<PAGE>
As filed with the Securities and Exchange Commission on June 27, 1996.
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-1A
REGISTRATION STATEMENT UNDER THE
SECURITIES ACT OF 1933
[_]
Registration Statement No. 33-8371 [_]
Pre-Effective Amendment No. [_]
--
[X]
Post-Effective Amendment No. 10
REGISTRATION STATEMENT UNDER THE
INVESTMENT COMPANY ACT OF 1940
[_]
Registration Statement No. 811-4822 [_]
[X]
Amendment No. 11
NUVEEN TAX-FREE MONEY MARKET FUND, INC.
(Exact Name of Registrant as Specified in Charter)
333 West Wacker Drive, Chicago, 60606
Illinois
(Address of Principal Executive (Zip Code)
Offices)
Registrant's Telephone Number, Including Area Code: (312) 917-7700
James J. Wesolowski, Esq.-Vice President and Secretary
333 West Wacker Drive
Chicago, Illinois 60606
(Name and Address of Agent for Service)
It is proposed that this filing will become effective (check appropriate box):
Immediately upon filing pursuant to paragraph (b)
on (date) pursuant to paragraph
[_] [_] (a)(1)
on July 1, 1996 pursuant to paragraph (b)
[X] 75 days after filing pursuant to par-
[_] agraph (a)(2)
60 days after filing pursuant to paragraph (a)(1)
[_] on (date) pursuant to paragraph
[_] (a)(2) of Rule 485.
If appropriate, check the following box:
[_]This post-effective amendment designates a new effective date for a previ-
ously filed post-effective amendment.
PURSUANT TO RULE 24F-2 OF THE INVESTMENT COMPANY ACT OF 1940, REGISTRANT HAS
ELECTED TO REGISTER AN INDEFINITE NUMBER OF SHARES. A RULE 24F-2 NOTICE FOR
THE REGISTRANT'S FISCAL YEAR ENDING FEBRUARY 29, 1996, WAS FILED ON OR ABOUT
APRIL 23, 1996.
CALCULATION OF REGISTRATION FEE FOR SHARES OF
MASSACHUSETTS TAX-FREE MONEY MARKET FUND
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PROPOSED PROPOSED
MAXIMUM MAXIMUM AMOUNT OF
TITLE OF SECURITIES AMOUNT BEING OFFERING PRICE AGGREGATE REGISTRATION
BEING REGISTERED REGISTERED PER UNIT OFFERING PRICE FEE*
- -------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Shares of Common Stock, $.01 par value.. 6,322,415 $1.00 $6,322,415 $100.00
</TABLE>
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
*Registrant has elected to calculate its filing fee in the manner described in
Rule 24e-2 under the Investment Company Act of 1940. The total amount of secu-
rities redeemed during the previous fiscal year was $105,535,960. The total
amount of redeemed securities used for reduction pursuant to Rule 24e-2(a) or
Rule 24f-2(c) was $99,503,545. The amount of redeemed securities being used
for reduction of the registration fee in this Amendment is $6,032,415.
CALCULATION OF REGISTRATION FEE FOR SHARES OF
NEW YORK TAX-FREE MONEY MARKET FUND
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PROPOSED PROPOSED
MAXIMUM MAXIMUM AMOUNT OF
TITLE OF SECURITIES AMOUNT BEING OFFERING PRICE AGGREGATE REGISTRATION
BEING REGISTERED REGISTERED PER UNIT OFFERING PRICE FEE*
- -------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Shares of Common Stock, $.01 par value.. 4,914,206 $1.00 $4,914,206 $100.00
</TABLE>
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
*Registrant has elected to calculate its filing fee in the manner described in
Rule 24e-2 under the Investment Company Act of 1940. The total amount of secu-
rities redeemed during the previous fiscal year was $35,802,377. The total
amount of redeemed securities used for reduction pursuant to Rule 24e-2(a) or
Rule 24f-2(c) was $31,178,171. The amount of redeemed securities being used
for reduction of the registration fee in this Amendment is $4,624,206.
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
<PAGE>
CONTENTS
OF
POST-EFFECTIVE AMENDMENT NO. 10
TO
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
FILE NO. 33-8371
AND
AMENDMENT NO. 11
TO
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940
FILE NO. 811-4822
This Registration Statement comprises the following papers and contents:
The Facing Sheet
Table of Contents
Cross-Reference Sheet
Part A--The Prospectus
Part B--The Statement of Additional Information
Copy of Annual Report to Shareholders (the financial state-
ments from which are incorporated by reference into the
Statement of Additional Information)
Part C--Other Information
Signatures
Index to Exhibits
Exhibits
<PAGE>
NUVEEN TAX-FREE MONEY MARKET FUND, INC.
-----------------
CROSS REFERENCE SHEET
PART A--PROSPECTUS
<TABLE>
<CAPTION>
ITEM IN PART A
OF FORM N-1A PROSPECTUS LOCATION
-------------- -------------------
<C> <S>
1 Cover Page
2(a) Fund Expenses
(b) Highlights
(c) Highlights
3(a) Financial Highlights
(b) Not applicable
(c) Yield
(d) Not applicable
4(a) General Information--Capital Stock; Investment Objectives of
the Funds; Investment Policies
(b) Investment Objectives of the Funds; Investment Policies
(c) Investment Objectives of the Funds; Investment Policies
5(a) Management of the Funds
(b) Management of the Funds
(c) Management of the Funds
(d) General Information--Custodian, Shareholder Services Agent and
Transfer Agent; How to Buy Fund Shares
(e) General Information--Custodian, Shareholder Services Agent and
Transfer Agent
(f) Not applicable
(g) Not applicable
5A Not applicable
6(a) General Information--Capital Stock
(b) Not applicable
(c) General Information--Capital Stock
(d) Not applicable
(e) General Information
(f) Dividends and Taxes
(g) Dividends and Taxes
(h) Not applicable
7(a) Management of the Funds
(b) Net Asset Value; How to Buy Fund Shares
(c) How to Buy Fund Shares
(d) How to Buy Fund Shares
</TABLE>
<PAGE>
NUVEEN TAX-FREE MONEY MARKET FUND, INC.
-----------------
CROSS REFERENCE SHEET
PART A--PROSPECTUS
<TABLE>
<CAPTION>
ITEM IN PART A
OF FORM N-1A PROSPECTUS LOCATION
-------------- -------------------
<C> <S>
(e) How to Buy Fund Shares--Distribution and Service Plan
(f) How to Buy Fund Shares--Distribution and Service Plan
8(a) How to Redeem Fund Shares
(b) How to Redeem Fund Shares
(c) Not applicable
(d) How to Redeem Fund Shares
9 Not applicable
</TABLE>
<PAGE>
PART B--STATEMENT OF ADDITIONAL INFORMATION
<TABLE>
<CAPTION>
ITEM IN PART B LOCATION IN STATEMENT
OF FORM N-1A OF ADDITIONAL INFORMATION
-------------- -------------------------
<C> <S>
10 Cover Page
11 Cover Page
12 Not applicable
13 Fundamental Policies and Investment Portfolio
14(a) Management
(b) Management
(c) Management
15(a) Not applicable
(b) Management
(c) Management
16(a) Investment Adviser and Investment Management Agreement;
Management
(b) Investment Adviser and Investment Management Agreement
(c) Not applicable
(d) Not applicable
(e) Not applicable
(f) Additional Information on the Purchase of Fund Shares
(g) Not applicable
(h) Independent Public Accountants and Custodian
(i) Not applicable
17(a) Portfolio Transactions
(b) Not applicable
(c) Portfolio Transactions
(d) Not applicable
(e) Not applicable
18(a) See "General Information" and "How to Redeem Fund Shares" in
the Prospectus
(b) Not applicable
19(a) Additional Information on the Purchase of Fund Shares
(b) Net Asset Value
(c) Not applicable
20 Tax Matters
21(a) See "How to Buy Fund Shares" in the Prospectus; Principal
Underwriter and Distributor
(b) Not applicable
(c) Not applicable
22(a) Yield Information
(b) Not applicable
23 Incorporated by reference to Annual Report
</TABLE>
<PAGE>
PART A--PROSPECTUS
NUVEEN TAX-FREE MONEY MARKET FUND, INC.
333 West Wacker Drive
Chicago, Illinois 60606
<PAGE>
NUVEEN [LOGO]
Nuveen Tax-Free [PHOTO]
Money Market Funds
Dependable tax-free
income for generations
MASSACHUSETTS
NEW YORK
PROSPECTUS/JULY 1, 1996
<PAGE>
NUVEEN TAX-FREE MONEY MARKET FUNDS PROSPECTUS
NUVEEN TAX-FREE MONEY MARKET FUND, INC.
Prospectus
July 1, 1996
NUVEEN MASSACHUSETTS TAX-FREE MONEY MARKET FUND
NUVEEN NEW YORK TAX-FREE MONEY MARKET FUND
Nuveen Tax-Free Money Market Fund, Inc. is an open-end, diversified management
investment company consisting of the two money market funds named above (the
"Funds"). Each Fund represents a separate portfolio, and has the objective of
providing, through investment in high quality short-term Municipal Obligations,
as high a level of current interest income exempt from both federal and
designated state income taxes as is consistent, in the view of the Fund's
management, with stability of principal and the maintenance of liquidity.
This Prospectus, which should be retained for future reference, sets forth
concisely the information about the Funds that a prospective investor should
know before investing. A "Statement of Additional Information" dated July 1,
1996, containing additional information about the Funds has been filed with the
Securities and Exchange Commission and is incorporated by reference into this
Prospectus. A copy of this statement may be obtained without charge by writing
to Nuveen Tax-Free Money Market Fund, Inc., or by calling John Nuveen & Co.
Incorporated at the number provided below. For more information, call toll-free
800.621.7227.
An investment in the Funds is neither insured nor guaranteed by the U.S.
Government and there can be no assurance that the Funds will be able to
maintain a stable net asset value of $1.00 per share.
Shares of the Funds are not deposits or obligations of, or guaranteed or
endorsed by, any bank and are not federally insured by the Federal Deposit
Insurance Corporation, the Federal Reserve Board or any other agency.
The Funds may invest a significant percentage of their assets in the
securities of a single issuer, and, therefore, an investment in the Funds may
be riskier than an investment in other types of money market funds.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS
A CRIMINAL OFFENSE.
John Nuveen & Co. Incorporated
For information, call toll-free 800.621.7227
<PAGE>
CONTENTS
<TABLE>
<S> <C>
3 Summary of Fund expenses
5 Highlights
8 Financial highlights
12 Yield
13 The Fund and its investment objective and policies
23 Management of the Fund
25 Dividends and taxes
29 Net asset value
30 How to buy Fund shares
36 How to redeem Fund shares
41 General information
42 Taxable equivalent yield tables
</TABLE>
<PAGE>
SUMMARY OF FUND EXPENSES
NUVEEN TAX-FREE MONEY MARKET FUNDS PROSPECTUS
The following tables illustrate all expenses and fees that a
shareholder will incur. The expenses and fees shown are for
the fiscal year ended February 29, 1996.
<TABLE>
<CAPTION>
Institutional Distribution Service
Shareholder transaction expenses series Plan series Plan series
- -----------------------------------------------------------------------------
MASSACHUSETTS FUND
<S> <C> <C> <C>
Sales charges imposed on purchases None None None
Sales charges imposed on reinvested
dividends None None None
Redemption fees None None None
Exchange fees None None None
<CAPTION>
NEW YORK FUND
<S> <C> <C> <C>
Sales charges imposed on purchases None None None
Sales charges imposed on reinvested
dividends None None None
Redemption fees None None None
Exchange fees None None None
<CAPTION>
Annual operating expenses
(as a percentage of average daily Institutional Distribution Service
net assets) series Plan series Plan series
- -----------------------------------------------------------------------------
<S> <C> <C> <C>
MASSACHUSETTS FUND
Management fees .40% .40% .40%
12b-1 fees (or service fees) None .09 .10
Other operating expenses, after ex-
pense
reimbursements .14 .06 .05
---- ---- ----
Total expenses, after expense
reimbursements .54 .55 .55
---- ---- ----
<CAPTION>
NEW YORK FUND
<S> <C> <C> <C>
Management fees .40% .40% .40%
12b-1 fees (or service fees) None .04 .06
Other operating expenses, after ex-
pense
reimbursements .15 .11 .09
---- ---- ----
Total expenses, after expense
reimbursements .55 .55 .55
---- ---- ----
</TABLE>
The purpose of the foregoing tables is to help you understand
all expenses and fees that you would bear directly or
indirectly as an investor in the Funds.
3
<PAGE>
As discussed under "Management of the Funds" and reflected in
the tables above, the management fee is reduced or Nuveen
Advisory assumes certain expenses so as to prevent the total
expenses of each series of each Fund in any fiscal year from
exceeding .55 of 1% of the average daily net asset value of
the series. Without expense reimbursements, for the fiscal
year ended February 29, 1996, other operating expenses would
have been .17, .35 and .13, and total expenses would have
been .57, .84, and .63, of 1% of the average daily net
assets, of the Institutional series, the Distribution Plan
series and the Service Plan series, respectively, of the
Massachusetts Fund. Without expense reimbursements, for the
fiscal year ended February 29, 1996, other operating expenses
would have been .98, .50, and 1.46, and total expenses would
have been 1.38, .94, and 1.92 of 1% of the average daily net
assets, of the Institutional series, the Distribution Plan
series and the Service Plan series, respectively, of the New
York Fund. See "Management of the Funds."
The following example illustrates the expenses that you would
pay on a $1,000 investment over various time periods assuming
(1) a 5% annual rate of return and
(2) redemption at the end of each time period. As noted in
the table above, the Funds charge no redemption fees of any
kind.
<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
- -------------------------------------------------------------------------
<S> <C> <C> <C> <C>
MASSACHUSETTS FUND:
Service and Distribution Plan series $6 $18 $31 $69
Institutional series $6 $17 $30 $68
NEW YORK FUND:
All series $6 $18 $31 $69
</TABLE>
This example should not be considered a representation of
past or future expenses or performance. Actual expenses may
be greater or less than those shown. This example assumes
that the percentage amounts listed for each Fund under Annual
Operating Expenses remain the same in each of the periods.
4
<PAGE>
HIGHLIGHTS NUVEEN TAX-FREE MONEY MARKET FUNDS PROSPECTUS
Nuveen Tax-Free Money Market Fund, Inc. is an open-end,
diversified management investment company whose shares are
issued in separate classes, each covering a separate
designated state portfolio. The Fund currently has two
portfolios outstanding: the Nuveen Massachusetts Tax-Free
Money Market Fund (the "Massachusetts Fund") and the Nuveen
New York Tax-Free Money Market Fund (the "New York Fund").
Each Fund invests primarily in high quality short-term
Municipal Obligations of a single designated state, with the
objective of providing as high a level of current interest
income exempt both from federal income tax and from the
income tax imposed by its designated state as is consistent,
in the view of the Fund's management, with stability of
principal and the maintenance of liquidity. Each Fund will
value its investments at amortized cost and seek to maintain
a net asset value of $1.00 per share. There is no guarantee
that this value will be maintained, or that the objective of
the Funds will be realized. See "Net Asset Value" on page 29
and "Investment Objective" on page 13.
Each Fund intends to qualify, as it has in prior years, for
tax treatment as a regulated investment company and to
satisfy conditions which will enable interest income that is
exempt from federal and designated state income taxes in the
hands of a Fund to retain such tax-exempt status when
distributed to the shareholders of that Fund. See "Dividends
and Taxes" on page 25.
HOW TO BUY FUND SHARES
Shares of each of the Funds may be purchased on days on which
the Federal Reserve Bank of Boston is normally open for
business ("business days") at the net asset value next
determined after an order is received together with payment
in federal funds. The minimum initial investment is $5,000,
and subsequent purchases must be in amounts of $100 or more.
See "How to Buy Fund Shares" on page 30, or for further
information, please call Nuveen toll-free at 800.621.7227.
5
<PAGE>
HOW TO REDEEM FUND SHARES
Shareholders may redeem shares at net asset value next
computed after receipt of a redemption request in proper form
on any business day. Shareholders may make redemption
requests in writing or, for shareholders of the Distribution
Plan series, by check. Shareholders who have completed and
filed the necessary authorization form may make redemption
requests by telephone with proceeds to be transferred to a
predesignated bank account or sent to their address of
record. There is no redemption fee. A fee may be charged for
wire redemptions. See "How to Redeem Fund Shares" on page 36.
DIVIDENDS AND REINVESTMENT
Each of the Funds declares dividends daily from its
accumulated net income on shares entitled to such dividends,
and distributes such dividends monthly in the form of
additional shares of the respective Funds or, at the option
of the shareholder, in cash. See "Dividends and Taxes" on
page 25.
INVESTMENT ADVISER AND PRINCIPAL UNDERWRITER
John Nuveen & Co. Incorporated ("Nuveen") acts as principal
underwriter of the shares of the Funds. The Funds have
adopted Distribution and Service Plans under which qualifying
organizations may be paid a fee for servicing shareholder
accounts. A portion of the fees paid under these Plans is
charged to the Distribution Plan and Service Plan series of
shares of the Funds. See "How to Buy Fund Shares--
Distribution and Service Plan" on page 30. Nuveen Advisory
Corp. ("Nuveen Advisory"), a wholly-owned subsidiary of
Nuveen, is the Funds' investment adviser and receives an
annual management fee of .4 of 1% of the first $500 million
of average daily net assets. The management fees will be
reduced or Nuveen Advisory will assume certain expenses in
amounts necessary to prevent the total expenses of each
series of each Fund (excluding interest, taxes, fees incurred
in acquiring and disposing of portfolio securities and
extraordinary expenses) in any fiscal year from exceeding .55
of 1% of its average daily net asset value. See "Management
of the Funds" on page 23.
6
<PAGE>
NUVEEN TAX-FREE MONEY MARKET FUNDS PROSPECTUS
INVESTMENTS
Each of the Funds invests primarily in Municipal Obligations
consisting of money market instruments issued by governmental
authorities in the Fund's designated state (or in certain
possessions of the United States) having ratings or other
credit and risk characteristics as described on pages 16-18,
the income on which is exempt from federal and designated
state income taxes. In addition, as described below, each
Fund may invest a portion of its assets in taxable "temporary
investments." Temporary investments are limited to
obligations issued or guaranteed by the full faith and credit
of the United States, or certificates of deposit issued by
U.S. banks with assets of at least $1 billion, or "high
grade" commercial paper or corporate notes, bonds or
debentures with a remaining maturity of 397 days or less, or
repurchase agreements in respect of any of the foregoing with
selected dealers, U.S. banks or other recognized financial
institutions, subject to the specific limitations stated
below. The Funds may from time to time invest a portion of
their assets in debt obligations which are not rated, and in
variable rate or floating rate obligations. Investors are
urged to read the descriptions of these investments and
practices set forth in this Prospectus. See "Investment
Policies" on page 13.
The information set forth above should be read in conjunction
with the detailed information set forth elsewhere in this
Prospectus.
7
<PAGE>
FINANCIAL HIGHLIGHTS
The following financial information has been derived from
Nuveen Tax-Free Money Market Fund, Inc.'s financial
statements, which have been audited by Arthur Andersen LLP,
independent public accountants, as indicated in their report
appearing in Nuveen Tax-Free Money Market Fund, Inc.'s
Annual Report, and
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Income from investment
operations Less distributions
--------------------------------------------------------
Net
realized
and Dividends
Net unrealized from
asset value Net gain (loss) net Distributions
beginning investment from investment from
of period income investments income capital gains
- -------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
MA**
- -------------------------------------------------------------------------------------
Year ended
2/29/96
Service Plan series $1.000 $.032* $-- $(.032) $--
Distribution Plan se-
ries 1.000 .032* -- (.032) --
Institutional series 1.000 .032* -- (.032) --
Year ended
2/28/95
Service Plan series 1.000 .025* -- (.025) --
Distribution Plan se-
ries 1.000 .025* -- (.025) --
Institutional series 1.000 .026 -- (.026) --
Year ended
2/28/94
Service Plan series 1.000 .018* -- (.018) --
Distribution Plan se-
ries 1.000 .017* -- (.017) --
Institutional series 1.000 .018 -- (.018) --
Year ended
2/28/93
Service Plan series 1.000 .023* -- (.023) --
Distribution Plan se-
ries 1.000 .023* -- (.023) --
Institutional series 1.000 .023* -- (.023) --
10 months ended
2/29/92
Service Plan series 1.000 .032* -- (.032) --
Distribution Plan se-
ries 1.000 .032* -- (.032) --
Institutional series 1.000 .032 -- (.032) --
Year ended
4/30/91
Service Plan series 1.000 .053* -- (.053) --
Distribution Plan se-
ries 1.000 .053* -- (.053) --
Institutional series 1.000 .053 -- (.053) --
Year ended 4/30,
1990++ 1.000 .057* -- (.057) --
1989++ 1.000 .050* -- (.050) --
1988++ 1.000 .043* -- (.043) --
12/10/86 to
4/30/87++ 1.000 .016* -- (.016) --
- -------------------------------------------------------------------------------------
</TABLE>
See notes on page 10.
8
<PAGE>
NUVEEN TAX-FREE MONEY MARKET FUNDS PROSPECTUS
should be read in conjunction with the financial statements
and related notes appearing in the Annual Report.
Selected data for a common share outstanding throughout each
period is as follows:
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Ratios/Supplemental data
-----------------------------------------------------------------------------------------------
Ratio of Ratio of
expenses Ratio of net expenses Ratio of net
Total return to average investment income to average investment income
on Net assets net assets to average net assets to average
Net asset value net asset end of period before net assets before after net assets after
end of period value (in thousands) reimbursement reimbursement reimbursement* reimbursement*
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
- ----------------------------------------------------------------------------------------------------------------------------------
$1.000 3.17% $38,251 .63% 3.06% .55% 3.14%
1.000 3.17 26,279 .84 2.87 .55 3.16
1.000 3.18 3,550 .57 3.12 .54 3.15
1.000 2.53 27,732 .61 2.49 .55 2.55
1.000 2.53 24,237 .82 2.28 .55 2.55
1.000 2.61 1,036 .47 2.63 .47 2.63
1.000 1.77 38,576 .55 1.88 .52 1.91
1.000 1.74 27,773 .76 1.67 .55 1.88
1.000 1.80 3,406 .49 1.93 .49 1.93
1.000 2.33 40,214 .73 2.16 .55 2.34
1.000 2.33 27,993 .82 2.07 .55 2.34
1.000 2.34 5,325 .58 2.31 .55 2.34
1.000 3.22 61,476 .62+ 3.73+ .55+ 3.80+
1.000 3.22 34,509 .72+ 3.63+ .55+ 3.80+
1.000 3.24 8,917 .53+ 3.82+ .53+ 3.82+
1.000 5.30 37,979 .68 5.12 .55 5.25
1.000 5.30 33,809 .76 5.04 .55 5.25
1.000 5.30 14,973 .54 5.26 .54 5.26
1.000 5.70 53,631 .74 5.48 .55 5.67
1.000 5.00 31,319 .76 4.97 .55 5.18
1.000 4.29 35,614 .75 4.03 .48 4.30
1.000 1.60 12,371 3.02+ 1.40+ .06+ 4.36+
- ----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
9
<PAGE>
Selected data for a common share outstanding
throughout each period is as follows:
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Income from investment
operations Less distributions
--------------------------------------------------------
Net
realized
and Dividends
Net unrealized from
asset value Net gain (loss) net Distributions
beginning investment from investment from
of period income investments income capital gains
- -------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
NY**
- -------------------------------------------------------------------------------------
Year ended
2/29/96
Service Plan series $1.000 $.032* $-- $(.032) $--
Distribution Plan se-
ries 1.000 .032* -- (.032) --
Institutional series 1.000 .032* -- (.032) --
Year ended
2/28/95
Service Plan series 1.000 .024* -- (.024) --
Distribution Plan se-
ries 1.000 .024* -- (.024) --
Institutional series 1.000 .023* -- (.023) --
Year ended
2/28/94
Service Plan series 1.000 .015* -- (.015) --
Distribution Plan se-
ries 1.000 .015* -- (.015) --
Institutional series 1.000 .015* -- (.015) --
Year ended
2/28/93
Service Plan series 1.000 .020* -- (.020) --
Distribution Plan se-
ries 1.000 .020* -- (.020) --
Institutional series 1.000 .020* -- (.020) --
10 months ended
2/29/92
Service Plan series 1.000 .029* -- (.029) --
Distribution Plan se-
ries 1.000 .029* -- (.029) --
Institutional series 1.000 .030* -- (.030) --
Year ended
4/30/91
Service Plan series 1.000 .047* -- (.047) --
Distribution Plan se-
ries 1.000 .047* -- (.047) --
Institutional series 1.000 .047* -- (.047) --
Year ended 4/30,
1990++ 1.000 .054* -- (.054) --
1989++ 1.000 .050* -- (.050) --
1988++ 1.000 .041* -- (.041) --
12/10/86 to
4/30/87++ 1.000 .015* -- (.015) --
- -------------------------------------------------------------------------------------
</TABLE>
* Reflects the waiver of certain management fees and reimbursement of
certain other expenses by the Adviser, if applicable (see Notes to
Financial Statements in the Annual Report).
** Effective for the fiscal year ended April 30, 1991, and thereafter,
the Fund has presented the above per share data by series.
+ Annualized.
++ Represents combined per share data and ratios for the Service Plan,
Distribution Plan and Institutional series.
10
<PAGE>
NUVEEN TAX-FREE MONEY MARKET FUNDS PROSPECTUS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Ratios/Supplemental data
-----------------------------------------------------------------------------------------------
Ratio of Ratio of
expenses Ratio of net expenses Ratio of net
Total return to average investment income to average investment income
on Net assets net assets to average net assets to average
Net asset value net asset end of period before net assets before after net assets after
end of period value (in thousands) reimbursement reimbursement reimbursement* reimbursement*
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
- ----------------------------------------------------------------------------------------------------------------------------------
$1.000 3.20% $ 554 1.92% 1.82% .55% 3.19%
1.000 3.20 31,631 .94 2.80 .55 3.19
1.000 3.20 17 1.38 2.37 .55 3.20
1.000 2.36 640 .95 1.98 .55 2.38
1.000 2.37 29,798 .79 2.14 .55 2.38
1.000 2.28 17 2.14 .79 .55 2.38
1.000 1.51 557 1.49 .69 .55 1.63
1.000 1.51 27,886 .78 1.40 .55 1.63
1.000 1.51 17 4.60 (2.42) .55 1.63
1.000 2.02 529 1.17 1.42 .55 2.04
1.000 2.02 34,827 .78 1.81 .55 2.04
1.000 2.02 17 19.33 (16.59) .55 2.19
1.000 2.94 1,934 .87+ 3.19+ .55+ 3.51+
1.000 2.94 45,259 .71+ 3.35+ .55+ 3.51+
1.000 2.97 17 11.89+ (7.83)+ .55+ 3.51+
1.000 4.73 1,653 .88 4.39 .55 4.72
1.000 4.73 41,446 .69 4.58 .55 4.72
1.000 4.73 17 .62 4.65 .55 4.72
1.000 5.36 41,602 .71 5.18 .55 5.34
1.000 4.95 30,262 .86 4.74 .55 5.05
1.000 4.10 17,016 1.03 3.54 .50 4.07
1.000 1.50 4,134 4.20+ .05+ .05+ 4.20+
- ----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
11
<PAGE>
YIELD
From time to time, Nuveen Tax-Free Money Market Fund, Inc.
may advertise the "yield," "effective yield" and "taxable
equivalent yield" of the various series of each of its two
Funds. The "yield" of a series refers to the rate of income
generated by an investment in the series over a specified
seven-day period, expressed as an annualized figure.
"Effective yield" is calculated similarly except that, when
annualized, the income earned by the investment is assumed to
be reinvested. Accordingly, the effective yield will be
slightly higher than the yield due to this compounding
effect. "Taxable equivalent yield" is the yield that a
taxable investment would need to generate in order to equal
the series' yield on an after-tax basis for an investor in a
stated tax bracket (normally assumed to be the bracket with
the highest marginal tax rate). A taxable equivalent yield
quotation for a given series will be higher than the yield or
the effective yield quotations for the series. Additional
information concerning performance figures appears in the
Statement of Additional Information.
Based on the seven-day period ended February 29, 1996, the
current yield, effective yield and taxable equivalent yield
(using a combined federal and state income tax rate of 47.0%
for Massachusetts and 44.0% for New York) for the
Massachusetts and New York Funds were as follows:
<TABLE>
<CAPTION>
Taxable
Current Effective equivalent
yield yield yield
- -------------------------------------------------------------------------------------
MASSACHUSETTS FUND
<S> <C> <C> <C> <C> <C>
All series 2.77% 2.81% 5.23%
NEW YORK FUND
Service and Distribution Plan series 2.75% 2.79% 4.91%
Institutional series 2.74% 2.78% 4.89%
</TABLE>
This Prospectus may be in use for a full year and it can be
expected that during this period there will be material
fluctuations in yield from that quoted above. For information
as to current yields, please call Nuveen at 800.621.7227.
12
<PAGE>
THE FUND AND ITS INVESTMENTOBJECTIVE AND POLICIES
NUVEEN TAX-FREE MONEY MARKET FUNDS PROSPECTUS
INVESTMENT OBJECTIVE
Nuveen Tax-Free Money Market Fund, Inc. is an open-end,
diversified management investment company which has the
objective of providing, through investment in professionally
managed portfolios of high quality short-term Municipal
Obligations (described below), as high a level of current
interest income exempt both from federal income tax and from
the income tax imposed by each Fund's designated state as is
consistent, in the view of the management of Nuveen Tax-Free
Money Market Fund, Inc., with stability of principal and the
maintenance of liquidity. Each Fund's investment objective is
a fundamental policy of the Fund and may not be changed
without the approval of the holders of a majority of the
shares of that Fund. Each Fund values its portfolio
securities at amortized cost and seeks to maintain a constant
net asset value of $1.00 per share. There is a risk in all
investments and, therefore, there can be no assurance that
the objective of any Fund will be achieved.
INVESTMENT POLICIES
Each Fund pursues its investment objective through the
investment policies described below. These policies are
essentially the same for each Fund, except that each Fund
will primarily invest in short-term Municipal Obligations of
issuers in the Fund's designated state (or in Municipal
Obligations issued by governmental authorities in certain
possessions of the United States to the extent interest on
such obligations is exempt from taxation by the states
pursuant to federal law), in order that the interest income
on such short-term Municipal Obligations is exempt from that
state's income tax as well as federal income tax. Because of
the different credit characteristics of governmental
authorities in each of the designated states and because of
differing supply and demand factors for each state's short-
term Municipal Obligations, there may be differences in the
yield on each Fund and the degree of market and financial
risk to which each Fund is subject. Ordinarily, short-term
Municipal Obligations in which the Funds will invest offer
lower yields than Municipal Obligations with longer
maturities, although the latter present greater market risk
(i.e., the risk that their market values will be affected by
changes in interest rates). Similarly, the fact that the
Funds invest in high quality Municipal Obligations tends to
reduce the yield as compared with investments in lower
quality securities, but the higher quality securities present
less credit risk (i.e., the risk that principal and interest
will not be paid when due). Each Fund will, as a fundamental
policy, pursue its investment objective by investing at least
80% of its net assets in its designated state's short-term
Municipal Obligations, except during temporary defensive
periods.
13
<PAGE>
PORTFOLIO INVESTMENTS
Each Fund's investment assets are eligible for purchase by
money market funds under applicable guidelines of the
Securities and Exchange Commission ("SEC"), and consist of
(1) short-term Municipal Obligations which at the time of
purchase are rated within the two highest long-term grades by
Moody's Investors Service, Inc. ("Moody's")--Aaa or Aa, or by
Standard & Poor's Corporation ("S&P")--AAA or AA or, in the
case of municipal notes, rated MIG-1, MIG-2, VMIG-1 or VMIG-2
by Moody's or SP-1 or SP-2 by S&P, or, in the case of
municipal commercial paper, rated Prime-1 or Prime-2 by
Moody's or A-1 or A-2 by S&P; (2) unrated short-term
Municipal Obligations which, in the opinion of Nuveen
Advisory, have credit characteristics equivalent to the
foregoing and are deemed to be of "high quality" by Nuveen
Advisory; and (3) temporary investments, within the
limitations and for the purposes as stated below. To the
extent that unrated Municipal Obligations may be less liquid,
there may be somewhat greater risk in purchasing unrated
Municipal Obligations than in purchasing comparable but rated
Municipal Obligations.
The investments of the Funds will be limited to obligations
maturing within 397 days from the date of acquisition or
which have variable or floating rates of interest (which
rates vary with changes in specified market rates or indices
such as a bank prime rate or tax-exempt money market index).
The Funds may invest in such variable and floating rate
instruments even if they carry stated maturities in excess of
397 days, provided that (1) certain conditions contained in
rules and regulations issued by the SEC under the Investment
Company Act of 1940 are satisfied, and (2) they permit the
Funds to recover the full principal amount thereof upon
specified notice. The right of each Fund to obtain payment at
par on a demand instrument upon demand could be affected by
events occurring between the date the Fund elects to redeem
the instrument and the date redemption proceeds are due which
affect the ability of the issuer to pay the instrument at par
value.
The types of short-term Municipal Obligations in which the
Funds may invest include bond anticipation notes, tax
anticipation notes, revenue anticipation notes, construction
loan notes issued to provide construction financing for
specific projects, and bank notes issued by governmental
authorities to commercial banks as evidence of borrowings.
Since these short-term securities frequently serve as interim
financing pending receipt of anticipated funds from the
issuance of long-term bonds, tax
14
<PAGE>
NUVEEN TAX-FREE MONEY MARKET FUNDS PROSPECTUS
collections or other anticipated future revenues, a weakness
in an issuer's ability to obtain such funds as anticipated
could adversely affect the issuer's ability to meet its
obligations on those short-term securities.
Because the Funds invest in securities backed by banks and
other financial institutions, changes in the credit quality
of these institutions could cause losses to the Funds and
affect share price.
Each Fund has obtained commitments (each, a "Commitment")
from MBIA Insurance Corporation ("MBIA") with respect to
certain designated bonds held by each Fund for which credit
support is furnished by one of the banks ("Approved Banks")
approved by MBIA under its established credit approval
standards. Under the terms of a Commitment, if a Fund were to
determine that certain adverse circumstances relating to the
financial condition of the Approved Bank had occurred, the
Fund could cause MBIA to issue a "while-in-fund" insurance
policy covering the underlying bonds; after time and subject
to further terms and conditions, the Fund could obtain from
MBIA an "insured-to-maturity" insurance policy as to the
covered bonds. Each type of insurance policy would insure
payment of interest on the bonds and payment of principal at
maturity. Although such insurance would not guarantee the
market value of the bonds or the value of Fund shares, each
Fund believes that its ability to obtain insurance for such
bonds under such adverse circumstances will enable the Fund
to hold or dispose of such bonds at a price at or near their
par value.
Except during temporary defensive periods, each Fund will
invest at least 80% of its net assets in short-term Municipal
Obligations, and not more than 20% of its net assets in
"temporary investments," the income from which may be subject
to its designated state's income tax or to both federal and
state income taxes, including the federal alternative minimum
tax. During extraordinary circumstances, a Fund may invest
more than 20% of its net assets in temporary investments for
defensive purposes. The Funds to date have never purchased,
and have no present intention to purchase, temporary
investments. Each Fund will invest in temporary investments
with remaining maturities of 397 days or less which, in the
opinion of Nuveen Advisory, are of "high grade" quality. The
foregoing restrictions and other limita-
tions discussed herein will apply only at the time of
purchase of securities and will not be considered violated
unless an excess or deficiency occurs or exists immediately
after and as a result of an acquisition of securities.
15
<PAGE>
Because investments of the Funds will consist of securities
with relatively short maturities, the Funds can expect to
have a high portfolio turnover rate. The Funds will maintain
a dollar-weighted average portfolio maturity of not more than
90 days. During the fiscal year ended February 29, 1996, the
average maturity of the Massachusetts Fund ranged from 51 to
57 days and the average maturity of the New York Fund ranged
from 31 to 48 days.
MUNICIPAL OBLIGATIONS
Municipal Obligations include debt obligations issued by
states, cities and local authorities to obtain funds for
various public purposes, including the construction of such
public facilities as airports, bridges, highways, housing,
hospitals, mass transportation, schools, streets and water
and sewer works. Other public purposes for which Municipal
Obligations may be issued include the refinancing of
outstanding obligations, the 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 included within the
term Municipal Obligations if the interest paid thereon
qualifies as exempt from federal income tax. Municipal
Obligations in which each Fund will primarily invest are
issued by that Fund's designated state and cities and local
authorities in that state or are issued by possessions of the
United States within Section 103(c) of the Internal Revenue
Code (such as Puerto Rico), and bear interest that, in the
opinion of bond counsel to the issuer, is exempt from federal
income tax and from income tax imposed by the designated
state.
Two principal classifications of Municipal Obligations are
"general obligation" and "revenue" bonds. General obligation
bonds are secured by the issuer's pledge of its full faith,
credit and taxing power for the payment of principal and
interest. Revenue bonds are payable only from the revenues
derived from a particular 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 taxing power
of the issuer of such bonds. There are, of course, variations
in the security of Municipal Obligations, both within a
particular classification and between classifications,
depending on numerous factors.
Municipal Obligations can be further classified between bonds
and notes. Bonds are issued to raise longer-term capital but,
when purchased by the Funds, will have 397 days or less
remaining until maturity or will have a variable or floating
rate of inter-
est (see below). These issues may be either general
obligation bonds or revenue bonds.
16
<PAGE>
NUVEEN TAX-FREE MONEY MARKET FUNDS PROSPECTUS
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 revenues.
Municipal Obligations also include very short-term unsecured,
negotiable promissory notes, issued by states,
municipalities, and their agencies which are known as "tax-
exempt commercial paper" or "municipal paper." Payment of
principal 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
Funds may invest in such other types of notes to the extent
consistent with their investment objectives and limitations.
Such notes may be issued for different purposes and with
different security than those mentioned above.
The yields on Municipal Obligations are dependent on a
variety of factors, including 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 opinions as to the quality of the 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.
The Funds may purchase and sell Municipal Obligations on a
when-issued or delayed delivery basis. When-issued and
delayed delivery transactions arise when securities are
purchased or sold with payment and delivery beyond the
regular settlement date. (When-issued transactions normally
settle within 30 to 45 days.) On such transactions the
payment obligation and the interest rate are fixed at the
time the buyer enters into the commitment to purchase. The
commitment to purchase securities on a when-issued or delayed
delivery basis may involve an element of risk because the
value of the securities is subject to market fluctuation.
17
<PAGE>
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.
Obligations of issuers of Municipal Obligations 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 the
laws enacted in the future by Congress, state legislatures or
referenda extending 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 Municipal
Obligations may be materially affected.
ECONOMIC FACTORS PERTAINING TO DESIGNATED STATES
Because each Fund will concentrate its investment in
Municipal Obligations issued by governmental authorities
within a single designated state, it may be affected by
political, economic or regulatory factors that may impair the
ability of issuers in that state to pay interest on or to
repay the principal of their debt obligations. Set forth
below are summaries of economic factors that bear upon the
risk of investing in Municipal Obligations issued by public
authorities in the designated states that are the subject of
currently offered Funds. This information was obtained from
official statements of issuers located in the respective
designated states as well as from other publicly available
official documents and statements. Nuveen Tax-Free Money
Market Fund, Inc. has not independently verified any of the
information contained in such statements and documents.
Additional considerations relating to these risks are
contained in the Statement of Additional Information.
MASSACHUSETTS
In recent years, the Commonwealth of Massachusetts and
certain of its public bodies and municipalities, particularly
the City of Boston, have faced serious financial difficulties
which have affected the credit standing and borrowing
abilities of Massachusetts and these respective entities and
may have contributed to higher interest rates on debt
obligations. As a result of these difficulties, the rating
agencies lowered the credit ratings on Massachusetts general
obligation bonds several times during 1989 and 1990. Since
then, both S&P and Moody's have upgraded Massachusetts
general obligation bonds several times. As of the date of
this Prospectus, the uninsured general obligation bonds carry
a rating of A+ by S&P and A1 by Moody's. Since 1988, there
has been a significant slowdown in the Commonwealth's
economy, as indicated by a rise in unemployment, a slowing of
its
18
<PAGE>
NUVEEN TAX-FREE MONEY MARKET FUNDS PROSPECTUS
per capita income growth and a trend in declining state
revenues. In fiscal 1991, the Commonwealth's expenditures for
state government programs exceeded current revenues, and
although fiscal 1992, 1993, 1994 and 1995 results indicate
that revenues exceeded expenditures, no assurance can be
given that lower than expected tax revenues will not resume
and continue. The continuation of, or an increase in, the
financial difficulties of the Commonwealth and its public
bodies and municipalities, or the development of a financial
crisis relating to these entities, could result in declines
in the market value of, or default on, existing obligations
issued by governmental authorities in the state of
Massachusetts, including Municipal Obligations held by the
Massachusetts Fund. Many factors, in addition to those cited
above, do or may have a bearing upon the financial condition
of the Commonwealth, including social and economic
conditions, many of which are not within the control of the
Commonwealth.
NEW YORK
New York State has historically been one of the wealthiest
states in the nation. For decades, however, the State's
economy has grown more slowly than that of the nation as a
whole, gradually eroding the State's relative economic
affluence. Statewide, urban centers have experienced
significant changes involving migration of the more affluent
to the suburbs and an influx of generally less affluent
residents. Regionally, the older Northeast cities have
suffered because of the relative success that the South and
the West have had in attracting people and business. New York
City has faced greater competition as other major cities have
developed financial and business resources which make them
less dependent on the specialized services traditionally
available almost exclusively in New York City, which has had
an additional negative impact on New York City's recovery.
The State has for many years had a very high State and local
tax burden relative to other states. The burden of State and
local taxation, in combination with the many other causes of
regional economic dislocation, has contributed to the
decisions of some businesses and individuals to relocate
outside, or not locate within, the State.
The State's economic growth continues to lag behind the
nation's due in part to a significant retrenchment in the
banking and financial services industry, cutbacks in defense
spending, and an overbuilt real estate market.
The State has projected the rate of economic growth to slow
within New York during 1996 reflecting continued moderate
expansion of the national economy.
19
<PAGE>
The Governor announced on April 3, 1996 that the State ended
its 1995-96 fiscal year with an operating surplus of
approximately $445 million. The State Legislature enacted the
State's 1995-96 fiscal year budget on June 7, 1995, more than
two months after the start of that fiscal year.
As of January 19, 1996, the updated 1995-96 State Financial
Plan (the "Plan") projected total general fund receipts and
disbursements each of $32.7 billion, representing reductions
in receipts and disbursements of $144 million and $103
million, respectively, from the amounts set forth in the
1995-96 State budget, as adopted by the legislature. The Plan
projected a General Fund balance of approximately $172
million at the close of the 1995-96 fiscal year.
The Governor issued a proposed State budget for the 1996-97
fiscal year on December 15, 1995, which projected a balanced
general fund and receipts and disbursements of $31.3 billion
and $31.2 billion, respectively. As of June 10, 1996, the
State legislature had not yet enacted, nor had the Governor
and the legislature reached an agreement on, the budget for
the 1996-97 fiscal year commencing on April 1, 1996. Due to
continuing uncertainties as to the amount of federal aid and
proposed changes to the Medicaid program resulting from the
federal budget impasse, the Governor proposed an alternate
budget for fiscal year 1996-97 to replace over $1 billion of
Medicaid reimbursement which might not be forth-
coming. The Governor and the State's legislature have agreed
on or proposed a series of short-term stopgap spending
measures to fund state payrolls and advances to certain
municipalities and certain state programs. The delay in the
enactment of the budget may negatively affect certain
proposed actions and reduce projected savings.
Following enactment of the State's 1995-96 fiscal year
budget, New York City adopted a 1996 fiscal year budget in
June 1995, which provided for $31.4 billion in spending.
However, in January 1996, unexpected budget gaps totaling
approximately $760 million for the 1996 fiscal year were
identified and the Mayor called for additional spending cuts.
On March 1, 1996, Moody's indicated that its Baa1 rating of
New York City's general obligation bonds was under review
pending adoption of the City's budget for fiscal year 1997.
S&P placed the City on negative credit watch in January 1995.
On January 30, 1996, the Mayor outlined his proposed $31
billion budget for the 1997 fiscal year which included $2.0
billion of deficit reduction measures more than half of which
were dependent upon State actions in the 1997 fiscal year. On
May 9, 1996, the Mayor issued a substantially revised fiscal
year 1997 budget of $32.7 billion that would reduce spending
from the prior year and would include $1.1 billion in budget
cuts affecting City agencies.
20
<PAGE>
NUVEEN TAX-FREE MONEY MARKET FUNDS PROSPECTUS
The revised budget would restore approximately $300 million
in tax cuts and seek a four year extension of the surcharge
on the City's personal income tax. The City Council adopted a
$33 billion budget on June 12, 1996 that increased spending
by $250 million above the Mayor's proposed budget. The
Governor and the legislature have not agreed upon the level
of State aid to the City during the 1997 fiscal year and
there can be no assurances that further cuts will not be
necessary to close additional budget gaps once a state budget
is adopted. In addition, due to the continuing federal
government impasse, the City is uncertain as to the level of
federal aid it will receive and the impact of changes in
federal law upon its operations and tax receipts. If State or
Federal aid in later years is less than the level projected
in the Mayor's proposal, projected savings may be negatively
impacted and the Mayor may be required to propose significant
additional spending reductions or tax increases to balance
the City's budget for the 1997 and later fiscal years. If the
State, the State Agencies, New York City, other
municipalities or school districts were to suffer serious
financial difficulties jeopardizing their respective access
to the
public credit markets, or increasing the risk of a default,
the market price of Municipal Obligations issued by such
entities could be adversely affected.
Absent appropriate legislative relief, the City may also face
limitations on its borrowing capacity after 1998 under the
State's Constitution that will prevent it from borrowing
additional funds, as a result of the decrease in real estate
values within the City. The inability to finance capital
improvements would increase the City's budget gaps in later
years.
