<PAGE>
May 31, 1999 Annual Report
NUVEEN
Mutual Funds
Extraordinary Talent. Masterful Performance.
Nuveen Municipal Bond Funds
[Photo Appears Here]
Dependable, tax-free
income to help
you keep more
of what you earn.
Kentucky
Michigan
Ohio
Featuring Portfolio Management By Nuveen Investment Advisory Services
A Premier Adviser/SM/ for Income Investing
<PAGE>
Contents
1 Dear Shareholder
3 Nuveen Flagship Kentucky Municipal Bond Fund
6 Nuveen Flagship Michigan Municipal
Bond Fund
9 Nuveen Flagship Ohio Municipal Bond
Fund
12 Portfolio of Investments
37 Statement of Net Assets
38 Statement of Operations
39 Statement of Changes in Net Assets
41 Notes to Financial Statements
47 Financial Highlights
51 Report of Independent Public
Accountants
52 Building a Better Portfolio
53 Fund Information
<PAGE>
[Photo of Timothy R. Schwertfeger Appears Here]
Timothy R. Schwertfeger
Chairman of the Board
Dear
Shareholder
I invite you to take a few minutes to read the annual report we've prepared for
you on the performance of your Nuveen state municipal bond fund for the fiscal
year ended May 31, 1999. You, along with your financial adviser, have made a
sound choice in choosing Nuveen to manage this portion of your assets. Since
1898, more than 1.3 million investors have trusted us to help them build and
sustain the wealth of a lifetime.
I'm pleased to report your fund continued to meet its primary objective of
providing you with dependable tax-free income and attractive after-tax total
returns. I will briefly describe the national economic environment during the
past 12 months. My discussion is followed by comments about the strategies
employed in managing your fund from the portfolio manager of each fund
represented in this report.
The Year In Review.
The Federal Reserve eased short-term rates for the first time in almost three
years by cutting the federal funds rate in the fall of 1998 three times,
bringing it to 4.75%. A month after the close of your fund's fiscal year, the
Fed raised its target by 25 basis points to 5%. (Be sure to read your fund
manager's comments about managing your fund in a rising interest rate
environment.)
The fed funds rate is the rate that banks charge each other for overnight
loans and serves as the basis many financial institutions use for setting
interest charges on a variety of products, from mortgage and car loans to credit
cards.
The Fed's rate cuts were made to avert a potential domestic credit crunch and
restore some stability to global markets. The moves seemed to have worked, as
the U.S. economy since has continued its pattern of non-inflationary growth,
accompanied by low interest rates and unemployment levels that remain among the
lowest in three decades, prompting the late June reversal by the Fed.
All indications point to a confident U.S. consumer who is comfortable with the
current state of the economy, especially the performance of the housing, stock
and job markets. This confidence is reflected in the most recent Consumer
Confidence Index report, issued by the University of Michigan's Conference Board
Inc., which showed a record-setting eighth consecutive month of gains in June.
On the global front, the turmoil of the past two years appears to be fading
somewhat, as international financial markets have begun to send recovery
signals.
Domestic inflation continues to be benign, with an increase of 2.1% for the 12
months ended May 31, 1999. The general backdrop of inflation indicators
continued to be mild, with the employment cost index, average hourly earnings,
and import and producer price trends all remaining favorable.
Federal Reserve Chairman Alan Greenspan recently stated that a key factor in
achieving today's peaceful coexistence of economic growth and low inflation has
been increased productivity. Improvements in productivity, spurred by
technological advances, have been responsible for
1
<PAGE>
offsetting wage and other inflationary pressures that we would normally expect
to see as part of a growing economy.
Why Municipal Bonds?
Our municipal bond funds continued to offer attractive, stable income in a
market that places a high premium on yield. In 1998, municipal bonds represented
a reasonably insulated haven in an otherwise turbulent market, with lower
volatility relative to Treasury bonds and other fixed-income investments. Even
in 1999, with interest rates rising again, municipals outperformed Treasuries
through the end of May.
The high ratio of tax-exempt municipal yields to Treasury yields sheltered
municipal bonds, to some extent, from the price decline that occurred in the
Treasury market during the first part of the year. While the yield on 30-year
Treasury bonds rose from 5.10% at the end of December to 5.83% as of May 31,
1999, the yield on the Bond Buyer Revenue Bond Index, an unmanaged index of
long-term municipal revenue bonds, gained 15 basis points--from 5.26% to 5.41%.
Given the inverse relationship between interest rates and bond prices, we saw
bond prices fall as rates rose over this period.
Though municipal bond prices did decrease, the decline was not as dramatic
as the drop in Treasuries.
This performance differential reflects the fact that Treasuries had become
relatively expensive as the result of safe-haven buying during the international
economic crises in 1998. As the financial turmoil subsided, however, foreign
investors returned to investing in their own countries rather than in U.S.
dollar-denominated securities, and the decline in demand caused U.S. Treasuries
to drop in price.
At the end of May 1999, the ratio between long-term municipal yields and
30-year Treasury yields stood at 93%, compared with the historical average of
86% for the period of 1986-1999. For investors, this meant that quality long-
term municipal bonds offered yields comparable to those of long Treasury bonds--
even before the tax advantages of municipal bonds were taken into account.
During the funds' fiscal year, that ratio hit a high of 104% in December.
On an after-tax basis in today's market, municipal bonds continue to
present an exceptionally attractive investment option relative to Treasuries.
During 1998, lower interest rates and the strong economy combined to
generate high levels of new municipal issuance and a significant increase in the
refinancing of existing bonds. Municipal issuance in 1998 reached $284 billion,
up 29% over 1997.
In the first part of 1999, however, as the market settled into a more
stable interest rate environment, refunding activity has dropped off
dramatically, resulting in a drop in municipal supply. This, in turn, has
enhanced the attractiveness of the municipal bonds that were brought to market,
as demand--especially from individual investors--remained relatively strong.
The Value of Nuveen Expertise. Nuveen Mutual Funds are a diverse collection of
investments featuring highly regarded asset management firms--Premier
Advisers/SM/--who direct the investment activities of each portfolio.
The Premier Advisers are firms that have earned a reputation for excellence
in their field of expertise--including Nuveen Investment Advisory Services for
income investing, Rittenhouse Financial Services for growth investing and
Institutional Capital Corporation for value investing.
For more information on our funds, contact your financial adviser for a
prospectus, or call Nuveen at (800) 621-7227, or download one from
www.nuveen.com. Please read the prospectus carefully before you invest or send
money.
We encourage you to talk with your financial adviser about Nuveen's
expanding array of investments and the ways they can help you establish a
diversified portfolio designed to build and sustain long-term financial
security.
We are grateful for the confidence you have placed in us and are dedicated
to maintaining your trust in the years ahead.
Sincerely,
/S/ Timothy R. Schwertfeger
Timothy R. Schwertfeger
Chairman of the Board
July 15, 1999
Following an April 15, 1999 special meeting of Nuveen Kentucky Limited Term
Municipal Bond Fund shareholders, that fund was reorganized into Nuveen Flagship
Kentucky Municipal Bond Fund effective April 23, 1999. The combination of the
funds' investment portfolios will benefit investors through lower operating
costs, greater investment efficiencies and improved portfolio diversification.
2
<PAGE>
NUVEEN FLAGSHIP KENTUCKY MUNICIPAL BOND FUND
Report from the Portfolio Manager
Portfolio Manager Tom O'Shaughnessy discusses fund performance, the municipal
market and key investment strategies for the Kentucky fund for the fiscal year
ended May 31, 1999.
Comments cover the year ended May 31, 1999; performance statistics are quoted
for Class A shares at net asset value.
In what shape is Kentucky's economy? The state continues to diversify into a
more modern manufacturing and service oriented base, which is helping to reduce
its reliance on the historically important industries of coal, tobacco and heavy
industry. Kentucky's unemployment rate has fallen to 4.2% at May 31 from 4.8% a
year ago. Job growth has been concentrated in health services, business services
and retail trade.
Generally, Kentucky's per capita income is lower than the national average.
A bright spot for Kentucky is that Amazon.com, the Seattle-based internet book
seller, recently announced that it would locate two distribution centers in
Kentucky. Amazon was attracted to the state by its central location in the U.S.
and its generally lower wages. Although the Kentucky economy continues to
strengthen, the municipal market has seen relatively little supply during the
fiscal year. Rising interest rates in 1999 slowed municipal bond activity--both
new issuance and refundings--in the latter half of the fund's fiscal year.
There were two reasons the market slowed--the increased interest rates,
which primarily slowed new issuance, plus the fact that the refunding market has
essentially been exhausted. Municipalities flooded the market with refundings in
recent years when interest rates were dropping. A provision of the Tax Reform
Act of 1986, however, limits municipalities to only one tax-exempt refunding of
a bond issuance.
Throughout the period, municipal bonds held their values quite well
compared to U.S. Treasury bonds.
How did Nuveen Flagship Kentucky Municipal Bond Fund perform during its fiscal
year? Nuveen Flagship Kentucky Municipal Bond Fund generated a total return on
net asset value of 3.66%, outperforming the 3.53% average annual total return
posted by the Lipper Kentucky Municipal Debt Peer Group.* Total return equals a
fund's income and capital gains distributions, if any, plus or minus changes in
net asset value. The fund's taxable equivalent total return, for investors in
the 35% combined federal and state income tax bracket, was 6.37%.**
As of May 31, 1999, the fund's SEC 30-day yield was 4.39%. For investors in the
combined 35% federal and state income tax bracket, that is equivalent to a yield
of 6.75% on a taxable investment.
How did you manage the fund to achieve this performance? We continued to focus
on bonds we determined to have a good "call" structure. Issuers generally have
the right to call or redeem their bonds after a given date prior to maturity,
which they would do if interest rates declined. To protect the fund's income
stream, we looked for bonds with call dates far in the future--or better yet,
that are noncallable.
In addition to call protection, we continued to search for bonds that
offered attractive yields and sound underlying credit quality. Examples of
recent acquisitions include bonds for Louisville Regional Airport where Federal
Express is a major carrier, and issuances by Bellarmine College and Kentucky
Housing Corporation. We rely on Nuveen Research to help identify these
opportunities.
*The Lipper Peer Group return represents the average annualized total return
of the funds in the Lipper Kentucky Municipal Debt category. The return
assumes reinvestment of dividends and does not reflect any applicable sales
charges.
**Taxable equivalent total return equals a fund's taxable equivalent income
(based on the combined federal and state tax rate) plus capital gains
distributions, if any, plus or minus changes in net asset value.
3
<PAGE>
In addition to assessing the credit quality of individual issuers, Nuveen
Research helps us monitor events in the municipal market and analyze how those
events affect individual state and national municipal markets. For example,
during spring 1998, a major not-for-profit healthcare provider in Philadelphia
declared bankruptcy. While the impact of this bankruptcy was most pronounced in
the healthcare sector of the Pennsylvania municipal market, it was felt to a
lesser extent throughout the municipal market.
Uncertainty created by the Philadelphia health-care situation prompted
investors to demand higher yields for lower-rated issues across the country,
causing the yield "spread," or the difference between the highest credit quality
securities and those of lower credit quality, to widen. Prior to the bankruptcy,
this spread had been relatively narrow, suggesting that investors were not being
compensated adequately for taking on additional credit risk. With spreads having
widened, lower-rated securities have become more attractive on a risk-adjusted
basis.
With interest rates at a higher level, and the widening differential
between low-rated and high-rated credits, we took the opportunity to investigate
lower-rated issues. Using the expertise of Nuveen Research, we considered only
those bonds that offered adequate compensation for the level of risk.
For instance, the fund benefited from Nuveen's strength in analyzing
multifamily housing bonds when we purchased the entire issue of City of
Henderson Residential Revenue bonds. Working closely with the issuer and the
underwriter, Nuveen negotiated stronger credit protections and favorable pricing
for this complicated transaction.
Shown only to a few institutional investors, this transaction represents
added value to investors in the fund. Our team's expertise and resources makes
us particularly qualified to analyze, negotiate and price these bonds
correctly.
In recent months, we have taken advantage of rising interest rates by
selling some bonds at a loss--because as interest rates rose, prices of the
bonds fell--and subsequently buying similar securities, whose yield reflected
the higher interest rates.
Called a "swap," this action produced two benefits for the fund and for
shareholders--tax efficiency and potentially higher income. Tax losses were
created by the swaps, which will benefit the fund and are used to offset capital
gains for up to eight years. The higher yield of the new bonds should boost the
fund's income as well.
What is your outlook for Nuveen Flagship Kentucky Municipal Bond Fund?
Rising interest rates in 1999 have made it advantageous for us to lock in higher
yields by extending the portfolio's maturity beyond that of our benchmark. We
believe that bond yields are currently attractive in relation to inflation.
Should interest rates fall or remain stable, the portfolio's longer duration
would be advantageous.
Although Kentucky's economy is becoming stronger and more diversified, the
supply of available bonds continues to be thin. Nevertheless, we will continue
to seek out undervalued securities that provide income and the opportunity for
price appreciation through credit rating upgrades.
"The fund benefited from Nuveen's strength in analyzing multi-family
housing bonds when we purchased the entire issue of City of Henderson
Residential Revenue bonds. Working closely with the issuer and the underwriter,
Nuveen negotiated stronger credit protections and favorable pricing for this
complicated transaction."
4
<PAGE>
NUVEEN FLAGSHIP KENTUCKY MUNICIPAL BOND FUND
Highlights as of May 31, 1999
<TABLE>
<CAPTION>
Quick Facts
A Shares B Shares C Shares R Shares
<S> <C> <C> <C> <C>
NAV $ 11.22 $ 11.22 $ 11.21 $ 11.20
- -------------------------------------------------------------------------------------
May's Declared Dividend* $0.0455 $0.0385 $0.0405 $0.0475
- -------------------------------------------------------------------------------------
Fund Symbol FKYTX N/A FKYCX N/A
- -------------------------------------------------------------------------------------
CUSIP 67065R507 67065R606 67065R705 67065R804
- -------------------------------------------------------------------------------------
Inception Date 5/87 2/97 10/93 2/97
- -------------------------------------------------------------------------------------
</TABLE>
* Paid June 1, 1999
<TABLE>
<CAPTION>
Total Returns (Annualized)+
A Shares B Shares C Shares R Shares
NAV Offer NAV NAV NAV
<S> <C> <C> <C> <C> <C>
1-Year 3.66% -0.70% 2.90% 3.12% 3.89%
- -----------------------------------------------------------------------
1-Year TER** 6.37% 1.89% 5.19% 5.53% 6.72%
- -----------------------------------------------------------------------
5-Year 6.77% 5.85% 6.09% 6.18% 6.84%
- -----------------------------------------------------------------------
10-Year 7.41% 6.94% 6.94% 6.82% 7.44%
</TABLE>
+ 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.
** Taxable Equivalent Return (based on a combined federal and state tax rate
of 35%).
Index Comparison.*
[LINE CHART APPEARS HERE]
<TABLE>
<CAPTION>
Nuveen Flagship Nuveen Flagship Lehman Brothers
Kentucky Municipal Kentucky Municipal Municipal
May Bond Fund (Offer) Bond Fund (NAV) Bond Index
<S> <C> <C> <C>
1989 9,580 10,000 10,000
1990 10,191 10,638 10,731
1991 11,248 11,741 11,813
1992 12,317 12,857 12,974
1993 13,844 14,451 14,526
1994 14,110 14,728 14,885
1995 15,439 16,116 16,240
1996 16,063 16,768 16,982
1997 17,325 18,085 18,391
1998 18,883 19,711 20,117
1999 19,579 20,438 21,058
</TABLE>
Nuveen Flagship Kentucky Municipal Bond Fund (Offer) $19,579
Nuveen Flagship Kentucky Municipal Bond Fund (NAV) $ 20,438
Lehman Brothers Municipal Bond Index $21,058
* The Index Comparison shows the change in value of a $10,000 investment in the
Class A shares of the Nuveen fund compared with the Lehman Brothers Municipal
Bond Index. The Lehman Index is comprised of a broad range of investment-grade
Bond Index. The Lehman Index is comprised of a broad range of investment-grade
municipal bonds, and does not reflect any initial or ongoing expenses. The
Nuveen fund return depicted in the chart reflects the initial maximum sales
charge applicable to A shares (4.20%) and all ongoing fund expenses.
Monthly Tax-Free Dividends (Class A Shares)*
[BAR CHART APPEARS HERE]
<TABLE>
<CAPTION>
<S> <C>
June .0475
July .0475
August .0475
September .0475
October .0465
November .0465
December .0465
January .0465
February .0465
March .0455
April .0455
May .0455
</TABLE>
* The fund also paid shareholders capital gains and net ordinary income
distributions in December of $0.0237 per share.
Morningstar Rating/TM 1/
****
Overall rating among 1,586 municipal bond funds as of 5/31/99.
<TABLE>
<CAPTION>
Portfolio Statistics
<S> <C>
Fund Net Assets $515 million
- -------------------------------------
Effective Maturity 19.64 years
- -------------------------------------
Average
Effective Duration 6.92
- -------------------------------------
</TABLE>
<TABLE>
<CAPTION>
Top Five Sectors/2/
<S> <C>
Tax Obligation (Limited) 21%
- ----------------------------------
Health Care 19%
- ----------------------------------
U.S. Guaranteed 13%
- ----------------------------------
Utilities 9%
- ----------------------------------
Water and Sewer 8%
- ----------------------------------
</TABLE>
Bond Credit Quality/2/
[PIE CHART APPEARS HERE]
AAA/U.S.
Guaranteed..56%
AA...........6%
A...........18%
BBB/NR......20%
Returns are historical and do not guarantee future performance. Investment
returns and principal value will fluctuate so that when shares are redeemed,
they may be worth more or less than original cost. Performance of classes will
differ. For additional information, please see the fund's prospectus.
/1/ The Morningstar rating is an overall rating for the municipal bond category
and relates to Class A Shares only; other classes may vary. Morningstar
proprietary ratings reflect historical risk-adjusted performance as of 5/31/99
and are subject to change every month. Past performance is no guarantee of
future results. Ratings are calculated from the fund's three-, five-, and 10-
year average annual returns (if applicable) in excess of 90-day Treasury bill
returns, with appropriate fee adjustments, and a risk factor that reflects fund
performance below 90-day T-bill returns. A shares of the fund received 4 stars
for the 3- and 5-year periods and 3 stars for the 10-year period. The top 10% of
the funds in a broad asset class receive 5 stars and the next 22.5% receive 4
stars. The fund was rated among 1586, 1184, and 368 funds for the three-, five-,
and 10-year periods, respectively.
/2/ as a percentage of total bond holdings
5
<PAGE>
NUVEEN FLAGSHIP MICHIGAN MUNICIPAL BOND FUND
Report from the Portfolio Manager
Portfolio Manager Mike Davern discusses fund performance, the municipal market
and key investment strategies for the Michigan fund for the fiscal year ended
May 31, 1999.
Comments cover the year ended May 31, 1999; performance statistics are quoted
for Class A shares at net asset value.
How strong is Michigan's economy? With an unemployment rate of 3.9% at May 31,
the Michigan economy continues to diversify beyond the economically sensitive
automobile industry. At the same time, the auto industry has been a positive
contributor to Michigan's economy during the past fiscal year.
In response to low interest rates, the expanding economy and Michigan's
continued population growth, the state's municipal bond issuance surged in 1998.
A significant percentage of new Michigan issues represents general obligation
bonds for school districts and are of extremely high quality.
Rising interest rates in 1999, however, significantly slowed municipal bond
activity--both new issuance and refundings--in the latter half of the fund's
fiscal year.
There were two reasons the market slowed--the increased interest rates,
which primarily slowed new issuance, plus the fact that the refunding market has
essentially been exhausted. Municipalities flooded the market with refundings in
recent years when interest rates were dropping. A provision of the Tax Reform
Act of 1986, however, limits municipalities to only one tax-exempt refunding per
issue.
As was the case on the national level, increasing concerns about rising
economic growth and potential inflation caused bond yields to rise and prices to
fall. However, municipal bonds held their values quite well compared to U.S.
Treasury bonds.
How did Nuveen Flagship Michigan Municipal Bond Fund perform during its fiscal
year? Nuveen Flagship Michigan Municipal Bond Fund generated a total return on
net asset value of 3.45%, outperforming the 3.3% average annual total return
posted by the Lipper Michigan Municipal Debt Peer Group.* Total return equals a
fund's income and capital gains distributions, if any, plus or minus changes in
net asset value. The fund's taxable equivalent return, for investors in the 34%
combined federal and state income tax bracket, was 6.07%.**
As of May 31, 1999, the fund's SEC 30-day yield was 4.09%. For investors in
the combined 34% federal and state income tax bracket, that is equivalent to a
yield of 6.2% on a taxable investment.
How did you manage the fund to achieve this performance? We continued to focus
on bonds we determined to have a good "call" structure. Issuers generally have
the right to call or redeem their bonds after a given date prior to maturity,
which they would do if interest rates decline. To protect the fund's income
stream, we look for bonds with call dates far in the future--or better yet, that
are noncallable. Only 7% of the Michigan portfolio is callable between now and
the year 2001.
In addition to good call protection, we continued to search for bonds that
offered attractive yields and sound underlying credit quality. We rely on Nuveen
Research to help identify these opportunities.
* The Lipper Peer Group return represents the average annualized total return of
the 49 funds in the Lipper Michigan Municipal Debt category. The return
assumes reinvestment of dividends and does not reflect any applicable sales
charges.
**Taxable equivalent total return equals a fund's taxable equivalent income
(based on the combined federal and state tax rate) plus capital gains
distributions, if any, plus or minus changes in net asset value.
6
<PAGE>
Nuveen Research also helps us monitor events in the municipal market and
analyze how those events affect individual state and national municipal markets.
For example, during spring 1998, a major not-for-profit healthcare provider
in Philadelphia declared bankruptcy. While the impact of this bankruptcy was
most pronounced in the healthcare sector of the Pennsylvania municipal market,
it was felt to a lesser extent throughout the municipal market.
Uncertainty created by the Philadelphia healthcare situation prompted
investors to demand higher yields for lower-rated issues across the country,
causing the yield "spread," or the difference between the highest credit quality
securities and those of lower credit quality, to widen. Prior to the bankruptcy,
this spread had been relatively narrow, suggesting that investors were not being
compensated adequately for taking on additional credit risk. With spreads having
widened, lower-rated securities have become more attractive on a risk-adjusted
basis.
With interest rates at a higher level, and the widening differential
between low-rated and high-rated credits, we took the opportunity to investigate
lower-rated issues. Using the expertise of Nuveen Research, we considered only
those bonds that offered adequate compensation for the level of risk.
Other bonds in the portfolio with a high coupon and good call protection
often are "pre-refunded" as interest rates fall, as they did in '98. A pre-
refunding establishes an escrow of U.S. government securities designed to retire
the original debt at a designated date. As a result, the bond price rises
through the elimination of credit risk due to the U.S. government escrow account
and the acceleration of maturity to the call date. So, pre-refunding is a big
plus for the portfolio.
In recent months, however, we have taken advantage of rising interest rates
by selling some bonds at a loss--because as interest rates rose, prices of the
bonds fell--and subsequently buying similar securities, whose yield reflected
the higher interest rates.
Called a "swap," this action produced two benefits for the fund and for
shareholders--tax efficiency and potentially higher income. Tax losses were
created by the swaps, which will benefit the fund and are used to offset capital
gains for up to eight years. The higher yield of the new bonds should boost the
fund's income as well.
What is your outlook for Nuveen Flagship Michigan Municipal Bond Fund?
Rising interest rates in 1999 have made it advantageous for us to lock in higher
yields by extending the portfolio's maturity beyond that of our benchmark.
We believe that bond yields are currently attractive in relation to
inflation. Should interest rates fall or remain stable, the portfolio's longer
duration would be beneficial.
With Michigan's strong economy and influx of population, we expect there
will continue to be a buoyant supply and demand for municipal bonds in areas
such as housing, healthcare, education and utilities. We will continue to seek
out undervalued securities that provide income and the opportunity for price
appreciation through credit rating upgrades.
"Other bonds in the portfolio with a high coupon and good call protection often
are "pre-refunded" as interest rates fall... A pre-refunding is a big plus for
the portfolio."
7
<PAGE>
NUVEEN FLAGSHIP MICHIGAN MUNICIPAL BOND FUND
Highlights as of May 31, 1999
Quick Facts
<TABLE>
<CAPTION>
A Shares B Shares C Shares R Shares
<S> <C> <C> <C> <C>
NAV $11.83 $ 11.85 $ 11.82 $ 11.83
- ----------------------------------------------------------------------------------------------------
May's Declared Dividend* $0.049 $0.0415 $0.0435 $0.0510
- ----------------------------------------------------------------------------------------------------
Fund Symbol FMITX N/A FLMCX NMMIX
- ----------------------------------------------------------------------------------------------------
CUSIP 67065R853 67065R846 67065R838 67065R820
- ----------------------------------------------------------------------------------------------------
Inception Date 6/85 2/97 6/93 2/97
- ----------------------------------------------------------------------------------------------------
</TABLE>
*Paid June 1, 1999
Total Returns (Annualized)+
<TABLE>
<CAPTION>
A Shares B Shares C Shares R Shares
NAV Offer NAV NAV NAV
<S> <C> <C> <C> <C> <C>
1-Year 3.45% -0.90% 2.69% 2.90% 3.66%
- ----------------------------------------------------------------------------------------------------
1-Year TER** 6.07% 1.61% 4.90% 5.22% 6.38%
- ----------------------------------------------------------------------------------------------------
5-Year 6.57% 5.65% 5.92% 6.00% 6.67%
- ----------------------------------------------------------------------------------------------------
10-Year 7.14% 6.67% 6.68% 6.52% 7.18%
</TABLE>
+ 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.
** Taxable Equivalent Return (based on a combined federal and state tax rate of
34%).
Index Comparison*
[LINE CHART APPEARS HERE]
<TABLE>
<CAPTION>
Nuveen Flagship Nuveen Flagship Lehman Brothers
Michigan Municipal Michigan Municipal Municipal
May Bond Fund (Offer) Bond Fund (NAV) Bond Index
<S> <C> <C> <C>
1989 9,580 10,000 10,000
1990 10,174 10,620 10,731
1991 11,064 11,549 11,813
1992 12,142 12,674 12,974
1993 13,630 14,227 14,526
1994 13,882 14,491 14,885
1995 15,070 15,730 16,240
1996 15,616 16,301 16,982
1997 16,935 17,678 18,391
1998 18,453 19,262 20,117
1999 19,088 19,925 21,058
</TABLE>
Nuveen Flagship Michigan Municipal Bond Fund (Offer) $19,088
Nuveen Flagship Michigan Municipal Bond Fund (NAV) $19,925
Lehman Brothers Municipal Bond Index $21,058
* The Index Comparison shows the change in value of a $10,000 investment in
the Class A shares of the Nuveen fund compared with the Lehman Brothers
Municipal Bond Index. The Lehman Index is comprised of a broad range of
investment-grade municipal bonds, and does not reflect any initial or
ongoing expenses. The Nuveen fund return depicted in the chart reflects the
initial maximum sales charge applicable to A shares (4.20%) and all ongoing
fund expenses.
Monthly Tax-Free Dividends (Class A Shares)*
[BAR CHART APPEARS HERE]
Month
- -----
June .0500
July .0500
August .0500
September .0500
October .0500
November .0500
December .0500
January .0500
February .0500
March .0500
April .0490
May .0490
* The fund also paid shareholders capital gains and net ordinary income
distributions in December of $0.0565 per share.
Portfolio Statistics
Fund Net Assets $343 million
- ----------------------------------------------------------------------
Effective Maturity 17.03 years
- ----------------------------------------------------------------------
Average
Effective Duration 7.45
- ----------------------------------------------------------------------
Top Five Sectors/1/
U.S. Guaranteed 22%
- ----------------------------------------------------------------------
Health Care 18%
- ----------------------------------------------------------------------
Tax Obligation (Limited) 15%
- ----------------------------------------------------------------------
Tax Obligation (General) 14%
- ----------------------------------------------------------------------
Water and Sewer 6%
- ----------------------------------------------------------------------
Bond Credit Quality/1/
[PIE CHART APPEARS HERE]
AAA/U.S.
Guaranteed......59%
AA..............15%
A............... 8%
BBB/NR..........18%
/1/ as a percentage of total bond holdings
Returns are historical and do not guarantee future performance. Investment
returns and principal value will fluctuate so that when shares are redeemed,
they may be worth more or less than original cost. Performance of classes will
differ. For additional information, please see the fund's prospectus.
8
<PAGE>
NUVEEN FLAGSHIP OHIO MUNICIPAL BOND FUND
Report from the Portfolio Manager
Portfolio Manager Tom Futrell discusses fund performance, the municipal market
and key investment strategies for the Ohio fund for the
fiscal year ended May 31, 1999.
Comments cover the year ended May 31, 1999; performance
statistics are quoted for Class A shares at net asset value.
How strong is Ohio's economy? The Ohio economy continues to diversify beyond
manufacturing, on which it is still more reliant than most states. The
unemployment rate is 4.2% as of May 31, and job growth is concentrated in the
construction and services area, with some high technology growth in northern
Ohio.
The importance of industrial exports has increased the state's exposure to the
global economy, a concern last fall in light of Asia's difficulties. However,
the Far East's improved outlook is currently a positive for the state.
In response to low interest rates and Ohio's expanding economy, the state's
municipal bond issuance was healthy in 1998.
Rising interest rates in 1999, however, significantly slowed municipal bond
activity--both new issuance and refundings--in the latter half of the fund's
fiscal year. There were two reasons the market slowed--the increased interest
rates, which primarily slowed new issuance, plus the fact that the refunding
market has essentially been exhausted. Municipalities flooded the market with
refundings in recent years when interest rates were dropping. A provision of the
Tax Reform Act of 1986, however, limits municipalities to only one tax-exempt
refunding per issue.
As was the case on the national level, increasing concerns about strong
economic growth and potential inflation caused bond yields to rise and prices to
fall. However, municipal bonds held their values quite well compared to U.S.
Treasury bonds.
How did Nuveen Flagship Ohio Municipal Bond Fund perform during its fiscal year?
Nuveen Flagship Ohio Municipal Bond Fund generated a total return on net asset
value of 3.92%, outperforming the 3.52% average annual total return posted by
the Lipper Ohio Municipal Debt Peer Group.* The fund ranked 12th out of 51
municipal bond funds for the fiscal year period in its Lipper category. Total
return equals a fund's income and capital gain distributions, if any, plus or
minus changes in net asset value. The fund's taxable equivalent total return,
for investors in the 36% combined federal and state income tax bracket, was
6.76%.**
As of May 31, 1999, the fund's SEC 30-day yield was 3.78%. For investors in
the combined 36% federal and state income tax bracket, that is equivalent to a
yield of 5.91% on a taxable investment.
How did you manage the fund to achieve this performance? We continued to focus
on bonds we determined to have a good "call" structure. Issuers generally have
the right to call or redeem their bonds after a given date prior to maturity,
which they are likely to do if interest rates decline. To protect the fund's
income stream, we looked for bonds with call dates far in the future--or better
yet, that are noncallable.
In addition to good call protection, we continued to search for bonds that
offered attractive yields and sound underlying credit quality. For instance, we
added a block of Ohio Housing Residential Mortgage Program bonds because they
offered both high credit quality and relatively high yields.
In addition to the bonds' structure, we believe that this state-run agency
does an excellent job in financing the construction of homes and apartment
buildings.
* The Lipper Peer Group return represents the average annualized total return
of the 51 funds in the Lipper Ohio Municipal Debt category. The return
assumes reinvestment of dividends and does not reflect any applicable sales
charges.
** Taxable equivalent total return equals a fund's taxable equivalent income
(based on the combined federal and state tax rate) plus capital gains
distributions, if any, plus or minus changes in net asset value.
9
<PAGE>
To help pay for the purchase, we took advantage of demand by retail individual
bond investors and strategically sold several intermediate maturity bonds. By
doing so, we were able to maintain the fund's long-term focus and offset the
inherent shortening of the portfolio that happens over time.
With interest rates at a higher level, and the widening differential between
low-rated and high-rated credits, we took the opportunity to investigate lower-
rated issues. Using the expertise of Nuveen Research, we considered only those
bonds that offered adequate compensation for the level of risk.
For instance, the fund was able to purchase Ohio Water Development Authority
bonds paying a 5.875% coupon due 2020. At the time of purchase, the yield
represented about 0.65 percentage points over high-grade bond yields. The bonds
helped finance Toledo Edison's Bay Shore Power Project, which involves modifying
one of Toledo Edison's conventional coal-fired facilities using an advanced
technology. Once converted, the facility will be able to produce extremely low-
cost energy.
In recent months, we have taken advantage of rising interest rates by selling
some bonds at a loss--because as interest rates rose, prices of the bonds fell--
and subsequently buying similar securities, whose yield now reflected the higher
interest rates.
Called a "swap," this action produced two benefits for the fund and for
shareholders--tax efficiency and potentially higher income. Tax losses were
created by the swaps, which will benefit the fund and are used to offset capital
gains for up to eight years. The higher yield of the new bonds should boost the
fund's income as well.
What is your outlook for Nuveen Flagship Ohio Municipal Bond Fund? With Ohio's
strong economy and expanding financing needs, we expect there will continue to
be a buoyant supply and demand for municipal bonds in areas such as housing,
healthcare, education and utilities.
We will continue to seek out lower investment grade and non-rated
opportunities to improve the incremental yield of the fund and boost income. We
will also continue to buy bonds that have maturities in the 20-30 year range.
"We added a block of Ohio Housing Residential Mortgage Program bonds because
they offered both high credit quality and relatively high yields. In addition to
the bonds' structure, we believe that this state-run agency does an excellent
job in financing the construction of homes and apartment buildings."
10
<PAGE>
NUVEEN FLAGSHIP OHIO MUNICIPAL BOND FUND
Highlights as of May 31, 1999
<TABLE>
<CAPTION>
Quick Facts
A Shares B Shares C Shares R Shares
<S> <C> <C> <C> <C>
NAV $ 11.57 $ 11.56 $ 11.56 $ 11.57
- -------------------------------------------------------------------------------
May's Declared Dividend* $0.0480 $0.0410 $0.0430 $0.0500
- -------------------------------------------------------------------------------
Fund Symbol FOHTX N/A FOHCX NXOHX
- -------------------------------------------------------------------------------
CUSIP 67065R762 67065R754 67065R747 67065R739
- -------------------------------------------------------------------------------
Inception Date 6/85 2/97 8/93 2/97
- -------------------------------------------------------------------------------
</TABLE>
*Paid June 1, 1999
<TABLE>
<CAPTION>
Total Returns (Annualized)+
A Shares B Shares C Shares R Shares
NAV Offer NAV NAV NAV
<S> <C> <C> <C> <C> <C>
1-Year 3.92% -0.41% 3.18% 3.39% 4.22%
- -------------------------------------------------------------------------------
1-Year TER** 6.76% 2.32% 5.61% 5.94% 7.19%
- -------------------------------------------------------------------------------
5-Year 6.30% 5.40% 5.62% 5.74% 6.41%
- -------------------------------------------------------------------------------
10-Year 6.98% 6.52% 6.51% 6.40% 7.03%
</TABLE>
+ 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.
**Taxable Equivalent Return (based on a combined federal and state tax rate of
36%).
Index Comparison*
[LINE CHART APPEARS HERE]
<TABLE>
<CAPTION>
Nuveen Flagship Nuveen Flagship Lehman Brothers
Ohio Municipal Ohio Municipal Municipal
May Bond Fund (Offer) Bond Fund (NAV) Bond Index
<S> <C> <C> <C>
1989 9,580 10,000 10,000
1990 10,140 10,585 10,731
1991 11,103 11,590 11,813
1992 12,188 12,722 12,974
1993 13,553 14,148 14,526
1994 13,854 14,461 14,885
1995 14,962 15,618 16,240
1996 15,501 16,180 16,982
1997 16,645 17,374 18,391
1998 18,100 18,893 20,117
1999 18,813 19,638 21,058
</TABLE>
- -- Nuveen Flagship Ohio Municipal Bond Fund (Offer) $18,813
- -- Nuveen Flagship Ohio Municipal Bond Fund (NAV) $19,638
- -- Lehman Brothers Municipal Bond Fund Index $21,058
(*) The Index Comparison shows the change in value of a $10,000 investment in
the Class A shares of the Nuveen fund compared with the Lehman Brothers
Municipal Bond Index. The Lehman Index is comprised of a broad range of
investment-grade municipal bonds, and does not reflect any initial or
ongoing expenses. The Nuveen fund return depicted in the chart reflects the
initial maximum sales charge applicable to A shares (4.20%) and all ongoing
fund expenses.
Monthly Tax-Free Dividends (Class A Shares)*
[BAR CHART APPEARS HERE]
Month
- -----
June .0490
July .0490
August .0490
September .0490
October .0480
November .0480
December .0480
January .0480
February .0480
March .0480
April .0480
May .0480
* The fund also paid shareholders capital gains and net ordinary income
distributions in December of $0.0447 per share.
