<PAGE>
NUVEEN
Money Market
Funds
February 28, 1998
Annual Report
Dependable, tax-free income
to help you keep more of
what you earn.
[PHOTO APPEARS HERE]
Reserves
California
Massachusetts
New York
<PAGE>
Contents
1 Dear Shareholder
3 Reserves Performance Overview
4 California Performance Overview
5 Massachusetts Performance Overview
6 New York Performance Overview
7 Portfolio of Investments
18 Statement of Net Assets
20 Statement of Operations
24 Statement of Changes in Net Assets
31 Notes to Financial Statements
34 Financial Highlights
42 Report of Independent Public Accountants
44 Building Better Portfolios
45 Fund Information
<PAGE>
Dear Shareholder
[PHOTO OF TIMOTHY R. SCHWERTFEGER APPEARS HERE]
Timothy R. Schwertfeger
Chairman of the Board
Over the past two years, many financial markets have been unusually strong.
Short-term rates trended higher early in 1997 on expectations that the Federal
Reserve Board would take steps to tighten monetary policy and slow the pace of
economic growth. In March, the Fed raised its target rate for the federal funds
rate by 25 basis points, but then took no further action. Short-term securities
reversed course and yields trended downward for the remainder of the funds'
fiscal year. Still, falling commodity prices kept producer prices in check,
while low import prices--due in part to the weakness in Asian markets--limited
U.S. companies' ability to raise consumer prices. This combination has kept
inflation subdued and the Federal Reserve "on hold".
Performance Review
Your Nuveen tax-free money market fund continued to generate tax-free income
while preserving net asset value stability. As of the end of February, investors
were receiving 7-day annualized tax-free yields that ranged from 2.75% to 3.04%,
equivalent to taxable yields of between 3.99% and 4.41% for investors in the 31%
federal income tax bracket. When state taxes are taken into account, the
advantage of tax-free investing is even more apparent.
Portfolio Adjustments
Beginning in the fourth quarter of 1997, many Asian countries experienced
economic problems and severe currency devaluations. We continue to watch the
Asian situation--and Japanese banks in particular--for any additional credit
erosions and possible rating changes.
During this time, the Nuveen Money Market Funds, working with Nuveen Research,
continued to closely monitor those issues in the portfolios that were
additionally secured by letters of credit from Japanese banks. While others were
eliminating all Japanese-bank letters of credit, the funds maintained their
current positions based on our credit analysis.
With the funds' maturities averaging between 30 and 58 days, we were able to
selectively participate in the large new issue municipal note
Wealth takes
a lifetime
to build.
Once achieved,
it should be
preserved.
1
<PAGE>
"Nuveen
money market
funds provide
an excellent
balance to
other stock
and bond
investments."
calendar. During the third quarter of 1997, many short-term buyers seemed
reluctant to extend their average maturities, expecting the Federal Reserve to
raise rates. The funds were able to buy tax-exempt notes at historically cheap
levels which proved to be a wise move since the Fed did not raise rates. As a
result, the funds' average maturities during the third quarter of 1997 were
generally increased to the upper end of their ranges.
Short-Term Outlook
Looking forward, it's likely that upward pressure on wages may ultimately push
inflation up a bit. It's still uncertain whether the Fed will deem it necessary
to raise short-term rates, and if they hold the line, money market rates should
remain relatively stable in 1998.
Helping You Build A Better Portfolio
The events of 1997 have also focused renewed attention on the need for
diversification and appropriate asset allocation. In addition to their well-
known benefits--stability of principal and higher yields than bank accounts--
money market funds can also play an important role in your long-term investment
plan. Stock market volatility, especially late in the year, provided a vivid
illustration of the steadying effect that short-term investments can provide in
a well-constructed investment portfolio. Nuveen money market funds provide an
excellent balance to other stock and bond investments. Your financial adviser
can introduce you to a variety of other Nuveen products and services to round
out your portfolio of core investments, including the new Nuveen Rittenhouse
Growth Fund, a blue chip equity mutual fund that provides a tax-efficient
approach to building and sustaining wealth.
On behalf of everyone at Nuveen, I thank you for your continued confidence in us
and our family of investments.
Sincerely,
/s/ Timothy R. Schwertfeger
Timothy R. Schwertfeger
Chairman of the Board
April 15, 1998
2
<PAGE>
Nuveen Tax-Free Reserves, Inc.
Performance Overview
As of February 28, 1998
Fund Highlights
Inception Date 11/82
Net Assets ($000) $270,723
Average Weighted Maturity (Days) 42.1
- ----------------------------------------------------------
Tax-Free Yields
SEC 7-Day Yield 2.86%
SEC 30-Day Yield 2.75%
- ----------------------------------------------------------
Taxable Equivalent Yields
SEC 7-Day Yield 4.14%
SEC 30-Day Yield 3.99%
- ----------------------------------------------------------
Based on a federal tax rate of 31%; represents the yield from a taxable
investment necessary to equal the yield of the Nuveen fund on an after-tax
basis.
Top 5 Sectors
Health Care 18%
Utilities 18%
Tax Obligation (General) 16%
Long Term Care 10%
Tax Obligation (Limited) 7%
- ----------------------------------------------------------
1997-1998 Index Comparison
[MOUNTAIN CHART APPEARS HERE]
- --------------------------------------------------------------------------------
1997-1998 Index Comparison
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
IBC Donoghue Retail Tax-Exempt Money Market Fund Average Nuveen Tax-Free Reserves, Inc. 30-Day Yield
<S> <C> <C>
Feb 2.81 2.83
Mar 2.68 2.71
Apr 3.02 3.07
May 3.33 3.36
Jun 3.2 3.22
Jul 3.02 3.04
Aug 2.95 2.94
Sep 3.07 3.1
Oct 3.05 3.09
Nov 3.11 3.16
Dec 3.12 3.17
Jan 2.99 3.01
Feb 2.74 2.77
</TABLE>
[_] IBC Donoghue Retail Tax-Exempt Money Market Fund Average
[_] Nuveen Tax-Free Reserves, Inc. 30-Day Yield
Past performance is not predictive of future performance.
3
<PAGE>
Nuveen California Tax-Free Money Market Fund
Performance Overview
As of February 28, 1998
Fund Highlights
Inception Date 3/86
Net Assets ($000) $160,495
Average Weighted Maturity (Days) 30.1
- ----------------------------------------------------------
Tax-Free Yields
SEC 7-Day Yield 3.04%
SEC 30-Day Yield 2.85%
- ----------------------------------------------------------
Taxable Equivalent Yields
SEC 7-Day Yield 4.86%
SEC 30-Day Yield 4.55%
- ----------------------------------------------------------
Based on a combined federal and state income tax rate of 37.4%; represents the
yield from a taxable investment necessary to equal the yield of the Nuveen fund
on an after-tax basis.
Top 5 Sectors
Tax Obligation (Limited) 25%
Water and Sewer 19%
Housing (Multifamily) 15%
Health Care 14%
Tax Obligation (General) 12%
- ----------------------------------------------------------
1997-1998 Index Comparison
[MOUNTAIN CHART APPEARS HERE]
<TABLE>
<CAPTION>
IBC Donoghue California
Nuveen California Retail Tax-Exempt Money Market
30-Day Yield Fund Average
----------------- ------------------------------
<S> <C> <C>
Feb 2.89 2.76
Mar 2.67 2.6
Apr 3.21 3
May 3.57 3.32
Jun 3.38 3.15
Jul 3.11 2.92
Aug 2.98 2.8
Sep 3.17 2.98
Oct 3.15 2.97
Nov 3.27 3.05
Dec 3.24 3.04
Jan 3.23 2.85
Feb 2.83 2.59
</TABLE>
[_] Nuveen California 30-Day Yield
[_] IBC Donoghue California Retail Tax-Exempt Money Market Fund Average
Past performance is not predictive of future performance.
4
<PAGE>
Nuveen Massachusetts Tax-Free Money Market Fund
Performance Overview
As of February 28, 1998
Fund Highlights
Inception Date 2/87
Net Assets ($000) $37,583
Average Weighted Maturity (days) 58.2
- ----------------------------------------------------------
Tax-Free Yields
SEC 7-Day Yield 2.75%
SEC 30-Day Yield 2.73%
- ----------------------------------------------------------
Taxable Equivalent Yields
SEC 7-Day Yield 4.53%
SEC 30-Day Yield 4.50%
- ----------------------------------------------------------
Based on a combined federal and state income tax rate of 39.3%; represents the
yield from a taxable investment necessary to equal the yield of the Nuveen fund
on an after-tax basis.
Top 5 Sectors
Tax Obligation (General) 28%
Education and Civic Organizations 26%
Health Care 22%
Housing (Multifamily) 7%
Long-Term Care 6%
- ----------------------------------------------------------
1997-1998 Index Comparison
[MOUNTAIN CHART APPEARS HERE]
<TABLE>
<CAPTION>
Nuveen Massachusetts 30-Day Yield IBC Donoghue Massachusetts Retail Tax-Exempt Money Market Fund Average
<S> <C> <C> <C> <C>
Feb. 1997 2.81 2.8
Mar. 1997 2.61 2.68
Apr. 1997 3.12 3.06
May. 1997 3.43 3.33
Jun. 1997 3.29 3.18
Jul. 1997 3.09 3.04
Aug. 1997 3.00 2.94
Sep. 1997 3.13 3.05
Oct. 1997 3.04 3.03
Nov. 1997 3.2 3.1
Dec. 1997 3.12 3.08
Jan. 1998 2.97 2.91
Feb. 1998 2.71 2.65
</TABLE>
[_] Nuveen Massachusetts 30-Day Yield
[_] IBC Donoghue Massachusetts Retail Tax-Exempt Money Market Fund Average
Past performance is not predictive of future performance.
5
<PAGE>
Nuveen New York Tax-Free Money Market Fund
Performance Overview
As of February 28, 1998
Fund Highlights
Inception Date 2/87
Net Assets ($000) $30,276
Average Weighted Maturity (days) 33.0
- ----------------------------------------------------------
Tax-Free Yields
SEC 7-Day Yield 2.84%
SEC 30-Day Yield 2.69%
- ----------------------------------------------------------
Taxable Equivalent Yields
SEC 7-Day Yield 4.42%
SEC 30-Day Yield 4.18%
- ----------------------------------------------------------
Based on a combined federal and state income tax rate of 35.7%; represents the
yield from a taxable investment necessary to equal the yield of the Nuveen fund
on an after-tax basis.
