<PAGE>
As filed with the Securities and Exchange Commission on May 13, 1999.
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form N-1A
REGISTRATION STATEMENT UNDER THE
SECURITIES ACT OF 1933
[_]
Registration Statement No. 33-8371 [_]
Pre-Effective Amendment No. [_]
--
[X]
Post-Effective Amendment No. 14
REGISTRATION STATEMENT UNDER THE
INVESTMENT COMPANY ACT OF 1940
[_]
Registration Statement No. 811-4822 [_]
[X]
Amendment No. 15
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 pursuant
to paragraph (b)
[_] on June 25, 1999 pursuant to para-
graph (a)(1)
[X]
on (date) pursuant to paragraph (b)
75 days after filing pursuant to par-
[_] [_] agraph (a)(2)
60 days after filing pursuant to paragraph (a)(1)
[_] on (date) pursuant to paragraph
[_] (a)(2) of Rule 485.
If appropriate, check the following box:
[_]This post-effective amendment designates a new effective date for a previ-
ously filed post-effective amendment.
<PAGE>
CONTENTS
OF
POST-EFFECTIVE AMENDMENT NO. 14
TO
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
FILE NO. 33-8371
AND
AMENDMENT NO. 15
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
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>
PART A--PROSPECTUS
NUVEEN TAX-FREE MONEY MARKET FUND
333 West Wacker Drive
Chicago, Illinois 60606
<PAGE>
June 25, 1999 Prospectus
Mutual Funds
Nuveen New York Tax-Exempt
Money Market Fund
For investors
seeking
attractive triple
tax-free
income
and
stability
of principal
Featuring Portfolio Management By Nuveen Investment Advisory Services
A Premier Adviser/SM/ for Income Investing
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The Securities and Exchange Commission has not
approved or disapproved these securities or
passed upon the adequacy of this prospectus. Any
representation to the contrary is a criminal offense.
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<PAGE>
Table of Contents
Section 1 The Fund
This section provides you with an overview of the fund including investment
objectives, portfolio holdings and historical performance information.
Introduction 1
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Nuveen New York Tax-Exempt Money Market Fund 2
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Section 2 How We Manage Your Money
This section gives you a detailed discussion of our investment and risk
management strategies.
Who Manages the Fund 4
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What Securities We Invest In 4
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How We Select Investments 5
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How We Manage Risk 6
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Section 3 How You Can Buy and Sell Shares
This section provides the information you need to move money into and out of
your account.
How to Buy Shares 8
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Systematic Investing 9
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Special Services 9
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How to Sell Shares 10
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Section 4 General Information
This section summarizes the fund's distribution policies and other general
information.
Dividends, Distributions and Taxes 12
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Taxes and Tax Reporting 12
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Service Plan 13
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Net Asset Value 14
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Fund Service Providers 14
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Year 2000 14
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Section 5 Financial Highlights
This section provides the fund's financial performance
for the past five years. 15
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We have used the icons below throughout this prospectus to make it easy for you
to find the type of information you need.
Investment
Strategy
Risks
Fees, Charges
and Expenses
Shareholder
Instructions
Performance and
Current Portfolio
Information
<PAGE>
Section 1 The Fund June 25, 1999
Nuveen New York Tax-Exempt Money Market Fund
Introduction
This prospectus is intended to provide important information to help you
evaluate whether the Nuveen New York Tax-Exempt Money Market Fund may be right
for you. Please read it carefully before investing and keep it for future
reference.
Regular Income, Convenience and Stability of Principal
Tax-free money market funds offer you the opportunity to earn tax-free income on
your cash reserves while also providing easy access to your money and stability
of principal. They can provide a convenient way to make gradual transfers into
stock or bond funds, or to lower the overall risk of your portfolio.
The fund invests in high quality municipal money market securities that its
investment adviser believes present minimal credit risks. The fund's investment
policies are designed to mitigate overall risk and maintain a constant price per
share of $1.00, but there can be no guarantee of this.
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NOT FDIC INSURED MAY LOSE VALUE NO BANK GUARANTEE
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Section 1 The Fund 1
<PAGE>
Nuveen New York Tax-Exempt Money Market Fund
Fund Overview
Investment Objective
The fund's investment objective is to provide as high a level of current income
exempt from both regular federal and New York personal income taxes as is
consistent with the stability of principal and the maintenance of liquidity.
How the Fund Pursues Its Objective
The Fund invests substantially all of its assets in high quality New York tax-
exempt money market instruments that the fund's investment adviser believes
present minimal credit risks. The adviser selects money market instruments based
on its assessment of current market interest rates and its market outlook. The
adviser seeks to identify money market instruments with favorable
characteristics the adviser believes are not yet recognized by the market.
What are the Risks of Investing in the Fund?
While the fund invests in securities its investment adviser believes present
minimal credit and interest rate risks, the fund is not risk free. The value of
the fund's investments may be adversely affected by changes in prevailing
interest rates, an issuer's credit quality or New York's economy. The fund's
investment policies are designed to mitigate these risks and maintain a constant
price per share of $1.00, but there can be no guarantee of this. Like any mutual
fund investment, loss of money is a risk of investing.
Is This Fund Right for You?
The fund may be appropriate for you if you seek to:
. Earn monthly tax-free income on your cash reserves with check-writing
privileges;
. Maintain stability of principal;
. Make gradual transfers into stock or bond funds; or
. Lower the overall risk of your investment portfolio.
You should not invest in this fund if you seek to pursue long-term growth of
principal.
How the Fund Has Performed
The chart and table below illustrate annual fund returns for each of the past
ten years as well as annualized fund and index returns for the one-, five-year,
ten-year and since inception periods ended December 31, 1998. This information
is intended to help you assess the variability of fund returns over the past ten
years (and consequently, the potential rewards and risks of a fund investment).
Past performance is not necessarily an indication of future performance.
Total Returns/1/
[Bar Chart Appears Here] Annual Returns*
5.65% 5.19% 3.92% 2.23% 1.62% 2.17% 3.45% 2.92% 3.15% 2.87%
1989 1990 1991 1992 1993 1994 1995 1996 1997 1998
* The year-to-date return as of March 31, 1999 was .56%.
During the last ten years ended December 31, 1998, the highest and lowest
quarterly returns were 1.46% and .34%, respectively, for the quarters ended June
30, 1989 and March 31, 1993.
<TABLE>
<CAPTION>
Average Annual Total Returns for
the Periods Ended December 31, 1998
-----------------------------------
1 Year 5 Year 10 Year
<S> <C> <C> <C>
Nuveen New York Tax-Exempt Money Market Fund 2.87% 2.91% 3.31%
-------------------------------------------------------------------------------
Lipper Index/2/ 2.84% 2.89% 3.34%
</TABLE>
Based on the seven-day period ended December 31, 1998, the fund's yield was
3.08%, and the taxable equivalent yield (using maximum federal income tax rate
of 39.6%) was 5.10%. For the fund's current yields, please call Nuveen at (800)
257-8787.
2 Section 1 The Fund
<PAGE>
What are the Costs of Investing?
Shareholder Transaction Expenses
Paid Directly From Your Investment
<TABLE>
<CAPTION>
<S> <C>
- -----------------------------------------------------------------
Maximum Sales Charge Imposed
on Purchases None
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Maximum Sales Charge Imposed
on Reinvested Dividends None
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Exchange Fees None
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Annual Fund Operating Expenses/4/
Paid From Fund Assets
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Management Fees .40%
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12b-1 Distribution and Service Fees/5/ .25%
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Other Expenses .29%
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Total Operating Expenses--Gross+ .94%
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+ After Expense Reimbursements
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Expense Reimbursements -- .39%
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Total Operating Expenses--Net .55%
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</TABLE>
Total Operating Expenses--Net reflect the undertaking of the fund's adviser to
reimburse expenses through December 31, 1999 in an amount necessary to limit
total operating expenses to .55%. Thereafter, reimbursements may be modified or
discontinued at the adviser's discretion without notice.
Example
The following example is intended to help you compare the cost of investing in
the fund with the cost of investing in other mutual funds. The example assumes
you invest $10,000 in the fund for the time periods indicated, and then redeem
all your shares at the end of a period. The example also assumes that your
investment has a 5% return each year and that the fund's operating expenses
remain the same. Your actual returns and costs may higher or lower.
<TABLE>
<CAPTION>
<S> <C>
1 Year $77
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3 Years $240
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5 Years $417
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10 Years $930
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How the Fund Is Invested (as of 05/31/99)
Portfolio Statistics
<CAPTION>
<S> <C>
Weighted Average Maturity (Days) 39
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Credit Quality
<CAPTION>
Industry Diversification (Top 5)
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Tax Obligations/General 24%
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Education and Civic Organizations 17%
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Tax Obligations/Limited 12%
- ----------------------------------------------------
Housing/Multifamily 9%
- ----------------------------------------------------
Long-Term Care 9%
- ----------------------------------------------------
</TABLE>
1. Before June 1999, the fund offered three share classes. Returns reflect the
performance of the Distribution Series adjusted for any differences between
the fund's current fees and those of the Distribution Series.
2. Lipper Index returns reflect the performance of mutual funds in the Lipper
New York Tax-Exempt Money Market Index. Returns assume reinvestment of
dividends and do not reflect any applicable sales charges.
3. Expense information has been restated to reflect current fees payable under
the investment management agreement and 12b-1 Plan approved at the June 4,
1999 Shareholder Meeting.
4. The 12b-1 fees paid by the Fund increased since the last fiscal year to .25%
because the number of authorized dealers has increased and Nuveen has begun
retaining 12b-1 fees on accounts with no authorized dealer for which Nuveen
provides on-going shareholder account services.
Section 1 The Fund 3
<PAGE>
Section 2 How We Manage Your Money
To help you understand how the fund's assets are managed, this section includes
a detailed discussion of the adviser's investment and risk management
strategies. For a more complete discussion of these matters, please consult the
Statement of Additional Information.
Who Manages the Fund
Nuveen Investment Advisory Services provides advisory and investment management
services to a broad range of clients. Nuveen Investment Advisory Services is
comprised of Nuveen Advisory Corp. and Nuveen Institutional Advisory Corp., both
of which are wholly-owned subsidiaries of John Nuveen & Co. Incorporated
(Nuveen). Nuveen Advisory Corp. (Nuveen Advisory) is the fund's investment
adviser and as such is responsible for the selection and on-going monitoring of
the securities in the fund's portfolio, managing the fund's business affairs and
providing certain clerical, bookkeeping and other administrative services.
Nuveen Advisory is located at 333 West Wacker Drive, Chicago, IL 60606. For
providing these services, Nuveen Advisory is paid an annual management fee. For
the most recent fiscal year, the fund paid .40% of its average net assets to
Nuveen Advisory for its services.
Founded in 1898, Nuveen has been synonymous with investments that withstand the
test of time. Today, we offer a broad range of quality investments designed for
individuals seeking to build and maintain wealth. Nuveen is the sponsor and
principal underwriter of the fund's shares and has sponsored or underwritten
more than $60 billion of investment company securities. Nuveen and its
affiliates have approximately $50 billion in assets under management.
What Securities We Invest In
New York Tax-Exempt Money Market Instruments
The Fund invests in high quality, short-term New York tax-exempt debt
securities, commonly known as New York municipal money market securities
substantially all of which are issued within the State of New York. New York
municipal money market securities pay income which is exempt from both regular
federal income tax and New York state and local personal income taxes.
States and local governments, municipalities, agencies and other governmental
units issue municipal money market securities to raise money for various public
purposes, such as building public facilities, refinancing outstanding debt and
financing general operating expenses. These securities include general
obligation bonds, which are backed by the full faith and credit of the issuer
and may be repaid from any revenue source, and revenue bonds, which may be
repaid only from the revenue of a specific facility or source. Tax-exempt
securities also include notes, such
4 Section 2 How We Manage Your Money
<PAGE>
as bond anticipation, revenue anticipation, construction loan and bank notes,
and commercial paper.
Credit-Enhanced Investments
Some of the fund's investments may be backed by a letter of credit or other type
of credit enhancements. For example, if an issuer does not have the desired
credit rating, another company may use its higher credit rating to back the
issuer's rating by selling the issuer a letter of credit. Investments backed by
a letter of credit are subject to the risk that the company issuing the letter
of credit will not be able to fulfill its obligations to the fund, or is thought
to be unlikely to be able to do so. This could cause losses to the fund and
affect its share price.
Variable Rate and Floating Rate Demand Notes
We expect variable rate and floating rate securities will comprise a large
portion of the fund's portfolio. These investments may have stated maturities of
more than 397 days, but generally allow the holder to receive payment of
principal plus accrued interest much sooner than this. Because their interest
rates are not fixed, the income earned by the fund on these securities generally
will fluctuate with changes in short-term interest rates.
When-Issued and Delayed Delivery Transactions
The fund may buy or sell securities on a when-issued or delayed delivery basis,
paying for or taking delivery of the securities at a later date, normally within
15-45 days of the trade. These transactions involve an element of risk because
the value of the security to be purchased may decline before the settlement
date.
Temporary Strategies
The fund on a temporary basis may invest in municipal money market securities
whose income is not exempt from New York state and local personal income
taxes, or in taxable money market securities. Taxable money market securities
include U.S. government securities, quality commercial paper or similar fixed-
income securities with remaining maturities of one year or less. The fund will
only do so under extraordinary circumstances or unusual market conditions. Under
these circumstances, the fund will not be pursuing its investment objective.
How We Select Investments
Nuveen Advisory selects money market instruments based on its assessment of
current market interest rates and its market outlook. Portfolio managers are
supported by a team of specialized research analysts who review securities
available for purchase, monitor the continued creditworthiness of the fund's
investments, and analyze economic, political and demographic trends affecting
the New York money market. We seek to identify money market instruments with
favorable characteristics we believe are not yet recognized by the market. We
then select those higher-yielding and undervalued money market instruments that
we believe represent the most attractive values without adding undue risk. We
actively manage the maturity of the fund and its portfolio to optimally balance
the fund's yield with the fund's exposure to interest rate risk.
Section 2 How We Manage Your Money 5
<PAGE>
How We Manage Risk
Risk is inherent in all investing. Investing in a mutual fund -- even a money
market fund -- involves risk, including the risk that you may receive little or
no return on your investment or even that you may lose part of your investment.
In pursuing its investment objective, the fund assumes investment risk, chiefly
in the form of interest rate and credit risk. The fund tries to limit risk by
restricting the types and maturities of the money market instruments it
purchases, and by diversifying its investment portfolio among issuers and across
different industries. Therefore, before investing, you should consider carefully
the following risks that you assume when you invest in the fund.
Interest rate risk: Because the fund invests in fixed-income securities, the
fund is subject to interest rate risk. Interest rate risk is the risk that the
value of the fund's portfolio will decline because of rising interest rates.
Interest rate risk is generally lower for shorter-term investments and higher
for longer-term investments.
To mitigate interest rate risk, the fund, under normal market conditions,
maintains an investment portfolio with an overall weighted average maturity of
90 days or less. In addition, the fund limits its investments to money market
instruments with remaining effective maturities of 397 days or less.
Credit risk: The fund is subject to credit risk. Credit risk is the risk that an
issuer of a money market instrument will be unable to meet its obligation to
make interest and principal payments due to changing financial or market
conditions, or possibly due to Year 2000 issues (see below).
The fund attempts to mitigate credit risk by investing only in high quality
money market instruments that Nuveen Advisory believes present minimal credit
risks at the time of purchase. High quality instruments are:
. rated in one of the two highest short-term rating categories by at least two
nationally recognized rating services, or
. if only one service has rated the instrument, rated by that service in one of
its two highest short-term rating categories, or
. unrated instruments that Nuveen Advisory judges to be of comparable quality.
In addition, the fund will not invest more than 5% of its total assets in money
market instruments rated in the second highest short-term rating categories or
in their unrated equivalents.