Portfolio Statistics
Fund Net Assets $698 million
- --------------------------------------
Effective Maturity 19.02 years
- --------------------------------------
Average
- --------------------------------------
Effective Duration 6.71
- --------------------------------------
Top Five Sectors/1/
U.S. Guaranteed 18%
- --------------------------------------
Tax Obligation (General) 16%
- --------------------------------------
Health Care 15%
- --------------------------------------
Utilities 13%
- --------------------------------------
Housing (Single-Family) 8%
- --------------------------------------
Bond Credit Quality/1/
[PIE CHART APPEARS HERE]
AAA/U.S.
Guaranteed.... 67%
AA............ 7%
A............. 10%
BBB/NR........ 16%
/1/ as a percentage of total bond holdings
Returns are historical and do not guarantee future performance. Investment
returns and principal value will fluctuate so that when shares are redeemed,
they may be worth more or less than original cost. Performance of classes will
differ. For additional information, please see the fund's prospectus.
11
<PAGE>
Portfolio of Investments
Nuveen Flagship Kentucky Municipal Bond Fund
May 31, 1999
<TABLE>
<CAPTION>
Principal Optional Call Market
Amount Description Provisions* Ratings** Value
- ------------------------------------------------------------------------------------------------------------------------------------
Basic Materials -- 0.2%
<S> <C> <C> <C> <C>
$1,000,000 Jefferson County, Kentucky, Pollution Control Revenue 7/03 at 103 AA- $ 1,088,980
Bonds (E.I. du Pont de Nemours and Company Project),
1982 Series A, 6.300%, 7/01/12
- ------------------------------------------------------------------------------------------------------------------------------------
Consumer Staples -- 0.1%
320,000 City of Newport, Kentucky, Industrial Building Revenue No Opt. Call N/R 320,035
Bonds, Series 1996A (Louis Truath Dairy, Inc. Project),
4.800%, 6/01/99
- ------------------------------------------------------------------------------------------------------------------------------------
Education and Civic Organizations -- 2.4%
5,085,000 City of Campbellsville, Kentucky, Industrial Building 3/09 at 102 BBB- 4,950,248
Revenue Bonds (Campbellsville University Project),
Series 1999, 5.500%, 3/01/29
5,930,000 County of Jefferson, Kentucky, College Revenue Bonds 5/09 at 101 Baa2 5,667,301
(Bellarmine College Project), Series 1999, 5.250%,
5/01/29 (DD)
500,000 Kentucky Higher Education Student Loan Corporation, No Opt. Call Aaa 540,415
Insured Student Loan Revenue Bonds, 1991 Series B,
6.800%, 6/01/03 (Alternative Minimum Tax)
700,000 Northern Kentucky University, Consolidated Education 5/01 at 102 AAA 756,217
Building Revenue Bonds, Series F, 7.000%, 5/01/10
475,000 University of Kentucky, Consolidated Educational No Opt. Call AAA 492,518
Buildings Revenue Bonds, Series O, 5.000%, 5/01/03
- ------------------------------------------------------------------------------------------------------------------------------------
Energy -- 4.0%
325,000 City of Ashland, Kentucky, Pollution Control 2/00 at 102 1/2 Baa1 338,332
Revenue Refunding Bonds (Ashland Oil Inc. Project),
Series 1988A, 7.375%, 7/01/09
5,000,000 City of Ashland, Kentucky, Pollution Control 8/02 at 102 Baa1 5,390,350
Revenue Refunding Bonds (Ashland Oil Inc. Project),
Series 1992, 6.650%, 8/01/09
9,000,000 City of Ashland, Kentucky, Sewage and Solid Waste 2/05 at 102 Baa1 10,071,900
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 Revenue Bonds, 10/01 at 102 Baa1 4,668,296
Series 1991 (Ashland Oil Inc. Project), 7.200%,
10/01/20 (Alternative Minimum Tax)
- ------------------------------------------------------------------------------------------------------------------------------------
Forest and Paper Products -- 5.5%
2,370,000 Hancock County, Kentucky, Solid Waste Disposal Facilities 5/06 at 102 A- 2,599,084
Revenue Bonds (Willamette Industries, Inc. Project),
Series 1996, 6.600%, 5/01/26
9,750,000 County of Henderson, Kentucky, Solid Waste Disposal Revenue 3/05 at 102 Baa2 10,431,720
Bonds (MacMillan Bloedel Project), Series 1995, 7.000%,
3/01/25 (Alternative Minimum Tax)
1,500,000 Maysville, Kentucky, Industrial Development Revenue Bonds, 2/00 at 103 N/R 1,558,365
Crystal Tissue Project, 8.000%, 2/01/09 (Alternative
Minimum Tax)
3,750,000 County of Perry, Kentucky, Solid Waste Disposal Bonds 6/04 at 102 N/R 4,058,550
(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 4,598,322
2,000,000 6.550%, 4/15/27 (Alternative Minimum Tax) 4/07 at 102 N/R 2,134,240
2,820,000 City of Wickliffe, Kentucky, Solid Waste Disposal Facility 4/06 at 102 A1 3,042,244
Revenue Bonds, Series 1996 (Westvaco Corporation Project),
6.375%, 4/01/26 (Alternative Minimum Tax)
</TABLE>
12
<PAGE>
<TABLE>
<CAPTION>
Principal Optional Call Market
Amount Description Provisions* Ratings** Value
- -----------------------------------------------------------------------------------------------------------------------------------
Health Care - 19.2%
<S> <C> <C> <C> <C>
$ 1,310,000 County of Christian, Kentucky, Hospital Revenue Bonds, 7/06 at 102 A- $ 1,360,566
Series 1996A, Jennie Stuart Medical Center, 6.000%, 7/01/17
3,500,000 County of Christian, Kentucky, Hospital Revenue and 7/06 at 102 A- 3,741,150
Refunding Bonds, Series 1997A, Jennie Stuart Medical
Center, 6.000%, 7/01/13
5,270,000 County of Clark, Kentucky, Hospital Refunding and 3/07 at 102 BBB- 5,486,597
Improvement Revenue Bonds (Clark Regional Medical
Center Project), Series 1997, 6.200%, 4/01/13
3,300,000 County of Daviess, Kentucky, Insured Hospital Revenue 8/02 at 102 AAA 3,559,281
Bonds (ODCH, Inc. Project), Series 1992A, 6.250%, 8/01/22
2,705,000 County of Floyd, Kentucky, Hospital Revenue Refunding 2/01 at 102 AAA 2,865,352
Bonds (FHA-Insured Mortgage Loan-Highland Hospital
Corporation Project), Series 1991, 7.500%, 8/01/10
4,000,000 County of Hopkins, Kentucky, Hospital Revenue Bonds, 11/01 at 102 AAA 4,300,840
Series 1991 (The Trover Clinic Foundation, Incorporated),
6.625%, 11/15/11
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 1,283,058
12,785,000 6.550%, 5/01/22 5/02 at 102 AAA 13,802,175
4,625,000 County of Jefferson, Kentucky, Health Facilities Revenue 7/07 at 101 AAA 4,560,851
Bonds, Series 1997 (University Medical Center, Inc.
Project), 5.250%, 7/01/22
17,640,000 County of Jefferson, Kentucky, Health Facilities Revenue 10/07 at 101 AAA 17,125,618
Bonds, Series 1997 (Alliant Health System, Inc.),
5.125%, 10/01/27
7,800,000 County of Jefferson, Kentucky, Health Facilities Revenue 10/08 at 101 AAA 7,598,994
Bonds, Series 1998 (Alliant Health System, Inc.),
5.200%, 10/01/28
2,900,000 County of Jefferson, Kentucky, Insured Hospital Revenue 10/02 at 102 AAA 3,141,367
Bonds, Series 1992 (Alliant Health System, Inc. Project),
6.436%, 10/01/14
1,000,000 Kentucky Development Finance Authority (St. Elizabeth 11/01 at 100 AAA 1,045,280
Medical Center), Revenue Refunding Bonds, 6.000%,
11/01/10
5,000,000 Kentucky Economic Development Finance Authority, Hospital 12/03 at 102 AAA 5,415,700
Facilities Revenue Bonds, Series 1993A (Saint Elizabeth
Medical Center, Inc. Project), 6.000%, 12/01/22
9,500,000 Kentucky Economic Development Finance Authority, Hospital 2/07 at 102 AAA 9,882,470
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 5.500%, 10/01/07 No Opt. Call N/R 510,960
500,000 5.600%, 10/01/08 4/08 at 102 N/R 513,535
3,500,000 5.850%, 10/01/17 4/08 at 102 N/R 3,538,885
1,500,000 5.875%, 10/01/22 4/08 at 102 N/R 1,511,220
2,435,000 McCracken County, Kentucky, Hospital Facilities Revenue 11/04 at 102 AAA 2,681,179
Refunding Bonds, Series1994A (Mercy Health System),
6.300%, 11/01/06
City of Radcliff, Kentucky, Tax-Exempt Mortgage Revenue
Refunding Bonds, Series 1997 (GNMA Backed - Lincoln Trail
Care and Treatment Facility):
650,000 5.100%, 7/20/07 No Opt. Call AAA 662,981
1,555,000 5.650%, 1/20/19 7/07 at 102 AAA 1,603,936
2,800,000 City of Russell, Kentucky, Health System Revenue Bonds, 1/08 at 102 BBB 2,750,020
Our Lady of Bellefonte Hospital Issue, Series 1997
(Franciscan Health Partnership, Inc. Refunding
Revenue Bonds), 5.500%, 7/01/15
- -----------------------------------------------------------------------------------------------------------------------------------
Housing/Multifamily -- 2.1%
2,500,000 Greater Kentucky Housing Assistance Corporation, Mortgage 1/03 at 100 AAA 2,569,200
Revenue Refunding Bonds, Series 1993A (FHA-Insured Mortgage
Loans - Section 8 Assisted Projects), 6.250%, 7/01/24
3,510,000 City of Henderson, Kentucky, Residential Facilities Revenue 5/09 at 102 N/R 3,515,686
Bonds (Pleasant Pointe Project), Senior Tax-Exempt Series
1999A, 6.125%, 5/01/29 (WI)
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 690,585
2,900,000 5.650%, 8/20/34 8/08 at 102 AAA 2,989,494
</TABLE>
13
<PAGE>
Portfolio of Investments
Nuveen Flagship Kentucky Municipal Bond Fund (continued)
May 31, 1999
<TABLE>
<CAPTION>
Principal Optional Call Market
Amount Description Provisions* Ratings** Value
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Housing/Multifamily (continued)
$ 705,000 City of Louisville, Kentucky, Multifamily Housing Revenue Refunding No Opt. Call Aa2 $ 706,622
Bonds, Series 1989 (Station House Square Associates L.P. Project),
5.125%, 7/15/19 (Mandatory put 7/15/99)
335,000 County of Martin, Kentucky, Mortgage Revenue Refunding Bonds, Series 9/99 at 105 Aa 344,135
1995 (FHA Insured Mortgage Loan-Section 8 Assisted Project),
5.375%, 7/01/05
- -----------------------------------------------------------------------------------------------------------------------------------
Housing/Single Family - 7.2%
7,000,000 Kentucky Housing Corporation, Housing Revenue Bonds, 1996 Series E, 7/06 at 102 AAA 7,452,690
6.300%, 1/01/28 (Alternative Minimum Tax)
3,000,000 Kentucky Housing Corporation, Housing Revenue Bonds, 1997 Series B, 6/07 at 102 AAA 3,195,150
6.250%, 7/01/28 (Alternative Minimum Tax)
1,145,000 Kentucky Housing Corporation, Housing Revenue Bonds (FHA Insured/ VA 7/00 at 102 AAA 1,189,449
Guaranteed Mortgage Loans), 1988 Series C, 7.900%, 1/01/21
(Alternative Minimum Tax)
175,000 Kentucky Housing Corporation, Housing Revenue Bonds (FHA Insured/VA 7/00 at 102 AAA 175,735
Guaranteed), 1990 Series B, 7.800%, 1/01/21 (Alternative Minimum Tax)
1,000,000 Kentucky Housing Corporation, Housing Revenue Bonds (Federally Insured 7/02 at 102 AAA 1,061,050
or Guaranteed Mortgage Loans), Series 1992B, 6.625%, 7/01/14
415,000 Kentucky Housing Corporation, Housing Revenue Bonds (Federally Insured 1/03 at 102 AAA 438,311
or Guaranteed Mortgage Loans), Series 1991C-1, 6.600%, 1/01/11
100,000 Kentucky Housing Corporation, Housing Revenue Bonds, 1993 Series B 1/04 at 102 AAA 103,437
(Federally Insured or Guaranteed Mortgage Loans), 5.150%, 7/01/07
3,560,000 Kentucky Housing Corporation, Housing Revenue Bonds, 1998 Series F, 1/09 at 101 AAA 3,508,166
5.000%, 7/01/18 (Alternative Minimum Tax)
830,000 Kentucky Housing Corporation, Housing Revenue Bonds (Federally Insured 1/04 at 102 AAA 880,331
or Guaranteed Mortgage Loans), 1994 Series A, 6.500%, 7/01/17
1,990,000 Kentucky Housing Corporation, Housing Revenue Bonds (Federally Insured 7/04 at 102 AAA 2,120,624
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 2,110,742
or Guaranteed Mortgage Loans), 1995 Series B, 6.625%, 7/01/26
(Alternative Minimum Tax)
5,335,000 Kentucky Housing Corporation, Housing Revenue Bonds, 1999 Series B, 4/09 at 101 AAA 5,303,470
5.250%, 1/01/28 (Alternative Minimum Tax) (DD1)
9,480,000 Kentucky Housing Corporation, Housing Revenue Bonds, Series A, 4/09 at 101 AAA 9,421,319
5.200%, 1/01/31
- -----------------------------------------------------------------------------------------------------------------------------------
Long-Term Care - 3.4%
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 1,290,580
715,000 6.125%, 11/15/13 11/04 at 102 BBB 745,144
3,210,000 6.125%, 11/15/18 11/04 at 102 BBB 3,345,334
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 1,731,312
4,250,000 5.500%, 11/15/30 5/08 at 102 BBB 4,090,200
200,000 Kentucky Economic Development Finance Authority, Hospital Revenue No Opt. Call Aa3 204,736
Refunding Bonds, Series 1996 (Green River Regional Mental Health/
Mental Retardation Board, Inc.), 5.200%, 11/01/01
5,700,000 Kentucky Economic Development Finance Authority, Tax Exempt Mortgage 1/08 at 105 AAA 6,097,005
Revenue Bonds (South Central Nursing Homes, Inc. Project), Series
1997A, 6.000%, 7/01/27
- -----------------------------------------------------------------------------------------------------------------------------------
Tax Obligation/General - 1.9%
4,790,000 Commonwealth of Puerto Rico, Public Improvement Bonds of 1996 (General 7/06 at 101 1/2 A 4,849,827
Obligation Bonds), 5.400%, 7/01/25
2,000,000 Commonwealth of Puerto Rico, Public Improvement Bonds of 1997, 7/07 at 100 A 2,015,560
5.375%, 7/01/25
</TABLE>
14
<PAGE>
<TABLE>
<CAPTION>
Principal Optional Call Market
Amount Description Provisions* Ratings** Value
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Tax Obligation/General (continued)
$ 280,000 Commonwealth of Puerto Rico, Public Improvement Refunding Bonds, No Opt. Call A $ 296,355
Series 1993 (General Obligation Bonds), 5.375%, 7/01/05
3,000,000 Commonwealth of Puerto Rico, Public Improvement Bonds of 1998 (General 7/08 at 101 A 2,877,840
Obligation Bonds), 5.000%, 7/01/28
- ------------------------------------------------------------------------------------------------------------------------------------
Tax Obligation/Limited - 21.2%
615,000 Boone County, Kentucky, School District Finance Corporation School 2/03 at 102 A1 648,917
Building Refunding and Improvement Revenue Bonds, Series 1993,
6.000%, 2/01/18
1,595,000 City of Bowling Green Municipal Projects Corporation, 12/04 at 102 A2 1,756,382
Kentucky, 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 1,058,647
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 544,132
535,000 5.800%, 5/01/12 5/04 at 102 A1 569,952
570,000 5.800%, 5/01/13 5/04 at 102 A1 605,939
600,000 5.800%, 5/01/14 5/04 at 102 A1 636,468
1,070,000 Fleming County School District Finance Corporation, School 3/05 at 102 A 1,127,673
Building Revenue Bonds, Series 1995, 5.875%, 3/01/15
3,155,000 City of Florence, Kentucky, Public Properties Corporation, 6/07 at 102 AAA 3,261,702
First Mortgage Revenue Bonds (Administrative Office Complex
Project), Series 1997, 5.500%, 6/01/27
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 481,419
1,260,000 5.550%, 9/01/23 3/06 at 102 A 1,305,851
3,550,000 Floyd County, Kentucky, Public Properties Corporation, First Mortgage 3/06 at 102 A 3,803,115
Revenue Bonds (Floyd County Justice Center Project), Series 1996B,
6.200%, 9/01/26
1,200,000 Floyd County School District Finance Corporation, Kentucky, School 5/05 at 102 A1 1,246,728
Building Revenue Bonds, Series 1995, 5.500%, 5/01/15
2,280,000 Grant County School District Finance Corporation, School Building 3/07 at 102 Aaa 2,319,649
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 12/04 at 102 AAA 579,044
1,775,000 6.250%, 12/01/14 12/04 at 102 AAA 1,966,150
Hardin County, Kentucky, School District Finance Corporation, School
Building Revenue Bonds, Series of 1991:
265,000 6.800%, 6/01/08 6/01 at 103 A1 286,433
300,000 6.800%, 6/01/10 6/01 at 103 A1 324,264
3,465,000 Hopkins County, Kentucky, School District Finance Corporation, 6/04 at 102 A1 3,718,084
School Building Revenue Bonds, Series 1994, 6.200%, 6/01/19
4,195,000 Jefferson County, Kentucky, School District Finance Corporation, 2/06 at 102 AAA 4,190,008
School Building Revenue Bonds, Series 1996A, 5.125%, 2/01/16
4,600,000 Jefferson County, Kentucky, School District Finance Corporation, 2/09 at 101 AAA 4,176,984
School Building Revenue Bonds, Series 1998C, 4.500%, 2/01/19
1,072,876 County of Jefferson, Kentucky, Equipment Lease Purchase 6/99 at 101 N/R 1,100,954
Revenue Bonds, Series 1987 (Energy System Project), 9.000%, 6/01/03
197,818 County of Jefferson, Kentucky, Equipment Lease Purchase 6/99 at 102 N/R 205,742
Revenue Bonds, Series 1988 (Energy System Project), 9.500%, 6/01/03
2,500,000 Jefferson County, Kentucky, Capital Projects Corporation Lease Revenue 8/99 at 51 31/32 Aa3 1,288,225
Bonds, Series 1987B, 0.000%, 8/15/08
</TABLE>
15
<PAGE>
Portfolio of Investments
Nuveen Flagship Kentucky Municipal Bond Fund (continued)
May 31, 1999
<TABLE>
<CAPTION>
Principal Optional Call Market
Amount Description Provisions* Ratings** Value
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Tax Obligation/Limited (continued)
City of Jeffersontown, Kentucky, Public Projects Refunding and Improvements,
Certificates of Participation:
$ 100,000 5.000%, 11/01/05 No Opt. Call A $ 104,776
1,000,000 5.750%, 11/01/15 11/06 at 102 A 1,058,470
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 553,554
545,000 6.750%, 6/01/11 6/01 at 103 A1 591,543
2,500,000 Jessamine County, Kentucky, School District Finance Corporation, School 6/04 at 102 A1 2,667,450
Building Revenue Bonds, Series 1994, 6.125%, 6/01/19
5,650,000 Jessamine County, Kentucky, School District Finance Corporation, School 1/06 at 102 A1 5,828,653
Building Revenue Bonds, Series 1995,
5.500%, 1/01/21
4,500,000 Kenton County, Kentucky, Public Properties Corporation, First Mortgage 3/09 at 101 A1 4,276,035
Revenue Bonds (Courthouse Facilities Project), 1998 Series A,
5.000%, 3/01/29
400,000 Commonwealth of Kentucky, State Property and Buildings Commission, Revenue 11/01 at 102 A+ 432,512
and Revenue Refunding Bonds, Project No. 40, 2nd Series, 6.875%, 11/01/07
250,000 Commonwealth of Kentucky, State Property and Buildings Commission, Revenue 10/01 at 102 A 270,125
and Revenue Refunding Bonds, Project No. 53, 6.625%, 10/01/07
60,000 The Turnpike Authority of Kentucky, Economic Development Road Revenue No Opt. Call AAA 63,842
and Revenue Refunding Bonds (Revitalization Projects), Series 1993,
5.400%, 7/01/05
1,000,000 The Turnpike Authority of Kentucky, Economic Development Road Revenue 7/05 at 102 AAA 1,045,520
and Revenue Refunding Bonds (Revitalization Projects), Series 1995,
5.625%, 7/01/15
125,000 The Turnpike Authority of Kentucky, Resource Recovery Road Revenue 7/99 at 100 A+ 125,239
Refunding Bonds, 1985 Series A, 6.000%, 7/01/09
Lexington, Kentucky, Center Corporation, Mortgage Revenue Refunding and
Improvement Bonds, Series 1993A:
2,600,000 0.000%, 10/01/11 No Opt. Call A1 1,410,032
2,550,000 0.000%, 10/01/12 No Opt. Call A1 1,305,779
435,000 Lincoln County, Kentucky, School District Finance Corporation, School 5/02 at 102 A1 463,566
Building Revenue Bonds, Series 1992, 6.200%, 5/01/12
1,525,000 McCracken County, Kentucky, Public Properties Corporation, Public 9/06 at 102 AAA 1,629,539
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 2,462,083
School Building Revenue Bonds, Second Series of 1995, 5.600%,
8/01/16
1,410,000 Morgan County, Kentucky, School District Finance Corporation School 9/04 at 102 A1 1,509,320
Building Revenue Bonds, Series 1994, 6.000%, 9/01/14
Mount Sterling, Kentucky, Lease Revenue Bonds (Kentucky League of
Cities Funding Program), Series 1993A:
775,000 5.625%, 3/01/03 No Opt. Call Aa 811,185
13,000,000 6.200%, 3/01/18 3/03 at 102 Aa 13,635,180
Pendleton County, Kentucky, County Lease Revenue Bonds, Kentucky
Associated Counties Leasing Trust Program, Series 1993A:
12,960,000 6.500%, 3/01/19 3/03 at 102 A 13,693,018
500,000 6.400%, 3/01/19 No Opt. Call A 568,465
2,000,000 Puerto Rico Aqueduct and Sewer Authority, Refunding Bonds, Series 1995, 7/06 at 101 1/2 A 1,944,340
Guaranteed by the Commonwealth of Puerto Rico, 5.000%, 7/01/19
8,250,000 Puerto Rico Highway and Transportation Authority, Highway Revenue Bonds, 7/16 at 100 A 8,485,125
Series Y of 1996, 5.500%, 7/01/36
115,000 Puerto Rico Infrastructure Finance Authority, Special Tax Revenue Bonds, 7/99 at 101 BBB+ 117,663
Series 1988A, 7.750%, 7/01/08
7,000,000 Warren County, Kentucky, Justice Center Expansion Corporation, First 9/07 at 102 AAA 6,975,150
Mortgage Revenue Bonds, AOC Judicial Facility Series 1997A, 5.250%,
9/01/24
</TABLE>
16
<PAGE>
<TABLE>
<CAPTION>
Principal Optional Call Market
Amount Description Provisions* Ratings** Value
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Transportation -- 4.6%
$10,640,000 Kenton County Airport Board (Commonwealth of Kentucky), Special 2/02 at 100 BBB $10,840,670
Facilities Revenue Bonds, 1992 Series A (Delta Air Lines, Inc.
Project), 6.125%, 2/01/22 (Alternative Minimum Tax)
300,000 Kenton County, Kentucky, Airport Board, Cincinnati/Northern No Opt. Call AAA 307,521
Kentucky International Airport Revenue Bonds, Series 1996A,
5.000%, 3/01/02 (Alternative Minimum Tax)
1,250,000 Kenton County, Kentucky, Airport Board, Cincinnati/Northern 3/06 at 102 AAA 1,314,375
Kentucky International Airport Revenue Bonds, Series 1996B (non-AMT),
5.750%, 3/01/13
5,000,000 Regional Airport Authority of Louisville and Jefferson County, 7/05 at 102 AAA 5,130,350
Kentucky, Airport System Revenue Bonds, 1995 Series A, 5.625%,
7/01/25 (Alternative Minimum Tax)
6,000,000 Regional Airport Authority of Louisville and Jefferson County, 3/09 at 101 Baa3 6,004,260
Kentucky, Special Facilities Revenue Bonds, 1999 Series A
(Airis Louisville, L.L.C. Project), 5.500%, 3/01/19 (Alternative
Minimum Tax) (WI)
- -----------------------------------------------------------------------------------------------------------------------------------
U.S. Guaranteed -- 13.4%
430,000 Bardstown Independent School District Finance Corporation, School 11/02 at 102 A1*** 471,112
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, School 9/01 at 102 A*** 786,814
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, School 9/01 at 103 A1*** 1,091,780
Building Revenue Bonds, Series C of 1991, 6.750%, 9/01/11
(Pre-refunded to 9/01/01)
1,215,000 Boone County, Kentucky, School District Finance Corporation, School 12/02 at 102 A1*** 1,323,427
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*** 609,036
600,000 6.750%, 6/01/11 (Pre-refunded to 6/01/01) 6/01 at 102 A*** 646,764
1,645,000 City of Edgewood, Kentucky, Public Properties Corporation, First 12/01 at 102 A2*** 1,794,465
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 Corporation 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*** 108,225
320,000 7.000%, 3/01/14 (Pre-refunded to 3/01/01) 3/01 at 103 A3*** 347,184
345,000 7.000%, 3/01/15 (Pre-refunded to 3/01/01) 3/01 at 103 A3*** 374,308
360,000 7.000%, 3/01/16 (Pre-refunded to 3/01/01) 3/01 at 103 A3*** 390,582
17,000,000 Jefferson County, Kentucky, Capital Projects Corporation, 2/01 at 24 11/16 AAA 3,929,040
Lease Revenue Bonds, Series 1989B, 0.000%, 8/15/19
(Pre-refunded to 2/15/01)
4,900,000 County of Jefferson, Kentucky, Insured Hospital Revenue Bonds, 10/02 at 102 AAA 5,344,675
Series 1992 (Alliant Health System, Inc. Project), 6.436%, 10/01/14
(Pre-refunded to 10/29/02)
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*** 1,338,233
1,070,000 7.100%, 3/01/10 (Pre-refunded to 3/01/00) 3/00 at 101 A*** 1,110,735
815,000 Kenton County School District Finance Corporation, Kentucky, School 12/01 at 102 A+*** 888,725
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*** 3,101,250
Series 1989A (St. Luke Hospital, Inc.), 7.500%, 10/01/12
(Pre-refunded to 10/01/99)
Kentucky Development Finance Authority, Sisters of Charity of Nazareth
Health Corporation, Hospital Revenue Bonds, Series 1989:
1,750,000 7.375%, 11/01/16 (Pre-refunded to 11/01/99) 11/99 at 102 A1*** 1,813,368
500,000 7.375%, 11/01/16 (Pre-refunded to 11/01/99) 11/99 at 102 AAA 518,410
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 2,184,980
9,070,000 7.000%, 10/01/21 (Pre-refunded to 10/01/01) 10/01 at 102 AAA 9,908,884
580,000 Kentucky Development Finance Authority, Sisters of Charity of Nazareth 11/01 at 102 A1*** 628,482
Health Corporation, Revenue Refunding Bonds, Series 1991, 6.600%,
11/01/06 (Pre-refunded to 11/01/01)
</TABLE>
17
<PAGE>
Portfolio of Investments
Nuveen Flagship Kentucky Municipal Bond Fund (continued)
May 31, 1999
<TABLE>
<CAPTION>
Principal Optional Call Market
Amount Description Provisions* Ratings** Value
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
U.S. Guaranteed (continued)
$ 600,000 Kentucky Infrastructure Authority, Infrastructure Revolving Fund Program 6/05 at 102 A*** $ 675,450
Revenue Bonds, 1995 Series J, 6.375%, 6/01/14 (Pre-refunded to
6/01/05)
1,495,000 Kentucky Infrastructure Authority Governmental Agencies Program, Revenue 8/99 at 102 A*** 1,536,053
Refunding Bonds, Series 1989A, 7.800%, 8/01/08 (Pre-refunded to
8/01/99)
2,075,000 Commonwealth of Kentucky, State Property and Buildings Commission 9/04 at 102 A+*** 2,286,401
Revenue Bonds, Project No. 56, 6.000%, 9/01/14 (Pre-refunded to
9/01/04)
4,875,000 The Turnpike Authority of Kentucky, Economic Development Road Revenue 5/00 at 101 1/2 AAA 5,128,939
Bonds (Revitalization Projects), Series 1990, 7.250%, 5/15/10
(Pre-refunded to 5/15/00)
250,000 Laurel County, Kentucky, School District Finance Corporation, School 3/01 at 102 A*** 268,445
Building Revenue Bonds, 7.000%, 3/01/10 (Pre-refunded to 3/01/01)
1,000,000 Lawrence County, Kentucky, School District Finance Corporation, School 11/04 at 102 A1*** 1,140,320
Building Revenue Bonds, Series 1994, 6.750%, 11/01/14 (Pre-refunded
to 11/01/04)
Lexington-Fayette Urban County Government, Kentucky, Governmental
Project Revenue Bonds, Series 1994 (University of Kentucky Alumni
Association, Inc., Commonwealth Library Project):
3,195,000 6.750%, 11/01/17 (Pre-refunded to 11/01/04) 11/04 at 102 AAA 3,658,435
4,320,000 6.750%, 11/01/24 (Pre-refunded to 11/01/04) 11/04 at 102 AAA 4,946,616
2,790,000 The City of Louisville Parking Authority of River City (PARC), Inc., 6/01 at 103 A*** 3,034,934
Kentucky, First Mortgage Revenue Bonds, Series 1991,
6.875%, 12/01/20 (Pre-refunded to 6/01/01)
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*** 328,509
325,000 6.800%, 6/01/10 (Pre-refunded to 6/01/01) 6/01 at 102 A1*** 350,051
350,000 6.800%, 6/01/11 (Pre-refunded to 6/01/01) 6/01 at 102 A1*** 376,978
2,000,000 Northern Kentucky University Certificates of Participation, Student 1/01 at 102 AAA 2,147,860
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, School 7/02 at 102 A1*** 1,334,636
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 Bonds, 12/00 at 102 AAA 2,143,767
Series 1990L, 7.400%, 12/01/10 (Pre-refunded to 12/01/00)
940,000 Western Kentucky University, Consolidated Educational Building Revenue 11/00 at 102 AAA 1,010,002
Bonds, Series 1990J, 7.400%, 5/01/10 (Pre-refunded to 11/01/00)
- -----------------------------------------------------------------------------------------------------------------------------------
Utilities - 8.6%
7,000,000 County of Boone, Kentucky, Collateralized Pollution Control Revenue 1/04 at 102 AAA 7,164,570
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 Revenue 2/02 at 102 Aa2 5,328,631
Bonds (Kentucky Utilities Company Project), 1992 Series B,
6.250%, 2/01/18
County of Jefferson, Kentucky, Pollution Control Revenue Bonds, 1990
Series A (Louisville Gas and Electric Company Project):
1,000,000 7.450%, 6/15/15 6/00 at 102 Aa2 1,050,650
1,750,000 5.900%, 4/15/23 4/05 at 102 Aa2 1,837,028
1,250,000 Mercer County, Kentucky, Collateralized Pollution Control Revenue Bonds 2/02 at 102 Aa2 1,325,837
(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 4,032,658
6,475,000 0.000%, 1/01/12 No Opt. Call AAA 3,472,543
7,900,000 0.000%, 1/01/17 No Opt. Call AAA 3,169,243
13,300,000 0.000%, 1/01/18 No Opt. Call AAA 5,047,350
5,100,000 0.000%, 1/01/19 No Opt. Call AAA 1,830,135
4,725,000 0.000%, 1/01/20 No Opt. Call AAA 1,605,933
400,000 City of Owensboro, Kentucky, Electric Light and Power System Revenue No Opt. Call AAA 329,760
Bonds, Series 1993A, 0.000%, 1/01/04 (Alternative Minimum Tax)
3,000,000 Puerto Rico Electric Power Authority, Power Revenue Bonds, Series T, 7/04 at 102 BBB+ 3,214,230
6.000%, 7/01/16
</TABLE>
18
<PAGE>
<TABLE>
<CAPTION>
Principal Optional Call Market
Amount Description Provisions* Ratings** Value
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Utilities (continued)
$ 4,795,000 Trimble County, Kentucky, Pollution Control Revenue Bonds 11/00 at 102 Aa2 $ 5,093,489
(Louisville Electric Company), Series 1990A, 7.625%,
11/01/20 (Alternative Minimum Tax)
- -----------------------------------------------------------------------------------------------------------------------------------
Water and Sewer - 7.8%
625,000 City of Danville, Kentucky, Multi-City Lease Revenue 12/01 at 103 AAA 681,931
Bonds (City of Radcliff, Kentucky, Sewer System Revenue
Project), Fixed Rate Series 1991-B, 6.875%, 3/01/19
(Optional put 12/01/10)
1,750,000 City of Henderson, Kentucky, Water and Sewer Revenue and
Refunding Bonds, Series 1994A, 6.100%, 11/01/14 11/04 at 103 AAA 1,933,138
Kenton County Water District No. 1, Water District Revenue Bonds,
Series 1995B:
200,000 5.600%, 2/01/04 No Opt. Call AAA 212,852
2,040,000 5.700%, 2/01/20 8/05 at 102 AAA 2,150,221
500,000 Kentucky Infrastructure Authority, Infrastructure Revolving Fund
Program Revenue Bonds, 1991 Series E, 6.500%, 6/01/11 6/01 at 102 A 535,660
1,000,000 Kentucky Infrastructure Authority, Governmental Agencies Program
Revenue Refunding Bonds, 1993 Series E, 5.750%, 8/01/18 8/03 at 102 A 1,027,320
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 404,798
Kentucky Infrastructure Authority, Governmental Agencies Program Revenue
Bonds, 1995 Series G:
420,000 6.300%, 8/01/10 8/05 at 102 A 470,102
445,000 6.350%, 8/01/11 8/05 at 102 A 499,277
825,000 6.375%, 8/01/14 8/05 at 102 A 927,688
405,000 Kentucky Infrastructure Authority, Governmental Agencies Program Revenue 8/99 at 102 A 416,077
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 3,116,766
2,070,000 6.500%, 5/15/24 11/04 at 102 AAA 2,346,842
2,500,000 6.750%, 5/15/25 11/04 at 102 AAA 2,864,674
3,865,000 Louisville and Jefferson County Metropolitan Sewer District (Commonwealth 2/05 at 102 Aaa 3,916,056
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 (Commonwealth 5/07 at 101 AAA 10,446,344
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 (Commonwealth 11/07 at 101 AAA 6,059,759
of Kentucky), Sewer and Drainage System Revenue Bonds, Series 1997B,
5.350%, 5/15/22
1,000,000 Louisville and Jefferson County Metropolitan Sewer District (Commonwealth 5/08 at 101 AAA 921,089
of Kentucky), Sewer and Drainage System Revenue Bonds, Series 1998A,
4.750%, 5/15/28
500,000 Paducah, Kentucky, Waterworks Revenue Refunding Bonds, Series 1991, 6.700%, 7/01 at 102 AAA 539,534
7/01/09
- -----------------------------------------------------------------------------------------------------------------------------------
$545,555,694 Total Investments - (cost $492,461,610) - 101.6% 523,340,679
============-----------------------------------------------------------------------------------------------------------------------
Other Assets Less Liabilities - (1.6)% (8,206,210)
--------------------------------------------------------------------------------------------------------------------
Net Assets - 100% $515,134,469
====================================================================================================================
</TABLE>
* Optional Call Provisions (not covered by the report
of independent public accountants): 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 (not covered by the report of independent
public accountants): 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.
(DD) Security purchased on a delayed delivered basis
(note 1).
(DD1) Portion of security purchased on a delayed delivery
basis (note 1).
(WI) Security purchased on a when-issued basis (note 1).
See accompanying notes to financial statements.
