<PAGE>
NUVEEN
Municipal
Bond Funds
November 30, 1998
Semiannual Report
Dependable, tax-free income
to help you keep more of
what you earn.
[PHOTO APPEARS HERE]
Kentucky
Kentucky Limited
Michigan
Ohio
<PAGE>
Contents
1 Dear Shareholder
4 Nuveen Flagship Kentucky Municipal Bond Fund Commentary and Overview
6 Nuveen Flagship Kentucky Limited Term Municipal Bond Fund Commentary
and Overview
8 Nuveen Flagship Michigan Municipal Bond Fund Commentary and Overview
10 Nuveen Flagship Ohio Municipal Bond Fund Commentary and Overview
12 Portfolio of Investments
40 Statement of Net Assets
41 Statement of Operations
42 Statement of Changes in Net Assets
44 Notes to Financial Statements
50 Financial Highlights
52 Building Better Portfolios
53 Fund Information
Highlights
As of November 30, 1998
For Class A shares at net asset value
Credit Quality Performance Highlights
Nuveen Flagship Kentucky Municipal Bond Fund
[PIE CHART APPEARS HERE]
AAA/U.S. Guaranteed 55% . One-year total return of 6.69%
AA 6% . Outperformed Lipper's Peer Group average
A 22% . Good credit quality, with 61% of the funds
BBB/NR 17% assets invested in AAA- or AA-rated bonds
Nuveen Flagship Kentucky Limited Term Municipal Bond Fund
[PIE CHART APPEARS HERE]
AAA/U.S. Guaranteed 44% . One-year total return of 5.36%
AA 19% . Outperformed Lipper's Peer Group average
A 26% . Good credit quality, with 63% of the funds
BBB/NR 11% assets invested in AAA- or AA-rated bonds
Nuveen Flagship Michigan Municipal Bond Fund
[PIE CHART APPEARS HERE]
AAA/U.S. Guaranteed 59% . One-year total return of 6.99%
AA 16% . Outperformed Lipper's Peer Group average
A 10% . Good credit quality, with 75% of the funds
BBB/NR 15% assets invested in AAA- or AA-rated bonds
Nuveen Flagship Ohio Municipal Bond Fund
[PIE CHART APPEARS HERE]
AAA/U.S. Guaranteed 68% . One-year total return of 7.19%
AA 7% . Outperformed Lipper's Peer Group average
A 11% . Good credit quality, with 75% of the funds
BBB/NR 14% assets invested in AAA- or AA-rated bonds
<PAGE>
[PHOTO OF TIMOTHY R. SCHWERTFEGER APPEARS HERE]
Timothy R. Schwertfeger
Chairman of the Board
Wealth takes a lifetime to build. Once achieved, it should be preserved.
Dear Shareholder
I'm pleased to report on the performance of the Nuveen Municipal Bond Funds for
the 12 months ended November 30, 1998. Providing a reliable source of tax-free
income and competitive after-tax total returns remains the primary investment
objective for each of these funds. In each case, we achieved this objective,
illustrating once again that Nuveen municipal bond funds can provide an
excellent investment option for income-oriented investors.
The Year in Review
Over the past year, the markets endured bouts of volatility, as the Asian
financial crisis spilled over into emerging markets and affected economies
around the globe. This economic turmoil affected the U.S. equity market, which
was very volatile over the past year. The Federal Reserve (the Fed) intervened
in an attempt to soften the impact of the financial crises abroad and in the
U.S. equity market by lowering short-term interest rates in September by a
quarter of a point. Since that time, the Fed has twice again reduced rates,
bringing the federal funds rate to 4.75%. As long term interest rates fell to
historic lows, investors were reminded of the importance of a well balanced
portfolio and professional management. Despite the market volatility throughout
the year, your Nuveen Municipal Bond Fund continued to provide attractive
current market yields and after-tax total returns. Your fund represented a
bright spot among fixed-income investments. In addition, the funds have
maintained good levels of call protection, which provide a strong foundation
for potentially stable income streams in the foreseeable future. Looking ahead,
we will continue to focus on new municipal bond issuance while leveraging our
institutional buying power to buy and sell securities at the best possible
prices and identifying undervalued securities through proprietary market
research.
1
<PAGE>
Municipal Market Review
Over the past year, declining interest rates drove yields on 30-year Treasuries
to their lowest levels since 1977. The story in the municipal market, however,
was quite different. With yields on the long Treasury bond pushing below 5% at
times, the yield on the Bond Buyer 40, an unmanaged index of long-term municipal
bonds, fell just 26 basis points - from 5.36% to 5.10% - compared with the
99-point drop in Treasury yields over the past 12 months. As of November 30,
1998, the ratio of municipal yields to Treasury yields stood at 100.8%, compared
with the more typical range of 86-87%. For investors, this means that municipal
bonds currently offer about the same yield as Treasury bonds--before taxes are
taken into account. On an after-tax basis, municipal bonds present an even more
attractive investment option relative to Treasuries.
One of the main factors in the steep decline in Treasury yields during the past
year was the strong interest in these investments by international investors. As
the financial turmoil in Asia continued to spread to economies worldwide and the
dollar strengthened against foreign currencies, the demand for U.S. dollar-
denominated Treasury securities increased. In the municipal market, where
foreign demand was limited by an inability of foreign investors to benefit from
the tax advantages of municipal bonds, low interest rates and a strong economy
combined to generate high levels of new issuance and a dramatic increase in the
refinancing of existing bonds. The first eleven months of 1998 saw $255.24
billion of new municipal issuance and refunding activity, up 28.4% over the same
period in 1997. In terms of total issuance, this puts 1998 on pace to be the
second largest year on record.
2
<PAGE>
"The key to taking advantage of the exceptional values currently available in
the municipal market is the expertise of a market specialist, such as Nuveen
Advisory Corp."
In addition, the continued strength of the U.S. economy has brought about
improvements in the fundamental financial health of many municipalities and
boosted the overall credit quality of municipal bonds. In the third quarter of
1998, upgraded issues by the two major rating agencies outnumbered downgrades by
a margin of 7 to 2.
Nuveen Expertise Is Key
The key to taking advantage of the exceptional values currently available in the
municipal market is the expertise of a market specialist, such as Nuveen
Advisory Corp. To this end, Nuveen has assembled the Premier Advisers(SM), a
growing group of experts that can provide time-tested experience and insight in
a variety of investment categories. In addition to Nuveen Advisory Corp., our
Premier Adviser for tax-free investing, you can rely on our other Premier
Advisers to share their wisdom in the equity market, including Institutional
Capital Corporation for value investing and Rittenhouse Financial Services, Inc.
for growth investing. For more information about our funds, including charges
and expenses, contact your financial adviser for a prospectus, or call Nuveen at
(800) 621-7227. Please read the prospectus carefully before you invest or send
money.
We encourage you to talk with your financial adviser about the ways Nuveen's
expanding selection of investments can assist you in establishing a diversified
portfolio designed to help you build and sustain long-term financial security.
For more than 100 years, Nuveen has been a respected name in the financial
world. We are grateful for the confidence you have shown in us, and we intend to
continue earning your trust in the years ahead.
Sincerely,
/s/ Timothy R. Schwertfeger
Timothy R. Schwertfeger
Chairman of the Board
January 15, 1999
3
<PAGE>
Nuveen Flagship Kentucky Municipal Bond Fund
Portfolio Manager's Comments
Portfolio Manager Rick Huber discusses the Nuveen Flagship Kentucky Municipal
Bond Fund and reviews factors that affected performance over the past 12 months.
Comments cover the 12-month period ended November 30, 1998 and all performance
statistics are quoted for Class A shares.
What is the status of Kentucky's economy and its municipal market?
Kentucky has enjoyed an improving economic base that has outperformed the nation
in annual growth since 1990. That base continues to diversify and modernize into
the light manufacturing and service-oriented sectors, reducing the state's
traditional reliance on coal, tobacco, and heavy manufacturing. Continued low
unemployment numbers and job growth concentrated in the retail, business
services, and health services have complemented Kentucky's economic growth and
diversification.
Kentucky's economy is expected to continue in its current positive direction,
although growth in jobs, wages and productivity is expected to moderate
somewhat.
In spite of those improving economic conditions, however, the municipal market
has seen relatively little supply in 1998. In fact, Kentucky ranked just 26th
among the states in year-to-date issuance as of November 30, 1998. Although the
state's total issuance, $2.67 billion, is up 15.6% versus its 1997 issuance, it
has been a challenge trying to identify good values.
How did the Nuveen Flagship Kentucky Municipal Bond Fund's underlying portfolio
perform during the past year?
Over the past 12 months, the Nuveen Flagship Kentucky Municipal Bond Fund
generated a total return on Class A shares at net asset value of 6.69%,
equivalent to a taxable total return of 9.48% for investors in the 35.1%
combined federal and state income tax bracket. That performance exceeded the
6.40% average annual total return posted by the Lipper Kentucky Municipal Debt
Peer Group* of 12 municipal bond funds.
What key strategies were used over the course of the year? Were there any
particular sectors in which Nuveen looked for undervalued securities?
The fund continued to enjoy success with its sector strategy. A sector is a
particular group of bonds usually found in one industry. Currently, our two
largest sector allocations are limited tax obligation bonds and healthcare
securities, which accounted for 24% and 21%, respectively, of the fund's
investments, as of November 30, 1998. Although we continue to see good values in
the healthcare sector, we have looked for opportunities in other sectors,
including utilities and the emerging general obligation sector, to add
diversification to the portfolio. In all cases, our focus is on high-quality
credits that we believe will continue to provide good value over the life of the
fund.
Aside from our sector strategy, the fund has also benefited from well-
diversified call protection, which helped it maintain more predictable income
streams. Staggered call exposure will help to protect the fund from reinvestment
risk in the event that interest rates continue to decline.
The fund also maintained its primary focus on high-quality securities, with 61%
of the portfolio invested in AAA rated or AA rated bonds, as of November 30,
1998. However, Nuveen's extensive research capabilities also make it possible
for us to identify lower-rated debt that we believe offers both strong quality
characteristics and the opportunity for additional yield.
Were there any other factors that affected the fund?
There were two significant events in the state this year that impacted the
fund's investment opportunities. First was the state's tight municipal bond
supply, which made it a challenge to keep the portfolio fully invested. Given
the recent rallies in the municipal market, keeping the fund fully invested
during the year was key.
Another development in Kentucky was a 1998 state court decision that overturned
important restrictions on the issuance of general obligation debt. The resulting
ability of Kentucky municipalities to issue general obligation debt created some
small though important investment opportunities for us, especially given the
year's light municipal issuance volume.
What is your outlook for the Nuveen Flagship Kentucky Municipal Bond Fund?
One important event in the coming year is the anticipated merger of this fund
with the Nuveen Flagship Kentucky Limited Term Municipal Bond Fund. We believe
this merger will enhance economies of scale for shareholders of both funds, but
should not impact the fund's future investment performance.
Overall, we will continue to manage the fund by seeking out undervalued
securities that provide attractive income relative to the market, consistent
with the preservation of capital.
The housing bond sector will be a prime candidate for addition to the portfolio
as a way to increase yield. The reason for this is that single family housing
bonds contain prepayment risk. This prepayment risk increases as interest rates
fall, but it's rewarded in the form of higher yield. In today's market, however,
we view that additional risk as minute due to the low level of current interest
rates. We will also look for opportunities in the general obligation sector,
which will help us further diversify our sector allocation while offering some
potentially attractive values.
* The Lipper Peer Group return represents the average annualized returns of the
funds in the Lipper Kentucky Municipal Debt category. The return assumes
reinvestment of dividends and does not reflect any applicable sales charge.
4
<PAGE>
Nuveen Flagship Kentucky Municipal Bond Fund
Performance Overview
As of November 30, 1998
Monthly Tax-Free Dividends (Class A Shares)/1/
[BAR CHART APPEARS HERE]
<TABLE>
<S> <C>
12/97 .0495
1/98 .0475
2/98 .0475
3/98 .0475
4/98 .0475
5/98 .0475
6/98 .0475
7/98 .0475
8/98 .0475
9/98 .0475
10/98 .0465
11/98 .0465
</TABLE>
Top 5 Sectors
<TABLE>
<S> <C>
Tax Obligation (Limited) 24%
- ---------------------------------------------
Health Care 21%
- ---------------------------------------------
U.S. Guaranteed 11%
- ---------------------------------------------
Utilities 10%
- ---------------------------------------------
Water and Sewer 8%
- ---------------------------------------------
</TABLE>
Portfolio Statistics
<TABLE>
<CAPTION>
Share Class A B C R
- --------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Inception Date 5/87 2/97 10/93 2/97
- --------------------------------------------------------------------------------
Net Asset Value $11.46 $11.46 $11.45 $11.44
- --------------------------------------------------------------------------------
Total Net Assets ($000) $505,355
- --------------------------------------------------------------------------------
Effective Maturity (Years) 19.91
- --------------------------------------------------------------------------------
Modified Duration (Years) 6.31
- --------------------------------------------------------------------------------
</TABLE>
Annualized Total Return/2/
<TABLE>
<CAPTION>
Share Class A(NAV) A(Offer) B C R
- --------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
1-Year 6.69% 2.19% 5.82% 6.05% 6.93%
- --------------------------------------------------------------------------------
5-Year 6.12% 5.21% 5.46% 5.53% 6.16%
- --------------------------------------------------------------------------------
10-Year 8.12% 7.66% 7.65% 7.53% 8.14%
- --------------------------------------------------------------------------------
</TABLE>
Tax-Free Yields
<TABLE>
<CAPTION>
Share Class A(NAV) A(Offer) B C R
- --------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Distribution Rate 4.87% 4.67% 4.14% 4.35% 5.09%
- --------------------------------------------------------------------------------
SEC 30-Day Yield 3.98% 3.82% 3.24% 3.44% 4.18%
- --------------------------------------------------------------------------------
Taxable Equivalent Yield/3/ 6.13% 5.89% 4.99% 5.30% 6.44%
- --------------------------------------------------------------------------------
</TABLE>
1 The Fund also paid shareholders taxable distributions in December of $0.0508
per share.
2 Class A share returns are actual. Class B, C and R share returns are actual
for the period since class inception; returns prior to class inception are
Class A share returns adjusted for differences in sales charges and expenses,
which are primarily differences in distribution and service fees. Class A
shares have a 4.2% maximum sales charge. Class B shares have a CDSC that
begins at 5% for redemptions during the first year after purchase and declines
periodically to 0% over the following five years, which is not reflected in
the return figures. Class C shares have a 1% CDSC for redemptions within one
year which is not reflected in the one-year total return.
3 Based on SEC yield and a federal income tax rate of 35.1%. Represents the
yield on a taxable investment necessary to equal the yield of the Nuveen fund
on an after-tax basis.
5
<PAGE>
Nuveen Flagship Kentucky Limited Term Municipal Bond Fund
Portfolio Manager's Comments
Portfolio Manager Paul Brennan discusses the Nuveen Flagship Kentucky Limited
Term Municipal Bond Fund and reviews factors that affected performance over the
past 12 months.
Comments cover the 12-month period ended November 30, 1998 and all performance
statistics are quoted for Class A shares.
What is the status of Kentucky's economy and its municipal market?
Kentucky has enjoyed an improving economic base that has outperformed the nation
in annual growth since 1990. That base continues to diversify and modernize into
the light manufacturing and service-oriented sectors, reducing the state's
traditional reliance on coal, tobacco, and heavy manufacturing. Continued low
unemployment numbers and job growth concentrated in the retail, business
services, and health services have complemented Kentucky's economic growth and
diversification.
Kentucky's economy is expected to continue in its current positive direction,
although growth in jobs, wages and productivity is expected to moderate
somewhat.
In spite of those improving economic conditions, however, the municipal market
has seen relatively little supply in 1998. In fact, Kentucky ranked just 26th
among the states in year-to-date issuance as of November 30, 1998. Although the
state's total issuance, $2.67 billion, is up 15.6% versus its 1997 issuance, it
has been a challenge trying to identify good values.
How did the Nuveen Flagship Kentucky Limited Term Municipal Bond Fund's
underlying portfolio perform during the past year?
Over the past 12 months, the Nuveen Flagship Kentucky Limited Term Municipal
Bond Fund generated a total return on Class A shares at net asset value of
5.36%, equivalent to a taxable total return of 7.71% for investors in the 35.1%
combined federal and state income tax bracket. That performance exceeded the
5.14% average annual total return posted by the Lipper Other State Short
Intermediate Municipal Debt Peer Group* of 19 municipal bond funds.
What key strategies were used over the course of the year? Were there any
particular sectors in which Nuveen looked for undervalued securities?
The fund continued to enjoy success with its sector strategy. A sector is a
particular group of bonds usually found in one industry. Our two largest sector
allocations were limited tax obligation bonds and health care securities, which
each accounted for 24% of the fund's investments, as of November 30, 1998.
Although we continue to see good values in the healthcare sector, we have looked
for opportunities in other sectors, including housing and the emerging general
obligation sector, to add diversification to the portfolio. In all cases, our
focus is on high-quality credits that we believe will continue to provide good
value over the life of the fund.
Aside from our sector strategy, the fund also benefited from well-diversified
call protection, which helped it maintain more predictable income streams.
Staggered call exposure will help to protect the fund from reinvestment risk in
the event that interest rates continue to decline.
The fund also maintained its primary focus on high-quality securities, with 63%
of the portfolio invested in AAA rated or AA rated bonds, as of November 30,
1998. However, Nuveen's extensive research capabilities also make it possible
for us to identify lower-rated debt that we believe offers both strong quality
characteristics and the opportunity for additional yield.
Were there any other factors that affected the fund?
Another development in Kentucky was a 1998 state court decision that overturned
important restrictions on the issuance of general obligation debt. The resulting
ability of Kentucky municipalities to issue general obligation debt created some
small, though important, investment opportunities for us, especially given the
year's light municipal issuance volume.
What is your outlook for the Nuveen Flagship Kentucky Limited Term Municipal
Bond Fund?
One important event in the coming year is the anticipated merger of this fund
with the Nuveen Flagship Kentucky Municipal Bond Fund. We believe this merger
will enhance economies of scale for shareholders of both funds, and will create
opportunities for our Limited Term investors to enjoy the additional yield and
potentially higher income streams of a longer term portfolio. The merged fund
will continue to seek out undervalued securities that provide attractive income
relative to the market, consistent with the preservation of capital.
Specifically, the housing bond sector will be a prime candidate for addition to
the portfolio as a way to increase yield. The reason for this is that single
family housing bonds contain prepayment risk. This prepayment risk increases as
interest rates fall, but it's rewarded in the form of higher yield. In today's
market, however, we view that additional risk as minute due to the low level of
current interest rates. We will also look for opportunities in the general
obligation sector, which will help us further diversify our sector allocation
while offering some potentially attractive values.
* The Lipper Peer Group return represents the average annualized returns of the
funds in the Lipper Other State Short Intermediate Municipal Debt category.
The return assumes reinvestment of dividends and does not reflect any
applicable sales charge.
6
<PAGE>
Nuveen Flagship Kentucky Limited Term Municipal Bond Fund
Performance Overview
As of November 30, 1998
Monthly Tax-Free Dividends (Class A Shares)
[BAR CHART APPEARS HERE]
12/97 .0365
1/98 .0365
2/98 .0365
3/98 .0365
4/98 .0365
5/98 .0365
6/98 .0365
7/98 .035
8/98 .035
9/98 .035
10/98 .035
11/98 .035
Top 5 Sectors
Tax Obligation (Limited) 24%
........................................
Health Care 24%
........................................
Education and Civic Organizations 14%
........................................
Housing (Multifamily) 10%
........................................
Water and Sewer 9%
- ----------------------------------------
Portfolio Statistics
<TABLE>
<CAPTION>
Share Class A C R
- ------------------------------------------------------------------------------
<S> <C> <C> <C>
Inception Date 9/95 9/95 2/97
..............................................................................
Net Asset Value $10.19 $10.18 $10.17
..............................................................................
Total Net Assets ($000) $11,153
..............................................................................
Effective Maturity (Years) 5.74
..............................................................................
Modified Duration (Years) 4.77
- ------------------------------------------------------------------------------
</TABLE>
Annualized Total Return/1/
<TABLE>
<CAPTION>
Share Class A(NAV) A(Offer) C R
- ------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
1-Year 5.36% 2.71% 4.99% 5.62%
..............................................................................
3-Year 5.45% 4.58% 5.08% 5.53%
..............................................................................
Since Inception 5.99% 5.16% 5.62% 6.07%
- ------------------------------------------------------------------------------
</TABLE>
Tax-Free Yields
<TABLE>
<CAPTION>
Share Class A(NAV) A(Offer) C R
- ------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Distribution Rate 4.12% 4.02% 3.77% 4.37%
..............................................................................
SEC 30-Day Yield 3.19% 3.11% 2.85% 3.39%
..............................................................................
Taxable Equivalent Yield/2/ 4.92% 4.79% 4.39% 5.22%
- ------------------------------------------------------------------------------
</TABLE>
1 Class A share returns are actual. Class C and R share returns are actual for
the period since class inception; returns prior to class inception are Class
A share returns adjusted for differences in sales charges and expenses, which
are primarily differences in distribution and service fees. Class A shares
have a 2.50% maximum sales charge. Class C shares have a 1% CDSC for
redemptions within one year which is not reflected in the one-year total
return.
2 Based on SEC yield and a federal income tax rate of 35.1%. Represents the
yield on a taxable investment necessary to equal the yield of the Nuveen fund
on an after-tax basis.
7
<PAGE>
Nuveen Flagship Michigan Municipal Bond Fund
Portfolio Manager's Comments
Portfolio Manager Rick Huber discusses the Nuveen Flagship Michigan Municipal
Bond Fund and reviews factors that affected performance over the past 12 months.
Comments cover the 12-month period ended November 30, 1998 and all performance
statistics are quoted for Class A shares.
What is the status of Michigan's economy and its municipal market?
The Michigan economy continues to expand as it diversifies away from its
dependence on the inherently cyclical auto industry. Unemployment continues to
be below national levels at 3.6%. While the state has diversified its employment
base by increasing employment in the trade and services sectors, it is still
reliant on the auto sector. The state's economy is expected to be more cyclical
than the nation, but the state has positioned itself to be more stable than in
previous years. The state's improved credit quality was recognized in the first
quarter of 1998 by Moody's, which upgraded its rating to Aa1 from Aa2. S&P rates
it AA+. Both ratings remained the same, as of November 30, 1998.
In response to low interest rates, the expanding economy, and Michigan's
continued population growth, the state's municipal bond issuance through
November increased 57% over the same period in 1997. Supply is expected to
remain heavy over the next few years due to the continuing need for
infrastructure financing and increased school spending.
How did the Nuveen Flagship Michigan Municipal Bond Fund's underlying portfolio
perform during the past year?
Over the past 12 months, the Nuveen Flagship Michigan Municipal Bond Fund
generated a total return on Class A shares at net asset value of 6.99%,
equivalent to a taxable total return of 9.64% for investors in the 34% combined
federal and state income tax bracket. That performance exceeded the 6.81%
average annual total return posted by the Lipper Michigan Municipal Debt Peer
Group* of 52 municipal bond funds.
What key strategies were used over the course of the year? Were there any
particular sectors in which Nuveen looked for undervalued securities?
In general, we spent the recent period further improving the Nuveen Flagship
Michigan Municipal Bond Fund's portfolio structure by adding high-quality
securities offering good call protection, higher coupons, and attractive value
relative to the larger market.
We sought out those securities in a number of ways. First, we looked to make new
purchases in sectors offering bonds that our managers believe were not fully
priced by the market. One of the fund's largest sectors, healthcare, with 20% of
the fund's investments, as of November 30, 1998, not only experienced some of
the state's heaviest issuance volume, it also performed well during the period.
Second, we choose to hold onto the high coupon bonds purchased in earlier
periods, which became pre-refunded as interest rates fell. A pre-refunding
establishes an escrow of U.S. government securities designed to pay off the
original debt at a designated call date. As a result, the bond price rises
through the elimination of credit risk and the acceleration of maturity.
We also looked to take advantage of slightly wider yield spreads between higher
and lower-rated securities. Nuveen's extensive research capabilities give us the
ability to identify lower-rated debt that we believe offers both strong credit
characteristics and the opportunity for additional yield. In Michigan, we found
attractive lower-rated bonds in a number of sectors, an example of which
includes non-rated revenue bonds for Holland Homes issued by the Michigan
Strategic Fund. Overall, however, the fund's portfolio continues to be very high
quality, with 75% of its holdings rated AAA or AA, as of November 30, 1998.
The fund also benefited from well-diversified call protection, which helped it
maintain more predictable income streams. Staggered call exposure will help to
protect the fund from reinvestment risk in the event that interest rates
continue to decline.
What is your outlook for the Nuveen Flagship Michigan Municipal Bond Fund?
Overall, we will continue to manage the fund by seeking out undervalued
securities that provide attractive income relative to the market, consistent
with the preservation of capital.
The housing bond sector will be a prime candidate for addition to the portfolio
as a way to increase yield. Since single family housing bonds contain prepayment
risk, they generally come to market at lower prices and higher yields in
comparison to other high quality issues. In today's market, however, we view any
prepayment risk as very low due to the present level of interest rates. In
addition, we intend to use our market clout to work with housing bond issuers to
structure call-protected maturities at good prices.
We will also continue to work closely with Nuveen's research team to identify
lower-rated credits that we believe are of fundamentally high quality, adding
yield to the portfolio without compromising the overall quality of the
portfolio.
* The Lipper Peer Group return represents the average annualized returns of the
funds in the Lipper Michigan Municipal Debt category. The return assumes
reinvestment of dividends and does not reflect any applicable sales charge.
8
<PAGE>
Nuveen Flagship Michigan Municipal Bond Fund
Performance Overview
As of November 30, 1998
Monthly Tax-Free Dividends (Class A Shares)/1/
[BAR CHART APPEARS HERE]
<TABLE>
<S> <C>
12/97 .051
1/98 .05
2/98 .05
3/98 .05
4/98 .05
5/98 .05
6/98 .05
7/98 .05
8/98 .05
9/98 .05
10/98 .05
11/98 .05
</TABLE>
Top 5 Sectors
<TABLE>
<S> <C>
U.S. Guaranteed 23%
- ---------------------------------------------
Health Care 20%
- ---------------------------------------------
Tax Obligation (General) 15%
- ---------------------------------------------
Tax Obligation (Limited) 14%
- ---------------------------------------------
Water and Sewer 6%
- ---------------------------------------------
</TABLE>
Portfolio Statistics
<TABLE>
<CAPTION>
Share Class A B C R
- --------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Inception Date 6/85 2/97 6/93 2/97
- --------------------------------------------------------------------------------
Net Asset Value $12.18 $12.20 $12.17 $12.18
- --------------------------------------------------------------------------------
Total Net Assets ($000) $351,616
- --------------------------------------------------------------------------------
Effective Maturity (Years) 16.50
- --------------------------------------------------------------------------------
Modified Duration (Years) 6.26
- --------------------------------------------------------------------------------
</TABLE>
Annualized Total Return/2/
<TABLE>
<CAPTION>
Share Class A(NAV) A(Offer) B C R
- --------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
1-Year 6.99% 2.46% 6.28% 6.51% 7.20%
- --------------------------------------------------------------------------------
5-Year 6.04% 5.15% 5.42% 5.49% 6.12%
- --------------------------------------------------------------------------------
10-Year 7.79% 7.32% 7.32% 7.17% 7.83%
- --------------------------------------------------------------------------------
</TABLE>
Tax-Free Yields
<TABLE>
<CAPTION>
Share Class A(NAV) A(Offer) B C R
- --------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Distribution Rate 4.93% 4.72% 4.18% 4.39% 5.12%
- --------------------------------------------------------------------------------
SEC 30-Day Yield 3.86% 3.70% 3.11% 3.31% 4.06%
- --------------------------------------------------------------------------------
Taxable Equivalent Yield/3/ 5.85% 5.61% 4.71% 5.02% 6.15%
- --------------------------------------------------------------------------------
</TABLE>
1 The Fund also paid shareholders taxable distributions in December of $0.0281
per share.
2 Class A share returns are actual. Class B, C, and R share returns are actual
for the period since class inception; returns prior to class inception are
Class A share returns adjusted for differences in sales charges and expenses,
which are primarily differences in distribution and service fees. Class A
shares have a 4.2% maximum sales charge. Class B shares have a CDSC that
begins at 5% for redemptions during the first year after purchase and declines
periodically to 0% over the following five years, which is not reflected in
the return figures. Class C shares have a 1% CDSC for redemptions within one
year which is not reflected in the one-year total return.
3 Based on SEC yield and a federal income tax rate of 34%. Represents the yield
on a taxable investment necessary to equal the yield of the Nuveen fund on an
after-tax basis.
9
<PAGE>
Nuveen Flagship Ohio Municipal Bond Fund
Portfolio Manager's Comments
Portfolio Manager Rick Huber discusses the Nuveen Flagship Ohio Municipal Bond
Fund and reviews factors that affected performance over the past 12 months.
Comments cover the 12-month period ended November 30, 1998 and all performance
statistics are quoted for Class A shares.
What is the status of Ohio's economy and its municipal market?
Although Ohio's economy remains more reliant on manufacturing than many other
states, it has diversified, reducing the state's reliance on auto and steel
industries. The state's employment growth has trailed the national rate, but its
unemployment rate remains slightly below the national average. Job growth has
been concentrated in construction and the service sectors, with additional jobs
in the high-tech sector concentrated in the northern portion of the state.
The importance of industrial exports to the Ohio economy increases the state's
exposure to the global economy. That exposure has produced some negative effects
in light of the economic difficulties facing Asia, as well as heightened
competition. Steel exports, for example, have experienced declines in part due
to lower priced imports.
Ohio remains one of the country's largest issuers of municipal bonds. In 1998,
the state ranked ninth in year-to-date issuance as of November 30, 1998. Total
issuance, $7.68 billion, was up 8.9% versus the same period in 1997.
How did the Nuveen Flagship Ohio Municipal Bond Fund's underlying portfolio
perform during the past year?
Over the past 12 months, the Nuveen Flagship Ohio Municipal Bond Fund performed
well, generating a total return on Class A shares at net asset value of 7.19%,
equivalent to a taxable total return of 10.07% for investors in the 35.8%
combined federal and state income tax bracket. That performance exceeded the
6.78% average annual total return posted by the Lipper Ohio Municipal Debt Peer
Group* of 52 municipal bond funds.
What key strategies were used over the course of the year? Were there any
particular areas in which Nuveen looked for undervalued securities?
The fund continued to enjoy success with its sector strategy during the recent
period. A sector is a particular group of bonds usually found in one industry.
Currently, our two largest allocations are U.S. Guaranteed Bonds and general tax
obligation securities, which accounted for 20% and 17%, respectively, of the
fund's investments, as of November 30, 1998. These areas not only experienced
some of the state's heaviest issuance volume, they performed well during the
period ended November 30, 1998.
Two other sectors that have performed well recently are housing and healthcare.
The healthcare sector in particular has seen yield spreads widen between higher-
rated and lower-rated securities because bond insurers are increasingly
unwilling to insure securities rated lower than AA.
Aside from our sector strategy, the fund has also benefited from well-
diversified call protection, which helped it maintain more predictable income
streams. Staggered call exposure will help to protect the fund from reinvestment
risk in the event that interest rates continue to decline.
The fund also maintained its primary focus on high-quality securities, with 75%
of the portfolio invested in bonds rated AA or AAA as of November 30, 1998.
However, Nuveen's extensive research capabilities also make it possible for us
to identify lower-rated debt that we believe offers both strong quality
characteristics and the opportunity for additional yield.
The Nuveen Flagship Ohio Municipal Bond Fund is among Nuveen's largest municipal
funds, which means we have to buy bonds in larger blocks to impact the
portfolio's performance. We looked toward large issuers and heavy-issuance
sectors for attractive investment opportunities during the year.
What is your outlook for the Nuveen Flagship Ohio Municipal Bond Fund?
Overall, we will continue to manage the fund by seeking out undervalued
securities that provide attractive income relative to the market, consistent
with the preservation of capital. Specifically, we will continue to improve the
portfolio's overall structure by trying to further improve the fund's call
protection as well as long-term total return prospects.
The housing bond sector will be a prime candidate for addition to the portfolio
as a way to increase yield. The reason for this is that single family housing
bonds contain prepayment risk. This prepayment risk increases as interest rates
fall, but it's rewarded in the form of higher yield. In today's market, however,
we view that additional risk as very low due to the present level of interest
rates.
We will also continue to work closely with Nuveen's research team to identify
lower rated credits that we believe are of fundamentally high quality, adding
yield to the portfolio without compromising the overall quality of the
portfolio.
* The Lipper Peer Group return represents the average annualized returns of the
funds in the Lipper Ohio Municipal Debt category. The return assumes
reinvestment of dividends and does not reflect any applicable sales charge.
10
<PAGE>
Nuveen Flagship Ohio Municipal Bond Fund
Performance Overview
As of November 30, 1998
Monthly Tax-Free Dividends (Class A Shares)/1/
[BAR CHART APPEARS HERE]
12/97 .0505
1/98 .049
2/98 .049
3/98 .049
4/98 .049
5/98 .049
6/98 .049
7/98 .049
8/98 .049
9/98 .049
10/98 .048
11/98 .048
Top 5 Sectors
U.S. Guaranteed 20%
.................................
Tax Obligation (General) 17%
.................................
Health Care 15%
.................................
Utilities 11%
.................................
Tax Obligation (Limited) 7%
- ---------------------------------
Portfolio Statistics
<TABLE>
<CAPTION>
Share Class A B C R
- ------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Inception Date 6/85 2/97 8/93 2/97
..............................................................................
Net Asset Value $11.84 $11.83 $11.83 $11.84
..............................................................................
Total Net Assets ($000) $706,940
..............................................................................
Effective Maturity (Years) 18.76
..............................................................................
Modified Duration (Years) 6.37
- ------------------------------------------------------------------------------
</TABLE>
Annualized Total Return/2/
<TABLE>
<CAPTION>
Share Class A(NAV) A(Offer) B C R
- ------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
1-Year 7.19% 2.70% 6.34% 6.56% 7.41%
..............................................................................
5-Year 5.74% 4.83% 5.08% 5.16% 5.82%
..............................................................................
10-Year 7.58% 7.12% 7.11% 6.99% 7.62%
- ------------------------------------------------------------------------------
</TABLE>
Tax-Free Yields
<TABLE>
<CAPTION>
Share Class A(NAV) A(Offer) B C R
- ------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Distribution Rate 4.86% 4.66% 4.16% 4.36% 5.07%
..............................................................................
SEC 30-Day Yield 3.71% 3.56% 2.97% 3.17% 3.92%
..............................................................................
Taxable Equivalent Yield/3/ 5.78% 5.55% 4.63% 4.94% 6.11%
- ------------------------------------------------------------------------------
</TABLE>
1 The Fund also paid shareholders taxable distributions in December of $0.0504
per share.
2 Class A share returns are actual. Class B, C and R share returns are actual
for the period since class inception; returns prior to class inception are
Class A share returns adjusted for differences in sales charges and expenses,
which are primarily differences in distribution and service fees. Class A
shares have a 4.2% maximum sales charge. Class B shares have a CDSC that
begins at 5% for redemption during the first year after purchase and declines
periodically to 0% over the following five years, which is not reflected in
the return figures. Class C shares have a 1% CDSC for redemptions within one
year which is not reflected in the one-year total return.
3 Based on SEC yield and a federal income tax rate of 35.8%. Represents the
yield on a taxable investment necessary to equal the yield of the Nuveen fund
on an after-tax basis.
11
<PAGE>
Portfolio of Investments (Unaudited)
Nuveen Flagship Kentucky Municipal Bond Fund
November 30, 1998
<TABLE>
<CAPTION>
Principal Optional Call Market
Amount Description Provisions* Ratings** Value
- ----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Basic Materials - 0.2%
$1,000,000 Jefferson County, Kentucky, Pollution Control 7/03 at 103 AA- $ 1,103,320
Revenue Bonds (E.I. du Pont de Nemours and
Company Project), 1982 Series A, 6.300%,
7/01/12
- ----------------------------------------------------------------------------------------------------------
Education and Civic Organizations - 0.2%
700,000 Northern Kentucky University, 5/01 at 102 AAA 762,818
Consolidated Education Building
Revenue Bonds, Series F,
7.000%. 5/01/10
- ----------------------------------------------------------------------------------------------------------
Energy - 4.0%
5,000,000 City of Ashland, Kentucky, Pollution Control 8/02 at 102 Baa1 5,388,450
Revenue Refunding Bonds (Ashland Oil Inc.
Project), Series 1992, 6.650%, 8/01/09
9,000,000 City of Ashland, Kentucky, Sewage and Solid 2/05 at 102 Baa1 10,139,040
Waste Revenue Bonds, Series 1995 (Ashland
Oil Inc. Project), 7.125%, 2/01/22
(Alternative Minimum Tax)
4,360,000 City of Ashland, Kentucky, Solid Waste 10/01 at 102 Baa1 4,719,874
Revenue Bonds, Series 1991 (Ashland Oil Inc.
Project), 7.200%, 10/01/20 (Alternative
Minimum Tax)
- ----------------------------------------------------------------------------------------------------------
Forest and Paper Products - 5.7%
2,370,000 Hancock County, Kentucky, Solid Waste Disposal 5/06 at 102 A- 2,644,802
Facilities Revenue Bonds (Willamette Industries,
Inc. Project), Series 1996, 6.600%, 5/01/26
9,750,000 County of Henderson, Kentucky, Solid Waste 3/05 at 102 Baa2 10,511,768
Disposal Revenue Bonds (MacMillan Bloedel
Project), Series 1995, 7.000%, 3/01/25
(Alternative Minimum Tax)
1,500,000 Maysville (Kentucky) Industrial Development 2/00 at 103 N/R 1,571,925
Revenue Bonds, Crystal Tissue Project,
8.000%, 2/01/09 (Alternative Minimum Tax)
3,750,000 County of Perry, Kentucky, Solid Waste 6/04 at 102 N/R 4,121,250
Disposal Revenue Bonds (TJ International
Project), Series 1994, 7.000%, 6/01/24
(Alternative Minimum Tax)
County of Perry, Kentucky, Solid Waste Disposal
Revenue Bonds (TJ International Project),
Series 1996:
4,240,000 6.800%, 5/01/26 (Alternative Minimum Tax) 5/06 at 102 N/R 4,676,381
2,000,000 6.550%, 4/15/27 (Alternative Minimum Tax) 4/07 at 102 N/R 2,175,220
2,820,000 City of Wickliffe, Kentucky, Solid Waste 4/06 at 102 A1 3,092,891
Disposal Facility Revenue Bonds, Series 1996
(Westvaco Corporation Project), 6.375%,
4/01/26 (Alternative Minimum Tax)
- ----------------------------------------------------------------------------------------------------------
Health Care - 20.7%
1,310,000 County of Christian, Kentucky, Hospital 7/06 at 102 A- 1,407,399
Revenue Bonds, Series 1996A, Jennie Stuart
Medical Center, 6.000%, 7/01/17
3,500,000 County of Christian, Kentucky, Hospital 7/06 at 102 A- 3,825,990
Revenue and Refunding Bonds, Series 1997A,
Jennie Stuart Medical Center, 6.000%, 7/01/13
5,270,000 County of Clark, Kentucky, Hospital Refunding 4/07 at 102 BBB- 5,600,218
and Improvement Revenue Bonds (Clark Regional
Medical Center Project), Series 1997, 6.200%,
4/01/13
3,300,000 County of Daviess, Kentucky, Insured Hospital 8/02 at 102 AAA 3,603,765
Revenue Bonds, 1992 (ODCH, Inc. Project),
Series A, 6.250%, 8/01/22
2,805,000 County of Floyd, Kentucky, Hospital Revenue 2/01 at 102 AAA 3,007,998
Refunding Bonds (FHA Insured Mortgage Loan
Highland Hospital Corporation Project),
Series 1991, 7.500%, 8/01/10
4,000,000 County of Hopkins, Kentucky, Hospital 11/01 at 102 AAA 4,348,960
Revenue Bonds, Series 1991 (The Trover Clinic
Foundation, Incorporated), 6.625%, 11/15/11
</TABLE>
12
<PAGE>
<TABLE>
<CAPTION>
Principal Optional Call Market
Amount Description Provisions* Ratings** Value
- -----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Health Care (continued)
County of Jefferson, Kentucky, Health Facilities
Revenue Bonds, Series 1992 (Jewish Hospital
Healthcare Services Inc. Project):
$ 1,190,000 6.500%, 5/01/15 5/02 at 102 AAA $ 1,299,528
12,785,000 6.550%, 5/01/22 5/02 at 102 AAA 13,981,932
4,625,000 County of Jefferson, Kentucky, Health 7/07 at 101 AAA 4,686,651
Facilities Revenue Bonds, Series 1997,
(University Medical Center, Inc. Project),
5.250%, 7/01/22
15,640,000 County of Jefferson, Kentucky, Health 10/07 at 101 AAA 15,615,445
Facilities Revenue Bonds, Series 1997
(Alliant Health System, Inc.), 5.125%,
10/01/27
7,800,000 County of Jefferson, Kentucky, Health 10/08 at 101 AAA 7,878,468
System Revenue Bonds, Series 1998
(Alliant Health System, Inc.), 5.200%,
10/01/28
7,800,000 County of Jefferson, Kentucky, Insured 10/02 at 102 AAA 8,566,974
Hospital Revenue Bonds, Series 1992
(Alliant Health System, Inc.), 6.436%,
10/01/14
1,750,000 Kentucky Development Finance Authority, 11/99 at 102 A1 1,848,718
Hospital Revenue Bonds (Sisters of
Charity of Nazareth Health Corporation),
Series 1989, 7.375%, 11/01/16
1,000,000 Kentucky Development Finance Authority 11/01 at 100 AAA 1,056,330
(St. Elizabeth Medical Center, Inc.
