<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON AUGUST 21, 1997.
1933 ACT REGISTRATION NO. 333-14725
1940 ACT REGISTRATION NO. 811-07873
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
----------------
FORM N-1A
<TABLE>
<CAPTION>
REGISTRATION STATEMENT UNDER THE
SECURITIES ACT OF 1933 [_]
<S> <C>
Pre-Effective Amendment No. [_]
Post-Effective Amendment No. 1 [X]
and/or
REGISTRATION STATEMENT UNDER THE
INVESTMENT COMPANY ACT OF 1940 [_]
Amendment No. 1 [X]
</TABLE>
(Check appropriate box or boxes)
----------------
NUVEEN FLAGSHIP MUNICIPAL TRUST
(Exact name of Registrant as Specified in Charter)
333 West Wacker Drive, Chicago, 60606
Illinois
(Address of Principal Executive Office) (Zip Code)
Registrant's Telephone Number, including Area Code: (312) 917-7700
Gifford R. Zimmerman, Esq.--Vice With a copy to:
President and Assistant Secretary
333 West Wacker Drive Thomas S. Harman
Fried, Frank, Harris, Shriver &
Chicago, Illinois 60606 Jacobson
(Name and Address of Agent for Service) 1001 Pennsylvania Ave., NW
Suite 800
Washington, D.C. 20004
It is proposed that this filing will become effective (check appropriate box):
[_]
Immediately upon filing pursuant [_]
to paragraph (b)
on (date) pursuant to paragraph
(a)(1)
[_]
75 days after filing pursuant
to paragraph (a)(2)
[X]
on August 27, 1997 pursuant to
paragraph (b) [_]
on (date) pursuant to paragraph
(a)(2) of Rule 485.
[_]
60 days after filing pursuant to
paragraph (a)(1)
If appropriate, check the following box:
[_]
This post-effective amendment designates a new effective date for a previ-
ously filed post-effective amendment.
PURSUANT TO RULE 24F-2 OF THE INVESTMENT COMPANY ACT OF 1940, REGISTRANT HAS
REGISTERED AN INDEFINITE NUMBER OF SHARES (DESIGNATED AS CLASS A SHARES, CLASS
B SHARES, CLASS C SHARES AND CLASS R SHARES) OF THE FOLLOWING SERIES: NUVEEN
MUNICIPAL BOND FUND; NUVEEN INSURED MUNICIPAL BOND FUND; NUVEEN FLAGSHIP ALL-
AMERICAN MUNICIPAL BOND FUND; AND AN INDEFINITE NUMBER OF SHARES (DESIGNATED AS
CLASS A SHARES, CLASS C SHARES AND CLASS R SHARES) OF THE FOLLOWING SERIES:
NUVEEN FLAGSHIP INTERMEDIATE MUNICIPAL BOND FUND AND NUVEEN FLAGSHIP LIMITED
TERM MUNICIPAL BOND FUND. A RULE 24F-2 NOTICE FOR THE REGISTRANT'S FISCAL YEAR
ENDED APRIL 30, 1997 WAS FILED ON OR ABOUT JUNE 29, 1997.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
CALCULATION OF REGISTRATION FEE FOR SHARES OF
MUNICIPAL BOND FUND
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PROPOSED PROPOSED
MAXIMUM MAXIMUM AMOUNT OF
TITLE OF SECURITIES AMOUNT BEING OFFERING PRICE AGGREGATE REGISTRATION
BEING REGISTERED REGISTERED PER UNIT OFFERING PRICE FEE*
- ------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Shares of Common Stock, $.01 par value................... 1,173,300 $9.77 $0 $0
</TABLE>
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
*Registrant has elected to calculate its filing fee in the manner described in
Rule 24e-2 under the Investment Company Act of 1940. The total amount of secu-
rities redeemed during the previous fiscal year was $63,401,060. The total
amount of redeemed securities used for reduction pursuant to Rule 24f-2(c) was
$51,937,922. The amount of redeemed securities being used for reduction of the
registration fee in this Amendment is $11,463,138.
CALCULATION OF REGISTRATION FEE FOR SHARES OF
INSURED MUNICIPAL BOND FUND
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PROPOSED PROPOSED
MAXIMUM MAXIMUM AMOUNT OF
TITLE OF SECURITIES AMOUNT BEING OFFERING PRICE AGGREGATE REGISTRATION
BEING REGISTERED REGISTERED PER UNIT OFFERING PRICE FEE*
- ------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Shares of Common Stock, $.01 par value................... 417,646 $11.41 $0 $0
</TABLE>
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
*Registrant has elected to calculate its filing fee in the manner described in
Rule 24e-2 under the Investment Company Act of 1940. The total amount of secu-
rities redeemed during the previous fiscal year was $17,108,094. The total
amount of redeemed securities used for reduction pursuant to Rule 24f-2(c) was
$12,342,758. The amount of redeemed securities being used for reduction of the
registration fee in this Amendment is $4,765,336.
CALCULATION OF REGISTRATION FEE FOR SHARES OF
INTERMEDIATE MUNICIPAL BOND FUND
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PROPOSED PROPOSED
MAXIMUM MAXIMUM AMOUNT OF
TITLE OF SECURITIES AMOUNT BEING OFFERING PRICE AGGREGATE REGISTRATION
BEING REGISTERED REGISTERED PER UNIT OFFERING PRICE FEE*
- ------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Shares of Common Stock, $.01 par value................... 447,566 $11.11 $0 $0
</TABLE>
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
*Registrant has elected to calculate its filing fee in the manner described in
Rule 24e-2 under the Investment Company Act of 1940. The total amount of secu-
rities redeemed during the previous fiscal year was $13,864,964. The total
amount of redeemed securities used for reduction pursuant to Rule 24f-2(c) was
$8,892,503. The amount of redeemed securities being used for reduction of the
registration fee in this Amendment is $4,972,461.
CALCULATION OF REGISTRATION FEE FOR SHARES OF
LIMITED TERM MUNICIPAL BOND FUND
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PROPOSED PROPOSED
MAXIMUM MAXIMUM AMOUNT OF
TITLE OF SECURITIES AMOUNT BEING OFFERING PRICE AGGREGATE REGISTRATION
BEING REGISTERED REGISTERED PER UNIT OFFERING PRICE FEE*
- ------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Shares of Common Stock, $.01 par value................... 5,210,210 $11.06 $0 $0
</TABLE>
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
*Registrant has elected to calculate its filing fee in the manner described in
Rule 24e-2 under the Investment Company Act of 1940. The total amount of secu-
rities redeemed during the previous fiscal year was $125,247,208. The total
amount of redeemed securities used for reduction pursuant to Rule 24f-2(c) was
$67,622,281. The amount of redeemed securities being used for reduction of the
registration fee in this Amendment is $57,624,927.
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
<PAGE>
CONTENTS
OF
REGISTRATION STATEMENT
UNDER THE SECURITIES ACT OF 1933
FILE NO. 333-14725
AND
REGISTRATION STATEMENT
UNDER THE INVESTMENT COMPANY ACT OF 1940
FILE NO. 811-07873
This Registration Statement comprises the following papers and contents:
The Facing Sheet
Cross-Reference Sheet
Part A-The Prospectus
Part B-The Statement of Additional Information
Copy of Annual Reports to Shareholders (the financial
statements from which are incorporated by reference into the
Statement of Additional Information)
Part C-Other Information
Signatures
Index to Exhibits
Exhibits
<PAGE>
NUVEEN FLAGSHIP MUNICIPAL TRUST
----------------
CROSS REFERENCE SHEET
PART A--PROSPECTUS
<TABLE>
<CAPTION>
ITEM IN
PART A
OF FORM N-
1A PROSPECTUS LOCATION
---------- -------------------
<S> <C>
1 Cover Page Cover Page
2 Synopsis Expense Information
3 Condensed Financial Information Financial Highlights
4 General Description of Registrant Fund Strategies
5 Management of the Fund General Information
5A Management's Discussion of Fund Incorporated by Reference to Annual and
Performance Semi-Annual Reports to Shareholders; Taxes
and Tax Reporting
6 Capital Stock and Other How to Select a Purchase Option; Taxes and
Securities Tax Reporting
7 Purchase of Securities Being Investing in the Funds
Offered
8 Redemption or Repurchase How to Sell Fund Shares
9 Pending Legal Proceedings Not Applicable
</TABLE>
<PAGE>
PART B--STATEMENT OF ADDITIONAL INFORMATION
<TABLE>
<CAPTION>
ITEM IN
PART B
OF FORM N- LOCATION IN STATEMENT
1A OF ADDITIONAL INFORMATION
---------- -------------------------
<S> <C>
10 Cover Page Cover Page
11 Table of Contents Cover Page
12 General Information and History Not Applicable
13 Investment Objectives and Investment Policies and Investment
Policies Portfolio
14 Management of the Fund Management
15 Control Persons and Principal Management
Holders of Securities
16 Investment Advisory and Other Investment Adviser and Investment
Services Management Agreement; Portfolio
Transactions Distribution and Service Plan;
Independent Public Accountants and
Custodian
17 Brokerage Allocation and Other Portfolio Transactions
Practices
18 Capital Stock and Other See "How to Select a Purchase Option" and
Securities "Taxes and Tax Reporting" in the Prospectus
19 Purchase, Redemption and Pricing Additional Information on the Purchase and
of Securities Redemption of Fund Shares; Net Asset Value
20 Tax Status Tax Matters
21 Underwriters Additional Information on the Purchase and
Redemption of Fund Shares; See "Investing
in the Funds" and "Fund Service Providers"
in the Prospectus
22 Calculation of Performance Data Performance Information
23 Financial Statements Incorporated by Reference to Annual Reports
to Shareholders
</TABLE>
<PAGE>
PART A--PROSPECTUS
NUVEEN FLAGSHIP MUNICIPAL TRUST
333 West Wacker Drive
Chicago, Illinois 60606
<PAGE>
NUVEEN
Municipal
Bond Funds
August 27, 1997
Prospectus
Dependable, tax-free income
to help you keep more of
what you earn.
[PHOTO APPEARS HERE]
National
<PAGE>
INVESTING IN NUVEEN MUTUAL FUNDS
Since our founding in 1898, John Nuveen & Co. has been synonymous with invest-
ments that withstand the test of time. Today, we offer a range of equity and
fixed-income mutual funds designed to suit the unique circumstances and finan-
cial planning needs of mature investors. More than 1.3 million investors have
entrusted Nuveen to help them maintain the lifestyle they currently enjoy.
Value-investing -- purchasing securities of strong companies and communities at
an attractive price -- is the cornerstone of Nuveen's investment philosophy. A
long-term strategy that offers the potential for above average returns over
time with moderated risk, successful value-investing begins with in-depth re-
search and a discerning eye for value. Our team of investment professionals is
backed by the discipline, resources and expertise of Nuveen's almost a century
of investment experience, including one of the most recognized research depart-
ments in the industry.
This prospectus describes in detail the investment objectives, policies and
risks of certain Nuveen municipal bond funds. We invite you to discuss the con-
tents with your financial adviser, or you may call us at 800-621-7227 for addi-
tional information.
<PAGE>
Nuveen Municipal Bond Fund
Nuveen Insured Municipal Bond Fund
Nuveen Flagship All-American Municipal Bond Fund
Nuveen Flagship Intermediate Municipal Bond Fund
Nuveen Flagship Limited Term Municipal Bond Fund
AUGUST 27, 1997
PROSPECTUS
OVERVIEW
The funds listed above are diversified funds and part
of the Nuveen Flagship Municipal Trust, an open-end
investment company. Each fund seeks to provide high
tax-free income and preservation of capital through
investments in diversified portfolios of quality mu-
nicipal bonds.
Each fund offers a set of flexible purchase options
which permit you to purchase fund shares in the way
that is best suited to your individual circumstances
and investment needs. For detailed information about
these flexible purchase options, please refer to "How
to Select a Purchase Option" later in this prospectus.
This prospectus contains important information you
should know before investing. Please read it carefully
and keep it for future reference. You can find more
detailed information about each fund in the statement
of additional information which is part of this pro-
spectus by reference. For a free copy, write to Nuveen
or call (800) 621-7227.
SHARES OF THE FUNDS ARE NOT DEPOSITS OR OBLIGATIONS
OF, OR GUARANTEED OR ENDORSED BY, ANY BANK AND ARE NOT
FEDERALLY INSURED BY THE FEDERAL DEPOSIT INSURANCE
CORPORATION, OR ANY OTHER U.S. GOVERNMENT AGENCY.
SHARES OF THE FUNDS INVOLVE INVESTMENT RISKS, INCLUD-
ING THE POSSIBLE LOSS OF THE PRINCIPAL AMOUNT INVEST-
ED.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED
BY THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE
SECURITIES COMMISSION NOR HAS THE SECURITIES AND EX-
CHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPEC-
TUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL
OFFENSE.
<TABLE>
<CAPTION>
CONTENTS
<S> <C>
1 OVERVIEW DIVIDENDS AND TAXES
2 FUND SUMMARIES AND 18 How the Funds Pay Dividends
FINANCIAL HIGHLIGHTS
18 Taxes and Tax Reporting
FUND STRATEGIES
19 Taxable Equivalent Yields
12 Investment Objective
GENERAL INFORMATION
12 How the Funds Select
Investments 19 How to Contact Nuveen
13 Risk Reduction Strategies 19 Fund Service Providers
INVESTING IN THE FUNDS 20 How the Funds Report Performance
14 How to Buy Fund Shares 21 How Fund Shares are Priced
14 How to Select a Purchase 21 Organization
Option
16 How to Sell Fund Shares
16 Exchanging Shares
17 Optional Features and Services
</TABLE>
---
1
<PAGE>
NUVEEN MUNICIPAL BOND FUND
PERFORMANCE INFORMATION AS OF 4/30/97
INCEPTION: November 29, 1976
NET ASSETS: $2.9 billion
TOTAL RETURN (ANNUALIZED)
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
CLASS A CLASS A
(OFFER PRICE) (NAV) CLASS B CLASS C CLASS R
- --------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
1 Year 2.38% 6.87% 6.36% 6.16% 7.25%
5 Years 5.35% 6.26% 5.57% 5.49% 6.55%
10 Years 7.07% 7.53% 6.93% 6.74% 7.81%
Inception 6.71% 6.94% 6.65% 6.15% 7.21%
</TABLE>
Class R total returns reflect actual performance for all periods; Class A, B
and C total returns reflect actual performance for periods since class incep-
tion, and Class R performance for periods prior to class inception (see "Fi-
nancial Highlights" for dates), adjusted for the differences in sales charges
and fees between the classes. Class B total returns assume an ongoing invest-
ment and do not reflect the imposition of the CDSC; your returns for the 1
year and 5 year periods would be lower if you redeemed at the end of those pe-
riods. See Overview of Fund Operating Expenses and Shareholder Transaction Ex-
penses.
The fund assumes investment risk in pursuit of its investment objective,
chiefly in the form of interest rate risk and credit risk. The fund limits
this risk by purchasing only certain types and maturities of municipal bonds
and by diversifying its investment portfolio geographically and by industry.
See Risk Reduction Strategies for further information.
[BAR CHART APPEARS HERE]
Average Maturity 20.6
Average Modified Duration 7.9
CREDIT QUALITY
[PIE CHART APPEARS HERE]
BBB (8%)
A (18%)
AA (36%)
AAA (37%)
BB/NR (1%)
INDUSTRY DIVERSIFICATION (TOP 5)
[PIE CHART APPEARS HERE]
Electric Utilities (20%)
Health Care Facilities (17%)
Housing Facilities (16%)
Escrowed Bonds (13%)
Water/Sewer Facilities (9%)
Other (25%)
EXPENSE INFORMATION AS OF 4/30/97
SHAREHOLDER TRANSACTION EXPENSES
- -------------------------------------------------------------------------------
(Maximum, as % of Offering Price)
<TABLE>
<CAPTION>
CLASS A CLASS B CLASS C CLASS R
- ---------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Sales Charge on Purchases 4.20%(1) - - -
Sales Charge on Reinvested Dividends - - - -
Contingent Deferred Sales Charge (CDSC) on
Redemptions - (1) 5%(2) 1%(3) -
</TABLE>
OVERVIEW OF FUND OPERATING EXPENSES (4)
- -------------------------------------------------------------------------------
(Annual, as % of Average Net Assets)
<TABLE>
<CAPTION>
CLASS A CLASS B CLASS C CLASS R
- -------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Management Fees 0.45% 0.45% 0.45% 0.45%
12b-1 Fees 0.20% 0.95% 0.75% -
Other Expenses 0.12% 0.12% 0.12% 0.12%
- -------------------------------------------------------------------------------------------------
Total (Gross) 0.77% 1.52% 1.32% 0.57%
Waivers/
Reimbursements - - - -
- -------------------------------------------------------------------------------------------------
Total (Net) 0.77% 1.52% 1.32% 0.57%
</TABLE>
SUMMARY OF SHAREHOLDER EXPENSES (5)
- -------------------------------------------------------------------------------
The example illustrates the expenses on a hypothetical $1,000 investment in
the fund based on the Total Expenses shown at left, an assumed annual total
return of 5% and reinvestment of all dividends.
<TABLE>
<CAPTION>
HOLDING PERIOD CLASS A CLASS B CLASS C CLASS R
- ------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
1 Year $50 $55 $13 $6
3 Years $66 $80 $42 $18
5 Years $83 $94 $72 $32
10 Years $133 $161 $159 $71
</TABLE>
---
2
<PAGE>
FINANCIAL HIGHLIGHTS
The financial highlights below are excerpted from the fund's latest annual re-
port which has been audited by Arthur Andersen LLP, the fund's independent au-
ditors. You may find more information about the fund's performance in its an-
nual report. For a free copy of the fund's latest annual and semi-annual re-
ports, write to Nuveen or call (800) 621-7227.
<TABLE>
<CAPTION>
CLASS OPERATING PERFORMANCE LESS DISTRIBUTIONS
INCEPTION DATE ---------------------- ------------------------
NET
REALIZED
NET AND DIVIDENDS NET TOTAL
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 (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
- --------------------------------------------------------------------------------------------
<CAPTION>
CLASS RATIOS/SUPPLEMENTAL DATA
INCEPTION DATE --------------------------------------------------
RATIO
OF NET
RATIO OF INVESTMENT
EXPENSES INCOME TO
TO AVERAGE AVERAGE
MUNICIPAL BOND NET ASSETS NET ASSETS
NET ASSETS AFTER AFTER PORTFOLIO
YEAR ENDING END OF PERIOD REIMBURSE- REIMBURSE- TURNOVER
APRIL 30, (IN MILLIONS) MENT(B) MENT(B) RATE
- ------------------------------------------------------------------
<S> <C> <C> <C> <C>
CLASS A (6/95)
1997(G) $70.3 .77%+ 5.13%+ 2%
1997(f) 68.2 .81+ 5.11+ 12
1996(c) 37.1 .83+ 5.14+ 17
CLASS B (2/97)
1997(G) .5 1.53+ 4.39+ 2
1997(c) - 1.51+ 5.23+ 12
CLASS C (6/95)
1997(G) 5.4 1.32+ 4.58+ 2
1997(f) 5.0 1.54 4.37 12
1996(c) 1.9 1.58+ 4.39+ 17
CLASS R (11/76)
1997(G) 2,774.6 .57+ 5.33+ 2
1997(f) 2,818.2 .57 5.35 12
1996(f) 2,878.6 .59 5.53 17
1995(f) 2,741.2 .59 5.79 17
1994(f) 2,700.0 .62 5.49 15
1993(f) 2,371.7 .61 5.95 14
1992(d) 1,835.7 .62+ 6.24+ 6
1991(e) 1,661.4 .60 6.48 10
1990(e) 1,323.6 .62 6.78 8
1989(e) 1,119.8 .64 6.85 12
1988(e) 945.4 .65 7.11 8
- --------------------------------------------------------------------------------------------
</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.
NOTES:
(1) The Class A sales charge may be reduced or waived based on the amount of
purchase or for certain eligible categories of investors. A CDSC of 1% is
imposed on redemptions of certain purchases of $1 million or more within 18
months of purchase. See "How to Select a Purchase Option."
(2) CDSC declines to 0% at the end of six years.
(3) Imposed only on redemptions within 12 months of purchase.
(4) Effective February 1, 1997, the fund reduced the service fee on Class A and
C shares from 0.25% to 0.20% and reduced the distribution fee on Class C
shares from 0.75% to 0.55%. Long-term holders of Class B and C shares may
pay more in distribution fees and CDSCs than the maximum initial sales
charge permitted under National Association of Securities Dealers (NASD)
Rules of Fair Practice. Nuveen Advisory has agreed to waive some or all of
its fees or reimburse expenses to prevent total operating expenses (not
counting distribution and service fees) from exceeding 0.75% of the fund's
average daily net assets.
5) The expenses shown assume that you redeem your shares at the end of each
holding period. Class B shares convert to Class A shares after eight years.
If instead you redeemed your shares prior to the end of each stated period,
your expenses might be higher. If you did not redeem Class B shares at the
end of each holding period, your expenses would have been $15 for the one
year period, $48 for the three year period, $83 for the five year period,
and $161 for the ten year period. This example does not represent past or
future expenses; actual expenses may be higher or lower.
