<PAGE>
As filed with the Securities and Exchange Commission on June 16, 1998.
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
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. [_]
--
Post-Effective Amendment No. 13 [X]
REGISTRATION STATEMENT UNDER THE
INVESTMENT COMPANY ACT OF 1940 [_]
Registration Statement No. 811-4822 [_]
Amendment No. 14 [X]
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
Gifford R. Zimmerman, Esq.-Vice President and Assistant Secretary
333 West Wacker Drive
Chicago, Illinois 60606
(Name and Address of Agent for Service)
It is proposed that this filing will become effective (check appropriate box):
[_] Immediately upon filing [_] on (date) pursuant to paragraph (a)(1)
pursuant to paragraph (b)
[X] on June 24, 1998 pursuant [_] 75 days after filing pursuant
to paragraph (b) to paragraph (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.
<PAGE>
CONTENTS
OF
POST-EFFECTIVE AMENDMENT NO. 13
TO
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
FILE NO. 33-8371
AND
AMENDMENT NO. 14
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; The Fund and Its Investment
Objective and Policies
(b) The Fund and Its Investment Objective and Policies
(c) The Fund and Its Investment Objective and Policies
5(a) Management of the Fund
(b) Management of the Fund
(c) Management of the Fund
(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 Fund
(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) Distribution and Service Plan
(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
(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]
Money Market
Funds
June 24, 1998
Prospectus
Dependable, tax-free income
to help you keep more of
what you earn.
[PHOTO APPEARS HERE]
Massachusetts
New York
<PAGE>
NUVEEN TAX-FREE MONEY MARKET FUND, INC.
Nuveen Massachusetts Tax-Free Money Market Fund
Nuveen New York Tax-Free Money Market Fund
JUNE 24, 1998
PROSPECTUS
Nuveen Tax-Free Money Market Fund, Inc. is an open-
end, diversified management investment company con-
sisting of the two money market funds named above
(the "Funds"). Each Fund represents a separate port-
folio, and has the objective of providing, through
investment in high quality short-term Municipal Obli-
gations, 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 main-
tenance 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 Informa-
tion" dated June 24, 1998, containing additional
information about the Funds has been filed with the
Securities and Exchange Commission and is incorpo-
rated 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) 858-4084.
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 Insur-
ance 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 DISAP-
PROVED BY THE SECURITIES AND EXCHANGE COMMISSION OR
ANY STATE SECURITIES COMMISSION NOR HAS THE SECURI-
TIES 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) 858-4084
---
1
<PAGE>
Contents
<TABLE>
<C> <S>
2 Summary of Fund Expenses
3 Highlights
5 Financial Highlights
6 Yield
7 The Fund and Its Investment
Objective and Policies
11 Management of the Fund
12 Dividends and Taxes
13 Net Asset Value
14 How to Buy Fund Shares
16 How to Redeem Fund Shares
19 General Information
19 Taxable Equivalent Yield Tables
</TABLE>
Summary of Fund Expenses
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 28,
1998.
<TABLE>
<CAPTION>
INSTITUTIONAL DISTRIBUTION SERVICE
SHAREHOLDER TRANSACTION EXPENSES SERIES PLAN SERIES PLAN SERIES
- -------------------------------------------------------------------------------
<S> <C> <C> <C>
MASSACHUSETTS FUND
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
NEW YORK FUND
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 INSTITUTIONAL DISTRIBUTION SERVICE
PERCENTAGE OF AVERAGE DAILY 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 .12
Other operating expenses, after expense
reimbursements .15 .06 .03
- -------------------------------------------------------------------------------
Total expenses, after expense reim-
bursements .55 .55 .55
- -------------------------------------------------------------------------------
NEW YORK FUND
Management fees .40% .40% .40%
12b-1 fees (or service fees) None .05 .04
Other operating expenses, after expense
reimbursements .15 .10 .11
- -------------------------------------------------------------------------------
Total expenses, after expense reim-
bursements .55 .55 .55
- -------------------------------------------------------------------------------
</TABLE>
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:
All series $6 $18 $31 $69
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.
---
2
<PAGE>
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.
As discussed under "Management of the Funds" and reflected in the tables on the
previous page, the management fee is reduced or Nuveen Advisory assumes certain
expenses 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 the series. Without expense reimbursements, for the fiscal year
ended February 28, 1998, other operating expenses would have been .28 .46 and
.37, and total expenses would have been .68, .95, and .89, 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 28, 1998, other
operating expenses would have been .73, .44, and .76, and total expenses would
have been 1.13, .89, and 1.20 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."
Highlights
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 out-
standing: the Nuveen Massachusetts Tax-Free Money Market Fund (the "Massachu-
setts 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 Obli-
gations 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 13 and "Investment Objective" on page 7.
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 inter-
est 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 share-
holders of that Fund. See "Dividends and Taxes" on page 12.
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 pay-
ment 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 14, or for further information, please call Nuveen toll-free at (800) 858-
4084.
HOW TO REDEEM FUND SHARES
Shareholders may redeem shares at the net asset value next computed after
receipt of a redemption request in proper form on any business day. Sharehold-
ers may make redemption requests in writing or, for shareholders of the Distri-
bution 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 17.
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 12.
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 share-
holder 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 16. 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. See "Management of the Funds"
on page 11.
INVESTMENTS
Each of the Funds invests primarily in Municipal Obligations consisting of
money market instruments issued by governmental authorities in the Fund's des-
ignated state (or
---
3
<PAGE>
in certain possessions of the United States) having ratings or other credit and
risk characteristics as described on pages 7-11, 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 guar-
anteed 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 remain-
ing 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 7.
The information set forth above should be read in conjunction with the detailed
information set forth elsewhere in this Prospectus.
---
4
<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
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 fol-
lows:
<TABLE>
<CAPTION>
OPERATING PERFORMANCE LESS DISTRIBUTIONS
----------------------- ------------------------
NET
REALIZED AND DIVIDENDS NET TOTAL
NET ASSET UNREALIZED FROM TAX- ASSET RETURN
VALUE NET GAIN (LOSS) EXEMPT NET DISTRIBUTIONS VALUE ON NET
BEGINNING INVESTMENT FROM INVESTMENT FROM CAPITAL END OF ASSET
OF PERIOD INCOME(A) INVESTMENTS INCOME GAINS PERIOD VALUE(B)
- ------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
MASSACHUSETTS**
- ------------------------------------------------------------------------------------------------------
YEAR ENDED
FEBRUARY 28/29
1998
Service Plan series $1.00 $.03 $-- $(.03) $-- $1.00 3.05%
Distribution Plan series 1.00 .03 -- (.03) -- 1.00 3.05
Institutional series 1.00 .03 -- (.03) -- 1.00 3.05
1997
Service Plan series 1.00 .03 -- (.03) -- 1.00 2.84
Distribution Plan series 1.00 .03 -- (.03) -- 1.00 2.84
Institutional series 1.00 .03 -- (.03) -- 1.00 2.84
1996
Service Plan series 1.00 .03 -- (.03) -- 1.00 3.17
Distribution Plan series 1.00 .03 -- (.03) -- 1.00 3.17
Institutional series 1.00 .03 -- (.03) -- 1.00 3.18
1995
Service Plan series 1.00 .03 -- (.03) -- 1.00 2.53
Distribution Plan series 1.00 .03 -- (.03) -- 1.00 2.53
Institutional series 1.00 .03 -- (.03) -- 1.00 2.61
1994
Service Plan series 1.00 .02 -- (.02) -- 1.00 1.77
Distribution Plan series 1.00 .02 -- (.02) -- 1.00 1.74
Institutional series 1.00 .02 -- (.02) -- 1.00 1.80
1993
Service Plan series 1.00 .02 -- (.02) -- 1.00 2.33
Distribution Plan series 1.00 .02 -- (.02) -- 1.00 2.33
Institutional series 1.00 .02 -- (.02) -- 1.00 2.34
1992(C)
Service Plan series 1.00 .03 -- (.03) -- 1.00 3.22
Distribution Plan series 1.00 .03 -- (.03) -- 1.00 3.22
Institutional series 1.00 .03 -- (.03) -- 1.00 3.24
1991(D)
Service Plan series 1.00 .05 -- (.05) -- 1.00 5.30
Distribution Plan series 1.00 .05 -- (.05) -- 1.00 5.30
Institutional series 1.00 .05 -- (.05) -- 1.00 5.30
1990(E) 1.00 .06 -- (.06) -- 1.00 5.70
1989(E) 1.00 .05 -- (.05) -- 1.00 5.00
<CAPTION>
RATIOS/SUPPLEMENTAL DATA
------------------------------------------------------------------------
RATIO OF NET RATIO OF NET
RATIO OF INVESTMENT RATIO OF INVESTMENT
NET ASSETS EXPENSES TO INCOME TO EXPENSES TO INCOME TO
END OF AVERAGE NET AVERAGE NET AVERAGE NET AVERAGE NET
PERIOD (IN ASSETS BEFORE ASSETS BEFORE ASSETS AFTER ASSETS AFTER
THOUSANDS) REIMBURSEMENT REIMBURSEMENT REIMBURSEMENT(A) REIMBURSEMENT(A)
- ------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
MASSACHUSETTS**
- ------------------------------------------------------------------------------------------------------
YEAR ENDED
FEBRUARY 28/29
1998
Service Plan series $6,085 .89% 2.71% .55% 3.05%
Distribution Plan series 25,920 .95 2.65 .55 3.05
Institutional series 5,578 .68 2.91 .55 3.04
1997
Service Plan series 9,964 .74 2.64 .55 2.83
Distribution Plan series 27,083 .90 2.49 .55 2.84
Institutional series 3,977 .61 2.78 .55 2.84
1996
Service Plan series 38,251 .63 3.06 .55 3.14
Distribution Plan series 26,279 .84 2.87 .55 3.16
Institutional series 3,550 .57 3.12 .54 3.15
1995
Service Plan series 27,732 .61 2.49 .55 2.55
Distribution Plan series 24,237 .82 2.28 .55 2.55
Institutional series 1,036 .47 2.63 .47 2.63
1994
Service Plan series 38,576 .55 1.88 .52 1.91
Distribution Plan series 27,773 .76 1.67 .55 1.88
Institutional series 3,406 .49 1.93 .49 1.93
1993
Service Plan series 40,214 .73 2.16 .55 2.34
Distribution Plan series 27,993 .82 2.07 .55 2.34
Institutional series 5,325 .58 2.31 .55 2.34
1992(C)
Service Plan series 61,476 .62* 3.73* .55* 3.80*
Distribution Plan series 34,509 .72* 3.63* .55* 3.80*
Institutional series 8,917 .53* 3.82* .53* 3.82*
1991(D)
Service Plan series 37,979 .68 5.12 .55 5.25
Distribution Plan series 33,809 .76 5.04 .55 5.25
Institutional series 14,973 .54 5.26 .54 5.26
1990(E) 53,631 .74 5.48 .55 5.67
1989(E) 31,319 .76 4.97 .55 5.18
- ------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------
</TABLE>
See notes on page 6.
---
5
<PAGE>
Selected data for a common share outstanding throughout each period is as fol-
lows:
<TABLE>
<CAPTION>
OPERATING PERFORMANCE LESS DISTRIBUTIONS
----------------------- ------------------------
NET
REALIZED AND DIVIDENDS NET TOTAL
NET ASSET UNREALIZED FROM TAX- ASSET RETURN
VALUE NET GAIN (LOSS) EXEMPT NET DISTRIBUTIONS VALUE ON NET
BEGINNING INVESTMENT FROM INVESTMENT FROM CAPITAL END OF ASSET
OF PERIOD INCOME(A) INVESTMENTS INCOME GAINS PERIOD VALUE(B)
- ------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
NEW YORK**
- ------------------------------------------------------------------------------------------------------
YEAR ENDED
FEBRUARY 28/29
1998
Service Plan series $1.00 $.03 $ -- $ (.03) $ -- $ 1.00 3.10%
Distribution Plan series 1.00 .03 -- (.03) -- 1.00 3.10
Institutional series 1.00 .03 -- (.03) -- 1.00 3.10
1997
Service Plan series 1.00 .03 -- (.03) -- 1.00 2.90
Distribution Plan series 1.00 .03 -- (.03) -- 1.00 2.90
Institutional series 1.00 .03 -- (.03) -- 1.00 2.90
1996
Service Plan series 1.00 .03 -- (.03) -- 1.00 3.20
Distribution Plan series 1.00 .03 -- (.03) -- 1.00 3.20
Institutional series 1.00 .03 -- (.03) -- 1.00 3.20
1995
Service Plan series 1.00 .02 -- (.02) -- 1.00 2.36
Distribution Plan series 1.00 .02 -- (.02) -- 1.00 2.37
Institutional series 1.00 .02 -- (.02) -- 1.00 2.28
1994
Service Plan series 1.00 .02 -- (.02) -- 1.00 1.51
Distribution Plan series 1.00 .02 -- (.02) -- 1.00 1.51
Institutional series 1.00 .02 -- (.02) -- 1.00 1.51
1993
Service Plan series 1.00 .02 -- (.02) -- 1.00 2.02
Distribution Plan series 1.00 .02 -- (.02) -- 1.00 2.02
Institutional series 1.00 .02 -- (.02) -- 1.00 2.02
1992(C)
Service Plan series 1.00 .03 -- (.03) -- 1.00 2.94
Distribution Plan series 1.00 .03 -- (.03) -- 1.00 2.94
Institutional series 1.00 .03 -- (.03) -- 1.00 2.97
1991(D)
Service Plan series 1.00 .05 -- (.05) -- 1.00 4.73
Distribution Plan series 1.00 .05 -- (.05) -- 1.00 4.73
Institutional series 1.00 .05 -- (.05) -- 1.00 4.73
<CAPTION>
RATIOS/SUPPLEMENTAL DATA
-------------------------------------------------------------------------
RATIO OF NET RATIO OF NET
RATIO OF INVESTMENT RATIO OF INVESTMENT
NET ASSETS EXPENSES TO INCOME TO EXPENSES TO INCOME TO
END OF AVERAGE NET AVERAGE NET AVERAGE NET AVERAGE NET
PERIOD (IN ASSETS BEFORE ASSETS BEFORE ASSETS AFTER ASSETS AFTER
THOUSANDS) REIMBURSEMENT REIMBURSEMENT REIMBURSEMENT(A) REIMBURSEMENT(A)
- ------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
NEW YORK**
- ------------------------------------------------------------------------------------------------------
YEAR ENDED
FEBRUARY 28/29
1998
Service Plan series $ 1,406 1.20% 2.38% .55% 3.03%
Distribution Plan series 28,854 .89 2.75 .55 3.09
Institutional series 17 1.13 2.52 .55 3.10
1997
Service Plan series 414 1.27 2.17 .55 2.89
Distribution Plan series 26,116 .92 2.52 .55 2.89
Institutional series 17 1.12 2.33 .55 2.90
1996
Service Plan series 554 1.92 1.82 .55 3.19
Distribution Plan series 31,631 .94 2.80 .55 3.19
Institutional series 17 1.38 2.37 .55 3.20
1995
Service Plan series 640 .95 1.98 .55 2.38
Distribution Plan series 29,798 .79 2.14 .55 2.38
Institutional series 17 2.14 .79 .55 2.38
1994
Service Plan series 557 1.49 .69 .55 1.63
Distribution Plan series 27,886 .78 1.40 .55 1.63
Institutional series 17 4.60 (2.42) .55 1.63
1993
Service Plan series 529 1.17 1.42 .55 2.04
Distribution Plan series 34,827 .78 1.81 .55 2.04
Institutional series 17 19.33 (16.59) .55 2.19
1992(C)
Service Plan series 1,934 .87* 3.19* .55* 3.51*
Distribution Plan series 45,259 .71* 3.35* .55* 3.51*
Institutional series 17 11.89* (7.83)* .55* 3.51*
1991(D)
Service Plan series 1,653 .88 4.39 .55 4.72
Distribution Plan series 41,446 .69 4.58 .55 4.72
Institutional series 17 .62 4.65 .55 4.72
1990(E) 1.00 .05 -- (.05) -- 1.00 5.36
1989(E) 1.00 .05 -- (.05) -- 1.00 4.95
- ------------------------------------------------------------------------------------------------------
1990(E) 41,602 .71 5.18 .55 5.34
1989(E) 30,262 .86 4.74 .55 5.05
- ------------------------------------------------------------------------------------------------------
</TABLE>
* Annualized.
**Effective for the fiscal year ended April 30, 1991, and thereafter, the Fund
has presented the per share data by series.
(a) After waiver of certain management fees or reimbursement of expenses, if
applicable, by Nuveen Advisory.
(b) Total returns are calculated on net asset value and are not annualized.
(c) For the ten months ended February 29.
(d) For the fiscal year ended April 30.
(e) For the fiscal year ended April 30, represents combined per share data and
ratios for the Service Plan, Distribution Plan and Institutional Series.
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
---
6
<PAGE>
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 Addi-
tional Information.
Based on the seven-day period ended February 28, 1998, the current yield,
effective yield and taxable equivalent yield (using a combined federal and
state income tax rate of 46.8% for Massachusetts and 43.7% for New York) for
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 2.75% 2.79% 5.17%
NEW YORK FUND
Service and Distribution Series 2.84% 2.88% 5.04%
Institutional Series 2.83% 2.87% 5.03%
- -------------------------------------------------------------
</TABLE>
This Prospectus may be in use for a full year and it can be expected that dur-
ing this period there will be material fluctuations in yield from that quoted
above. For information as to current yields, please call Nuveen at (800) 858-
4084.
The Fund and Its Investment Objective and Policies
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 Obliga-
tions (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 mainte-
nance 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 Obli-gations 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 pur-
suant 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 fed-
eral income tax. Because of the different credit characteristics of governmen-
tal 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 invest-
ment objective by investing at least 80% of its net assets in its designated
state's short-term Municipal Obligations, except during temporary defensive
periods.
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 pur-
chase are highly rated by nationally recognized statistical rating organiza-
tions; (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 pur-
chasing 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 indi-
ces 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 Com-
pany 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
---
7
<PAGE>
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 commer-
cial banks as evidence of borrowings. Since these short-term securities fre-
quently serve as interim financing pending receipt of anticipated funds from
the issuance of long-term bonds, tax collections or other anticipated future
revenues, a weakness in an issuer's ability to obtain such funds as anticipated
could adversely affect the issuer's ability to meet its obligations on 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.
To help protect against such losses, each Fund has obtained from MBIA Insurance
Corp. a commitment to issue, subject to certain conditions and at a Fund's
request, insurance policies to cover certain Municipal Obligations held by the
Fund that are backed by a credit agreement from one of a number of banks previ-
ously approved by MBIA. If the bank were to deteriorate financially (under
standards set forth in MBIA's commitment), the Fund could elect to purchase
insurance on the underlying Municipal Obligation from MBIA, which would insure
payment of regularly scheduled principal of and interest on the Municipal Obli-
gation. Although this insurance would not guarantee the market value of the
Municipal Obligation or the value of the Fund shares, each Fund believes that
its ability to obtain such insurance will enable the Fund to hold or sell these
securities 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 circum-
stances, a Fund may invest more than 20% of its net assets in temporary invest-
ments 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 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 acquisi-
tion of securities.
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 28, 1998, the average
maturity of the Massachusetts Fund ranged from 36 to 60 days and the average
maturity of the New York Fund ranged from 25 to 54 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 posses-
sions 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 gener-
ally 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 Obliga-
tions, 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 interest (see below). These issues may be either general obli-
gation bonds or revenue bonds.
Notes are short-term instruments with a maturity of two years or less. Most
notes are general obligations of the issuer and are sold in anticipation of a
bond sale, collection of taxes or receipt of other revenues. Payment of these
notes is primarily dependent upon the issuer's receipt of the anticipated reve-
nues.
Municipal Obligations also include very short-term unsecured, negotiable prom-
issory notes, issued by states, municipalities, and their agencies which are
known as
---
8
<PAGE>
"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 Obliga-
tion 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 reg-
ular settlement date. (When-issued transactions normally settle within 15 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 commit-
ment to purchase securities on a when-issued or delayed delivery basis may
involve an element of risk because the value of the securities is subject to
market fluctuation. No interest accrues 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 abil-
ity 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 contrib-
uted to higher interest rates on debt obligations. As a result of these diffi-
culties, 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 AA- by S&P and Aa3 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 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, 1995, 1996 and 1997 results indicate that revenues exceeded expen-
ditures, 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 Com-
monwealth, including social and economic conditions, many of which are not
within the control of the Commonwealth.
---
9
<PAGE>
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 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 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.
The State's economy remains more reliant on the securities industry than is the
national economy. As a result, the State remains susceptible to downturns in
that industry, which could cause adverse changes in wage and employment levels.
The State has projected continued moderate economic growth within New York dur-
ing 1998 and 1999, although growth rates will lessen gradually during the
course of the two years. Personal income growth is expected to be modest but
below 1997 levels largely because increases in 1998 year-end bonuses are
expected to be lower.
The State expects to end its 1997-98 fiscal year with an operating surplus of
approximately $1.8 billion. The State Legislature enacted the State's 1997-98
fiscal year budget on August 4, 1997, more than four months after the start of
that fiscal year.
As of January 20, 1998, the updated 1997-98 State Financial Plan (the "Plan")
projected total general fund receipts of $35.2 billion and disbursements of
$35.2 billion, representing increases in receipts and disbursements of $2.15
billion and $2.27 billion over 1996-97 fiscal year. The Plan projected a Gen-
eral Fund balance of approximately $465 million at the close of the 1997-98
fiscal year.
The Governor issued a proposed State budget for the 1998-99 fiscal year on Jan-
uary 20, 1998, which projected a balanced general fund and receipts and dis-
bursements of $36.22 billion and 36.18 billion, respectively. As of May 11,
1998, the State legislature had not yet enacted, nor had the Governor and the
legislature reached an agreement on, the budget for the 1998-99 fiscal year
commencing on April 1, 1998. 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 pro-
grams. The delay in the enactment of the budget may negatively affect certain
proposed actions and reduce projected savings.
On June 4, 1997, New York City adopted a 1998 fiscal year budget, which pro-
vided for $33.4 billion in spending. Due to increased tax revenues resulting
from increased Wall Street profits and tourism, New York City has estimated
that it may end the 1998 fiscal year with a surplus of $2.0 billion. On April
24, 1998, the Mayor outlined his proposed $34.1 billion Executive Budget. The
Mayor's proposed budget called for $595 million in additional spending cuts at
City agencies and a continuation of the personal income tax surcharge which is
due to expire. The 1998-99 budget proposal includes several tax reductions
including the elimination of the City's sales tax on all clothing and shoe pur-
chases under $110.
The Governor and the legislature have not agreed upon the level of State aid to
the City during the 1999 fiscal year and there can be no assurances that fur-
ther cuts will not be necessary to close additional budget gaps once a state
budget is adopted. 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 spend-
ing reductions or tax increases to balance the City's budget for the 1999 and
later fiscal years. If the State, the State Agencies, New York City, other
municipalities or school districts were to suffer serious financial difficul-
ties 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.
On March 5, 1997, New York Governor George Pataki signed legislation creating
The New York City Transitional Finance Authority, which is authorized to issue
up to $7.5 billion in bonds for capital spending by New York City. The City had
faced limitations on its borrowing capacity after 1998 under the State's Con-
stitution that would have prevented it from borrowing additional funds, as a
result of the decrease in real estate values within the City. The first issu-
ance of TFA debt occurred in October 1997.
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) 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; (3) 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 (4) 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 govern-
ments, and obligations issued or guaranteed by the U.S. Government, its agen-
cies or instrumentalities. For purposes of the foregoing sentence, the "issuer"
of a security shall be deemed to be the entity whose assets
---
10
<PAGE>
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 securi-
ties.
For a more complete description of the fundamental and non-fundamental invest-
ment 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, which-
ever is less.
Management of the Fund
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 Direc-
tors 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 cleri-
cal, 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 divi-
dends 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 28, 1998, management fees amounted to .40 of 1% of the average
daily net assets of each Fund. For the fiscal year ended February 28, 1998, net
of applicable expense reimbursements, total expenses were .55 of 1% of the
average daily net assets of each series of the Massachusetts and New York
Funds. Without expense reimbursements, total expenses for the fiscal year ended
February 28, 1998 would have been .68, .95 and .89 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 1.13, .89 and
1.20 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 currently serves as investment adviser to 42 open-end funds
(the "Nuveen Mutual Funds") and 52 exchange-traded municipal securities funds
(the "Nuveen Exchange-Traded Funds"). As of the date of this Prospectus, Nuveen
Advisory manages approximately $36 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. Nuveen, the princi-
pal underwriter of the Fund's shares, is the sponsor of the Nuveen Tax-Exempt
Unit Trust and Nuveen Unit Trusts, registered unit investment trusts. It is
also the principal underwriter of 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 funds and unit trusts.
Founded in 1898, Nuveen is a subsidiary of The John Nuveen Company which, in
turn, is approximately 78% owned by The St. Paul Companies, Inc. ("St. Paul").
St. Paul is located in St. Paul, Minnesota, and is principally engaged in pro-
viding property-liability insurance through subsidiaries.
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11
<PAGE>
Dividends and Taxes
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 divi-
dend. 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 Distribu-
tion Plan series of the Funds, expenses will include, among other things, pay-
ments to banks or other organizations and securities dealers pursuant to
Service Agreements and Distribution Agreements with Nuveen. See "Distribution
and Service Plan" 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 addi-
tional 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.
FEDERAL INCOME TAX MATTERS
Each Fund intends to qualify, as it has in prior years, under Subchapter M of
the Internal Revenue Code of 1986, as amended (the "Code"), for tax treatment
as a regulated investment company. 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 tempo-
rary 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 corpora-
tions. 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 distri-
butions to shareholders 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.
The Code provides that interest on indebtedness incurred or continued to pur-
chase 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 substan-
tial users. Accordingly, the Funds may not be appropriate investments for
shareholders who are considered either a "substantial user" or a "related per-
son" 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 mini-
mum tax on corporations and individuals. This type of private activity bond
includes most industrial and housing revenue bonds. Shareholders whose tax lia-
bility 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 corpo-
rations 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 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.
STATE INCOME TAX MATTERS
MASSACHUSETTS
Individual shareholders of the Massachusetts Fund who are subject to Massachu-
setts income taxation will not be required to include that portion of their
federally tax-exempt dividends in Massachusetts gross income which the Massa-
chusetts 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
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notice mailed to shareholders of the Massachusetts Fund. Similarly, such share-
holders will not be required to include in Massachusetts gross income capital
gain dividends designated by the Massachusetts Fund to the extent such divi-
dends 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 United
States obligations exempt from state taxation and included in Federal gross
income will not be included in Massachusetts gross income, provided such divi-
dends 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' Mas-
sachusetts income.
With respect to corporate shareholders of the Massachusetts Fund that are sub-
ject to the Massachusetts excise tax, dividends received from the Massachusetts
Fund are includable in gross income and generally may not be deducted by corpo-
rate shareholders in computing their net income, and the net worth base of an
intangible property corporation includes the corporate 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 div-
idends (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. Distributions to individual shareholders of
dividends derived from interest that does not qualify as exempt-interest divi-
dends (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 authori-
ties in states other than New York State, and distributions derived from inter-
est 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.
In addition, interest incurred by a shareholder to purchase or carry shares of
the New York Fund is not deductible for New York personal income taxes to the
extent that it relates to dividends exempt from New York State tax that are
distributed to a shareholder during the taxable year.
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 unincorpo-
rated 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 sharehold-
ers. 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 sharehold-
ers 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.
Net Asset Value
Net asset value of the shares of each Fund will be determined by The Chase Man-
hattan Bank, 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 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 pur-
chase
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<PAGE>
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.
How to Buy Fund Shares
IN GENERAL
Shares of each of the Funds may be purchased by residents of the Fund's desig-
nated 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 dis-
tribution 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 Agree-
ments 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 com-
pared with the holders of the Institutional series of the same Fund. These fees
are described below under the caption "Distribution and Service Plan" 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. How-
ever, 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 require-
ments.
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 TELEPHONE
To open an account, call Nuveen toll-free at (800) 858-4084 to 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:
(on or before August 10, 1998)
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:
(after August 10, 1998)
Chase Manhattan Bank
ABA #021000021 DDA #323-096328
For: The Nuveen Funds
For [Nuveen Fund Name]
Please include your name and account number.
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 the bank 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 fol-
lowing business day.
PURCHASE BY MAIL
To open an account, complete the Application Form and mail it 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 (if mailed before
August 10, 1998) and to Nuveen Tax-Free Money Market Fund, Inc. P.O. Box 5186,
Bowling Green Station, New York, New York, 10274-5186 (if mailed after August
10, 1998). Subsequent investments may be made by
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<PAGE>
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 long-
er.
FUND DIRECT--ELECTRONIC FUNDS TRANSFER
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 a Systematic
Investment Plan, and sending dividends and distributions, redemption payments
or Systematic Withdrawal Plan payments directly to your bank account. To acti-
vate Fund Direct privileges, just complete the appropriate section of the
enclosed Account Application, or an Account Update Form. To obtain an Account
Update Form, call Nuveen at (800) 858-4084. 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 you indicate other-
wise in writing. After you establish Fund Direct privileges for your account,
any change of bank account information must be made by signature-guaranteed
instructions to our Transfer Agent as described in "How to Redeem Fund Shares."
Purchases may be made by telephone only after your account has been estab-
lished. To purchase shares in amounts up to $250,000 through a telephone repre-
sentative, call our Transfer Agent at (800) 858-4084. The purchase payment will
be debited from your bank account.
PURCHASE THROUGH A SECURITIES DEALER
OR SERVICE ORGANIZATION
To open an account through a bank or a securities broker or dealer ("service
organization"), investors should send money to that organization for transmis-
sion to the Funds and furnish it with the information required in the Applica-
tion Form. Each 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 REINVESTMENT OF
NUVEEN UNIT TRUST DISTRIBUTIONS
Unitholders of Nuveen Unit Trusts may purchase shares of the Fund for the des-
ignated state of which they are residents by automatically reinvesting distri-
butions from their Nuveen Unit Trust. To obtain information on share purchases
through investment of Nuveen Unit Trust distributions, check the applicable box
on the enclosed Application Form or call Nuveen toll-free at (800) 858-4084.
COMMENCEMENT OF DIVIDENDS
Shares are deemed to have been purchased and are entitled to dividends commenc-
ing on the day the purchase order becomes effective.
THE FUND OFFERS TWO DIFFERENT TYPES
OF SYSTEMATIC INVESTMENT PROGRAMS
SYSTEMATIC INVESTMENT PLAN
Once you have established a Fund account, you may make regular investments in
an amount of $50 or more each month by authorizing our Transfer Agent 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 discre-
tion. No charge is made in connection with this Plan, and there is no cost to
the Funds. To obtain an Account Update Form which you can use to initiate a
Systematic Investment Plan, call Nuveen toll-free at (800) 858-4084.
PAYROLL DIRECT DEPOSIT PLAN
Once you have established a Fund account you may, with your employer's consent,
make regular investments in Fund shares of $50 or more per month 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) 858-4084.
OTHER SHAREHOLDER PROGRAMS
EXCHANGE PRIVILEGES
You may exchange shares of a Fund for the appropriate class of shares of any
other Nuveen open-end fund with reciprocal exchange privileges, (the "Nuveen
Funds"), into an identically registered account, 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. You may exchange Fund shares by calling (800) 858-4084 or by mailing
your written request to our Transfer Agent. Shares of Nuveen Funds purchased
subject to a front-end sales charge may be exchanged for shares of the Funds or
any other Nuveen Fund at the next determined net asset value without any front-
end sales charge. No CDSC otherwise applicable, will be assessed on an
exchange, and the holding period of your investment will be carried over to the
new fund for purposes of determining any future CDSC. You may not exchange B
shares for shares of a Nuveen money market fund. Shares of any Nuveen Fund pur-
chased through dividend reinvestment or through reinvestment of Nuveen Unit
Trust distributions (and any dividends thereon) may be exchanged for Class A
shares of any 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
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<PAGE>
shares (i.e., the shares to be exchanged were originally issued in exchange for
shares on which a front-end sales charge was paid), in which case the exchange
will be made at net asset value. Because certain other Nuveen Funds may deter-
mine 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 our Transfer Agent. The exchange privilege
may be modified or discontinued at any time. If you do not wish to have tele-
phone exchange privileges, you must indicate this on the "Telephone Services"
section of your Account Application or otherwise notify the Fund in writing of
your desire.
ADDITIONAL INFORMATION
An account will be maintained for each shareholder of record in the Funds by
our Transfer Agent. Share certificates will be issued only upon written request
of the shareholder to our Transfer Agent. No certificates are issued for frac-
tional shares. The 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
our Transfer Agent's sub-accounting system to minimize their internal record-
keeping requirements. A broker/dealer or other investor requesting shareholder
servicing or accounting other than the master account or 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.
The Fund has authorized one or more brokers to accept on its behalf purchase
and redemption orders. Such brokers are authorized to designate other interme-
diaries to accept purchase and redemption orders on the Fund's behalf. The Fund
will be deemed to have received a purchase or redemption order when an autho-
rized broker or, if applicable, a broker's authorized designee accepts the
order. Customer orders received by such broker (or their designee) will be
priced at the Fund's net asset value next computed after they are accepted by
an authorized broker (or their designee). Orders accepted by an authorized bro-
ker (or their designee) before the close of regular trading on the New York
Stock Exchange will receive that day's share price; orders accepted after the
close of trading will receive the next business day's share price.
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 suspen-
sion 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 fees to securities dealers and service organizations for services
rendered in the distribution of shares of such Fund or the servicing of share-
holder accounts. Such services may include, among other things, establishing
and maintaining shareholder accounts; processing purchase and redemption trans-
actions; arranging for bank wires; performing sub-accounting; answering share-
holder 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 will be made to such organizations in amounts
of up to .25 of 1% per year of average assets of serviced accounts and 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 materi-
ally 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 Distribu-
tion Plan series and the Service Plan series of the Funds should read this pro-
spectus in light of the terms governing their accounts with securities dealers
and service organizations, respectively.
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<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 deter-
mine 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 pro-
ceeds 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.
CHECK REDEMPTION
Shareholders of the Distribution Plan series of any Fund may request that the
Fund provide them with drafts ("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 Kan-
sas 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 frac-
tional 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 fea-
ture does not constitute a bank checking account.
BY WRITTEN REQUEST
Shareholders may redeem their shares by sending a written request for redemp-
tion directly to Nuveen Tax-Free Money Market Fund, Inc., c/o Shareholder Serv-
ices, Inc., P.O. Box 5330, Denver, Colorado 80217-5330 (if mailed before August
10, 1998) and to the Fund, c/o Nuveen Investor Services, P.O. Box 5186, Bowling
Green, New York, New York 10274-5186 (if mailed after August 10, 1998), accom-
panied 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 guaranteed by a member of an
approved Medallion Guarantee Program or in such other manner as may be accept-
able 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.
TELEPHONE REDEMPTION BY CHECK
Unless you have declined telephone privileges, you may sell Fund shares by
calling (800) 858-4084. Your telephone redemption must not exceed $50,000 and
you may not redeem by telephone shares held in certificate form. 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 will be effected and the redemption check will
be mailed on the second business day.
Nuveen, the transfer agent, or the Fund will be liable for losses resulting
from unauthorized telephone redemptions only if they do not follow reasonable
procedures designed to verify the identity of the caller. You should immedi-
ately verify your trade confirmations when you receive them. Telephone redemp-
tions will not be honored for 30 days after the address on your account has
changed.
TELEPHONE REDEMPTION VIA FUND DIRECT
To redeem shares held in non-certificate form by telephone with the redemption
proceeds paid via Fund Direct-Electronic Funds Transfer, you must complete the
Telephone Services section of the enclosed Application Form and return it to
Nuveen or our Transfer Agent. If you did not authorize Telephone Redemption via
Fund Direct when you opened your account, you may do so by sending a 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. Proceeds of share redemptions made by Fund
Direct will be transferred only to the commercial bank account specified by the
shareholder. Redemption proceeds may be delayed one additional business day if
the Federal Reserve Bank of Boston or the Federal Reserve Bank of New York is
closed on the day the redemption proceeds would ordinarily be wired.
If you have authorized Telephone Redemption via Fund Direct, you can take
advantage of two methods of telephone redemption: regular telephone redemption
and expedited telephone redemption. You may make regular
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17
<PAGE>
Fund Direct redemption requests by calling Nuveen at (800) 858-4084. If a regu-
lar telephone redemption 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 on the following business day. For regular redemption
requests received after 4:00 p.m. Eastern Time, the shares to be redeemed earn
income through the following business day, and the redemption is effected on
the second business day following the request. For all regular redemptions, you
will typically receive your funds within three business days after your redemp-
tion is effected. You may make expedited telephone redemption requests to
redeem shares that are worth at least $1,000 by calling Nuveen at (800) 858-
4084. If an expedited redemption request is received by 12:00 noon Eastern
Time, the shares to be redeemed do not earn income on that day, but the redemp-
tion is effected, and you will normally receive your funds, on that day. If an
expedited redemption request is received after 12:00 noon Eastern Time, the
shares to be redeemed earn income on the day the request is received. The
redemption is effected, and you will normally receive your funds, on the next
business day following the request. The Fund reserves the right to charge a fee
for expedited redemption requests.
HOW TO CHANGE AUTHORIZED REDEMPTION INSTRUCTIONS
In order to establish multiple accounts, or to change the account or accounts
designated to receive redemption proceeds, a written request specifying the
change must be sent to Nuveen. This request must be signed by each account
owner with signatures guaranteed by a member of an approved Medallion Guarantee
Program or in such other manner as may be acceptable to the Fund. Further docu-
mentation may be required from corporations, executors, trustees or personal
representatives.
The Funds reserve the right to refuse telephone redemptions and, at their
option, may limit the timing, amount or frequency of these redemptions. Tele-
phone 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.
REDEMPTION THROUGH SERVICE ORGANIZATIONS
Fund shareholders may also redeem shares through their accounts with service
organizations in accordance with procedures established by each such service
organization. The 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 organiza-
tions the procedures and charges, if any, that govern redemptions.
SYSTEMATIC WITHDRAWAL PLAN
If you own Fund shares currently worth at least $10,000, you may establish a
Systematic Withdrawal Plan by completing an 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) 858-4084. 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. A
Systematic Withdrawal Plan may be terminated at any time by you or the Fund. To
obtain an Account Update Form, which you can use to initiate a Systematic With-
drawal Plan, call Nuveen toll-free at (800) 858-4084.
