<PAGE>
NUVEEN
Municipal
Bond Funds
April 30, 1997
Annual Report
Dependable, tax-free income
to help you keep more of
what you earn.
[PHOTO OF COUPLE APPEARS HERE]
National
National Insured
<PAGE>
Contents
1 Dear Shareholder
3 Answering Your Questions
6 Nuveen Municipal
Bond Fund Overview
8 Nuveen Insured Municipal
Bond Fund Overview
11 Financial Section
63 Shareholder Information
64 Fund Information
<PAGE>
Dear Shareholder
It is my pleasure to report to you on the performance of the Nuveen Municipal
Bond Fund and the Nuveen Insured Municipal Bond Fund, and to welcome new
investors to our family of investments. This report represents portfolio
performance for the period ended April 30, 1997. Your fund's fiscal year end
changed from February 28 to April 30 as part of the Nuveen/Flagship
reorganization approved by shareholders earlier this year.
Shareholders were rewarded during the fiscal year with the attractive tax-free
income and consistent performance that are hallmarks of Nuveen's disciplined
investment approach --qualities that make these funds a good choice for those
seeking a stable addition to their core investment portfolio.
The funds' sound performance came during a volatile year in the municipal bond
market, including a mid-1996 decline and a post-election rally. Our focus on
high quality bonds helped to control price swings, while the market's volatility
created opportunities for the funds' portfolio managers to add value and enhance
fund yields. By continuing to seek out undervalued bonds in sectors and regions
we believe are fundamentally strong, Nuveen was able to generate very attractive
current yields for shareholders while also preserving capital.
As of April 30, 1997, Class A shareholders in the Municipal Bond Fund were
receiving tax-free yields on net asset value of 4.89%, while Class A
shareholders in
[Photo of Timothy R. Schwertfeger appears here]
1
<PAGE>
the Insured Municipal Bond Fund were receiving 4.77%. To match these yields,
investors in the 31% federal income tax bracket would have had to earn 7.09% and
6.91%, respectively, from taxable alternatives.
During the same period, both funds finished in the top quartile of their
respective peer groups based on total return performance. The fund's Class A
shares tracked the benchmark Lehman Municipal Bond Index, generating total
returns of 6.87% for the Municipal Bond Fund and 6.11% for the Insured Municipal
Bond Fund, compared with a total return of 6.63% for the Lehman Index.
Nuveen has recently made significant and exciting additions to the investment
options available to our shareholders -- additions that make it easier to keep
more of what you earn. We introduced three new equity and balanced funds for
investors seeking both long-term growth and current income. We also introduced
new fund pricing options to make purchasing our mutual funds even more
convenient, and we revamped our prospectuses and annual shareholder reports to
make them easier to read and provide expanded information about the funds.
On behalf of everyone at Nuveen, I thank you for your confidence in us and our
family of investments. You can continue to depend on us for high-quality
investment products that withstand the test of time. We look forward to serving
you in the future.
Sincerely,
/s/ Timothy R. Schwertfeger
Timothy R. Schwertfeger
Chairman of the Board
June 12, 1997
"Shareholders were rewarded during the fiscal year with attractive tax-free
income and consistent performance that are hallmarks of Nuveen's disciplined
investment approach."
2
<PAGE>
Answering Your Questions
What are the investment objectives of the funds?
The funds aim to provide investors with a high level of tax-free income while
preserving the capital that investors have entrusted to us. Many investors rely
on their portfolio as a principal source of ongoing financial security. To that
end, we focus our portfolio strategy on preserving what Nuveen investors have
accumulated while generating income to support a comfortable lifestyle.
What is your strategy for meeting those objectives?
Rigorous research analysis and a value investing approach are at the foundation
of both funds' strategies. Each is a Nuveen hallmark, and they go hand in hand.
A value strategy means that we look for high-quality securities that are
undervalued and attractively priced relative to the rest of the market. Nuveen
Research helps identify those market sectors, geographic regions and bond
structures likely to produce bonds whose long-term value is higher than their
current prices would indicate.
One current example of a region we've identified as undervalued is the Sun Belt.
The growth of the Southeast and Southwest has resulted in a huge volume of
municipal bond issuance, most of which is to provide essential services:
schools, correctional facilities, and water and sewer systems. The combination
of volume and quality has created tremendous opportunities to find value.
[Photo of Tom Spalding Appears Here]
Tom Spalding, head of Nuveen's Chicago-based portfolio management team, talks
about the municipal bond market and offers insights into factors that affected
fund performance over the past year.
3
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That's not to say it's easy. There is more municipal market information out
there than ever before, and the markets are more efficient. As a result, there
are fewer opportunities to find value. But by focusing on quality issues with
fundamental value, as opposed to trying to call the direction of interest rates,
we've been able to produce the high level of income and consistent share price
performance investors expect.
How did the funds perform during the year and what key economic and market
factors affected the funds' performance?
The Nuveen Municipal Bond Fund was a solid performer in its Lipper category
(57th of 231 national municipal bond funds), providing Class A shareholders with
steady tax-free income and a total return of 6.87% for the 12 months ended April
30, 1997. The Nuveen Insured Municipal Bond Fund also turned in a strong
performance versus its peers (16th in a group of 51 national insured municipal
bond funds). Shareholders received a total return of 6.11% for the period.
During this period, the Lehman Brothers Municipal Bond Index, which does not
incur operating expenses or transaction costs, reported a 6.63% total return.
During the last 12 months the Treasury market has shown significant volatility,
while the municipal market has been more price-stable and has outperformed its
taxable counterpart. For the same time period, the Bond Buyer Revenue Bond Index
began the period yielding 6.32% and closed the period at 6.13%. When bond yields
go down, prices go up, improving the net asset value of your fund. This
improvement in municipal bond performance relative to Treasuries was primarily
due to a
"Nuveen Research helps identify those market sectors, geographic regions and
bond structures likely to produce bonds whose long-term value is higher than
their current prices would indicate."
4
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light and steady supply of new municipal issues combined with renewed investor
demand from individual retail buyers and insurance companies. Additionally, the
municipal market has not been subjected to tax-based political debates or high-
profile credit issues such as the credit problems that occurred in Orange
County, California, which affected the relative strength of our market over the
past few years.
What is your market outlook for the coming year?
The economy in the second quarter has grown at a slower pace than during the
first quarter; however, the growth still may be at a level that exceeds the
Federal Reserve's long-term targets. Interest rates on 30-year Treasuries have
moved in a range of between 6.65% to 7.20% over the past several months, and
expectations are that this range may continue through the third quarter.
Municipal bond yields have continued to move to a lower percentage of Treasuries
due to a favorable supply/demand environment, and that may continue although
with slightly greater volatility.
Of course, that's a short-term outlook. By following a disciplined value
strategy, and depending on sound research, the long-term outlook for our
municipal bond funds -- and for Nuveen shareholders -- is very good. We will
continue to look for opportunities in sectors like healthcare and public power
and in regions like the Midwest and the Sun Belt. And will continue to identify
bonds that are structured in ways that make them attractive through a complete
interest rate cycle.
- -----
5
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CREDIT QUALITY
[PIE CHART APPEARS HERE]
AAA 36.5%
BBB 7.7%
BB/NR .9%
A 18.4%
AA 36.5%
DIVERSIFICATION
[PIE CHART APPEARS HERE]
Electric Utilities 20%
Housing Facilities 16%
Water & Sewer 9%
Escrowed Bonds 13%
Other 12%
General Obligations 7%
Transportation 6%
Health Care Facilities 17%
Morningstar Rating/3/
<TABLE>
<CAPTION>
Municipal Bond Fund
Overview
Fund Highlights
- --------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Share Class A B C R
Inception Date 6/95 2/97 6/95 11/76
- --------------------------------------------------------------------------------
Net Asset Value (NAV) $9.14 $ 9.15 $9.14 $9.15
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Total Net Assets ($000) $2,850,807
- --------------------------------------------------------------------------------
Average Weighted Maturity (years) 20.64
- --------------------------------------------------------------------------------
Duration (years) 7.9
- --------------------------------------------------------------------------------
Annualized Total Return/1/
- --------------------------------------------------------------------------------
Share Class A(NAV) A(Offer) B C R
1-Year 6.87% 2.38% 6.36% 6.16% 7.25%
- --------------------------------------------------------------------------------
5-Year 6.26% 5.35% 5.57% 5.49% 6.55%
- --------------------------------------------------------------------------------
10-Year 7.53% 7.07% 6.80% 6.74% 7.81%
- --------------------------------------------------------------------------------
Tax-Free Yields
- --------------------------------------------------------------------------------
Share Class A(NAV) A(Offer) B C R
Dist Rate 5.12% 4.91% 4.39% 4.60% 5.31%
- --------------------------------------------------------------------------------
SEC 30-Day Yld 4.89% 4.69% 4.14% 4.34% 5.09%
- --------------------------------------------------------------------------------
Taxable Equiv Yld/2/ 7.09% 6.80% 6.00% 6.29% 7.38%
- --------------------------------------------------------------------------------
</TABLE>
1 Returns of the oldest share class of a fund are actual. Returns for other
classes are actual for the period since inception and prior to class
inception are the returns for the fund's oldest class, adjusted for
differences in sales charges and expenses. Class A shares have an initial
sales charge, while Class B, C and R shares have no initial sales charge.
Class B shares have a CDSC that declines from 5% to 0% after 6 years. Class C
shares have a 1% CDSC for redemptions within one year. Returns do not reflect
imposition of the CDSC
2 Based on SEC yield and a federal income tax rate of 31%. Represents the yield
on a taxable investment necessary to equal the yield of the Nuveen fund on an
after-tax basis.
3 Overall rating among 1,257, 608 and 274 municipal bond funds for the 3-, 5-
and 10-year periods ended 4/30/97, respectively.
6
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Nuveen Municipal Bond Fund
April 30, 1997 Annual Report
Index Comparison*
[Line Chart Appears Here]
<TABLE>
<CAPTION>
Lehman
Brothers
Municipal Nuveen Municpal Nuveen Municipal
Date Bond Index Bond Fund (NAV) Bond Fund (Offer)
- ---- ------------- --------------- -----------------
<S> <C> <C> <C>
May-87 $10,000.00 $10,000.00 $ 9,580.00
May-88 $10,843.61 $10,758.25 $10,306.41
May-89 $12,089.90 $12,198.02 $11,685.70
May-90 $12,974.48 $12,915.47 $12,373.02
May-91 $14,282.11 $14,124.82 $13,531.58
May-92 $15,685.25 $15,400.38 $14,753.56
May-93 $17,561.76 $16,843.84 $16,136.40
May-94 $17,995.40 $17,226.70 $16,503.18
May-95 $19,634.16 $18,723.19 $17,936.81
May-96 $20,531.57 $19,380.17 $18,566.21
</TABLE>
Lehman Brothers Municipal Bond Index -$22,091
Nuveen Municipal Bond Fund (NAV) -$20,667
Nuveen Municipal Bond Fund (Offer) -$19,737
Past performance is not predictive of future performance.
* The Index Comparison shows change in value of a $10,000 investment in the A
shares of the Nuveen fund compared with the Lehman Brothers Municipal Bond
Index. The Lehman Municipal Bond Index is comprised of a broad range of
investment-grade municipal bonds, and does not reflect any initial or ongoing
expenses. The Nuveen fund return depicted in the chart reflects the initial
maximum sales charge applicable to A shares (4.20%) and all ongoing fund
expenses.
Dividend History (A Shares)
[Bar Chart Appears Here]
<TABLE>
<CAPTION>
Share
Ex Div Date Dividend
<S> <C>
5/9/1996 0.0395
6/7/1996 0.0395
7/9/1996 0.0385
8/9/1996 0.0385
9/9/1996 0.0385
10/9/1996 0.0385
11/8/1996 0.0838
12/9/1996 0.0385
1/9/1997 0.0385
2/13/1997 0.039
3/9/1997 0.039
4/9/1997 0.039
</TABLE>
The fund paid shareholders a capital gains distribution of $0.0453 per share in
December 1996.
7
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Insured Municipal Bond Fund
Overview
Credit Quality
[PIE CHART APPEARS HERE]
AAA 98.7%
BBB 0.6%
AA 0.7%
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Diversification
[PIE CHART APPEARS HERE]
Water & Sewer 7%
Escrowed Bonds 20%
Health Care Facilities 18%
Other 10%
General Obligations 19%
Housing Facilities 5%
Educational Facilities 7%
Pollution Control 5%
Lease Rental 9%
- ------------------------------------------------------------------------------
Morningstar Rating /3/
- ------------------------------------------------------------------------------
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
Fund Highlights
- ---------------------------------------------------------------------------
Share Class A B C R
Inception Date 9/94 2/97 9/94 12/86
...........................................................................
Net Asset Value (NAV) $10.66 $10.67 $10.56 $10.62
- ---------------------------------------------------------------------------
- ---------------------------------------------------------------------------
Total Net Assets ($000) $790,016
...........................................................................
Average Weighted Maturity (years) 22.08
...........................................................................
Duration (years) 7.84
- ---------------------------------------------------------------------------
Annualized Total Return/1/
- ---------------------------------------------------------------------------
Share Class A(NAV) A(Offer) B C R
1-Year 6.11% 1.66% 5.57% 5.49% 6.46%
...........................................................................
5-Year 6.94% 6.02% 6.15% 6.04% 7.14%
...........................................................................
10-Year 8.09% 7.62% 7.31% 7.23% 8.32%
...........................................................................
Tax-Free Yields
- ---------------------------------------------------------------------------
Share Class A(NAV) A(Offer) B C R
...........................................................................
Dist Rate 5.18% 4.96% 4.44% 4.60% 5.37%
...........................................................................
SEC 30-Day Yld 4.77% 4.57% 4.02% 4.23% 4.97%
...........................................................................
Taxable Equiv Yld/2/ 6.91% 6.62% 5.83% 6.13% 7.20%
- ---------------------------------------------------------------------------
</TABLE>
1 Returns of the oldest share class of a fund are actual. Returns for other
classes are actual for the period since inception and prior to class
inception are the returns for the fund's oldest class, adjusted for
differences in sales charges and expenses. Class A shares have an initial
sales charge, while Class B, C and R shares have no initial sales charge.
Class B shares have a CDSC that declines from 5% to 0% after 6 years. Class C
shares have a 1% CDSC for redemptions within one year. Returns do not reflect
imposition of the CDSC
2 Based on SEC yield and a federal income tax rate of 31%. Represents the yield
on a taxable investment necessary to equal the yield of the Nuveen fund on an
after-tax basis.
3 Overall rating among 1,257, 608 and 274 municipal bond funds for the 3-, 5-
and 10-year periods ended 4/30/97, respectively.
8
<PAGE>
Nuveen Insured Municipal Bond Fund
April 30, 1997 Annual Report
* The Index Comparison shows change in value of a $10,000 investment in the A
shares of the Nuveen fund compared with the Lehman Brothers Municipal Bond
Index. The Lehman Municipal Bond Index is comprised of a broad range of
investment-grade municipal bonds, and does not reflect any initial or ongoing
expenses. The Nuveen fund return depicted in the chart reflects the initial
maximum sales charge applicable to A shares (4.20%) and all ongoing fund
expenses.
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------
Index Comparison*
- ----------------------------------------------------------------------------------------
[LINE CHART APPEARS HERE]
Lehman
Brothers Nuveen Insured Nuveen Insured
Municipal Municipal Bond Municipal Bond Fund
Date Bond Index Fund (NAV) (Offer)
- ---- ---------- -------------- -------------------
<S> <C> <C> <C>
$10,000.00 $10,000.00 $ 9,580.00
May-88 $10,843.61 $10,671.86 $10,223.64
May-89 $12,089.90 $12,297.40 $11,780.91
May-90 $12,974.48 $12,986.22 $12,440.80
May-91 $14,282.11 $14,345.63 $13,743.11
May-92 $15,685.25 $15,746.77 $15,085.41
May-93 $17,561.76 $17,774.05 $17,027.54
May-94 $17,995.40 $18,034.88 $17,277.42
May-95 $19,634.16 $19,908.23 $19,072.09
Mar-96 $20,597.46 $20,595.99 $19,730.95
Apr-97 $22,091.00 $21.762.00 $20,782.00
</TABLE>
- ------------------------------------------------------------------------------
Dividend History (A Shares)
- ------------------------------------------------------------------------------
[BAR CHART APPEARS HERE]
EX DIV DATE SHARES DIVIDEND
5/9/96 0.0445
6/7/96 0.0445
7/9/96 0.0445
8/9/96 0.0445
9/9/96 0.0445
10/9/96 0.0445
11/8/96 0.0831
12/9/96 0.0445
1/9/97 0.0445
2/13/97 0.046
3/9/97 0.046
4/9/97 0.046
The fund paid shareholders a capital gains distribution of $0.0376 per share in
December 1996.
9
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Financial Section
Contents
12 Portfolio of Investments
46 Statement of Net Assets
47 Statement of Operations
48 Statement of Changes in Net Assets
50 Notes to Financial Statements
58 Financial Highlights
62 Report of Independent Public
Accountants
11
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Portfolio of Investments
Municipal Bond
<TABLE>
<CAPTION>
Principal Optional Call Market
Amount Description Provisions* Ratings** Value
- -------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Alaska -- 1.5%
$ 3,885,000 Alaska Housing Finance Corporation, Insured Mortgage 6/97 at 100 Aa1 $ 3,901,550
Program Bonds, 1978 First Series, 6.375%, 12/01/07
14,500,000 Alaska Housing Finance Corporation, Insured Mortgage 12/03 at 102 Aa1 14,547,850
Program Bonds, 1993 First Series, 5.800%, 12/01/18
Alaska Housing Finance Corporation, Insured Mortgage
Program Bonds, 1990 First Series:
3,290,000 7.650%, 12/01/10 12/00 at 102 Aa1 3,310,957
9,860,000 7.800%, 12/01/30 12/00 at 102 Aa1 9,925,175
12,375,000 Alaska Housing Finance Corporation, Collateralized 12/03 at 102 Aaa 12,058,076
Home Mortgage Bonds, 1990 Series A,
5.850%, 6/01/25
- -------------------------------------------------------------------------------------------------------------------------------
Arizona -- 2.7%
7,750,000 Arizona Board of Regents, Arizona State University, 7/02 at 101 AA 7,835,405
System Revenue Refunding Bonds, Series 1992-A,
5.750%, 7/01/12
20,350,000 Salt River Project Agricultural Improvement and Power 1/02 at 100 Aa 19,352,240
District, Arizona, Salt River Project Electric System
Revenue Bonds, 1992 Series C, 5.500%, 1/01/28
9,145,000 Salt River Project Agricultural Improvement and Power 7/97 at 100 Aa 8,775,359
District, Arizona, Salt River Project Electric System
Revenue Bonds, 1973 Series A, 5.000%, 1/01/10
Salt River Project Agricultural Improvement and Power
District, Electric System Revenue Refunding Bonds,
1993 Series C:
5,000,000 4.900%, 1/01/08 1/04 at 102 Aa 4,850,500
36,820,000 4.750%, 1/01/17 1/04 at 100 Aa 32,572,813
4,570,000 The Industrial Development Authority of the City of 9/97 at 102 Aaa 4,731,230
Scottsdale, Arizona, Hospital Revenue Refunding
Bonds (Scottsdale Memorial Hospital),
Series 1987 A, 8.500%, 9/01/07
- -------------------------------------------------------------------------------------------------------------------------------
Arkansas -- 0.4%
11,210,000 Jefferson County, Arkansas, Hospital Refunding 7/03 at 102 A 11,697,523
Revenue Bonds, Series 1993, 6.000%, 7/01/06
- -------------------------------------------------------------------------------------------------------------------------------
California -- 13.8%
19,220,000 California Health Facilities Financing Authority, Insured 7/04 at 102 Aaa 17,658,759
Health Facility Refunding Revenue Bonds (Catholic
Healthcare West) 1994 Series A, 5.000%, 7/01/14
</TABLE>
12
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<TABLE>
<CAPTION>
Nuveen Municipal Bond Funds
April 30, 1997 Annual Report
Principal Optional Call Market
Amount Description Provisions* Ratings** Value
- ----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
California -- continued
$38,795,000 California Statewide Communities Development 7/03 at 102 AA $36,661,663
Authority, Certificates of Participation, St. Joseph
Health System Obligated Group, 5.500%, 7/01/23
11,500,000 California Statewide Communities Development 10/03 at 102 Aaa 11,210,315
Authority, Insured Health Facilities Revenue,
Certificates of Participation (UniHealth America),
1993 Series A, 5.500%, 10/01/14
12,000,000 State Public Works Board of the State of California 11/04 at 102 Aaa 13,778,160
Lease Revenue Bonds (Department of Corrections),
1994 Series A (California State Prison--
Monterey County (Soledad II)), 7.000%, 11/01/19
(Pre-refunded to 11/01/04)
State of California, Department of Water Resources,
Central Valley Project, Water System Revenue Bonds,
Series L:
15,515,000 5.700%, 12/01/16 6/03 at 101 1/2 Aa 15,378,623
9,500,000 5.750%, 12/01/19 12/03 at 101 1/2 Aa 9,422,385
12,250,000 5.500%, 12/01/23 12/03 at 101 1/2 Aa 11,698,383
21,000,000 State of California, Department of Water Resources, 12/03 at 101 Aa 17,927,490
Central Valley Project, Water System Revenue
Bonds, Series M, 4.875%, 12/01/27
15,725,000 Central Joint Powers Health Financing Authority, 2/03 at 102 Baa1 14,397,496
Certificates of Participation, Series 1993 (Community
Hospitals of Central California), 5.250%, 2/01/13
9,000,000 East Bay Municipal Utility District (Alameda and 6/03 at 102 Aaa 8,012,610
Contra Costa Counties, California), Water System
Subordinated Revenue Refunding Bonds,
Series 1993A, 5.000%, 6/01/21
Foothill/Eastern Transportation Corridor Agency,
Toll Road Revenue Bonds Series 1995A:
45,000,000 0.000%, 1/01/23 No Opt. Call Baa 8,798,850
15,000,000 6.000%, 1/01/34 1/05 at 102 Baa 14,640,300
17,040,000 Los Angeles Convention and Exhibition Center 8/03 at 102 Aaa 16,069,742
Authority, Lease Revenue Bonds, 1993 Refunding
Series A, The City of Los Angeles (California),
5,125%,8/15/13
</TABLE>
13
<PAGE>
<TABLE>
<CAPTION>
Portfolio of Investments
Municipal Bond -- continued
Principal Optional Call Market
Amount Description Provisions* Ratings** Value
- ------------------------------------------------------------------------------------------------------------------------------------
California -- continued
<S> <C> <C> <C> <C>
$17,575,000 Department of Water and Power of the City of 4/02 at 102 Aa $18,460,253
Los Angeles, California, Water Works Revenue Bonds,
Issue of 1992, 6.500%, 4/15/32
16,000,000 The City of Los Angeles (California), Wastewater 6/03 at 102 Aaa 15,669,440
System Revenue Bonds, Series 1993-B,
5.700%, 6/01/23
15,615,000 The City of Los Angeles, California, Wastewater System 11/03 at 102 Aaa 14,292,878
Revenue Bonds, Series 1993-D, 5.200%, 11/01/21
15,750,000 Los Angeles County, Metropolitan Transportation 7/03 at 102 AA- 15,394,365
Authority, Proposition A, Sales Tax Revenue
Refunding Bonds, Series 1993-A, 5.500%, 7/01/13
Los Angeles County Metropolitan Transit Authority,
Proposition C Sales Tax Revenue Second Senior
Bonds, Series 1993-B:
17,185,000 4.750%, 7/01/18 7/03 at 102 Aaa 14,821,547
8,000,000 5.250%, 7/01/23 7/03 at 102 Aaa 7,355,280
Los Angeles County Sanitation Districts Financing
Authority, Capital Projects Revenue Bonds,
1993 Series A (Senior Ad Valorem Obligation Bonds):
10,500,000 5.375%, 10/01/13 10/03 at 102 Aa 10,100,790
20,750,000 5.000%, 10/01/23 10/03 at 100 Aa 18,404,005
31,360,000 Los Angeles County Transportation Commission 7/02 at 102 Aaa 34,717,402
(California) Proposition C Sales Tax Revenue
Bonds, Second Senior Bonds, Series 1992-A,
6.750%, 7/01/19 (Pre-refunded to 7/01/02)
5,000,000 The Metropolitan Water District of Southern 7/02 at 102 Aa 4,798,700
California, Water Revenue Bonds, Issue of 1992,
5.500%, 7/01/19
22,405,000 Northern California Power Agency, Hydroelectric 7/98 at 102 A- 23,350,491
Project Number One Revenue Bonds, Refunding
Series E, 7.150%, 7/01/24
15,600,000 Sacramento County Sanitation Districts Financing 12/03 at 102 Aa 13,234,260
Authority, 1993 Revenue Bonds, 4.750%, 12/01/23
8,050,000 The Regents of the University of California, Refunding 9/02 at 102 A 8,950,473
Revenue Bonds (Multiple Purpose Projects),
Series A, 6.875%, 9/01/16 (Pre-refunded to 9/01/02)
</TABLE>
14
<PAGE>
<TABLE>
<CAPTION>
Nuveen Municipal Bond Funds
April 30, 1997 Annual Report
Principal Optional Call Market
Amount Description Provisions* Ratings** Value
- ----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Colorado -- 1.1%
$29,175,000 Colorado Housing and Finance Authority, Single- 11/01 at 102 Aa1 $30,616,245
Family Housing Revenue Refunding Bonds,
1991 Series A, 7.250%, 11/01/31
- ----------------------------------------------------------------------------------------------------------------
Connecticut -- 0.1%
830,000 Connecticut Housing Finance Authority, Housing 11/00 at 102 Aa 835,644
Mortgage Finance Program Bonds, 1990 Series B,
1990 Subseries B1, 7.550%, 11/15/08
2,970,000 Connecticut Resources Recovery Authority, 7/97 at 101 1/2 A 3,024,351
Bridgeport Resco Company, L.P. Project Bonds,
Series B, 8.625%, 1/01/04
- ----------------------------------------------------------------------------------------------------------------
District of Columbia -- 0.3%
7,470,000 Capitol Hill Towers, Inc., First Mortgage Revenue 7/97 at 102 N/R 7,645,097
Bonds (FHA Insured Mortgage--Section 8
Assisted Elderly Housing), 8.500%, 1/01/22
- ----------------------------------------------------------------------------------------------------------------
Florida -- 2.9%
4,500,000 Dade County Health Facilities Authority (Florida), 12/97 at 102 Aaa 4,705,155
Hospital Revenue Bonds, Series 1987 (Mount Sinai
Medical Center Project), 8.400%, 12/01/07
(Pre-refunded to 12/01/97)
31,000,000 Hillsborough County Industrial Development 5/02 at 103 AA 35,854,910
Authority, Pollution Control Revenue Refunding
Bonds (Tampa Electric Company Project)
Series 1992, 8.000%, 5/01/22
9,300,000 Jacksonville Electric Authority (Jacksonville, Florida), 10/99 at 101 1/2 Aa1 9,850,002
St. Johns River Power Park System Special
Obligation Bonds, First Crossover Series,
6.500%, 10/01/14 (Pre-refunded to 10/01/99)
25,000,000 Orlando Utilities Commission, Water and Electric 10/99 at 100 Aa 22,265,500
Subordinated Revenue Bonds, Series 1989D,
5.000%, 10/01/23
8,005,000 City of Pensacola Health Facilities Authority, Health 1/98 at 101 1/2 Aaa 8,325,280
Facilities Revenue Refunding Bonds, Series 1988
(Daughters of Charity National Health System
Sacred Heart Hospital of Pensacola, Florida),
7.750%, 1/01/03 (Pre-refunded to 1/01/98)
1,420,000 The Elderly Housing Corporation of Sarasota, Inc. 7/97 at 103 N/R 1,464,616
(Elderly Housing Project for the Sarasota Housing
Authority) First Mortgage Revenue Bonds,
Series 1978, 7.500%, 7/01/09
</TABLE>
15
<PAGE>
<TABLE>
<CAPTION>
Portfolio of Investments
Municipal Bond - continued
Principal Optional Call Market
Amount Description Provisions* Ratings** Value
- ----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Hawaii -- 0.3%
$ 8,000,000 Department of Budget and Finance of the State of 7/01 at 102 Aaa $ 8,990,880
Hawaii, Special Purpose Revenue Bonds, Kapiolani
Health Care System Obligated Group, (Pali Momi
Medical Center Project), Series 1991, 7.650%,
7/01/19 (Pre-refunded to 7/01/01)
- ----------------------------------------------------------------------------------------------------------------
Illinois -- 18.3%
8,500,000 Illinois Development Finance Authority, Revenue and 2/00 at 102 Baa2 9,465,345
Refunding Bonds, Series 1990A (Columbus-Cuneo-
Cabrini Medical Center), 8.500%, 2/01/15
(Pre-refunded to 2/01/00)
17,075,000 Illinois Educational Facilities Authority, Revenue 7/03 at 102 Aa1 16,262,230
Refunding Bonds, The University of Chicago,
Series 1993B, 5.600%, 7/01/24
10,000,000 Illinois Health Facilities Authority, Revenue Bonds, 10/02 at 102 Aaa 10,168,600
Series 1992 (Highland Park Hospital),
6.200%, 10/01/22
6,115,000 Illinois Health Facilities Authority Revenue Refunding 10/03 at 102 A- 5,701,320
Bonds, Series 1993 (Illinois Masonic Medical
Center), 5.500%, 10/01/19
34,120,000 Illinois Health Facilities Authority, Revenue Bonds, 11/03 at 102 Aaa 31,911,754
Series 1993 (Rush-Presbyterian-St. Luke's Medical
Center Obligated Group), 5.500%, 11/15/25
7,275,000 Illinois Health Facilities Authority, Revenue Bonds, 3/04 at 102 Aaa 7,283,294
Series 1994 (Southern Illinois Hospital Services),
5.850%, 3/01/14
54,900,000 Illinois Health Facilities Authority, Revenue Bonds, 8/04 at 102 AA 55,341,396
Series 1994A (Northwestern Memorial Hospital),
6.000%, 8/15/24
15,000,000 Illinois Health Facilities Authority, FHA Insured 2/06 at 102 Aaa 15,063,450
Mortgage Revenue Bonds, Series 1996 (Sinai
Health System), 6.000%, 2/15/24
21,670,000 State of Illinois, Build Illinois Bonds (Sales Tax 6/01 at 100 AAA 21,887,567
Revenue Bonds),Series O, 6.000%, 6/15/18
14,200,000 State of Illinois, Build Illinois Bonds (Sales Tax 6/03 at 102 AAA 13,197,764
Revenue Bonds),Series S, 5.250%, 6/15/18
15,100,000 State of Illinois, General Obligation Bonds, Series 10/02 at 102 AA- 16,107,019
of March 1992 (Full Faith and Credit),
6.200%, 10/01/04
</TABLE>
16
<PAGE>
Nuveen Municipal Bond Funds
April 30, 1997 Annual Report
<TABLE>
<CAPTION>
Principal Optional Call Market
Amount Description Provisions* Ratings** Value
- ---------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Illinois -- continued
State of Illinois, General Obligation Bonds, Series of
August 1992 (Full Faith and Credit):
$ 14,750,000 5.875%, 6/01/10 6/02 at 102 AA- $15,057,095
5,000,000 5.875%, 6/01/11 6/02 at 102 AA- 5,080,700
10,000,000 State of Illinois, General Obligation Bonds, Series of 4/03 at 102 AA- 9,825,700
April 1993 (Full Faith and Credit), 5.700%, 4/01/18
The Illinois State Toll Highway Authority, Toll
Highway Priority Revenue Bonds, 1992 Series A:
20,000,000 6.450%, 1/01/13 1/03 at 102 A1 20,951,000
8,655,000 6.200%, 1/01/16 1/03 at 102 Aaa 8,852,594
16,270,000 City of Chicago, General Obligation Bonds (Emergency 1/03 at 102 Aaa 15,587,474
Telephone System) Series 1993, 5.625%, 1/01/23
7,880,000 City of Chicago, General Obligation Bonds, Project 1/04 at 102 Aaa 7,303,184
Series 1993, 5.250%, 1/01/18
22,175,000 Chicago Metropolitan Housing Development Corporation, 7/02 at 102 AA 23,072,866
Housing Development Revenue Refunding Bonds --
(FHA-Insured Mortgage Loans -- Section 8 Assisted
Projects) Series 1992B, 6.900%, 7/01/22
7,965,000 City of Chicago, Motor Fuel Tax Revenue Bonds, 1/03 at 101 Aaa 7,147,233
Refunding Series 1993, 5.000%, 1/01/16
57,400,000 City of Chicago (Illinois), Chicago-O'Hare 1/04 at 102 A1 52,109,442
International Airport, General Airport Revenue
Refunding Bonds, 1993 Series A, 5.000%, 1/01/16
18,710,000 City of Chicago (Illinois), Chicago-O'Hare 1/04 at 102 Aaa 16,846,484
International Airport, General Airport Second Lien,
Revenue Refunding Bonds, 1993 Series C,
5.000%, 1/01/18
1,500,000 City of Chicago Sales Tax Revenue Bonds, Series 1997, 1/08 at 102 Aaa 1,405,080
5.375%, 1/01/27
22,335,000 City of Chicago, Water Revenue Bonds, Series 1995, 11/06 at 102 Aaa 20,347,408
5.000%, 11/01/15
25,380,000 The County of Cook, Illinois, General Obligation 11/03 at 100 Aaa 22,381,353
Bonds, Series 1993A, 5.000%, 11/15/23
17,300,000 DuPage Water Commission (DuPage, Cook and Will 3/02 at 100 Aaa 17,316,435
Counties, Illinois) General Obligation Water
Refunding Bonds, Series 1992, 5.750%, 3/01/11
</TABLE>
17
<PAGE>
<TABLE>
CAPTION>
Portfolio of Investments
Municipal Bond--continued
Principal Optional Call Market
Amount Description Provisions* Ratings** Value
- ------------------------------------------------------------------------------------------------------------------------------------
Illinois -- continued
<S> <C> <C> <C> <C>
$ 9,500,000 DuPage Water Commission (DuPage, Cook 5/03 at 102 Aa1 $ 9,143,465
and Will Counties, Illinois) Water Refunding
Revenue Bonds, Series 1993, 5.250%, 5/01/14
2,000,000 Village of Hazel Crest, Illinois, Hospital Facilities Revenue 7/97 at 102 AAA 2,057,400
Refunding and Improvement Bonds (South Suburban
Hospital Foundation Project), Series 1987, 9.125%,
7/01/17 (Pre-refunded to 7/01/97)
Metropolitan Pier and Exposition Authority (Illinois),
McCormick Place Expansion Project Bonds, Series 1992A:
5,000,000 0.000%, 6/15/17 No Opt. Call Aaa 1,524,450
56,180,000 6.500%, 6/15/27 (Pre-refunded to 6/15/03) 6/03 at 102 Aaa 61,702,494
5,000,000 Regional Transportation Authority, Cook, DuPage, Kane, 6/03 at 102 Aaa 5,041,750
Lake, McHenry and Will Counties, Illinois, General
Obligation Refunding Bonds, Series 1993C,
5.800%, 6/01/13
The Elderly Housing Corporation of Zion, Illinois, Housing
Development Revenue Bonds, (Dell-Zion Associates
Section 8 Assisted Project) Series 1978:
85,000 7.250%, 3/01/98 9/97 at 102 A 85,844
1,705,000 7.750%, 3/01/10 9/97 at 102 A 1,746,380