Project), 6.000%, 11/01/10
5,000,000 Kentucky Economic Development Finance 12/03 at 102 AAA 5,487,100
Authority, Hospital Facilities Revenue
Bonds, Series 1993A (Saint Elizabeth Medical
Center, Inc. Project), 6.000%, 12/01/22
9,500,000 Kentucky Economic Development Finance 2/07 at 102 AAA 10,098,310
Authority, Hospital Revenue and Refunding
Revenue Bonds, Series 1997, (Pikeville United
Methodist Hospital of Kentucky, Inc. Project),
5.700%, 2/01/28
Kentucky Economic Development Finance Authority,
Hospital System Refunding and Improvement Revenue
Bonds, Series 1997 (Appalachian Regional
Healthcare, Inc. Project):
500,000 5.600%, 10/01/08 4/08 at 102 BBB 526,225
3,500,000 5.850%, 10/01/17 4/08 at 102 BBB 3,636,465
1,500,000 5.875%, 10/01/22 4/08 at 102 BBB 1,554,540
2,050,000 McCracken County, Kentucky, Hospital 11/04 at 102 AAA 2,303,811
Facilities Revenue Refunding Bonds,
Series 1994A (Mercy Health System),
6.300%, 11/01/06
1,555,000 City of Radcliff, Kentucky, Tax-Exempt 7/07 at 102 AAA 1,643,433
Mortgage Revenue Refunding Bonds, Series 1997
(GNMA Backed - Lincoln Trail Care and Treatment
Facility), 5.650%, 1/20/19
2,800,000 City of Russell, Kentucky, Health System 1/08 at 102 Baa1 2,829,960
Revenue Bonds, Our Lady of Bellefonte
Hospital Issue, Series 1997 (Franciscan
Health Partnership, Inc.), Refunding Revenue
Bonds, 5.500%, 7/01/15
- -----------------------------------------------------------------------------------------------------------
Housing/Multifamily - 1.3%
2,500,000 Greater Kentucky Housing Assistance Corporation, 7/03 at 100 AAA 2,593,525
Mortgage Revenue Refunding Bonds, Series 1993A
(FHA Insured Mortgage Loans - Section 8
Assisted Projects), 6.250%, 7/01/24
County of Jefferson, Kentucky, Multifamily Housing
Revenue Bonds (Kentucky Towers Project),
Series 1998A:
700,000 5.000%, 8/20/18 8/08 at 102 AAA 701,799
2,900,000 5.650%, 8/20/34 8/08 at 102 AAA 3,028,499
- -----------------------------------------------------------------------------------------------------------
Housing/Single Family - 4.7%
7,000,000 Kentucky Housing Corporation, Housing 7/06 at 102 AAA 7,518,280
Revenue Bonds, 1996 Series E, 6.300%,
1/01/28 (Alternative Minimum Tax)
3,000,000 Kentucky Housing Corporation, Housing 7/07 at 102 AAA 3,239,850
Revenue Bonds, 1997 Series B, 6.250%,
7/01/28 (Alternative Minimum Tax)
435,000 Kentucky Housing Corporation, Housing 1/99 at 102 AAA 444,292
Revenue Bonds (FHA Insured/VA Guaranteed
Mortgage Loans), 1988 Series B, 7.625%,
1/01/09 (Alternative Minimum Tax)
1,360,000 Kentucky Housing Corporation, Housing 7/00 at 102 AAA 1,427,089
Revenue Bonds (FHA Insured/VA Guaranteed
Mortgage Loans), 1988 Series C, 7.900%,
1/01/21 (Alternative Minimum Tax)
635,000 Kentucky Housing Corporation, Housing 7/00 at 102 AAA 651,612
Revenue Bonds (FHA Insured/VA Guaranteed),
1990 Series B, 7.800%, 1/01/21 (Alternative
Minimum Tax)
</TABLE>
13
<PAGE>
<TABLE>
<CAPTION>
Portfolio of Investments (Unaudited)
Nuveen Flagship Kentucky Municipal Bond Fund (continued)
November 30, 1998
Principal Optional Call Market
Amount Description Provisions* Ratings** Value
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Housing/Single Family (continued)
$1,000,000 Kentucky Housing Corporation, Housing Revenue Bonds (Federally Insured 7/02 at 102 AAA $1,071,830
or Guaranteed Mortgage Loans), Series 1992B, 6.625%, 7/01/14
450,000 Kentucky Housing Corporation, Housing Revenue Bonds (Federally Insured 1/03 at 102 AAA 479,682
or Guaranteed Mortgage Loans), Series 1991C-1, 6.600%, 1/01/11
3,560,000 Kentucky Housing Corporation, Housing Revenue Bonds (Federally Insured 1/09 at 101 AAA 3,569,470
or Guaranteed Mortgage Loans), 1998 Series F, 5.000%, 7/01/18
(Alternative Minimum Tax)
900,000 Kentucky Housing Corporation, Housing Revenue Bonds (Federally Insured 1/04 at 102 AAA 963,846
or Guaranteed Mortgage Loans), 1994 Series A, 6.500%, 7/01/17
2,095,000 Kentucky Housing Corporation, Housing Revenue Bonds (Federally Insured 7/04 at 102 AAA 2,258,515
or Guaranteed Mortgage Loans), 1994 Series C, 6.400%, 1/01/17
1,975,000 Kentucky Housing Corporation, Housing Revenue Bonds (Federally Insured 1/05 at 102 AAA 2,133,948
or Guaranteed Mortgage Loans), 1995 Series B, 6.625%, 7/01/26
(Alternative Minimum Tax)
- ----------------------------------------------------------------------------------------------------------------------------------
Long Term Care -- 3.5%
County of Jefferson, Kentucky, First Mortgage Revenue Bonds, Series 1994
(The First Christian Church Homes of Kentucky Project):
1,240,000 6.000%, 11/15/09 11/04 at 102 BBB 1,313,879
715,000 6.125%, 11/15/13 11/04 at 102 BBB 758,594
3,210,000 6.125%, 11/15/18 11/04 at 102 BBB 3,405,714
Kentucky Economic Development Finance Authority, Health Care Facilities
Revenue Bonds, Series 1998 (The Christian Church Homes of Kentucky Inc.
Obligated Group):
1,800,000 5.375%, 11/15/23 5/08 at 102 BBB 1,806,066
4,250,000 5.500%, 11/15/30 5/08 at 102 BBB 4,264,238
5,700,000 Kentucky Economic Development Finance Authority, Tax Exempt Mortgage 1/08 at 105 AAA 6,193,415
Revenue Bonds (South Central Nursing Homes, Inc. Project), Series 1997A,
6.000%, 7/01/27
- ----------------------------------------------------------------------------------------------------------------------------------
Tax Obligation/General -- 2.0%
4,790,000 Commonwealth of Puerto Rico, Public Improvement Bonds of 1996 7/06 at 101 1/2 A 4,991,707
(General Obligation Bonds), 5.400%, 7/01/25
2,000,000 Commonwealth of Puerto Rico, Public Improvement Bonds of 1997 7/07 at 101 1/2 A 2,073,640
(General Obligation Bonds), 5.375%, 7/01/25
3,000,000 Commonwealth of Puerto Rico, Public Improvement Refunding Bonds 7/08 at 101 A 2,979,870
of 1998 (General Obligation Bonds), 5.000%, 7/01/26
- ----------------------------------------------------------------------------------------------------------------------------------
Tax Obligation/Limited -- 23.6%
615,000 Boone County (Kentucky), School District Finance Corporation, School 2/03 at 102 A1 650,596
Building Refunding and Improvement Revenue Bonds, Series 1993,
6.000%, 2/01/18
1,595,000 City of Bowling Green Municipal Projects Corporation, Kentucky, 12/04 at 102 A2 1,786,942
Lease Revenue Bonds, Series 1994, 6.500%, 12/01/14
1,005,000 Casey County School District Finance Corporation, School Building 3/05 at 102 A1 1,076,265
Revenue Bonds, Series 1995, 5.750%, 3/01/15
Daviess County (Kentucky), School District Finance Corporation, School
Building Revenue Bonds, Series 1994:
505,000 5.800%, 5/01/11 5/04 at 102 A1 551,718
535,000 5.800%, 5/01/12 5/04 at 102 A1 578,790
570,000 5.800%, 5/01/13 5/04 at 102 A1 615,224
600,000 5.800%, 5/01/14 5/04 at 102 A1 646,098
1,070,000 Fleming County School District Finance Corporation, School Building 3/05 at 102 A 1,145,210
Revenue Bonds, Series 1995, 5.875%, 3/01/15
3,155,000 City of Florence, Kentucky, Public Properties Corporation, First 6/07 at 102 AAA 3,344,868
Mortgage Revenue Bonds (Administrative Office Complex Project),
Series 1997, 5.500%, 6/01/27
</TABLE>
14
<PAGE>
<TABLE>
<CAPTION>
Principal Optional Call Market
Amount Description Provisions* Ratings** Value
- ---------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Tax Obligations/Limited (continued)
Floyd County, Kentucky Public Properties
Corporation, First Mortgage Revenue Bonds
(Floyd County Justice Center Project)
Series 1995A:
$ 465,000 5.500%, 9/01/17 3/06 at 102 A $ 489,682
1,260,000 5.550%, 9/01/23 3/06 at 102 A 1,332,286
3,550,000 Floyd County, Kentucky, Public Properties 3/06 at 105 A 3,868,258
Corporation, First Mortgage Revenue Bonds
(Floyd County Justice Center Project),
Series 1996B, 6.200%, 9/01/26
1,200,000 Floyd County School District Finance Corporation, 5/05 at 102 A1 1,276,284
Kentucky, School Building Revenue Bonds,
Series 1995, 5.500%, 5/01/15
2,280,000 Grant County School District Finance Corporation, 3/07 at 102 Aaa 2,374,688
School Building Revenue Bonds, Series 1997,
5.375%, 3/01/17
Hardin County, Kentucky, Building Commission
Revenue Bonds (Detention Facility Project),
Series 1994:
525,000 6.200%, 12/01/11 No Opt. Call AAA 590,326
1,775,000 6.250%, 12/01/14 12/04 at 102 AAA 2,000,532
300,000 Hardin County (Kentucky), School District 6/01 at 103 A1 328,521
Finance Corporation, School Building Revenue
Bonds, Series of 1991, 6.800%, 6/01/10
3,465,000 Hopkins County (Kentucky), School District 6/04 at 102 A1 3,772,519
Finance Corporation, School Building Revenue
Bonds, Series 1994, 6.200%, 6/01/19
1,250,000 Jefferson County Economic Development Corporation 7/01 at 100 A1 1,272,713
(Kentucky), Lease Revenue Bonds, Series 1986,
7.750%, 7/01/16
4,195,000 Jefferson County (Kentucky), School District 2/06 at 102 AAA 4,277,725
Finance Corporation, School Building Revenue
Bonds (Series 199A), 5.125%, 2/01/16
1,167,919 County of Jefferson, Kentucky, Equipment Lease No Opt. Call N/R 1,189,760
Purchase Revenue Bonds, Series 1987 (Energy
System Project), 9.000%, 6/01/03
215,122 County of Jefferson, Kentucky, Equipment Lease No Opt. Call N/R 221,721
Purchase Revenue Bonds, Series 1988 (Energy
System Project), 9.500%, 6/01/03
2,500,000 Jefferson County, Kentucky, Capital Projects 2/02 at 100 Aa3 1,235,900
Corporation, Lease Revenue Bonds,
Series 1987B, 0.000%, 8/15/08
1,000,000 City of Jeffersontown, Kentucky, Public Projects No Opt. Call A 1,082,860
Refunding and Improvements, Certificates of
Participation, 5.750%, 11/01/15
Jessamine County (Kentucky), School District
Finance Corporation, School Building Revenue
Bonds, Series 1991:
510,000 6.750%, 6/01/10 6/01 at 103 A1 561,439
545,000 6.750%, 6/01/11 6/01 at 103 A1 599,969
2,500,000 Jessamine County (Kentucky), School District 6/04 at 102 A1 2,705,275
Finance Corporation, School Building Revenue
Bonds, Series 1994, 6.125%, 6/01/19
5,650,000 Jessamine County (Kentucky), School District 1/06 at 102 A1 5,936,060
Finance Corporation, School Building Revenue
Bonds, Series 1996, 5.500%, 1/01/21
4,500,000 Kenton County, Kentucky, Public Properties 3/09 at 101 A1 4,420,440
Corporation, First Mortgage Revenue Bonds
(Courthouse Facilities Project), 1998
Series A, 5.000%, 3/01/29
400,000 Commonwealth of Kentucky, State Property and 11/01 at 102 A+ 438,188
Buildings Commission Revenue and Revenue
Refunding Bonds, Project No. 40, 2nd
Series, 6.875%, 11/01/07
250,000 Commonwealth of Kentucky, State Property and 10/01 at 102 A 273,758
Buildings Commission Revenue and Revenue
Refunding Bonds, Project No. 53,
6.625%, 10/01/07
2,075,000 Commonwealth of Kentucky, State Property and 9/04 at 102 A+ 2,253,803
Buildings Commission Revenue Bonds,
Project No. 56, 6.000%, 9/01/14
2,000,000 The Turnpike Authority of Kentucky Economic No Opt. Call AAA 2,135,640
Development, Revenue and Revenue Refunding
Bonds (Revitalization Projects),
Series 1993, 5.300%, 7/01/04
1,000,000 The Turnpike Authority of Kentucky Economic 7/05 at 102 AAA 1,072,350
Development, Revenue and Revenue Refunding
Bonds (Revitalization Projects),
Series 1995, 5.625%, 7/01/15
</TABLE>
15
<PAGE>
Portfolio of Investments (Unaudited)
Nuveen Flagship Kentucky Municipal Bond Fund (continued)
November 30, 1998
<TABLE>
<CAPTION>
Principal Optional Call Market
Amount Description Provisions* Ratings** Value
- -----------------------------------------------------------------------------------------------------------------------------------
Tax Obligation/Limited (continued)
<C> <S> <C> <C> <C>
$ 250,000 Laurel County, Kentucky, School District Finance Corporation, 3/01 at 102 A $ 272,555
School Building Revenue Bonds, 7.000%, 3/01/10
1,000,000 Lawrence County, Kentucky, School District Finance Corporation, 11/04 at 102 A1 1,146,030
School Building Revenue Bonds, Series 1994, 6.750%, 11/01/14
Lexington, Kentucky, Center Corporation Mortgage Revenue Refunding
and Improvement Bonds, Series 1993A:
2,600,000 0.000%, 10/01/11 No Opt. Call A 1,452,074
2,550,000 0.000%, 10/01/12 No Opt. Call A 1,342,677
435,000 Lincoln County, Kentucky, School District Finance Corporation, 5/02 at 102 A1 469,978
School Building Revenue Bonds, Series 1992, 6.200%, 5/01/12
6,165,000 Louisville, Kentucky, Airport Lease Revenue Bonds, Series 1989A, 2/99 at 103 A 6,390,084
7.875%, 2/01/19 (Alternative Minimum Tax)
1,525,000 McCracken County, Kentucky, Public Properties Corporation, Public 9/06 at 102 AAA 1,665,681
Project Revenue Bonds (Court Facilities Project), Series 1995,
5.900%, 9/01/26
2,365,000 McCreary County (Kentucky), School District Finance Corporation, 8/05 at 102 A 2,505,505
School Building Revenue Bonds, Second Series of 1995, 5.600%,
8/01/16
1,410,000 Morgan County, Kentucky, School District Finance Corporation, 9/04 at 102 A1 1,533,742
School Building Revenue Bonds, Series 1994, 6.000%, 9/01/14
13,000,000 Mount Sterling, Kentucky, Lease Revenue Bonds (Kentucky League of 3/03 at 102 Aa 13,813,410
Cities Funding Program), Series 1993A, 6.200%, 3/01/18
Pendleton County, Kentucky, County Lease Revenue Bonds, Kentucky
Associated Counties Leasing Trust Program Series 1993-A:
12,960,000 6.500%, 3/01/19 3/03 at 102 A 13,866,682
500,000 6.400%, 3/01/19 No Opt. Call A 588,105
2,000,000 Puerto Rico Aqueduct and Sewer Authority, Refunding Bonds, 7/06 at 101 1/2 A 1,991,000
Series 1995, Guaranteed by the Commonwealth of Puerto Rico,
5.000%, 7/01/19
8,250,000 Puerto Rico Highway and Transportation Authority, Highway 7/16 at 100 A 8,904,720
Revenue Bonds, Series Y of 1996, 5.500%, 7/01/36
115,000 Puerto Rico Infrastructure Finance Authority, Special Tax 7/00 at 100 BBB+ 117,685
Revenue Bonds, Series 1988A, 7.750%, 7/01/08
7,000,000 Warren County, Kentucky, Justice Center Expansion Corporation, 9/07 at 102 AAA 7,206,360
First Mortgage Revenue Bonds, AOC Judicial Facility,
Series 1997A, 5.250%, 9/01/24
- -----------------------------------------------------------------------------------------------------------------------------------
Transportation -- 4.1%
10,640,000 Kenton County Airport Board (Commonwealth of Kentucky), Special 2/02 at 100 BBB- 10,811,517
Facilities Revenue Bonds, 1992 Series A (Delta Air Lines, Inc.
Project), 6.125%, 2/01/22 (Alternative Minimum Tax)
1,250,000 Kenton County (Kentucky), Airport Board, Cincinnati/Northern 3/06 at 102 AAA 1,346,975
Kentucky International Airport Revenue Bonds, Series 1996B,
5.750%, 3/01/13
5,000,000 Regional Airport Authority of Louisville and Jefferson County, 7/05 at 102 AAA 5,228,200
Kentucky, Airport System Revenue Bonds, 1995 Series A,
5.625%, 7/01/25 (Alternative Minimum Tax)
2,790,000 The City of Louisville Parking Authority of River City (PARC), 6/01 at 103 A 3,079,323
Inc. (Kentucky), First Mortgage Revenue Bonds, Series 1991,
6.875%, 12/01/20
- -----------------------------------------------------------------------------------------------------------------------------------
U.S. Guaranteed -- 10.8%
430,000 Bardstown Independent School District Finance Corporation, 11/02 at 102 A1*** 478,121
School Building Refunding and Improvement Revenue Bonds,
Series of 1992, 6.375%, 5/01/17 (Pre-refunded to 11/01/02)
725,000 Bell County, Kentucky, School District Finance Corporation, 9/01 at 102 A*** 798,515
School Building Revenue Bonds, Series 1991, 6.875%,
9/01/11 (Pre-refunded to 9/01/01)
1,000,000 Boone County (Kentucky), School District Finance Corporation, 9/01 at 103 A1*** 1,107,350
School Building Revenue Bonds, Series C of 1991,
6.750%, 9/01/11 (Pre-refunded to 9/01/01)
</TABLE>
16
<PAGE>
<TABLE>
<CAPTION>
Principal Optional Call Market
Amount Description Provisions* Ratings** Value
- -----------------------------------------------------------------------------------------------------------------------------------
<C> <S> <C> <C> <C>
U.S. Guaranteed (continued)
$ 1,215,000 Boone County (Kentucky), School District Finance Corporation, 12/02 at 102 A1*** $ 1,342,028
School Building Refunding and Improvement Revenue Bonds,
Series 1992, 6.125%, 12/01/17 (Pre-refunded to 12/01/02)
Christian County (Kentucky), School District Finance Corporation,
School Building Revenue Bonds, Series 1991:
565,000 6.750%, 6/01/10 (Pre-refunded to 6/01/01) 6/01 at 102 A*** 617,681
600,000 6.750%, 6/01/11 (Pre-refunded to 6/01/01) 6/01 at 102 A*** 655,944
1,645,000 City of Edgewood, Kentucky, Public Properties Corporation, First 12/01 at 102 A2*** 1,819,321
Mortgage Revenue Bonds (Public Facilities Project), Series 1991,
6.700%, 12/01/21 (Pre-refunded to 12/01/01)
City of Florence, Kentucky, Public Properties Corporartion, First
Mortgage Revenue Bonds (Recreational Facilities Project):
100,000 7.000%, 3/01/10 (Pre-refunded to 3/01/01) 3/01 at 103 A3*** 109,852
320,000 7.000%, 3/01/14 (Pre-refunded to 3/01/01) 3/01 at 103 A3*** 352,336
345,000 7.000%, 3/01/15 (Pre-refunded to 3/01/01) 3/01 at 103 A3*** 379,862
360,000 7.000%, 3/01/16 (Pre-refunded to 3/01/01) 3/01 at 103 A3*** 396,378
16,750,000 Jefferson County, Kentucky, Capital Projects Corporation, Lease 2/01 at 24 11/16 AAA 3,807,443
Revenue Bonds, Series 1989B, 0.000%, 8/15/19
(Pre-refunded to 2/15/01)
Kenton County, Kentucky, Public Parks Corporation, Mortgage
Revenue Bonds, Series 1990:
1,290,000 7.000%, 3/01/08 (Pre-refunded to 3/01/00) 3/00 at 101 A*** 1,358,860
1,070,000 7.100%, 3/01/10 (Pre-refunded to 3/01/00) 3/00 at 101 A*** 1,128,411
815,000 Kenton County School District Finance Corporation (Kentucky), 12/01 at 102 A+*** 901,643
School Building Revenue Bonds, Series 1991, 6.800%, 12/01/11
(Pre-refunded to 12/01/01)
3,000,000 Kentucky Development Finance Authority, Hospital Revenue Bonds, 10/99 at 102 A*** 3,165,390
Series 1989A (St. Luke Hospital, Inc.), 7.500%, 10/01/12
(Pre-refunded to 10/01/99)
500,000 Kentucky Development Finance Authority, Sisters of Charity of 11/99 at 102 AAA 528,865
Nazareth Health Corporation, Hospital Revenue Bonds,
Series 1989, 7.375%, 11/01/16 (Pre-refunded to 11/01/99)
Kentucky Development Finance Authority, Hospital Facilities
Revenue Bonds, Series 1991A (St. Luke Hospital, Inc.):
2,000,000 7.000%, 10/01/11 (Pre-refunded to 10/01/01) 10/01 at 102 AAA 2,217,220
9,070,000 7.000%, 10/01/21 (Pre-refunded to 10/01/01) 10/01 at 102 AAA 10,055,093
1,495,000 Kentucky Infrastructure Authority, Governmental Agencies 8/99 at 102 A*** 1,570,288
Program, Revenue Refunding Bonds, Series 1989A, 7.800%,
8/01/08 (Pre-refunded to 8/01/99)
4,875,000 The Turnpike Authority of Kentucky, Economic Development Road 5/00 at 101 1/2 AAA 5,210,059
Revenue Bonds (Revitalization Projects), Series 1990, 7.250%,
5/15/10 (Pre-refunded to 5/15/00)
Lexington-Fayette Urban County Government (Kentucky)
Governmental Project Revenue Bonds, Series 1994 (University
of Kentucky Alumini Association, Inc. Commonwealth Library
Project):
3,195,000 6.750%, 11/01/17 (Pre-refunded to 11/01/04) 11/04 at 102 AAA 3,725,658
4,320,000 6.750%, 11/01/24 (Pre-refunded to 11/01/04) 11/04 at 102 AAA 5,037,509
Montgomery County, Kentucky, School District Finance
Corporation, School Building Revenue Bonds, Series 1991:
305,000 6.800%, 6/01/09 (Pre-refunded to 6/01/01) 6/01 at 102 A1*** 333,322
325,000 6.800%, 6/01/10 (Pre-refunded to 6/01/01) 6/01 at 102 A1*** 355,180
350,000 6.800%, 6/01/11 (Pre-refunded to 6/01/01) 6/01 at 102 A1*** 382,501
2,000,000 Northern Kentucky University, Certificates of Participation, 1/01 at 102 AAA 2,183,120
Student Housing Facilities, Series 1991, 7.250%, 1/01/12
(Pre-refunded to 1/01/01)
1,230,000 Perry County, Kentucky, School District Finance Corporation, 7/02 at 102 A1*** 1,353,554
School Building Revenue Bonds, Series 1992, 6.250%, 7/01/11
(Pre-refunded to 7/01/02)
1,990,000 Western Kentucky University, Housing and Dining System Revenue 12/00 at 102 AAA 2,179,329
Bonds, Series 1990L, 7.400%, 12/01/10 (Pre-refunded to 12/01/00)
940,000 Western Kentucky University, Consolidated Educational Building 11/00 at 102 AAA 1,026,621
Revenue Bonds, Series 1990J, 7.400%, 5/01/10
(Pre-refunded to 11/01/00)
</TABLE>
17
<PAGE>
Portfolio of Investments (Unaudited)
Nuveen Flagship Kentucky Municipal Bond Fund (continued)
November 30, 1998
<TABLE>
<CAPTION>
Principal Optional Call Market
Amount Description Provisions* Ratings** Value
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Utilities - 9.9%
$ 7,000,000 County of Boone, Kentucky, Collateralized Pollution Control Revenue 1/04 at 102 AAA $ 7,327,460
Refunding Bonds, 1994 Series A (The Cincinnati Gas and Electric
Company Project), 5.500%, 1/01/24
5,030,000 County of Carroll, Kentucky, Collateralized Pollution Control 2/02 at 102 Aa2 5,312,988
Revenue Bonds (Kentucky Utilities Company Project), 1992 Series B,
6.250%, 2/01/18
5,000,000 Cities of Carrollton and Henderson, Kentucky, Public Energy No Opt. Call AAA 5,235,000
Authority of Kentucky Trust Gas Revenue Bonds, Series 1998,
5.000%, 1/01/07
1,000,000 County of Jefferson, Kentucky, Pollution Control Revenue Bonds, 6/00 at 102 Aa2 1,067,770
1990 Series A (Louisville Gas and Electric Company Project),
7.450%, 6/15/15
1,750,000 County of Jefferson, Kentucky, Pollution Control Revenue Bonds, 4/05 at 102 Aa2 1,879,203
1995 Series A (Louisville Gas and Electric Company Project),
5.900%, 4/15/23
1,250,000 Mercer County, Kentucky, Collateralized Pollution Control Revenue 2/02 at 102 Aa2 1,339,988
Bonds (Kentucky Utilities Company Project), Series 1992A,
6.250%, 2/01/18
Owensboro, Kentucky, Electric Light and Power Revenue Bonds,
Series 1991B:
7,100,000 0.000%, 1/01/11 No Opt. Call AAA 4,121,976
6,475,000 0.000%, 1/01/12 No Opt. Call AAA 3,548,106
7,900,000 0.000%, 1/01/17 No Opt. Call AAA 3,251,008
13,300,000 0.000%, 1/01/18 No Opt. Call AAA 5,181,946
5,100,000 0.000%, 1/01/19 No Opt. Call AAA 1,883,940
4,725,000 0.000%, 1/01/20 No Opt. Call AAA 1,654,175
3,000,000 Puerto Rico Electric Power Authority, Power Revenue Bonds, Series T, 7/04 at 102 BBB+ 3,267,540
6.000%, 7/01/16
4,795,000 Trimble County, Kentucky, Pollution Control Revenue Bonds 11/00 at 102 Aa2 5,178,312
(Louisville Electric Company), Series 1990A, 7.625%, 11/01/20
(Alternative Minimum Tax)
- -----------------------------------------------------------------------------------------------------------------------------------
Water and Sewer - 8.0%
625,000 City of Danville, Kentucky, Multi-City Lease Revenue Bonds 12/01 at 103 AAA 687,881
(City of Radcliff Kentucky, Sewer System Revenue Project),
Fixed Rate Series 1991-B, 6.875%, 3/01/19
1,750,000 City of Henderson, Kentucky, Water and Sewer Revenue and Refunding 11/04 at 103 AAA 1,965,128
Bonds, Series of 1994A, 6.100%, 11/01/14
2,040,000 Kenton County Water District No. 1, Water District Revenue Bonds, 2/05 at 102 AAA 2,186,268
Series 1995B, 5.700%, 2/01/20
500,000 Kentucky Infrastructure Authority, Infrastructure Revolving Fund 6/01 at 102 A 542,900
Program Revenue Bonds, 1991 Series E, 6.500%, 6/01/11
1,000,000 Kentucky Infrastructure Authority, Governmental Agencies Program 8/03 at 102 A 1,046,920
Revenue Refunding Bonds, 1993 Series E, 5.750%, 8/01/18
Kentucky Infrastructure Authority, Infrastructure Revolving Fund
Program Revenue Bonds, 1995 Series J:
440,000 6.300%, 6/01/10 6/05 at 102 A 493,596
360,000 6.350%, 6/01/11 6/05 at 102 A 404,208
600,000 6.375%, 6/01/14 6/05 at 102 A 681,455
Kentucky Infrastructure Authority, Governmental Agencies Program
Revenue Bonds, 1995 Series G:
420,000 6.300%, 8/01/10 8/05 at 102 A 472,075
445,000 6.350%, 8/01/11 8/05 at 102 A 500,620
825,000 6.375%, 8/01/14 8/05 at 102 A 932,885
405,000 Kentucky Infrastructure Authority, Governmental Agencies Program 8/99 at 102 A 424,390
Revenue Refunding Bonds, Series 1989A, 7.800%, 8/01/08
Louisville and Jefferson County Metropolitan Sewer District
(Commonwealth of Kentucky), Sewer and Drainage System Revenue
Bonds, Series 1994A:
2,720,000 6.750%, 5/15/19 11/04 at 102 AAA 3,174,156
2,070,000 6.500%, 5/15/24 11/04 at 102 AAA 2,388,324
2,500,000 6.750%, 5/15/25 11/04 at 102 AAA 2,917,424
</TABLE>
18
<PAGE>
<TABLE>
<CAPTION>
Principal Optional Call Market
Amount Description Provisions* Ratings** Value
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Water and Sewer (continued)
$ 3,865,000 Louisville and Jefferson County Metropolitan Sewer District 2/05 at 102 Aaa $ 4,004,178
(Commonwealth of Kentucky), Sewer and Drainage System Revenue
Bonds, Series 1996A, 5.400%, 5/15/22
10,500,000 Louisville and Jefferson County Metropolitan Sewer District 5/07 at 101 AAA 10,741,604
(Commonwealth of Kentucky), Sewer and Drainage System Revenue
Bonds, Series 1997A, 5.250%, 5/15/27
6,000,000 Louisville and Jefferson County Metropolitan Sewer District 11/07 at 101 AAA 6,234,419
(Commonwealth of Kentucky), Sewer and Drainage System Revenue
Bonds, Series 1997B, 5.350%, 5/15/22
500,000 Paducah, Kentucky, Waterworks Revenue Refunding Bonds, Series 1991, 7/01 at 102 AAA 547,113
6.700%, 7/01/09
- -----------------------------------------------------------------------------------------------------------------------------------
$510,733,041 Total Investments - (cost $458,152,347) - 98.7% 498,596,440
============-----------------------------------------------------------------------------------------------------------------------
Other Assets Less Liabilities - 1.3% 6,758,807
--------------------------------------------------------------------------------------------------------------------
Net Assets - 100% $505,355,247
====================================================================================================================
</TABLE>
* Optional Call Provisions: Dates (month and year) and prices of the earliest
optional call or redemption. There may be other call provisions at varying
prices at later dates.
** Ratings: Using the higher of Standard & Poor's or Moody's rating.
*** Securities are backed by an escrow or trust containing sufficient U.S.
government or U.S. government agency securities which ensures the timely
payment of principal and interest. Securities are normally considered to be
equivalent to AAA rated securities.
N/R Investment is not rated.
See accompanying notes to financial statements.
19
<PAGE>
Portfolio of Investments (Unaudited)
Nuveen Flagship Kentucky Limited Term Municipal Bond Fund
November 30, 1998
<TABLE>
<CAPTION>
Principal Optional Call Market
Amount Description Provisions* Ratings** Value
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Consumer Staples - 2.9%
$ 320,000 City of Newport, Kentucky, Industrial Building Revenue Bonds, Series 1996A No Opt. Call N/R $322,624
- (Louis Truath Dairy, Inc. Project), 4.800%, 6/01/99
- -----------------------------------------------------------------------------------------------------------------------------------
Education and Civic Organizations - 14.0%
500,000 City of Berea, Kentucky, Berea College General Obligation Bonds, No Opt. Call Aaa 511,360
Series 1998, 4.800%, 7/01/08 (Alternative Minimum Tax)
500,000 Kentucky Higher Education Student Loan Corporation, Insured Student No Opt. Call Aaa 547,255
Loan Revenue Bonds, 1991 Series B, 6.800%, 6/01/03
(Alternative Minimum Tax)
475,000 University of Kentucky, Consolidated Educational Buildings Revenue No Opt. Call AAA 497,088
Bonds, Series O, 5.000%, 5/01/03
- -----------------------------------------------------------------------------------------------------------------------------------
Energy - 3.1%
325,000 City of Ashland, Kentucky, Pollution Control Revenue Refunding Bonds 2/00 at 102 1/2 Baa1 342,904
(Ashland Oil Inc. Project), Series 1988A, 7.375%, 7/01/09
- -----------------------------------------------------------------------------------------------------------------------------------
Health Care - 23.0%
580,000 Kentucky Development Finance Authority, Sisters of Charity of Nazareth 11/01 at 102 A1 637,188
Health Corporation, Revenue Refunding Bonds, Series 1991,
6.600%, 11/01/06
270,000 Kentucky Economic Development Finance Authority, Medical Center Revenue No Opt. Call AAA 270,902
Refunding and Improvement Bonds, Series 1993A (Ashland Hospital
Corporation d/b/a Kings Daughter Medical Center Project), 5.100%, 2/01/99
500,000 Kentucky Economic Development Finance Authority, Hospital System No Opt. Call BBB 523,095
Refunding and Improvement Revenue Bonds, Series 1997
(Appalachian Regional Healthcare, Inc. Project), 5.500%, 10/01/07
385,000 McCracken County, Kentucky, Hospital Facilities Revenue Refunding Bonds, 11/04 at 102 AAA 432,667
Series 1994A (Mercy Health System), 6.300%, 11/01/06
680,000 City of Radcliff, Kentucky, Tax-Exempt Mortgage Revenue Refunding Bonds, No Opt. Call AAA 710,634
Series 1997 (GNMA Backed - Lincoln Trail Care and Treatment Facility),
5.100%, 7/20/07
- -----------------------------------------------------------------------------------------------------------------------------------
Housing/Multifamily - 9.6%
705,000 City of Louisville, Kentucky, Multi-Family Housing Revenue Refunding No Opt. Call Aa2 712,952
Bonds, Series 1989 (Station House Square Associates L.P. Project),
5.125%, 7/15/19
350,000 County of Martin, Kentucky, Mortgage Revenue Refunding Bonds, Series 1995 7/01 at 100 Aa 362,016
(FHA Insured Mortgage Loan - Section 8 Assisted Project), 5.375%, 7/01/05
- -----------------------------------------------------------------------------------------------------------------------------------
Housing/Single Family - 1.9%
100,000 Kentucky Housing Corporation, Housing Revenue Bonds, 1993 Series B 1/04 at 102 AAA 104,520
(Federally Insured or Guaranteed Mortgage Loans), 5.150%, 7/01/07
100,000 Kentucky Housing Corporation, Housing Revenue Bonds, 1995 Series F No Opt. Call AAA 102,728
(Federally Insured or Guaranteed Mortgage Loans), 4.800%, 7/01/03
- -----------------------------------------------------------------------------------------------------------------------------------
Long Term Care - 1.9%
200,000 Kentucky Economic Development Finance Authority, Hospital Revenue No Opt. Call Aa3 206,350
Refunding Bonds, Series 1996 (Green River Regional Mental
Health/Mental Retardation Board, Inc.), 5.200%, 11/01/01
- -----------------------------------------------------------------------------------------------------------------------------------
Tax Obligation/General - 2.7%
280,000 Commonwealth of Puerto Rico, Public Improvement Refunding Bonds, Series No Opt. Call A 301,165
1993 (General Obligation Bonds), 5.375%, 7/01/05
</TABLE>
20
<PAGE>
<TABLE>
<CAPTION>
Principal Optional Call Market
Amount Description Provisions* Ratings** Value
- -----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Tax Obligation/Limited - 23.6%
$ 265,000 Hardin County (Kentucky), School District 6/01 at 103 A1 $ 290,194
Finance Corporation, School Building
Revenue Bonds, Series of 1991, 6.800%, 6/01/08
300,000 Jefferson County, Kentucky, Capital Projects No Opt. Call AAA 319,638
Corporation, Lease Revenue Bonds, Series
1996A, 5.500%, 4/01/03
City of Jeffersontown, Kentucky, Public
Projects Refunding and Improvements,
Certificates of Participation:
505,000 4.850%, 11/01/04 No Opt. Call A 530,806
100,000 5.000%, 11/01/05 No Opt. Call A 106,331
50,000 Kentucky Interlocal School Transportation No Opt. Call A1 52,092
Association (KISTA), Equipment Lease Revenue
Bonds, Series of 1993, 5.200%, 3/01/02
360,000 The Turnpike Authority of Kentucky, Economic No Opt. Call AAA 388,591
Development Road Revenue and Revenue
Refunding Bonds (Revitalization Projects),
Series 1993, 5.400%, 7/01/05
125,000 The Turnpike Authority of Kentucky, Resource No Opt. Call A+ 125,263
Recovery Road Revenue Refunding Bonds,
1985 Series A, 6.000%, 7/01/09
775,000 Mount Sterling, Kentucky, Lease Revenue No Opt. Call Aa 822,260
Bonds (Kentucky League of Cities Funding
Program), Series 1993A, 5.625%, 3/01/03
- -----------------------------------------------------------------------------------------------------------
Transportation - 2.8%
300,000 Kenton County (Kentucky), Airport Board, No Opt. Call AAA 310,083
Cincinnati/Northern Kentucky International
Airport Revenue Bonds, Series 1996A, 5.000%,
3/01/02 (Alternative Minimum Tax)
- -----------------------------------------------------------------------------------------------------------
U.S. Guaranteed - 0.5%
250,000 Jefferson County, Kentucky, Capital 2/01 at 24 11/16 AAA 56,828
Projects Corporation, Lease
Revenue Bonds, Series 1989B, 0.000%,
8/15/19 (Pre-refunded to 2/15/01)
- -----------------------------------------------------------------------------------------------------------
Utilities - 2.9%
400,000 City of Owensboro, Kentucky, Electric No Opt. Call AAA 327,512
Light and Power System Revenue Bonds,
Series 1993A, 0.000%, 1/01/04
(Alternative Minimum Tax)
- -----------------------------------------------------------------------------------------------------------
Water and Sewer - 8.6%
200,000 Kenton County Water District No. 1, No Opt. Call AAA 215,718
Water District Revenue Bonds, Series
1995B, 5.600%, 2/01/04
Kentucky Infrastructure Authority,
Wastewater Revolving Fund Program
Revenue Refunding Bonds, 1995 Series C:
150,000 5.300%, 6/01/03 No Opt. Call A 158,500
200,000 5.500%, 6/01/05 No Opt. Call A 216,016
350,000 Kentucky Infrastructure Authority, No Opt. Call A 366,190
Governmental Agencies Program Revenue and
Revenue Refunding Bonds, 1995 Series H,
5.200%, 8/01/02
- -----------------------------------------------------------------------------------------------------------
$10,600,000 Total Investments - (cost $10,473,622) - 97.5% 10,871,470
- -----------------------------------------------------------------------------------------------------------
Other Assets Less Liabilities - 2.5% 281,480
---------------------------------------------------------------------------------------------
Net Assets - 100% $11,152,950
---------------------------------------------------------------------------------------------
</TABLE>
* Optional Call Provisions: Dates (month and year) and prices of the earliest
optional call or redemption. There may be other call provisions at varying
prices at later dates.
** Ratings: Using the higher of Standard & Poor's or Moody's rating.
N/R Investment is not rated.
See accompanying notes to financial statements.
21
<PAGE>
Portfolio of Investments (Unaudited)
Nuveen Flagship Michigan Municipal Bond Fund
November 30, 1998
<TABLE>
<CAPTION>
Principal Optional Call Market
Amount Description Provisions* Ratings** Value
- ----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Capital Goods - 0.3%
$1,055,000 Michigan Strategic Fund, Limited Obligation 12/03 at 102 A1 $ 1,109,058
Revenue Bonds (WMX Technologies, Inc. Project),
Series 1993, 6.000%, 12/01/13 (Alternative
Minimum Tax)
- ----------------------------------------------------------------------------------------------------------
Consumer Cyclical - 2.4%
2,500,000 Michigan Strategic Fund, Limited Obligation No Opt. Call A1 2,941,750
Refunding Revenue Bonds, Series 1991A, 7.100%,
2/01/06
5,000,000 Michigan Strategic Fund, Multi-Modal 9/05 at 102 A 5,447,600
Interchangeable Rate Pollution Control
Refunding Revenue Bonds (General Motors
Corporation), Series 1995, 6.200%, 9/01/20
- ----------------------------------------------------------------------------------------------------------
Education and Civic Organizations - 1.2%
210,000 Board of Control of Grand Valley State 10/00 at 100 A 214,935
University, Michigan, General Revenue Bonds,
Series 1988, 7.875%, 10/01/08
750,000 Michigan Higher Education Student Loan 6/06 at 102 Aaa 803,858
Authority, Student Loan Revenue Bonds, Series
XVII-A, 5.750%, 6/01/13 (Alternative Minimum
Tax)
1,000,000 Michigan Higher Education Student Loan 6/08 at 101 AAA 995,820
Authority, Student Loan Revenue Bonds, Series
XVII-B, 5.400%, 6/01/18 (Alternative Minimum
Tax)
1,000,000 Board of Trustees of Michigan State University, 2/06 at 101 AAA 993,300
General Revenue Bonds, Series 1996, 5.000%,
2/15/26
1,000,000 Board of Trustees of Western Michigan University 11/02 at 102 AAA 1,109,790
(Michigan), General Revenue Bonds, Series 1992A,
6.250%, 11/15/12
- ----------------------------------------------------------------------------------------------------------
Forest and Paper Products - 2.2%
7,500,000 The Economic Development Corporation of 10/03 at 102 Baa1 7,790,100
Dickinson County (Michigan), Pollution Control
Refunding Revenue Bonds (Champion International
Corporation Project), Series 1993, 5.850%,
10/01/18
- ----------------------------------------------------------------------------------------------------------
Health Care - 21.2%
1,000,000 The Economic Development Corporation of the City 11/05 at 102 AAA 1,084,550
of Dearborn, Hospital Revenue Bonds (Oakwood
Obligated Group), Series 1995A, 5.750%, 11/15/15
500,000 City of Farmington Hills Hospital Finance 2/02 at 102 AAA 550,760
Authority (Michigan), Hospital Revenue Bonds
(Botsford General Hospital), Series 1992A,
6.500%, 2/15/11
City of Flint Hospital Building Authority,
Revenue Rental Bonds, Series 1998B (Hurley
Medical Center):
1,000,000 5.375%, 7/01/18 7/08 at 101 Baa1 996,950
1,000,000 5.375%, 7/01/28 7/08 at 101 Baa1 997,740
500,000 County of Grand Traverse (Michigan), Hospital 7/02 at 102 AAA 545,275
Finance Authority, Hospital Revenue Refunding
Bonds (Munson Healthcare Obligated Group), Series
1992A, 6.250%, 7/01/22
6,000,000 City of Kalamazoo Hospital Finance Authority, 5/06 at 102 AAA 6,469,080
Hospital Revenue Refunding and Improvement Bonds
(Bronson Methodist Hospital), Series 1996,
5.875%, 5/15/26
1,290,000 Kent Hospital Finance Authority (Michigan), 11/01 at 102 AAA 1,398,837
Hospital Revenue Refunding Bonds (Pine Rest
Christian Hospital), Series 1992, 6.500%,
11/01/10
3,530,000 Lake View Community Hospital Authority 2/07 at 101 N/R 3,512,527
(Michigan), Hospital Revenue Refunding Bonds,
Series 1997, 6.250%, 2/15/13
40,000 Michigan State Hospital Finance Authority, 8/00 at 100 A- 40,943
Hospital Revenue and Refunding Bonds (The
Detroit Medical Center Obligated Group), Series
1988B, 8.125%, 8/15/08
3,000,000 Michigan State Hospital Finance Authority, 1/00 at 100 BBB+ 3,036,660
Revenue Refunding Bonds, Memorial Hospital-
Owosso, Series 1987A, 7.375%, 1/01/03
6,500,000 Michigan State Hospital Finance Authority, 8/03 at 102 A- 7,117,500
Revenue and Refunding Bonds (The Detroit
Medical Center Obligated Group), Series 1993A,
6.500%, 8/15/18
</TABLE>
22
<PAGE>
<TABLE>
<CAPTION>
Principal Optional Call Market
Amount Description Provisions* Ratings** Value
- ----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Health Care (continued)
$1,000,000 Michigan State Hospital Finance Authority, 7/99 at 102 AAA $1,042,350
Revenue Refunding, Oakland General Hospital,
7.000%, 7/01/15
1,850,000 Michigan State Hospital Finance Authority, 10/03 at 102 A1 1,681,280
Hospital Revenue Refunding Bonds (McLaren
Obligated Group), Series 1993A, 4.500%,
10/15/21
1,000,000 Michigan State Hospital Finance Authority, 11/01 at 102 AAA 1,085,840
Hospital Revenue Refunding Bonds (Sparrow
Obligated Group), Series 1991, 6.500%,
11/15/11
2,920,000 Michigan State Hospital Finance Authority, 8/04 at 102 A- 2,937,053
Hospital Revenue and Refunding Bonds
(The Detroit Medical Center Obligated
Group), Series 1993B, 5.500%, 8/15/23
1,000,000 Michigan State Hospital Finance Authority, 1/05 at 102 AA- 1,089,970
Hospital Revenue and Refunding Bonds
(Otsego Memorial Hospital Gaylord, Michigan),
Series 1995, 6.125%, 1/01/15
2,000,000 Michigan State Hospital Finance Authority, 7/05 at 102 AAA 2,092,460
Hospital Revenue Refunding Bonds (Port
Huron Hospital Obligated Group), Series
1995, 5.500%, 7/01/15
1,000,000 Michigan State Hospital Finance Authority, No Opt. Call BBB 1,080,090
Hospital Revenue Refunding Bonds (Gratiot
Community Hospital, Alma, Michigan), Series
1995, 6.100%, 10/01/07
4,500,000 Michigan State Hospital Finance Authority, 5/06 at 102 AA- 4,531,590
Hospital Revenue and Refunding Bonds
(Henry Ford Health System), Series 1995A,
5.250%, 11/15/20
1,000,000 Michigan State Hospital Finance Authority, 10/06 at 102 BBB 1,063,720
Hospital Revenue Bonds (Michigan Community
Hospital), Series 1996, 6.250%, 10/01/27
2,000,000 Michigan State Hospital Finance Authority, 8/07 at 101 AA- 2,087,800
Hospital Revenue Refunding Bonds (Mercy
Health Services), Series 1997S, 5.500%,
8/15/20
Michigan State Hospital Finance Authority,
Hospital Revenue and Refunding Bonds (Genesys
Regional Medical Center Obligated Group),
Series 1998A:
1,000,000 5.500%, 10/01/18 10/08 at 102 BBB 1,004,460
4,000,000 5.500%, 10/01/27 10/08 at 102 BBB 4,019,120
1,250,000 Michigan State Hospital Finance Authority, 8/08 at 101 A- 1,216,000
Hospital Revenue Bonds (The Detroit Medical
Center Obligated Group), Series 1998A, 5.250%,
8/15/28
Pontiac, Michigan, Hospital Finance Authority,
Hospital Revenue Refunding, Nomc Obligation Group:
3,000,000 6.000%, 8/01/18 8/03 at 102 BBB- 3,068,940
5,165,000 6.000%, 8/01/23 8/03 at 102 BBB- 5,281,058
8,345,000 Royal Oak, Michigan, Hospital Finance Authority, 1/06 at 102 AA 8,407,588
Hospital Revenue Refunding Bonds (William
Beaumont Hospital), Series 1996I, 5.250%,
1/01/20
2,000,000 Saginaw Hospital Finance Authority (Michigan), 10/99 at 102 BBB+ 2,089,840
Hospital Revenue Refunding Bonds (Saginaw
General Hospital), Series 1989, 7.625%,
10/01/08
500,000 City of Saginaw (Michigan), Hospital Finance 7/01 at 102 AAA 541,695
Authority (St. Lukes Hospital), Hospital
Revenue Refunding Bonds, Series 1991 C,
6.750%, 7/01/17
1,000,000 Regents of the University of Michigan, Hospital 12/00 at 100 AA 1,055,700
Revenue Bonds, Series 1990, 6.375%, 12/01/24
3,500,000 Regents of the University of Michigan, Medical 12/01 at 102 Aa2 3,840,690
Service Plan Revenue Bonds, Series 1991,
6.500%, 12/01/21
- ----------------------------------------------------------------------------------------------------------
Housing/Multifamily - 3.3%
435,000 Grand Rapids Housing Corporation, Multifamily 1/04 at 104 AAA 486,787
Revenue Refunding Bonds, Series 1992 (FHA
Insured Mortgage Loan-Section 8 Assisted
Elderly Project), 7.375%, 7/15/41
750,000 Grand Rapids Housing Finance Authority, 9/04 at 100 AAA 832,973
Multifamily Housing Refunding Revenue
Bonds, Series 1990A (Fannie Mae
Collateralized), 7.625%, 9/01/23
1,190,000 Michigan State Housing Development Authority, 10/05 at 102 Aaa 1,292,376
Limited Obligation Multi-Family Revenue
Refunding Bonds, Series 1995A (GNMA
Collateralized Program-Parc Pointe Apartments),
6.500%, 10/01/15
6,000,000 Michigan State Housing Development Authority, No Opt. Call AA- 1,654,260
Section 8 Assisted Mortgage Revenue Bonds,
Series 1983I, 0.000%, 4/01/14
5,000,000 Michigan State Housing Development Authority, 4/01 at 102 AA- 5,372,200
Rental Housing Revenue Bonds, 1990 Series B,
7.550%, 4/01/23
</TABLE>
23
<PAGE>
Portfolio of Investments (Unaudited)
Nuveen Flagship Michigan Municipal Bond Fund (continued)
November 30, 1998
<TABLE>
<CAPTION>
Principal Optional Call Market
Amount Description Provisions* Ratings** Value
- ---------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Housing/Multifamily (continued)
$ 290,000 Michigan State Housing Development Authority, No Opt. Call AA- $ 311,747
Rental Housing Revenue Bonds, 1991 Series B,
7.100%, 4/01/21
410,000 Michigan State Housing Development Authority, 10/02 at 102 AA- 441,291
Rental Housing Revenue Bonds, 1992 Series A,
6.650%, 4/01/23
1,000,000 Michigan State Housing Development Authority, 6/05 at 102 AAA 1,074,210
Rental Housing Revenue Bonds, 1995 Series B,
6.150%, 10/01/15
- ---------------------------------------------------------------------------------------------------------
Housing/Single Family - 4.0%
905,000 Michigan State Housing Development Authority, 6/00 at 102 AA+ 943,318
Single Family Mortgage Revenue Bonds,
Series 1990A, 7.500%, 6/01/15
2,325,000 Michigan State Housing Development Authority, 12/00 at 102 AA+ 2,440,553
Single Family Mortgage Revenue Bonds,
Series 1990C, 7.550%, 12/01/15
2,000,000 Michigan State Housing Development Authority, 6/04 at 102 AA+ 2,139,520
Single Family Mortgage Revenue Bonds,
Series 1994A, 6.450%, 12/01/14
3,930,000 Michigan State Housing Development Authority, 12/04 at 102 AA+ 4,159,001
Single Family Mortgage Revenue Refunding Bonds,
Series 1994C, 6.500%, 6/01/16
1,230,000 Michigan State Housing Development Authority, 6/05 at 102 AA+ 1,328,105
Single Family Mortgage Revenue Bonds,
Series 1995 A, 6.800%, 12/01/16
1,500,000 Michigan State Housing Development Authority, 12/06 at 102 AA+ 1,598,925
Single Family Mortgage Revenue Bonds,
Series 1996D, 5.950%, 12/01/16
1,250,000 Michigan State Housing Development Authority, 6/07 at 102 AAA 1,332,025
Single Family Mortgage Revenue Bonds,
Series 1997A, 6.050%, 12/01/27 (Alternative
Minimum Tax)
- ---------------------------------------------------------------------------------------------------------
Long Term Care - 5.0%
2,500,000 The Economic Development Corporation of the City 5/07 at 102 BBB 2,655,725
of Kalamazoo (Kalamazoo County, Michigan),
Limited Obligation Revenue and Refunding
Revenue Bonds (Friendship Village of
Kalamazoo), Series 1997A, 6.250%, 5/15/27
Michigan State Hospital Finance Authority,
Revenue Bonds (Presbyterian Villages of
Michigan Obligation Group), Series 1997:
600,000 6.375%, 1/01/15 1/07 at 102 N/R 648,396
1,200,000 6.500%, 1/01/25 7/05 at 102 N/R 1,294,728
500,000 6.375%, 1/01/25 1/07 at 102 N/R 537,905
Michigan Strategic Fund, Limited Obligation
Revenue Bonds (Porter Hills Presbyterian
Village Inc. Project), Series 1998:
400,000 5.300%, 7/01/18 7/08 at 101 A 403,368
2,675,000 5.375%, 7/01/28 7/08 at 101 A 2,697,443
2,000,000 Michigan Strategic Fund, Limited Obligation 11/08 at 101 N/R 1,997,100
Revenue and Refunding Revenue Bonds,
Series 1998 (Holland Home), 5.750%, 11/15/28
7,110,000 Michigan Strategic Fund, Limited Obligation 6/08 at 100 BBB+ 6,994,960
Revenue Bonds (Clark Retirement Community Inc.
