<PAGE>
As filed with the Securities and Exchange Commission on June 25, 1999
- --------------------------------------------------------------------------------
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form N-1A
REGISTRATION STATEMENT UNDER THE
SECURITIES ACT OF 1933 [_]
File No. 2-78736 [_]
Pre-Effective Amendment No.
---
Post-Effective Amendment No. 19 [X]
---
REGISTRATION STATEMENT UNDER THE
INVESTMENT COMPANY ACT OF 1940 [_]
File No. 811-3531
Amendment No. 20 [X]
Nuveen Municipal Money Market Fund, Inc.
(Exact Name of Registrant as Specified in Charter)
333 West Wacker Drive, Chicago, Illinois 60606
(Zip Code)
(Address of Principal Executive Offices)
Registrant's Telephone Number, Including Area Code: (312) 917-7700
Gifford R. Zimmerman, Esq.--Vice President and Assistant Secretary
333 West Wacker Drive
Chicago, Illinois 60606
(Name and Address of Agent for Service)
It is proposed that this filing will become effective (check appropriate box):
[X] Immediately upon filing pursuant [_] on (date) pursuant to paragraph
to paragraph (b) (a)(1)
[_] on June 25, 1999 pursuant to [_] 75 days after filing pursuant to
paragraph (b) paragraph (a)(2)
[_] 60 days after filing pursuant to [_] on (date) pursuant to paragraph
paragraph (a)(1) (a)(2) of Rule 485.
If appropriate, check the following box:
[_] This post-effective amendment designates a new effective date for a previ-
ously filed post-effective amendment.
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<PAGE>
NUVEEN MUNICIPAL MONEY MARKET FUND, INC.
CONTENTS
OF
POST-EFFECTIVE AMENDMENT NO. 19
TO
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
FILE NO. 2-78736
AND
AMENDMENT NO. 20
TO
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940
FILE NO. 811-3531
This Registration Statement comprises the following papers and contents:
The Facing Sheet
Table of Contents
Part A--The Prospectus
Part B--The Statement of Additional Information
Copy of Annual Report to Shareholders (the financial
statements from which are incorporated by reference into the
Statement of Additional Information)
Part C--Other Information
Signatures
Index to Exhibits
Exhibits
<PAGE>
PART A--PROSPECTUS
NUVEEN MUNICIPAL MONEY MARKET FUND, INC.
333 West Wacker Drive
Chicago, Illinois 60606
<PAGE>
June 28, 1999 Prospectus
[NUVEEN LOGO]
Mutual Funds
Nuveen Municipal Money Market Fund
For investors seeking
tax-free income,
stability and
liquidity in a
flexible cash
management
investment
Featuring Portfolio Management By Nuveen Investment Advisory Services
A Premier Adviser/SM/ for Income Investing
The Securities and Exchange Commission has not approved or disapproved these
securities or passed upon the adequacy of this prospectus. Any representation to
the contrary is a criminal offense.
<PAGE>
Table of Contents
We have used the icons
below throughout this
prospectus to make it
easy for you to find the
type of information
you need.
Investment
Strategy
Risks
Fees, Charges
and Expenses
Shareholder
Instructions
Performance and
Current Portfolio
Information
Section 1 The Fund
This section provides you with an overview of the fund including investment
objectives, portfolio holdings and historical performance information.
<TABLE>
<S> <C>
Introduction 1
............................................................................
Nuveen Municipal Money Market Fund 2
............................................................................
Section 2 How We Manage Your Money
This section gives you a detailed discussion of our investment and
risk management strategies.
Who Manages the Fund 4
............................................................................
What Securities We Invest In 4
............................................................................
How We Select Investments 5
............................................................................
What the Risks Are and How We Manage Them 6
............................................................................
Section 3 How You Can Buy and Sell Shares
This section provides the information you need to move money into
and out of your account.
How to Buy Shares 8
............................................................................
Systematic Investing 9
............................................................................
Special Services 9
............................................................................
How to Sell Shares 10
............................................................................
Section 4 General Information
This section summarizes the fund's distribution policies and other
general information.
Dividends and Distributions 12
............................................................................
Taxes and Tax Reporting 12
............................................................................
Service Plan 13
............................................................................
Net Asset Value 14
............................................................................
Fund Service Providers 14
............................................................................
Year 2000 14
............................................................................
Section 5 Financial Highlights
This section provides the fund's financial performance
for the past five years. 16
............................................................................
</TABLE>
<PAGE>
June 28, 1999
Section 1 The Fund
Nuveen New York Tax-Exempt Money Market Fund
Introduction
This prospectus is intended to provide important information to help you
evaluate whether the Nuveen New York Tax-Exempt Money Market Fund may be right
for you. Please read it carefully before investing and keep it for future
reference.
Regular Income, Convenience and Stability of Principal
Tax-free money market funds offer you the opportunity to earn tax-free income on
your cash reserves while also providing easy access to your money and stability
of principal. They can provide a convenient way to make gradual transfers into
stock or bond funds, or to lower the overall risk of your portfolio.
The fund invests in high quality municipal money market securities that its
investment adviser believes present minimal credit risks. The fund's investment
policies are designed to mitigate overall risk and maintain a constant price per
share of $1.00, but there can be no guarantee of this.
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NOT FDIC OR GOVERNMENT INSURED MAY LOSE VALUE NO BANK GUARANTEE
- --------------------------------------------------------------------------------
Section 1 The Fund 1
<PAGE>
Nuveen Municipal Money Market Fund
Fund Overview
Investment Objective
The fund's investment objective is to provide as high a level of current income
exempt from regular federal income taxes as is consistent with the stability of
principal and the maintenance of liquidity.
How the Fund Pursues Its Objective
The fund invests substantially all of its assets in a diversified portfolio of
high quality municipal money market instruments that the fund's investment
adviser believes present minimal credit risks. The adviser selects money market
instruments based on its assessment of current market interest rates and its
market outlook. The adviser seeks to identify money market instruments with
favorable characteristics the adviser believes are not yet recognized by the
market.
What are the Risks of Investing in the Fund?
While the fund invests in securities its investment adviser believes present
minimal credit and interest rate risks, the fund is not risk free. The value of
the fund's investments may be adversely affected by changes in prevailing
interest rates or an issuer's credit quality. The fund's investment policies are
designed to mitigate these risks and maintain a constant price per share of
$1.00, but there can be no guarantee of this. Like any mutual fund investment,
loss of money is a risk of investing. An investment in the fund is not FDIC or
government insured, or a bank deposit.
Is This Fund Right for You?
The fund may be appropriate for you if you seek to:
. Earn monthly tax-free income on your cash reserves with check-writing
privileges;
. Maintain stability of principal;
. Make gradual transfers into stock or bond funds; or
. Lower the overall risk of your investment portfolio.
You should not invest in this fund if you seek to pursue long-term growth of
principal. You may not want to invest in this fund if you are subject to federal
alternative minimum tax.
How the Fund Has Performed
The chart and table below illustrate annual fund returns for each of the past
ten years as well as annualized fund and index returns for the one-, five-year
and ten-year periods ended December 31, 1998. This information is intended to
help you assess the variability of fund returns over the past ten years (and
consequently, the potential rewards and risks of a fund investment). Of course
past performance is not necessarily an indication of future performance.
Total Returns
Annual Returns*
1989--5.96%
1990--5.57%
1991--4.23%
1992--2.55%
1993--1.88%
1994--2.27%
1995--3.32%
1996--2.92%
1997--3.06%
1998--2.96%
*The year-to-date return as of March 31, 1999 was .61%.
During the last ten years ended December 31, 1998, the highest and lowest
quarterly returns were 1.53% and .44%, respectively, for the quarters ended June
30, 1989 and March 31, 1994.
Average Annual Total Returns for
the Periods Ended December 31, 1998
----------------------------------------
1 Year 5 Year 10 Year
----------------------------------------
Nuveen Municipal
Money Market Fund 2.96% 2.91% 3.46%
- -------------------------------------------------------------------------------
Lipper Index/1/ 3.04% 3.06% 3.58%
Based on the seven-day period ended December 31, 1998, the fund's yield was
3.06%, and the taxable equivalent yield (using maximum federal income tax rate
of 39.6%) was 5.07%. For the fund's current yields, please call Nuveen at
(800) 257-8787.
2 Section 1 The Fund
<PAGE>
What are the Costs of Investing?
These tables describe the fees and expenses that you may pay if you buy and hold
shares of the fund.
<TABLE>
<CAPTION>
Shareholder Transaction Expenses
<S> <C>
Paid Directly From Your Investment
- --------------------------------------------------
Maximum Sales Charge Imposed
on Purchases None
..................................................
Maximum Sales Charge Imposed
on Reinvested Dividends None
..................................................
Exchange Fees None
..................................................
Annual Fund Operating Expenses/2/
Paid From Fund Assets
Management Fees .49%
..................................................
12b-1 Distribution and Service Fees/3/ .20%
..................................................
Other Expenses .26%
..................................................
Total Operating Expenses-Gross+ .95%
..................................................
+ After Expense Reimbursements
..................................................
Expense Reimbursements (.20%)
..................................................
Total Operating Expenses--Net .75%
..................................................
</TABLE>
Net expenses reflect the undertaking of the fund's adviser to reimburse
expenses through December 31, 1999, in an amount necessary to limit total
operating expenses to .75%. Thereafter, reimbursements may be modified or
discontinued without notice at the adviser's discretion.
Example
The following example is intended to help you compare the cost of investing in
the fund with the cost of investing in other mutual funds. The example assumes
you invest $10,000 in the fund for the time periods indicated, and then redeem
all your shares at the end of a period. The example also assumes that your
investment has a 5% return each year and that the fund's operating expenses
remain the same. Your actual returns and costs may be higher or lower.
<TABLE>
<S> <C>
1 Year $ 97
..................................................
3 Years $ 303
..................................................
5 Years $ 525
..................................................
10 Years $1,166
..................................................
</TABLE>
How the Fund Is Invested (as of 06/18/99)
<TABLE>
CAPTION>
Portfolio Statistics
<S> <C>
Weighted Average Maturity (Days) 37
..................................................
Credit Quality
SP-1+, SP-1, A-1+, A-1 61%
SP-2, A-2 11%
N/R 28%
Industry Diversification (Top 5)
Tax Obligations/General 19%
..................................................
Health Care 17%
..................................................
Long-Term Care 13%
..................................................
Utilities 12%
..................................................
Industrial/Other 7%
..................................................
</TABLE>
1. Lipper Index returns reflect the performance of funds in the Lipper Municipal
Money Market Index. Returns assume reinvestment of dividends and do not
reflect any applicable sales charges.
2. Expense information has been restated to reflect current fees payable under
the investment management agreement and 12b-1 Plan recently approved by
shareholders.
3. The 12b-1 fees paid by the Fund increased since the last fiscal year to .20%
because the number of authorized dealers has increased and Nuveen has begun
retaining 12b-1 fees on accounts with no authorized dealer for which Nuveen
provides on-going shareholder account services.
Section 1 The Fund 3
<PAGE>
Section 2 How We Manage Your Money
To help you understand how the fund's assets are managed, this section includes
a detailed discussion of the adviser's investment and risk management
strategies. For a more complete discussion of these matters, please consult the
Statement of Additional Information.
Who Manages the Fund
Nuveen Investment Advisory Services provides advisory and investment management
services to a broad range of clients. Nuveen Investment Advisory Services is
comprised of Nuveen Advisory Corp. and Nuveen Institutional Advisory Corp., both
of which are wholly-owned subsidiaries of John Nuveen & Co. Incorporated
(Nuveen). Nuveen Advisory Corp. (Nuveen Advisory) is the fund's investment
adviser and as such is responsible for the selection and on-going monitoring of
the securities in the fund's portfolio, managing the fund's business affairs and
providing certain clerical, bookkeeping and other administrative services.
Nuveen Advisory is located at 333 West Wacker Drive, Chicago, IL 60606. For
providing these services, Nuveen Advisory is paid an annual management fee. For
the most recent fiscal year, the fund paid .50% of its average net assets to
Nuveen Advisory for its services.
Founded in 1898, Nuveen has been synonymous with investments that withstand the
test of time. Today, we offer a broad range of quality investments designed for
individuals seeking to build and maintain wealth. Nuveen is the sponsor and
principal underwriter of the fund's shares and has sponsored or underwritten
more than $60 billion of investment company securities. Nuveen and its
affiliates have approximately $55 billion in assets under management.
What Securities We Invest In
Municipal Money Market Securities
The Fund invests in high quality, short-term tax exempt debt securities,
commonly known as municipal money market securities. Municipal money market
securities pay income which is exempt from regular federal income tax but may be
subject to the federal alternative minimum tax.
States and local governments, municipalities, agencies and other governmental
units issue municipal money market securities to raise money for various public
purposes, such as building public facilities, refinancing outstanding debt and
financing general operating expenses. These securities include general
obligation bonds, which are backed by the full faith and credit of the issuer
and may be repaid from any revenue source, and revenue bonds, which may be
repaid only from the revenue of a specific facility or source. These securities
also include notes, such as
4 Section 2 How We Manage Your Money
<PAGE>
bond anticipation, revenue anticipation, construction loans and bank notes, and
commercial paper.
Credit-Enhanced Investments
Some of the fund's investments may be backed by a letter of credit or other type
of credit enhancement. For example, if an issuer does not have the desired
credit rating, another company may use its higher credit rating to back the
issuer's rating by selling the issuer a letter of credit. Investments backed by
a letter of credit are subject to the risk that the company issuing the letter
of credit will not be able to fulfill its obligations to the fund, or is thought
to be unlikely to be able to do so. This could cause losses to the fund and
affect its share price.
Variable Rate and Floating Rate Demand Notes
We expect variable rate and floating rate securities will comprise a large
portion of the fund's portfolio. These investments may have stated maturities of
more than 397 days, but generally allow the holder to receive payment of
principal plus accrued interest much sooner than this. Because their interest
rates are not fixed, the income earned by the fund on these securities generally
will fluctuate with changes in short-term interest rates.
When-Issued and Delayed Delivery Transactions
The fund may buy or sell securities on a when-issued or delayed delivery basis,
paying for or taking delivery of the securities at a later date, normally within
15-45 days of the trade. These transactions involve an element of risk because
the value of the security to be purchased may decline before the settlement
date.
Temporary Strategies
The fund on a temporary basis may invest in taxable money market securities.
Taxable money market securities include U.S. government securities, quality
commercial paper or similar fixed-income securities with remaining maturities of
one year or less. The fund will only do so under extraordinary circumstances or
unusual market conditions. Under these circumstances, the fund will not be
pursuing and may not achieve its investment objective.
How We Select Investments
Nuveen Advisory selects money market instruments based on its assessment of
current market interest rates and its market outlook. Portfolio managers are
supported by a team of specialized research analysts who review securities
available for purchase, monitor the continued creditworthiness of the fund's
investments, and analyze economic, political and demographic trends affecting
the municipal money market. We seek to identify money market instruments with
favorable characteristics we believe are not yet recognized by the market. We
then select those higher-yielding and undervalued money market instruments that
we believe represent the most attractive values without adding undue risk. We
actively manage the maturity of the fund and its portfolio to optimally balance
the fund's yield with the fund's exposure to interest rate risk.
Section 2 How We Manage Your Money 5
<PAGE>
An Important Note About Risk
Although the fund's investment policies are intended to minimize interest rate
and credit risk, there can be no guarantee of this.
What the Risks Are and How We Manage Them
Risk is inherent in all investing. Investing in a mutual fund -- even a money
market fund -- involves risk, including the risk that you may receive little or
no return on your investment or even that you may lose part of your investment.
In pursuing its investment objective, the fund assumes investment risk, chiefly
in the form of interest rate and credit risk. The fund tries to limit risk by
restricting the types and maturities of the money market instruments it
purchases, and by diversifying its investment portfolio among issuers and across
different industries. Therefore, before investing, you should consider carefully
the following risks that you assume when you invest in the fund.
Interest rate risk: Because the fund invests in fixed-income securities, the
fund is subject to interest rate risk. Interest rate risk is the risk that the
value of the fund's portfolio will decline because of rising interest rates.
Interest rate risk is generally lower for shorter-term investments and higher
for longer-term investments.
To mitigate interest rate risk, the fund, under normal market conditions,
maintains an investment portfolio with an overall weighted average maturity of
90 days or less. In addition, the fund limits its investments to money market
instruments with remaining effective maturities of 397 days or less.
Credit risk: The fund is subject to credit risk. Credit risk is the risk that an
issuer of a money market instrument will be unable to meet its obligation to
make interest and principal payments due to changing financial or market
conditions, or possibly due to Year 2000 issues (see below). Generally, higher
rated fixed-income securities carry less credit risk than lower rated fixed-
income securities.
The fund attempts to mitigate credit risk by investing only in high quality
money market instruments that Nuveen Advisory believes present minimal credit
risks at the time of purchase. High quality instruments are:
. rated in one of the two highest short-term rating categories by at least two
nationally recognized rating services, or
. if only one service has rated the instrument, rated by that service in one of
its two highest short-term rating categories, or
. unrated instruments that Nuveen Advisory judges to be of comparable quality.
In addition, the fund will not invest more than 5% of its total assets in money
market instruments rated in the second highest short-term rating categories or
in their unrated equivalents.
Year 2000 issues may affect the ability of municipal issuers to meet their
interest and principal payment obligations to their bond holders, and may
adversely affect the bonds' credit ratings and values. Municipal issuers may
have greater Year 2000 risks than other issuers. Nuveen Advisory is requesting
information from municipal issuers so that Nuveen Advisory can take the issuers'
Year 2000 readiness, if made available, into account in making investment
decisions. There can be no assurance that issuers will
6 Section 2 How We Manage Your Money
<PAGE>
provide this information to Nuveen Advisory, or that issuers will begin or
complete the work necessary to address any Year 2000 issues on a timely basis.
Concentration risk: Concentration risk is the risk that economic or other
developments affecting a single industry may cause the value of related money
market instruments to decline.
To mitigate concentration risk, the fund will not invest more than 25% of its
assets in any one industry, excluding governmental issuers. The fund may,
however, invest more than 25% of its assets in a broad segment of the municipal
market, such as instruments issued to fund hospitals, housing or airports, if
Nuveen Advisory believes that the potential returns justify any additional risks
that may arise from doing so. These policies on concentration risk may not be
changed without shareholder approval.
The fund may invest without limit in securities backed by letters of credit or
other credit enhancements issued by banks and other financial institutions. As a
result, changes in the banking industry may cause the value of securities backed
by such credit enhancements to decline.
Insurance: The fund has purchased liability insurance against a decline in the
value of the fund's portfolio caused by the default or bankruptcy of an issuer
whose securities are owned by the fund. The insurance covers substantially all
of the fund's investments except U.S. government securities. The maximum total
coverage for all Nuveen money market funds is $50 million, with a deductible for
each loss of 0.10% of the fund's net assets. The fund pays the policy's
premiums. Coverage under the policy is subject to certain conditions and may not
be renewable upon expiration. While the policy is intended to provide some
protection against credit risk and to help the fund maintain a constant price
per share of $1.00, there is no guarantee that the insurance will do so.
Section 2 How We Manage Your Money 7
<PAGE>
Section 3 How You Can Buy and Sell Shares
We offer a number of services for your convenience. Please see the Statement of
Additional Information for further details.
How to Buy Shares
The fund offers only a single class of shares. Fund shares may be purchased at
net asset value on any business day, which is any day the Federal Reserve Bank
of Boston is normally open for business. Generally, the Bank is closed on
weekends and national holidays. The fund's net asset value is determined at
12:00 noon Eastern Time on each business day, and on other days where there is
significant trading activity in the fund's shares. If the fund receives your
order in proper form before 12:00 noon Eastern Time and the fund's custodian
receives federal funds from you before 3:00 p.m., Eastern Time, you will receive
the dividend declared and net asset value computed on that day. These orders can
be placed by calling (800) 858-4084. Otherwise, you will receive the next
business day's dividend and net asset value.
Through a Financial Adviser
You may purchase shares through your financial adviser, who can handle all the
details for you, including opening a new account. Financial advisers also can
help you review your financial needs and formulate long-term investment goals
and objectives. In addition, financial advisers generally can help you develop a
customized financial plan, select investments, and monitor and review your
portfolio on an on-going basis to help assure that your investments continue to
meet your needs as circumstances change. Financial advisers are paid for on-
going investment advice and services either from fund sales charges and fees or
by charging you a separate fee in lieu of a sales charge. If you do not have a
financial adviser, call (800) 257-8787 and Nuveen can refer you to one in your
area.
By Mail
You may open an account and buy shares through the mail by completing the
enclosed application and mailing it along with your check to the fund, c/o
Nuveen Investor Services, P.O. Box 5186, Bowling Green Station, New York, NY
10274-5186. No third party checks will be accepted.
Investment Minimums
The minimum initial investment is $3,000 ($50 if you establish a systematic
investment plan). Subsequent investments must be in amounts of $50 or more. The
fund reserves the right to reject purchase orders and to waive or increase the
minimum investment requirements.
8 Section 3 How You Can Buy and Sell Shares
<PAGE>
Systematic Investing
Once you have established a fund account, you may participate in the fund's
systematic investment plan. Systematic investing allows you to make regular
investments through automatic deductions from your bank account or directly from
your paycheck. The minimum automatic deduction is $50 per month. There is no
charge to participate in the fund's systematic investment plan. You can stop the
deductions at any time by notifying the fund in writing.
From Your Bank Account
You can make systematic investments by authorizing us to draw
preauthorized checks on your bank account. To do this, simply complete the
appropriate section of the account application form or submit an Account Update
Form.
From Your Paycheck
With your employer's consent, you can make systematic investments by authorizing
your employer to deduct monies from your paycheck. To do this, contact your
financial adviser or call Nuveen at (800) 257-8787.
Special Services
To help make your investing with us easy and efficient, we offer you the
following services at no extra cost.
Exchanging Shares
You may exchange fund shares into an identically registered account at
any time for an appropriate class of another Nuveen mutual fund available in
your state. Your exchange must meet the minimum purchase requirements of the
fund into which you are exchanging. You may have to pay a sales charge when
exchanging shares that you purchased without a sales charge for shares that are
sold with a sales charge. Please consult the Statement of Additional Information
for details.
The fund may change or cancel its exchange policy at any time upon 60 days'
notice.
Fund Direct/SM/
The Fund Direct Program allows you to link your fund account to your bank
account, transfer money electronically between these accounts, and perform a
variety of account transactions, including purchasing shares by telephone and
investing through a systematic investment plan. You also may have dividends,
distributions, redemption payments or systematic withdrawal plan payments sent
directly to your bank account. Your financial adviser can help you complete the
forms for these services, or you can call Nuveen at (800) 257-8787 for copies of
the necessary forms.
Section 3 How You Can Buy and Sell Shares 9
<PAGE>
An Important Note About Telephone Transactions
Although Nuveen Investor Services has certain safeguards and procedures to
confirm the identity of callers, it will not be liable for losses resulting from
following telephone instructions it reasonably believes to be genuine. Also, you
should verify your trade confirmations immediately upon receipt.
How to Sell Shares
You may sell (redeem) your shares on any business day. You will receive the
share price next determined after the fund has received your properly completed
redemption request. If you are selling shares purchased recently with a check,
you will not receive your redemption proceeds until your check has cleared. This
may take up to ten days from your purchase date.
Through Your Financial Adviser
You may sell your shares through your financial adviser who can prepare the
necessary documentation. Your adviser may charge you for this service.
By Telephone
If you have authorized telephone redemption privileges, you can redeem your
shares by calling (800) 257-8787. Telephone redemptions are not available if you
own shares in certificate form and may not exceed $50,000. Checks will only be
issued to you as the shareholder of record and mailed to your address of record.
If you have established Fund Direct privileges, you may have redemption proceeds
transferred electronically to your bank account. We will normally mail your
check the next business day.
By Check
You may request that the fund provides you with redemption checks. These checks
may be made payable to any person in the amount of $500 or more. Simply fill out
the appropriate section of the application form and submit the enclosed
signature card. You must have enough shares in your account to cover the amount
of each check you write or it will be returned. Writing checks from your fund
account does not mean that your account is like a bank checking account. This
check redemption privilege may be modified or terminated at any time.
By Mail
You can sell your shares at any time by sending a written request to the fund,
c/o Nuveen Investor Services, P.O. Box 5186, Bowling Green Station, New York, NY
10274-5186. Your redemption request must include the following information:
. The fund's name;
. Your name and account number;
. The dollar or share amount you wish to redeem;
. The signature of each owner exactly as it appears on the account;
. The name of the person to whom you want your redemption proceeds paid
(if other than to the shareholder of record);
. The address where you want your redemption proceeds sent (if other than the
address of record); and
. Any required signature guarantees (see below).
The fund will normally mail your check the next business day after it receives
your redemption request, but in no event more than seven days after the fund
receives your request. If you purchased your shares by check, your redemption
proceeds will not be mailed until your check has cleared. This may take up to
ten days from your purchase date.
10 Section 3 How You Can Buy and Sell Shares
<PAGE>
An Important Note About Involuntary Redemption
From time to time, the fund may establish minimum account size requirements. The
fund reserves the right to liquidate your account upon 30 days' written notice
if the value of your account falls below an established minimum. The fund
presently has set a minimum account balance of $100 unless you have an active
Nuveen Defined Portfolio reinvestment account.
Signature Guarantees
Signature guarantees are required if you are redeeming more than $50,000, you
want the check payable to someone other than the shareholder of record, you want
the check sent to another address, or if the address on the fund's records has
been changed within the last 60 days. Signature guarantees must be obtained from
a bank, brokerage firm or other financial intermediary that is a member of an
approved Medallion Guarantee Program or that is otherwise approved by the fund.
A notary public cannot provide a signature guarantee.
Systematic Withdrawal
If the value of your fund account is at least $10,000, you may participate in
the fund's systematic withdrawal plan. The plan allows you to make regular
withdrawals through automatic deductions from your fund account. The minimum
automatic withdrawal is $50 per month. You may elect to receive payments
monthly, quarterly, semi-annually or annually, and may choose to receive a
check, or have the monies transferred directly to your bank account (see
"Special Services -- Fund Direct" above), paid to a third party or sent payable
to you at an address other than the address on the fund's records. To
participate in the systematic withdrawal plan, simply complete the appropriate
section of the account application or submit an account update form.
Redemptions In-Kind
The fund generally pays redemption proceeds in cash. Under unusual conditions
that make cash payment unwise and for the protection of existing shareholders,
the fund may pay all or a portion of your redemption proceeds in securities or
other fund assets. Although it is unlikely that your shares would be redeemed
in-kind, you would probably have to pay transaction costs to sell the securities
distributed to you, as well as taxes on any capital gains from that sale.
Section 3 How You Can Buy and Sell Shares 11
<PAGE>
Section 4 General Information
To help you understand the tax implications of investing in the fund, this
section includes important details about how the fund makes distributions to
shareholders. We discuss some other fund policies, as well.
Dividends and Distributions
The fund pays tax-free dividends monthly. The fund declares dividends on each
business day to shareholders of record on that day.
Payment and Reinvestment Options
The fund automatically reinvests your dividends in additional fund shares unless
you request otherwise. You may request to have your dividends paid to you by
check, deposited directly into your bank account, paid to a third party, sent to
an address other than the address on the fund's records, or reinvested in shares
of another Nuveen mutual fund. For more information, contact your financial
adviser or call Nuveen at (800) 257-8787.
Taxes and Tax Reporting
Because the fund invests in municipal money market securities, your regular
monthly dividends will be exempt from regular federal income tax. A portion of
these dividends, however, may be subject to state and local taxes or the federal
alternative minimum tax. Although very unlikely, the fund may, from time to
time, distribute taxable ordinary income or capital gains.
Early in each year, you will receive a statement detailing the amount and nature
of all dividends that you were paid during the prior year. If you hold your
investment at the firm where you purchased your fund shares, you will receive
the statement from that firm. If you hold your shares directly at the fund,
Nuveen will send you the statement. The tax status of your dividends is the same
whether you reinvest your dividends or elect to receive them in cash.
If you receive social security or railroad retirement benefits, you should
consult your tax adviser about how an investment in the fund may affect the
federal taxation of your benefits.
Please note that if you do not furnish the fund with your correct Social
Security number or employer identification number, federal law requires the fund
to withhold federal income tax from your distributions and redemption proceeds,
currently at a rate of 31%.