Top 5 Sectors
Tax Obligation (General) 20%
Education and Civic Organizations 19%
Health Care 10%
Tax Obligation (Limited) 10%
Consumer Cyclical 9%
- ----------------------------------------------------------
1997-1998 Index Comparison
[MOUNTAIN CHART APPEARS HERE]
1997-1998 Index Comparison
[MOUNTAIN CHART APPEARS HERE]
<TABLE>
<CAPTION>
Nuveen New York IBC Donoghue New York
30-Day Yield Retail Tax-Exempt
Money Market Fund Average
<S> <C> <C>
Feb. 1997 2.88 2.77
Mar. 1997 2.74 2.63
Apr. 1997 3.2 3.02
May. 1997 3.45 3.32
Jun. 1997 3.31 3.18
Jul. 1997 3.11 2.98
Aug. 1997 3.00 2.87
Sep. 1997 3.15 3.03
Oct. 1997 3.12 3.02
Nov. 1997 3.23 3.13
Dec. 1997 3.21 3.12
Jan. 1998 3.03 2.93
Feb. 1998 2.68 2.68
</TABLE>
[_] Nuveen New York 30-Day Yield
[_] IBC Donoghue New York Retail Tax-Exempt Money Market Fund Average
Past performance is not predictive of future performance.
6
<PAGE>
Portfolio of Investments
February 28, 1998
Reserves
<TABLE>
<CAPTION>
Principal Amortized
Amount Description Ratings* Cost
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Alabama -- 1.0%
$ 2,735,000 Marshall County Special Obligation School Refunding Warrants, Series 1994, A-1+ $2,735,000
Variable Rate Demand Bonds, 3.450%, 2/01/12+
- -----------------------------------------------------------------------------------------------------------------------------------
Arizona -- 5.6%
7,000,000 The Industrial Development Authority of the County of Apache (Arizona), VMIG-1 7,000,000
Pollution Control Revenue Bonds, 1981 Series B (Tucson Electric Power
Company Project), Variable Rate Demand Bonds, 3.750%, 10/01/21+
8,000,000 Mesa Municipal Development Corporation, Special Tax Bonds, Series 1985, VMIG-1 8,000,000
Commercial Paper, 3.200%, 4/09/98
- -----------------------------------------------------------------------------------------------------------------------------------
California -- 1.9%
5,000,000 California State Revenue Anticipation Notes, Series 1997, 4.500%, 6/30/98 MIG-1 5,010,434
- -----------------------------------------------------------------------------------------------------------------------------------
Colorado -- 1.8%
5,000,000 Fort Morgan Water Works and Distribution Enterprise, Water Revenue A-1+ 5,000,000
Bonds, Series 1997, Variable Rate Demand Bonds, 3.450%, 12/01/17+
- -----------------------------------------------------------------------------------------------------------------------------------
District of Columbia -- 3.0%
8,100,000 District of Columbia General Obligation, Series 1992A-2, Variable VMIG-1 8,100,000
Rate Demand Bonds, 3.700%, 10/01/07+
- -----------------------------------------------------------------------------------------------------------------------------------
Florida -- 6.9%
1,400,000 Florida Housing Finance Agency, Multi-Family Housing Revenue A-1 1,400,000
Refunding Bonds, 1989 Series E (Fairmont Oaks Project), Variable Rate
Demand Bonds, 3.650%, 4/01/26+
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, 3.225%, 12/01/07+
4,800,000 Sarasota County Public Hospital District, Sarasota Memorial A-1+ 4,800,000
Hospital Project, Series C, Commercial Paper, 3.400%, 5/14/98
Sunshine State Governmental Financing Commission, Commercial Paper:
3,300,000 3.750%, 3/06/98 VMIG-1 3,300,000
4,000,000 3.550%, 6/23/98 VMIG-1 4,000,000
2,200,000 Volusia County Health Facilities Authority, Health Facilities A-1+ 2,200,000
Revenue Bonds (The Alliance Community for Retirement Living,
Inc. Project), Series 1995, Variable Rate Demand Bonds,
3.800%, 9/01/20+
- -----------------------------------------------------------------------------------------------------------------------------------
Hawaii -- 0.7%
1,800,000 Department of Budget and Finance of the State of Hawaii, Special Purpose A-1 1,800,000
Demand Revenue Bonds (Adventist Health System--West),
Series 1984, Variable Rate Demand Bonds, 3.750%, 9/01/99+
- -----------------------------------------------------------------------------------------------------------------------------------
Illinois -- 15.2%
5,500,000 Illinois Health Facilities Authority, Revenue Bonds, Series 1997 VMIG-1 5,500,000
(Victory Health Services), Commercial Paper, 3.600%, 3/12/98
2,700,000 Illinois Health Facilities Authority, Rush Presbyterian Series 1989A, VMIG-1 2,700,000
Commercial Paper, 3.400%, 5/15/98
7,000,000 Illinois Development Finance Authority, Pollution Control Revenue Bonds P-1 7,000,000
(Diamond-Star Motors Corporation Project), Series 1995,
Variable Rate Demand Bonds, 3.750%, 12/01/08+
</TABLE>
7
<PAGE>
Portfolio of Investments
February 28, 1998
Reserves -- continued
<TABLE>
<CAPTION>
Principal Amortized
Amount Description Ratings* Cost
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Illinois -- continued
$ 2,000,000 Illinois Development Finance Authority, Revenue Bonds, Radiological Society of A-1+ $2,000,000
North America, Series 1997, Variable Rate Demand Bonds, 3.550%, 6/01/17
6,000,000 Illinois Educational Facilities Authority, Adjustable Demand Revenue Bonds, VMIG-1 6,000,000
Shedd Aquarium Society, Series 1987B, Commercial Paper, 3.850%, 7/23/98
3,000,000 City of Chicago, General Obligation Tender Notes, Series 1997, 3.550%, 10/29/98 MIG-1 3,000,000
5,000,000 City of Chicago, General Obligation Tender Notes, Series 1998, 3.550%, 2/04/99 SP-1+ 5,000,000
2,500,000 City of Chicago, Chicago-OOHare International Airport, Special Facility Revenue P-1 2,500,000
Bonds (American Airlines, Inc. Project), Series 1983A, Variable Rate Demand
Bonds, 3.650%, 12/01/17
5,700,000 City of Decatur, Macon County, Illinois, Unit Priced Demand Adjustable Water VMIG-1 5,700,000
Revenue Bonds, Series 1985, Commercial Paper, 4.100%, 3/12/98
1,770,000 Village of Oak Park, Illinois, Variable Rate Demand Revenue Bonds (Lone Tree N/R 1,770,000
Area Girl Scout Council, Inc. Project), Series 1997, 3.600%, 11/01/17
- ---------------------------------------------------------------------------------------------------------------------------
Iowa -- 3.0%
5,000,000 Iowa School Cash Anticipation Program, Iowa School Corporations, Warrant MIG-1 5,010,799
Certificates, 1997-98 Series A Notes, 4.500%, 6/26/98
2,900,000 City of Eddyville, Iowa, Industrial Development Revenue Bonds (Heartland Lysine, N/R 2,900,000
Inc. Project), Series 1985, Variable Rate Demand Bonds, 3.650%, 11/01/03
- ---------------------------------------------------------------------------------------------------------------------------
Kentucky -- 3.3%
9,005,000 Hancock County, Kentucky, Industrial Building Revenue Refunding Bonds (Southwire N/R 9,005,000
Company Project), Series 1990, Variable Rate Demand Bonds, 3.600%, 7/01/10
- ---------------------------------------------------------------------------------------------------------------------------
Louisiana -- 1.5%
4,000,000 Ascension Parish Pollution Control (BASF Wyandotte Corporation), Variable Rate P-1 4,000,000
Demand Bonds, 3.650%, 12/01/05
- ---------------------------------------------------------------------------------------------------------------------------
Massachusetts -- 0.9%
2,400,000 Newton Bond Anticipation Notes, 4.000%, 3/25/98 N/R 2,400,130
- ---------------------------------------------------------------------------------------------------------------------------
Michigan -- 4.7%
7,100,000 Michigan Job Development Authority, Limited Obligation Revenue Bonds (Frankenmuth A-1 7,100,000
Bavarian Inn Motor Lodge Project), Series A, Variable Rate Demand Bonds,
3.875%, 9/01/15
5,000,000 The School District of the City of Kalamazoo, County of Kalamazoo, State of SP-1+ 5,001,803
Michigan, 1997 State Aid Notes (Limited Tax General Obligation), 4.000%, 4/15/98
735,000 The Economic Development Corporation of the City of Warren, Macomb County, P-1 735,000
Michigan, Floating Rate Limited Obligation Revenue Bonds (The Prince Company, Inc.,
Michigan Division Project), Series A, Variable Rate Demand Bonds, 3.600%, 11/01/99
- ---------------------------------------------------------------------------------------------------------------------------
Minnesota -- 1.9%
5,125,000 City of Bloomington, Minnesota, Floating Rate Demand Bonds, Commercial Revenue A-1+ 5,125,000
Bonds (James Avenue Associates Project), Series 1985, Variable Rate Demand
Bonds, 3.450%, 12/01/15
- ---------------------------------------------------------------------------------------------------------------------------
Missouri -- 4.5%
3,000,000 Health and Educational Facilities Authority of the State of Missouri, Health VMIG-1 3,000,000
Facilities Revenue Bonds (Bethesda Barclay), Series 1996A, Variable Rate
Demand Bonds, 3.950%, 8/15/26
</TABLE>
8
<PAGE>
<TABLE>
<CAPTION>
Principal Amortized
Amount Description Ratings* Cost
- ------------------------------------------------------------------------------------------------------------------------
Missouri -- continued
<S> <C> <C> <C>
$ 9,200,000 State Environmental Improvement and Energy Resources Authority of the State of VMIG-1 $ 9,200,000
Missouri, Unit Priced Demand Adjustable Pollution Control Revenue Bonds, Series
1985 A (Union Electric Company), Commercial Paper, 3.200%, 4/08/98
- ------------------------------------------------------------------------------------------------------------------------
New Hampshire -- 2.5%
6,900,000 New Hampshire Higher Educational and Health Facilities Authority, Revenue Bonds, A-1 6,900,000
Hunt Community Issue, Series 1996, Variable Rate Demand Bonds, 3.500%, 5/01/26+
- ------------------------------------------------------------------------------------------------------------------------
North Carolina -- 3.7%
4,650,000 North Carolina Municipal Power Agency, Catawba Electric Revenue, Commercial A-1+ 4,650,000
Paper, Series A, 3.250%, 3/20/98
2,400,000 The Wake County Industrial Facilities and Pollution Control Financing Authority, VMIG-1 2,400,000
Pollution Control Revenue Refunding Bonds, Carolina Power and Light Company
Project, Series 1990B, Variable Rate Demand Bonds, 3.500%, 6/15/14+
3,000,000 The Wake County Industrial Facilities and Pollution Control Financing Authority, A-2 3,000,000
Pollution Control Refunding Bonds (Carolina Power and Light Company Project),
Series 1985C, Commercial Paper, 4.250%, 3/06/98
- ------------------------------------------------------------------------------------------------------------------------
Ohio -- 12.2%
2,555,000 Ohio School Districts, 1998 Cash Flow Borrowing Program, Certificates of MIG-1 2,566,853
Participation, Series A, Tax Anticipation Notes, 4.120%, 12/31/98