Year 2000 issues may affect the ability of municipal issuers to meet their
interest and principal payment obligations to their bond holders, and may
adversely affect the bonds' credit ratings and values. Municipal issuers may
have greater Year 2000 risks than other issuers. Nuveen Advisory is requesting
information from municipal issuers so that Nuveen Advisory can take the issuers'
Year 2000 readiness, if made available, into account in making investment
decisions. There can be no assurance that issuers will provide this information
to Nuveen Advisory, or that issuers will begin or complete the work necessary to
address any Year 2000 issues on a timely basis. Generally, higher rated fixed-
income securities carry less credit risk than lower rated fixed-income
securities.
Concentration risk: Concentration risk is the risk that economic or other
developments affecting a single industry may cause the value of related money
market instruments to decline.
To mitigate concentration risk, the fund will not invest more than 25% of its
total assets in any one industry, excluding governmental issuers. The fund may,
however, invest more than 25% of its assets in a broad segment
An Important Note About Risk
Although the fund's investment policies are intended to minimize interest rate
and credit risk, there can be no guarantee of this.
6 Section 2 How We Manage Your Money
<PAGE>
of the tax-exempt market, such as instruments issued to fund hospitals, housing
or airports, if Nuveen Advisory believes that the potential returns justify any
additional risks that may arise from doing so. These policies on concentration
risk may not be changed without shareholder approval.
The fund may invest without limit in securities backed by letters of credit or
other credit enhancements issued by banks and other financial institutions. As a
result, changes in the banking industry may cause the value of securities backed
by such credit enhancements to decline.
State Specific Risk
Because the fund invests primarily in New York municipal money market securities
it bears investment risk from the economical, political or regulatory changes
that could adversely affect municipal issuers in the state and therefore the
value of the fund's portfolio. See "Appendix--Additional State Information."
Insurance: The fund has purchased liability insurance against a decline in the
value of the fund's portfolio caused by the default or bankruptcy of an issuer
whose securities are owned by the fund. The insurance covers substantially all
of the fund's investments except U.S. government securities. The maximum total
coverage for all Nuveen money market funds is $50 million, with a deductible for
each loss of 0.10% of the fund's net assets. The fund pays the policy's
premiums. Coverage under the policy is subject to certain conditions and may not
be renewable upon expiration. While the policy is intended to provide some
protection against credit risk and to help the fund maintain a constant price
per share of $1.00, there is no guarantee that the insurance will do so.
Section 2 How We Manage Your Money 7
<PAGE>
Section 3 How You Can Buy and Sell Shares
We offer a number of services for your convenience. Please see the Statement of
Additional Information for further details.
How to Buy Shares
The fund offers only a single class of shares. Fund shares may be purchased at
net asset value on any business day, which is any day the Federal Reserve Bank
of Boston is normally open for business. Generally, the bank is closed on
weekends and National holidays. The fund's net asset value is determined at
12:00 noon Eastern Time on each business day, and on other days where there is
significant trading activity in the fund's shares. If the Fund receives your
order in proper form before 12:00 noon and the fund's custodian receives federal
funds from you before 3:00 p.m., Eastern Time, you will receive the dividend
declared and net asset value computed on that day. Otherwise, you will receive
the next business day's dividend and net asset value.
Through a Financial Adviser
You may purchase shares through your financial adviser, who can handle all the
details for you, including opening a new account. Financial advisers also can
help you review your financial needs and formulate long-term investment goals
and objectives. In addition, financial advisers generally can help you develop a
customized financial plan, select investments, and monitor and review your
portfolio on an on-going basis to help assure that your investments continue to
meet your needs as circumstances change. Financial advisers are paid for on-
going investment advice and services either from fund sales charges and fees or
by charging you a separate fee in lieu of a sales charge. If you do not have a
financial adviser, call (800) 257-8787 and Nuveen can refer you to one in your
area.
By Mail
You may open an account and buy shares through the mail by completing the
enclosed application and mailing it along with your check to the fund, c/o
Nuveen Investor Services, P.O. Box 5186, Bowling Green Station, New York, NY
10274-5186.
Investment Minimums
The minimum initial investment in the Fund is $3,000 ($50 if you establish a
systematic investment plan). Subsequent investments must be in amounts of $50 or
more. The fund reserves the right to reject purchase orders and to waive or
increase the minimum investment requirements.
8 Section 3 How You Can Buy and Sell Shares
<PAGE>
Systematic Investing
Once you have established a fund account, you may participate in the fund's
systematic investment plan. Systematic investing allows you to make regular
investments through automatic deductions from your bank account or directly from
your paycheck. The minimum automatic deduction is $50 per month. There is no
charge to participate in the fund's systematic investment plan. You can stop the
deductions at any time by notifying the fund in writing.
From Your Bank Account
You can make systematic investments by authorizing us to draw preauthorized
checks on your bank account. To do this, simply complete the appropriate section
of the account application form or submit an account update form.
From Your Paycheck
With your employer's consent, you can make systematic investments by authorizing
your employer to deduct monies from your paycheck. To do this, contact your
financial adviser or call Nuveen at (800) 257-8787.
Special Services
To help make your investing with us easy and efficient, we offer you the
following services at no extra cost.
Exchanging Shares
You may exchange fund shares into an identically registered account at any time
for an appropriate class of another Nuveen mutual fund available in your state.
Your exchange must meet the minimum purchase requirements of the fund into which
you are exchanging. You may have to pay a sales charge when exchanging shares
that you purchased without a sales charge for shares that are sold with a sales
charge. Please consult the Statement of Additional Information for details.
The fund may change or cancel its exchange policy at any time upon 60 days'
notice. Because an exchange is treated for tax purposes as a purchase and sale,
and any gain may be subject to tax, you should consult your tax adviser about
the tax consequences of exchanging your shares.
Fund Direct/SM/
The Fund Direct Program allows you to link your fund account to your bank
account, transfer money electronically between these accounts, and perform a
variety of account transactions, including purchasing shares by telephone and
investing through a systematic investment plan. You also may have dividends,
distributions, redemption payments or systematic withdrawal plan payments sent
directly to your bank account. Your financial adviser can help you complete the
forms for these services, or you can call Nuveen at (800) 257-8787 for copies of
the necessary forms.
Section 3 How You Can Buy and Sell Shares 9
<PAGE>
An Important Note About Telephone Transactions
Although Nuveen Investor Services has certain safeguards and procedures to
confirm the identity of callers, it will not be liable for losses resulting from
following telephone instructions it reasonably believes to be genuine. Also, you
should verify your trade confirmations immediately upon receipt.
How to Sell Shares
You may sell (redeem) your shares on any business day. You will receive the
share price next determined after the fund has received your properly completed
redemption request. If you are selling shares purchased recently with a check,
you will not receive your redemption proceeds until your check has cleared. This
may take up to ten days from your purchase date.
Through Your Financial Adviser
You may sell your shares through your financial adviser who can prepare the
necessary documentation. Your adviser may charge you for this service.
By Telephone
If you have authorized telephone redemption privileges, you can redeem your
shares by calling (800) 257-8787. Telephone redemptions are not available if you
own shares in certificate form and may not exceed $50,000. Checks will only be
issued to you as the shareholder of record and mailed to your address of record.
If you have established Fund Direct privileges, you may have redemption proceeds
transferred electronically to your bank account. We will normally mail your
check the next business day.
By Check
You may request that the fund provides you with redemption checks. These checks
may be made payable to any person in the amount of $500 or more. Simply fill out
the appropriate section of the application form and submit the enclosed
signature card. You must have enough shares in your account to cover the amount
of each check you write or it will be returned. Writing checks from your fund
account does not mean that your account is like a bank checking account. This
check redemption privilege may be modified or terminated at any time.
By Mail
You can sell your shares at any time by sending a written request to the fund,
c/o Nuveen Investor Services, P.O. Box 5186, Bowling Green Station, New York, NY
10274-5186. Your redemption request must include the following information:
. The fund's name;
. Your name and account number;
. The dollar or share amount you wish to redeem;
. The signature of each owner exactly as it appears on the account;
. The name of the person to whom you want your redemption proceeds paid (if
other than to the shareholder of record);
. The address where you want your redemption proceeds sent (if other than the
address of record); and
. Any required signature guarantees (see below).
10 Section 3 How You Can Buy and Sell Shares
<PAGE>
An Important Note About Involuntary Redemption
From time to time, the fund may establish minimum account size requirements. The
fund reserves the right to liquidate your account upon 30 days' written notice
if the value of your account falls below an established minimum. The fund
presently has set a minimum account balance of $100 unless you have an active
Nuveen Defined Portfolio reinvestment account.
The fund will normally mail your check the next business day after it receives
your redemption request, but in no event more than seven days after the fund
receives your request. If you purchased your shares by check, your redemption
proceeds will not be mailed until your check has cleared. This may take up to
ten days from your purchase date.
Signature Guarantees
Signature guarantees are required if you are redeeming more than $50,000, you
want the check payable to someone other than the shareholder of record, you want
the check sent to another address, or if the address on the fund's records has
been changed within the last 60 days. Signature guarantees must be obtained from
a bank, brokerage firm or other financial intermediary that is a member of an
approved Medallion Guarantee Program or that is otherwise approved by the fund.
A notary public cannot provide a signature guarantee.
Systemic Withdrawal
If the value of your fund account is at least $10,000, you may participate in
the fund's systematic withdrawal plan. The plan allows you to make regular
withdrawals through automatic deductions from your fund account. The minimum
automatic withdrawal is $50 per month. You may elect to receive payments
monthly, quarterly, semi-annually or annually, and may choose to receive a
check, or have the monies transferred directly to your bank account (see
"Special Services -- Fund Direct" above), paid to a third party or sent payable
to you at an address other than the address on the fund's records. To
participate in the systematic withdrawal plan, simply complete the appropriate
section of the account application or submit an account update form.
Redemptions In-Kind
The fund generally pays redemption proceeds in cash. Under unusual conditions
that make cash payment unwise and for the protection of existing shareholders,
the fund may pay all or a portion of your redemption proceeds in securities or
other fund assets. Although it is unlikely that your shares would be redeemed
in-kind, you would probably have to pay brokerage costs to sell the securities
distributed to you, as well as taxes on any capital gains from that sale.
Section 3 How You Can Buy and Sell Shares 11
<PAGE>
Section 4 General Information
To help you understand the tax implications of investing in the fund, this
section includes important details about how the fund makes distributions to
shareholders. We discuss some other fund policies, as well.
Dividends, Distributions and Taxes
The fund pays triple tax-free dividends monthly. In the very unlikely event that
the Fund realizes capital gains or ordinary income subject to regular federal
income tax, it will pay any capital gains or other taxable distributions
annually in March. The fund declares dividends on each business day to
shareholders of record on that day.
Payment and Reinvestment Options
The fund automatically reinvests your dividends in additional fund shares unless
you request otherwise. You may request to have your dividends paid to you by
check, deposited directly into your bank account, paid to a third party, sent to
an address other than the address on the fund's records, or reinvested in shares
of another Nuveen mutual fund. For more information, contact your financial
adviser or call Nuveen at (800) 257-8787.
Taxes and Tax Reporting
Because the fund invests in New York municipal money market securities, your
regular monthly dividends will be exempt from regular federal as well as New
York state and local income taxes. A portion of these dividends, however, may
be subject to the federal alternative minimum tax.
Although very unlikely, the fund may, from time to time, distribute taxable
ordinary income or capital gains. Capital gains are taxable to shareholders
either as ordinary income or as long-term capital gains, depending on how long
the fund owned the investment.
Early in each year, you will receive a statement detailing the amount and nature
of all dividends and capital gains that you were paid during the prior year. If
you hold your investment at the firm where you purchased your fund shares, you
will receive the statement from that firm. If you hold your shares directly at
the fund, Nuveen will send you the statement. The tax status of your dividends
is the same whether you reinvest your dividends or elect to receive them in
cash.
If you receive social security or railroad retirement benefits, you should
consult your tax adviser about how an investment in the fund may affect the
federal taxation of your benefits. The State of New York does not tax any
portion of these benefits.
Please note that if you do not furnish the fund with your correct Social
Security number or employer identification number, federal law requires
12 Section 4 General Information
<PAGE>
the fund to withhold federal income tax from your distributions and redemption
proceeds, currently at a rate of 31%.
Please consult the Statement of Additional Information and your tax adviser for
more information about taxes.
Taxable Equivalent Yields
The taxable equivalent yield is the current yield you would need to earn on a
taxable investment in order to equal a stated tax-free yield on a municipal
investment. To assist you to more easily compare municipal investments like the
funds with taxable alternative investments, the table below presents the taxable
equivalent yields for a range of hypothetical tax-free yields and tax rates.
<TABLE>
<CAPTION>
Taxable Equivalent Yield
- --------------------------------------------------------------------------------
Combined State and Tax-Exempt Yields
Federal Tax Rates 2.00% 2.50% 3.00% 3.50% 4.00%
- --------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
XXX% 5.56%
- --------------------------------------------------------------------------------
XXX% 5.80%
- --------------------------------------------------------------------------------
XXX% 6.25%
- --------------------------------------------------------------------------------
XXX% 6.62%
- --------------------------------------------------------------------------------
</TABLE>
The yields and tax rates shown above are hypothetical and do not predict your
actual returns or effective tax rate. For more detailed information, see the
Statement of Additional Information or consult your tax adviser.
Service Plan
Nuveen serves as the selling agent and distributor of the fund's shares. In this
capacity, Nuveen manages the offering of the fund's shares and is responsible
for all sales and promotional activities, and for providing certain services to
shareholders. The fund has adopted a service plan in accordance with Rule 12b-1
under the Investment Company Act of 1940 to reimburse Nuveen for these services.
The service fee payable under the plan is .25% of the average daily net assets
of serviced accounts. Nuveen uses this fee to compensate authorized dealers,
including Nuveen, for providing on-going account services to shareholders. These
services may include establishing and maintaining your account, answering your
questions and providing other personal services to you. Because these fees are
paid out of the fund's assets on an on-going basis, over time these fees will
increase the cost of your investment. Nuveen may, in its discretion and from its
own resources, pay certain financial service firms additional amounts for
services rendered to shareholders.
Section 4 General Information 13
<PAGE>
Net Asset Value
The price you pay and receive for your shares is based on the fund's net asset
value per share, which is determined at 12:00 noon Eastern Time on each business
day. Because the fund seeks to maintain a constant price per share of $1.00, the
fund values its portfolio securities using the amortized cost method, which
approximates market value and is described in more detail in the Statement of
Additional Information. There can be no assurance that the fund will be able to
maintain a constant price per share of $1.00.
Fund Service Providers
The custodian of the fund's assets is The Chase Manhattan Bank, 4 New York
Plaza, New York, NY 10004-2413. Chase also provides certain accounting services
to the fund. The fund's transfer, shareholder services and dividend paying
agent, Chase Global Funds Services Company, P.O. Box 5186, New York, NY 10274-
5186, performs bookkeeping, data processing and administrative services for the
maintenance of shareholder accounts.
Year 2000
The fund's service providers rely on computer systems to manage the fund's
investments, process shareholder transactions and provide shareholder account
maintenance. Because of the way computers historically have stored dates, some
of these systems currently may not be able to correctly process activity
occurring in the year 2000. Nuveen is working with the fund's service providers
to adapt their systems to address this issue. Nuveen and the fund expect that
the necessary work will be completed on a timely basis, although there can be no
assurance of this.
14 Section 4 General Information
<PAGE>
Section 5 Financial Highlights
Section 5 Financial Highlights 15
<PAGE>
Nuveen Mutual Funds
Nuveen offers a variety of mutual funds designed to help you reach your
financial goals. The funds below are grouped by investment objectives.