12 Section 4 General Information
<PAGE>
Please consult the Statement of Additional Information and your tax adviser for
more information about taxes.
Taxable Equivalent Yields
The taxable equivalent yield is the current yield you would need to earn on a
taxable investment in order to equal a stated tax-free yield on a municipal
investment. To assist you to more easily compare municipal investments like the
funds with taxable alternative investments, the table below presents the taxable
equivalent yields for a range of hypothetical tax-free yields and tax rates.
Taxable Equivalent Yield
===========================================================
Tax-Exempt Yields
<TABLE>
<S> <C> <C> <C> <C> <C>
Federal Tax Rates 2.00% 2.50% 3.00% 3.50% 4.00%
- -----------------------------------------------------------
28.0% 2.78% 3.47% 4.17% 4.86% 5.56%
- -----------------------------------------------------------
31.0% 2.90% 3.62% 4.35% 5.07% 5.80%
- -----------------------------------------------------------
36.0% 3.13% 3.91% 4.69% 5.47% 6.25%
- -----------------------------------------------------------
39.6% 3.31% 4.14% 4.97% 5.79% 6.62%
- -----------------------------------------------------------
</TABLE>
The yields and tax rates shown above are hypothetical and do not predict your
actual returns or effective tax rate. For more detailed information, see the
Statement of Additional Information or consult your tax adviser.
Service Plan
Nuveen serves as the selling agent and distributor of the fund's shares. In this
capacity, Nuveen manages the offering of the fund's shares and is responsible
for all sales and promotional activities, and for providing certain services to
shareholders. The fund has adopted a service plan in accordance with Rule 12b-1
under the Investment Company Act of 1940 to reimburse Nuveen for these services.
Nuveen uses the service fee paid under the plan to compensate authorized
dealers, including Nuveen, for providing on-going account services to
shareholders. These services may include establishing and maintaining your
account, answering your questions and providing other personal services to you.
Because these fees are paid out of the fund's assets on an ongoing basis, over
time these fees will increase the cost of your investment. Nuveen may, in its
discretion and from its own resources, pay certain financial service firms
additional amounts for services rendered to shareholders.
Service fees under the plan are paid in accordance with the following schedule:
Average Daily Net Assets
of Serviced Accounts Fee
======================================================
Less than $2 million .10%
- ------------------------------------------------------
$2 million to $5 million .15%
- ------------------------------------------------------
$5 million to $10 million .20%
- ------------------------------------------------------
$10 million and over .25%
- ------------------------------------------------------
Section 4 General Information 13
<PAGE>
Net Asset Value
The price you pay and receive for your shares is based on the fund's net asset
value per share, which is determined at 12:00 noon Eastern Time on each business
day. Because the fund seeks to maintain a constant price per share of $1.00, the
fund values its portfolio securities using the amortized cost method, which
approximates market value and is described in more detail in the Statement of
Additional Information. There can be no assurance that the fund will be able to
maintain a constant price per share of $1.00.
Fund Service Providers
The custodian of the fund's assets is The Chase Manhattan Bank, 4 New York
Plaza, New York, NY 10004-2413. Chase also provides certain accounting services
to the fund. The fund's transfer, shareholder services and dividend paying
agent, Chase Global Funds Services Company, P.O. Box 5186, New York, NY
10274-5186, performs bookkeeping, data processing and administrative services
for the maintenance of shareholder accounts.
Year 2000
The fund's service providers rely on computer systems to manage the fund's
investments, process shareholder transactions and provide shareholder account
maintenance. Because of the way computers historically have stored dates, some
of these systems currently may not be able to correctly process activity
occurring in the year 2000. Nuveen is working with the fund's service providers
to adapt their systems to address this issue. Nuveen and the fund expect that
the necessary work will be completed on a timely basis, although there can be no
assurance of this.
14 Section 4 General Information
<PAGE>
Section 5 Financial Highlights
The following table is intended to help you better understand the fund's
past performance. The table is excerpted from the fund's latest financial
statements audited by Arthur Andersen LLP. You may obtain the complete
statements along with the auditor's report by requesting from Nuveen a free copy
of the fund's latest annual shareholder report.
Municipal Money Market Fund
<TABLE>
<CAPTION>
Less
Distributions
Beginning Net from Net Ending Ending
Net Invest- Invest- Net Net
Year Ended Asset ment ment Asset Total Assets
February 28/29, Value Income(a) Income Value Return (000)
<S> <C> <C> <C> <C> <C> <C>
- -------------------------------------------------------------------------------------------------------------
1999 $1.00 $.03 $(.03) $1.00 2.85% $252,354
1998 1.00 .03 (.03) 1.00 3.02 270,723
1997 1.00 .03 (.03) 1.00 2.87 304,087
1996 1.00 .03 (.03) 1.00 3.23 339,662
1995 1.00 .03 (.03) 1.00 2.46 351,606
- -------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
Ratio/Supplemental Data
------------------------------------------------------------
Ratio Ratio
of Net of Net
Ratio of Investment Ratio of Investment
Expenses Income Expenses Income to
to Average to Average to Average Average
Net Assets Net Assets Net Assets Net Assets
Before Before After After
Year Ended Reimburse- Reimburse- Reimburse- Reimburse-
February 28/29, ment ment ment(a) ment(a)
<S> <C> <C> <C> <C>
- -----------------------------------------------------------------------------------
1999 .80% 2.79% .75% 2.84%
1998 .81 2.96 .75 3.02
1997 .80 2.82 .75 2.87
1996 .79 3.18 .75 3.22
1995 .78 2.40 .75 2.43
- -----------------------------------------------------------------------------------
</TABLE>
(a) After waiver of certain management fees or reimbursement of expenses, if
applicable, by Nuveen Advisory.
Section 5 Financial Highlights 15
<PAGE>
Nuveen Mutual Funds
Nuveen offers a variety of mutual funds designed to help you reach your
financial goals. The funds below are grouped by investment objectives.
Growth
Nuveen Rittenhouse Growth Fund
Growth and Income
European Value Fund
Growth and Income Stock Fund
Balanced Stock and Bond Fund
Balanced Municipal and Stock Fund
Dividend and Growth Fund
Income
Income Fund
Tax-Free Income
National Municipal Bond Funds
Long-term
Insured Long-term
Intermediate-term
Limited-term
State Municipal Bond Funds
Arizona
California/1/
Colorado
Connecticut
Florida
Georgia
Kansas
Kentucky
Louisiana
Maryland
Massachusetts/1/
Michigan
Missouri
New Jersey
New Mexico
New York/1/
North Carolina
Ohio
Pennsylvania
Tennessee
Virginia
Wisconsin
Cash Reserves
Money Market Fund
Municipal Money Market Fund
California Tax-Exempt Money Market Fund
New York Tax-Exempt Money Market Fund
Several additional sources of information are available to you. The Statement of
Additional Information, incorporated by reference into this prospectus, contains
detailed information on fund policies and operations. Shareholder reports
contain management's discussion of market conditions, investment strategies that
significantly affected the fund's performance results during its last fiscal
year. Call Nuveen at (800) 257-8787 to request a free copy of any of these
materials or other fund information, or ask your financial adviser for copies.
You also may obtain this and other fund information directly from the Securities
and Exchange Commission (SEC). The SEC may charge a copying fee for this
information. Visit the SEC on-line at http://www.sec.gov or in person at the
SEC's Public Reference Room in Washington, D.C. Call the SEC at (800) SEC-0330
for room hours and operation. You also may request fund information by writing
to the SEC's Public Reference Section, Washington, D.C. 20549. The fund's
Investment Company Act file number is 811-03531.
/1/ Long-term and insured long-term portfolios.
NUVEEN
John Nuveen & Co. Incorporated
333 West Wacker Drive
Chicago, IL 60606-1286
(800) 257-8787
www.nuveen.com
<PAGE>
PART B--STATEMENT OF ADDITIONAL INFORMATION
NUVEEN MUNICIPAL MONEY MARKET FUND, INC.
333 West Wacker Drive
Chicago, Illinois 60606
<PAGE>
Statement of Additional Information
June 28, 1999
Nuveen Municipal Money Market Fund, Inc.
333 West Wacker Drive
Chicago, Illinois 60606
NUVEEN MUNICIPAL MONEY MARKET FUND
This Statement of Additional Information is not a prospectus. This Statement of
Additional Information should be read in conjunction with the Prospectus of the
Nuveen Municipal Money Market Fund dated June 28, 1999. The Prospectus may be
obtained without charge from certain securities representatives, banks, and
other financial institutions that have entered into sales agreements with John
Nuveen & Co. Incorporated, or from the Fund by mailing a written request to the
Fund, c/o John Nuveen & Co. Incorporated ("Nuveen"), 333 West Wacker Drive,
Chicago, Illinois 60606 or by calling (800) 257-8787.
<TABLE>
<S> <C>
Table of Contents Page
- ------------------------------------------------------------
Investment Policies and Investment Portfolio S-2
- ------------------------------------------------------------
Management S-11
- ------------------------------------------------------------
Investment Adviser and Investment Management Agreement S-15
- ------------------------------------------------------------
Portfolio Transactions S-16
- ------------------------------------------------------------
Net Asset Value S-17
- ------------------------------------------------------------
Tax Matters S-19
- ------------------------------------------------------------
Performance Information S-22
- ------------------------------------------------------------
Additional Information About Purchases and Sales S-25
- ------------------------------------------------------------
Service Plan S-28
- ------------------------------------------------------------
Other Information Regarding Shares of the Fund S-30
- ------------------------------------------------------------
Financial Statements S-31
- ------------------------------------------------------------
</TABLE>
Principal Underwriter Investment Adviser Independent Public Accountants
John Nuveen & Co. Incorporated
Nuveen Advisory for the Fund
Corp., Subsidiary
of John Nuveen &
Co. Incorporated
Arthur Andersen LLP
Chicago: 33 West Monroe Street
333 West Wacker Drive Chicago, Illinois 60603
Chicago, Illinois 60606 333 West Wacker
Drive
(312) 917-7700
Chicago, Illinois
60606
Transfer and Dividend
New York: Disbursing Agent
10 East 50th Street Chase Global Funds
New York, New York 10022Custodian Services Company
(212) 207-2000 The Chase Manhattan P.O. Box 5186
Bank New York, New York 10274
4 New York Plaza
New York, New York
10004
<PAGE>
FUNDAMENTAL POLICIES AND INVESTMENT PORTFOLIO
Fundamental Policies
The Fund's investment objective and certain fundamental policies are described
in the Prospectus. The Fund, as a fundamental policy, may not, without the ap-
proval of the holders of a majority of the shares:
(1) Invest in securities other than Municipal Obligations and temporary in-
vestments as those terms are defined in the Prospectus;
(2) Invest more than 5% of its total assets in securities of any one issuer,
excluding the United States government, its agencies and instrumentalities;
(3) Borrow money, except for temporary or emergency purposes and not for in-
vestment purposes and then only in an amount not exceeding (a) 10% of the
value of the Fund's total assets at the time of borrowing or (b) one-third of
the value of the Fund's total assets including the amount borrowed in order to
meet redemption requests which might otherwise require the untimely disposi-
tion of securities. While any such borrowings exceed 5% of total assets, no
additional purchases of investment securities will be made by the Fund. If due
to market fluctuations or other reasons the value of the Fund's assets fall
below 300% of its borrowings, the Fund will reduce its borrowings within 3
business days. To do this, the Fund may have to sell a portion of its invest-
ments at a time when it may be disadvantageous to do so;
(4) Pledge, mortgage or hypothecate its assets, except that, to secure
borrowings permitted by subparagraph (3) above, it may pledge securities hav-
ing a market value at the time of pledge not exceeding 10% of the value of the
Fund's total assets;
(5) Issue senior securities as defined in the Investment Company Act of 1940
except to the extent such issuance might be involved with respect to
borrowings described under item (3) above;
(6) Underwrite any issue of securities, except to the extent that the purchase
of Municipal Obligations in accordance with the Fund's investment objective,
policies, and limitations, may be deemed to be an underwriting;
(7) Purchase or sell real estate, but this shall not prevent the Fund from in-
vesting in Municipal Obligations secured by real estate or interests therein
or foreclosing upon and selling such security;
(8) Purchase or sell commodities or commodities contracts or oil, gas or other
mineral exploration or development programs;
(9) Make loans, other than by entering into repurchase agreements and through
the purchase of Municipal Obligations or temporary investments in accordance
with its investment objective, policies and limitations;
(10) Make short sales of securities or purchase any securities on margin, ex-
cept for such short-term credits as are necessary for the clearance of trans-
actions;
(11) Write or purchase put or call options, except to the extent that the pur-
chase of a stand-by commitment may be considered the purchase of a put;
S-2
<PAGE>
(12) Concentrate more than 25% of its assets in the securities of issuers in
any single industry; provided, however, that such limitations shall not be ap-
plicable on the purchase of Municipal Obligations issued by governments or po-
litical subdivisions of governments, and obligations issued or guaranteed by
the U.S. Government, its agencies or instrumentalities;
(13) Invest more than 10% of its assets in repurchase agreements maturing in
more than seven days, "illiquid" securities (such as non-negotiable CDs) and
securities without readily available market quotations.
For the purpose of applying the limitations set forth in paragraph (2) above,
the issuer shall be deemed a separate issuer when its assets and revenues are
separate from other governmental entities and its securities are backed only
by its assets and revenues. Similarly, in the case of a non-governmental user,
such as an industrial corporation or a privately owned or operated hospital,
if the security is backed only by the assets and revenues of the non-govern-
mental user then such non-governmental user would be deemed to be the sole is-
suer. Where a security is also backed by the enforceable obligation of a supe-
rior or unrelated governmental entity or other entity (other than a bond in-
surer) it shall be included in the computation of securities owned that are
issued by such governmental entity or other entity.
Where a security is guaranteed by a governmental entity or some other facili-
ty, such as a bank guarantee or letter of credit, such a guarantee or letter
of credit would be considered a separate security and would be treated as an
issue of such government, other entity or bank. Where a security is insured by
bond insurance, it shall not be considered a security issued or guaranteed by
the insurer; instead the issuer of such security will be determined in accor-
dance with the principles set forth above. The foregoing restrictions do not
limit the percentage of the Fund's assets that may be invested in securities
insured by any single insurer. It is a fundamental policy of the Fund, which
cannot be changed without the approval of the holders of a majority of shares
of such Fund, that the Fund will not hold securities of a single bank, includ-
ing securities backed by a letter of credit of such bank, if such holdings
would exceed 10% of the total assets of the Fund.
The foregoing restrictions and limitations, as well as the Fund's policies as
to ratings of fund investments, will apply only at the time of purchase of se-
curities, and the percentage limitations will not be considered violated un-
less an excess or deficiency occurs or exists immediately after and as a re-
sult of an acquisition of securities, unless otherwise indicated.
The foregoing fundamental investment policies, together with the investment
objective of the Fund, cannot be changed without approval by holders of a "ma-
jority of the Fund's outstanding voting shares." As defined in the Investment
Company Act of 1940, this means the vote of (i) 67% or more of the Fund's
shares present at a meeting, if the holders of more than 50% of the Fund's
shares are present or represented by proxy, or (ii) more than 50% of the
Fund's shares, whichever is less.
S-3
<PAGE>
General Information
The Nuveen Municipal Money Market Fund, Inc. (the "Fund") is an open-end diver-
sified management company incorporated as a Maryland corporation on July 6,
1982. It is authorized to issue 2,000,000,000 shares of Common Stock, $.01 par
value. Prior to June 1999, the Fund was called the Nuveen Tax-Free Reserves,
Inc. Fund shares represent an interest in the same portfolio of investments of
the Fund. Fund shares have equal rights as to voting, redemption, dividends and
liquidation, and have exclusive voting rights with respect to any applicable
distribution or service plan. There are no conversion, preemptive or other sub-
scription rights. The Board of Directors of the Fund has the right to establish
additional series and classes of shares in the future, to change those series
or classes and to determine the preferences, voting powers, rights and privi-
leges thereof.
Year 2000 Issues
The "Year 2000" problem refers to the fact that many computer programs use only
the last two digits of a year, and do not recognize a year that begins with
"20" instead of "19." If this problem is not corrected, computers could func-
tion improperly or not at all, which could affect the global economy. The SEC
has urged securities issuers to disclose the steps they are taking to correct
any Year 2000 problems.
The Fund invests primarily in money market instruments. If the issuers of these
instruments do not correct any Year 2000 problems in a timely manner, they
could experience problems in conducting their operations or in making payments
on their securities, which could cause the value of these securities to de-
cline. Issuers could experience three types of Year 2000 problems. First, if an
issuer's internal computer systems experience Year 2000 problems, this could
disrupt an issuer's operations (such as its ability to collect local taxes or
fees). Second, an issuer may rely on other parties for the payments that sup-
port its debt service, such as servicers that collect mortgage or student loan
payments, and those third parties may have Year 2000 problems that interfere
with their ability to forward payments to the issuer. Third, an issuer may have
mechanical problems in sending payments to its securities holders.
Nuveen Advisory is obtaining information about the Year 2000 readiness of the
issuers of its portfolio securities as part of its on-going surveillance of the
creditworthiness of those issuers.
Portfolio Securities
The various securities in which the Fund intends to invest are described in the
Prospectus. The following is a more complete description of certain Municipal
Obligations in which the Fund may invest:
Municipal Obligations
The Fund invests in debt obligations issued by states, cities and local author-
ities to obtain funds for various public purposes, including the construction
of such public facilities as airports, bridges, highways, housing, hospitals,
mass transportation, schools, streets and water and sewer works. Other public
purposes for which these securities may be issued include the refinancing of
outstanding obligations, the obtaining of funds for general operating expenses
and for loans to other public institutions and facilities. In addition, certain
industrial development bonds and pollution control bonds may be in-
S-4
<PAGE>
cluded within the term Municipal Obligations if the interest paid thereon qual-
ifies as exempt from federal income tax.
Two principal classifications of these securities (sometimes called Municipal
Obligations) are "general obligation" and "revenue" bonds. General obligation
bonds are secured by the issuer's pledge of its full faith, credit and taxing
power for the payment of principal and interest. Revenue bonds are payable only
from the revenues derived from a particular facility or class of facilities or,
in some cases, from the proceeds of a special excise or other specific revenue
source. Industrial development and pollution control bonds are in most cases
revenue bonds and do not generally constitute the pledge of the credit or tax-
ing power of the issuer of such bonds.
Municipal Obligations can be further classified between bonds and notes. Bonds
are issued to raise longer-term capital but, when purchased by the Fund, will
have 397 days or less remaining until maturity or will have a variable or
floating rate of interest. These issues may be either general obligation bonds
or revenue bonds.
Notes are short-term instruments with a maturity of two years or less. Most
notes are general obligations of the issuer and are sold in anticipation of a
bond sale, collection of taxes or receipt of other revenues. Payment of these
notes is primarily dependent upon the issuer's receipt of the anticipated reve-
nues.
Municipal Obligations also include very short-term unsecured, negotiable prom-
issory notes, issued by states, municipalities, and their agencies, which are
known as "tax-exempt commercial paper" or "municipal paper." Payment of princi-
pal and interest on issues of municipal paper may be made from various sources,
to the extent that funds are available therefrom. There is a limited secondary
market for issues of municipal paper.
While these various types of notes as a group represent the major portion of
the tax-exempt note market, other types of notes are occasionally available in
the marketplace and the Fund may invest in such other types of notes to the ex-
tent consistent with its investment objective and limitations. Such notes may
be issued for different purposes and with different security than those men-
tioned above.
The yields on Municipal Obligations are dependent on a variety of factors, in-
cluding the condition of the general money market and the Municipal Obligation
market, the size of a particular offering, the maturity of the obligation and
the rating of the issue. The ratings of Moody's and S&P represent their opin-
ions as to the quality of those Municipal Obligations which they undertake to
rate. It should be emphasized, however, that ratings are general and are not
absolute standards of quality. Consequently, Municipal Obligations with the
same maturity, coupon and rating may have different yields while obligations of
the same maturity and coupon with different ratings may have the same yield.
The market value of outstanding Municipal Obligations will vary with changes in
prevailing interest rate levels and as a result of changing evaluations of the
ability of their issuers to meet interest and principal payments.
S-5
<PAGE>
Obligations of issuers of debt securities are subject to the provisions of
bankruptcy, insolvency and other laws affecting the rights and remedies of
creditors. In addition, the obligations of such issuers may become subject to
laws enacted in the future by Congress, state legislatures or referenda ex-
tending the time for payment of principal and/or interest, or imposing other
constraints upon enforcement of such obligations or upon municipalities to levy
taxes. There is also the possibility that, as a result of legislation or other
conditions, the power or ability of any issuer to pay, when due, the principal
of and interest on its debt security may be materially affected.
Bond Anticipation Notes (BANs) are usually general obligations of state and lo-
cal governmental issuers which are sold to obtain interim financing for pro-
jects that will eventually be funded through the sale of long-term debt obliga-
tions or bonds. The ability of an issuer to meet its obligations on its BANs is
primarily dependent on the issuer's access to the long-term municipal bond mar-
ket and the likelihood that the proceeds of such bond sales will be used to pay
the principal and interest on the BANs.
Tax Anticipation Notes (TANs) are issued by state and local governments to fi-
nance the current operations of such governments. Repayment is generally to be
derived from specific future tax revenues. TANs are usually general obligations
of the issuer. A weakness in an issuer's capacity to raise taxes due to, among
other things, a decline in its tax base or a rise in delinquencies, could ad-
versely affect the issuer's ability to meet its obligations on outstanding
TANs.
Revenue Anticipation Notes (RANs) are issued by governments or governmental
bodies with the expectation that future revenues from a designated source will
be used to repay the notes. In general they also constitute general obligations
of the issuer. A decline in the receipt of projected revenues, such as antici-
pated revenues from another level of government, could adversely affect an is-
suer's ability to meet its obligations on outstanding RANs. In addition, the
possibility that the revenues would, when received, be used to meet other obli-
gations could affect the ability of the issuer to pay the principal and inter-
est on RANs.
Construction Loan Notes are issued to provide construction financing for spe-
cific projects. Frequently, these notes are redeemed with funds obtained from
the Federal Housing Administration.
Bank Notes are notes issued by local governmental bodies and agencies such as
those described above to commercial banks as evidence of borrowings. The pur-
poses for which the notes are issued are varied but they are frequently issued
to meet short-term working-capital or capital-project needs. These notes may
have risks similar to the risks associated with TANs and RANs.
Industrial Development and Pollution Control Bonds are issued by or on behalf
of public authorities to finance various privately-rated facilities. Typically
the interest paid thereon is exempt from federal income tax.
Variable and Floating Rate Instruments. Certain money market instruments may
carry variable or floating rates of interest. Such instruments bear interest at
rates which are not fixed, but which vary with changes in specified market
rates or indices, such as a bank prime rate or tax-exempt money market index.
Variable rate notes are adjusted to current interest rate levels at certain
specified times, such as every 30 days, as set forth in the instrument. A
floating rate note adjusts automatically whenever there is a change in its base
interest rate adjustor, e.g., a change in the prime lending rate or specified
interest rate indices. Typically such instruments carry demand features permit-
ting the Fund to recover the full principal amount thereof upon specified
notice.
S-6
<PAGE>
One form of variable or floating rate instrument consists of an underlying
fixed rate municipal bond that is subject to a third party demand feature or
"tender option." The holder of the bond would pay a "tender fee" to the third
party tender option provider, the amount of which would be periodically ad-
justed so that the bond/tender option combination would reasonably be expected
to have a market value that approximates the par value of the bond. This
bond/tender option combination would therefore be functionally equivalent to
ordinary variable or floating rate obligations as described above, and the Fund
may purchase such obligations subject to certain conditions specified by the
Securities and Exchange Commission.
The Fund's right to obtain payment at par on a demand instrument upon demand
could be adversely affected by events occurring between the date the Fund
elects to tender the instrument and the date proceeds are due. Nuveen Advisory
will monitor on an ongoing basis the pricing, quality and liquidity of such in-
struments and will similarly monitor the ability of an obligor under the demand
arrangement, including demand obligors as to instruments supported by bank let-
ters of credit or guarantees, to pay principal and interest on demand. Although
the ultimate maturity of such variable rate obligations may exceed one year,
the Fund will treat the maturity of each variable rate demand obligation, for
purposes of computing its dollar-weighted average portfolio maturity, as the
longer of (i) the notice period required before the Fund is entitled to payment
of the principal amount through demand, or (ii) the period remaining until the
next interest rate adjustment.
The Fund may also obtain standby commitments with respect to Municipal Obliga-
tions. Under a standby commitment (often referred to as a put), the party issu-
ing the commitment agrees to purchase at the Fund's option the Municipal Obli-
gation at an agreed-upon price on certain dates or within a specific period.
Since the value of a standby commitment depends in part upon the ability of the
issuing party to meet its purchase obligations thereunder, the Fund will enter
into standby commitments only with parties which have been evaluated by Nuveen
Advisory and, in the opinion of Nuveen Advisory, present minimal credit risks.
The amount payable to the Fund upon its exercise of a standby commitment would
be (1) the acquisition cost of the Municipal Obligations (excluding any accrued
interest that the Fund paid on acquisition), less any amortized market premium
or plus any amortized market or original during the period the Fund owned the
security, plus (2) all interest accrued on the security since the last interest
payment date during the period the security was owned by the Fund. The Fund's
right to exercise standby commitments held by it will be unconditional and un-
qualified. The acquisition of a standby commitment will not affect the valua-
tion of the underlying security, which will continue to be valued in accordance
with the amortized cost method. The standby commitment itself will be valued at
zero in determining net asset value. The Fund may purchase standby commitments
for cash or pay a higher price for portfolio securities which are acquired sub-
ject to such a commitment (thus reducing the yield to maturity otherwise avail-
able for the same securities). The maturity of a Municipal Obligation purchased
by the Fund will not be considered shortened by any standby commitment to which
such security is subject. Although the Fund rights under a standby commitment
would not be transferable, the Fund could sell Municipal Obligations which were
subject to a standby commitment to a third party at any time.
S-7
<PAGE>
When-Issued Securities
The Fund may purchase and sell Municipal Obligations on a when-issued or de-
layed delivery basis. When-issued and delayed delivery transactions arise when
securities are purchased or sold with payment and delivery beyond the regular
settlement date. (When-issued transactions normally settle within 30-45 days.)
On such transactions the payment obligation and the interest rate are fixed at
the time the buyer enters into the commitment. The commitment to purchase secu-
rities on a when-issued or delayed delivery basis may involve an element of
risk because the value of the securities is subject to market fluctuation, no
interest accrues to the purchaser prior to settlement of the transaction, and
at the time of delivery the market value may be less than cost. At the time the
Fund makes the commitment to purchase a Municipal Obligation on a when-issued
or delayed delivery basis, it will record the transaction and reflect the
amount due and the value of the security in determining its net asset value.
Likewise, at the time the Fund makes the commitment to sell a Municipal Obliga-
tion on a delayed delivery basis, it will record the transaction and include
the proceeds to be received in determining its net asset value; accordingly,
any fluctuations in the value of the Municipal Obligation sold pursuant to a
delayed delivery commitment are ignored in calculating net asset value so long
as the commitment remains in effect. The Fund will maintain designated readily
marketable assets at least equal in value to commitments to purchase when-is-
sued or delayed delivery securities, such assets to be segregated by the Custo-
dian specifically for the settlement of such commitments. The Fund will only
make commitments to purchase Municipal Obligations on a when-issued or delayed
delivery basis with the intention of actually acquiring the securities, but the
Fund reserves the right to sell these securities before the settlement date if
it is deemed advisable. If a when-issued security is sold before delivery any
gain or loss would not be tax-exempt.
Taxable Investments
Taxable investments (sometimes called "Temporary Investments") include obliga-
tions of the United States Government, its agencies or instrumentalities; debt
securities of issuers having, at the time of purchase, a quality rating within
the two highest grades by either Moody's Investors Service, Inc. ("Moody's") or
Standard & Poor's Corporation ("S&P") (Aaa or Aa, or AAA or AA, respectively);
commercial paper rated in the highest grade by either of such rating services
(Prime-1 or A-1, respectively); certificates of deposit of domestic banks with
assets of $1 billion or more; and Municipal Obligations and U.S. Government ob-
ligations subject to short-term repurchase agreements.
Subject to the limitations described in the Prospectus the Fund may invest in
the following taxable investments:
U.S. Government Direct Obligations--issued by the United States Treasury and
include bills, notes, and bonds.