---
3
<PAGE>
NUVEEN INSURED MUNICIPAL BOND FUND
PERFORMANCE INFORMATION AS OF 4/30/97
INCEPTION: December 22, 1986
NET ASSETS: $790 million
TOTAL RETURN (ANNUALIZED)
<TABLE>
- --------------------------------------------------------------------------------------------
<CAPTION>
CLASS A CLASS A
(OFFER PRICE) (NAV) CLASS B CLASS C CLASS R
- --------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
1 Year 1.66% 6.11% 5.57% 5.49% 6.46%
5 Years 6.02% 6.94% 6.15% 6.04% 7.14%
10 Years 7.62% 8.09% 7.45% 7.23% 8.32%
Inception 6.96% 7.41% 6.82% 6.55% 7.65%
</TABLE>
Class R total returns reflect actual performance for all periods; Class A, B
and C total returns reflect actual performance for periods since class incep-
tion (see "Financial Highlights" for dates), and Class R performance for peri-
ods prior to class inception, adjusted for the differences in sales charges and
fees between the classes. Class B total returns assume an ongoing investment
and do not reflect the imposition of the CDSC; your returns for the 1 year and
5 year periods would be lower if you redeemed at the end of those periods. See
Overview of Fund Operating Expenses and Shareholder Transaction Expenses.
The fund assumes investment risk in pursuit of its investment objective,
chiefly in the form of interest rate risk and credit risk. The fund limits this
risk by purchasing only certain types and maturities of municipal bonds and by
diversifying its investment portfolio geographically and by industry. See Risk
Reduction Strategies for further information.
MATURITY (YEARS)
[BAR CHART APPEARS HERE]
Average Maturity 22.1
Average Modified Duration 7.8
CREDIT QUALITY
[PIE CHART APPEARS HERE]
Escrowed (20%)
Insured (80%)
INDUSTRY DIVERSIFICATION (TOP 5)
[PIE CHART APPEARS HERE]
Health Care Facilities (18%)
General Obligation Bonds (19%)
Escrowed Bonds (20%)
Lease Rental Facilities (9%)
Water/Sewer Facilities (7%)
Other (27%)
EXPENSE INFORMATION AS OF 4/30/97
SHAREHOLDER TRANSACTION EXPENSES
- --------------------------------------------------------------------------------
(Maximum, as % of Offering Price)
<TABLE>
<CAPTION>
CLASS A CLASS B CLASS C CLASS R
- ----------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Sales Charge on Purchases 4.20%(1) - - -
Sales Charge on Reinvested Dividends - - - -
Contingent Deferred Sales Charge (CDSC) on Redemptions - (1) 5%(2) 1%(3) -
</TABLE>
OVERVIEW OF FUND OPERATING EXPENSES (4)
- --------------------------------------------------------------------------------
(Annual, as % of Average Net Assets)
<TABLE>
<CAPTION>
CLASS A CLASS B CLASS C CLASS R
- -------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Management Fees 0.48% 0.48% 0.48% 0.48%
12b-1 Fees 0.20% 0.95% 0.75% -
Other Expenses 0.16% 0.16% 0.16% 0.16%
- -------------------------------------------------------------------------------------------------
Total (Gross) 0.84% 1.59% 1.39% 0.64%
Waivers/
Reimbursements - - - -
- -------------------------------------------------------------------------------------------------
Total (Net) 0.84% 1.59% 1.39% 0.64%
</TABLE>
SUMMARY OF SHAREHOLDER EXPENSES (5)
- --------------------------------------------------------------------------------
The example illustrates the expenses on a hypothetical $1,000 investment in the
fund based on the Total Expenses shown at left, an assumed annual total return
of 5% and reinvestment of all dividends.
<TABLE>
<CAPTION>
HOLDING PERIOD CLASS A CLASS B CLASS C CLASS R
- ------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
1 Year $50 $56 $14 $7
3 Years $68 $82 $44 $20
5 Years $87 $98 $76 $36
10 Years $141 $169 $167 $80
</TABLE>
---
4
<PAGE>
FINANCIAL HIGHLIGHTS
The financial highlights below are excerpted from the fund's latest annual re-
port which has been audited by Arthur Andersen LLP, the fund's independent au-
ditors. You may find more information about the fund's performance in its an-
nual report. For a free copy of the fund's latest annual and semi-annual re-
ports, write to Nuveen or call (800) 621-7227.
<TABLE>
<CAPTION>
CLASS OPERATING PERFORMANCE LESS DISTRIBUTIONS
INCEPTION DATE ----------------------- -------------------------
NET
INSURED MUNICIPAL BOND 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(S)
- -------------------------------------------------------------------------------------------------------
<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
- -------------------------------------------------------------------------------------------------------
<CAPTION>
CLASS RATIOS/SUPPLEMENTAL DATA
INCEPTION DATE --------------------------------------------------
RATIO OF
NET
RATIO OF INVESTMENT
EXPENSES INCOME TO
INSURED MUNICIPAL BOND TO AVERAGE AVERAGE
NET ASSETS NET ASSETS
NET ASSETS AFTER AFTER PORTFOLIO
YEAR ENDING END OF PERIOD REIMBURSE- REIMBURSE- TURNOVER
APRIL 30, (IN MILLIONS) MENT(B) MENT(B) RATE
- -------------------------------------------------------------------------
<S> <C> <C> <C> <C>
CLASS A (9/94)
1997(e) $69.3 .84%+ 5.12%+ 12%
1997(d) 68.3 .87 5.07 35
1996(d) 46.9 .91 5.01 27
1995(c) 14.1 1.00+ 5.55+ 25
CLASS B (2/97)
1997(e) .5 1.59+ 4.36+ 12
1997(c) .2 1.58+ 4.84+ 35
CLASS C (9/94)
1997(e) 5.6 1.39+ 4.57+ 12
1997(d) 5.4 1.61 4.33 35
1996(d) 5.2 1.63 4.34 27
1995(c) 4.0 1.75+ 4.83+ 25
CLASS R (12/86)
1997(e) 714.6 .64+ 5.31+ 12
1997(d) 732.6 .63 5.31 35
1996(d) 761.9 .63 5.33 27
1995(d) 736.7 .64 5.67 25
1994(d) 745.9 .65 5.21 11
1993(d) 567.2 .72 5.68 20
1992(d) 306.9 .73 6.12 45
1991(d) 178.9 .80 6.45 53
1990(d) 111.8 .83 6.49 78
1989(d) 66.0 .87 6.83 106
1988(d) 41.3 .60 6.93 88
- -------------------------------------------------------------------------------------------------------
</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.
NOTES:
(1) The Class A sales charge may be reduced or waived based on the amount of
purchase or for certain eligible categories of investors. A CDSC of 1% is
imposed on redemptions of certain purchases of $1 million or more within
18 months of purchase. See "How to Select a Purchase Option."
(2) CDSC declines to 0% at the end of six years.
(3) Imposed only on redemptions within 12 months of purchase.
(4) Effective February 1, 1997, the fund reduced the service fee on Class A
and C shares from 0.25% to 0.20% and reduced the distribution fee on Class
C shares from 0.75% to 0.55%. Long-term holders of Class B and C shares
may pay more in distribution fees and CDSCs than the maximum initial sales
charge permitted under National Association of Securities Dealers (NASD)
Rules of Fair Practice. Nuveen Advisory has agreed to waive some or all of
its fees or reimburse expenses to prevent total operating expenses (not
counting distribution and service fees) from exceeding 0.975% of the
fund's average daily net assets.
(5) The expenses shown assume that you redeem your shares at the end of each
holding period. Class B shares convert to Class A shares after eight
years. If instead you redeemed your shares prior to the end of each stated
period, your expenses might be higher. If you did not redeem Class B
shares at the end of each holding period, your expenses would have been
$16 for the one year period, $50 for the three year period, $87 for the
five year period, and $169 for the ten year period. This example does not
represent past or future expenses; actual expenses may be higher or lower.
---
5
<PAGE>
NUVEEN FLAGSHIP ALL-AMERICAN MUNICIPAL BOND FUND
PERFORMANCE INFORMATION AS OF 4/30/97
INCEPTION: October 3, 1988
NET ASSETS: $272.3 million
TOTAL RETURN (ANNUALIZED)
<TABLE>
- --------------------------------------------------------------------------------------------
<CAPTION>
CLASS A CLASS A
(OFFER PRICE) (NAV) CLASS B CLASS C CLASS R
- --------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
1 year 3.68% 8.23% 7.68% 7.64% 8.38%
5 years 6.96% 7.88% 7.30% 7.28% 7.91%
Inception 8.05% 8.59% 8.04% 7.99% 8.61%
</TABLE>
Class A total returns reflect actual performance for all periods; Class B, C
and R total returns reflect actual performance for periods since class incep-
tion (see "Financial Highlights" for dates), and Class A performance for peri-
ods prior to class inception, adjusted for the differences in sales charges
and (in the case of Classes B and C) fees between the classes. Class B total
returns assume an ongoing investment and do not reflect the imposition of the
CDSC; your returns for the 1 year and 5 year periods would be lower if you re-
deemed at the end of those periods. See Overview of Fund Operating Expenses
and Shareholder Transaction Expenses.
The fund assumes investment risk in pursuit of its investment objective,
chiefly in the form of interest rate risk and credit risk. The fund limits
this risk by purchasing only certain types and maturities of municipal bonds
and by diversifying its investment portfolio geographically and by industry.
See Risk Reduction Strategies for further information.
MATURITY (YEARS)
[BAR CHART APPEARS HERE]
Average Maturity 22.6
Average Modified Duration 8.2
CREDIT QUALITY
[PIE CHART APPEARS HERE]
BBB/NR 57%
A 23%
AA 5%
AAA 15%
INDUSTRY DIVERSIFICATION (TOP 5)
[PIE CHART APPEARS HERE]
Other 28%
Pollution Control 23%
Lease Rental 11%
Housing Facilities 7%
Educational Facilities 8%
Health Care Facilities 23%
EXPENSE INFORMATION AS OF 4/30/97
SHAREHOLDER TRANSACTION EXPENSES
- -------------------------------------------------------------------------------
(Maximum, as % of Offering Price)
<TABLE>
<CAPTION>
CLASS A CLASS B CLASS C CLASS R
- ----------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Sales Charge on Purchases 4.20%(1) - - -
Sales Charge on Reinvested Dividends - - - -
Contingent Deferred Sales Charge (CDSC) on Redemptions -(1) 5%(2) 1%(3) -
</TABLE>
OVERVIEW OF FUND OPERATING EXPENSES (4)
- -------------------------------------------------------------------------------
(Annual, as % of Average Net Assets)
<TABLE>
<CAPTION>
CLASS A CLASS B CLASS C CLASS R
- -------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Management Fees 0.49% 0.49% 0.49% 0.49%
12b-1 Fees 0.20% 0.95% 0.75% -
Other 0.12% 0.12% 0.12% 0.12%
- -------------------------------------------------------------------------------------------------
Total (Gross) 0.81% 1.56% 1.36% 0.61%
Waivers/
Reimbursements - - - -
- -------------------------------------------------------------------------------------------------
Total (Net) 0.81% 1.56% 1.36% 0.61%
</TABLE>
SUMMARY OF SHAREHOLDER EXPENSES (5)
- -------------------------------------------------------------------------------
The example illustrates the expenses on a hypothetical $1,000 investment in
the fund based on the Total Expenses shown at left, an assumed annual total
return of 5% and reinvestment of all dividends.
<TABLE>
<CAPTION>
HOLDING PERIOD CLASS A CLASS B CLASS C CLASS R
- ------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
1 Year $50 $55 $14 $6
3 Years $67 $81 $43 $20
5 Years $85 $96 $74 $34
10 Years $138 $165 $164 $76
</TABLE>
---
6
<PAGE>
FINANCIAL HIGHLIGHTS
The financial highlights below are excerpted from the fund's latest annual re-
port which has been audited by Deloitte & Touche LLP, the fund's independent
auditors. You may find more information about the fund's performance in its
annual report. For a copy of the fund's latest annual and semi-annual reports,
write to Nuveen or call (800) 621-7227.
<TABLE>
<CAPTION>
CLASS OPERATING PERFORMANCE LESS DISTRIBUTIONS
(INCEPTION DATE) ----------------------- -------------------------
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
- ----------------------------------------------------------------------------------------------------
<CAPTION>
CLASS RATIOS/SUPPLEMENTAL DATA
(INCEPTION DATE) --------------------------------------------------
RATIO
OF NET
RATIO OF INVESTMENT
EXPENSES INCOME TO
ALL-AMERICAN++ TO AVERAGE AVERAGE
NET ASSETS NET ASSETS
NET ASSETS AFTER AFTER PORTFOLIO
YEAR ENDING END OF PERIOD REIMBURSE- REIMBURSE- TURNOVER
APRIL 30, (IN MILLIONS) MENT(B) MENT(B) RATE
- ----------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
CLASS A (10/88)
1997(E) $216.6 .87%+ 5.54%+ 39%
1996(f) 208.0 .83 5.60 79
1995(f) 185.5 .76 6.02 71
1994(f) 159.9 .62 5.77 81
1993(f) 170.8 .65 6.24 72
1992(f) 129.5 .56 6.81 86
1991(f) 79.6 .42 7.33 94
1990(f) 49.0 .42 7.29 132
1989(c) 25.6 - 7.27+ 57
CLASS B (2/97)
1997(D) .7 1.55+ 4.83+ 39
CLASS C (6/93)
1997(E) 54.9 1.42+ 4.99+ 39
1996(f) 47.3 1.37 5.05 79
1995(f) 45.2 1.31 5.47 71
1994(f) 40.0 1.09+ 5.16+ 81
CLASS R (2/97)
1997(D) .2 .61+ 5.95+ 39
- ----------------------------------------------------------------------------------------------------
</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.
NOTES:
(1) The Class A sales charge may be reduced or waived based on the amount of
purchase or for certain eligible categories of investors. A CDSC of 1% is
imposed on redemptions of certain purchases of $1 million or more within
18 months of purchase. See "How to Select a Purchase Option."
(2) CDSC declines to 0% at the end of six years.
(3) Imposed only on redemptions within 12 months of purchase.
(4) Effective February 1, 1997 the fund eliminated the 0.20% distribution fee
on Class A shares and reduced the distribution fee on Class C shares from
0.75% to 0.55%. Long-term holders of Class B and C shares may pay more in
distribution fees and CDSCs than the maximum initial sales charge permit-
ted under National Association of Securities Dealers (NASD) Rules of Fair
Practice. The waiver/reimbursement levels shown reflect Nuveen's current
undertaking, made in connection with its acquisition of Flagship Resources
as described in "Fund Service Providers--Investment Adviser," to continue
Flagship's general dividend-setting practices.
(5) The expenses shown assume that you redeem your shares at the end of each
holding period. Class B shares convert to Class A shares after eight
years. If instead you redeemed your shares immediately prior to the end of
each stated period, your expenses might be higher. If you did not redeem
Class B shares at the end of each holding period, your expenses would have
been $16 for the one year period, $49 for the three year period, $85 for
the five year period, and $165 for the ten year period. This example does
not represent past or future expenses; actual expenses may be higher or
lower.
---
7
<PAGE>
NUVEEN FLAGSHIP INTERMEDIATE MUNICIPAL BOND FUND
PERFORMANCE INFORMATION AS OF 4/30/97
INCEPTION: September 15, 1992
NET ASSETS: $43.9 million
TOTAL RETURN (ANNUALIZED)
<TABLE>
- -------------------------------------------------------------------------------------------------
<CAPTION>
CLASS A CLASS A
(OFFER PRICE) (NAV) CLASS C CLASS R
- -------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
1 year 3.48% 6.68% 5.99% 6.53%
Inception 6.18% 6.88% 6.29% 6.85%
- -------------------------------------------------------------------------------------------------
</TABLE>
Class A total returns reflect actual performance for all periods; Class C and R
total returns reflect actual performance for periods since class inception (see
"Financial Highlights" for dates), and Class A performance for periods prior to
class inception, adjusted for the differences in sales charges and (in the case
of Class C) fees between the classes. See Overview of Fund Operating Expenses
and Shareholder Transaction Expenses.
The fund assumes investment risk in pursuit of its investment objective,
chiefly in the form of interest rate risk and credit risk. The fund limits this
risk by purchasing only certain types and maturities of municipal bonds and by
diversifying its investment portfolio geographically and by industry. See Risk
Reduction Strategies for further information.
MATURITY (YEARS)
Average Maturity 9.1
Average Modified Duration 7.2
CREDIT QUALITY
[PIE CHART APPEARS HERE]
BBB/NR 37%
A 13%
AA 10%
AAA 40%
INDUSTRY DIVERSIFICATION (TOP 5)
[PIE CHART APPEARS HERE]
Health Care Facilities 23%
Transportation 17%
General Obligation 12%
Other 30%
Pollution Control 7%
Lease Rental 11%
EXPENSE INFORMATION AS OF 4/30/97
SHAREHOLDER TRANSACTION EXPENSES
- --------------------------------------------------------------------------------
(Maximum, as % of Offering Price)
<TABLE>
<CAPTION>
CLASS A CLASS C CLASS R
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
Sales Charge on Purchases 3.00%(1) - -
Sales Charge on Reinvested Dividends - - -
Contingent Deferred Sales Charge (CDSC) on Redemptions -(1) 1%(2) -
</TABLE>
OVERVIEW OF FUND OPERATING EXPENSES (3)
- --------------------------------------------------------------------------------
(Annual, as % of Average Net Assets)
<TABLE>
<CAPTION>
CLASS A CLASS C CLASS R
- -------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Management Fees 0.50% 0.50% 0.50%
12b-1 Fees 0.20% 0.75% -
Other 0.34% 0.34% 0.34%
- -------------------------------------------------------------------------------------------------
Total (Gross) 1.04% 1.59% 0.84%
Waivers/
Reimbursements (0.25%) (0.25%) (0.25%)
- -------------------------------------------------------------------------------------------------
Total (Net) 0.79% 1.34% 0.59%
</TABLE>
SUMMARY OF SHAREHOLDER EXPENSES (4)
- --------------------------------------------------------------------------------
The example illustrates the expenses on a hypothetical $1,000 investment in the
fund based on the Total Expenses shown at left, an assumed annual total return
of 5% and reinvestment of all dividends.
<TABLE>
<CAPTION>
HOLDING PERIOD CLASS A CLASS C CLASS R
- ---------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
1 Year $38 $14 $6
3 Years $54 $42 $19
5 Years $73 $73 $33
10 Years $125 $161 $74
</TABLE>
---
8
<PAGE>
FINANCIAL HIGHLIGHTS
The financial highlights below are excerpted from the fund's latest annual re-
port which has been audited by Deloitte & Touche LLP, the fund's independent
auditors. You may find more information about the fund's performance in its
annual report. For a free copy of the fund's latest annual and semi-annual re-
ports, write to Nuveen or call (800) 621-7227.
<TABLE>
<CAPTION>
CLASS
(INCEPTION
DATE) OPERATING PERFORMANCE LESS DISTRIBUTIONS
- --------------- ---------------------- -------------------------
NET
REALIZED
INTERMEDIATE++ NET 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)
- --------------------------------------------------------------------------------------------------
<CAPTION>
CLASS
(INCEPTION
DATE) RATIOS/SUPPLEMENTAL DATA:
- ---------------- --------------------------------------------------
RATIO
OF NET
RATIO OF INVESTMENT
EXPENSES INCOME TO
INTERMEDIATE++ TO AVERAGE AVERAGE
NET ASSETS NET ASSETS
NET ASSETS AFTER AFTER PORTFOLIO
YEAR ENDING END OF PERIOD REIMBURSE- REIMBURSE- TURNOVER
APRIL 30, (IN MILLIONS) MENT(B) MENT(B) RATE
- --------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
CLASS A (9/92)
1997(E) $40.9 .68%+ 4.96%+ 26%
1996(f) 46.7 .62 4.86 81
1995(f) 42.1 .54 5.15 102
1994(f) 35.9 .40 4.93 69
1993(c) 19.0 .39+ 4.98+ 102
CLASS C (12/95)
1997(E) 2.5 1.23+ 4.38+ 26
1996(c) 1.2 1.13+ 4.28+ 81
CLASS R (2/97)
1997(D) .5 .40+ 5.40+ 26
- --------------------------------------------------------------------------------------------------
</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.
NOTES:
(1) The Class A sales charge may be reduced or waived based on the amount of
purchase or for certain eligible categories of investors. A CDSC of 1% is
imposed on redemptions of certain purchases of $1 million or more within
18 months of purchase. See "How to Select a Purchase Option."
(2) Imposed only on redemptions within 12 months of purchase.
(3) Effective February 1, 1997, the fund eliminated the 0.20% distribution fee
on Class A shares and reduced the distribution fee on Class C shares from
0.75% to 0.55%. Long-term holders of Class C shares may pay more in dis-
tribution fees and CDSCs than the maximum initial sales charge permitted
under National Association of Securities Dealers (NASD) Rules of Fair
Practice. The waiver/reimbursement levels shown reflect Nuveen's current
undertaking, made in connection with its acquisition of Flagship Resources
as described in "Fund Service Providers--Investment Adviser," to continue
Flagship's general dividend-setting practices.
(4) The expenses shown assume that you redeem your shares at the end of each
holding period. If instead you redeemed your shares immediately prior to
the end of each stated period, your expenses might be higher. This example
does not represent past or future expenses; actual expenses may be higher
or lower.