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 pol-
icy 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 secu-
rities 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.
ACCOUNT MINIMUMS
From time to time, the funds may establish minimum account size requirements.
The funds reserve the right to liquidate your account upon 30 days written
notice if the value of your account falls below an established minimum. The
funds presently have set a minimum balance of $100 unless you have an active
unit trust reinvestment account.
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.
---
18
<PAGE>
General Information
INVESTOR INQUIRIES
Investor inquiries may be made directly of the Funds in writing or by calling
John Nuveen & Co. Incorporated, the Nuveen Tax-Free Money Market Fund, Inc.'s
distributor, toll-free at (800) 858-4084.
CUSTODIAN, SHAREHOLDER SERVICES AGENT AND TRANSFER AGENT
The custodian of the assets of the Funds is The Chase Manhattan Bank, 4 New
York Plaza, New York, New York 10004. The custodian performs custodial fund
accounting and portfolio accounting services. Shareholder Services, Inc., P.O.
Box 5330, Denver, Colorado 80217-5330 is the transfer, shareholder services and
dividend paying agent for the Funds ("Transfer Agent") and performs bookkeep-
ing, data processing and administrative services incident to the maintenance of
shareholder accounts. On or about August 10, 1998, Chase Global Funds Services
Company, P.O. Box 5186, New York, New York 10274-5186 will be the Fund's Trans-
fer Agent.
Nuveen Advisory and the transfer agent rely on computer systems to manage the
fund's investments, process shareholder transactions and provide shareholder
account maintenance. Because of the way computers historically have stored
dates, some of these systems currently may not be able to correctly process
activity occurring in the year 2000. Nuveen Advisory is working with the fund's
service providers to adapt their systems to address this "year 2000 issue."
Nuveen Advisory and the fund expect the necessary work to be completed no later
than December 1999, although we can make no assurance with respect to the sys-
tems of the fund's service providers.
CAPITAL STOCK
Nuveen Tax-Free Money Market Fund, Inc. was incorporated in 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 Massa-
chusetts 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 vot-
ing rights and equal rights with respect to dividends declared by such portfo-
lio 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.
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 and the amount that
those subject to a given combined tax rate would have to put into a tax-free
investment in order to generate the same after-tax income as a taxable invest-
ment. 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 occa-
sionally 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 1998 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 fed-
eral 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 cer-
tain 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.
---
19
<PAGE>
MASSACHUSETTS
Combined marginal tax rates for Massachusetts joint taxpayers with four per-
sonal exemptions
<TABLE>
<CAPTION>
FEDERAL COMBINED TAX-FREE YIELD
FEDERAL ADJUSTED STATE AND 2.00% 2.50% 3.00% 3.50% 4.00% 4.50% 5.00% 5.50%
TAXABLE GROSS FEDERAL ----- ----- ----- ----- ----- ----- ----- -----
INCOME INCOME TAX RATE** TAXABLE EQUIVALENT YIELD
- -----------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
$ 0- 42,350 $ 0-124,500 25.0% 2.67 3.33 4.00 4.67 5.33 6.00 6.67 7.33
42,350-102,300 0-124,500 36.5 3.15 3.94 4.72 5.51 6.30 7.09 7.87 8.66
124,500-186,800 37.5 3.20 4.00 4.80 5.60 6.40 7.20 8.00 8.80
102,300-155,950 0-124,500 39.5 3.31 4.13 4.96 5.79 6.61 7.44 8.26 9.09
124,500-186,800 40.0 3.33 4.17 5.00 5.83 6.67 7.50 8.33 9.17
186,800-309,300 42.5 3.48 4.35 5.22 6.09 6.96 7.83 8.70 9.57
155,950-278,450 124,500-186,800 44.5 3.60 4.50 5.41 6.31 7.21 8.11 9.01 9.91
186,800-309,300 47.5 3.81 4.76 5.71 6.67 7.62 8.57 9.52 10.48
Over 309,300 44.5 3.60 4.50 5.41 6.31 7.21 8.11 9.01 9.91
Over 278,450 186,800-309,300 51.0 4.08 5.10 6.12 7.14 8.16 9.18 10.20 11.22
Over 309,300 48.0 3.85 4.81 5.77 6.73 7.69 8.65 9.62 10.58
- -----------------------------------------------------------------------------------------------
</TABLE>
Combined marginal tax rates for Massachusetts single taxpayers with one per-
sonal exemption.
<TABLE>
<CAPTION>
FEDERAL COMBINED TAX-FREE YIELD
FEDERAL ADJUSTED STATE AND 2.00% 2.50% 3.00% 3.50% 4.00% 4.50% 5.00% 5.50%
TAXABLE GROSS FEDERAL ---- ---- ---- ---- ---- ---- ---- -----
INCOME INCOME TAX RATE** TAXABLE EQUIVALENT YIELD
- ---------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
$ 0 - 25,350 $ 0 - 124,500 25.0% 2.67 3.33 4.00 4.67 5.33 6.00 6.67 7.33
25,350 - 61,400 0 - 124,500 36.5 3.15 3.94 4.72 5.51 6.30 7.09 7.87 8.66
61,400 - 128,100 0 - 124,500 39.5 3.31 4.13 4.96 5.79 6.61 7.44 8.26 9.09
124,500 - 247,000 40.5 3.36 4.20 5.04 5.88 6.72 7.56 8.40 9.24
128,100 - 278,450 124,500 - 247,000 45.5 3.67 4.59 5.50 6.42 7.34 8.26 9.17 10.09
Over 247,000 44.5 3.60 4.50 5.41 6.31 7.21 8.11 9.01 9.91
Over 278,450 Over 247,000 48.0 3.85 4.81 5.77 6.73 7.69 8.65 9.62 10.58
- ---------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
FOR AN AFTER-TAX RETURN EQUAL TO YOUR TAX-FREE INVESTMENT MAY BE LESS*
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.
---
20
<PAGE>
NEW YORK
Combined federal and New York state marginal tax rates for joint taxpayers with
four personal exemptions
<TABLE>
<CAPTION>
FEDERAL
FEDERAL ADJUSTED COMBINED TAX-FREE YIELD
TAXABLE GROSS STATE AND 2.00% 2.50% 3.00% 3.50% 4.00% 4.50% 5.00%
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- 42,350 $ 0-100,000 21.0% 2.53 3.16 3.80 4.43 5.06 5.70 6.33
100,000-124,500 22.0 2.56 3.21 3.85 4.49 5.13 5.77 6.41
42,350-102,300 0-100,000 33.0 2.99 3.73 4.48 5.22 5.97 6.72 7.46
100,000-124,500 34.0 3.03 3.79 4.55 5.30 6.06 6.82 7.58
124,500-150,000 35.0 3.08 3.85 4.62 5.38 6.15 6.92 7.69
150,000-186,800 34.0 3.03 3.79 4.55 5.30 6.06 6.82 7.58
102,300-155,950 0-100,000 35.5 3.10 3.88 4.65 5.43 6.20 6.98 7.75
100,000-124,500 37.0 3.17 3.97 4.76 5.56 6.35 7.14 7.94
124,500-150,000 38.0 3.23 4.03 4.84 5.65 6.45 7.26 8.06
150,000-186,800 36.5 3.15 3.94 4.72 5.51 6.30 7.09 7.87
186,800-309,300 39.0 3.28 4.10 4.92 5.74 6.56 7.38 8.20
155,950-278,450 124,500-150,000 42.5 3.48 4.35 5.22 6.09 6.96 7.83 8.70
150,000-186,800 41.5 3.42 4.27 5.13 5.98 6.84 7.69 8.55
186,800-309,300 44.5 3.60 4.50 5.41 6.31 7.21 8.11 9.01
Over 309,300 41.5 3.42 4.27 5.13 5.98 6.84 7.69 8.55
Over 278,450 186,800-309,300 48.0 3.85 4.81 5.77 6.73 7.69 8.65 9.62
Over 309,300 45.0 3.64 4.55 5.45 6.36 7.27 8.18 9.09
- -----------------------------------------------------------------------------------------
</TABLE>
Combined federal and New York state marginal tax rates for single taxpayers
with one personal exemption
<TABLE>
<CAPTION>
FEDERAL
FEDERAL ADJUSTED COMBINED TAX-FREE YIELD
TAXABLE GROSS STATE AND 2.00% 2.50% 3.00% 3.50% 4.00% 4.50% 5.00%
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- 25,350 $ 0-100,000 21.0% 2.53 3.16 3.80 4.43 5.06 5.70 6.33
100,000-124,500 21.5 2.55 3.18 3.82 4.46 5.10 5.73 6.37
25,350- 61,400 0-100,000 33.0 2.99 3.73 4.48 5.22 5.97 6.72 7.46
100,000-124,500 33.5 3.01 3.76 4.51 5.26 6.02 6.77 7.52
61,400-128,100 0-100,000 35.5 3.10 3.88 4.65 5.43 6.20 6.98 7.75
100,000-124,500 36.5 3.15 3.94 4.72 5.51 6.30 7.09 7.87
124,500-150,000 38.0 3.23 4.03 4.84 5.65 6.45 7.26 8.06
150,000-247,000 37.5 3.20 4.00 4.80 5.60 6.40 7.20 8.00
128,100-278,450 124,500-150,000 42.5 3.48 4.35 5.22 6.09 6.96 7.83 8.70
150,000-247,000 42.0 3.45 4.31 5.17 6.03 6.90 7.76 8.62
Over 247,000 41.5 3.42 4.27 5.13 5.98 6.84 7.69 8.55
Over 278,450 Over 247,000 45.0 3.64 4.55 5.45 6.36 7.27 8.18 9.09
- -----------------------------------------------------------------------------------------
</TABLE>
---
21
<PAGE>
<TABLE>
<CAPTION>
FOR AN AFTER-TAX RETURN
EQUAL TO THAT PROVIDED BY YOUR TAX-FREE INVESTMENT MAY BE LESS*
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 income and New York State adjusted
gross income. This supplemental 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 table does reflect
the effect of the state limitation on itemized 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 effect 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 income of $200,000 to $250,000
or $475,000 to $525,000 or single taxpayers with a New York adjusted gross
income of $100,000 to $150,000 or $475,000 to $525,000. The table assumes 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.
Combined federal, New York state and New York City marginal tax rates for joint
taxpayers with four personal exemptions
<TABLE>
<CAPTION>
FEDERAL
FEDERAL ADJUSTED COMBINED TAX-FREE YIELD
TAXABLE GROSS STATE AND 2.00% 2.50% 3.00% 3.50% 4.00% 4.50% 5.00%
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-
42,350 $ 0-100,000 24.5% 2.65 3.31 3.97 4.64 5.30 5.96 6.62
100,000-124,500 26.0 2.70 3.38 4.05 4.73 5.41 6.08 6.76
42,350-
102,300 0-100,000 36.0 3.13 3.91 4.69 5.47 6.25 7.03 7.81
100,000-124,500 37.5 3.20 4.00 4.80 5.60 6.40 7.20 8.00
124,500-150,000 38.5 3.25 4.07 4.88 5.69 6.50 7.32 8.13
150,000-186,800 37.0 3.17 3.97 4.76 5.56 6.35 7.14 7.94
102,300-
155,950 0-100,000 39.0 3.28 4.10 4.92 5.74 6.56 7.38 8.20
100,000-124,500 40.0 3.33 4.17 5.00 5.83 6.67 7.50 8.33
124,500-150,000 41.0 3.39 4.24 5.08 5.93 6.78 7.63 8.47
150,000-186,800 40.0 3.33 4.17 5.00 5.83 6.67 7.50 8.33
186,800-309,300 42.0 3.45 4.31 5.17 6.03 6.90 7.76 8.62
155,950-
278,450 124,500-150,000 45.5 3.67 4.59 5.50 6.42 7.34 8.26 9.17
150,000-186,800 44.5 3.60 4.50 5.41 6.31 7.21 8.11 9.01
186,800-309,300 47.0 3.77 4.72 5.66 6.60 7.55 8.49 9.43
Over 309,300 44.5 3.60 4.50 5.41 6.31 7.21 8.11 9.01
Over
278,450 186,800-309,300 50.5 4.04 5.05 6.06 7.07 8.08 9.09 10.10
Over 309,300 47.5 3.81 4.76 5.71 6.67 7.62 8.57 9.52
- ------------------------------------------------------------------------------------
</TABLE>
---
22
<PAGE>
Combined federal, New York state and New York City marginal tax rates for sin-
gle taxpayers with one personal exemption
<TABLE>
<CAPTION>
FEDERAL COMBINED TAX-FREE YIELD
FEDERAL ADJUSTED STATE AND 2.00% 2.50% 3.00% 3.50% 4.00% 4.50% 5.00%
TAXABLE GROSS FEDERAL ---- ---- ---- ---- ---- ---- ----
INCOME INCOME TAX RATE** TAXABLE EQUIVALENT YIELD
- -----------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
$ 0- 25,350 $ 0-100,000 24.5% 2.65 3.31 3.97 4.64 5.30 5.96 6.62
100,000-124,500 25.0 2.67 3.33 4.00 4.67 5.33 6.00 6.67
25,350- 61,400 0-100,000 36.0 3.13 3.91 4.69 5.47 6.25 7.03 7.81
100,000-124,500 36.5 3.15 3.94 4.72 5.51 6.30 7.09 7.87
61,400-128,100 0-100,000 39.0 3.28 4.10 4.92 5.74 6.56 7.38 8.20
100,000-124,500 39.5 3.31 4.13 4.96 5.79 6.61 7.44 8.26
124,500-150,000 41.0 3.39 4.24 5.08 5.93 6.78 7.63 8.47
150,000-247,000 40.5 3.36 4.20 5.04 5.88 6.72 7.56 8.40
128,100-278,450 124,500-150,000 45.5 3.67 4.59 5.50 6.42 7.34 8.26 9.17
150,000-247,000 45.0 3.64 4.55 5.45 6.36 7.27 8.18 9.09
Over 247,000 44.5 3.60 4.50 5.41 6.31 7.21 8.11 9.01
Over 278,450 Over 247,000 47.5 3.81 4.76 5.71 6.67 7.62 8.57 9.52
- -----------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
FOR AN AFTER-TAX RETURN
EQUAL TO THAT PROVIDED BY YOUR TAX-FREE INVESTMENT MAY BE LESS*
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 income and New York State adjusted
gross income. This supplemental 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 table does reflect
the effect of the state limitation on itemized 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 affect 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 income of $200,000 to $250,000
or $475,000 to $525,000 or single taxpayers with a New York adjusted gross
income of $100,000 to $150,000 or $475,000 to $525,000. The table assumes 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.
---
23
<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
4 New York Plaza
New York, New York 10004
<PAGE>
Serving Investors
for Generations
[PHOTO APPEARS HERE]
John Nuveen, Sr.
Since our founding in 1898, John Nuveen & Co. has been synonymous with
investments that withstand the test of time. Today, we offer a broad range of
investments designed for mature investors whose portfolios are the principal
source of their ongoing financial security. More than 1.3 million investors have
entrusted Nuveen to help them maintain the lifestyle they currently enjoy.
A value investing approach -- purchasing securities of strong companies and
communities that represent good long-term value -- is the cornerstone of
Nuveen's investment philosophy. It is a careful, long-term strategy that offers
the potential for attractive returns with moderated risk. Successful value
investing begins with in-depth research and a discerning eye for marketplace
opportunity. Nuveen's team of investment professionals is backed by the
discipline, resources and expertise of almost a century of investment
experience, including one of the most recognized research departments in the
industry.
To meet the unique circumstances and financial planning needs of mature
investors, Nuveen offers a wide array of taxable and tax-free investment
products -- including equity and fixed-income mutual funds, unit trusts,
exchange-traded funds, individual managed account services, and cash management
products.
To find out more about how Nuveen investment products and services can help you
preserve your financial security, talk with your financial adviser, or call us
at (800) 621-7227 for more information, including a prospectus where applicable.
Please read that information carefully before you invest.
[NUVEEN LOGO]
John Nuveen & Co. Incorporated
333 West Wacker Drive
Chicago, IL 60606-1286
(800) 621-7227
www.nuveen.com
MPR-3-6.98
<PAGE>
PART B--STATEMENT OF ADDITIONAL INFORMATION
NUVEEN TAX-FREE MONEY MARKET FUND, INC.
333 West Wacker Drive
Chicago, Illinois 60606
<PAGE>
[NUVEEN LOGO]
Statement of Additional Information
June 24, 1998
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 June 24, 1998.
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Table of Contents Page
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Fundamental Policies and Investment Portfolio 2
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Management 28
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Investment Adviser and Investment Management Agreement 33
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Portfolio Transactions 35
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Net Asset Value 36
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Tax Matters 37
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Distribution and Service Plan 43
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Yield Information 45
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Independent Public Accountants and Custodian 47
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The audited financial statements for the fiscal year ended February 28, 1998
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 Independent Public Accountants
John Nuveen & Co. Nuveen Advisory Corp., for the Fund
Incorporated Subsidiary of Arthur Andersen LLP
John Nuveen & Co. 33 West Monroe Street
Chicago: Incorporated Chicago, Illinois 60603
333 West Wacker Drive 333 West Wacker Drive
Chicago, Illinois 60606 Chicago, Illinois 60606
(312) 917-7700
Custodian
New York: The Chase Manhattan Bank
10 East 50th Street 4 New York Plaza
New York, New York 10022 New York, New York 10004
(212) 207-2000
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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;
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(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.
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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.
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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
agencies, and certain debt instruments issued by domestic banks or corpora-
tions, may carry variable or floating rates of interest. Such instruments bear
interest at rates which are not fixed, but which vary with changes in speci-
fied market 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 certain specified times, such as every 30 days, as set forth in the instru-
ment. 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 fea-
tures permitting the Funds to recover the full principal amount thereof upon
specified notice.
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 obli-
gation, for purposes of computing its dollar-weighted average portfolio matu-
rity, as the longer of (i) the notice period required before the Funds are en-
titled 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-
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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 15-45
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
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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
assets in its designated state's Municipal Obligations. Each Fund is therefore
more susceptible to political, economic or regulatory factors adversely af-
fecting issuers of Municipal Obligations in its designated state. Brief summa-
ries of these factors are contained in the Prospectus. Set forth below is ad-
ditional information that bears upon the risk of investing in Municipal Obli-
gations issued by public authorities in these states. This information was ob-
tained 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 in-
formation inaccurate.
FACTORS PERTAINING TO MASSACHUSETTS
As described above, except to the extent the Massachusetts Fund invests in
temporary 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 affect-
ing issuers of Massachusetts Municipal Obligations. Without intending to be
complete, 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 eco-
nomic difficulties, and the resulting impact on Commonwealth or local govern-
mental finances generally, will not adversely affect the market value of Mas-
sachusetts 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
revenues for state government programs have exceeded expenditures, however no
assurance can be given that lower than expected tax revenues will not resume
and continue.
1998 Fiscal Year Budget. The budget for 1998 provides for total expenditures
and appropriations of approximately $18.8 billion, a 2.8% increase over FY97
expenditures. The budget incorporates tax cuts valued by the Dept of Revenue
at $61 million and provides for an accelerated pension funding schedule. Sup-
plemental appropriations have been approved for FY98 in the amount of approxi-
mately $94.0 million, including transfer of $34.8 million to the Massachusetts
Water Pollution Abatement
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Trust for state revolving fund programs. Estimated budgeted revenues and other
revenue sources are projected to reach $20.0 billion, up 3.5% over fiscal 1997
level. Tax revenues are projected to reach $13.2 billion, a mere 2.3% increase
over fiscal 1997 level as a result of tax cuts. A surplus of $116 million is
expected at fiscal year end.
Tax law changes effective in FY98 will: increase anticipated revenues by $19
million from miscellaneous fees to be collected as a result of the convention
center legislation approved on November 17, 1997, reduce tax revenues by an
estimated $25 million as a result of the exemption of military pensions from
state income tax, which was approved by Acting Governor Cellucci on November
6, 1997, and reduce tax revenues by an estimated $140 million as a result of a
change in sales tax payment schedule.
Under legislation enacted in 1996, Franklin County government terminated on
July 1, 1997. Legislation approved by Governor Weld on July 11, 1997 abolished
Middlesex County government on that day and provided for the abolition of
county government in Hampden and Worcester Counties on July 1, 1998. These
Counties' debt and liabilities will be assumed by the Commonwealth and amor-
tized over a period of up to 25 years from assessments on the cities and towns
within the County.
On October 20, 1997, Acting Governor Cellucci announced that the Department of
Revenue will issue regulations changing the payment schedules for approxi-
mately 15,000 sales, meals and room occupancy taxpayers that pay over $25,000
in tax per year. Under the new simplified rules, beginning January 1, 1998,
these taxpayers will be required to file a tax return and make a tax payment
on the 20th of each month for taxable sales made during the preceding month.
Under the old rules, affected taxpayers were required to forward tax payments
on the 27th of each month for taxable sales made from the 23rd of the preced-
ing month to the 22nd of the current month, as well as file a quarterly tax
return. While these new regulations will not affect the amount of tax owed,
the Department of Revenue estimates that the Commonwealth will realize a re-
duction in fiscal 1998 revenues of $120 million to $160 million, which has
been incorporated into the January 16, 1998 revenue estimates. This reduction
will be a one-time event.
On November 17, 1997, the Legislature overrode Acting Governor Cellucci's vote
to enact legislation authorizing the Commonwealth to issue special obligation
convention center bonds secured by a pledge of certain taxes related to tour-
ism and conventions, including a 2.75% convention center financing fee imposed
by the legislation on hotel room occupancy in four Massachusetts cities.
The fiscal 1998 budget is based on numerous spending and revenue estimates the
achievement of which cannot be assured.
1997 FISCAL YEAR
Revenues exceeded expenditures for the 7th consecutive year. Budgeted revenues
and other sources totaled $19.3 billion, up 11.6% over FY96. Total revenues
exceeded total expenditures by $281.8 million. Tax revenues grew 6.8% to $12.9
billion. During the fiscal year, legislation was enacted and approved to raise
statutory ceiling on State's Stabilization (or Rainy Day) fund from 5% of tax
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revenues to 5% of total budgetary income. As a result, the Stabilization fund
balance now stands at $799.3 million.
During FY97, the legislature mandated several transfers to be charged to FY97,
including: $229.8 million to a Capital Investment Trust Fund to finance cer-
tain specified capital expenditures, $100 million to the Stabilization Fund
(in addition to the $134.3 million transfer required by state finance law),
$128 million to a Caseload Increase Mitigation Fund to finance Dept of Transi-
tional Assistance programs in the even caseloads increase beyond what is bud-
geted, and $20.2 million to the Massachusetts Water Pollution Abatement Trust
for state capitalization grants for the state revolving fund programs.
On March 11, 1997, the Legislature's Committee on Counties approved legisla-
tion that would abolish Middlesex County government immediately upon final ap-
proval of the legislation and transfer its functions to the Commonwealth. The
county's debts and liabilities which are in force on July 1, 1997 would be as-
sumed by the Commonwealth and amortized over a period of up to 25 years from
assessments on the cities and towns within the county. The legislation would
also bar the sale of public property to satisfy judgments against the county.
The legislation is now being considered by the House Committee on Ways and
Means.
On March 12, 1997, the Legislature's Committee on Transportation approved leg-
islation to establish a Metropolitan Highway System, in substantially the form
in which it had been filed by the Governor on January 6, 1997. A provision in
the legislation added by the committee would mandate a new "asset assesment
study" to determine, within one year, whether the Massachusetts Port Authority
could afford to contribute as much as $300 million toward the cost of the Ted
Williams Tunnel/Central Artery project, rather than the $200 million contribu-
tion proposed by the Governor and contemplated by the legislation. The study
is to be conducted by the Executive Office for Administration and Finance, the
State Auditor, the Division of Capital Planning and Operations and the Port
Authority. The legislation approved by the Transportation Committee does not
authorize any additional state spending for the project. The Governor's pro-
posals for additional spending authorizations are contained in a transporta-
tion bond bill which is still being considered by the committee. The bill ap-
proved by the Transportation Committee has been scheduled in both the House of
Representatives and Senate for expedited debate and enactment on March 13,
1997.
1996 Fiscal Year. Budgeted revenues and other sources, including non-tax reve-
nues, collected in fiscal 1996 were approximately $17.328 billion, approxi-
mately $944 million or 5.7% above fiscal 1995 revenues of approximately
$16.387 billion. Fiscal 1996 tax revenue collections were approximately
$12.049 billion, approximately $365 million above the Department of Revenue's
revised financial year 1996 tax revenue estimate of $11.684 billion and $886
million, or 7.9% above fiscal 1995 tax revenues of $11.163 billion.
Budgeted expenditures and other uses of funds in fiscal 1996 were approxi-
mately $16.881 billion, approximately $630.6 million or 3.9% above fiscal 1995
budgeted expenditures and uses of $16.251 billion. The Commonwealth ended fis-
cal 1996 with an operating gain of approximately $446.4 million and an ending
fund balance of approximately $1.172 billion.
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On August 8, 1996, the Governor approved legislation making two changes in the
apportionment formula for the business corporations tax payable by certain mu-
tual fund service corporations. Effective January 1, 1997, the legislation
changes the computation of the sales factor. Instead of sourcing sales from the
state where the seller bears the cost of performing the services relating to
the sale, the corporations will source sales to the state of domicile of the
ultimate consumer of the service. Effective July 1, 1997, the legislation
changes the current three-factor formula to a single sales factor formula, just
as the November, 1995 legislation did for certain federal defense contractors
and, over time, for manufacturing firms. The new law requires the affected cor-
porations to increase their numbers of employees by 5% per year for five years,
subject to exceptions for adverse economic conditions affecting the stock mar-
ket or the amount of assets under their management. The Department of Revenue
estimates that the changes will result in a revenue reduction of approximately
$10 million in fiscal 1997 and approximately $30 million to $53 million on an
annualized basis thereafter, starting in fiscal 1998.
On August 9, 1996, the Governor signed legislation providing tax credit to
shippers that pay federal harbor maintenance taxes on cargo passing through
Massachusetts ports. The Department of Revenue estimates that there will be no
impact on revenues in fiscal 1997 as a result of this tax credit, and that the
annualized revenue loss will be approximately $3 million to $4 million, begin-
ning in fiscal 1998.
The Executive Office for Administration and Finance is currently evaluating the
impact of the federal welfare reform legislation enacted on August 22, 1996 on
the Commonwealth's spending and revenue associated with public assistance pro-
grams. Current estimates indicate no fiscal 1997 spending impact associated
with the passage of the federal reform. While current estimates also indicate
an $86.3 million increase in federal revenues for the Commonwealth in fiscal
1997, this has not yet been incorporated into the Commonwealth's estimates for
fiscal 1997 federal revenues.
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 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 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
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purposes, such as expenditures related to the Massachusetts Bay Transit Au-
thority. The Executive Office of Administration and Finance is analyzing the
effect, if any, this initiative 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, not-
withstanding the terms of the petition, 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 tran-
sit purposes. The Legislature has twice postponed the effective date of the
provision that would exclude Highway Fund balance from the computation of
"consolidated net surplus." The most recent postponement changed the effective
date of the provision to July 1, 1998.
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, in-
cluding non-tax revenues, collected in fiscal 1994 were approximately $15.550
billion. Total 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. Budgeted expenditures and other uses of funds in fiscal 1994 were ap-
proximately $15.523 billion, which is $826.5 million or approximately 5.6%
higher than fiscal 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 com-
prehensive 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 Of-
fice for Administration and Finance expects the annual increases in expendi-
tures above the fiscal 1993 base spending of $1.288 billion to be approxi-
mately $396 million in fiscal 1995, $625 million in fiscal 1996 and $868 mil-
lion 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 appropriations 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
fiscal 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, includ-
ing 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 mil-
lion and aggregate ending fund balances in the budgeted operating funds of the
Commonwealth of approximately $562.5 million. After payment in full of the
distribution 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
position of approximately $622.2 million, as compared to a projected position
of $485.1 million.
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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 ex-
penditures were $300 million more than the initial July 1991 estimates of bud-
getary expenditures, due in part to increases in certain human services pro-
grams, including an increase of $268.7 million for the Medicaid program and
$50.0 million for mental retardation consent decree requirements. Budgeted
revenues and other sources for fiscal 1992 totalled approximately $13.7 bil-
lion (including tax revenues of approximately $9.5 billion), reflecting an in-
crease of approximately 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 amount of
$514.0 million due on June 30, 1992, retirement of the Commonwealth's out-
standing commercial paper (except for approximately $50 million of bond antic-
ipation 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
approximately $731 million, as compared with the Commonwealth's cash balance
of $182.3 million at the end of fiscal 1991.
Employment. Reversing a trend of relatively low unemployment during the early
and mid 1980's, the Massachusetts unemployment rate beginning in 1990 in-
creased significantly to where the Commonwealth's unemployment rate exceeded
the national unemployment rate. During 1990, the Massachusetts unemployment
rate increased 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 November 1997 was 3.9%, as
compared with the United States unemployment rate of 4.6% for the same period.
Other factors which may significantly and adversely affect the employment rate
in the Commonwealth include reductions in federal government spending on de-
fense-related industries. 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 AA-. At the same time, S&P currently rates state and agency
notes at SP1. From 1989 through 1992, the Commonwealth had experienced a
steady decline in its S&P rating, with its decline beginning in May 1989, when
S&P lowered its rating on the Commonwealth's general obligation bonds and
other Commonwealth obligations from AA+ to AA and continuing a series of fur-
ther reductions until March 1992, when the rating was affirmed at BBB.
Moody's currently rates the Commonwealth's uninsured general obligation bonds
at Aa3. 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
reduced 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 Com-
monwealth's general obligation bonds from Baa1 to Baa.
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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.
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, 1998 was approximately $10.349 billion. The total bond and
note liabilities of the Commonwealth as of April 1, 1998, including guaranteed
bond and contingent liabilities was approximately $14.526 billion.
Debt Service. During the 1980's, 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 Funds of $925 million per fiscal year. Capital expenditures were $694.1
million, $575.9 million, $760.6 million, $902.2 million, $908.5 million and
$956.3 million in fiscal 1992, fiscal 1993, fiscal 1994, fiscal 1995, fiscal
1996 and fiscal 1997, respectively. Commonwealth-financed capital expenditures
are projected to be approximately $1.05 billion in fiscal 1998.
The growth of capital expenditures during the 1980's accounts for the signifi-
cant rise in annual debt service expenditures since fiscal 1989. Payments for
debt service on Commonwealth general obligation bonds and notes in fiscal 1992
were $898.3 million, representing a 4.7% decrease from $942.3 million in fiscal
1991, which resulted from a $261 million one-time reduction achieved through
the issuance of refunding bonds in September and October, 1991. Debt service
expenditures for fiscal 1993, fiscal 1994, fiscal 1995, fiscal 1996 and fiscal
1997 were $1.140 billion, $1.149 billion, $1.231 billion, $1.184 billion, and
$1.275 billion, respectively, and are projected to be $1.224 billion for fiscal
1998. The amounts noted represent debt service payments on Commonwealth debt
(including Fiscal Recovery Bonds and special obligation bonds). The amounts
noted do not include debt service contract assistance payments to the Massachu-
setts Bay Transportation Authority ($302.6 million projected in fiscal 1998),
the Massachusetts Convention Center ($24.6 million projected in fiscal 1998),
the Massachusetts Government Land Bank ($6 million projected in fiscal 1998)
and the Massachusetts Water Pollution Abatement Trust (up to $46 mm in each
fiscal year) and grants to municipalities under the school building assistance
program to defray a portion of the debt service costs on local school bonds
($187.3 million projected in fiscal 1998).
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
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payment of interest and principal on general obligation debt (excluding the
Fiscal Recovery Bonds). The percentage of total appropriations expended from
the budgeted operating funds for debt service for fiscal 1997 is 5.7%, which is
projected to rise to 6.3% in fiscal 1998.
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.
As a result of comprehensive legislation approved in January, 1988, the Common-
wealth is required to fund future pension liabilities currently and to amortize
the Commonwealth's unfunded liabilities over 30 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 increased to approximately $1.007 bil-
lion, $1.061 billion and $1.065 billion, respectively.
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
$3.142 billion in current dollars, with approximately $901 million to be spent
on or after June 30, 1997.
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
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of services to such recipients challenge the rates at which they are reimbursed
by the Commonwealth. To the extent that such actions result in judgments re-
quiring 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. On 3-13-98, the Superior
Court entered judgement for the Commonwealth & dismissed the complaint.
The Commonwealth faces an additional potential liability of approximately $75
million to $135 million in connection with a taking by the Massachusetts High-
way Department related to the relocation of Northern Avenue in Boston.
In Massachusetts Wholesalers of Malt Beverages v. Commonwealth (Suffolk Supe-
rior Court No. 90-1523), associations of bottlers challenged the 1990 amend-
ments to the bottle bill which escheat abandoned deposits to the Commonwealth.
Plaintiffs claimed a taking; the Commonwealth argued a legitimate regulation of
abandoned amounts. In March, 1993, the Supreme Judicial Court upheld the amend-
ments except for the initial funding requirement, which the Court upheld sever-
able. In August, 1994, the Superior Court ruled that the Commonwealth is liable
for certain amounts (plus interest) as a result of the Supreme Judicial Court's
decision. The actual amount will be determined in further proceedings. In Feb-
ruary, 1996, the Commonwealth settled all remaining issues with one group of
plaintiffs, the Massachusetts Soft Drink Association. Payments to that group
will total approximately $7 million. The Legislature appropriated the funds
necessary for these payments in its final supplemental budget for fiscal 1996.
Litigation with the other group of plaintiffs, the Massachusetts Wholesalers of
Malt Beverages, is still pending. The remaining potential liability is approxi-
mately $50 million.
In the First National Bank of Boston v. Commission of Revenue (Appellate Tax
Board No. F232249), the First National Bank of Boston challenges the constitu-
tionality of the former version of the Commonwealth's bank excise tax. In 1992,
several pre-1992 petitions filed by the bank, which raised the same issues,
were settled prior to a board decision. The bank has now filed claims with re-
spect to 1993 and 1994. The bank claims that the tax violated the Commerce
Clause of the United States Constitution by including its worldwide income
without apportionment. The Commonwealth's potential liability is $128 million.
In State Street Bank and Trust Company v. Commissioner of Revenue (Appellate
Tax Board Nos. F215497, F232152, F233019 and F233948), State Street Bank and
Trust Company has raised the same claims as the First National Bank of Boston,
outlined above. State Street Bank also claims that it is entitled to alterna-
tive apportionment under the bank excise tax. The Department of Revenue esti-
mated that the amount of the abatement could have totaled $158 mm. On 2-19-98,
the case was settled for $8.7 million.
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
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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.
On May 13, 1996, the Court entered an order for judgment and memorandum con-
cerning relief for tax years ending on or after January 1, 1996. A final ruling
was entered on June 6, 1996. The Department of Revenue is continuing to analyze
the final fiscal impact of the ruling, to date, it has paid approximately $11
million in accordance with the judgment.
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 that state tax
revenues will not reach the limit imposed by either the initiative 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,
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sales and use taxes, corporate excise taxes, and the balance of the state lot-
tery fund. If implemented in accordance with its terms (including appropriation
of the necessary funds), the petition as approved would shift several hundred
million dollars 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.
As part of Acting Governor Celluci's fiscal 1999 budget recommendations, he
proposed a reduction in the tax rate on "Part B" personal income (so-called
"earned" income) from the current level of 5.95% to 5% over three calendar
years. The rate would be reduced to 5.6% effective January 1, 1999, 5.3% effec-
tive January 1, 2000 and 5% effective January 1, 2001. The Executive Office for
Administration and Finance estimates that the static revenue impact of these
changes would be a reduction in personal income tax collections of approxi-
mately $206 million in fiscal 1999, $616 million in fiscal 2000, $1.035 billion
in fiscal 2001 and $1.292 billion in fiscal 2002, at which time the rate reduc-
tion would be fully implemented. The Acting Governor also proposed a reduction
in the tax rate on "Part A" personal income (so-called "unearned" income) from
12% to 5% over five years. The Executive Office for Administration and Finance
estimates that the static revenue impact of these changes would be a reduction
in personal income tax collections of approximately $30 million in fiscal 1999,
$101 million in fiscal 2000, $173 million in fiscal 2001, $249 million in fis-
cal 2002, $327 million in fiscal 2003 and $372 million in fiscal 2004, at which
time the rate reduction would be fully implemented. See "1999 fiscal year." On
March 12, 1998 the House of Representatives approved legislation that would re-
duce the rate on Part A and Part B income, and raise the rate on capital gains
income, to 5.7%, as well as raising the age of the children's exemption to age
18 and raising the amount of the exemption from $1,200 to $2,400.
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
included a full marital deduction starting July 1, 1994.
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
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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 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.
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 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 and 1996. Personal income and employ-
ment growth in the State improved in 1997, although at lower levels than in the
national economy. The State has forecasted continued moderate growth in 1998
and 1999, although growth rates are expected to lessen gradually during the
course of the two years. The State's economic growth continues to lag behind
the nation's, due in part to restructuring in the healthcare, social service
and banking sectors and continued spending restraint in government. Many
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uncertainties exist in forecasts of both the national and State economies and
there can be no assurance that the State's economy will perform at a level suf-
ficient to meet the State's projections of receipts and disbursements.
1998-99 Fiscal Year. The Governor issued a proposed Executive Budget for the
1998-99 fiscal year (the "Proposed Budget") on January 20, 1998, which pro-
jected a balanced general fund and receipts and disbursements of $36.22 billion
and $36.18 billion, respectively. As of May 11, 1998, the State legislature had
not yet enacted, nor had the Governor and the legislature reached an agreement
on, the budget for the 1998-99 fiscal year, which commenced on April 1, 1998.
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.
As compared to the 1997-98 Financial Plan, the governor's budget proposes year-
to-year in general fund spending of 2.89 percent. Current law and programmatic
requirements are primarily responsible for the year-to-year growth in general
fund spending. New spending is partially offset by reductions in capital pro-
jects transfers due to the financing of a certain program from resources avail-
able in 1997-98, welfare assistance savings, lower spending in certain areas
and lower transfers.
The Proposed Budget and the 1998-99 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.
1997-98 Fiscal Year. The State is projecting that it will end the 1997-98 fis-
cal year with a $1.8 billion cash surplus. Almost all of the surplus was de-
rived from higher-than-expected tax receipts, reflecting continued growth in
the State's economy and another strong year in the financial markets.