- --Treasury bills are issued with maturities of up to one year. They are issued
in bearer form, are sold on a discount basis and are payable at par value at
maturity.
- --Treasury notes are longer-term interest-bearing obligations with original ma-
turities of one to seven years.
S-8
<PAGE>
- --Treasury bonds are longer-term interest-bearing obligations with original ma-
turities from five to thirty years.
U.S. Government Agencies Securities--Certain federal agencies have been estab-
lished as instrumentalities of the United States government to supervise and
finance certain types of activities. These agencies include, but are not lim-
ited to the Bank for Cooperatives, Federal Land Banks, Federal Intermediate
Credit Banks, Federal Home Loan Banks, Federal National Mortgage Association,
Government National Mortgage Association, Export-Import Bank of the United
States and Tennessee Valley Authority. Issues of these agencies, while not di-
rect obligations of the United States government, are either backed by the full
faith and credit of the United States or are guaranteed by the Treasury or sup-
ported by the issuing agencies' right to borrow from the Treasury. There can be
no assurance that the United States government itself will pay interest and
principal on securities as to which it is not so legally obligated.
Certificates of Deposit (CDs)--A certificate of deposit is a negotiable inter-
est-bearing instrument with a specific maturity. CDs are issued by banks in ex-
change for the deposit of funds and normally can be traded in the secondary
market, prior to maturity. The Fund will only invest in U.S. dollar denominated
CDs issued by U.S. banks with assets of $1 billion or more.
Commercial Paper--Commercial paper is the term used to designate unsecured
short-term promissory notes issued by corporations. Maturities on these issues
vary from a few to 397 days. Commercial paper may be purchased from U.S. corpo-
rations.
Other Corporate Obligations--The Fund may purchase notes, bonds and debentures
issued by corporations if at the time of purchase there is less than 397 days
remaining until maturity or if they carry a variable or floating rate of inter-
est.
Repurchase Agreements--A repurchase agreement is a contractual agreement
whereby the seller of securities (U.S. Government or Municipal Obligations)
agrees to repurchase the same security at a specified price on a future date
agreed upon by the parties. The agreed upon repurchase price determines the
yield during the Fund's holding period. Repurchase agreements are considered to
be loans collateralized by the underlying security that is the subject of the
repurchase contract. The Fund will only enter into repurchase agreements with
dealers, domestic banks or recognized financial institutions that in the opin-
ion of Nuveen Advisory represent minimal credit risk. The risk to the Fund is
limited to the ability of the issuer to pay the agreed upon repurchase price on
the delivery date; however, although the value of the underlying collateral at
the time the transaction is entered into always equals or exceeds the agreed
upon repurchase price, if the value of the collateral declines there is a risk
of loss of both principal and interest. In the event of default, the collateral
may be sold but the Fund might incur a loss if the value of the collateral de-
clines, and might incur disposition costs or experience delays in connection
with liquidating the collateral. In addition, if bankruptcy proceedings are
commenced with respect to the seller of the security, realization upon the col-
lateral by the Fund may be delayed or limited. Nuveen Advisory will monitor the
value of the collateral at the time the transaction is entered into and at all
times subsequent during the term of the repurchase agreement in an effort to
determine that the value always equals or exceeds the agreed upon repurchase
price. In the event the value of the collateral declines below the repurchase
price, Nuveen Advisory will demand additional collateral from the issuer to in-
crease the value of the collateral to at least that of the repurchase price.
S-9
<PAGE>
Ratings of Investments
The two highest ratings of Moody's for Municipal Obligations are Aaa and Aa.
Municipal Obligations rated Aaa are judged to be of the "best quality." The
rating of Aa is assigned to Municipal Obligations which are of "high quality by
all standards," but as to which margins of protection or other elements make
long-term risks appear somewhat larger than in Aaa rated Municipal Obligations.
The Aaa and Aa rated Municipal Obligations comprise what are generally known as
"high grade bonds." Moody's bond rating symbols may contain numerical modifiers
of a generic rating classification. The modifier 1 indicates that the bond
ranks at the high end of its category; the modifier 2 indicates a mid-range
ranking; and the modifier 3 indicates that the issue ranks in the lower end of
its generic rating category.
The two highest ratings of S&P for Municipal Obligations are AAA and AA. Munic-
ipal Obligations rated AAA have an extremely strong capacity to pay principal
and interest. The rating of AA indicates that capacity to pay principal and in-
terest is very strong and such bonds differ from AAA issues only in small de-
gree.
The highest rating of Moody's and S&P for federally tax-exempt short-term loans
and notes is VMIG-1 or MIG-I and SP-1, respectively. Obligations designated
VMIG-I and MIG-I are the best quality, enjoying strong protection from estab-
lished cash flows for their servicing or from established and broad-based ac-
cess to the market for refinancing, or both. The designation SP-1 indicates a
very strong or strong capacity to pay principal and interest.
The Fund's ability to purchase commercial paper of tax-exempt and corporate is-
suers is limited to commercial paper rated Prime-1 by Moody's or A-1 by S&P.
The rating Prime-1 (P-1) is the highest commercial paper rating assigned by
Moody's. Issuer's rated P-1 have a superior capacity for repayment of short-
term obligations normally evidenced by the following characteristics: leading
market positions in well-established industries; high rates of return on funds
employed; conservative capitalization structures which moderate reliance on
debt and ample asset protection; broad margins in earnings coverage of fixed
financial charges and high internal cash generation; well-established access to
a range of financial markets and assured sources of alternative liquidity. The
designation A-1 indicates that the degree of safety regarding timely payment is
very strong.
Subsequent to its purchase by the Fund, an issue may cease to be rated or its
rating may be reduced below the minimum required for purchase by the Fund. Nei-
ther event requires the elimination of such obligations from the Fund, but
Nuveen Advisory will consider such an event in its determination of whether the
Fund should continue to hold such obligation.
S-10
<PAGE>
MANAGEMENT
The management of the Fund, including general supervision of the duties per-
formed by Nuveen Advisory under the Investment Management Agreement, is the re-
sponsibility of its Board of Directors. There are seven directors of the Fund,
one of whom is an "interested person" (as that term is defined in the Invest-
ment Company Act of 1940). None of the Directors who are not "interested per-
sons" of the Fund has ever been a director or employee of, or consultant to,
Nuveen or its affiliates. The names and business addresses of the directors and
officers of the Fund and their ages and principal occupations and other affili-
ations during the past five years are set forth below.
<TABLE>
- --------------------------------------------------------------------------------
<CAPTION>
Positions and Principal Occupations
Name and Address Age Offices with Funds During Past Five Years
- --------------------------------------------------------------------------------
<C> <C> <C> <S>
Timothy R. Schwertfeger*+ 50 Chairman of the Board Chairman of the Board of
333 West Wacker Drive and Director the Funds (since July
Chicago, IL 60606 1996); Trustee and
President of the Funds
advised by Nuveen
Institutional Advisory
Corp. (since July 1996);
Chairman (since July
1996), Director, and
previously Executive
Vice President, of The
John Nuveen Company,
John Nuveen & Co.,
Nuveen Advisory Corp.
and Nuveen Institutional
Advisory Corp.; Director
(since 1996) of
Institutional Capital
Corporation; Chairman
and Director of Nuveen
Asset Management, Inc.;
Chairman and Director of
Rittenhouse Financial
Services Inc. (since
1999).
- --------------------------------------------------------------------------------
Robert P. Bremner 58 Director Private Investor and
3725 Huntington Street, N.W. Management Consultant.
Washington, D.C. 20015
- --------------------------------------------------------------------------------
Lawrence H. Brown 64 Director Retired (August 1989) as
201 Michigan Avenue Senior Vice President of
Highwood, IL 60040 The Northern Trust
Company (banking and
trust industry).
- --------------------------------------------------------------------------------
Anne E. Impellizzeri 66 Director Executive Director
3 West 29th Street (since 1998) of Manitoga
New York, NY 10001 (center for Russell
Wright's design/home and
landscape); formerly
President and Chief
Executive Officer of
Blanton-Peale,
Institutes of Religion
and Health (a training
and counseling
organization).
- --------------------------------------------------------------------------------
Peter R. Sawers 66 Director Adjunct Professor of
22 The Landmark Business and Economics,
Northfield, IL 60093 University of Dubuque,
Iowa; Adjunct Professor,
Lake Forest Graduate
School of Management,
Lake Forest, Illinois;
Chartered Financial
Analyst; Certified
Management Consultant.
- --------------------------------------------------------------------------------
William J. Schneider 54 Director Senior Partner and Chief
4000 Miller-Valentine Ct. Operating Officer,
P.O. Box 744 Miller-Valentine
Dayton, OH 45401 Partners, Vice
President, Miller-
Valentine Group
(commercial real
estate); Member
Community Advisory
Board, National City
Bank, Dayton, Ohio.
</TABLE>
- --------------------------------------------------------------------------------
S-11
<PAGE>
<TABLE>
- ---------------------------------------------------------------------------------------
<CAPTION>
Positions and Principal Occupations
Name and Address Age Offices with Funds During Past Five Years
- ---------------------------------------------------------------------------------------
<C> <C> <C> <S>
Judith M. Stockdale 51 Director Executive Director,
35 E. Wacker Drive Gaylord and Dorothy
Suite 2600 Donnelley Foundation, a
Chicago, IL 60601 private family
foundation (since 1994);
prior thereto, Executive
Director, Great Lakes
Protection Fund (from
1990 to 1994).
- --------------------------------------------------------------------------------
Alan G. Berkshire+ 38 Vice President and Asst. Secretary Vice President and
333 West Wacker Drive since 1998 General Counsel (since
Chicago, IL 60606 September 1997) and
Secretary (since May
1998) of The John Nuveen
Company, John Nuveen &
Co. Incorporated, Nuveen
Advisory Corp. and
Nuveen Institutional
Advisory Corp.; prior
thereto, partner in the
law firm of Kirkland &
Ellis.
- --------------------------------------------------------------------------------
Peter H. D'Arrigo+ 31 Vice President and Treasurer Vice President of John
333 West Wacker Drive since 1999 Nuveen & Co.
Chicago, IL 60606 Incorporated (since
January 1999), prior
thereto. Assistant Vice
President (from January
1997); formerly,
Associate of John Nuveen
& Co. Incorporated;
Chartered Financial
Analyst.
- --------------------------------------------------------------------------------
Michael S. Davern+ 42 Vice President since 1997 Vice President of Nuveen
333 West Wacker Drive Advisory Corp. (since
Chicago, IL 60606 January 1997); prior
thereto, Vice President
and Portfolio Manager of
Flagship Financial, Inc.
(from September 1991 to
January 1997).
- ---------------------------------------------------------------------------------------
Lorna C. Ferguson+ 53 Vice President since 1998 Vice President of John
333 West Wacker Drive Nuveen & Co.
Chicago, IL 60606 Incorporated; Vice
President of Nuveen
Advisory Corp. and
Nuveen Institutional
Advisory Corp. (since
January 1998).
- ---------------------------------------------------------------------------------------
William M. Fitzgerald+ 35 Vice President since 1996 Vice President of Nuveen
333 West Wacker Drive Advisory Corp. (since
Chicago, IL 60606 December 1995); prior
thereto, Assistant Vice
President of
Nuveen Advisory Corp.
(from September 1992 to
December 1995);
Chartered Financial
Analyst.
- ---------------------------------------------------------------------------------------
Stephen D. Foy+ 44 Vice President and Controller Vice President of John
333 West Wacker Drive since 1998 Nuveen & Co.
Chicago, IL 60606 Incorporated and (since
May 1998) The John
Nuveen Company;
Certified Public
Accountant.
- --------------------------------------------------------------------------------
J. Thomas Futrell+ 43 Vice President since 1991 Vice President of Nuveen
333 West Wacker Drive Advisory Corp.;
Chicago, IL 60606 Chartered Financial
Analyst.
- ---------------------------------------------------------------------------------------
Richard A. Huber+ 36 Vice President since 1997 Vice President of Nuveen
333 West Wacker Drive Institutional Advisory
Chicago, IL 60606 Corp. (since March 1998)
and Nuveen Advisory
Corp. (since January
1997); prior thereto,
Vice President and
Portfolio Manager of
Flagship Financial, Inc.
- ---------------------------------------------------------------------------------------
Steven J. Krupa+ 41 Vice President since 1990 Vice President of Nuveen
333 West Wacker Drive Advisory Corp.
Chicago, IL 60606
</TABLE>
- --------------------------------------------------------------------------------
S-12
<PAGE>
<TABLE>
- ------------------------------------------------------------------------------------
<CAPTION>
Positions and Principal Occupations
Name and Address Age Offices with Funds During Past Five Years
- ------------------------------------------------------------------------------------
<C> <C> <C> <S>
Larry W. Martin+ 47 Vice President and Vice President,
333 West Wacker Drive Asst. Secretary since 1993 Assistant Secretary and
Chicago, IL 60606 Assistant General
Counsel of John Nuveen &
Co. Incorporated; Vice
President and Assistant
Secretary of Nuveen
Advisory Corp. and
Nuveen Institutional
Advisory Corp.,
Assistant Secretary of
The John Nuveen Company
and (since January 1997)
Nuveen Asset Management
Inc.
- ------------------------------------------------------------------------------------
Edward F. Neild, IV+ 33 Vice President since 1996 Vice President of Nuveen
333 West Wacker Drive Advisory Corp. and
Chicago, IL 60606 Nuveen Institutional
Advisory Corp. (since
September 1996); prior
thereto, Assistant Vice
President of Nuveen
Advisory Corp. (from
December 1993 to
September 1996) and
Nuveen Institutional
Advisory Corp. (from May
1995 to September 1996);
Chartered Financial
Analyst.
- ------------------------------------------------------------------------------------
Stephen S. Peterson+ 41 Vice President since 1997 Vice President, (since
333 West Wacker Drive September 1997),
Chicago, IL 60606 Assistant Vice President
(from September 1996 to
September 1997), and
Portfolio Manager prior
thereto, of Nuveen
Advisory Corp.;
Chartered Financial
Analyst.
- ------------------------------------------------------------------------------------
Stuart W. Rogers+ 43 Vice President since 1997 Vice President of John
333 West Wacker Drive Nuveen & Co.
Chicago, IL 60606 Incorporated.
- ------------------------------------------------------------------------------------
Thomas C. Spalding, Jr.+ 47 Vice President since 1980 Vice President of Nuveen
333 West Wacker Drive Advisory Corp. and
Chicago, IL 60606 Nuveen Institutional
Advisory Corp.;
Chartered Financial
Analyst.
- ------------------------------------------------------------------------------------
William S. Swanson+ 33 Vice President since 1998 Vice President of John
333 West Wacker Drive Nuveen & Co.
Chicago, IL 60606 Incorporated (since
October 1997); Assistant
Vice President (from
September 1996 to
October 1997) and
formerly, Associate;
Chartered Financial
Analyst.
- ------------------------------------------------------------------------------------
Gifford R. Zimmerman+ 42 Vice President since 1993 and Vice President,
333 West Wacker Drive Secretary since 1998 Assistant Secretary and
Chicago, IL 60606 Associate General
Counsel, formerly
Assistant General
Counsel (since September
1997) of John Nuveen &
Co. Incorporated; Vice
President and Assistant
Secretary of Nuveen
Advisory Corp. and
Nuveen Institutional
Advisory Corp.;
Assistant Secretary of
The John Nuveen Company
(since May 1994);
Chartered Financial
Analyst.
</TABLE>
- --------
*Mr. Schwertfeger is an interested person of the Fund.
+Person is affiliated with the Fund and affiliated with the Fund's adviser or
principal underwriter.
Timothy R. Schwertfeger and Peter R. Sawers serve as members of the Executive
Committee of the Board of Directors. The Executive Committee, which meets be-
tween regular meetings of the Board of Directors, is authorized to exercise all
of the powers of the Board of Directors provided that the scope of the powers
of the Executive Committee, unless otherwise specifically authorized by the
full Board, shall be limited to (i) emergency matters where assembling the full
Board in a timely manner is impracticable (and in which event management would
take all reasonable steps to quickly notify the individual Board members of the
actions taken by the Executive Committee), or (ii) matters of administrative or
restricted nature.
S-13
<PAGE>
The directors of the Fund are directors, or trustees, as the case may be, of 39
Nuveen open-end portfolios and 55 Nuveen closed-end funds. Mr. Schwertfeger is
also trustee of 11 Nuveen open-end and closed-end funds advised by Nuveen In-
stitutional Advisory Corp.
The following table sets forth compensation paid by the Fund during the fiscal
year ended February 28, 1999 to each of the directors. The Fund has no retire-
ment or pension plans. The officers and directors affiliated with Nuveen serve
without any compensation from the Fund.
<TABLE>
<CAPTION>
Total Compensation
Aggregate From the Fund and
Compensation Fund Complex Paid
Name of Director from the Fund to Directors
- --------------------------------------------------------------------------------
<S> <C> <C>
Robert P. Bremner.............................. $807 $73,000
Lawrence H. Brown.............................. $873 $80,250
Anne E. Impellizzeri........................... $807 $73,000
Peter R. Sawers................................ $807 $73,500
William J. Schneider........................... $807 $73,000
Judith M. Stockdale............................ $807 $73,500
</TABLE>
Each director who is not affiliated with Nuveen or Nuveen Advisory receives a
fee. The Fund requires no employees other than its officers, all of whom are
compensated by Nuveen.
The officers and directors of each Fund, in the aggregate, own less than 1% of
the shares of the Fund.
As of June 22, 1999, there are no shareholders known by the Fund to own of rec-
ord or beneficially 5% or more of the Fund's shares.
S-14
<PAGE>
INVESTMENT ADVISER AND INVESTMENT MANAGEMENT AGREEMENT
Nuveen Advisory acts as investment adviser for the Fund and in such capacity
manages the investment and reinvestment of the assets of the Fund. Nuveen Advi-
sory also administers the Fund's business affairs, provides office facilities
and equipment and certain clerical, bookkeeping and administrative services,
and permits any of its officers or employees to serve without compensation as
directors or officers of the Fund if elected to such positions. See "Who Man-
ages the Fund" in the Prospectus.
Pursuant to an investment management agreement between Nuveen Advisory and the
Fund, the Fund has agreed to pay annual management fees at the rates set forth
below, which are based on the Fund's average daily net asset value:
<TABLE>
<CAPTION>
Average Daily Net Asset Value Management Fee
- ---------------------------------------------
<S> <C>
First
$125M 0.5000 of 1%
Next $125M 0.4875 of 1%
Next $250M 0.4750 of 1%
Next $500M 0.4625 of 1%
Next $1B 0.4500 of 1%
Over $2B 0.4250 of 1%
</TABLE>
Through December 31, 1999, Nuveen Advisory has undertaken to reimburse Fund ex-
penses in an amount necessary to limit total operating expenses to .75 of 1% of
the Fund's daily net asset value. Thereafter, Nuveen Advisory may choose to
modify, continue or discontinue these reimbursements at its sole discretion.
Before June 1999 and pursuant to an investment management agreement between
Nuveen Advisory and the Fund, the Fund agreed to pay annual management fees at
the rates set forth below, which are based on the Fund's average daily net as-
set value:
<TABLE>
<CAPTION>
Average Daily Net Asset
Value Management Fees
- -------------------------------------------
<S> <C>
For the first $500 million .5000 of 1%
For the next $500 million .4750 of 1%
For assets over $1 billion .4500 of 1%
</TABLE>
For periods before June 1999, Nuveen Advisory had agreed to waive all or a por-
tion of its management fee or reimburse certain expenses of the Fund in order
to prevent total operating expenses of (including Nuveen Advisory's management
fee, but excluding interest, taxes, fees incurred in acquiring and disposing of
portfolio securities, any asset-based distribution or service fees and, to the
extent permitted, extraordinary expenses) in any fiscal year from exceeding .75
of 1% of the average daily net asset value of the Fund. Nuveen Advisory could
also voluntarily agree to reimburse additional expenses from time to time,
which could be terminated at any time in its discretion. For the last three
fiscal years, the Fund paid net management fees to Nuveen Advisory as follows:
<TABLE>
<CAPTION>
Management Fees Net of
Expense Fee Waivers and Expense
Reimbursement Paid to Nuveen Reimbursements for the
Advisory for the Year Ended Year Ended
----------------------------- -----------------------
2/28/97 2/28/98 2/28/99 2/28/97 2/28/98 2/28/99
----------------------
<S> <C> <C> <C> <C> <C> <C>
1,377,941 1,196,845 1,146,839 165,912 178,780 131,692
</TABLE>
S-15
<PAGE>
Nuveen Advisory is a wholly-owned subsidiary of John Nuveen & Co. Incorporated
("Nuveen"), the Fund's principal underwriter. Nuveen and its affiliates have
sponsored or underwritten more than $60 billion of investment company securi-
ties. Over 1,300,000 individuals have invested to date in Nuveen's funds and
trusts. Founded in 1898, Nuveen is a subsidiary of The John Nuveen Company
which, in turn, is approximately 78% owned by The St. Paul Companies, Inc.
("St. Paul"). St. Paul is located in St. Paul, Minnesota and is principally en-
gaged in providing property-liability insurance through subsidiaries.
Nuveen Advisory's portfolio managers call upon the resources of Nuveen's Re-
search Department. The Nuveen Research Department reviews more than $100 bil-
lion in municipal bonds every year.
The Fund, the other Nuveen funds, Nuveen Advisory, and other related entities
have adopted a code of ethics which essentially prohibits all Nuveen fund man-
agement personnel, including Nuveen fund portfolio managers, from engaging in
personal investments which compete or interfere with, or attempt to take advan-
tage of, the Fund's anticipated or actual portfolio transactions, and is de-
signed to assure that the interest of Fund shareholders are placed before the
interest of Nuveen personnel in connection with personal investment transac-
tions.
PORTFOLIO TRANSACTIONS
Nuveen Advisory, in effecting purchases and sales of portfolio securities for
the account of the Fund, will place orders in such manner as, in the opinion of
management, will offer the best price and market for the execution of each
transaction. Portfolio securities will normally be purchased directly from an
underwriter or in the over-the-counter market from the principal dealers in
such securities, unless it appears that a better price or execution may be ob-
tained elsewhere. Portfolio securities will not be purchased from Nuveen or its
affiliates except in compliance with the Investment Company Act of 1940.
The Fund since its inception has effected all portfolio transactions on a prin-
cipal (as opposed to an agency) basis and, accordingly, has not paid any bro-
kerage commissions.
Purchases from underwriters include a commission or concession paid by the is-
suer to the underwriter, and purchases from dealers include the spread between
the bid and asked price. Given the best price and execution obtainable, it is
the practice of the Fund to select dealers which, in addition, furnish research
information (primarily credit analyses of issuers) and statistical and other
services to Nuveen Advisory. It is not possible to place a dollar value on in-
formation and statistical and other services received from dealers. Since it is
only supplementary to Nuveen Advisory's own research efforts, the receipt of
research information is not expected to reduce significantly Nuveen Advisory's
expenses. Any research benefits obtained are available to all of Nuveen
Advisory's other clients. While Nuveen Advisory will be primarily responsible
for the placement of the Fund's business, the policies and practices of Nuveen
Advisory in this regard must be consistent with the foregoing and will, at all
times, be subject to review by the Board of Directors of the Fund.
S-16
<PAGE>
Nuveen Advisory reserves the right to, and does, manage other investment ac-
counts and investment companies or other clients which may have investment ob-
jectives similar to the Fund. Subject to applicable laws and regulations,
Nuveen Advisory will attempt to allocate equitably portfolio transactions among
the Fund and the portfolios of its other clients purchasing securities whenever
decisions are made to purchase or sell securities by the Fund and one or more
of such other clients simultaneously. In making such allocations the main fac-
tors to be considered will be the respective investment objectives of the Fund
and such other clients, the relative size of portfolio holdings of the same or
comparable securities, the availability of cash for investment by the Fund and
such other clients, the size of investment commitments generally held by the
Fund and such other clients and opinions of the persons responsible for recom-
mending investments to the Fund and such other clients.
While this procedure could have a detrimental effect on the price or amount of
the securities available to the Fund from time to time, it is the opinion of
the Fund's Board of Directors that the benefits available from Nuveen
Advisory's organization will outweigh any disadvantage that may arise from ex-
posure to simultaneous transactions.
Under the Investment Company Act of 1940, the Fund may not purchase portfolio
securities from any underwriting syndicate of which Nuveen is a member except
under certain limited conditions set forth in Rule 10f-3. The Rule sets forth
requirements relating to, among other things, the type of securities purchased
by the Fund and the amount of securities which may be purchased in any one is-
sue. In addition, purchases of securities made pursuant to the terms of the
Rule must be approved at least quarterly by the Board of Directors of the Fund,
including a majority of the members thereof who are not interested persons of
the Fund.
NET ASSET VALUE
As stated in the Prospectus, the net asset value of the shares of the Fund will
be determined by The Chase Manhattan Bank, the Fund's custodian, as of 12:00
noon, Eastern Time, (1) on each day on which the Federal Reserve Bank of Boston
is normally open and (2) on any day during which there is sufficient degree of
trading in the Fund's portfolio securities that the current net asset value of
the Fund's shares might be materially affected by such changes in the value of
the portfolio securities. The Federal Reserve Bank of Boston is not open and
the Fund will similarly not be open on New Year's Day, Martin Luther King's
Birthday, Washington's Birthday, Good Friday, Memorial Day, Independence Day,
Labor Day, Columbus Day, Veteran's Day, Thanksgiving Day and Christmas Day. It
is possible that changing circumstances during the year will result in addition
or deletions to the above lists. The net asset value per share will be computed
by dividing the value of the portfolio securities held by the Fund, plus cash
or other assets, less liabilities, by the total number of shares outstanding at
such time.
As stated in the Prospectus, the Fund will seek to maintain a net asset value
of $1.00 per share. In this connection, the Fund values its portfolio securi-
ties at their amortized cost, as permitted by the Securities and Exchange Com-
mission (the "Commission") under Rule 2a-7 under the Investment Company Act of
1940. This method does not take into account unrealized securities gains or
losses. It involves
S-17
<PAGE>
valuing an instrument at its cost on the date of purchase and thereafter assum-
ing a constant amortization to maturity of any discount or premium. While this
method provides certainty in valuation, it may result in periods during which
the value of an investment, as determined by amortized cost, is higher or lower
than the price the Fund would receive if it sold the instrument. During periods
of declining interest rates, the daily yield on shares of the Fund may tend to
be higher than a like computation made by a fund with identical investments
utilizing a method of valuation based upon market prices and estimates of mar-
ket prices for all of its portfolio instruments. Thus, if the use of the amor-
tized cost method by the Fund resulted in a lower aggregate portfolio value on
a particular day, a prospective investor in the Fund would be able to obtain a
somewhat higher yield than would result from an investment in a fund utilizing
solely market values, and existing investors in the Fund would receive less in-
vestment income. The converse would apply in a period of rising interest rates.
The Fund, as a condition to the use of amortized cost and the maintenance of
its per share net asset value of $1.00, must maintain a dollar-weighted average
portfolio maturity of 90 days or less, only purchase instruments having remain-
ing maturities of 397 days or less, and invest only in securities determined to
be of high quality with minimal credit risks. The Fund may invest in variable
and floating rate instruments even if they carry stated maturities in excess of
397 days, upon certain conditions contained in rules and regulations issued by
the Securities and Exchange Commission under the Investment Company Act of
1940, but will do so only if there is a secondary market for such instruments
or if they carry demand features, permissible under rules of the Commission for
money market funds, to recover the full principal amount thereof upon specified
notice at par, or both.