Growth
Nuveen Rittenhouse Growth Fund
Growth and Income
Growth and Income Stock Fund
Balanced Stock and Bond Fund
Balanced Municipal and Stock Fund
Dividend and Growth Fund
European Value Fund
Income
Income Fund
Tax-Free Income
National Municipal Bond Funds
Long-term Intermediate-term
Insured Long-term Limited-term
State Municipal Bond Funds
Arizona Louisiana North Carolina
California/1/ Maryland Ohio
Colorado Massachusetts/1/ Pennsylvania
Connecticut Michigan Tennessee
Florida Missouri Virginia
Georgia New Jersey Wisconsin
Kansas New Mexico
Kentucky New York/1/
Cash Reserves
Money Market Fund
Municipal Money Market Fund
California Tax-Exempt Money Market Fund
New York Tax-Exempt Money Market Fund
Several additional sources of information are available to you. The Statement of
Additional Information, incorporated by reference into this prospectus, contains
detailed information on fund policies and operations. Shareholder reports
contain management's discussion of market conditions, investment strategies and
performance results as of the fund's latest semi-annual or annual fiscal year
end. Call Nuveen at (800) 257-8787 to request a free copy of any of these
materials or other fund information, or ask your financial adviser for copies.
You also may obtain this and other fund information directly from the Securities
and Exchange Commission (SEC). The SEC may charge a copying fee for this
information. Visit the SEC on-line at http://www.sec.gov or in person at the
SEC's Public Reference Room in Washington, D.C. Call the SEC at (800) SEC-0330
for room hours and operation. You also may request fund information by writing
to the SEC's Public Reference Section, Washington, D.C. 20549. The fund's
Investment Company Act file number is 811-04822.
1. Long-term and insured long-term portfolios.
NUVEEN
John Nuveen & Co. Incorporated
333 West Wacker Drive
Chicago, IL 60606-1286
(800) 257-8787
www.nuveen.com
<PAGE>
PART B--STATEMENT OF ADDITIONAL INFORMATION
NUVEEN TAX-FREE MONEY MARKET FUND
333 West Wacker Drive
Chicago, Illinois 60606
<PAGE>
Statement of Additional Information
June 25, 1999
Nuveen Tax-Free Money Market Fund, Inc.
333 West Wacker Drive
Chicago, Illinois 60606
NUVEEN NEW YORK TAX-EXEMPT MONEY MARKET FUND
This Statement of Additional Information is not a prospectus. This Statement of
Additional Information should be read in conjunction with the Prospectus of the
Nuveen New York Tax-Exempt Money Market Fund dated June 25, 1999. The Prospec-
tus may be obtained without charge from certain securities representatives,
banks, and other financial institutions that have entered into sales agreements
with John Nuveen & Co. Incorporated, or from the Fund by mailing a written re-
quest to the Fund, c/o. John Nuveen & Co. Incorporated ("Nuveen"), 333 West
Wacker Drive, Chicago, Illinois 60606 or by calling (800) 257-8787.
<TABLE>
<S> <C>
Table of Contents Page
- --------------------------------------------------------------------------
Investment Policies and Investment Portfolio S-2
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Management S-18
- --------------------------------------------------------------------------
Investment Adviser and Investment Management Agreement S-24
- --------------------------------------------------------------------------
Portfolio Transactions S-25
- --------------------------------------------------------------------------
Net Asset Value S-26
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Tax Matters S-28
- --------------------------------------------------------------------------
Performance Information S-32
- --------------------------------------------------------------------------
Additional Information on the Purchase and Redemption of Fund Shares S-38
- --------------------------------------------------------------------------
Service Plan S-41
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Other Information Regarding Shares of the Fund S-42
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</TABLE>
Principal Underwriter Investment Adviser Independent Public Accountants
John Nuveen & Co. Incorporated
Nuveen Advisory for the Fund
Corp., Subsidiary
of John Nuveen &
Co. Incorporated
Arthur Andersen LLP
Chicago: 33 West Monroe Street
333 West Wacker Drive Chicago, Illinois 60603
Chicago, Illinois 60606 333 West Wacker
Drive
(312) 917-7700 Transfer and Dividend
Chicago, Illinois
60606
Disbursing Agent
New York: Chase Global Funds Services
Company
10 East 50th Street
New York, New York 10022Custodian P.O. Box 5186
(212) 207-2000 The Chase Manhattan New York, NY 10274
Bank
4 New York Plaza
New York, New York
10004
<PAGE>
INVESTMENT POLICIES AND INVESTMENT PORTFOLIO
Fundamental Policies
The investment objective and certain fundamental policies of the Fund are de-
scribed in the Prospectus. The Fund, as a fundamental policy, may not, without
the approval of the holders of a majority of the shares of the 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 Fund;
(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
the 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 the Fund's total
assets, no additional purchases of investment securities will be made by the
Fund. If due to market fluctuations or other reasons, the value of the Fund's
assets 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 the Fund from in-
vesting in Municipal Obligations secured by real estate or interests therein
or foreclosing upon and selling such security;
(8) Purchase or sell commodities or commodities contracts or oil, gas or other
mineral exploration or development programs;
(9) Make loans, other than by entering into repurchase agreements and through
the purchase of Municipal Obligations or temporary investments in accordance
with its investment objective, policies and limitations;
(10) Make short sales of securities or purchase any securities on margin, ex-
cept for such short-term credits as are necessary for the clearance of trans-
actions;
(11) Write or purchase put or call options, except to the extent that the pur-
chase of a stand-by commitment may be considered the purchase of a put;
S-2
<PAGE>
(12) 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;
(13) Invest more than 10% of its assets in repurchase agreements maturing in
more than seven days, "illiquid" securities (such as non-negotiable CDs) and
securities without readily available market quotations;
For the purpose of applying the limitations set forth in paragraph (2) above,
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-governmental issu-
er, such as an industrial corporation or a privately owned or operated hospi-
tal, if the security is backed only by the assets and revenues of the non-gov-
ernmental user then such non-governmental user would be deemed to be the sole
issuer. Where a security is also backed by the enforceable obligation of a su-
perior or unrelated governmental entity (other than a bond insurer) it shall
be included in the computation of securities owned that are issued by such su-
perior governmental entity or other entity.
Where a security is guaranteed by a governmental entity or some other facili-
ty, such as a bank guarantee or letter of credit, such a guarantee or letter
of credit would be considered a separate security and would be treated as an
issue of such government, other entity or bank. Where a security is insured by
bond insurance, it shall not be considered a security issued or guaranteed by
the insurer; instead the issuer of such security will be determined in accor-
dance with the principles set forth above. The foregoing restrictions do not
limit the percentage of the Fund's assets that may be invested in securities
insured by any single insurer. It is a fundamental policy of the Fund, which
cannot be changed without the approval of the holders of a majority of shares
of such Fund, that the Fund will not hold securities of a single bank, includ-
ing securities backed by a letter of credit of such bank, if such holdings
would exceed 10% of the total assets of the Fund.
The foregoing restrictions and limitations, as well as the Fund's policies as
to ratings of fund investments, will apply only at the time of purchase of se-
curities, and the percentage limitations will not be considered violated un-
less an excess or deficiency occurs or exists immediately after and as a re-
sult of an acquisition of securities, unless otherwise indicated.
The foregoing fundamental investment policies, together with the investment
objective of the Fund, cannot be changed without approval by holders of a "ma-
jority of the Fund's outstanding voting shares." As defined in the Investment
Company Act of 1940, this means the vote of (i) 67% or more of the Fund's
shares present at a meeting, if the holders of more than 50% of the Fund's
shares are present or represented by proxy, or (ii) more than 50% of the
Fund's shares, whichever is less.
General Information
The Nuveen New York Tax-Exempt Fund, Inc. (the "Corporation") is an open-end
diversified management company incorporated as a Minnesota corporation on July
11, 1986. It is authorized to issue 2,500,000,000 shares of Common Stock, $.01
par value of its series the Nuveen New York Tax-Exempt Money Market Fund (the
"Fund"). Prior to June 1999, the Corporation and the Fund were called
S-3
<PAGE>
the Nuveen Tax-Free Fund, Inc. and Nuveen New York Tax-Free Money Market Fund,
respectively. Fund Shares represent an interest in the same portfolio of in-
vestments of the Fund. Fund Shares have equal rights as to voting, redemption,
dividends and liquidation, and have exclusive voting rights with respect to any
applicable distribution or service plan. There are no conversion, preemptive or
other subscription rights. The Board of Directors of the Fund have the right to
establish additional series and classes of shares in the future, to change
those series or classes and to determine the preferences, voting powers, rights
and privileges thereof.
Nuveen Tax-Free Money Market Fund, Inc. is a series company under SEC Rule 18f-
2 and the Fund is a separate series issuing its own shares. Certain matters un-
der 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.
Year 2000 Issues
The "Year 2000" problem refers to the fact that many computer programs use only
the last two digits of a year, and do not recognize a year that begins with
"20" instead of "19." If this problem is not corrected, computers could func-
tion improperly or not at all, which could affect the global economy. The SEC
has urged securities issuers to disclose the steps they are taking to correct
any Year 2000 problems.
The Fund invests primarily in money market instruments. If the issuers of these
instruments do not correct any Year 2000 problems in a timely manner, they
could experience problems in conducting their operations or in making payments
on their securities, which could cause the value of these securities to de-
cline. Issuers could experience three types of Year 2000 problems. First, if an
issuer's internal computer systems experience Year 2000 problems, this could
disrupt an issuer's operations (such as its ability to collect local taxes or
fees). Second, an issuer may rely on other parties for the payments that sup-
port its debt service, such as servicers that collect mortgage or student loan
payment, and those third parties may have Year 2000 problems that interfere
with their ability to forward payments to the issuer. Third, an issuer may have
mechanical problems in sending payments to its securities holders.
Nuveen Advisory is obtaining information about the Year 2000 readiness of the
issuers of its portfolio securities as part of its ongoing surveillance of the
creditworthiness of those issuers.
Portfolio Securities
The various securities in which the Fund intends to invest are described in the
Prospectus. The following is a more complete description of certain short-term
Municipal Obligations in which the Fund may invest:
The Fund invests in debt obligations issued by New York State, its cities and
local authorities to obtain funds for various public purposes, including the
construction of such public facilities as airports,
S-4
<PAGE>
bridges, highways, housing, hospitals, mass transportation, schools, streets
and water and sewer works. Other public purposes for which these securities may
be issued include the refinancing of outstanding obligations, the obtaining of
funds for general operating expenses and for loans to other public institutions
and facilities. In addition, the Fund may invest in certain industrial develop-
ment bonds and pollution control bonds in which the Fund will primarily invest
are issued by New York State and cities and local authorities in New York or
are issued by possessions of the United States within Section 103(c) of the In-
ternal Revenue Code (such as Puerto Rico).
Two principal classifications of municipal securities 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.
Municipal securities can be further classified between bonds and notes. Bonds
are issued to raise longer-term capital but, when purchased by the Fund, will
have 397 days or less remaining until maturity or will have a variable or
floating rate of interest (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 securities also include very short-term unsecured, negotiable promis-
sory notes, issued by states, municipalities, and their agencies which are
known as "tax-exempt commercial paper" or "municipal paper." Payment of princi-
pal and interest on issues of municipal paper may be made from various sources,
to the extent that funds are available therefrom. There is a limited secondary
market for issues of municipal paper.
While these various types of notes as a group represent the major portion of
the tax-exempt note market, other types of notes are occasionally available in
the marketplace, and the 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 securities are dependent on a variety of factors, in-
cluding the condition of the general money market and the municipal securities
market, the size of a particular offering, the maturity of the obligation and
the rating of the issue. The ratings of Moody's and S&P represent their opin-
ions as to the quality of the municipal securities which they undertake to
rate. It should be emphasized, however, that ratings are general and are not
absolute standards of quality. Consequently, municipal securities with the same
maturity, coupon and rating may have different yields while obliga-
S-5
<PAGE>
tions of the same maturity and coupon with different ratings may have the same
yield. The market value of outstanding municipal securities will vary with
changes in prevailing interest rate levels and as a result of changing evalua-
tions of the ability of their issuers to meet interest and principal payments.
Obligations of issuers of debt 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 ex-
tending the time for payment of principal and/or interest, or imposing other
constraints upon enforcement of such obligations or upon municipalities to levy
taxes. There is also the possibility that, as a result of legislation or other
conditions, the power or ability of any issuer to pay, when due, the principal
of and interest on its obligations may be materially affected.
Bond Anticipation Notes (BANs) are usually general obligations of state and lo-
cal governmental issuers which are sold to obtain interim financing for pro-
jects that will eventually be funded through the sale of long-term debt obliga-
tions or bonds. The ability of an issuer to meet its obligations on its BANs is
primarily dependent on the issuer's access to the long-term municipal bond mar-
ket and the likelihood that the proceeds of such bond sales will be used to pay
the principal and interest on the BANs.
Tax Anticipation Notes (TANs) are issued by state and local governments to fi-
nance the current operations of such governments. Repayment is generally to be
derived from specific future tax revenues. TANs are usually general obligations
of the issuer. A weakness in an issuer's capacity to raise taxes due to, among
other things, a decline in its tax base or a rise in delinquencies could ad-
versely affect the issuer's ability to meet its obligations on outstanding
TANs.
Revenue Anticipation Notes (RANs) are issued by governments or governmental
bodies with the expectation that future revenues from a designated source will
be used to repay the notes. In general, they also constitute general 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.
Construction Loan Notes are issued to provide construction financing for spe-
cific projects. Frequently, these notes are redeemed with funds obtained from
the Federal Housing Administration.
Bank Notes are notes issued by local governmental bodies and agencies such as
those described above to commercial banks as evidence of borrowings. The pur-
poses for which the notes are issued are varied but they are frequently issued
to meet short-term working-capital or capital-project needs. These notes may
have risks similar to the risks associated with TANs and RANs.
Industrial Development Bonds (IDBs) and Pollution Control Bonds (PCBs) are is-
sued by or on behalf of public authorities to finance various privately-rated
facilities. These bonds are included within the term municipal security if the
interest paid thereon is exempt from federal income tax.
S-6
<PAGE>
Variable and Floating Rate Instruments Certain money market instruments may
carry variable or floating rates of interest. Such instruments bear interest
at rates which are not fixed, but which vary with changes in specified market
rates or indices, such as a bank prime rate or a tax-exempt money market in-
dex. Variable rate notes are adjusted to current interest rate levels at cer-
tain specified times, such as every 30 days, as set forth in the instrument. A
floating rate note adjusts automatically whenever there is a change in its
base interest rate adjustor, e.g., a change in the prime lending rate or spec-
ified interest rate indices. Typically such instruments carry demand features
permitting the Funds to recover the full principal amount thereof upon speci-
fied 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
Fund may purchase such obligations subject to certain conditions specified by
the Securities and Exchange Commission.
The Fund's right to obtain payment at par on a demand instrument upon demand
could be adversely affected by events occurring between the date the Fund
elects to tender the instrument and the date the proceeds are due. Nuveen Ad-
visory 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 Fund 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 Fund is enti-
tled to payment of the principal amount through demand, or (ii) the period re-
maining until the next interest rate adjustment.
The Fund 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 the Fund's option the Municipal
Obligation at an agreed-upon price on certain dates or within a specific peri-
od. 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 Fund
will enter into stand-by commitments only with parties which have been evalu-
ated by Nuveen Advisory and, in the opinion of Nuveen Advisory, present mini-
mal credit risks.
The amount payable to the 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 pe-
riod the Fund owned the security, plus (2) all interest accrued on the secu-
rity since the last interest payment date during the period the security was
owned by the Fund. The Fund's right to exercise stand-by commitments held by
it will be unconditional and unqualified. The acquisition of a stand-by com-
mitment will not affect the valuation of the underlying security, which will
continue to
S-7
<PAGE>
be valued in accordance with the amortized cost method. The stand-by commit-
ment itself will be valued at zero in determining net asset value. The 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 maturity otherwise available for the same securities). The maturity
of a Municipal Obligation purchased by the Fund will not be considered short-
ened 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 Municipal Obligations which were subject to a stand-by commitment
to a third party at any time.