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 1998-99 projects that the State will end 1998-99 with a closing
balance in the general fund of $500 million and faces budget gaps of $1.5 bil-
lion and $3.75 billion that may need to be closed for fiscal years 1999-2000
and 2000-01, respectively.
Indebtedness. As of March 31, 1997, the total amount of State general obliga-
tion debt stood at $4.7 billion.
The Governor's budget for fiscal year 1998-99 projects approximately $2.5 bil-
lion of borrowings by the state for capital purposes. The projections of the
State regarding its borrowings for any fiscal year are subject to change if ac-
tual receipts fall short of State projections or if other circumstances re-
quire.
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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. The Corporation
is authorized to issue up to $4.7 billion in bonds plus amounts necessary to
fund a capital reserve, costs of issuance and, in certain cases, capitalized
interest. As of March 31, 1996, LGAC had issued all of its authorization. Any
issuance of bonds by the Corporation in the future will be for refunding pur-
poses only.
Financing of capital programs by other public authorities of the State is also
obtained from lease-purchase and contractual-obligation financing arrangements
(nonvoter approved), the debt service for which is paid from State appropria-
tions. As of March 31, 1997, there were $20.8 billion of such other financing
arrangements outstanding and additional financings of this nature by public au-
thorities including LGAC. In addition, certain agencies had issued and have
outstanding approximately $3.3 billion of "moral obligation financings" as of
March 31, 1997, which are to be repaid from project revenues. There has never
been a default on moral obligation debt of the State.
Ratings. In connection with the March 1998 State issuance of general obligation
bonds, Moody's rating of the State's general obligation bonds stood at A2 and
S&P's rating stood at A. On August 28, 1997, S&P upgraded its rating on the
State's general obligation bonds form A- to A.
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.
(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 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 review and approve the
City's budgets and four-year financial plans (the financial plans also apply to
certain City-related public agencies).
Economic activity in the City has experienced periods of growth and recession
and can be expected to experience periods of growth and recession in the fu-
ture. Changes in the economic activity in the City, particularly employment,
per capita personal income and retail sales, may have an impact on the City.
Overall, the City's economic improvement accelerated significantly in fiscal
year 1997. Much of the increase can be traced to the performance of the securi-
ties industry, but the City's economy also produced gains in the retail trade
sector, the hotel and tourism industry, and business services, with private
sector employment higher than previously forecasted. The City's current Finan-
cial Plan assumes that, after strong growth in 1997-1998, moderate economic
growth will exist through calendar year 2002, with moderating job growth and
wage increases. However, there can be no assurance that the
20
<PAGE>
economic projections assumed in the Financial Plan will occur or that the tax
revenues projected in the Financial Plan to be received in the amounts antici-
pated.
Fiscal Year 1999 and the 1998-2002 Financial Plan. On January 29, 1998, the
Mayor released his preliminary $34.3 billion budget for fiscal year 1999. The
Mayor announced on April 24, 1998 that the preliminary budget for the 1999
fiscal year will be modified to utilize the incurred surplus from the 1998
fiscal year to reduce sales taxes, increase spending on certain programs and
to repay a portion of the City's debt.
On April 24, 1998, the Mayor also announced revisions to the proposed 1998-
2002 Financial Plan (the "Plan"), which now projects budget gaps of $1.5 bil-
lion, $2.1 billion and $1.6 billion for fiscal years 2000, 2001 and 2002, re-
spectively. The City Comptroller and State Comptroller have each stated that
the fiscal year 1999 budget includes moderate revenue risks. The State Comp-
troller has projected budget gaps for fiscal years 2000, 2001 and 2002 that
are each in excess of the City's estimate.
An extended delay by the State in adopting its 1998-99 fiscal year budget or
the failure of the State legislature to extend the income tax surcharge would
negatively impact upon the City's financial condition and ability to close
budget gaps for fiscal years 1999 and thereafter.
Given the foregoing, there can be no assurance that the City will continue to
maintain a balanced budget during fiscal year 1999 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 sub-
mit 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
exercise certain powers, including prior approval of City financial plans,
proposed 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 1998-99
fiscal 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 1999-2000 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 de-
lays.
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 major 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 fi-
nancing requirements. Such assumptions and contingencies include the timing of
any regional and
21
<PAGE>
local economic recovery, the absence of wage increases in excess of the in-
creases 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 identify additional expenditure reductions and action by the
State legislature to achieve balanced operating budgets for fiscal year 1999
and thereafter. Any such proposed expenditure reductions will be difficult to
implement because of their size and the substantial expenditure reductions al-
ready 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. The City's four-year
capital plan contemplates capital spending of $25.5 billion through the 2002
fiscal year, which will be financed through issuance of general obligation
bonds, Transitional Finance Authority Bonds, Water Authority Revenue Bonds and
Covered Organization obligations, and will be used primarily to reconstruct and
rehabilitate the City's infrastructure and physical assets and to make capital
investments. 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.
On March 5, 1997, New York Governor George Pataki signed legislation creating
The New York City Transitional Finance Authority, which beginning in fiscal
year 1998 is authorized to issue up to $7.5 billion in bonds for capital spend-
ing by the City. Absent creation of this authority, the City would have faced
limitations on its borrowing capacity after 1998 under the State's Constitu-
tion. As of May 11, 1998, the Authority had issued $2.15 billion in bonds. The
bonds are secured by a primary lien on the City's personal income tax receipts
as well as a secondary lien on sales tax receipts.
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, 1997, the City
estimated its potential future liability on outstanding claims to be $3.5
billion.
22
<PAGE>
In April 1996, certain unions, elected officials and others filed an action in
the Supreme Court of the State of New York, County of New York, against the
Mayor which asserted that the City failed to subsidize HHC at the minimum fund-
ing levels required for the 1994 through 1997 fiscal years. On July 15, 1997,
the Court permitted the plaintiffs to amend the complaint and seek an order re-
quiring the City to pay to HHC at least $949 million, $931 million and $831
million for the 1994, 1995 and 1996 fiscal years, respectively, and an amount
to be determined by the Court for the 1997 fiscal year. The Court denied plain-
tiff's motion to preliminarily enjoin the defendant from further reducing the
City's subsidy to HHC for the 1996 and 1997 fiscal years from the amount origi-
nally budgeted for the 1996 fiscal year.
Fiscal Year 1998. New York City adopted its 1998 fiscal year budget in June
1997, which provided for spending of $33.4 billion. Due to increased tax reve-
nues resulting from increased profits on Wall Street and tourism, the City ex-
pects to end fiscal year 1998 with a surplus of $2.0 billion.
Fiscal Years 1991 through 1997. The City achieved balanced operating results in
accordance with generally accepted accounting principles for fiscal years 1991
through 1997. The City was required to close substantial budget gaps in these
fiscal years in order to maintain balanced operating results.
Ratings. As of May 11, 1998, Moody's S&P, and Fitch rate the City's outstanding
general obligation bonds A3, BBB+, and A-, respectively. On February 3, 1998,
S&P placed its BBB+ rating of City bonds on Creditwatch with positive implica-
tions. Moody's rating of City bonds was revised in February 1998 to A3 from Ba-
al.
As of December 31, 1997, the City MAC and TFA had, respectively, $26.6 billion
and $3.6 billion and $2.15 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 provi-
sions for State appropriations to maintain various debt service reserve funds)
to appropriate funds on behalf of the Agencies. Moreover, it is expected that
the problems faced by these Agencies will continue and will require increasing
amounts of State assistance in future years. Failure of the State to appropri-
ate necessary amounts or to take other action to permit those Agencies having
financial difficulties 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 significant 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 obligation 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 March 31, 1997, the State reported that its public benefit corporations
had an aggregate of $36.9 billion of outstanding debt, some of which was State-
supported and State-related debt.
23
<PAGE>
(4) State Litigation: The State is a defendant in numerous legal proceedings
pertaining to matters incidental to the performance of routine governmental
operations. 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
mental 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
significant amounts of land were unconstitutionally taken from the Indians in
violation of various treaties and agreements during the eighteenth and nine-
teenth 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 assis-
tance. 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
1998-99 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. State law requires the Comptroller to review and make
recommendations concerning the budgets 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. In December
1995, in reaction to continuing financial problems, the Troy Municipal Assis-
tance Corp., which was created in 1995, imposed a 1996 budget plan upon Troy,
New York. Such revenue bonds have not to date been refinanced. A similar mu-
nicipal assistance corporation has also been established for Newburgh. In ad-
dition, several other New York cities, including Utica, 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 financial con-
dition.
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. Federal welfare reform
legislation may increase the local burden for welfare benefits. 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
24
<PAGE>
jeopardizing their respective access to the public credit markets, the market-
ability of notes and bonds issued by localities within the State, including
notes or bonds in the Fund, could be adversely affected. Localities also face
anticipated and potential problems resulting from certain pending litigation,
judicial decisions, and long-range economic trends. The longer-range potential
problems of declining urban population, increasing expenditures, and other
economic trends could adversely affect certain localities and require increas-
ing 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
obligations payable from payments from private borrowers. These entities are
subject to various economic risks and uncertainties, and the credit quality of
the securities issued by them may vary considerably from the credit quality of
obligations 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 in-
vestments 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 either of such rating services (Prime-1 or A-1, respectively); cer-
tificates of deposit of domestic banks with assets of $1 billion or more; and
Municipal Obligations 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
25
<PAGE>
include, but are not limited 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 agen-
cies, while not direct 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 supported 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 collateralized 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 opin-
ion of Nuveen Advisory present minimal credit risk. The risk to the Funds is
limited to the ability of the issuer to pay the agreed-upon repurchase price on
the delivery date; however, although the value of the underlying collateral at
the time the transaction is entered into always equals or exceeds the agreed-
upon repurchase price, if the value of the collateral declines there is a risk
of loss of both principal and interest. In the event of default, the collateral
may be sold but the Funds might incur a loss if the value of the collateral de-
clines, and might incur disposition costs or experience delays in connection
with liquidating the collateral. In addition, if bankruptcy proceedings are
commenced with respect to the seller of the security, realization upon the col-
lateral by the 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 in-
crease the value of the collateral to at least that of the repurchase price.
Variable and Floating Rate Investments--See description on page 5.
26
<PAGE>
RATINGS OF INVESTMENTS
The two highest ratings of Moody's for Municipal Obligations are Aaa and Aa.
Municipal Obligations rated Aaa are judged to be of the "best quality." The
rating of Aa is assigned to Municipal Obligations which are of "high quality by
all standards," but as to which margins of protection or other elements make
long-term risks appear somewhat larger than in Aaa rated Municipal Obligations.
The Aaa and Aa rated Municipal Obligations comprise what are generally known as
"high grade bonds." Moody's bond rating symbols may contain numerical modifiers
of a generic rating classification. The modifier 1 indicates that the bond
ranks at the high end of its category; the modifier 2 indicates a mid-range
ranking; and the modifier 3 indicates that the issue ranks in the lower end of
its generic rating category.
The two highest ratings of S&P for Municipal Obligations are AAA and AA. Munic-
ipal Obligations rated AAA have an extremely strong capacity to pay principal
and interest. The rating of AA indicates that capacity to pay principal and in-
terest is very strong and such bonds differ from AAA issues only in small de-
gree.
The 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.
The Funds' ability to purchase commercial paper of tax-exempt and corporate is-
suers is limited to commercial paper rated highly by nationally recognized sta-
tistical rating organizations. Issuers rated in the highest category generally
have a superior capacity for repayment of short-term obligations normally evi-
denced by the following characteristics: leading market positions in well-es-
tablished industries; high rates of return on funds employed; conservative cap-
italization structures with moderate reliance on debt and ample asset protec-
tion; broad margins in earnings coverage of fixed financial charges and high
internal cash generation; well-established access to a range of financial mar-
kets and assured sources of alternative liquidity. Issuers rated in the second
highest category have a strong capacity for repayment of short-term promissory
obligations.
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.
27
<PAGE>
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 eight 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 six 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 PRINCIPAL OCCUPATIONS
NAME AND ADDRESS AGE OFFICES WITH FUNDS DURING PAST FIVE YEARS
- --------------------------------------------------------------------------------
<C> <C> <C> <S>
Timothy R. Schwertfeger* 49 Chairman of the Board Chairman since July 1,
333 West Wacker Drive and Director 1996 of The John Nuveen
Chicago, IL 60606 Company, John Nuveen &
Co. Incorporated, Nuveen
Advisory Corp. and
Nuveen Institutional
Advisory Corp., prior
thereto Executive Vice
President and Director
of The John Nuveen
Company and John Nuveen
& Co. Incorporated;
Director of Nuveen
Advisory Corp. (since
1992) and Nuveen
Institutional Advisory
Corp. (since October
1992); Chairman and
Director (since January
1997) of Nuveen Asset
Management, Inc.;
Director (since 1996) of
Institutional Capital
Corporation.
- --------------------------------------------------------------------------------
Anthony T. Dean* 53 President and President since July 1,
333 West Wacker Drive Director 1996 of The John Nuveen
Chicago, IL 60606 Company, John Nuveen &
Co. Incorporated, Nuveen
Advisory Corp. and
Nuveen Institutional
Advisory Corp.; prior
thereto, Executive Vice
President and
Director of The John
Nuveen Company, John
Nuveen & Co.
Incorporated, Nuveen
Advisory Corp. (since
October 1992) and Nuveen
Institutional Advisory
Corp. (since October
1992); President and
Director (since January
1997) of Nuveen Asset
Management, Inc.;
Chairman and Director
(since 1997) of
Rittenhouse Financial
Services, Inc.
- --------------------------------------------------------------------------------
Robert P. Bremner 57 Director Private Investor and
3725 Huntington Street, N.W. Management Consultant.
Washington, D.C. 20015
- --------------------------------------------------------------------------------
Lawrence H. Brown 63 Director Retired (August 1989) as
201 Michigan Avenue Senior Vice President of
Highwood, IL 60040 The Northern Trust
Company
- --------------------------------------------------------------------------------
Anne E. Impellizzeri 65 Director President and Chief
3 West 29th Street Executive Officer of
New York, NY 10001 Blanton-Peale,
Institutes of Religion
and Health (since
December 1990).
</TABLE>
- --------------------------------------------------------------------------------
28
<PAGE>
<TABLE>
- --------------------------------------------------------------------------------
<CAPTION>
POSITIONS AND PRINCIPAL OCCUPATIONS
NAME AND ADDRESS AGE OFFICES WITH FUNDS DURING PAST FIVE YEARS
- --------------------------------------------------------------------------------
<C> <C> <C> <S>
Peter R. Sawers 65 Director Adjunct Professor of
22 The Landmark Business and Economics,
Northfield, IL 60093 University of Dubuque,
Iowa; Adjunct Professor,
Lake Forest Graduate
School of Management,
Lake Forest, Illinois.
- --------------------------------------------------------------------------------
William J. Schneider 53 Director Senior Partner, Miller-
4000 Miller-Valentine Ct. Valentine Partners, Vice
P.O. Box 744 President, Miller-
Dayton, OH 45401 Valentine Realty, Inc.
- --------------------------------------------------------------------------------
Judith M. Stockdale 50 Director Executive Director,
35 E. Wacker Drive Gaylord and Dorothy
Suite 2600 Donnelley Foundation
Chicago, IL 60601 (since 1994); prior
thereto, Executive
Director, Great Lakes
Protection Fund (from
1990 to 1994).
- --------------------------------------------------------------------------------
Bruce P. Bedford 58 Executive Vice President Executive Vice President
333 West Wacker Drive of John Nuveen & Co.
Chicago, IL 60606 Incorporated, Nuveen
Advisory Corp. and
Nuveen
Institutional Advisory
Corp. (since January
1997); prior thereto,
Chairman and CEO of
Flagship Resources Inc.
and Flagship Financial
Inc. and the Flagship
funds.
- --------------------------------------------------------------------------------
Alan G. Berkshire 37 Vice President and Vice President and
333 West Wacker Drive Assistant Secretary General Counsel (since
Chicago, IL 60606 September 1997) and
Secretary (since May
1998) of The John Nuveen
Company, John Nuveen &
Co. Incorporated, Nuveen
Advisory Corp. and
Nuveen Institutional
Advisory Corp., prior
therero, Partner in the
law firm of Kirkland &
Ellis.
- --------------------------------------------------------------------------------
Michael S. Davern 40 Vice President Vice President of Nuveen
333 West Wacker Drive Advisory Corp. (since
Chicago, IL 60606 January 1997); prior
thereto, Vice President
and Portfolio Manager
(since September 1991)
of Flagship Financial.
- --------------------------------------------------------------------------------
Lorna C. Ferguson 53 Vice President Vice President of John
333 West Wacker Drive Nuveen & Co.
Chicago, IL 60606 Incorporated; Vice
President (since January
1998) of Nuveen Advisory
Corp. and Nuveen
Institutional Advisory
Corp.
- --------------------------------------------------------------------------------
William M. Fitzgerald 34 Vice President Vice President of Nuveen
333 West Wacker Drive Advisory Corp. (since
Chicago, IL 60606 December 1995);
Assistant Vice President
of Nuveen Advisory Corp.
(from September 1992 to
December 1995), prior
thereto Assistant
Portfolio Manager of
Nuveen Advisory Corp.
- --------------------------------------------------------------------------------
Kathleen M. Flanagan 51 Vice President Vice President of John
333 West Wacker Drive Nuveen & Co.
Chicago, IL 60606 Incorporated.
- --------------------------------------------------------------------------------
Stephen D. Foy 44 Vice President Vice President of John
333 West Wacker Drive and Controller Nuveen & Co.
Chicago, IL 60606 Incorporated
</TABLE>
- --------------------------------------------------------------------------------
29
<PAGE>
<TABLE>
- --------------------------------------------------------------------------------------------
<CAPTION>
POSITIONS AND PRINCIPAL OCCUPATIONS
NAME AND ADDRESS AGE OFFICES WITH FUNDS DURING PAST FIVE YEARS
- --------------------------------------------------------------------------------------------
<S> <C> <C> <C>
J. Thomas Futrell 42 Vice President Vice President of Nuveen Advisory Corp.
333 West Wacker Drive
Chicago, IL 60606
- --------------------------------------------------------------------------------------------
Richard A. Huber 35 Vice President Vice President of Nuveen Advisory Corp.
333 West Wacker Drive (since January 1997); prior thereto, Vice
Chicago, IL 60606 President and Portfolio Manager of Flagship
Financial.
- --------------------------------------------------------------------------------------------
Steven J. Krupa 40 Vice President Vice President of Nuveen Advisory Corp.
333 West Wacker Drive
Chicago, IL 60606
- --------------------------------------------------------------------------------------------
Anna R. Kucinskis 52 Vice President Vice President of John Nuveen & Co.
333 West Wacker Drive Incorporated.
Chicago, IL 60606
- --------------------------------------------------------------------------------------------
Larry W. Martin 46 Vice President and Vice President, Assistant Secretary and
333 West Wacker Drive Assistant Secretary Assistant General Counsel of John Nuveen &
Chicago, IL 60606 Co. Incorporated; Vice President (since May
1993) and Assistant Secretary of Nuveen
Advisory Corp.; Vice President (since May
1993) and Assistant Secretary of Nuveen
Institutional Advisory Corp.; Assistant
Secretary of The John Nuveen Company.
- --------------------------------------------------------------------------------------------
Edward F. Neild, IV 32 Vice President Vice President (since September 1996),
333 West Wacker Drive previously Assistant Vice President (since
Chicago, IL 60606 December 1993) of Nuveen Advisory Corp.,
Portfolio Manager prior thereto (since
January 1992); Vice President (since
September 1996), previously Assistant Vice
President (since May 1995) of Nuveen
Institutional Advisory Corp., Portfolio
Manager prior thereto.
- --------------------------------------------------------------------------------------------
Walter K. Parker 49 Vice President Vice President of Nuveen Advisory Corp.
333 West Wacker Drive (since January 1997); prior thereto, Vice
Chicago, IL 60606 President and Portfolio Manager (since July
1994) of Flagship Financial; Portfolio
Manager and CIO Trust Investor for PNC
Bank.
- --------------------------------------------------------------------------------------------
Stephen S. Peterson 40 Vice President Vice President (since September 1997),
333 West Wacker Drive previously Assistant Vice President (since
Chicago, IL 60606 September 1996) of Nuveen Advisory Corp.,
Portfolio Manager prior thereto.
- --------------------------------------------------------------------------------------------
Stuart W. Rogers 42 Vice President Vice President of John Nuveen & Co.
333 West Wacker Drive Incorporated.
Chicago, IL 60606
- --------------------------------------------------------------------------------------------
Thomas C. Spalding, Jr. 46 Vice President Vice President of Nuveen Advisory Corp. and
333 West Wacker Drive Nuveen Institutional Advisory Corp.;
Chicago, IL 60606 Chartered Financial Analyst.
- --------------------------------------------------------------------------------------------
H. William Stabenow 63 Vice President and Vice President and Treasurer of The John
333 West Wacker Drive Treasurer Nuveen Company, John Nuveen & Co.
Chicago, IL 60606 Incorporated, Nuveen Advisory Corp. and
Nuveen Institutional Advisory Corp.
</TABLE>
30
<PAGE>
<TABLE>
- -----------------------------------------------------------------------------------------
<CAPTION>
POSITIONS AND PRINCIPAL OCCUPATIONS
NAME AND ADDRESS AGE OFFICES WITH FUNDS DURING PAST FIVE YEARS
- -----------------------------------------------------------------------------------------
<S> <C> <C> <C>
William S. Swanson 32 Vice President Vice President of John Nuveen & Co.
333 West Wacker Drive Incorporated (since October 1997), prior
Chicago, IL 60606 thereto, Assistant Vice President (since
September 1996); formerly, Associate of
John Nuveen & Co. Incorporated.
- -----------------------------------------------------------------------------------------
Jan E. Terbrueggen 42 Vice President Vice President Nuveen Advisory Corp. (since
333 West Wacker Drive January 1997);
Chicago, IL 60606 prior thereto, Vice President and Portfolio
Manager of Flagship Financial.
- -----------------------------------------------------------------------------------------
Gifford R. Zimmerman 41 Vice President and Vice President (since September 1992),
333 West Wacker Drive Secretary Assistant Secretary, and Associate General
Chicago, IL 60606 Counsel formerly Assistant General Counsel
of John Nuveen & Co. Incorporated; Vice
President (since May 1993) and Assistant
Secretary of Nuveen Advisory Corp.; Vice
President (since May 1993) and Assistant
Secretary of Nuveen Institutional Advisory
Corp.
</TABLE>
- --------------------------------------------------------------------------------
Anthony T. Dean, Timothy R. Schwertfeger and Peter R. Sawers serve as members
of the Executive Committee of the Board of Directors. The Executive Committee,
which meets between regular meetings of the Board of Directors, is authorized
to exercise all of the powers of the Board of Directors.
The directors of Nuveen Tax-Free Money Market Fund, Inc. are directors or
trustees, as the case may be, of 42 Nuveen open-end portfolios and of 52 Nuveen
closed-end funds.
The following table sets forth compensation paid by Nuveen Tax-Free Money Mar-
ket Fund, Inc. during the fiscal year ended February 28, 1998 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
- --------------------------------------------------------------------------------
<S> <C> <C>
Anthony T. Dean................................ $ 0 $ 0
Timothy R. Schwertfeger........................ 0 0
Robert P. Bremner.............................. 548 58,780
Lawrence H. Brown.............................. 573 76,000
Anne E. Impellizzeri........................... 561 71,750
Margaret K. Rosenheim*......................... 360(2) 47,405(3)
Peter R. Sawers................................ 561 71,750
William J. Schneider........................... 548 58,780
Judith M. Stockdale............................ 274 32,000(1)
</TABLE>
- --------
* Former trustee, retired July, 1997.
(1) First payment was in July, 1997.
(2) Includes $50 in interest earned on deferred compensation from prior years.
(3) Includes $1,655 in interest earned on deferred compensation from prior
years.
Each director who is not affiliated with Nuveen or Nuveen Advisory will receive
a fee. The Fund requires no employees other than its officers, all of whom are
compensated by Nuveen.
On May 19, 1998, the officers and directors of the Fund as a group owned less
than 1% of the outstanding shares of each Fund.
31
<PAGE>
The following table sets forth the percentage ownership of each person who as
of May 19, 1998 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
Service Plan Series.... Express & Co. 85.98%
c/o Baybank Capital Mkt. OPS
Attn: Mary Richardson
155 Federal St., Fl. 7
Boston, MA 02110-1802
Donna R Van Kleeck Tr 5.38%
UA 12/22/97
Donna Van Kleeck RevTrust
3 Hartford St.
Dover, MA 02110-1802
Massachusetts Fund
Institutional Series... Rockland Trust Co. 99.18%
Attn: Trust Operations Dept.
2036 Washington St.
Hanover, MA 02339-1617
New York Fund
Service Plan Series.... Carlo Migliaccio & 64.62%
Augusta Migliaccio
JT Ten WROS Not TC
311 W 51st St.
New York, NY 10019-6408
Henry Epstein 10.46%
Bella Epstein JT Ten
189 Lindberg Ave.
Oceanside, NY 11572-5507
New York Fund
Distribution Plan Se- Sandra Bass 17.20%
ries................... 47 Deer Park Rd.
Great Neck, NY 11024-2138
Estate of Edith Atlas 15.52%
Sandra & Morton Bass Executors
185 Great Neck Rd.
Great Neck, NY 11021-3312
New York Fund
Institutional Series... Nuveen Advisory Corp. Inc. 100.00%
Attn. Darlene Cramer
333 W. Wacker Dr. Fl. 34
Chicago, Il 60606-1220
</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 positions.
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
------------------------ --------------------------
2/29/96 2/28/97 2/28/98 2/29/96 2/28/97 2/28/98
- --------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Massachusetts Fund.......... $138,984 $90,667 $16,188 $ 95,444 $152,133 $143,925
New York Fund............... 0 7,960 15,559 125,330 107,183 95,248
Total For Both Funds........ 138,984 98,627 31,747 220,774 259,316 239,173
</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. In 1961, Nuveen began sponsoring
the Nuveen Tax-Exempt Unit Trust and since that time has issued more than $37
billion in taxable and tax-exempt unit trusts, including over $12 billion tax-
exempt insured unit trusts. In addition, Nuveen open-end and closed-end funds
held approximately $38 billion in securities under management as of the date of
this Statement. Over 1,000,000 individuals have invested to date in Nuveen's
funds and trusts. Founded 1898, Nuveen is a subsidiary of The John Nuveen Com-
pany which, in turn, is approximately 78% owned by The St. Paul Companies, Inc.
("St. Paul"). St. Paul is located in St. Paul, Minnesota, and is principally
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 Nuveen Research Department reviews more than $100 bil-
lion in municipal 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 transactions
among the Funds and the portfolios of its other clients purchasing securities
whenever decisions are made to purchase or sell securities by the Funds and
one or more of such other clients simultaneously. In making such allocations
the main factors to be considered will be the respective investment objectives
of the Funds and such other clients, the relative size of portfolio holdings
of the same or
34
<PAGE>
comparable securities, the availability of cash for investment by the Funds and
such other clients, the size of investment commitments generally held by the
Funds and such other clients and opinions of the persons responsible for recom-
mending 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, Nuveen Tax-Free Money Market
Fund, Inc.'s custodian, as of 12:00 noon, Eastern Time, (1) on each day on
which the Federal Reserve Bank of Boston is normally open and (2) on any day
during which there is 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 and the Fund similarly will not be
open on New Year's Day, Washington's Birthday, Martin Luther King's Birthday,
Memorial Day, Independence Day, Labor Day, Columbus Day, Veterans Day, Thanks-
giving Day and Christmas Day. The net asset value per share of each Fund will
be computed by dividing the value of the portfolio securities held by such
Fund, plus cash or other 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 in valuation, it may re-
sult in periods during which the value of an investment, as determined by amor-
tized 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
35
<PAGE>
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 Morgan, Lewis & Bockius LLP, 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 diversify its holdings so that, at the close
of each quarter of its taxable year, (i) at least 50% of the value of its total
assets is comprised of cash, cash items, United States Government securities,
securities of other regulated investment companies and other securities limited
in respect of any one issuer to an amount not greater in value than 5% of the
value of a Fund's total assets and to not more than 10% of the outstanding vot-
ing securities of such issuer, and (ii) not more than 25% of the value of the
total assets is invested in the securities of any one issuer (other than United
States Government securities and securities of other regulated investment com-
panies) 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 on the portion of its net investment income and net realized capital gains
that is currently distributed to shareholders in any taxable year for which a
Fund distributes at least 90% of the sum of (i) its "investment company taxable
income" (which includes dividends, taxable interest, 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" (the excess of its net long-term capital
gain over its short-term capital loss) and is reduced by deductible expenses)
and (ii) its "net tax-exempt interest" (the excess of its gross tax-exempt in-
terest income over certain disallowed deductions).
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 in-
come designated as tax-exempt for any particular distribution may be substan-
tially 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>
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 trans-
actions among them under various provisions of the Code (or if they are members
of the same controlled group of corporations under the Code). This includes a
partnership and each of its partners (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. 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.
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.
39
<PAGE>
Each Fund is required in certain circumstances to withhold 31% of taxable div-
idends 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 certif-
icates, 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
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 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.
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 Ob-
ligations issued by Massachusetts governmental authorities and are specifi-
cally exempted from income taxation in Massachusetts, provided that such divi-
dends are identified in a written notice mailed to the shareholders of the
Massachusetts Fund not later than sixty days after the close of the Massachu-
setts Fund's tax year. Lastly, any dividends of the Massachusetts Fund attrib-
utable to interest on United States 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 shareholders will be required to include all remaining
dividends in their Massachusetts income.
To the extent not otherwise exempted from Massachusetts income taxation as
provided above, the Massachusetts Fund's long-term capital gains for federal
income 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 corpo-
ration or any foreign business corporation which exercises its charter, quali-
fies 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
40
<PAGE>
Massachusetts excise taxation either as a tangible property corporation or as
an intangible property corporation. If the corporate shareholder is a tangible
property corporation, it will be taxed upon its net income allocated to Massa-
chusetts 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). Distributions to individual
shareholders of dividends derived from interest that does not qualify as an ex-
empt-interest dividend (as determined for federal income tax purposes), distri-
butions of exempt-interest dividends (as determined for federal income tax pur-
poses) which are derived from interest earned on Municipal Obligations issued
by governmental authorities in states other than New York State, and distribu-
tions derived from interest earned on United States obligations will be in-
cluded 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. Present New York law taxes long-term
capital gains at the rates applicable to ordinary income.
41
<PAGE>
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 taxa-
tion) will be taxed upon their entire net income, business and investment cap-
ital, or at a flat rate minimum tax. Entire income will include dividends re-
ceived 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 purpos-
es. Investment capital will include the corporate shareholder's shares of the
New York Fund. Corporate 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 unin-
corporated 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 determined for federal income tax purposes) which the New York Fund
clearly identifies as directly attributable to interest earned on New York Mu-
nicipal Obligations.
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 pur-
poses 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-interest 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.
Shareholders of the Funds are advised to consult their own tax advisers in
that regard.
DISTRIBUTION AND SERVICE PLAN
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 se-
ries: (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.
As discussed in the Prospectus under "How to Purchase Fund Shares--Distribu-
tion and Service Plan," each Fund has adopted a Distribution and Service Plan
(the "Plan") with respect to its shares of the
42
<PAGE>
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., in-
cluding a majority of the directors 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 Distribution Plan series, to securities dealers for
services rendered in the distribution of the shares of such series. In each
case, such services may include, among other things, establishing and maintain-
ing shareholder accounts, processing purchase and redemption transactions, ar-
ranging for bank wires, performing sub-accounting, answering shareholder inqui-
ries and such other services as Nuveen may request. Payments to such securities
dealers and banks or other organizations will be at the rate of .25 of 1% per
year of the average assets of serviced accounts. One-half of such amounts will
be paid by the Service Plan series and the Distribution Plan series of each
Fund and one-half by Nuveen. Expenses that are incurred under the Plan in a
given fiscal year but not reimbursed by the Fund in that year are not carried
over to future years. For the fiscal year ended February 28, 1998, Nuveen Tax-
Free Money Market Fund, Inc. paid fees to banks and other organizations under
the Service Plan in the amount of $9,519 in connection with the Massachusetts
Fund and $220 in connection with the New York Fund. For the same period, Nuveen
Tax-Free Money Market Fund, Inc. paid fees to securities dealers under the Dis-
tribution Plan in the amount of $23,932 in connection with the Massachusetts
Fund and $12,367 in connection 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 federal or state statutes or regulations relating to the permissible ac-
tivities of banks and their subsidiaries or affiliates, as well as judicial or
administrative decisions or interpretations of statutes or regulations, could
prevent a bank from continuing to perform all or a part of its shareholder ser-
vicing activities. If a bank were prohibited from so acting, its shareholder
customers would be permitted to remain shareholders of the Funds and alterna-
tive 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 28, 1998 the current yield, effective
yield and taxable equivalent yield (using a combined federal and state income
tax rate of 46.8% for Massachusetts and 43.7% 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 2.75% 2.79% 5.17%
NEW YORK FUND:
Distribution and Service Plan Series: 2.84% 2.88% 5.04%
Institutional Series: 2.83% 2.87% 5.03%
</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)/365/7/ -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
quotations is not a representation of what an investment in the series will
actually yield for any given future period. Actual yields will depend not only
on changes in interest rates on money market instruments during the period in
question, but also on such matters as the expenses 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 perfor-
mance of its Funds to that of other money market mutual funds tracked by
Lipper Analytical Services, Inc. ("Lipper"), by Donoghue's Money Fund Report
("Donoghue's") or similar services or by financial publications such as
Barron's, Changing Times, Forbes and Money Magazine. Performance comparisons
by these indexes, services or publications may rank mutual funds over differ-
ent periods of time by means of aggregate, average, year-by-year or other
types of performance figures. Lipper performance calculations include the re-
investment of all capital gain and income dividends for the periods covered by
the calculations. As reported by Donoghue's, all investment results represent
total return (annualized results for the period net of management fees and ex-
penses) and one year investment results are effective annual yields assuming
reinvestment of dividends.
A comparison of tax-exempt and taxable equivalent yields is one element to
consider 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 tax-
able investments such as corporate or U.S. Government bonds and bank CDs or
money market 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.
45
<PAGE>
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.
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.
46
<PAGE>
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, 4 New York Plaza, New York, New York 10004.
47
<PAGE>
NUVEEN
Money Market
Funds
February 28, 1998
Annual Report
Dependable, tax-free income
to help you keep more of
what you earn.
[PHOTO APPEARS HERE]
Reserves
California
Massachusetts
New York
<PAGE>
Contents
1 Dear Shareholder
3 Reserves Performance Overview
4 California Performance Overview
5 Massachusetts Performance Overview
6 New York Performance Overview
7 Portfolio of Investments
18 Statement of Net Assets
20 Statement of Operations
24 Statement of Changes in Net Assets
31 Notes to Financial Statements
34 Financial Highlights
42 Report of Independent Public Accountants
44 Building Better Portfolios
45 Fund Information
<PAGE>
Dear Shareholder
[PHOTO OF TIMOTHY R. SCHWERTFEGER APPEARS HERE]
Timothy R. Schwertfeger
Chairman of the Board
Over the past two years, many financial markets have been unusually strong.
Short-term rates trended higher early in 1997 on expectations that the Federal
Reserve Board would take steps to tighten monetary policy and slow the pace of
economic growth. In March, the Fed raised its target rate for the federal funds
rate by 25 basis points, but then took no further action. Short-term securities
reversed course and yields trended downward for the remainder of the funds'
fiscal year. Still, falling commodity prices kept producer prices in check,
while low import prices--due in part to the weakness in Asian markets--limited
U.S. companies' ability to raise consumer prices. This combination has kept
inflation subdued and the Federal Reserve "on hold".
Performance Review
Your Nuveen tax-free money market fund continued to generate tax-free income
while preserving net asset value stability. As of the end of February, investors
were receiving 7-day annualized tax-free yields that ranged from 2.75% to 3.04%,
equivalent to taxable yields of between 3.99% and 4.41% for investors in the 31%
federal income tax bracket. When state taxes are taken into account, the
advantage of tax-free investing is even more apparent.
Portfolio Adjustments
Beginning in the fourth quarter of 1997, many Asian countries experienced
economic problems and severe currency devaluations. We continue to watch the
Asian situation--and Japanese banks in particular--for any additional credit
erosions and possible rating changes.
During this time, the Nuveen Money Market Funds, working with Nuveen Research,
continued to closely monitor those issues in the portfolios that were
additionally secured by letters of credit from Japanese banks. While others were
eliminating all Japanese-bank letters of credit, the funds maintained their
current positions based on our credit analysis.
With the funds' maturities averaging between 30 and 58 days, we were able to
selectively participate in the large new issue municipal note
Wealth takes
a lifetime
to build.
Once achieved,
it should be
preserved.
1
<PAGE>
"Nuveen
money market
funds provide
an excellent
balance to
other stock
and bond
investments."
calendar. During the third quarter of 1997, many short-term buyers seemed
reluctant to extend their average maturities, expecting the Federal Reserve to
raise rates. The funds were able to buy tax-exempt notes at historically cheap
levels which proved to be a wise move since the Fed did not raise rates. As a
result, the funds' average maturities during the third quarter of 1997 were
generally increased to the upper end of their ranges.
Short-Term Outlook
Looking forward, it's likely that upward pressure on wages may ultimately push
inflation up a bit. It's still uncertain whether the Fed will deem it necessary
to raise short-term rates, and if they hold the line, money market rates should
remain relatively stable in 1998.
Helping You Build A Better Portfolio
The events of 1997 have also focused renewed attention on the need for
diversification and appropriate asset allocation. In addition to their well-
known benefits--stability of principal and higher yields than bank accounts--
money market funds can also play an important role in your long-term investment
plan. Stock market volatility, especially late in the year, provided a vivid
illustration of the steadying effect that short-term investments can provide in
a well-constructed investment portfolio. Nuveen money market funds provide an
excellent balance to other stock and bond investments. Your financial adviser
can introduce you to a variety of other Nuveen products and services to round
out your portfolio of core investments, including the new Nuveen Rittenhouse
Growth Fund, a blue chip equity mutual fund that provides a tax-efficient
approach to building and sustaining wealth.