The Board of Trustees, pursuant to Rule 2a-7, has established procedures de-
signed to stabilize, to the extent reasonably possible, the Fund's price per
share as computed for the purpose of sales and redemptions at $1.00. Such pro-
cedures will include review of the Fund's portfolio holdings by the Board of
Trustees, at such intervals as it may deem appropriate, to determine whether
the net asset value calculated by using available market quotations or market
equivalents deviates from $1.00 per share based on amortized cost. Market quo-
tations and market equivalents used in such review may be obtained from a pric-
ing agent approved by the Board of Trustees. The Board has selected Nuveen Ad-
visory to act as pricing agent, but in the future may select an independent
pricing service to perform this function. In serving as pricing agent, Nuveen
Advisory will follow guidelines adopted by the Board, and the Board will moni-
tor Nuveen Advisory to see that the guidelines are followed. The pricing agent
will value the Fund's investment based on methods which include consideration
of yield or prices of municipal obligations of comparable quality, coupon, ma-
turity, and type; indications as to values from dealers; and general market
conditions. The pricing agent may employ electronic data processing techniques
and/or a matrix system to determine valuations. The extent of any deviation be-
tween the Fund's net asset value based on the pricing agent's market valuation
and $1.00 per share based on amortized cost will be examined by the Board of
Trustees. If such deviation exceeds 1/2 of 1%, the Board of Trustees will
promptly consider what action, if any, will be initiated. In the event the
Board of Trustees determines that a deviation exists which may result in mate-
rial dilution or other unfair results to investors or existing shareholders, it
has agreed to take such corrective action as it regards as necessary and appro-
priate, including the sale of portfolio instruments prior to maturity to real-
ize capital gains or losses or to shorten average portfolio maturity; withhold-
ing dividends or payment of distributions from capital gains; redemption of
shares in kind; or establishing a net asset value per share by using available
market quotations.
S-18
<PAGE>
TAX MATTERS
Federal Income Tax Matters
The following discussion of federal income tax matters is based upon the advice
of Morgan, Lewis & Bockius LLP, Washington, D.C., counsel to the Fund.
The Fund intends to qualify, as it has in prior years, under Subchapter M of
the Internal Revenue Code of 1986, as amended, (the "Code"), for tax treatment
as a regulated investment company. In order to qualify as a regulated
investment company, the Fund must satisfy certain requirements relating to the
source of its income, diversification of its assets, and distributions of its
income to shareholders. First, the Fund must derive at least 90% of its annual
gross income (including tax-exempt interest) from dividends, interest, payments
with respect to securities loans, gains from the sale or other disposition of
stock or securities, foreign currencies or other income (including but not
limited to gains from options and futures) derived with respect to its business
of investing in such stock or securities (the "90% gross income test"). Second,
the Fund must diversify its holdings so that, at the close of each quarter of
its taxable year, (i) at least 50% of the value of its total assets is
comprised of cash, cash items, United States Government securities, securities
of other regulated investment companies and other securities limited in respect
of any one issuer to an amount not greater in value than 5% of the value of the
Fund's total assets and to not more than 10% of the outstanding voting
securities of such issuer, and (ii) not more than 25% of the value of the total
assets is invested in the securities of any one issuer (other than United
States Government securities and securities of other regulated investment
companies) or two or more issuers controlled by the Fund and engaged in the
same, similar or related trades or businesses.
As a regulated investment company, the Fund will not be subject to federal in-
come tax on the portion of its net investment income and net realized gain that
is currently distributed to shareholders in any taxable year for which the Fund
distributes at least 90% of the sum of (i) its "investment company taxable in-
come" (which includes dividends, taxable interest, taxable original issue dis-
count and market discount income, income from securities lending, net short-
term capital gain in excess of long-term capital loss, and any other taxable
income other than "net capital gain" (the excess of its net long-term capital
gain over its short-term capital loss) and is reduced by deductible expenses)
and (ii) its "net tax-exempt interest" (the excess of its gross tax-exempt in-
terest income over certain disallowed deductions).
The Fund also intends to satisfy conditions which will enable it to designate
certain distributions, as Exempt Interest Dividends. Shareholders receiving
Exempt Interest Dividends will not be subject to regular federal income tax on
the amount of such dividends.
Distributions by the Fund of net interest income received from certain taxable
investments (such as certificates of deposit, commercial paper and obligations
of the United States Government, its agencies and instrumentalities) and net
short-term capital gains realized by the Fund, if any, will be taxable to
shareholders as ordinary income whether received in cash or additional shares.
If the Fund purchases a security at a market discount, any gain realized by the
Fund upon the sale or redemption of the security will be treated as taxable
interest income to the extent such gain does not exceed the market discount,
and any gain realized in excess of the market discount will be treated as a
capital gain. Any
S-19
<PAGE>
net long-term capital gains realized by the Fund and distributed to
shareholders in cash or in additional shares will be taxable to shareholders as
long-term capital gains regardless of the length of time investors have owned
shares of the Fund. The Fund does not expect to realize significant long-term
capital gains. Because the taxable portion of the Fund's investment income
consists primarily of interest, none of its dividends, whether or not treated
as exempt-interest dividends, is expected to qualify under the Internal Revenue
Code for the dividends received deductions for corporations.
Capital gains are taxable to shareholders either as ordinary income or as long-
term capital gains, depending on how long the fund owned the investment. Early
in each year, you will receive a statement detailing the amount and nature of
all capital gains that you were paid during the prior year.
In the very unlikely event that the fund realizes capital gains or ordinary
income subject to regular federal income tax, it will pay any capital gains or
other taxable distributions in December.
If the Fund has both tax-exempt and taxable income, it will use the "average
annual" method for determining the designated percentage that is taxable income
and designate the use of such method within 60 days after the end of the Fund's
taxable year. Under this method, one designated percentage is applied uniformly
to all distributions made during the Fund's taxable year. The percentage of
income designated as tax-exempt for any particular distribution may be
substantially different from the percentage of the Fund's income that was tax-
exempt during the period covered by the distribution.
Although dividends generally will be treated as distributed when paid,
dividends declared in October, November or December, payable to shareholders of
record on a specified date in one of those months and paid during the following
January, will be treated as having been distributed by the Fund (and received
by the shareholders) on December 31.
The redemption or exchange of the shares of the Fund is not expected to result
in capital gain or loss to the shareholders because the Fund's net asset value
is expected to remain constant at $1.00 per share. To the extent that the
Fund's net asset value is greater or less than $1.00 per share, redemptions or
exchanges may result in capital gain or loss to the shareholder.
In order to avoid a 4% federal excise tax, the Fund must distribute or be
deemed to have distributed by December 31 of each calendar year at least 98% of
its taxable ordinary income for such year, at least
98% of the excess of its realized capital gains over its realized capital
losses (generally computed on the basis of the one-year period ending on Octo-
ber 31 of such year) and 100% of any taxable ordinary income and the excess of
realized capital gains over realized capital losses for the prior year that was
not distributed during such year and on which the Fund paid no federal income
tax. The Fund intends to make timely distributions in compliance with these re-
quirements and consequently it is anticipated that it generally will not be re-
quired to pay the excise tax.
If in any year the Fund should fail to qualify under Subchapter M for tax
treatment as a regulated investment company, the Fund would incur a regular
corporate federal income tax upon its income for that year (other than interest
income from tax-exempt securities) and distributions to its shareholders out of
net interest income from tax-exempt securities or other investments, or out of
net capital gains, would be taxable to shareholders as ordinary dividend income
for federal income tax purposes to the extent of the Fund's available earnings
and profits.
S-20
<PAGE>
The Fund may invest in the type of private activity bonds the interest on which
is not federally tax-exempt to persons who are "substantial users" of the fa-
cilities financed by such bonds or "related persons" of such "substantial us-
ers." Accordingly, the Fund may not be an appropriate investment for a share-
holder who is considered either a "substantial user" or a "related person"
within the meaning of the Code. In general, a "substantial user" of a facility
financed from the proceeds of private activity bonds includes a "non-exempt
person who regularly uses a part of such facility in his trade or business."
"Related persons" are in general defined to include persons among whom there
exists a relationship, either by family or business, which would result in a
disallowance of losses in transactions among them under various provisions of
the Code (or if they are members of the same controlled group of corporations
under the Code). This includes a partnership and each of its partners (includ-
ing their spouses and minor children) and an S corporation and each of its
shareholders (and their spouses and minor children). Various combinations of
these relationships may also constitute "related persons" under the Code. For
additional information, investors should consult their tax advisers before in-
vesting in the Fund.
Federal tax law imposes an alternative minimum tax with respect to both corpo-
rations and individuals. Interest on certain securities, such as bonds issued
to make loans for housing purposes or to private entities (but not for certain
tax-exempt organizations such as universities and non-profit hospitals), is in-
cluded as an item of tax preference in determining the amount of a taxpayer's
alternative minimum taxable income. To the extent that the Fund receives income
from securities subject to the alternative minimum tax, a portion of the divi-
dends paid by it, although otherwise exempt from federal income tax, will be
taxable to shareholders to the extent that their tax liability is determined
under the alternative minimum tax regime. The Fund will annually supply share-
holders with a report indicating the percentage of Fund income attributable to
securities subject to the federal alternative minimum tax.
In addition, the alternative minimum taxable income for corporations is in-
creased by 75% of the difference between an alternative measure of income ("ad-
justed current earnings") and the amount otherwise determined to be the alter-
native minimum taxable income. Interest on all securities, and therefore all
distributions by the Fund that would otherwise be tax-exempt, is included in
calculating a corporation's adjusted current earnings.
Individuals whose provisional income exceeds a base amount will be subject to
federal income tax on up to one-half of their social security or railroad re-
tirement benefits. Provisional income currently includes adjusted gross income,
one-half of social security benefits and tax-exempt interest, including exempt-
interest dividends from the Fund. Individuals whose modified income exceeds an
adjusted base amount are required to include in gross income up to 85% of their
social security or railroad retirement benefits.
The Code provides that interest on indebtedness incurred or continued to pur-
chase or carry shares of the Fund is not deductible. Under rules used by the
IRS for determining when borrowed funds are considered used for the purpose of
purchasing or carrying particular assets, the purchase of shares of the Fund
may be considered to have been made with borrowed funds even though such funds
are not directly traceable to the purchase of shares.
S-21
<PAGE>
The Fund is required in certain circumstances to withhold 31% of taxable divi-
dends and certain other payments paid to non-corporate holders of shares who
have not furnished to the Fund their correct taxpayer identification number (in
the case of individuals, their social security number) and certain certifi-
cates, or who are otherwise subject to back-up withholding.
The foregoing is a general and abbreviated summary of the provisions of the
Code and Treasury Regulations presently in effect as they directly govern the
taxation of the Fund and its shareholders. For complete provisions, reference
should be made to the pertinent Code sections and Treasury Regulations. The
Code and Treasury Regulations are subject to change by legislative or adminis-
trative action, and any such change may be retroactive with respect to Fund
transactions. Shareholders are advised to consult their own tax advisers for
more detailed information concerning the federal taxation of the Fund and the
income tax consequences to its shareholders.
State Tax Matters
The following is based upon the advice of Morgan, Lewis & Bockius LLP, Washing-
ton, D.C. counsel to the Fund, and assumes that the Fund will be qualified as a
regulated investment company under Subchapter M of the Code.
The exemption from federal income tax for distributions which are designated
Exempt Interest Dividends will not necessarily result in exemption under the
income or other tax laws of any state or local taxing authority. The laws of
the several states and local taxing authorities vary with respect to the taxa-
tion of such distributions, and shareholders of the Fund are advised to consult
their own tax advisers in that regard.
PERFORMANCE INFORMATION
The historical performance may be expressed in terms of "yield," "effective
yield" or "taxable equivalent yield." The Fund's "yield" refers to the rate of
income generated by an investment in the Fund over a specified seven-day peri-
od, expressed as an annualized figure. "Effective yield" is calculated simi-
larly except that, when annualized, the income earned by the investment is as-
sumed to be reinvested. Due to this compounding effect, the effective yield
will be slightly higher than the yield. Yield figures will fluctuate over time.
"Taxable equivalent yield" is the yield that a taxable investment would need to
generate in order to equal the Fund's yield on an after-tax basis for an in-
vestor in a stated tax bracket (normally assumed to be the bracket with the
highest marginal tax rate). A taxable equivalent yield quotation will be higher
than the yield or the effective yield quotations for the Fund. The Fund's yield
and effective yield for the seven-day period ended February 28, 1999 were 2.47%
and 2.50%, respectively. These various measures of performance are described
below.
Yield is computed in accordance with a standard method prescribed by rules of
the Securities and Exchange Commission. Under that method, current yield is
based on a seven-day period and is computed as follows: The Fund's net invest-
ment income per share for the period is divided by the price per share (ex-
pected to remain constant at $1.00) at the beginning of the period, the result
(the "base period return") is divided by 7 and multiplied by 365, and the re-
sulting figure is carried to the nearest
S-22
<PAGE>
hundredth of one percent. For the purpose of this calculation, the Fund's net
investment income per share includes its accrued interest income plus or minus
amortized purchase discount or premium less accrued expenses, but does not in-
clude realized capital gains or losses or unrealized appreciation or deprecia-
tion of investments.
The Fund's effective yield is calculated by taking the base period return (com-
puted as described above) and calculating the effect of assumed compounding.
The formula for effective yield is: (base period return + 1) 365/7 - 1.
Taxable equivalent yield is computed by dividing that portion of the Fund's
yield which is tax-exempt by 1 minus the stated federal income tax rate and
adding the result to that portion, if any, of the yield of the Fund that is not
tax-exempt. Based upon (1) a 1999 federal income tax of 39.6, and (2) the yield
for the Fund as described above for the seven-day period ended February 28,
1999, the taxable equivalent yield for the Fund for that period was 4.09%.
The Fund's yield will fluctuate, and the publication of annualized yield quota-
tions is not a representation of what an investment in the Fund will actually
yield for any given future period. Actual yields will depend not only on
changes in interest rates on money market instruments during the period in
question, but also on such matters as the Fund's expenses.
In reports or other communications to shareholders or in advertising and sales
literature, the Fund may compare its performance to that of other money market
mutual funds tracked by Lipper Analytical Services, Inc. ("Lipper"), by
Donoghue's Money Fund Report ("Donoghue's") or similar services or by financial
publications such as Barron's, Changing Times, Forbes and Money Magazine. Per-
formance comparisons by these indexes, services or publications may rank mutual
funds over different periods of time by means of aggregate, average, year-by-
year or other types of performance figures. Lipper performance calculations in-
clude the reinvestment of all capital gain and income dividends for the periods
covered by the calculations. As reported by Donoghue's, all investment results
represent total return (annualized results for the period net of management
fees and expenses) and one year investment results are effective annual yields
assuming reinvestment of dividends.
A comparison of tax-exempt and taxable equivalent yields is one element to con-
sider in making an investment decision. The Fund may from time to time in its
advertising and sales materials compare its then current yields as of a recent
date with the yields on taxable investments such as corporate or U.S. Govern-
ment bonds and bank CDs or money market accounts, each of which has investment
characteristics that may differ from those of the Fund. U.S. Government bonds,
for example, are backed by the full faith and credit of the U.S. Government,
and bank CDs and money market accounts are generally shorter term investments
insured by an agency of the federal government. Bank money market accounts and
money market funds provide stability of principal but pay interest at rates
which vary with the condition of the short-term taxable debt market.
S-23
<PAGE>
The following table shows the effects for individuals of federal income taxes
on the amount that those subject to a given tax rate would have to put into a
tax-free investment in order to generate the same after-tax income as a taxable
investment.*
Read down to find the amount of a tax-free investment at the specified rate
that would provide the same after-tax income as a $50,000 taxable invest-
ment at the stated taxable rate.
<TABLE>
<CAPTION>
2.00% 2.50% 3.00% 3.50% 4.00% 4.50% 5.00%
Taxable Tax-Free Tax-Free Tax-Free Tax-Free Tax-Free Tax-Free Tax-Free
- -----------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
3.00% $ 51,750 $41,400 $34,500 $29,571 $25,875 $23,000 $20,700
- -----------------------------------------------------------------------
4.00% $ 69,000 $55,200 $46,000 $39,429 $34,500 $30,667 $27,600
- -----------------------------------------------------------------------
5.00% $ 86,250 $69,000 $57,500 $49,286 $43,125 $38,333 $34,500
- -----------------------------------------------------------------------
6.00% $103,500 $82,800 $69,000 $59,143 $51,750 $46,000 $41,400
- -----------------------------------------------------------------------
7.00% $120,750 $96,600 $80,500 $69,000 $60,375 $53,667 $48,300
- -----------------------------------------------------------------------
</TABLE>
*The dollar amounts in the table reflect a 31% federal income tax rate.
The table is for illustrative purposes only and is not intended to predict the
actual return you might earn on your investment. The Fund occasionally may ad-
vertise its performance in similar tables using a different current tax rate
than that shown here. The tax rate shown here may be higher or lower than your
actual tax rate; a higher tax rate would tend to make the dollar amounts in the
table lower, while a lower tax rate would make the amounts higher. You should
consult your tax adviser to determine your actual tax rate.
Taxable Equivalent Yield Tables
The following tables show the effects for individuals of federal income taxes
on what you would have to earn on a taxable investment to equal a given tax-
free yield. These tables are for illustrative purposes only and are not in-
tended to predict the actual return you might earn on a Fund investment. The
Fund occasionally may advertise its performance in similar tables using other
current tax rates than those shown here. The tax rates used in these tables
have been rounded to the nearest one-half of one percent. They are based upon
published 1999 marginal federal tax rates and do not take into account changes
in tax rates that are proposed from time to time. A taxpayer's marginal tax
rate is affected by both his taxable income and his adjusted gross income. The
tables assume taxpayers are not subject to any alternative minimum taxes and
deduct any state income taxes paid on their federal income tax return. They re-
flect the effect of the current federal tax limitations on itemized deductions
and personal exemptions, which were designed to phase out certain benefits of
these deductions for higher income taxpayers. These limitations are subject to
certain maximums, which depend on the number of exemptions claimed and the to-
tal amount of the taxpayer's itemized deductions. For example, the limitation
on itemized deductions will not cause a taxpayer to lose more than 80% of his
allowable itemized deductions with certain exceptions. The tax rates shown here
may be higher or lower than your actual tax rate.
S-24
<PAGE>
Marginal tax rates for joint taxpayers with four personal exemptions
<TABLE>
<CAPTION>
Federal Tax-Free Yield
Federal Adjusted Federal 2.00% 2.50% 3.00% 3.50% 4.00% 4.50% 5.00%
Taxable Gross Tax -----------------------------------------------------------------------
Income Income Ratio Taxable Equivalent Yield
- -----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
$ 0-
42,350 $ 0-124,500 15.0% 2.35 2.94 3.53 4.12 4.71 5.29 5.88
42,350-
102,300 0-124,500 28.0 2.78 3.47 4.17 4.86 5.58 6.25 6.94
124,500-186,800 29.0 2.82 3.52 4.23 4.93 5.63 6.34 7.04
102,300-
155,050 0-124,500 31.0 2.90 3.62 4.35 5.07 5.80 6.52 7.25
124,500-186,800 32.0 2.94 3.68 4.41 5.15 5.88 6.62 7.35
186,800-309,300 34.5 3.05 3.82 4.58 5.34 6.11 6.87 7.63
155,950-
278,450 124,500-186,800 37.0 3.17 3.97 4.78 5.56 6.35 7.14 7.94
186,800-309,300 40.0 3.33 4.17 5.00 5.83 6.67 7.50 8.33
Over 309,300 37.0 3.17 3.97 4.76 5.56 6.35 7.14 7.94
Over
278,450 186,800-309,300 44.0 3.57 4.46 5.36 6.25 7.14 8.04 8.93
Over 309,300 41.0 3.39 4.24 6.06 5.93 6.78 7.63 8.47
- -----------------------------------------------------------------------------------------------------------
</TABLE>
Marginal tax rates for single taxpayers with one personal exemption
<TABLE>
<CAPTION>
Federal Combined
Federal Adjusted State Tax-Free Yield
Taxable Gross and 2.00% 2.50% 3.00% 3.50% 4.00% 4.50% 5.00%
Income Income Federal --------------------------------------------------------------------
Tax Rate Taxable Equivalent Yield
- ----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
$ 0-
25,350 $ 0-124,500 15.0% 2.35 2.94 3.53 4.12 4.71 5.29 5.88
25,350-
61,400 0-124,500 28.0 2.78 3.47 4.17 4.96 5.56 6.25 6.94
61,400-
128,100 0-124,500 31.0 2.90 3.62 4.35 5.07 5.80 6.52 7.25
124,500-247,000 32.5 2.96 3.70 4.44 5.19 5.93 6.67 7.41
128,100-
278,450 124,500-247,000 38.0 3.23 4.03 4.84 5.65 6.45 7.26 8.06
Over 247,000 37.0 3.17 3.97 4.76 5.58 6.35 7.14 7.94
Over
278,450 Over 247,000 41.0 3.38 4.24 5.08 5.93 6.78 7.63 8.47
- ----------------------------------------------------------------------------------------------------------
</TABLE>
ADDITIONAL INFORMATION ABOUT PURCHASES AND SALES
Exchange Privileges
You may exchange shares of the fund for the appropriate class of shares of any
other open-end management investment company with reciprocal exchange privi-
leges advised by Nuveen Advisory (the "Nuveen Funds"), into an identically reg-
istered account, provided that the Nuveen Fund into which shares are to be ex-
changed is offered in the shareholder's state of residence and that the shares
to be exchanged have been held by the shareholder for a period of at least 15
days. You may exchange fund shares by calling (800) 257-8787 or by mailing your
written request to our Transfer Agent. Shares of Nuveen Funds purchased subject
to a front-end sales charge may be exchanged for shares of the fund or any
other Nuveen Fund at the next determined net asset value without any front-end
sales charge. No CDSC otherwise applicable will be assessed on an exchange, and
the holding period of your investment will be carried over to the new fund for
purposes of determining any future CDSC. You may exchange Class B shares for
shares of a Nuveen money market fund. Shares of any Nuveen Fund purchased
through dividend reinvestment or through reinvestment of Nuveen Definied Port-
folio distributions (and any dividends thereon) may be exchanged for Class A
shares of any Nuveen Fund without a front-end
S-25
<PAGE>
sales charge. Exchanges of shares with respect to which no front-end sales
charge has been paid will be made at the public offering price, which may in-
clude a front-end sales charge, unless a front-end sales charge has previously
been paid on the investment represented by the exchanged shares (i.e., the
shares to be exchanged were originally issued in exchange for shares on which a
front-end sales charge was paid), in which case the exchange will be made at
net asset value. Because certain other Nuveen Funds may determine net asset
value and therefore honor purchase or redemption requests on days when the fund
does not (generally, Martin Luther King's Birthday, Columbus Day and Veterans
Day), exchanges of shares of one of those funds for shares of the fund may not
be effected on such days.
The total value of shares being exchanged must at least equal the minimum in-
vestment requirement of the Nuveen Fund into which they are being exchanged.
Exchanges are made based on the relative dollar values of the shares involved
in the exchange, and will be effected by redemption of shares of the Nuveen
Fund held and purchase of the shares of the other Nuveen Fund. For federal in-
come tax purposes, any such exchange constitutes a sale and purchase of shares
and may result in capital gain or loss. Before exercising any exchange, you
should obtain the Prospectus for the Nuveen Fund into which shares are to be
exchanged and read it carefully. If the registration of the account for the
fund you are purchasing is not exactly the same as that of the fund account
from which the exchange is made, written instructions from all holders of the
account from which the exchange is being made must be received, with signatures
guaranteed by a member of an approved Medallion Guarantee Program or in such
other manner as may be acceptable to the fund. The exchange privilege may be
modified or discontinued at any time. If you do not wish to have telephone ex-
change privileges, you must indicate this in the "Telephone Services" section
of your Account Application or otherwise notify the Fund in writing of your
desire.
Additional Information
An account will be maintained for each shareholder of record in the fund by our
Transfer Agent. Share certificates will be issued only upon written request of
the shareholder to our Transfer Agent. No certificates are issued for frac-
tional shares. The Fund reserves the right to reject any purchase order and to
waive or increase minimum investment requirements.
Confirmations of each purchase and redemption order as well as monthly state-
ments are sent to every shareholder. Master accounts also receive a monthly
summary report setting forth the share balance and dividends earned for the
month for each sub-account established under that master account.
To assist those institutions performing their own-sub-accounting, same day in-
formation as to the fund's daily per share income to seven decimal places and
the one-day yield to four decimal places are normally available by 3:30 p.m.,
Eastern Time.
A change in registration or transfer of shares held in the name of a
broker/dealer can only be effected by an order in good form from the
broker/dealer acting on behalf of the investor. Broker/dealers are encouraged
to open single master accounts. However, some broker/dealers may wish to use
our Transfer Agent's sub-accounting system to minimize their internal record-
keeping requirements. A broker/dealer or other investor requesting shareholder
servicing or accounting other than the master account or subaccounting service
offered by the Fund will be required to enter into a separate agreement with
the agent for these services for a fee to be determined in accordance with the
level of services to be furnished.
S-26
<PAGE>
Banks and other organizations through which investors may purchase shares of
the Fund may impose charges in connection with purchase orders. Investors
should contact their institutions directly to determine what charges, if any,
may be imposed.
Subject to the rules of the SEC, the fund reserves the right to suspend the
continuous offering of the shares at any time, but such suspension shall not
affect the shareholder's right of redemption as described below. The fund also
reserves the right to reject any purchase order and to waive or increase mini-
mum investment requirements.
Telephone Redemption via Fund DirectSM
To redeem shares held in non-certificate form by telephone with the redemption
proceeds paid via Fund Direct-Electronic Funds Transfer, you must complete the
Telephone Services section of the enclosed Application Form and return it to
Nuveen or our Transfer Agent. If you did not authorize Telephone Redemption
via Fund Direct when you opened your account, you may do so by sending a writ-
ten request to the Fund signed by each account owner with signatures guaran-
teed by a member of an approved Medallion Guarantee Program or in such other
manner as may be acceptable to the fund. Proceeds of share redemptions made by
Fund Direct will be transferred only to the commercial bank account specified
by the shareholder. Redemption proceeds may be delayed one additional business
day if the Federal Reserve Bank of Boston or the Federal Reserve Bank of New
York is closed on the day the redemption proceeds would ordinarily be wired.
If you have authorized Telephone Redemption via Fund Direct, you can take ad-
vantage of two methods of telephone redemption: regular telephone redemption
and expedited telephone redemption. You may make regular Fund Direct redemp-
tion requests by calling Nuveen at (800) 257-8787. If a regular telephone re-
demption request is received prior to 4:00 p.m. Eastern Time, the shares to be
redeemed earn income on the day the request is made, and the redemption is ef-
fected on the following business day. For regular redemption requests received
after 4:00 p.m. Eastern Time, the shares to be redeemed earn income through
the following business day, and the redemption is effected on the second busi-
ness day following the request. For all regular redemptions, you will typi-
cally receive your funds within three business days after your redemption is
effected. You may make expedited telephone redemption requests to redeem
shares that are worth at least $1,000 by calling Nuveen at (800) 257-8787. If
an expedited redemption request is received by 12:00 noon Eastern Time, the
shares to be redeemed do not earn income on that day, but the redemption is
effected, and you will normally receive your funds, on that day. If an expe-
dited redemption request is received after 12:00 noon Eastern Time, the shares
to be redeemed earn income on the day the request is received. The redemption
is effected, and you will normally receive your funds, on the next business
day following the request. The Fund reserves the right to charge a fee for ex-
pedited redemption requests.
How to Change Authorized Redemption Instructions
In order to establish multiple accounts, or to change the account or accounts
designated to receive redemption proceeds, a written request specifying the
change must be sent to Nuveen. This request must be signed by each account
owner with signatures guaranteed by a member of an approved Medal-
S-27
<PAGE>
lion Guarantee Program or in such other manner as may be acceptable to the
Fund. Further documentation may be required from corporations, executors,
trustees or personal representatives.
The Fund reserves the right to refuse a telephone redemption and, at its op-
tion, may limit the timing, amount or frequency of these redemptions. This pro-
cedure may be modified or terminated at any time, on 30 days' notice, by the
Fund. The Fund, the transfer agent and Nuveen will not be liable for following
telephone instructions reasonably believed to be genuine.
Redemption in Kind
The Fund has committed to pay in cash all redemption requests made by each
shareholder during any 90 day period up to the lesser of $250,000 or 1% of the
net asset value of the Fund at the beginning of such period. This commitment is
irrevocable without the prior approval of the SEC and is a fundamental policy
of the Fund which may not be changed without shareholder approval. In the case
of redemption requests in excess of such amounts, the Board of Directors re-
serves the right to have the Fund make payment in whole or in part in securi-
ties or other assets of the Fund in case of an emergency or any time a cash
distribution would impair the liquidity of the Fund to the detriment of the ex-
isting shareholders. In this event, the securities would be valued in the same
manner as the portfolio of the Fund is valued. If the recipient were to sell
such securities, he or she would incur brokerage charges.