CERTAIN FUNDAMENTAL INVESTMENT POLICIES
Each of the Funds, as a fundamental policy, may not, without
the approval of the holders of a majority of the outstanding
shares of that Fund, (1) invest more than 5% of its total
assets in securities of any one issuer, except that this
limitation shall not apply to securities of the United States
government, its agencies and instrumentalities or to the
investment of 25% of such Fund's assets; (2) borrow money,
except from banks for temporary or emergency purposes and
then only in an amount not exceeding (a) 10% of the value of
the Fund's total assets at the time of borrowing or (b) one-
third of the value of the Fund's total assets including the
amount borrowed, in order to meet redemption requests which
might otherwise require the untimely disposition of
securities; (3) pledge, mortgage or hypothecate its assets,
except that, to secure permitted borrowings for temporary or
emergency purposes, it may pledge securities having a market
value at the time of the pledge not exceeding 10% of the
value of the Fund's assets; (4) make loans, other than by
entering into repurchase agreements and through the purchase
of Municipal
21
<PAGE>
Obligations or temporary investments in accordance with its
investment objective, policies and limitations; (5) invest
more than 5% of its total assets in securities of unseasoned
issuers which, together with their predecessors, have been in
operation for less than three years; (6) invest more than 10%
of its assets in repurchase agreements maturing in more than
seven days, "illiquid" securities (such as non-negotiable
CDs) and securities without readily available market
quotations; or (7) invest more than 25% of its total assets
in securities of issuers in any one industry, provided,
however, that such limitation shall not be applicable to
municipal bonds issued by governments or political
subdivisions of governments, and obligations issued or
guaranteed by the U.S. Government, its agencies or
instrumentalities. For purposes of the foregoing sentence,
the "issuer" of a security shall be deemed to be the entity
whose assets and revenues are committed to the payment of
principal and interest on such security, provided that the
guarantee of an instrument will be considered a separate
security (subject to certain exclusions allowed under the
Investment Company Act of 1940). It is a fundamental policy
of each of the Funds, which cannot be changed without the
approval of the holders of a majority of shares of such Fund,
that a Fund will not hold securities of a single bank,
including securities backed by a letter of credit of such
bank, if such holdings would exceed 10% of the total assets
of such Fund. The foregoing restrictions and other
limitations discussed herein will apply only at the time of
purchase of securities and will not be considered violated
unless an excess or deficiency occurs or exists immediately
after and as a result of an acquisition of securities.
Under the Investment Company Act of 1940, the Funds 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.
For a more complete description of the fundamental and non-
fundamental investment policies summarized above and the
other fundamental investment policies applicable to each of
the Funds, see the Statement of Additional Information. The
investment policies of a Fund specifically identified as
fundamental, together with its investment objective, cannot
be changed without approval by holders of a "majority of the
Fund's outstanding voting shares." As defined by the
Investment Company Act of 1940, this means the vote of (i)
67% or more of the shares present at a meeting, if the
holders of more than 50% of the shares are present or
represented by proxy or (ii) more than 50% of the shares,
whichever is less.
22
<PAGE>
MANAGEMENT OF THE FUND NUVEEN TAX-FREE MONEY MARKET FUNDS PROSPECTUS
The management of Nuveen Tax-Free Money Market Fund, Inc.,
including general supervision of the duties performed for
each Fund by Nuveen Advisory under the Investment Management
Agreement, is the responsibility of the Board of Directors of
Nuveen Tax-Free Money Market Fund, Inc.
Nuveen Advisory acts as the investment adviser for and
manages the investment and reinvestment of the assets of each
Fund. Its address is 333 West Wacker Drive, Chicago, Illinois
60606. Nuveen Advisory also administers the Funds' 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 Nuveen Tax-Free
Money Market Fund, Inc. if elected to such positions.
For the services and facilities furnished by Nuveen Advisory,
each Fund has agreed to pay an annual management fee as
follows:
<TABLE>
<CAPTION>
AVERAGE DAILY NET ASSET
VALUE MANAGEMENT FEES
- ---------------------------------------------
<S> <C>
For the first $500 million .400 of 1%
For the next $500 million .375 of 1%
For assets over $1 billion .350 of 1%
</TABLE>
All fees and expenses are accrued daily and deducted before
payment of dividends to investors. In addition to the
management fee of Nuveen Advisory, each Fund pays all other
costs and expenses of its operations and a portion of the
Funds' general administrative expenses allocated in
proportion to the net assets of each Fund. Included in the
expenses paid by the Funds is each Fund's share of payments
under its Distribution and Service Plans.
The management fees will be reduced or Nuveen Advisory will
assume certain expenses of each series of each Fund in
amounts necessary to prevent the total expenses (including
Nuveen Advisory's management fees and the Distribution Plan
series and the Service Plan series of each Fund's share of
payments under the Distribution and Service Plans, but
excluding interest, taxes, fees incurred in acquiring and
disposing of portfolio securities and, to the extent
permitted, extraordinary expenses) of each series in any
fiscal year from exceeding .55 of 1% of the average daily net
asset value of such series. For the fiscal year ended
February 29, 1996, management fees amounted to .40 of 1% of
the average daily net assets of each Fund. For the fiscal
year ended February 29, 1996, net of applicable expense
reimbursements, total expenses were .54, .55 and .55 of 1% of
the average daily
23
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net assets of the Institutional series, the Distribution Plan
series and the Service Plan series, respectively, of the
Massachusetts Fund, and .55 of 1% of the average daily net
assets of each series of the New York Fund. Without expense
reimbursements, total expenses for the fiscal year ended
February 29, 1996 would have been .57, .84 and .63 of 1% of
the average daily net assets of the Institutional series, the
Distribution Plan series and the Service Plan series,
respectively, of the Massachusetts Fund, and 1.38, .94 and
1.92 of 1% of the average daily net assets of the
Institutional series, the Distribution Plan series and the
Service Plan series, respectively, of the New York Fund.
Nuveen Advisory was organized in 1976 and since then has
exclusively engaged in the management of municipal securities
portfolios. It currently serves as investment adviser to 21
open-end municipal securities portfolios (the "Nuveen Mutual
Funds") and 53 exchange-traded municipal securities funds
(the "Nuveen Exchange-Traded Funds"). Each of these invests
substantially all of its assets in investment grade quality,
tax-free municipal securities. As of the date of this
Prospectus, Nuveen Advisory manages approximately $30 billion
in assets held by the Nuveen Mutual Funds and the Nuveen
Exchange-Traded Funds.
Nuveen Advisory is a wholly-owned subsidiary of John Nuveen &
Co. Incorporated ("Nuveen"), 333 West Wacker Drive, Chicago,
Illinois 60606, the oldest and largest investment banking
firm (based on number of employees) specializing in the
underwriting and distribution of tax-exempt securities.
Nuveen, the principal underwriter of the Funds' shares, is
sponsor of the Nuveen Tax-Exempt Unit Trust, a registered
unit investment trust. It is also the principal underwriter
for the Nuveen Mutual Funds, and served as co-managing
underwriter for the shares of the Nuveen Exchange-Traded
Funds. Over 1,000,000 individuals have invested to date in
Nuveen's tax-exempt funds and trusts. Founded in 1898, Nuveen
is a subsidiary of The John Nuveen Company which, in turn, is
approximately 80% owned by The St. Paul Companies, Inc. ("St.
Paul"). St. Paul is located in St. Paul, Minnesota, and is
principally engaged in providing property-liability insurance
through subsidiaries.
24
<PAGE>
DIVIDENDS AND TAXES NUVEEN TAX-FREE MONEY MARKET FUNDS PROSPECTUS
Dividends All of the net income attributable to the respective series
of each Fund is declared on each calendar day as a dividend
on shares entitled to such dividend. Net income of each Fund
series consists of all interest income accrued and discounts
earned on portfolio assets (adjusted for amortization of
premium or discount on securities when required for federal
income tax purposes), plus or minus any realized short-term
gains or losses on portfolio instruments since the previous
dividend declaration, less estimated expenses incurred
subsequent to the previous dividend declaration. For the
Service Plan series and Distribution Plan series of the
Funds, expenses will include, among other things, payments to
banks or other organizations and securities dealers pursuant
to Service Agreements and Distribution Agreements with
Nuveen. See "Distribution and Service Plans" below for
additional information on these expenses. It is not expected
that realized or unrealized gains or losses on portfolio
instruments will be a meaningful factor in the computation of
the net income of the Funds. Dividends are paid monthly and
are reinvested in additional shares of the Fund on which the
dividends are declared at net asset value or, at the
shareholder's option, paid in cash. Net realized long-term
capital gains, if any, will be paid not less frequently than
once a year within 30 days of the end of the Nuveen Tax-Free
Money Market Fund, Inc.'s fiscal year and reinvested in
additional shares of the Fund on which such gains are paid at
net asset value unless the shareholder has elected to receive
capital gains in cash. The Funds do not anticipate realizing
any significant long-term capital gains or losses.
Each Fund intends to qualify, as it has in prior years, under
Federal Income Subchapter M of the Internal Revenue Code of 1986, as amended
Tax Matters (the "Code"), for tax treatment as a regulated investment
company. Each fund also intends to satisfy conditions which
will enable interest from Municipal Obligations, which is
exempt from federal income tax in the hands of the Fund, to
retain such tax-exempt status when distributed to the
shareholders of the Fund.
Distributions by each Fund of net income received, if any,
from taxable temporary investments and net short-term capital
gains, if any, realized by the Fund, will be taxable to
shareholders as ordinary income. So long as a Fund qualifies
as a regulated investment company under the Code,
distributions to shareholders will not qualify for the
dividends received deduction for corporations. If in any year
a 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 taxable
income for that year, and the entire amount of distributions
to shareholders would be taxable to shareholders as ordinary
income.
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<PAGE>
The Code provides that interest on indebtedness incurred or
continued to purchase or carry shares of a Fund is not
deductible. Under rules used by the Internal Revenue Service
for determining when borrowed funds are considered used for
the purpose of purchasing or carrying particular assets, the
purchase of shares may be considered to have been made with
borrowed funds even though such funds are not directly
traceable to the purchase of shares.
Tax-exempt income is taken into account in calculating the
amount of social security and railroad retirement benefits
that may be subject to federal income tax.
The Funds may invest in the type of private activity bonds
the interest on which is not federally tax-exempt to persons
who are "substantial users" of the facilities financed by
such bonds or who are "related persons" of such substantial
users. Accordingly, the Funds may not be appropriate
investments for shareholders who are considered either a
"substantial user" or a "related person" thereof. Such
persons should consult their tax advisers before investing in
the Funds.
Although the Funds have not done so and have no present
intention to do so, the Funds may also invest in private
activity bonds, the interest on which is a specific item of
tax preference for purposes of computing the alternative
minimum tax on corporations and individuals. This type of
private activity bond includes most industrial and housing
revenue bonds. Shareholders whose tax liability is determined
under the alternative minimum tax will be taxed on their
share of the Fund's exempt-interest dividends that were paid
from income earned on these bonds. In addition, the
alternative minimum taxable income for corporations is
increased by 75% of the difference between an alternative
measure of income ("adjusted current earnings") and the
amount otherwise determined to be alternative minimum taxable
income. Interest on all Municipal Obligations, and therefore
all distributions by the Fund that would otherwise be tax
exempt, is included in calculating a corporation's adjusted
current earnings.
Each Fund is required in certain circumstances to withhold
31% of taxable dividends and certain other payments paid to
non-corporate holders of shares who have not furnished to the
Fund their correct taxpayer identification number (in the
case of individuals, their social security number) and
certain certificates, or who are otherwise subject to back-up
withholding.
26
<PAGE>
NUVEEN TAX-FREE MONEY MARKET FUNDS PROSPECTUS
MASSACHUSETTS
State Income
Tax Matters Individual shareholders of the Massachusetts Fund who are
subject to Massachusetts income taxation will not be required
to include that portion of their federally tax-exempt
dividends in Massachusetts gross income which the
Massachusetts Fund clearly identifies as directly
attributable to interest earned on Municipal Obligations
issued by governmental authorities in Massachusetts which are
specifically exempted from income taxation in Massachusetts,
provided such dividends are identified in a timely written
notice mailed to shareholders of the Massachusetts Fund, or
interest earned on obligations of certain U.S. territories or
possessions. Similarly, such shareholders will not be
required to include in Massachusetts gross income capital
gain dividends designated by the Massachusetts Fund to the
extent such dividends are attributable to gains derived from
Municipal Obligations issued by Massachusetts governmental
authorities and are specifically exempted from income
taxation in Massachusetts, provided such dividends are
identified in a timely written notice mailed to shareholders
of the Massachusetts Fund. Lastly, any dividends of the
Massachusetts Fund attributable to interest on U.S.
obligations exempt from state taxation and included in
Federal gross income will not be included in Massachusetts
gross income, provided such dividends are identified in a
timely written notice mailed to shareholders of the
Massachusetts Fund. Distributions of dividends derived from
any net income received from taxable temporary investments
and any net short-term capital gains realized by the
Massachusetts Fund will be included in shareholders'
Massachusetts income.
With respect to corporate shareholders of the Massachusetts
Fund that are subject to the Massachusetts excise tax, divi-
dends received from the Massachusetts Fund are includable in
gross income and generally may not be deducted by corporate
shareholders in computing their net income, and the net worth
base of an intangible property corporation includes the cor-
porate shareholders' shares in the Massachusetts Fund.
NEW YORK
Individual shareholders of the New York Fund who are subject
to New York State or New York City personal income taxation
will not be required to include in their New York adjusted
gross income that portion of their exempt-interest dividends
(as determined for federal income tax purposes) which the New
York Fund clearly identifies as directly attributable to
interest earned on Municipal Obligations issued by
governmental authorities in New York ("New York Municipal
Obligations") and which are specifically exempted from
personal income taxation in New York State or New York City,
or interest earned on obligations of U.S. territories or
possessions
27
<PAGE>
that is exempt from taxation by the states pursuant to
federal law. Distributions to individual shareholders of
dividends derived from interest that does not qualify as
exempt-interest dividends (as determined for federal income
tax purposes), distributions of exempt-interest dividends (as
determined for federal income tax purposes) which are derived
from interest on Municipal Obligations issued by governmental
authorities in states other than New York State, and
distributions derived from interest earned on federal
obligations will be included in their New York adjusted gross
income as ordinary income. Distributions to individual
shareholders of the New York Fund of capital gain dividends
(as determined for federal income tax purposes) will be
included in their New York adjusted gross income as long-term
capital gains. Distributions to individual shareholders of
the New York Fund of dividends derived from any net income
received from taxable temporary investments and any net
short-term capital gains realized by the New York Fund will
be included in their New York adjusted gross income as
ordinary income.
For purposes of New York State franchise taxation (or New
York City general corporation taxation), entire income will
include dividends received from the New York Fund (as
determined for federal income tax purposes), and investment
capital will include a corporate shareholder's shares of the
New York Fund. If a shareholder of the New York Fund is
subject to the New York City unincorporated business tax,
income and gains derived from the New York Fund will be
subject to such tax, except for exempt-interest dividends (as
determined for federal income tax purposes) which the New
York Fund clearly identifies as directly attributable to
interest earned on New York Municipal Obligations.
The foregoing is a general and abbreviated summary of the
provisions of the Code and Treasury Regulations and tax
provisions of designated states presently in effect as they
directly govern the taxation of each Fund or its
shareholders. The foregoing state tax information assumes
that each Fund qualifies as a regulated investment company
for federal income tax purposes under subchapter M of the
Code, and that the amounts so designated by each Fund to its
shareholders qualify as "exempt-interest dividends" under
Section 852(b)(5) of the Code. These provisions are subject
to change by legislative or administrative 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
taxation of each Fund and the federal, state and local tax
consequences to its shareholders.
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<PAGE>
NET ASSET VALUE NUVEEN TAX-FREE MONEY MARKET FUNDS PROSPECTUS
Net asset value of the shares of each Fund will be determined
by The Chase Manhattan Bank, N.A., Nuveen Tax-Free Money
Market Fund, Inc.'s custodian, as of 12:00 noon, Eastern Time
on each day on which the Federal Reserve Bank of Boston is
normally open for business (a "business day") and as of 12:00
noon Eastern Time on any other day during which there is a
sufficient degree of trading in the Funds' portfolio
securities such that the current net asset value of the
Funds' shares might be materially affected by changes in the
value of the portfolio securities. The net asset value per
share of each Fund will be computed by dividing the sum of
the value of the portfolio securities held by such Fund, plus
any cash or other assets, less liabilities, by the total
number of shares of such Fund outstanding at such time.
Each Fund will seek to maintain a net asset value of $1.00
per share. In this connection, portfolio securities in each
Fund are valued on the basis of their amortized cost. This
method values a security at its cost on the date of purchase
and thereafter assumes a constant amortization to maturity of
any discount or premium, regardless of the impact of
fluctuating interest rates on the market value of the
security. For a more complete description of the amortized
cost valuation method and its effect on existing and
prospective shareholders of the Funds, see the Statement of
Additional Information. There can be no assurance that each
Fund will be able at all times to maintain a net asset value
of $1.00 per share.
29
<PAGE>
HOW TO BUY FUND SHARES
In General Shares of each of the Funds may be purchased by residents of
the Fund's designated state on business days (as defined
under "Net Asset Value") at the net asset value which is next
computed after receipt of the order, provided payment in
federal funds is received as described herein.
Shares of each Fund are issued in three series: (i) the
"Service Plan" series intended for purchase by or through
banks and other organizations ("Service Organizations") who
have agreed to perform certain services for their customers
who are shareholders of this series of the Fund, (ii) the
"Distribution Plan" series intended for purchase by or
through securities dealers who have entered into Distribution
Agreements with Nuveen with respect to the distribution of
shares of the Fund and (iii) the "Institutional" series
intended for purchase by trustees, bank trust departments,
corporations and investment bankers or advisers. The
Distribution Plan was adopted by the Funds in accordance with
Rule 12b-1 under the 1940 Act which permits an investment
company to bear distribution expenses (as that term is
construed by the Securities and Exchange Commission) in
connection with certain services provided by securities
dealers. The Service Plan, although not a Rule 12b-1 plan, is
a comparable agreement entered into with Service
Organizations who provide certain administrative services.
There are no sales charges on purchases of shares of any of
the three series of each Fund. However, shares of the Service
Plan series and shares of the Distribution Plan series are
charged with a portion of fees paid to Service Organizations
and securities dealers, respectively, pursuant to Service
Agreements and Distribution Agreements with Nuveen. The
allocation of a portion of these fees to the Service Plan
series and to the Distribution Plan series of shares of each
Fund will be charged against the yield to holders of such
shares, which will typically result in a lower yield to these
holders as compared with the holders of the Institutional
series of the same Fund. These fees are described below under
the caption "Distribution and Service Plans" and in the
Statement of Additional Information. Shares of the Service
Plan series and the Distribution Plan series enjoy certain
exclusive voting rights on matters related to the allocation
of fees to shares of these two series. Except for the
allocation of these fees and the special voting rights
related thereto, shares of each of the three series of each
Fund are identical.
Purchases of shares of the Funds by Federal Reserve wire are
recommended. However, purchases may also be made by bank
wire, Federal Reserve draft or check. The minimum initial
investment in any of the Funds is $5,000, and subsequent
investments must be in amounts of $100 or more. The Funds
reserve the right to reject purchase orders and to waive or
increase the minimum investment requirements.
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<PAGE>
NUVEEN TAX-FREE MONEY MARKET FUNDS PROSPECTUS
In order to maximize the earnings on its assets, each of the
Funds strives to be invested as completely as practicable. A
Fund is normally required to make settlement in federal funds
for securities purchased. Accordingly, orders for shares of
one of the Funds may be made, and become effective on
business days, as follows:
Purchase by To open an account, call Nuveen toll-free at 800.858.4084 to
Telephone obtain an account number, control number and instructions.
Information concerning the account such as name, address and
social security or tax identification number will be taken
over the telephone. Payment may be made by wire transfer to
the United Missouri Bank of Kansas City, N.A. as follows:
United Missouri Bank of Kansas City, N.A.
ABA #101000695
Nuveen Tax-Free Money Market Fund, Inc.
[Designated State] Fund
Shareholder Account No. (see above):
Shareholder Account Name:
The investor will be required to complete an application form
and mail it to Nuveen after making the initial telephone
purchase. Subsequent investments may be made by following the
same telephone order and wire transfer procedure.
If an order is received by Nuveen by 12:00 noon, Eastern
Time, and federal funds are received by United Missouri Bank
of Kansas City, N.A. on the same day by 3:00 p.m., Eastern
Time, the order is effective that day. If both the order and
federal funds are not received by the times specified above,
the order will become effective the following business day.
Purchase by To open an account, complete the Application Form and mail it
Mail with a check or Federal Reserve draft to Nuveen Tax-Free
Money Market Fund, Inc., [Designated State] Fund, P.O. Box
5330, Denver, Colorado 80217-5330. Subsequent investments may
be made by mailing a check with the investor's account number
to the above address. The order becomes effective as soon as
the check or draft is converted to federal funds. This
typically occurs one business day after receipt but may take
longer.
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<PAGE>
Fund Direct You can use Fund Direct to link your Fund account to your
account at your bank or other financial institution to enable
you to send money electronically between those accounts to
perform a variety of account transactions. These include
purchases of shares by telephone, investments under Automatic
Deposit Plan, and sending dividends and distributions,
redemption payments or Automatic Withdrawal Plan payments
directly to your bank account. Fund Direct privileges must be
requested via a Fund Direct Application you obtain by calling
800.621.7227. Fund Direct privileges will apply to each
shareholder listed in the registration on your account as
well as to your Authorized Dealer representative of record
unless and until SSI receives written instructions
terminating or changing those privileges. After you establish
Fund Direct for your account, any change of bank account
information must be made by signature-guaranteed instructions
to SSI as described in "How to Redeem Fund Shares."
Purchases may be made by telephone only after your account
has been established. To purchase shares in amounts up to
$250,000 through a telephone representative, call SSI at
800.621.7227. The purchase payment will be debited from your
bank account.
FOR MORE INFORMATION ABOUT THESE PURCHASE OPTIONS AND TO
OBTAIN THE APPLICATION FORMS REQUIRED FOR SOME OF THEM, CALL
NUVEEN TOLL-FREE AT
800.621.7227.
Purchase
Through a To open an account through a securities dealer, bank or other
Securities Service Organization, investors should send money to that
Dealer or organization for transmission to the Funds and furnish it
Service with the information required in the Application Form. Each
Organization of the Funds has Distribution and Service Plan pursuant to
which payments are made, in the case of the Distribution Plan
series to dealers who provide assistance in distributing
shares of such series of the Fund, and in the case of the
Service Plan series to Service Organizations who provide
assistance in servicing shareholder accounts of such series.
See "Distribution and Service Plan."
Purchase by Unitholders of Nuveen Unit Investment Trusts ("UITs") may
Reinvestment purchase shares of the Fund for the designated state of which
of Nuveen Unit they are residents by automatically reinvesting distributions
Investment from their Nuveen UIT. To obtain information on share
Trust purchases through investment of Nuveen UIT distributions,
Distributions check the applicable box on the enclosed Application Form or
call Nuveen toll-free at 800.237.0910.
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NUVEEN TAX-FREE MONEY MARKET FUNDS PROSPECTUS
COMMENCEMENT OF DIVIDENDS
Shares are deemed to have been purchased and are entitled to
dividends commencing on the day the purchase order becomes
effective.
THE FUND OFFERS TWO DIFFERENT TYPES OF SYSTEMATIC INVESTMENT
PROGRAMS:
Automatic Once you have established a Fund account, you may make
Deposit Plan regular investments in an amount of $25 or more each month by
authorizing Shareholder Services, Inc. ("SSI") to draw
preauthorized checks on your bank account. There is no
obligation to continue payments and you may terminate your
participation at any time at your discretion. No charge is
made in connection with this Plan, and there is no cost to
the Funds. To obtain an application form for the Automatic
Deposit Plan, check the applicable box on the enclosed
Application Form or call Nuveen toll-free at 800.621.7227.
Payroll Direct Once you have established a Fund account you may, with your
Deposit Plan employer's consent, make regular investments in Fund shares
of $25 or more per pay period by authorizing your employer to
deduct such amount automatically from your paycheck. There is
no obligation to continue payments and you may terminate your
participation at any time at your discretion. No charge is
made for this service and there is no cost to the Funds. To
obtain an application form for the Payroll Direct Deposit
Plan, check the applicable box on the enclosed Application
Form or call Nuveen toll-free at 800.621.7227.
OTHER SHAREHOLDER PROGRAMS
Exchange You may exchange shares of a Fund for shares of any other
Privilege open-end management investment company with reciprocal
exchange privileges advised by Nuveen Advisory (the "Nuveen
Funds"), provided that the Nuveen Fund into which shares are
to be exchanged is offered in your state of residence and
that the shares to be exchanged have been held by you for a
period of at least 15 days. Shares of Nuveen Funds purchased
subject to a front-end sales charge may be exchanged for
shares of the Funds or any other Nuveen Fund at the next
determined net asset value without any front-end sales
charge. Shares of any Nuveen Fund purchased through dividend
reinvestment or through reinvestment of Nuveen Tax-Exempt
Unit Trust distributions (and any dividends thereon) may be
exchanged for shares of the Funds or any other Nuveen Fund
without a front-end sales charge. Exchanges of shares with
respect to which no front-end sales charge has been paid will
be made at the public offering price, which may include a
front-end sales charge, unless a front-end sales charge has
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
33
<PAGE>
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 Funds do not
(generally, Martin Luther King's Birthday, Columbus Day and
Veterans Day), exchanges of shares of one of those funds for
shares of the Funds may not be effected on such days.
The total value of shares being exchanged must at least equal
the minimum investment requirement of the Nuveen Fund into
which they are being exchanged. Exchanges are made based on
the relative dollar values of the shares involved in the
exchange, and will be effected by redemption of shares of the
Nuveen Fund held and purchase of the shares of the other
Nuveen Fund. For federal income 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 a
Fund. You may also make exchanges by telephone if a
preauthorized exchange authorization, as provided on the
account Application Form, is on file with SSI, Nuveen Tax-
Free Money Market Fund's shareholder service agent. The
exchange privilege may be modified or discontinued at any
time.
ADDITIONAL INFORMATION
An account will be maintained for each shareholder of record
in the Funds by SSI. Share certificates will be issued only
upon written request of the shareholder to SSI. No
certificates are issued for fractional shares. The Funds
reserve the right to reject any purchase order and to waive
or increase minimum investment requirements.
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 SSI's
sub-accounting system to minimize their internal
recordkeeping requirements. A broker/dealer or other investor
requesting shareholder servicing or accounting other than the
master account or sub-accounting service offered by the Funds
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.
34
<PAGE>
NUVEEN TAX-FREE MONEY MARKET FUNDS PROSPECTUS
Subject to the rules and regulations of the SEC, each Fund
reserves the right to suspend the continuous offering of its
shares at any time, but such suspension shall not affect the
shareholder's right of redemption as described in "How to
Redeem Fund Shares" below.
DISTRIBUTION AND SERVICE PLAN
Each of the Funds has adopted a Distribution Plan pursuant to
Rule 12b-1 under the 1940 Act and a Service Plan
(collectively, the "Plan"), pursuant to which the
Distribution Plan series and the Service Plan series of such
Fund and Nuveen pay, in equal amounts, fees to securities
dealers and Service Organizations for services rendered in
the distribution of shares of such Fund or the servicing of
shareholder accounts. Such services may include, among other
things, establishing and maintaining shareholder accounts,
processing purchase and redemption transactions, arranging
for bank wires, performing sub-accounting, answering
shareholder inquiries and such other services as Nuveen may
request. Nuveen will enter into Distribution or Service
Agreements with organizations who render such services.
Service payments to such organizations in amounts of up to
.25 of 1% per year of average assets of serviced accounts
will be paid one-half by the respective series of each Fund
and one-half by Nuveen.
The Plan continues in effect from year to year so long as
such continuance is approved at least annually by a vote of
the Board of Directors and a vote of the non-interested
directors. The Plan may not be amended to increase materially
the cost which the Distribution Plan series or the Service
Plan series of the Funds may bear for distribution and
services, respectively, without the approval of the non-
interested directors and the shareholders of the affected
series of that Fund. Any other material amendments of the
Plan must be approved by the non-interested directors.
Beneficial owners of shares of the Distribution Plan series
and the Service Plan series of the Funds should read this
prospectus in light of the terms governing their accounts
with securities dealers and Service Organizations,
respectively.
35
<PAGE>
HOW TO REDEEM FUND SHARES
In General Upon receipt of a proper redemption request on a business
day, the Fund will redeem its shares at their next determined
net asset value. You may use the telephone redemption, check
redemption, or the regular redemption procedures discussed
hereafter. The purchase and redemption methods employed will
determine when funds will be available to you. Where the
shares to be redeemed have been purchased by check or through
Fund Direct within 15 days prior to the date the redemption
request is received, the Fund will not send the redemption
proceeds until the check or Fund Direct transfer for the
purchase has cleared, which may take up to 15 days. There is
no delay when the shares being redeemed were purchased by
wiring federal funds.
Shareholders of the Distribution Plan series of any Fund may
Check request that the Fund provide them with drafts ("Redemption
Redemption Checks") drawn on the Fund's account. These Redemption Checks
may be made payable to the order of any person in an amount
of $500 or more, and dividends are earned until the
Redemption Check clears. Redemption Checks clear through the
United Missouri Bank of Kansas City, N.A. (the "Bank") and
are subject to the same rules and regulations that the Bank
applies to checking accounts.
When a Redemption Check is presented, a sufficient number of
full and fractional shares in the shareholder's account will
be redeemed to cover the amount of the Redemption Check.
Shares for which stock certificates have been issued will not
be available for redemption by the use of Redemption Checks.
There must be sufficient shares in the shareholder's account
to cover the amount of each Redemption Check written or the
check will be returned. Checks should not be used to close an
account. Shareholders wishing to use Redemption Checks must
complete the appropriate section of the Application Form and
submit the enclosed signature card.
This check redemption privilege may be modified or terminated
at any time by Nuveen Tax-Free Money Market Fund, Inc. or the
Bank. The Check redemption feature does not constitute a bank
checking account.
By Written Shareholders may redeem their shares by sending a written
Request request for redemption directly to Nuveen Tax-Free Money
Market Fund, Inc., c/o Shareholder Services, Inc., P.O. Box
5330, Denver, Colorado 80217-5330, accompanied by duly
endorsed certificates, if issued. Requests for redemption and
share certificates, if issued, must be signed by each
shareholder and, if the redemption proceeds exceed $50,000 or
are payable other than to the shareholder of record at the
address of record (which address may not have been changed in
the preceding 30 days), the signature must be
36
<PAGE>
NUVEEN TAX-FREE MONEY MARKET FUNDS PROSPECTUS
guaranteed by a member of an approved Medallion Guarantee
Program or in such other manner as may be acceptable to the
Fund. Under normal circumstances payment will be made by
check and mailed within one business day (and in no event
more than seven days) after receipt of a redemption request
in proper form.
By TEL-A-CHECK You may redeem shares by TEL-A-CHECK telephone redemptions,
with the redemption proceeds paid by check, by completing the
TEL-A-CHECK authorization section of the enclosed Application
Form and returning it to Nuveen or SSI. If you did not
authorize TEL-A-CHECK when you opened your account, you may
obtain authorization by writing the Fund. The request must be
signed by each account owner with signatures guaranteed by a
member of an approved Medallion Guarantee Program or in such
other manner as may be acceptable to the Fund. If you have
authorized TEL-A-CHECK and your account address has not
changed within the last 30 days, you can redeem shares that
are held in non-certificate form and that are worth $50,000
or less by calling Nuveen at 800.621.7227. While you or
anyone authorized by you may make telephone redemption
requests, redemption checks will be issued only in the name
of the shareholder of record and will be mailed to the
address of record. If your telephone 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 will be effected and the redemption check will be
mailed on the following business day. For 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 and the redemption check will be mailed on the
second business day.
By TEL-A-WIRE Before you may redeem shares by TEL-A-WIRE telephone
redemptions, with the redemption proceeds paid by Federal
Reserve wire, you must complete the TEL-A-WIRE authorization
section of the enclosed Application Form and return it to
Nuveen or SSI. If you did not authorize TEL-A-WIRE when you
opened your account, you may do so by sending a written
request to the Fund signed by each account owner with
signatures guaranteed by a member of an approved Medallion
Guarantee Program or in such other manner as may be
acceptable to the Fund.
If you have authorized TEL-A-WIRE redemption, you can take
advantage of the following expedited redemption procedures to
redeem shares held in non-certificate form that are worth at
least $1,000. You may make TEL-A-WIRE redemption requests by
calling Nuveen at 800.858.4084. If a 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 proceeds are ordinarily wired on the same
37
<PAGE>
day to the commercial bank account designated. If the
redemption request is received after 12:00 noon Eastern Time,
the shares to be redeemed earn income on the day the request
is received and the redemption is effected and proceeds are
ordinarily wired the next business day. 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. The Fund reserves the right to charge a
fee for TEL-A-WIRE.
By Fund Direct Before you may redeem shares by Fund Direct telephone
redemptions, with the redemption proceeds being sent via
automated clearing house wire, you must complete the Fund
Direct Application Form and return it to Nuveen or SSI. If
you did not authorize Fund Direct when you opened your
account, you may obtain an Application Form by calling
800.621.7227. The Fund Direct Application Form must be signed
by each account owner with signatures guaranteed 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 by
automated clearing house only to the commercial bank account
specified by the shareholder.
If you have authorized Fund Direct, you can take advantage of
the following expedited redemption procedures to redeem
shares held in non-certificate form. You may make Fund Direct
redemption requests by calling Nuveen at 800.621.7227. If
your telephone 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 effected and the funds
will be wired on the following business day. For 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 and the funds will be wired on the
second business day.
How to Change In order to establish multiple accounts, or to change the
Authorized account or accounts designated to receive redemption
Redemption proceeds, a written request specifying the change must be
Instructions sent to Nuveen. This request must be signed by each account
owner with signatures guaranteed by a member of an approved
Medallion Guarantee Program or in such other manner as may be
acceptable to the Fund. Further documentation may be required
from corporations, executors, trustees or personal
representatives.
38
<PAGE>
NUVEEN TAX-FREE MONEY MARKET FUNDS PROSPECTUS
The Funds reserve the right to refuse telephone redemptions
and, at their option, may limit the timing, amount or
frequency of these redemptions. Telephone redemption
procedures may be modified or terminated at any time, on 30
days' notice, by the Funds. The Funds, SSI and Nuveen will
not be liable for following telephone instructions reasonably
believed to be genuine. The Funds employ procedures
reasonably designed to confirm that telephone instructions
are genuine. These procedures include recording all telephone
instructions and requiring up to three forms of
identification prior to acting upon a caller's instructions.
If a Fund does not follow reasonable procedures for
protecting shareholders against loss on telephone
transactions, it may be liable for any losses due to
unauthorized or fraudulent telephone instructions.
Redemption Fund shareholders may also redeem shares through their
Through accounts with Service Organizations in accordance with
Service procedures established by each such Service Organization. The
Organizations Funds have no redemption charge, but Service Organizations
may impose transaction fees or other charges relating to the
redemption of Fund shares. Individual shareholders should
determine from their Service Organizations the procedures and
charges, if any, that govern redemptions.
Automatic If you own Fund shares currently worth at least $10,000, you
Withdrawal may establish an Automatic Withdrawal Plan by completing an
Plan application form for the Plan. You may obtain an application
form by checking the applicable box on the enclosed
Application Form or by calling Nuveen toll-free at
800.621.7227. The Plan permits you to request periodic
withdrawals on a monthly, quarterly, semi-annual or annual
basis in an amount of $50 or more. All shares of the Funds
you own will be accumulated in the Plan, with a sufficient
number of shares being redeemed periodically to meet the
requested withdrawal payments. Depending upon the size of the
payments requested under the Plan, redemptions for the
purpose of making such payments may reduce or even exhaust
your account. Withdrawals under this Plan should not,
therefore, be considered a yield on investment. An Automatic
Withdrawal Plan may be terminated at any time by you or the
Funds. To obtain an application form for the Automatic
Withdrawal Plan, check the applicable box on the enclosed
Application Form or call Nuveen toll-free at 800.621.7227.
39
<PAGE>
REDEMPTION IN KIND
Each 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
such Fund at the beginning of such period. This commitment is
irrevocable without the prior approval of the SEC and is a
fundamental policy of each Fund which may not be changed
without shareholder approval. In the case of redemption
requests in excess of such amounts, the Board of Directors
reserves the right to have the Funds make payment in whole or
in part in securities or other assets of such Fund in case of
an emergency or any time a cash distribution would
impair the liquidity of such Fund to the detriment of the
existing shareholders. In this event, the securities would be
valued in the same manner as securities of such Fund are
valued. If the recipient were to sell such securities, he or
she would incur brokerage charges.
OTHER PRACTICES
The Funds 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 Funds normally utilizes is restricted, or an
emergency exists as determined by the SEC so that disposal of
a 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 Funds.
40
<PAGE>
GENERAL INFORMATION NUVEEN TAX-FREE MONEY MARKET FUNDS PROSPECTUS
Investor inquiries may be made directly of the Funds in
Investor writing or by calling
Inquiries
John Nuveen & Co. Incorporated, Nuveen Tax-Free Money Market
Fund, Inc.'s distributor, toll-free at 800.621.7227.
Custodian, The custodian of the assets of the Funds is The Chase
Shareholder Manhattan Bank, N.A., 770 Broadway, New York, New York 10003.
Services Agent The custodian performs custodial fund accounting and
and Transfer portfolio accounting services. Shareholder Services, Inc.,
Agent P.O. Box 5330, Denver, Colorado 80217-5330, is the transfer,
shareholder services and dividend paying agent for the Funds
and performs bookkeeping, data processing and administrative
services incident to the maintenance of shareholder accounts.
Nuveen Tax-Free Money Market Fund, Inc. was incorporated in
Capital Stock Minnesota on July 11, 1986. It is authorized to issue an
aggregate of 5,000,000,000 shares of common stock, $.01 par
value, consisting of 2,500,000,000 shares of the
Massachusetts Fund and 2,500,000,000 shares of the New York
Fund. Nuveen Tax-Free Money Market Fund, Inc. reserves the
right to reclassify a portion of these shares by allocating
them to other portfolio classes that may be established in
the future. Shares of each portfolio class will have equal
non-cumulative voting rights and equal rights with respect to
dividends declared by such portfolio class and the assets of
such portfolio class upon liquidation, except that only
shares of a particular portfolio class will be entitled to
vote on matters concerning only that portfolio class. Shares
are fully paid and non-assessable when issued and have no
pre-emptive, conversion or exchange rights.
41
<PAGE>
TAXABLE EQUIVALENT YIELD TABLES
The following tables show the combined effects for
individuals of federal, state and local (if applicable)
income taxes on what you would have to earn on a taxable
investment to equal a given tax-exempt yield. These tables
are for illustrative purposes only and are not intended to
predict the actual return you might earn on a Fund
investment. The Funds occasionally may advertise their
performance in similar tables using other current combined
tax rates than those shown here. The combined tax rates used
in these tables have been rounded to the nearest one-half of
one percent. They are based upon published 1996 marginal
federal tax rates and marginal state tax rates currently
available and scheduled to be in effect, 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 table
assumes that federal taxable income is equal to state income
subject to tax, and for cases in which more than one state
rate falls within a federal bracket, the highest state rate
corresponding to the highest income within that federal
bracket is used. The tables assume taxpayers are not subject
to any alternative minimum taxes and deduct any state income
taxes paid on their federal income tax returns. Unless noted
otherwise, the tables do not reflect any local taxes or any
taxes other than personal income taxes. They also reflect 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 total 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 combined tax
rates shown here may be higher or lower than your actual
combined tax rate.
42
<PAGE>
NUVEEN TAX-FREE MONEY MARKET FUNDS PROSPECTUS
MASSACHUSETTS
Combined marginal tax rates for Massachusetts joint taxpayers
with four personal exemptions
<TABLE>
<CAPTION>
Tax-free yield
--------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
2.00% 2.50% 3.00% 3.50% 4.00% 4.50% 5.00%
--------------------------------------------------------------------------
<CAPTION>
Federal
Federal Adjusted Combined
Taxable Gross State and
Income Income Federal
(1,000's) (1,000's) Tax Rate** Taxable equivalent yield
- ------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
$ 0-40.1 $ 0-118.0 25.0% 2.67 3.33 4.00 4.67 5.33 6.00 6.67
40.1-96.9 0-118.0 36.5 3.15 3.94 4.72 5.51 6.30 7.09 7.87
118.0-177.0 37.5 3.20 4.00 4.80 5.60 6.40 7.20 8.00
96.9-147.7 0-118.0 39.5 3.31 4.13 4.96 5.79 6.61 7.44 8.26
118.0-177.0 44.0 3.33 4.17 5.00 5.83 6.67 7.50 8.33
177.0-299.5 42.5 3.48 4.35 5.22 6.09 6.96 7.83 8.70
147.7-263.8 118.0-177.0 44.5 3.60 4.50 5.41 6.31 7.21 8.11 9.01
177.0-299.5 47.0 3.77 4.72 5.66 6.60 7.55 8.49 9.43
Over 299.5 44.5 3.60 4.50 5.41 6.31 7.21 8.11 9.01
Over 263.8 177.0-299.5 50.5 4.04 5.05 6.06 7.07 8.08 9.09 10.10
Over 299.5 48.0 3.85 4.81 5.77 6.73 7.69 8.65 9.62
</TABLE>
43
<PAGE>
MASSACHUSETTS-CONTINUED
Combined marginal tax rates for Massachusetts single
taxpayers with one personal exemption
<TABLE>
<CAPTION>
Tax-free yield
---------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
2.00% 2.50% 3.00% 3.50% 4.00% 4.50% 5.00%
---------------------------------------------------------------------------
<CAPTION>
Federal
Federal Adjusted Combined
Taxable Gross State and
Income Income Federal
(1,000's) (1,000's) Tax Rate** Taxable equivalent yield
- -------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
$ 0-24.0 $ 0-118.0 25.0% 2.67 3.33 4.00 4.67 5.33 6.00 6.67
24.0-58.2 0-118.0 36.5 3.15 3.94 4.72 5.51 6.30 7.09 7.87
58.2-121.3 0-118.0 39.5 3.31 4.13 4.96 5.79 6.61 7.44 8.26
118.0-240.5 40.5 3.36 4.20 5.04 5.88 6.72 7.56 8.40
121.3-263.8 118.0-240.5 45.5 3.67 4.59 5.50 6.42 7.34 8.26 9.17
Over 240.5 44.5 3.60 4.50 5.41 6.31 7.21 8.11 9.01
Over 263.8 Over 240.5 48.0 3.85 4.81 5.77 6.73 7.69 8.65 9.62
</TABLE>
<TABLE>
<CAPTION>
Your tax-free investment may be less*
------------------------------------------------------------------------------------
For an after-tax return
equal to that provided
by a 2.0% 2.5% 3.0% 3.5% 4.0% 4.5% 5.0%
- --------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
$50,000 in a 3% taxable
investment $ 45,375 $36,300 $30,250 $25,929 $22,688 $20,167 $18,150
$50,000 in a 4% taxable
investment 60,500 48,400 40,333 34,571 30,250 26,889 24,200
$50,000 in a 5% taxable
investment 75,625 60,500 50,417 43,214 37,813 33,611 30,250
$50,000 in a 6% taxable
investment 90,750 72,600 60,500 51,857 45,375 40,333 36,300
$50,000 in a 7% taxable
investment 105,875 84,700 70,583 60,500 52,938 47,056 42,350
</TABLE>
* Dollar amounts in the table reflect a 39.5% combined federal and state tax
rate.
** The Massachusetts state tax rate shown is the rate at which interest is
taxed. Certain other types of income are taxed at other rates.
For example, $50,000 in a 5% taxable investment earns the
same after-tax return as $43,214 in a 3.5% tax-free Nuveen
investment.