- ------------------------------------------------------------------------------------------------------------------------------------
Indiana -- 3.6%
49,600,000 Indiana Health Facilities Financing Authority, Hospital 11/03 at 102 AA 47,894,256
Revenue Bonds (Daughters of Charity) Series 1993,
5.750%, 11/15/22
11,590,000 Indiana Health Facility Financing Authority, Hospital 9/02 at 102 Aaa 12,176,106
Revenue Refunding Bonds, Series 1992A (Methodist
Hospital of Indiana, Inc.), 5.750%, 9/01/11
12,550,000 Indiana State Office Building Commission, Capital 7/97 at 102 Aaa 12,903,157
Complex Revenue Bonds, Series 1987 (State Office
Building II Facility), 8.750%, 7/01/12
(Pre-refunded to 7/01/97)
10,100,000 Indiana State Office Building Commission Correctional 12/01 at 102 A1 10,550,965
Facilities Program, Revenue Bonds, Series 1991,
6.375%, 7/01/16
2,500,000 The Indianapolis Local Public Improvement Bond Bank, 2/03 at 102 A+ 2,688,000
Series 1992D Bonds, 6.750%, 2/01/20
12,500,000 The Indianapolis Local Public Improvement 1/03 at 102 Aaa 12,640,500
Bond Bank, Series 1993 A Bonds, 6.000%, 1/10/18
2,430,000 Southwind Housing, Inc., 7.125%, 11/15/21 No Opt. Call N/R 2,829,103
</TABLE>
18
<PAGE>
<TABLE>
<CAPTION>
Nuveen Municipal Bond Funds
April 30, 1997 Annual Report
Principal Optional Call Market
Amount Description Provisions* Ratings** Value
- --------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Iowa -- 0.3%
$ 3,720,000 Iowa Housing Finance Authority, Single Family 8/97 at 100 1/2 Aaa $ 3,738,749
Mortgage Bonds, 1977 Series A, 5.875%, 8/01/08
3,815,000 City of Davenport, Iowa, Hospital Facility Revenue 7/02 at 102 Aaa 4,096,127
Bonds (Mercy Hospital Project), Series 1992,
6.625%, 7/01/14
- --------------------------------------------------------------------------------------------------------------------
Kentucky -- 3.2%
3,330,000 Kentucky Housing Corporation, Housing Revenue Bonds, 7/01 at 102 Aaa 3,511,751
(FHA Insured/VA Guaranteed) 1991 Series A,
7.250%, 1/01/17
Kentucky Housing Corporation, Housing Revenue
Bonds, 1993 Series B (Federally Insured or
Guaranteed Mortgage Loans):
17,600,000 5.300%, 7/01/10 1/04 at 102 Aaa 17,111,248
14,400,000 5.400%, 7/01/14 1/04 at 102 Aaa 13,853,376
The Turnpike Authority of Kentucky, Resource
Recovery Road Revenue Refunding Bonds,
1987 Series A:
9,860,000 8.000%, 7/01/03 7/97 at 102 A+ 10,123,854
8,980,000 5.000%, 7/01/08 7/97 at 102 A+ 8,713,923
34,500,000 County of Carroll, Kentucky, Collateralized Pollution 9/02 at 102 Aa2 38,530,635
Control Revenue Bonds (Kentucky Utilities
Company Project) 1992 Series A, 7.450%, 9/15/16
- --------------------------------------------------------------------------------------------------------------------
Maine -- 0.8%
Maine State Housing Authority, Mortgage Purchase
Bonds, 1994 Series A:
13,650,000 5.650%, 11/15/20 2/04 at 102 AA 13,218,387
10,000,000 5.700%, 11/15/26 2/04 at 102 AA 9,653,800
- --------------------------------------------------------------------------------------------------------------------
Maryland -- 0.1%
2,500,000 Community Development Administration Maryland 1/07 at 102 Aa 2,500,800
Department of Housing and Community
Development, Housing Revenue Bonds,
Series 1996A, 5.875%, 7/01/16
- --------------------------------------------------------------------------------------------------------------------
15,000,000 Massachusetts -- 3.0%
Massachuseetts Bay Transportation Authority, 8/00 at 102 Aaa 16,603,050
Certificates of Participation, 1990 Series A,
7.650%, 8/01/15 (Pre-refunded to 8/01/00)
</TABLE>
19
<PAGE>
Portfolio of Investments
Municipal Bond -- continued
<TABLE>
<CAPTION>
Principal Optional Call Market
Amount Description Provisions* Ratings** Value
- --------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Massachusetts -- continued
Massachusetts Water Resources Authority, General
Revenue Bonds, 1990 Series A:
$ 6,500,000 7.500%, 4/01/16 (Pre-refunded to 4/01/00) 4/00 at 102 Aaa $ 7,125,755
9,605,000 6.000%, 4/01/20 4/00 at 100 A 9,613,356
Massachusetts Water Resources Authority, General
Revenue Refunding Bonds, 1993 Series B:
14,765,000 5.250%, 3/01/13 3/03 at 102 A 14,032,508
10,795,000 5.000%, 3/01/22 3/03 at 100 A 9,478,658
24,650,000 Massachusetts Water Resources Authority, General 12/04 at 102 A 22,548,834
Revenue Bonds, 1993 Series C, 5.250%, 12/01/20
5,170,000 The Commonwealth of Massachusetts, General No Opt. Call A1 5,113,544
Obligation Refunding Bonds, 1993 Series C,
4.700%, 8/01/02
- --------------------------------------------------------------------------------------------------------------------
Michigan -- 4.9%
Michigan State Hospital Finance Authority, Hospital
Revenue and Refunding Bonds (The Detroit Medical
Center Obligated Group), Series 1993B:
19,585,000 5.750%, 8/15/13 8/04 at 102 A 19,048,763
59,250,000 5.500%, 8/15/23 8/04 at 102 A 55,386,900
3,000,000 Michigan State Hospital Finance Authority, Hospital 10/05 at 100 BBB 3,266,130
Revenue Refunding Bonds (Genesys Health System
Obligated Group), Series 1995A, 7.500%, 10/01/27
10,000,000 Michigan State Housing Development Authority, 10/02 at 102 A+ 10,426,100
Rental Housing Revenue Bonds, 1992 Series A,
6.600%, 4/01/12
12,080,000 Michigan State Housing Development Authority, 4/04 at 102 Aaa 12,079,396
Rental Housing Revenue Bonds, 1994 Series B,
5.700%, 4/01/12
15,000,000 School District of the City of Detroit, Wayne County, 5/06 at 102 Aaa 14,783,250
Michigan, School Building and Site Improvement
Bonds (Unlimited Tax General Obligation),
Series 1996A, 5.700%, 5/01/25
5,000,000 City of Detroit, Michigan, Sewage Disposal System 7/97 at 102 AAA 5,136,600
Revenue Refunding Bonds, Series 1987,
8.250%, 7/01/05 (Pre-refunded to 7/01/97)
16,805,000 Hospital Finance Authority of the City of St. Joseph, 1/04 at 102 Aaa 15,712,675
Revenue Refunding Bonds (Mercy Memorial
Medical Center Obligated Group) Series 1993,
5.250%, 1/01/16
20
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Nuveen Municipal Bond Funds
April 30, 1997 Annual Report
Principal Optional Call Market
Amount Description Provisions* Ratings** Value
- --------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Michigan -- continued
$ 5,000,000 Regents of the University of Michigan, Hospital 6/97 at 100 AA $ 5,008,700
Revenue Refunding Bonds, Series 1986A,
6.625%, 12/01/10
- --------------------------------------------------------------------------------------------------------------------
Minnesota -- 0.4%
2,430,000 Minnesota Housing Finance Agency, Housing 8/97 at 101 AA 2,455,758
Development Bonds, 1977 Series A,
6.250%, 2/01/20
9,760,000 Minnesota Housing Finance Agency, Rental Housing 2/05 at 102 Aaa 9,845,790
Bonds, 1995 Series D, 5.800%, 8/01/11
- --------------------------------------------------------------------------------------------------------------------
Missouri -- 0.8%
15,750,000 Health and Educational Facilities Authority of the 10/99 at 102 1/2 BBB+ 17,279,168
State of Missouri, Health Facilities Refunding and
Improvement Revenue Bonds (Heartland Health
System's Project) Series 1989, 8.125%, 10/01/10
6,195,000 Missouri Housing Development Commission, Housing 9/97 at 101 1/4 AA+ 6,292,509
Development Bonds, Series B 1979, (Federally
Insured Mortgage Bonds), 7.000%, 9/15/22
- --------------------------------------------------------------------------------------------------------------------
Montana -- 0.2%
5,825,000 Montana Health Facility Authority, Health Care 6/06 at 102 BBB- 5,832,864
Revenue Bonds, Series 1996 (Community Medical
Center, Inc.), 6.375%, 6/01/18
- --------------------------------------------------------------------------------------------------------------------
Nebraska -- 1.3%
33,860,000 Consumers Public Power District, Nebraska, Nuclear 7/97 at 100 A1 33,896,907
Facility Revenue Bonds, 1968 Series,
5.100%, 1/01/03
2,340,000 Hospital Authority No. 1 of Hall County, Nebraska, 6/97 at 103 AA 2,414,365
Hospital Facility Revenue Bonds (Lutheran
Hospitals and Homes Society Grand Island Project)
Series 1977, 6.750%, 12/01/07
- --------------------------------------------------------------------------------------------------------------------
Nevada -- 0.3%
8,630,000 City of Reno, Nevada, Insured Hospital Revenue 5/03 at 102 Aaa 8,670,388
Bonds (St. Mary's Regional Medical Center),
Series 1993A, 5.800%, 5/15/13
21
</TABLE>
<PAGE>
Portfolio of Investments
Municipal Bond -- continued
<TABLE>
<CAPTION>
Principal Optional Call Market
Amount Description Provisions* Ratings** Value
- -------------------------------------------------------------------------------------------------------------------------------
<C> <S> <C> <C> <C>
New Hampshire -- 0.3%
$ 8,500,000 The Industrial Development Authority of the State of 12/01 at 103 BB $ 8,991,810
New Hampshire, Pollution Control Revenue Bonds
(Central Maine Power Company Project, 1984
Series B), 7.375%, 5/01/14
- -------------------------------------------------------------------------------------------------------------------------------
New Jersey -- 0.4%
10,750,000 New Jersey Housing and Mortgage Finance Agency, 5/02 at 102 A+ 11,485,193
Housing Revenue Bonds, 1992 Series A,
6.950%, 11/01/13
- -------------------------------------------------------------------------------------------------------------------------------
New York -- 7.5%
8,400,000 Dormitory Authority of the State of New York, Beth 11/05 at 102 Aaa 8,597,064
Israel Medical Center Revenue Bonds, Series 1996,
6.000%, 11/01/15
8,000,000 Dormitory Authority of the State of New York, Mental 2/07 at 102 Baa1 7,502,240
Health Services Facilities Improvement, Revenue
Bonds, Series 1997B, 5.500%, 8/15/17
8,000,000 New York Local Government Assistance Corporation 4/02 at 102 Aaa 8,891,200
(A Public Benefit Corporation of the State
of New York), Series 1991D Bonds,
7.000%, 4/01/18 (Pre-refunded to 4/01/02)
New York State Housing Finance Agency, Health
Facilities Revenue Bonds (New York City),
1990 Series A Refunding:
16,160,000 8.000%, 11/01/08 (Pre-refunded to 11/01/00) 11/00 at 102 Aaa 18,169,334
3,330,000 8.000%, 11/01/08 11/00 at 102 BBB+ 3,696,000
7,525,000 Power Authority of the State of New York, General 1/03 at 102 Aa 7,033,994
Purpose Bonds, Series CC, 5.250%, 1/01/18
11,490,000 State of New York Mortgage Agency, Mortgage 10/98 at 102 Aa 11,738,873
Revenue Bonds, Eighth Series A, 6.875%, 4/01/17
10,725,000 Battery Park City Authority, Senior Revenue Refunding 11/03 at 102 AA 9,880,299
Bonds, Series 1993A, 5.000%, 11/01/13
16,270,000 Municipal Assistance Corporation for the City of New 7/97 at 102 AA 16,700,992
York, New York, Series 59 Bonds, 7.750%, 7/01/06
(Pre-refunded to 7/01/97)
14,250,000 Municipal Assistance Corporation for the City of New 7/97 at 100 AA 14,303,865
York, New York, Series 60 Bonds, 6.000%, 7/01/08
(Pre-refunded to 7/01/97)
</TABLE>
22
<PAGE>
<TABLE>
<CAPTION>
Nuveen Municipal Bond Funds
April 30, 1997 Annual Report
Principal Optional Call Market
Amount Description Provisions* Ratings** Value
- -------------------------------------------------------------------------------------------------------------------------
New York -- continued
<S> <C> <C> <C> <C>
$ 18,565,000 Municipal Assistance Corporation for the City of New 7/97 at 102 AA $ 19,027,269
York, New York, Series 62 Bonds, 6.750%, 7/01/06
(Pre-refunded to 7/01/97)
2,350,000 The City of New York, General Obligation Bonds, No Opt. Call Baa1 2,413,897
Fiscal 1996 Series C, 6.000%, 8/15/04
5,000,000 The City of New York, General Obligation Bonds, 11/97 at 101 1/2 Aaa 5,180,600
Fiscal 1988 Series A, 8.125%, 11/01/06
(Pre-refunded to 11/01/97)
8,000,000 The City of New York, General Obligation Bonds, 8/03 at 102 Baa1 7,786,640
Fiscal 1994 Series D, 5.750%, 8/15/11
8,525,000 The City of New York, General Obligation Bonds, 8/02 at 101 1/2 Aaa 9,340,757
Fiscal 1992 Series C, Fixed Rate Bonds, Subseries
C-1, 6.625%, 8/01/12 (Pre-refunded to 8/01/02)
14,000,000 The City of New York, General Obligation Bonds, 2/05 at 101 Baa1 14,497,700
Fiscal 1995 Series F, 6.625%, 2/15/25
The City of New York, General Obligation Bonds,
Fiscal 1996 Series G:
7,500,000 5.900%, 2/01/05 No Opt. Call Baa1 7,639,200
12,655,000 5.750%, 2/01/17 2/06 at 101 1/2 Baa1 12,100,205
15,620,000 The City of New York General Obligation Bonds, 8/06 at 101 1/2 Baa1 15,381,951
Fiscal 1997 Series E, 6.000%, 8/01/16
8,600,000 New York City Municipal Water Finance Authority, 6/02 at 101 1/2 A2 8,631,390
Water and Sewer Revenue Bonds, Fiscal 1993
Series A, 6.000%, 6/15/17
5,000,000 Triborough Bridge and Tunnel Authority (New York), 1/04 at 100 Aa 4,320,700
General Purpose Revenue Bonds, Series 1994A,
4.750%, 1/01/19
- -------------------------------------------------------------------------------------------------------------------------
North Carolina -- 3.3%
17,290,000 North Carolina Eastern Municipal Power Agency, 1/98 at 102 Aaa 18,098,999
Power System Revenue Bonds, Refunding Series
1988A, 8.000%, 1/01/21 (Pre-refunded to 1/01/98)
68,150,000 North Carolina Eastern Municipal Power Agency, 1/03 at 102 Baa1 68,368,762
Power System Revenue Bonds, Refunding Series
1993B, 6.250%, 1/01/12
5,545,000 North Carolina Municipal Power Agency Number 1, 1/98 at 102 Aaa 5,769,462
Catawba Electric Revenue Refunding Bonds,
Series 1988, 7.625%, 1/01/14
</TABLE>
23
<PAGE>
<TABLE>
<CAPTION>
Portfolio of Investments
Municipal Bond -- continued
Principal Optional Call Market
Amount Description Provisions* Ratings** Value
- ----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
North Carolina -- continued
Housing Authority of the City of Wilmington,
North Carolina, First Mortgage Revenue Bonds,
Series 1979:
$ 115,000 7.750%, 6/01/98 6/97 at 100 N/R $ 117,760
1,195,000 7.750%, 6/01/10 6/97 at 100 N/R 1,220,908
- ----------------------------------------------------------------------------------------------------------------
Oklahoma -- 0.3%
5,375,000 The Comanche County Hospital Authority (Lawton, 7/99 at 102 AAA 5,861,599
Oklahoma), Hospital Revenue Bonds, Series 1989,
8.050%, 7/01/16 (Pre-refunded to 7/01/99)
2,970,000 Midwest City Memorial Hospital Authority (Midwest 4/02 at 102 BBB+ 3,325,539
City, Oklahoma) Hospital Revenue Bonds Series
1992, 7.375%, 4/01/12 (Pre-refunded to 4/01/02)
- ----------------------------------------------------------------------------------------------------------------
Oregon -- 0.4%
11,500,000 State of Oregon, Department of Administrative Services, 5/07 at 101 Aaa 11,461,130
Certificates of Participation, 1997 Series A,
5.800%, 5/01/24 (WI)
- ----------------------------------------------------------------------------------------------------------------
Pennsylvania -- 3.1%
Pennsylvania Housing Finance Agency, Multi-Family
Housing Refunding Bonds (Federal Housing
Administration Insured Mortgage Loans)
Issue FHA -- 1992:
4,025,000 8.100%, 7/01/13 7/02 at 102 AAA 4,377,872
16,830,000 8.200%, 7/01/24 7/02 at 102 AAA 18,339,651
22,500,000 Pennsylvania Housing Finance Agency, Rental Housing 7/03 at 102 Aaa 22,328,325
Refunding Bonds, Issue 1993, 5.750%, 7/01/14
16,600,000 Pennsylvania Intergovernmental Cooperation Authority, 6/03 at 100 Aaa 14,763,376
Special Tax Revenue Refunding Bonds (City of
Philadelphia Funding Program), Series of 1993A,
5.000%, 6/15/22
10,000,000 Lehigh County Industrial Development Authority, 9/04 at 102 Aaa 10,496,700
Pollution Control Revenue Refunding Bonds, 1994
Series B (Pennsylvania Power & Light Company
Project), 6.400%, 9/01/29
9,300,000 City of Philadelphia, Pennsylvania, Airport Revenue 6/97 at 100 A- 9,323,250
Bonds, Series 1978, Philadelphia International
Airport, 6.200%, 6/15/06
7,000,000 City of Philadelphia, Pennsylvania, Water and Sewer 8/01 at 100 AAA 7,600,740
Revenue Bonds, Sixteenth Series:
7.000%, 8/01/18 (Pre-refunded to 8/01/01)
</TABLE>
24
<PAGE>
<TABLE>
<CAPTION>
Nuveen Municipal Bond Funds
April 30, 1997 Annual Report
Principal Optional Call Market
Amount Description Provisions* Ratings** Value
<S> <C> <C> <C> <C>
- ---------------------------------------------------------------------------------------------------------------------------------
Rhode Island -- 0.2%
$ 7,595,000 Rhode Island Convention Center Authority, 5/03 at 100 Aaa $ 6,700,537
Refunding Revenue Bonds, 1993 Series B,
5.000%, 5/15/20
- ---------------------------------------------------------------------------------------------------------------------------------
South Carolina -- 0.8%
20,750,000 Piedmont Municipal Power Agency, Electric Revenue 1/98 at 102 Aaa 21,559,665
Bonds, 1988 Refunding Series A, 7.400%, 1/01/18
- ---------------------------------------------------------------------------------------------------------------------------------
Texas -- 3.8%
City of Austin, Texas, Water, Sewer and Electric
Refunding Revenue Bonds, Series 1982:
300,000 14.000%, 11/15/01 (Pre-refunded to 5/15/99) 5/99 at 100 A 345,600
18,415,000 14.000%, 11/15/01 No Opt. Call A 23,330,775
29,500,000 Brazos River Authority (Texas) Collateralized Revenue 8/00 at 102 Aaa 29,564,310
Refunding Bonds (Houston Lighting & Power
Company Project) Series 1995, 5.800%, 8/01/15
24,800,000 Harris County, Texas, Toll Road Senior Lien Revenue 8/04 at 102 Aaa 24,203,560
Refunding Bonds, Series 1994, 5.300%, 8/15/13
7,000,000 Harris County Health Facilities Development 2/01 at 102 Aa 7,482,300
Corporation (Texas) Hospital Revenue Bonds
(St. Luke's Episcopal Hospital Project), Series
1991A, 6.750%, 2/15/21
City of San Antonio, Texas, Electric and Gas Systems
Revenue Improvement Bonds, New Series 1988:
5,000,000 8.000%, 2/01/09 (Pre-refunded to 2/01/98) 2/98 at 102 Aaa 5,249,350
3,500,000 8.000%, 2/01/16 (Pre-refunded to 2/01/98) 2/98 at 102 Aaa 3,674,545
16,000,000 City of San Antonio, Texas, Electric and Gas Systems 2/02 at 101 Aa1 14,496,320
Revenue Refunding Bonds, New Series 1992,
5.000%, 2/01/17
- ---------------------------------------------------------------------------------------------------------------------------------
Utah -- 3.1%
Intermountain Power Agency (Utah), Power Supply
Revenue Refunding Bonds, 1993 Series A:
6,300,000 5.500%, 7/01/13 7/03 at 103 A1 6,074,082
9,750,000 5.500%, 7/01/20 7/03 at 102 A1 9,102,698
44,990,000 5.000%, 7/01/23 7/03 at 100 A1 39,164,245
16,260,000 Intermountain Power Agency (Utah), Power Supply 7/97 at 102 A1 16,664,061
Revenue Bonds, Series 1987B, 7.200%, 7/01/19
15,000,000 Intermountain Power Agency Power Supply Revenue 7/07 at 102 Aaa 14,859,600
Refunding Bonds, 1997 Series B,
5.750%, 7/01/19
25
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Principal Optional Call Market
Amount Description Provisions* Ratings** Value
<S> <C> <C> <C> <C>
- ---------------------------------------------------------------------------------------------------------------------------------
Utah -- continued
$ 1,615,000 Layton, Utah, Industrial Development Revenue Bonds 6/97 at 100 Ba3 $ 1,616,583
(C.D.I. Ltd. Project -- K Mart Guaranteed),
8.750%, 6/01/05
- ---------------------------------------------------------------------------------------------------------------------------------
Vermont -- 0.1%
235,000 University of Vermont and State Agricultural College, 7/97 at 101 A1 238,067
Housing, Dining and Student Services Facilities
System Bonds, Lot 1, Series 1969-A,
6.300%, 7/01/06
- ---------------------------------------------------------------------------------------------------------------------------------
Virginia -- 3.9%
50,000,000 Virginia Housing Development Authority, 1/02 at 102 Aa1 51,877,500
Commonwealth Mortgage Bonds, 1992 Series A,
7.150%, 1/01/33
3,275,000 Virginia Housing Development Authority, Multi-Family 11/97 at 101 Aa1 3,312,040
Mortgage Bonds, 1978 Series B, 6.700%, 11/01/21
Virginia Housing Development Authority, Multi-Family
Housing Bonds, 1993 Series C:
19,080,000 5.550%, 5/01/08 5/03 at 102 Aa1 19,165,478
28,075,000 5.900%, 5/01/14 5/03 at 102 Aa1 28,341,993
6,240,000 Chesapeake Hospital Authority, Virginia, Hospital 7/98 at 102 Aaa 6,614,400
Facility Revenue Bonds (Chesapeake General
Hospital), Series 1988, 7.625%, 7/01/18
(Pre-refunded to 7/01/98)
870,000 Industrial Development Authority of the City of No Opt. Call N/R 872,245
Chesapeake, Medical Facility Insured-Mortgage
Revenue Bonds (Medical Facilities of America XIV
Project), Series 1979, 7.500%, 9/01/01
- ---------------------------------------------------------------------------------------------------------------------------------
Washington -- 6.9%
Washington Public Power Supply System, Nuclear
Project No. 1 Refunding Revenue Bonds, Series 1993A:
14,260,000 7.000%, 7/01/07 No Opt. Call Aa1 15,907,743
18,500,000 5.750%, 7/01/13 7/03 at 102 Aa1 18,164,410
10,000,000 5.700%, 7/01/17 7/03 at 102 Aaa 9,759,200
7,805,000 Washington Public Power Supply System, Nuclear No Opt. Call Aa1 8,751,668
Project No. 1 Refunding Revenue Bonds,
Series 1993B, 7.000%, 7/01/09
5,000,000 Washington Public Power Supply System, Nuclear No Opt. Call Aa1 5,737,800
Project No. 1 Refunding Revenue Bonds,
Series 1989B, 7.125%, 7/01/16
26
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Nuveen Municipal Bond Funds
April 30, 1997 Annual Report
Principal Optional Call Market
Amount Description Provisions* Ratings** Value
- ---------------------------------------------------------------------------------------------------------------------------------
Washington -- continued
<S> <C> <C> <C> <C>
$10,000,000 Washington Public Power Supply System, Nuclear 7/03 at 102 Aa1 $ 9,371,000
Project No. 1 Refunding Revenue Bonds,
1993C, 5.375%, 7/01/15
8,835,000 Washington Public Power Supply System, Nuclear 7/03 at 102 Aa1 8,483,014
Project No. 3, Refunding Revenue Bonds, Series
1993B, 5.700%, 7/01/18
Washington Public Power Supply System, Nuclear
Project No. 3 Refunding Revenue Bonds, Series 1993C:
9,180,000 5.300%, 7/01/10 7/03 at 102 Aa1 8,804,630
51,070,000 5.375%, 7/01/15 7/03 at 102 Aa1 47,857,697
11,545,000 5.500%, 7/01/18 7/03 at 102 Aa1 10,798,154
6,450,000 Public Utility District No. 1 of Chelan County, Rocky 7/97 at 100 Aa3 6,219,993
Reach Hydro-Electric System Revenue Bonds,
Series of 1968, 5.125%, 7/01/23
24,745,000 Public Utility District No. 1 of Chelan County, Rocky 7/97 at 100 Aa3 24,743,268
Reach Hydro-Electric System Revenue Bonds,
Series of 1957, 5.000%, 7/01/13
1,495,000 Columbia Storage Power Exchange, Columbia 10/97 at 100 Aa 1,495,314
Storage Power Exchange Revenue Bonds,
3.875%, 4/01/03
16,250,000 Public Utility District No. 1 of Douglas County, 9/97 at 101 A+ 14,421,713
Washington, Wells Hydroelectric Revenue Bonds,
Series of 1963, 4.000%, 9/01/18
7,250,000 Municipality of Metropolitan Seattle, Sewer 1/03 at 102 Aaa 7,283,785
Refunding Revenue Bonds, Series Y,
5.700%, 1/01/12
- -----------------------------------------------------------------------------------------------------------------------------------
Wisconsin -- 4.3%
13,700,000 Wisconsin Health and Educational Facilities Authority, 11/01 at 102 Aaa 14,005,098
Revenue Bonds, Series 1991 (Columbia Hospital, Inc.),
6.250%, 11/15/21
9,830,000 Wisconsin Health and Educational Facilities Authority, 6/02 at 102 Aaa 10,063,363
Health Facilities Refunding Revenue Bonds
(SSM Health Care), Series 1992AA, 6.250%, 6/01/20
6,000,000 Wisconsin Health and Educational Facilities Authority 12/02 at 102 Aaa 6,023,160
Revenue Bonds, Series 1992A (Meriter Hospital, Inc.),
6.000%, 12/01/22
18,500,000 Wisconsin Health and Educational Facilities Authority 12/02 at 102 Aaa 16,753,600
Revenue Bonds, Series 1993 (Aurora Health Care
Obligated Group), 5.250%,
8/15/23
</TABLE>
27
<PAGE>
Portfolio of Investments
Municipal Bond -- continued
<TABLE>
<CAPTION>
Principal Optional Call Market
Amount Description Provisions* Ratings** Value
- ---------------------------------------------------------------------------------------------------------------------------------
Wisconsin -- continued
<C> <S> <C> <C> <C>
$ 3,750,00 Wisconsin Health and Educational Facilities Authority, 10/04 at 102 Aaa $ 3,779,437
Revenue Bonds, Series 1994A (Froedtert Memorial
Lutheran Hospital, Inc.), 5.875%, 10/01/13
32,000,000 Wisconsin Health and Educational Facilities 5/06 at 102 Aaa 31,318,720
Revenue Bonds, Series 1996 (Aurora Medical Group,
Inc. Project), 5.750%, 11/15/25
4,500,000 Wisconsin Housing and Economic Development No Opt. Call A 4,487,040
Authority, Insured Mortgage Revenue Refunding
Bonds, 1977 Series A, 5.800%, 6/01/17
8,500,000 Wisconsin Housing and Economic Development 4/02 at 102 A1 8,979,144
Authority, Multi-Family Housing Revenue Bonds,
1992 Series B, 7.050%, 11/01/22
28,200,000 Wisconsin Housing and Economic Development 12/03 at 102 A1 27,993,011
Authority, Housing Revenue Bonds, 1993 Series C,
5.800%, 11/01/13
- ------------------------------------------------------------------------------------------------------------------------------
$2,880,650,000 Total Investments -- (cost $2,692,147,640) -- 98.9% 2,818,580,455
==============----------------------------------------------------------------------------------------------------------------
Other Assets Less Liabilities -- 1.1% 32,226,505
--------------------------------------------------------------------------------------------------------------
Net Assets -- 100% $2,850,806,960
==============================================================================================================
</TABLE>
* Optional Call Provisions (not covered by the report of
independent public accountants): Dates (month and year) and
prices of the earliest optional call or redemption. There may
be other call provisions at varying prices at later dates.
** Ratings (not covered by the report of independent public
accountants): Using the higher of Standard & Poor's or
Moody's rating.
N/R - Investment is not rated.
(WI) Security purchased on a when-issued basis (see note 1 of the
Notes to Financial Statements).
28
<PAGE>
<TABLE>
<CAPTION>
Portfolio of Investments Nuveen Municipal Bond Funds
Insured Municipal Bond April 30, 1997 Annual Report
Principal Optional Call Market
Amount Description Provisions* Ratings** Value
- ----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Alabama -- 7.6%
$ 5,600,000 The Alabama Public Health Care Authority, Mortgage 10/06 at 102 Aaa $ 5,651,016
Revenue Bonds, Series 1996, 6.000%, 10/01/25
2,120,000 The Water Supply Board of the City of Albertville 3/02 at 102 Aaa 2,289,685
(Alabama) Water Revenue Bonds, Series 1992,
6.700%, 3/01/11
3,500,000 City of Athens, Alabama, Electric Revenue Warrants, 6/05 at 102 Aaa 3,562,020
Series 1995, 6.000%, 6/01/25
4,615,000 The Governmental Utility Services Corporation of the 12/99 at 102 Aaa 4,997,260
City of Auburn, Floating/Fixed Rate Wastewater
Treatment Revenue Bonds, Series 1984 (Merscot-
Auburn Limited Partnership Project),
7.300%, 1/01/12
1,875,000 The Special Care Facilities Financing Authority of the 1/01 at 102 Aaa 2,016,338
City of Birmingham -- Baptist Medical Centers
(Alabama), Revenue Bonds, Series 1991-A
(The Baptist Medical Centers), 7.000%, 1/01/21
1,225,000 The Utilities Board of the City of Daphne (Alabama), 6/00 at 102 Aaa 1,331,943
Water, Gas and Sewer Revenue Refunding Bonds,
Series 1990B, 7.350%, 6/01/20
6,750,000 The Public Building Authority of the City of Huntsville 10/05 at 102 Aaa 6,846,188
(Alabama), Municipal Justice and Public Safety
Center Lease Revenue Bonds, Series 1996A,
6.000%, 10/01/25
3,000,000 City of Madison (Alabama), General Obligation School 2/04 at 102 Aaa 3,119,490
Warrants, Series 1994, 6.250%, 2/01/19
5,500,000 City of Madison (Alabama), General Obligation 4/05 at 102 Aaa 5,600,485
Warrants, Series 1995, 6.000%, 4/01/23
3,000,000 Mobile County, Alabama, General Obligation Tax 2/00 at 102 Aaa 3,215,040
Pledge Warrants, Series 1991, 6.700%, 2/01/11
(Pre-refunded to 2/01/00)
12,000,000 The Medical Clinic Board of the City of Montgomery, 3/06 at 102 Aaa 12,108,240
Alabama, Health Care Facility Revenue Bonds,
Jackson Hospital & Clinic, Series 1996,
6.000%, 3/01/26
3,000,000 The Utilities Board of the City of Oneonta (Alabama), 11/04 at 102 Aaa 3,319,740
Utility Revenue Bonds, Series 1994,
6.900%, 11/01/24
</TABLE>
29
<PAGE>
<TABLE>
<CAPTION>
Portfolio of Investments
Insured Municipal Bond - continued
Principal Optional Call Market
Amount Description Provisions* Ratings** Value
- ----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Alabama -- continued
West Morgan -- East Lawrence Water Authority, Water
Revenue Bonds, Series 1994:
$ 2,200,000 6.800%, 8/15/19 (Pre-refunded to 8/15/04) 8/04 at 102 Aaa $ 2,476,452
3,000,000 6.850%, 8/15/25 (Pre-refunded to 8/15/04) 8/04 at 102 Aaa 3,386,070
- ----------------------------------------------------------------------------------------------------------------
Alaska -- 2.3%
8,565,000 Alaska Housing Finance Corporation, Mortgage 6/06 at 102 Aaa 8,591,980
Revenue Bonds, 1996 Series A, 6.000%, 12/01/15
Alaska Industrial Development and Export Authority,
Revolving Fund Bonds, Series 1997A:
4,500,000 5.900%, 4/01/17 (Alternative Minimum Tax) 4/07 at 102 Aaa 4,440,105
5,000,000 6.125%, 4/01/27 (Alternative Minimum Tax) 4/07 at 102 Aaa 5,029,100
- ----------------------------------------------------------------------------------------------------------------
Arizona -- 2.1%
5,000,000 Navajo County, Arizona, Pollution Control Corporation, 8/03 at 102 Baa1 4,919,300
Pollution Control Revenue Refunding Bonds
(Arizona Public Service Company), 1993 Series A,
5.875%, 8/15/28
6,000,000 Tempe Union High School District No. 213 of Maricopa 7/04 at 101 Aaa 6,268,440
County, Arizona, School Improvement and Refunding
Bonds, Series 1994, 6.000%, 7/01/10
5,000,000 City of Tucson, Arizona, Water System Revenue Bonds, 7/06 at 101 Aaa 5,116,000
Series 1994-A (1996), 6.000%, 7/01/21
- ----------------------------------------------------------------------------------------------------------------
California -- 9.0%
5,000,000 California Health Facilities Financing Authority, 7/06 at 102 Aaa 5,050,200
Insured Health Facility Refunding Revenue Bonds,
(Mark Twain St. Joseph's HealthCare Corporation),
1996 Series A, 6.000%, 7/01/25
3,525,000 Brea Public Financing Authority (Orange County, 8/01 at 102 Aaa 3,901,118
California), 1991 Tax Allocation Revenue Bonds,
Series A (Redevelopment Project AB),
7.000%, 8/01/15 (Pre-refunded to 8/01/01)
14,740,000 Los Angeles Convention and Exhibition Center Authority, 8/03 at 102 Aaa 13,900,999
Lease Revenue Bonds, 1993 Refunding Series A,
The City of Los Angeles (California),
5.375%, 8/15/18
11,630,000 Los Angeles County Sanitation Districts Financing 10/03 at 102 Aaa 10,757,169
Authority, Capital Projects Revenue Bonds, 1993
Series A (Senior Ad Valorem Obligation Bonds),
5.250%, 10/01/19
</TABLE>
30
<PAGE>
<TABLE>
<CAPTION>
Nuveen Municipal Bond Funds
April 30, 1997 Annual Report
Principal Optional Call Market
Amount Description Provisions* Ratings** Value
- ----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
California -- continued
$13,750,000 Ontario Redevelopment Financing Authority 8/03 at 102 Aaa $14,134,038
(San Bernardino County, California) 1993 Revenue
Bonds (Ontario Redevelopment Project No. 1),
5.800%, 8/01/23
5,295,000 County of Riverside, California (1994 Desert Justice 12/04 at 101 Aaa 5,453,850
Facility Project) Certificates of Participation,
6.000%, 12/01/12
2,250,000 Sacramento Municipal Utility District, Electric 9/01 at 102 Aaa 2,449,845
Revenue Bonds, 1991 Series Y, 6.500%, 9/01/21
(Pre-refunded to 9/01/01)
6,050,000 The Regents of the University of California Refunding 9/03 at 102 Aaa 5,366,713
Revenue Bonds (1989 Multiple Purpose Projects),
Series C, 5.000%, 9/01/23
10,000,000 The Regents of the University of California, Revenue 9/02 at 102 Aaa 10,481,500
Bonds (Multiple Purpose Projects), Series D,
6.375%, 9/01/24
- ----------------------------------------------------------------------------------------------------------------
Colorado -- 1.1%
4,500,000 Board of Water Commissioners, City and County of 11/01 at 101 Aaa 4,821,165
Denver, Colorado, Certificates of Participation,
Series 1991, 6.625%, 11/15/11
3,500,000 Jefferson County, Colorado, Refunding Certificates of 12/02 at 102 Aaa 3,817,940
Participation, 6.650%, 12/01/08
- ----------------------------------------------------------------------------------------------------------------
Delaware -- 0.5%
3,600,000 Delaware Economic Development Authority, Pollution 5/02 at 102 Aaa 3,869,856
Control Refunding Revenue Bonds (Delmarva
Power & Light Company Project) Series 1992B,
6.750%, 5/01/19
- ----------------------------------------------------------------------------------------------------------------
District of Columbia -- 1.1%
2,500,000 District of Columbia (Washington, D.C.) General 6/00 at 102 Aaa 2,740,950
Obligation Bonds (Series 1990B), 7.500%, 6/01/10
(Pre-refunded to 6/01/00)
6,000,000 District of Columbia (Washington, D.C.) General 6/04 at 102 Aaa 6,146,640
Obligation Bonds, Series 1994B, 6.100%, 6/01/11
</TABLE>
31
<PAGE>
Portfolio of Investments
Insured Municipal Bond -- continued
<TABLE>
<CAPTION>
Principal Optional Call Market
Amount Description Provisions* Ratings** Value
- ------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Florida -- 0.7%
Florida Keys Aqueduct Authority, Water Revenue
Refunding Bonds, Series 1991:
$ 920,000 6.750%, 9/01/21 (Pre-refunded to 9/01/01) 9/01 at 101 Aaa $ 999,709
80,000 6.750%, 9/01/21 9/01 at 101 Aaa 85,794
Brevard County, Florida, Utility Revenue Bonds,
Series 1985B:
1,520,000 7.375%, 3/01/14 (Pre-refunded to 3/01/98) 3/98 at 102 Aaa 1,592,960
205,000 7.375%, 3/01/14 3/98 at 102 Aaa 213,862
2,405,000 South Broward Hospital District (Florida) Hospital 5/03 at 102 Aaa 2,739,151
Revenue and Refunding Revenue Bonds,
Series 1993, 7.500%, 5/01/08
- ------------------------------------------------------------------------------------------------------------------------
Georgia -- 2.8%
5,000,000 City of Albany (Georgia), Sewerage System Revenue 7/02 at 102 Aaa 5,480,350
Bonds, Series 1992, 6.625%, 7/01/17
(Pre-refunded to 7/01/02)
5,000,000 Development Authority of Appling County (Georgia), 1/04 at 101 Aaa 5,514,700
Pollution Control Revenue Bonds (Oglethorpe
Power Corporation Hatch Project), Series 1994,
7.150%, 1/01/21
2,250,000 Chatham County Hospital Authority, Hospital Revenue 1/01 at 102 Aaa 2,457,518
Bonds (Memorial Medical Center, Inc.) (Savannah,
Georgia), Series 1990A, 7.000%, 1/01/21
(Pre-refunded to 1/01/01)
4,590,000 Marietta Development Authority, First Mortgage 9/05 at 102 Aaa 4,761,115
Revenue Bonds (Life College, Inc.) Series 1995-B,
6.250%, 9/01/25
3,020,000 Development Authority of the City of Marietta, First 9/05 at 102 Aaa 3,067,474
Mortgage Revenue Bonds (Life College, Inc.)