On behalf of everyone at Nuveen, I thank you for your continued confidence in us
and our family of investments.
Sincerely,
/s/ Timothy R. Schwertfeger
Timothy R. Schwertfeger
Chairman of the Board
April 15, 1998
2
<PAGE>
Nuveen Tax-Free Reserves, Inc.
Performance Overview
As of February 28, 1998
Fund Highlights
Inception Date 11/82
Net Assets ($000) $270,723
Average Weighted Maturity (Days) 42.1
- ----------------------------------------------------------
Tax-Free Yields
SEC 7-Day Yield 2.86%
SEC 30-Day Yield 2.75%
- ----------------------------------------------------------
Taxable Equivalent Yields
SEC 7-Day Yield 4.14%
SEC 30-Day Yield 3.99%
- ----------------------------------------------------------
Based on a federal tax rate of 31%; represents the yield from a taxable
investment necessary to equal the yield of the Nuveen fund on an after-tax
basis.
Top 5 Sectors
Health Care 18%
Utilities 18%
Tax Obligation (General) 16%
Long Term Care 10%
Tax Obligation (Limited) 7%
- ----------------------------------------------------------
1997-1998 Index Comparison
[MOUNTAIN CHART APPEARS HERE]
- --------------------------------------------------------------------------------
1997-1998 Index Comparison
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
IBC Donoghue Retail Tax-Exempt Money Market Fund Average Nuveen Tax-Free Reserves, Inc. 30-Day Yield
<S> <C> <C>
Feb 2.81 2.83
Mar 2.68 2.71
Apr 3.02 3.07
May 3.33 3.36
Jun 3.2 3.22
Jul 3.02 3.04
Aug 2.95 2.94
Sep 3.07 3.1
Oct 3.05 3.09
Nov 3.11 3.16
Dec 3.12 3.17
Jan 2.99 3.01
Feb 2.74 2.77
</TABLE>
[_] IBC Donoghue Retail Tax-Exempt Money Market Fund Average
[_] Nuveen Tax-Free Reserves, Inc. 30-Day Yield
Past performance is not predictive of future performance.
3
<PAGE>
Nuveen California Tax-Free Money Market Fund
Performance Overview
As of February 28, 1998
Fund Highlights
Inception Date 3/86
Net Assets ($000) $160,495
Average Weighted Maturity (Days) 30.1
- ----------------------------------------------------------
Tax-Free Yields
SEC 7-Day Yield 3.04%
SEC 30-Day Yield 2.85%
- ----------------------------------------------------------
Taxable Equivalent Yields
SEC 7-Day Yield 4.86%
SEC 30-Day Yield 4.55%
- ----------------------------------------------------------
Based on a combined federal and state income tax rate of 37.4%; represents the
yield from a taxable investment necessary to equal the yield of the Nuveen fund
on an after-tax basis.
Top 5 Sectors
Tax Obligation (Limited) 25%
Water and Sewer 19%
Housing (Multifamily) 15%
Health Care 14%
Tax Obligation (General) 12%
- ----------------------------------------------------------
1997-1998 Index Comparison
[MOUNTAIN CHART APPEARS HERE]
<TABLE>
<CAPTION>
IBC Donoghue California
Nuveen California Retail Tax-Exempt Money Market
30-Day Yield Fund Average
----------------- ------------------------------
<S> <C> <C>
Feb 2.89 2.76
Mar 2.67 2.6
Apr 3.21 3
May 3.57 3.32
Jun 3.38 3.15
Jul 3.11 2.92
Aug 2.98 2.8
Sep 3.17 2.98
Oct 3.15 2.97
Nov 3.27 3.05
Dec 3.24 3.04
Jan 3.23 2.85
Feb 2.83 2.59
</TABLE>
[_] Nuveen California 30-Day Yield
[_] IBC Donoghue California Retail Tax-Exempt Money Market Fund Average
Past performance is not predictive of future performance.
4
<PAGE>
Nuveen Massachusetts Tax-Free Money Market Fund
Performance Overview
As of February 28, 1998
Fund Highlights
Inception Date 2/87
Net Assets ($000) $37,583
Average Weighted Maturity (days) 58.2
- ----------------------------------------------------------
Tax-Free Yields
SEC 7-Day Yield 2.75%
SEC 30-Day Yield 2.73%
- ----------------------------------------------------------
Taxable Equivalent Yields
SEC 7-Day Yield 4.53%
SEC 30-Day Yield 4.50%
- ----------------------------------------------------------
Based on a combined federal and state income tax rate of 39.3%; represents the
yield from a taxable investment necessary to equal the yield of the Nuveen fund
on an after-tax basis.
Top 5 Sectors
Tax Obligation (General) 28%
Education and Civic Organizations 26%
Health Care 22%
Housing (Multifamily) 7%
Long-Term Care 6%
- ----------------------------------------------------------
1997-1998 Index Comparison
[MOUNTAIN CHART APPEARS HERE]
<TABLE>
<CAPTION>
Nuveen Massachusetts 30-Day Yield IBC Donoghue Massachusetts Retail Tax-Exempt Money Market Fund Average
<S> <C> <C> <C> <C>
Feb. 1997 2.81 2.8
Mar. 1997 2.61 2.68
Apr. 1997 3.12 3.06
May. 1997 3.43 3.33
Jun. 1997 3.29 3.18
Jul. 1997 3.09 3.04
Aug. 1997 3.00 2.94
Sep. 1997 3.13 3.05
Oct. 1997 3.04 3.03
Nov. 1997 3.2 3.1
Dec. 1997 3.12 3.08
Jan. 1998 2.97 2.91
Feb. 1998 2.71 2.65
</TABLE>
[_] Nuveen Massachusetts 30-Day Yield
[_] IBC Donoghue Massachusetts Retail Tax-Exempt Money Market Fund Average
Past performance is not predictive of future performance.
5
<PAGE>
Nuveen New York Tax-Free Money Market Fund
Performance Overview
As of February 28, 1998
Fund Highlights
Inception Date 2/87
Net Assets ($000) $30,276
Average Weighted Maturity (days) 33.0
- ----------------------------------------------------------
Tax-Free Yields
SEC 7-Day Yield 2.84%
SEC 30-Day Yield 2.69%
- ----------------------------------------------------------
Taxable Equivalent Yields
SEC 7-Day Yield 4.42%
SEC 30-Day Yield 4.18%
- ----------------------------------------------------------
Based on a combined federal and state income tax rate of 35.7%; represents the
yield from a taxable investment necessary to equal the yield of the Nuveen fund
on an after-tax basis.
Top 5 Sectors
Tax Obligation (General) 20%
Education and Civic Organizations 19%
Health Care 10%
Tax Obligation (Limited) 10%
Consumer Cyclical 9%
- ----------------------------------------------------------
1997-1998 Index Comparison
[MOUNTAIN CHART APPEARS HERE]
1997-1998 Index Comparison
[MOUNTAIN CHART APPEARS HERE]
<TABLE>
<CAPTION>
Nuveen New York IBC Donoghue New York
30-Day Yield Retail Tax-Exempt
Money Market Fund Average
<S> <C> <C>
Feb. 1997 2.88 2.77
Mar. 1997 2.74 2.63
Apr. 1997 3.2 3.02
May. 1997 3.45 3.32
Jun. 1997 3.31 3.18
Jul. 1997 3.11 2.98
Aug. 1997 3.00 2.87
Sep. 1997 3.15 3.03
Oct. 1997 3.12 3.02
Nov. 1997 3.23 3.13
Dec. 1997 3.21 3.12
Jan. 1998 3.03 2.93
Feb. 1998 2.68 2.68
</TABLE>
[_] Nuveen New York 30-Day Yield
[_] IBC Donoghue New York Retail Tax-Exempt Money Market Fund Average
Past performance is not predictive of future performance.
6
<PAGE>
Portfolio of Investments
February 28, 1998
Reserves
<TABLE>
<CAPTION>
Principal Amortized
Amount Description Ratings* Cost
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Alabama -- 1.0%
$ 2,735,000 Marshall County Special Obligation School Refunding Warrants, Series 1994, A-1+ $2,735,000
Variable Rate Demand Bonds, 3.450%, 2/01/12+
- -----------------------------------------------------------------------------------------------------------------------------------
Arizona -- 5.6%
7,000,000 The Industrial Development Authority of the County of Apache (Arizona), VMIG-1 7,000,000
Pollution Control Revenue Bonds, 1981 Series B (Tucson Electric Power
Company Project), Variable Rate Demand Bonds, 3.750%, 10/01/21+
8,000,000 Mesa Municipal Development Corporation, Special Tax Bonds, Series 1985, VMIG-1 8,000,000
Commercial Paper, 3.200%, 4/09/98
- -----------------------------------------------------------------------------------------------------------------------------------
California -- 1.9%
5,000,000 California State Revenue Anticipation Notes, Series 1997, 4.500%, 6/30/98 MIG-1 5,010,434
- -----------------------------------------------------------------------------------------------------------------------------------
Colorado -- 1.8%
5,000,000 Fort Morgan Water Works and Distribution Enterprise, Water Revenue A-1+ 5,000,000
Bonds, Series 1997, Variable Rate Demand Bonds, 3.450%, 12/01/17+
- -----------------------------------------------------------------------------------------------------------------------------------
District of Columbia -- 3.0%
8,100,000 District of Columbia General Obligation, Series 1992A-2, Variable VMIG-1 8,100,000
Rate Demand Bonds, 3.700%, 10/01/07+
- -----------------------------------------------------------------------------------------------------------------------------------
Florida -- 6.9%
1,400,000 Florida Housing Finance Agency, Multi-Family Housing Revenue A-1 1,400,000
Refunding Bonds, 1989 Series E (Fairmont Oaks Project), Variable Rate
Demand Bonds, 3.650%, 4/01/26+
3,100,000 Pasco County Housing Finance Authority, Multi-Family Housing VMIG-1 3,100,000
Revenue Bonds (Carlton Arms of Magnolia Valley Project), Series 1985,
Variable Rate Demand Bonds, 3.225%, 12/01/07+
4,800,000 Sarasota County Public Hospital District, Sarasota Memorial A-1+ 4,800,000
Hospital Project, Series C, Commercial Paper, 3.400%, 5/14/98
Sunshine State Governmental Financing Commission, Commercial Paper:
3,300,000 3.750%, 3/06/98 VMIG-1 3,300,000
4,000,000 3.550%, 6/23/98 VMIG-1 4,000,000
2,200,000 Volusia County Health Facilities Authority, Health Facilities A-1+ 2,200,000
Revenue Bonds (The Alliance Community for Retirement Living,
Inc. Project), Series 1995, Variable Rate Demand Bonds,
3.800%, 9/01/20+
- -----------------------------------------------------------------------------------------------------------------------------------
Hawaii -- 0.7%
1,800,000 Department of Budget and Finance of the State of Hawaii, Special Purpose A-1 1,800,000
Demand Revenue Bonds (Adventist Health System--West),
Series 1984, Variable Rate Demand Bonds, 3.750%, 9/01/99+
- -----------------------------------------------------------------------------------------------------------------------------------
Illinois -- 15.2%
5,500,000 Illinois Health Facilities Authority, Revenue Bonds, Series 1997 VMIG-1 5,500,000
(Victory Health Services), Commercial Paper, 3.600%, 3/12/98
2,700,000 Illinois Health Facilities Authority, Rush Presbyterian Series 1989A, VMIG-1 2,700,000
Commercial Paper, 3.400%, 5/15/98
7,000,000 Illinois Development Finance Authority, Pollution Control Revenue Bonds P-1 7,000,000
(Diamond-Star Motors Corporation Project), Series 1995,
Variable Rate Demand Bonds, 3.750%, 12/01/08+
</TABLE>
7
<PAGE>
Portfolio of Investments
February 28, 1998
Reserves -- continued
<TABLE>
<CAPTION>
Principal Amortized
Amount Description Ratings* Cost
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Illinois -- continued
$ 2,000,000 Illinois Development Finance Authority, Revenue Bonds, Radiological Society of A-1+ $2,000,000
North America, Series 1997, Variable Rate Demand Bonds, 3.550%, 6/01/17
6,000,000 Illinois Educational Facilities Authority, Adjustable Demand Revenue Bonds, VMIG-1 6,000,000
Shedd Aquarium Society, Series 1987B, Commercial Paper, 3.850%, 7/23/98
3,000,000 City of Chicago, General Obligation Tender Notes, Series 1997, 3.550%, 10/29/98 MIG-1 3,000,000
5,000,000 City of Chicago, General Obligation Tender Notes, Series 1998, 3.550%, 2/04/99 SP-1+ 5,000,000
2,500,000 City of Chicago, Chicago-OOHare International Airport, Special Facility Revenue P-1 2,500,000
Bonds (American Airlines, Inc. Project), Series 1983A, Variable Rate Demand
Bonds, 3.650%, 12/01/17
5,700,000 City of Decatur, Macon County, Illinois, Unit Priced Demand Adjustable Water VMIG-1 5,700,000
Revenue Bonds, Series 1985, Commercial Paper, 4.100%, 3/12/98
1,770,000 Village of Oak Park, Illinois, Variable Rate Demand Revenue Bonds (Lone Tree N/R 1,770,000
Area Girl Scout Council, Inc. Project), Series 1997, 3.600%, 11/01/17
- ---------------------------------------------------------------------------------------------------------------------------
Iowa -- 3.0%
5,000,000 Iowa School Cash Anticipation Program, Iowa School Corporations, Warrant MIG-1 5,010,799
Certificates, 1997-98 Series A Notes, 4.500%, 6/26/98
2,900,000 City of Eddyville, Iowa, Industrial Development Revenue Bonds (Heartland Lysine, N/R 2,900,000
Inc. Project), Series 1985, Variable Rate Demand Bonds, 3.650%, 11/01/03
- ---------------------------------------------------------------------------------------------------------------------------
Kentucky -- 3.3%
9,005,000 Hancock County, Kentucky, Industrial Building Revenue Refunding Bonds (Southwire N/R 9,005,000
Company Project), Series 1990, Variable Rate Demand Bonds, 3.600%, 7/01/10
- ---------------------------------------------------------------------------------------------------------------------------
Louisiana -- 1.5%
4,000,000 Ascension Parish Pollution Control (BASF Wyandotte Corporation), Variable Rate P-1 4,000,000
Demand Bonds, 3.650%, 12/01/05
- ---------------------------------------------------------------------------------------------------------------------------
Massachusetts -- 0.9%
2,400,000 Newton Bond Anticipation Notes, 4.000%, 3/25/98 N/R 2,400,130
- ---------------------------------------------------------------------------------------------------------------------------
Michigan -- 4.7%
7,100,000 Michigan Job Development Authority, Limited Obligation Revenue Bonds (Frankenmuth A-1 7,100,000
Bavarian Inn Motor Lodge Project), Series A, Variable Rate Demand Bonds,
3.875%, 9/01/15
5,000,000 The School District of the City of Kalamazoo, County of Kalamazoo, State of SP-1+ 5,001,803
Michigan, 1997 State Aid Notes (Limited Tax General Obligation), 4.000%, 4/15/98
735,000 The Economic Development Corporation of the City of Warren, Macomb County, P-1 735,000
Michigan, Floating Rate Limited Obligation Revenue Bonds (The Prince Company, Inc.,
Michigan Division Project), Series A, Variable Rate Demand Bonds, 3.600%, 11/01/99
- ---------------------------------------------------------------------------------------------------------------------------
Minnesota -- 1.9%
5,125,000 City of Bloomington, Minnesota, Floating Rate Demand Bonds, Commercial Revenue A-1+ 5,125,000
Bonds (James Avenue Associates Project), Series 1985, Variable Rate Demand
Bonds, 3.450%, 12/01/15
- ---------------------------------------------------------------------------------------------------------------------------
Missouri -- 4.5%
3,000,000 Health and Educational Facilities Authority of the State of Missouri, Health VMIG-1 3,000,000
Facilities Revenue Bonds (Bethesda Barclay), Series 1996A, Variable Rate
Demand Bonds, 3.950%, 8/15/26
</TABLE>
8
<PAGE>
<TABLE>
<CAPTION>
Principal Amortized
Amount Description Ratings* Cost
- ------------------------------------------------------------------------------------------------------------------------
Missouri -- continued
<S> <C> <C> <C>
$ 9,200,000 State Environmental Improvement and Energy Resources Authority of the State of VMIG-1 $ 9,200,000
Missouri, Unit Priced Demand Adjustable Pollution Control Revenue Bonds, Series
1985 A (Union Electric Company), Commercial Paper, 3.200%, 4/08/98
- ------------------------------------------------------------------------------------------------------------------------
New Hampshire -- 2.5%
6,900,000 New Hampshire Higher Educational and Health Facilities Authority, Revenue Bonds, A-1 6,900,000
Hunt Community Issue, Series 1996, Variable Rate Demand Bonds, 3.500%, 5/01/26+
- ------------------------------------------------------------------------------------------------------------------------
North Carolina -- 3.7%
4,650,000 North Carolina Municipal Power Agency, Catawba Electric Revenue, Commercial A-1+ 4,650,000
Paper, Series A, 3.250%, 3/20/98
2,400,000 The Wake County Industrial Facilities and Pollution Control Financing Authority, VMIG-1 2,400,000
Pollution Control Revenue Refunding Bonds, Carolina Power and Light Company
Project, Series 1990B, Variable Rate Demand Bonds, 3.500%, 6/15/14+
3,000,000 The Wake County Industrial Facilities and Pollution Control Financing Authority, A-2 3,000,000
Pollution Control Refunding Bonds (Carolina Power and Light Company Project),
Series 1985C, Commercial Paper, 4.250%, 3/06/98
- ------------------------------------------------------------------------------------------------------------------------
Ohio -- 12.2%
2,555,000 Ohio School Districts, 1998 Cash Flow Borrowing Program, Certificates of MIG-1 2,566,853
Participation, Series A, Tax Anticipation Notes, 4.120%, 12/31/98
8,300,000 Centerville Health Care, Health Care Revenue Bonds (Bethany Lutheran Village VMIG-1 8,300,000
Continuing Care Facilities Expansion Project), Variable Rate Demand Bonds,
3.500%, 5/01/08+
3,600,000 Cuyahoga County, University Hospital of Cleveland, Series 1985, Variable Rate VMIG-1 3,600,000
Demand Bonds, 3.850%, 1/01/16+
3,000,000 Cuyahoga County Hospital, Revenue Refunding Bonds, Cleveland Clinic, Series VMIG-1 3,000,000
1998A, Variable Rate Demand Bonds, 3.400%, 1/01/24+
5,120,000 County of Erie, Ohio, Adjustable Rate Demand Bonds, Health Care Facilities VMIG-1 5,120,000
Revenue Bonds (The Commons of Providence Project), Series 1996 B,
Variable Rate Demand Bonds, 3.560%, 10/01/21+
3,570,000 County of Franklin, Ohio, Floating Rate Demand Bonds, Hospital Financing Revenue N/R 3,570,000
Bonds, Series 1993 (Traditions at Mill Run Project), Variable Rate Demand Bonds,
3.570%, 11/01/14+
5,000,000 County of Lucas, Ohio, Multi-Mode Variable Rate Demand Facilities Improvement VMIG-1 5,000,000
Revenue Bonds, Series 1997 (The Toledo Zoological Society Project), Variable
Rate Demand Bonds, 3.450%, 10/01/05+
1,800,000 County of Ottawa, Ohio, Hospital Facilities, Variable Rate Demand Revenue Bonds, N/R 1,800,000
Series 1997 (Luther Home of Mercy Project), 3.450%, 10/01/17+
- ------------------------------------------------------------------------------------------------------------------------
Pennsylvania -- 5.3%
2,250,000 Butler County Industrial Development Authority (Pennsylvania), Industrial N/R 2,250,000
Development Revenue Bonds (Wise Business Forms, Incorporated Project),
Variable Rate Demand Bonds, Series 1997, 3.510%, 8/01/18+
7,000,000 Dauphin County General Authority (Pennsylvania), Variable Rate Demand Revenue A-1+ 7,000,000
Bonds (All Health Pooled Financing Program), Series A of 1997, 3.450%, 10/01/27+
1,000,000 City of Philadelphia Tax and Revenue Anticipation Notes, Series A of 1997-1998,
4.500%, 6/30/98 MIG-1 1,001,593
4,000,000 City of Philadelphia, Pennsylvania, General Obligation Bonds, Series 1990,
Commercial Paper, 4.100%, 3/12/98 VMIG-2 4,000,000
</TABLE>
9
<PAGE>
<TABLE>
<CAPTION>
Portfolio of Investments
February 28, 1998
Reserves -- continued
Principal Amortized
Amount Description Ratings* Cost
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Tennessee -- 2.4%
$3,500,000 The Industrial Development Board of the County of Jackson, Tennessee, Variable N/R $3,500,000
Rate Industrial Development Demand Revenue Bonds (Esselte Project), Series
1985B, Variable Rate Demand Bonds, 3.750%, 8/01/15+
3,100,000 The Industrial Development Board of the Metropolitan Government of Nashville N/R 3,100,000
and Davidson County (State of Tennessee), Multifamily Housing Revenue
Refunding Bonds (Hickory Trace Apartments Project), Series 1995, Variable
Rate Demand Bonds, 3.450%, 6/01/15+
- ---------------------------------------------------------------------------------------------------------------------------
Texas -- 7.2%
4,000,000 Texas State Tax and Revenue Anticipation Notes, Series 1997A, 4.750%, 8/31/98 MIG-1 4,022,282
7,000,000 Austin (Travis and Williamson Counties), Series A, Austin Combined Utilities, A-1+ 7,000,000
Commercial Paper, 3.000%, 3/11/98
8,500,000 Brownsville Utility System, Commercial Paper, Series A, 3.450%, 5/08/98 A-1+ 8,500,000
- ---------------------------------------------------------------------------------------------------------------------------
Utah -- 1.3%
3,550,000 West Valley City Industrial Development (Johnson Matthey Project), Variable N/R 3,550,000
Rate Demand Bonds, 3.750%, 12/01/11+
- ---------------------------------------------------------------------------------------------------------------------------
Virginia -- 3.3%
3,000,000 Industrial Development Authority of Albemarle County, Virginia, Health A-1 3,000,000
Services Revenue Bonds (The University of Virginia Health Services
Foundation), Series 1996, Variable Rate Demand Bonds, 3.400%, 2/01/26+
2,600,000 The Industrial Development Authority of the City of Norfolk, Floating Rate N/R 2,600,000
Industrial Development Revenue Bonds (Norfolk-Virginia Beach-Portsmouth
MSA Limited Partnership Project), Variable Rate Demand Bonds, 5.525%, 11/01/04+
3,300,000 The Industrial Development Authority of the City of Richmond, Floating N/R 3,300,000
Rate Industrial Development Revenue Bonds (Richmond MSA Limited Partnership
Project), Variable Rate Demand Bonds, 5.525%, 11/01/04+
- ---------------------------------------------------------------------------------------------------------------------------
Washington -- 3.4%
4,900,000 Washington Health Care Facilities Authority, Series 1984 (Adventist A-1 4,900,000
Health System--West/Walla Walla General Hospital), Variable Rate
Demand Bonds, 3.750%, 9/01/09+
4,250,000 Spokane County, Washington, Road Fund, Tax Anticipation Notes, Series SP-1+ 4,256,095
1997, 4.250%, 6/30/98
- ---------------------------------------------------------------------------------------------------------------------------
Wisconsin -- 2.2%
6,000,000 Wisconsin Health and Educational Facilities Authority, Alexian Village VMIG-1 6,000,000
of Milwaukee, Inc. Refinancing, Series 1988A, Variable Rate Demand Bonds,
3.950%, 3/01/17+
- ---------------------------------------------------------------------------------------------------------------------------
$268,915,000 Total Investments -- 99.4% 268,979,989
============---------------------------------------------------------------------------------------------------------------
Other Assets Less Liabilities -- 0.6% 1,742,848
----------------------------------------------------------------------------------------------------------
Net Assets -- 100% $270,722,837
==========================================================================================================
</TABLE>
* Ratings (not covered by the report of independent public
accountants): Using the higher of Standard & Poor's or
Moody's rating.
N/R -- Investment is not rated.
+ The security has a maturity of more than one year, but
has variable rate and demand features which qualify it
as a short-term security. The rate disclosed is that
currently in effect. This rate changes periodically
based on market conditions or a specified market index.
See accompanying notes to financial statements.
10
<PAGE>
<TABLE>
<CAPTION>
Portfolio of Investments
February 28, 1998
California
Principal Amortized
Amount Description Ratings* Cost
- ----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Consumer Staples - 4.4%
$7,000,000 San Dimas Industrial Development Bonds (Bausch & Lomb N/R $7,000,000
Incorporated), Variable Rate Demand Bonds, 3.700%, 12/01/15+
- ----------------------------------------------------------------------------------------------------------------
Health Care - 14.1%
5,100,000 California Health Facilities Financing Authority, Insured VMIG-1 5,100,000
Revenue Bonds (Sutter/CHS), 3.650%, 7/01/22+
1,575,000 California Health Facilities Financing Authority, Refunding VMIG-1 1,575,000
Revenue Bonds (St. Joseph Health System), Series 1985B,
Variable Rate Demand Bonds, 3.650%, 7/01/13+
4,300,000 California Health Facilities Authority (St. Joseph Health VMIG-1 4,300,000
System), Series 1991B, Variable Rate Demand Bonds,
3.650%, 7/01/09+
3,700,000 California Statewide Community Development Authority, Certificates VMIG-1 3,700,000
of Participation (Sutter Health Obligation Group), Variable Rate
Demand Bonds, 3.850%, 7/01/15+
5,000,000 Torrance Hospital Revenue (Little Company of Mary Hospital A-1 5,000,000
- Torrance Memorial Hospital), Variable Rate Demand Bonds,
3.250%, 2/01/22+
3,000,000 Washington Township Hospital District, 1984 Issue A, VMIG-1 3,000,000
Variable Rate Demand Bonds, 3.700%, 1/01/16+
- ----------------------------------------------------------------------------------------------------------------
Housing/Multifamily - 14.7%
2,910,000 Chico Multifamily Housing (Sycamore Glen Project), Series N/R 2,910,000
1995, Variable Rate Demand Bonds, 3.480%, 4/07/14+
3,000,000 Hayward Housing Authority, Multifamily Mortgage Revenue A-2 3,000,000
Refunding, Series 1993A [Huntwood Terrace), Variable Rate
Demand Bonds, 4.000%, 3/01/27+
4,796,000 City of Los Angeles (Studio Colony Project), Variable Rate VMIG-1 4,796,000
Demand Bonds, Multifamily Housing Revenue Bonds,
3.700%, 5/01/07+
7,900,000 Orange County Apartment Development (Monarch Bay Apartments A-1 7,900,000
Project), Variable Rate Demand Bonds, 3.500%, 10/01/07+
3,800,000 Orange County (Robinson Ranch Apartments Project), Variable VMIG-1 3,800,000
Rate Demand Revenue Bonds, 3.200%, 11/01/08+
1,150,000 San Bernardino Multifamily Housing (Castle Park Apartments), VMIG-1 1,150,000
Variable Rate Demand Bonds, 3.750%, 11/01/05+
- ---------------------------------------------------------------------------------------------------------------
Other Revenue - 3.1%
5,000,000 California State Revenue Anticipation Notes, Series 1997, MIG-1 5,010,434
4.500%, 6/30/98
- ---------------------------------------------------------------------------------------------------------------
Tax Obligation/General - 11.9%
5,000,000 California School Cash Reserve Program Authority, 1997 MIG-1 5,014,591
Pool Bonds, Series A, 4.750%, 7/02/98
2,000,000 Irvine Ranch Water District, Variable Rate Demand Bonds, VMIG-1 2,000,000
3.550%, 6/01/15+
2,000,000 Riverside County School Financing Authority, 1997-98 MIG-1 2,009,884
Revenue Anticipation Notes, School Districts
Financing Program, 4.500%, 10/01/98
3,000,000 San Diego County Teeter Obligation, Tax-Exempt Commercial P-1 3,000,000
Paper, Series B, 3.500%, 3/11/98
2,000,000 County of San Mateo, California, 1997-98 Tax and Revenue SP-1+ 2,004,506
Anticipation Notes, 4.500%, 7/01/98
5,000,000 South Coast Local Education Agencies, Pooled Tax and SP-1+ 5,011,169
Revenue Anticipation Notes Program,
Series 1997A, 4.500%, 6/30/98
</TABLE>
11
<PAGE>
Portfolio of Investments
February 28, 1998
California -- continued
<TABLE>
<CAPTION>
Principal Amortized
Amount Description Ratings* Cost
- --------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Tax Obligation/Limited -- 24.9%
$ 9,000,000 Kern Community College District, Certificates of Participation, Series A-2 $ 9,000,000
1995, Variable Rate Demand Bonds, 4.150%, 1/01/25**
5,000,000 Los Angeles County Metro Transport Authority, Second Subordinate Sales A-1 5,000,000
Tax Revenue, Commercial Paper, 3.550%, 5/19/98
1,900,000 Oakland, California, Certificates of Participation, Capital N/R 1,900,000
Improvement Project, Variable Rate Demand Bonds, 3.500%, 12/01/15**
7,000,000 Orange County, Irvine Coast Assessment District #88-1, Variable Rate VMIG-1 7,000,000
Demand Bonds, 3.600%, 9/02/18**
3,000,000 County of Riverside Teeter Obligation, Tax-Exempt Commercial Paper, A-1+ 3,000,000
Series B, 3.700%, 3/12/98
5,000,000 San Joaquin County Transportation Authority, Sales Tax Revenue A-1+ 5,000,000
Commercial Paper, 3.400%, 6/05/98
6,000,000 Santa Clara County Transit District, Refunding Equipment Trust VMIG-1 6,000,000
Certificates, Variable Rate Demand Bonds, 4.050%, 6/01/15**
3,000,000 Westminster Redevelopment Agency, Westminster Commercial Redevelopment A-1+ 3,000,000
Project No. 1, 1997 Tax Allocation Revenue Refunding Bonds,
Variable Rate Demand Bonds (Orange County, California), 3.200%,
8/01/27**
- --------------------------------------------------------------------------------------------------------------------
Utilities -- 7.1%
1,000,000 California Pollution Control Financing Authority, Pacific Gas & A-1+ 1,000,000
Electric, Series 1996D, Commercial Paper, 3.200%, 5/08/98
5,400,000 California Pollution Control Financing Authority, Pollution A-1+ 5,400,000
Control Refunding Revenue Bonds (Pacific Gas and Electric Company),
1996 Series C, Variable Rate Demand Bonds, 3.550%, 11/01/26**
5,000,000 Sacramento Municipal Utility District, Series I, Commercial Paper, A-1+ 5,000,000
3.000%, 3/27/98
- --------------------------------------------------------------------------------------------------------------------
Water and Sewer -- 19.1%
4,675,000 Hillsborough Certificates of Participation, Water & Sewer System Project, A-1 4,675,000
Series 1995A, Variable Rate Demand Bonds, 3.350%, 6/01/15**
2,500,000 Los Angeles Wastewater System, Commercial Paper, 3.150%, 5/20/98 VMIG-1 2,500,000
7,400,000 Monterey County Financing Authority, Revenue Bonds (Reclamation and VMIG-1 7,400,000
Distribution Project), Series 1995A, Variable Rate Demand Bonds,
3.900%, 9/01/36**
6,300,000 Orange County Sanitation District, Certificates of Participation, VMIG-1 6,300,000
Variable Rate Demand Bonds, 3.600%, 8/01/17**
4,050,000 San Diego County, Rincon Del Diablo Municipal Water District, Rincon VMIG-2 4,050,000
Public Facilities Corporation, Commercial Paper, 3.900%, 5/01/98
5,800,000 Santa Paula Public Financing Authority, Lease Revenue Bonds, Series A-2 5,800,000
1996, Water System Acquisition Project, Variable Rate Demand Bonds,
3.800%, 2/01/26**
- --------------------------------------------------------------------------------------------------------------------
$159,256,000 Total Investments -- 99.3% 159,306,584
================----------------------------------------------------------------------------------------------------
Other Assets Less Liabilities -- 0.7% 1,188,858
------------------------------------------------------------------------------------------------
Net Assets -- 100% $160,495,442
================================================================================================
* Ratings (not covered by the report of independent public accountants): Using the higher of
Standard & Poor's or Moody's rating.
N/R -- Investment is not rated.
** The security has a maturity of more than one year, but has variable rate and demand features
which qualify it as a short-term security. The rate disclosed is that currently in effect.
This rate changes periodically based on market conditions or a specified market index.
See accompanying notes to financial statements.
</TABLE>
12
<PAGE>
Portfolio of Investments
February 28, 1998
Massachusetts
<TABLE>
<CAPTION>
Principal Amortized
Amount Description Ratings* Cost
- --------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Education and Civic Organizations -- 24.7%
$ 800,000 Massachusetts Health and Educational Facilities Authority (Harvard VMIG-1 $ 800,000
University), Variable Rate Demand Bonds, 2.950%, 2/01/16**
1,700,000 Massachusetts Health and Educational Facilities Authority, Amherst College VMIG-1 1,700,000
Issue, Series F, Variable Rate Demand Bonds, 3.100%, 11/01/26**
1,000,000 Massachusetts Industrial Finance Agency (Showa Women's Institute Boston, VMIG-1 1,000,000
Inc. 1994 Project), Variable Rate Demand Bonds, 3.650%, 3/15/04**
1,000,000 Massachusetts Industrial Finance Agency (Emerson College Issue), Series N/R 1,000,000
1995, Variable Rate Demand Bonds, 3.200%, 1/01/15**
1,000,000 Massachusetts Industrial Finance Agency (Massachusetts Society for the A-1 1,000,000
Prevention of Cruelty to Animals Issue), Series 1997, Variable Rate
Demand Bonds, 3.250%, 8/01/27**
1,000,000 Massachusetts Industrial Finance Agency (Gordon College Issue), Series A-1+ 1,000,000
1997, Variable Rate Demand Bonds, 3.250%, 12/01/27**
1,000,000 Massachusetts Industrial Finance Agency (Eastern Nazarene College Issue), A-1+ 1,000,000
Series 1997, Variable Rate Demand Bonds, 3.250%, 10/01/27**
1,800,000 Puerto Rico Industrial Medical, Educational and Environmental Authority VMIG-1 1,800,000
(Inter American University of Puerto Rico), Commercial Paper, 3.650%,
4/06/98
- --------------------------------------------------------------------------------------------------------------------
Health Care -- 21.5%
1,000,000 Massachusetts Health and Educational Facilities Authority, Capital Asset VMIG-1 1,000,000
Program, Series A, Variable Rate Demand Bonds, 3.300%, 1/01/01**
1,000,000 Massachusetts Health and Educational Facilities Authority (Capital Asset VMIG-1 1,000,000
Program, Series B), Variable Rate Demand Bonds, 3.400%, 7/01/05**
1,700,000 Massachusetts Health and Educational Facilities Authority (Capital Asset VMIG-1 1,700,000
Program), Variable Rate Demand Bonds, 3.600%, 1/01/35**
1,800,000 Massachusetts Health and Educational Facilities Authority (Brigham and VMIG-1 1,800,000
Women's Hospital), Variable Rate Demand Bonds, 3.300%, 7/01/17**
1,900,000 Massachusetts Health and Educational Facilities Authority, Partners VMIG-1 1,900,000
Healthcare System, Series P, Variable Rate Demand Bonds, 3.100%,
7/01/27**
675,000 Massachusetts Health and Educational Facilities Authority, Hallmark Health Aaa 675,997
System Issue, Revenue Bonds, Series A, Variable Rate Demand Bonds,
4.250%, 7/01/98
- --------------------------------------------------------------------------------------------------------------------
Housing/Multifamily -- 6.8%
1,560,000 Massachusetts Industrial Finance Agency, Chestnut House Apartments A-2 1,560,000
(FHA Insurance), Variable Rate Demand Bonds, 3.300%, 8/01/26**
1,000,000 Massachusetts Industrial Finance Agency (Lower Mills Associates LP), N/R 1,000,000
Series 1995, Variable Rate Demand Bonds, 3.200%, 12/01/20**
- --------------------------------------------------------------------------------------------------------------------
Industrial/Other -- 1.6%
585,000 Massachusetts Industrial Finance Agency, Adjustable Rate Industrial Revenue N/R 585,000
Bonds (Jencoat/Levy Realty Trust), Variable Rate Demand Bonds, 4.415%,
10/06/99**
- --------------------------------------------------------------------------------------------------------------------
Long Term Care -- 5.3%
1,300,000 Massachusetts Industrial Finance Agency, Revenue Bonds (Goddard House), A-1 1,300,000
Series 1995, Variable Rate Demand Bonds, 3.150%, 11/01/25**
</TABLE>
13
<PAGE>
Portfolio of Investments
February 28, 1998
Massachusetts -- continued
<TABLE>
<CAPTION>
Principal Amortized
Amount Description Ratings* Cost
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Long Term Care -- continued
$ 680,000 Massachusetts Industrial Finance Agency, Edgewood Retirement Community Project, VMIG-1 $ 680,000
Series 1995-C, Variable Rate Demand Bonds, 3.300%, 11/15/25+
- ---------------------------------------------------------------------------------------------------------------------------------
Other Revenue -- 2.7%
1,000,000 Montachusett Regional Transit Authority, Massachusetts, Revenue Anticipation Notes, N/R 1,001,065
4.250%, 6/26/98
- ---------------------------------------------------------------------------------------------------------------------------------
Tax Obligation/General -- 27.3%
1,800,000 Massachusetts Bay Transportation Authority, Series C, Commercial Paper, 3.550%, 4/29/98 A-1+ 1,800,000
1,000,000 Town of Barnstable, Massachusetts, Bond Anticipation Notes, 4.250%, 10/23/98 N/R 1,002,489
1,000,000 Farmingham General Obligation, Unlimited Tax Bond Anticipation Note, 4.000%, 2/05/99 N/R 1,003,335
1,000,000 Town of Georgetown, Massachusetts, Bond Anticipation Notes, 4.000%, 6/12/98 N/R 1,000,542
1,500,000 Town of Holliston, Massachusetts, Bond Anticipation Notes, 4.000%, 9/23/98 N/R 1,502,912
1,000,000 Newton Bond Anticipation Notes, 4.000%, 3/25/98 N/R 1,000,127
1,000,000 City of Quincy, Massachusetts, Bond Anticipation Notes, 4.200%, 5/21/98 N/R 1,000,680
1,000,000 Town of Uxbridge, Massachusetts, Bond Anticipation Notes, 4.250%, 7/15/98 N/R 1,001,433
1,000,000 Town of Weston, Massachusetts, Bond Anticipation Notes, 4.000%, 9/30/98 N/R 1,001,694
- ---------------------------------------------------------------------------------------------------------------------------------
Utilities -- 1.6%
600,000 Massachusetts Industrial Finance Agency, Resource Recovery (Ogden Haverhill), VMIG-1 600,000
Variable Rate Demand Bonds, 3.150%, 12/01/06+
- ---------------------------------------------------------------------------------------------------------------------------------
Water and Sewer -- 5.1%
1,000,000 Massachusetts Water Resources Authority, Series 1997, Commercial Paper, 3.600%, 5/13/98 A-1+ 1,000,000
900,000 Massachusetts Water Resources Authority, Series 1994, Commercial Paper, 3.650%, 5/13/98 A-1+ 900,000
- ---------------------------------------------------------------------------------------------------------------------------------
$36,300,000 Total Investments -- 96.6% 36,315,274
===========----------------------------------------------------------------------------------------------------------------------
Other Assets Less Liabilities -- 3.4% 1,268,024
-----------------------------------------------------------------------------------------------------------------
Net Assets -- 100% $37,583,298
=================================================================================================================
</TABLE>
* Ratings (not covered by the report of independent public
accountants): Using the higher of Standard & Poor's or
Moody's rating.