44
<PAGE>
NUVEEN TAX-FREE MONEY MARKET FUNDS PROSPECTUS
NEW YORK
Combined federal and New York state marginal tax rates for
joint taxpayers with four personal exemptions
<TABLE>
<CAPTION>
Tax-free yield
---------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
2.00% 2.50% 3.00% 3.50% 4.00% 4.50% 5.00%
---------------------------------------------------------------------------
<CAPTION>
Federal
Federal Adjusted Combined
Taxable Gross State and
Income Income Federal
(1,000's) (1,000's) Tax Rate** Taxable equivalent yield
- -------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
$ 0-40.1 $ 0-100.0 21.0% 2.53 3.16 3.80 4.43 5.06 5.70 6.33
100.0-118.0 22.0 2.56 3.21 3.85 4.49 5.13 5.77 6.41
40.1-96.9 0-100.0 33.0 2.99 3.73 4.48 5.22 5.97 6.72 7.46
100.0-118.0 34.0 3.03 3.79 4.55 5.30 6.06 6.82 7.58
118.0-150.0 35.0 3.08 3.85 4.62 5.38 6.15 6.92 7.69
150.0-177.0 34.0 3.03 3.79 4.55 5.30 6.06 6.82 7.58
96.9-147.7 0-100.0 36.0 3.13 3.91 4.69 5.47 6.25 7.03 7.81
100.0-118.0 36.5 3.15 3.94 4.72 5.51 6.30 7.09 7.87
118.0-150.0 37.5 3.20 4.00 4.80 5.60 6.40 7.20 8.00
150.0-177.0 37.0 3.17 3.97 4.76 5.56 6.35 7.14 7.94
177.0-299.5 39.5 3.31 4.13 4.96 5.79 6.61 7.44 8.26
147.7-263.8 118.0-150.0 42.5 3.48 4.35 5.22 6.09 6.96 7.83 8.70
150.0-177.0 41.5 3.42 4.27 5.13 5.98 6.84 7.69 8.55
177.0-299.5 44.5 3.60 4.50 5.41 6.31 7.21 8.11 9.01
Over 299.5 41.5 3.42 4.27 5.13 5.98 6.84 7.69 8.55
Over 263.8 177.0-299.5 48.0 3.85 4.81 5.77 6.73 7.69 8.65 9.62
Over 299.5 45.0 3.64 4.55 5.45 6.36 7.27 8.18 9.09
</TABLE>
45
<PAGE>
NEW YORK-CONTINUED
Combined federal and New York state marginal tax rates for
single taxpayers with one personal exemption
<TABLE>
<CAPTION>
Tax-free yield
---------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
2.00% 2.50% 3.00% 3.50% 4.00% 4.50% 5.00%
------------------------------------------------------------------------
<CAPTION>
Federal
Federal Adjusted Combined
Taxable Gross State and
Income Income Federal
(1,000's) (1,000's) Tax Rate** Taxable equivalent yield
- ----------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
$ 0-
24.0 $ 0-100.0 21.0% 2.53 3.16 3.80 4.43 5.06 5.70 6.33
100.0-118.0 21.5 2.55 3.18 3.82 4.46 5.10 5.73 6.37
24.0-58.2 0-100.0 33.0 2.99 3.73 4.48 5.22 5.97 6.72 7.46
100.0-118.0 33.5 3.01 3.76 4.51 5.26 6.02 6.77 7.52
58.2-121.3 0-100.0 36.0 3.13 3.91 4.69 5.47 6.25 7.03 7.81
100.0-118.0 36.5 3.15 3.94 4.72 5.51 6.30 7.09 7.87
118.0-150.0 38.0 3.23 4.03 4.84 5.65 6.45 7.26 8.06
150.0-240.5 37.5 3.20 4.00 4.80 5.60 6.40 7.20 8.00
121.3-
263.8 118.0-150.0 42.5 3.48 4.35 5.22 6.09 6.96 7.83 8.70
150.0-240.5 42.5 3.48 4.35 5.22 6.09 6.96 7.83 8.70
Over 240.5 41.5 3.42 4.27 5.13 5.98 6.84 7.69 8.55
Over 263.8 Over 240.5 45.0 3.64 4.55 5.45 6.36 7.27 8.18 9.09
</TABLE>
46
<PAGE>
NUVEEN TAX-FREE MONEY MARKET FUNDS PROSPECTUS
<TABLE>
<CAPTION>
Your tax-free investment may be less*
------------------------------------------------------------------------------------
For an after-tax return
equal to that provided
by a 2.0% 2.5% 3.0% 3.5% 4.0% 4.5% 5.0%
- --------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
$50,000 in a 3% taxable
investment $ 48,000 $38,400 $32,000 $27,429 $24,000 $21,333 $19,200
$50,000 in a 4% taxable
investment 64,000 51,200 42,667 36,571 32,000 28,444 25,600
$50,000 in a 5% taxable
investment 80,000 64,000 53,333 45,714 40,000 35,556 32,000
$50,000 in a 6% taxable
investment 96,000 76,800 64,000 54,857 48,000 42,667 38,400
$50,000 in a 7% taxable
investment 112,000 89,600 74,667 64,000 56,000 49,778 44,800
</TABLE>
* The dollar amounts in the table reflect a 36.0% combined
federal and state tax rate.
** The table also reflects the New York State supplemental
income tax based upon a taxpayer's New York State taxable in-
come and New York State adjusted gross income. This supple-
mental tax results in an increased marginal state income tax
rate to the extent a taxpayer's New York State adjusted gross
income ranges between $100,000 and $150,000. Although the ta-
ble does reflect the effect of the state limitation on item-
ized deductions that corresponds to the federal limitation,
it does not reflect additional limitations under which a New
York taxpayer could lose up to an additional 50 percent of
his otherwise allowable itemized deductions, because the ef-
fect of this limitation varies according to the particular
amount of his itemized deductions. The application of this
limit may result in a higher tax rate than indicated in the
table for joint taxpayers with a New York adjusted gross in-
come of $150,000 to $200,000 or $475,000 to $525,000 or sin-
gle taxpayers with a New York adjusted gross income of
$100,000 to $150,000 or $475,000 to $525,000. The table as-
sumes that a taxpayer's New York adjusted gross income equals
his federal adjusted gross income. The table does not reflect
the treatment of various state and city tax credits that
could affect the tax rate of particular New York taxpayers.
For example, $50,000 in a 5% taxable investment earns the
same after-tax return as $45,714 in a 3.5% tax-free Nuveen
investment.
47
<PAGE>
NEW YORK-CONTINUED
Combined federal, New York state and New York City marginal
tax rates for joint taxpayers with four personal exemptions
<TABLE>
<CAPTION>
Tax-free yield
-----------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
2.00% 2.50% 3.00% 3.50% 4.00% 4.50% 5.00%
-----------------------------------------------------------------------------
<CAPTION>
Federal
Federal Adjusted Combined
Taxable Gross State and
Income Income Federal
(1,000's) (1,000's) Tax Rate** Taxable equivalent yield
- ---------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
$ 0-
40.1 $ 0-100.0 25.0% 2.67 3.33 4.00 4.67 5.33 6.00 6.67
100.0-118.0 25.5 2.68 3.36 4.03 4.70 5.37 6.04 6.71
40.1-96.9 0-100.0 36.5 3.15 3.94 4.72 5.51 6.30 7.09 7.87
100.0-118.0 37.0 3.17 3.97 4.76 5.56 6.35 7.14 7.94
118.0-150.0 38.0 3.23 4.03 4.84 5.65 6.45 7.26 8.06
150.0-177.0 37.5 3.20 4.00 4.80 5.60 6.40 7.20 8.00
96.9-147.7 0-100.0 39.0 3.28 4.10 4.92 5.74 6.56 7.38 8.20
100.0-118.0 39.5 3.31 4.13 4.96 5.79 6.61 7.44 8.26
118.0-150.0 41.0 3.39 4.24 5.08 5.93 6.78 7.63 8.47
150.0-177.0 40.0 3.33 4.17 5.00 5.83 6.67 7.50 8.33
177.0-299.5 42.5 3.48 4.35 5.22 6.09 6.96 7.83 8.70
147.7-263.8 118.0-150.0 45.0 3.64 4.55 5.45 6.36 7.27 8.18 9.09
150.0-177.0 44.5 3.60 4.50 5.41 6.31 7.21 8.11 9.01
177.0-299.5 47.0 3.77 4.72 5.66 6.60 7.55 8.49 9.43
Over 299.5 44.5 3.60 4.50 5.41 6.31 7.21 8.11 9.01
Over 263.8 177.0-299.5 50.5 4.04 5.05 6.06 7.07 8.08 9.09 10.10
Over 299.5 48.0 3.85 4.81 5.77 6.73 7.69 8.65 9.62
</TABLE>
48
<PAGE>
NUVEEN TAX-FREE MONEY MARKET FUNDS PROSPECTUS
Combined federal, New York state and New York City marginal
tax rates for single taxpayers with one personal exemption
<TABLE>
<CAPTION>
Tax-free yield
---------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
2.00% 2.50% 3.00% 3.50% 4.00% 4.50% 5.00%
---------------------------------------------------------------------------
<CAPTION>
Federal
Federal Adjusted Combined
Taxable Gross State and
Income Income Federal
(1,000's) (1,000's) Tax Rate** Taxable equivalent yield
- -------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
$ 0-
24.0 $ 0-100.0 25.0% 2.67 3.33 4.00 4.67 5.33 6.00 6.67
100.0-118.0 25.0 2.67 3.33 4.00 4.67 5.33 6.00 6.67
24.0-58.2 0-100.0 36.5 3.15 3.94 4.72 5.51 6.30 7.09 7.87
100.0-118.0 36.5 3.15 3.94 4.72 5.51 6.30 7.09 7.87
58.2-121.3 0-100.0 39.0 3.28 4.10 4.92 5.74 6.56 7.38 8.20
100.0-118.0 39.5 3.31 4.13 4.96 5.79 6.61 7.44 8.26
118.0-150.0 41.0 3.39 4.24 5.08 5.93 6.78 7.63 8.47
150.0-240.5 40.5 3.36 4.20 5.04 5.88 6.72 7.56 8.40
121.3-263.8 118.0-150.0 45.5 3.67 4.59 5.50 6.42 7.34 8.26 9.17
150.0-240.5 45.0 3.64 4.55 5.45 6.36 7.27 8.18 9.09
Over 240.5 44.5 3.60 4.50 5.41 6.31 7.21 8.11 9.01
Over 263.8 Over 240.5 48.0 3.85 4.81 5.77 6.73 7.69 8.65 9.62
</TABLE>
49
<PAGE>
NEW YORK-CONTINUED
<TABLE>
<CAPTION>
Your tax-free investment may be less*
------------------------------------------------------------------------------------
For an after-tax return
equal to that provided
by a 2.0% 2.5% 3.0% 3.5% 4.0% 4.5% 5.0%
- --------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
$50,000 in a 3% taxable
investment $ 48,000 $38,400 $32,000 $27,429 $24,000 $21,333 $19,200
$50,000 in a 4% taxable
investment 64,000 51,200 42,667 36,571 32,000 28,444 25,600
$50,000 in a 5% taxable
investment 80,000 64,000 53,333 45,714 40,000 35,556 32,000
$50,000 in a 6% taxable
investment 96,000 76,800 64,000 54,857 48,000 42,667 38,400
$50,000 in a 7% taxable
investment 112,000 89,600 74,667 64,000 56,000 49,778 44,800
</TABLE>
* The dollar amounts in the table reflect a 36.0% combined
federal and state tax rate.
** The table also reflects the New York State supplemental
income tax based upon a taxpayer's New York State taxable in-
come and New York State adjusted gross income. This supple-
mental tax results in an increased marginal state income tax
rate to the extent a taxpayer's New York state adjusted gross
income ranges between $100,000 and $150,000. Although the ta-
ble does reflect the effect of the state limitation on item-
ized deductions that corresponds to the federal limitation,
it does not reflect additional limitations under which a New
York taxpayer could lose up to an additional 50 percent of
his otherwise allowable itemized deductions, because the af-
fect of this limitation varies according to the particular
amount of his itemized deductions. The application of this
limit may result in a higher tax rate than indicated in the
table for joint taxpayers with a New York adjusted gross in-
come of $150,000 to $200,000 or $475,000 to $525,000 or sin-
gle taxpayers with a New York adjusted gross income of
$100,000 to $150,000 or $475,000 to $525,000. The table as-
sumes that a taxpayer's New York adjusted gross income equals
his federal adjusted gross income. The table does not reflect
the treatment of various state and city tax credits that
could affect the tax rate of particular New York taxpayers.
For example, $50,000 in a 5% taxable investment earns the
same after-tax return as $45,714 in a 3.5% tax-free Nuveen
investment.
50
<PAGE>
[LOGO OF NUVEEN]
Nuveen Tax-Free Money Market Funds
Application Form
Note: This application form may not be used for all types of accounts and
certain optional fund services. Please obtain special application materials
by checking the boxes in item 7 on the other side of this sheet. If you need
any assistance in completing this form, call Nuveen toll-free at 800.621.7227.
1 ACCOUNT REGISTRATION AND INFORMATION
Please check the box that describes the type of account you are opening, and
complete all the information which applies to your account type.
Note: Registration for two or more persons will be as joint tenants with right
of survivorship unless noted otherwise.
[_] Individual
Last name, first, initial Social security number
[_] Joint tenant (if any)
Last name, first, initial
[_] Gift to a minor
Name of trustee State name under the Uniform Gift to Minors Act
Minor's name (only one minor may be named) Minor's social security number
[_] Trust [_] Custodian
Trustee's or custodian's name Trust's agreement date (mandatory)
Trust's name Trust's taxpayer I.D. number
2 MAILING ADDRESS
Street address City, state, zip code
Daytime telephone number Evening telephone number
(include area code) (include area code)
3 FUND SELECTION
Please indicate in which Nuveen Fund(s) you would like to open an account and
the amount you would like to invest.
State funds may not be registered for sale in all states.
[_] Enclosed is my check in the amount payable to the Fund(s) indicated below.
[_] Funds in the amount listed below were wired to United Missouri Bank of
Kansas City.
Note: Please call Nuveen at 800.858.4084 to obtain an account number before
wiring funds.
Nuveen Money Market Funds
$ Tax-Free Reserves, Inc. (Minimum initial investment $1,000.)
- ----------------
$ California Tax-Free Money Market Fund (Minimum initial
- ----------------investment $5,000.)
$ Massachusetts Tax-Free Money Market Fund (Minimum initial
- ----------------investment $5,000.)
$ New York Tax-Free Money Market Fund (Minimum initial investment
- ----------------$5,000.)
Please enclose a separate check made payable to each fund in which you are
investing. If more than one fund is selected, any optional features chosen will
apply to all fund accounts. If you prefer to wire funds to an open account, or
need any assistance in completing this form, call Nuveen toll-free at
800.858.4084.
4 DISTRIBUTION OPTIONS
If no box is checked, all distributions from a Fund will be reinvested into the
same Fund.
[_] Dividends are to be paid by check.
[_] Capital gains are to be paid by check.
5 INFORMATION ABOUT YOUR FINANCIAL ADVISER
Please supply the name and address of your financial adviser so that they
will receive duplicate copies of your fund statements.
Financial adviser's name Firm name
Street address City, state, zip code
6 CERTIFICATION AND SIGNATURE(S)
Sign in ink exactly as the name (or names) appear above in section 1, Account
registration.
I certify that I have power and authority to establish this account and select
the options requested. I also release the Fund(s), Shareholder Services, Inc.
(SSI), John Nuveen & Co. Incorporated, United Missouri Bank of Kansas City,
N.A., First Interstate Bank of Denver, N.A. and their agents and representatives
from all liability and agree to indemnify each of them from any and all losses,
damages or costs for acting in good faith in accordance with instructions
believed to be genuine. With respect to the options identified on items #8, #9
and #11 of this application, I understand that the Fund(s), SSI and Nuveen will,
not be liable for following telephone instructions reasonably believed to be
genuine. I also understand that the Fund(s) employ procedures reasonably
designed to confirm that telephone instructions are genuine and if these
procedures are not followed, the Fund(s) may be liable for any losses due to
unauthorized or fraudulent telephone instructions. I agree that the
authorizations herein shall continue until SSI receives written notice of a
change or modification signed by all account owners. I understand that each
account is subject to the terms of the prospectus of the Nuveen fund selected,
as amended from time to time, and subject to acceptance by that Fund in Chicago,
Illinois and to the laws of Illinois. All terms shall be binding upon my heirs,
representatives and assigns. I certify that I have received and read the current
prospectus for each Fund I have selected. Under penalties of perjury, I certify
(1) that the number shown on this Application Form is my correct Social Security
or Taxpayer Identification Number, and (2) that the IRS has not notified me that
I am subject to backup withholding (Line out clause (2) if you are subject to
backup withholding.)
Individual's signature Date Joint tenant's signature (if applicable) Date
Custodian/Trustee signature (if applicable)
See reverse side for additional optional fund services.
Mail this completed application form to:
Nuveen Tax-Free Money Market Funds
P.O. Box 5330
Denver, Colorado 80217-5330
<PAGE>
[LOGO OF NUVEEN]
Nuveen
Tax-Free Money
Market Funds
Application
Form
Optional Fund Services
7 OPTIONAL FUND SERVICES
Please send me application materials for these optional fund services which are
described in the prospectus:
<TABLE>
<CAPTION>
<S> <C> <C>
[_] Automatic Deposit Plan [_] Automatic Withdrawal Plan [_] Fund Direct
[_] Payroll Direct Deposit Plan [_] UIT Reinvestment
</TABLE>
8 TEL-A-WIRE AUTHORIZATION
You can select Option A, Option B or both.
By electing this option, I authorize SSI and Nuveen to honor telephone
instructions to redeem my Fund shares (minimum $1,000), subject to the terms and
conditions described in the prospectus.
[_] OPTION A
By completing this section, I elect to have redemption proceeds wired to my
personal checking, NOW or money market account at a commercial bank. (Attach a
check marked "void" and complete Option A.)
Name of bank Bank's routing code Bank's telephone number
(include area code)
Bank's street address Bank's city, state and zip code
Your bank account name Your bank account number
[_] OPTION B
By completing this section, I elect to have redemption proceeds wired in my name
to the commercial bank account of my financial adviser's firm. (A representative
of that firm must complete and sign the second part of Option B.)
Name of financial adviser's firm Firm's telephone number (include area code)
Firm's street address Firm's city, state and zip code
Your account name Your account number
If you have selected Option B, this section must be completed by your financial
adviser.
Name of bank of financial adviser's firm Bank's telephone number Routing code
(include area code)
Bank's street address Bank's city, state and zip code
Bank's account number Financial adviser's signature Date
9 TEL-A-CHECK AUTHORIZATION
[_] I hereby authorize the Fund and its agents to honor telephone instructions
to redeem shares worth $50,000 or less from my account and send those proceeds
by check payable to me to my address of record, subject to the terms and
conditions described in the prospectus.
10 CHECK REDEMPTION AUTHORIZATION
You must check the box to elect this option.
[_] By checking this box, you authorize drafts drawn on the Fund to be honored
and the redemption of a sufficient number of Fund shares to pay such draft. Read
the instructions and explanation below carefully before completing this section
and return the completed signature card with this application form.
Joint accounts.
You must complete this section to elect this option.
[_] Either owner of the fund(s) may sign redemption checks.
[_] All owners of the fund(s) are required to sign redemption checks.
A. Checks must be on forms provided by the Fund and for a minimum of $500 or
they will not be honored. Checks are authorizations to redeem Fund shares
and are payable through the United Missouri Bank of Kansas City, N.A. (the
"Bank").
B. Check forms will not be issued until a completed signature card is received
by the Fund.
C. Checks requiring redemption of shares held for 15 days or less that were
not purchased by "wire transfer" of federal funds or for which there are
insufficient shares to cover payment will not be honored.
D. Unless one signer is authorized on the account application form and
signature card, each check must be signed by all account owners or it will
not be honored. If SSI receives written notice by either owner of a
revocation of the authorization to sign individually, all account owners
will be required to sign redemption checks. Checks must be signed exactly
as registered.
E. The privilege is subject to the Fund's and the Bank's rules and
regulations, and applicable governmental regulations, as amended from time
to time.
F. The Fund may refuse to honor checks and may refuse to effect redemptions to
pay checks whenever the right of redemption has been suspended or
postponed, or whenever the account is otherwise impaired.
G. The account owner agrees to examine confirmations and cancelled checks and
to notify SSI of any unauthorized or missing signature or endorsement or
alteration on the check or error on the confirmation within 30 days after
mailing to owner. Failure to do so shall preclude any claim against the
Fund, the Bank, SSI or their representatives and agents by reason of any
unauthorized or missing signature or endorsement, alteration, error or
forgery of any kind.
11 TELEPHONE EXCHANGE AUTHORIZATION
You must check the box to elect this option.
[_] I hereby authorize the fund and its agents to honor telephone instructions
to invest redemption proceeds from the fund into other Nuveen Mutual Funds,
subject to the terms and conditions described in the prospectus.
Mail the completed application form to:
Nuveen Tax-Free Money Market Funds
P.O. Box 5330
Denver, Colorado 80217-5330
- --------------------------------------------------------------------------------
Internal use only
Check writing signature card
Please indicate the Nuveen Fund(s) to the right for which this signature card
applies.
In order to process this card, you must write your account number in the space
provided.
[_] Nuveen Tax-Free Reserves, Inc.
[_] Nuveen California Tax-Free Money Market Fund, Inc.
[_] Nuveen Massachusetts Tax-Free Money Market Fund, Inc.
[_] Nuveen New York Tax-Free Money Market Fund, Inc.
Customer account number
Please print the names of the registered owners or legal representatives and
sign in the space provided below.
[_] Check here if more than one signature will be required on checks.
1. Authorized account signer 2. Authorized account signer
1. Authorized account signature 2. Authorized account signature
<PAGE>
PRINCIPAL UNDERWRITER
John Nuveen & Co. Incorporated
Investment Bankers
333 West Wacker Drive
Chicago, Illinois 60606
312.917.7700
INVESTMENT ADVISER
Nuveen Advisory Corp.
Subsidiary of John Nuveen & Co.
Incorporated
333 West Wacker Drive
Chicago, Illinois 60606
CUSTODIAN
The Chase Manhattan Bank, N.A.
770 Broadway
New York, New York 10003
TRANSFER AND SHAREHOLDER SERVICES
AGENT
Shareholder Services, Inc.
P.O. Box 5330
Denver, Colorado 80217
INDEPENDENT PUBLIC ACCOUNTANTS
FOR THE FUNDS
Arthur Andersen LLP
33 West Monroe Street
Chicago, Illinois 60603
LOGO
MPR-2-6.6
LOGO
John Nuveen & Co. Incorporated
333 West Wacker Drive
Chicago, Illinois 60606-1286
<PAGE>
PART B--STATEMENT OF ADDITIONAL INFORMATION
NUVEEN TAX-FREE MONEY MARKET FUND, INC.
333 West Wacker Drive
Chicago, Illinois 60606
<PAGE>
Statement of Additional Information
July 1, 1996
Nuveen Tax-Free Money Market Fund, Inc.
333 West Wacker Drive
Chicago, Illinois 60606
NUVEEN MASSACHUSETTS TAX-FREE MONEY MARKET FUND
NUVEEN NEW YORK TAX-FREE MONEY MARKET FUND
Nuveen Tax-Free Money Market Fund, Inc. is an open-end diversified management
investment company consisting of the two money market funds named above (the
"Funds"). This Statement of Additional Information is not a prospectus. A pro-
spectus for the Nuveen Tax-Free Money Market Fund, Inc. may be obtained from
certain securities brokers, banks, and other financial institutions that have
entered into service agreements with the Funds or from the Funds, c/o John
Nuveen & Co. Incorporated, 333 West Wacker Drive, Chicago, Illinois 60606. This
Statement of Additional Information relates to, and should be read in conjunc-
tion with, the Prospectus dated July 1, 1996.
<TABLE>
<S> <C>
Table of Contents Page
- ------------------------------------------------------------
Fundamental Policies and Investment Portfolio 2
- ------------------------------------------------------------
Management 28
- ------------------------------------------------------------
Investment Adviser and Investment Management Agreement 33
- ------------------------------------------------------------
Portfolio Transactions 34
- ------------------------------------------------------------
Net Asset Value 35
- ------------------------------------------------------------
Tax Matters 37
- ------------------------------------------------------------
Additional Information on the Purchase of Fund Shares 42
- ------------------------------------------------------------
Yield Information 44
- ------------------------------------------------------------
Independent Public Accountants and Custodian 46
- ------------------------------------------------------------
</TABLE>
The audited financial statements for the fiscal year ended February 29, 1996
appearing in the Annual Report of Nuveen Tax-Free Money Market Fund, Inc. are
incorporated herein by reference. The Annual Report accompanies this Statement
of Additional Information.
Principal Underwriter Investment Adviser Transfer and Shareholder
[/R] Services Agent [/R]
John Nuveen & Co. Incorporated
Nuveen Advisory Corp.,
Subsidiary of John
Nuveen & Co.
Incorporated
Shareholder Services,
Chicago: Inc. [/R]
333 West Wacker Drive P.O. Box 5330 [/R]
Chicago, Illinois 60606 Denver, Colorado 80217-
333 West Wacker Drive 5330
312.917.7700 [/R] [/R]
New York: Chicago, Illinois Independent Public
60606 Accountants [/R]
10 East 50th Street [/R]
New York, New York 10022 for the Fund [/R]
Custodian
212.207.2000 Arthur Andersen LLP
The Chase Manhattan
Bank, N.A. 33 West Monroe Street
770 Broadway [/R]
Chicago, Illinois 60603
New York, New York
10003 [/R]
<PAGE>
FUNDAMENTAL POLICIES AND INVESTMENT PORTFOLIO
FUNDAMENTAL POLICIES
The investment objective and certain fundamental policies of each Fund are de-
scribed in the Prospectus. Each of the Funds, as a fundamental policy, may
not, without the approval of the holders of a majority of the shares of that
Fund:
(1) Invest in securities other than Municipal Obligations and temporary in-
vestments, as those terms are defined in the Prospectus, and stand-by commit-
ments with respect to Municipal Obligations purchased by the Funds;
(2) Invest more than 5% of its total assets in securities of any one issuer,
except that this limitation shall not apply to securities of the United States
government, its agencies and instrumentalities or to the investment of 25% of
such Fund's assets;
(3) Borrow money, except from banks for temporary or emergency purposes and
not for investment purposes and then only in an amount not exceeding (a) 10%
of the value of its 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 dispo-
sition of securities. While any such borrowings exceed 5% of such Fund's total
assets, no additional purchases of investment securities will be made by such
Fund. If due to market fluctuations or other reasons, the value of the Fund's
assets falls 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
investments 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 its investment objective, policies
and limitations, may be deemed to be an underwriting;
(7) Purchase or sell real estate, but this shall not prevent any 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;
2
<PAGE>
(11) Write or purchase put or call options, except to the extent that the pur-
chase of a stand-by commitment may be considered the purchase of a put;
(12) Invest more than 5% of its total assets in securities of unseasoned is-
suers which, together with their predecessors, have been in operation for less
than three years;
(13) Invest more than 25% of its total assets in securities of issuers in any
one industry; provided, however, that such limitations shall not be applicable
to Municipal Obligations issued by governments or political subdivisions of
governments, and obligations issued or guaranteed by the U.S. Government, its
agencies or instrumentalities;
(14) Invest more than 10% of its assets in repurchase agreements maturing in
more than seven days, "illiquid" securities (such as non-negotiable CDs) and
securities without readily available market quotations;
(15) Purchase or retain the securities of any issuer other than the securities
of the Funds if, to the knowledge of Nuveen Tax-Free Money Market Fund, Inc.,
or those directors of Nuveen Tax-Free Money Market Fund, Inc., or those offi-
cers and directors of Nuveen Advisory Corp. ("Nuveen Advisory"), who individu-
ally own beneficially more than 1/2 of 1% of the outstanding securities of
such issuer, together own beneficially more than 5% of such outstanding secu-
rities.
For the purpose of applying the limitations set forth in paragraphs (2) and
(12) above, an 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-gov-
ernmental issuer, such as an industrial corporation or a privately owned or
operated hospital, if the security is backed only by the assets and revenues
of the non-governmental user then such non-governmental user would be deemed
to be the sole issuer. Where a security is also backed by the enforceable ob-
ligation of a superior or unrelated governmental entity (other than a bond in-
surer) it shall be included in the computation of securities owned that are
issued by such superior governmental entity or other entity.
If, however, a security is guaranteed by a governmental entity or some other
entity (other than a bond insurer), such as a bank guarantee or letter of
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. It is a fundamental policy of each of the Funds which cannot be changed
without the approval of the holders of a majority of shares of such Fund, that
a Fund will not hold securities of a single bank, including securities backed
by a letter of credit of such bank, if such holdings would exceed 10% of the
total assets of such Fund.
The foregoing fundamental investment policies, together with the investment
objective of each Fund, cannot be changed without approval by holders of "a
majority of a 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. The foregoing restrictions and limitations
will apply only at the time of purchase of securities and will not be consid-
ered violated unless an excess or deficiency occurs or exists immediately af-
ter and as a result of an acquisition of securities, unless otherwise indicat-
ed.
3
<PAGE>
Nuveen Tax-Free Money Market Fund, Inc. is a series company under SEC Rule 18f-
2 and each Fund is a separate series issuing its own shares. Certain matters
under the Investment Company Act of 1940 which must be submitted to a vote of
the holders of the outstanding voting securities of a series company shall not
be deemed to have been effectively acted upon unless approved by the holders of
a majority of the outstanding voting securities of each series affected by such
manner.
PORTFOLIO SECURITIES
As described in the Prospectus, each of the Funds will invest primarily in a
diversified portfolio of Municipal Obligations consisting of money market in-
struments issued by governmental authorities in the Fund's designated state (or
by governmental authorities in certain possessions of the United States). In
general, Municipal Obligations include debt obligations issued to obtain funds
for various public purposes, including construction of a wide range of public
facilities. Industrial development bonds and pollution control bonds that are
issued by or on behalf of public authorities to finance various privately-oper-
ated facilities are included within the term Municipal Obligations if the in-
terest paid thereon is exempt from federal income tax. Municipal Obligations in
which each Fund will primarily invest are issued by that Fund's designated
state and cities and local authorities in that state, (or by governmental au-
thorities in certain possessions of the United States), and bear interest that,
in the opinion of bond counsel to the issuer, is exempt from federal income tax
and from income tax imposed by the designated state.
The various securities in which each of the Funds intends to invest are de-
scribed in the Prospectus. The following is a more complete description of cer-
tain short-term Municipal Obligations in which each Fund may invest:
Bond Anticipation Notes (BANs) are usually general obligations of state and lo-
cal governmental issuers which are sold to obtain interim financing for pro-
jects that will eventually be funded through the sale of long-term debt obliga-
tions or bonds. The ability of an issuer to meet its obligations on its BANs is
primarily dependent on the issuer's access to the long-term municipal bond mar-
ket and the likelihood that the proceeds of such bond sales will be used to pay
the principal and interest on the BANs.
Tax Anticipation Notes (TANs) are issued by state and local governments to fi-
nance the current operations of such governments. Repayment is generally to be
derived from specific future tax revenues. TANs are usually general obligations
of the issuer. A weakness in an issuer's capacity to raise taxes due to, among
other things, a decline in its tax base or a rise in delinquencies could ad-
versely affect the issuer's ability to meet its obligations on outstanding
TANs.
Revenue Anticipation Notes (RANs) are issued by governments or governmental
bodies with the expectation that future revenues from a designated source will
be used to repay the notes. In general, they also constitute general obliga-
tions of the issuer. A decline in the receipt of projected revenues, such as
anticipated revenues from another level of government, could adversely affect
an issuer's ability to meet its obligations on outstanding RANs. In addition,
the possibility that the revenues would, when received, be used to meet other
obligations could affect the ability of the issuer to pay the principal and in-
terest on RANs.
4
<PAGE>
Construction Loan Notes are issued to provide construction financing for spe-
cific projects. Frequently, these notes are redeemed with funds obtained from
the Federal Housing Administration.
Bank Notes are notes issued by local governmental bodies and agencies such as
those described above to commercial banks as evidence of borrowings. The pur-
poses for which the notes are issued are varied but they are frequently issued
to meet short-term working-capital or capital-project needs. These notes may
have risks similar to the risks associated with TANs and RANs.
Variable and Floating Rate Instruments--Certain Municipal Obligations, certain
instruments issued, guaranteed or sponsored by the U.S. Government or its agen-
cies, and certain debt instruments issued by domestic banks or corporations,
may carry variable or floating rates of interest. Such instruments bear inter-
est at rates which are not fixed, but which vary with changes in specified mar-
ket rates or indices, such as a bank prime rate or a tax-exempt money market
index. Variable rate notes are adjusted to current interest rate levels at cer-
tain specified times, such as every 30 days, as set forth in the instrument. A
floating rate note adjusts automatically whenever there is a change in its base
interest rate adjustor, e.g., a change in the prime lending rate or specified
interest rate indices. Typically such instruments carry demand features permit-
ting the Funds to recover the full principal amount thereof upon specified no-
tice.
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
Funds may purchase such obligations subject to certain conditions specified by
the Securities and Exchange Commission.
The Funds' right to obtain payment at par on a demand instrument upon demand
could be adversely affected by events occurring between the date the Funds
elect to tender the instrument and the date the proceeds are due. Nuveen Advi-
sory will monitor on an ongoing basis the pricing, quality and liquidity of
such instruments and will similarly monitor the ability of an obligor under a
demand instrument, including demand obligors as to instruments supported by
bank letters 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 Funds will treat the maturity of each variable rate demand obliga-
tion, for purposes of computing its dollar-weighted average portfolio maturity,
as the longer of (i) the notice period required before the Funds are entitled
to payment of the principal amount through demand, or (ii) the period remaining
until the next interest rate adjustment.
The Funds may also obtain stand-by commitments with respect to Municipal Obli-
gations. Under a stand-by commitment (often referred to as a put), the party
issuing the commitment agrees to purchase at a Fund's option the Municipal Ob-
ligation at an agreed-upon price on certain dates or within a specific period.
Since the value of a stand-by commitment depends in part upon the ability of
the issuing party to meet its purchase obligations thereunder, the Funds will
enter into stand-by commit-
5
<PAGE>
ments 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 a Fund upon its exercise of a stand-by 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 issue discount 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. A Fund's right to exercise stand-by commitments held by it will be uncon-
ditional and unqualified. The acquisition of a stand-by commitment will not af-
fect the valuation of the underlying security, which will continue to be valued
in accordance with the amortized cost method. The stand-by commitment itself
will be valued at zero in determining net asset value. A Fund may purchase
stand-by commitments for cash or pay a higher price for portfolio securities
which are acquired subject to such a commitment (thus reducing the yield to ma-
turity otherwise available for the same securities). The maturity of a Munici-
pal Obligation purchased by a Fund will not be considered shortened by any
stand-by commitment to which such security is subject. Although a Fund's rights
under a stand-by commitment would not be transferable, the Fund could sell Mu-
nicipal Obligations which were subject to a stand-by commitment to a third
party at any time.
WHEN-ISSUED SECURITIES
As described under "Investment Policies--Municipal Obligations" in the Prospec-
tus, each Fund may purchase and sell Municipal Obligations on a when-issued or
delayed delivery basis. When-issued and delayed delivery transactions arise
when securities are purchased or sold with payment and delivery beyond the reg-
ular 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 pur-
chase securities on a when-issued or delayed delivery basis may involve an ele-
ment of risk because the value of the securities is subject to market fluctua-
tion, no interest accrues to the purchaser prior to settlement of the transac-
tion, and at the time of delivery the market value may be less than cost. At
the time a Fund makes the commitment to purchase a Municipal Obligation on a
when-issued or delayed delivery basis, it will record the transaction and re-
flect the amount due and the value of the security in determining its net asset
value. Likewise, at the time a Fund makes the commitment to sell a Municipal
Obligation on a delayed delivery basis, it will record the transaction and in-
clude the proceeds to be received in determining its net asset value; accord-
ingly, 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. Each Fund will also maintain desig-
nated readily marketable assets at least equal in value to commitments to pur-
chase when-issued or delayed delivery securities, such assets to be segregated
by the Custodian specifically for the settlement of such commitments. A Fund
will only make commitments to purchase Municipal Obligations on a when-issued
or delayed delivery basis with the intention of actually acquiring the securi-
ties, but each Fund reserves the right to sell these securities before the set-
tlement date if it is deemed advisable. If a when-issued security is sold be-
fore delivery any gain or loss would not be tax-exempt. A Fund commonly engages
in when-issued transactions in order to
6
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purchase or sell newly-issued Municipal Obligations, and may engage in delayed
delivery transactions in order to manage its operations more effectively.
SPECIAL CONSIDERATIONS RELATING TO MUNICIPAL OBLIGATIONS OF DESIGNATED STATES
As described in the Prospectus, except for investments in temporary invest-
ments, each of the Funds will, at all times, invest at least 80% of its net as-
sets in its designated state's Municipal Obligations. Each Fund is therefore
more susceptible to political, economic or regulatory factors adversely affect-
ing issuers of Municipal Obligations in its designated state. Brief summaries
of these factors are contained in the Prospectus. Set forth below is additional
information that bears upon the risk of investing in Municipal Obligations is-
sued by public authorities in these states. This information was obtained from
official statements of issuers located in the designated states as well as from
other publicly available official documents and statements. Nuveen Tax-Free
Money Market Fund, Inc. has not independently verified any of the information
contained in such statements and documents, but Nuveen Tax-Free Money Market
Fund, Inc. is not aware of facts which would render such information inaccu-
rate.
FACTORS PERTAINING TO MASSACHUSETTS
As described above, except to the extent the Massachusetts Fund invests in tem-
porary investments, the Massachusetts Fund will invest substantially all of its
net assets in Massachusetts Municipal Obligations. The Massachusetts Fund is
therefore susceptible to political, economic or regulatory factors affecting
issuers of Massachusetts Municipal Obligations. Without intending to be com-
plete, the following briefly summarizes the current financial situation, as
well as some of the complex factors affecting the financial situation, in the
Commonwealth of Massachusetts (the "Commonwealth"). It is derived from sources
that are generally available to investors and is based in part on information
obtained from various agencies in Massachusetts. No independent verification
has been made of the accuracy or completeness of the following information.
There can be no assurance that current or future statewide or regional economic
difficulties, and the resulting impact on Commonwealth or local governmental
finances generally, will not adversely affect the market value of Massachusetts
Obligations in the Fund or the ability of particular obligors to make timely
payments of debt service on (or relating to) those obligations.
Since 1988, there has been a significant slowdown in the Commonwealth's econo-
my, as indicated by a rise in unemployment, a slowing of its per capita income
growth and declining state revenues. Since fiscal 1991, the Commonwealth's rev-
enues for state government programs have exceeded expenditures, however no as-
surance can be given that lower than expected tax revenues will not resume and
continue.
1996 Fiscal Year Budget. On July 21, 1995, the Governor signed the Common-
wealth's budget for fiscal 1996. The fiscal 1996 budget is based on estimated
budgeted revenues and other sources of approximately $16.778 billion, which in-
cludes fiscal 1996 tax revenues of $11.653 billion. Estimated fiscal 1996 tax
revenues are approximately $490 million, or 4.3%, higher than estimated fiscal
1995 tax revenues.
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Fiscal 1996 non-tax revenues are projected to total $5.158 billion, approxi-
mately $66 million, or 1.3%, less than fiscal 1995 non-tax revenues of approx-
imately $5.224 billion. Federal reimbursements are projected to decrease by
approximately $1 million from approximately $2.970 billion in fiscal 1995 to
approximately $2.969 billion in fiscal 1996, primarily as a result of in-
creased reimbursements for Medicare spending, offset by a reduction in reim-
bursements received in 1995 for one-time Medicare expenses incurred in fiscal
1994 and fiscal 1995. Fiscal 1996 departmental revenues are projected to de-
cline by approximately $94 million, or 7.4%, from approximately $1.273 billion
in fiscal 1995 to approximately $1.179 billion in fiscal 1996. Major changes
in projected non-tax received for fiscal 1996 include a decline in motor vehi-
cle license and registration fees, reduction of abandoned property revenues
and a decrease due to non-recurring revenues received in fiscal 1995 from hos-
pitals and nursing homes as part of Medicare fiscal rate settlements and other
reimbursements by municipal hospitals to the state.
Fiscal 1996 appropriations in the Annual Appropriations Act total approxi-
mately $16.847 billion, including approximately $25 million in gubernatorial
vetoes overriden by the legislature. In the final supplemental budget for fis-
cal 1995, approved on August 24, 1995, another $71.1 million of appropriations
were continued for use in for 1996.
As of February 1, 1996, the Governor had signed into law fiscal 1996 supple-
mental appropriations totalling approximately $23.5 million, including approx-
imately $12.6 million to fund higher education collective bargaining contracts
and $5.6 million for the Department of Social Services. These appropriations
were offset by approximately $10.4 million in line item reductions, including
a reduction of $9.8 million for the state's debt service contract assistance
to the MBTA. Both the House and Senate have passed supplemental appropriation
bills totalling $64.8 million primarily relating to snow and ice removal costs
incurred by both the Commonwealth and cities and towns. The bills are cur-
rently awaiting resolution by a conference committee of the House and Senate.
On January 26, 1996 and February 9, 1996, the Governor filed additional sup-
plemental appropriation bills totalling approximately $7.3 million for costs
relating to prison overcrowding relief as well as reimbursement costs associ-
ated with a court settlement. No action has been taken on these bills by ei-
ther branch of the Legislature.
As of May 28, 1996, fiscal 1996 projected spending is approximately $16.963
billion, including approximately $153.2 million reserved for contingencies.
Projected revenues are approximately $16.851 billion. The fiscal 1996 tax rev-
enue projection is $11.684 billion, which represents an increase of approxi-
mately $80 million from the earlier estimate, based upon tax revenue collec-
tions through April 1996.
The fiscal 1996 budget is based on numerous spending and revenue estimates the
achievement of which cannot be assured.
1995 Fiscal Year. Budgeted revenues and other sources, including non-tax reve-
nues, collected in fiscal 1995 were approximately $16.387 billion, approxi-
mately $837 million, or 5.4%, above fiscal 1994 revenues of $15.550 billion.
Fiscal 1995 tax revenues collections were approximately $11.163, billion ap-
proximately $12 million above the Department of Revenue's revised fiscal year
1995 tax revenue
8
<PAGE>
estimate of $10.151 billion and $556 million, or 5.2%, above fiscal year tax
revenues of $10.607 billion.
Budgeted expenditures and other uses of funds in fiscal 1995 were approximately
$16.251 billion, approximately $728 million, or 4.7%, above fiscal 1994 bud-
geted expenditures and uses of $15.523 billion. The Commonwealth ended fiscal
1995 with an operating gain of $137 million and an ending fund balance of $726
million.
On February 10, 1995, the Governor signed into law certain reforms to the Com-
monwealth's program for Aid to Families with Dependent Children ("AFDC") which
will take effect on July 1, 1995, subject to federal approval of certain waiv-
ers. The revised program reduces AFDC benefits to able bodied recipients by
2.75%, while allowing them to keep a larger portion of their earned wages, re-
quires approximately 22,000 able-bodied parents of school-aged children to work
or perform community service for 20 hours per week and requires approximately
16,000 recipients who have children between the ages of two and six to partici-
pate in an education or training program or perform community service. The plan
also establishes a pilot program for up to 2,000 participants that offers tax
credits and wage subsidies to employers who hire welfare recipients. Parents
who find employment will be provided with extended medical benefits and day
care benefits for up to one year. The plan mandates paternal identification,
expands funding for anti-fraud initiatives, and requires parents on AFDC to im-
munize their children. Parents who are disabled, caring for a disabled child,
have a child under the age of two, or are teen-agers living at home and attend-
ing high school, will continue to receive cash assistance. Since most provi-
sions of the new law do not take effect until July 1, 1995, the Executive Of-
fice for Administration projects that the reforms will not materially affect
fiscal 1995 public assistance spending. The fiscal 1995 expenditure estimate of
$16.449 billion includes $247.8 million appropriated to fund the Commonwealth's
public assistance programs for the last four months of fiscal 1995. The Common-
wealth is currently evaluating the new law's impact on fiscal 1996 projected
spending for public assistance programs.
On November 8, 1994, the voters in the statewide general election approved an
initiative petition that would slightly increase the portion of the gasoline
tax revenue credited to the Highway Fund, one of the Commonwealth's three major
budgetary funds, prohibit the transfer of money from the Highway Fund to other
funds for non-highway purposes and not permit including the Highway Fund bal-
ance in the computation "consolidated net surplus" for purposes of state fi-
nance laws. The initiative petition also provides that no more than 15% of gas-
oline tax revenues may be used for mass transportation purposes, such as expen-
ditures related to the Massachusetts Bay Transit Authority. The Executive Of-
fice of Administration and Finance is analyzing the effect, if any, this ini-
tiative petition, which became law on December 8, 1994, may have on the fiscal
1995 budget and it currently does not expect it to have any materially adverse
impact. This is not a constitutional amendment and is subject to amendment or
repeal by the Legislature, which may also, notwithstanding the terms of the pe-
tition, appropriate moneys from the Highway Fund in such amounts and for such
purposes as it determines, subject only to a constitutional restriction that
such moneys be used for highways or mass transit purposes.
9
<PAGE>
1994 Fiscal Year. Fiscal 1994 tax revenue collections were approximately
$10.607 billion, $87 million below the Department of Revenue's fiscal year 1994
tax revenue estimate of $10.694 billion and $677 million above fiscal 1993 tax
revenues of $9.930 billion. Budgeted revenues and other sources, including non-
tax revenues, collected in fiscal 1994 were approximately $15.550 billion. To-
tal revenues and other sources increased by approximately 5.7% from fiscal 1993
to fiscal 1994 while tax revenues increased by 6.8% for the same period. Bud-
geted expenditures and other uses of funds in fiscal 1994 were approximately
$15.523 billion, which is $826.5 million or approximately 5.6% higher than fis-
cal 1993 budgeted expenditures and other uses.
As of June 30, 1994, the Commonwealth showed a year-end cash position of ap-
proximately $757 million, as compared to a projected position of $599 million.
In June, 1993, the Legislature adopted and the Governor signed into law compre-
hensive education reform legislation. This legislation required an increase in
expenditures for education purposes above fiscal 1993 base spending of $1.288
billion of approximately $175 million in fiscal 1994. The Executive Office for
Administration and Finance expects the annual increases in expenditures above
the fiscal 1993 base spending of $1.288 billion to be approximately $396 mil-
lion in fiscal 1995, $625 million in fiscal 1996 and $868 million in fiscal
1997. Additional annual increases are also expected in later fiscal years. The
fiscal 1995 budget as signed by the Governor includes $896 million in appropri-
ations to satisfy this legislation.
1993 Fiscal Year. The Commonwealth's budgeted expenditures and other uses were
approximately $14.696 billion in fiscal 1993, which is approximately $1.280
billion or 9.6% higher than fiscal 1992 expenditures and other uses. Final fis-
cal 1993 budgeted expenditures were $23 million lower than the initial July
1992 estimates of fiscal 1993 budgeted expenditures. Budgeted revenues and
other sources for fiscal 1993 totalled approximately $14.710 billion, including
tax revenues of $9.930 billion. Total revenues and other sources increased by
approximately 6.9% from fiscal 1992 to fiscal 1993, while tax revenues in-
creased by 4.7% for the same period. Overall, fiscal 1993 ended with a surplus
of revenues and other sources over expenditures and other uses of $13.1 million
and aggregate ending fund balances in the budgeted operating funds of the Com-
monwealth of approximately $562.5 million. After payment in full of the distri-
bution of local aid to the Commonwealth's cities and towns ("Local Aid") and
the retirement of short term debt, the Commonwealth showed a year end cash po-
sition of approximately $622.2 million, as compared to a projected position of
$485.1 million.
