<PAGE>
November 30, 1999 Semiannual 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]
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
11 Nuveen Flagship Ohio Municipal Bond
Fund
14 Portfolio of Investments
38 Statement of Net Assets
39 Statement of Operations
40 Statement of Changes in Net Assets
41 Notes to Financial Statements
46 Financial Highlights
49 Fund Information
<PAGE>
DEAR
Shareholder
[Photo of Timothy R. Schwertfeger appears here]
Timothy R. Schwertfeger
Chairman of the Board
How did you gain your financial wisdom? While some of us study finance, the
financial markets, economics or related disciplines in formal programs, most of
us end up accumulating practical knowledge through the years, from friends,
family, colleagues and media.
At Nuveen, we believe a formal financial education should start early in life. A
study sponsored by the National Council on Economic Education shows that a
whopping 66% of high school students tested on basic money skills scored an "F."
Only 3% received an "A."
Because we believe strongly in education and are committed to children's
financial literacy, we have launched a community service program, Kid$ense, in
our hometown of Chicago.
The Kid$ense curriculum, which is available for grades kindergarten through
sixth, includes textbooks, teaching materials and teacher training. The lessons
introduce children to the concept of money and how it works in society; buying,
selling and trading; working, earning, saving and investing.
Nuveen's commitment to children's financial literacy goes beyond the 250
Chicago public schools who have benefited from the Kid$ense curriculum. We also
have a commitment to family wealth management, which is a positive philosophy
that addresses the role of wealth in our lives and our world.
At Nuveen, we are dedicated to helping you and your financial adviser
develop a family wealth management strategy unique to you and your goals and
values. In your next shareholder report, look for more information about
Nuveen's dedication to Family Wealth Management, or ask your financial adviser
about this new approach to investing.
The Economic Environment. I want to briefly report on the economic environment
in which your Nuveen investment performed. Read on, as we've conducted an in-
depth interview with a representative from your fund's portfolio management
team, describing how the team of investment and research professionals directed
the portfolio during the semi-annual fiscal period ended November 30, 1999.
Until fairly recently, the U.S. economy has been characterized by robust
growth, generally low interest rates and unemployment levels that remain among
the lowest in three decades.
Concerns, however, about the continued pace of the economy's expansion have
begun to test the "new paradigm," which holds that improvements in productivity
enable us to have both economic growth and low inflation at the same time. With
investors and the various markets watching -- and reacting to -- every
announcement concerning economic statistics, volatility has increased,
especially in the equity markets.
We have entered a different economic environment from that of 12 months
ago. This shift has occurred in response to two factors:
. the Asian financial crisis of 1998 did not produce the U.S. economic
slowdown that was widely expected to keep economic growth from becoming
overly robust;
. evidence of accelerating prices contributed to the reemergence of the
specter of inflation, accompanied by predictions of higher interest
rates.
"We also have a commitment to family wealth management, which is a positive
philosophy that addresses the role of wealth in our lives and our world."
SEMIANNUAL REPORT page 1
<PAGE>
"Your financial
adviser can serve
as a valuable
resource in helping
you determine if
adjustments are
needed in your
current asset
allocation plan."
In an effort to pre-empt this threat of inflation, the Federal Reserve
Board (the Fed) moved to raise interest rates by a quarter-point on three
separate occasions between June and November 1999. This brought the federal
funds rate, which represents the amount banks charge one another on overnight
loans and serves as a standard for short-term market rates, from 4.75% to 5.50%.
These increases offset the three rate cuts enacted by the Fed a year earlier.
At its November 1999 meeting, the Fed announced that it would shift to a
neutral stance following the latest interest rate increase, giving the markets
some respite during the Y2K transition. However, the Fed's indication that it
would continue to closely watch the pace of economic growth for any signs of
inflationary pressure left the door open for additional tightenings.
In January 2000, the annual rotation among members of the Fed's Open Market
Committee, the body that ultimately decides interest rate policy, will put
several members considered more "hawkish" on inflation fighting into voting
slots. This could tilt policy toward further rate increases in the new year.
Municipal bonds continued to serve investors well. At the end of November
1999, the ratio between long-term municipal yields and 30-year Treasury yields
stood at 97.14%, compared with the historical average of 89.6% over the period
1979-1999. For investors, this meant that quality long-term municipal bonds
offered yields comparable to those of long-term Treasury bonds -- even before
the tax advantages of municipals were taken into account. Of course, Treasuries
are backed by the full faith and credit of the U.S. government. Even so, on an
after-tax basis, municipal bonds continued to present an exceptionally
attractive investment option relative to Treasuries.
In the coming months, we expect to see a healthy supply of new municipal
bonds, although total volume is expected to drop from the near-record levels of
1998. This is due to the dramatic decrease in the refunding of existing bonds in
the wake of higher interest rates compared to early 1999.
Keeping the Balance. The increased volatility in the markets highlights the
importance of maintaining balance in your investment portfolio. With a properly
balanced portfolio of equities, bonds and cash, your assets may be better
positioned to weather the markets' ups and downs. A balanced portfolio can also
help you increase your opportunities for capital growth while reducing risk.
Your financial adviser can serve as a valuable resource in helping you determine
if adjustments are needed in your current asset allocation plan.
For more information on any Nuveen investment, including a prospectus,
contact your financial adviser. Or call Nuveen at (800) 621-7227 or visit our
Internet site at www.nuveen.com. Please read the prospectus carefully before you
invest or send money.
Since 1898, Nuveen has been synonymous with investments that stand the test
of time. As we enter a new millennium, we are committed to maintaining that
reputation and finding the best ways to serve your evolving investment needs.
Thank you for your continued confidence.
Sincerely,
/s/ Timothy Schwertfeger
Timothy R. Schwertfeger
Chairman of the Board
January 15, 2000
SEMIANNUAL REPORT page 2
<PAGE>
NUVEEN FLAGSHIP KENTUCKY MUNICIPAL BOND FUND
NUVEEN FLAGSHIP FLORIDA MUNICIPAL BOND FUND
From the Portfolio Manager's Perspective
Portfolio Manager Tom O'Shaughnessy discusses fund performance, the municipal
market and key investment strategies for the Kentucky fund for the six-month
period ended November 30, 1999.
Q How did Kentucky's economy and municipal market do?
TOM The state's economy continued to grow at a healthy rate, but at a slightly
slower pace than the national economy as a whole. Job growth in Kentucky
outstripped the national average, although incomes remained flat. Unemployment
fell to 4.1% in mid-1999 -- down from 4.4% a year earlier -- and hovered at
levels not seen in more than a dozen years. Job losses in the traditionally low-
wage sectors of coal mining, tobacco, and apparel have been offset by increases
in the higher-earning auto, transportation equipment, air transport, health
services and back office operations/financial business services sectors.
The state's ongoing economic strength translated into healthy tax
collections and municipal revenues and helped bolster the overall
creditworthiness of the Kentucky municipal market. That was virtually the only
silver lining in what proved to be a very stormy environment for municipal
bonds. Continued signs of better-than-expected economic growth prompted the
Federal Reserve to raise short-term interest rates by a total of 0.75% over the
period from June through November, 1999. As bond yields rose in response, their
prices slumped and all but the shortest-maturity bond funds suffered losses.
Q How did Nuveen Flagship Kentucky Municipal Bond Fund perform during the period
ended November 30, 1999?
TOM Nuveen Flagship Kentucky Municipal Bond Fund generated a six-month total
return on net asset value of -3.92%, compared to the -2.87% total return posted
by the Lipper Kentucky Municipal Debt Peer Group.* For the one-, five-, and ten-
year periods ending November 30, 1999, the Nuveen fund had an average annual
return of -3.42%, 6.80% and 6.55%, respectively, compared to the Lipper peer
group average annual total returns of -2.42%, 6.68%, 6.52% for the same time
periods.*
Total return equals a fund's income and capital gain distributions, if any,
plus or minus changes in net asset value.
The fund's six-month taxable equivalent total return, for investors in a
35% combined federal and state income tax bracket, was -2.59%.** As of November
30, 1999, the fund's SEC 30-day yield was 5.08%. For investors in the combined
35% federal and state income tax bracket, that is equivalent to a yield of 7.82%
on a taxable investment.
Q What was your strategy amid this difficult market environment?
TOM We took advantage of the rising interest rate environment to engage in what
are known as "swaps." We sold bonds with lower interest rates, replacing them
with similar -- in terms of credit quality, maturity and structure -- bonds with
higher prevailing interest
- -------------------------------------------------------------------------------
Nuveen is dedicated to providing investors access to a team of highly
experienced investment managers, each overseeing portfolios within their
specific areas of expertise. We call them Premier Advisers/sm/ -- a select group
of asset management firms who direct the investment activities of the Nuveen
Mutual Funds. Nuveen has chosen them for their rigorously disciplined investment
approaches and their consistent long-term performance.
Drawing on decades of experience and specialized knowledge, these skilled asset
managers have earned reputations for excellence in their fields of expertise,
whether it be blue-chip growth stocks, large-cap value stocks, bonds or
international securities.
Nuveen's Premier Adviser/sm/ for income investing is Nuveen Investment Advisory
Services (NIAS). NIAS follows a disciplined, research-driven investment approach
to uncover income securities that combine exceptional relative value with above-
average return potential. Drawing on 300 combined years of investment
experience, the Nuveen team of portfolio managers and research analysts offers:
. A commitment to exhaustive research
. An active, value-oriented investment style
. The unmatched presence of trading leverage of a market leader.
This disciplined, research-oriented approach has paid off for investors,
and is a key investment strategy for Nuveen Flagship Kentucky Municipal Bond
Fund.
Performance figures are quoted for Class A shares at net asset value. Comments
cover the six-month period ended November 30, 1999. The views expressed reflect
those of the portfolio management team and are subject to change at any time,
based on market and other conditions.
SEMIANNUAL REPORT page 3
<PAGE>
rates. These swaps generated two benefits for the fund. First, they helped
increase the fund's income-producing potential. Second, the swaps helped enhance
the fund's tax efficiency. Many of the bonds we sold were done so at prices
below their purchase price, generating tax losses that can be used to offset
capital gains. A tax loss can be used for this purpose anytime over an eight-
year period, so we consider swaps to be a valuable tool for the fund.
We identified other attractive opportunities throughout the period because
as interest rates rose, yield "spreads" widened. The spread is the difference in
yields between higher-rated and lower-rated securities. The higher yields on
lower-rated and non-rated securities made them more attractive than their
higher-rated counterparts on a risk-adjusted basis. Using the expertise of
Nuveen research, we considered only those bonds that we felt offered adequate
compensation for the level of risk we assumed.
On some occasions, we were able to improve the fund's call protection as we
purchased newly issued bonds. Issuers generally have the right to call or redeem
their bonds after a given date prior to maturity, which they tend to do more
often when interest rates are falling and there's a financial incentive to
refinance. Call protection helps to protect the fund's income stream by allowing
us the luxury of hanging onto higher-yielding bonds if interest rates fall.
Since interest rates were on the rise during the past six months, few
individual investors were seeking out call protection. As a result, call
protection was available fairly cheaply and, in many cases, at virtually no
cost. By improving the call protection of the fund, the dividend income that
shareholders receive may be more stable and less sensitive to interest rate
changes in the future.
Q What is your outlook for Nuveen Flagship Kentucky Municipal Bond Fund?
TOM As long as the yield spread remains wide and the economy remains sound, we
believe that the lower- and non-rated segments of the market will continue to
offer good value and help maintain the fund's income potential. In addition, we
will continue to engage in tax swapping when we're presented with attractive
opportunities to do so.
To the extent that investors seek out value in the bond market, municipals
could benefit. As of November 30, 1999, municipal bonds traded at 97.14% of U.S.
Treasury bonds. Though it is important to note that Treasury bonds are backed by
the full faith and credit of the U.S. government, municipals are priced quite
attractively to their Treasury counterparts.
NUVEEN FLAGSHIP KENTUCKY MUNICIPAL BOND FUND
Top Five Sectors
Tax Obligation (Limited) 20%
- ----------------------------------
Healthcare 18%
- ----------------------------------
U.S Guaranteed 13%
- ----------------------------------
Utilities 9%
- ----------------------------------
Housing (Single Family) 8%
- ----------------------------------
As a percentage of total bond holdings as of November 30, 1999. Holdings are
subject to change.
"Call protection helps to protect the fund's income stream by allowing us the
luxury of hanging onto higher-yielding bonds if interest rates fall."
NUVEEN FLAGSHIP KENTUCKY MUNICIPAL BOND FUND
Bond Credit Quality
[PIE CHART APPEARS HERE]
AAA/U.S. Guaranteed...54%
AA....................11%
A.....................13%
BBB/NR................22%
As a percentage of total bond holdings as of November 30, 1999. Holdings are
subject to change.
* The Lipper Peer Group returns represent the average annualized total return
of the 16 funds in the Lipper Kentucky Municipal Debt Category for the six-
month and one-year periods ended November 30, 1999, seven funds for the five-
year period, and three funds for the 10-year period. The returns assume
reinvestment of dividends and do not reflect any applicable sales charges.
** Taxable equivalent total return equals a fund's taxable equivalent income
(based on the combined federal and state income tax rate) plus capital gains
distributions, if any, plus or minus changes in net asset value.
SEMIANNUAL REPORT page 4
<PAGE>
NUVEEN FLAGSHIP KENTUCKY MUNICIPAL BOND FUND
Fund Spotlight as of November 30, 1999
<TABLE>
<CAPTION>
Quick Facts
A Shares B Shares C Shares R Shares
<S> <C> <C> <C> <C>
NAV $10.51 $10.51 $10.50 $10.49
- ---------------------------------------------------------------------------------------------
Fund Symbol FKYTX N/A FKYCX N/A
- ---------------------------------------------------------------------------------------------
CUSIP 67065R507 67065R606 67065R705 67065R804
- ---------------------------------------------------------------------------------------------
Inception Date 5/87 2/97 10/93 2/97
- ---------------------------------------------------------------------------------------------
Total Returns (Annualized)+
A Shares B Shares C Shares R Shares
NAV Offer NAV w/CDSC NAV NAV
<S> <C> <C> <C> <C> <C> <C>
1-Year -3.42% -7.45% -4.13% -7.80% -3.94% -3.21%
- -----------------------------------------------------------------------------------------------
1-Year TER* -0.77% -4.92% -1.89% -5.56% -1.59% -0.45%
- -----------------------------------------------------------------------------------------------
5-Year 6.80% 5.90% 6.10% 5.94% 6.23% 6.89%
- -----------------------------------------------------------------------------------------------
10-Year 6.55% 6.09% 6.07% 6.07% 5.96% 6.59%
- -----------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
Tax-Free Yields
A Shares B Shares C Shares R Shares
NAV Offer NAV NAV NAV
<S> <C> <C> <C> <C> <C>
SEC 30-Day Yield 5.08% 4.86% 4.33% 4.53% 5.28%
- -----------------------------------------------------------------------------------------------
Taxable Equivalent Yield 7.82% 7.48% 6.66% 6.97% 8.12%
</TABLE>
Terms To Know
The following are a few terms used throughout this report.
Duration A mathematical measure of the price sensitivity of a bond fund's
portfolio to changes in interest rates. Typically the shorter the duration, the
less price and return variability you can expect in the fund's price per share
as interest rates change.
Fed Easing When the Federal Reserve is following an easy money policy, it is
essentially increasing the money supply by decreasing the federal funds rate and
making money cheaper to borrow. The intention is to help the economy grow.
Fed Tightening When the Federal Reserve is following tight money policy, it is
essentially decreasing the money supply by increasing the fed funds rate and
making money more expensive to borrow. The intention is to slow the growth of
the economy and curtail inflation.
Federal Fund Rates The interest rate charged by banks to lend to other banks
needing overnight loans; this figure is the most sensitive indicator of the
direction of short-term interest rates.
Municipal Bond A bond issued by a state, city, or other municipality to finance
public works such as the construction of roads or schools. The interest is
usually free from federal income tax and may be free from state and local taxes
as well.
SEC Yield A standardized measure of the current net market yields on a mutual
fund's investment portfolio.
Taxable Equivalent Yield The return an investor would have to realize on a fully
taxable investment to equal the stated yield on a tax-exempt investment.
+ 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. 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 income tax
rate of 35%).
Portfolio Statistics
Total Net Assets $469.0 million
- --------------------------------
Average Effective
Maturity 19.43 years
- --------------------------------
Average Duration 7.98
- --------------------------------
Monthly Tax-Free Dividends (Class A Shares) /./
[BAR CHART APPEARS HERE]
12/1998 .0465
1/1999 .0465
2/1999 .0465
3/1999 .0455
4/1999 .0455
5/1999 .0455
6/1999 .0455
7/1999 .0455
8/1999 .0455
9/1999 .0455
10/1999 .0455
11/1999 .0460
/./ The Fund also paid shareholders capital gains and net ordinary income
distributions in December 1998 of $0.0237 per share.
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 their original cost. Performance of classes
will differ. For additional information, please see the fund prospectus.
SEMIANNUAL REPORT page 5
<PAGE>
NUVEEN FLAGSHIP MICHIGAN MUNICIPAL BOND FUND
From the Portfolio Manager's Perspective
- -------------------------------------------------------------------------------
Nuveen is dedicated to providing investors access to a team of highly
experienced investment managers, each overseeing portfolios within their
specific areas of expertise. We call them Premier Advisers/sm/ -- a select group
of asset management firms who direct the investment activities of the Nuveen
Mutual Funds. Nuveen has chosen them for their rigorously disciplined investment
approaches and their consistent long-term performance.
Drawing on decades of experience and specialized knowledge, these skilled asset
managers have earned reputations for excellence in their fields of expertise,
whether it be blue-chip growth stocks, large-cap value stocks, bonds or
international securities.
Nuveen's Premier Adviser/sm/ for income investing is Nuveen Investment Advisory
Services (NIAS). NIAS follows a disciplined, research-driven investment approach
to uncover income securities that combine exceptional relative value with above-
average return potential. Drawing on 300 combined years of investment
experience, the Nuveen team of portfolio managers and research analysts offers:
. A commitment to exhaustive research
. An active, value-oriented investment style
. The unmatched presence of trading leverage of a market leader.
This disciplined, research-oriented approach has paid off for investors, and is
a key investment strategy for Nuveen Flagship Michigan Municipal Bond Fund.
Performance figures are quoted for Class A shares at net asset value. Comments
cover the six-month period ended November 30, 1999. The views expressed reflect
those of the portfolio management team and are subject to change at any time,
based on market and other conditions.
Nuveen Flagship Michigan Municipal Bond Fund features portfolio management by
Nuveen Investment Advisory Services, a team of portfolio managers and research
analysts committed to a disciplined, research-oriented investment strategy. To
help you understand the fund's performance for the six-month period ended
November 30, 1999, we spoke with Portfolio Manager Mike Davern.
Q In an effort to cool off any brewing inflationary pressures, the Federal
Reserve Board (the Fed) raised short-term interest rates by 25 basis points, or
0.25 percent, three times in the six-month reporting period we're discussing
today. The increases occurred in June, August and November. The Fed indicated
that the rate increases were a reversal of the rate cuts it made in 1998 when
global economic and market instability threatened to derail the U.S. economy.
How do bonds typically perform in such an environment?
MIKE When interest rates are rising, it's virtually impossible for bonds to
produce the type of performance results we like to see, since bond prices move
inversely to yields. Let's look at the numbers. The 30-year U.S. Treasury bond
yield rose from 5.92% on June 1, 1999, to 6.28% on November 30, 1999, an
increase of 36 basis points. Municipal bonds had an even tougher time. The 30-
year municipal bond started the period yielding 5.33% and ended it at 6.00%, a
much more dramatic jump of 67 basis points.
Q That's quite a discrepancy. Why have municipal bonds underperformed Treasury
bonds?
MIKE Unlike the highly liquid Treasury bond market -- which brings in buyers
and sellers from all over the world -- the municipal market's performance is
highly dependent upon local factors of supply and demand. Despite rising
interest rates and higher financing costs, the booming U.S. economy has
encouraged local municipalities to finance new projects, and thus, the supply of
bonds was quite plentiful. However, demand was not quite so robust, even though
municipal bonds are offering extremely attractive yields, especially when viewed
on a taxable equivalent basis. In fact, as of November 30, 1999, the ratio
between long-term municipal yields and 30-year Treasury yields stood at 97.14%,
meaning that municipal bonds presented an exceptionally attractive investment
option relative to Treasuries, which are backed by the full faith and credit of
the U.S. government.
SEMIANNUAL REPORT page 6
<PAGE>
Q Have Y2K concerns caused any disruptions in the market?
MIKE Actually, they haven't. If anything, it has been an extremely normal year
in terms of the timing of issuance.
For example, we recently looked at one big municipal bond deal that was set
to close on December 31, 1999, and it was oversubscribed. If there were concerns
about year-end cash flow, then the issuer would have had trouble placing the
deal. So we can't sense any problems associated with the Y2K computer bug. With
all the effort put into fixing computer systems over the last two years, it
really is not all that surprising.
Q What other national trends did you notice?
MIKE As you know, some of the bonds in our portfolios are insured. One trend
we're seeing now is in the bond insurance area: four major bond insurance
companies have stepped back a little bit, choosing not to insure some deals in
reaction to the bankruptcy of a hospital issuer in Philadelphia. This has caused
the insurers to reassess their risk exposure, certainly in the hospital market
as well as some other lower-rated credits.
Although that may sound like a negative, it actually created an opportunity
for us. So many of the bonds in our portfolio are insured with high credit
quality but relatively low yield that it's nice to get to choose from some
lower-rated credits. With the insurers stepping back, a portion of the new issue
supply is now coming to the market uninsured. This environment allows us to use
our excellent credit research staff to find bonds which have the potential for
extra yield without exposure to extra risk.
Q How did the fund perform for the period ended November 30, 1999?
MIKE Nuveen Flagship Michigan Municipal Bond Fund generated a six-month total
return on net asset value of -3.80%, underperforming the Lipper Michigan
Municipal Bond Fund category, which reported an average return of -3.10%.* For
the one-, five- and 10-year periods, the Nuveen fund reported average annualized
total returns of -3.77%, 6.47% and 6.29%, respectively, compared to the Lipper
peer group average total returns of -3.03%, 6.51% and 6.40%, for the same time
periods.*
Total return equals a fund's income plus capital gains distributions, if
any, plus or minus changes in net asset value.
Nuveen Flagship Michigan Municipal Bond Fund's six-month taxable equivalent
total return, for investors in the 34% combined federal and state income tax
bracket, was -2.50%.** As of November 30, 1999, the fund's SEC 30-day yield was
4.87%. For investors in the combined 34% federal and state income tax bracket,
that is equivalent to a yield of 7.38% on a taxable investment.
"This environment allows us to use our excellent credit research staff to find
bonds which have the potential for extra yield without exposure to extra risk."
SEMIANNUAL REPORT page 7
<PAGE>
"Tax losses can therefore be very valuable for the fund. If the bonds purchased
are also at a discount to par value (priced less than 100), the fund still
maintains its ability to come back in price if the market recovers."
Q Why did the fund underperform its benchmark?
MIKE Our fund invests in bonds with long-term maturities, which is one of the
ways it pursues its objective. In a bear market for bonds, which has generally
been the environment in 1999, long-term maturities will typically underperform
because these bonds are the most sensitive to changes in interest rates. In a
bull market, we would hope to outperform.
On the plus side, the rising interest rate environment provided the
opportunity to buy bonds with higher yields and better call protection, thus
strengthening the fund's dividend-paying capability.
Since bond prices fall in a rising interest rate environment, certain bonds
purchased earlier in the period fell in value. We sold some of these bonds,
taking a capital loss that, for tax purposes, can be used to offset capital
gains, or be carried forward for up to eight years to offset future gains. Tax
losses can therefore be very valuable for the fund. If the bonds purchased are
also at a discount to par value (priced less than 100), the fund still maintains
its ability to come back in price if the market recovers.
Q What other variables do you look for when considering a purchase for the
portfolio?
MIKE There are at least five different variables that we examine: price,
coupon, call, sector and rating.
Price. In a bear market, owning a bond selling at a discount to par, or
say, 80 cents on the dollar, has its advantages. As time passes, the bond heads
toward maturity when it is repaid at $1. As a result, a discount bond isn't
going to drop as much in price in a bear market because the passage of time is
tugging the bond upward in price, and thus closer to maturity. We say that a
bond priced at a deep discount has good "convexity," suggesting that the bond's
ability to go up in price is greater than its ability to go down in price. In
contrast, a bond selling at a premium above par usually has less upside. Premium
bonds typically pay higher coupons, which means that the issuer will want to
"call" the bonds, or redeem them, if interest rates later fall. As a result,
such bonds have less upside price potential.
Call. We prefer to own bonds that can't be called for at least eight to 10
years, and avoid, whenever possible, bonds subject to call risk in the next year
or so. Currently, only 3.3% of the Michigan portfolio is callable in the year
2000. That's particularly important if interest rates begin falling again. Bonds
with longer calls can generally be found in the primary or new issue market.
Coupon. As far as a bond's coupon is concerned, we're looking for bonds
that provide good tax-exempt income while keeping the fund's credit quality
high. In today's market, we're looking for bonds that pay more than 6%, which is
the equivalent of nearly 9.09% on a taxable equivalent basis for taxpayers in
the combined 34% federal and state income tax bracket.
Sector. We try to purchase bonds in sectors where there is limited supply
such as transportation and water/sewer. We believe that anytime you can find
something that's relatively scarce, then you're finding something that has
value. In addition, we have reduced our exposure to the Michigan hospital
sector, because the state's hospitals have been hard hit by cutbacks in Medicaid
reimbursement.
SEMIANNUAL REPORT page 8
<PAGE>
Several developments in the healthcare sector took place during the year.
As a result of the merger between Baa2/BBB-rated Genesys Health System and AA-
rated Sisters of St. Joseph, the portfolio's Genesys holdings were refunded
during the period for a substantial gain to the fund. In addition, the fund
avoided a credit downgrade of Henry Ford Hospital from AA3 to A1, thanks to a
recommendation from Nuveen research, by selling its holdings ahead of the
downgrade.
Rating. Most of our purchases are in Standard & Poor's top four credit
rating categories, or, if non-rated, judged by Nuveen research to have
equivalent credit quality. Over the past few years, the majority of purchases
have been insured bonds. In the past six months, however, there's been some
opportunity to buy A, BAA and non-rated bonds.
Q What is your outlook for Nuveen Flagship Michigan Municipal Bond Fund?
MIKE We will continue to focus on maintaining a stable dividend that is exempt
from federal and state income taxes. Using Nuveen research, we will continue to
look for attractively priced bonds offering higher yields. In a high tax state
such as Michigan, we believe that municipal bonds represent a very attractive
option for investors searching for yield.
NUVEEN FLAGSHIP MICHIGAN MUNICIPAL BOND FUND
Top Five Sectors
U.S. Guaranteed 19%
- -----------------------------------
Tax Obligation (Limited) 18%
- -----------------------------------
Tax Obligation (General) 18%
- -----------------------------------
Healthcare 15%
- -----------------------------------
Water and Sewer 6%
- -----------------------------------
As a percentage of total bond holdings as of November 30, 1999. Holdings are
subject to change.
NUVEEN FLAGSHIP MICHIGAN MUNICIPAL BOND FUND
Bond Credit Quality
[PIE CHART APPEARS HERE]
AAA/U.S. Guaranteed.....61%
AA......................14%
A........................8%
BBB/NR..................17%
As a percentage of total bond holdings as of November 30, 1999. Holdings are
subject to change.
"In a high tax state such as Michigan, we believe that municipal bonds represent
a very attractive option for investors searching for yield."
* The Lipper Peer Group returns represent the average annualized total return
of the 48 funds in the Lipper Michigan Municipal Debt Category for the six-
month and one-year periods ended November 30, 1999, and 34 and nine funds
for the five- and 10-year periods, respectively. The returns assume
reinvestment of dividends and do not reflect any applicable sales charges.
** Taxable equivalent total return equals a fund's taxable equivalent income
(based on the combined federal and state income tax rate) plus capital gains
distributions, if any, plus or minus changes in net asset value.
SEMIANNUAL REPORT page 9
<PAGE>
Fund Spotlight as of November 30, 1999
NUVEEN FLAGSHIP MICHIGAN MUNICIPAL BOND FUND
<TABLE>
<CAPTION>
10
Quick Facts
A Shares B Shares C Shares R Shares
<S> <C> <C> <C> <C>
NAV $11.09 $11.10 $11.07 $11.08
- ---------------------------------------------------------------------------------------------
Fund Symbol FMITX N/A FLMCX NMMIX
- ---------------------------------------------------------------------------------------------
CUSIP 67065R853 67065R846 67065R838 67065R820
- ---------------------------------------------------------------------------------------------
Inception Date 6/85 2/97 6/93 2/97
- ---------------------------------------------------------------------------------------------
Total Returns (Annualized)+
A Shares B Shares C Shares R Shares
NAV Offer NAV w/CDSC NAV NAV
<S> <C> <C> <C> <C> <C> <C>
1-Year -3.77% -7.78% -4.57% -8.21% -4.40% -3.66%
- ---------------------------------------------------------------------------------------------
1-Year TER* -1.20% -5.32% -2.39% -6.03% -2.12% -0.98%
- ---------------------------------------------------------------------------------------------
5-Year 6.47% 5.55% 5.78% 5.62% 5.89% 6.57%
- ---------------------------------------------------------------------------------------------
10-Year 6.29% 5.84% 5.82% 5.82% 5.67% 6.34%
- ---------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
Tax-Free Yields
A Shares B Shares C Shares R Shares
NAV Offer NAV NAV NAV
<S> <C> <C> <C> <C> <C>
SEC 30-Day Yield 4.87% 4.66% 4.12% 4.32% 5.08%
- ---------------------------------------------------------------------------------------------
Taxable Equivalent Yield 7.38% 7.06% 6.24% 6.55% 7.70%
</TABLE>
Terms To Know
The following are a few terms used throughout this report.
Duration A mathematical measure of the price sensitivity of a bond fund's
portfolio to changes in interest rates. Typically the shorter the duration, the
less price and return variability you can expect in the fund's price per share
as interest rates change.
Fed Easing When the Federal Reserve is following an easy money policy, it is
essentially increasing the money supply by decreasing the federal funds rate and
making money cheaper to borrow. The intention is to help the economy grow.
Fed Tightening When the Federal Reserve is following tight money policy, it is
essentially decreasing the money supply by increasing the fed funds rate and
making money more expensive to borrow. The intention is to slow the growth of
the economy and curtail inflation.
Federal Fund Rates The interest rate charged by banks to lend to other banks
needing overnight loans; this figure is the most sensitive indicator of the
direction of short-term interest rates.
Municipal Bond A bond issued by a state, city, or other municipality to finance
public works such as the construction of roads or schools. The interest is
usually free from federal income tax and may be free from state and local taxes
as well.
SEC Yield A standardized measure of the current net market yields on a mutual
fund's investment portfolio.
Taxable Equivalent Yield The return an investor would have to realize on a fully
taxable investment to equal the stated yield on a tax-exempt investment.
+ 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. 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 income tax
rate of 34%).
Portfolio Statistics
Total Net Assets $304.2 million
- ----------------------------------
Average Effective
Maturity 17.64 years
- ----------------------------------
Average Duration 8.54
- ----------------------------------
Monthly Tax-Free Dividends (Class A Shares) /./
[BAR CHART APPEARS HERE]
12/1998 .0500
1/1999 .0500
2/1999 .0500
3/1999 .0500
4/1999 .0490
5/1999 .0490
6/1999 .0490
7/1999 .0490
8/1999 .0490
9/1999 .0490
10/1999 .0490
11/1999 .0490
/./ The Fund also paid shareholders capital gains and net ordinary income
distributions in December 1998 of $0.0565 per share.
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 their original cost. Performance of classes
will differ. For additional information, please see the fund prospectus.
SEMIANNUAL REPORT page 10
<PAGE>
NUVEEN FLAGSHIP OHIO MUNICIPAL BOND FUND
From the Portfolio Manager's Perspective
- --------------------------------------------------------------------------------
Portfolio Manager Tom Futrell discusses fund performance, the municipal market
and key investment strategies for the Ohio fund for the six-month period ended
November 30, 1999.
Q How did the Ohio economy and the state's municipal market fare?
TOM Ohio's economy continued on a reasonably strong growth track, although it
trails the nation as a whole in a couple of key indicators. Personal income was
slightly below the national level. While the state's unemployment rate remained
low at 4.4% as of November 30, 1999, it was slightly higher than the 4.1%
national rate. Manufacturing employment was down from a year ago, mirroring a
national trend, although wage and income levels were higher as a result of
increased levels of overtime in a number of industries. The state continued to
diversify and move away from a manufacturing base, with much of the new job
growth concentrated in construction, financial services and real estate.
The state's economic strength translated into better creditworthiness for
the overall Ohio municipal bond market. But economic strength, both in Ohio and
across the nation, had a significant downside. It continually fanned inflation
fears and prompted the Federal Reserve to raise interest rates in a "preemptive"
strike against potential inflation. As interest rates rose, municipal bond
prices slumped. Rising interest rates caused all but the shortest-maturity
securities and funds to post significant losses.
Rising interest rates also curtailed Ohio municipal bond supply. New issue
supply is down more than 20% for the year as of November 1999. Furthermore,
refunding activity came to a standstill as the economic impetus for refinancing
many older bonds all but diminished in light of higher interest rates.
Q How did Nuveen Flagship Ohio Municipal Bond Fund perform during the period
ended November 30, 1999?
TOM Nuveen Flagship Ohio Municipal Bond Fund generated a six-month total return
on net asset value of -3.71%, compared with the -3.23% total return posted by
the Lipper Ohio Municipal Debt Peer Group.* For the one-, five-, and ten-year
periods ending November 30, 1999, the Nuveen fund had an average annual return
of -3.20%, 6.16% and 6.19%, respectively, compared to the Lipper peer group
average annual total returns of -3.01%, 6.48%, 6.33% for the same time periods.*
Total return equals a fund's income and capital gain distributions, if any,
plus or minus changes in net asset value.
For the six-month period the fund's taxable equivalent total return for
investors in the 36% combined federal and state income tax bracket was -2.31%.**
As of November 30, 1999, the fund's SEC 30-day yield was 4.32%. For investors in
a combined 36% federal and state income tax bracket, that is equivalent to a
yield of 6.75% on a taxable investment.
Nuveen is dedicated to providing investors access to a team of highly
experienced investment managers, each overseeing portfolios within their
specific areas of expertise. We call them Premier Advisers/sm/ -- a select group
of asset management firms who direct the investment activities of the Nuveen
Mutual Funds. Nuveen has chosen them for their rigorously disciplined investment
approaches and their consistent long-term performance.
Drawing on decades of experience and specialized knowledge, these skilled asset
managers have earned reputations for excellence in their fields of expertise,
whether it be blue-chip growth stocks, large-cap value stocks, bonds or
international securities.
Nuveen's Premier Adviser/sm/ for income investing is Nuveen Investment Advisory
Services (NIAS). NIAS follows a disciplined, research-driven investment approach
to uncover income securities that combine exceptional relative value with above-
average return potential. Drawing on 300 combined years of investment
experience, the Nuveen team of portfolio managers and research analysts offers:
. A commitment to exhaustive research
. An active, value-oriented investment style
. The unmatched presence of trading leverage of a market leader.
This disciplined, research-oriented approach has paid off for investors, and is
a key investment strategy for Nuveen Flagship Ohio Municipal Bond Fund.
Performance figures are quoted for Class A shares at net asset value. Comments
cover the six-month period ended November 30, 1999. The views expressed reflect
those of the portfolio management team and are subject to change at any time,
based on market and other conditions.
SEMIANNUAL REPORT page 11
<PAGE>
"Rising interest rates made it advantageous for us to pursue three main goals:
Lock in higher yields, improve the fund's tax efficiency and enhance its
protection against calls."
* The Lipper Peer Group returns represent the average annualized total return
of the 52 funds in the Lipper Ohio Municipal Debt Category for the six-month
period ended November 30, 1999, 51 funds for the one-year period, 41 funds
for the five-year period, and 12 funds for the 10-year period. The returns
assume reinvestment of dividends and do not reflect any applicable sales
charges.
* * Taxable equivalent total return equals a fund's taxable equivalent income
(based on the combined federal and state income tax rate) plus capital gains
distributions, if any, plus or minus changes in net asset value.
NUVEEN FLAGSHIP OHIO MUNICIPAL BOND FUND
====================================
Top Five Sectors
====================================
U.S. Guaranteed 19%
- ------------------------------------
Healthcare 17%
- ------------------------------------
Tax Obligation (General) 17%
- ------------------------------------
Utilities 11%
- ------------------------------------
Housing (Single Family) 8%
- ------------------------------------
As a percentage of total bond holdings as of November 30, 1999. Holdings are
subject to change.
Q What strategies did you employ amid this difficult market environment?
TOM Rising interest rates made it advantageous for us to pursue three main
goals: Lock in higher yields, improve the fund's tax efficiency and
enhance its protection against calls.
As interest rates rose, the difference in yield, or "spread," between
higher- and lower-quality bonds widened. In other words, lower-rated securities
offered increasingly more incremental yield over higher-rated securities and as
a result, became more attractive on a risk-adjusted basis in our view. Using the
expertise of Nuveen research, we identified high-yielding, lower-quality and
non-rated bonds that we felt offered adequate compensation in the form of
incremental yield for the level of risk we assumed.
To improve the fund's tax efficiency, we sold some bonds at a loss and
subsequently bought similar securities, whose yield reflected prevailing higher
interest rates. Tax losses were created by these "swaps," which can be
beneficial for the fund because they can be used to offset capital gains for an
eight-year period. The higher yields of the new bonds should boost the fund's
income as well.
In our purchases of new bonds, we gravitated toward those with good
call protection. Issuers generally have the right to call, or redeem, their
bonds after a given date prior to maturity, which they generally do when
interest rates decline. Call protection helps protect the fund's income stream
in declining interest rate environments.
Since interest rates were on the rise, few individual investors were
seeking out call protection, and, as a result, it was available fairly cheaply
or at virtually no cost.
Q What is your outlook for Nuveen Flagship Ohio Municipal Bond Fund?
TOM To improve the income the fund generates, we will continue to seek out
attractive lower investment-grade securities and non-rated bonds. We'll
do that as long as we feel that the incremental yield they offer adequately
compensates us for doing so. In addition, we'll make tax swaps when the market
rewards us for doing so. Finally, we'll continue to seek out opportunities to
buy bonds with good call protection when they come to market at an attractive
cost.
To the extent that investors seek out value in the bond market,
municipals could benefit. As of November 30, 1999, municipal bonds traded at
97.14% of U.S. Treasury bonds. Though it is important to note that Treasury
bonds are backed by the full faith and credit of the U.S. government, municipals
are priced quite attractively to their Treasury counterparts.
NUVEEN FLAGSHIP OHIO MUNICIPAL BOND FUND
====================================
Bond Credit Quality
====================================
[PIE CHART APPEARS HERE]
AAA/U.S. Guaranteed..............66%
AA............................... 8%
A................................12%
BBB/NR...........................14%
As a percentage of total bond holdings as of November 30, 1999. Holdings are
subject to change.