When-Issued Securities As described in the Prospectus, the Fund may purchase
and sell securities on a when-issued or delayed delivery basis. When-issued
and delayed delivery transactions arise when securities are purchased or sold
with payment and delivery beyond the regular settlement date when-issued
transactions normally settle within 15-45 days). On such transactions the pay-
ment obligation and the interest rate are fixed at the time the buyer enters
into the commitment. The commitment to purchase securities on a when-issued or
delayed delivery basis may involve an element of risk because the value of the
securities is subject to market fluctuation, no interest accrues to the pur-
chaser prior to settlement of the transaction, and at the time of delivery the
market value may be less than cost. At the time the Fund makes the commitment
to purchase a Municipal Obligation on a when-issued or delayed delivery basis,
it will record the transaction and reflect the amount due and the value of the
security in determining its net asset value. Likewise, at the time the Fund
makes the commitment to sell a Municipal Obligation on a delayed delivery ba-
sis, it will record the transaction and include the proceeds to be received in
determining its net asset value; accordingly, any fluctuations in the value of
the Municipal Obligation sold pursuant to a delayed delivery commitment are
ignored in calculating net asset value so long as the commitment remains in
effect. The Fund will also maintain designated readily marketable assets at
least equal in value to commitments to purchase when-issued or delayed deliv-
ery securities, such assets to be segregated by the Custodian specifically for
the settlement of such commitments. The Fund will only make commitments to
purchase Municipal Obligations on a when-issued or delayed delivery basis with
the intention of actually acquiring the securities, but the Fund reserves the
right to sell these securities before the settlement date if it is deemed ad-
visable. If a when-issued security is sold before delivery any gain or loss
would not be tax-exempt. The Fund commonly engages in when-issued transactions
in order to purchase or sell newly-issued Municipal Obligations, and may en-
gage in delayed delivery transactions in order to manage its operations more
effectively.
Special Considerations Relating to New York Securities
Because the Fund invests substantially all of its assets in New York securi-
ties, the Fund is therefore more susceptible to political, economic or regula-
tory factors adversely affecting New York. Set forth below is information that
bears upon the risk of investing in securities issued by public authorities in
New York. This information was obtained from official statements of issuers
located in the designated states as well as from other publicly available of-
ficial documents and statements. The Fund has not independently verified any
of the information contained in such statements and documents, but the Fund is
not aware of facts which would render such information inaccurate.
S-8
<PAGE>
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 securities
held by the Fund or the ability of particular 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 recoveries. Moderate economic growth
continued in calendar year 1994. Economic growth slowed within New York during
1995 and 1996. Personal income and employment 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 contin-
ued spending restraint in government. Many 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 sufficient to meet the State's projec-
tions of receipts and disbursements.
1999-2000 Fiscal Year. The Governor issued a proposed Executive Budget for the
1999-2000 fiscal year (the "Proposed Budget") on [January 20], 1999, which pro-
jected a balanced general fund and receipts and disbursements of $36.22 billion
and $36.18 billion, respectively. As of [May 11], 1999, the State legislature
had not yet enacted, nor had the Governor and the legislature reached an agree-
ment on, the budget for the 1999-2000 fiscal year, which commenced on April 1,
1999. The Governor and the State's legislature have agreed on or proposed a se-
ries of short-term stopgap spending measures to fund state payrolls and ad-
vances to certain municipalities and certain state programs. The delay in the
enactment of the budget may negatively affect certain proposed actions and re-
duce projected savings.
As compared to the 1998-99 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 1998-99, welfare assistance savings, lower spending in certain areas
and lower transfers.
S-9
<PAGE>
The Proposed Budget and the 1999-2000 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.
1998-99 Fiscal Year. The State is projecting that it will end the 1998-99 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 1999-2000 projects that the State will end 1998-99 with a clos-
ing balance in the general fund of $500 million and faces budget gaps of $1.5
billion and $3.75 billion that may need to be closed for fiscal years 2000-01
and 2001-02, respectively.
Indebtedness. As of March 31, 1999, the total amount of State general obliga-
tion debt stood at $4.7 billion.
The Governor's budget for fiscal year 1999-2000 projects approximately $2.5
billion 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.
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.
S-10
<PAGE>
Ratings. In connection with the March 1999 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 economic projec-
tions assumed in the Financial Plan will occur or that the tax revenues pro-
jected in the Financial Plan to be received in the amounts anticipated.
Fiscal Year 2000 and the 1998-2002 Financial Plan. On January 29, 1999, the
Mayor released his preliminary billion budget for fiscal year 2000.
The Mayor announced on April 24, 1999 that the preliminary budget for the 1999
fiscal year will be modified to utilize the incurred surplus from the 1999 fis-
cal year to reduce sales taxes, increase spending on certain programs and to
repay a portion of the City's debt.
On April 24, 1999, the Mayor also announced revisions to the proposed 1998-2002
Financial Plan (the "Plan"), which now projects budget gaps of $1.5 billion,
$2.1 billion and $1.6 billion for fiscal years 2000, 2001 and 2002, respective-
ly. The City Comptroller and State Comptroller have each stated that the fiscal
year 1999 budget includes moderate revenue risks. The State Comptroller has
projected budget gaps for fiscal years 2000, 2001 and 2002 that are each in ex-
cess of the City's estimate.
S-11
<PAGE>
An extended delay by the State in adopting its 1999-2000 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 2000 and thereafter.
Given the foregoing, there can be no assurance that the City will continue to
maintain a balanced budget during fiscal year 2000 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 1999-2000
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 local economic recovery, the absence of wage increases in ex-
cess of the increases assumed in its financial plan, employment growth, provi-
sion 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 fed-
eral 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 2000
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.
S-12
<PAGE>
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 2003
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, 1999, 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.
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 1999. New York City adopted its 1999 fiscal year budget in June
1998, 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 1999 with a surplus of $2.0 billion.
S-13
<PAGE>
Fiscal Years 1991 through 1998. The City achieved balanced operating results
in accordance with generally accepted accounting principles for fiscal years
1991 through 1998. 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, 1999, Moody's S&P, and Fitch rate the City's outstand-
ing 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
implications. Moody's rating of City bonds was revised in February 1998 to A3
from Baal.
As of December 31, 1998, 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 pro-
visions for State appropriations to maintain various debt service reserve
funds) to appropriate funds on behalf of the Agencies. Moreover, it is ex-
pected that the problems faced by these Agencies will continue and will re-
quire increasing amounts of State assistance in future years. Failure of the
State to appropriate necessary 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 oc-
cur, would be likely to have a significant adverse affect on investor confi-
dence 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 Fed-
eral guarantees of City and MAC obligations and could thus jeopardize the
City's long-term financing plans.
As of March 31, 1999, 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.
(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
S-14
<PAGE>
eighteenth and nineteenth centuries. The claimants seek recovery of approxi-
mately six million acres of land, as well as compensatory and punitive damages.
(5) Other Municipalities: Certain localities in addition to New York City could
have financial problems leading to requests for additional State assistance.
The potential impact on the State of such actions by localities is not included
in projections of State receipts and expenditures in the State's 1999-2000 fis-
cal 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 Assistance
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 municipal
assistance corporation has also been established for Newburgh. In addition,
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 condition.
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 jeop-
ardizing their respective access to the public credit markets, the marketabil-
ity of notes and bonds issued by localities within the State, including notes
or bonds in the Fund, could be adversely affected. Localities also face antici-
pated and potential problems resulting from certain pending litigation, judi-
cial decisions, and long-range economic trends. The longer-range potential
problems of declining urban population, increasing expenditures, and other eco-
nomic trends could adversely affect certain localities and require increasing
State assistance in the future.
(6) Other Issuers of New York Municipal Obligations. There are a number of
other state agencies, instrumentalities and political subdivisions of the State
that issue Municipal Obligations, some of which may be conduit revenue obliga-
tions payable from payments from private borrowers. These entities are subject
to various economic risks and uncertainties, and the credit quality of the se-
curities issued by them may vary considerably from the credit quality of obli-
gations backed by the full faith and credit of the State.
S-15
<PAGE>
Taxable Investments
Taxable investments (sometimes called "Temporary Investments") include obliga-
tions of the United States Government, its agencies or instrumentalities; debt
securities of issuers having, at the time of purchase, a quality rating within
the two highest grades by either Moody's Investors Service, Inc. ("Moody's") or
Standard and Poor's Corporation ("S&P") (Aaa or Aa, or AAA or AA, respective-
ly); commercial paper rated in the highest grade by either of such rating serv-
ices (Prime-1 or A-1, respectively); certificates of deposit of domestic banks
with assets of $1 billion or more; and municipal securities and U.S. Government
obligations subject to short-term repurchase agreements.
Subject to the limitations described in the prospectus, the Funds may invest in
the following taxable investments:
U.S. Government Direct Obligations--issued by the United States Treasury and
include bills, notes and bonds.
--Treasury bills are issued with maturities of up to one year. They are is-
sued in bearer form, are sold on a discount basis and are payable at par
value at maturity.
--Treasury notes are longer-term interest-bearing obligations with original
maturities of one to seven years.
--Treasury bonds are longer-term interest-bearing obligations with original
maturities from five to thirty years.
U.S. Government Agencies Securities--Certain federal agencies have been estab-
lished as instrumentalities of the United States Government to supervise and
finance certain types of activities. These agencies include, but are not lim-
ited to, the Bank for Cooperatives, Federal Land Banks, Federal Intermediate
Credit Banks, Federal Home Loan Banks, Federal National Mortgage Association,
Government National Mortgage Association, Export-Import Bank of the United
States and Tennessee Valley Authority. Issues of these agencies, while not di-
rect obligations of the United States Government, are either backed by the full
faith and credit of the United States or are guaranteed by the Treasury or sup-
ported by the issuing agencies' right to borrow from the Treasury. There can be
no assurance that the United States Government itself will pay interest and
principal on securities as to which it is not so legally obligated.
Certificates of Deposit (CDs)--A certificate of deposit is a negotiable inter-
est-bearing instrument with a specific maturity. CDs are issued by banks in ex-
change for the deposit of funds and normally can be traded in the secondary
market, prior to maturity. The Funds will only invest in U.S. dollar denomi-
nated CDs issued by U.S. banks with assets of $1 billion or more.
Commercial Paper--Commercial paper is the term used to designate unsecured
short-term promissory notes issued by corporations. Maturities on these issues
vary from a few to 397 days. Commercial paper may be purchased from U.S. corpo-
rations.
S-16
<PAGE>
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 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. Repur-
chase 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 fi-
nancial institutions that in the opinion 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 declines, and might incur disposition costs
or experience delays in connection with liquidating the collateral. In addi-
tion, if bankruptcy proceedings are commenced with respect to the seller of the
security, realization upon the collateral by the Funds may be delayed or limit-
ed. 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 collat-
eral declines below the repurchase price, Nuveen Advisory will demand addi-
tional collateral from the issuer to increase the value of the collateral to at
least that of the repurchase price.
Variable and Floating Rate Investments--See description on page 7.
Ratings of Investments
The two highest ratings of Moody's for municipal securities are Aaa and Aa. Mu-
nicipal securities rated Aaa are judged to be of the "best quality." The rating
of Aa is assigned to municipal securities 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 securities. The
Aaa and Aa rated municipal securities 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 securities are AAA and AA. Munici-
pal securities rated AAA have an extremely strong capacity to pay principal and
interest. The rating of AA indicates that capacity to pay principal and inter-
est is very strong and such bonds differ from AAA issues only in small degree.
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
S-17
<PAGE>
the market for refinancing, or both. Obligations designated as MIG-2 or VMIG-2
are high quality obligations with ample margins of protection. The designation
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 Fund's 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 the Fund, an issue may cease to be rated or its
rating may be reduced below the minimum required for purchase by the Fund. Nei-
ther event requires the elimination of such obligations from the Fund, but
Nuveen Advisory will consider such an event in its determination of whether the
Fund should continue to hold such obligation.
MANAGEMENT
The management of the Fund, including general supervision of the duties per-
formed by Nuveen Advisory under the Investment Management Agreement, is the re-
sponsibility of its Board of Directors. There are seven directors of the Fund,
one of whom is an "interested person" (as that term is defined in the Invest-
ment Company Act of 1940. The names and business addresses of the directors and
officers of the Fund and their ages and principal occupations and other affili-
ations during the past five years are set forth below.
<TABLE>
- ------------------------------------------------------------------------------------------
<CAPTION>
Positions and Principal Occupations
Name and Address Age Offices with Funds During Past Five Years
- ------------------------------------------------------------------------------------------
<C> <C> <C> <S>
Timothy R. Schwertfeger*+ 50 Chairman of the Board and Director Chairman of the Board of
333 West Wacker Drive the Funds (since July
Chicago, IL 60606 1996); Trustee and
President of the Funds
advised by Nuveen
Institutional Advisory
Corp. (since July 1996);
Chairman (since July
1996), Director, and
previously Executive
Vice President, of The
John Nuveen Company,
John Nuveen & Co.,
Nuveen Advisory Corp.
and Nuveen Institutional
Advisory Corp; Director
(since 1998) of
Institutional Capital
Corporation; Chairman
and Diector of Nuveen
Asset Management Inc.;
Chairman and Director of
Rittenhouse Financial
Services Inc. (since
1999).
</TABLE>
- --------------------------------------------------------------------------------
S-18
<PAGE>
<TABLE>
- ---------------------------------------------------------------------------------------------
<CAPTION>
Positions and Principal Occupations
Name and Address Age Offices with Funds During Past Five Years
- ---------------------------------------------------------------------------------------------
<C> <C> <C> <S>
Robert P. Bremner 58 Director Private Investor and
3725 Huntington Street, N.W. Management Consultant.
Washington, D.C. 20015
- ---------------------------------------------------------------------------------------------
Lawrence H. Brown 64 Director Retired (August 1989) as
201 Michigan Avenue Senior Vice President of
Highwood, IL 60040 The Northern Trust
Company (banking and
trust industry).
- ---------------------------------------------------------------------------------------------
Anne E. Impellizzeri 66 Director Executive Director
3 West 29th Street (since 1998) of Manitoga
New York, NY 10001 (Center for Russell
Wright's design/home and
landscape); formerly
President and Chief
Executive Officer of
Blanton-Peale,
Institutes of Religion
and Health (a training
and counseling
organization).
- ---------------------------------------------------------------------------------------------
Peter R. Sawers 66 Director Adjunct Professor of
22 The Landmark Business and Economics,
Northfield, IL 60093 University of Dubuque,
Iowa; Adjunct Professor,
Lake Forest Graduate
School of Management,
Lake Forest, Illinois;
Chartered Financial
Analyst; Certified
Management Consultant.
- ---------------------------------------------------------------------------------------------
William J. Schneider 54 Director Senior Partner and Chief
4000 Miller-Valentine Ct. Operating Officer,
P.O. Box 744 Miller-Valentine
Dayton, OH 45401 Partners, Vice
President, Miller-
Valentine Group
(commercial real
estate); Member
Community Advisory
Board, National City
Bank, Dayton, Ohio.
- ---------------------------------------------------------------------------------------------
Judith M. Stockdale 51 Director Executive Director,
35 E. Wacker Drive Gaylord and Dorothy
Suite 2600 Donnelley Foundation, a
Chicago, IL 60601 private family
foundation (since 1994);
prior thereto, Executive
Director, Great Lakes
Protection Fund (from
1990 to 1994).
- --------------------------------------------------------------------------------
Alan G. Berkshire+ 38 Vice President and Asst. Secretary Vice President and
333 West Wacker Drive since 1998 General Counsel (since
Chicago, IL 60606 September 1997) and
Secretary (since May
1998) of The John Nuveen
Company, John Nuveen &
Co. Incorporated, Nuveen
Advisory Corp. and
Nuveen Institutional
Advisory Corp.; prior
thereto, partner in the
law firm of Kirkland &
Ellis.