Project), Series 1998, 5.250%, 6/01/18
250,000 The Economic Development Corporation of the 3/02 at 101 Aaa 265,183
City of Warren, Nursing Home Revenue Refunding
Bonds (GNMA Mortgage-Backed Security-Autumn
Woods Project), Series 1992, 6.900%, 12/20/22
- ---------------------------------------------------------------------------------------------------------
Tax Obligation/General - 14.4%
400,000 County of Bay, Michigan, Bay County West Side 5/99 at 102 A 411,808
Regional Sewage Disposal System Bonds,
6.400%, 5/01/02
5,000,000 Brighton Area Schools, County of Livingston, No Opt. Call AAA 1,714,450
State of Michigan, 1992 Refunding Bonds,
Series II (General Obligation Unlimited Tax),
0.000%, 5/01/20
500,000 City of East Lansing Building Authority, 10/99 at 102 AA 524,340
County of Ingham, State of Michigan, Building
Authority Refunding Bonds, Series 1991,
7.000%, 10/01/16
2,430,000 School District of the City of Garden City, 5/04 at 101 AAA 2,714,140
County of Wayne, State of Michigan, 1994
Refunding Bonds (General Obligation - Unlimited
Tax), 6.400%, 5/01/11
1,265,000 Holton Public Schools, Counties of Muskegon, 5/08 at 100 AAA 1,258,903
Oceana and Newaygo State of Michigan, 1998 School
Building and Site Bonds (General Obligation
Unlimited Tax), 5.000%, 5/01/22
</TABLE>
24
<PAGE>
<TABLE>
<CAPTION>
Principal Optional Call Market
Amount Description Provisions* Ratings** Value
- ----------------------------------------------------------------------------------------------------------
<C> <S> <C> <C> <C>
Tax Obligation/General (continued)
$1,000,000 Lake Orion Community School District, County 5/05 at 101 AAA $ 1,046,080
of Oakland, State of Michigan, 1995 Refunding
Bonds (General Obligation - Unlimited Tax),
5.500%, 5/01/20
2,700,000 Livonia, Michigan, Public Schools School No Opt. Call AAA 1,806,840
District, Series II, 0.000%, 5/01/08
2,410,000 Mona Shores, Michigan, School District, School 5/05 at 102 AAA 2,557,661
Building and Site, 5.500%, 5/01/14
Okemos Public Schools, County of Ingham, State
of Michigan, 1993 Refunding Bonds:
1,000,000 0.000%, 5/01/17 No Opt. Call AAA 403,390
1,020,000 0.000%, 5/01/18 No Opt. Call AAA 389,446
1,500,000 Portage Lake Michigan Water and Sewer Authority,
Refunding, 6.200%, 10/01/20 10/05 at 102 AAA 1,686,255
Commonwealth of Puerto Rico, Public
Improvement Bonds of 1994 (General Obligation
Bonds):
3,125,000 6.450%, 7/01/17 7/04 at 102 AAA 3,575,281
2,370,000 6.500%, 7/01/23 7/04 at 101 1/2 AAA 2,717,418
500,000 Redford Union Schools, District No. 1, County No Opt. Call AAA 507,950
of Wayne, State of Michigan, 1997 Refunding
Bonds (General Obligation - Unlimited Tax),
5.000%, 5/01/22
1,650,000 Saint Clair County Building Authority, 4/06 at 101 AAA 1,723,260
Michigan, General Obligation Bonds,
5.375%, 4/01/15
750,000 South Lyon Community Schools, Counties of 5/01 at 102 AA+ 802,418
Oakland, Washtenaw and Livingston, State
of Michigan, 1991 Refunding Bonds (General
Obligation - Unlimited Tax), 6.250%, 5/01/14
2,925,000 Spring Lake Public Schools, General Obligation 5/07 at 100 AAA 3,125,714
Bonds, Series 1997, 5.700%, 5/01/23
Waterford, Michigan, School District:
2,500,000 6.250%, 6/01/13 6/04 at 101 AAA 2,809,300
2,470,000 6.375%, 6/01/14 6/04 at 101 AAA 2,790,754
5,000,000 Wayland, Michigan, Unit School District, 5/05 at 101 AAA 5,677,550
6.250%, 5/01/14
1,250,000 Wayne County, Michigan, Building Authority, 6/06 at 102 AAA 1,285,313
Capital Improvement, Series A, 5.250%, 6/01/16
3,270,000 West Ottawa, Michigan, Public School District No Opt. Call AAA 1,319,085
Refunding, 0.000%, 5/01/17
2,000,000 Western Townships Utilities Authority, Sewage 1/99 at 102 BBB+ 2,047,700
Disposal System Bonds, Series 1989,
8.200%, 1/01/18
1,000,000 Western Townships Utilities Authority, Sewage 1/02 at 100 AAA 1,072,160
Disposal System Refunding Bonds, Series 1991,
6.500%, 1/01/10
5,175,000 Williamston Community School District, General No Opt. Call AAA 5,644,217
Obligation - Unlimited Tax, Series 1996 (Q-SBLF),
5.500%, 5/01/25
1,000,000 School District of Ypsilanti, County of 5/09 at 100 AAA 987,010
Washtenaw, State of Michigan, 1998
Refunding Bonds (General Obligation Unlimited
Tax), 5.000%, 5/01/20 (WI)
- ----------------------------------------------------------------------------------------------------------
Tax Obligation/Limited - 13.4%
2,000,000 City of Detroit Building Authority, Building 2/07 at 101 A 2,182,080
Authority Revenue Bonds (District Court
Madison Center), Series A, 6.150%, 2/01/11
9,460,000 Detroit/Wayne County Stadium Authority (State 2/07 at 102 AAA 9,627,158
of Michigan), Building Authority (Stadium)
Bonds, Series 1997 (Wayne County Limited
Tax General Obligation), 5.250%, 2/01/27
Downtown Development Authority of the City of
Grand Rapids, Michigan, Tax Increment Revenue
Bonds, Series 1994:
3,985,000 0.000%, 6/01/17 No Opt. Call AAA 1,600,934
3,495,000 0.000%, 6/01/18 No Opt. Call AAA 1,328,939
1,650,000 6.875%, 6/01/24 6/04 at 102 AAA 1,892,418
2,000,000 Lansing, Michigan, Building Authority, 6/05 at 101 AA+ 2,107,160
Refunding, 5.600%, 6/01/19
250,000 Michigan Municipal Bond Authority, State 12/01 at 100 AAA 252,750
Revolving Fund Revenue Bonds, Series
1992A, 4.750%, 12/01/09
5,500,000 Michigan Municipal Bond Authority, Revenue No Opt. Call AAA 3,776,465
Refunding, Government Loan A, 0.000%, 12/01/07
2,800,000 Michigan Municipal Bond Authority, Local No Opt. Call AAA 1,864,044
Government Loan, Series C, 0.000%, 6/15/08
1,000,000 State Building Authority, State of Michigan, 10/01 at 102 AA 1,091,270
1991 Revenue Refunding Bonds, Series I,
6.750%, 10/01/11
</TABLE>
25
<PAGE>
Portfolio of Investments (Unaudited)
Nuveen Flagship Michigan Municipal Bond Fund (continued)
November 30, 1998
<TABLE>
<CAPTION>
Principal Optional Call Market
Amount Description Provisions* Ratings** Value
- ----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Tax Obligation/Limited (continued)
$5,000,000 State Building Authority, State of Michigan, 10/01 at 102 AA $ 5,371,750
1991 Revenue Refunding Bonds, Series I,
6.250%, 10/01/20
7,585,000 State Building Authority, State of Michigan, 10/01 at 102 AA 8,148,945
1991 Revenue Bonds, Series II,
6.250%, 10/01/20
6,000,000 The House of Representatives of the State of No Opt. Call AAA 1,737,180
Michigan, Certificates of Participation,
0.000%, 8/15/23
2,260,000 Puerto Rico Highway and Transportation 7/02 at 101 1/2 A 2,475,740
Authority, Highway Revenue Bonds, 1992
Series V, 6.625%, 7/01/12
1,000,000 Puerto Rico Highway and Transportation 7/16 at 100 A 1,079,360
Authority, Highway Revenue Bonds, Series Y
of 1996, 5.500%, 7/01/36
1,500,000 Puerto Rico Highway and Transportation 7/08 at 101 A 1,478,295
Authority, Transportation Revenue Bonds,
Series A, 5.000%, 7/01/38
1,085,000 Romulus, Michigan, Tax Increment Finance 11/06 at 100 N/R 1,203,742
Authority, Limited Obligation Revenue,
6.750%, 11/01/19
- ----------------------------------------------------------------------------------------------------------
Transportation -- 1.2%
250,000 Capital Region Airport Authority (Lansing, 7/02 at 102 AAA 275,035
Michigan), Airport Revenue Bonds, Series 1992,
6.700%, 7/01/21 (Alternative Minimum Tax)
4,000,000 Charter County of Wayne, Michigan, Detroit 12/08 at 101 AAA 3,904,400
Metropolitan-Wayne County Airport, Airport
Revenue Bonds, Series 1998A, 5.000%, 12/01/22
(Alternative Minimum Tax)
- ----------------------------------------------------------------------------------------------------------
U.S. Guaranteed -- 21.4%
1,000,000 City of Battle Creek, County of Calhoun, 5/04 at 102 BBB+*** 1,189,130
State of Michigan, Battle Creek Downtown
Development Authority, 1994 Development Bonds,
7.600%, 5/01/16 (Pre-refunded to 5/01/04)
1,800,000 City of Battle Creek, County of Calhoun, 5/04 at 102 A-*** 2,126,916
State of Michigan, Tax Increment Finance
Authority, 1994 Development Bonds, 7.400%,
5/01/16 (Pre-refunded to 5/01/04)
1,000,000 City of Bay City, County of Bay, State of 1/01 at 102 AAA 1,078,820
Michigan Electric Utility System Revenue Bonds,
1991 Series, 6.600%, 1/01/12 (Pre-refunded to
1/01/01)
1,895,000 Buena Vista School District, County of Saginaw, 5/01 at 102 N/R*** 2,086,130
State of Michigan, 1991 School Building and
Site Bonds (General Obligation Unlimited Tax),
7.200%, 5/01/16 (Pre-refunded to 5/01/01)
1,000,000 The Central Michigan University Board of 10/00 at 102 A+*** 1,080,890
Trustees, General Revenue Bonds, Series 1990,
7.000%, 10/01/10 (Pre-refunded to 10/01/00)
750,000 City of Detroit, Michigan, General Obligation 4/01 at 102 AAA 836,783
Bonds (Unlimited Tax), Series 1991, 8.000%,
4/01/11 (Pre-refunded to 4/01/01)
300,000 School District of the City of Detroit, Wayne 5/00 at 102 Aa1*** 323,475
County, Michigan, School Building and Site
Bonds, Series XXIII, 7.750%, 5/01/10
(Pre-refunded to 5/01/00)
1,650,000 School District of the City of Detroit, Wayne 5/01 at 102 Aaa 1,814,192
County, Michigan, School Building and Site
Bonds (Unlimited Tax General Obligation),
Series 1991, 7.150%, 5/01/11 (Pre-refunded
to 5/01/01)
3,600,000 School District of the City of Detroit, Wayne 5/06 at 102 AAA 4,029,516
County, Michigan, School Building and Site
Improvement Bonds (Unlimited Tax General
Obligation), Series 1996A, 5.700%, 5/01/25
(Pre-refunded to 5/01/06)
10,700,000 City of Detroit (Michigan), Downtown Development 7/06 at 102 A-*** 12,324,795
Authority, Tax Increment Refunding Bonds
(Development Area No. 1 Projects), Series
1996C, 6.250%, 7/01/25 (Pre-refunded to 7/01/06)
1,000,000 City of Detroit, Michigan, Sewage Disposal 7/99 at 101 1/2 AAA 1,038,220
System Revenue Bonds, Series 1989,
7.125%, 7/01/19 (Pre-refunded to 7/01/99)
2,000,000 City of Detroit, Michigan, Water Supply System 7/00 at 102 AAA 2,155,260
Revenue Bonds, Series 1990, 7.250%, 7/01/20
(Pre-refunded to 7/01/00)
500,000 City of Farmington Hills, Hospital Finance 2/02 at 102 AAA 550,760
Authority (Michigan), Hospital Revenue Bonds
(Botsford General Hospital), Series 1992A,
6.500%, 2/15/22 (Pre-refunded to 2/15/02)
3,000,000 City of Grand Rapids, Michigan, Water Supply 1/00 at 102 AAA 3,183,690
System Improvement Revenue Bonds, Series 1990,
7.250%, 1/01/20 (Pre-refunded to 1/01/00)
2,500,000 Haslett Public Schools, Counties of Ingham, 5/00 at 101 AA+*** 2,663,225
Clinton and Shiawassee, State of Michigan,
1990 School Building and Site Bonds,
7.500%, 5/01/20 (Pre-refunded to 5/01/00)
</TABLE>
26
<PAGE>
<TABLE>
<CAPTION>
Principal Optional Call Market
Amount Description Provisions* Ratings** Value
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
U.S. Guaranteed (continued)
$ 750,000 City of Hudsonville Building Authority, County of Ottawa, 10/02 at 102 AAA $ 839,678
State of Michigan, Building Authority Refunding Bonds,
Series 1992, 6.600%, 10/01/17 (Pre-refunded to 10/01/02)
2,000,000 Huron Valley School District, Counties of Oakland and 5/01 at 102 N/R*** 2,191,920
Livingston, State of Michigan, 1991 School Building and
Site Bonds, 7.100%, 5/01/08 (Pre-refunded to 5/01/01)
1,940,000 City of Kalamazoo (Michigan), Hospital Finance Authority, 5/03 at 102 A1*** 2,170,336
Hospital Revenue Refunding and Improvement Bonds (Bronson
Methodist Hospital), Series 1992A, 6.375%, 5/15/17
(Pre-refunded to 5/15/03)
4,000,000 Lake Orion, Michigan, Community School District, Refunding, 5/05 at 101 AAA 4,708,040
7.000%, 5/01/15 (Pre-refunded to 5/01/05)
510,000 Livingston County, Michigan, Genoa-Oceola Sewer Drain No. 1, 5/99 at 102 A*** 526,284
Sanitary Drainage District (Full Faith and Credit of the County),
6.000%, 5/01/08 (Pre-refunded to 5/01/99)
930,000 City of Marquette Hospital Finance Authority, Hospital Revenue 4/99 at 102 A+*** 961,918
Refunding Bonds (Marquette General Hospital, Marquette,
Michigan), 1989 Series C, 7.500%, 4/01/07
(Pre-refunded to 4/01/99)
825,000 Menominee Michigan Area Public School District, 7.400%, 5/01/20 5/00 at 102 AA+*** 886,240
(Pre-refunded to 5/01/00)
3,000,000 Michigan Higher Education Facilities Authority, Limited 5/01 at 103 A*** 3,335,070
Obligation, Aquinas College Project, 7.350%, 5/01/11
(Pre-refunded to 5/01/01)
555,000 Michigan Municipal Bond Authority, State Revolving Fund Reserve 10/02 at 102 AA+*** 620,934
Bonds, Series 1992A, 6.600%, 10/01/18 (Pre-refunded to 10/01/02)
Michigan Municipal Bond Authority, State Revolving Fund Revenue
Bonds, Series 1994:
950,000 7.000%, 10/01/04 No Opt. Call AA+*** 1,100,452
1,000,000 6.500%, 10/01/14 (Pre-refunded to 10/01/04) 10/04 at 102 AA+*** 1,149,020
1,000,000 6.500%, 10/01/17 (Pre-refunded to 10/01/04) 10/04 at 102 AA+*** 1,149,020
500,000 Michigan State Hospital Finance Authority, Hospital Revenue Bonds 12/02 at 102 AAA 566,835
(MidMichigan Obligated Group), Series 1992, 6.900%, 12/01/24
(Pre-refunded to 12/01/02)
1,000,000 Michigan State Hospital Finance Authority, Henry Ford Health 7/00 at 102 AAA 1,073,480
System, Series A, 7.000%, 7/01/10 (Pre-refunded to 7/01/00)
6,000,000 Michigan Hospital Finance Authority (Oakwood Hospital Obligated 7/00 at 102 AAA 6,450,060
Group), 7.100%, 7/01/18 (Pre-refunded to 7/01/00)
800,000 Michigan State Hospital Finance Authority, Sisters Of Mercy 2/01 at 102 AAA 874,928
Health Corporation, Series J, 7.200%, 2/15/18 (Pre-refunded
to 2/15/01)
1,000,000 Michigan State Hospital Finance Authority, Hospital Revenue Bonds 11/01 at 102 Aa2*** 1,108,810
(Daughters of Charity National Health System-Providence
Hospital), Series 1991, 7.000%, 11/01/21 (Pre-refunded to
11/01/01)
2,400,000 Oakland County, Michigan, Economic Development Corporation, 1/00 at 102 N/R*** 2,602,392
Limited Obligation Revenue, Pontiac Osteopathic Hospital
Project, 9.625%, 1/01/20 (Pre-refunded to 1/01/00)
1,000,000 Oakland County, Michigan, Economic Development Corporation, 11/04 at 102 Aaa 1,173,030
Limited Obligation Revenue Refunding, Cranbrook Educational
Community, Series C, 6.900%, 11/01/14 (Pre-refunded to
11/01/04)
1,800,000 Puerto Rico Commonwealth Highway Authority, Highway Revenue, 7/00 at 102 AAA 1,954,980
Series Q, 7.750%, 7/01/16 (Pre-refunded to 7/01/00)
1,040,000 Rockford Public Schools, County of Kent, State of Michigan, 5/00 at 101 N/R*** 1,105,000
1990 School Building and Site and Refunding Bonds (General
Obligation Bonds), 7.375%, 5/01/19 (Pre-refunded to 5/01/00)
180,000 Saginaw-Midland Municipal Water Supply Corporation, State of 9/04 at 102 A*** 209,921
Michigan, Water Supply Revenue Bonds (Limited Tax General
Obligation), Series 1992, 6.875%, 9/01/16 (Pre-refunded
to 9/01/04)
7,000,000 Vicksburg Community Schools, Counties of Kalamazoo and 5/06 at 37 1/4 AAA 1,922,060
St. Joseph, State of Michigan, 1991 School Building and
Site Bonds, 0.000%, 5/01/20 (Pre-refunded to 5/01/06)
- -----------------------------------------------------------------------------------------------------------------------------------
Utilities -- 3.3%
400,000 Michigan Public Power Agency, Belle River Project Refunding 1/03 at 102 AA- 404,652
Revenue Bonds, 1993 Series A, 5.250%, 1/01/18
3,000,000 Michigan State South Central Power Agency, Power Supply System 11/04 at 102 BBB+ 3,426,030
Revenue Refunding, 7.000%, 11/01/11
3,500,000 Michigan State Strategic Fund, Limited Obligation Revenue 6/04 at 102 AAA 3,934,770
Refunding, Detroit Education Company, Series B, 6.450%,
6/15/24
</TABLE>
27
<PAGE>
Portfolio of Investments (Unaudited)
Nuveen Flagship Michigan Municipal Bond Fund (continued)
November 30, 1998
<TABLE>
<CAPTION>
Principal Optional Call Market
Amount Description Provisions* Ratings** Value
- -----------------------------------------------------------------------------------------------------------------------------------
<C> <S> <C> <C> <C>
Utilities (continued)
$ 1,000,000 Monroe County, Michigan, Economic Development Corporation, No Opt. Call AAA $ 1,283,270
Limited Obligation Revenue Refunding-Collateralized,
Detroit Edison Company, Series AA, 6.950%, 9/01/22
1,000,000 County of Monroe, Michigan, Pollution Control Revenue Bonds No Opt. Call AAA 1,114,210
(The Detroit Edison Company Project), Series A-1994, 6.350%,
12/01/04 (Alternative Minimum Tax)
4,000,000 Puerto Rico Electric Power Authority, Power Revenue Bonds, No Opt. Call AAA 1,644,520
Series O, 0.000%, 7/01/17
- -----------------------------------------------------------------------------------------------------------------------------------
Water and Sewer -- 5.8%
City of Detroit, Michigan, Sewage Disposal System Revenue
Refunding Bonds, Series 1995-B:
1,500,000 5.250%, 7/01/15 7/05 at 101 AAA 1,548,570
10,500,000 5.250%, 7/01/21 7/05 at 101 AAA 10,684,590
2,885,000 City of Detroit, Michigan, Sewage Disposal System Revenue Bonds, 7/07 at 101 AAA 2,867,082
Series 1997-A, 5.000%, 7/01/22
1,570,000 City of Detroit, Michigan, Water Supply System Revenue Second No Opt. Call AAA 1,716,873
Lien Bonds, Series 1995-A, 5.550%, 7/01/12
2,230,000 City of Detroit, Michigan, Water Supply System Revenue Second No Opt. Call AAA 2,438,615
Lien Bonds, Series 1995-B, 5.550%, 7/01/12
1,000,000 City of Grand Rapids, Michigan, Sanitary Sewer System Improvement 1/00 at 102 AA- 1,058,358
Revenue Refunding Bonds, Series 1990, 7.000%, 1/01/16
- -----------------------------------------------------------------------------------------------------------------------------------
$ 358,345,000 Total Investments -- (cost $315,710,985) -- 99.1% 348,556,233
- -----------------------------------------------------------------------------------------------------------------------------------
Other Assets Less Liabilities -- 0.9% 3,060,158
------------------------------------------------------------------------------------------------------------------
Net Assets -- 100% $351,616,391
==================================================================================================================
</TABLE>
* Optional Call Provisions: Dates (month and year) and prices of the earliest
optional call or redemption. There may be other call provisions at varying
prices at later dates.
** Ratings: Using the higher of Standard & Poor's or Moody's rating.
*** Securities are backed by an escrow or trust containing sufficient U.S.
government or U.S. government agency securities which ensures the timely
payment of principal and interest. Securities are normally considered to be
equivalent to AAA rated securities.
N/R Investment is not rated.
(WI) Security purchased on a when-issued basis (note 1).
See accompanying notes to financial statements.
28
<PAGE>
Portfolio of Investments (Unaudited)
Nuveen Flagship Ohio Municipal Bond Fund
November 30, 1998
<TABLE>
<CAPTION>
Principal Optional Call Market
Amount Description Provisions* Ratings** Value
- ----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Basic Materials - 0.3%
$1,650,000 Toledo, Lucas County, Ohio, Port Authority, 3/02 at 102 AA- $1,831,434
Port Revenue Refunding Facilities, Cargill
Inc. Project, 7.250%, 3/01/22
- ----------------------------------------------------------------------------------------------------------
Capital Goods - 0.2%
1,335,000 Ohio Water Development Authority, Revenue 3/02 at 102 N/R 1,440,051
Bonds, USA Waste Services, Series 1992,
7.750%, 9/01/07 (Alternative Minimum Tax)
- ----------------------------------------------------------------------------------------------------------
Education and Civic Organizations - 4.2%
2,050,000 Miami University, Ohio, University Revenues 12/99 at 102 A+ 2,150,184
Bonds, 6.900%, 12/01/04
3,500,000 State of Ohio, Education Loan Revenue Bonds, 6/07 at 102 AAA 3,632,090
Series 1997A (Supplemental Student Loan
Program), 1997A1, 5.850%, 12/01/19
(Alternative Minimum Tax)
1,750,000 State of Ohio (Ohio Higher Educational Facility 12/04 at 102 AAA 1,883,508
Commission), Higher Educational Facility
Revenue Bonds (University of Dayton 1994
Project), 5.800%, 12/01/19
2,025,000 State of Ohio (Ohio Higher Educational 12/03 at 102 AAA 2,286,428
Facility Commission), Higher Educational
Facility Mortgage Revenue Bonds (University
of Dayton 1992 Project), 6.600%, 12/01/17
1,200,000 State of Ohio (Ohio Higher Educational 9/06 at 101 N/R 1,259,508
Facility Commission), Higher Educational
Facility Revenue Bonds (The University of
Findlay 1996 Project), 6.125%, 9/01/16
7,000,000 State of Ohio (Ohio Higher Educational 5/07 at 102 AAA 7,283,920
Facility Commission), Higher Education
Facility Revenue Bonds (Xavier University
1997 Project), 5.375%, 5/15/22
State of Ohio (Ohio Higher Educational Facility
Commission), Higher Education Facility Revenue
Bonds (Case Western Reserve University, Ohio):
1,870,000 7.125%, 10/01/14 10/00 at 102 AA 2,025,023
750,000 6.500%, 10/01/20 No Opt. Call AA 905,408
2,250,000 State of Ohio (Ohio Higher Educational 4/07 at 102 A2 2,411,978
Facility Commission), Higher Education
Facility Revenue Bonds (John Carroll
University Project), 5.750%, 4/01/19
4,250,000 University of Cincinnati (Ohio), General 6/07 at 100 AAA 4,396,455
Receipts Bonds, Series AB, 5.375%, 6/01/20
1,230,000 Youngstown State University, Ohio, General 12/04 at 102 AAA 1,389,076
Receipts Bonds, 6.000%, 12/15/16
- ----------------------------------------------------------------------------------------------------------
Energy - 0.5%
2,125,000 County of Ashtabula, Ohio, Industrial 5/02 at 102 Baa2 2,284,375
Development Refunding Revenue Bonds, 1992
Series A (Ashland Oil, Inc. Project),
6.900%, 5/01/10
1,000,000 Ohio Air Quality Development Authority, State 4/01 at 102 Baa1 1,068,580
of Ohio, Air Quality Development Refunding
Revenue Bonds, Series 1992 (Ashland Oil, Inc.
Project), 6.850%, 4/01/10
- ----------------------------------------------------------------------------------------------------------
Health Care - 14.9%
1,250,000 County of Butler, Ohio, Hospital Facilities 1/02 at 102 BBB- 1,350,950
Revenue Refunding and Improvement Bonds,
Series 1991 (Fort Hamilton-Hughes Memorial
Hospital Center), 7.500%, 1/01/10
City of Cambridge, Ohio, Hospital Revenue
Refunding Bonds, Series 1991 (Guernsey
Memorial Hospital Project):
500,000 8.000%, 12/01/06 12/01 at 102 BBB 550,850
1,000,000 8.000%, 12/01/11 12/01 at 102 BBB 1,101,700
1,500,000 County of Cuyahoga, Ohio, Hospital Improvement 1/06 at 102 AAA 1,584,240
and Refunding Revenue Bonds, Series 1996A
(University Hospitals Health System, Inc.
Project), 5.625%, 1/15/26
1,000,000 County of Cuyahoga, Ohio, Hospital Improvement 2/07 at 102 AAA 1,063,810
and Refunding Revenue Bonds, Series 1997
(The MetroHealth System Project), 5.625%,
2/15/17
2,000,000 Cuyahoga County, Ohio, Industrial Development 8/01 at 103 AAA 2,205,060
Refunding Revenue Bonds, Series 1991
(University Health Care Center Project),
7.300%, 8/01/11
</TABLE>
29
<PAGE>
Portfolio of Investments (Unaudited)
Nuveen Flagship Ohio Municipal Bond Fund (continued)
November 30, 1998
<TABLE>
<CAPTION>
Principal Optional Call Market
Amount Description Provisions* Ratings** Value
- ----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Health Care (continued)
$2,010,000 County of Erie, Ohio, Hospital Improvement and 1/02 at 102 A $ 2,197,694
Refunding Revenue Bonds, Series 1992 (Firelands
Community Hospital Project), 6.750%, 1/01/08
County of Franklin, Ohio, Hospital Refunding and
Improvement Revenue Bonds, 1996 Series A (The
Childrens Hospital Project):
1,575,000 5.750%, 11/01/15 11/06 at 101 Aa 1,679,517
5,275,000 5.875%, 11/01/25 11/06 at 101 Aa 5,656,594
County of Franklin, Ohio, Hospital Revenue Bonds,
Holy Cross Health Systems Corporation, Series
1996:
965,000 5.800%, 6/01/16 6/06 at 102 AA 1,032,849
2,000,000 5.875%, 6/01/21 6/06 at 102 AA 2,173,380
1,500,000 Franklin County, Ohio, Hospital Revenue 6/00 at 102 AAA 1,612,605
Refunding Bonds (Holy Cross Health System-
Mt. Carmel Health), Series 1990-A,
7.625%, 6/01/09
City of Garfield Heights, Ohio, Hospital
Improvement and Refunding Revenue Bonds,
Series 1992B (Marymount Hospital Project):
3,000,000 6.650%, 11/15/11 11/02 at 102 A 3,292,620
3,500,000 6.700%, 11/15/15 11/02 at 102 A 3,834,285
3,000,000 County of Hamilton, Ohio, Hospital Facilities 1/03 at 102 A 3,273,870
Revenue Refunding Bonds, Series 1992A
(Bethesda Hospital, Inc.), 6.250%, 1/01/12
1,720,000 Franciscan Sisters of the Poor Health System, 7/02 at 102 Baa1 1,853,696
Inc., Hamilton County, Ohio, Health System
Revenue Bonds, Providence Hospital Issue,
Series 1992, 6.875%, 7/01/15
7,890,000 County of Lorain, Ohio, Hospital Revenue 11/05 at 102 AAA 8,074,784
Refunding, Emh Regional Medical Center,
5.375%, 11/01/21
2,220,000 County of Lorain, Ohio, Hospital Facilities 9/07 at 102 AAA 2,329,180
Revenue Bonds, Series 1997B (Catholic
Healthcare Partners), 5.500%, 9/01/27
1,000,000 County of Lucas, Ohio, Hospital Improvement 8/00 at 102 AAA 1,068,500
Revenue Bonds, Series 1990A (St. Vincent
Medical Center), 6.750%, 8/15/20
3,000,000 County of Lucas, Ohio, Hospital Improvement 8/02 at 102 AAA 3,309,330
Revenue Bonds, Series 1992 (St. Vincent Medical
Center), 6.500%, 8/15/12
500,000 Mansfield, Hospital Improvement Revenue 12/01 at 102 AAA 547,050
(Mansfield General Hospital),
6.700%, 12/01/09
2,000,000 County of Marion, Ohio, Hospital Refunding and 5/06 at 102 BBB+ 2,199,700
Improvement Revenue Bonds, Series 1996 (The
Community Hospital), 6.375%, 5/15/11
1,250,000 Maumee Hospital Facilities Revenue (St. Lukes 12/04 at 102 AAA 1,372,175
Hospital), 5.800%, 12/01/14
4,405,000 County of Miami, Ohio, Hospital Facilities 5/06 at 102 BBB 4,711,324
Revenue Refunding and Improvement Bonds,
Series 1996A (Upper Valley Medical Center),
6.250%, 5/15/16
4,205,000 County of Miami, Ohio, Hospital Facilities 5/06 at 102 BBB 4,497,416
Revenue Refunding and Improvement Bonds,
Series 1996C (Upper Valley Medical Center),
6.250%, 5/15/13
4,000,000 City of Middleburg Heights, Ohio, Hospital 8/08 at 102 AAA 4,313,120
Improvement Refunding Revenue Bonds,
Series 1995 (Southwest General Health
Center Project), 5.625%, 8/15/15
2,000,000 City of Middleburg Heights, Ohio, Hospital 8/08 at 102 AAA 2,156,420
Improvement Refunding Revenue Bonds,
Series 1995 (Southwest General Health
Center Project), 5.750%, 8/15/21
11,000,000 County of Montgomery, Ohio, Health System 1/08 at 102 Baa1 11,126,940
Revenue Bonds, Franciscan Medical Center
Dayton Campus Issue, Series 1997,
5.500%, 7/01/18
County of Montgomery, Ohio, Hospital Facilities
Revenue Refunding and Improvement Bonds, Series
1996 (Kettering Medical Center):
1,500,000 5.625%, 4/01/16 4/06 at 102 AAA 1,592,715
7,000,000 6.250%, 4/01/20 No Opt. Call AAA 8,298,430
2,500,000 County of Montgomery, Ohio, Sisters of Charity 5/03 at 101 AAA 2,771,750
Health Care, Series 1992A, 6.250%, 5/15/08
2,790,000 City of Mount Vernon, Ohio, Hospital 6/99 at 101 1/2 N/R 2,851,603
Refunding Revenue Bonds, Series 1986A
(Knox Community Hospital), 7.875%, 6/01/12
4,000,000 City of Parma, Ohio, Hospital Improvement and 11/08 at 101 A- 4,045,480
Refunding Revenue Bonds, Series 1998 (The
Parma Community Hospital Association),
5.375%, 11/01/29
</TABLE>
30
<PAGE>
<TABLE>
<CAPTION>
Principal Optional Call Market
Amount Description Provisions* Ratings** Value
- -----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Health Care (continued)
$ 1,725,000 County of Shelby, Ohio, Hospital Facilities 9/02 at 102 BBB $ 1,918,580
Revenue Refunding and Improvement Bonds,
Series 1992 (The Shelby County Memorial
Hospital Association), 7.700%, 9/01/18
2,750,000 County of Trumbull, Ohio, Hospital Refunding 11/01 at 102 AAA 3,038,310
and Improvement Revenue Bonds, Series 1991
(Trumbell Memorial Hospital Project), Series
1991B, 6.900%, 11/15/12
750,000 County of Tuscarawas, Ohio, Hospital Facilities 10/03 at 102 Baa2 801,855
Revenue Bonds, Series 1993A (Union Hospital
Project), 6.500%, 10/01/21
- -----------------------------------------------------------------------------------------------------------
Housing/Multifamily - 5.1%
1,600,000 Butler County, Ohio, Multifamily Housing 9/08 at 103 N/R 1,614,992
Revenue Bonds, Series 1998 (Anthony Wayne
Apartments Project), 6.500%, 9/01/30
(Alternative Minimum Tax)
1,150,000 County of Clark, Ohio, Multifamily Housing 11/08 at 103 N/R 1,153,968
Revenue Bonds (Church of God Retirement Home),
Series 1998, 6.250%, 11/01/30 (Alternative
Minimum Tax)
16,160,000 County of Franklin, Ohio, Mortgage Revenue 10/07 at 103 Aaa 16,654,496
Bonds, Series 1997 (GNMA Collateralized -
Columbus Properties Project), 5.600%, 4/20/39
(Alternative Minimum Tax)
6,200,000 Hamilton County, Multifamily Housing Revenue 1/07 at 102 AAA 6,464,988
Bonds (Huntington Meadows Project), Series 1997,
5.700%, 1/01/27 (Alternative Minimum Tax)
2,800,000 Ohio Capital Corporation for Housing, Mortgage 11/02 at 100 AAA 2,843,288
Revenue Refunding Bonds (FHA Section 8 Assisted
Project), Series 1997C, 5.700%, 1/01/24
6,000,000 Ohio Capital Corporation for Housing, Mortgage 1/02 at 100 AAA 6,031,860
Revenue Refunding Bonds, Series 1998A (FHA
Insured Mortgage Loans - Section 8 Assisted
Projects), 5.300%, 1/01/24
Ohio Capital Corporation for Housing,
Multifamily Housing Refunding Revenue Bonds,
Series 1989A:
310,000 7.500%, 11/01/11 11/99 at 103 AAA 323,253
1,215,000 7.600%, 11/01/23 11/99 at 103 AAA 1,266,941
- -----------------------------------------------------------------------------------------------------------
Housing/Single Family - 5.4%
4,970,000 Ohio Housing Finance Agency, Residential 9/07 at 102 AAA 5,184,207
Mortgage Revenue Bonds, 1996 Series B-3
(Mortgage-Backed Securities Program),
5.750%, 9/01/28 (Alternative Minimum Tax)
5,435,000 Ohio Housing Finance Agency, Residential 9/07 at 102 AAA 5,669,249
Mortgage Revenue Bonds, Series 1997C,
5.750%, 9/01/28 (Alternative Minimum Tax)
4,005,000 Ohio Housing Finance Agency, Residential 3/08 at 101 AAA 4,140,529
Mortgage Revenue Bonds, 1997 Series D-1
(Mortgage-Backed Securities Program),
5.500%, 3/01/19 (Alternative Minimum Tax)
1,990,000 Ohio Housing Finance Agency, Residential 9/04 at 102 AAA 2,128,046
Mortgage Revenue Bonds, Series 1994-A1
(GNMA Mortgage-Backed Securities Program),
6.100%, 9/01/14
5,255,000 Ohio Housing Finance Agency, Residential 9/04 at 102 AAA 5,666,309
Mortgage Revenue Bonds, Series 1994-B1,
6.375%, 9/01/14
12,965,000 Ohio Housing Finance Agency, Residential 9/07 at 102 AAA 13,935,301
Mortgage Revenue Bonds, Series 1997A,
6.150%, 3/01/29 (Alternative Minimum Tax)
495,000 Ohio Housing Finance Agency, Single 3/00 at 102 AAA 515,364
Family Mortgage Revenue Bonds (GNMA Mortgage-
Backed Securities Program), 1990 Series A,
7.400%, 9/01/15
Ohio Housing Finance Agency, Single Family
Mortgage Revenue Bonds (GNMA Mortgage-Backed
Securities Program), 1990 Series D:
520,000 7.500%, 9/01/13 9/00 at 102 AAA 549,593
260,000 7.050%, 9/01/16 9/01 at 102 AAA 275,436
- -----------------------------------------------------------------------------------------------------------
Industrial/Other - 0.4%
2,860,000 Cleveland-Cuyahoga County Port Authority 5/08 at 102 N/R 2,795,822
(Ohio), Development Revenue Bonds (Port of
Cleveland Bond Fund-Jergens, Inc., Project),
Series 1998A, 5.375%, 5/15/18
(Alternative Minimum Tax)
- -----------------------------------------------------------------------------------------------------------
Long Term Care - 2.9%
4,030,000 County of Cuyahoga, Ohio, Health Care 6/00 at 100 N/R 4,283,930
Facilities Revenue Bonds, Series 1990
(Altenheim Project), 9.280%, 6/01/15
2,500,000 Fairlawn, Ohio, Health Care Facilities 10/99 at 102 N/R 2,607,600
Revenue Bonds, Series 1989 (The Village
at Saint Edward Project), 8.750%, 10/01/19
</TABLE>
31
<PAGE>
Portfolio of Investments (Unaudited)
Nuveen Flagship Ohio Municipal Bond Fund (continued)
November 30, 1998
<TABLE>
<CAPTION>
Principal Optional Call Market
Amount Description Provisions* Ratings** Value
- ----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Long Term Care (continued)
$1,500,000 County of Franklin, Ohio, Health Care 7/03 at 102 N/R $1,532,370
Facilities Revenue Bonds, Series 1993 (Ohio
Presbyterian Retirement Services), 6.500%,
7/01/23
3,120,000 County of Franklin, Ohio, Health Care Facilities 11/05 at 102 Aa2 3,336,809
Revenue Bonds, Series 1995 (Heinzerling
Foundation), 6.200%, 11/01/20
1,350,000 County of Franklin, Ohio, Hospital Facilities 7/01 at 103 N/R 1,497,501
Mortgage Revenue Bonds, 1991 Series A (Ohio
Presbyterian Retirement Services), 8.750%,
7/01/21
660,000 County of Franklin, Hospital Revenue Refunding 8/00 at 102 N/R 686,433
FHA Insured Mortgage Loan (Worthington
Christian Village Nursing Home), 7.000%,
8/01/16
County of Hamilton, Ohio, Health Care
Facilities Revenue Bonds, Series 1998A (Twin
Towers):
1,000,000 5.125%, 10/01/18 10/08 at 101 A 993,770
1,250,000 5.125%, 10/01/23 10/08 at 101 A 1,229,050
County of Marion, Ohio, Health Care Facilities
Refunding and Improvement Revenue Bonds,
Series 1993 (United Church Homes, Inc.
