrial Development Revenue
Bonds (Toys "R" Us-NYTEX Inc. Facility), Series 1984, Variable Rate Demand Bonds, A-1 1,000,000
3.325%, 11/01/19+
500,000 Yonkers Industrial Development Agency, Series 1989, Civic Facility Revenue Bonds,
Variable Rate Demand Bonds, 3.000%, 7/01/19+ VMIG-1 500,000
- ------------------------------------------------------------------------------------------------------------------------------------
EDUCATION AND CIVIC ORGANIZATIONS - 16.2%
1,400,000 Dormitory Authority of the State of New York, New York Founding Charitable
Corporation, Series 1997, Variable Rate Demand Bonds, 3.000%, 7/01/12+ VMIG-1 1,400,000
1,000,000 New York State Housing Finance Agency, Series 1984-A (Mt. Sinai School of Medicine),
Variable Rate Demand Bonds, 2.800%, 11/01/14+ VMIG-1 1,000,000
1,500,000 New York City Trust for Cultural Resources (Guggenheim Foundation), Variable Rate
Demand Bonds, 3.200%, 12/01/15+ VMIG-1 1,500,000
1,500,000 Syracuse Industrial Development Agency, Multi-Modal Interchangable Rate Revenue
Bonds, Civic Facility (Syracuse University), 3.200%, 3/01/23+ VMIG-1 1,500,000
- ------------------------------------------------------------------------------------------------------------------------------------
FINANCIALS - 3.0%
1,000,000 New York City Industrial Development Agency, Refunding Revenue (LaGuardia
Associates Project), Variable Rate Demand Bonds, 2.900%, 12/01/15+ A-1+ 1,000,000
- ------------------------------------------------------------------------------------------------------------------------------------
HEALTH CARE - 5.4%
900,000 New York State Dormitory Authority, Sloan Kettering Cancer Center Revenue Bonds,
Series 1989A, Commercial Paper, 3.550%, 10/13/98 A-1+ 900,000
900,000 New York State Medical Care Facilities Finance Agency (Lenox Hill Hospital),
Variable Rate Demand Bonds, 3.000%, 11/01/08+ VMIG-1 900,000
- ------------------------------------------------------------------------------------------------------------------------------------
HOUSING/MULTIFAMILY - 6.2%
1,400,000 New York State Housing Finance Agency (Normandie Court), Variable Rate Demand Bonds,
3.150%, 5/15/15+ VMIG-1 1,400,000
370,000 New York City Housing Development Corporation (Parkgate Tower), Variable Rate
Demand Bonds, 3.150%, 12/01/07+ A-1+ 370,000
300,000 New York City Housing Development Corporation (Columbus Gardens Project), Variable
Rate Demand Bonds, 3.050%, 2/01/07+ A-1+ 300,000
- ------------------------------------------------------------------------------------------------------------------------------------
INDUSTRIAL/OTHER - 3.0%
1,000,000 Guilderland Industrial Development Agency, Series 1993A (Northeastern Industrial
Park Project), Variable Rate Demand Bonds, 3.000%, 12/01/08+ P-1 1,000,000
- ------------------------------------------------------------------------------------------------------------------------------------
LONG TERM CARE - 5.7%
1,100,000 New York State Dormitory Authority (St. Francis Center at the Knolls, Inc.),
Variable Rate Demand Bonds, 3.450%, 7/01/23+ VMIG-1 1,100,000
800,000 New York State Dormitory Authority, Series 1995 (Beverwyck Inc), Variable Rate
Demand Bonds, 2.950%, 7/01/25+ VMIG-1 800,000
- ------------------------------------------------------------------------------------------------------------------------------------
TAX OBLIGATIONS/GENERAL - 23.8%
1,000,000 New York State General Obligation Bonds, Series 1997A, New York State Environmental
Quarterly, Commercial Paper, 3.350%, 11/20/98 A-1+ 1,000,000
1,000,000 Brockport Central School District, Bond Anticipation Notes, Series 1988, 4.000%,
3/30/99 N/R 1,002,220
1,000,000 County of Erie, New York, General Obligation Notes, Refunding Serial Bonds, Series
1997B, 4.500%, 10/29/98 N/R 1,001,040
1,000,000 New York City General Obligation Bonds, Variable Rate Demand Bonds, 3.000%,
2/01/21+ VMIG-1 1,000,000
600,000 New York City General Obligation Bonds, Adjustable Rate Bonds, Fiscal 1994 Series
B-4, 3.750%, 8/15/21+ VMIG-1 600,000
</TABLE>
----
12
<PAGE>
<TABLE>
<CAPTION>
PRINCIPAL AMORTIZED
AMOUNT DESCRIPTION RATINGS* COST
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
TAX OBLIGATIONS/GENERAL (CONTINUED)
$ 1,100,000 New York City General Obligation Bonds, Fiscal 1995 Series B, Variable Rate
Demand Bonds, 3.250%, 8/15/22+ VMIG-1 $ 1,100,000
1,250,000 Puerto Rico Government Development Bank, Adjustable Refunding Bonds, Series 1985,
Variable Rate Demand Bonds, 2.500%, 12/01/15+ VMIG-1 1,250,000
1,000,000 South Huntington Union Free School District, Suffolk County, New York, Tax
Anticipation Notes, Series 1998-99, 3.900%, 6/30/99 MIG-1 1,002,300
- ------------------------------------------------------------------------------------------------------------------------------------
TAX OBLIGATIONS/LIMITED - 12.1%
1,400,000 New York Local Government Assistance Corporation, Series 1995E, Variable Rate
Demand Bonds, 3.000%, 4/01/25+ VMIG-1 1,400,000
640,000 New York State Job Development Authority, Series 1984E, Variable Rate Demand Bonds,
3.300%, 3/01/99 VMIG-1 640,000
1,000,000 Puerto Rico Highway and Transportation Authority, Transportation Revenue Bonds,
Series A, Variable Rate Demand Bonds, 2.750%, 7/01/28+ VMIG-1 1,000,000
1,000,000 Triborough Bridge and Tunnel Authority, Special Obligation, Variable Rate Demand
Bonds, Series 1994 (1994 Resolution), 2.800%, 1/01/24+ MIG-1 1,000,000
- ------------------------------------------------------------------------------------------------------------------------------------
UTILITIES - 12.0%
1,000,000 New York State Energy Research and Development Authority, Pollution Control Revenue P-1 1,000,000
(Central Hudson Gas and Electric Corporation), Variable Rate Demand Bonds, 3.000%,
11/01/20+
1,500,000 New York State Energy Research and Development Authority, Pollution Control
(Niagara Mohawk Power Corporation), Variable Rate Demand Bonds, 3.200%, 3/01/27+ P-1 1,500,000
1,500,000 Long Island Power Authority, New York, Electric System Revenue Bonds, Sub Series 6,
Variable Rate Demand Bonds, 3.300%, 5/01/33+ VMIG-1 1,500,000
- ------------------------------------------------------------------------------------------------------------------------------------
WATER AND SEWER - 6.0%
1,000,000 New York City Municipal Water Finance Authority, Water and Sewer System Revenue
Bonds, Fiscal 1996 Series A, Variable Rate Demand Bonds, 3.750%, 6/15/25+ VMIG-1 1,000,000
1,000,000 New York City Municipal Water Finance Authority, New York City, Series 3, Commercial
Paper, 3.500%, 9/04/98 A-1+ 1,000,000
- ------------------------------------------------------------------------------------------------------------------------------------
$ 33,760,000 Total Investments - 101.2% 33,765,560
- ------------------------------------------------------------------------------------------------------------------------------------
Other Assets Less Liabilities - (1.2%) (397,598)
---------------------------------------------------------------------------------------------------------------------
Net Assets - 100% $ 33,367,962
=====================================================================================================================
</TABLE>
* Ratings: Using the higher of Standard & Poor's or Moody's rating.