SEMIANNUAL REPORT page 12
<PAGE>
NUVEEN FLAGSHIP OHIO MUNICIPAL BOND FUND
Fund Spotlight as of November 30, 1999
<TABLE>
<CAPTION>
Quick Facts
A Shares B Shares C Shares R Shares
<S> <C> <C> <C> <C>
NAV $10.86 $10.86 $10.85 $10.86
- ----------------------------------------------------------------------------------
Fund Symbol FOHTX N/A FOHCX NXOHX
- ----------------------------------------------------------------------------------
CUSIP 67065R762 67065R754 67065R747 67065R739
- ----------------------------------------------------------------------------------
Inception Date 6/85 2/97 8/93 2/97
- ----------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
Total Returns (Annualized)+
A Shares B Shares C Shares R Shares
NAV Offer NAV w/CDSC NAV NAV
<S> <C> <C> <C> <C> <C> <C>
1-Year -3.20% -7.27% -3.82% -7.49% -3.71% -2.99%
- --------------------------------------------------------------------------------------------
1-Year TER* -0.41% -4.60% -1.45% -5.12% -1.22% -0.09%
- --------------------------------------------------------------------------------------------
5-Year 6.16% 5.25% 5.47% 5.31% 5.58% 6.28%
- --------------------------------------------------------------------------------------------
10-Year 6.19% 5.74% 5.71% 5.71% 5.61% 6.25%
- --------------------------------------------------------------------------------------------
</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. 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 income tax
rate of 36%).
<TABLE>
<CAPTION>
Tax-Free Yields
A Shares B Shares C Shares R Shares
NAV Offer NAV NAV NAV
<S> <C> <C> <C> <C> <C>
SEC 30-Day Yield 4.32% 4.14% 3.57% 3.77% 4.52%
- ---------------------------------------------------------------------------
Taxable Equivalent Yield 6.75% 6.47% 5.58% 5.89% 7.06%
</TABLE>
Monthly Tax-Free Dividends (Class A Shares)/./
[BAR CHART APPEARS HERE]
12/1998 .0480
1/1999 .0480
2/1999 .0480
3/1999 .0480
4/1999 .0480
5/1999 .0480
6/1999 .0480
7/1999 .0480
8/1999 .0470
9/1999 .0470
10/1999 .0470
11/1999 .0470
/./ The Fund also paid shareholders capital gains and net ordinary income
distributions in December 1998 of $0.0447 per share.
Portfolio Statistics
Total Net Assets $640.9 million
- --------------------------------------------
Average Effective
Maturity 18.79 years
- --------------------------------------------
Average Duration 8.49
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 their original cost. Performance of classes
will differ. For additional information, please see the fund prospectus.
Terms To Know
The following are a few terms used throughout this report.
Duration A mathematical measure of the price sensitivity of a bond fund's
portfolio to changes in interest rates. Typically the shorter the duration, the
less price and return variability you can expect in the fund's price per share
as interest rates change.
Fed Easing When the Federal Reserve is following an easy money policy, it is
essentially increasing the money supply by decreasing the federal funds rate and
making money cheaper to borrow. The intention is to help the economy grow.
Fed Tightening When the Federal Reserve is following tight money policy, it is
essentially decreasing the money supply by increasing the fed funds rate and
making money more expensive to borrow. The intention is to slow the growth of
the economy and curtail inflation.
Federal Fund Rates The interest rate charged by banks to lend to other banks
needing overnight loans; this figure is the most sensitive indicator of the
direction of short-term interest rates.
Municipal Bond A bond issued by a state, city, or other municipality to finance
public works such as the construction of roads or schools. The interest is
usually free from federal income tax and may be free from state and local taxes
as well.
SEC Yield A standardized measure of the current net market yields on a mutual
fund's investment portfolio.
Taxable Equivalent Yield The return an investor would have to realize on a
fully taxable investment to equal the stated yield on a tax-exempt investment.
SEMIANNUAL REPORT page 13
<PAGE>
Portfolio of Investments (Unaudited)
Nuveen Flagship Kentucky Municipal Bond Fund
November 30, 1999
<TABLE>
<CAPTION>
Principal Optional Call Market
Amount Description Provisions* Ratings** Value
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Basic Materials - 5.7%
$ 2,370,000 Hancock County, Kentucky, Solid Waste Disposal Facilities Revenue Bonds 5/06 at 102 A- $ 2,408,797
Bonds (Willamette Industries, Inc. Project), Series 1996, 6.600%,
5/01/26
9,750,000 County of Henderson, Kentucky, Solid Waste Disposal Revenue Bonds 3/05 at 102 Baa2 10,068,533
(MacMillan Bloedel Project), Series 1995, 7.000%, 3/01/25 (Alternative
Minimum Tax)
1,000,000 Jefferson County, Kentucky, Pollution Control Revenue Bonds (E.I. du Pont 7/03 at 103 AA- 1,051,190
de Nemours and Company Project), 1982 Series A, 6.300%, 7/01/12
3,750,000 County of Perry, Kentucky, Solid Waste Disposal Revenue Bonds 6/04 at 102 N/R 3,890,325
(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 4,365,462
2,000,000 6.550%, 4/15/27 (Alternative Minimum Tax) 4/07 at 102 N/R 2,029,160
2,820,000 City of Wickliffe, Kentucky, Solid Waste Disposal Facility Revenue 4/06 at 102 A2 2,778,659
Bonds, Series 1996 (Westvaco Corporation Project), 6.375%, 4/01/26
(Alternative Minimum Tax)
- -----------------------------------------------------------------------------------------------------------------------------------
Education and Civic Organizations - 3.7%
5,085,000 City of Campbellsville, Kentucky, Industrial Building Revenue 3/09 at 102 BBB- 4,485,631
Bonds (Campbellsville University Project), Series 1999,
5.500%, 3/01/29
5,930,000 County of Jefferson, Kentucky, College Revenue Bonds (Bellarmine 5/09 at 101 Baa2 4,952,855
College Project), Series 1999, 5.250%, 5/01/29
4,000,000 County of Jefferson, Kentucky, Student Housing Industrial Building 9/09 at 102 N/R 3,955,520
Revenue Bonds (Collegiate Housing Foundation - University of
Louisville Project), Series 1999A, 7.125%, 9/01/29
500,000 Kentucky Higher Education Student Loan Corporation, Insured Student No Opt. Call Aaa 527,900
Loan Revenue Bonds, 1991 Series B, 6.800%, 6/01/03 (Alternative
Minimum Tax)
700,000 Northern Kentucky University, Consolidated Education Building Revenue 5/01 at 102 AAA 739,753
Bonds, Series F, 7.000%, 5/01/10
2,500,000 Puerto Rico Industrial, Tourist, Educational, Medical and Environmental 2/09 at 101 BBB 2,215,500
Control Facilities Financing Authority, Higher Education Revenue Bonds,
Series 1999 (Ana G. Mendez University System Project), 5.375%, 2/01/29
475,000 University of Kentucky, Consolidated Educational Buildings Revenue No Opt. Call AAA 482,358
Bonds, Series O, 5.000%, 5/01/03
- -----------------------------------------------------------------------------------------------------------------------------------
Energy - 4.1%
325,000 City of Ashland, Kentucky, Pollution Control Revenue Refunding 2/00 at 102 1/2 Baa1 334,861
Bonds (Ashland Oil Inc. Project), Series 1988A, 7.375%, 7/01/09
5,000,000 City of Ashland, Kentucky, Pollution Control Revenue Refunding 8/02 at 102 Baa1 5,226,350
Bonds (Ashland Oil Inc. Project), Series 1992, 6.650%, 8/01/09
9,000,000 City of Ashland, Kentucky, Sewage and Solid Waste Revenue Bonds, 2/05 at 102 Baa1 9,332,820
Series 1995 (Ashland Inc. Project), 7.125%, 2/01/22 (Alternative
Minimum Tax)
4,360,000 City of Ashland, Kentucky, Solid Waste Revenue Bonds, Series 1991 10/01 at 102 Baa1 4,544,428
(Ashland Oil Inc. Project), 7.200%, 10/01/20 (Alternative Minimum Tax)
- -----------------------------------------------------------------------------------------------------------------------------------
Health Care - 17.5%
1,310,000 County of Christian, Kentucky, Hospital Revenue Bonds, Series 1996A, 7/06 at 102 A- 1,273,228
Jennie Stuart Medical Center, 6.000%, 7/01/17
3,500,000 County of Christian, Kentucky, Hospital Revenue and Refunding Bonds, 7/06 at 102 A- 3,514,910
Series 1997A, Jennie Stuart Medical Center, 6.000%, 7/01/13
</TABLE>
14
<PAGE>
<TABLE>
<CAPTION>
Principal Optional Call Market
Amount Description Provisions* Ratings** Value
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Health Care (continued)
$ 5,270,000 County of Clark, Kentucky, Hospital Refunding and Improvement 3/07 at 102 N/R $ 5,068,581
Revenue Bonds (Clark Regional Medical Center Project), Series 1997,
6.200%, 4/01/13
3,300,000 County of Daviess, Kentucky, Insured Hospital Revenue Bonds 8/02 at 102 AAA 3,338,841
(ODCH, Inc. Project), 1992 Series A, 6.250%, 8/01/22
2,595,000 County of Floyd, Kentucky, Hospital Revenue Refunding Bonds 2/01 at 102 AAA 2,702,433
(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, Series 1991 11/01 at 102 AAA 4,212,320
(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 1,257,556
12,785,000 6.550%, 5/01/22 5/02 at 102 AAA 13,206,010
17,640,000 County of Jefferson, Kentucky, Health Facilities Revenue Bonds, 10/07 at 101 AAA 15,266,185
Series 1997 (Alliant Health System, Inc.), 5.125%, 10/01/27
5,550,000 County of Jefferson, Kentucky, Health System Revenue Bonds, 10/08 at 101 AAA 4,849,757
Series 1998 (Alliant Health System, Inc.), 5.200%, 10/01/28
2,900,000 County of Jefferson, Kentucky, Insured Hospital Revenue Bonds, 10/02 at 102 AAA 3,029,746
Series 1992 (Alliant Health System, Inc.), 6.436%, 10/01/14
1,000,000 Kentucky Economic Development Finance Authority, Hospital 11/01 at 100 AAA 1,025,580
Refunding and Improvement Revenue Bonds (St. Elizabeth Medical
Center), Series 1991A, 6.000%, 11/01/10
5,000,000 Kentucky Economic Development Finance Authority, Hospital 12/03 at 102 AAA 5,011,000
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 Revenue 2/07 at 102 AAA 8,990,800
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 465,355
500,000 5.600%, 10/01/08 4/08 at 102 N/R 462,240
3,500,000 5.850%, 10/01/17 4/08 at 102 N/R 2,927,645
1,500,000 5.875%, 10/01/22 4/08 at 102 N/R 1,217,205
1,665,000 McCracken County, Kentucky, Hospital Facilities Revenue Refunding 11/04 at 102 AAA 1,784,480
Bonds, Series 1994A (Mercy Health System), 6.300%, 11/01/06
2,800,000 City of Russell, Kentucky, Health System Revenue Bonds, Our Lady 1/08 at 102 BBB 2,459,408
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 Revenue 1/03 at 100 AAA 2,511,625
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 Bonds 5/09 at 102 N/R 3,081,850
(Pleasant Pointe Project), Senior Tax-Exempt Series 1999A, 6.125%,
5/01/29
4,600,000 County of Jefferson, Kentucky, Multifamily Housing Revenue Bonds 8/08 at 102 AAA 4,296,032
(Kentucky Towers Project), Series 1998A, 5.650%, 8/20/34
- ------------------------------------------------------------------------------------------------------------------------------------
Housing/Single Family - 7.8%
7,000,000 Kentucky Housing Corporation, Housing Revenue Bonds, 1996 Series 7/06 at 102 AAA 7,074,340
E, 6.300%, 1/01/28 (Alternative Minimum Tax)
3,000,000 Kentucky Housing Corporation, Housing Revenue Bonds, 1997 Series 6/07 at 102 AAA 3,038,550
B, 6.250%, 7/01/28 (Alternative Minimum Tax)
970,000 Kentucky Housing Corporation, Housing Revenue Bonds (FHA-Insured/ 7/00 at 102 AAA 996,200
VA Guaranteed Mortgage Loans), 1988 Series C, 7.900%, 1/01/21
(Alternative Minimum Tax)
1,000,000 Kentucky Housing Corporation, Housing Revenue Bonds (Federally 7/02 at 102 AAA 1,035,580
Insured or Guaranteed Mortgage Loans), Series 1992B, 6.625%,
7/01/14
</TABLE>
15
<PAGE>
Portfolio of Investments (Unaudited)
Nuveen Flagship Kentucky Municipal Bond Fund (continued)
November 30, 1999
<TABLE>
<CAPTION>
Principal Optional Call Market
Amount Description Provisions* Ratings** Value
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Housing/Single Family (continued)
$ 245,000 Kentucky Housing Corporation, Housing Revenue Bonds (Federally 1/03 at 102 AAA $ 251,022
Insured or Guaranteed Mortgage Loans), Series 1991C-1, 6.600%, 1/01/11
2,560,000 Kentucky Housing Corporation, Housing Revenue Bonds, 1998 1/09 at 101 AAA 2,275,405
Series F, 5.000%, 7/01/18 (Alternative Minimum Tax)
780,000 Kentucky Housing Corporation, Housing Revenue Bonds (Federally 1/04 at 102 AAA 797,995
Insured or Guaranteed Mortgage Loans), 1994 Series A, 6.500%,
7/01/17
9,480,000 Kentucky Housing Corporation, Housing Revenue Bonds, 1999 4/09 at 101 AAA 8,392,454
Series A, 5.200%, 1/01/31
1,835,000 Kentucky Housing Corporation, Housing Revenue Bonds (Federally 7/04 at 102 AAA 1,874,324
Insured or Guaranteed Mortgage Loans), 1994 Series C, 6.400%,
1/01/17
1,975,000 Kentucky Housing Corporation, Housing Revenue Bonds (Federally 1/05 at 102 AAA 2,030,379
Insured 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 4/09 at 101 AAA 4,683,543
Series B, 5.250%, 1/01/28 (Alternative Minimum Tax)
4,500,000 Kentucky Housing Corporation, Housing Revenue Bonds, 1999 8/09 at 100 AAA 4,181,805
Series E, 5.700%, 7/01/27 (Alternative Minimum Tax)
- -----------------------------------------------------------------------------------------------------------------------------------
Long-Term Care - 4.4%
4,840,000 City of Florence, Kentucky, Housing Facilities Revenue Bonds, 8/09 at 101 A 4,747,750
Series 1999 (Bluegrass RHF Housing, Inc. Project), 6.375%, 8/15/29
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 1,224,450
715,000 6.125%, 11/15/13 11/04 at 102 BBB 684,934
3,210,000 6.125%, 11/15/18 11/04 at 102 BBB 3,036,371
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 1,581,372
4,250,000 5.500%, 11/15/30 5/08 at 102 BBB 3,539,868
5,700,000 Kentucky Economic Development Finance Authority, Tax Exempt 1/08 at 105 AAA 5,633,518
Mortgage Revenue Bonds (South Central Nursing Homes, Inc. Project),
Series 1997A, 6.000%, 7/01/27
- -----------------------------------------------------------------------------------------------------------------------------------
Tax Obligation/General - 1.9%
2,500,000 County of Jefferson, Kentucky, General Obligation Refunding 5/09 at 100 AA 2,538,400
Bonds, Series 1999C, 6.150%, 5/15/16 (Alternative Minimum Tax)
4,790,000 Commonwealth of Puerto Rico, Public Improvement Bonds of 1996 7/06 at 101 1/2 A 4,419,206
(General Obligation Bonds), 5.400%, 7/01/25
2,000,000 Commonwealth of Puerto Rico, Public Improvement Bonds of 1997, 7/07 at 100 A 1,838,680
5.375%, 7/01/25
- -----------------------------------------------------------------------------------------------------------------------------------
Tax Obligation/Limited - 20.1%
615,000 Boone County School District Finance Corporation, School 2/03 at 102 Aa3 624,250
Building Refunding and Improvement Revenue Bonds, Series 1993,
6.000%, 2/01/18
1,595,000 City of Bowling Green Municipal Projects Corporation, Kentucky, 12/04 at 102 A2 1,713,269
Lease Revenue Bonds, Series 1994, 6.500%, 12/01/14
1,005,000 Casey County School District Finance Corporation, School 3/05 at 102 Aa3 1,024,507
Building Revenue Bonds, Series 1995, 5.750%, 3/01/15
Daviess County School District Finance Corporation, School
Building Revenue Bonds, Series 1994:
505,000 5.800%, 5/01/11 5/04 at 102 Aa3 522,544
535,000 5.800%, 5/01/12 5/04 at 102 Aa3 550,766
570,000 5.800%, 5/01/13 5/04 at 102 Aa3 584,147
600,000 5.800%, 5/01/14 5/04 at 102 Aa3 612,114
3,800,000 Fayette County School District Finance Corporation, School 9/09 at 101 Aa3 3,640,362
Building Revenue Bonds, Series 1999, 5.375%, 9/01/17
</TABLE>
16
<PAGE>
<TABLE>
<CAPTION>
Principal Optional Call Market
Amount Description Provisions* Ratings** Value
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Tax Obligation/Limited (continued)
$ 1,070,000 Fleming County School District Finance Corporation, School 3/05 at 102 A+ $ 1,070,321
Building Revenue Bonds, Series 1995, 5.875%, 3/01/15
3,155,000 City of Florence, Public Properties Corporation, First 6/07 at 102 AAA 2,973,304
Mortgage Revenue Bonds (Administrative Office Complex
Project), Series 1997, 5.500%, 6/01/27
1,260,000 Floyd County, Public Properties Corporation, First Mortgage 3/06 at 102 A 1,164,479
Revenue Bonds (Floyd County Justice Center Project),
Series 1995A, 5.550%, 9/01/23
3,550,000 Floyd County, Public Properties Corporation, First Mortgage 3/06 at 102 A 3,605,061
Revenue Bonds (Floyd County Justice Center Project),
Series 1996B, 6.200%, 9/01/26
1,200,000 Floyd County School District Finance Corporation, Kentucky, 5/05 at 102 Aa3 1,187,040
School Building Revenue Bonds, Series 1995, 5.500%, 5/01/15
2,280,000 Grant County School District Finance Corporation, School 3/07 at 102 Aaa 2,176,214
Building Revenue Bonds, Series 1997, 5.375%, 3/01/17
Hardin County, Building Commission, Revenue Bonds (Detention
Facility Project), Series 1994:
525,000 6.200%, 12/01/11 12/04 at 102 AAA 556,106
1,775,000 6.250%, 12/01/14 12/04 at 102 AAA 1,864,283
300,000 Hardin County School District Finance Corporation, School 6/01 at 103 Aa3 317,973
Building Revenue Bonds, Series of 1991, 6.800%, 6/01/10
3,465,000 Hopkins County School District Finance Corporation, School 6/04 at 102 Aa3 3,642,512
Building Revenue Bonds, Series 1994, 6.200%, 6/01/19
3,195,000 Jefferson County, School District Finance Corporation, School 2/06 at 102 AAA 2,972,628
Building Revenue Bonds, Series 1996A, 5.125%, 2/01/16
4,600,000 Jefferson County, School District Finance Corporation, School 2/09 at 101 AAA 3,808,478
Building Revenue Bonds, Series 1998C, 4.500%, 2/01/19
973,556 County of Jefferson, Kentucky, Equipment Lease Purchase 6/00 at 101 N/R 988,646
Revenue Bonds, Series 1987 (Energy System Project),
9.000%, 6/01/03
179,692 County of Jefferson, Kentucky, Equipment Lease Purchase 6/00 at 102 N/R 184,623
Revenue Bonds, Series 1988 (Energy System Project),
9.500%, 6/01/03
2,500,000 Jefferson County Capital Projects Corporation, Lease Revenue 2/00 at 53 7/16 Aa3 1,323,725
Bonds, Series 1987B, 0.000%, 8/15/08
1,000,000 City of Jeffersontown, Kentucky, Public Projects Refunding and 11/06 at 102 A3 993,250
Improvements, Certificates of Participation, 5.750%, 11/01/15
Jessamine County School District Finance Corporation, School
Building Revenue Bonds, Series 1991:
510,000 6.750%, 6/01/10 6/01 at 103 Aa3 542,543
545,000 6.750%, 6/01/11 6/01 at 103 Aa3 579,776
2,500,000 Jessamine County School District Finance Corporation, School 6/04 at 102 Aa3 2,582,500
Building Revenue Bonds, Series 1994, 6.125%, 6/01/19
4,500,000 Kenton County Public Properties Corporation, First Mortgage 3/09 at 101 A1 3,809,205
Revenue Bonds (Courthouse Facilities Project), 1998
Series A, 5.000%, 3/01/29
400,000 Commonwealth of Kentucky State Property and Buildings 11/01 at 102 A+ 423,164
Commission, Revenue and Revenue Refunding Bonds,
Project No. 40, 2nd Series, 6.875%, 11/01/07
250,000 Commonwealth of Kentucky State Property and Buildings 10/01 at 102 Aa3 264,353
Commission, Revenue and Revenue Refunding Bonds,
Project No. 53, 6.625%, 10/01/07
125,000 The Turnpike Authority of Kentucky, Resource Recovery Road 1/00 at 100 A+ 125,179
Revenue Refunding Bonds, 1985 Series A, 6.000%, 7/01/09
Lexington Center Corporation, Mortgage Revenue Refunding and
Improvement Bonds, Series 1993A:
2,600,000 0.000%, 10/01/11 No Opt. Call A1 1,355,406
2,550,000 0.000%, 10/01/12 No Opt. Call A1 1,244,094
435,000 Lincoln County School District Finance Corporation, School 5/02 at 102 Aa3 460,234
Building Revenue Bonds, Series 1992, 6.200%, 5/01/12
</TABLE>
17
<PAGE>
Portfolio of Investments (Unaudited)
Nuveen Flagship Kentucky Municipal Bond Fund (continued)
November 30, 1999
<TABLE>
<CAPTION>
Principal Optional Call Market
Amount Description Provisions* Ratings** Value
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Tax Obligation/Limited (continued)
$ 1,525,000 McCracken County Public Properties Corporation, Public 9/06 at 102 AAA $ 1,494,302
Project Revenue Bonds (Court Facilities Project),
Series 1995, 5.900%, 9/01/26
1,365,000 McCreary County School District Finance Corporation, School 8/05 at 102 Aa3 1,332,404
Building Revenue Bonds, Second Series of 1995, 5.600%,
8/01/16
1,410,000 Morgan County School District Finance Corporation, School 9/04 at 102 Aa3 1,443,516
Building Revenue Bonds, Series 1994, 6.000%, 9/01/14
13,000,000 Mount Sterling, Kentucky, Lease Revenue Bonds (Kentucky 3/03 at 102 Aa 13,070,590
League of Cities Funding Program), Series 1993A,
6.200%, 3/01/18
Pendleton County, Kentucky, County Lease Revenue Bonds, Kentucky
Associated Counties Leasing Trust Program, Series 1993-A:
12,960,000 6.500%, 3/01/19 3/03 at 102 A 13,214,664
500,000 6.400%, 3/01/19 No Opt. Call A 521,720
8,250,000 Puerto Rico Highway and Transportation Authority, Highway 7/16 at 100 A 7,613,678
Revenue Bonds, Series Y of 1996, 5.500%, 7/01/36
115,000 Puerto Rico Infrastructure Finance Authority, Special Tax 1/00 at 101 BBB+ 116,466
Revenue Bonds, Series 1988A, 7.750%, 7/01/08
7,000,000 Warren County, Justice Center Expansion Corporation, First 9/07 at 102 AAA 6,356,140
Mortgage Revenue Bonds, AOC Judicial Facility, Series 1997A,
5.250%, 9/01/24
- -----------------------------------------------------------------------------------------------------------------------------------
Transportation - 4.6%
10,640,000 Kenton County Airport Board, Special Facilities Revenue Bonds, 1992 2/02 at 100 BBB- 10,167,690
Series A (Delta Air Lines, Inc. Project), 6.125%, 2/01/22
(Alternative Minimum Tax)
1,250,000 Kenton County Airport Board, Cincinnati/Northern Kentucky 3/06 at 102 AAA 1,256,800
International Airport Revenue Bonds, Series 1996B, 5.750%,
3/01/13
5,000,000 Regional Airport Authority of Louisville and Jefferson 7/05 at 102 AAA 4,697,100
County, 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 5,294,700
Kentucky, Special Facilities Revenue Bonds, 1999 Series A
(Airis Louisville, LLC Project), 5.500%, 3/01/19 (Alternative
Minimum Tax)
- -----------------------------------------------------------------------------------------------------------------------------------
U.S. Guaranteed - 13.1%
430,000 Bardstown Independent School District Finance Corporation, 11/02 at 102 Aa3*** 460,156
School Building Refunding and Improvement Revenue Bonds,
Series of 1992, 6.375%, 5/01/17 (Pre-refunded to 11/01/02)
725,000 Bell County School District Finance Corporation, School 9/01 at 102 A+*** 769,718
Building Revenue Bonds, Series 1991, 6.875%, 9/01/11
(Pre-refunded to 9/01/01)
1,000,000 Boone County School District Finance Corporation, School 9/01 at 103 Aa3*** 1,068,960
Building Revenue Bonds, Series C of 1991, 6.750%, 9/01/11
(Pre-refunded to 9/01/01)
1,215,000 Boone County School District Finance Corporation, School 12/02 at 102 Aa3*** 1,293,440
Building Refunding and Improvement Revenue Bonds, Series 1992,
6.125%, 12/01/17 (Pre-refunded to 12/01/02)
Christian County 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*** 596,261
600,000 6.750%, 6/01/11 (Pre-refunded to 6/01/01) 6/01 at 102 A*** 633,198
1,645,000 City of Edgewood Public Properties Corporation, First 12/01 at 102 A2*** 1,753,323
Mortgage Revenue Bonds (Public Facilities Project),
Series 1991, 6.700%, 12/01/21 (Pre-refunded to 12/01/01)
City of Florence, 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*** 106,093
320,000 7.000%, 3/01/14 (Pre-refunded to 3/01/01) 3/01 at 103 A3*** 339,987
345,000 7.000%, 3/01/15 (Pre-refunded to 3/01/01) 3/01 at 103 A3*** 366,549
360,000 7.000%, 3/01/16 (Pre-refunded to 3/01/01) 3/01 at 103 A3*** 382,486
16,500,000 Jefferson County Capital Projects Corporation, Lease Revenue 2/01 at 24 11/16 AAA 3,860,505
Bonds, Series 1989B, 0.000%, 8/15/19 (Pre-refunded to 2/15/01)
</TABLE>
18
<PAGE>
<TABLE>
<CAPTION>
Principal Optional Call Market
Amount Description Provisions* Ratings** Value
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
U.S. Guaranteed (continued)
$ 4,900,000 Jefferson County, Kentucky, Insured Hospital Revenue Bonds, 10/02 at 102 AAA $ 5,216,589
Series 1992 (Alliant Health System, Inc. Project), 6.436%,
10/01/14 (Pre-refunded to 10/29/02)
Kenton County 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*** 1,312,511
1,070,000 7.100%, 3/01/10 (Pre-refunded to 3/01/00) 3/00 at 101 A*** 1,088,918
815,000 Kenton County School District Finance Corporation, School 12/01 at 102 Aa3*** 868,880
Building Revenue Bonds, Series 1991, 6.800%, 12/01/11
(Pre-refunded to 12/01/01)
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 2,133,580
9,070,000 7.000%, 10/01/21 (Pre-refunded to 10/01/01) 10/01 at 102 AAA 9,675,785
600,000 Kentucky Infrastructure Authority, Infrastructure Revolving 6/05 at 102 Aa3*** 656,454
Fund Program Revenue Bonds, 1995 Series J, 6.375%, 6/01/14
(Pre-refunded to 6/01/05)
2,075,000 Commonwealth of Kentucky State Property and Buildings 9/04 at 102 Aa3*** 2,224,110
Commission, 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 5/00 at 101 1/2 AAA 5,020,129
Revenue Bonds (Revitalization Projects), Series 1990,
7.250%, 5/15/10 (Pre-refunded to 5/15/00)
250,000 Laurel County School District Finance Corporation, School 3/01 at 102 A+*** 263,020
Building Revenue Bonds, 7.000%, 3/01/10 (Pre-refunded
to 3/01/01)
1,000,000 Lawrence County School District Finance Corporation, School 11/04 at 102 Aa3*** 1,106,140
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 3,546,035
4,320,000 6.750%, 11/01/24 (Pre-refunded to 11/01/04) 11/04 at 102 AAA 4,794,638
2,790,000 The City of Louisville Parking Authority of River City, Inc. 6/01 at 103 A*** 2,972,829
(Kentucky), First Mortgage Revenue Bonds, Series 1991, 6.875%,
12/01/20 (Pre-refunded to 6/01/01)
1,500,000 Maysville (Kentucky), Industrial Development Revenue Bonds, 2/00 at 103 N/R*** 1,553,610
Crystal Tissue Project, 8.000%, 2/01/09 (Alternative Minimum
Tax) (Pre-refunded to 2/01/00)
Montgomery County 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 Aa3*** 321,809
325,000 6.800%, 6/01/10 (Pre-refunded to 6/01/01) 6/01 at 102 Aa3*** 342,911
350,000 6.800%, 6/01/11 (Pre-refunded to 6/01/01) 6/01 at 102 Aa3*** 369,289
2,000,000 Northern Kentucky University, Certificates of Participation, 1/01 at 102 AAA 2,102,780
Student Housing Facilities, Series 1991, 7.250%, 1/01/12
(Pre-refunded to 1/01/01)
1,230,000 Perry County School District Finance Corporation, School 7/02 at 102 Aa3*** 1,305,879
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 12/00 at 102 AAA 2,095,669
Revenue Bonds, Series 1990L, 7.400%, 12/01/10
(Pre-refunded to 12/01/00)
940,000 Western Kentucky University, Consolidated Educational 11/00 at 102 AAA 987,338
Building Revenue Bonds, Series 1990J, 7.400%, 5/01/10
(Pre-refunded to 11/01/00)
- -----------------------------------------------------------------------------------------------------------------------------------
Utilities - 8.9%
7,000,000 County of Boone, Kentucky, Collateralized Pollution Control 1/04 at 102 AAA 6,535,620
Revenue Refunding Bonds, 1994 Series A (The Cincinnati Gas
and Electric Company Project), 5.500%, 1/01/24
5,030,000 County of Carroll, Kentucky, Collateralized Pollution Control 2/02 at 102 Aa2 5,037,646
Revenue Bonds (Kentucky Utilities Company Project), 1992
Series B, 6.250%, 2/01/18
1,000,000 County of Jefferson, Kentucky, Pollution Control Revenue 6/00 at 102 Aa2 1,032,440
Bonds, 1990 Series A (Louisville Gas and Electric Company
Project), 7.450%, 6/15/15
1,750,000 County of Jefferson, Kentucky, Pollution Control Revenue 4/05 at 102 Aa2 1,729,963
Bonds, 1995 Series A (Louisville Gas and Electric Company
Project), 5.900%, 4/15/23
</TABLE>
19
<PAGE>
Portfolio of Investments (Unaudited)
Nuveen Flagship Kentucky Municipal Bond Fund (continued)
November 30, 1999
<TABLE>
<CAPTION>
Principal Optional Call Market
Amount Description Provisions* Ratings** Value
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Utilities (continued)
$ 1,250,000 Mercer County, Kentucky, Collateralized Pollution Control 2/02 at 102 Aa2 $ 1,261,938
Revenue Bonds (Kentucky Utilities Company Project),
Series 1992A, 6.250%, 2/01/18
Owensboro, Kentucky, Electric Light and Power Revenue Bonds,
Series 1991B:
7,100,000 0.000%, 1/01/11 No Opt. Call AAA 3,899,107
6,475,000 0.000%, 1/01/12 No Opt. Call AAA 3,329,380
7,900,000 0.000%, 1/01/17 No Opt. Call AAA 2,872,282
13,300,000 0.000%, 1/01/18 No Opt. Call AAA 4,517,744
5,100,000 0.000%, 1/01/19 No Opt. Call AAA 1,616,955
4,725,000 0.000%, 1/01/20 No Opt. Call AAA 1,405,073
400,000 City of Owensboro, Kentucky, Electric Light and Power System No Opt. Call AAA 328,472
Revenue Bonds, Series 1993A, 0.000%, 1/01/04 (Alternative
Minimum Tax)
3,000,000 Puerto Rico Electric Power Authority, Power Revenue Bonds, 7/04 at 102 BBB+ 3,039,630
Series T, 6.000%, 7/01/16
4,795,000 Trimble County, Kentucky, Pollution Control Revenue Bonds 11/00 at 102 Aa2 4,994,568
(Louisville Electric Company), Series 1990A, 7.625%,
11/01/20 (Alternative Minimum Tax)
- -----------------------------------------------------------------------------------------------------------------------------------
Water and Sewer - 5.5%
1,405,000 Christian County Water District, Waterworks Revenue Bonds, 10/09 at 101 Aaa 1,421,368
Series 1999, 6.000%, 1/01/30
625,000 City of Danville, Kentucky, Multi-City Lease Revenue Bonds 12/01 at 103 AAA 667,281
(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 11/04 at 103 AAA 1,849,103
Refunding Bonds, Series of 1994A, 6.100%, 11/01/14
1,040,000 Kenton County Water District No. 1, Water District Revenue 8/05 at 102 AAA 1,017,359
Bonds, Series 1995B, 5.700%, 2/01/20
500,000 Kentucky Infrastructure Authority, Infrastructure Revolving 6/01 at 102 Aa3 525,635
Fund Program Revenue Bonds, 1991 Series E, 6.500%, 6/01/11
Kentucky Infrastructure Authority, Infrastructure Revolving
Fund Program Revenue Bonds, 1995 Series J:
440,000 6.300%, 6/01/10 6/05 at 102 Aa3 479,820
360,000 6.350%, 6/01/11 6/05 at 102 Aa3 393,440
Kentucky Infrastructure Authority, Governmental Agencies Program Revenue
Bonds, 1995 Series G:
420,000 6.300%, 8/01/10 8/05 at 102 A+ 446,288
445,000 6.350%, 8/01/11 8/05 at 102 A+ 474,989
825,000 6.375%, 8/01/14 8/05 at 102 A+ 890,464
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 3,020,642
2,070,000 6.500%, 5/15/24 11/04 at 102 AAA 2,276,069
2,500,000 6.750%, 5/15/25 11/04 at 102 AAA 2,776,325
3,865,000 Louisville and Jefferson County Metropolitan Sewer District 2/05 at 102 Aaa 3,619,261
(Commonwealth of Kentucky), Sewer and Drainage System
Revenue Bonds, Series 1996A, 5.400%, 5/15/22
6,000,000 Louisville and Jefferson County Metropolitan Sewer District 11/07 at 101 AAA 5,577,240
(Commonwealth of Kentucky), Sewer and Drainage System
Revenue Bonds, Series 1997B, 5.350%, 5/15/22
500,000 Paducah, Kentucky, Waterworks Revenue Refunding Bonds, Series 7/01 at 102 AAA 528,120
1991, 6.700%, 7/01/09
- -----------------------------------------------------------------------------------------------------------------------------------
$518,813,248 Total Investments - (cost $466,820,336) - 99.4% 466,439,662
============-----------------------------------------------------------------------------------------------------------------------
Other Assets Less Liabilities - 0.6% 2,592,791
-------------------------------------------------------------------------------------------------------------------
Net Assets - 100% $469,032,453
===================================================================================================================
</TABLE>
* Optional Call Provisions: Dates (month and year) and prices of the earliest
optional call or redemption. There may be other call provisions at varying
prices at later dates.
** Ratings: Using the higher of Standard & Poor's or Moody's rating.
*** Securities are backed by an escrow or trust containing sufficient U.S.
government or U.S. government agency securities which ensures the timely
payment of principal and interest. Securities are normally considered to be
equivalent to AAA rated securities.
N/R Investment is not rated.
See accompanying notes to financial statements.