8,300,000 Centerville Health Care, Health Care Revenue Bonds (Bethany Lutheran Village VMIG-1 8,300,000
Continuing Care Facilities Expansion Project), Variable Rate Demand Bonds,
3.500%, 5/01/08+
3,600,000 Cuyahoga County, University Hospital of Cleveland, Series 1985, Variable Rate VMIG-1 3,600,000
Demand Bonds, 3.850%, 1/01/16+
3,000,000 Cuyahoga County Hospital, Revenue Refunding Bonds, Cleveland Clinic, Series VMIG-1 3,000,000
1998A, Variable Rate Demand Bonds, 3.400%, 1/01/24+
5,120,000 County of Erie, Ohio, Adjustable Rate Demand Bonds, Health Care Facilities VMIG-1 5,120,000
Revenue Bonds (The Commons of Providence Project), Series 1996 B,
Variable Rate Demand Bonds, 3.560%, 10/01/21+
3,570,000 County of Franklin, Ohio, Floating Rate Demand Bonds, Hospital Financing Revenue N/R 3,570,000
Bonds, Series 1993 (Traditions at Mill Run Project), Variable Rate Demand Bonds,
3.570%, 11/01/14+
5,000,000 County of Lucas, Ohio, Multi-Mode Variable Rate Demand Facilities Improvement VMIG-1 5,000,000
Revenue Bonds, Series 1997 (The Toledo Zoological Society Project), Variable
Rate Demand Bonds, 3.450%, 10/01/05+
1,800,000 County of Ottawa, Ohio, Hospital Facilities, Variable Rate Demand Revenue Bonds, N/R 1,800,000
Series 1997 (Luther Home of Mercy Project), 3.450%, 10/01/17+
- ------------------------------------------------------------------------------------------------------------------------
Pennsylvania -- 5.3%
2,250,000 Butler County Industrial Development Authority (Pennsylvania), Industrial N/R 2,250,000
Development Revenue Bonds (Wise Business Forms, Incorporated Project),
Variable Rate Demand Bonds, Series 1997, 3.510%, 8/01/18+
7,000,000 Dauphin County General Authority (Pennsylvania), Variable Rate Demand Revenue A-1+ 7,000,000
Bonds (All Health Pooled Financing Program), Series A of 1997, 3.450%, 10/01/27+
1,000,000 City of Philadelphia Tax and Revenue Anticipation Notes, Series A of 1997-1998,
4.500%, 6/30/98 MIG-1 1,001,593
4,000,000 City of Philadelphia, Pennsylvania, General Obligation Bonds, Series 1990,
Commercial Paper, 4.100%, 3/12/98 VMIG-2 4,000,000
</TABLE>
9
<PAGE>
<TABLE>
<CAPTION>
Portfolio of Investments
February 28, 1998
Reserves -- continued
Principal Amortized
Amount Description Ratings* Cost
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Tennessee -- 2.4%
$3,500,000 The Industrial Development Board of the County of Jackson, Tennessee, Variable N/R $3,500,000
Rate Industrial Development Demand Revenue Bonds (Esselte Project), Series
1985B, Variable Rate Demand Bonds, 3.750%, 8/01/15+
3,100,000 The Industrial Development Board of the Metropolitan Government of Nashville N/R 3,100,000
and Davidson County (State of Tennessee), Multifamily Housing Revenue
Refunding Bonds (Hickory Trace Apartments Project), Series 1995, Variable
Rate Demand Bonds, 3.450%, 6/01/15+
- ---------------------------------------------------------------------------------------------------------------------------
Texas -- 7.2%
4,000,000 Texas State Tax and Revenue Anticipation Notes, Series 1997A, 4.750%, 8/31/98 MIG-1 4,022,282
7,000,000 Austin (Travis and Williamson Counties), Series A, Austin Combined Utilities, A-1+ 7,000,000
Commercial Paper, 3.000%, 3/11/98
8,500,000 Brownsville Utility System, Commercial Paper, Series A, 3.450%, 5/08/98 A-1+ 8,500,000
- ---------------------------------------------------------------------------------------------------------------------------
Utah -- 1.3%
3,550,000 West Valley City Industrial Development (Johnson Matthey Project), Variable N/R 3,550,000
Rate Demand Bonds, 3.750%, 12/01/11+
- ---------------------------------------------------------------------------------------------------------------------------
Virginia -- 3.3%
3,000,000 Industrial Development Authority of Albemarle County, Virginia, Health A-1 3,000,000
Services Revenue Bonds (The University of Virginia Health Services
Foundation), Series 1996, Variable Rate Demand Bonds, 3.400%, 2/01/26+
2,600,000 The Industrial Development Authority of the City of Norfolk, Floating Rate N/R 2,600,000
Industrial Development Revenue Bonds (Norfolk-Virginia Beach-Portsmouth
MSA Limited Partnership Project), Variable Rate Demand Bonds, 5.525%, 11/01/04+
3,300,000 The Industrial Development Authority of the City of Richmond, Floating N/R 3,300,000
Rate Industrial Development Revenue Bonds (Richmond MSA Limited Partnership
Project), Variable Rate Demand Bonds, 5.525%, 11/01/04+
- ---------------------------------------------------------------------------------------------------------------------------
Washington -- 3.4%
4,900,000 Washington Health Care Facilities Authority, Series 1984 (Adventist A-1 4,900,000
Health System--West/Walla Walla General Hospital), Variable Rate
Demand Bonds, 3.750%, 9/01/09+
4,250,000 Spokane County, Washington, Road Fund, Tax Anticipation Notes, Series SP-1+ 4,256,095
1997, 4.250%, 6/30/98
- ---------------------------------------------------------------------------------------------------------------------------
Wisconsin -- 2.2%
6,000,000 Wisconsin Health and Educational Facilities Authority, Alexian Village VMIG-1 6,000,000
of Milwaukee, Inc. Refinancing, Series 1988A, Variable Rate Demand Bonds,
3.950%, 3/01/17+
- ---------------------------------------------------------------------------------------------------------------------------
$268,915,000 Total Investments -- 99.4% 268,979,989
============---------------------------------------------------------------------------------------------------------------
Other Assets Less Liabilities -- 0.6% 1,742,848
----------------------------------------------------------------------------------------------------------
Net Assets -- 100% $270,722,837
==========================================================================================================
</TABLE>
* Ratings (not covered by the report of independent public
accountants): Using the higher of Standard & Poor's or
Moody's rating.
N/R -- Investment is not rated.
+ The security has a maturity of more than one year, but
has variable rate and demand features which qualify it
as a short-term security. The rate disclosed is that
currently in effect. This rate changes periodically
based on market conditions or a specified market index.
See accompanying notes to financial statements.
10
<PAGE>
<TABLE>
<CAPTION>
Portfolio of Investments
February 28, 1998
California
Principal Amortized
Amount Description Ratings* Cost
- ----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Consumer Staples - 4.4%
$7,000,000 San Dimas Industrial Development Bonds (Bausch & Lomb N/R $7,000,000
Incorporated), Variable Rate Demand Bonds, 3.700%, 12/01/15+
- ----------------------------------------------------------------------------------------------------------------
Health Care - 14.1%
5,100,000 California Health Facilities Financing Authority, Insured VMIG-1 5,100,000
Revenue Bonds (Sutter/CHS), 3.650%, 7/01/22+
1,575,000 California Health Facilities Financing Authority, Refunding VMIG-1 1,575,000
Revenue Bonds (St. Joseph Health System), Series 1985B,
Variable Rate Demand Bonds, 3.650%, 7/01/13+
4,300,000 California Health Facilities Authority (St. Joseph Health VMIG-1 4,300,000
System), Series 1991B, Variable Rate Demand Bonds,
3.650%, 7/01/09+
3,700,000 California Statewide Community Development Authority, Certificates VMIG-1 3,700,000
of Participation (Sutter Health Obligation Group), Variable Rate
Demand Bonds, 3.850%, 7/01/15+
5,000,000 Torrance Hospital Revenue (Little Company of Mary Hospital A-1 5,000,000
- Torrance Memorial Hospital), Variable Rate Demand Bonds,
3.250%, 2/01/22+
3,000,000 Washington Township Hospital District, 1984 Issue A, VMIG-1 3,000,000
Variable Rate Demand Bonds, 3.700%, 1/01/16+
- ----------------------------------------------------------------------------------------------------------------
Housing/Multifamily - 14.7%
2,910,000 Chico Multifamily Housing (Sycamore Glen Project), Series N/R 2,910,000
1995, Variable Rate Demand Bonds, 3.480%, 4/07/14+
3,000,000 Hayward Housing Authority, Multifamily Mortgage Revenue A-2 3,000,000
Refunding, Series 1993A [Huntwood Terrace), Variable Rate
Demand Bonds, 4.000%, 3/01/27+
4,796,000 City of Los Angeles (Studio Colony Project), Variable Rate VMIG-1 4,796,000
Demand Bonds, Multifamily Housing Revenue Bonds,
3.700%, 5/01/07+
7,900,000 Orange County Apartment Development (Monarch Bay Apartments A-1 7,900,000
Project), Variable Rate Demand Bonds, 3.500%, 10/01/07+
3,800,000 Orange County (Robinson Ranch Apartments Project), Variable VMIG-1 3,800,000
Rate Demand Revenue Bonds, 3.200%, 11/01/08+
1,150,000 San Bernardino Multifamily Housing (Castle Park Apartments), VMIG-1 1,150,000
Variable Rate Demand Bonds, 3.750%, 11/01/05+
- ---------------------------------------------------------------------------------------------------------------
Other Revenue - 3.1%
5,000,000 California State Revenue Anticipation Notes, Series 1997, MIG-1 5,010,434
4.500%, 6/30/98
- ---------------------------------------------------------------------------------------------------------------
Tax Obligation/General - 11.9%
5,000,000 California School Cash Reserve Program Authority, 1997 MIG-1 5,014,591
Pool Bonds, Series A, 4.750%, 7/02/98
2,000,000 Irvine Ranch Water District, Variable Rate Demand Bonds, VMIG-1 2,000,000
3.550%, 6/01/15+
2,000,000 Riverside County School Financing Authority, 1997-98 MIG-1 2,009,884
Revenue Anticipation Notes, School Districts
Financing Program, 4.500%, 10/01/98
3,000,000 San Diego County Teeter Obligation, Tax-Exempt Commercial P-1 3,000,000
Paper, Series B, 3.500%, 3/11/98
2,000,000 County of San Mateo, California, 1997-98 Tax and Revenue SP-1+ 2,004,506
Anticipation Notes, 4.500%, 7/01/98
5,000,000 South Coast Local Education Agencies, Pooled Tax and SP-1+ 5,011,169
Revenue Anticipation Notes Program,
Series 1997A, 4.500%, 6/30/98
</TABLE>
11
<PAGE>
Portfolio of Investments
February 28, 1998
California -- continued
<TABLE>
<CAPTION>
Principal Amortized
Amount Description Ratings* Cost
- --------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Tax Obligation/Limited -- 24.9%
$ 9,000,000 Kern Community College District, Certificates of Participation, Series A-2 $ 9,000,000
1995, Variable Rate Demand Bonds, 4.150%, 1/01/25**
5,000,000 Los Angeles County Metro Transport Authority, Second Subordinate Sales A-1 5,000,000
Tax Revenue, Commercial Paper, 3.550%, 5/19/98