N/R Investment is not rated.
+ The security has a maturity of more than one year, but has variable rate
and demand features which qualify it as a short-term security. The rate
disclosed is that currently in effect. This rate changes periodically based
on market conditions or a specified market index.
See accompanying notes to financial statements.
----
13
<PAGE>
STATEMENT OF NET ASSETS (UNAUDITED)
August 31, 1998
<TABLE>
<CAPTION>
RESERVES CALIFORNIA MASSACHUSETTS NEW YORK
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
ASSETS
Investments in short-term municipal securities, at
amortized cost, which approximates market value (note 1) $ 252,055,179 $ 141,572,369 $ 39,282,338 $ 33,765,560
Cash 804,302 790,349 206,286 --
Receivables:
Interest 1,359,859 1,086,412 280,987 152,511
Investments sold 1,300,000 6,000,000 1,000,000 400,000
Other assets 6,156 5,448 1,554 1,320
- ------------------------------------------------------------------------------------------------------------------------------------
Total assets 255,525,496 149,454,578 40,771,165 34,319,391
- ------------------------------------------------------------------------------------------------------------------------------------
LIABILITIES
Cash overdraft -- -- -- 417,262
Payable for investments purchased -- -- 1,000,000 400,000
Accrued expenses:
Management fees (note 4) 93,518 50,961 7,700 7,914
12b-1 fees (note 4) 16,457 8,418 21,915 1,027
Other 109,907 37,530 101,561 49,913
Dividends payable 617,291 395,590 96,017 75,313
- ------------------------------------------------------------------------------------------------------------------------------------
Total liabilities 837,173 492,499 1,227,193 951,429
- ------------------------------------------------------------------------------------------------------------------------------------
Net assets applicable to shares outstanding (note 3) $ 254,688,323 $ 148,962,079 $ 39,543,972 $ 33,367,962
- ------------------------------------------------------------------------------------------------------------------------------------
Shares outstanding:
Service Plan series -- 81,376,011 5,421,762 1,413,535
Distribution Plan series -- 57,146,716 29,996,906 31,937,760
Institutional series -- 10,439,352 4,125,304 16,667
- ------------------------------------------------------------------------------------------------------------------------------------
Total shares outstanding 254,688,323 148,962,079 39,543,972 33,367,962
- ------------------------------------------------------------------------------------------------------------------------------------
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.
-----
14
<PAGE>
STATEMENT OF OPERATIONS (UNAUDITED)
Six Months Ended August 31, 1998
<TABLE>
<CAPTION>
RESERVES
- -------------------------------------------------------------------------------
<S> <C>
INVESTMENT INCOME (NOTE 1) $ 4,837,093
- -------------------------------------------------------------------------------
EXPENSES
Management fees (note 4) 650,176
12b-1 fees (note 4) 52,877
Shareholders' servicing agent fees and expenses 205,685
Custodian's fees and expenses 29,438
Directors' fees and expenses (note 4) 3,350
Professional fees 1,939
Shareholders' reports - printing and mailing expenses 46,925
Federal and state registration fees 17,189
Other expenses 12,590
- -------------------------------------------------------------------------------
Total expenses before expense reimbursement 1,020,169
Expense reimbursement (note 4) (44,904)
- -------------------------------------------------------------------------------
Net expenses 975,265
Net investment income 3,861,828
Net gain from investment transactions (notes 1 and 2) --
- -------------------------------------------------------------------------------
Net increase in net assets from operations $ 3,861,828
===============================================================================
</TABLE>
<TABLE>
<CAPTION>
CALIFORNIA
- ------------------------------------------------------------------------------------------------------------------------------------
SERVICE PLAN DISTRIBUTION PLAN INSTITUTIONAL
SERIES SERIES SERIES TOTAL
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
INVESTMENT INCOME (NOTE 1) $ 1,689,025 $ 1,028,936 $ 651,120 $ 3,369,081
- ------------------------------------------------------------------------------------------------------------------------------------
EXPENSES
Management fees (note 4) 188,968 115,533 73,439 377,940
12b-1 fees (note 4) 46,626 3,613 -- 50,239
Shareholders' servicing agent fees and expenses 1,022 28,949 109 30,080
Custodian's fees and expenses 13,184 8,053 2,736 23,973
Directors' fees and expenses (note 4) 1,240 755 368 2,363
Professional fees 4,217 2,573 1,320 8,110
Shareholders' reports - printing and mailing expenses 12,932 23,022 57 36,011
Federal and state registration fees 2,300 -- -- 2,300
Other expenses 6,326 3,805 1,645 11,776
- ------------------------------------------------------------------------------------------------------------------------------------
Total expenses before expense reimbursement 276,815 186,303 79,674 542,792
Expense reimbursement (note 4) (16,984) (27,445) -- (44,429)
- ------------------------------------------------------------------------------------------------------------------------------------
Net expenses 259,831 158,858 79,674 498,363
Net investment income 1,429,194 870,078 571,446 2,870,718
Net gain from investment transactions (notes 1 and 2) -- -- -- --
- ------------------------------------------------------------------------------------------------------------------------------------
Net increase in net assets from operations $ 1,429,194 $ 870,078 $ 571,446 $ 2,870,718
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
See accompanying notes to financial statements.