Series 1995A and Series 1995B, 5.950%, 9/01/19
1,000,000 Municipal Electric Authority of Georgia, Project One 1/04 at 102 Aaa 1,060,700
Subordinated Bonds, Series 1994A,
6.500%, 1/01/26
- ------------------------------------------------------------------------------------------------------------------------
Illinois -- 14.6%
6,685,000 Illinois Health Facilities Authority, Revolving Fund 2/99 at 103 Aaa 7,216,591
Pooled Financing Program, Methodist Health
Services Corporation, Peoria, 8.000%, 8/01/15
3,000,000 Illinois Health Facilities Authority, Revenue Bonds, 8/04 at 102 Aaa 3,031,410
Series 1994A (The University of Chicago Hospitals
Project), 6.125%, 8/15/24
</TABLE>
----------
32
<PAGE>
Nuveen Municipal Bond Funds
April 30, 1997 Annual Report
<TABLE>
<CAPTION>
Principal Optional Call Market
Amount Description Provisions* Ratings** Value
- ------------------------------------------------------------------------------------------------------------------------------
<C> <S> <C> <C> <C>
Illinois -- continued
$ 4,500,000 Illinois Health Facilities Authority, Revenue Bonds, 5/04 at 102 Aaa $ 4,610,565
Series 1994 (Ingalls Health System Project),
6.250%, 5/15/24
4,000,000 Illinois Health Facilities Authority, Health Care 11/04 at 102 Aaa 4,246,480
Facilities Revenue Bonds, Series 1995
(Northwestern Medical Faculty Foundation, Inc.),
6.500%, 11/15/15
7,000,000 Illinois Health Facilities Authority, Revenue Bonds, 1/06 at 102 Aaa 7,029,400
(Carle Foundation), Series 1996, 6.000%, 1/01/27
2,100,000 Illinois Health Facilities Authority, Ingalls Health 1/00 at 102 Aaa 2,261,448
System Revenue Bonds, Series 1989 (The Ingalls
Memorial Hospital Project), 7.000%, 1/01/19
(Pre-refunded to 1/01/00)
Illinois Health Facilities Authority, Revenue Bonds
Series 1988-B, (Community Provider Pooled
Loan Program):
169,000 7.900%, 8/15/03 No Opt. Call Aaa 190,259
1,181,000 7.900%, 8/15/03 5/97 at 102 Aaa 1,208,364
5,000,000 State of Illinois General Obligation Bonds, Series of 8/04 at 102 AA- 4,993,300
August 1994, 5.875%, 8/01/19
State of Illinois, General Obligation Bonds, Series of
February 1995:
3,065,000 6.100%, 2/01/19 2/05 at 102 Aaa 3,103,956
5,545,000 6.100%, 2/01/20 2/05 at 102 Aaa 5,615,477
5,000,000 The State of Illinois acting by the Department of 7/06 at 102 Aaa 4,850,400
Central Management Services for the benefit of
the Department of Public Aid, 5.650%, 7/01/17
2,500,000 City of Chicago (Illinois), General Obligation Adjustable 7/02 at 101 1/2 Aaa 2,755,850
Rate Bonds, Central Public Library Project, Series C
of 1988, 6.850%, 1/01/17 (Pre-refunded to 7/01/02)
5,000,000 City of Chicago, General Obligation Bonds, Project 1/02 at 102 Aaa 5,213,600
Series A of 1992, 6.250%, 1/01/12
Chicago School Reform Board of Trustees of the Board
of Education of the City of Chicago, Illinois, Unlimited
Tax General Obligation Bonds, (Dedicated Tax
Revenues), Series 1997:
9,590,000 5.800%, 12/01/17 (WI) 12/07 at 102 Aaa 9,512,129
10,000,000 5.750%, 12/01/27 (WI) 12/07 at 102 Aaa 9,781,200
</TABLE>
33
<PAGE>
<TABLE>
<CAPTION>
Portfolio of Investments
Insured Municipal Bond--continued
Principal Optional Call Market
Amount Description Provisions* Ratings** Value
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Illinois -- continued
$ 1,500,000 Public Building Commission of Chicago, Cook County, 1/98 at 102 Aaa $ 1,567,170
Illinois, Building Revenue Bonds, Series A of 1988
(Community College District No. 508),
7.700%, 1/01/08 (Pre-refunded to 1/01/98)
21,300,000 Public Building Commission of Chicago (Illinois) 12/03 at 102 Aaa 20,949,828
Building Revenue Bonds, Series A of 1993
(Board of Education of the City of Chicago),
5.750%, 12/01/18
6,540,000 Town of Cicero, Cook County, Illinois, General 12/04 at 102 Aaa 6,886,489
Obligation Corporate Purpose Bonds, Series 1994A,
6.400%, 12/01/14
2,500,000 Community College District No. 508, Cook County, No Opt. Call Aaa 3,128,425
Illinois, Certificates of Participation,
8.750%, 1/01/07
2,370,000 Board of Governors of State Colleges and Universities 4/04 at 102 Aaa 2,476,295
(Illinois), Eastern Illinois University, Auxiliary
Facilities System Revenue Bonds, Series 1994A,
6.375%, 4/01/16
4,000,000 Regional Transportation Authority, Cook, DuPage, 6/03 at 102 Aaa 3,965,400
Kane, Lake, McHenry and Will Counties, Illinois,
General Obligation Refunding Bonds,
Series 1993C, 5.850%, 6/01/23
- -------------------------------------------------------------------------------- ----------------------- ---- -------------
Indiana -- 4.7%
3,750,000 City of Indianapolis, Indiana, Gas Utility System 6/02 at 102 Aaa 3,834,825
Revenue Bonds, Series 1992 A, 6.200%, 6/01/23
5,000,000 Indiana Health Facility Financing Authority, Hospital 5/02 at 102 Aaa 5,223,200
Revenue Refunding and Improvement Bonds,
Series 1992 (Community Hospitals Projects),
6.400%, 5/01/12
1,000,000 Indiana Municipal Power Agency, Power Supply 1/00 at 102 Aaa 1,080,150
System Revenue Bonds, 1990 Series A,
7.100%, 1/01/15 (Pre-refunded to 1/01/00)
5,000,000 Indiana Municipal Power Agency, Power Supply System 1/03 at 102 Aaa 5,048,150
Revenue Bonds, 1993 Series A, 6.125%, 1/01/19
5,350,000 Jasper County, Indiana, Collateralized Pollution 7/01 at 102 Aaa 5,796,779
Control Refunding Revenue Bonds (Northern
Indiana Public Service Company Project), Series 1991,
7.100%, 7/01/17
</TABLE>
34
<PAGE>
<TABLE>
<CAPTION>
Nuveen Municipal Bond Funds
April 30, 1997 Annual Report
Principal Optional Call Market
Amount Description Provisions* Ratings** Value
- ----------------------------------------------------------------------------------------------------------------
<C> <S> <C> <C> <C>
Indiana -- continued
$ 2,000,000 Lawrence Central High School Building Corporation, 7/00 at 102 Aaa $ 2,186,320
Marion County, Indiana, First Mortgage Bonds,
Series 1990, 7.250%, 7/01/08
(Pre-refunded to 7/01/00)
3,300,000 Marion County Convention and Recreational Facilities 6/01 at 102 Aaa 3,627,789
Authority (Indiana), Excise Taxes Lease Rental
Revenue Bonds, Series 1991B, 7,000%, 6/01/21
(Pre-refunded to 6/01/01)
2,250,000 Hospital Authority of Monroe County, Hospital Revenue 5/99 at 101 Aaa 2,366,370
Refunding Bonds, Series 1989 (Bloomington
Hospital Project), 7.125%, 5/01/11
1,000,000 City of Princeton, Indiana, Pollution Control Refunding 3/00 at 102 Aaa 1,078,320
Revenue Bonds, 1990 Series (Public Service
Company of Indiana, Inc. Project C),
7.375%, 3/15/12
2,000,000 Hospital Authority of St. Joseph County (Indiana), 8/01 at 102 Aaa 2,167,560
Fixed Rate Hospital Revenue Refunding Bonds,
Series 1991A (Memorial Hospital of South Bend
Project), 7.000%, 8/15/20
2,190,000 Shelby County Jail Building Corporation, First Mortgage 7/02 at 102 Aaa 2,389,005
Bonds (Shelby County, Indiana), 6.500%, 7/15/09
(Pre-refunded to 7/15/02)
2,265,000 Southwest Allen Multi School Bldg. Corp., First 1/02 at 101 Aaa 2,387,129
Mortgage Refunding Bonds, Series 1992 B,
Fort Wayne, Indiana, 6.375%, 1/15/09
- ----------------------------------------------------------------------------------------------------------------
Kentucky -- 0.8%
5,000,000 Kentucky Economic Development Finance Authority, 2/07 at 102 AAA 4,841,150
Hospital Revenue and Refunding Revenue Bonds,
Series 1997 (Pikeville United Methodist Hospital
of Kentucky, Inc. Project), 5.700%, 2/01/28
1,000,000 Louisville and Jefferson County Metropolitan Sewer 5/00 at 102 Aaa 1,093,020
District (Commonwealth of Kentucky) Drainage
Revenue Bonds, Series 1989, 7.350%, 5/01/19
(Pre-refunded to 5/01/00)
- ----------------------------------------------------------------------------------------------------------------
Louisiana -- 3.4%
7,000,000 Louisiana Public Facilities Authority, Hospital Revenue 5/02 at 102 Aaa 7,705,530
Refunding Bonds (Southern Baptist Hospital
Project), Series 1992, 6.800%, 5/15/12
(Pre-refunded to 5/15/02)
</TABLE>
-------
35
<PAGE>
<TABLE>
<CAPTION>
Portfolio of Investments
Insured Municipal Bond -- continued
Principal Optional Call Market
Amount Description Provisions* Ratings** Value
- ----------------------------------------------------------------------------------------------------------------
<C> <S> <C> <C> <C>
Louisiana -- continued
$ 1,615,000 Louisiana Public Facilities Authority, Fixed Rate Health 12/98 at 102 Aaa $ 1,729,310
and Education Capital Facilities Revenue Bonds
(West Jefferson Medical Center), Series 1985D,
7.900%, 12/01/15
State of Louisiana General Obligation Bonds,
Series 1992-A:
5,000,000 6.500%, 5/01/09 5/02 at 102 Aaa 5,375,350
2,000,000 6.500%, 5/01/12 5/02 at 102 Aaa 2,142,800
5,640,000 Orleans Parish Parishwide School District, General 3/06 at 100 Aaa 5,096,530
Obligation Bonds, Series 1996, 5.000%, 9/01/20
4,750,000 Hospital Service District No. 1 of the Parish of 2/04 at 102 Aaa 4,899,530
Tangipahoa, State of Louisiana, Hospital Revenue
Bonds (Series 1994), 6.250%, 2/01/24
- ----------------------------------------------------------------------------------------------------------------
Maine -- 3.7%
3,175,000 Maine Health and Higher Educational Facilities 7/04 at 102 Aaa 3,521,710
Authority, Revenue Bonds, Series 1994B,
7.000%, 7/01/24
11,500,000 Maine Health and Higher Educational Facilities 7/05 at 102 Aaa 11,533,810
Authority, Revenue Bonds, Series 1995A,
5.875%, 7/01/25
12,750,000 Maine State Housing Authority, Mortgage Purchase 5/06 at 102 Aaa 13,073,340
Bonds, 1996 Series B-2 (AMT), 6.450%, 11/15/26
(Alternative Minimum Tax)
Town of Old Orchard Beach, Maine, 1992 General
Obligation Bonds:
750,000 6.650%, 9/01/09 9/02 at 103 Aaa 818,813
500,000 6.650%, 9/01/10 9/02 at 103 Aaa 545,380
- ----------------------------------------------------------------------------------------------------------------
Maryland -- 0.1%
1,000,000 Morgan State University, Maryland, Academic Fees 7/00 at 102 Aaa 1,087,110
and Auxiliary Facilities Fees Revenue Bonds,
1990 Series A, 7.000%, 7/01/20
(Pre-refunded to 7/01/00)
- ----------------------------------------------------------------------------------------------------------------
Massachusetts -- 3.9%
1,250,000 Massachusetts Bay Transportation Authority, 8/00 at 102 Aaa 1,383,588
Certificates of Participation, 1990 Series A,
7.650%, 8/01/15 (Pre-refunded to 8/01/00)
</TABLE>
------
36
<PAGE>
Nuveen Municipal Bond Funds
April 30, 1997 Annual Report
<TABLE>
<CAPTION>
Principal Optional Call Market
Amount Description Provisions* Ratings** Value
- --------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Massachusetts -- continued
$ 2,000,000 Massachusetts Health and Educational Facilities 4/00 at 102 Aaa $ 2,180,020
Authority, Revenue Bonds, Capital Asset Program
Issue, Series F, 7.300%, 10/01/18
(Pre-refunded to 4/01/00)
3,400,000 Massachusetts Health and Educational Facilities 7/02 at 102 Aaa 3,620,320
Authority, Revenue Bonds, New England Medical
Center Hospitals Issue, Series F, 6.625%, 7/01/25
4,000,000 Massachusetts Health and Educational Facilities 7/02 at 102 Aaa 4,255,600
Authority, Revenue Bonds, South Shore Hospital
Issue, Series D, 6.500%, 7/01/22
11,050,000 Massachusetts Health and Educational Facilities 11/03 at 102 AAA 10,011,853
Authority, Revenue Bonds, Cape Cod Health
Systems, Inc. Issue, Series A, 5.250%, 11/15/21
4,000,000 Massachusetts Health and Educational Facilities 10/05 at 102 Aaa 4,019,760
Authority, Revenue Bonds, Berkshire Health
Systems Issue, Series D, 6.000%, 10/01/19
3,500,000 City of Boston, Massachusetts, Revenue Bonds, Boston 8/00 at 102 Aaa 3,871,385
City Hospital (FHA Insured Mortgage), Series A,
7.625%, 2/15/21 (Pre-refunded to 8/15/00)
1,150,000 City of Haverhill, Massachusetts, General Obligation 6/02 at 102 Aaa 1,261,033
Municipal Purpose Loan of 1992, Series A,
7.000%, 6/15/12
- ------------------------------------------------------------------------------------------------------------------------------------
Michigan -- 6.1%
5,000,000 Michigan State Hospital Finance Authority, Hospital 11/06 at 102 Aaa 5,010,200
Revenue Bonds, (Sparrow Obligated Group), Series
1996, 5.900%, 11/15/26
8,280,000 Michigan State Housing Development Authority, Rental 4/07 at 102 Aaa 8,255,408
Housing Revenue Bonds, 1997 Series A (AMT),
6.100%, 10/01/33 (Alternative Minimum Tax)
2,000,000 Michigan Strategic Fund Limited Obligation Refunding 12/01 at 102 Aaa 2,160,240
Revenue Bonds (The Detroit Edison Company Pollution
Control Bonds Project), Collateralized Series 1991DD,
6.875%, 12/01/21
12,130,000 City of Bay City, County of Bay, State of Michigan, 1991 No Opt. Call Aaa 2,939,706
General Obligation Unlimited Tax Street Improvement
Bonds, 0.000%, 6/01/21
</TABLE>
37
<PAGE>
Portfolio of Investments
Insured Municipal Bond - continued
<TABLE>
<CAPTION>
Principal Optional Call Market
Amount Description Provisions* Ratings** Value
- --------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Michigan -- continued
$ 5,000,000 Caledonia Community Schools, Counties of Kent, Allegan 5/02 at 102 Aaa $ 5,486,400
and Barry, State of Michigan, 1992 School Building and
Site and Refunding Bonds (General Obligation -- Unlimited
Tax), 6.700%, 5/01/22 (Pre-refunded to 5/01/02)
2,500,000 Chelsea School District, Counties of Washtenaw and 5/05 at 101 Aaa 2,530,300
Jackson, State of Michigan, 1995 School Building and
Site Bonds (General Obligation -- Unlimited Tax),
6.000%, 5/01/19
2,000,000 City of Detroit, Michigan, Sewage Disposal System 7/01 at 102 Aaa 2,173,460
Revenue Bonds, Series 1991, 6.625%, 7/01/21
(Pre-refunded to 7/01/01)
14,690,000 Detroit/Wayne County Stadium Authority, 2/07 at 102 Aaa 13,637,902
(State of Michigan), Building Authority (Stadium)
Bonds, Series 1997, (Wayne County Limited Tax
General Obligation), 5.250%, 2/01/27
6,085,000 School District of the City of River Rouge, County of 5/03 at 101 1/2 Aaa 5,910,178
Wayne, State of Michigan, 1993 School Building and
Site Bonds (General Obligation -- Unlimited Tax),
5.625%, 5/01/22
- --------------------------------------------------------------------------------------------------------------------------
Mississippi -- 0.8%
6,400,000 Medical Center Educational Building Corporation 12/04 at 102 Aaa 6,411,200
(Mississippi), Revenue Bonds, Series 1993 (University
of Mississippi Medical Center Project),
5.900%, 12/01/23
- --------------------------------------------------------------------------------------------------------------------------
Missouri -- 1.0%
7,950,000 St. Louis Municipal Finance Corporation, City Justice 2/06 at 102 Aaa 8,136,746
Center, Leasehold Revenue Improvement Bonds, Series
1996A, (City of St. Louis, Missouri, Lessee),
5.950%, 2/15/16
- --------------------------------------------------------------------------------------------------------------------------
Nevada -- 0.6%
2,500,000 County of Churchill, Nevada, Health Care Facilities 1/04 at 102 Aaa 2,510,650
Revenue Bonds (Western Health Care Network, Inc.),
Series 1994A, 6.000%, 1/01/24
2,000,000 Clark County, Nevada, Industrial Development Refunding 10/02 at 102 Aaa 2,205,500
Revenue Bonds (Nevada Power Company Project)
Series 1992C, 7.200%, 10/01/22
- --------------------------------------------------------------------------------------------------------------------------
</TABLE>
38
<PAGE>
Nuveen Municipal Bond Funds
April 30, 1997 Annual Report
<TABLE>
<CAPTION>
Principal Optional Call Market
Amount Description Provisions* Ratings** Value
- --------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
New Hampshire -- 0.4%
$2,850,000 New Hampshire Higher Educational and Health Facilities 7/02 at 102 Aaa $2,923,245
Authority, Revenue Refunding Bonds, University System
of New Hampshire Issue, Series 1992, 6.250%, 7/01/20
- --------------------------------------------------------------------------------------------------------------------------
New Jersey -- 0.4%
1,480,000 New Jersey Housing and Mortgage Finance Agency, 4/98 at 103 Aaa 1,547,162
Home Mortgage Purchase Revenue Bonds, 1987 Series
B (Remarketing), 8.100%, 10/01/17
1,820,000 Housing Finance Corporation of the Township of 6/97 at 104 Aaa 1,898,606
Pennsauken (Pennsauken, New Jersey), Section
8 Assisted Housing Revenue Bonds (Pennsauken
Housing Associates -- 1979 Elderly Project),
8.000%, 4/01/11
- --------------------------------------------------------------------------------------------------------------------------
New Mexico -- 1.0%
3,000,000 City of Albuquerque, New Mexico, Hospital System 8/97 at 102 Aaa 3,079,650
Revenue Bonds, 1992 Series B (Presbyterian Healthcare
Services), 6.600%, 8/01/07
4,445,000 City of Farmington, New Mexico, Pollution Control Revenue 12/02 at 102 Aaa 4,649,070
Refunding Bonds, 1992 Series A (Public Service
Company of New Mexico, San Juan and Four Corners
Projects), 6.375%, 12/15/22
- --------------------------------------------------------------------------------------------------------------------------
New York -- 9.7%
8,375,000 Dormitory Authority of the State of New York, Mount Sinai 7/04 at 102 Aaa 7,464,386
School of Medicine, Insured Revenue Bonds, Series
1994A, 5.000%, 7/01/21
Metropolitan Transportation Authority, Commuter
Facilities Revenue Bonds, Series 1992B:
4,955,000 6.250%, 7/01/17 7/02 at 102 Aaa 5,138,137
6,925,000 6.250%, 7/01/22 7/02 at 102 Aaa 7,156,226
5,000,000 Metropolitan Transportation Authority, Commuter Facilities 7/04 at 101 1/2 Aaa 5,258,000
Revenue Bonds, Series 1994A, 6.375%, 7/01/18
5,000,000 Metropolitan Transportation Authority, Commuter Facilities 7/07 at 101 1/2 Aaa 4,865,150
Revenue Bonds, Series 1997A, 5.625%, 7/01/27
285,000 The City of New York, General Obligation Bonds, Fiscal 8/02 at 101 1/2 Aaa 306,899
1992 Series C, 6.625%, 8/01/12
5,715,000 The City of New York, General Obligation Bonds, Fiscal 8/02 at 101 1/2 Aaa 6,261,868
1992 Series C, Fixed Rate Bonds, Subseries C-1,
6.625%, 8/01/12 (Pre-refunded to 8/01/02)
</TABLE>
39
<PAGE>
Portfolio of Investments
Insured Municipal Bond - continued
<TABLE>
<CAPTION>
Principal Optional Call Market
Amount Description Provisions* Ratings** Value
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
New York -- continued
$ 3,010,000 The City of New York, General Obligation Bonds, Fiscal 5/03 at 101 1/2 Aaa $3,060,719
1993 Series E, 6.000%, 5/15/16
3,750,000 The City of New York, General Obligation Bonds, Fiscal 2/02 at 101 1/2 Aaa 4,078,800
1992 Series B, 7.000%, 2/01/18
6,330,000 New York City Municipal Water Finance Authority, Water 6/01 at 101 Aaa 6,771,138
and Sewer System Revenue Bonds, Fiscal 1992 Series A,
6.750%, 6/15/16
2,025,000 New York City Municipal Water Finance Authority, Water 6/99 at 101 1/2 Aaa 2,150,003
and Sewer System Revenue Bonds, Fiscal 1990
Series A, 6.750%, 6/15/14 (Pre-refunded to 6/15/99)
4,470,000 New York City Municipal Water Finance Authority, 6/02 at 101 1/2 Aaa 4,439,962
Water and Sewer System Revenue Bonds,
Fiscal 1993 Series A, 5.750%, 6/15/18
3,900,000 New York City Transit Authority, Transit Facilities No Opt. Call Aaa 3,783,975
Refunding Revenue Bonds, Series 1993 (Livingston
Plaza Project), 5.400%, 1/01/18
New York City Industrial Development Agency, Civic
Facility Revenue Bonds, (USTA National Tennis Center
Incorporated Project):
3,500,000 6.500%, 11/15/10 11/04 at 102 Aaa 3,797,430
3,000,000 6.600%, 11/15/11 11/04 at 102 Aaa 3,273,360
5,240,000 Triborough Bridge and Tunnel Authority, Special 1/01 at 102 Aaa 5,638,869
Obligation Refunding Bonds, Series 1991B,
6.875%, 1/01/15
3,015,000 Triborough Bridge and Tunnel Authority, Special Obligation 1/02 at 100 Aaa 2,907,726
Bonds, Series 1992, 5.500%, 1/01/17
- ------------------------------------------------------------------------------------------------------------------------------------
North Carolina -- 1.3%
10,000,000 North Carolina Eastern Municipal Power Agency, Power 1/07 at 102 Aaa 9,952,900
System Revenue Bonds, Refunding Series 1996A,
5.700%, 1/01/15
- ------------------------------------------------------------------------------------------------------------------------------------
Ohio -- 0.5%
1,000,000 Board of Education, City School District of Columbus, 12/00 at 102 Aaa 1,094,580
Franklin County, Ohio, General Obligation Bonds,
Series 1990-A (Unlimited Tax) For School Building
Renovation and Improvement, 7.000%, 12/01/11
(Pre-refunded to 12/01/00)
40
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Nuveen Municipal Bond Funds
April 30, 1997 Annual Report
Principal Optional Call Market
Amount Description Provisions* Ratings** Value
<S> <C> <C> <C> <C>
- -----------------------------------------------------------------------------------------------------------------------
Ohio-- continued
$2,500,000 Dublin City School District, Franklin, Delaware and 12/02 at 102 Aaa $ 2,593,875
Union Counties, Ohio, Various Purpose School Building
Construction and Improvement Bonds (General
Obligation -- Unlimited Tax), 6.200%, 12/01/19
- -----------------------------------------------------------------------------------------------------------------------
Oklahoma -- 2.0%
5,000,000 Oklahoma Industries Authority, Health System Revenue 8/05 at 102 Aaa 5,285,200
Bonds (Obligated Group consisting of Baptist Medical
Center of Oklahoma, Inc., South Oklahoma City
Hospital Corporation and Baptist Rural Health System,
Inc.), Series 1995C, Fixed Rate Bonds, 6.250%, 8/15/12
265,000 Muskogee County Home Finance Authority (Oklahoma) 6/00 at 102 Aaa 278,499
Single Family Mortgage Revenue Refunding Bonds,
Series 1990A, 7.600%, 12/01/10
10,525,000 Tulsa Metropolitan Utility Authority (Tulsa, Oklahoma), 9/05 at 102 Aaa 10,465,113
Utility Revenue Bonds, Series 1995, 5.750%, 9/01/19
- -----------------------------------------------------------------------------------------------------------------------
Pennsylvania -- 1.1%
3,000,000 North Penn Water Authority (Montgomery County, 11/04 at 101 Aaa 3,401,310
Pennsylvania), Water Revenue Bonds, Series of 1994,
7.000%, 11/01/24 (Pre-refunded to 11/01/04)
3,900,000 The Philadelphia Municipal Authority, Philadelphia, 11/01 at 102 Aaa 4,338,165
Pennsylvania, Justice Lease Revenue Bonds, 1991
Series B, 7.125%, 11/15/18 (Pre-refunded to 11/15/01)
1,000,000 Washington County Hospital Authority (Pennsylvania), 7/00 at 102 Aaa 1,075,790
Hospital Revenue Refunding Bonds, Series A of 1990
(The Washington Hospital Project), 7.150%, 7/01/17
- -----------------------------------------------------------------------------------------------------------------------
Rhode Island -- 1.4%
2,250,000 Rhode Island Depositors Economic Corporation, 8/02 at 102 Aaa 2,468,565
Special Obligation Bonds, 1992 Series A, 6.625%,
8/01/19 (Pre-refunded to 8/01/02)
4,000,000 City of Cranston, Rhode Island, General Obligation 7/01 at 101 1/2 Aaa 4,419,480
Bonds, 7.200%, 7/15/11 (Pre-refunded to 7/15/01)
3,130,000 Kent County Water Authority (Rhode Island), General 7/04 at 102 Aaa 3,300,241
Revenue Bonds, 1994 Series A, 6.350%, 7/15/14
1,000,000 Providence Housing Development Corporation, 7/04 at 102 Aaa 1,044,510
Mortgage Revenue Refunding Bonds, Series 1994A
(FHA Insured Mortgage Loan -- Barbara Jordan
Apartments Project) (Providence, Rhode Island),
6.650%, 7/01/15
41
</TABLE>
<PAGE>
Portfolio of Investments
Insured Municipal Bond -- continued
<TABLE>
<CAPTION>
Principal Optional Call Market
Amount Description Provisions* Ratings* Value
- -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
South Carolina -- 2.6%
$1,000,000 City of Aiken, South Carolina, Water and Sewer 1/00 at 102 Aaa $ 1,076,270
System Revenue Refunding and Capital Improvement
Bonds, Series 1990, 7.250%, 1/01/14
Charleston County, South Carolina, Charleston Public
Facilities Corporation, Certificates of Participation,
Series 1994B:
1,430,000 6.875%, 6/01/14 (Pre-refunded to 6/01/04) 6/04 at 102 Aaa 1,612,525
70,000 6.875%, 6/01/14 6/04 at 102 Aaa 77,077
2,385,000 7.000%, 6/01/19 (Pre-refunded to 6/01/04) 6/04 at 102 Aaa 2,707,070
115,000 7.000%, 6/01/19 6/04 at 102 Aaa 127,464
5,600,000 Charleston County, South Carolina, Charleston Public 6/05 at 101 Aaa 5,381,768
Facilities Corporation, Certificates of Participation,
Series 1995, 5.500%, 12/01/20
5,435,000 Greenville Memorial Auditorium District, Public Facilities 3/06 at 102 Aaa 5,360,268
Corporation, Greenville Memorial Auditorium District,
Taxable Certificates of Participation (Bi-Lo Center
Project), Series 1996C, 5.750%, 3/01/22
2,000,000 City of Rock Hill, South Carolina, Combined Utility System 1/00 at 102 Aaa 2,155,340
Revenue Bonds, Series 1990, 7.000%, 1/01/20
(Pre-refunded to 1/01/00)
2,000,000 City of Rock Hill, South Carolina, Combined Utility 1/01 at 102 Aaa 2,074,700
System Revenue Bonds, Series 1991,
6.375%, 1/01/15
- -------------------------------------------------------------------------------------------------------------------------
South Dakota -- 0.1%
1,000,000 South Dakota Health and Educational Facilities Authority, 7/00 at 102 Aaa 1,092,230
Revenue Bonds, Series 1990 (McKennan Hospital Issue),
7.250%, 7/01/15 (Pre-refunded to 7/01/00)
- -------------------------------------------------------------------------------------------------------------------------
Texas -- 5.6%
6,080,000 Texas Health Facilities Development Corporation, 8/03 at 102 Aaa 6,295,840
Hospital Revenue Bonds (All Saints Episcopal
Hospitals of Fort Worth Project), Series 1993B,
6.250%, 8/15/22
3,000,000 Bexar County (Texas), Health Facilities Development 8/04 at 102 Aaa 3,260,010
Corporation, Hospital Revenue Bonds (Baptist
Memorial Hospital System Project), Series 1994,
6.750%, 8/15/19
4,575,000 Harris County, Texas, Toll Road Senior Lien Revenue 8/02 at 102 Aaa 4,997,546
Refunding Bonds, Series 1992A, 6.500%, 8/15/17
(Pre-refunded to 8/15/02)
====
42
</TABLE>
<PAGE>
Nuveen Municipal Bond Funds
April 30, 1997 Annual Report
<TABLE>
<CAPTION>
Principal Optional Call Market
Amount Description Provisions* Ratings** Value
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Texas -- continued
$1,000,000 Harris County Hospital District Refunding Revenue No Opt. Call Aaa $ 1,180,670
Bonds, Texas, Series 1990, 7.400%, 2/15/10
500,000 City of Houston, Texas, Senior Lien Hotel Occupancy Tax 7/01 at 100 Aaa 542,350
and Parking Facilities, Weekly Adjustable/Fixed Rate
Revenue Bonds, Series 1985, Custodial Receipts,
Series A, 7.000%, 7/01/15 (Pre-refunded to 7/01/01)
825,000 Lower Colorado River Authority, Priority Refunding 1/01 at 102 Aaa 891,214
Revenue Bonds, Series 1991, Series B, 7.000%, 1/01/11
Ratama Development Corporation, Special Facilities
Revenue Bonds, (Ratama Park Racetrack Project)Series 1993
9,715,000 8.750%, 12/15/18 No Opt. Call Aaa 13,302,457
5,405,000 10.000%, 12/15/20 No Opt. Call Aaa 8,328,347
5,000,000 Tarrant County Health Facilities Development Corporation, No Opt. Call Aaa 5,191,500
Hospital Revenue Refunding and Improvement Bonds
(Fort Worth Osteopathic Hospital, Inc. Project)
Series 1993, 6.000%, 5/15/21
- ----------------------------------------------------------------------------------------------------------------------
Utah -- 1.5%
8,055,000 State of Utah, State Building Ownership Authority, Lease 11/05 at 100 Aaa 7,924,508
Revenue Bonds (State Facilities Master Lease Program),
Series 1995A, 5.750%, 5/15/18
220,000 Utah Housing Finance Agency, Single Family Mortgage No Opt. Call AA 227,970
Senior Bonds, 1988 Issue C (Federally Insured or
Guaranteed Mortgage Loans), 8.375%, 7/01/19
3,500,000 White City Water Improvement District, Salt Lake 2/05 at 100 Aaa 3,722,950
County, Utah, General Obligation Water Bonds,
Series 1995, 6.600%, 2/01/25
- ----------------------------------------------------------------------------------------------------------------------
Washington -- 1.5%
5,000,000 Washington Public Power Supply System, Nuclear No Opt. Call Aaa 5,065,500
Project No. 2 Refunding Revenue Bonds,
Series 1993B, 5.400%, 7/01/05
2,500,000 Washington Public Power Supply System, Nuclear 7/99 at 102 Aaa 2,688,200
Project No. 3 Refunding Revenue Bonds, Series
1989A, 7.250%, 7/01/16 (Pre-refunded to 7/01/99)
1,500,000 City of Marysville, Washington, Water and Sewer 12/03 at 100 Aaa 1,674,960
Revenue Bonds, Series 1991, 7.000%, 12/01/11
(Pre-refunded to 12/01/03)
</TABLE>
43
<PAGE>
Portfolio of Investments
Insured Municipal Bond - continued
<TABLE>
<CAPTION>
Principal Optional Call Market
Amount Description Provisions* Ratings** Value
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Washington -- continued
$2,000,000 Bellingham School District No. 501, Whatcom 12/04 at 100 Aaa $ 2,067,180
County, Washington, Unlimited Tax General
Obligation Bonds, Series 1994, 6.125%, 12/01/13
- ----------------------------------------------------------------------------------------------------------------------
West Virginia -- 0.1%
1,000,000 School Building Authority of West Virginia, Capital 7/00 at 102 Aaa 1,093,160
Improvement Revenue Bonds, Series 1990A, 7.250%,
7/01/15 (Pre-refunded to 7/01/00)
- ----------------------------------------------------------------------------------------------------------------------
Wisconsin -- 1.8%
10,410,000 Wisconsin Health and Educational Facilities Authority, 2/07 at 102 Aaa 10,085,103
Revenue Bonds, (Sisters of the Sorrowful Mother --
Ministry Corporation), Series 1997A,
5.700%, 8/15/26
1,000,000 Wisconsin Municipal Insurance Commission, Revenue 10/97 at 102 Aaa 1,039,480
Bonds, Series 1987, 8.700%, 4/01/07
2,000,000 City of Superior, Wisconsin, Limited Obligation No Opt. Call Aaa 2,314,520
Refunding Revenue Bonds (Midwest Energy Resources
Company Project) Series E-1991,
6.900%, 8/01/21
1,000,000 School District of Three Lakes, Forest and Oneida 4/03 at 100 Aaa 1,100,210
Counties, Wisconsin, General Obligation Refunding
Bonds, 6.750%, 4/01/12 (Pre-refunded to 4/01/03)
- ----------------------------------------------------------------------------------------------------------------------
Wyoming -- 0.3%
2,000,000 The Trustees of the University of Wyoming, Facilities 6/00 at 101 Aaa 2,131,960
Revenue Bonds, Series 1991, 7.100%, 6/01/10
- ----------------------------------------------------------------------------------------------------------------------
Puerto Rico -- 0.5%
3,750,000 Commonwealth of Puerto Rico, Public Improvement 7/02 at 101 1/2 Aaa 4,114,837
Bonds of 1992 (General Obligation Bonds),
6.600%, 7/01/13 (Pre-refunded to 7/01/02)
- ----------------------------------------------------------------------------------------------------------------------
$762,725,000 Total Investments -- (cost $741,510,518) -- 98.7% 779,438,466
- ----------------------------------------------------------------------------------------------------------------------
</TABLE>
44
<PAGE>
Nuveen Municipal Bond Funds
April 30, 1997 Annual Report
<TABLE>
<CAPTION>
Principal Optional Call Market
Amount Description Provisions* Ratings** Value
- ------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Temporary Investments in Short-Term Municipal Securities -- 2.6%
$8,000,000 The Medical Clinic Board of the City of A-1+ $ 8,000,000
Birmingham-UAHSF, Medical Clinic Revenue Bonds,
UAHSF Series 1001, Variable Rate Demand Bonds,
3.850%, 12/01/26+
9,500,000 City of Chicago,Chicago-O'Hare International Airport, P-1 9,500,000
Special Facility Revenue Bonds, (American Airlines, Inc.
Project), Series 1983B, Variable Rate Demand Bonds,
3.850%, 12/01/17+
3,000,000 The Economic Development Corporation of the County P-1 3,000,000
of Delta, Michigan, Environmental Improvement Revenue
Refunding Bonds, 1985 Series F, (Mead-Escanaba Paper
Company Project), Variable Rate Demand Bonds, 3.850%, 12/01/13+
- ------------------------------------------------------------------------------------------------------
$20,500,000 Total Temporary Investments -- 2.6% 20,500,000
===========-------------------------------------------------------------------------------------------
Other Assets Less Liabilities -- (1.3)% (9,922,134)
----------------------------------------------------------------------------------------
Net Assets -- 100% $790,016,332
========================================================================================
</TABLE>
All of the bonds in the portfolio, excluding temporary investments in
short-term municipal securities, are either covered by Original Issue
Insurance, Secondary Market Insurance or Portfolio Insurance, or are
backed by an escrow or trust containing sufficient U.S. Government or
U.S. Government agency securities, any of which ensure the timely
payment of principal and interest.
* Optional Call Provisions (not covered by the report of
independent public accountants): Dates (month and year) and
prices of the earliest optional call or redemption. There may be
other call provisions at varying prices at later dates.
** Ratings (not covered by the report of independent public
accountants): Using the higher of Standard & Poor's or Moody's
rating.
(WI) Security purchased on a when-issued basis (see note 1 of the
Notes to Financial Statements).
+ The security has a maturity of more than one year, but has
variable rate and demand features which qualify it as a short-
term security. The rate disclosed is that currently in effect.
This rate changes periodically based on market conditions or a
specified market index.
45
<PAGE>
Statement of Net Assets
April 30, 1997
<TABLE>
<CAPTION>
Insured
Municipal Bond Municipal Bond
- ------------------------------------------------------------------------------------------------------
<S> <C> <C>
Assets
Investments in municipal securities, at market value (note 1) $2,818,580,455 $779,438,466
Temporary investments in short-term municipal securities,
at amortized cost, which approximates market value (note 1) - 20,500,000
Receivables:
Interest 55,776,789 14,092,877
Shares sold 299,253 322,049
Investments sold 9,699,225 30,000
Other assets 639,304 188,678
- ------------------------------------------------------------------------------------------------------
Total assets 2,884,995,026 814,572,070
- ------------------------------------------------------------------------------------------------------
Liabilities
Cash overdraft 9,964,895 2,497,884
Payables:
Investments purchased 11,310,186 19,041,120
Shares redeemed 1,564,028 179,380
Accrued expenses:
Management fees (note 6) 1,049,863 308,078
12b-1 distribution and service fees (notes 1 and 6) 15,177 15,214
Other 561,046 211,260
Dividends payable 9,722,871 2,302,802
- ------------------------------------------------------------------------------------------------------
Total liabilities 34,188,066 24,555,738
- ------------------------------------------------------------------------------------------------------
Net assets (note 7) $2,850,806,960 $790,016,332
======================================================================================================
Class A Shares (note 1)
Net assets $ 70,330,660 $ 69,291,034
Shares outstanding 7,691,375 6,497,792
Net asset value and redemption price per share $ 9.14 $ 10.66
Offering price per share (net asset value per share plus
maximum sales charge of 4.20% of offering price) $ 9.54 $ 11.13
======================================================================================================
Class B Shares (note 1)
Net assets $ 468,403 $ 488,115
Shares outstanding 51,212 45,766
Net asset value, offering and redemption price per share $ 9.15 $ 10.67
======================================================================================================
Class C Shares (note 1)
Net assets $ 5,359,886 $ 5,615,083
Shares outstanding 586,562 531,552
Net asset value, offering and redemption price per share $ 9.14 $ 10.56
======================================================================================================
Class R Shares (note 1)
Net assets $2,774,648,011 $714,622,100
Shares outstanding 303,309,714 67,284,174
Net asset value, offering and redemption price per share $ 9.15 $ 10.62
======================================================================================================
See accompanying notes to financial statements.
</TABLE>
46
<PAGE>
<TABLE>
<CAPTION>
Statement of Operations Nuveen Municipal Bond Funds
April 30, 1997 Annual Report
Insured
Municipal Bond Municipal Bond
---------------------------------- ----------------------------------
Two months ended Year ended Two months ended Year ended
4/30/97 2/28/97 4/30/97 2/28/97
<S> <C> <C> <C> <C>
- --------------------------------------------------------------------------------------------- ----------------------------------
Investment Income
Tax-exempt interest income (note 1) $ 28,125,731 $ 170,495,195 $ 7,896,365 $ 47,345,542
- ---------------------------------------------------------------------------------------------- ----------------------------------
Expenses
Management fees (note 6) 2,148,330 12,969,912 631,735 3,795,515
12b-1 service fees -- Class A (notes 1 and 6) 23,211 133,192 22,905 140,125
12b-1 distribution and service fees -- Class B (notes 1
and 6) 374 16 594 141
12b-1 distribution and service fees -- Class C (notes 1
and 6) 6,377 32,590 6,861 51,506
Shareholders' servicing agent fees and expenses 405,201 2,262,180 116,297 710,003
Custodian's fees and expenses 46,057 346,413 16,679 135,049
Trustees' fees and expenses (note 6) 10,919 39,906 3,007 11,034
Professional fees 16,549 118,365 26,721 32,377
Shareholders' reports -- printing and mailing expenses 71,466 367,875 36,513 160,896
Federal and state registration fees 11,582 78,234 5,353 97,491
Portfolio insurance expense - - 3,383 16,767
Other expenses 26,833 164,015 7,592 51,618
- ---------------------------------------------------------------------------------------------- ----------------------------------
Total expenses 2,766,899 16,512,698 877,640 5,202,522
- ---------------------------------------------------------------------------------------------- ----------------------------------
Net investment income 25,358,832 153,982,497 7,018,725 42,143,020
- ---------------------------------------------------------------------------------------------- ----------------------------------
Realized and Unrealized Gain (Loss) from Investments
Net realized gain (loss) from investment transactions
(notes 1 and 4) 124,391 13,454,600 (986,589) (1,089,131)
Net change in unrealized appreciation or depreciation
of investments (29,401,558) (11,748,742) (10,703,435) (7,672,084)
- ---------------------------------------------------------------------------------------------- ----------------------------------
Net gain (loss) from investments (29,277,167) 1,705,858 (11,690,024) (8,761,215)
- ---------------------------------------------------------------------------------------------- ----------------------------------
Net increase (decrease) in net assets from operations $ (3,918,335) $ 155,688,355 $ (4,671,299) $ 33,381,805
- ---------------------------------------------------------------------------------------------- ----------------------------------
See accompanying notes to financial statements.
</TABLE>
47
<PAGE>
Statement of Changes in Net Assets
<TABLE>
<CAPTION>
Municipal Bond
--------------------------------------------------
Two months ended Year ended Year ended
4/30/97 2/28/97 2/29/96
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Operations
Net investment income $ 25,358,832 $ 153,982,497 $ 156,911,846
Net realized gain (loss) from investment transactions
(notes 1 and 4) 124,391 13,454,600 10,618,706
Net change in unrealized appreciation or depreciation
of investments (29,401,558) (11,748,742) 84,862,109
- -------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets from operations (3,918,335) 155,688,355 252,392,661
- -------------------------------------------------------------------------------------------------------------------
Distributions to Shareholders (note 1)
From undistributed net investment income:
Class A (605,734) (2,735,302) (707,943)
Class B (1,502) (45) N/A
Class C (38,827) (146,481) (30,677)
Class R (24,664,380) (151,041,117) (157,137,272)
From accumulated net realized gains from
investment transactions:
Class A - (304,876) (63,661)
Class B - - N/A
Class C - (19,401) (3,523)
Class R - (13,873,562) (8,354,729)
- -------------------------------------------------------------------------------------------------------------------
Decrease in net assets from distributions to shareholders (25,310,443) (168,120,784) (166,297,805)
- -------------------------------------------------------------------------------------------------------------------
Fund Share Transactions (note 2)
Net proceeds from sale of shares 32,164,961 288,845,641 492,450,182
Net proceeds from shares issued to shareholders
due to reinvestment of distributions 19,772,961 133,505,722 124,215,111
- -------------------------------------------------------------------------------------------------------------------
51,937,922 422,351,363 616,665,293
- -------------------------------------------------------------------------------------------------------------------
Cost of shares redeemed (63,401,060) (436,065,365) (526,292,941)
- -------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets
from Fund share transactions (11,463,138) (13,714,002) 90,372,352
- -------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets (40,691,916) (26,146,431) 176,467,208
Net assets at the beginning of period 2,891,498,876 2,917,645,307 2,741,178,099
- -------------------------------------------------------------------------------------------------------------------
Net assets at the end of period $2,850,806,960 $2,891,498,876 $2,917,645,307
===================================================================================================================
Balance of undistributed net investment income at end of period $ 1,277,538 $ 1,229,149 $ 1,169,597
===================================================================================================================
N/A - The Funds were not authorized to issue Class B Shares prior to February 1, 1997.
See accompanying notes to financial statements.
</TABLE>
48
<PAGE>
Statement of Changes in Net Assets -- continued
<TABLE>
<CAPTION>
Nuveen Municipal Bond Funds
April 30, 1997 Annual Report
Insured Municipal Bond
------------------------------------------------
Two months ended Year ended Year ended
4/30/97 2/28/97 2/29/96
- ---------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Operations
Net investment income $ 7,018,725 $ 42,143,020 $ 41,913,841
Net realized gain (loss) from investment transactions
(notes 1 and 4) (986,589) (1,089,131) 4,402,500
Net change in unrealized appreciation or depreciation
of investments (10,703,435) (7,672,084) 36,885,934
- ---------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets from operations (4,671,299) 33,381,805 83,202,275
- ---------------------------------------------------------------------------------------------------------------------
Distributions to Shareholders (note 1)
From undistributed net investment income:
Class A (590,571) (2,881,559) (1,614,782)
Class B (2,670) (832) N/A
Class C (41,445) (224,876) (192,149)
Class R (6,443,374) (38,675,228) (40,071,660)
From accumulated net realized gains from
investment transactions:
Class A -- (211,577) --
Class B -- -- N/A
Class C -- (17,777) --
Class R -- (2,484,412) --
- ---------------------------------------------------------------------------------------------------------------------
Decrease in net assets from distributions to shareholders (7,078,060) (44,496,261) (41,878,591)
- ---------------------------------------------------------------------------------------------------------------------
Fund Share Transactions (note 2)
Net proceeds from sale of shares 7,673,973 84,624,586 258,736,089
Net proceeds from shares issued to shareholders
due to reinvestment of distributions 4,668,785 29,865,624 27,690,501
- ---------------------------------------------------------------------------------------------------------------------
12,342,758 114,490,210 286,426,590
- ---------------------------------------------------------------------------------------------------------------------
Cost of shares redeemed (17,108,094) (110,894,714) (268,478,494)
- ---------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets
from Fund share transactions (4,765,336) 3,595,496 17,948,096
- ---------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets (16,514,695) (7,518,960) 59,271,780
Net assets at the beginning of period 806,531,027 814,049,987 754,778,207
- ---------------------------------------------------------------------------------------------------------------------
Net assets at the end of period $790,016,332 $ 806,531,027 $ 814,049,987
=====================================================================================================================
Balance of undistributed net investment income at end of period $ 526,230 $ 585,565 $ 225,040
=====================================================================================================================
N/A - The Funds were not authorized to issue Class B Shares prior to February 1, 1997.
49 See accompanying notes to financial statements.
</TABLE>
<PAGE>
Notes to Financial Statements
1. General Information and Significant Accounting Policies
The Nuveen Flagship Municipal Trust (the "Trust") is an open-end diversified
management investment company registered under the Investment Company Act of
1940, as amended. The Trust comprises the Nuveen Municipal Bond Fund ("Municipal
Bond") and the Nuveen Insured Municipal Bond Fund ("Insured Municipal Bond")
(collectively, the "Funds"), among others. The Trust was organized as a
Massachusetts business trust on July 1, 1996.
The John Nuveen Company, parent of John Nuveen & Co. Incorporated and Nuveen
Advisory Corp., respectively, the distributor ("Distributor") and investment
advisor ("Adviser") of the Funds, entered into an agreement under which Nuveen
acquired Flagship Resources Inc. and after the close of business on January 31,
1997, consolidated their respective mutual fund businesses. This agreement was
approved at a meeting by the shareholders of the Flagship Funds in December
1996.
After the close of business on January 31, 1997, Municipal Bond and Insured
Municipal Bond were reorganized into the Trust. Prior to the reorganization,
Municipal Bond was a Massachusetts Business Trust and Insured Municipal Bond
(formerly Nuveen Insured Municipal Bond Fund) was a series of the Nuveen Insured
Tax-Free Bond Fund, Inc., each an open-end diversified management investment
company. As part of this reorganization, the Funds changed their fiscal year
ends from February 28 to April 30.
Each Fund seeks 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
April 30, 1997, Municipal Bond and Insured Municipal Bond had such outstanding
purchase commitments of $11,310,186 and $19,041,120, respectively.
50
<PAGE>
Nuveen Municipal Bond Funds
April 30, 1997 Annual Report
Interest Income
Interest income is determined on the basis of interest accrued, adjusted for
amortization of premiums and accretion of discounts on long-term debt securities
when required for federal income tax purposes.
Dividends and Distributions to Shareholders
Tax-exempt net investment income is declared as a dividend monthly and payment
is made or reinvestment is credited to shareholder accounts on the first
business day after month-end. Net realized capital gains and/or market discount
from investment transactions are distributed to shareholders not less frequently
than annually. Furthermore, capital gains are distributed only to the extent
they exceed available capital loss carryovers.
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.
Federal 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, each Fund intends to
satisfy conditions which will enable interest from municipal securities, which
is exempt from regular federal income tax, to retain such tax-exempt status when
distributed to the shareholders of the respective Funds. All income dividends
paid during the two months ended April 30, 1997, have been designated Exempt
Interest Dividends. Net realized capital gain and market discount distributions
are subject to federal taxation.
Insurance
Insured Municipal Bond invests in municipal securities which are either covered
by insurance or backed by an escrow or trust account containing sufficient U.S.
Government or U.S. Government agency securities, both of which ensure the timely
payment of principal and interest. Each insured municipal security is covered by
Original Issue Insurance, Secondary Market Insurance or Portfolio Insurance.
Such insurance does not guarantee the market value of the municipal securities
or the value of the Fund's shares. Original Issue Insurance and Secondary Market
Insurance remain in effect as long as the municipal securities covered thereby
remain outstanding and the insurer remains in business, regardless of whether
the Fund ultimately disposes of such municipal securities. Consequently, the
market value of the municipal securities covered by Original Issue Insurance or
Secondary Market Insurance may reflect value attributable to the insurance.