N/R - Investment is not rated.
+ The security has a maturity of more than one year, but has
variable rate and demand features which qualify it as a
short-term security. The rate disclosed is that currently
in effect. This rate changes periodically based on market
conditions or a specified market index.
See accompanying notes to financial statements.
14
<PAGE>
<TABLE>
<CAPTION>
Portfolio of Investments
February 28, 1998
New York
Principal Amortized
Amount Description Ratings* Cost
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Consumer Cyclical - 8.6%
$1,100,000 New York Environmental Facilities Corporation (General Electric Company), A-1+ $1,100,000
Commercial Paper, 3.550%, 3/09/98
1,000,000 Dutchess County Industrial Development Agency, Industrial Development A-1 1,000,000
Revenue Bonds (Toys "R" US--NYTEX Inc. Facility), Series 1984, Variable
Rate Demand Bonds, 3.475%, 11/01/19+
500,000 Yonkers Industrial Development Agency, Series 1989, Civic Facility Revenue VMIG-1 500,000
Bonds, Variable Rate Demand Bonds, 3.200%, 7/01/19+
- ----------------------------------------------------------------------------------------------------------------------
Education and Civic Organizations - 18.4%
1,300,000 Dormitory Authority of the State of New York, New York Founding Charitable VMIG-1 1,300,000
Corporation, Revenue Bonds, Series 1997, Variable Rate Demand Bonds,
3.300%, 7/01/12+
1,100,000 New York State Housing Finance Agency, Demand Revenue Bonds, Series 1984-A VMIG-1 1,100,000
(Mt. Sinai School of Medicine), Variable Rate Demand Bonds, 3.250%,
11/01/14+
1,100,000 New York City Trust for Cultural Resources (Guggenheim Foundation), Variable VMIG-1 1,100,000
Rate Demand Bonds, 3.650%, 12/01/15+
200,000 New York City Industrial Development Agency, Revenue Bonds, Series 1989, A-1+ 200,000
Audubon Society, Variable Rate Demand Bonds, 3.650%, 12/01/14+
900,000 Puerto Rico Industrial Medical Education and Environmental Authority, A-1 900,000
Ana G. Mendez Educational Foundation (FEAGM Project), Variable Rate Demand
Bonds, 4.100%, 12/01/15+
980,000 Syracuse Industrial Development Agency, Multi-Modal Interchangeable Rate Civic VMIG-1 980,000
Facility, Revenue Bonds (Syracuse University), Variable Rate Demand Bonds,
3.650%, 3/01/23+
- ----------------------------------------------------------------------------------------------------------------------
Financials - 6.6%
1,000,000 City of Albany Industrial Development Agency, Industrial Development Revenue A-1 1,000,000
Bonds (Vulcan Investors 1986-1 Project), Series 1986 A, Variable Rate Demand
Bonds, 4.100%, 7/01/06 (Mandatory put 7/01/98)+
1,000,000 New York City Industrial Development Agency, Refunding Revenue (LaGuardia A-1+ 1,000,000
Associates Project), Variable Rate Demand Bonds, 3.300%, 12/01/15+
- ----------------------------------------------------------------------------------------------------------------------
Health Care - 9.6%
900,000 Dormitory Authority of the State of New York (Sloan Kettering Cancer Center), A-1 900,000
Variable Rate Demand Bonds, 3.300%, 7/01/19+
900,000 New York State Medical Care Facilities Finance Agency (Lenox Hill Hospital), VMIG-1 900,000
Variable Rate Demand Bonds, 3.300%, 11/01/08+
1,100,000 New York State Medical Care Facilities Finance Agency (Children's Hospital
of Buffalo), Variable Rate Demand Bonds, 3.400%, 11/01/05+ VMIG-1 1,100,000
- ----------------------------------------------------------------------------------------------------------------------
Housing/Multifamily - 5.5%
1,000,000 New York State Housing Finance Agency (Normandie Court), Variable Rate
Demand Bonds, 3.150%, 5/15/15+ VMIG-1 1,000,000
370,000 New York City Housing Development Corporation (Parkgate Tower), Variable
Rate Demand Bonds, 3.200%, 12/01/07+ A-1+ 370,000
300,000 New York City Housing Development Corporation (Columbus Gardens Project),
Variable Rate Demand Bonds, 3.200%, 2/01/07+ A-1+ 300,000
</TABLE>
15
<PAGE>
Portfolio of Investments
February 28, 1998
New York - continued
<TABLE>
<CAPTION>
Principal Amortized
Amount Description Ratings* Cost
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Industrial/Other - 5.6%
$ 700,000 Guilderland Industrial Development Agency, Series 1993A (Northeastern P-1 $ 700,000
Ind Park PJ), Variable Rate Demand Bonds, 3.550%, 12/01/08+
1,000,000 Nassau County Industrial Development Agency, Manhasset Associates A-1 1,000,000
Project, Series 1984, Variable Rate Demand Bonds, 3.100%, 12/01/99+
- ----------------------------------------------------------------------------------------------------------------------
Long Term Care - 6.3%
1,100,000 New York State Dormitory Authority (St. Francis Center at the Knolls, VMIG-1 1,100,000
Inc.), Variable Rate Demand Bonds, 3.750%, 7/01/23+
800,000 New York State Dormitory Authority, Revenue Bonds, Series 1995 VMIG-1 800,000
(Beverwyck Inc), Variable Rate Demand Bonds, 3.300%, 7/01/25+
- ----------------------------------------------------------------------------------------------------------------------
Tax Obligation/General - 19.0%
1,000,000 New York State Environmental Quality, Variable Interest Rate General VMIG-1 1,000,000
Obligation Bonds, Series 1997A, 3.450%, 2/01/17+
1,000,000 Buffalo Revenue Anticipation Notes, 4.400%, 8/05/98 MIG-1 1,002,435
1,000,000 County of Erie, New York, General Obligation Serial Notes, 1997B, N/R 1,004,341
4.500%, 10/29/98
1,000,000 New York City General Obligation Adjustable Rate Bonds, Fiscal 1994, VMIG-1 1,000,000
Series B-4, Variable Rate Demand Bonds, 3.900%, 8/15/21+
500,000 The City of New York, General Obligation Bonds, Fiscal 1995, Series B, VMIG-1 500,000
Variable Rate Demand Bonds, 3.600%, 8/15/22+
1,250,000 Puerto Rico Government Development Bank, Adjustable Refunding Bonds, VMIG-1 1,250,000
Series 1985, Variable Rate Demand Bonds, 2.900%, 12/01/15+
- ----------------------------------------------------------------------------------------------------------------------
Tax Obligation/Limited - 9.4%
1,200,000 New York Local Government Assistance Corp, Series 1995E, Variable Rate VMIG-1 1,200,000
Demand Bonds, 3.150%, 4/01/25+
640,000 New York State Job Development Authority, Series 1984E, Variable Rate VMIG-1 640,000
Demand Bonds, 4.100%, 3/01/99+
1,000,000 Triborough Bridge and Tunnel Authority, Special Obligation, Series 1994, MIG-1 1,000,000
Variable Rate Demand Bonds, 3.150%, 1/01/24+
- ----------------------------------------------------------------------------------------------------------------------
Transportation - 1.3%
400,000 New York State Thruway Authority, General Revenue Bonds, Variable Rate VMIG-1 400,000
Demand Bonds, 3.650%, 1/01/24+
- ----------------------------------------------------------------------------------------------------------------------
Utilities - 3.3%
1,000,000 New York State Energy Research and Development Authority, Pollution P-1 1,000,000
Control Revenue (Central Hudson Gas and Electric Corporation),
Variable Rate Demand Bonds, 3.200%, 11/01/20+
</TABLE>
16
<PAGE>
<TABLE>
<CAPTION>
Principal Amortized
Amount Description Ratings* Cost
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Water and Sewer - 3.3%
$1,000,000 New York City Municipal Water Finance Authority, Series 3, A-1+ $ 1,000,000
Commercial Paper, 3.300%, 3/09/98
- -------------------------------------------------------------------------------------------------------------------
$29,340,000 Total Investments - 96.9%, 29,346,776
===========--------------------------------------------------------------------------------------------------------
Other Assets Less Liabilities - 3.1% 929,527
--------------------------------------------------------------------------------------------------
Net Assets - 100% $30,276,303
==================================================================================================
</TABLE>
* Ratings (not covered by the report of independent public
accountants): Using the higher of Standard & Poor's or
Moody's rating.
N/R - Investment is not rated.
+ The security has a maturity of more than one year, but
has variable rate and demand features which qualify it as
a short-term security. The rate disclosed is that
currently in effect. This rate changes periodically based
on market conditions or a specified market index.
17
See accompanying notes to financial statements.
<PAGE>
<TABLE>
<CAPTION>
Statement of Net Assets
February 28, 1998
Reserves California
- ---------------------------------------------------------------------------------------------
<S> <C> <C>
Assets
Investments in short-term municipal securities, at amortized
cost, which approximates market value (note 1) $268,979,989 $159,306,584
Cash 1,108,739 652,281
Receivables:
Interest 1,507,742 983,936
Investments sold -- --
Other assets 4,293 8,319
- ---------------------------------------------------------------------------------------------
Total assets 271,600,763 160,951,120
- ---------------------------------------------------------------------------------------------
Liabilities
Accrued expenses:
Management fees (note 4) 94,638 45,277
12b-1 fees (note 4) 17,667 34,497
Other 196,852 17,036
Dividends payable 568,769 358,868
- ---------------------------------------------------------------------------------------------
Total liabilities 877,926 455,678
- ---------------------------------------------------------------------------------------------
Net assets applicable to shares outstanding (note 3) $270,722,837 $160,495,442
=============================================================================================
Shares outstanding:
Service Plan series -- 86,915,597
Distribution Plan series -- 54,788,953
Institutional series -- 18,790,892
- ---------------------------------------------------------------------------------------------
Total shares outstanding 270,722,837 160,495,442
=============================================================================================
Net asset value, offering and redemption price per share
(net assets divided by shares outstanding) $ 1.00 $ 1.00
=============================================================================================
</TABLE>
18
See accompanying notes to financial statements.
<PAGE>
<TABLE>
<CAPTION>
Massachusetts New York
- --------------------------------------------------------------------------------------------
<S> <C> <C>
Assets
Investments in short-term municipal securities, at amortized
cost, which approximates market value (note 1) $36,315,274 $29,346,776
Cash 1,068,064 795,044
Receivables:
Interest 303,309 147,831
Investments sold 100,000 120,364
Other assets 978 499
- --------------------------------------------------------------------------------------------
Total assets 37,787,625 30,410,514
- --------------------------------------------------------------------------------------------
Liabilities
Accrued expenses:
Management fees (note 4) 1,935 3,226
12b-1 fees (note 4) 21,303 2,682
Other 99,353 63,601
Dividends payable 81,736 64,702
- --------------------------------------------------------------------------------------------
Total liabilities 204,327 134,211
- --------------------------------------------------------------------------------------------
Net assets applicable to shares outstanding (note 3) $37,583,298 $30,276,303
============================================================================================
Shares outstanding:
Service Plan series 6,085,454 1,405,519
Distribution Plan series 25,920,217 28,854,117
Institutional series 5,577,627 16,667
- --------------------------------------------------------------------------------------------
Total shares outstanding 37,583,298 30,276,303
============================================================================================
Net asset value, offering and redemption price per share
(net assets divided by shares outstanding) $ 1.00 $ 1.00
============================================================================================
</TABLE>
See accompanying notes to financial statements.
19
<PAGE>
Statement of Operations
Year ended February 28, 1998
<TABLE>
<CAPTION>
Reserves
<S> <C>
- -------------------------------------------------------------------------------
Investment Income
Tax-exempt interest income (note 1) $10,364,736
- -------------------------------------------------------------------------------
Expenses
Management fees (note 4) 1,375,625
12b-1 fees (note 4) 118,178
Shareholders' servicing agent fees and expenses 446,085
Custodian's fees and expenses 55,780
Directors' fees and expenses (note 4) 5,610
Professional fees 23,126
Shareholders' reports - printing and mailing expenses 151,600
Federal and state registration fees 43,261
Other expenses 23,003
- -------------------------------------------------------------------------------
Total expenses before expense reimbursement 2,242,268
Expense reimbursement (note 4) (178,780)
- -------------------------------------------------------------------------------
Net expenses 2,063,488
- -------------------------------------------------------------------------------
Net investment income 8,301,248
Net gain from investment transactions (notes 1 and 2) --
- -------------------------------------------------------------------------------
Net increase in net assets from operations $ 8,301,248
===============================================================================
</TABLE>
See accompanying notes to financial statements.
20
<PAGE>
<TABLE>
<CAPTION>
California
-------------------------------------------------------------
Service Plan Distribution Plan Institutional
series series series Total
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Investment Income
Tax-exempt interest income (note 1) $2,866,349 $1,971,285 $869,013 $5,706,647
- ----------------------------------------------------------------------------------------------------------------------
Expenses
Management fees (note 4) 312,991 214,290 94,714 621,995
12b-1 fees (note 4) 78,990 62,307 -- 141,297
Shareholders' servicing agent fees and expenses 4,125 37,513 212 41,850
Custodian's fees and expenses 21,301 14,582 6,448 42,331
Directors' fees and expenses (note 4) 1,654 1,142 502 3,298
Professional fees 6,972 4,809 2,117 13,898
Shareholders' reports - printing and mailing expenses 8,279 16,970 2,778 28,027
Federal and state registration fees 11,026 494 1,592 13,112
Other expenses 5,849 4,052 1,791 11,692
- ----------------------------------------------------------------------------------------------------------------------
Total expenses before expense reimbursement 451,187 356,159 110,154 917,500
Expense reimbursement (note 4) (20,777) (61,479) -- (82,256)
- ----------------------------------------------------------------------------------------------------------------------
Net expenses 430,410 294,680 110,154 835,244
- ----------------------------------------------------------------------------------------------------------------------
Net investment income 2,435,939 1,676,605 758,859 4,871,403
Net gain from investment transactions (notes 1 and 2) -- -- -- --
- ----------------------------------------------------------------------------------------------------------------------
Net increase in net assets from operations $2,435,939 $1,676,605 $758,859 $4,871,403
======================================================================================================================
</TABLE>
See accompanying notes to financial statements.
21
<PAGE>
Statement of Operations - continued
Year ended February 28, 1998
<TABLE>
<CAPTION>
Massachusetts
--------------------------------------------------------------
Service Plan Distribution Plan Institutional
series series series Total
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Investment Income
Tax-exempt interest income (note 1) $296,695 $ 975,737 $168,303 $1,440,735
- -----------------------------------------------------------------------------------------------------------------------
Expenses
Management fees (note 4) 32,948 108,396 18,769 160,113
12b-1 fees (note 4) 17,119 23,932 -- 41,051
Shareholders' servicing agent fees and expenses 1,191 30,580 704 32,475
Custodian's fees and expenses 10,324 33,914 5,847 50,085
Directors' fees and expenses (note 4) 935 3,070 529 4,534
Professional fees 7,976 26,067 4,456 38,499
Shareholders' reports - printing and mailing expenses 1,155 28,498 142 29,795
Federal and state registration fees 802 776 649 2,227
Other expenses 1,086 3,599 622 5,307
- -----------------------------------------------------------------------------------------------------------------------
Total expenses before expense reimbursement 73,536 258,832 31,718 364,086
Expense reimbursement (note 4) (28,267) (109,750) (5,908) (143,925)
- -----------------------------------------------------------------------------------------------------------------------
Net expenses 45,269 149,082 25,810 220,161
- -----------------------------------------------------------------------------------------------------------------------
Net investment income 251,426 826,655 142,493 1,220,574
Net gain from investment transactions (notes 1 and 2) -- -- -- --
- -----------------------------------------------------------------------------------------------------------------------
Net increase in net assets from operations $251,426 $ 826,655 $142,493 $1,220,574
=======================================================================================================================
</TABLE>
See accompanying notes to financial statements.
22
<PAGE>
<TABLE>
<CAPTION>
New York
--------------------------------------------------------------
Service Plan Distribution Plan Institutional
series series series Total
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Investment Income
Tax-exempt interest income (note 1) $20,007 $988,441 $608 $1,009,056
- -----------------------------------------------------------------------------------------------------------------------
Expenses
Management fees (note 4) 2,239 108,502 66 110,807
12b-1 fees (note 4) 220 12,367 -- 12,587
Shareholders' servicing agent fees and expenses 1,724 29,224 26 30,974
Custodian's fees and expenses 889 44,368 27 45,284
Directors' fees and expenses (note 4) 11 609 -- 620
Professional fees 287 14,810 10 15,107
Shareholders' reports -- printing and mailing expenses 1,281 27,782 58 29,121
Federal and state registration fees 7 248 -- 255
Other expenses 62 2,814 1 2,877
- -----------------------------------------------------------------------------------------------------------------------
Total expenses before expense reimbursement 6,720 240,724 188 247,632
Expense reimbursement (note 4) (3,642) (91,510) (96) (95,248)
- -----------------------------------------------------------------------------------------------------------------------
Net expenses 3,078 149,214 92 152,384
- -----------------------------------------------------------------------------------------------------------------------
Net investment income 16,929 839,227 516 856,672
Net gain from investment transactions (notes 1 and 2) -- -- -- --
- -----------------------------------------------------------------------------------------------------------------------
Net increase in net assets from operations $16,929 $839,227 $516 $ 856,672
=======================================================================================================================
</TABLE>
See accompanying notes to financial statements.
23
<PAGE>
Statement of Changes in Net Assets
<TABLE>
<CAPTION>
Reserves
-----------------------------
Year ended Year ended
2/28/98 2/28/97
- ---------------------------------------------------------------------------------------
<S> <C> <C>
Operations
Net investment income $ 8,301,248 $ 8,865,233
Net realized gain (loss) from investment transactions
(notes 1 and 2) -- --
- ---------------------------------------------------------------------------------------
Net increase in net assets from operations 8,301,248 8,865,233
- ---------------------------------------------------------------------------------------
Distributions to Shareholders (note 1) (8,301,248) (8,865,233)
- ---------------------------------------------------------------------------------------
Common Share Transactions
(at constant net asset value of $1 per share) (note 1)
Net proceeds from sale of shares 175,436,062 423,698,103
Net proceeds from shares issued to shareholders
due to reinvestment of distributions 7,880,661 8,439,437
- ---------------------------------------------------------------------------------------
183,316,723 432,137,540
- ---------------------------------------------------------------------------------------
Cost of shares redeemed (216,681,366) (467,712,524)
- ---------------------------------------------------------------------------------------
Net increase (decrease) in net assets from
share transactions (33,364,643) (35,574,984)
Net assets at the beginning of year 304,087,480 339,662,464
- ---------------------------------------------------------------------------------------
Net assets at the end of year $ 270,722,837 $ 304,087,480
=======================================================================================
</TABLE>
See accompanying notes to financial statements.
24
<PAGE>
<TABLE>
<CAPTION>
California
-----------------------------------------------------------------
Year ended 2/28/98
-----------------------------------------------------------------
Service Plan Distribution Plan Institutional
series series series Total
- ----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Operations
Net investment income $ 2,435,939 $ 1,676,605 $ 758,859 $ 4,871,403
Net realized gain (loss) from investment transactions
(notes 1 and 2) -- -- -- --
- ----------------------------------------------------------------------------------------------------------------------------
Net increase in net assets from operations 2,435,939 1,676,605 758,859 4,871,403
- ----------------------------------------------------------------------------------------------------------------------------
Distributions to Shareholders (note 1) (2,435,939) (1,676,605) (758,859) (4,871,403)
- ----------------------------------------------------------------------------------------------------------------------------
Common Share Transactions
(at constant net asset value of $1 per share) (note 1)
Net proceeds from sale of shares 161,050,966 31,802,629 101,301,804 294,155,399
Net proceeds from shares issued to shareholders due to
reinvestment of distributions 2,277,888 1,512,816 18 3,790,722
- ----------------------------------------------------------------------------------------------------------------------------
163,328,854 33,315,445 101,301,822 297,946,121
- ----------------------------------------------------------------------------------------------------------------------------
Cost of shares redeemed (171,719,687) (36,016,099) (115,353,497) (323,089,283)
- ----------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets from share
transactions (8,390,833) (2,700,654) (14,051,675) (25,143,162)
Net assets at the beginning of year 95,306,430 57,489,607 32,842,567 185,638,604
- ----------------------------------------------------------------------------------------------------------------------------
Net assets at the end of year $ 86,915,597 $ 54,788,953 $ 18,790,892 $ 160,495,442
============================================================================================================================
</TABLE>
See accompanying notes to financial statements.
25
<PAGE>
Statement of Changes in Net Assets -- continued
<TABLE>
<CAPTION>
California
------------------------------------------------------------------
Year ended 2/28/97
------------------------------------------------------------------
Service Plan Distribution Plan Institutional
series series series Total
- ----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Operations
Net investment income $ 2,063,055 $ 1,895,382 $ 1,473,714 $ 5,432,151
Net realized gain (loss) from investment
transactions (notes 1 and 2) -- -- -- --
- ----------------------------------------------------------------------------------------------------------------------------
Net increase in net assets from operations 2,063,055 1,895,382 1,473,714 5,432,151
- ----------------------------------------------------------------------------------------------------------------------------
Distributions to Shareholders (note 1) (2,063,055) (1,895,382) (1,473,714) (5,432,151)
- ----------------------------------------------------------------------------------------------------------------------------
Common Share Transactions
(at constant net asset value of $1 per share) (note 1)
Net proceeds from sale of shares 138,494,313 60,809,468 209,608,538 408,912,319
Net proceeds from shares issued to shareholders
due to reinvestment of distributions 1,919,782 1,593,201 47,282 3,560,265
- ----------------------------------------------------------------------------------------------------------------------------
140,414,095 62,402,669 209,655,820 412,472,584
- ----------------------------------------------------------------------------------------------------------------------------
Cost of shares redeemed (115,829,598) (77,933,155) (211,205,458) (404,968,211)
- ----------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets from
share transactions 24,584,497 (15,530,486) (1,549,638) 7,504,373
Net assets at the beginning of year 70,721,933 73,020,093 34,392,205 178,134,231
- ----------------------------------------------------------------------------------------------------------------------------
Net assets at the end of year $ 95,306,430 $ 57,489,607 $ 32,842,567 $ 185,638,604
============================================================================================================================
</TABLE>
See accompanying notes to financial statements.
26
<PAGE>
<TABLE>
<CAPTION>
Massachusetts
----------------------------------------------------------------
Year ended 2/28/98
----------------------------------------------------------------
Service Plan Distribution Plan Institutional
series series series Total
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Operations
Net investment income $ 251,426 $ 826,655 $ 142,493 $ 1,220,574
Net realized gain (loss) from investment
transactions (notes 1 and 2) -- -- -- --
- ---------------------------------------------------------------------------------------------------------------------------
Net increase in net assets from operations 251,426 826,655 142,493 1,220,574
- ---------------------------------------------------------------------------------------------------------------------------
Distributions to Shareholders (note 1) (251,426) (826,655) (142,493) (1,220,574)
- ---------------------------------------------------------------------------------------------------------------------------
Common Share Transactions
(at constant net asset value of $1 per share) (note 1)
Net proceeds from sale of shares 11,631,756 20,106,738 11,348,896 43,087,390
Net proceeds from shares issued to shareholders
due to reinvestment of distributions 252,889 812,123 21,738 1,086,750
- ---------------------------------------------------------------------------------------------------------------------------
11,884,645 20,918,861 11,370,634 44,174,140
- ---------------------------------------------------------------------------------------------------------------------------
Cost of shares redeemed (15,763,455) (22,081,518) (9,770,347) (47,615,320)
- ---------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets from
share transactions (3,878,810) (1,162,657) 1,600,287 (3,441,180)
Net assets at the beginning of year 9,964,264 27,082,874 3,977,340 41,024,478
- ---------------------------------------------------------------------------------------------------------------------------
Net assets at the end of year $ 6,085,454 $ 25,920,217 $ 5,577,627 $ 37,583,298
===========================================================================================================================
</TABLE>
27
See accompanying notes to financial statements.
<PAGE>
Statement of Changes in Net Assets -- continued
<TABLE>
<CAPTION>
Massachusetts
----------------------------------------------------------------
Year ended 2/28/97
----------------------------------------------------------------
Service Plan Distribution Plan Institutional
series series series Total
- ----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Operations
Net investment income $ 829,383 $ 765,855 $ 126,569 $ 1,721,807
Net realized gain (loss) from investment
transactions (notes 1 and 2) (134) (365) (53) (552)
- ----------------------------------------------------------------------------------------------------------------------------
Net increase in net assets from operations 829,249 765,490 126,516 1,721,255
- ----------------------------------------------------------------------------------------------------------------------------
Distributions to Shareholders (note 1) (829,249) (765,490) (126,516) (1,721,255)
- ----------------------------------------------------------------------------------------------------------------------------
Common Share Transactions
(at constant net asset value of $1 per share) (note 1)
Net proceeds from sale of shares 44,456,256 21,736,601 12,606,653 78,799,510
Net proceeds from shares issued to shareholders
due to reinvestment of distributions 897,029 748,887 37,305 1,683,221
- ----------------------------------------------------------------------------------------------------------------------------
45,353,285 22,485,488 12,643,958 80,482,731
- ----------------------------------------------------------------------------------------------------------------------------
Cost of shares redeemed (73,639,600) (21,681,856) (12,216,797) (107,538,253)
- ----------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets from
share transactions (28,286,315) 803,632 427,161 (27,055,522)
Net assets at the beginning of year 38,250,579 26,279,242 3,550,179 68,080,000
- ----------------------------------------------------------------------------------------------------------------------------
Net assets at the end of year $ 9,964,264 $ 27,082,874 $ 3,977,340 $ 41,024,478
============================================================================================================================
</TABLE>
28
See accompanying notes to financial statements.
<PAGE>
<TABLE>
<CAPTION>
New York
-----------------------------------------------------------------
Year ended 2/28/98
-----------------------------------------------------------------
Service Plan Distribution Plan Institutional
series series series Total
- ----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Operations
Net investment income $ 16,929 $ 839,227 $ 516 $ 856,672
Net realized gain (loss) from investment
transactions (notes 1 and 2) -- -- -- --
- ----------------------------------------------------------------------------------------------------------------------------
Net increase in net assets from operations 16,929 839,227 516 856,672
- ----------------------------------------------------------------------------------------------------------------------------
Distributions to Shareholders (note 1) (16,929) (839,227) (516) (856,672)
- ----------------------------------------------------------------------------------------------------------------------------
Common Share Transactions
(at constant net asset value of $1 per share) (note 1)
Net proceeds from sale of shares 1,014,732 14,585,479 -- 15,600,211
Net proceeds from shares issued to shareholders
due to reinvestment of distributions 13,306 854,990 -- 868,296
- ----------------------------------------------------------------------------------------------------------------------------
1,028,038 15,440,469 -- 16,468,507
- ----------------------------------------------------------------------------------------------------------------------------
Cost of shares redeemed (36,590) (12,701,915) -- (12,738,505)
- ----------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets from
share transactions 991,448 2,738,554 -- 3,730,002
Net assets at the beginning of year 414,071 26,115,563 16,667 26,546,301
- ----------------------------------------------------------------------------------------------------------------------------
Net assets at the end of year $1,405,519 $ 28,854,117 $16,667 $ 30,276,303
============================================================================================================================
See accompanying notes to financial statements.
</TABLE>
29
<PAGE>
Statement of Changes in Net Assets - continued
<TABLE>
<CAPTION>
New York
-----------------------------------------------------------------
Year ended 2/28/97
-----------------------------------------------------------------
Service Plan Distribution Plan Institutional
series series series Total
- ----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Operations
Net investment income $ 12,056 $ 819,638 $ 483 $ 832,177
Net realized gain (loss) from investment
transactions (notes 1 and 2) -- -- -- --
- ----------------------------------------------------------------------------------------------------------------------------
Net increase in net assets from operations 12,056 819,638 483 832,177
- ----------------------------------------------------------------------------------------------------------------------------
Distributions to Shareholders (note 1) (12,056) (819,638) (483) (832,177)
- ----------------------------------------------------------------------------------------------------------------------------
Common Share Transactions
(at constant net asset value of $1 per share) (note 1)
Net proceeds from sale of shares 57,000 12,254,309 -- 12,311,309
Net proceeds from shares issued to shareholders
due to reinvestment of distributions 11,184 794,185 -- 805,369
- ----------------------------------------------------------------------------------------------------------------------------
68,184 13,048,494 -- 13,116,678
- ----------------------------------------------------------------------------------------------------------------------------
Cost of shares redeemed (208,572) (18,564,379) -- (18,772,951)
- ----------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets from
share transactions (140,388) (5,515,885) -- (5,656,273)
Net assets at the beginning of year 554,459 31,631,448 16,667 32,202,574
- ----------------------------------------------------------------------------------------------------------------------------
Net assets at the end of year $ 414,071 $ 26,115,563 $16,667 $ 26,546,301
============================================================================================================================
See accompanying notes to financial statements.
</TABLE>
30
<PAGE>
Notes to Financial Statements
February 28, 1998
1. General Information and Significant Accounting Policies
The money market Funds (the "Funds") covered in this report are Nuveen Tax-Free
Reserves, Inc., a nationally diversified Fund, Nuveen California Tax-Free Fund,
Inc. (comprising the Nuveen California Tax-Free Money Market Fund) and Nuveen
Tax-Free Money Market Fund, Inc. (comprising the Nuveen Massachusetts and New
York Tax-Free Money Market Funds).
The Funds are registered under the Investment Company Act of 1940 as open-end,
diversified management investment companies. Each Fund invests in tax-exempt
money market instruments. Shares of the state Funds are issued in three series:
(1) the "Service Plan" series intended for purchase by or through banks and
other organizations who have agreed to perform certain services for their
customers who are shareholders of this series of the Fund, (2) the "Distribution
Plan" series intended for purchase by or through securities dealers who have
agreed to perform distribution and administrative services for their customers
who are shareholders of this series of the Fund and (3) the "Institutional"
series intended for purchase by trustees, bank trust departments and investment
bankers or advisers.
Each Fund issues its own shares at net asset value, which the Fund will seek to
maintain at $1.00 per share, without a sales charge.
The following is a summary of significant accounting policies followed by the
Funds in the preparation of their financial statements in accordance with
generally accepted accounting principles.
Securities Valuation
Investments in each of the Funds consist of short-term municipal securities
maturing within one year from the date of acquisition. Securities with a
maturity of more than one year in all cases have variable rate and demand
features qualifying them as short-term securities and are valued at amortized
cost. On a dollar-weighted basis, the average maturity of all such securities
must be 90 days or less (at February 28, 1998, the dollar-weighted average life
was 42 days for Reserves, 30 days for California, 58 days for Massachusetts and
33 days for New York).
Securities Transactions
Securities transactions are recorded on a trade date basis. Realized gains and
losses from such transactions are determined on the specific identification
method. Securities purchased or sold on a when-issued or delayed delivery basis
may have extended settlement periods. Any securities so purchased are subject to
market fluctuation during this period. The Funds have instructed the custodian
to segregate assets in a separate account with a current value at least equal to
the amount of the when-issued and delayed delivery purchase commitments. At
February 28, 1998, there were no such outstanding purchase commitments in any of
the Funds.
Interest Income
Interest income is determined on the basis of interest accrued, adjusted for
amortization of premiums and accretion of discounts.
Dividends and Distributions to Shareholders
Tax-exempt net investment income, adjusted for realized short-term gains and
losses on investment transactions, is declared as a dividend to shareholders of
record as of the close of each business day and payment is made or reinvestment
is credited to shareholder accounts after month-end.
Income Taxes
Each Fund is a separate taxpayer for federal income tax purposes. Each Fund
intends to comply with the requirements of the Internal Revenue Code applicable
to regulated investment companies and to distribute all of its tax-exempt net
investment income, including any net realized capital gains from investment
transactions. Therefore, no federal income tax provision is required.
Furthermore, each Fund intends to satisfy conditions which will enable interest
from municipal securities, which is exempt from regular federal income tax and
designated state income taxes for the California, Massachusetts and New York
Funds, to retain such tax exempt status when distributed to the shareholders of
the Funds. All income dividends paid during the fiscal year ended February 28,
1998, have been designated Exempt Interest Dividends. Net realized capital gain
distributions, if any, are subject to federal taxation.
Insurance Commitments
The Funds have obtained commitments (each a "Commitment") from Municipal Bond
Investors Assurance Corporation ("MBIA") with respect to certain designated
bonds held by the Funds for which credit support is furnished by banks
("Approved Banks") approved by MBIA under its established credit approval
standards. Under the terms of a Commitment, if a Fund were to determine that
certain adverse circumstances relating to the financial condition of the
Approved Banks had occurred, the Fund could cause MBIA to issue a "while-in-
fund" insurance policy covering the underlying bonds; after time and subject to
further terms and conditions, the Fund could obtain from MBIA an "insured-to-
maturity" insurance policy as to the covered bonds. Each type of insurance
policy would insure payment of interest on the bonds and payment of principal at
maturity. Although such
31
<PAGE>
Notes to Financial Statements--continued
February 28, 1998
insurance would not guarantee the market value of the bonds or the value of the
Funds' shares, the Funds believe that their ability to obtain insurance for such
bonds under such adverse circumstances will enable the Funds to hold or dispose
of such bonds at a price at or near their par value.
Derivative Financial Instruments
The Funds may invest in transactions in certain derivative financial
instruments, including futures, forward, swap and option contracts, and other
financial instruments with similar characteristics. Although the Funds are
authorized to invest in such financial instruments, and may do so in the future,
they did not make any such investments during the fiscal year ended February 28,
1998.
Use of Estimates
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities at the date of the
financial statements and the reported amounts of increases and decreases in net
assets from operations during the reporting period.
2. Securities Transactions
Purchases and sales (including maturities) of investments in short-term
municipal securities during the fiscal year ended February 28, 1998, were as
follows:
<TABLE>
<CAPTION>
Reserves California Massachusetts New York
------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Purchases $655,708,583 $328,756,802 $94,228,093 $42,274,710
Sales and Maturities 688,777,500 354,432,000 97,155,000 38,770,000
==============================================================================
</TABLE>
At February 28, 1998, the cost of investments owned for federal income tax
purposes was the same as the cost for financial reporting purposes for each
Fund.
3. Composition of Net Assets
At February 28, 1998, the Funds had common stock authorized at $.01 par value
per share. The composition of net assets as well as the number of authorized
shares were as follows:
<TABLE>
<CAPTION>
Reserves California Massachusetts New York
---------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Capital paid in:
Service Plan series $ -- $ 86,915,597 $ 6,085,454 $ 1,405,519
Distribution Plan series -- 54,788,953 25,920,217 28,854,117
Institutional series -- 18,790,892 5,577,627 16,667
---------------------------------------------------------------------------------------------
Net assets $ 270,722,837 $ 160,495,442 $ 37,583,298 $ 30,276,303
=============================================================================================
Authorized shares 2,000,000,000 2,350,000,000 2,500,000,000 2,500,000,000
=============================================================================================
</TABLE>
4. Management Fee and Other Transactions with Affiliates
Under the Funds' investment management agreement with Nuveen Advisory Corp. (the
"Adviser"), a wholly owned subsidiary of The John Nuveen Company, each Fund pays
an annual management fee, payable monthly, at the rates set forth below which
are based upon the average daily net asset value of each Fund:
<TABLE>
<CAPTION>
Management fees
----------------------------
Average daily net asset value Reserves CA, MA, NY
-------------------------------------------------------------------------
<S> <C> <C>
For the first $500 million .500 of 1% .400 of 1%
For the next $500 million .475 of 1 .375 of 1
For net assets over $1 billion .450 of 1 .350 of 1
========================================================================
</TABLE>
32
<PAGE>
Also, pursuant to a distribution agreement with the Funds, John Nuveen & Co.
Incorporated (the "Distributor"), a wholly owned subsidiary of The John Nuveen
Company, pays sales and promotion expenses in connection with the offering of
Fund shares. The Funds have adopted a Distribution Plan pursuant to Rule 12b-1
of the Investment Company Act of 1940 and a Service Plan pursuant to which the
Distribution Plan series and the Service Plan series and the Distributor pay, in
equal amounts, fees to securities dealers and service organizations for services
rendered in the distribution of shares of the Funds or the servicing of
shareholder accounts. For Reserves, total service payments to such securities
dealers and organizations on an annualized basis range from .1 of 1% to .2 of 1%
of the average daily net asset value of serviced accounts up to $10 million and
.3 of 1% for such assets over $10 million. For the California, Massachusetts and
New York Funds, total service payments to such securities dealers and
organizations are .25 of 1% per year of the average daily net asset value of
serviced accounts.
The management fee is reduced by, or the Adviser assumes certain expenses of
each Fund, in an amount necessary to prevent the total expenses of each Fund
(including the management fee and each Fund's share of service payments under
the Distribution and Service Plans, but excluding interest, taxes, fees incurred
in acquiring and disposing of portfolio securities and, to the extent permitted,
extraordinary expenses) in any fiscal year from exceeding .75 of 1% of the
average daily net asset value of Reserves, and .55 of 1% of the average daily
net asset value of the California, Massachusetts and New York Funds.