20
<PAGE>
Portfolio of Investments
Nuveen Flagship Michigan Municipal Bond Fund
November 30, 1998
<TABLE>
<CAPTION>
Principal Optional Call Market
Amount Description Provisions* Ratings** Value
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Basic Materials - 2.3%
$ 7,500,000 The Economic Development Corporation of Dickinson County (Michigan), 10/03 at 102 Baa1 $ 6,977,850
Pollution Control Refunding Revenue Bonds (Champion International
Corporation Project), Series 1993, 5.850%, 10/01/18
- ------------------------------------------------------------------------------------------------------------------------------------
Capital Goods - 0.3%
1,055,000 Michigan Strategic Fund, Limited Obligation Revenue Bonds (WMX 12/03 at 102 BBB 971,497
Technologies, Inc. Project), Series 1993, 6.000%, 12/01/13
(Alternative Minimum Tax)
- ------------------------------------------------------------------------------------------------------------------------------------
Consumer Cyclicals - 3.4%
2,500,000 Michigan Strategic Fund, Limited Obligation Refunding Revenue Bonds, No Opt. Call A1 2,788,300
Series 1991A, 7.100%, 2/01/06
5,000,000 Michigan Strategic Fund, Multi-Modal Interchangeable Rate Pollution 9/05 at 102 A 4,961,950
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- 2,537,826
(Worthington Armstrong Venture Project), Series 1997,
5.750%, 10/01/22 (Alternative Minimum Tax)
- ------------------------------------------------------------------------------------------------------------------------------------
Education and Civic Organizations - 0.9%
750,000 Michigan Higher Education Student Loan Authority, Student Loan 6/06 at 102 Aaa 751,245
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 919,050
Revenue Bonds, Series XVII-B, 5.400%, 6/01/18
(Alternative Minimum Tax)
1,000,000 Board of Trustees of Western Michigan University, General Revenue 11/02 at 102 AAA 1,068,790
Bonds, Series 1992A, 6.250%, 11/15/12
- ------------------------------------------------------------------------------------------------------------------------------------
Health Care - 15.2%
500,000 Farmington Hills Hospital Finance Authority (Michigan), Hospital 2/02 at 102 AAA 531,180
Revenue Bonds (Botsford General Hospital), Series 1992A,
6.500%, 2/15/11
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 826,230
1,000,000 5.375%, 7/01/28 7/08 at 101 Baa1 862,660
160,000 County of Grand Traverse Hospital Finance Authority, Hospital Revenue 7/02 at 102 AAA 161,541
Refunding Bonds (Munson Healthcare Obligated Group), Series 1992A,
6.250%, 7/01/22
1,290,000 Kent Hospital Finance Authority (Michigan), Hospital Revenue 11/01 at 102 AAA 1,355,442
Refunding Bonds (Pine Rest Christian Hospital), Series 1992,
6.500%, 11/01/10
3,530,000 Lake View Community Hospital Authority (Michigan), Hospital Revenue 2/07 at 101 N/R 3,219,572
Refunding Bonds, Series 1997, 6.250%, 2/15/13
6,500,000 Michigan State Hospital Finance Authority, Revenue and Refunding 8/03 at 102 BBB 6,092,320
Bonds (The Detroit Medical Center Obligated Group), Series 1993A,
6.500%, 8/15/18
1,000,000 Michigan State Hospital Finance Authority, Hospital Revenue Refunding 11/01 at 102 AAA 1,051,340
Bonds (Sparrow Obligated Group), Series 1991, 6.500%, 11/15/11
2,920,000 Michigan State Hospital Finance Authority, Hospital Revenue and 8/04 at 102 BBB 2,370,398
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- 1,006,210
Refunding Bonds (Otsego Memorial Hospital Gaylord, Michigan),
Series 1995, 6.125%, 1/01/15
5,000,000 Michigan State Hospital Finance Authority, Revenue Bonds (Ascension 11/09 at 101 AA 4,915,650
Health Credit Group), Series 1999A, 6.125%, 11/15/26
1,000,000 Michigan State Hospital Finance Authority, Hospital Revenue Refunding No Opt. Call BBB 1,021,930
Bonds (Gratiot Community Hospital, Alma, Michigan), Series 1995,
6.100%, 10/01/07
</TABLE>
21
<PAGE>
Portfolio of Investments (Unaudited)
Nuveen Flagship Michigan Municipal Bond Fund (continued)
November 30, 1999
<TABLE>
<CAPTION>
Principal Optional Call Market
Amount Description Provisions* Ratings** Value
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Health Care (continued)
$ 1,000,000 Michigan State Hospital Finance Authority, Hospital Revenue Bonds 10/06 at 102 BBB $ 938,080
(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- 1,852,020
Refunding Bonds (Mercy Health Services), Series 1997S,
5.500%, 8/15/20
1,975,000 Michigan State Hospital Finance Authority, Hospital Revenue and 5/08 at 101 BBB 1,678,434
Refunding Bonds (Hackley Hospital Obligated Group), Series 1998A,
5.375%, 5/15/19
1,250,000 Michigan State Hospital Finance Authority, Hospital Revenue Bonds 8/08 at 101 BBB 965,613
(The Detroit Medical Center Obligated Group), Series 1998A,
5.250%, 8/15/28
2,200,000 Michigan State Hospital Finance Authority, Hospital Revenue Bonds 11/09 at 101 AA- 2,118,512
(Henry Ford Health System), Series 1999A, 6.000%, 11/15/24
Pontiac Hospital Finance Authority, Hospital Revenue Refunding
Bonds, Nomc Obligation Group:
3,000,000 6.000%, 8/01/18 8/03 at 102 BBB- 2,755,410
5,165,000 6.000%, 8/01/23 8/03 at 102 BBB- 4,661,981
8,145,000 Royal Oak Hospital Finance Authority, Hospital Revenue Refunding 1/06 at 102 AAA 7,362,184
Bonds (William Beaumont Hospital), Series 1996I, 5.250%, 1/01/20
500,000 City of Saginaw Hospital Finance Authority (St. Luke's Hospital), 7/01 at 102 AAA 524,675
Hospital Revenue Refunding Bonds, Series 1991C, 6.750%, 7/01/17
- -----------------------------------------------------------------------------------------------------------------------------------
Housing/Multifamily - 4.3%
430,000 Grand Rapids Housing Corporation, Multifamily Revenue Refunding 1/04 at 104 AAA 455,834
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 817,403
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 1,237,636
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- 1,629,960
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- 5,213,550
Revenue Bonds, 1990 Series B, 7.550%, 4/01/23
190,000 Michigan State Housing Development Authority, Rental Housing 1/02 at 102 AA- 198,375
Revenue Bonds, 1991 Series B, 7.100%, 4/01/21
400,000 Michigan State Housing Development Authority, Rental Housing 10/02 at 102 AA- 419,716
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 1,022,880
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 2,160,000
Revenue Bonds, 1999 Series A, 5.300%, 10/01/37 (Alternative
Minimum Tax)
- -----------------------------------------------------------------------------------------------------------------------------------
Housing/Single Family - 3.3%
720,000 Michigan State Housing Development Authority, Single Family 6/00 at 102 AA+ 735,883
Mortgage Revenue Bonds, Series 1990A, 7.500%, 6/01/15
2,000,000 Michigan State Housing Development Authority, Single Family 6/04 at 102 AA+ 2,036,040
Mortgage Revenue Bonds, Series 1994A, 6.450%, 12/01/14
3,930,000 Michigan State Housing Development Authority, Single Family 12/04 at 102 AA+ 3,972,405
Mortgage Revenue Refunding Bonds, Series 1994C, 6.500%, 6/01/16
540,000 Michigan State Housing Development Authority, Single Family 6/05 at 102 AA+ 554,197
Mortgage Revenue Bonds, 1995 Series A, 6.800%, 12/01/16
1,500,000 Michigan State Housing Development Authority, Single Family 12/06 at 102 AA+ 1,498,410
Mortgage Revenue Bonds, Series 1996D, 5.950%, 12/01/16
1,250,000 Michigan State Housing Development Authority, Single Family 6/07 at 102 AAA 1,246,650
Mortgage Revenue Bonds, Series 1997A, 6.050%, 12/01/27
(Alternative Minimum Tax)
</TABLE>
22
<PAGE>
<TABLE>
<CAPTION>
Principal Optional Call Market
Amount Description Provisions* Ratings** Value
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Long-Term Care - 5.6%
$ 2,000,000 The Economic Development Corporation of the Charter Township of 7/09 at 101 A $ 1,713,200
Grand Rapids (Michigan), Limited Obligation Revenue Bonds
(Porter Hills Obligated Group - Cook Valley Estate 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 2,337,275
(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 Obligated Group) Series 1997:
600,000 6.375%, 1/01/15 1/07 at 102 N/R 589,146
1,200,000 6.500%, 1/01/25 7/05 at 102 N/R 1,163,868
500,000 6.375%, 1/01/25 1/07 at 102 N/R 479,475
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 351,008
2,675,000 5.375%, 7/01/28 7/08 at 101 A 2,270,380
2,000,000 Michigan Strategic Fund, Limited Obligation Revenue and Refunding 11/08 at 101 N/R 1,685,220
Revenue Bonds, Series 1998 (Holland Home), 5.750%, 11/15/28
7,110,000 Michigan Strategic Fund, Limited Obligation Revenue Bonds (Clark 6/08 at 100 BBB+ 6,130,455
Retirement Community Inc. Project), Series 1998, 5.250%, 6/01/18
250,000 The Economic Development Corporation of the City of Warren, 3/02 at 101 Aaa 255,843
Nursing Home Revenue Refunding Bonds (GNMA Mortgage-Backed
Security - Autumn Woods Project), Series 1992, 6.900%,
12/20/22
- -----------------------------------------------------------------------------------------------------------------------------------
Tax Obligation/General - 17.6%
400,000 Bay County, Michigan, West Side Regional Sewage Disposal System 5/00 at 102 A 410,668
Bonds, 6.400%, 5/01/02
1,100,000 School District of the City of Birmingham, County of Oakland, 11/07 at 100 AAA 976,426
State of Michigan, School Building and Site Bonds, Series 1998,
5.000%, 11/01/20
Brighton Area Schools, County of Livingston, State of Michigan, 1992
Refunding Bonds, Series II (General Obligation Unlimited Tax):
2,425,000 0.000%, 5/01/19 No Opt. Call AAA 752,162
5,000,000 0.000%, 5/01/20 No Opt. Call AAA 1,454,350
3,455,000 Charlotte Public Schools, County of Easton, State of Michigan, No Opt. Call AAA 3,121,109
1999 School Building and Site Bonds (General Obligation -
Unlimited Tax), 5.250%, 5/01/25
3,500,000 Clarkston Community Schools, County of Oakland, State of 5/07 at 100 AAA 3,184,965
Michigan, 1997 School Building and Site Bonds (General
Obligation - Unlimited Tax), 5.250%, 5/01/23
1,800,000 Coopersville Area Public Schools, Counties of Ottawa and 5/09 at 100 AAA 1,544,904
Muskegon, State of Michigan, 1999 School Building and Site
Bonds (General Obligation - Unlimited Tax), 5.000%, 5/01/29
2,520,000 City of Detroit, Michigan, General Obligation Bonds (Unlimited 4/10 at 101 AAA 2,411,842
Tax), Series 1999-B, 5.500%, 4/01/18
9,410,000 School District of the City of Detroit, Wayne County, Michigan, 5/09 at 101 AAA 7,720,905
School Building and Site Improvement Bonds (Unlimited Tax -
General Obligation), Series 1998A, 4.750%, 5/01/28
2,430,000 School District of Garden City, County of Wayne, State of 5/04 at 101 AAA 2,589,773
Michigan, 1994 Refunding Bonds (General Obligation -
Unlimited Tax), 6.400%, 5/01/11
2,000,000 Jonesville Community Schools, Counties of Hillsdale and Jackson, 5/09 at 100 AAA 1,937,900
State of Michigan, 1999 School Building and Site Bonds (General
Obligation - Unlimited Tax), 5.750%, 5/01/29
1,425,000 City of Kalamazoo Building Authority, County of Kalamazoo, State 10/09 at 100 AAA 1,326,290
of Michigan, 1999 Building Authority Bonds, 5.375%, 10/01/22
2,700,000 Livonia Public School District, County of Wayne, State of No Opt. Call AAA 1,742,445
Michigan, 1992 School Building and Site Bonds, Series II
(General Obligation - Unlimited Tax), 0.000%, 5/01/08
2,800,000 Michigan Municipal Bond Authority, Local Government Loan Program No Opt. Call AAA 1,795,528
Revenue Bonds, Series 1991C, Group A, 0.000%, 6/15/08
</TABLE>
23
<PAGE>
Portfolio of Investments (Unaudited)
Nuveen Flagship Michigan Municipal Bond Fund (continued)
November 30, 1999
<TABLE>
<CAPTION>
Principal Optional Call Market
Amount Description Provisions* Ratings** Value
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Tax Obligation/General (continued)
Okemos Public Schools, County of Ingham, State of Michigan,
1993 Refunding Bonds:
$ 1,000,000 0.000%, 5/01/17 No Opt. Call AAA $ 355,870
1,020,000 0.000%, 5/01/18 No Opt. Call AAA 339,048
1,500,000 Portage Lake Water and Sewage Authority, Houghton County, 10/05 at 102 AAA 1,521,660
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 3,421,906
370,000 6.500%, 7/01/23 7/04 at 101 1/2 AAA 405,912
500,000 Redford Union Schools District No. 1, County of Wayne, State No Opt. Call AAA 443,565
of Michigan, 1997 Refunding Bonds (General Obligation -
Unlimited Tax), 5.000%, 5/01/22
750,000 South Lyon Community Schools, Counties of Oakland, Washtenaw 5/01 at 102 AA+ 780,098
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 of 6/04 at 101 AAA 2,666,093
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, Barry and 5/05 at 101 AAA 5,404,400
Kent, State of Michigan, 1994 School and Building Site Bonds
(General Obligation - Unlimited Tax), 6.250%, 5/01/14
3,270,000 West Ottawa Public Schools, County of Ottawa, State of No Opt. Call AAA 1,163,695
Michigan, 1992 Refunding Bonds (General Obligation -
Unlimited Tax), 0.000%, 5/01/17
1,000,000 Western Townships Utilities Authority, Sewage Disposal System 1/02 at 100 AAA 1,035,520
Refunding Bonds, Series 1991, 6.500%, 1/01/10
5,175,000 Williamston Community School District, General Obligation - No Opt. Call AAA 4,926,755
Unlimited Tax, Series 1996, 5.500%, 5/01/25
- -----------------------------------------------------------------------------------------------------------------------------------
Tax Obligation/Limited - 17.6%
2,000,000 City of Detroit Building Authority, Building Authority Revenue 2/07 at 101 A 2,036,380
Bonds (District Court Madison Center), Series A, 6.150%, 2/01/11
3,705,000 City of Detroit Downtown Development Authority, Tax Increment 7/08 at 100 AAA 3,071,482
Refunding Bonds (Development Area No. 1 Projects), Series
1998A, 4.750%, 7/01/25
15,460,000 Detroit/Wayne County Stadium Authority (State of Michigan), 2/07 at 102 AAA 13,904,415
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 1,411,168
3,495,000 0.000%, 6/01/18 No Opt. Call AAA 1,155,936
1,650,000 6.875%, 6/01/24 6/04 at 102 AAA 1,786,224
250,000 Michigan Municipal Bond Authority, State Revolving Fund 12/01 at 100 AAA 241,973
Revenue Bonds, Series 1992A, 4.750%, 12/01/09
5,500,000 Michigan Municipal Bond Authority, Local Government Loan No Opt. Call AAA 3,647,050
Program Revenue Bonds, Series 1991A (Insured Wayne County
Refunding Bonds), 0.000%, 12/01/07
1,500,000 Michigan Municipal Bond Authority, State Revolving Fund 10/09 at 100 AA+ 1,263,615
Revenue Bonds, Drinking Water Revolving Fund Revenue Bonds,
Series 1998, 4.750%, 10/01/20
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 1,056,490
5,000,000 6.250%, 10/01/20 10/01 at 102 AA 5,092,250
7,585,000 State Building Authority, State of Michigan, 1991 Revenue 10/01 at 102 AA 7,724,943
Bonds, Series II, 6.250%, 10/01/20
6,000,000 The House of Representatives of the State of Michigan, No Opt. Call AAA 1,407,600
Certificates of Participation, 0.000%, 8/15/23
2,260,000 Puerto Rico Highway and Transportation Authority, Highway 7/02 at 101 1/2 A 2,356,231
Revenue Bonds, 1992 Series V, 6.625%, 7/01/12
5,000,000 Puerto Rico Highway and Transportation Authority, Highway 7/16 at 100 A 4,614,350
Revenue Bonds, Series Y of 1996, 5.500%, 7/01/36
2,000,000 Puerto Rico Highway and Transportation Authority, 7/08 at 101 A 1,676,000
Transportation Revenue Bonds, Series A, 5.000%, 7/01/38
</TABLE>
24
<PAGE>
<TABLE>
<CAPTION>
Principal Optional Call Market
Amount Description Provisions* Ratings** Value
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Tax Obligation/Limited (continued)
$ 1,085,000 Romulus Tax Increment Finance Authority, Wayne County, Michigan 11/06 at 100 N/R $ 1,132,013
(Limited Obligation Revenue Bonds), 1994 Development Bonds,
Remarketed, 6.750%, 11/01/19
- ------------------------------------------------------------------------------------------------------------------------------------
Transportation - 1.4%
250,000 Capital Region Airport Authority (Lansing, Michigan), Airport 7/02 at 102 AAA 265,035
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 1,901,228
County Airport, Airport Revenue Bonds, Series 1998B, 4.875%,
12/01/23
2,500,000 Charter County of Wayne, Michigan, Detroit Metropolitan/ Wayne 12/08 at 101 AAA 2,130,825
County Airport, Airport Revenue Bonds, Series 1998A, 5.000%,
12/01/22 (Alternative Minimum Tax)
- ------------------------------------------------------------------------------------------------------------------------------------
U.S. Guaranteed - 18.5%
1,000,000 City of Battle Creek, County of Calhoun, State of Michigan, 5/04 at 102 BBB*** 1,129,250
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 Michigan, Tax 5/04 at 102 A-*** 2,020,752
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, Electric 1/01 at 102 AAA 1,044,670
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, State of 5/01 at 102 N/R*** 2,007,563
Michigan, 1991 School Building and Site Bonds (General
Obligation - Unlimited Tax), 7.200%, 5/01/16 (Pre-refunded to
5/01/01)
750,000 City of Detroit, Michigan, General Obligation Bonds (Unlimited 4/01 at 102 AAA 800,423
Tax), Series 1991, 8.000%, 4/01/11 (Pre-refunded to 4/01/01)
300,000 School District of the City of Detroit, Wayne County, Michigan, 5/00 at 102 Aa1*** 310,608
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 County, Michigan, 5/01 at 102 AA+*** 1,745,981
School Building and Site Bonds (Unlimited Tax - General Obligation),
Series 1991, 7.150%, 5/01/11 (Pre-refunded to 5/01/01)
10,700,000 City of Detroit Downtown Development Authority, Tax Increment 7/06 at 102 A-*** 11,669,313
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 Revenue Bonds, 7/00 at 102 AAA 2,077,160
Series 1990, 7.250%, 7/01/20 (Pre-refunded to 7/01/00)
500,000 City of Farmington Hills Hospital Finance Authority (Michigan), 2/02 at 102 AAA 531,180
Hospital Revenue Bonds (Botsford General Hospital), Series 1992A,
6.500%, 2/15/22 (Pre-refunded to 2/15/02)
2,500,000 Haslett Public Schools, Counties of Ingham, Clinton and 5/00 at 101 AA+*** 2,561,225
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 Ottawa, State 10/02 at 102 AAA 807,060
of Michigan, Building Authority Refunding Bonds, Series 1992,
6.600%, 10/01/17 (Pre-refunded to 10/01/02)
2,000,000 Huron Valley School District, Counties of Oakland and 5/01 at 102 N/R*** 2,112,760
State of Michigan, 1991 School Building and Site Bonds,
7.100%, 5/01/08 (Pre-refunded to 5/01/01)
4,000,000 Lake Orion Community School District, County of Oakland, State 5/05 at 101 AAA 4,461,480
of Michigan, 1994 Refunding Bonds (General Obligation - Unlimited
Tax), 7.000%, 5/01/15 (Pre-refunded to 5/01/05)
825,000 Menominee Area Public School District, 7.400%, 5/01/20 5/00 at 102 AA+*** 853,124
(Pre-refunded to 5/01/00)
3,000,000 Michigan Higher Education Facilities Authority, Limited 5/01 at 103 N/R*** 3,209,490
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+*** 596,758
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+*** 1,044,972
1,000,000 6.500%, 10/01/14 (Pre-refunded to 10/01/04) 10/04 at 102 AA+*** 1,095,460
1,000,000 6.500%, 10/01/17 (Pre-refunded to 10/01/04) 10/04 at 102 AA+*** 1,095,460
500,000 Michigan State Hospital Finance Authority, Hospital Revenue 12/02 at 102 AAA 543,180
Bonds (MidMichigan Obligated Group), Series 1992, 6.900%,
12/01/24 (Pre-refunded to 12/01/02)
800,000 Michigan State Hospital Finance Authority, Sisters of Mercy 2/01 at 102 AAA 842,816
Health Corporation, Series J, 7.200%, 2/15/18 (Pre-refunded to
2/15/01)
</TABLE>
25
<PAGE>
Portfolio of Investments (Unaudited)
Nuveen Flagship Michigan Municipal Bond Fund (continued)
November 30, 1999
<TABLE>
<CAPTION>
Principal Optional Call Market
Amount Description Provisions* Ratings** Value
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
U.S. Guaranteed (continued)
$ 1,000,000 Michigan State Hospital Finance Authority, Hospital Revenue 11/01 at 102 Aa2*** $ 1,067,520
Bonds (Daughters of Charity National Health System -
Providence Hospital), Series 1991, 7.000%, 11/01/21
(Pre-refunded to 11/01/01)
1,000,000 Oakland County Economic Development Corporation, Limited 11/04 at 102 Aaa 1,115,380
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 Revenue 7/00 at 102 AAA 1,876,536
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, 5/00 at 101 N/R*** 1,064,586
1990 School Building and Site and Refunding Bonds
(General Obligation Bonds), 7.375%, 5/01/19 (Pre-refunded
to 5/01/00)
180,000 Saginaw-Midland Municipal Water Supply Corporation, State of 9/04 at 102 A2*** 199,413
Michigan, Water Supply Revenue Bonds (Limited Tax - General
Obligation), Series 1992, 6.875%, 9/01/16 (Pre-refunded to
9/01/04)
3,500,000 Regents of the University of Michigan, Medical Service Plan 12/01 at 102 Aa2*** 3,710,875
Revenue Bonds, Series 1991, 6.500%, 12/01/21 (Pre-refunded
to 12/01/01)
7,000,000 Vicksburg Community Schools, Counties of Kalamazoo and St. 5/06 at 37 1/4 AAA 1,889,160
Joseph, 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 of 6/04 at 101 AAA 2,685,900
Michigan, School District Bonds, Series 1995 (General
Obligation - Unlimited Tax), 6.250%, 6/01/13
(Pre-refunded to 6/01/04)
- -----------------------------------------------------------------------------------------------------------------------------------
Utilities - 3.6%
400,000 Michigan Public Power Agency, Belle River Project Refunding 1/03 at 102 AA- 371,936
Revenue Bonds, 1993 Series A, 5.250%, 1/01/18
3,000,000 Michigan State South Central Power Agency, Power Supply 11/04 at 102 Baa1 3,226,650
System Revenue Refunding Bonds, 7.000%, 11/01/11
3,500,000 Michigan State Strategic Fund, Limited Obligation Revenue 6/04 at 102 AAA 3,602,515
Refunding Bonds, Detroit Education Company, Series B,
6.450%, 6/15/24
1,000,000 Monroe County Economic Development Corporation, Limited No Opt. Call AAA 1,135,220
Obligation Revenue Refunding Bonds, Collateralized,
Detroit Edison Company, Series, AA, 6.950%, 9/01/22
1,000,000 County of Monroe, Michigan, Pollution Control Revenue Bonds No Opt. Call AAA 1,060,330
(The Detroit Edison Company Project), Series A-1994, 6.350%,
12/01/04 (Alternative Minimum Tax)
4,000,000 Puerto Rico Electric Power Authority, Power Revenue Bonds, No Opt. Call AAA 1,471,000
Series O, 0.000%, 7/01/17
- -----------------------------------------------------------------------------------------------------------------------------------
Water and Sewer - 5.8%
City of Detroit, Michigan, Sewage Disposal System Revenue Refunding
Bonds, Series 1995-B:
1,500,000 5.250%, 7/01/15 7/05 at 101 AAA 1,440,540
10,500,000 5.250%, 7/01/21 7/05 at 101 AAA 9,618,525
1,570,000 City of Detroit, Michigan, Water Supply System Revenue No Opt. Call AAA 1,609,266
Second Lien Bonds, Series 1995-A, 5.550%, 7/01/12
2,230,000 City of Detroit, Michigan, Water Supply System Revenue No Opt. Call AAA 2,285,771
Second Lien Bonds, Series 1995-B, 5.550%, 7/01/12
2,500,000 City of Detroit, Michigan, Water Supply System Revenue 1/10 at 101 AAA 2,425,370
Senior Lien Bonds, Series 1999-A, 5.750%, 7/01/26
500,000 City of Grand Rapids, Michigan, Sanitary Sewer System 7/08 at 101 AAA 410,360
Improvement and Refunding Revenue Bonds, Series 1998A,
4.750%, 1/01/28
- -----------------------------------------------------------------------------------------------------------------------------------
$346,040,000 Total Investments - (cost $301,008,821) - 99.8% $303,559,234
============-----------------------------------------------------------------------------------------------------------------------
</TABLE>
26
<PAGE>
<TABLE>
<CAPTION>
Principal Optional Call Market
Amount Description Provisions* Ratings** Value
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Short-Term Investments - 0.7%
$ 1,000,000 Farmington Hills Hospital Finance Authority, Variable Rate Demand Revenue VMIG-1 $ 1,000,000
Bonds (Botsford General Hospital), Series 1991B, 3.750%, 2/15/16+
1,000,000 Regents of the University of Michigan, Adjustable Rate Demand Hospital VMIG-1 1,000,000
Revenue Refunding Bonds, Series 1992A, Variable Rate Demand Bonds,
3.650%, 12/01/19+
- -----------------------------------------------------------------------------------------------------------------------------------
$ 2,000,000 Total Short-Term Investments - (cost $2,000,000) 2,000,000
===========------------------------------------------------------------------------------------------------------------------------
Other Assets Less Liabilities - (0.5)% (1,402,221)
--------------------------------------------------------------------------------------------------------------------
Net Assets - 100% $304,157,013
====================================================================================================================
</TABLE>
* Optional Call Provisions: Dates (month and year) and prices of the earliest
optional call or redemption. There may be other call provisions at varying
prices at later dates.
** Ratings: Using the higher of Standard & Poor's or Moody's rating.
*** Securities are backed by an escrow or trust containing sufficient U.S.
government or U.S. government agency securities which ensures the timely
payment of principal and interest. Securities are normally considered to be
equivalent to AAA rated securities.
N/R Investment is not rated.
+ Security has a maturity of more than one year, but has variable rate and
demand features which qualify it as a short-term security. The rate
disclosed is that currently in effect. This rate changes periodically based
on market conditions or a specified market index.
See accompanying notes to financial statements.
27
<PAGE>
Portfolio of Investments (Unaudited)
Nuveen Flagship Ohio Municipal Bond Fund
November 30, 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, Port Authority, Port Revenue Refunding Bonds, Cargill 3/02 at 102 AA- $ 1,748,538
Inc. Project, 7.250%, 3/01/22
- -----------------------------------------------------------------------------------------------------------------------------------
Capital Goods - 0.2%
1,240,000 Ohio Water Development Authority, Revenue Bonds, USA Waste 3/02 at 102 N/R 1,256,182
Services, Series 1992, 7.750%, 9/01/07 (Alternative Minimum Tax)
- -----------------------------------------------------------------------------------------------------------------------------------
Consumer Cyclicals - 0.3%
1,700,000 City of Moraine, Ohio, Solid Waste Disposal Revenue Bonds No Opt. Call A 1,608,268
(General Motors Corporation Project), Series 1999, 5.650%, 7/01/24
(Alternative Minimum Tax)
- -----------------------------------------------------------------------------------------------------------------------------------
Education and Civic Organizations - 3.7%
2,050,000 Miami University, Ohio, University Revenues Bonds, 6.900%, 12/99 at 102 A+ 2,116,400
12/01/04
3,500,000 State of Ohio, Education Loan Revenue Bonds, Series 1997A 6/07 at 102 AAA 3,413,060
(Supplemental Student Loan Program), 1997A1, 5.850%,
12/01/19 (Alternative Minimum Tax)
1,750,000 Ohio Higher Educational Facility Commission, Higher Educational 12/04 at 102 AAA 1,744,873
Facility Revenue Bonds (University of Dayton - 1994 Project),
5.800%, 12/01/19
2,025,000 Ohio Higher Educational Facility Commission, Higher Educational 12/03 at 102 AAA 2,179,670
Facility Mortgage Revenue Bonds (University of Dayton -
1992 Project), 6.600%, 12/01/17
1,200,000 Ohio Higher Educational Facility Commission, Higher Educational 9/06 at 101 N/R 1,190,928
Facility Revenue Bonds (The University of Findlay -
1996 Project), 6.125%, 9/01/16
5,000,000 Higher Educational Facility Commission, Higher Educational 5/07 at 102 AAA 4,699,750
Facility Revenue Bonds (Xavier University - 1997 Project),
5.375%, 5/15/22
Ohio Higher Educational Facility Commission, Higher Educational
Facility Revenue Bonds Case Western Reserve University, Ohio:
1,870,000 7.125%, 10/01/14 10/00 at 102 AA 1,952,598
750,000 6.500%, 10/01/20 No Opt. Call AA 813,990
4,250,000 University of Cincinnati (Ohio), General Receipts Bonds, Series 6/07 at 100 AAA 4,027,683
AB, 5.375%, 6/01/20
1,230,000 Youngstown State University, Ohio, General Receipts Bonds, 12/04 at 102 AAA 1,326,518
6.000%, 12/15/16
- -----------------------------------------------------------------------------------------------------------------------------------
Energy - 0.5%
2,125,000 County of Ashtabula, Ohio, Industrial Development Refunding 5/02 at 102 Baa2 2,217,374
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 1,043,180
Quality Development Refunding Revenue Bonds, Series 1992
(Ashland Oil, Inc. Project), 6.850%, 4/01/10
- -----------------------------------------------------------------------------------------------------------------------------------
Health Care - 16.6%
10,000,000 Akron, Bath and Copley Joint Township Hospital District, Ohio, 11/09 at 101 Baa1 8,398,500
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 1/02 at 102 Baa1 1,299,513
and Improvement Bonds, Series 1991 (Fort Hamilton - Hughes
Memorial Hospital Center), 7.500%, 1/01/10
City of Cambridge, Ohio, Hospital Revenue Refunding Bonds, Series 1991
(Guernsey Memorial Hospital Project):
500,000 8.000%, 12/01/06 12/01 at 102 BBB 527,345
1,000,000 8.000%, 12/01/11 12/01 at 102 BBB 1,049,180
12,000,000 County of Cuyahoga, Ohio, Hospital Improvement Revenue Bonds, 2/09 at 101 A- 11,719,200
Series 1999 (The Metrohealth System Project), 6.125%, 2/15/24
1,500,000 County of Cuyahoga, Ohio, Hospital Improvement and Refunding 1/06 at 102 AAA 1,425,195
Revenue Bonds, Series 1996A (University Hospitals Health System,
Inc. Project), 5.625%, 1/15/26
</TABLE>
28
<PAGE>
<TABLE>
<CAPTION>
Principal Optional Call Market
Amount Description Provisions* Ratings** Value
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Health Care (continued)
$1,000,000 County of Cuyahoga, Ohio, Hospital Improvement and Refunding 2/07 at 102 AAA $ 978,350
Revenue Bonds, Series 1997 (The MetroHealth System Project),
5.625%, 2/15/17
2,010,000 County of Erie, Ohio, Hospital Improvement and Refunding Revenue 1/02 at 102 A 2,118,299
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 1,570,842
5,275,000 5.875%, 11/01/25 11/06 at 101 Aa 5,137,850
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 959,432
2,000,000 5.875%, 6/01/21 6/06 at 102 AA 1,959,380
1,500,000 County of Franklin, County, Ohio, Hospital Revenue Refunding 6/00 at 102 AAA 1,553,925
Bonds (Holy Cross Health System - Mt. Carmel Health), Series
1990-A, 7.625%, 6/01/09
3,000,000 County of Franklin, Ohio, Hospital Improvement Revenue Bonds, 5/09 at 102 Aa3 2,606,040
Series 1999 (The Children`s Hospital Project), 5.200%, 5/01/29
3,000,000 County of Hamilton, Ohio, Hospital Facilities Revenue Refunding 1/03 at 102 A 3,097,800
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 7,324,366
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 2,096,325
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 1,036,970
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 3,194,400
1992 (St. Vincent Medical Center), 6.500%, 8/15/12
500,000 Mansfield, Ohio, Hospital Improvement Revenue Bonds, Series 1991 12/01 at 102 AAA 528,605
(Mansfield General Hospital Project), 6.700%, 12/01/09
2,000,000 County of Marion, Ohio, Hospital Refunding and Improvement 5/06 at 102 BBB+ 1,960,220
Revenue 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 1,264,675
Hospital), Series 1994, 5.800%, 12/01/14
4,405,000 County of Miami, Ohio, Hospital Facilities Revenue Refunding and 5/06 at 102 BBB 4,206,863
Improvement Bonds, Series 1996A (Upper Valley Medical Center),
6.250%, 5/15/16
4,205,000 County of Miami, Ohio, Hospital Facilities Revenue Refunding and 5/06 at 102 BBB 4,037,305
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 3,966,720
2,000,000 5.750%, 8/15/21 8/08 at 102 AAA 1,950,200
11,000,000 County of Montgomery, Ohio, Health System Revenue Bonds, 1/08 at 102 BBB 9,629,070
Franciscan Medical Center Dayton Campus Issue, Series 1997,
5.500%, 7/01/18
County of Montgomery, Ohio, Hospital Facilities Revenue Refunding and
Improvement Bonds, Series 1996 (Kettering Medical Center):
1,500,000 5.625%, 4/01/16 4/06 at 102 AAA 1,476,285
7,000,000 6.250%, 4/01/20 No Opt. Call AAA 7,368,340
2,500,000 County of Montgomery, Ohio, Sisters of Charity Health Care, 5/03 at 101 AAA 2,660,450
Series 1992A, 6.250%, 5/15/08
City of Parma, Ohio, Hospital Improvement and Refunding Revenue
Bonds, Series 1998 (The Parma Community Hospital Association):
1,250,000 5.350%, 11/01/18 11/08 at 101 A- 1,120,625
5,000,000 5.375%, 11/01/29 11/08 at 101 A- 4,311,650
</TABLE>
29
<PAGE>
Portfolio of Investments (Unaudited)
Nuveen Flagship Ohio Municipal Bond Fund (continued)
November 30, 1999
<TABLE>
<CAPTION>
Principal Optional Call Market
Amount Description Provisions* Ratings** Value
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Health Care (continued)
$ 2,750,000 County of Trumbull, Ohio, Hospital Refunding and Improvement 11/01 at 102 AAA $ 2,936,203
Revenue Bonds, Series 1991 (Trumbell 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 732,413
Series 1993A (Union Hospital Project), 6.500%, 10/01/21
- -----------------------------------------------------------------------------------------------------------------------------------
Housing/Multifamily - 6.4%
1,600,000 County of Butler, Ohio, Multifamily Housing Revenue Bonds, 9/08 at 103 N/R 1,486,000
Series 1998 (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 1,052,158
(Church of God Retirement Home), Series 1998, 6.250%, 11/01/30
(Alternative Minimum Tax)
7,800,000 County of Cuyahoga, Ohio, Multifamily Housing First Mortgage 6/09 at 102 N/R 7,353,606
Revenue Bonds, Series 1999A (Village of Euclid Apartments
Project), 6.500%, 6/01/31
16,160,000 County of Franklin, Ohio, Mortgage Revenue Bonds, Series 1997 10/07 at 103 Aaa 14,707,539
(GNMA Collateralized - Columbus Properties Project), 5.600%,
4/20/39 (Alternative Minimum Tax)
6,200,000 County of Hamilton, Multifamily Housing Revenue Bonds 1/07 at 102 AAA 6,015,984
(Huntington Meadows Project), Series 1997, 5.700%, 1/01/27
(Alternative Minimum Tax)
2,705,000 County of Henry, Ohio, Health Care Facility Revenue Bonds, 8/09 at 102 AAA 2,722,420
Series 1999 (GNMA Collateralized - The Alpine Village Project),
6.375%, 2/20/41
1,790,000 Lucas Northgate Housing Development Corporation (Ohio), 1/04 at 102 Aaa 1,751,443
Mortgage Revenue Refunding Bonds, Series 1999A (FHA-Insured
Mortgage Loan - Northgate Apartments - Section 8 Assisted Project),
5.950%, 7/01/19
6,315,000 Ohio Capital Corporation for Housing, Mortgage Revenue 2/09 at 102 Aa2 6,141,274
Refunding Bonds, Series 1999G (FHA-Insured Mortgage Loans -
Section 8 Assisted Projects), 5.950%, 2/01/23
- -----------------------------------------------------------------------------------------------------------------------------------
Housing/Single Family - 8.1%
5,000,000 Ohio Housing Finance Agency, Residential Mortgage Revenue 7/09 at 100 AAA 4,709,650
Bonds, 1999 Series C (Mortgage-Backed Securities Program),
5.750%, 9/01/30 (Alternative Minimum Tax)
4,965,000 Ohio Housing Finance Agency, Residential Mortgage Revenue 9/07 at 102 AAA 4,717,346
Bonds, 1996 Series B-3 (Mortgage-Backed Securities Program),
5.750%, 9/01/28 (Alternative Minimum Tax)
5,435,000 Ohio Housing Finance Agency, Mortgage Residential Mortgage 9/07 at 102 AAA 5,185,044
Revenue Bonds, Series 1997C, 5.750%, 9/01/28 (Alternative
Minimum Tax)
4,460,000 Ohio Housing Finance Agency, Residential Mortgage Revenue 3/08 at 101 1/2 AAA 4,130,272
Bonds, 1997 Series D-1 (Mortgage-Backed Securities Program),
5.500%, 3/01/19 (Alternative Minimum Tax)
1,980,000 Ohio Housing Finance Agency, Residential Mortgage Revenue 9/04 at 102 AAA 2,012,591
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 2,788,038
Bonds, 1997 Series B (Mortgage-Backed Securities Program),
5.400%, 9/01/29 (Alternative Minimum Tax)
4,915,000 Ohio Housing Finance Agency, Residential Mortgage Revenue 9/04 at 102 AAA 5,051,195
Bonds, Series 1994B1, 6.375%, 9/01/14
11,250,000 Ohio Housing Finance Agency, Residential Mortgage Revenue 9/08 at 101 AAA 9,729,675
Bonds, 1999 Series A1 (Mortgage-Backed Securities Program),
5.250%, 9/01/30 (Alternative Minimum Tax)
12,795,000 Ohio Housing Finance Agency, Residential Mortgage Revenue 9/07 at 102 AAA 12,886,740
Bonds, Series 1997A, 6.150%, 3/01/29 (Alternative Minimum Tax)
325,000 Ohio Housing Finance Agency, Single Family Mortgage Revenue 3/00 at 102 AAA 332,196
Bonds (GNMA Mortgage-Backed Securities Program), 1990 Series A,
7.400%, 9/01/15
380,000 Ohio Housing Finance Agency, Single Family Mortgage Revenue 9/00 at 102 AAA 391,495
Bonds (GNMA Mortgage-Backed Securities Program), 1990 Series D,
7.500%, 9/01/13
195,000 Ohio Housing Finance Agency, Single Family Mortgage Revenue 9/01 at 102 AAA 203,475
Bonds (GNMA Mortgage-Backed Securities Program), 1991 Series D,
7.050%, 9/01/16
</TABLE>
30
<PAGE>
<TABLE>
<CAPTION>
Principal Optional Call Market
Amount Description Provisions* Ratings** Value
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Industrial/Other - 0.4%
$ 2,775,000 Cleveland-Cuyahoga County Port Authority (Ohio), Development 5/08 at 102 N/R $ 2,441,556
Revenue Bonds (Port of Cleveland Bond Fund - Jergens, Inc.,
Project), Series 1998A, 5.375%, 5/15/18 (Alternative Minimum Tax)
- -----------------------------------------------------------------------------------------------------------------------------------
Long-Term Care - 2.7%
4,030,000 County of Cuyahoga, Ohio, Health Care Facilities Revenue Bonds, 6/00 at 100 N/R 4,094,198
Series 1990 (Altenheim Project), 9.280%, 6/01/15
2,000,000 County of Cuyahoga, Ohio, Industrial Development Refunding 8/01 at 103 AAA 2,112,760
Revenue Bonds, Series 1991 (University Health Care Center Project),
7.300%, 8/01/11
1,500,000 County of Franklin, Ohio, Health Care Facilities Revenue Bonds, 7/03 at 102 N/R 1,390,965
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 3,153,790
Series 1995 (Heinzerling Foundation), 6.200%, 11/01/20
645,000 Franklin County, Hospital Revenue Refunding Bonds, FHA-Insured 8/00 at 102 N/R 657,313
Mortgage Loan (Worthington Christian Village Nursing Home),
7.000%, 8/01/16
County of Hamilton, Ohio, Health Care Facilities Revenue Bonds, Series 1998A
(Twin Towers):
1,000,000 5.125%, 10/01/18 10/08 at 101 A 866,920
1,250,000 5.125%, 10/01/23 10/08 at 101 A 1,051,650
1,180,000 County of Marion, Ohio, Health Care Facilities Refunding and 11/03 at 102 BBB- 1,157,674
Improvement Revenue Bonds, Series 1993 (United Church Homes, Inc.
Project), 6.375%, 11/15/10
750,000 County of Marion, Ohio, Health Care Facilities Refunding and 11/03 at 102 BBB- 722,970
Improvement Revenue Bonds, Series 1993 (United Church Homes, Inc.