Other Practices
The Fund may encourage registered representatives and their firms to help ap-
portion their assets among bonds, stocks and cash, and may seek to participate
in programs that recommend a portion of their assets be invested in money mar-
ket instruments.
The Fund may suspend the right of redemption or delay payment more than seven
days (a) during any period when the New York Stock Exchange is closed (other
than customary weekend and holiday closings), (b) when trading in the markets
the Fund normally utilizes is restricted, or an emergency exists as determined
by the SEC so that disposal of the Fund's investments or determination of its
net asset value is not reasonably practicable, or (c) for such other periods as
the SEC by order may permit for protection of the shareholders of the Fund.
The Fund has authorized certain brokers and firms to accept purchase and re-
demption orders on its behalf. The Fund will consider an order to be "received"
when such a broker or firm accepts the order from its customer.
In addition to the types of compensation to dealers to promote sales of Fund
shares that are described in the prospectus, Nuveen may from time to time make
additional reallowances only to certain authorized dealers who sell or are ex-
pected to sell certain minimum amounts of shares of the Nuveen Mutual Funds
during specified time periods.
SERVICE PLAN
The Fund has adopted a Service Plan pursuant to Rule 12b-1 under the 1940 Act.
The Plan was adopted by the Board of Directors, including a majority of direc-
tors who are not interested persons and who have no direct or indirect finan-
cial interest in the Plan, and approved by shareholders.
S-28
<PAGE>
Under the Plan, the Fund pays Nuveen an annual fee according to the schedule
below. Nuveen will pay this fee to authorized dealers of record, including
Nuveen, for providing ongoing services to the Fund and its shareholders. Such
services generally include establishing and maintaining shareholder accounts,
processing purchase and redemption orders, arranging for bank wires and answer-
ing shareholder inquiries. Under the Plan, the Fund pays the entire amount of
the fees. Nuveen may, in its discretion and from its own resources, pay certain
financial service firms additional amounts for services rendered to sharehold-
ers.
The annual 12b-1 fee under the Plan is computed as follows:
<TABLE>
<CAPTION>
Net Assets of Serviced 12b-1
Accounts Fee
- --------------------------------
<S> <C>
Less than $2 million .10%
$2 million to $5 million .15%
$5 million to $10 million .20%
$10 million and over .25%
- --------------------------------
</TABLE>
Under the Plan, the Controller or Treasurer of the fund will report quarterly
to the Board of Directors for its review amounts expended for distribution
services. The Plan, may be terminated at any time, without the payment of any
penalty, by a vote of a majority of the directors who are not "interested per-
sons" and who have no direct or indirect financial interest in the Plan or any
related agreements or by vote of a majority of the outstanding voting securi-
ties of the fund. The Plan may be renewed from year to year if approved at
least annually by a vote of the Board of Directors and a vote of the non-inter-
ested directors who have no direct or indirect financial interest in the Plan
or the related service agreements cast in person at a meeting called for the
purpose of voting on the Plan. The Plan may be continued only if the Directors
who vote to approve such continuance conclude, in the exercise of reasonable
business judgment and in light of their fiduciary duties under applicable law,
that there is a reasonable likelihood that the Plan will benefit the Fund and
its shareholders. The Plan is intended to benefit the fund by promoting the
sale of fund shares, which in turn leads to economies of scale and helps assure
the continued viability of the fund. The Plan may not be amended to increase
materially the cost which the fund may bear under the Plan without shareholder
approval, and any other material amendments of the Plan must be approved by the
non-interested directors by a vote cast in person at a meeting called for the
purpose of considering such amendments. During the continuance of the Plan, as
required by the Rule, the selection and nomination of the non-interested direc-
tors of the fund will be committed to the discretion of the non-interested di-
rectors then in office. Nuveen's compensation under the Plan is not based on
Nuveen's expenses incurred in providing services to shareholders.
No director of the fund and no "interested" person of the fund has any direct
or indirect financial interest in the Plan or any agreement related to the
Plan.
S-29
<PAGE>
Before June 1999, Fund shares were offered subject to a 12b-1 fee pursuant to a
Distribution Plan. The Plan was adopted by a vote of the Board of Directors in-
cluding a majority of the directors who are not interested persons of the Fund
and who have no direct or indirect financial interest in the operation of the
Plan. Under the Plan, the Fund and Nuveen paid fees to service organizations
for services rendered in the distribution of shares of the Fund or the servic-
ing of shareholder accounts. Nuveen entered into service agreements with orga-
nizations who render such services. Service payments to such organizations were
made in accordance with the following schedule:
<TABLE>
<CAPTION>
Daily Average Assets of Payment on an
Serviced Accounts Annualized Basis
- -----------------------------------------
<S> <C>
$0-$2 Million .10 of 1%
$2-$5 Million .15 of 1%
$5-$10 Million .20 of 1%
$10 Million and Over .30 of 1%
</TABLE>
Payments of the above fees were split evenly between Nuveen and the fund and
thus the maximum the fund paid on an annualized basis was .15 of 1%. Nuveen
could, in its discretion, pay from its own resources to a service organization
satisfying certain criteria an additional amount not to exceed in the case of a
given service organization the greater of (a) .05 of 1% per year based on aver-
age assets of accounts serviced, or (b) the amount by which the payment, if
based on .30 of 1% of average assets of accounts serviced, would have exceeded
the actual amount of the payment under the above schedule. Expenses that are
incurred under the Plan in a given fiscal year but not reimbursed by the Fund
in that year are not carried over to future years. For the fiscal year ended
February 28, 1999, the Fund paid fees to service organizations under the Plan
in the amount of $115,000.
OTHER INFORMATION REGARDING SHARES OF THE FUND
Shareholders should note that when a fund dividend check has been returned to
the sender by the post office after repeated mailings, the shareholder account
will thereafter be registered for automatic reinvestment of dividends and thus
the dividend check and future dividend checks will be reinvested in additional
Fund shares. Shareholders are reminded that they need to advise the Funds
promptly in writing of any change in address.
The Glass-Steagall Act and other applicable laws, among other things, may limit
banks from engaging in the business of underwriting, selling or distributing
securities. Since the only functions of banks who may be engaged as service or-
ganizations is to perform administrative shareholder servicing functions, the
fund believes that such laws should not preclude a bank from acting as a serv-
ice organization. However, future changes in either federal or state statutes
or regulations relating to the permissible activities of banks and their sub-
sidiaries or affiliates, as well as judicial or administrative decisions or in-
terpretations of statutes or regulations, could prevent a bank from continuing
to perform all or a part of its shareholder servicing activities. If a bank
were prohibited from so acting, its shareholder customers would be permitted to
remain shareholders of the Fund and alternative means for continuing the ser-
vicing of such shareholders would be sought.
Nuveen serves as the principal underwriter of the shares of the fund pursuant
to a "best efforts" arrangement as provided by a distribution agreement with
the Fund, dated February 1, 1987 and last renewed on February 24, 1993 ("Dis-
tribution Agreement"). Pursuant to the Distribution Agreement, the Fund, ap-
pointed Nuveen to be its agent for the distribution of the Fund's shares on a
continuous offering
S-30
<PAGE>
basis. Nuveen sells shares to or through brokers, dealers, banks or other qual-
ified financial intermediaries (collectively referred to as "Dealers"), or oth-
ers, in a manner consistent with the Fund's then effective registration state-
ment. Pursuant to the Distribution Agreement, Nuveen, at its own expense, fi-
nances certain activities incident to the sale and distribution of the Fund's
shares, including printing and distributing of prospectuses and Statements of
Additional Information to other than existing shareholders, the printing and
distributing of sales literature, advertising and payment of compensation and
giving of concessions to dealers. Expenses incurred in registering the Fund and
its shares under federal and state securities laws are paid by the Fund.
To help advisers and investors better understand and more efficiently use an
investment in the Fund to reach their investment goals, the Fund and its spon-
sor, Nuveen, may advertise and create specific investment programs and systems.
For example, such activities may include presenting information on how to use
an investment in the Fund, alone or in combination with an investment in other
mutual funds or unit investment trusts sponsored by Nuveen, to accumulate as-
sets for future education needs or periodic payments such as insurance premi-
ums. The Fund and its sponsor may produce software or additional sales litera-
ture to promote the advantages of using the Fund to meet these and other spe-
cific investor needs.
FINANCIAL STATEMENTS
The audited financial statements for the Fund's most recent fiscal year appear
in the Fund's Annual Reports; and are incorporated herein by reference. The An-
nual Reports accompany this Statement of Additional Information.
S-31
<PAGE>
PART C--OTHER INFORMATION
NUVEEN MUNICIPAL MONEY MARKET FUND, INC.
333 West Wacker Drive
Chicago, Illinois 60606
<PAGE>
PART C--OTHER INFORMATION
Item 23: Exhibits.
<TABLE>
<C> <S>
(a) Articles of Incorporation of Registrant, as amended and as
currently in effect. Filed as Exhibit 1 to Registrant's
Registration Statement on Form N-1A (File No. 2-78736) and
incorporated herein by reference thereto.
(a)(1) Amendment to Articles of Incorporation of Registrant designating
name change filed herewith.
(b) By-Laws of Registrant as currently in effect. Filed as Exhibit 2
to Registrant's Registration Statement on Form N-1A (File No. 2-
78736) and incorporated herein by reference thereto.
(b)(1) Amendment to By-Laws of Registrant filed herewith.
(c) Not applicable.
(d)(1) Investment Management Agreement between Registrant and Nuveen
Advisory Corp. dated May 1, 1988. Filed as Exhibit 5(a) to Post-
Effective Amendment No. 14 to the Registrant's Registration
Statement on Form N-1A (File No. 2-78736) as filed on April 27,
1995, and incorporated herein by reference thereto.
(d)(2) Renewal, dated May 5, 1998, of Investment Management Agreement.
Filed as Exhibit 5(b) to Post-Effective Amendment No. 17 to the
Registrant's Registration Statement on Form N-1A (File No. 2-
78736) as filed on June 16, 1998, and incorporated herein by
reference thereto.
(e)(1) Distribution Agreement between Registrant and John Nuveen & Co.
Incorporated, dated August 2, 1982. Filed as Exhibit 6 to
Registrant's Registration Statement on Form N-1A (File No. 2-
78736) and incorporated herein by reference thereto.
(e)(2) Renewal, dated July 31, 1997, of Distribution Agreement. Filed as
Exhibit 6(b) to Post-Effective Amendment No. 17 to the
Registrant's Registration Statement on Form N-1A (File No. 2-
78736) as filed on June 16, 1998, and incorporated herein by
reference thereto.
(e)(3) Renewal, dated July 31, 1998, of Distribution Agreement filed
herewith.
(f) Not applicable.
(g)(1). Custody Agreement, dated October 1, 1993, between Registrant and
United States Trust Company of New York. Filed as Exhibit 8 to
Post-Effective Amendment No. 13 to Registrant's Registration
Statement on Form N-1A (File No. 2-78736) and incorporated herein
by reference thereto.
(g)(2). Letter evidencing assignment of U.S. Trust Company of New York's
rights and responsibilities under the Custody Agreement to The
Chase Manhattan Bank, and is incorporated herein by reference
thereto.
</TABLE>
C-1
<PAGE>
<TABLE>
<C> <S>
(h). Transfer Agency Agreement between Registrant and Chase Global
Funds Services Company, dated August 24, 1998 filed herewith.
(i). Opinion of Morgan, Lewis & Bockius LLP filed herewith.
(j). Consent of Independent Public Accountants filed herewith.
(k). Not applicable.
(l). Not applicable.
(m). Registrant's 12b-1 Service Plan filed herewith.
(n). Not applicable.
(o). Not applicable.
99(p). Form of Money Market Fund Insurance Program filed herewith.
99(s)(1). Certified copy of resolution of Board of Directors authorizing
the signing of the names of officers and directors on the
Registration Statement pursuant to power of attorney filed
herewith.
99(s)(2). Original Power of Attorney for Judith M. Stockdale authorizing,
among others, Gifford R. Zimmerman and Larry W. Martin to
execute the Registration Statement on her behalf as one of the
Registrant's Directors was filed as Exhibit 99(c) to Post-
Effective Amendment No. 17 to Registrant's Registration
Statement on Form N-1A (File No. 2-78736) as filed on June 16,
1998, and is incorporated herein by reference thereto. Original
Powers of Attorney for all of Registrant's other Directors
authorizing, among others, Gifford R. Zimmerman and Larry W.
Martin to execute the Registration Statement were filed as
Exhibit 99(c) to Post-Effective Amendment No. 16 to Registrant's
Registration Statement on Form N-1A (File No. 2-78736) as filed
on June 2, 1997, and is incorporated herein by reference
thereto.
</TABLE>
Item 24: Persons Controlled by or under Common Control with Registrant
Not applicable.
C-2
<PAGE>
Item 25: Indemnification
Section 2-418 of the General Corporation Law of Maryland provides for Indemni-
fication of officers and directors. Article NINTH of the Articles of Incorpo-
ration of Registrant provides as follows:
NINTH: To the maximum extent permitted by the General Corporation Law of
the State of Maryland, as from time to time amended, the Corporation shall
indemnify its currently acting and its former directors, officers, employ-
ees and agents, and those persons who, at the request of the Corporation
serve or have served another corporation, partnership, joint venture, trust
or other enterprise in one or more such capacities. The indemnification
provided for herein shall not be deemed exclusive of any other rights to
which those seeking indemnification may otherwise be entitled.
Expenses (including attorneys' fees) incurred in defending a civil or crim-
inal action, suit or proceeding (including costs connected with the prepa-
ration of a settlement) may be paid by the Corporation in advance of the
final disposition of such action, suit or proceeding, if authorized by the
Board of Directors in the specific case, upon receipt of an undertaking by
or on behalf of the director, officer, employee or agent to repay that
amount of the advance which exceeds the amount which it is ultimately de-
termined that he is entitled to receive from the Corporation by reason of
indemnification as authorized herein; provided, however, that prior to mak-
ing any such advance at least one of the following conditions shall have
been met: (1) the indemnitee shall provide a security for his undertaking,
(2) the Corporation shall be insured against losses arising by reason of
any lawful advances, or (3) a majority of a quorum of the disinterested,
non-party directors of the Corporation, or an independent legal counsel in
a written opinion, shall determine, based on a review of readily available
facts, that there is reason to believe that the indemnitee ultimately will
be found and entitled to indemnification.
Nothing in these Articles of Incorporation or in the By-Laws shall be
deemed to protect or provide indemnification to any director or officer of
the Corporation against any liability to the Corporation or to its security
holders to which he would otherwise be subject by reason of willful misfea-
sance, bad faith, gross negligence or reckless disregard of the duties in-
volved in the conduct of his office ("disabling conduct"), and the Corpora-
tion shall not indemnify any of its officers or directors against any lia-
bility to the Corporation or to its security holders unless a determination
shall have been made in the manner provided hereafter that such liability
has not arisen from such officer's or director's disabling conduct. A de-
termination that an officer or director is entitled to indemnification
shall have been properly made if it is based upon (1) a final decision on
the merits by a court or other body before whom the proceeding was brought
that the person to be indemnified ("indemnitee") was not liable by reason
of disabling conduct or, (2) in the absence of such a decision, a reason-
able determination, based upon a review of the facts, that the indemnitee
was not liable by reason of disabling conduct, by (a) the vote of a major-
ity of a quorum of directors who are neither "interested persons" of the
Corporation as defined in the Investment Company Act of 1940 nor parties to
the proceeding, or (b) an independent legal counsel in a written opinion.
-----------------
Insofar as indemnification for liabilities arising under the Securities Act of
1933 may be permitted to the officers, directors or controlling persons of the
Registrant pursuant to the Articles of Incorporation of the Registrant or oth-
erwise, the Registrant has been advised that in the opinion of the Securities
C-3
<PAGE>
and Exchange Commission such indemnification is against public policy as ex-
pressed in the Act and is, therefore, unenforceable. In the event that a claim
for indemnification against such liabilities (other than the payment by the
Registrant of expenses incurred or paid by an officer or director or control-
ling person of the Registrant in the successful defense of any action, suit or
proceeding) is asserted by such officer, director or controlling persons in
connection with the securities being registered, the Registrant will, unless
in the opinion of its counsel the matter has been settled by controlling pre-
cedent, submit to a court of appropriate jurisdiction the question of whether
such indemnification by it is against public policy as expressed in the Act
and will be governed by the final adjudication of such issue.
The directors and officers of the Registrant (and of the other management in-
vestment companies for which Nuveen Advisory serves as investment adviser) are
covered by an Investment Trust Errors and Omissions policy in the aggregate
amount of $20,000,000 (with a maximum deductible of $500,000) against liabil-
ity and expenses of claims of wrongful acts arising out of their position with
the Registrant (and such other companies), except for matters which involve
willful acts, bad faith, gross negligence and willful disregard of duty (i.e.,
where the insured did not act in good faith for a purpose he or she reasonably
believed to be in the best interest of the applicable investment company or
where he or she had reasonable cause to believe this conduct was unlawful).
Item 26: Business and Other Connections of Investment Adviser
Nuveen Advisory Corp. serves as investment adviser to the following open-end
management type investment companies: Nuveen Flagship Multistate Trust I,
Nuveen Flagship Multistate Trust II, Nuveen Flagship Multistate Trust III,
Nuveen Flagship Multistate Trust IV, Nuveen Flagship Municipal Trust, Nuveen
Taxable Funds Inc., Nuveen Money Market Trust, and Nuveen Municipal Money Mar-
ket Fund, Inc. It also serves as investment adviser to the following closed-
end management investment companies: Nuveen Municipal Value Fund, Inc., Nuveen
California Municipal Value Fund, Inc., Nuveen New York Municipal Value Fund,
Inc., Nuveen Municipal Income Fund, Inc., Nuveen Premium Income Municipal
Fund, Inc., Nuveen Performance Plus Municipal Fund, Inc., Nuveen California
Performance Plus Municipal Fund, Inc., Nuveen New York Performance Plus Munic-
ipal Fund, Inc., Nuveen Municipal Advantage Fund, Inc., Nuveen Municipal Mar-
ket Opportunity Fund, Inc., Nuveen California Municipal Market Opportunity
Fund, Inc., Nuveen Investment Quality Municipal Fund, Inc., Nuveen California
Investment Quality Municipal Fund, Inc., Nuveen New York Investment Quality
Municipal Fund, Inc., Nuveen Insured Quality Municipal Fund, Inc., Nuveen
Florida Investment Quality Municipal Fund, Nuveen New Jersey Investment Qual-
ity Municipal Fund, Inc., Nuveen Pennsylvania Investment Quality Municipal
Fund, Nuveen Select Quality Municipal Fund, Inc., Nuveen California Select
Quality Municipal Fund, Inc., Nuveen New York Select Quality Municipal Fund,
Inc., Nuveen Quality Income Municipal Fund, Inc., Nuveen Insured Municipal Op-
portunity Fund, Inc., Nuveen Florida Quality Income Municipal Fund, Nuveen
Michigan Quality Income Municipal Fund, Inc., Nuveen Ohio Quality Income Mu-
nicipal Fund, Inc., Nuveen Texas Quality Income Municipal Fund, Nuveen Cali-
fornia Quality Income Municipal Fund, Inc., Nuveen New York Quality Income Mu-
nicipal Fund, Inc., Nuveen Premier Municipal Income Fund, Inc., Nuveen Premier
Insured Municipal Income Fund, Inc., Nuveen Premium Income Municipal Fund 2,
Inc., Nuveen Insured California Premium Income Municipal Fund, Inc., Nuveen
Insured New York Premium Income Mu -
C-4
<PAGE>
nicipal Fund, Inc., Nuveen Select Maturities Municipal Fund, Nuveen Arizona
Premium Income Municipal Fund, Inc., Nuveen Insured Florida Premium Income Mu-
nicipal Fund, Nuveen Michigan Premium Income Municipal Fund, Inc., Nuveen New
Jersey Premium Income Municipal Fund, Inc., Nuveen Premium Income Municipal
Fund 4, Inc., Nuveen Insured California Premium Income Municipal Fund 2, Inc.,
Nuveen Pennsylvania Premium Income Municipal Fund 2, Nuveen Maryland Premium
Income Municipal Fund, Nuveen Massachusetts Premium Income Municipal Fund,
Nuveen Virginia Premium Income Municipal Fund, Nuveen Washington Premium In-
come Municipal Fund, Nuveen Connecticut Premium Income Municipal Fund, Nuveen
Georgia Premium Income Municipal Fund, Nuveen Missouri Premium Income Munici-
pal Fund, Nuveen North Carolina Premium Income Municipal Fund, Nuveen Califor-
nia Premium Income Municipal Fund, Nuveen Insured Premium Income Municipal
Fund 2, Nuveen Dividend Advantage Municipal Fund, Nuveen California Dividend
Advantage Municipal Fund, and Nuveen New York Dividend Advantage Municipal
Fund. Nuveen Advisory Corp. has no other clients or business at the present
time. The principal business address for all of these investment companies is
333 West Wacker Drive, Chicago, Illinois 60606.
For a description of other business, profession, vocation or employment of a
substantial nature in which any director or officer, other than Timothy R.
Schwertfeger, of the investment adviser has engaged during the last two years
for his account or in the capacity of director, officer, employee, partner or
trustee, see the descriptions under "Management" in the Statement of Addi-
tional Information.
Timothy R. Schwertfeger is Chairman and Director of Nuveen Advisory Corp., the
investment adviser. Mr. Schwertfeger has, during the last two years, been
Chairman and formerly Executive Vice President and Director of The John Nuveen
Company, John Nuveen & Co. Incorporated, and Nuveen Institutional Advisory
Corp.; Chairman and Director (since January 1997) of Nuveen Asset Management,
Inc.; Director (since 1996) of Institutional Capital Corporation.
Item 27: Principal Underwriters
(a) John Nuveen & Co. Incorporated ("Nuveen") acts as principal underwriter to
the following open-end management type investment companies: Nuveen Flagship
Multistate Trust I, Nuveen Flagship Multistate Trust II, Nuveen Flagship
Multistate Trust III, Nuveen Flagship Multistate Trust IV, Nuveen Flagship Mu-
nicipal Trust, Nuveen Municipal Money Market Fund, Inc., Nuveen Money Market
Trust, Nuveen Taxable Funds, Inc., Nuveen Investment Trust, Nuveen Investment
Trust II and Nuveen Investment Trust III. Nuveen also acts as depositor and
principal underwriter of the Nuveen Tax-Exempt Unit Trust and Nuveen Unit
Trusts, registered unit investment trusts. Nuveen has also served as a co-man-
aging underwriter of the shares of Nuveen Municipal Value Fund, Inc., Nuveen
California Municipal Value Fund, Inc., Nuveen New York Municipal Value Fund,
Inc., Nuveen Municipal Income Fund, Inc., Nuveen Premium Income Municipal
Fund, Inc., Nuveen Performance Plus Municipal Fund, Inc., Nuveen California
Performance Plus Municipal Fund, Inc., Nuveen New York Performance Plus Munic-
ipal Fund, Inc., Nuveen Municipal Advantage Fund, Inc., Nuveen Municipal Mar-
ket Opportunity Fund, Inc., Nuveen California Municipal Market Opportunity
Fund, Inc., Nuveen Investment Quality Municipal Fund, Inc., Nuveen California
Investment Quality Municipal Fund, Inc., Nuveen New York Investment Quality
Municipal Fund, Inc., Nuveen Insured Quality Municipal
C-5
<PAGE>
Fund, Inc., Nuveen Florida Investment Quality Municipal Fund, Nuveen New Jer-
sey Investment Quality Municipal Fund, Inc., Nuveen Pennsylvania Investment
Quality Municipal Fund, Nuveen Select Quality Municipal Fund, Inc., Nuveen
California Select Quality Municipal Fund, Inc., Nuveen New York Select Quality
Municipal Fund, Inc., Nuveen Quality Income Municipal Fund, Inc., Nuveen In-
sured Municipal Opportunity Fund, Inc., Nuveen Florida Quality Income Munici-
pal Fund, Nuveen Michigan Quality Income Municipal Fund, Inc., Nuveen Ohio
Quality Income Municipal Fund, Inc., Nuveen Texas Quality Income Municipal
Fund, Nuveen California Quality Income Municipal Fund, Inc., Nuveen New York
Quality Income Municipal Fund, Inc., Nuveen Premier Municipal Income Fund,
Inc., Nuveen Premier Insured Municipal Income Fund, Inc., Nuveen Select Tax-
Free Income Portfolio, Nuveen Premium Income Municipal Fund 2, Inc., Nuveen
Insured California Premium Income Municipal Fund, Inc., Nuveen Insured New
York Premium Income Municipal Fund, Inc., Nuveen Select Maturities Municipal
Fund, Nuveen Arizona Premium Income Municipal Fund, Inc., Nuveen Insured Flor-
ida Premium Income Municipal Fund, Nuveen Michigan Premium Income Municipal
Fund, Inc., Nuveen New Jersey Premium Income Municipal Fund, Inc., Nuveen Pre-
mium Income Municipal Fund 4, Inc., Nuveen Insured California Premium Income
Municipal Fund 2, Inc., Nuveen Pennsylvania Premium Income Municipal Fund 2,
Nuveen Maryland Premium Income Municipal Fund, Nuveen Massachusetts Premium
Income Municipal Fund, Nuveen Virginia Premium Income Municipal Fund, Nuveen
Washington Premium Income Municipal Fund, Nuveen Connecticut Premium Income
Municipal Fund, Nuveen Georgia Premium Income Municipal Fund, Nuveen Missouri
Premium Income Municipal Fund, Nuveen North Carolina Premium Income Municipal
Fund, Nuveen California Premium Income Municipal Fund, Nuveen Insured Premium
Income Municipal Fund 2, Nuveen Select Tax-Free Income Portfolio 2, Nuveen In-
sured California Select Tax-Free Income Portfolio, Nuveen Insured New York Se-
lect Tax-Free Income Portfolio, Nuveen Select Tax-Free Income Portfolio 3,
Nuveen Dividend Advantage Municipal Fund, Nuveen California Dividend Advantage
Municipal Fund and Nuveen New York Dividend Advantage Municipal Fund.
(b)
<TABLE>
<CAPTION>
Name and
Principal
Business Positions and Offices Positions and Offices
Address with Underwriter with Registrant
- -------------------------------------------------------------------------------
<S> <C> <C>
Timothy R. Chairman of the Board, Chairman of the Board
Schwertfeger Chief Executive Officer and Director
333 West Wacker and Director
Drive
Chicago, IL
60606
John P. Amboian President None
333 West Wacker
Drive
Chicago, IL
60606
Alan G. Vice President Vice President and Assistant Secretary
Berkshire
333 West Wacker
Drive
Chicago, IL
60606
William Adams Vice President None
IV
333 West Wacker
Drive
Chicago, IL
60606
</TABLE>
C-6
<PAGE>
<TABLE>
<S> <C> <C>
Clifton L. Fenton Vice President None
333 West Wacker Drive
Chicago, IL 60606
Kathleen M. Flanagan Vice President None
333 West Wacker Drive
Chicago, IL 60606
Stephen D. Foy Vice President Vice President and Controller
333 West Wacker Drive
Chicago, IL 60606
Robert D. Freeland Vice President None
333 West Wacker Drive
Chicago, IL 60606
Michael G. Gaffney Vice President None
333 West Wacker Drive
Chicago, IL 60606
Anna R. Kucinskis Vice President None
333 West Wacker Drive
Chicago, IL 60606
Robert B. Kuppenheimer Vice President None
333 West Wacker Drive
Chicago, IL 60606
Larry W. Martin Vice President and Vice President and
333 West Wacker Drive Assistant Secretary Assistant Secretary
Chicago, IL 60606
Thomas C. Muntz Vice President None
333 West Wacker Drive
Chicago, IL 60606
Stuart W. Rogers Vice President Vice President
333 West Wacker Drive
Chicago, IL 60606
Bradford W. Shaw, Jr. Vice President None
333 West Wacker Drive
Chicago, IL 60606
Paul C. Williams Vice President None
333 West Wacker Drive
Chicago, IL 60606
</TABLE>
C-7
<PAGE>
<TABLE>
<S> <C> <C>
Margaret E. Wilson Vice President and None
333 West Wacker Drive Corporate Controller
Chicago, IL 60606
Gifford R. Zimmerman Vice President and Vice President and
333 West Wacker Drive Assistant Secretary Secretary
Chicago, IL 60606
</TABLE>
Item 28: Location of Account and Records
Nuveen Advisory Corp., 333 West Wacker Drive, Chicago, Illinois 60606, main-
tains Articles of Incorporation, By-Laws, minutes of directors and shareholder
meetings, contracts and all advisory material of the investment adviser.