1992 Fiscal Year. The Commonwealth's budgeted expenditures and other uses were
approximately $13.4 billion in fiscal 1992, which is $238.7 million or 1.7%
lower than fiscal 1991 budgeted expenditures. Final fiscal 1992 budgeted expen-
ditures were $300 million more than the initial July 1991 estimates of budget-
ary expenditures, due in part to increases in certain human services programs,
including an increase of $268.7 million for the Medicaid program and $50.0 mil-
lion for mental retardation consent decree requirements. Budgeted revenues and
other sources for fiscal 1992 totalled approximately $13.7 billion (including
tax revenues of approximately $9.5 billion), reflecting an increase of approxi-
mately 0.7% from fiscal 1991 to 1992 and an increase of 5.4% in tax revenues
for the same period. Overall, fiscal 1992 is estimated to have ended with an
excess of revenues and other sources over expenditures and other uses of $312.3
million. After payment in full of Local Aid in the
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amount of $514.0 million due on June 30, 1992, retirement of the Commonwealth's
outstanding commercial paper (except for approximately $50 million of bond an-
ticipation notes) and certain other short term borrowings, as of June 30, 1992,
the end of fiscal 1992, the Commonwealth showed a year-end cash position of ap-
proximately $731 million, as compared with the Commonwealth's cash balance of
$182.3 million at the end of fiscal 1991.
1991 Fiscal Year. Budgeted expenditures for fiscal 1991 were approximately
$13.659 billion, as against budgeted revenues and other sources of approxi-
mately $13.634 billion. The Commonwealth suffered an operating loss of approxi-
mately $21.2 million. Application of the adjusted fiscal 1990 fund balances of
$258.3 million resulted in a fiscal 1991 budgetary surplus of $237.1 million.
State law requires that approximately $59.2 million of the fiscal year ending
balances of $237.1 million be placed in the Stabilization Fund, a reserve from
which funds can be appropriated (i) to make up any difference between actual
state revenues in any fiscal year in which actual revenues fall below the al-
lowable amount, (ii) to replace state and local losses by federal funds or
(iii) for any event, as determined by the legislature, which threatens the
health, safety or welfare of the people or the fiscal stability of the Common-
wealth or any of its political subdivisions.
Upon taking office in January 1991, the new Governor proposed a series of leg-
islative and administrative actions, including withholding of allotments under
Section 9C of Chapter 29 of the General Laws, intended to eliminate the pro-
jected deficits. The new Governor's review of the Commonwealth's budget indi-
cated projected spending of approximately $14.1 billion with an estimated $850
million in budget balancing measures that would be needed prior to the close of
fiscal 1991. At that time, estimated tax revenues were revised to approximately
$8.8 billion, $903 million less than was estimated at the time the fiscal 1991
budget was adopted. The Legislature adopted a number of the Governor's recom-
mendations and the Governor took certain administrative actions not requiring
legislative approval, including the adoption of a state employee furlough pro-
gram. It is estimated by the Commonwealth that spending reductions achieved
through savings initiatives and withholding of allotments total approximately
$484.3 million in aggregate for fiscal 1991. However, these savings and reduc-
tions may be impacted negatively by litigation pursued by third parties con-
cerning the Governor's actions under Section 9C of Chapter 29 of the General
Laws and with regard to the state employee furlough program.
In addition, the new administration in May 1991 filed an amendment to its Med-
icaid state plan that enables it to claim 50% federal reimbursement on
uncompensated care payments for certain hospitals in the Commonwealth. As a re-
sult, in fiscal 1991, the Commonwealth obtained additional non-tax revenues in
the form of federal reimbursements equal to approximately $513 million on ac-
count of uncompensated care payments. This reimbursement claim was based upon
recent amendments of federal law contained in the Omnibus Budget Reconciliation
Act of 1990 and, consequently, on relatively undeveloped federal laws, regula-
tions and guidelines. At the request of the federal Health Care Financing Ad-
ministration, the Office of Inspector General of the United States Department
of Health and Human Services has commenced an audit of the reimbursement. The
administration, which had reviewed the matter with the Health Care Financing
Administration prior to claiming the reimbursement, believes that the Common-
wealth will prevail in the audit. If the Commonwealth does not prevail, the
Commonwealth would have the right to contest an appeal, but could be required
to pay all
11
<PAGE>
or part of Medicaid reimbursements with interest and to have such amount de-
ducted from future reimbursement payments.
Employment. Reversing a trend of relatively low unemployment during the early
and mid 1980's, the Massachusetts unemployment rate beginning in 1990 increased
significantly to where the Commonwealth's unemployment rate exceeded the na-
tional unemployment rate. During 1990, the Massachusetts unemployment rate in-
creased from 4.5% in January to 6.1% in July to 6.7% in August. During 1991,
the Massachusetts unemployment rate averaged 9.0% while the average United
States unemployment rate was 6.7%. The Massachusetts unemployment rate during
1992 averaged 8.5% while the average United States unemployment rate was 7.4%.
Since 1993, the average monthly unemployment rate has declined steadily. The
Massachusetts unemployment rate in February 1996 was 5.0%, as compared with the
United States unemployment rate of 5.5% for the same period. Other factors
which may significantly and adversely affect the employment rate in the Common-
wealth include reductions in federal government spending on defense-related in-
dustries. Due to this and other considerations, there can be no assurance that
unemployment in the Commonwealth will not increase in the future.
Debt Ratings. S&P currently rates the Commonwealth's uninsured general obliga-
tion bonds at A+. At the same time, S&P currently rates state and agency notes
at SP1. From 1989 through 1992, the Commonwealth had experienced a steady de-
cline in its S&P rating, with its decline beginning in May 1989, when S&P low-
ered its rating on the Commonwealth's general obligation bonds and other Com-
monwealth obligations from AA+ to AA and continuing a series of further reduc-
tions until March 1992, when the rating was affirmed at BBB.
Moody's currently rates the Commonwealth's uninsured general obligation bonds
at A1. From 1989 through 1992, the Commonwealth had experienced a steady de-
cline in its rating by Moody's since May 1989. In May 1989, Moody's lowered its
rating on the Commonwealth's notes from MIG-1 to MIG-2, and its rating on the
Commonwealth's commercial paper from P-1 to P-2. On June 21, 1989, Moody's re-
duced the Commonwealth's general obligation rating from Aa to A. On November
15, 1989, Moody's reduced the rating on the Commonwealth's general obligations
from A to Baa1, and on March 9, 1990, Moody's reduced the rating of the Common-
wealth's general obligation bonds from Baa1 to Baa.
There can be no assurance that these ratings will continue.
In recent years, the Commonwealth and certain of its public bodies and munici-
palities have faced serious financial difficulties which have affected the
credit standing and borrowing abilities of Massachusetts and its respective en-
tities and may have contributed to higher interest rates on debt obligations.
The continuation of, or an increase in, such financial difficulties could re-
sult in declines in the market values of, or default on, existing obligations
including Massachusetts Obligations in the Fund. Should there be during the
term of the Fund a financial crisis relating to Massachusetts, its public bod-
ies or municipalities, the market value and marketability of all outstanding
bonds issued by the Commonwealth and its public authorities or municipalities
including the Massachusetts Obligations in the Fund and interest income to the
Fund could be adversely affected.
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<PAGE>
Total Bond and Note Liabilities. The total general obligation bond indebtedness
of the Commonwealth (including Dedicated Income Tax Debt and Special Obligation
Debt) as of April 1, 1996 was approximately $10.093 billion. There were also
outstanding approximately $240 million in general obligation notes and other
short term general obligation debt. The total bond and note liabilities of the
Commonwealth as of April 1, 1996, including guaranteed bond and contingent lia-
bilities was approximately $13.818 billion.
Debt Service. During the 1980s, capital expenditures were increased substan-
tially, which has had a short term impact on the cash needs of the Commonwealth
and also accounts for a significant rise in debt service during that period. In
November, 1988, the Executive Office for Administration and Finance established
an administrative limit on state-financed capital spending in the Capital Pro-
jects Fund of $925 million per fiscal year. Capital expenditures were $847.0
million, $694.1 million, $575.9 million, $760.6 million and $902.2 million in
fiscal 1991, fiscal 1992, fiscal 1993, fiscal 1994
and fiscal 1995, respectively. Commonwealth-financed capital expenditures are
projected to be approximately $898.0 million in fiscal 1996. Debt service ex-
penditures for fiscal 1991, fiscal 1992, fiscal 1993, fiscal 1994 and fiscal
1995 were $942.3 million, $898.3 million, $1.140 billion, $1.149 billion, and
$1.231 billion, respectively, and are projected to be approximately $1.199 bil-
lion for fiscal 1996. The amounts represented do not include debt service on
notes issued to finance certain Medicare-related liabilities, certain debt
service contract assistance payment to Massachusetts Bay Transportation Author-
ity ($205.5 million projected in fiscal 1996), the Massachusetts Convention
Center ($24.6 million projected in fiscal 1996), the Massachusetts Government
Land Bank ($6 million projected in fiscal 1996), the Massachusetts Water Pollu-
tion Abatement Trust ($16.6 million projected in fiscal 1996) and grants to mu-
nicipalities under the school building assistance program to defray a portion
of the debt service costs on local school bonds ($174.5 million projected in
fiscal 1996).
In January 1990, legislation was passed to impose a limit on debt service be-
ginning in fiscal 1991, providing that no more than 10% of the total appropria-
tions in any fiscal year may be expended for payment of interest and principal
on general obligation debt (excluding the Fiscal Recovery Bonds). The percent-
age of total appropriations expended from the budgeted operating funds for debt
service (excluding debt service on Fiscal Recovery Bonds) for fiscal 1994 is
5.6%, which is projected to increase to 5.9% in fiscal 1995.
Certain Liabilities. Among the material future liabilities of the Commonwealth
are significant unfunded general liabilities of its retirement systems and a
program to fund such liabilities; a program whereby, starting in 1978, the Com-
monwealth began assuming full financial responsibility for all costs of the ad-
ministration of justice within the Commonwealth; continuing demands to raise
aggregate aid to cities, towns, schools and other districts and transit author-
ities above current levels; and Medicaid expenditures which have increased each
year since the program was initiated. The Commonwealth has signed consent de-
crees to continue improving mental health care and programs for the mentally
retarded in order to meet federal standards, including those governing receipt
of federal reimbursements under various programs, and the parties in those
cases have worked cooperatively to resolve the disputed issues.
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As a result of comprehensive legislation approved in January, 1988, the Common-
wealth is required, beginning in fiscal 1989, to fund future pension liabili-
ties currently and to amortize the Commonwealth's unfunded liabilities over 40
years. The funding schedule must provide for annual payments in each of the ten
years ending fiscal 1998 which are at least equal to the total estimated pay-
as-you-go pension costs in each year. As a result of this requirement, the
funding requirements for fiscal 1996, 1997 and 1998 are estimates to be in-
creased to approximately $1.007 billion, $1.061 billion and $1.128 billion, re-
spectively.
Litigation. The Commonwealth is engaged in various lawsuits involving environ-
mental and related laws, including an action brought on behalf of the U.S. En-
vironmental Protection Agency alleging violations of the Clean Water Act and
seeking to enforce the clean-up of Boston Harbor. The MWRA, successor in lia-
bility to the Metropolitan District Commission, has assumed primary responsi-
bility for developing and implementing a court-approved plan for the construc-
tion of the treatment facilities necessary to achieve compliance with federal
requirements. Under the Clean Water Act, the Commonwealth may be liable for
costs of compliance in these or any other Clean Water cases if the MWRA or
a municipality is prevented from raising revenues necessary to comply with a
judgment. The MWRA currently projects that the total cost of construction of
the treatment facilities required under the court's order is approximately
$3.557 billion in current dollars, with approximately $1.046 billion to be
spent on or after June 30, 1995. On October 18, 1995, the court entered an or-
der which reduced the MWRA's obligation to build certain additional secondary
treatment facilities, which is estimated by the MWRA will save ratepayers ap-
proximately $165 million.
The Department of Public Welfare has been sued for the alleged unlawful denial
of personal care attendant services to certain disabled Medicaid recipients.
The Superior Court has denied the plaintiff's motion for preliminary injunction
and has also denied the plaintiff's motion for class certification. If the
plaintiffs were to prevail on their claims and the Commonwealth were required
to provide all of the services sought by the plaintiffs to all similarly situ-
ated persons, it would substantially increase the annual cost to the Common-
wealth if these services are eventually required. The Department of Public Wel-
fare currently estimates this increase to be as much as $200 million per year.
There are also actions pending in which recipients of human services benefits,
such as welfare recipients, the mentally retarded, the elderly, the handi-
capped, children, residents of state hospitals and inmates of corrections in-
stitutions, seek expanded levels of services and benefits and in which provid-
ers of services to such recipients challenge the rates at which they are reim-
bursed by the Commonwealth. To the extent that such actions result in judgments
requiring the Commonwealth to provide expanded services or benefits or pay in-
creased rates, additional operating and capital expenditures might be needed to
implement such judgments.
In 1995, the Spaulding Rehabilitation Hospital ("Spaulding") filed an action to
enforce an agreement to acquire its property by eminent domain in connection
with the Central Artery/Third Harbor Tunnel Project. If successful, Spaulding
could recover the fair market value of its property in addition to its reloca-
tion costs with respect to its personal property. The Commonwealth estimates
its potential liability at approximately $50 million.
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The Commonwealth faces an additional potential liability of approximately $40
million in connection with a taking by the Massachusetts Highway Department re-
lated to the relocation of Northern Avenue in Boston.
In addition, there are several tax matters in litigation which could result in
significant refunds to taxpayers if decisions unfavorable to the Commonwealth
are rendered. In BayBank, et al. v. Commissioner of Revenue, the banks chal-
lenge the inclusion of income from tax exempt obligations in the measure of the
bank excise tax. The Appellate Tax Board issued findings of fact and a report
in favor of the Commissioner of Revenue on September 30, 1993. The case is
pending before the Supreme Judicial Court. The potential liability is approxi-
mately $55 million, including similarly situated banks and tax years after
1990.
In National Association of Government Employees v. Commonwealth, the Superior
Court declared that a line item in the Commonwealth's general appropriations
act for fiscal 1994 that increased the state employees' percentage share of
their group health insurance premiums from 10% to 15% violated the terms
of several collective bargaining agreements, and therefore was invalid under
the United States Constitution as regards employees covered by the agreements.
On February 9, 1995, the Supreme Judicial Court vacated the Superior Court's
decision and declared that the fiscal 1994 line item did not violate
the contracts clause. In June, 1995, the United States Supreme Court denied the
plaintiff's writ of certiorari. Several other unions have filed a companion
suit asserting that the premium increase similarly violated other collective
bargaining agreements. The latter suit is in its initial stages. Prior to the
Supreme Judicial Court's decision the Commonwealth's aggregate liability is es-
timated to be approximately $32 million.
A variety of other civil suits pending against the Commonwealth may also affect
its future liabilities. There include challenges to the Commonwealth's alloca-
tion of school aid under Section 9C of Chapter 29 of the General Laws and to
adopt a state employee furlough program. No prediction is possible as to the
ultimate outcome of these proceedings.
On March 22, 1995, the Supreme Judicial Court held in Perini Corporation v.
Commission of Revenues that certain deductions from the net worth measure of
the Massachusetts corporate excise tax violate the Commerce Clause of the
United States Constitution. On October 2, 1995, the United States Supreme Court
denied the Commonwealth's petition for writ of certiorari. The Department of
Revenue estimates that tax revenues in the amount of $40 to $55 million may be
abated as a result of the Supreme Judicial Court's decision.
Many factors, in addition to those cited above, have or may have a bearing upon
the financial condition of the Commonwealth, including social and economic con-
ditions, many of which are not within the control of the Commonwealth.
Expenditure and Tax Limitation Measures. Limits have been established on state
tax revenues by legislation approved by the Governor on October 25, 1986 and by
an initiative petition approved by the voters on November 4, 1986. The Execu-
tive Office for Administration and Finance currently estimates
15
<PAGE>
that state tax revenues will not reach the limit imposed by either the initia-
tive petition or the legislative enactment in fiscal 1992.
Proposition 2 1/2, passed by the voters in 1980, led to large reductions in
property taxes, the major source of income for cities and towns and large in-
creases in state aid to offset such revenue losses. According to the Executive
Office for Administration and Finance, all of the 351 cities and towns have now
achieved a property tax level of no more than 2.5% of full property values. Un-
der the terms of Proposition 2 1/2, the property tax levy can now be increased
annually for all cities and towns, almost all by 2.5% of the prior fiscal
year's tax levy plus 2.5% of the value of new properties and of significant im-
provements to property. Legislation has also been enacted providing for certain
local option taxes. A voter initiative petition approved at the statewide gen-
eral election in November, 1990 further regulates the distribution of Local Aid
of no less than 40% of collections from individual income taxes, sales and use
taxes, corporate excise taxes, and the balance of the state lottery fund. If
implemented in accordance with its terms (including appropriation of the neces-
sary funds), the petition as approved would shift several hundred million dol-
lars to direct Local Aid.
Other Tax Measures. To provide revenue to pay debt service on both the deficit
and Medicaid-related borrowings and to fund certain direct Medicaid expendi-
tures, legislation was enacted imposing an additional tax on certain types of
personal income for 1989 and 1990 taxable years at rates of 0.375% and 0.75%,
respectively, effectively raising the tax rate of 1989 from 5% to 5.375% and
for 1990 to 5.75%. Recent legislation has effectively further increased tax
rates to 5.95% for tax year 1990 to 6.25% for tax year 1991 and returning to
5.95% for tax year 1992 and subsequent tax years. The tax is applicable to all
personal income except income derived from dividends, capital gains, unemploy-
ment compensation, alimony, rent, interest, pensions, annuities and IRA/Keogh
distributions. The income tax rate on other interest (excluding interest on ob-
ligations of the United States and of the Commonwealth and its subdivisions),
dividends and net capital gains (after a 50% reduction) was increased from 10%
to 12% for tax year 1990 and subsequent years, by recently enacted legislation.
Estate Tax Revisions. The fiscal 1993 budget included legislation which gradu-
ally phases out the current Massachusetts estate tax and replaces it with a
"sponge tax" in 1997. The "sponge tax" is based on the maximum amount of the
credit for state taxes allowed for federal estate tax purposes. The estate tax
is phased out by means of annual increases in the basic exemption from the cur-
rent $200,000 level. The exemption is increased to $300,000 for 1993, $400,000
for 1994, $500,000 for 1995 and $600,000 for 1996. In addition, the legislation
includes a full marital deduction starting July 1, 1994. Currently the marital
deduction is limited to 50% of the Massachusetts adjusted gross estate. The
static fiscal impact of the phase out of the estate tax was estimated to be ap-
proximately $24.8 million in fiscal 1994 and is estimated to be approximately
$72.5 million in fiscal 1995.
Other Issuers of Massachusetts Obligations. There are a number of state agen-
cies, instrumentalities and political subdivisions of the Commonwealth that is-
sue Municipal Obligations, some of which may be conduit revenue obligations
payable from payments from private borrowers. These entities are subject to
various economic risks and uncertainties, and the credit quality of the securi-
ties issued by them may vary considerably from the credit quality of obliga-
tions backed by the full faith and credit of the Commonwealth. The brief sum-
mary above does not address, nor does it attempt to address, any difficulties
and the financial situations of those other issuers of Massachusetts Obliga-
tions.
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FACTORS PERTAINING TO NEW YORK
As described above, except to the extent the New York Fund invests in temporary
investments, the New York Fund will invest substantially all of its assets in
New York Municipal Obligations. The New York Fund is therefore susceptible to
political, economic or regulatory factors affecting New York State and govern-
mental bodies within New York State. Some of the more significant events and
conditions relating to the financial situation in New York are summarized be-
low. The following information provides only a brief summary of the complex
factors affecting the financial situation in New York, is derived from sources
that are generally available to investors and is believed to be accurate. It is
based on information drawn from official statements and prospectuses issued by,
and other information reported by, the State of New York (the "State"), by its
various public bodies (the "Agencies"), and by other entities located within
the State, including the City of New York (the "City"), in connection with the
issuance of their respective securities.
There can be no assurance that current or future statewide or regional economic
difficulties, and the resulting impact on State or local government finances
generally, will not adversely affect the market value of New York Municipal Ob-
ligations held in the portfolio of the New York Fund or the ability of particu-
lar obligors to make timely payments of debt service on (or relating to) those
obligations.
(1) The State: The State has historically been one of the wealthiest states in
the nation. For decades, however, the State economy has grown more slowly than
that of the nation as a whole, gradually eroding the State's relative economic
affluence. Statewide, urban centers have experienced significant changes in-
volving migration of the more affluent to the suburbs and an influx of gener-
ally less affluent residents. Regionally, the older Northeast cities have suf-
fered because of the relative success that the South and the West have had in
attracting people and business. The City has also had to face greater competi-
tion as other major cities have developed financial and business capabilities
which make them less dependent on the specialized services traditionally avail-
able almost exclusively in the City, which has had an additional negative im-
pact on New York City's recovery. The State has for many years had a very high
State and local tax burden relative to other states. The burden of State and
local taxation, in combination with the many other causes of regional economic
dislocation, has contributed to the decisions of some businesses and individu-
als to relocate outside, or not locate within, the State.
Slowdown of Regional Economy. A national recession commenced in mid-1990. The
downturn continued throughout the State's 1990-91 fiscal year and was followed
by a period of weak economic growth during the 1991 and 1992 calendar years.
For calendar year 1993, the economy grew faster
than in 1992, but still at a very moderate rate as compared to other recov-
eries. Moderate economic growth continued in calendar year 1994. Economic
growth slowed within New York during 1995 as the expansion of the national
economy moderated. The State has forecasted a slowdown in the expansion of the
State's economy in 1996. The State's economic growth continues to lag behind
the nation's, due in part to a significant retrenchment in the banking and fi-
nancial services industries, downsizing by major corporations, cutbacks in de-
fense spending, and an oversupply of office buildings. Many uncertainties exist
in forecasts of both the national and State economies and there can be no as-
surance that the State's economy will perform at a level sufficient to meet the
State's projections of receipts and disbursements.
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1996-97 Fiscal Year. The Governor issued a proposed Executive Budget for the
1996-97 fiscal year (the "Proposed Budget") on December 15, 1995, which pro-
jected a balanced general fund and receipts and disbursements of $31.3 billion
and $31.2 billion, respectively. As of June 10, 1996, the State legislature had
not yet enacted, nor had the Governor and the legislature reached an agreement
on, the budget for the 1996-97 fiscal year, which commenced on April 1, 1996.
The Governor and the State's legislature have agreed on or proposed a series of
short-term stopgap spending measures to fund state payrolls and advances to
certain municipalities and certain state programs. The delay in the enactment
of the budget may negatively affect certain proposed actions and reduce pro-
jected savings.
The Proposed Budget and the 1996-97 Financial Plan provide for the closing of a
projected $3.9 billion budget gap in the 1996-97 fiscal year by cost-contain-
ment savings in social welfare programs, savings from State agency
restructurings, decreasing the level of some categories of local aid, new reve-
nue measures and a reduction in the number of state employees. Up to $1.3 bil-
lion of gap closing
measures by the State are dependent upon federal actions with respect to the
Medicaid program that have not been enacted due to the federal budget impact.
The Governor has proposed that, depending upon the ultimate form of Medicaid
relief provided to the states, any resulting gap would be filled through a com-
bination of increased revenues, additional cuts in spending for social servic-
es, and so-called "one shot" sources of revenue or cost savings.
The Proposed Budget and the 1996-97 Financial Plan may be impacted negatively
by uncertainties relating to the economy and tax collections. In particular,
should the national economy grow more slowly than forecasted by the State, rev-
enues received by the State would be adversely affected. In addition, proposed
retroactive changes to the federal tax treatment of capital gains would flow
through to the State and could significantly reduce tax receipts.
1995-96 Fiscal Year. The Governor announced on April 3, 1996 that the State
ended its 1994-95 fiscal year with an operating surplus of approximately $445
million. The State Legislature enacted the State's 1995-96 fiscal year budget
on June 7, 1995, more than two months after the start of that fiscal year. As
of January 19, 1996, the updated 1995-96 State Financial Plan (the "Plan") pro-
jected total general fund receipts and disbursements each of $32.7 billion,
representing reductions in receipts and disbursements of $144 million and $103
million, respectively, from the amounts set forth in the 1995-96 budget. The
Plan projected for a General Fund balance of approximately $172 million at the
close of the 1995-96 fiscal year.
1994-95 Fiscal Year. The State ended the 1994-95 fiscal year with a General
Fund balance of approximately $158 million.
Future Fiscal Years. There can be no assurance that the State will not face
substantial potential budget gaps in the future resulting from a significant
disparity between tax revenues projected from a lower recurring receipts base
and the spending required to maintain State programs at current levels. To ad-
dress any potential budgetary imbalance, the State may need to take significant
actions to align recurring receipts and disbursements. The Governor's budget
for fiscal year 1996-97 projects that budget gaps of $1.4 billion and $2.5 bil-
lion may need to be closed for fiscal years 1997-98 and 1998-99, respectively.
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Indebtedness. As of March 31, 1995, the total amount of long-term State general
obligation debt authorized but unissued stood at $1.8 billion. As of the same
date, the State had approximately $5.2 billion in general obligation bonds, in-
cluding $149 million in bond anticipation notes outstanding.
The State originally projected that its borrowings for capital purposes during
the State's 1995-96 fiscal year would consist of $248 million in general obli-
gation bonds and bond anticipation notes and $186 million in general obligation
commercial paper. The Legislature authorized the issuance of up to $33 million
in certificates of participation in pools of leases for equipment and real
property to be utilized by State agencies in fiscal year 1995-96. The Gover-
nor's budget for fiscal year 1996-97 projects approximately $400 million of
borrowings by the state for capital purposes. The projections of the State re-
garding its borrowings for any fiscal year are subject to change if actual re-
ceipts fall short of State projections or if other circumstances require.
In June 1990, legislation was enacted creating the New York Local Government
Assistance Corporation ("LGAC"), a public benefit corporation empowered to is-
sue long-term obligations to fund certain payments to local governments tradi-
tionally funded through the State's annual seasonal borrowing. As of June 31,
1995, LGAC had issued its bonds to provide net proceeds of $4.7 billion com-
pleting the program.
Financing of capital programs by other public authorities of the State is also
obtained from lease-purchase and contractual-obligation financing arrangements,
the debt service for which is paid from State appropriations. As of March 31,
1995, there were $18 billion of such other financing arrangements outstanding
and additional financings of this nature by public authorities. In addition,
certain agencies had issued and outstanding approximately $7.0 billion of
"moral obligation financings" as of March 31, 1995, which are to be repaid from
project revenues. While there has never been a default on moral obligation debt
of the State, the State would be required to make up any shortfall in debt
service.
Ratings. Moody's rating of the State's general obligation bonds stood at A on
January 24, 1996, and S&P's rating stood at A- with a positive outlook, on Jan-
uary 24, 1996, an improvement from S&P's stable outlook from February 1994
through April 1993 and negative outlook prior to April 1993.
Previously, Moody's lowered its rating to A on June 6, 1990, its rating having
been A1 since May 27, 1986. S&P lowered its rating from A to A- on January 13,
1992. S&P's previous ratings were A from March 1990 to January 1992, AA- from
August 1987 to March 1990 and A+ from November 1982 to August 1987.
Moody's maintained its A rating and S&P continued its A- rating in connection
with the State's issuance of $116 million of its general obligation bonds in
January 1996.
(2) The City and the Municipal Assistance Corporation ("MAC"): The City ac-
counts for approximately 40% of the State's population and personal income, and
the City's financial health affects the State in numerous ways.
In response to the City's fiscal crisis in 1975, the State took a number of
steps to assist the City in returning to fiscal stability. Among other actions,
the State Legislature (i) created MAC to assist with
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long-term financing for the City's short-term debt and other cash requirements
and (ii) created the State Financial Control Board (the "Control Board") to re-
view and approve the City's budgets and four-year financial plans (the finan-
cial plans also apply to certain City-related public agencies).
In recent years, the rate of economic growth in the City slowed substantially
as the City's economy entered a recession. While by some measures the City's
economy may have begun to recover, a number of factors, including poor perfor-
mance by the City's financial services companies, may prevent a significant im-
provement in the City's economy and may in fact negatively impact upon the
City's finances by reducing tax receipts. The City Comptroller has issued re-
ports concluding that the recession of the City's economy may be ending, but
there is little prospect of any significant improvement in the near term.
Fiscal Year 1997 and the 1996-1999 Financial Plan. On January 31, 1996, the
Mayor released his preliminary $31 billion budget for fiscal year 1997, which
included $2.0 billion of deficit reduction measures and relied upon a $750 mil-
lion reduction in mandated welfare and Medicaid expenditures from the State and
a $643 million reduction in expenditures by City agencies and the Board of Edu-
cation ("BOE") budget, The Mayor has also received from MAC a commitment for
$125 million in fiscal year 1996 in return for a commitment by the City to cut
projected City spending by $125 million in fiscal year 1997 and each of the
next three fiscal years. On May 9, 1996, the Mayor released a revised fiscal
year 1997 budget of $32.7 billion that would impose $1.1 billion in budget cuts
on City agencies. The revised budget reduces reliance on savings in welfare and
Medicaid expenditures by $250 million and restores $300 million of proposed tax
cuts, including a recommended four year extension of the City surcharge on per-
sonal income taxes. The City Council adopted a $33 billion budget on June 12,
1996 that increased spending by $250 million above the Mayor's proposed budget.
The 1996-1999 Financial Plan (the "Plan"), as revised in May 1996 by the Mayor,
projected budget gaps of $1.4 and 2.3 billion for fiscal years 1998 and 1999,
respectively. The forecasted budget shortfall in fiscal year 2000 could be as
much as $2.9 million. The City Comptroller and State Comptroller have each
warned that the fiscal year 1997 budget includes significant revenue risks. The
State Comptroller has expressed concern that projected budget gaps for fiscal
years 1999 and 2000 are each in excess of $2 billion despite the City's signif-
icant cost-cutting efforts.
The amount of gap closing measures requiring State action set forth in the Plan
is well in excess of proposed assistance to the City outlined in the Governor's
Proposed Budget. Due to the continuing federal budget impasse, the City cannot
be assured that its assumptions regarding the amount of federal aid or the im-
pact of changes in federal law upon its operations or tax receipts. An extended
delay by the State in adopting its 1996-97 fiscal year budget or in the adop-
tion of the federal budget would negatively impact upon the City's financial
condition and ability to close budget gaps for fiscal years 1997 and thereaf-
ter.
The Mayor was required to submit an executive budget for fiscal year 1997 to
the City Council in late April 1996. Due to continuing uncertainties related to
the amount of State and federal aid, the City Council extended the date by
which the Mayor was to submit such executive budget.
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Given the foregoing, there can be no assurance that the City will continue to
maintain a balanced budget during fiscal year 1997 or thereafter, or that it
can maintain a balanced budget without additional tax or other revenue in-
creases or reductions in City services, which could adversely affect the City's
economic base.
Pursuant to State law, the City prepares a four-year annual financial plan,
which is reviewed and revised on a quarterly basis and which includes the
City's capital, revenue and expense projections. The City is required to submit
its financial plans to review bodies, including the Control Board. If
the City were to experience certain adverse financial circumstances, including
the occurrence or the substantial likelihood and the imminence of the occur-
rence of an annual operating deficit of more than $100 million or the loss of
access to the public credit markets to satisfy the City's capital and seasonal
financial requirements, the Control Board would be required by State law to ex-
ercise certain powers, including prior approval of City financial plans, pro-
posed borrowings and certain contracts.
The City depends on the State for State aid both to enable the City to balance
its budget and to meet its cash requirements. If the State experiences revenue
shortfalls or spending increases beyond its projections during its 1996-97 fis-
cal year or subsequent years, such developments could result in reductions in
projected State aid to the City. In addition, there can be no assurance that
State budgets for the 1997-98 or future fiscal years will be adopted by the
April 1 statutory deadline and that there will not be adverse effects on the
City's cash flow and additional City expenditures as a result of such delays.
The City projections set forth in the Plan are based on various assumptions and
contingencies which are uncertain and which may not materialize. Changes in ma-
jor assumptions could significantly affect the City's ability to balance its
budget as required by State law and to meet its annual cash flow and financing
requirements. Such assumptions and contingencies include the timing of any re-
gional and local economic recovery, the absence of wage increases in excess of
the increases assumed in its financial plan, employment growth, provision of
State and Federal aid and mandate relief, State legislative approval of future
State budgets, levels of education expenditures as may be required by State
law, adoption of future City budgets by the New York City Council, approval by
the Governor or the State Legislature and the cooperation of MAC with respect
to various other actions proposed in the Plan and changes in federal tax law.
The City's ability to maintain a balanced operating budget is dependent on
whether it can implement necessary service and personnel reduction programs
successfully. As discussed above, the City must identify additional expenditure
reductions and revenue sources to achieve balanced operating budgets for fiscal
year 1997 and thereafter. Any such proposed expenditure reductions will be dif-
ficult to implement because of their size and the substantial expenditure re-
ductions already imposed on City operations in recent years.
Attaining a balanced budget is also dependent upon the City's ability to market
its securities successfully in the public credit markets. On May 3, 1996, the
Mayor announced a $1 billion reduction in City capital spending over a five
year period through fiscal year 2000. The City's financing program for fiscal
years 1996 through 2000 contemplates capital spending of $14 billion, which
will be financed through issuance of general obligation bonds, Water Authority
Revenue Bonds and Covered Organiza
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tion obligations, and will be used primarily to reconstruct and rehabilitate
the City's infrastructure and physical assets and to make capital investments.
The City's financing program assumes the receipt of approximately $1 billion
from the sale of City's sewer and water systems. However, the City Comptroller
has obtained a court order blocking such sale, which the City is appealing. In
the event such appeal is unsuccessful the City would be required to reduce cap-
ital spending during the next four years or find additional sources of funds in
such amount. A significant portion of such bond financing is used to reimburse
the City's general fund for capital expenditures already incurred. In addition,
the City issues revenue and tax anticipation notes to finance its seasonal
working capital requirements. The terms and success of projected public sales
of City general obligation bonds and notes will be subject to prevailing market
conditions at the time of the sale, and no assurance can be given that the
credit markets will absorb the projected amounts of public bond and note sales.
In addition, future developments concerning the City and public discussion of
such developments, the City's future financial needs and other issues may af-
fect the market for outstanding City general obligation bonds and notes. If the
City were unable to sell its general obligation bonds and notes, it would be
prevented from meeting its planned operating and capital expenditures.
Absent appropriate legislative relief, the City may also face limitations on
its borrowing capacity after 1998 under the State's Constitution that will pre-
vent it from borrowing additional funds, as a result of the decrease in real
estate values within the City. The inability to finance capital improvements
would increase the City's budget gaps in later years or require it to signifi-
cantly curtail capital spending which would lead to a deterioration in the
City's infrastructure and ability to deliver services.
The City is a defendant in a significant number of lawsuits and is subject to
numerous claims and investigations, including, but not limited to, actions com-
menced and claims asserted against the City arising out of alleged constitu-
tional violations, torts, breaches of contracts, and other violations of law
and condemnation proceedings. While the ultimate outcome and fiscal impact, if
any, on the proceedings and claims are not currently predictable, adverse de-
terminations in certain of them might have a material adverse effect upon the
City's ability to carry out its financial plan. As of June 30, 1995, the City
estimated its potential future liability on outstanding claims to be $2.5
billion.
On January 30, 1995, Robert L. Schulz and other defendants commenced a federal
district court action seeking among other matters to cancel the issuance on
January 31, 1995 of $659 million of City bonds. While the federal courts have
rejected requests for temporary restraining orders and expedited appeals, the
case is still pending. The City has indicated that it believes the action to be
without merit as it relates to the City, but there can be no assurance as to
the outcome of the litigation and an adverse ruling or the granting of a perma-
nent injunction would have a negative impact on the City's financial condition
and its ability to fund its operations.
Fiscal Year 1996. New York City adopted its 1996 fiscal year budget in June
1995, and submitted its Financial Plan for the 1996 fiscal year to the Control
Board on July 11, 1995. The fiscal 1996 budget and Financial Plan originally
provided for spending of $31.4 billion and a closed budget gap of $3.1 billion.
However, in January 1996 additional unexpected budget gaps totaling approxi-
mately $760 million were identified in the fiscal 1996 budget. The widening of
the budget gap for fiscal year 1996 resulted from shortfalls in tax revenues
and State and federal aid and the failure to achieve
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Medicaid, welfare and other savings at the levels projected. The City has un-
dertaken a number of actions to close the recently discovered gap, including
additional agency cuts, refinancing of MAC debt, the proposed sale of the
City's parking meters and the proposed sale of approximately $250 million of
uncollected tax liens. The City Comptroller has questioned whether the City
will be able to close the remaining budget gap for fiscal year 1996 prior to
fiscal year-end on June 30, 1996 and has criticized certain gap-closing mea-
sures as being at the expense of future revenues.
Fiscal Years 1991 through 1995. The City achieved balanced operating results
in accordance with generally accepted accounting principles for fiscal years
1991 through 1995. The City was required to close substantial budget gaps in
these fiscal years in order to maintain balanced operating results.
Ratings. As of the date of this prospectus, Moody's rating of the City's gen-
eral obligation bonds stood at Baa1 and S&P's rating stood at BBB+. On Febru-
ary 11, 1991, Moody's had lowered its rating from A.
On March 1, 1996, Moody's confirmed its Baa1 rating in connection with a
scheduled March 1996 sale of $1.3 billion of the City's general obligation
bonds but indicated that it would review such rating for a possible downgrade
following adoption of the City's 1997 fiscal year budget. S&P also confirmed
its rating of the City's general obligation bonds in connection with the such
general obligation bond issue in March 1996.
In January 1995, in response to the City's plan to borrow $120 million to re-
fund debt due in February without imposing additional cuts in the fiscal 1995
budget, S&P placed the City on negative credit watch. In late May 1996, S&P
confirmed the City's rating citing improvements in the revised fiscal year
1997 budget. Any rating decrease would negatively affect the marketability of
the City's bonds and significantly increase the City's financing costs.
On October 12, 1993, Moody's increased its rating of the City's issuance of
$650 million of Tax Anticipation Notes ("TANs") to MIG-1 from MIG-2. Prior to
that date, on May 9, 1990, Moody's revised downward its rating on outstanding
City revenue anticipation notes from MIG-1 to MIG-2 and rated the $900 million
notes then being sold MIG-2. S&P's rating of the October 1993 TANs issue in-
creased to SP-1 from SP-2. Prior to that date, on April 29, 1991, S&P revised
downward its rating on City revenue anticipation notes from SP-1 to SP-2.
As of December 31, 1995, the City and MAC had, respectively, $24.4 billion and
$4.0 billion of outstanding net long-term and short-term indebtedness.
(3) The State Agencies: Certain Agencies of the State have faced substantial
financial difficulties which could adversely affect the ability of such Agen-
cies to make payments of interest on, and principal amounts of, their respec-
tive bonds. The difficulties have in certain instances caused the State (under
so-called "moral obligation" provisions, which are non-binding statutory pro-
visions for State appropriations to maintain various debt service reserve
funds) to appropriate funds on behalf of the Agencies. Moreover, it is ex-
pected that the problems faced by these Agencies will continue and will re-
quire increasing amounts of State assistance in future years. Failure of the
State to appropriate necessary
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amounts or to take other action to permit those Agencies having financial dif-
ficulties to meet their obligations could result in a default by one or more of
the Agencies. Such default, if it were to occur, would be likely to have a sig-
nificant adverse affect on investor confidence in, and therefore the market
price of, obligations of the defaulting Agencies. In addition, any default in
payment on any general obligation of any Agency whose bonds contain a moral ob-
ligation provision could constitute a failure of certain conditions that must
be satisfied in connection with Federal guarantees of City and MAC obligations
and could thus jeopardize the City's long-term financing plans.
As of September 30, 1994, the State reported that eighteen Agencies each had
outstanding debt of $100 million or more and an aggregate of $70.3 billion of
outstanding debt, some of which was State-supported and State-related debt.
(4) State Litigation: The State is a defendant in numerous legal proceedings
pertaining to matters incidental to the performance of routine governmental op-
erations. Such litigation includes, but is not limited to, claims asserted
against the State arising from alleged torts, alleged breaches of contracts,
condemnation proceedings and other alleged violations of State and Federal
laws. Included in the State's outstanding litigation are a number of cases
challenging the constitutionality or the adequacy and effectiveness of a vari-
ety of significant social welfare programs primarily involving the State's men-
tal hygiene programs. Adverse judgments in these matters generally could result
in injunctive relief coupled with prospective changes in patient care which
could require substantial increased financing of the litigated programs in the
future.
The State is also engaged in a variety of claims wherein significant monetary
damages are sought. Actions commenced by several Indian nations claim that sig-
nificant amounts of land were unconstitutionally taken from the Indians in vio-
lation of various treaties and agreements during the eighteenth and nineteenth
centuries. The claimants seek recovery of approximately six million acres of
land, as well as compensatory and punitive damages.
(5) Other Municipalities: Certain localities in addition to New York City could
have financial problems leading to requests for additional State assistance.
The potential impact on the State of such actions by localities is not included
in projections of State receipts and expenditures in the State's 1994-95 fiscal
year.
Fiscal difficulties experienced by the City of Yonkers ("Yonkers") resulted in
the creation of the Financial Control Board for the City of Yonkers (the "Yon-
kers Board") by the State in 1984. The Yonkers Board is charged with oversight
of the fiscal affairs of Yonkers. Future actions taken by the Governor or the
State Legislature to assist Yonkers could result in allocation of State re-
sources in amounts that cannot yet be determined.
Municipalities and school districts have engaged in substantial short-term and
long-term borrowings. In 1993, the total indebtedness of all localities in the
State (other than New York City) was approximately $17.7 billion. State law re-
quires the Comptroller to review and make recommendations concerning the bud-
gets of those local government units other than New York City authorized by
State law to issue debt to finance deficits during the period that such deficit
financing is outstanding. Fifteen
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localities had outstanding indebtedness for State financing at the close of
their fiscal year ending in 1993. In December 1995, in reaction to continuing
financial problems, the Troy Municipal Assistance Corp., which was created in
1995, imposed a 1996 budget plan upon Troy, New York. Troy MAC had been ex-
pected to refinance $35 million of revenue bonds issued by Troy, for which Troy
lacks resources to fund debt service. Such revenue bonds have not to date been
refinanced. A similar municipal assistance corporation has also been estab-
lished for Newburgh. In addition, several other New York cities, including Uti-
ca, Rome, Schenectady, Syracuse and Niagara Falls have faced continuing budget
deficits, as federal and state aid and local tax revenues have declined while
government expenses have increased. The financial problems being experienced by
the State's smaller urban centers place additional strains upon the State's fi-
nancial condition at a time when the State is struggling with its own budget
gaps.
Certain proposed Federal expenditure reductions could reduce, or in some cases
eliminate, Federal funding of some local programs and accordingly might impose
substantial increased expenditure requirements on affected localities to in-
crease local revenues to sustain those expenditures. In addition,
proposed changes in the treatment of capital gains for federal income tax pur-
poses could reduce the receipts of the State and City. If the State, New York
City or any of the Agencies were to suffer serious financial difficulties jeop-
ardizing their respective access to the public credit markets, the marketabil-
ity of notes and bonds issued by localities within the State, including notes
or bonds in the Fund, could be adversely affected. Localities also face antici-
pated and potential problems resulting from certain pending litigation, judi-
cial decisions, and long-range economic trends. The longer-range potential
problems of declining urban population, increasing expenditures, and other eco-
nomic trends could adversely affect certain localities and require increasing
State assistance in the future.
(6) Other Issuers of New York Municipal Obligations. There are a number of
other state agencies, instrumentalities and political subdivisions of the State
that issue Municipal Obligations, some of which may be conduit revenue obliga-
tions payable from payments from private borrowers. These entities are subject
to various economic risks and uncertainties, and the credit quality of the se-
curities issued by them may vary considerably from the credit quality of obli-
gations backed by the full faith and credit of the State.
TEMPORARY INVESTMENTS
As stated in the Prospectus, the Funds to date have not invested and have no
present intention to invest in "temporary investments" the income from which is
subject to federal income tax. However, the Prospectus also discusses briefly
the ability of each Fund to invest a portion of its assets in such temporary
investments which will not exceed 20% of any Fund's assets except when made for
defensive purposes. The Funds will invest only in temporary investments which,
in the opinion of the Adviser, are of "high grade" quality and have remaining
maturities of 397 days or less.
Temporary investments include obligations 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 and Poor's Corporation ("S&P")
(Aaa or Aa, or AAA or AA, respectively); commercial paper rated in the highest
grade by
25
<PAGE>
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 Ob-
ligations and U.S. Government obligations subject to short-term repurchase
agreements.
Subject to the foregoing limitations, the Funds may invest in the following
temporary 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 is-
sued 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
maturities of one to seven years.
--Treasury bonds are longer-term interest-bearing obligations with original
maturities 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 Funds will only invest in U.S. dollar denomi-
nated CDs issued by U.S. banks with assets of $1 billion or more.
Commercial Paper--Commercial paper is the term used to designate unsecured
short-term promissory notes issued by corporations. Maturities on these issues
vary from a few days to nine months. Commercial paper may be purchased from
U.S. corporations.
Other Corporate Obligations--The Funds 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 collateral-
26
<PAGE>
ized by the underlying security that is the subject of the repurchase contract.
The Funds will only enter into repurchase agreements with dealers, domestic
banks or recognized financial institutions that in the opinion of Nuveen Advi-
sory present minimal credit risk. The risk to the Funds is limited to the abil-
ity 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 trans-
action 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 Funds might incur a loss if the value of the collateral declines, 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 collateral by the Funds 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 increase the value of the
collateral to at least that of the repurchase price.
Variable and Floating Rate Investments--See description on page 5.