---
9
<PAGE>
NUVEEN FLAGSHIP LIMITED TERM MUNICIPAL BOND FUND
PERFORMANCE INFORMATION AS OF 4/30/97
INCEPTION:
October 19, 1987
NET ASSETS:
$449 million
TOTAL RETURN (ANNUALIZED)
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
CLASS A CLASS A
(OFFER PRICE) (NAV) CLASS C CLASS R
- -------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
1 year 2.18% 4.80% 4.49% 4.66%
5 years 5.14% 5.68% 5.34% 5.65%
Inception 6.33% 6.61% 6.29% 6.60%
</TABLE>
Class A total returns reflect actual performance for all periods; Class C and
R total returns reflect actual performance for periods since class inception
(see "Financial Highlights" for dates), and Class A performance for periods
prior to class inception, adjusted for the differences in sales charges and
(in the case of Class C) fees between the classes. See Overview of Fund Oper-
ating Expenses and Shareholder Transaction Expenses.
The fund assumes investment risk in pursuit of its investment objective,
chiefly in the form of interest rate risk and credit risk. The fund limits this
risk by purchasing only certain types and maturities of municipal bonds and by
diversifying its investment portfolio geographically and by industry. See Risk
Reduction Strategies for further information.
MATURITY (YEARS)
[BAR CHART APPEARS HERE]
Average Maturity 5.5
Average Modified Duration 4.7
CREDIT QUALITY
[PIE CHART APPEARS HERE]
BBB/NR (39%)
A (17%)
AA (5%)
AAA (39%)
INDUSTRY DIVERSIFICATION (TOP 5)
[PIE CHART APPEARS HERE]
Lease Rental (14%)
General Obligation (13%)
Transportation (8%)
Other (36%)
Educational Facilities (10%)
Health Care Facilities (19%)
EXPENSE INFORMATION AS OF 4/30/97
SHAREHOLDER TRANSACTION EXPENSES
- -------------------------------------------------------------------------------
(Maximum, as % of Offering Price)
<TABLE>
<CAPTION>
CLASS A CLASS C CLASS R
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
Sales Charge on Purchases 2.50%(1) - -
Sales Charge on Reinvested Dividends - - -
Contingent Deferred Sales Charge (CDSC) on Redemptions -(1) 1%(2) -
</TABLE>
OVERVIEW OF FUND OPERATING EXPENSES (3)
- -------------------------------------------------------------------------------
(Annual, as % of Average Net Assets)
<TABLE>
<CAPTION>
CLASS A CLASS C CLASS R
- ----------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Management Fees 0.43% 0.43% 0.43%
12b-1 Fees 0.20% 0.55% -
Other Expenses 0.13% 0.13% 0.13%
- ----------------------------------------------------------------------------------------------------
Total (Gross) 0.76% 1.11% 0.56%
Waivers/
Reimbursements - - -
- ----------------------------------------------------------------------------------------------------
Total (Net) 0.76% 1.11% 0.56%
</TABLE>
SUMMARY OF SHAREHOLDER EXPENSES (4)
- -------------------------------------------------------------------------------
The example illustrates the expenses on a hypothetical $1,000 investment in
the fund based on the Total Expenses shown at left, an assumed annual total
return of 5% and reinvestment of all dividends.
<TABLE>
<CAPTION>
HOLDING PERIOD CLASS A CLASS C CLASS R
- ---------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
1 Year $33 $11 $6
3 Years $49 $35 $18
5 Years $66 $61 $31
10 Years $117 $135 $70
</TABLE>
---
10
<PAGE>
FINANCIAL HIGHLIGHTS
The financial highlights below are excerpted from the fund's latest annual re-
port which has been audited by Deloitte & Touche LLP, the fund's independent
auditors. You may find more information about the fund's performance in its
annual report. For a free copy of the fund's latest annual and semi-annual re-
ports, write to Nuveen or call (800) 621-7227.
<TABLE>
<CAPTION>
CLASS
(INCEPTION OPERATING PERFORMANCE LESS DISTRIBUTIONS
DATE) ---------------------- -------------------------
NET
REALIZED
LIMITED TERM++ NET 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 (10/87)
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)
- ----------------------------------------------------------------------------------------------
<CAPTION>
CLASS
(INCEPTION RATIOS/SUPPLEMENTAL DATA:
DATE) --------------------------------------------------
RATIO
OF NET
RATIO OF INVESTMENT
EXPENSES INCOME TO
LIMITED TERM++ TO AVERAGE AVERAGE
NET ASSETS NET ASSETS
NET ASSETS AFTER AFTER PORTFOLIO
YEAR ENDING END OF PERIOD REIMBURSE- REIMBURSE- TURNOVER
APRIL 30, (IN MILLIONS) MENT(B) MENT(B) RATE
- -------------------------------------------------------------------
<S> <C> <C> <C> <C>
CLASS A (10/87)
1997(E) $425.4 .80%+ 4.76%+ 29%
1996(f) 489.2 .79 4.77 39
1995(f) 569.2 .74 4.88 20
1994(f) 704.6 .70 4.76 22
1993(f) 570.5 .70 5.10 20
1992(f) 284.5 .47 5.88 48
1991(f) 67.5 .56 6.32 167
1990(f) 19.0 .70 6.48 38
1989(f) 13.4 .56 6.28 50
1988(c) 9.8 .40+ 5.85+ 67
CLASS C (12/95)
1997(E) 23.6 1.11+ 4.44+ 29
1996(c) 15.4 1.19+ 4.17+ 39
CLASS R (2/97)
1997(D) - .55+ 5.07+ 29
- --------------------------------------------------------------------------
</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.
NOTES:
(1) The Class A sales charge may be reduced or waived based on the amount of
purchase or for certain eligible categories of investors. A CDSC of 1% is
imposed on redemptions of certain purchases of $1 million or more within
18 months of purchase. See "How to Select a Purchase Option."
(2) Imposed only on redemptions within 12 months of purchase.
(3) Effective February 1, 1997, the fund eliminated the 0.20% distribution fee
on Class A shares and reduced the distribution fee on Class C shares from
0.50% to 0.35%. Long-term holders of Class C shares may pay more in dis-
tribution fees and CDSCs than the maximum initial sales charge permitted
under National Association of Securities Dealers (NASD) Rules of Fair
Practice. The waiver/reimbursement levels shown reflect Nuveen's current
undertaking, made in connection with its acquisition of Flagship Resources
as described in "Fund Service Providers--Investment Adviser," to continue
Flagship's general dividend-setting practices.
(4) The expenses shown assume that you redeem your shares at the end of each
holding period. If instead you redeemed your shares immediately prior to
the end of each stated period, your expenses might be higher. This example
does not represent past or future expenses; actual expenses may be higher
or lower.
---
11
<PAGE>
FUND STRATEGIES
INVESTMENT OBJECTIVE
The investment objective of each fund is to provide you with as high a level
of current interest income exempt from regular federal income taxes as is con-
sistent with preservation of capital. There is no assurance that the funds
will achieve their investment objective.
INVESTOR SUITABILITY
The funds are a suitable investment for tax-conscious investors seeking to:
. Earn regular monthly tax-free dividends;
. Preserve investment capital over time;
. Reduce taxes on investment income;
. Set aside money systematically for retirement, estate planning or college
funding.
The funds are not a suitable investment for individuals seeking to:
. Pursue an aggressive, high-growth investment strategy;
. Invest through an IRA or 401k plan;
. Avoid fluctuations in share price.
HOW THE FUNDS SELECT INVESTMENTS
TAX-FREE MUNICIPAL BONDS
The funds invest primarily in municipal bonds that pay interest that is exempt
from regular federal income taxes. Income from these bonds may be subject to
the federal alternative minimum tax.
Municipal bonds are either general obligation or revenue bonds and typically
are issued to finance public projects (such as roads or public buildings), to
pay general operating expenses, or to refinance outstanding debt. Municipal
bonds may also be issued for private activities, such as housing, medical and
educational facility construction, or for privately owned industrial develop-
ment and pollution control projects. General obligation bonds are backed by
the full faith and credit, or taxing authority, of the issuer and may be re-
paid from any revenue source; revenue bonds may be repaid only from the reve-
nues of a specific facility or source.
The Nuveen Insured Fund primarily purchases insured municipal bonds. See "In-
surance" below. Under normal market conditions, the Nuveen Insured Fund will
invest at least 65% of its assets in insured municipal bonds.
FOCUS ON QUALITY MUNICIPAL BONDS
The funds purchase only quality municipal bonds that are either rated invest-
ment grade (AAA/Aaa to BBB/Baa) by independent ratings agencies at the time of
purchase or are non-rated but judged to be investment grade by the funds' in-
vestment adviser. Each fund except the Insured Municipal Bond Fund will invest
at least 80% of its net assets in investment-grade quality bonds. The Insured
Municipal Bond Fund will invest at least 80% of its net assets in insured mu-
nicipal bonds or municipal bonds backed by an escrow or trust account that
contains sufficient U.S. government-backed securities to assure timely payment
of interest and principal.
The funds may purchase municipal bonds that represent lease obligations. These
carry special risks because the issuer of the bonds may not be obligated to
appropriate money annually to make payments under the lease. In order to re-
duce this risk, the funds will only purchase leases where the issuer has a
strong incentive to continue making appropriations until maturity.
Bond ratings are furnished by Standard & Poor's Corporation, Fitch Investors
Services, and Moody's Investors Services. The ratings BBB and Baa are not
identical--S&P and Fitch consider bonds rated BBB to have adequate capacity to
pay principal and interest; Moody's considers bonds rated Baa to have some
speculative characteristics. Bond ratings represent the opinions of the rat-
ings agencies; they are not absolute standards of quality.
VALUE INVESTING STRATEGY
The funds' investment adviser uses a value-oriented strategy and looks for
higher-yielding and undervalued municipal bonds that offer above-average total
return potential. The adviser emphasizes fundamental research and selects mu-
nicipal bonds on the basis of its evaluation of each bond's relative value in
terms of current yield, price, credit quality and future prospects. The ad-
viser then monitors each fund's portfolio to assure that municipal bonds pur-
chased continue to represent over time, in its opinion, the best values avail-
able.
PORTFOLIO MATURITY
Each fund purchases municipal bonds with different maturities in pursuit of
its investment objective, but maintains under normal market conditions an in-
vestment portfolio with an overall weighted average maturity within a defined
range. The Limited-Term Fund maintains a weighted average portfolio maturity
of 1 to 7 years. The Intermediate Fund maintains a weighted average portfolio
maturity of 5 to 10 years. All of the other three funds described in this pro-
spectus are long-term funds and normally maintain a weighted average portfolio
maturity of 15 to 30 years. See "Defensive Investment Strategies" below for
further information.
INSURANCE
The Insured Municipal Bond Fund primarily purchases insured municipal bonds.
Insured municipal bonds are either covered by individual, permanent insurance
policies (obtained either at the time of issuance or subsequently), or covered
"while in fund" under a master portfolio insurance policy purchased by a fund.
Insurance guarantees only the timely payment of interest and principal on the
bonds; it does not guarantee the value of either individual bonds or fund
shares.
---
12
<PAGE>
Portfolio insurance policies are effective only so long as the fund continues
to own the covered bond, and the price the fund would receive upon sale of
such a bond would not benefit from the insurance. Insurers under master port-
folio insurance policies currently include MBIA Insurance Corp., AMBAC Indem-
nity Corp., Financial Security Assurance, Inc., and Financial Guaranty Insur-
ance Co. The funds' investment adviser may obtain master policies from other
insurers, but only from insurers that specialize in insuring municipal bonds
and whose claims-paying ability is rated Aaa or AAA by Moody's or S&P. Insur-
ers are responsible for making their own assessment of the insurability of a
municipal bond.
The Insured Municipal Bond Fund can invest up to 20% of its net assets in un-
insured municipal bonds that are backed by an escrow containing sufficient
U.S. Government or U.S. Government agency securities to ensure timely payment
of principal and interest. Such bonds are normally regarded as having the
credit characteristics of the underlying U.S. Government-backed securities.
PORTFOLIO TURNOVER
A fund buys and sells portfolio securities in the normal course of its invest-
ment activities. The proportion of the fund's investment portfolio that is
sold and replaced with new securities during a year is known as the fund's
portfolio turnover rate. The funds intend to keep portfolio turnover rela-
tively low in order to reduce trading costs and the realization of taxable
capital gains. Each fund, however, may make limited short-term trades to take
advantage of market opportunities or reduce market risk.
DELAYED DELIVERY TRANSACTIONS
Each fund may buy or sell bonds on a when-issued or delayed delivery basis,
making payment or taking delivery at a later date, normally within 15 to 45
days of the trade date. This type of transaction may involve an element of
risk because no interest accrues on the bonds prior to settlement and, since
securities are subject to market fluctuation, the value of the bonds at time
of delivery may be less (or more) than cost.
RISK REDUCTION STRATEGIES
In pursuit of its investment objective, each fund assumes investment risk,
chiefly in the form of interest rate and credit risk. Interest rate risk is
the risk that changes in market interest rates will affect the value of a
fund's investment portfolio. In general, the value of a municipal bond falls
when interest rates rise, and increases when interest rates fall. Credit risk
is the risk that an issuer of a municipal bond is unable to meet its obliga-
tion to make interest and principal payments. In general, lower rated munici-
pal bonds are perceived to carry a greater degree of risk in the issuer's
ability to make interest and principal payments. Municipal bonds with longer
maturities (durations) or lower ratings generally provide higher current in-
come, but are subject to greater price fluctuation due to changes in market
conditions than bonds with shorter maturities or higher ratings, respectively.
The funds limit your investment risk generally by restricting the types and
maturities of municipal bonds they purchase, and by diversifying their invest-
ment portfolios geographically as well as across different industry sectors.
The funds should be considered long-term investments and may not be suitable
for investors with short-term investment horizons.
INVESTMENT LIMITATIONS
The funds have adopted certain investment limitations (based on total fund as-
sets) designed to limit your investment risk and maintain portfolio diversifi-
cation. Each fund may not have more than:
. 5% in securities of any one issuer (except U.S. government securities or for
25% of each fund's assets).
. 25% in any one industry sector, such as electric utilities or health care;
. 10% in borrowings (33% if used to meet redemptions).
DEFENSIVE INVESTMENT STRATEGIES
Each fund may invest in high quality short-term municipal securities in order
to reduce risk and preserve capital. Under normal market conditions, each fund
may invest only up to 20% of net assets in short-term municipal securities
that are exempt from regular federal income tax, although the funds may invest
up to 100% as a temporary defensive measure in response to adverse market con-
ditions. During temporary defensive periods, the weighted average maturity of
a fund's investment portfolio may fall below the defined range described above
under "Portfolio Maturity."
If suitable short-term municipal investments are not reasonably available, the
funds may invest in short-term taxable securities that are rated Aaa or AAA,
by Moody's or S&P, respectively, or issued by the U.S. government, and that
have a maturity of one year or less or have a variable interest rate.
Each fund may also use various investment strategies designed to limit the
risk of bond price fluctuations and to preserve capital. These hedging strate-
gies include using financial futures contracts, options on financial futures,
or options based on either an index of long-term tax-free securities or on
debt securities whose prices, in the opinion of the funds' investment adviser,
correlate with the prices of the funds' investments. The funds, however, have
no present intent to use these strategies.
FUNDAMENTAL INVESTMENT POLICIES
Each fund's investment objective as well as the policies described above in
"Focus on Quality Municipal Bonds," "Insurance," and "Risk Reduction Strate-
gies" are fundamental and may not be changed without the approval of a major-
ity of the shareholders of each fund.
---
13
<PAGE>
INVESTING IN THE FUNDS
HOW TO BUY FUND SHARES
You may open an account with $3,000 per fund share class and make additional
investments at any time with as little as $50. Reinvestment of Nuveen unit
trust distributions have no purchase minimums. Purchases through sponsors of
fee-based programs meeting certain criteria, as described in the statement of
additional information, may be eligible for lower minimums. The share price
you pay will depend on when Nuveen receives your order: orders received before
the close of regular trading on the New York Stock Exchange (normally 4 p.m.
Eastern time) will receive that day's share price; otherwise you will receive
the next business day's share price.
BUYING SHARES THROUGH A FINANCIAL ADVISER
You may buy fund shares through your financial adviser, who can handle all the
details for you, including establishing an account with Nuveen. Financial ad-
visers can also help you review your financial needs and formulate long-term
investment goals and objectives. In addition, financial advisers generally can
help you develop a customized financial plan, select investments, and monitor
and review your portfolio on an ongoing basis to assure your investments con-
tinue to meet your needs as circumstances change.
Financial advisers are usually paid either from fund sales charges and fees or
by charging you a separate fee in lieu of a sales charge for ongoing invest-
ment advice and services.
If you do not have a financial adviser, call (800) 621-7227 and Nuveen can re-
fer you to one in your area.
BUYING SHARES BY MAIL
You may also open an account and purchase shares by mail by completing the en-
closed Nuveen application and mailing it along with your check (payable to the
appropriate fund) to the address listed under "How to Contact Nuveen." Sales
charges are not waived when you buy shares by mail.
Each fund reserves the right to reject any purchase order and waive or in-
crease minimum investment requirements. The funds also reserve the right to
suspend the issuance of shares at any time; any suspension, however, will not
affect your ability to redeem shares.
HOW TO SELECT A PURCHASE OPTION
The funds offer you a variety of flexible options when buying shares. Whether
you typically work with a financial adviser on a commission or a fee basis or
prefer to work on a more self-directed basis, you can purchase shares in the
way that is most suited to your individual circumstances and investment needs.
Each of the four available ways to purchase fund shares is called a class of
shares: Class A, Class B, Class C and Class R. While each of these classes
features different sales charges, on-going fees and eligibility requirements,
each entitles you to a share of the same portfolio of municipal bonds.
Selecting the class of shares which is most appropriate for you will depend on
a variety of factors. You should weigh carefully whether you and your finan-
cial adviser work on a commission or fee basis, the types of services that you
will receive, the amount you intend to buy, how long you plan to own your in-
vestment and whether or not you will reinvest dividends. If you compensate
your financial adviser directly, you should consider the fees your financial
adviser charges for investment advice or handling your trades in addition to
any sales charges and fees imposed by the funds. Please refer to your finan-
cial adviser's sales material for further information. Each class of shares is
described in more detail below and under "Fund Service Providers--The Distrib-
utor." Your financial adviser can explain each option and help you determine
which is most appropriate for you, or you can call (800) 621-7227.
BUYING CLASS A SHARES
You may buy Class A shares at their public offering price on the day of pur-
chase. The price you pay will equal the Class A NAV (net asset value) plus a
sales charge based upon the amount of your purchase. Class A shares also bear
a 0.20% annual service fee which compensates your financial adviser for pro-
viding you with ongoing service.
The following Class A sales charges and commissions apply to all funds de-
scribed in this prospectus except the Intermediate Fund and Limited Term
Funds.
CLASS A SALES CHARGES AND COMMISSIONS
<TABLE>
- -------------------------------------------------------------------------------------------
<CAPTION>
AUTHORIZED
DEALER
SALES CHARGE COMMISSION
----------------------------------- ----------
AS % OF AS % OF
PUBLIC AS % OF PUBLIC
OFFERING YOUR NET OFFERING
PURCHASE AMOUNT PRICE INVESTMENT PRICE
- -------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Up to $50,000 4.20% 4.38% 3.70%
$50,000-100,000 4.00 4.18 3.50
$100,000-250,000 3.50 3.63 3.00
$250,000-500,000 2.50 2.56 2.00
$500,000-1,000,000 2.00 2.04 1.50
$1,000,000 and over -(1) - -(1)
</TABLE>
The following Class A sales charges and commissions apply to the Intermediate
Fund:
CLASS A SALES CHARGES AND COMMISSIONS
<TABLE>
- -------------------------------------------------------------------------------------------
<CAPTION>
AUTHORIZED
DEALER
SALES CHARGE COMMISSION
----------------------------------- ----------
AS % OF AS % OF
PUBLIC AS % OF PUBLIC
OFFERING YOUR NET OFFERING
PURCHASE AMOUNT PRICE INVESTMENT PRICE
- -------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Up to $50,000 3.00% 3.09% 2.50%
$50,000-100,000 2.50 2.56 2.00
$100,000-250,000 2.00 2.04 1.50
$250,000-500,000 1.50 1.52 1.25
$500,000-1,000,000 1.25 1.27 1.00
$1,000,000 and over -(1) - -(1)
</TABLE>
---
14
<PAGE>
The following Class A sales charges and commissions apply to the Limited Term
Fund:
CLASS A SALES CHARGES AND COMMISSIONS
<TABLE>
- -------------------------------------------------------------------------------------------
<CAPTION>
AUTHORIZED
DEALER
SALES CHARGE COMMISSION
------------------------------------------- ----------
AS % OF AS % OF
PUBLIC AS % OF PUBLIC
OFFERING YOUR NET OFFERING
PURCHASE AMOUNT PRICE INVESTMENT PRICE
- -------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Up to $50,000 2.50% 2.56% 2.00%
$50,000-100,000 2.00 2.04 1.60
$100,000-250,000 1.50 1.52 1.20
$250,000-500,000 1.25 1.27 1.00
$500,000-1,000,000 0.75 0.76 0.60
$1,000,000 and over -(1) - -(1)
</TABLE>
(1) Nuveen pays authorized dealers a commission equal to the sum of 1% of the
first $2.5 million, plus 0.50% of the next $2.5 million, plus 0.25% of any
amount over $5 million. Unless the authorized dealer waived the commis-
sion, you may be assessed a contingent deferred sales charge (CDSC) of 1%
if you redeem any of your shares within 18 months of purchase. The CDSC is
calculated on the lower of your purchase price or redemption proceeds.