Project), 6.300%, 11/15/15
2,110,000 City of Napoleon, Ohio, Health Care Facilities Mortgage Revenue 9/04 at 102 Aa 2,218,771
Refunding Bonds, Series 1994 (The Lutheran Orphans and Old Folks
Home Society at Napoleon, Ohio, Inc. - FHA-Insured Project),
6.875%, 8/01/23
- -----------------------------------------------------------------------------------------------------------------------------------
Tax Obligation/General - 16.4%
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 6,925,920
9,500,000 5.250%, 12/01/21 12/05 at 102 AAA 8,783,035
3,955,000 City of Akron, Ohio, General Obligation Bonds, Various Purpose 12/04 at 102 AAA 4,337,330
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 274,620
2,850,000 5.750%, 12/01/24 12/05 at 101 AAA 2,803,602
1,000,000 Archbold Area Local School District, General Obligation Bonds 12/06 at 102 AAA 1,011,080
(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 1,006,670
Tax), School Improvement Bonds, Series 1995, 5.800%, 12/01/16
3,000,000 Avon Lake City School District, Lorain County, Ohio, School 12/09 at 102 AAA 2,836,980
Building Construction Bonds, Series 1999 (General Obligation -
Unlimited Tax), 5.500%, 12/01/26
2,905,000 Board of Education, Batavia Local School District, County of 12/05 at 102 AAA 3,196,836
Clermont, Ohio, School Improvement Bonds, Series 1995 (Unlimited
Tax), 6.300%, 12/01/22
2,500,000 Buckeye Valley Local School District, Ohio, General Obligation No Opt. Call AAA 2,849,475
(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 143,529
125,000 8.500%, 12/01/05 No Opt. Call N/R 145,933
125,000 8.500%, 12/01/06 No Opt. Call N/R 148,028
125,000 8.500%, 12/01/07 No Opt. Call N/R 149,776
125,000 8.500%, 12/01/08 No Opt. Call N/R 151,199
130,000 8.500%, 12/01/09 No Opt. Call N/R 158,296
</TABLE>
31
<PAGE>
Portfolio of Investments (Unaudited)
Nuveen Flagship Ohio Municipal Bond Fund (continued)
November 30, 1999
<TABLE>
<CAPTION>
Principal Optional Call Market
Amount Description Provisions* Ratings** Value
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Tax Obligation/General (continued)
$ 4,745,000 City of Cleveland, Ohio, Various Purpose General Obligation 11/04 at 102 AAA $5,243,415
Bonds, Series 1994, 6.625%, 11/15/14
550,000 County of Columbiana, Ohio, County Jail Facilities Construction 12/04 at 102 AA 608,075
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 1,585,755
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 734,627
500,000 9.375%, 4/15/07 No Opt. Call AAA 635,055
1,000,000 County of Cuyahoga, Ohio, General Obligation Various Purpose No Opt. Call AA+ 997,490
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+ 1,343,588
Obligation), 5.650%, 5/15/18
750,000 City of Defiance, Ohio, Waterworks System Improvement Bonds, 12/04 at 102 AAA 768,060
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 556,990
1,000,000 0.000%, 12/01/11 No Opt. Call AAA 523,840
1,110,000 City of Fairborn, Ohio, General Obligation Bonds, Utility 10/02 at 102 AAA 1,196,258
Improvement 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 3,830,688
Tax - General Obligation Bonds), 5.375%, 12/01/20
1,575,000 Garaway Local School District, Ohio, School Improvement Bonds, 12/00 at 102 AAA 1,646,363
Series 1990 (General Obligation - Unlimited Tax Bonds), 7.200%,
12/01/14
620,000 County of Geauga, Ohio, General Obligation (Limited Tax) Sewer No Opt. Call Aa2 683,649
District Improvement Bonds (Bainbridge Water Project), 6.850%,
12/01/10
1,000,000 Grandview Heights City School District, Franklin County, Ohio, 12/05 at 101 AA 1,011,620
School Facilities Construction and Improvement Bonds (General
Obligation - Unlimited Tax), 6.100%, 12/01/19
1,000,000 Huron County, Ohio, Correctional Facility Bonds (Limited Tax - 12/07 at 102 AAA 1,014,740
General Obligation), 5.850%, 12/01/16
1,200,000 County of Jefferson, Ohio, Human Services Building Construction 12/01 at 102 AAA 1,277,784
Bonds, Series 1991 (General Obligation - Limited Tax), 6.625%,
12/01/14
1,885,000 City of Kent, Ohio, General Obligation (Limited Tax), Sewer 12/02 at 102 Aa3 2,016,837
System Improvement Refunding Bonds, Series 1992, 6.500%, 12/01/10
1,070,000 Kettering, Ohio, General Obligation (Limited Tax) Bonds, 6.650%, 12/01 at 102 Aa3 1,133,569
12/01/12
1,000,000 Kettering City School District (Ohio), General Obligation Bonds - 12/05 at 101 AAA 919,450
Unlimited Tax, 5.250%, 12/01/22
500,000 Kings Local School District, General Obligation (Unlimited Tax), 12/05 at 100 AAA 479,390
School Improvement Bonds, Series 1995, 5.500%, 12/01/21
500,000 Kirtland Local School District, Ohio, School Improvement Bonds, 12/99 at 102 N/R 511,210
Series 1989 General Obligation - Unlimited Tax Bonds, 7.500%,
12/01/09
1,000,000 Lakeview, Ohio, Local School District General Obligation Bonds, 12/04 at 102 AAA 1,119,250
6.900%, 12/01/14
1,440,000 Lakewood, Ohio, General Obligation Bonds, Series 1995B, 5.750%, 12/05 at 102 Aa3 1,455,163
12/01/15
1,000,000 Lakota Local School District, County of Butler, Ohio, School 12/05 at 100 AAA 1,074,050
Improvement Unlimited Tax - General Obligation Bonds, Series 1994,
6.125%, 12/01/17
Logan County, Ohio, General Obligation Bonds:
155,000 7.750%, 12/01/02 No Opt. Call A 169,111
155,000 7.750%, 12/01/03 No Opt. Call A 172,743
155,000 7.750%, 12/01/04 No Opt. Call A 175,807
155,000 7.750%, 12/01/05 No Opt. Call A 178,298
155,000 7.750%, 12/01/06 No Opt. Call A 180,570
1,000,000 County of Lucas, Ohio, General Obligation (Limited Tax), Various 12/02 at 102 A1 1,069,230
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 979,560
Purpose Improvement Bonds, Series 1995-1, 5.400%, 12/01/15
</TABLE>
32
<PAGE>
<TABLE>
<CAPTION>
Principal Optional Call Market
Amount Description Provisions* Ratings** Value
<S> <C> <C> <C> <C>
Tax Obligation/General (continued)
$1,000,000 County of Mahoning, Ohio, General Obligation Bonds, Various 12/99 at 102 AAA $1,022,530
Purpose Improvement Bonds, Series 1989, Limited Tax, 7.200%,
12/01/09
865,000 Marysville, Ohio, Exempt Village School District, General No Opt. Call AAA 325,318
Obligation Bonds, 0.000%, 12/01/16
1,215,000 Mason City School District, Counties of Warren and Butler, Ohio, 12/09 at 101 Aa3 1,161,917
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 1,055,680
Various Purpose Bonds, Series 1992, 6.250%, 12/15/12
North Royalton City School District, Ohio, School Improvement
Bonds, Series 1994:
2,200,000 6.000%, 12/01/14 12/09 at 102 AAA 2,298,670
2,400,000 6.100%, 12/01/19 12/09 at 102 AAA 2,466,024
600,000 Oak Hills, Ohio, Local School District, General Obligation 12/07 at 101 Aa3 582,978
Bonds, Series 1997A, 5.700%, 12/01/25
1,000,000 State of Ohio, Full Faith and Credit, General Obligation No Opt. Call AA+ 1,079,680
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+ 815,520
2,000,000 6.200%, 8/01/14 8/05 at 102 AA+ 2,174,720
7,640,000 State of Ohio, Full Faith and Credit, General Obligation No Opt. Call AAA 3,562,456
Infrastructure Improvement Bonds,
Series 1993, 0.000%, 8/01/13
500,000 Olmsted Falls, Ohio, Local School District, General Obligation 12/01 at 102 AAA 536,810
Bonds, 7.050%, 12/15/11
1,750,000 Pickerington Local School District, Fairfield and Franklin 12/01 at 102 A1 1,852,078
Counties, Ohio, General Obligation Bonds
(Pickerington Public Library Project - Unlimited Tax), 6.750%,
12/01/16
Pickerington Local School District, General Obligation Bonds:
500,000 0.000%, 12/01/11 No Opt. Call AAA 261,920
500,000 0.000%, 12/01/13 No Opt. Call AAA 228,850
1,000,000 Revere Local School District, Ohio, School Improvement Bonds, 12/03 at 102 AAA 1,015,830
Series 1993 (General Obligation -
Unlimited Tax Bonds), 6.000%, 12/01/16
2,340,000 City of Stow, Ohio, Safety Center Construction Bonds (General 12/05 at 102 A1 2,380,529
Obligation - Limited Tax),
6.200%, 12/01/20
2,870,000 City of Strongsville, Ohio, Various Purpose Improvement Bonds, 12/06 at 102 Aa3 2,891,267
Series 1996 (General
Obligation - Limited Tax), 5.950%, 12/01/21
540,000 Trumbull County, Ohio, General Obligation Sewer Bonds, Series 12/04 at 102 AAA 574,209
1994, 6.200%, 12/01/14
1,320,000 Twinsburg, Ohio, City School District General Obligation Bonds, 12/01 at 102 AAA 1,398,131
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 958,627
1,870,000 0.000%, 12/01/12 No Opt. Call AAA 916,543
1,910,000 Vandalia, Ohio, General Obligation Bonds, 5.850%, 12/01/21 12/06 at 101 Aa3 1,911,986
750,000 West Geauga Local School District, Ohio, School Improvement 11/04 at 102 AAA 778,553
Bonds, Series 1994 (General
Obligation - Unlimited Tax), 5.950%, 11/01/12
1,000,000 Woodridge Local School District, General Obligation Bonds, 12/04 at 102 AAA 1,010,520
6.000%, 12/01/19
1,425,000 Wooster City School District, Wayne County, Ohio, General 12/02 at 102 AAA 1,534,369
Obligation Bonds (Unlimited Tax),
School Building Construction and Improvement, 6.500%, 12/01/17
300,000 Youngstown, Ohio, General Obligation Bonds - Limited Tax, Series 12/04 at 102 AAA 316,023
1994, 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- 523,245
1991 Series I,
6.900%, 6/01/10
6,000,000 City of Cleveland, Ohio, Certificates of Participation, Series 11/07 at 102 AAA 5,386,740
1997, Cleveland Stadium Project,
5.250%, 11/15/27
1,500,000 Ohio State Building Authority (Juvenile Correctional Building), 9/04 at 102 AAA 1,653,060
6.600%, 10/01/14
</TABLE>
33
<PAGE>
Portfolio of Investments (Unaudited)
Nuveen Flagship Ohio Municipal Bond Fund (continued)
November 30, 1999
<TABLE>
<CAPTION>
Principal Optional Call Market
Amount Description Provisions* Ratings** Value
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Tax Obligation/Limited (continued)
$1,100,000 Ohio State Department of Transportation, Certificates of 4/02 at 102 AAA $ 1,159,180
Participation, Panhandle Rail Line Project, Series 1992A,
6.500%, 4/15/12
26,850,000 Puerto Rico Highway and Transportation Authority, Highway 7/16 at 100 A 24,779,060
Revenue 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 2,586,438
Series L (Guaranteed by the Commonwealth of Puerto Rico), 5.500%,
7/01/21
5,000,000 Puerto Rico Public Finance Corporation, 1998 Series A Bonds No Opt. Call AAA 4,516,150
(Commonwealth Appropriation Bonds), 5.125%, 6/01/24
- -----------------------------------------------------------------------------------------------------------------------------------
Transportation - 4.1%
7,840,000 City of Cleveland, Ohio, Airport System Revenue Bonds, Series 1/08 at 101 AAA 6,781,600
1997A, 5.125%, 1/01/27 (Alternative Minimum Tax)
8,500,000 City of Dayton, Ohio, Special Facilities Revenue Refunding 2/08 at 102 BBB 7,633,510
Bonds, Series 1998A (Emery Air Freight Corporation and Emery Worldwide
Airlines, Inc.), 5.625%, 2/01/18
11,000,000 State of Ohio, Turnpike Revenue Bonds, 1996 Series A, Issued by No Opt. Call AAA 11,575,190
the Ohio Turnpike Commission, 5.500%, 2/15/26
- -----------------------------------------------------------------------------------------------------------------------------------
U.S. Guaranteed - 18.4%
2,000,000 City of Athens (County of Athens, Ohio), Sanitary Sewer System 12/09 at 100 A*** 2,272,220
Mortgage Revenue Bonds, Series 1989, 7.300%, 12/01/14 (Pre-refunded
to 12/01/09)
3,000,000 City of Barberton, Ohio, Hospital Facilities Revenue Bonds, 1/02 at 102 N/R*** 3,213,630
Series 1992 (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 5/00 at 102 N/R*** 2,702,772
Bonds, Series 1990 (The Community Hospital of Bedford, Inc.), 8.500%,
5/15/09 (Pre-refunded to 5/15/00)
City of Bellefontaine, Sewer System First Mortgage Revenue Refunding and
Improvement Bonds:
1,000,000 6.800%, 12/01/07 (Pre-refunded to 12/01/02) 12/02 at 101 Baa1*** 1,073,000
1,000,000 6.900%, 12/01/11 (Pre-refunded to 12/01/02) 12/02 at 101 Baa1*** 1,075,550
1,000,000 Canal Winchester Local School District, Franklin and Fairfield 12/01 at 102 AAA 1,073,570
Counties, Ohio, General Obligation Bonds (Unlimited Tax), 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, 9/01 at 100 AAA 1,142,820
Series 1989A (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 1,051,640
2,000,000 7.375%, 12/01/20 (Pre-refunded to 12/01/00) 12/00 at 102 AAA 2,105,720
3,700,000 County of Clermont, Ohio, Sewer System Revenue Bonds, Series 12/01 at 102 AAA 3,969,249
1991, Clermont County Sewer District, 7.100%, 12/01/21 (Pre-refunded
to 12/01/01)
City of Cleveland, Ohio, General Obligation Bonds, Series 1988:
1,010,000 7.500%, 8/01/08 (Pre-refunded to 2/01/03) 2/03 at 100 AAA 1,098,011
1,010,000 7.500%, 8/01/09 (Pre-refunded to 2/01/03) 2/03 at 100 AAA 1,098,011
500,000 City of Cleveland, Ohio, Various Purpose General Obligation 7/02 at 102 AAA 533,120
Bonds, 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, 12/01 at 102 Aaa 864,473
School Improvement Bonds, Series 1991 (General Obligation - Unlimited
Tax Bonds), 8.250%, 12/01/08 (Pre-refunded to 12/01/01)
920,000 City of Cleveland, Ohio, First Mortgage Revenue Refunding Bonds, 1/02 at 102 AAA 975,724
Series F, 1992-B, 6.500%, 1/01/11 (Pre-refunded to 1/01/02)
City of Cleveland, Ohio, Waterworks Improvement and Refunding Revenue Bonds,
1st Mortgage Series 1996-H:
2,280,000 5.750%, 1/01/21 (Pre-refunded to 1/01/06) 1/06 at 102 AAA 2,427,835
5,795,000 5.750%, 1/01/26 (Pre-refunded to 1/01/06) 1/06 at 102 AAA 6,170,748
</TABLE>
34
<PAGE>
<TABLE>
<CAPTION>
Principal Optional Call Market
Amount Description Provisions* Ratings** Value
- -----------------------------------------------------------------------------------------------------------------------------------
<C> <S> <C> <C> <C>
U.S. Guaranteed (continued)
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 $ 272,558
5,500,000 6.250%, 8/15/24 (Pre-refunded to 8/15/05) 8/05 at 102 AAA 5,996,265
1,250,000 Conversion and Remarketing of the County of Cuyahoga, Ohio, Hospital 10/00 at 103 N/R*** 1,319,737
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 8/00 at 102 AAA 5,993,168
(Meridia Health System), 7.250%, 8/15/19 (Pre-refunded to 8/15/00)
1,000,000 City of Delphos, Ohio, Sewer System Mortgage Revenue Bonds, 9/00 at 102 AAA 1,043,660
Series 1990, 7.250%, 9/01/20 (Pre-refunded to 9/01/00)
1,350,000 County of Franklin, Ohio, Hospital Facilities Improvement Revenue Bonds, 5/00 at 102 AAA 1,396,440
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 1,036,160
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*** 1,474,686
1991 Series A (Ohio Presbyterian Retirement Services), 8.750%, 7/01/21
(Pre-refunded to 7/01/01)
1,000,000 County of Franklin, Ohio, Revenue Bonds, Series 1991 (Online 7/01 at 100 N/R*** 1,043,010
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 District, Franklin 12/00 at 102 N/R*** 1,049,860
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-*** 3,234,960
3,500,000 6.700%, 11/15/15 (Pre-refunded to 11/15/02) 11/02 at 102 AA-*** 3,778,915
1,495,000 County of Hamilton, Ohio, Judson Care Center Nursing Home and Board 8/00 at 101 1/4 AA-*** 1,550,450
and Care Project (FHA-Insured Mortgage), 7.800%, 8/01/19
(Pre-refunded to 8/01/00)
1,000,000 Hudson Local School District, Ohio, General Obligation Unlimited Tax 12/00 at 102 A1*** 1,051,140
Bonds, Series 1990A, 7.100%, 12/15/13 (Pre-refunded to 12/15/00)
1,000,000 Hudson Local School District, Ohio, School Facilities Improvement Bonds, 12/00 at 102 A1*** 1,051,460
Series 1991A, 7.100%, 12/15/14 (Pre-refunded to 12/15/00)
1,000,000 Kent State University (A State University of Ohio), General Receipts 5/02 at 102 AAA 1,066,250
Bonds, Series 1992, 6.500%, 5/01/22 (Pre-refunded to 5/01/02)
1,500,000 City of Lorain, Ohio, Hospital Refunding Revenue Bonds, Series 1992 11/02 at 102 A1*** 1,622,595
(Lakeland Community Hospital, Inc.), 6.500%, 11/15/12
1,500,000 County of Lucas, Ohio, Hospital Facilities Revenue Bonds, Series 1991 12/01 at 102 N/R*** 1,632,405
(Flower Memorial Hospital), 8.125%, 12/01/11 (Pre-refunded to 12/01/01)
4,250,000 County of Mahoning, Ohio, Hospital Improvement Revenue Bonds, 10/02 at 100 AAA 4,446,520
Series 1991 (YHA, Inc. Project), Series 1991A, 7.000%, 10/15/14
(Pre-refunded to 10/15/02)
1,000,000 The Board of Education of the Marysville Exempted Village School District, 12/00 at 102 AAA 1,051,170
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 Revenue Bonds, Series 1991, 12/01 at 101 AAA 1,328,338
7.050%, 12/01/21 (Pre-refunded to 12/01/01)
1,850,000 Massillon City School District, Ohio, General Obligation - 12/00 at 102 AAA 1,944,665
Unlimited Tax Bonds, School Improvement Bonds, Series 1990,
7.200%, 12/01/11 (Pre-refunded to 12/01/00)
3,000,000 City of Middleburg Heights, Ohio, Hospital Improvement Revenue 8/01 at 102 AAA 3,197,190
Bonds, Series 1991 (Southwest General Hospital Project),
7.200%, 8/15/19 (Pre-refunded to 8/15/01)
1,000,000 Mount Gilead, Ohio, Water System Revenue, First Mortgage Bonds, 12/02 at 102 N/R*** 1,092,400
7.200%, 12/01/17 (Pre-refunded to 12/01/02)
</TABLE>
35
<PAGE>
Portfolio of Investments (Unaudited)
Nuveen Flagship Ohio Municipal Bond Fund (continued)
November 30, 1999
<TABLE>
<CAPTION>
Principal Optional Call Market
Amount Description Provisions* Ratings** Value
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
U.S. Guaranteed (continued)
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 $ 2,363,133
5,700,000 0.000%, 1/15/15 (Pre-refunded to 7/15/11) 7/11 at 70 15/32 AAA 2,133,111
15,000 Ohio Building Authority, State Facilities Refunding Bonds 4/03 at 100 AAA 17,164
(Frank J. Lausche State Office Building), 1982 Series A,
10.125%, 10/01/06 (Pre-refunded to 4/01/03)
1,000,000 Ohio Higher Educational Facilities Commission (Ohio Northern 5/00 at 100 AAA 1,015,260
University Project), 7.300%, 5/15/10 (Pre-refunded to 5/15/00)
4,865,000 Ohio Water Development Authority, Water Development Revenue No Opt. Call AAA 5,102,315
Bonds, Pure Water 1990
Series I, 6.000%, 12/01/16
1,000,000 County of Ottawa, Ohio, Sanitary Sewer System Special 9/01 at 102 AAA 1,065,260
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 Obligation Bonds, 12/00 at 102 A+*** 1,055,150
Series 1990 (Limited Tax Obligation), 7.600%, 12/01/11
(Pre-refunded to 12/01/00)
1,600,000 Pickerington Local School District, General Obligation Bonds, 12/00 at 102 AAA 1,683,104
Series 1990B, 7.250%, 12/01/13 (Pre-refunded to 12/01/00)
700,000 Puerto Rico Commonwealth Highway Authority, Highway Revenue 7/00 at 102 AAA 729,764
Bonds, Series Q, 7.750%, 7/01/10 (Pre-refunded to 7/01/00)
1,500,000 Puerto Rico Electric Power Authority, Power Revenue Bonds, 7/01 at 102 Aaa 1,595,040
Series P, 7.000%, 7/01/21 (Pre-refunded to 7/01/01)
3,165,000 Reynoldsburg City School District, Ohio, General Obligation 12/02 at 102 AAA 3,412,345
Bonds, School Building Construction and Improvement, 6.550%,
12/01/17 (Pre-refunded to 12/01/02)
1,200,000 Ridgemont Local School District, Ohio, General Obligation 12/02 at 102 N/R*** 1,310,064
(Unlimited Tax) School Improvement Bonds, Series 1992,
7.250%, 12/01/14 (Pre-refunded to 12/01/02)
605,000 Scioto County, Ohio, Human Services Building Bonds, General 8/01 at 101 N/R*** 638,771
Obligation, 7.150%, 8/01/11 (Pre-refunded to 8/01/01)
1,725,000 County of Shelby, Ohio, Hospital Facilities Revenue 9/02 at 102 N/R*** 1,890,876
Refunding and 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 City School District, General Obligation Bonds, 6/02 at 102 AAA 1,070,150
6.600%, 6/01/16 (Pre-refunded to 6/01/02)
1,000,000 University of Cincinnati, General Receipts Bonds, Series O, 12/02 at 102 AA*** 1,070,300
6.300%, 6/01/12 (Pre-refunded to 12/01/02)
4,775,000 County of Warren, Ohio, Hospital Facilities Improvement and 7/01 at 102 Aa2*** 5,073,915
Refunding Revenue Bonds, Series 1991 (Otterbein Home Project),
7.200%, 7/01/11 (Pre-refunded to 7/01/01)
750,000 County of Warren, Ohio, Waterworks System Revenue Bonds, 12/02 at 102 AAA 809,655
Series 1992, Warren County Water District, 6.600%, 12/01/16
(Pre-refunded to 12/01/02)
1,500,000 City of Warren, Ohio, General Obligation (Limited Tax) 11/00 at 102 BBB+*** 1,580,235
Sewerage System 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 9/02 at 102 Baa1*** 1,631,775
Area Health Care, 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 9/01 at 102 AAA 1,600,185
Hospital District (St. Annis Hospital Project), Series 1991A,
7.100%, 9/15/21 (Pre-refunded to 9/15/01)
- -----------------------------------------------------------------------------------------------------------------------------------
Utilities - 11.2%
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 1,105,470
1,535,000 0.000%, 11/15/13 No Opt. Call AAA 704,304
10,685,000 City of Cleveland, Ohio, Public Power System Improvement, 11/01 at 102 AAA 11,359,544
First Mortgage Revenue Bonds, Series 1991B, 7.000%, 11/15/17
1,900,000 City of Cleveland, Ohio, Public Power System Improvement, 11/01 at 102 AAA 2,019,947
First Mortgage Revenue Bonds, Series 1991A, 7.000%, 11/15/17
4,000,000 City of Cleveland, Ohio, Public Power System, First Mortgage 11/06 at 102 AAA 3,506,720
Revenue Refunding Bonds, Series 1996, Sub-Series 1, 5.000%, 11/15/24
</TABLE>
36
<PAGE>
<TABLE>
<CAPTION>
Principal Optional Call Market
Amount Description Provisions* Ratings** Value
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Utilities (continued)
$ 7,520,000 Ohio Municipal Electric Generation Agency (American Municipal 2/03 at 102 AAA $ 7,036,840
Power - Ohio, Inc.), 5.375%, 2/15/24
Ohio Air Quality Development Authority, Revenue Bonds, 1985 Series A
(Columbus Southern Power Company Project):
1,750,000 6.375%, 12/01/20 12/02 at 102 AAA 1,807,698
7,000,000 6.250%, 12/01/20 6/03 at 102 Baa1 6,723,710
2,000,000 Ohio Air Quality Development Authority, Pollution Control 3/00 at 102 AAA 2,054,620
Revenue Refunding Bonds, 1990 Series A (Ohio Edison Company
Project), 7.450%, 3/01/16
15,000,000 Ohio Air Quality Development Authority, Air Quality 9/05 at 102 A+ 14,636,550
Development Revenue Refunding Bonds, 1995 Series (The Dayton
Power and Light Company Project), 6.100%, 9/01/30
6,000,000 Ohio Air Quality Development Authority, Air Quality 4/07 at 102 AAA 5,666,820
Development Revenue Bonds (JMG Funding, Limited Partnership
Project), Series 1997, 5.625%, 1/01/23 (Alternative Minimum Tax)
500,000 Ohio Water Development Authority, Collateralized Water 8/02 at 102 AA- 507,120
Development Revenue Refunding Bonds, 1992 Series A (The Dayton
Power and Light Company Project), 6.400%, 8/15/27
15,600,000 Ohio Water Development Authority Solid Waste Disposal Revenue 9/08 at 102 N/R 13,962,780
Bonds (Bay Shore Power Project), Convertible Series 1998B,
5.875%, 9/01/20 (Alternative Minimum Tax)
1,545,000 Puerto Rico Electric Power Authority, Power Revenue Bonds, No Opt. Call BBB+ 552,847
Series O, 0.000%, 7/01/17
- -----------------------------------------------------------------------------------------------------------------------------------
Water and Sewer - 3.6%
3,000,000 County of Butler, Ohio, Sewer System Revenue Bonds, Series 12/06 at 101 AAA 2,773,590
1996, 5.250%, 12/01/21
10,000,000 City of Cleveland, Ohio, Waterworks Improvement, First No Opt. Call AAA 9,654,800
Mortgage Refunding Revenue Bonds, Series G, 1993, 5.500%, 1/01/21
80,000 City of Cleveland, Ohio, Waterworks Improvement, First 1/02 at 102 AAA 84,574
Mortgage Revenue Refunding Bonds, Series F, 1992B, 6.500%, 1/01/11
1,600,000 County of Greene, Ohio, Water System Revenue Bonds, Series 12/07 at 102 AAA 1,632,352
1996, 6.125%, 12/01/21
2,200,000 City of Greenville, Ohio (Darke County), Wastewater System, 12/02 at 102 AAA 2,295,344
First Mortgage Revenue Bonds, Series 1992 (Governmental
Enterprise Revenue Bonds), 6.350%, 12/01/17
1,000,000 City of Hamilton, Ohio, Water System Mortgage Revenue Bonds, 10/01 at 102 AAA 1,051,390
1991 Series A, 6.400%, 10/15/10
795,000 City of Huber Heights, Ohio, Water System Revenue Bonds, No Opt. Call AAA 241,320
Series 1995, 0.000%, 12/01/19
1,000,000 County of Montgomery, Ohio, Water Revenue Bonds, Greater 11/02 at 102 AAA 1,037,920
Moraine Beavercreek Sewer District, Series 1992, 6.250%, 11/15/17
1,000,000 Ohio Water Development Authority, Water Development Revenue 6/05 at 102 AAA 1,002,940
Bonds, 1995 Fresh Water Series, 5.900%, 12/01/21
2,000,000 Ohio Water Development Authority, Water Development Revenue 6/08 at 101 AAA 1,789,860
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 768,873
500,000 Toledo, Ohio, Waterworks Revenue Refunding Mortgage Bonds, 11/04 at 102 AAA 518,290
6.450%, 11/15/24
- -----------------------------------------------------------------------------------------------------------------------------------
$662,150,000 Total Investments - (cost $632,153,937) - 99.2% 635,564,601
============-----------------------------------------------------------------------------------------------------------------------
Other Assets Less Liabilities - 0.8% 5,373,140
-------------------------------------------------------------------------------------------------------------------
Net Assets - 100% $640,937,741
===================================================================================================================
</TABLE>
* Optional Call Provisions: Dates (month and year) and prices of the earliest
optional call or redemption. There may be other call provisions at varying
prices at later dates.
** Ratings: Using the higher of Standard & Poor's or Moody's rating.
*** Securities are backed by an escrow or trust containing sufficient U.S.
government or U.S. government agency securities which ensures the timely
payment of principal and interest. Securities are normally considered to be
equivalent to AAA rated securities.
N/R Investment is not rated.
See accompanying notes to financial statements.
37
<PAGE>
Statement of Net Assets (Unaudited)
November 30, 1999
<TABLE>
<CAPTION>
Kentucky Michigan Ohio
- -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Assets
Investments in municipal securities, at market value (note 1) $466,439,662 $303,559,234 $635,564,601
Temporary investments in short-term municipal securities,
at amortized cost, which approximates market value (note 1) -- 2,000,000 --
Receivables:
Interest 7,166,097 4,889,557 12,030,137
Investments sold -- 2,350,000 2,456,750
Shares sold 182,971 261,599 416,783
Other assets 359,104 257,951 216,223
- -------------------------------------------------------------------------------------------------------------------------
Total assets 474,147,834 313,318,341 650,684,494
- -------------------------------------------------------------------------------------------------------------------------
Liabilities
Cash overdraft 3,068,208 6,050,587 6,350,516
Payable for shares redeemed 656,124 2,450,051 1,517,739
Accrued expenses:
Management fees (note 6) 209,817 136,408 280,557
12b-1 distribution and service fees (notes 1 and 6) 101,568 70,961 111,214
Other 63,272 39,199 204,000
Dividends payable 1,016,392 414,122 1,282,727
- -------------------------------------------------------------------------------------------------------------------------
Total liabilities 5,115,381 9,161,328 9,746,753
- -------------------------------------------------------------------------------------------------------------------------
Net assets (note 7) $469,032,453 $304,157,013 $640,937,741
=========================================================================================================================
Class A Shares (note 1)
Net assets $422,962,222 $228,600,191 $427,046,107
Shares outstanding 40,241,075 20,615,754 39,311,719
Net asset value and redemption price per share $ 10.51 $ 11.09 $ 10.86
Offering price per share (net asset value per share plus maximum sales charge
of 4.20% of offering price) $ 10.97 $ 11.58 $ 11.34
=========================================================================================================================
Class B Shares (note 1)
Net assets $ 10,457,100 $ 8,526,926 $ 15,550,926
Shares outstanding 994,670 768,178 1,432,427
Net asset value, offering and redemption price per share $ 10.51 $ 11.10 $ 10.86
=========================================================================================================================
Class C Shares (note 1)
Net assets $ 34,786,334 $ 42,849,442 $ 46,637,192
Shares outstanding 3,312,644 3,869,782 4,297,575
Net asset value, offering and redemption price per share $ 10.50 $ 11.07 $ 10.85
=========================================================================================================================
Class R Shares (note 1)
Net assets $ 826,797 $ 24,180,454 $151,703,516
Shares outstanding 78,848 2,181,565 13,967,772
Net asset value, offering and redemption price per share $ 10.49 $ 11.08 $ 10.86
=========================================================================================================================
</TABLE>
See accompanying notes to financial statements.
38
<PAGE>
Statement of Operations (Unaudited)
Six Months Ended November 30, 1999
<TABLE>
<CAPTION>
Kentucky Michigan Ohio
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Investment Income (note 1) $ 14,997,538 $ 9,728,610 $ 20,070,341
- -------------------------------------------------------------------------------------------------------------------
Expenses
Management fees (note 6) 1,317,908 872,369 1,770,777
12b-1 service fees - Class A (notes 1 and 6) 445,189 244,720 449,808
12b-1 distribution and service fees - Class B (notes 1 and 6) 49,743 38,085 71,349
12b-1 distribution and service fees - Class C (notes 1 and 6) 137,725 171,087 184,325
Shareholders' servicing agent fees and expenses 149,272 76,608 258,619
Custodian's fees and expenses 101,062 48,398 108,579
Trustees' fees and expenses (note 6) 7,479 4,103 8,991
Professional fees 9,101 4,393 29,499
Shareholders' reports - printing and mailing expenses 21,411 38,046 57,287
Federal and state registration fees 5,330 6,015 4,857
Other expenses 12,629 9,862 37,445
- -------------------------------------------------------------------------------------------------------------------
Total expenses before custodian fee credit 2,256,849 1,513,686 2,981,536
Custodian fee credit (note 1 (801) (8,855) (32,266)
- -------------------------------------------------------------------------------------------------------------------
Net expenses 2,256,048 1,504,831 2,949,270
- -------------------------------------------------------------------------------------------------------------------
Net investment income 12,741,490 8,223,779 17,121,071
- -------------------------------------------------------------------------------------------------------------------
Realized and Unrealized Gain (Loss) from Investments
Net realized gain (loss) from investment transactions (notes 1 and 4) (1,724,932) (1,045,390) (837,134)
Net change in unrealized appreciation or depreciation of investments (31,259,743) (20,243,047) (41,821,958)
- -------------------------------------------------------------------------------------------------------------------
Net gain (loss) from investments (32,984,675) (21,288,437) (42,659,092)
- -------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets from operations $(20,243,185) $(13,064,658) $(25,538,021)
===================================================================================================================
</TABLE>
See accompanying notes to financial statements.
39
<PAGE>
Statement of Changes in Net Assets (Unaudited)
<TABLE>
<CAPTION>
Kentucky Michigan Ohio
------------------------------- ------------------------------- -------------------------------
Six Months Ended Year Ended Six Months Ended Year Ended Six Months Ended Year Ended
11/30/99 5/31/99 11/30/99 5/31/99 11/30/99 5/31/99
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Operations
Net investment income $ 12,741,490 $ 24,371,211 $ 8,223,779 $ 16,895,962 $ 17,121,071 $ 34,638,423
Net realized gain (loss)
from investment
transactions (notes 1 and 4) (1,724,932) 510,764 (1,045,390) 2,296,613 (837,134) 1,618,785
Net change in unrealized
appreciation or depreciation
of investments (31,259,743) (7,334,078) (20,243,047) (7,584,682) (41,821,958) (9,049,017)
- ----------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in
net assets from operations (20,243,185) 17,547,897 (13,064,658) 11,607,893 (25,538,021) 27,208,191
- ----------------------------------------------------------------------------------------------------------------------------------
Distributions to Shareholders (note 1)
From undistributed net investment income:
Class A (11,310,206) (22,685,548) (6,329,654) (13,190,292) (11,492,114) (23,597,778)
Class B (225,147) (286,307) (176,191) (255,860) (323,467) (448,001)
Class C (832,311) (1,381,734) (1,049,250) (2,123,812) (1,125,367) (2,161,843)
Class R (21,816) (38,706) (671,740) (1,398,706) (4,134,402) (8,432,580)
From accumulated net realized gains
from investment transactions:
Class A -- (949,721) -- (1,239,012) -- (1,818,617)
Class B -- (13,524) -- (28,005) -- (40,242)
Class C -- (63,109) -- (223,599) -- (185,121)
Class R -- (1,619) -- (125,490) -- (623,027)
- ----------------------------------------------------------------------------------------------------------------------------------
Decrease in net assets from
distributions to shareholders (12,389,480) (25,420,268) (8,226,835) (18,584,776) (17,075,350) (37,307,209)
- -----------------------------------------------------------------------------------------------------------------------------------
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 22,097,940 58,123,682 14,560,663 47,599,095 33,098,484 76,326,399
Net proceeds from shares
issued to shareholders
due to reinvestment of
distributions 5,965,487 12,771,045 2,443,891 6,087,951 7,655,541 17,436,625
- ----------------------------------------------------------------------------------------------------------------------------------
28,063,427 80,528,396 17,004,554 53,687,046 40,754,025 93,763,024
Cost of shares redeemed (41,532,778) (42,438,595) (34,940,866) (43,389,935) (55,151,960) (75,213,088)
- ----------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in
net assets from Fund
share transactions (13,469,351) 38,089,801 (17,936,312) 10,297,111 (14,397,935) 18,549,936
- ----------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in
net assets (46,102,016) 30,217,430 (39,227,805) 3,320,228 (57,011,306) 8,450,918
Net assets at the beginning
of period 515,134,469 484,917,039 343,384,818 340,064,590 697,949,047 689,498,129
- ----------------------------------------------------------------------------------------------------------------------------------
Net assets at the end of
period $469,032,453 $515,134,469 $304,157,013 $343,384,818 $640,937,741 $697,949,047
==================================================================================================================================
Balance of undistributed net
investment income at the
end of period $ 355,941 $ 3,931 $ 20,881 $ 23,937 $ 80,255 $ 34,534
==================================================================================================================================
</TABLE>
See accompanying notes to financial statements.
40
<PAGE>
Notes to Financial Statements (Unaudited)
1. General Information and Significant Accounting Policies
The Nuveen Flagship Multistate Trust IV (the "Trust") is an open-end investment
company registered under the Investment Company Act of 1940, as amended. The
Trust comprises the Nuveen Flagship Kentucky Municipal Bond Fund ("Kentucky"),
the Nuveen Flagship 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
November 30, 1999, there were no such outstanding purchase commitments in any of
the 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. Net
realized capital gain and market discount distributions are subject to federal
taxation.
41
<PAGE>
Notes to Financial Statements (Unaudited) (continued)
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 six months ended November 30, 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.
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.
Use of Estimates
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities at the date of the
financial statements and the reported amounts of increases and decreases in net
assets from operations during the reporting period. Actual results may differ
from those estimates.