-----
15
<PAGE>
STATEMENT OF OPERATIONS (UNAUDITED) (continued)
Six Months Ended August 31, 1998
<TABLE>
<CAPTION>
MASSACHUSETTS
- ----------------------------------------------------------------------------------------------------------------------------------
SERVICE PLAN DISTRIBUTION PLAN INSTITUTIONAL
SERIES SERIES SERIES TOTAL
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
INVESTMENT INCOME (NOTE 1) $ 101,531 $ 515,667 $ 69,301 $ 686,499
- ----------------------------------------------------------------------------------------------------------------------------------
EXPENSES
Management fees (note 4) 11,570 59,129 7,985 78,684
12b-1 fees (note 4) 3,966 12,877 -- 16,843
Shareholders' servicing agent fees and expenses 284 15,795 1,317 17,396
Custodian's fees and expenses 3,077 14,469 1,989 19,535
Directors' fees and expenses (note 4) 58 406 51 515
Professional fees 821 4,146 601 5,568
Shareholders' reports - printing and mailing expenses 630 16,727 3 17,360
Federal and state registration fees 950 1,375 1,800 4,125
Other expenses 293 1,466 205 1,964
- ----------------------------------------------------------------------------------------------------------------------------------
Total expenses before expense reimbursement 21,649 126,390 13,951 161,990
Expense reimbursement (note 4) (5,742) (45,086) (2,972) (53,800)
- ----------------------------------------------------------------------------------------------------------------------------------
Net expenses 15,907 81,304 10,979 108,190
- ----------------------------------------------------------------------------------------------------------------------------------
Net investment income 85,624 434,363 58,322 578,309
Net gain from investment transactions (notes 1 and 2) -- -- -- --
- ----------------------------------------------------------------------------------------------------------------------------------
Net increase in net assets from operations $ 85,624 $ 434,363 $ 58,322 $ 578,309
==================================================================================================================================
</TABLE>
<TABLE>
<CAPTION>
NEW YORK
- ---------------------------------------------------------------------------------------------------------------------------------
SERVICE PLAN DISTRIBUTION PLAN INSTITUTIONAL
SERIES SERIES SERIES TOTAL
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
INVESTMENT INCOME (NOTE 1) $ 24,752 $ 507,326 $ 291 $ 532,369
- ---------------------------------------------------------------------------------------------------------------------------------
EXPENSES
Management fees (note 4) 2,856 58,696 33 61,585
12b-1 fees (note 4) 1,570 2,883 -- 4,453
Shareholders' servicing agent fees and expenses 389 22,969 26 23,384
Custodian's fees and expenses 338 6,329 4 6,671
Directors' fees and expenses (note 4) 67 1,347 1 1,415
Shareholders' reports - printing and mailing expenses 490 10,348 22 10,860
Federal and state registration fees 426 48 -- 474
Other expenses 46 933 -- 979
- ---------------------------------------------------------------------------------------------------------------------------------
Total expenses before expense reimbursement 6,182 103,553 86 109,821
Expense reimbursement (note 4) (2,257) (22,843) (41) (25,141)
- ---------------------------------------------------------------------------------------------------------------------------------
Net expenses 3,925 80,710 45 84,680
- ---------------------------------------------------------------------------------------------------------------------------------
Net investment income 20,827 426,616 246 447,689
Net gain from investment transactions (notes 1 and 2) -- -- -- --
- ---------------------------------------------------------------------------------------------------------------------------------
Net increase in net assets from operations $ 20,827 $ 426,616 $ 246 $ 447,689
=================================================================================================================================
</TABLE>
See accompanying notes to financial statements.
-----
16
<PAGE>
STATEMENT OF CHANGES IN NET ASSETS (UNAUDITED)
<TABLE>
<CAPTION>
RESERVES
- ------------------------------------------------------------------------------------------------------------------------------------
SIX MONTHS ENDED YEAR ENDED
8/31/98 2/28/98
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
OPERATIONS
Net investment income $ 3,861,828 $ 8,301,248
Net realized gain from investment transactions (notes 1 and 2) -- --
- ------------------------------------------------------------------------------------------------------------------------------------
Net increase in net assets from operations 3,861,828 8,301,248
- ------------------------------------------------------------------------------------------------------------------------------------
DISTRIBUTIONS TO SHAREHOLDERS (NOTE 1) (3,861,828) (8,301,248)
- ------------------------------------------------------------------------------------------------------------------------------------
COMMON SHARE TRANSACTIONS
(at constant net asset value of $1 per share) (note 1)
Net proceeds from sale of shares 79,019,107 175,436,062
Net proceeds from shares issued to shareholders due to reinvestment of distributions 3,601,683 7,880,661
- ------------------------------------------------------------------------------------------------------------------------------------
82,620,790 183,316,723
- ------------------------------------------------------------------------------------------------------------------------------------
Cost of shares redeemed (98,655,304) (216,681,366)
- ------------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets from share transactions (16,034,514) (33,364,643)
Net assets at the beginning of period 270,722,837 304,087,480
- ------------------------------------------------------------------------------------------------------------------------------------
Net assets at the end of period $ 254,688,323 $ 270,722,837
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
See accompanying notes to financial statements.
-----
17
<PAGE>
STATEMENT OF CHANGES IN NET ASSETS (UNAUDITED) (continued)
<TABLE>
<CAPTION>
CALIFORNIA
- ------------------------------------------------------------------------------------------------------------------------------------
SIX MONTHS ENDED 8/31/98
- ------------------------------------------------------------------------------------------------------------------------------------
SERVICE PLAN DISTRIBUTION PLAN INSTITUTIONAL
SERIES SERIES SERIES TOTAL
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
OPERATIONS
Net investment income $ 1,429,194 $ 870,078 $ 571,446 $ 2,870,718
Net realized gain from investment transactions (notes 1 and 2) -- -- -- --
- ------------------------------------------------------------------------------------------------------------------------------------
Net increase in net assets from operations 1,429,194 870,078 571,446 2,870,718
- ------------------------------------------------------------------------------------------------------------------------------------
DISTRIBUTIONS TO SHAREHOLDERS (NOTE 1) (1,429,194) (870,078) (571,446) (2,870,718)
- ------------------------------------------------------------------------------------------------------------------------------------
COMMON SHARE TRANSACTIONS
(at constant net asset value of $1 per share) (note 1)
Net proceeds from sale of shares 119,575,952 25,297,092 82,688,933 227,561,977
Net proceeds from shares issued to shareholders
due to reinvestment of distributions 1,349,912 760,863 298,129 2,408,904
- ------------------------------------------------------------------------------------------------------------------------------------
120,925,864 26,057,955 82,987,062 229,970,881
- ------------------------------------------------------------------------------------------------------------------------------------
Cost of shares redeemed (126,465,450) (23,700,192) (91,338,602) (241,504,244)
- ------------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets from share transactions (5,539,586) 2,357,763 (8,351,540) (11,533,363)
Net assets at the beginning of period 86,915,597 54,788,953 18,790,892 160,495,442
- ------------------------------------------------------------------------------------------------------------------------------------
Net assets at the end of period $ 81,376,011 $ 57,146,716 $ 10,439,352 $148,962,079
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
CALIFORNIA
- ------------------------------------------------------------------------------------------------------------------------------------
YEAR ENDED 8/31/98
- ------------------------------------------------------------------------------------------------------------------------------------
SERVICE PLAN DISTRIBUTION PLAN INSTITUTIONAL
SERIES SERIES SERIES TOTAL
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
OPERATIONS
Net investment income $ 2,435,939 $ 1,676,605 $ 758,859 $ 4,871,403
Net realized gain from investment transactions (notes 1 and 2) -- -- -- --
- ------------------------------------------------------------------------------------------------------------------------------------
Net increase in net assets from operations 2,435,939 1,676,605 758,859 4,871,403
- ------------------------------------------------------------------------------------------------------------------------------------
DISTRIBUTIONS TO SHAREHOLDERS (NOTE 1) (2,435,939) (1,676,605) (758,859) (4,871,403)
- ------------------------------------------------------------------------------------------------------------------------------------
COMMON SHARE TRANSACTIONS
(at constant net asset value of $1 per share) (note 1)
Net proceeds from sale of shares 161,050,966 31,802,629 101,301,804 294,155,399
Net proceeds from shares issued to shareholders
due to reinvestment of distributions 2,277,888 1,512,816 18 3,790,722
- ------------------------------------------------------------------------------------------------------------------------------------
163,328,854 33,315,445 101,301,822 297,946,121
- ------------------------------------------------------------------------------------------------------------------------------------
Cost of shares redeemed (171,719,687) (36,016,099) (115,353,497) (323,089,283)
- ------------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets from share transactions (8,390,833) (2,700,654) (14,051,675) (25,143,162)
Net assets at the beginning of year 95,306,430 57,489,607 32,842,567 185,638,604
- ------------------------------------------------------------------------------------------------------------------------------------
Net assets at the end of year $ 86,915,597 $ 54,788,953 $ 18,790,892 $160,495,442
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
See accompanying notes financial statements.