Nuveen periodically undertakes sales promotion programs with authorized deal-
ers and may pay them the full applicable sales charge as a commission. In ad-
dition, Nuveen may provide support to authorized dealers in connection with
sales meetings, seminars, prospecting seminars and other events at which
Nuveen presents its products and services. Under certain circumstances, Nuveen
may also make ongoing payments to authorized dealers to facilitate the market-
ing and administration of new and existing shareholder accounts, including
payments for advertising that features the products and services of both par-
ties. The statement of additional information contains further information
about these programs. Nuveen pays for these programs at its own expense and
not out of fund assets.
OTHER SALES CHARGE DISCOUNTS
Nuveen offers a number of programs that enable you to reduce or eliminate the
sales charge on Class A shares:
Sales Charge Reductions
. Rights of Accumulation
. Letter of Intent (LOI)
. Group Purchase
Sales Charge Waivers
. Nuveen Unit Trust Reinvestment
. Purchases using Redemptions from Unrelated Funds
. Fee-Based Programs
. Bank Trust Departments
. Certain Employees of Nuveen or Authorized Dealers
Please refer to the statement of additional information for detailed descrip-
tions of these programs. Further information on these programs is also avail-
able through your financial adviser or by calling (800) 621-7227. Your finan-
cial adviser can also provide and help you prepare the necessary application
forms. You or your financial adviser are responsible for notifying Nuveen
about your eligibility for any sales charge reduction or waiver at the time of
each purchase.
The funds may modify or discontinue these programs at any time upon written
notice to shareholders.
BUYING CLASS B SHARES
You may buy Class B shares at their public offering price on the day of pur-
chase. The price you pay will equal the Class B NAV. There is no initial sales
charge, but Class B shares bear a 0.20% annual service fee which compensates
your financial adviser for providing you with ongoing service, and a 0.75% an-
nual distribution fee which compensates Nuveen for paying your financial ad-
viser a 4% commission at the time of purchase. The Intermediate Fund and Lim-
ited Term Fund do not currently offer B Shares.
Class B shares convert automatically to Class A shares eight years after pur-
chase. Class B shares will convert only if the fund is assured that the con-
version does not generate tax consequences for investors, based upon the opin-
ion of outside counsel or the written assurance of the IRS.
CLASS B CONTINGENT DEFERRED SALES CHARGE
If you redeem Class B shares within six years of purchase, you will be as-
sessed a contingent deferred sales charge (CDSC) based upon the following
schedule:
The CDSC is calculated on the lower of your purchase price or redemption pro-
ceeds.
<TABLE>
<CAPTION>
DURING YEAR
- ---------------------------------------------------------------------------------------------------------------
1 2 3 4 5 6 7+
- ---------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
CDSC 5% 4% 4% 3% 2% 1% 0%
</TABLE>
BUYING CLASS C SHARES
You may buy Class C shares at their public offering price on the day of pur-
chase. The price you pay will equal the Class C NAV. There is no initial sales
charge, but Class C shares bear a 0.20% annual service fee which compensates
your financial adviser for providing you with ongoing service, and a 0.55%
(0.35% for the Limited Term Fund) annual distribution fee which compensates
Nuveen for paying your financial adviser for the sale, including a 1% commis-
sion at the time of sale.
If you redeem your Class C shares within one year of purchase, you may be as-
sessed a CDSC of 1%. The CDSC is calculated on the lower of your purchase
price or redemption proceeds.
BUYING CLASS R SHARES
You may purchase Class R shares at their public offering price on the day of
purchase. The price you pay will equal the Class R NAV. You may purchase Class
R shares only if you are investing at least $1 million or would otherwise
qualify to purchase Class A shares without a sales charge under certain of the
programs described under "Other Sales Charge Discounts" above. See the state-
ment of additional information for more details. There are no sales charges or
ongoing
---
15
<PAGE>
fees. Class R shares have lower ongoing expenses than Class A shares.
HOW TO SELL FUND SHARES
You may use one of the methods described below to redeem your shares on any
day the New York Stock Exchange is open. You will receive the share price next
determined after Nuveen has received your redemption request in good order.
Your redemption request must be received before the close of trading of the
New York Stock Exchange (normally 4 p.m. Eastern time) for you to receive that
day's price. The funds do not charge any redemption fees, although you will be
assessed a CDSC where applicable.
SELLING SHARES THROUGH YOUR FINANCIAL ADVISER
You may sell fund shares by contacting your financial adviser who can provide
and help you prepare all the necessary documentation. Your financial adviser
may charge you for this service.
SELLING SHARES BY TELEPHONE
Unless you have declined telephone redemption privileges, you may sell fund
shares by calling (800) 621-7227. Your redemption must not exceed $50,000 and
you may not redeem by telephone shares held in certificate form. Checks will
be issued only to the shareholder on record and mailed to the address on rec-
ord. If you have established electronic funds transfer privileges on your ac-
count, you may have redemption proceeds transferred electronically to your
bank account; if you are redeeming $1,000 or more, you may expedite your re-
quest by having your redemption proceeds wired directly into your bank ac-
count. See "Fund Direct--Electronic Funds Transfer" below.
Nuveen, the transfer agent or the fund will be liable for losses resulting
from unauthorized telephone redemptions only if they do not follow reasonable
procedures designed to verify the identity of the caller. You should immedi-
ately verify your trade confirmations when you receive them.
SELLING SHARES BY MAIL
You may sell fund shares by mail by sending a written request to Nuveen at the
address listed below under "How to Contact Nuveen." Your request must include
the following information:
. The fund's name;
. Your name and account number;
. The dollar or share amount you wish to redeem;
. The signature of each owner exactly as it appears on the account;
. The name of the person you want your redemption proceeds paid to, if other
than to the shareholder of record;
. The address you want your redemption proceeds sent to, if other than the ad-
dress of record;
. Any certificates you have for the shares; and
. Any required signature guarantees.
Signatures must be guaranteed if you are redeeming more than $50,000, you want
the check payable to someone other than the shareholder on record, or you want
the check sent to another address (or the address on record has been changed
within the last 60 days). Signature guarantees must be obtained from a bank,
brokerage firm or other financial intermediary that is a member of an approved
Medallion Guarantee Program or that is otherwise approved by the fund. A
notary public cannot provide a signature guarantee.
Unless other arrangements are made, checks will be sent to your address on
record. Checks will normally be mailed within one business day, but in no
event more than seven days from receipt of your redemption request. If any
shares were purchased less than 15 days prior to your request, the fund will
not mail your redemption proceeds until the check for your purchase has
cleared, which may take up to 15 days.
Each fund may suspend redemptions or delay payment on redemptions for more
than seven days (three days for street name accounts) in certain extraordinary
circumstances as described in the statement of additional information.
OPERATION OF THE CDSC
When you redeem Class A, Class B, or Class C shares subject to a CDSC, the
fund will first redeem any shares that are not subject to a CDSC or that rep-
resent an increase in the value of your fund account due to capital apprecia-
tion, and then redeem the shares you have owned for the longest period of
time, unless you ask the fund to redeem your shares in a different order. No
CDSC is imposed on shares you buy through the reinvestment of dividends and
capital gains. The holding period is calculated on a monthly basis and begins
on the first day of the month in which you buy shares. When you redeem shares
subject to a CDSC, the CDSC is calculated on the lower of your purchase price
or redemption proceeds, deducted from your redemption proceeds, and paid to
Nuveen. The CDSC may be waived under certain special circumstances as de-
scribed in the statement of additional information.
ACCOUNT MINIMUMS
From time to time, the funds may establish minimum account size requirements.
The funds reserve the right to liquidate your account upon 30 days written no-
tice if the value of your account falls below an established minimum. The
funds presently have set a minimum balance of $100 unless you have an active
unit trust reinvestment account. You will not be assessed a CDSC on an invol-
untary redemption.
EXCHANGING SHARES
You may exchange fund shares at any time for the same class of shares in an-
other Nuveen mutual fund registered for sale in your state. You may exchange
fund shares by calling (800) 621-7227 or by mailing your written request to
Nuveen at the address listed under "How to Contact Nuveen."
You must have owned your fund shares for at least 15 days and your exchange
must meet the minimum purchase re-
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16
<PAGE>
quirements of the fund into which you are exchanging. No CDSC will be assessed
on an exchange, and the holding period of your investment will be carried over
to the new fund for purposes of determining any future CDSC. You may not ex-
change Class B shares for shares of a Nuveen money market fund.
Because an exchange is treated for tax purposes as the concurrent sale and
purchase of fund shares, you should consult your tax adviser about the tax
consequences of any contemplated exchange. Each fund reserves the right to
limit or terminate exchange privileges if it believes doing so is in the best
interests of fund shareholders.
RESTRICTIONS ON MARKET TIMING
The exchange privilege is not intended to permit you to use a fund for short-
term trading. Excessive exchange activity may interfere with portfolio manage-
ment, raise fund operating expenses or otherwise have an adverse effect on
fund shareholders. In order to limit excessive exchange activity and in other
circumstances where the funds' investment adviser believes doing so would be
in the best interests of the fund, each fund reserves the right to revise or
terminate the exchange privilege, limit the amount or number of exchanges, or
reject any exchange. You will be notified in the event this happens to the ex-
tent required by law.
OPTIONAL FEATURES AND SERVICES
SYSTEMATIC INVESTMENT
Once you have opened an account, you may make regular investments of $50 or
more a month through automatic deductions from your bank account (see "Fund
Direct--Electronic Funds Transfer" below), or directly from your paycheck. To
invest regularly from your bank account, simply complete the appropriate sec-
tion of the account application. To invest regularly from your paycheck, call
Nuveen for a Payroll Direct Deposit Enrollment form. If you need additional
copies of these forms, or would like assistance completing them, contact your
financial adviser or call Nuveen at (800) 621-7227.
One of the benefits of systematic investing is "dollar cost averaging." Be-
cause you are making fixed payments, you buy fewer shares when the price is
high, and more when the price is low. As a result, the average price you pay
will be less than the average share price of fund shares over this period.
Dollar cost averaging does not assure profits or protect against losses in a
steadily declining market. Since dollar cost averaging involves continuous in-
vestment regardless of fluctuating price levels, you should consider your fi-
nancial ability to continue investing in declining as well as rising markets
before deciding to invest in this way.
Systematic investing may also make you eligible for reduced sales charges on
shares of the fund as well as other Nuveen mutual funds (see "Other Sales
Charge Discounts").
THE POWER OF SYSTEMATIC INVESTING
The chart below illustrates the benefits of systematic investing based on a
$3,000 initial investment and subsequent monthly investments of $100 over 20
years. The example assumes you earn a return of 4%, 5% or 6% annually on your
investment and that you reinvest all dividends. These annual returns do not
reflect past or projected fund performance.
THE POWER OF SYSTEMATIC INVESTING
[CHART APPEARS HERE]
[PLOT POINTS TO COME]
SYSTEMATIC WITHDRAWALS
If the value of your fund account is at least $10,000, you may request to have
$50 or more withdrawn automatically from your account. You may elect to re-
ceive payments monthly, quarterly, semi-annually or annually, and may choose
to receive a check, have the monies transferred directly into your bank ac-
count (see "Fund Direct--Electronic Funds Transfer" below), paid to a third
party or sent payable to you at an address other than your address of record.
You must complete the appropriate section of the account application or Ac-
count Update Form to participate in the fund's systematic withdrawal plan.
You should not establish systematic withdrawals if you intend to make concur-
rent purchases of Class A, B or C shares because you may unnecessarily pay a
sales charge or CDSC on these purchases.
REINSTATEMENT PRIVILEGE
If you redeem fund shares, you may reinvest all or part of your redemption
proceeds in shares of the same class up to one year later without incurring
any applicable sales charges, and your prior holding period will be reinstat-
ed. You may exercise this privilege only once per redemption request.
If you paid a CDSC, your CDSC will be refunded and your holding period rein-
stated. You should consult your tax adviser about the tax consequences of ex-
ercising your reinstatement privilege.
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17
<PAGE>
FUND DIRECT--ELECTRONIC FUNDS TRANSFER
You may arrange to transfer funds electronically between your bank account and
your fund account by completing the appropriate section of the account appli-
cation or the Account Update Form. If you need additional copies of these
forms, or would like assistance completing them, contact your financial ad-
viser or call Nuveen at (800) 621-7227. You may use Fund Direct to quickly and
conveniently purchase or sell shares by telephone, systematically invest or
withdraw funds, or send dividend payments directly to your bank account.
In addition, if you have established electronic funds transfer privileges on
your account, you may request that redemption proceeds of $1,000 or more be
sent by Federal Reserve wire directly into your bank account. While you will
generally receive your redemption proceeds more quickly than a regular tele-
phone redemption via Fund Direct, the fund may charge you a fee for this expe-
dited service.
DIVIDENDS AND TAXES
HOW THE FUNDS PAY DIVIDENDS
The funds pay tax-free dividends monthly and any taxable capital gains or
other distributions once a year in December. The funds declare dividends on or
about the ninth of each month and generally pay dividends on the first busi-
ness day of the following month.
PAYMENT AND REINVESTMENT OPTIONS
The funds automatically reinvest your dividends each month in additional fund
shares of the same share class unless you request otherwise. You may request
to have your dividends paid to you by check, deposited directly into your bank
account, paid to a third party, sent to an address other than your address of
record or reinvested in shares of the same share class of another Nuveen mu-
tual fund. If you wish to do so, complete the appropriate section of the ac-
count application, contact your financial adviser or call Nuveen at (800) 621-
7227.
CALCULATION OF FUND DIVIDENDS
Each fund pays dividends based upon its past and projected net income in order
to distribute substantially all of its net income each fiscal year.
In order to maintain a more stable monthly dividend, each fund may sometimes
distribute less or more than the amount of net income earned in a particular
period as a result of fluctuations in a fund's net income. Undistributed net
income is included in the fund's share price; similarly, distributions from
previously undistributed net income reduce the fund's share price. This divi-
dend policy is not expected to affect the management of a fund's portfolio.
Dividends for Class A, B, C and R shares are determined in the same manner and
at the same time. Dividends per share will vary based on which class of fund
shares you own, reflecting the different ongoing fees and other expenses of
each class.
TAXES AND TAX REPORTING
The discussion below and in the statement of additional information provides
general tax information related to an investment in fund shares. Because tax
laws are complex and often change, you should consult your tax adviser about
the tax consequences of a specific fund investment.
Because the funds invest in municipal bonds, the regular monthly dividends you
receive will be exempt from regular federal income tax. All or a portion of
these dividends, however, may be subject to state and local taxes or to the
federal alternative minimum tax (AMT).
Although the funds do not seek to realize taxable income or capital gains, the
funds may realize and distribute taxable income or capital gains from time to
time as a result of each fund's normal investment activities. Each fund will
distribute in December any taxable income or capital gains realized over the
preceding year. Net short-term gains are taxable as ordinary income. Net long-
term capital gains are taxable as long-term capital gains regardless of how
long you have owned your investment. Taxable dividends do not qualify for a
dividends received deduction if you are a corporate shareholder.
Each year, you will receive a year-end statement that describes the tax status
of dividends paid to you during the preceding year, including the source of
its investment income by state and the portion of its income that is subject
to AMT. You will receive this statement from the firm where you purchased your
fund shares if you hold your investment in street name; Nuveen will send you
this statement if you hold your shares in registered form.
The tax status of your dividends is not affected by whether you reinvest your
dividends or receive them in cash.
BUYING OR SELLING SHARES CLOSE TO A RECORD DATE
If you purchase fund shares shortly before the record date for a taxable divi-
dend, this is commonly known as "buying a dividend." The entire dividend you
receive may be taxable to you even though a portion of the dividend effec-
tively represents a return of your purchase price. Similarly, if you sell or
exchange fund shares shortly before the record date for a tax-exempt dividend,
a portion of the price you receive may be treated as a taxable capital gain
even though it reflects tax-free income earned but not yet distributed by the
fund.
REDEEMING SHARES HELD LESS THAN SIX MONTHS
If you sell or exchange shares that you have owned for less than six months
and you recognized a short-term capital loss when you redeemed your shares,
the loss you can claim will be reduced by the amount of tax-free dividends
paid to you on those shares. Any remaining short-term capital loss will be
treated as long-term capital loss to the extent you also received capital gain
dividends on those shares. You should consult your tax adviser for complete
information about
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18
<PAGE>
these rules. Please consider the tax consequences carefully when contemplating
a redemption.
OTHER IMPORTANT TAX INFORMATION
In order to avoid corporate taxation of its earnings and to pay tax-free divi-
dends, each fund must meet certain I.R.S. requirements that govern the fund's
sources of income, diversification of assets and distribution of earnings to
shareholders. Each fund has met these requirements in the past and intends to
do so in the future. If a fund failed to do so, the fund would be required to
pay corporate taxes on its earnings and all your distributions would be taxable
as ordinary income.
A fund may be required to withhold 31% of certain of your dividends if you have
not provided the fund with your correct taxpayer identification number (nor-
mally your social security number), or if you are otherwise subject to back-up
withholding.
If you receive social security benefits, you should be aware that tax-free in-
come is taken into account in calculating the amount of these benefits that may
be subject to federal income tax.
If you borrow money to buy fund shares, you may not deduct the interest on that
loan. Under I.R.S. rules, fund shares may be treated as having been bought with
borrowed money even if the purchase cannot be traced directly to borrowed mon-
ey.
If you are subject to the alternative minimum tax, a portion of your regular
monthly dividends may be taxable.
TAXABLE EQUIVALENT YIELDS
The taxable equivalent yield is the current yield you would need to earn on a
taxable investment in order to equal a stated tax-free yield on a municipal in-
vestment. To assist you to more easily compare municipal investments like the
funds with taxable alternative investments, the table below presents the tax-
able equivalent yields for a range of hypothetical tax-free yields and tax
rates:
TAXABLE EQUIVALENT OF TAX-FREE YIELDS
Tax-Free Yield
<TABLE>
<CAPTION>
TAX RATE 4.00% 4.50% 5.00% 5.50% 6.00%
- --------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
28.0% 5.56% 6.25% 6.94% 7.64% 8.33%
31.0% 5.80% 6.52% 7.25% 7.97% 8.70%
36.0% 6.25% 7.03% 7.81% 8.59% 9.37%
39.6% 6.62% 7.45% 8.28% 9.11% 9.93%
</TABLE>
The yields and tax rates shown above are hypothetical and do not predict your
actual returns or effective tax rate. For more detailed information, see the
statement of additional information or consult your tax adviser.
GENERAL INFORMATION
HOW TO CONTACT NUVEEN
GENERAL INFORMATION
If you would like general information about Nuveen Mutual Funds or any other
Nuveen product, call (800) 621-7227 between 7:30 a.m. and 7:00 p.m. Central
time.
PURCHASES, REDEMPTIONS AND OTHER TRANSACTIONS
If you are calling to purchase or redeem shares, request an exchange or conduct
other account transactions, call (800) 621-7227 between 7:30 a.m. and 7:00 p.m.
Central time. If you are sending a written request to Nuveen, you should mail
your request to the following address:
Nuveen Mutual Funds
c/o Shareholder Services Inc.
P.O. Box 5330
Denver, CO 80217-5330
When purchasing fund shares by mail, please be sure to include a check made out
to the name of the Fund and mark clearly on your check which class of shares
you are purchasing. If you do not specify which class of shares you are pur-
chasing, Nuveen will assume you are buying Class A shares if you are opening a
new account; if you are adding to an existing account, Nuveen will assume you
wish to buy more shares of the class you already own.
FUND SERVICE PROVIDERS
INVESTMENT ADVISER
Nuveen Advisory Corp. ("Nuveen Advisory") serves as the investment adviser to
the funds and in this capacity is responsible for the selection and on-going
monitoring of the municipal bonds in each fund's investment portfolio. Nuveen
Advisory serves as investment adviser to investment portfolios with more than
$35 billion in municipal assets under management. The funds' Board of Trustees
oversees the activities of Nuveen Advisory, which also include managing the
funds' business affairs and providing certain clerical, bookkeeping and other
administrative services. Established in 1976, Nuveen Advisory is a wholly-owned
subsidiary of John Nuveen & Co. Incorporated, which itself is approximately 78%
owned by the St. Paul Companies, Inc. Effective January 1, 1997, The John
Nuveen Company acquired Flagship Resources Inc., and as part of that acquisi-
tion, Flagship Financial, the adviser to the Flagship Funds, was merged with
Nuveen Advisory.
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19
<PAGE>
For providing these services, Nuveen Advisory is paid an annual management
fee. The following schedule applies to all funds described in this prospectus
except the Limited Term Fund:
MANAGEMENT FEES
<TABLE>
- ------------------------------------------------------------------------------
<CAPTION>
AVERAGE DAILY NET ASSET VALUE MANAGEMENT FEE
- ------------------------------------------------------------------------------
<S> <C>
For the first $125 million 0.5000%
For the next $125 million 0.4875%
For the next $250 million 0.4750%
For the next $500 million 0.4625%
For the next $1 billion 0.4500%
For assets over $2 billion 0.4250%
</TABLE>
The following schedule applies to the Limited Term Fund:
MANAGEMENT FEES
<TABLE>
- ------------------------------------------------------------------------------
<CAPTION>
AVERAGE DAILY NET ASSET VALUE MANAGEMENT FEE
- ------------------------------------------------------------------------------
<S> <C>
For the first $125 million 0.4500%
For the next $125 million 0.4375%
For the next $250 million 0.4250%
For the next $500 million 0.4125%
For the next $1 billion 0.4000%
For assets over $2 billion 0.3750%
</TABLE>
For more information about fees and expenses, see the fund operating expense
tables in the Fund Summaries.