The management fee compensates the Adviser for overall investment advisory and
administrative services, and general office facilities. The Funds pay no
compensation directly to those of the Directors who are affiliated with the
Adviser or to their officers, all of whom receive remuneration for their
services to the Funds from the Adviser or its affiliates.
5. Investment Composition
At February 28, 1998, the revenue sources by municipal purpose, expressed as a
percent of total investments, were as follows:
<TABLE>
<CAPTION>
Reserves California Massachusetts New York
--------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Basic Materials 3% --% --% --%
Capital Goods 3 -- -- --
Consumer Cyclical 3 -- -- 9
Consumer Staples -- 4 -- --
Education and Civic Organizations 6 -- 26 19
Financials -- -- -- 7
Health Care 18 14 22 10
Housing/Multifamily 3 15 7 6
Industrial/Other 7 -- 2 6
Long Term Care 10 -- 6 7
Other Revenue 2 4 2 --
Tax Obligation/General 16 12 28 20
Tax Obligation/Limited 7 25 -- 10
Utilities 18 7 2 3
Water and Sewer 4 19 5 3
--------------------------------------------------------------------------------------
100% 100% 100% 100%
======================================================================================
</TABLE>
At February 28, 1998, certain investments in short-term municipal securities
have credit enhancements (letters of credit, guarantees or insurance) issued by
third party domestic or foreign banks or other institutions (92% for Reserves,
92% for California, 77% for Massachusetts and 96% for New York).
For additional information regarding each investment security, refer to the
Portfolio of Investments.
33
<PAGE>
Financial Highlights
Selected data for a share outstanding throughout each period is as follows:
<TABLE>
<CAPTION>
RESERVES Operating performance Less distributions
------------------------ --------------------------
Net
Net realized and Dividends Net Total
asset unrealized from tax- asset return
value Net gain (loss) exempt net Distributions value on net
Year ended beginning investment from investment from capital end of asset
February 28/29, of period income (a) investments income gains period value (b)
- ----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
1998 $1.00 $.03 $-- $(.03) $-- $1.00 3.02%
1997 1.00 .03 -- (.03) -- 1.00 2.87
1996 1.00 .03 -- (.03) -- 1.00 3.23
1995 1.00 .03 -- (.03) -- 1.00 2.46
1994 1.00 .02 -- (.02) -- 1.00 1.84
1993 1.00 .02 -- (.02) -- 1.00 2.34
1992 (c) 1.00 .02 -- (.02) -- 1.00 1.45
1991 (d) 1.00 .05 -- (.05) -- 1.00 4.57
1990 (d) 1.00 .06 -- (.06) -- 1.00 5.45
1989 (d) 1.00 .06 -- (.06) -- 1.00 5.70
================================================================================================================
</TABLE>
* Annualized.
(a) After waiver of certain management fees or reimbursement of expenses, if
applicable, by Nuveen Advisory.
(b) Total returns are calculated on net asset value and are not annualized.
(c) For the five months ended February 29.
(d) For the fiscal year ended September 30.
34
<PAGE>
<TABLE>
<CAPTION>
Ratios/Supplemental data
- -------------------------------------------------------------------
Ratio Ratio
of net of net
Ratio of investment Ratio of investment
expenses income to expenses income to
to average average to average average
net assets net assets net assets net assets
Net assets before before after after
end of period reimburse- reimburse- reimburse- reimburse-
(in thousands) ment ment ment (a) ment (a)
- -------------------------------------------------------------------
<S> <C> <C> <C> <C>
$ 270,723 .81% 2.96% .75% 3.02%
304,087 .80 2.82 .75 2.87
339,662 .79 3.18 .75 3.22
351,606 .78 2.40 .75 2.43
404,201 .80 1.78 .75 1.83
450,746 .74 2.35 .74 2.35
477,127 .75* 3.48* .75* 3.48*
451,808 .72 4.56 .72 4.56
430,206 .73 5.45 .73 5.45
390,258 .72 5.69 .72 5.69
===================================================================
</TABLE>
35
<PAGE>
Financial Highlights -- continued
Selected data for a share outstanding throughout each period is as follows:
<TABLE>
<CAPTION>
CALIFORNIA** Operating Performance Less distributions
-------------------------------------- --------------------------
Net
Net realized and Dividends Net Total
asset unrealized from tax- asset return
value Net gain (loss) exempt net Distributions value on net
Year ended beginning investment from investment from capital end of asset
February 28/29, of period income (a) investments income gains period value (b)
- -------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
1998
Service Plan series $1.00 $.03 $-- $(.03) $-- $1.00 3.13%
Distribution Plan series 1.00 .03 -- (.03) -- 1.00 3.13
Institutional series 1.00 .03 -- (.03) -- 1.00 3.22
1997
Service Plan series 1.00 .03 -- (.03) -- 1.00 2.94
Distribution Plan series 1.00 .03 -- (.03) -- 1.00 2.94
Institutional series 1.00 .03 -- (.03) -- 1.00 3.02
1996
Service Plan series 1.00 .03 -- (.03) -- 1.00 3.32
Distribution Plan series 1.00 .03 -- (.03) -- 1.00 3.31
Institutional series 1.00 .03 -- (.03) -- 1.00 3.40
1995
Service Plan series 1.00 .03 -- (.03) -- 1.00 2.59
Distribution Plan series 1.00 .03 -- (.03) -- 1.00 2.60
Institutional series 1.00 .03 -- (.03) -- 1.00 2.69
1994
Service Plan series 1.00 .02 -- (.02) -- 1.00 1.94
Distribution Plan series 1.00 .02 -- (.02) -- 1.00 1.92
Institutional series 1.00 .02 -- (.02) -- 1.00 2.07
1993
Service Plan series 1.00 .02 -- (.02) -- 1.00 2.28
Distribution Plan series 1.00 .02 -- (.02) -- 1.00 2.29
Institutional series 1.00 .02 -- (.02) -- 1.00 2.36
1992(c)
Service Plan series 1.00 .02 -- (.02) -- 1.00 2.39
Distribution Plan series 1.00 .02 -- (.02) -- 1.00 2.39
Institutional series 1.00 .03 -- (.03) -- 1.00 2.45
1991(d)
Service Plan series 1.00 .05 -- (.05) -- 1.00 4.70
Distribution Plan series 1.00 .05 -- (.05) -- 1.00 4.70
Institutional series 1.00 .05 -- (.05) -- 1.00 4.80
1990 (e) 1.00 .05 -- (.05) -- 1.00 5.37
1989 (e) 1.00 .06 -- (.06) -- 1.00 5.62
- -------------------------------------------------------------------------------------------------------------------------------
</TABLE>
* Annualized.
** Effective for the fiscal year ended June 30, 1991, and
thereafter, the Fund has presented the per share data by series.
(a) After waiver of certain management fees or reimbursement of
expenses, if applicable, by Nuveen Advisory.
(b) Total returns are calculated on net asset value and are not
annualized.
(c) For the eight months ended February 29.
(d) For the fiscal year ended June 30.
(e) For the fiscal year ended June 30, represents combined per share data
and ratios for the Service Plan, Distribution Plan and Institutional
Series.
36
<PAGE>
<TABLE>
<CAPTION>
Ratios/Supplemental data
- --------------------------------------------------------------------------
Ratio of net Ratio
Ratio of investment Ratio of of net
expenses income to expenses investment
to average average to average income to
net assets net assets net assets average net
Net assets before before after assets after
end of period reimburse- reimburse- reimburse- reimburse-
(in thousands) ment ment ment (a) ment (a)
- --------------------------------------------------------------------------
<S> <C> <C> <C> <C>
$ 86,916 .58% 3.09% .55% 3.12%
54,789 .66 3.02 .55 3.13
18,791 .47 3.22 .47 3.22
95,306 .59 2.89 .55 2.93
57,490 .61 2.87 .55 2.93
32,843 .46 3.01 .46 3.01
70,722 .56 3.28 .54 3.30
73,020 .62 3.23 .55 3.30
34,392 .46 3.39 .46 3.39
41,772 .59 2.15 .55 2.19
67,157 .64 2.47 .55 2.56
50,772 .47 2.74 .47 2.74
415,238 .53 1.94 .53 1.94
72,380 .73 1.74 .55 1.92
32,299 .41 2.06 .41 2.06
469,812 .57 2.24 .55 2.26
80,652 .62 2.19 .55 2.26
24,156 .47 2.33 .47 2.33
478,886 .56* 3.53* .55* 3.54*
91,670 .61* 3.48* .55* 3.54*
18,334 .45* 3.64* .45* 3.64*
431,590 .57 4.65 .55 4.67
90,031 .61 4.61 .55 4.67
22,342 .45 4.77 .45 4.77
452,465 .59 5.34 .55 5.38
362,927 .57 5.68 .55 5.70
==========================================================================
</TABLE>
37
<PAGE>
Financial Highlights -- continued
Selected data for a share outstanding throughout each period is as follows:
<TABLE>
<CAPTION>
MASSACHUSETTS** Operating Performance Less distributions
---------------------------- ----------------------------
Net
Net realized and Dividends Net Total
asset unrealized from tax- asset return
value Net gain (loss) exempt net Distributions value on net
Year ended beginning investment from investment from capital end of asset
February 28/29, of period income (a) investments income gains period value (b)
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
1998
Service Plan series $1.00 $.03 $-- $(.03) $-- $1.00 3.05%
Distribution Plan series 1.00 .03 -- (.03) -- 1.00 3.05
Institutional series 1.00 .03 -- (.03) -- 1.00 3.05
1997
Service Plan series 1.00 .03 -- (.03) -- 1.00 2.84
Distribution Plan series 1.00 .03 -- (.03) -- 1.00 2.84
Institutional series 1.00 .03 -- (.03) -- 1.00 2.84
1996
Service Plan series 1.00 .03 -- (.03) -- 1.00 3.17
Distribution Plan series 1.00 .03 -- (.03) -- 1.00 3.17
Institutional series 1.00 .03 -- (.03) -- 1.00 3.18
1995
Service Plan series 1.00 .03 -- (.03) -- 1.00 2.53
Distribution Plan series 1.00 .03 -- (.03) -- 1.00 2.53
Institutional series 1.00 .03 -- (.03) -- 1.00 2.61
1994
Service Plan series 1.00 .02 -- (.02) -- 1.00 1.77
Distribution Plan series 1.00 .02 -- (.02) -- 1.00 1.74
Institutional series 1.00 .02 -- (.02) -- 1.00 1.80
1993
Service Plan series 1.00 .02 -- (.02) -- 1.00 2.33
Distribution Plan series 1.00 .02 -- (.02) -- 1.00 2.33
Institutional series 1.00 .02 -- (.02) -- 1.00 2.34
1992 (c)
Service Plan series 1.00 .03 -- (.03) -- 1.00 3.22
Distribution Plan series 1.00 .03 -- (.03) -- 1.00 3.22
Institutional series 1.00 .03 -- (.03) -- 1.00 3.24
1991 (d)
Service Plan series 1.00 .05 -- (.05) -- 1.00 5.30
Distribution Plan series 1.00 .05 -- (.05) -- 1.00 5.30
Institutional series 1.00 .05 -- (.05) -- 1.00 5.30
1990 (e) 1.00 .06 -- (.06) -- 1.00 5.70
1989 (e) 1.00 .05 -- (.05) -- 1.00 5.00
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
* Annualized.
** Effective for the fiscal year ended June 30, 1991, and
thereafter, the Fund has presented the per share data by series.
(a) After waiver of certain management fees or reimbursement of
expenses, if applicable, by Nuveen Advisory.
(b) Total returns are calculated on net asset value and are not
annualized.
(c) For the ten months ended February 29.
(d) For the fiscal year ended April 30.
(e) For the fiscal year ended April 30, represents combined per
share data and ratios for the Service Plan, Distribution Plan and
Institutional Series.
38
<PAGE>
<TABLE>
<CAPTION>
Ratios/Supplemental data
- ------------------------------------------------------------------------------------------
Ratio of net Ratio
Ratio of investment Ratio of of net
expenses income to expenses investment
to average average to average income to
net assets net assets net assets average net
Net assets before before after assets after
end of period reimburse- reimburse- reimburse- reimburse-
(in thousands) ment ment ment (a) ment (a)
- ------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
$ 6,085 .89% 2.71% .55% 3.05%
25,920 .95 2.65 .55 3.05
5,578 .68 2.91 .55 3.04
9,964 .74 2.64 .55 2.83
27,083 .90 2.49 .55 2.84
3,977 .61 2.78 .55 2.84
38,251 .63 3.06 .55 3.14
26,279 .84 2.87 .55 3.16
3,550 .57 3.12 .54 3.15
27,732 .61 2.49 .55 2.55
24,237 .82 2.28 .55 2.55
1,036 .47 2.63 .47 2.63
38,576 .55 1.88 .52 1.91
27,773 .76 1.67 .55 1.88
3,406 .49 1.93 .49 1.93
40,214 .73 2.16 .55 2.34
27,993 .82 2.07 .55 2.34
5,325 .58 2.31 .55 2.34
61,476 .62* 3.73* .55* 3.80*
34,509 .72* 3.63* .55* 3.80*
8,917 .53* 3.82* .53* 3.82*
37,979 .68 5.12 .55 5.25
33,809 .76 5.04 .55 5.25
14,973 .54 5.26 .54 5.26
53,631 .74 5.48 .55 5.67
31,319 .76 4.97 .55 5.18
==========================================================================================
</TABLE>
39
<PAGE>
Financial Highlights -- continued
Selected data for a share outstanding throughout each period is as
follows:
<TABLE>
<CAPTION>
NEW YORK** Operating performance Less distributions
------------------------ ----------------------------
Net
Net realized and Dividends Net Total
asset unrealized from tax- asset return
value Net gain (loss) exempt net Distributions value on net
Year ended beginning investment from investment from capital end of asset
February 28/29, of period income (a) investments income gains period value(b)
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
1998
Service Plan series $1.00 $.03 $-- $(.03) $-- $1.00 3.10%
Distribution Plan series 1.00 .03 -- (.03) -- 1.00 3.10
Institutional series 1.00 .03 -- (.03) -- 1.00 3.10
1997
Service Plan series 1.00 .03 -- (.03) -- 1.00 2.90
Distribution Plan series 1.00 .03 -- (.03) -- 1.00 2.90
Institutional series 1.00 .03 -- (.03) -- 1.00 2.90
1996
Service Plan series 1.00 .03 -- (.03) -- 1.00 3.20
Distribution Plan series 1.00 .03 -- (.03) -- 1.00 3.20
Institutional series 1.00 .03 -- (.03) -- 1.00 3.20
1995
Service Plan series 1.00 .02 -- (.02) -- 1.00 2.36
Distribution Plan series 1.00 .02 -- (.02) -- 1.00 2.37
Institutional series 1.00 .02 -- (.02) -- 1.00 2.28
1994
Service Plan series 1.00 .02 -- (.02) -- 1.00 1.51
Distribution Plan series 1.00 .02 -- (.02) -- 1.00 1.51
Institutional series 1.00 .02 -- (.02) -- 1.00 1.51
1993
Service Plan series 1.00 .02 -- (.02) -- 1.00 2.02
Distribution Plan series 1.00 .02 -- (.02) -- 1.00 2.02
Institutional series 1.00 .02 -- (.02) -- 1.00 2.02
1992 (c)
Service Plan series 1.00 .03 -- (.03) -- 1.00 2.94
Distribution Plan series 1.00 .03 -- (.03) -- 1.00 2.94
Institutional series 1.00 .03 -- (.03) -- 1.00 2.97
1991 (d)
Service Plan series 1.00 .05 -- (.05) -- 1.00 4.73
Distribution Plan series 1.00 .05 -- (.05) -- 1.00 4.73
Institutional series 1.00 .05 -- (.05) -- 1.00 4.73
1990 (e) 1.00 .05 -- (.05) -- 1.00 5.36
1989 (e) 1.00 .05 -- (.05) -- 1.00 4.95
- ----------------------------------------------------------------------------------------------------------------------
</TABLE>
* Annualized.
** Effective for the fiscal year ended April 30, 1991, and
thereafter, the Fund has presented the per share data by series.
(a) After waiver of certain management fees or reimbursement of
expenses, if applicable, by Nuveen Advisory.
(b) Total returns are calculated on net asset value and are not
annualized.
(c) For the ten months ended February 29.
(d) For the fiscal year ended April 30.
(e) For the fiscal year ended April 30, represents combined per
share data and ratios for the Service Plan, Distribution Plan
and Institutional Series.
40
<PAGE>
<TABLE>
<CAPTION>
Ratios/Supplemental Data
- --------------------------------------------------------------------------------
Ratio of net Ratio
Ratio of investment Ratio of of net
expenses income to expenses investment
to average average to average income to
net assets net assets net assets average net
Net assets before before after assets after
end of period reimburse- reimburse- reimburse- reimburse-
(in thousands) ment ment ment(a) ment(a)
- --------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
$ 1,406 1.20% 2.38% .55% 3.03%
28,854 .89 2.75 .55 3.09
17 1.13 2.52 .55 3.10
414 1.27 2.17 .55 2.89
26,116 .92 2.52 .55 2.89
17 1.12 2.33 .55 2.90
554 1.92 1.82 .55 3.19
31,631 .94 2.80 .55 3.19
17 1.38 2.37 .55 3.20
640 .95 1.98 .55 2.38
29,798 .79 2.14 .55 2.38
17 2.14 .79 .55 2.38
557 1.49 .69 .55 1.63
27,886 .78 1.40 .55 1.63
17 4.60 (2.42) .55 1.63
529 1.17 1.42 .55 2.04
34,827 .78 1.81 .55 2.04
17 19.33 (16.59) .55 2.19
1,934 .87* 3.19* .55* 3.51*
45,259 .71* 3.35* .55* 3.51*
17 11.89* (7.83)* .55* 3.51*
1,653 .88 4.39 .55 4.72
41,446 .69 4.58 .55 4.72
17 .62 4.65 .55 4.72
41,602 .71 5.18 .55 5.34
30,262 .86 4.74 .55 5.05
================================================================================
</TABLE>
41
<PAGE>
Report of Independent Public Accountants
To the Board of Directors and Shareholders of
Nuveen Tax-Free Reserves, Inc.
Nuveen California Tax-Free Fund, Inc.
Nuveen Tax-Free Money Market Fund, Inc.:
We have audited the accompanying statements of net assets of
Nuveen Tax-Free Reserves, Inc. (a Maryland Corporation), Nuveen
California Tax-Free Fund, Inc. (comprising the Nuveen California
Tax-Free Money Market Fund) (a Maryland Corporation) and Nuveen
Tax-Free Money Market Fund, Inc. (comprising the Nuveen
Massachusetts and New York Tax-Free Money Market Funds) (a
Minnesota Corporation), including the portfolios of investments,
as of February 28, 1998, and the related statements of operations
for the year then ended, the statements of changes in net assets
for each of the two years in the period then ended and the
financial highlights for the periods indicated thereon. These
financial statements and financial highlights are the
responsibility of the Fund's management. Our responsibility is to
express an opinion on these financial statements and financial
highlights based on our audits.
We conducted our audits in accordance with generally accepted
auditing standards. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the
financial statements and financial highlights are free of material
misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of securities
owned as of February 28, 1998, by correspondence with the
custodian. An audit also includes assessing the accounting
principles used and significant estimates made by management, as
well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, the financial statements and financial highlights
referred to above present fairly, in all material respects, the
net assets of each of the respective funds constituting the Nuveen
Tax-Free Reserves, Inc., Nuveen California Tax-Free Fund, Inc. and
Nuveen Tax-Free Money Market Fund, Inc. as of February 28, 1998,
the results of their operations for the year then ended, the
changes in their net assets for each of the two years in the
period then ended, and the financial highlights for the periods
indicated thereon, in conformity with generally accepted
accounting principles.
ARTHUR ANDERSEN LLP
Chicago, Illinois
April 15, 1998
42
<PAGE>
43
<PAGE>
Building Better Portfolios with Nuveen
Reducing the impact of taxes and moderating risk are important
goals for many risk-sensitive investors seeking to build better
portfolios. For these investors, a tax-efficient, risk-resistant
investment portfolio often forms the foundation of a carefully
crafted financial plan for building and sustaining wealth. Nuveen
is committed to providing investors and their financial advisers
with a range of products and investment tools to help build better
portfolios.
Mutual Funds
Nuveen Mutual Funds offer investors access to the Nuveen family of
premier advisers, including Nuveen Advisory Corp., Institutional
Capital Corp. and Rittenhouse Financial Services. Our equity,
balanced and income funds seek to provide consistent performance,
time-tested strategies to reduce risk and experienced,
professional management.
Private Asset Management
Rittenhouse Financial Services and Nuveen Asset Management offer
comprehensive, customized investment management solutions to
investors with assets of $250,000 or more. A range of actively
managed growth, balanced and municipal income-oriented portfolios
are available, all based upon a disciplined investment philosophy.
Unit Trusts
Nuveen Unit Trusts are fixed portfolios of quality securities that
are a convenient, attractive alternative to purchasing individual
securities. They provide low-cost diversification to reduce risk,
experienced, professional security selection and surveillance, and
daily liquidity at that day's net asset value for quick access to
your assets.
Exchange-Traded Funds
Nuveen Exchange-Traded Funds offer investors actively managed
portfolios of investment-grade quality municipal bonds. The fund
shares are listed and traded on the New York and American stock
exchanges. Exchange-traded funds provide the investment
convenience, price visibility and liquidity of common stocks.
MuniPreferred/R/
Nuveen MuniPreferred offers investors a AAA-rated investment with
an attractive tax-free yield for the cash reserves portion of an
investment portfolio. MuniPreferred shares are backed 2-to-1 by
the long-term portfolios of Nuveen dual-class exchange-traded
funds and are available for national as well as a wide variety of
state-specific portfolios.
Nuveen Family of Mutual Funds
Nuveen offers a variety of funds designed to help you reach
your financial goals.
Growth
Nuveen Rittenhouse Growth Fund
Growth and Income
Growth and Income Stock Fund
Balanced Stock and Bond Fund
Balanced Municipal and Stock Fund
Tax-Free Income
National Funds
Long-Term Insured Intermediate-Term Limited Term
State Funds
Alabama
Arizona
California
Colorado
Connecticut
Florida
Georgia
Kansas
Kentucky
Louisiana
Maryland
Massachusetts
Michigan
Missouri
New Jersey
New Mexico
New York
North Carolina
Ohio
Pennsylvania
South Carolina
Tennessee
Virginia
Wisconsin
44
<PAGE>
Fund Information
Board of Directors Custodian
Robert P. Bremner The Chase Manhattan Bank
Lawrence H. Brown 4 New York Plaza
Anthony T. Dean New York, NY 10004-2413
Anne E. Impellizzeri (800) 257-8787
Peter R. Sawers
William J. Schneider Transfer Agent,
Timothy R. Schwertfeger
Judith M. Stockdale Shareholder Services and
Fund Manager Dividend Disbursing Agent
Nuveen Advisory Corp. Shareholder Services, Inc.
333 West Wacker Drive Nuveen Investor Services
Chicago, IL 60606 P.O. Box 5330
Denver, CO 80217-5330
(800) 621-7227
Legal Counsel
Fried, Frank, Harris,
Shriver & Jacobson
Washington, D.C.
Public Accountants
Arthur Andersen LLP
Chicago, IL
45
<PAGE>
[PHOTO OF JOHN NUVEEN, SR. APPEARS HERE]
John Nuveen, Sr.
Serving Investors for Generations
Since our founding in 1898, John Nuveen & Co. has been synonymous with
investments that withstand the test of time. Today, we offer a broad range of
investments designed for risk-sensitive individuals seeking to build and sustain
wealth. In fact, more than 1.3 million investors have trusted Nuveen to help
them maintain the lifestyle they currently enjoy.
The cornerstone of Nuveen's investment philosophy is a commitment to disciplined
long-term investment strategies focused on providing consistent, attractive
performance over time - with moderated risk. We emphasize quality securities
carefully chosen through in-depth research, and we follow those securities
closely over time to ensure that they continue to meet our exacting standards.
Whether your focus is long-term growth, dependable current income or sustaining
accumulated wealth, Nuveen offers a wide variety of products and services to
help meet your unique circumstances and financial planning needs. Our equity,
balanced, and income funds, along with our unit trusts and private asset
management, can form the foundation of a tax-efficient and risk-resistant
portfolio.
Talk with your financial adviser to learn more about how Nuveen investment
products and services can help you build and sustain your long-term financial
security. Or call us at (800) 621-7227 for more information, including a
prospectus where applicable. Please read that information carefully before you
invest.
NUVEEN
OUR SECOND CENTURY 1898/1998
helping investors sustain the wealth of a lifetime.(TM)
John Nuveen & Co. Incorporated
333 West Wacker Drive
Chicago, IL 60606-1286
www.nuveen.com
<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 28, 1998
Statement of Net Assets, February 28, 1998
Statement of Operations, Year Ended February 28, 1998
Statement of Changes in Net Assets, Years Ended February 28, 1998 and
February 28, 1997
Report of Independent Public Accountants dated April 15, 1998
(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. 11 to the Registrant's
Registration Statement on Form N-1A (File No. 33-8371) and is
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 5, 1998, 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.
</TABLE>
C-1
<PAGE>
<TABLE>
<C> <S>
6(b). Renewal, dated July 31, 1997, of Distribution Agreement.
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. Filed as Exhibit 8(b) to Post-Effective Amendment No. 10 to
Registrant's Registration Statement on Form N-1A (File No. 33-8371) and
incorporated herein by reference thereto.
9(a). Transfer Agency Agreement between Registrant and Shareholder Services,
Inc., dated July 1, 1997.
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 Morgan, Lewis & Bockius LLP.
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.
</TABLE>
C-2
<PAGE>
<TABLE>
<C> <S>
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.
99(b). Certified copy of resolution of Board of Directors authorizing the
signing of the names of directors and officers on the Registration
Statement pursuant to power of attorney.
99(c). Original Power of Attorney for Judith M. Stockdale authorizing, among
others, Gifford R. Zimmerman and Larry W. Martin to execute the
Registration Statement on her behalf as one of the Registrant's
Directors. Original Powers of Attorney for all of Registrant's other
Directors authorizing, among others, Gifford R. Zimmerman and Larry W.
Martin to execute the Registration Statement were filed as Exhibit
99(c) to Post-Effective Amendment No. 11 to Registrant's Registration
Statement on Form N-1A (File No. 33-8371) and is 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 19, 1998:
<TABLE>
<CAPTION>
TITLE OF SERIES NUMBER OF RECORD HOLDERS
--------------- ------------------------
<S> <C>
Massachusetts Fund--Distribution Plan Series..... 1,010
Massachusetts Fund--Service Plan Series.......... 34
Massachusetts Fund--Institutional Series......... 3
New York Fund--Distribution Plan Series.......... 898
New York Fund--Service Plan Series............... 40
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
C-3
<PAGE>
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 determined that he is entitled to receive
from the Corporation by reason of indemnification as authorized herein;
provided, however, that prior to making any such advance at least one of
the following conditions shall have been met: (1) the indemnitee shall pro-
vide a security for his undertaking, (2) the Corporation shall be insured
against losses arising by reason of any lawful advances, or (3) a majority
of a quorum of the disinterested, non-party directors of the Corporation,
or an independent legal counsel in a written opinion, shall determine,
based on a review of readily available facts, that there is reason to be-
lieve that the indemnitee ultimately will be found entitled to indemnifica-
tion.
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 $20,000,000 (with
a maximum deductible of $500,000) against liability and expenses of claims of
wrongful acts arising out of their position with the Registrant, 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 Flagship Multistate Trust I,
Nuveen Flagship Multistate Trust II, Nuveen Flagship Multistate Trust III,
Nuveen Flagship Multistate Trust IV, Nuveen Flagship Municipal Trust, Flagship
Admiral Funds Inc., Nuveen California Tax-Free Fund, Inc., Nuveen Tax-Free
Money Market Fund, Inc., Nuveen Tax-Exempt Money Market Fund, Inc., and Nuveen
Tax-Free Reserves, Inc. It also serves as investment adviser to the following
closed-end management investment companies: Nuveen Municipal Value Fund, Inc.,
Nuveen California Municipal Value Fund, Inc.,
C-4
<PAGE>
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 Municipal Market Opportunity Fund, Inc., Nuveen California Munici-
pal Market Opportunity Fund, Inc., Nuveen Investment Quality Municipal Fund,
Inc., Nuveen California Investment Quality Municipal Fund, Inc., Nuveen New
York Investment Quality Municipal Fund, Inc., Nuveen Insured Quality Municipal
Fund, Inc., Nuveen Florida Investment Quality Municipal Fund, Nuveen New Jersey
Investment 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 Premium Income Municipal Fund 4, Inc., Nuveen Insured California Premium
Income Municipal Fund 2, Inc., Nuveen Pennsylvania Premium Income Municipal
Fund 2, Nuveen Maryland Premium Income Municipal Fund, Nuveen Massachusetts
Premium Income Municipal Fund, Nuveen Virginia Premium Income Municipal Fund,
Nuveen Washington Premium Income Municipal Fund, Nuveen Connecticut Premium In-
come Municipal Fund, Nuveen Georgia Premium Income Municipal Fund, Nuveen Mis-
souri Premium Income Municipal Fund, Nuveen North Carolina Premium Income Mu-
nicipal Fund, Nuveen California Premium Income Municipal Fund and Nuveen In-
sured Premium Income Municipal Fund 2. Nuveen Advisory Corp. has no other cli-
ents or business at the present time. The principal business address for all of
these investment companies is 333 West Wacker Drive, Chicago, Illinois, 60606.
For a description of other business, profession, vocation or employment of a
substantial nature in which any director or officer, other than Timothy R.
Schwertfeger and Anthony T. Dean, of the investment adviser has engaged during
the last two years for his account or in the capacity of director, officer, em-
ployee, partner or trustee, see the descriptions under "Management" in the
Statement of Additional Information.
Timothy R. Schwertfeger is Chairman and Director of Nuveen Advisory Corp., the
investment adviser. Mr. Schwertfeger has, during the last two years, been
Chairman and formerly Executive Vice President and Director of The John Nuveen
Company, John Nuveen & Co. Incorporated, and Nuveen Institutional Advisory
Corp.; Chairman and Director (since January 1997) of Nuveen Asset Management,
Inc.; Director (since 1996) of Institutional Capital Corporation. Anthony T.
Dean is President and Director of Nuveen Advisory Corp., the investment advis-
er. Mr. Dean has, during the last two years, been Executive Vice President and
Director of The John Nuveen Company and John Nuveen & Co.
C-5
<PAGE>
Incorporated; and Director of Nuveen Institutional Advisory Corp.; President
and Director (since January 1997) of Nuveen Asset Management, Inc.; Chairman
and Director of Rittenhouse Financial Services, Inc.
ITEM 29: PRINCIPAL UNDERWRITERS
(a) John Nuveen & Co. Incorporated ("Nuveen") acts as principal underwriter to
the following open-end management type investment companies: Nuveen Flagship
Multistate Trust I, Nuveen Flagship Multistate Trust II, Nuveen Flagship
Multistate Trust III, Nuveen Flagship Multistate Trust IV, Nuveen Flagship Mu-
nicipal Trust, Nuveen California Tax-Free Fund, Inc., Nuveen Tax-Free Money
Market Fund, Inc., Nuveen Tax-Exempt Money Market Fund, Inc., Nuveen Tax-Free
Reserves, Inc., Flagship Admiral Funds Inc., Nuveen Investment Fund and Nuveen
Investment Trust II. Nuveen also acts as depositor and principal underwriter
of the Nuveen Tax-Exempt Unit Trust and Nuveen Unit Trusts, registered unit
investment trusts. Nuveen has also served or is serving as a co-managing un-
derwriter of the shares of Nuveen Municipal Value Fund, Inc., Nuveen Califor-
nia 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 Perfor-
mance Plus Municipal Fund, Inc., Nuveen New York Performance Plus Municipal
Fund, Inc., Nuveen Municipal Advantage Fund, Inc., Nuveen Municipal Market Op-
portunity Fund, Inc., Nuveen California Municipal Market Opportunity Fund,
Inc., Nuveen Investment Quality Municipal Fund, Inc., Nuveen California In-
vestment Quality Municipal Fund, Inc., Nuveen New York Investment Quality Mu-
nicipal Fund, Inc., Nuveen Insured Quality Municipal Fund, Inc., Nuveen Flor-
ida 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 Municipal Opportu-
nity 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 Premier Insured
Municipal Income Fund, Inc., Nuveen Select Tax-Free Income Portfolio, Nuveen
Premium Income Municipal Fund 2, Inc., Nuveen Insured California Premium In-
come Municipal Fund, Inc., Nuveen Insured New York Premium Income Municipal
Fund, Inc., Nuveen Select Maturities Municipal Fund, Nuveen Arizona Premium
Income Municipal Fund, Inc., Nuveen Insured Florida Premium Income Municipal
Fund, Nuveen Michigan Premium Income Municipal Fund, Inc., Nuveen New Jersey
Premium Income Municipal Fund, Inc., Nuveen Premium Income Municipal Fund 4,
Inc., Nuveen Insured California Premium Income Municipal Fund 2, Inc., Nuveen
Pennsylvania Premium Income Municipal Fund 2, Nuveen Maryland Premium Income
Municipal Fund, Nuveen Massachusetts Premium Income Municipal Fund, Nuveen
Virginia Premium Income Municipal Fund, Nuveen Washington Premium Income Mu-
nicipal Fund, Nuveen Connecticut Premium Income Municipal Fund, Nuveen Georgia
Premium Income Municipal Fund, Nuveen Missouri Premium Income Municipal Fund,
Nuveen North Carolina Premium Income Municipal Fund, Nuveen California Premium
Income Municipal Fund, Nuveen Insured Premium Income Municipal Fund 2, Nuveen
Select Tax-Free Income Portfolio 2, Nuveen Insured California Select Tax-Free
Income Portfolio, Nuveen Insured New York Select Tax-Free Income Portfolio and
Nuveen Select Tax-Free Income Portfolio 3.
C-6
<PAGE>
(b)
<TABLE>
<CAPTION>
NAME AND PRINCIPAL POSITIONS AND OFFICES POSITIONS AND OFFICES
BUSINESS ADDRESS WITH UNDERWRITER WITH REGISTRANT
- -----------------------------------------------------------------------------
<S> <C> <C>
Timothy R. Schwertfeger Chairman of the Board, Chairman of the Board
333 West Wacker Drive Chief Executive Officer and Director
Chicago, IL 60606 and Director
Anthony T. Dean President President and Director
333 West Wacker Drive and Director
Chicago, IL 60606
John P. Amboian Executive Vice President None
333 West Wacker Drive and Chief Financial Officer
Chicago, IL 60606
Bruce Bedford Executive Vice President Executive Vice President
333 West Wacker Drive
Chicago, IL 60606
Alan G. Berkshire Vice President Vice President and
333 West Wacker Drive and Secretary Assistant Secretary
Chicago, IL 60606
William Adams IV Vice President None
333 West Wacker Drive
Chicago, IL 60606
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 Vice President and
333 West Wacker Drive Controller
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
</TABLE>
C-7
<PAGE>
<TABLE>
<CAPTION>
NAME AND PRINCIPAL POSITIONS AND OFFICES POSITIONS AND OFFICES
BUSINESS ADDRESS WITH UNDERWRITER WITH REGISTRANT
- ----------------------------------------------------------------------------------
<S> <C> <C>
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
Stuart W. Rogers Vice President None
333 West Wacker Drive
Chicago, IL 60606
Bradford W. Shaw, Jr. Vice President None
333 West Wacker Drive
Chicago, IL 60606
H. William Stabenow Vice President and Vice President and
333 West Wacker Drive Treasurer Treasurer
Chicago, IL 60606
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 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, 4 New York Plaza, New York, New York 10004, maintains
all general and subsidiary ledgers, journals, trial balances, records of all
portfolio purchases and sales, and all other required records not maintained by
Nuveen Advisory Corp., Shareholder Services, Inc., or Chase Global Funds Serv-
ices Company.
C-8
<PAGE>
Until August 10, 1998, Shareholder Services, Inc., P.O. Box 5330, Denver, Colo-
rado, 80217-5330, will maintain all the required records in its capacity as
transfer, dividend paying, and shareholder service agent for the Registrant.
After August 10, 1998, Chase Global Funds Services Company, P.O. Box 5186, New
York, New York 10274-5186, will maintain the same records in the same capacity
for the Registrant.
ITEM 31: MANAGEMENT SERVICES
Not applicable.
ITEM 32: UNDERTAKINGS
Not applicable.
C-9
<PAGE>
SIGNATURES
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933 AND THE INVESTMENT
COMPANY ACT OF 1940 THE REGISTRANT CERTIFIES THAT THIS REGISTRATION STATEMENT
MEETS ALL THE REQUIREMENTS FOR EFFECTIVENESS UNDER PARAGRAPH (B) OF RULE 485
UNDER THE SECURITIES ACT OF 1933 AND HAS DULY CAUSED THIS REGISTRATION STATE-
MENT TO BE SIGNED ON ITS BEHALF BY THE UNDERSIGNED, THEREUNTO DULY AUTHORIZED,
IN THIS CITY OF CHICAGO, AND STATE OF ILLINOIS, ON THE 15TH DAY OF JUNE, 1998.
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/ Stephen D. Foy Vice President and June 15, 1998
- ------------------------------- Controller (Principal
Stephen D. Foy Financial and
Accounting Officer)
Timothy R. Schwertfeger Chairman of the Board )
and Director (Principal )
Executive Officer) )
)
Anthony T. Dean President and Director )
)
Robert P. Bremner Director )
)
Lawrence H. Brown Director }
)
Anne E. Impellizzeri Director ) /s/ Gifford R. Zimmerman
) By_________________________
Peter R. Sawers Director ) Gifford R. Zimmerman
) Attorney-in-Fact
William J. Schneider Director )
) June 15, 1998
Judith M. Stockdale Director )
</TABLE>
AN ORIGINAL POWER OF ATTORNEY AUTHORIZING, AMONG OTHERS, GIFFORD R. ZIMMERMAN
AND LARRY W. MARTIN TO EXECUTE THIS REGISTRATION STATEMENT, AND AMENDMENTS
THERETO, FOR JUDITH M. STOCKDALE, HAS BEEN EXECUTED AND IS FILED AS AN EXHIBIT
TO THIS REGISTRATION STATEMENT. AN ORIGINAL POWER OF ATTORNEY FOR EACH OF THE
OTHER OFFICERS AND DIRECTORS OF THE REGISTRANT HAS BEEN EXECUTED AND IS INCOR-
PORATED BY REFERENCE IN THIS REGISTRATION STATEMENT.