1,900,000 Oakland, California, Certificates of Participation, Capital N/R 1,900,000
Improvement Project, Variable Rate Demand Bonds, 3.500%, 12/01/15**
7,000,000 Orange County, Irvine Coast Assessment District #88-1, Variable Rate VMIG-1 7,000,000
Demand Bonds, 3.600%, 9/02/18**
3,000,000 County of Riverside Teeter Obligation, Tax-Exempt Commercial Paper, A-1+ 3,000,000
Series B, 3.700%, 3/12/98
5,000,000 San Joaquin County Transportation Authority, Sales Tax Revenue A-1+ 5,000,000
Commercial Paper, 3.400%, 6/05/98
6,000,000 Santa Clara County Transit District, Refunding Equipment Trust VMIG-1 6,000,000
Certificates, Variable Rate Demand Bonds, 4.050%, 6/01/15**
3,000,000 Westminster Redevelopment Agency, Westminster Commercial Redevelopment A-1+ 3,000,000
Project No. 1, 1997 Tax Allocation Revenue Refunding Bonds,
Variable Rate Demand Bonds (Orange County, California), 3.200%,
8/01/27**
- --------------------------------------------------------------------------------------------------------------------
Utilities -- 7.1%
1,000,000 California Pollution Control Financing Authority, Pacific Gas & A-1+ 1,000,000
Electric, Series 1996D, Commercial Paper, 3.200%, 5/08/98
5,400,000 California Pollution Control Financing Authority, Pollution A-1+ 5,400,000
Control Refunding Revenue Bonds (Pacific Gas and Electric Company),
1996 Series C, Variable Rate Demand Bonds, 3.550%, 11/01/26**
5,000,000 Sacramento Municipal Utility District, Series I, Commercial Paper, A-1+ 5,000,000
3.000%, 3/27/98
- --------------------------------------------------------------------------------------------------------------------
Water and Sewer -- 19.1%
4,675,000 Hillsborough Certificates of Participation, Water & Sewer System Project, A-1 4,675,000
Series 1995A, Variable Rate Demand Bonds, 3.350%, 6/01/15**
2,500,000 Los Angeles Wastewater System, Commercial Paper, 3.150%, 5/20/98 VMIG-1 2,500,000
7,400,000 Monterey County Financing Authority, Revenue Bonds (Reclamation and VMIG-1 7,400,000
Distribution Project), Series 1995A, Variable Rate Demand Bonds,
3.900%, 9/01/36**
6,300,000 Orange County Sanitation District, Certificates of Participation, VMIG-1 6,300,000
Variable Rate Demand Bonds, 3.600%, 8/01/17**
4,050,000 San Diego County, Rincon Del Diablo Municipal Water District, Rincon VMIG-2 4,050,000
Public Facilities Corporation, Commercial Paper, 3.900%, 5/01/98
5,800,000 Santa Paula Public Financing Authority, Lease Revenue Bonds, Series A-2 5,800,000
1996, Water System Acquisition Project, Variable Rate Demand Bonds,
3.800%, 2/01/26**
- --------------------------------------------------------------------------------------------------------------------
$159,256,000 Total Investments -- 99.3% 159,306,584
================----------------------------------------------------------------------------------------------------
Other Assets Less Liabilities -- 0.7% 1,188,858
------------------------------------------------------------------------------------------------
Net Assets -- 100% $160,495,442
================================================================================================
* Ratings (not covered by the report of independent public accountants): Using the higher of
Standard & Poor's or Moody's rating.
N/R -- Investment is not rated.
** The security has a maturity of more than one year, but has variable rate and demand features
which qualify it as a short-term security. The rate disclosed is that currently in effect.
This rate changes periodically based on market conditions or a specified market index.
See accompanying notes to financial statements.
</TABLE>
12
<PAGE>
Portfolio of Investments
February 28, 1998
Massachusetts
<TABLE>
<CAPTION>
Principal Amortized
Amount Description Ratings* Cost
- --------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Education and Civic Organizations -- 24.7%
$ 800,000 Massachusetts Health and Educational Facilities Authority (Harvard VMIG-1 $ 800,000
University), Variable Rate Demand Bonds, 2.950%, 2/01/16**
1,700,000 Massachusetts Health and Educational Facilities Authority, Amherst College VMIG-1 1,700,000
Issue, Series F, Variable Rate Demand Bonds, 3.100%, 11/01/26**
1,000,000 Massachusetts Industrial Finance Agency (Showa Women's Institute Boston, VMIG-1 1,000,000
Inc. 1994 Project), Variable Rate Demand Bonds, 3.650%, 3/15/04**
1,000,000 Massachusetts Industrial Finance Agency (Emerson College Issue), Series N/R 1,000,000
1995, Variable Rate Demand Bonds, 3.200%, 1/01/15**
1,000,000 Massachusetts Industrial Finance Agency (Massachusetts Society for the A-1 1,000,000
Prevention of Cruelty to Animals Issue), Series 1997, Variable Rate
Demand Bonds, 3.250%, 8/01/27**
1,000,000 Massachusetts Industrial Finance Agency (Gordon College Issue), Series A-1+ 1,000,000
1997, Variable Rate Demand Bonds, 3.250%, 12/01/27**
1,000,000 Massachusetts Industrial Finance Agency (Eastern Nazarene College Issue), A-1+ 1,000,000
Series 1997, Variable Rate Demand Bonds, 3.250%, 10/01/27**
1,800,000 Puerto Rico Industrial Medical, Educational and Environmental Authority VMIG-1 1,800,000
(Inter American University of Puerto Rico), Commercial Paper, 3.650%,
4/06/98
- --------------------------------------------------------------------------------------------------------------------
Health Care -- 21.5%
1,000,000 Massachusetts Health and Educational Facilities Authority, Capital Asset VMIG-1 1,000,000
Program, Series A, Variable Rate Demand Bonds, 3.300%, 1/01/01**
1,000,000 Massachusetts Health and Educational Facilities Authority (Capital Asset VMIG-1 1,000,000
Program, Series B), Variable Rate Demand Bonds, 3.400%, 7/01/05**
1,700,000 Massachusetts Health and Educational Facilities Authority (Capital Asset VMIG-1 1,700,000
Program), Variable Rate Demand Bonds, 3.600%, 1/01/35**
1,800,000 Massachusetts Health and Educational Facilities Authority (Brigham and VMIG-1 1,800,000
Women's Hospital), Variable Rate Demand Bonds, 3.300%, 7/01/17**
1,900,000 Massachusetts Health and Educational Facilities Authority, Partners VMIG-1 1,900,000
Healthcare System, Series P, Variable Rate Demand Bonds, 3.100%,
7/01/27**
675,000 Massachusetts Health and Educational Facilities Authority, Hallmark Health Aaa 675,997
System Issue, Revenue Bonds, Series A, Variable Rate Demand Bonds,
4.250%, 7/01/98
- --------------------------------------------------------------------------------------------------------------------
Housing/Multifamily -- 6.8%
1,560,000 Massachusetts Industrial Finance Agency, Chestnut House Apartments A-2 1,560,000
(FHA Insurance), Variable Rate Demand Bonds, 3.300%, 8/01/26**
1,000,000 Massachusetts Industrial Finance Agency (Lower Mills Associates LP), N/R 1,000,000
Series 1995, Variable Rate Demand Bonds, 3.200%, 12/01/20**
- --------------------------------------------------------------------------------------------------------------------
Industrial/Other -- 1.6%
585,000 Massachusetts Industrial Finance Agency, Adjustable Rate Industrial Revenue N/R 585,000
Bonds (Jencoat/Levy Realty Trust), Variable Rate Demand Bonds, 4.415%,
10/06/99**
- --------------------------------------------------------------------------------------------------------------------
Long Term Care -- 5.3%
1,300,000 Massachusetts Industrial Finance Agency, Revenue Bonds (Goddard House), A-1 1,300,000
Series 1995, Variable Rate Demand Bonds, 3.150%, 11/01/25**
</TABLE>
13
<PAGE>
Portfolio of Investments
February 28, 1998
Massachusetts -- continued
<TABLE>
<CAPTION>
Principal Amortized
Amount Description Ratings* Cost
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Long Term Care -- continued
$ 680,000 Massachusetts Industrial Finance Agency, Edgewood Retirement Community Project, VMIG-1 $ 680,000
Series 1995-C, Variable Rate Demand Bonds, 3.300%, 11/15/25+
- ---------------------------------------------------------------------------------------------------------------------------------
Other Revenue -- 2.7%
1,000,000 Montachusett Regional Transit Authority, Massachusetts, Revenue Anticipation Notes, N/R 1,001,065
4.250%, 6/26/98
- ---------------------------------------------------------------------------------------------------------------------------------
Tax Obligation/General -- 27.3%
1,800,000 Massachusetts Bay Transportation Authority, Series C, Commercial Paper, 3.550%, 4/29/98 A-1+ 1,800,000
1,000,000 Town of Barnstable, Massachusetts, Bond Anticipation Notes, 4.250%, 10/23/98 N/R 1,002,489
1,000,000 Farmingham General Obligation, Unlimited Tax Bond Anticipation Note, 4.000%, 2/05/99 N/R 1,003,335
1,000,000 Town of Georgetown, Massachusetts, Bond Anticipation Notes, 4.000%, 6/12/98 N/R 1,000,542
1,500,000 Town of Holliston, Massachusetts, Bond Anticipation Notes, 4.000%, 9/23/98 N/R 1,502,912
1,000,000 Newton Bond Anticipation Notes, 4.000%, 3/25/98 N/R 1,000,127
1,000,000 City of Quincy, Massachusetts, Bond Anticipation Notes, 4.200%, 5/21/98 N/R 1,000,680
1,000,000 Town of Uxbridge, Massachusetts, Bond Anticipation Notes, 4.250%, 7/15/98 N/R 1,001,433
1,000,000 Town of Weston, Massachusetts, Bond Anticipation Notes, 4.000%, 9/30/98 N/R 1,001,694
- ---------------------------------------------------------------------------------------------------------------------------------
Utilities -- 1.6%
600,000 Massachusetts Industrial Finance Agency, Resource Recovery (Ogden Haverhill), VMIG-1 600,000
Variable Rate Demand Bonds, 3.150%, 12/01/06+
- ---------------------------------------------------------------------------------------------------------------------------------
Water and Sewer -- 5.1%
1,000,000 Massachusetts Water Resources Authority, Series 1997, Commercial Paper, 3.600%, 5/13/98 A-1+ 1,000,000
900,000 Massachusetts Water Resources Authority, Series 1994, Commercial Paper, 3.650%, 5/13/98 A-1+ 900,000
- ---------------------------------------------------------------------------------------------------------------------------------
$36,300,000 Total Investments -- 96.6% 36,315,274
===========----------------------------------------------------------------------------------------------------------------------
Other Assets Less Liabilities -- 3.4% 1,268,024
-----------------------------------------------------------------------------------------------------------------
Net Assets -- 100% $37,583,298
=================================================================================================================
</TABLE>
* Ratings (not covered by the report of independent public
accountants): Using the higher of Standard & Poor's or
Moody's rating.