19
<PAGE>
Portfolio of Investments
Nuveen Flagship Michigan Municipal Bond Fund
May 31, 1999
<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 Revenue Bonds (WMX 12/03 at 102 A1 $1,110,904
Technologies, Inc. Project), Series 1993, 6.000%, 12/01/13
(Alternative Minimum Tax)
- -----------------------------------------------------------------------------------------------------------------------------------
Consumer Cyclical - 3.2%
2,500,000 Michigan Strategic Fund, Limited Obligation Refunding Revenue No Opt. Call A1 2,877,825
Bonds, Series 1991A, 7.100%, 2/01/06
5,000,000 Michigan Strategic Fund, Multi-Modal Interchangeable Rate 9/05 at 102 A 5,362,650
Pollution Control Refunding Revenue Bonds (General Motors
Corporation), Series 1995, 6.200%, 9/01/20
2,650,000 Michigan Strategic Fund, Limited Obligation Revenue Bonds No Opt. Call A- 2,752,290
(Worthington Armstrong Venture Project), Series 1997, 5.750%,
10/01/22 (Alternative Minimum Tax)
- -----------------------------------------------------------------------------------------------------------------------------------
Education and Civic Organizations - 0.9%
210,000 Board of Control of Grand Valley State University, Michigan, 10/99 at 101 A+ 214,893
General Revenue Bonds, Series 1988, 7.875%, 10/01/08
750,000 Michigan Higher Education Student Loan Authority, Student Loan 6/06 at 102 Aaa 788,730
Revenue Bonds, Series XVII-A, 5.750%, 6/01/13 (Alternative
Minimum Tax)
1,000,000 Michigan Higher Education Student Loan Authority, Student Loan 6/08 at 101 AAA 998,230
Revenue Bonds, Series XVII-B, 5.400%, 6/01/18 (Alternative Minimum
Tax)
1,000,000 Board of Trustees of Western Michigan University, Michigan, General 11/02 at 102 AAA 1,094,810
Revenue Bonds, Series 1992A, 6.250%, 11/15/12
- -----------------------------------------------------------------------------------------------------------------------------------
Forest and Paper Products - 2.2%
7,500,000 The Economic Development Corporation of Dickinson County (Michigan), 10/03 at 102 Baa1 7,660,500
Pollution Control Refunding Revenue Bonds (Champion International
Corporation Project), Series 1993, 5.850%, 10/01/18
- -----------------------------------------------------------------------------------------------------------------------------------
Health Care - 18.1%
1,000,000 The Economic Development Corporation of the City of Dearborn, 11/05 at 102 AAA 1,060,780
Hospital Revenue Bonds (Oakwood Obligated Group), Series 1995A,
5.750%, 11/15/15
500,000 City of Farmington Hills, Hospital Finance Authority (Michigan), 2/02 at 102 AAA 542,885
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 952,370
1,000,000 5.375%, 7/01/28 7/08 at 101 Baa1 935,240
160,000 County of Grand Traverse (Michigan), Hospital Finance Authority, 7/02 at 102 AAA 172,102
Hospital Revenue Refunding Bonds (Munson Healthcare Obligated
Group), Series 1992A, 6.250%, 7/01/22
6,000,000 City of Kalamazoo Hospital Finance Authority, Hospital Revenue 5/06 at 102 AAA 6,315,660
Refunding and Improvement Bonds (Bronson Methodist Hospital),
Series 1996, 5.875%, 5/15/26
1,290,000 Kent Hospital Finance Authority (Michigan), Hospital Revenue 11/01 at 102 AAA 1,382,867
Refunding Bonds (Pine Rest Christian Hospital), Series 1992,
6.500%, 11/01/10
3,530,000 Lake View Community Hospital Authority (Michigan), Hospital 2/07 at 101 N/R 3,434,055
Revenue Refunding Bonds, Series 1997, 6.250%, 2/15/13
40,000 Michigan State Hospital Finance Authority, Hospital Revenue and 8/99 at 101 BBB 40,934
Refunding Bonds (The Detroit Medical Center Obligated Group),
Series 1988B, 8.125%, 8/15/08
3,000,000 Michigan State Hospital Finance Authority, Revenue Refunding 7/99 at 101 BBB+ 3,036,000
Bonds, Memorial Hospital Owosso Series 1987A, 7.375%, 1/01/03
6,500,000 Michigan State Hospital Finance Authority, Revenue and Refunding 8/03 at 102 BBB 6,618,625
Bonds (The Detroit Medical Center Obligated Group), Series 1993A,
6.500%, 8/15/18
1,000,000 Michigan State Hospital Finance Authority, Hospital Revenue 11/01 at 102 AAA 1,072,800
Refunding Bonds (Sparrow Obligated Group), Series 1991, 6.500%,
11/15/11
</TABLE>
20
<PAGE>
<TABLE>
<CAPTION>
Principal Optional Call Market
Amount Description Provisions* Ratings** Value
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Health Care (continued)
$2,920,000 Michigan State Hospital Finance Authority, Hospital Revenue and 8/04 at 102 BBB $2,685,728
Refunding Bonds (The Detroit Medical Center Obligated Group),
Series 1993B, 5.500%, 8/15/23
1,000,000 Michigan State Hospital Finance Authority, Hospital Revenue and 1/05 at 102 AA- 1,074,740
Refunding Bonds (Otsego Memorial Hospital, Gaylord, Michigan),
Series 1995, 6.125%, 1/01/15
2,000,000 Michigan State Hospital Finance Authority, Hospital Revenue 7/05 at 102 AAA 2,042,420
Refunding Bonds (Port Huron Hospital Obligated Group),
Series 1995, 5.500%, 7/01/15
1,000,000 Michigan State Hospital Finance Authority, Hospital Revenue No Opt. Call BBB 1,058,960
Refunding Bonds (Gratiot Community Hospital, Alma, Michigan)
Series 1995, 6.100%, 10/01/07
1,000,000 Michigan State Hospital Finance Authority, Hospital Revenue 10/06 at 102 BBB 1,042,630
Bonds (Michigan Community Hospital), Series 1996, 6.250%, 10/01/27
2,000,000 Michigan State Hospital Finance Authority, Hospital Revenue 8/07 at 101 AA- 2,002,140
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 101 BBB 972,100
4,000,000 5.500%, 10/01/27 10/08 at 101 BBB 3,812,360
1,975,000 Michigan State Hospital Finance Authority, Hospital Revenue and 5/08 at 101 BBB 1,892,208
Refunding Bonds (Hackley Hospital Obligated Group),
Series 1998A, 5.375%, 5/15/19
1,250,000 Michigan State Hospital Finance Authority, Hospital Revenue 8/08 at 101 BBB 1,099,650
Bonds (The Detroit Medical Center Obligated Group),
Series 1998A, 5.250%, 8/15/28
Pontiac Michigan Hospital Finance Authority, Hospital Revenue
Refunding Bonds, Nomc Obligation Group:
3,000,000 6.000%, 8/01/18 8/03 at 102 BBB- 3,025,680
5,165,000 6.000%, 8/01/23 8/03 at 102 BBB- 5,206,837
8,345,000 Royal Oak, Michigan, Hospital Finance Authority, Hospital 1/06 at 102 AA 8,104,330
Revenue Refunding Bonds (William Beaumont
Hospital), Series 1996I, 5.250%, 1/01/20
2,000,000 Saginaw Hospital Finance Authority (Michigan), Hospital Revenue 10/99 at 102 BBB+ 2,056,340
Refunding Bonds (Saginaw General Hospital),
Series 1989, 7.625%, 10/01/08
500,000 City of Saginaw (Michigan), Hospital Finance Authority (St. 7/01 at 102 AAA 535,565
Lukes Hospital), Hospital Revenue Refunding Bonds,
Series 1991C, 6.750%, 7/01/17
- ------------------------------------------------------------------------------------------------------------------------------------
Housing/Multifamily - 4.0%
430,000 Grand Rapids Housing Corporation, Multifamily Revenue Refunding 1/04 at 104 AAA 473,602
Bonds, Series 1992 (FHA Insured Mortgage Loan -- Section 8
Assisted Elderly Project), 7.375%, 7/15/41
750,000 Grand Rapids Housing Finance Authority, Multifamily Housing 9/04 at 100 AAA 821,760
Refunding Revenue Bonds, Series 1990A (Fannie Mae Collateralized),
7.625%, 9/01/23
1,190,000 Michigan State Housing Development Authority, Limited Obligation 4/05 at 102 Aaa- 1,279,607
Multifamily Revenue Refunding Bonds, Series 1995A (GNMA
Collateralized Program-Parc Pointe Apartments), 6.500%, 10/01/15
6,000,000 Michigan State Housing Development Authority, Section 8 Assisted No Opt. Call AA- 1,683,240
Mortgage Revenue Bonds, Series 1983I, 0.000%, 4/01/14
5,000,000 Michigan State Housing Development Authority, Rental Housing 4/01 at 102 AA- 5,304,300
Revenue Bonds, 1990 Series B, 7.550%, 4/01/23
190,000 Michigan State Housing Development Authority, Rental Housing 1/02 at 102 AA- 202,010
Revenue Bonds, 1991 Series B, 7.100%, 4/01/21
400,000 Michigan State Housing Development Authority, Rental Housing 10/02 at 102 AA- 426,444
Revenue Bonds, 1992 Series A, 6.650%, 4/01/23
1,000,000 Michigan State Housing Development Authority, Rental Housing 6/05 at 102 AAA 1,062,920
Revenue Bonds, 1995 Series B, 6.150%, 10/01/15
2,500,000 Michigan State Housing Development Authority, Rental Housing 4/09 at 101 AAA 2,475,500
Revenue Bonds, 1999 Series A, 5.300%, 10/01/37
(Alternative Minimum Tax)
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
21
<PAGE>
Portfolio of Investments
Nuveen Flagship Michigan Municipal Bond Fund (continued)
May 31, 1999
<TABLE>
<CAPTION>
Principal Optional Call Market
Amount Description Provisions* Ratings** Value
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Housing/Single Family - 3.7%
$ 820,000 Michigan State Housing Development Authority, Single Family Mortgage 6/00 at 102 AA+ $ 847,634
Revenue Bonds, Series 1990A, 7.500%, 6/01/15
2,015,000 Michigan State Housing Development Authority, Single Family Mortgage 12/00 at 102 AA+ 2,096,547
Revenue Bonds, Series 1990C, 7.550%, 12/01/15
2,000,000 Michigan State Housing Development Authority, Single Family Mortgage 6/04 at 102 AA+ 2,116,400
Revenue Bonds, Series 1994A, 6.450%, 12/01/14
3,930,000 Michigan State Housing Development Authority, Single Family Mortgage 12/04 at 102 AA+ 4,110,819
Revenue Refunding Bonds, Series 1994C, 6.500%, 6/01/16
775,000 Michigan State Housing Development Authority, Single Family Mortgage 6/05 at 102 AA+ 810,108
Revenue Bonds, Series 1995A, 6.800%, 12/01/16
1,500,000 Michigan State Housing Development Authority, Single Family Mortgage 12/06 at 102 AA+ 1,577,805
Revenue Bonds, Series 1996D, 5.950%, 12/01/16
1,250,000 Michigan State Housing Development Authority, Single Family Mortgage 6/07 at 102 AAA 1,314,150
Revenue Bonds, Series 1997A, 6.050%, 12/01/27
(Alternative Minimum Tax)
- -----------------------------------------------------------------------------------------------------------------------------------
Long-Term Care - 5.5%
2,000,000 The Economic Development Corporation of the Charter Township of Grand 7/09 at 101 A 1,918,620
Rapids (Michigan), Limited Obligation Revenue Bonds
(Porter Hills Obligated Group Cook Valley Estates Project),
Series 1999, 5.450%, 7/01/29
2,500,000 The Economic Development Corporation of the City of Kalamazoo 5/07 at 102 BBB 2,601,425
(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 635,022
1,200,000 6.500%, 1/01/25 7/05 at 102 N/R 1,270,272
500,000 6.375%, 1/01/25 1/07 at 102 N/R 526,905
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 387,608
2,675,000 5.375%, 7/01/28 7/08 at 101 A 2,587,073
2,000,000 Michigan Strategic Fund, Limited Obligation Revenue and Refunding 11/08 at 101 N/R 1,928,540
Revenue Bonds, Series 1998 (Holland Home), 5.750%, 11/15/28
7,110,000 Michigan Strategic Fund, Limited Obligation Revenue Bonds 6/08 at 100 BBB+ 6,793,107
(Clark Retirement Community Inc. Project), Series 1998,
5.250%, 6/01/18
250,000 The Economic Development Corporation of the City of Warren, Nursing 3/02 at 101 Aaa 261,745
Home Revenue Refunding Bonds
(GNMA Mortgage-Backed Security - Autumn Woods Project),
Series 1992, 6.900%, 12/20/22
- -----------------------------------------------------------------------------------------------------------------------------------
Tax Obligation/General - 13.6%
400,000 County of Bay, State of Michigan, West Side Regional Sewage Disposal 11/99 at 102 A 411,516
System Bonds, 6.400%, 5/01/02
410,000 Bishop International Airport Authority, County of Genesee, State of 12/10 at 100 AAA 399,713
Michigan, Limited Tax General Obligation Refunding Bonds,
Series 1999-A, 5.150%, 12/01/19
5,000,000 Brighton Area Schools, County of Livingston, State of Michigan, 1992 No Opt. Call AAA 1,663,200
Refunding Bonds, Series II (General Obligation Unlimited Tax),
0.000%, 5/01/20
1,200,000 Coopersville Area Public Schools, Counties of Ottawa and Muskegon, 5/09 at 100 AAA 1,147,092
State of Michigan, 1999 School Building and Site Bonds (General
Obligation - Unlimited Tax), 5.000%, 5/01/29
8,210,000 School District of the City of Detroit, Wayne County, Michigan, 5/09 at 101 AAA 7,562,395
School Building and Site Improvement Bonds (Unlimited Tax General
Obligation), Series 1998A, 4.750%, 5/01/28
500,000 City of East Lansing Building Authority, County of Ingham, State of 10/99 at 102 AA 515,735
Michigan, Building Authority Refunding Bonds, Series 1991, 7.000%,
10/01/16
2,430,000 School District of the City of Garden City, County of Wayne, State of 5/04 at 101 AAA 2,662,600
Michigan, 1994 Refunding Bonds (General Obligation - Unlimited Tax),
6.400%, 5/01/11
</TABLE>
22
<PAGE>
<TABLE>
<CAPTION>
Principal Optional Call Market
Amount Description Provisions* Ratings** Value
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Tax Obligation/General (continued)
$ 1,000,000 Lake Orion Community School District, County of 5/05 at 101 AAA $ 1,025,100
Oakland, State of Michigan, 1995 Refunding Bonds
(General Obligation - Unlimited Tax), 5.500%, 5/01/20
2,700,000 Livonia Public Schools, School District County of No Opt. Call AAA 1,785,159
Wayne, State of Michigan, 1992 School Building and Site Bonds,
Series II (General Obligation - Unlimited Tax), 0.000%, 5/01/08
1,345,000 Mona Shores Public Schools, County of Muskegon, 5/05 at 102 AAA 1,400,791
State of Michigan, 1995 School Building and Site Bonds (General
Obligation - Unlimited Tax), 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 392,910
1,020,000 0.000%, 5/01/18 No Opt. Call AAA 379,022
1,415,000 Plymouth-Canton Community Schools, Counties of Wayne 5/09 at 100 AA+ 1,322,572
and Washtenaw, State of Michigan, 1999 School Building and Site
Bonds (General Obligation - Unlimited Tax), 4.750%, 5/01/21
1,500,000 Portage Lake Water and Sewage Authority, Houghton 10/05 at 102 AAA 1,644,825
County, Michigan, General Obligation Limited Tax Refunding Bonds,
6.200%, 10/01/20
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 3,510,406
370,000 6.500%, 7/01/23 7/04 at 101 1/2 AAA 416,476
500,000 Redford Union Schools, District No. 1, County of No Opt. Call AAA 489,625
Wayne, State of Michigan, 1997 Refunding Bonds (General Obligation -
Unlimited Tax), 5.000%, 5/01/22
1,650,000 County of St. Clair, State of Michigan, Building Authority Bonds, 4/06 at 101 AAA 1,685,970
General Obligation Limited Tax, Series 1996, 5.375%, 4/01/15
750,000 South Lyon Community Schools, Counties of Oakland, 5/01 at 102 AA+ 793,763
Washtenaw and Livingston, State of Michigan, 1991 Refunding Bonds
(General Obligation - Unlimited Tax), 6.250%, 5/01/14
2,470,000 Waterford School District, County of Oakland, State 6/04 at 101 AAA 2,744,022
of Michigan, School District Bonds, Series 1995 (General Obligation -
Unlimited Tax), 6.375%, 6/01/14
5,000,000 Wayland Union School District, Counties of Allegan, 5/05 at 101 AAA 5,573,000
Barry and Kent, State of Michigan, 1994 School and Building Site Bonds
(General Obligation - Unlimited Tax), 6.250%, 5/01/14
1,250,000 Wayne County Building Authority (State of Michigan), 6/06 at 102 AAA 1,257,575
Capital Improvement Bonds, Series 1996A (Limited Tax General
Obligation), 5.250%, 6/01/16
3,270,000 West Ottawa Public Schools, County of Ottawa, State No Opt. Call AAA 1,284,816
of Michigan, 1992 Refunding Bonds (General Obligation - Unlimited
Tax), 0.000%, 5/01/17
1,000,000 Western Townships Utilities Authority, Sewage 1/02 at 100 AAA 1,056,630
Disposal System Refunding Bonds, Series 1991, 6.500%, 1/01/10
5,175,000 Williamston Community School District, General No Opt. Call AAA 5,413,361
Obligation - Unlimited Tax, Series 1996, 5.500%, 5/01/25
- ------------------------------------------------------------------------------------------------------------------------------------
Tax Obligation/Limited - 14.6%
2,000,000 City of Detroit Building Authority, Revenue Bonds 2/07 at 101 A 2,144,760
(District Court Madison Center), Series A, 6.150%, 2/01/11
2,000,000 City of Detroit, Michigan, Downtown Development 7/08 at 100 AAA 1,836,120
Authority, Tax Increment Refunding Bonds (Development Area No. 1
Projects), Series 1998A, 4.750%, 7/01/25
9,460,000 Detroit/Wayne County Stadium Authority (State of 2/07 at 102 AAA 9,384,225
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 1,558,972
3,495,000 0.000%, 6/01/18 No Opt. Call AAA 1,293,045
1,650,000 6.875%, 6/01/24 6/04 at 102 AAA 1,859,501
2,000,000 Lansing Michigan Building Authority, Refunding 6/05 at 101 AA+ 2,077,000
Bonds, 5.600%, 6/01/19
250,000 Michigan Municipal Bond Authority, State Revolving 12/01 at 100 AAA 250,848
Fund Revenue Bonds, Series 1992A, 4.750%, 12/01/09
5,500,000 Michigan Municipal Bond Authority, Local Government No Opt. Call AAA 3,738,295
Loan Program Revenue Bonds, Series 1991A (Insured Wayne County
Refunding Bonds), 0.000%, 12/01/07
</TABLE>
23
<PAGE>
Portfolio of Investments
Nuveen Flagship Michigan Municipal Bond Fund (continued)
May 31, 1999
<TABLE>
<CAPTION>
Principal Optional Call Market
Amount Description Provisions* Ratings** Value
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Tax Obligation/Limited (continued)
$ 2,800,000 Michigan Municipal Bond Authority, Local Government No Opt. Call AAA $ 1,840,804
Loan Program Revenue Bonds, Series 1991C, Group A, 0.000%, 6/15/08
State Building Authority, State of Michigan, 1991 Revenue Refunding
Bonds, Series I:
1,000,000 6.750%, 10/01/11 10/01 at 102 AA 1,079,050
5,000,000 6.250%, 10/01/20 10/01 at 102 AA 5,300,000
7,585,000 State Building Authority, State of Michigan, 1991 10/01 at 102 AA 8,040,100
Revenue Bonds, Series II, 6.250%, 10/01/20
6,000,000 The House of Representatives of the State of No Opt. Call AAA 1,656,720
Michigan, Certificates of Participation, 0.000%, 8/15/23
2,260,000 Puerto Rico Highway and Transportation Authority, 7/02 at 101 1/2 A 2,451,512
Highway Revenue Bonds 1992 Series V, 6.625%, 7/01/12
1,000,000 Puerto Rico Highway and Transportation Authority, 7/16 at 100 A 1,028,500
Highway Revenue Bonds, Series Y of 1996, 5.500%, 7/01/36
3,500,000 Puerto Rico Highway and Transportation Authority, 7/08 at 101 A 3,324,580
Transportation Revenue Bonds, Series A, 5.000%, 7/01/38
1,085,000 Romulus Tax Increment Finance Authority, Wayne 11/06 at 100 N/R 1,181,522
County, Michigan (Limited Obligation Revenue Bonds), 1994,
Development Bonds, Remarketed, 6.750%, 11/01/19
- ------------------------------------------------------------------------------------------------------------------------------------
Transportation - 2.2%
250,000 Capital Region Airport Authority (Lansing, Michigan), Airport 7/02 at 102 AAA 271,378
Revenue Bonds, Series 1992, 6.700%, 7/01/21 (Alternative Minimum Tax)
2,250,000 Charter County of Wayne, Michigan, Detroit Metropolitan Wayne No Opt. Call AAA 2,124,045
County Airport, Airport Revenue Bonds, Series 1998B, 4.875%, 12/01/23
Charter County of Wayne, Michigan, Detroit Metropolitan Wayne County
Airport, Airport Revenue Bonds, Series 1998A:
2,500,000 5.000%, 12/01/22 (Alternative Minimum Tax) 12/08 at 101 AAA 2,375,700
3,000,000 5.000%, 12/01/28 (Alternative Minimum Tax) 12/08 at 101 AAA 2,817,570
- ------------------------------------------------------------------------------------------------------------------------------------
U.S. Guaranteed - 21.6%
1,000,000 City of Battle Creek, County of Calhoun, State of 5/04 at 102 BBB*** 1,163,430
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 State of 5/04 at 102 A-*** 2,083,554
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 Michigan, 1/01 at 102 AAA 1,063,970
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*** 2,053,195
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 Trustees, General Revenue 10/00 at 102 A+*** 1,065,190
Bonds, Series 1990, 7.000%, 10/01/10 (Pre-refunded to 10/01/00)
750,000 City of Detroit, Michigan, General Obligation Bonds (Unlimited Tax), 4/01 at 102 AAA 820,943
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*** 317,823
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 1,786,043
County, Michigan, School Building and Site Bonds (Unlimited Tax General
Obligation), Series 1991, 7.150%, 5/01/11 (Pre-refunded to 5/01/01)
2,600,000 School District of the City of Detroit, Wayne County, Michigan, 5/06 at 102 AAA 2,848,898
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-*** 12,068,851
Authority, Tax Increment Refunding Bonds (Development Area No. 1
Projects), Series 1996C, 6.250%, 7/01/25 (Pre-refunded to 7/01/06)
2,000,000 City of Detroit, Michigan, Water Supply System 7/00 at 102 AAA 2,121,980
Revenue Bonds, Series 1990, 7.250%, 7/01/20 (Pre-refunded to 7/01/00)
</TABLE>
24
<PAGE>
<TABLE>
<CAPTION>
Principal Optional Call Market
Amount Description Provisions* Ratings** Value
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
U.S. Guaranteed (continued)
$ 500,000 City of Farmington Hills, Hospital Finance 2/02 at 102 AAA $ 542,885
Authority, Michigan, Hospital Revenue Bonds (Botsford General Hospital),
Series 1992A, 6.500%, 2/15/22 (Pre-refunded to 2/15/02)
340,000 County of Grand Traverse, Michigan, Hospital Finance 7/02 at 102 AAA 369,237
Authority, Hospital Revenue Refunding Bonds (Munson Healthcare Obligated
Group), Series 1992A, 6.250%, 7/01/22 (Pre-refunded to 7/01/02)
2,500,000 Haslett Public Schools, Counties of Ingham, Clinton 5/00 at 101 AA+*** 2,618,625
and Shiawassee, State of Michigan, 1990 School Building and Site
Bonds, 7.500%, 5/01/20 (Pre-refunded to 5/01/00)
750,000 City of Hudsonville Building Authority, County of 10/02 at 102 AAA 827,378
Ottawa, 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 5/01 at 102 N/R*** 2,157,620
and 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, Hospital 5/03 at 102 A1*** 2,136,328
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 Community School District, County of 5/05 at 101 AAA 4,614,320
Oakland, State of Michigan 1994 Refunding Bonds (General Obligation -
Unlimited Tax), 7.000%, 5/01/15 (Pre-refunded to 5/01/05)
825,000 Menominee, Michigan, Area Public School District, 5/00 at 102 AA+*** 871,951
7.400%, 5/01/20 (Pre-refunded to 5/01/00)
3,000,000 Michigan Higher Education Facilities Authority 5/01 at 103 A*** 3,280,560
Revenue, Limited Obligation, Aquinas College Project,
7.350%, 5/01/11 (Pre-refunded to 5/01/01)
555,000 Michigan Municipal Bond Authority, State Revolving Fund Revenue 10/02 at 102 AA+*** 611,521
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+*** 1,079,675
1,000,000 6.500%, 10/01/14 (Pre-refunded to 10/01/04) 10/04 at 102 AA+*** 1,128,830
1,000,000 6.500%, 10/01/17 (Pre-refunded to 10/01/04) 10/04 at 102 AA+*** 1,128,830
500,000 Michigan State Hospital Finance Authority, Hospital 12/02 at 102 AAA 557,735
Revenue Bonds (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 1,058,110
System, Series A, 7.000%, 7/01/10 (Pre-refunded to 7/01/00)
1,000,000 Michigan Hospital Finance Authority (Oakwood Hospital Obligated 7/00 at 102 AAA 1,059,080
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 860,824
Health Corporation, Series J, 7.200%, 2/15/18 (Pre-refunded to 2/15/01)
1,000,000 Michigan State Hospital Finance Authority, Hospital 11/01 at 102 Aa2*** 1,092,290
Revenue Bonds (Daughters of Charity National Health System-Providence
Hospital), Series 1991, 7.000%, 11/01/21 (Pre-refunded to 11/01/01)
1,065,000 Mona Shores Public Schools, County of Muskegon, 5/05 at 102 AAA 1,153,864
State of Michigan, 1995 School Building and Site Bonds (General
Obligation - Unlimited Tax), 5.500%, 5/01/14 (Pre-refunded to 5/01/05)
2,335,000 Oakland County, Michigan, Economic Development 1/00 at 102 N/R*** 2,464,593
Corporation, Limited Obligation Revenue Bonds, Pontiac Osteopathic
Hospital Project, 9.625%, 1/01/20 (Pre-refunded to 1/01/00)
1,000,000 Oakland County, Michigan, Economic Development Corporation, Limited 11/04 at 102 Aaa 1,151,760
Obligation Revenue Refunding Bonds, 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 7/00 at 102 AAA 1,920,762
Revenue Bonds, 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, 1990 5/00 at 101 N/R*** 1,087,195
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*** 206,075
Michigan, Water Supply Revenue Bonds (Limited Tax General Obligation),
Series 1992, 6.875%, 9/01/16 (Pre-refunded to 9/01/04)
2,925,000 Spring Lake Public Schools, General Obligation 5/07 at 100 AAA 3,184,126
Bonds, Series 1997, 5.700%, 5/01/23 (Pre-refunded to 5/01/07)
1,000,000 Regents of the University of Michigan, Hospital Revenue Bonds, 12/00 at 100 AA*** 1,041,970
Series 1990, 6.375%, 12/01/24 (Pre-refunded to 12/01/00)
</TABLE>
25
<PAGE>
Portfolio of Investments
Nuveen Flagship Michigan Municipal Bond Fund (continued)
May 31, 1999
<TABLE>
<CAPTION>
Principal Optional Call Market
Amount Description Provisions* Ratings** Value
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
U.S. Guaranteed (continued)
$ 3,500,000 Regents of the University of Michigan, Medical Service Plan Revenue 12/01 at 102 Aa2*** $ 3,789,940
6.500%, 12/01/21 (Pre-refunded to 12/01/01)
7,000,000 Vicksburg Community Schools, Counties of Kalamazoo and St. Joseph, 5/06 at 37 1/4 AAA 1,919,400
State of Michigan, 1991 School Building and Site Bonds, 0.000%,
5/01/20 (Pre-refunded to 5/01/06)
2,500,000 Waterford School District, County of Oakland, State 6/04 at 101 AAA 2,763,325
of Michigan, School District Bonds, Series 1995 (General Obligation -
Unlimited Tax), 6.250%, 6/01/13 (Pre-refunded to 6/01/04)
- ------------------------------------------------------------------------------------------------------------------------------------
Utilities - 3.4%
400,000 Michigan Public Power Agency, Belle River Project, 1/03 at 102 AA- 398,804
Refunding Revenue Bonds, 1993 Series A, 5.250%, 1/01/18
3,000,000 Michigan State South Central Power Agency, Power 11/04 at 102 Baa1 3,352,830
Supply System Revenue Refunding Bonds, 7.000%, 11/01/11
3,500,000 Michigan State Strategic Fund, Limited Obligation Revenue Refunding 6/04 at 102 AAA 3,871,805
Bonds, Detroit Education Company, Series B, 6.450%, 6/15/24
1,000,000 Monroe County, Michigan, Economic Development Corporation, No Opt. Call AAA 1,238,360
Limited Obligation Revenue Refunding Bonds, Collateralized,
Detroit Edison Company, Series, AA, 6.950%, 9/01/22
1,000,000 County of Monroe, Michigan, Pollution Control No Opt. Call AAA 1,093,500
Revenue Bonds (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 No Opt. Call AAA 1,628,320
Bonds, Series O, 0.000%, 7/01/17
- ------------------------------------------------------------------------------------------------------------------------------------
Water and Sewer - 5.6%
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 1,517,174
10,500,000 5.250%, 7/01/21 7/05 at 101 AAA 10,438,364
1,570,000 City of Detroit, Michigan, Water Supply System, No Opt. Call AAA 1,676,304
Revenue Second Lien Bonds, Series 1995-A, 5.550%, 7/01/12
2,230,000 City of Detroit, Michigan, Water Supply System, No Opt. Call AAA 2,380,992
Revenue Second Lien Bonds, Series 1995-B, 5.550%, 7/01/12
3,400,000 City of Grand Rapids, Michigan, Sanitary Sewer 7/08 at 101 AAA 3,133,099
System Improvement and Refunding Revenue Bonds,
Series 1998A, 4.750%, 1/01/28
- ------------------------------------------------------------------------------------------------------------------------------------
$358,885,000 Total Investments - (cost $316,731,299) - 98.9% 339,524,760
============------------------------------------------------------------------------------------------------------------------------
Other Assets Less Liabilities - 1.1% 3,860,058
---------------------------------------------------------------------------------------------------------------------
Net Assets - 100% $343,384,818
=====================================================================================================================
</TABLE>
* Optional Call Provisions (not covered by the report of
independent public accountants): 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 (not covered by the report of independent public
accountants): 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.