2. Fund Shares
Transactions in Fund shares were as follows:
<TABLE>
<CAPTION>
Kentucky
----------------------------------------------------
Six Months Ended 11/30/99 Year Ended 5/31/99
----------------------------------------------------
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 1,473,777 16,039,652 3,649,401 41,613,655
Class B 176,733 1,925,477 535,579 6,099,201
Class C 374,773 4,074,351 901,574 10,264,891
Class R 5,419 58,460 12,814 145,935
Shares issued to shareholders due to reinvestment of distributions:
Class A 499,653 5,418,478 1,036,557 11,833,474
Class B 10,604 114,832 12,216 139,432
Class C 39,053 422,606 68,926 785,998
Class R 885 9,571 1,065 12,141
- ---------------------------------------------------------------------------------------------------------------------------
2,580,897 28,063,427 7,068,058 80,528,396
- ---------------------------------------------------------------------------------------------------------------------------
Shares redeemed:
Class A (3,363,072) (36,146,345) (3,271,484) (37,270,021)
Class B (76,814) (826,281) (38,705) (440,621)
Class C (423,562) (4,534,024) (414,950) (4,727,847)
Class R (2,388) (26,128) (9) (106)
- ---------------------------------------------------------------------------------------------------------------------------
(3,865,836) (41,532,778) (3,725,148) (42,438,595)
- ---------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) (1,284,939) $(13,469,351) 3,342,910 $ 38,089,801
===========================================================================================================================
</TABLE>
42
<PAGE>
<TABLE>
<CAPTION>
Michigan
---------------------------------------------------------
Six Months Ended 11/30/99 Year Ended 5/31/99
--------------------------------------------------------
Shares Amount Shares Amount
- -------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Shares sold:
Class A 811,230 $ 9,274,946 2,626,252 $ 31,703,772
Class B 165,949 1,886,772 355,032 4,296,838
Class C 227,802 2,599,548 837,002 10,095,573
Class R 70,087 799,397 125,559 1,502,912
Shares issued to shareholders due to reinvestment of distributions:
Class A 144,518 1,653,871 352,015 4,259,327
Class B 5,517 63,139 8,755 106,023
Class C 25,713 293,793 56,899 687,366
Class R 37,838 433,088 85,549 1,035,235
- -------------------------------------------------------------------------------------------------------------------------------
1,488,654 17,004,554 4,447,063 53,687,046
- -------------------------------------------------------------------------------------------------------------------------------
Shares redeemed:
Class A (2,342,435) (26,598,738) (2,812,412) (33,923,328)
Class B (56,030) (639,656) (28,668) (347,390)
Class C (525,964) (5,984,499) (541,578) (6,514,267)
Class R (150,132) (1,717,973) (215,849) (2,604,950)
- -------------------------------------------------------------------------------------------------------------------------------
(3,074,561) (34,940,866) (3,598,507) (43,389,935)
- -------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) (1,585,907) $(17,936,312) 848,556 $ 10,297,111
===============================================================================================================================
</TABLE>
<TABLE>
<CAPTION>
Ohio
--------------------------------------------------------
Six Months Ended 11/30/99 Year Ended 5/31/99
--------------------------------------------------------
Shares Amount Shares Amount
- -------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Shares sold:
Class A 1,807,566 $ 20,249,708 4,107,940 $ 48,297,312
Class B 288,023 3,198,003 666,096 7,825,915
Class C 581,855 6,489,620 978,318 11,491,425
Class R 285,491 3,161,153 741,899 8,711,747
Shares issued to shareholders due to reinvestment of distributions:
Class A 379,703 4,253,759 854,764 10,063,343
Class B 12,276 137,145 18,133 213,273
Class C 32,239 360,607 68,099 800,943
Class R 259,275 2,904,030 540,083 6,359,066
- -------------------------------------------------------------------------------------------------------------------------------
3,646,428 40,754,025 7,975,332 93,763,024
- -------------------------------------------------------------------------------------------------------------------------------
Shares redeemed:
Class A (3,591,997) (39,860,109) (4,536,687) (53,343,458)
Class B (121,638) (1,344,760) (63,145) (740,574)
Class C (719,221) (7,967,266) (653,874) (7,678,737)
Class R (536,989) (5,979,825) (1,146,476) (13,450,319)
- -------------------------------------------------------------------------------------------------------------------------------
(4,969,845) (55,151,960) (6,400,182) (75,213,088)
- -------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) (1,323,417) $(14,397,935) 1,575,150 $ 18,549,936
===============================================================================================================================
</TABLE>
43
<PAGE>
Notes to Financial Statements (Unaudited) (continued)
3. Distributions to Shareholders
The Funds declared dividend distributions from their tax-exempt net investment
income which were paid on December 20, 1999, to shareholders of record on
December 9, 1999, as follows:
<TABLE>
<CAPTION>
Kentucky Michigan Ohio
- -------------------------------------------------------------------------------
Dividend per share:
<S> <C> <C> <C>
Class A $.0460 $.0490 $.0470
Class B .0395 .0420 .0400
Class C .0410 .0435 .0420
Class R .0475 .0505 .0490
===============================================================================
</TABLE>
The Funds also declared taxable distributions, which include capital gains
and/or market discount, which were paid on December 7, 1999, to shareholders of
record on December 2, 1999, as follows:
<TABLE>
<CAPTION>
Kentucky Michigan Ohio
- -------------------------------------------------------------------------------
<S> <C> <C> <C>
Taxable distributions per share: $ .0035 $ .0509 $ .0163
===============================================================================
</TABLE>
4. Securities Transactions
Purchases and sales (including maturities) of investments in long-term municipal
securities and short-term municipal securities for the six months ended November
30, 1999, were as follows:
<TABLE>
<CAPTION>
Kentucky Michigan Ohio
- -------------------------------------------------------------------------------
Purchases:
<S> <C> <C> <C>
Long-term municipal securities $31,377,257 $58,367,560 $47,473,480
Short-term municipal securities -- 10,000,000 9,175,000
Sales:
Long-term municipal securities 56,100,805 73,815,980 49,800,241
Short-term municipal securities -- 8,000,000 9,175,000
===============================================================================
</TABLE>
At November 30, 1999, the identified cost of investments owned for federal
income tax purposes were as follows:
<TABLE>
<CAPTION>
Kentucky Michigan Ohio
- -------------------------------------------------------------------------------
<S> <C> <C> <C>
$466,822,051 $303,229,406 $632,153,937
===============================================================================
</TABLE>
5. Unrealized Appreciation (Depreciation)
Gross unrealized appreciation and gross unrealized depreciation of investments
for federal income tax purposes at November 30, 1999, were as follows:
<TABLE>
<CAPTION>
Kentucky Michigan Ohio
- -----------------------------------------------------------------------------------------
<S> <C> <C> <C>
Gross unrealized:
appreciation $ 13,014,358 $10,375,950 $ 19,958,732
depreciation (13,396,747) (8,046,122) (16,548,068)
- -----------------------------------------------------------------------------------------
Net unrealized appreciation (depreciation) $ (382,389) $ 2,329,828 $ 3,410,664
=========================================================================================
</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>
44
<PAGE>
The management fee compensates the Adviser for overall investment advisory and
administrative services, and general office facilities. The Trust pays no
compensation directly to those of its Trustees who are affiliated with the
Adviser or to its officers, all of whom receive remuneration for their services
to the Trust from the Adviser or its affiliates.
The Adviser may voluntarily reimburse expenses from time to time, which may be
terminated at any time at its discretion.
During the six months ended November 30, 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 $213,842 $111,075 $200,781
Paid to authorized dealers 192,842 101,848 197,005
==============================================================================
</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.
During the six months ended November 30, 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 $156,066 $90,810 $213,755
==============================================================================
</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 collected on Class B Shares, and all 12b-1 service and
distribution fees collected on Class C Shares during the first year following a
purchase are retained by the Distributor. During the six months ended November
30, 1999, the Distributor retained such 12b-1 fees as follows:
<TABLE>
<CAPTION>
Kentucky Michigan Ohio
- ------------------------------------------------------------------------------
<S> <C> <C> <C>
12b-1 fees retained $61,430 $52,710 $91,171
==============================================================================
</TABLE>
The remaining 12b-1 fees charged to the Funds were paid to compensate authorized
dealers for providing services to shareholders relating to their investments.
The Distributor also collected and retained CDSC on share redemptions during the
six months ended November 30, 1999, as follows:
<TABLE>
<CAPTION>
Kentucky Michigan Ohio
- ------------------------------------------------------------------------------
<S> <C> <C> <C>
CDSC retained $19,843 $20,190 $38,433
==============================================================================
</TABLE>
7. Composition of Net Assets
At November 30, 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 $470,630,529 $301,456,645 $637,325,083
Balance of undistributed net
investment income 355,941 20,881 80,255
Accumulated net realized gain (loss)
from investment transactions (1,573,343) 129,074 121,739
Net unrealized appreciation
(depreciation) of investments (380,674) 2,550,413 3,410,664
- ------------------------------------------------------------------------------
Net assets $469,032,453 $304,157,013 $640,937,741
===============================================================================
</TABLE>
45
<PAGE>
Financial Highlights (Unaudited)
Selected data for a share outstanding throughout each period:
<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 (Loss) Total Income Gains Total Value Return(a)
- -----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Class A (5/87)
2000 (e) $11.22 $.28 $(.72) $(.44) $(.27) $ -- $(.27) $10.51 (3.92)%
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)
2000 (e) 11.22 .24 (.72) (.48) (.23) -- (.23) 10.51 (4.28)
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 (d) 11.07 .17 (.01) .16 (.17) -- (.17) 11.06 1.47
Class C (10/93)
2000 (e) 11.21 .25 (.72) (.47) (.24) -- (.24) 10.50 (4.19)
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)
2000 (e) 11.20 .29 (.71) (.42) (.29) -- (.29) 10.49 (3.82)
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 (d) 11.08 .20 (.04) .16 (.21) -- (.21) 11.03 1.42
================================================================================================================
</TABLE>
<TABLE>
<CAPTION>
Ratios/Supplemental Data
---------------------------------------------------------------------------------------------------
Before Credit/ After After Credit/
Reimbursement Reimbursement (b) Reimbursement (c)
--------------------------- ----------------------- -----------------------
Ratio Ratio Ratio
of Net of Net of Net
Invest- Invest- Invest-
Ratio of ment Ratio of ment Ratio of ment
Expenses Income Expenses Income Expenses Income
Ending to to to to to to
Net Average Average Average Average Average Average Portfolio
Assets Net Net Net Net Net Net Turnover
(000) Assets Assets Assets Assets Assets Assets Rate
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Class A (5/87)
2000 (e) $422,962 .86%* 5.21%* .86%* 5.21%* .86%* 5.21%* 6%
1999 467,127 .84 4.88 .82 4.90 .82 4.90 10
1998 451,338 .84 5.12 .77 5.19 .77 5.19 12
1997 430,803 .99 5.20 .75 5.44 .75 5.44 13
1996 410,808 1.02 5.19 .71 5.50 .71 5.50 17
1995 394,457 1.04 5.49 .68 5.85 .68 5.85 28
Class B (2/97)
2000 (e) 10,457 1.60* 4.46* 1.60* 4.46* 1.60* 4.46* 6
1999 9,923 1.60 4.12 1.56 4.16 1.56 4.16 10
1998 4,273 1.59 4.33 1.54 4.38 1.54 4.38 12
1997 (d) 544 1.59* 4.56* 1.39* 4.76* 1.39* 4.76* 13
Class C (10/93)
2000 (e) 34,786 1.40* 4.66* 1.40* 4.66* 1.40* 4.66* 6
1999 37,246 1.40 4.33 1.37 4.36 1.37 4.36 10
1998 28,630 1.39 4.57 1.33 4.63 1.33 4.63 12
1997 24,468 1.54 4.64 1.29 4.89 1.29 4.89 13
1996 20,647 1.57 4.63 1.27 4.93 1.27 4.93 17
1995 15,831 1.58 4.92 1.23 5.27 1.23 5.27 28
Class R (2/97)
2000 (e) 827 .66* 5.41* .66* 5.41* .66* 5.41* 6
1999 839 .64 5.09 .62 5.11 .62 5.11 10
1998 675 .64 5.31 .58 5.37 .58 5.37 12
1997 (d) 455 .64* 5.62* .49* 5.77* .49* 5.77* 13
=======================================================================================================================
</TABLE>
46
* Annualized.
** Information included prior to the fiscal year ended May 31, 1997, reflects
the financial highlights of Flagship Kentucky.
(a) Total returns are calculated on net asset value without any sales charge and
are not annualized.
(b) After expense reimbursement from the investment adviser, where applicable
(note 6).
(c) After custodian fee credit and expense reimbursement, where applicable
(notes 1 and 6).
(d) From commencement of class operations as noted.
(e) For the six months ended November 30, 1999.
<PAGE>
Selected data for a share outstanding throughout each period:
<TABLE>
<CAPTION>
Class (Inception Date)
Investment Operations Less Distributions
----------------------------- ------------------------
Net
MICHIGAN** 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 (Loss) Total Income Gains Total Value Return(a)
- ------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Class A (6/85)
2000 (e) $ 11.83 $.29 $(.74) $(.45) $(.29) $ -- $ (.29) $11.09 (3.80)%
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)
2000 (e) 11.85 .25 (.75) (.50) (.25) -- (.25) 11.10 (4.24)
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 (d) 11.66 .17 .04 .21 (.17) -- (.17) 11.70 1.86
CLASS C (6/93)
2000 (e) 11.82 .26 (.75) (.49) (.26) -- (.26) 11.07 (4.16)
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)
2000 (e) 11.83 .31 (.75) (.44) (.31) -- (.31) 11.08 (3.78)
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 (d) 11.66 .21 .02 .23 (.21) -- (.21) 11.68 2.01
</TABLE>
<TABLE>
<CAPTION>
Ratios/Supplemental Data
-----------------------------------------------------------------------------------
Before Credit/ After After Credit/
Reimbursement Reimbursement (b) Reimbursement (c)
-------------------- ------------------ ------------------
Ratio Ratio Ratio
of Net of Net of Net
Invest- Invest- Invest-
Ratio of ment Ratio of ment Ratio of ment
Expenses Income Expenses Income Expenses Income
Ending to to to to to to
Net Average Average Average Average Average Average Portfolio
Assets Net Net Net Net Net Net Turnover
(000) Assets Assets Assets Assets Assets Assets Rate
- -----------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Class A (6/85)
2000 (e) $228,600 .85%* 5.14%* .85%* 5.14%* .85%* 5.15%* 18%
1999 260,396 .84 4.94 .84 4.94 .84 4.94 18
1998 263,632 .84 5.11 .84 5.11 .84 5.11 13
1997 259,055 .97 5.21 .85 5.33 .85 5.33 34
1996 248,422 1.01 5.23 .82 5.42 .82 5.42 54
1995 250,380 1.03 5.59 .80 5.82 .80 5.82 37
CLASS B (2/97)
2000 (e) 8,527 1.60* 4.41* 1.60* 4.41* 1.60* 4.41* 18
1999 7,733 1.60 4.20 1.60 4.20 1.60 4.20 18
1998 3,839 1.59 4.32 1.59 4.32 1.59 4.32 13
1997 (d) 380 1.59* 4.52* 1.59* 4.52* 1.59* 4.52* 34
CLASS C (6/93)
2000 (e) 42,849 1.40* 4.60* 1.40* 4.60* 1.40* 4.60* 18
1999 48,946 1.39 4.39 1.39 4.39 1.39 4.39 18
1998 45,690 1.39 4.56 1.39 4.56 1.39 4.56 13
1997 41,649 1.52 4.65 1.40 4.77 1.40 4.77 34
1996 41,365 1.56 4.67 1.37 4.86 1.37 4.86 54
1995 37,122 1.58 5.02 1.35 5.25 1.35 5.25 37
CLASS R (2/97)
2000 (e) 24,180 .65* 5.35* .65* 5.35* .65* 5.35* 18
1999 26,310 .64 5.14 .64 5.14 .64 5.14 18
1998 26,904 .64 5.31 .64 5.31 .64 5.31 13
1997 (d) 26,211 .65* 5.57* .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) Total returns are calculated on net asset value without any sales charge
and are not annualized.
(b) After expense reimbursement from the investment adviser, where applicable
(note 6).
(c) After custodian fee credit and expense reimbursement, where applicable
(notes 1 and 6).
(d) From commencement of class operations as noted.
(e) For the six months ended November 30, 1999.
47
<PAGE>
Financial Highlights (Unaudited) (continued)
Selected data for a share outstanding throughout each period:
<TABLE>
<CAPTION>
Class (Inception Date)
Investment Operations Less Distributions
----------------------------- ------------------------
OHIO** Net
Unrealized
Beginning Net Invest- Net Ending
Net Invest- ment Invest- Net
Year Ended Asset ment Gain ment Capital Asset Total
May 31, Value Income (Loss) Total Income Gains Total Value Return(a)
- ------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
CLASS A (6/85)
2000 (e) $11.57 $.29 $(.72) $(.43) $(.28) $ -- $(.28) $10.86 (3.71)%
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)
2000 (e) 11.56 .24 (.70) (.46) (.24) -- (.24) 10.86 (3.99)
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 (d) 11.42 .17 (.01) .16 (.17) -- (.17) 11.41 1.45
CLASS C (8/93)
2000 (e) 11.56 .25 (.71) (.46) (.25) -- (.25) 10.85 (3.97)
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)
2000 (e) 11.57 .30 (.71) (.41) (.30) -- (.30) 10.86 (3.60)
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 (d) 11.42 .21 (.01) .20 (.21) -- (.21) 11.41 1.77
- ------------------------------------------------------------------------------------------------------------
Ratios/Supplemental Data
------------------------------------------------------------------------------------
Before Credit/ After After Credit/
Reimbursement Reimbursement (b) Reimbursement (c)
------------------ ------------------ ------------------
Ratio Ratio Ratio
of Net of Net of Net
Invest- Invest- Invest-
Ratio of ment Ratio of ment Ratio of ment
Expenses Income Expenses Income Expenses Income
Ending to to to to to to
Net Average Average Average Average Average Average Portfolio
Assets Net Net Net Net Net Net Turnover
(000) Assets Assets Assets Assets Assets Assets Rate
- ------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
CLASS A (6/85)
2000 (e) $427,046 .88%* 5.10%* .88%* 5.10%* .87%* 5.11%* 7%
1999 471,075 .85 4.94 .85 4.94 .85 4.94 11
1998 472,821 .85 5.15 .85 5.15 .85 5.15 15
1997 463,253 .96 5.32 .89 5.39 .89 5.39 17
1996 443,077 1.02 5.31 .92 5.41 .92 5.41 31
1995 445,566 1.03 5.70 .95 5.78 .95 5.78 31
CLASS B (2/97)
2000 (e) 15,551 1.63* 4.36* 1.63* 4.36* 1.62* 4.37* 7
1999 14,494 1.61 4.20 1.61 4.20 1.61 4.20 11
1998 7,422 1.61 4.39 1.61 4.39 1.61 4.39 15
1997 (d) 1,649 1.60* 4.63* 1.60* 4.63* 1.60* 4.63* 17
CLASS C (8/93)
2000 (e) 46,637 1.43* 4.55* 1.43* 4.55* 1.42* 4.56* 7
1999 50,889 1.40 4.39 1.40 4.39 1.40 4.39 11
1998 47,036 1.40 4.60 1.40 4.60 1.40 4.60 15
1997 40,713 1.51 4.77 1.44 4.84 1.44 4.84 17
1996 34,939 1.56 4.75 1.47 4.84 1.47 4.84 31
1995 28,461 1.58 5.13 1.50 5.21 1.50 5.21 31
CLASS R (2/97)
2000 (e) 151,704 .68* 5.30* .68* 5.30* .67* 5.31* 7
1999 161,491 .65 5.14 .65 5.14 .65 5.14 11
1998 162,220 .65 5.35 .65 5.35 .65 5.35 15
1997 (d) 160,312 .65* 5.65* .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) Total returns are calculated on net asset value without any sales charge and
are not annualized.
(b) After expense reimbursement from the investment adviser, where applicable
(note 6).
(c) After custodian fee credit and expense reimbursement, where applicable
(notes 1 and 6).
(d) From commencement of class operations as noted.
(e) For the six months ended November 30, 1999.
48
<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
49
<PAGE>
SERVING
Investors for Generations
[Photo of John Nuveen Sr. appears here]
John Nuveen, Sr.
Since our founding in 1898, John Nuveen & Co. has been synonymous with
investments that withstand the test of time. Today we offer a broad range of
quality investments designed for individuals seeking to build and sustain
wealth. In fact, more than 1.3 million investors have trusted Nuveen to help
them pursue their financial goals.
The cornerstone of Nuveen's investment philosophy is a commitment to
disciplined long-term investment strategies 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.
NUVEEN
John Nuveen & Co. Incorporated
333 West Wacker Drive
Chicago, IL 60606-1286
www.nuveen.com
<PAGE>
November 30, 1999 Semiannual 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
7 Nuveen Flagship Kansas Municipal Bond
Fund Spotlight
8 Nuveen Flagship Missouri Municipal
Bond Fund
12 Nuveen Flagship Missouri Municipal
Bond Fund Spotlight
13 Nuveen Flagship Wisconsin Municipal Bond
Fund
17 Nuveen Flagship Wisconsin Municipal Bond
Fund Spotlight
18 Portfolio of Investments
32 Statement of Net Assets
33 Statement of Operations
34 Statement of Changes in Net Assets
36 Notes to Financial Statements
41 Financial Highlights
44 Building a Better Portfolio
45 Fund Information
<PAGE>
DEAR
Shareholder
[Photo of Timothy R. Schwertfeger appears here]
Timothy R. Schwertfeger
Chairman of the Board
How did you gain your financial wisdom? While some of us study finance, the
financial markets, economics or related disciplines in formal programs, most of
us end up accumulating practical knowledge through the years, from friends,
family, colleagues and media.
At Nuveen, we believe a formal financial education should start early in life. A
study sponsored by the National Council on Economic Education shows that a
whopping 66% of high school students tested on basic money skills scored an "F."
Only 3% received an "A."
Because we believe strongly in education and are committed to children's
financial literacy, we have launched a community service program, Kid$ense, in
our hometown of Chicago.
The Kid$ense curriculum, which is available for grades kindergarten through
sixth, includes textbooks, teaching materials and teacher training. The lessons
introduce children to the concept of money and how it works in society; buying,
selling and trading; working, earning, saving and investing.
Nuveen's commitment to children's financial literacy goes beyond the 250
Chicago public schools who have benefited from the Kid$ense curriculum. We also
have a commitment to family wealth management, which is a positive philosophy
that addresses the role of wealth in our lives and our world.
At Nuveen, we are dedicated to helping you and your financial adviser
develop a family wealth management strategy unique to you and your goals and
values. In your next shareholder report, look for more information about
Nuveen's dedication to Family Wealth Management, or ask your financial adviser
about this approach to investing.
The Economic Environment. I want to briefly report on the economic environment
in which your Nuveen investment performed. Read on, as we've conducted an in-
depth interview with a representative from your fund's portfolio management
team, describing how the team of investment and research professionals directed
the portfolio during the semi-annual fiscal period ended November 30, 1999.
Until fairly recently, the U.S. economy has been characterized by robust
growth, generally low interest rates and unemployment levels that remain among
the lowest in three decades.
Concerns, however, about the continued pace of the economy's expansion have
begun to test the "new paradigm," which holds that improvements in productivity
enable us to have both economic growth and low inflation at the same time. With
investors and the various markets watching--and reacting to--every announcement
concerning economic statistics, volatility has increased, especially in the
equity markets.
We have entered a different economic environment from that of 12 months
ago. This shift has occurred in response to two factors:
. the Asian financial crisis of 1998 did not produce the U.S. economic
slowdown that was widely expected to keep economic growth from
becoming overly robust;
. evidence of accelerating prices contributed to the reemergence of the
specter of inflation, accompanied by predictions of higher interest
rates.
"We also have a
commitment to
family wealth
management,
which is a
positive philosophy
that addresses
the role of wealth
in our lives
and our world."
SEMIANNUAL REPORT page 1
<PAGE>
"Your financial
adviser can serve
as a valuable
resource in helping
you determine if
adjustments are
needed in your
current asset
allocation plan."
In an effort to pre-empt this threat of inflation, the Federal Reserve
Board (the Fed) moved to raise interest rates by a quarter-point on three
separate occasions between June and November 1999. This brought the federal
funds rate, which represents the amount banks charge one another on overnight
loans and serves as a standard for short-term market rates, from 4.75% to
5.50%. These increases offset the three rate cuts enacted by the Fed a year
earlier.
At its November 1999 meeting, the Fed announced that it would shift to a
neutral stance following the latest interest rate increase, giving the markets
some respite during the Y2K transition. However, the Fed's indication that it
would continue to closely watch the pace of economic growth for any signs of
inflationary pressure left the door open for additional tightenings.
In January 2000, the annual rotation among members of the Fed's Open Market
Committee, the body that ultimately decides interest rate policy, will put
several members considered more "hawkish" on inflation fighting into voting
slots. This could tilt policy toward further rate increases in the new year.
Municipal bonds continued to serve investors well. At the end of November
1999, the ratio between long-term municipal yields and 30-year Treasury yields
stood at 97.14%, compared with the historical average of 89.6% over the period
1979-1999. For investors, this meant that quality long-term municipal bonds
offered yields comparable to those of long-term Treasury bonds--even before
the tax advantages of municipals were taken into account. Of course, Treasuries
are backed by the full faith and credit of the U.S. government. Even so, on an
after-tax basis, municipal bonds continued to present an exceptionally
attractive investment option relative to Treasuries.
In the coming months, we expect to see a healthy supply of new municipal
bonds, although total volume is expected to drop from the near-record levels of
1998. This is due to the dramatic decrease in the refunding of existing bonds in
the wake of higher interest rates compared to early 1999.
Keeping the Balance. The increased volatility in the markets highlights the
importance of maintaining balance in your investment portfolio. With a properly
balanced portfolio of equities, bonds and cash, your assets may be better
positioned to weather the markets' ups and downs. A balanced portfolio can also
help you increase your opportunities for capital growth while reducing risk.
Your financial adviser can serve as a valuable resource in helping you determine
if adjustments are needed in your current asset allocation plan.
For more information on any Nuveen investment, including a prospectus,
contact your financial adviser. Or call Nuveen at (800) 621-7227 or visit our
Internet site at www.nuveen.com. Please read the prospectus carefully before you
invest or send money.
Since 1898, Nuveen has been synonymous with investments that stand the test
of time. As we enter a new millennium, we are committed to maintaining that
reputation and finding the best ways to serve your evolving investment needs.
Thank you for your continued confidence.
Sincerely,
/s/ Timothy Schwertfeger
Timothy R. Schwertfeger
Chairman of the Board
January 15, 2000
SEMIANNUAL REPORT page 2
<PAGE>
NUVEEN FLAGSHIP KANSAS MUNICIPAL BOND FUND
From the Portfolio Manager's Perspective
- --------------------------------------------------------------------------------
Nuveen Flagship Kansas Municipal Bond Fund features portfolio management by
Nuveen Investment Advisory Services, a team of portfolio managers and research
analysts committed to a disciplined, research-oriented investment strategy. To
help you understand the fund's performance for the six-month period ended
November 30, 1999, we spoke with Portfolio Manager Mike Davern.
Q In an effort to cool any brewing inflationary pressures, the Federal Reserve
Board (the Fed) raised short-term interest rates by 25 basis points, or 0.25
percent, three times in the six-month reporting period we're discussing today.
The increases occurred in June, August and November. The Fed indicated that the
rate increases were a reversal of the rate cuts it made in 1998 when global
economic and market instability threatened to derail the U.S. economy. How do
bonds typically perform in such an environment?
MIKE When interest rates are rising, it's virtually impossible for bonds to
produce the type of performance results we like to see, since bond prices move
inversely to yields. Let's look at the numbers. The 30-year U.S. Treasury bond
yield rose from 5.92% on June 1, 1999, to 6.28% on November 30, 1999, an
increase of 36 basis points. Municipal bonds had an even tougher time. The 30-
year municipal bond started the period yielding 5.33% and ended it at 6.00%, a
much more dramatic jump of 67 basis points.
Q That's quite a discrepancy. Why have municipal bonds underperformed Treasury
bonds?
MIKE Unlike the highly liquid Treasury bond market--which brings in buyers and
sellers from all over the world--the municipal market's performance is highly
dependent on local factors of supply and demand.
Despite rising interest rates and higher financing costs, the booming U.S.
economy has encouraged local municipalities to finance new projects, and thus,
the supply of bonds was quite plentiful. However, demand was not quite so
robust, even though municipal bonds are offering extremely attractive yields,
especially when viewed on a taxable equivalent basis. In fact, as of November
30, 1999, the ratio between long-term municipal yields and 30-year Treasury
yields stood at 97.14%, meaning that municipal bonds presented an exceptionally
attractive investment option relative to Treasuries, which are backed by the
full faith and credit of the U.S. government.
Nuveen is dedicated to providing investors access to a team of highly
experienced investment managers, each overseeing portfolios within their
specific areas of expertise. We call them Premier Advisers/sm/--a select group
of asset management firms who direct the investment activities of the Nuveen
Mutual Funds. Nuveen has chosen them for their rigorously disciplined investment
approaches and their consistent long-term performance.
Drawing on decades of experience and specialized knowledge, these skilled asset
managers have earned reputations for excellence in their fields of expertise,
whether it be blue-chip growth stocks, large-cap value stocks, bonds or
international securities.
Nuveen's Premier Adviser/sm/ for income investing is Nuveen Investment Advisory
Services (NIAS). NIAS follows a disciplined, research-driven investment approach
to uncover income securities that combine exceptional relative value with above-
average return potential. Drawing on 300 combined years of investment
experience, the Nuveen team of portfolio managers and research analysts offers:
. A commitment to exhaustive research
. An active, value-oriented investment style
. The unmatched presence of trading leverage of a market leader.
This disciplined, research-oriented approach has paid off for investors,
and is a key investment strategy for Nuveen Flagship Kansas Municipal Bond Fund.
Performance figures are quoted for Class A shares at net asset value. Comments
cover the six-month period ended November 30, 1999. The views expressed reflect
those of the portfolio management team and are subject to change at any time,
based on market and other conditions.
SEMIANNUAL REPORT page 3
<PAGE>
"This environment
allows us to use our
excellent credit
research staff
to find bonds
which have the
potential for
extra yield
without exposure
to extra risk."
Q Have Y2K concerns caused any disruptions in the market?
MIKE Actually, they haven't. If anything, it has been an extremely normal year
in terms of the timing of issuance.
For example, we recently looked at one big municipal bond deal that was set
to close on December 31, 1999, and it was oversubscribed. If there were concerns
about year-end cash flow, then the issuer would have had trouble placing the
deal. So we can't sense any problems associated with the Y2K computer bug. With
all the effort put into fixing computer systems over the last two years, it
really is not all that surprising.
Q What other national trends did you notice?
MIKE As you know, some of the bonds in our portfolios are insured. One trend
we're seeing now is in the bond insurance area: four major bond insurance
companies have stepped back a little bit, choosing not to insure some deals in
reaction to the bankruptcy of a hospital issuer in Philadelphia. This has caused
the insurers to reassess their risk exposure, certainly in the hospital market
as well as some other lower-rated credits.
Although that may sound like a negative, it actually created an opportunity
for us. So many of the bonds in our portfolio are insured with high credit
quality but relatively low yield that it's nice to get to choose from some
lower-rated credits. With the insurers stepping back, a portion of the new issue
supply is now coming to the market uninsured. This environment allows us to use
our excellent credit research staff to find bonds which have the potential for
extra yield without exposure to extra risk.
Q How did the fund perform for the period ended November 30, 1999?
MIKE Nuveen Flagship Kansas Municipal Bond Fund generated a six-month total
return on net asset value of -4.64%, underperforming the Lipper Kansas Municipal
Bond Fund category, which reported an average total return of -3.20%. For the
one- and five-year periods ended November 30, 1999, the Nuveen fund had an
average annualized total return of -4.54% and 6.83%, respectively, compared to
the Lipper peer group average total return of -2.55% and 6.20% for the same time
periods.*
Total return equals a fund's income plus capital gains distributions, if
any, plus or minus changes in net asset value.
Nuveen Flagship Kansas Municipal Bond Fund's six-month taxable equivalent
total return, for investors in the 35.5% combined federal and state income tax
bracket, was -3.34%.** As of November 30, 1999, the fund's SEC 30-day yield was
5.02%. For investors in the combined 35.5% federal and state income tax bracket,
that is equivalent to a yield of 7.78% on a taxable investment.
Q Why did the fund underperform its benchmark?
MIKE Our fund invests primarily in bonds with long-term maturities, which is
one of the ways it pursues its objective. In a bear market for bonds, which has
generally been the environment in 1999, long-term maturities will typically
underperform because these bonds are the most sensitive to changes in interest
rates. In a bull market, we would hope to outperform, as shown by our longer-
term performance numbers.
SEMIANNUAL REPORT page 4
<PAGE>
On the plus side, the rising interest rate environment provided the
opportunity to buy bonds with higher yields and better call protection, thus
strengthening the fund's dividend-paying capability.
Since bond prices fall in a rising interest rate environment, certain bonds
purchased earlier in the period fell in value. We sold some of these bonds,
taking a capital loss that, for tax purposes, can be used to offset capital
gains, or be carried forward for up to eight years to offset future gains. Tax
losses can therefore be very valuable for the fund. If the bonds purchased are
also at a discount to par value (priced less than 100), the fund still maintains
its ability to come back in price if the market recovers.
Q What variables do you look for when considering a purchase for the portfolio?
MIKE There are at least five different variables that we examine: price,
coupon, call, sector and rating.
Price. In a bear market, owning a bond selling at a discount to par, or
say, 80 cents on the dollar, has its advantages. As time passes, the bond heads
toward maturity when it is repaid at $1. As a result, a discount bond isn't
going to drop as much in price in a bear market because the passage of time is
tugging the bond upward in price, and thus closer to maturity. We say that a
bond priced at a deep discount has good "convexity," suggesting that the bond's
ability to go up in price is greater than its ability to go down in price. In
contrast, a bond selling at a premium above par usually has less upside. Premium
bonds typically pay higher coupons, which means that the issuer will want to
"call" the bonds, or redeem them, if interest rates later fall. As a result,
such bonds have less upside.
Call. We prefer to own bonds that can't be called for at least eight to 10
years, and avoid, whenever possible, bonds subject to call risk in the next year
or so. Currently, two bonds are scheduled to be called out of the Kansas
portfolio in the year 2000 and less than 5% is subject to call in 2001. That's
particularly important if interest rates begin falling again. Bonds with longer
calls can generally be found in the primary or new issue market.
Coupon. As far as a bond's coupon is concerned, we're looking for bonds
that provide good tax-exempt income while keeping the fund's credit quality
high. In today's market, we're looking for bonds that pay more than 6%, which is
the equivalent of 9.3% on a taxable equivalent basis for taxpayers in the
combined 35.5% federal and state income tax bracket.
Sector. We try to purchase bonds in sectors where there is limited supply
such as transportation and water/sewer. We believe that anytime you can find
something that's relatively scarce, then you're finding something that has
value. In addition, certain sectors offer attractive yields because they are out
of favor in the municipal bond investment community. One such purchase
opportunity, identified with the assistance of Nuveen research, was the
acquisition of the AA-rated Lawrence Memorial Hospital Revenue bonds. The bonds
provided the fund a substantially higher yield than available earlier in the
year and offered attractive call protection as well.
NUVEEN FLAGSHIP KANSAS MUNICIPAL BOND FUND
Top Five Sectors
Healthcare 20%
- ---------------------------------------------
Tax Obligation (Limited) 20%
- ---------------------------------------------
Housing (Multifamily) 14%
- ---------------------------------------------
U.S. Guaranteed 10%
- ---------------------------------------------
Education and Civic Organizations 8%
As a percentage of total bond holdings as of November 30, 1999. Holdings are
subject to change.
"We try to
purchase bonds
in sectors
where there is
limited supply such
as transportation
and water/sewer."
SEMIANNUAL REPORT page 5
<PAGE>
"In a high tax state
such as Kansas,
we believe that
municipal bonds
represent a very
attractive option
for investors
searching for yield."
* The Lipper Peer Group returns represent the average annualized total return
of the 13 funds in the Lipper Kansas Municipal Debt Category for the six-
month and one-year periods ended November 30, 1999, and seven funds for the
five-year period. The returns assume reinvestment of dividends and do not
reflect any applicable sales charges.
** Taxable equivalent total return equals a fund's taxable equivalent income
(based on the combined federal and state income tax rate) plus capital
gains distributions, if any, plus or minus changes in net asset value.
Rating. All of our purchases are in Standard & Poor's top four credit
rating categories, or, if non-rated, judged by Nuveen research to have
equivalent credit quality. Over the past few years, the majority of purchases
have been insured bonds. In the past six months, however, there's been some
opportunity to buy A, BAA and non-rated bonds. In fact, we've even bought
uninsured bonds, paid an insurance company to insure them and reaped an
immediate paper profit.
Q That sounds interesting. Can you give us an example?
MIKE Recently, we took a BBB-rated Puerto Rico highway bond owned by the fund
for some time and got it insured in the secondary market. For the minimal cost
of the insurance policy, we were able to pick up a AAA rating on the bond, which
increased the bond's value more than the cost of the insurance. This isn't as
simple to do as it appears. In fact, this is where the advantage of Nuveen's
research capabilities comes in handy.
Q What is your outlook for Nuveen Flagship Kansas Municipal Bond Fund?
MIKE We will continue to focus on maintaining a stable dividend that is exempt
from federal and state income taxes. Using Nuveen research, we will continue to
look for attractively priced bonds offering higher yields. In a high tax state
such as Kansas, we believe that municipal bonds represent a very attractive
option for investors searching for yield.
NUVEEN FLAGSHIP KANSAS MUNICIPAL BOND FUND
Bond Credit Quality
[PIE CHART APPEARS HERE]
AAA/U.S. Guaranteed........... 40%
AA............................ 15%
A............................. 22%
BBB/NR........................ 23%
As a percentage of total bond holdings as of November 30, 1999. Holdings are
subject to change.
SEMIANNUAL REPORT page 6
<PAGE>
NUVEEN FLAGSHIP KANSAS MUNICIPAL BOND FUND
Fund Spotlight as of November 30, 1999
Quick Facts
<TABLE>
<CAPTION>
A Shares B Shares C Shares R Shares
<S> <C> <C> <C> <C>
NAV $ 9.76 $ 9.69 $ 9.77 $ 9.81
- ---------------------------------------------------------------------------------------------
Fund Symbol FKSTX N/A N/A N/A
- ---------------------------------------------------------------------------------------------
CUSIP 67065R101 67065R200 67065R309 67065R408
- ---------------------------------------------------------------------------------------------
Inception Date 1/92 2/97 2/97 2/97
- ---------------------------------------------------------------------------------------------
</TABLE>
Total Returns (Annualized)+
<TABLE>
<CAPTION>
A Shares B Shares C Shares R Shares
NAV Offer NAV w/CDSC NAV NAV
<S> <C> <C> <C> <C> <C> <C>
1-Year -4.54% -8.55% -5.39% -9.02% -5.13% -4.37%
- ---------------------------------------------------------------------------------------------
1-Year TER* -1.93% -6.05% -3.18% -6.81% -2.81% -1.63%
- ---------------------------------------------------------------------------------------------
5-Year 6.83% 5.91% 5.99% 5.84% 6.38% 7.07%
- ---------------------------------------------------------------------------------------------
Since Inception 5.73% 5.15% 4.99% 4.99% 5.31% 5.87%
- ---------------------------------------------------------------------------------------------
</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. 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 income tax
rate of 35.5%).
<TABLE>
<CAPTION>
Tax-Free Yields
A Shares B Shares C Shares R Shares
NAV Offer NAV NAV NAV
<S> <C> <C> <C> <C> <C>
SEC 30-Day Yield 5.02% 4.81% 4.28% 4.48% 5.23%
- ---------------------------------------------------------------------------------
Taxable Equivalent Yield 7.78% 7.46% 6.64% 6.95% 8.11%
</TABLE>
Monthly Tax-Free Dividends (Class A Shares)
[BAR CHART APPEARS HERE]
12/1998 .0425
1/1999 .0425
2/1999 .0425
3/1999 .0425
4/1999 .0410
5/1999 .0410
6/1999 .0410
7/1999 .0410
8/1999 .0410
9/1999 .0410
10/1999 .0410
11/1999 .0410
Portfolio Statistics
Total Net Assets $120.6 million
- -----------------------------------------
Average Effective
Maturity 21.22 years
- -----------------------------------------
Average Duration 9.8
- -----------------------------------------
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 their original cost. Performance of classes
will differ. For additional information, please see the fund prospectus.
Terms To Know
The following are a few terms used throughout this report.
Duration A mathematical measure of the price sensitivity of a bond fund's
portfolio to changes in interest rates. Typically the shorter the duration, the
less price and return variability you can expect in the fund's price per share
as interest rates change.
Fed Easing When the Federal Reserve is following an easy money policy, it is
essentially increasing the money supply by decreasing the federal funds rate and
making money cheaper to borrow. The intention is to help the economy grow.
Fed Tightening When the Federal Reserve is following tight money policy, it is
essentially decreasing the money supply by increasing the fed funds rate and
making money more expensive to borrow. The intention is to slow the growth of
the economy and curtail inflation.