-----
18
<PAGE>
<TABLE>
<CAPTION>
MASSACHUSETTS
- ------------------------------------------------------------------------------------------------------------------------------------
SIX MONTHS ENDED 8/31/98
- ------------------------------------------------------------------------------------------------------------------------------------
SERVICE PLAN DISTRIBUTION PLAN INSTITUTIONAL
SERIES SERIES SERIES TOTAL
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
OPERATIONS
Net investment income $ 85,624 $ 434,363 $ 58,322 $ 578,309
Net realized gain from investment transactions (notes 1
and 2) -- -- -- --
- ------------------------------------------------------------------------------------------------------------------------------------
Net increase in net assets from operations 85,624 434,363 58,322 578,309
- ------------------------------------------------------------------------------------------------------------------------------------
DISTRIBUTIONS TO SHAREHOLDERS (NOTE 1) (85,624) (434,363) (58,322) (578,309)
- ------------------------------------------------------------------------------------------------------------------------------------
COMMON SHARE TRANSACTIONS
(at constant net asset value of $1 per share) (note 1)
Net proceeds from sale of shares 2,585,631 19,186,525 3,037,212 24,809,368
Net proceeds from shares issued to shareholders
due to reinvestment of distributions 84,702 406,518 6,273 497,493
- ------------------------------------------------------------------------------------------------------------------------------------
2,670,333 19,593,043 3,043,485 25,306,861
- ------------------------------------------------------------------------------------------------------------------------------------
Cost of shares redeemed (3,334,025) (15,516,354) (4,495,808) (23,346,187)
- ------------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets from share
transactions (663,692) 4,076,689 (1,452,323) 1,960,674
Net assets at the beginning of period 6,085,454 25,920,217 5,577,627 37,583,298
- ------------------------------------------------------------------------------------------------------------------------------------
Net assets at the end of period $5,421,762 $29,996,906 $4,125,304 $39,543,972
- ------------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
MASSACHUSETTS
- ------------------------------------------------------------------------------------------------------------------------------------
YEAR ENDED 2/28/98
- ------------------------------------------------------------------------------------------------------------------------------------
SERVICE PLAN DISTRIBUTION PLAN INSTITUTIONAL
SERIES SERIES SERIES TOTAL
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
OPERATIONS
Net investment income $ 251,426 $ 826,655 $ 142,493 $ 1,220,574
Net realized gain from investment transactions (notes 1
and 2) -- -- -- --
- ------------------------------------------------------------------------------------------------------------------------------------
Net increase in net assets from operations 251,426 826,655 142,493 1,220,574
- ------------------------------------------------------------------------------------------------------------------------------------
DISTRIBUTIONS TO SHAREHOLDERS (NOTE 1) (251,426) (826,655) (142,493) (1,220,574)
- ------------------------------------------------------------------------------------------------------------------------------------
COMMON SHARE TRANSACTIONS
(at constant net asset value of $1 per share) (note 1)
Net proceeds from sale of shares 11,631,756 20,106,738 11,348,896 43,087,390
Net proceeds from shares issued to shareholders
due to reinvestment of distributions 252,889 812,123 21,738 1,086,750
- ------------------------------------------------------------------------------------------------------------------------------------
11,884,645 20,918,861 11,370,634 44,174,140
- ------------------------------------------------------------------------------------------------------------------------------------
Cost of shares redeemed (15,763,455) (22,081,518) (9,770,347) (47,615,320)
- ------------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets from share
transactions (3,878,810) (1,162,657) 1,600,287 (3,441,180)
Net assets at the beginning of year 9,964,264 27,082,874 3,977,340 41,024,478
- ------------------------------------------------------------------------------------------------------------------------------------
Net assets at the end of year $ 6,085,454 $25,920,217 $5,577,627 $37,583,298
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
See accompanying notes to financial statements.