Portfolio Insurance is effective only while the municipal
51
<PAGE>
Notes to Financial Statements -- continued
securities are held by the Fund. Accordingly, neither the price used in
determining the market value of the underlying municipal securities nor the net
asset value of the Fund's shares include value, if any, attributable to the
Portfolio Insurance. Each policy of the Portfolio Insurance does, however, give
the Fund the right to obtain permanent insurance with respect to the municipal
security covered by the Portfolio Insurance policy at the time of its sale.
Flexible Sales Charge Program
Each Fund offers Class A, Class B, Class C and Class R Shares. Class A Shares
incur a sales charge on purchases and an annual 12b-1 service fee. Class B
Shares, which were first offered for sale on February 1, 1997, are sold without
a sales charge on purchases but incur annual 12b-1 distribution and service
fees. An investor purchasing Class B Shares agrees to pay a contingent deferred
sales charge ("CDSC") of up to 5% depending upon the length of time the shares
are held (CDSC is reduced to 0% at the end of six years). Class C Shares are
sold without a sales charge on purchases, 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 18 months of purchase. Class R Shares
are not subject to any sales charge on purchases or 12b-1 distribution or
service fees. Class R Shares are available for purchases of over $1 million and
in other limited circumstances.
Derivative Financial Instruments
The Funds may invest in certain derivative financial instruments including
futures, forward, swap, and option contracts, and other financial instruments
with similar characteristics. Although the Funds are authorized to invest in
such financial instruments, and may do so in the future, they did not make any
such investments during the two months ended April 30, 1997.
Expense Allocation
Expenses of each Fund that are not directly attributable to a specific class of
shares are prorated among the classes based on the relative net assets of each
class. Expenses directly attributable to a class of shares, which presently only
includes 12b-1 distribution and service fees, are recorded to the specific
class.
Use of Estimates
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities at the date of the
financial statements and the reported amounts of increases and decreases in net
assets from operations during the reporting period.
52
<PAGE>
<TABLE>
<CAPTION>
Nuveen Municipal Bond Funds
April 30, 1997 Annual Report
2. Fund Shares
Transactions in Fund shares were as follows:
Municipal Bond
-----------------------------------------------------------------------------------------------
Two months ended Year ended Year ended
4/30/97 2/28/97 2/29/96
-------------------------------------------------------------------------------------
Shares Amount Shares Amount Shares Amount
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Shares sold:
Class A 1,026,576 $ 9,412,803 7,913,532 $ 72,392,333 10,085,967 $ 93,033,904
Class B 46,550 424,404 4,630 43,000 N/A N/A
Class C 52,166 473,637 379,075 3,482,943 208,938 1,925,249
Class R 2,404,891 21,854,117 23,272,855 212,927,365 43,438,989 397,491,029
Shares issued to shareholders due to
reinvestment of distributions:
Class A 43,927 402,112 222,308 2,045,959 48,593 453,018
Class B 32 293 - - N/A N/A
Class C 3,585 32,777 13,729 126,401 2,138 19,887
Class R 2,112,348 19,337,779 14,285,524 131,333,362 13,470,516 123,742,206
- ------------------------------------------------------------------------------------------------------------------------------------
5,690,075 51,937,922 46,091,653 422,351,363 67,255,141 616,665,293
- ------------------------------------------------------------------------------------------------------------------------------------
Shares redeemed:
Class A (762,269) (6,963,040) (4,751,496) (43,639,384) (6,135,763) (56,994,434)
Class B - - - - N/A N/A
Class C (14,973) (135,974) (53,764) (496,539) (4,332) (40,390)
Class R (6,174,392) (56,302,046) (42,855,041) (391,929,442) (51,218,535) (469,258,117)
- ------------------------------------------------------------------------------------------------------------------------------------
(6,951,634) (63,401,060) (47,660,301) (436,065,365) (57,358,630) (526,292,941)
- ------------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) (1,261,559) $(11,463,138) (1,568,648) $ (13,714,002) 9,896,511 $ 90,372,352
- ------------------------------------------------------------------------------------------------------------------------------------
N/A - The Funds were not authorized to issue Class B Shares prior to February 1, 1997.
53
</TABLE>
<PAGE>
NOTES to Financial Statements--continued
<TABLE>
<CAPTION>
Insured Municipal Bond
-----------------------------------------------------------------------------------------------------------
Two months ended Year ended Year ended
4/30/97 2/28/97 2/29/96
---------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Shares Amount Shares Amount Shares Amount
- -----------------------------------------------------------------------------------------------------------------------------------
Shares sold:
Class A 290,416 $ 3,095,852 2,993,504 $ 32,144,825 10,080,588 $ 108,423,277
Class B 24,672 264,169 21,053 227,426 N/A N/A
Class C 58,684 618,793 169,708 1,808,841 661,711 7,075,313
Class R 348,752 3,695,159 4,720,426 50,443,494 13,451,112 143,237,499
Shares issued to shareholders due to
reinvestment of distributions:
Class A 34,181 365,671 182,510 1,968,382 88,109 951,544
Class B 41 439 - - N/A N/A
Class C 3,214 34,077 19,086 203,691 15,241 161,275
Class R 400,458 4,268,598 2,579,133 27,693,551 2,491,979 26,577,682
- -----------------------------------------------------------------------------------------------------------------------------------
1,160,418 12,342,758 10,685,420 114,490,210 26,788,740 286,426,590
- -----------------------------------------------------------------------------------------------------------------------------------
Shares redeemed:
Class A (135,522) (1,441,615) (1,146,982) (12,317,662) (7,244,524) (78,678,465)
Class B - - - - N/A N/A
Class C (38,598) (406,595) (155,088) (1,641,544) (588,441) (6,281,962)
Class R (1,438,979) (15,259,884) (9,079,255) (96,935,508) (17,181,722) (183,518,067)
- -----------------------------------------------------------------------------------------------------------------------------------
(1,613,099) (17,108,094) (10,381,325) (110,894,714) (25,014,687) (268,478,494)
- -----------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) (452,681) $ (4,765,336) 304,095 $ 3,595,496 1,774,053 $ 17,948,096
===================================================================================================================================
N/A - The Funds were not authorized to issue Class B Shares prior to February 1, 1997.
</TABLE>
54
<PAGE>
Nuveen Municipal Bond Funds
April 30, 1997 Annual Report
3. Distributions to Shareholders
On May 9, 1997, the Funds declared dividend distributions from
their tax-exempt net investment income which were paid on June 2,
1997, to shareholders of record on May 9, 1997, as follows:
<TABLE>
<CAPTION>
Insured
Municipal Bond Municipal Bond
- --------------------------------------------------------------------------------
<S> <C> <C>
Dividend per share:
Class A $.0390 $.0460
Class B .0335 .0395
Class C .0350 .0405
Class R .0405 .0475
- --------------------------------------------------------------------------------
</TABLE>
4. Securities Transactions
Purchases and sales (including maturities) of investments in municipal
securities and temporary municipal investments for the two months ended April
30, 1997, were as follows:
<TABLE>
<CAPTION>
Insured
Municipal Bond Municipal Bond
- --------------------------------------------------------------------------------
<S> <C> <C>
Purchases
Investments in municipal securities $50,459,978 $ 95,945,129
Temporary municipal investments 29,500,000 75,100,000
Sales
Investments in municipal securities 87,114,019 116,296,850
Temporary municipal investments 35,300,000 62,050,000
- --------------------------------------------------------------------------------
</TABLE>
At April 30, 1997, the identified cost of investments owned for federal income
tax purposes was the same as the cost for financial reporting purposes for each
Fund.
At April 30, 1997, Insured Municipal Bond had an unused capital loss carryover
of $2,094,993 available for federal income tax purposes to be applied against
future capital gains, if any. If not applied, $1,108,404 of the carryover will
expire in the year 2004 and $986,589 of the carryover will expire in the year
2005.
5. Unrealized Appreciation (Depreciation)
Gross unrealized appreciation and gross unrealized depreciation of investments
at April 30, 1997, were as follows:
<TABLE>
<CAPTION>
Insured
Municipal Bond Municipal Bond
- --------------------------------------------------------------------------------
<S> <C> <C>
Gross unrealized:
appreciation $134,266,556 $38,753,445
depreciation (7,833,741) (825,497)
- --------------------------------------------------------------------------------
Net unrealized appreciation $126,432,815 $37,927,948
================================================================================
</TABLE>
55
<PAGE>
Notes to Financial Statements--continued
6. Management Fee and Other Transactions with Affiliates
Under the Trust's investment management agreement with the Adviser, each Fund
pays an annual management fee, payable monthly, at the rates set forth below
which are based upon the average daily net asset value of each Fund:
<TABLE>
<CAPTION>
Average daily net asset value Management fee
- --------------------------------------------------------------------------------
<S> <C>
For the first $125 million .5000 of 1%
For the next $125 million .4875 of 1
For the next $250 million .4750 of 1
For the next $500 million .4625 of 1
For the next $1 billion .4500 of 1
For net assets over $2 billion .4250 of 1
- --------------------------------------------------------------------------------
</TABLE>
The Adviser has agreed to waive part of its management fees or reimburse certain
expenses of each Fund in order to limit total expenses to .75 of 1% of the
average daily net assets of Municipal Bond and .975 of 1% of the average daily
net assets of Insured Municipal Bond, excluding any 12b-1 fees applicable to
Class A, Class B and Class C Shares. The adviser may also voluntarily agree to
reimburse additional expenses from time to time, which may be terminated at any
time at its discretion.
The management fee compensates the Adviser for overall investment advisory and
administrative services, and general office facilities. The Trust pays no
compensation directly to 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.
The Distributor collected sales charges of approximately $83,300 and $78,000 for
Municipal Bond and Insured Municipal Bond, respectively, on Class A share
purchases, of which approximately $74,100 and $71,900, respectively, were paid
out as concessions to authorized dealers. The Distributor also received 12b-1
service fees on Class A shares, substantially all of which were paid to
compensate authorized dealers for providing services to shareholders relating to
their investments.
During the two months ended April 30, 1997, the Distributor compensated
authorized dealers directly with approximately $19,400 for Municipal Bond and
$13,100 for Insured Municipal Bond in commission advances on Class B and Class C
share sales. Class B and Class C shares purchased are subject to a CDSC if the
shares are redeemed within a specified period of purchase. Any such CDSC is to
be retained by the Distributor to compensate for commissions advanced to
authorized dealers. During the two months ended April 30, 1997, CDSC of
approximately $600 for Municipal Bond and $1,300 for Insured Municipal Bond was
collected and retained by the Distributor. Also, 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 to compensate for commissions advanced
to authorized dealers.
56
<PAGE>
<TABLE>
<CAPTION>
Nuveen Municipal Bond Funds
April 30, 1997 Annual Report
7. Composition of Net Assets
At April 30, 1997, each Fund had an unlimited number of $.01 par value
shares authorized. Net assets consisted of:
Insured
Municipal Bond Municipal Bond
----------------------------------------------------------------------------------------------------
<S> <C> <C>
Capital paid-in $2,719,799,686 $753,732,568
Balance of undistributed net investment income 1,277,538 526,230
Accumulated net realized gain (loss) from investment transactions 3,296,921 (2,170,414)
Net unrealized appreciation of investments 126,432,815 37,927,948
----------------------------------------------------------------------------------------------------
Net assets $2,850,806,960 $790,016,332
====================================================================================================
</TABLE>
8. Investment Composition
Each Fund invests in municipal securities which include general obligation,
escrowed and revenue bonds. At April 30, 1997, the revenue sources by
municipal purpose for these investments, expressed as a percent of total
investments, were as follows:
<TABLE>
<CAPTION>
Municipal Bond Insured Municipal Bond
---------------------------------------------------------------------
<S> <C> <C>
Revenue Bonds:
Electric Utilities 20% 4%
Health Care Facilities 17 18
Housing Facilities 16 5
Water/Sewer Facilities 9 7
Lease Rental Facilities 2 9
Educational Facilities 1 7
Transportation 6 3
Pollution Control 5 5
Other 4 3
General Obligation Bonds 7 19
Escrowed Bonds 13 20
---------------------------------------------------------------------
100% 100%
=====================================================================
</TABLE>
Certain long-term and intermediate-term investments owned by the Funds are
either covered by insurance issued by several private insurers or are
backed by an escrow or trust containing U.S. Government or U.S. Government
agency securities, either of which ensure the timely payment of principal
and interest in the event of default (34% for Municipal Bond and 100% for
Insured Municipal Bond). Such insurance or escrow, however, does not
guarantee the market value of the municipal securities or the value of the
Funds' shares (see note 1). All of the temporary investments in short-term
municipal securities have credit enhancements (letters of credit,
guarantees or insurance) issued by third party domestic or foreign banks or
other institutions.
For additional information regarding each investment security, refer to the
Portfolio of Investments of each Fund.
57
<PAGE>
Financial Highlights
Selected data for a share outstanding throughout each period is as
follows:
<TABLE>
<CAPTION>
Operating Performance Less Distributions
----------------------- ----------------------------
Net
Net realized and Dividends Net Total
MUNICIPAL asset unrealized from tax- asset return
value Net gain (loss) exempt net Distributions value on net
Year ending beginning investment from investment from capital end of asset
April 30, of period income(b) investments income gains period value(a)
- --------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Class A (6/95)
1997(g) $9.24 $.08 $(.10) $(.08) $ - $9.14 (.23)%
1997(f) 9.28 .48 - (.47) (.05) 9.24 5.26
1996(c) 9.15 .34 .14 (.32) (.03) 9.28 5.33
Class B (2/97)
1997(g) 9.24 .09 (.11) (.07) - 9.15 (.25)
1997(c) 9.23 .03 .01 (.03) - 9.24 .47
Class C (6/95)
1997(g) 9.23 .07 (.09) (.07) - 9.14 (.21)
1997(f) 9.26 .42 - (.40) (.05) 9.23 4.64
1996(c) 9.15 .29 .13 (.28) (.03) 9.26 4.59
Class R (11/76)
1997(g) 9.24 .08 (.09) (.08) - 9.15 (.09)
1997(f) 9.28 .49 .01 (.49) (.05) 9.24 5.53
1996(f) 9.00 .51 .31 (.51) (.03) 9.28 9.31
1995(f) 9.28 .52 (.21) (.51) (.08) 9.00 3.60
1994(f) 9.45 .52 (.07) (.52) (.10) 9.28 4.79
1993(f) 9.08 .56 .41 (.54) (.06) 9.45 11.04
1992(d) 9.04 .24 .08 (.24) (.04) 9.08 3.56
1991(e) 8.65 .58 .44 (.59) (.04) 9.04 12.15
1990(e) 8.73 .60 (.08) (.60) - 8.65 6.04
1989(e) 8.52 .60 .24 (.60) (.03) 8.73 10.07
1988(e) 8.02 .60 .54 (.60) (.04) 8.52 14.50
- --------------------------------------------------------------------------------------------------------------------------
</TABLE>
+ Annualized.
(a) Total returns are calculated on net asset value without any sales
charge.
(b) After waiver of certain management fees or reimbursement of
expenses, if applicable, by Nuveen Advisory.
(c) From commencement of class operations as noted through
February 28/29.
(d) For the five months ending February 29.
(e) For the year ending September 30.
(f) For the year ending February 28/29.
(g) For the two months ending April 30.
====
58
<PAGE>
<TABLE>
<CAPTION>
Nuveen Municipal Bond Funds
April 30, 1997 Annual Report
Ratios/Supplemental Data
- ----------------------------------------------------------------------------------------------------
Ratio Ratio
of net of net
Ratio of investment Ratio of investment
expense income to expenses income to
to average average to average average
net assets net assets net assets net assets
Net assets before before after after Portfolio
end of period reimburse- reimburse- reimburse- reimburse- turnover
(in thousands) ment ment ment(b) ment(b) rate
- ----------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
$ 70,331 .77%+ 5.13%+ .77%+ 5.13%+ 2%
68,204 .81 5.11 .81 5.11 12
37,089 .86+ 5.11+ .83+ 5.14+ 17
468 1.53+ 4.39+ 1.53+ 4.39+ 2
43 1.51+ 5.23+ 1.51+ 5.23+ 12
5,360 1.32+ 4.58+ 1.32+ 4.58+ 2
5,039 1.54 4.37 1.54 4.37 12
1,915 1.64+ 4.33+ 1.58+ 4.39+ 17
2,774,648 .57+ 5.33+ .57+ 5.33+ 2
2,818,214 .57 5.35 .57 5.35 12
2,878,641 .59 5.53 .59 5.53 17
2,741,178 .59 5.79 .59 5.79 17
2,700,007 .62 5.49 .62 5.49 15
2,371,669 .61 5.95 .61 5.95 14
1,835,708 .62+ 6.24+ .62+ 6.24+ 6
1,661,420 .60 6.48 .60 6.48 10
1,323,623 .62 6.78 .62 6.78 8
1,119,833 .64 6.85 .64 6.85 12
945,361 .65 7.11 .65 7.11 8
- ----------------------------------------------------------------------------------------------------
</TABLE>
59
<PAGE>
Financial Highlights -- continued
<TABLE>
<CAPTION>
Operating Performance Less Distributions
--------------------- ------------------
Net
Net realized and Dividends Net Total
INSURED MUNICIPAL BOND asset unrealized from tax- asset return
value Net gain (loss) exempt net Distributions value on net
Year ending beginning investment from investment from capital end of asset
April 30, of period income(b) investments income gains period value(a)
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Class A (9/94)
1997(e) $10.82 $.09 $(.16) $(.09) $ - $10.66 (.63)
1997(d) 10.97 .56 (.13) (.54) (.04) 10.82 4.04
1996(d) 10.40 .54 .57 (.54) - 10.97 10.90
1995(c) 10.31 .26 .12 (.27) (.02) 10.40 3.84
Class B (2/97)
1997(e) 10.82 .09 (.16) (.08) - 10.67 (.65)
1997(c) 10.80 .04 .02 (.04) - 10.82 .55
Class C (9/94)
1997(e) 10.72 .08 (.16) (.08) - 10.56 (.73)
1997(d) 10.85 .46 (.09) (.46) (.04) 10.72 3.48
1996(d) 10.31 .46 .54 (.46) - 10.85 9.88
1995(c) 10.29 .23 .08 (.27) (.02) 10.31 3.09
Class R (12/86)
1997(e) 10.78 .09 (.15) (.10) - 10.62 (.60)
1997(d) 10.92 .57 (.11) (.56) (.04) 10.78 4.38
1996(d) 10.38 .57 .54 (.57) - 10.92 10.94
1995(d) 10.81 .57 (.40) (.58) (.02) 10.38 1.85
1994(d) 10.85 .57 .02 (.57) (.06) 10.81 5.47
1993(d) 10.03 .59 .88 (.59) (.06) 10.85 15.24
1992(d) 9.69 .61 .43 (.62) (.08) 10.03 11.03
1991(d) 9.52 .62 .19 (.61) (.03) 9.69 8.94
1990(d) 9.35 .63 .26 (.63) (.09) 9.52 9.73
1989(d) 9.30 .63 .05 (.63) - 9.35 7.63
1988(d) 9.79 .64 (.49) (.64) - 9.30 2.00
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
+ Annualized.
(a) Total returns are calculated on net asset value without any sales
charge.
(b) After waiver of certain management fees or reimbursement of
expenses, if applicable, by Nuveen Advisory.
(c) From commencement of class operations as noted through February
28.
(d) For the year ending February 28/29.
(e) For the two months ending April 30.
60
<PAGE>
Nuveen Municipal Bond Funds
April 30, 1997 Annual Report
<TABLE>
Ratios/Supplemental Data
- -------------------------------------------------------------------------------------
Ratio Ratio
of net of net
Ratio of investment Ratio of investment
expenses income to expenses income to
to average average to average average
net assets net assets net assets net assets
Net assets before before after after Portfolio
end of period reimburse- reimburse- reimburse- reimburse- turnover
(in thousands) ment ment ment ment rate
- -------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
$ 69,291 .84%+ 5.12%+ .84%+ 5.12%+ 12%
68,268 .87 5.07 .87 5.07 35
46,943 .92 5.00 .91 5.01 27
14,097 1.27+ 5.28+ 1.00+ 5.55+ 25
488 1.59+ 4.36+ 1.59+ 4.36+ 12
228 1.58+ 4.84+ 1.58+ 4.84+ 35
5,615 1.39+ 4.57+ 1.39+ 4.57+ 12
5,448 1.61 4.33 1.61 4.33 35
5,151 1.63 4.34 1.63 4.34 27
3,979 1.75+ 4.83+ 1.75+ 4.83+ 25
714,622 .64+ 5.31+ .64+ 5.31+ 12
732,587 .63 5.31 .63 5.31 35
761,936 .63 5.33 .63 5.33 27
736,702 .64 5.67 .64 5.67 25
745,914 .65 5.21 .65 5.21 11
567,232 .72 5.68 .72 5.68 20
306,853 .73 6.12 .73 6.12 45
178,931 .80 6.45 .80 6.45 53
111,806 .83 6.49 .83 6.49 78
66,049 .87 6.83 .87 6.83 106
41,330 .88 6.65 .60 6.93 88
- -------------------------------------------------------------------------------------
</TABLE>
61
<PAGE>
Report of Independent Public Accountants
To the Board of Trustees and Shareholders of
Nuveen Flagship Municipal Trust:
We have audited the accompanying statements of net assets of Nuveen Flagship
Municipal Trust (comprising the Nuveen Municipal Bond Fund and Nuveen Insured
Municipal Bond Fund) (a Massachusetts business trust), including the portfolios
of investments, as of April 30, 1997, and the related statements of operations,
statements of changes in net assets and the financial highlights for the periods
indicated thereon. These financial statements and financial highlights are the
responsibility of the Fund's management. Our responsibility is to express an
opinion on these financial statements and financial highlights based on our
audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of securities owned as of April
30, 1997, by correspondence with the custodian and brokers. As to securities
purchased but not received, we requested confirmation from brokers and, when
replies were not received, we carried out other alternative auditing procedures.
An audit also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the net assets of each of the
respective funds constituting the Nuveen Flagship Municipal Trust as of April
30, 1997, the results of their operations, the changes in their net assets and
their financial highlights for the periods indicated thereon in conformity with
generally accepted accounting principles.
ARTHUR ANDERSEN LLP
Chicago, Illinois
June 11, 1997
62
<PAGE>
Shareholder Information
Nuveen Family of Mutual Funds
Nuveen offers a variety of funds designed to
help you reach your financial goals.
Growth and Income Funds
Growth and Income Stock Fund
Balanced Stock and Bond Fund
Balanced Municipal and Stock Fund
Municipal Bond Funds
National Funds
Long-Term
Insured
Intermediate-Term
Limited-Term
State Funds
Alabama Michigan
Arizona Missouri
California New Jersey
Colorado New Mexico
Connecticut New York
Florida North Carolina
Georgia Ohio
Kansas Pennsylvania
Kentucky South Carolina
Louisiana Tennessee
Maryland Virginia
Massachusetts Wisconsin
To purchase additional shares of your Nuveen Municipal Bond Fund, contact your
financial adviser. If you would like to add to your current investment on a
monthly or semi-annual basis, you can sign up for Nuveen's systematic investing
program, which allows you to invest a fixed dollar amount every month
automatically.
You can also invest automatically through dividend reinvestment. By reinvesting
your fund's dividends back into the fund, you gain the added growth potential of
long-term compounding.
For more information on any of these service options call your adviser, or
Nuveen at (800) 621-7227.
63
<PAGE>
Fund Information
Board of Trustees
Robert P. Bremner
Lawrence H. Brown
Anthony T. Dean
Anne E. Impellizzeri
Margaret K. Rosenheim
Peter R. Sawers
William J. Schneider
Timothy R. Schwertfeger
Fund Manager
Nuveen Advisory Corp.
333 West Wacker Drive
Chicago, IL 60606
Custodian
The Chase Manhattan Bank
4 New York Plaza
New York, NY 10004-2413
Transfer Agent,
Shareholder Services and
Dividend Disbursing Agent
Shareholder Services, Inc.
Nuveen Investor Services
P.O. Box 5330
Denver, CO 80217-5330
(800) 621-7227
Legal Counsel
Fried, Frank, Harris
Shriver & Jacobson
Washington, D.C.
Public Accountants
Arthur Andersen LLP
Chicago, Illinois
64
<PAGE>
Serving Investors
for Generations
[Painting 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
investments designed for mature investors whose portfolios are the principal
source of their ongoing financial security. More than 1.3 million investors have
entrusted Nuveen to help them maintain the lifestyle they currently enjoy.
A value investing approach -- purchasing securities of strong companies and
communities that represent good long-term value -- is the cornerstone of
Nuveen's investment philosophy. It is a careful, long-term strategy that offers
the potential for attractive returns with moderated risk. Successful value
investing begins with in-depth research and a discerning eye for marketplace
opportunity. Nuveen's team of investment professionals is backed by the
discipline, resources and expertise of almost a century of investment
experience, including one of the most recognized research departments in the
industry.
To meet the unique circumstances and financial planning needs of mature
investors, Nuveen offers a wide array of taxable and tax-free investment
products -- including equity and fixed-income mutual funds, unit trusts,
exchange-traded funds, individual managed account services, and cash management
products.
To find out more about how Nuveen investment products and services can help you
preserve your financial security, talk with your financial adviser, or call us
at (800) 621-7227 for more information, including a prospectus where applicable.
Please read that information carefully before you invest.
[Nuveen Logo Appears Here]
John Nuveen & Co. Incorporated
333 West Wacker Drive
Chicago, IL 60606-1286
(800) 621-7227
www.nuveen.com
<PAGE>
NUVEEN
Municipal
Bond Funds
April 30, 1997
Annual Report
Dependable, tax-free income
to help you keep more of
what you earn.
[PHOTO OF COUPLE APPEARS HERE]
All-American
Intermediate
Limited Term
<PAGE>
Contents
<TABLE>
<CAPTION>
<S> <C>
1 Dear Shareholder
3 Answering Your Questions
6 All-American Municipal
Bond Fund Overview
8 Intermediate Municipal
Bond Fund Overview
10 Limited Term Municipal
Bond Fund Overview
13 Financial Section
71 Shareholder Meeting Results
83 Shareholder Information
84 Fund Information
</TABLE>
<PAGE>
Dear Shareholder
[PHOTO OF TIMOTHY R. SCHWERTFEGER APPEARS HERE]
It is my pleasure to report to you on the performance of the Nuveen Flagship
All-American, Intermediate, and Limited Term Municipal Bond Funds, and to
welcome new investors to our family of investments. Shareholders were rewarded
during the fiscal year with the attractive tax-free income and consistent
performance that are hallmarks of Nuveen's disciplined investment approach -
qualities that make these funds a good choice for those seeking a stable
addition to their core investment portfolio.
The funds' outstanding performance came during a volatile year in the municipal
bond market, including a mid-1996 decline and a post-election rally. Our focus
on high-quality bonds helped to control price swings, while the market's
volatility created opportunities for portfolio managers to add value and enhance
fund yields. By continuing to seek out undervalued bonds in sectors and regions
we believe are fundamentally strong, Nuveen was able to generate very attractive
current yields for shareholders while also preserving capital.
As of April 30, 1997, Class A shareholders in the All-American Municipal Bond
Fund were receiving tax-free yields on net asset value of 5.38%, while Class A
shareholders in the Intermediate and Limited Term Municipal Bond Funds were
receiving 5.03% and 4.43%, respectively. To match these yields, All-American
investors in the 31% federal income tax bracket would have had to earn 7.80%
from taxable, long-term alternatives, while investors in the Intermediate and
Limited Term funds would have had to earn 7.29% and 6.42%, respectively, from
taxable counterparts.
1
<PAGE>
"Shareholders were rewarded during the fiscal year with attractive tax-free
income and consistent performance that are hallmarks of Nuveen's disciplined
investment approach."
During the same period, these funds turned in impressive total return
performance when compared with their peers. The All-American fund's Class A
Shares outperformed the benchmark Lehman Municipal Bond Index, generating a
total return of 8.23% compared with a total return of 6.63% for the Lehman
Index. The Intermediate fund had a 6.68% total return, outperforming the 10-year
Lehman Municipal Bond Index. The Limited Term fund, which invests in short-term
municipal bonds and is less volatile than longer-term bond funds, posted a 4.80%
total return.
Nuveen has recently made significant and exciting additions to the investment
options available to our shareholders - additions that make it easier to keep
more of what you earn. We introduced three new equity and balanced funds for
investors seeking both long-term growth and current income. We also introduced
new fund pricing options to make purchasing our mutual funds even more
convenient, and we revamped our prospectuses and annual shareholder reports to
make them easier to read and provide expanded information about the funds.
Further, Nuveen's array of municipal bond funds is now one of the largest in the
industry since our merger with Flagship Resources Inc. This merger offers you
even greater access to the municipal market plus additional expertise, resources
and increased efficiencies for our shareholders.
On behalf of everyone at Nuveen, I thank you for your confidence in us and our
family of investments. You can continue to depend on us for high-quality
investment products that withstand the test of time. We look forward to serving
you in the future.
Sincerely,
/s/ Timothy R. Schwertfeger
Timothy R. Schwertfeger
Chairman of the Board
June 12, 1997
2
<PAGE>
[PHOTO OF TED NEILD APPEARS HERE]
Ted Neild, head of Nuveen's Dayton-based portfolio management team, talks about
the municipal bond market and offers insights into factors that affected fund
performance over the past year.
Answering Your Questions
What are the investment objectives of the funds?
The funds aim to provide investors with a high level of tax-free income while
preserving the capital that investors have entrusted to us. Many investors rely
on their portfolio as a principal source of their ongoing financial security. To
that end, we focus our portfolio strategy on preserving what Nuveen investors
have accumulated while generating income to support a comfortable lifestyle.
What is your strategy for meeting those objectives?
Rigorous research analysis and a value investing approach are at the foundation
of these funds' strategies. Each is a Nuveen hallmark, and they go hand in hand.
A value strategy means that we look for high-quality securities that are
undervalued and attractively priced relative to the rest of the market. Nuveen
Research helps identify those market sectors, geographic regions and bond
structures likely to produce bonds whose long-term value is higher than their
current prices would indicate.
One current example of a region we've identified as undervalued is the Sun Belt.
The growth of the Southeast and Southwest has resulted in a huge volume of
municipal bond issuance, most of which is to provide essential services:
schools, correctional facilities, and water and sewer systems. The combination
of volume and quality has created tremendous opportunities to find value.
That's not to say it's easy. There is more municipal market information out
there than ever before, and the markets are more efficient. As a result, there
are fewer opportunities to find value. But by focusing on quality
3
<PAGE>
"Nuveen Research helps identify those market sectors, geographic regions and
bond structures likely to produce bonds whose long-term value is higher than
their current prices would indicate."
issues with fundamental value, as opposed to trying to call the direction of
interest rates, we're able to produce the high level of income consistent share
price performance investors expect.
How did the funds perform during the year and what key economic and market
factors affected the funds' performance?
The All-American fund was one of the top performing funds in its Lipper category
(4th of 231 national municipal bond funds), providing Class A shareholders with
a total return of 8.23%. During this period, the Lehman Brothers Municipal Bond
Index, which does not incur operating expenses or transaction costs, reported a
6.63% total return. Additionally, in keeping with Nuveen's policy of providing
stable monthly dividends, the All-American fund began paying a stabilized
dividend, ensuring consistent and regular cash flows to shareholders.
With over 70% of the fund invested in investment-grade quality bonds rated "A",
"Baa" or non-rated, the All-American fund's performance was greatly enhanced
by the continuing compression of yield spreads and improving underlying credit
fundamentals. To ensure ongoing total return performance, portfolio structure
was improved by maintaining and improving call protection when appropriate.
This, combined with selected opportunities to enhance the fund's income returns,
contributed to an impressive total return performance.
The Intermediate fund was one of the top performing funds in its Lipper category
also (6th of 136 national intermediate municipal bond funds), providing
shareholders with a total return of 6.68%, compared with the 10-year Lehman
Index of 6.36%.
The fund continued to focus on improving call protection and found opportunities
to buy higher yielding securities, which enhanced the fund's income level.
Attractive bonds were found in selective healthcare, transportation and tax-
4
<PAGE>
backed bonds. The fund also began paying a stabilized dividend, ensuring
consistent and regular cash flows to shareholders.
The Limited Term fund was the top performing fund in its Lipper category for the
period ended April 30, finishing 1st out of 28 funds, posting a total return of
4.80%. During this period, the Lehman Brothers 5-Year Municipal Bond Index,
which does not incur operating expenses or transaction costs, reported a total
return of 4.65%. By focusing on maximizing the yield paid to investors, we were
able to generate impressive dividend yields and total returns. With over half of
the fund invested in investment-grade quality securities rated "A", "Baa" or
non-rated, the fund's performance was greatly enhanced by the continuing
compression of yield spreads and improving underlying credit fundamentals. The
fund also began paying a stabilized dividend, ensuring consistent and regular
cash flows to shareholders.
What is your market outlook for the coming year?
We continue to see an economic expansion characterized by low unemployment and
little wage and price inflation pressures. The Federal Reserve has demonstrated
its continued vigilance against inflation by making a pre-emptive rate hike at
the end of March. We anticipate continued municipal market demand as individual
investors focus on strategically rebalancing their portfolios and reducing their
exposure to the volatility recently demonstrated by the equity market.
By following a disciplined value strategy, and depending on sound research, the
long-term outlook for our municipal bond funds - and for Nuveen shareholders -
is very good. We will continue to look for opportunities in sectors like
healthcare and public power and in regions like the Midwest and the Sun Belt,
and to identify bonds that are structured in ways that make them attractive
through a complete interest rate cycle.
5
<PAGE>
All-American
Municipal Bond Fund
Overview
Credit Quality
[Pie Chart Appears Here]
AAA 15.3%
AA 4.7%
A 23.1%
BBB/NR 56.9%
- ------------------------
Diversification
[Pie Chart Appears Here]
Housing Facilities 7%
Electric Utilities 5%
Lease Rental 11%
Pollution Control 23%
Water and Sewer 5%
Escrowed Bonds 4%
Health Care Facilities 23%
Other 6%
Transportation 4%
General Obligations 4%
- ------------------------
Morningstar Rating/3/
* * * *
<TABLE>
<CAPTION>
Fund Highlights
- --------------------------------------------------------------------------------
Share Class A B C R
<S> <C> <C> <C> <C>
Inception Date 10/88 2/97 6/93 2/97
................................................................................
Net Asset Value (NAV) $10.90 $10.91 $10.89 $10.91
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Total Net Assets ($000) $272,319
................................................................................
Average Weighted Maturity (years) 22.64
................................................................................
Duration (years) 8.18
- --------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
Annualized Total Return/1/
- --------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Share Class A(NAV) A(Offer) B C R
1-Year 8.23% 3.68% 7.68% 7.64% 8.38%
................................................................................
5-Year 7.88% 6.96% 7.30% 7.28% 7.91%
................................................................................
Life of Fund 8.59% 8.05% 8.01% 7.99% 8.61%
- --------------------------------------------------------------------------------
Tax-Free Yields
- --------------------------------------------------------------------------------
Share Class A(NAV) A(Offer) B C R
Dist Rate 5.49% 5.26% 4.73% 4.95% 5.69%
................................................................................
SEC 30-Day Yld 5.38% 5.15% 4.63% 4.83% 5.58%
................................................................................
Taxable Equiv Yld/2/ 7.80% 7.46% 6.71% 7.00% 8.09%
- --------------------------------------------------------------------------------
</TABLE>
1 Returns of the oldest share class of a fund are actual. Returns for other
classes are actual for the period since inception and prior to class
inception are the returns for the fund's oldest class, adjusted for
differences in sales charges and expenses. Class A shares have an initial
sales charge, while Class B, C and R shares have no initial sales charge.
Class B shares have a CDSC that declines from 5% to 0% after 6 years. Class C
shares have a 1% CDSC for redemptions within one year. Returns do not reflect
imposition of the CDSC.
2 Based on SEC yield and a federal income tax rate of 31%. Represents the yield
on a taxable investment necessary to equal the yield of the Nuveen fund on an
after-tax basis.
3 Overall rating of Class A Shares among 1,257,608 and 274 municipal bond funds
for the 3-, 5- and 10-year periods ended 4/30/97, respectively.
6
<PAGE>
Nuveen Flagship All-American Municipal Bond Fund
April 30, 1997 Annual Report
* The Index Comparison shows change in value of a $10,000 investment in the A
shares of the Nuveen fund compared with the Lehman Brothers Municipal Bond
Index. The Lehman Municipal Bond Index is comprised of a broad range of
investment-grade municipal bonds, and does not reflect any initial or ongoing
expenses. The Nuveen fund return depicted in the chart reflects the initial
maximum sales charge applicable to A shares (4.20%) and all ongoing fund
expenses.
[LINE CHART APPEARS HERE]
<TABLE>
<CAPTION>
Lehman Nuveen Flagship Nuveen Flagship
Brothers All American Tax- All American Tax-
Municipal Free Value Fund Free Value Fund
Date Bond Index (NAV) (Offer)
- ------ ---------- ----------------- -----------------
<S> <C> <C> <C>
$10,000.00 $10,000.00 $ 9,580.00
Oct-89 $10,999.81 $11,001.55 $10,539.48
Oct-90 $11,816.17 $11,680.42 $11,189.85
Oct-91 $13,254.29 $13,325.67 $12,765.99
Oct-92 $14,367.10 $14,551.35 $13,940.20
Oct-93 $16,388.89 $17,160.54 $16,439.79
Oct-94 $15,674.81 $16,212.86 $15,531.92
Oct-95 $18,001.99 $18,494.80 $17,718.02
Oct-96 $19,029.70 $19,729.20 $18,900.58
Apr-97 $19.577.07 $20,274.00 $19,422.00
</TABLE>
- --- Nuveen Flagship All-American Municipal Bond Fund (NAV) -$20,274
- --- Nuveen Flagship All-American Municipal Bond Fund (Offer) -$19,422
- --- Lehman Brothers Municipal Bond Index -$19,577
Past performance is not predictive of future performance.
[BAR CHART APPEARS HERE]
<TABLE>
<CAPTION>
Ex Div Date Share Dividend
<S> <C>
5/30/1996 0.05073
6/29/1996 0.0491
7/30/1996 0.05073
8/30/1996 0.05073
9/29/1996 0.0491
10/30/1996 0.05073
11/29/1996 0.0491
12/30/1996 0.05073
1/30/1997 0.05087
2/27/1997 0.0499
3/30/1997 0.0499
4/29/1997 0.0499
</TABLE>
The fund paid shareholders a capital gains distribution of $0.0591 per share in
December 1996.
7
<PAGE>
Intermediate
Municipal Bond Fund
Overview
Credit Quality
[PIE CHART APPEARS HERE]
AAA 39.5%
AA 9.8%
A 13.5%
BBB/NR 37.2%
- --------------------------
Diversification
[PIE CHART APPEARS HERE]
Lease Rental 11%
Educational Facilities 6%
Transportation 17%
Pollution Control 17%
General Obligations 12%
Housing Facilities 3%
Water and Sewer 9%
Health Care Facilities 23%
Electric Utilities 3%
Other 9%
- --------------------------
Morningstar Rating/3/
* * *
<TABLE>
<CAPTION>
Fund Highlights
=============================================================================
Share Class A B C R
<S> <C> <C> <C> <C>
Inception Date 9/92 N/A 12/95 2/97
Net Asset Value (NAV) $10.47 N/A $10.47 $ 10.45
- ------------------------------------------------------------------------------
- ------------------------------------------------------------------------------
Total Net Assets ($000) $43,915
Average Weighted Maturity (years) 9.09
Duration (years) 7.16
- ------------------------------------------------------------------------------
Annualized Total Return/1/
==============================================================================
Share Class A(NAV) A(Offer) B C R
1-Year 6.68% 3.48% N/A 5.99% 6.53%
Life of Fund 6.88% 6.17% N/A 6.29% 6.85%
- ------------------------------------------------------------------------------
Tax-Free Yields
==============================================================================
Share Class A(NAV) A(Offer) B C R
Dist Rate 4.91% 4.76% N/A 4.36% 5.12%
SEC 30-Day Yld 5.03% 4.88% N/A 4.48% 5.24%
Taxable Equiv Yld/2/ 7.29% 7.07% N/A 6.49% 7.59%
- ------------------------------------------------------------------------------
</TABLE>
1 Returns of the oldest share class of a fund are actual. Returns for other
classes are actual for the period since inception and prior to class
inception are the returns for the fund's oldest class, adjusted for
differences in sales charges and expenses. Class A shares have an initial
sales charge, while Class C and R shares have no initial sales charge. Class
B shares have a CDSC that declines from 5% to 0% after 6 years. Class C
shares have a 1% CDSC for redemptions within one year. Returns do not reflect
imposition of the CDSC.
2 Based on SEC yield and a federal income tax rate of 31%. Represents the yield
on a taxable investment necessary to equal the yield of the Nuveen fund on an
after-tax basis.
3 Overall rating of Class A Shares among 1,257,608 and 274 municipal bond funds
for the 3-, 5- and 10-year periods ended 4/30/97, respectively.
8
<PAGE>
Nuveen Flagship Intermediate Municipal Bond Fund
April 30, 1997 Annual Report
* The Index Comparison shows change in value of a $10,000 investment in the A
shares of the Nuveen fund compared with the Lehman Brothers Intermediate
Municipal Bond Index. The Lehman Intermediate Municipal Bond Index is
comprised of a broad range of investment-grade, intermediate-term municipal
bonds, and does not reflect any initial or ongoing expenses. The Nuveen fund
return depicted in the chart reflects the initial maximum sales charge
applicable to A shares (3.0%) and all ongoing fund expenses.