26
<PAGE>
Portfolio of Investments
Nuveen Flagship Ohio Municipal Bond Fund
May 31, 1999
<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, Port Revenue Refunding 3/02 at 102 AA- $ 1,800,365
Facilities, Cargill Inc. Project, 7.250%, 3/01/22
- -----------------------------------------------------------------------------------------------------------------------------------
Capital Goods - 0.2%
1,335,000 Ohio Water Development Authority, Revenue Bonds, USA Waste 3/02 at 102 N/R 1,420,961
Services, Series 1992, 7.750%, 9/01/07 (Alternative Minimum Tax)
- -----------------------------------------------------------------------------------------------------------------------------------
Education and Civic Organizations - 4.2%
2,050,000 Miami University, Ohio, University Revenue Bonds, 6.900%, 12/01/04 12/99 at 102 A+ 2,124,477
3,500,000 State of Ohio, Education Loan Revenue Bonds, Series 1997A 6/07 at 102 AAA 3,627,365
(Supplemental Student Loan Program), 1997A1, 5.850%,
12/01/19 (Alternative Minimum Tax)
1,750,000 State of Ohio (Ohio Higher Educational Facility Commission), 12/04 at 102 AAA 1,848,735
Higher Educational Facility Revenue Bonds (University of Dayton
1994 Project), 5.800%, 12/01/19
2,025,000 State of Ohio (Ohio Higher Educational Facility Commission), 12/03 at 102 AAA 2,252,327
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 Facility Commission), 9/06 at 101 N/R 1,241,472
Higher Educational Facility Revenue Bonds (The University of
Findlay 1996 Project), 6.125%, 9/01/16
7,000,000 State of Ohio, Higher Educational Facility Revenue 5/07 at 102 AAA 7,088,200
Bonds (Xavier University 1997 Project), 5.375%, 5/15/22
Ohio Higher Educational Facility Commission, Case
Western Reserve University:
1,870,000 7.125%, 10/01/14 10/00 at 102 AA 1,991,999
750,000 6.500%, 10/01/20 No Opt. Call AA 881,303
2,250,000 Ohio State Higher Educational Facility Revenue Bonds, John 4/07 at 102 A2 2,352,150
Carroll University Project, 5.750%, 4/01/19
4,250,000 University of Cincinnati, Ohio, General Receipts Bonds, 6/07 at 100 AAA 4,299,555
Series AB, 5.375%, 6/01/20
1,230,000 Youngstown State University, Ohio, General Receipts Bonds, 12/04 at 102 AAA 1,366,136
6.000%, 12/15/16
- -----------------------------------------------------------------------------------------------------------------------------------
Energy - 0.5%
2,125,000 County of Ashtabula, Ohio, Industrial Development Refunding 5/02 at 102 Baa2 2,280,210
Revenue Bonds, 1992 Series A (Ashland Oil, Inc. Project),
6.900%, 5/01/10
1,000,000 Ohio Air Quality Development Authority, State of Ohio, Air 4/01 at 102 Baa1 1,061,640
Quality Development Refunding Revenue Bonds, Series 1992
(Ashland Oil, Inc. Project), 6.850%, 4/01/10
- -----------------------------------------------------------------------------------------------------------------------------------
Health Care - 14.6%
10,000,000 Akron, Bath and Copley Joint Township Hospital District, Ohio, 11/09 at 101 Baa1 9,437,900
Hospital Facilities Revenue Bonds, Series 1998A (Summa Health
System Project), 5.375%, 11/15/24
1,250,000 County of Butler, Ohio, Hospital Facilities Revenue Refunding and 1/02 at 102 BBB- 1,331,725
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 541,440
1,000,000 8.000%, 12/01/11 12/01 at 102 BBB 1,082,880
1,500,000 County of Cuyahoga, Ohio, Hospital Improvement and Refunding 1/06 at 102 AAA 1,541,145
Revenue Bonds, Series 1996A (University Hospitals Health
System, Inc. Project), 5.625%, 1/15/26
1,000,000 County of Cuyahoga, Ohio, Hospital Improvement and Refunding 2/07 at 102 AAA 1,032,390
Revenue Bonds, Series 1997 (The MetroHealth System Project),
5.625%, 2/15/17
</TABLE>
27
<PAGE>
Portfolio of Investments
Nuveen Flagship Ohio Municipal Bond Fund (continued)
May 31, 1999
<TABLE>
<CAPTION>
Principal Optional Call Market
Amount Description Provisions* Ratings** Value
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Health Care (continued)
$ 2,000,000 Cuyahoga County, Ohio, Industrial Development Refunding Revenue 8/01 at 103 AAA $ 2,159,720
Bonds, Series 1991 (University Health Care Center Project),
7.300%, 8/01/11
2,010,000 County of Erie, Ohio Hospital Improvement and Refunding Revenue 1/02 at 102 A 2,160,830
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 Children's Hospital Project):
1,575,000 5.750%, 11/01/15 11/06 at 101 Aa 1,647,072
5,275,000 5.875%, 11/01/25 11/06 at 101 Aa 5,535,321
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 1,018,789
2,000,000 5.875%, 6/01/21 6/06 at 102 AA 2,108,620
1,500,000 Franklin County, Ohio, Hospital Revenue Refunding Bonds (Holy 6/00 at 102 AAA 1,587,315
Cross Health System - Mt. Carmel Health), Series 1990-A,
7.625%, 6/01/09
3,000,000 County of Franklin, Ohio, Hospital Improvement Revenue 5/09 at 102 Aa3 2,909,160
Bonds, Series 1999 (The Childrens Hospital Project),
5.200%, 5/01/29
3,000,000 County of Hamilton, Ohio, Hospital Facilities Revenue, 1/03 at 102 A 3,213,480
Refunding Bonds, Series 1992A (Bethesda Hospital, Inc.),
6.250%, 1/01/12
7,890,000 County of Lorain, Ohio, Hospital Facilities Revenue and Refunding 11/05 at 102 AAA 7,916,116
Bonds, Series 1995 (EMH Regional Medical Center), 5.375%, 11/01/21
2,250,000 County of Lorain, Ohio, Hospital Facilities Revenue Bonds, Series 9/07 at 102 AAA 2,303,843
1997B (Catholic Healthcare Partners), 5.500%, 9/01/27
1,000,000 County of Lucas, Ohio, Hospital Improvement Revenue Bonds, Series 8/00 at 102 AAA 1,055,160
1990A (St. Vincent Medical Center), 6.750%, 8/15/20
3,000,000 County of Lucas, Ohio, Hospital Improvement Revenue Bonds, Series 8/02 at 102 AAA 3,264,810
1992 (St. Vincent Medical Center), 6.500%, 8/15/12
500,000 Mansfield, Ohio, Hospital Improvement Revenue Bonds, Series 12/01 at 102 AAA 540,220
1991 (Mansfield General Hospital Project), 6.700%, 12/01/09
2,000,000 County of Marion, Ohio, Hospital Refunding and Improvement Revenue 5/06 at 102 BBB+ 2,137,960
Bonds, Series 1996 (The Community Hospital), 6.375%, 5/15/11
1,250,000 Maumee, Ohio, Hospital Facilities Revenue Bonds (St. Luke's 12/04 at 102 AAA 1,337,613
Hospital), Series 1994, 5.800%, 12/01/14
4,405,000 County of Miami, Ohio, Hospital Facilities Revenue Refunding 5/06 at 102 BBB 4,588,777
and Improvement Bonds, Series 1996A (Upper Valley Medical Center),
6.250%, 5/15/16
4,205,000 Miami County, Ohio, Hospital Facilities Revenue Refunding and 5/06 at 102 BBB 4,386,446
Improvement Bonds (Upper Valley Medical Center), Series 1996C,
6.250%, 5/15/13
City of Middleburg Heights, Ohio, Hospital Improvement Refunding
Revenue Bonds, Series 1995 (Southwest General Health Center Project):
4,000,000 5.625%, 8/15/15 8/08 at 102 AAA 4,168,640
2,000,000 5.750%, 8/15/21 8/08 at 102 AAA 2,098,480
11,000,000 Montgomery County, Ohio, Health System Revenue Bonds, Franciscan 1/08 at 102 BBB 10,757,890
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 1,547,295
7,000,000 6.250%, 4/01/20 No Opt. Call AAA 8,010,590
2,500,000 Montgomery County, Ohio, Revenue Bonds, Sisters of Charity Health 5/03 at 101 AAA 2,729,950
Care, Series 1992A, 6.250%, 5/15/08
4,000,000 City of Parma, Ohio, Hospital Improvement and Refunding Revenue 11/08 at 101 A- 3,877,560
Bonds, Series 1998 (The Parma Community Hospital Association),
5.375%, 11/01/29
2,750,000 County of Trumbull, Ohio, Hospital Refunding and Improvement Revenue 11/01 at 102 AAA 3,008,363
Bonds, Series 1991 (Trumbull Memorial Hospital Project), Series
1991B, 6.900%, 11/15/12
750,000 County of Tuscarawas, Ohio, Hospital Facilities Revenue Bonds, 10/03 at 102 Baa2 790,448
Series 1993A (Union Hospital Project), 6.500%, 10/01/21
</TABLE>
28
<PAGE>
<TABLE>
<CAPTION>
Principal Optional Call Market
Amount Description Provisions* Ratings** Value
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Housing/Multi-family - 4.9%
$1,600,000 Butler County, Ohio, Multifamily Housing Revenue Bonds, Series 1998 9/08 at 103 N/R $ 1,593,424
(Anthony Wayne Apartments Project), 6.500%, 9/01/30 (Alternative
Minimum Tax)
1,150,000 County of Clark, Ohio, Multifamily Housing Revenue Bonds 11/08 at 103 N/R 1,134,360
(Church of God Retirement Home), Series 1998, 6.250%, 11/01/30
(Alternative Minimum Tax)
16,160,000 County of Franklin, Ohio, Mortgage Revenue Bonds, Series 1997 10/07 at 103 Aaa 16,458,960
(GNMA Collateralized - Columbus Properties Project), 5.600%,
4/20/39 (Alternative Minimum Tax)
6,200,000 Hamilton County, Multifamily Housing Revenue Bonds (Huntington 1/07 at 102 AAA 6,381,784
Meadows Project), Series 1997, 5.700%, 1/01/27 (Alternative
Minimum Tax)
2,800,000 Ohio Capital Corporation for Housing Mortgage Revenue Refunding 1/02 at 100 AAA 2,825,284
Bonds, FHA Section 8 Assisted Project, Series 1997C, 5.700%,
1/01/24
4,000,000 Ohio Capital Corporation for Housing Mortgage Revenue 1/02 at 100 AAA 4,012,240
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 323,212
1,215,000 7.600%, 11/01/23 11/99 at 103 AAA 1,266,783
- ------------------------------------------------------------------------------------------------------------------------------------
Housing/Single Family - 7.6%
4,965,000 Ohio Housing Finance Agency, Residential Mortgage Revenue 9/07 at 102 AAA 5,119,759
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 Mortgage Revenue 9/07 at 102 AAA 5,604,409
Bonds, Series 1997C, 5.750%, 9/01/28 (Alternative Minimum Tax)
5,410,000 Ohio Housing Finance Agency, Residential Mortgage Revenue 3/08 at 101 1/2 AAA 5,519,607
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 Mortgage Revenue 9/04 at 102 AAA 2,104,326
Bonds, Series 1994-A1 (GNMA Mortgage-Backed Securities
Program), 6.100%, 9/01/14
3,095,000 Ohio Housing Finance Agency, Residential Mortgage Revenue 9/08 at 102 AAA 3,120,967
Bonds, 1997 Series B (Mortgage-Backed Securities Program),
5.400%, 9/01/29 (Alternative Minimum Tax)
5,145,000 Ohio Housing Finance Agency, Residential Mortgage Revenue Bonds, 9/04 at 102 AAA 5,490,693
Series 1994B1, 6.375%, 9/01/14
11,250,000 Ohio Housing Finance Agency, Residential Mortgage Revenue Bonds, 9/08 at 101 AAA 11,175,525
1999 Series A1 (Mortgage-Backed Securities Program), 5.250%,
9/01/30 (Alternative Minimum Tax)
12,875,000 Ohio Housing Finance Agency, Residential Mortgage Revenue Bonds, 9/07 at 102 AAA 13,616,214
Series 1997A, 6.150%, 3/01/29 (Alternative Minimum Tax)
400,000 Ohio Housing Finance Agency, Single Family Mortgage Revenue 3/00 at 102 AAA 412,744
Bonds (GNMA Mortgage-Backed Securities Program), 1990
Series A, 7.400%, 9/01/15
445,000 Ohio Housing Finance Agency, Single Family Mortgage Revenue 9/00 at 102 AAA 465,047
Bonds (GNMA Mortgage-Backed Securities Program), 1990
Series D, 7.500%, 9/01/13
250,000 Ohio Housing Finance Agency, Single Family Mortgage Revenue Bonds 9/01 at 102 AAA 262,410
(GNMA Mortgage-Backed Securities Program), 1991 Series D, 7.050%,
9/01/16
- ------------------------------------------------------------------------------------------------------------------------------------
Industrial/Other - 0.4%
2,775,000 Cleveland-Cuyahoga County Port Authority (Ohio), Development 5/08 at 102 N/R 2,739,230
Revenue Bonds (Port of Cleveland Bond Fund - Jergens, Inc.,
Project), Series 1998A, 5.375%, 5/15/18 (Alternative Minimum Tax)
- ------------------------------------------------------------------------------------------------------------------------------------
Long-Term Care - 2.3%
4,030,000 County of Cuyahoga, Ohio, Health Care Facilities Revenue Bonds, 6/00 at 100 N/R 4,192,288
Series 1990 (Altenheim Project), 9.280%, 6/01/15
1,500,000 County of Franklin, Ohio, Health Care Facilities Revenue Bonds, 7/03 at 102 N/R 1,511,415
Series 1993 (Ohio Presbyterian Retirement Services), 6.500%,
7/01/23
3,120,000 County of Franklin, Ohio, Health Care Facilities Revenue Bonds, 11/05 at 102 Aa2 3,277,310
Series 1995 (Heinzerling Foundation), 6.200%, 11/01/20
655,000 Franklin County, Hospital Revenue Refunding Bonds, FHA Insured 8/00 at 102 N/R 676,615
Mortgage Loan (Worthington Christian Village Nursing Home),
7.000%, 8/01/16
</TABLE>
29
<PAGE>
Portfolio of Investments
Nuveen Flagship Ohio Municipal Bond Fund (continued)
May 31, 1999
<TABLE>
<CAPTION>
Principal Optional Call Market
Amount Description Provisions* Ratings** Value
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Long-Term Care (continued)
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 $ 968,920
1,250,000 5.125%, 10/01/23 10/08 at 101 A 1,185,500
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- 1,307,413
750,000 6.300%, 11/15/15 11/03 at 102 BBB- 781,425
2,130,000 City of Napoleon, Ohio, Health Care Facilities Mortgage Revenue 9/04 at 102 Aa 2,322,020
Refunding Bonds, Series 1994 (The Lutheran Orphans and Old
Folks Home Society at Napoleon, Inc. FHA Insured Project),
6.875%, 8/01/23
- ------------------------------------------------------------------------------------------------------------------------------------
Tax Obligation/General - 15.7%
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 7,347,120
9,500,000 5.250%, 12/01/21 12/05 at 102 AAA 9,535,530
3,955,000 City of Akron, Ohio, General Obligation Bonds, Various Purpose 12/04 at 102 AAA 4,478,919
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 291,012
2,850,000 5.750%, 12/01/24 12/05 at 101 AAA 3,003,758
1,000,000 Archbold Area Local School District, General Obligation Bonds 12/06 at 102 AAA 1,075,330
(Unlimited Tax), Series 1996,
6.000%, 12/01/21
1,000,000 Aurora City School District, Ohio, General Obligation (Unlimited 12/05 at 102 AAA 1,062,500
Tax), School Improvement Bonds, Series 1995, 5.800%, 12/01/16
2,905,000 Board of Education, Batavia Local School District, County of 12/05 at 102 AAA 3,303,392
Clermont, Ohio, School Improvement Bonds, Series 1995 (Unlimited
Tax), Bank Qualified, 6.300%, 12/01/22
2,500,000 Buckeye Valley Local School District, Ohio, General Obligation Bonds No Opt. Call AAA 2,992,400
(Unlimited Tax), 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 149,255
125,000 8.500%, 12/01/05 No Opt. Call N/R 152,113
125,000 8.500%, 12/01/06 No Opt. Call N/R 154,625
125,000 8.500%, 12/01/07 No Opt. Call N/R 156,846
125,000 8.500%, 12/01/08 No Opt. Call N/R 158,933
130,000 8.500%, 12/01/09 No Opt. Call N/R 166,780
4,745,000 City of Cleveland, Ohio, Various Purpose General Obligation Bonds, 11/04 at 102 AAA 5,408,398
Series 1994, 6.625%, 11/15/14
550,000 County of Columbiana, Ohio, County Jail Facilities Construction 12/04 at 102 AA 627,297
Bonds (General Obligation Unlimited Tax), 6.600%, 12/01/17
1,500,000 City of Columbus, Ohio, General Obligation Refunding Bonds, 1/02 at 102 Aaa 1,618,845
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 764,616
500,000 9.375%, 4/15/07 No Opt. Call AAA 661,745
1,000,000 County of Cuyahoga, Ohio, General Obligation Various Purpose No Opt. Call AA+ 1,048,850
Refunding Bonds, Series 1993B (Limited Tax Obligation),
5.250%, 10/01/13
1,345,000 County of Cuyahoga, Ohio, General Obligation Bonds (Limited Tax No Opt. Call AA+ 1,446,991
Obligation), 5.650%, 5/15/18
200,000 City of Dayton, Ohio, General Obligation Bonds (Three Issues), No Opt. Call A+ 204,792
Limited Tax, 10.500%, 10/01/99
750,000 City of Defiance, Ohio, Waterworks System Improvement Bonds, 12/04 at 102 AAA 824,685
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 576,090
1,000,000 0.000%, 12/01/11 No Opt. Call AAA 543,790
</TABLE>
30
<PAGE>
<TABLE>
<CAPTION>
Principal Optional Call Market
Amount Description Provisions* Ratings** Value
- --------------------------------------------------------------------------------------------------------------------------------
<C> <S> <C> <C> <C>
Tax Obligation/General (continued)
$ 250,000 East Holmes Local School District, Ohio School Improvement Refunding 6/99 at 102 AAA $ 255,843
Bonds, General Obligations - Unlimited Tax, 7.700%, 12/01/08
1,110,000 City of Fairborn, Ohio General Obligation Bonds, Utility Improvement 10/02 at 102 AAA 1,226,850
Bonds, Series 1991, 7.000%, 10/01/11
4,040,000 County of Franklin, Ohio, Refunding Bonds, Series 1993 (Limited 12/08 at 102 AAA 4,116,396
Tax General Obligation Bonds), 5.375%, 12/01/20
1,575,000 Garaway Local School District, Ohio School Improvement Bonds, Series 12/00 at 102 AAA 1,682,242
1990 (General Obligation - Unlimited Tax Bonds), 7.200%, 12/01/14
620,000 County of Geauga, Ohio, General Obligation (Limited Tax), Sewer District No Opt. Call Aa2 706,540
Improvement Bonds (Bainbridge Water Project), 6.850%, 12/01/10
1,000,000 Grandview Heights City School District, Franklin County, Ohio School 12/05 at 101 AA 1,085,980
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, Ohio, 12/07 at 102 AAA 1,070,590
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 1,079,600
General Obligation), 5.850%, 12/01/16
1,000,000 Indian Valley Local School District, Ohio General Obligation 12/05 at 102 AAA 1,058,340
(Unlimited Tax), School Improvement Bonds, Series 1995,
5.750%, 12/01/19
1,200,000 County of Jefferson, Ohio, Human Services Building Construction Bonds, 12/01 at 102 AAA 1,307,196
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 2,066,865
Improvement Refunding Bonds, Series 1992, 6.500%, 12/01/10
1,070,000 Kettering, Ohio, General Obligation Bonds (Limited Tax), 6.650%, 12/01 at 102 Aa3 1,158,254
12/01/12
1,000,000 Kettering City School District, Ohio, General Obligation Bonds 12/05 at 101 AAA 1,003,380
(Unlimited Tax), 5.250%, 12/01/22
500,000 Kings Local School District, General Obligation (Unlimited Tax), 12/05 at 100 AAA 512,205
School Improvement Bonds, Series 1995, 5.500%, 12/01/21
500,000 Kirtland Local School District, Ohio, School Improvement Bonds, Series 12/99 at 102 N/R 519,220
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 1,156,290
6.900%, 12/01/14
1,440,000 Lakewood, Ohio, General Obligation Bonds, Series 1995B, 12/05 at 102 Aa3 1,529,986
5.750%, 12/01/15
1,000,000 Lakota Local School District, County of Butler, Ohio, School Improvement 12/05 at 100 AAA 1,109,530
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 173,797
155,000 7.750%, 12/01/03 No Opt. Call A 177,797
155,000 7.750%, 12/01/04 No Opt. Call A 181,393
155,000 7.750%, 12/01/05 No Opt. Call A 184,593
155,000 7.750%, 12/01/06 No Opt. Call A 187,311
1,000,000 County of Lucas, Ohio, General Obligation (Limited Tax), Various 12/02 at 102 A1 1,097,980
Purpose Improvement Bonds, Series 1992, 6.650%, 12/01/12
1,000,000 County of Lucas, Ohio, General Obligation (Limited Tax), Various 12/05 at 102 AAA 1,026,400
Purpose Improvement Bonds, Series 1995-1, 5.400%, 12/01/15
1,000,000 County of Mahoning, Ohio, General Obligation Bonds, Various Purpose 12/99 at 102 AAA 1,039,070
Improvement Bonds, Series 1989, Limited Tax, 7.200%, 12/01/09
865,000 Marysville, Ohio, Exempt Village School District, General Obligation No Opt. Call AAA 362,781
Bonds, 0.000%, 12/01/16
1,215,000 Mason City School District, Counties of Warren and Butler, Ohio, 12/09 at 101 Aa3 1,237,964
School Improvement Unlimited Tax General Obligation Bonds,
Series 1998, 5.300%, 12/01/17
1,000,000 City of North Olmsted, Ohio, General Obligation (Limited Tax), 12/02 at 102 AAA 1,086,740
Various Purpose Bonds, Series 1992, 6.250%, 12/15/12
North Royalton City School District, Ohio, School Improvement Bonds,
Bonds, Series 1994:
2,200,000 6.000%, 12/01/14 12/09 at 102 AAA 2,463,010
2,400,000 6.100%, 12/01/19 12/09 at 102 AAA 2,623,416
</TABLE>
31
<PAGE>
Portfolio of Investments
Nuveen Flagship Ohio Municipal Bond Fund (continued)
May 31, 1999
<TABLE>
<CAPTION>
Principal Optional Call Market
Amount Description Provisions* Ratings** Value
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Tax Obligation/General (continued)
$ 600,000 Oak Hills, Ohio, Local School District, General Obligation Bonds, 12/07 at 101 Aa3 $ 627,546
Series 1997A, 5.700%, 12/01/25
1,000,000 State of Ohio, Full Faith and Credit, General Obligation No Opt. Call AA+ 1,119,790
Infrastructure Improvement Bonds, Series 1994, 6.000%, 8/01/10
State of Ohio, Full Faith and Credit General Obligation
Infrastructure Improvement Bonds, Series 1995:
750,000 6.200%, 8/01/13 8/05 at 102 AA+ 840,870
2,000,000 6.200%, 8/01/14 8/05 at 102 AA+ 2,242,320
7,640,000 State of Ohio, Full Faith and Credit General Obligation No Opt. Call AAA 3,767,666
Infrastructure Improvement Bonds, Series 1993, 0.000%, 8/01/13
500,000 Olmsted Falls, Ohio, Local School District, General Obligation Bonds, 12/01 at 102 AAA 550,245
7.050%, 12/15/11
1,750,000 Pickerington Local School District, Fairfield and Franklin Counties, 12/01 at 102 A1 1,892,345
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 271,895
500,000 0.000%, 12/01/13 No Opt. Call AAA 242,510
1,000,000 Revere Local School District, Ohio, School Improvement Bonds, 12/03 at 102 AAA 1,071,650
Series 1993 (General Obligation Unlimited Tax Bonds),
6.000%, 12/01/16
2,340,000 City of Stow, Ohio, Safety Center Construction Bonds 12/05 at 102 A1 2,556,310
(General Obligation Limited Tax), 6.200%, 12/01/20
2,870,000 City of Strongsville, Ohio, Various Purpose Improvement Bonds, 12/06 at 102 Aa3 3,091,191
Series 1996 (General Obligation - Limited Tax), 5.950%, 12/01/21
540,000 Trumbull County, Ohio, General Obligation Sewer Bonds, Series 1994, 12/04 at 102 AAA 596,003
6.200%, 12/01/14
1,320,000 Twinsburg Ohio City School District, General Obligation Bonds, 12/01 at 102 AAA 1,429,151
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 995,136
1,870,000 0.000%, 12/01/12 No Opt. Call AAA 959,665
1,910,000 Vandalia Ohio, General Obligation Bonds, 5.850%, 12/01/21 12/06 at 101 Aa3 2,031,782
750,000 West Geauga Local School District, Ohio, School Improvement Bonds, 11/04 at 102 AAA 814,913
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 1,071,620
6.000%, 12/01/19
1,425,000 Wooster City School District, Wayne County, Ohio, General Obligation 12/02 at 102 AAA 1,573,499
Bonds (Unlimited Tax), For 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 329,712
6.125%, 12/01/14
- -----------------------------------------------------------------------------------------------------------------------------------
Tax Obligation/Limited - 6.3%
500,000 County of Athens, Ohio, Community Mental Health Revenue Bonds, 6/01 at 102 AA- 533,065
1991 Series I, 6.900%, 6/01/10
6,000,000 City of Cleveland, Ohio, Certificates of Participation, Series 1997, 11/07 at 102 AAA 6,007,020
Cleveland Stadium Project, 5.250%, 11/15/27
3,000,000 County of Hamilton, Ohio, Sales Tax Bonds, Series 1998B, Hamilton 6/08 at 101 AAA 2,896,170
County Football Project, 5.000%,12/01/27
1,500,000 Ohio State Building Authority (Juvenile Correctional Building), 9/04 at 102 AAA 1,704,255
6.600%, 10/01/14
1,100,000 Ohio State Department of Transportation Certificates of 4/02 at 102 AAA 1,185,085
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 28,643,725
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 2,829,168
Series L Guaranteed by the Commonwealth of Puerto Rico,
5.500%, 7/01/21
- -----------------------------------------------------------------------------------------------------------------------------------
Transportation - 4.3%
9,840,000 City of Cleveland, Ohio, Airport System Revenue Bonds, Series 1997A, 1/08 at 101 AAA 9,487,728
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 8,516,150
Series 1998A (Emery Air Freight Corporation and Emery Worldwide
Airlines, Inc.-Guarantors), 5.625%, 2/01/18
</TABLE>
32
<PAGE>
<TABLE>
<CAPTION>
Principal Optional Call Market
Amount Description Provisions* Ratings** Value
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Transportation (continued)
$11,000,000 State of Ohio, Turnpike Revenue Bonds, 1996 Series A, Issued by the Ohio No Opt. Call AAA $ 11,944,130
Turnpike Commission, 5.500%, 2/15/26
- -----------------------------------------------------------------------------------------------------------------------------------
U.S. Guaranteed - 17.8%
2,000,000 City of Athens, County of Athens, Ohio, Sanitary Sewer System Mortgage 12/09 at 100 A*** 2,375,960
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, Series 1992 1/02 at 102 N/R*** 3,291,390
(The Barberton Citizens Hospital Company Project), 7.250%, 1/01/12
(Pre-refunded to 1/01/02)
2,630,000 City of Bedford, Ohio, Hospital Facilities Refunding Revenue Bonds, 5/00 at 102 N/R*** 2,773,309
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 Counties, 12/01 at 102 AAA 1,100,420
Ohio, General Obligation Bonds (Unlimited Tax), For School Facilities
Construction and Improvement, 7.100%, 12/01/13 (Pre-refunded to 12/01/01)
1,085,000 County of Clermont, Ohio, Hospital Facilities Revenue Bonds, Series 1989A 9/01 at 100 AAA 1,172,592
(Mercy Health System, Province of Cincinnati), 7.500%, 9/01/19
(Pre-refunded to 9/01/01)
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 1,074,780
2,000,000 7.375%, 12/01/20 (Pre-refunded to 12/01/00) 12/00 at 102 AAA 2,153,200
3,700,000 County of Clermont, Ohio, Sewer System Revenue Bonds, Series 1991, 12/01 at 102 AAA 4,067,780
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 1,130,533
1,010,000 7.500%, 8/01/09 (Pre-refunded to 2/01/03) 2/03 at 100 AAA 1,130,533
500,000 City of Cleveland, Ohio, Various Purpose General Obligation Bonds, 7/02 at 102 AAA 545,565
Series 1992, 6.375%, 7/01/12 (Pre-refunded to 7/01/02)
790,000 Board of Education of the Cleveland City School District, Ohio, School 12/01 at 102 Aaa 889,595
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 Refunding Bonds, Series F, 1/02 at 102 AAA 996,572
1992-B, 6.500%, 1/01/11 (Pre-refunded to 1/01/02)
City of Cleveland, Ohio, Waterworks Improvement and Refunding Revenue
Bonds, First Mortgage Revenue Bonds, Series 1996-H:
2,280,000 5.750%, 1/01/21 (Pre-refunded to 1/01/06) 1/06 at 102 AAA 2,505,811
5,795,000 5.750%, 1/01/26 (Pre-refunded to 1/01/06) 1/06 at 102 AAA 6,368,937
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 281,838
5,500,000 6.250%, 8/15/24 (Pre-refunded to 8/15/05) 8/05 at 102 AAA 6,200,425
1,250,000 Conversion and Remarketing of the County of Cuyahoga, Ohio, Hospital 10/00 at 103 N/R*** 1,348,838
Improvement Revenue Bonds (Deaconess Hospital of Cleveland Project),
Series 1985B, 7.450%, 10/01/18 (Pre-refunded to 10/01/00)
5,750,000 County of Cuyahoga, Ohio, Hospital Revenue Bonds, Series 1990 (Meridia 8/00 at 102 AAA 6,124,843
Health System), 7.250%, 8/15/19 (Pre-refunded to 8/15/00)
305,000 County of Cuyahoga, Ohio, Distribution System Improvement Revenue Bonds, 6/99 at 102 N/R*** 311,274
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 Revenue Bonds, Series 1990, 9/00 at 102 AAA 1,066,140
7.250%, 9/01/20 (Pre-refunded to 9/01/00)
2,500,000 Fairlawn, Ohio, Health Care Facilities Revenue Bonds, Series 1989 10/99 at 102 N/R*** 2,593,250
(The Village at Saint Edward Project), 8.750%, 10/01/19
(Pre-refunded to 10/01/99)
1,350,000 County of Franklin, Ohio, Hospital Facilities Improvement Revenue Bonds, 5/00 at 102 AAA 1,425,533
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 Refunding and Improvement 5/00 at 102 AAA 1,059,640
Revenue Bonds, Series 1990B (Riverside United Methodist Hospital Project),
7.600%, 5/15/20 (Pre-refunded to 5/15/00)
1,350,000 County of Franklin, Ohio, Hospital Facilities Mortgage Revenue Bonds, 7/01 at 103 N/R*** 1,515,726
1991 Series A (Ohio Presbyterian Retirement Services), 8.750%,
7/01/21 (Pre-refunded to 7/01/01)
</TABLE>
33
<PAGE>
Portfolio of Investments
Nuveen Flagship Ohio Municipal Bond Fund (continued)
May 31, 1999
<TABLE>
<CAPTION>
Principal Optional Call Market
Amount Description Provisions* Ratings** Value
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
U.S. Guaranteed (continued)
$ 1,000,000 County of Franklin, Ohio, Revenue Bonds, Series 7/01 at 100 N/R*** $1,066,970
1991 (OCLC Online Computer Library Center, Incorporated
Project), 7.200%, 7/15/06 (Pre-refunded to 7/15/01)
1,000,000 Board of Education, Gahanna-Jefferson City School 12/00 at 102 N/R*** 1,071,880
District, Franklin County, Ohio, General
Obligation Bonds, Series 1990A, 7.125%, 12/01/14
(Pre-refunded to 12/01/00)
City of Garfield Heights, Ohio, Hospital Improvement and Refunding
Revenue Bonds, Series 1992B (Marymount Hospital Project):
3,000,000 6.650%, 11/15/11 (Pre-refunded to 11/15/02) 11/02 at 102 AA-*** 3,314,760
3,500,000 6.700%, 11/15/15 (Pre-refunded to 11/15/02) 11/02 at 102 AA-*** 3,872,820
1,720,000 Franciscan Sisters of the Poor Health System, Inc. 7/02 at 102 BBB*** 1,888,319
Revenue Bonds, Hamilton County, Ohio, Health
System Revenue Bonds, Providence Hospital Issue Series 1992, 6.875%,
7/01/15 (Pre-refunded to 7/01/02)
1,495,000 County of Hamilton, Ohio, Judson Care Center 8/00 at 101 1/4 AA-*** 1,587,660
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 Obligation 12/00 at 102 A1*** 1,073,290
Unlimited Tax, 7.100%, 12/15/13 (Pre-refunded to 12/15/00)
1,000,000 Board of Education of the Hudson Local School 12/00 at 102 A1*** 1,074,240
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 1,090,940
Ohio), General Receipts Bonds, Series 1992,
6.500%, 5/01/22 (Pre-refunded to 5/01/02)
1,500,000 City of Lorain, Ohio, Hospital Refunding Revenue 11/02 at 102 A1*** 1,684,110
Bonds, Series 1992 (Lakeland Community Hospital,
Inc.), 6.500%, 11/15/12
1,500,000 County of Lucas, Ohio, Hospital Facilities Revenue 12/01 at 102 N/R*** 1,678,965
Bonds, Series 1991 (Flower Memorial Hospital),
8.125%, 12/01/11 (Pre-refunded to 12/01/01)
4,250,000 County of Mahoning, Ohio, Hospital Improvement 10/02 at 100 AAA 4,539,765
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 Facilities 12/99 at 103 N/R*** 1,215,194
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 Exempted 12/00 at 102 AAA 1,074,110
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 Mortgage 12/01 at 101 AAA 1,361,488
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 1,987,104
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 Village 12/02 at 100 AAA 1,040,530
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 3,270,870
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 2,474,761
5,700,000 0.000%, 1/15/15 (Pre-refunded to 7/15/11) 7/11 at 70 15/32 AAA 2,240,955
20,000 Ohio Building Authority, State Facilities 4/03 at 100 AAA 23,466
Refunding Bonds (Frank J. Lausche State Office
Building), 1982 Series A, 10.125%, 10/01/06
(Pre-refunded to 4/01/03)
1,000,000 State of Ohio, Ohio Higher Educational Facilities 5/00 at 100 AAA 1,037,830
Commission (Ohio Northern University Project),
7.300%, 5/15/10 (Pre-refunded to 5/15/00)
4,630,000 Ohio Water Development Authority, State of Ohio, No Opt. Call AAA 5,128,327
Water Development Revenue Bonds, Pure Water
1990 Series I, 6.000%, 12/01/16
1,000,000 County of Ottawa, Ohio, Sanitary Sewer System 9/01 at 102 AAA 1,090,460
Special Assessment Bonds (Portage-Catawba
Island Project), Series 1991, 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*** 1,080,190
Obligation Bonds, Series 1990 (Limited Tax
Obligation), 7.600%, 12/01/11 (Pre-refunded to 12/01/00)
</TABLE>
34
<PAGE>
<TABLE>
<CAPTION>
Principal Optional Call Market
Amount Description Provisions* Ratings** Value
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
U.S. Guaranteed (continued)
$ 1,600,000 Pickerington Ohio Local School District, General Obligation Bonds, 12/00 at 102 AAA $ 1,720,624
Series 1990B, 7.250%, 12/01/13, (Pre-refunded to 12/01/00)
700,000 Puerto Rico Commonwealth Highway Authority, Highway Revenue Bonds, 7/00 at 102 AAA 746,963
Series Q, 7.750%, 7/01/10 (Pre-refunded to 7/01/00)
1,500,000 Puerto Rico Electric Power Authority, Power Revenue Bonds, Series P, 7/01 at 102 Aaa 1,629,810
7.000%, 7/01/21 (Pre-refunded to 7/01/01)
3,165,000 Reynoldsburg City School District, Ohio, General Obligation Bonds, 12/02 at 102 AAA 3,499,952
For School Building Construction and Improvement, 6.550%,
12/01/17 (Pre-refunded to 12/01/02)
1,200,000 Ridgemont Local School District, Ohio, General Obligation (Unlimited Tax), 12/02 at 102 N/R*** 1,345,056
School Improvement Bonds, Series 1992, 7.250%, 12/01/14 (Pre-refunded
to 12/01/02)
605,000 Scioto County, Ohio Human Services Building Bonds, General Obligation, 8/01 at 101 N/R*** 654,084
7.150%, 8/01/11 (Pre-refunded to 8/01/01)
1,725,000 County of Shelby, Ohio, Hospital Facilities Revenue Refunding and 9/02 at 102 N/R*** 1,942,402
Improvement Bonds, Series 1992 (The Shelby County Memorial Hospital
Association), 7.700%, 9/01/18 (Pre-refunded to 9/01/02)
1,000,000 Sylvania, Ohio, City School District, General Obligation Bonds, 6.600%, 6/02 at 102 AAA 1,095,690
6/01/16 (Pre-refunded to 6/01/02)
1,000,000 University of Cincinnati, General Receipts Bonds, Series O, 6.300%, 12/02 at 102 AA*** 1,096,310
6/01/12 (Pre-refunded to 12/01/02)
4,775,000 County of Warren, Ohio, Hospital Facilities Improvement and Refunding 7/01 at 102 Aa2*** 5,188,420
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 Revenue Bonds, Series 1992, 12/02 at 102 AAA 830,595
Warren County Water District, 6.600%, 12/01/16 (Pre-refunded to
12/01/02)
1,500,000 City of Warren, Ohio, General Obligation (Limited Tax), Sewerage System 11/00 at 102 BBB+*** 1,618,500
Improvement Bonds, Series 1990, 7.750%, 11/01/10 (Pre-refunded to
11/01/00)
1,500,000 Washington County, Ohio, Hospital Revenue Bonds (Marietta Area Health Care, 9/02 at 102 Baa1*** 1,676,760
Inc. Project), Series 1992, 7.375%, 9/01/12 (Pre-refunded to 9/01/02)
1,500,000 Westerville, Minerva Park and Blendon, Ohio, Joint Township Hospital 9/01 at 102 AAA 1,637,985
District (St. Ann's Hospital Project), Series 1991A, 7.100%, 9/15/21
(Pre-refunded to 9/15/01)
- -----------------------------------------------------------------------------------------------------------------------------------
Utilities -- 13.1%
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 1,157,220
1,535,000 0.000%, 11/15/13 No Opt. Call AAA 746,148
10,685,000 City of Cleveland, Ohio, Public Power System Improvement First Mortgage 11/01 at 102 AAA 11,618,655
Revenue Bonds, Series 1991B, 7.000%, 11/15/17
1,900,000 City of Cleveland, Ohio, Public Power System Improvement First Mortgage 11/01 at 102 AAA 2,066,022
Revenue Bonds, Series 1991A, 7.000%, 11/15/17
4,000,000 City of Cleveland, Ohio, Public Power System, First Mortgage Revenue 11/06 at 102 AAA 3,868,520
Refunding Bonds, Series 1996, Sub-Series 1, 5.000%, 11/15/24
7,520,000 Ohio Municipal Electric Generation Agency (American Municipal Power - 2/03 at 102 AAA 7,585,574
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 1,895,740
7,000,000 6.250%, 12/01/20 6/03 at 102 Baa1 7,393,750
750,000 State of Ohio, Pollution Control Revenue Refunding Bonds, Ohio Air 7/99 at 102 Baa3 767,715
Quality Development Authority, 1989 Series B, (Ohio Edison Company
Project), 7.625%, 7/01/23
5,900,000 Ohio Air Quality Development Authority, State of Ohio, Air Quality 8/99 at 102 Baa1 6,056,232
Development Revenue Refunding Bonds (Ohio Power Company Project),
Series B, 7.400%, 8/01/09
2,000,000 Ohio Air Quality Development Authority, State of Ohio, Pollution Control 3/00 at 102 AAA 2,094,240
Revenue Refunding Bonds, 1990 Series A (Ohio Edison Company Project),
7.450%, 3/01/16
15,000,000 State of Ohio, Ohio Air Quality Development Authority, Air Quality 9/05 at 102 A+ 15,911,100
Development Revenue Refunding Bonds, 1995 Series (The Dayton Power
and Light Company Project), 6.100%, 9/01/30
</TABLE>
35
<PAGE>
Portfolio of Investments
Nuveen Flagship Ohio Municipal Bond Fund (continued)
May 31, 1999
<TABLE>
<CAPTION>
Principal Optional Call Market
Amount Description Provisions* Ratings** Value
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Utilities (continued)
$ 6,000,000 State of Ohio, Ohio Air Quality Development Authority, Air Quality 4/07 at 102 AAA $ 6,140,640
Development Revenue Bonds (JMG Funding, Limited Partnership Project),
Series 1997, 5.625%, 1/01/23 (Alternative Minimum Tax)
500,000 Ohio Water Development Authority, State of Ohio, Collateralized Water 8/02 at 102 AA- 539,495
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 Control Revenue (Ohio 7/99 at 102 Baa3 7,216,521
Edison Company), 7.625%, 7/01/23
15,600,000 Ohio Water Development Authority, State of Ohio, Solid Waste Disposal 9/08 at 102 N/R 15,839,772
Revenue Bonds (Bay Shore Power Project) Tax Exempt Series 1998A,
5.875%, 9/01/20 (Alternative Minimum Tax)
1,545,000 Puerto Rico Electric Power Authority, Power Revenue Bonds, No Opt. Call BBB+ 611,434
Series O, 0.000%, 7/01/17
- ----------------------------------------------------------------------------------------------------------------------------------
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 1,100,020
1,000,000 6.900%, 12/01/11 12/02 at 101 Baa1 1,103,270
3,000,000 County of Butler, Ohio, Sewer System Revenue Bonds, Series 1996, 12/06 at 101 AAA 3,011,220
5.250%, 12/01/21
13,000,000 City of Cleveland, Ohio, Waterworks Improvement First Mortgage No Opt. Call AAA 13,683,930
Refunding Revenue Bonds, Series G, 1993, 5.500%, 1/01/21
80,000 City of Cleveland, Ohio, Waterworks Improvement First Mortgage 1/02 at 102 AAA 86,338
Revenue Refunding Bonds, Series F, 1992B, 6.500%, 1/01/11
5,000,000 City of Cleveland, Ohio, Waterworks Improvement and Refunding 1/08 at 101 AAA 4,826,550
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 42,171
55,000 5.750%, 1/01/26 1/06 at 102 AAA 57,876
1,600,000 County of Greene, Ohio, Water System Revenue Bonds, Series 1996, 12/07 at 102 AAA 1,734,159
6.125%, 12/01/21
2,200,000 City of Greenville, Ohio (Darke County), Wastewater System First 12/02 at 102 AAA 2,400,265
Mortgage Revenue Bonds, Series 1992 (Governmental Enterprise
Revenue Bonds), 6.350%, 12/01/17
1,000,000 City of Hamilton, Ohio, Water System Mortgage Revenue Bonds, 10/01 at 102 AAA 1,072,839
1991 Series A, 6.400%, 10/15/10
795,000 City of Huber Heights, Ohio, Water System Revenue Bonds, Series 1995, No Opt. Call AAA 274,115
0.000%, 12/01/19
1,000,000 County of Montgomery, Ohio, Water Revenue Bonds, Greater Moraine 11/02 at 102 AAA 1,086,979
Beavercreek Sewer District, Series 1992, 6.250%, 11/15/17
1,000,000 Mount Gilead, Ohio, Water System Revenue, First Mortgage Bonds, 12/02 at 102 N/R 1,121,149
7.200%, 12/01/17
1,000,000 Ohio Water Development Authority, State of Ohio, Water Development 6/05 at 102 AAA 1,066,739
Revenue Bonds, 1995 Fresh Water Series, 5.900%, 12/01/21
2,000,000 Ohio Water Development Authority State of Ohio Water Development 6/08 at 101 AAA 1,969,799
Revenue Bonds, Fresh Water Series 1998, 5.125%, 12/01/23
750,000 Toledo, Ohio, Sewer System, Revenue Mortgage Bonds, 6.350%, 11/15/17 11/04 at 102 AAA 834,172
500,000 Toledo, Ohio, Waterworks System, Revenue Refunding Mortgage Bonds, 11/04 at 102 AAA 558,859
6.450%, 11/15/24
- ----------------------------------------------------------------------------------------------------------------------------------
$ 665,515,000 Total Investments - (cost $634,842,457) - 97.4% 680,075,080
==============--------------------------------------------------------------------------------------------------------------------
Other Assets Less Liabilities - 2.6% 17,873,967
----------------------------------------------------------------------------------------------------------------
Net Assets - 100% $697,949,047
================================================================================================================
</TABLE>
* Optional Call Provisions (not covered by the report of
independent public accountants): 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 (not covered by the report of independent public
accountants): 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.