Project):
1,250,000 6.375%, 11/15/10 11/03 at 102 BBB- 1,328,863
750,000 6.300%, 11/15/15 11/03 at 102 BBB- 794,490
2,155,000 City of Napoleon, Ohio, Health Care Facilities 9/04 at 102 Aa 2,387,632
Mortgage Revenue Refunding Bonds, Series 1994
(The Lutheran Orphans and Old Folks Home
Society at Napoleon, Ohio, Inc.-FHA Insured
Project), 6.875%, 8/01/23
- ----------------------------------------------------------------------------------------------------------
Tax Obligation/General -- 16.9%
Adams County/Ohio Valley School District,
Counties of Adams and Highland, Ohio,
School Improvement Unlimited Tax General
Obligation Bonds Series 1995:
6,000,000 7.000%, 12/01/15 No Opt. Call AAA 7,607,520
9,500,000 5.250%, 12/01/21 12/05 at 102 AAA 9,694,655
3,955,000 City of Akron, Ohio, General Obligation Bonds, 12/04 at 102 AAA 4,554,855
Various Purpose Improvement Bonds, Series
1994 (Limited Tax), 6.750%, 12/01/14
Anthony Wayne Local School District, Lucas,
Wood and Fulton Counties, Ohio, School
Facilities Construction and Improvement Bonds:
600,000 0.000%, 12/01/13 No Opt. Call AAA 294,936
2,850,000 5.750%, 12/01/24 12/05 at 101 AAA 3,066,287
1,000,000 Archbold Area Local School District, General 12/06 at 102 AAA 1,112,810
Obligation Bonds (Unlimited Tax), Series 1996,
6.000%, 12/01/21
1,000,000 Aurora City School District, Ohio, General 12/05 at 102 AAA 1,085,000
Obligation (Unlimited Tax), School
Improvement Bonds, Series 1995, 5.800%,
12/01/16
2,905,000 Board of Education, Batavia Local School 12/05 at 102 AAA 3,372,008
District, County of Clermont, Ohio, School
Improvement Bonds, Series 1995 (Unlimited Tax),
6.300%, 12/01/22
1,000,000 Board of Education, Beavercreek Local School
District, County of Greene, Ohio, School No Opt. Call AAA 1,222,760
Improvement Bonds, Series 1996 (Unlimited
Tax General Obligation), 6.600%, 12/01/15
2,500,000 Buckeye Valley Local School District, Ohio, No Opt. Call AAA 3,128,250
General Obligation (Unlimited Tax) Bonds,
School Improvement Bonds, Series 1995A,
6.850%, 12/01/15
Chesapeake-Union Exempt Village School
District, Ohio, General Obligation Bonds
Series 1986:
125,000 8.500%, 12/01/04 No Opt. Call N/R 152,111
125,000 8.500%, 12/01/05 No Opt. Call N/R 155,131
125,000 8.500%, 12/01/06 No Opt. Call N/R 157,763
125,000 8.500%, 12/01/07 No Opt. Call N/R 160,233
125,000 8.500%, 12/01/08 No Opt. Call N/R 162,504
130,000 8.500%, 12/01/09 No Opt. Call N/R 170,863
4,745,000 City of Cleveland, Ohio, Various Purpose 11/04 at 102 AAA 5,508,755
General Obligation Bonds, Series 1994,
6.625%, 11/15/14
550,000 County of Columbiana, Ohio, County Jail 12/04 at 102 AA 639,287
Facilities Construction Bonds (General
Obligation-Unlimited Tax), 6.600%, 12/01/17
</TABLE>
32
<PAGE>
<TABLE>
<CAPTION>
Principal Optional Call Market
Amount Description Provisions* Ratings** Value
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Tax Obligation/General (continued)
$1,500,000 City of Columbus, Franklin County, Ohio, General Obligation Refunding 1/02 at 102 Aaa $ 1,643,070
Bonds, Series 1992B, 6.500%, 1/01/10
City of Columbus, Franklin County, Ohio, General Obligation Bonds:
590,000 9.375%, 4/15/06 No Opt. Call AAA 786,747
500,000 9.375%, 4/15/07 No Opt. Call AAA 683,620
1,000,000 County of Cuyahoga, Ohio, General Obligation Various Purpose No Opt. Call AA+ 1,074,300
Refunding Bonds, Series 1993B (Limited Tax Obligation),
5.250%, 10/01/13
1,345,000 County of Cuyahoga, Ohio, General Obligation Bonds No Opt. Call AA+ 1,489,413
(Limited Tax Obligation), 5.650%, 5/15/18
200,000 City of Dayton, Ohio, General Obligation Bonds (Three Issues), No Opt. Call A+ 212,002
Limited Tax, 10.500%, 10/01/99
750,000 City of Defiance, Ohio, Waterworks System Improvement Bonds, 12/04 at 102 AAA 839,063
Series 1994, 6.200%, 12/01/20
Delaware City School District, Delaware County, Ohio,
School Facilities Construction and Improvement Bonds
(General Obligation-Unlimited Tax):
1,000,000 0.000%, 12/01/10 No Opt. Call AAA 586,860
1,000,000 0.000%, 12/01/11 No Opt. Call AAA 554,280
2,010,000 City of Dublin, Ohio, General Obligation Bonds, Various Purpose 12/09 at 101 Aa2 2,105,837
Refunding and Improvement Bonds, Series 1998A, 5.250%, 12/01/14
250,000 East Holmes Local School District, Ohio, School Improvement 12/98 at 102 AAA 255,893
Refunding Bonds, General Obligation-Unlimited Tax, 7.700%, 12/01/08
1,110,000 City of Fairborn, Ohio, General Obligation Bonds, Utility 10/02 at 102 AAA 1,249,083
Improvement Bonds, Series 1991, 7.000%, 10/01/11
4,040,000 County of Franklin, Ohio, Refunding Bonds, Series 1993 12/08 at 102 AAA 4,259,534
(Limited Tax General Obligation Bonds), 5.375%, 12/01/20
1,575,000 Garaway Local School District, Ohio, School Improvement Bonds, 12/00 at 102 AAA 1,706,040
Series 1990 (General Obligation-Unlimited Tax Bonds),
7.200%, 12/01/14
620,000 County of Geauga, Ohio, General Obligation (Limited Tax), Sewer No Opt. Call Aa2 759,494
District Improvement Bonds (Bainbridge Water Project),
6.850%, 12/01/10
1,000,000 Grandview Heights City School District, Franklin County, Ohio, 12/05 at 101 AA 1,096,520
School Facilities Construction and Improvement Bonds (General
Obligation-Unlimited Tax), 6.100%, 12/01/19
1,000,000 Highland Local School District, Morrow and Delaware Counties, 12/07 at 102 AAA 1,096,050
Ohio, School Facilities Construction and Improvement Bonds
(General Obligation-Unlimited Tax), 5.875%, 12/01/19
1,000,000 Huron County, Ohio, Correctional Facility Bonds (Limited Tax 12/07 at 102 AAA 1,106,380
General Obligation), 5.850%, 12/01/16
1,000,000 Indian Valley Local School District, Ohio, General Obligation 12/05 at 102 AAA 1,080,660
(Unlimited Tax), School Improvement Bonds, Series 1995, 5.750%,
12/01/19
1,200,000 County of Jefferson, Ohio, Human Services Building Construction 12/01 at 102 AAA 1,325,352
Bonds, Series 1991 (General Obligation-Limited Tax), 6.625%,
12/01/14
1,885,000 City of Kent, Ohio, General Obligation (Limited Tax) Sewer System 12/02 at 102 Aa3 2,096,723
Improvement Refunding Bonds, Series 1992, 6.500%, 12/01/10
1,070,000 Kettering Ohio, Series 1991, Limited Tax Issue, 6.650%, 12/01/12 12/01 at 102 Aa3 1,173,116
1,000,000 Kettering City School District (Ohio), General Obligation 12/05 at 101 AAA 1,018,630
Bonds-Unlimited Tax, 5.250%, 12/01/22
500,000 Kings Local School District, General Obligation (Unlimited Tax)- 12/05 at 100 AAA 523,180
School Improvement Bonds, Series 1995, 5.500%, 12/01/21
500,000 Kirtland Local School District, Ohio, School Improvement Bonds, 12/99 at 102 N/R 528,530
Series 1989, General Obligation-Unlimited Tax Bonds, 7.500%, 12/01/09
1,000,000 Lakeview, Ohio, Local School District General Obligation Bonds, 12/04 at 102 AAA 1,178,520
6.900%, 12/01/14
1,440,000 Lakewood, Ohio, Series 1995B, 5.750%, 12/01/15 12/05 at 102 Aa3 1,546,128
</TABLE>
33
<PAGE>
Portfolio of Investments (Unaudited)
Nuveen Flagship Ohio Municipal Bond Fund (continued)
November 30, 1998
<TABLE>
<CAPTION>
Principal Optional Call Market
Amount Description Provisions* Ratings** Value
- ----------------------------------------------------------------------------------------------------------
<C> <S> <C> <C> <C>
Tax Obligation/General (continued)
$1,000,000 Lakota Local School District, County of Butler, 12/05 at 100 AAA $ 1,132,260
Ohio, School Improvement Unlimited Tax General
Obligation Bonds, Series 1994, 6.125%, 12/01/17
Logan County, Ohio, General Obligation Bonds:
155,000 7.750%, 12/01/02 No Opt. Call A 177,103
155,000 7.750%, 12/01/03 No Opt. Call A 181,424
155,000 7.750%, 12/01/04 No Opt. Call A 185,290
155,000 7.750%, 12/01/05 No Opt. Call A 188,926
155,000 7.750%, 12/01/06 No Opt. Call A 192,191
1,000,000 County of Lucas, Ohio, General Obligation 12/02 at 102 A1 1,110,450
(Limited Tax), Various Purpose Improvement
Bonds, Series 1992, 6.650%, 12/01/12
1,000,000 County of Lucas, Ohio, General Obligation 12/05 at 102 AAA 1,049,780
(Limited Tax), Various Purpose Improvement
Bonds, Series 1995-1, 5.400%, 12/01/15
1,000,000 County of Mahoning, Ohio, General Obligation 12/99 at 102 AAA 1,058,330
Bonds, Various Purpose Improvement Bonds,
Series 1989, Limited Tax, 7.200%, 12/01/09
865,000 Marysville, Ohio, Exempt Village School No Opt. Call AAA 365,687
District, General Obligation Bonds,
0.000%, 12/01/16
1,215,000 Mason City School District, Counties of Warren 12/09 at 101 Aa3 1,269,602
and Butler, Ohio, School Improvement Unlimited
Tax General Obligation Bonds, Series 1998,
5.300%, 12/01/17
2,500,000 North Canton City School District, Ohio, School 12/08 at 101 Aaa 2,514,575
Improvement Refunding Bonds, Series 1998
(General Obligation Unlimited Tax),
5.000%, 12/01/19
1,000,000 City of North Olmsted, Ohio, General Obligation 12/02 at 102 AAA 1,100,810
(Limited Tax), Various Purpose Bonds, Series
1992, 6.250%, 12/15/12
North Royalton City School District, Ohio, School
Improvement Bonds, Series 1994:
2,200,000 6.000%, 12/01/14 12/09 at 102 AAA 2,526,458
2,400,000 6.100%, 12/01/19 12/09 at 102 AAA 2,693,880
600,000 Oak Hills, Ohio, Local School District, General 12/07 at 101 Aa3 641,760
Obligation Bonds, Series 1997A, 5.700%, 12/01/25
1,000,000 State of Ohio, Full Faith and Credit, General No Opt. Call AA+ 1,154,140
Obligation Infrastructure Improvement Bonds,
Series 1994, 6.000%, 8/01/10
Ohio State Infrastructure Improvement:
750,000 6.200%, 8/01/13 8/05 at 102 AA+ 858,413
2,000,000 6.200%, 8/01/14 8/05 at 102 AA+ 2,289,100
7,640,000 Ohio State, College Savings Bonds, No Opt. Call AAA 3,815,263
0.000%, 8/01/13
500,000 Olmsted Falls, Ohio, Local School District, 12/01 at 102 AAA 558,610
General Obligation Bonds, 7.050%, 12/15/11
1,750,000 Pickerington Local School District, Fairfield 12/01 at 102 A1 1,916,758
and Franklin Counties, Ohio, General Obligation
Bonds (Pickerington Public Library Project-
Unlimited Tax), 6.750%, 12/01/16
Pickerington, Ohio, Local School District General
Obligation Bonds:
500,000 0.000%, 12/01/11 No Opt. Call AAA 277,140
500,000 0.000%, 12/01/13 No Opt. Call AAA 245,780
1,000,000 Revere Local School District, Ohio, School 12/03 at 102 AAA 1,102,200
Improvement Bonds, Series 1993 (General
Obligation-Unlimited Tax Bonds),
6.000%, 12/01/16
2,340,000 City of Stow, Ohio, Safety Center Construction 12/05 at 102 A1 2,590,825
Bonds (General Obligation Limited Tax),
6.200%, 12/01/20
2,870,000 City of Strongsville, Ohio, Various Purpose 12/06 at 102 Aa3 3,127,468
Improvement Bonds, Series 1996 (General
Obligation-Limited Tax), 5.950%, 12/01/21
540,000 County of Trumbull, Ohio, General Obligation 12/04 at 102 AAA 606,269
Sewer Bonds, Series 1994, 6.200%, 12/01/14
1,070,000 County of Trumbull, Ohio, Correctional No Opt. Call AAA 1,241,350
Facilities Bonds, Series 1995 (General
Obligation Limited Tax), 7.000%, 12/01/04
1,320,000 Twinsburg, Ohio, City School District, General 12/01 at 102 AAA 1,447,090
Obligation Bonds, 6.700%, 12/01/11
Upper Arlington, Ohio, City School District,
General Obligation Bonds:
1,830,000 0.000%, 12/01/11 No Opt. Call AAA 1,014,332
1,870,000 0.000%, 12/01/12 No Opt. Call AAA 977,056
1,910,000 Vandalia, Ohio, General Obligation Bonds,
5.850%, 12/01/21 12/06 at 101 Aa 2,057,280
</TABLE>
34
<PAGE>
<TABLE>
<CAPTION>
Principal Optional Call Market
Amount Description Provisions* Ratings** Value
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Tax Obligation/General (continued)
$ 750,000 West Geauga Local School District, Ohio, School Improvement Bonds, 11/04 at 102 AAA $ 831,315
Series 1994 (General Obligation-Unlimited Tax), 5.950%, 11/01/12
1,000,000 Woodridge, Ohio, Local School District, General Obligation Bonds, 12/04 at 102 AAA 1,108,810
6.000%, 12/01/19
1,425,000 Wooster City School District, Wayne County, Ohio, General Obligation 12/02 at 102 AAA 1,597,083
Bonds Unlimited Tax), School Building Construction and Improvement,
6.500%, 12/01/17
300,000 Youngstown, Ohio, General Obligation Bonds, Limited Tax, Series 1994, 12/04 at 102 AAA 335,631
6.125%, 12/01/14
- -----------------------------------------------------------------------------------------------------------------------------------
Tax Obligation/Limited - 6.7%
500,000 County of Athens, Ohio, Community Mental Health Revenue Bonds, 1991 6/01 at 102 AA- 539,565
Series I, 6.900%, 6/01/10
6,000,000 City of Cleveland, Ohio, Certificates of Participation, Series 1997, 11/07 at 102 AAA 6,143,040
Cleveland Stadium Project, 5.250%, 11/15/27
5,000,000 County of Hamilton, Ohio, Sales Tax Bonds, Series 1998B, Hamilton 6/08 at 101 AAA 4,981,000
County Football Project, 5.000%, 12/01/27
1,500,000 Ohio State Building Authority (Juvenile Correctional Building), 9/04 at 102 AAA 1,710,990
6.600%, 10/01/14
1,100,000 Ohio State Department of Transportation, Certificates of 4/02 at 102 AAA 1,200,265
Participation, Panhandle Rail Line Project, Series 1992A,
6.500%, 4/15/12
27,850,000 Puerto Rico Highway and Transportation Authority, Highway Revenue 7/16 at 100 A 30,060,176
Bonds, Series Y of 1996, 5.500%, 7/01/36
2,700,000 Puerto Rico Public Buildings Authority, Revenue Refunding Bonds, No Opt. Call A 2,929,392
Series L, Guaranteed by the Commonwealth of Puerto Rico,
5.500%, 7/01/21
- -----------------------------------------------------------------------------------------------------------------------------------
Technology - 0.2%
1,000,000 County of Franklin, Ohio, Revenue Bonds, Series 1991 (OCLC Online 7/01 at 100 N/R 1,052,530
Computer Library Center, Incorporated Project), 7.200%, 7/15/06
- -----------------------------------------------------------------------------------------------------------------------------------
Transportation - 4.3%
9,840,000 City of Cleveland, Ohio, Airport System Revenue Bonds, 1/08 at 101 AAA 9,752,719
Series 1997A, 5.125%, 1/01/27 (Alternative Minimum Tax)
8,500,000 City of Dayton, Ohio, Special Facilities Revenue Refunding Bonds, 2/08 at 102 BBB 8,629,625
Series 1998A (Emery Air Freight Corporation and Emery Worldwide
Airlines, Inc.-Guarantors) (Non-AMT), 5.625%, 2/01/18
11,000,000 State of Ohio, Turnpike Revenue Bonds, 1996 Series A, Issued by the No Opt. Call AAA 12,148,950
Ohio Turnpike Commission, 5.500%, 2/15/26
- -----------------------------------------------------------------------------------------------------------------------------------
U.S. Guaranteed - 19.5%
2,000,000 City of Athens (County of Athens, Ohio), Sanitary Sewer System 12/09 at 100 A*** 2,347,300
Mortgage Revenue Bonds, Series 1989, 7.300%, 12/01/14
(Pre-refunded to 12/01/09)
3,000,000 City of Barberton, Ohio, Hospital Facilities Revenue Bonds, 1/02 at 102 N/R*** 3,352,470
Series 1992 (The Barberton Citizens Hospital Company Project),
7.250%, 1/01/12 (Pre-refunded to 1/01/02)
2,790,000 City of Bedford, Ohio, Hospital Facilities Refunding Revenue Bonds, 5/00 at 102 N/R*** 3,012,363
Series 1990 (The Community Hospital of Bedford, Inc.),
8.500%, 5/15/09 (Pre-refunded to 5/15/00)
1,000,000 Canal Winchester Local School District, Franklin and Fairfield 12/01 at 102 AAA 1,117,440
Counties, Ohio, General Obligation Bonds (Unlimited Tax),
For School Facilities Construction and Improvement,
7.100%, 12/01/13 (Pre-refunded to 12/01/01)
County of Clermont, Ohio, Hospital Facilities Revenue Bonds,
Series 1989 A (Mercy Health System, Province of Cincinnati):
1,085,000 7.500%, 9/01/19 (Pre-refunded to 9/01/01) 9/01 at 100 AAA 1,193,728
3,660,000 7.500%, 9/01/19 (Pre-refunded to 9/01/99) 9/99 at 102 AAA 3,850,320
County of Clermont, Ohio, Sewer System Revenue Bonds, Series 1990,
Clermont County Sewer District:
1,000,000 7.250%, 12/01/11 (Pre-refunded to 12/01/00) 12/00 at 102 AAA 1,092,180
2,000,000 7.375%, 12/01/20 (Pre-refunded to 12/01/00) 12/00 at 102 AAA 2,188,940
</TABLE>
35
<PAGE>
Portfolio of Investments (Unaudited)
Nuveen Flagship Ohio Municipal Bond Fund (continued)
November 30, 1998
<TABLE>
<CAPTION>
Principal Optional Call Market
Amount Description Provisions* Ratings** Value
- ----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
U.S. Guaranteed (continued)
$3,700,000 County of Clermont, Ohio, Sewer System Revenue 12/01 at 102 AAA $4,130,051
Bonds, Series 1991, Clermont County Sewer
District, 7.100%, 12/01/21 (Pre-refunded to
12/01/01)
City of Cleveland, Ohio, General Obligaton Bonds,
Series 1988:
1,010,000 7.500%, 8/01/08 (Pre-refunded to 2/01/03) 2/03 at 100 AAA 1,152,562
1,010,000 7.500%, 8/01/09 (Pre-refunded to 2/01/03) 2/03 at 100 AAA 1,152,562
500,000 City of Cleveland, Ohio, Various Purpose General 7/02 at 102 AAA 553,370
Obligation Bonds, Series 1992, 6.375%, 7/01/12
(Pre-refunded to 7/01/02)
790,000 Board of Education of the Cleveland City School 12/01 at 102 Aaa 907,307
District, Ohio, School Improvement Bonds,
Series 1991 (General Obligation-Unlimited
Tax Bonds), 8.250%, 12/01/08 (Pre-refunded
to 12/01/01)
920,000 City of Cleveland, Ohio, First Mortgage Revenue 1/02 at 102 AAA 1,011,586
Refunding Bonds, Series F, 1992-B, 6.500%,
1/01/11 (Pre-refunded to 1/01/02)
City of Cleveland, Ohio, Waterworks Improvement
and Refunding Revenue Bonds, 1st Mortgage
Series 1996-H:
2,280,000 5.750%, 1/01/21 (Pre-refunded to 1/01/06) 1/06 at 102 AAA 2,554,672
5,795,000 5.750%, 1/01/26 (Pre-refunded to 1/01/06) 1/06 at 102 AAA 6,493,124
County of Cuyahoga, Ohio, Hospital Revenue
Bonds (Meridia Health System), Series 1995:
250,000 6.250%, 8/15/14 (Pre-refunded to 8/15/05) 8/05 at 102 AAA 287,505
5,500,000 6.250%, 8/15/24 (Pre-refunded to 8/15/05) 8/05 at 102 AAA 6,325,110
1,250,000 Conversion and Remarketing of the County of 10/00 at 103 N/R*** 1,370,438
Cuyahoga, Ohio, Hospital Improvement Revenue
Bonds (Deaconess Hospital of Cleveland
Project), Series 1985B, 7.450%, 10/01/18
(Pre-refunded to 10/01/00)
1,000,000 County of Cuyahoga, Ohio, Hospital Revenue 1/99 at 102 AAA 1,024,560
Improvement and Refunding Bonds, Series 1989 A
(University Hospitals Health System, Inc.
Project), 6.875%, 1/15/19 (Pre-refunded to
1/15/99)
4,000,000 County of Cuyahoga, Ohio, Hospital Facilities 8/99 at 102 Aaa 4,191,240
Revenue Bonds, Series 1989
(Fairview General Hospital), 7.375%, 8/01/19
(Pre-refunded to 8/01/99)
5,750,000 County of Cuyahoga, Ohio, Hospital Facilities 8/00 at 102 AAA 6,221,558
Revenue Bonds, Series 1990 (Meridia
Health System), 7.250%, 8/15/19 (Pre-refunded
to 8/15/00)
4,990,000 County of Cuyahoga, Ohio, Distribution System 6/99 at 102 N/R*** 5,201,676
Improvement Revenue Bonds, Series 1989
(The Medical Center Company Project), 7.800%,
6/01/09 (Pre-refunded to 6/01/99)
1,000,000 City of Delphos, Ohio, Sewer System Mortgage 9/00 at 102 AAA 1,083,180
Revenue Bonds, Series 1990, 7.250%, 9/01/20
(Pre-refunded to 9/01/00)
2,600,000 County of Erie, Ohio, Franciscan Services 1/99 at 102 N/R*** 2,661,464
Corporation Revenue Bonds, Series 1989A
(Providence Hospital, Inc), 7.625%, 1/01/19
(Pre-refunded to 1/01/99)
1,500,000 City of Findlay, Ohio, General Obligation Bonds, 8/99 at 102 AA-*** 1,570,035
7.200%, 8/01/11 (Pre-refunded to 8/01/99)
1,350,000 County of Franklin, Ohio, Hospital Facilities 5/00 at 102 AAA 1,448,010
Improvement Revenue Bonds, Series 1990A
(Riverside United Methodist Hospital Project),
7.250%, 5/15/20 (Pre-refunded to 5/15/00)
1,000,000 County of Franklin, Ohio, Hospital Facilities 5/00 at 102 AAA 1,077,830
Refunding and Improvement Revenue Bonds,
Series 1990B (Riverside United Methodist
Hospital Project), 7.600%, 5/15/20
(Pre-refunded to 5/15/00)
1,000,000 Board of Education, Gahanna-Jefferson City 12/00 at 102 N/R*** 1,088,760
School District, Franklin County, Ohio,
General Obligation Bonds, Series 1990A,
7.125%, 12/01/14 (Pre-refunded to 12/01/00)
1,495,000 County of Hamilton, Ohio, Judson Care Center 8/00 at 101 1/4 AA-*** 1,616,708
Nursing Home and Board and Care Project
(FHA Insured Mortgage), 7.800%, 8/01/19
(Pre-refunded to 8/01/00)
1,000,000 Hudson Local School District, General 12/00 at 102 A1*** 1,090,140
Obligation-Unlimited Tax, 7.100%, 12/15/13
(Pre-refunded to 12/15/00)
1,000,000 Board of Education of the Hudson Local 12/00 at 102 A1*** 1,090,970
School District, Ohio, School Facilities
Improvement Bonds, Series 1991A, 7.100%,
12/15/14 (Pre-refunded to 12/15/00)
1,000,000 Kent State University (A State University of 5/02 at 102 AAA 1,106,940
Ohio), General Receipts Bonds, Series 1992,
6.500%, 5/01/22
</TABLE>
36
<PAGE>
<TABLE>
<CAPTION>
Principal Optional Call Market
Amount Description Provisions* Ratings** Value
- ----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
U.S. Guaranteed (continued)
$1,500,000 City of Lorain, Ohio, Hospital Refunding 11/02 at 102 A1*** $ 1,722,045
Revenue Bonds, Series 1992 (Lakeland
Community Hospital, Inc.), 6.500%, 11/15/12
1,500,000 County of Lucas, Ohio, Hospital Facilities 12/01 at 102 N/R*** 1,712,820
Revenue Bonds, Series 1991 (Flower Memorial
Hospital), 8.125%, 12/01/11 (Pre-refunded
to 12/01/01)
2,000,000 County of Mahoning, Ohio, Hospital No Opt. Call A1*** 2,028,080
Improvement and Refunding Revenue Bonds,
Series 1986 (St. Elizabeth Hospital Medical
Center Project), 7.375%, 12/01/09
4,250,000 County of Mahoning, Ohio, Hospital 10/02 at 100 AAA 4,602,113
Improvement Revenue Bonds, Series 1991 (YHA,
Inc. Project), Series 1991A, 7.000%,
10/15/14 (Pre-refunded to 10/15/02)
1,150,000 County of Marion, Ohio, Health Care 12/99 at 103 N/R*** 1,246,359
Facilities Revenue Bonds, Series 1990
(United Church Homes, Inc.), 8.875%,
12/01/12 (Pre-refunded to 12/01/99)
1,000,000 The Board of Education of the Marysville 12/00 at 102 AAA 1,091,220
Exempted Village School District, Union
County, Ohio, School Improvement Bonds,
General Obligation (Unlimited Tax), 7.200%,
12/01/10 (Pre-refunded to 12/01/00)
1,250,000 City of Marysville, Ohio, Water System 12/01 at 101 AAA 1,382,375
Mortgage Revenue Bonds, Series 1991 7.050%,
12/01/21 (Pre-refunded to 12/01/01)
1,850,000 Massillon City School District, Ohio, General 12/00 at 102 AAA 2,018,757
Obligation-Unlimited Tax Bonds, School
Improvement Bonds, Series 1990, 7.200%,
12/01/11 (Pre-refunded to 12/01/00)
1,000,000 Board of Education of the Mentor Exempted 12/02 at 100 AAA 1,061,260
Village School District, Ohio, Improvement
Bonds, Series 1989 (General Obligation
Bonds), 7.400%, 12/01/11 (Pre-refunded to
12/01/02)
3,000,000 City of Middleburg Heights, Ohio, Hospital 8/01 at 102 AAA 3,327,690
Improvement Revenue Bonds, Series 1991
(Southwest General Hospital Project),
7.200%, 8/15/19 (Pre-refunded to 8/15/01)
Ohio Housing Finance Agency Single Family
Mortgage Revenue Bonds:
6,460,000 0.000%, 1/15/15 (Pre-refunded to 1/15/11) 1/11 at 67 1/32 AAA 2,501,054
5,700,000 0.000%, 1/15/15 (Pre-refunded to 7/15/11) 7/11 at 70 15/32 AAA 2,267,973
20,000 Ohio Building Authority, State Facilities 4/03 at 100 AAA 23,759
Refunding Bonds (Frank J. Lausche State
Office Building), 1982 Series A, 10.125%,
10/01/06 (Pre-refunded to 4/01/03)
3,250,000 State of Ohio (Ohio Building Authority), 8/99 at 102 Aaa 3,405,090
State Correctional Facilities Bonds, 1986
Series A, 7.350%, 8/01/06 (Pre-refunded to
8/01/99)
1,000,000 State of Ohio, Ohio Higher Educational 5/00 at 100 AAA 1,054,980
Facilities Commission (Ohio Northern
University Project), 7.300%, 5/15/10
(Pre-refunded to 5/15/00)
1,900,000 Ohio State Public Facilities Commission, 11/99 at 102 Aa3*** 1,970,395
Higher Education Facilities Bonds, Series
1989A, 7.250%, 5/01/04 (Pre-refunded to
11/01/99)
4,630,000 Ohio Water Development Authority, State of No Opt. Call AAA 5,217,084
Ohio, Water Development Revenue Bonds, Pure
Water 1990 Series I, 6.000%, 12/01/16
1,000,000 Ottawa County, Ohio, Special Assessment 9/01 at 102 AAA 1,107,020
Portage, Catawba Isle, 7.000%, 9/01/11
(Pre-refunded to 9/01/01)
1,000,000 City of Parma, Ohio, Various Purpose General 12/00 at 102 A*** 1,099,100
Obligation Bonds, Series 1990 (Limited Tax
Obligation), 7.600%, 12/01/11 (Pre-refunded
to 12/01/00)
1,600,000 Pickerington, Ohio, Local School District, 12/00 at 102 AAA 1,748,800
General Obligation Bonds, Series 1990B,
7.250%, 12/01/13 (Pre-refunded to 12/01/00)
700,000 Puerto Rico Commonwealth Highway Authority, 7/00 at 102 AAA 760,270
Highway Revenue, Series Q, 7.750%, 7/01/10
(Pre-refunded to 7/01/00)
1,500,000 Puerto Rico Electric Power Authority, Power 7/01 at 102 Aaa 1,655,505
Revenue Bonds, Series P, 7.000%, 7/01/21
(Pre-refunded to 7/01/01)
3,165,000 Reynoldsburg City School District, Ohio, 12/02 at 102 AAA 3,553,029
General Obligation Bonds, School Building
Construction and Improvement, 6.550%,
12/01/17 (Pre-refunded to 12/01/02)
1,200,000 Ridgemont Local School District, Ohio, 12/02 at 102 N/R*** 1,369,896
General Obligation (Unlimited Tax),
School Improvement Bonds, Series 1992,
7.250%, 12/01/14 (Pre-refunded to 12/01/02)
605,000 Scioto County, Ohio, Human Services Building 8/01 at 101 N/R*** 664,611
Bonds, General Obligation Bonds 7.150%,
8/01/11 (Pre-refunded to 8/01/01)
</TABLE>
37
<PAGE>
Portfolio of Investments (Unaudited)
Nuveen Flagship Ohio Municipal Bond Fund
November 30, 1998
<TABLE>
<CAPTION>
Principal Optional Call Market
Amount Description Provisions* Ratings** Value
- ----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
U.S. Guaranteed (continued)
$ 750,000 Southwest Local School District, Ohio, 12/99 at 103 AAA $ 805,148
Hamilton County, General Obligation Bonds,
7.650%, 12/01/10 (Pre-refunded to 12/01/99)
1,000,000 Sylvania, Ohio, City School District, General 6/02 at 102 AAA 1,112,220
Obligation Bonds, 6.600%, 6/01/16
(Pre-refunded to 6/01/02)
1,000,000 University of Cincinnati, General Receipts 12/02 at 102 AA*** 1,112,590
Bonds, Series O, 6.300%, 6/01/12 (Pre-refunded
to 12/01/02)
4,775,000 County of Warren, Ohio, Hospital Facilities 7/01 at 102 Aa2*** 5,273,606
Improvement and Refunding Revenue Bonds,
Series 1991 (Otterbein Home Project), 7.200%,
7/01/11 (Pre-refunded to 7/01/01)
750,000 County of Warren, Ohio, Waterworks System 12/02 at 102 AAA 843,338
Revenue Bonds, Series 1992, Warren County
Water District, 6.600%, 12/01/16 (Pre-
refunded to 12/01/02)
1,500,000 City of Warren, Ohio, General Obligation 11/00 at 102 BBB+*** 1,647,480
(Limited Tax), Sewerage System Improvement
Bonds, Series 1990, 7.750%, 11/01/10 (Pre-
refunded to 11/01/00)
1,500,000 Washington County (Marietta Area Health Care 9/02 at 102 Baa1*** 1,708,140
Project), 7.375%, 9/01/12 (Pre-refunded
to 9/01/02)
1,500,000 Westerville, Minerva Park and Blendon, Ohio, 9/01 at 102 AAA 1,663,905
Joint Township Hospital District (St. Anns
Hospital Project), Series 1991A, 7.100%,
9/15/21 (Pre-refunded to 9/15/01)
- ----------------------------------------------------------------------------------------------------------
Utilities - 11.0%
City of Cleveland, Ohio, Public Power System
First Mortgage Revenue Bonds, Series 1994A:
2,250,000 0.000%, 11/15/12 No Opt. Call AAA 1,178,033
1,535,000 0.000%, 11/15/13 No Opt. Call AAA 756,141
10,685,000 City of Cleveland, Ohio, Public Power System 11/01 at 102 AAA 11,781,388
Improvement, First Mortgage Revenue Bonds,
Series 1991B, 7.000%, 11/15/17
1,900,000 Cleveland Public Power System, 7.000%, 11/15/17 11/01 at 102 AAA 2,094,959
4,900,000 City of Cleveland, Ohio, Public Power System, 11/06 at 102 AAA 4,882,213
First Mortgage Revenue Refunding Bonds,
Series 1996, Sub-Series 1, 5.000%, 11/15/24
7,520,000 Ohio Municipal Electric Generation Agency 2/03 at 102 AAA 7,718,754
(American Municipal Power-Ohio, Inc.),
5.375%, 2/15/24
Ohio Air Quality Development Authority, Revenue
Bonds, 1985 Series A (Columbus Southern Power
Company Project):
1,750,000 6.375%, 12/01/20 12/02 at 102 AAA 1,919,558
7,000,000 6.250%, 12/01/20 6/03 at 102 Baa1 7,344,890
750,000 Ohio Air Quality Development Authority, 7/99 at 102 Baa3 776,310
Pollution Control Revenue Refunding Bonds,
1989 Series B (Ohio Edison Company Project),
7.625%, 7/01/23
5,900,000 Ohio Air Quality Development Authority, Air 8/99 at 102 Baa1 6,101,485
Quality Development Revenue Refunding Bonds
(Ohio Power Company Project), Series B, 7.400%,
8/01/09
2,000,000 Ohio Air Quality Development Authority, Pollution 3/00 at 102 AAA 2,125,640
Control Revenue Refunding Bonds, 1990 Series A
(Ohio Edison Company Project), 7.450%, 3/01/16
15,000,000 Ohio Air Quality Development Authority, Air 9/05 at 102 A+ 16,185,300
Quality Development Revenue Refunding Bonds,
1995 Series (The Dayton Power and Light
Company Project), 6.100%, 9/01/30
6,000,000 Ohio Air Quality Development Authority, Air 4/07 at 102 AAA 6,272,280
Quality Development Revenue Bonds (JMG
Funding, Limited Partnership Project) Series
1997, 5.625%, 1/01/23 (Alternative Minimum
Tax)
500,000 Ohio Water Development Authority, 8/02 at 102 AA- 538,590
Collateralized Water Development
Revenue Refunding Bonds, 1992 Series A
(The Dayton Power and Light Company Project),
6.400%, 8/15/27
7,050,000 Ohio Water Development Authority, Pollution 7/99 at 102 Baa3 7,292,732
Control Revenue (Ohio Edison Company),
7.625%, 7/01/23
1,545,000 Puerto Rico Electric Power Authority, Power No Opt. Call BBB+ 623,763
Revenue Bonds, Series O, 0.000%, 7/01/17
</TABLE>
38
<PAGE>
<TABLE>
<CAPTION>
Principal Optional Call Market
Amount Description Provisions* Ratings** Value
- ----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Water and Sewer - 5.2%
City of Bellefontaine, Sewer System, First
Mortgage Revenue Refunding and Improvement
Bonds (Bank Qualified):
$1,000,000 6.800%, 12/01/07 12/02 at 101 Baa1 $ 1,080,130
1,000,000 6.900%, 12/01/11 12/02 at 101 Baa1 1,084,490
3,000,000 County of Butler, Ohio, Sewer System Revenue 12/06 at 101 AAA 3,068,010
Bonds, Series 1996, 5.250%, 12/01/21
13,000,000 City of Cleveland, Ohio, Waterworks No Opt. Call AAA 14,183,520
Improvement, First Mortgage Refunding
Revenue Bonds, Series G, 1993,
5.500%, 1/01/21
5,000,000 City of Cleveland, Ohio, Waterworks Improvement 1/08 at 101 AAA 4,995,950
and Refunding Revenue Bonds, Series I, 1998,
5.000%, 1/01/28
City of Cleveland, Ohio, Waterworks Improvement
and Refunding Revenue Bonds, First Mortgage
Series 1996-H:
40,000 5.750%, 1/01/21 1/06 at 102 AAA 43,174
55,000 5.750%, 1/01/26 1/06 at 102 AAA 59,216
80,000 City of Cleveland, Ohio, Waterworks Revenue 1/02 at 102 AAA 87,078
Refunding Bonds, First Mortgage Series F,
1992-B, 6.500%, 1/01/11
1,600,000 County of Greene, Ohio, Water System Revenue 12/07 at 102 AAA 1,798,830
Bonds, Series 1996, 6.125%, 12/01/21
2,200,000 City of Greenville, Ohio (Darke County), 12/02 at 102 AAA 2,432,650
Wastewater System, First Mortgage Revenue
Bonds, Series 1992 (Governmental Enterprise
Revenue Bonds), 6.350%, 12/01/17
1,000,000 City of Hamilton, Ohio, Water System Mortgage 10/01 at 102 AAA 1,085,610
Revenue Bonds, 1991 Series A, 6.400%, 10/15/10
795,000 City of Huber Heights, Ohio, Water System No Opt. Call AAA 279,472
Revenue Bonds, Series 1995, 0.000%, 12/01/19
1,000,000 County of Montgomery, Ohio, Water Revenue Bonds, 11/02 at 102 AAA 1,101,207
Greater Moraine Beavercreek Sewer District,
Series 1992, 6.250%, 11/15/17
1,000,000 Mount Gilead, Ohio, Water System Revenue, First 12/02 at 102 N/R 1,078,868
Mortgage Bonds, 7.200%, 12/01/17
1,000,000 Ohio Water Development Authority, State of Ohio, 6/05 at 102 AAA 1,087,638
Water Development Revenue Bonds, 1995 Fresh
Water Series, 5.900%, 12/01/21
2,000,000 Ohio Water Development Authority, State of Ohio, 6/08 at 101 AAA 2,008,618
Water Development Revenue Bonds, Fresh Water
Series 1998, 5.125%, 12/01/23
750,000 Toledo, Ohio, Sewer System Revenue Mortgage 11/04 at 102 AAA 848,675
Bonds, 6.350%, 11/15/17
500,000 Toledo, Ohio, Waterworks Revenue Refunding 11/04 at 102 AAA 568,398
Mortgage Bonds, 6.450%, 11/15/24
- ----------------------------------------------------------------------------------------------------------
$661,410,000 Total Investments - (cost $630,502,682) - 97.7% 690,345,315
=============---------------------------------------------------------------------------------------------
Temporary Investments in Short-Term Municipal Securities - 1.0%
5,500,000 County of Cuyahoga, Ohio, Hospital Revenue Bonds (The Cleveland VMIG-1 5,500,000
Clinic Foundation), Series 1997D, Variable Rate Demand Bonds,
3.300%, 1/01/26+
1,300,000 Ohio Air Quality Development Authority, State of Ohio, Air VMIG-1 1,300,000
Quality Development Revenue Refunding Bonds
(The Cincinnati Gas and Electric Company Project),
1995 Series A, Variable Rate Demand Bonds, 3.250%, 9/01/30+
- ----------------------------------------------------------------------------------------------------------
$6,800,000 Total Temporary Investments - 1.0% 6,800,000
============----------------------------------------------------------------------------------------------
Other Assets Less Liabilities - 1.3% 9,795,026
----------------------------------------------------------------------------------------------
Net Assets - 100% $706,940,341
==============================================================================================
</TABLE>
* Optional Call Provisions: Dates (month and year) and prices of the earliest
optional call or redemption. There may be other call provisions at varying
prices at later dates.
** Ratings: Using the higher of Standard & Poor's or Moody's rating.
*** Securities are backed by an escrow or trust containing sufficient U.S.
government or U.S. government agency securities which ensures the timely
payment of principal and interest. Securities are normally considered to be
equivalent to AAA rated securities.
N/R Investment is not rated.
+ The security has a maturity of more than one year, but has variable rate and
demand features which qualify it as a short-term security. The rate
disclosed is that currently in effect. This rate changes periodically based
on market conditions or a specified marked index.
See accompanying notes to financial statements.
39
<PAGE>
Statement of Net Assets (Unaudited)
November 30,1998
<TABLE>
<CAPTION>
Kentucky Kentucky Limited Michigan Ohio
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Assets
Investments in municipal securities, at market value (note 1) $498,596,440 $10,871,470 $348,556,233 $690,345,315
Temporary investments in short-term municipal securities,
at amortized cost, which approximates market value (note 1) -- -- -- 6,800,000
Cash 862,106 121,498 -- --
Receivables:
Interest 7,137,471 160,021 5,383,364 12,932,218
Investments sold -- -- 1,985,000 1,469,863
Shares sold 683,708 8,473 160,722 786,710
Other assets 188,893 22,544 185,500 272,986
- ------------------------------------------------------------------------------------------------------------------------------
Total assets 507,468,618 11,184,006 356,270,819 712,607,092
- ------------------------------------------------------------------------------------------------------------------------------
Liabilities
Cash overdraft -- -- 2,888,315 2,857,663
Payables:
Investments purchased -- -- 987,010 --
Shares redeemed 698,286 6 112,158 946,593
Accrued expenses:
Management fees (note 6) 220,836 1,760 154,847 304,741
12b-1 distribution and service fees (notes 1 and 6) 100,501 2,682 78,200 115,946
Other 92,415 13,699 24,470 165,041
Dividends payable 1,001,333 12,909 409,428 1,276,767
- ------------------------------------------------------------------------------------------------------------------------------
Total liabilities 2,113,371 31,056 4,654,428 5,666,751
- ------------------------------------------------------------------------------------------------------------------------------
Net assets (note 7) $505,355,247 $11,152,950 $351,616,391 $706,940,341
==============================================================================================================================
Class A Shares (note 1)
Net assets $466,860,435 $ 8,147,214 $269,790,676 $482,218,847
Shares outstanding 40,739,829 799,642 22,141,318 40,728,929
Net asset value and redemption price per share $ 11.46 $10.19 $12.18 $11.84
Offering price per share (net asset value per share plus maximum
sales charge of 4.20%, 2.50%, 4.20% and 4.20%, respectively,
of offering price) $ 11.96 $10.45 $12.71 $12.36
==============================================================================================================================
Class B Shares (note 1)
Net assets $ 6,554,245 N/A $ 6,057,441 $ 10,654,970
Shares outstanding 571,833 N/A 496,660 900,492
Net asset value, offering and redemption price per share $ 11.46 N/A $12.20 $11.83
==============================================================================================================================
Class C Shares (note 1)
Net assets $31,145,672 $2,987,159 $48,414,979 $ 48,820,003
Shares outstanding 2,720,086 293,307 3,979,336 4,126,526
Net asset value, offering and redemption price per share $ 11.45 $ 10.18 $ 12.17 $ 11.83
==============================================================================================================================
Class R Shares (note 1)
Net assets $ 794,895 $ 18,577 $27,353,295 $165,246,521
Shares outstanding 69,511 1,827 2,245,528 13,958,412
Net asset value, offering and redemption price per share $ 11.44 $ 10.17 $ 12.18 $ 11.84
==============================================================================================================================
</TABLE>
N/A -- Kentucky Limited is not authorized to issue Class B Shares.