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 two highest ratings of Moody's and S&P for federally tax-exempt short-term
loans and notes are MIG-1 and MIG-2, or VMIG-1 and VMIG-2 in the case of vari-
able instruments, and SP-1 and SP-2, respectively. Obligations designated MIG-1
or VMIG-1 are the best quality enjoying strong protection from established cash
flows of funds for their servicing or from established and broad-based access
to the market for refinancing, or both. Obligations designated as MIG-2 or
VMIG-2 are high quality obligations with ample margins of protection. The des-
ignation SP-1 indicates a very strong or strong capacity to pay principal and
interest while the designation SP-2 denotes a satisfactory capacity to pay
principal and interest.
27
<PAGE>
The Funds' ability to purchase commercial paper of tax-exempt and corporate is-
suers is limited to commercial paper rated Prime-1 or Prime-2 by Moody's or A-1
or A-2 by S&P. The rating Prime-1 (P-1) is the highest commercial paper rating
assigned by Moody's. Issuers rated P-1 have a superior capacity for repayment
of short-term obligations normally evidenced by the following characteristics:
leading market positions in well-established industries; high rates of return
on funds employed; conservative capitalization structures with moderate reli-
ance on debt and ample asset protection; broad margins in earnings coverage of
fixed financial charges and high internal cash generation; well-established ac-
cess to a range of financial markets and assured sources of alternative liquid-
ity. Issuers rated Prime-2 have a strong capacity for repayment of short-term
promissory obligations. The designation A-1 indicates that the degree of safety
regarding timely payment is very strong, while the designation A-2 denotes a
strong capacity for timely repayment.
Subsequent to its purchase by a Fund, an issue may cease to be rated or its
rating may be reduced below the minimum required for purchase by such Fund.
Neither 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.
MANAGEMENT
The management of Nuveen Tax-Free Money Market Fund, Inc., including general
supervision of the duties performed by Nuveen Advisory under the Investment
Management Agreement, is the responsibility of its Board of Directors. There
are six directors of Nuveen Tax-Free Money Market Fund, Inc., two of whom are
"interested persons" (as the term "interested persons" is defined in the In-
vestment Company Act of 1940) and four of whom are "disinterested persons." The
names and business addresses of the directors and officers of the Fund and
their principal occupations and other affiliations during the past five years
are set forth below, with those directors who are "interested persons" of
Nuveen Tax-Free Money Market Fund, Inc. indicated by an asterisk.
<TABLE>
- -------------------------------------------------------------------------------------
<CAPTION>
POSITIONS AND
OFFICES WITH PRINCIPAL OCCUPATIONS
NAME AND ADDRESS AGE FUNDS DURING PAST FIVE YEARS
- -------------------------------------------------------------------------------------
<S> <C> <C> <C>
Timothy R. 47 Chairman of the Chairman (since July 1, 1996) and Director,
Schwertfeger* Board and formerly Executive Vice President of The
333 West Wacker Director John Nuveen Company (since March 1992) and
Drive of John Nuveen & Co. Incorporated; Chairman
Chicago, IL 60606 (since July 1, 1996) and Director (since
October 1, 1992) of Nuveen Advisory Corp.
and Nuveen Institutional Advisory Corp.
- -------------------------------------------------------------------------------------
Anthony T. Dean* 51 President and President (since July 1, 1996) and Direc-
333 West Wacker Director tor, formerly Executive Vice President of
Drive The John Nuveen Company (since March 1992)
Chicago, IL 60606 and of John Nuveen & Co. Incorporated;
President (since July 1, 1996) and Director
(since October 1, 1992) of Nuveen Advisory
Corp. and Nuveen Institutional Advisory
Corp.
- -------------------------------------------------------------------------------------
Lawrence H. Brown 61 Director Retired (August 1989) as Senior Vice Presi-
201 Michigan Avenue dent of The Northern Trust Company.
Highwood, IL 60040
</TABLE>
- --------------------------------------------------------------------------------
28
<PAGE>
<TABLE>
- -------------------------------------------------------------------------------------
<CAPTION>
POSITIONS AND
OFFICES WITH PRINCIPAL OCCUPATIONS
NAME AND ADDRESS AGE FUNDS DURING PAST FIVE YEARS
- -------------------------------------------------------------------------------------
<S> <C> <C> <C>
Anne E. Impellizerri 63 Director President and Chief Executive Officer of
3 West 29th Street Blanton-Peale Institute of Religion and
New York, NY 10001 Health (since December 1990); prior there-
to, Vice President of New York City Part-
nership (from 1987 to 1990).
- -------------------------------------------------------------------------------------
Margaret K. Rosen- 69 Director Helen Ross Professor of Social Welfare
heim Policy, School of Social Service Adminis-
969 East 60th Street tration, University of Chicago.
Chicago, IL 60637
- -------------------------------------------------------------------------------------
Peter R. Sawers 63 Director Adjunct Professor of Business and Econom-
22 The Landmark ics, University of Dubuque, Iowa; Adjunct
Northfield, IL 60093 Professor, Lake Forest Graduate School of
Management, Lake Forest, Illinois (since
January 1992); prior thereto, Executive
Director, Towers Perrin Australia (manage-
ment consultant); Chartered Financial Ana-
lyst; Certified Management Consultant.
- -------------------------------------------------------------------------------------
William M. Fitzger- 32 Vice President Vice President of Nuveen Advisory Corp.
ald (since December 1995); Assistant Vice
333 West Wacker President of Nuveen Advisory Corp. (from
Drive September 1992 to December 1995); prior
Chicago, IL 60606 thereto Assistant Portfolio Manager of
Nuveen Advisory Corp. (from June 1988 to
September 1992).
- -------------------------------------------------------------------------------------
Kathleen M. Flanagan 49 Vice President Vice President of John Nuveen & Co. Incor-
333 West Wacker porated.
Drive
Chicago, IL 60606
- -------------------------------------------------------------------------------------
J. Thomas Futrell 40 Vice President Vice President of Nuveen Advisory Corp.
333 West Wacker
Drive
Chicago, IL 60606
- -------------------------------------------------------------------------------------
Steven J. Krupa 38 Vice President Vice President of Nuveen Advisory Corp.
333 West Wacker
Drive
Chicago, IL 60606
- -------------------------------------------------------------------------------------
Anna R. Kucinskis 50 Vice President Vice President of John Nuveen & Co. Incor-
333 West Wacker porated.
Drive
Chicago, IL 60606
- -------------------------------------------------------------------------------------
Larry W. Martin 44 Vice President Vice President (since September 1992), As-
333 West Wacker and sistant Secretary and Assistant General
Drive Assistant Sec- Counsel of John Nuveen & Co. Incorporated;
Chicago, IL 60606 retary Vice President (since May 1993) and Assis-
tant Secretary of Nuveen Advisory Corp.;
Vice President (since May 1993) and Assis-
tant Secretary (since January 1992) of
Nuveen Institutional Advisory Corp; Assis-
tant Secretary of The John Nuveen Company
(since February 1993).
</TABLE>
- --------------------------------------------------------------------------------
29
<PAGE>
<TABLE>
- -------------------------------------------------------------------------------------
<CAPTION>
POSITIONS AND
OFFICES WITH PRINCIPAL OCCUPATIONS
NAME AND ADDRESS AGE FUNDS DURING PAST FIVE YEARS
- -------------------------------------------------------------------------------------
<S> <C> <C> <C>
O. Walter Renfftlen 56 Vice President Vice President and Controller of The John
333 West Wacker and Controller Nuveen Company (since March 1992), John
Drive Nuveen & Co. Incorporated, Nuveen Advisory
Chicago, IL 60606 Corp. and Nuveen Institutional Advisory
Corp.
- -------------------------------------------------------------------------------------
Thomas C. Spalding, 44 Vice President Vice President of Nuveen Advisory Corp.
Jr. and Nuveen Institutional Advisory Corp;
333 West Wacker Chartered Financial Analyst.
Drive
Chicago, IL 60606
- -------------------------------------------------------------------------------------
H. William Stabenow 61 Vice President Vice President and Treasurer of The John
333 West Wacker and Treasurer Nuveen Company (since March 1992), John
Drive Nuveen & Co. Incorporated, Nuveen Advisory
Chicago, IL 60606 Corp. and Nuveen Institutional Advisory
Corp. (since January 1992).
- -------------------------------------------------------------------------------------
James J. Wesolowski 45 Vice President Vice President, General Counsel and Secre-
333 West Wacker and Secretary tary of The John Nuveen Company (since
Drive March 1992), John Nuveen & Co., Nuveen Ad-
Chicago, IL 60606 visory Corp. and Nuveen Institutional Ad-
visory Corp.
- -------------------------------------------------------------------------------------
Gifford R. Zimmerman 39 Vice President Vice President (since September 1992), As-
333 West Wacker and sistant Secretary and Assistant General
Drive Assistant Sec- Counsel of John Nuveen & Co. Incorporated,
Chicago, IL 60606 retary Vice President (since May 1993) and Assis-
tant Secretary of Nuveen Advisory Corp.;
Vice President (since May 1993) and Assis-
tant Secretary (since January 1992) of
Nuveen Institutional Advisory Corp.
- -------------------------------------------------------------------------------------
</TABLE>
Timothy R. Schwertfeger and Margaret K. Rosenheim serve as members of the Exec-
utive Committee of the Board of Directors. The Executive Committee, which meets
between regular meetings of the Board of Directors, is authorized to exercise
all of the powers of the Board of Directors.
The directors of Nuveen Tax-Free Money Market Fund, Inc. are also directors or
trustees, as the case may be, of the 19 other Nuveen open-end portfolios and 53
Nuveen closed-end funds.
30
<PAGE>
The following table sets forth compensation paid by Nuveen Tax-Free Money Mar-
ket Fund, Inc. during the fiscal year ended February 29, 1996 to each of the
directors. The Nuveen Tax-Free Money Market Fund, Inc. has no retirement or
pension plans. The officers and directors affiliated with Nuveen serve without
any compensation from the Nuveen Tax-Free Money Market Fund, Inc.
<TABLE>
<CAPTION>
TOTAL COMPENSATION
AGGREGATE FROM THE FUND AND
COMPENSATION FUND COMPLEX PAID
NAME OF DIRECTOR FROM THE FUND TO DIRECTORS(1)
- --------------------------------------------------------------------------------
<S> <C> <C>
Richard J. Franke*............................. $ 0 $ 0
Timothy R. Schwertfeger........................ 0 0
Lawrence H. Brown.............................. 531 55,500
Anne E. Impellizzeri........................... 531 63,000
John O'Toole................................... 487 47,000
Margaret K. Rosenheim.......................... 598(2) 62,322(3)
Peter R. Sawers................................ 531 55,500
</TABLE>
*Mr. Franke retired as of June 30, 1996
(1) The directors of the Nuveen Tax-Free Money Market Fund, Inc. are directors
or trustees, as the case may be, of 21 Nuveen open-end funds and 53 Nuveen
closed-end funds.
(2) Includes $51 in interest earned on deferred compensation from prior years.
(3) Includes $1,572 in interest earned on deferred compensation from prior
years.
Each director who is not employed by Nuveen or Nuveen Advisory will receive a
$45,000 annual retainer for serving as a director of all funds for which Nuveen
Advisory serves as investment adviser and a $1,000 fee per day plus expenses
for attendance at all meetings held on a day on which a regularly scheduled
Board meeting is held, a $1,000 fee per day plus expenses for attendance in
person or a $500 fee per day plus expenses for attendance by telephone at a
meeting held on a day on which no regular board meeting is held and a $250 fee
per day plus expenses for attendance in person or by telephone at a meeting of
the Executive Committee. The annual retainer, fees and expenses will be allo-
cated among the funds on the basis of relative net assets. Nuveen Tax-Free
Money Market Fund, Inc. requires no employees other than its officers, all of
whom are compensated by Nuveen.
On May 28, 1996, the officers and directors of the Fund as a group owned less
than 1% of the outstanding shares of each Fund.
The following table sets forth the percentage ownership of each person who as
of May 28, 1996 owns of record or is known by the Registrant to own of record
5% or more of any class of each Fund's shares of the Funds. The Funds believe
that none of these Shares are owned beneficially, but are held as agent for
various accounts which are the beneficial owners.
<TABLE>
<CAPTION>
NAME OF FUND AND CLASS NAME AND ADDRESS OF OWNER PERCENTAGE OF OWNERSHIP
- -------------------------------------------------------------------------------
<S> <C> <C>
Massachusetts Fund Express & Co 93.27%
Service Plan Series......... Attn Mary Richardson
155 Federal St Fl 7
Boston, MA 02110-1727
Massachusetts Fund William B. Henry Jr 9.88%
Distribution Plan Series.... 94 N Main St
Cohasset, MA 02025-1438
</TABLE>
31
<PAGE>
<TABLE>
<CAPTION>
NAME OF FUND AND CLASS NAME AND ADDRESS OF OWNER PERCENTAGE OF OWNERSHIP
- ----------------------------------------------------------------------------------
<S> <C> <C>
Massachusetts Fund Rockland Trust Co 73.71%
Institutional Series... Attn Trust Operations Dept
2036 Washington St
Hanover, MA 02339-1617
Southwest Securities Inc 15.12%
For the Exclusive Benefit of
Our Customers
1201 Elm St Ste 4300
Dallas, TX 75270-2134
Citizens-Union Savings Bank 11.17%
Trust Department
Attn Barbara E. Parker
4 South Main Street
Fall River, MA 02722-1311
New York Fund Henry Epstein 31.57%
Service Plan Series.... Bella Epstein Jt Ten
189 Lindberg Ave
Oceanside, NY 11572-5507
Shirley R Mast & James F 13.74%
Mast & William L Mast
1235 Hatch Rd
Webster, NY 14580-2422
Peter J. Callahan 6.83%
& Rita S. Callahan
242 Windsor Ln
West Hempstead, NY 11552-3037
Dora Restucci 5.64%
Francis J. Restucci
64 Bedford Rd
Katonah, NY 10536-2117
Surinder K Lakhanpal 10.41
6501 Cherylwood Dr Apt 4
Springfield, IL 62707-8658
New York Fund Estate of Edith Atlas 19.47%
Distribution Plan Se- Sandra & Norton Bass Executors
ries................... 185 Great Neck Rd
Great Neck, NY 11021-3312
Sandra Bass 12.18%
47 Deer Park Rd
Great Neck, NY 11024-2138
New York Fund Nuveen Advisory Corp., Inc 100%
Institutional Series... 333 W Wacker Dr Fl 34
Chicago, IL 60606-1218
</TABLE>
32
<PAGE>
INVESTMENT ADVISER AND INVESTMENT MANAGEMENT AGREEMENT
Nuveen Advisory acts as investment adviser for Nuveen Tax-Free Money Market
Fund, Inc. and in such capacity manages the investment and reinvestment of the
assets of each Fund. Nuveen Advisory also administers Nuveen Tax-Free Money
Market Fund, Inc.'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 of-
ficers of Nuveen Tax-Free Money Market Fund, Inc. if elected to such posi-
tions. See "Management of the Funds" in the Prospectus.
Nuveen Advisory is paid an annual management fee with respect to each Fund at
the rates set forth below which are based upon the average daily net asset
value of each Fund.
<TABLE>
<CAPTION>
AVERAGE DAILY NET ASSET
VALUE MANAGEMENT FEE
- ------------------------------------------
<S> <C>
For the first $500 million .400 of 1%
For the next $500 million .375 of 1%
For assets over $1 billion .350 of 1%
</TABLE>
The management fees will be reduced or Nuveen Advisory will assume certain ex-
penses of each series of each Fund in amounts necessary to prevent the total
expenses of each series of each Fund in any fiscal year from exceeding .55 of
1% of the average daily net asset value of each series.
<TABLE>
<CAPTION>
MANAGEMENT FEES
NET OF EXPENSE
REIMBURSEMENT FEE WAIVERS AND
PAID TO NUVEEN ADVISORY EXPENSE REIMBURSEMENTS FOR
FOR THE YEAR ENDED THE YEAR ENDED
-------------------------- --------------------------
2/28/94 2/28/95 2/29/96 2/28/94 2/28/95 2/29/96
- --------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Massachusetts Fund........ $226,631 $186,808 $138,984 $ 66,068 $ 96,303 $ 95,444
New York Fund............. 49,139 47,656 0 76,018 71,808 125,330
Total For Both Funds...... 275,770 234,464 138,984 142,086 168,111 220,774
</TABLE>
As discussed in the Prospectus, in addition to the management fees of Nuveen
Advisory, each Fund pays all other costs and expenses of its operations and a
portion of the Funds' general administrative expenses allocated in proportion
to the net assets of each Fund, including each Fund's share of payments under
the Distribution and Service Plans.
Nuveen Advisory is a wholly-owned subsidiary of John Nuveen & Co. Incorporated
("Nuveen"), the Funds' principal underwriter. Founded in 1898, Nuveen is the
oldest and largest investment banking firm specializing in the underwriting
and distribution of tax-exempt securities and maintains the largest research
department in the investment banking community devoted exclusively to the
analysis of municipal securities. In 1961, Nuveen began sponsoring the Nuveen
Tax-Exempt Unit Trust and since that time has issued more than $36 billion in
tax-exempt unit trusts, including over $12 billion tax-exempt insured unit
trusts. In addition, Nuveen open-end and closed-end funds held approximately
$31billion in tax-exempt securities under management as of the date of this
Statement. Over 1,000,000 individuals have invested to date in Nuveen's tax-
exempt funds and trusts. Nuveen is a subsidiary of The John Nuveen Company
which, in turn, is approximately 80% owned by The St. Paul Companies, Inc.
("St. Paul"). St. Paul is located in St. Paul, Minnesota, and is principally
engaged in providing property-liability insurance through subsidiaries.
33
<PAGE>
Nuveen Advisory's portfolio managers call upon the resources of Nuveen's Re-
search Department, the largest in the investment banking industry devoted ex-
clusively to tax-exempt securities. Nuveen's Research Department was selected
in 1995 by Research & Ratings Review, a municipal industry publication, as one
of the leading research teams in the municipal industry, based on an extensive
industry-wide poll of portfolio managers, department heads and bond buyers.
The Nuveen Research Department reviews more than $100 billion in tax-exempt
bonds every year.
The Funds, 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 ad-
vantage of, a 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 each 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 Funds expect that all portfolio transactions will be effected on a princi-
pal (as opposed to an agency) basis and, accordingly, do not expect to pay any
brokerage commissions.
Purchases from underwriters will include a commission or concession paid by
the issuer to the underwriter, and purchases from dealers will include the
spread between the bid and asked price. Given the best price and execution ob-
tainable, it will be the practice of the Funds to select dealers which, in ad-
dition, 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 information and statistical and other services re-
ceived from dealers. Since it is only supplementary to Nuveen Advisory's own
research efforts, the receipt of research information is not expected to re-
duce 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 business of the Funds,
the policies and practices of Nuveen Advisory in this regard must be consis-
tent with the foregoing and will, at all times, be subject to review by the
Board of Directors of Nuveen Tax-Free Money Market Fund, Inc.
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 Funds. Subject to applicable laws and regulations,
Nuveen Advisory will attempt to allocate equitably portfolio transac-
34
<PAGE>
tions among the Funds and the portfolios of its other clients purchasing secu-
rities whenever decisions are made to purchase or sell securities by the Funds
and one or more of such other clients simultaneously. In making such alloca-
tions the main factors to be considered will be the respective investment ob-
jectives of the Funds and such other clients, the relative size of portfolio
holdings of the same or comparable securities, the availability of cash for in-
vestment by the Funds and such other clients, the size of investment commit-
ments generally held by the Funds and such other clients and opinions of the
persons responsible for recommending investments to the Funds and such other
clients.
While this procedure could have a detrimental effect on the price or amount of
the securities available to the Funds from time to time, it is the opinion of
Nuveen Tax-Free Money Market Fund, Inc.'s Board of Directors that the benefits
available from Nuveen Advisory's organization outweigh any disadvantage that
may arise from exposure to simultaneous transactions.
Under the Investment Company Act of 1940, the Funds may not purchase portfolio
securities from any underwriting syndicate of which Nuveen is a member except
under certain limited conditions set forth in Rule 10f-3. The Rule sets forth
requirements relating to, among other things, the terms of an issue of Munici-
pal Obligations purchased by the Funds, the amount of Municipal Obligations
which may be purchased in any one issue and the proportion of the assets of the
Funds which may be invested in a particular issue. 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 Nuveen Tax-Free Money Market Fund, Inc.,
including a majority of the members thereof who are not interested persons of
Nuveen Tax-Free Money Market Fund, Inc.
NET ASSET VALUE
As stated in the Prospectus, the net asset value of the shares of each Fund
will be determined by The Chase Manhattan Bank, N.A., Nuveen Tax-Free Money
Market Fund, Inc.'s custodian, as of 12:00 noon, Eastern Time on each day on
which the Federal Reserve Bank of Boston is normally open for business and as
of 12:00 noon, Eastern Time on any other day during which there is a sufficient
degree of trading in the Funds' portfolio securities that the current net asset
value of the shares of the Funds might be materially affected by changes in the
value of the portfolio securities. The Federal Reserve Bank of Boston is not
open for business on New Year's Day, Washington's Birthday, Martin Luther
King's Birthday, Memorial Day, Independence Day, Labor Day, Columbus Day, Vet-
erans Day, Thanksgiving Day and Christmas Day. The net asset value per share of
each Fund will be computed by dividing the sum of the value of the portfolio
securities held by such Fund, plus any cash or assets, less liabilities, by the
total number of shares of such Fund outstanding at such time.
Nuveen Tax-Free Money Market Fund, Inc. will seek to maintain a net asset value
of $1.00 per share for each of the Funds. In this connection, Nuveen Tax-Free
Money Market Fund, Inc. intends to value the portfolio securities of each Fund
at their amortized cost, as permitted by Rule 2a-7 under the Investment Company
Act of 1940. This method does not take into account unrealized securities gains
or losses. It involves valuing an instrument at its cost on the date of pur-
chase and thereafter assuming a constant amortization to maturity of any dis-
count or premium. While this method provides certainty
35
<PAGE>
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 Funds
would receive if it sold the instrument. During periods of declining interest
rates, the daily yield on shares held in the Funds 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 market prices for all of
its portfolio instruments. Thus, if the use of the amortized cost method by the
Funds resulted in a lower aggregate portfolio value on a particular day, a pro-
spective investor in the Funds 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 Funds would receive less investment income. The
converse would apply in a period of rising interest rates.
The Funds, 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 Funds may invest in variable
and floating rate instruments even if they carry stated maturities in excess of
397 days, upon certain conditions contained in rules and regulations issued by
the Securities and Exchange Commission (the "Commission") under the Investment
Company Act of 1940, but will do so only if there is a secondary market for
such instruments or if they carry demand features, permissible under rules of
the Commission for money market funds, to recover the full principal amount
thereof upon specified notice at par, or both.
The Board of Directors, pursuant to the requirements of Rule 2a-7, has estab-
lished procedures designed to stabilize, to the extent reasonably possible, the
Funds' price per share as computed for the purpose of sales and redemptions at
$1.00. Such procedures will include review of the portfolio holdings of the
Funds by the Board of Directors, 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 amor-
tized cost. Market quotations and market equivalents used in such review may be
obtained from a pricing agent approved by the Board of Directors. The Board has
selected Nuveen Advisory to act as pricing agent, but in the future may select
an independent pricing service to perform this function. In serving as pricing
agent, Nuveen Advisory will follow guidelines adopted by the Board, and the
Board will monitor Nuveen Advisory to see that the guidelines are followed. The
pricing agent will value the investments in the Funds based on methods which
include consideration of: yield or prices of municipal obligations of compara-
ble quality, coupon, maturity and type; indications as to value from dealers;
and general market conditions. The pricing agent may employ electronic data
processing techniques and/or a matrix system to determine valuations. The ex-
tent of any deviation between the net asset value of a Fund based on the pric-
ing agent's market valuation and $1.00 per share based on amortized cost will
be examined by the Board of Directors. If such deviation exceeds 1/2 of 1%, the
Board of Directors will promptly consider what action, if any, will be initiat-
ed. In the event the Board of Directors determines that a deviation exists
which may result in material dilution or other unfair results to investors or
existing shareholders, it has agreed to take such corrective action as it re-
gards as necessary and appropriate, including the sale of portfolio instruments
prior to maturity to realize capital gains or losses or to shorten average
portfolio maturity; withholding dividends or payment of distributions from cap-
ital or capital gains; redemption of shares in kind; or establishing a net as-
set value per share by using available market quotations.
36
<PAGE>
TAX MATTERS
FEDERAL INCOME TAX MATTERS
The following discussion of federal income tax matters is based upon the advice
of Fried, Frank, Harris, Shriver and Jacobson, Washington, D.C., counsel to the
Funds.
As described in the Prospectus, each Fund intends to qualify, as it has in
prior years, under Subchapter M of the Internal Revenue Code of 1986 (the
"Code") for tax treatment as a regulated investment company. In order to qual-
ify as regulated investment company, a Fund must satisfy certain requirements
relating to the source of its income, diversification of its assets, and dis-
tributions of its income to shareholders. First, a 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 re-
spect to its business of investing in such stock or securities (the "90% gross
income test"). Second, a Fund must derive less than 30% of its annual gross in-
come from the sale or other disposition of any of the following which was held
for less than three months: (i) stock or securities and (ii) certain options,
futures, or forward contracts (the "short-short test"). Third, a Fund must di-
versify 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 in-
vestment companies and other securities limited in respect of any one issuer to
an amount not greater in value than 5% of the value of a Fund's total assets
and to not more than 10% of the outstanding voting securities of such issuer,
and (ii) not more than 25% of the value of the total assets it invested in the
securities of any one issuer (other than United States Government securities
and securities of other regulated investment companies) or two or more issuers
controlled by a Fund and engaged in the same, similar or related trades or
businesses.
As a regulated investment company, a Fund will not be subject to federal income
tax in any taxable year for which it distributes at least 90% of the sum of (i)
its "investment company taxable income" (which includes dividends, taxable in-
terest, taxable original issue discount and market discount income, income from
securities lending, net short-term capital gain in excess of long-term capital
loss, and any other taxable income other than "net capital gain" (as defined
below) and is reduced by deductible expenses) and (ii) its "net tax-exempt in-
terest" (the excess of its gross tax-exempt interest income over certain disal-
lowed deductions).
Each Fund also intends to satisfy conditions (including requirements as to the
proportion of its assets invested in Municipal Obligations) which will enable
it to designate distributions from the interest income generated by its invest-
ment in Municipal Obligations, which is exempt from regular federal income tax
when received by such Fund, as Exempt Interest Dividends. Shareholders receiv-
ing Exempt Interest Dividends will not be subject to federal income tax on the
amount of such dividends.
Distributions by each Fund of net interest income received from certain taxable
temporary investments (such as certificates of deposit, commercial paper and
obligations of the United States Government, its agencies and instrumentali-
ties) and net short-term capital gains realized by a Fund, if any, will be tax-
able to shareholders as ordinary income whether received in cash or additional
shares. If a Fund purchases a Municipal Obligation at a market discount, any
gain realized by the Fund upon sale or
37
<PAGE>
redemption of the Municipal Obligation will be treated as taxable interest in-
come to the extent such gain does not exceed the market discount, and any gain
realized in excess of the market discount will be treated as capital gains. Any
net long-term capital gains realized by a Fund and distributed to shareholders
in cash or additional shares will be taxable to shareholders as long-term capi-
tal gains regardless of the length of time investors have owned shares of a
Fund. The Funds do not expect to realize significant long-term capital gains.
Because the taxable portion of each 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 divi-
dends received deductions for corporations.
If a Fund has both tax-exempt and taxable income, it will use the "average an-
nual" 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, divi-
dends declared in October, November or December, payable to shareholders of
record on a specified date in one of those months and paid during the following
January, will be treated as having been distributed by each Fund (and received
by the shareholders) on December 31.
The redemption or exchange of the shares of a Fund is not expected to result in
capital gain or loss to the shareholders because the Fund's net asset value is
expected to remain constant at $1.00 per share. To the extent that the Fund's
net asset value is greater or lesser than $1.00 per share, redemptions or ex-
changes may result in capital gain or loss to the shareholder.
In order to avoid a 4% federal excise tax, each 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 October 31 of such year) and 100% of
any taxable ordinary income and the excess of realized capital gains over real-
ized capital losses for the prior year that was not distributed during such
year and on which such Fund paid no federal income tax. The Funds intend to
make timely distributions in compliance with these requirements and conse-
quently it is anticipated that they generally will not be required to pay the
excise tax.
If in any year a Fund should fail to qualify under Subchapter M for tax treat-
ment as a regulated investment company, the Fund would incur a regular corpo-
rate federal income tax upon its income for that year, other than interest in-
come from Municipal Obligations, and distributions to its shareholders out of
net interest income from Municipal Obligations or other investments, or out of
net capital gains, would be taxable to shareholders as ordinary dividend income
for federal income tax purposes to the extent of the Fund's available earnings
and profits.
38
<PAGE>
Among the requirements that the Fund must meet in order to qualify under
Subchapter M in any year is that less than 30% of its gross income must be de-
rived from the sale or other disposition of securities held for less than three
months.
As stated in the Prospectus under "Dividends and Taxes," the Funds may invest
in the type of private activity bonds the interest on which is not federally
tax-exempt to persons who are "substantial users" of the facilities financed by
such bonds or "related persons" of such "substantial users." Accordingly, the
Funds may not be appropriate investments for shareholders who are considered
either a "substantial user" or a "related person" within the meaning of the
Code. In general, a "substantial user" of a facility financed from the proceeds
of private activity bonds includes a "non-exempt person who regularly uses a
part of such facility in his trade or business." "Related persons" are in gen-
eral defined to include persons among whom there exists a relationship either
by family or business, which would
result in a disallowance of losses in transactions among them under various
provisions of the Code (or if they are members of the same controlled group of
corporations under the Code). For certain private activity bonds, this includes
a partnership and each of its partners (including their spouses and minor chil-
dren) and an S corporation and each of its shareholders (and their spouses and
minor children). Various combinations of these relationships may also consti-
tute "related persons" under the Code. The foregoing is not a complete state-
ment of all of the provisions of the Code covering the definitions of "substan-
tial user" and "related person." For additional information, investors should
consult their tax advisers before investing in the Funds.
Federal tax law imposes an alternative minimum tax with respect to both corpo-
rations and individuals. Interest on certain Municipal Obligations, such as
bonds issued to make loans for housing purposes or to private entities (but not
for certain tax-exempt organizations such as universities and non-profit hospi-
tals), is included as an item of tax preference in determining the amount of a
taxpayer's alternative minimum taxable income. To the extent that a Fund re-
ceives income from Municipal Obligations subject to the alternative minimum
tax, a portion of the dividends paid by it, although otherwise exempt from fed-
eral income tax, will be taxable to shareholders to the extent that their tax
liability is determined under the alternative minimum tax regime.
The Funds will annually supply shareholders with a report indicating the per-
centage of Fund income attributable to Municipal Obligations subject to the
federal alternative minimum tax.
In addition, the alternative minimum taxable income for corporations is in-
creased by 75% of the difference between an alternative measure of income ("ad-
justed current earnings") and the amount otherwise determined to be the alter-
native minimum taxable income. Interest on all Municipal Obligations, and
therefore all distributions by a Fund that would otherwise be tax-exempt, is
included in calculating the alternative measures of a corporation's taxable in-
come.
Individuals whose "modified income" exceeds a base amount will be subject to
Federal income tax on up to one-half of their social security or railroad re-
tirement benefits. Modified income currently includes adjusted gross income,
one-half of social security benefits and tax-exempt interest, including exempt-
interest dividends from the Fund. Individuals whose modified income exceeds the
adjusted base amount are required to include in gross income up to 85% of their
social security benefits.
39
<PAGE>
The Code provides that interest on indebtedness incurred or continued to pur-
chase or carry shares of any Fund is not deductible. Under rules used by the
IRS for determining when borrowed funds are considered used for the purpose of
purchasing or carrying particular assets, the purchase of shares of a Fund may
be considered to have been made with borrowed funds even though such funds are
not directly traceable to the purchase of shares.
Each 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 Funds and their shareholders. For complete provisions, refer-
ence should be made to the pertinent Code sections and Treasury Regulations.
The Code and Treasury Regulations are subject to change by legislative or ad-
ministrative action, and any such change may be retroactive with respect to
transactions of the Funds. Shareholders are advised to consult their own tax
advisers for more detailed information concerning the federal taxation of the
Funds and the income tax consequences to their shareholders.
STATE TAX MATTERS
Massachusetts. Individual shareholders of the Massachusetts Fund who are sub-
ject to Massachusetts income taxation will not be required to include that por-
tion of their federally tax-exempt dividends in Massachusetts gross income
which the Massachusetts Fund clearly identifies as directly attributable to in-
terest earned on Municipal Obligations issued by governmental authorities in
Massachusetts and which are specifically exempted from income taxation in Mas-
sachusetts; provided that such portion is identified in a written notice mailed
to the shareholders of the Massachusetts Fund not later than sixty days after
the close of the Massachusetts Fund's tax year. Also, the individual sharehold-
ers of the Massachusetts Fund will not be required to include in gross income
interest earned on obligations of United States possessions and territories to
the extent interest earned on such obligations is exempt from taxation by the
states pursuant to federal law.
Similarly, such shareholders will not be required to include in Massachusetts
gross income capital gain dividends designated by the Massachusetts Fund to the
extent such dividends are attributable to gains derived from Municipal Obliga-
tions issued by Massachusetts governmental authorities and are specifically ex-
empted from income taxation in Massachusetts, provided that such dividends are
identified in a written notice mailed to the shareholders of the Massachusetts
Fund not later than sixty days after the close of the Massachusetts Fund's tax
year. Lastly, any dividends of the Massachusetts Fund attributable to interest
on U.S. obligations exempt from state taxation and included in Federal gross
income will not be included in Massachusetts gross income if identified by the
Massachusetts Fund in a written notice mailed to shareholders within sixty days
after the close of the Massachusetts Fund's tax year. Massachusetts sharehold-
ers will be required to include all remaining dividends in their Massachusetts
income.
40
<PAGE>
To the extent not otherwise exempted from Massachusetts income taxation as pro-
vided above, the Massachusetts Fund's long-term capital gains for federal in-
come tax purposes will be taxed as long-term capital gains to the individual
shareholders of the Massachusetts Fund for purposes of Massachusetts income
taxation. Massachusetts shareholders will be required to recognize any taxable
gain or loss that is recognized for federal income tax purposes upon an ex-
change or redemption of their shares.
If a shareholder of the Massachusetts Fund is a Massachusetts business corpora-
tion or any foreign business corporation which exercises its charter, qualifies
to do business, actually does business or owns or uses any part of its capital,
plant or other property in Massachusetts, then it will be subject to Massachu-
setts excise taxation either as a tangible property corporation or as an intan-
gible property corporation. If the corporate shareholder is a tangible property
corporation, it will be taxed upon its net income allocated to Massachusetts
and the value of certain tangible property. If it is an intangible
property corporation, it will be taxed upon its net income and net worth allo-
cated to Massachusetts. Net income is gross income less allowable deductions
for federal income tax purposes, subject to specified modifications. Dividends
received from the Massachusetts Fund are includable in gross income and gener-
ally may not be deducted by a corporate shareholder in computing its net in-
come. The corporation's shares in the Massachusetts Fund are not includable in
the computation of the tangible property base of a tangible property corpora-
tion, but are includable in the computation of the net worth base of an intan-
gible property corporation.
Shares of the Massachusetts Fund will be includable in the Massachusetts gross
estate of a deceased individual shareholder who is a resident of Massachusetts
for purposes of the Massachusetts Estate Tax.
Shares of the Massachusetts Fund will be exempt from local property taxes in
Massachusetts.
New York. Individual shareholders of the New York Fund who are subject to New
York State (or New York City) personal income taxation will not be required to
include in their New York adjusted gross income that portion of their exempt-
interest dividends (as determined for federal income tax purposes) which the
New York Fund clearly identifies as directly attributable to interest earned on
Municipal Obligations issued by governmental authorities in New York ("New York
Municipal Obligations") and which are specifically exempted from personal in-
come taxation in New York State (or New York City), or interest earned on obli-
gations of United States possessions or territories to the extent interest
earned on such obligations is exempt from taxation by the states pursuant to
federal law. Distributions to individual shareholders of dividends derived from
interest that does not qualify as an exempt-interest dividend (as determined
for federal income tax purposes), distributions of exempt-interest dividends
(as determined for federal income tax purposes) which are derived from interest
earned on Municipal Obligations issued by governmental authorities in states
other than New York State, and distributions derived from interest earned on
federal obligations will be included in their New York adjusted gross income as
ordinary income.
Distributions to individual shareholders of the New York Fund of capital gain
dividends (as determined for federal income tax purposes) will be included in
their New York adjusted gross income as long-term capital gains. Distributions
to individual shareholders of the New York Fund of dividends derived from any
net income received from taxable temporary investments and any net short-term
41
<PAGE>
capital gains realized by the New York Fund will be included in their New York
adjusted gross income as ordinary income. Present New York law taxes long-term
capital gains at the rates applicable to ordinary income.
Gain or loss, if any, resulting from an exchange or redemption of shares of the
New York Fund that is recognized by individual shareholders of the New York
Fund for federal income tax purposes will be recognized for purposes of New
York State (or New York City) personal income taxation.
Generally, corporate shareholders of the New York Fund which are subject to New
York State franchise taxation (or New York City general corporation taxation)
will be taxed upon their entire net income, business and investment capital, or
at a flat rate minimum tax. Entire income will include dividends received from
the New York Fund (as determined for federal income tax purposes), as well as
any gain or loss recognized from an exchange or redemption of shares of the New
York Fund that is recognized for federal income tax purposes. Investment capi-
tal will include the corporate shareholder's shares of the New York Fund. Cor-
porate shareholders of the New York Fund, which are subject to the temporary
metropolitan transportation surcharge, will be required to pay a tax surcharge
on the franchise taxes imposed by New York State.
Shareholders of the New York Fund will not be subject to New York City unincor-
porated business taxation solely by reason of their ownership of shares of the
New York Fund. If a shareholder of the New York Fund is subject to the New York
City unincorporated business tax, income and gains derived from the New York
Fund will be subject to such tax, except for exempt-interest dividends (as de-
termined for federal income tax purposes) which the New York Fund clearly iden-
tifies as directly attributable to interest earned on New York Municipal Obli-
gations.
Shares of the New York Fund will be exempt from local property taxes in New
York State and New York City, but will be includible in the New York gross es-
tate of a deceased individual holder who is a resident of New York for purposes
of the New York Estate Tax.
The foregoing is a general and abbreviated summary of some of the important
state tax provisions of designated states presently in effect as they directly
govern the taxation of the Funds or their shareholders. The foregoing state tax
information assumes that each Fund qualifies as a regulated investment company
for federal income tax purposes under subchapter M of the Code, and that the
amounts so designated by each Fund to its shareholders qualify as "exempt-in-
terest dividends" under Section 852(b)(5) of the Code. These state provisions
are subject to change by legislative or administrative action, and any such
change may be retroactive with respect to transactions of the Funds. Sharehold-
ers of the Funds are advised to consult their own tax advisers in that regard.
ADDITIONAL INFORMATION ON THE PURCHASE OF FUND SHARES
Shares of each Fund may be purchased at the net asset value which is next com-
puted after receipt of an order, provided payment in federal funds is received
as described in the Prospectus. Shares of each Fund are issued in three series:
(i) the Service Plan series, (ii) the Distribution Plan series, and (iii) the
Institutional series. There is no sales charge on purchases of shares of any
series of the Fund.
42
<PAGE>
As discussed in the Prospectus under "How to Purchase Fund Shares--Distribution
and Service Plan," each Fund has adopted a Distribution and Service Plan (the
"Plan") with respect to its shares of the Distribution Plan series and the
Service Plan series. The Plan was adopted by a vote of the Board of Directors
of Nuveen Tax-Free Money Market Fund, Inc., including a majority of the direc-
tors who are not interested persons of Nuveen Tax-Free Money Market Fund, Inc.
and who have no direct or indirect financial interest in the operation of the
Plans. Under the Plan, the Distribution Plan series and the Service Plan series
of each Fund and Nuveen pay fees (i) in the case of the Service Plan series, to
banks and other organizations described in the Prospectus for the servicing of
accounts of shareholders of such series and (ii) in the case of the Distribu-
tion Plan series, to securities dealers for services rendered in the distribu-
tion of the shares of such series. In each case, such services may include,
among
other things, establishing and maintaining shareholder accounts, processing
purchase and redemption transactions, arranging for bank wires, performing sub-
accounting, answering shareholder inquiries and such other services as Nuveen
may request. Payments to such securities dealers and banks or other organiza-
tions will be at the rate of .25 of 1% per year of the average assets of serv-
iced accounts. A portion of such amounts will be paid by the Service Plan se-
ries and the Distribution Plan series of each Fund and a portion by Nuveen. For
the fiscal year ended February 29, 1996, Nuveen Tax-Free Money Market Fund,
Inc. paid fees to banks and other organizations under the Service Plan in the
amount of $30,649 in connection with the Massachusetts Fund and $299 in connec-
tion with the New York Fund. For the same period, Nuveen Tax-Free Money Market
Fund, Inc. paid fees to securities dealers under the Distribution Plan in the
amount of $21,424 in connection with the Massachusetts Fund and $13,414 in con-
nection with the New York Fund.
Under the Plan, the Controller or the Treasurer of Nuveen Tax-Free Money Market
Fund, Inc. will report quarterly to the Board of Directors for its review
amounts expended for services rendered under the Plan. The Plan may be termi-
nated at any time, without the payment of any penalty, by a vote of a majority
of the directors who are not "interested persons" and who have no direct or in-
direct financial interest in the Plan or by vote of a majority of the outstand-
ing voting securities of the applicable series of each Fund. The Plan may be
renewed from year to year if approved by a vote of the Board of Directors and a
vote of the non-interested directors who have no direct or indirect financial
interest in the Plan cast in person at a meeting called for the purpose of vot-
ing 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 judg-
ment and in light of their fiduciary duties under applicable law, that there is
a reasonable likelihood that the Plan will benefit such series of Nuveen Tax-
Free Money Market Fund, Inc. and its shareholders. The Plan may not be amended
to increase materially the cost which the Distribution Plan series or the Serv-
ice Plan series of each Fund may bear under the Plan without the approval of
the shareholders of the affected series, and any other material amendments of
the Plans 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. Dur-
ing the continuance of the Plan, the selection and nomination of the non-inter-
ested directors of Nuveen Tax-Free Money Market Fund, Inc. will be committed to
the discretion of the non-interested directors then in office.
No director of the Nuveen Tax-Free Money Market Fund, Inc., nor any interested
person of the Nuveen Tax-Free Money Market Fund, Inc., has any direct or indi-
rect financial interest in the Plans.
43
<PAGE>
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,
Nuveen Tax-Free Money Market Fund, Inc. believes that such laws should not pre-
clude a bank
from acting as a Service Organization. However, future changes in either fed-
eral or state statutes or regulations relating to the permissible activities of
banks and their subsidiaries or affiliates, as well as judicial or administra-
tive decisions or interpretations of statutes or regulations, could prevent a
bank from continuing to perform all or a part of its shareholder servicing ac-
tivities. If a bank were prohibited from so acting, its shareholder customers
would be permitted to remain shareholders of the Funds and alternative means
for continuing the servicing of such shareholders would be sought.
YIELD INFORMATION
As explained in the Prospectus, the historical performance of a series of a
Fund may be expressed in terms of "yield," "effective yield" or "taxable equiv-
alent yield." These various measures of performance are described below. Based
on the seven-day period ended February 29, 1996 the current yield, effective
yield and taxable equivalent yield (using a combined federal and state income
tax rate of 47.0% for Massachusetts and 44.0% for New York) for the series of
the Massachusetts and New York Funds were as follows:
<TABLE>
<CAPTION>
TAXABLE
CURRENT EFFECTIVE EQUIVALENT
YIELD YIELD YIELD
- -------------------------------------------------------------------
<S> <C> <C> <C>
MASSACHUSETTS FUND:
All Series 2.77% 2.81% 5.23%
NEW YORK FUND:
Service and Distribution Plan Series 2.75% 2.79% 4.91%
Institutional Series 2.74% 2.78% 4.89%
</TABLE>
Each series' 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 series'
net investment income per share for the period is divided by the price per
share (expected to remain constant at $1.00) at the beginning of the period,
the result (the "base period return") is divided by 7 and multiplied by 365,
and the resulting figure is carried to the nearest hundredth of one percent.
For the purpose of this calculation, the series' net investment income per
share includes its accrued interest income plus or minus amortized purchase
discount or premium less accrued expenses, but does not include realized capi-
tal gains or losses or unrealized appreciation or depreciation of investments.
44
<PAGE>
A series' 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)/3//6//5///7/ -1.
A series' taxable equivalent yield is computed by dividing that portion of the
series' yield which is tax-exempt by the remainder of (1 minus the stated fed-
eral income tax rate) and adding the product to that portion, if any, of the
yield of the series that is not tax-exempt.
Each series' yield will fluctuate, and the publication of annualized yield quo-
tations is not a representation of what an investment in the series will actu-
ally yield for any given future period. Actual yields will depend not only on
changes in interest rates on money market instruments during the period in
question, but also on such matters as the expenses attributable to the series.
In reports or other communications to shareholders or in advertising and sales
literature, Nuveen Tax-Free Money Market Fund, Inc. may compare the performance
of its Funds to that of other money market mutual funds tracked by Lipper Ana-
lytical 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. Performance 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 include the reinvestment
of all capital gain and income dividends for the periods covered by the calcu-
lations. As reported by Donoghue's, all investment results represent total re-
turn (annualized results for the period net of management fees and expenses)
and one year investment results are effective annual yields assuming reinvest-
ment of dividends.
A comparison of tax-exempt and taxable equivalent yields is one element to con-
sider in making an investment decision. Nuveen Tax-Free Money Market Fund, Inc.
may from time to time in its advertising and sales materials compare the then
current yields of its Funds as of a recent date with the yields on taxable in-
vestments such as corporate or U.S. Government bonds and bank CDs or money mar-
ket accounts, each of which has investment characteristics that may differ from
those of the Funds. 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 insured by an agency of the federal government.