Federal Fund Rates The interest rate charged by banks to lend to other banks
needing overnight loans; this figure is the most sensitive indicator of the
direction of short-term interest rates.
Municipal Bond A bond issued by a state, city, or other municipality to finance
public works such as the construction of roads or schools. The interest is
usually free from federal income tax and may be free from state and local taxes
as well.
SEC Yield A standardized measure of the current net market yields on a mutual
fund's investment portfolio.
Taxable Equivalent Yield The return an investor would have to realize on a fully
taxable investment to equal the stated yield on a tax-exempt investment.
SEMIANNUAL REPORT page 7
<PAGE>
NUVEEN FLAGSHIP MISSOURI MUNICIPAL BOND FUND
From the Portfolio Manager's Perspective
Nuveen is dedicated to providing investors access to a team of highly
experienced investment managers, each overseeing portfolios within their
specific areas of expertise. We call them Premier Advisers/sm/ -- a select group
of asset management firms who direct the investment activities of the Nuveen
Mutual Funds. Nuveen has chosen them for their rigorously disciplined investment
approaches and their consistent long-term performance.
Drawing on decades of experience and specialized knowledge, these skilled asset
managers have earned reputations for excellence in their fields of expertise,
whether it be blue-chip growth stocks, large-cap value stocks, bonds or
international securities.
Nuveen's Premier Adviser/sm/ for income investing is Nuveen Investment Advisory
Services (NIAS). NIAS follows a disciplined, research-driven investment approach
to uncover income securities that combine exceptional relative value with above-
average return potential. Drawing on 300 combined years of investment
experience, the Nuveen team of portfolio managers and research analysts offers:
. A commitment to exhaustive research
. An active, value-oriented investment style
. The unmatched presence of trading leverage of a market leader.
This disciplined, research-oriented approach has paid off for investors,
and is a key investment strategy for Nuveen Flagship Missouri Municipal Bond
Fund.
Performance figures are quoted for Class A shares at net asset value. Comments
cover the six-month period ended November 30, 1999. The views expressed reflect
those of the portfolio management team and are subject to change at any time,
based on market and other conditions.
Nuveen Flagship Missouri Municipal Bond Fund features portfolio management by
Nuveen Investment Advisory Services, a team of portfolio managers and research
analysts committed to a disciplined, research-oriented investment strategy. To
help you understand the fund's performance for the six-month period ended
November 30, 1999, we spoke with Portfolio Manager Mike Davern.
Q In an effort to cool any brewing inflationary pressures, the Federal Reserve
Board (the Fed) raised short-term interest rates by 25 basis points, or 0.25
percent, three times in the six-month reporting period we're discussing today.
The increases occurred in June, August and November. The Fed indicated that the
rate increases were a reversal of the rate cuts it made in 1998 when global
economic and market instability threatened to derail the U.S. economy. How do
bonds typically perform in such an environment?
MIKE When interest rates are rising, it's virtually impossible for bonds to
produce the type of performance results we like to see, since bond prices move
inversely to yields. Let's look at the numbers. The 30-year U.S. Treasury bond
yield rose from 5.92% on June 1, 1999, to 6.28% on November 30, 1999, an
increase of 36 basis points. Municipal bonds had an even tougher time. The 30-
year municipal bond started the period yielding 5.33% and ended it at 6.00%, a
much more dramatic jump of 67 basis points.
Q That's quite a discrepancy. Why have municipal bonds underperformed Treasury
bonds?
MIKE Unlike the highly liquid Treasury bond market -- which brings in buyers
and sellers from all over the world -- the municipal market's performance is
highly dependent on local factors of supply and demand.
Despite rising interest rates and higher financing costs, the booming U.S.
economy has encouraged local municipalities to finance new projects, and thus,
the supply of bonds was quite plentiful. However, demand was not quite so
robust, even though municipal bonds are offering extremely attractive yields,
especially when viewed on a taxable equivalent basis. In fact, as of November
30, 1999, the ratio between long-term municipal yields and 30-year Treasury
yields stood at 97.14%, meaning that municipal bonds presented an exceptionally
attractive investment option relative to Treasuries, which are backed by the
full faith and credit of the U.S. government.
Q Have Y2K concerns caused any disruptions in the market?
MIKE Actually, they haven't. If anything, it has been an extremely normal year
in terms of the timing of issuance.
SEMIANNUAL REPORT page 8
<PAGE>
For example, we recently looked at one big municipal bond deal that was set
to close on December 31, 1999, and it was oversubscribed. If there were concerns
about year-end cash flow, then the issuer would have had trouble placing the
deal. So we can't sense any problems associated with the Y2K computer bug. With
all the effort put into fixing computer systems over the last two years, it
really is not all that surprising.
Q What other national trends did you notice?
MIKE As you know, some of the bonds in our portfolios are insured. One trend
we're seeing now is in the bond insurance area: four major bond insurance
companies have stepped back a little bit, choosing not to insure some deals in
reaction to the bankruptcy of a hospital issuer in Philadelphia. This has caused
the insurers to reassess their risk exposure, certainly in the hospital market
as well as some other lower-rated credits.
Although that may sound like a negative, it actually created an opportunity
for us. So many of the bonds in our portfolio are insured with high credit
quality but relatively low yield that it's nice to get to choose from some
lower-rated credits. With the insurers stepping back, a portion of the new issue
supply is now coming to the market uninsured. This environment allows us to use
our excellent credit research staff to find bonds which have the potential for
extra yield without exposure to extra risk.
Q How did the fund perform for period ended November 30, 1999?
MIKE Nuveen Flagship Missouri Municipal Bond Fund generated a six-month total
return on net asset value of -3.87%, underperforming the Lipper Missouri
Municipal Bond Fund category, which reported an average total return of -3.44%.
For the one-, five- and 10-year periods ended November 30, 1999, the Nuveen fund
had an average annualized total return of -3.42%, 6.67% and 6.54%, respectively,
compared to the Lipper peer group average total returns of -3.17%, 6.66% and
6.14% for the same time periods.*
Total return equals a fund's income plus capital gains distributions, if
any, plus or minus changes in net asset value.
Nuveen Flagship Missouri Municipal Bond Fund's taxable equivalent total
return, for investors in the 35% combined federal and state income tax bracket,
was -2.53%.** As of November 30, 1999, the fund's SEC 30-day yield was 5.00%.
For investors in the combined 35% federal and state income tax bracket, that is
equivalent to a yield of 7.69% on a taxable investment.
Q Why did the fund underperform its benchmark?
MIKE Our fund invests primarily in bonds with long-term maturities, which is one
of the ways it pursues its objective. In a bear market for bonds, which has
generally been the environment in 1999, long-term maturities will typically
underperform because these bonds are the most sensitive to changes in interest
rates. In a bull market, we would hope to outperform, as shown by our longer-
term performance numbers.
On the plus side, the rising interest rate environment provided the
opportunity to buy bonds with higher yields and better call protection, thus
strengthening the fund's dividend-paying capability.
"This environment
allows us to use our
excellent credit
research staff
to find bonds
which have the
potential for
extra yield
without exposure
to extra risk."
SEMIANNUAL REPORT page 9
<PAGE>
"We try to
purchase bonds
in sectors
where there is
limited supply such
as transportation
and water/sewer."
Since bond prices fall in a rising interest rate environment, certain bonds
purchased earlier in the period fell in value. We sold some of these bonds,
taking a capital loss that, for tax purposes, can be used to offset capital
gains, or be carried forward for up to eight years to offset future gains. Tax
losses can therefore be very valuable for the fund. If the bonds purchased are
also at a discount to par value (priced less than 100), the fund still maintains
its ability to come back in price if the market recovers.
Q What variables do you look for when considering a purchase for the portfolio?
MIKE There are at least five different variables that we examine: price, coupon,
call, sector and rating.
Price. In a bear market, owning a bond selling at a discount to par, or
say, 80 cents on the dollar, has its advantages. As time passes, the bond heads
toward maturity when it is repaid at $1. As a result, a discount bond isn't
going to drop as much in price in a bear market because the passage of time is
tugging the bond upward in price, and thus closer to maturity. We say that a
bond priced at a deep discount has good "convexity," suggesting that the bond's
ability to go up in price is greater than its ability to go down in price. In
contrast, a bond selling at a premium above par usually has less upside. Premium
bonds typically pay higher coupons, which means that the issuer will want to
"call" the bonds, or redeem them, if interest rates later fall. As a result,
such bonds have less upside.
Call. We prefer to own bonds that can't be called for at least eight to 10
years, and avoid, whenever possible, bonds subject to call risk in the next year
or so. Currently, only 2.3% of the Missouri portfolio is callable in the year
2000. That's particularly important if interest rates begin falling again. Bonds
with longer calls can generally be found in the primary or new issue market.
Coupon. As far as a bond's coupon is concerned, we're looking for bonds
that provide good tax-exempt income while keeping the fund's credit quality
high. In today's market, we're looking for bonds that pay more than 6%, which is
the equivalent of 9.2% on a taxable equivalent basis for taxpayers in the
combined 35% federal and state income tax bracket.
Sector. We try to purchase bonds in sectors where there is limited supply
such as transportation and water/sewer. We believe that anytime you can find
something that's relatively scarce, then you're finding something that has
value.
Rating. All of our purchases are in Standard & Poor's top four credit
rating categories, or, if non-rated, judged by Nuveen research to have
equivalent credit quality. Over the past few years, the majority of purchases
have been insured bonds. In the past six months, however, there's been some
opportunity to buy A, BAA and non-rated bonds. In fact, we've even bought
uninsured bonds, paid an insurance company to insure them and reaped an
immediate paper profit.
NUVEEN FLAGSHIP MISSOURI MUNICIPAL BOND FUND
Top Five Sectors
Tax Obligation (Limited) 16%
- --------------------------------------------
Healthcare 15%
- --------------------------------------------
Housing (Multifamily) 12%
- --------------------------------------------
U.S. Guaranteed 11%
- --------------------------------------------
Long-Term Care 11%
- --------------------------------------------
As a percentage of total bond holdings as of November 30, 1999. Holdings are
subject to change.
SEMIANNUAL REPORT page 10
<PAGE>
For instance, during the period the fund purchased a non-rated bond issued
by the Howard Bend Levee District yielding about 6 percent. At the time of
purchase, the fund obtained a 0.70 percentage point yield advantage over AAA
bonds issued at the same time. Nuveen research believes that the underlying
credit quality of this bond is a solid A rating.
Another purchase was the City of Lees Summit Industrial Development
Authority bonds for an expansion of the John Knox Village, a non-rated
retirement facility. Because Nuveen research was already familiar with this
credit, the fund was able to act quickly to purchase these bonds at an
attractive yield.
NUVEEN FLAGSHIP MISSOURI MUNICIPAL BOND FUND
Bond Credit Quality
[PIE CHART APPEARS HERE]
AAA/U.S. Guaranteed.......... 49%
AA........................... 13%
A............................ 10%
BBB/NR....................... 28%
As a percentage of total bond holdings as of November 30, 1999. Holdings are
subject to change.
Q What is your outlook for Nuveen Flagship Missouri Municipal Bond Fund?
MIKE We will continue to focus on maintaining a stable dividend that is exempt
from federal and state income taxes. Using Nuveen research, we will continue to
look for attractively priced bonds offering higher yields. In a high tax state
such as Missouri, we believe that municipal bonds represent a very attractive
option for investors searching for yield.
* The Lipper Peer Group returns represent the average annualized total return
of the 20 funds in the Lipper Missouri Municipal Debt Category for the six-
month and one-year periods ended November 30, 1999, and 14 and five funds for
the five- and 10-year periods, respectively. The returns assume reinvestment
of dividends and do not reflect any applicable sales charges.
** Taxable equivalent total return equals a fund's taxable equivalent income
(based on the combined federal and state income tax rate) plus capital gains
distributions, if any, plus or minus changes in net asset value.
SEMIANNUAL REPORT page 11
<PAGE>
NUVEEN FLAGSHIP MISSOURI MUNICIPAL BOND FUND
Fund Spotlight as of November 30, 1999
Terms To Know
The following are a few terms used throughout this report.
Duration A mathematical measure of the price sensitivity of a bond fund's
portfolio to changes in interest rates. Typically the shorter the duration, the
less price and return variability you can expect in the fund's price per share
as interest rates change.
Fed Easing When the Federal Reserve is following an easy money policy, it is
essentially increasing the money supply by decreasing the federal funds rate and
making money cheaper to borrow. The intention is to help the economy grow.
Fed Tightening When the Federal Reserve is following tight money policy, it is
essentially decreasing the money supply by increasing the fed funds rate and
making money more expensive to borrow. The intention is to slow the growth of
the economy and curtail inflation.
Federal Fund Rates The interest rate charged by banks to lend to other banks
needing overnight loans; this figure is the most sensitive indicator of the
direction of short-term interest rates.
Municipal Bond A bond issued by a state, city, or other municipality to finance
public works such as the construction of roads or schools. The interest is
usually free from federal income tax and may be free from state and local taxes
as well.
SEC Yield A standardized measure of the current net market yields on a mutual
fund's investment portfolio.
Taxable Equivalent Yield The return an investor would have to realize on a
fully taxable investment to equal the stated yield on a tax-exempt investment.
Quick Facts
<TABLE>
<CAPTION>
A Shares B Shares C Shares R Shares
<S> <C> <C> <C> <C>
NAV $10.42 $10.42 $10.41 $10.42
- -----------------------------------------------------------------------
Fund Symbol FMOTX N/A FMOCX N/A
- -----------------------------------------------------------------------
CUSIP 67065R812 67065R796 67065R788 67065R770
- -----------------------------------------------------------------------
Inception Date 8/87 2/97 2/94 2/97
- -----------------------------------------------------------------------
</TABLE>
Total Returns (Annualized)+
<TABLE>
<CAPTION>
A Shares B Shares C Shares R Shares
NAV Offer NAV w/CDSC NAV NAV
<S> <C> <C> <C> <C> <C> <C>
1-Year -3.42% -7.50% -4.07% -7.74% -3.95% -3.22%
- --------------------------------------------------------------------------------
1-Year TER* -0.76% -4.95% -1.82% -5.50% -1.59% -0.45%
- --------------------------------------------------------------------------------
5-Year 6.67% 5.76% 5.97% 5.81% 6.10% 6.79%
- --------------------------------------------------------------------------------
10-Year 6.54% 6.09% 6.05% 6.05% 5.96% 6.61%
- --------------------------------------------------------------------------------
</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. 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 income tax
rate of 35%).
Tax-Free Yields
<TABLE>
<CAPTION>
A Shares B Shares C Shares R Shares
NAV Offer NAV NAV NAV
<S> <C> <C> <C> <C> <C>
SEC 30-Day Yield 5.00% 4.79% 4.24% 4.45% 5.20%
- -------------------------------------------------------------------------------
Taxable Equivalent Yield 7.69% 7.37% 6.52% 6.85% 8.00%
</TABLE>
Monthly Tax-Free Dividends (Class A Shares)
[BAR CHART APPEARS HERE]
<TABLE>
<CAPTION>
Month Amount
<S> <C>
12/1998 $.0460
1/1999 .0455
2/1999 .0455
3/1999 .0455
4/1999 .0455
5/1999 .0455
6/1999 .0455
7/1999 .0455
8/1999 .0455
9/1999 .0455
10/1999 .0455
11/1999 .0455
</TABLE>
Portfolio Statistics
<TABLE>
<CAPTION>
<S> <C>
Total Net Assets $229.0 million
- -----------------------------------
Average Effective
Maturity 19.65 years
- -----------------------------------
Average Duration 8.22
- -----------------------------------
</TABLE>
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 their original cost. Performance of classes
will differ. For additional information, please see the fund prospectus.
SEMIANNUAL REPORT page 12
<PAGE>
NUVEEN FLAGSHIP WISCONSIN MUNICIPAL BOND FUND
From the Portfolio Manager's Perspective
Nuveen Flagship Wisconsin Municipal Bond Fund features portfolio management by
Nuveen Investment Advisory Services, a team of portfolio managers and research
analysts committed to a disciplined, research-oriented investment strategy. To
help you understand the fund's performance for the six-month period ended
November 30, 1999, we spoke with Portfolio Manager Mike Davern.
Q In an effort to cool any brewing inflationary pressures, the Federal Reserve
Board (the Fed) raised short-term interest rates by 25 basis points, or 0.25
percent, three times in the six-month reporting period we're discussing today.
The increases occurred in June, August and November. The Fed indicated that the
rate increases were a reversal of the rate cuts it made in 1998 when global
economic and market instability threatened to derail the U.S. economy. How do
bonds typically perform in such an environment?
MIKE When interest rates are rising, it's virtually impossible for bonds to
produce the type of performance results we like to see, since bond prices move
inversely to yields. Let's look at the numbers. The 30-year U.S. Treasury bond
yield rose from 5.92% on June 1, 1999, to 6.28% on November 30, 1999, an
increase of 36 basis points. Municipal bonds had an even tougher time. The 30-
year municipal bond started the period yielding 5.33% and ended it at 6.00%, a
much more dramatic jump of 67 basis points.
Q That's quite a discrepancy. Why have municipal bonds underperformed Treasury
bonds?
MIKE Unlike the highly liquid Treasury bond market -- which brings in buyers and
sellers from all over the world -- the municipal market's performance is highly
dependent on local factors of supply and demand.
Despite rising interest rates and higher financing costs, the booming U.S.
economy has encouraged local municipalities to finance new projects, and thus,
the supply of bonds was quite plentiful. However, demand was not quite so
robust, even though municipal bonds are offering extremely attractive yields,
especially when viewed on a taxable equivalent basis. In fact, as of November
30, 1999, the ratio between long-term municipal yields and 30-year Treasury
yields stood at 97.14%, meaning that municipal bonds presented an exceptionally
attractive investment option relative to Treasuries, which are backed by the
full faith and credit of the U.S. government.
Nuveen is dedicated to providing investors access to a team of highly
experienced investment managers, each overseeing portfolios within their
specific areas of expertise. We call them Premier Advisers/sm/ -- a select group
of asset management firms who direct the investment activities of the Nuveen
Mutual Funds. Nuveen has chosen them for their rigorously disciplined investment
approaches and their consistent long-term performance.
Drawing on decades of experience and specialized knowledge, these skilled asset
managers have earned reputations for excellence in their fields of expertise,
whether it be blue-chip growth stocks, large-cap value stocks, bonds or
international securities.
Nuveen's Premier Adviser/sm/ for income investing is Nuveen Investment Advisory
Services (NIAS). NIAS follows a disciplined, research-driven investment approach
to uncover income securities that combine exceptional relative value with above-
average return potential. Drawing on 300 combined years of investment
experience, the Nuveen team of portfolio managers and research analysts offers:
. A commitment to exhaustive research
. An active, value-oriented investment style
. The unmatched presence of trading leverage of a market leader.
This disciplined, research-oriented approach has paid off for investors, and is
a key investment strategy for Nuveen Flagship Wisconsin Municipal Bond Fund.
Performance figures are quoted for Class A shares at net asset value. Comments
cover the six-month period ended November 30, 1999. The views expressed reflect
those of the portfolio management team and are subject to change at any time,
based on market and other conditions.
SEMIANNUAL REPORT page 13
<PAGE>
Q Have Y2K concerns caused any disruptions in the market?
MIKE Actually, they haven't. If anything, it has been an extremely normal year
in terms of the timing of issuance.
For example, we recently looked at one big municipal bond deal that was set
to close on December 31, 1999, and it was oversubscribed. If there were concerns
about year-end cash flow, then the issuer would have had trouble placing the
deal. So we can't sense any problems associated with the Y2K computer bug. With
all the effort put into fixing computer systems over the last two years, it
really is not all that surprising.
Q What other national trends did you notice?
MIKE As you know, some of the bonds in our portfolios are insured. One trend
we're seeing now is in the bond insurance area: four major bond insurance
companies have stepped back a little bit, choosing not to insure some deals in
reaction to the bankruptcy of a hospital issuer in Philadelphia. This has caused
the insurers to reassess their risk exposure, certainly in the hospital market
as well as some other lower-rated credits.
Although that may sound like a negative, it actually created an opportunity
for us. So many of the bonds in our portfolio are insured with high credit
quality but relatively low yield that it's nice to get to choose from some
lower-rated credits. With the insurers stepping back, a portion of the new issue
supply is now coming to the market uninsured. This environment allows us to use
our excellent credit research staff to find bonds which have the potential for
extra yield without exposure to extra risk.
Q How did the fund perform for the period ended November 30, 1999?
MIKE Nuveen Flagship Wisconsin Municipal Bond Fund generated a six-month total
return on net asset value of -5.80%, underperforming the Lipper Other States
Municipal Debt category, which reported an average total return of -3.29%. For
the one-year period ending November 30, 1999, the Nuveen fund had a total return
of -5.72%, compared to the Lipper peer group average total return of -2.86%.*
For the five-year period, the Nuveen fund reported a 6.18% average annual total
return compared with the Lipper peer group return of 6.40%.
Total return equals a fund's income plus capital gains distributions, if
any, plus or minus changes in net asset value.
Nuveen Flagship Wisconsin Municipal Bond Fund's six-month taxable
equivalent total return, for investors in the 35.5% combined federal and state
income tax bracket, was -4.59%.** As of November 30, 1999, the fund's SEC 30-day
yield was 4.73%. For investors in the combined 35.5% federal and state income
tax bracket, that is equivalent to a yield of 7.33% on a taxable investment.
"This environment
allows us to use our
excellent credit
research staff
to find bonds
which have the
potential for
extra yield
without exposure
to extra risk."
SEMIANNUAL REPORT page 14
<PAGE>
Q Why did the fund underperform its benchmark?
MIKE The Lipper Other States Municipal Debt category includes bond funds with
short and intermediate maturities. In contrast, our fund invests primarily in
bonds with long-term maturities, which is one of the ways it pursues its
objective. In a bear market for bonds, which has generally been the environment
in 1999, long-term maturities will typically underperform because these bonds
are the most sensitive to changes in interest rates. In a bull market, we would
hope to outperform.
On the plus side, the rising interest rate environment provided the
opportunity to buy bonds with higher yields and better call protection, thus
strengthening the fund's dividend-paying capability.
Since bond prices fall in a rising interest rate environment, certain bonds
purchased earlier in the period fell in value. We sold some of these bonds,
taking a capital loss that, for tax purposes, can be used to offset capital
gains, or be carried forward for up to eight years to offset future gains. Tax
losses can therefore be very valuable for the fund. If the bonds purchased are
also at a discount to par value (priced less than 100), the fund still maintains
its ability to come back in price as the market recovers.
Q What variables do you look for when considering a purchase for the portfolio?
MIKE There are at least five different variables that we examine: price, coupon,
call, sector and rating.
Price. In a bear market, owning a bond selling at a discount to par, or
say, 80 cents on the dollar, has its advantages. As time passes, the bond heads
toward maturity when it is repaid at $1. As a result, a discount bond isn't
going to drop as much in price in a bear market because the passage of time is
tugging the bond upward in price, and thus closer to maturity. We say that a
bond priced at a deep discount has good "convexity," suggesting that the bond's
ability to go up in price is greater than its ability to go down in price. In
contrast, a bond selling at a premium above par usually has less upside. Premium
bonds typically pay higher coupons, which means that the issuer will want to
"call" the bonds, or redeem them, if interest rates later fall. As a result,
such bonds have less upside.
Call. We prefer to own bonds that can't be called for at least eight to 10
years, and avoid, whenever possible, bonds subject to call risk in the next year
or so. Bonds with longer calls can generally be found in the primary or new
issue market.
Coupon. As far as a bond's coupon is concerned, we're looking for bonds
that provide good tax-exempt income while keeping the fund's credit quality
high. In today's market, we're looking for bonds that pay more than 6%, which is
the equivalent of 9.3% on a taxable equivalent basis for taxpayers in the
combined 35.5% federal and state income tax bracket.
Sector. We try to purchase bonds in sectors where there is limited supply
such as transportation and water/sewer. We believe that anytime you can find
something that's relatively scarce, then you're finding something that has
value.
NUVEEN FLAGSHIP WISCONSIN MUNICIPAL BOND FUND
Top Five Sectors
Tax Obligation (Limited) 54%
- ----------------------------------------------------
U.S. Guaranteed 9%
- ----------------------------------------------------
Housing (Multifamily) 8%
- ----------------------------------------------------
Long-Term Care 7%
- ----------------------------------------------------
Education and Civic Organizations 7%
- ----------------------------------------------------
As a percentage of total bond holdings as of
November 30, 1999. Holdings are subject to change.
SEMIANNUAL REPORT page 15
<PAGE>
"In a high tax state such as Wisconsin, we believe that municipal bonds
represent a very attractive option for investors searching for yield."
* The Lipper Peer Group returns represent the average annualized total return
of the 75 funds in the Lipper Other States Municipal Debt Category for the
six-month and one-year periods ended November 30, 1999, and 47 funds for
the five-year period. The returns assume reinvestment of dividends and do
not reflect any applicable sales charges.
** Taxable equivalent total return equals a fund's taxable equivalent income
(based on the combined federal and state income tax rate) plus capital
gains distributions, if any, plus or minus changes in net asset value.
Rating. All of our purchases are in Standard & Poor's top four credit
rating categories, or, if non-rated, judged by Nuveen research to have
equivalent credit quality. Over the past few years, the majority of purchases
have been insured bonds. In the past six months, however, there's been some
opportunity to buy A, BAA and non-rated bonds.
Due to a scarcity of issuance, finding attractive double-tax exempt bonds
in the Wisconsin municipal market can be especially challenging, even though
overall nationwide demand for municipal bonds is weak. As a result, when double-
tax exempt bonds do become available in Wisconsin, they are often overpriced
relative to the credit risk inherent in the issue. Still, values can be
uncovered. As a constant participant in the Wisconsin municipal market, the fund
is able to take advantage of these limited opportunities when they become
available.
For example, we recently purchased $1 million of AAA-rated Madison
Community Development Authority bonds for the Glentree Glen Apartments. The fund
received an excellent yield for this rare AAA-rated, double-tax exempt Wisconsin
credit maturing in 2029. By purchasing a total of five new double-tax exempt
bonds for the fund, we were able to increase our percentage of direct Wisconsin
double-tax exempt bonds to 70% at November 30, 1999. The remaining holdings,
issues from Puerto Rico, Guam and the Virgin Islands are also double-tax exempt.
NUVEEN FLAGSHIP WISCONSIN MUNICIPAL BOND FUND
Bond Credit Quality
[PIE CHART APPEARS HERE]
<TABLE>
<CAPTION>
<S> <C>
AAA/U.S. Guaranteed.............. 38%
AA............................... 15%
A................................ 15%
BBB/NR........................... 32%
</TABLE>
As a percentage of total bond holdings as of November 30, 1999. Holdings are
subject to change.
Q What is your outlook for Nuveen Flagship Wisconsin Municipal Bond Fund?
MIKE We will continue to focus on maintaining a stable dividend that is exempt
from federal and state income taxes. Using Nuveen research, we will continue to
look for attractively priced bonds offering higher yields. In a high tax state
such as Wisconsin, we believe that municipal bonds represent a very attractive
option for investors searching for yield.
SEMIANNUAL REPORT page 16
<PAGE>
NUVEEN FLAGSHIP WISCONSIN MUNICIPAL BOND FUND
Fund Spotlight as of November 30, 1999
Quick Facts
<TABLE>
<CAPTION>
A Shares B Shares C Shares R Shares
<S> <C> <C> <C> <C>
NAV $9.39 $9.41 $9.41 $9.42
- -----------------------------------------------------------------------
Fund Symbol FWIAX N/A N/A N/A
- -----------------------------------------------------------------------
CUSIP 67065R721 67065R713 67065R697 67065R689
- -----------------------------------------------------------------------
Inception Date 6/94 2/97 2/97 2/97
- -----------------------------------------------------------------------
</TABLE>
Total Returns (Annualized)+
<TABLE>
<CAPTION>
A Shares B Shares C Shares R Shares
NAV Offer NAV w/CDSC NAV NAV
<S> <C> <C> <C> <C> <C> <C>
1-Year -5.72% -9.70% -6.52% -10.12% -6.21% -5.50%
- ----------------------------------------------------------------------------------
1-Year TER* -3.28% -7.37% -4.51% -8.11% -4.08% -2.95%
- ----------------------------------------------------------------------------------
5-Year 6.18% 5.28% 5.52% 5.36% 5.75% 6.36%
- ----------------------------------------------------------------------------------
Since Inception 4.65% 3.84% 4.01% 3.86% 4.23% 4.81%
- ----------------------------------------------------------------------------------
</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. 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 income tax
rate of 35.5%).
Tax-Free Yields
<TABLE>
<CAPTION>
A Shares B Shares C Shares R Shares
NAV Offer NAV NAV NAV
<S> <C> <C> <C> <C> <C>
SEC 30-Day Yield 4.73% 4.53% 3.98% 4.18% 4.93%
- --------------------------------------------------------------------------------
Taxable Equivalent Yield 7.33% 7.02% 6.17% 6.48% 7.64%
</TABLE>
Monthly Tax-Free Dividends (Class A Shares)
[BAR CHART APPEARS HERE]
<TABLE>
<CAPTION>
Month Amount
<S> <C>
12/1998 $.0400
1/1999 .0380
2/1999 .0380
3/1999 .0380
4/1999 .0380
5/1999 .0380
6/1999 .0380
7/1999 .0380
8/1999 .0365
9/1999 .0365
10/1999 .0365
11/1999 .0365
</TABLE>
Portfolio Statistics
<TABLE>
<CAPTION>
<S> <C>
Total Net Assets $37.9 million
- ----------------------------------
Average Effective
Maturity 21.43 years
- ----------------------------------
Average Duration 10.59
- ----------------------------------
</TABLE>
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 their original cost. Performance of classes
will differ. For additional information, please see the fund prospectus.
Terms To Know
The following are a few terms used throughout this report.
Duration A mathematical measure of the price sensitivity of a bond fund's
portfolio to changes in interest rates. Typically the shorter the duration, the
less price and return variability you can expect in the fund's price per share
as interest rates change.
Fed Easing When the Federal Reserve is following an easy money policy, it is
essentially increasing the money supply by decreasing the federal funds rate and
making money cheaper to borrow. The intention is to help the economy grow.
Fed Tightening When the Federal Reserve is following tight money policy, it is
essentially decreasing the money supply by increasing the fed funds rate and
making money more expensive to borrow. The intention is to slow the growth of
the economy and curtail inflation.
Federal Fund Rates The interest rate charged by banks to lend to other banks
needing overnight loans; this figure is the most sensitive indicator of the
direction of short-term interest rates.
Municipal Bond A bond issued by a state, city, or other municipality to finance
public works such as the construction of roads or schools. The interest is
usually free from federal income tax and may be free from state and local taxes
as well.
SEC Yield A standardized measure of the current net market yields on a mutual
fund's investment portfolio.
Taxable Equivalent Yield The return an investor would have to realize on a
fully taxable investment to equal the stated yield on a tax-exempt investment.
SEMIANNUAL REPORT page 17
<PAGE>
Portfolio of Investments (Unaudited)
Nuveen Flagship Kansas Municipal Bond Fund
November 30, 1999
<TABLE>
<CAPTION>
Principal Optional Call Market
Amount Description Provisions* Ratings** Value
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Basic Materials - 3.6%
$1,000,000 Dodge City, Kansas, Pollution Control Revenue Refunding Bonds 5/02 at 102 Aa3 $1,054,530
(Excel Corporation Project/Cargill), Series 1992, 6.625%, 5/01/05
3,700,000 Ford County, Kansas, Sewage and Solid Waste Disposal Revenue 6/08 at 102 A+ 3,288,338
Bonds (Excel Corporation Project/Cargill), Series 1998,
5.400%, 6/01/28 (Alternative Minimum Tax)
- ------------------------------------------------------------------------------------------------------------------------------------
Capital Goods - 3.9%
4,550,000 City of Clearwater, Kansas, Pollution Control Refunding Revenue 2/02 at 101 A+ 4,693,917
Bonds (Vulcan Materials Company), Series 1992, 6.375%, 2/01/12
- ------------------------------------------------------------------------------------------------------------------------------------
Consumer Cyclicals - 0.6%
650,000 Wichita Airport Authority, Kansas, Airport Facilities Refunding 3/02 at 102 AA 694,941
Revenue Bonds (Wichita Airport Hotel Associates, LP Project),
Series 1992, 7.000%, 3/01/05
- ------------------------------------------------------------------------------------------------------------------------------------
Consumer Staples - 1.5%
2,000,000 Garden City, Kansas, Sewage Disposal Revenue Bonds, Series 1997 9/07 at 102 BBB+ 1,853,040
(Monfort, Inc. [ConAgra, Inc. -- Guarantor] Project), 5.750%,
9/01/17 (Alternative Minimum Tax)
- ------------------------------------------------------------------------------------------------------------------------------------
Education and Civic Organizations - 7.5%
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 1,148,008
1,000,000 5.700%, 4/01/18 4/08 at 100 N/R 909,830
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 874,454
1,000,000 5.600%, 10/01/18 10/08 at 100 N/R 912,750
1,500,000 Puerto Rico Industrial, Tourist, Educational, Medical and 2/09 at 101 BBB 1,369,245
Environmental Control Facilities Financing Authority, Higher
Education Revenue Bonds, Series 1999 (Ana G. Mendez University
System Project), 5.375%, 2/01/19
3,860,000 Washburn University of Topeka, Building Revenue Bonds (Topeka, 7/09 at 100 AAA 3,875,093
Kansas), Series 1999 (Learning Living Center Project), 6.000%, 7/01/22
- ------------------------------------------------------------------------------------------------------------------------------------
Health Care - 20.2%
5,630,000 Colby, Kansas, Health Facilities Refunding Revenue Bonds 8/08 at 100 N/R 4,911,331
(Citizens Medical Center, Inc.), Series 1998, 5.625%, 8/15/16
2,815,000 Kansas Development Finance Authority, Health Facilities Revenue 11/06 at 100 AAA 2,798,392
Bonds (Stormont-Vail HealthCare, Inc.), Series 1996F -- Tax Exempt,
5.800%, 11/15/16
2,150,000 Kansas Development Finance Authority, Health Facilities Revenue 11/06 at 100 AAA 2,106,828
Bonds (Stormont-Vail HealthCare, Inc.), Series 1996G -- Tax Exempt,
5.800%, 11/15/21
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 1,082,375
400,000 6.200%, 7/01/19 7/04 at 100 A3 395,284
City of Lawrence, Kansas, Hospital Revenue Bonds, Series 1999
(The Lawrence Memorial Hospital):
930,000 6.000%, 7/01/19 7/09 at 100 AA 914,702
1,110,000 5.750%, 7/01/24 7/09 at 100 AA 1,038,705
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- 884,220
1,750,000 5.750%, 11/15/24 11/08 at 100 BBB- 1,516,568
</TABLE>
18
<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 $ 102,753
Environmental Control Facilities Financing Authority, Hospital Revenue
Bonds, 1995 Series A (Hospital Auxilio Mutuo Obligated Group Project),
6.250%, 7/01/24
1,800,000 City of Salina, Kansas, Hospital Revenue Bonds (Salina Regional 10/09 at 100 AAA 1,731,654
Health Center Inc.), Series 1999, 5.750%, 10/01/29
1,500,000 University of Kansas Hospital Authority, Health Facilities 9/09 at 100 AAA 1,407,645
Revenue Bonds (KU Health System), Series 1999A, 5.550%, 9/01/26
5,000,000 City of Wichita, Kansas, Hospital Facilities Improvement and 11/09 at 101 A+ 4,903,900
Refunding Revenue Bonds, Series XI of 1999 (Via Christi Health System,
Inc.), 6.250%, 11/15/24
450,000 CSJ Health System of Wichita, Inc. (Kansas), Revenue Bonds, 11/01 at 102 A+ 480,902
Series 1991X, 7.000%, 11/15/18
- -----------------------------------------------------------------------------------------------------------------------------------
Housing/Multifamily - 14.3%
965,000 Kansas City, Kansas, Multifamily Housing Revenue Refunding Bonds, 7/01 at 100 AAA 978,356
Series 1994 (FHA-Insured Mortgage Loan - Rainbow Towers Project),
6.700%, 7/01/23
Kansas Development Finance Authority, Multifamily Housing Revenue Bonds
(Park Apartments Project), Series 1996:
325,000 5.700%, 12/01/09 (Alternative Minimum Tax) 12/06 at 100 AAA 325,000
665,000 5.900%, 12/01/14 (Alternative Minimum Tax) 12/06 at 100 AAA 668,405
1,150,000 6.000%, 12/01/21 (Alternative Minimum Tax) 12/06 at 100 AAA 1,123,930
5,000,000 Kansas Development Finance Authority, Multifamily Housing 12/08 at 101 N/R 4,569,150
Refunding Revenue Bonds (First Kansas State Partnership,
LP Project), Series 1998Y, 6.125%, 12/01/28 (Alternative Minimum Tax)
Lenexa, Kansas, Multifamily Housing Revenue Refunding Bonds
(Barrington Park Apartments Project), Series 1993A:
445,000 6.300%, 2/01/09 2/03 at 102 AA 457,166
475,000 6.400%, 2/01/10 2/03 at 102 AA 487,953
2,000,000 6.450%, 2/01/18 2/03 at 102 AA 2,054,460
1,000,000 6.500%, 2/01/23 2/03 at 102 AA 1,020,500
1,000,000 City of Olathe, Kansas, Multifamily Housing Refunding Revenue 6/04 at 102 AAA 1,030,430
Bonds (Federal National Mortgage Association Program - Deerfield
Apartments Project), Series 1994A, 6.450%, 6/01/19
City of Wichita, Kansas, Multifamily Housing Revenue Refunding Bonds
(The Shore Apartments Project), Series XI-A, 1994:
1,500,000 6.700%, 4/01/19 4/09 at 102 AA 1,565,220
2,000,000 6.800%, 4/01/24 4/09 at 102 AA 2,103,100
900,000 City of Wichita, Kansas, Multifamily Housing Revenue Bonds 11/05 at 102 A 870,840
(Brentwood Apartments Project), Senior Lien Series IX-A,
1995, 5.850%, 12/01/25
- ----------------------------------------------------------------------------------------------------------------------------------
Housing/Single Family - 5.1%
2,410,000 Kansas City, Kansas, GNMA Collateralized Mortgage Revenue Bonds, 5/05 at 103 Aaa 2,302,153
Series 1995, 5.900%, 11/01/27 (Alternative Minimum Tax)
230,000 City of Olathe, Kansas, Labette County, Kansas, Collateralized 2/05 at 105 Aaa 247,933
Single Family Mortgage Refunding Revenue Bonds, Series 1994C-I,
7.800%, 2/01/25
1,360,000 Sedgwick County, Kansas and Shawnee County, Kansas, Single Family No Opt. Call Aaa 1,473,370
Mortgage Revenue Bonds (Mortgaged-Backed Securities Program),
1997 Series A-1, 6.950%, 6/01/29 (Alternative Minimum Tax)
1,210,000 Sedgwick County, Kansas and Shawnee County, Kansas, Single Family 6/08 at 105 Aaa 1,252,519
Mortgage Revenue Bonds (Mortgaged-Backed Securities Program),
1998 Series A1, 0.000%, 12/01/22 (Alternative Minimum Tax)
855,000 Sedgwick County, Kansas and Shawnee County, Kansas, 11/04 at 105 Aaa 918,458
Collateralized Single 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, Public Improvement Bonds of 1994 7/04 at 102 AAA 1,478,264
(General Obligation Bonds), 6.450%, 7/01/17
350,000 Unified School District No. 437 (Auburn-Washburn), Shawnee 3/02 at 100 AAA 365,295
County, Kansas, General Obligation Refunding Bonds,
Series 1992, 6.600%, 9/01/09
</TABLE>
19
<PAGE>
<TABLE>
<CAPTION>
Portfolio of Investments (Unaudited)
Nuveen Flagship Kansas Municipal Bond Fund (continued)
November 30, 1999
Principal Optional Call Market
Amount Description Provisions* Ratings** Value
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Tax Obligation/Limited - 20.1%
$ 1,700,000 State of Kansas Department of Transportation, Highway Revenue 9/02 at 102 AA+ $1,799,586
Bonds, Series 1992A, 6.000%, 9/01/12
1,780,000 State of Kansas Department of Transportation, Highway Revenue 9/09 at 100 AA+ 1,658,675
Bonds, Series 1999, 5.250%, 9/01/19
1,050,000 Kansas Development Finance Authority, Revenue Bonds, Series T 12/00 at 102 N/R 1,080,912
of 1992 (Kansas Highway Patrol Central Training Facility),
6.600%, 12/01/07
10,525,000 Puerto Rico Highway and Transportation Authority, Highway 7/16 at 100 A 9,713,207
Revenue Bonds, Series Y of 1996, 5.500%, 7/01/36
1,620,000 Puerto Rico Highway and Transportation Authority, 7/08 at 101 A 1,357,560
Transportation Revenue Bonds, Series A,
5.000%, 7/01/38
20,000 Puerto Rico Infrastructure Finance Authority, Special Tax 1/00 at 101 BBB+ 20,255
Revenue Bonds, Series 1988A, 7.750%, 7/01/08
250,000 Shawnee County, Kansas, Certificates of Participation, Series 7/09 at 100 N/R 215,688
1999A (Shawnee Community Mental Health Center, Inc. Project),
5.350%, 7/01/19
2,250,000 Topeka Public Building Commission (Kansas), Revenue Bonds, 6/09 at 100 AAA 1,928,453
Series 1998 (State of Kansas - 10th
and Jackson Projects), 5.000%, 6/01/31
2,000,000 Virgin Islands Public Finance Authority, Revenue and 10/08 at 101 BBB- 1,812,180
Refunding Bonds (Virgin Islands Matching
Fund Loan Notes), Series 1998A (Senior Lien/Refunding),
5.625%, 10/01/25
2,000,000 Virgin Islands Public Finance Authority, Revenue Bonds 10/10 at 101 BBB- 1,994,200
(Virgin Islands Gross Receipts Taxes Loan
Note), Series 1999A, 6.375%, 10/01/19
14,025,000 The Unified Government of Wyandotte County/Kansas City, No Opt. Call AAA 2,486,633
Kansas, Sales Tax Special Obligation
Revenue Bonds (Kansas International Speedway Corporation
Project), Series 1999, 0.000%, 12/01/27
- ------------------------------------------------------------------------------------------------------------------------------------
Transportation - 1.2%
1,500,000 Puerto Rico Ports Authority, Special Facilities Revenue 6/06 at 102 BBB- 1,505,775
Bonds, 1996 Series A (American Airlines,
Inc. Project), 6.250%, 6/01/26 (Alternative Minimum Tax)
- ------------------------------------------------------------------------------------------------------------------------------------
U.S. Guaranteed - 10.2%
440,000 Unified School District No. 340, Jefferson County, Kansas, 9/04 at 100 AAA 472,595
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 6,259,955
Series 1992, 0.000%, 5/01/12
1,000,000 Commonwealth of Puerto Rico, Public Improvement Bonds, of 7/04 at 101 1/2 AAA 1,095,010
1994 (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 85,771
Revenue Bonds, Series T,
6.625%, 7/01/18 (Pre-refunded to 7/01/02)
3,120,000 Reno County, Kansas and Labette County, Kansas, Single Family No Opt. Call Aaa 1,224,662
Mortgage Revenue Bonds, Series 1983A, 0.000%, 12/01/15
2,095,000 Reno County, Kansas, Sedwick County, Kansas and Finney No Opt. Call AAA 797,567
County, Kansas, Single Family Mortgage
Revenue Bonds, Series 1984A, 0.000%, 4/01/16
2,250,000 City of Wichita, Kansas, Revenue Bonds (CSJ Health System of 11/01 at 102 A+*** 2,413,778
Wichita, Inc.), Series 1985 XXV
(Remarketed), 7.200%, 10/01/15
- ------------------------------------------------------------------------------------------------------------------------------------
Utilities - 6.2%
1,500,000 City of Gardner, Kansas, Electric Utility System Revenue 11/01 at 101 N/R 1,560,135
Bonds, Series 1992 Refunding,
7.000%, 11/01/09
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 2,664,025
1,010,000 6.375%, 9/01/23 9/04 at 102 AAA 1,033,917
Puerto Rico Electric Power Authority, Power Revenue Bonds,
Series T:
215,000 6.125%, 7/01/08 7/04 at 102 BBB+ 227,121
150,000 6.000%, 7/01/16 7/04 at 102 BBB+ 151,982
5,000,000 Puerto Rico Electric Power Authority, Power Revenue Bonds, No Opt. Call AAA 1,838,750
Series O, 0.000%, 7/01/17
</TABLE>
20
<PAGE>
<TABLE>
<CAPTION>
Principal Optional Call Market
Amount Description Provisions* Ratings** Value
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Water and Sewer--2.9%
$ 3,000,000 Kansas Development Finance Authority, Water Pollution Control 11/03 at 102 AA+ $ 3,101,520
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 Revenue 3/02 at 102 N/R 375,783
Bonds, Series 1998, 7.125%, 3/01/12
- ------------------------------------------------------------------------------------------------------------------------------------
$146,225,000 Total Investments--(cost $121,267,083)--98.8% 119,117,602
============------------------------------------------------------------------------------------------------------------------------
Short-Term Investments--0.7%
$ 795,000 Kansas Development Finance Authority, Revenue Bonds (Village Shalom A-1+ 795,000
============ Obligated Group), Series 1998BB, Variable Rate Demand Revenue Bonds,
3.700%, 11/15/28+
--------------------------------------------------------------------------------------------------------------------
Other Assets Less Liabilities--0.5% 685,222
--------------------------------------------------------------------------------------------------------------------
Net Assets--100% $120,597,824
====================================================================================================================
</TABLE>
* Optional Call Provisions: Dates (month and year) and prices of the earliest
optional call or redemption. There may be other call provisions at varying
prices at later dates.