- --------------------------------------------------------------------------------
Peter H. D'Arrigo 31 Vice President and Treasurer Vice President of John
333 West Wacker Drive since 1999 Nuveen & Co.
Chicago, IL 60606 Incorporated (since
January 1999), prior
thereto. Assistant Vice
President (from January
1997); formerly,
Associate of John Nuveen
& Co. Incorporated;
Chartered Financial
Analyst.
</TABLE>
- --------------------------------------------------------------------------------
S-19
<PAGE>
<TABLE>
- ----------------------------------------------------------------------------------
<CAPTION>
Positions and Principal Occupations
Name and Address Age Offices with Funds During Past Five Years
- ----------------------------------------------------------------------------------
<C> <C> <C> <S>
Michael S. Davern+ 41 Vice President since 1997 Vice President of Nuveen
333 West Wacker Drive Advisory Corp. (since
Chicago, IL 60606 January 1997); prior
thereto, Vice President
and Portfolio Manager of
Flagship Financial, Inc.
(from September 1991 to
January 1997).
- ----------------------------------------------------------------------------------
Lorna C. Ferguson+ 53 Vice President since 1998 Vice President of John
333 West Wacker Drive Nuveen & Co.
Chicago, IL 60606 Incorporated; Vice
President of Nuveen
Advisory Corp. and
Nuveen Institutional
Advisory Corp. (since
January 1998).
- ----------------------------------------------------------------------------------
William M. Fitzgerald+ 35 Vice President since 1996 Vice President of Nuveen
333 West Wacker Drive Advisory Corp. (since
Chicago, IL 60606 December 1995); prior
thereto, Assistant Vice
President of
Nuveen Advisory Corp.
(from September 1992 to
December 1995);
Chartered Financial
Analyst.
- ----------------------------------------------------------------------------------
Stephen D. Foy+ 44 Vice President and Controller Vice President of John
333 West Wacker Drive since 1998 Nuveen & Co.
Chicago, IL 60606 Incorporated and (since
May 1998) The John
Nuveen Company;
Certified Public
Accountant.
- --------------------------------------------------------------------------------
J. Thomas Futrell+ 43 Vice President since 1991 Vice President of Nuveen
333 West Wacker Drive Advisory Corp.;
Chicago, IL 60606 Chartered Financial
Analyst.
- ----------------------------------------------------------------------------------
Richard A. Huber+ 36 Vice President since 1997 Vice President of Nuveen
333 West Wacker Drive Institutional Advisory
Chicago, IL 60606 Corp. (since March 1998)
and Nuveen Advisory
Corp. (since January
1997); prior thereto,
Vice President and
Portfolio Manager of
Flagship Financial, Inc.
- ----------------------------------------------------------------------------------
Steven J. Krupa+ 41 Vice President since 1990 Vice President of Nuveen
333 West Wacker Drive Advisory Corp.
Chicago, IL 60606
- ----------------------------------------------------------------------------------
Larry W. Martin+ 47 Vice President since 1993 and Vice President,
333 West Wacker Drive Asst. Secretary since 1998 Assistant Secretary and
Chicago, IL 60606 Assistant General
Counsel of John Nuveen &
Co. Incorporated; Vice
President and Assistant
Secretary of Nuveen
Advisory Corp. and
Nuveen Institutional
Advisory Corp.,
Assistant Secretary of
The John Nuveen Company
and (since January 1997)
Nuveen Asset Management
Inc.
- ----------------------------------------------------------------------------------
Edward F. Neild, IV+ 33 Vice President since 1996 Vice President of Nuveen
333 West Wacker Drive Advisory Corp. and
Chicago, IL 60606 Nuveen Institutional
Advisory Corp. (since
September 1996); prior
thereto, Assistant Vice
President of Nuveen
Advisory Corp. (from
December 1993 to
September 1996) and
Nuveen Institutional
Advisory Corp. (from May
1995 to September 1996);
Chartered Financial
Analyst.
- ----------------------------------------------------------------------------------
Stephen S. Peterson+ 41 Vice President since 1997 Vice President, (since
333 West Wacker Drive September 1997),
Chicago, IL 60606 Assistant Vice President
(from September 1996 to
September 1997), and
Portfolio Manager prior
thereto, of Nuveen
Advisory Corp.;
Chartered Financial
Analyst.
</TABLE>
- --------------------------------------------------------------------------------
S-20
<PAGE>
<TABLE>
- -----------------------------------------------------------------------------------
<CAPTION>
Positions and Principal Occupations
Name and Address Age Offices with Funds During Past Five Years
- -----------------------------------------------------------------------------------
<C> <C> <C> <S>
Stuart W. Rogers+ 42 Vice President since 1997 Vice President of John
333 West Wacker Drive Nuveen & Co.
Chicago, IL 60606 Incorporated.
- -----------------------------------------------------------------------------------
Thomas C. Spalding Jr.+ 47 Vice President since 1980 Vice President of Nuveen
333 West Wacker Drive Advisory Corp. and
Chicago, IL 60606 Nuveen Institutional
Advisory Corp.;
Chartered Financial
Analyst.
- -----------------------------------------------------------------------------------
William S. Swanson+ 33 Vice President since 1998 Vice President of John
333 West Wacker Drive Nuveen & Co.
Chicago, IL 60606 Incorporated (since
October 1997); Assistant
Vice President (from
September 1996 to
October 1997) and,
formerly, Associate;
Chartered Financial
Analyst.
- -----------------------------------------------------------------------------------
Gifford R. Zimmerman+ 42 Vice President since 1993 and Vice President,
333 West Wacker Drive Secretary since 1998 Assistant Secretary and
Chicago, IL 60606 Associate General
Counsel, formerly
Assistant General
Counsel (since September
1997) of John Nuveen &
Co. Incorporated; Vice
President and Assistant
Secretary of Nuveen
Advisory Corp. and
Nuveen Institutional
Advisory Corp.;
Assistant Secretary of
The John Nuveen Company
(since May 1994);
Chartered Financial
Analyst.
</TABLE>
- --------------------------------------------------------------------------------
- --------
* Mr. Schwertfeger is an interested person of the Fund.
+ Person is an affiliate of the Fund and an affiliate of the adviser or prin-
cipal underwriter.
Timothy R. Schwertfeger and Peter R. Sawers serve as members of the Executive
Committee of the Board of Directors. The Executive Committee, which meets be-
tween regular meetings of the Board of Directors, is authorized to exercise all
of the powers of the Board of Directors provided that the scope of the powers
of the Executive Committee, unless otherwise specifically authorized by the
full Board, shall be limited to (i) emergency matters where assembling the full
Board in a timely manner is impracticable (and in which event management would
take all reasonable steps to quickly notify the individual Board members of the
actions taken by the Executive Committee), or (ii) matters of an administrative
or ministerial nature.
The directors of Nuveen Tax-Free Money Market Fund, Inc. are directors or
trustees, as the case may be, of 32 Nuveen open-end portfolios and of 52 Nuveen
closed-end funds.
S-21
<PAGE>
The following table sets forth compensation paid by the Fund during the fiscal
year ended February 28, 1999 to each of the directors. The Fund has no retire-
ment or pension plans. The officers and directors affiliated with Nuveen serve
without any compensation from the Fund.
<TABLE>
<CAPTION>
Total Compensation
Aggregate From the Fund and
Compensation Fund Complex Paid
Name of Director from the Fund to Directors
- --------------------------------------------------------------------------------
<S> <C> <C>
Anthony T. Dean*............................... $ 0 $ 0
Timothy R. Schwertfeger........................ $ 0 $ 0
Robert P. Bremner.............................. $190.08 $71,500.00
Lawrence H. Brown.............................. $198.51 $79,000.00
Anne E. Impellizzeri........................... $190.08 $71,500.00
Peter R. Sawers................................ $190.08 $72,000.00
William J. Schneider........................... $190.08 $71,500.00
Judith M. Stockdale............................ $190.08 $72,000.00
</TABLE>
- --------
* Former trustee, retired February, 1999.
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, 1999, the officers and directors of the Fund as a group owned less
than 1% of the outstanding shares of the Fund.
S-22
<PAGE>
The following table sets forth the percentage ownership of each person who as
of May 19, 1999 owns of record or is known by the Fund to own of record 5% or
more of the Fund's shares. The Fund believes that none of these shares are
owned beneficially, but are held as agent for various accounts which are the
beneficial owners. [to be inserted]
<TABLE>
<CAPTION>
- ------------------------
<S> <C> <C>
</TABLE>
S-23
<PAGE>
INVESTMENT ADVISER AND INVESTMENT MANAGEMENT AGREEMENT
Nuveen Advisory acts as investment adviser for the Fund and in such capacity
manages the investment and reinvestment of the Fund's assets. Nuveen Advisory
also administers the Fund's business affairs, provides office facilities and
equipment and certain clerical, bookkeeping and administrative services, and
permits any of its officers or employees to serve without compensation as di-
rectors or officers of the Fund if elected to such positions.
Pursuant to an investment management agreement between Nuveen Advisory and the
Fund, the Fund has agreed to pay annual management fees at the rate set forth
below, which are based on the Fund's average daily net asset value:
<TABLE>
<CAPTION>
Average Daily Net Asset Value Management Fee
- ---------------------------------------------
<S> <C>
First $125M 0.4000 of 1%
Next $125M 0.3875 of 1%
Next $250M 0.3750 of 1%
Next $500M 0.3625 of 1%
Next $1B 0.3500 of 1%
Over $2B 0.3250 of 1%
</TABLE>
Through December 31, 1999, Nuveen Advisory has undertaken to reimburse Fund ex-
penses in an amount necessary to limit total operating expenses to .55 of 1% of
the Fund's daily net asset value. Thereafter, Nuveen Advisory may choose to
modify, continue or discontinue these reimbursements at its sole discretion.
Before June 1999, and pursuant to an investment management agreement between
Nuveen Advisory and the Fund, the Fund agreed to pay annual management fees at
the rates set forth below, which are based on the Fund's average daily net as-
set value:
<TABLE>
<CAPTION>
Average Daily Net Asset
Value Management 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>
For periods before June 1999, Nuveen Advisory had agreed to waive all or a por-
tion of its management fee or reimburse certain expenses of the Fund in order
to prevent total operating expenses of (including Nuveen Advisory's management
fee, but excluding interest, taxes, fees incurred in acquiring and disposing of
portfolio securities, any asset-based distribution or service fees and, to the
extent permitted, extraordinary expenses) in any fiscal year from exceeding .55
of 1% of the average daily net asset value of the Fund. Nuveen Advisory could
also voluntarily agree to reimburse additional expenses from time to time,
which could be terminated at any time in its discretion. For the last three
fiscal years, the Fund paid net management fees to Nuveen Advisory as follows:
<TABLE>
<CAPTION>
Management Fees
Net of Expense Fee Waivers and
Reimbursement Expense Reimbursements
Paid to Nuveen Advisory for
for the Year Ended the Year Ended
----------------------- -----------------------
2/28/97 2/28/98 2/28/99 2/28/97 2/28/98 2/28/99
---------------------
<S> <C> <C> <C> <C> <C> <C>
7,960 15,559 107,183 95,248
</TABLE>
S-24
<PAGE>
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. In addition, Nuveen open-end
and closed-end funds held approximately [$38 billion] in securities under man-
agement as of the date of this Statement. Over 1,000,000 individuals have in-
vested to date in Nuveen's funds and trusts. Founded 1898, Nuveen is a subsidi-
ary 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 providing property-liability insurance
through subsidiaries.
Nuveen Advisory's portfolio managers call upon the resources of Nuveen's Re-
search Department. The Nuveen Research Department reviews more than $100 bil-
lion in municipal bonds every year.
The Fund, the other Nuveen funds, Nuveen Advisory, and other related entities
have adopted a code of ethics which essentially prohibits all Nuveen fund man-
agement personnel, including Nuveen fund portfolio managers, from engaging in
personal investments which compete or interfere with, or attempt to take advan-
tage of, the Fund's anticipated or actual portfolio transactions, and is de-
signed to assure that the interest of Fund shareholders are placed before the
interest of Nuveen personnel in connection with personal investment transac-
tions.
PORTFOLIO TRANSACTIONS
Nuveen Advisory, in effecting purchases and sales of portfolio securities for
the account of the Fund, will place orders in such manner as, in the opinion of
management, will offer the best price and market for the execution of each
transaction. Portfolio securities will normally be purchased directly from an
underwriter or in the over-the-counter market from the principal dealers in
such securities, unless it appears that a better price or execution may be ob-
tained elsewhere. Portfolio securities will not be purchased from Nuveen or its
affiliates except in compliance with the Investment Company Act of 1940.
The Fund expects 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 obtainable,
it will be the practice of the Fund to select dealers which, in addition, fur-
nish research information (primarily credit analyses of issuers) and statisti-
cal and other services to Nuveen Advisory. It is not possible to place a dollar
value on information and statistical and other services received from dealers.
Since it is only supplementary to Nuveen Advisory's own research efforts, the
receipt of research information is not expected to reduce significantly Nuveen
Advisory's expenses. Any research benefits obtained are available to all of
Nuveen Advisory's other clients. While Nuveen Advisory will be primarily re-
sponsible for the placement of the business of the
S-25
<PAGE>
Funds, the policies and practices of Nuveen Advisory in this regard must be
consistent with the foregoing and will, at all times, be subject to review by
the Board of Directors.
Nuveen Advisory reserves the right to, and does, manage other investment ac-
counts and investment companies or other clients which may have investment ob-
jectives similar to the Fund. Subject to applicable laws and regulations,
Nuveen Advisory will attempt to allocate equitably portfolio transactions among
the Fund and the portfolios of its other clients purchasing securities whenever
decisions are made to purchase or sell securities by the Fund and one or more
of such other clients simultaneously. In making such allocations the main fac-
tors to be considered will be the respective investment objectives of the Fund
and such other clients, the relative size of portfolio holdings of the same or
comparable securities, the availability of cash for investment by the Fund and
such other clients, the size of investment commitments generally held by the
Fund and such other clients and opinions of the persons responsible for recom-
mending investments to the Fund and such other clients.
While this procedure could have a detrimental effect on the price or amount of
the securities available to the Fund from time to time, it is the opinion of
the Fund's Board of Directors that the benefits available from Nuveen
Advisory's organization outweigh any disadvantage that may arise from exposure
to simultaneous transactions.
Under the Investment Company Act of 1940, the Fund may not purchase portfolio
securities from any underwriting syndicate of which Nuveen is a member except
under certain limited conditions set forth in Rule 10f-3. The Rule sets forth
requirements relating to, among other things, the type of securities purchased
by the Fund and the amount of securities which may be purchased in any one is-
sue. In addition, purchases of securities made pursuant to the terms of the
Rule must be approved at least quarterly by the Board of Directors, including a
majority of the members thereof who are not interested persons of the Fund.
NET ASSET VALUE
As stated in the Prospectus, the net asset value of the shares of the Fund will
be determined separately for each class of the Fund's shares by The Chase Man-
hattan Bank, the Fund's custodian, as of 12:00 noon, Eastern Time, (1) on each
day on which the Federal Reserve Bank of Boston is normally open and (2) on any
day during which there is sufficient degree of trading in the Fund's portfolio
securities that the current net asset value of the Fund shares might be materi-
ally affected by such changes in the value of the portfolio securities. The
Federal Reserve Bank of Boston is not open and the Fund will similarly not be
open on New Year's Day, Martin Luther King's Birthday, Washington's Birthday,
Good Friday, Memorial Day, Independence Day, Labor Day, Columbus Day, Veteran's
Day, Thanksgiving Day and Christmas Day. It is possible that changing circum-
stances during the year will result in addition or deletions to the above
lists. The net asset value per share will be computed by dividing the value of
the portfolio securities held by the Fund, plus cash or other assets, less lia-
bilities, by the total number of shares outstanding at such time.