Index Comparison*
[LINE CHART APPEARS HERE]
<TABLE>
<CAPTION>
Lehman
Brothers Nuveen Flagship Nuveen Flagship
Municipal Int. Municipal Bond Int. Municipal Bond
Date Bond Index Fund (NAV) (Fund Offer)
- ---- ---------- ------------------- -------------------
<S> <C> <C> <C>
Oct-92 $ 10,000.00 $ 10,000.00 $ 9,700.00
Sep-93 $ 11,347.41 $ 11,550.57 $ 11,204.05
Sep-94 $ 11,070.67 $ 11,372.95 $ 11,031.77
Sep-95 $ 12,309.49 $ 12,498.16 $ 12,123.22
Sep-96 $ 13,053.40 $ 13,140.35 $ 12,746.14
Apr-96 $ 13,620.00 $ 13,598.52 $ 13,190.56
</TABLE>
Sep-93
- --- Lehman Brothers Intermediate Municipal Bond Index -$13,620
- --- Nuveen Flagship Intermediate Bond Fund (NAV) -$13,599
- --- Nuveen Flagship Intermediate Municipal Bond Fund (Offer) -$13,191
Past performance is not predictive of future performance.
Dividend History (A Shares)
[BAR CHART APPEARS HERE]
<TABLE>
<CAPTION>
Ex Div Date Share Dividend
----------- --------------
<S> <C>
1/30/1997 N 0.04365
2/27/1997 N 0.0428
3/30/1997 N 0.0428
4/29/1997 N 0.0428
</TABLE>
9
<PAGE>
Limited Term
Municipal Bond Fund
Overview
Credit Quality
[PIE CHART APPEARS HERE]
AAA 38.5%
AA 5.2%
A 17.5%
BBB/NR 38.8%
Diversification
[PIE CHART APPEARS HERE]
Lease Rental 14%
Housing Facilities 7%
Water & Sewer 4%
Escrowed Bonds 5%
Health Care Facilities 19%
Other 6%
General Obligations 13%
Transportation 8%
Educational Facilities 10%
Pollution Control 6%
Electric Utilities 8%
Morningstar Rating/3/
* * * * *
<TABLE>
<CAPTION>
Fund Highlights
==============================================================================
Share Class A B C R
<S> <C> <C> <C> <C>
Inception Date 10/87 N/A 12/95 2/97
- ------------------------------------------------------------------------------
Net Asset Value (NAV) $10.61 N/A $10.60 $10.59
- ------------------------------------------------------------------------------
- ------------------------------------------------------------------------------
Total Net Assets ($000) $448,992
- ------------------------------------------------------------------------------
Average Weighted Maturity (years) 5.46
- ------------------------------------------------------------------------------
Duration (years) 4.68
- ------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
Annualized Total Return/1/
==============================================================================
Share Class A(NAV) A(Offer) B C R
<S> <C> <C> <C> <C> <C>
1-Year 4.80% 2.18% N/A 4.49% 4.66%
- ------------------------------------------------------------------------------
5-Year 5.68% 5.14% N/A 5.34% 5.65%
- ------------------------------------------------------------------------------
Life of Fund 6.61% 6.33% N/A 6.29% 6.60%
- ------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
Tax-Free Yields
==============================================================================
Share Class A(NAV) A(Offer) B C R
<S> <C> <C> <C> <C> <C>
Dist Rate 4.69% 4.58% N/A 4.39% 4.91%
- ------------------------------------------------------------------------------
SEC 30-Day Yld 4.43% 4.31% N/A 4.08% 4.63%
- ------------------------------------------------------------------------------
Taxable Equiv Yld/2/ 6.42% 6.25% N/A 5.91% 6.71%
- ------------------------------------------------------------------------------
</TABLE>
1 Returns of the oldest share class of a fund are actual. Returns for other
classes are actual for the period since inception and prior to class
inception are the returns for the fund's oldest class, adjusted for
differences in sales charges and expenses. Class A shares have an initial
sales charge, while Class B, C and R shares have no initial sales charge.
Class B shares have a CDSC that declines from 5% to 0% after 6 years. Class
C shares have a 1% CDSC for redemptions within one year. Returns do not
reflect imposition of the CDSC.
2 Based on SEC yield and a federal income tax rate of 31%. Represents the
yield on a taxable investment necessary to equal the yield of the Nuveen
fund on an after-tax basis.
3 Overall rating among 1,257,608 and 274 municipal bond funds for the 3-, 5-
and 10-year periods ended 4/30/97, respectively.
10
<PAGE>
Nuveen Flagship Limited Term Municipal Bond Fund
April 30, 1997 Annual Report
* The Index Comparison shows change in value of a $10,000 investment in the A
shares of the Nuveen fund compared with the Lehman Brothers Intermediate
Municipal Bond Index. The Index is comprised of a broad range of intermediate-
term, investment-grade municipal bonds, and does not reflect any initial or
ongoing expenses. The Nuveen fund return depicted in the chart reflects the
initial maximum sales charge applicable to A shares (2.5%) and all ongoing
fund expenses.
Index Comparison*
[LINE CHART APPEARS HERE]
Lehman
Brothers Nuveen Flagship Nuveen Flagship
Municipal LT Municipal Bond LT Municipal Bond
Date Bond Index Fund (NAV) Fund (Offer)
------ ------------ ------------------- -------------------
10/87 $10,000.00 $10,000.00 $ 9,750.00
10/88 $11,456.17 $10,781.00 $10,511.48
10/89 $12,383.62 $11,484.56 $11,197.45
10/90 $13,302.68 $12,218.27 $11,912.82
10/91 $14,921.72 $13,444.20 $13,108.10
10/92 $16,174.53 $14,593.53 $14,228.70
10/93 $18,450.66 $16,094.84 $15,692.47
10/94 $17,646.75 $16,024.24 $15,623.63
10/95 $20,266.70 $17,341.34 $16,907.81
10/96 $21,423.70 $18,122.44 $17,669.38
4/97 $21,340.00 $18,411.32 $17,951.03
- --- Lehman Brothers Intermediate Municipal Bond Index -$21,340
- --- Nuveen Flagship Limited Term Municipal Bond Fund (NAV) -$18,411
- --- Nuveen Flagship Limited Term Municipal Bond Fund (Offer) -$17,951
Past performance is not predictive of future performance
Dividend History (A Shares)
[BAR CHART APPEARS HERE]
Ex Div Date Share Dividend
------------- ----------------
5/30/1996 0.0426
6/29/1996 0.04082
7/30/1996 0.04218
8/30/1996 0.04218
9/29/1996 0.04082
10/30/1996 0.04218
11/29/1996 0.04082
12/30/1996 0.04218
1/30/1997 0.0423
2/27/1997 0.0415
3/30/1997 0.0415
4/29/1997 0.0415
11
<PAGE>
Financial Section
Contents
14 Portfolio of Investments
49 Statement of Net Assets
50 Statement of Operations
51 Statement of Changes in Net Assets
53 Notes to Financial Statements
63 Financial Highlights
70 Report of Independent Auditors
13
<PAGE>
Portfolio of Investments
Nuveen Flagship All-American
<TABLE>
<CAPTION>
Principal Optional Call Market
Amount Description Provisions* Ratings** Value
- --------------------------------------------------------------------------------------------------------------------------
Alaska - 0.1%
<C> <S> <C> <C> <C>
$ 280,000 Alaska State Housing Finance Corporation, Refunding 7/97 at 100 Aa1 $ 281,851
Insured Mortgage Program, 1st Series, 7.800%,
12/01/30 (Pre-refunded to 7/01/97)
- --------------------------------------------------------------------------------------------------------------------------
California - 9.2%
5,000,000 California Health Facilities Financing Authority, Revenue 7/07 at 102 AAA 4,894,200
Refunding Insured Pomona Valley Hospital
Series A, 5.625%, 7/01/19 (WI)
2,000,000 California Pollution Control Financing Authority, Pollution No Opt. Call A 2,038,800
Control Revenue Refunding, San Diego Gas and
Electric, Series A, 5.900%, 6/01/14
8,000,000 Contra Costa, California Home Mortgage Finance Authority, No Opt. Call AAA 2,486,320
Home Mortgage Revenue, 0.000%, 9/01/17
2,000,000 Foothill/Eastern Transportation Corridor Agency, California No Opt. Call Baa 1,305,480
Tollroad Revenue Senior Lien, Series A,
0.000%, 1/01/05
7,000,000 Long Beach, California, Aquarium of the Pacific Project, 7/05 at 102 BBB 6,821,290
Series A, 6.125%, 7/01/23
4,000,000 Los Angeles, California Regional Apartments Improvement 5/06 at 102 Baa3 4,082,520
Corporation, Lease Revenue Refunding Facilities,
Sublease International Airport, 6.350%, 11/01/25
Sacramento, California Cogeneration Authority,
Procter and Gamble Project:
500,000 6.200%, 7/01/06 7/05 at 102 BBB- 518,700
1,000,000 6.500%, 7/01/21 7/05 at 102 BBB- 1,029,490
2,000,000 Taft California Public Financing Authority, Lease Revenue 1/07 at 101 BBB+ 1,985,040
Community Correctional Facility Project, Series A,
6.050%, 1/01/17
- --------------------------------------------------------------------------------------------------------------------------
Colorado - 3.1%
6,000,000 Arapahoe County, Colorado Capital Improvement Tollroad No Opt. Call Baa 3,686,880
Fund, Highway Revenue E - 470, Series C,
0.000%, 8/31/05
2,000,000 Arapahoe County, Colorado Capital Improvement Tollroad 8/05 at 103 Baa 2,136,560
Fund, Highway Revenue Senior E - 470,
Series B, 6.950%, 8/31/20
</TABLE>
14
<PAGE>
Nuveen Flagship Municipal Bond Funds
April 30, 1997 Annual Report
<TABLE>
<CAPTION>
Principal Optional Call Market
Amount Description Provisions* Ratings** Value
- --------------------------------------------------------------------------------------------------------------------------
<C> <S> <C> <C> <C>
Colorado - continued
$ 2,500,000 Hyland Hills Metropolitan Park and Recreation District, 12/06 at 101 N/R $2,602,175
Colorado, Special Revenue Refunding and Improvement,
Series A, 6.750%, 12/15/15
- --------------------------------------------------------------------------------------------------------------------------
Connecticut - 1.8%
1,000,000 Connecticut State Health and Educational Facilities 7/03 at 102 BBB- 949,300
Authority, Sacred Heart University, Series B,
5.500%, 7/01/09
2,000,000 Connecticut State Health and Educational Facilities 11/04 at 102 AAA 2,218,340
Authority, Nursing Home Program,
7.125%, 11/01/14
2,000,000 Eastern Connecticut Resource Recovery Authority, Solid 1/03 at 102 BBB+ 1,823,340
Waste Revenue, Wheelabrator Lisbon Project, Series A,
5.500%, 1/01/20
- --------------------------------------------------------------------------------------------------------------------------
District of Columbia - 0.6%
1,480,000 District of Columbia Revenue, Georgetown University, 4/99 at 102 A+ 1,559,506
Series B, 7.150%, 4/01/21
- --------------------------------------------------------------------------------------------------------------------------
Florida - 2.8%
1,000,000 Lady Lake, Florida Industrial Development, Sunbelt No Opt. Call N/R 1,157,490
Utilities Inc. Project, 9.625%, 7/01/15
1,965,000 Nassau County, Florida, InterCare Facilities, 1/03 at 103 N/R 2,187,693
Gf/Amelia Island Properties Project,
Series A, 9.750%, 1/01/23
1,750,000 Polk County, Florida, Industrial Development Authority, 12/06 at 102 A-1+ 1,708,438
Solid Waste Disposal Facility, Tampa
Electric Company Project, 5.850%, 12/01/30
1,965,000 Sanford Florida Airport Authority, Industrial Development, 5/06 at 102 N/R 1,983,137
Central Florida Terminals Inc. Project,
Series A, 7.500%, 5/01/10
645,000 Sanford Florida Airport Authority, Industrial Development, 5/07 at 102 N/R 625,844
Central Florida Terminals Inc. Project,
Series C, 7.500%, 5/01/21
- --------------------------------------------------------------------------------------------------------------------------
Georgia - 1.1%
2,000,000 Georgia Municipal Electric Authority, Power Revenue No Opt. Call A 1,974,100
Refunding, Series C, 5.700%, 1/01/19
1,000,000 Municipal Electric Authority, Georgia, Special Obligation, No Opt. Call A+ 1,093,160
Fifth Crossover Series, Project One, 6.500%, 1/01/17
</TABLE>
15
<PAGE>
Portfolio of Investments
Nuveen Flagship All-American -- continued
<TABLE>
<CAPTION>
Principal Optional Call Market
Amount Description Provisions* Rating** Value
- --------------------------------------------------------------------------------------------------------------------------
<C> <S> <C> <C> <C>
Illinois - 8.1%
$ 1,750,000 Chicago, Illinois Gas Supply, Peoples Gas Light 5/00 at 102 AA- $1,921,990
and Coke Company, Series A, 8.100%, 5/01/20
1,000,000 Chicago, Illinois Gas Supply, Revenue Refunding (The 6/05 at 102 AA- 1,022,610
Peoples Gas Light), Series A, 6.100%, 6/01/25
2,000,000 Illinois Development Finance Authority, Presbyterian 9/06 at 102 AA- 2,061,080
Home Lake, Series B, 6.300%, 9/01/22
4,000,000 Illinois Educational Facilities Authority, 12/04 at 100 BBB 4,150,120
Columbia College, 6.875%, 12/01/17
3,750,000 Illinois Educational Facilities Authority, Revenues 7/01 at 102 A+ 4,053,413
Refunding, Loyola University Chicago, Series A,
7.125%, 7/01/21
1,000,000 Illinois Health Facilities Authority, Revenue Refunding, 5/02 at 102 AA 1,019,840
Galesburg Cottage Hospital, 6.250%, 5/01/11
2,000,000 Illinois Health Facilities Authority, Revenue Refunding, 8/06 at 102 N/R 1,998,200
Fairview Obligation Group, Series A, 7.125%, 8/15/17
6,000,000 Illinois Health Facilities Authority, Revenue Refunding, 2/07 at 102 A- 5,677,860
Sarah Bush Lincoln Health Center, Series B,
5.750%, 2/15/22
145,000 Illinois Health Facilities Authority, Revenue Refunding, 1/99 at 102 BBB+ 152,047
Westlake Community Hospital, 7.875%, 1/01/13
- -----------------------------------------------------------------------------------------------------------------------------
Indiana - 7.2%
1,000,000 Fishers Indiana Economic Development, First 9/98 at 102 N/R 1,046,640
Mortgage United Student FDS Inc., 8.375%, 9/01/14
1,750,000 Indiana Health Facility Financing Authority, Hancock 8/00 at 102 N/R 1,962,993
Memorial Hospital Project, 8.300%, 8/15/20
(Pre-refunded to 8/15/00)
1,250,000 Indiana Transportation Finance Authority, Airport Facilities 11/02 at 102 Aaa 1,378,563
Lease Revenue, Series A, United Air,
6.750%, 11/01/11 (Pre-refunded to 11/01/02)
4,000,000 Indiana University Student Fee, Series K, No Opt. Call AAA 1,785,520
Refunding, 0.000%, 8/01/11
2,000,000 Indianapolis, Indiana Airport Authority, Special 7/04 at 102 BBB 2,153,220
Facilities, Federal Express Corporation Project,
7.100%, 1/15/17
</TABLE>
16
<PAGE>
Nuveen Flagship Municipal Bond Funds
April 30, 1997 Annual Report
<TABLE>
<CAPTION>
Principal Optional Call Market
Amount Description Provisions* Ratings** Value
- --------------------------------------------------------------------------------------------------------------------------
<C> <S> <C> <C> <C>
Indiana - continued
$ 4,000,000 Indianapolis, Indiana Airport Authority, Special 11/05 at 102 Baa2 $ 4,066,320
Facility, United Airlines Project, Series A,
6.500%, 11/15/31
5,450,000 Indianapolis, Indiana Economic Development, 7/06 at 102 A 5,527,118
Willowbrook Apartments Project, Series A,
6.500%, 7/01/26
500,000 Monroe County, Indiana Hospital Authority, 5/02 at 101 AAA 534,600
Bloomington Hospital Project,
6.700%, 5/01/12
1,000,000 Rockport, Indiana Pollution Control Revenue Refunding, 3/01 at 102 Baa2 1,074,200
Indiana/Michigan Power, Series B, 7.600%, 3/01/16
- --------------------------------------------------------------------------------------------------------------------------
Kentucky - 7.9%
5,000,000 Ashland, Kentucky Sewer and Solid Waste, 2/05 at 102 Baa1 5,352,200
Ashland Inc. Project, 7.125%, 2/01/22
5,000,000 Henderson County, Kentucky, Solid Waste Disposal, 3/05 at 102 Baa2 5,275,650
Macmillan Bloedel Project, 7.000%, 3/01/25
4,500,000 Jefferson County, Kentucky, Capital Projects Corporation, No Opt. Call A+ 1,894,005
Municipal Refunding Lease, Series A,
0.000%, 8/15/12
5,000,000 Louisville andJefferson County, Kentucky, Metropolitan 11/04 at 102 AAA 5,475,500
Sewer District, Sewer and Drain System Revenue
Refunding, Series A, 6.750%, 5/15/25
3,500,000 Pendleton County, Kentucky, Multi-County Lease Revenue, 3/03 at 102 A 3,639,895
Series A, 6.500%, 3/01/19
- --------------------------------------------------------------------------------------------------------------------------
Louisiana - 0.8%
2,000,000 New Orleans, Louisiana, Audubon Park Commission, 4/02 at 102 N/R 2,182,340
Aquarium Revenue, Series A, 8.000%, 4/01/12
- --------------------------------------------------------------------------------------------------------------------------
Maryland - 0.8%
2,000,000 Maryland State Energy Financing Administration, 12/06 at 102 A- 2,079,840
Solid Waste Disposal Limited Obligation,
Wheelabrator Water Projects, 6.450%, 12/01/16
- --------------------------------------------------------------------------------------------------------------------------
Massachusetts - 3.9%
3,000,000 Massachusetts State Housing Finance Agency, Housing 4/03 at 102 A+ 3,074,880
Projects Refunding, Series A, 6.300%, 10/01/13
</TABLE>
17
<PAGE>
Portfolio of Investments
Nuveen Flagship All-American - continued
<TABLE>
<CAPTION>
Principal Optional Call Market
Amount Description Provisions* Ratings** Value
- --------------------------------------------------------------------------------------------------------------------------
<C> <S> <C> <C> <C>
Massachusetts - continued
$ 4,900,000 Massachusetts State Health and Educational Facilities 12/05 at 102 A1 $5,027,449
Authority, Dana Farber Cancer Project,
Series G1, 6.250%, 12/01/22
2,750,000 Massachusetts State Industrial Finance Agency, Revenue 3/06 at 102 AAA 2,651,110
Refunding, College of The Holy Cross, 5.500%, 3/01/20
- --------------------------------------------------------------------------------------------------------------------------
Michigan - 0.9%
2,000,000 Pontiac, Michigan Hospital Finance Authority, Hospital 8/03 at 102 BBB- 1,929,040
Revenue Refunding, Nomc Obligation Group,
6.000%, 8/01/13
420,000 Western Townships Michigan Utilities Authority, Sewer 1/99 at 102 BBB+ 450,295
Disposal System, 8.200%, 1/01/18
- --------------------------------------------------------------------------------------------------------------------------
Missouri - 1.4%
2,000,000 Claiborne County, Mississippi Pollution Control, Revenue 5/00 at 102 BBB- 2,096,160
Refunding, System Energy Resources, Inc.,
7.300%, 5/01/25
1,725,000 Gautier, Mississippi Utility District, Revenue Refunding, 3/02 at 102 AAA 1,779,665
6.375%, 3/01/19
- --------------------------------------------------------------------------------------------------------------------------
New Hampshire - 0.5%
700,000 New Hampshire Higher Educational and Health Facilities 7/99 at 100 BBB+ 680,645
Authority, Revenue Refunding, Catholic Medical Center,
6.000%, 7/01/17
600,000 New Hampshire Higher Educational and Health Facilities 1/01 at 102 BBB+ 634,218
Authority, St. Joseph Hospital, 7.500%, 1/01/16
- --------------------------------------------------------------------------------------------------------------------------
New Jersey - 1.6%
425,000 Essex County, New Jersey, Improvement Authority Lease, 4/04 at 102 BBB+ 438,689
6.600%, 4/01/14
2,400,000 New Jersey Economic Development Authority, Electric 6/02 at 102 N/R 2,578,152
Energy Facility, Vineland Cogeneration,
7.875%, 6/01/19
1,375,000 New Jersey Economic Development Authority, 5/05 at 102 AAA 1,428,226
Educational Testing Service, Series B,
6.125%, 5/15/15
- --------------------------------------------------------------------------------------------------------------------------
</TABLE>
18
<PAGE>
Nuveen Flagship Municipal Bond Funds
April 30, 1997 Annual Report
<TABLE>
<CAPTION>
Principal Optional Call Market
Amount Description Provisions* Ratings** Value
- --------------------------------------------------------------------------------------------------------------------------
<C> <S> <C> <C> <C>
New York - 15.6%
$ 1,900,000 New York City, Series B, Fiscal 1992, 7.500%, 2/01/09 2/02 at 101 1/2 BBB+ $ 2,103,623
3,810,000 New York, New York Series E, 6.000%, 8/01/26 8/06 at 101 1/2 BBB+ 3,709,759
New York, New York Series D:
140,000 7.500%, 2/01/17 (Pre-refunded to 2/01/02) 2/02 at 101 1/2 Aaa 157,587
545,000 7.500%, 2/01/17 2/02 at 101 1/2 BBB+ 600,988
145,000 7.500%, 2/01/18 (Pre-refunded to 2/01/02) 2/02 at 101 1/2 Aaa 163,215
605,000 7.500%, 2/01/18 2/02 at 101 1/2 BBB+ 667,152
1,000,000 New York, New York Refunding, Series H, 8/07 at 101 BBB+ 990,600
6.125%, 8/01/25
3,000,000 New York, New York, Series I, 6.250%, 4/15/27 4/07 at 101 BBB+ 2,997,870
1,750,000 New York City Housing Development Corporation, 6/01 at 102 AAA 1,852,060
Multi-Unit Mortgage Refunding Loan, Series A,
7.350%, 6/01/19
1,720,000 New York State Dormitory Authority, Revenues Department 7/04 at 102 Baa1 1,726,364
of Education, Series A, 6.250%, 7/01/24
1,480,000 New York State Dormitory Authority, City No Opt. Call Baa1 1,452,339
University System, 2nd General, Series A,
5.750%, 7/01/18
2,500,000 New York State Dormitory Authority, Revenues Department 7/05 at 102 Baa1 2,663,450
of Health, Roswell Park Cancer, 6.625%, 7/01/24
2,000,000 New York State Housing Finance Agency, Multifamily 8/07 at 102 AAA 1,971,100
Mortgage Housing, Series A, 6.050%, 8/15/32
3,000,000 New York State Housing Finance Agency, Service Contract 9/05 at 102 Baa1 3,070,560
Obligation, Series A, 6.375%, 9/15/15
1,590,000 New York State Mortgage Agency, Homeowner 4/01 at 102 Aa2 1,675,081
Mortgage, Series Uu, 7.750%, 10/01/23
5,500,000 New York State Urban Development Corporation, Revenue No Opt. Call Baa1 5,352,325
Refunding, State Facilities, 5.700%, 4/01/20
1,500,000 New York State Urban Development Corporation, Revenue No Opt. Call Baa1 1,444,245
Refunding, Center for Industrial Innovation,
5.500%, 1/01/13
2,125,000 New York State Urban Development Corporation, Revenue No Opt. Call Baa1 2,020,365
Refunding, University Facility Grant, 5.500%, 1/01/19
7,500,000 Port Authority of New York and New Jersey, Special 10/06 at 102 N/R 7,757,175
Obligation Revenue, 5th Installment, Special Project,
Kiac-4, 6.750%, 10/01/19
</TABLE>
19
<PAGE>
Portfolio of Investments
Nuveen Flagship All-American - continued
<TABLE>
<CAPTION>
Principal Optional Call Market
Amount Description Provisions* Rating** Value
- --------------------------------------------------------------------------------------------------------------------------
<C> <S> <C> <C> <C>
North Carolina - 0.5%
$ 1,299,276 Woodfin Treatment Facility Inc., North Carolina, 12/03 at 102 N/R $ 1,320,636
Certificates of Participation, 6.750%, 12/01/13
- --------------------------------------------------------------------------------------------------------------------------
North Dakota - 0.2%
555,000 North Dakota State Housing Finance Agency, Single-Family 7/99 at 103 Aa2 577,017
Mortgage, Series B, 8.000%, 7/01/13
- --------------------------------------------------------------------------------------------------------------------------
Ohio - 9.8%
1,400,000 Cleveland, Ohio, Public Power System 11/01 at 102 AAA 1,530,354
Improvement, 1st Mortgage, Series A,
7.000%, 11/15/17
1,350,000 Columbiana County, Ohio County Jail Facility, 12/04 at 102 AA 1,456,259
6.700%, 12/01/24
1,000,000 Cuyahoga County, Ohio Health Care Facilities, 6/00 at 100 N/R 1,085,390
Altenheim Project, 9.280%, 6/01/15
3,000,000 Cuyahoga County, Ohio Hospital, Meridia Health System, 8/05 at 102 A1 3,060,090
6.250%, 8/15/24
1,000,000 Cuyahoga County, Ohio Hospital, Fairview 2/03 at 102 A1 1,036,270
General Hospital and Lutheran Medical Center,
6.300%, 8/15/15
2,350,000 Garfield Heights, Ohio Hospital, Revenue Refunding and 11/02 at 102 A 2,493,092
Improvement, Marymont Hospital Project, Series A,
6.700%, 11/15/15
1,500,000 Lucas County, Ohio Hospital, Flower Memorial 12/01 at 102 BBB+ 1,721,940
Hospital, Series A, 8.125%, 12/01/11
(Pre-refunded to 12/01/01)
Mahoning Valley, Ohio Sanitation District:
500,000 7.900%, 12/15/15 12/01 at 102 N/R 542,790
1,600,000 7.900%, 12/15/16 12/01 at 102 N/R 1,736,928
3,500,000 Miami County, Ohio Hospital Facilities, Revenue 5/06 at 102 BBB 3,528,560
Refunding and Improvement, Upper Valley Medical
Center, Series A, 6.375%, 5/15/26
2,750,000 Ohio State Air Quality Development Authority, Revenue 9/05 at 102 A+ 2,806,788
Refunding, Dayton Power and Light Company Project,
6.100%, 9/01/30
1,750,000 Ohio State Higher Educational Facility Commission, 12/03 at 102 AAA 1,894,200
University of Dayton Project, 6.600%, 12/01/17
</TABLE>
20
<PAGE>
Nuveen Flagship Municipal Bond Funds
April 30, 1997 Annual Report
<TABLE>
Principal Optional Call Market
Amount Description Provisions* Ratings** Value
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Ohio - continued
$ 3,500,000 Shelby County, Ohio Hospital Facilities, Revenue Refunding 9/02 at 102 BBB $ 3,781,890
and Improvement, Memorial Hospital Association,
7.700%, 9/01/18
- ------------------------------------------------------------------------------------------------------------------------------------
Oklahoma - 1.0%
2,750,000 Tulsa, Oklahoma Municipal Airport, Revenue Refunding, 6/05 at 102 Baa2 2,765,730
American Airlines Project, 6.250%, 6/01/20
- ------------------------------------------------------------------------------------------------------------------------------------
Pennsylvania - 4.8%
2,500,000 Allegheny County, Pennsylvania Higher Education Building 2/06 at 102 Baa2 2,430,875
Authority, Robert Morris College, Series A,
6.400%, 2/15/14
1,500,000 Clarion County, Pennsylvania Hospital Authority, 7/99 at 102 BBB- 1,584,105
Revenue Refunding, Clarion Hospital Project,
8.100%, 7/01/12
1,000,000 Delaware County, Pennsylvania Industrial Development 4/01 at 102 AAA 1,089,730
Authority, Pollution Control, Philadelphia
Electric Company Project, 7.375%, 4/01/21
500,000 Falls Township, Pennsylvania Hospital Authority, 8/02 at 102 AAA 533,595
Revenue Refunding, Delaware Valley Medical Center
Project, 7.000%, 8/01/22
1,000,000 Latrobe, Pennsylvania Industrial Development Authority, 5/04 at 102 Baa1 1,046,980
Saint Vincent College Project, 6.750%, 5/01/24
1,700,000 Philadelphia, Pennsylvania Gas Works, Fourteenth 7/03 at 102 Baa1 1,726,809
Series A Refunding, 6.375%, 7/01/26
4,500,000 Philadelphia, Pennsylvania, Hospitals and Higher Education 11/03 at 102 A- 4,656,825
Facilities Authority, Temple University Hospital,
Series A Refunding, 6.625%, 11/15/23
- ------------------------------------------------------------------------------------------------------------------------------------
Rhode Island - 0.6%
1,600,000 Rhode Island Housing and Mortgage Finance Corporation, 10/00 at 102 AA+ 1,686,832
Homeownership Opportunity, Series 3A,
7.850%, 10/01/16
- ------------------------------------------------------------------------------------------------------------------------------------
South Carolina - 2.8%
1,975,000 Berkeley County, South Carolina School District, 2/04 at 102 AAA 2,065,949
Certificates of Participation, Berkeley School Facilities
Group Inc, 6.300%, 2/01/16
1,770,000 Georgetown County, South Carolina Water and Sewer 6/05 at 102 N/R 1,719,891
District, Revenue Refunding and Improvement,
6.500%, 6/01/25
</TABLE>
21
<PAGE>
Portfolio of Investments
Nuveen Flagship All-American -- continued
<TABLE>
<CAPTION>
Principal Optional Call Market
Amount Description Provisions* Ratings** Value
- --------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
South Carolina -- continued
$ 1,000,000 South Carolina State Housing Finance and Development 6/05 at 102 BBB+ $ 1,030,930
Authority, Multifamily Revenue, Hunting Ridge
Apartments, 6.750%, 6/01/25
1,000,000 South Carolina State Housing Finance and Development 11/05 at 102 AA- 1,001,860
Authority, Multifamily Revenue Refunding, Runaway
Bay Apartments Project, 6.125%, 12/01/15
1,750,000 York County, South Carolina Water and Sewer, 12/03 at 102 N/R 1,700,160
6.500%, 12/01/25
- --------------------------------------------------------------------------------------------------------------------------
Tennessee -- 2.0%
1,085,000 Shelby County, Tennessee Health Educational and Housing 8/07 at 105 N/R 1,274,170
Facilities, Open Arms Development CTRS, Series A,
9.750%, 8/01/19
1,100,000 Shelby County, Tennessee Health Educational and Housing 8/07 at 105 N/R 1,295,733
Facilities, Open Arms Development CTRS, Series C,
9.750%, 8/01/19
1,380,000 South Fulton, Tennessee Industrial Development Board, 10/05 at 102 A3 1,411,353
Tyson Foods Inc. Project, 6.350%, 10/01/15
1,500,000 Wilson County, Tennessee, Certificates of Participation, 6/04 at 102 A 1,533,944
Educational Facilities, 6.250%, 6/30/15
- --------------------------------------------------------------------------------------------------------------------------
Texas -- 5.2%
7,000,000 Alliance Airport Authority, Inc., Texas Special Facilities, 4/06 at 102 BBB 7,062,510
Federal Express Corporation Project, 6.375%, 4/01/21
2,000,000 Dallas - Fort Worth Texas International Airport Facility, 11/02 at 102 Baa2 2,141,480
Improvement Corporation, American Airlines Inc,
7.250%, 11/01/30
2,000,000 North Central Texas Health Facility, Development 2/06 at 102 BBB 2,010,300
Corporation, Revenue Refunding, CC Young Memorial
Home Project, 6.375%, 2/15/20
2,895,000 Port of Bay City Authority, Texas Matagorda County, 5/06 at 102 A+ 3,019,831
Hoechst, Celanese Corporation Project,
6.500%, 5/01/26
- --------------------------------------------------------------------------------------------------------------------------
Utah -- 0.8%
2,000,000 Carbon County, Utah Solid Waste Disposal, Revenue 2/05 at 102 BBB+ 2,200,720
Refunding, Laidlaw Inc/Ecdc Project, Series A,
7.500%, 2/01/10
</TABLE>
22
<PAGE>
<TABLE>
<CAPTION>
Principal Optional Call Market
Amount Description Provisions* Ratings** Value
- -----------------------------------------------------------------------------------------------------------------------------------
Virginia - 3.0%
<S> <C> <C> <C> <C>
$ 3,000,000 Fairfax County, Virginia Redevelopment and Housing 3/05 at 102 AAA $ 3,131,250
Authority, Multi-Family Housing Revenue Refunding,
Mt. Vernon Apartments, Series A, 6.625%, 9/20/20
2,000,000 Hanover County Virginia Industrial Development Authority, No Opt. Call AAA 2,171,540
Memorial Regional Medical Center Project,
6.375%, 8/15/18
2,750,000 Southeastern Public Service Authority, Regional Solid 7/03 at 102 A- 2,748,322
Waste System, 6.000%, 7/01/13
- ----------------------------------------------------------------------------------------------------------------------------------
West Virginia- 0.2%
500,000 Mason County, West Virginia Pollution Control, Appalachian 1/00 at 102 Baa1 525,764
Power Company, Series G, 7.400%, 1/01/14
- ----------------------------------------------------------------------------------------------------------------------------------
Wisconsin - 0.4%
855,000 Fall Creek, Wisconsin, Municipal Nursing Home Mortgage 7/99 at 100 N/R 906,624
Revenue, 9.875%, 7/01/19
- ----------------------------------------------------------------------------------------------------------------------------------
$ 274,449,276 Total Investments - (cost $256,401,015) - 98.7% 268,825,821
==============--------------------------------------------------------------------------------------------------------------------
Other Assets Less 3,493,400
---------------------------------------------------------------------------------------------------------------
Liabilities - 1.3%
Net Assets - 100% $272,319,221
===============================================================================================================
* Optional Call Provisions (not covered by the report of independent auditors): Dates (month and year) and
prices of the earliest optional call or redemption. There may be other call provisions at varying prices at
later dates.
** Ratings (not covered by the report of independent auditors): Using the higher of Standard & Poor's or
Moody's rating.
N/R - Investment is not rated.
(WI) Security purchased on a when-issued basis (see note 1 of the Notes to Financial Statements).
See accompanying notes to financial statements.
23
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Portfolio Holdings by State
Nuveen Flagship Intermediate
Principal Optional Call Market
Amount Description Provisions* Rating** Value
- --------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Arizona -1.2%
$ 525,000 Pima County, Arizona Industrial Development 5/07 at 102 AAA $ 526,748
Authority, Single Family Mortgage
Revenue Refunding,
Series B, 5.850%, 5/01/09
- --------------------------------------------------------------------------------------------------------------------------
California - 2.4%
1,000,000 Sacramento California Cogeneration Authority, 7/05 at 102 BBB- 1,037,400
Procter and Gamble Cogeneration Project,
6.200%, 7/01/06
- --------------------------------------------------------------------------------------------------------------------------
Colorado - 8.8%
2,300,000 Arapahoe County, Colorado Capital 8/05 at 95 29/32 Baa 1,339,129
Improvement Tollroad Fund, Highway
Revenue E-470, Series C,
0.000%, 8/31/06
500,000 Colorado Health Facilities 12/05 at 102 BBB+ 510,470
Authority, Covenant Retirement
Community Project, 6.200%, 12/01/07
1,000,000 Denver Colorado City and County, Airport 11/05 at 102 AAA 1,003,520
Revenue, Series B, 5.400%, 11/15/06
1,000,000 Eagle County, Colorado Air Term No Opt. Call N/R 1,026,210
Corporation, Airport Terminal Project,
6.750%, 5/01/06
- --------------------------------------------------------------------------------------------------------------------------
Connecticut - 3.0%
1,000,000 Connecticut State Health and No Opt. Call BBB- 996,570
Educational Facilities Authority,
Quinnipiac College, Series D,
5.625%, 7/01/03
335,000 Eastern Connecticut Resource 1/03 at 102 BBB+ 330,558
Recovery Authority, Solid Waste,
Wheelabrator Lisbon Project,
Series A, 5.150%, 1/01/05
- --------------------------------------------------------------------------------------------------------------------------
District of Columbia -0.5%
205,000 District of Columbia, American University, 10/06 at 101 AAA 205,250
5.375%, 10/01/08
- --------------------------------------------------------------------------------------------------------------------------
Florida - 5.6%
275,000 Florida State Broward County No Opt. Call AA+ 387,203
Expressway Authority,
9.875%, 7/01/09
1,000,000 Palm Beach County, Florida No Opt. Call AAA 1,049,630
School Board, Certificates
of Participation, Series A,
5.800%, 8/01/04
1,000,000 Sanford Florida Airport Authority, No Opt. Call N/R 1,016,780
Industrial Development, Central Florida
Terminals Inc. Project, Series A,
7.500%, 5/01/06
</TABLE>
24
<PAGE>
<TABLE>
<CAPTION>
Nuveen Flagship Municipal Bond Funds
April 30, 1997 Annual Report
Principal Optional Call Market
Amount Description Provisions* Rating** Value
- --------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Guam - 0.6%
$ 275,000 Guam Government, Series A, 4.900%, 11/15/04 11/03 at 102 BBB $ 260,079
- --------------------------------------------------------------------------------------------------------------------------
Illinois - 2.3%
1,000,000 Illinois Health Facilities Authority, No Opt. Call A- 1,020,200
Mercy Hospital and Medical Center, 6.000%, 1/01/06
- --------------------------------------------------------------------------------------------------------------------------
Indiana - 1.1%
500,000 Indiana Bond Special Program, Hendricks 2/07 at 102 AA- 503,135
Redevelopment, Series B, 5.750%, 2/01/08 (WI)
- --------------------------------------------------------------------------------------------------------------------------
Kansas - 1.0%
420,000 Lenexa, Kansas, Multifamily Housing Revenue 2/03 at 102 AA 434,830
Refunding, Barrington Park Apartments
Project, Series A, 6.200%, 2/01/08
- --------------------------------------------------------------------------------------------------------------------------
Kentucky - 7.5%
1,165,000 Kentucky Infrastructure Authority, Revenue 8/05 at 102 A 1,197,923
Refunding Governmental Agencies Program,
Series H, 5.600%, 8/01/06
1,000,000 Louisville and Jefferson County, Kentucky, No Opt. Call AAA 1,027,830
Regional Airport Authority, Series A, 5.750%, 7/01/01
1,000,000 McCracken County, Kentucky, Revenue No Opt. Call AAA 1,063,620
Refunding, Mercy Health System, Series A,
6.100%, 11/01/04
- --------------------------------------------------------------------------------------------------------------------------
Louisiana - 0.8%
345,000 Louisiana Public Facilities Authority, No Opt. Call Aaa 361,381
Revenue Refunding, Student Loan Senior, Series A-2,
6.600%, 3/01/03
- --------------------------------------------------------------------------------------------------------------------------
Maryland - 1.1%
500,000 Maryland State Health and Higher 1/07 at 102 A- 505,520
Educational Facilities Authority, Revenue Refunding,
Pickersgill Issue, Series A, 5.750%, 1/01/08
- --------------------------------------------------------------------------------------------------------------------------
Massachusetts - 5.4%
Massachusetts State Health and Educational Facilities
Authority, Dana Farber Cancer Project, Series G - 1:
500,000 6.500%, 12/01/05 No Opt. Call A1 538,785
750,000 6.500%, 12/01/06 12/05 at 102 A1 817,215
1,000,000 Massachusetts State Water Pollution Abatement, 2/04 at 102 AA+ 1,038,260
Tollroad Water Pollution Abatement Revenue
Loan Program, Series A, 5.700%, 2/01/05
</TABLE>
25
<PAGE>
Portfolio Holdings by State
Nuveen Flagship Intermediate - continued
<TABLE>
<CAPTION>
Principal Optional Call Market
Amount Description Provisions* Rating** Value
- --------------------------------------------------------------------------------------------------------------------------
<C> <S> <C> <C> <C>
Michigan - 8.4%
$ 750,000 Michigan Municipal Bond Authority, State No Opt. Call Aa1 $ 842,730
Revolving Fund, 7.000%, 10/01/04
750,000 Michigan State Hospital Finance Authority, 8/04 at 102 AAA 740,498
Revenue Refunding, Detroit Medical Center,
Series B, 5.100%, 8/15/07
1,000,000 Michigan State Hospital Finance Authority, No Opt. Call BBB 1,023,000
Revenue Refunding, Gratiot Community Hospital,
6.100%, 10/01/07
1,000,000 Monroe County, Michigan, Pollution Control, No Opt. Call AAA 1,071,280
Detroit Edison Company Project, Series A,
6.350%, 12/01/04
- --------------------------------------------------------------------------------------------------------------------------
Missouri - 3.8%
1,000,000 Branson, Missouri, Tax Increment Allocation, No Opt. Call N/R 993,860
Branson Meadows Project, Series A,
6.400%, 11/01/05
350,000 St. Louis County, Missouri, Industrial Development 12/02 at 102 N/R 372,747
Authority, Revenue Refunding, Kiel Center
Multipurpose Arena, 7.625%, 12/01/09
300,000 St. Louis, Missouri, Airport Revenue Refunding, 7/02 at 102 AAA 311,898
Lambert, St. Louis International, 5.900%, 7/01/03
- --------------------------------------------------------------------------------------------------------------------------
Nevada - 2.3%
1,000,000 Las Vegas, Nevada, Downtown Redevelopment 6/05 at 101 AAA 1,001,380
Agency, Tax Increment Revenue Refunding, Parity
Lien, Series A, 5.300%, 6/01/06
- --------------------------------------------------------------------------------------------------------------------------
New Hampshire - 2.2%
1,000,000 New Hampshire State Turnpike System Revenue, 2/04 at 102 A 956,640
4.800%, 2/01/07
- --------------------------------------------------------------------------------------------------------------------------
New Jersey - 1.2%
500,000 New Jersey Economic Development Authority, No Opt. Call AAA 512,715
Educational Testing Service, Series B,
5.500%, 5/15/05
- --------------------------------------------------------------------------------------------------------------------------
New Mexico - 0.2%
100,000 New Mexico Educational Assistance Foundation, No Opt. Call Aaa 105,021
Student Loan, Series One - A, 6.300%, 12/01/02
</TABLE>
26
<PAGE>
Nuveen Flagship Municipal Bond Funds
April 30, 1997 Annual Report
<TABLE>
<CAPTION>
Principal Option Call Market
Amount Description Provisions* Rating** Value
- --------------------------------------------------------------------------------------------------------------------------
New York - 12.7%
<S> <C> <C> <C> <C>
$ 500,000 Albany New York Housing Authority, Limited 10/05 at 102 Baa1 $ 499,035
Obligation Refunding, 5.700%, 10/01/06
700,000 New York City, Series F, 6.375%, 2/15/06 2/05 at 101 BBB+ 733,726
200,000 New York City, Series G, 5.750%, 2/01/06 BBB+ 201,072
500,000 New York City, New York, Series B, 5.700%, 8/15/07 8/06 at 101 1/2 BBB+ 498,030
250,000 New York State Energy Resh and Development No Opt. Call Baa1 248,405
Authority, State Service Contract, Western New
York Nuclear Service Center, Series B,
5.500%, 4/01/05
750,000 New York State Housing Finance Agency, Revenue No Opt. Call BBB+ 761,190
Refunding, Health Facilities, New York City,
Series A, 6.000%, 5/01/06
500,000 New York State Tollway Authority, Service Contract 4/05 at 102 Baa1 506,935
Revenue, Local Highway and Bridge, 5.750%, 4/01/06
1,000,000 Port Authority of New York and New Jersey, Special No Opt. Call N/R 1,079,560
Obligation Revenue, 3rd Installment,
Special Project - Kiac-4, 7.000%, 10/01/07
1,000,000 Port Authority of New York and New Jersey, Special No Opt. Call AAA 1,073,040
Obligation Revenue, JFK International Air Terminal
1st Installment, 6.250%, 12/01/10 (WI)
- --------------------------------------------------------------------------------------------------------------------------
Ohio - 13.4%
Cleveland - Cuyahoga County Ohio Port Authority,
Revenue Refunding, Rock and Roll Hall of Fame:
360,000 5.750%, 12/01/07 No Opt. Call N/R 359,132
425,000 5.850%, 12/01/08 No Opt. Call N/R 424,269
1,000,000 Franklin County, Ohio Hospital, Revenue Refunding 11/06 at 101 Aa 1,028,050
and Improvement, Children's Hospital Project,
Series A, 5.550%, 11/01/07
1,000,000 Hamilton County, Ohio, Hospital Facilities, Revenue No Opt. Call AAA 994,410
Refunding, Children's Hospital Medical Center,
Series F, 5.200%, 5/15/09
900,000 Miami County Ohio Hospital Facilities, Revenue No Opt. Call BBB 927,234
Refunding and Improvement, Upper Valley
Medical Center, Series C, 6.000%, 5/15/06
1,000,000 Ohio State Building Authority, State Facilities, 10/04 at 102 AAA 1,039,650
Administration Building Fund, Series A,
5.650%, 10/01/05
</TABLE>
27
<PAGE>
Portfolio Holdings by State
Nuveen Flagship Intermediate - continued
<TABLE>
<CAPTION>
Principal Optional Call Market
Amount Description Provisions* Rating** Value
- --------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Ohio - continued
$ 1,000,000 Ohio State Public Facilities Commission, Higher Education No Opt. Call AAA $ 1,045,490
Capital Facilities, Series B, 5.750%, 11/01/04
- --------------------------------------------------------------------------------------------------------------------------
Pennsylvania - 7.7%
1,010,000 Lehigh County, Pennsylvania, General Purpose Authority, 7/05 at 102 AAA 1,023,039
Revenues Refunding, Lehigh Valley Hospital Inc., Series A,
5.400%, 7/01/06
1,000,000 Philadelphia, Pennsylvania, 4.900%, 5/15/06 No Opt. Call AAA 975,530
500,000 Philadelphia, Pennsylvania Gas Works, Revenue Refunding, No Opt. Call Baa1 535,385
Fourteenth Series A, Refunding, 7.000%, 7/01/02
1,500,000 Westmoreland County Pennsylvania Municipal Authority, No Opt. Call AAA 868,560
Municipal Service Revenue Refunding, Series A,
0.000%, 8/15/07
- --------------------------------------------------------------------------------------------------------------------------
South Carolina - 0.6%
240,000 Myrtle Beach South Carolina, Certificates of Participation, No Opt. Call BBB+ 252,216
Myrtle Beach Convention Center Project, 6.750%, 7/01/02
- --------------------------------------------------------------------------------------------------------------------------
South Dakota - 1.3%
550,000 South Dakota Student Loan Finance Corporation, Series A, No Opt. Call A+ 562,881
Refunding, 5.850%, 8/01/00
- --------------------------------------------------------------------------------------------------------------------------
Tennessee - 2.3%
500,000 Clarksville, Tennessee, Hospital, Revenue Refunding and No Opt. Call Baa1 502,760
Improvement, Clarksville Memorial Project, 6.000%, 7/01/03
500,000 Metro Government Nashville and Davidson County Tennessee No Opt. Call BBB+ 509,515
Industrial Development Board, Revenue Refunding and
Improvement, Osco Treatment Inc., 6.000%, 5/01/03
- --------------------------------------------------------------------------------------------------------------------------
Texas - 5.7%
400,000 Brazos Texas Higher Education Authority Inc., Student Loan No Opt. Call Aaa 418,172
Revenue Refunding, Series A - 1, 6.200%, 12/01/02
3,000,000 Goose Creek Texas Independent School District Refunding, No Opt. Call AAA 1,567,770
0.000%, 2/15/09
</TABLE>
28
<PAGE>
<TABLE>
<CAPTION>
Nuveen Flagship Municipal Bond Funds
April 30, 1997 Annual Report
Principal Optional Call Market
Amount Description Provisions* Rating** Value
- --------------------------------------------------------------------------------------------------------------------------
<C> <S> <C> <C> <C>
Texas - continued
$ 535,000 Texas State Department Housing and Community No Opt. Call A $ 542,586
Affairs, Multi-Family Revenue Housing, NHP
Foundation, Asmara Project, Series A, 5.800%, 1/01/06
- --------------------------------------------------------------------------------------------------------------------------
Wyoming - 0.5%
200,000 Wyoming State Farm Loan Board, Capital Facilities 10/02 at 102 AA- 210,073
Revenue Refunding, 6.100%, 10/01/06
- --------------------------------------------------------------------------------------------------------------------------
$47,365,000 Total Investments - (cost $44,139,584) - 103.6% 45,517,730
===============-----------------------------------------------------------------------------------------------------------
Other Assets Less Liabilities - (3.6%) (1,602,245)
-----------------------------------------------------------------------------------------------------------
Net Assets - 100% $43,915,485
===========================================================================================================
</TABLE>
* Optional Call Provisions (not covered by the report of
independent auditors): Dates (month and year) and prices of
the earliest optional call or redemption. There may be
other call provisions at varying prices at later dates.