PORTFOLIO MANAGERS
Overall investment management strategy and operating policies for the funds
are set by the Investment Policy Committee of Nuveen Advisory. The Investment
Policy Committee is comprised of the principal executive officers and portfo-
lio managers of Nuveen Advisory and meets regularly to review economic condi-
tions, the outlook for the financial markets in general and the status of the
municipal markets in particular. Day-to-day operation of each fund and the ex-
ecution of its specific investment strategies is the responsibility of the
designated portfolio manager described below.
Thomas C. Spalding is the portfolio manager for the Municipal Bond Fund. Mr.
Spalding has managed the fund since 1976 and has been a Vice President of
Nuveen Advisory since 1978. Steven J. Krupa is the portfolio manager for the
Insured Fund. Mr. Krupa has managed the fund since 1994 and has been a Vice
President of Nuveen Advisory since 1990. Richard Huber is the portfolio man-
ager for the All-American Fund and the Limited-Term Fund. Mr. Huber has man-
aged the funds since 1995 and since 1995, had been a Vice President of Flag-
ship Financial Inc., the funds' prior investment adviser, until becoming a
Vice President of Nuveen Advisory upon the acquisition of Flagship Resources
Inc. by The John Nuveen Company in January 1997. Paul Brennan is the portfolio
manager for the Intermediate Fund. Mr. Brennan has managed or co-managed the
fund since September 1995 and since 1991 had been an employee of Flagship Fi-
nancial Inc., the funds' prior investment adviser, until becoming an Assistant
Vice President of Nuveen Advisory upon the acquisition of Flagship Resources
Inc. by The John Nuveen Company in January 1997.
THE DISTRIBUTOR
John Nuveen and Co. Incorporated serves as the selling agent and distributor
of the funds' shares. In this capacity, Nuveen manages the offering of the
funds' shares and is responsible for all sales and promotional activities. In
order to reimburse Nuveen for its costs in connection with these activities,
including compensation paid to authorized dealers, each fund has adopted a
distribution and service plan under Rule 12b-1 of the Investment Company Act
of 1940.
The plan authorizes each fund to pay Nuveen an annual 0.20% service fee on the
average daily net assets of Class A, B and C shares outstanding. The plan also
authorizes each fund (excluding the Intermediate Municipal Bond Fund and Lim-
ited Term Municipal Bond Fund which do not currently offer Class B shares) to
pay Nuveen an annual 0.75% distribution fee on the average daily net assets of
Class B shares outstanding. The plan also authorizes each fund to pay Nuveen
an annual 0.55% (0.35% for the Limited Term Municipal Bond Fund) distribution
fee on the average daily net assets of Class C shares outstanding. In order to
help compensate Nuveen for the sales commission paid to financial advisers at
the time of sale on sales of Class B and Class C shares, Nuveen retains the
first year's service fee on sales of Class B shares and all Class B distribu-
tion fees; and retains the first year's service and distribution fees on sales
of Class C shares. Otherwise, Nuveen pays these fees to the broker of record.
The statement of additional information contains a detailed description of the
plan and its provisions.
TRANSFER AGENT
Each fund has appointed a transfer agent which is responsible for distributing
dividend payments and providing certain bookkeeping, data processing and other
administrative services in connection with the maintenance of shareholder ac-
counts. Shareholder Services, Inc., P.O. Box 5330, Denver, CO 80217-5330, cur-
rently serves as transfer agent for the Municipal Bond Fund and the Insured
Municipal Bond Fund. Boston Financial, P.O. Box 8509, Boston, MA, 02266-8509,
currently serves as transfer agent for the All-American Fund, the Intermediate
Fund, and the Limited Term Fund. The funds intend to consolidate transfer
agent activities with a single firm in the future.
HOW THE FUNDS REPORT PERFORMANCE
Each fund may quote its yield and total return in reports to shareholders,
sales literature and advertisements. The funds may also compare their invest-
ment results to various passive indices or other mutual funds with similar in-
vestment objectives. Comparative performance information may include data from
Lipper Analytical Services, Inc., Morningstar, Inc. and other industry publi-
cations. See the statement of additional information for a more detailed dis-
cussion. You may
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20
<PAGE>
find more information about each fund's performance in its annual report. Call
Nuveen at (800) 621-7227 for a free copy.
HOW FUND SHARES ARE PRICED
The share price for each class of fund shares, also called its net asset value
(NAV), is calculated every business day as of the close of regular trading on
the New York Stock Exchange (normally 4 p.m. Eastern time). The net asset
value for a class of fund shares is computed by calculating the total value of
the class' portion of the fund's portfolio investments and other assets, sub-
tracting any liabilities or other debts, and dividing by the total number of
its shares outstanding.
The prices of municipal bonds in each fund's investment portfolio are provided
by a pricing service approved and supervised by the fund's Board of Trustees.
When price quotes are not readily available (which is usually the case for mu-
nicipal 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.
ORGANIZATION
The Trust is an open-end diversified investment company under the Investment
Company Act of 1940, consisting of multiple funds. The shares of each fund are
divided into classes. Each class of shares represents an interest in the same
portfolio of investments and the shares of each class have equal rights as to
voting, redemption, dividends and liquidation. However, each class bears dif-
ferent sales charges and service fees. B shares convert to A shares after 8
years.
Class C shares of the Municipal Bond Fund and the Insured Municipal Bond Fund
purchased before February 1, 1997 convert to A shares six years after pur-
chase, but only if you request conversion. You must submit your request to SSI
no later than the last business day of the 71st month following the month in
which you purchased your shares.
The funds are not required to and do not intend to hold annual meetings.
Shareholders owning ten percent or more of a fund's outstanding shares may
call a special meeting for any purpose, including to elect or remove trustees
or to change fundamental policies.
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21
<PAGE>
Nuveen Family of Mutual Funds
Nuveen offers a variety of funds designed to help you reach your
financial goals. The funds below are grouped by investment
objectives.
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 Long-term
Intermediate-term
Limited-term
[Map Appears Here]
State Funds
Alabama Kentucky/3/ New York/1/
Arizona Louisiana North Carolina
California/1/ Maryland Ohio
Colorado Massachusetts/1/ Pennsylvania
Connecticut Michigan South Carolina
Florida/2/ Missouri Tennessee
Georgia New Jersey/2/ Virginia
Kansas New Mexico Wisconsin
1. Long-term, insured long-term, intermediate-term and limited-term
portfolios.
2. Long-term and insured long-term portfolios.
3. Long-term and intermediate-term portfolios.
NUVEEN
John Nuveen & Co. Incorporated
333 West Wacker Drive
Chicago, IL 60606-1286
(800) 621-7227
www.nuveen.com
<PAGE>
AUGUST 27, 1997
NUVEEN FLAGSHIP MUNICIPAL TRUST
NUVEEN MUNICIPAL BOND FUND
NUVEEN INSURED MUNICIPAL BOND FUND
NUVEEN FLAGSHIP ALL-AMERICAN MUNICIPAL BOND FUND
NUVEEN FLAGSHIP INTERMEDIATE MUNICIPAL BOND FUND
NUVEEN FLAGSHIP LIMITED TERM MUNICIPAL BOND FUND
STATEMENT OF ADDITIONAL INFORMATION
This Statement of Additional Information is not a prospectus. This Statement
of Additional Information should be read in conjunction with the Prospectus of
the Nuveen Flagship Municipal Trust dated August 27, 1997. The Prospectus may
be obtained without charge from certain securities representatives, banks, and
other financial institutions that have entered into sales agreements with John
Nuveen & Co. Incorporated, or from the Funds, by mailing a written request to
the Funds, c/o John Nuveen & Co. Incorporated, 333 West Wacker Drive, Chicago,
Illinois 60606 or by calling (800) 621-7227.
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Investment Policies and Investment Portfolio............................... S-2
Management................................................................. S-12
Investment Adviser and Investment Management Agreement..................... S-19
Portfolio Transactions..................................................... S-20
Net Asset Value............................................................ S-21
Tax Matters................................................................ S-21
Performance Information.................................................... S-24
Additional Information on the Purchase and Redemption of Fund Shares....... S-30
Distribution and Service Plan.............................................. S-34
Independent Public Accountants and Custodian............................... S-35
Financial Statements....................................................... S-35
Appendix A--Ratings of Investments......................................... A-1
Appendix B--Description of Hedging Techniques.............................. B-1
</TABLE>
The audited financial statements for each Fund's most recent fiscal year
appear in the Funds' Annual Reports. The Annual Reports accompany this
Statement of Additional Information.
<PAGE>
INVESTMENT POLICIES AND INVESTMENT PORTFOLIO
INVESTMENT POLICIES
The investment objective and certain fundamental investment policies of each
Fund are described in the Prospectus. Each of the Funds, as a fundamental
policy, may not, without the approval of the holders of a majority of the
shares of that Fund:
(1) Invest in securities other than Municipal Obligations and short-term
securities, as described in the Prospectus. Municipal Obligations are
municipal bonds that pay interest that is exempt from regular federal
income taxes.
(2) Invest more than 5% of its total assets in securities of any one
issuer, except this limitation shall not apply to securities of the United
States Government or to the investment of 25% of such Fund's assets.
(3) Borrow money, except from banks for temporary or emergency purposes
and not for investment purposes and then only in an amount not exceeding
(a) 10% of the value of its total assets at the time of borrowing or (b)
one-third of the value of the Fund's total assets including the amount
borrowed, in order to meet redemption requests which might otherwise
require the untimely disposition of securities. While any such borrowings
exceed 5% of such Fund's total assets, no additional purchases of
investment securities will be made by such Fund. If due to market
fluctuations or other reasons, the value of the Fund's assets falls below
300% of its borrowings, the Fund will reduce its borrowings within 3
business days. To do this, the Fund may have to sell a portion of its
investments at a time when it may be disadvantageous to do so.
(4) Pledge, mortgage or hypothecate its assets, except that, to secure
borrowings permitted by subparagraph (2) above, it may pledge securities
having a market value at the time of pledge not exceeding 10% of the value
of the Fund's total assets.
(5) Issue senior securities as defined in the Investment Company Act of
1940, except to the extent such issuance might be involved with respect to
borrowings described under item (3) above or with respect to transactions
involving futures contracts or the writing of options within the limits
described in the Prospectus and this Statement of Additional Information.
(6) Underwrite any issue of securities, except to the extent that the
purchase or sale of Municipal Obligations in accordance with its investment
objective, policies and limitations, may be deemed to be an underwriting.
(7) Purchase or sell real estate, but this shall not prevent any Fund
from investing in Municipal Obligations secured by real estate or interests
therein or foreclosing upon and selling such security.
(8) Purchase or sell commodities or commodities contracts or oil, gas or
other mineral exploration or development programs, except for transactions
involving futures contracts within the limits described in the Prospectus
and this Statement of Additional Information.
(9) Make loans, other than by entering into repurchase agreements and
through the purchase of Municipal Obligations or temporary investments in
accordance with its investment objective, policies and limitations.
(10) Make short sales of securities or purchase any securities on margin,
except for such short-term credits as are necessary for the clearance of
transactions.
(11) Write or purchase put or call options, except to the extent that the
purchase of a stand-by commitment may be considered the purchase of a put,
and except for transactions involving options within the limits described
in the Prospectus and this Statement of Additional Information.
(12) Invest more than 25% of its total assets in securities of issuers in
any one industry; provided, however, that such limitations shall not be
applicable to Municipal Obligations issued by governments or political
subdivisions of governments, and obligations issued or guaranteed by the
U.S. Government, its agencies or instrumentalities.
(13) Purchase or retain the securities of any issuer other than the
securities of the Fund if, to the Fund's knowledge, those trustees of the
Trust, or those officers and directors of Nuveen Advisory Corp. ("Nuveen
Advisory"), who individually own beneficially more than 1/2 of 1% of the
outstanding securities of such issuer, together own beneficially more than
5% of such outstanding securities.
In addition, each Fund, as a non-fundamental policy, may not invest more than
15% of its net assets in "illiquid" securities, including repurchase agreements
maturing in more than seven days.
For the purpose of applying the limitations set forth in paragraph (2) above,
an issuer shall be deemed the sole issuer of a security when its assets and
revenues are separate from other governmental entities and its securities are
backed only by its assets and revenues. Similarly, in the case of a non-
governmental user, such as an industrial corporation or a privately owned or
operated hospital, if the security is backed only by the assets and revenues of
the non-governmental user, then such non-governmental user would be deemed to
be the sole issuer. Where a security is also backed by the enforceable
obligation of a superior or unrelated governmental entity or other entity
(other than a bond insurer), it shall also be included in the computation of
securities owned that are issued by such governmental or other entity.
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Where a security is guaranteed by a governmental entity or some other
facility, such as a bank guarantee or letter of credit, such a guarantee or
letter of credit would be considered a separate security and would be treated
as an issue of such government, other entity or bank. Where a security is
insured by bond insurance, it shall not be considered a security issued or
guaranteed by the insurer; instead the issuer of such security will be
determined in accordance with the principles set forth above. The foregoing
restrictions do not limit the percentage of the Fund's assets that may be
invested in securities insured by any single insurer.
The foregoing restrictions and limitations, as well as a Fund's policies as
to ratings of portfolio investments, will apply only at the time of purchase of
securities, and the percentage limitations will not be considered violated
unless an excess or deficiency occurs or exists immediately after and as a
result of an acquisition of securities, unless otherwise indicated.
The foregoing fundamental investment policies, together with the investment
objective of each Fund, cannot be changed without approval by holders of a
"majority of the Fund's outstanding voting shares." As defined in the
Investment Company Act of 1940, this means the vote of (i) 67% or more of the
Fund's shares present at a meeting, if the holders of more than 50% of the
Fund's shares are present or represented by proxy, or (ii) more than 50% of the
Fund's shares, whichever is less.
The Nuveen Flagship Municipal Trust (the "Trust") is an open-end diversified
management series investment company organized as a Massachusetts business
trust on July 1, 1996. Each of the Funds is an open-end management investment
company organized as a series of the Nuveen Flagship Municipal Trust. The Trust
is an open-end management series company under SEC Rule 18f-2. Each Fund is a
separate series issuing its own shares. The Trust currently has five series:
the Nuveen Municipal Bond Fund (originally incorporated in Maryland on October
8, 1976 and reorganized as a Massachusetts business trust on June 12, 1995);
the Nuveen Insured Municipal Bond Fund (formerly a series of the Nuveen Insured
Tax-Free Bond Fund, Inc., a Minnesota corporation incorporated on July 14,
1986); the Nuveen Flagship All-American Municipal Bond Fund (formerly the
Flagship All-American Tax Exempt Fund, a series of the Flagship Tax Exempt
Funds Trust); the Nuveen Flagship Intermediate Municipal Bond Fund (formerly
the Flagship Intermediate Tax Exempt Fund, a series of the Flagship Tax Exempt
Funds Trust); and the Nuveen Flagship Limited Term Municipal Bond Fund
(formerly the Flagship Limited Term Tax Exempt Fund, a series of the Flagship
Tax Exempt Funds Trust). Certain matters under the Investment Company Act of
1940 which must be submitted to a vote of the holders of the outstanding voting
securities of a series company shall not be deemed to have been effectively
acted upon unless approved by the holders of a majority of the outstanding
voting securities of each Fund affected by such matter.
The Trust is an entity of the type commonly known as a "Massachusetts
business trust." Under Massachusetts law, shareholders of a trust may, under
certain circumstances, be held personally liable as partners for its
obligations. However, the Declaration of Trust contains an express disclaimer
of shareholder liability for acts or obligations of the Trust and requires that
notice of this disclaimer be given in each agreement, obligation or instrument
entered into or executed by the Trust or the Trustees. The Declaration of Trust
further provides for indemnification out of the assets and property of the
Trust for all loss and expense of any shareholder personally liable for the
obligations of the Trust. Thus, the risk of a shareholder incurring financial
loss on account of shareholder liability is limited to circumstances in which
both inadequate insurance existed and the Trust itself were unable to meet its
obligations. The Trust believes the likelihood of these circumstances is
remote.
PORTFOLIO SECURITIES
As described in the Prospectus, each Fund invests primarily in a diversified
portfolio of Municipal Obligations issued within the 50 states and certain U.S.
possessions and territories. In general, Municipal Obligations include debt
obligations issued by states, cities and local authorities to obtain funds for
various public purposes, including construction of a wide range of public
facilities such as airports, bridges, highways, hospitals, housing, mass
transportation, schools, streets and water and sewer works. Industrial
development bonds and pollution control bonds that are issued by or on behalf
of public authorities to finance various privately-rated facilities are
included within the term Municipal Obligations if the interest paid thereon is
exempt from federal income tax.
The investment assets of each Fund will consist of (1) Municipal Obligations
which are rated at the time of purchase within the four highest grades (Baa or
BBB or better) by Moody's Investors Service, Inc. ("Moody's"), by Standard and
Poor's Corporation ("S&P") or by Fitch Investors Service, Inc. ("Fitch"), (2)
unrated Municipal Obligations which, in the opinion of Nuveen Advisory, have
credit characteristics equivalent to bonds rated within the four highest grades
by Moody's, S&P or Fitch, except that the Fund may not invest more than 20% of
its net assets in unrated bonds and (3) temporary investments as described
below, the income from which may be subject to state income tax or to both
federal and state income taxes. See Appendix A for more information about
ratings by Moody's, S&P, and Fitch.
As described in the Prospectus, each Fund may invest in Municipal Obligations
that constitute participations in a lease obligation or installment purchase
contract obligation (hereafter collectively called "lease obligations") of a
municipal authority or entity. Although lease obligations do not constitute
general obligations of the municipality for which the municipality's taxing
power is pledged, a lease obligation is ordinarily backed by the municipality's
covenant to budget for, appropriate and make the payments due under the lease
obligation. However, certain lease obligations contain "non-appropriation"
clauses which provide that the municipality has no obligation to make lease or
installment purchase
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payments in future years unless money is appropriated for such purpose on a
yearly basis. Although nonappropriation lease obligations are secured by the
leased property, disposition of the property in the event of foreclosure might
prove difficult. A Fund will seek to minimize the special risks associated with
such securities by only investing in those nonappropriation leases where Nuveen
Advisory has determined that the issuer has a strong incentive to continue
making appropriations and timely payment until the security's maturity. Some
lease obligations may be illiquid under certain circumstances. Lease
obligations normally provide a premium interest rate which along with regular
amortization of the principal may make them attractive for a portion of the
assets of the Funds.
Obligations of issuers of Municipal Obligations are subject to the provisions
of bankruptcy, insolvency and other laws affecting the rights and remedies of
creditors. In addition, the obligations of such issuers may become subject to
the laws enacted in the future by Congress, state legislatures or referenda
extending the time for payment of principal and/or interest, or imposing other
constraints upon enforcement of such obligations or upon municipalities to levy
taxes. There is also the possibility that, as a result of legislation or other
conditions, the power or ability of any issuer to pay, when due, the principal
of and interest on its Municipal Obligations may be materially affected.
INSURANCE
Each insured Municipal Obligation held by the Nuveen Insured Municipal Bond
Fund will either be (1) covered by an insurance policy applicable to a specific
security and obtained by the issuer of the security or a third party at the
time of original issuance ("Original Issue Insurance"), (2) covered by an
insurance policy applicable to a specific security and obtained by the Fund or
a third party subsequent to the time of original issuance ("Secondary Market
Insurance"), or (3) covered by a master municipal insurance policy purchased by
the Fund ("Portfolio Insurance"). The Fund currently maintains a policy of
Portfolio Insurance with MBIA Insurance Corporation, AMBAC Indemnity
Corporation, Financial Security Assurance, Inc., and Financial Guaranty
Insurance Company, and may in the future obtain other policies of Portfolio
Insurance, depending on the availability of such policies on terms favorable to
the Fund. However, the Fund may determine not to obtain such policies and to
emphasize investments in Municipal Obligations insured under Original Issue
Insurance or Secondary Market Insurance. In any event, the Fund will only
obtain policies of Portfolio Insurance issued by insurers whose claims-paying
ability is rated Aaa by Moody's Investors Service, Inc. ("Moody's") or AAA by
Standard & Poor's Corporation ("S&P"). The Fund currently intends to obtain
insurance polices only from mono-line insurers specializing in insuring
municipal debt. Municipal Obligations covered by Original Issue Insurance or
Secondary Market Insurance are themselves typically assigned a rating of Aaa or
AAA, as the case may be, by virtue of the Aaa or AAA claims-paying ability of
the insurer and would generally be assigned a lower rating if the ratings were
based primarily upon the credit characteristics of the issuer without regard to
the insurance feature. By way or contrast, the ratings, if any, assigned to
Municipal Obligations insured under Portfolio Insurance will be based primarily
upon the credit characteristics of the issuers without regard to the insurance
feature, and will generally carry a rating that is below Aaa or AAA. While in
the portfolio of the Fund, however, a Municipal Obligation backed by Portfolio
Insurance will effectively be of the same quality as a Municipal Obligation
issued by an issuer of comparable credit characteristics that is backed by
Original Issue Insurance or Secondary Market Insurance.