The following tables show 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>
2.50% 3.00% 3.50% 4.00% 4.50% 5.00%
2.00% TAX- TAX- TAX- TAX- TAX- TAX-
TAXABLE TAX-FREE FREE FREE FREE FREE FREE 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.
45
<PAGE>
This table is for illustrative purposes only and is not intended to predict the
actual return you might earn on your investment. The Funds occasionally may ad-
vertise their 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.
INDEPENDENT PUBLIC ACCOUNTANTS AND CUSTODIAN
Arthur Andersen LLP, independent public accountants, 33 W. Monroe Street, Chi-
cago, Illinois 60603 have been selected as auditors for Nuveen Tax-Free Money
Market Fund, Inc. In addition to audit services, Arthur Andersen LLP provides
consultation and assistance on accounting, internal control, tax and related
matters. The financial statements of Nuveen Tax-Free Money Market Fund, Inc.
incorporated by reference elsewhere in this Statement of Additional Information
and the information set forth under "Financial Highlights" in the Prospectus
have been audited by Arthur Andersen LLP as indicated in their report with re-
spect thereto, and are included in reliance upon the authority of said firm as
experts in giving said report.
The custodian of the Nuveen Tax Free Money Market Fund, Inc.'s assets is The
Chase Manhattan Bank, N.A., 770 Broadway, New York, New York 10003.
46
<PAGE>
[NUVEEN LOGO]
Nuveen Tax-Free
Money Market Funds
Dependable tax-free
income for generations
TAX-FREE RESERVES
CALIFORNIA
MASSACHUSETTS
NEW YORK
[PHOTO OF COUPLE APPEARS HERE]
ANNUAL REPORT/FEBRUARY 29, 1996
<PAGE>
CONTENTS
3 Dear shareholder
5 Answering your questions
7 Fund performance
9 Report of independent public accountants
10 Portfolio of investments
23 Statement of net assets
24 Statement of operations
28 Statement of changes in net assets
35 Notes to financial statements
40 Financial highlights
<PAGE>
Dear
shareholder
[PHOTO OF RICHARD J. FRANKE APPEARS HERE]
After rising steeply throughout 1994, short-term interest rates fell in 1995.
Following an unprecedented series of seven rate increases between February 1994
and February 1995, the Fed responded to a climate of slowing economic growth and
diminished inflationary pressure by cutting rates three times over the past ten
months, the first reductions in nearly three years.
During market fluctuations such as these, Nuveen money market funds continue
to play an integral role in helping you reach your investment goals by offering
you an attractive level of tax-free current income, daily liquidity, and
diversification.
Overall, money market fund yields are lower than last year's rates due to the
effects of the Fed's actions. As of February 29, 1996, the seven-day annualized
yield for the money market funds covered in this report ranged from 2.75% to
2.87%. To match these yields, an investor in the 36% federal income tax bracket
would have had to earn at least 4.30% on taxable alternatives. For the state
money market funds, the addition of state taxes to the equation increases the
advantages provided by tax-free municipal bonds, raising the required taxable-
equivalent yield to a range of 4.62% to 4.95%.
As some of you may know, on June 30, 1996, I will be retiring as the Chairman
and Chief Executive Officer of John Nuveen & Co.
"Nuveen money
market funds
continue to play
an integral role in
helping you reach
your investment goals."
3
<PAGE>
Incorporated and as Chairman of the board of the Nuveen Funds. As I look back
over the 41 years I have spent at Nuveen, I'm proud to have been associated with
a firm that holds integrity, honesty, and value as the cornerstones of its
business. I'm confident that these traditions will continue to be the hallmarks
of Nuveen.
Over the past few years, I have been working closely with other Nuveen
managers to ensure that the company and the funds continue to be guided by
strong and talented management following my retirement. Timothy Schwertfeger,
who has been with Nuveen since 1977, has been named my successor as Chief
Executive Officer and Chairman of Nuveen. He currently serves as executive vice
president of Nuveen and president of the Nuveen Funds. I am very confident in
his abilities and the abilities of the entire Nuveen management team.
The transition in management has been well planned, and it will have no effect
on the way your funds are managed. Our management team is committed to
continuing Nuveen's successful tradition of prudent management, helping our
shareholders meet their need for tax-free investment income with a full range of
investment choices.
Our commitment to the municipal marketplace remains as strong as ever. Our
focus will continue to be on providing research-oriented management and
maintaining our leadership role in the municipal bond market. We anticipate many
more years of progress and accomplishment for our shareholders and our firm.
I'd like to take this occasion to thank you for selecting Nuveen Tax-Free
Money Market Fund investments. We appreciate your investment in Nuveen and we
look forward to reporting continued success in the years ahead.
Sincerely,
/s/ Richard J. Franke
Richard J. Franke
Chairman of the Board
April 15, 1996
4
<PAGE>
Answering your
questions
Tom Spalding, head of Nuveen's portfolio management team, discusses factors
affecting Nuveen's Tax-Free Money Market Funds and the outlook for 1996.
How did the
investment climate
over the past year
affect these funds?
In 1995, the combination of slow economic growth and low inflation created the
ideal environment for the Federal Reserve Board to cut interest rates. In July
and December 1995 and again at the end of January 1996, a succession of short-
term rate cuts contributed to the decline of municipal bond yields. Yet, as of
February 29, 1996, Nuveen money market funds continued to enjoy annualized
taxable-equivalent yields of 4.30% or better.
What are some of
the advantages of
investing in short-
term funds?
Money market fund investors receive attractive tax-free income compared with
other short-term vehicles, along with share price stability, daily liquidity,
and investment convenience. When combined with the flexibility of checkwriting
access to funds, money market funds remain a valuable and convenient investment
alternative.
5
<PAGE>
[PHOTO OF PAINTING APPEARS HERE]
Tom Spalding, head of Nuveen's portfolio management team, answers investors'
questions on developments in the municipal market.
What is Nuveen's
market outlook
for 1996?
Although inflation currently remains low and economic growth is moderating, we
continue to watch these factors for potential changes and impact on the bond
markets. During this election year, we are also closely monitoring any changes
in economic policy that may affect the municipal market. A combination of
various factors-such as cutbacks in federal spending, consumer confidence
levels, and concerns about corporate earnings projections-could keep the economy
growing at a slow pace throughout the year.
6
<PAGE>
NUVEEN TAX-FREE
RESERVES, INC.
Tax-Free Reserves
Shareholders continued to enjoy attractive tax-free dividends over the past 12
months, even as interest rates fell from levels of a year ago. On a
taxable-equivalent basis, the fund's current 7-day yield on net asset value was
4.30% on February 29, 1996.
[CHART APPEARS HERE]
<TABLE>
<CAPTION>
<S> <C>
3/95................................. 3.25
5/95................................. 3.66
7/95................................. 3.01
9/95................................. 3.21
11/95................................ 3.25
1/96................................. 2.87
</TABLE>
<TABLE>
<CAPTION>
- --------------------------------------------
FUND HIGHLIGHTS 2/29/96
- --------------------------------------------
<S> <C>
Current 7-day SEC yield on NAV 2.75%
Taxable-equivalent yield on NAV* 4.30%
Federal tax rate 36.0%
Total net assets ($000) 339,662
- --------------------------------------------
</TABLE>
*An investor subject to the indicated income tax rate would need to receive this
return from a fully taxable investment to equal the stated 7-day annualized
yield on NAV.
NUVEEN CALIFORNIA TAX-FREE
MONEY MARKET FUND
California
Shareholders continued to enjoy attractive tax-free dividends over the past 12
months, even as interest rates fell from levels of a year ago. On a
taxable-equivalent basis, the fund's current 7-day yield on net asset value was
4.95% on February 29, 1996.
[CHART APPEARS HERE]
<TABLE>
<CAPTION>
<S> <C>
3/95................................. 3.31
5/95................................. 3.78
7/95................................. 2.98
9/95................................. 3.32
11/95................................ 3.29
1/96................................. 2.89
</TABLE>
<TABLE>
<CAPTION>
- --------------------------------------------
FUND HIGHLIGHTS 2/29/96
- --------------------------------------------
<S> <C>
Current 7-day SEC yield on NAV 2.87%
Taxable-equivalent yield on NAV* 4.95%
Combined state and federal tax rate 42.0%
Total net assets ($000) 178,134
- --------------------------------------------
</TABLE>
*An investor subject to the indicated income tax rate would need to receive this
return from a fully taxable investment to equal the stated 7-day annualized
yield on NAV.
7
<PAGE>
NUVEEN MASSACHUSETTS TAX-FREE
MONEY MARKET FUND
Massachusetts
Shareholders continued to enjoy attractive tax-free dividends over the past 12
months, even as interest rates fell from levels of a year ago. On a
taxable-equivalent basis, the fund's current 7-day yield on net asset value was
4.90% on February 29, 1996.
[CHART APPEARS HERE]
<TABLE>
<CAPTION>
<S> <C>
3/95................................. 3.16
5/95................................. 3.62
7/95................................. 2.98
9/95................................. 3.11
11/95................................ 3.12
1/96................................. 2.84
</TABLE>
<TABLE>
<CAPTION>
- --------------------------------------------
FUND HIGHLIGHTS 2/29/96
- --------------------------------------------
<S> <C>
Current 7-day SEC yield on NAV 2.77%
Taxable-equivalent yield on NAV* 4.90%
Federal tax rate 43.5%
Total net assets ($000) 68,080
- --------------------------------------------
</TABLE>
*An investor subject to the indicated income tax rate would need to receive this
return from a fully taxable investment to equal the stated 7-day annualized
yield on NAV.
NUVEEN NEW YORK TAX-FREE
MONEY MARKET FUND
New York
Shareholders continued to enjoy attractive tax-free dividends over the past 12
months, even as interest rates fell from levels of a year ago. On a
taxable-equivalent basis, the fund's current 7-day yield on net asset value was
4.62% on February 29, 1996.
[CHART APPEARS HERE]
<TABLE>
<CAPTION>
<S> <C>
3/95................................. 3.19
5/95................................. 3.67
7/95................................. 2.87
9/95................................. 3.17
11/95................................ 3.23
1/96................................. 3.18
</TABLE>
<TABLE>
<CAPTION>
- --------------------------------------------
FUND HIGHLIGHTS 2/29/96
- --------------------------------------------
<S> <C>
Current 7-day SEC yield on NAV 2.75%
Taxable-equivalent yield on NAV* 4.62%
Combined state and federal tax rate 40.5%
Total net assets ($000) 32,203
- --------------------------------------------
</TABLE>
*An investor subject to the indicated income tax rate would need to receive this
return from a fully taxable investment to equal the stated 7-day annualized
yield on NAV.
8
<PAGE>
REPORT OF INDEPENDENT
PUBLIC ACCOUNTANTS
NUVEEN TAX-FREE MONEY MARKET FUNDS ANNUAL REPORT
FEBRUARY 29, 1996
To the Board of Directors and Shareholders of
Nuveen Tax-Free Reserves, Inc.
Nuveen California Tax-Free Fund, Inc.,
Nuveen Tax-Free Money Market Fund, Inc.:
We have audited the accompanying statements of net assets of NUVEEN TAX-FREE
RESERVES, INC. (a Maryland Corporation), NUVEEN CALIFORNIA TAX-FREE FUND, INC.
(comprising the Nuveen California Tax-Free Money Market Fund) (a Maryland
Corporation) and NUVEEN TAX-FREE MONEY MARKET FUND, INC. (comprising the Nuveen
Massachusetts and New York Tax-Free Money Market Funds) (a Minnesota
Corporation), including the portfolios of investments, as of February 29, 1996,
and the related statements of operations for the year then ended, the statements
of changes in net assets for each of the two years in the period then ended and
the financial highlights for the periods indicated thereon. These financial
statements and financial highlights are the responsibility of the Funds'
management. Our responsibility is to express an opinion on these financial
statements and financial highlights based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of securities owned as of
February 29, 1996, by correspondence with the custodian and brokers. As to
securities purchased but not received, we requested confirmation from brokers
and, when replies were not received, we carried out other alternative auditing
procedures. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the net assets of each of the
respective funds constituting Nuveen Tax-Free Reserves, Inc., Nuveen California
Tax-Free Fund, Inc. and Nuveen Tax-Free Money Market Fund, Inc. as of February
29, 1996, the results of their operations for the year then ended, the changes
in their net assets for each of the two years in the period then ended, and the
financial highlights for the periods indicated thereon in conformity with
generally accepted accounting principles.
ARTHUR ANDERSEN LLP
Chicago, Illinois,
April 8, 1996
9
<PAGE>
PORTFOLIO OF INVESTMENTS
NUVEEN TAX-FREE RESERVES, INC.
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------
PRINCIPAL AMORTIZED
AMOUNT DESCRIPTION RATINGS* COST
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
ALABAMA - 6.2%
$ 7,215,000 Anniston Industrial Development Board (Union Foundry Company),
Variable Rate Demand Bonds, 3.400%, 6/01/05+ VMIG-1 $ 7,215,000
13,800,000 Birmingham Medical Clinic Board (University of Alabama Health
Services Foundation), Variable Rate Demand Bonds,
3.550%, 12/01/26+ A-1+ 13,800,000
- -----------------------------------------------------------------------------------------------------------------------
ARIZONA - 6.7%
10,000,000 Apache County Industrial Development, Pollution Control (Tucson
Electric), Variable Rate Demand Bonds, 3.450%, 10/01/21+ VMIG-1 10,000,000
7,600,000 Mesa Municipal Development Corporation, Special Tax, Series 1985,
Commercial Paper, 3.250%, 5/31/96 VMIG-1 7,600,000
5,000,000 Mesa Municipal Development Corporation, Special Tax, Series 1995,
Commercial Paper, 3.200%, 4/29/96 VMIG-1 5,000,000
- -----------------------------------------------------------------------------------------------------------------------
ARKANSAS - 2.8%
2,400,000 Arkansas Hospital Equipment Finance Authority (Washington Regional
Medical Center), Variable Rate Demand Bonds, 3.350%, 10/01/98+ VMIG-1 2,400,000
7,000,000 University of Arkansas-Board of Trustees (UAMS Campus-Series 1994),
Variable Rate Demand Bonds, 3.400%, 12/01/19+ VMIG-1 7,000,000
- -----------------------------------------------------------------------------------------------------------------------
CALIFORNIA - 2.1%
5,000,000 California School Cash Reserve Program, Series 1995 Notes,
4.750%, 7/03/96 MIG-1 5,016,318
2,000,000 Orange County Apartment Development (Monarch Bay Apartments
Project), Variable Rate Demand Bonds, 3.450%, 10/01/07+ A-1 2,000,000
- -----------------------------------------------------------------------------------------------------------------------
DELAWARE - 3.4%
11,682,500 New Castle County Economic Development, Revenue Refunding
(Henderson/McGuire Partners Project), Series 1994, Variable
Rate Demand Bonds, 3.450%, 8/15/20+ A-1 11,682,500
- -----------------------------------------------------------------------------------------------------------------------
DISTRICT OF COLUMBIA - 3.6%
9,000,000 District of Columbia General Obligation, General Fund Recovery,
Variable Rate Demand Bonds, 3.550%, 6/01/03+ A-1+ 9,000,000
3,210,000 District of Columbia (American University Project), Variable Rate
Demand Bonds, 3.300%, 10/01/15+ VMIG-1 3,210,000
- -----------------------------------------------------------------------------------------------------------------------
FLORIDA - 4.5%
4,210,000 Florida Municipal Power Agency, Initial Pooled Loan Program, Series
1995A, Commercial Paper, 3.150%, 5/24/96 A-1 4,210,000
3,100,000 Pasco Multi-Family Housing, Carlton Arms of Magnolia Valley,
Series 1985, Variable Rate Demand Bonds, 3.400%, 12/01/07+ VMIG-1 3,100,000
- -----------------------------------------------------------------------------------------------------------------------
</TABLE>
10
<PAGE>
<TABLE>
<CAPTION>
NUVEEN TAX-FREE MONEY MARKET FUNDS ANNUAL REPORT
FEBRUARY 29, 1996
- -----------------------------------------------------------------------------------------------------------------------------------
PRINCIPAL AMORTIZED
AMOUNT DESCRIPTION RATINGS* COST
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
FLORIDA (CONTINUED)
$ 4,800,000 Sarasota County Public Hospital District (Sarasota Memorial Hospital), A-1 $ 4,800,000
Commercial Paper, 3.300%, 7/30/96
3,300,000 Sunshine State Governmental Financing Commission, Commercial
Paper, 3.200%, 5/14/96 VMIG-1 3,300,000
- -----------------------------------------------------------------------------------------------------------------------------------
GEORGIA - 3.9%
3,400,000 Georgia Municipal Gas Authority (Transco Portfolio Project),
Commercial Paper, 3.250%, 5/24/96 VMIG-1 3,400,000
10,000,000 Fulco Hospital Authority, Revenue Anticipation Certificates (St. Joseph's
Hospital of Atlanta Project), Commercial Paper, 3.300%, 4/09/96 VMIG-1 10,000,000
- -----------------------------------------------------------------------------------------------------------------------------------
HAWAII - 1.0%
3,400,000 Hawaii Department of Budget and Finance, Special Purpose (Adventist
Health System), Variable Rate Demand Bonds, 3.550%, 9/01/99+ A-1 3,400,000
- -----------------------------------------------------------------------------------------------------------------------------------
ILLINOIS - 15.6%
9,200,000 Illinois Development Finance Authority, Pollution Control
(Diamond-Star Motors Corporation), Variable Rate Demand Bonds,
3.550%, 12/01/08+ P-1 9,200,000
6,000,000 Illinois Educational Facilities Authority, Shedd Aquarium Society,
Series 1987B, Commercial Paper, 3.350%, 5/08/96 VMIG-1 6,000,000
3,300,000 Illinois Health Facilities Authority (Condell Memorial Hospital),
Variable Rate Demand Bonds, 3.600%, 11/01/05+ VMIG-1 3,300,000
5,000,000 Illinois Health Facilities Authority (Victory Health Services Project),
Series 1991, Commercial Paper, 3.200%, 3/20/96 VMIG-1 5,000,000
3,100,000 Chicago General Obligation Tender Notes, Series 1995-A, 3.750%,
10/31/96 (Mandatory put 5/01/96) VMIG-1 3,100,000
3,800,000 Chicago General Obligation, Variable Rate Demand Bonds,
3.900%, 1/01/10+ VMIG-1 3,800,000
12,700,000 Chicago O'Hare International Airport (American Airlines), Variable
Rate Demand Bonds, 3.550%, 12/01/17+ P-1 12,700,000
5,700,000 Decatur Water Bonds (New South Water Treatment), Series 1985,
Commercial Paper, 3.500%, 4/08/96 VMIG-1 5,700,000
4,300,000 Decatur Water Bonds (South Water Treatment), Series 1985,
Commercial Paper, 3.300%, 4/11/96 VMIG-1 4,300,000
- -----------------------------------------------------------------------------------------------------------------------------------
INDIANA - 2.5%
6,000,000 Indianapolis Economic Development (Yellow Freight), Commercial
Paper, 4.500%, 1/15/97 N/R 6,000,000
2,500,000 Indianapolis Economic Development (Children's Museum of
Indianapolis), Series 1995, Variable Rate Demand Bonds,
3.350%, 10/01/25+ A-1+ 2,500,000
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
11
<PAGE>
PORTFOLIO OF INVESTMENTS
NUVEEN TAX-FREE RESERVES, INC.--CONTINUED
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------
PRINCIPAL AMORTIZED
AMOUNT DESCRIPTION RATINGS* COST
<C> <S> <C> <C>
- --------------------------------------------------------------------------------------------------------
IOWA - 2.1%
$ 4,250,000 Iowa School Corporation, Warrant Certificates, Series 1995-96A,
Municipal Note, 4.750%, 6/28/96 MIG-1 $ 4,261,967
2,900,000 Eddyville Pollution Control Heartland Lysine Inc., Variable Rate
Demand Bonds, 3.700%, 11/01/03+ N/R 2,900,000
- --------------------------------------------------------------------------------------------------------
KENTUCKY - 2.7%
9,005,000 Hancock County Industrial Development (Southwire Company Project),
Variable Rate Demand Bonds, 3.800%, 7/01/10+ N/R 9,005,000
- --------------------------------------------------------------------------------------------------------
LOUISIANA - 3.8%
13,000,000 Louisiana Recovery District, Sales Tax, Variable Rate Demand Bonds,
3.500%, 7/01/98+ VMIG-1 13,000,000
- --------------------------------------------------------------------------------------------------------
MASSACHUSETTS - 1.2%
4,200,000 Massachusetts Industrial Finance Agency (Showa Women's Institute/
Boston), Variable Rate Demand Bonds, 3.600%, 3/15/04+ VMIG-1 4,200,000
- --------------------------------------------------------------------------------------------------------
MICHIGAN - 2.5%
7,100,000 Michigan Job Development Authority, Limited Obligation
(Frankenmuth Bavarian Inn), Variable Rate Demand Bonds,
3.625%, 8/15/15+ A-1 7,100,000
1,370,000 Warren Economic Development Corporation, Limited Obligation
(The Prince Company--Michigan Division), Variable Rate Demand
Bonds, 3.600%, 11/01/99+ P-1 1,370,000
- --------------------------------------------------------------------------------------------------------
MINNESOTA - 2.6%
6,330,000 Bloomington Commercial Development (James Avenue Associates
Project), Variable Rate Demand Bonds, 3.400%, 12/01/15+ A-1+ 6,330,000
2,500,000 St. Paul Housing and Redevelopment Authority, District Heating,
Variable Rate Demand Bonds, 3.900%, 12/01/12+ A-1 2,500,000
- --------------------------------------------------------------------------------------------------------
MISSISSIPPI - 1.8%
6,200,000 Lawrence County Pollution Control (Georgia-Pacific Corp. Project),
Series 1995, Variable Rate Demand Bonds, 3.275%, 12/01/00+ Aa-3 6,200,000
- --------------------------------------------------------------------------------------------------------
MISSOURI - 2.7%
3,600,000 Missouri Environmental Improvement and Energy Resources Authority,
Pollution Control, Series 1985A (Union Electric Company),
Commercial Paper, 3.250%, 4/04/96 VMIG-1 3,600,000
5,600,000 Missouri Environmental Improvement and Energy Resources Authority,
Pollution Control (Union Electric Company), Commercial Paper,
3.200%, 5/09/96 VMIG-1 5,600,000
- --------------------------------------------------------------------------------------------------------
</TABLE>
12
<PAGE>
NUVEEN TAX-FREE MONEY MARKET FUNDS ANNUAL REPORT
FEBRUARY 29, 1996
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------
PRINCIPAL AMORTIZED
AMOUNT DESCRIPTION RATINGS* COST
- --------------------------------------------------------------------------------------------------------
<C> <S> <C> <C>
NEVADA - 2.1%
$ 7,000,000 Clark County Industrial Development, Refunding Bonds (Nevada Power
Company Project), Series 1995 C, Variable Rate Demand Bonds,
3.300%, 10/01/30+ A-1+ $ 7,000,000
- --------------------------------------------------------------------------------------------------------
NORTH CAROLINA - 3.5%
2,400,000 Wake County Industrial Facilities and Pollution Control Financing
Authority, Series 1990B, Commercial Paper, 3.400%, 4/10/96 P-1 2,400,000
6,630,000 Wake County Industrial Facilities and Pollution Control Financing
Authority, Series 1990A, Commercial Paper, 3.350%, 4/30/96 P-1 6,630,000
3,000,000 Wake County Industrial Facilities and Pollution Control Financing
Authority, Variable Rate Demand Bonds, 3.600%, 10/01/15+ VMIG-1 3,000,000
- --------------------------------------------------------------------------------------------------------
OHIO - 11.1%
9,200,000 Centerville Health Care (Bethany Lutheran Village Continuing Care
Facilities Expansion Project), Variable Rate Demand Bonds,
3.350%, 5/01/08+ VMIG-1 9,200,000
6,900,000 Cincinnati and Hamilton County Port Authority (Kenwood Office
Associates), Variable Rate Demand Bonds, 3.600%, 9/01/25+ A-1 6,900,000
3,795,000 Franklin County Hospital Facilities (Traditions at Mill Run),
Floating Rate Demand Bonds, 3.450%, 11/01/14+ N/R 3,795,000
2,080,000 Hamilton County Healthcare Revenue Bonds, Series 1995 (Community
Limited Care Dialysis Center Project), Variable Rate Demand
Bonds, 3.400%, 9/01/05+ N/R 2,080,000
8,300,000 Montgomery County (Miami Valley Hospital), Series C, Commercial
Paper, 3.800%, 4/04/96 VMIG-1 8,300,000
7,500,000 Summit County, Twinsburg City School District, Unlimited Tax,
General Obligation Improvement Notes, 4.500%, 6/06/96 N/R 7,513,769
- --------------------------------------------------------------------------------------------------------
TENNESSEE - 3.0%
6,900,000 Clarksville Public Building Authority, Pooled Financing,
Series 1994, Variable Rate Demand Bonds, 3.400%, 6/01/24+ A-1 6,900,000
3,000,000 Montgomery County Public Building Authority, Pooled Financing,
Series 1995, Variable Rate Demand Bonds, 3.400%, 3/01/25+ A-1 3,000,000
- --------------------------------------------------------------------------------------------------------
VIRGINIA - 2.7%
3,000,000 Albemarle County Industrial Development Authority (The University
of Virginia Health Services Foundation), Series 1996, Variable
Rate Demand Bonds, 3.350%, 2/01/26+ A-1 3,000,000
2,600,000 Norfolk Industrial Development Authority (Norfolk, Virginia Beach,
Portsmouth), Industrial Development, Variable Rate Demand Bonds,
5.363%, 11/01/04+ N/R 2,600,000
3,300,000 Richmond Industrial Development Authority (Richmond MSA),
Variable Rate Demand Bonds, 5.363%, 11/01/04+ N/R 3,300,000
- --------------------------------------------------------------------------------------------------------
</TABLE>
13
<PAGE>
PORTFOLIO OF INVESTMENTS
NUVEEN TAX-FREE RESERVES, INC.--CONTINUED
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------
PRINCIPAL AMORTIZED
AMOUNT DESCRIPTION RATINGS* COST
<C> <S> <C> <C>
- ----------------------------------------------------------------------------------------------------------
WASHINGTON - 3.9%
$ 5,300,000 Washington Health Care Facilities Authority (Adventist Health
System West/Walla Walla General), Variable Rate Demand Bonds,
3.450%, 9/01/09+ A-1 $ 5,300,000
3,300,000 Washington Housing Finance Commission (Crista Ministries Project),
Series 1991B, Variable Rate Demand Bonds, 3.400%, 7/01/11+ VMIG-1 3,300,000
4,700,000 Washington Public Power Supply System (Nuclear Project 3), Revenue
Refunding, Series 1993-3A2, Variable Rate Demand Bonds,
3.200%, 7/01/18+ VMIG-1 4,700,000
- ----------------------------------------------------------------------------------------------------------
WISCONSIN - 0.8%
2,800,000 Wisconsin Health and Educational Facilities Authority (Alexian
Village of Milwaukee), Series 1988A, Commercial Paper,
3.350%, 4/10/96 VMIG-1 2,800,000
- ----------------------------------------------------------------------------------------------------------
$335,477,500 Total Investments - 98.8% 335,519,554
============----------------------------------------------------------------------------------------------
Other Assets Less Liabilities - 1.2% 4,142,910
- ----------------------------------------------------------------------------------------------------------
Net Assets - 100% $339,662,464
==========================================================================================================
</TABLE>
* Ratings (not covered by the report of independent public accountants): Using
the higher of Standard & Poor's or Moody's rating.
N/R - Investment is not rated.
+ The security has a maturity of more than one year, but has variable rate and
demand features which qualify it as a short-term security. The rate disclosed is
that currently in effect. This rate changes periodically based on market
conditions or a specified market index.
See accompanying notes to financial statements.
14
<PAGE>
NUVEEN TAX-FREE MONEY MARKET FUNDS ANNUAL REPORT
FEBRUARY 29, 1996
NUVEEN CALIFORNIA TAX-FREE MONEY MARKET FUND
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
PRINCIPAL AMORTIZED
AMOUNT DESCRIPTION RATINGS* COST
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
$ 5,000,000 California Health Facilities Authority (Catholic Healthcare West), Series
1995B, Variable Rate Demand Bonds, 3.000%, 7/01/05+ VMIG-1 $ 5,000,000
2,600,000 California Health Facilities Authority (St. Joseph Health System), Series
1985-A, Variable Rate Demand Bonds, 3.150%, 7/01/13+ VMIG-1 2,600,000
2,000,000 California Health Facilities Authority (Sutter Health), Series 1990B,
Variable Rate Demand Bonds, 3.300%, 3/01/20+ VMIG-1 2,000,000
2,400,000 California Health Facilities Authority (St. Joseph Health System),
Series 1991-B, Variable Rate Demand Bonds, 3.100%, 7/01/09+ VMIG-1 2,400,000
7,000,000 California Pollution Control Finance Authority (Pacific Gas and Electric),
Series D 1988, Commercial Paper, 3.300%, 3/14/96 A-1 7,000,000
7,500,000 California Pollution Control Finance Authority (Shell Oil Company),
Variable Rate Demand Bonds, 3.150%, 10/01/11+ VMIG-1 7,500,000
3,000,000 California School Cash Reserve Program, Series 1995 Notes,
4.750%, 7/03/96 MIG-1 3,009,790
4,780,000 California State Revenue Anticipation Warrants, 1994 Series C,
5.750%, 4/25/96 Aaa 4,793,887
5,610,000 California Statewide Community Development Authority, Certificates of
Participation, Series 1993, Variable Rate Demand Bonds, 3.250%, 12/01/18+ A-1+ 5,610,000
3,250,000 Chico Multi-Family Housing (Sycamore Glen Project), Series 1995,
Variable Rate Demand Bonds, 3.550%, 4/07/14+ N/R 3,250,000
4,500,000 Contra Costa Multi-Family Mortgage Revenue Refunding (Delta Square
Project), Series 1990A,Variable Rate Demand Bonds, 3.150%, 8/01/07+ VMIG-1 4,500,000
5,000,000 Eastern Municipal Water District, Water and Sewer Revenue, Series 1993B,
Variable Rate Demand Bonds, 3.000%, 7/01/20+ VMIG-1 5,000,000
4,900,000 Grand Terrace Redevelopment Agency, Multi-Family Housing (Mount
Vernon Villas Project), Variable Rate Demand Bonds, 3.350%, 12/01/11+ A-1 4,900,000
3,000,000 Hayward Housing Authority, Multi-Family Mortgage, Revenue
Refunding, Series 1993A (Huntwood Terrace), Variable Rate Demand
Bonds, 3.600%, 3/01/27+ A-1 3,000,000
4,000,000 Hillsborough Certificates of Participation, Water and Sewer System
Project, Series 1995A, Variable Rate Demand Bonds, 3.750%, 6/01/15+ A-1 4,000,000
9,000,000 Kern Community College District, Certificates of Participation, Series
1995, Variable Rate Demand Bonds, 3.550%, 1/01/25+ A-2 9,000,000
8,000,000 Los Angeles County Metropolitan Transportation Authority, Second
Subordinate Sales Tax Revenue, Commercial Paper, 3.100%, 4/10/96 A-1 8,000,000
8,400,000 Monterey County Financing Authority (Reclamation and Distribution
Project), Series 1995A, Variable Rate Demand Bonds, 3.450%, 9/01/36+ VMIG-1 8,400,000
7,200,000 Oakland Certificates of Participation, Capital Improvement
Project, Variable Rate Demand Bonds, 3.400%, 12/01/15+ N/R 7,200,000
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
15
<PAGE>
PORTFOLIO OF INVESTMENTS
NUVEEN CALIFORNIA TAX-FREE MONEY MARKET FUND-CONTINUED
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
PRINCIPAL AMORTIZED
AMOUNT DESCRIPTION RATINGS* COST
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
$ 7,900,000 Orange County Apartment Development (Monarch Bay Apartments
Project), Variable Rate Demand Bonds, 3.450%, 10/01/07+ A-1 $ 7,900,000
3,800,000 Orange County Apartment Development (Robinson Ranch Apartments
Project), Variable Rate Demand Bonds, 3.450%, 11/01/08+ VMIG-1 3,800,000
5,000,000 Orange County Apartment Development (Niguel Summit), Variable
Rate Demand Bonds, 3.200%, 11/01/09+ VMIG-1 5,000,000
7,000,000 Sacramento Municipal Utility District, Series I, Commercial Paper,
2.950%, 5/24/96 A-1+ 7,000,000
1,200,000 San Bernardino Multi-Family Housing (Castle Park Apartments),
Variable Rate Demand Bonds, 3.650%, 11/01/05+ VMIG-1 1,200,000
2,200,000 San Diego County Rincon Del Diablo Municipal Water District, Rincon
Public Facilities Corporation, Commercial Paper, 3.750%, 5/01/96 VMIG-1 2,200,000
3,000,000 San Diego Housing Authority, Multi-Family Housing, Revenue Refunding,
Series 1993-A (Carmel Del Mar Apartments), Variable
Rate Demand Bonds, 3.150%, 12/01/15+ A-1+ 3,000,000
7,000,000 San Dimas Industrial Development (Bausch & Lomb Incorporated),
Variable Rate Demand Bonds, 3.750%, 12/01/15+ N/R 7,000,000
7,600,000 Santa Ana Health Facilities Authority (Town & Country), Variable Rate
Demand Bonds, 3.250%, 10/01/20+ A-1 7,600,000
4,000,000 Santa Clara County Transit District Refunding Equipment, Trust
Certificates, Variable Rate Demand Bonds, 3.200%, 6/01/15+ VMIG-1 4,000,000
6,000,000 Santa Paula Public Financing Authority, Series 1996, Water System
Acquisition Project, Variable Rate Demand Bonds, 3.700%, 2/01/26+ A-1 6,000,000
5,000,000 Solano County Tax and Revenue Anticipation Notes, Series 1995-96,
4.500%, 11/01/96 MIG-1 5,020,958
4,000,000 Southeast Resource Recovery Facilities Authority, Series 1995A, Variable
Rate Demand Bonds, 3.300%, 12/01/18+ A-1 4,000,000
6,400,000 Torrance Hospital (Little Company of Mary Hospital-Torrance
Memorial Hospital), Variable Rate Demand Bonds, 3.900%, 2/01/22+ A-2 6,400,000
2,640,000 Vista Multi-Family Housing (Shadowridge Apartments), Variable Rate
Demand Bonds, 3.050%, 5/01/05+ A-1+ 2,640,000
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
16
<PAGE>
NUVEEN TAX-FREE MONEY MARKET FUNDS ANNUAL REPORT
FEBRUARY 29, 1996
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
PRINCIPAL AMORTIZED
AMOUNT DESCRIPTION RATINGS* COST
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
$ 4,500,000 Visalia Public Finance Authority, Certificates of Participation, 1991
Convention Center Expansion Project, Variable Rate Demand
Bonds, 3.350%, 12/01/16+ VMIG-1 $ 4,500,000
3,000,000 Washington Township Hospital District, 1984 Issue A, Variable Rate
Demand Bonds, 3.450%, 1/01/16+ VMIG-1 3,000,000
- ------------------------------------------------------------------------------------------------------------------------------------
$ 177,380,000 Total Investments - 99.6% 177,424,635
- ------------------------------------------------------------------------------------------------------------------------------------
Other Assets Less Liabilities - 0.4% 709,596
- ------------------------------------------------------------------------------------------------------------------------------------
Net Assets - 100% $ 178,134,231
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
* Ratings (not covered by the report of independent public accountants): Using
the higher of Standard & Poor's or Moody's rating.
N/R - Investment is not rated.
+ The security has a maturity of more than one year, but has variable rate and
demand features which qualify it as a short-term security. The rate disclosed
is that currently in effect. This rate changes periodically based on market
conditions or a specified market index.
See accompanying notes to financial statements.
17
<PAGE>
PORTFOLIO OF INVESTMENTS
NUVEEN MASSACHUSETTS TAX-FREE MONEY MARKET FUND
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
PRINCIPAL AMORTIZED
AMOUNT DESCRIPTION RATINGS* COST
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
$ 2,000,000 Massachusetts Municipal Wholesale Electric Company, Series 1994,
Variable Rate Demand Bonds, 3.050%, 7/01/19+ A-1+ $ 2,000,000
2,200,000 Massachusetts General Obligation Notes, Series 1995A,
4.250%, 6/12/96 MIG-1 2,203,888
1,000,000 Massachusetts Dedicated Income Tax, Series 1990E, Variable Rate
Demand Bonds, 3.350%, 12/01/97+ VMIG-1 1,000,000
3,500,000 Massachusetts Health and Educational Facilities Authority (Fallon
Health Care), Variable Rate Demand Bonds, 3.400%, 4/14/98+ A-1+ 3,500,000
1,420,000 Massachusetts Health and Educational Facilities Authority (Newbury
College), Variable Rate Demand Bonds, 3.100%, 11/01/18+ N/R 1,420,000
700,000 Massachusetts Health and Educational Facilities Authority (Capital Asset
Program), Variable Rate Demand Bonds, 3.700%, 1/01/35+ VMIG-1 700,000
3,500,000 Massachusetts Health and Educational Facilities Authority (Harvard
University), Variable Rate Demand Bonds, 2.800%, 8/01/17+ VMIG-1 3,500,000
2,500,000 Massachusetts Health and Educational Facilities Authority (Brigham
and Women's Hospital), Variable Rate Demand Bonds, 3.500%, 7/01/17+ VMIG-1 2,500,000
1,000,000 Massachusetts Health and Educational Facilities Authority (M.I.T.
Project), Variable Rate Demand Bonds, 2.800%, 7/01/21+ VMIG-1 1,000,000
2,000,000 Massachusetts Health and Educational Facilities Authority (Wellesley
College), Series E, Variable Rate Demand Bonds, 2.700%, 7/01/22+ VMIG-1 2,000,000
800,000 Massachusetts Housing Finance Agency, Multi-Family Revenue Refunding
Bonds, Series 1995A, Variable Rate Demand Bonds, 3.300%, 12/01/25+ VMIG-1 800,000
1,145,000 Massachusetts Industrial Finance Agency (Jencoat/Levy Realty Trust),
Variable Rate Demand Bonds, 4.075%, 10/06/99+ N/R 1,145,000
1,000,000 Massachusetts Industrial Finance Agency (Nova Realty Trust 1994
Refunding), Variable Rate Demand Bonds, 3.150%, 12/01/02+ P-1 1,000,000
2,600,000 Massachusetts Industrial Finance Agency (Manhasset Bay Associates,
1985 Cambridge Issue), Variable Rate Demand Bonds, 3.300%, 10/01/10+ Aa-3 2,600,000
2,300,000 Massachusetts Industrial Finance Agency (Holyoke Water Power Company
Project), Variable Rate Demand Bonds, 2.950%, 5/01/22+ VMIG-1 2,300,000
2,000,000 Massachusetts Health and Educational Facilities Authority (Community
Health Center Capital Fund), Variable Rate Demand Bonds, 3.250%,
3/01/15+ A-2 2,000,000
2,200,000 Massachusetts Industrial Finance Agency, Pollution Control (New
England Power Company Project), Variable Rate DemandBonds, 3.350%,
3/01/18+ A-1 2,200,000
3,400,000 Massachusetts Port Authority, Multimodal Series 1995A, Variable Rate
Demand Bonds, 3.350%, 7/01/15+ VMIG-1 3,400,000
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
18
<PAGE>
NUVEEN TAX-FREE MONEY MARKET FUNDS ANNUAL REPORT
FEBRUARY 29, 1996
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------------------
PRINCIPAL AMORTIZED
AMOUNT DESCRIPTION RATINGS* COST
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
$1,900,000 Massachusetts Industrial Finance Agency (WGBH Educational
Foundation Project), Adjustable Rate Bonds, 3.150%, 10/01/09+ VMIG-1 $1,900,000
1,500,000 Massachusetts Industrial Finance Agency (The Williston Northampton
School), Variable Rate Demand Bonds, 3.050%, 4/01/24+ N/R 1,500,000
3,400,000 Massachusetts Industrial Finance Agency (Showa Women's Institute/
Boston), Variable Rate Demand Bonds, 3.600%, 3/15/04+ VMIG-1 3,400,000
1,000,000 Massachusetts Industrial Finance Agency (Emerson College), Series 1995,
Variable Rate Demand Bonds, 3.400%, 1/01/15+ N/R 1,000,000
2,500,000 Massachusetts Industrial Finance Agency (Edgewood Retirement
Community Project), Series 1995C, Variable Rate Demand Bonds,
3.300%, 11/15/25+ VMIG-1 2,500,000
1,000,000 Massachusetts Industrial Finance Agency (Lower Mills Associates LP),
3.400%, 12/01/20+ N/R 1,000,000
3,000,000 Massachusetts Water Resources Authority, Series 1994, Commercial
Paper, 3.300%, 3/29/96 A-1+ 3,000,000
1,500,000 Boston Water and Sewer Commission, Series 1994A, General Revenue
Senior Series, Variable Rate Demand Bonds, 2.900%, 11/01/24+ VMIG-1 1,500,000
600,000 Brookline General Obligation Notes, Unlimited Tax,
4.650%, 2/15/97 (WI) Aaa 608,298
550,000 Cape Cod Regional Transit Authority, Revenue Anticipation Notes,
Unlimited Tax, 4.100%, 7/05/96 N/R 550,811
1,160,000 Franklin General Obligation Notes, Unlimited Tax, 4.500%, 11/15/96 Aaa 1,165,582
2,600,000 Lincoln Bond Anticipation Notes, Unlimited Tax, 4.000%, 7/05/96 Aa-1 2,602,984
1,000,000 Medford Bond Anticipation Notes, 4.100%, 5/15/96 N/R 1,000,696
1,950,000 Mendon Upton Regional School District, Bond Anticipation Notes,
Unlimited Tax, 3.430%, 2/28/97 (WI) N/R 1,952,418
2,986,000 Merrimac Valley Regional Transit Authority, Revenue Anticipation Notes,
Unlimited Tax, 3.880%, 4/26/96 N/R 2,987,460
900,000 New Bedford Industrial Development (Cliftex Corporation), Series 1989,
Variable Rate Demand Bonds, 4.075%, 10/01/97+ N/R 900,000
2,500,000 Salem Massachusetts Bond Anticipation Notes, 4.000%, 7/01/96 A-1 2,503,050
800,000 Shrewsbury General Obligation Notes, Series 1996, 3.500%, 2/01/97 Aaa 801,776
2,000,000 West Bridgewater Bond Anticipation Notes, Unlimited Tax,
4.000%, 7/24/96 N/R 2,004,933
378,000 West Tisbury General Obligation Notes, Unlimited Tax,
4.900%, 1/01/97 Aaa 381,061
610,000 Westfield General Obligation Notes, Series 1995, 5.800%, 11/15/96 Aaa 618,594
- ---------------------------------------------------------------------------------------------------------------------------------
</TABLE>
19
<PAGE>
PORTFOLIO OF INVESTMENTS
NUVEEN MASSACHUSETTS TAX-FREE MONEY MARKET FUND-CONTINUED
<TABLE>
<CAPTION>
PRINCIPAL AMORTIZED
AMOUNT DESCRIPTION RATINGS* COST
<S> <C> <C> <C>
$ 1,000,000 Puerto Rico Industrial Medical Educational and Environmental
- ----------- Authority (Ana G. Mendez Educational Foundation, FEAGM Project),
Variable Rate Demand Bonds, 3.350%, 12/01/15+ A-1+ $ 1,000,000
---------------------------------------------------------------------------------------------
$70,099,000 Total Investments - 103.0% 70,146,551
=========== ---------------------------------------------------------------------------------------------
Other Assets Less Liabilities - (3.0)% (2,066,551)
---------------------------------------------------------------------------------------------
Net Assets - 100% $68,080,000
=============================================================================================
</TABLE>
* Ratings (not covered by the report of independent public accountants): Using
the higher of Standard & Poor's or Moody's rating.
N/R = Investment is not rated.
+ The security has a maturity of more than one year, but has variable rate and
demand features which qualify it as a short=term security. The rate
disclosed is that currently in effect. This rate changes periodically based on
market conditions or a specified market index.
(WI) Security purchased on a when=issued basis (note 1).
See accompanying notes to financial statements.