See accompanying notes to financial statements.
40
<PAGE>
Statement of Operations (Unaudited)
Six Months Ended November 30, 1998
<TABLE>
<CAPTION>
Kentucky Kentucky Limited Michigan Ohio
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Investment Income (note 1) $14,220,259 $276,554 $10,031,519 $20,262,270
- ---------------------------------------------------------------------------------------------------------------------------------
Expenses
Management fees (note 6) 1,324,915 25,132 934,196 1,845,357
12b-1 service fees--Class A (notes 1 and 6) 459,785 8,411 267,346 478,714
12b-1 distribution and service fees--Class B (notes 1 and 6) 26,695 N/A 24,929 41,369
12b-1 distribution and service fees--Class C (notes 1 and 6) 111,322 7,541 176,369 179,076
Shareholders' servicing agent fees and expenses 133,793 15,898 66,925 213,262
Custodian's fees and expenses 51,341 6,365 40,548 72,146
Trustees' fees and expenses (note 6) 3,273 1,250 1,461 6,320
Professional fees 28,197 4,778 10,787 11,626
Shareholders' reports--printing and mailing expenses 40,558 3,397 39,768 62,314
Federal and state registration fees 3,024 1,670 12,464 47,218
Other expenses 15,157 224 12,877 20,820
- ---------------------------------------------------------------------------------------------------------------------------------
Total expenses before expense reimbursement 2,198,060 74,666 1,587,670 2,978,222
Expense reimbursement (note 6) (946) (21,388) -- --
- ---------------------------------------------------------------------------------------------------------------------------------
Net expenses 2,197,114 53,278 1,587,670 2,978,222
- ---------------------------------------------------------------------------------------------------------------------------------
Net investment income 12,023,145 223,276 8,443,849 17,284,048
- ---------------------------------------------------------------------------------------------------------------------------------
Realized and Unrealized Gain from Investments
Net realized gain from investment transactions (notes 1 and 4) 529,074 22 707,767 618,529
Net change in unrealized appreciation or depreciation of investments 2,498,653 76,785 2,467,106 5,560,995
- ---------------------------------------------------------------------------------------------------------------------------------
Net gain from investments 3,027,727 76,807 3,174,873 6,179,524
- ---------------------------------------------------------------------------------------------------------------------------------
Net increase in net assets from operations $15,050,872 $300,083 $11,618,722 $23,463,572
=================================================================================================================================
</TABLE>
N/A--Kentucky Limited is not authorized to issue Class B Shares.
See accompanying notes to financial statements.
41
<PAGE>
Statement of Changes in Net Assets (Unaudited)
<TABLE>
<CAPTION>
Kentucky Kentucky Limited
------------------------------- --------------------------------
Six Months Ended Year Ended Six Months Ended Year Ended
11/30/98 5/31/98 11/30/98 5/31/98
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Operations
Net investment income $ 12,023,145 $ 24,365,910 $ 223,276 $ 503,516
Net realized gain from investment
transactions (notes 1 and 4) 529,074 2,172,160 22 32,390
Net change in unrealized appreciation or
depreciation of investments 2,498,653 14,097,294 76,785 204,860
- ------------------------------------------------------------------------------------------------------------------------------------
Net increase in net assets from operations 15,050,872 40,635,364 300,083 740,766
- ------------------------------------------------------------------------------------------------------------------------------------
Distributions to Shareholders (note 1)
From undistributed net investment income:
Class A (11,348,062) (22,954,811) (175,582) (409,988)
Class B (116,543) (102,552) N/A N/A
Class C (654,899) (1,254,173) (51,826) (94,041)
Class R (18,175) (32,294) (369) (590)
From accumulated net realized gains from investment
transactions:
Class A -- (1,984,678) -- --
Class B -- (10,705) N/A N/A
Class C -- (120,396) -- --
Class R -- (2,930) -- --
- ------------------------------------------------------------------------------------------------------------------------------------
Decrease in net assets from distributions to shareholders (12,137,679) (26,462,539) (227,777) (504,619)
- ------------------------------------------------------------------------------------------------------------------------------------
Fund Share Transactions (note 2)
Net proceeds from sale of shares 31,533,618 47,501,865 909,884 3,676,589
Net proceeds from shares issued to shareholders
due to reinvestment of distributions 6,148,078 15,618,317 103,616 312,624
- ------------------------------------------------------------------------------------------------------------------------------------
37,681,696 63,120,182 1,013,500 3,989,213
- ------------------------------------------------------------------------------------------------------------------------------------
Cost of shares redeemed (20,156,681) (48,645,223) (1,353,493) (3,818,637)
- ------------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets from Fund share
transactions 17,525,015 14,474,959 (339,993) 170,576
- ------------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets 20,438,208 28,647,784 (267,687) 406,723
Net assets at the beginning of period 484,917,039 456,269,255 11,420,637 11,013,914
- ------------------------------------------------------------------------------------------------------------------------------------
Net assets at the end of period $505,355,247 $484,917,039 $11,152,950 $11,420,637
====================================================================================================================================
Balance of undistributed (over-distributed) net investment
income at end of period $ (89,519) $ 25,015 $ (3,515) $ 986
====================================================================================================================================
</TABLE>
N/A--Kentucky Limited is not authorized to issue Class B Shares.
See accompanying notes to financial statements.
42
<PAGE>
Statement of Changes in Net Assets (Unaudited) (continued)
<TABLE>
<CAPTION>
Michigan Ohio
------------------------------------ -----------------------------------
Six Months Ended Year Ended Six Months Ended Year Ended
11/30/98 5/31/98 11/30/98 5/31/98
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Operations
Net investment income $ 8,443,849 $ 16,864,427 $ 17,284,048 $ 35,243,212
Net realized gain from investment
transactions (notes 1 and 4) 707,767 1,595,690 618,529 4,967,956
Net change in unrealized appreciation or
depreciation of investments 2,467,106 10,225,980 5,560,995 16,619,119
- -----------------------------------------------------------------------------------------------------------------------------------
Net increase in net assets from operations 11,618,722 28,686,097 23,463,572 56,830,287
- -----------------------------------------------------------------------------------------------------------------------------------
Distributions to Shareholders (note 1)
From undistributed net investment income:
Class A (6,590,187) (13,344,536) (11,831,218) (24,388,584)
Class B (108,941) (63,731) (181,379) (182,260)
Class C (1,033,844) (1,982,594) (1,059,467) (2,008,254)
Class R (700,582) (1,409,716) (4,206,068) (8,687,614)
From accumulated net realized gains from investment
transactions:
Class A -- (597,076) -- (1,996,392)
Class B -- (3,361) -- (16,956)
Class C -- (101,904) -- (178,327)
Class R -- (61,084) -- (681,846)
- -----------------------------------------------------------------------------------------------------------------------------------
Decrease in net assets from distributions to
shareholders (8,433,554) (17,564,002) (17,278,132) (38,140,233)
- -----------------------------------------------------------------------------------------------------------------------------------
Fund Share Transactions (note 2)
Net proceeds from sale of shares 23,229,066 28,641,868 38,977,895 63,755,865
Net proceeds from shares issued to shareholders
due to reinvestment of distributions 2,988,780 10,647,679 8,155,791 24,926,989
- -----------------------------------------------------------------------------------------------------------------------------------
26,217,846 39,289,547 47,133,686 88,682,854
- -----------------------------------------------------------------------------------------------------------------------------------
Cost of shares redeemed (17,851,213) (37,642,403) (35,876,914) (83,801,938)
- -----------------------------------------------------------------------------------------------------------------------------------
Net increase in net assets from Fund share
transactions 8,366,633 1,647,144 11,256,772 4,880,916
- -----------------------------------------------------------------------------------------------------------------------------------
Net increase in net assets 11,551,801 12,769,239 17,442,212 23,570,970
Net assets at the beginning of period 340,064,590 327,295,351 689,498,129 665,927,159
- -----------------------------------------------------------------------------------------------------------------------------------
Net assets at the end of period $351,616,391 $340,064,590 $706,940,341 $689,498,129
===================================================================================================================================
Balance of undistributed net investment income
at end of period $ 106,940 $ 96,645 $ 42,229 $ 36,313
===================================================================================================================================
</TABLE>
See accompanying notes to financial statements.
43
<PAGE>
Notes to Financial Statements (Unaudited)
1. General Information and Significant Accounting Policies
The Nuveen Flagship Multistate Trust IV (the "Trust") is an open-end investment
company registered under the Investment Company Act of 1940, as amended. The
Trust comprises the Nuveen Flagship Kentucky Municipal Bond Fund ("Kentucky"),
the Nuveen Flagship Kentucky Limited Term Municipal Bond Fund ("Kentucky
Limited"), the Nuveen Flagship Michigan Municipal Bond Fund ("Michigan") and the
Nuveen Flagship Ohio Municipal Bond Fund ("Ohio") (collectively the "Funds"),
among others. The Trust was organized as a Massachusetts business trust on
July 1, 1996.
The Board of Trustees has determined that it is in the best interests of
Kentucky Limited to be reorganized and combined with Kentucky. The
reorganization is subject to the approval of the shareholders of Kentucky
Limited at the shareholder meeting scheduled for April, 1999.
The Funds seek to provide high tax-free income and preservation of capital
through investments in diversified portfolios of quality municipal bonds.
The following is a summary of significant accounting policies followed by the
Funds in the preparation of their financial statements in accordance with
generally accepted accounting principles.
Securities Valuation
The prices of municipal bonds in each Fund's investment portfolio are provided
by a pricing service approved by the Fund's Board of Trustees. When price quotes
are not readily available (which is usually the case for municipal securities),
the pricing service establishes fair market value based on yields or prices of
municipal bonds of comparable quality, type of issue, coupon, maturity and
rating, indications of value from securities dealers and general market
conditions. Temporary investments in securities that have variable rate and
demand features qualifying them as short-term securities are valued at amortized
cost, which approximates market value.
Securities Transactions
Securities transactions are recorded on a trade date basis. Realized gains and
losses from such transactions are determined on the specific identification
method. Securities purchased or sold on a when-issued or delayed delivery basis
may have extended settlement periods. Any securities so purchased are subject to
market fluctuation during this period. The Funds have instructed the custodian
to segregate assets in a separate account with a current value at least equal to
the amount of the when-issued and delayed delivery purchase commitments. At
November 30, 1998, Michigan had an outstanding when-issued purchase commitment
of $987,010. There were no such outstanding purchase commitments in any of the
other funds.
Investment Income
Interest income is determined on the basis of interest accrued, adjusted for
amortization of premiums and accretion of discounts on long-term debt securities
when required for federal income tax purposes.
Dividends and Distributions to Shareholders
Tax-exempt net investment income is declared as a dividend monthly and payment
is made or reinvestment is credited to shareholder accounts on the first
business day after month-end. Net realized capital gains and/or market discount
from investment transactions, if any, are distributed to shareholders not less
frequently than annually. Furthermore, capital gains are distributed only to the
extent they exceed available capital loss carryforwards.
44
<PAGE>
Distributions to shareholders of tax-exempt net investment income, net realized
capital gains and/or market discount are recorded on the ex-dividend date. The
amount and timing of distributions are determined in accordance with federal
income tax regulations, which may differ from generally accepted accounting
principles. Accordingly, temporary over-distributions as a result of these
differences may occur and will be classified as either distributions in excess
of net investment income, distributions in excess of net realized gains and/or
distributions in excess of net ordinary taxable income from investment
transactions, where applicable.
Income Taxes
Each Fund is a separate taxpayer for federal income tax purposes. Each Fund
intends to comply with the requirements of the Internal Revenue Code applicable
to regulated investment companies and to distribute all of its tax-exempt net
investment income, in addition to any significant amounts of net realized
capital gains and/or market discount from investment transactions. The Funds
currently consider significant net realized capital gains and/or market discount
as amounts in excess of $.001 per share. Furthermore, the Funds intend to
satisfy conditions which will enable interest from municipal securities, which
is exempt from regular federal and designated state income taxes, to retain such
tax-exempt status when distributed to the shareholders of the Funds. Net
realized capital gain and market discount distributions are subject to federal
taxation.
Flexible Sales Charge Program
Each Fund offers Class A, C and R Shares. Kentucky, Michigan and Ohio also offer
Class B Shares. Class A Shares are sold with a sales charge and incur an annual
12b-1 service fee. Class A Share purchases of $1 million or more are sold at net
asset value without an up-front sales charge but may be subject to a 1%
contingent deferred sales charge ("CDSC") if redeemed within 18 months of
purchase. Class B Shares are sold without a sales charge but incur annual 12b-1
distribution and service fees. An investor purchasing Class B Shares agrees to
pay a CDSC of up to 5% depending upon the length of time the shares are held by
the investor (CDSC is reduced to 0% at the end of six years). Class B Shares
convert to Class A Shares eight years after purchase. Class C Shares are sold
without a sales charge but incur annual 12b-1 distribution and service fees. An
investor purchasing Class C Shares agrees to pay a CDSC of 1% if Class C Shares
are redeemed within one year of purchase. Class R Shares are not subject to any
sales charge or 12b-1 distribution or service fees. Class R Shares are available
for purchases of over $1 million and in other limited circumstances.
Derivative Financial Instruments
The Funds may invest in certain derivative financial instruments including
futures, forward, swap, option contracts, and other financial instruments with
similar characteristics. Although the Funds are authorized to invest in such
financial instruments, and may do so in the future, they did not make any such
investments during the six months ended November 30, 1998.
Expense Allocation
Expenses of the Funds that are not directly attributable to a specific class of
shares are prorated among the classes based on the relative net assets of each
class. Expenses directly attributable to a class of shares, which presently only
includes 12b-1 distribution and service fees, are recorded to the specific
class.
Use of Estimates
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities at the date of the
financial statements and the reported amounts of increases and decreases in net
assets from operations during the reporting period. Actual results may differ
from those estimates.
45
<PAGE>
Notes to Financial Statements (Unaudited) (continued)
2. Fund Shares
Transactions in Fund shares were as follows:
<TABLE>
<CAPTION>
Kentucky Kentucky Limited
-------------------------------------------------- ---------------------------------------------------
Six Months Ended 11/30/98 Year Ended 5/31/98 Six Months Ended 11/30/98 Year Ended 5/31/98
-------------------------------------------------- ---------------------------------------------------
Shares Amount Shares Amount Shares Amount Shares Amount
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Shares sold:
Class A 2,154,111 $ 24,621,064 3,217,301 $ 36,434,351 26,491 $ 269,099 286,922 $ 2,892,341
Class B 196,943 2,248,423 323,485 3,657,888 N/A N/A N/A N/A
Class C 398,498 4,552,006 639,620 7,226,085 62,847 638,286 76,327 769,248
Class R 9,832 112,125 16,255 183,541 245 2,499 1,495 15,000
Shares issued to
shareholders due to
reinvestment of
distributions:
Class A 498,292 5,701,045 1,281,834 14,485,026 5,521 56,064 23,560 236,867
Class B 4,675 53,531 4,212 47,833 N/A N/A N/A N/A
Class C 34,149 390,252 94,246 1,063,652 4,654 47,200 7,475 75,229
Class R 283 3,250 1,937 21,806 35 352 52 528
- ------------------------------------------------------------------------------------------------------------------------------------
3,296,783 37,681,696 5,578,890 63,120,182 99,793 1,013,500 395,831 3,989,213
- ------------------------------------------------------------------------------------------------------------------------------------
Shares redeemed:
Class A (1,532,417) (17,504,249) (3,866,440) (43,715,326) (120,551) (1,221,426) (316,310) (3,201,570)
Class B (4,842) (55,420) (1,809) (20,440) N/A N/A N/A N/A
Class C (227,522) (2,596,906) (434,290) (4,909,457) (13,035) (131,963) (61,079) (617,067)
Class R (9) (106) -- -- (10) (104) -- --
- ------------------------------------------------------------------------------------------------------------------------------------
(1,764,790) (20,156,681) (4,302,539) (48,645,223) (133,596) (1,353,493) (377,389) (3,818,637)
- ------------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) 1,531,993 $ 17,525,015 1,276,351 $ 14,474,959 (33,803) $ (339,993) 18,442 $ 170,576
====================================================================================================================================
N/A - Kentucky Limited is not authorized to issue Class B Shares.
</TABLE>
<TABLE>
<CAPTION>
Michigan Ohio
-------------------------------------------------- --------------------------------------------------
Six Months Ended 11/30/98 Year Ended 5/31/98 Six Months Ended 11/30/98 Year Ended 5/31/98
-------------------------------------------------- --------------------------------------------------
Shares Amount Shares Amount Shares Amount Shares Amount
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Shares sold:
Class A 1,243,068 $ 15,074,575 1,390,245 $ 16,660,336 2,260,899 $ 26,641,983 3,219,388 $ 37,568,749
Class B 190,340 2,312,184 287,386 3,449,240 267,834 3,158,285 516,543 6,021,505
Class C 410,801 4,972,911 589,706 7,052,332 396,096 4,669,443 995,368 11,636,371
Class R 72,508 869,396 123,751 1,479,960 383,014 4,508,184 730,018 8,529,240
Shares issued to
shareholders due to
reinvestment of
distributions:
Class A 176,834 2,144,540 678,487 8,087,898 407,200 4,800,687 1,424,465 16,558,328
Class B 3,578 43,483 2,834 34,056 7,108 83,807 9,946 116,135
Class C 27,717 335,737 127,033 1,512,300 32,878 387,188 139,502 1,619,985
Class R 38,302 465,020 84,732 1,013,425 244,539 2,884,109 569,608 6,632,541
- -----------------------------------------------------------------------------------------------------------------------------------
2,163,148 26,217,846 3,284,174 39,289,547 3,999,568 47,133,686 7,604,838 88,682,854
- -----------------------------------------------------------------------------------------------------------------------------------
Shares redeemed:
Class A (1,115,170) (13,520,672) (2,418,756) (28,925,631) (2,229,600) (26,304,956) (4,938,984) (57,591,525)
Class B (14,881) (180,734) (5,100) (61,520) (7,132) (83,809) (38,316) (446,171)
Class C (249,090) (3,006,501) (498,829) (5,971,586) (312,607) (3,679,831) (692,246) (8,051,008)
Class R (93,795) (1,143,306) (224,782) (2,683,666) (493,630) (5,808,318) (1,520,403) (17,713,234)
- -----------------------------------------------------------------------------------------------------------------------------------
(1,472,936) (17,851,213) (3,147,467) (37,642,403) (3,042,969) (35,876,914) (7,189,949) (83,801,938)
- -----------------------------------------------------------------------------------------------------------------------------------
Net increase 690,212 $ 8,366,633 136,707 $ 1,647,144 956,599 $ 11,256,772 414,889 $ 4,880,916
===================================================================================================================================
</TABLE>
46
<PAGE>
3. Distributions to Shareholders
The Funds declared dividend distributions from their tax-exempt net investment
income which were paid on December 21, 1998, to shareholders of record on
December 9, 1998, as follows:
<TABLE>
<CAPTION>
Kentucky
Kentucky Limited Michigan Ohio
- --------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Dividend per share:
Class A $.0465 $.0350 $.0500 $.0480
Class B .0395 N/A .0425 .0410
Class C .0415 .0320 .0445 .0430
Class R .0485 .0370 .0520 .0500
================================================================================
N/A - Kentucky Limited is not authorized to issue Class B Shares.
</TABLE>
The following Funds also declared taxable distributions, which include capital
gains and/or market discount, which were paid on December 7, 1998, to
shareholders of record on December 2, 1998, as follows:
<TABLE>
<CAPTION>
Kentucky Michigan Ohio
- -------------------------------------------------
<S> <C> <C> <C>
Taxable distributions
per share: $.0237 $.0565 $.0447
=================================================
</TABLE>
4. Securities Transactions
Purchases and sales (including maturities) of investments in municipal
securities and temporary municipal investments for the six months ended November
30, 1998, were as follows:
<TABLE>
<CAPTION>
Kentucky
Kentucky Limited Michigan Ohio
- --------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Purchases:
Investments in municipal
securities $40,399,667 $ -- $27,054,181 $32,900,914
Temporary municipal
investments 22,550,000 650,000 12,300,000 32,400,000
Sales:
Investments in municipal
securities 22,892,065 265,000 22,457,448 30,815,013
Temporary municipal
investments 24,550,000 650,000 12,300,000 25,600,000
================================================================================
</TABLE>
At November 30, 1998, the identified cost of investments owned for federal
income tax purposes was the same as the cost for financial reporting purposes
for each Fund.
At May 31, 1998, the Funds' last fiscal year end, Kentucky Limited had unused
capital loss carryforwards of $70,735 available for federal income tax purposes
to be applied against future capital gains, if any. If not applied, $135 of the
carryforward will expire in the year 2004 and $70,600 of the carryforward will
expire in the year 2005.
5. Unrealized Appreciation (Depreciation)
Gross unrealized appreciation and gross unrealized depreciation of investments
at November 30, 1998, were as follows:
<TABLE>
<CAPTION>
Kentucky
Kentucky Limited Michigan Ohio
- --------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Gross unrealized:
appreciation $40,444,093 $402,845 $32,877,510 $59,849,151
depreciation -- (4,997) (32,262) (6,518)
- --------------------------------------------------------------------------------
Net unrealized appreciation $40,444,093 $397,848 $32,845,248 $59,842,633
================================================================================
</TABLE>
47
<PAGE>
Notes to Financial Statements (Unaudited) (continued)
6. Management Fee and Other Transactions with Affiliates
Under the Trust's investment management agreement with the Adviser, each Fund
pays an annual management fee, payable monthly, at the rates set forth below
which are based upon the average daily net asset value of each Fund:
<TABLE>
<CAPTION>
Kentucky, Michigan & Ohio
Average Daily Net Asset Value Management Fee
- -------------------------------------------------------------------------------
<S> <C>
For the first $125 million .5500 of 1%
For the next $125 million .5375 of 1
For the next $250 million .5250 of 1
For the next $500 million .5125 of 1
For the next $1 billion .5000 of 1
For net assets over $2 billion .4750 of 1
===============================================================================
Kentucky Limited
Average Daily Net Asset Value Management Fee
- -------------------------------------------------------------------------------
For the first $125 million .4500 of 1%
For the next $125 million .4375 of 1
For the next $250 million .4250 of 1
For the next $500 million .4125 of 1
For the next $1 billion .4000 of 1
For net assets over $2 billion .3750 of 1
===============================================================================
</TABLE>
The management fee compensates the Adviser for overall investment advisory and
administrative services, and general office facilities. The Trust pays no
compensation directly to those of its Trustees who are affiliated with the
Adviser or to its officers, all of whom receive remuneration for their services
to the Trust from the Adviser or its affiliates.
The Adviser may voluntarily reimburse expenses from time to time, which may be
terminated at any time at its discretion.
During the six months ended November 30, 1998, the Distributor collected sales
charges on purchases of Class A Shares, the majority of which were paid out as
concessions to authorized dealers. The Distributor also received 12b-1 service
fees on Class A Shares, substantially all of which were paid to compensate
authorized dealers for providing services to shareholders relating to their
investments.
During the six months ended November 30, 1998, the Distributor compensated
authorized dealers directly with commission advances at the time of purchase as
follows:
<TABLE>
<CAPTION>
Kentucky
Kentucky Limited Michigan Ohio
- -----------------------------------------------------------------------
<S> <C> <C> <C> <C>
Commission advances $207,531 $5,975 $179,242 $233,334
=======================================================================
</TABLE>
48
<PAGE>
To compensate for commissions advanced to authorized dealers, all 12b-1 service
fees collected on Class B Shares, except for Kentucky Limited, during the first
year following a purchase, all 12b-1 distribution fees on Class B Shares, except
for Kentucky Limited, and all 12b-1 service and distribution fees on Class C
Shares during the first year following a purchase are retained by the
Distributor. Kentucky Limited is not authorized to issue Class B Shares. During
the six months ended November 30, 1998, the Distributor retained such 12b-1 fees
as follows:
<TABLE>
<CAPTION>
Kentucky
Kentucky Limited Michigan Ohio
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
12b-1 fees retained $ 59,709 $ 1,849 $ 64,040 $ 91,526
====================================================================================================================================
</TABLE>
The remaining 12b-1 fees charged to the Funds were paid to compensate authorized
dealers for providing services to shareholders relating to their investments.
The Distributor also collected and retained CDSC on share redemptions during the
six months ended November 30, 1998, as follows:
<TABLE>
<CAPTION>
Kentucky
Kentucky Limited Michigan Ohio
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
CDSC retained $ 5,374 $ 178 $ 6,630 $ 12,085
====================================================================================================================================
</TABLE>
7. Composition of Net Assets
At November 30, 1998, the Funds had an unlimited number of $.01 par value shares
authorized. Net assets consisted of:
<TABLE>
<CAPTION>
Kentucky
Kentucky Limited Michigan Ohio
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Capital paid-in $ 463,802,902 $ 10,829,422 $ 317,462,479 $ 644,429,855
Balance of undistributed (over-distributed) net investment income (89,519) (3,515) 106,940 42,229
Accumulated net realized gain (loss) from investment transactions 1,197,771 (70,805) 1,201,724 2,625,624
Net unrealized appreciation of investments 40,444,093 397,848 32,845,248 59,842,633
- ------------------------------------------------------------------------------------------------------------------------------------
Net assets $ 505,355,247 $ 11,152,950 $ 351,616,391 $ 706,940,341
====================================================================================================================================
</TABLE>
49
<PAGE>
Financial Highlights (Unaudited)
Selected data for a share outstanding throughout each period is as follows:
<TABLE>
<CAPTION>
Class (Inception Date) Investment Operations Less Distributions
--------------------------------- ---------------------------
Net
Realized/ Net Ending
Beginning Net Unrealized Invest- Net
Year Ended Net Asset Investment Investment ment Capital Asset Total
May 31, Value Income (a) Gain (Loss) Total Income Gain Total Value Return (b)
- ---------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
KENTUCKY**
Class A (5/87)
1999 (d) $11.39 $.28 $ .07 $ .35 $(.28) $ -- $(.28) $11.46 3.13%
1998 11.05 .59 .38 .97 (.58) (.05) (.63) 11.39 9.00
1997 10.82 .60 .24 .84 (.60) (.01) (.61) 11.05 7.87
1996 10.99 .61 (.17) .44 (.61) -- (.61) 10.82 4.04
1995 10.65 .61 .35 .96 (.62) -- (.62) 10.99 9.42
1994 11.06 .62 (.40) .22 (.63) -- (.63) 10.65 1.90
Class B (2/97)
1999 (d) 11.39 .24 .07 .31 (.24) -- (.24) 11.46 2.75
1998 11.06 .50 .38 .88 (.50) (.05) (.55) 11.39 8.10
1997 (c) 11.07 .17 (.01) .16 (.17) -- (.17) 11.06 1.47
Class C (10/93)
1999 (d) 11.38 .25 .07 .32 (.25) -- (.25) 11.45 2.86
1998 11.04 .52 .39 .91 (.52) (.05) (.57) 11.38 8.43
1997 10.81 .54 .24 .78 (.54) (.01) (.55) 11.04 7.29
1996 10.99 .54 (.17) .37 (.55) -- (.55) 10.81 3.38
1995 10.65 .55 .35 .90 (.56) -- (.56) 10.99 8.82
1994 (c) 11.46 .36 (.81) (.45) (.36) -- (.36) 10.65 (5.88)*
Class R (2/97)
1999 (d) 11.37 .29 .08 .37 (.30) -- (.30) 11.44 3.24
1998 11.03 .61 .39 1.00 (.61) (.05) (.66) 11.37 9.25
1997 (c) 11.08 .20 (.04) .16 (.21) -- (.21) 11.03 1.42
- ---------------------------------------------------------------------------------------------------------------------
KENTUCKY LIMITED***
Class A (9/95)
1999 (d) $10.12 $.21 $ .07 $ .28 $(.21) $ -- $(.21) $10.19 2.80%
1998 9.92 .44 .20 .64 (.44) -- (.44) 10.12 6.53
1997 9.79 .45 .12 .57 (.44) -- (.44) 9.92 5.96
1996 (c) 9.75 .31 .04 .35 (.31) -- (.31) 9.79 5.45*
Class C (9/95)
1999 (d) 10.12 .19 .06 .25 (.19) -- (.19) 10.18 2.52
1998 9.92 .40 .20 .60 (.40) -- (.40) 10.12 6.17
1997 9.79 .41 .13 .54 (.41) -- (.41) 9.92 5.64
1996 (c) 9.75 .29 .04 .33 (.29) -- (.29) 9.79 5.12*
Class R (2/97)
1999 (d) 10.10 .22 .07 .29 (.22) -- (.22) 10.17 2.93
1998 9.92 .46 .18 .64 (.46) -- (.46) 10.10 6.58
1997 (c) 9.98 .15 (.10) .05 (.11) -- (.11) 9.92 .56
=====================================================================================================================
</TABLE>
<TABLE>
<CAPTION>
Ratios/Supplemental Data
------------------------------------------------------------------------------------------------
Ratio of Net
Ratio of Investment Ratio of Ratio of Net
Expenses to Income to Expenses Investment
Average Net Average Net to Average Income to Average Portfolio
Year Ended Ending Net Assets Before Assets Before Net Assets After Net Assets After Turnover
May 31, Assets (000) Reimbursement Reimbursement Reimbursement (a) Reimbursement (a) Rate
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
KENTUCKY**
Class A (5/87)
1999 (d) $466,860 .85%* 4.89%* .85%* 4.89%* 5%
1998 451,338 .84 5.12 .77 5.19 12
1997 430,803 .99 5.20 .75 5.44 13
1996 410,808 1.02 5.19 .71 5.50 17
1995 394,457 1.04 5.49 .68 5.85 28
1994 369,495 1.03 5.15 .58 5.60 12
Class B (2/97)
1999 (d) 6,554 1.59* 4.13* 1.59* 4.13* 5
1998 4,273 1.59 4.33 1.54 4.38 12
1997 (c) 544 1.59* 4.56* 1.39* 4.76* 13
Class C (10/93)
1999 (d) 31,146 1.40* 4.34* 1.40* 4.34* 5
1998 28,630 1.39 4.57 1.33 4.63 12
1997 24,468 1.54 4.64 1.29 4.89 13
1996 20,647 1.57 4.63 1.27 4.93 17
1995 15,831 1.58 4.92 1.23 5.27 28
1994 (c) 11,172 1.65* 4.39* 1.08* 4.96* 12
Class R (2/97)
1999 (d) 795 .65* 5.09* .65* 5.09* 5
1998 675 .64 5.31 .58 5.37 12
1997 (c) 455 .64* 5.62* .49* 5.77* 13
- ----------------------------------------------------------------------------------------------------------------------
KENTUCKY LIMITED***
Class A (9/95)
1999 (d) $ 8,147 1.25%* 3.70%* .87%* 4.08%* --%
1998 8,989 1.34 3.67 .66 4.35 36
1997 8,870 1.68 3.37 .53 4.52 56
1996 (c) 8,389 1.67* 3.07* .37* 4.37* 48
Class C (9/95)
1999 (d) 2,987 1.60* 3.35* 1.22* 3.73* --
1998 2,416 1.69 3.32 1.01 4.00 36
1997 2,144 2.00 3.03 .84 4.19 56
1996 (c) 1,767 1.98* 2.78* .64* 4.12* 48
Class R (2/97)
1999 (d) 19 1.05* 3.90* .67* 4.28* --
1998 16 1.13 3.87 .46 4.54 36
1997 (c) -- .86* 4.87* -- 5.73* 56
======================================================================================================================
</TABLE>
* Annualized.
** Information included prior to the fiscal year ended May 31, 1997, reflects
the financial highlights of Flagship Kentucky.
*** Information included prior to the fiscal year ended May 31, 1997, reflects
the financial highlights of Flagship Kentucky Limited.
(a) After waiver of certain management fees or reimbursement of expenses, if
applicable, by Nuveen Advisory or its predecessor Flagship Financial.
(b) Total returns are calculated on net asset value without any sales charge
and are not annualized except where noted.
(c) From commencement of class operations as noted.
(d) For the six months ended November 30, 1998.
50
<PAGE>
<TABLE>
<CAPTION>
Financial Highlights (Unaudited) (continued)
Selected data for a share outstanding throughout each period is as follows:
Class (Inception Date) Investment Operations Less Distributions
--------------------------------- ---------------------------
Net
Realized/ Net Ending
Net Unrealized Invest- Net
Year Ended Beginning Net Investment Investment ment Capital Asset Total
May 31, Asset Value Income (a) Gain (Loss) Total Income Gain Total Value Return (b)
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
MICHIGAN**
CLASS A (6/85)
1999(d) $ 12.07 $ .30 $ .11 $ .41 $ (.30) $ -- $ (.30) $ 12.18 3.43%
1998 11.68 .61 .42 1.03 (.61) (.03) (.64) 12.07 8.95
1997 11.37 .62 .31 .93 (.61) (.01) (.62) 11.68 8.42
1996 11.59 .63 (.22) .41 (.63) -- (.63) 11.37 3.61
1995 11.31 .65 .28 .93 (.65) -- (.65) 11.59 8.57
1994 11.77 .66 (.43) .23 (.66) (.03)+ (.69) 11.31 1.87
CLASS B (2/97)
1999(d) 12.09 .26 .11 .37 (.26) -- (.26) 12.20 3.04
1998 11.70 .52 .42 .94 (.52) (.03) (.55) 12.09 8.12
1997(c) 11.66 .17 .04 .21 (.17) -- (.17) 11.70 1.86
CLASS C (6/93)
1999(d) 12.06 .27 .11 .38 (.27) -- (.27) 12.17 3.15
1998 11.66 .54 .43 .97 (.54) (.03) (.57) 12.06 8.45
1997 11.35 .55 .32 .87 (.55) (.01) (.56) 11.66 7.84
1996 11.58 .56 (.22) .34 (.57) -- (.57) 11.35 2.96
1995 11.30 .58 .28 .86 (.58) -- (.58) 11.58 7.98
1994(c) 11.86 .54 (.52) .02 (.55) (.03)+ (.58) 11.30 .19*
CLASS R (2/97)
1999(d) 12.07 .31 .11 .42 (.31) -- (.31) 12.18 3.53
1998 11.68 .63 .42 1.05 (.63) (.03) (.66) 12.07 9.16
1997(c) 11.66 .21 .02 .23 (.21) -- (.21) 11.68 2.01
- ---------------------------------------------------------------------------------------------------------------------
OHIO***
CLASS A (6/85)
1999(d) $ 11.74 $ .29 $ .10 $ .39 $ (.29) $ -- $ (.29) $ 11.84 3.37%
1998 11.41 .60 .38 .98 (.60) (.05) (.65) 11.74 8.76
1997 11.21 .61 .20 .81 (.61) -- (.61) 11.41 7.38
1996 11.43 .62 (.21) .41 (.63) -- (.63) 11.21 3.59
1995 11.21 .64 .22 .86 (.64) -- (.64) 11.43 7.99
1994 11.59 .64 (.38) .26 (.64) -- (.64) 11.21 2.24
CLASS B (2/97)
1999(d) 11.73 .25 .10 .35 (.25) -- (.25) 11.83 3.01
1998 11.41 .51 .38 .89 (.52) (.05) (.57) 11.73 7.89
1997(c) 11.42 .17 (.01) .16 (.17) -- (.17) 11.41 1.45
CLASS C (8/93)
1999(d) 11.73 .26 .10 .36 (.26) -- (.26) 11.83 3.11
1998 11.41 .54 .37 .91 (.54) (.05) (.59) 11.73 8.12
1997 11.21 .55 .20 .75 (.55) -- (.55) 11.41 6.80
1996 11.43 .55 (.21) .34 (.56) -- (.56) 11.21 3.03
1995 11.20 .57 .23 .80 (.57) -- (.57) 11.43 7.50
1994(c) 11.69 .46 (.49) (.03) (.46) -- (.46) 11.20 (.17)*
CLASS R (2/97)
1999(d) 11.73 .30 .11 .41 (.30) -- (.30) 11.84 3.56
1998 11.41 .62 .37 .99 (.62) (.05) (.67) 11.73 8.89
1997(c) 11.42 .21 (.01) .20 (.21) -- (.21) 11.41 1.77
=====================================================================================================================
</TABLE>
<TABLE>
<CAPTION>
Ratios/Supplemental Data
------------------------------------------------------------------------------------------------
Ratio of Net
Ratio of Investment Ratio of Ratio of Net
Expenses to Income to Expenses Investment
Average Net Average Net to Average Income to Average Portfolio
Year Ended Ending Net Assets Before Assets Before Net Assets After Net Assets After Turnover
May 31, Assets (000) Reimbursement Reimbursement Reimbursement (a) Reimbursement (a) Rate
- ---------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
MICHIGAN**
CLASS A (6/85)
1999(d) $ 269,791 .85%* 4.94%* .85%* 4.94%* 7%
1998 263,632 .84 5.11 .84 5.11 13
1997 259,055 .97 5.21 .85 5.33 34
1996 248,422 1.01 5.23 .82 5.42 54
1995 250,380 1.03 5.59 .80 5.82 37
1994 242,993 1.02 5.29 .75 5.56 28
CLASS B (2/97)
1999(d) 6,057 1.60* 4.19* 1.60* 4.19* 7
1998 3,839 1.59 4.32 1.59 4.32 13
1997(c) 380 1.59* 4.52* 1.59* 4.52* 34
CLASS C (6/93)
1999(d) 48,415 1.40* 4.39* 1.40* 4.39* 7
1998 45,690 1.39 4.56 1.39 4.56 13
1997 41,649 1.52 4.65 1.40 4.77 34
1996 41,365 1.56 4.67 1.37 4.86 54
1995 37,122 1.58 5.02 1.35 5.25 37
1994(c) 30,042 1.61* 4.53* 1.25* 4.89* 28
CLASS R (2/97)
1999(d) 27,353 .65* 5.14* .65* 5.14* 7
1998 26,904 .64 5.31 .64 5.31 13
1997(c) 26,211 .65* 5.57* .65* 5.57* 34
- -----------------------------------------------------------------------------------------------------------------------------
OHIO***
CLASS A (6/85)
1999(d) $ 482,219 .85%* 4.95%* .85%* 4.95%* 4%
1998 472,821 .85 5.15 .85 5.15 15
1997 463,253 .96 5.32 .89 5.39 17
1996 443,077 1.02 5.31 .92 5.41 31
1995 445,566 1.03 5.70 .95 5.78 31
1994 445,272 1.02 5.39 .93 5.48 9
CLASS B (2/97)
1999(d) 10,655 1.61* 4.20* 1.61* 4.20* 4
1998 7,422 1.61 4.39 1.61 4.39 15
1997(c) 1,649 1.60* 4.63* 1.60* 4.63* 17
CLASS C (8/93)
1999(d) 48,820 1.40* 4.40* 1.40* 4.40* 4
1998 47,036 1.40 4.60 1.40 4.60 15
1997 40,713 1.51 4.77 1.44 4.84 17
1996 34,939 1.56 4.75 1.47 4.84 31
1995 28,461 1.58 5.13 1.50 5.21 31
1994(c) 25,674 1.60* 4.65* 1.46* 4.79* 9
CLASS R (2/97)
1999(d) 165,247 .65* 5.15* .65* 5.15* 4
1998 162,220 .65 5.35 .65 5.35 15
1997(c) 160,312 .65* 5.65* .65* 5.65* 17
=====================================================================================================================
</TABLE>
* Annualized.
** Information included prior to the fiscal year ended May 31, 1997, reflects
the financial highlights of Flagship Michigan.
*** Information included prior to the fiscal year ended May 31, 1997, reflects
the financial highlights of Flagship Ohio.
+ The amount shown includes a distribution in excess of capital gains
of $.02 per share.
(a) After waiver of certain management fees or reimbursement of expenses, if
applicable, by Nuveen Advisory or its predecessor Flagship Financial.
(b) Total returns are calculated on net asset value without any sales charge and
are not annualized except where noted.
(c) From commencement of class operations as noted.
(d) For the six months ended November 30, 1998.
51
<PAGE>
Nuveen Family of Mutual Funds
Nuveen offers a variety of funds designed to help you reach your financial
goals.
Growth
Nuveen Rittenhouse Growth Fund
Growth and Income
European Value Fund
Growth and Income Stock Fund
Balanced Stock and Bond Fund
Balanced Municipal and Stock Fund
Tax-Free Income
National Funds
Long-Term
Insured
Intermediate-Term
Limited-Term
State Funds
Arizona
California
Colorado
Connecticut
Florida
Georgia
Kansas
Kentucky
Louisiana
Maryland
Massachusetts
Michigan
Missouri
New Jersey
New Mexico
New York
North Carolina
Ohio
Pennsylvania
Tennessee
Virginia
Wisconsin
Building a Better Portfolio Can Make You a Successful Investor
Successful investors know that a well-diversified portfolio - one that balances
different types of investments, levels of risk and tax management - can be the
foundation for building and sustaining wealth. That's why Nuveen offers you and
your financial adviser a wide range of quality investments that can help you
build a better portfolio in the pursuit of your financial goals.
Mutual Funds
Nuveen offers a family of equity, balanced and municipal bond funds featuring
Premier Advisers(SM) including Institutional Capital Corporation, Rittenhouse
Financial Services, and Nuveen Advisory Corp. Each brings a specialized
expertise in a particular investment style or asset class, time-tested
investment strategies and a focus on consistent, long-term performance. With
Nuveen's Premier Adviser funds, you have all the advantages of a family of funds
plus the benefits of specialized investment expertise.
Private Asset Management
Rittenhouse Financial Services and Nuveen Asset Management offer comprehensive,
customized investment management solutions to investors with assets of $250,000
or more to invest. A range of actively managed growth, balanced and municipal
income-oriented portfolios are available, all based upon a disciplined
investment philosophy.
Defined Portfolios
Nuveen Defined Portfolios are fixed portfolios of quality securities that are a
convenient, attractive alternative to purchasing individual securities. They
provide low-cost diversification to reduce risk, while also offering
experienced, professional security selection and surveillance. In addition,
Nuveen Defined Portfolios provide daily liquidity at that day's net asset value
for quick access to your assets.
Exchange-Traded Funds
Nuveen Exchange-Traded Funds offer investors actively managed portfolios of
investment-grade quality municipal bonds. The fund shares are listed and traded
on the New York and American stock exchanges. Exchange-traded funds provide the
investment convenience, price visibility and liquidity of common stocks.
MuniPreferred(R)
Nuveen MuniPreferred offers investors a AAA rated investment with an attractive
tax-free yield for the cash reserves portion of an investment portfolio.
MuniPreferred shares are backed 2-to-1 by the long-term portfolios of Nuveen
dual-class exchange-traded funds and are available for national as well as a
wide variety of state-specific portfolios.
52
<PAGE>
Fund Information
Board of Trustees
Robert P. Bremner
Lawrence H. Brown
Anthony T. Dean
Anne E. Impellizzeri
Peter R. Sawers
William J. Schneider
Timothy R. Schwertfeger
Judith M. Stockdale
Fund Manager
Nuveen Advisory Corp.
333 West Wacker Drive
Chicago, IL 60606
Transfer Agent and Shareholder Services
The Chase Manhattan Bank
4 New York Plaza
New York, NY 10004-2413
(800) 257-8787
Legal Counsel
Morgan, Lewis &
Bockius LLP
Washington, D.C.
Independent Public Accountants
Arthur Andersen LLP
Chicago, IL
53
<PAGE>
Serving Investors for Generations
[PHOTO OF JOHN NUVEEN, SR., APPEARS HERE]
John Nuveen, Sr.
Since our founding in 1898, John Nuveen & Co. has been synonymous with
investments that withstand the test of time. Today we offer a broad range of
quality investments designed for individuals seeking to build and sustain
wealth. In fact, more than 1.3 million investors have trusted Nuveen to help
them pursue their financial goals.