C-10
<PAGE>
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
SEQUENTIALLY
EXHIBIT NUMBERED
NUMBER EXHIBIT PAGE
------- ------- ------------
<C> <S> <C>
5(c). Renewal, dated May 5, 1998, of Investment Management
Agreement.
6(b). Renewal, dated July 31, 1997, of Distribution Agree-
ment.
9(a). Transfer Agency Agreement dated July 1, 1997.
10. Opinion of Morgan, Lewis & Bockius LLP.
11. Consent of Independent Public Accountants.
16. Schedule of Computation of Yield Figures.
17. Financial Data Schedule.
99(b). Certified copy of resolution of Board of Directors
authorizing the signing of the names of directors and
officers on the Registration Statement pursuant to
power of attorney.
99(c) Original Powers of Attorney for Judith M. Stockdale
authorizing, among others, Gifford R. Zimmerman and
Larry W. Martin to execute the Registration Statement
on her behalf as one of the Registrant's Directors.
</TABLE>
<PAGE>
EXHIBIT 5(c)
NUVEEN TAX-FREE MONEY MARKET FUND, INC.
RENEWAL OF INVESTMENT MANAGEMENT AGREEMENT
------------------------------------------
This Agreement made this 5th day of May, 1998 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 that certain
Investment Management Agreement (the "Agreement") pursuant to which the Adviser
furnishes investment management and other services to the Fund; and
WHEREAS, the Agreement terminates August 1, 1998 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, 1999 in the manner required by the Investment Company Act of 1940.
NOW THEREFORE, in consideration of the mutual covenants contained in the
Agreement the parties hereto do hereby continue the Agreement in effect until
August 1, 1999 and ratify and confirm the Agreement in all respects.
NUVEEN TAX-FREE
MONEY MARKET FUND, INC.
By: /s/ Gifford R. Zimmerman
------------------------------
Vice President
ATTEST:
/s/ Karen L. Healy
- -----------------------------
Assistant Secretary
NUVEEN ADVISORY CORP.
By: /s/ Edward F. Neild
------------------------------
Vice President
ATTEST:
/s/ Larry W. Martin
- -----------------------------
Assistant Secretary
<PAGE>
EXHIBIT 6(b)
Renewal of Distribution Agreement
---------------------------------
This Agreement made this 31st day of July, 1997 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, 1997 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, 1998 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, 1998 and ratify and confirm the Agreement in all respects.
NUVEEN TAX-FREE MONEY MARKET FUND, INC.
By: /s/ Gifford R. Zimmerman
------------------------------
Vice President
ATTEST:
/s/ Karen L. Healy
- -----------------------------
Assistant Secretary
JOHN NUVEEN & CO. INCORPORATED
By: /s/ Anna R. Kucinskis
------------------------------
Vice President
ATTEST:
/s/ Larry Martin
- -----------------------------
Assistant Secretary
<PAGE>
Exhibit 9(a)
NUVEEN TAX-FREE MONEY MARKET FUND, INC.
TRANSFER AGENCY AGREEMENT
This agreement is made as of the 1st day of July, 1997, between NUVEEN
TAX-FREE MONEY MARKET FUND, INC., a Minnesota corporation having its principal
office and place of business at 333 West Wacker Drive, Chicago, Illinois 60606
(hereinafter referred to as the "Fund"), and SHAREHOLDER SERVICES, INC., a
Colorado corporation having its place of business at 6803 South Tucson Way,
Englewood, Colorado 80112 (hereinafter referred to as the "Transfer Agent").
In consideration of the mutual promises hereinafter set forth, the parties
hereto covenant and agree as follows:
ARTICLE 1
DEFINITIONS
Whenever used in this Agreement, the following words and phrases shall have
the following meanings:
1.1 "Approved Institution" shall mean a broker-dealer, broker, bank or
other entity named in a Certificate, as hereinafter defined, and having
account(s) in the Fund or the Distributor or an agent it appoints, in each case
acting on behalf of the Fund for the benefit of its clients. From time to time
the Fund may amend a previously delivered Certificate by delivering to the
Transfer Agent a Certificate naming an additional entity as an Approved
Institution or deleting any entity named as an Approved Institution in a
previously delivered Certificate.
1.2 "Business Day" shall mean each day on which the New York Stock
Exchange is open for trading.
1.3 "Certificate" shall mean any notice, instruction, or other instrument
in writing, authorized or required by this Agreement to be given to the Transfer
Agent by the Fund and which is signed by any Officer, as hereinafter defined,
and actually received by the Transfer Agent. "Certificate" shall also include
any notice submitted to the Transfer Agent by electronic or telephone
transmission, reasonably believed by the Transfer Agent to be genuine and to
have been properly made, signed or authorized by an Officer.
1.4 "Computer Tape" shall mean any computer/electromagnetic tape or
transmission transmitted by an Approved Institution, via a remote terminal or
other similar link, into a data processing, storage, or collection system or
similar system (the "System"), located on the Transfer Agent's premises. For
purposes of Section 5.1, such Computer Tape shall be deemed to have been
furnished at such times as are agreed upon from time to time by the Transfer
Agent and Fund only if the information reflected thereon was input into the
system at such times as are agreed upon from time to time by the Transfer Agent
and the Fund.
1.5 "Custodian" shall mean, with respect to the Fund, Chase Manhattan Bank
of New York as custodian under the terms and conditions of the Custody Agreement
between the Custodian and the
Page 1
<PAGE>
Fund, or in any case any successor(s) to such Custodian performing similar
functions for or on behalf of the Fund.
1.6 "Direct Accounts" means accounts registered in the name(s) of
shareholders other than Approved Institutions.
1.7 "Distributor" shall mean John Nuveen & Co. Incorporated (hereinafter
referred to as "Nuveen & Co."), as distributor under the terms and conditions of
the Distributor's Contract between the Fund and Nuveen & Co., wherein Nuveen &
Co. has the exclusive right to sell shares of the Fund to investors against
orders therefor at net asset value, or any successor(s) to Nuveen & Co.
performing a similar function for or on behalf of the Fund.
1.8 "Effective Date" shall mean July 1, 1997 or the date the Fund begins
operations.
1.9 "Series" shall mean each individual portfolio of the Fund, if any,
each being a separate portfolio of securities and other assets, interests in
which are represented by a separate series of the Fund's shares, and such terms
shall include any other such portfolio that may be created for which the
Transfer Agent agrees to act as transfer agent pursuant to Article 10 of this
Agreement.
1.10 "Officer" shall mean the Fund's Chairman of the Board, President, any
Vice President, Secretary, any Assistant Secretary, Treasurer, any Assistant
Treasurer and any other person duly authorized by the Board of Directors of the
Fund to execute or give any Certificate on behalf of the Fund and named in the
Certificate annexed hereto as Appendix A, as such Certificate may be amended
from time to time.
1.11 "Prospectus" shall mean the most current Fund prospectus and statement
of additional information relating to the Shares, actually received by the
Transfer Agent from the Fund and shall include to the extent applicable, shares
designated as comprising any and all classes of any series of the Fund.
1.12 "Shares" shall mean full or fractional shares comprising all or any
part of each series representing the beneficial interest in the Fund and shall
include to the extent applicable, shares designated as comprising any and all
classes of any series of the Fund.
ARTICLE 2
APPOINTMENT OF TRANSFER AGENT
2.1 The Fund hereby constitutes and appoints the Transfer Agent as
transfer agent of all the Shares of the Fund and as dividend disbursing agent
for the Fund during the term of this Agreement.
2.2 The Transfer Agent hereby accepts appointment as transfer agent and
dividend disbursing agent and agrees to perform the duties hereinafter set
forth.
Page 2
<PAGE>
2.3. In connection with such appointment, upon or prior to executing this
Agreement, the Fund shall deliver to the Transfer Agent such of the following as
have not already been furnished to the Transfer Agent:
(a) A copy of the Articles of Incorporation of the Fund and all amendments
thereto certified by the Secretary of the Fund;
(b) A copy of the By-Laws of the Fund certified by the Secretary of the
Fund;
(c) A copy of resolutions of the Board of Directors of the Fund, certified
by the Secretary of the Fund, authorizing the execution of this Transfer Agency
Agreement;
(d) A Certificate signed by the Secretary of the Fund specifying the names
and specimen signatures of the Officers of the Fund;
(e) Specimen Share certificates for Shares of each series of the Fund in
the form approved by the Board of Directors of the Fund, together with a
certificate signed by the Secretary of the Fund as to such approval;
(f) Copies of the most recently filed Post-Effective Amendment to the
Fund's Registration Statement, filed with the Securities and Exchange Commission
under the Securities Act of 1933, as amended, and under the Investment Company
Act of 1940, as amended, together with any applications for exemptive relief
from any of the provisions of such laws filed by the Fund and the record of any
formal action of the Securities and Exchange Commission with respect to all such
applications; and
(g) Opinion of Counsel for the Fund to the effect that (1) beneficial
interest in each Fund is divided into an unlimited number of shares of
beneficial interest, (2) the issue and sale of the Fund's authorized but
unissued Shares have been duly authorized under Maryland law, (3) the
outstanding Shares are fully paid and non-assessable and (4) upon the issue and
sale of any authorized and unissued Shares and upon receipt of the authorized
consideration therefor in an amount not less than either the Shares' net asset
value or par value, if any, established and in force at the time of their sale,
the Fund Shares so issued will be validly issued, fully paid and non-assessable.
2.4. The Fund shall either (a) furnish the Transfer Agent with sufficient
supplies of blank share certificates in the form approved from time to time by
the Board of Directors of the Fund, and from time to time will renew such
supplies upon request of the Transfer Agent, or (b) authorize the Transfer Agent
to itself create laser-printed Share certificates in the form approved by the
Board of Directors of the Fund. Any such blank Share certificates shall be
properly signed, by facsimile or otherwise, by authorized Officers and, if
required, shall bear the seal of the Fund or a facsimile thereof.
Notwithstanding the death, resignation or removal of any Officer authorized to
sign such Share certificates, the Transfer Agent may continue to countersign and
issue Share certificates bearing such Officer's signature until otherwise
directed by the Fund. The Fund agrees to indemnify and exonerate, save and hold
the Transfer Agent harmless, from and against any and all claims or demands that
may be asserted against the Transfer Agent with respect to the genuineness of
any Share certificate supplied to the Transfer Agent by the Fund pursuant to
this Agreement.
Page 3
<PAGE>
ARTICLE 3
AUTHORIZATION AND ISSUANCE OF SHARES
3.1. The Transfer Agent shall maintain records of accounts evidencing
ownership of Shares as provided in this Agreement and in the Fund's Prospectus
and, subject to the terms and conditions of this Agreement, when requested shall
countersign, record, issue, and deliver certificates for Shares both upon
original issue and transfer. Evidence of the ownership of Shares shall be
maintained on the Transfer Agent's records in book (uncertificated) form, or, if
requested by an Approved Institution (or the Distributor or its agent acting on
behalf of such Approved Institution) or shareholder, share certificates shall be
issued, subject to the provisions of Article 5 hereof, to evidence the ownership
of Shares.
3.2. Prior to the issuance of any Shares pursuant to Share splits and
prior to any reduction in the number of Shares outstanding, the Fund shall
deliver the following documents to the Transfer Agent:
(a) A copy of the resolution(s) adopted by the Board of Directors of the
Fund and/or the shareholders of the relevant Fund, certified by the Secretary of
the Fund, authorizing such issuance of additional Shares of such Fund or such
reduction, as the case may be;
(b) In the case of the issuance of Shares, an opinion of counsel for the
Fund with respect to matters set forth in Section 2.3(g) hereof as to such
shares; and
(c) Such additional documents as the Transfer Agent may reasonably
request.
ARTICLE 4
RECAPITALIZATION OR CAPITAL ADJUSTMENT
4.1. In the case of any Share split, recapitalization or other capital
adjustment, the Transfer Agent will, in the case of accounts represented by
uncertificated Shares, cause the account records to be adjusted, as necessary,
to reflect the number of Shares held for the account of each such shareholder as
a result of such adjustment, or, in the case of Shares represented by
certificates, will, if so instructed by the Fund, issue revised Share
certificates in exchange for, or upon transfer of, outstanding Share
certificates in the old form, in either case upon receiving:
(a) A Certificate authorizing the issuance of revised Share certificates
and any other action required to be taken by the Transfer Agent in connection
with any such split, recapitalization or other capital adjustment;
(b) A copy of any amendment to the Articles of Incorporation of the Fund,
certified by the Secretary of the Fund, with respect to the adjustment;
(c) Specimen Share certificates in the revised form approved by the Board
of Directors of the Fund;
Page 4
<PAGE>
(d) An opinion of counsel for the Fund with respect to the matters set
forth in Article 2, Section 2.3(g) hereof as to such Shares; and
(e) Such additional documents as the Transfer Agent may reasonably
request.
4.2. The Fund shall either (a) furnish the Transfer Agent with a
sufficient supply of blank Share certificates in any new form authorized in
connection with any such Share split, recapitalization or other capital
adjustment, and from time to time will replenish such supply upon the request of
the Transfer Agent, or (b) authorize the Transfer Agent to itself create laser-
printed Share certificates in the form approved by the Board of Directors of the
Fund. Any such blank Share certificates shall be properly signed by authorized
Officers and, if required, shall bear the Fund's seal or facsimile thereof.
ARTICLE 5
ISSUANCE, REDEMPTION, AND TRANSFER OF SHARES
5.1. (a) On each Business Day, the Transfer Agent shall accept, at such
time as are agreed upon from time to time by the Transfer Agent and the Fund,
(i) purchase orders received by the Transfer Agent directly from an Approved
Institution (or the Distributor or its agent acting on behalf of such Approved
Institution) or an individual investor, (ii) redemption requests either received
from a shareholder, whether or not an Approved Institution (or the Distributor
or its agent acting on behalf of such Approved Institution), or contained in a
Certificate, and (iii) requests for exchanges of the Fund's Shares of a given
class for Shares of another fund received from a shareholder, whether or not an
Approved Institution (or the Distributor or its agent acting on behalf of such
Approved Institution), or contained in a Certificate, provided that (1) such
purchase order, exchange request or redemption request, as the case may be, is
in conformity with the Fund's purchase, exchange, and redemption procedures, as
applicable, described in the Prospectus, and (2) if such type of purchase order,
exchange request, or redemption request is not described in the Prospectus in
effect upon the commencement date of the Agreement, the Transfer Agent has
agreed to accept and act as to such order or request. Upon receipt on any
Business Day of any check drawn or endorsed to the Transfer Agent, the Fund or
the Distributor for the purchase of Shares, or any payment made by Automated
Clearing House or Federal Funds wire, the Transfer Agent shall deposit such
check or payment in the bank account established by the Fund or the Distributor
for the collection of such amounts and shall wire such amounts to the Fund's
Custodian on the next Business Day. The Transfer Agent shall have no
responsibility hereunder for the Fund's compliance with states securities
registration laws ("Blue Sky laws") relating to such purchase orders, except to
the extent that the Transfer Agent will maintain records in a manner that will
enable the Fund to monitor the total number of Shares of the Fund sold in each
state and shall provide the Fund reports as to such sales as specified in
Appendix B to this Agreement.
(b) On each Business Day, the Transfer Agent shall also accept, at
such times as are agreed upon from time to time by the Transfer Agent and the
Fund, a Computer Tape consistent in all respects with the Transfer Agent's tape
layout package, as amended from time to time, which is believed by the Transfer
Agent to be furnished by or on behalf of any Approved Institution, setting forth
data as to purchases, redemptions and exchanges of Shares irrespective of
whether payment of the purchase price accompanies such computer tape. The
Transfer Agent may rely on the data on such Computer Tapes as
Page 5
<PAGE>
accurate, and shall not be responsible hereunder for errors in such Computer
Tapes furnished to it hereunder, unless caused by the Transfer Agent's own
negligence, bad faith or willful misconduct.
(c) On each Business Day, the Fund shall provide or cause to be
provided to the Transfer Agent, at such time as the parties hereto shall agree,
the net asset value per share for the Fund and such other information as the
Transfer Agent may reasonably request.
5.2. On the Business Day following each Business Day, at such time as the
Transfer Agent and the Fund shall agree, an authorized employee of the Transfer
Agent shall confirm the following information by summary sheet transmitted by
electronic or other electromagnetic means to an authorized employee or agent of
the Fund (or by such other form as shall be agreed upon from time to time by the
Fund and the Transfer Agent):
(a) The total dollar amount to be applied toward the purchase of
Shares of the Fund and the number of Shares of the Fund purchased on such prior
Business Day, computed by aggregating the amounts so specified in (i) the
purchase orders received by the Transfer Agent on such prior Business Day from
individual investors and (ii) all Computer Tapes described in Section 5.1(b)
timely received by the Transfer Agent with respect to such prior Business Day;
(b) The total dollar value and number of Shares of the Fund redeemed
on such prior Business Day, computed by aggregating the amounts so specified in
(i) the redemption requests received by the Transfer Agent directly on the
preceding Business Day from shareholders, and (ii) all Computer Tapes described
in Section 5.1(b) relating to such prior Business Day; and
(c) The total dollar value and number of Shares of the Fund to be
exchanged for Shares of another fund and the number of Shares of such other fund
to be issued in such exchanges on such prior Business Day, and the total dollar
value and number of shares of the Fund to be issued in exchange for shares of
another fund on such prior business day (if not included in 5.2(a) above)
computed by aggregating the amounts represented by any exchange requests
received directly by the Transfer Agent from shareholders and the amounts
specified in all Computer Tapes described in Section 5.1(b) relating to such
prior Business Day.
5.3. Following each Business Day, the Transfer Agent will (on a day on
which banks in Denver, Colorado, Chicago, Illinois and New York, New York are
open for business but in any event on or prior to the Fifth Business Day
following such Business Day) advise the Distributor of the amount of cash
necessary to be wired to the Custodian, representing purchase orders for
appropriate Fund's Shares received by the Transfer Agent as to such Business
Day, as set forth in Section 5.1 above. As to each Business Day, the Transfer
Agent will advise the Fund of the amount of cash representing exchange orders
received by the Transfer Agent as to such Business Day, such advice to be given
on the next Business Day.
5.4. As to each Business Day, the Transfer Agent shall issue to, and redeem
from, the accounts specified in a purchase order, redemption request, or
exchange request received by the Transfer Agent in proper form in accordance
with the Prospectus and, when required by the Prospectus, properly endorsed by
the record owner thereof with the record owner's or owners' signature(s)
guaranteed by a U.S. commercial bank or U.S. trust company, a member of a
national securities exchange, a foreign
Page 6
<PAGE>
bank with a U.S. correspondent bank or a federally-chartered savings and loan
association, or shall issue to, and/or redeem from, the accounts specified in a
Computer Tape received by the Transfer Agent from an Approved Institution, the
appropriate number of full and fractional Shares based on the net asset value
per Share of the relevant series of the relevant Funds specified in an advice
received as to such Business Day from the Fund. Notwithstanding the foregoing,
if a redemption specified in a redemption request received directly by the
Transfer Agent or in a Computer Tape is for a dollar value of Shares in excess
of the dollar value of uncertificated Shares in the specified account plus the
dollar value of certificated Shares in the specified account for which the
Transfer Agent has received the tender of a Share certificate or certificates in
proper form as described above, the Transfer Agent shall not effect such
redemption in whole or part. In such case involving a Computer Tape, the
Transfer Agent shall orally or by electronic or other electromagnetic means
advise both the Fund and the Approved Institution (or the Distributor or its
agent if acting on behalf of such Approved Institution) which supplied such
Computer Tape of such discrepancy. In such case involving a direct shareholder,
the Transfer Agent shall, within five (5) business days, notify such shareholder
directly, orally or in writing.
5.5. The Transfer Agent shall, as of each Business Day specified in a
Certificate described in Section 6.1, issue Shares of the Fund, based on the net
asset value per Share of the Fund specified in an advice received from the Fund
to such Business Day, in connection with a reinvestment of a dividend or
distribution on Shares of the Fund.
5.6. On each Business Day, the Transfer Agent shall advise the Fund by
computer/electromagnetic tape specifying, with respect to the immediately
preceding Business Day: the total number of Shares of the Fund (including
fractional Shares) issued and outstanding at the opening of business on such
day; the total number of Shares of the Fund sold on such day, pursuant to
Section 5.2; the total number of Shares of the Fund redeemed or exchanged on
such day; the total number of Shares of the Fund, if any, sold on such day
pursuant to preceding Section 5.4, and the total number of Shares of the Fund
issued and outstanding at the close of business on such day. Unless the Fund or
its agent shall advise the Transfer Agent of any error in the information
contained in such computer/electromagnetic tape (the "Initial Tape") prior to
the transmission of the next computer/electromagnetic tape by the Transfer
Agent, the Transfer Agent shall be deemed to have fulfilled its responsibilities
hereunder with respect to the accuracy of the data on subsequent
computer/electromagnetic tapes submitted to the Fund that are based, in whole or
in part upon any inaccurate data from the Initial Tape.
5.7. In connection with each purchase, exchange and redemption of Shares
other than pursuant to a Computer Tape submitted by an Approved Institution (or
by the Distributor or its agent acting on behalf of such Approved Institution),
the Transfer Agent shall send to the shareholder such statements as are
described in the Prospectus or as otherwise reasonably instructed in writing by
the Funds. If the Prospectus indicates that certificates for Shares are
available, and if specifically requested in writing by any shareholder, or if
otherwise required hereunder, the Transfer Agent will countersign, issue and
mail to such shareholder, at the address set forth in the records of the
Transfer Agent, a Share certificate for any full Shares requested.
5.8. In computing the redemption proceeds to be paid to any shareholder or
to an account for an Approved Institution, the Transfer Agent shall first
compute the amount of any withholding for federal income taxes for which the
Transfer Agent has the responsibility under this Agreement to calculate such
Page 7
<PAGE>
withholding, in such manner as the Fund and the Transfer Agent shall agree from
time to time in conformity with instructions provided by the Fund to the
Transfer Agent. The Transfer Agent shall also compute any withholding for
federal income taxes for which the Transfer Agent has such responsibility at the
time of any exchange of a Fund's shares for another fund's shares. In the case
of a redemption of Shares directly by a shareholder of record and not by means
of a Computer Tape submitted by an Approved Institution (or by the Distributor
or its agent acting on behalf of such Approved Institution), upon deposit of
moneys in a redemption account by the relevant Custodian against which the
Transfer Agent is authorized by the Fund to draw checks in connection with a
redemption of Shares of the Fund, the Transfer Agent shall cancel the redeemed
Shares and after making appropriate deduction for any withholding of taxes
required of it by this Agreement or applicable law, make payment of (i) the
redemption proceeds to the order of the shareholder, and (ii) any tax withheld
to the Internal Revenue Service, in accordance with the Fund's redemption and
payment procedures described in the Prospectus or as otherwise reasonably
described in a written instruction from the Fund. In the case of an exchange of
Shares directly by a shareholder of record and not by means of a Computer Tape
submitted by an Approved Institution (or the Distributor or its agent acting on
behalf of such Approved Institution), upon deposit of moneys in an account by
the relevant Custodian against which the Transfer Agent is authorized by the
Fund to draw checks in connection with an exchange of Shares of a fund, the
Transfer Agent shall cancel the exchanged Shares, and withhold and pay taxes
required under this Agreement and applicable law. In the case of a redemption
of Shares pursuant to a Computer Tape, the Transfer Agent shall, on the next
Business Day, send the Fund a Computer Tape setting forth the amount of
redemption proceeds due each Approved Institution. If such Approved Institution
(or the Distributor or its agent acting on behalf of such Approved Institution)
has previously furnished the Transfer Agent withholding instructions with
respect to such redemption or any exchange of Shares pursuant to a Computer
Tape, the Transfer Agent shall include in the Computer Tape furnished to the
Fund information as to the amount of such withholding.
5.9. The Transfer Agent shall not be required to issue Shares of any fund
(other than with respect to the reinvestment of dividends or distributions on
shares owned by an existing shareholder if so stated in the Certificate) after
it has received a Certificate stating that the sale of Shares of that fund has
been suspended or discontinued.
5.10. The Transfer Agent shall not be responsible for the payment of any
original issue or other taxes required to be paid by the Fund in connection with
the issuance of any Shares.
5.11. The Transfer Agent shall not be responsible for issuing or effecting
any "stop transfer" or other similar order or restrictions on any Shares held in
the name of an Approved Institution. In the case of Shares registered in the
name of a shareholder other than an Approved Institution as to which a "stop
transfer" or other similar order or restriction applies, the Transfer Agent will
adhere to the terms of such stop transfer or similar order, except that it may
rely on a Certificate to effect a redemption, exchange or transfer of such
Shares, notwithstanding such stop order or restriction.
5.12. The Transfer Agent shall accept (a) a Computer Tape which is
furnished by or on behalf of any Approved Institution (or the Distributor or its
agent acting on behalf of such Approved Institution) and represented to be
instructions with respect to the transfer of Shares from one account of such
Approved Institution to another such account, and (b) as to Shares standing
directly in the name of a shareholder other than an Approved Institution,
transfer instructions in proper form in accordance with
Page 8
<PAGE>
the Fund's Prospectus and the Transfer Agent's rules described herein, and shall
effect the transfer specified in said Computer Tape or transfer instructions,
provided that any necessary documents or Share certificates have been tendered
to the Transfer Agent.
5.13. (a) Except as otherwise provided in sub-paragraph (b) of this
Section 5.13 and in Section 5.14, Shares will be transferred, exchanged or
redeemed other than pursuant to Computer Tapes from an Approved Institution (or
the Distributor on its agent acting on behalf of such Approved Institution) upon
presentation to the Transfer Agent of endorsed Share certificates or, in the
case of uncertificated Shares, instructions endorsed in proper form in
accordance with the Prospectus as stated in Section 5.4, accompanied by such
documents as the Transfer Agent reasonably deems necessary to evidence the
authority of the person making such transfer, exchange or redemption, and
bearing satisfactory evidence of the payment of transfer taxes. In the case of
small estates, where no administration is contemplated, the Transfer Agent may,
when furnished with an appropriate small estates affidavit under applicable law
or with a surety bond, and without further approval of the Fund, transfer or
redeem Shares registered in the name of a decedent if the current market value
of the Shares being redeemed or transferred does not exceed such amount as may
from time to time be prescribed by the applicable state statutes and
regulations. The Transfer Agent reserves the right to refuse to transfer,
exchange or redeem Shares until it is reasonably satisfied that the endorsement
on the Share certificate or instructions is valid and genuine, and for that
purpose it will require, unless otherwise instructed by an Officer, a signature
guarantee as stated in Section 5.4 of this Agreement. The Transfer Agent also
reserves the right to refuse to transfer, exchange or redeem Shares until it is
reasonably satisfied that the requested transfer, exchange or redemption is
legally authorized, or until it is reasonably satisfied that there is no basis
to any claims adverse to such transfer, exchange or redemption. The Transfer
Agent may, in effecting transfers, exchanges and redemptions of Shares, rely
upon those provisions of the Uniform Act for the Simplification of Fiduciary
Security Transfers or the Uniform Commercial Code, as the same may be amended
from time to time, applicable to the transfer of securities.
(b) Notwithstanding the foregoing or any other provision contained
in this Agreement to the contrary, the Transfer Agent shall be fully protected
by the Fund in requiring any instructions, documents, assurances, endorsements
or guarantees, including, without limitation, any signature guarantees, in
connection with a redemption, exchange or transfer of Shares whenever the
Transfer Agent reasonably believes that requiring the same would be consistent
with the transfer, exchange and redemption procedures described in the
Prospectus, or in any instructions or certificates provided to the Transfer
Agent by the Fund.
5.14. Notwithstanding any provision contained in this Agreement to the
contrary, the Transfer Agent shall not be expected to require, as a condition to
any transfer, redemption or exchange of any Shares pursuant to a Computer Tape,
any documents, including, without limitation, any documents of the kind
described in Section 5.13(a) to evidence the authority of the person requesting
the transfer, exchange or redemption and/or the payment of any transfer taxes,
and shall be fully protected in acting in accordance with the applicable
provisions of this Agreement.
5.15. Nothing contained in this Agreement shall constitute any agreement
or representation by the Transfer Agent to permit, or to agree to permit, any
Approved Institution to input information into the System, although the Transfer
Agent may, with the Fund's written permission, permit access to the
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System by an Approved Institution to retrieve data or information as to such
Approved Institution's accounts.
ARTICLE 6
DIVIDENDS AND DISTRIBUTIONS
6.1. The Fund shall furnish to the Transfer Agent a Certificate either (i)
setting forth with respect to each series of the Fund the date of the
declaration of a dividend or distribution, the date of accrual or payment
thereof, as the case may be, the record date as of which shareholders entitled
to payment or accrual, as the case may be, shall be determined, the amount per
Share of such dividend or distribution for each series of the Fund, the payment
date on which all previously accrued and unpaid dividends are to be paid, and
the total amount, if any, payable by the Transfer Agent with respect to such
dividend or distribution on such payment date, or (ii) stating that the
declaration of dividends and distributions shall be on a daily or other periodic
basis and containing information of the type set forth in subsection (i) hereof.
6.2. Upon the payment date specified in the relevant Certificate, the
Transfer Agent shall, in the case of a cash dividend or distribution, advise the
Fund (by telephone or other electronic transmission) of the amount of cash
necessary to make the payment of the dividend or distribution to the
shareholders of record as of such payment date, including the amounts to be paid
to Approved Institutions. The Fund shall be responsible for having the
appropriate Custodian transfer a sufficient amount of cash to a dividend
disbursement account maintained by the Fund for the relevant Series against
which the Transfer Agent shall cause checks, ACH or federal funds wire payment
to be drawn to the order of such shareholders or Approved Institutions in
payment of the dividend. The Transfer Agent shall not be liable for any
improper payments made in accordance with a Certificate described in Section
6.1. If the Transfer Agent shall not receive from the appropriate Custodian
sufficient cash to make payments of any cash dividend or distribution to
shareholders of the Fund as of the record date, the Transfer Agent shall, upon
notifying the Fund, withhold payment to all shareholders of record as of the
record date until sufficient cash is provided to the Transfer Agent unless
otherwise instructed by the Fund by a Certificate and acceptable to the Transfer
Agent. In the case of dividends or distributions reinvested in additional
Shares of a series of the Fund, the Transfer Agent shall follow the procedures
set forth in Section 5.5.
6.3. The Transfer Agent shall in no way be responsible for the
determination of the rate or form of dividends or capital gain distributions due
shareholders.
6.4. The Transfer Agent shall, upon request of the Fund, file such
appropriate information returns concerning the payment of dividends and capital
gain distributions and redemptions with the proper Federal, state and local
authorities as are required by law to be filed by the Fund but shall in no way
be responsible for the collection or withholding of taxes due on such dividends
or distributions or on redemption proceeds due shareholders, except and only to
the extent required of it by applicable law for accounts of shareholders other
than Approved Institutions. If any amount is to be withheld from any dividend
or distribution paid to, or exchange or redemption proceeds or other cash
distribution from, the account of an Approved Institution, such Approved
Institution (or the Distributor or its agent acting on behalf of such Approved
Institution) may advise the Transfer Agent of the amount to be withheld
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therefrom, and if such advice is provided in a timely manner to the Transfer
Agent, the Transfer Agent will provide a separate check for such amount to the
Approved Institution, which shall be responsible for the proper application of
such withheld amounts.
ARTICLE 7
CONCERNING THE FUND
7.1. The Fund shall promptly deliver to the Transfer Agent written notice
of any change in the Officers authorized to sign or give Share certificates or
Certificates, together with a specimen signature of each new Officer.
7.2. It shall be the sole responsibility of the Fund to deliver to the
Transfer Agent in a timely manner the Fund's currently effective Prospectus,
copies of any exemptive relief obtained by the Fund under applicable securities
laws and copies of any amendments to the Fund; Articles of Incorporation, By-
Laws and any other documents to be furnished by the Fund under this Agreement to
enable the Transfer Agent to carry out its duties hereunder, and, for purposes
of this Agreement, the Transfer Agent shall not be deemed to have notice of any
information contained in such Prospectus, exemptive relief or other document
until it is actually received by the Transfer Agent.
ARTICLE 8
CONCERNING THE TRANSFER AGENT
8.1. Subject to the standard of care set forth in Section 8.4, the Transfer
Agent shall not be liable and shall be fully protected in acting upon any
Computer Tape, Certificate, oral instructions, writing or document reasonably
believed by it to be genuine and to have been signed (in the case of written
instructions or documents) or made by the proper person or persons and shall not
be held to have any notice of any change of authority of any person until
receipt of written notice thereof from the Fund or such person. Subject to the
standard of care set forth in Section 8.4, the Transfer Agent shall be similarly
protected in processing Share certificates which it reasonably believes to bear
the proper manual or facsimile signatures of the Officers of the Fund and the
proper countersignature of the Transfer Agent or any prior transfer agent.
8.2. The Transfer Agent covenants that it shall carry out its
responsibilities under this Agreement in accordance and compliance with the
provisions of applicable laws and regulations governing its operation as a
transfer agent.
8.3. The Transfer Agent shall keep and maintain on behalf of the Fund such
records which the Fund or the Transfer Agent is, or may be, required to keep and
maintain pursuant to any applicable statutes, rules and regulations, including
without limitation Rule 31a-1 under the Investment Company Act of 1940, relating
to the maintenance of records in connection with the services to be provided
hereunder. The Transfer Agent agrees to make such records available for
inspection by the Fund at reasonable times and otherwise to keep confidential
all records and other information relative to the Fund and its shareholders,
except when the Transfer Agent reasonably believes it has been requested to
divulge
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such information by duly-constituted authorities or court process, or requested
by a shareholder with respect to information concerning an account as to which
such shareholder has either a legal or beneficial interest or when requested by
the Fund, the shareholder, or the dealer of record as to such account.
8.4 (a) The Transfer Agent shall not be liable for any loss or damage,
including, without limitation, attorneys' fees, expenses and court costs,
resulting from the Transfer Agent's actions or omissions to act under or in
connection with this Agreement and its duties and responsibilities hereunder,
except for any loss or damage arising out of its own failure to act in good
faith, or its negligence or willful misfeasance.
(b) The Transfer Agent shall, provided such coverage is readily
available to the Transfer Agent at reasonable rates and upon reasonable terms
and conditions, maintain an insurance policy or surety bond, in the face amount
of $10 million per covered transaction against losses suffered by the Transfer
Agent in excess of the policy deductibles arising from errors or omission on the
part of the Transfer Agent in carrying out its responsibilities under this
Agreement and other agreements. The Transfer Agent shall upon request, furnish
promptly to the Fund copies of all insurance policies maintained pursuant to
this Section 8.4(b) that have not previously been furnished to the Fund.
(c) Any costs or losses incurred by the Fund for the processing of
any purchase, redemption, exchange or other share transactions at a price per
share other than the price per share applicable to the effective date of the
transaction (the foregoing being generally referred to herein as "as of"
transactions) will be handled in the following manner:
1. For each calendar year, if all "as of" transactions for the year
resulting from the actions or inactions of the Transfer Agent,
taken in the aggregate, result in a net loss to the Fund ("net
loss"), Transfer Agent will reimburse the Fund for such net loss,
except to the extent that such net loss may be offset by
application of a "net benefit" to the Fund carried over from
prior calendar years pursuant to sub-paragraph 2 immediately
below.
2. For each calendar year, if all "as of" transactions for the year
resulting from the actions or inactions of the Transfer Agent,
taken in the aggregate, result in a net benefit to the Fund ("net
benefit"), the Fund shall not reimburse the Transfer Agent for
the amount of such net benefit; however, any "net benefit" for
any calendar year may be used to offset, in whole or in part, any
"net loss" suffered by the Fund in any future calendar year so as
to reduce the amount by which the Transfer Agent shall be
required to reimburse the Fund for such "net loss" in such year
pursuant to sub-paragraph 1 immediately above.
3. Any "net loss" for which the Transfer Agent reimburses the Fund
in any calendar year shall not be carried over into future years
so as to offset any "net benefit" in such future years.
8.5 The Fund shall indemnify and exonerate, save and hold harmless the
Transfer Agent and its officers, directors, employees and agents (hereinafter
the Transfer Agent and such persons are referred to as "Indemnitees") from and
against any and all liabilities or losses arising from claims or
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demands (whether with or without basis in fact or law), and from any and all
expenses (including, without limitation, reasonable attorney's fees, expenses
and court costs associated with defending against such claims and demands,) of
any nature which any Indemnitee may sustain or incur or which may be asserted
against any Indemnitee by any person arising out of or in any manner related to
any action taken or omitted to be taken by the Transfer Agent in good faith and
without negligence or willful misconduct in reasonable reliance upon (i) any
provision of this Agreement; (ii) the Prospectus; (iii) any instruction or order
including, without limitation, any Computer Tape reasonably believed by the
Transfer Agent to have been received from an Approved Institution (or the
Distributor or its agent acting on behalf of such Approved Institution); (iv)
any instrument or order reasonably believed by the Transfer Agent to be genuine
and to be signed, countersigned or executed by any duly authorized Officer, (v)
any Certificate or other instructions of an Officer, (vi) any opinion of legal
counsel for the Fund; (vii) any records or data supplied by the Fund's prior
transfer agent; or (viii) any order of any court, arbitration panel or other
judicial entity.
8.6. At any time the Transfer Agent may apply to an Officer of the Fund for
written instructions with respect to any matters arising in connection with the
Transfer Agent's duties and obligations under this Agreement, and the Transfer
Agent shall not be liable for any action taken or omitted by it in good faith
and without negligence or willful misconduct in accordance with such written
instructions. The Transfer Agent may consult with counsel to the Fund, at the
expense of the Fund and shall be fully protected with respect to anything done
or omitted by it in good faith and without negligence or willful misfeasance in
accordance with the advice or opinion of counsel to the Fund. Such application
by the Transfer Agent for written instructions from an Officer of the Fund may,
at the option of the Transfer Agent, set forth in writing any action proposed to
be taken or omitted by the Transfer Agent with respect to its duties or
obligations under this Agreement and the date on and/or after which such action
shall be taken, and the Transfer Agent shall not be liable (other than for its
bad faith, negligence or willful misfeasance) for any action taken or omitted in
accordance with a proposal included in any such application on or after the date
specified therein unless, prior to taking or omitting any such action, the
Transfer Agent has received written instructions in response to such application
specifying the action to be taken or omitted.