____
19
<PAGE>
STATEMENTS OF CHANGES IN NET ASSETS (UNAUDITED) (continued)
<TABLE>
<CAPTION>
NEW YORK
- ------------------------------------------------------------------------------------------------------------------------------------
SIX MONTHS ENDED 8/31/98
- ------------------------------------------------------------------------------------------------------------------------------------
SERVICE PLAN DISTRIBUTION PLAN INSTITUTIONAL
SERIES SERIES SERIES TOTAL
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
OPERATIONS
Net investment income $ 20,827 $ 426,616 $ 246 $ 447,689
Net realized gain from investment transactions (notes 1
and 2) -- -- -- --
- ------------------------------------------------------------------------------------------------------------------------------------
Net increase in net assets from operations 20,827 426,616 246 447,689
- ------------------------------------------------------------------------------------------------------------------------------------
DISTRIBUTIONS TO SHAREHOLDERS (NOTE 1) (20,827) (426,616) (246) (447,689)
- ------------------------------------------------------------------------------------------------------------------------------------
COMMON SHARE TRANSACTIONS
(at constant net asset value of $1 per share) (note 1)
Net proceeds from sale of shares 90,172 10,057,540 -- 10,147,712
Net proceeds from shares issued to shareholders
due to reinvestment of distributions 6,363 398,558 -- 404,921
- ------------------------------------------------------------------------------------------------------------------------------------
96,535 10,456,098 -- 10,552,633
- ------------------------------------------------------------------------------------------------------------------------------------
Cost of shares redeemed (88,519) (7,372,455) -- (7,460,974)
- ------------------------------------------------------------------------------------------------------------------------------------
Net increase in net assets from share transactions 8,016 3,083,643 -- 3,091,659
Net assets at the beginning of period 1,405,519 28,854,117 16,667 30,276,303
- ------------------------------------------------------------------------------------------------------------------------------------
Net assets at the end of period $ 1,413,535 $31,937,760 $16,667 $33,367,962
- ------------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
NEW YORK
- ------------------------------------------------------------------------------------------------------------------------------------
YEAR ENDED 2/28/98
- ------------------------------------------------------------------------------------------------------------------------------------
SERVICE PLAN DISTRIBUTION PLAN INSTITUTIONAL
SERIES SERIES SERIES TOTAL
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
OPERATIONS
Net investment income $ 16,929 $ 839,227 $ 516 $ 856,672
Net realized gain from investment transactions (notes 1
and 2) -- -- -- --
- ------------------------------------------------------------------------------------------------------------------------------------
Net increase in net assets from operations 16,929 839,227 516 856,672
- ------------------------------------------------------------------------------------------------------------------------------------
DISTRIBUTIONS TO SHAREHOLDERS (NOTE 1) (16,929) (839,227) (516) (856,672)
- ------------------------------------------------------------------------------------------------------------------------------------
COMMON SHARE TRANSACTIONS
(at constant net asset value of $1 per share) (note 1)
Net proceeds from sale of shares 1,014,732 14,585,479 -- 15,600,211
Net proceeds from shares issued to shareholders
due to reinvestment of distributions 13,306 854,990 -- 868,296
- ------------------------------------------------------------------------------------------------------------------------------------
1,028,038 15,440,469 -- 16,468,507
- ------------------------------------------------------------------------------------------------------------------------------------
Cost of shares redeemed (36,590) (12,701,915) -- (12,738,505)
- ------------------------------------------------------------------------------------------------------------------------------------
Net increase in net assets from share transactions 991,448 2,738,554 -- 3,730,002
Net assets at the beginning of year 414,071 26,115,563 16,667 26,546,301
- ------------------------------------------------------------------------------------------------------------------------------------
Net assets at the end of year $ 1,405,519 $28,854,117 $ 16,667 $30,276,303
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
See accompanying notes to financial statements.
____
20
<PAGE>
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
1. GENERAL INFORMATION AND SIGNIFICANT ACCOUNTING POLICIES
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. (comprising the Nuveen California Tax-Free Money Market Fund) and Nuveen
Tax-Free Money Market Fund, Inc. (comprising 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 a 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 Valuation
Investments in each of the Funds consist of short-term municipal securities
maturing within one year from the date of acquisition. Securities with a
maturity of more than one year in all cases have variable rate and demand
features qualifying them as short-term securities and are valued at amortized
cost. On a dollar-weighted basis, the average maturity of all such securities
must be 90 days or less (at August 31, 1998, the dollar-weighted average life
was 46 days for Reserves, 47 days for California, 36 days for Massachusetts and
25 days for New York).
Securities Transactions
Securities transactions are recorded on a trade date basis. Realized gains and
losses from such transactions are determined on the specific identification
method. Securities purchased or sold on a when-issued or delayed delivery basis
may have extended settlement periods. Any securities so purchased are subject to
market fluctuation during this period. The Funds have instructed the custodian
to segregate assets in a separate account with a current value at least equal to
the amount of the when-issued and delayed delivery purchase commitments. At
August 31, 1998, California had an outstanding when-issued purchase commitment
of $1,000,000. There were no such outstanding purchase commitments in any of the
other Funds.
Investment Income
Interest income is determined on the basis of interest accrued, adjusted for
amortization of premiums and accretion of discounts.
Dividends and Distributions to Shareholders
Tax-exempt net investment income, adjusted for realized short-term gains and
losses on investment transactions, is declared as a dividend to shareholders of
record as of the close of each business day and payment is made or reinvestment
is credited to shareholder accounts after month-end.
Income Taxes
Each Fund is a separate taxpayer for federal income tax purposes. Each Fund
intends to comply with the requirements of the Internal Revenue Code applicable
to regulated investment companies and to distribute all of its tax-exempt net
investment income, including any net realized capital gains from investment
transactions. Therefore, no federal income tax provision is required.
Furthermore, each Fund intends to satisfy conditions which will enable interest
from municipal securities, which is exempt from regular federal income tax and
designated state income taxes for the California, Massachusetts and New York
Funds, to retain such tax exempt status when distributed to the shareholders of
the Funds. Net realized capital gain distributions, if any, are subject to
federal taxation.
Insurance Commitments
The Funds have obtained commitments (each a "Commitment") 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 the
Approved Banks had occurred, the Fund could cause MBIA to issue
----
21
<PAGE>
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)(continued)
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.
Derivative Financial Instruments
The Funds may invest in 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 six months ended August 31,
1998.
Use of Estimates
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities at the date of the
financial statements and the reported amounts of increases and decreases in net
assets from operations during the reporting period. Actual results could differ
from those estimates.
2. SECURITIES TRANSACTIONS
Purchases and sales (including maturities) of investments in short-term
municipal securities during the six months ended August 31, 1998, were as
follows:
<TABLE>
<CAPTION>
RESERVES CALIFORNIA MASSACHUSETTS NEW YORK
- -------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Purchases $347,185,480 $353,008,666 $37,984,375 $25,506,160
Sales and Maturities 364,020,000 370,646,000 35,000,000 21,080,000
===============================================================================
</TABLE>
At August 31, 1998, the cost of investments owned for federal income tax
purposes was the same as the cost for financial reporting purposes for each
Fund.
3. COMPOSITION OF NET ASSETS
At August 31, 1998, 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 CALIFORNIA MASSACHUSETTS NEW YORK
- --------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Capital paid in:
Service Plan series $ -- $ 81,376,011 $ 5,421,762 $ 1,413,535
Distribution Plan series -- 57,146,716 29,996,906 31,937,760
Institutional series -- 10,439,352 4,125,304 16,667
- --------------------------------------------------------------------------------------------
Net assets $ 254,688,323 $ 148,962,079 $ 39,543,972 $ 33,367,962
- --------------------------------------------------------------------------------------------
Authorized shares 2,000,000,000 2,350,000,000 2,500,000,000 2,500,000,000
============================================================================================
</TABLE>
4. MANAGEMENT FEE AND OTHER TRANSACTIONS WITH AFFILIATES
Under the Funds' investment management agreement with Nuveen Advisory Corp. (the
"Adviser"), a wholly owned subsidiary of The John Nuveen Company, each Fund pays
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 million .500 of 1% .400 of 1%
For the next $500 million .475 of 1 .375 of 1
For net assets over $1 billion .450 of 1 .350 of 1
==========================================================================
</TABLE>
Also, pursuant to a distribution agreement with the Funds, John Nuveen & Co.