The Fund's policy of investing in Municipal Obligations insured by insurers
whose claims-paying ability is rated Aaa or AAA will apply only at the time of
the purchase of a security, and a Fund will not be required to dispose of
securities in the event Moody's or S&P, as the case may be, downgrades its
assessment of the claims-paying ability of a particular insurer or the credit
characteristics of a particular issuer. In this connection, it should be noted
that in the event Moody's or S&P or both should down-grade its assessment of
the claims-paying ability of a particular insurer, it could also be expected to
downgrade the ratings assigned to Municipal Obligations insured under Original
Issue Insurance or Secondary Market Insurance issued by such insurer, and
Municipal Obligations insured under Portfolio Insurance issued by such insurer
would also be of reduced quality in the portfolio of the Fund. Moody's and S&P
continually assess the claims-paying ability of insurers and the credit
characteristics of issuers, and there can be no assurance that they will not
downgrade their assessments subsequent to the time the Fund purchases
securities.
In addition to insured Municipal Obligations, the Fund may invest in
Municipal Obligations that are entitled to the benefit of an escrow or trust
account which contains securities issued or guaranteed by the U.S. Government
or U.S. Government agencies, backed by the full faith and credit of the United
States, and sufficient in amount to ensure the payment of interest and
principal on the original interest payment and maturity dates ("collateralized
obligations"). These collateralized obligations generally will not be insured
and will include, but are not limited to, Municipal Obligations that have been
(1) advance refunded where the proceeds of the refunding have been used to
purchase U.S. Government or U.S. Government agency securities that are placed
in escrow and whose interest or maturing principal payments, or both, are
sufficient to cover the remaining scheduled debt service on the Municipal
Obligations, and (2) issued under state or local housing finance programs which
use the issuance proceeds to fund mortgages that are then exchanged for U.S.
Government or U.S. Government agency securities and deposited with a trustee as
security for the Municipal Obligations. These collateralized obligations are
normally regarded as having the credit characteristics of the underlying U.S.
Government or U.S. Government agency securities. Collateralized obligations
will not constitute more than 20% of the Fund's assets.
Each insured Municipal Obligation in which the Fund invests will be covered
by Original Issue Insurance, Secondary Market Insurance or Portfolio Insurance.
There is no limitation on the percentage of the Fund's assets that may be
invested in Municipal Obligations insured by any given insurer.
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Original Issue Insurance. Original Issue Insurance is purchased with respect
to a particular issue of Municipal Obligations by the issuer thereof or a third
party in conjunction with the original issuance of such Municipal Obligations.
Under such insurance, the insurer unconditionally guarantees to the holder of
the Municipal Obligation the timely payment of principal and interest on such
obligation when and as such payments shall become due but shall not be paid by
the issuer, except that in the event of any acceleration of the due date of the
principal by reason of mandatory or optional redemption (other than
acceleration by reason of a mandatory sinking fund payment), default or
otherwise, the payments guaranteed may be made in such amounts and at such
times as payments of principal would have been due had there not been such
acceleration. The insurer is responsible for such payments less any amounts
received by the holder from any trustee for the Municipal Obligation issuers or
from any other source. Original Issue Insurance does not guarantee payment on
an accelerated basis, the payment of any redemption premium (except with
respect to certain premium payments in the case of certain small issue
industrial development and pollution control Municipal Obligations), the value
of the shares of the Fund, the market value of Municipal Obligations, or
payments of any tender purchase price upon the tender of the Municipal
Obligations. Original Issue Insurance also does not insure against nonpayment
of principal of or interest on Municipal Obligations resulting from the
insolvency, negligence or any other act or omission of the trustee or other
paying agent for such obligations.
In the event that interest on or principal of a Municipal Obligation covered
by insurance is due for payment but is unpaid by the issuer thereof, the
applicable insurer will make payments to its fiscal agent (the "Fiscal Agent")
equal to such unpaid amounts of principal and interest not later than one
business day after the insurer has been notified that such nonpayment has
occurred (but not earlier than the date such payment is due). The Fiscal Agent
will disburse to the Fund the amount of principal and interest which is then
due for payment but is unpaid upon receipt by the Fiscal Agent of (i) evidence
of the Fund's right to receive payment of such principal and interest and (ii)
evidence, including any appropriate instruments of assignment, that all of the
rights to payment of such principal or interest then due for payment shall
thereupon vest in the insurer. Upon payment by the insurer of any principal or
interest payments with respect to any Municipal Obligations, the insurer shall
succeed to the rights of the Fund with respect to such payment.
Original Issue Insurance remains in effect as long as the Municipal
Obligations covered thereby remain outstanding and the insurer remains in
business, regardless of whether the Fund ultimately disposes of such Municipal
Obligations. Consequently, Original Issue Insurance may be considered to
represent an element of market value with respect to the Municipal Obligations
so insured, but the exact effect, if any, of this insurance on such market
value cannot be estimated.
Secondary Market Insurance. Subsequent to the time of original issuance of a
Municipal Obligation, the Fund or a third party may, upon the payment of a
single premium, purchase insurance on such Municipal Obligation. Secondary
Market Insurance generally provides the same type of coverage as is provided by
Original Issue Insurance and remains in effect as long as the Municipal
Obligation covered thereby remain outstanding, the holder of such Municipal
Obligation does not voluntarily relinquish the Secondary Market Insurance and
the insurer remains in business, regardless of whether the Fund ultimately
disposes of such Municipal Obligation.
One of the purposes of acquiring Secondary Market Insurance with respect to a
particular Municipal Obligation would be to enable the Fund to enhance the
value of such Municipal Obligation. The Fund, for example, might seek to
purchase a particular Municipal Obligation and obtain Secondary Market
Insurance with respect thereto if, in the opinion of Nuveen Advisory, the
market value of such Municipal Obligation, as insured, would exceed the current
value of the Municipal Obligation without insurance plus the cost of the
Secondary Market Insurance. Similarly, if the Fund owns but wishes to sell a
Municipal Obligation that is then covered by Portfolio Insurance, the Fund
might seek to obtain Secondary Market Insurance with respect thereto if, in the
opinion of Nuveen Advisory, the net proceeds of a sale by the Fund of such
obligation, as insured, would exceed the current value of such obligation plus
the cost of the Secondary Market Insurance.
Portfolio Insurance. Portfolio Insurance guarantees the payment of principal
and interest on specified eligible Municipal Obligations purchased by the Fund.
Except as described below, Portfolio Insurance generally provides the same type
of coverage as is provided by Original Issue Insurance or Secondary Market
Insurance. Municipal Obligations insured under one Portfolio Insurance policy
would generally not be insured under any other policy purchased by the Fund. A
Municipal Obligation is eligible for coverage under a policy if it meets
certain requirements of the insurer. Portfolio Insurance is intended to reduce
financial risk, but the cost thereof and compliance with investment
restrictions imposed under the policy will reduce the yield to shareholders of
the Fund.
If a Municipal Obligation is already covered by Original Issue Insurance or
Secondary Market Insurance, then such Municipal Obligation is not required to
be additionally insured under any policy of Portfolio Insurance that the Fund
may purchase. All premiums respecting Municipal Obligations covered by Original
Issue Insurance or Secondary Market Insurance are paid in advance by the issuer
or other party obtaining the insurance.
Portfolio Insurance policies are effective only as to Municipal Obligations
owned by and held by the Fund, and do not cover Municipal Obligations for which
the contract for purchase fails. A "when-issued" Municipal Obligation will be
covered under a Portfolio Insurance policy upon the settlement date of the
issue of such "when-issued" Municipal Obligation. In determining whether to
insure Municipal Obligations held by the Fund, an insurer will apply its own
standards, which correspond generally to the standards it has established for
determining the insurability of new issues of Municipal Obligations. See
"Original Issue Insurance" above.
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Each Portfolio Insurance policy will be noncancellable and will remain in
effect so long as the Fund is in existence, the Municipal Obligations covered
by the policy continue to be held by the Fund, and the Fund pays the premiums
for the policy. Each insurer will generally reserve the right at any time upon
90 days' written notice to the Fund to refuse to insure any additional
securities purchased by the Fund after the effective date of such notice. The
Board of Trustees will
generally reserve the right to terminate each policy upon seven days' written
notice to an insurer if it determines that the cost of such policy is not
reasonable in relation to the value of the insurance to the Fund.
Each Portfolio Insurance policy will terminate as to any Municipal Obligation
that has been redeemed from or sold by the Fund on the date of such redemption
or the settlement date of such sale, and an insurer shall not have any
liability thereafter under a policy as to any such Municipal Obligation, except
that if the date of such redemption or the settlement date of such sale occurs
after a record date and before the related payment date with respect to any
such Municipal Obligation, the policy will terminate as to such Municipal
Obligation on the business day immediately following such payment date. Each
policy will terminate as to all Municipal Obligations covered thereby on the
date on which the last of the covered Municipal Obligations mature, are
redeemed or are sold by the Fund.
One or more policies of Portfolio Insurance may provide a Fund, pursuant to
an irrevocable commitment of the insurer, with the option to exercise the right
to obtain permanent insurance ("Permanent Insurance") with respect to a
Municipal Obligation that is to be sold by the Fund. The Fund would exercise
the right to obtain Permanent Insurance upon payment of a single, predetermined
insurance premium payable from the proceeds of the sale of such Municipal
Obligation. It is expected that the Fund will exercise the right to obtain
Permanent Insurance for a Municipal Obligation only if, in the opinion of
Nuveen Advisory, upon such exercise the net proceeds from the sale by the Fund
of such obligation, as insured, would exceed the proceeds from the sale of such
obligation without insurance.
The Permanent Insurance premium with respect to each such obligation is
determined based upon the insurability of each such obligation as of the date
of purchase by the Fund and will not be increased or decreased for any change
in the creditworthiness of such obligation unless such obligation is in default
as to payment or principal or interest, or both. In such event, the Permanent
Insurance premium shall be subject to an increase predetermined at the date of
purchase by the Fund.
The Fund generally intends to retain any insured securities covered by
Portfolio Insurance that are in default or in significant risk of default and
to place a value on the insurance, which ordinarily will be the difference
between the market value of the defaulted security and the market value of
similar securities of minimum investment grade (i.e., rated BBB) that are not
in default. In certain circumstances, however, Nuveen Advisory may determine
that an alternative value for the insurance, such as the difference between the
market value of the defaulted security and either its par value or the market
value of securities of a similar nature that are not in default or in
significant risk of default, is more appropriate. To the extent that the Fund
holds such defaulted securities, it may be limited in its ability to manage its
investment portfolio and to purchase other Municipal Obligations. Except as
described above with respect to securities covered by Portfolio Insurance that
are in default or subject to significant risk of default, the Funds will not
place any value on the insurance in valuing the Municipal Obligations that it
holds.
Because each Portfolio Insurance policy will terminate as to Municipal
Obligations sold by the Fund on the date of sale, in which event the insurer
will be liable only for those payments of principal and interest that are then
due and owing (unless Permanent Insurance is obtained by the Fund), the
provision for this insurance will not enhance the marketability of securities
held by the Fund, whether or not the securities are in default or in
significant risk of default. On the other hand, since Original Issue Insurance
and Secondary Market Insurance generally will remain in effect as long as
Municipal Obligations covered thereby are outstanding, such insurance may
enhance the marketability of such securities, even when such securities are in
default or in significant risk of default, but the exact effect, if any, on
marketability cannot be estimated. Accordingly, the Funds may determine to
retain or, alternatively, to sell Municipal Obligations covered by Original
Issue Insurance or Secondary Market Insurance that are in default or in
significant risk of default.
Premiums for a Portfolio Insurance policy are paid monthly, and are adjusted
for purchases and sales of Municipal Obligations covered by the policy during
the month. The yield on the Fund is reduced to the extent of the insurance
premiums it pays. Depending upon the characteristics of the Municipal
Obligations held by the Fund, the annual premium rate for policies of Portfolio
Insurance is estimated to range from .15% to .30% of the value of the Municipal
Obligations covered under the policy. Because the majority of the Municipal
Obligations in the Fund were not covered by policies of Portfolio Insurance
during the year ended February 29, 1996, premium expenses as a percentage of
the value of Municipal Obligations held by the Fund for such period were .00%.
Set forth below is information about the various municipal bond insurers with
whom the Nuveen Insured Municipal Bond Fund currently maintains policies of
Portfolio Insurance.
AMBAC INDEMNITY CORPORATION ("AMBAC INDEMNITY")
AMBAC Indemnity is a Wisconsin-domiciled stock insurance corporation
regulated by the Office of the Commissioner of Insurance of the State of
Wisconsin and licensed to do business in 50 states, the District of Columbia,
the Territory of Guam and the Commonwealth of Puerto Rico, with admitted assets
of approximately $2,642,000,000 (unaudited) and statutory capital of
approximately $1,509,000,000 (unaudited) as of March 31, 1997. Statutory
capital
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consists of AMBAC Indemnity's policyholders' surplus and statutory contingency
reserve. AMBAC Indemnity is a wholly-owned subsidiary of AMBAC, Inc., a 100%
publicly-held company. Moody's, S&P and Fitch Investors Service, L.P., each
have assigned a triple-A claims-paying ability rating to AMBAC Indemnity.
AMBAC Indemnity has obtained a ruling from the Internal Revenue Service to
the effect that the insuring of an obligation by AMBAC Indemnity will not
affect the treatment for federal income tax purposes of interest on such
obligation and that insurance proceeds representing maturing interest paid by
AMBAC Indemnity under policy provisions substantially identical to those
contained in its municipal bond insurance policy shall be treated for federal
income tax purposes in the same manner as if such payments were made by the
issuer of the bonds.
Copies of AMBAC Indemnity's financial statements prepared in accordance with
statutory accounting standards are available from AMBAC Indemnity. The address
of AMBAC Indemnity's administrative offices and its telephone number are One
State Street Plaza, 17th Floor, New York, New York 10004 and (212) 668-0340.
FINANCIAL SECURITY ASSURANCE INC. ("FINANCIAL SECURITY")
Financial Security is a monoline insurance company incorporated under the
laws of the State of New York. Financial Security is licensed to engage in the
financial guaranty insurance business in all 50 states, the District of
Columbia and Puerto Rico.
Financial Security is a wholly owned subsidiary of Financial Security
Assurance Holdings Ltd. ("Holdings"), a New York Stock Exchange listed company.
Major shareholders of Holdings include Fund American Enterprise Holdings, Inc.,
U.S. West Capital Corporation and the Tokio Marine and Fire Insurance Co., Ltd.
No shareholder is obligated to pay any debts of or any claims against Financial
Security. Financial Security is domiciled in the State of New York and is
subject to regulation by the State of New York Insurance Department. As of
March 31, 1997, the total policyholders' surplus and contingency reserves and
the total unearned premium reserve, respectively, of Financial Security and its
consolidated subsidiaries were, in accordance with statutory accounting
principles, approximately $691,321,000 (unaudited) and $417,390,000
(unaudited), the total shareholders' equity and the total unearned premium
reserve, respectively, of Financial Security and its consolidated subsidiaries
were, in accordance with generally accepted accounting principles,
approximately $824,939,000 (unaudited) and $361,589,000 (unaudited). Copies of
Financial Security's financial statements may be obtained by writing to
Financial Security at 350 Park Avenue, New York, New York 10022, Attention:
Communications Department. Financial Security's telephone number is (212) 826-
0100.
MBIA INSURANCE CORPORATION ("MBIA")
The Insurer is the principal operating subsidiary of MBIA Inc., a New York
Stock Exchange listed company. MBIA Inc. is not obligated to pay the debts of
or claims against the Insurer. The Insurer is domiciled in the State of New
York and licensed to do business in and subject to regulation under the laws of
all 50 states, the District of Columbia, the Commonwealth of Puerto Rico, the
Commonwealth of the Northern Mariana Islands, the Virgin Islands of the United
States and the Territory of Guam. The Insurer has two European branches, one in
the Republic of France and the other in the Kingdom of Spain. New York has laws
prescribing minimum capital requirements, limiting classes and concentrations
of investments and requiring the approval of policy rates and forms. State laws
also regulate the amount of both the aggregate and individual risks that may be
insured, the payment of dividends by the Insurer, changes in control and
transactions among affiliates. Additionally, the Insurer is required to
maintain contingency reserves on its liabilities in certain amounts and for
certain periods of time.
As of December 31, 1996 the Insurer had admitted assets of $4.4 billion
(audited), total liabilities of $3.0 billion (audited), and total capital and
surplus of $1.4 billion (audited) determined in accordance with statutory
accounting practices prescribed or permitted by insurance regulatory
authorities. As of March 31, 1997, the Insurer had admitted assets of $4.5
billion (unaudited), total liabilities of $3.0 billion (unaudited), and total
capital and surplus of $1.5 billion (unaudited) determined in accordance with
statutory accounting practices prescribed or permitted by insurance regulatory
authorities.
Furthermore, copies of the Insurer's year end financial statements prepared
in accordance with statutory accounting practices are available without charge
from the Insurer. A copy of the Annual Report on Form 10-K of MBIA Inc. is
available from the Insurer or the Securities and Exchange Commission. The
address of the Insurer is 113 King Street, Armonk, New York 10504. The
telephone number of the Insurer is (914) 273-4545.
The Insurer's policy unconditionally and irrevocably guarantees to the Nuveen
Insured Municipal Bond Fund the full and complete payment required to be made
by or on behalf of the issuer to the applicable paying agent or its successor
of an amount equal to (i) the principal of (either at the stated maturity or by
advancement of maturity pursuant to a mandatory sinking fund payment) and
interest on, the Municipal Obligations as such payments shall become due but
shall not be so paid (except that in the event of any acceleration of the due
date of such principal by reason of mandatory or optional redemption or
acceleration resulting from default or otherwise, other than any advancement of
maturity pursuant to a mandatory sinking fund payment, the payments guaranteed
by the Insurer's policy shall be made in such amounts and at such times as such
payments of principal would have been due had there not been any such
acceleration) and (ii) the reimbursement of any such payment which is
subsequently recovered from the Fund pursuant to a final judgment by a court of
competent jurisdiction that such payment constitutes an avoidable preference to
the Fund within the meaning of any applicable bankruptcy law (a "Preference").
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The Insurer's policy does not insure against loss of any prepayment premium
which may at any time be payable with respect to any Municipal Obligation. The
Insurer's policy does not, under any circumstance, insure against loss relating
to: (i) optional or mandatory redemptions (other than mandatory sinking fund
redemptions); (ii) any payments to be made on an accelerated basis; (iii)
payments of the purchase price of Municipal Obligations upon tender thereof; or
(iv) any Preference relating to (i) through (iii) above. The Insurer's policy
also does not insure against nonpayment of principal of or interest on the
Municipal Obligations resulting from the insolvency, negligence or any other
act or omission of any paying agent for the Municipal Obligations.
With respect to small issue industrial development bonds and pollution
control revenue bonds covered by the policy, the Insurer guarantees the full
and complete payments required to be made by or on behalf of an issuer of such
bonds if there occurs pursuant to the terms of the bonds an event which results
in the loss of the tax-exempt status of interest on such bonds, including
principal, interest or premium payments payable thereon, if any, as and when
required to be made by or on behalf of the issuer pursuant to the terms of such
bonds.
When the Insurer receives from the paying agent or the Fund, (1) telephonic
or telegraphic notice (subsequently confirmed in writing by registered or
certified mail), or (2) written notice by registered or certified mail, that a
required payment of any insured amount which is then due has not been made, the
Insurer on the due date of such payment or within one business day after
receipt of notice of such nonpayment, whichever is later, will make a deposit
of funds, in an account with State Street Bank and Trust Company, N.A., in New
York, New York, or its successor, sufficient for the payment of any such
insured amounts which are then due. Upon presentment and surrender of such
Municipal Obligations or presentment of such other proof of ownership of the
Municipal Obligations, together with any appropriate instruments of assignment
to evidence the assignment of the insured amounts due on the Municipal
Obligations as are paid by the Insurer, and appropriate instruments to effect
the appointment of the Insurer as agent for the Fund in any legal proceeding
related to payment of insured amounts on Municipal Obligations, such
instruments being in a form satisfactory to State Street Bank and Trust
Company, N.A., State Street Bank and Trust Company, N.A. shall disburse to the
Fund or the paying agent payment of the insured amounts due on such Municipal
Obligations, less any amount held by the paying agent for the payment of such
insured amounts and legally available therefor.
FINANCIAL GUARANTY INSURANCE COMPANY ("FINANCIAL GUARANTY")
The Portfolio Insurance Policy is non-cancellable except for failure to pay
the premium. The premium rate for each purchase of a security covered by the
Portfolio Insurance Policy is fixed for the life of the Insured Bond. The
insurance premiums are payable monthly by the Fund and are adjusted for
purchases, sales and payments prior to maturity of Insured Bonds during the
month. In the event of a sale of any Insured Bond by the Fund or payment
thereof prior to maturity, the Portfolio Insurance policy terminates as to such
Insured Bond.
Under the provisions of the Portfolio Insurance Policy, Financial Guaranty
unconditionally and irrevocably agrees to pay to State Street Bank and Trust
Company, or its successor, as its agent (the "Fiscal Agent"), that portion of
the principal of and interest on the Insured Bonds which shall become due for
payment but shall be unpaid by reason of nonpayment by the issuer of the
Insured Bonds. The term "due for payment" means, when referring to the
principal of an Insured Bond, its stated maturity date or the date on which it
shall have been called for mandatory sinking fund redemption and does not refer
to any earlier date on which payment is due by reason of call for redemption
(other than by mandatory sinking fund redemption), acceleration or other
advancement of maturity and means, when referring to interest on an Insured
Bond, the stated date for payment of interest. In addition, the Portfolio
Insurance Policy covers nonpayment by the issuer that results from any payment
of principal or interest made by such issuer on the Insured Bond to the Fund
which has been recovered from the Fund or its shareholders pursuant to the
United States Bankruptcy Code by a trustee in bankruptcy in accordance with a
final, nonappealable order of a court having competent jurisdiction.