** Ratings: Using the higher of Standard & Poor's or Moody's rating.
*** Securities are backed by an escrow or trust containing sufficient U.S.
government or U.S. government agency securities which ensures the timely
payment of principal and interest. Securities are normally considered to be
equivalent to AAA rated securities.
N/R Investment is not rated.
+ Security has a maturity of more than one year, but has variable rate and
demand features which qualify it as a short-term security. The rate
disclosed is that currently in effect. This rate changes periodically based
on market conditions or a specified market index.
See accompanying notes to financial statements.
21
<PAGE>
Portfolio of Investments (Unaudited)
Nuveen Flagship Missouri Municipal Bond Fund
November 30, 1999
<TABLE>
<CAPTION>
Principal Optional Call Market
Amount Description Provisions* Ratings** Value
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Consumer Cyclicals - 0.9%
$2,075,000 Missouri Economic Development, Export and Infrastructure Board, 12/01 at 102 N/R $2,151,070
Industrial Development Revenue Refunding Bonds (Drury Inn Project),
Series 1988 Remarketing, 8.250%, 12/01/12
- ------------------------------------------------------------------------------------------------------------------------------------
Consumer Staples - 3.1%
3,000,000 The Industrial Development Authority of the County of Cape Girardeu, 5/08 at 101 AA 2,631,660
Missouri, Solid Waste Disposal Revenue Bonds (The Procter and Gamble
Products Company Project), 1998 Series, 5.300%, 5/15/28
(Alternative Minimum Tax)
5,100,000 Missouri State Development Finance Board, Solid Waste Disposal No Opt. Call AA 4,445,925
Revenue Bonds (Procter and Gamble Paper Products Company Project),
Series 1999, 5.200%, 3/15/29 (Alternative Minimum Tax)
- ------------------------------------------------------------------------------------------------------------------------------------
Education and Civic Organizations - 9.5%
1,000,000 Missouri Higher Education Loan Authority, Student Loan Revenue Bonds, 2/02 at 102 A 1,040,180
Series 1992 Subordinate Lien, 6.500%, 2/15/06 (Alternative Minimum Tax)
4,190,000 Missouri Higher Education Loan Authority, Student Loan Revenue Bonds, 2/04 at 102 A 4,318,675
Series 1994F, 6.750%, 2/15/09 (Alternative Minimum Tax)
1,155,000 Health and Educational Facilities Authority of the State of Missouri, No Opt. Call AA 1,078,828
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 Missouri, 6/04 at 102 A2 3,725,033
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 1,457,094
1,000,000 5.750%, 6/15/17 6/07 at 101 Baa1 959,990
2,000,000 Health and Educational Facilities Authority of the State of Missouri, 11/08 at 101 AA+ 1,665,000
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 Missouri, 10/08 at 100 N/R 934,406
Educational Facilities Revenue Bonds (The Barstow School), Series
1998, 5.250%, 10/01/23
2,000,000 Health and Educational Facilities Authority of the State of Missouri, 1/10 at 100 AA 1,910,500
Educational Facilities Revenue Bonds (Central Institute for the Deaf),
Series 1999, 5.850%, 1/01/22
Health and Educational Facilities Authority of the State of Missouri,
Educational Facilities Revenue Bonds (Stephens College Issue),
Series 1999:
500,000 5.875%, 6/01/19 6/08 at 102 A1 484,225
900,000 6.000%, 6/01/24 6/08 at 102 A1 878,022
1,195,000 6.000%, 6/01/29 6/08 at 102 A1 1,158,887
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 680,154
1,000,000 7.750%, 12/01/13 (Alternative Minimum Tax) 12/02 at 102 N/R 1,049,750
500,000 7.875%, 12/01/24 (Alternative Minimum Tax) 12/02 at 102 N/R 526,555
- ------------------------------------------------------------------------------------------------------------------------------------
Health Care - 14.8%
415,000 Dent County Industrial Development Authority, Industrial Development 6/01 at 102 N/R 431,642
Revenue Bonds (Southeast Missouri Community Treatment
Center), 8.500%, 6/01/12
775,000 Farmington Industrial Development Authority, Revenue Bonds, 6/01 at 102 N/R 806,078
Series 1992 (Southeast Missouri Community Treatment Center
Project), 8.500%, 6/01/12
The Industrial Development Authority of the County of Jackson, State of
Missouri, Health Care System Revenue Bonds, Saint Joseph Health Center
Issue, Series 1992:
1,910,000 6.500%, 7/01/12 7/02 at 102 AAA 2,015,795
6,250,000 6.500%, 7/01/19 7/02 at 102 AAA 6,450,188
</TABLE>
22
<PAGE>
<TABLE>
<CAPTION>
Principal Optional Call Market
Amount Description Provisions* Ratings** Value
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Health Care (continued)
$ 500,000 The Industrial Development Authority of the City of Joplin, 12/07 at 101 AA- $ 457,560
Missouri, Revenue Bonds (Catholic Health Initiatives),
Series 1997A, 5.125%, 12/01/15
2,565,000 Health and Educational Facilities Authority of the State of 2/02 at 102 AAA 2,678,399
Missouri, Health Facilities Revenue Bonds (Health Midwest),
Series 1992B, 6.250%, 2/15/12
555,000 Health and Educational Facilities Authority of the State of 11/02 at 102 BBB+ 576,695
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 2,760,121
650,000 6.500%, 5/15/20 5/04 at 102 AA 691,009
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+ 3,195,912
1,675,000 5.250%, 2/15/28 2/08 at 102 BBB+ 1,383,399
395,000 Health and Educational Facilities Authority of the State of 2/06 at 102 BBB+ 392,480
Missouri, Health Facilities Revenue Bonds (Lake of the Ozarks
General Hospital Inc.), Series 1996, 6.500%, 2/15/21
790,000 Health and Educational Facilities Authority of the State of Missouri, 11/06 at 100 BBB+ 649,870
Health Facilities Revenue Bonds (Capital Region Medical Center)
Series 1998, 5.250%, 11/01/23
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 924,612
4,740,000 0.000%, 9/01/21 No Opt. Call AAA 1,266,528
6,300,000 0.000%, 9/01/22 No Opt. Call AAA 1,580,796
1,000,000 State Environmental Improvement and Energy Resource Authority No Opt. Call A3 1,016,650
(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 Taney, 5/08 at 101 BBB+ 2,505,390
Missouri, Hospital Revenue Bonds (The Skaggs Community Hospital
Association), Series 1998, 5.400%, 5/15/28
The Industrial Development Authority of the City of West Plains, Missouri,
Hospital Facilities Revenue Bonds (Ozark Medical Center), Series 1997:
500,000 5.500%, 11/15/12 11/07 at 101 N/R 431,785
2,095,000 5.600%, 11/15/17 11/07 at 101 N/R 1,754,521
2,230,000 5.650%, 11/15/22 11/07 at 101 N/R 1,827,307
- -----------------------------------------------------------------------------------------------------------------------------------
Housing/Multifamily - 11.7%
1,630,000 The Industrial Development Authority of the City of Lees Summit, 10/09 at 100 AAA 1,601,459
Missouri, Multifamily Housing Revenue Bonds (Crossroads of
Lees Summit Apartments Project), Series 1999A, 6.100%, 4/01/24
(Alternative Minimum Tax)
885,000 Missouri Housing Development Commission, Multifamily Housing 12/05 at 103 N/R 885,000
Revenue Bonds, Series 1995A (Primm Place Apartments Project),
6.250%, 12/01/17 (Alternative Minimum Tax)
1,000,000 Missouri Housing Development Commission, Multifamily Housing 6/08 at 100 AAA 895,360
Revenue Refunding Bonds (FHA-Insured Mortgage Loans), Series 1998,
5.450%, 6/01/28 (Alternative Minimum Tax)
2,815,000 Missouri Housing Development Commission, Multifamily Housing 4/08 at 102 N/R 2,630,083
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 616,394
Missouri, Multifamily Housing Refunding Revenue Bonds (Brittany
Place Apartments Project), Series A of 1997, 5.600%, 1/01/21
(Alternative Minimum Tax)
2,000,000 Housing Authority of St. Louis County, Missouri, Multifamily 3/05 at 102 AAA 2,061,100
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. Louis, 8/06 at 105 AAA 9,563,983
Missouri, Multifamily Housing Revenue Bonds, Series 1996A
(GNMA Mortgage-Backed Securities - Covington Manor
Apartments), 6.875%, 8/20/36 (Alternative Minimum Tax)
3,685,000 Industrial Development Authority of the County of St Louis, 1/08 at 100 AAA 3,360,167
Missouri, Multifamily Housing Revenue Refunding Bonds (Bonhomme
Village Apartments Project), Series 1997A, 5.450%, 1/01/28
</TABLE>
23
<PAGE>
Portfolio of Investments (Unaudited)
Nuveen Flagship Missouri Municipal Bond Fund (continued)
November 30, 1999
<TABLE>
<CAPTION>
Principal Optional Call Market
Amount Description Provisions* Ratings** Value
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Housing/Multifamily (continued)
$ 500,000 Industrial Development Authority of the County of St. Louis, Missouri, 3/09 at 102 AAA $ 438,990
Multifamily Housing Revenue Refunding Bonds (GNMA Collateralized - Lucas
Hunt Village Apartments Project), Series 1999A, 5.200%, 9/20/31
1,550,000 The Industrial Development Authority of the County of St. Louis, Missouri, 8/08 at 102 AAA 1,427,380
Multifamily Housing Revenue Bonds, Series 1999B (GNMA Collateralized
- Glen Trails West Apartments Project), 5.700%, 8/20/39 (Alternative
Minimum Tax)
1,890,000 Land Clearance for Redevelopment Authority of the City of St. Louis, 5/03 at 102 AAA 1,907,993
Missouri, Multifamily Mortgage Refunding Bonds, Series 1993 (FHA-
Insured Mortgage Loan - St. Louis Place Apartments), 6.250%, 8/01/27
1,425,000 The Industrial Development Authority of University City, Missouri, 8/07 at 102 Aaa 1,385,157
Revenue Refunding Bonds, Series 1997A (GNMA Collateralized - River
Valley Apartments), 5.900%, 2/20/37
- -----------------------------------------------------------------------------------------------------------------------------------
Housing/Single Family - 6.2%
1,500,000 Greene County, Missouri, Collateralized Single Family Mortgage Revenue No Opt. Call AAA 1,507,260
Bonds, Series 1996, 6.300%, 12/01/22 (Alternative Minimum Tax)
1,490,000 Missouri Housing Development Commission, Single Family Mortgage Revenue 1/07 at 102 AAA 1,497,629
Bonds (Homeownership Loan Program), 1996 Series D, 6.125%, 3/01/28
(Alternative Minimum Tax)
875,000 Missouri Housing Development Commission, Single Family Mortgage Revenue 3/07 at 105 AAA 951,003
Bonds (Homeownership Loan Program), 1997 Series A-2, 7.300%, 3/01/28
(Alternative Minimum Tax)
240,000 Missouri Housing Development Commission, Single Family Mortgage Revenue 3/07 at 101 AAA 229,130
Bonds (Homeownership Loan Program), 1997 Series B-2, 5.900%, 9/01/28
(Alternative Minimum Tax)
90,000 Missouri Housing Development Commission, Single Mortgage Revenue Bonds 2/00 at 102 AAA 91,937
(GNMA Mortgage Backed Securities Program), 1990 Series A, 7.625%, 2/01/22
(Alternative Minimum Tax)
Missouri Housing Development Commission, Single Mortgage Revenue Bonds
(Homeownership Loan Program), 1995 Series B Remarketing:
1,995,000 6.375%, 9/01/20 (Alternative Minimum Tax) 9/06 at 102 AAA 2,018,062
1,575,000 6.450%, 9/01/27 (Alternative Minimum Tax) 9/06 at 102 AAA 1,600,043
510,000 Missouri Housing Development Commission, Single Family Mortgage Revenue 6/00 at 102 AAA 522,908
Bonds (GNMA Mortgage Back Securities Program), 1990 Series B, 7.750%,
6/01/22 (Alternative Minimum Tax)
1,150,000 Missouri Housing Development Commission, Single Family Mortgage Revenue 2/01 at 102 AAA 1,184,546
Bonds (GNMA Mortgage Back Securities Program), 1991 Series A, 7.375%,
8/01/23 (Alternative Minimum Tax)
Missouri Housing Development Commission, Single Family Mortgage Revenue
Bonds (GNMA Mortgage Back Securities Program), 1994 Series A:
320,000 6.700%, 12/01/07 (Alternative Minimum Tax) 12/04 at 102 AAA 326,867
1,420,000 7.125%, 12/01/14 (Alternative Minimum Tax) 12/04 at 102 AAA 1,479,810
630,000 7.200%, 12/01/17 (Alternative Minimum Tax) 12/04 at 102 AAA 657,367
955,000 Missouri Housing Development Commission, Single Family Mortgage Revenue 3/08 at 105 AAA 967,577
Bonds (Homeownership Loan Program), 1998 Series B-2, 6.400%, 3/01/29
(Alternative Minimum Tax)
1,195,000 Missouri Housing Development Commission, Single Family Mortgage Revenue 9/08 at 105 AAA 1,203,604
Bonds (Homeownership Loan Program), 1998 Series D-2, 6.300%, 3/01/29
(Alternative Minimum Tax)
- -----------------------------------------------------------------------------------------------------------------------------------
Industrial/Other - 0.2%
500,000 City of Jefferson, Missouri, Industrial Refunding Revenue Bonds, Series 4/00 at 100 N/R 500,750
1992 (Scholastic, Inc. Project), 7.200%, 4/01/03
- -----------------------------------------------------------------------------------------------------------------------------------
Long-Term Care - 10.5%
4,800,000 The Industrial Development Authority of Kansas City, Missouri, Retirement 11/08 at 102 N/R 4,048,224
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 Lees Summit, Missouri, 8/05 at 102 N/R 1,021,620
Health Facilities Revenue Bonds (John Knox Village Project), Series 1995,
6.625%, 8/15/13
5,000,000 The Industrial Development Authority of the City of Lees Summit, Missouri, 8/09 at 101 N/R 4,807,250
Health Facilities Revenue Bonds (John Knox Village Project), Series 1999,
6.000%, 8/15/17
3,750,000 Health and Educational Facilities Authority of the State of Missouri, 2/06 at 102 N/R 3,688,275
Health Facilities Revenue Bonds (Lutheran Senior Services), Series 1996A,
6.375%, 2/01/27
</TABLE>
24
<PAGE>
<TABLE>
<CAPTION>
Principal Optional Call Market
Amount Description Provisions* Ratings** Value
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Long-Term Care (continued)
$3,500,000 Health and Educational Facilities Authority of the State of Missouri, Health 2/07 at 102 N/R $ 3,285,240
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 1,287,213
1,800,000 6.250%, 9/01/10 9/06 at 102 N/R 1,818,252
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 413,535
1,500,000 5.850%, 8/15/28 8/08 at 102 N/R 1,268,160
2,425,000 The Industrial Development Authority of the County of St. Louis, Missouri, 8/05 at 104 AAA 2,464,309
Healthcare Facilities Revenue Bonds, Series 1995 (GNMA Collateralized -
Mother of Perpetual Help Project), 6.250%, 8/01/28
- -----------------------------------------------------------------------------------------------------------------------------------
Tax Obligation/General - 3.7%
1,000,000 Jefferson City School District, Missouri, General Obligation Bonds, No Opt. Call Aa2 1,134,420
Series 1991A, 6.700%, 3/01/11 Commonwealth of Puerto Rico, Public
Improvement Bonds of 1994 (General Obligation Bonds):
2,500,000 6.450%, 7/01/17 7/04 at 102 AAA 2,737,525
3,350,000 6.500%, 7/01/23 7/04 at 101 1/2 AAA 3,675,151
1,050,000 The City of St. Louis, Missouri, Public Safety General Obligation Bonds, 8/07 at 100 AAA 967,995
Series 1999, 5.125%, 2/15/19
- -----------------------------------------------------------------------------------------------------------------------------------
Tax Obligation/Limited - 15.5%
2,285,000 The Public Building Corporation of the City of Branson, Missouri, Leasehold 11/06 at 101 BBB 2,331,934
Revenue Bonds, Series 1995 (City Hall and Fire Station Improvement
Projects), 6.250%, 11/01/12
1,025,000 Excelsior Springs School District Building Corporation, Leasehold Revenue No Opt. Call AAA 455,326
Bonds (Excelsior Springs 40 School District), Series 1994, 0.000%, 3/01/14
4,440,000 Howard Bend Levee District (St. Louis County, Missouri), Levee District 3/09 at 101 N/R 4,225,548
Improvement Bonds, Series 1999, 5.850%, 3/01/19
2,000,000 Jackson County Public Facilities Authority, Leasehold Revenue Refunding 12/04 at 100 AAA 2,046,140
and Improvement Bonds (Jackson County, Missouri, Capital Improvements
Project), Series 1994, 6.125%, 12/01/15
1,200,000 Land Clearance for Redevelopment Authority of Kansas City, Missouri, Lease 12/05 at 102 AAA 1,202,424
Revenue Bonds, (Municipal Auditorium and Muehlebach Hotel Redevelopment
Project), Series 1995A, 5.900%, 12/01/18
The City of Lake St. Louis, Missouri, Certificates of Participation, Public
Facilities Authority, Series 1993 (Municipal Golf Course Project):
1,020,000 6.900%, 12/01/05 12/02 at 103 N/R 1,061,973
2,720,000 7.550%, 12/01/14 12/02 at 103 N/R 2,848,928
1,500,000 Missouri School Boards Association, Insured Lease Participation 3/06 at 101 AAA 1,537,515
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 325,952
Rehabilitation Center Project), Series A 1995, 6.000%, 11/01/15
1,750,000 Monarch-Chesterfield Levee District (St. Louis County, Missouri), Levee 3/10 at 101 AAA 1,734,740
District Improvement Bonds, Series 1999, 5.750%, 3/01/19 (DD)
1,500,000 Puerto Rico Highway and Transportation Authority, Highway Revenue Bonds, 7/02 at 101 1/2 A 1,563,870
1992 Series V, 6.625%, 7/01/12
5,900,000 Puerto Rico Highway and Transportation Authority, Highway Revenue Bonds, 7/16 at 100 A 5,444,933
1996 Series Y, 5.500%, 7/01/36
75,000 Puerto Rico Highway and Transportation Authority, Highway Revenue Bonds, No Opt. Call AAA 75,191
Series W, 5.500%, 7/01/15
3,000,000 Puerto Rico Public Buildings Authority, Revenue Refunding Bonds, Series L, No Opt. Call A 2,873,820
Guaranteed by the Commonwealth of Puerto Rico, 5.500%, 7/01/21
3,000,000 Regional Convention and Sports Complex Authority, St. Louis County, 8/03 at 102 Aa3 2,896,980
Missouri, Convention and Sports Facility Project and Refunding Bonds,
Series B of 1993, 5.750%, 8/15/21
</TABLE>
25
<PAGE>
Portfolio of Investments (Unaudited)
Nuveen Flagship Missouri Municipal Bond Fund (continued)
November 30, 1999
<TABLE>
<CAPTION>
Principal Optional Call Market
Amount Description Provisions* Ratings** Value
----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Tax Obligation/Limited (continued)
Regional Convention and Sports Complex Authority, City of St. Louis,
Missouri, Convention and Sport Facility Project and Refunding Bonds,
Series C of 1997:
$1,000,000 5.300%, 8/15/17 8/07 at 100 AAA $ 947,030
4,000,000 5.300%, 8/15/20 8/07 at 100 AAA 3,734,320
45,000 Regional Convention and Sports Complex Authority, City of St. Louis, 8/03 at 100 N/R 47,770
Missouri, Convention and Sports Facility Project Bonds,
Series C of 1991, 7.900%, 8/15/21
----------------------------------------------------------------------------------------------------------------------------------
Transportation - 5.1%
2,000,000 Puerto Rico Ports Authority, Special Facilities Revenue Bonds, 1996 6/06 at 102 BBB- 2,007,700
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 256,620
2,500,000 5.250%, 7/01/27 (Alternative Minimum Tax) 7/07 at 101 AAA 2,203,700
Land Clearance for Redevelopment Authority of the City of St. Louis
(Missouri), Tax Exempt Parking Facility Revenue Refunding and
Improvement Bonds, Series of 1999C (Parking Facilities Project):
2,400,000 7.050%, 9/01/24 9/09 at 102 N/R 2,409,912
1,000,000 7.000%, 9/01/29 9/09 at 102 N/R 1,007,410
4,050,000 The City of St. Louis, Missouri, Parking Revenue Refunding Bonds, 12/06 at 102 AAA 3,806,150
Series 1996, 5.375%, 12/15/21
----------------------------------------------------------------------------------------------------------------------------------
U.S. Guaranteed - 11.1%
4,500,000 Cape Girardeau County, Missouri, Single Family Mortgage Revenue Bonds, No Opt. Call Aaa 1,897,380
Series 1983, 0.000%, 12/01/14
1,500,000 Clay County Public Building Authority, Leasehold Refunding and 5/02 at 102 N/R*** 1,634,610
and 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 Bond, Series No Opt. Call Aaa 408,708
1984, 0.000%, 3/01/16
4,000,000 Kansas City, Missouri, General Improvement Airport Revenue Bonds, 9/04 at 101 AAA 4,413,680
Series 1994 B, 6.875%, 9/01/14 (Pre-refunded to 9/01/04)
645,000 Kansas City Municipal Assistance Corporation, Leasehold Improvement 11/01 at 100 A3*** 676,786
Revenue Bonds, Series 1991A (Truman Medical Center Charitable
Foundation Project), 7.000%, 11/01/09 (Pre-refunded to 11/01/01)
2,385,000 The Industrial Development Authority of the City of Kirkwood, 7/02 at 102 N/R*** 2,536,281
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*** 1,060,300
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)
1,000,000 Health and Educational Facilities Authority of the State of 10/04 at 101 A2*** 1,079,220
Missouri, Educational Facilities Revenue Bonds (St. Louis University
High School), Series 1994, 6.350%, 10/01/14 (Pre-refunded to
10/01/04)
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*** 2,765,378
2,650,000 7.625%, 2/01/22 (Pre-refunded to 2/01/02) 2/02 at 102 N/R*** 2,870,560
1,000,000 Regional Convention and Sports Complex Authority, County of 8/03 at 100 AAA 1,083,890
St. Louis, Missouri, Convention and Sports Facility Project Bonds,
Series 1991B, 7.000%, 8/15/11 (Pre-refunded to 8/15/03)
1,295,000 Land Clearance for Redevelopment Authority of the City of St. Louis 7/00 at 102 N/R*** 1,347,046
Lease Revenue Bonds, Series 1992 (Station East Redevelopment Project),
7.750%, 7/01/21 (Pre-refunded to 7/01/00)
1,975,000 City of St. Louis, Missouri, Parking Revenue Bonds, Series 1992, 12/02 at 102 AA-*** 2,123,895
6.625% 12/15/21 (Pre-refunded to 12/15/02)
955,000 Regional Convention and Sports Complex Authority, City of St. Louis, 8/03 at 100 Aaa 1,063,946
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), General 10/01 at 102 AAA 472,861
Obligation School Building Bonds, Series 1991, 6.750%, 4/01/11
(Pre-refunded to 10/01/01)
</TABLE>
26
<PAGE>
<TABLE>
<CAPTION>
Principal Optional Call Market
Amount Description Provisions* Ratings** Value
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Utilities -- 2.4%
$ 1,500,000 State Environmental Improvement and Energy Resource Authority 5/00 at 102 AA- $ 1,545,165
(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 551,625
Series O, 0.000%, 7/01/17
2,000,000 City of Sikeston, Missouri, Electric System Revenue Bonds, No Opt. Call AAA 2,179,740
1992 Series, 6.200%, 6/01/10
1,070,000 City of Sikeston, Missouri, Electric System Revenue Refunding No Opt. Call AAA 1,129,021
Bonds, 1996 Series, 6.000%, 6/01/14
- -----------------------------------------------------------------------------------------------------------------------------------
Water and Sewer -- 4.1%
20,000 Public Water Supply District No. 6, Clay County, Missouri, 12/99 at 101 N/R 20,247
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 403,520
County, Missouri, Water System Refunding Revenue Bonds,
Series 1992 (St. Charles County Public Water Supply District
No. 2 Project), 7.000%, 8/01/08
1,635,000 Missouri State Environmental Improvement and Energy Resources 4/09 at 100 AA 1,581,209
Authority, Water Facilities Refunding Revenue Bonds (Tri-County
Water Authority Project), Series 1999, 6.000%, 4/01/22
3,600,000 State Environmental Improvement and Energy Resources Authority 12/01 at 102 Aa1 3,789,180
(State of Missouri), Water Pollution Control Revenue Bonds
(State Revolving Fund Program -- Multiple Participants),
Series 1991A, 6.875%, 6/01/14
2,000,000 State Environmental Improvement and Energy Resources Authority 7/02 at 102 Aa1 2,095,240
(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 Authority 7/04 at 102 Aa1 651,821
(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 Authority 10/00 at 102 Aa1 619,110
(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 5/00 at 100 N/R 125,231
Improvement Revenue Bonds, Series 1989, 8.000%, 11/01/09
- -----------------------------------------------------------------------------------------------------------------------------------
$243,660,000 Total Investments -- (cost $227,785,138) - 98.8% 226,192,955
============-----------------------------------------------------------------------------------------------------------------------
Other Assets Less Liabilities -- 1.2% 2,838,234
------------------------------------------------------------------------------------------------------------------
Net Assets -- 100% $229,031,189
==================================================================================================================
</TABLE>
* Optional Call Provisions: Dates (month and year) and
prices of the earliest optional call or redemption. There
may be other call provisions at varying prices at later
dates.
** Ratings: Using the higher of Standard & Poor's or
Moody's rating.
*** Securities are backed by an escrow or trust containing
sufficient U.S. government or U.S. government agency
securities which ensures the timely payment of principal
and interest. Securities are normally considered to
be equivalent to AAA rated securities.
N/R Investment is not rated.
(DD) Security purchased on a delayed delivery basis (note 1).
See accompanying notes to financial statements.
27
<PAGE>
Portfolio of Investments (Unaudited)
Nuveen Flagship Wisconsin Municipal Bond Fund
November 30, 1999
<TABLE>
<CAPTION>
Principal Optional Call Market
Amount Description Provisions* Ratings** Value
----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Capital Goods - 1.4%
Community Development Authority of 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 $ 249,806
300,000 5.250%, 3/01/08 (Alternative Minimum Tax) 3/01 at 103 N/R 292,224
- -----------------------------------------------------------------------------------------------------------------------------------
Consumer Staples - 2.3%
1,000,000 Redevelopment Authority of the City of Green Bay, Wisconsin, No Opt. Call Baa2 889,360
Industrial Development Revenue Bonds, Series 1999 (Fort James Project),
5.600%, 5/01/19
- -----------------------------------------------------------------------------------------------------------------------------------
Education and Civic Organizations - 6.5%
475,000 Housing Authority of the City of Ashland (Wisconsin), Student Housing 4/08 at 100 Aa3 423,786
Revenue Bonds, Series 1998 (Northland College Project), 5.100%,
4/01/18
500,000 Community Development Authority of the City of Madison, Wisconsin, 11/06 at 102 AA- 442,740
Fixed Rate Development Revenue Bonds, Series 1998A
(Fluno Center Project), 5.000%, 11/01/20
500,000 Redevelopment Authority of the City of Milwaukee, Wisconsin, Revenue 10/07 at 102 AAA 466,660
Refunding Bonds, Series 1999B (Milwaukee School of Engineering
Project), 5.000%, 10/01/17
300,000 Redevelopment Authority of the City of Milwaukee, Wisconsin, 6/09 at 102 A1 263,529
Redevelopment Revenue Bonds, Series 1999B (Young Women's Christian
Association of Greater Milwaukee), 5.300%, 6/01/29
370,000 Puerto Rico Industrial, Tourist, Educational, Medical and 2/09 at 101 BBB 327,894
Environmental Control Facilities Financing Authority, Higher Education
Revenue Bonds, Series 1999 (Ana G. Mendez University System Project),
5.375%, 2/01/29
600,000 University of Puerto Rico, University System Revenue Bonds, 6/05 at 101 1/2 AAA 552,228
Series M, 5.250%, 6/01/25
----------------------------------------------------------------------------------------------------------------------------------
Health Care - 2.6%
500,000 Puerto Rico Industrial, Tourist, Educational, Medical and 1/05 at 102 AAA 513,765
Environmental Control Facilities Financing Authority, Hospital Revenue
Bonds, 1995 Series A (Hospital Auxilio Mutuo Obligated Group Project),
6.250%, 7/01/24
450,000 Puerto Rico Industrial, Tourist, Educational, Medical and 8/05 at 101 1/2 AAA 464,823
Environmental Control Facilities Financing Authority, Hospital Revenue
Refunding Bonds, 1995 Series A, FHA-Insured Mortgage - Pila Hospital
Project), 5.875%, 8/01/12
----------------------------------------------------------------------------------------------------------------------------------
Housing/Multifamily - 7.9%
Housing Authority of Dane County, Wisconsin, Multifamily Housing
Revenue Bonds (Forest Harbor Apartments Project):
25,000 5.900%, 7/01/12 7/02 at 102 N/R 25,160
50,000 5.950%, 7/01/13 7/02 at 102 N/R 50,119
50,000 6.000%, 7/01/14 7/02 at 102 N/R 50,019
1,000,000 Community Development Authority of the City of Madison, Wisconsin, 9/06 at 102 AAA 900,310
Multifamily Housing Revenue Refunding Bonds, Series 1999A
(Greentree Glen Project), 5.500%, 9/20/29 (Alternative Minimum Tax)
200,000 Redevelopment Authority of the City of Milwaukee, Wisconsin, 8/07 at 102 N/R 193,726
Multifamily Housing Revenue Bonds, Series 1993 (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), Multifamily 5/06 at 102 AAA 433,050
Revenue Refunding Bonds, Series 1998A (Lake Shore Apartments),
5.100%, 11/20/26
300,000 Walworth County Housing Authority, Housing Revenue Bonds, Series 1997 9/05 at 102 N/R 284,757
(FHA-Insured Mortgage Loan - Kiwanis Heritage, Inc. Senior Apartments
Project), 5.550%, 9/01/22
Housing Authority of the City of Waukesha, Wisconsin, Multifamily
Housing Revenue Refunding Bonds, Series 1996A (GNMA Collateralized
Mortgage Loan - Westgrove Woods Project):
350,000 5.800%, 12/01/18 (Alternative Minimum Tax) 12/06 at 102 AAA 344,463
750,000 6.000%, 12/01/31 (Alternative Minimum Tax) 12/06 at 102 AAA 730,253
</TABLE>
28
<PAGE>
<TABLE>
<CAPTION>
Principal Optional Call Market
Amount Description Provisions* Ratings** Value
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Housing/Single Family - 3.4%
$ 1,000,000 Guam Housing Corporation, Single Family Mortgage Revenue No Opt. Call AAA $ 953,990
Bonds (Guaranteed Mortgage-Backed Securities Program),
1998 Series A, 5.750%, 9/01/31 (Alternative Minimum Tax)
200,000 Puerto Rico Housing Bank and Finance Agency, Affordable 4/05 at 102 AAA 201,604
Housing Mortgage Subsidy Program, Single Family Mortgage
Revenue Bonds, Portfolio I, 6.250%, 4/01/29 (Alternative
Minimum Tax)
115,000 Virgin Islands Housing Finance Authority, Single Family 3/05 at 102 AAA 117,588
Mortgage Revenue Refunding Bonds (GNMA Mortgage Backed
Securities Program), 1995 Series A, 6.450%, 3/01/16
(Alternative Minimum Tax)
- -----------------------------------------------------------------------------------------------------------------------------------
Long-Term Care - 6.9%
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 133,232
195,000 5.300%, 12/01/18 12/04 at 100 A1 171,588
395,000 5.300%, 12/01/19 12/04 at 100 A1 342,880
1,000,000 Housing Authority of the City of Superior, Wisconsin, Hospital 7/04 at 102 N/R 968,930
Revenue Refunding Bonds, Series 1996 (GNMA Collateralized --
St. Francis Home, Inc. Project), 6.150%, 7/20/31
1,120,000 Waukesha County Housing Authority, Housing Revenue Refunding 12/03 at 102 N/R 991,861
Bonds, Series 1998 (The Arboretum Project), 5.250%, 12/01/21
(Alternative Minimum Tax) (Optional put 12/01/12)
- -----------------------------------------------------------------------------------------------------------------------------------
Tax Obligation/General - 1.1%
250,000 Government of Guam, General Obligation Bonds, Series 1993A, 11/03 at 102 BBB- 228,313
5.400%, 11/15/18
200,000 Commonwealth of Puerto Rico, Public Improvement Refunding Bonds, 7/08 at 101 A 172,042
Series 1998 (General Obligation Bonds), 5.000%, 7/01/26
- -----------------------------------------------------------------------------------------------------------------------------------
Tax Obligation/Limited - 53.5%
1,500,000 Community Development Authority of the Village of Ashwaubenon 6/09 at 100 Aa2 1,459,740
(Wisconsin), Lease Revenue Bonds, Series 1999A (Arena Project),
5.800%, 6/01/29 (WI)
1,500,000 Community Development Authority of the City of Cudahy 6/06 at 100 N/R 1,520,505
(Wisconsin), 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 888,280
Redevelopment Lease Revenue Bonds, Series 1999B, 5.100%, 2/01/18
1,500,000 Community Development Authority of the City of Glendale, 9/08 at 100 N/R 1,395,045
Wisconsin, Community Development Lease Revenue Bonds,
Series 1998A, 5.400%, 9/01/18
Redevelopment Authority of the City of Green Bay (Wisconsin), Lease
Revenue Bonds, Series 1999A (Convention Center Project):
1,500,000 5.250%, 6/01/24 6/09 at 100 Aa2 1,377,225
2,000,000 5.100%, 6/01/29 6/09 at 100 Aa2 1,766,200
500,000 Community Development Authority of the Village of Jackson, 12/09 at 100 N/R 449,195
Wisconsin, Community Development Revenue Refunding Bonds,
Series 1999, 5.100%, 12/01/17
300,000 Community Development Authority of the City of Madison, 3/05 at 100 Aa2 312,747
Wisconsin, Lease Revenue Bonds, Series 1995 (Monona
Terrace Community and Convention Center Project),
6.100%, 3/01/10
200,000 Puerto Rico Aqueduct and Sewer Authority, Refunding Bonds, 7/06 at 101 1/2 A 184,202
Series 1995, Guaranteed by the Commonwealth of Puerto Rico,
5.000%, 7/01/15
320,000 Puerto Rico Highway and Transportation Authority, Highway 7/02 at 101 1/2 A 333,626
Revenue Bonds, 1992 Series V, 6.625%, 7/01/12
600,000 Puerto Rico Highway and Transportation Authority, Highway 7/06 at 101 1/2 A 562,236
Revenue Bonds, Series Y of 1996, 5.500%, 7/01/26
Puerto Rico Highway and Transportation Authority, Transportation
Revenue Bonds (Series A):
1,000,000 0.000%, 7/01/17 No Opt. Call AAA 367,750
700,000 5.000%, 7/01/38 7/08 at 101 A 586,600
600,000 Puerto Rico Public Buildings Authority, Public Education and 7/03 at 101 1/2 A 601,524
Health Facilities Refunding Bonds, Series M, Guaranteed by
the Commonwealth of Puerto Rico, 5.750%, 7/01/15
2,500,000 Puerto Rico Public Buildings Authority, Revenue Refunding No Opt. Call A 2,394,850
Bonds, Series L Guaranteed by the Commonwealth of
Puerto Rico, 5.500%, 7/01/21
</TABLE>
29
<PAGE>
Portfolio of Investments (Unaudited)
Nuveen Flagship Wisconsin 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)
Southeast Wisconsin Professional Baseball Park District, Sales Tax
Revenue Bonds, Series 1997:
$1,390,000 0.000%, 12/15/27 No Opt. Call AAA $ 246,795
1,000,000 0.000%, 12/15/29 No Opt. Call AAA 156,500
500,000 Southeast Wisconsin Professional Baseball Park District, Sales No Opt. Call AAA 475,385
Tax Revenue Refunding Bonds, Series 1998A, 5.500%, 12/15/26
1,000,000 Southeast Wisconsin Professional Baseball Park District, Sales 12/04 at 100 AAA 1,001,470
Tax Revenue Bonds, Series 1999, 6.100%, 12/15/29
375,000 Waterfront Redevelopment Authority of the City of 10/08 at 100 N/R 320,423
Sturgeon Bay, 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 713,806
335,000 4.800%, 12/01/12 12/08 at 100 N/R 307,835
600,000 Virgin Islands Public Finance Authority, Revenue and Refunding 10/08 at 101 BBB- 543,654
Bonds (Virgin Islands Matching Fund Loan Notes), Series 1998A
(Senior Lien/Refunding), 5.625%, 10/01/25
500,000 Wauwatosa Redevelopment Authority, Milwaukee County, 12/07 at 100 AAA 501,115
Wisconsin, Lease Revenue Bonds, Series 1997, 5.650%, 12/01/16
1,250,000 Wisconsin Center District, Senior Dedicated Tax Revenue Bonds, No Opt. Call AAA 425,738
Series 1996A, 0.000%, 12/15/17
Wisconsin Center District, Junior Dedicated Tax Revenue
Refunding Bonds, Series 1999:
1,000,000 5.250%, 12/15/23 No Opt. Call AAA 911,650
500,000 5.250%, 12/15/27 No Opt. Call AAA 450,330
- -----------------------------------------------------------------------------------------------------------------------------------
Transportation - 1.3%
500,000 Puerto Rico Ports Authority, Special Facilities Revenue Bonds, 1996 6/06 at 102 BBB- 501,925
Series A (American Airlines, Inc. Project), 6.250%, 6/01/26
(Alternative Minimum Tax)
- -----------------------------------------------------------------------------------------------------------------------------------
U.S. Guaranteed - 9.1%
145,000 Puerto Rico Electric Power Authority, Power Revenue Bonds, 7/04 at 102 BBB+*** 158,669
Series 1994-T, 6.375%, 7/01/24 (Pre-refunded to 7/01/04)
125,000 Puerto Rico Telephone Authority, Revenue Refunding Bonds, 1/03 at 101 1/2 AAA 130,445
Series 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 236,727
1,600,000 5.800%, 12/15/26 (Pre-refunded to 3/13/07) 3/07 at 101 AAA 1,703,008
150,000 Redevelopment Authority of the City of Superior, Wisconsin, Revenue 5/02 at 102 AA*** 156,624
Bonds, Series 1994 (Superior Memorial Hospital Inc.--FHA-Insured
Mortgage Loan), 5.600%, 11/01/07 (Pre-refunded to 5/01/02)
1,000,000 Wisconsin Center District, Junior Dedicated Tax Revenue Bonds, 12/06 at 101 AAA 1,060,070
Series 1996B, 5.700%, 12/15/20 (Pre-refunded to 12/15/06)
</TABLE>
30
<PAGE>
<TABLE>
<CAPTION>
Principal Optional Call Market
Amount Description Provisions* Ratings** Value
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Utilities - 3.7%
$ 315,000 Guam Power Authority, Revenue Bonds, 1992 Series A, 6.300%, 10/01/22 10/02 at 102 AAA $ 338,045
1,085,000 Guam Power Authority, Revenue Bonds, 1993 Series A, 5.250%, 10/01/23 10/03 at 102 BBB 958,055
115,000 Puerto Rico Electric Power Authority, Power Revenue Bonds, 7/04 at 102 BBB+ 116,514
Series T, 6.000%, 7/01/16
- ------------------------------------------------------------------------------------------------------------------------------------
$43,305,000 Total Investments - (cost $39,918,469) - 99.7% 37,795,208
===========-------------------------------------------------------------------------------------------------------------------------
Short-Term Investments - 3.9%
$ 1,500,000 Carlton Pollution Control Revenue Series 1991B (Wisconsin Power and Light), VMIG-1 1,500,000
========== Variable Rate Demand Bonds, 3.700%, 9/01/05+
---------------------------------------------------------------------------------------------------------------------
Other Assets Less Liabilities - (3.6)% (1,378,854)
---------------------------------------------------------------------------------------------------------------------
Net Assets - 100% $37,916,354
====================================================================================================================================
</TABLE>
* Optional Call Provisions: Dates (month and year) and prices
of the earliest optional call or redemption. There may be
other call provisions at varying prices at later dates.