N/R - Investment is not rated.
+ The security has a maturity of more than one year, but has
variable rate and demand features which qualify it as a
short-term security. The rate disclosed is that currently
in effect. This rate changes periodically based on market
conditions or a specified market index.
See accompanying notes to financial statements.
14
<PAGE>
<TABLE>
<CAPTION>
Portfolio of Investments
February 28, 1998
New York
Principal Amortized
Amount Description Ratings* Cost
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Consumer Cyclical - 8.6%
$1,100,000 New York Environmental Facilities Corporation (General Electric Company), A-1+ $1,100,000
Commercial Paper, 3.550%, 3/09/98
1,000,000 Dutchess County Industrial Development Agency, Industrial Development A-1 1,000,000
Revenue Bonds (Toys "R" US--NYTEX Inc. Facility), Series 1984, Variable
Rate Demand Bonds, 3.475%, 11/01/19+
500,000 Yonkers Industrial Development Agency, Series 1989, Civic Facility Revenue VMIG-1 500,000
Bonds, Variable Rate Demand Bonds, 3.200%, 7/01/19+
- ----------------------------------------------------------------------------------------------------------------------
Education and Civic Organizations - 18.4%
1,300,000 Dormitory Authority of the State of New York, New York Founding Charitable VMIG-1 1,300,000
Corporation, Revenue Bonds, Series 1997, Variable Rate Demand Bonds,
3.300%, 7/01/12+
1,100,000 New York State Housing Finance Agency, Demand Revenue Bonds, Series 1984-A VMIG-1 1,100,000
(Mt. Sinai School of Medicine), Variable Rate Demand Bonds, 3.250%,
11/01/14+
1,100,000 New York City Trust for Cultural Resources (Guggenheim Foundation), Variable VMIG-1 1,100,000
Rate Demand Bonds, 3.650%, 12/01/15+
200,000 New York City Industrial Development Agency, Revenue Bonds, Series 1989, A-1+ 200,000
Audubon Society, Variable Rate Demand Bonds, 3.650%, 12/01/14+
900,000 Puerto Rico Industrial Medical Education and Environmental Authority, A-1 900,000
Ana G. Mendez Educational Foundation (FEAGM Project), Variable Rate Demand
Bonds, 4.100%, 12/01/15+
980,000 Syracuse Industrial Development Agency, Multi-Modal Interchangeable Rate Civic VMIG-1 980,000
Facility, Revenue Bonds (Syracuse University), Variable Rate Demand Bonds,
3.650%, 3/01/23+
- ----------------------------------------------------------------------------------------------------------------------
Financials - 6.6%
1,000,000 City of Albany Industrial Development Agency, Industrial Development Revenue A-1 1,000,000
Bonds (Vulcan Investors 1986-1 Project), Series 1986 A, Variable Rate Demand
Bonds, 4.100%, 7/01/06 (Mandatory put 7/01/98)+
1,000,000 New York City Industrial Development Agency, Refunding Revenue (LaGuardia A-1+ 1,000,000
Associates Project), Variable Rate Demand Bonds, 3.300%, 12/01/15+
- ----------------------------------------------------------------------------------------------------------------------
Health Care - 9.6%
900,000 Dormitory Authority of the State of New York (Sloan Kettering Cancer Center), A-1 900,000
Variable Rate Demand Bonds, 3.300%, 7/01/19+
900,000 New York State Medical Care Facilities Finance Agency (Lenox Hill Hospital), VMIG-1 900,000
Variable Rate Demand Bonds, 3.300%, 11/01/08+
1,100,000 New York State Medical Care Facilities Finance Agency (Children's Hospital
of Buffalo), Variable Rate Demand Bonds, 3.400%, 11/01/05+ VMIG-1 1,100,000
- ----------------------------------------------------------------------------------------------------------------------
Housing/Multifamily - 5.5%
1,000,000 New York State Housing Finance Agency (Normandie Court), Variable Rate
Demand Bonds, 3.150%, 5/15/15+ VMIG-1 1,000,000
370,000 New York City Housing Development Corporation (Parkgate Tower), Variable
Rate Demand Bonds, 3.200%, 12/01/07+ A-1+ 370,000
300,000 New York City Housing Development Corporation (Columbus Gardens Project),
Variable Rate Demand Bonds, 3.200%, 2/01/07+ A-1+ 300,000
</TABLE>
15
<PAGE>
Portfolio of Investments
February 28, 1998
New York - continued
<TABLE>
<CAPTION>
Principal Amortized
Amount Description Ratings* Cost
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Industrial/Other - 5.6%
$ 700,000 Guilderland Industrial Development Agency, Series 1993A (Northeastern P-1 $ 700,000
Ind Park PJ), Variable Rate Demand Bonds, 3.550%, 12/01/08+
1,000,000 Nassau County Industrial Development Agency, Manhasset Associates A-1 1,000,000
Project, Series 1984, Variable Rate Demand Bonds, 3.100%, 12/01/99+
- ----------------------------------------------------------------------------------------------------------------------
Long Term Care - 6.3%
1,100,000 New York State Dormitory Authority (St. Francis Center at the Knolls, VMIG-1 1,100,000
Inc.), Variable Rate Demand Bonds, 3.750%, 7/01/23+
800,000 New York State Dormitory Authority, Revenue Bonds, Series 1995 VMIG-1 800,000
(Beverwyck Inc), Variable Rate Demand Bonds, 3.300%, 7/01/25+
- ----------------------------------------------------------------------------------------------------------------------
Tax Obligation/General - 19.0%
1,000,000 New York State Environmental Quality, Variable Interest Rate General VMIG-1 1,000,000
Obligation Bonds, Series 1997A, 3.450%, 2/01/17+
1,000,000 Buffalo Revenue Anticipation Notes, 4.400%, 8/05/98 MIG-1 1,002,435
1,000,000 County of Erie, New York, General Obligation Serial Notes, 1997B, N/R 1,004,341
4.500%, 10/29/98
1,000,000 New York City General Obligation Adjustable Rate Bonds, Fiscal 1994, VMIG-1 1,000,000
Series B-4, Variable Rate Demand Bonds, 3.900%, 8/15/21+
500,000 The City of New York, General Obligation Bonds, Fiscal 1995, Series B, VMIG-1 500,000
Variable Rate Demand Bonds, 3.600%, 8/15/22+
1,250,000 Puerto Rico Government Development Bank, Adjustable Refunding Bonds, VMIG-1 1,250,000
Series 1985, Variable Rate Demand Bonds, 2.900%, 12/01/15+
- ----------------------------------------------------------------------------------------------------------------------
Tax Obligation/Limited - 9.4%
1,200,000 New York Local Government Assistance Corp, Series 1995E, Variable Rate VMIG-1 1,200,000
Demand Bonds, 3.150%, 4/01/25+
640,000 New York State Job Development Authority, Series 1984E, Variable Rate VMIG-1 640,000
Demand Bonds, 4.100%, 3/01/99+
1,000,000 Triborough Bridge and Tunnel Authority, Special Obligation, Series 1994, MIG-1 1,000,000
Variable Rate Demand Bonds, 3.150%, 1/01/24+
- ----------------------------------------------------------------------------------------------------------------------
Transportation - 1.3%
400,000 New York State Thruway Authority, General Revenue Bonds, Variable Rate VMIG-1 400,000
Demand Bonds, 3.650%, 1/01/24+
- ----------------------------------------------------------------------------------------------------------------------
Utilities - 3.3%
1,000,000 New York State Energy Research and Development Authority, Pollution P-1 1,000,000
Control Revenue (Central Hudson Gas and Electric Corporation),
Variable Rate Demand Bonds, 3.200%, 11/01/20+
</TABLE>
16
<PAGE>
<TABLE>
<CAPTION>
Principal Amortized
Amount Description Ratings* Cost
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Water and Sewer - 3.3%
$1,000,000 New York City Municipal Water Finance Authority, Series 3, A-1+ $ 1,000,000
Commercial Paper, 3.300%, 3/09/98
- -------------------------------------------------------------------------------------------------------------------
$29,340,000 Total Investments - 96.9%, 29,346,776
===========--------------------------------------------------------------------------------------------------------
Other Assets Less Liabilities - 3.1% 929,527
--------------------------------------------------------------------------------------------------
Net Assets - 100% $30,276,303
==================================================================================================
</TABLE>
* Ratings (not covered by the report of independent public
accountants): Using the higher of Standard & Poor's or
Moody's rating.
N/R - Investment is not rated.
+ The security has a maturity of more than one year, but
has variable rate and demand features which qualify it as
a short-term security. The rate disclosed is that
currently in effect. This rate changes periodically based
on market conditions or a specified market index.
17
See accompanying notes to financial statements.
<PAGE>
<TABLE>
<CAPTION>
Statement of Net Assets
February 28, 1998
Reserves California
- ---------------------------------------------------------------------------------------------
<S> <C> <C>
Assets
Investments in short-term municipal securities, at amortized
cost, which approximates market value (note 1) $268,979,989 $159,306,584
Cash 1,108,739 652,281
Receivables:
Interest 1,507,742 983,936
Investments sold -- --
Other assets 4,293 8,319
- ---------------------------------------------------------------------------------------------
Total assets 271,600,763 160,951,120
- ---------------------------------------------------------------------------------------------
Liabilities
Accrued expenses:
Management fees (note 4) 94,638 45,277
12b-1 fees (note 4) 17,667 34,497
Other 196,852 17,036
Dividends payable 568,769 358,868
- ---------------------------------------------------------------------------------------------
Total liabilities 877,926 455,678
- ---------------------------------------------------------------------------------------------
Net assets applicable to shares outstanding (note 3) $270,722,837 $160,495,442
=============================================================================================
Shares outstanding:
Service Plan series -- 86,915,597
Distribution Plan series -- 54,788,953
Institutional series -- 18,790,892
- ---------------------------------------------------------------------------------------------
Total shares outstanding 270,722,837 160,495,442
=============================================================================================
Net asset value, offering and redemption price per share
(net assets divided by shares outstanding) $ 1.00 $ 1.00
=============================================================================================
</TABLE>
18
See accompanying notes to financial statements.