Financial Guaranty will make such payments to the Fiscal Agent on the date
such principal or interest becomes due for payment or on the business day next
following the day on which Financial Guaranty shall have received notice of
nonpayment, whichever is later. The Fiscal Agent will disburse the Trustee the
face amount of principal and interest which is then due for payment but is
unpaid by reason of nonpayment by the issuer, but only upon receipt by the
Fiscal Agent of (i) evidence of the Trustee's right to receive payment of the
principal or interest due for payment and (ii) evidence, including any
appropriate instruments of assignment, that all of the rights to payment of
such principal or interest due for payment thereupon shall vest in Financial
Guaranty. Upon such disbursement, Financial Guaranty shall become the owner of
the Insured Bond, appurtenant coupon or right to payment of principal or
interest on such Insured Bond and shall be fully subrogated to all of the
Trustee's rights thereunder, including the right to payment, thereof.
In determining whether to insure municipal securities held in the Fund,
Financial Guaranty will apply its own standards which are not necessarily the
same as the criteria used in regard to the selection of securities by the Fund.
Certain of the municipal securities insured under the Portfolio Insurance
Policy may also be insured under an insurance policy obtained by the issuer of
such municipal securities. The premium for any insurance policy or policies
obtained by an issuer or Insured Bonds has been paid in advance by such issuer
and any such policy or policies are non-cancellable and will continue in force
so long as the Insured Bonds so insured are outstanding. Financial Guaranty has
also agreed, if requested by the Funds on or before the fifth day preceding the
1st day of any month, to insure to maturity Insured Bonds sold by the Trustee
during the month immediately following such request of the Funds. The
S-8
<PAGE>
premium for any such insurance to maturity provided by Financial Guaranty is
paid by the Fund and any such insurance is non-cancellable and will continue in
force so long as the Bonds so insured are outstanding.
Financial Guaranty is a wholly-owned subsidiary of FGIC Corporation (the
"Corporation"), a Delaware holding company. The Corporation is a subsidiary of
General Electric Capital Corporation. Financial Guaranty is a monoline
financial guaranty insurer domiciled in the State of New York and subject to
regulation by the State of New York Insurance Department. As of March 31, 1997,
the total capital and surplus of Financial Guaranty was approximately
$1,123,724,061. Financial Guaranty prepares financial statements on the basis
of both statutory accounting principles and generally accepted accounting
principles. Copies of such financial statements may be obtained by writing to
Financial Guaranty at 115 Broadway, New York, New York 10006, Attention:
Communications Department (telephone number :
(212) 312-3000) or to the New York State Insurance Department at 160 West
Broadway, 18th Floor, New York, New York 10013, Attention: Property Companies
Bureau (telephone number: (212) 602-0389).
The policies of insurance obtained by the Fund from Financial Guaranty and
the negotiations in respect thereof represent the only relationship between
Financial Guaranty and the Fund. Otherwise neither Financial Guaranty nor its
parent, FGIC Corporation, or any affiliate thereof has any significant
relationship, direct or indirect, with the Fund or the Board of Trustees of the
Fund.
The above municipal bond insurers have insurance claims-paying ability
ratings of AAA from S&P and Aaa from Moody's. Financial Guaranty also has an
insurance claims-paying ability rating of AAA from Fitch.
An S&P insurance claims-paying ability rating is an assessment of an
operating insurance company's financial capacity to meet obligations under an
insurance policy in accordance with its terms. An insurer with an insurance
claims-paying ability rating of AAA has the highest rating assigned by S&P.
Capacity to honor insurance contracts is adjudged by S&P to be extremely strong
and highly likely to remain so over a long period of time. A Moody's insurance
claims-paying ability rating is an opinion of the ability of an insurance
company to repay punctually senior policyholder obligations and claims. An
insurer with an insurance claims-paying ability rating of Aaa is adjudged by
Moody's to be of the best quality. In the opinion of Moody's, the policy
obligations of an insurance company with an insurance claims-paying ability
rating of Aaa carry the smallest degree of credit risk and, while the financial
strength of these companies is likely to change, such changes as can be
visualized are most unlikely to impair the company's fundamentally strong
position.
An insurance claims-paying ability rating by S&P or Moody's does not
constitute an opinion on any specific contract in that such an opinion can only
be rendered upon the review of the specific insurance contract. Furthermore, an
insurance claims-paying ability rating does not take into account deductibles,
surrender or cancellation penalties or the timeliness of payment, nor does it
address the ability of a company to meet nonpolicy obligations (i.e., debt
contracts).
The assignment of ratings by S&P or Moody's to debt issues that are fully or
partially supported by insurance policies, contracts or guarantees is a
separate process form the determination of claims-paying ability ratings. The
likelihood of a timely flow of funds from the insurer to the trustee for the
bondholders is a key element in the rating determination for such debt issues.
S&P's and Moody's ratings are not recommendations to buy, sell or hold the
Municipal Obligations insured by policies issued by AMBAC Indemnity, Financial
Security, MBIA or Financial Guaranty and such ratings may be subject to
revision or withdrawal at any time by the rating agencies. Any downward
revision or withdrawal of either or both ratings may have an adverse effect on
the market price of the Municipal Obligations insured by policies issued by
AMBAC Indemnity, Financial Security, MBIA or Financial Guaranty.
S&P's ratings of AMBAC Indemnity, Financial Security, MBIA and Financial
Guaranty should be evaluated independent of Moody's ratings. Any further
explanation as to the significance of the ratings may be obtained only from the
applicable rating agency. See Appendix A for more information about ratings by
Moody's, S&P, and Fitch.
PORTFOLIO TRADING AND TURNOVER
The Funds will make changes in their investment portfolio from time to time
in order to take advantage of opportunities in the municipal market and to
limit exposure to market risk. The Funds may also engage to a limited extent in
short-term trading consistent with their investment objective. Securities may
be sold in anticipation of market decline or purchased in anticipation of
market rise and later sold. In addition, a security may be sold and another of
comparable quality purchased at approximately the same time to take advantage
of what Nuveen Advisory believes to be a temporary disparity in the normal
yield relationship between the two securities. Each Fund may make changes in
its investment portfolio in order to limit its exposure to changing market
conditions. Changes in a Fund's investments are known as "portfolio turnover."
While it is impossible to predict future portfolio turnover rates, the annual
portfolio turnover rate for each of the Funds is generally not expected to
exceed 75%. However, each Fund reserves the right to make changes in its
investments whenever it deems such action advisable and, therefore, a Fund's
annual portfolio turnover rate may exceed 75% in particular years depending
upon market conditions.
S-9
<PAGE>
The portfolio turnover rates for the Funds, for the 1996 fiscal year-end of
each Fund as a series of its predecessor entity (described above), and for the
1997 fiscal year-end, as indicated, were
<TABLE>
<CAPTION>
FISCAL
YEAR
---------
1996 1997
---- ----
<S> <C> <C>
Nuveen Municipal Bond Fund.................................... 17% 12%*
Nuveen Insured Municipal Bond Fund............................ 27% 35%*
Nuveen Flagship All-American Municipal Bond Fund.............. 79% 39%**
Nuveen Flagship Intermediate Municipal Bond Fund.............. 81% 26%**
Nuveen Flagship Limited Term Municipal Bond Fund.............. 39% 29%**
</TABLE>
- --------
* For the fiscal year ended February 28, 1997. For the period March 1, 1997 to
April 30, 1997, the portfolio turnover rate for the Nuveen Municipal Bond
Fund was 2% and the rate for the Nuveen Insured Municipal Bond Fund was 12%.
** For the eleven months ended April 30, 1997.
WHEN-ISSUED SECURITIES
Each Fund may purchase and sell Municipal Obligations on a when-issued or
delayed delivery basis. When-issued and delayed delivery transactions arise
when securities are purchased or sold with payment and delivery beyond the
regular settlement date. (When-issued transactions normally settle within 15-45
days.) On such transactions the payment obligation and the interest rate are
fixed at the time the buyer enters into the commitment. The commitment to
purchase securities on a when-issued or delayed delivery basis may involve an
element of risk because the value of the securities is subject to market
fluctuation, no interest accrues to the purchaser prior to settlement of the
transaction, and at the time of delivery the market value may be less than
cost. At the time a Fund makes the commitment to purchase a Municipal
Obligation on a when-issued or delayed delivery basis, it will record the
transaction and reflect the amount due and the value of the security in
determining its net asset value. Likewise, at the time a Fund makes the
commitment to sell a Municipal Obligation on a delayed delivery basis, it will
record the transaction and include the proceeds to be received in determining
its net asset value; accordingly, any fluctuations in the value of the
Municipal Obligation sold pursuant to a delayed delivery commitment are ignored
in calculating net asset value so long as the commitment remains in effect. The
Funds will maintain designated readily marketable assets at least equal in
value to commitments to purchase when-issued or delayed delivery securities,
such assets to be segregated by the Custodian specifically for the settlement
of such commitments. The Funds will only make commitments to purchase Municipal
Obligations on a when-issued or delayed delivery basis with the intention of
actually acquiring the securities, but the Funds reserve the right to sell
these securities before the settlement date if it is deemed advisable. If a
when-issued security is sold before delivery any gain or loss would not be tax-
exempt. The Funds commonly engage in when-issued transactions in order to
purchase or sell newly-issued Municipal Obligations, and may engage in delayed
delivery transactions in order to manage its operations more effectively.
HEDGING AND OTHER DEFENSIVE ACTIONS
Each Fund may periodically engage in hedging transactions. Hedging is a term
used for various methods of seeking to preserve portfolio capital value by
offsetting price changes in one investment through making another investment
whose price should tend to move in the opposite direction. It may be desirable
and possible in various market environments to partially hedge the portfolio
against fluctuations in market value due to interest rate fluctuations by
investment in financial futures and index futures as well as related put and
call options on such instruments. Both parties entering into an index or
financial futures contract are required to post an initial deposit of 1% to 5%
of the total contract price. Typically, option holders enter into offsetting
closing transactions to enable settlement in cash rather than take delivery of
the position in the future of the underlying security. Each Fund will only sell
covered futures contracts, which means that the Fund segregates assets equal to
the amount of the obligations.
These transactions present certain risks. In particular, the imperfect
correlation between price movements in the futures contract and price movements
in the securities being hedged creates the possibility that losses on the hedge
by a Fund may be greater than gains in the value of the securities in such
series' portfolio. In addition, futures and options markets may not be liquid
in all circumstances. As a result, in volatile markets, a Fund may not be able
to close out the transaction without incurring losses substantially greater
than the initial deposit. Finally, the potential daily deposit requirements in
futures contracts create an ongoing greater potential financial risk than do
options transactions, where the exposure is limited to the cost of the initial
premium. Losses due to hedging transactions will reduce yield. Net gains, if
any, from hedging and other portfolio transactions will be distributed as
taxable distributions to shareholders.
No Fund will make any investment (whether an initial premium or deposit or a
subsequent deposit) other than as necessary to close a prior investment if,
immediately after such investment, the sum of the amount of its premiums and
deposits would exceed 5% of such series' net assets. Each series will invest in
these instruments only in markets believed by the investment adviser to be
active and sufficiently liquid. For further information regarding these
investment strategies and risks presented thereby, see Appendix B to this
Statement of Additional Information.
S-10
<PAGE>
Each Fund reserves the right for liquidity or defensive purposes (such as
thinness in the market for municipal securities or an expected substantial
decline in value of long-term obligations), to temporarily invest up to 20% of
its assets in obligations issued or guaranteed by the U.S. Government and its
agencies or instrumentalities, including up to 5% in adequately collateralized
repurchase agreements relating thereto. Interest on each instrument is taxable
for Federal income tax purposes and would reduce the amount of tax-free
interest payable to shareholders.
TEMPORARY INVESTMENTS
The Prospectus discusses briefly the ability of the Funds to invest a portion
of their assets in federally tax-exempt or taxable "temporary investments."
Temporary investments will not exceed 20% of a Fund's assets except when made
for defensive purposes. The Funds will invest only in taxable temporary
investments that are either U.S. Government securities or are rated within the
highest grade by Moody's, S&P, or Fitch and mature within one year from the
date of purchase or carry a variable or floating rate of interest. See Appendix
A for more information about ratings by Moody's, S&P, and Fitch.
The Funds may invest in the following federally tax-exempt temporary
investments:
Bond Anticipation Notes (BANs) are usually general obligations of state
and local governmental issuers which are sold to obtain interim financing
for projects that will eventually be funded through the sale of long-term
debt obligations or bonds. The ability of an issuer to meet its obligations
on its BANs is primarily dependent on the issuer's access to the long-term
municipal bond market and the likelihood that the proceeds of such bond
sales will be used to pay the principal and interest on the BANs.
Tax Anticipation Notes (TANs) are issued by state and local governments
to finance the current operations of such governments. Repayment is
generally to be derived from specific future tax revenues. Tax anticipation
notes are usually general obligations of the issuer. A weakness in an
issuer's capacity to raise taxes due to, among other things, a decline in
its tax base or a rise in delinquencies, could adversely affect the
issuer's ability to meet its obligations on outstanding TANs.
Revenue Anticipation Notes (RANs) are issued by governments or
governmental bodies with the expectation that future revenues from a
designated source will be used to repay the notes. In general, they also
constitute general obligations of the issuer. A decline in the receipt of
projected revenues, such as anticipated revenues from another level of
government, could adversely affect an issuer's ability to meet its
obligations on outstanding RANs. In addition, the possibility that the
revenues would, when received, be used to meet other obligations could
affect the ability of the issuer to pay the principal and interest on RANs.
Construction Loan Notes are issued to provide construction financing for
specific projects. Frequently, these notes are redeemed with funds obtained
from the Federal Housing Administration.
Bank Notes are notes issued by local government bodies and agencies as
those described above to commercial banks as evidence of borrowings. The
purposes for which the notes are issued are varied but they are frequently
issued to meet short-term working capital or capital-project needs. These
notes may have risks similar to the risks associated with TANs and RANs.
Tax-Exempt Commercial Paper (Municipal Paper) represents very short-term
unsecured, negotiable promissory notes, issued by states, municipalities
and their agencies. Payment of principal and interest on issues of
municipal paper may be made from various sources, to the extent the funds
are available therefrom. Maturities of municipal paper generally will be
shorter than the maturities of TANs, BANs or RANs. There is a limited
secondary market for issues of municipal paper.
Certain Municipal Obligations may carry variable or floating rates of
interest whereby the rate of interest is not fixed, but varies with changes in
specified market rates or indices, such as a bank prime rate or a tax-exempt
money market index.
While these various types of notes as a group represent the major portion of
the tax-exempt note market, other types of notes are occasionally available in
the marketplace and the Fund may invest in such other types of notes to the
extent permitted under its investment objective, policies and limitations. Such
notes may be issued for different purposes and may be secured differently from
those mentioned above.
The Funds may also invest in the following taxable temporary investments:
U.S. Government Direct Obligations are issued by the United States
Treasury and include bills, notes and bonds.
--Treasury bills are issued with maturities of up to one year. They are
issued in bearer form, are sold on a discount basis and are payable at
par value at maturity.
--Treasury notes are longer-term interest bearing obligations with
original maturities of one to seven years.
--Treasury bonds are longer-term interest-bearing obligations with
original maturities from five to thirty years.
S-11
<PAGE>
U.S. Government Agencies Securities--Certain federal agencies have been
established as instrumentalities of the United States Government to supervise
and finance certain types of activities. These agencies include, but are not
limited to, the Bank for Cooperatives, Federal Land Banks, Federal Intermediate
Credit Banks, Federal Home Loan Banks, Federal National Mortgage Association,
Government National Mortgage Association, Export-Import Bank of the United
States, and Tennessee Valley Authority. Issues of these agencies, while not
direct obligations of the United States Government, are either backed by the
full faith and credit of the United States or are guaranteed by the Treasury or
supported by the issuing agencies' right to borrow from the Treasury. There can
be no assurance that the United States Government itself will pay interest and
principal on securities as to which it is not legally so obligated.
Certificates of Deposit (CDs)--A certificate of deposit is a negotiable
interest bearing instrument with a specific maturity. CDs are issued by banks
in exchange for the deposit of funds and normally can be traded in the
secondary market, prior to maturity. The Fund will only invest in U.S. dollar
denominated CDs issued by U.S. banks with assets of $1 billion or more.
Commercial Paper--Commercial paper is the term used to designate unsecured
short-term promissory notes issued by corporations. Maturities on these issues
vary from a few days to nine months. Commercial paper may be purchased from
U.S. corporations.
Other Corporate Obligations--The Funds may purchase notes, bonds and
debentures issued by corporations if at the time of purchase there is less than
one year remaining until maturity or if they carry a variable or floating rate
of interest.
Repurchase Agreements--A repurchase agreement is a contractual agreement
whereby the seller of securities (U.S. Government or Municipal Obligations)
agrees to repurchase the same security at a specified price on a future date
agreed upon by the parties. The agreed upon repurchase price determines the
yield during a Fund's holding period. Repurchase agreements are considered to
be loans collateralized by the underlying security that is the subject of the
repurchase contract. The Funds will only enter into repurchase agreements with
dealers, domestic banks or recognized financial institutions that in the
opinion of Nuveen Advisory present minimal credit risk. The risk to the Funds
is limited to the ability of the issuer to pay the agreed-upon repurchase price
on the delivery date; however, although the value of the underlying collateral
at the time the transaction is entered into always equals or exceeds the
agreed-upon repurchase price, if the value of the collateral declines there is
a risk of loss of both principal and interest. In the event of default, the
collateral may be sold but a Fund might incur a loss if the value of the
collateral declines, and might incur disposition costs or experience delays in
connection with liquidating the collateral. In addition, if bankruptcy
proceedings are commenced with respect to the seller of the security,
realization upon the collateral by a Fund may be delayed or limited. Nuveen
Advisory will monitor the value of collateral at the time the transaction is
entered into and at all times subsequent during the term of the repurchase
agreement in an effort to determine that the value always equals or exceeds the
agreed upon price. In the event the value of the collateral declined below the
repurchase price, Nuveen Advisory will demand additional collateral from the
issuer to increase the value of the collateral to at least that of the
repurchase price. Each of the Funds will not invest more than 10% of its assets
in repurchase agreements maturing in more than seven days.
MANAGEMENT
The management of the Trust, including general supervision of the duties
performed for the Funds under the Investment Management Agreement, is the
responsibility of its Board of Trustees. The Trust currently has eight
trustees, two of whom are "interested persons" (as the term "interested
persons" is defined in the Investment Company Act of 1940) and six of whom are
"disinterested persons." The names and business addresses of the trustees and
officers of the Trust and their principal occupations and other affiliations
during the past five years are set forth below, with those trustees who are
"interested persons" of the Trust indicated by an asterisk.
<TABLE>
<CAPTION>
POSITIONS
AND OFFICES PRINCIPAL OCCUPATIONS
NAME AND ADDRESS AGE WITH TRUST DURING PAST FIVE YEARS
- ---------------- --- ----------- ----------------------
<S> <C> <C> <C>
Timothy R. 48 Chairman and Chairman since July 1, 1996 of The John Nuveen
Schwertfeger* Trustee Company, John Nuveen & Co. Incorporated, Nuveen
333 West Wacker Advisory Corp. and Nuveen Institutional Advisory
Drive Corp.; prior thereto Executive Vice President and
Chicago, IL 60606 Director of The John Nuveen Company (since March
1992), John Nuveen & Co. Incorporated, Nuveen
Advisory Corp. (since October 1992) and Nuveen
Institutional Advisory Corp. (since October 1992).
Anthony T. Dean* 52 President and President since July 1, 1996 of The John Nuveen
333 West Wacker Drive Trustee Company, John Nuveen & Co. Incorporated, Nuveen
Chicago, IL 60606 Advisory Corp. and Nuveen Institutional Advisory
Corp.; prior thereto, Executive Vice President and
Director of The John Nuveen Company (since March
1992), John Nuveen & Co. Incorporated, Nuveen
Advisory Corp. (since October 1992) and Nuveen
Institutional Advisory Corp. (since October 1992).
</TABLE>
S-12
<PAGE>
<TABLE>
<CAPTION>
POSITIONS
AND OFFICES PRINCIPAL OCCUPATIONS
NAME AND ADDRESS AGE WITH TRUST DURING PAST FIVE YEARS
- ---------------- --- ----------- ----------------------
<S> <C> <C> <C>
Robert P. Bremner 56 Trustee Private Investor and Management Consultant.
3725 Huntington
Street, N.W.
Washington, D.C. 20015
Lawrence H. Brown 63 Trustee Retired (August 1989) as Senior Vice President of
201 Michigan Avenue The Northern Trust Company.
Highwood, IL 60040
Anne E. Impellizzeri 64 Trustee President and Chief Executive Officer of Blanton-
3 West 29th Street Peale Institute of Religion and Health.
New York, NY 10001
Peter R. Sawers 64 Trustee Adjunct Professor of Business and Economics,
22 The Landmark University of Dubuque, Iowa; Adjunct Professor,
Northfield, IL 60093 Lake Forest Graduate School of Management, Lake
Forest, Illinois; Chartered Financial Analyst;
Certified Management Consultant.
William J. Schneider 52 Trustee Senior Partner, Miller-Valentine Partners, Vice
4000 Miller-Valentine President, Miller-Valentine Group.
Ct.