Incorporated (the "Distributor"), a wholly owned subsidiary of The John Nuveen
Company, 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
Distribution Plan series and the Service Plan series and the Distributor 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 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.
----
22
<PAGE>
The management fee 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 Funds.
The management fee compensates the Adviser for overall investment advisory and
administrative services, and general office facilities. The Funds pay no
compensation directly to those of its 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 or its affiliates.
5. INVESTMENT COMPOSITION
At August 31, 1998, the revenue sources by municipal purpose, expressed as a
percent of total investments, were as follows:
<TABLE>
<CAPTION>
Reserves California Massachusetts New York
- ------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Basic Materials 5% --% --% --%
Capital Goods 4 -- -- --
Consumer Cyclical 4 -- -- 8
Consumer Staples -- 5 -- --
Education and Civic Organizations 6 -- 24 16
Financials -- -- -- 3
Health Care 16 18 23 5
Housing/Multifamily 1 15 11 6
Industrial/Other 8 -- -- 3
Long Term Care 10 -- 5 6
Tax Obligation/General 18 24 27 23
Tax Obligation/Limited 6 17 2 12
Transportation -- 2 -- --
Utilities 16 3 3 12
Water and Sewer 6 16 5 6
- -----------------------------------------------------------------------------------------
100% 100% 100% 100%
- -----------------------------------------------------------------------------------------
</TABLE>
At August 31, 1998, certain 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 (89% for Reserves, 79% for
California, 79% for Massachusetts and 91% for New York).
For additional information regarding each investment security, refer to the
Portfolio of Investments.
----
23
<PAGE>
Financial Highlights
----
24
<PAGE>
FINANCIAL HIGHLIGHTS (UNAUDITED)
Selected data for a share outstanding throughout each period is as follows:
<TABLE>
<CAPTION>
INVESTMENT OPERATIONS LESS DISTRIBUTIONS
--------------------- ------------------
RESERVES
BEGINNING NET ENDING
NET NET REALIZED/ NET NET
YEAR ENDED ASSET INVESTMENT UNREALIZED INVESTMENT CAPITAL ASSET TOTAL
FEBRUARY 28/29 VALUE INCOME (A) GAIN (LOSS) INCOME GAINS VALUE RETURN (B)
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
1999 (c) $ 1.00 $ .01 $-- $ (.01) $-- $ 1.00 1.48%
1998 1.00 .03 -- (.03) -- 1.00 3.02
1997 1.00 .03 -- (.03) -- 1.00 2.87
1996 1.00 .03 -- (.03) -- 1.00 3.23
1995 1.00 .03 -- (.03) -- 1.00 2.46
1994 1.00 .02 -- (.02) -- 1.00 1.84
- -----------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
INVESTMENT OPERATIONS LESS DISTRIBUTIONS
--------------------- ------------------
CALIFORNIA
BEGINNING NET ENDING
NET NET REALIZED/ NET NET
YEAR ENDED ASSET INVESTMENT UNREALIZED INVESTMENT CAPITAL ASSET TOTAL
FEBRUARY 28/29 VALUE INCOME (A) GAIN (LOSS) INCOME GAINS VALUE RETURN (B)
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
1999 (C)
Service Plan series $ 1.00 $ .02 $ -- $ (.02) $ -- $ 1.00 1.52%
Distribution Plan series 1.00 .02 -- (.02) -- 1.00 1.52
Institutional series 1.00 .02 -- (.02) -- 1.00 1.58
1998
Service Plan series 1.00 .03 -- (.03) -- 1.00 3.13
Distribution Plan series 1.00 .03 -- (.03) -- 1.00 3.13
Institutional series 1.00 .03 -- (.03) -- 1.00 3.22
1997
Service Plan series 1.00 .03 -- (.03) -- 1.00 2.94
Distribution Plan series 1.00 .03 -- (.03) -- 1.00 2.94
Institutional series 1.00 .03 -- (.03) -- 1.00 3.02
1996
Service Plan series 1.00 .03 -- (.03) -- 1.00 3.32
Distribution Plan series 1.00 .03 -- (.03) -- 1.00 3.31
Institutional series 1.00 .03 -- (.03) -- 1.00 3.40
1995
Service Plan series 1.00 .03 -- (.03) -- 1.00 2.59
Distribution Plan series 1.00 .03 -- (.03) -- 1.00 2.60
Institutional series 1.00 .03 -- (.03) -- 1.00 2.69
1994
Service Plan series 1.00 .02 -- (.02) -- 1.00 1.94
Distribution Plan series 1.00 .02 -- (.02) -- 1.00 1.92
Institutional series 1.00 .02 -- (.02) -- 1.00 2.07
- ---------------------------------------------------------------------------------------------------------------------------------
</TABLE>
-----
25
<PAGE>
<TABLE>
<CAPTION>
RATIOS/SUPPLEMENTAL DATA
- ----------------------------------------------------------------------------------------------------
RATIO RATIO
OF NET OF NET
RATIO OF INVESTMENT RATIO INVESTMENT
EXPENSES INCOME TO EXPENSES INCOME TO
TO AVERAGE AVERAGE TO AVERAGE AVERAGE
ENDING NET ASSETS NET ASSETS NET ASSETS NET ASSETS
NET BEFORE BEFORE AFTER AFTER
ASSETS REIMBURSE- REIMBURSE- REIMBURSE- REIMBURSE-
(000) MENT MENT MENT(A) MENT(A)
- ----------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
$ 254,688 .78%* 2.94%* .75%* 2.97%
270,723 .81 2.96 .75 3.02
304,087 .80 2.82 .75 2.87
339,662 .79 3.18 .75 3.22
351,606 .78 2.40 .75 2.43
404,201 .80 1.78 .75 1.83
- ----------------------------------------------------------------------------------------------------
</TABLE>
* Annualized.
(a) After waiver of certain management fees or reimbursement of expenses, if
applicable, by Nuveen Advisory.
(b) Total returns are calculated on net asset value and are not annualized.
(c) For the six months ended August 31, 1998.
<TABLE>
<CAPTION>
RATIO/SUPPLEMENTAL DATA
- ----------------------------------------------------------------------------------------------------
RATIO RATIO
OF NET OF NET
RATIO OF INVESTMENT RATIO INVESTMENT
EXPENSES INCOME TO EXPENSES INCOME TO
TO AVERAGE AVERAGE TO AVERAGE AVERAGE
ENDING NET ASSETS NET ASSETS NET ASSETS NET ASSETS
NET BEFORE BEFORE AFTER AFTER
ASSETS REIMBURSE- REIMBURSE- REIMBURSE- REIMBURSE-
(000) MENT MENT MENT(A) MENT(A)
- ----------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
$ 81,376 .59%* 2.99%* .55%* 3.03%*
57,147 .65* 2.92* .55* 3.02*
10,439 .43* 3.11* .43* 3.11*
86,916 .58 3.09 .55 3.12
54,789 .66 3.02 .55 3.13
18,791 .47 3.22 .47 3.22
95,306 .59 2.89 .55 2.93
57,490 .61 2.87 .55 2.93
32,843 .46 3.01 .46 3.01
70,722 .56 3.28 .54 3.30
73,020 .62 3.23 .55 3.30
34,392 .46 3.39 .46 3.39
41,772 .59 2.15 .55 2.19
67,157 .64 2.47 .55 2.56
50,772 .47 2.74 .47 2.74
415,238 .53 1.94 .53 1.94
72,380 .73 1.74 .55 1.92
32,299 .41 2.06 .41 2.06
- ----------------------------------------------------------------------------------------------------
</TABLE>
* Annualized.