36
<PAGE>
Statement of Net Assets
May 31, 1999
<TABLE>
<CAPTION>
Kentucky Michigan Ohio
- ----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Assets
Investments in municipal securities, at market value (note 1) $523,340,679 $339,524,760 $680,075,080
Cash 1,803,538 -- 473,734
Receivables:
Interest 7,284,656 5,331,005 12,554,701
Investments sold -- 850,000 6,778,700
Shares sold 492,817 222,722 686,459
Other assets 242,693 222,169 258,560
- ----------------------------------------------------------------------------------------------------------------------------
Total assets 533,164,383 346,150,656 700,827,234
- ----------------------------------------------------------------------------------------------------------------------------
Liabilities
Cash overdraft -- 1,521,114 --
Payables:
Investments purchased 16,332,674 -- --
Shares redeemed 315,526 538,040 916,943
Accrued expenses:
Management fees (note 6) 135,773 157,946 313,933
12b-1 distribution and service fees (notes 1 and 6) 113,014 81,785 123,452
Other 125,628 47,588 202,607
Dividends payable 1,007,299 419,365 1,321,252
- ----------------------------------------------------------------------------------------------------------------------------
Total liabilities 18,029,914 2,765,838 2,878,187
- ----------------------------------------------------------------------------------------------------------------------------
Net assets (note 7) $515,134,469 $343,384,818 $697,949,047
============================================================================================================================
Class A Shares (note 1)
Net assets $467,126,510 $260,396,154 $471,074,723
Shares outstanding 41,630,717 22,002,441 40,716,447
Net asset value and redemption price per share $ 11.22 $ 11.83 $ 11.57
Offering price per share (net asset value per share plus maximum sales charge
of 4.20% of offering price) $ 11.71 $ 12.35 $ 12.08
============================================================================================================================
Class B Shares (note 1)
Net assets $ 9,922,940 $ 7,732,645 $ 14,494,335
Shares outstanding 884,147 652,742 1,253,766
Net asset value, offering and redemption price per share $ 11.22 $ 11.85 $ 11.56
============================================================================================================================
Class C Shares (note 1)
Net assets $ 37,246,090 $ 48,946,404 $ 50,889,097
Shares outstanding 3,322,380 4,142,231 4,402,702
Net asset value, offering and redemption price per share $ 11.21 $ 11.82 $ 11.56
============================================================================================================================
Class R Shares (note 1)
Net assets $ 838,929 $ 26,309,615 $161,490,892
Shares outstanding 74,932 2,223,772 13,959,995
Net asset value, offering and redemption price per share $ 11.20 $ 11.83 $ 11.57
============================================================================================================================
</TABLE>
See accompanying notes to financial statements.
37
<PAGE>
Statement of Operations
Year Ended May 31, 1999
<TABLE>
<CAPTION>
Kentucky Michigan Ohio
- ----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Investment Income (note 1) $28,715,685 $20,077,314 $40,635,823
- ----------------------------------------------------------------------------------------------------------------
Expenses
Management fees (note 6) 2,679,383 1,870,026 3,702,803
12b-1 service fees - Class A (notes 1 and 6) 924,591 531,983 955,303
12b-1 distribution and service fees - Class B (notes 1 and 6) 65,879 57,940 101,641
12b-1 distribution and service fees - Class C (notes 1 and 6) 236,689 360,422 365,952
Shareholders' servicing agent fees and expenses 247,472 139,136 487,240
Custodian's fees and expenses 120,066 82,000 136,608
Trustees' fees and expenses (note 6) 8,978 4,681 13,560
Professional fees 34,746 16,657 21,353
Shareholders' reports - printing and mailing expenses 110,856 78,853 146,631
Federal and state registration fees 6,934 15,836 30,644
Other expenses 22,270 25,943 35,665
- ----------------------------------------------------------------------------------------------------------------
Total expenses before custodian fee credit and expense reimbursement 4,457,864 3,183,477 5,997,400
Custodian fee credit (note 1) (11,312) (2,125) --
Expense reimbursement (note 6) (102,078) -- --
- ----------------------------------------------------------------------------------------------------------------
Net expenses 4,344,474 3,181,352 5,997,400
- ----------------------------------------------------------------------------------------------------------------
Net investment income 24,371,211 16,895,962 34,638,423
- ----------------------------------------------------------------------------------------------------------------
Realized and Unrealized Gain (Loss) from Investments
Net realized gain from investment transactions (notes 1 and 4) 510,764 2,296,613 1,618,785
Net change in unrealized appreciation or depreciation of investments (7,334,078) (7,584,682) (9,049,017)
- ----------------------------------------------------------------------------------------------------------------
Net gain (loss) from investments (6,823,314) (5,288,069) (7,430,232)
- ----------------------------------------------------------------------------------------------------------------
Net increase in net assets from operations $17,547,897 $11,607,893 $27,208,191
================================================================================================================
</TABLE>
See accompanying notes to financial statements.
38
<PAGE>
Statement of Changes in Net Assets
<TABLE>
<CAPTION>
Kentucky
----------------------------
Year Ended Year Ended
5/31/99 5/31/98
- ------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Operations
Net investment income $ 24,371,211 $ 24,365,910
Net realized gain from investment transactions (notes 1 and 4) 510,764 2,172,160
Net change in unrealized appreciation or depreciation of investments (7,334,078) 14,097,294
- ------------------------------------------------------------------------------------------------------------------
Net increase in net assets from operations 17,547,897 40,635,364
- ------------------------------------------------------------------------------------------------------------------
Distributions to Shareholders (note 1)
From undistributed net investment income:
Class A (22,685,548) (22,954,811)
Class B (286,307) (102,552)
Class C (1,381,734) (1,254,173)
Class R (38,706) (32,294)
From accumulated net realized gains from investment transactions:
Class A (949,721) (1,984,678)
Class B (13,524) (10,705)
Class C (63,109) (120,396)
Class R (1,619) (2,930)
- ------------------------------------------------------------------------------------------------------------------
Decrease in net assets from distributions to shareholders (25,420,268) (26,462,539)
- ------------------------------------------------------------------------------------------------------------------
Fund Share Transactions (note 2)
Net proceeds from shares issued in the reorganization of Kentucky Limited (note 1) 9,633,669 --
Net proceeds from sale of shares 58,123,682 47,501,865
Net proceeds from shares issued to shareholders
due to reinvestment of distributions 12,771,045 15,618,317
- ------------------------------------------------------------------------------------------------------------------
80,528,396 63,120,182
Cost of shares redeemed (42,438,595) (48,645,223)
- ------------------------------------------------------------------------------------------------------------------
Net increase in net assets from Fund share transactions 38,089,801 14,474,959
- ------------------------------------------------------------------------------------------------------------------
Net increase in net assets 30,217,430 28,647,784
Net assets at the beginning of year 484,917,039 456,269,255
- ------------------------------------------------------------------------------------------------------------------
Net assets at the end of year $515,134,469 $484,917,039
==================================================================================================================
Balance of undistributed net investment income at the end of year $ 3,931 $ 25,015
==================================================================================================================
</TABLE>
See accompanying notes to financial statements.
39
<PAGE>
Statement of Changes in Net Assets (continued)
<TABLE>
<CAPTION>
Michigan Ohio
---------------------------- ----------------------------
Year Ended Year Ended Year Ended Year Ended
5/31/99 5/31/98 5/31/99 5/31/98
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Operations
Net investment income $ 16,895,962 $ 16,864,427 $ 34,638,423 $ 35,243,212
Net realized gain from investment transactions (notes 1 and 4) 2,296,613 1,595,690 1,618,785 4,967,956
Net change in unrealized appreciation or depreciation of investments (7,584,682) 10,225,980 (9,049,017) 16,619,119
- ----------------------------------------------------------------------------------------------------------------------------------
Net increase in net assets from operations 11,607,893 28,686,097 27,208,191 56,830,287
- ----------------------------------------------------------------------------------------------------------------------------------
Distributions to Shareholders (note 1)
From undistributed net investment income:
Class A (13,190,292) (13,344,536) (23,597,778) (24,388,584)
Class B (255,860) (63,731) (448,001) (182,260)
Class C (2,123,812) (1,982,594) (2,161,843) (2,008,254)
Class R (1,398,706) (1,409,716) (8,432,580) (8,687,614)
From accumulated net realized gains from investment transactions:
Class A (1,239,012) (597,076) (1,818,617) (1,996,392)
Class B (28,005) (3,361) (40,242) (16,956)
Class C (223,599) (101,904) (185,121) (178,327)
Class R (125,490) (61,084) (623,027) (681,846)
- -----------------------------------------------------------------------------------------------------------------------------------
Decrease in net assets from distributions to shareholders (18,584,776) (17,564,002) (37,307,209) (38,140,233)
- -----------------------------------------------------------------------------------------------------------------------------------
Fund Share Transactions (note 2)
Net proceeds from sale of shares 47,599,095 28,641,868 76,326,399 63,755,865
Net proceeds from shares issued to shareholders due to
reinvestment of distributions 6,087,951 10,647,679 17,436,625 24,926,989
- ----------------------------------------------------------------------------------------------------------------------------------
53,687,046 39,289,547 93,763,024 88,682,854
Cost of shares redeemed (43,389,935) (37,642,403) (75,213,088) (83,801,938)
- ----------------------------------------------------------------------------------------------------------------------------------
Net increase in net assets from Fund share transactions 10,297,111 1,647,144 18,549,936 4,880,916
- ----------------------------------------------------------------------------------------------------------------------------------
Net increase in net assets 3,320,228 12,769,239 8,450,918 23,570,970
Net assets at the beginning of year 340,064,590 327,295,351 689,498,129 665,927,159
- ----------------------------------------------------------------------------------------------------------------------------------
Net assets at the end of year $343,384,818 $340,064,590 $697,949,047 $689,498,129
==================================================================================================================================
Balance of undistributed net investment income at the end of year $ 23,937 $ 96,645 $ 34,534 $ 36,313
==================================================================================================================================
</TABLE>
See accompanying notes to financial statements.
40
<PAGE>
Notes to Financial Statements
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 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.
After the close of business on April 23, 1999, Nuveen Flagship Kentucky Limited
Term Municipal Bond Fund ("Kentucky Limited") reorganized into Kentucky as
approved by the shareholders of Kentucky Limited on April 15, 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 May
31, 1999, Kentucky had outstanding delayed delivery and when-issued purchase
commitments of $16,332,674. 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 monthly as a dividend 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.
41
<PAGE>
Notes to Financial Statements (continued)
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. All monthly
tax-exempt income dividends paid during the fiscal year ended May 31, 1999, have
been designated Exempt Interest Dividends. Net realized capital gain and market
discount distributions are subject to federal taxation.
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 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 only under limited circumstances, or by specified classes
of investors.
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 fiscal year ended May 31, 1999.
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.
Custodian Fee Credit
Each Fund has an arrangement with the custodian bank whereby the custodian fees
and expenses are reduced by credits earned on each Fund's cash on deposit with
the bank. Such deposit arrangements are an alternative to overnight investments.
42
<PAGE>
2. Fund Shares
Transactions in Fund shares were as follows:
<TABLE>
<CAPTION>
Kentucky
------------------------------------------------------
Year Ended 5/31/99 Year Ended 5/31/98
-------------------------- --------------------------
Shares Amount Shares Amount
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Shares issued in the reorganization of Kentucky Limited:
Class A 596,400 $ 6,760,656 -- $ --
Class C 251,869 2,854,283 -- --
Class R 1,657 18,730 -- --
Shares sold:
Class A 3,649,401 41,613,655 3,217,301 36,434,351
Class B 535,579 6,099,201 323,485 3,657,888
Class C 901,574 10,264,891 639,620 7,226,085
Class R 12,814 145,935 16,255 183,541
Shares issued to shareholders due to reinvestment of distributions:
Class A 1,036,557 11,833,474 1,281,834 14,485,026
Class B 12,216 139,432 4,212 47,833
Class C 68,926 785,998 94,246 1,063,652
Class R 1,065 12,141 1,937 21,806
- -----------------------------------------------------------------------------------------------------------------------------
7,068,058 80,528,396 5,578,890 63,120,182
- -----------------------------------------------------------------------------------------------------------------------------
Shares redeemed:
Class A (3,271,484) (37,270,021) (3,866,440) (43,715,326)
Class B (38,705) (440,621) (1,809) (20,440)
Class C (414,950) (4,727,847) (434,290) (4,909,457)
Class R (9) (106) -- --
- -----------------------------------------------------------------------------------------------------------------------------
(3,725,148) (42,438,595) (4,302,539) (48,645,223)
- -----------------------------------------------------------------------------------------------------------------------------
Net increase 3,342,910 $ 38,089,801 1,276,351 $ 14,474,959
=============================================================================================================================
Michigan
------------------------------------------------------
Year Ended 5/31/99 Year Ended 5/31/98
-------------------------- --------------------------
Shares Amount Shares Amount
- -----------------------------------------------------------------------------------------------------------------------------
Shares sold:
Class A 2,626,252 $ 31,703,772 1,390,245 $ 16,660,336
Class B 355,032 4,296,838 287,386 3,449,240
Class C 837,002 10,095,573 589,706 7,052,332
Class R 125,559 1,502,912 123,751 1,479,960
Shares issued to shareholders due to reinvestment of distributions:
Class A 352,015 4,259,327 678,487 8,087,898
Class B 8,755 106,023 2,834 34,056
Class C 56,899 687,366 127,033 1,512,300
Class R 85,549 1,035,235 84,732 1,013,425
- -----------------------------------------------------------------------------------------------------------------------------
4,447,063 53,687,046 3,284,174 39,289,547
- -----------------------------------------------------------------------------------------------------------------------------
Shares redeemed:
Class A (2,812,412) (33,923,328) (2,418,756) (28,925,631)
Class B (28,668) (347,390) (5,100) (61,520
Class C (541,578) (6,514,267) (498,829) (5,971,586)
Class R (215,849) (2,604,950) (224,782) (2,683,666
- -----------------------------------------------------------------------------------------------------------------------------
(3,598,507) (43,389,935) (3,147,467) (37,642,403)
- -----------------------------------------------------------------------------------------------------------------------------
Net increase 848,556 $ 10,297,111 136,707 $ 1,647,144
=============================================================================================================================
</TABLE>
43
<PAGE>
Notes to Financial Statements (continued)
<TABLE>
<CAPTION>
Ohio
------------------------------------------------------
Year Ended 5/31/99 Year Ended 5/31/98
-------------------------- --------------------------
Shares Amount Shares Amount
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Shares sold:
Class A 4,107,940 $ 48,297,312 3,219,388 $ 37,568,749
Class B 666,096 7,825,915 516,543 6,021,505
Class C 978,318 11,491,425 995,368 11,636,371
Class R 741,899 8,711,747 730,018 8,529,240
Shares issued to shareholders due to reinvestment of distributions:
Class A 854,764 10,063,343 1,424,465 16,558,328
Class B 18,133 213,273 9,946 116,135
Class C 68,099 800,943 139,502 1,619,985
Class R 540,083 6,359,066 569,608 6,632,541
- -----------------------------------------------------------------------------------------------------------------------------
7,975,332 93,763,024 7,604,838 88,682,854
- -----------------------------------------------------------------------------------------------------------------------------
Shares redeemed:
Class A (4,536,687) (53,343,458) (4,938,984) (57,591,525)
Class B (63,145) (740,574) (38,316) (446,171)
Class C (653,874) (7,678,737) (692,246) (8,051,008)
Class R (1,146,476) (13,450,319) (1,520,403) (17,713,234)
- -----------------------------------------------------------------------------------------------------------------------------
(6,400,182) (75,213,088) (7,189,949) (83,801,938)
- -----------------------------------------------------------------------------------------------------------------------------
Net increase 1,575,150 $ 18,549,936 414,889 $ 4,880,916
=============================================================================================================================
</TABLE>
3. Distributions to Shareholders
The Funds declared dividend distributions from their tax-exempt net investment
income which were paid on July 1, 1999, to shareholders of record on June 9,
1999, as follows:
<TABLE>
<CAPTION>
Kentucky Michigan Ohio
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Dividend per share:
Class A $.0455 $.0490 $.0480
Class B .0385 .0415 .0410
Class C .0405 .0435 .0430
Class R .0475 .0510 .0500
=============================================================================================================================
</TABLE>
44
<PAGE>
4. Securities Transactions
Purchases and sales (including maturities) of investments in long-term municipal
securities and short-term municipal securities for the fiscal year ended May 31,
1999, were as follows:
<TABLE>
<CAPTION>
Kentucky Michigan Ohio
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Purchases:
Long-term municipal securities in the reorganization of Kentucky Limited $ 7,668,659 -- --
Long-term municipal securities 91,279,981 $65,480,003 $83,759,088
Short-term municipal securities 36,950,000 17,300,000 39,000,000
Sales:
Long-term municipal securities 47,876,582 62,082,584 78,785,847
Short-term municipal securities 38,950,000 17,300,000 39,000,000
===========================================================================================================================
</TABLE>
At May 31, 1999, the identified cost of investments owned for federal income tax
purposes was the same as the cost for financial reporting purposes for each
Fund.
5. Unrealized Appreciation (Depreciation)
Gross unrealized appreciation and gross unrealized depreciation of investments
at May 31, 1999, were as follows:
<TABLE>
<CAPTION>
Kentucky Michigan Ohio
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Gross unrealized:
appreciation $32,057,961 $24,045,107 $45,980,905
depreciation (1,178,892) (1,251,646) (748,282)
- ---------------------------------------------------------------------------------------------------------------------------
Net unrealized appreciation $30,879,069 $22,793,461 $45,232,623
===========================================================================================================================
</TABLE>
6. Management Fee and Other Transactions with Affiliates
Under the Trust's investment management agreement with Nuveen Advisory Corp.
(the "Adviser"), a wholly owned subsidiary of The John Nuveen Company, each Fund
pays an annual management fee, payable monthly, at the rates set forth below
which are based upon the average daily net assets of each Fund as follows:
<TABLE>
<CAPTION>
Average Daily Net Assets 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
===========================================================================================================================
</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 fiscal year ended May 31, 1999, John Nuveen & Co. Incorporated (the
"Distributor"), a wholly owned subsidiary of The John Nuveen Company, collected
sales charges on purchases of Class A Shares, the majority of which were paid
out as concessions to authorized dealers as follows:
<TABLE>
<CAPTION>
Kentucky Michigan Ohio
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Sales charges collected $1,082,479 $579,165 $1,028,321
Paid to authorized dealers 945,660 532,961 951,725
===========================================================================================================================
</TABLE>
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.
45
<PAGE>
Notes to Financial Statements (continued)
During the fiscal year ended May 31, 1999, the Distributor compensated
authorized dealers directly with commission advances at the time of purchase as
follows:
<TABLE>
<CAPTION>
Kentucky Michigan Ohio
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Commission advances $ 423,501 $ 335,941 $ 524,451
===========================================================================================================================
</TABLE>
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 fiscal year ended May 31, 1999, the
Distributor retained such 12b-1 fees as follows:
<TABLE>
<CAPTION>
Kentucky Michigan Ohio
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
12b-1 fees retained $ 139,540 $ 157,320 $ 214,544
===========================================================================================================================
</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
fiscal year ended May 31, 1999, as follows:
<TABLE>
<CAPTION>
Kentucky Michigan Ohio
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
CDSC retained $ 14,573 $ 13,756 $ 47,829
===========================================================================================================================
</TABLE>
7. Composition of Net Assets
At May 31, 1999, the Funds had an unlimited number of $.01 par value shares
authorized. Net assets consisted of:
<TABLE>
<CAPTION>
Kentucky Michigan Ohio
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Capital paid-in $484,099,880 $319,392,956 $651,723,017
Balance of undistributed net investment income 3,931 23,937 34,534
Accumulated net realized gain from investment transactions 151,589 1,174,464 958,873
Net unrealized appreciation of investments 30,879,069 22,793,461 45,232,623
- ---------------------------------------------------------------------------------------------------------------------------
Net assets $515,134,469 $343,384,818 $697,949,047
===========================================================================================================================
</TABLE>
46
<PAGE>
Financial Highlights
47
<PAGE>
Financial Highlights
Selected data for a share outstanding throughout each period is
as follows:
<TABLE>
<CAPTION>
Class (Inception Date)
Investment Operations Less Distributions
----------------------------- --------------------------
KENTUCKY** 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 Gains Total Value Return(b)
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Class A (5/87)
1999 $11.39 $.56 $(.15) $ .41 $(.56) $(.02) $(.58) $11.22 3.66%
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
Class B (2/97)
1999 11.39 .48 (.15) .33 (.48) (.02) (.50) 11.22 2.90
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 11.38 .50 (.15) .35 (.50) (.02) (.52) 11.21 3.12
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
Class R (2/97)
1999 11.37 .58 (.15) .43 (.58) (.02) (.60) 11.20 3.89
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
=======================================================================================================================
</TABLE>
<TABLE>
<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
Ending Net Assets Net Assets Net Assets Net Assets
Net Before Credit/ Before Credit/ After Credit/ After Credit/ Portfolio
Assets Reimburse- Reimburse- Reimburse- Reimburse- Turnover
(000) ment ment ment(a) ment(a) Rate
- -----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Class A (5/87)
1999 $467,127 .84% 4.88% .82% 4.90% 10%
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
Class B (2/97)
1999 9,923 1.60 4.12 1.56 4.16 10
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 37,246 1.40 4.33 1.37 4.36 10
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
Class R (2/97)
1999 839 .64 5.09 .62 5.11 10
1998 675 .64 5.31 .58 5.37 12
1997 (c) 455 .64* 5.62* .49* 5.77* 13
===========================================================================================================
</TABLE>
* Annualized.
** Information included prior to the fiscal year ended May 31, 1997, reflects
the financial highlights of Flagship Kentucky.
(a) After custodian fee credit and expense reimbursement, where applicable
(notes 1 and 6).
(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.
48
<PAGE>
Financial Highlights (continued)
Selected data for a share outstanding throughout each period is
as follows:
<TABLE>
<CAPTION>
Class (Inception Date)
Investment Operations Less Distributions
----------------------------------- --------------------------
MICHIGAN** 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 Gains Total Value Return (b)
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
CLASS A (6/85)
1999 $12.07 $.60 $(.18) $ .42 $(.60) $(.06) $(.66) $11.83 3.45%
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
CLASS B (2/97)
1999 12.09 .51 (.18) .33 (.51) (.06) (.57) 11.85 2.69
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 12.06 .53 (.18) .35 (.53) (.06) (.59) 11.82 2.90
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
CLASS R (2/97)
1999 12.07 .62 (.18) .44 (.62) (.06) (.68) 11.83 3.66
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
===============================================================================================================================
</TABLE>
<TABLE>
<CAPTION>
Class (Inception Date)
Ratios/Supplemental Data
------------------------------------------------------------------------------------------------
Ratio Ratio
of Net of Net
MICHIGAN** Ratio of Investment Ratio of Investment
Expenses Income Expenses Income to
to Average to Average to Average Average
Ending Net Assets Net Assets Net Assets Net Assets
Net Before Credit/ Before Credit/ After Credit/ After Credit/ Portfolio
Year Ended Assets Reimburse- Reimburse- Reimburse- Reimburse- Turnover
May 31, (000) ment ment ment(a) ment(a) Rate
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
CLASS A (6/85)
1999 $260,396 .84% 4.94% .84% 4.94% 18%
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
CLASS B (2/97)
1999 7,733 1.60 4.20 1.60 4.20 18
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 48,946 1.39 4.39 1.39 4.39 18
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
CLASS R (2/97)
1999 26,310 .64 5.14 .64 5.14 18
1998 26,904 .64 5.31 .64 5.31 13
1997 (c) 26,211 .65* 5.57* .65* 5.57* 34
====================================================================================================================================
</TABLE>
* Annualized.
** Information included prior to the fiscal year ended May 31, 1997, reflects
the financial highlights of Flagship Michigan.
(a) After custodian fee credit and expense reimbursement, where applicable
(notes 1 and 6).
(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.
49
<PAGE>
Financial Highlights (continued)
Selected data for a share outstanding throughout each period is
as follows:
<TABLE>
<CAPTION>
Class (Inception Date)
Investment Operations Less Distributions
----------------------------------- --------------------------
OHIO** 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 Gains Total Value Return (b)
===================================================================================================================================
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
CLASS A (6/85)
1999 $11.74 $.58 $(.13) $ .45 $(.58) $(.04) $(.62) $11.57 3.92%
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
CLASS B (2/97)
1999 11.73 .49 (.12) .37 (.50) (.04) (.54) 11.56 3.18
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 11.73 .52 (.13) .39 (.52) (.04) (.56) 11.56 3.39
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
CLASS R (2/97)
1999 11.73 .60 (.12) .48 (.60) (.04) (.64) 11.57 4.22
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>
Class (Inception Date)
Ratios/Supplemental Data
------------------------------------------------------------------------------------------------
Ratio Ratio
of Net of Net
OHIO** Ratio of Investment Ratio of Investment
Expenses Income Expenses Income to
to Average to Average to Average Average
Ending Net Assets Net Assets Net Assets Net Assets
Net Before Credit/ Before Credit/ After Credit/ After Credit/ Portfolio
Year Ended Assets Reimburse- Reimburse- Reimburse- Reimburse- Turnover
May 31, (000) ment ment ment(a) ment(a) Rate
====================================================================================================================================
<S> <C> <C> <C> <C> <C> <C>
CLASS A (6/85)
1999 $471,075 .85% 4.94% .85% 4.94% 11%
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
CLASS B (2/97)
1999 14,494 1.61 4.20 1.61 4.20 11
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 50,889 1.40 4.39 1.40 4.39 11
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
CLASS R (2/97)
1999 161,491 .65 5.14 .65 5.14 11
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 Ohio.
(a) After custodian fee credit and expense reimbursement, where applicable
(notes 1 and 6).
(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.
50
<PAGE>
Report of Independent Public Accountants
To the Board of Trustees and Shareholders of
Nuveen Flagship Multistate Trust IV:
We have audited the accompanying statements of net assets, including the
portfolios of investments, of Nuveen Flagship Kentucky Municipal Bond Fund,
Nuveen Flagship Michigan Municipal Bond Fund and Nuveen Flagship Ohio Municipal
Bond Fund (collectively, the "Funds") (three of the portfolios constituting the
Nuveen Flagship Multistate Trust IV (a Massachusetts business trust)), as of
May 31, 1999, and the related statements of operations for the year then ended,
and the statements of changes in net assets and the financial highlights for
each of the two years then ended. These financial statements and financial
highlights are the responsibility of the Funds' management. Our responsibility
is to express an opinion on these financial statements and financial highlights
based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of securities owned as of May
31, 1999, by correspondence with the custodian and brokers. As to securities
purchased but not received, we requested confirmation from brokers and, when
replies were not received, we carried out alternative auditing procedures. An
audit also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the net assets of the Nuveen
Flagship Kentucky Municipal Bond Fund, Nuveen Flagship Michigan Municipal Bond
Fund and Nuveen Flagship Ohio Municipal Bond Fund of the Nuveen Flagship
Multistate Trust IV as of May 31, 1999, and the results of their operations for
the year then ended, and the changes in their net assets and the financial
highlights for each of the two years then ended, in conformity with generally
accepted accounting principles.
ARTHUR ANDERSEN LLP
Chicago, Illinois
July 20, 1999
51
<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
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Income
European Value Fund
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Income Stock Fund
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and Bond Fund
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and Stock Fund
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Growth Fund
Income
Income Fund
Tax-Free Income
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Insured
Intermediate-Term
Limited-Term
State Funds
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Ohio
Pennsylvania
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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
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
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
Chase Global Fund Services Company
P.O. Box 5186
New York, NY 10274
(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
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 whose aim is to provide consistent,
competitive performance over time -- with moderated risk. We emphasize quality
securities carefully chosen through in-depth research, and we follow those
securities closely over time to ensure that they continue to meet our exacting
standards.
Whether your focus is long-term growth, dependable 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 growth,
growth and income, income, and tax-free 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.
[Photo of John Nuveen Sr. Appears Here]
John Nuveen, Sr.
NUVEEN
John Nuveen & Co. Incorporated
333 West Wacker Drive
Chicago, IL 60606-1286
www.nuveen.com
VAN-5-5-99
<PAGE>
May 31, 1999 Annual Report
NUVEEN
Mutual Funds
Extraordinary Talent. Masterful Performance.
Nuveen Municipal Bond Funds
Dependable, tax-free
income to help
you keep more
of what you earn.
[Photo appears here]
Kansas
Missouri
Wisconsin
Featuring Portfolio Management By Nuveen Investment Advisory Services
A Premier Adviser/SM/ for Income Investing
<PAGE>
Contents
1 Dear Shareholder
3 Nuveen Flagship Kansas Municipal Bond Fund
6 Nuveen Flagship Missouri Municipal Bond Fund
9 Nuveen Flagship Wisconsin Municipal Bond Fund
12 Portfolio of Investments
26 Statement of Net Assets
27 Statement of Operations
28 Statement of Changes in Net Assets
30 Notes to Financial Statements
35 Financial Highlights
39 Report of Independent Public Accountants
40 Building a Better Portfolio
41 Fund Information
<PAGE>
[Photo of Timothy R. Schwertfeger Appears Here]
Timothy R. Schwertfeger
Chairman of the Board
DEAR
Shareholder
I invite you to take a few minutes to read the annual report we've prepared for
you on the performance of your Nuveen state municipal bond fund for the fiscal
year ended May 31, 1999. You, along with your financial adviser, have made a
sound choice in choosing Nuveen to manage this portion of your assets. Since
1898, more than 1.3 million investors have trusted us to help them build and
sustain the wealth of a lifetime.
I'm pleased to report your fund continued to meet its primary objective of
providing you with dependable tax-free income and attractive after-tax total
returns. I will briefly describe the national economic environment during the
past 12 months. My discussion is followed by comments about the strategies
employed in managing your fund from the portfolio manager of each fund
represented in this report.
The Year In Review. The Federal Reserve eased short-term rates for the first
time in almost three years by cutting the federal funds rate in the fall of 1998
three times, bringing it to 4.75%. A month after the close of your fund's fiscal
year, the Fed raised its target by 25 basis points to 5%. (Be sure to read your
fund manager's comments about managing your fund in a rising interest rate
environment.)
The fed funds rate is the rate that banks charge each other for overnight
loans and serves as the basis many financial institutions use for setting
interest charges on a variety of products, from mortgage and car loans to credit
cards.
The Fed's rate cuts were made to avert a potential domestic credit crunch
and restore some stability to global markets. The moves seemed to have worked,
as the U.S. economy since has continued its pattern of non-inflationary growth,
accompanied by low interest rates and unemployment levels that remain among the
lowest in three decades, prompting the late June reversal by the Fed.
All indications point to a confident U.S. consumer who is comfortable with
the current state of the economy, especially the performance of the housing,
stock and job markets. This confidence is reflected in the most recent Consumer
Confidence Index report, issued by the University of Michigan's Conference Board
Inc., which showed a record-setting eighth consecutive month of gains in June.
On the global front, the turmoil of the past two years appears to be fading
somewhat, as international financial markets have begun to send recovery
signals.
Domestic inflation continues to be benign, with an increase of 2.1% for the
12 months ended May 31, 1999. The general backdrop of inflation indicators
continued to be mild, with the employment cost index, average hourly earnings,
and import and producer price trends all remaining favorable.
Federal Reserve Chairman Alan Greenspan recently stated that a key factor
in achieving today's peaceful coexistence of economic growth and low inflation
has been increased productivity. Improvements in productivity, spurred by
technological advances, have been responsible for
1
<PAGE>
offsetting wage and other inflationary pressures that we would normally expect
to see as part of a growing economy.
Why Municipal Bonds? Our municipal bond funds continued to offer attractive,
stable income in a market that places a high premium on yield. In 1998,
municipal bonds represented a reasonably insulated haven in an otherwise
turbulent market, with lower volatility relative to Treasury bonds and other
fixed-income investments. Even in 1999, with interest rates rising again,
municipals outperformed Treasuries through the end of May.
The high ratio of tax-exempt municipal yields to Treasury yields sheltered
municipal bonds, to some extent, from the price decline that occurred in the
Treasury market during the first part of the year. While the yield on 30-year
Treasury bonds rose from 5.10% at the end of December to 5.83% as of May 31,
1999, the yield on the Bond Buyer Revenue Bond Index, an unmanaged index of
long-term municipal revenue bonds, gained 15 basis points--from 5.26% to 5.41%.
Given the inverse relationship between interest rates and bond prices, we saw
bond prices fall as rates rose over this period.
Though municipal bond prices did decrease, the decline was not as dramatic
as the drop in Treasuries.
This performance differential reflects the fact that Treasuries had become
relatively expensive as the result of safe-haven buying during the international
economic crises in 1998. As the financial turmoil subsided, however, foreign
investors returned to investing in their own countries rather than in U.S.
dollar-denominated securities, and the decline in demand caused U.S. Treasuries
to drop in price.
At the end of May 1999, the ratio between long-term municipal yields and
30-year Treasury yields stood at 93%, compared with the historical average of
86% for the period of 1986-1999. For investors, this meant that quality long-
term municipal bonds offered yields comparable to those of long Treasury bonds--
even before the tax advantages of municipal bonds were taken into account.
During the funds' fiscal year, that ratio hit a high of 104% in December.
On an after-tax basis in today's market, municipal bonds continue to
present an exceptionally attractive investment option relative to Treasuries.
During 1998, lower interest rates and the strong economy combined to
generate high levels of new municipal issuance and a significant increase in the
refinancing of existing bonds. Municipal issuance in 1998 reached $284 billion,
up 29% over 1997.
In the first part of 1999, however, as the market settled into a more
stable interest rate environment, refunding activity has dropped off
dramatically, resulting in a drop in municipal supply. This, in turn, has
enhanced the attractiveness of the municipal bonds that were brought to market,
as demand--especially from individual investors--remained relatively strong.
The Value of Nuveen Expertise. Nuveen Mutual Funds are a diverse collection of
investments featuring highly regarded asset management firms--Premier
Advisers/SM/--who direct the investment activities of each portfolio.
The Premier Advisers are firms that have earned a reputation for excellence
in their field of expertise--including Nuveen Investment Advisory Services for
income investing, Rittenhouse Financial Services for growth investing and
Institutional Capital Corporation for value investing.
For more information on our funds, contact your financial adviser for a
prospectus, or call Nuveen at (800) 621-7227, or download one from
www.nuveen.com. Please read the prospectus carefully before you invest or send
money.
We encourage you to talk with your financial adviser about Nuveen's
expanding array of investments and the ways they can help you establish a
diversified portfolio designed to build and sustain long-term financial
security.
We are grateful for the confidence you have placed in us and are dedicated
to maintaining your trust in the years ahead.