** Ratings (not covered by the report of independent
auditors): Using the higher of Standard & Poor's or Moody's
rating.
N/R - Investment is not rated.
(WI) Security purchased on a when-issued basis (see note 1 of
the Notes to Financial Statements).
See accompanying notes to financial statements.
29
<PAGE>
Portfolio Holdings by State
Nuveen Flagship Limited Term
<TABLE>
<CAPTION>
Principal Optional Call Market
Amount Description Provisions* Rating** Value
- --------------------------------------------------------------------------------------------------------------------------
<C> <S> <C> <C> <C>
Alaska - 0.2%
$ 945,000 Alaska Industrial Development and Exposition No Opt. Call A2 $ 961,934
Authority, Revolving Fund, Series A,
5.700%, 4/01/99
- --------------------------------------------------------------------------------------------------------------------------
Arizona - 0.5%
250,000 Arizona Educational Loan Marketing Corporation, No Opt. Call Aa 258,870
Educational Loan, Senior Series,
6.125%, 9/01/02
2,000,000 Tucson Arizona Refunding, 5.375%, 7/01/05 No Opt. Call AAA 2,047,620
- --------------------------------------------------------------------------------------------------------------------------
California - 2.2%
1,250,000 Long Beach, California, Aquarium of The Pacific, No Opt. Call BBB 1,245,063
Series A, 5.750%, 7/01/05
Sacramento, California Cogeneration Authority,
Procter and Gamble Cogeneration Project:
1,000,000 5.900%, 7/01/02 No Opt. Call BBB- 1,024,470
500,000 6.000%, 7/01/03 No Opt. Call BBB- 513,935
500,000 7.000%, 7/01/04 No Opt. Call BBB- 541,125
4,800,000 Southern California Public Power Authority, Revenue No Opt. Call AAA 4,980,192
Refunding, Palo Verde Project, Series A,
5.500%, 7/01/05
1,500,000 Taft California Public Financing Authority, Lease No Opt. Call BBB+ 1,487,655
Revenue, Community Correctional Facility Project,
Series A, 5.500%, 1/01/06
- --------------------------------------------------------------------------------------------------------------------------
Colorado - 5.9%
9,000,000 Arapahoe County, Colorado Capital Improvement, 8/05 at 95 29/32 Baa 5,240,070
Tollroad Fund Highway Revenue E - 470, Series C,
0.000%, 8/31/06
Arvada, Colorado, Limited Sales and Use Tax:
500,000 6.200%, 6/01/98 No Opt. Call N/R 511,475
500,000 6.300%, 6/01/99 No Opt. Call N/R 517,355
400,000 6.400%, 6/01/00 No Opt. Call N/R 418,428
3,135,000 Colorado Health Facilities Authority, Covenant No Opt. Call BBB+ 3,150,173
Retirement Communities Project,
5.650%, 12/01/04
1,515,000 Colorado Housing Finance Authority, Single Family No Opt. Call Aa1 1,177,549
Housing, Series A, 0.000%, 11/01/01
3,515,000 Colorado Housing Finance Authority, Single Family No Opt. Call Aa1 2,562,751
Housing, Series A, 0.000%, 11/01/02
</TABLE>
30
<PAGE>
Nuveen Flagship Municipal Bond Funds
April 30, 1997 Annual Report
<TABLE>
<CAPTION>
Principal Optional Call Market
Amount Description Provisions* Ratings** Value
- --------------------------------------------------------------------------------------------------------------------------
Colorado - continued
<C> <S> <C> <C> <C>
$ 2,120,000 Colorado Student Obligation Bond Authority, Student No Opt. Call A $ 2,195,260
Loan Revenue, Series A, 6.625%, 6/01/99
6,475,000 Denver, Colorado City and County Airport, No Opt. Call AAA 6,690,618
Series B, 5.750%, 11/15/04
415,000 Denver, Colorado City and County, Industrial No Opt. Call BBB+ 424,047
Development Revenue, University of Denver
Project, 6.800%, 3/01/98
1,600,000 Eagle County, Colorado Air Term Corporation, No Opt. Call N/R 1,641,936
Airport Terminal Project, 6.750%, 5/01/06
535,000 Hyland Hills Metropolitan Park and Recreation No Opt. Call N/R 537,600
District, Colorado, Special Revenue Refunding
and Improvement, Series A, 4.750%, 12/15/97
500,000 Hyland Hills Metropolitan Park and Recreation No Opt. Call N/R 504,710
District, Colorado, Special Revenue Refunding
and Improvement, Series A, 5.000%, 12/15/98
500,000 Hyland Hills Metropolitan Park and Recreation No Opt. Call N/R 507,865
District, Colorado, Special Revenue Refunding
and Improvement, Series A, 5.400%, 12/15/00
200,000 University of Colorado, Certificates of Participation, 12/98 at 102 A2 212,442
Series D, Colorado Association of
School Boards Lease Purchase Finance Program,
7.100%, 12/01/00 (Pre-refunded to 12/01/98)
- --------------------------------------------------------------------------------------------------------------------------
Connecticut - 2.6%
Bridgeport, Connecticut Refunding, Series A:
4,650,000 5.250%, 9/01/04 No Opt. Call AAA 4,716,077
1,000,000 6.000%, 9/01/05 No Opt. Call AAA 1,062,860
2,800,000 Connecticut State Health and Educational Facilities No Opt. Call BBB- 2,790,396
Authority, Quinnipiac College, Series D,
5.625%, 7/01/03
1,025,000 New Haven, Connecticut, Series A, 9.250%, 3/01/02 No Opt. Call AAA 1,146,698
625,000 New Haven, Connecticut, Series B, 5.900%, 12/01/98 No Opt. Call AAA 635,944
Stratford, Connecticut:
610,000 6.750%, 3/01/98 No Opt. Call N/R 624,048
650,000 6.900%, 3/01/99 No Opt. Call N/R 677,287
</TABLE>
31
<PAGE>
<TABLE>
<CAPTION>
Portfolio Holdings by State
Nuveen Flagship Limited Term - continued
Principal Optional Call Market
Amount Description Provisons* Rating** Value
- --------------------------------------------------------------------------------------------------------------------------
<C> <S> <C> <C> <C>
District of Columbia - 0.2%
District of Columbia Redevelopment Agency,
Washington D.C. Sports Arena Special Tax:
$ 500,000 4.850%, 11/01/97 No Opt. Call Baa $ 500,885
500,000 5.300%, 11/01/99 No Opt. Call Baa 503,370
- --------------------------------------------------------------------------------------------------------------------------
Florida - 1.1%
1,000,000 Dade County, Florida Aviation, Series U, No Opt. Call Aa3 1,028,660
6.400%, 10/01/98
455,000 Florida School State Boards Association Inc., No Opt. Call N/R 457,862
Certificates of Participation, Florida School Districts
Financing Program, Series 5, 7.500%, 7/01/97
100,000 Jacksonville, Florida Electric Authority, Revenue 4/03 at 101 Aa1 99,904
Refunding, St. John Issue 2, Series 10,
5.000%, 10/01/04
540,000 North Springs Improvement District, Florida Water No Opt. Call N/R 571,563
and Sewer Revenue, 7.900%, 10/01/01
100,000 Ocoee, Florida, Water and Sewer System Revenue, 10/06 at 102 AAA 99,100
5.100%, 10/01/08
2,625,000 Sanford, Florida Airport Authority, Industrial No Opt. Call N/R 2,657,445
Development Revenue, Central Florida Terminals
Inc. Project, Series A, 7.300%, 5/01/04
- --------------------------------------------------------------------------------------------------------------------------
Georgia 0.7%
3,000,000 Atlanta, Georgia Airport Facilities, Revenue No Opt. Call AAA 3,287,760
Refunding, 6.500%, 1/01/06
- --------------------------------------------------------------------------------------------------------------------------
Illinois - 2.3%
450,000 De Kalb, Illinois, Single Family Mortgage, No Opt. Call Aaa 463,019
Series A, 6.700%, 12/01/99
275,000 Evergreen Park, Illinois, Hospital Facility, Revenue No Opt. Call AAA 276,488
Refunding, Little Company Mary Hospital,
5.750%, 8/15/97
970,000 Illinois Health Facilities Authority, Revenue No Opt. Call AA 982,009
Refunding, Galesburg Cottage Hospital,
5.400%, 5/01/00
1,500,000 Illinois Health Facilities Authority, Revenue No Opt. Call A- 1,482,390
Refunding, Sarah Bush Lincoln Health Center,
Series B, 5.500%, 2/15/06
</TABLE>
32
<PAGE>
<TABLE>
<CAPTION>
Nuveen Flagship Municipal Bond Funds
April 30, 1997 Annual Report
Principal Optional Call Market
Amount Description Provisions* Rating** Value
- --------------------------------------------------------------------------------------------------------------------------
Illinois - continued
<S> <C> <C> <C> <C>
$ 1,550,000 Illinois Health Facilities Authority, Servantor, 8/99 at 102 N/R $ 1,674,310
Series B, 7.500%, 8/15/01
895,000 Illinois Health Facilities Authority, Mercy Hospital No Opt. Call A- 903,332
and Medical Center, 5.600%, 1/01/02
325,000 Illinois Health Facilities Authority, Carle No Opt. Call AAA 336,281
Foundation, Series C, 6.700%, 1/01/99
3,000,000 Illinois St. Refunding, 6.200%, 10/01/04 10/02 at 102 AA- 3,200,070
1,975,000 Romeoville, Illinois, Refunding, Series B, Alternate No Opt. Call N/R 2,072,328
Revenue Source, 7.850%, 1/01/01
- --------------------------------------------------------------------------------------------------------------------------
Indiana - 2.4%
Indiana Bond Special Program, Hendricks
Redevelopment, Series B:
1,525,000 5.250%, 2/01/03 (WI) No Opt. Call AA- 1,521,127
1,075,000 5.400%, 2/01/04 (WI) No Opt. Call AA- 1,077,311
Indianapolis Indiana Economic Development,
Multifamily Housing Revenue Castle Dore
Project, Series A:
160,000 5.125%, 10/01/02 4/98 at 100 N/R 159,990
330,000 5.125%, 10/01/07 4/98 at 100 N/R 329,980
435,000 5.125%, 10/01/12 4/98 at 100 N/R 434,974
590,000 5.125%, 10/01/17 4/98 at 100 N/R 589,965
5,370,000 5.125%, 4/01/37 No Opt. Call N/R 5,369,678
1,250,000 Valparaiso, Indiana, Multi - Schools Building No Opt. Call AAA 1,311,174
Corporation First Mortgage, 6.100%, 7/01/01
- --------------------------------------------------------------------------------------------------------------------------
Iowa - 1.4%
Iowa State, Certificates of Participation,
Series A:
2,145,000 5.750%, 7/01/98 No Opt. Call AAA 2,184,103
1,775,000 6.000%, 7/01/99 No Opt. Call AAA 1,825,250
Iowa Student Loan Liquidity Corporation, Student
Loan Revenue, Iowa Partnership:
600,000 5.850%, 7/01/99 No Opt. Call A 612,540
325,000 6.000%, 7/01/00 No Opt. Call A 334,064
600,000 6.100%, 7/01/01 No Opt. Call A 620,862
650,000 6.200%, 7/01/02 No Opt. Call A 674,902
</TABLE>
33
<PAGE>
Portfolio Holdings by State
Nuveen Flagship Limited Term - continued
<TABLE>
<CAPTION>
Principal Optional Call Market
Amount Description Provisions* Rating** Value
- --------------------------------------------------------------------------------------------------------------------------
<C> <S> <C> <C> <C>
Kentucky - 9.5%
$ 3,180,000 Christian County, Kentucky, Hospital Revenue No Opt. Call A- $ 3,195,646
Refunding, Jennie Stuart Medical Center,
Series A, 5.500%, 7/01/06
Jeffersontown, Kentucky, Certificates of Participation,
Kentucky Public Projects:
335,000 4.650%, 11/01/02 No Opt. Call A 331,017
520,000 4.750%, 11/01/03 No Opt. Call A 512,715
355,000 4.850%, 11/01/04 No Opt. Call A 351,070
50,000 Kenton County, Kentucky, Water District No. 1, No Opt. Call AAA 52,112
Waterworks Revenue, Series A, 5.700%, 2/01/04
Kenton County, Kentucky, Water District No. 1,
Waterworks Revenue, Series B:
475,000 5.600%, 2/01/03 No Opt. Call AAA 491,093
500,000 5.600%, 2/01/04 No Opt. Call AAA 517,985
500,000 5.600%, 2/01/05 No Opt. Call AAA 518,555
Kentucky Development Finance Authority, Revenue
Refunding, Sisters Of Charity Health, Nazareth
Health Corporation:
1,280,000 5.750%, 11/01/98 No Opt. Call A+ 1,303,539
1,330,000 6.000%, 11/01/01 No Opt. Call A+ 1,375,885
2,720,000 6.600%, 11/01/06 11/01 at 102 A+ 2,908,061
1,460,000 Kentucky Higher Education Student Loan Corporation No Opt. Call Aaa 1,569,909
Insured Student Loan Revenue Insured,
Series B, 6.800%, 6/01/03
Kentucky Infrastructure Authority, Revenue
Refunding, Wastewater Revolving Fund Program,
Series C:
180,000 5.300%, 6/01/03 No Opt. Call A 182,749
220,000 5.400%, 6/01/04 No Opt. Call A 224,464
200,000 5.500%, 6/01/05 No Opt. Call A 205,170
Kentucky Infrastructure Authority, Revenue
Refunding, Governmental Agencies Program,
Series H:
1,945,000 5.300%, 8/01/03 No Opt. Call A 1,972,716
675,000 5.400%, 8/01/04 No Opt. Call A 687,913
1,000,000 5.500%, 8/01/05 No Opt. Call A 1,024,550
500,000 Kentucky State Property and Buildings Commission No Opt. Call A+ 530,555
Revenues Refunding, Project No. 59,
6.000%, 11/01/05
</TABLE>
34
<PAGE>
<TABLE>
<CAPTION>
Nuveen Flagship Municipal Bond Funds
April 30, 1997 Annual Report
Principal Optional Call Market
Amount Description Provisions* Rating Value
- --------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Kentucky - continued
Kentucky State Authority, Economic Development
Revenue Refunding, Revitalization Projects:
$ 60,000 5.400%, 7/01/05 No Opt. Call AAA $ 61,367
$5,000,000 5.000%, 7/01/02 No Opt. Call AAA 5,041,550
1,000,000 Kentucky State Authority, Resource Recovery No Opt. Call A+ 1,256,690
Refunding Revenue, 0.000%, 7/01/05
165,000 Lexington - Fayette Urban County Kentucky, No Opt. Call AAA 167,021
Government Public Facilities Company
Mortgage Revenue, 5.000%, 11/01/01
Louisville and Jefferson County, Kentucky, Regional
Airport Authority, System Revenue, Series A:
1,030,000 5.750%, 7/01/98 No Opt. Call AAA 1,048,983
1,300,000 5.750%, 7/01/99 No Opt. Call AAA 1,329,900
1,375,000 5.750%, 7/01/00 No Opt. Call AAA 1,412,923
455,000 5.750%, 7/01/01 No Opt. Call AAA 467,663
1,535,000 5.750%, 7/01/02 No Opt. Call AAA 1,582,524
1,030,000 Louisville and Jefferson County, Kentucky, Regional No Opt. Call AAA 1,006,578
Airport Authority, System Revenue, Louisville
International Airport, Series A, 4.900%, 7/01/04
3,225,000 Mt. Sterling, Kentucky, Lease Revenue Kentucky No Opt. Call Aa 3,265,474
League Cities, Series A, 5.625%, 3/01/03
10,800,000 Owensboro, Kentucky, Electric Light and Power No Opt. Call AAA 7,784,424
Revenue, Series A, 0.000%, 1/01/04
100,000 University of Kentucky, University Revenue No Opt. Call AAA 100,231
Construction Educational Buildings, Series O,
5.000%, 5/01/03
- --------------------------------------------------------------------------------------------------------------------------
Louisiana - 5.0%
6,000,000 East Baton Rouge Parish Louisiana, Industrial No Opt. Call A+ 6,182,580
Pollution and Pollution Control Revenue
Refunding, Hoechst Celanese Corporation
Project, 5.400%, 12/01/02
3,000,000 Jefferson, Louisiana, Sales Tax District, Special No Opt. Call AAA 3,039,570
Sales Tax Revenue Refunding, Series A,
6.125%, 12/01/97
Louisiana Public Facilities Authority, Hospital
Revenue, Our Lady Of Lourdes Regional Medical:
1,285,000 4.700%, 2/01/99 No Opt. Call AAA 1,289,883
1,215,000 4.900%, 2/01/00 No Opt. Call AAA 1,221,087
</TABLE>
35
<PAGE>
Portfolio Holdings by State
Nuveen Flagship Limited Term - continued
<TABLE>
<CAPTION>
Principal Optional Call Market
Amount Description Provisions* Rating** Value
- --------------------------------------------------------------------------------------------------------------------------
Louisiana - continued
<S> <C> <C> <C> <C>
$1,170,000 Louisiana Public Facilities Authority, Hospital No Opt. Call A3 $1,220,989
Revenue, Womans Hospital Foundation Project,
6.750%, 10/01/02
3,080,000 Louisiana Public Facilities Authority, Hospital No Opt. Call AAA 3,264,615
Revenue Refunding, Southern Baptist Hospital
Project, 6.200%, 5/15/02
2,500,000 Louisiana State Offshore Term Authority, Deepwater No Opt. Call A 2,598,750
Port Revenue Refunding, 1st Stage, Series B,
6.100%, 9/01/02
Office Facilities Corporation, Capital Facilities:
400,000 7.250%, 12/01/99 No Opt. Call BBB+ 423,992
770,000 7.350%, 12/01/00 No Opt. Call BBB+ 828,659
Ouachita Parish Louisiana Hospital Service, District
No. 1, Glenwood Regional Medical Center:
405,000 6.800%, 7/01/97 No Opt. Call A 406,985
440,000 7.000%, 7/01/98 No Opt. Call A 454,344
425,000 7.000%, 7/01/99 No Opt. Call A 445,749
300,000 7.250%, 7/01/00 No Opt. Call A 321,390
- --------------------------------------------------------------------------------------------------------------------------
Maine - 0.1%
260,000 Maine Educational Loan Marketing Corporation, No Opt. Call A 263,112
Student Loan Revenue Refunding, Series 1991,
6.500%, 11/01/97
- --------------------------------------------------------------------------------------------------------------------------
Maryland - 1.3%
Maryland State Energy Financing Administration,
Solid Waste Disposal Revenue Limited Obligation,
Wheelabrator Water Projects:
2,280,000 5.650%, 12/01/03 No Opt. Call A- 2,307,337
1,000,000 5.850%, 12/01/05 No Opt. Call A- 1,019,530
2,400,000 Northeast Maryland Waste Disposal Authority, No Opt. Call AAA 2,669,832
Resource Recovery Revenue Refunding,
Southwest Resource Recovery Facility,
7.150%, 1/01/04
- --------------------------------------------------------------------------------------------------------------------------
Massachusetts - 6.0%
265,000 Brockton, Massachusetts, 5.350%, 6/15/00 No Opt. Call A- 268,578
Massachusetts Education Loan Authority Education
Loan Revenue Refunding, Issue E, Series B:
1,000,000 5.500%, 7/01/01 No Opt. Call AAA 1,024,960
3,075,000 5.700%, 7/01/04 No Opt. Call AAA 3,186,992
</TABLE>
36
<PAGE>
Nuveen Flagship Municipal Bond Funds
April 30, 1997 Annual Report
<TABLE>
<CAPTION>
Principal Optional Call Market
Amount Description Provisions* Rating** Value
- --------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Massachusetts - continued
Massachusetts Educational Financing Authority, Education
Loan Revenue Refunding, Issue E:
$ 1,970,000 5.250%, 7/01/06 No Opt. Call AAA $ 1,951,502
2,775,000 5.350%, 7/01/07 7/06 at 102 AAA 2,757,185
2,635,000 Massachusetts Municipal Wholesale Electric Company, Power No Opt. Call AAA 2,759,188
Supply System Revenue, Series A, 6.300%, 7/01/00
3,800,000 Massachusetts Municipal Wholesale Electric Company Power No Opt. Call AAA 3,979,094
Supply System Revenue Refunding, Series B, 6.300%, 7/01/00
1,000,000 Massachusetts State Refunding, Series A, 6.100%, 8/01/99 No Opt. Call A+ 1,033,510
Massachusetts State Cons Loan, Series C:
1,000,000 7.000%, 12/01/97 No Opt. Call A+ 1,018,000
975,000 7.000%, 12/01/98 No Opt. Call A+ 1,015,463
1,000,000 Massachusetts State Convention Center Authority, Refunding, No Opt. Call A1 1,022,330
Hynes Convention Center, 5.900%, 9/01/98
1,100,000 Massachusetts State Industrial Finance Agency, Resource No Opt. Call AAA 1,114,982
Recovery Revenue Refunding, Refusetech Inc. Project,
Series A, 5.250%, 7/01/99
New Bedford, Massachusetts:
600,000 5.250%, 3/01/00 No Opt. Call Baa3 603,828
600,000 5.400%, 3/01/01 No Opt. Call Baa3 604,080
600,000 5.500%, 3/01/02 No Opt. Call Baa3 604,248
2,500,000 New England Education Loan Marketing Corporation No Opt. Call A1 2,525,475
Massachusetts Refunding, Student Loan, Series F,
5.625%, 7/01/04
415,000 Springfield, Massachusetts, Refunding, Series A, No Opt. Call A- 423,669
5.800%, 9/01/99
Springfield, Massachusetts, School Project Loan, Series B:
815,000 5.800%, 9/01/99 No Opt. Call Baa 827,527
250,000 6.100%, 9/01/02 No Opt. Call Baa 258,348
</TABLE>
37
<PAGE>
Portfolio Holdings by State
Nuveen Flagship Limited Term - continued
<TABLE>
<CAPTION>
Principal Optional Call Market
Amount Description Provisions* Rating** Value
- --------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Michigan - 6.9%
$ 3,315,000 Detroit, Michigan, Economic Development Corporation Resource No Opt. Call AAA $ 3,448,561
Recovery Revenue, Series A, 6.350%, 5/01/00
3,000,000 Greater Detroit Resource Recovery Authority, Michigan No Opt. Call AAA 3,078,600
Revenue Refunding, Series A, 5.500%, 12/13/04
820,000 Madison Heights, Michigan, Tax Increment Finance Authority No Opt. Call N/R 860,869
Revenue, 8.500%, 3/15/01
900,000 Michigan Higher Education Student Loan Authority, Series 7, No Opt. Call AAA 936,828
6.375%, 10/01/00
2,000,000 Michigan Higher Education Student Loan Authority, Revenue No Opt. Call Aa1 2,022,320
Refunding, Senior Series XV, Series A, 5.400%, 9/01/00
2,700,000 Michigan State Hospital Finance Authority, Revenue No Opt. Call AAA 2,758,590
Refunding, St. John, Series A, 5.400%, 5/15/00
3,075,000 Michigan State Hospital Finance Authority, Revenue No Opt. Call BBB 3,052,184
Refunding, Gratiot Community Hospital, 5.300%, 10/01/01
1,000,000 Michigan State Hospital Finance Authority, Revenue No Opt. Call AA- 1,048,500
Refunding, Mercy Health Services, Series T,
6.000%, 8/15/06 (WI)
Michigan State Housing Development Authority, Rental Housing
Revenue, Series B:
3,085,000 5.450%, 4/01/05 No Opt. Call AAA 3,113,074
3,325,000 5.450%, 10/01/05 6/05 at 102 AAA 3,356,787
4,095,000 Pontiac, Michigan, Hospital Finance Authority, Hospital 8/00 at 100 BBB- 4,073,010
Revenue Refunding, Nomc Obligation Group, 5.800%, 8/01/03
3,000,000 Wayne Charter County, Michigan, Airport Revenue Refunding, No Opt. Call AAA 3,039,210
Detroit Metropolitan Airport, Series A, 5.150%, 12/01/00
- --------------------------------------------------------------------------------------------------------------------------
Minnesota - 0.4%
615,000 Brainerd, Minnesota, Health Care Facilities Revenue No Opt. Call AAA 619,699
Benedictine Health, St. Joseph, Series D, 5.000%, 2/15/00
1,045,000 Duluth, Minnesota, Economic Development Authority, Health No Opt. Call AAA 1,051,625
Care Facilities Revenue Benedictine Health System, St.