<PAGE>
<TABLE>
<CAPTION>
Massachusetts New York
- --------------------------------------------------------------------------------------------
<S> <C> <C>
Assets
Investments in short-term municipal securities, at amortized
cost, which approximates market value (note 1) $36,315,274 $29,346,776
Cash 1,068,064 795,044
Receivables:
Interest 303,309 147,831
Investments sold 100,000 120,364
Other assets 978 499
- --------------------------------------------------------------------------------------------
Total assets 37,787,625 30,410,514
- --------------------------------------------------------------------------------------------
Liabilities
Accrued expenses:
Management fees (note 4) 1,935 3,226
12b-1 fees (note 4) 21,303 2,682
Other 99,353 63,601
Dividends payable 81,736 64,702
- --------------------------------------------------------------------------------------------
Total liabilities 204,327 134,211
- --------------------------------------------------------------------------------------------
Net assets applicable to shares outstanding (note 3) $37,583,298 $30,276,303
============================================================================================
Shares outstanding:
Service Plan series 6,085,454 1,405,519
Distribution Plan series 25,920,217 28,854,117
Institutional series 5,577,627 16,667
- --------------------------------------------------------------------------------------------
Total shares outstanding 37,583,298 30,276,303
============================================================================================
Net asset value, offering and redemption price per share
(net assets divided by shares outstanding) $ 1.00 $ 1.00
============================================================================================
</TABLE>
See accompanying notes to financial statements.
19
<PAGE>
Statement of Operations
Year ended February 28, 1998
<TABLE>
<CAPTION>
Reserves
<S> <C>
- -------------------------------------------------------------------------------
Investment Income
Tax-exempt interest income (note 1) $10,364,736
- -------------------------------------------------------------------------------
Expenses
Management fees (note 4) 1,375,625
12b-1 fees (note 4) 118,178
Shareholders' servicing agent fees and expenses 446,085
Custodian's fees and expenses 55,780
Directors' fees and expenses (note 4) 5,610
Professional fees 23,126
Shareholders' reports - printing and mailing expenses 151,600
Federal and state registration fees 43,261
Other expenses 23,003
- -------------------------------------------------------------------------------
Total expenses before expense reimbursement 2,242,268
Expense reimbursement (note 4) (178,780)
- -------------------------------------------------------------------------------
Net expenses 2,063,488
- -------------------------------------------------------------------------------
Net investment income 8,301,248
Net gain from investment transactions (notes 1 and 2) --
- -------------------------------------------------------------------------------
Net increase in net assets from operations $ 8,301,248
===============================================================================
</TABLE>
See accompanying notes to financial statements.
20
<PAGE>
<TABLE>
<CAPTION>
California
-------------------------------------------------------------
Service Plan Distribution Plan Institutional
series series series Total
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Investment Income
Tax-exempt interest income (note 1) $2,866,349 $1,971,285 $869,013 $5,706,647
- ----------------------------------------------------------------------------------------------------------------------
Expenses
Management fees (note 4) 312,991 214,290 94,714 621,995
12b-1 fees (note 4) 78,990 62,307 -- 141,297
Shareholders' servicing agent fees and expenses 4,125 37,513 212 41,850
Custodian's fees and expenses 21,301 14,582 6,448 42,331
Directors' fees and expenses (note 4) 1,654 1,142 502 3,298
Professional fees 6,972 4,809 2,117 13,898
Shareholders' reports - printing and mailing expenses 8,279 16,970 2,778 28,027
Federal and state registration fees 11,026 494 1,592 13,112
Other expenses 5,849 4,052 1,791 11,692
- ----------------------------------------------------------------------------------------------------------------------
Total expenses before expense reimbursement 451,187 356,159 110,154 917,500
Expense reimbursement (note 4) (20,777) (61,479) -- (82,256)
- ----------------------------------------------------------------------------------------------------------------------
Net expenses 430,410 294,680 110,154 835,244
- ----------------------------------------------------------------------------------------------------------------------
Net investment income 2,435,939 1,676,605 758,859 4,871,403
Net 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
======================================================================================================================
</TABLE>
See accompanying notes to financial statements.
21
<PAGE>
Statement of Operations - continued
Year ended February 28, 1998
<TABLE>
<CAPTION>
Massachusetts
--------------------------------------------------------------
Service Plan Distribution Plan Institutional
series series series Total
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Investment Income
Tax-exempt interest income (note 1) $296,695 $ 975,737 $168,303 $1,440,735
- -----------------------------------------------------------------------------------------------------------------------
Expenses
Management fees (note 4) 32,948 108,396 18,769 160,113
12b-1 fees (note 4) 17,119 23,932 -- 41,051
Shareholders' servicing agent fees and expenses 1,191 30,580 704 32,475
Custodian's fees and expenses 10,324 33,914 5,847 50,085
Directors' fees and expenses (note 4) 935 3,070 529 4,534
Professional fees 7,976 26,067 4,456 38,499
Shareholders' reports - printing and mailing expenses 1,155 28,498 142 29,795
Federal and state registration fees 802 776 649 2,227
Other expenses 1,086 3,599 622 5,307
- -----------------------------------------------------------------------------------------------------------------------
Total expenses before expense reimbursement 73,536 258,832 31,718 364,086
Expense reimbursement (note 4) (28,267) (109,750) (5,908) (143,925)
- -----------------------------------------------------------------------------------------------------------------------
Net expenses 45,269 149,082 25,810 220,161
- -----------------------------------------------------------------------------------------------------------------------
Net investment income 251,426 826,655 142,493 1,220,574
Net gain from investment transactions (notes 1 and 2) -- -- -- --
- -----------------------------------------------------------------------------------------------------------------------
Net increase in net assets from operations $251,426 $ 826,655 $142,493 $1,220,574
=======================================================================================================================
</TABLE>
See accompanying notes to financial statements.
22
<PAGE>
<TABLE>
<CAPTION>
New York
--------------------------------------------------------------
Service Plan Distribution Plan Institutional
series series series Total
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Investment Income
Tax-exempt interest income (note 1) $20,007 $988,441 $608 $1,009,056
- -----------------------------------------------------------------------------------------------------------------------
Expenses
Management fees (note 4) 2,239 108,502 66 110,807
12b-1 fees (note 4) 220 12,367 -- 12,587
Shareholders' servicing agent fees and expenses 1,724 29,224 26 30,974
Custodian's fees and expenses 889 44,368 27 45,284
Directors' fees and expenses (note 4) 11 609 -- 620
Professional fees 287 14,810 10 15,107
Shareholders' reports -- printing and mailing expenses 1,281 27,782 58 29,121
Federal and state registration fees 7 248 -- 255
Other expenses 62 2,814 1 2,877
- -----------------------------------------------------------------------------------------------------------------------
Total expenses before expense reimbursement 6,720 240,724 188 247,632
Expense reimbursement (note 4) (3,642) (91,510) (96) (95,248)
- -----------------------------------------------------------------------------------------------------------------------
Net expenses 3,078 149,214 92 152,384
- -----------------------------------------------------------------------------------------------------------------------
Net investment income 16,929 839,227 516 856,672
Net gain from investment transactions (notes 1 and 2) -- -- -- --
- -----------------------------------------------------------------------------------------------------------------------
Net increase in net assets from operations $16,929 $839,227 $516 $ 856,672
=======================================================================================================================
</TABLE>
See accompanying notes to financial statements.
23
<PAGE>
Statement of Changes in Net Assets
<TABLE>
<CAPTION>
Reserves
-----------------------------
Year ended Year ended
2/28/98 2/28/97
- ---------------------------------------------------------------------------------------
<S> <C> <C>
Operations
Net investment income $ 8,301,248 $ 8,865,233
Net realized gain (loss) from investment transactions
(notes 1 and 2) -- --
- ---------------------------------------------------------------------------------------
Net increase in net assets from operations 8,301,248 8,865,233
- ---------------------------------------------------------------------------------------
Distributions to Shareholders (note 1) (8,301,248) (8,865,233)
- ---------------------------------------------------------------------------------------
Common Share Transactions
(at constant net asset value of $1 per share) (note 1)
Net proceeds from sale of shares 175,436,062 423,698,103
Net proceeds from shares issued to shareholders
due to reinvestment of distributions 7,880,661 8,439,437
- ---------------------------------------------------------------------------------------
183,316,723 432,137,540
- ---------------------------------------------------------------------------------------
Cost of shares redeemed (216,681,366) (467,712,524)
- ---------------------------------------------------------------------------------------
Net increase (decrease) in net assets from
share transactions (33,364,643) (35,574,984)
Net assets at the beginning of year 304,087,480 339,662,464
- ---------------------------------------------------------------------------------------
Net assets at the end of year $ 270,722,837 $ 304,087,480
=======================================================================================
</TABLE>
See accompanying notes to financial statements.
24
<PAGE>
<TABLE>
<CAPTION>
California
-----------------------------------------------------------------
Year ended 2/28/98
-----------------------------------------------------------------
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 (loss) 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 to financial statements.
25
<PAGE>
Statement of Changes in Net Assets -- continued
<TABLE>
<CAPTION>
California
------------------------------------------------------------------
Year ended 2/28/97
------------------------------------------------------------------
Service Plan Distribution Plan Institutional
series series series Total
- ----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Operations
Net investment income $ 2,063,055 $ 1,895,382 $ 1,473,714 $ 5,432,151
Net realized gain (loss) from investment
transactions (notes 1 and 2) -- -- -- --
- ----------------------------------------------------------------------------------------------------------------------------
Net increase in net assets from operations 2,063,055 1,895,382 1,473,714 5,432,151
- ----------------------------------------------------------------------------------------------------------------------------
Distributions to Shareholders (note 1) (2,063,055) (1,895,382) (1,473,714) (5,432,151)
- ----------------------------------------------------------------------------------------------------------------------------
Common Share Transactions
(at constant net asset value of $1 per share) (note 1)
Net proceeds from sale of shares 138,494,313 60,809,468 209,608,538 408,912,319
Net proceeds from shares issued to shareholders
due to reinvestment of distributions 1,919,782 1,593,201 47,282 3,560,265
- ----------------------------------------------------------------------------------------------------------------------------
140,414,095 62,402,669 209,655,820 412,472,584
- ----------------------------------------------------------------------------------------------------------------------------
Cost of shares redeemed (115,829,598) (77,933,155) (211,205,458) (404,968,211)
- ----------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets from
share transactions 24,584,497 (15,530,486) (1,549,638) 7,504,373
Net assets at the beginning of year 70,721,933 73,020,093 34,392,205 178,134,231
- ----------------------------------------------------------------------------------------------------------------------------
Net assets at the end of year $ 95,306,430 $ 57,489,607 $ 32,842,567 $ 185,638,604
============================================================================================================================
</TABLE>
See accompanying notes to financial statements.