(a) After waiver of certain management fees or reimbursement of expenses, if
applicable, by Nuveen Advisory.
(b) Total returns are calculated on net asset value and are not annualized.
(c) For the six months ended August 31, 1998.
----
26
<PAGE>
FINANCIAL HIGHLIGHTS (UNAUDITED) (continued)
Selected data for a share outstanding throughout
each period is as follows:
INVESTMENT OPERATIONS LESS DISTRIBUTIONS
------------------------- -----------------------------
<TABLE>
<CAPTION>
MASSACHUSETTS
BEGINNING NET ENDING
NET NET REALIZED/ NET NET
YEAR ENDED ASSET INVESTMENT UNREALIZED INVESTMENT CAPITAL ASSET TOTAL
FEBRUARY 28/29 VALUE INCOME(a) INCOME GAINS VALUE RETURN (b)
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
1999 (C)
Service Plan series $ 1.00 $ .02 $-- $ (.02) $-- $ 1.00 1.50%
Distribution Plan series 1.00 .02 -- (.02) -- 1.00 1.50%
Institutional series 1.00 .02 -- (.02) -- 1.00 1.50%
1998
Service Plan series 1.00 .03 -- (.03) -- 1.00 3.05
Distribution Plan series 1.00 .03 -- (.03) -- 1.00 3.05
Institutional series 1.00 .03 -- (.03) -- 1.00 3.05
1997
Service Plan series 1.00 .03 -- (.03) -- 1.00 2.84
Distribution Plan series 1.00 .03 -- (.03) -- 1.00 2.84
Institutional series 1.00 .03 -- (.03) -- 1.00 2.84
1996
Service Plan series 1.00 .03 -- (.03) -- 1.00 3.17
Distribution Plan series 1.00 .03 -- (.03) -- 1.00 3.17
Institutional series 1.00 .03 -- (.03) -- 1.00 3.18
1995
Service Plan series 1.00 .03 -- (.03) -- 1.00 2.53
Distribution Plan series 1.00 .03 -- (.03) -- 1.00 2.53
Institutional series 1.00 .03 -- (.03) -- 1.00 2.61
1994
Service Plan series 1.00 .02 -- (.02) -- 1.00 1.77
Distribution Plan series 1.00 .02 -- (.02) -- 1.00 1.74
Institutional series 1.00 .02 -- (.02) -- 1.00 1.80
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
INVESTMENT OPERATIONS LESS DISTRIBUTIONS
--------------------------- --------------------------
<TABLE>
<CAPTION>
NEW YORK
BEGINNING NET ENDING
NET NET REALIZED/ NET NET
YEAR ENDED ASSET INVESTMENT UNREALIZED INVESTMENT CAPITAL ASSET TOTAL
FEBRUARY 28/29, VALUE INCOME(a) INCOME GAINS VALUE RETURN (b)
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
1999 (c)
Service Plan series $ 1.00 $ .01 $-- $ (.01) $-- $ 1.00 1.48%
Distribution Plan series 1.00 .01 -- (.01) -- 1.00 1.48
Institutional series 1.00 .01 -- (.01) -- 1.00 1.48
1998
Service Plan series 1.00 .03 -- (.03) -- 1.00 3.10
Distribution Plan series 1.00 .03 -- (.03) -- 1.00 3.10
Institutional series 1.00 .03 -- (.03) -- 1.00 3.10
1997
Service Plan series 1.00 .03 -- (.03) -- 1.00 2.90
Distribution Plan series 1.00 .03 -- (.03) -- 1.00 2.90
Institutional series 1.00 .03 -- (.03) -- 1.00 2.90
1996
Service Plan series 1.00 .03 -- (.03) -- 1.00 3.20
Distribution Plan series 1.00 .03 -- (.03) -- 1.00 3.20
Institutional series 1.00 .03 -- (.03) -- 1.00 3.20
1995
Service Plan series 1.00 .02 -- (.02) -- 1.00 2.36
Distribution Plan series 1.00 .02 -- (.02) -- 1.00 2.37
Institutional series 1.00 .02 -- (.02) -- 1.00 2.28
1994
Service Plan series 1.00 .02 -- (.02) -- 1.00 1.51
Distribution Plan series 1.00 .02 -- (.02) -- 1.00 1.51
Institutional series 1.00 .02 -- (.02) -- 1.00 1.51
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
----
27
<PAGE>
<TABLE>
<CAPTION>
RATIOS/SUPPLEMENTAL DATA
- ---------------------------------------------------------------------------------
RATIO RATIO
OF NET OF NET
RATIO OF INVESTMENT RATIO OF INVESTMENT
EXPENSES INCOME TO EXPENSES INCOME TO
TO AVERAGE AVERAGE TO AVERAGE AVERAGE
ENDING NET ASSETS NET ASSETS NET ASSETS NET ASSETS
NET BEFORE BEFORE AFTER AFTER
ASSETS REIMBURSE- REIMBURSE- REIMBURSE- REIMBURSE-
(000) MENT MENT MENT(A) MENT(A)
- ---------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
$ 5,422 .75%* 2.76%* .55%* 2.96%*
29,997 .85* 2.64* .55* 2.94*
4,125 .70* 2.79* .55* 2.94*
6,085 .89 2.71 .55 3.05
25,920 .95 2.65 .55 3.05
5,578 .68 2.91 .55 3.04
9,964 .74 2.64 .55 2.83
27,083 .90 2.49 .55 2.84
3,977 .61 2.78 .55 2.84
38,251 .63 3.06 .55 3.14
26,279 .84 2.87 .55 3.16
3,550 .57 3.12 .54 3.15
27,732 .61 2.49 .55 2.55
24,237 .82 2.28 .55 2.55
1,038 .47 2.63 .47 2.63
38,576 .55 1.88 .52 1.91
27,773 .76 1.67 .55 1.88
3,406 .49 1.93 .49 1.93
- --------------------------------------------------------------------------------
</TABLE>
* Annualized.
(a) After waiver of certain management fees or reimbursement of expenses, if
applicable, by Nuveen Advisory.
(b) Total returns are calculated on net asset value and are not annualized.
(c) For the six months ended August 31, 1998.