Mary, Series C, 5.000%, 2/15/00
</TABLE>
38
<PAGE>
<TABLE>
<CAPTION>
Nuveen Flagship Municipal Bond Funds
April 30, 1997 Annual Report
Principal Optional Call Market
Amount Description Provisions* Rating** Value
- --------------------------------------------------------------------------------------------------------------------------
<C> <S> <C> <C> <C>
Missouri - 0.7%
Branson, Missouri, Tax Increment Allocation
Revenue, Branson Meadows Project, Series A:
$ 1,740,000 5.850%, 11/01/01 No Opt. Call N/R $ 1,730,500
810,000 6.400%, 11/01/05 No Opt. Call N/R 805,027
655,000 St. Louis, Missouri, Regional Convention and Sports No Opt. Call N/R 687,409
Complex Authority, Series C, 7.750%, 8/15/01
- --------------------------------------------------------------------------------------------------------------------------
Mississippi - 0.9%
1,155,000 Hinds County, Mississippi, Revenue Refunding, No Opt. Call AAA 1,161,433
Mississippi Methodist Hospital and
Rehabilitation, 4.900%, 5/01/00
Mississippi Hospital Equipment and Facilities
Authority, Revenue Refunding, Mississippi Baptist
Medical Center:
1,690,000 5.350%, 5/01/03 No Opt. Call AAA 1,717,716
1,000,000 5.400%, 5/01/04 No Opt. Call AAA 1,018,660
- --------------------------------------------------------------------------------------------------------------------------
New Hampshire - 0.8%
505,000 New Hampshire Higher Educational and Health No Opt. Call BBB+ 534,260
Facilities Authority, Revenue Hospital,
St. Joseph Hospital, 7.250%, 1/01/01
New Hampshire State Housing Finance Authority,
Single Family Residental Mortgage, Series D:
280,000 6.050%, 1/01/98 No Opt. Call Aa 282,691
360,000 6.200%, 1/01/99 No Opt. Call Aa 367,639
355,000 6.350%, 1/01/00 No Opt. Call Aa 366,665
360,000 6.450%, 1/01/01 No Opt. Call Aa 375,070
New Hampshire State Housing Finance Authority,
Multi Family Housing, Series 1:
865,000 6.300%, 1/01/98 No Opt. Call A1 873,659
890,000 6.300%, 7/01/98 No Opt. Call A1 905,442
- --------------------------------------------------------------------------------------------------------------------------
New Jersey - 5.7%
1,800,000 Atlantic City, New Jersey, 5.650%, 8/15/99 No Opt. Call A- 1,832,688
4,035,000 New Jersey Economic Development Authority, No Opt. Call N/R 4,112,754
Electric Energy Facility Revenue, Vineland
Cogeneration Project, 6.750%, 6/01/99
570,000 New Jersey Economic Development Authority, 6/99 at 102 Aa3 593,798
Economic Development Revenue, Series R - 1,
5.800%, 6/01/01
</TABLE>
39
<PAGE>
Portfolio Holdings by State
Nuveen Flagship Limited Term - continued
<TABLE>
<CAPTION>
Principal Optional Call Market
Amount Description Provisions* Rating** Value
- --------------------------------------------------------------------------------------------------------------------------
<C> <S> <C> <C> <C>
New Jersey - continued
$ 100,000 New Jersey Economic Development Authority, No Opt. Call A1 $ 101,491
Economic Development Revenue Refunding,
Burlington Coat Factory, 5.400%, 9/01/03
New Jersey Health Care Facilities Financing
Authority, Revenue Bayonne Hospital Obligation
Group Issue:
860,000 5.750%, 7/01/00 No Opt. Call AAA 886,368
1,000,000 5.800%, 7/01/01 No Opt. Call AAA 1,037,120
1,000,000 5.900%, 7/01/02 No Opt. Call AAA 1,044,870
4,300,000 New Jersey Economic Development Authority, No Opt. Call AAA 4,409,349
Revenue Educational Testing Service, Series B,
5.500%, 5/15/05
New Jersey State Educational Facilities Authority,
Revenue Stevens Institution of Technology,
Series A:
1,155,000 6.000%, 7/01/99 No Opt. Call A- 1,186,982
1,275,000 6.100%, 7/01/00 No Opt. Call A- 1,320,479
995,000 6.200%, 7/01/01 No Opt. Call A- 1,038,969
1,165,000 6.300%, 7/01/02 No Opt. Call A- 1,227,188
New Jersey State Educational Facilities Authority,
Revenue Higher Educational, St. Peters College,
Series B:
295,000 6.100%, 7/01/00 No Opt. Call BBB+ 305,172
355,000 6.200%, 7/01/01 No Opt. Call BBB+ 370,418
800,000 New Jersey State Transportation Tollroad Fund No Opt. Call Aaa 841,072
Authority, Transportation System, Series A,
6.000%, 6/15/02
4,995,000 New Jersey Wastewater Treatment Tollroad Loan, No Opt. Call AAA 5,405,839
Revenue Refunding, Series C, 6.250%, 5/15/05
- --------------------------------------------------------------------------------------------------------------------------
New Mexico - 0.1%
90,000 Bernalillo County, New Mexico, Gross Receipts Tax No Opt. Call AA 90,647
Revenue, Series A, 5.150%, 4/01/04
</TABLE>
40
<PAGE>
Nuveen Flagship Municipal Bond Funds
April 30, 1997 Annual Report
<TABLE>
<CAPTION>
Principal Optional Call Market
Amount Description Provisions* Rating** Value
- --------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
New York - 18.0%
Albany, New York, Housing Authority, Limited Obligation
Refunding:
$ 250,000 4.900%, 10/01/99 No Opt. Call Baa1 $ 251,553
500,000 5.100%, 10/01/01 No Opt. Call Baa1 502,570
700,000 5.250%, 10/01/02 No Opt. Call Baa1 705,054
750,000 5.400%, 10/01/03 No Opt. Call Baa1 756,113
750,000 5.500%, 10/01/04 No Opt. Call Baa1 752,678
1,000,000 5.600%, 10/01/05 No Opt. Call Baa1 999,150
500,000 5.700%, 10/01/06 10/05 at 102 Baa1 499,035
700,000 5.850%, 10/01/07 10/05 at 102 Baa1 696,402
Jamestown, New York, Series A:
150,000 7.000%, 3/15/04 No Opt. Call Baa2 163,889
750,000 7.000%, 3/15/05 No Opt. Call Baa2 825,083
1,000,000 Metropolitan Transportation Authority, New York Service No Opt. Call Baa1 1,060,760
Contract Transportation Facilities, Series N,
6.625%, 7/01/02
New York City, Series D:
275,000 7.875%, 8/01/97 No Opt. Call Aaa 277,805
520,000 7.875%, 8/01/97 BBB+ 524,914
1,280,000 New York City, Series A, 8.250%, 11/01/99 No Opt. Call Aaa 1,394,317
3,000,000 New York City Refunding, Series A, 5.875%, 8/01/03 No Opt. Call BBB+ 3,072,870
New York City, Series F:
575,000 8.000%, 11/15/97 No Opt. Call AAA 587,840
425,000 8.000%, 11/15/97 No Opt. Call BBB+ 433,853
New York City, Series G:
3,000,000 5.700%, 2/01/03 No Opt. Call BBB+ 3,042,240
500,000 5.750%, 2/01/06 No Opt. Call BBB+ 502,680
3,000,000 New York, New York, Refunding, Series H, 5.400%, 8/01/04 No Opt. Call BBB+ 2,974,920
New York, New York, Series F:
4,000,000 6.100%, 2/15/02 No Opt. Call BBB+ 4,183,310
5,000,000 New York, New York, Series I, 5.625%, 4/15/05 No Opt. Call BBB+ 5,007,800
1,000,000 New York State Dormitory Authority, State University 5/00 at 102 BBB+ 1,073,590
Educational Facilities, Series A, 7.400%, 5/15/01
4,155,000 New York State Dormitory Authority, Revenue Refunding, City No Opt. Call Baa1 4,275,453
University, Series U, 5.875%, 7/01/00
</TABLE>
41
<PAGE>
<TABLE>
<CAPTION>
Portfolio Holdings by State
Nuveen Flagship Limited Term - continued
Principal Optional Call Market
Amount Description Provisions Rating** Value
- --------------------------------------------------------------------------------------------------------------------------
New York - continued
<S> <C> <C> <C> <C>
$ 2,900,000 New York State Dormitory Authority, Revenue No Opt. Call Baa1 $ 3,080,786
Refunding, Department of Health,
6.750%, 7/01/01
New York State Dormitory Authority, Revenue
Refunding, State University Educational Facilities,
Series A:
7,500,000 5.250%, 5/15/01 No Opt. Call BBB+ 7,556,775
2,000,000 6.500%, 5/15/05 No Opt. Call BBB+ 2,131,180
2,000,000 6.500%, 5/15/06 No Opt. Call BBB+ 2,133,580
New York State Dormitory Authority, State
University Educational, Series A:
770,000 7.000%, 5/15/02 (Pre-refunded to 5/15/99) 5/99 at 102 BBB+ 821,582
230,000 7.000%, 5/15/02 5/99 at 102 BBB+ 242,011
1,000,000 New York State Dormitory Authority, Revenue No Opt. Call Baa 1,002,220
Refunding, Nyack Hospital, 5.500%, 7/01/00
1,000,000 New York State Dormitory Authority, Revenue No Opt. Call Baa 1,002,700
Refunding, Nyack Hospital, 6.000%, 7/01/06
3,315,000 New York State Dormitory Authority, Revenue No Opt. Call Baa1 3,427,677
Refunding, City University System,
General Resource, 6.000%, 7/01/04
5,000,000 New York State Housing Finance Agency, No Opt. Call BBB+ 5,096,150
Revenue Refunding, Health Facilities,
New York City, Series A, 5.875%, 5/01/04
4,000,000 New York State Medical Care Facilities Finance 8/97 at 102 BBB+ 4,119,000
Agency, Revenue Refunding, Mental Health
Services Facilities, Series A, 8.150%, 2/15/98
1,500,000 New York State Medical Care Facilities Finance 8/97 at 102 BBB+ 1,544,445
Agency, Revenue Refunding, Mental Health
Services Facilities, Series A, 8.250%, 2/15/99
New York State Urban Development Corporation,
Revenue Refunding Project, Center For
Industrial Innovation:
2,405,000 5.300%, 1/01/04 No Opt. Call Baa1 2,388,838
1,265,000 6.250%, 1/01/05 No Opt. Call Baa1 1,325,214
New York State Urban Development Corporation,
Correctional Facilities, Series G:
700,000 7.000%, 1/01/98 No Opt. Call Baa1 713,454
695,000 6.500%, 1/01/99 No Opt. Call Baa1 716,302
</TABLE>
42
<PAGE>
Nuveen Flagship Municipal Bond Funds
April 30, 1997 Annual Report
<TABLE>
<CAPTION>
Principal Optional Call Market
Amount Description Provisions* Rating** Value
- --------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
New York--Continued
$ 1,000,000 New York State Urban Development Corporation, No Opt. Call Baa1 $ 1,002,380
Revenue Refunding, Correctional Facilities,
5.250%, 1/01/02
Onondaga County, New York, Resource Recovery
Agency, Revenue Development Costs:
570,000 5.900%, 5/01/98 No Opt. Call Baa1 571,630
480,000 6.100%, 5/01/99 No Opt. Call Baa1 485,280
630,000 6.200%, 5/01/00 No Opt. Call Baa1 639,582
3,700,000 Port Authority of New York and New Jersey No Opt. Call N/R 3,994,372
Special Obligation Revenue 3rd Installment,
Special Project, Kiac-4, 7.000%, 10/01/07
3,035,000 Port Authority of New York and New Jersey No Opt. Call AAA 3,192,699
Special Obligation Revenue Special Project,
RFK International Air Terminal, 1st Installment,
6.000%, 12/01/05 (WI)
- --------------------------------------------------------------------------------------------------------------------------
North Carolina - 1.3%
5,475,000 North Carolina Municipal Power Agency, No. 1 1/03 at 102 A- 5,671,607
Catawba Electric Revenue Refunding,
6.000%, 1/01/05
- --------------------------------------------------------------------------------------------------------------------------
Ohio - 6.9%
Barberton, Ohio, Hospital Facilities Revenue,
Barberton Citizens Hospital Company Project:
500,000 6.250%, 1/01/99 No Opt. Call A 514,575
750,000 6.400%, 1/01/00 No Opt. Call A 782,820
500,000 6.550%, 1/01/01 No Opt. Call A 529,855
Cambridge, Ohio, Hospital Improvement Revenue
Refunding, Guernsey Memorial Hospital:
545,000 7.500%, 12/01/98 No Opt. Call BBB 567,367
680,000 7.650%, 12/01/99 No Opt. Call BBB 742,859
595,000 7.750%, 12/01/00 No Opt. Call BBB 630,801
640,000 7.850%, 12/01/01 No Opt. Call BBB 689,133
Cleveland - Cuyahoga County, Ohio, Port Authority,
Revenue Refunding, Rock and Roll Hall of Fame:
500,000 4.900%, 12/01/00 No Opt. Call N/R 497,190
850,000 5.000%, 12/01/01 No Opt. Call N/R 841,738
1,000,000 5.100%, 12/01/02 No Opt. Call N/R 987,070
750,000 5.350%, 12/01/04 No Opt. Call N/R 739,868
335,000 5.600%, 12/01/06 No Opt. Call N/R 332,534
990,000 Cleveland, Ohio, Certificates of Participation, Motor No Opt. Call BBB 993,406
Vehicle, Motorized Equipment, 6.350%, 7/01/97
</TABLE>
43
<PAGE>
<TABLE>
<CAPTION>
Portfolio Holdings by State
Nuveen Flagship Intermediate - continued
Principal Optional Call Market
Amount Description Provisions* Rating** Value
- --------------------------------------------------------------------------------------------------------------------------
<C> <S> <C> <C> <C>
Ohio - continued
$ 650,000 Cleveland, Ohio, City School District Series A, No Opt. Call AAA $ 662,474
Library Improvement, 5.200%, 12/01/00
375,000 Cuyahoga County, Ohio, Health Care Facilities No Opt. Call N/R 402,143
Revenue, Altenheim Project, 8.750%, 6/01/99
Cuyahoga County, Ohio, Hospital Revenue
Meridia Health System:
500,000 5.750%, 8/15/00 No Opt. Call A1 513,695
795,000 5.850%, 8/15/01 No Opt. Call A1 822,261
735,000 5.950%, 8/15/02 No Opt. Call A1 765,319
45,000 East Cleveland, Ohio, Revenue Local No Opt. Call N/R 45,838
Government Fund, 7.900%, 12/01/97
Erie County, Ohio, Hospital Improvement Revenue
Refunding, Firelands Community Hospital Project:
1,110,000 6.000%, 1/01/98 No Opt. Call A 1,124,030
1,175,000 6.100%, 1/01/99 No Opt. Call A 1,201,085
700,000 Lucas County, Ohio, Hospital Revenue, Flower No Opt. Call BBB+ 731,290
Memorial Hospital, Series A, 7.200%, 12/01/98
Lucas County, Ohio, Hospital Revenue,
Flower Hospital:
685,000 5.500%, 12/01/99 No Opt. Call BBB+ 701,604
370,000 5.800%, 12/01/01 No Opt. Call BBB+ 385,129
790,000 5.900%, 12/01/02 No Opt. Call BBB+ 828,355
435,000 6.000%, 12/01/03 No Opt. Call BBB+ 460,256
5,195,000 Lucas County, Ohio, Hospital Revenue Refunding,
Promedica Healthcare Obligation,
6.000%, 11/15/05 No Opt. Call AAA 5,509,817
Mahoning Valley, Ohio, Sanitation District:
400,000 6.800%, 12/15/98 No Opt. Call N/R 412,448
400,000 6.950%, 12/15/99 No Opt. Call N/R 417,736
400,000 7.100%, 12/15/00 No Opt. Call N/R 422,620
400,000 7.250%, 12/15/01 No Opt. Call N/R 427,672
1,000,000 Miami County, Ohio, Hospital Facilities Revenue No Opt. Call BBB 1,030,260
Refunding and Improvement, Upper Valley
Medical Center, Series C, 6.000%, 5/15/06
905,000 Ohio State Economic Development Revenue 6/98 at 102 A- 945,110
Superior Forge and Steel Corporation,
Series 2, 7.250%, 6/01/01
</TABLE>
44
<PAGE>
<TABLE>
<CAPTION>
Nuveen Flagship Municipal Bond Funds
April 30, 1997 Annual Report
Principal Optional Call Market
Amount Description Provisions Rating** Value
- --------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Ohio - continued
$ 3,825,000 Ohio State Special Obligation Elementary and No Opt. Call AAA $3,974,175
Secondary Capital Facilities, Series A,
5.700%, 6/01/02
435,000 Shelby County, Ohio, Hospital Facilities Revenue No Opt. Call BBB 444,513
Refunding and Improvement, Memorial Hospital
Association, 6.100%, 9/01/98
- --------------------------------------------------------------------------------------------------------------------------
Pennsylvania - 9.0%
Allegheny County, Pennsylvania, Hospital Development
Authority Revenue, St. Margaret Memorial Hospital:
350,000 6.350%, 10/01/97 No Opt. Call BBB+ 353,315
400,000 6.600%, 10/01/98 No Opt. Call BBB+ 411,636
400,000 6.700%, 10/01/99 No Opt. Call BBB+ 416,828
400,000 6.800%, 10/01/00 No Opt. Call BBB+ 421,648
147,000 Allegheny County, Pennsylvania, Industrial No Opt. Call N/R 151,592
Development Authority, Solid Waste Disposal
Revenue Conversion System Inc. Project,
8.000%, 3/01/98
4,000,000 Delaware County, Pennsylvania, Industrial No Opt. Call A 4,107,680
Development Authority Revenue Refunding,
Resource Recovery Facility, Series A,
6.000%, 1/01/03
1,000,000 Monroeville, Pennsylvania, Hospital Authority, No Opt. Call A3 1,005,240
Hospital Revenue Refunding, Forbes Health
System, 5.750%, 10/01/05
950,000 Montgomery County, Pennsylvania, Higher Education No Opt. Call BBB+ 988,589
and Health Authority, Hospital Revenue,
Pottstown Memorial Medical Center Project,
7.000%, 11/15/99
2,500,000 Pennsylvania Intergovernmental Coop Authority, No Opt. Call AAA 2,597,325
Special Tax Revenue, City of Philadelphia Funding
Program, 6.000%, 6/15/00
3,000,000 Philadelphia, Pennsylvania, Refunding, No Opt. Call AAA 3,015,390
Series A, 5.125%, 5/15/03
500,000 Philadelphia, Pennsylvania, Gas Works Revenue, No Opt. Call Baa1 501,860
Thirteenth Series, 7.100%, 6/15/97
Philadelphia, Pennsylvania, Gas Works Revenue
Fourteenth, Series A:
3,600,000 5.600%, 7/01/99 No Opt. Call Baa1 3,655,440
3,425,000 5.700%, 7/01/00 No Opt. Call Baa1 3,488,774
45
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Portfolio Holdings by State
Nuveen Flagship Limited Term-continued
Principal Optional Call Market
Amount Description Provisions* Rating** Value
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Pennsylvania - continued
$ 1,390,000 Philadelphia, Pennsylvania, Hospitals and Higher No Opt. Call BBB+ $ 1,403,386
Education Facilities Authority, Revenue Refunding,
Philadelphia Major Project, 5.300%, 8/01/99
Philadelphia, Pennsylvania, School District, Series A:
3,990,000 5.450%, 7/01/04 No Opt. Call AAA 4,075,067
1,080,000 6.050%, 5/15/99 No Opt. Call AAA 1,114,301
5,000,000 Philadelphia, Pennsylvania, Water and Wastewater No Opt. Call AAA 4,996,750
Revenue Regular Fixed Ars, 5.150%, 6/15/04
Philadelphia, Pennsylvania, Hospitals and Higher
Education Facilities Authority, Hospital Revenue
Refunding, Pennsylvania Hospital:
3,490,000 5.850%, 7/01/02 No Opt. Call BBB+ 3,533,067
2,020,000 6.050%, 7/01/04 No Opt. Call BBB+ 2,058,562
2,000,000 6.150%, 7/01/05 No Opt. Call BBB+ 2,044,840
- ----------------------------------------------------------------------------------------------------------------------------------
Puerto Rico - 0.4%
1,575,000 Puerto Rico Commonwealth Urban Renewal No Opt. Call BBB 1,471,633
and Housing Corporation, Commonwealth
Appropriation Refunding, 0.000%, 10/01/98
325,000 Puerto Rico Electric Power Authority, Power Revenue, 7/01 at 102 Aaa 359,440
Formerly Puerto Rico Commonwealth
Water Resource Authority Power, Series P,
7.000%, 7/01/11 (Pre-refunded to 7/01/01)
- -----------------------------------------------------------------------------------------------------------------------------------
Rhode Island - 0.9%
4,035,000 Rhode Island Housing and Mortgage Finance No Opt. Call AAA 4,080,717
Corporation, Multifamily Housing, Series A,
5.350%, 7/01/03
- -----------------------------------------------------------------------------------------------------------------------------------
Tennessee - 1.2%
3,250,000 Metro Government Nashville and Davidson County, No Opt. Call BBB+ 3,311,848
Tennessee Industrial Development Board Revenue
Refunding and Improvement, Osco Treatment Inc,
6.000%, 5/01/03
1,000,000 Tennessee Housing Development Agency, Mortgage No Opt. Call A+ 1,011,980
Finance Refunding, Series A, 5.100%, 7/01/01
Tennessee Housing Development Agency, Mortgage
Finance, Series B:
605,000 5.300%, 1/01/00 No Opt. Call A+ 612,968
260,000 5.300%, 7/01/00 No Opt. Call A+ 264,022
</TABLE>
46
<PAGE>
<TABLE>
<CAPTION>
Nuveen Flagship Municipal Bond Funds
April 30, 1997 Annual Report
Principal Optional Call Market
Amount Description Provisions* Rating** Value
- --------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Texas - 2.2%
$ 1,575,000 Anderson County, Texas, Revenue Refunding, No Opt. Call AAA $ 1,601,318
Coffield Prison Farm Project, 5.300%, 3/15/00
Brazos, Texas, Higher Education Authority, Student
Loan Revenue Refunding, Series A - 1:
1,730,000 5.900%, 12/01/00 No Opt. Call Aaa 1,777,592
1,235,000 6.050%, 12/01/01 No Opt. Call Aaa 1,279,818
1,325,000 North Central Texas Health Facility Development 2/01 at 100 BBB 1,325,516
Corporation, Revenue Refunding, C C Young
Memorial Home Project, 5.700%, 2/15/03
1,000,000 Pasadena, Texas, Industrial Development Corporation, 10/97 at 100 A 1,006,800
Economic Development Revenue University
Space, Lunar and Planetary Project,
7.050%, 10/01/01
Texas State Higher Education Coordinating Board,
College Student Entertainment Loan Revenue,
Senior Lien:
680,000 6.900%, 4/01/99 No Opt. Call A 702,070
665,000 7.000%, 4/01/00 No Opt. Call A 697,000
1,375,000 7.100%, 4/01/01 No Opt. Call A 1,456,493
- --------------------------------------------------------------------------------------------------------------------------
Utah - 0.1%
300,000 Carbon County, Utah, Solid Waste Disposal Revenue No Opt. Call N/R 301,656
Refunding, East Carbon Development
Corporation, Series A, 8.000%, 7/01/97
- --------------------------------------------------------------------------------------------------------------------------
Vermont - 0.9%
Vermont State Student Assistance Corporation,
Education Loan Revenue Finance Program,
Series A - 3:
2,000,000 5.800%, 12/15/99 No Opt. Call AAA 2,048,160
1,000,000 5.900%, 12/15/00 No Opt. Call AAA 1,028,470
1,000,000 6.050%, 12/15/01 No Opt. Call AAA 1,039,260
- --------------------------------------------------------------------------------------------------------------------------
Virginia - 1.4%
2,850,000 Newport News, Virginia Redevelopment and 5/05 at 102 AAA 2,871,743
Housing Authority, Multifamily Housing Revenue
Refunding, Fredericksburg, Oxford Project,
Series A, 5.550%, 5/01/27
3,000,000 Virginia State Public Building Authority, Building 8/04 at 101 AA 3,251,220
Revenue, Series A, 6.250%, 8/01/15
(Pre-refunded to 8/01/04)
</TABLE>
47
<PAGE>
Portfolio Holdings by State
Nuveen Flagship Limited Term - continued
<TABLE>
<CAPTION>
Principal Optional Call Market
Amount Description Provisions* Rating** Value
- --------------------------------------------------------------------------------------------------------------------------
<C> <S> <C> <C> <C>
Washington - 0.4%
$ 1,670,000 Washington State Health Care Facilities Authority, No Opt. Call AAA $ 1,751,580
Children's Hospital and Medical Center,
6.000%, 10/01/02
- --------------------------------------------------------------------------------------------------------------------------
Wisconsin - 0.5%
Wisconsin State Health and Educational Facilities
Authority, Revenue Refunding, Lutheran Hospital,
Louisiana Crosse Inc, Series A:
1,155,000 5.300%, 2/15/01 No Opt. Call AAA 1,172,310
1,100,000 5.200%, 2/15/10 No Opt. Call AAA 1,112,086
- --------------------------------------------------------------------------------------------------------------------------
$446,102,000 Total Investments - (cost $440,735,480) - 100.1% 449,536,155
============--------------------------------------------------------------------------------------------------------------
Other Assets Less Liabilities - (0.1)% (544,342)
---------------------------------------------------------------------------------------------------------
Net Assets - 100% $448,991,813
==========================================================================================================================
</TABLE>
* Optional Call Provisions (not covered by the report of independent
auditors): Dates (month and year) and prices of the earliest optional call
or redemption. There may be other call provisions at varying prices at
later dates.
** Ratings (not covered by the report of independent auditors): Using the
higher of Standard and Poor's or Moody's rating.
N/R - Investment is not rated.
(WI) Security purchased on a when-issued basis (see note 1 of the Notes to
Financial Statements).
See accompanying notes to financial statements.
48
<PAGE>
<TABLE>
<CAPTION>
Statement of Net Assets Nuveen Flagship Municipal Bond Funds
April 30, 1997 April 30, 1997 Annual Report
Nuveen Flagship Nuveen Flagship Nuveen Flagship
All-American Intermediate Limited Term
<S> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------------------------------------
Assets
Investments in municipal securities, at market value (note 1) $268,825,821 $45,517,730 $449,536,155
Cash - - 1,065,692
Receivables:
Interest 4,842,532 762,193 7,732,224
Shares sold 690,566 280,896 858,729
Investments sold 5,927,821 - -
Other assets 7,961 2,419 22,089
- ------------------------------------------------------------------------------------------------------------------------------------
Total assets 280,294,701 46,563,238 459,214,889
- ------------------------------------------------------------------------------------------------------------------------------------
Liabilities
Cash overdraft 978,648 596,800 -
Payables:
Investments purchased 4,841,206 1,561,582 6,825,073
Shares redeemed 651,035 241,955 1,252,919
Accrued expenses:
Management fees (note 6) 82,197 2,331 161,914
12b-1 distribution and service fees (notes 1 and 6) 69,354 8,316 81,138
Other 125,749 55,738 163,152
Dividends payable 1,227,291 181,031 1,738,880
- ------------------------------------------------------------------------------------------------------------------------------------
Total liabilities 7,975,480 2,647,753 10,223,076
- ------------------------------------------------------------------------------------------------------------------------------------
Net assets (note 7) $272,319,221 $43,915,485 $448,991,813
- ------------------------------------------------------------------------------------------------------------------------------------
Class A Shares (note 1)
Net assets $216,575,087 $40,906,348 $425,401,062
Shares outstanding 19,867,542 3,907,686 40,110,006
Net asset value and redemption price per share $ 10.90 $ 10.47 $ 10.61
Offering price per share (net asset value per share plus
maximum sales charge of 4.20%, 3.00% and 2.50%,
respectively, of offering price) $ 11.38 $ 10.79 $ 10.88
- ------------------------------------------------------------------------------------------------------------------------------------
Class B Shares (note 1)
Net assets $ 711,042 N/A N/A
Shares outstanding 65,186 N/A N/A
Net asset value, offering and redemption price per share $ 10.91 N/A N/A
- ------------------------------------------------------------------------------------------------------------------------------------
Class C Shares (note 1)
Net assets $ 54,849,750 $ 2,540,357 $ 23,550,772
Shares outstanding 5,035,475 242,541 2,221,947
Net asset value, offering and redemption price per share $ 10.89 $ 10.47 $ 10.60
- ------------------------------------------------------------------------------------------------------------------------------------
Class R Shares (note 1)
Net assets $ 183,342 $ 468,780 $ 39,979
Shares outstanding 16,810 44,861 3,774
Net asset value, offering and redemption price per share $ 10.91 $ 10.45 $ 10.59
- ------------------------------------------------------------------------------------------------------------------------------------
N/A - Nuveen Flagship Intermediate and Nuveen Flagship Limited Term are not authorized to issue Class B Shares.
See accompanying notes to financial statements.
</TABLE>
49
<PAGE>
Statement of Operations
11 months ended April 30, 1997
<TABLE>
<CAPTION>
Nuveen Flagship Nuveen Flagship Nuveen Flagship
All-American* Intermediate* Limited Term*
- ----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Investment Income
Tax-exempt interest income (note 1) $15,685,354 $2,452,796 $24,624,689
- ----------------------------------------------------------------------------------------------------------------------------
Expenses
Management fees (note 6) 1,218,270 217,495 1,481,442
12b-1 service fees - Class A (notes 1 and 6) 683,251 145,606 1,482,478
12b-1 distribution and service fees - Class B (notes 1 and 6) 660 N/A N/A
12b-1 distribution and service fees - Class C (notes 1 and 6) 421,541 16,039 120,039
Shareholders' servicing agent fees and expenses 133,582 41,323 282,042
Custodian's fees and expenses 95,650 49,178 158,736
Trustees' fees and expenses (note 6) 6,193 1,202 12,096
Professional fees 19,313 12,931 25,399
Shareholders' reports - printing and mailing expenses 20,000 4,759 43,347
Federal and state registration fees 44,666 25,160 42,741
Organization expenses (note 1) - 6,546 -
Other expenses 9,905 2,093 19,130
- ----------------------------------------------------------------------------------------------------------------------------
Total expenses before reimbursement 2,653,031 522,332 3,667,450
Expense reimbursement (note 6) (269,587) (216,714) (75,003)
- ----------------------------------------------------------------------------------------------------------------------------
Net expenses 2,383,444 305,618 3,592,447
- ----------------------------------------------------------------------------------------------------------------------------
Net investment income 13,301,910 2,147,178 21,032,242
- ----------------------------------------------------------------------------------------------------------------------------
Realized and Unrealized Gain from Investments
Net realized gain from investment transactions
(notes 1 and 4) 2,249,650 147,832 1,658,088
Net change in unrealized appreciation or depreciation
of investments 4,859,517 801,793 116,950
- ----------------------------------------------------------------------------------------------------------------------------
Net gain from investments 7,109,167 949,625 1,775,038
- ----------------------------------------------------------------------------------------------------------------------------
Net increase in net assets from operations $20,411,077 $3,096,803 $22,807,280
</TABLE>
* Information represents eight months of Flagship All-
American, Flagship Intermediate and Flagship Limited Term
and three months of Nuveen Flagship All-American, Nuveen
Flagship Intermediate and Nuveen Flagship Limited Term,
respectively (see note 1 of the Notes to Financial
Statements).
N/A - Nuveen Flagship Intermediate and Nuveen Flagship Limited
Term are not authorized to issue Class B Shares.
See accompanying notes to financial statements.
50
<PAGE>
Statement of Changes in Net Assets
<TABLE>
<CAPTION>
Nuveen Flagship Municipal Bond Funds
April 30, 1997 Annual Report
Nuveen Flagship Flagship Nuveen Flagship Flagship
All-American* All-American Intermediate* Intermediate
---------------------------------------------------------------
11 months ended Year ended 11 months ended Year ended
4/30/97 5/31/96 4/30/97 5/31/96
- -------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Operations
Net investment income $ 13,301,910 $ 13,630,068 $ 2,147,178 $ 2,231,236
Net realized gain from investment
transactions (notes 1 and 4) 2,249,650 4,802,765 147,832 1,178,381
Net change in unrealized appreciation or
depreciation of investments 4,859,517 (8,074,381) 801,793 (1,349,675)
- -------------------------------------------------------------------------------------------------------------
Net increase in net assets from
operations 20,411,077 10,358,452 3,096,803 2,059,942
- -------------------------------------------------------------------------------------------------------------
Distributions to Shareholders (note 1)
From undistributed net investment income:
Class A (10,934,899) (11,330,827) (2,059,165) (2,230,105)
Class B (3,405) N/A N/A N/A
Class C** (2,349,107) (2,350,784) (74,318) (15,633)
Class R (1,421) N/A (4,137) N/A
From accumulated net realized gains
from investment transactions:
Class A (1,174,852) - - -
Class B - N/A N/A N/A
Class C** (285,764) - - -
Class R - N/A - N/A
- -------------------------------------------------------------------------------------------------------------
Decrease in net assets from
distributions to shareholders (14,749,448) (13,681,611) (2,137,620) (2,245,738)
- -------------------------------------------------------------------------------------------------------------
Fund ShareTransactions (note 2)
Net proceeds from sale of shares 45,105,197 64,410,375 7,641,512 16,566,991
Net proceeds from shares issued to
shareholders due to reinvestment
of distributions 6,771,634 7,107,483 1,250,991 1,433,834
- -------------------------------------------------------------------------------------------------------------
51,876,831 71,517,858 8,892,503 18,000,825
- -------------------------------------------------------------------------------------------------------------
Cost of shares redeemed (40,524,782) (43,626,650) (13,864,964) (11,954,767)
- -------------------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets
from Fund share transactions 11,352,049 27,891,208 (4,972,461) 6,046,058
- -------------------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets 17,013,678 24,568,049 (4,013,278) 5,860,262
- -------------------------------------------------------------------------------------------------------------
Net assets at the beginning of period 255,305,543 230,737,494 47,928,763 42,068,501
- -------------------------------------------------------------------------------------------------------------
Net assets at the end of period $272,319,221 $255,305,543 $ 43,915,485 $ 47,928,763
- -------------------------------------------------------------------------------------------------------------
Balance of undistributed net investment
income at end of period $ 13,078 $ - $ 9,558 $ -
- -------------------------------------------------------------------------------------------------------------
</TABLE>
* Information represents eight months of Flagship All-American, Flagship
Intermediate and Flagship Limited Term and three months of Nuveen Flagship
All-American, Nuveen Flagship Intermediate and Nuveen Flagship Limited
Term, respectively (see note 1 of the Notes to Financial Statements).
N/A - Nuveen Flagship Intermediate and Nuveen Flagship Limited Term are not
authorized to issue Class B Shares. Flagship All -American was not
authorized to issue Class B Shares and the Funds were not authorized to
issue Class R Shares prior to February 1, 1997.
See accompanying notes to financial statements.
51
<PAGE>
Statement of Changes in Net Assets - continued
<TABLE>
<CAPTION>
Nuveen Flagship Flagship
Limited Term* Limited Term
-------------------------------
11 months ended Year ended
4/30/97 5/31/96
- --------------------------------------------------------------------------------------------------
<S> <C> <C>
Operations
Net investment income $ 21,032,242 $ 25,355,276
Net realized gain from investment transactions
(notes 1 and 4) 1,658,088 1,123,864
Net change in unrealized appreciation or depreciation
of investments 116,950 (5,083,239)
- --------------------------------------------------------------------------------------------------
Net increase in net assets from operations 22,807,280 21,395,901
- --------------------------------------------------------------------------------------------------
Distributions to Shareholders (note 1)
From undistributed net investment income:
Class A (19,952,270) (24,835,168)
Class B N/A N/A
Class C** (809,432) (175,819)
Class R (286) N/A
From accumulated net realized gains from investment transactions:
Class A - -
Class B N/A N/A
Class C** - -
Class R - N/A
- --------------------------------------------------------------------------------------------------
Decrease in net assets from distributions to shareholders (20,761,988) (25,010,987)
- --------------------------------------------------------------------------------------------------
Fund ShareTransactions (note 2)
Net proceeds from the sale of shares 55,204,267 90,170,813
Net proceeds from shares issued to shareholders due to
reinvestment of distributions 12,418,014 16,369,864
- --------------------------------------------------------------------------------------------------
67,622,281 106,540,677
- --------------------------------------------------------------------------------------------------
Cost of shares redeemed (125,247,208) (167,550,003)
- --------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets
from Fund share transactions (57,624,927) (61,009,326)
- --------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets (55,579,635) (64,624,412)
- --------------------------------------------------------------------------------------------------
Net assets at the beginning of period 504,571,448 569,195,860
- --------------------------------------------------------------------------------------------------
Net assets at the end of period $ 448,991,813 $ 504,571,448
- --------------------------------------------------------------------------------------------------
Balance of undistributed net investment income
at end of period $ 1,014,800 $ 744,546
- --------------------------------------------------------------------------------------------------
</TABLE>
* Information represents eight months of Flagship All-American, Flagship
Intermediate and Flagship Limited Term and three months of Nuveen Flagship
All-American, Nuveen Flagship Intermediate and Nuveen Flagship Limited
Term, respectively (see note 1 of the Notes to Financial Statements).
N/A - Nuveen Flagship Intermediate and Nuveen Flagship Limited Term are not
authorized to issue Class B Shares. Flagship All -American was not
authorized to issue Class BShares and the Funds were not authorized to
issue Class R Shares prior to February 1, 1997.
See accompanying notes to financial statements.
52
<PAGE>
Notes to Financial Statements Nuveen Flagship Municipal Bond Funds
April 30, 1997 Annual Report
1. General Information and Significant Accounting Policies
The Nuveen Flagship Municipal Trust (the "Trust") is an open-end diversified
management investment company registered under the Investment Company Act of
1940, as amended. The Trust comprises the Nuveen Flagship All-American Municipal
Bond Fund ("Nuveen Flagship All-American"), the Nuveen Flagship Intermediate
Municipal Bond Fund ("Nuveen Flagship Intermediate") and the Nuveen Flagship
Limited Term Municipal Bond Fund ("Nuveen Flagship Limited Term") (collectively,
the "Funds"), among others. The Trust was organized as a Massachusetts business
trust on July 1, 1996.
The John Nuveen Company, parent of John Nuveen & Co. Incorporated and Nuveen
Advisory Corp., respectively, the distributor ("Distributor") and investment
advisor ("Adviser") of the Funds, entered into an agreement under which Nuveen
acquired Flagship Resources Inc. and after the close of business on January 31,
1997, consolidated their respective mutual fund businesses. This agreement was
approved at a meeting by the shareholders of the Flagship Funds in December
1996.
After the close of business on January 31, 1997, the Flagship All-American Tax
Exempt Fund ("Flagship All-American"), the Flagship Intermediate Tax Exempt Fund
("Flagship Intermediate") and the Flagship Limited Term Tax Exempt Fund
("Flagship Limited Term") were reorganized into the Trust. At this time they
were renamed Nuveen Flagship All-American Municipal Bond Fund, Nuveen Flagship
Intermediate Municipal Bond Fund and Nuveen Flagship Limited Term Municipal Bond
Fund, respectively. The Funds had a May 31 fiscal year end prior to being
reorganized into the Trust and now have an April 30 fiscal year end.
Each Fund seeks 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 Funds' 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
April 30, 1997, Nuveen Flagship All-
53
<PAGE>
Notes to Financial Statements - continued
American, Nuveen Flagship Intermediate and Nuveen Flagship Limited Term had such
outstanding purchase commitments of $4,841,206, $1,561,582 and $6,825,073,
respectively.
Interest 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
as required for federal income tax purposes.
Dividends and Distributions to Shareholders
Tax-exempt net investment income is declared as a dividend monthly and payment
is made or reinvestment is credited to shareholder accounts on the first
business day after month-end. Net realized capital gains and/or market discount
from investment transactions are distributed to shareholders not less frequently
than annually. Furthermore, capital gains are distributed only to the extent
they exceed available capital loss carryovers. Prior to the reorganization, tax-
exempt net investment income for Flagship All-American, Flagship Intermediate
and Flagship Limited Term was declared as a dividend daily and payment was made
on the last business day of each month.
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 ordinary taxable income from investment transactions,
where applicable.
Federal 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, each Fund intends to
satisfy conditions which will enable interest from municipal securities, which
is exempt from regular federal income tax, to retain such tax-exempt status when
distributed to the shareholders of the respective Funds. All income dividends
paid during the 11 months ended April 30, 1997, have been designated Exempt
Interest Dividends. Net realized capital gain and market discount distributions
are subject to federal taxation.
Flexible Sales Charge Program
Each Fund offers Class A, Class C and Class R Shares. Nuveen Flagship All-
American Fund also offers Class B Shares. Class A Shares incur a sales charge on
purchases and an annual 12b-1 service fee. Class B Shares, which were first
offered for sale on February 1, 1997, are sold without a sales charge on
purchases but incur annual 12b-1 distribution and service fees. An investor
purchasing Class B Shares agrees to pay a contingent deferred sales charge
("CDSC") of up to 5% depending upon the length of time the shares are held (CDSC
declines to 0% at the end of six years). Class C Shares
54
<PAGE>
Nuveen Flagship Municipal Bond Funds
April 30, 1997 Annual Report
are sold without a sales charge on purchases 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 18 months of purchase. Class R Shares,
which were first offered for sale on February 1, 1997, are not subject to any
sales charge on purchases or 12b-1 distribution or service fees. Class R Shares
are available for purchases of over $1 million and in other limited
circumstances.
Derivative Financial Instruments
The Funds may invest in certain derivative financial instruments including
futures, forward, swap, and option contracts, and other financial instruments
with similar characteristics. Although the Funds are authorized to invest in
such financial instruments, and may do so in the future, they did not make any
such investments during the 11 months ended April 30, 1997.
Expense Allocation
Expenses of each Fund that are not directly attributable to a specific class of
shares are prorated among the classes based on the relative net assets of each
class. Expenses directly attributable to a class of shares, which presently only
includes 12b-1 distribution and service fees, are recorded to the specific
class.
Use of Estimates
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities at the date of the
financial statements and the reported amounts of increases and decreases in net
assets from operations during the reporting period.
Organizational Expenses
The organizational expenses incurred on behalf of Nuveen Flagship Intermediate
(approximately $35,700) will be reimbursed to the Advisor on a straight-line
basis over a period of five years. As of April 30, 1997, $20,874 has been
reimbursed. In the event that the Advisor's current investment in the Trust
falls below $100,000 prior to the full reimbursement of the organizational
expenses, then it will forego any further reimbursement.
55
<PAGE>
Notes to Financial Statements - continued
<TABLE>
<CAPTION>
2. Fund Shares
Transactions in Fund shares were as follows:
Nuveen Flagship Flagship Nuveen Flagship Flagship
All-American* All-American Intermediate* Intermediate
-------------------------------------------------------------------------------------------------------------
11 months ended 4/30/97 Year ended 5/31/96 11 months ended 4/30/97 Year ended 5/31/96
Shares Amount Shares Amount Shares Amount Shares Amount
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Shares sold
Class A 2,917,181 $ 31,668,207 4,757,928 $ 51,859,159 539,437 $ 5,639,771 1,461,305 $ 15,332,025
Class B 65,162 712,816 N/A N/A N/A N/A N/A N/A
Class C ** 1,153,656 12,540,237 1,153,142 12,551,216 145,976 1,523,605 117,137 1,234,966
Class R 16,754 183,937 N/A N/A 44,829 478,136 N/A N/A
Shares issued to shareholders due to reinvestment of distributions
Class A 514,027 5,592,134 529,263 5,744,859 118,796 1,215,858 136,334 1,423,816
Class B 24 265 N/A N/A N/A N/A N/A N/A
Class C ** 108,469 1,178,627 125,662 1,362,624 3,777 34,796 957 10,018
Class R 56 608 N/A N/A 32 337 N/A N/A
- ----------------------------------------------------------------------------------------------------------------------------------
4,775,329 51,876,831 6,565,995 71,517,858 852,847 8,892,503 1,715,733 18,000,825
- ----------------------------------------------------------------------------------------------------------------------------------
Shares redeemed
Class A (3,061,374) (33,300,392) (2,979,351) (32,444,225) (1,302,182) (13,627,224) (1,134,391) (11,928,052)
Class B - - N/A N/A N/A N/A N/A N/A
Class C ** (665,228) (7,224,390) (1,035,684) (11,182,425) (22,717) (237,740) (2,589) (26,715)
Class R - - N/A N/A - - N/A N/A
- ----------------------------------------------------------------------------------------------------------------------------------
(3,726,602) (40,524,782) (4,015,035) (43,626,650) (1,324,899) (13,864,964) (1,136,980) (11,954,767)
- ----------------------------------------------------------------------------------------------------------------------------------
Net increase
(decrease) 1,048,727 $ 11,352,049 2,550,960 $ 27,891,208 (472,052) $ (4,972,461) 578,753 $ 6,046,058
- ----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
* Information represents eight months of Flagship All-American, Flagship
Intermediate and Flagship Limited Term and three months of Nuveen Flagship
All-American, Nuveen Flagship Intermediate and Nuveen Flagship Limited
Term, respectively (see note 1 of the Notes to Financial Statements).
N/A - Nuveen Flagship Intermediate and Nuveen Flagship Limited Term are not
authorized to issue Class B Shares. Flagship All-American was not
authorized to issue Class B Shares and the Funds were not authorized to
issue Class R Shares prior to February 1, 1997.
** Class C Shares for Flagship Intermediate and Flagship Limited Term
commenced operations on December 1, 1995.
56
<PAGE>
<TABLE>
<CAPTION>
Nuveen Flagship Municipal Bond Funds
April 30, 1997 Annual Report
Nuveen Flagship Flagship
Limited Term* Limited Term
------------------------------------------------------------
11 months ended 4/30/97 Year ended 5/31/96
Shares Amount Shares Amount
------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Shares sold
Class A 4,064,504 $ 43,309,184 6,914,835 $ 74,019,115
Class B N/A N/A N/A N/A
Class C ** 1,111,314 11,854,862 1,505,009 16,151,698
Class R 3,763 40,221 N/A N/A
Shares issued to shareholders
due to reinvestment of distributions
Class A 1,125,302 11,989,359 1,522,705 16,288,950
Class B N/A N/A N/A N/A
Class C ** 40,213 428,533 7,584 80,914
Class R 11 122 N/A N/A
------------------------------------------------------------------------------------------------------------------
6,345,107 67,622,281 9,950,133 106,540,677
------------------------------------------------------------------------------------------------------------------
Shares redeemed
Class A (11,367,265) (121,107,007) (15,607,722) (166,978,057)
Class B N/A N/A N/A N/A
Class C ** (388,996) (4,140,201) (53,177) (571,946)
Class R - - N/A N/A
------------------------------------------------------------------------------------------------------------------
(11,756,261) (125,247,208) (15,660,899) (167,550,003)
------------------------------------------------------------------------------------------------------------------
Net increase (decrease) (5,411,154) $ (57,624,927) (5,710,766) $ (61,009,326)
------------------------------------------------------------------------------------------------------------------
</TABLE>
* Information represents eight months of Flagship All-
American, Flagship Intermediate and Flagship Limited Term
and three months of Nuveen Flagship All-American, Nuveen
Flagship Intermediate and Nuveen Flagship Limited Term,
respectively (see note 1 of the Notes to Financial
Statements).
N/A - Nuveen Flagship Intermediate and Nuveen Flagship Limited
Term are not authorized to issue Class B Shares. Flagship
All-American was not authorized to issue Class B Shares and
the Funds were not authorized to issue Class R Shares prior
to February 1, 1997.
** Class C Shares for Flagship Intermediate and Flagship
Limited Term commenced operations on December 1, 1995.
57
<PAGE>
Notes to Financial Statements - continued
3. Distributions to Shareholders
On May 9, 1997, the Funds declared dividend distributions from their tax-exempt
net investment income which were paid on June 2, 1997, to shareholders of record
on May 9, 1997, as follows:
<TABLE>
<CAPTION>
Nuveen Flagship Nuveen Flagship Nuveen Flagship
All-American* Intermediate* Limited Term*
- -------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Dividend per share:
Class A $.0499 $.0428 $.0415
Class B .0430 N/A N/A
Class C .0449 .0380 .0388
Class R .0517 .0446 .0433
- -------------------------------------------------------------------------------------------------
</TABLE>
N/A - Nuveen Flagship Intermediate and Nuveen Flagship Limited Term are not
authorized to issue Class B Shares.
4. Securities Transactions
Purchases and sales (including maturities) of investments in municipal
securities and temporary municipal investments for the months ended April 30,
1997, were as follows:
<TABLE>
<CAPTION>
Nuveen Flagship Nuveen Flagship Nuveen Flagship
All-American* Intermediate* Limited Term*
- -----------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Purchases
Investments in municipal securities $110,088,451 $12,599,350 $139,727,058
Temporary municipal investments 11,000,000 - -
Sales
Investments in municipal securities 102,438,815 16,827,164 199,704,201
Temporary municipal investments 11,000,000 - -
- -----------------------------------------------------------------------------------------------------
</TABLE>
*Information represents eight months of Flagship All-American, Flagship
Intermediate and Flagship Limited Term and three months of Nuveen Flagship All-
American, Nuveen Flagship Intermediate and Nuveen Flagship Limited Term,
respectively (see note 1 of the Notes to Financial Statements).
At April 30, 1997, the identified cost of investments owned for federal income
tax purposes was the same as the cost for financial reporting purposes for each
Fund.
At April 30, 1997, Nuveen Flagship Intermediate and Nuveen Flagship Limited Term
had unused capital loss carryforwards of $300,689 and $5,140,875, respectively,
available for federal income tax purposes to be applied against future capital
gains, if any. If not applied, the carryovers will expire in the year 2003.
58
<PAGE>
Nuveen Flagship Municipal Bond Funds
April 30, 1997 Annual Report
5. Unrealized Appreciation (Depreciation)
Gross unrealized appreciation and gross unrealized depreciation of investments
at April 30, 1997, were as follows:
<TABLE>
<CAPTION>
Nuveen Flagship Nuveen Flagship Nuveen Flagship
All-American Intermediate Limited Term
- ------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Gross unrealized:
appreciation $12,537,491 $1,398,812 $9,031,989
depreciation (112,685) (20,666) (231,314)
- ------------------------------------------------------------------------------------------------
Net unrealized appreciation $12,424,806 $1,378,146 $8,800,675
- ------------------------------------------------------------------------------------------------
</TABLE>
6. Management Fee and Other Transactions with Affiliates
Under the Trust's investment management agreement with the Adviser, each Fund
pays an annual management fee, payable monthly, at the rates set forth below
which are based upon the average daily net asset value of each Fund as follows:
<TABLE>
<CAPTION>
Nuveen Flagship
All-American & Intermediate
Average daily net asset value Management Fee
- ----------------------------------------------------------------------------
<S> <C>
For the first $125 million .5000 of 1%
For the next $125 million .4875 of 1
For the next $250 million .4750 of 1
For the next $500 million .4625 of 1
For the next $1 billion .4500 of 1
For net assets over $2 billion .4250 of 1
- ----------------------------------------------------------------------------
Nuveen Flagship
Limited Term
Average daily net asset value Management Fee
- ----------------------------------------------------------------------------
For the first $125 million .4500 of 1%
For the next $125 million .4375 of 1
For the next $250 million .4250 of 1
For the next $500 million .4125 of 1
For the next $1 billion .4000 of 1
For net assets over $2 billion .3750 of 1
- ---------------------------------------------------------------------------
</TABLE>
Prior to the reorganization (see note 1) Flagship All-American and Flagship
Intermediate paid a management fee of .5 of 1% and Flagship Limited Term paid a
management fee of .3 of 1%.
The management fee compensates the Adviser for overall investment advisory and
administrative services, and general office facilities. The Trust pays no
compensation
59
<PAGE>
Notes to Financial Statements - continued
directly to 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.
The Adviser may voluntarily reimburse expenses from time to time, which may be
terminated at any time at its discretion.
During the eleven months ended April 30, 1997, the Distributor and its
predecessor (Flagship Funds Inc., a wholly-owned subsidiary of Flagship
Resources Inc.) 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>
Nuveen Flagship Nuveen Flagship Nuveen Flagship
All-American Intermediate Limited Term
- ----------------------------------------------------------------------------------
<S> <C> <C> <C>
Gross sales charges collected $456,000 $73,400 $331,800
Paid to authorized dealers $394,600 $57,700 $265,900
</TABLE>
During the period ended April 30, 1997, the Distributor and its predecessor
compensated authorized dealers directly with approximately $177,800 for Nuveen
Flagship All-American, $12,800 for Nuveen Flagship Intermediate and $196,400 for
Nuveen Flagship Limited Term in commission advances at the time of purchase. 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 on Class C shares during the first year following a purchase
are retained by the Distributor. During the period ended April 30, 1997, the
Distributor and its predecessor collected and retained approximately $4,900 for
Nuveen Flagship All-American, $3,400 for Nuveen Flagship Intermediate, and
$35,400 for Nuveen Flagship Limited Term of CDSC on share redemptions.