Sincerely,
/s/ Timothy R. Schwertfeger
Timothy R. Schwertfeger
Chairman of the Board
July 15, 1999
2
<PAGE>
NUVEEN FLAGSHIP KANSAS MUNICIPAL BOND FUND
Report from the Portfolio Manager
Portfolio Manager Mike Davern discusses fund performance, the municipal market
and key investment strategies for the Kansas fund for the fiscal year ended May
31, 1999.
In what state is the Kansas economy? Unemployment was only 3.4% in May in
Kansas, which is experiencing healthy growth in per capita income. Beyond its
traditional roots in agriculture, the state's economy has diversified broadly
into manufacturing, trade and service sectors.
Kansas' expanding economy has led to growing infrastructure and school
financing needs, resulting in strong municipal bond issuance in 1998. Despite
rising interest rates in 1999, issuance in Kansas continued to grow in 1999.
Increasing concerns about rising economic growth and potential inflation caused
bond yields to rise and prices to fall. However, municipal bonds held their
values quite well compared to U.S. Treasury bonds.
How did Nuveen Flagship Kansas Municipal Bond Fund perform during its fiscal
year? Nuveen Flagship Kansas Municipal Bond Fund generated a total return on net
asset value of 3.81%. That compares to the 3.82% average annual total return
posted by the Lipper Kansas Municipal Debt Peer Group.* The fund ranked 8th out
of 13 municipal bond funds for the fiscal year period in its Lipper peer group.
Total return equals a fund's income, plus capital gains distributions, if any,
plus or minus changes in net asset value. The fund's taxable equivalent total
return, for investors in the 35.5% combined federal and state income tax
bracket, was 6.52%.**
As of May 31, 1999, the fund's SEC 30-day yield was 4.27%. For investors in
the combined 35.5% federal and state income tax bracket, that is equivalent to a
yield of 6.62% on a taxable investment.
How did you manage the fund to achieve this performance? We continued to focus
on bonds we determined to have a good "call" structure. Issuers generally have
the right to call or redeem their bonds after a given date prior to maturity,
which they would do if interest rates declined.
To protect the fund's income stream, we looked for bonds with call dates far in
the future--or better yet, that are noncallable. Only 3% of the Kansas portfolio
is callable between now and the year 2002.
For example, the fund recently acquired three bond issues, each with call
protection of 10 or more years. The issues included a Topeka Public Building
Commission lease for a state office building, an electric system revenue bond
for the city of Holton and a water and sewer bond for the city of Wichita. All
three bonds are insured.
We also continued to search for bonds that offered attractive yields and
sound underlying credit quality.
In addition to assessing the credit quality of individual issuers, Nuveen
Research helps us monitor events in the municipal market and analyze how those
events affect individual state and national municipal markets. For example,
during spring 1998, a major not-for-profit healthcare provider in Philadelphia
declared bankruptcy. While the impact of this bankruptcy was most pronounced in
the healthcare sector of the Pennsylvania municipal market, it was felt to a
lesser extent throughout the municipal market.
Comments cover the year ended May 31, 1999; performance statistics are
quoted for Class A shares at net asset value.
** The Lipper Peer Group return represents the average annualized return of
13 funds in the Lipper Other States Municipal Debt category. The return
assumes reinvestment of dividends and does not reflect any applicable sales
charges.
** Taxable equivalent total return equals a fund's taxable equivalent income
(based on the combined federal and state tax rate), plus capital gains
distributions, if any, plus or minus changes in net asset value.
3
<PAGE>
Uncertainty created by the Philadelphia healthcare situation prompted
investors to demand higher yields for lower-rated issues across the country,
causing the yield "spread," or the difference between the highest credit quality
securities and those of lower credit quality, to widen. Prior to the bankruptcy,
this spread had been relatively narrow, suggesting that investors were not being
compensated adequately for taking on additional credit risk. With spreads having
widened, lower-rated securities have become more attractive on a risk-adjusted
basis.
With interest rates at a higher level, and the widening differential
between low-rated and high-rated credits, we took the opportunity to investigate
lower-rated issues. Using the expertise of Nuveen Research, we considered only
those bonds that offered adequate compensation for the level of risk.
In recent months, we have taken advantage of rising interest rates by
selling some bonds at a loss--because as interest rates rose, prices of the
bonds fell--and subsequently buying similar securities, whose yield now
reflected the higher interest rates.
Called a "swap," this action produced two benefits for the fund and for
shareholders--tax efficiency and potentially higher income. Tax losses were
created by the swaps, which will benefit the fund and are used to offset capital
gains for up to eight years. The higher yield of the new bonds should boost the
fund's income as well.
What is your outlook for Nuveen Flagship Kansas Municipal Bond Fund? Rising
interest rates in 1999 have made it advantageous for us to lock in higher yields
by extending the portfolio's maturity beyond that of our Lipper peer group.
We believe that bond yields are currently attractive relative to inflation.
Should interest rates fall or remain stable, the portfolio's longer maturity
would be advantageous.
Although the Kansas economy is growing, and the overall level of issuance
has increased, the Kansas municipal bond market still offers limited supply. As
such, it becomes a challenge to find new investments that offer good value.
However, as a major investor in the Kansas market, we will continue to have
excellent access to undervalued securities that provide income and the
opportunity for price appreciation.
"To protect the fund's income stream, we looked for bonds with call dates far in
the future--or better yet, that are noncallable. Only 3% of the Kansas portfolio
is callable between now and the year 2002."
4
<PAGE>
NUVEEN FLAGSHIP KANSAS MUNICIPAL BOND FUND
Highlights as of May 31, 1999
Quick Facts
A Shares B Shares C Shares R Shares
NAV $ 10.49 $ 10.43 $ 10.51 $ 10.55
- ------------------------------------------------------------------------------
May's Declared Dividend* $0.0410 $0.0345 $0.0365 $0.0435
- ------------------------------------------------------------------------------
Fund Symbol FKSTX N/A N/A N/A
- ------------------------------------------------------------------------------
CUSIP 67065R101 67065R200 67065R309 67065R408
- ------------------------------------------------------------------------------
Inception Date 1/92 2/97 2/97 2/97
- ------------------------------------------------------------------------------
* Paid June 1, 1999
Total Returns (Annualized)/+/
A Shares B Shares C Shares R Shares
NAV Offer NAV NAV NAV
1-Year 3.81% -0.51% 3.07% 3.18% 4.06%
- ------------------------------------------------------------------------------
1-Year TER** 6.52% 2.09% 5.38% 5.60% 6.90%
- ------------------------------------------------------------------------------
5-Year 6.72% 5.81% 5.94% 6.31% 6.95%
- ------------------------------------------------------------------------------
Since Inception 6.81% 6.19% 6.09% 6.41% 6.96%
+ 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.
** Taxable Equivalent Return (based on a combined federal and state tax rate of
35.50%).
Index Comparison/*/
[LINE CHART APPEARS HERE]
<TABLE>
<CAPTION>
Nuveen Flagship Nuveen Flagship Lehman Brothers
Kansas Municipal Kansas Municipal Municipal
Bond Fund (Offer) Bond Fund (NAV) Bond Index
<S> <C> <C> <C>
January
- -------
1992 9,580 10,000 10,000
May
- ---
1992 10,701 11,170 10,982
1993 12,244 12,781 12,328
1994 11,457 11,960 11,890
1995 13,060 13,630 13,681
1996 13,472 14,060 14,207
1997 14,927 15,580 15,645
1998 15,848 16,540 16,685
1999 15,696 16,384 16,580
</TABLE>
______ Nuveen Flagship Kansas Municipal Bond Fund (Offer) $15,686
______ Nuveen Flagship Kansas Municipal Bond Fund (NAV) $16,384
______ Lehman Brothers Municipal Bond Index $16,580
/*/ The Index Comparison shows the change in value of a $10,000 investment in
the Class A shares of the Nuveen fund compared with the Lehman Brothers
Municipal Bond Index. The Lehman Index is comprised of a broad range of
investment-grade municipal bonds, and does not reflect any initial or
ongoing expenses. The Nuveen fund return depicted in the chart reflects the
initial maximum sales charge applicable to A shares (4.20%) and all ongoing
fund expenses.
Monthly Tax-Free Dividends (Class A Shares)
[BAR CHART APPEARS HERE]
<TABLE>
<CAPTION>
Month
- -----
<S> <C>
June .0435
July .0435
August .0435
September .0435
October .0425
November .0425
December .0425
January .0425
February .0425
March .0425
April .0410
May .0410
</TABLE>
Portfolio Statistics
Fund Net Assets $126.5 million
- ------------------------------------------------------
Effective Maturity 20.82 years
- ------------------------------------------------------
Average
Effective Duration 8.56
- ------------------------------------------------------
Top Five Sectors/1/
Tax Obligation (Limited) 23%
- ------------------------------------------------------
Health Care 19%
- ------------------------------------------------------
Housing (Multifamily) 15%
- ------------------------------------------------------
U.S. Guaranteed 11%
- ------------------------------------------------------
Utilities 8%
- ------------------------------------------------------
Bond Credit Quality/1/
[PIE CHART APPEARS HERE]
<TABLE>
<S> <C>
AAA/U.S.
Guaranteed....... 46%
AA............... 15%
A................ 18%
BBB/NR........... 21%
</TABLE>
/1/ as a percentage of total bond holdings
Returns are historical and do not guarantee future performance. Investment
returns and principal value will fluctuate so that when shares are redeemed,
they may be worth more or less than original cost. Performance of classes will
differ. For additional information, please see the fund's prospectus.
5
<PAGE>
NUVEEN FLAGSHIP MISSOURI MUNICIPAL BOND FUND
Report from the Portfolio Manager
Portfolio Manager Mike Davern discusses fund performance, the municipal market
and key investment strategies for the Missouri fund for the fiscal year ended
May 31, 1999.
Comments cover the year ended May 31, 1999; performance statistics are quoted
for Class A shares at net asset value.
How strong is Missouri's economy? With an unemployment rate of only 3.5% in
May, Missouri's economy is quite diversified in fields such as defense,
manufacturing, services and tourism. Population growth continues at a rate in
excess of 5% per year, and per capita income is growing rapidly.
Missouri's expanding economy led to growing infrastructure and school
financing needs, resulting in strong municipal bond issuance in 1998. Rising
interest rates in 1999, however, significantly slowed municipal bond activity--
both new issuance and refundings--in the latter half of the fund's fiscal year.
There were two reasons the market slowed--the increased interest rates, which
primarily slowed new issuance, plus the fact that the refunding market has
essentially been exhausted. Municipalities flooded the market with refundings in
recent years when interest rates were dropping. A provision of the Tax Reform
Act of 1986, however, limits municipalities to only one tax-exempt refunding of
a bond issuance.
As was the case on the national level, increasing concerns about strong
economic growth and potential inflation caused bond yields to rise and prices
to fall. However, municipal bonds held their values quite well compared to U.S.
Treasury bonds.
How did Nuveen Flagship Missouri Municipal Bond Fund perform during its fiscal
year? Nuveen Flagship Missouri Municipal Bond Fund generated a total return on
net asset value of 3.95%, outperforming the 3.47% average annual total return
posted by the Lipper Missouri Municipal Debt Peer Group.* The fund ranked 3rd
out of 23 municipal bond funds for the fiscal year period in its Lipper peer
group. Total return equals a fund's income, plus capital gains distributions, if
any, plus or minus changes in net asset value. The fund's taxable equivalent
total return, for investors in the 35% combined federal and state income tax
bracket, was 6.65%.**
As of May 31, 1999, the fund's SEC 30-day yield was 4.22%. For investors in
the combined 35% federal and state income tax bracket, that is equivalent to a
yield of 6.49% on a taxable investment.
How did you manage the fund to achieve this performance? We continued to focus
on bonds we determined to have a good "call" structure. Issuers generally have
the right to call or redeem their bonds after a given date prior to maturity,
which they would do if interest rates decline. To protect the fund's income
stream, we looked for bonds with call dates far in the future--or better yet,
that are noncallable.
Although most Missouri bonds are callable, the portfolio has a high
percentage of non-callable securities--only 2.3% is callable between now and the
year 2001. As a large institutional buyer, the fund receives high priority when
desirable issues come to market.
A good example of a high-quality non-callable security in the portfolio is
an issue by the Missouri Development Finance Board Solid Waste Project. The
bonds are rated by Moody's Investors Service as Aa2, the second highest rating
it issues.
* 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.
** Taxable equivalent total return equals a fund's taxable equivalent income
(based on the combined federal and state tax rate), plus capital gains
distributions, if any, plus or minus changes in net asset value.
6
<PAGE>
Maturing in 2029, the securities carry a 5.2% coupon. The bonds are backed
by Procter & Gamble, which is able to use the disposal project for waste
produced by one of its plants. If interest rates fall and the bond market
rallies, this issue will appreciate in value without having to be concerned
about the shortness of time until the call date.
In addition to call protection, we continue to search for bonds that offer
attractive yields and sound underlying credit quality.
Nuveen Research also helps us monitor events in the municipal market and
analyze how those events affect individual state and national municipal markets.
For example, during spring 1998, a major not-for-profit healthcare provider in
Philadelphia declared bankruptcy. While the impact of this bankruptcy was most
pronounced in the healthcare sector of the Pennsylvania municipal market, it was
felt to a lesser extent throughout the municipal market.
Uncertainty created by the Philadelphia healthcare situation prompted
investors to demand higher yields for lower-rated issues across the country,
causing the yield "spread," or the difference between the highest credit quality
securities and those of lower credit quality, to widen. Prior to the bankruptcy,
this spread had been relatively narrow, suggesting that investors were not
being compensated adequately for taking on additional credit risk.
With spreads having widened, lower-rated securities have become more
attractive on a risk-adjusted basis.
With interest rates at a higher level, and the widening differential
between low-rated and high-rated credits, we took the opportunity to investigate
lower-rated issues. Using the expertise of Nuveen Research, we considered only
those bonds that offered adequate compensation for the level of risk.
In recent months, we have taken advantage of rising interest rates by
selling some bonds at a loss--because as interest rates rose, prices of the
bonds fell--and subsequently buying similar securities, whose yield reflected
the higher interest rates.
Called a "swap," this action produced two benefits for the fund and for
shareholders--tax efficiency and potentially higher income. Tax losses were
created by the swaps, which will benefit the fund and are used to offset capital
gains for up to eight years. The higher yield of the new bonds should boost the
fund's income as well.
What is your outlook for Nuveen Flagship Missouri Municipal Bond Fund? Rising
interest rates in 1999 have made it advantageous for us to lock in higher yields
by extending the portfolio's maturity beyond that of our Lipper peer group. We
believe that bond yields are currently attractive relative to inflation. Should
interest rates fall or remain stable, the portfolio's longer maturity would be
advantageous.
With Missouri's strong economy and influx of population, we expect there
will continue to be a buoyant supply and demand for municipal bonds in areas
such as housing, healthcare, education and utilities. We will continue to seek
out undervalued securities that provide income and the opportunity for price
appreciation through credit rating upgrades.
"To protect the fund's income stream, we looked for bonds with call dates far in
the future--or better yet, that are noncallable. Although most Missouri bonds
are callable, the portfolio has a high percentage of non-callable securities--
only 2.3% is callable between now and the year 2001."
7
<PAGE>
NUVEEN FLAGSHIP MISSOURI MUNICIPAL BOND FUND
Highlights as of May 31, 1999
Quick Facts
<TABLE>
<CAPTION>
A Shares B Shares C Shares R Shares
<S> <C> <C> <C> <C>
NAV $ 11.12 $ 11.11 $ 11.11 $ 11.12
- ----------------------------------------------------------------------------------------------------
May's Declared Dividend* $0.0455 $0.0385 $0.0405 $0.0475
- ----------------------------------------------------------------------------------------------------
Fund Symbol FMOTX N/A FMOCX N/A
- ----------------------------------------------------------------------------------------------------
CUSIP 67065R812 67065R796 67065R788 67065R770
- ----------------------------------------------------------------------------------------------------
Inception Date 8/87 2/97 2/94 2/97
- ----------------------------------------------------------------------------------------------------
* Paid June 1, 1999
</TABLE>
Total Returns (Annualized)+
<TABLE>
<CAPTION>
A Shares B Shares C Shares R Shares
NAV Offer NAV NAV NAV
<S> <C> <C> <C> <C>
1-Year 3.95% -0.39% 3.09% 3.31% 4.17%
- --------------------------------------------------------------------------------------------------------------
1-Year TER** 6.65% 2.19% 5.37% 5.71% 6.99%
- --------------------------------------------------------------------------------------------------------------
5-Year 6.62% 5.71% 5.93% 6.03% 6.73%
- --------------------------------------------------------------------------------------------------------------
10-Year 7.32% 6.87% 6.85% 6.73% 7.37%
- --------------------------------------------------------------------------------------------------------------
</TABLE>
+ 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.
** Taxable Equivalent Return (based on a combined federal and state tax rate
of 35%).
Index Comparison(*)
[LINE CHART APPEARS HERE]
<TABLE>
<CAPTION>
Nuveen Flagship Nuveen Flagship Lehman Brothers
Missouri Municipal Missouri Municipal Municipal
May Bond Fund (Offer) Bond Fund (NAV) Bond Index
- ---
<S> <C> <C> <C>
1989 9,580 10,000 10,000
1990 10,140 10,585 10,731
1991 11,146 11,635 11,813
1992 12,227 12,763 12,974
1993 13,758 14,361 14,526
1994 14,091 14,708 14,885
1995 15,245 15,913 16,240
1996 15,779 16,471 16,982
1997 17,086 17,835 18,391
1998 18,678 19,496 20,117
1999 19,417 20,269 21,058
</TABLE>
- --- Nuveen Flagship Missouri Municipal Bond Fund (Offer) $19,417
- --- Nuveen Flagship Missouri Municipal Bond Fund (NAV) $20,269
- --- Lehman Brothers Minicipal Bond Index $21,058
(*) The Index Comparison shows the change in value of a $10,000 investment in
the Class A shares of the Nuveen fund compared with the Lehman Brothers
Municipal Bond Index. The Lehman Index is comprised of a broad range of
investment-grade municipal bonds, and does not reflect any initial or
ongoing expenses. The Nuveen fund return depicted in the chart reflects the
initial maximum sales charge applicable to A shares (4.20%) and all ongoing
fund expenses.
Monthly Tax-Free Dividends (Class A Shares)
[BAR CHART APPEARS HERE]
<TABLE>
<CAPTION>
Month
- -----
<S> <C>
June .0460
July .0460
August .0460
September .0460
October .0460
November .0460
December .0460
January .0460
February .0455
March .0455
April .0455
May .0455
</TABLE>
Portfolio Statistics
Fund Net Assets $ 257.6 million
- -------------------------------------------------------------------------------
Effective Maturity 19.86 years
- -------------------------------------------------------------------------------
Average Effective Duration 7.62
- -------------------------------------------------------------------------------
Top Five Sectors/1/
Health Care 17%
- -------------------------------------------------------------------------------
Tax Obligation (Limited) 15%
- -------------------------------------------------------------------------------
U.S. Guaranteed 12%
- -------------------------------------------------------------------------------
Housing (Multifamily) 11%
- -------------------------------------------------------------------------------
Long-Term Care 8%
- -------------------------------------------------------------------------------
Bond Credit Quality/1/
[PIE CHART APPEARS HERE]
AAA/U.S.Guaranteed......................................................... 56%
AA......................................................................... 13%
A.......................................................................... 9%
BBB/NR..................................................................... 22%
/1/ as a percentage of total bond holdings
Returns are historical and do not guarantee future performance. Investment
returns and principal value will fluctuate so that when shares are redeemed,
they may be worth more or less than original cost. Performance of classes will
differ. For additional information, please see the fund's prospectus.
8
<PAGE>
NUVEEN FLAGSHIP WISCONSIN MUNICIPAL BOND FUND
Report from the Portfolio Manager
Portfolio Manager Mike Davern discusses fund performance, the municipal market
and key investment strategies for the Wisconsin fund for the fiscal year ended
May 31, 1999.
How strong is Wisconsin's economy? Wisconsin continues to enjoy a healthy,
diversified economy with a mixture of agriculture, manufacturing, services and
retail trade. Efforts to attract business and promote development and job
training in Wisconsin have been largely successful.
Wisconsin's expanding economy led to growing infrastructure and housing
financing needs, resulting in strong municipal bond issuance in 1998. Rising
interest rates in 1999, however, significantly slowed municipal bond activity--
both new issuance and refundings--in the latter half of the fund's fiscal year.
There were two reasons the market slowed--the increased interest rates, which
primarily slowed new issuance, plus the fact that the refunding market has
essentially been exhausted. Municipalities flooded the market with refundings in
recent years when interest rates were dropping. A provision of the Tax Reform
Act of 1986, however, limits municipalities to only one tax-exempt refunding of
a bond issuance.
Although Wisconsin has a state income tax, most municipal bonds issued in
Wisconsin are only exempt from federal income tax. The limited number of bonds
that have the double-tax exemption are in very strong demand.
As was the case on the national level, increasing concerns about rising
economic growth and potential inflation caused bond yields to rise and prices to
fall. However, municipal bonds held their values quite well compared to U.S.
Treasury bonds.
How did Nuveen Flagship Wisconsin Municipal Bond Fund perform during its fiscal
year? Nuveen Flagship Wisconsin Municipal Bond Fund generated a total return on
net asset value of 3.83%, outperforming the 3.52% average annual total return
posted by the Lipper Other States Municipal Debt Peer Group.* The fund's taxable
equivalent total return, for investors in the 35.5% combined federal and state
income tax bracket, was 6.40%.** Total return equals a fund's income, plus
capital gains distributions, if any, plus or minus changes in net asset value.
As of May 31, 1999, the fund's SEC 30-day yield was 4.42%. For investors in
the combined 35.5% federal and state income tax bracket, that is equivalent to a
yield of 6.85% on a taxable investment.
How did you manage the fund to achieve this performance? We continued to focus
on bonds we determined to have a good "call" structure. Issuers generally have
the right to call or redeem their bonds after a given date prior to maturity,
which they would do if interest rates decline. To protect the fund's income
stream, we looked for bonds with call dates far in the future--or better yet,
that are noncallable. Currently, the portfolio contains no bonds that are
callable before the year 2002, at which point only 4.7% of the portfolio is
subject to being called.
In addition, we continued to seek out bonds that offered double tax
exemption. Currently, nearly 60% of the fund is invested in double-tax exempt
Wisconsin paper, which is a relatively high percentage.
Comments cover the year ended May 31, 1999; performance statistics are
quoted for Class A shares at net asset value.
* The Lipper Peer Group return represents the average annual ized return of
the 79 funds in the Lipper Other States Municipal Debt category. The return
assumes reinvestment of dividends and does not reflect any applicable sales
charges.
** Taxable equivalent total return equals a fund's taxable equivalent income
(based on the combined federal and state tax rate), plus capital gains
distributions, if any, plus or minus changes in net asset value.
<PAGE>
For instance, the fund purchased six separate double-tax exempt bond issues
during the second quarter of 1999, ranging from an additional purchase of AAA
rated Wisconsin Center District bonds already owned by the fund, to the purchase
of two separate non-rated transactions for Sturtevant and Jackson County's
Community Development Authorities.
As a large institutional buyer, Nuveen often receives priority when
desirable issues come to market.
In addition to call protection and double tax-exemption, we continue to
search for bonds that offer attractive yields and sound underlying credit
quality.
Nuveen Research also helps us monitor events in the municipal market and
analyze how those events affect individual state and national municipal markets.
For example, during spring 1998, a major not-for-profit healthcare provider in
Philadelphia declared bankruptcy. While the impact of this bankruptcy was most
pronounced in the healthcare sector of the Pennsylvania municipal market, it was
felt to a lesser extent throughout the municipal market.
Uncertainty created by the Philadelphia healthcare situation prompted
investors to demand higher yields for lower-rated issues across the country,
causing the yield "spread," or the difference between the highest credit quality
securities and those of lower credit quality, to widen. Prior to the bankruptcy,
this spread had been relatively narrow, suggesting that investors were not being
compensated adequately for taking on additional credit risk. With spreads having
widened, lower-rated securities have become more attractive on a risk-adjusted
basis.
With interest rates at a higher level, and the widening differential
between low-rated and high-rated credits, we took the opportunity to investigate
lower-rated issues. Using the expertise of Nuveen Research, we considered only
those bonds that offered adequate compensation for the level of risk.
In recent months, we have taken advantage of rising interest rates by
selling some bonds at a loss--because as interest rates rose, prices of the
bonds fell--and subsequently buying similar securities, whose yield now
reflected the higher interest rates.
Called a "swap," this action produced two benefits for the fund and for
shareholders--tax efficiency and potentially higher income. Tax losses were
created by the swaps, which will benefit the fund and are used to offset capital
gains for up to eight years. The higher yield of the new bonds should boost the
fund's income as well.
What is your outlook for Nuveen Flagship Wisconsin Municipal Bond Fund? Rising
interest rates in 1999 have made it advantageous for us to lock in higher yields
by extending the portfolio's maturity beyond that of our Lipper peer group. We
believe that bond yields are currently attractive in relation to inflation.
Should interest rates fall or remain stable, the portfolio's longer maturity
would be advantageous.
With Wisconsin's strong economy and influx of population, there will
continue to be a buoyant supply and demand for municipal bonds in areas such as
housing, healthcare, education and utilities. We will continue to seek out
undervalued securities that provide income and the opportunity for price
appreciation through credit rating upgrades.
"We continued to seek out bonds that offered double tax exemption. Currently,
nearly 60% of the fund is invested in double-tax exempt Wisconsin paper, which
is a relatively high percentage."
10
<PAGE>
NUVEEN FLAGSHIP WISCONSIN MUNICIPAL BOND FUND
Highlights as of May 31, 1999
Quick Facts
<TABLE>
<CAPTION>
A Shares B Shares C Shares R Shares
<S> <C> <C> <C> <C>
NAV $ 10.20 $ 10.23 $ 10.22 $ 10.23
- -------------------------------------------------------------------------------
May's Declared Dividend* $0.0380 $0.0315 $0.0335 $0.0400
- -------------------------------------------------------------------------------
Fund Symbol FWIAX N/A N/A N/A
- -------------------------------------------------------------------------------
CUSIP 67065R721 67065R713 67065R697 67065R689
- -------------------------------------------------------------------------------
Inception Date 6/94 2/97 2/97 2/97
- -------------------------------------------------------------------------------
* Paid June 1, 1999
</TABLE>
Total Returns (Annualized)+
<TABLE>
<CAPTION>
A Shares B Shares C Shares R Shares
NAV Offer NAV NAV NAV
<S> <C> <C> <C> <C>
1-Year 3.83% -0.52% 3.05% 3.29% 4.04%
- -------------------------------------------------------------------------------
1-Year TER** 6.40% 1.94% 5.18% 5.55% 6.73%
- -------------------------------------------------------------------------------
3-Year 7.11% 5.59% 6.46% 6.66% 7.36%
- -------------------------------------------------------------------------------
Since Inception 6.40% 5.49% 5.78% 5.97% 6.55%
</TABLE>
+ 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.
** Taxable Equivalent Return (based on a combined federal and state tax rate
of 35.5%).
Index Comparison(R)
<TABLE>
<CAPTION>
Nuveen Flagship Nuveen Flagship Lehman Brothers
Wisconsin Municipal Wisconsin Municipal Municipal Bond
June Bond Fund (Offer) Bond Fund (NAV) Index
<S> <C> <C> <C>
1994 9,580 10,000 10,000
May
1995 10,137 10,582 10,816
1996 10,728 11,198 11,534
1997 11,509 12,013 12,488
1998 12,614 13,167 13,568
1999 13,058 13,630 14,147
</TABLE>
- ------ Nuveen Flagship Wisconsin Municipal Bond Fund (Offer) $13,058
- ------ Nuveen Flagship Wisconsin Municipal Bond Fund (NAV) $13,630
- ------ Lehman Brothers Muncipal Bond Index $14,147
(R) The Index Comparison shows the change in value of a $10,000 investment in
the Class A shares of the Nuveen fund compared with the Lehman Brothers
Municipal Bond Index. The Lehman Index is comprised of a broad range of
investment-grade municipal bonds, and does not reflect any initial or
ongoing expenses. The Nuveen fund return depicted in the chart reflects the
initial maximum sales charge applicable to A shares (4.20%) and all ongoing
fund expenses.
Monthly Tax-Free Dividends (Class A Shares)
[BAR CHART APPEARS HERE]
Month
- -----
June .0410
July .0400
August .0400
September .0400
October .0400
November .0400
December .0400
January .0380
February .0380
March .0380
April .0380
May .0380
Portfolio Statistics
Fund Net Assets $ 36.6 million
- -------------------------------------------------------------------------------
Effective Maturity 20.57 years
- -------------------------------------------------------------------------------
Average Effective Duration 9.23
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
Top Five Sectors/1/
- -------------------------------------------------------------------------------
Tax Obligation (Limited) 44%
- -------------------------------------------------------------------------------
U.S. Guaranteed 12%
- -------------------------------------------------------------------------------
Long-Term Care 8%
- -------------------------------------------------------------------------------
Utilities 7%
- -------------------------------------------------------------------------------
Housing (Multifamily) 6%
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
Bond Credit Quality/1/
- -------------------------------------------------------------------------------
[PIE CHART APPEARS HERE]
AAA/U.S.Guaranteed........................................................ 41%
AA........................................................................ 4%
A......................................................................... 18%
BBB/NR.................................................................... 37%
/1/ as a percentage of total bond holdings
Returns are historical and do not guarantee future performance. Investment
returns and principal value will fluctuate so that when shares are redeemed,
they may be worth more or less than original cost. Performance of classes will
differ. For additional information, please see the fund's prospectus.
___
11
<PAGE>
Portfolio of Investments
Nuveen Flagship Kansas Municipal Bond Fund
May 31, 1999
<TABLE>
<CAPTION>
Principal Optional Call Market
Amount Description Provisions* Ratings** Value
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Basic Materials - 5.3%
$ 1,000,000 Dodge City, Kansas, Pollution Control Revenue Refunding Bonds, 5/02 at 102 Aa3 $ 1,077,150
Series 1992 (Excel Corporation Project/Cargill), 6.625%, 5/01/05
3,700,000 Ford County, Kansas, Sewage and Solid Waste Disposal Revenue 6/08 at 102 A+ 3,654,564
Bonds (Excel Corporation Project/Cargill) Series 1998,
5.400%, 6/01/28 (Alternative Minimum Tax)
2,000,000 Garden City, Kansas, Sewage Disposal Revenue Bonds, Series 1997 9/07 at 102 BBB+ 2,026,860
(Monfort, Inc. Project, ConAgra, Inc. - Guarantor), 5.750%,
9/01/17 (Alternative Minimum Tax)
- ---------------------------------------------------------------------------------------------------------------------------------
Capital Goods - 3.8%
4,550,000 City of Clearwater, Kansas, Pollution Control Refunding Revenue 2/02 at 101 A+ 4,785,144
Bonds (Vulcan Materials Company), Series 1992, 6.375%, 2/01/12
- ---------------------------------------------------------------------------------------------------------------------------------
Consumer Cyclical - 0.6%
650,000 Wichita Airport Authority of the City of Wichita, Kansas, 3/02 at 102 AA 711,458
Airport Facilities Refunding Revenue Bonds (Wichita Airport
Hotel Associates, L.P. Project), Series 1992, 7.000%, 3/01/05
- ---------------------------------------------------------------------------------------------------------------------------------
Education and Civic Organizations - 3.3%
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 1,214,425
1,000,000 5.700%, 4/01/18 4/08 at 100 N/R 982,810
City of Olathe, Kansas, Educational Facilities Revenue Bonds
(Kansas Independent College Association Pooled Educational Loan
Program), Series C 1998, Fixed Rate Bonds, Baker University Project:
940,000 5.400%, 10/01/13 10/08 at 100 N/R 926,558
1,000,000 5.600%, 10/01/18 10/08 at 100 N/R 987,940
- ---------------------------------------------------------------------------------------------------------------------------------
Health Care - 18.2%
5,630,000 Colby, Kansas, Health Facilities Refunding Revenue Bonds 8/08 at 100 N/R 5,457,553
(Citizens 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 2,939,536
3,380,000 5.800%, 11/15/21 11/06 at 100 AAA 3,530,613
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 783,180
2,150,000 5.800%, 11/15/21 11/06 at 100 AAA 2,245,804
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 2,246,948
1,500,000 5.500%, 11/15/22 11/07 at 100 Aaa 1,533,030
City of Lawrence, Kansas, Hospital Revenue Bonds, Series 1994
(The Lawrence Memorial Hospital):
1,075,000 6.200%, 7/01/14 7/04 at 100 A3 1,126,159
400,000 6.200%, 7/01/19 7/04 at 100 A3 417,760
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- 995,440
1,250,000 5.750%, 11/15/24 11/08 at 100 BBB- 1,240,063
</TABLE>
12
<PAGE>
<TABLE>
<CAPTION>
Principal Optional Call Market
Amount Description Provisions* Ratings** Value
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Health Care (continued)
$ 100,000 Puerto Rico Industrial, Tourist, Educational, Medical and 1/05 at 102 AAA $ 109,626
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+ 481,887
1991X, 7.000%, 11/15/18
- ---------------------------------------------------------------------------------------------------------------------------------
Housing/Multifamily - 14.3%
965,000 City of Kansas City, Kansas, Multi-family Housing Revenue 7/01 at 100 AAA 992,705
Refunding Bonds, Series 1994 (FHA-Insured Mortgage Loan -
Rainbow Towers Project), 6.700%, 7/01/23
Kansas Development Finance Authority, Multi-family Housing Revenue
Bonds (Park Apartments Project), Series 1996:
325,000 5.700%, 12/01/09 (Alternative Minimum Tax) 12/06 at 100 AAA 336,421
665,000 5.900%, 12/01/14 (Alternative Minimum Tax) 12/06 at 100 AAA 694,466
1,150,000 6.000%, 12/01/21 (Alternative Minimum Tax) 12/06 at 100 AAA 1,200,773
5,000,000 Kansas Development Finance Authority, Multi-family Housing Refunding 12/08 at 101 N/R 4,926,150
Revenue Bonds (First Kansas State Partnership, L.P. Project),
Series 1998Y, 6.125%, 12/01/28 (Alternative Minimum Tax)
Lenexa, Kansas, Multi-family Housing Revenue Refunding Bonds
(Barrington Park Apartments Project) Series 1993A:
445,000 6.300%, 2/01/09 2/03 at 102 AA 469,586
475,000 6.400%, 2/01/10 2/03 at 102 AA 501,177
2,000,000 6.450%, 2/01/18 2/03 at 102 AA 2,110,080
1,000,000 6.500%, 2/01/23 2/03 at 102 AA 1,049,080
1,000,000 City of Olathe, Kansas, Multi-family Housing Refunding Revenue Bonds 6/04 at 102 AAA 1,063,570
(Federal National Mortgage Association Program - Deerfield
Apartments Project), Series 1994A, 6.450%, 6/01/19
City of Wichita, Kansas, Multi-family Housing Revenue Refunding Bonds
(The Shores Apartments Project), Series 1994 XI-A:
1,500,000 6.700%, 4/01/19 4/09 at 102 AA 1,639,620
2,000,000 6.800%, 4/01/24 4/09 at 102 AA 2,201,140
900,000 City of Wichita, Kansas, Multi-family Housing Revenue Bonds 11/05 at 102 A 930,429
(Brentwood Apartments Project), Senior Lien Series 1995 IX-A,
5.850%, 12/01/25
- ---------------------------------------------------------------------------------------------------------------------------------
Housing/Single Family - 6.6%
2,445,000 City of Kansas City, Kansas, GNMA Collateralized Mortgage Revenue 5/05 at 103 Aaa 2,542,849
Bonds, Series 1995, 5.900%, 11/01/27 (Alternative Minimum Tax)
295,000 City of Olathe, Kansas, Labette County, Collateralized Single 2/05 at 105 Aaa 328,034
Family Mortgage Refunding Revenue Bonds, Series 1994C-I,
7.800%, 2/01/25
1,360,000 Sedgwick and Shawnee Counties, Kansas, Single Family Mortgage No Opt. Call Aaa 1,505,955
Revenue Bonds (Mortgage-Backed Securities Program), 1997
Series A-1, 6.950%, 6/01/29 (Alternative Minimum Tax)
1,250,000 Sedgwick and Shawnee Counties, Kansas, Single Family Mortgage 6/08 at 105 Aaa 1,374,788
Revenue Bonds (Mortgage-Backed Securities Program), 1998
Series A-1, 5.500%, 12/01/22 (Alternative Minimum Tax)
1,460,000 Sedgwick, Shawnee, and Leavenworth Counties, Kansas, GNMA 6/99 at 103 AAA 1,505,771
Collateralized Mortgage Revenue Bonds, 1989 Series A,
7.875%, 12/01/21 (Alternative Minimum Tax)
940,000 Sedgwick and Shawnee Counties, Kansas, Collateralized Single 11/04 at 105 Aaa 1,041,125
Family Mortgage Refunding Revenue Bonds, Series 1994A-III,
8.125%, 5/01/24 (Alternative Minimum Tax)
- ---------------------------------------------------------------------------------------------------------------------------------
Tax Obligation/General - 1.5%
1,350,000 Commonwealth of Puerto Rico, General Obligation Public Improvement 7/04 at 102 AAA 1,516,496
Bonds of 1994, 6.450%, 7/01/17
350,000 Unified School District No. 437 (Auburn - Washburn), Shawnee 3/02 at 100 AAA 373,674
County, Kansas, General Obligation Refunding Bonds, Series 1992,
6.600%, 9/01/09
</TABLE>
13
<PAGE>
Portfolio of Investments
Nuveen Flagship Kansas Municipal Bond Fund (continued)
May 31, 1999
<TABLE>
<CAPTION>
Principal Option Call Market
Amount Description Provisions* Ratings** Value
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Tax Obligation/Limited - 22.3%
4,450,000 State of Kansas, Department of Transportation, Highway Revenue 9/02 at 102 AA+ $ 4,816,502
Bonds, Series 1992A, 6.000%, 9/01/12
1,050,000 Kansas Development Finance Authority, Revenue Bonds, Series 1992T, 12/00 at 102 N/R 1,102,311
(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 1,063,120
1,000,000 5.500%, 7/01/15 No Opt. Call AAA 1,069,090
750,000 Puerto Rico Highway and Transportation Authority, Highway Revenue No Opt. Call A 797,340
Bonds, Series X, 5.500%, 7/01/13
7,800,000 Puerto Rico Highway and Transportation Authority, Highway Revenue 7/16 at 100 A 8,022,300
Bonds, Series Y of 1996, 5.500%, 7/01/36
520,000 Puerto Rico Highway and Transportation Authority, Transportation 7/08 at 101 A 493,938
5.000%, 7/01/38
20,000 Puerto Rico Infrastructure Finance Authority, Special Tax Revenue 7/99 at 101 BBB+ 20,463
Bonds, Series 1988A, 7.750%, 7/01/08
500,000 Puerto Rico Public Buildings Authority, Government Facilities 7/07 at 101 1/2 A 497,065
Revenue Bonds, Series B, Guaranteed by the Commonwealth of
Puerto Rico, 5.250%, 7/01/21
250,000 Shawnee County, Kansas, Certificates of Participation, 7/09 at 100 N/R 239,770
Series 1999A (Shawnee Community Mental Health Center, Inc.