As stated in the Prospectus, the Fund will seek to maintain a net asset value
of $1.00 per share. In this connection, the Fund values its portfolio securi-
ties at their amortized cost, as permitted by the Securi-
S-26
<PAGE>
ties and Exchange Commission (the "Commission") under Rule 2a-7 under the In-
vestment 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 purchase and thereafter assuming a constant amortization to matu-
rity of any discount or premium. While this method provides certainty in valua-
tion, it may result in periods during which the value of an investment, as de-
termined by amortized cost, is higher or lower than the price the Fund would
receive if it sold the instrument. During periods of declining interest rates,
the daily yield on shares of the Fund may tend to be higher than a like compu-
tation made by a fund with identical investments utilizing a method of valua-
tion 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
Fund resulted in a lower aggregate portfolio value on a particular day, a pro-
spective investor in the Fund would be able to obtain a somewhat higher yield
than would result from an investment in a fund utilizing solely market values,
and existing investors in the Fund would receive less investment income. The
converse would apply in a period of rising interest rates.
The Fund, as a condition to the use of amortized cost and the maintenance of
its per share net asset value of $1.00, must maintain a dollar-weighted average
portfolio maturity of 90 days or less, only purchase instruments having remain-
ing maturities of 397 days or less, and invest only in securities determined to
be of high quality with minimal credit risks. The Fund may invest in variable
and floating rate instruments even if they carry stated maturities in excess of
397 days, upon certain conditions contained in rules and regulations issued by
the Securities and Exchange Commission under the Investment Company Act of
1940, but will do so only if there is a secondary market for such instruments
or if they carry demand features, permissible under rules of the Commission for
money market funds, to recover the full principal amount thereof upon specified
notice at par, or both.
The Board of Trustees, pursuant to Rule 2a-7, has established procedures de-
signed to stabilize, to the extent reasonably possible, the Fund's price per
share as computed for the purpose of sales and redemptions at $1.00. Such pro-
cedures will include review of the Fund's portfolio holdings by the Board of
Trustees, at such intervals as it may deem appropriate, to determine whether
the net asset value calculated by using available market quotations or market
equivalents deviates from $1.00 per share based on amortized cost. Market quo-
tations and market equivalents used in such review may be obtained from a pric-
ing agent approved by the Board of Trustees. The Board has selected Nuveen Ad-
visory to act as pricing agent, but in the future may select an independent
pricing service to perform this function. In serving as pricing agent, Nuveen
Advisory will follow guidelines adopted by the Board, and the Board will moni-
tor Nuveen Advisory to see that the guidelines are followed. The pricing agent
will value the Fund's investment based on methods which include consideration
of yield or prices of municipal obligations of comparable quality, coupon, ma-
turity, and type; indications as to values from dealers; and general market
conditions. The pricing agent may employ electronic data processing techniques
and/or a matrix system to determine valuations. The extent of any deviation be-
tween the Fund's net asset value based on the pricing agent's market valuation
and $1.00 per share based on amortized cost will be examined by the Board of
Trustees. If such deviation exceeds 1/2 of 1%, the Board of Trustees will
promptly consider what action, if any, will be initiated. In the event the
Board of Trustees determines that a deviation exists which may result in mate-
rial dilution or other unfair results to investors or existing shareholders, it
has agreed to take such corrective action as it regards as necessary and appro-
priate, including the sale of portfolio instruments prior to maturity to real-
ize capital gains or losses or to shorten average portfolio maturity.
S-27
<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, the 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 qualify as regu-
lated investment company, the Fund must satisfy certain requirements relating
to the source of its income, diversification of its assets, and distributions
of its income to shareholders. First, the Fund must derive at least 90% of its
annual gross income (including tax-exempt interest) from dividends, interest,
payments with respect to securities loans, gains from the sale or other dispo-
sition of stock or securities, foreign currencies or other income (including
but not limited to gains from options and futures) derived with respect to its
business of investing in such stock or securities (the "90% gross income
test"). Second, the Fund must diversify its holdings so that, at the close of
each quarter of its taxable year, (i) at least 50% of the value of its total
assets is comprised of cash, cash items, United States Government securities,
securities of other regulated investment companies and other securities limited
in respect of any one issuer to an amount not greater in value than 5% of the
value of the Fund's total assets and to not more than 10% of the outstanding
voting securities of such issuer, and (ii) not more than 25% of the value of
the total assets is invested in the securities of any one issuer (other than
United States Government securities and securities of other regulated invest-
ment companies) or two or more issuers controlled by a Fund and engaged in the
same, similar or related trades or businesses.
As a regulated investment company, the Fund will not be subject to federal in-
come 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 the Fund distributes at least 90% of the sum of (i) its "investment com-
pany taxable income" (which includes dividends, taxable interest, taxable orig-
inal 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 ex-
penses) and (ii) its "net tax-exempt interest" (the excess of its gross tax-ex-
empt interest income over certain disallowed deductions).
The Fund also intends to satisfy conditions which will enable it to designate
certain distributions as exempt interest dividends. Shareholders receiving ex-
empt interest dividends will not be subject to regular federal income tax on
the amount of such dividends.
Distributions by the Fund of net interest income received from certain taxable
investments (such as certificates of deposit, commercial paper and obligations
of the United States Government, its agencies and instrumentalities) and net
short-term capital gains realized by the Fund, if any, will be taxable to
shareholders as ordinary income whether received in cash or additional shares.
If the Fund purchases a security at a market discount, any gain realized by the
Fund upon sale or redemption of the security will be treated as taxable inter-
est income to the extent such gain does not exceed the market discount, and any
gain realized in excess of the market discount will be treated as a capital
gain. Any net long-
S-28
<PAGE>
term capital gains realized by the Fund and distributed to shareholders in cash
or additional shares will be taxable to shareholders as long-term capital gains
regardless of the length of time investors have owned shares of the Fund. The
Fund does not expect to realize significant long-term capital gains. Because
the taxable portion of the Fund's investment income consists primarily of in-
terest, none of its dividends, whether or not treated as exempt-interest divi-
dends, is expected to qualify under the Internal Revenue Code for the dividends
received deductions for corporations.
If the Fund has both tax-exempt and taxable income, it will use the "average
annual" method for determining the designated percentage that is taxable income
and designate the use of such method within 60 days after the end of the Fund's
taxable year. Under this method, one designated percentage is applied uniformly
to all distributions made during the Fund's taxable year. The percentage of 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 the Fund (and received
by the shareholders) on December 31.
The redemption or exchange of the shares of the Fund is not expected to result
in capital gain or loss to the shareholders because the Fund's net asset value
is expected to remain constant at $1.00 per share. To the extent that the
Fund's net asset value is greater or lesser than $1.00 per share, redemptions
or exchanges may result in capital gain or loss to the shareholder.
In order to avoid a 4% federal excise tax, the Fund must distribute or be
deemed to have distributed by December 31 of each calendar year at least 98% of
its taxable ordinary income for such year, at least 98% of the excess of its
realized capital gains over its realized capital losses (generally computed on
the basis of the one-year period ending on 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 the Fund paid no federal income tax. The Fund intends to make
timely distributions in compliance with these requirements and consequently it
is anticipated that they generally will not be required to pay the excise tax.
If in any year the Fund should fail to qualify under Subchapter M for tax
treatment as a regulated investment company, the Fund would incur a regular
corporate federal income tax upon its income for that year, (other than inter-
est income from tax-exempt securities) and distributions to its shareholders
out of net interest income from tax-exempt securities or other investments, or
out of net capital gains, would be taxable to shareholders as ordinary dividend
income for federal income tax purposes to the extent of the Fund's available
earnings and profits.
The Fund may invest in the type of private activity bonds the interest on which
is not federally tax-exempt to persons who are "substantial users" of the fa-
cilities financed by such bonds or "related persons" of such "substantial us-
ers." Accordingly, the Funds may not be appropriate investments for sharehold-
ers who are considered either a "substantial user" or a "related person" within
the meaning of
S-29
<PAGE>
the Code. In general, a "substantial user" of a facility financed from the pro-
ceeds of private activity bonds includes a "non-exempt person who regularly
uses a part of such facility in his trade or business." "Related persons" are
in general defined to include persons among whom there exists a relationship
either by family or business, which would result in a disallowance of losses in
transactions among them under various provisions of the Code (or if they are
members of the same controlled group of corporations under the Code). This in-
cludes a partnership and each of its partners (including their spouses and mi-
nor children) and an S corporation and each of its shareholders (and their
spouses and minor children). Various combinations of these relationships may
also constitute "related persons" under the Code. For additional information,
investors should consult their tax advisers before investing in the Funds.
Federal tax law imposes an alternative minimum tax with respect to both corpo-
rations and individuals. Interest on certain securities, such as bonds issued
to make loans for housing purposes or to private entities (but not for certain
tax-exempt organizations such as universities and non-profit hospitals), is in-
cluded as an item of tax preference in determining the amount of a taxpayer's
alternative minimum taxable income. To the extent that the Fund receives income
from securities subject to the alternative minimum tax, a portion of the divi-
dends paid by it, although otherwise exempt from federal income tax, will be
taxable to shareholders to the extent that their tax liability is determined
under the alternative minimum tax regime. The Fund will annually supply share-
holders with a report indicating the percentage of the Fund income attributable
to securities subject to the federal alternative minimum tax.
In addition, the alternative minimum taxable income for corporations is in-
creased by 75% of the difference between an alternative measure of income ("ad-
justed current earnings") and the amount otherwise determined to be the alter-
native minimum taxable income. Interest on all securities, and therefore all
distributions by the Fund that would otherwise be tax exempt, is included in
calculating a corporation's adjusted current earnings.
Individuals whose provisional income exceeds a base amount will be subject to
Federal income tax on up to one-half of their social security or railroad re-
tirement benefits. Provisional income currently includes adjusted gross income,
one-half of social security benefits and tax-exempt interest, including exempt-
interest dividends from the Fund. Individuals whose modified income exceeds the
adjusted base amount are required to include in gross income up to 85% of their
social security or railroad retirement benefits.
The Code provides that interest on indebtedness incurred or continued to pur-
chase or carry shares of 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 the Fund
may be considered to have been made with borrowed funds even though such funds
are not directly traceable to the purchase of shares.
The Fund is required in certain circumstances to withhold 31% of taxable divi-
dends and certain other payments paid to non-corporate holders of shares who
have not furnished to the Fund their correct taxpayer identification number (in
the case of individuals, their social security number) and certain certifi-
cates, or who are otherwise subject to back-up withholding.
S-30
<PAGE>
The foregoing is a general and abbreviated summary of the provisions of the
Code and Treasury Regulations presently in effect as they directly govern the
taxation of the Fund and their shareholders. For complete provisions, reference
should be made to the pertinent Code sections and Treasury Regulations. The
Code and Treasury Regulations are subject to change by legislative or adminis-
trative action, and any such change may be retroactive with respect to transac-
tions of the Fund. Shareholders are advised to consult their own tax advisers
for more detailed information concerning the federal taxation of the Fund and
the income tax consequences to their shareholders.
State Tax Matters
The following is based upon the advice of Morgan, Lewis & Bockius LLP, Washing-
ton, D.C., counsel to the Fund, and assumes that the Fund will be qualified as
a regulated investment company under Subchapter M of the Code and will be qual-
ified thereunder to pay exempt interest dividends.
Individual shareholders of the 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 dividends which (1) are
attributable to interest on any obligations of New York or its political subdi-
visions or to interest on obligations of the United States, its territories,
possessions or instrumentalities that are exempt from state taxation under fed-
eral law, and (2) are designated by the Fund as New York exempt-interest divi-
dends in a written notice to shareholders not later than 60 days after the
close of the Fund's taxable year. Dividends which are not designated as New
York exempt-interest dividends will be included in New York adjusted gross in-
come as ordinary income.
Distributions to individual shareholders of capital gain dividends (as deter-
mined for federal income tax purposes) will be included in their New York ad-
justed gross income as 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 realized short-term capital gains
will be included in their New York adjusted gross income as ordinary income.
Present New York law taxes long-term capital gains at the rates applicable to
ordinary income.
Gain or loss, if any, resulting from an exchange or redemption of shares of the
New York Fund that is recognized by individual shareholders of the New York
Fund for federal income tax purposes will be recognized for purposes of New
York State (or New York City) personal income taxation.
Generally, corporate shareholders which are subject to New York State franchise
taxation (or New York City general corporation taxation) will be taxed upon
their entire net income, business and investment capital, or at a flat rate
minimum tax. Entire net income will include dividends received from the Fund,
as well as any gain or loss recognized from an exchange or redemption of Fund
shares that is recognized for federal income tax purposes. Investment capital
will include the corporate shareholder's shares of the Fund.
Fund shares will be exempt from local property taxes in New York State and New
York City, but will be includible in the New York gross estate of a deceased
individual holder who is a resident of New York for purposes of the New York
Estate Tax.
S-31
<PAGE>
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.
PERFORMANCE INFORMATION
The historical performance of the Fund may be expressed in terms of "yield,"
"effective yield" or "taxable equivalent yield." The "yield " of the Fund re-
fers 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. Due to this compounding effect,
the effective yield will be slightly higher than the yield. "Taxable equiva-
lent yield" is the yield that a taxable investment would need to generate in
order to equal the series' yield on an after-tax basis for an investor in a
stated bracket) often the bracket with the highest marginal tax rate). A tax-
able equivalent yield quotation for a given series will be higher than the
yield or the effective yield quotation for the series. The yield figures will
fluctuate over time. A comparison of tax-exempt and taxable equivalent yields
is one element to consider in making an investment decision. The Fund may from
time to time in its advertising and sales materials compare the then current
yield as of the most recent quarter of the Fund with the yield on taxable in-
vestments such as corporate or U.S. Government bonds, bank CDs and money mar-
ket accounts or money market funds, each of which has investment characteris-
tics that may differ from those of the Fund. U.S. Government bonds, for exam-
ple, 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 govern-
ment. Bank money market accounts and money market funds provide stability of
principal, but pay interest at rates that vary with the condition of the
short-term taxable debt market. The investment characteristics of the Fund are
described more fully elsewhere in this Prospectus.
Any given performance quotation or performance comparison for the fund is
based on historical earnings and should not be considered as representative of
the performance of the fund for any future period.
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 in-
vestment 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 re-
sult (the "base period return") is divided by seven 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 capital gains
or losses or unrealized appreciation or depreciation of investments.
S-32
<PAGE>
Effective yield is calculated by taking the base period return (computed as de-
scribed above) and calculating the effect of assumed compounding. The formula
for effective yield is: (base period return +1) 365/7 -1. Based on the seven-
day period ended February 28, 1999, the yield and effective yield was % and
%, respectively/1/.
Taxable equivalent yield is computed by dividing that portion of the fund's
yield which is tax-exempt by 1 minus the stated combined federal and state in-
come tax rate and adding the result to that portion, if any, of the yield of
the fund that is not tax-exempt. Based upon (1) a combined 1999 federal and
California income tax of 45.2%, and (2) the yield for the fund as described
above for the seven-day period ended February 28, 1999, the taxable equivalent
yield for the fund for that period was 5.53%.
Yield will fluctuate, and the publication of annualized yield quotations is not
a representation of what an investment in the fund will actually yield for any
given future period. Actual yields will depend not only on changes in interest
rates on money market instruments during the period in question, but also on
such matters as the expenses attributable to the fund.
In reports or other communications to shareholders or in advertising and sales
literature, the fund may compare its performance to that of other money market
mutual funds tracked by Lipper Analytical Services, Inc. ("Lipper"), by
Donoghue's Money fund Report ("Donoghue's") or similar services or by financial
publications such as Barron's, Changing Times, Forbes and Money Magazine. Per-
formance comparisons by these indexes, services or publications may rank mutual
funds over different periods of time by means of aggregate, average, year-by-
year or other types of performance figures. Lipper performance calculations in-
clude the reinvestment of all capital gain and income dividends for the periods
covered by the calculations. As reported by Donoghue's all investment results
represent total return (annualized results for the period net of management
fees and expenses) and one year investment results are effective annual yields
assuming reinvestment of dividends.