<TABLE>
<CAPTION>
RATIOS/SUPPLEMENTAL DATA
- --------------------------------------------------------------------------------
RATIO RATIO
OF NET OF NET
RATIO OF INVESTMENT RATIO OF INVESTMENT
EXPENSES INCOME TO EXPENSES INCOME TO
TO AVERAGE AVERAGE TO AVERAGE AVERAGE
ENDING NET ASSETS NET ASSETS NET ASSETS NET ASSETS
NET BEFORE BEFORE AFTER AFTER
ASSETS REIMBURSE- REIMBURSE- REIMBURSE- REIMBURSE-
(000) MENT MENT MENT(A) MENT(A)
- ---------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
$ 1,414 .87%* 2.60%* .55%* 2.92%*
31,938 .71* 2.75* .55* 2.91*
17 1.02* 2.45* .55* 2.92*
1,406 1.20 2.38 .55 3.03
28,854 .89 2.75 .55 3.09
17 1.13 2.52 .55 3.10
414 1.27 2.17 .55 2.89
26,116 .92 2.52 .55 2.89
17 1.12 2.33 .55 2.90
554 1.92 1.82 .55 3.19
31,631 .94 2.80 .55 3.19
17 1.38 2.37 .55 3.20
640 .95 1.98 .55 2.38
29,798 .79 2.14 .55 2.38
17 2.14 .79 .55 2.38
557 1.49 .69 .55 1.63
27,886 .78 1.40 .55 1.63
17 4.60 (2.42) .55 1.63
- ----------------------------------------------------------------------------------------------
</TABLE>
* Annualized.
(a) After waiver of certain management fees or reimbursement of expenses, if
applicable, by Nuveen Advisory.
(b) Total returns are calculated on net asset value and are not annualized.
(c) For the six months ended August 31, 1998.
------
28
<PAGE>
BUILDING A BETTER PORTFOLIO
CAN MAKE YOU A SUCCESSFUL INVESTOR
NUVEEN FAMILY OF MUTUAL FUNDS
Nuveen offers a variety of funds designed to help you reach your financial
goals.
GROWTH
Nuveen Rittenhouse Growth Fund
GROWTH AND INCOME
European Value Fund
Growth and Income Stock Fund
Balanced Stock and Bond Fund
Balanced Municipal and Stock Fund
Tax-Free Income
National Funds
Long-Term Insured Intermediate-Term Limited-Term
State Funds
Arizona California Colorado Connecticut Florida Georgia Kansas Kentucky
Louisiana Maryland Massachusetts Michigan Missouri New Jersey New Mexico New
York North Carolina Ohio Pennsylvania Tennessee Virginia Wisconsin
Successful investors know that a well-diversified portfolio - one that balances
different types of investments, levels of risk, and tax management - can be the
foundation for building and sustaining wealth. That's why Nuveen offers you and
your financial adviser a wide range of quality investments that can help you
build a better portfolio in the pursuit of your financial goals.
MUTUAL FUNDS
Nuveen offers a family of equity, balanced, and municipal bond funds featuring
Premier AdvisersSM including Institutional Capital Corporation, Rittenhouse
Financial Services, and Nuveen Advisory Corp. Each brings a specialized
expertise in a particular investment style or asset class, time-tested
investment strategies, and a focus on consistent, long-term performance. With
Nuveen's Premier Adviser funds, you have all the advantages of a family of funds
plus the benefits of specialized investment expertise.
PRIVATE ASSET MANAGEMENT
Rittenhouse Financial Services and Nuveen Asset Management offer comprehensive,
customized investment management solutions to investors with assets of $250,000
or more to invest. A range of actively managed growth, balanced, and municipal
income- oriented portfolios are available, all based upon a disciplined
investment philosophy.
DEFINED PORTFOLIOS
Nuveen Defined Portfolios are fixed portfolios of quality securities that are a
convenient, attractive alternative to purchasing individual securities. They
provide low-cost diversification to reduce risk, while also offering
experienced, professional security selection and surveillance. In addition,
Nuveen Defined Portfolios provide daily liquidity at that day's net asset value
for quick access to your assets.
EXCHANGE-TRADED FUNDS
Nuveen Exchange-Traded Funds offer investors actively managed portfolios of
investment-grade quality municipal bonds. The fund shares are listed and traded
on the New York and American stock exchanges. Exchange-traded funds provide the
investment convenience, price visibility and liquidity of common stocks.
MUNIPREFERRED(R)
Nuveen MuniPreferred offers investors a AAA rated investment with an attractive
tax-free yield for the cash reserves portion of an investment portfolio.
MuniPreferred shares are backed 2-to-1 by the long-term portfolios of Nuveen
dual-class exchange-traded funds and are available for national as well as a
wide variety of state-specific portfolios.
-----
29
<PAGE>
Fund Information
BOARD OF DIRECTORS
Robert P. Bremner
Lawrence H. Brown
Anthony T. Dean
Anne E. Impellizzeri
Peter R. Sawers
William J. Schneider
Timothy R. Schwertfeger
Judith M. Stockdale
FUND MANAGER
Nuveen Advisory Corp.
333 West Wacker Drive
Chicago, IL 60606
TRANSFER AGENT AND
SHAREHOLDER SERVICES
The Chase Manhattan Bank
4 New York Plaza
New York, NY 10004-2413
(800) 257-8787
LEGAL COUNSEL
Morgan, Lewis &
Bockius LLP
Washington, D.C.
INDEPENDENT PUBLIC
ACCOUNTANTS
Arthur Andersen LLP
Chicago, IL
<PAGE>
SERVING INVESTORS FOR GENERATIONS
[PHOTO OF JOHN NUVEEN, SR. APPEARS HERE]
Since our founding in 1898, John Nuveen & Co. has been synonymous with
investments that withstand the test of time. Today we offer a broad range of
quality investments designed for individuals seeking to build and sustain
wealth. In fact, more than 1.3 million investors have trusted Nuveen to help
them pursue their financial goals.
The cornerstone of Nuveen's investment philosophy is a commitment to disciplined
long-term investment strategies focused on providing consistent, attractive
performance over time. We emphasize quality securities carefully chosen through
in-depth research, and we follow those securities closely over time to ensure
that they continue to meet our exacting standards.
Whether your focus is long-term growth, dependable current income or sustaining
accumulated wealth, Nuveen offers a wide variety of investments and services to
help meet your unique circumstances and financial planning needs. Our equity,
balanced, and tax-free income funds, along with our defined portfolios and
private asset management, can help you build a better, well-diversified
portfolio.
Talk with your financial adviser to learn more about how Nuveen investment
products and services can help you. Or call us at (800) 257-8787 for more
information, including a prospectus where applicable. Please read that
information carefully before investing.
NUVEEN 1898
Our Second Century 1998
helping investors sustain the wealth of a lifetime.(TM)
John Nuveen & Co. Incorporated
333 West Wacker Drive
Chicago, IL 60606-1286
www,nuveen.com