The cornerstone of Nuveen's investment philosophy is a commitment to disciplined
long-term investment strategies focused on providing consistent, attractive
performance over time. We emphasize quality securities carefully chosen through
in-depth research, and we follow those securities closely over time to ensure
that they continue to meet our exacting standards.
Whether your focus is long-term growth, dependable current income or sustaining
accumulated wealth, Nuveen offers a wide variety of investments and services to
help meet your unique circumstances and financial planning needs. Our equity,
balanced, and tax-free income funds, along with our defined portfolios and
private asset management, can help you build a better, well-diversified
portfolio.
Talk with your financial adviser to learn more about how Nuveen investment
products and services can help you. Or call us at (800) 257-8787 for more
information, including a prospectus where applicable. Please read that
information carefully before investing.
1898
NUVEEN
1998
OUR SECOND CENTURY
helping investors sustain the wealth of a lifetime./SM/
John Nuveen & Co. Incorporated
333 West Wacker Drive
Chicago, IL 60606-1286
www.nuveen.com
VSA-5-11-98
<PAGE>
NUVEEN
Municipal
Bond Funds
November 30, 1998
- ----------------------------------
Semiannual Report
- ----------------------------------
Dependable, tax-free income
to help you keep more of
what you earn.
[PHOTO APPEARS HERE]
Kansas
Missouri
Wisconsin
<PAGE>
Highlights
As of November 30, 1998
For Class A shares on net asset value
Credit Quality Performance Highlights
Nuveen Flagship Kansas Municipal Bond Fund
[PIE CHART . One-year total return of 7.71%
APPEARS HERE] . Outperformed Lipper Peer Group average and
paralleled the Lehman Brothers Municipal Bond Index
AAA/U.S. Guaranteed 45% for one-year period
AA 23% . Good credit quality with 68% of the funds assets
A 14% invested in AAA or AA rated bonds
BBB/NR 18%
Nuveen Flagship Missouri Municipal Bond Fund
[PIE CHART . One-year total return of 7.22%
APPEARS HERE] . Outperformed Lipper Peer Group average for one-year
period
AAA/U.S. Guaranteed 58% . Good credit quality, with 68% of the funds assets
AA 10% invested in AAA or AA rated bonds
A 13%
BBB/NR 21%
Nuveen Flagship Wisconsin Municipal Bond Fund
[PIE CHART . One-year total return of 8.27%
APPEARS HERE] . Outperformed Lipper Peer Group average and
paralleled the Lehman Brothers Municipal Bond Index
AAA/U.S. Guaranteed 39% for one-year period
AA 4% . Class A shares one-year total return ranked #2 out
A 25% of 74 funds in the Lipper States Municipal Debt
BBB/NR 33% category, behind only the fund's R shares
Contents
1 Dear Shareholder
4 Nuveen Flagship Kansas Municipal
Bond Fund Commentary and Overview
6 Nuveen Flagship Missouri
Municipal Bond Fund Commentary and Overview
8 Nuveen Flagship Wisconsin Municipal Bond Fund Commentary and Overview
10 Portfolio of Investments
24 Statement of Net Assets
25 Statement of Operations
26 Statement of Changes in Net Assets
28 Notes to Financial Statements
33 Financial Highlights
36 Building Better Portfolios
37 Fund Information
<PAGE>
Dear Shareholder
[PHOTO OF TIMOTHY R. SCHWERTFEGER APPEARS HERE]
Timothy R. Schwertfeger
Chairman of the Board
Wealth takes a lifetime to build. Once achieved, it should be preserved.
I'm pleased to report on the performance of your Nuveen Flagship Municipal Bond
Fund for the 12 months ended November 30, 1998. Providing a high level of
current interest income exempt from regular federal, state and, in some cases,
local income taxes as is consistent with the preservation of capital remains the
primary investment objective for each of the funds covered in this report. In
each case, we achieved this objective, illustrating once again that Nuveen tax-
free mutual funds can provide an excellent investment option for income-oriented
investors.
The Year in Review
Over the past year, the markets endured bouts of volatility, as the Asian
financial crisis spilled over into emerging markets and affected economies
around the globe. The Federal Reserve intervened in an attempt to soften the
impact of the financial crises by lowering short-term interest rates in
September by a quarter of a point. Since that time, the Fed has twice again
reduced rates, bringing the federal funds rate to 4.75%. As long-term interest
rates fell to historic lows, investors were reminded of the importance of a well
balanced portfolio and professional management. Despite the market volatility
throughout the year, your Nuveen Flagship Municipal Bond Fund continued to
provide attractive current market yields and after-tax total returns. Your fund
represented a bright spot among fixed-income investments. In addition, the funds
have maintained good levels of call protection, which provides a strong
foundation for potentially stable income streams in the future. Looking ahead,
we will continue to focus on new municipal bond issuance while leveraging our
institutional position to buy and sell securities at competitive prices and
identifying undervalued securities through proprietary market research.
Municipal Market Review
Over the past year, declining interest rates drove yields on 30-year
1
<PAGE>
Treasuries to their lowest levels since 1977. With yields on the long Treasury
bond pushing below 5% at times, the yield on the Bond Buyer 40, an unmanaged
index of long-term municipal bonds, fell just 26 basis points from 5.36% to
5.10% compared with the 99-point drop, to 5.06%, in Treasury yields over the
past 12 months. As of November 30, 1998, the ratio of long-term municipal yields
to 30-year Treasury yields stood at 100.8%, compared with the more typical range
of 86-87%. Over the past few months, this ratio has climbed as high as 104%. For
investors, this means that long-term municipal bonds currently offer about the
same yield as Treasury bonds with comparable maturities, before taxes are taken
into account. On an after-tax basis, municipal bonds present an even more
attractive investment option relative to Treasuries.
One of the main factors in the steep decline in Treasury yields during the past
year was the strong interest in these investments by international investors. As
the financial turmoil in Asia continued to spread to economies worldwide and the
dollar strengthened against foreign currencies, the demand for U.S. Treasury
securities increased. In the municipal market, where foreign demand was limited
by an inability of foreign investors to benefit from the tax advantages of
municipals, low interest rates and a strong economy combined to generate high
levels of new issuance and a dramatic increase in the refinancing of existing
bonds. The first eleven months of 1998 saw over $255 billion of municipal
issuance, up 28.4% over the same period in 1997. In terms of total issuance,
this put 1998 on pace to be the second largest year on record.
2
<PAGE>
"The key to taking advantage of the exceptional values currently available in
the financial markets is the expertise of a market specialist, such as Nuveen
Investment Advisory Services."
In addition, the continued strength of the U.S. economy brought about
improvements in the fundamental financial health of many municipalities and
boosted the overall credit quality of municipal bonds. In the third quarter of
1998, upgraded issues by the two major rating agencies outnumbered downgrades by
a margin of 7 to 2.
Nuveen Expertise Is Key
The key to taking advantage of the exceptional values currently available in the
financial markets is the expertise of a market specialist, such as Nuveen
Investment Advisory Services. To this end, Nuveen has assembled the Premier
Advisers/SM/, a growing group of experts that can provide time-tested experience
and insight in a variety of investment categories. In addition to Nuveen
Investment Advisory Services, our Premier Adviser for tax-free investing, you
can rely on our other Premier Advisers for equity investments, including
Institutional Capital Corporation for value investing and Rittenhouse Financial
Services, Inc. for growth investing. For more information about the funds
managed by these Premier Advisers, including charges and expenses, contact your
financial adviser for a prospectus, or call Nuveen at (800) 621-7227. Please
read the prospectus carefully before you invest or send money.
We encourage you to talk with your financial adviser about the ways Nuveen's
expanding selection of investments can assist you in establishing a diversified
portfolio designed to help you build and sustain long-term financial security.
Over the past 100 years, Nuveen has evolved from a company that dealt with only
municipal bonds into a nationally respected firm that handles a variety of
investment options. I look forward to continuing this exciting journey. We are
grateful for the confidence you have shown in us, and we intend to continue
earning your trust in the years ahead.
Sincerely,
/s/ Timothy R. Schwertfeger
Timothy R. Schwertfeger
Chairman of the Board
January 15, 1999
3
<PAGE>
Nuveen Flagship Kansas Municipal Bond Fund
Portfolio Manager's Comments
Portfolio Manager Mike Davern discusses the Nuveen Flagship Kansas Municipal
Bond Fund and reviews factors that affected performance over the past 12 months.
Comments cover the 12-month period ended November 30, 1998 and all performance
statistics are quoted for Class A shares.
What is the status of the Kansas economy and its municipal market?
Growth in Kansas' trade, service, and manufacturing sectors is beginning to
challenge the historical dominance of agriculture within the state's economy.
This improved diversification has helped boost economic performance recently, as
have gains in aircraft manufacturing and the recovery of the agricultural
sector. In addition, Kansas' unemployment rate remains low, and personal income
continues to grow at a healthy rate.
The state's municipal bond issuance grew at a brisk pace in 1998. This was due
to a variety of factors: low interest rates, expansive economic conditions, a
growing infrastructure, and school financing needs. In fact, as of November 30,
1998, issuance was up 64% over 1997 levels and is expected to remain heavy for
some time to come.
How did the Nuveen Flagship Kansas Municipal Bond Fund's underlying portfolio
perform during the past year?
Over the past 12 months, the Nuveen Flagship Kansas Municipal Bond Fund
generated a total return on net asset value of 7.71%, equivalent to a taxable
total return of 10.61% for investors in the combined 36.3% federal and state
income tax bracket. That performance exceeded the 6.66% average annual total
return posted by the Lipper Kansas Municipal Debt Peer Group* of 12 municipal
bond funds.
What key strategies were used over the course of the year? Were there any
particular sectors in which Nuveen looked for undervalued securities?
We spent the year trying to improve the fund's portfolio structure by adding
bonds with higher coupons, good protection against calls, and attractive value
relative to the larger market.
We sought out those securities in two ways. First, we looked to make new
purchases in sectors offering bonds that our managers believe were not fully
priced by the market. The fund's two largest sector allocations were healthcare
bonds and limited tax obligation securities, which accounted for 20% and 19%,
respectively, of the fund's investments, as of November 30, 1998. These sectors
not only experienced some of the state's heaviest issuance volume, they
performed well during the period and offered some opportunities to find value.
Second, we took advantage of the slightly wider yield spreads between higher and
lower-rated securities. Typically, an investment-grade (at least BBB- rated)
bond pays higher interest rates because of its lower credit rating. The bond's
lower credit rating is rewarded in the form of a higher yield. Conversely, AAA
rated securities pay lower interest rates due to the fact that there is less
credit risk to the issue.
While searching for investment-grade securities, Nuveen's extensive research
capabilities give us the ability to identify lower-rated debt that we believe
offers both strong quality characteristics and the opportunity for additional
yield. In Kansas, we found attractive, lower-rated bonds in a number of sectors,
although the fund's portfolio continues to be of very high quality, with 68% of
its holdings rated AAA or AA.
Finding bonds with good call protection was also important. Call protection
insulates investors from income erosion, especially in a declining interest rate
environment. Regarding the Kansas fund, less than 10% of the portfolio is
callable prior to 2002.
What is your outlook for the Nuveen Flagship Kansas Municipal Bond Fund?
We will continue to manage the fund by seeking out undervalued securities that
provide both attractive income and the opportunity for price appreciation
relative to the market, consistent with the preservation of capital.
Housing bonds will be prime candidates for addition to the portfolio as a way to
increase yield. Single family housing bonds often have higher yields than other
bonds of similar maturities because the housing bonds are subject to early calls
if home owners pre-pay their mortgages. In today's market, however, we view this
prepayment risk as minimal due to the present low level of interest rates.
We will also continue to work closely with Nuveen's research team to identify
lower rated, investment-grade bonds that we believe will add yield to the
portfolio without taking on undue credit risk.
* The Lipper Peer Group return represents the average annualized return of
the 12 funds in the Lipper Kansas Municipal Debt category. The return
assumes reinvestment of dividends and does not reflect any applicable sales
charges.
---
4
<PAGE>
Nuveen Flagship Kansas Municipal Bond Fund
Performance Overview
As of November 30, 1998
- -------------------------------------------------
Monthly Tax-Free Dividends (Class A Shares)
- -------------------------------------------------
[BAR CHART APPEARS HERE]
12/97 .0435
1/98 .0435
2/98 .0435
3/98 .0435
4/98 .0435
5/98 .0435
6/98 .0435
7/98 .0435
8/98 .0435
9/98 .0435
10/98 .0425
11/98 .0425
- --------------------------------------------
Top 5 Sectors (as a % of total investments)
- --------------------------------------------
Health Care 20%
............................................
Tax Obligation (Limited) 19%
............................................
U.S. Guaranteed 13%
............................................
Housing (Multifamily) 11%
............................................
Basic Materials 10%
- --------------------------------------------
<TABLE>
<CAPTION>
------------------------------------------------------------------------------
Portfolio Statistics
------------------------------------------------------------------------------
Share Class A B C R
------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Inception Date 1/92 2/97 2/97 2/97
..............................................................................
Net Asset Value $10.73 $10.67 $10.75 $ 10.79
..............................................................................
Total Net Asset ($000) $121,728
..............................................................................
Effective Maturity (Years) 20.49
..............................................................................
Modified Duration (Years) 7.72
------------------------------------------------------------------------------
Annualized Total Return/1/
------------------------------------------------------------------------------
Share Class A(NAV) A(Offer) B C R
..............................................................................
1-Year 7.71% 3.17% 6.97% 7.15% 7.92%
..............................................................................
5-Year 5.81% 4.91% 5.05% 5.42% 6.00%
..............................................................................
Inception 7.30% 6.64% 6.58% 6.91% 7.45%
------------------------------------------------------------------------------
</TABLE>
1 Class A share returns are actual. Class B, C and R share returns are actual
for the period since class inception; returns prior to class inception are
Class A share returns adjusted for differences in sales charges and expenses,
which are primarily differences in distribution and service fees. Class A
shares have a 4.2% maximum sales charge. Class B shares have a CDSC that
begins at 5% for redemptions during the first year after purchase and
declines periodically to 0% over the following five years, which is not
reflected in the return figures. Class C shares have a 1% CDSC for
redemptions within one year which is not reflected in the one-year total
return.
5
<PAGE>
Nuveen Flagship Missouri Municipal Bond Fund
Portfolio Manager's Comments
Portfolio Manager Mike Davern discusses the Nuveen Flagship Missouri Municipal
Bond Fund and reviews factors that affected performance over the past 12 months.
Comments cover the 12-month period ended November 30, 1998 and all performance
statistics are quoted for Class A shares.
What is the status of Missouri's economy and its municipal market?
Missouri's economy is well diversified. Although recent growth has favored
sectors like services and tourism, defense and manufacturing remain important
elements of the state's economy.
Missouri's unemployment rate remained well below the national average in 1998,
and population growth continues at a rate of approximately 5.6%. Per capita
income experienced healthy gains in 1998, bringing it to about 94% of the
national average.
In response to low interest rates, expansive state and national economic
conditions, a growing infrastructure, and school financing needs, the state's
municipal bond issuance grew at a very brisk pace in 1998. For the first 11
months of 1998, issuance was up almost 85% over 1997 levels and is expected to
remain strong for some time to come.
How did the Nuveen Flagship Missouri Municipal Bond Fund's underlying
portfolio perform during the past year?
Over the past 12 months, the Nuveen Flagship Missouri Municipal Bond Fund
generated a total return on net asset value of 7.22%, equivalent to a taxable
total return of 9.98% for investors in the combined 35.1% federal and state
income tax bracket. That performance exceeded the 6.66% average annual total
return posted by the Lipper Missouri Municipal Debt Peer Group* of 23 municipal
bond funds.
What key strategies were used over the course of the year? Were there any
particular sectors in which Nuveen looked for undervalued securities?
We spent the year trying to improve the fund's portfolio structure by adding
bonds with higher coupons, good protection against calls, and attractive value
relative to the larger market.
We sought out those securities in two ways. First, we looked to make new
purchases in sectors offering bonds that our managers believe were not fully
priced by the market. The fund's two largest sector allocations were healthcare
bonds and limited tax obligation securities, which accounted for 19% and 15%,
respectively, of the fund's investments, as of November 30, 1998. These sectors
not only experienced some of the state's heaviest issuance volume, they
performed well during the period and offered some opportunities to find value.
Second, we took advantage of the slightly wider yield spreads between higher and
lower-rated securities. Typically, an investment-grade (at least BBB-rated) bond
pays higher interest rates because of its lower credit rating. The bond's lower
credit rating is rewarded in the form of a higher yield. Conversely, AAA rated
securities pay lower interest rates due to the fact that there is less credit
risk to the issue.
While searching for investment-grade securities, Nuveen's extensive research
capabilities give us the ability to identify lower-rated debt that we believe
offers both strong quality characteristics and the opportunity for additional
yield. In Missouri, we found attractive, lower-rated bonds in a number of
sectors, although the fund's portfolio continues to be of very high quality,
with 68% of its holdings rated AAA or AA.
Finding bonds with good call protection was also important. Call protection
insulates investors from income erosion, especially in a declining interest rate
environment. Regarding the Missouri fund, less than 10% of the portfolio is
callable prior to 2002.
What is your outlook for the Nuveen Flagship Missouri Municipal Bond Fund?
We will continue to manage the fund by seeking out undervalued securities that
provide both attractive income and the opportunity for price appreciation
relative to the market, consistent with the preservation of capital.
Housing bonds will be prime candidates for addition to the portfolio as a way to
increase yield. Single family housing bonds often have higher yields than other
bonds of similar maturities because the housing bonds are subject to early calls
if home owners pre-pay their mortgages. In today's market, however, we view this
prepayment risk as minimal due to the present low level of interest rates.
We will also continue to work closely with Nuveen's research team to identify
lower rated, investment-grade bonds that we believe will add yield to the
portfolio without taking on undue credit risk.
* The Lipper Peer Group return represents the average annualized return of
the 23 funds in the Lipper Missouri Municipal Debt category. The return
assumes reinvestment of dividends and does not reflect any applicable sales
charges.
6
<PAGE>
Nuveen Flagship Missouri Municipal Bond Fund
Performance Overview
As of November 30, 1998
- --------------------------------------------
Monthly Tax-Free Dividends (Class A Shares)
- -------------------------------------------
[BAR CHART APPEARS HERE]
12/97 .0465
1/98 .0465
2/98 .0465
3/98 .0465
4/98 .0460
5/98 .0460
6/98 .0460
7/98 .0460
8/98 .0460
9/98 .0460
10/98 .0460
11/98 .0460
- -------------------------------------------
Top 5 Sectors (as a % of total investments)
- -------------------------------------------
Health Care 19%
...........................................
Tax Obligation (Limited) 15%
...........................................
U.S. Guaranteed 13%
...........................................
Housing (Multifamily) 10%
...........................................
Housing (Single Family) 9%
- -------------------------------------------
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------
Portfolio Statistics
- -------------------------------------------------------------------------------------
Share Class A B C R
- ------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Inception Date 8/87 2/97 2/94 2/97
....................................................................................
Net Asset Value $11.34 $11.33 $11.33 $11.34
....................................................................................
Total Net Assets ($000) $257,289
....................................................................................
Average Effective Maturity (Years) 19.72
....................................................................................
Modified Duration (Years) 7.07
- ------------------------------------------------------------------------------------
Annualized Total Return/1/
- ------------------------------------------------------------------------------------
Share Class A(NAV) A(Offer) B C R
- ------------------------------------------------------------------------------------
1-Year 7.22% 2.69% 6.43% 6.66% 7.45%
....................................................................................
5-Year 5.97% 5.06% 5.30% 5.38% 6.05%
....................................................................................
10-Year 8.01% 7.55% 7.54% 7.41% 8.05%
- -------------------------------------------------------------------------------------
</TABLE>
1 Class A share returns are actual. Class B, C and R share returns are actual
for the period since class inception; returns prior to class inception are
Class A share returns adjusted for differences in sales charges and expenses,
which are primarily differences in distribution and service fees. Class A
shares have a 4.2% maximum sales charge. Class B shares have a CDSC that
begins at 5% for redemptions during the first year after purchase and
declines periodically to 0% over the following five years, which is not
reflected in the return figures. Class C shares have a 1% CDSC for
redemptions within one year which is not reflected in the one-year total
return.
7
<PAGE>
Nuveen Flagship Wisconsin Municipal Bond Fund
Portfolio Manager's Comments
Portfolio Manager Mike Davern discusses the Nuveen Flagship Wisconsin Municipal
Bond Fund and reviews factors that affected performance over the past 12 months.
Comments cover the 12-month period ended November 30, 1998 and all performance
statistics are quoted for Class A shares.
What is the status of Wisconsin's economy and its municipal market?
Wisconsin continued to enjoy a strong and diversified economy in 1998. Non-
agricultural employment was evenly spread among the manufacturing, service, and
trade sectors. In addition, the state's aggressive efforts to attract business
and promote development and job training have been largely successful.
Unemployment in Wisconsin continues to be low and per capita income in the state
stands at about 96% of the national average.
In response to low interest rates, expansive economic conditions, a growing
infrastructure, and school financing needs, the state's municipal bond issuance
grew at a brisk pace in 1998. Issuance was up 39% over 1997 levels and is
expected to remain strong for some time to come.
How did the Nuveen Flagship Wisconsin Municipal Bond Fund's underlying portfolio
perform during the past year?
Over the past 12 months, the Nuveen Flagship Wisconsin Municipal Bond Fund
generated a very attractive total return on net asset value of 8.27%, equivalent
to a taxable total return of 11.01% for investors in the combined 35.7% federal
and state income tax bracket. That performance exceeded the 6.51% average annual
total return posted by the Lipper States Municipal Debt Peer Group* of 74
municipal bond funds.
What key strategies were used over the course of the year? Were there any
particular sectors in which Nuveen looked for undervalued securities?
We spent the year trying to improve the fund's portfolio structure by adding
high-quality, Wisconsin double exempt securities offering higher coupons, good
protection against calls, and attractive value relative to the larger market.
Double exempt securities with good credit quality are extremely rare in the
Wisconsin market, relative to demand. However, despite this supply problem,
several new, double exempt bonds were added to the portfolio during the year. We
believe these securities have the ability to perform well as supply and demand
balances revert to historical trends.
We looked to make new purchases in sectors offering bonds that our managers
believe were not fully priced by the market. A sector is a particular group of
bonds usually found in one industry. The fund's two largest sector allocations
were limited tax obligation securities and long-term care bonds, which accounted
for 43% and 9%, respectively, of the fund's investments, as of November 30,
1998. These sectors not only experienced some of the state's heaviest issuance
volume, they performed well during the period and offered some opportunities to
find value.
Finding bonds with good call protection was also important. Call protection
insulates investors from income erosion, especially in a declining interest rate
environment. The Wisconsin fund has only approximately 5% of its portfolio
scheduled to be called prior to 2002.
What is your outlook for the Nuveen Flagship Wisconsin Municipal Bond Fund?
We will continue to manage the fund by seeking out undervalued securities that
provide both attractive income and the opportunity for price appreciation
relative to the market, consistent with the preservation of capital.
Housing bonds will be prime candidates for addition to the portfolio as a way to
increase yield. Single family housing bonds often have higher yields than other
bonds of similar maturities because the housing bonds are subject to early calls
if home owners pre-pay their mortgages. In today's market, however, we view this
prepayment risk as minimal due to the present low level of interest rates.
We will also continue to work closely with Nuveen's research team to identify
lower rated, investment-grade bonds that we believe will add yield to the
portfolio without taking on any undue credit risk.
* The Lipper Peer Group return represents the average annualized return of
the 74 funds in the Lipper States Municipal Debt category. The return
assumes reinvestment of dividends and does not reflect any applicable sales
charges.
8
<PAGE>
Nuveen Flagship Wisconsin Municipal Bond Fund
Performance Overview
As of November 30, 1998
- --------------------------------------------------------------------------------
Monthly Tax-Free Dividends (Class A Shares)/1/
- --------------------------------------------------------------------------------
[BAR CHART APPEARS HERE]
12/97 .0420
1/98 .0410
2/98 .0410
3/98 .0410
4/98 .0410
5/98 .0410
6/98 .0410
7/98 .0410
8/98 .0400
9/98 .0400
10/98 .0400
11/98 .0400
- -------------------------------------------------------------------------------
Top 5 Sectors (as a % of total investments)
- -------------------------------------------------------------------------------
Tax Obligation (Limited) 43%
...............................................................................
Long Term Care 9%
...............................................................................
U.S. Guaranteed 9%
...............................................................................
Utilities 8%
...............................................................................
Housing (Multifamily) 8%
- -------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Portfolio Statistics
- --------------------------------------------------------------------------------
Share Class A B C R
- --------------------------------------------------------------------------------
Inception Date 6/94 2/97 9/97 2/97
................................................................................
Net Asset Value $10.42 $10.45 $10.44 $ 10.45
................................................................................
Total Net Assets ($000) $32,900
................................................................................
Effective Maturity (Years) 21.30
................................................................................
Modified Duration (Years) 8.22
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Annualized Total Return/2/
- --------------------------------------------------------------------------------
Share Class A(NAV) A(Offer) B C R
- --------------------------------------------------------------------------------
1-Year 8.27% 3.74% 7.43% 7.69% 8.45%
................................................................................
3-Year 6.01% 5.09% 6.00% 6.19% 6.82%
................................................................................
Since inception 7.11% 6.08% 6.51% 6.70% 7.25%
- --------------------------------------------------------------------------------
/1/ Class A share returns are actual. Class B, C and R share returns are actual
for the period since class inception; returns prior to class inception are
Class A share returns adjusted for differences in sales charges and
expenses, which are primarily differences in distribution and service fees.
Class A shares have a 4.2% maximum sales charge. Class B shares have a CDSC
that begins at 5% for redemptions during the first year after purchase and
declines periodically to 0% over the following five years, which is not
reflected in the return figures. Class C shares have a 1% CDSC for
redemptions within one year which is not reflected in the one-year total
return.
9
<PAGE>
Portfolio of Investments (Unaudited)
Nuveen Flagship Kansas Municipal Bond Fund
November 30, 1998
<TABLE>
<CAPTION>
Principal Optional Call Market
Amount Description Provisions* Ratings** Value
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Basic Materials 9.7%
$ 4,550,000 City of Clearwater, Kansas, Pollution Control Refunding Revenue Bonds 1/02 at 101 AA $ 4,837,151
(Vulcan Materials Company), Series 1992, 6.375%, 2/01/12
1,000,000 Dodge City, Kansas, Pollution Control Revenue Refunding Bonds, Series 5/02 at 102 Aa3 1,104,370
1992 (Excel Corporation Project/Cargill), 6.625%, 5/01/05
3,700,000 Ford County, Kansas, Sewage and Solid Waste Disposal Revenue Bonds No Opt. Call AA 3,758,645
(Excel Corporation Project), Series 1998 (Cargill Inc), 5.400%,
5/01/28 (Alternative Minimum Tax)
2,000,000 City of Garden City, Kansas, Sewage Disposal Revenue Bonds, Series 9/07 at 102 BBB+ 2,087,040
1997 (Monfort, Inc. [ConAgra, Inc.-Guarantor] Project), 5.750%,
9/01/17 (Alternative Minimum Tax)
- ------------------------------------------------------------------------------------------------------------------------------------
Consumer Cyclical 0.6%
650,000 Wichita Airport Authority of the City of Wichita, Kansas, Airport 3/02 at 102 AA 722,982
Facilities Refunding Revenue Bonds (Wichita Airport Hotel
Associates, L.P. Project), Series 1992, 7.000%, 3/01/05
- ------------------------------------------------------------------------------------------------------------------------------------
Education and Civic Organizations 3.4%
City of Olathe, Kansas, Educational Facilities Refunding and
Improvement Revenue Bonds (MidAmerica Nazarene University
Project), Series 1998:
1,220,000 5.550%, 4/01/13 4/08 at 100 N/R 1,232,554
1,000,000 5.700%, 4/01/18 4/08 at 100 N/R 1,004,870
City of Olathe, Kansas, Educational Facilities Revenue Bonds
(Kansas Independent College Association Pooled Educational
Loan Program), Series C 1998 Project:
940,000 5.400%, 10/01/13 10/08 at 100 N/R 943,130
1,000,000 5.600%, 10/01/18 10/08 at 100 N/R 1,001,190
- ------------------------------------------------------------------------------------------------------------------------------------
Health Care 19.4%
5,630,000 Colby, Kansas, Health Facilities Refunding Revenue Bonds (Citizens 8/08 at 100 N/R 5,564,242
Medical Center, Inc.), Series 1998, 5.625%, 8/15/16
Kansas Development Finance Authority, Health Facilities Revenue Bonds
(Stormont - Vail HealthCare, Inc.), Series 1996F - Tax Exempt:
2,815,000 5.800%, 11/15/16 11/06 at 100 AAA 3,012,191
3,380,000 5.800%, 11/15/21 11/06 at 100 AAA 3,604,770
Kansas Development Finance Authority, Health Facilities Revenue Bonds
(Stormont - Vail HealthCare, Inc.), Series 1996G - Tax Exempt:
750,000 5.800%, 11/15/16 11/06 at 100 AAA 802,538
2,150,000 5.800%, 11/15/21 11/06 at 100 AAA 2,292,975
Kansas Development Finance Authority, Health Facilities Revenue Bonds
(Hays Medical Center Inc.), Series 1997B:
2,200,000 5.500%, 11/15/17 11/07 at 100 Aaa 2,303,840
1,500,000 5.500%, 11/15/22 11/07 at 100 Aaa 1,567,350
City of Lawrence, Kansas, Hospital Revenue Bonds, Series 1994
(The Lawrence Memorial Hospital):
1,075,000 5.200%, 7/01/14 7/04 at 100 A3 1,149,831
400,000 5.200%, 7/01/19 7/04 at 100 A3 426,832
City of Newton, Kansas, Hospital Refunding Revenue Bonds, Series
1998A (Newton Healthcare Corporation):
1,000,000 5.700%, 11/15/18 11/08 at 100 BBB 1,020,920
1,250,000 5.750%, 11/15/24 11/08 at 100 BBB 1,280,613
100,000 Puerto Rico Industrial, Tourist, Educational, Medical and 7/05 at 102 AAA 112,257
Environmental Control Facilities Financing Authority, Hospital
Revenue Bonds, 1995 Series A (Hospital Auxilio Mutuo Obligated
Group Project), 6.250%, 7/01/24
450,000 CSJ Health System of Wichita, Inc. (Kansas), Revenue Bonds, Series 11/01 at 102 A+ 489,695
1991X, 7.000%, 11/15/18
</TABLE>
10
<PAGE>
<TABLE>
<CAPTION>
Principal Optional Call Market
Amount Description Provisions* Ratings** Value
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Housing/Multifamily 11.0%
$ 965,000 City of Kansas City, Kansas, Multifamily Housing Revenue 7/01 at 100 AAA $ 1,002,857
Refunding Bonds, Series 1994 (FHA Insured Mortgage Loan
- Rainbow Towers Project), 6.700%, 7/01/23
Kansas Development Finance Authority, Multifamily Housing
Revenue Bonds (Park Apartments Project), Series 1995:
325,000 5.700%, 12/01/09 (Alternative Minimum Tax) 6/06 at 100 AAA 339,853
565,000 5.900%, 12/01/14 (Alternative Minimum Tax) 6/06 at 100 AAA 701,834
1,150,000 6.000%, 12/01/21 (Alternative Minimum Tax) 6/06 at 100 AAA 1,213,446
Lenexa, Kansas, Multifamily Housing Revenue Refunding
Bonds (Barrington Park Apartments Project), Series 1993A:
445,000 6.300%, 2/01/09 2/03 at 102 AA 473,907
475,000 6.400%, 2/01/10 2/03 at 102 AA 505,775
2,000,000 6.450%, 2/01/18 2/03 at 102 AA 2,129,400
1,000,000 6.500%, 2/01/23 2/03 at 102 AA 1,058,810
1,000,000 City of Olathe, Kansas, Multifamily Housing Refunding 6/04 at 102 AAA 1,074,230
Revenue Bonds (Federal National Mortgage Association
Program - Deerfield Apartments Project), Series 1994A,
6.450%, 6/01/19
City of Wichita, Kansas, Multifamily Housing Revenue
Refunding Bonds (The Shores Apartments Project),
Series XI-A, 1994:
1,500,000 6.700%, 4/01/19 4/09 at 102 AA 1,661,235
2,000,000 6.800%, 4/01/24 4/09 at 102 AA 2,230,600
900,000 City of Wichita, Kansas, Multifamily Housing 11/05 at 102 A 940,977
Revenue Bonds (Brentwood Apartments Project), Senior
Lien Series IX-A, 1995, 5.850%, 12/01/25
- ------------------------------------------------------------------------------------------------------------------------------------
Housing/Single Family - 8.5%
2,565,000 City of Kansas City, Kansas, GNMA Collateralized 5/05 at 103 Aaa 2,697,251
Mortgage Revenue Bonds, Series 1995,
5.900%, 11/01/27 (Alternative Minimum Tax)
385,000 City of Olathe, Labette County, Kansas, 2/05 at 105 Aaa 432,821
Collateralized Single Family Mortgage Refunding
Revenue Bonds, Series 1994C-I, 7.800%, 2/01/25
1,500,000 Sedgwick County, Kansas, and Shawnee County, No Opt. Call Aaa 1,673,985
Kansas, Single Family Mortgage Revenue Bonds
(Mortgaged-Backed Securities Program), 1997
Series A-1, 6.950%, 6/01/29 (Alternative Minimum Tax)
2,250,000 Sedgwick County, Kansas, and Shawnee County, 6/08 at 105 Aaa 2,502,045
Kansas, Single Family Mortgage Revenue Bonds
(Mortgaged-Backed Securities Program), 1998
Series A1, 5.500%, 12/01/22 (Alternative Minimum Tax)
1,675,000 Sedgwick County, Kansas, Shawnee County, Kansas, 6/99 at 103 AAA 1,741,230
and Leavenworth County, Kansas, GNMA Collateralized
Mortgage Revenue Bonds, 1989 Series A, 7.875%,
12/01/21 (Alternative Minimum Tax)
1,145,000 Sedgwick County, Kansas, and Shawnee County, 11/04 at 105 Aaa 1,281,003
Kansas, Collateralized Single Family Mortgage
Refunding Revenue Bonds, Series 1994A-III,
8.125%, 5/01/24 (Alternative Minimum Tax)
- ------------------------------------------------------------------------------------------------------------------------------------
Tax Obligation/General - 2.3%
800,000 Unified School District No. 368 (Paola), Miami 6/02 at 100 AAA 872,000
County, Kansas, General Obligation Bonds, Series 1992,
6.600%, 12/01/08
1,350,000 Commonwealth of Puerto Rico, Public Improvement 7/04 at 102 AAA 1,544,522
Bonds of 1994 (General Obligation Bonds),
6.450%, 7/01/17
350,000 Unified School District No. 437 (Auburn - Washburn), 3/02 at 100 AAA 379,439
Shawnee County, Kansas, General Obligation Refunding
Bonds, Series 1992, 6.600%, 9/01/09
- ------------------------------------------------------------------------------------------------------------------------------------
Tax Obligation/Limited - 18.8%
4,450,000 State of Kansas, Department of Transportation, Highway 9/02 at 102 AA+ 4,880,360
Revenue Bonds, Series 1992A, 6.000%, 9/01/12
1,050,000 Kansas Development Finance Authority, Revenue Bonds, 12/00 at 102 N/R 1,115,888
Series T 1992 (State of Kansas - Kansas Highway
Patrol Central Training Facility), 6.600%, 12/01/07
Puerto Rico Highway and Transportation Authority,
Highway Revenue Bonds (Series W):
1,000,000 5.500%, 7/01/13 No Opt. Call A 1,084,280
1,000,000 5.500%, 7/01/15 No Opt. Call AAA 1,100,520
</TABLE>
11
<PAGE>
Portfolio of Investments (Unaudited)
Nuveen Flagship Kansas Municipal Bond Fund (continued)
November 30, 1998
<TABLE>
<CAPTION>
Principal Optional Call Market
Amount Description Provisions* Ratings** Value
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Tax Obligation/Limited (continued)
$ 750,000 Puerto Rico Highway and Transportation Authority, Highway Revenue No Opt. Call A $ 813,210
Bonds (Series X), 5.500%, 7/01/13
7,800,000 Puerto Rico Highway and Transportation Authority, Highway Revenue 7/16 at 100 A 8,419,008
Bonds (Series Y of 1996), 5.500%, 7/01/36
3,000,000 Puerto Rico Highway and Transportation Authority, Transportation 7/18 at 100 A 2,888,610
Revenue Bonds (Series A), 4.750%, 7/01/38
20,000 Puerto Rico Infrastructure Finance Authority, Special Tax Revenue 7/00 at 100 BBB+ 20,467
Bonds, Series 1988A, 7.750%, 7/01/08
500,000 Puerto Rico Public Buildings Authority, Government Facilities 7/07 at 101 1/2 A 508,715
Revenue Bonds, Series B, Guaranteed by the Commonwealth of
Puerto Rico, 5.250%, 7/01/21
2,000,000 Virgin Islands Public Finance Authority, Revenue and Refunding No Opt. Call BBB 2,054,140
Bonds (Virgin Islands Matching Fund Loan Notes), Series 1998A
(Senior Lien/Refunding), 5.625%, 10/01/25
- ------------------------------------------------------------------------------------------------------------------------------------
Transportation - 1.3%
1,500,000 Puerto Rico Ports Authority, Special Facilities Revenue Bonds, 6/06 at 102 BBB 1,616,340
1996 Series A (American Airlines, Inc. Project), 6.250%,
6/01/26 (Alternative Minimum Tax)
- ------------------------------------------------------------------------------------------------------------------------------------
U.S. Guaranteed - 12.2%
275,000 Cowley County Community College, Cowley County, Kansas, Series 3/00 at 101 A*** 289,644
1992, Certificates of Participation, 7.000%, 3/01/12
(Pre-refunded to 3/01/00)
170,000 City of Derby, Kansas, General Obligation Bonds, Series II 1992, 12/00 at 100 A2*** 180,147
6.500%, 12/01/12 (Pre-refunded to 12/01/00)
325,000 City of Hays, Kansas, Sales Tax Revenue Bonds, Series 1992, 9/00 at 100 N/R*** 342,859
6.875%, 9/01/12 (Pre-refunded to 9/01/00)
Jackson County, Kansas, Unified School District No. 336 (Holton),
General Obligation Bonds, Series 1992:
355,000 6.600%, 10/01/12 (Pre-refunded to 10/01/03) 10/03 at 100 N/R*** 398,764
380,000 6.650%, 10/01/13 (Pre-refunded to 10/01/03) 10/03 at 100 N/R*** 427,679
440,000 Unified School District No. 340, Jefferson County, Kansas, 9/04 at 100 AAA 495,642
General Obligation Bonds, Series 1994, 6.350%, 9/01/14
(Pre-refunded to 9/01/04)
12,475,000 Johnson County Residual, 0.000%, 5/01/12 No Opt. Call Aaa 6,705,562
1,000,000 Commonwealth of Puerto Rico, Public Improvement Bonds of 1994 7/04 at 101 1/2 AAA 1,144,090
(General Obligation Bonds), 6.450%, 7/01/17 (Pre-refunded
to 7/01/04)
80,000 Puerto Rico Highway and Transportation Authority, Highway Revenue 7/02 at 101 1/2 AAA 89,141
Bonds (Series T), 6.625%, 7/01/18 (Pre-refunded to 7/01/02)
3,120,000 Reno County, Kansas, Labette County, Kansas, Single Family No Opt. Call AAA 1,342,910
Mortgage Revenue Bonds, Series 1983A, 0.000%, 12/01/15
2,095,000 Reno County, Kansas, Sedwick County, Kansas, Finney County, No Opt. Call AAA 894,481
Kansas, Single Family Mortgage Revenue Bonds, Series 1984A,
0.000%, 4/01/16
2,250,000 City of Wichita, Kansas, Revenue Bonds (CSJ Health System of 11/01 at 102 A+*** 2,597,288
Wichita, Inc.), Series 1985 XXV (Remarketed), 7.200%, 10/01/15
</TABLE>
12
<PAGE>
<TABLE>
<CAPTION>
Principal Optional Call Market
Amount Description Provisions* Ratings** Value
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Utilities 7.2%
$ 1,500,000 City of Gardner, Kansas, Electric Utility System 11/01 at 101 N/R $ 1,611,420
Revenue Bonds, Series 1992 Refunding,
7.000%, 11/01/09
City of Kansas City, Kansas, Utility System
Refunding and Improvement Revenue Bonds, Series 1994:
2,500,000 6.250%, 9/01/14 9/04 at 102 AAA 2,807,575
1,650,000 6.375%, 9/01/23 9/04 at 102 AAA 1,863,461
Puerto Rico Electric Power Authority, Power
Revenue Bonds, Series T:
215,000 6.125%, 7/01/08 7/04 at 102 BBB+ 239,329
150,000 6.000%, 7/01/16 7/04 at 102 BBB+ 163,377
5,000,000 Puerto Rico Electric Power Authority, Power Revenue
Bonds, Series O, 0.000%, 7/01/17 No Opt. Call AAA 2,055,650
- ------------------------------------------------------------------------------------------------------------------------------------
Water and Sewer-3.0%
3,000,000 Kansas Development Finance Authority, Water 11/03 at 102 AA+ 3,273,207
Pollution Control Revolving Fund Revenue Bonds,
1993 SRF Series II (Leveraged Bonds), 6.000%,
11/01/14
350,000 City of Newton, Kansas, Wastewater Treatment System 3/02 at 102 N/R 391,420
Refunding Revenue Bonds, Series 1998,
7.125%, 3/01/12
- ------------------------------------------------------------------------------------------------------------------------------------
$123,605,000 Total Investments (cost $109,179,857) 97.4% 118,592,390
- ------------------------------------------------------------------------------------------------------------------------------------
Temporary Investments in Short-Term Municipal
Securities 0.8%
$1,000,000 Kansas Development Finance Authority, Health VMIG-1 1,000,000
============= Facilities Revenue Bonds (Stormont - Vail
HealthCare, Inc.), Series M, Variable Rate
Demand Bonds, 3.350%, 11/15/23+
-------------------------------------------------------------------------------------------------------
Other Assets Less Liabilities-1.8% 2,135,774
-------------------------------------------------------------------------------------------------------
Net Assets 100% 121,728,164 $121,728,164
-------------------------------------------------------------------------------------------------------
</TABLE>
* Optional Call Provisions: Dates (month and year) and prices of the earliest
optional call or redemption. There may be other call provisions at varying
prices at later dates.
** Ratings: Using the higher of Standard & Poor's or Moody's rating.
*** Securities are backed by an escrow or trust containing sufficient U.S.
government or U.S. government agency securities which ensures the timely
payment of principal and interest. Securities are normally considered to be
equivalent to AAA rated securities.
N/R Investment is not rated.
+ The security has a maturity of more than one year, but has variable rate
and demand features which qualify it as a short-term security. The rate
disclosed is that currently in effect. This rate changes periodically based
on market conditions or a specified market index.
See accompanying notes to financial statements.