26
<PAGE>
<TABLE>
<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 (loss) 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>
27
See accompanying notes to financial statements.
<PAGE>
Statement of Changes in Net Assets -- continued
<TABLE>
<CAPTION>
Massachusetts
----------------------------------------------------------------
Year ended 2/28/97
----------------------------------------------------------------
Service Plan Distribution Plan Institutional
series series series Total
- ----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Operations
Net investment income $ 829,383 $ 765,855 $ 126,569 $ 1,721,807
Net realized gain (loss) from investment
transactions (notes 1 and 2) (134) (365) (53) (552)
- ----------------------------------------------------------------------------------------------------------------------------
Net increase in net assets from operations 829,249 765,490 126,516 1,721,255
- ----------------------------------------------------------------------------------------------------------------------------
Distributions to Shareholders (note 1) (829,249) (765,490) (126,516) (1,721,255)
- ----------------------------------------------------------------------------------------------------------------------------
Common Share Transactions
(at constant net asset value of $1 per share) (note 1)
Net proceeds from sale of shares 44,456,256 21,736,601 12,606,653 78,799,510
Net proceeds from shares issued to shareholders
due to reinvestment of distributions 897,029 748,887 37,305 1,683,221
- ----------------------------------------------------------------------------------------------------------------------------
45,353,285 22,485,488 12,643,958 80,482,731
- ----------------------------------------------------------------------------------------------------------------------------
Cost of shares redeemed (73,639,600) (21,681,856) (12,216,797) (107,538,253)
- ----------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets from
share transactions (28,286,315) 803,632 427,161 (27,055,522)
Net assets at the beginning of year 38,250,579 26,279,242 3,550,179 68,080,000
- ----------------------------------------------------------------------------------------------------------------------------
Net assets at the end of year $ 9,964,264 $ 27,082,874 $ 3,977,340 $ 41,024,478
============================================================================================================================
</TABLE>
28
See accompanying notes to financial statements.
<PAGE>
<TABLE>
<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 (loss) 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 (decrease) 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
============================================================================================================================
See accompanying notes to financial statements.
</TABLE>
29
<PAGE>
Statement of Changes in Net Assets - continued
<TABLE>
<CAPTION>
New York
-----------------------------------------------------------------
Year ended 2/28/97
-----------------------------------------------------------------
Service Plan Distribution Plan Institutional
series series series Total
- ----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Operations
Net investment income $ 12,056 $ 819,638 $ 483 $ 832,177
Net realized gain (loss) from investment
transactions (notes 1 and 2) -- -- -- --
- ----------------------------------------------------------------------------------------------------------------------------
Net increase in net assets from operations 12,056 819,638 483 832,177
- ----------------------------------------------------------------------------------------------------------------------------
Distributions to Shareholders (note 1) (12,056) (819,638) (483) (832,177)
- ----------------------------------------------------------------------------------------------------------------------------
Common Share Transactions
(at constant net asset value of $1 per share) (note 1)
Net proceeds from sale of shares 57,000 12,254,309 -- 12,311,309
Net proceeds from shares issued to shareholders
due to reinvestment of distributions 11,184 794,185 -- 805,369
- ----------------------------------------------------------------------------------------------------------------------------
68,184 13,048,494 -- 13,116,678
- ----------------------------------------------------------------------------------------------------------------------------
Cost of shares redeemed (208,572) (18,564,379) -- (18,772,951)
- ----------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets from
share transactions (140,388) (5,515,885) -- (5,656,273)
Net assets at the beginning of year 554,459 31,631,448 16,667 32,202,574
- ----------------------------------------------------------------------------------------------------------------------------
Net assets at the end of year $ 414,071 $ 26,115,563 $16,667 $ 26,546,301
============================================================================================================================
See accompanying notes to financial statements.
</TABLE>
30
<PAGE>
Notes to Financial Statements
February 28, 1998
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 February 28, 1998, the dollar-weighted average life
was 42 days for Reserves, 30 days for California, 58 days for Massachusetts and
33 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
February 28, 1998, there were no such outstanding purchase commitments in any of
the Funds.
Interest Income
Interest income is determined on the basis of interest accrued, adjusted for
amortization of premiums and accretion of discounts.
Dividends and Distributions to Shareholders
Tax-exempt net investment income, adjusted for realized short-term gains and
losses on investment transactions, is declared as a dividend to shareholders of
record as of the close of each business day and payment is made or reinvestment
is credited to shareholder accounts after month-end.
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. All income dividends paid during the fiscal year ended February 28,
1998, have been designated Exempt Interest Dividends. 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 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
31
<PAGE>
Notes to Financial Statements--continued
February 28, 1998
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 fiscal year ended February 28,
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.
2. Securities Transactions
Purchases and sales (including maturities) of investments in short-term
municipal securities during the fiscal year ended February 28, 1998, were as
follows:
<TABLE>
<CAPTION>
Reserves California Massachusetts New York
------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Purchases $655,708,583 $328,756,802 $94,228,093 $42,274,710
Sales and Maturities 688,777,500 354,432,000 97,155,000 38,770,000
==============================================================================
</TABLE>
At February 28, 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 February 28, 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 $ -- $ 86,915,597 $ 6,085,454 $ 1,405,519
Distribution Plan series -- 54,788,953 25,920,217 28,854,117
Institutional series -- 18,790,892 5,577,627 16,667
---------------------------------------------------------------------------------------------
Net assets $ 270,722,837 $ 160,495,442 $ 37,583,298 $ 30,276,303
=============================================================================================
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>
32
<PAGE>
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.
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 the 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 February 28, 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 3% --% --% --%
Capital Goods 3 -- -- --
Consumer Cyclical 3 -- -- 9
Consumer Staples -- 4 -- --
Education and Civic Organizations 6 -- 26 19
Financials -- -- -- 7
Health Care 18 14 22 10
Housing/Multifamily 3 15 7 6
Industrial/Other 7 -- 2 6
Long Term Care 10 -- 6 7
Other Revenue 2 4 2 --
Tax Obligation/General 16 12 28 20
Tax Obligation/Limited 7 25 -- 10
Utilities 18 7 2 3
Water and Sewer 4 19 5 3
--------------------------------------------------------------------------------------
100% 100% 100% 100%
======================================================================================
</TABLE>
At February 28, 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 (92% for Reserves,
92% for California, 77% for Massachusetts and 96% for New York).
For additional information regarding each investment security, refer to the
Portfolio of Investments.
33
<PAGE>
Financial Highlights
Selected data for a share outstanding throughout each period is as follows:
<TABLE>
<CAPTION>
RESERVES Operating performance Less distributions
------------------------ --------------------------
Net
Net realized and Dividends Net Total
asset unrealized from tax- asset return
value Net gain (loss) exempt net Distributions value on net
Year ended beginning investment from investment from capital end of asset
February 28/29, of period income (a) investments income gains period value (b)
- ----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
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
1993 1.00 .02 -- (.02) -- 1.00 2.34
1992 (c) 1.00 .02 -- (.02) -- 1.00 1.45
1991 (d) 1.00 .05 -- (.05) -- 1.00 4.57
1990 (d) 1.00 .06 -- (.06) -- 1.00 5.45
1989 (d) 1.00 .06 -- (.06) -- 1.00 5.70
================================================================================================================
</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 five months ended February 29.
(d) For the fiscal year ended September 30.
34
<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
net assets net assets net assets net assets
Net assets before before after after
end of period reimburse- reimburse- reimburse- reimburse-
(in thousands) ment ment ment (a) ment (a)
- -------------------------------------------------------------------
<S> <C> <C> <C> <C>
$ 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
450,746 .74 2.35 .74 2.35
477,127 .75* 3.48* .75* 3.48*
451,808 .72 4.56 .72 4.56
430,206 .73 5.45 .73 5.45
390,258 .72 5.69 .72 5.69
===================================================================
</TABLE>
35
<PAGE>
Financial Highlights -- continued
Selected data for a share outstanding throughout each period is as follows:
<TABLE>
<CAPTION>
CALIFORNIA** Operating Performance Less distributions
-------------------------------------- --------------------------
Net
Net realized and Dividends Net Total
asset unrealized from tax- asset return
value Net gain (loss) exempt net Distributions value on net
Year ended beginning investment from investment from capital end of asset
February 28/29, of period income (a) investments income gains period value (b)
- -------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
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
1993
Service Plan series 1.00 .02 -- (.02) -- 1.00 2.28
Distribution Plan series 1.00 .02 -- (.02) -- 1.00 2.29
Institutional series 1.00 .02 -- (.02) -- 1.00 2.36
1992(c)
Service Plan series 1.00 .02 -- (.02) -- 1.00 2.39
Distribution Plan series 1.00 .02 -- (.02) -- 1.00 2.39
Institutional series 1.00 .03 -- (.03) -- 1.00 2.45
1991(d)
Service Plan series 1.00 .05 -- (.05) -- 1.00 4.70
Distribution Plan series 1.00 .05 -- (.05) -- 1.00 4.70
Institutional series 1.00 .05 -- (.05) -- 1.00 4.80
1990 (e) 1.00 .05 -- (.05) -- 1.00 5.37
1989 (e) 1.00 .06 -- (.06) -- 1.00 5.62
- -------------------------------------------------------------------------------------------------------------------------------
</TABLE>
* Annualized.
** Effective for the fiscal year ended June 30, 1991, and
thereafter, the Fund has presented the per share data by series.
(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 eight months ended February 29.
(d) For the fiscal year ended June 30.
(e) For the fiscal year ended June 30, represents combined per share data
and ratios for the Service Plan, Distribution Plan and Institutional
Series.