The Chase Manhattan Bank, 4 New York Plaza, New York, New York 10004, main-
tains all general and subsidiary ledgers, journals, trial balances, records of
all portfolio purchases and sales, and all other required records not main-
tained by Nuveen Advisory Corp. or Chase Global Funds Services Company.
Chase Global Funds Services Company, P.O. Box 5186, New York, New York 10274-
5186, will maintain all the required records in its capacity as transfer,
dividend paying, and shareholder service agent for the Registrant.
Item 29: Management Services
Not applicable.
Item 30: Undertakings
Not applicable.
C-8
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended, and the
Investment Company Act of 1940, as amended, the Registrant certifies that it
meets all of the requirements for effectiveness of this Registration Statement
pursuant to Rule 485(b) under the Securities Act of 1933 and has duly caused
this Post-Effective Amendment No. 19 to Registration Statement No. 2-78736 to
be signed on its behalf by the undersigned, thereunto duly authorized, in the
City of Chicago, State of Illinois on the 25th day of June, 1999.
NUVEEN MUNICIPAL MONEY MARKET FUND,
INC.
/s/ Gifford R. Zimmerman
--------------------------------------
Gifford R. Zimmerman, Vice President
Pursuant to the requirements of the Securities Act of 1933, this Registration
Statement has been signed below by the following persons in the capacities and
on the date indicated.
<TABLE>
<CAPTION>
Signature Title Date
--------- ----- ----
<S> <C> <C>
/s/ Stephen D. Foy
- -------------------------------
Stephen D. Foy Vice President and June 25, 1999
Controller (Principal
Financial and
Accounting Officer)
Timothy R. Schwertfeger Chairman of the Board
and Director (Principal
Executive Officer)
Robert P. Bremner Director
Lawrence H. Brown Director /s/ Gifford R.
Anne E. Impellizzeri Director Zimmerman
Peter R. Sawers Director
William J. Schneider Director
Judith M. Stockdale Director
</TABLE>
By_________________________
Gifford R. Zimmerman
Attorney-in-Fact
June 25, 1999
An original power of attorney authorizing, among others, Gifford R. Zimmerman
to execute this Registration Statement, and Amendments thereto, for each of the
other officers and directors of the Registrant has been executed and is
incorporated by reference in this Registration Statement.
C-9
<PAGE>
Exhibit (a)(1)
NUVEEN TAX-FREE RESERVES, INC.
ARTICLES OF AMENDMENT TO ARTICLES OF INCORPORATION
NUVEEN TAX-FREE RESERVES, INC., a Maryland corporation having its principal
office in Baltimore City, Maryland (the "Corporation"), hereby certifies to the
State Department of Assessments and Taxation of Maryland that:
FIRST: The charter of the Corporation is hereby amended by amending Article
SECOND of the Articles of Incorporation to read as follows:
SECOND: That the name of the Corporation is: Nuveen Municipal Money
Market Fund, Inc. (the "Corporation").
SECOND: The amendment of the charter of the Corporation as hereinabove set
forth has been duly approved by a majority of the entire board of directors and
is limited to a change expressly permitted by Section 2-605 of the Maryland
General Corporation Law to be made without action by the stockholders. The
Corporation is registered as an open-end company under the Investment Company
Act of 1940.
IN WITNESS WHEREOF, NUVEEN TAX-FREE RESERVES, INC. has caused these
Articles of Amendment to be signed in its name and on its behalf by its Vice
President and witnessed by its Assistant Secretary.
The undersigned Vice President acknowledges these Articles of Amendment to
be the corporate act of the Corporation and states that to the best of his
knowledge, information and belief, the matters and facts set forth herein with
respect to the authorization and approval hereof are true in all material
respects and that this statement is made under the penalties of perjury.
Witness NUVEEN TAX-FREE
RESERVES, INC.
/s/ Karen L. Healy By: /s/ Gifford R. Zimmerman
____________________________ -------------------------------
Karen L. Healy Gifford R. Zimmerman
Assistant Secretary Vice President
<PAGE>
Exhibit (b)(1)
Amendment to By-Laws
of
NUVEEN TAX-FREE RESERVES, INC.
The By-Laws of Nuveen Tax-Free Reserves, Inc., a Maryland corporation, (the
"Fund") have been amended by unanimous vote of the Board of Directors at a
meeting duly called, convened and held on October 29, 1998, to read as follows:
WHEREAS, the Fund's By-Laws permit shareholders to cast a vote at any
regular or special meeting of shareholders either in person or by proxy;
and
WHEREAS, such proxies are currently returned to the Fund by means of the
United States Postal Service or by overnight courier; and
WHEREAS, the Board now deems it beneficial to include the submission of
proxies by telephonic and electronic means.
NOW, THEREFORE, BE IT RESOLVED, that the Fund's By-Laws be amended to
include the following:
Section 2.6A Proxy Representation. A Shareholder may cast or authorize
the casting of a vote by filing a written appointment of a proxy with
an officer of the Fund at or before the meeting at which the
appointment is to be effective. The placing of a Shareholder's name on
a proxy pursuant to telephonic or electronically transmitted
instructions (including, without limitation, instructions transmitted
over the Internet) obtained pursuant to procedures which are
reasonably designed to verify that such instructions have been
authorized by such Shareholder, shall constitute execution of such
proxy by or on behalf of such Shareholder.
<PAGE>
Exhibit (e)(3)
Renewal of Distribution Agreement
---------------------------------
This Agreement made this 31st day of July, 1998 by and between Nuveen Tax-Free
Reserves, Inc., a Maryland corporation (the "Fund"), and John Nuveen & Co.
Incorporated, a Delaware corporation (the "Underwriter");
WHEREAS, the parties hereto are the contracting parties under that certain
Distribution Agreement (the "Agreement") pursuant to which the Underwriter acts
as agent for the distribution of shares of the Fund; and
WHEREAS, the Agreement terminates August 1, 1998 unless continued in the manner
required by the Investment Company Act of 1940;
WHEREAS, the Board of Directors of the Fund, at a meeting called for the purpose
of reviewing the Agreement has approved the Agreement and its continuance until
August 1, 1999 in the manner required by the Investment Company Act of 1940;
NOW THEREFORE, in consideration of the mutual covenants contained in the
Agreement the parties hereto do hereby continue the Agreement in effect until
August 1, 1999 and ratify and confirm the Agreement in all respects.
NUVEEN TAX-FREE RESERVES, INC.
By: /s/ Gifford R. Zimmerman
----------------------------
Vice President
ATTEST:
/s/ Karen L. Healy
- -------------------
Assistant Secretary
JOHN NUVEEN & CO. INCORPORATED
By: /s/ Alan G. Berkshire
------------------------------
Vice President
ATTEST:
/s/ Larry Martin
- -------------------
Assistant Secretary
<PAGE>
MUTUAL FUNDS SERVICE AGREEMENT
. Transfer Agency Services
NUVEEN FUNDS
August 24, 1998
<PAGE>
MUTUAL FUNDS SERVICE AGREEMENT
Table of Contents
-----------------
<TABLE>
<CAPTION>
Section Page
- ------- ----
<S> <C>
1. Appointment......................................................... 1
2. Representations and Warranties...................................... 1
3. Delivery of Documents............................................... 3
4. Services Provided................................................... 3
5. Fees and Expenses................................................... 4
6. Limitation of Liability and Indemnification......................... 6
7. Term................................................................ 8
8. Notices............................................................. 9
9. Waiver.............................................................. 9
10. Force Majeure....................................................... 9
11. Additional Funds.................................................... 9
12. Amendments.......................................................... 10
13. Assignment.......................................................... 10
14. Severability........................................................ 10
15. Governing Law....................................................... 10
Signatures................................................................. 10
Schedule A -- Fees and Expenses............................................ A-1
Schedule B -- List of Nuveen Funds and Jurisdictions under which Funds
are Organized................................................ B-1
Schedule C -- Transfer Agency Services Description......................... C-1
</TABLE>
<PAGE>
MUTUAL FUNDS SERVICE AGREEMENT
Table of Contents (continued)
-----------------------------
<TABLE>
<CAPTION>
Page
----
<S> <C>
Schedule A -- Fees and Expenses........................................ A-1
Schedule B -- List of Nuveen Funds and Jurisdictions under
which Funds are Organized................................ B-1
Schedule C -- Transfer Agency Services Description..................... C-1
</TABLE>
<PAGE>
MUTUAL FUNDS SERVICE AGREEMENT
AGREEMENT made as of August 24, 1998 by and between the Nuveen Funds
(each, a "Fund" and collectively the "Funds"), for the Funds listed on Schedule
B, and organized under the jurisdictions set forth on Schedule B, and Chase
Global Funds Services Company ("Chase"), a Delaware corporation.
W I T N E S S E T H:
WHEREAS, each Fund is registered as an open-end management investment
company under the Investment Company Act of 1940, as amended (the "1940 Act");
and
WHEREAS, each Fund wishes to contract with Chase to provide certain
services with respect to the Fund;
NOW, THEREFORE, in consideration of the premises and mutual covenants
herein contained, it is agreed between the parties hereto as follows:
1. Appointment. The Funds hereby appoint Chase to provide services for
the Funds, as described hereinafter, subject to the supervision of the Board of
Directors or Trustees of the Funds (the "Board"), for the period and on the
terms set forth in this Agreement. Chase accepts such appointment and agrees to
furnish the services herein set forth in return for the compensation as provided
in Section 5 of and Schedule A to this Agreement.
2. Representations and Warranties.
(a) Chase represents and warrants to the Funds that:
(i) Chase is a corporation, duly organized and existing under the
laws of the State of Delaware;
(ii) Chase is duly qualified to carry on its business in the
Commonwealth of Massachusetts;
(iii) Chase is empowered under applicable laws and by its Articles
of Incorporation and By-Laws to enter into and perform this Agreement;
(iv) all requisite corporate proceedings have been taken to
authorize Chase to enter into and perform this Agreement;
(v) Chase has, and will continue to have, access to the
facilities, personnel and equipment required to fully perform its duties and
obligations hereunder;
1
<PAGE>
(vi) no legal or administrative proceedings have been instituted
or threatened which would impair Chase's ability to perform its duties and
obligations under this Agreement; and
(vii) Chase's entrance into this Agreement shall not cause a
material breach or be in material conflict with any other agreement or
obligation of Chase or any law or regulation applicable to Chase;
(b) Each Fund represents and warrants to Chase that:
(i) the Fund is a duly organized and existing and in good standing
under the laws of the jurisdictions set forth above its name on Schedule B;
(ii) the Fund is empowered under applicable laws and by its
Charter Document and By-Laws to enter into and perform this Agreement;
(iii) all requisite proceedings have been taken to authorize the
Fund to enter into and perform this Agreement;
(iv) the Fund is an investment company properly registered under
the 1940 Act;
(v) a registration statement under the Securities Act of 1933, as
amended ("1933 Act") and the 1940 Act on Form N-1A has been filed and will be
effective and will remain effective during the term of this Agreement, and all
necessary filings under the laws of the states will have been made and will be
current during the term of this Agreement;
(vi) no legal or administrative proceedings have been instituted
or threatened which would impair the Fund's ability to perform its duties and
obligations under this Agreement;
(vii) the Fund's registration statement complies in all material
respects with the 1933 Act and the 1940 Act (including the rules and regulations
thereunder) and none of the Fund's prospectuses and/or statements of additional
information contain any untrue statement of material fact or omit to state a
material fact necessary to make the statements therein not misleading; and
(viii) the Fund's entrance into this Agreement shall not cause a
material breach or be in material conflict with any other agreement or
obligation of the Fund or any law or regulation applicable to it.
2
<PAGE>
3. Delivery of Documents. Each Fund will promptly furnish to Chase such
copies, properly certified or authenticated, of contracts, documents and other
related information that Chase may request or requires to properly discharge its
duties. Such documents may include but are not limited to the following:
(a) Resolutions of the Board authorizing the appointment of Chase to
provide certain services to the Fund and approving this Agreement;
(b) The Fund's Charter Document;
(c) The Fund's By-Laws;
(d) The Fund's Notification of Registration on Form N-8A under the 1940
Act as filed with the Securities and Exchange Commission ("SEC");
(e) The Fund's registration statement including exhibits, as amended,
on Form N-1A (the "Registration Statement") under the 1933 Act and the 1940 Act,
as filed with the SEC;
(f) Copies of the Investment Advisory Agreement between the Fund and
its investment adviser (the "Advisory Agreement");
(g) Opinions of counsel and auditors' reports;
(h) The Fund's prospectus(es) and statement(s) of additional
information relating to all funds, series, portfolios and classes, as
applicable, and all amendments and supplements thereto (such Prospectus(es) and
Statement(s) of Additional Information and supplements thereto, as presently in
effect and as from time to time hereafter amended and supplemented, herein
called the "Prospectuses"); and
(i) Such other agreements as the Fund may enter into from time to time
including securities lending agreements, futures and commodities account
agreements, brokerage agreements and options agreements.
4. Services Provided.
(a) Chase will provide the following services subject to the control,
direction and supervision of the Board and its designated agents and in
compliance with the objectives, policies and limitations set forth in the Funds'
Registration Statement, Charter Document and By-Laws; applicable laws and
regulations; and all resolutions and policies implemented by the Board:
(i) Transfer Agency.
A description of the above service is contained in Schedule C to this Agreement.
(b) Chase will also:
3
<PAGE>
(i) provide office facilities with respect to the provision of the
services contemplated herein (which may be in the offices of Chase or a
corporate affiliate of Chase);
(ii) provide or otherwise obtain personnel sufficient for
provision of the services contemplated herein;
(iii) furnish equipment and other materials, which are necessary
or desirable for provision of the services contemplated herein; and
(iv) keep records relating to the services provided hereunder in
such form and manner as Chase may deem appropriate or advisable. To the extent
required by Section 31 of the 1940 Act and the rules thereunder, Chase agrees
that all such records prepared or maintained by Chase relating to the services
provided hereunder are the property of the Funds and will be preserved for the
periods prescribed under Rule 31a-2 under the 1940 Act, maintained at the Funds'
expense, and made available in accordance with such Section and rules.
5. Fees and Expenses.
(a) As compensation for the services rendered to the Funds pursuant to
this Agreement the Funds shall pay Chase monthly fees determined as set forth in
Schedule A to this Agreement. Such fees are to be billed monthly and shall be
due and payable upon receipt of the invoice. Upon any termination of the
provision of services under this Agreement before the end of any month, the fee
for the part of the month before such termination shall be prorated according to
the proportion which such part bears to the full monthly period and shall be
payable upon the date of such termination.
(b) For the purpose of determining fees calculated as a function of
each Fund's assets, the value of the Fund's assets and net assets shall be
computed as required by its currently effective Prospectus, generally accepted
accounting principles, and resolutions of the Board.
(c) The Funds may request additional services, additional processing,
or special reports, with such specifications, requirements and documentation as
may be reasonably required by Chase. If Chase elects to provide such services
or arrange for their provision, it shall be entitled to additional fees and
expenses at its customary rates and charges.
(d) Chase will bear its own expenses in connection with the performance
of the services under this Agreement except as provided herein or as agreed to
by the parties. Each Fund agrees to promptly reimburse Chase for any services,
equipment or supplies ordered by or for the Fund through Chase and for any other
expenses that Chase may incur on the Fund's behalf at the
4
<PAGE>
Fund's request or as consented to by the Fund. Such other expenses to be
incurred in the operation of the Fund and to be borne by the Funds, include, but
are not limited to: taxes; interest; brokerage fees and commissions; salaries
and fees of officers, directors, or trustees who are not officers, directors,
shareholders or employees of Chase, or the Fund's distributor; SEC and state
Blue Sky registration and qualification fees, levies, fines and other charges;
postage and mailing costs; costs of share certificates; advisory fees;
independent public accountants and custodians; insurance premiums including
fidelity bond premiums; legal expenses; consulting fees; customary bank charges
and fees; expenses of typesetting and printing of Prospectuses for regulatory
purposes and for distribution to current shareholders of the Fund (the Fund's
distributor to bear the expense of all other printing, production, and
distribution of Prospectuses, and marketing materials); expenses of printing and
production costs of shareholders' reports and proxy statements and materials;
expenses of proxy solicitation and annual meetings; costs and expenses of Fund
stationery and forms; customer service telephone expenses, costs and expenses of
telephone and data lines and devices which are specially requested by the Fund;
costs associated with corporate or trust, shareholder, and Board meetings; trade
association dues and expenses; reprocessing costs to Chase caused by third party
errors; and any extraordinary expenses and other customary Fund expenses.
(e) All fees, out-of-pocket expenses, or additional charges of Chase
shall be billed on a monthly basis and shall be due and payable upon receipt of
the invoice.
(f) Chase will render, after the close of each month in which services
have been furnished, a statement reflecting all of the charges for such month.
Charges remaining unpaid after thirty (30) days shall bear interest in finance
charges equivalent to, in the aggregate, the Prime Rate (as reasonably
determined by Chase) plus two percent per year and all costs and expenses of
effecting collection of any such sums, including reasonable attorney's fees,
shall be paid by the Funds to Chase.
(g) In the event that the Funds are more than sixty (60) days
delinquent in payments of monthly billings in connection with this Agreement
(with the exception of specific amounts which may be contested in good faith by
the Funds), this Agreement may be terminated upon thirty (30) days' written
notice to the Funds by Chase. The Funds must notify Chase in writing of any
contested amounts within thirty (30) days of receipt of a billing for such
amounts. Disputed amounts are not due and payable while they are being
investigated.
5
<PAGE>
6. Limitation of Liability and Indemnification.
(a) Chase shall not be liable for any error of judgment or mistake of
law or for any loss or expense suffered by the Funds, in connection with the
matters to which this Agreement relates, except for a loss or expense solely
caused by or resulting from willful misfeasance, bad faith or negligence on
Chase's part in the performance of its duties or from reckless disregard by
Chase of its obligations and duties under this Agreement. In no event shall
Chase be liable for any indirect, incidental, special or consequential losses or
damages of any kind whatsoever, even if Chase has been advised of the likelihood
of such loss or damage and regardless of the form of action.
(b) Subject to Section 6(a) above, Chase shall not be responsible for,
and the Funds shall indemnify and hold Chase harmless from and against, any and
all losses, damages, costs, reasonable attorneys' fees and expenses, payments,
expenses and liabilities incurred by Chase, any of its agents, or the Funds'
agents in the performance of its/their duties hereunder, including but not
limited to those arising out of or attributable to:
(i) any and all actions of Chase or its officers or agents
required to be taken pursuant to this Agreement;
(ii) the reasonable reliance on or use by Chase or its officers or
agents of information, records, or documents which are received by Chase or its
officers or agents and furnished to it or them by or on behalf of the Funds, and
which have been prepared or maintained by the Funds or any third party on behalf
of the Funds;
(iii) the Funds' refusal or failure to comply with the terms of
this Agreement or the Funds' lack of good faith, or actions, or lack thereof,
involving negligence or willful misfeasance;
(iv) the breach of any representation or warranty of the Funds
hereunder;
(v) the taping or other form of recording of telephone
conversations or other forms of electronic communications with investors and
shareholders, or reasonable reliance by Chase on telephone or other electronic
instructions of any person acting on behalf of a shareholder or shareholder
account for which telephone or other electronic services have been authorized;
(vi) the reliance on or the carrying out by Chase or its officers
or agents of any proper instructions reasonably believed to be duly authorized,
or requests of the Funds or
6
<PAGE>
recognition by Chase of any share certificates which are reasonably believed to
bear the proper signatures of the officers of the Funds and the proper
countersignature of any transfer agent or registrar of the Funds;
(vii) any delays, inaccuracies, errors in or omissions from
information or data provided to Chase by data, corporate action, pricing
services or securities brokers and dealers;
(viii) the offer or sale of shares by any Fund in violation of any
requirement under the Federal securities laws or regulations or the securities
laws or regulations of any state, or in violation of any stop order or other
determination or ruling by any Federal agency or any state agency with respect
to the offer or sale of such shares in such state (1) resulting from activities,
actions, or omissions by the Funds or their other service providers and agents,
or (2) existing or arising out of activities, actions or omissions by or on
behalf of the Fund prior to the effective date of this Agreement;
(ix) any failure of a Fund's registration statement to comply with
the 1933 Act and the 1940 Act (including the rules and regulations thereunder)
and any other applicable laws, or any untrue statement of a material fact or
omission of a material fact necessary to make any statement therein not
misleading in a Fund's prospectus;
(x) the actions taken by the Funds, their investment adviser, and
their distributor in compliance with applicable securities, tax, commodities and
other laws, rules and regulations, or the failure to so comply; and
(xi) all actions, inactions, omissions, or errors caused by third
parties to whom Chase or the Funds has assigned any rights and/or delegated any
duties under this Agreement at the request of or as required by the Funds, their
investment advisers, distributor, administrator or sponsor.
(c) In performing its services hereunder, Chase shall be entitled to
reasonably rely on any oral or written instructions, notices or other
communications, including electronic transmissions, from the Funds and their
custodians, officers and directors, investors, agents and other service
providers and shareholders which Chase reasonably believes to be genuine, valid
and authorized, and shall be indemnified by the Funds for any loss or expense
caused by such reliance. Chase shall also be entitled to consult with and rely
on the advice and opinions of outside legal counsel retained by the Funds, as
necessary or appropriate.
7
<PAGE>
(d) Chase shall indemnify and hold the Funds harmless from and against
any and all losses, damages, costs, charges, payments, expenses and liability,
excluding attorneys' fees and costs, arising out of or attributable to Chase's
refusal or failure to comply with the material terms of this Agreement, or
Chase's lack of good faith, negligence or willful misconduct.
(e) Subject to the above Sections 6 (a) through 6 (d), any costs or
losses incurred by a Fund for the processing of any purchase, redemption,
exchange or other share transactions at a price per share other than the price
per share applicable to the effective date of the transaction (the foregoing
being generally referred to herein as "as of" transactions) will be handled in
the following manner:
(i) For each calendar year, if all "as of" transactions for the
year, taken in the aggregate, result in a net loss to a Fund ("net loss"), Chase
will reimburse the Fund for such net loss, except to the extent that such net
loss may be offset by application of a "net benefit" to the Fund carried over
from prior calendar years pursuant to sub-paragraph (ii) immediately below.
(ii) For each calendar year, if all "as of" transactions for the
year, taken in the aggregate, result in a net benefit to a Fund ("net benefit"),
the Fund shall not reimburse Chase for the amount of such net benefit; however,
any "net benefit" for any calendar year may be used to offset, in whole or in
part, any "net loss" suffered by the Fund in any future calendar year so as to
reduce the amount by which Chase shall be required to reimburse the Fund for
such "net loss" in such year pursuant to sub-paragraph (i) immediately above.
(iii) Any "net loss" for which Chase reimburses a Fund in any
calendar year shall not be carried over into future years so as to offset any
"net benefit" in such future years.
7. Term. This Agreement shall become effective on the date first
hereinabove written for an initial term of four years. The Agreement may be
modified or amended from time to time by mutual agreement between the parties
hereto. After the initial term, the Agreement shall continue in effect unless
terminated by either party on 6 months' prior written notice. Upon termination
of this Agreement, each Fund shall pay to Chase such compensation and any
reasonable out-of-pocket or other reimbursable expenses which may become due or
payable under the terms hereof as of the date of termination or after the date
that the provision of services ceases, whichever is later. If the Funds
terminate the Agreement for any reason during the first year of the initial
term, they will reimburse Chase in accordance with Schedule A.
8
<PAGE>
8. Notices. Any notice required or permitted hereunder shall be in
writing and shall be deemed effective on the date of personal delivery (by
private messenger, courier service or otherwise) or upon confirmed receipt of
telex or facsimile, whichever occurs first, or upon receipt if by mail to the
parties at the following address (or such other address as a party may specify
by notice to the other):
If to the Funds:
John Nuveen & Co., Incorporated
333 West Wacker Drive
Chicago, IL 60606
Attention: Fund Controller
Fax: (312) 917-8049
If to Chase:
Chase Global Funds Services Company
73 Tremont Street
Boston, MA 02108
Attention: Karl O. Hartmann, Esq., General Counsel
Fax: (617) 557-8616
9. Waiver. The failure of a party to insist upon strict adherence to any
term of this Agreement on any occasion shall not be considered a waiver nor
shall it deprive such party of the right thereafter to insist upon strict
adherence to that term or any term of this Agreement. Any waiver must be in
writing signed by the waiving party.
10. Force Majeure. Chase shall not be responsible or liable for any harm,
loss or damage suffered by the Funds, their investors, or other third parties or
for any failure or delay in performance of Chase's obligations under this
Agreement arising out of or caused, directly or indirectly, by circumstances
beyond Chase's control. In the event of a force majeure, any resulting harm,
loss, damage, failure or delay by Chase will not give the Funds the right to
terminate this Agreement.
11. Additional Funds. In the event that John Nuveen & Company Incorporated
sponsors additional open-end management companies with respect to which it
desires Chase to provide services under the terms of this Agreement, it shall so
notify Chase in writing, and if Chase agrees in writing to provide such
services, such Fund or Funds shall be subject to the terms of this Agreement and
Schedule C shall be modified accordingly.
9
<PAGE>
12. Amendments. This Agreement may be modified or amended from time to
time by mutual written agreement between the parties. No provision of this
Agreement may be changed, discharged, or terminated orally, but only by an
instrument in writing signed by the party against which enforcement of the
change, discharge or termination is sought.
13. Assignment. Chase may assign and delegate this Agreement and its
rights and obligations hereunder without the consent of the other party.
14. Severability. If any provision of this Agreement is invalid or
unenforceable, the balance of the Agreement shall remain in effect, and if any
provision is inapplicable to any person or circumstance it shall nevertheless
remain applicable to all other persons and circumstances.
15. Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY THE SUBSTANTIVE
LAWS OF THE STATE OF NEW YORK.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their officers designated below as of the date first written above.
NUVEEN FUNDS
By: /s/ Stuart Rogers
--------------------------
Name: Stuart Rogers
------------------------
Title: Vice President
-----------------------
CHASE GLOBAL FUNDS
SERVICES COMPANY
By: /s/ Donald P. Hearn
--------------------------
Name: Donald P. Hearn
------------------------
Title: Chairman and CEO
------------------------
10
<PAGE>
MUTUAL FUNDS SERVICE AGREEMENT
SCHEDULE A
FEES AND EXPENSES
Transfer Agency Fees
A. $18.50 per municipal fund account per annum
$18.25 per equity fund account per annum
$29.00 per money market fund account per annum
B. Out-of-pocket expenses, including but not limited to those in Section 5(d),
will be computed, billed and payable monthly Customized systems and
technology charges (excluding those projects covered under the conversion
agreement) will be negotiated individually and billed along with out-of-
pocket expenses.
C. If the Funds terminate this Agreement for any reason whatsoever between the
date of this Agreement and July 1, 1999, there will be immediately due and
owing to Chase by Nuveen a $6 million charge; if between the date of July
1, 1999 and June 30, 2000, a $4 million charge; and if between July 1, 2000
and June 30, 2001, a $2 million charge. In addition, the Funds will
reimburse Chase for all costs it incurs in connection with any conversion
to another transfer agent.