8.7. Any report, confirmation or other document furnished to the Fund or to
an Approved Institution as part of the Transfer Agent's responsibilities under
this Agreement shall be deemed final and conclusive on the 8th Business Day
after such report, confirmation or document has been furnished to the Fund or
Approved Institution, as the case may be, and the Transfer Agent shall not be
liable to the Fund or such Approved Institution under this Agreement as to any
error or omission in such report, confirmation or document that is not reported
to the Transfer Agent within such 7-day period.
8.8. The Transfer Agent shall deliver Share certificates by courier or by
certified or registered mail to the shareholder's address in the records of the
Transfer Agent. The Transfer Agent shall advise the Fund of any Share
certificates returned as undeliverable after being transmitted by courier or
mailed as herein provided for.
8.9. The Transfer Agent may issue new Share certificates in place of Share
certificates represented to have been lost, stolen, or destroyed upon receiving
instructions satisfactory to the Transfer Agent. If the Transfer Agent receives
written notification from the owner of the lost, destroyed, or stolen Share
certificate within a reasonable time after the owner has notice of such loss,
destruction or
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theft, the Transfer Agent shall issue a replacement Share certificate upon
receipt of an affidavit or affidavits of loss or nonreceipt and an indemnity
agreement executed by the registered owner or his legal representative, and
supported (a) in the case of a certificate having a value at the time of
replacement of less than $100, by a fixed penalty surety bond for twice the
then-current market value of Shares represented by said certificate and (b) in
the case of a certificate having a value at time of replacement of $100 or more,
by an open penalty bond, in form satisfactory to the Transfer Agent or (c) by
such other documentation or reasonable assurances in a particular case as may be
set forth in a Certificate. If the Fund receives such written notification from
the owner of the lost, destroyed or stolen Share certificate within a reasonable
time after the owner has notice of it, the Fund shall promptly notify the
Transfer Agent. The Transfer Agent may issue new Share certificates in exchange
for, and upon surrender of, mutilated Share certificates.
8.10. The Transfer Agent will supply shareholder lists to the Fund from
time to time upon receiving a request therefor from an Officer of the Fund.
8.11. At the request of an Officer, the Transfer Agent will address and
mail such appropriate notices to shareholders as to the Fund may direct, at the
Fund's expense.
8.12. Notwithstanding any of the foregoing provisions of this Agreement,
the Transfer Agent shall be under no duty or obligation to inquire into, and
shall not be liable for:
(a) The legality of the issue or sale of any Shares, the sufficiency
of the amount to be received therefor, or the authority of an Approved
Institution or of the Fund, as the case may be, to request such sale or
issuance;
(b) The legality of a transfer, exchange or of a redemption of any
Shares by an Approved Institution, the propriety of the amount to be paid
therefor, or the authority of an Approved Institution to request such transfer,
exchange or redemption;
(c) The legality of the declaration of any dividend or capital gains
distribution by the Fund, or the legality of the issue of any Shares in payment
of any Share dividend or distribution; or
(d) The legality of any recapitalization or readjustment of the
Shares.
8.13. The Transfer Agent shall be entitled to receive, and the Fund hereby
agrees to pay to the Transfer Agent for its performance hereunder, including its
performance of the duties and functions set forth in Appendix B hereto, (i) its
reasonable out-of-pocket expenses (including without limitation legal expenses,
court costs, and attorney's fees associated with litigation or arbitration)
incurred in connection with this Agreement and its performance hereunder and
(ii) such compensation as is specified in Appendix C hereto as such fees may be
amended from time to time by agreement in writing by the Transfer Agent and the
Fund.
8.14. The Transfer Agent shall have no duties or responsibilities
whatsoever except such duties and responsibilities as are specifically set forth
in this Agreement, and no covenant or obligation shall be implied in this
Agreement against the Transfer Agent.
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8.15. The Transfer Agent shall indemnify and exonerate, save and hold
harmless the Fund, and its officers, directors, employees and agents, from and
against any and all liabilities or losses arising from claims and demands
(whether with or without basis in fact or law), and from any and all expenses
(including, without limitation, reasonable attorney's fees, expenses and court
costs), of any nature which the Fund or any officer, director, employee or agent
may sustain or incur or which may be asserted against them by any person arising
out of or in any manner related to the Transfer Agent's failure to comply with
the terms of this Agreement or which arise out of the Transfer Agent's
negligence or willful misconduct provided, however, that the Transfer Agent
shall not indemnify and exonerate, save and hold harmless, the Fund, its
officers, directors, employees, and agents for anything arising out of or in any
manner related to the Fund's failure to comply with the terms of this Agreement
or which arises out of the Fund's, or any officer's, director's, employee's or
agent's (other than the Transfer Agent) negligence or willful misconduct or the
Transfer Agent's reliance on information or instructions received from, or
issued on behalf of, the Fund.
ARTICLE 9
TERMINATION
9.1. The initial term of this Agreement shall commence on the Effective
Date and shall continue through June 5, 1998 (the "Initial Term") unless earlier
terminated pursuant to Section 9.2. Thereafter, this Agreement shall continue
from day to day thereafter (such period shall be referred to as the "Renewal
Term"), until either of the parties hereto terminates this Agreement by giving
at least 30 days prior written notice to the other party, whereupon this
Agreement shall terminate automatically upon the earlier of the expiration of
the 30 day period specified in the written notice or on August 1, 1998. For
every business day which the Agreement continues past June 30, 1998, the Fund
shall pay to the Transfer Agent a daily processing fee of $5,000. This daily
processing fee is in addition to any other fees payable under this Agreement and
it is agreed by the Fund and the transfer Agent that this daily processing fee
is not a penalty but is a reasonable estimate of the expenses that would be
incurred by the Transfer Agent in continuing to offer the Fund the services
provided for under this Agreement. In no event shall the term of this
Agreement, including any "Renewal Term" continue past August 1, 1998. In the
event such notice of termination is given by the Fund, it shall be accompanied
by a copy of a resolution of the Board of Directors of the Fund, certified by
the Secretary or any Assistant Secretary, electing to terminate this Agreement.
In the event such notice is given by the Transfer Agent, the Fund shall, on or
before the termination date, deliver to the Transfer Agent a copy of a
resolution of its Board of Directors certified by the Secretary or any Assistant
Secretary designating a successor transfer agent or transfer agents. In the
absence of such designation by the Fund, the Transfer Agent may designate a
successor transfer agent. If the Fund fails to designate a successor transfer
agent, the Fund shall, upon the date specified for termination of this Agreement
and delivery of the records maintained hereunder, be deemed to be its own
transfer agent and the Transfer Agent shall thereby be relieved of all duties
and responsibilities pursuant to this Agreement.
9.2 Notwithstanding Section 9.1 hereof, this Agreement may be terminated
at any time by the Fund upon not less than 60 days' written notice from the Fund
to the Transfer Agent notifying the Transfer Agent: (i) if a majority of the
Directors who are not "interested persons" (as that term is defined in the
Investment Company Act of 1940) upon completion of the procedures set forth
below have reasonably made a specific finding that the Transfer Agent has failed
on a continuing basis to perform
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its duties pursuant to this Agreement in a satisfactory manner consistent with
then current industry standards and practices or (ii) if there is instituted or
pending an action or proceeding by or before any court or governmental,
administrative or regulatory agency against or involving the parties hereto,
their affiliates, the Directors of the Fund or any of them and challenging the
making of this Agreement or alleging that any material term of the Agreement is
contrary to law or any governmental agency has threatened in writing to commence
such an action or proceeding. Prior to any termination pursuant to clause (i),
the Board of Directors of the Fund shall provide the Transfer Agent with a
written statement of the specific aspects of the Transfer Agent's performance of
its duties that are unsatisfactory, the specific incident or incidents giving
rise to the Board of Directors' conclusion and any written material that the
Board of Directors' relied upon in making such a determination. The Transfer
Agent shall have 30 days to respond to such written statement. If no response is
made, or if, after reasonable consideration of the response of the Transfer
Agent, such response is unsatisfactory to the Board of Directors, then the Board
of Directors of the Fund may terminate the Agreement pursuant to clause (i)
thereof. For purposes of making a finding as contemplated by clause (i) above,
the Transfer Agent shall be, absent unusual circumstances, conclusively presumed
to have failed on a continuing basis to perform its duties pursuant to this
Agreement in a satisfactory manner consistent with the industry standards and
practices prevailing on the date of this Agreement if any of the following
should occur:
(1) The Transfer Agent through its fault is unable (more than once in
a twelve-month period) to process daily activity for any two successive Business
Days and to confirm information generated by such activity by the fourth
Business Day following the later of such two Business Days. (For example,
assuming no holidays, daily activity on a Monday and Tuesday is not confirmed by
the following Monday.)
(2) The Transfer Agent through its fault is unable (more than two
times in any twelve-month period) to provide system access to personnel of an
Approved Institution for six hours between 9:00 a.m. and 5:00 p.m. Chicago time
on three successive Business Days.
(3) The Transfer Agent through its fault is unable (more than twice in
any one year) to create and mail dividend checks within four Business Days after
the Fund's payable date (assuming that the required information has been
furnished to the Transfer Agent on the record date).
(4) The Transfer Agent through its fault is unable to instruct various
financial institutions on daily money movements from and to the Funds'
Custodians for two successive Business Days by the Fourth Business Day following
the later of such two Business Days. (For this purpose, instructions based on
reasonable estimates are treated as fulfilling the Transfer Agent's obligations
hereunder.)
(5) The Transfer Agent through its fault is unable (more than twice in
any twelve-month period) to transmit dividend activity to an Approved
Institution within five Business days from the relevant Fund's payable date.
For purposes of the foregoing, an event described in any of the foregoing
clauses 1 through 5 shall be deemed not to have occurred if the Transfer Agent's
inability to perform is a result, directly or indirectly of faulty or inadequate
performance by service provider including, but not limited to, telephone
companies, pricing services, Nuveen & Co., Approved Institutions, and banks
other than the Transfer
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Agent and its agents and employees or a result, directly or indirectly, of other
events out of the Transfer Agent's reasonable control. Also for the purposes of
the foregoing, if the Transfer Agent processes transactions or instructions (as
the case may be) as required hereunder within the time periods indicated but
more than 10% of the transactions, checks or instructions, as the case may be,
are inaccurate in any material respect, and are not corrected within the
requisite time then the Transfer Agent shall be deemed to have been unable to
perform the relevant service within the requisite time.
9.3. In the event the Fund or the Transfer Agent terminates the Transfer
Agency Agreement at any time, the Fund shall be responsible for the payment of
any and all additional fees and expenses of the Transfer Agent relating to the
conversion to the new Transfer Agent. Included in these expenses will be any
travel/entertainment expenses incurred by the Transfer Agent related to
preparation for the conversion that exceed $2,000 in the aggregate per month.
Upon termination of this Agreement, the Transfer Agent will facilitate transfer
of the records maintained by it hereunder and cooperate with such successor
transfer agent as may be designated pursuant to the provisions of Section 9.1
hereof with respect to delivery of such records and assumption by such successor
transfer agent of its duties. The records will be delivered to the successor
transfer agent in the format in which they are maintained and all shareholder
records currently maintained in the ORIN computer system or on imaging discs
will be delivered in either their current format or at the expense of the Fund
will be converted into another format acceptable to the Fund and Transfer Agent.
The Fund must request the conversion of the imaging files to another acceptable
format on or before January 1, 1998 in order to allow the Transfer Agent
sufficient time to convert the records. If no such request is made on or before
that date, the shareholder records will be delivered in the format in which they
are currently stored by the Transfer Agent. The Fund shall be responsible for
any and all expenses related to the delivery of all records and, if applicable,
the conversion of the shareholder records from their current format to any other
format as elected by the Fund.
Upon termination of the Transfer Agency Agreement, the Transfer Agent shall
assist the Fund in transferring any bank accounts currently existing for the
payment of dividends and distributions or redemption of shares of the Fund to
the successor transfer agent. If the Fund elects not to transfer those
accounts, the Transfer Agent shall maintain the accounts for a period of 12
months from termination of this Agreement and then close the accounts and return
any remaining monies in those accounts to the Fund. The Fund shall be
responsible for keeping sufficient funds in those accounts to clear any
outstanding checks and the Transfer Agent shall have no responsibility for any
checks that do not clear that account for any reason.
Upon the termination of the Transfer Agency Agreement and for a period of three
(3) months thereafter, the Transfer Agent shall identify a specific person to
help interpret records for the Fund or the successor transfer agent. All
requests from the Fund or the successor transfer agent shall be directed to that
person. The Fund shall be responsible for any and all expenses related to such
assistance.
Upon termination of the Transfer Agency Agreement, the Fund and/or the successor
transfer agent shall be responsible for any and all regulatory and/or tax
reporting that may be required for the calendar year during which the
termination of the Agreement occurs. The Transfer Agent will account to the
successor transfer agent or the Fund for any withholding liability accrued for
any taxes withheld during any prior of that year in which it acted as transfer
agent for the Fund, including but not limited to TEFRA.
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ARTICLE 10
ADDITIONAL SERIES
10.1. In the event that the Fund establishes one or more Series in
addition to the Series named herein with respect to which it desires to have the
Transfer Agent render services as transfer agent under the terms hereof, it
shall so notify the Transfer Agent in writing at least 60 days in advance of the
sale of Shares of such Series and shall deliver to the Transfer Agent the
documents listed in Section 2.3 with respect to such Series. Unless the
Transfer Agent declines in writing within a reasonable time to provide such
services, the Shares of such Series shall be subject to this Agreement.
ARTICLE 11
MISCELLANEOUS
11.1. The Fund agrees that prior to effecting any change in the Prospectus
which would increase or alter the duties and obligations of the Transfer Agent
hereunder, it shall advise the Transfer Agent of such proposed change at least
30 days prior to the intended date of the same, and shall proceed with such
change only if it shall have received the written consent of the Transfer Agent
hereto, and shall have received and agreed to the schedule of charges, if any,
specified by the Transfer Agent necessary to effect such change.
11.2. Any notice or other instrument in writing, authorized or required by
this Agreement to be given to the Fund shall be sufficiently given if addressed
to the Fund and mailed or delivered to it at its office at 333 West Wacker
Drive, Chicago, Illinois 60606, Attention: Mr. Stuart Rogers, or at such other
place as the Fund may from time to time designate in writing.
11.3. Any notice or other instrument in writing, authorized or required by
this Agreement to be given to the Transfer Agent shall be sufficiently given if
addressed to the Transfer Agent, Attention: President, and mailed or delivered
to it at its office at 6803 South Tucson Way, Englewood, Colorado 80112, with a
copy to be sent to Andrew J. Donohue at OppenheimerFunds, Inc. Two World Trade
Center, New York, NY 10048 or at such other place as the Transfer Agent may from
time to time designate in writing.
11.4. This Agreement may not be amended or modified in any manner except
by a written agreement executed by both parties.
11.5. This Agreement shall extend to and shall be binding upon the parties
hereto, and their respective successors and assigns; provided, however, that
this Agreement shall not be assignable by the Fund or the Transfer Agent without
the written consent of the other party. A change of ownership of the Transfer
Agent as a result of an internal reorganization of the Transfer Agent, its
parent corporation or affiliates shall not be deemed to be an "assignment"
hereunder. A change in "control" (as defined under the Investment Company Act
of 1940) of the Transfer Agent's parent corporation shall not be deemed an
"assignment" hereunder. A sale of a controlling interest in the capital stock
or of all or substantially all of the assets of the Transfer Agent to a third
party unaffiliated with the Transfer Agent or its parent corporation shall be
deemed to be an "assignment" hereunder.
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11.6. This Agreement shall be governed by and construed in accordance with
the laws of the State of Colorado applicable to agreements to be wholly
performed in that state.
11.7. This Agreement may be executed in any number of counterparts each of
which shall be deemed to be an original; but such counterparts shall, together,
constitute only one instrument.
11.8. The provisions of this Agreement are intended to benefit only the
Transfer Agent and the Fund, and no rights shall be granted to any other person
by virtue of this Agreement.
11.9. Neither the Fund nor the Transfer Agent will be liable or
responsible hereunder for delays or errors by reason of circumstances reasonably
beyond its control, including, without limitation, acts of civil or military
authority, national emergencies, labor difficulties, fire, mechanical breakdown,
flood, catastrophe, acts of God, insurrection, war, riots, or failure of
transportation, communication or power supply.
11.10. The Fund shall establish and maintain such bank accounts, with such
bank or banks as are selected by the Fund, as are necessary so that the Transfer
Agent may perform the services to be provided hereunder. To the extent that
performance of such services shall require the Transfer Agent directly to
disburse amounts for payments of dividends, redemption proceeds or other
purposes, the Fund shall provide such bank or banks with all instructions and
authorizations necessary to evidence the Transfer Agent's authority to effect
such transactions.
Page 19
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their respective officers, thereunto duly authorized, as of the day
and year first above written.
Attest: NUVEEN CALIFORNIA TAX-FREE FUND, INC.
/s/ Gifford R. Zimmerman Asst Secy By: /s/ Anna Kucinskis VP
- ------------------------------------- -----------------------------------
Name Title Name Title
Attest: SHAREHOLDER SERVICES, INC.
/s/ Kathryn L. Kluck AVP By: /s/ Barbara Hennigar
- ------------------------------------- ------------------------------------
Name Title Barbara Hennigar, President
Page 20
<PAGE>
NUVEEN TAX-FREE MONEY MARKET FUND, INC.
TRANSFER AGENCY AGREEMENT
Appendix A
Officer's Certificate
I, ____________________________, the Secretary of NUVEEN TAX-FREE MONEY
MARKET FUND, INC., a Minnesota corporation (the "Fund"), do hereby certify that:
The following individuals have been duly authorized by the Directors of the
Fund in conformity with the Fund's Articles of Incorporation and By-Laws to
execute any Certificate, instruction, notice or other instrument, including an
amendment to Appendix B to this Agreement, or to give oral instructions on
behalf of the Fund, and the signatures set forth opposite their respective names
are their true and correct signatures.
NAME TITLE SIGNATURE
- ---- ----- ---------
___________________ Chairman _____________________
___________________ President _____________________
___________________ Secretary _____________________
___________________ Trustee _____________________
___________________ Vice President _____________________
___________________ _______________ _____________________
___________________ _______________ _____________________
___________________ _______________ _____________________
___________________ _______________ _____________________
___________________ _______________ _____________________
___________________ _______________ _____________________
___________________ _______________ _____________________
________________________________, Secretary
Name
Page 21
<PAGE>
NUVEEN TAX-FREE MONEY MARKET FUND, INC.
TRANSFER AGENCY AGREEMENT
Appendix B
Transfer Agent Services
SERVICE: SSI WILL:
- ------- --------
New Account Set-Ups Process new sales applications. Place
telephone calls to account representatives as
needed to clarify instructions for new
account set-ups.
Purchases - New and Subsequent Process mailed-in, lockbox, bank wire, list
billing, ACH, and telephone payments as
received. Coordinate and balance UIT
reinvestment payments.
Transfers Negotiate and process all transfer requests.
Exchanges - Mail and Telephone Negotiate and process exchange requests.
Record telephone exchange requests.
Redemptions - Mail and Telephone Negotiate and process mailed in, ACH and
telephone redemption requests. Record
telephone redemption requests.
Wire Order Purchases and Process wire order purchases and redemptions
Redemptions for designated settlement period accepted on
recorded telephone lines and via NSCC
FUND/SERV. Process purchases and redemptions
for same day wire settlement.
Account Maintenance Process all written and telephone
maintenance. For address changes, prepare
(Address Changes, Dividend and mail a notice of the address change to
Option Changes, Name Changes, the former address.
Broker or Dealer Changes,
etc.)
Certificate Issuances Issue certificates as requested by
shareholders.
Telephone Services Provide efficient handling of all incoming
shareholder and broker/dealer telephone
calls. Make outgoing clarification
calls/coordination with Chase on UIT/ETF
consolidations. Provide timely problem
resolution for all servicing calls. Provide
automated trend reporting.
Page 1
<PAGE>
SERVICE: SSI WILL:
- ------- --------
Correspondence with Shareholders Respond to all shareholder and broker/dealer
and Broker/Dealers written inquiries. Document all
correspondence affecting shareholder accounts
on the Shareholder Accounting System.
Shareholder Confirms Prepare and mail confirmations of daily
(Daily/Monthly/Quarterly/Annual) account activity. Prepare and mail monthly,
quarterly, and annual confirmations as
directed by the fund.
Dealer Confirms Prepare and mail weekly dealer confirmations
listing activity on client accounts as
directed by the Fund.
Distribution Disbursements Prepare and mail cash distribution checks.
Process reinvested distributions.
Commission Statements Provide bimonthly commission statements
listing each purchase and the portion of the
sales charge paid to the broker/dealer.
Commission Checks Provide bimonthly commission checks to
broker/dealers.
Daily Transmission of Reports Transmit daily transaction activity reports,
balancing reports, and sales information via
telephone lines to a printer at Nuveen.
Fund Summary Sheets Prepare daily reports that summarize by type
of transaction all capital stock activity for
each fund. Transmit/download wire/capital
stock activity information to Chase.
Sales Reporting Provide daily, weekly, monthly, quarterly,
and annual reports of sales information.
12b-1 Reporting Complete 12b-1 processing including
calculating the 12b-1 payment amounts and
sending checks to the broker/dealer home
offices. Provide a listing broken down by
sales representative within each branch.
Invalid Taxpayer Identification Mail Forms W-9 as required to validate
Number Solicitation and taxpayer identification numbers; institute
Backup Withholding backup withholding as required by IRS
regulations, and timely send all notices.
Regulatory Reporting Compute, prepare, and mail all necessary
reports to shareholders, federal, and/or
state authorities (Forms 1099-DIV, 1099-B,
and 1042S).
Page 2
<PAGE>
SERVICE: SSI WILL:
- ------- --------
Front-End Imaging of Documents Front-end Image all incoming documents.
Cost Basis Reporting Provide cost basis information as available
to shareholders annually for use in
determining capital gains and losses.
Blue Sky Reporting Provide monthly report of purchases and
redemptions by state.
Financial Reporting Mailings Provide mail handling for 2 financial reports
per fund per year to Nuveen shareholders.
Prospectus Mailings Provide mail handling for 1 prospectus per
fund per year to Nuveen shareholders.
Proxy Solicitation and Tabulation Perform 1 proxy solicitation and tabulation
per fund per year.
Networking Accounts Provide transmission and appropriate services
for each network level.
Cash Availability Transmit mutual fund activity to designated
entity on a daily basis for cash availability
purposes.
Commission/12b-1 Balancing Provide balancing reports for commission and
12b-1 payments.
Page 3
<PAGE>
NUVEEN TAX-FREE MONEY MARKET FUND, INC.
TRANSFER AGENCY AGREEMENT
Appendix C
Fee Schedule
The Transfer Agent will provide the transfer agent services listed on Appendix B
for the Fund at the rates set forth below:
Annual Transfer Agent Fees:
- --------------------------
From July 1, 1997 through termination
Annual-Per-Account Fees *
------------------------
First 20,000 Accts.** $ 24.80 per account
Next 30,000 Accts.** $ 22.50 per account
Over 50,000 Accts.** $ 21.40 per account
Out-Of-Pocket Expenses:
- ----------------------
Out-of-pocket expenses may be incurred by either the Fund or the Transfer
Agent and are not included in the annual Transfer Agent Fees. Those out-of-
pocket expenses directly incurred by the Transfer Agent will be billed to the
Fund on a monthly basis. These out-of-pocket expenses include, but are not
limited to, the printing of forms, envelopes, postage and proxy solicitation
fees for the shareholder mailings, costs of abandoned property reports or
searches for missing or inactive shareholders, equipment and system access
costs, microfilm, telephone line and usage charges, overnight express mail
charges, check signature plates and stamps, and programmer/analyst and testing
technician time beyond that agreed to in writing. Bank charges and earnings
credit will be billed directly to the Fund by United Missouri Bank (or other
banks). The Transfer Agent may require the prior payment of anticipated out-of-
pocket expenses, from time to time.
_________________
* Payable on a monthly basis for each non-retirement plan account in existence
at the end of the month. Retirement Plan accounts may be subject to a separate
fee schedule to be negotiated.
** The determination of the number of accounts for purposes of determining the
per account fee shall be based on all Nuveen Funds using the same fee schedule
and shall be allocated on a Fund by Fund basis in a manner determined by the
Transfer Agent based on the number of accounts in each fund.
The Transfer Agent shall, from time to time, but no more frequently than
monthly, send an invoice to the Fund itemizing the compensation and expense
reimbursement. The Fund shall pay such invoice (except to the extent that the
amount thereof is in dispute) by wire not later than 30 days after receipt of
the invoice.
<PAGE>
Exhibit 10
June 10, 1998
(202) 467-7662
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 special 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 Fund's shares of common stock, par value $.01 (the
"Shares"). This opinion is being delivered to you in connection with the Fund's
filing of Post-Effective Amendment No. 13 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 certification of the Minnesota State Department of Assessments and
Taxation (the "Department") as to the existence and good standing of
the Fund;
(b) copies, certified by the Department, of the Fund's Articles of
Incorporation and of all amendments and all supplements thereto (the
"Charter");
<PAGE>
Nuveen Tax-Free Money Market Fund, Inc.
June 10, 1998
Page 2
(c) a certificate executed by Karen L. Healy, the Assistant Secretary of
the Fund, certifying as to, and attaching copies of, the Fund's
Charter and By-Laws, as amended (the "By-Laws"), and certain
resolutions adopted by the Board of Directors of the Fund authorizing
the issuance of the Shares; and
(d) a printer's proof, dated June 3, 1998, 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, all authenticity of all original or certified copies, and the
conformity to original or certified copies of all copies submitted to us as
conformed or reproduced copies. As to various questions of fact relevant to such
opinion, we have relied upon, and assume the accuracy of, certificates and oral
or written statements of public officials and officers or representatives of the
Fund. We have assumed that the Amendment, as filed with the Securities and
Exchange Commission, will be in substantially the form of the printer's proof
referred to in paragraph (d) above.
Based upon, and subject to, the limitations set forth herein, we are of the
opinion that the Shares, when issued and sold in accordance with the Fund's
Charter and for the consideration described in the Registration Statement, will
be legally issued, fully paid and nonassessable under the laws of the State of
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,
/s/ Morgan, Lewis & Bockius LLP
MORGAN, LEWIS & BOCKIUS LLP
<PAGE>
EXHIBIT 11
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the use of our report
dated April 15, 1998, 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.
ARTHUR ANDERSEN LLP
Chicago, Illinois
June 8, 1998
<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 2/28/98:
i. Massachusetts:
.0005281 365
All Series (----------) X --- = 2.75%
1.00 7 ====
ii. New York:
Service and Distribution .0005450 365
Plan Series (----------) X --- = 2.84%
1.00 7 ====
Institutional .0005436 365
Series (----------) X --- = 2.83%
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 2/28/98:
i. Massachusetts:
.0005281 /365/7/
All Series [ (----------) + 1 ] - 1 = 2.79%
1.00 =====
ii. New York:
Service and Distribution .0005450 /365/7/
Plan Series [ (----------) + 1 ] - 1 = 2.88%
1.00 =====
.0005436 /365/7/
Institutional Series [ (----------) + 1 ] - 1 = 2.87%
1.00 =====
1
<PAGE>
III. Taxable Equivalent Yield
Based on a combined federal and state income tax rate of 46.8% for Massachu-
setts and 43.7% for New York, the Taxable Equivalent Yields for the Massachu-
setts and New York Funds for the Seven Day Period Ended 2/28/98 are:
Massachusetts:
2.75%
All Series -------- = 5.17%
1 - .468 =====
New York:
2.84%
Distribution and Service Plan Series: -------- = 5.04%
1 - .437 =====
2.83%
Institutional Series: -------- = 5.03%
1 - .437 =====
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> MASSACHUSETTS MONEY MARKET SERVICE
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> FEB-28-1998
<PERIOD-START> MAR-01-1997
<PERIOD-END> FEB-28-1998
<INVESTMENTS-AT-COST> 36315
<INVESTMENTS-AT-VALUE> 36315
<RECEIVABLES> 403
<ASSETS-OTHER> 1070
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 37788
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 205
<TOTAL-LIABILITIES> 205
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 6085
<SHARES-COMMON-STOCK> 6085
<SHARES-COMMON-PRIOR> 9964
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 0
<NET-ASSETS> 6085
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 297
<OTHER-INCOME> 0
<EXPENSES-NET> 46
<NET-INVESTMENT-INCOME> 251
<REALIZED-GAINS-CURRENT> 0
<APPREC-INCREASE-CURRENT> 0
<NET-CHANGE-FROM-OPS> 251
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 251
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 11632
<NUMBER-OF-SHARES-REDEEMED> (15763)
<SHARES-REINVESTED> 253
<NET-CHANGE-IN-ASSETS> (3879)
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 33
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 74
<AVERAGE-NET-ASSETS> 8248
<PER-SHARE-NAV-BEGIN> 1.00
<PER-SHARE-NII> .030
<PER-SHARE-GAIN-APPREC> 0
<PER-SHARE-DIVIDEND> (.030)
<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> 012
<NAME> MASSACHUSETTS MONEY MARKET DISTRIBUTION
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> FEB-28-1998
<PERIOD-START> MAR-01-1997
<PERIOD-END> FEB-28-1998
<INVESTMENTS-AT-COST> 36315
<INVESTMENTS-AT-VALUE> 36315
<RECEIVABLES> 403
<ASSETS-OTHER> 1070
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 37788
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 205
<TOTAL-LIABILITIES> 205
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 25920
<SHARES-COMMON-STOCK> 25920
<SHARES-COMMON-PRIOR> 27083
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 0
<NET-ASSETS> 25920
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 976
<OTHER-INCOME> 0
<EXPENSES-NET> 149
<NET-INVESTMENT-INCOME> 827
<REALIZED-GAINS-CURRENT> 0
<APPREC-INCREASE-CURRENT> 0
<NET-CHANGE-FROM-OPS> 827
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 827
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 20107
<NUMBER-OF-SHARES-REDEEMED> (22082)
<SHARES-REINVESTED> 812
<NET-CHANGE-IN-ASSETS> (1163)
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 108
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 259
<AVERAGE-NET-ASSETS> 27108
<PER-SHARE-NAV-BEGIN> 1.00
<PER-SHARE-NII> .030
<PER-SHARE-GAIN-APPREC> 0
<PER-SHARE-DIVIDEND> (.030)
<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> 013
<NAME> MASSACHUSETTS MONEY MARKET INSTITUTIONAL
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> FEB-28-1998
<PERIOD-START> MAR-01-1997
<PERIOD-END> FEB-28-1998
<INVESTMENTS-AT-COST> 36315
<INVESTMENTS-AT-VALUE> 36315
<RECEIVABLES> 403
<ASSETS-OTHER> 1070
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 37788
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 205
<TOTAL-LIABILITIES> 205
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 5578
<SHARES-COMMON-STOCK> 5578
<SHARES-COMMON-PRIOR> 3977
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 0
<NET-ASSETS> 5578
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 168
<OTHER-INCOME> 0
<EXPENSES-NET> 26
<NET-INVESTMENT-INCOME> 142
<REALIZED-GAINS-CURRENT> 0
<APPREC-INCREASE-CURRENT> 0
<NET-CHANGE-FROM-OPS> 142
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 142
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 11349
<NUMBER-OF-SHARES-REDEEMED> (9770)
<SHARES-REINVESTED> 22
<NET-CHANGE-IN-ASSETS> 1600
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 19
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 32
<AVERAGE-NET-ASSETS> 4686
<PER-SHARE-NAV-BEGIN> 1.00
<PER-SHARE-NII> .030
<PER-SHARE-GAIN-APPREC> 0
<PER-SHARE-DIVIDEND> (.030)
<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 intirety by
references to such documents.
</LEGEND>
<SERIES>
<NUMBER> 021
<NAME> NEW YORK MONEY MARKT SERVICE
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> FEB-28-1998
<PERIOD-START> MAR-01-1997
<PERIOD-END> FEB-28-1998
<INVESTMENTS-AT-COST> 29347
<INVESTMENTS-AT-VALUE> 29347
<RECEIVABLES> 268
<ASSETS-OTHER> 796
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 30411
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 135
<TOTAL-LIABILITIES> 135
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 1406
<SHARES-COMMON-STOCK> 1406
<SHARES-COMMON-PRIOR> 414
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 0
<NET-ASSETS> 1406
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 20
<OTHER-INCOME> 0
<EXPENSES-NET> 3
<NET-INVESTMENT-INCOME> 17
<REALIZED-GAINS-CURRENT> 0
<APPREC-INCREASE-CURRENT> 0
<NET-CHANGE-FROM-OPS> 17
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 17
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 1015
<NUMBER-OF-SHARES-REDEEMED> (37)
<SHARES-REINVESTED> 13
<NET-CHANGE-IN-ASSETS> 991
<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> 7
<AVERAGE-NET-ASSETS> 1406
<PER-SHARE-NAV-BEGIN> 1.00
<PER-SHARE-NII> .03
<PER-SHARE-GAIN-APPREC> 0
<PER-SHARE-DIVIDEND> (.03)
<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 intirety by
references to such documents.
</LEGEND>
<SERIES>
<NUMBER> 022
<NAME> NEW YORK MONEY MARKET DISTRIBUTION
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> FEB-28-1998
<PERIOD-START> MAR-01-1997
<PERIOD-END> FEB-28-1998
<INVESTMENTS-AT-COST> 29347
<INVESTMENTS-AT-VALUE> 29347
<RECEIVABLES> 268
<ASSETS-OTHER> 796
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 30411
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 135
<TOTAL-LIABILITIES> 135
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 28854
<SHARES-COMMON-STOCK> 28854
<SHARES-COMMON-PRIOR> 26116
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 0
<NET-ASSETS> 28854
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 988
<OTHER-INCOME> 0
<EXPENSES-NET> 149
<NET-INVESTMENT-INCOME> 839
<REALIZED-GAINS-CURRENT> 0
<APPREC-INCREASE-CURRENT> 0
<NET-CHANGE-FROM-OPS> 839
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 839
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 14585
<NUMBER-OF-SHARES-REDEEMED> (12702)
<SHARES-REINVESTED> 855
<NET-CHANGE-IN-ASSETS> 2739
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 109
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 241
<AVERAGE-NET-ASSETS> 28854
<PER-SHARE-NAV-BEGIN> 1.00
<PER-SHARE-NII> .03
<PER-SHARE-GAIN-APPREC> 0
<PER-SHARE-DIVIDEND> (.03)
<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 intirety by
references to such documents.
</LEGEND>
<SERIES>
<NUMBER> 023
<NAME> NEW YORK MONEY MARKT INSTITUTIONAL
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> FEB-28-1998
<PERIOD-START> MAR-01-1997
<PERIOD-END> FEB-28-1998
<INVESTMENTS-AT-COST> 29347
<INVESTMENTS-AT-VALUE> 29347
<RECEIVABLES> 268
<ASSETS-OTHER> 796
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 30411
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 135
<TOTAL-LIABILITIES> 135
<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> 1
<AVERAGE-NET-ASSETS> 17
<PER-SHARE-NAV-BEGIN> 1.00
<PER-SHARE-NII> .03
<PER-SHARE-GAIN-APPREC> 0
<PER-SHARE-DIVIDEND> (.03)
<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, Gifford R. Zimmerman, 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 22, 1998, and (3) that
said resolution has not been amended or rescinded and remains in full force and
effect.
April 28, 1998
/s/ Gifford R. Zimmerman
-------------------------------
Gifford R. Zimmerman, Secretary
<PAGE>
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 Timothy R. Schwertfeger, Anthony T.
Dean, Bruce P. Bedford, 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, as fully to all intents and purposes as
he might or could do in person, and ratifying and confirming all that said
attorneys-in-fact and agents or any of them, or their or his substitute or
substitutes, may lawfully do or cause to be done by virtue thereof.
<PAGE>
Exhibit 99(c)
NUVEEN TAX-FREE MONEY MARKET FUND, INC.
------------------
POWER OF ATTORNEY
------------------
KNOW ALL MEN BY THESE PRESENTS, that the undersigned, a director of the above
referenced organization, hereby constitutes and appoints TIMOTHY R.
SCHWERTFEGER, ANTHONY T. DEAN, BRUCE P. BEDFORD, LARRY W. MARTIN, GIFFORD R.
ZIMMERMAN, AND THOMAS S. HARMAN each of them (with full power to each of them to
act alone) his true and lawful attorney-in-fact and agent, for him on his behalf
and in his name, place and stead, in any and all capacities, to sign, execute
and affix his seal thereto and file one or more Registration Statements on Form
N-1A, under the Securities Act of 1933, as amended, and the Investment Company
Act of 1940, as amended, including any amendment or amendments thereto, with all
exhibits, and any and all other documents required to be filed with any
regulatory authority, federal or state, without limitation, granting unto said
attorneys, and each of them, full power and authority to do and perform each and
every act and thing requisite and necessary to be done in order to effectuate
the same as fully to all intents and purposes as he might or could do if
personally present, hereby ratifying and confirming all that said attorneys-in-
fact and agents, or any of them, may lawfully do or cause to be done by virtue
hereof.
IN WITNESS WHEREOF, the undersigned director of the above-referenced
organization has hereunto set his hand this 1st day of July, 1997.
/s/ Judith M. Stockdale
-----------------------
STATE OF ILLINOIS )
)SS
COUNTY OF COOK )
On this 1st day of July, 1997, personally appeared before me, a Notary
Public in and for said County and State, the person named above who is known to
me to be the person whose name and signature is affixed to the foregoing Power
of Attorney and who acknowledged the same to be his voluntary act and deed for
the intent and purposes therein set forth.
- --------------------------------
"OFFICIAL SEAL"
VIRGINIA L. CORCORAN
Notary Public, State of Illinois
My Commission Expires 10/26/97
- --------------------------------
/s/ Virginia L. Corcoran
--------------------------------
My Commission Expires: 10/26/97