36
<PAGE>
<TABLE>
<CAPTION>
Ratios/Supplemental data
- --------------------------------------------------------------------------
Ratio of net Ratio
Ratio of investment Ratio of of net
expenses income to expenses investment
to average average to average income to
net assets net assets net assets average net
Net assets before before after assets after
end of period reimburse- reimburse- reimburse- reimburse-
(in thousands) ment ment ment (a) ment (a)
- --------------------------------------------------------------------------
<S> <C> <C> <C> <C>
$ 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
469,812 .57 2.24 .55 2.26
80,652 .62 2.19 .55 2.26
24,156 .47 2.33 .47 2.33
478,886 .56* 3.53* .55* 3.54*
91,670 .61* 3.48* .55* 3.54*
18,334 .45* 3.64* .45* 3.64*
431,590 .57 4.65 .55 4.67
90,031 .61 4.61 .55 4.67
22,342 .45 4.77 .45 4.77
452,465 .59 5.34 .55 5.38
362,927 .57 5.68 .55 5.70
==========================================================================
</TABLE>
37
<PAGE>
Financial Highlights -- continued
Selected data for a share outstanding throughout each period is as follows:
<TABLE>
<CAPTION>
MASSACHUSETTS** Operating Performance Less distributions
---------------------------- ----------------------------
Net
Net realized and Dividends Net Total
asset unrealized from tax- asset return
value Net gain (loss) exempt net Distributions value on net
Year ended beginning investment from investment from capital end of asset
February 28/29, of period income (a) investments income gains period value (b)
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
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
1993
Service Plan series 1.00 .02 -- (.02) -- 1.00 2.33
Distribution Plan series 1.00 .02 -- (.02) -- 1.00 2.33
Institutional series 1.00 .02 -- (.02) -- 1.00 2.34
1992 (c)
Service Plan series 1.00 .03 -- (.03) -- 1.00 3.22
Distribution Plan series 1.00 .03 -- (.03) -- 1.00 3.22
Institutional series 1.00 .03 -- (.03) -- 1.00 3.24
1991 (d)
Service Plan series 1.00 .05 -- (.05) -- 1.00 5.30
Distribution Plan series 1.00 .05 -- (.05) -- 1.00 5.30
Institutional series 1.00 .05 -- (.05) -- 1.00 5.30
1990 (e) 1.00 .06 -- (.06) -- 1.00 5.70
1989 (e) 1.00 .05 -- (.05) -- 1.00 5.00
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
* Annualized.
** Effective for the fiscal year ended June 30, 1991, and
thereafter, the Fund has presented the per share data by series.
(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 ten months ended February 29.
(d) For the fiscal year ended April 30.
(e) For the fiscal year ended April 30, represents combined per
share data and ratios for the Service Plan, Distribution Plan and
Institutional Series.
38
<PAGE>
<TABLE>
<CAPTION>
Ratios/Supplemental data
- ------------------------------------------------------------------------------------------
Ratio of net Ratio
Ratio of investment Ratio of of net
expenses income to expenses investment
to average average to average income to
net assets net assets net assets average net
Net assets before before after assets after
end of period reimburse- reimburse- reimburse- reimburse-
(in thousands) ment ment ment (a) ment (a)
- ------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
$ 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
1,036 .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
40,214 .73 2.16 .55 2.34
27,993 .82 2.07 .55 2.34
5,325 .58 2.31 .55 2.34
61,476 .62* 3.73* .55* 3.80*
34,509 .72* 3.63* .55* 3.80*
8,917 .53* 3.82* .53* 3.82*
37,979 .68 5.12 .55 5.25
33,809 .76 5.04 .55 5.25
14,973 .54 5.26 .54 5.26
53,631 .74 5.48 .55 5.67
31,319 .76 4.97 .55 5.18
==========================================================================================
</TABLE>
39
<PAGE>
Financial Highlights -- continued
Selected data for a share outstanding throughout each period is as
follows:
<TABLE>
<CAPTION>
NEW YORK** Operating performance Less distributions
------------------------ ----------------------------
Net
Net realized and Dividends Net Total
asset unrealized from tax- asset return
value Net gain (loss) exempt net Distributions value on net
Year ended beginning investment from investment from capital end of asset
February 28/29, of period income (a) investments income gains period value(b)
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
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
1993
Service Plan series 1.00 .02 -- (.02) -- 1.00 2.02
Distribution Plan series 1.00 .02 -- (.02) -- 1.00 2.02
Institutional series 1.00 .02 -- (.02) -- 1.00 2.02
1992 (c)
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 2.97
1991 (d)
Service Plan series 1.00 .05 -- (.05) -- 1.00 4.73
Distribution Plan series 1.00 .05 -- (.05) -- 1.00 4.73
Institutional series 1.00 .05 -- (.05) -- 1.00 4.73
1990 (e) 1.00 .05 -- (.05) -- 1.00 5.36
1989 (e) 1.00 .05 -- (.05) -- 1.00 4.95
- ----------------------------------------------------------------------------------------------------------------------
</TABLE>
* Annualized.
** Effective for the fiscal year ended April 30, 1991, and
thereafter, the Fund has presented the per share data by series.
(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 ten months ended February 29.
(d) For the fiscal year ended April 30.
(e) For the fiscal year ended April 30, represents combined per
share data and ratios for the Service Plan, Distribution Plan
and Institutional Series.
40
<PAGE>
<TABLE>
<CAPTION>
Ratios/Supplemental Data
- --------------------------------------------------------------------------------
Ratio of net Ratio
Ratio of investment Ratio of of net
expenses income to expenses investment
to average average to average income to
net assets net assets net assets average net
Net assets before before after assets after
end of period reimburse- reimburse- reimburse- reimburse-
(in thousands) ment ment ment(a) ment(a)
- --------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
$ 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
529 1.17 1.42 .55 2.04
34,827 .78 1.81 .55 2.04
17 19.33 (16.59) .55 2.19
1,934 .87* 3.19* .55* 3.51*
45,259 .71* 3.35* .55* 3.51*
17 11.89* (7.83)* .55* 3.51*
1,653 .88 4.39 .55 4.72
41,446 .69 4.58 .55 4.72
17 .62 4.65 .55 4.72
41,602 .71 5.18 .55 5.34
30,262 .86 4.74 .55 5.05
================================================================================
</TABLE>
41
<PAGE>
Report of Independent Public Accountants
To the Board of Directors and Shareholders of
Nuveen Tax-Free Reserves, Inc.
Nuveen California Tax-Free Fund, Inc.
Nuveen Tax-Free Money Market Fund, Inc.:
We have audited the accompanying statements of net assets of
Nuveen Tax-Free Reserves, Inc. (a Maryland Corporation), Nuveen
California Tax-Free Fund, Inc. (comprising the Nuveen California
Tax-Free Money Market Fund) (a Maryland Corporation) and Nuveen
Tax-Free Money Market Fund, Inc. (comprising the Nuveen
Massachusetts and New York Tax-Free Money Market Funds) (a
Minnesota Corporation), including the portfolios of investments,
as of February 28, 1998, and the related statements of operations
for the year then ended, the statements of changes in net assets
for each of the two years in the period then ended and the
financial highlights for the periods indicated thereon. These
financial statements and financial highlights are the
responsibility of the Fund's management. Our responsibility is to
express an opinion on these financial statements and financial
highlights based on our audits.
We conducted our audits in accordance with generally accepted
auditing standards. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the
financial statements and financial highlights are free of material
misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of securities
owned as of February 28, 1998, by correspondence with the
custodian. An audit also includes assessing the accounting
principles used and significant estimates made by management, as
well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, the financial statements and financial highlights
referred to above present fairly, in all material respects, the
net assets of each of the respective funds constituting the Nuveen
Tax-Free Reserves, Inc., Nuveen California Tax-Free Fund, Inc. and
Nuveen Tax-Free Money Market Fund, Inc. as of February 28, 1998,
the results of their operations for the year then ended, the
changes in their net assets for each of the two years in the
period then ended, and the financial highlights for the periods
indicated thereon, in conformity with generally accepted
accounting principles.
ARTHUR ANDERSEN LLP
Chicago, Illinois
April 15, 1998
42
<PAGE>
43
<PAGE>
Building Better Portfolios with Nuveen
Reducing the impact of taxes and moderating risk are important
goals for many risk-sensitive investors seeking to build better
portfolios. For these investors, a tax-efficient, risk-resistant
investment portfolio often forms the foundation of a carefully
crafted financial plan for building and sustaining wealth. Nuveen
is committed to providing investors and their financial advisers
with a range of products and investment tools to help build better
portfolios.
Mutual Funds
Nuveen Mutual Funds offer investors access to the Nuveen family of
premier advisers, including Nuveen Advisory Corp., Institutional
Capital Corp. and Rittenhouse Financial Services. Our equity,
balanced and income funds seek to provide consistent performance,
time-tested strategies to reduce risk and experienced,
professional management.
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. A range of actively
managed growth, balanced and municipal income-oriented portfolios
are available, all based upon a disciplined investment philosophy.
Unit Trusts
Nuveen Unit Trusts are fixed portfolios of quality securities that
are a convenient, attractive alternative to purchasing individual
securities. They provide low-cost diversification to reduce risk,
experienced, professional security selection and surveillance, and
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.
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
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
Alabama
Arizona
California
Colorado
Connecticut
Florida
Georgia
Kansas
Kentucky
Louisiana
Maryland
Massachusetts
Michigan
Missouri
New Jersey
New Mexico
New York
North Carolina
Ohio
Pennsylvania
South Carolina
Tennessee
Virginia
Wisconsin
44
<PAGE>
Fund Information
Board of Directors Custodian
Robert P. Bremner The Chase Manhattan Bank
Lawrence H. Brown 4 New York Plaza
Anthony T. Dean New York, NY 10004-2413
Anne E. Impellizzeri (800) 257-8787
Peter R. Sawers
William J. Schneider Transfer Agent,
Timothy R. Schwertfeger
Judith M. Stockdale Shareholder Services and
Fund Manager Dividend Disbursing Agent
Nuveen Advisory Corp. Shareholder Services, Inc.
333 West Wacker Drive Nuveen Investor Services
Chicago, IL 60606 P.O. Box 5330
Denver, CO 80217-5330
(800) 621-7227
Legal Counsel
Fried, Frank, Harris,
Shriver & Jacobson
Washington, D.C.
Public Accountants
Arthur Andersen LLP
Chicago, IL
45
<PAGE>
[PHOTO OF JOHN NUVEEN, SR. APPEARS HERE]
John Nuveen, Sr.
Serving Investors for Generations
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
investments designed for risk-sensitive individuals seeking to build and sustain
wealth. In fact, more than 1.3 million investors have trusted Nuveen to help
them maintain the lifestyle they currently enjoy.
The cornerstone of Nuveen's investment philosophy is a commitment to disciplined
long-term investment strategies focused on providing consistent, attractive
performance over time - with moderated risk. 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 products and services to
help meet your unique circumstances and financial planning needs. Our equity,
balanced, and income funds, along with our unit trusts and private asset
management, can form the foundation of a tax-efficient and risk-resistant
portfolio.
Talk with your financial adviser to learn more about how Nuveen investment
products and services can help you build and sustain your long-term financial
security. Or call us at (800) 621-7227 for more information, including a
prospectus where applicable. Please read that information carefully before you
invest.
NUVEEN
OUR SECOND CENTURY 1898/1998
helping investors sustain the wealth of a lifetime.(TM)
John Nuveen & Co. Incorporated
333 West Wacker Drive
Chicago, IL 60606-1286
www.nuveen.com