A-1
<PAGE>
MUTUAL FUNDS SERVICE AGREEMENT
SCHEDULE B
Flagship Admiral Funds Inc. (Maryland Corporation)
Flagship Utility Income Fund
Nuveen Investment Trust (Massachusetts Business Trust)
Nuveen Growth and Income Stock Fund
Nuveen Balanced Stock and Bond Fund
Nuveen Balanced Municipal and Stock Fund
Nuveen European Value Fund
Nuveen Investment Trust II (Massachusetts Business Trust)
Nuveen Rittenhouse Growth Fund
Nuveen Investment Trust III (Massachusetts Business Trust)
Nuveen Income Fund
Nuveen Flagship Municipal Trust (Massachusetts Business Trust)
Nuveen Municipal Bond Fund
Nuveen Insured Municipal Bond Fund
Nuveen Flagship All-American Municipal Bond Fund
Nuveen Flagship Limited Term Municipal Bond Fund
Nuveen Flagship Intermediate Municipal Bond Fund
Nuveen Flagship Multistate Trust I (Massachusetts Business Trust)
Nuveen Flagship Arizona Municipal Bond Fund
Nuveen Flagship Colorado Municipal Bond Fund
Nuveen Flagship Florida Municipal Bond Fund
Nuveen Flagship Florida Intermediate Municipal Bond Fund
Nuveen Maryland Municipal Bond Fund
Nuveen Flagship New Mexico Municipal Bond Fund
B-1
<PAGE>
Nuveen Flagship Pennsylvania Municipal Bond Fund
Nuveen Flagship Virginia Municipal Bond Fund
Nuveen Flagship Multistate Trust II (Massachusetts Business Trust)
Nuveen California Municipal Bond Fund
Nuveen California Insured Municipal Bond Fund
Nuveen Flagship Connecticut Municipal Bond Fund
Nuveen Massachusetts Municipal Bond Fund
Nuveen Massachusetts Insured Municipal Bond Fund
Nuveen Flagship New Jersey Municipal Bond Fund
Nuveen Flagship New Jersey Intermediate Municipal Bond Fund
Nuveen Flagship New York Municipal Bond Fund
Nuveen New York Insured Municipal Bond Fund
Nuveen Flagship Multistate Trust III (Massachusetts Business Trust)
Nuveen Flagship Alabama Municipal Bond Fund
Nuveen Flagship Georgia Municipal Bond Fund
Nuveen Flagship Louisiana Municipal Bond Fund
Nuveen Flagship North Carolina Municipal Bond Fund
Nuveen Flagship South Carolina Municipal Bond Fund
Nuveen Flagship Tennessee Municipal Bond Fund
Nuveen Flagship Multistate Trust IV (Massachusetts Business Trust)
Nuveen Flagship Kansas Municipal Bond Fund
Nuveen Flagship Kentucky Municipal Bond Fund
Nuveen Flagship Kentucky Limited Term Municipal Bond Fund
Nuveen Flagship Michigan Municipal Bond Fund
Nuveen Flagship Missouri Municipal Bond Fund
Nuveen Flagship Ohio Municipal Bond Fund
Nuveen Flagship Wisconsin Municipal Bond Fund
Nuveen Tax-Exempt Money Market Fund, Inc. (Maryland Corporation)
Nuveen Tax-Free Reserves, Inc. (Maryland Corporation)
Nuveen Tax-Free Money Market Fund, Inc. (Minnesota Corporation)
Nuveen Massachusetts Tax-Free Money Market Fund
B-2
<PAGE>
Nuveen New York Tax-Free Money Market Fund
Nuveen California Tax-Free Fund, Inc. (Maryland Corporation)
Nuveen California Tax-Free Money Market Fund
B-3
<PAGE>
MUTUAL FUNDS SERVICE AGREEMENT
SCHEDULE C
DESCRIPTION OF TRANSFER AGENCY SERVICES
The following is a general description of the transfer agency services Chase
shall provide to each Fund.
A. Shareholder Recordkeeping. Maintain records showing for each Fund
shareholder the following: (i) name, address, appropriate tax
certification and tax identifying number; (ii) number of shares of each
Fund, portfolio or class; (iii) historical information including, but not
limited to, dividends paid, date and price of all transactions including
individual purchases and redemptions, based upon appropriate supporting
documents; and (iv) any dividend reinvestment order, application,
specific address, payment and processing instructions and correspondence
relating to the current maintenance of the account.
B. Share Issuance. Record the issuance of shares of each Fund, portfolio or
class. Except as specifically agreed in writing between Chase and the
Fund, Chase shall have no obligation when countersigning and issuing
and/or crediting shares to take cognizance of any other laws relating to
the issue and sale of such shares except insofar as policies and
procedures of the Stock Transfer Association recognize such laws.
C. Transfer, Purchase, Exchange and Redemption Orders. Process all orders
for the transfer, purchase, exchange and redemption of shares of the Fund
in accordance with the Fund's current prospectus and customary transfer
agency policies and procedures, including electronic transmissions which
the Fund acknowledges it has authorized, or in accordance with any
instructions of the Fund or its agents which Chase reasonably believes to
be authorized.
D. Shareholder Communications. Transmit all communications by the Fund to
its shareholders promptly following the delivery by the Fund of the
material to be transmitted by mail, telephone, courier service or
electronically.
E. Proxy Materials. Assist with the mailing or transmission of proxy
materials, tabulating votes, and compiling and certifying voting results.
Services may include the provision of inspectors of election at any
meeting of shareholders.
F. Share Certificates. If permitted by Fund policies, and if a shareholder
of the Fund requests a certificate representing shares, Chase as Transfer
Agent, will countersign and mail a share certificate to the investor at
his/her address as it appears on the Fund's shareholder records.
C-1
<PAGE>
G. Returned Checks. In the event that any check or other negotiable
instrument for the payment of shares is returned unpaid for any reason,
Chase will take such steps, as Chase may, in its discretion, deem
appropriate and notify the Fund of such action. However, the Fund
remains ultimately liable for any returned checks or negotiable
instruments of its shareholders.
H. Shareholder & Broker-Dealer Correspondence. Acknowledge all
correspondence from shareholders and broker-dealers relating to share
accounts and undertake such other shareholder and broker-dealer
correspondence as may from time to time be mutually agreed upon.
I. Tax Reporting. Chase shall issue appropriate shareholder tax forms as
required.
J. Dividend Disbursing. Chase will prepare and mail checks, place wire
transfers or credit income and capital gain payments to shareholders.
The Fund will advise Chase of the declaration of any dividend or
distribution and the record and payable date thereof at least five (5)
days prior to the record date. Chase will, on or before the payment date
of any such dividend or distribution, notify the Fund's Custodian of the
estimated amount required to pay any portion of such dividend or
distribution payable in cash, and on or before the payment date of such
distribution, the Fund will instruct its Custodian to make available to
Chase sufficient funds for the cash amount to be paid out. If a
shareholder is entitled to receive additional shares by virtue of any
such distribution or dividend, appropriate credits will be made to each
shareholder's account.
K. Escheatment. Chase shall provide escheatment services only with respect
to the escheatment laws of the Commonwealth of Massachusetts, including
those which relate to reciprocal agreements with other states.
L. Telephone Services. Chase will provide staff coverage, training and
supervision in connection with the Fund's telephone line for shareholder
inquiries, and will respond to inquiries concerning shareholder records,
transactions processed by Chase, procedures to effect the shareholder
records and inquiries of a general nature relative to shareholder
services.
M. 12b-1. Chase will calculate and process all 12b-1 payments in accordance
with each Fund's current prospectus.
N. Commission Payments. Chase will calculate and process all commission
payments in accordance with each Fund's current prospectus.
O. Requests for Information. Chase will provide all required information in
a timely fashion in support of regulatory filings.
P. SAS 70. Chase will make available to the Funds' sponsor independent
auditor reports in compliance with SAS 70.
C-2
<PAGE>
Q. Regulatory Changes. Chase will provide assistance with the analysis and
implementation of any changes required by regulatory bodies.
C-3
<PAGE>
Exhibit 99.i
June 25, 1999
Nuveen Municipal Money Market Fund, Inc.
333 West Wacker Drive
Chicago, Illinois 60606
Re: Opinion of Counsel regarding Post-Effective Amendment No. 19 to the
Registration Statement filed on Form N-1A under the Securities Act of
1933 (File No. 2-78736)
Ladies and Gentlemen:
We have acted as counsel to Nuveen Municipal Money Market Fund, Inc., a
Maryland corporation (the "Fund"), in connection with the above-referenced
Registration Statement on Form N-1A (as amended, the "Registration Statement")
which relates to the Fund's shares of common stock, par value $.01 per share
(collectively, the "Shares"). This opinion is being delivered to you in
connection with the Fund's filing of Post-Effective Amendment No. 19 to the
Registration Statement (the "Amendment") to be filed with the Securities and
Exchange Commission on or about June 25, 1999 pursuant to Rule 485(b) of the
Securities Act of 1933 (the "1933 Act"). With your permission, all assumptions
and statements of reliance herein have been made without any independent
investigation or verification on our part except to the extent otherwise
expressly stated, and we express no opinion with respect to the subject matter
or accuracy of such assumptions or items relied upon.
In connection with this opinion, we have reviewed, among other things,
executed copies of the following documents:
(a) a certificate of the Maryland State Department of Assessments and
Taxation (the "Department") as to the existence of good standing of
the Fund;
(b) copies, certified by the Department, of the Fund's Articles of
Incorporation and of all amendments and all supplements thereto (the
"Charter");
<PAGE>
Nuveen Tax-Free Reserves, Inc.
June 25, 1999
Page 2
(c) a certificate executed by Karen L. Healy, an Assistant Secretary of
the Fund, certifying as to, and attaching copies of, the Fund's
Charter and the By-Laws, as amended (the "By-Laws"), and certain
resolutions adopted by the Board of Directors of the Fund authorizing
the issuance of the Shares; and
(d) a printer's proof, dated June 25, 1999, of the Amendment.
In our capacity as counsel to the Fund, we have examined the originals, or
certified, conformed or reproduced copies, of all records, agreements,
instruments and documents as we have deemed relevant or necessary as the basis
for the opinions hereinafter expressed. In all such examinations, we have
assumed the legal capacity of all natural persons executing documents, the
genuineness of all signatures, the authenticity of all original or certified
copies, and the conformity to original or certified copies of all copies
submitted to us as conformed or reproduced copies. As to various questions of
fact relevant to such opinion, we have relied upon, and assume the accuracy of,
certificates and oral or written statements of public officials and officers or
representatives of the Fund. We have assumed that the Registration Statement,
as filed with the Securities and Exchange Commission, will be in substantially
the form of the printer's proof referred to in paragraph (d) above.
Based upon, and subject to, the limitations set forth herein, we are of the
opinion that the Shares, when issued and sold in accordance with the Fund's
Charter and By-Laws, and for the consideration described in the Registration
Statement, will be legally issued, fully paid and non-assessable, under the laws
of the State of Maryland.
We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement. In giving this consent, we do not admit that we are in
the category of persons whose consent is required under Section 7 of the 1933
Act.
Very truly yours,
Morgan, Lewis & Bockius LLP
<PAGE>
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the use of our report
dated April 12, 1999, and to all references to our Firm included in or made a
part of this registration statement of Nuveen Municipal Money Market Fund, Inc.
(formerly Nuveen Tax-Free Reserves, Inc.)
ARTHUR ANDERSEN LLP
Chicago, Illinois
June 21, 1999
<PAGE>
Nuveen Municipal Money Market Fund, Inc.
12b-1 Service Plan
Pursuant to the provisions of Rule 12b-1 under the Investment Company Act of
1940 (the "Act"), this l2b-1 Service Plan (the "Plan") has been adopted for
Nuveen Municipal Money Market Fund, Inc. (the "Fund"), by the members of the
Fund's Board of Directors (the "Board"), including the Board members who are not
"interested persons" of the Fund and who have no direct or indirect financial
interest in the operation of the Plan or in any agreements related to the Plan
(the "Qualified Board Members") at a meeting called for the purpose of voting on
this Plan.
1. Compensation. The Fund will pay to John Nuveen & Co. Incorporated
("Nuveen") at the end of each calendar month (or such other payment period as
the Board may determine) a service fee computed at the annual rates set forth
below. Nuveen shall compensate various financial service firms ("Firms") that
appear as the dealer of record as to shares of the Fund (which may include
Nuveen), in accordance with the provisions of the Fund's Service Agreement (the
"Service Agreement"), for providing ongoing services to the Fund or its
shareholders. Such services shall include establishing and maintaining
shareholder accounts; processing purchase; redemption and exchange transactions;
performing sub-accounting services; providing information or answering
shareholders' inquiries as to the Fund, their shares of the Fund, or their
overall investment portfolio; promoting sale of shares of the Fund; and other
similar services. In its discretion, Nuveen may pay, out of its own resources,
additional compensation or concessions to Firms satisfying certain criteria, in
such amounts as Nuveen may determine from time to time. The service fee paid by
the Fund shall be based upon average daily net assets of the Fund. For the month
(or other payment period) in which this Plan becomes effective or terminates,
there shall be an appropriate proration of the service fee set forth in this
Paragraph 1 on the basis of the number of days that the Plan and any agreements
related to the Plan are in effect during the month (or other payment period).
The Fund shall pay l2b-1 service fees to Nuveen based on the annual percentage
of the average daily net assets of the Fund in each dealer's account, as
follows:
Net Assets Service Fee
---------- -----------
Less than $2 million .10%
$2 million to $5 million .15%
$5 million to $10 million .20%
$10 million and over .25%
2. Periodic Reporting. Nuveen shall prepare for the Board on a quarterly
basis reports complying with the requirements of Rule l2b-1 showing 12b-1 fees
paid by the Fund and amounts paid to the various Firms, and such other
information as from time to time shall be reasonably requested by the Board.
3. Continuance. This Plan shall continue in effect indefinitely, provided
that such
<PAGE>
continuance is approved at least annually by a vote of a majority of the Board,
and of the Qualified Board Members, cast in person at a meeting called for such
purpose or by vote of at least a majority of the outstanding voting securities
of the affected Fund.
4. Termination. This Plan may be terminated at any time without penalty with
respect to the Fund by vote of a majority of the Qualified Board Members or by
vote of the majority of the outstanding voting securities of the Fund.
5. Amendment. This Plan may not be amended to increase materially the amount
to be paid to Nuveen by the Fund for services with respect to the Fund without
the vote of a majority of the outstanding voting securities of the Fund. All
material amendments to this Plan must in any event be approved by a vote of a
majority of the Board, and of the Qualified Board Members, cast in person at a
meeting called for such purpose.
6. Selection of Non-Interested Board Members. So long as this Plan is in
effect, the selection and nomination of those Board members who are not
interested persons of the Company will be committed to the discretion of Board
members who are not themselves interested persons.
7. Recordkeeping. The Fund will preserve copies of this Plan, the Service
Agreement, and all reports made pursuant to Paragraph 2 above for a period of
not less than six (6) years from the date of this Plan, the Service Agreement,
or any such report, as the case may be, the first two (2) years in an easily
accessible place.
8. Limitation of Liability. Any obligation of the Company or a Fund hereunder
shall be binding only upon the assets of the Fund and shall not be binding on
any Board member, officer, employee, agent, or shareholder of the Fund. Neither
the authorization of any action by the Board members or shareholders of the Fund
nor the adoption of the Plan on behalf of the Fund shall impose any liability
upon any Board member or upon any shareholder.
9. Definitions. The terms "interested person" and "vote of a majority of the
outstanding voting securities" shall have the meanings set forth in the Act and
the rules and regulations thereunder.
10. Severability; Separate Action. In any provision of this Plan shall be held
or made invalid by a court decision, rule or otherwise, the remainder of this
Plan shall not be affected thereby. Action shall be taken separately for the
Series or Class as the Act or the rules thereunder so require.
June 25, 1999
<PAGE>
ICIM REINSURANCE COMPANY
102 South Winooski Avenue
Burlington, Vermont 05402-0739
MONEY MARKET FUND BOND
<PAGE>
ICIM REINSURANCE COMPANY
102 South Winooski Avenue
Burlington, Vermont 05402-0739
MONEY MARKET FUND BOND
DECLARATIONS
Bond Number:
--------------------------
ITEM 1. Named Insured Money Market Fund:
-------------------------------
Address:
------------------------------------------------------
ITEM 2. Bond Period:
From: To:
----------------------- -------------------------------------
(Month, Day, Year) (Month, Day, Year)
(Both dates at 12:01 A.M. Standard Time at the address of the Company stated
in Item 1.)
ITEM 3. Limit of Liability:
$_________ Aggregate Limit of Liability for the Bond Period
ITEM 4. Deductible:
__________ basis points -- First Tier Securities
50 basis points -- Second Tier Securities
ITEM 5. Riders:
This Bond is subject to the terms of the following Riders attached and
incorporated by reference at the effective date of this Bond and to all
other Riders attached after the effective date of the Bond.
Riders:
ITEM 6. Designated Agent:
Name:
-------------------------------------------------------------------
Address:
---------------------------------------------------------------
Telephone: Telecopier:
-------------------- ------------------------------
(C) 1998 ICIM Reinsurance Company
All rights reserved.
<PAGE>
MONEY MARKET FUND BOND
ICIM Reinsurance Company (hereinafter, the "Company"), in consideration of
an agreed premium, and in reliance upon the application and all other
information furnished to the Company by the Insured Money Market Funds, agrees
that if an Insured Money Market Fund sustains a Loss in excess of the
Deductible, solely as the result of any single Loss Event occurring during the
Bond Period with respect to a Protected Asset, (1) the Insured Money Market Fund
may, consistent with the provisions of the attached no-action letter issued by
the staff of the Securities and Exchange Commission and subject to the
provisions of the Bond, continue to include the Protected Asset as a portfolio
asset of the Insured Money Market Fund until the Payment Date, and (2) the
Company will, subject to the provisions of this Bond, pay the Covered Loss to
the Insured Money Market Fund on the Payment Date.
I. DEFINITIONS
Whenever used in this Bond the following terms shall have the meanings
indicated.
A. "Act" shall mean the Investment Company Act of 1940, as amended
from time to time.
B. "Bond" shall mean this bond and all riders issued during the Bond
Period.
C. "Bond Period" shall mean the period stated in Item 2 of the
Declarations, unless this Bond is terminated or canceled pursuant to
Sections III.G, III.Q or III.R below, in which event the Bond Period
shall end at 12:01 a.m. on the date on which the termination or
cancellation is effective.
D. "Business Day" shall mean any day other than Saturday, Sunday or
any customary business holiday.
E. "Covered Loss" shall mean the applicable Loss less the Deductible.
F. "Deductible" shall mean the dollar amount computed by reference to the
basis points set forth in Item 4 of the Declarations. The Deductible
shall be derived by applying such basis points to the value of the
total assets of the Insured Money Market Fund (using the method of
valuation routinely used by it to compute its net asset value) as of
the close of business on the first Business Day prior to the Loss
Event. The Deductible shall be determined separately for each
2
<PAGE>
Insured Money Market Fund and for each Loss Event.
G. "Designated Agent" shall mean the entity or person stated in Item 6
of the Declarations, at the stated address.
H. "Event of Insolvency" shall mean:
1. An admission of insolvency, the application by an entity for the
appointment of a trustee, receiver, rehabilitator, or similar officer
for all or substantially all of its assets, a general assignment for
the benefit of creditors, or the filing by an entity of a voluntary
petition in bankruptcy or application for reorganization or an
arrangement with creditors; or
2. The institution of similar proceedings by another person which
proceedings are not contested by the entity; or
3. The institution of similar proceedings by a government agency, whether
or not contested by the entity.
I. "Impaired Asset" shall mean a Protected Asset that has experienced a Loss
Event.
J. "Insured Money Market Fund" or "Fund" shall mean each registered investment
company (or series thereof) listed on Item 1 of the Declarations that is a
money market fund under Rule 2a-7.
K. "Investment Adviser" shall mean an investment adviser, as defined in the
Act, to an Insured Money Market Fund.
L. "Limit of Liability" shall mean the Company's maximum aggregate limit of
liability under this Bond as set forth in Item 3 of the Declarations.
M. "Loss" shall mean:
1. with respect to Loss Events I.N.1 and I.N.2, the excess, if any, of
the amortized cost of the Impaired Asset over the fair market value of
the Impaired Asset, both as determined at the close of business on the
Payment Date;
2. with respect to Loss Event I.N.3 (i), the amount of the reduction in
the net asset value of the Insured Money Market
3
<PAGE>
Fund as a result of such Loss Event; and
3. with respect to Loss Event I.N.3 (ii), the amount of payment found to
be a preference by a court; and
4. with respect to Loss Event I.N.4, the excess, if any, of (i) the
repurchase price due the Insured Money Market Fund over (ii) any
amount received by the Insured Money Market Fund from the seller plus
the fair market value of the purchased securities or other collateral
held by or for the Insured Money Market Fund under the repurchase
agreement, determined as of the first Business Day following the Loss
Event.
N. "Loss Event" shall mean:
1. the issuer of a Protected Asset has either (i) defaulted in the
payment of all or any portion of the principal or accrued interest
when due and payable, or (ii) become the subject of an Event of
Insolvency; or
2. with respect to a Protected Asset backed by a demand feature,
guarantee, letter of credit or similar credit enhancement, such credit
enhancement has become uncollectible, in whole or in part, as the
result of the credit enhancement provider becoming the subject of an
Event of Insolvency; or
3. with respect to a claim by a trustee in bankruptcy, debtor in
possession, receiver, conservator or analogous entity that a payment
received by an Insured Money Market Fund from an issuer or credit
enhancement provider is a preference, the earlier to occur of:
(i) a determination by an Insured Money Market Fund's board of
directors, in accordance with the Act and generally accepted
accounting principles, that the Insured Money Market Fund's net
asset value must be reduced to reflect the preference claim; or
(ii) a final judgment by a court that such payment constitutes a
voidable preference; or
4. an event of seller default under a repurchase agreement.
4
<PAGE>
O. "Maturity Date" shall mean, with respect to a Protected Asset, the
earlier of its stated maturity date or 397 days following the Loss
Event.
P. "Payment Date" shall mean the date selected by the Company for payment of
the Covered Loss. The Company shall consult with the Insured Money Market
Fund before establishing the Payment Date, and shall provide at least one
Business Day's prior notice of the Payment Date.
1. With respect to Loss Events I.N.1 and I.N.2, the Payment Date shall
not be later than the Maturity Date of the Impaired Asset, except if a
Loss Event occurs within five Business Days of the Maturity Date of
the Impaired Asset, the Payment Date may be up to five Business Days
following such Loss Event.
2. With respect to Loss Event I.N.3, the Payment Date shall not be later
than five Business Days following the payment by the Insured Money
Market Fund of the amount determined to be a preference.
3. With respect to Loss Event I.N.4, the Payment Date shall not be later
than five Business Days following the Loss Event.
Q. "Protected Asset" shall mean any security, as defined in Section 2(a)(36)
of the Act (bus excluding any security backed by the full faith and credit
of the United States), that, on the first Business Day prior to the Loss
Event and without considering the potential effect of the Bond, the Insured
Money Market Fund was entitled to hold in its portfolio pursuant to
Rule 2a-7.
R. "Rule 2a-7" shall mean Rule 2a-7 promulgated by the Securities and Exchange
Commission pursuant to the Act, as amended from time to time.
II. SPECIAL PROVISIONS
A. The Company shall pay any increase in the amount of Covered Loss resulting
from an extension of the Payment Date beyond the first Business Day
following the Loss Event, and any such increase shall not be subject to or
applied against the Limit of Liability, provided, however, that:
5
<PAGE>
(1) If the notice and additional information required of the Insured
Money Market Fund pursuant to Section III.A.(3) and (4) hereof are first
given to the Company after the first Business Day following the Loss Event,
any such increase in the amount of a Covered Loss that occurred on or prior
to the first Business Day after the date such notice and additional
information are given to the Company shall be subject to and applied
against the Limit of Liability; and
(2) if the Loss (above the Deductible), as measured on either (i) the
first Business Day following the Loss Event or (ii) the first Business Day
after the date that the notice and additional information required of the
Insured Money Market Fund pursuant to Section III.A.(3) and (4) are first
given to the Company, as applicable, exceeds the Limit of Liability, the
Company shall have no obligation to pay such excess amount or any
subsequent increase in such amount.
B. If, between the date of a Loss Event and the Payment Date, payments become
due on an Impaired Asset by its issuer or credit enhancement provider, the
Company shall pay promptly after such due date, subject to the Deductible
and the other provisions of this Bond, an amount equal to the excess, if
any, of the payments due by the issuer or credit enhancement provider over
any such payments actually made; provided that the Insured Money Market
Fund has delivered to the Company notice and additional information
pursuant to Section III.A.(3) and (4). If such payments represent principal
or interest that would otherwise be reflected in the Loss, such payments
shall be applied against the Covered Loss.
C. In lieu of paying a given Covered Loss, the Company shall have the right,
but not the obligation, to purchase the Impaired Asset giving rise to such
Covered Loss at amortized cost determined as of the Payment Date, less the
Deductible.
D. If, in the good faith judgment of the Company, a Protected Asset is likely
to experience a Loss Event, then the Company shall have the right, but not
the obligation, to purchase such Protected Asset at a price equal to the
greater of the then fair market value or amortized cost of the Protected
Asset.
E. If: (1) a Protected Asset held by an Insured Money Market Fund is likely to
experience a Loss Event in the good faith judgment of its Investment
Adviser, and
6
<PAGE>
(2) such Investment Adviser during the Bond Period purchases such
Protected Asset from the Insured Money Market Fund with the prior written
consent of the Company (which consent may be withheld in the Company's sole
discretion) and,
(3) such Protected Asset was one that, on the first Business Day
prior to such purchase by the Investment Adviser and without considering
the potential effect of the Bond, the Insured Money Market Fund was
entitled to hold in its portfolio, pursuant to Rule 2a-7,
then, if, during the Bond Period, such Protected Asset experiences a Loss
Event prior to its Maturity Date while owned by such Investment Adviser,
the Company shall, subject to the provisions of this Bond, pay to such
Investment Adviser the Covered Loss relating to such purchased Protected
Asset as if such Protected Asset were still owned by such Insured Money
Market Fund. In such case, as the context requires, references in the Bond
to the Insured Money Market Fund shall be read to apply to such Investment
Adviser.
III. CONDITIONS AND LIMITATIONS
A. This Bond shall respond only if: (1) the Loss Event occurs and is
reported to the Company during the Bond Period; (2) the Insured Money
Market Fund sustains a Loss in excess of the Deductible solely as a
result of that Loss Event; (3) upon its discovery of such Loss Event,
the Insured Money Market Fund immediately informs the Company, as set
forth in Section III.N., of such discovery; (4) the Insured Money
Market Fund promptly thereafter provides to the Company additional
information in substantially the form attached as Exhibit A; and (5)
there has been full compliance with all of the provisions of this
Bond.
B. The responsibility for proving any payment obligation of the Company
under this Bond as to a given Loss Event shall at all times rest with
the Insured Money Market Fund.
C. The Company shall pay a given Covered Loss on the Payment Date,
subject to the provisions of this Bond and provided that additional
information in substantially the form attached as Exhibit A has been
submitted by the Insured Money Market Fund to the Company. The Insured
Money Market Fund shall be obliged to promptly
7
<PAGE>
furnish the Company with such other documents and assistance as the
Company may request to permit the Company to select a Payment Date, to
measure the Loss sustained or potentially sustainable by the Fund, or
otherwise to assess and exercise the Company's rights and obligations
under this Bond. After payment of the Covered Loss, the Company shall
have no further obligation under this Bond or any successor bond to
pay any additional loss that may be sustained by the Insured Money
Market Fund or the Investment Adviser with respect to the Impaired
Asset.
D. The Company shall make any payment under this Bond directly to the
Insured Money Market Fund. If the Company makes any payment to the
Insured Money Market Fund, the Fund must provide the Company with a
full and unconditional release of all liabilities arising from such
Loss Event. No other person or entity shall have any rights under this
Bond.
E. Except as set forth in II.A., the amount set forth under Limit of
Liability in the Declarations shall be the Company's maximum aggregate
limit of liability under the Bond. The Company's Limit of Liability
will not be reinstated, in whole or in part, by any salvage,
subrogation or other recovery by the Company.
F. If the total payments otherwise due to one or more Insured Money
Market Funds under the terms of this Bond exceeds the Limit of
Liability, (1) the Insured Money Market Funds shall be paid in the
chronological order of the dates of their respective Loss Events, and,
(2) if Loss Events occur on the same date, the Insured Money Market
Funds incurring such Losses shall be paid in proportion to their
respective total assets as measured by the Funds as of the close of
the first Business Day before the Loss Event, unless otherwise agreed
by the Company and the affected Funds.
G. In the event the Limit of Liability is exhausted, any and all
obligations of the Company shall be deemed to be completely fulfilled
and extinguished and this Bond shall terminate immediately.
H. Coverage under this Bond shall apply only to the excess over any other
valid and collectible insurance or similar indemnity coverage.