20
<PAGE>
NUVEEN TAX-FREE MONEY MARKET FUNDS ANNUAL REPORT
FEBRUARY 29, 1996
NUVEEN NEW YORK TAX-FREE MONEY MARKET FUND
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------
PRINCIPAL AMORTIZED
AMOUNT DESCRIPTION RATINGS* COST
- ----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
$1,400,000 New York City Fiscal 94 Series A-10, Variable Rate Demand Bonds,
3.450%, 8/01/16+ VMIG-1 $1,400,000
300,000 New York City Housing Development Corporation (Columbus Gardens
Project), Variable Rate Demand Bonds, 3.150%, 2/01/07+ A-1 300,000
1,000,000 New York City Industrial Development Agency (LaGuardia Associates
Project), Variable Rate Demand Bonds, 3.150%, 12/01/15+ A-1 1,000,000
1,100,000 New York City Trust for Cultural Resources (Guggenheim Foundation),
Variable Rate Demand Bonds, 3.400%, 12/01/15+ VMIG-1 1,100,000
1,300,000 New York City Trust For Cultural Resources, Series 1985 (Carnegie
Hall), Variable Rate Demand Bonds, 3.200%, 12/01/15+ VMIG-1 1,300,000
500,000 Dormitory Authority of the State of New York, Second Short-Term
Revenue Notes, 1989 Series A, Commercial Paper, 3.650%, 3/12/96 A-1 500,000
800,000 Dormitory Authority of the State of New York (St. Francis Center at the
Knolls, Inc.), Variable Rate Demand Bonds, 3.300%, 7/01/23+ VMIG-1 800,000
1,300,000 Dormitory Authority of the State of New York (Oxford University Press),
Series 1993, Variable Rate Demand Bonds, 3.250%, 7/01/23+ VMIG-1 1,300,000
1,400,000 Dormitory Authority of the State of New York (Beverwyck Inc), Series
1995, Variable Rate Demand Bonds, 3.050%, 7/01/25+ VMIG-1 1,400,000
1,400,000 New York State Energy Research and Development Authority, Pollution
Control (Central Hudson Gas and Electric Corporation), Variable Rate
Demand Bonds, 3.050%, 11/01/20+ A-1+ 1,400,000
1,400,000 New York State Energy Research and Development Authority, Pollution
Control (Niagara Mohawk Corporation), Variable Rate Demand Bonds,
3.850%, 3/01/27+ N/R 1,400,000
1,100,000 New York State Environmental Facilities Corporation (General Electric
Company), Commercial Paper, 3.450%, 3/12/96 A-1+ 1,100,000
1,400,000 New York State Housing Finance Agency (Normandie Court), Variable
Rate Demand Bonds, 3.100%, 5/15/15+ VMIG-1 1,400,000
900,000 New York State Housing Finance Agency (Mt. Sinai School of Medicine),
Series 1984-A, Variable Rate Demand Bonds, 3.150%, 11/01/14+ VMIG-1 900,000
885,000 New York State Job Development Authority, Series 1984E, Variable Rate
Demand Bonds, 3.650%, 3/01/99+ MIG-1 885,000
1,400,000 New York Local Government Assistance Corporation, Series 1995E,
Variable Rate Demand Bonds, 3.150%, 4/01/25+ VMIG-1 1,400,000
1,300,000 New York State Medical Care Facilities Finance Agency (Lenox Hill
Hospital), Variable Rate Demand Bonds, 3.100%, 11/01/08+ VMIG-1 1,300,000
1,300,000 New York State Medical Care Facilities Finance Agency (Children's
Hospital of Buffalo), Variable Rate Demand Bonds, 3.100%, 11/01/05+ VMIG-1 1,300,000
900,000 New York State Thruway Authority, Variable Rate Demand Bonds,
3.350%, 1/01/24+ VMIG-1 900,000
1,223,387 Babylon Bond Anticipation Notes, 1995 Series A, 3.850%, 10/30/96 N/R 1,226,724
1,000,000 Buffalo Revenue Anticipation Notes, 4.200%, 7/16/96 VMIG-1 1,002,938
1,400,000 Chautauqua County General Obligation, Tax Anticipation Notes,
4.000%, 12/20/96 N/R 1,407,672
- ----------------------------------------------------------------------------------------------------------------
</TABLE>
21
<PAGE>
PORTFOLIO OF INVESTMENTS
NUVEEN NEW YORK TAX-FREE MONEY MARKET FUND-CONTINUED
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------
PRINCIPAL AMORTIZED
AMOUNT DESCRIPTION RATINGS* COST
- ----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
$ 1,000,000 Guilderland Industrial Development Agency (Northeastern Industrial
Park), Series 1993A, Variable Rate Demand Bonds,
3.150%, 12/01/08+ P-1 $1,000,000
1,400,000 Monroe County Revenue Anticipation Notes, 1995 General Obligation,
4.500%, 3/14/96 AA 1,400,368
1,200,000 Nassau County Industrial Development Agency (Cold Spring Harbor),
Variable Rate Demand Bonds, 3.450%, 7/01/19+ A-1+ 1,200,000
900,000 Suffolk County Industrial Development Agency (Phototronics
Corporate Facility), Variable Rate Demand Bonds, 3.300%, 1/01/98+ VMIG-1 900,000
1,400,000 Triborough Bridge and Tunnel Authority, Special Obligation, Series 1994,
Variable Rate Demand Bonds, 3.250%, 1/01/24+ MIG-1 1,400,000
1,300,000 Yonkers Industrial Development Agency (Civic Facility), Series 1989,
Variable Rate Demand Bonds, 3.450%, 7/01/19+ VMIG-1 1,300,000
- ----------------------------------------------------------------------------------------------------------------
$31,908,387 Total Investments - 99.1% 31,922,702
===========-----------------------------------------------------------------------------------------------------
Other Assets Less Liabilities - 0.9% 279,872
- ----------------------------------------------------------------------------------------------------------------
Net Assets - 100% $32,202,574
================================================================================================================
</TABLE>
* Ratings (not covered by the report of independent public accountants): Using
the higher of Standard & Poor's or Moody's rating.
N/R - Investment is not rated.
+ The security has a maturity of more than one year, but has variable rate and
demand features which qualify it as a short-term security. The rate
disclosed is that currently in effect. This rate changes periodically based on
market conditions or a specified market index.
See accompanying notes to financial statements.
22
<PAGE>
STATEMENT OF NET ASSETS NUVEEN TAX-FREE MONEY MARKET FUNDS ANNUAL REPORT
FEBRUARY 29, 1996
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------
RESERVES CA MA NY
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
ASSETS
Investments in short-term municipal securities,
at amortized cost (note 1) $335,519,554 $177,424,635 $70,146,551 $31,922,702
Cash 3,847,244 312,071 220,655 137,606
Receivables:
Interest 1,304,883 827,401 474,222 135,425
Investments sold -- 100,000 -- 115,000
Other assets 39,995 24,066 12,555 9,974
------------ ------------ ----------- -----------
Total assets 340,711,676 178,688,173 70,853,983 32,320,707
------------ ------------ ----------- -----------
LIABILITIES
Payable for investments purchased -- -- 2,561,026 --
Accrued expenses:
Management fees (note 4) 135,475 58,287 22,560 10,068
Other 170,749 77,370 32,017 38,066
Dividends payable 742,988 418,285 158,380 69,999
------------ ------------ ----------- -----------
Total liabilities 1,049,212 553,942 2,773,983 118,133
------------ ------------ ----------- -----------
Net assets applicable to shares outstanding (note 3) $339,662,464 $178,134,231 $68,080,000 $32,202,574
============ ============ =========== ===========
Shares outstanding:
Service Plan series -- 70,721,933 38,250,579 554,459
Distribution Plan series -- 73,020,093 26,279,242 31,631,448
Institutional series -- 34,392,205 3,550,179 16,667
------------ ------------ ----------- -----------
Total shares outstanding 339,662,464 178,134,231 68,080,000 32,202,574
============ ============ =========== ===========
Net asset value, offering and redemption price per share
(net assets divided by shares outstanding) $ 1.00 $ 1.00 $ 1.00 $ 1.00
============ ============ =========== ===========
</TABLE>
See accompanying notes to financial statements.
23
<PAGE>
STATEMENT OF OPERATIONS
Year ended February 29, 1996
<TABLE>
<CAPTION>
RESERVES
<S> <C>
INVESTMENT INCOME
Tax-exempt interest income (note 1) $13,393,726
-----------
Expenses:
Management fees (note 4) 1,685,865
12b-1 expense (note 4) 145,504
Shareholders' servicing agent fees and expenses 461,510
Custodian's fees and expenses 98,054
Directors' fees and expenses (note 4) 4,173
Professional fees 22,196
Shareholders' reports-printing and mailing expenses 181,747
Federal and state registration fees 15,054
Other expenses 34,254
-----------
Total expenses before expense reimbursement 2,648,357
Expense reimbursement from investment adviser (note 4) (119,509)
-----------
Net expenses 2,528,848
-----------
Net investment income 10,864,878
Net gain (loss) from investment transactions -
-----------
Net increase in net assets from operations $10,864,878
===========
</TABLE>
See accompanying notes to financial statements.
24
<PAGE>
NUVEEN TAX-FREE MONEY MARKET FUNDS ANNUAL REPORT
FEBRUARY 29, 1996
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------------
CALIFORNIA MONEY MARKET
-----------------------------------------------------------------------
Service Distribution Institutional
Plan series Plan series series Total
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
INVESTMENT INCOME
Tax-exempt interest income (note 1) $ 2,249,638 $ 2,663,057 $ 1,426,639 $ 6,339,334
------------ ------------- ------------- -------------
Expenses:
Management fees (note 4) 234,499 276,546 148,326 659,371
12b-1 expense (note 4) 53,171 49,929 - 103,100
Shareholders' servicing agent fees and expenses 4,707 41,838 350 46,895
Custodian's fees and expenses 18,090 23,545 13,076 54,711
Directors' fees and expenses (note 4) 1,164 1,459 832 3,455
Professional fees 6,555 7,421 3,939 17,915
Shareholders' reports--printing and mailing expenses 3,829 21,456 200 25,485
Federal and state registration fees 1,504 538 - 2,042
Other expenses 4,140 5,218 3,945 13,303
------------ ------------- ------------- -------------
Total expenses before expense reimbursement 327,659 427,950 170,668 926,277
Expense reimbursement from investment adviser (note 4) (11,469) (47,885) - (59,354)
------------ ------------- ------------- -------------
Net expenses 316,190 380,065 170,668 866,923
------------ ------------- ------------- -------------
Net investment income 1,933,448 2,282,992 1,255,971 5,472,411
Net gain (loss) from investment transactions - - - -
------------ ------------- ------------- -------------
Net increase in net assets from operations $ 1,933,448 $ 2,282,992 $ 1,255,971 $ 5,472,411
------------ ------------- ------------- -------------
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
See accompanying notes to financial statements.
25
<PAGE>
STATEMENT OF OPERATIONS
Year ended February 29, 1996
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
MASSACHUSETTS MONEY MARKET
------------------------------------------------------------------------
Service Distribution Institutional
Plan series Plan series Series Total
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
INVESTMENT INCOME
Tax-exempt interest income (note 1) $ 1,139,943 $ 904,774 $ 124,483 $ 2,169,200
------------ ---------- ----------- -------------
Expenses:
Management fees (note 4) 123,420 97,516 13,492 234,428
12b-1 expense (note 4) 30,649 21,424 - 52,073
Shareholders' servicing agent fees and expenses 801 32,367 747 33,915
Custodian's fees and expenses 22,234 22,962 2,566 47,762
Directors' fees and expenses (note 4) 1,237 1,029 137 2,403
Professional fees 8,515 6,795 1,010 16,320
Shareholders' reports--printing and mailing expenses 261 18,368 277 18,906
Federal and state regulation fees 3,358 1,165 626 5,149
Other expenses 3,824 2,433 415 6,672
------------ ---------- ----------- -------------
Total expenses before expense reimbursement 194,299 204,059 19,270 417,628
Expense reimbursement from investment adviser (note 4) (24,442) (70,083) (919) (95,444)
------------ ---------- ----------- -------------
Net expenses 169,857 133,976 18,351 322,184
------------ ---------- ----------- -------------
Net investment income 970,086 770,798 106,132 1,847,016
Net gain (loss) from investment transactions - - - -
------------ ---------- ----------- -------------
Net increase in net assets from operations $ 970,086 $ 770,798 $ 106,132 $ 1,847,016
============ ========== =========== =============
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
See accompanying notes to financial statements.
26
<PAGE>
NUVEEN TAX-FREE MONEY MARKET FUNDS ANNUAL REPORT
FEBRUARY 29, 1996
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
NEW YORK MONEY MARKET
----------------------------------------------------------------------
Service Distribution Institutional
Plan series Plan series series Total
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
INVESTMENT INCOME
Tax-exempt interest income (note 1) $ 18,844 $ 1,135,683 $ 624 $ 1,155,151
------------ ------------ ------------ ------------
Expenses:
Management fees (note 4) 2,014 121,439 66 123,519
12b-1 expense (note 4) 299 13,414 - 13,713
Shareholders' servicing agent fees and expenses 1,141 29,335 22 30,498
Custodian's fees and expenses 933 57,461 32 58,426
Directors' fees and expenses (note 4) 7 371 - 378
Professional fees 263 16,033 9 16,305
Shareholders' reports--printing and mailing expenses 2,679 43,448 73 46,200
Federal and state registration fees 2,293 631 26 2,950
Other expenses 58 3,145 1 3,204
------------ ------------ ------------ ------------
Total expenses before expense reimbursement 9,687 285,277 229 295,193
Expense reimbursement from investment adviser (note 4) (6,908) (118,284) (138) (125,330)
------------ ------------ ------------ ------------
Net expenses 2,779 166,993 91 169,863
------------ ------------ ------------ ------------
Net investment income 16,065 968,690 533 985,288
Net gain (loss) from investment transactions - - - -
------------ ------------ ------------ ------------
Net increase in net assets from operations $ 16,065 $ 968,690 $ 533 $ 985,288
------------ ------------ ------------ ------------
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
See accompanying notes to financial statements.
27
<PAGE>
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
RESERVES
------------- -------------
Year ended Year ended
2/29/96 2/28/95
------------- -------------
<S> <C> <C>
OPERATIONS
Net investment income $ 10,864,878 $ 8,795,175
Net realized gain (loss) from investment transactions -- --
------------- -------------
Net increase in net assets from operations 10,864,878 8,795,175
------------- -------------
DISTRIBUTIONS TO SHAREHOLDERS (note 1) (10,864,878) (8,795,175)
------------- -------------
COMMON SHARE TRANSACTIONS
(at constant net asset value of $1 per share) (note 1)
Net proceeds from sale of shares 808,776,352 657,011,312
Net asset value of shares issued to shareholders due
to reinvestment of distributions from net investment
income and from net realized gains from investment
transactions 10,240,006 7,787,100
------------- -------------
819,016,358 664,798,412
Cost of shares redeemed (830,960,291) (717,393,211)
------------- -------------
Net increase (decrease) in net assets derived from
Common share transactions (11,943,933) (52,594,799)
Net assets at the beginning of year 351,606,397 404,201,196
------------- -------------
Net assets at the end of year $ 339,662,464 $ 351,606,397
============= =============
</TABLE>
See accompanying notes to financial statements.
28
<PAGE>
NUVEEN TAX-FREE MONEY MARKET FUNDS ANNUAL REPORT
FEBRUARY 29, 1996
<TABLE>
<CAPTION>
CALIFORNIA MONEY MARKET
--------------------------------------------------------------
Year ended February 29, 1996
--------------------------------------------------------------
Service Distribution Institutional
Plan series Plan series series Total
<S> <C> <C> <C> <C>
- -------------------------------------------------------------------------------------------------------------------------
OPERATIONS
Net investment income.................................... $ 1,933,448 $ 2,282,992 $ 1,255,971 $ 5,472,411
Net realized gain (loss) from investment transactions.... -- -- -- --
------------- ------------- ------------- -------------
Net increase in net assets from operations.............. 1,933,448 2,282,992 1,255,971 5,472,411
------------- ------------- ------------- -------------
DISTRIBUTIONS TO SHAREHOLDERS (note 1)................... (1,933,448) (2,282,992) (1,255,971) (5,472,411)
------------- ------------- ------------- -------------
COMMON SHARE TRANSACTIONS
(at constant net asset value of $1 per share) (note 1)
Net proceeds from sale of shares......................... 137,297,132 130,907,267 212,399,556 480,603,955
Net asset value of shares issued to shareholders due to
reinvestment of distributions from net investment
income and from net realized gains from investment
transactions............................................ 1,633,671 1,762,239 3,093 3,399,003
------------- ------------- ------------- -------------
138,930,803 132,669,506 212,402,649 484,002,958
Cost of shares redeemed (109,980,788) (126,806,592) (228,782,833) (465,570,213)
------------- ------------- ------------- -------------
Net increase (decrease) in net assets derived from
Common share transactions........................... 28,950,015 5,862,914 (16,380,184) 18,432,745
Net assets at the beginning of year...................... 41,771,918 67,157,179 50,772,389 159,701,486
------------- ------------- ------------- -------------
Net assets at the end of year............................ $ 70,721,933 $ 73,020,093 $ 34,392,205 $ 178,134,231
============= ============= ============= =============
</TABLE>
See accompanying notes to financial statements.
29
<PAGE>
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
CALIFORNIA MONEY MARKET
----------------------------------------------------------------------
Year ended February 28, 1995
----------------------------------------------------------------------
Service Distribution Institutional
Plan series Plan series series Total
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
OPERATIONS
Net investment income $ 2,628,687 $ 1,814,647 $ 1,366,100 $ 5,809,434
Net realized gain (loss) from investment transactions (11,576) (4,489) (2,299) (18,364)
------------- ------------- ------------- -------------
Net increase in net assets from operations 2,617,111 1,810,158 1,363,801 5,791,070
------------- ------------- ------------- -------------
DISTRIBUTIONS TO SHAREHOLDERS (note 1) (2,617,111) (1,810,158) (1,363,801) (5,791,070)
------------- ------------- ------------- -------------
COMMON SHARE TRANSACTIONS
(at constant net asset value of $1 per share) (note 1)
Net proceeds from sale of shares 208,318,412 113,315,156 247,997,081 569,630,649
Net asset value of shares issued to shareholders due to
reinvestment of distributions from net investment
income and from net realized gains from investment
transactions 2,983,786 1,322,451 7,041 4,313,278
------------- ------------- ------------- -------------
211,302,198 114,637,607 248,004,122 573,943,927
Cost of shares redeemed (584,768,062) (119,860,860) (229,530,966) (934,159,888)
------------- ------------- ------------- -------------
Net increase (decrease) in net assets derived from
Common share transactions (373,465,864) (5,223,253) 18,473,156 (360,215,961)
Net assets at the beginning of year 415,237,782 72,380,432 32,299,233 519,917,447
------------- ------------- ------------- -------------
Net assets at the end of year $ 41,771,918 $ 67,157,179 $ 50,772,389 $ 159,701,486
============= ============= ============= =============
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
See accompanying notes to financial statements.
30
<PAGE>
NUVEEN TAX-FREE MONEY MARKET FUNDS ANNUAL REPORT
FEBRUARY 29, 1996
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
MASSACHUSETTS MONEY MARKET
---------------------------------------------------------------------
Year ended February 29, 1996
---------------------------------------------------------------------
Service Distribution Institutional
Plan series Plan series series Total
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
OPERATIONS
Net investment income $ 970,086 $ 770,798 $ 106,132 $ 1,847,016
Net realized gain (loss) from investment transactions - - - -
------------ ------------ ------------ ------------
Net increase in net assets from operations 970,086 770,798 106,132 1,847,016
------------ ------------ ------------ ------------
DISTRIBUTIONS TO SHAREHOLDERS (note 1) (970,086) (770,798) (106,132) (1,847,016)
------------ ------------ ------------ ------------
COMMON SHARE TRANSACTIONS
(at constant net asset value of $1 per share) (note 1)
Net proceeds from sale of shares 77,847,781 24,524,563 16,474,350 118,846,694
Net asset value of shares issued to shareholders due to
reinvestment of distributions from net investment
income and from net realized gains from investment
transactions 960,638 758,160 46,176 1,764,974
------------ ------------ ------------ ------------
78,808,419 25,282,723 16,520,526 120,611,668
Cost of shares redeemed (68,289,392) (23,240,661) (14,005,907) (105,535,960)
------------ ------------ ------------ ------------
Net increase (decrease) in net assets derived from
Common share transactions 10,519,027 2,042,062 2,514,619 15,075,708
Net assets at the beginning of year 27,731,552 24,237,180 1,035,560 53,004,292
------------ ------------ ------------ ------------
Net assets at the end of year $ 38,250,579 $ 26,279,242 $ 3,550,179 $ 68,080,000
============ ============ ============ ============
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
See accompanying notes to financial statements.
31
<PAGE>
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
MASSACHUSETTS MONEY MARKET
---------------------------------------------------------------------
Year ended February 28, 1995
---------------------------------------------------------------------
Service Distribution Institutional
Plan series Plan series series Total
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
OPERATIONS
Net investment income $ 1,007,902 $ 699,762 $ 101,590 $ 1,809,254
Net realized gain (loss) from investment transactions (1,430) (1,013) (60) (2,503)
------------- ------------ ------------ -------------
Net increase in net assets from operations 1,006,472 698,749 101,530 1,806,751
------------- ------------ ------------ -------------
DISTRIBUTIONS TO SHAREHOLDERS (note 1) (1,006,472) (698,749) (101,530) (1,806,751)
------------- ------------ ------------ -------------
COMMON SHARE TRANSACTIONS
(at constant net asset value of $1 per share) (note 1)
Net proceeds from sale of shares 126,292,160 26,877,207 10,226,869 163,396,236
Net asset value of shares issued to shareholders due to
reinvestment of distributions from net investment income
and from net realized gains from investment transactions 982,397 655,827 5,596 1,643,820
------------- ------------ ------------ -------------
127,274,557 27,533,034 10,232,465 165,040,056
Cost of shares redeemed (138,119,127) (31,068,859) (12,602,539) (181,790,525)
------------- ------------ ------------ -------------
Net increase (decrease) in net assets derived from
Common share transactions (10,844,570) (3,535,825) (2,370,074) (16,750,469)
Net assets at the beginning of year 38,576,122 27,773,005 3,405,634 69,754,761
------------- ------------ ------------ -------------
Net assets at the end of year $ 27,731,552 $ 24,237,180 $ 1,035,560 $ 53,004,292
============= ============ ============ =============
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
See accompanying notes to financial statements.
32
<PAGE>
NUVEEN TAX-FREE MONEY MARKET FUNDS ANNUAL REPORT
FEBRUARY 29, 1996
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
NEW YORK MONEY MARKET
---------------------------------------------------------------------
Year ended February 29, 1996
---------------------------------------------------------------------
Service Distribution Institutional
Plan series Plan series series Total
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
OPERATIONS
Net investment income $ 16,065 $ 968,690 $ 533 $ 985,288
Net realized gain (loss) from investment transactions - - - -
--------- ------------ -------- ------------
Net increase in net assets from operations 16,065 968,690 533 985,288
--------- ------------ -------- ------------
DISTRIBUTIONS TO SHAREHOLDERS (note 1) (16,065) (968,690) (533) (985,288)
--------- ------------ -------- ------------
COMMON SHARE TRANSACTIONS
(at constant net asset value of $1 per share) (note 1)
Net proceeds from sale of shares 364,272 36,230,907 - 36,595,179
Net asset value of shares issued to shareholders due to
reinvestment of distributions from net investment
income and from net realized gains from investment
transactions 13,053 942,307 - 955,360
--------- ------------ -------- ------------
377,325 37,173,214 - 37,550,539
Cost of shares redeemed (462,939) (35,339,438) - (35,802,377)
--------- ------------ -------- ------------
Net increase (decrease) in net assets derived from
Common share transactions (85,614) 1,833,776 - 1,748,162
Net assets at the beginning of year 640,073 29,797,672 16,667 30,454,412
--------- ------------ -------- ------------
Net assets at the end of year $ 554,459 $ 31,631,448 $ 16,667 $ 32,202,574
========= ============ ======== ============
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
See accompanying notes to financial statements.
33
<PAGE>
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
NEW YORK MONEY MARKET
-----------------------------------------------------------------------
Year ended February 28, 1995
-----------------------------------------------------------------------
Service Distribution Institutional
Plan series Plan series series Total
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
OPERATIONS
Net investment income $ 17,057 $ 692,514 $ 385 $ 709,956
Net realized gain (loss) from investment transactions - - - -
----------- ------------ -------- ------------
Net increase in net assets from operations 17,057 692,514 385 709,956
----------- ------------ -------- ------------
DISTRIBUTIONS TO SHAREHOLDERS (note 1) (17,057) (692,514) (385) (709,956)
----------- ------------ -------- ------------
COMMON SHARE TRANSACTIONS
(at constant net asset value of $1 per share) (note 1)
Net proceeds from sale of shares 1,126,675 16,626,815 - 17,753,490
Net asset value of shares issued to shareholders due to
reinvestment of distributions from net investment
income and from net realized gains from investment
transactions 15,591 626,707 - 642,298
----------- ------------ -------- ------------
1,142,266 17,253,522 - 18,395,788
Cost of shares redeemed (1,058,955) (15,341,900) - (16,400,855)
----------- ------------ -------- ------------
Net increase (decrease) in net assets derived from
Common share transactions 83,311 1,911,622 - 1,994,933
Net assets at the beginning of year 556,762 27,886,050 16,667 28,459,479
----------- ------------ -------- ------------
Net assets at the end of year $ 640,073 $ 29,797,672 $ 16,667 $ 30,454,412
=========== ============ ======== ============
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
See accompanying notes to financial statements.
34
<PAGE>
NOTES TO FINANCIAL STATEMENTS
NUVEEN TAX-FREE MONEY MARKET FUNDS ANNUAL REPORT
FEBRUARY 29, 1996
1. GENERAL INFORMATION AND SIGNIFICANT
ACCOUNTING POLICIES
At February 29, 1996, the money market Funds (the "Funds") covered in this
report are Nuveen Tax-Free Reserves, Inc., a nationally diversified Fund, Nuveen
California Tax-Free Fund, Inc. (comprising the Nuveen California Tax-Free Money
Market Fund) and Nuveen Tax-Free Money Market Fund, Inc. (comprising the Nuveen
Massachusetts and New York Tax-Free Money Market Funds).
The Funds are registered under the Investment Company Act of 1940 as an open-
end, diversified management investment companies.
Each Fund invests in tax-exempt money market instruments. Shares of the state
Funds are issued in three series: (1) the "Service Plan" series intended for
purchase by or through banks and other organizations who have agreed to perform
certain services for their customers who are shareholders of this series of the
Fund, (2) the "Distribution Plan" series intended for purchase by or through
securities dealers who have agreed to perform distribution and administrative
services for their customers who are shareholders of this series of the Fund and
(3) the "Institutional" series intended for purchase by trustees, bank trust
departments and investment bankers or advisers who do not perform additional
distribution and administrative services.
Each Fund issues its own shares, at net asset value which the Fund will seek to
maintain at $1.00 per share without a sales charge.
The following is a summary of significant accounting policies followed by the
Funds in the preparation of their financial statements in accordance with
generally accepted accounting principles.
Securities valuation
Investments in each of the Funds consist of short-term municipal securities
maturing within one year from the date of acquisition. Securities with a
maturity of more than one year in all cases have variable rate and demand
features qualifying them as short-term securities and are traded and valued at
amortized cost. On a dollar-weighted basis, the average maturity of all such
securities must be 90 days or less (at February 29, 1996, the dollar-weighted
average life was 33 days for Reserves, 22 days for California Money Market, 53
days for Massachusetts Money Market and 32 days for New York Money Market).
35
<PAGE>
NOTES TO FINANCIAL STATEMENTS
Securities transactions
Securities transactions are recorded on a trade date basis. Realized gains and
losses from such transactions are determined on the specific identification
method. Securities purchased or sold on a when-issued or delayed delivery basis
may be settled a month or more after the transaction date. The securities so
purchased are subject to market fluctuation during this period. The Funds have
instructed the custodian to segregate assets in a separate account with a
current value at least equal to the amount of its purchase commitments. At
February 29, 1996, the Massachusetts Money Market had purchase commitments of
$2,561,026. There were no such purchase commitments in any of the other Funds.
Interest income
Interest income is determined on the basis of interest accrued, adjusted for
amortization of premiums and accretion of discounts.
Dividends and distributions to shareholders
Net investment income, adjusted for realized short-term gains and losses on
investment transactions, is declared as a dividend to shareholders of record as
of the close of each business day and payment is made or reinvestment is
credited to shareholder accounts after month-end.
Income taxes
Each Fund is a separate taxpayer for federal income tax purposes and intends to
comply with the requirements of the Internal Revenue Code applicable to
regulated investment companies by distributing all of its net investment income,
including any net realized gains from investments, to shareholders. Therefore,
no federal income tax provision is required. Furthermore, each Fund intends to
satisfy conditions which will enable interest from municipal securities, which
is exempt from regular federal income tax and designated state income taxes for
the California, Massachusetts and New York Money Market Funds, to retain such
tax exempt status when distributed to the shareholders of the Funds. All income
dividends paid during the year ended February 29, 1996, have been designated
Exempt Interest Dividends.
Insurance commitments
The Funds have obtained commitments (each a "Commitment") from Municipal Bond
Investors Assurance Corporation ("MBIA") with respect to certain designated
bonds held by the Funds for which credit support is furnished by banks
("Approved Banks") approved by MBIA under its established credit approval
standards. Under the terms of a Commitment, if a Fund were to determine that
certain adverse circumstances relating to the financial condition of the
Approved Bank had occurred, the Fund could cause MBIA to issue a "while-in-fund"
insurance policy covering the underlying bonds; after time and subject to
further terms and conditions, the Fund could obtain from MBIA an "insured-to-
maturity" insurance policy as to the covered bonds. Each type of insurance
policy would insure payment of interest on the bonds
36
<PAGE>
NUVEEN TAX-FREE MONEY MARKET FUNDS ANNUAL REPORT
FEBRUARY 29, 1996
and payment of principal at maturity. Although such insurance would not
guarantee the market value of the bonds or the value of the Funds' shares, the
Funds believe that their ability to obtain insurance for such bonds under such
adverse circumstances will enable the Funds to hold or dispose of such bonds at
a price at or near their par value.
Derivative financial instruments
In October 1994, the Financial Accounting Standards Board (FASB) issued
Statement of Financial Accounting Standards No. 119 Disclosure about Derivative
Financial Instruments and Fair Value of Financial Instruments which prescribes
disclosure requirements for transactions in certain derivative financial
instruments including future, forward, swap, and option contracts, and other
financial instruments with similar characteristics. Although the Funds are
authorized to invest in such financial instruments, and may do so in the future,
they did not make any such investments during the year ended February 29, 1996,
other than occasional purchases of high quality synthetic money market
securities, if applicable.
Use of estimates
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities at the date of the
financial statements and the reported amounts of increases and decreases in net
assets from operations during the reporting period.
2. SECURITIES TRANSACTIONS
Purchases and sales (including maturities) of investment securities during the
year ended February 29, 1996, were as follows:
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------
RESERVES CA MA NY
- --------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Purchases............. $1,299,772,860 $483,700,236 $235,091,836 $106,630,911
Sales and Maturities.. 1,317,652,500 458,401,000 216,602,000 104,915,000
- --------------------------------------------------------------------------------------
</TABLE>
At February 29, 1996, the cost of investments owned for federal income tax
purposes was the same as the cost for financial reporting purposes for all
Funds.
37
<PAGE>
NOTES TO FINANCIAL STATEMENTS
3. COMPOSITION OF NET ASSETS
At February 29, 1996, the Funds had common stock authorized at $.01 par value
per share. The composition of net assets as well as the number of authorized
shares were as follows:
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------
RESERVES CA MA NY
- --------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Capital paid in:
Service Plan series $ -- $ 70,721,933 $ 38,250,579 $ 554,459
Distribution Plan series -- 73,020,093 26,279,242 31,631,448
Institutional series -- 34,392,205 3,550,179 16,667
-------------- -------------- -------------- --------------
Net assets $ 339,662,464 $ 178,134,231 $ 68,080,000 $ 32,202,574
============== ============== ============== ==============
Authorized shares 2,000,000,000 2,350,000,000 2,500,000,000 2,500,000,000
============== ============== ============== ==============
</TABLE>
[CAPTION]
4. MANAGEMENT FEE AND OTHER TRANSACTIONS WITH AFFILIATES
Under the Funds' investment management agreements with Nuveen Advisory Corp.
(the "Adviser"), a wholly owned subsidiary of The John Nuveen Company, each Fund
pays to the Adviser an annual management fee, payable monthly, at the rates set
forth below which are based upon the average daily net asset value of each Fund:
<TABLE>
<CAPTION>
- -------------------------------------------------------------
MANAGEMENT FEES
- -------------------------------------------------------------
AVERAGE DAILY NET ASSET VALUE RESERVES CA, MA, NY
- -------------------------------------------------------------
<S> <C> <C>
For the first $500,000,000 .5 of 1% .4 of 1%
For the next $500,000,000 .475 of 1 .375 of 1
For net assets over $1,000,000,000 .45 of 1 .35 of 1
- -------------------------------------------------------------
</TABLE>
Also, pursuant to a distribution agreement with the Funds, Nuveen is the
distributor or principal underwriter of Fund shares and pays sales and promotion
expenses in connection with the offering of Fund shares. The Funds have adopted
a Distribution Plan pursuant to Rule 12b-1 of the Investment Company Act of 1940
and a Service Plan pursuant to which the Distributor Plan series and the Service
Plan series and Nuveen pay, in equal amounts, fees to securities dealers and
service organizations for services rendered in the distribution of shares of the
Funds or the servicing of shareholder accounts. For Reserves, total service
payments to such securities dealers and organizations on an annualized basis
range from .1 of 1% to .2 of 1% of the average daily net asset value of serviced
accounts up to $10 million and .3 of 1% for such assets over $10 million. For
the California, Massachusetts and New York Money Market Funds, total service
payments to such securities dealers and organizations are .25 of 1% per year of
the average daily net asset value of serviced accounts.
38
<PAGE>
NUVEEN TAX-FREE MONEY MARKET FUNDS ANNUAL REPORT
FEBRUARY 29, 1996
The management fee referred to above is reduced by, or the Adviser assumes
certain expenses of each Fund, in an amount necessary to prevent the total
expenses of each Fund (including the management fee and each Fund's share of
service payments under the Distribution and Service Plans, but excluding
interest, taxes, fees incurred in acquiring and disposing of portfolio
securities and, to the extent permitted, extraordinary expenses) in any fiscal
year from exceeding .75 of 1% of the average daily net asset value of Reserves,
and .55 of 1% of the average daily net asset value of the California,
Massachusetts and New York Money Market Funds.
The management fee compensates the Adviser for overall investment advisory and
administrative services, and general office facilities. The Funds pay no
compensation directly to their directors who are affiliated with the Adviser or
to their officers, all of whom receive remuneration for their services to the
Funds from the Adviser.
5. INVESTMENT COMPOSITION
Each Fund invests in municipal securities which include general obligation and
revenue bonds. At February 29, 1996, the revenue sources by municipal purpose
for these investments, expressed as a percent of total investments, were as
follows:
<TABLE>
<CAPTION>
- -----------------------------------------------------------
RESERVES CA MA NY
- -----------------------------------------------------------
<S> <C> <C> <C> <C>
Revenue Bonds:
Pollution Control Facilities 36% 12% 12% 27%
Health Care Facilities 23 20 21 15
Housing Facilities 6 22 3 8
Water/Sewer Facilities 3 14 6 --
Educational Facilities 4 -- 14 2
Lease Rental Facilities -- 12 -- --
Electric Utilities 2 4 10 --
Transportation 2 -- 5 3
Other 13 9 -- 22
General Obligation Bonds 11 7 29 23
--- --- --- ---
100% 100% 100% 100%
=== === === ===
- -----------------------------------------------------------
</TABLE>
In addition, certain temporary investments in short-term municipal securities
have credit enhancements (letters of credit, guarantees or insurance) issued by
third party domestic or foreign banks or other institutions (95% for Reserves,
100% for California, 62% for Massachusetts and 84% for New York).
For additional information regarding each investment security, refer to the
Portfolio of Investments.
39
<PAGE>
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
SELECTED DATA FOR A COMMON SHARE OUTSTANDING THROUGHOUT EACH PERIOD IS AS FOLLOWS:
- --------------------------------------------------------------------------------------------------------------------------------
Income from investment operations Less distributions
--------------------------------------------------------------------
Net
realized and Dividends
Net asset Net unrealized gain from net Distribution Net asset
value beginning investment (loss) from investment from value end of
of period income investments income capital gains period
- --------------------------------------------------------------------------------------------------------------------------------
RESERVES
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Year ended 2/29
1996 $1.000 $.032* $ - $(.032) $ - $1.000
Year ended 2/28,
1995 1.000 .025* - (.025) - 1.000
1994 1.000 .018* - (.018) - 1.000
1993 1.000 .023 - (.023) - 1.000
5 months ended
2/29/92 1.000 015 - (.015) - 1.000
Year ended 9/30,
1991 1.000 .046 - (.046) - 1.000
1990 1.000 .055 - (.055) - 1.000
1989 1.000 .057 - (.057) - 1.000
Year ended 2/29
1988 1.000 .045 - (.045) - 1.000
Year ended 2/28,
1987 1.000 .039 - (.039) - 1.000
1986 1.000 .045* - (.045) - 1.000
- -------------------------------------------------------------------------------------------------------------------------------
</TABLE>
See notes on page 46.
40
<PAGE>
<TABLE>
<CAPTION>
NUVEEN TAX-FREE MUTUAL FUNDS ANNUAL REPORT
FEBRUARY 29, 1996
- ---------------------------------------------------------------------------------------------------------------
Ratios/Supplemental data
- ---------------------------------------------------------------------------------------------------------------
Ratio of Ratio of Ratio of Ratio of
expenses to net investment expenses net investment
Total return Net assets average income to average to average net income to average
on net asset end of period net assets before net assets before assets after net assets after
value (in thousands) reimbursement reimbursement reimbursement* reimbursement*
- ---------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
3.23% $339,662 .79% 3.18% .75% 3.22%
2.46 351,606 .78 2.40 .75 2.43
1.84 404,201 .80 1.78 .75 1.83
2.34 450,746 .74 2.35 .74 2.35
1.45 477,127 .75+ 3.48+ .75+ 3.48+
4.57 451,808 .72 4.56 .72 4.56
5.45 430,206 .73 5.45 .73 5.45
5.70 390,258 .72 5.69 .72 5.69
4.52 409,653 .73 4.52 .73 4.52
3.88 361,044 .73 3.85 .73 3.85
4.46 272,677 .80 4.34 .75 4.39
- ---------------------------------------------------------------------------------------------------------------
</TABLE>
41
<PAGE>
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
SELECTED DATA FOR A COMMON SHARE OUTSTANDING THROUGHOUT EACH PERIOD IS AS FOLLOWS:
- ---------------------------------------------------------------------------------------------------------------------------
Income from investment operations Less distributions
- ---------------------------------------------------------------------------------------------------------------------------
Net
Net realized and
asset value Net unrealized Dividends from Distributions
beginning investment gain (loss) from net investment from
of period income investments income capital gains
- ---------------------------------------------------------------------------------------------------------------------------
CA**
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Year ended
2/29/96
Service Plan series $1.000 $.033* $ - $(.033) $ -
Distribution Plan series 1.000 .033* - (.033) -
Institutional series 1.000 .034 - (.034) -
Year ended
2/28/95
Service Plan series 1.000 .026* - (.026) -
Distribution Plan series 1.000 .026* - (.026) -
Institutional series 1.000 .027 - (.027) -
Year ended
2/28/94
Service Plan series 1.000 .019 - (.019) -
Distribution Plan series 1.000 .019* - (.019) -
Institutional series 1.000 .021 - (.021) -
Year ended
2/28/93
Service Plan series 1.000 .023* - (.023) -
Distribution Plan series 1.000 .023* - (.023) -
Institutional series 1.000 .024 - (.024) -
8 months ended
2/29/92
Service Plan series 1.000 .024* - (.024) -
Distribution Plan series 1.000 .024* - (.024) -
Institutional series 1.000 .025 - (.025) -
Year ended
6/30/91
Service Plan series 1.000 .047* - (.047) -
Distribution Plan series 1.000 .047* - (.047) -
Institutional series 1.000 .048 - (.048) -
Year ended 6/30,
1990++ 1.000 .054* - (.054) -
1989++ 1.000 .056* - (.056) -
1988++ 1.000 .043* - (.043) -
1987++ 1.000 .039* - (.039) -
- ---------------------------------------------------------------------------------------------------------------------------
</TABLE>
See notes on page 46
42
<PAGE>
NUVEEN TAX-FREE MONEY MARKET FUNDS ANNUAL REPORT
FEBRUARY 29, 1996
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------------
Ratios/Supplemental data
- ---------------------------------------------------------------------------------------------------------------------------
Ratio of net
Ratio of investment Ratio Ratio of net
expenses to income to of expenses investment income
Net assets average net average net to average to average
Net asset value Total return on end of period assets before assets before net assets after net assets after
end of period net asset value (in thousands) reimbursement reimbursement reimbursement* reimbursement*
- ---------------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
$ 1.000 3.32% $ 70,722 .56% 3.28% .54% 3.30%
1.000 3.31 73,020 .62 3.23 .55 3.30
1.000 3.40 34,392 .46 3.39 .46 3.39
1.000 2.59 41,772 .59 2.15 .55 2.19
1.000 2.60 67,157 .64 2.47 .55 2.56
1.000 2.69 50,772 .47 2.74 .47 2.74
1.000 1.94 415,238 .53 1.94 .53 1.94
1.000 1.92 72,380 .73 1.74 .55 1.92
1.000 2.07 32,299 .41 2.06 .41 2.06
1.000 2.28 469,812 .57 2.24 .55 2.26
1.000 2.29 80,652 .62 2.19 .55 2.26
1.000 2.36 24,156 .47 2.33 .47 2.33
1.000 2.39 478,886 .56+ 3.53+ .55+ 3.54+
1.000 2.39 91,670 .61+ 3.48+ .55+ 3.54+
1.000 2.45 18,334 .45+ 3.64+ .45+ 3.64+
1.000 4.70 431,590 .57 4.65 .55 4.67
1.000 4.70 90,031 .61 4.61 .55 4.67
1.000 4.80 22,342 .45 4.77 .45 4.77
1.000 5.37 452,465 .59 5.34 .55 5.38
1.000 5.62 362,927 .57 5.68 .55 5.70
1.000 4.28 207,897 .59 4.27 .55 4.31
1.000 3.90 284,956 .63 3.79 .50 3.92
- ---------------------------------------------------------------------------------------------------------------------------
</TABLE>
43
<PAGE>
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
SELECTED DATA FOR A COMMON SHARE OUTSTANDING THROUGHOUT EACH PERIOD IS AS FOLLOWS:
- ---------------------------------------------------------------------------------------------------------------
Income from investment operations Less distributions
--------------------------------------------------------------------
Net
Net realized and Dividends
asset value Net unrealized gain from net Distribution
beginning investment (loss) from investment from
of period income investments income capital gains
- ---------------------------------------------------------------------------------------------------------------
MA***
- ---------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Year ended
2/29/96
Service Plan series $1.000 $.032* $-- $(.032) $--
Distribution Plan series 1.000 .032* -- (.032) --
Institutional series 1.000 .032* -- (.032) --
Year ended
2/28/95
Service Plan series 1.000 .025* -- (.025) --
Distribution Plan series 1.000 .025* -- (.025) --
Institutional series 1.000 .026 -- (.026) --
Year ended
2/28/94
Service Plan series 1.000 .018* -- (.018) --
Distribution Plan series 1.000 .017* -- (.017) --
Institutional series 1.000 .018 -- (.018) --
Year ended
2/28/94
Service Plan series 1.000 .023* -- (.023) --
Distribution Plan series 1.000 .023* -- (.023) --
Institutional series 1.000 .023* -- (.023) --
10 months ended
2/29/92
Service Plan series 1.000 .032* -- (.032) --
Distribution Plan series 1.000 .032* -- (.032) --
Institutional series 1.000 .032 -- (.032) --
Year ended
4/30/91
Service Plan series 1.000 .053* -- (.053) --
Distribution Plan series 1.000 .053* -- (.053) --
Institutional series 1.000 .053 -- (.053) --
Year ended 4/30,
1990++ 1.000 .057* -- (.057) --
1989++ 1.000 .050* -- (.050) --
1988++ 1.000 .043* -- (.043) --
12/10/86 to
4/30/87++ 1.000 .016* -- (.016) --
- ---------------------------------------------------------------------------------------------------------------
</TABLE>
See notes on page 46.
44
<PAGE>
<TABLE>
<CAPTION>
NUVEEN TAX-FREE MONEY MARKET FUNDS ANNUAL REPORT
FEBRUARY 29, 1996
- -------------------------------------------------------------------------------------------------------------------------------
Ratios/Supplemental data
-------------------------------------------------------------------------------------------------------------------
Ratio of Ratio of Ratio of Ratio of
expenses to net investment expenses net investment
Net asset Total return Net assets average income to average to average net income to average
value end of on net asset end of period net assets before net assets before assets after net assets after
period value (in thousands) reimbursement reimbursement reimbursement* reimbursement*
- -------------------------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
$1.000 3.17% $38,251 .63% 3.06% .55% 3.14%
1.000 3.17 26,279 .84 2.87 .55 3.16
1.000 3.18 3,550 .57 3.12 .54 3.15
1.000 2.53 27,732 .61 2.49 .55 2.55
1.000 2.53 24,237 .82 2.28 .55 2.55
1.000 2.61 1,036 .47 2.63 .47 2.63
1.000 1.77 38,576 .55 1.88 .52 1.91
1.000 1.74 27,773 .76 1.67 .55 1.88
1.000 1.80 3,406 .49 1.93 .49 1.93
1.000 2.33 40,214 .73 2.16 .55 2.34
1.000 2.33 27,993 .82 2.07 .55 2.34
1.000 2.34 5,325 .58 2.31 .55 2.34
1.000 3.22 61,476 .62+ 3.73+ .55+ 3.80+
1.000 3.22 34,509 .72+ 3.63+ .55+ 3.80+
1.000 3.24 8,917 .53+ 3.82+ .53+ 3.82+
1.000 5.30 37,979 .68 5.12 .55 5.25
1.000 5.30 33,809 .76 5.04 .55 5.25
1.000 5.30 14,973 .54 5.26 .54 5.26
1.000 5.70 53,631 .74 5.48 .55 5.67
1.000 5.00 31,319 .76 4.97 .55 5.18
1.000 4.29 35,614 .75 4.03 .48 4.30
1.000 1.60 12,371 3.02+ 1.40+ .06+ 4.36+
- -------------------------------------------------------------------------------------------------------------------------------
</TABLE>
45
<PAGE>
FINANCIAL HIGHLIGHTS
SELECTED DATA FOR A COMMON SHARE OUTSTANDING THROUGHOUT EACH PERIOD IS AS
FOLLOWS:
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
Income from investment operations Less distributions
--------------------------------- ---------------------------------
Net
Net realized and
asset value Net unrealized Dividends from Distributions
beginning investment gain (loss) from net investment from
of period income investments income capital gains
- ----------------------------------------------------------------------------------------------------------------------------------
NY***
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Year ended
2/29/96
Service Plan series $1.000 $.032* $ - $(.032) $ -
Distribution Plan series 1.000 .032* - (.032) -
Institutional series 1.000 .032* - (.032) -
Year ended
2/28/95
Service Plan series 1.000 .024* - (.024) -
Distribution Plan series 1.000 .024* - (.024) -
Institutional series 1.000 .023* - (.023) -
Year ended
2/28/94
Service Plan series 1.000 .015* - (.015) -
Distribution Plan series 1.000 .015* - (.015) -
Institutional series 1.000 .015* - (.015) -
Year ended
2/28/93
Service Plan series 1.000 .020* - (.020) -
Distribution Plan series 1.000 .020* - (.020) -
Institutional series 1.000 .020* - (.020) -
10 months ended
2/29/92
Service Plan series 1.000 .029* - (.029) -
Distribution Plan series 1.000 .029* - (.029) -
Institutional series 1.000 .030* - (.030) -
Year ended
4/30/91
Service Plan series 1.000 .047* - (.047) -
Distribution Plan series 1.000 .047* - (.047) -
Institutional series 1.000 .047* - (.047) -
Year ended 4/30,
1990++ 1.000 .054* - (.054) -
1989++ 1.000 .050* - (.050) -
1988++ 1.000 .041* - (.041) -
12/10/86 to
4/30/87++ 1.000 .015* - (.015) -
- --------------------------------------------------------------------------------------------------------------------------------
</TABLE>
* Reflects the waiver of certain management fees and reimbursement of certain
other expenses by the Adviser, if applicable (note 4).