Project), 5.350%, 7/01/19
Topeka Public Building Commission, Kansas, Revenue Bonds, Series
1998 (State of Kansas - 10th and Jackson Projects):
1,000,000 5.000%, 6/01/24 6/09 at 100 AAA 976,970
3,250,000 5.000%, 6/01/31 6/09 at 100 AAA 3,146,683
1,000,000 Topeka Public Building Commission, Kansas, Revenue Bonds, Series 6/09 at 100 AAA 970,110
1999 (State of Kansas - Department of Social and Rehabilitation
Services Project), 5.000%, 6/01/30
2,000,000 Virgin Islands Public Finance Authority, Revenue and Refunding 10/08 at 101 BBB- 2,016,520
Bonds (Virgin Islands Matching Fund Loan Notes),
Series 1998A (Senior Lien/Refunding), 5.625%, 10/01/25
14,025,000 The Unified Government of Wyandotte County, Kansas City, Kansas, No Opt. Call AAA 3,049,175
Sales Tax Special Obligation Revenue Bonds (Kansas International
Speedway Corporation Project), Series 1999, 0.000%, 12/01/27
- ------------------------------------------------------------------------------------------------------------------------------------
Transportation - 1.3%
1,500,000 Puerto Rico Ports Authority, Special Facilities Revenue Bonds, 6/06 at 102 BBB- 1,608,795
1996 Series A (American Airlines, Inc. Project), 6.250%,
6/01/26 (Alternative Minimum Tax)
- ------------------------------------------------------------------------------------------------------------------------------------
U.S. Guaranteed - 10.8%
440,000 Unified School District No. 340, Jefferson County, Kansas, 9/04 at 100 AAA 487,137
General Obligation Bonds, Series 1994, 6.350%, 9/01/14
(Pre-refunded to 9/01/04)
12,475,000 Johnson County, Kansas, Residual Revenue and Refunding Bonds, No Opt. Call Aaa 6,639,195
Series 1992, 0.000%, 5/01/12
540,000 City of Kansas City, Kansas, Utility System Refunding and 9/04 at 102 AAA 607,219
Improvement Revenue Bonds, Series 1994, 6.375%, 9/01/23
(Pre-refunded to 9/01/04)
1,000,000 Commonwealth of Puerto Rico, Public Improvement Bonds of 1994 7/04 at 101 1/2 AAA 1,123,330
(General Obligation Bonds), 6.450%, 7/01/17 (Pre-refunded to
7/01/04)
80,000 Puerto Rico Highway and Transportation Authority, Highway 7/02 at 101 1/2 AAA 87,710
Revenue Bonds, Series T, 6.625%, 7/01/18 (Pre-refunded to
7/01/02)
Reno and Labette Counties, Kansas, Single Family Mortgage Revenue
Bonds, Series 1983A:
2,120,000 0.000%, 12/01/15 No Opt. Call AAA 921,670
1,000,000 0.000%, 12/01/15 No Opt. Call Aaa 434,750
2,095,000 Reno, Sedwick, and Finney Counties, Kansas, Single Family No Opt. Call AAA 888,301
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+*** 2,478,038
Wichita, Inc.), Series 1985 XXV (Remarketed), 7.200%, 10/01/15
</TABLE>
14
<PAGE>
<TABLE>
<CAPTION>
Principal Option Call Market
Amount Description Provisions* Ratings** Value
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Utilities - 7.7%
1,500,000 City of Gardner, Kansas, Electric Utility System Revenue Bonds, 11/01 at 101 N/R $ 1,589,475
Series 1992 Refunding, 7.000%, 11/01/09
1,000,000 City of Holton, Kansas, Electric System Revenue Bonds, Series 12/08 at 100 AA 963,610
1999A, 5.150%, 12/01/21
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 2,762,675
1,110,000 6.375%, 9/01/23 9/04 at 102 AAA 1,227,272
750,000 Puerto Rico Electric Power Authority, Power Revenue Bonds, 7/08 at 101 1/2 BBB+ 719,460
Series DD, 5.000%, 7/01/28
Puerto Rico Electric Power Authority, Power Revenue Bonds,
Series T:
215,000 6.125%, 7/01/08 7/04 at 102 BBB+ 237,630
150,000 6.000%, 7/01/16 7/04 at 102 BBB+ 160,711
5,000,000 Puerto Rico Electric Power Authority, Power Revenue Bonds, Series
O, 0.000%, 7/01/17 No Opt. Call AAA 2,035,399
- ------------------------------------------------------------------------------------------------------------------------------------
Water and Sewer - 2.9%
3,000,000 Kansas Development Finance Authority, Water Pollution Control 11/03 at 102 AA+ 3,238,589
Revolving Fund Revenue Bonds, 1993 SRF Series II
(Leveraged Bonds), 6.000%, 11/01/14
350,000 City of Newton, Kansas, Wastewater Treatment System Refunding 3/02 at 102 N/R 384,688
Revenue Bonds, Series 1998, 7.125%, 3/01/12
- ------------------------------------------------------------------------------------------------------------------------------------
143,325,000 Total Investments - (cost $118,230,539) - 98.6% 124,655,408
- ------------------------------------------------------------------------------------------------------------------------------------
Other Assets Less Liabilities - 1.4% 1,830,4
-----------------------------------------------------------------------------------------------------------------
Net Assets - 100% $126,485,866
=================================================================================================================
</TABLE>
* Optional Call Provisions (not covered by the report of
independent public accountants): 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 (not covered by the report of independent public
accountants): 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.
15
<PAGE>
Portfolio of Investments
Nuveen Flagship Missouri Municipal Bond Fund
May 31, 1999
<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 Board, 12/01 at 102 N/R $2,243,214
Industrial Development
Revenue Refunding Bonds (Drury Inn Project), Series 1988
Remarketing, 8.250%, 12/01/12
- ----------------------------------------------------------------------------------------------------------------------------------
Consumer Staples - 3.2%
3,000,000 The Industrial Development Authority of the County of Cape 5/08 at 101 AA 2,932,620
Girardeau, Missouri, Solid Waste
Disposal Revenue Bonds (The Procter & Gamble Products Company
Project), 1998 Series, 5.300%, 5/15/28 (Alternative Minimum Tax)
5,500,000 Missouri State Development Finance Board, Solid Waste Disposal No Opt. Call AA 5,397,425
Revenue Bonds (Procter & Gamble Paper Products Company Project),
Series 1999, 5.200%, 3/15/29
(Alternative Minimum Tax) (DD)
- ----------------------------------------------------------------------------------------------------------------------------------
Education and Civic Organizations - 8.0%
1,000,000 Missouri Higher Education Loan Authority, Student Loan Revenue 2/02 at 102 A 1,053,850
Bonds, Series 1992
Subordinate Lien, 6.500%, 2/15/06 (Alternative Minimum Tax)
4,190,000 Missouri Higher Education Loan Authority, Student Loan 2/04 at 102 A 4,439,724
Revenue Bonds, Series 1994F, 6.750%, 2/15/09 (Alternative
Minimum Tax)
1,155,000 Health and Educational Facilities Authority of the State of No Opt. Call AA 1,185,018
Missouri, Educational Facilities
Revenue Bonds (Rockhurst University), Series 1999, 5.500%,
10/01/25
3,630,000 Health and Educational Facilities Authority of the State of 6/04 at 102 A2 3,886,387
Missouri, Educational Facilities
Revenue Bonds (University of Health Sciences Project), Series
1994, 6.350%, 6/01/14
Health and Educational Facilities Authority of the State of
Missouri, Educational Facilities Revenue Bonds (Maryville
University of Saint Louis Project), Series 1997:
1,475,000 5.625%, 6/15/13 6/07 at 101 Baa1 1,537,865
1,250,000 5.750%, 6/15/17 6/07 at 101 Baa1 1,271,425
3,000,000 Health and Educational Facilities Authority of the State of 11/08 at 101 AA+ 2,831,760
State of Missouri, Educational Facilities
Revenue Bonds (Washington University), Series 1998A, 5.000%,
11/15/37
1,100,000 Health and Educational Facilities Authority of the State of 10/08 at 100 N/R 1,022,890
Missouri, 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 696,456
1,000,000 7.750%, 12/01/13 (Alternative Minimum Tax) 12/02 at 102 N/R 1,073,730
500,000 7.875%, 12/01/24 (Alternative Minimum Tax) 12/02 at 102 N/R 538,820
1,000,000 Curators of the University of Missouri, Facilities Revenue 11/07 at 101 AA+ 1,059,880
Bonds, Series 1997,
5.800%, 11/01/27
- ----------------------------------------------------------------------------------------------------------------------------------
Health Care - 16.4%
415,000 Dent County, Missouri, Industrial Development Authority, 6/01 at 102 N/R 438,684
Industrial Development Revenue Bonds (Southeast Missouri
Community Treatment Center), 8.500%, 6/01/12
775,000 Farmington, Missouri, Industrial Development Authority, Revenue 6/01 at 102 N/R 821,810
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 1,197,633
Missouri, Health Facilities Revenue Bonds, Series 1996A (Hannibal
Regional Hospital), 5.750%, 3/01/22
</TABLE>
16
<PAGE>
<TABLE>
<CAPTION>
Principal Optional Call Market
Amount Description Provisions* Ratings** Value
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Health Care (continued)
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 $2,159,560
6,250,000 6.500%, 7/01/19 7/02 at 102 AAA 6,758,125
2,565,000 Health and Educational Facilities Authority of the State of 2/02 at 102 AAA 2,742,472
Missouri, Health Facilities Revenue Bonds (Health Midwest),
Series 1992B, 6.250%, 2/15/12
555,000 Health and Educational Facilities Authority of the 11/02 at 102 BBB+ 595,010
State of Missouri, Health Facilities Revenue Bonds (Heartland
Health System Project), Series 1992, 6.875%, 11/15/04
Health and Educational Facilities Authority of the State of
Missouri, Health Facilities Revenue Bonds (BJC Health System),
Series 1994A:
2,450,000 6.750%, 5/15/12 No Opt. Call AA 2,895,361
650,000 6.500%, 5/15/20 5/04 at 102 AA 733,551
Health and Educational Facilities Authority of the State of
Missouri, Health Facilities Revenue Bonds (Freeman Health System
Project), Series 1998:
3,700,000 5.250%, 2/15/18 2/08 at 102 BBB+ 3,592,441
1,675,000 5.250%, 2/15/28 2/08 at 102 BBB+ 1,598,486
395,000 Health and Educational Facilities Authority of the 2/06 at 102 BBB+ 418,929
State of Missouri, Health Facilities Revenue Bonds (Lake of the
Ozarks General Hospital Inc.), Series 1996, 6.500%, 2/15/21
Health and Educational Facilities Authority of the State of
Missouri, Health Facilities Revenue Bonds (Capital Region Medical
Center), Series 1998:
790,000 5.250%, 11/01/23 11/06 at 100 BBB+ 757,460
350,000 5.300%, 11/01/28 11/06 at 100 BBB+ 334,439
Health and Educational Facilities Authority of the
State of Missouri, Health Facilities Revenue Bonds (Lester Cox
Medical Center), Series 1992H:
2,650,000 0.000%, 9/01/17 No Opt. Call AAA 1,021,469
4,740,000 0.000%, 9/01/21 No Opt. Call AAA 1,459,114
6,300,000 0.000%, 9/01/22 No Opt. Call AAA 1,836,828
1,000,000 State Environmental Improvement and Energy Resource Authority, No Opt. Call A3 1,088,640
Missouri Pollution Control Revenue Refunding Bonds, American
Cyanamid Company Issue, Series 1994, 5.800%, 9/01/09
3,000,000 The Industrial Development Authority of the County of 5/08 at 101 BBB+ 2,906,070
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 2,041,920
1,390,000 5.600%, 11/01/26 11/06 at 102 AAA 1,434,605
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- 994,340
2,095,000 5.600%, 11/15/17 11/07 at 101 BBB- 2,068,854
2,230,000 5.650%, 11/15/22 11/07 at 101 BBB- 2,190,150
- ----------------------------------------------------------------------------------------------------------------------------------
Housing/Multifamily - 10.8%
650,000 The Industrial Development Authority of Kansas City, Missouri, 2/08 at 102 AAA 659,887
Multi-family Housing Revenue Refunding Bonds (President Gardens
Apartment Project), Series 1997A, 5.550%, 8/01/25
2,000,000 Missouri Economic Development Export and Infrastructure Board, 9/99 at 102 AA 2,053,420
Multi-family Housing Revenue Refunding Bonds, 1991 Series A
(Quality Hill Projects), 7.500%, 9/15/21
(Mandatory put 9/15/11)
885,000 Missouri Housing Development Commission, Multi-family Housing 12/05 at 103 N/R 919,683
Revenue Bonds, Series 1995A (Primm Place Apartments Project),
6.250%, 12/01/17 (Alternative Minimum Tax)
1,000,000 Missouri Housing Development Commission, Multi-family Housing 6/08 at 100 AAA 1,006,360
Revenue Refunding Bonds (FHA-Insured Mortgage Loans), Series 1998,
5.450%, 6/01/28 (Alternative Minimum Tax)
</TABLE>
17
<PAGE>
Portfolio of Investments
Nuveen Flagship Missouri Municipal Bond Fund(continued)
May 31, 1999
<TABLE>
<CAPTION>
Principal Optional Call Market
Amount Description Provisions* Ratings** Value
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Housing/Multifamily (continued)
$ 2,815,000 Missouri Housing Development Commission, Multi-family 4/08 at 102 N/R $ 2,804,444
Housing Revenue Bonds (The Mansion Apartments Phase II
Project), Series 1999, 6.125%, 10/01/22 (Alternative Minimum Tax)
655,000 The Industrial Development Authority of the City of Raytown, 1/07 at 100 AAA 667,936
Missouri, Multi-family Housing Refunding Revenue Bonds
(Brittany Place Apartments Project), Series 1997A, 5.600%,
1/01/21 (Alternative Minimum Tax)
2,000,000 Housing Authority of St. Louis County, Missouri, Multi-family 3/05 at 102 AAA 2,133,060
Housing Revenue Refunding Bonds (Kensington Square Apartments
Project), Series 1995, 6.650%, 3/01/20
9,105,000 The Industrial Development Authority of the County of St. 8/06 at 105 AAA 9,977,805
Louis, Missouri, Multi-family Housing Revenue Bonds, Series
1996A (GNMA Mortgage-Backed Securities - Covington Manor
Apartments), 6.875%, 8/20/36 (Alternative Minimum Tax)
3,685,000 Industrial Development Authority of the County of St. Louis, 1/08 at 100 AAA 3,758,221
Missouri, Multi-family Housing Revenue Refunding Bonds
(Bonhomme Village Apartments Project), Series 1997A,
5.450%, 1/01/28
500,000 Industrial Development Authority of the County of St. Louis, 3/09 at 102 AAA 498,405
Missouri, Multi-family Housing Revenue Refunding Bonds
(GNMA Collateralized - Lucas Hunt Village Apartments Project),
Series 1999A, 5.200%, 9/20/31
1,890,000 Land Clearance for Redevelopment Authority of the City of 5/03 at 102 AAA 1,975,315
St. Louis, Missouri, Multi-family Mortgage Refunding Bonds
- Series 1993 (FHA-Insured Mortgage Loan - St. Louis Place
Apartments), 6.250%, 8/01/27
1,425,000 The Industrial Development Authority of University City, 8/07 at 102 Aaa 1,482,570
Missouri, Revenue Refunding Bonds, Series 1997A (GNMA
Collateralized - River Valley Apartments), 5.900%, 2/20/37
- -----------------------------------------------------------------------------------------------------------------------------------
Housing/Single Family - 8.1%
1,500,000 Greene County, Missouri, Collateralized Single Family No Opt. Call AAA 1,632,165
Mortgage Revenue Bonds, Series 1996, 6.300%, 12/01/22
(Alternative Minimum Tax)
1,665,000 Missouri Housing Development Commission, Single Family 1/07 at 102 AAA 1,753,079
Mortgage Revenue Bonds (Homeownership Loan Program),
1996 Series D, 6.125%, 3/01/28 (Alternative Minimum Tax)
920,000 Missouri Housing Development Commission, Single Family 3/07 at 105 AAA 1,039,517
Mortgage Revenue Bonds (Homeownership Loan Program),
1997 Series A-2, 7.300%, 3/01/28 (Alternative
Minimum Tax)
250,000 Missouri Housing Development Commission, Single Family 3/07 at 101 AAA 259,490
Mortgage Revenue Bonds (Homeownership Loan Program),
1997 Series B-2, 5.900%, 9/01/28 (Alternative
Minimum Tax)
105,000 Missouri Housing Development Commission, Single Family 2/00 at 102 AAA 108,201
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:
2,140,000 6.375%, 9/01/20 (Alternative Minimum Tax) 9/06 at 102 AAA 2,269,427
1,690,000 6.450%, 9/01/27 (Alternative Minimum Tax) 9/06 at 102 AAA 1,800,036
595,000 Missouri Housing Development Commission, Single Family 6/00 at 102 AAA 616,372
Mortgage Revenue Bonds (GNMA Mortgage-Backed Securities
Program), 1990 Series B, 7.750%, 6/01/22 (Alternative
Minimum Tax)
1,335,000 Missouri Housing Development Commission, Single Family 2/01 at 102 AAA 1,395,262
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:
360,000 6.700%, 12/01/07 (Alternative Minimum Tax) 12/04 at 102 AAA 380,030
1,585,000 7.125%, 12/01/14 (Alternative Minimum Tax) 12/04 at 102 AAA 1,704,398
700,000 7.200%, 12/01/17 (Alternative Minimum Tax) 12/04 at 102 AAA 753,459
1,700,000 Missouri Housing Development Commission, Single Family 9/07 at 101 AAA 1,741,973
Mortgage Revenue Bonds (Homeownership Loan Program),
1997 Series C-2 , 5.500%, 9/01/17 (Alternative Minimum
Tax)
980,000 Missouri Housing Development Commission, Single Family 3/08 at 105 AAA 1,076,295
Mortgage Revenue Bonds (Homeownership Loan Program),
1998 Series B-2, 6.400%, 3/01/29 (Alternative Minimum
Tax)
1,200,000 Missouri Housing Development Commission, Single Family 9/08 at 105 AAA 1,313,220
Mortgage Revenue Bonds (Homeownership Loan Program),
1998 Series D-2, 6.300%, 3/01/29 (Alternative Minimum
Tax)
</TABLE>
18
<PAGE>
<TABLE>
<CAPTION>
Principal Optional Call Market
Amount Description Provisions* Ratings** Value
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Housing/ Single Family (continued)
$ 3,000,000 Missouri Housing Development Commission, Single Family 9/08 at 101 AAA $ 2,967,120
Mortgage Revenue Bonds (Homeownership Loan Program),
1998 Series E-1, 5.200%, 9/01/23 (Alternative Minimum Tax)
Industrial/Other -0.2%
500,000 City of Jefferson, Missouri, Industrial Refunding 4/00 at 100 N/R 504,735
Revenue Bond, Series 1992 (Scholastic, Inc. Project),
7.200%, 4/01/03
- ------------------------------------------------------------------------------------------------------------------------------------
Long-Term Care - 8.3%
1,000,000 The Industrial Development Authority of the City of 12/08 at 104 AAA 1,005,150
Bridgeton, Missouri, Facilities Revenue Bonds, Series
1999A (GNMA Collateralized- Mizpah Assisted Living
Services Project), 5.600%, 12/20/38
4,800,000 The Industrial Development Authority of Kansas City, 11/08 at 102 N/R 4,593,744
Missouri, Retirement Facility Refunding and Improvement
Revenue Bonds, Series 1998A (Kingswood Project),
5.875%, 11/15/29
1,000,000 The Industrial Development Authority of the City of 8/05 at 102 N/R 1,062,580
Lees Summit, Missouri Health Facilities Revenue Bonds
(John Knox Village Project), Series 1995, 6.625%,
8/15/13
3,750,000 Health and Educational Facilities Authority of the 2/06 at 102 N/R 3,918,638
State of Missouri, Health Facilities Revenue Bonds
(Lutheran Senior Services), Series 1996A,
6.375%, 2/01/27
3,000,000 Health and Educational Facilities Authority of the 2/07at 102 N/R 3,073,080
State of Missouri, 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 1,337,662
1,800,000 6.250%, 9/01/10 9/06 at 102 N/R 1,938,690
The Industrial Development Authority of the County of
St. Louis, Missouri, Revenue Bonds (Bethesda Living
Centers - Autumn View Gardens at Schuetz Road Project),
Series 1998B:
475,000 5.750%, 8/15/18 8/03 at 100 N/R 456,546
1,500,000 5.850%, 8/15/28 8/08 at 102 N/R 1,456,950
2,425,000 The Industrial Development Authority of the County of 8/05 at 104 AAA 2,628,991
St. Louis, Missouri, Healthcare Facilities Revenue
Bonds, Series1995 (GNMA Collateralized -Mother of
Perpetual Help Project), 6.250%, 8/01/28
- ------------------------------------------------------------------------------------------------------------------------------------
Tax Obligation/General -3.3%
1,000,000 Jefferson City School District, Missouri, General No Opt. Call Aa 1,180,490
Obligation Bonds, Series 1991A, 6.700%, 3/01/11
Commonwealth of Puerto Rico, General Obligation Public
Improvement Bonds of 1994:
2,500,000 6.450%, 7/01/17 7/04 at 102 AAA 2,808,325
3,350,000 6.500%, 7/01/23 7/04 at 1011/2 AAA 3,770,794
1,540,000 Francis Howell School District, St. Charles County, No Opt. Call AAA 772,279
Missouri, General Obligation Bonds, Series 1998C
(Missouri Direct Deposit Program), 0.000%, 3/01/13
- ------------------------------------------------------------------------------------------------------------------------------------
Tax Obligation/Limited - 14.4%
2,285,000 The Public Building Corporation of the City of Branson, 11/06 at 101 BBB 2,425,710
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 Building No Opt.Call AAA 496,315
Corporation, Leasehold Revenue Bonds, Excelsior Springs
40 School District of Excelsior Springs, Missouri,
Series 1994, 0.000%, 3/01/14
2,000,000 Jackson County, Missouri, Public Facilities Authority, 12/04 at 100 AAA 2,166,620
Leasehold Revenue Refunding and Improvement Bonds
(Capital Improvements Project), Series 1994, 6.125%,
12/01/15
1,200,000 Land Clearance For Redevelopment Authority, Kansas 12/05 at 102 AAA 1,276,428
City, Missouri, Lease Revenue Bonds (Municipal
Auditorium and Muehlebach Hotel Redevelopment Project),
Series 1995A, 5.900%, 12/01/18
</TABLE>
19
<PAGE>
Portfolio of Investments
Nuveen Flagship Missouri Municipal Bond Fund (continued)
May 31, 1999
<TABLE>
<CAPTION>
Principal Optional Call Market
Amount Description Provisions* Ratings** Value
- -------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Tax Obligation/Limited (continued)
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 $ 1065,900
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 1,585,725
Participation Certificates (Fox C-6 School District, Jefferson
County, Missouri Project), Series 1996, 5.625%, 3/01/11
320,000 State of Missouri, Certificates of Participation (Psychiatric 11/05 at 100 AA 340,003
Rehabilitation Center Project), Series A 1995, 6.000%,
11/01/15
1,500,000 Puerto Rico Highway and Transportation Authority, Highway 7/02 at 101 1/2 A 1,627,110
Revenue Bonds, 1992 Series V, 6.625%, 7/01/12
5,900,000 Puerto Rico Highway and Transportation Authority, Highway 7/16 at 100 A 6,068,150
Revenue Bonds, 1996 Series Y, 5.500%, 7/01/36
1,400,000 Puerto Rico Highway and Transportation Authority, Highway No Opt. Call AAA 1,496,726
Revenue Bonds, Series W, 5.500%, 7/01/15
5,500,000 Puerto Rico Public Buildings Authority, Revenue Refunding No Opt. Call A 5,763,120
Bonds, Series L, Guaranteed by the Commonwealth of Puerto
Rico, 5.500%, 7/01/21
250,000 Puerto Rico Public Buildings Authority, Government 7/07 at 101 1/2 A 248,533
Facilities Revenue Bonds, Series B, Guaranteed by the
Commonwealth of Puerto Rico, 5.250%, 7/01/21
3,000,000 Regional Convention and Sports Complex Authority, St. Louis 8/03/ at 102 Aa3 3,106,500
County, Missouri, Convention and Sports Facility Project
Refunding Bonds, Series B 1993, 5.750%, 8/15/21
780,000 Land Clearance for Redevelopment Authority of the City of St. 7/07 at 101 AAA 787,753
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
Refunding Bonds, Series C 1997:
1,660,000 5.300%, 8/15/17 8/07 at 100 AAA 1,675,156
4,000,000 5.300%, 8/15/20 8/07 at 100 AAA 4,032,800
45,000 The City of St. Louis, Missouri, Regional Convention and 8/03 at 100 N/R 49,133
Sports Complex Authority, Convention and Sports Facility
Project Bonds, Series C of 1991, 7.900%, 8/15/21
- -------------------------------------------------------------------------------------------------------------------------------
Transportation - 4.2%
2,000,000 Puerto Rico Ports Authority, Special Facilities Revenue Bonds, 6/06 at 102 BBB 2,145,060
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 278,830
4,500,000 5.250%, 7/01/27 (Alternative Minimum Tax) 7/07 at 101 AAA 4,393,215
4,050,000 The City of St. Louis, Missouri, at 102 Parking Revenue 12/06 at 102 AAA 4,104,189
Refunding Bonds, Series 1996, 5.375%, 12/15/21
- -------------------------------------------------------------------------------------------------------------------------------
U.S. Guaranteed - 11.9%
4,500,000 Cape Girardeau County, Missouri, Single Family Mortgage No Opt. Call Aaa 2,076,705
Revenue Bonds, Series 1983, 0.000%, 12/01/14
1,500,000 Clay County Public Building Authority, Leasehold Refunding and 5/02 at 102 N/R*** 1,676,970
Improvement Revenue Bonds, Series 1992 (Paradise Pointe Golf
Course Project), 7.625%, 5/15/14 (Pre-refunded to 5/15/02)
1,070,000 Greene County, Missouri, Single Family Mortgage Revenue Bonds, No Opt. Call Aaa 454,868
Series 1984, 0.000%, 3/01/16
50,000 City of Hamilton, Missouri, Waterworks Revenue Bonds, Series 7/99 at 103 1/2 N/R*** 51,943
1989, 7.750%, 7/01/14 (Pre-refunded to 7/01/99)
4,000,000 City of Kansas City, Missouri, General Improvement Airport 9/04 at 101 AAA 4,555,320
Revenue Bonds, Series 1994B, 6.875%, 9/01/14 (Pre-refunded to
9/01/04)
645,000 Kansas City Municipal Assistance Corporation, Leasehold 11/01 at 101 A3*** 692,904
Improvement Revenue Bonds, Series 1991A (Truman Medical Center
Charitable Foundation Project), 7.000%, 11/01/09 (Pre-refunded
to 11/01/01)
</TABLE>
20
<PAGE>
<TABLE>
<CAPTION>
Principal Optional Call Market
Amount Description Provisions* Ratings** Value
- -------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
U.S. Guaranteed (continued)
$ 2,500,000 The Industrial Development Authority of the City of Kirkwood, 7/02 at 102 N/R*** $ 2,721,525
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)
1,000,000 Missouri Economic Development Export and Infrastructure Board, 5/02 at 100 N/R*** 1,086,650
Industrial Development Revenue Bonds (Community Water Company
Inc. Project), Series 1992, 7.125%, 5/01/17 (Alternative
Minimum Tax) (Pre-refunded to 5/15/02)
805,000 Health and Educational Facilities Authority of the State of 2/06 at 102 BBB+*** 912,540
Missouri, Health Facilities Revenue Bonds (Lake of the Ozarks
General Hospital Inc.), Series 1996, 6.500%, 2/15/21 (Pre-
refunded to 2/15/06)
1,500,000 Health and Educational Facilities Authority of the State of 10/04 at 101 A2*** 1,666,695
Missouri, Educational Facilities Revenue Bonds (Saint Louis
University High School), Series 1994, 6.350%, 10/01/14 (Pre-
refunded to 10/01/04)
155,000 State Environmental Improvement and Energy Resource Authority, 10/00 at 102 N/R*** 164,999
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)
Industrial Development Authority of the County of St. Louis,
Missouri, Health Care Facilities Revenue Bonds, Series 1992
(Lutheran Health Care Association):
2,565,000 7.375%, 2/01/14 (Pre-refunded to 2/01/02) 2/02 at 102 N/R*** 2,832,299
2,650,000 7.625%, 2/01/22 (Pre-refunded to 2/01/02) 2/02 at 102 N/R*** 2,942,799
290,000 Certificates of Receipt, Series 1993, St. Louis County, No Opt. Call AAA 306,910
Missouri, GNMA Collateralized Mortgage Revenue Bonds, Series
1989A (Escrowed with United States Governmental Obligations),
5.650%, 8/01/15 (Alternative Minimum Tax)
1,000,000 Regional Convention and Sports Complex Authority, County of St. 8/03 at 100 AAA 1,117,050
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 the City of St. 7/00 at 102 N/R*** 1,409,588
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-*** 4,401,915
1992, 6.625%, 12/15/21 (Pre-refunded to 12/15/02)
955,000 Regional Convention and Sports Complex Authority, City of St. 8/03 at 100 Aaa 1,098,794
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 483,577
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*** 52,292
50,000 7.625%, 4/01/07 (Pre-refunded to 4/01/00) 4/00 at 101 N/R*** 52,292
- --------------------------------------------------------------------------------------------------------------------------------
Utilities - 6.0%
1,500,000 State Environmental Improvement and Energy Resource Authority, 5/00 at 102 AA- 1,572,585
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 610,620
Series O, 0.000%, 7/01/17
2,000,000 City of Sikeston, Missouri, Electric System Revenue Bonds, 1992 No Opt. Call AAA 2,263,800
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 3,079,258
1,070,000 6.000%, 6/01/14 No Opt. Call AAA 1,200,722
6,000,000 6.000%, 6/01/16 No Opt. Call AAA 6,700,260
- --------------------------------------------------------------------------------------------------------------------------------
Water and Sewer -3.1%
20,000 Public Water Supply District No. 6, Clay County, Missouri, 6/99 at 101 N/R 20,259
Revenue Bonds, Series 1988, 8.200%, 6/01/01
400,000 East Central Missouri Water and Sewer Authority, St. Charles 8/00 at 100 N/R 408,868
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 State Environmental Improvement and Energy Resources Authority, 12/01 at 102 Aa1 3,885,120
State of Missouri, Water Pollution Control Revenue Bonds (State
Revolving Fund Program - Multiple Participants), Series 1991A,
6.875% 6/01/14
</TABLE>
21
<PAGE>
Portfolio of Investments
Nuveen Flagship Missouri Municipal Bond Fund (continued)
May 31, 1999
<TABLE>
<CAPTION>
Principal Optioal Call Market
Amount Description Provisions* Ratings** Value
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Water and Sewer (continued)
$ 2,000,000 State Environmental Improvement and Energy Resources 7/02 at 102 Aa1 $ 2,150,960
Authority, State of Missouri, Water Pollution Control Revenue
Bonds (State Revolving Fund Program - Multiple Participant
Series), Series 1992A, 6.550%, 7/01/14
600,000 State Environmental Improvement and Energy Resources 7/04 at 102 Aa1 677,387
Authority, State of Missouri, Water Pollution Control Revenue
Bonds (State Revolving Fund Program - Multiple Participant
Series), Series 1994B, 7.200%, 7/01/16
595,000 State Environmental Improvement and Energy Resources 10/00 at 102 Aa1 830,824
Authority, 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 126,530
Improvement Revenue Bonds, Series 1989, 8.000%, 11/01/09
- --------------------------------------------------------------------------------------------------------------------------------
$ 257,070,000 Total Investments - (cost $241,080,848) - 98.8% 254,587,623
==============------------------------------------------------------------------------------------------------------------------
Other Assets Less Liabilities - 1.2% 3,033,445
-------------------------------------------------------------------------------------------------------------
Net Assets - 100% $ 257,621,068
==============================================================================================================
</TABLE>
* Optional Call Provisions (not covered by the report of
independent public acccountants): 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 (not covered by the report of independent public
accountants): 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
(DD) Portion of security purchased on a delayed basis (note
1).
See accompanying notes to financial statements.