A comparison of tax-exempt and taxable equivalent yields is one element to con-
sider in making an investment decision. The Fund may from time to time in its
advertising and sales materials compare its then current yields as of a recent
date with the yields on taxable investments such as corporate or U.S. Govern-
ment bonds and bank CDs or money market accounts, each of which has investment
characteristics that may differ from those of the Fund. U.S. Government bonds,
for example, are backed by the full faith and credit of the U.S. Government,
and bank CDs and money market accounts are generally shorter term investments
insured by an agency of the federal government. Bank money market accounts and
money market funds provide stability of principal but pay interest at rates
which vary with the condition of the short-time taxable debt market.
- --------
1 Historical yield has been recalculated to reflect fund expenses as disclosed
in the fund's prospectus dated June 25, 1999, including a 12b-1 fee the im-
position of which will affect future performance. Before June 1999, the fund
offered three share classes. Returns reflect the performance of the Distri-
bution Series, adjusted for any differences between the fund's current fees
and those of the Distribution Series.
S-33
<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 Fund occasionally may ad-
vertise its performance in similar tables using a different current tax rate
than that shown here. The tax rate shown here may be higher or lower than your
actual tax rate; a higher tax rate would tend to make the dollar amounts in the
table lower, while a lower tax rate would make the amounts higher. You should
consult your tax adviser to determine your actual tax rate.
Taxable Equivalent Yield Tables
The following tables show the combined effects for individuals of federal,
state and local income taxes on:
. what you would have to earn on a taxable investment to equal a given tax-
free 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 investment.
These tables are for illustrative purposes only and are not intended to predict
the actual return you might earn on a Fund investment. The Funds occasionally
may advertise their performance in similar tables using other current combined
tax rates than those shown here. The combined tax rates used in these tables
have been rounded to the nearest one-half of one percent. They are based upon
published 1999 marginal federal tax rates and marginal state tax rates cur-
rently 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 al-
ternative minimum taxes and deduct any state income taxes paid on their federal
income tax returns. Unless noted otherwise, the tables do not reflect any local
taxes or any taxes other than personal income
S-34
<PAGE>
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 limita-
tions are subject to certain maximums, which depend on the number of exemptions
claimed and the total amount of the taxpayer's itemized deductions. For exam-
ple, 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.
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>
S-35
<PAGE>
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>
<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 in-
come 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 limita-
tion 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 particu-
lar 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.
S-36
<PAGE>
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>
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>
S-37
<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>
ADDITIONAL INFORMATION ABOUT PURCHASES AND SALES
Exchange Privileges
You may exchange shares of the fund for the appropriate class of shares of any
other open-end management investment company with reciprocal exchange privi-
leges advised by Nuveen Advisory (the "Nuveen Funds"), into an identically reg-
istered account, provided that the Nuveen Fund into which shares are to be ex-
changed is offered in the shareholder's state of residence and that the shares
to be exchanged have been held by the shareholder for a period of at least 15
days. You may exchange fund shares by calling (800) 257-8787 or by mailing your
written request to our Transfer Agent. Shares of Nuveen Funds purchased subject
to a front-end sales charge may be exchanged for shares of the fund or any
other Nuveen Fund at the next determined net asset value without any front-end
sales charge. No CDSC otherwise applicable will be assessed on an exchange, and
the holding period of your investment will be carried over to the new fund for
purposes of determining any future CDSC. You may exchange Class B shares for
shares of a Nuveen money market fund. Shares of any Nuveen Fund purchased
through dividend reinvestment or through reinvestment of Nuveen Unit Trust dis-
tributions (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 re-
spect to which no front-end sales charge has been paid will be made at the pub-
lic offering price, which may include a front-end sales charge, unless a front-
end sales charge has previously been paid on the investment represented by the
exchanged shares (i.e., the shares to be exchanged were originally issued in
exchange for shares on which a front-end sales charge was paid), in which case
the exchange will be made at net asset value. Because certain other Nuveen
Funds may determine net asset value and therefore honor purchase or redemption
requests on days when the fund does not (generally, Martin Luther King's Birth-
day, Columbus Day and Veterans Day), exchanges of shares of one of those funds
for shares of the fund may not be effected on such days.
The total value of shares being exchanged must at least equal the minimum in-
vestment requirement of the Nuveen Fund into which they are being exchanged.
Exchanges are made based on the relative dollar values of the shares involved
in the exchange, and will be effected by redemption of shares of the Nuveen
Fund held and purchase of the shares of the other Nuveen Fund. For federal in-
come tax purposes, any such exchange constitutes a sale and purchase of shares
and may result in capital gain or loss. Before exercising any exchange, you
should obtain the Prospectus for the Nuveen Fund into which shares are to be
exchanged and read it carefully. If the registration of the account for the
fund you are purchasing is not exactly the same as that of the fund account
from which the exchange is made, written instructions from all holders of the
account from which the exchange is being made must be received, with signatures
guaranteed by a member of an approved Medallion Guarantee Program or in such
other manner as may be acceptable to the fund. The exchange privilege may be
modified or discontinued at
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<PAGE>
any time. If you do not wish to have telephone exchange privileges, you must
indicate this in the "Telephone Services" section of your Account Application
or otherwise notify the Fund in writing of your desire.
Additional Information
An account will be maintained for each shareholder of record in the fund by our
Transfer Agent. Share certificates will be issued only upon written request of
the shareholder to our Transfer Agent. No certificates are issued for frac-
tional shares. The fund reserves the right to reject any purchase order and to
waive or increase minimum investment requirements.
Confirmations of each purchase and redemption order as well as monthly state-
ments are sent to every shareholder. Master accounts also receive a monthly
summary report setting forth the share balance and dividends earned for the
month for each sub-account established under that master account.
To assist those institutions performing their own-sub-accounting, same day in-
formation as to the fund's daily per share income to seven decimal places and
the one-day yield to four decimal places are normally available by 3:30 p.m.,
Eastern Time.
A change in registration or transfer of shares held in the name of a
broker/dealer can only be effected by an order in good form from the
broker/dealer acting on behalf of the investor. Broker/dealers are encouraged
to open single master accounts. However, some broker/dealers may wish to use
our Transfer Agent's sub-accounting system to minimize their internal record-
keeping requirements. A broker/dealer or other investor requesting shareholder
servicing or accounting other than the master account or subaccounting service
offered by the fund will be required to enter into a separate agreement with
the agent for these services for a fee to be determined in accordance with the
level of services to be furnished.
Banks and other organizations through which investors may purchase shares of
the fund may impose charges in connection with purchase orders. Investors
should contact their institutions directly to determine what charges, if any,
may be imposed.
Subject to the rules of the SEC, the fund reserves the right to suspend the
continuous offering of the shares at any time, but such suspension shall not
affect the shareholder's right of redemption as described below. The fund also
reserves the right to reject any purchase order and to waive or increase mini-
mum investment requirements.
Telephone Redemption via Fund 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.
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<PAGE>
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 Bos-
ton or the Federal Reserve Bank of New York is closed on the day the redemption
proceeds would ordinarily be wired.
If you have authorized Telephone Redemption via Fund Direct, you can take ad-
vantage of two methods of telephone redemption: regular telephone redemption
and expedited telephone redemption. You may make regular Fund Direct redemption
requests by calling Nuveen at (800) 257-8787. If a regular 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 follow-
ing the request. For all regular redemptions, you will typically receive your
funds within three business days after your redemption is effected. You may
make expedited telephone redemption requests to redeem shares that are worth at
least $1,000 by calling Nuveen at (800) 257-8787. If an expedited redemption
request is received by 12:00 noon Eastern Time, the shares to be redeemed do
not earn income on that day, but the redemption is effected, and you will nor-
mally 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 fund reserves the right to refuse a telephone redemption and, at its op-
tion, may limit the timing, amount or frequency of these redemptions. This pro-
cedure may be modified or terminated at any time, on 30 days' notice, by the
fund. The fund, the transfer agent and Nuveen will not be liable for following
telephone instructions reasonably believed to be genuine.
Redemption in Kind
The fund has committed to pay in cash all redemption requests made by each
shareholder during any 90 day period up to the lesser of $250,000 or 1% of the
net asset value of the fund at the beginning of such period. This commitment is
irrevocable without the prior approval of the SEC and is a fundamental policy
of the fund which may not be changed without shareholder approval. In the case
of redemption requests in excess of such amounts, the Board of Directors re-
serves the right to have the fund make payment in whole or in part in securi-
ties or other assets of the fund in case of an emergency or any time a cash
distribution would impair the liquidity of the Fund to the detriment of the ex-
isting
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<PAGE>
shareholders. In this event, the securities would be valued in the same manner
as the portfolio of the fund is valued. If the recipient were to sell such se-
curities, he or she would incur brokerage charges.
Other Practices
The fund may suspend the right of redemption or delay payment more than seven
days (a) during any period when the New York Stock Exchange is closed (other
than customary weekend and holiday closings), (b) when trading in the markets
the fund normally utilizes is restricted, or an emergency exists as determined
by the SEC so that disposal of the Fund's investments or determination of its
net asset value is not reasonably practicable, or (c) for such other periods as
the SEC by order may permit for protection of the shareholders of the Fund.
The fund has authorized certain brokers and firms to accept purchase and re-
demption orders on its behalf. The fund will consider an order to be "received"
when such a broker or firm accepts the order from its customer.
SERVICE PLAN
The Fund has adopted a Service Plan Pursuant to Rule 12b-1 under the 1940 Act.
The Plan was adopted by the Board of Directors, including a majority of direc-
tors who are not interested persons and who have no direct or indirect finan-
cial interest in the Plan, and approved by shareholders.
Under the Plan, the Fund pays an annual 12b-1 fee of .25% of the average daily
net assets of serviced accounts to reimburse Nuveen for compensating authorized
dealers, including Nuveen, for providing ongoing services to shareholders. Such
services generally include establishing and maintaining shareholder accounts,
processing purchase and redemption orders, arranging for bank wires and answer-
ing shareholder inquiries. Under the Plan, the Fund pays the entire amount of
the 12b-1 fees. Nuveen may, in its discretion and from its own resources, pay
certain firms additional amounts for services rendered to shareholders.
Under the Plan, the Controller of the Fund will report quarterly to the Board
of Directors for its review amounts expended for services rendered under the
Plan. The Plan may be terminated at any time, without the payment of any penal-
ty, by a vote of a majority of the directors who are not "interested persons"
and who have no direct or indirect financial interest in the Plan or by vote of
a majority of the outstanding 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 voting on the Plan. The Plan may be continued only if
the directors who vote to approve such continuance conclude, in the exercise of
reasonable business judgment and in light of their fiduciary duties under ap-
plicable law, that there is a reasonable likelihood that the Plan will benefit
the Fund and its shareholders. The Plan is intended to benefit the Fund by pro-
moting the sale of fund shares, which in turn leads to economies of scale and
helps assure the continued viability of the Fund. The Plan may not be amended
to increase materially the cost which the Fund may bear under
S-41
<PAGE>
the Plan without the approval of the shareholders. Any other material amend-
ments of the Plan must be approved by the non-interested directors by a vote
cast in person at a meeting called for the purpose of considering such amend-
ments. During the continuance of the Plan, the selection and nomination of the
non-interested directors of the Fund will be committed to the discretion of the
non-interested directors then in office. Nuveen's compensation under the Plan
is not based on Nuveen's expense incurred in providing services to sharehold-
ers.
No director nor any interested person of the Fund has any direct or indirect
financial interest in the Plan or any agreement related to the Plan.
Before June 1999, the Fund had three share classes, each with its own distribu-
tion agreements. The Institutional series was offered without any 12b-1 or
service fees. The Distribution Plan series was offered with a 12b-1 fee pursu-
ant to a Distribution Plan and Service Plan series was offered with a service
fee pursuant to a Service Plan. The Distribution Plan was adopted pursuant to
Rule 12b-1 of the 1940 Act while the Service Plan, although containing compara-
ble terms, is not a Rule 12b-1 plan. The Plans were adopted by a vote of the
Board of Directors including a majority of the directors who are not interested
persons of the Fund and who have no direct or indirect financial interest in
the operation of the Plan. Under the Plans, the Distribution Plan series and
the Service Plan series and Nuveen paid 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
could include, among other things, establishing and maintaining shareholder ac-
counts, processing purchase and redemption transactions, arranging for bank
wires, performing sub-accounting, answering shareholder inquiries and such
other services as Nuveen may have invested. Payments to such securities dealers
and banks or other organizations was at the rate of .25 of 1% per year of the
average assets of serviced accounts. One-half of such amounts was paid by the
Service Plan series and the Distribution Plan series of the Fund and one-half
by Nuveen. Expenses that were incurred under the Plan in a given fiscal year
but not reimbursed by the Fund in that year were not carried over to future
years. For the fiscal year ended February 28, 1999, Fund paid fees to banks and
other organizations under the Service Plan in the amount of $2,000 and paid
fees to securities dealers under the Distribution Plan in the amount of $8,000.
OTHER INFORMATION REGARDING SHARES OF THE FUND
Shareholders should note that when a Fund dividend check has been returned to
the sender by the post office after repeated mailings, the shareholder account
will thereafter be registered for automatic reinvestment of dividends and thus
the dividend check and future dividend checks will be reinvested in additional
Fund shares. Shareholders are reminded that they need to advise the Fund
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 financial
service firms is to perform administrative shareholder servicing functions, the
Fund believes that such laws should not preclude a bank from performing share-
holder servic-
S-42
<PAGE>
es. However, future changes in either federal or state statutes or regulations
relating to the permissible activities of banks and their subsidiaries or af-
filiates, 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 servicing activities. If a bank were prohib-
ited from providing services to shareholders, its shareholder customers would
be permitted to remain shareholders and alternative means for continuing the
servicing of such shareholders would be sought.
Nuveen serves as the principal underwriter of the shares of the Fund pursuant
to a "best efforts" arrangement as provided by a distribution agreement with
the Fund, dated October 30, 1986 and last renewed on ("Dis-
tribution Agreement"). Pursuant to the Distribution Agreement, the Fund ap-
pointed Nuveen to be its agent for the distribution of the Fund's shares on a
continuous offering basis. Nuveen sells shares to or through brokers, dealers,
banks or other qualified financial intermedaries (collectively referred to as
"Dealers"), or others, in a manner consistent with the Fund's then effective
registration statement. Pursuant to the Distribution Agreement, Nuveen, at its
own expense, finances certain activities incident to the sale and distribution
of the Fund's shares, including printing and distributing of prospectuses and
statements of additional information to other than existing shareholders, the
printing and distributing of sales literature, advertising and payment of com-
pensation and giving of concessions to dealers. Expenses incurred in register-
ing the Fund and its shares under federal and state securities laws are paid
by the Fund.
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<PAGE>
PART C--OTHER INFORMATION
NUVEEN TAX-FREE MONEY MARKET FUND
333 West Wacker Drive
Chicago, Illinois 60606
<PAGE>
PART C--OTHER INFORMATION
Item 23: Exhibits.
<TABLE>
<C> <S>
(a). Articles of Incorporation of Registrant, as amended. 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.
(b). 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.
(c). Not applicable.
(d)(1). 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) as filed on April 27, 1995, and incorporated
herein by reference thereto.
(d)(2). 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) as
filed on April 27, 1995, and incorporated herein by reference thereto.
(d)(3). Renewal, dated May 5, 1998, of Investment Management Agreement. Filed
as Exhibit 5(c) to Post-Effective Amendment No. 13 to the Registrant's
Registration Statement on Form N-1A (File No. 33-8371) and
incorporated herein by reference thereto.
(e)(1). 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 reference thereto.
(e)(2). Renewal, dated July 31, 1997, of Distribution Agreement. Filed as
Exhibit 6(b) to Post-Effective Amendment No. 13 to the Registrant's
Registration Statement on Form N-1A (File No. 33-8371) and
incorporated herein by reference thereto.
(f). Not applicable.