** Effective for the fiscal year ended June 30, 1991, and thereafter, the Fund
has presented the above per share data by series.
*** Effective for the fiscal year ended April 30, 1991, and thereafter, the
Fund has presented the above per share data by series.
+ Annualized.
+ + Represents combined per share data and ratios for the Service Plan,
Distribution Plan and Institutional series.
46
<PAGE>
NUVEEN TAX-FREE MONEY MARKET FUNDS ANNUAL REPORT
FEBRUARY 29, 1996
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------------------
Ratios/Supplemental data
- ----------------------------------------------------------------------------------------------------------------------------------
Ratio of Ratio of net Ratio of Ratio of net
expences investment income expences investment income
Net assets to average to average to average to average
Net asset value Total return on end of period net assets before net assets before net assets after net assets after
end of period net asset value (in thousands) reimbursement reimbursement reimbursement* reimbursement*
- ----------------------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------------------
<C> <C> <C> <C> <C> <C> <C>
$1.000 3.20% $ 554 1.92% 1.82% .55% 3.19%
1.000 3.20 31,631 .94 2.80 .55 3.19
1.000 3.20 17 1.38 2.37 .55 3.20
1.000 2.36 640 .95 1.98 .55 2.38
1.000 2.37 29,798 .79 2.14 .55 2.38
1.000 2.28 17 2.14 .79 .55 2.38
1.000 1.51 557 1.49 .69 .55 1.63
1.000 1.51 27,886 .78 1.40 .55 1.63
1.000 1.51 17 4.60 (2.42) .55 1.63
1.000 2.02 529 1.17 1.42 .55 2.04
1.000 2.02 34,827 .78 1.81 .55 2.04
1.000 2.02 17 19.33 (16.59) .55 2.19
1.000 2.94 1,934 .87+ 3.19+ .55+ 3.51+
1.000 2.94 45,259 .71+ 3.35+ .55+ 3.51+
1.000 2.97 17 11.89+ (7.83)+ .55+ 3.51+
1.000 4.73 1,653 .88 4.39 .55 4.72
1.000 4.73 41,446 .69 4.58 .55 4.72
1.000 4.73 17 .62 4.65 .55 4.72
1.000 5.36 41,602 .71 5.18 .55 5.34
1.000 4.95 30,262 .86 4.74 .55 5.05
1.000 4.10 17,016 1.03 3.54 .50 4.07
1.000 1.50 4,134 4.20+ .05+ .05+ 4.20+
- ----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
47
<PAGE>
[PHOTO OF PAINTING APPEARS HERE]
Your
investment
partners
Since 1898, John Nuveen & Co. Incorporated has worked to bring together the
various participants in the municipal bond industry and build strong
partnerships that benefit all concerned. Investors, financial advisers,
municipal officials, investment bankers-Nuveen believes that forging
relationships within these groups based on trust and value is the key to
successful investing.
As the oldest and largest municipal bond specialist in the United States,
Nuveen's investment bankers work with issuers to understand and meet their needs
in structuring and selling their bond issues.
Nuveen also works closely with financial advisers around the country,
including brokerage firms, banks, insurance companies, and independent financial
planners, to bring the benefits of tax-free investing to you. These advisers are
experts at identifying your needs and recommending the best solutions for your
situation. Together we make a powerful team, helping you create a successful
investment plan that meets your needs today and in the future.
For nearly 100 years,
Nuveen has earned its
reputation as a tax-free income
specialist by focusing on
municipal bonds
[NUVEEN LOGO]
John Nuveen & Co. Incorporated
333 West Wacker Drive
Chicago, Illinois 60606-1286
OEF3-APR96
<PAGE>
PART C--OTHER INFORMATION
NUVEEN TAX-FREE MONEY MARKET FUND, INC.
333 West Wacker Drive
Chicago, Illinois 60606
<PAGE>
PART C--OTHER INFORMATION
ITEM 24: FINANCIAL STATEMENTS AND EXHIBITS.
(a) Financial statements:
Included in the Prospectus:
Financial Highlights
Included in the Statement of Additional Information through incorporation
by reference to the Registrant's Annual Report:
Portfolio of Investments, February 29, 1996
Statement of Net Assets, February 29, 1996
Statement of Operations, Year Ended February 29, 1996
Statement of Changes in Net Assets, Years Ended February 29, 1996 and
February 28, 1995
Report of Independent Public Accountants dated April 8, 1996
(b) Exhibits
<TABLE>
<C> <S>
1. Articles of Incorporation of Registrant, as amended. Filed as Exhibit 1
to Post-Effective Amendment No. 7 to the Registrant's Registration
Statement on Form N-1A (File No. 33-8371) and incorporated herein by
reference thereto.
2. By-Laws of Registrant, as amended. Filed as Exhibit 2 to Post-Effective
Amendment No. 8 to the Registrant's Registration Statement on Form N-1A
(File No. 33-8371) and incorporated herein by reference thereto.
3. Not applicable.
4. Specimen certificates of shares of Capital Stock of Registrant. Filed
as Exhibit 4 to Post-Effective Amendment No. 7 to the Registrant's
Registration Statement on Form N-1A (File No. 33-8371) and incorporated
herein by reference thereto.
5(a). Investment Management Agreement between Registrant and Nuveen Advisory
Corp., dated July 30, 1986. Filed as Exhibit 5(a) to Post-Effective
Amendment No. 9 to the Registrant's Registration Statement on Form N-1A
(File No. 33-8371) and incorporated herein by reference thereto.
5(b). Amendment, dated April 30, 1990, to Investment Management Agreement.
Filed as Exhibit 5(b) to Post-Effective Amendment No. 9 to the
Registrant's Registration Statement on Form N-1A (File No. 33-8371) and
incorporated herein by reference thereto.
5(c). Renewal, dated May 7, 1996, of Investment Management Agreement.
6(a). Distribution Agreement between Registrant and John Nuveen & Co.
Incorporated, dated July 30, 1986. Filed as Exhibit 6 to Registrant's
Registration Statement on Form N-1A (File No. 33-8371) and incorporated
herein by this reference thereto.
6(b). Renewal, dated July 27, 1995, of Distribution Agreement.
</TABLE>
C-1
<PAGE>
<TABLE>
<C> <S>
7. Not applicable.
8(a). 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. 8 to Registrant's Registration Statement on Form N-1A
(File No. 33-8371) and incorporated herein by reference thereto.
8(b). Letter evidencing assignment of U.S. Trust Company of New York's rights
and responsibilities under The Custody Agreement to The Chase Manhattan
Bank, N.A.
9(a). Transfer Agency Agreement between Registrant and Shareholder Services,
Inc., dated December 19, 1994 filed as Exhibit 9(a) to Post-Effective
Amendment No. 9 to Registrant's Registration Statement on Form N-1A
(File No. 33-8371) and incorporated herein by reference thereto.
9(b). Service Plan adopted with respect to shares of the Registrant's Service
Plan Series. Filed as Exhibit 9(b) to Registrant's Registration
Statement on Form N-1A (File No. 33-8371) and incorporated herein by
this reference thereto.
9(c). Service Agreement, as amended, relating to the Service Plan and adopted
with respect to shares of the Registrant's Service Plan Series. Filed
as Exhibit 9(c) to Post-Effective Amendment No. 2 to Registrant's
Registration Statement on Form N-1A (File 33-8371) and incorporated
herein by reference thereto.
10. Opinion of Fried, Frank, Harris, Shriver & Jacobson.
11. Consent of Independent Public Accountants.
12. Not applicable.
13. Subscription Agreement of Nuveen Advisory Corp., dated July 30, 1986.
Filed as Exhibit 13 to Registrant's Registration Statement on Form N-1A
(File No. 33-8371) and incorporated herein by this reference thereto.
14. Not applicable.
15(a). Distribution Plan adopted under Rule 12b-1 with respect to shares of
the Registrant's Distribution Plan Series. Filed as Exhibit 15 to
Registrant's Registration Statement on Form N-1A (File No. 33-8371) and
incorporated herein by this reference thereto.
15(b). Distribution and Service Agreement, as amended, relating to the
Distribution Plan and adopted with respect to shares of the
Registrant's Distribution Plan Series. Filed as Exhibit 15(b) to Post-
Effective Amendment No. 2 to Registrant's Registration Statement on
Form N-1A (File No. 33-8371) and incorporated herein by this reference
thereto.
16. Schedule of Computation of Yield Figures.
17. Financial Data Schedule.
18. Not applicable.
99(a). Agreement for a Money Market Fund Insurance Program. Filed as Exhibit
18 to Post-Effective Amendment No. 8 to Registrant's Registration
Statement on Form N-1A (File No. 33-8371) and incorporated herein by
reference thereto.
</TABLE>
C-2
<PAGE>
<TABLE>
<C> <S>
99(b). Certified copy of resolution of Board of Directors authorizing the
signing of the names of directors and officers on the Registration
Statement pursuant to power of attorney.
99(c). Original Powers of Attorney of all Registrant's Directors authorizing,
among others, James J. Wesolowski and Gifford R. Zimmerman to execute
the Registration Statement. Filed as Exhibit 99(c) to Post-Effective
Amendment No. 9 to the Registrant's Registration Statement on Form N-1A
(File No. 33-8371) and incorporated herein by reference thereto.
99(d). Code of Ethics and Reporting Requirements. Filed as Exhibit 99(d) to
Post-Effective Amendment No. 9 to the Registrant's Registration
Statement on Form N-1A (File No. 33-8371) and incorporated herein by
reference thereto.
</TABLE>
ITEM 25: PERSONS CONTROLLED BY OR UNDER COMMON CONTROL WITH REGISTRANT
Not applicable.
ITEM 26: NUMBER OF HOLDERS OF SECURITIES
At May 28, 1996:
<TABLE>
<CAPTION>
TITLE OF SERIES NUMBER OF RECORD HOLDERS
--------------- ------------------------
<S> <C>
Massachusetts Fund--Distribution Plan Series..... 1,116
Massachusetts Fund--Service Plan Series.......... 43
Massachusetts Fund--Institutional Series......... 3
New York Fund--Distribution Plan Series.......... 1,049
New York Fund--Service Plan Series............... 46
New York Fund--Institutional Series.............. 1
</TABLE>
ITEM 27: INDEMNIFICATION
Article EIGHTH of the Registrant's Articles of Incorporation provides as fol-
lows:
EIGHTH: To the maximum extent permitted by the Minnesota Business Corpora-
tion Act, as from time to time amended, the Corporation shall indemnify its
currently acting and its former directors, officers, employees and agents,
and those persons who, at the request of the Corporation serve or have
served another corporation, partnership, joint venture, trust or other en-
terprise 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
C-3
<PAGE>
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 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 indemnitee was not liable by reason of disabling conduct or, (2)
in the absence of such a decision, a reasonable determination, based upon a
review of the facts, that the indemnitee was not liable by reason of disa-
bling conduct, by (a) the vote of a majority of a quorum of directors who
are neither "interested persons" of the Corporation as defined in the In-
vestment Company Act of 1940 nor parties to the proceeding, or (b) an inde-
pendent legal counsel in a written opinion.
The directors and officers of the Registrant are covered by an Investment
Trust Errors and Omission policy in the aggregate amount of $60,000,000 (with
a maximum deductible of $500,000) against liability and expenses of claims of
wrongful acts arising out of their position with the Registrant, 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 Regis-
trant or where he or she had reasonable cause to believe this conduct was un-
lawful).
ITEM 28: BUSINESS AND OTHER CONNECTIONS OF INVESTMENT ADVISER
Nuveen Advisory Corp. serves as investment adviser to the following open-end
management type investment companies: Nuveen Municipal Bond Fund, Nuveen Tax-
Exempt Money Market Fund, Inc., Nuveen Tax-Free Reserves, Inc., Nuveen Cali-
fornia Tax-Free Fund, Inc., Nuveen Tax-Free Bond Fund, Inc., Nuveen Insured
Tax-Free Bond Fund, Inc. Nuveen Tax-Free Money Market Fund, Inc. and Nuveen
Multistate Tax-Free Trust. It also serves as investment adviser to the follow-
ing closed-end management investment companies: Nuveen Municipal Value Fund,
Inc., Nuveen California Municipal Value Fund, Inc., Nuveen New York Municipal
Value Fund, Inc., Nuveen Municipal Income Fund, Inc., Nuveen Premium Income
Municipal Fund, Inc., Nuveen Performance Plus Municipal Fund, Inc., Nuveen
California Performance Plus Municipal Fund, Inc., Nuveen New York Performance
Plus Municipal Fund, Inc., Nuveen Municipal Advantage Fund, Inc., Nuveen Mu-
nicipal Market Opportunity Fund, Inc., Nuveen California Municipal Market Op-
portunity 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
C-4
<PAGE>
Florida Investment Quality Municipal Fund, Nuveen New Jersey Investment Quality
Municipal Fund, Inc., Nuveen Pennsylvania Investment Quality Municipal Fund,
Nuveen Select Quality Municipal Fund, Inc., Nuveen California Select Quality
Municipal Fund, Inc., Nuveen New York Select Quality
Municipal Fund, Inc., Nuveen Quality Income Municipal Fund, Inc., Nuveen In-
sured Municipal Opportunity Fund, Inc., Nuveen Florida Quality Income Municipal
Fund, Nuveen Michigan Quality Income Municipal Fund, Inc., Nuveen Ohio Quality
Income Municipal Fund, Inc., Nuveen Texas Quality Income Municipal Fund, Nuveen
California Quality Income Municipal Fund, Inc., Nuveen New York Quality Income
Municipal Fund, Inc., Nuveen Premier Municipal Income Fund, Inc., Nuveen Pre-
mier 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 Municipal Fund, Inc., Nuveen Select Maturities
Municipal Fund, Nuveen Arizona Premium Income Municipal Fund, Inc., Nuveen In-
sured Florida Premium Income Municipal Fund, Nuveen Michigan Premium Income Mu-
nicipal Fund, Inc., Nuveen New Jersey Premium Income Municipal Fund, Inc.,
Nuveen Insured Premium Income Municipal Fund, Inc., Nuveen Premium Income Mu-
nicipal Fund 4, Inc., Nuveen Insured California Premium Income Municipal Fund
2, Inc., Nuveen Pennsylvania Premium Income Municipal Fund 2, Nuveen Maryland
Premium Income Municipal Fund, Nuveen Massachusetts Premium Income Municipal
Fund, Nuveen Virginia Premium Income Municipal Fund, Nuveen Washington Premium
Income Municipal Fund, Nuveen Connecticut Premium Income Municipal Fund, Nuveen
Georgia Premium Income Municipal Fund, Nuveen Missouri Premium Income Municipal
Fund, Nuveen North Carolina Premium Income Municipal Fund, Nuveen California
Premium Income Municipal Fund and Nuveen Insured Premium Income Municipal Fund
2. Nuveen Advisory Corp. has no other clients or business at the present time.
The principal business address for all of these investment companies is 333
West Wacker Drive, Chicago, Illinois, 60606.
For a description of other business, profession, vocation or employment of a
substantial nature in which any director or officer of the investment adviser
has engaged during the last two years for his account or in the capacity of di-
rector, officer, employee, partner or trustee, see the descriptions under "Man-
agement" in the Statement of Additional Information.
ITEM 29: PRINCIPAL UNDERWRITERS
(a) John Nuveen & Co. Incorporated ("Nuveen") acts as principal underwriter of
the Nuveen Municipal Bond Fund, Nuveen Tax-Exempt Money Market Fund, Inc.,
Nuveen Tax-Free Reserves, Inc., Nuveen California Tax-Free Fund, Inc., Nuveen
Tax-Free Bond Fund, Inc., Nuveen Insured Tax-Free Bond Fund, Inc., Nuveen Tax-
Free Money Market Fund, Inc. and Nuveen Multistate Tax-Free Trust, all open-end
management investment companies. Nuveen also acts as depositor and principal
underwriter of the Nuveen Tax-Exempt Unit Trust, a registered unit investment
trust. Nuveen has also served or is serving as a co-managing underwriter of the
shares of Nuveen Municipal Value Fund, Inc., Nuveen California Municipal Value
Fund, Inc., Nuveen New York Municipal Value Fund, Inc., Nuveen Muni- cipal In-
come 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 Municipal Fund, Inc., Nuveen Municipal
Advantage Fund, Inc., Nuveen Municipal Market Opportunity Fund, Inc., Nuveen
California Municipal Market Opportunity Fund, Inc., Nuveen Investment Quality
Municipal Fund, Inc., Nuveen California Investment Quality Municipal Fund,
Inc., Nuveen New York Investment Quality Municipal Fund, Inc., Nuveen Insured
Quality Municipal
C-5
<PAGE>
Fund, Inc., Nuveen Florida Investment Quality Municipal Fund, Nuveen New Jersey
Investment Quality Municipal Fund, Inc., Nuveen Pennsylvania Investment Quality
Municipal Fund, Nuveen Select Quality Municipal Fund, Inc., Nuveen California
Select Quality Municipal Fund, Inc., Nuveen New York Select Quality Municipal
Fund, Inc., Nuveen Quality Income Municipal Fund, Inc., Nuveen Insured Munici-
pal Opportunity Fund, Inc., Nuveen Florida Quality Income Municipal Fund,
Nuveen Michigan Quality Income Municipal Fund, Inc., Nuveen Ohio Quality Income
Municipal Fund, Inc., Nuveen Texas Quality Income Municipal Fund, Nuveen Cali-
fornia Quality Income Municipal Fund, Inc., Nuveen New York Quality Income Mu-
nicipal Fund, Inc., Nuveen Premier Municipal Income Fund, Inc., Nuveen Premier
Insured Municipal Income Fund, Inc., Nuveen 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 In-
come Municipal Fund, Inc., Nuveen Insured Florida Premium Income Municipal
Fund, Nuveen Michigan Premium Income Municipal Fund, Inc., Nuveen New Jersey
Premium Income Municipal Fund, Inc., Nuveen Insured Premium Income Municipal
Fund, Inc., Nuveen Premium Income Municipal Fund 4, Inc., Nuveen Insured Cali-
fornia Premium Income Municipal Fund 2, Inc., Nuveen Pennsylvania Premium In-
come Municipal Fund 2, Nuveen Maryland Premium Income Municipal Fund, Nuveen
Massachusetts Premium Income Municipal Fund, Nuveen Virginia Premium Income Mu-
nicipal Fund, Nuveen Washington Premium Income Municipal Fund, Nuveen Connecti-
cut Premium Income Municipal Fund, Nuveen Georgia Premium Income Municipal
Fund, Nuveen Missouri Premium Income Municipal Fund, Nuveen North Carolina Pre-
mium Income Municipal Fund, Nuveen California Premium Income Municipal Fund,
Nuveen Insured Premium Income Municipal Fund 2, Nuveen Select Tax-Free Income
Portfolio 2, Nuveen Insured California Select Tax-Free Income Portfolio, Nuveen
Insured New York Select Tax-Free Income Portfolio and Nuveen Select Tax-Free
Income Portfolio 3.
(b)
<TABLE>
<CAPTION>
NAME AND PRINCIPAL POSITIONS AND OFFICES POSITIONS AND OFFICES
BUSINESS ADDRESS WITH UNDERWRITER WITH REGISTRANT
- -------------------------------------------------------------------------------
<S> <C> <C>
Timothy R. Chairman of the Board, Chairman of the Board
Schwertfeger Chief Executive Officer and Director and Director
333 West Wacker
Drive
Chicago, IL 60606
Anthony T. Dean President, Chief Operating President and Director
333 West Wacker Officer and Director
Drive
Chicago, IL 60606
John P. Amboian Executive Vice President None
333 West Wacker and Chief Financial Officer
Drive
Chicago, IL 60606
William Adams IV Vice President None
333 West Wacker
Drive
Chicago, IL 60606
</TABLE>
C-6
<PAGE>
<TABLE>
<CAPTION>
NAME AND PRINCIPAL POSITIONS AND OFFICES POSITIONS AND OFFICES
BUSINESS ADDRESS WITH UNDERWRITER WITH REGISTRANT
- ----------------------------------------------------------------------------------
<S> <C> <C>
Clifton L. Fenton Vice President None
333 West Wacker Drive
Chicago, IL 60606
Kathleen M. Flanagan Vice President Vice President
333 West Wacker Drive
Chicago, IL 60606
Stephen D. Foy Vice President None
333 West Wacker Drive
Chicago, IL 60606
Robert D. Freeland Vice President None
333 West Wacker Drive
Chicago, IL 60606
Michael G. Gaffney Vice President None
333 West Wacker Drive
Chicago, IL 60606
Anna R. Kucinskis Vice President Vice President
333 West Wacker Drive
Chicago, IL 60606
Robert B. Kuppenheimer Vice President None
333 West Wacker Drive
Chicago, IL 60606
Larry W. Martin Vice President and Vice President and
333 West Wacker Drive Assistant Secretary Assistant Secretary
Chicago, IL 60606
Thomas C. Muntz Vice President None
333 West Wacker Drive
Chicago, IL 60606
O. Walter Renfftlen Vice President and Vice President and
333 West Wacker Drive Controller Controller
Chicago, IL 60606
Stuart W. Rogers Vice President None
333 West Wacker Drive
Chicago, IL 60606
Bradford W. Shaw, Jr. Vice President None
333 West Wacker Drive
Chicago, IL 60606
</TABLE>
C-7
<PAGE>
<TABLE>
<CAPTION>
NAME AND PRINCIPAL POSITIONS AND OFFICES POSITIONS AND OFFICES
BUSINESS ADDRESS WITH UNDERWRITER WITH REGISTRANT
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
H. William Stabenow Vice President and Vice President and
333 West Wacker Drive Treasurer Treasurer
Chicago, IL 60606
James J. Wesolowski Vice President, General Vice President and
333 West Wacker Drive Counsel and Secretary Secretary
Chicago, IL 60606
Paul C. Williams Vice President None
333 West Wacker Drive
Chicago, IL 60606
Gifford R. Zimmerman Vice President and Vice President and
333 West Wacker Drive Assistant Secretary Assistant Secretary
Chicago, IL 60606
</TABLE>
ITEM 30: LOCATION OF ACCOUNTS 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, N.A., 770 Broadway, New York, New York 10003, 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 Shareholder Services, Inc.
Shareholder Services, Inc., P.O. Box 5330, Denver, Colorado, 80217-5330, main-
tains all the required records in its capacity as transfer, dividend paying,
and shareholder service agent for the Registrant.
ITEM 31: MANAGEMENT SERVICES
Not applicable.
ITEM 32: UNDERTAKINGS
Not applicable.
C-8
<PAGE>
SIGNATURES
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933 AND THE INVESTMENT
COMPANY ACT OF 1940 THE REGISTRANT CERTIFIES THAT THIS REGISTRATION STATEMENT
MEETS ALL THE REQUIREMENTS FOR EFFECTIVENESS UNDER PARAGRAPH (B) OF RULE 485
UNDER THE SECURITIES ACT OF 1933 AND HAS DULY CAUSED THIS REGISTRATION STATE-
MENT TO BE SIGNED ON ITS BEHALF BY THE UNDERSIGNED, THEREUNTO DULY AUTHORIZED,
IN THIS CITY OF CHICAGO, AND STATE OF ILLINOIS, ON THE 27TH DAY OF JUNE, 1996.
NUVEEN TAX-FREE 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/ O. Walter Renfftlen
- -------------------------------
O. Walter Renfftlen Vice President and June 27, 1996
Controller (Principal
Financial and
Accounting Officer)
Richard J. Franke Chairman of the Board
and Director (Principal
Executive Officer)
Lawrence H. Brown Director
Anne E. Impellizzeri Director /s/ Gifford R.
Zimmerman
By_________________________
Gifford R. Zimmerman
Margaret K. Rosenheim Director Attorney-in-Fact
Peter R. Sawers Director
Timothy R. Schwertfeger President and Director
June 27, 1996
</TABLE>[/R]
AN ORIGINAL POWER OF ATTORNEY AUTHORIZING, AMONG OTHERS, JAMES J. WESOLOWSKI
AND GIFFORD R. ZIMMERMAN TO EXECUTE THIS REGISTRATION STATEMENT, AND AMENDMENTS
THERETO, FOR EACH OF THE OFFICERS AND DIRECTORS OF REGISTRANT ON WHOSE BEHALF
THIS REGISTRATION STATEMENT IS FILED, HAS BEEN EXECUTED AND IS INCORPORATED BY
REFERENCE TO THIS REGISTRATION STATEMENT.
C-9
<PAGE>
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
SEQUENTIALLY
EXHIBIT NUMBERED
NUMBER EXHIBIT PAGE
------- ------- ------------
<C> <S> <C>
5(c). Renewal, dated May 7, 1996, of Investment Management
Agreement.
6(b). Renewal, dated July 27, 1995, of Distribution Agree-
ment.
8(b). Letter evidencing assignment of U.S. Trust Company of
New York's rights and responsibilities under the Cus-
tody Agreement to The Chase Manhattan Bank, N.A.
10. Opinion of Fried, Frank, Harris, Shriver & Jacobson.
11. Consent of Independent Public Accountants.
16. Schedule of Computation of Yield Figures.
17. Financial Data Schedule.
99(b). Certified copy of resolution of Board of Directors
authorizing the signing of the names of directors and
officers on the Registration Statement pursuant to
power of attorney.
</TABLE>
<PAGE>
Exhibit 5(c)
NUVEEN TAX-FREE MONEY MARKET FUND, INC.
RENEWAL OF INVESTMENT MANAGEMENT AGREEMENT
------------------------------------------
This Agreement made this 7th day of May, 1996 by and between Nuveen Tax-Free
Money Market Fund, Inc., a Minnesota corporation (the "Fund"), and Nuveen
Advisory Corp., a Delaware corporation (the "Adviser");
WHEREAS, the parties hereto are the contracting parties under the certain
Investment Management Agreement (the "Agreement") pursuant to which the Adviser
furnishes investment management and other services to the Fund; and
WHEREAS, the Agreement terminates August 1, 1996 unless continued in the manner
required by the Investment Company Act of 1940; and
WHEREAS, the Board of Directors, at a meeting called for the purpose of
reviewing the Agreement, have approved the Agreement and its continuance until
August 1, 1997 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, 1997 and ratify and confirm the Agreement in all respects.
NUVEEN TAX-FREE
MONEY MARKET FUND, INC.
By /s/ James J. Wesolowski
------------------------
Vice President
ATTEST:
/s/ Karen L. Healy
- -------------------
Assistant Secretary
NUVEEN ADVISORY CORP.
By /s/ Gifford R. Zimmerman
------------------------
Vice President
ATTEST:
/s/ Larry Martin
- -------------------
Assistant Secretary
<PAGE>
Exhibit 6(b)
Renewal of Distribution Agreement
---------------------------------
This Agreement made this 27th day of July, 1995 by and between Nuveen Tax-Free
Money Market Fund, Inc., a Minnesota 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, 1995 unless continued in the manner
required by the Investment Company Act of 1940; and
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, 1996 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, 1996 and ratify and confirm the Agreement in all respects.
NUVEEN TAX-FREE MONEY MARKET FUND, INC.
By: /s/ Larry Martin
----------------------------
Vice President
ATTEST:
/s/ Morrison C. Warren
- --------------------------------
Assistant Secretary
JOHN NUVEEN & CO. INCORPORATED
By: /s/ Kenneth C. Dunn
----------------------------
Vice President
ATTEST:
/s/ Gifford R. Zimmerman
- ---------------------------------
Assistant Secretary
<PAGE>
EXHIBIT 8(B)
The Chase Manhattan Bank, N.A.
770 Broadway
New York, New York 10003-9598
April 18, 1996
Mr. Giff Zimmerman
John Nuveen & Co. Incorporated
333 West Wacker Drive
Chicago, IL 60606
Dear Giff:
On September 2, 1995, The United States Trust Company of New York (UST) was
merged into Chase Manhattan Bank, N.A. (Chase). As a result of this transac-
tion, Chase succeeded by operation of law, all rights and responsibilities of
UST under all Transfer Agency, Custodian and Fund Accounting agreements be-
tween US Trust and John Nuveen & Co.'s managed investment companies.
Sincerely,
/s/ Andrew M. Massa
_______________________________________
Andrew M. Massa
Vice President
1
<PAGE>
Exhibit 10
June 26, 1996
(202) 639-7065
Nuveen Tax-Free Money Market Fund, Inc.
333 West Wacker Drive
Chicago, Illinois 60606
RE: Registration Statement on Form N-1A
Under the Securities Act of 1933
(File No. 33-8371)
-----------------------------------
Ladies and Gentlemen:
We have acted as counsel to Nuveen Tax-Free Money Market Fund, Inc., a
Minnesota 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 Nuveen Massachusetts Tax-Free Money Market Fund--
Institutional Series Shares; Nuveen Massachusetts Tax-Free Money Market Fund--
Service Plan Series Shares; Nuveen Massachusetts Tax-Free Money Market Fund--
Distribution Plan Series Shares; Nuveen New York Tax-Free Money Market Fund--
Institutional Series Shares; Nuveen New York Tax-Free Money Market Fund--
Service Plan Series Shares; and Nuveen New York Tax-Free Money Market Fund--
Distribution Plan Series Shares, par value $.01 (collectively, the "Shares").
This opinion is being delivered to you in connection with the Fund's filing of
Post-Effective Amendment No. 10 to the Registration Statement (the "Amendment")
with the Securities and Exchange Commission pursuant to Rule 485(b) of the
Securities Act of 1933 (the "1933 Act"). With your permission, all assumptions
and statements of reliance herein have been made without any independent
investigation or verification on our part except to the extent otherwise
expressly stated, and we express no opinion with respect to the subject matter
or accuracy of such assumptions or items relied upon.
In connection with this opinion, we have reviewed, among other things,
executed copies of the following documents:
(a) a certificate of the Secretary of the State of Minnesota as to the
existence and good standing of the Fund;
(b) copies, certified by the Secretary of State of Minnesota, of the
Fund's Articles of Incorporation and of all amendments and all
supplements thereto (the "Articles of Incorporation");
<PAGE>
Nuveen Tax-Free Money Market Fund, Inc.
June 26, 1996
Page 2
(c) a certificate executed by Karen L. Healy, an Assistant Secretary of the
Fund, certifying as to the Fund's Articles of Incorporation and By-
Laws, as amended (the "By-Laws"), and certain resolutions adopted by
the Board of Directors of the Fund authorizing the issuance of the
Shares; and
(d) a printer's proof, dated June 26, 1996, of the Amendment.
In our capacity as counsel to the Fund, we have examined the originals, or
certified, conformed or reproduced copies, of all records, agreements,
instruments and documents as we have deemed relevant or necessary as the basis
for the opinion hereinafter expressed. In all such examinations, we have
assumed the legal capacity of all natural persons executing documents, the
genuineness of all signatures, the authenticity of all original or certified
copies, and the conformity to original or certified copies of all copies
submitted to us as conformed or reproduced copies. As to various questions of
fact relevant to such opinion, we have relied upon, and assume the accuracy of,
certificates and oral or written statements of public officials and officers or
representatives of the Fund. We have assumed that the Amendment, as filed
with the Securities and Exchange Commission, will be in substantially the form
of the printer's proof referred to in paragraph (d) above.
Based upon, and subject to, the limitations set forth herein, we are of the
opinion that the Shares, when issued and sold in accordance with the Fund's
Articles of Incorporation and for the consideration described in the
Registration Statement, will be legally issued, fully paid and nonassessable.
The opinion expressed herein is limited to the laws of the State of
Minnesota.
We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement. In giving this consent, we do not admit that we are in
the category of persons whose consent is required under Section 7 of the 1933
Act.
Very truly yours,
FRIED, FRANK, HARRIS, SHRIVER & JACOBSON
By: /s/ THOMAS S. HARMAN
----------------------------
Thomas S. Harman
<PAGE>
[LETTERHEAD OF ARTHUR ANDERSEN LLP]
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the use of our report
dated April 8, 1996, and to all references to our firm included in or made a
part of this registration statement of Nuveen Tax-Free Money Market Fund, Inc.
/S/ ARTHUR ANDERSEN LLP
ARTHUR ANDERSEN LLP
Chicago, Illinois
June 13, 1996
<PAGE>
EXHIBIT 16
SCHEDULE OF COMPUTATION OF YIELD FIGURES
I. Current Yield
A. Current Yield is calculated as follows:
Net investment income per Share for the seven day period
i. -------------------------------------------------------- = Base Period
Value of account at beginning of seven day period Return
ii. Base Period Return X 365/7 = Current Yield
B. Calculation of Current Yield for Seven Day Period Ended 2/29/96:
i. Massachusetts:
.0005311 365
All Series (----------) X --- = 2.77%
1.00 7 ====
ii. New York:
Service and Distribution .0005274 365
Plan Series (----------) X --- = 2.75%
1.00 7 ====
Institutional .0005262 365
Series (----------) X --- = 2.74%
1.00 7 ====
II. Effective Yield
A. Effective Yield is calculated as follows:
(Base Period Return + 1) 365/7 - 1 = Effective Yield
B. Calculation of Effective Yield for Seven Day Period ended 2/29/96:
i. Massachusetts:
.0005311 /365/7/
All Series [ (----------) + 1 ] - 1 = 2.81%
1.00
ii. New York:
Service and Distribution .0005274 /365/7/
Plan Series [ (----------) + 1 ] - 1 = 2.79%
1.00
.0005262 /365/7/
Institutional Series [ (----------) + 1 ] - 1 = 2.78%
1.00
1
<PAGE>
III. Taxable Equivalent Yield
Based on a combined federal and state income tax rate of 47.0% for Massachu-
setts and 44.0% for New York, the Taxable Equivalent Yields for the Massachu-
setts and New York Funds for the Seven Day Period Ended 2/29/96 are:
Massachusetts:
2.77%
All Series -------- = 5.23%
(1 - .470) =====
New York:
2.75%
Service and Distribution -------- = 4.91%
Plan Series (1 - .440) =====
2.74%
Institutional Series -------- = 4.89%
(1 - .440) =====
2
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<LEGEND>
This schedule contains Summary Financial Information extracted from the Form
N-SAR and the financial statements and is qualified in its entirety by
references to such documents.
</LEGEND>
<SERIES>
<NUMBER> 011
<NAME> NUVEEN MASSACHUSETTS MONEY MARKET SERVICE
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> FEB-29-1996
<PERIOD-START> MAR-01-1995
<PERIOD-END> FEB-29-1996
<INVESTMENTS-AT-COST> 70147
<INVESTMENTS-AT-VALUE> 70147
<RECEIVABLES> 474
<ASSETS-OTHER> 233
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 70854
<PAYABLE-FOR-SECURITIES> 2561
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 213
<TOTAL-LIABILITIES> 2774
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 38251
<SHARES-COMMON-STOCK> 38251
<SHARES-COMMON-PRIOR> 27732
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 0
<NET-ASSETS> 38251
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 1140
<OTHER-INCOME> 0
<EXPENSES-NET> 170
<NET-INVESTMENT-INCOME> 970
<REALIZED-GAINS-CURRENT> 0
<APPREC-INCREASE-CURRENT> 0
<NET-CHANGE-FROM-OPS> 970
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 970
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 77848
<NUMBER-OF-SHARES-REDEEMED> 68289
<SHARES-REINVESTED> 961
<NET-CHANGE-IN-ASSETS> 10519
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 123
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 194
<AVERAGE-NET-ASSETS> 30847
<PER-SHARE-NAV-BEGIN> 1
<PER-SHARE-NII> .032
<PER-SHARE-GAIN-APPREC> 0
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> .032
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 1
<EXPENSE-RATIO> .55
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<LEGEND>
This schedule contains Summary Financial Information extracted from the Form
N-SAR and the financial statements and is qualified in its entirety by
references to such documents.
</LEGEND>
<SERIES>
<NUMBER> 012
<NAME> NUVEEN MASSACHUSETTS MONEY MARKET DISTRIBUTION
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> FEB-29-1996
<PERIOD-START> MAR-01-1995
<PERIOD-END> FEB-29-1996
<INVESTMENTS-AT-COST> 70147
<INVESTMENTS-AT-VALUE> 70147
<RECEIVABLES> 474
<ASSETS-OTHER> 233
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 70854
<PAYABLE-FOR-SECURITIES> 2561
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 213
<TOTAL-LIABILITIES> 2774
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 26279
<SHARES-COMMON-STOCK> 26279
<SHARES-COMMON-PRIOR> 24237
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 0
<NET-ASSETS> 26279
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 905
<OTHER-INCOME> 0
<EXPENSES-NET> 134
<NET-INVESTMENT-INCOME> 771
<REALIZED-GAINS-CURRENT> 0
<APPREC-INCREASE-CURRENT> 0
<NET-CHANGE-FROM-OPS> 771
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 771
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 24525
<NUMBER-OF-SHARES-REDEEMED> 23241
<SHARES-REINVESTED> 758
<NET-CHANGE-IN-ASSETS> 2042
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 98
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 204
<AVERAGE-NET-ASSETS> 24381
<PER-SHARE-NAV-BEGIN> 1
<PER-SHARE-NII> .032
<PER-SHARE-GAIN-APPREC> 0
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> .032
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 1
<EXPENSE-RATIO> .55
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<LEGEND>
This schedule contains Summary Financial Information extracted from the Form
N-SAR and the financial statements and is qualified in its entirety by
references to such documents.
</LEGEND>
<SERIES>
<NUMBER> 013
<NAME> NUVEEN MASSACHUSETTS MONEY MARKET INSTITUTIONAL
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> FEB-29-1996
<PERIOD-START> MAR-01-1995
<PERIOD-END> FEB-29-1996
<INVESTMENTS-AT-COST> 70147
<INVESTMENTS-AT-VALUE> 70147
<RECEIVABLES> 474
<ASSETS-OTHER> 233
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 70854
<PAYABLE-FOR-SECURITIES> 2561
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 213
<TOTAL-LIABILITIES> 2774
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 3550
<SHARES-COMMON-STOCK> 3550
<SHARES-COMMON-PRIOR> 1036
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 0
<NET-ASSETS> 3550
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 124
<OTHER-INCOME> 0
<EXPENSES-NET> 18
<NET-INVESTMENT-INCOME> 106
<REALIZED-GAINS-CURRENT> 0
<APPREC-INCREASE-CURRENT> 0
<NET-CHANGE-FROM-OPS> 106
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 106
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 16474
<NUMBER-OF-SHARES-REDEEMED> 14006
<SHARES-REINVESTED> 46
<NET-CHANGE-IN-ASSETS> 2515
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 13
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 19
<AVERAGE-NET-ASSETS> 3374
<PER-SHARE-NAV-BEGIN> 1
<PER-SHARE-NII> .032
<PER-SHARE-GAIN-APPREC> 0
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> .032
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 1
<EXPENSE-RATIO> .54
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<LEGEND>
This schedule contains Summary Financial Information extracted from the Form
N-SAR and the financial statements and is qualified in its entirety by
references to such documents.
</LEGEND>
<SERIES>
<NUMBER> 021
<NAME> NUVEEN NEW YORK MONEY MARKET SERVICE
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> FEB-29-1996
<PERIOD-START> MAR-01-1995
<PERIOD-END> FEB-29-1996
<INVESTMENTS-AT-COST> 31923
<INVESTMENTS-AT-VALUE> 31923
<RECEIVABLES> 250
<ASSETS-OTHER> 148
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 32321
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 118
<TOTAL-LIABILITIES> 118
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 554
<SHARES-COMMON-STOCK> 554
<SHARES-COMMON-PRIOR> 640
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 0
<NET-ASSETS> 554
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 19
<OTHER-INCOME> 0
<EXPENSES-NET> 3
<NET-INVESTMENT-INCOME> 16
<REALIZED-GAINS-CURRENT> 0
<APPREC-INCREASE-CURRENT> 0
<NET-CHANGE-FROM-OPS> 16
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 16
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 364
<NUMBER-OF-SHARES-REDEEMED> 463
<SHARES-REINVESTED> 13
<NET-CHANGE-IN-ASSETS> (86)
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 2
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 10
<AVERAGE-NET-ASSETS> 503
<PER-SHARE-NAV-BEGIN> 1.00
<PER-SHARE-NII> .032
<PER-SHARE-GAIN-APPREC> 0
<PER-SHARE-DIVIDEND> .032
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 1.00
<EXPENSE-RATIO> .55
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<LEGEND>
This schedule contains Summary Financial Information extracted from the Form
N-SAR and the financial statements and is qualified in its entirety by
references to such documents.
</LEGEND>
<SERIES>
<NUMBER> 022
<NAME> NUVEEN NEW YORK MONEY MARKET DISTRIBUTION
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> FEB-29-1996
<PERIOD-START> MAR-01-1995
<PERIOD-END> FEB-29-1996
<INVESTMENTS-AT-COST> 31923
<INVESTMENTS-AT-VALUE> 31923
<RECEIVABLES> 250
<ASSETS-OTHER> 148
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 32321
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 118
<TOTAL-LIABILITIES> 118
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 31631
<SHARES-COMMON-STOCK> 31631
<SHARES-COMMON-PRIOR> 29798
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 0
<NET-ASSETS> 31631
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 1136
<OTHER-INCOME> 0
<EXPENSES-NET> 167
<NET-INVESTMENT-INCOME> 969
<REALIZED-GAINS-CURRENT> 0
<APPREC-INCREASE-CURRENT> 0
<NET-CHANGE-FROM-OPS> 969
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 969
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 36231
<NUMBER-OF-SHARES-REDEEMED> 35339
<SHARES-REINVESTED> 942
<NET-CHANGE-IN-ASSETS> 1834
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 121
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 285
<AVERAGE-NET-ASSETS> 30321
<PER-SHARE-NAV-BEGIN> 1.00
<PER-SHARE-NII> .032
<PER-SHARE-GAIN-APPREC> 0
<PER-SHARE-DIVIDEND> .032
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 1.00
<EXPENSE-RATIO> .55
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<LEGEND>
This schedule contains Summary Financial Information extracted from the Form
N-SAR and the financial statements and is qualified in its entirety by
references to such documents.
</LEGEND>
<SERIES>
<NUMBER> 023
<NAME> NUVEEN NEW YORK MONEY MARKET INSTITUTIONAL
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> FEB-29-1996
<PERIOD-START> MAR-01-1995
<PERIOD-END> FEB-29-1996
<INVESTMENTS-AT-COST> 31923
<INVESTMENTS-AT-VALUE> 31923
<RECEIVABLES> 250
<ASSETS-OTHER> 148
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 32321
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 118
<TOTAL-LIABILITIES> 118
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 17
<SHARES-COMMON-STOCK> 17
<SHARES-COMMON-PRIOR> 17
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 0
<NET-ASSETS> 17
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 1
<OTHER-INCOME> 0
<EXPENSES-NET> 0
<NET-INVESTMENT-INCOME> 1
<REALIZED-GAINS-CURRENT> 0
<APPREC-INCREASE-CURRENT> 0
<NET-CHANGE-FROM-OPS> 1
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 1
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 0
<NUMBER-OF-SHARES-REDEEMED> 0
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 0
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 0
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 0
<AVERAGE-NET-ASSETS> 17
<PER-SHARE-NAV-BEGIN> 1.00
<PER-SHARE-NII> .032
<PER-SHARE-GAIN-APPREC> 0
<PER-SHARE-DIVIDEND> .032
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 1.00
<EXPENSE-RATIO> .55
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<PAGE>
Exhibit 99(b)
Certified Resolution
--------------------
The undersigned, James J. Wesolowski, hereby certifies, on behalf of Nuveen
Tax-Free Money Market Fund, 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 January 21, 1996, and (3) that
said resolution has not been amended or rescinded and remains in full force and
effect.
June 10, 1996
/s/ James J. Wesolowski
------------------------------
James J. Wesolowski, Secretary
<PAGE>
Exhibit 99(b)
FURTHER RESOLVED, that each member of the Board and officer of the Fund who may
be required to execute the Registration Statement on Form N-1A, or any amendment
or amendments thereto, be, and each of them hereby is, authorized to execute a
power of attorney appointing Richard J. Franke, Timothy R. Schwertfeger, James
J. Wesolowski, Larry W. Martin, Gifford R. Zimmerman, and Thomas S. Harman, and
each of them, his true and lawful attorneys-in-fact and agents, with full power
of substitution and resubstitution, for him and in his name, place and stead, in
any and all capacities, to sign the Registration Statement and any and all
amendments thereto and to file the same, with all exhibits thereto, and other
documents in connection therewith, with the Securities and Exchange Commission,
granting unto said attorneys-in-fact and agents, and each of them, full power
and authority to do and perform each and every act and thing requisite or
necessary to be done in and about the premises, as fully to all intents and
purposes as he might or could do in person, and ratifying and confirming all
that said attorneys-in-fact and agents or any of them, or their or his
substitute or substitutes, may lawfully do or cause to be done by virtue
thereof.