** Ratings: Using the higher of Standard & Poor's or
Moody's rating.
*** Securities are backed by an escrow or trust containing
sufficient U.S. government or U.S. government agency
securities which ensures the timely payment of principal and
interest. Securities are normally considered to be
equivalent to AAA rated securities.
N/R Investment is not rated.
(WI) Security purchased on a when-issued basis (note 1).
+ Security has a maturity of more than one year, but has
variable rate and demand features which qualify it as a
short-term security. The rate disclosed is that currently in
effect. This rate changes periodically based on market
conditions or a specified market index.
See accompanying notes to financial statements.
31
<PAGE>
Statement of Net Assets (Unaudited)
November 30, 1999
<TABLE>
<CAPTION>
Kansas Missouri Wisconsin
- --------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Assets
Investments in municipal securities, at market value (note 1) $119,117,602 $226,192,955 $37,795,208
Temporary investments in short-term municipal securities,
at amortized cost, which approximates market value (note 1) 795,000 -- 1,500,000
Cash -- 503,370 --
Receivables:
Interest 1,814,649 4,255,000 724,478
Investments sold 552,108 569,648 --
Shares sold 208,235 363,117 70,715
Other assets 93,946 128,648 33,450
- --------------------------------------------------------------------------------------------------------------
Total assets 122,581,540 232,012,738 40,123,851
- --------------------------------------------------------------------------------------------------------------
Liabilities
Cash overdraft 1,519,875 -- 429,488
Payables:
Investments purchased -- 1,881,053 1,468,890
Shares redeemed 134,413 517,461 142,882
Accrued expenses:
Management fees (note 6) 55,310 102,902 14,367
12b-1 distribution and service fees (notes 1 and 6) 26,697 46,765 10,339
Other 44,132 24,918 49,677
Dividends payable 203,289 408,450 91,854
- --------------------------------------------------------------------------------------------------------------
Total liabilities 1,983,716 2,981,549 2,207,497
- --------------------------------------------------------------------------------------------------------------
Net assets (note 7) $120,597,824 $229,031,189 $37,916,354
==============================================================================================================
Class A Shares (note 1)
Net assets $106,911,533 $211,028,868 $30,265,682
Shares outstanding 10,959,280 20,253,362 3,224,383
Net asset value and redemption price per share $ 9.76 $ 10.42 $ 9.39
Offering price per share (net asset value per share plus
maximum sales charge of 4.20% of offering price) $ 10.19 $ 10.88 $ 9.80
==============================================================================================================
Class B Shares (note 1)
Net assets $ 6,264,283 $ 5,451,672 $ 3,893,427
Shares outstanding 646,209 523,413 413,557
Net asset value, offering and redemption price per share $ 9.69 $ 10.42 $ 9.41
==============================================================================================================
Class C Shares (note 1)
Net assets $ 6,243,437 $ 12,097,513 $ 3,656,326
Shares outstanding 638,847 1,161,960 388,756
Net asset value, offering and redemption price per share $ 9.77 $ 10.41 $ 9.41
==============================================================================================================
Class R Shares (note 1)
Net assets $ 1,178,571 $ 453,136 $ 100,919
Shares outstanding 120,145 43,497 10,717
Net asset value, offering and redemption price per share $ 9.81 $ 10.42 $ 9.42
==============================================================================================================
</TABLE>
See accompanying notes to financial statements.
32
<PAGE>
Statement of Operations (Unaudited)
Six Months Ended November 30, 1999
<TABLE>
<CAPTION>
Kansas Missouri Wisconsin
- ---------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Investment Income (note 1) $ 3,685,792 $ 7,378,753 $ 1,034,284
- ---------------------------------------------------------------------------------------------------------------------
Expenses
Management fees (note 6) 347,067 667,969 103,392
12b-1 service fees--Class A (notes 1 and 6) 112,613 226,702 29,864
12b-1 distribution and service fees--Class B (notes 1 and 6) 30,314 25,915 18,781
12b-1 distribution and service fees--Class C (notes 1 and 6) 23,727 49,128 13,783
Shareholders' servicing agent fees and expenses 47,266 81,109 12,660
Custodian's fees and expenses 40,168 45,210 27,932
Trustees' fees and expenses (note 6) 1,872 2,304 396
Professional fees 213 720 5,438
Shareholders' reports--printing and mailing expenses 22,094 20,251 15,195
Federal and state registration fees 9,205 5,467 5,296
Other expenses 4,249 5,500 263
- ---------------------------------------------------------------------------------------------------------------------
Total expenses before custodian fee credit and expense reimbursement 638,788 1,130,275 233,000
Custodian fee credit (note 1) (13,623) (9,394) (6,047)
Expense reimbursement (note 6) (6,917) -- (27,633)
- ---------------------------------------------------------------------------------------------------------------------
Net expenses 618,248 1,120,881 199,320
- ---------------------------------------------------------------------------------------------------------------------
Net investment income 3,067,544 6,257,872 834,964
- ---------------------------------------------------------------------------------------------------------------------
Realized and Unrealized Gain (Loss) from Investments
Net realized gain (loss) from investment transactions (notes 1 and 4) (704,026) (1,161,493) (219,915)
Net change in unrealized appreciation or depreciation of investments (8,574,350) (15,098,958) (2,919,162)
- ---------------------------------------------------------------------------------------------------------------------
Net gain (loss) from investments (9,278,376) (16,260,451) (3,139,077)
- ---------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets from operations $(6,210,832) $(10,002,579) $(2,304,113)
=====================================================================================================================
</TABLE>
See accompanying notes to financial statements.
33
<PAGE>
<TABLE>
<CAPTION>
Statement of Changes in Net Assets (Unaudited)
Kansas Missouri
------------------------------- -------------------------------
Six Months Ended Year Ended Six Months Ended Year Ended
11/30/99 5/31/99 11/30/99 5/31/99
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Operations
Net investment income $ 3,067,544 $ 5,613,417 $ 6,257,872 $ 12,319,943
Net realized gain (loss) from investment transactions
(notes 1 and 4) (704,026) 392,767 (1,161,493) 932,600
Net change in unrealized appreciation or depreciation of
investments (8,574,350) (1,874,001) (15,098,958) (3,631,812)
- -----------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets from operations (6,210,832) 4,132,183 (10,002,579) 9,620,731
- -----------------------------------------------------------------------------------------------------------------------------------
Distributions to Shareholders (note 1)
From undistributed net investment income:
Class A (2,766,947) (5,236,017) (5,795,980) (11,626,924)
Class B (131,959) (199,683) (117,440) (155,720)
Class C (138,638) (171,237) (298,479) (531,389)
Class R (23,078) (8,514) (10,827) (4,200)
- -----------------------------------------------------------------------------------------------------------------------------------
Decrease in net assets from distributions to shareholders (3,060,622) (5,615,451) (6,222,726) (12,318,233)
- -----------------------------------------------------------------------------------------------------------------------------------
Fund Share Transactions (note 2)
Net proceeds from sale of shares 14,534,072 31,570,124 12,950,431 30,981,161
Net proceeds from shares issued to shareholders due to
reinvestment of distributions 1,217,177 2,397,854 2,435,733 5,097,764
- -----------------------------------------------------------------------------------------------------------------------------------
15,751,249 33,967,978 15,386,164 36,078,925
Cost of shares redeemed (12,367,837) (13,183,041) (27,750,738) (22,186,899)
- -----------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets from Fund share
transactions 3,383,412 20,784,937 (12,364,574) 13,892,026
- -----------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets (5,888,042) 19,301,669 (28,589,879) 11,194,524
Net assets at the beginning of period 126,485,866 107,184,197 257,621,068 246,426,544
- -----------------------------------------------------------------------------------------------------------------------------------
Net assets at the end of period $120,597,824 $126,485,866 $229,031,189 $257,621,068
===================================================================================================================================
Balance of undistributed net investment income
at the end of period $ 7,334 $ 412 $ 40,215 $ 5,069
===================================================================================================================================
</TABLE>
See accompanying notes to financial statements.
34
<PAGE>
<TABLE>
<CAPTION>
Wisconsin
-------------------------------
Six Months Ended Year Ended
11/30/99 5/31/99
- -------------------------------------------------------------------------------------------------------
<S> <C> <C>
Operations
Net investment income $ 834,964 $ 1,433,507
Net realized gain (loss) from investment transactions (notes 1 and 4) (219,915) 31,594
Net change in unrealized appreciation or depreciation of investments (2,919,162) (354,954)
- -------------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets from operations (2,304,113) 1,110,147
- -------------------------------------------------------------------------------------------------------
Distributions to Shareholders (note 1)
From undistributed net investment income:
Class A (680,253) (1,227,494)
Class B (74,610) (104,859)
Class C (73,185) (97,280)
Class R (2,453) (3,847)
- -------------------------------------------------------------------------------------------------------
Decrease in net assets from distributions to shareholders (830,501) (1,433,480)
- -------------------------------------------------------------------------------------------------------
Fund Share Transactions (note 2)
Net proceeds from sale of shares 5,994,079 10,740,181
Net proceeds from shares issued to shareholders due to reinvestment
of distributions 531,893 960,959
- -------------------------------------------------------------------------------------------------------
6,525,972 11,701,140
Cost of shares redeemed (2,051,650) (2,401,689)
- -------------------------------------------------------------------------------------------------------
Net increase in net assets from Fund share transactions 4,474,322 9,299,451
- -------------------------------------------------------------------------------------------------------
Net increase in net assets 1,339,708 8,976,118
Net assets at the beginning of period 36,576,646 27,600,528
- -------------------------------------------------------------------------------------------------------
Net assets at the end of period $37,916,354 $36,576,646
=======================================================================================================
Balance of undistributed net investment income at the end of period $ 5,410 $ 947
=======================================================================================================
</TABLE>
See accompanying notes to financial statements.
35
<PAGE>
Notes to Financial Statements (Unaudited)
1. General Information and Significant Accounting Policies
The Nuveen Flagship Multistate Trust IV (the "Trust") is an open-end investment
company registered under the Investment Company Act of 1940, as amended. The
Trust comprises the Nuveen Flagship Kansas Municipal Bond Fund ("Kansas"), the
Nuveen Flagship Missouri Municipal Bond Fund ("Missouri") and the Nuveen
Flagship Wisconsin Municipal Bond Fund ("Wisconsin") (collectively, the
"Funds"), among others. The Trust was organized as a Massachusetts business
trust on July 1, 1996.
The Funds seek to provide high tax-free income and preservation of capital
through investments in diversified portfolios of quality municipal bonds.
The following is a summary of significant accounting policies followed by the
Funds in the preparation of their financial statements in accordance with
generally accepted accounting principles.
Securities Valuation
The prices of municipal bonds in each Fund's investment portfolio are provided
by a pricing service approved by the Fund's Board of Trustees. When price quotes
are not readily available (which is usually the case for municipal securities),
the pricing service establishes fair market value based on yields or prices of
municipal bonds of comparable quality, type of issue, coupon, maturity and
rating, indications of value from securities dealers and general market
conditions. Temporary investments in securities that have variable rate and
demand features qualifying them as short-term securities are valued at amortized
cost, which approximates market value.
Securities Transactions
Securities transactions are recorded on a trade date basis. Realized gains and
losses from such transactions are determined on the specific identification
method. Securities purchased or sold on a when-issued or delayed delivery basis
may have extended settlement periods. Any securities so purchased are subject to
market fluctuation during this period. The Funds have instructed the custodian
to segregate assets in a separate account with a current value at least equal to
the amount of the when-issued and delayed delivery purchase commitments. At
November 30, 1999, Missouri and Wisconsin had outstanding delayed delivery and
when-issued purchase commitments of $1,881,053 and $1,468,890, respectively.
There were no such outstanding purchase commitments in Kansas.
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 shareholders of the Funds. Net realized
capital gain and market discount distributions are subject to federal taxation.
36
<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 six months ended November 30, 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.
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.
Use of Estimates
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities at the date of the
financial statements and the reported amounts of increases and decreases in net
assets from operations during the reporting period. Actual results may differ
from those estimates.
2. Fund Shares
Transactions in Fund shares were as follows:
<TABLE>
<CAPTION>
Kansas
------------------------------------------------------
Six Months Ended Year Ended
11/30/99 5/31/99
------------------------- ---------------------------
Shares Amount Shares Amount
- --------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Shares sold:
Class A 1,190,656 $ 12,223,579 2,070,976 $ 22,111,543
Class B 56,809 569,755 338,463 3,592,058
Class C 106,765 1,081,784 485,599 5,195,815
Class R 65,298 658,954 63,074 670,708
Shares issued to shareholders due to
reinvestment of distributions:
Class A 107,213 1,082,583 204,225 2,180,079
Class B 5,698 57,120 11,758 124,503
Class C 7,520 76,034 8,496 90,854
Class R 142 1,440 225 2,418
- --------------------------------------------------------------------------------------------------
1,540,101 15,751,249 3,182,816 33,967,978
- --------------------------------------------------------------------------------------------------
Shares redeemed:
Class A (1,120,269) (11,254,086) (1,133,132) (12,087,524)
Class B (39,329) (392,836) (34,327) (362,189)
Class C (62,365) (624,427) (68,688) (732,197)
Class R (9,625) (96,488) (104) (1,131)
- --------------------------------------------------------------------------------------------------
(1,231,588) (12,367,837) (1,236,251) (13,183,041)
- --------------------------------------------------------------------------------------------------
Net increase 308,513 $ 3,383,412 1,946,565 $ 20,784,937
==================================================================================================
</TABLE>
37
<PAGE>
Notes to Financial Statements (Unaudited) (continued)
<TABLE>
<CAPTION>
Missouri
------------------------------------------------------
Six Months Ended Year Ended
11/30/99 5/31/99
------------------------- --------------------------
Shares Amount Shares Amount
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Shares sold:
Class A 1,039,277 $ 11,152,517 2,059,573 $ 23,245,894
Class B 64,654 695,992 347,008 3,910,407
Class C 94,400 1,019,267 305,854 3,443,979
Class R 7,776 82,655 33,982 380,881
Shares issued to shareholders due to reinvestment of distributions:
Class A 211,619 2,278,430 415,813 4,695,252
Class B 4,317 46,415 9,733 109,725
Class C 9,964 107,168 25,897 291,783
Class R 347 3,720 89 1,004
- -----------------------------------------------------------------------------------------------------------------------------
1,432,354 15,386,164 3,197,949 36,078,925
- -----------------------------------------------------------------------------------------------------------------------------
Shares redeemed:
Class A (2,444,826) (25,912,515) (1,812,770) (20,424,817)
Class B (21,333) (226,292) (30,293) (338,255)
Class C (152,362) (1,611,931) (124,260) (1,397,146)
Class R -- -- (2,376) (26,681)
- -----------------------------------------------------------------------------------------------------------------------------
(2,618,521) (27,750,738) (1,969,699) (22,186,899)
- -----------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) (1,186,167) $(12,364,574) 1,228,250 $ 13,892,026
=============================================================================================================================
</TABLE>
<TABLE>
<CAPTION>
Wisconsin
------------------------------------------------------
Six Months Ended Year Ended
11/30/99 5/31/99
------------------------- --------------------------
Shares Amount Shares Amount
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Shares sold:
Class A 470,951 $ 4,601,126 608,036 $ 6,270,838
Class B 54,034 535,552 210,301 2,185,117
Class C 87,775 857,248 215,001 2,223,917
Class R 17 153 5,783 60,309
Shares issued to shareholders due to reinvestment of distributions:
Class A 45,193 441,308 79,265 821,500
Class B 3,455 33,908 6,147 63,822
Class C 5,542 54,213 6,933 72,025
Class R 251 2,464 347 3,612
- -----------------------------------------------------------------------------------------------------------------------------
667,218 6,525,972 1,131,813 11,701,140
- -----------------------------------------------------------------------------------------------------------------------------
Shares redeemed:
Class A (155,623) (1,500,659) (188,176) (1,949,001)
Class B (14,954) (142,483) (27,493) (285,123)
Class C (42,839) (408,508) (16,267) (167,457)
Class R -- -- (11) (108)
- -----------------------------------------------------------------------------------------------------------------------------
(213,416) (2,051,650) (231,947) (2,401,689)
- -----------------------------------------------------------------------------------------------------------------------------
Net increase 453,802 $ 4,474,322 899,866 $ 9,299,451
=============================================================================================================================
</TABLE>
3. Distributions to Shareholders
The Funds declared dividend distributions from their tax-exempt net investment
income which were paid on December 20, 1999, to shareholders of record on
December 9, 1999, as follows:
Kansas Missouri Wisconsin
- ---------------------------------------------------
Dividend per share:
Class A $.0410 $.0455 $.0365
Class B .0345 .0385 .0305
Class C .0365 .0405 .0320
Class R .0430 .0470 .0380
===================================================
Missouri and Wisconsin also declared capital gains distributions of $.0089 and
$.0066 per share, respectively, which were paid on December 7, 1999 to
shareholders of record on December 2, 1999.
38
<PAGE>
4. Securities Transactions
Purchases and sales (including maturities) of investments in long-term municipal
securities and short-term municipal securities for the six months ended November
30, 1999, were as follows:
<TABLE>
<CAPTION>
Kansas Missouri Wisconsin
- ------------------------------------------------------------------------------
<S> <C> <C> <C>
Purchases:
Long-term municipal securities $ 38,676,908 $ 26,725,371 $10,507,897
Short-term municipal securities 3,795,000 600,000 1,500,000
Sales:
Long-term municipal securities 35,315,956 39,049,272 5,383,542
Short-term municipal securities 3,000,000 600,000 --
==============================================================================
</TABLE>
At November 30, 1999, the identified cost of investments owned for federal
income tax purposes were as follows:
<TABLE>
<CAPTION>
Kansas Missouri Wisconsin
- ------------------------------------------------------------------------------
<S> <C> <C> <C>
$122,062,083 $227,794,474 $41,418,469
==============================================================================
</TABLE>
At May 31, 1999, the Funds' last fiscal year end, 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
for federal income tax purposes at November 30, 1999, were as follows:
<TABLE>
<CAPTION>
Kansas Missouri Wisconsin
- ----------------------------------------------------------------------------------------
<S> <C> <C> <C>
Gross unrealized:
appreciation $ 2,391,439 $ 5,607,713 $ 274,805
depreciation (4,540,920) (7,209,232) (2,398,066)
- ----------------------------------------------------------------------------------------
Net unrealized appreciation (depreciation) $(2,149,481) $(1,601,519) $(2,123,261)
========================================================================================
</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 six months ended November 30, 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 $58,648 $135,052 $44,036
Paid to authorized dealers 58,648 135,052 44,036
</TABLE>
39
<PAGE>
Notes to Financial Statements (Unaudited) (continued)
During the six months ended November 30, 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 $ 83,624 $ 60,384 $ 65,335
========================================================================================================================
</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 collected on Class B Shares, and all 12b-1 service and
distribution fees collected on Class C Shares during the first year following a
purchase are retained by the Distributor. During the six months ended November
30, 1999, the Distributor retained such 12b-1 fees as follows:
<TABLE>
<CAPTION>
Kansas Missouri Wisconsin
- ------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
12b-1 fees retained $ 42,498 $ 31,892 $ 22,852
========================================================================================================================
</TABLE>
The remaining 12b-1 fees charged to the Funds were paid to compensate authorized
dealers for providing services to shareholders relating to their investments.
The Distributor also collected and retained CDSC on share redemptions during the
six months ended November 30, 1999, as follows:
<TABLE>
<CAPTION>
Kansas Missouri Wisconsin
- ------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
CDSC retained $ 8,130 $ 3,430 $ 4,560
========================================================================================================================
</TABLE>
7. Composition of Net Assets
At November 30, 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 $127,683,195 $231,549,042 $40,227,722
Balance of undistributed net investment income 7,334 40,215 5,410
Accumulated net realized gain (loss) from investment transactions (4,943,224) (965,885) (193,517)
Net unrealized appreciation (depreciation) of investments (2,149,481) (1,592,183) (2,123,261)
- ------------------------------------------------------------------------------------------------------------------------
Net assets $120,597,824 $229,031,189 $37,916,354
========================================================================================================================
</TABLE>
40
<PAGE>
Financial Highlights (Unaudited)
Selected data for a share outstanding throughout each period:
<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 (Loss) Total Income Gains Total Value Return(a)
- ------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Class A (1/92)
2000 (e) $ 10.49 $ .25 $(.73) $(.48) $(.25) $ -- $(.25) $ 9.76 (4.64)%
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)
2000 (e) 10.43 .21 (.74) (.53) (.21) -- (.21) 9.69 (5.14)
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 (d) 10.23 .13 (.12) .01 (.11) -- (.11) 10.13 .13
Class C (2/97)
2000 (e) 10.51 .22 (.74) (.52) (.22) -- (.22) 9.77 (4.99)
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 (d) 10.18 .15 .04 .19 (.16) -- (.16) 10.21 1.85
Class R (2/97)
2000 (e) 10.55 .26 (.74) (.48) (.26) -- (.26) 9.81 (4.60)
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 (d) 10.20 .18 (.02) .16 (.14) -- (.14) 10.22 1.55
==================================================================================================================
</TABLE>
<TABLE>
<CAPTION>
Ratios/Supplemental Data
----------------------------------------------------------------------------------------
Before Credit/ After After Credit
Reimbursement Reimbursement(b) Reimbursement(c)
------------------- ------------------- -------------------
Ratio Ratio Ratio
of Net of Net of Net
Invest- Invest- Invest-
Ratio of ment Ratio of ment Ratio of ment
Expenses Income Expenses Income Expenses Income
Ending to to to to to to
Net Average Average Average Average Average Average Portfolio
Assets Net Net Net Net Net Net Turnover
(000) Assets Assets Assets Assets Assets Assets Rate
- --------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Class A (1/92)
2000 (e) $106,912 .95%* 4.88%* .93%* 4.89%* .91%* 4.91%* 28%
1999 113,140 .90 4.63 .75 4.78 .75 4.78 27
1998 102,217 .90 4.79 .71 4.98 .71 4.98 13
1997 95,891 1.03 4.89 .68 5.24 .68 5.24 40
1996 96,694 1.08 4.80 .57 5.31 .57 5.31 55
1995 83,683 1.10 5.11 .54 5.67 .54 5.67 72
Class B (2/97)
2000 (e) 6,264 1.69* 4.13* 1.68* 4.14* 1.66* 4.16* 28
1999 6,497 1.65 3.89 1.51 4.03 1.51 4.03 27
1998 3,238 1.65 4.02 1.45 4.22 1.45 4.22 13
1997 (d) 605 1.65* 4.24* 1.27* 4.62* 1.27* 4.62* 40
Class C (2/97)
2000 (e) 6,243 1.49* 4.34* 1.48* 4.35* 1.46* 4.37* 28
1999 6,171 1.45 4.10 1.32 4.23 1.32 4.23 27
1998 1,716 1.44 4.21 1.24 4.41 1.24 4.41 13
1997 (d) 91 1.45* 4.49* 1.09* 4.85* 1.09* 4.85* 40
Class R (2/97)
2000 (e) 1,179 .75* 5.11* .74* 5.12* .72* 5.14* 28
1999 679 .70 4.86 .59 4.97 .59 4.97 27
1998 12 .70 4.97 .51 5.16 .51 5.16 13
1997 (d) -- .08* 6.53* -- 6.61* -- 6.61* 40
==================================================================================================================
</TABLE>
* Annualized.
** Information included prior to the fiscal year ended May 31, 1997, reflects
the financial highlights of Flagship Kansas.
(a) Total returns are calculated on net asset value without any sales charge and
are not annualized.
(b) After expense reimbursement from the investment adviser, where applicable
(note 6).
(c) After custodian fee credit and expense reimbursement, where applicable
(notes 1 and 6).
(d) From commencement of class operations as noted.
(e) For the six months ended November 30, 1999.
41
<PAGE>
Financial Highlights (Unaudited)
Selected data for a share outstanding throughout each period:
<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 (Loss) Total Income Gains Total Value Return(a)
- ------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Class A (8/87)
2000 (e) $ 11.12 $ .28 $(.71) $(.43) $(.27) $ -- $(.27) $10.42 (3.87)%
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)
2000 (e) 11.11 .24 (.70) (.46) (.23) -- (.23) 10.42 (4.16)
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 (d) 10.81 .16 (.01) .15 (.16) -- (.16) 10.80 1.40
Class C (2/94)
2000 (e) 11.11 .25 (.71) (.46) (.24) -- (.24) 10.41 (4.14)
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)
2000 (e) 11.12 .29 (.71) (.42) (.28) -- (.28) 10.42 (3.77)
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 (d) 10.90 .17 (.12) .05 (.15) -- (.15) 10.80 .43
==================================================================================================================
</TABLE>
<TABLE>
<CAPTION>
Ratios/Supplemental Data
----------------------------------------------------------------------------------------
Before Credit/ After After Credit/
Reimbursement Reimbursement(b) Reimbursement(c)
--------------------- ------------------- -------------------
Ratio Ratio Ratio
of Net of Net of Net
Invest- Invest- Invest-
Ratio of ment Ratio of ment Ratio of ment
Expenses Income Expenses Income Expenses Income
Ending to to to to to to
Net Average Average Average Average Average Average Portfolio
Year Ended Assets Net Net Net Net Net Net Turnover
May 31, (000) Assets Assets Assets Assets Assets Assets Rate
- --------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Class A (8/87)
2000 (e) $211,029 .87%* 5.12%* .87%* 5.12%* .86%* 5.12%* 11%
1999 238,498 .86 4.87 .86 4.87 .86 4.87 12
1998 233,456 .87 5.02 .87 5.02 .87 5.02 19
1997 218,924 1.00 5.13 .86 5.27 .86 5.27 41
1996 212,717 1.05 5.12 .80 5.37 .80 5.37 38
1995 205,089 1.08 5.37 .67 5.78 .67 5.78 40
Class B (2/97)
2000 (e) 5,452 1.62* 4.37* 1.62* 4.37* 1.61* 4.38* 11
1999 5,286 1.61 4.13 1.61 4.13 1.61 4.13 12
1998 1,677 1.62 4.25 1.62 4.25 1.62 4.25 19
1997 (d) 454 1.62* 4.42* 1.45* 4.59* 1.45* 4.59* 41
Class C (2/94)
2000 (e) 12,098 1.42* 4.57* 1.42* 4.57* 1.41* 4.58* 11
1999 13,444 1.41 4.32 1.41 4.32 1.41 4.32 12
1998 11,253 1.42 4.47 1.42 4.47 1.42 4.47 19
1997 7,968 1.55 4.57 1.40 4.72 1.40 4.72 41
1996 6,220 1.60 4.54 1.35 4.79 1.35 4.79 38
1995 3,989 1.63 4.76 1.20 5.19 1.20 5.19 40
Class R (2/97)
2000 (e) 453 .67* 5.33* .67* 5.33* .67* 5.34* 11
1999 393 .66 5.07 .65 5.08 .65 5.08 12
1998 41 .67 5.22 .67 5.22 .67 5.22 19
1997 (d) 34 .67* 5.53* .55* 5.65* .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) Total returns are calculated on net asset value without any sales charge and
are not annualized.
(b) After expense reimbursement from the investment adviser, where applicable
(note 6).
(c) After custodian fee credit and expense reimbursement, where applicable
(notes 1 and 6).
(d) From commencement of class operations as noted.
(e) For the six months ended November 30, 1999.
42
<PAGE>
Selected data for a share outstanding throughout each period:
<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 (Loss) Total Income Gains Total Value Return(a)
- ------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Class A (6/94)
2000 (e) $10.20 $.22 $(.81) $(.59) $(.22) $ -- $(.22) $ 9.39 (5.80)%
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 (d) 9.58 .49 .21 .70 (.49) -- (.49) 9.79 7.36*
Class B (2/97)
2000 (e) 10.23 .19 (.83) (.64) (.18) -- (.18) 9.41 (6.25)
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 (d) 9.87 .12 (.06) .06 (.11) -- (.11) 9.82 .60
Class C (2/97)
2000 (e) 10.22 .20 (.81) (.61) (.20) -- (.20) 9.41 (6.05)
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 (d) 9.87 .13 (.07) .06 (.11) -- (.11) 9.82 .65
Class R (2/97)
2000 (e) 10.23 .23 (.81) (.58) (.23) -- (.23) 9.42 (5.69)
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 (d) 9.87 .15 (.07) .08 (.13) -- (.13) 9.82 .84
==================================================================================================================
</TABLE>
<TABLE>
<CAPTION>
Ratios/Supplemental Data
----------------------------------------------------------------------------------------
Before Credit/ After After Credit/
Reimbursement Reimbursement(b) Reimbursement(c)
-------------------- ------------------- -------------------
Ratio Ratio Ratio
of Net of Net of Net
Invest- Invest- Invest-
Ratio of ment Ratio of ment Ratio of ment
Expenses Income Expenses Income Expenses Income
Ending to to to to to to
Net Average Average Average Average Average Average Portfolio
Year Ended Assets Net Net Net Net Net Net Turnover
May 31, (000) Assets Assets Assets Assets Assets Assets Rate
- --------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Class A (6/94)
2000 (e) $30,266 1.10%* 4.38%* .96%* 4.53%* .93%* 4.56%* 14%
1999 29,217 1.17 4.04 .68 4.53 .68 4.53 9
1998 24,313 1.36 4.06 .55 4.87 .55 4.87 10
1997 14,004 1.61 4.10 .51 5.20 .51 5.20 42
1996 12,370 1.51 4.15 .64 5.02 .64 5.02 47
1995 (d) 8,278 2.31* 3.33* .39* 5.25* .39* 5.25* 52
Class B (2/97)
2000 (e) 3,893 1.85* 3.63* 1.70* 3.78* 1.67* 3.81* 14
1999 3,795 1.94 3.28 1.43 3.79 1.43 3.79 9
1998 1,877 2.08 3.28 1.32 4.04 1.32 4.04 10
1997 (d) 20 2.18* 3.57* .94* 4.81* .94* 4.81* 42
Class C (2/97)
2000 (e) 3,656 1.65* 3.84* 1.51* 3.98* 1.48* 4.01* 14
1999 3,457 1.73 3.49 1.23 3.99 1.23 3.99 9
1998 1,366 1.89 3.47 1.11 4.25 1.11 4.25 10
1997 (d) 76 1.98* 3.62* .69* 4.91* .69* 4.91* 42
Class R (2/97)
2000 (e) 101 .91* 4.58* .76* 4.73* .72* 4.76* 14
1999 107 .97 4.25 .48 4.74 .48 4.74 9
1998 45 41.12 4.28 .32 5.08 .32 5.08 10
1997 (d) 40 1.28* 4.39* -- 5.67* -- 5.67* 42
==============================================================================================================
</TABLE>
* Annualized.
** Information included prior to the fiscal year ended May 31, 1997, reflects
the financial highlights of Flagship Wisconsin.
(a) Total returns are calculated on net asset value without any sales charge and
are not annualized.
(b) After expense reimbursement from the investment adviser, where applicable
(note 6).
(c) After custodian fee credit and expense reimbursement, where applicable
(notes 1 and 6).
(d) From commencement of class operations as noted.
(e) For the six months ended November 30, 1999.
43
<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
International Growth Fund
Innovation Fund
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
Floating Rate Fund(1)
Tax-Free Income
National Funds
High Yield
Long-Term
Insured Long Term
Intermediate-Term
Limited-Term
State Funds
Arizona
California(2)
Colorado
Connecticut
Florida
Georgia
Kansas
Kentucky
Louisiana
Maryland
Massachusetts(2)
Michigan
Missouri
New Jersey
New Mexico
New York(2)
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.
1. This is a continuously-offered closed-end interval fund. As such, redemptions
are only available during quarterly repurchase periods. See fund prospectus
for additional information.
2. Long-term and insured long-term portfolios.
44
<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
45
<PAGE>
SERVING
Investors for Generations
[Photo of John Nuveen, Sr. appears here]
John Nuveen, Sr.
Since our founding in 1898, John Nuveen & Co. has been synonymous with
investments that withstand the test of time. Today we offer a broad range of
quality investments designed for individuals seeking to build and sustain
wealth. In fact, more than 1.3 million investors have trusted Nuveen to help
them pursue their financial goals.
The cornerstone of Nuveen's investment philosophy is a commitment to
disciplined long-term investment strategies 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.
NUVEEN
John Nuveen & Co. Incorporated
333 West Wacker Drive
Chicago, IL 60606-1286
www.nuveen.com