(g)(1). Custody Agreement, dated October 1, 1993, between Registrant and
United States Trust Company of New York. Filed as Exhibit 8 to Post-
Effective Amendment No. 8 to Registrant's Registration Statement on
Form N-1A (File No. 33-8371) and incorporated herein by reference
thereto.
(g)(2). Letter evidencing assignment of U.S. Trust Company of New York's
rights and responsibilities under The Custody Agreement to The Chase
Manhattan Bank, 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) as filed on June 27, 1996, and incorporated herein by
reference thereto.
(h)(1). Transfer Agency Agreement between Registrant and Shareholder Services,
Inc., dated July 1, 1997. Filed as Exhibit 9(a) to Post-Effective
Amendment No. 13 to the Registrant's Registration Statement on Form N-
1A (File No. 33-8371) and incorporated herein by reference thereto.
</TABLE>
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<PAGE>
<TABLE>
<C> <S>
(h)(2). 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.
(h)(3). 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.
(i). Opinion of Morgan, Lewis & Bockius LLP to be filed by later
amendment.
(j). Consent of Independent Public Accountants to be filed by later
amendment.
(k). Not applicable.
(l). 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.
(m)(1). 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.
(m)(2). 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.
(n). Not applicable.
99(p). 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(r)(1). 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. Filed as Exhibit 99(b) to
Post-Effective Amendment No. 13 to Registrant's Registration
Statement on Form N-1A (File No. 33-8371) and incorporated herein by
reference thereto.
99(s)(2). Original Power of Attorney for Judith M. Stockdale authorizing,
among others, Gifford R. Zimmerman and Larry W. Martin to execute
the Registration Statement on her behalf as one of the Registrant's
Directors was filed as Exhibit 99(c) to Post-Effective Amendment No.
13 to the Registrant's Registration Statement on Form N-1A (File No.
33-8371) as filed on June 16, 1998, and is incorporated herein by
reference thereto. Original Powers of Attorney for all of
Registrant's other Directors authorizing, among others, Gifford R.
Zimmerman and Larry W. Martin to execute the Registration Statement
were filed as Exhibit 99(c) to Post-Effective Amendment No. 11 to
the Registrant's Registration Statement on Form N-1A (File No. 33-
8371) as filed on June 4, 1997, and is incorporated herein by
reference thereto.
99(q). 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) as filed on April 27,
1995, and incorporated herein by reference thereto.
</TABLE>
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<PAGE>
Item 24: Persons Controlled by or under Common Control with Registrant
Not applicable.
Item 25: Indemnification
Article EIGHTH of the Registrant's Articles of Incorporation provides as fol-
lows:
EIGHTH: To the maximum extent permitted by the Minnesota Business Corpora-
tion Act, as from time to time amended, the Corporation shall indemnify its
currently acting and its former directors, officers, employees and agents,
and those persons who, at the request of the Corporation serve or have
served another corporation, partnership, joint venture, trust or other en-
terprise in one or more such capacities. The indemnification provided for
herein shall not be deemed exclusive of any other rights to which those
seeking indemnification may otherwise be entitled.
Expenses (including attorneys' fees) incurred in defending a civil or crim-
inal action, suit or proceeding (including costs connected with the prepa-
ration of a settlement) may be paid by the Corporation in advance of the
final disposition of such action, suit or proceeding, if authorized by the
Board of Directors in the specific case, upon receipt of an undertaking by
or on behalf of the director, officer, employee or agent to repay that
amount of the advance which exceeds the amount which it is ultimately de-
termined that he is entitled to receive from the Corporation by reason of
indemnification as authorized herein; provided, however, that prior to mak-
ing any such advance at least one of the following conditions shall have
been met: (1) the indemnitee shall provide a security for his undertaking,
(2) the Corporation shall be insured against losses arising by reason of
any lawful advances, or (3) a majority of a quorum of the disinterested,
non-party directors of the Corporation, or an independent legal counsel in
a written opinion, shall determine, based on a review of readily available
facts, that there is reason to believe that the indemnitee ultimately will
be found entitled to indemnification.
Nothing in these Articles of Incorporation or in the By-Laws shall be
deemed to protect or provide indemnification to any director or officer of
the Corporation against any liability to the Corporation or to its security
holders to which he would otherwise be subject by reason of willful misfea-
sance, bad faith, gross negligence or reckless disregard of the duties in-
volved in the conduct of his office ("disabling conduct"), and the Corpora-
tion shall not indemnify any of its officers or directors against any lia-
bility to the Corporation or to its security holders unless a determination
shall have been made in the manner provided hereafter that such liability
has not arisen from such officer's or director's disabling conduct. A de-
termination that an officer or director is entitled to indemnification
shall have been properly made if it is based upon (1) a final decision on
the merits by a court or other body before whom the proceeding was brought
that the indemnitee was not liable by reason of disabling conduct or, (2)
in the absence of such a decision, a reasonable determination, based upon a
review of the facts, that the indemnitee was not liable by reason of disa-
bling conduct, by (a) the vote of a majority of a quorum of directors who
are neither "interested persons" of the Corporation as defined in the In-
vestment Company Act of 1940 nor parties to the proceeding, or (b) an inde-
pendent legal counsel in a written opinion.
The directors and officers of the Registrant are covered by an Investment Trust
Errors and Omission policy in the aggregate amount of $20,000,000 (with a maxi-
mum deductible of $500,000) against
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<PAGE>
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 Registrant or where he or she had reasonable cause to believe
this conduct was unlawful).
Item 26: Business and Other Connections of Investment Adviser
Nuveen Advisory Corp. serves as investment adviser to the following open-end
management type investment companies: Nuveen Flagship Multistate Trust I,
Nuveen Flagship Multistate Trust II, Nuveen Flagship Multistate Trust III,
Nuveen Flagship Multistate Trust IV, Nuveen Flagship Municipal Trust, Nuveen
Taxable Funds Inc, Nuveen California Tax-Exempt Money Market Fund, Inc., Nuveen
New York Tax-Exempt Fund, Nuveen Institutional Tax-Exempt Money Market Fund,
Inc., and Nuveen, Municipal Money Market Fund. It also serves as investment ad-
viser to the following closed-end management investment companies: Nuveen Mu-
nicipal Value Fund, Inc., Nuveen California Municipal Value Fund, Inc., Nuveen
New York Municipal Value Fund, Inc., Nuveen Municipal Income Fund, Inc., Nuveen
Premium Income Municipal Fund, Inc., Nuveen Performance Plus Municipal Fund,
Inc., Nuveen California Performance Plus Municipal Fund, Inc., Nuveen New York
Performance Plus Municipal Fund, Inc., Nuveen Municipal Advantage Fund, Inc.,
Nuveen Municipal Market Opportunity Fund, Inc., Nuveen California Municipal
Market Opportunity Fund, Inc., Nuveen Investment Quality Municipal Fund, Inc.,
Nuveen California Investment Quality Municipal Fund, Inc., Nuveen New York In-
vestment Quality Municipal Fund, Inc., Nuveen Insured Quality Municipal Fund,
Inc., Nuveen Florida Investment Quality Municipal Fund, Nuveen New Jersey In-
vestment Quality Municipal Fund, Inc., Nuveen Pennsylvania Investment Quality
Municipal Fund, Nuveen Select Quality Municipal Fund, Inc., Nuveen California
Select Quality Municipal Fund, Inc., Nuveen New York Select Quality Municipal
Fund, Inc., Nuveen Quality Income Municipal Fund, Inc., Nuveen Insured Munici-
pal Opportunity Fund, Inc., Nuveen Florida Quality Income Municipal Fund,
Nuveen Michigan Quality Income Municipal Fund, Inc., Nuveen Ohio Quality Income
Municipal Fund, Inc., Nuveen Texas Quality Income Municipal Fund, Nuveen Cali-
fornia Quality Income Municipal Fund, Inc., Nuveen New York Quality Income Mu-
nicipal Fund, Inc., Nuveen Premier Municipal Income Fund, Inc., Nuveen Premier
Insured Municipal Income Fund, Inc., Nuveen Premium Income Municipal Fund 2,
Inc., Nuveen Insured California Premium Income Municipal Fund, Inc., Nuveen In-
sured 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.
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<PAGE>
For a description of other business, profession, vocation or employment of a
substantial nature in which any director or officer, other than Timothy R.
Schwertfeger, of the investment adviser has engaged during the last two years
for his account or in the capacity of director, officer, employee, partner or
trustee, see the descriptions under "Management" in the Statement of Addi-
tional Information.
Timothy R. Schwertfeger is Chairman and Director of Nuveen Advisory Corp., the
investment adviser. Mr. Schwertfeger has, during the last two years, been
Chairman and formerly Executive Vice President and Director of The John Nuveen
Company, John Nuveen & Co. Incorporated, and Nuveen Institutional Advisory
Corp.; Chairman and Director (since January 1997) of Nuveen Asset Management,
Inc.; Director (since 1996) of Institutional Capital Corporation.
Item 27: Principal Underwriters
(a) John Nuveen & Co. Incorporated ("Nuveen") acts as principal underwriter to
the following open-end management type investment companies: Nuveen Flagship
Multistate Trust I, Nuveen Flagship Multistate Trust II, Nuveen Flagship
Multistate Trust III, Nuveen Flagship Multistate Trust IV, Nuveen Flagship Mu-
nicipal Trust, Nuveen California Tax-Exempt Money Market Fund, Inc., Nuveen
New York Tax-Exempt Money Market Fund, Nuveen Institutional Tax-Exempt Money
Market Fund, Inc., Nuveen Municipal Money Market Fund, Inc., Nuveen Money Mar-
ket Trust, Nuveen Taxable Funds Inc., Nuveen Investment Fund, Nuveen Invest-
ment Trust II and Nuveen Investment Trust III. Nuveen also acts as depositor
and principal underwriter of the Nuveen Tax-Exempt Unit Trust and Nuveen Unit
Trusts, registered unit investment trusts. Nuveen has also served or is serv-
ing as a co-managing underwriter of the shares of Nuveen Municipal Value Fund,
Inc., Nuveen California Municipal Value Fund, Inc., Nuveen New York Municipal
Value Fund, Inc., Nuveen Municipal Income Fund, Inc., Nuveen Premium Income
Municipal Fund, Inc., Nuveen Performance Plus Municipal Fund, Inc., Nuveen
California Performance Plus Municipal Fund, Inc., Nuveen New York Performance
Plus Municipal Fund, Inc., Nuveen Municipal Advantage Fund, Inc., Nuveen Mu-
nicipal Market Opportunity Fund, Inc., Nuveen California Municipal Market Op-
portunity Fund, Inc., Nuveen Investment Quality Municipal Fund, Inc., Nuveen
California Investment Quality Municipal Fund, Inc., Nuveen New York Investment
Quality Municipal Fund, Inc., Nuveen Insured Quality Municipal Fund, Inc.,
Nuveen Florida Investment Quality Municipal Fund, Nuveen New Jersey Investment
Quality Municipal Fund, Inc., Nuveen Pennsylvania Investment Quality Municipal
Fund, Nuveen Select Quality Municipal Fund, Inc., Nuveen California Select
Quality Municipal Fund, Inc., Nuveen New York Select Quality Municipal Fund,
Inc., Nuveen Quality Income Municipal Fund, Inc., Nuveen Insured Municipal Op-
portunity Fund, Inc., Nuveen Florida Quality Income Municipal Fund, Nuveen
Michigan Quality Income Municipal Fund, Inc., Nuveen Ohio Quality Income Mu-
nicipal Fund, Inc., Nuveen Texas Quality Income Municipal Fund, Nuveen Cali-
fornia Quality Income Municipal Fund, Inc., Nuveen New York Quality Income Mu-
nicipal Fund, Inc., Nuveen Premier Municipal Income Fund, Inc., Nuveen Premier
Insured Municipal Income Fund, Inc., Nuveen Select Tax-Free Income Portfolio,
Nuveen Premium Income Municipal Fund 2, Inc., Nuveen Insured California Pre-
mium Income Municipal Fund, Inc., Nuveen Insured New York Premium Income Mu-
nicipal Fund, Inc., Nuveen Select Maturities Municipal Fund, Nuveen Arizona
Premium Income Municipal Fund, Inc., Nuveen Insured Florida Premium Income Mu-
nicipal Fund, Nuveen Michigan Premium Income Municipal Fund, Inc., Nuveen New
Jersey Premium Income Municipal Fund, Inc., Nuveen Premium Income Municipal
Fund 4, Inc., Nuveen Insured California Premium Income Municipal Fund 2, Inc.,
Nuveen
C-5
<PAGE>
Pennsylvania Premium Income Municipal Fund 2, Nuveen Maryland Premium Income
Municipal Fund, Nuveen Massachusetts Premium Income Municipal Fund, Nuveen Vir-
ginia Premium Income Municipal Fund, Nuveen Washington Premium Income Municipal
Fund, Nuveen Connecticut Premium Income Municipal Fund, Nuveen Georgia Premium
Income Municipal Fund, Nuveen Missouri Premium Income Municipal Fund, Nuveen
North Carolina Premium Income Municipal Fund, Nuveen California Premium Income
Municipal Fund, Nuveen Insured Premium Income Municipal Fund 2, Nuveen Select
Tax-Free Income Portfolio 2, Nuveen Insured California Select Tax-Free Income
Portfolio, Nuveen Insured New York Select Tax-Free Income Portfolio and Nuveen
Select Tax-Free Income Portfolio 3.
(b)
<TABLE>
<CAPTION>
Name and Principal Positions and Offices Positions and Offices
Business Address with Underwriter with Registrant
- ----------------------------------------------------------------------------------
<S> <C> <C>
Timothy R. Schwertfeger Chairman of the Board, Chairman of the Board
333 West Wacker Drive Chief Executive Officer and Director
Chicago, IL 60606 and Director
John P. Amboian President None
333 West Wacker Drive
Chicago, IL 60606
Alan G. Berkshire Vice President Vice President and
333 West Wacker Drive 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
</TABLE>
C-6
<PAGE>
<TABLE>
<CAPTION>
Name and Principal Positions and Offices Positions and Offices
Business Address with Underwriter with Registrant
<S> <C> <C>
Michael G. Gaffney Vice President None
333 West Wacker Drive
Chicago, IL 60606
Anna R. Kucinskis Vice President Vice President
333 West Wacker Drive
Chicago, IL 60606
Robert B. Kuppenheimer Vice President None
333 West Wacker Drive
Chicago, IL 60606
Larry W. Martin Vice President and Vice President and
333 West Wacker Drive Assistant Secretary Assistant Secretary
Chicago, IL 60606
Thomas C. Muntz Vice President None
333 West Wacker Drive
Chicago, IL 60606
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
Paul C. Williams Vice President None
333 West Wacker Drive
Chicago, IL 60606
Margaret E. Wilson Vice President and None
333 West Wacker Drive Corporate Controller
Chicago, IL 60606
Gifford R. Zimmerman Vice President and Vice President and
333 West Wacker Drive Assistant Secretary Secretary
Chicago, IL 60606
</TABLE>
C-7
<PAGE>
Item 28: 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.
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 29: Management Services
Not applicable.
Item 30: Undertakings
Not applicable.
C-8
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and the Investment
Company Act of 1940 the Registrant has duly caused this Registration Statement
to be signed on its behalf by the undersigned, thereunto duly authorized, in
this City of Chicago, and State of Illinois, on the 13th day of May, 1999.
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 May 13, 1999
- -------------------------------
Stephen D. Foy Vice President and
Controller (Principal
Financial and
Accounting Officer)
Timothy R. Schwertfeger Chairman of the Board
and Director (Principal
Executive Officer)
Robert P. Bremner Director
Lawrence H. Brown Director
/s/ Gifford R.
Zimmerman
By_________________________
Anne E. Impellizzeri Director Gifford R. Zimmerman
Peter R. Sawers Director Attorney-in-Fact
William J. Schneider Director
Judith M. Stockdale Director
May 13, 1999
</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-9