13
<PAGE>
Portfolio of Investments (Unaudited)
Nuveen Flagship Missouri Municipal Bond Fund
November 30, 1998
<TABLE>
<CAPTION>
Principal Optional Call Market
Amount Description Provisions* Ratings** Value
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Consumer Cyclical 0.9%
$ 2,125,000 Missouri Economic Development, Export and Infrastructure 12/01 at 102 N/R $ 2,270,414
Board, Industrial Development Revenue Refunding Bonds
(Drury Inn Project), Series 1988 Remarketing,
8.250%, 12/01/12
- ------------------------------------------------------------------------------------------------------------------------------------
Consumer Staples 1.8%
4,500,000 The Industrial Development Authority of the County of 5/08 at 101 AA 4,587,500
Cape Girardeau, Missouri, Solid Waste Disposal Revenue Bonds
(The Procter & Gamble Products Company Project), 1998 Series,
5.300%, 5/15/28 (Alternative Minimum Tax)
- ------------------------------------------------------------------------------------------------------------------------------------
Education and Civic Organizations 7.2%
1,000,000 Missouri Higher Education Loan Authority, Student Loan Revenue, 2/02 at 102 A 1,055,890
Subordinate Lien, 6.500%, 2/15/06 (Alternative Minimum Tax)
4,190,000 Missouri Higher Education Loan Authority, Student Loan Revenue, 2/04 at 102 A 4,503,915
Series F, 6.750%, 2/15/09 (Alternative Minimum Tax)
3,630,000 Missouri State Health and Educational Facilities Authority, 6/04 at 102 A2 3,942,325
Educational Facilities Revenue Bonds, University Health
Sciences Project, 6.350%, 6/01/14
1,500,000 Missouri State Health and Educational Facilities Authority, 10/04 at 101 A2 1,616,070
Educational Facilities Revenue Bonds, St. Louis
University High School, 6.350%, 10/01/14
2,725,000 Missouri State Health and Educational Facilities Authority, 6/07 at 101 Baa1 2,884,238
Educational Facilities Revenue Bonds, Maryville University
of St. Louis Project, 5.750%, 6/15/17
1,100,000 Missouri State Health and Educational Facilities Authority, 10/08 at 100 N/R 1,054,295
Educational Facilities Revenue Bonds (The Barstow School),
Series 1998, 5.250%, 10/01/23
The Industrial Development Authority of the City of St. Louis,
Missouri, Industrial Revenue Refunding Bonds (Kiel Center
Multipurpose Arena Project), Series 1992:
650,000 7.625%, 12/01/09 (Alternative Minimum Tax) 12/02 at 102 N/R 706,186
1,000,000 7.750%, 12/01/13 (Alternative Minimum Tax) 12/02 at 102 N/R 1,088,980
500,000 7.875%, 12/01/24 (Alternative Minimum Tax) 12/02 at 102 N/R 546,700
1,000,000 University of Missouri, University Revenues, System Facilities, 11/07 at 101 AA+ 1,084,820
5.800%, 11/01/27
- ------------------------------------------------------------------------------------------------------------------------------------
Health Care 18.8%
1,000,000 Industrial Development Authority of the County of Cape No Opt. Call AAA 1,053,490
Girardeau, Missouri, Health Facilities Refunding Revenue
Bonds (Southeast Missouri Hospital Association),
Series 1993, 5.250%, 6/01/16
415,000 Dent County, Missouri, Industrial Development Authority, 6/01 at 102 N/R 444,677
Industrial Development Revenue Bonds (Southeast Missouri
Community Treatment Center), 8.500%, 6/01/12
775,000 Farmington, Missouri, Industrial Development Authority, 6/01 at 102 N/R 833,621
Revenue Bonds, Series 1992 (Southeast Missouri Community
Treatment Center Project), 8.500%, 6/01/12
1,150,000 The Industrial Development Authority of the City of Hannibal, 3/06 at 102 AAA 1,225,889
Missouri, Health Facilities Revenue Bonds, Series 1996A
(Hannibal Regional Hospital), 5.750%, 3/01/22
The Industrial Development Authority of the County of Jackson,
State of Missouri, Health Care System Revenue Bonds, Saint
Joseph Health Center Issue, Series 1992:
2,000,000 6.500%, 7/01/12 7/02 at 102 AAA 2,187,080
6,250,000 6.500%, 7/01/19 7/02 at 102 AAA 6,845,625
2,565,000 Missouri State Health and Educational Facilities Authority, 2/02 at 102 AAA 2,775,279
Health Facilities Revenue Bonds (Health Midwest),
Series 1992B, 6.250%, 2/15/12
555,000 Missouri State Health and Educational Facilities Authority, 11/02 at 102 BBB+ 603,951
Health Facilities Revenue Bonds, Heartland Health System
Project, 6.875%, 11/15/04
</TABLE>
14
<PAGE>
<TABLE>
<CAPTION>
Principal Optional Call Market
Amount Description Provisions* Ratings** Value
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Health Care (continued)
$ 2,450,000 Missouri State Health and Educational Facilities No Opt. Call AA $2,969,988
Authority, Health Facilities Revenue Bonds (BJC
Health System), Series 1994A, 6.750%, 5/15/12
650,000 Missouri State Health and Educational Facilities 5/04 at 102 AA 741,384
Authority, Health Facilities Revenue Bonds (BJC
Health System), Series A, 6.500%, 5/15/20
1,200,000 Missouri State Health and Educational Facilities 2/06 at 102 BBB+ 1,310,760
Authority, Health Facilities Revenue Bonds (Lake
of the Ozarks General Hospital, Inc.), Series 1995,
6.500%, 2/15/21
Missouri State Health and Educational Facilities
Authority, Health Facilities Revenue Bonds (Freeman
Health System Project), Series 1998:
2,450,000 5.250%, 2/15/18 2/08 at 102 BBB+ 2,426,701
1,675,000 5.250%, 2/15/28 2/08 at 102 BBB+ 1,647,815
Missouri State Health and Educational Facilities
Authority, Health Facilities Revenue Bonds (BJC
Health System) Series 1998:
1,000,000 5.000%, 5/15/28 5/08 at 101 AA 978,100
2,000,000 5.000%, 5/15/38 5/08 at 101 AA 1,921,860
14,390,000 Missouri State Health and Educational No Opt. Call AAA 4,665,831
Facilities Authority, Health Facilities
Revenue Bonds, Lester Cox Center,
H, 0.000%, 9/01/21
200,000 Missouri State Health and Educational 10/99 at 102 1/2 BBB+ 212,650
Facilities Authority, Health Facilities
Refunding and Improvement Revenue Bonds
(Heartland Health Systems Project), Series
1989, 8.125%, 10/01/10
300,000 Missouri State Health and Educational 2/99 at 100 BBB 300,798
Facilities Authority, Health Facilities
Revenue Refunding Bonds (C.E. Still Osteopathic
Hospital Project), Series 1987, 7.625%, 2/01/08
1,000,000 State Environmental Improvement and No Opt. Call A3 1,111,140
Energy Resource Authority (Missouri),
Pollution Control Revenue Refunding Bonds,
American Cyanamid Company Issue, Series
1994, 5.800%, 9/01/09
2,425,000 The Industrial Development Authority of the 8/05 at 104 AAA 2,672,762
County of St. Louis, Missouri, Healthcare
Facilities Revenue Bonds, Series 1995 (GNMA
Collateralized - Mother of Perpetual Help
Project), 6.250%, 8/01/28
3,000,000 The Industrial Development Authority of the 5/08 at 101 BBB+ 3,007,560
County of Taney, Missouri, Hospital Revenue
Bonds (The Skaggs Community Hospital
Association), Series 1998, 5.400%, 5/15/28
The Curators of the University of Missouri, Health
Facilities Revenue Bonds (University of Missouri
Health System), Series 1996A:
2,000,000 5.500%, 11/01/16 11/06 at 102 AAA 2,102,120
1,390,000 5.600%, 11/01/26 11/06 at 102 AAA 1,469,578
The Industrial Development Authority of the City of
West Plains, Missouri, Hospital Facilities Revenue
Bonds (Ozark Medical Center), Series 1997:
1,000,000 5.500%, 11/15/12 11/07 at 101 BBB 1,015,610
1,595,000 5.600%, 11/15/17 11/07 at 101 BBB 1,619,770
2,230,000 5.650%, 11/15/22 11/07 at 101 BBB 2,259,035
- --------------------------------------------------------------------------------------------------------------------------------
Housing/Multifamily 9.8%
650,000 The Industrial Development Authority of the City 2/08 at 102 AAA 667,934
of Kansas City, Missouri, Multifamily Housing
Revenue Refunding Bonds (President Gardens Apartment
Project), Series 1997A, 5.550%, 8/01/25
2,000,000 Missouri Economic Development, Export and Infrastructure 9/99 at 102 AA 2,072,300
Board, Multifamily Housing Revenue Refunding Bonds, 1991
Series A (Quality Hill Projects), 7.500%, 9/15/21
885,000 Missouri Housing Development Commission, Multifamily 12/05 at 103 N/R 930,675
Housing Revenue Bonds, Series 1995A (Primm Place
Apartments Project), 6.250%, 12/01/17 (Alternative
Minimum Tax)
1,000,000 Missouri Housing Development Commission, Multifamily No Opt. Call AAA 1,017,810
Housing Revenue Refunding Bonds (FHA-Insured Mortgage
Loans), Series 1998, 5.450%, 6/01/28 (Alternative
Minimum Tax)
655,000 The Industrial Development Authority of the City of 1/07 at 100 AAA 669,914
Raytown, Missouri, Multifamily Housing Refunding
Revenue Bonds (Brittany Place Apartments Project),
Series A, 1997, 5.600%, 1/01/21 (Alternative Minimum Tax)
2,000,000 Housing Authority of St. Louis County, Missouri, 3/05 at 102 AAA 2,155,200
Multifamily Housing Revenue Refunding Bonds (Kensington
Square Apartments Project), Series 1995, 6.650%, 3/01/20
</TABLE>
15
<PAGE>
Portfolio of Investments (Unaudited)
Nuveen Flagship Missouri Municipal Bond Fund (continued)
November 30, 1998
<TABLE>
<CAPTION>
Principal Optional Call Market
Amount Description Provisions* Ratings** Value
- ------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Housing/Multifamily (continued)
$ 500,000 The Industrial Development 3/99 at 102 AAA $ 512,660
Authority of the County of St.
Louis, Missouri, Multifamily
Housing Revenue Refunding Bonds, Series 1989
(Lucas - Hunt Village Project), 7.500%, 9/20/19
9,105,000 The Industrial Development 8/06 at 105 AAA 10,027,883
Authority of the County of St.
Louis, Missouri,
Multifamily Housing Revenue Bonds, Series
1996A (GNMA Mortgage-Backed Securities -
Covington Manor Apartments),
6.875%, 8/20/36 (Alternative Minimum Tax)
3,685,000 The Industrial Development Authority of the 1/08 at 100 AAA 3,799,309
County of St Louis, Missouri, Multifamily
Housing Revenue Refunding Bonds (Bonhomme Village
Apartments Project), Series 1997A, 5.450%, 1/01/28
1,890,000 Land Clearance for Redevelopment Authority 5/03 at 102 AAA 1,987,581
of the City of St. Louis, Missouri,
Multifamily Mortgage Refunding Bonds, Series 1993
(FHA Insured Mortgage Loan -
St. Louis Place Apartments), 6.250%, 8/01/27
1,425,000 The Industrial Development 8/07 at 102 Aaa 1,496,492
Authority of the City of
University City, Missouri,
Revenue Refunding Bonds, Series 1997A (GNMA
Collateralized - River Valley Apartments),
5.900%, 2/20/37
- ------------------------------------------------------------------------------------------------------------------------
Housing/Single Family 8.7%
1,500,000 Greene County, Missouri, No Opt. Call AAA 1,665,285
Collateralized Single Family
Mortgage Revenue Bonds,
Series 1996, 6.300%, 12/01/22
(Alternative Minimum Tax)
1,760,000 Missouri Housing Development Commission, 3/07 at 102 AAA 1,875,051
Single Family Mortgage Revenue Bonds
(Homeownership Loan Progam),
1996 Series D, 6.125%, 3/01/28
(Alternative Minimum Tax)
920,000 Missouri Housing Development 3/07/ at 105 AAA 1,051,818
Commission, Single Family
Mortgage Revenue Bonds
(Homeownership Loan Program), 1997 Series
A-2, 7.300%, 3/01/28 (Alternative Minimum Tax)
255,000 Missouri Housing Development 3/07 at 101 AAA 267,957
Commission, Single Family
Mortgage Revenue Bonds
(Homeownership Loan Program), 1997 Series
B-2, 5.900%, 9/01/28 (Alternative Minimum Tax)
125,000 Missouri Housing Development 2/00 at 102 AAA 129,939
Commission, Single Mortgage Revenue Bonds
(GNMA Mortgage-Backed Securities Program), 1990
Series A, 7.625%, 2/01/22 (Alternative Minimum Tax)
Missouri Housing Development Commission,
Single Family Mortgage Revenue Bonds
(Homeownership Loan Program)
1995 Series B Remarketing:
2,260,000 6.375%, 9/01/20 (Alternative 9/06 at 102 AAA 2,428,686
Minimum Tax)
1,805,000 6.450%, 9/01/27 (Alternative 9/06 at 102 AAA 1,948,461
Minimum Tax)
715,000 Missouri Housing Development 6/00 at 102 AAA 747,397
Commission, Single Family Mortgage Revenue
Bonds (GNMA Mortgage-Backed Securities Program),
1990 Series B, 7.750%, 6/01/22
(Alternative Minimum Tax)
1,510,000 Missouri Housing Development 2/01 at 102 AAA 1,592,884
Commission, Single Family Mortgage
Revenue Bonds (GNMA Mortgage-Backed
Securities Program), 1991
Series A, 7.375%, 8/01/23
(Alternative Minimum Tax)
Missouri Housing Development Commission,
Single Family Mortgage Revenue Bonds
(GNMA Mortgage-Backed Securities Program),
1994 Series A:
425,000 6.700%, 12/01/07 (Alternative 12/04 at 102 AAA 453,526
Minimum Tax)
1,870,000 7.125%, 12/01/14 (Alternative 12/04 at 102 AAA 2,031,549
Minimum Tax)
830,000 7.200%, 12/01/17 (Alternative 12/04 at 102 AAA 902,625
Minimum Tax)
1,755,000 Missouri Housing Development 9/07 at 101 AAA 1,817,811
Commission, Single Family Mortgage
Revenue Bonds (Homeownership Loan Program),
1997 Series C-2, 5.500%,
9/01/17 (Alternative Minimum Tax)
1,000,000 Missouri Housing Development 3/08 at 105 AAA 1,115,950
Commission, Single Family
Mortgage Revenue Bonds
(Homeownership Loan Program), 1998 Series
B-2, 6.400%, 3/01/29 (Alternative Minimum Tax)
1,200,000 Missouri Housing Development 9/08 at 105 AAA 1,335,348
Commission, Single Family
Mortgage Revenue Bonds
(Homeownership Loan Program), 1998 Series
D-2, 6.300%, 3/01/29 (Alternative Minimum Tax)
3,000,000 Missouri Housing Development 9/08 at 101 AAA 3,012,030
Commission, Single Family
Mortgage Revenue Bonds
(Homeownership Loan Program), 1998 Series
E-1, 5.200%, 9/01/23 (Alternative Minimum
Tax) (WI)
- ------------------------------------------------------------------------------------------------------------------------
Industrial/Other 0.2%
500,000 City of Jefferson, Missouri, 4/00 at 100 N/R 508,905
Industrial Refunding Revenue
Bond, Series 1992 (Scholastic, Inc.
Project), 7.200%, 4/01/03
</TABLE>
---
16
<PAGE>
<TABLE>
<CAPTION>
Principal Optional Call Market
Amount Description Provisions* Ratings** Value
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Long Term Care 6.9%
$ 4,800,000 The Industrial Development Authority of the City 11/08 at 102 N/R $ 4,732,512
of Kansas City, Missouri, Retirement Facility
Refunding and Improvement Revenue Bonds, Series
1998 A (Kingswood Project), 5.875%, 11/15/29
1,000,000 The Industrial Development Authority of the 8/05 at 102 N/R 1,081,470
City of Lees Summit, Missouri,
Health Facilities Revenue Bonds (John Knox
Village Project), Series 1995, 6.625%, 8/15/13
3,750,000 Missouri State Health and Educational Facilities 2/06 at 102 N/R 3,994,875
Authority, Health Facilities Revenue Bonds
(Lutheran Senior Services),
Series 1996A, 6.375%, 2/01/27
3,000,000 Missouri State Health and Educational Facilities 2/07 at 102 N/R 3,135,210
Authority, Health Facilities Revenue Bonds
(Lutheran Senior Services), Series 1997,
5.875%, 2/01/23
The Industrial Development Authority of the County
of St. Louis, Missouri, Refunding Revenue Bonds
(Friendship Village of South County Project),
Series 1996A:
1,265,000 5.750%, 9/01/05 No Opt. Call N/R 1,339,572
1,800,000 6.250%, 9/01/10 9/06 at 102 N/R 1,974,852
1,500,000 The Industrial Development Authority of the County 8/08 at 102 N/R 1,507,425
of St. Louis, Missouri, Revenue Bonds (Bethesda
Living Centers Project), Series 1998B, 5.850%,
8/15/28 (WI)
- ------------------------------------------------------------------------------------------------------------------------------------
Tax Obligation/General 3.4%
1,000,000 Jefferson City School District, Missouri, No Opt. Call Aa 1,216,490
General Obligation Bonds, Series 1991A,
6.700%, 3/01/11
Commonwealth of Puerto Rico, Public Improvement
Bonds of 1994 (General Obligation Bonds):
2,500,000 6.450%, 7/01/17 7/04 at 102 AAA 2,860,225
3,350,000 6.500%, 7/01/23 7/04 at 101 1/2 AAA 3,841,077
1,540,000 Francis Howell School District, St. Charles No Opt. Call AAA 784,368
County, Missouri, General Obligation Bonds,
Series 1998C (Missouri Direct Deposit
Program), 0.000%, 3/01/13
- ------------------------------------------------------------------------------------------------------------------------------------
Tax Obligation/Limited 14.8%
2,285,000 The Public Building Corporation of the City of 11/06 at 101 BBB 2,476,666
Branson, Missouri, Leasehold Revenue Bonds,
Series 1995 (City Hall and Fire Station
Improvement Projects), 6.250%, 11/01/12
1,025,000 Excelsior Springs, Missouri, School District No Opt. Call AAA 497,187
Building Corporation, Leasehold Revenue Bonds
(Excelsior Springs Missouri), Series 1994,
40 School District of Excelsior Springs
0.000%, 3/01/14
2,000,000 Jackson County, Missouri, Public Facilities 12/04 at 100 AAA 2,204,080
Authority, Leasehold Revenue Refunding
and Improvement Bonds (Jackson County,
Missouri, Capital Improvements Project),
Series 1994, 6.125%, 12/01/15
1,200,000 Land Clearance for Redevelopment Authority of 12/05 at 102 AAA 1,303,548
Kansas City, Missouri, Lease Revenue Bonds
(Municipal Auditorium and Muehlebach Hotel
Redevelopment Project), Series 1995A, 5.900%,
12/01/18
The City of Lake Saint Louis, Missouri,
Certificates of Participation, Public Facilities
Authority, Series 1993 (Municipal Golf Course
Project):
1,020,000 6.900%, 12/01/05 12/02 at 103 N/R 1,065,900
2,720,000 7.550%, 12/01/14 12/02 at 103 N/R 2,856,000
1,500,000 Missouri School Boards Association, Insured Lease 3/06 at 101 AAA 1,628,250
Participation Certificates (Fox C-6 School
District, Jefferson County, Missouri, Project),
Series 1996, 5.625%, 3/01/11
320,000 State of Missouri, Certificates 11/05 at 100 AA 345,789
of Participation (Psychiatric Rehabilitation
Center Project), Series A 1995, 6.000%, 11/01/15
1,500,000 Puerto Rico Highway and Transportation 7/02 at 101 1/2 A 1,643,190
Authority, Highway Revenue Bonds,
1992 Series V, 6.625%, 7/01/12
5,900,000 Puerto Rico Highway and Transportation 7/16 at 100 A 6,368,224
Authority, Highway Revenue Bonds,
Series Y of 1996, 5.500%, 7/01/36
1,400,000 Puerto Rico Highway and Transportation No Opt. Call AAA 1,540,728
Authority, Highway Revenue Bonds, (Series W),
5.500%, 7/01/15
5,500,000 Puerto Rico Public Buildings Authority, No Opt. Call A 5,967,280
Revenue Refunding Bonds, Series L, Guaranteed
by the Commonwealth of Puerto Rico,
5.500%, 7/01/21
250,000 Puerto Rico Public Buildings Authority, 7/07 at 101 1/2 A 254,358
Government Facilities Revenue Bonds, Series B,
Guaranteed by the Commonwealth of Puerto Rico,
5.250%, 7/01/21
</TABLE>
17
<PAGE>
Portfolio of Investments (Unaudited)
Nuveen Flagship Missouri Municipal Bond Fund (continued)
November 30, 1998
<TABLE>
<CAPTION>
Principal Optional Call Market
Amount Description Provisions* Ratings** Value
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Tax Obligation/Limited (continued)
$3,000,000 Regional Convention and Sports Complex 8/03 at 102 A $3,137,940
Authority, St. Louis County, Missouri,
Convention and Sports Facility Project and
Refunding Bonds, Series B 1993, 5.750%, 8/15/21
780,000 Land Clearance for Redevelopment Authority of 7/07 at 101 AAA 806,801
the City of St. Louis (Missouri), Kiel Site
Lease Revenue Refunding Bonds, Series 1997B,
5.300%, 7/01/16
Regional Convention and Sports Complex
Authority, City of St. Louis, Missouri,
Convention and Sports Facility Project
and Refunding Bonds, Series C of 1997:
1,660,000 5.300%, 8/15/17 8/07 at 100 AAA 1,714,448
4,000,000 5.300%, 8/15/20 8/07 at 100 AAA 4,104,880
45,000 The City of St. Louis, Missouri, Regional 8/03 at 100 N/R 49,942
Convention and Sports Complex Authority,
Convention and Sports Facility Project
Bonds, Series C of 1991, 7.900%, 8/15/21
- ----------------------------------------------------------------------------------------------------------------------
Transportation 4.3%
2,000,000 Puerto Rico Ports Authority, Special 6/06 at 102 BBB 2,155,120
Facilities Revenue Bonds, 1996 Series A
(American Airlines, Inc. Project),
6.250%, 6/01/26 (Alternative Minimum Tax)
The City of St. Louis, Missouri, Airport
Revenue Bonds, Series 1997 (1997 Capital
Improvement Program), Lambert - St. Louis
International Airport:
285,000 5.250%, 7/01/22 (Alternative Minimum Tax) 7/07 at 101 AAA 286,482
4,500,000 5.250%, 7/01/27 (Alternative Minimum Tax) 7/07 at 101 AAA 4,523,400
4,050,000 The City of St. Louis, Missouri, Parking Revenue 12/06 at 102 AAA 4,209,206
Refunding Bonds, Series 1996, 5.375%, 12/15/21
- ----------------------------------------------------------------------------------------------------------------------
U.S. Guaranteed 13.2%
4,500,000 Cape Girardeau County, Missouri, Single Family No Opt. Call Aaa 2,083,545
Mortgage Revenue Bonds, Series 1983, 0.000%,
12/01/14
1,500,000 Clay County Public Building Authority, 5/02 at 102 N/R*** 1,709,280
Leasehold Refunding and Improvement Revenue
Bonds, Series 1992 (Paradise Pointe Golf Course
Project),7.625%, 5/15/14 (Pre-refunded to
5/15/02)
50,000 DeKalb County, Missouri, Public Water Supply 1/99 at 101 N/R*** 50,705
District No. 1, Waterworks Revenue Refunding
Bonds, Series 1989, 8.000%, 1/01/09
(Pre-refunded to 1/01/99)
1,070,000 Greene County, Missouri, Single Family Mortgage No Opt. Call Aaa 458,720
Revenue Bonds, Series 1984, 0.000%, 3/01/16
50,000 City of Hamilton, Missouri, Waterworks 7/99 at 103 1/2 N/R*** 53,071
Revenue Bonds, Series 1989, 7.750%, 7/01/14
(Pre-refunded to 7/01/99)
4,000,000 City of Kansas City, Missouri, General 9/04 at 101 AAA 4,641,880
Improvement Airport Revenue Bonds, Series
1994B, 6.875%, 9/01/14 (Pre-refunded to
9/01/04)
Kansas City Municipal Assistance Corporation,
Leasehold Improvement Revenue Bonds, Series
1991A (Truman Medical Center Charitable
Foundation Project):
645,000 7.000%, 11/01/09 (Pre-refunded to 11/01/01) 11/01 at 100 A3*** 703,701
695,000 7.000%, 11/01/10 (Pre-refunded to 11/01/01) 11/01 at 100 A3*** 758,252
2,500,000 The Industrial Development Authority of the 7/02 at 102 N/R*** 2,763,000
City of Kirkwood, Missouri, Health Care System
Revenue Bonds,St. Joseph Hospital of Kirkwood
Issue Series 1992, 6.500%, 7/01/12
(Pre-refunded to 7/01/02)
50,000 Knox County, Missouri, Public Water Supply 1/99 at 101 N/R*** 50,706
District No. 1, Water System Revenue Refunding
Bonds, Series 1989, 8.000%, 1/01/09
(Pre-refunded to 1/01/99)
50,000 Marion County, Missouri, Public Water Supply 1/99 at 101 1/2 N/R*** 50,966
District No. 1, Water Revenue Refunding Bonds,
Series 1989, 8.250%, 1/01/12
(Pre-refunded to 1/01/99)
1,000,000 Missouri Economic Development, 5/02 at 100 N/R*** 1,106,100
Export and Infrastructure Board,
Industrial Development Revenue Bonds
(Community Water Company Inc. Project)
Series 1992, 7.125%, 5/01/17
(Pre-refunded to 5/15/02)
(Alternative Minimum Tax)
100,000 Missouri State Health and Educational 2/99 at 102 N/R*** 102,963
Facilities Authority, Health Facilities
Revenue Bonds (Lake of the Ozarks Hospital),
Series 1989, 8.000%, 2/15/11 (Pre-refunded
to 2/15/99)
155,000 State Environmental Improvement and Energy 10/00 at 102 N/R*** 167,392
Resource Authority (State of Missouri),
Water Pollution Control Revenue Bonds
(State Revolving Fund Program), Series
1990A, 7.000%, 10/01/10 (Pre-refunded to
10/01/00)
</TABLE>
18
<PAGE>
<TABLE>
<CAPTION>
Principal Optional Call Market
Amount Description Provisions* Ratings** Value
- ----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
U.S. Guaranteed (continued)
Phelps County, Missouri, Hospital Revenue Bonds, Phelps
County Regional Medical Center, Series 1990:
$ 500,000 8.200%, 3/01/05 (Pre-refunded to 3/01/00) 3/00 at 102 AAA $ 538,775
1,250,000 8.300%, 3/01/20 (Pre-refunded to 3/01/00) 3/00 at 102 AAA 1,348,463
100,000 Pike County, Missouri, Public Water Supply District No. 1, 7/99 at 101 N/R*** 103,685
Water Revenue Bonds, Series 1990, 7.750%, 7/01/09
(Pre-refunded to 7/01/99)
Industrial Development Authority of the County of St. Louis,
Missouri, Health Care Facilities Revenue Bonds, Series 1992
(Lutheran Health Care Association):
4,565,000 7.375%, 2/01/14 (Pre-refunded to 2/01/02) 2/02 at 102 N/R*** 5,132,795
2,650,000 7.625%, 2/01/22 (Pre-refunded to 2/01/02) 2/02 at 102 N/R*** 2,999,217
290,000 Certificates of Receipt, Series 1993, St. Louis County, No Opt. Call AAA 314,731
Missouri, GNMA Collateralized Mortgage Revenue Bonds,
5.650%, 8/01/15 (Alternative Minimum Tax)
1,000,000 Regional Convention and Sports Complex Authority, 8/03 at 100 AAA 1,136,460
County of St. Louis, Missouri, Convention and Sports
Facility Project Bonds, Series 1991B, 7.000%, 8/15/11
(Pre-refunded to 8/15/03)
1,325,000 Land Clearance for Redevelopment Authority of 7/00 at 102 N/R*** 1,433,478
the City of St. Louis, Lease Revenue Bonds, Series 1992
(Station East Redevelopment Project), 7.750%, 7/01/21
(Pre-refunded to 7/01/00)
3,975,000 City of St. Louis, Missouri, Parking Revenue Bonds, Series 12/02 at 102 AA-*** 4,444,567
1992, 6.625%, 12/15/21 (Pre-refunded to 12/15/02)
955,000 Regional Convention and Sports Complex Authority, 8/03 at 100 Aaa 1,121,600
City of St. Louis, Missouri, Convention and
Sports Facility Bonds, Series 1991C, 7.900%, 8/15/21
(Pre-refunded to 8/15/03)
445,000 The Board of Education of the City of St. Louis (Missouri), 10/01 at 102 AAA 490,359
General Obligation School Building Bonds, Series
1991, 6.750%, 4/01/11 (Pre-refunded to 10/01/01)
Vandalia, Missouri, Combined Water and Sewer System Revenue
Bonds Series 1990:
50,000 7.625%, 4/01/06 (Pre-refunded to 4/01/00) 4/00 at 101 N/R*** 53,208
50,000 7.625%, 4/01/07 (Pre-refunded to 4/01/00) 4/00 at 101 N/R*** 53,208
- -------------------------------------------------------------------------------------------------------------------------------
Utilities 6.1%
1,500,000 State Environmental Improvement and Energy Resource 5/00 at 102 AA 1,592,580
Authority (Missouri), Environmental Improvement Revenue
Bonds (Union Electric Company Project), Series 1990A,
7.400%, 5/01/20
1,500,000 Puerto Rico Electric Power Authority, Power Revenue Bonds, No Opt. Call AAA 616,695
Series O, 0.000%, 7/01/17
2,000,000 City of Sikeston, Missouri, Electric System Revenue Bonds, No Opt. Call AAA 2,333,080
1992 Series, 6.200%, 6/01/10
City of Sikeston, Missouri, Electric System
Revenue Refunding Bonds, 1996 Series:
2,750,000 6.000%, 6/01/13 No Opt. Call AAA 3,158,925
1,070,000 6.000%, 6/01/14 No Opt. Call AAA 1,227,675
6,000,000 6.000%, 6/01/16 No Opt. Call AAA 6,896,340
- -------------------------------------------------------------------------------------------------------------------------------
Water and Sewer 3.2%
50,000 Public Water Supply District No. 1 of Carroll 3/99 at 101 N/R 51,096
County, Missouri, Waterworks Revenue Refunding
Bonds, Series 1989, 8.000%, 3/01/09
30,000 Public Water Supply District No. 6 of Clay County, No Opt. Call N/R 30,394
Missouri, Revenue Bonds, Series 1988, 8.200%, 6/01/0
400,000 East Central, Missouri, Water and Sewer Authority, St. 8/00 at 100 N/R 410,070
Charles County, Missouri, Water System Refunding Revenue
Bonds, Series 1992 (St. Charles County Public Water
Supply District No. 2 Project), 7.000%, 8/01/08
3,600,000 Missouri State Environmental Improvement and 12/01 at 102 Aa1 3,947,040
Energy Resource Authority Water Pollution
Control Revenue Bonds, State Revolving
Fund - Multiple Participant, Series A, 6.875%, 6/01/14
2,000,000 State Environmental Improvement and Energy Resources Authority 7/02 at 102 Aa1 2,181,980
(State of Missouri), Water Pollution Control Revenue Bonds
(State Revolving Fund Program - Multiple Participant), Series
1992A, 6.550%, 7/01/14
600,000 State Environmental Improvement and Energy Resources Authority 7/04 at 102 Aa1 689,364
(State of Missouri), Water Pollution Control Revenue
Bonds (State Revolving Fund Program - Multiple Participant),
Series 1994B, 7.200%, 7/01/16
200,000 State Environmental Improvement and Energy Resources Authority 1/07 at 101 Aa1 205,110
(State of Missouri), Water Pollution Control Revenue
Bonds (State Revolving Fund Program - Multiple Participant),
Series 1996E, 5.250%, 1/01/19
</TABLE>
- --------
19
<PAGE>
Portfolio of Investments (Unaudited)
Nuveen Flagship Missouri Municipal Bond Fund (continued)
November 30, 1998
<TABLE>
<CAPTION>
Principal Optional Call Market
Amount Description Provisions* Ratings** Value
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Water and Sewer (continued)
$ 595,000 State Environmental Improvement and Energy Resources Authority 10/00 at 102 Aa1 $ 639,190
(State of Missouri), Water Pollution Control Revenue Bonds (State
Revolving Fund Program - City of Springfield Project), Series
1990A, 7.000%, 10/01/10
125,000 City of Osceola, Missouri, Sewer System Refunding and 11/99 at 100 N/R 128,550
Improvement Revenue Bonds,
Series 1989, 8.000%, 11/01/09
- ------------------------------------------------------------------------------------------------------------------------------
$253,195,000 Total Investments -- (cost $236,537,516) -- 99.3% 255,533,798
- ------------------------------------------------------------------------------------------------------------------------------
Temporary Investments in Short-Term Municipal Securities -- 0.4%
300,000 Independence, Missouri, Industrial Development Authority, A-1+ 300,000
Revenue Refunding Bonds (Groves and Graceland), Series A, Variable
Rate Demand Bonds, 3.250%, 11/01/27+
700,000 Missouri State Health and Educational Facilities Authority, Educational VMIG-1 700,000
Facilities Revenue Bonds, Druey College, Series A, Variable Rate Demand
Bonds, 3.350%. 8/15/21+
- ------------------------------------------------------------------------------------------------------------------------------
$ 1,000,000 Total Temporary Investments -- 0.4% 1,000,000
- ------------------------------------------------------------------------------------------------------------------------------
Other Assets Less Liabilities -- 0.3% 755,354
-------------------------------------------------------------------------------------------------------
Net Assets -- 100% $257,289,152
-------------------------------------------------------------------------------------------------------
</TABLE>
* Optional Call Provisions: Dates (month and year) and prices of the earliest
optional call or redemption. There may be other call provisions at varying
prices at later dates.
** Ratings: Using the higher of Standard & Poor's or Moody's rating.
*** Securities are backed by an escrow or trust containing sufficient U.S.
government or U.S. government agency securities which ensures the timely
payment of principal and interest. Securities are normally considered to be
equivalent to AAA rated securities.
N/R Investment is not rated.
(WI) Security purchased on a when-issued basis (note 1).
+ The security has a maturity of more than one year, but has variable rate
and demand features which qualify it as a short-term security. The rate
disclosed is that currently in effect. This rate changes periodically based
on market conditions or a specified market index.
See accompanying notes to financial statements.
20
<PAGE>
Portfolio of Investments (Unaudited)
Nuveen Flagship Wisconsin Municipal Bond Fund
November 30, 1998
<TABLE>
<CAPTION>
Principal Optional Call Market
Amount Description Provisions* Ratings** Value
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Capital Goods - 1.8%
Community development Authority of the Village
of Menomomee Falls (Wisconsin), Development
Revenue Bonds, Series 1996 (Herker Industries, Inc. Project):
$ 255,000 5.200%, 3/01/07 (Alternative Minimum Tax) 3/01 at 103 N/R $ 266,903
300,000 5.250%, 3/01/08 (Alternative Minimum Tax) 3/01 at 103 N/R 313,551
- ------------------------------------------------------------------------------------------------------------------------------------
Education and Civic Organizations 3.3%
475,000 Housing Authority of the City of Ashland (Wisconsin), 4/08 at 100 Aa3 480,491
Student Housing Revenue Bonds, Series 1998 (Northland
College Project), 5.100%, 4/01/18
600,000 University of Puerto Rico, University System Revenue Bonds, 6/05 at 101 1/2 AAA 611,328
Series M, 5.250%, 6/01/25
- ------------------------------------------------------------------------------------------------------------------------------------
Health Care 5.3%
500,000 Puerto Rico Industrial, Tourist, Educational, Medical and 7/05 at 102 AAA 561,285
Environmental Control Facilities Financing Authority,
Hospital Revenue Bonds, 1995 Series A
(Hospital Auxilio Mutuo Obligated Group Project),
6.250%, 7/01/24
450,000 Puerto Rico Industrial, Tourist, Educational, Medical and 8/05 at 101 1/2 AAA 493,983
Environmental Control Facilities Financing Authority,
Hospital Revenue Refunding Bonds, 1995 Series A
(FHA Insured Mortgage Pila Hospital Project),
5.875%, 8/01/12
Redevelopment Authority of the City of Superior,
Wisconsin, Revenue Bonds, Series 1994
(Superior Memorial Hospital Inc. FHA Insured Mortgage Loan):
100,000 5.300%, 5/01/04 5/02 at 102 AA 105,942
210,000 5.300%, 11/01/04 5/02 at 102 AA 222,478
150,000 5.600%, 11/01/07 5/02 at 102 AA 159,345
175,000 5.700%, 11/01/09 5/02 at 102 AA 187,646
- ------------------------------------------------------------------------------------------------------------------------------------
Housing/Multifamily 8.4%
Housing Authority of Dane County, Wisconsin, Multifamily
Housing Revenue Bonds (Forest Harbor Apartments Project):
25,000 5.900%, 7/01/12 No Opt. Call N/R 26,165
50,000 5.950%, 7/01/13 No Opt. Call N/R 52,079
50,000 6.000%, 7/01/14 No Opt. Call N/R 51,854
425,000 Community Development Authority of the City of Madison, 12/02 at 102 N/R 441,146
Wisconsin, Multifamily Housing Revenue Bonds
(Nichols Station II Project), 4.950%, 12/01/07
200,000 Redevelopment Authority of the City of Milwaukee, 8/07 at 102 N/R 210,614
Wisconsin, Multifamily Housing Revenue
Bonds, Series 1993 (FHA Insured Mortgage Loan City Hall
Square Apartments Project), 5.000%, 8/01/22
(Alternative Minimum Tax)
500,000 Housing Authority of the City of Sheboygan (Wisconsin), No Opt. Call AAA 508,635
Multifamily Revenue Refunding Bonds,
Series 1998A (Lake Shore Apartments), 5.100%, 11/20/26
300,000 Walworth County (Wisconsin), Housing Authority, Housing Revenue 9/05 at 102 N/R 309,624
Bonds, Series 1997 (FHA Insured Mortgage Loan - Kiwanis
Heritage, Inc. Senior Apartments Project), 5.550%, 9/01/22
Housing Authority of the City of Waukesha, Wisconsin,
Multifamily Housing Revenue Refunding Bonds, Series 1996A
(GNMA Collateralized Mortgage Loan Westgrove Woods Project):
350,000 5.800%, 12/01/18 (Alternative Minimum Tax) 12/06 at 102 AAA 369,009
750,000 6.000%, 12/01/31 (Alternative Minimum Tax) 12/06 at 102 AAA 795,735
- ------------------------------------------------------------------------------------------------------------------------------------
Housing/Single Family 4.4%
1,000,000 Guam Housing Corporation, Single Family Mortgage Revenue Bonds No Opt. Call AAA 1,092,700
(Guaranteed Mortgage-Backed Securities Program),
1998 Series A, 5.750%, 9/01/31 (Alternative Minimum Tax)
205,000 Puerto Rico Housing Bank and Finance Agency, Affordable Housing 4/05 at 102 AAA 217,388
Mortgage Subsidy Program, Single Family Mortgage Revenue Bonds,
Portfolio I, 6.250%, 4/01/29 (Alternative Minimum Tax)
</TABLE>
21
<PAGE>
Portfolio of Investments (Unaudited)
Nuveen Flagship Wisconsin Municipal Bond Fund (continued)
November 30, 1998
<TABLE>
<CAPTION>
Principal Optional Call Market
Amount Description Provisions* Ratings** Value
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Housing/Single Family (continued)
$ 130,000 Virgin Islands Housing Finance Authority, Single Family 3/05 at 102 AAA $ 139,802
Mortgage Revenue Refunding Bonds (GNMA Mortgage Backed
Securities Program), 1995 Series A, 6.450%, 3/01/16
(Alternative Minimum Tax)
- ------------------------------------------------------------------------------------------------------------------------------------
Industrial/Other - 0.5%
150,000 Redevelopment Authority of the City of Milwaukee (Wisconsin), 12/01 at 102 A+ 153,893
Redevelopment Revenue Refunding Bonds, Job Opportunity Bond
Program (Veterans Housing Projects), Series 1996,
4.500%, 12/01/02
- ------------------------------------------------------------------------------------------------------------------------------------
Long Term Care - 8.9%
Housing Authority of Sheboygan County, Wisconsin, Housing
Revenue Refunding Bonds (Rocky Knoll Health Center Project),
Series 1994:
150,000 5.300%, 12/01/17 12/04 at 100 A1 151,650
195,000 5.300%, 12/01/18 12/04 at 100 A1 196,845
395,000 5.300%, 12/01/19 12/04 at 100 A1 398,128
1,000,000 Housing Authority of the City of Superior, Wisconsin, 7/04 at 102 N/R 1,054,030
Hospital Revenue Refunding Bonds, Series 1996 (GNMA
Collateralized St. Francis Home, Inc. Project),
6.150%, 7/20/31
1,120,000 Waukesha County Housing Authority, Housing Revenue 12/03 at 102 N/R 1,130,562
Refunding Bonds, Series 1998 (The Arboretum Project),
5.250%, 12/01/21 (Alternative Minimum Tax)
- ------------------------------------------------------------------------------------------------------------------------------------
Tax Obligation/General - 5.5%
250,000 Government of Guam, General Obligation Bonds, 11/03 at 102 BBB 253,130
Series 1993A, 5.400%, 11/15/18
1,300,000 Commonwealth of Puerto Rico, Public Improvement 7/07 at 101 1/2 A 1,347,866
Bonds of 1997, 5.375%, 7/01/25
200,000 Commonwealth of Puerto Rico, Public Improvement 7/08 at 101 A 198,658
Refunding Bonds, Series 1998 (General Obligation Bonds),
5.000%, 7/01/26
- ------------------------------------------------------------------------------------------------------------------------------------
Tax Obligation/Limited - 42.7%
1,500,000 Community Development Authority of the City of Cudahy 6/06 at 100 N/R 1,597,230
(Wisconsin), Redevelopment Lease Revenue Bonds,
Series 1995, 6.000%, 6/01/11
1,500,000 Community Development Authority of the City of Glendale, 9/08 at 100 N/R 1,547,025
Wisconsin, Community Development Lease Revenue Bonds,
Series 1998A, 5.400%, 9/01/18
850,000 Government of Guam, Limited Obligation Infrastructure 11/07 at 102 AAA 861,756
Improvement Bonds, 1997 Series A, 5.000%, 11/01/17
300,000 Community Development Authority of the City of Madison, 3/05 at 100 Aa2 327,762
Wisconsin, Lease Revenue Bonds, Series 1995 (Monona Terrace
Community and Convention Center Project), 6.100%, 3/01/10
200,000 Puerto Rico Aqueduct and Sewer Authority, Refunding Bonds, 7/06 at 101 1/2 A 201,582
Series 1995, Guaranteed by the Commonwealth of Puerto Rico,
5.000%, 7/01/15
320,000 Puerto Rico Highway and Transportation Authority, 7/02 at 101 1/2 A 350,547
Highway Revenue Bonds, 1992 Series V,
6.625%, 7/01/12
600,000 Puerto Rico Highway and Transportation Authority, 7/06 at 101 1/2 A 628,884
Highway Revenue Bonds, Series Y of 1996,
5.500%, 7/01/26
Puerto Rico Highway and Transportation Authority,
Transportation Revenue Bonds, (Series A):
1,000,000 0.000%, 7/01/17 No Opt. Call AAA 411,130
1,200,000 5.000%, 7/01/38 7/08 at 101 A 1,182,636
750,000 Puerto Rico Infrastructure Financing Authority, 1/08 at 101 AAA 763,718
Bonds, Series 1997A, 5.000%, 7/01/17
600,000 Puerto Rico Public Buildings Authority, Public 7/03 at 101 1/2 A 637,950
Education and Health Facilities Refunding Bonds,
Series M, Guaranteed by the Commonwealth of Puerto Rico,
5.750%, 7/01/15
1,250,000 Puerto Rico Public Buildings Authority, Government Facilities 7/07 at 101 1/2 A 1,271,788
Revenue Bonds, Series B, Guaranteed by the Commonwealth
of Puerto Rico, 5.250%, 7/01/21
Southeast Wisconsin Professional Baseball Park District,
Sales Tax Revenue Bonds, Series 1997:
1,390,000 0.000%, 12/15/27 No Opt. Call AAA 319,255
1,000,000 0.000%, 12/15/29 No Opt. Call AAA 207,560
</TABLE>
22
<PAGE>
<TABLE>
<CAPTION>
Principal Optional Call
Amount Description Provisions* Ratings** Value
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Tax Obligation/Limited (continued)
$ 500,000 Southeast Wisconsin, Professional Baseball Park District, No Opt. Call AAA $ 546,670
Sales Tax Revenue Refunding Bonds, Series 1998A, 5.500%, 12/15/26
375,000 Waterfront Redevelopment Authority of the City of Sturgeon 10/08 at 100 N/R 372,690
Bay, Wisconsin, Redevelopment Lease Revenue Bonds, Series
1998A, 5.200%, 10/01/21
600,000 Virgin Islands Public Finance Authority, Revenue and Refunding No Opt. Call BBB 616,242
Bonds (Virgin Islands Matching Fund Loan Notes), Series 1998A
(Senior Lien/Refunding), 5.625%, 10/01/25
500,000 Wauwatosa Redevelopment Authority, Milwaukee County, 12/07 at 100 AAA 543,685
Wisconsin, Redevelopment Authority Lease Revenue Bonds,
Series 1997, 5.650%, 12/01/16
1,000,000 Wisconsin Center District, Junior Dedicated Tax Revenue Bonds, 12/06 at 101 A 1,068,770
Series 1996B, 5.700%, 12/15/20
1,500,000 Wisconsin Center District, Senior Dedicated Tax Revenue Bonds, No Opt. Call AAA 582,465
Series 1996A, 0.000%, 12/15/17
- ------------------------------------------------------------------------------------------------------------------------------------
Transportation 1.6%
500,000 Puerto Rico Ports Authority, Special Facilities Revenue Bonds, 6/06 at 102 BBB 538,780
1996 Series A (American Airlines, Inc. Project), 6.250%, 6/01/26
(Alternative Minimum Tax)
- ------------------------------------------------------------------------------------------------------------------------------------
U.S. Guaranteed 8.7%
590,000 Commonwealth of Puerto Rico, Public Improvement Bonds of 1992 7/02 at 101 1/2 AAA 660,812
(General Obligation Bonds), 6.800%, 7/01/21 (Pre-refunded
to 7/01/02)
145,000 Puerto Rico Electric Power Authority, Power Revenue Bonds, 7/04 at 102 BBB+*** 165,702
Series 1994-T, 6.375%, 7/01/24 (Pre-refunded to 7/01/04)
Southeast Wisconsin, Professional Baseball Park District,
Sales Tax Revenue Bonds, Series 1996:
225,000 5.650%, 12/15/16 (Pre-refunded to 3/13/07) 3/07 at 101 AAA 250,297
1,600,000 5.800%, 12/15/26 (Pre-refunded to 3/13/07) 3/07 at 101 AAA 1,800,176
- ------------------------------------------------------------------------------------------------------------------------------------
Utilities 8.1%
315,000 Guam Power Authority, Revenue Bonds, 1992 Series A, 6.300%, 10/02 at 102 BBB 337,957
10/01/22
1,085,000 Guam Power Authority, Revenue Bonds, 1993 Series A, 5.250%, 10/03 at 102 BBB 1,088,939
10/01/23
115,000 Puerto Rico Electric Power Authority, Power Revenue Bonds, 7/04 at 102 BBB+ 125,256
Series T, 6.000%, 7/01/16
300,000 Puerto Rico Electric Power Authority, Power Revenue Refunding 7/05 at 100 BBB+ 303,396
Bonds, Series Z, 5.250%, 7/01/21
650,000 Puerto Rico Electric Power Authority, Power Revenue Bonds, 7/07 at 101 1/2 AAA 678,785
Series AA, 5.375%, 7/01/27
125,000 Puerto Rico Telephone Authority, Revenue Refunding Bonds, 1/03 at 101 1/2 A+ 131,839
Series M, 5.400%, 1/01/08
- ------------------------------------------------------------------------------------------------------------------------------------
$34,545,000 Total Investments -- (cost $31,027,698) -- 99.2% 32,623,749
- ------------------------------------------------------------------------------------------------------------------------------------
Other Assets Less Liabilities 0.8% 275,958
-------------------------------------------------------------------------------------------------------
Net Assets 100% $32,899,707
=======================================================================================================
</TABLE>
* Optional Call Provisions: Dates (month and year) and prices of the earliest
optional call or redemption. There may be other call provisions at varying
prices at later dates.