I. The Company shall be subrogated, to the extent of any payment made or
obligated to be made under this Bond, to all claims or rights of
recovery of the Insured Money Market Fund, and such Fund, as a
condition to receipt of such payment, shall (1) take all action and do
8
<PAGE>
everything that may be necessary to enable the Company to pursue such
claims (including, without limitation, execution of an assignment, in
a form reasonably acceptable to the Company, of such claims and rights
in favor of the Company), and (2) otherwise cooperate with the Company
and exercise its best efforts to assist the Company to recover such
payments, together with all costs and expenses (including reasonable
attorney fees and disbursements incurred by the Company); provided,
however, all rights of subrogation shall be waived against the
officers and directors of the Fund, the Investment Adviser and
principal underwriter of the Fund ("Related Persons"), unless any such
Related Person has committed willful misfeasance, bad faith or gross
negligence in any way relating to the Impaired Asset.
Any amounts recovered through subrogation by or on behalf of an
Insured Money Market Fund for Loss Events under this Bond shall be
disbursed in the following order of priority:
1. the Company or the Insured Money Market Fund, as applicable,
shall be reimbursed for any amounts actually paid for the cost of
recovery proceedings; then
2. the Insured Money Market Fund shall be reimbursed to the extent
that its Covered Loss exceeded any payment made to it under this
Bond; then
3. the Company shall be reimbursed to the extent of its payments
made under this Bond; then
4. the Insured Money Market Fund shall be paid the balance.
J. If the Company has not exercised its right under Section II.C to
purchase an Impaired Asset, the Company shall have no rights of
recovery against the Insured Money Market Fund with respect to any
post-Payment Date increase in the fair market value of the Impaired
Asset. If the Company has exercised its right under Section II.C to
purchase an Impaired Asset, then the Insured Money Market Fund shall
have no rights of recovery against the Company with respect to any
post-Payment Date increase in the fair market value of the Impaired
Asset.
9
<PAGE>
K. The Designated Agent shall act on behalf of the Insured Money Market
Funds with respect to the giving of all notices to the Company and the
receiving of all notices from the Company.
L. Notice to any agent or knowledge possessed by any agent or other
person acting on behalf of the Company shall not effect a waiver or a
change in any part of this Bond or stop the Company from asserting any
rights under this Bond, nor shall the provisions of this Bond be
waived or changed except by written Rider issued to form a part of
this Bond.
M. Notice of the following events shall be given promptly to the Company:
(1) any Loss Event, whether or not the Loss is below the Deductible,
and (2) any downgrade of a portfolio security (other than a change in
modifier, such as a "+" or "-") by any nationally recognized
statistical ratings organization.
N. The notice referred to in Section III.A.(3) shall be given both by
telephone (1-800-643-4246) and facsimile (202-326-5373). A
confirmation in writing of such notice and any additional information
subsequently submitted shall be mailed by an air courier guaranteeing
overnight delivery to ICIM Reinsurance Company, 102 South Winooski
Avenue, Burlington, Vermont, 05402-0739. Any notice or communication
to be sent or delivered to any Insured Money Market Fund shall be
directed to the name and address or telecopier number set forth in
Item 6 of the Declarations. Except as otherwise provided in this Bond,
any such notice or communication shall be deemed to have been duly
given: upon receipt, if mailed; at the time delivered by hand, if
personally delivered; when receipt acknowledged, if telecopied; and on
the next Business Day, if timely delivered to an air courier
guaranteeing overnight delivery.
O. Assignment of any interest under this Bond shall not bind the Company
unless the Company provides its prior written consent (which consent
may be withheld by the Company in its sole discretion).
P. If a Loss Event occurs, no action shall be taken with respect to any
Impaired Asset, including, but not limited to, sale of the Impaired
Asset or waiver of rights of subrogation against any party, without
the prior written consent of the Company (which consent may not be
unreasonably withheld).
Q. This Bond may be canceled by the Company by mailing or delivering to
the Designated Agent written notice stating when, not less than
10
<PAGE>
sixty (60) days thereafter, such cancellation shall be effective. The
mailing of such notice shall be sufficient notice and cancellation
shall be effective on the date stated in the notice. Notwithstanding
the foregoing, the Bond may be canceled by the Company for failure to
pay a premium when due by mailing or delivering to the Designated
Agent written notice stating when, not less than ten (10) days
thereafter, such cancellation shall be effective. If this Bond is
cancelled, the earned premium shall be computed pro rata, but only if
no Loss Event has occurred during the Bond Period. If a Loss Event has
occurred during the Bond Period and prior to the effective date of
cancellation, the premium shall be deemed fully earned. Premium
adjustment may be made either at the time cancellation is effective or
as soon as practicable after cancellation becomes effective; however,
such payment or tender of unearned premium is not a condition of
cancellation.
R. (1) If, during the Bond Period, there is a change in control of any
Insured Money Market Fund or Investment Adviser or if any Fund or
Investment Adviser is merged, consolidated or otherwise combined with
any other entity, or if the Investment Adviser or principal
underwriter of any Fund ceases to act as such, the Designated Agent
shall report such proposed event to the Company in writing not less
than thirty (30) days prior to the effective date of such event.
(2) Up receipt of such report pursuant to subparagraph (1) above, the
Company may elect, in its sole discretion, to (a) impose conditions on
continued coverage, and/or (b) charge additional premium for continued
coverage, or (c) terminate the Bond in whole or with respect to the
affected Insured Money Market Fund.
(3) If (a) the notice required under subparagraph (1) is not given,
or (b) if such notice is given and any additional premium required
pursuant to subparagraph (2) is not paid when due, the Bond shall be
deemed to have terminated when the notice was required or such
additional premium was due.
S. In the event of termination, cancellation or non-renewal of this Bond
as to any or all Insured Money Market Funds, it shall be the
responsibility of such Insured Money Market Funds to notify any person
or entity entitled to notice of the discontinuance of coverage
(including any shareholders). The termination, cancellation or non-
renewal will be effective notwithstanding the failure by such Insured
Money Market Fund to provide such notice, and the Company shall
11
<PAGE>
in no event have any obligation to provide such notice.
T. No action shall lie against the Company unless, as a condition
precedent, there has been full compliance with all of the provisions
of this Bond.
U. Any waiver by the Company of a breach of any provision of this Bond
shall not operate as a waiver of any other breach of such provision or
a breach of any other provision of this Bond. The failure by the
Company to insist upon strict adherence to any provision of this Bond
on one or more occasions shall not be considered a waiver or deprive
the Company thereafter to insist upon strict adherence to that
provision or any other provision of this Bond. Any waiver or amendment
hereto must be in writing and executed by an authorized officer of the
Company.
V. The Declarations and the Money Market Fund Bond, along with the
completed and signed Application, including attachments, shall
constitute the contract between the Insured Money Market Fund and the
Company.
W. Any dispute arising out of or relating to an interpretation or breach
of the Bond shall be settled by binding arbitration. The Rules of the
American Arbitration Association shall apply to such arbitration,
except with respect to the selection of the arbitration panel, which
shall consist of one arbitration selected by the Insured, one
arbitrator selected by the Company and a third arbitrator selected by
the first two arbitrators.
IN WITNESS WHEREOF, the Company has caused this Bond to be issued and executed
on this ____ day of _________, ____.
ICIM REINSURANCE COMPANY
By:
-----------------------
Name:
Title:
12
<PAGE>
Exhibit A
---------
[NOTE: Language in brackets to be used when Adviser has purchased a
Protected Asset pursuant to Section II.E of the Bond.]
[Date]
ICIM Reinsurance Company
102 South Winooski Avenue
Burlington, Vermont 05402-0739
Re: Name of Insured Fund
Money Market Fund Bond Number _______
Ladies and Gentlemen:
We hereby inform ICIM Reinsurance ("Company") pursuant to Section III.A.(4)
of the above-referenced Bond (the "Bond") that the above-referenced Insured
Money Market Fund [Investment Adviser] has sustained a Loss in excess of the
Deductible solely as a result of the Loss Event described below. Capitalized
terms used but not defined in this letter shall have the respective meanings
ascribed to them in the Bond.
1. The following is information regarding the Impaired Asset which suffered a
Loss Event:
. Issuer and Title of Impaired Asset
. Face Amount of Impaired Asset
. Date of Loss Event
. Amortized cost of Impaired Asset as of the close of business on the date
of the Loss Event
. Estimated fair market value of Impaired Asset, if any, as of the close
of business on the date of the Loss Event
. Coupon amount (and/or interest payment) on Impaired Asset
. Issue Date and Maturity Date of Impaired Asset
. Date Impaired Asset purchased by Insured Money Market Fund
[Date Impaired Asset purchased from Insured Money Market Fund by
Investment Adviser]
. Credit Rating (S&P, Moody's, etc.) of Impaired Asset on the first
Business Day prior to Loss Event
13
<PAGE>
Exhibit A
---------
2. Net Asset Value of Insured Money Market Fund at close of business on first
Business Day prior to Loss Event (the calculation thereof is attached to this
notice):
3. The undersigned, a duly authorized officer of the Insured Money Market Fund
[Investment Adviser] represents that:
a. The Insured Money Market Fund [Investment Adviser] has suffered a Loss
Event with respect to the above-described Impaired Asset.
b. The above-described Impaired Asset is one that, on the first Business
Day prior to the Loss Event [prior to the date such Impaired Asset was
purchased by the Investment Adviser pursuant to Section II.E of the
Bond] and without considering the potential effect of the Bond, the
Insured Money Market Fund was entitled to hold in its portfolio
pursuant to Rule 2a-7, under the terms of the Bond and Riders attached
to the Bond.
c. The above-described Loss Event was not directly caused by a Year 2000
Failure.
d. The Insured Money Market Fund [Investment Adviser] will promptly and
timely take all requisite action to seek recompense under all other
applicable coverage for such Loss Event.
Very truly yours,
Name of Insured Money Market Fund
[Investment Adviser]
By:
------------------------
Name:
Title:
14
<PAGE>
July 27, 1998
Our Ref. No. 98-441-CC
RESPONSE OF THE OFFICE OF CHIEF COUNSEL ICI Mutual Insurance Company
DIVISION OF INVESTMENT MANAGEMENT File No. 132-3
- --------------------------------------- ----------------------------
Your letter dated July 22, 1998 requests our concurrence with your view
that the board of directors of a money market fund may consider the terms and
conditions of insurance coverage of the type described in your letter in
determining whether it is not in the best interests of the fund to dispose of a
portfolio security following the occurrence of a default or other credit-related
event described in subparagraphs (A) through (D) of Rule 2a-7(c)(6)(ii) under
the Investment Company Act of 1940 (the "Act").
Background
- ----------
ICI Mutual Insurance Company ("ICI Mutual") plans to introduce through its
wholly owned subsidiary, ICIM Reinsurance Company (the "Insurer"), an insurance
bond (a "Bond") designed to insure participating money market funds ("Insured
Funds") from losses resulting from payment defaults, issuer insolvencies and
other credit-related events with respect to portfolio securities held in
compliance with Rule 2a-7. The Bonds will be issued by the Insurer and
administered by ICIM Services, Inc., another wholly owned subsidiary of ICI
Mutual. You anticipate that money market funds that are affiliated with each
other may seek to purchase a Bond on a joint basis to secure higher coverage at
a lower cost than might be available if they purchased Bonds individually./1/
The Bonds will provide coverage to Insured Funds for "Loss Events" that
occur with respect to "Protected Assets." Subject to any exclusions set forth in
the Bond, "Protected Assets" will include any security, as defined in Section
2(a)(36) of the Act (but excluding any security or obligation backed by the full
faith and credit of the United States), that, on the first Business Day (as
defined in Rule 2a-7) prior to the Loss Event and without considering the
potential effect of the Bond, the Insured Fund was entitled to hold in its
portfolio pursuant to Rule 2a-7./2/ "Loss
- -------------------
/1/ You believe that affiliated money market funds purchasing insurance on a
joint basis may rely on Rule 17d-1(d)(7) under the Act to exempt them from the
prohibitions of Section 17(d) of the Act. You have not asked for, and we do not
express, any view as to whether the Bonds fall within the joint insurance
arrangements contemplated by Rule 17d-l(d)(7).
/2/ You state that all Protected Assets at the time of acquisition must
therefore be Eligible Securities under Rule 2a-7(a)(10), meet the portfolio
maturity requirements of Rule 2a-7(c)(2), the portfolio quality requirements of
Rule 2a-7(c)(3), and the portfolio diversification requirements of Rule
2a-7(c)(4). You state that an assessment by a board of directors or its delegate
as to whether a portfolio security presents "minimal credit risks" for purposes
of Rule 2a-7(c)(3)(i) at the time of acquisition or thereafter is separate from
the issue addressed in your letter of whether a security (apart from the effect
of a Bond) should be disposed of or retained upon the occurrence of a Loss
Event. You therefore believe that at least until a Loss Event
<PAGE>
Events" will include: (1) defaults by the issuer of the Protected Asset in the
payment of all or any portion of the principal or accrued interest when due and
payable, or the issuer becoming subject to an Event of Insolvency (as defined
in Rule 2a-7) ("Issuer Defaults"); (2) the uncollectibility, in whole or in
part, of a demand feature, guarantee, letter of credit or similar credit
enhancement backing a Protected Asset as a result of the credit enhancement
provider becoming the subject of an Event of Insolvency ("Credit Enhancement
Insolvencies"); (3) final judgments by a court that payments received by
Insured Funds from issuers or credit enhancement providers constitute voidable
preferences, or, if earlier, appropriate determinations by the boards of Insured
Funds that the Funds' net asset values must be reduced to reflect preference
claims by trustees in bankruptcy, debtors in possession, receivers, conservators
or analogous entities ("Preference Events"); and (4) events of seller default
under repurchase agreements ("Repo Defaults").
Upon the occurrence of a Loss Event, and subject to the terms, conditions
and limitations of the Bond, the Insurer will be obligated to pay the Insured
Fund the "Covered Loss." The "Covered Loss" is the amount of the loss ("Loss")
less any deductible on the Bond, up to the maximum aggregate limit of coverage
available under the Bond./3/ The Loss generally will be the excess, if any, of
the amortized cost over the fair market value of the affected portfolio
security, both as determined at the close of business on the "Payment Date." The
Payment Date will be selected by the Insurer after consulting with the Insured
Fund, and generally must be no later than the "Maturity Date" of the portfolio
security experiencing the Loss Event. The Maturity Date is defined as the
earlier of the asset's stated maturity date or 397 days following the Loss
Event. The Insured Fund will be required under the terms of the Bond to hold the
distressed security until the Payment Date./4/ You state that because the
Insurer is obligated to pay the excess, if any,
- --------------------------------------------------------------------------------
occurs, any determination made by the board of directors or its delegate that a
security presents minimal credit risks would need to be made without regard to
the potential availability of any insurance coverage under a Bond.
/3/ You state that the Bonds will be offered on an "aggregate limit" basis
rather than on a "per occurrence" basis.
/4/ You represent that actuarial studies commissioned by ICI Mutual demonstrate
that securities subject to an issuer default or insolvency often decline in
value immediately following the event but then recover a significant portion of
their value. You state that structuring the Bonds to require an Insured Fund to
hold the portfolio security until the Payment Date allows the Insurer to obtain
the potential benefit of any market recovery without the expense of buying the
security outright from the Insured Fund. You state that this reduced net loss to
the Insurer is accomplished at no additional risk to the Insured Fund. In
addition to benefiting the Insurer, you represent that this structure benefits
an Insured Fund by allowing the Insurer to charge lower
2
<PAGE>
of the amortized cost over the fair market value of the security as measured on
the Payment Date, if the spread of the security's amortized cost over its fair
market value increases between the day following the Loss Event and the Payment
Date, the Insurer will absorb the increased loss./5/
You state that following a Loss Event, an Insured Fund should be able to
reflect the then-current value of any pending claim under a Bond when "shadow-
pricing," i.e., computing the market-based value of its assets as required by
Rule 2a-7(c)(7)(ii)(A). You state that an Insured Fund therefore should be able
to continue to use the amortized cost or penny-rounding method of calculating
its net asset value so long as any portion of the loss that is not insured does
not cause the Insured Fund to deviate from its stable net asset value. You state
that in order to take the value of a claim into account in determining the
market value of an Insured Fund's portfolio, the board of directors of the
Insured Fund (or its delegate) would need to make a good faith determination
as to the sufficiency of the coverage available under the Bond and that, based
on the facts and circumstances known at the time, the Insured Fund has a valid
claim with respect to the security concerned.
Rule 2a-7(c)(6)(ii) requires that, in the event of a default or any of the
other events described in subparagraphs (A) through (D) thereunder, a money
market fund must dispose of the affected portfolio security as soon as
practicable consistent with achieving an orderly disposition of the security,
unless the board of directors makes a finding that such disposition would not be
in the best interests of the fund. Because the terms of the Bond will require an
Insured Fund to hold the portfolio security until the Payment Date in order to
receive coverage under the Bond, you believe that an issue may be raised under
paragraph (c)(6)(ii) of the rule, which contemplates disposal of such
securities.
You note that in making a finding of whether disposition of an affected
security is not in the best interests of a money market fund, the board of
directors likely will evaluate the amount of coverage under the Bond, the
probability of recovery under the Bond, and the fact that the Insured Fund would
lose any insurance coverage under the Bond if it disposed of the affected
security prior to the Payment Date. You state that if the board determines that
the Bond's coverage should be available to cover all or a portion of the Insured
Fund's loss, such conclusion is likely to be an influential and, in many cases,
the determinative factor in the board's finding
- --------------------------------------------------------------------------------
insurance premiums, and by potentially increasing the amount of remaining
coverage available to the Insured Fund under the Bond in the event of a
subsequent Loss Event.
/5/ You also represent that if the spread of a security's amortized cost over
its fair market value increases between the day following the Loss Event and the
Payment Date, the aggregate policy limits on the Bond will be reduced only by
the difference between the amortized cost of the security and its fair market
value as of the business day following the Loss Event (or such other date that
notice is given).
3
<PAGE>
regarding disposition of the security./6/ You believe that neither the Bond's
requirements nor the potentially adverse effect of the disposition of a
portfolio security on the Insured Fund's coverage under the Bond should be
viewed as improperly circumscribing a board's discretion in making this
determination under Rule 2a-7(c)(6)(ii).
Discussion
- ----------
Rule 2a-7(c)(6)(ii) provides that the board of directors of a money market
fund, in making a finding of whether it is in the best interests of the fund to
retain a security, "may take into account, among other factors, market
conditions that could affect the orderly disposition of the portfolio security."
The Commission added this provision to Rule 2a-7 in recognition of the concern
that it may not be in the best interests of a money market fund to dispose of
distressed securities in a "fire sale" environment./7/ Rule 2a-7, however, does
not specify what "other factors" the board may consider when determining whether
retention of a security is in the best interests of a fund. You assert that the
existence of insurance coverage of the type described in your letter is an
appropriate factor for the board of directors of a money market fund to
consider.
The staff is generally of the view that a board of directors should
consider any and all factors that it believes to be material in assessing
whether retention of a security is in the best interests of the fund./8/ Indeed,
as a general matter, the staff believes that in order for directors to satisfy
their duties as fiduciaries under the Act and under state law, they always must
consider all material factors in determining whether any course of action is in
the best interests of a fund. The staff concurs with your view that the board of
directors of an Insured Fund may find, consistent with the requirements of Rule
2a-7, that in light of the terms and conditions of a Bond it is not in the best
interests of the fund to dispose of a portfolio security following the
occurrence of a
- ------------------------------
/6/ You note that there may be instances in which the board of directors of an
Insured Fund concludes that it is in the best interests of the Insured Fund to
dispose of an affected security as soon as practicable, notwithstanding any
potential recovery under a Bond. Such a conclusion might be reached when
coverage is unlikely to be available under the Bond, or the aggregate limit of
liability has been exhausted by prior claims made under the Bond.
/7/ See Revisions to Rules Regulating Money Market Funds, Investment Company
Act Release No. 18005 (Feb. 20, 1991).
/8/ Cf. Revisions to Rules Regulating Money Market Funds, Investment Company
Act Release No. 17589 (July 17, 1990) at n.50 and accompanying text (indicating
that boards of directors should consider all material factors in analyzing
whether a security presents minimal credit risks, not just the elements
suggested by the staff) (citing Letter to Registrants (pub. avail. May 8, 1990)
and Investment Company Institute (pub. avail. Dec. 6, 1989)).
4
<PAGE>
default or other credit-related event described in subparagraphs (A) through (D)
of Rule 2a-7(c)(6)(ii)./9/ We believe that the existence of insurance coverage
does not improperly circumscribe the board's discretion in making this
determination./10/
We note that if the board of directors of an Insured Fund makes a
determination under Rule 2a-7(c)(6)(ii) that it is not in the best interests of
the Insured Fund to dispose of a security, the board or its delegate should
continually monitor subsequent events that may affect the value of the security
or the availability of the insurance coverage. If, as a result of such
subsequent events, the board determines that retention of the security is no
longer in the best interests of the Insured Fund, the Insured Fund should
dispose of the security as soon as practicable consistent with achieving its
orderly disposition./11/
/s/ Brendan C. Fox
- ------------------
Brendan C. Fox
Special Counsel
- -----------------------------
/9/ Our response is expressly limited to the question raised in your letter.
You have not asked for, and we do not express, any view with regard to the
operation of the Bonds under any provision of Rule 2a-7 other than paragraph
(c)(6)(ii).
/10/ We note that, under Rule 2a-7(c)(10), a money market fund must maintain a
written record of the board's considerations and actions taken in connection
with the discharge of its responsibilities under the rule, and that such records
must be available for inspection by the Commission.
/11/ We also take this opportunity to express our views regarding an Insured
Fund's disclosure obligations with regard to insurance coverage of the type
described in your letter. We believe that, consistent with the requirements of
Form N-1A, an Insured Fund should disclose the nature and extent of any
insurance coverage under a Bond in its registration statement and, if required
by generally accepted accounting principles, in its financial statements. We
also believe that, because a Bond does not guarantee that an Insured Fund will
not incur a loss, it may be misleading for an Insured Fund to market itself as
an "insured" or "guaranteed" fund.
5
<PAGE>
ICIM REINSURANCE COMPANY
MONEY MARKET FUND BOND
RIDER NO. 1
- --------------------------------------------------------------------------------
INSURED BOND NUMBER
Nuveen Tax-Free Reserves, Inc. 96402199M
- --------------------------------------------------------------------------------
EFFECTIVE DATE BOND PERIOD AUTHORIZED REPRESENTATIVE
April 1, 1999 April 1, 1999 to April 1, 2000
================================================================================
In consideration of the premium charged for this Bond, it is hereby understood
and agreed that Item 1 of the Declarations, Named Insured Money Market Fund,
shall include the following:
Nuveen California Tax-Free Fund, Inc., a series fund consisting of:
. Nuveen California Tax-Free Money Market Fund
Nuveen Tax-Free Money Market Fund, Inc., a series fund consisting of:
. Nuveen Massachusetts Tax-Free Money Market Fund
. Nuveen New York Tax-Free Money Market Fund
Nuveen Tax-Exempt Money Market Fund, Inc.
MR 1.0-00 (3/99)
<PAGE>
ICIM REINSURANCE COMPANY
MONEY MARKET FUND BOND
RIDER NO. 2
- --------------------------------------------------------------------------------
INSURED BOND NUMBER
Nuveen Tax-Free Reserves, Inc. 96402199M
- --------------------------------------------------------------------------------
EFFECTIVE DATE BOND PERIOD AUTHORIZED REPRESENTATIVE
April 1, 1999 April 1, 1999 to April 1, 2000
================================================================================
In consideration of the premium charged for this Bond, it is hereby understood
and agreed that the term "Protected Asset" shall not include:
1. any Unrated Security, as defined in Rule 21-7(a)(28), if, at the time of
its Acquisition (as defined in Rule 2a-7(a)(1)) by the Insured Money Market
Fund, such security either (i) had received a long-term rating from any
NRSRO (as defined in Rule 2a-7(a)(17)) that was not within the four highest
long-term rating categories (without regard to modifiers, such as a "+" or
"-"), or (ii) was issued by an issuer that had received a long-term rating
from any NRSRO with respect to a class of debt obligations (or any debt
obligation within that class) that is comparative in priority and security
with a security described in subpart (i) above ("Related Security"); unless
the security or Related Security also then had assigned to it a long-term
rating from two or more NRSROs in one of the four highest rating categories
(without regard to modifiers such as a "+" or "-"); or,
2. any security if, at the time of Acquisition of such security by the Fund,
such security had received a short-term rating from Standard & Poor's or
Moody's that was not within the two highest short-term rating categories
(without regard to modifiers such as a "+" or "-") established by Standard
& Poor's or Moody's; or,
3. any repurchase agreement if, at the time of Acquisition of such repurchase
agreement, the counterparty to such repurchase agreement was an issuer of
any Second Tier Security (as defined in Rule 2a-7(a)(22)).
Nothing herein contained shall be held to vary, alter, waive or extend any of
the terms, conditions, provisions, agreements or limitations of this Bond other
than as above stated.
<PAGE>
ICIM REINSURANCE COMPANY
MONEY MARKET FUND BOND
RIDER NO. 3
- --------------------------------------------------------------------------------
INSURED BOND NUMBER
Nuveen Tax-Free Reserves, Inc. 96402199M
- --------------------------------------------------------------------------------
EFFECTIVE DATE BOND PERIOD AUTHORIZED REPRESENTATIVE
April 1, 1999 April 1, 1999 to April 1, 2000
================================================================================
In consideration of the premium charged for this Bond, it is hereby understood
and agreed that the Insurer shall not be liable to make any payment for any Loss
resulting from any Loss Event directly caused by a Year 2000 Failure.
For purposes of this endorsement:
1. "Year 2000 Failure" means any failure, malfunction or inadequacy of
any Proprietary Computer-Related Product due to the inability to
correctly recognize, process, distinguish, interpret or accept any
date (including, without limitation, January 1, 1999, September 9,
1999, December 31, 1999, or any date in or after the Year 2000).
2. "Computer-Related Product" means any of the following: (a) computer
hardware, including microprocessors; (b) computer application
software; (c) computer operating system(s) and related software; (d)
computer network(s); (e) internet connections or other hardware
connections; (f) microprocessors not part of any computer system; (g)
microcontrollers or embedded chips; (h) any computerized or electronic
equipment or component(s) not delineated herein; or (i) any other
product, or any services, data or functions, that directly or
indirectly use or rely upon, in any manner, any of the foregoing.
3. "Proprietary Computer-Related Product" means any Computer-Related
Product utilized by (a) the issuer of the Protected Asset (in the case
of a Loss Event described in Section I.N(1)), the credit enhancement
provider with respect to the Protected Asset (in the case of a Loss
Event described in Section I.N(2)), or the seller under a repurchase
agreement (in the case of a Loss Event described in Section I.N(4))
(each individually, a "Designated Party"), or (b) any other person to
whom a Designated Party has delegated, by contract or otherwise, the
conduct of any or all of the Designated Party's operations or
obligations.
<PAGE>
Nothing herein contained shall be held to vary, alter, waive or extend any of
the terms, conditions, provisions, agreements or limitations of this Bond other
than as above stated.
<PAGE>
Certified Resolution
--------------------
The undersigned, Gifford R. Zimmerman, hereby certifies, on behalf of Nuveen
Municipal Money Market Fund, Inc., formerly Nuveen Tax-Free Reserves, Inc. (the
"Fund"), (1) that he is the duly elected, qualified and acting Secretary of the
Fund, and that as such Secretary he has custody of its corporate books and
records, (2) that attached to this Certificate is a true and correct copy of a
resolution duly adopted by the Board of Directors of the Fund at a meeting held
on February 1, 1999 and (3) that said resolution has not been amended or
rescinded and remains in full force and effect.
June 24, 1999
/s/ Gifford R. Zimmerman
------------------------------------
Gifford R. Zimmerman, Secretary
<PAGE>
RESOLVED, that the officers of the Fund be, and each of them hereby is,
authorized in the name and on behalf of the Fund to execute and cause to be
filed with the Securities and Exchange Commission such amendment or amendments
to the Fund's registration statement on Form N-lA, including the registration of
additional shares pursuant to Rule 24f-2 of the Investment Company Act of 1940,
as amended, as such officer shall deem necessary or desirable, such
determination to be conclusively evidenced by his or their execution of such an
amendment to the registration statement.
FURTHER RESOLVED, that the officers of the Fund be, and each of them hereby is,
authorized to execute, file or cause to be filed all such instruments and
documents, and make or cause to be made all such payments, and do or cause to be
done all such other acts and things as they may deem necessary or desirable in
order to effect the filing of such amendments of the registration statement.
