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IMPORTANT VOTING INFORMATION FOR SHAREHOLDERS OF
NUVEEN FLAGSHIP NEW JERSEY INTERMEDIATE MUNICIPAL BOND FUND
The following is a brief overview of the proposals to be voted upon at the
August 13, 1998 shareholder meeting. It should be read in conjunction with your
fund's proxy statement, which was mailed to you earlier. If you would like
another copy of the proxy statement, please call us at the number listed below.
YOUR VOTE IS VERY IMPORTANT.
If you have not already done so, please fill out and return the enclosed proxy
card in a timely fashion. Thank you for your support of the Nuveen family of
mutual funds.
Q. WHAT ARE SHAREHOLDERS BEING ASKED TO VOTE ON AT THE UPCOMING SPECIAL
SHAREHOLDER MEETING ON AUGUST 13?
A. The Board of Trustees for the Nuveen Flagship New Jersey Intermediate
Municipal Bond Fund (the "New Jersey Intermediate Fund") has called a Special
Shareholder Meeting for August 13, 1998 at which you will be asked to vote on
a reorganization (the "Reorganization") of your fund into the Nuveen Flagship
New Jersey Municipal Bond Fund (the "New Jersey Fund").
Q. ARE THERE ANY DIFFERENCES BETWEEN THE FUNDS?
A. The New Jersey Fund is substantially the same as the New Jersey Intermediate
Fund in its philosophy, investment objectives and policies and day-to-day
portfolio management except that the New Jersey Intermediate Fund maintains a
weighted average portfolio maturity between 5 and 10 years while the New
Jersey Fund maintains a weighted average portfolio maturity between 15 and 30
years. In evaluating the Reorganization, the New Jersey Intermediate Fund
shareholders should consider the impact of investing in a long-term municipal
bond fund.
Q. WHAT ADVANTAGES WILL THIS PRODUCE FOR FUND SHAREHOLDERS?
A. We expect the proposed Reorganization to (i) lower gross operating expenses
as a percentage of net assets due to the New Jersey Fund's larger net assets
and greater economies of scale; (ii) improve portfolio diversification; (iii)
lower portfolio transaction costs; and (iv) retain the exemption of dividends
from the New Jersey state personal income tax. The Board believes that these
potential benefits, together with the potentially higher distributions from
the New Jersey Fund, should offset the risks associated with investments in a
long term bond fund.
Q. HAS THE FUND'S BOARD OF TRUSTEES APPROVED THE PROPOSAL?
A. The Board of Trustees of the New Jersey Intermediate Fund unanimously agreed
that this Reorganization is in your best interests and recommends that you
vote in favor of it.
Q. WHAT IS THE TIMETABLE FOR THE REORGANIZATION?
A. Effective May 8, 1998, the New Jersey Intermediate Fund was closed to new
investors; existing investors, however, may continue to make additional
purchases and reinvest dividends. If approved by shareholders on August 13,
1998, the Reorganization is expected to take effect on August 21, 1998.
Q. WILL I RECEIVE NEW SHARES IN EXCHANGE FOR MY CURRENT SHARES?
A. Yes. Upon approval and completion of the Reorganization, shareholders of the
New Jersey Intermediate Fund will exchange their shares for shares of the New
Jersey Fund based upon a specified exchange ratio determined by the ratio of
the respective net asset values of the funds. You will receive New Jersey
Fund shares whose aggregate value at the time of issuance will equal the
aggregate value of your New Jersey Intermediate Fund shares on that date.
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Q. IF I OWN SHARES IN CERTIFICATE FORM, WILL I NEED TO EXCHANGE THEM FOR
CERTIFICATES OF MY NEW FUND?
A. Certificates for New Jersey Fund shares will not be issued automatically as
part of the Reorganization, although we will send you certificates upon
request. If you currently own New Jersey Intermediate Fund shares in
certificate form, you will need to return these certificates to Nuveen in
order to receive new certificates for your New Jersey Fund shares.
If you prefer, however, you may exchange your certificates for book entry
shares. These shares are held in a convenient computerized system that
enables shareholders to receive a complete and accurate record of their
holdings without having to worry about the safekeeping of certificates or the
expense involved with replacing a lost or stolen certificate. Just complete
the appropriate section of the Letter of Transmittal requesting book entry
shares. Regardless of the way you choose to hold your shares after the
Reorganization, certificates should be returned to the fund's transfer agent
by certified mail as soon as possible.
Q. WILL I HAVE TO PAY ANY FEES OR EXPENSES IN CONNECTION WITH THE
REORGANIZATION?
A. No. All of the funds' expenses associated with the Reorganization will be
borne by the New Jersey Intermediate Fund. However, since Nuveen currently
reimburses any additional operating expenses for the New Jersey Intermediate
Fund, Nuveen will effectively bear the full cost of the Reorganization.
Q. HOW DO MANAGEMENT FEES AND OTHER FUND OPERATING EXPENSES COMPARE BETWEEN THE
TWO FUNDS?
A. Upon approval and completion of the proposed Reorganization, New Jersey
Intermediate Fund shareholders will benefit from lower gross fund operating
expenses (before expense waivers/reimbursements) as a percentage of net
assets, reflecting the larger net assets and greater economies of scale of
the New Jersey Fund. Net fund operating expenses (after expense
waivers/reimbursements) of the New Jersey Fund are also lower than those of
the New Jersey Intermediate Fund as a percentage of net assets. For both the
New Jersey Fund and the New Jersey Intermediate Fund, Nuveen has agreed to
voluntarily waive some or all of its fees or reimburse certain expenses. The
waivers/ reimbursements for the New Jersey Fund are subject to change in the
future and there can be no assurance that Nuveen will continue the
waivers/reimbursements for the New Jersey Intermediate Fund if the
Reorganization is not approved.
Q. WILL THIS REORGANIZATION CREATE A TAXABLE EVENT FOR ME?
A. The Reorganization is intended to be done on a tax-free basis for federal
income tax purposes. Therefore, you will recognize no gain or loss for
federal income tax purposes as a result of the Reorganization. In addition,
the tax basis and holding period of the New Jersey Fund shares you receive
will be the same as the tax basis and holding period of your New Jersey
Intermediate Fund shares.
Q. CAN I EXCHANGE OR REDEEM MY NEW JERSEY INTERMEDIATE FUND SHARES BEFORE THE
REORGANIZATION TAKES PLACE?
A. Upon approval of the Reorganization, you may exchange your New Jersey
Intermediate Fund shares for shares of any other Nuveen Mutual Fund, or
redeem your shares, at any time. If you choose to do so, your request will be
treated as a normal exchange or redemption of shares (subject to any
applicable deferred sales charge) and will be a taxable transaction for
federal income tax purposes.
Q. HOW DO I VOTE MY SHARES?
A. You can vote your shares by completing and signing the enclosed proxy
card(s), and mailing them in the enclosed postage-paid envelope. If you need
any assistance, or have any questions regarding the proposals or how to vote
your shares, please call your financial adviser or Nuveen at (800) 621-7227
weekdays from 7:00 a.m. to 7:00 p.m. Central time.
Q. WILL NUVEEN CONTACT ME?
A. You may receive a call to verify that you received your proxy materials and
to answer any questions you may have about the Reorganization.