** Ratings: Using the higher of Standard & Poor's or Moody's rating.
*** Securities are backed by an escrow or trust containing sufficient U.S.
government or U.S. government agency securities which ensures the timely
payment of principal and interest. Securities are normally considered to be
equivalent to AAA rated securities.
N/R Investment is not rated.
See accompanying notes to financial statements.
23
<PAGE>
Statement of Net Assets (Unaudited)
November 30, 1998
<TABLE>
<CAPTION>
Kansas Missouri Wisconsin
- ---------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Assets
Investments in municipal securities, at market value (note 1) $118,592,390 $255,533,798 $32,623,749
Temporary investments in short-term municipal securities,
at amortized cost, which approximates market value (note 1) 1,000,000 1,000,000 --
Cash -- 569,522 --
Receivables:
Interest 1,573,454 4,675,041 574,347
Investments sold 190,593 580,500 --
Shares sold 2,225,761 122,786 9,855
Other assets 91,020 152,101 19,548
- ---------------------------------------------------------------------------------------------------------
Total assets 123,673,218 262,633,748 33,227,499
- ---------------------------------------------------------------------------------------------------------
Liabilities
Cash overdraft 1,587,047 -- 174,016
Payables:
Investments purchased -- 4,683,681 --
Shares redeemed 77,650 10,067 42,000
Accrued expenses:
Management fees (note 6) 37,548 114,266 3,022
12b-1 distribution and service fees (notes 1 and 6) 24,219 49,818 8,229
Other 31,359 83,873 16,017
Dividends payable 187,231 402,891 84,508
- ---------------------------------------------------------------------------------------------------------
Total liabilities 1,945,054 5,344,596 327,792
- ---------------------------------------------------------------------------------------------------------
Net assets (note 7) $121,728,164 $257,289,152 $32,899,707
=========================================================================================================
Class A Shares (note 1)
Net assets $112,747,739 $241,209,520 $27,386,289
Shares outstanding 10,503,552 21,269,460 2,627,648
Net asset value and redemption price per share $ 10.73 $ 11.34 $ 10.42
Offering price per share (net asset value per share plus
maximum sales charge of 4.20% of offering price) $ 11.20 $ 11.84 $ 10.88
=========================================================================================================
Class B Shares (note 1)
Net assets $ 5,143,834 $ 3,880,622 $ 3,028,090
Shares outstanding 482,151 342,362 289,743
Net asset value, offering and redemption price per share $ 10.67 $ 11.33 $ 10.45
=========================================================================================================
Class C Shares (note 1)
Net assets $ 3,780,171 $ 12,183,619 $ 2,378,761
Shares outstanding 351,493 1,075,127 227,794
Net asset value, offering and redemption price per share $ 10.75 $ 11.33 $ 10.44
=========================================================================================================
Class R Shares (note 1)
Net assets $ 56,420 $ 15,391 $ 106,567
Shares outstanding 5,227 1,357 10,193
Net asset value, offering and redemption price per share $ 10.79 $ 11.34 $ 10.45
=========================================================================================================
</TABLE>
See accompanying notes to financial statements
---
24
<PAGE>
Statement of Operations (Unaudited)
Six Months Ended November 30, 1998
<TABLE>
<CAPTION>
Kansas Missouri Wisconsin
- ----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Investment Income (note 1) $3,113,305 $7,201,265 $ 803,263
- ----------------------------------------------------------------------------------------------------------------
Expenses
Management fees (note 6) 311,199 683,797 84,571
12b-1 service fees--Class A (notes 1 and 6) 106,370 237,030 26,377
12b-1 distribution and service fees--Class B (notes 1 and 6) 19,099 13,176 10,662
12b-1 distribution and service fees--Class C (notes 1 and 6) 10,204 44,013 7,780
Shareholders' servicing agent fees and expenses 33,566 67,782 24,787
Custodian's fees and expenses 22,416 16,984 13,605
Trustees' fees and expenses (note 6) 1,715 1,800 1,344
Professional fees 8,997 17,814 4,319
Shareholders' reports--printing and mailing expenses 14,707 39,102 15,011
Federal and state registration fees 3,528 4,952 5,966
Other expenses 3,178 7,736 492
- ----------------------------------------------------------------------------------------------------------------
Total expenses before expense reimbursement 534,979 1,134,186 194,914
Expense reimbursement (note 6) (108,357) -- (75,784)
- ----------------------------------------------------------------------------------------------------------------
Net expenses 426,622 1,134,186 119,130
- ----------------------------------------------------------------------------------------------------------------
Net investment income 2,686,683 6,067,079 684,133
- ----------------------------------------------------------------------------------------------------------------
Realized and Unrealized Gain (Loss) from Investments
Net realized gain (loss) from investment transactions (notes 1 and 4) 266,143 541,393 (9,764)
Net change in unrealized appreciation or depreciation of investments 1,113,663 1,857,695 445,196
- ----------------------------------------------------------------------------------------------------------------
Net gain from investments 1,379,806 2,399,088 435,432
- ----------------------------------------------------------------------------------------------------------------
Net increase in net assets from operations $4,066,489 $8,466,167 $1,119,565
===============================================================================================================
</TABLE>
See accompanying notes to financial statements.
---
25
<PAGE>
Statement of Changes in Net Assets (Unaudited)
<TABLE>
<CAPTION>
Kansas Missouri
------------------------------------ --------------------------------------
Six Months Ended Year Ended Six Months Ended Year Ended
11/30/98 5/31/98 11/30/98 5/31/98
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Operations
Net investment income $ 2,686,683 $ 4,985,423 $ 6,067,079 $ 12,020,586
Net realized gain from investment transactions
(notes 1 and 4) 266,143 219,884 541,393 1,812,321
Net change in unrealized appreciation or
depreciation of investments 1,113,663 3,771,101 1,857,695 7,426,322
- -----------------------------------------------------------------------------------------------------------------------------------
Net increase in net assets from operations 4,066,489 8,976,408 8,466,167 21,259,229
- -----------------------------------------------------------------------------------------------------------------------------------
Distributions to Shareholders (note 1)
From undistributed net investment income:
Class A (2,570,431) (4,879,573) (5,776,702) (11,520,934)
Class B (81,974) (74,108) (56,919) (44,804)
Class C (58,391) (28,659) (255,122) (452,917)
Class R (1,192) (638) (614) (2,126)
- -----------------------------------------------------------------------------------------------------------------------------------
Decrease in net assets from distributions to
shareholders (2,711,988) (4,982,978) (6,089,357) (12,020,781)
- -----------------------------------------------------------------------------------------------------------------------------------
Fund Share Transactions (note 2)
Net proceeds from sale of shares 17,423,247 19,450,846 16,846,472 29,016,642
Net proceeds from shares issued to shareholders due
to reinvestment of distributions 1,219,578 2,514,735 2,704,531 6,950,162
- -----------------------------------------------------------------------------------------------------------------------------------
18,642,825 21,965,581 19,551,003 35,966,804
- -----------------------------------------------------------------------------------------------------------------------------------
Cost of shares redeemed (5,453,359) (15,361,968) (11,065,205) (26,158,524)
- -----------------------------------------------------------------------------------------------------------------------------------
Net increase in net assets from Fund share
transactions 13,189,466 6,603,613 8,485,798 9,808,280
- -----------------------------------------------------------------------------------------------------------------------------------
Net increase in net assets 14,543,967 10,597,043 10,862,608 19,046,728
Net assets at the beginning of period 107,184,197 96,587,154 246,426,544 227,379,816
- -----------------------------------------------------------------------------------------------------------------------------------
Net assets at the end of period $121,728,164 $107,184,197 $257,289,152 $246,426,544
===================================================================================================================================
Balance of undistributed (over-distributed) net
investment income at end of period $ (22,859) $ 2,446 $ (18,919) $ 3,359
===================================================================================================================================
</TABLE>
26
See accompanying notes to financial statements.
<PAGE>
<TABLE>
<CAPTION>
Wisconsin
--------------------------------
Six Months Ended Year Ended
11/30/98 5/31/98
- ------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Operations
Net investment income $ 684,133 $ 944,621
Net realized gain (loss) from investment transactions (notes 1 and 4) (9,764) 1,965
Net change in unrealized appreciation or depreciation of investments 445,196 867,069
- ------------------------------------------------------------------------------------------------------------------
Net increase in net assets from operations 1,119,565 1,813,655
- ------------------------------------------------------------------------------------------------------------------
Distributions to Shareholders (note 1)
From undistributed net investment income:
Class A (610,987) (888,945)
Class B (42,721) (30,662)
Class C (41,517) (21,939)
Class R (1,345) (2,181)
- ------------------------------------------------------------------------------------------------------------------
Decrease in net assets from distributions to shareholders (696,570) (943,727)
- ------------------------------------------------------------------------------------------------------------------
Fund Share Transactions (note 2)
Net proceeds from sale of shares 5,436,409 13,525,996
Net proceeds from shares issued to shareholders due to reinvestment
of distributions 463,103 586,627
- ------------------------------------------------------------------------------------------------------------------
5,899,512 14,112,623
- ------------------------------------------------------------------------------------------------------------------
Cost of shares redeemed (1,023,328) (1,522,817)
- ------------------------------------------------------------------------------------------------------------------
Net increase in net assets from Fund share transactions 4,876,184 12,589,806
- ------------------------------------------------------------------------------------------------------------------
Net increase in net assets 5,299,179 13,459,734
Net assets at the beginning of period 27,600,528 14,140,794
- ------------------------------------------------------------------------------------------------------------------
Net assets at the end of period $32,899,707 $27,600,528
- ------------------------------------------------------------------------------------------------------------------
Balance of undistributed (over-distributed) net investment income at end of period $ (11,517) $ 920
- ------------------------------------------------------------------------------------------------------------------
</TABLE>
See accompanying notes to financial statements.
27
<PAGE>
Notes to Financial Statements (Unaudited)
1. General Information and Significant Accounting Policies
The Nuveen Flagship Multistate Trust IV (the "Trust") is an open-end investment
company registered under the Investment Company Act of 1940, as amended. The
Trust comprises the Nuveen Flagship Kansas Municipal Bond Fund ("Kansas"), the
Nuveen Flagship Missouri Municipal Bond Fund ("Missouri") and the Nuveen
Flagship Wisconsin Municipal Bond Fund ("Wisconsin") (collectively, the
"Funds"), among others. The Trust was organized as a Massachusetts business
trust on July 1, 1996.
The Funds seek to provide high tax-free income and preservation of capital
through investments in diversified portfolios of quality municipal bonds.
The following is a summary of significant accounting policies followed by the
Funds in the preparation of their financial statements in accordance with
generally accepted accounting principles.
Securities Valuation
The prices of municipal bonds in each Fund's investment portfolio are provided
by a pricing service approved by the Fund's Board of Trustees. When price quotes
are not readily available (which is usually the case for municipal securities),
the pricing service establishes fair market value based on yields or prices of
municipal bonds of comparable quality, type of issue, coupon, maturity and
rating, indications of value from securities dealers and general market
conditions. Temporary investments in securities that have variable rate and
demand features qualifying them as short-term securities are valued at amortized
cost, which approximates market value.
Securities Transactions
Securities transactions are recorded on a trade date basis. Realized gains and
losses from such transactions are determined on the specific identification
method. Securities purchased or sold on a when-issued or delayed delivery basis
may have extended settlement periods. Any securities so purchased are subject to
market fluctuation during this period. The Funds have instructed the custodian
to segregate assets in a separate account with a current value at least equal to
the amount of the when-issued and delayed delivery purchase commitments. At
November 30, 1998, Missouri had outstanding when-issued purchase commitments of
$4,509,019. There were no such outstanding purchase commitments in either of the
other Funds.
Investment Income
Interest income is determined on the basis of interest accrued, adjusted for
amortization of premiums and accretion of discounts on long-term debt securities
when required for federal income tax purposes.
Dividends and Distributions to Shareholders
Tax-exempt net investment income is declared as a dividend monthly and payment
is made or reinvestment is credited to shareholder accounts on the first
business day after month-end. Net realized capital gains and/or market discount
from investment transactions, if any, are distributed to shareholders not less
frequently than annually. Furthermore, capital gains are distributed only to the
extent they exceed available capital loss carryforwards.
Distributions to shareholders of tax-exempt net investment income, net realized
capital gains and/or market discount are recorded on the ex-dividend date. The
amount and timing of distributions are determined in accordance with federal
income tax regulations, which may differ from generally accepted accounting
principles. Accordingly, temporary over-distributions as a result of these
differences may occur and will be classified as either distributions in excess
of net investment income, distributions in excess of net realized gains and/or
distributions in excess of net ordinary taxable income from investment
transactions, where applicable.
Income Taxes
Each Fund is a separate taxpayer for federal income tax purposes. Each Fund
intends to comply with the requirements of the Internal Revenue Code applicable
to regulated investment companies and to distribute all of its tax-exempt net
investment income, in addition to any significant amounts of net realized
capital gains and/or market discount from investment transactions. The Funds
currently consider significant net realized capital gains and/or market discount
as amounts in excess of $.001 per share. Furthermore, the Funds intend to
satisfy conditions which will enable interest from municipal securities, which
is exempt from regular federal and designated state income taxes, to retain
such tax-exempt status when distributed to the shareholders of the Funds. Net
realized capital gain and market discount distributions are subject to federal
taxation.
28
<PAGE>
Flexible Sales Charge Program
Each Fund offers Class A, B, C and R Shares. Class A Shares are sold with a
sales charge and incur an annual 12b-1 service fee. Class A Share purchases of
$1 million or more are sold at net asset value without an up-front sales charge
but may be subject to a 1% contingent deferred sales charge ("CDSC") if redeemed
within 18 months of purchase. Class B Shares are sold without a sales charge but
incur annual 12b-1 distribution and service fees. An investor purchasing Class B
Shares agrees to pay a CDSC of up to 5% depending upon the length of time the
shares are held by the investor (CDSC is reduced to 0% at the end of six years).
Class B Shares convert to Class A Shares eight years after purchase. Class C
Shares are sold without a sales charge but incur annual 12b-1 distribution and
service fees. An investor purchasing Class C Shares agrees to pay a CDSC of 1%
if Class C Shares are redeemed within one year of purchase. Class R Shares are
not subject to any sales charge or 12b-1 distribution or service fees. Class R
Shares are available for purchases of over $1 million and in other limited
circumstances.
Derivative Financial Instruments
The Funds may invest in certain derivative financial instruments including
futures, forward, swap and option contracts, and other financial instruments
with similar characteristics. Although the Funds are authorized to invest in
such financial instruments, and may do so in the future, they did not make any
such investments during the six months ended November 30, 1998.
Expense Allocation
Expenses of the Funds that are not directly attributable to a specific class of
shares are prorated among the classes based on the relative net assets of each
class. Expenses directly attributable to a class of shares, which presently only
includes 12b-1 distribution and service fees, are recorded to the specific
class.
Use of Estimates
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities at the date of the
financial statements and the reported amounts of increases and decreases in net
assets from operations during the reporting period. Actual results may differ
from those estimates.
2. Fund Shares
Transactions in Fund shares were as follows:
<TABLE>
<CAPTION>
Kansas
------------------------------------------------------
Six Months Ended Year Ended
11/30/98 5/31/98
------------------------------------------------------
Shares Amount Shares Amount
- -------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Shares sold:
Class A 1,234,783 $13,202,881 1,446,744 $ 15,169,400
Class B 185,450 1,971,843 246,506 2,575,382
Class C 205,904 2,204,628 154,351 1,624,614
Class R 4,103 43,895 7,647 81,450
Shares issued to shareholders due to reinvestment of distributions:
Class A 103,703 1,106,914 235,108 2,451,515
Class B 7,555 79,933 4,460 46,453
Class C 2,962 31,732 1,567 16,481
Class R 93 999 27 286
- -------------------------------------------------------------------------------------------------------------------------------
1,744,553 18,642,825 2,096,410 21,965,581
- -------------------------------------------------------------------------------------------------------------------------------
Shares redeemed:
Class A (474,545) (5,059,211) (1,456,152) (15,220,254)
Class B (17,991) (190,056) (3,593) (37,812)
Class C (18,893) (202,961) (3,309) (34,615)
Class R (104) (1,131) (6,549) (69,287)
- -------------------------------------------------------------------------------------------------------------------------------
(511,533) (5,453,359) (1,469,603) (15,361,968)
- -------------------------------------------------------------------------------------------------------------------------------
Net increase 1,233,020 $13,189,466 626,807 $ 6,603,613
- -------------------------------------------------------------------------------------------------------------------------------
</TABLE>
29
<PAGE>
Notes to Financial Statements (Unaudited) (continued)
<TABLE>
<CAPTION>
Missouri
-------------------------------------------------------
Six Months Ended Year Ended
11/30/98 5/31/98
-------------------------------------------------------
Shares Amount Shares Amount
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Shares sold:
Class A 1,147,087 $ 12,980,687 2,105,625 $ 23,418,825
Class B 192,981 2,174,998 131,214 1,466,418
Class C 150,054 1,690,787 371,741 4,116,750
Class R -- -- 1,309 14,649
Shares issued to shareholders due to reinvestment of distributions:
Class A 215,680 2,436,739 594,998 6,583,121
Class B 5,988 67,494 2,790 31,032
Class C 17,728 199,687 30,239 333,908
Class R 54 611 189 2,101
- ---------------------------------------------------------------------------------------------------------------------------------
1,729,572 19,551,003 3,238,105 35,966,804
- ---------------------------------------------------------------------------------------------------------------------------------
Shares redeemed:
Class A (877,983) (9,902,926) (2,183,973) (24,315,900)
Class B (5,934) (66,989) (26,702) (298,879)
Class C (95,122) (1,068,609) (137,556) (1,532,745)
Class R (2,376) (26,681) (976) (11,000)
- ---------------------------------------------------------------------------------------------------------------------------------
(981,415) (11,065,205) (2,349,207) (26,158,524)
- ---------------------------------------------------------------------------------------------------------------------------------
Net increase 748,157 $ 8,485,798 888,898 $ 9,808,280
- ---------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
Wisconsin
-------------------------------------------------------
Six Months Ended Year Ended
11/30/98 5/31/98
-------------------------------------------------------
Shares Amount Shares Amount
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Shares sold:
Class A 301,140 $ 3,106,102 1,023,987 $ 10,392,120
Class B 116,224 1,209,811 185,214 1,883,674
Class C 102,723 1,060,340 123,287 1,250,046
Class R 5,768 60,156 15 156
Shares issued to shareholders due to reinvestment of distributions:
Class A 38,709 400,950 54,801 552,761
Class B 2,921 30,283 1,536 15,642
Class C 2,961 30,770 1,578 16,051
Class R 106 1,100 215 2,173
- ---------------------------------------------------------------------------------------------------------------------------------
570,552 5,899,512 1,390,633 14,112,623
- ---------------------------------------------------------------------------------------------------------------------------------
Shares redeemed:
Class A (76,938) (796,267) (143,260) (1,453,452)
Class B (11,469) (118,677) (6,763) (69,320)
Class C (10,501) (108,276) (4) (45)
Class R (11) (108) -- --
- ---------------------------------------------------------------------------------------------------------------------------------
(98,919) (1,023,328) (150,027) (1,522,817)
- ---------------------------------------------------------------------------------------------------------------------------------
Net increase 471,633 $ 4,876,184 1,240,606 $ 12,589,806
- ---------------------------------------------------------------------------------------------------------------------------------
</TABLE>
3. Distributions to Shareholders
The Funds declared dividend distributions from their tax-exempt net investment
income which were paid on December 21, 1998, to shareholders of record on
December 9, 1998, as follows:
<TABLE>
<CAPTION>
Kansas Missouri Wisconsin
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Dividend per share:
Class A $.0425 $.0460 $.0400
Class B .0360 .0390 .0335
Class C .0380 .0410 .0355
Class R .0450 .0480 .0420
- ---------------------------------------------------------------------------------------------------------------------------------
</TABLE>
30
<PAGE>
4. Securities Transactions
Purchases and sales (including maturities) of investments in municipal
securities and temporary municipal investments for the six months ended November
30, 1998, were as follows:
<TABLE>
<CAPTION>
Kansas Missouri Wisconsin
- ----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Purchases:
Investments in municipal securities $30,101,089 $24,061,832 $4,748,120
Temporary municipal investments 4,500,000 1,000,000 1,000,000
Sales:
Investments in municipal securities 19,277,662 15,198,732 1,040,095
Temporary municipal investments 3,500,000 -- 1,000,000
- ----------------------------------------------------------------------------------------------------------------------------
</TABLE>
At November 30, 1998, the identified cost of investments owned for federal
income tax purposes was the same as the cost for financial reporting purposes
for each Fund.
At May 31, 1998, the Funds' last fiscal year end, the Funds' had unused capital
loss carryforwards available for federal income tax purposes to be applied
against future capital gains, if any. If not applied, the carryforwards will
expire as follows:
<TABLE>
<CAPTION>
Kansas Missouri Wisconsin
- ----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Expiration Year:
2003 $4,627,546 $736,992 $ --
2004 -- -- 5,196
- ----------------------------------------------------------------------------------------------------------------------------
Total $4,627,546 $736,992 $5,196
- ----------------------------------------------------------------------------------------------------------------------------
</TABLE>
5. Unrealized Appreciation (Depreciation)
Gross unrealized appreciation and gross unrealized depreciation of investments
at November 30, 1998, were as follows:
<TABLE>
<CAPTION>
Kansas Missouri Wisconsin
- ----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Gross unrealized:
appreciation $9,421,713 $19,021,213 $1,598,361
depreciation (9,180) (24,931) (2,310)
- ----------------------------------------------------------------------------------------------------------------------------
Net unrealized appreciation $9,412,533 $18,996,282 $1,596,051
- ----------------------------------------------------------------------------------------------------------------------------
</TABLE>
6. Management Fee and Other Transactions with Affiliates
Under the Trust's investment management agreement with the Adviser, each Fund
pays an annual management fee, payable monthly, at the rates set forth below
which are based upon the average daily net asset value of each Fund:
Average Daily Net Asset Value Management Fee
- --------------------------------------------------------------------------------
For the first $125 million .5500 of 1%
For the next $125 million .5375 of 1
For the next $250 million .5250 of 1
For the next $500 million .5125 of 1
For the next $1 billion .5000 of 1
For net assets over $2 billion .4750 of 1
- --------------------------------------------------------------------------------
The management fee compensates the Adviser for overall investment advisory and
administrative services, and general office facilities. The Trust pays no
compensation directly to those of its Trustees who are affiliated with the
Adviser or to its officers, all of whom receive remuneration for their services
to the Trust from the Adviser or its affiliates.
The Adviser may voluntarily agree to reimburse expenses from time to time, which
may be terminated at any time at its discretion.
During the six months ended November 30, 1998, the Distributor collected sales
charges on purchases of Class A Shares the majority of which were paid out as
concessions to authorized dealers. The Distributor also received 12b-1 service
fees on Class A Shares, substantially all of which were paid to compensate
authorized dealers for providing services to shareholders relating to their
investments.
31
<PAGE>
Notes to Financial Statements (Unaudited) (continued)
During the six months ended November 30, 1998, the Distributor compensated
authorized dealers directly with commission advances at the time of purchase as
follows:
Kansas Missouri Wisconsin
- --------------------------------------------------------------------------------
Commission advances $ 124,902 $ 144,503 $ 69,274
- --------------------------------------------------------------------------------
To compensate for commissions advanced to authorized dealers, all 12b-1 service
fees collected on Class B Shares during the first year following a purchase, all
12b-1 distribution fees on Class B Shares, and all 12b-1 service and
distribution fees on Class C Shares during the first year following a purchase
are retained by the Distributor. During the six months ended November 30, 1998,
the Distributor retained such 12b-1 fees as follows:
Kansas Missouri Wisconsin
- --------------------------------------------------------------------------------
12b-1 fees retained $ 27,309 $ 29,588 $ 17,177
- --------------------------------------------------------------------------------
The remaining 12b-1 fees charged to the Funds were paid to compensate authorized
dealers for providing services to shareholders relating to their investments.
The Distributor also collected and retained CDSC on share redemptions during the
six months ended November 30, 1998, as follows:
Kansas Missouri Wisconsin
- --------------------------------------------------------------------------------
CDSC retained $ 7,947 $ 11,820 $ 2,779
- --------------------------------------------------------------------------------
7. Composition of Net Assets
At November 30, 1998, the Funds had an unlimited number of $.01 par value shares
authorized. Net assets consisted of:
<TABLE>
<CAPTION>
Kansas Missouri Wisconsin
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Capital paid-in $116,704,311 $238,516,724 $31,330,133
Balance of undistributed (over-distributed) net investment income (22,859) (18,919) (11,517)
Accumulated net realized gain (loss) from investment transactions (4,365,821) (204,935) (14,960)
Net unrealized appreciation of investments 9,412,533 18,996,282 1,596,051
- -----------------------------------------------------------------------------------------------------------------------------------
Net assets $121,728,164 $257,289,152 $32,899,707
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
32
<PAGE>
Financial Highlights (Unaudited)
<TABLE>
<CAPTION>
Selected data for a share outstanding throughout each period is as follows:
Class (Inception Date)
Investment Operations Less Distributions
--------------------------------- --------------------------
Kansas** Net
Realized/
Unrealized
Beginning Net Invest- Net Ending
Net Invest- ment Invest- Net
Year Ended Asset ment Gain ment Capital Asset Total
May 31, Value Income (a) (Loss) Total Income Gain Total Value Return (b)
- ------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Class A (1/92)
1999 (d) $10.60 $.26 $ .13 $.39 $(.26) $ -- $(.26) $10.73 3.70%
1998 10.19 .52 .41 .93 (.52) -- (.52) 10.60 9.32
1997 9.83 .53 .36 .89 (.53) -- (.53) 10.19 9.21
1996 10.01 .54 (.18) .36 (.54) -- (.54) 9.83 3.63
1995 9.83 .55 .18 .73 (.55) -- (.55) 10.01 7.80
1994 10.38 .56 (.46) .10 (.58) (.07)+ (.65) 9.83 .62
Class B (2/97)
1999 (d) 10.54 .22 .13 .35 (.22) -- (.22) 10.67 3.35
1998 10.13 .44 .41 .85 (.44) -- (.44) 10.54 8.57
1997 (c) 10.23 .13 (.12) .01 (.11) -- (.11) 10.13 .13
Class C (2/97)
1999 (d) 10.63 .23 .12 .35 (.23) -- (.23) 10.75 3.34
1998 10.21 .47 .42 .89 (.47) -- (.47) 10.63 8.85
1997 (c) 10.18 .15 .04 .19 (.16) -- (.16) 10.21 1.85
Class R (2/97)
1999 (d) 10.66 .27 .13 .40 (.27) -- (.27) 10.79 3.81
1998 10.22 .56 .43 .99 (.55) -- (.55) 10.66 9.84
1997 (c) 10.20 .18 (.02) .16 (.14) -- (.14) 10.22 1.55
<CAPTION>
Ratios/Supplemental Data
- --------------------------------------------------------------------------------------------------------------
Kansas** Ratio Ratio
of Net of Net
Ratio of Investment Ratio of Investment
Expenses Income Expenses Income to
to Average to Average to Average Average
Net Assets Net Assets Net Assets Net Assets
Before Before Before After Portfolio
Year Ended Ending Net Reimburse- Reimburse- Reimburse- Reimburse- Turnover
May 31, Assets (000) ment ment ment (a) ment (a) Rate
- --------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Class A (1/92)
1999 (d) $112,748 .91%* 4.59%* .71%* 4.79%* 17%
1998 102,217 .90 4.79 .71 4.98 13
1997 95,891 1.03 4.89 .68 5.24 40
1996 96,694 1.08 4.80 .57 5.31 55
1995 83,683 1.10 5.11 .54 5.67 72
1994 80,060 1.06 4.57 .26 5.37 93
Class B (2/97)
1999 (d) 5,144 1.66* 3.85* 1.47* 4.04* 17
1998 3,238 1.65 4.02 1.45 4.22 13
1997 (c) 605 1.65* 4.24* 1.27* 4.62* 40
Class C (2/97)
1999 (d) 3,780 1.46* 4.06* 1.27* 4.25* 17
1998 1,716 1.44 4.21 1.24 4.41 13
1997 (c) 91 1.45* 4.49* 1.09* 4.85* 40
Class R (2/97)
1999 (d) 56 .71* 4.81* .52* 5.00* 17
1998 12 .70 4.97 .51 5.16 13
1997 (c) -- .08* 6.53* .-- 6.61* 40
</TABLE>
* Annualized.
** Information included prior to the fiscal year ended May 31, 1997, reflects
the financial highlights of Flagship Kansas.
+ The amount shown reflects a distribution in excess of capital gains of $.05
per share.
(a) After waiver of certain management fees or reimbursement of expenses, if
applicable, by Nuveen Advisory or its predecessor Flagship Financial.
(b) Total returns are calculated on net asset value without any sales charge and
are not annualized.
(c) From commencement of class operations as noted.
(d) For the six months ended November 30, 1998.
----
33
<PAGE>
Financial Highlights (Unaudited) (continued)
<TABLE>
<CAPTION>
Selected data for a share outstanding throughout each period is as follows:
Class (Inception Date)
Investment Operations Less Distributions
------------------------------------ -------------------------------
MISSOURI** Net
Realized/
Unrealized
Beginning Net Invest- Net Ending
Net Invest- ment Invest- Net
Year Ended Asset ment Gain ment Capital Asset Total
May 31, Value Income(a) (Loss) Total Income Gain Total Value Return(b)
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Class A (8/87)
1999(d) $11.23 $.27 $ .12 $ .39 $(.28) $ -- $(.28) $11.34 3.47%
1998 10.80 .56 .43 .99 (.56) -- (.56) 11.23 9.32
1997 10.51 .56 .29 .85 (.58) -- (.58) 10.80 8.29
1996 10.72 .58 (.21) .37 (.58) -- (.58) 10.51 3.51
1995 10.50 .60 .22 .82 (.60) -- (.60) 10.72 8.19
1994 10.87 .61 (.34) .27 (.61) (.03)+ (.64) 10.50 2.42
Class B (2/97)
1999(d) 11.23 .23 .10 .33 (.23) -- (.23) 11.33 3.00
1998 10.80 .47 .44 .91 (.48) -- (.48) 11.23 8.53
1997(c) 10.81 .16 (.01) .15 (.18) -- (.18) 10.80 1.40
Class C (2/94)
1999(d) 11.23 .24 .11 .35 (.25) -- (.25) 11.33 3.10
1998 10.80 .50 .43 .93 (.50) -- (.50) 11.23 8.74
1997 10.50 .51 .29 .80 (.50) -- (.50) 10.80 7.80
1996 10.72 .51 (.21) .30 (.52) -- (.52) 10.50 2.84
1995 10.50 .53 .23 .76 (.54) -- (.54) 10.72 7.80
1994(c) 11.33 .02 (.83) (.81) (.02) -- (.02) 10.50 (17.82)*
Class R (2/97)
1999(d) 11.23 .28 .12 .40 (.29) -- (.29) 11.34 3.58
1998 10.80 .58 .43 1.01 (.58) -- (.58) 11.23 9.56
1997(c) 10.90 .17 (.12) .05 (.15) -- (.15) 10.80 .43
- ------------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
Ratios/Supplemental Data
---------------------------------------------------------------------------------
Ratio Ratio
of Net of Net
Ratio of Investment Ratio of Investment
Expenses Income Expenses Income to
to Average to Average to Average Average
Net Assets Net Assets Net Assets Net Assets
Before Before After After Portfolio
Year Ended Ending Net Reimburse- Reimburse- Reimburse- Reimburse- Turnover
May 31, Assets(000) ment ment ment(a) ment(a) Rate
- ------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Class A (8/87)
1999(d) $241.210 .87% 4.88% .87% 4.88%* 6%
1998 233,458 .87 5.02 .87 5.02 19
1997 218,924 1.00 5.13 .86 5.27 41
1996 212,717 1.05 5.12 .80 5.37 38
1995 205,089 1.08 5.37 .67 5.78 40
1994 187,347 1.06 5.08 .62 5.52 34
Class B (2/97)
1999(d) 3,881 1.62* 4.11* 1.62* 4.11* 6
1998 1,677 1.82 4.25 1.62 4.25 19
1997(c) 454 1.82* 4.42* 1.45* 4.59* 41
Class C (2/94)
1999(d) 12,184 1.42* 4.31* 1.42* 4.31* 8
1998 11,253 1.42 4.47 1.42 4.47 19
1997 7,968 1.55 4.57 1.40 4.72 41
1996 6,220 1.80 4.54 1.35 4.79 38
1995 3,989 1.83 4.76 1.20 5.19 40
1994(c) 1,877 1.81* 3.98* 1.15* 4.44* 34
Class R (2/97)
1999(d) 15 .68* 5.06* .68* 5.06* 6
1998 41 .87 6.22 .87 5.22 19
1997(c) 34 .87* 5.53* .55* 5.65* 41
- ------------------------------------------------------------------------------------------------------------------
</TABLE>
* Annualized
** Information included prior to the fiscal year ended May 31, 1997, reflects
the financial highlights of Flagship Missouri.
+ The amount shown reflects a distribution in excess of capital gains of $.01
per share.
(a) After waiver of certain management fees or reimbursement of expenses, if
applicable, by Nuveen Advisory or its predecessor Flagship Financial.
(b) Total returns are calculated on net asset value without any sales charge and
are not annualized except where noted.
(c) From commencement of class operations as noted.
(d) For the six months ended November 30, 1998.
34
<PAGE>
Selected data for a share outstanding throughout each period is
as follows:
<TABLE>
<CAPTION>
Class (Inception Date)
Investment Operations Less Distributions
----------------------------------- ----------------------------------
WISCONSIN**
Net
Realized/
Beginning Unrealized Ending
Net Net Investment Net Net
Year Ended Assets Investment Gain Investment Capital Asset Total
May 31, Value Income (a) (Loss) Total Income Gain Total Value Return(b)
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Class A (6/94)
1999 (d) $10.28 $.24 $ .14 $ .38 $(.24) $ -- $(.24) $10.42 3.74%
1998 9.80 .49 .49 .98 (.50) -- (.50) 10.28 10.19
1997 9.61 .51 .19 .70 (.51) -- (.51) 9.80 7.40
1996 9.79 .50 (.18) .32 (.50) -- (.50) 9.61 3.35
1995 (c) 9.58 .49 .21 .70 (.49) -- (.49) 9.79 7.36*
Class B (2/97)
1999 (d) 10.31 .20 .14 .34 (.20) -- (.20) 10.45 3.34
1998 9.82 .42 .49 .91 (.42) -- (.42) 10.31 9.46
1997 (c) 9.87 .12 (.06) .06 (.11) -- (.11) 9.82 .60
Class C (2/97)
1999 (d) 10.30 .21 .14 .35 (.21) -- (.21) 10.44 3.46
1998 9.82 .44 .49 .93 (.45) -- (.45) 10.30 9.59
1997 (c) 9.87 .13 (.07) .06 (.11) -- (.11) 9.82 .65
Class R (2/97)
1999 (d) 10.31 .25 .14 .39 (.25) -- (.25) 10.45 3.83
1998 9.82 .53 .48 1.01 (.52) -- (.52) 10.31 10.47
1997 (c) 9.87 .15 (.07) .08 (.13) -- (.13) 9.82 .84
- ------------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
Ratios/Supplemental Data
-------------------------------------------------------------------------------------------------
Ratio Ratio
of Net of Net
Ratio of Investment Ratio of Investment
Expenses Income Expenses Income
to Average to Average to Average to Average
Net Assets Net Assets Net Assets Net Assets Portfolio
Year Ended Ending Net Before Before After Before Turnover
May 31, Assets (000) Reimbursement Reimbursement Reimbursement(a) Reimbursement(a) Rate
- ---------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Class A (6/94)
1999 (d) $27,386 1.16%* 4.04%* .68%* 4.54%* 3%
1998 24,313 1.36 4.06 .55 4.87 10
1997 14,004 1.61 4.10 .51 5.20 42
1996 12,370 1.51 4.15 .64 5.02 47
1995 (c) 8,278 2.31* 3.33* .39* 5.25* 52
Class B (2/97)
1999 (d) 3,028 1.93* 3.30* 1.44* 3.79* 3
1998 1,877 2.08 3.28 1.32 4.04 10
1997 (c) 20 2.18* 3.57* .94* 4.81* 42
Class C (2/97)
1999 (d) 2,379 1.73* 3.51* 1.24* 4.00* 3
1998 1,366 1.89 3.47 1.11 4.25 10
1997 (c) 76 1.98* 3.62* .69* 4.91* 42
Class R (2/97)
1999 (d) 107 .97* 4.25* .49* 4.73* 3
1998 45 1.12 4.28 .32 5.08 10
1997 (c) 40 1.28* 4.39* -- 5.67* 42
- ---------------------------------------------------------------------------------------------------------------------
</TABLE>
* Annualized.
** Information included prior to the fiscal year ended May 31, 1997, reflects
the financial highlights of Flagship Wisconsin.
(a) After waiver of certain management fees or reimbursement of expenses, if
applicable, by Nuveen Advisory or its predecessor Flagship Financial.
(b) Total returns are calculated on net asset value without any sales charge and
are not annualized except where noted.
(c) From commencement of class operations as noted.
(d) For the six months ended November 30, 1998.
---
35
<PAGE>
Building a Better Portfolio
Can Make You a Successful Investor
Nuveen Family of Mutual Funds
Nuveen offers a variety of funds designed to help you reach your financial
goals.
Growth
Nuveen Rittenhouse Growth Fund
Growth and Income
European Value Fund
Growth and Income Stock Fund
Balanced Stock and Bond Fund
Balanced Municipal and Stock Fund
Tax-Free Income
National Funds
Long-Term
Insured
Intermediate-Term
Limited-Term
State Funds
Arizona
California
Colorado
Connecticut
Florida
Georgia
Kansas
Kentucky
Louisiana
Maryland
Massachusetts
Michigan
Missouri
New Jersey
New Mexico
New York
North Carolina
Ohio
Pennsylvania
Tennessee
Virginia
Wisconsin
Successful investors know that a well-diversified portfolio - one that balances
different types of investments, levels of risk and tax management - can be the
foundation for building and sustaining wealth. That's why Nuveen offers you
and your financial adviser a wide range of quality investments that can help
you build a better portfolio in the pursuit of your financial goals.
Mutual Funds
Nuveen offers a family of equity, balanced and municipal bond funds featuring
Premier Advisers/SM/ including Institutional Capital Corporation, Rittenhouse
Financial Services, and Nuveen Advisory Corp. Each brings a specialized
expertise in a particular investment style or asset class, time-tested
investment strategies and a focus on consistent, long-term performance. With
Nuveen's Premier Adviser funds, you have all the advantages of a family of funds
plus the benefits of specialized investment expertise.
Private Asset Management
Rittenhouse Financial Services and Nuveen Asset Management offer comprehensive,
customized investment management solutions to investors with assets of $250,000
or more to invest. A range of actively managed growth, balanced and municipal
income-oriented portfolios are available, all based upon a disciplined
investment philosophy.
Defined Portfolios
Nuveen Defined Portfolios are fixed portfolios of quality securities that are a
convenient, attractive alternative to purchasing individual securities. They
provide low-cost diversification to reduce risk, while also offering
experienced, professional security selection and surveillance. In addition,
Nuveen Defined Portfolios provide daily liquidity at that day's net asset value
for quick access to your assets.
Exchange-Traded Funds
Nuveen Exchange-Traded Funds offer investors actively managed portfolios of
investment-grade quality municipal bonds. The fund shares are listed and traded
on the New York and American stock exchanges. Exchange-traded funds provide the
investment convenience, price visibility and liquidity of common stocks.
MuniPreferred(R)
Nuveen MuniPreferred offers investors a AAA rated investment with an attractive
tax-free yield for the cash reserves portion of an investment portfolio.
MuniPreferred shares are backed 2-to-1 by the long-term portfolios of Nuveen
dual-class exchange-traded funds and are available for national as well as a
wide variety of state-specific portfolios.
36
<PAGE>
Fund Information
Board of Trustees
Robert P. Bremner
Lawrence H. Brown
Anthony T. Dean
Anne E. Impellizzeri
Peter R. Sawers
William J. Schneider
Timothy R. Schwertfeger
Judith M. Stockdale
Fund Manager
Nuveen Advisory Corp.
333 West Wacker Drive
Chicago, IL 60606
Transfer Agent and
Shareholder Services
The Chase Manhattan Bank
4 New York Plaza
New York, NY 10004-2413
(800) 257-8787
Legal Counsel
Morgan, Lewis &
Bockius LLP
Washington, D.C.
Independent Public Accountants
Arthur Andersen LLP
Chicago, IL
37
<PAGE>
Serving Investors for Generations
[PHOTO OF JOHN NUVEEN, SR. APPEARS HERE]
John Nuveen, Sr.
Since our founding in 1898, John Nuveen & Co. has been synonymous with
investments that withstand the test of time. Today we offer a broad range of
quality investments designed for individuals seeking to build and sustain
wealth. In fact, more than 1.3 million investors have trusted Nuveen to help
them pursue their financial goals.
The cornerstone of Nuveen's investment philosophy is a commitment to disciplined
long-term investment strategies focused on providing consistent, attractive
performance over time. We emphasize quality securities carefully chosen through
in-depth research, and we follow those securities closely over time to ensure
that they continue to meet our exacting standards.
Whether your focus is long-term growth, dependable current income or sustaining
accumulated wealth, Nuveen offers a wide variety of investments and services to
help meet your unique circumstances and financial planning needs. Our equity,
balanced, and tax-free income funds, along with our defined portfolios and
private asset management, can help you build a better, well-diversified
portfolio.
Talk with your financial adviser to learn more about how Nuveen investment
products and services can help you. Or call us at (800) 257-8787 for more
information, including a prospectus where applicable. Please read that
information carefully before investing.
1898
NUVEEN
1998
OUR SECOND CENTURY
helping investors sustain the wealth of a lifetime./SM/
John Nuveen & co. Incorporated
333 West Wacker Drive
Chicago, IL 60606-1286
www.nuveen.com
VSA-6-11-98