22
<PAGE>
Portfolio of Investments
Nuveen Flagship Wisconsin Municipal Bond Fund
May 31, 1999
<TABLE>
<CAPTION>
Principal Optional Call Market
Amount Description Provisions* Ratings** Value
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Capital Goods - 1.5%
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 $ 257,764
300,000 5.250%, 3/01/08 (Alternative Minimum Tax) 3/01 at 103 N/R 302,586
- ------------------------------------------------------------------------------------------------------------------------------------
Consumer Staples - 2.7%
1,000,000 Redevelopment Authority of the City of Green Bay, Wisconsin, Industrial
Development Revenue Bonds, Series 1999 (Fort James Project), 5.600%, No Opt. Call Baa2 1,003,530
5/01/19
- ------------------------------------------------------------------------------------------------------------------------------------
Education and Civic Organizations - 4.3%
475,000 Housing Authority of the City of Ashland, Wisconsin, Student Housing
Revenue Bonds, Series 1998 (Northland College Project), 5.100%, 4/01/18 4/08 at 100 Aa3 461,581
500,000 Community Development Authority of the City of Madison, Wisconsin,
Fixed Rate Development Revenue Bonds, Series 1998A (Fluno Center Project), 11/06 at 102 AA- 491,910
5.000%, 11/01/20
600,000 University of Puerto Rico, University System Revenue Bonds, Series M,
5.250%, 6/01/25 6/05 at 101 1/2 AAA 602,916
- ------------------------------------------------------------------------------------------------------------------------------------
Health Care - 2.8%
500,000 Puerto Rico Industrial, Tourist, Educational, Medical and Environmental
Control Facilities Financing Authority, Hospital Revenue Bonds, 1/05 at 102 AAA 548,130
1995 Series A (Hospital Auxilio Mutuo Obligated Group Project),
6.250% 7/01/24
450,000 Puerto Rico Industrial, Tourist, Educational, Medical and Environmental
Control Facilities Financing Authority, Hospital Revenue Refunding Bonds, 8/05 at 101 1/2 AAA 484,218
1995 Series A (FHA-Insured Mortgage Pila Hospital Project), 5.875%,
8/01/12
- ------------------------------------------------------------------------------------------------------------------------------------
Housing/Multifamily - 6.3%
Housing Authority of Dane County, Wisconsin, Multi-family Housing
Revenue Bonds (Forest Harbor Apartments Project):
25,000 5.900%, 7/01/12 7/02 at 102 N/R 25,926
50,000 5.950%, 7/01/13 7/02 at 102 N/R 51,622
50,000 6.000%, 7/01/14 7/02 at 102 N/R 51,417
200,000 Redevelopment Authority of the City of Milwaukee, Wisconsin,
Multi-family Housing Revenue Bonds, Series 1993 8/07 at 102 N/R 207,852
(FHA-Insured Mortgage Loan - City Hall Square
Apartments Project), 6.000%, 8/01/22 (Alternative Minimum Tax)
500,000 Housing Authority of the City of Sheboygan, Wisconsin, Multi-family
Revenue Refunding Bonds, Series 1998A (Lake Shore Apartments), 5/06 at 102 AAA 503,215
5.100%, 11/20/26
300,000 Walworth County, Wisconsin, Housing Authority, Housing Revenue Bonds,
Series 1997 (FHA-Insured Mortgage Loan - Kiwanis Heritage, Inc. 9/05 at 102 N/R 305,739
Senior Apartments Project), 5.550%, 9/01/22
Housing Authority of the City of Waukesha, Wisconsin,
Multi-family 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 364,795
750,000 6.000%, 12/01/31 (Alternative Minimum Tax) 12/06 at 102 AAA 786,533
- ------------------------------------------------------------------------------------------------------------------------------------
Housing/Single Family - 3.8%
1,000,000 Guam Housing Corporation, Single Family Mortgage Revenue Bonds
(Guaranteed Mortgage-Backed Securities Program, 1998 Series A, 5.750%, No Opt. Call AAA 1,067,490
9/01/31 (Alternative Minimum Tax)
205,000 Puerto Rico Housing Bank and Finance Agency, Affordable Housing
Mortgage Subsidy Program, Single Family Mortgage Revenue Bonds, 4/05 at 102 AAA 215,055
Portfolio I, 6.250%, 4/01/29 (Alternative Minimum Tax)
115,000 Virgin Islands Housing Finance Authority, Single Family Mortgage
Revenue Refunding Bonds (GNMA Mortage-Backed Securities Program), 3/05 at 102 AAA 122,409
1995 Series A, 6.450%, 3/01/16 (Alternative Minimum Tax)
</TABLE>
23
<PAGE>
Portfolio of Investments
Nuveen Flagship Wisconsin Municipal Bond Fund
May 31, 1999
<TABLE>
<CAPTION>
Principal Optional Call Market
Amount Description Provisions* Ratings** Value
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Long-Term Care - 7.9%
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 $ 148,551
195,000 5.300%, 12/01/18 12/04 at 100 A1 192,319
395,000 5.300%, 12/01/19 12/04 at 100 A1 387,878
1,000,000 Housing Authority of the City of Superior, Wisconsin, Hospital 7/04 at 102 N/R
Revenue Refunding Bonds1,042,690 Series 1996 (GNMA Collateralized
- St. Francis Home, Inc. Project), 6.150%, 7/20/31
1,120,000 Waukesha County Housing Authority, Housing Revenue Refunding Bonds, Series 12/03 at 102 N/R 1,101,318
1998 (The Arboretum Project), 5.250%, 12/01/21 (Alternative Minimum Tax)
(Optional put 12/01/12)
- ------------------------------------------------------------------------------------------------------------------------------------
Tax Obligation/General - 4.8%
250,000 Government of Guam, General Obligation Bonds, Series 1993A, 5.400%, 11/03 at 102 BBB- 250,333
11/15/18
1,300,000 Commonwealth of Puerto Rico, Public Improvement Bonds of 1997, 5.375%, 7/07 at 100 A 1,310,114
7/01/25
200,000 Commonwealth of Puerto Rico, Public Improvement General Obligation 7/08 at 101 A 192,108
Refunding Bonds, Series 1998, 5.000%, 7/01/26
- ------------------------------------------------------------------------------------------------------------------------------------
Tax Obligation/Limited - 43.4%
1,500,000 Community Development Authority of the City of Cudahy, Wisconsin, 6/06 at 100 N/R 1,565,700
Redevelopment Lease Revenue Bonds, Series 1995, 6.000%, 6/01/11
1,000,000 Redevelopment Authority of the Village of De Forest, Wisconsin, 2/08 at 100 N/R 970,280
Redevelopment Lease Revenue Bonds, Series 1999B, 5.100%, 2/01/18
1,500,000 Community Development Authority of the City of Glendale, Wisconsin, 9/08 at 100 N/R 1,507,575
Community Development Lease Revenue Bonds, Series 1998A, 5.400%,
9/01/18
500,000 Community Development Authority of the Village of Jackson, Wisconsin, 12/09 at 100 N/R 490,085
Community Development Revenue Refunding Bonds, Series 1999, 5.100%,
12/01/17
300,000 Community Development Authority of the City of Madison, Wisconsin, 3/05 at 100 Aa2 322,200
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, Series 7/06 at 101 1/2 A 197,704
1995, Guaranteed by the Commonwealth of Puerto Rico, 5.000%,
7/01/15
320,000 Puerto Rico Highway and Transportation Authority, Highway Revenue 7/02 at 101 1/2 A 347,117
Bonds, 1992 Series V, 6.625%, 7/01/12
600,000 Puerto Rico Highway and Transportation Authority, Highway Revenue 7/06 at 101 1/2 A 613,098
Bonds, 1996 Series Y, 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 407,080
1,200,000 5.000%, 7/01/17 7/08 at 101 A 1,139,856
750,000 Puerto Rico Infrastructure Financing Authority, Special Tax Revenue 1/08 at 101 AAA 745,988
Bonds, Series 1997A, 5.000%, 7/01/17
600,000 Puerto Rico Public Buildings Authority, Public Education and Health , 7/03 at 101 1/2 A 634,176
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 Revenue 7/07 at 101 1/2 A 1,242,663
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 302,408
1,000,000 0.000%, 12/15/29 No Opt. Call AAA 195,220
500,000 Southeast Wisconsin Professional Baseball Park District, Sales Tax No Opt. Call AAA 524,455
Revenue Refunding Bonds, Series 1998A, 5.500%, 12/15/26
375,000 Waterfront Redevelopment Authority of the City of Sturgeon Bay, 10/08 at 100 N/R 354,068
Wisconsin, Redevelopment Lease Revenue Bonds, Series 1998A,
5.200%, 10/01/21
Community Development Authority of the Village of Sturtevant,
Wisconsin, Redevelopment Lease Revenue Refunding Bonds, Series
1999:
775,000 4.700%, 12/01/11 12/08 at 100 N/R 767,266
335,000 4.800%, 12/01/12 12/08 at 100 N/R 332,075
</TABLE>
24
<PAGE>
<TABLE>
<CAPTION>
Principal Optional Call Market
Amount Description Provisions* Ratings** Value
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Tax Obligation/Limited (continued)
$ 600,000 Virgin Islands Public Finance Authority, Revenue and Refunding Bonds 10/08 at 101 BBB- $ 604,956
(Virgin Islands Matching Fund Loan Notes), Series 1998A (Senior Lien
/Refunding), 5.625%, 10/01/25
500,000 Wauwatosa Redevelopment Authority, Milwaukee County, Wisconsin, 12/07 at 100 AAA 527,080
Redevelopment Authority Lease Revenue Bonds, Series 1997, 5.650%,
12/01/16
1,500,000 Wisconsin Center District, Senior Dedicated Tax Revenue Bonds, Series No Opt. Call AAA 568,515
1996A, 0.000%, 12/15/17
Wisconsin Center District, Junior Dedicated Tax Revenue Refunding
Bonds, Series 1999:
1,000,000 5.250%, 2/15/23 No Opt. Call AAA 1,018,730
500,000 5.250%, 12/15/27 No Opt. Call AAA 508,550
- ------------------------------------------------------------------------------------------------------------------------------------
Transportation - 1.5%
500,000 Puerto Rico Ports Authority, Special Facilities Revenue Bonds, 1996 6/06 at 102 BBB- 536,265
Series A (American Airlines, Inc. Project), 6.250%, 6/01/26
(Alternative Minimum Tax)
- ------------------------------------------------------------------------------------------------------------------------------------
U.S. Guaranteed - 12.0%
590,000 Commonwealth of Puerto Rico, General Obligation Public Improvement 7/02 at 101 1/2 AAA 649,844
Bonds of 1992, 6.800%, 7/01/21 (Pre-refunded to 7/01/02)
145,000 Puerto Rico Electric Power Authority, Power Revenue Bonds, Series 7/04 at 102 BBB+*** 162,693
7/01/24 1994-T, 6.375%, Pre-refunded to 7/01/04)
125,000 Puerto Rico Telephone Authority, Revenue Refunding Bonds, Series 1/03 at 101 1/2 AAA 132,920
M, 5.400%, 1/01/08 (Pre-refunded to 1/01/03)
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 244,737
1,600,000 5.800%, 12/15/26 (Pre-refunded to 3/13/07) 3/07 at 101 AAA 1,761,584
Redevelopment Authority of the City of Superior, Wisconsin,
Revenue Bonds, Series 1994 (Superior Memorial Hospital Inc.,
FHA-Insured Mortgage Loan):
150,000 5.600%, 11/01/07 (Pre-refunded to 5/01/02) 5/02 at 102 AA*** 159,509
175,000 5.700%, 11/01/09 (Pre-refunded to 5/01/02) 5/02 at 102 AA*** 186,022
1,000,000 Wisconsin Center District, Junior Dedicated Tax Revenue Bonds, 12/06 at 101 A*** 1,091,579
Series 1996B, 5.700%, 12/15/20 (Pre-refunded to 12/15/06)
- ------------------------------------------------------------------------------------------------------------------------------------
Utilities - 6.8%
315,000 Guam Power Authority, Revenue Bonds, 1992 Series A, 6.300%, 10/02 at 102 BBB 343,003
10/01/22
1,085,000 Guam Power Authority, Revenue Bonds, 1993 Series A, 5.250%, 10/01/23 10/03 at 102 BBB 1,060,858
115,000 Puerto Rico Electric Power Authority, Power Revenue Bonds, Series T, 7/04 at 102 BBB+ 123,211
6.000%, 7/01/16
300,000 Puerto Rico Electric Power Authority, Power Revenue Refunding Bonds, 7/05 at 100 BBB+ 299,012
Series Z, 5.250%, 7/01/21
650,000 Puerto Rico Electric Power Authority, Power Revenue Bonds, Series AA, 7/07 at 101 1/2 AAA 661,108
5.375%, 7/01/27
- ------------------------------------------------------------------------------------------------------------------------------------
$38,405,000 Total Investments - (cost $34,983,288) - 97.8% 35,779,189
===========-------------------------------------------------------------------------------------------------------------------------
Other Assets Less Liabilities - 2.2% 797,457
- ------------------------------------------------------------------------------------------------------------------------------------
Net Assets - 100% $36,576,646
====================================================================================================================================
</TABLE>
* Optional Call Provisions (not covered by the report of
independent public accountants): 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 (not covered by the report of independent public
accountants): 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.
25
<PAGE>
Statement of Net Assets
May 31, 1999
<TABLE>
<CAPTION>
Kansas Missouri Wisconsin
- ------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Assets
Investments in municipal securities, at market value (note 1) $ 124,655,408 $ 254,587,623 $ 35,779,189
Cash -- 934,608 247,331
Receivables:
Fund Manager (note 6) -- -- 975
Interest 1,833,137 4,637,090 629,944
Investments sold 245,299 610,000 --
Shares sold 216,515 541,403 59,486
Other assets 99,847 153,076 33,409
- ------------------------------------------------------------------------------------------------------------------------
Total assets 127,050,206 261,463,800 36,750,334
- ------------------------------------------------------------------------------------------------------------------------
Liabilities
Cash overdraft 162,762 -- --
Payables:
Investments purchased -- 2,501,069 --
Shares redeemed 70,349 676,343 20,411
Accrued expenses:
Management fees (note 6) 52,892 114,759 --
12b-1 distribution and service fees (notes 1 and 6) 28,475 53,472 10,151
Other 48,681 82,609 54,136
Dividends payable 201,181 414,480 88,990
- ------------------------------------------------------------------------------------------------------------------------
Total liabilities 564,340 3,842,732 173,688
- ------------------------------------------------------------------------------------------------------------------------
Net assets (note 7) $ 126,485,866 $ 257,621,068 $ 36,576,646
========================================================================================================================
Class A Shares (note 1)
Net assets $ 113,139,895 $ 238,497,570 $ 29,217,432
Shares outstanding 10,781,680 21,447,292 2,863,862
Net asset value and redemption price per share $ 10.49 $ 11.12 $ 10.20
Offering price per share (net asset value per share plus
maximum sales charge of 4.20% of offering price) $ 10.95 $ 11.61 $ 10.65
========================================================================================================================
Class B Shares (note 1)
Net assets $ 6,496,553 $ 5,286,196 $ 3,795,001
Shares outstanding 623,031 475,775 371,022
Net asset value, offering and redemption price per share $ 10.43 $ 11.11 $ 10.23
========================================================================================================================
Class C Shares (note 1)
Net assets $ 6,170,510 $ 13,443,921 $ 3,457,285
Shares outstanding 586,927 1,209,958 338,278
Net asset value, offering and redemption price per share $ 10.51 $ 11.11 $ 10.22
========================================================================================================================
Class R Shares (note 1)
Net assets $ 678,908 $ 393,381 $ 106,928
Shares outstanding 64,330 35,374 10,449
Net asset value, offering and redemption price per share $ 10.55 $ 11.12 $ 10.23
========================================================================================================================
</TABLE>
See accompanying notes to financial statements.
26
<PAGE>
Statement of Operations
Year Ended May 31, 1999
<TABLE>
<CAPTION>
Kansas Missouri Wisconsin
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Investment Income (note 1) $ 6,567,781 $ 14,608,020 $ 1,686,624
- ----------------------------------------------------------------------------------------------------------------------
Expenses
Management fees (note 6) 652,522 1,384,679 178,306
12b-1 service fees - Class A (notes 1 and 6) 218,928 477,400 54,123
12b-1 distribution and service fees - Class B (notes 1 and 6) 47,078 36,025 26,697
12b-1 distribution and service fees - Class C (notes 1 and 6) 30,218 91,871 18,488
Shareholders' servicing agent fees and expenses 50,392 122,883 34,365
Custodian's fees and expenses 51,760 62,708 54,717
Trustees' fees and expenses (note 6) 2,674 4,091 2,200
Professional fees 16,865 23,948 8,527
Shareholders' reports - printing and mailing expenses 44,625 68,055 31,648
Federal and state registration fees 8,559 8,077 4,608
Other expenses 5,673 13,655 1,524
- ----------------------------------------------------------------------------------------------------------------------
Total expenses before custodian fee credit and expense reimbursement 1,129,294 2,293,392 415,203
Custodian fee credit (note 1) (1,884) (1,015) (6,040)
Expense reimbursement (note 6) (173,046) (4,300) (156,046)
- ----------------------------------------------------------------------------------------------------------------------
Net expenses 954,364 2,288,077 253,117
- ----------------------------------------------------------------------------------------------------------------------
Net investment income 5,613,417 12,319,943 1,433,507
- ----------------------------------------------------------------------------------------------------------------------
Realized and Unrealized Gain (Loss) from Investments
Net realized gain from investment transactions (notes 1 and 4) 392,767 932,600 31,594
Net change in unrealized appreciation or depreciation of investments (1,874,001) (3,631,812) (354,954)
- ----------------------------------------------------------------------------------------------------------------------
Net gain (loss) from investments (1,481,234) (2,699,212) (323,360)
- ----------------------------------------------------------------------------------------------------------------------
Net increase in net assets from operations $ 4,132,183 $ 9,620,731 $ 1,110,147
======================================================================================================================
</TABLE>
See accompanying notes to financial statements.
27
<PAGE>
Statement of Changes in Net Assets
<TABLE>
<CAPTION>
Kansas Missouri
------------------------------ ---------------------------
Year Ended Year Ended Year Ended Year Ended
5/31/99 5/31/98 5/31/99 5/31/98
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Operations
Net investment income $ 5,613,417 $ 4,985,423 $ 12,319,943 $ 12,020,586
Net realized gain from investment transactions (notes 1 and 4) 392,767 219,884 932,600 1,812,321
Net change in unrealized appreciation or depreciation of investments (1,874,001) 3,771,101 (3,631,812) 7,426,322
- --------------------------------------------------------------------------------------------------------------------------------
Net increase in net assets from operations 4,132,183 8,976,408 9,620,731 21,259,229
- --------------------------------------------------------------------------------------------------------------------------------
Distributions to Shareholders (note 1)
From undistributed net investment income:
Class A (5,236,017) (4,879,573) (11,626,924) (11,520,934)
Class B (199,683) (74,108) (155,720) (44,804)
Class C (171,237) (28,659) (531,389) (452,917)
Class R (8,514) (638) (4,200) (2,126)
- --------------------------------------------------------------------------------------------------------------------------------
Decrease in net assets from distributions to shareholders (5,615,451) (4,982,978) (12,318,233) (12,020,781)
- --------------------------------------------------------------------------------------------------------------------------------
Fund Share Transactions (note 2)
Net proceeds from sale of shares 31,570,124 19,450,846 30,981,161 29,016,642
Net proceeds from shares issued to shareholders due to reinvestment
of distributions 2,397,854 2,514,735 5,097,764 6,950,162
- --------------------------------------------------------------------------------------------------------------------------------
33,967,978 21,965,581 36,078,925 35,966,804
Cost of shares redeemed (13,183,041) (15,361,968) (22,186,899) (26,158,524)
- --------------------------------------------------------------------------------------------------------------------------------
Net increase in net assets from Fund share transactions 20,784,937 6,603,613 13,892,026 9,808,280
- --------------------------------------------------------------------------------------------------------------------------------
Net increase in net assets 19,301,669 10,597,043 11,194,524 19,046,728
Net assets at the beginning of year 107,184,197 96,587,154 246,426,544 227,379,816
- --------------------------------------------------------------------------------------------------------------------------------
Net assets at the end of year $ 126,485,866 $ 107,184,197 $ 257,621,068 $ 246,426,544
================================================================================================================================
Balance of undistributed net investment income
at end of year $ 412 $ 2,446 $ 5,069 $ 3,359
================================================================================================================================
</TABLE>
See accompanying notes to financial statements.
28
<PAGE>
<TABLE>
<CAPTION>
Wisconsin
--------------------------------
Year Ended Year Ended
5/31/99 5/31/98
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Operations
Net investment income $ 1,433,507 $ 944,621
Net realized gain from investment transactions (notes 1 and 4) 31,594 1,965
Net change in unrealized appreciation or depreciation of investments (354,954) 867,069
- ---------------------------------------------------------------------------------------------------------------------------
Net increase in net assets from operations 1,110,147 1,813,655
- ---------------------------------------------------------------------------------------------------------------------------
Distributions to Shareholders (note 1)
From undistributed net investment income:
Class A (1,227,494) (888,945)
Class B (104,859) (30,662)
Class C (97,280) (21,939)
Class R (3,847) (2,181)
- ---------------------------------------------------------------------------------------------------------------------------
Decrease in net assets from distributions to shareholders (1,433,480) (943,727)
- ---------------------------------------------------------------------------------------------------------------------------
Fund Share Transactions (note 2)
Net proceeds from sale of shares 10,740,181 13,525,996
Net proceeds from shares issued to shareholders due to reinvestment
of distributions 960,959 586,627
- ---------------------------------------------------------------------------------------------------------------------------
11,701,140 14,112,623
Cost of shares redeemed (2,401,689) (1,522,817)
- ---------------------------------------------------------------------------------------------------------------------------
Net increase in net assets from Fund share transactions 9,299,451 12,589,806
- ---------------------------------------------------------------------------------------------------------------------------
Net increase in net assets 8,976,118 13,459,734
Net assets at the beginning of year 27,600,528 14,140,794
- ---------------------------------------------------------------------------------------------------------------------------
Net assets at the end of year $ 36,576,646 $ 27,600,528
===========================================================================================================================
Balance of undistributed net investment income at end of year $ 947 $ 920
===========================================================================================================================
</TABLE>
See accompanying notes to financial statements.
29
<PAGE>
Notes to Financial Statements
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 commitment. At May
31, 1999, Missouri had an outstanding delayed delivery purchase commitment of
$2,501,069. 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 monthly as a dividend 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. All monthly
tax-exempt income dividends paid during the fiscal year ended May 31, 1999, have
been designated Exempt Interest Dividends. Net realized capital gain and market
discount distributions are subject to federal taxation.
30
<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 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 only under limited circumstances, or by specified classes
of shareholders.
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 fiscal year ended May 31, 1999.
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.
Custodian Fee Credit
Each Fund has an arrangement with the custodian bank whereby the custodian fees
and expenses are reduced by credits earned on each Fund's cash on deposit with
the bank. Such deposit arrangements are an alternative to overnight investments.
2. Fund Shares
Transactions in Fund shares were as follows:
<TABLE>
<CAPTION>
Kansas
-------------------------------------------------------------
Year Ended Year Ended
5/31/99 5/31/98
-------------------------------------------------------------
Shares Amount Shares Amount
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Shares sold:
Class A 2,070,976 $22,111,543 1,446,744 $15,169,400
Class B 338,463 3,592,058 246,506 2,575,382
Class C 485,599 5,195,815 154,351 1,624,614
Class R 63,074 670,708 7,647 81,450
Shares issued to shareholders due to reinvestment of distributions:
Class A 204,225 2,180,079 235,108 2,451,515
Class B 11,758 124,503 4,460 46,453
Class C 8,496 90,854 1,567 16,481
Class R 225 2,418 27 286
- ---------------------------------------------------------------------------------------------------------------------------------
3,182,816 33,967,978 2,096,410 21,965,581
- ---------------------------------------------------------------------------------------------------------------------------------
Shares redeemed:
Class A (1,133,132) (12,087,524) (1,456,152) (15,220,254)
Class B (34,327) (362,189) (3,593) (37,812)
Class C (68,688) (732,197) (3,309) (34,615)
Class R (104) (1,131) (6,549) (69,287)
- ---------------------------------------------------------------------------------------------------------------------------------
(1,236,251) (13,183,041) (1,469,603) (15,361,968)
- ---------------------------------------------------------------------------------------------------------------------------------
Net increase 1,946,565 $20,784,937 626,807 $6,603,613
=================================================================================================================================
</TABLE>
31
<PAGE>
Notes to Financial Statements (continued)
<TABLE>
<CAPTION>
Missouri
-------------------------------------------------------------
Year Ended Year Ended
5/31/99 5/31/98
-------------------------------------------------------------
Shares Amount Shares Amount
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Shares sold:
Class A 2,059,573 $23,245,894 2,105,625 $23,418,825
Class B 347,008 3,910,407 131,214 1,466,418
Class C 305,854 3,443,979 371,741 4,116,750
Class R 33,897 380,881 1,309 14,649
Shares issued to shareholders due to reinvestment of distributions:
Class A 415,813 4,695,252 594,998 6,583,121
Class B 9,733 109,725 2,790 31,032
Class C 25,897 291,783 30,239 333,908
Class R 89 1,004 189 2,101
- ---------------------------------------------------------------------------------------------------------------------------------
3,197,949 36,078,925 3,238,105 35,966,804
- ---------------------------------------------------------------------------------------------------------------------------------
Shares redeemed:
Class A (1,812,770) (20,424,817) (2,183,973) (24,315,900)
Class B (30,293) (338,255) (26,702) (298,879)
Class C (124,260) (1,397,146) (137,556) (1,532,745)
Class R (2,376) (26,681) (976) (11,000)
- ---------------------------------------------------------------------------------------------------------------------------------
(1,969,699) (22,186,899) (2,349,207) (26,158,524)
- ---------------------------------------------------------------------------------------------------------------------------------
Net increase 1,228,250 $13,892,026 888,898 $9,808,280
=================================================================================================================================
</TABLE>
<TABLE>
<CAPTION>
Wisconsin
-------------------------------------------------------------
Year Ended Year Ended
5/31/99 5/31/98
-------------------------------------------------------------
Shares Amount Shares Amount
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Shares sold:
Class A 608,036 $76,270,838 1,023,987 $10,392,120
Class B 210,301 2,185,117 185,214 1,883,674
Class C 215,001 2,223,917 123,287 1,250,046
Class R 5,783 60,309 15 156
Shares issued to shareholders due to reinvestment of distributions:
Class A 79,265 821,500 54,801 552,761
Class B 6,147 63,822 1,536 15,642
Class C 6,933 72,025 1,578 16,051
Class R 347 3,612 215 2,173
- ---------------------------------------------------------------------------------------------------------------------------------
1,131,813 11,701,140 1,390,633 14,112,623
- ---------------------------------------------------------------------------------------------------------------------------------
Shares redeemed:
Class A (188,176) (1,949,001) (143,260) (1,453,452)
Class B (27,493) (285,123) (6,763) (69,320)
Class C (16,267) (167,457) (4) (45)
Class R (11) (108) -- --
- ---------------------------------------------------------------------------------------------------------------------------------
(231,947) (2,401,689) (150,027) (1,522,817)
- ---------------------------------------------------------------------------------------------------------------------------------
Net increase 899,866 $9,299,451 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 July 1, 1999, to shareholders of record on June 9,
1999, as follows:
<TABLE>
<CAPTION>
Kansas Missouri Wisconsin
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
Dividend per share:
Class A $ .0410 $ .0455 $ .0380
Class B .0345 .0385 .0315
Class C .0365 .0405 .0335
Class R .0430 .0475 .0400
================================================================================
</TABLE>
32
<PAGE>
4. Securities Transactions
Purchases and sales (including maturities) of investments in long-term municipal
securities and short-term municipal securities for the fiscal year ended May 31,
1999, were as follows:
<TABLE>
<CAPTION>
Kansas Missouri Wisconsin
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Purchases:
Long-term municipal securities $ 51,103,738 $ 42,258,268 $ 10,420,515
Short-term municipal securities 7,300,000 1,000,000 1,000,000
Sales:
Long-term municipal securities 31,681,554 29,437,358 2,827,902
Short-term municipal securities 7,300,000 1,000,000 1,000,000
===========================================================================================================================
</TABLE>
At May 31, 1999, 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, 1999, Kansas had an unused capital loss carryforward of $4,239,199
available for federal income tax purposes to be applied against future capital
gains, if any. If not applied, the carryforward will expire as in the year 2003.
5. Unrealized Appreciation (Depreciation)
Gross unrealized appreciation and gross unrealized depreciation of investments
at May 31,1999, were as follows:
<TABLE>
<CAPTION>
Kansas Missouri Wisconsin
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Gross unrealized:
appreciation $ 7,002,084 $ 14,245,137 $ 973,142
depreciation (577,215) (738,362) (177,241)
- ---------------------------------------------------------------------------------------------------------------------------
Net unrealized appreciation $ 6,424,869 $ 13,506,775 $ 795,901
===========================================================================================================================
</TABLE>
6. Management Fee and Other Transactions with Affiliates
Under the Trust's investment management agreement with Nuveen Advisory Corp.
(the "Adviser"), a wholly owned subsidiary of The John Nuveen Company, each Fund
pays an annual management fee, payable monthly, at the rates set forth below
which are based upon the average daily net assets of each Fund as follows:
<TABLE>
<CAPTION>
Average Daily Net Assets 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
================================================================================
</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 fiscal year ended May 31, 1999, John Nuveen & Co. Incorporated (the
"Distributor"), a wholly owned subsidiary of The John Nuveen Company, collected
sales charges on purchases of Class A Shares, the majority of which were paid
out as concessions to authorized dealers as follows:
<TABLE>
<CAPTION>
Kansas Missouri Wisconsin
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Sales charges collected $ 287,000 $ 606,372 $ 134,199
Paid to authorized dealers 281,327 576,668 117,933
===========================================================================================================================
</TABLE>
33
<PAGE>
Notes to Financial Statements (continued)
During the fiscal year ended May 31, 1999, the Distributor compensated
authorized dealers directly with commission advances at the time of purchase as
follows:
<TABLE>
<CAPTION>
Kansas Missouri Wisconsin
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Commission advances $ 261,956 $ 248,237 $ 119,611
===========================================================================================================================
</TABLE>
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 fiscal year ended May 31, 1999, the
Distributor retained such 12b-1 fees as follows:
<TABLE>
<CAPTION>
Kansas Missouri Wisconsin
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
12b-1 fees retained $ 68,592 $ 70,460 $ 39,557
===========================================================================================================================
</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
fiscal year ended May 31, 1999, as follows:
<TABLE>
<CAPTION>
Kansas Missouri Wisconsin
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
CDSC retained $ 26,721 $ 19,628 $ 4,564
===========================================================================================================================
</TABLE>
7. Composition of Net Assets
At May 31, 1999, 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 $ 124,299,783 $ 243,913,616 $ 35,753,400
Balance of undistributed net investment
income 412 5,069 947
Accumulated net realized gain (loss) from
investment transactions (4,239,198) 195,608 26,398
Net unrealized appreciation of investments
6,424,869 13,506,775 795,901
- ------------------------------------------------------------------------------------------------------------------------
Net assets $ 126,485,866 $ 257,621,068 $ 36,576,646
========================================================================================================================
</TABLE>
34
<PAGE>
Financial Highlights
35
<PAGE>
Financial Highlights
Selected data for a share outstanding throughout each period is as follows:
<TABLE>
<CAPTION>
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 Gains Total Value Return(b)
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Class A (1/92)
1999 $ 10.60 $ .51 $ (.11) $ .40 $ (.51) $ -- $ (.51) $ 10.49 3.81%
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
Class B (2/97)
1999 10.54 .43 (.11) .32 (.43) -- (.43) 10.43 3.07
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 10.63 .45 (.11) .34 (.46) -- (.46) 10.51 3.18
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 10.66 .54 (.11) .43 (.54) -- (.54) 10.55 4.06
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
-------------------------------------------------------------------------------------------------------------
Ratio Ratio
of Net of Net
Ratio of Investment Ratio of Investment
Expenses Income Expenses Income
to Average to Average to Average to Average
Ending Net Assets Net Assets Net Assets Net Assets
Net Before Credit/ Before Credit/ After Credit/ After Credit/ Portfolio
Assets Reimburse- Reimburse- Reimburse- Reimburse- Turnover
(000) ment ment ment (a) ment (a) Rate
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Class A (1/92)
1999 $ 113,140 .90% 4.63% .75% 4.78% 27%
1998 102,217 .90 4.79 .71 4.98 13
1997 95,891 1.03 4.80 .57 5.31 55
1996 96,694 1.08 5.11 .54 5.67 72
1995 83,683 1.10
Class B (2/97)
1999 6,497 1.65 3.89 1.51 4.03 27
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 6,171 1.45 4.10 1.32 4.23 27
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 679 .70 4.86 .59 4.97 27
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.
(a) After custodian fee credit and expense reimbursement, where applicable
(notes 1 and 6).
(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.
36
<PAGE>
Selected data for a share outstanding throughout each period is as follows:
<TABLE>
<CAPTION>
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 Gains Total Value Return (b)
- -----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Class A (8/87)
1999 $ 11.23 $ .55 $ (.11) $ .44 $ (.55) $ -- $ (.55) $ 11.12 3.95%
1998 10.80 .56 .43 .99 (.56) -- (.56) 11.23 9.32
1997 10.51 .56 .29 .85 (.56) -- (.56) 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
Class B (2/97)
1999 11.23 .47 (.12) .35 (.47) -- (.47) 11.11 3.09
1998 10.80 .47 .44 .91 (.48) -- (.48) 11.23 8.53
1997 (c) 10.81 .16 (.01) .15 (.16) -- (.16) 10.80 1.40
Class C (2/94)
1999 11.23 .49 (.12) .37 (.49) -- (.49) 11.11 3.31
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 7.60
Class R (2/97)
1999 11.23 .58 (.12) .46 (.57) -- (.57) 11.12 4.17
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 Credit/ Before Credit/ After Credit/ After Credit/ Portfolio
Ending Net Reimburse- Reimburse- Reimburse- Reimburse- Turnover
Assets(000) ment ment ment (a) ment (a) Rate
- -----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Class A (8/87)
1999 $ 238,498 .86% 4.87% .86% 4.87% 12%
1998 233,456 .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
Class B (2/97)
1999 5,286 1.61 4.13 1.61 4.13 12
1998 1,677 1.62 4.25 1.62 4.25 19
1997 (c) 454 1.62* 4.42* 1.45* 4.59* 41
Class C (2/94)
1999 13,444 1.41 4.32 1.41 4.32 12
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 1.60 4.54 1.35 4.79 38
1995 3,989 1.63 4.76 1.20 5.19 40
Class R (2/97)
1999 393 .66 5.07 .65 5.08 12
1998 41 .67 5.22 .67 5.22 19
1997 (c) 34 .67* 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.
(a) After custodian fee credit and expense reimbursement, where applicable
(notes 1 and 6)
(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.
37
<PAGE>
Financial Highlights (continued)
Selected data for a share outstanding throughout each period is as follows:
<TABLE>
<CAPTION>
Class (Inception Date)
Investment Operations Less Distributions
----------------------------- -------------------------
WISCONSIN** 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 Gains Total Value Return (b)
- ---------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Class A (6/94)
1999 $ 10.28 $ .47 $ (.08) $ .39 $ (.47) $ -- $ (.47) $ 10.20 3.83%
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 10.31 .39 (.08) .31 (.39) -- (.39) 10.23 3.05
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 10.30 .41 (.07) .34 (.42) -- (.42) 10.22 3.29
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 10.31 .49 (.08) .41 (.49) -- (.49) 10.23 4.04
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
to Average to Average to Average Average
Net Assets Net Assets Net Assets Net Assets
Before Credit/ Before Credit/ After Credit/ After Credit/ Portfolio
Ending Net Reimburse- Reimburse- Reimburse- Reimburse- Turnover
Assets(000) ment ment ment (a) ment (a) Rate
- -----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Class A (6/94)
1999 $ 29,217 1.17% 4.04% .68% 4.53% 9%
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 3,795 1.94 3.28 1.43 3.79 9
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 3,457 1.73 3.49 1.23 3.99 9
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 107 .97 4.25 .48 4.74 9
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 Missouri.
(a) After custodian fee credit and expense reimbursement, where applicable
(notes 1 and 6).
(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.
38
<PAGE>
Report of Independent Public Accountants
To the Board of Trustees and Shareholders of
Nuveen Flagship Multistate Trust IV:
We have audited the accompanying statements of net assets, including the
portfolios of investments, of Nuveen Flagship Kansas Municipal Bond Fund, Nuveen
Flagship Missouri Municipal Bond Fund, and Nuveen Flagship Wisconsin Municipal
Bond Fund (collectively, the "Funds") (three of the portfolios constituting the
Nuveen Flagship Multistate Trust IV (a Massachusetts business trust)), as of May
31, 1999, and the related statements of operations for the year then ended, and
the statements of changes in net assets and the financial highlights for each of
the two years then ended. These financial statements and financial highlights
are the responsibility of the Funds' management. Our responsibility is to
express an opinion on these financial statements and financial highlights based
on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of securities owned as of May
31, 1999, by correspondence with the custodian and brokers. As to securities
purchased but not received, we requested confirmation from brokers and, when
replies were not received, we carried out alternative auditing procedures. An
audit also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the net assets of the Nuveen
Flagship Kansas Municipal Bond Fund, Nuveen Flagship Missouri Municipal Bond
Fund, and Nuveen Flagship Wisconsin Municipal Bond Fund of the Nuveen Flagship
Multistate Trust IV as of May 31, 1999, and the results of their operations for
the year then ended, and the changes in their net assets and the financial
highlights for each of the two years then ended, in conformity with generally
accepted accounting principles.
ARTHUR ANDERSEN LLP
Chicago, Illinois
July 20, 1999
39
<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
Dividend and
Growth Fund
Income
Income 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
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.
40
<PAGE>
Fund Information
Board of Trustees
Robert P. Bremner
Lawrence H. Brown
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
Chase Global Fund Services Company
P.O. Box 5186
New York, NY 10274
(800) 257-8787
Legal Counsel
Morgan, Lewis &
Bockius LLP
Washington, D.C.
Independent Public Accountants
Arthur Andersen LLP
Chicago, IL
41
<PAGE>
SERVING
Investors for Generations
Since our founding in 1898, John Nuveen & Co. has been synonymous with
investments that withstand the test of time. Today we offer a broad range of
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 whose aim is to provide consistent,
competitive performance over time -- with moderated risk. We emphasize quality
securities carefully chosen through in-depth research, and we follow those
securities closely over time to ensure that they continue to meet our exacting
standards.
Whether your focus is long-term growth, dependable 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 growth,
growth and income, income, and tax-free 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.
[Photo of John Nuveen, Sr., APPEARS HERE]
NUVEEN
John Nuveen & Co. Incorporated
333 West Wacker Drive
Chicago, IL 60606-1286
www.nuveen.com