7. Composition of Net Assets
At April 30, 1997, each Fund had an unlimited number of $.01 par value shares
authorized. Net assets consisted of:
<TABLE>
<CAPTION>
Nuveen Flagship Nuveen Flagship Nuveen Flagship
All-American Intermediate Limited Term
- ------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Capital paid-in $258,950,046 $42,828,470 $444,374,169
Balance of undistributed net investment income 13,078 9,558 1,014,800
Accumulated net realized gain (loss) from
investment transactions 931,291 (300,689) (5,197,831)
Net unrealized appreciation of investments 12,424,806 1,378,146 8,800,675
- ------------------------------------------------------------------------------------------------------------------
Net assets $272,319,221 $43,915,485 $448,991,813
- ------------------------------------------------------------------------------------------------------------------
</TABLE>
60
<PAGE>
Nuveen Flagship Municipal Bond Funds
April 30, 1997 Annual Report
8. Investment Composition
Each Fund invests in municipal securities which include general obligation,
escrowed and revenue bonds. At April 30, 1997, the revenue sources by municipal
purpose for these investments, expressed as a percent of total investments, were
as follows:
<TABLE>
<CAPTION>
Nuveen Flagship Nuveen Flagship Nuveen Flagship
All-American Intermediate Limited Term
- ----------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Revenue Bonds:
Health Care Facilities 23% 23% 19%
Pollution Control 23 7 6
Transportation 4 17 8
Lease Rental Facilities 11 11 14
Educational Facilities 8 6 10
Water/Sewer Facilities 5 9 4
Electric Utilities 5 3 8
Housing Facilities 7 3 7
Other 6 9 6
General Obligation Bonds 4 12 13
Escrowed Bonds 4 - 5
- ----------------------------------------------------------------------------------------------
100% 100% 100%
- ----------------------------------------------------------------------------------------------
</TABLE>
Certain long-term and intermediate-term investments owned by the Funds are
either covered by insurance issued by several private insurers or are backed by
an escrow or trust containing U.S. Government or U.S. Government agency
securities, both of which ensure the timely payment of principal and interest in
the event of default (19% for Nuveen Flagship All-American, 36% for Nuveen
Flagship Intermediate and 39% for Nuveen Flagship Limited Term). Such insurance
or escrow, however, does not guarantee the market value of the municipal
securities or the value of any of the Funds' shares.
For additional information regarding each investment security, refer to the
Portfolio of Investments of each Fund.
61
<PAGE>
Financial Highlights
63
<PAGE>
<TABLE>
<CAPTION>
Financial Highlights
Selected data for a common share outstanding throughout each period is as follows:
Operating Performance Less Distributions
------------------------- ---------------------------
NUVEEN FLAGSHIP Net
ALL-AMERICAN++ Net realized and Dividends Net Total
asset unrealized from tax- asset return
value Net gain (loss) exempt net Distributions value on net
Year ending beginning investment from investment from capital end of asset
April 30, of period income(b) investments income gains period value(a)
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Class A (10/88)
1997(e) $10.67 $.55 $ .29 $(.55) $(.06) $10.90 8.02%
1996(f) 10.79 .61 (.12) (.61) - 10.67 4.64
1995(f) 10.61 .63 .18 (.63) - 10.79 8.01
1994(f) 11.07 .65 (.30) (.65) (.16)+++ 10.61 2.99
1993(f) 10.40 .67 .76 (.67) (.09) 11.07 14.25
1992(f) 9.95 .69 .45 (.69) - 10.40 11.94
1991(f) 9.73 .72 .22 (.72) - 9.95 10.10
1990(f) 9.81 .71 (.06) (.72) (.01) 9.73 6.92
1989(c) 9.58 .46 .23 (.46) - 9.81 10.66+
Class B (2/97)
1997(d) 10.98 .12 (.06) (.13) - 10.91 .54
Class C (6/93)
1997(e) 10.66 .50 .29 (.50) (.06) 10.89 7.48
1996(f) 10.78 .55 (.12) (.55) - 10.66 4.07
1995(f) 10.60 .57 .18 (.57) - 10.78 7.42
1994(f) 11.09 .57 (.32) (.57) (.17)+++ 10.60 2.16+
Class R (2/97)
1997(d) 10.99 .15 (.07) (.16) - 10.91 .69
- ------------------------------------------------------------------------------------------------------------------------------
</TABLE>
+ Annualized.
++ Information included prior to the period ending April 30, 1997, reflects the
financial highlights of Flagship All-American.
+++ The amounts shown include a distribution in excess of capital gains of $.10
per share.
(a) Total returns are calculated on net asset value without any sales charge.
(b) After waiver of certain management fees or reimbursement of expenses, if
applicable, by Nuveen Advisory or its predecessor Flagship Financial.
(c) From commencement of class operations as noted through May 31.
(d) From commencement of class operations as noted through April 30.
(e) For the 11 months ending April 30.
(f) For the year ending May 31.
64
<PAGE>
<TABLE>
<CAPTION>
Nuveen Flagship Municipal Bond Funds
April 30, 1997 Annual Report
Ratios/Supplemental Data
- ---------------------------------------------------------------------------------
Ratio Ratio
of net of net
Ratio of investment Ratio of investment
expenses income to expenses income to
to average average to average average
net assets net assets net assets net assets
Net assets before before after after Portfolio
end of period reimburse- reimburse- reimburse- reimburse- turnover
(in thousands) ment ment ment(b) ment(b) rate
- ---------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
$216,575 .98%+ 5.43%+ .87%+ 5.54%+ 39%
207,992 1.02 5.41 .83 5.60 79
185,495 1.06 5.72 .76 6.02 71
159,867 1.05 5.34 .62 5.77 81
170,831 1.05 5.84 .65 6.24 72
129,525 1.05 6.32 .56 6.81 86
79,557 1.10 6.65 .42 7.33 94
49,013 1.13 6.58 .42 7.29 132
25,644 1.38+ 5.89+ -- 7.27+ 57
711 1.55+ 4.83+ 1.55+ 4.83+ 39
54,850 1.53+ 4.88+ 1.42+ 4.99+ 39
47,314 1.57 4.85 1.37 5.05 79
45,242 1.61 5.17 1.31 5.47 71
39,997 1.63+ 4.62+ 1.09+ 5.16+ 81
183 .61+ 5.95+ .61+ 5.95+ 39
- ---------------------------------------------------------------------------------
</TABLE>
65
<PAGE>
Financial Highlights - continued
Selected data for a common share outstanding throughout each
period is as follows:
<TABLE>
<CAPTION>
Operating Performance Less Distributions
--------------------- ------------------
NUVEEN FLAGSHIP Net
INTERMEDIATE++ Net realized and Dividends Net Total
asset unrealized from asset return
value Net gain (loss) tax-exempt Distributions value on net
Year ending beginning investment from investment from capital end of asset
April 30, of period income(b) investments income gains period value (a)
- -------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Class A (9/92)
1997(e) $10.27 $.47 $ .20 $(.47) $ -- $10.47 6.64%
1996(f) 10.29 .51 (.02) (.51) -- 10.27 4.84
1995(f) 10.16 .51 .13 (.51) -- 10.29 6.63
1994(f) 10.35 .52 (.13) (.52) (.06)+++ 10.16 3.72
1993(c) 9.70 .36 .64 (.35) -- 10.35 14.06+
Class C (12/95)
1997(e) 10.28 .44 .17 (.42) -- 10.47 6.00
1996(c) 10.57 .23 (.30) (.22) -- 10.28 (1.78)+
Class R (2/97)
1997(d) 10.60 .13 (.15) (.13) -- 10.45 (.15)
- -------------------------------------------------------------------------------------------------------------------------------
</TABLE>
+ Annualized.
++ Information included prior to the period ending April 30, 1997, reflects
the financial highlights of Flagship Intermediate.
+++ The amount shown reflects a distribution in excess of capital gains of $.01
per share.
(a) Total returns are calculated on net asset value without any sales charge.
(b) After waiver of certain management fees or reimbursement of expenses, if
applicable, by Nuveen Advisory or its predecessor Flagship Financial.
(c) From commencement of class operations as noted through May 31.
(d) From commencement of class operations as noted through April 30.
(e) For the 11 months ending April 30.
(f) For the year ending May 31.
66
<PAGE>
<TABLE>
<CAPTION>
Nuveen Flagship Municipal Bond Funds
April 30, 1997 Annual Report
Ratios/Supplemental Data
- -------------------------------------------------------------------------------------------------------
Ratio Ratio
of net of net
Ratio of investment Ratio of investment
expenses income to expenses income to
to average average to average average
net assets net assets net assets net assets
Net assets before before after after Portfolio
end of period reimburse- reimburse- reimburse- reimburse- turnover
(in thousands) ment ment ment(b) ment(b) rate
- -------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
$40,906 1.18%+ 4.46%+ .68%+ 4.96%+ 26%
46,742 1.17 4.31 .62 4.86 81
42,069 1.24 4.45 .54 5.15 102
35,891 1.29 4.04 .40 4.93 69
18,971 1.59+ 3.78+ .39+ 4.98+ 102
2,540 1.71+ 3.90+ 1.23+ 4.38+ 26
1,187 1.73+ 3.68+ 1.13+ 4.28+ 81
469 .82+ 4.98+ .40+ 5.40+ 26
- -------------------------------------------------------------------------------------------------------
</TABLE>
67
<PAGE>
Financial Highlights - continued
Selected data for a common share outstanding throughout each
period is as follows:
<TABLE>
<CAPTION>
Operating Performance Less Distributions
NUVEEN FLAGSHIP ------------------------------ -------------------------------
LIMITED TERM++ Net asset Net realized Dividends from Total
value Net and unrealized tax-exempt net Distributions Net asset return on
Year ending beginning investment gain (loss) from investment from value end net asset
April 30, of period income(b) investments income capital gains of period value (a)
- -------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Class A (10/87)
1997(e) $10.57 $.46 $ .04 $(.46) $ - $10.61 4.78%
1996(f) 10.65 .51 (.09) (.50) - 10.57 4.03
1995(f) 10.60 .51 .04 (.50) - 10.65 5.41
1994(f) 10.74 .52 (.13) (.52) (.01) 10.60 3.58
1993(f) 10.29 .55 .45 (.55) - 10.74 10.02
1992(f) 10.04 .60 .26 (.60) (.01) 10.29 9.04
1991(f) 9.92 .63 .13 (.64) - 10.04 8.08
1990(f) 9.91 .64 .01 (.64) - 9.92 6.83
1989(f) 9.88 .62 .02 (.61) - 9.91 6.81
1988(c) 9.75 .36 .13 (.36) - 9.88 7.44+
Class C (12/95)
1997(e) 10.56 .44 .03 (.43) - 10.60 4.49
1996(c) 10.76 .22 (.19) (.23) - 10.56 .46+
Class R (2/97)
1997(d) 10.73 .12 (.13) (.13) - 10.59 (.09)
- --------------------------------------------------------------------------------------------------------------------------------
</TABLE>
+ Annualized.
++ Information included prior to the period ending April 30, 1997, reflects
the financial highlights of Flagship Limited Term.
(a) Total returns are calculated on net asset value without any sales charge.
(b) After waiver of certain management fees or reimbursement of expenses, if
applicable, by Nuveen Advisory or its predecessor Flagship Financial.
(c) From commencement of class operations as noted through May 31.
(d) From commencement of class operations through April 30.
(e) For the 11 months ending April 30.
(f) For the year ending May 31.
68
<PAGE>
Nuveen Flagship Municipal Bond Funds
April 30, 1997 Annual Report
<TABLE>
<CAPTION>
Ratios/Supplemental Data
- ----------------------------------------------------------------------------------------------------------
Ratio of Ratio of net Ratio of Ratio of net
expenses to investment income expenses to investment income
Net assets average net to average net average net to average net Portfolio
end of period assets before assets before assets after assets after turnover
(in thousands) reimbursement reimbursement reimbursement(b) reimbursement(b) rate
- ----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
$425,401 .82%+ 4.74%+ .80%+ 4.76%+ 29%
489,157 .84 4.72 .79 4.77 39
569,196 .82 4.80 .74 4.88 20
704,627 .79 4.67 .70 4.76 22
570,518 .82 4.98 .70 5.10 20
284,479 .93 5.42 .47 5.88 48
67,471 1.00 5.88 .56 6.32 167
19,018 1.22 5.96 .70 6.48 38
13,446 1.38 5.46 .56 6.28 50
9,835 .41+ 5.84+ .40+ 5.85+ 67
23,551 1.12+ 4.43+ 1.11+ 4.44+ 29
15,415 1.43+ 3.93+ 1.19+ 4.17+ 39
40 .55+ 5.07+ .55+ 5.07+ 29
- ----------------------------------------------------------------------------------------------------------
</TABLE>
69
<PAGE>
Independent Auditors' Report
To the Board of Trustees and Shareholders of
Nuveen Flagship Municipal Trust:
We have audited the accompanying statements of net assets of Nuveen Flagship
Municipal Trust (comprised of Nuveen Flagship All-American Municipal Bond Fund,
Nuveen Flagship Intermediate Municipal Bond Fund, and Nuveen Flagship Limited
Term Municipal Bond Fund, collectively, the "Funds"), including the portfolios
of investments, as of April 30, 1997, the related statements of operations for
the period then ended and the statements of changes in net assets and the
financial highlights for each of the periods presented. These financial
statements and financial highlights are the responsibility of the Funds'
management. Our responsibility is to express an opinion on these financial
statements and financial highlights based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of securities owned as of April
30, 1997, by correspondence with the Funds' custodian and brokers. An audit also
includes assessing the accounting principles used and significant estimates made
by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, such financial statements and financial highlights present
fairly, in all material respects, the financial position of the Funds at April
30, 1997, the results of their operations, the changes in their net assets, and
the financial highlights for the respective stated periods, in conformity with
generally accepted accounting principles.
DELOITTE & TOUCHE LLP
Dayton, Ohio
June 13, 1997
70
<PAGE>
Nuveen Flagship All-American Muni Fund
April 30, 1997 Annual Report
Shareholder Meeting Report
All-American
<TABLE>
<CAPTION>
A Shares C Shares
- ---------------------------------------------------------------------------------
<S> <C> <C> <C>
Advisory Agreement For 15,594,647 3,620,629
Against 194,548 47,300
Abstain 312,433 60,662
---------------------------------------------------------
Total 16,101,628 3,728,591
- ---------------------------------------------------------------------------------
Broker Non Votes 794,853 458,304
- ---------------------------------------------------------------------------------
Reorganization For 10,448,220 2,166,651
Against 181,532 49,798
Abstain 338,669 43,608
---------------------------------------------------------
Total 10,968,421 2,260,057
- ---------------------------------------------------------------------------------
Broker Non Votes 5,928,060 1,926,838
- ---------------------------------------------------------------------------------
Investment Objective For 10,348,400 2,091,974
Against 603,408 165,347
Abstain 111,681 8,106
---------------------------------------------------------
Total 11,063,489 2,265,427
- ---------------------------------------------------------------------------------
Broker Non Votes 5,832,992 1,921,468
- ---------------------------------------------------------------------------------
Investment Assets For 10,390,938 2,091,863
Against 558,231 165,458
Abstain 114,321 8,106
---------------------------------------------------------
Total 11,063,490 2,265,427
- ---------------------------------------------------------------------------------
Broker Non Votes 5,832,991 1,921,468
- ---------------------------------------------------------------------------------
Type Of Securities For 10,388,633 2,091,863
Against 604,795 165,458
Abstain 70,061 8,106
---------------------------------------------------------
Total 11,063,489 2,265,427
- ---------------------------------------------------------------------------------
Broker Non Votes 5,832,992 1,921,468
- ---------------------------------------------------------------------------------
Borrowing For 10,423,340 2,087,441
Against 567,356 169,880
Abstain 72,793 8,106
---------------------------------------------------------
Total 11,063,489 2,265,427
- ---------------------------------------------------------------------------------
Broker Non Votes 5,832,992 1,921,468
---------------------------------------------------------
</TABLE>
71
<PAGE>
Shareholder Meeting Report
All-American - continued
<TABLE>
<CAPTION>
A Shares C Shares
- ---------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Pledges For 10,362,992 2,087,441
Against 614,144 169,880
Abstain 86,353 8,106
-------------------------------------------------------------------
Total 11,063,489 2,265,427
- ---------------------------------------------------------------------------------------------------
Broker Non Votes 5,832,992 1,921,468
- ---------------------------------------------------------------------------------------------------
Senior Securities For 10,426,913 2,086,475
Against 556,699 170,846
Abstain 79,877 8,106
-------------------------------------------------------------------
Total 11,063,489 2,265,427
- ---------------------------------------------------------------------------------------------------
Broker Non Votes 5,832,992 1,921,468
- ---------------------------------------------------------------------------------------------------
Underwriting For 10,355,856 2,087,441
Against 612,011 169,880
Abstain 95,622 8,106
-------------------------------------------------------------------
Total 11,063,489 2,265,427
- ---------------------------------------------------------------------------------------------------
Broker Non Votes 5,832,992 1,921,468
- ---------------------------------------------------------------------------------------------------
Real Estate For 10,324,721 2,091,748
Against 630,043 165,573
Abstain 108,725 8,106
-------------------------------------------------------------------
Total 11,063,489 2,265,427
- ---------------------------------------------------------------------------------------------------
Broker Non Votes 5,832,992 1,921,468
- ---------------------------------------------------------------------------------------------------
Commodities For 10,327,184 2,086,053
Against 641,618 171,268
Abstain 94,687 8,106
-------------------------------------------------------------------
Total 11,063,489 2,265,427
- ---------------------------------------------------------------------------------------------------
Broker Non Votes 5,832,992 1,921,468
- ---------------------------------------------------------------------------------------------------
Loans For 10,374,246 2,091,863
Against 602,841 165,458
Abstain 86,402 8,106
-------------------------------------------------------------------
Total 11,063,489 2,265,427
- ---------------------------------------------------------------------------------------------------
Broker Non Votes 5,832,992 1,921,468
- ---------------------------------------------------------------------------------------------------
Short Sales/Margin Purchases For 10,316,150 2,086,053
Against 630,398 171,268
Abstain 116,941 8,106
-------------------------------------------------------------------
Total 11,063,489 2,265,427
- ---------------------------------------------------------------------------------------------------
Broker Non Votes 5,832,992 1,921,468
-------------------------------------------------------------------
</TABLE>
72
<PAGE>
Nuveen Flagship All-American Municipal Bond Fund
April 30, 1997 Annual Report
<TABLE>
<CAPTION>
A Shares C Shares
- ---------------------------------------------------------------------------------------------------
<S> <C> <C>
Put and Call Options For 10,296,902 2,086,053
Against 667,642 171,268
Abstain 98,946 8,106
-----------------------------------------------------------
Total 11,063,490 2,265,427
- ---------------------------------------------------------------------------------------------------
Broker Non Votes 5,832,991 1,921,468
- ---------------------------------------------------------------------------------------------------
Industry Concentration For 10,389,311 2,087,441
Against 605,899 169,880
Abstain 68,279 8,106
-----------------------------------------------------------
Total 11,063,489 2,265,427
- ---------------------------------------------------------------------------------------------------
Broker Non Votes 5,832,992 1,921,468
- ---------------------------------------------------------------------------------------------------
Affiliate Purchases For 10,358,192 2,091,117
Against 618,134 165,458
Abstain 87,163 52
-----------------------------------------------------------
Total 11,063,489 2,256,627
- ---------------------------------------------------------------------------------------------------
Broker Non Votes 5,832,992 1,930,268
- ---------------------------------------------------------------------------------------------------
Investment Companies For 10,288,510 2,091,433
Against 659,109 165,888
Abstain 115,870 8,106
-----------------------------------------------------------
Total 11,063,489 2,265,427
- ---------------------------------------------------------------------------------------------------
Broker Non Votes 5,832,992 1,921,468
- ---------------------------------------------------------------------------------------------------
Div vs. Non-Div For 10,403,405 2,086,695
Against 556,863 169,880
Abstain 103,221 8,852
-----------------------------------------------------------
Total 11,063,489 2,265,427
- ---------------------------------------------------------------------------------------------------
Broker Non Votes 5,832,992 1,921,468
- ---------------------------------------------------------------------------------------------------
12b-1 Fees For 15,170,335 3,538,226
Against 401,419 83,581
Abstain 526,739 106,786
-----------------------------------------------------------
Total 16,098,493 3,728,593
- ---------------------------------------------------------------------------------------------------
Broker Non Votes 797,988 458,302
- ---------------------------------------------------------------------------------------------------
</TABLE>
73
<PAGE>
Shareholder Meeting Report
All-American - continued
<TABLE>
<CAPTION>
A Shares C Shares
- ---------------------------------------------------------------------------------------------------
Directors
- ---------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Bremner For 16,571,571 4,080,365
Withhold 324,910 106,530
---------------------------------------------------------------
Total 16,896,481 4,186,895
- ---------------------------------------------------------------------------------------------------
Brown For 16,571,571 4,080,365
Withhold 324,910 106,530
---------------------------------------------------------------
Total 16,896,481 4,186,895
- ---------------------------------------------------------------------------------------------------
Dean For 16,571,571 4,080,365
Withhold 324,910 106,530
---------------------------------------------------------------
Total 16,896,481 4,186,895
- ---------------------------------------------------------------------------------------------------
Impellizzeri For 16,571,571 4,080,365
Withhold 324,910 106,530
---------------------------------------------------------------
Total 16,896,481 4,186,895
- ---------------------------------------------------------------------------------------------------
Rosenheim For 16,571,571 4,080,365
Withhold 324,910 106,530
---------------------------------------------------------------
Total 16,896,481 4,186,895
- ---------------------------------------------------------------------------------------------------
Sawers For 16,571,571 4,080,365
Withhold 324,910 106,530
---------------------------------------------------------------
Total 16,896,481 4,186,895
- ---------------------------------------------------------------------------------------------------
Schneider For 16,571,571 4,080,365
Withhold 324,910 106,530
---------------------------------------------------------------
Total 16,896,481 4,186,895
- ---------------------------------------------------------------------------------------------------
Schwertfeger For 16,571,571 4,080,365
Withhold 324,910 106,530
---------------------------------------------------------------
Total 16,896,481 4,186,895
</TABLE>
74
<PAGE>
Nuveen Flagship Intermediate Municipal Bond Fund
April 30, 1997 Annual Report
Shareholder Meeting Report
Intermediate
<TABLE>
<CAPTION>
Quorum A Shares C Shares
- ----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Advisory Agreement For 3,335,185 116,943
Against 54,252 26,586
Abstain 100,977 -
--------------------------------------------------------------------------
Total 3,490,414 143,529
- ----------------------------------------------------------------------------------------------------------------
Broker Non Votes 383,617 -
- ----------------------------------------------------------------------------------------------------------------
Reorganization For 2,304,158 106,240
Against 24,053 12,645
Abstain 100,131 -
--------------------------------------------------------------------------
Total 2,428,342 118,885
- ----------------------------------------------------------------------------------------------------------------
Broker Non Votes 1,445,689 24,644
- ----------------------------------------------------------------------------------------------------------------
Investment Objective For 2,254,382 106,240
Against 156,184 12,645
Abstain 17,776 -
--------------------------------------------------------------------------
Total 2,428,342 118,885
- ----------------------------------------------------------------------------------------------------------------
Broker Non Votes 1,445,689 24,644
- ----------------------------------------------------------------------------------------------------------------
Investment Assets For 2,247,296 106,240
Against 164,856 12,645
Abstain 16,190 -
--------------------------------------------------------------------------
Total 2,428,342 118,885
- ----------------------------------------------------------------------------------------------------------------
Broker Non Votes 1,445,689 24,644
- ----------------------------------------------------------------------------------------------------------------
Type Of Securities For 2,245,988 106,240
Against 166,164 12,645
Abstain 16,190 -
--------------------------------------------------------------------------
Total 2,428,342 118,885
- ----------------------------------------------------------------------------------------------------------------
Broker Non Votes 1,445,689 24,644
- ----------------------------------------------------------------------------------------------------------------
Borrowing For 2,246,128 106,240
Against 166,555 12,645
Abstain 15,659 -
--------------------------------------------------------------------------
Total 2,428,342 118,885
- ----------------------------------------------------------------------------------------------------------------
Broker Non Votes 1,445,689 24,644
- ----------------------------------------------------------------------------------------------------------------
Pledges For 2,246,519 106,240
Against 166,164 12,645
Abstain 15,659 -
--------------------------------------------------------------------------
Total 2,428,342 118,885
- ----------------------------------------------------------------------------------------------------------------
Broker Non Votes 1,445,689 24,644
- ----------------------------------------------------------------------------------------------------------------
</TABLE>
75
<PAGE>
Shareholder Meeting Report
Intermediate -- continued
<TABLE>
<CAPTION>
A Shares C Shares
- --------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Senior Securities For 2,248,953 106,240
Against 163,199 12,645
Abstain 16,190 -
------------------------------------------------------------------------
Total 2,428,342 118,885
- --------------------------------------------------------------------------------------------------------------
Broker Non Votes 1,445,689 24,644
- --------------------------------------------------------------------------------------------------------------
Underwriting For 2,245,988 106,240
Against 166,164 12,645
Abstain 16,190 -
------------------------------------------------------------------------
Total 2,428,342 118,885
- --------------------------------------------------------------------------------------------------------------
Broker Non Votes 1,445,689 24,644
- --------------------------------------------------------------------------------------------------------------
Real Estate For 2,237,615 106,240
Against 174,537 12,645
Abstain 16,190 -
------------------------------------------------------------------------
Total 2,428,342 118,885
- --------------------------------------------------------------------------------------------------------------
Broker Non Votes 1,445,689 24,644
- --------------------------------------------------------------------------------------------------------------
Commodities For 2,242,651 106,240
Against 169,500 12,645
Abstain 16,190 -
------------------------------------------------------------------------
Total 2,428,341 118,885
- --------------------------------------------------------------------------------------------------------------
Broker Non Votes 1,445,690 24,644
- --------------------------------------------------------------------------------------------------------------
Loans For 2,240,269 106,240
Against 167,892 12,645
Abstain 20,181 -
------------------------------------------------------------------------
Total 2,428,342 118,885
- --------------------------------------------------------------------------------------------------------------
Broker Non Votes 1,445,689 24,644
- --------------------------------------------------------------------------------------------------------------
Short Sales/Margin Purchases For 2,240,449 106,240
Against 172,234 12,645
Abstain 15,659 -
------------------------------------------------------------------------
Total 2,428,342 118,885
- --------------------------------------------------------------------------------------------------------------
Broker Non Votes 1,445,689 24,644
- --------------------------------------------------------------------------------------------------------------
Put and Call Options For 2,240,840 106,240
Against 171,843 12,645
Abstain 15,659 -
------------------------------------------------------------------------
Total 2,428,342 118,885
- --------------------------------------------------------------------------------------------------------------
Broker Non Votes 1,445,689 24,644
- --------------------------------------------------------------------------------------------------------------
</TABLE>
76
<PAGE>
Nuveen Flagship Intermediate Municipal Bond Fund
April 30, 1997 Annual Report
<TABLE>
<CAPTION>
A Shares C Shares
- --------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Industry Concentration For 2,255,483 106,240
Against 164,536 12,645
Abstain 8,323 -
------------------------------------------------------------------------
Total 2,428,342 118,885
- --------------------------------------------------------------------------------------------------------------
Broker Non Votes 1,445,689 24,644
- --------------------------------------------------------------------------------------------------------------
Affiliate Purchases For 2,249,484 106,240
Against 163,199 12,645
Abstain 15,659 -
------------------------------------------------------------------------
Total 2,428,342 118,885
- --------------------------------------------------------------------------------------------------------------
Broker Non Votes 1,445,689 24,644
- --------------------------------------------------------------------------------------------------------------
Investment Companies For 2,258,692 106,240
Against 158,829 12,645
Abstain 10,820 -
------------------------------------------------------------------------
Total 2,428,341 118,885
- --------------------------------------------------------------------------------------------------------------
Broker Non Votes 1,445,690 24,644
- --------------------------------------------------------------------------------------------------------------
Div vs. Non-Div For 2,248,743 106,240
Against 163,940 12,645
Abstain 15,659 -
------------------------------------------------------------------------
Total 2,428,342 118,885
- --------------------------------------------------------------------------------------------------------------
Broker Non Votes 1,445,689 24,644
- --------------------------------------------------------------------------------------------------------------
12b-1 Fees For 3,129,089 114,831
Against 133,033 26,586
Abstain 228,291 2,112
------------------------------------------------------------------------
Total 3,490,413 143,529
- --------------------------------------------------------------------------------------------------------------
Broker Non Votes 383,618 -
- --------------------------------------------------------------------------------------------------------------
</TABLE>
77
<PAGE>
Shareholder Meeting Report
Intermediate -- continued
<TABLE>
<CAPTION>
A Shares C Shares
- --------------------------------------------------------------------------------------------------------------
Directors
- --------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Bremner For 3,726,442 142,808
Withhold 147,589 721
------------------------------------------------------------------------
Total 3,874,031 143,529
- --------------------------------------------------------------------------------------------------------------
Brown For 3,726,442 142,808
Withhold 147,589 721
------------------------------------------------------------------------
Total 3,874,031 143,529
- --------------------------------------------------------------------------------------------------------------
Dean For 3,726,442 142,808
Withhold 147,589 721
------------------------------------------------------------------------
Total 3,874,031 143,529
- --------------------------------------------------------------------------------------------------------------
Impellizzeri For 3,726,442 142,808
Withhold 147,589 721
------------------------------------------------------------------------
Total 3,874,031 143,529
- --------------------------------------------------------------------------------------------------------------
Rosenheim For 3,726,442 142,808
Withhold 147,589 721
------------------------------------------------------------------------
Total 3,874,031 143,529
- --------------------------------------------------------------------------------------------------------------
Sawers For 3,726,442 142,808
Withhold 147,589 721
------------------------------------------------------------------------
Total 3,874,031 143,529
- --------------------------------------------------------------------------------------------------------------
Schneider For 3,726,442 142,808
Withhold 147,589 721
------------------------------------------------------------------------
Total 3,874,031 143,529
- --------------------------------------------------------------------------------------------------------------
Schwertfeger For 3,726,442 142,808
Withhold 147,589 721
------------------------------------------------------------------------
Total 3,874,031 143,529
</TABLE>
78
<PAGE>
Nuveen Flagship Limited Term Municipal Bond Fund
April 30, 1997 Annual Report
Shareholder Meeting Report
Limited Term
<TABLE>
<CAPTION>
A Shares C Shares
- --------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Advisory Agreement For 33,846,892 1,202,862
Against 993,167 108,649
Abstain 894,792 4,231
------------------------------------------------------------------------
Total 35,734,851 1,315,742
- --------------------------------------------------------------------------------------------------------------
Broker Non Votes 1,696,372 161,265
- --------------------------------------------------------------------------------------------------------------
Reorg For 24,962,843 543,547
Against 796,991 33,951
Abstain 725,580 7,609
------------------------------------------------------------------------
Total 26,485,414 585,107
- --------------------------------------------------------------------------------------------------------------
Broker Non Votes 10,945,871 891,900
- --------------------------------------------------------------------------------------------------------------
Investment Objective For 24,350,873 542,068
Against 1,998,265 43,039
Abstain 136,214 ----
------------------------------------------------------------------------
Total 26,485,352 585,107
- --------------------------------------------------------------------------------------------------------------
Broker Non Votes 10,945,871 891,900
- --------------------------------------------------------------------------------------------------------------
Investment Assets For 24,395,841 537,292
Against 1,939,440 47,815
Abstain 150,071 ----
------------------------------------------------------------------------
Total 26,485,352 585,107
- --------------------------------------------------------------------------------------------------------------
Broker Non Votes 10,945,871 891,900
- --------------------------------------------------------------------------------------------------------------
Type Of Securities For 24,392,720 537,292
Against 1,944,310 47,815
Abstain 148,322 ----
------------------------------------------------------------------------
Total 26,485,352 585,107
- --------------------------------------------------------------------------------------------------------------
Broker Non Votes 10,945,871 891,900
- --------------------------------------------------------------------------------------------------------------
Borrowing For 24,333,737 537,292
Against 1,956,070 47,615
Abstain 195,544 ----
------------------------------------------------------------------------
Total 26,485,351 584,907
- --------------------------------------------------------------------------------------------------------------
Broker Non Votes 10,945,872 892,100
- --------------------------------------------------------------------------------------------------------------
Pledges For 24,387,667 537,292
Against 1,952,937 47,815
Abstain 144,747 ----
------------------------------------------------------------------------
Total 26,485,351 585,107
- --------------------------------------------------------------------------------------------------------------
Broker Non Votes 10,945,872 891,900
- --------------------------------------------------------------------------------------------------------------
</TABLE>
79
<PAGE>
Shareholder Meeting Report
Limited Term -- continued
<TABLE>
<CAPTION>
A Shares C Shares
- --------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Senior Securities For 24,339,444 537,292
Against 1,957,319 47,815
Abstain 188,588 ----
------------------------------------------------------------------------
Total 26,485,351 585,107
- --------------------------------------------------------------------------------------------------------------
Broker Non Votes 10,945,872 891,900
- --------------------------------------------------------------------------------------------------------------
Underwriting For 24,376,736 537,292
Against 1,954,040 47,815
Abstain 154,577 ----
------------------------------------------------------------------------
Total 26,485,353 585,107
- --------------------------------------------------------------------------------------------------------------
Broker Non Votes 10,945,870 891,900
- --------------------------------------------------------------------------------------------------------------
Real Estate For 24,274,837 537,292
Against 2,054,111 47,815
Abstain 156,404 ----
------------------------------------------------------------------------
Total 26,485,352 585,107
- --------------------------------------------------------------------------------------------------------------
Broker Non Votes 10,945,871 891,900
- --------------------------------------------------------------------------------------------------------------
Commodities For 24,210,523 537,292
Against 2,086,787 47,815
Abstain 188,041 ----
------------------------------------------------------------------------
Total 26,485,351 585,107
- --------------------------------------------------------------------------------------------------------------
Broker Non Votes 10,945,872 891,900
- --------------------------------------------------------------------------------------------------------------
Loans For 24,366,857 537,292
Against 1,945,123 47,815
Abstain 173,372 ----
------------------------------------------------------------------------
Total 26,485,352 585,107
- --------------------------------------------------------------------------------------------------------------
Broker Non Votes 10,945,871 891,900
- --------------------------------------------------------------------------------------------------------------
Short Sales/Margin Purchases For 24,186,296 537,292
Against 2,121,247 47,815
Abstain 177,808 ----
------------------------------------------------------------------------
Total 26,485,351 585,107
- --------------------------------------------------------------------------------------------------------------
Broker Non Votes 10,945,872 891,900
- --------------------------------------------------------------------------------------------------------------
Put and Call Options For 24,189,241 537,292
Against 2,127,534 47,815
Abstain 168,577 ----
------------------------------------------------------------------------
Total 26,485,352 585,107
- --------------------------------------------------------------------------------------------------------------
Broker Non Votes 10,945,871 891,900
- --------------------------------------------------------------------------------------------------------------
</TABLE>
80
<PAGE>
Nuveen Flagship Intermediate Municipal Bond Fund
April 30, 1997 Annual Report
<TABLE>
<CAPTION>
A Shares C Shares
- --------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Industry Concentration For 24,358,103 537,292
Against 1,947,971 47,815
Abstain 179,278 ----
------------------------------------------------------------------------
Total 26,485,352 585,107
- --------------------------------------------------------------------------------------------------------------
Broker Non Votes 10,945,871 891,900
- --------------------------------------------------------------------------------------------------------------
Affiliate Purchases For 24,228,946 537,292
Against 2,064,704 47,815
Abstain 191,702 ----
------------------------------------------------------------------------
Total 26,485,352 585,107
- --------------------------------------------------------------------------------------------------------------
Broker Non Votes 10,945,871 891,900
- --------------------------------------------------------------------------------------------------------------
Investment Companies For 24,289,644 542,068
Against 2,006,185 43,039
Abstain 189,524 ----
------------------------------------------------------------------------
Total 26,485,353 585,107
- --------------------------------------------------------------------------------------------------------------
Broker Non Votes 11,372,780 891,900
- --------------------------------------------------------------------------------------------------------------
Div vs. Non-Div For 23,893,273 532,598
Against 1,953,520 47,815
Abstain 211,650 4,694
------------------------------------------------------------------------
Total 26,058,443 585,107
- --------------------------------------------------------------------------------------------------------------
Broker Non Votes 11,372,780 891,900
- --------------------------------------------------------------------------------------------------------------
12b-1 Fees For 32,890,652 1,178,974
Against 1,425,839 124,651
Abstain 1,418,359 12,118
------------------------------------------------------------------------
Total 35,734,850 1,315,743
- --------------------------------------------------------------------------------------------------------------
Broker Non Votes 1,696,373 161,264
- --------------------------------------------------------------------------------------------------------------
</TABLE>
81
<PAGE>
Shareholder Meeting Report
Limited Term -- continued
<TABLE>
<CAPTION>
A Shares C Shares
- --------------------------------------------------------------------------------------------------------------
Directors
- --------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Bremner For 35,978,194 1,433,784
Withhold 1,453,029 43,223
------------------------------------------------------------------------
Total 37,431,223 1,477,007
- --------------------------------------------------------------------------------------------------------------
Brown For 35,978,194 1,433,784
Withhold 1,453,029 43,223
------------------------------------------------------------------------
Total 37,431,223 1,477,007
- --------------------------------------------------------------------------------------------------------------
Dean For 35,978,194 1,433,784
Withhold 1,453,029 43,223
------------------------------------------------------------------------
Total 37,431,223 1,477,007
- --------------------------------------------------------------------------------------------------------------
Impellizzeri For 35,968,947 1,433,784
Withhold 1,462,276 43,223
------------------------------------------------------------------------
Total 37,431,223 1,477,007
- --------------------------------------------------------------------------------------------------------------
Rosenheim For 35,974,606 1,433,784
Withhold 1,456,617 43,223
------------------------------------------------------------------------
Total 37,431,223 1,477,007
- --------------------------------------------------------------------------------------------------------------
Sawers For 35,978,194 1,433,784
Withhold 1,456,029 43,223
------------------------------------------------------------------------
Total 37,434,223 1,477,007
- --------------------------------------------------------------------------------------------------------------
Schneider For 35,970,883 1,433,784
Withhold 1,460,340 43,223
------------------------------------------------------------------------
Total 37,431,223 1,477,007
- --------------------------------------------------------------------------------------------------------------
Schwertfeger For 35,975,606 1,433,784
Withhold 1,455,617 43,223
------------------------------------------------------------------------
Total 37,431,223 1,477,007
</TABLE>
82
<PAGE>
Shareholder Information
Nuveen Family of Mutual Funds
Nuveen offers a variety of funds designed to help you reach your financial
goals.
Growth and Income Funds
Growth and Income Stock Fund
Balanced Stock and Bond Fund
Balanced Municipal and Stock Fund
Municipal Bond Funds
National Funds
Long-Term
Insured
Intermediate-Term
Limited-Term
State Funds
Alabama Michigan
Arizona Missouri
California New Jersey
Colorado New Mexico
Connecticut New York
Florida North Carolina
Georgia Ohio
Kansas Pennsylvania
Kentucky South Carolina
Louisiana Tennessee
Maryland Virginia
Massachusetts Wisconsin
To purchase additional shares of your Nuveen Municipal Bond Fund, contact your
financial adviser. If you would like to add to your current investment on a
monthly or semi-annual basis, you can sign up for Nuveen's systematic investing
program, which allows you to invest a fixed dollar amount every month
automatically.
You can also invest automatically through dividend reinvestment. By reinvesting
your fund's dividends back into the fund, you gain the added growth potential of
long-term compounding.
For more information on any of these service options call your adviser, or
Nuveen at (800) 621-7227.
83
<PAGE>
Fund Information
Board of Trustees
Robert P. Bremner
Lawrence H. Brown
Anthony T. Dean
Anne E. Impellizzeri
Margaret K. Rosenheim
Peter R. Sawers
William J. Schneider
Timothy R. Schwertfeger
Fund Manager
Nuveen Advisory Corp.
Dayton, Ohio
Custodian
The Chase Manhattan Bank
4 New York Plaza
New York, NY 10004-2413
Transfer Agent,
Shareholder Services and
Dividend Disbursing Agent
Boston Financial
Nuveen Investor Services
P.O. Box 8509
Boston, Massachusetts 02266-8509
(800) 225-8530
Legal Counsel
Fried, Frank, Harris
Shriver & Jacobson
Washington, D.C.
Independent Auditors
Deloitte & Touche LLP
Dayton, Ohio
84
<PAGE>
Serving Investors
for Generations
[PAINTING 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
investments designed for mature investors whose portfolios are the principal
source of their ongoing financial security. More than 1.3 million investors have
entrusted Nuveen to help them maintain the lifestyle they currently enjoy.
A value investing approach - purchasing securities of strong companies and
communities that represent good long-term value - is the cornerstone of Nuveen's
investment philosophy. It is a careful, long-term strategy that offers the
potential for attractive returns with moderated risk. Successful value investing
begins with in-depth research and a discerning eye for marketplace opportunity.
Nuveen's team of investment professionals is backed by the discipline, resources
and expertise of almost a century of investment experience, including one of the
most recognized research departments in the industry.
To meet the unique circumstances and financial planning needs of mature
investors, Nuveen offers a wide array of taxable and tax-free investment
products - including equity and fixed-income mutual funds, unit trusts,
exchange-traded funds, individual managed account services, and cash management
products.
To find out more about how Nuveen investment products and services can help you
preserve your financial security, talk with your financial adviser, or call us
at (800) 621-7227 for more information, including a prospectus where applicable.
Please read that information carefully before you invest.
NUVEEN
John Nuveen & Co. Incorporated
333 West Wacker Drive
Chicago, IL 60606-1286
(800) 621-7227
www.nuveen.com