P.O. Box 744
Dayton, OH 45401
Judith M. Stockdale 49 Trustee Executive Director, Gaylord and Dorothy Donnelley
35 East Wacker Drive Foundation (since 1994); prior thereto, Executive
Chicago, IL 60601 Director, Great Lakes Protection Fund (from 1990
to 1994).
Bruce P. Bedford 57 Executive Executive Vice President of John Nuveen & Co.,
333 West Wacker Drive Vice President Nuveen Advisory Corp. and Nuveen Institutional
Chicago, IL 60606 Advisory Corp. (since January 1997); prior
thereto, Chairman and CEO of Flagship Resources
Inc. and Flagship Financial Inc. and the Flagship
funds (since January 1986).
Michael S. Davern 40 Vice President Vice President of Nuveen Advisory Corp. (since
One South Main Street January 1997); prior thereto, Vice President and
Dayton, OH 45402 Portfolio Manager (since September 1991) of
Flagship Financial.
William M. Fitzgerald 33 Vice President Vice President of Nuveen Advisory Corp. (since
333 West Wacker Drive December 1995); Assistant Vice President of Nuveen
Chicago, IL 60606 Advisory Corp. (from September 1992 to December
1995), prior thereto Assistant Portfolio Manager
of Nuveen Advisory Corp. (from June 1988 to
September 1992).
Kathleen M. Flanagan 50 Vice President Vice President of John Nuveen & Co. Incorporated,
333 West Wacker Drive Vice President (since June 1996) of Nuveen
Chicago, IL 60606 Advisory Corp. and Nuveen Institutional Advisory
Corp.
J. Thomas Futrell 42 Vice President Vice President of Nuveen Advisory Corp.
333 West Wacker Drive
Chicago, IL 60606
Richard A. Huber 34 Vice President Vice President of Nuveen Advisory Corp. (since
One South Main Street January 1997); prior thereto, Vice President and
Dayton, OH 45402 Portfolio Manager (since August 1985) of Flagship
Financial.
Steven J. Krupa 39 Vice President Vice President of Nuveen Advisory Corp.
333 West Wacker Drive
Chicago, IL 60606
Anna R. Kucinskis 51 Vice President Vice President of John Nuveen & Co. Incorporated.
333 West Wacker Drive
Chicago, IL 60606
</TABLE>
S-13
<PAGE>
<TABLE>
<CAPTION>
POSITIONS
AND OFFICES PRINCIPAL OCCUPATIONS
NAME AND ADDRESS AGE WITH TRUST DURING PAST FIVE YEARS
- ---------------- --- ----------- ----------------------
<S> <C> <C> <C>
Larry W. 46 Vice President Vice President (since September 1992), and
Martin Assistant Secretary and Assistant General Counsel
333 West of John Nuveen & Co. Incorporated; Vice President
Wacker (since May 1993) and Assistant Secretary of Nuveen
Drive Advisory Corp.; Vice President (since May 1993)
Chicago, IL and Assistant Secretary (since January 1992) of
60606 Nuveen Institutional Advisory Corp.; Assistant
Secretary of The John Nuveen Company (since
February 1993).
Edward F. 32 Vice President Vice President (since September 1996), previously
Neild, IV Assistant Vice President (since December 1993) of
One South Nuveen Advisory Corp., portfolio manager prior
Main Street thereto (since January 1992); Vice President
Dayton, OH (since September 1996), previously Assistant Vice
45402 President (since May 1995) of Nuveen Institutional
Advisory Corp., portfolio manager prior thereto.
Walter K. 48 Vice President Vice President of Nuveen Advisory Corp. (since
Parker January 1997); prior thereto, Vice President and
One South Portfolio Manager (since July 1994) of Flagship
Main Street Financial; Portfolio Manager and CIO Trust
Dayton, OH Investor (between 1983 and June 1994) for PNC
45402 Bank.
O. Walter 58 Vice President Vice President and Controller of The John Nuveen
Renfftlen Company (since March 1992), John Nuveen & Co.
333 West Incorporated, Nuveen Advisory Corp. and Nuveen
Wacker Institutional Advisory Corp.
Drive
Chicago, IL
60606
Thomas C. 45 Vice President Vice President of Nuveen Advisory Corp. and Nuveen
Spalding, Institutional Advisory Corp.; Chartered Financial
Jr. Analyst.
333 West
Wacker
Drive
Chicago, IL
60606
H. William 63 Vice President Vice President and Treasurer of The John Nuveen
Stabenow Company (since March 1992), John Nuveen & Co.
333 West Incorporated, Nuveen Advisory Corp. and Nuveen
Wacker Institutional Advisory Corp. (since January 1992).
Drive
Chicago, IL
60606
Jan E. 41 Vice President Vice President of Nuveen Advisory Corp. (since
Terbrueggen January 1997); prior thereto, Vice President and
One South Portfolio Manager (since January 1992) of Flagship
Main Street Financial.
Dayton, OH
45402
Gifford R. 40 Vice President Vice President (since September 1992), Assistant
Zimmerman and Assistant Secretary and Assistant General Counsel of John
333 West Secretary Nuveen & Co. Incorporated; Vice President (since
Wacker May 1993) and Assistant Secretary of Nuveen
Drive Advisory Corp.; Vice President (since May 1993)
Chicago, IL and Assistant Secretary (since January 1992) of
60606 Nuveen Institutional Advisory Corp.
</TABLE>
Anthony Dean, Peter Sawers, and Timothy Schwertfeger serve as members of the
Executive Committee of the Board of Trustees. The Executive Committee, which
meets between regular meetings of the Board of Trustees, is authorized to
exercise all of the powers of the Board of Trustees.
The trustees of the Trust are directors or trustees, as the case may be, of
42 Nuveen open-end funds and 52 Nuveen closed-end funds advised by Nuveen
Advisory Corp.
The following table sets forth compensation paid by the Trust to each of the
trustees of the Trust and the total compensation paid to each trustee during
the fiscal year ended April 30, 1997. The Trust has no retirement or pension
plans. The officers and trustees affiliated with Nuveen serve without any
compensation from the Trust.
<TABLE>
<CAPTION>
TOTAL
AGGREGATE COMPENSATION
COMPENSATION FROM TRUST AND
FROM THE SERIES FUND COMPLEX
NAME OF TRUSTEE OF THIS TRUST PAID TO TRUSTEES
--------------- --------------- ----------------
<S> <C> <C>
Robert P. Bremner........................ $ 5,127(1) $25,333(1)
Lawrence H. Brown........................ $ 9,364 $74,750
Anne E. Impellizzeri..................... $ 9,364 $74,750
Margaret K. Rosenheim.................... $11,963(2) $84,714(3)
Peter R. Sawers.......................... $ 9,364 $74,750
William J. Schneider..................... $ 5,327(1) $26,333(1)
Judith M. Stockdale...................... $ 0(4) $ 0(4)
</TABLE>
S-14
<PAGE>
- --------
(1) Includes compensation received as a trustee of the Flagship Funds, for the
period June 1, 1996 to January 1, 1997.
(2) Includes $465 in interest accrued on deferred compensation from prior
years; former Trustee, retired July 1997.
(3) Includes $1,964 in interest accrued on deferred compensation from prior
years.
(4) Elected to the Board in July 1997.
Each trustee who is not affiliated with Nuveen or Nuveen Advisory receives a
fee. The Trust requires no employees other than its officers, all of whom are
compensated by Nuveen.
The officers and directors of each Fund, in the aggregate, own less than 1%
of the shares of the Fund.
The following table sets forth the percentage ownership of each person, who,
as of August 13, 1997, owns of record, or is known by Registrant to own of
record or beneficially 5% or more of any class of a Fund's shares.
<TABLE>
<CAPTION>
NAME AND ADDRESS OF PERCENTAGE
NAME OF FUND AND CLASS OWNER OF OWNERSHIP
---------------------- ------------------- ------------
<C> <S> <C>
Nuveen Municipal Bond Fund
Class B Shares.................. Smith Barney Inc. 10.35%
D015DR81311
388 Greenwich Street
New York, New York 10015
BHC Securities, Inc. 7.13
FAO 70875400
Attn: Mutual Funds Dept
One Commerce Square
2005 Market Street Suite
1200
Philadelphia, PA 19103
Joseph Robinson & 6.99
Esther Robinson
JT TEN WROS NOT TC
47 Pierce St
Kingston, PA 18704-4632
Dolores J. Corby 6.49
1532 NE 96th St
Seattle, WA 98115-2540
PaineWebber for the 6.02
Benefit of
Carl C. Chaffee
3843 S. Nevia St.
Denver, CO 80237-1636
NFSC FEBO OBV-71031B 5.25
Gregory J. Lyons
P.O. Box 161
East Earl, PA 17519
Nuveen Municipal Bond Fund
Class C Shares.................. Oppenheimer & Co., Inc. 5.75%
FBO 020-38275-14
P.O. Box 3484
Church Street Station
New York, NY 10008-8484
PaineWebber for the 5.69
Benefit of
Irene Ruth Kroske Soule
771 Via Milano Circle
Apopka, FL 32712-3187
Nuveen Insured Municipal Bond
Fund Class A Shares............. NYSC FEBO 08Y-055 646 5.53%
Jack H. Martinelli
Harriet R. Martinelli
TTEE
Martinelli Family Trust
U/A 3/27/92 - 748 Pico
Ave
San Mateo, CA 94403
</TABLE>
S-15
<PAGE>
<TABLE>
<CAPTION>
PERCENTAGE
NAME OF FUND AND CLASS NAME AND ADDRESS OF OWNER OF OWNERSHIP
---------------------- ------------------------- ------------
<C> <S> <C>
Nuveen Insured Municipal Bond
Fund Class B Shares............. MLPF&S for the Benefit of its 32.14%
Customers
Attn: Fund Admn
4800 Deer Lake Dr E FL 5
Jacksonville, FL 32246-6484
FUBS & Co. FEBO 9.75
Marjorie B. Guy Trustee
FBO Marjorie B. Guy Trust
UTD 5/28/97
5004 Dickers Ave
Tampa, FL 33629
US Clearing Corp 9.69
FBO 953-15168-14
26 Broadway
New York, NY 10006-179B
Ruth Martin 8.54
9240 Lehigh Ave
Morton Grove, IL 60053-2310
Waverly G. Spears Cons 7.03
EST Charles Nolan Anderson Jr.
U/O DTD Oct 28 92
110 Sherwood Dr
Jackson, AL 36545-2135
Riley & Hill 6.85
Uson Rural Development
TEN COM
PO Box 428
Ontario, OR 97914-0428
Nuveen Insured Municipal Bond
Fund Class C Shares............. NFSC FEBO DC8-368148 5.83%
Florence B. Freer
196 Apache Lane
Stratford, CT 06497
Oregon Waste Technology Inc. 5.46
P.O. Box 4008
Brookings, OR 97415-0081
Nuveen Flagship All-American
Municipal Bond Fund Class A Merrill Lynch, Pierce, Fenner 39.32%
Shares.......................... & Smith for the sole benefit
of its Customers
Attn: Fund Administration
4800 Deer Lake Dr E FL 3
Jacksonville, FL 32246-6484
Nuveen Flagship All-American
Municipal Bond Fund Class B Merrill Lynch, Pierce, Fenner 29.65%
Shares.......................... & Smith for the sole benefit
of its Customers
Attn: Fund Administration
4800 Deer Lake Dr E FL 3
Jacksonville, FL 32246-6484
Marianne Zinga 10.99
Susan M. Zinga JTTEN
3 West Noyes
Arlington Heights, IL
60005-3745
</TABLE>
S-16
<PAGE>
<TABLE>
<CAPTION>
PERCENTAGE
NAME OF FUND AND CLASS NAME AND ADDRESS OF OWNER OF OWNERSHIP
---------------------- ------------------------- ------------
<S> <C> <C>
Prudential Securities Inc. FBO 7.60%
Mrs. Eleanor T. Flaherty
10851 Gulfshore Dr. Apt. 401
Naples, FL 34108-3026
Prudential Securities Inc. FBO 8.86
Alice G. DeAngelo
2500 Virginia Ave. NW
Washington, D.C. 20037-1901
Prudential Securities Inc. FBO 5.98
Hilda A. Hoffman TTER
August A. Hoffman
& Hilda A. Hoffman JT
DBCL Tr UA Dtd 09/29/92
Tequesta, FL 33469
Nuveen Flagship All-American
Municipal Bond Fund Class C Merrill Lynch, Pierce, Fenner 63.83%
Shares.......................... & Smith for the sole benefit
of its Customers
Attn: Fund Administration
4800 Deer Lake Dr E FL 3
Jacksonville, FL 32246-6484
Nuveen Flagship All-American
Municipal Bond Fund Class R Bruce P. Bedford 91.38%
Shares.......................... 1761 Buttonbush Circle
Palm City, FL 34990-8093
Nuveen Flagship Intermediate
Municipal Bond Fund Class A Merrill Lynch, Pierce, Fenner 31.27%
Shares.......................... & Smith for the sole benefit
of its Customers
Attn: Fund Administration
4800 Deer Lake Dr E FL 3
Jacksonville, FL 32246-6484
Nuveen Flagship Intermediate
Municipal Bond Fund Class C Merrill Lynch, Pierce, Fenner 69.10%
Shares.......................... & Smith for the sole benefit
of its Customers
Attn: Fund Administration
4800 Deer Lake Dr E FL 3
Jacksonville, FL 32246-6484
Nuveen Flagship Intermediate
Municipal Bond Fund Class R Patricia G. Diemer TR 77.48%
Shares.......................... U/A Jul 26 89
Patricia G. Diemer Trust
950 Hawthorne Ln
Northbrook, IL 60062-3417
Mary P. Madden 9.97
James R. Madden JT TEN
5090 Jameswood Circle
Kettering, OH 45429-5415
R. G. Van Moppes TTER 9.36
U/A Dtd Feb 4 85
Russell G. Van Moppes
Living Trust
P.O. Box 97308
Bellevue, WA 98009-9308
</TABLE>
S-17
<PAGE>
<TABLE>
<CAPTION>
PERCENTAGE
NAME OF FUND AND CLASS NAME AND ADDRESS OF OWNER OF OWNERSHIP
---------------------- ------------------------- ------------
<S> <C> <C>
Nuveen Flagship Limited Term
Municipal Bond Fund Class A Merrill Lynch, Pierce, Fenner 29.86%
Shares.......................... & Smith for the sole benefit
of its Customers
Attn: Fund Administration
4800 Deer Lake Dr E FL 3
Jacksonville, FL 32246-6484
Nuveen Flagship Limited Term
Municipal Bond Fund Class C Merrill Lynch, Pierce, Fenner 58.34%
Shares.......................... & Smith for the sole benefit
of its Customers
Attn: Fund Administration
4800 Deer Lake Dr E FL 3
Jacksonville, FL 32246-6484
Nuveen Flagship Limited Term
Municipal R. G. Van Moppes TTER U/A 51.54%
Bond Fund Class R Shares........ Dtd Feb 4 85
Russell G Van Moppes
Living Trust
P.O. Box 97308
Bellevue, WA 98009-9308
Karen M. Bergan 26.38
2109 Northwestern Ave.
Ames, IA 50010-4524
J.C. Bradford & Co. CUST 16.01
FBO Jeffery L. Cooper
330 Commerce St.
Nashville, TN 37201-1805
Catherine C. Smith 5.06
James C. Smith JT TEN
4 Morning View Dr.
Newport Coasts, CA
92657-1500
</TABLE>
S-18
<PAGE>
INVESTMENT ADVISER AND INVESTMENT MANAGEMENT AGREEMENT
Nuveen Advisory Corp. acts as investment adviser for and manages the
investment and reinvestment of the assets of each of the Funds. Nuveen Advisory
also administers the Trust's business affairs, provides office facilities and
equipment and certain clerical, bookkeeping and administrative services, and
permits any of its officers or employees to serve without compensation as
trustees or officers of the Trust if elected to such positions. See "Fund
Service Providers" in the Prospectus.
Pursuant to an investment management agreement between Nuveen Advisory and
the Trust, each of the Funds except the Limited Term Fund has agreed to pay an
annual management fee at the rates set forth below:
<TABLE>
<CAPTION>
AVERAGE DAILY NET ASSET VALUE FEE 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 assets over $2 billion....................................... .4250 of 1%
</TABLE>
The Limited Term Fund has agreed to pay an annual management fee at the rates
set forth below:
<TABLE>
<CAPTION>
AVERAGE DAILY NET ASSET VALUE MANAGEMENT FEE
- ----------------------------- --------------
<S> <C>
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 assets over $2 billion....................................... .3750 of 1%
</TABLE>
S-19
<PAGE>
Nuveen Advisory has agreed to waive some or all of its fees or reimburse
expenses to prevent total operating expenses (not counting distribution and
service fees, taxes, interest, fees incurred in acquiring and disposing of
portfolio securities and, to the extent permitted, extraordinary expenses) from
exceeding 0.75% of the Nuveen Municipal Bond Fund's average daily net assets,
and 0.975% of the Nuveen Insured Municipal Bond Fund's average daily net
assets.
For the All-American, Intermediate, and Limited Term Funds, Nuveen Advisory
has committed through at least 1998 to continue Flagship's general dividend-
setting practices.
For the last three fiscal years, the Nuveen Municipal Bond Fund and the
Nuveen Insured Municipal Bond Fund paid net management fees to Nuveen Advisory
as follows:
<TABLE>
<CAPTION>
MANAGEMENT FEES NET OF EXPENSE FEE WAIVERS AND EXPENSE
REIMBURSEMENT PAID TO NUVEEN REIMBURSEMENTS
ADVISORY FOR THE YEAR ENDED FOR THE YEAR ENDED
--------------------------------- ------------------------
2/28/95 2/29/96 2/28/97* 2/28/95 2/29/96 2/28/97*
----------- ---------- ---------- ------- ------- --------
<S> <C> <C> <C> <C> <C> <C>
Nuveen Municipal Bond
Fund................... $11,932,164 12,797,372 12,969,912 0 4,313 0
Nuveen Insured Municipal
Bond Fund.............. 3,439,021 3,756,793 3,795,515 10,570 1,303 0
</TABLE>
- --------
* For the period March 1, 1997 to April 30, 1997, the management fees were
$2,148,330 and $631,735, respectively, and the fee waivers were $0 for
both funds.
For the last three fiscal years, the Nuveen Flagship All-American Municipal
Bond Fund, the Nuveen Flagship Intermediate Municipal Bond Fund, and the Nuveen
Flagship Limited Term Municipal Bond Fund paid net management fees to Flagship
Financial, predecessor to Nuveen Advisory, and beginning on 2/1/97, to Nuveen
Advisory, as follows:
<TABLE>
<CAPTION>
MANAGEMENT FEES NET OF EXPENSE FEE WAIVERS AND EXPENSE
REIMBURSEMENT PAID TO FLAGSHIP REIMBURSEMENTS
FINANCIAL FOR THE YEAR ENDED FOR THE YEAR ENDED
------------------------------ ------------------------
5/31/95 5/31/96 4/30/97* 5/31/95 5/31/96 4/30/97*
---------- --------- --------- ------- ------- --------
<S> <C> <C> <C> <C> <C> <C>
All American Fund....... $ 420,954 644,844 948,683 632,023 588,351 269,587
Intermediate Fund....... 0 0 781 187,583 269,930 216,714
Limited Term Fund....... 1,369,218 1,259,810 1,406,439 458,100 332,579 75,003
</TABLE>
- --------
* For the eleven month period ended 4/30/97.
In addition to the management fee of Nuveen Advisory, each Fund pays all
other costs and expenses of its operations and a portion of the Trust's general
administrative expenses allocated in proportion to the net assets of each Fund.
Nuveen Advisory is a wholly owned subsidiary of John Nuveen & Co.
Incorporated ("Nuveen"), the Funds' principal underwriter. In 1961, Nuveen
began sponsoring the Nuveen Tax-Exempt Unit Trust and since that time has
issued more than $36 billion in tax-exempt unit trusts, including over $12
billion in tax-exempt insured unit trusts. In addition, Nuveen open-end and
closed-end funds held approximately $36 billion in tax-exempt securities under
management as of the date of this Statement. Over 1,000,000 individuals have
invested to date in Nuveen's tax-exempt funds and trusts. Founded in 1898,
Nuveen is a subsidiary of The John Nuveen Company which, in turn, is
approximately 78% owned by The St. Paul Companies, Inc. ("St. Paul"). St. Paul
is located in St. Paul, Minnesota and is principally engaged in providing
property-liability insurance through subsidiaries. Effective January 1, 1997,
The John Nuveen Company acquired Flagship Resources Inc., and as part of that
acquisition, Flagship Financial, the adviser to the Flagship Funds, was merged
with Nuveen Advisory.
Nuveen Advisory's portfolio managers call upon the resources of Nuveen's
Research Department. The Nuveen Research Department reviews more than $100
billion in municipal bonds every year.
The Funds, the other Nuveen funds, Nuveen Advisory, and other related
entities have adopted a code of ethics which essentially prohibits all Nuveen
fund management personnel, including Nuveen fund portfolio managers, from
engaging in personal investments which compete or interfere with, or attempt to
take advantage of, a Fund's anticipated or actual portfolio transactions, and
is designed to assure that the interests of Fund shareholders are placed before
the interests of Nuveen personnel in connection with personal investment
transactions.
PORTFOLIO TRANSACTIONS
Nuveen Advisory, in effecting purchases and sales of portfolio securities for
the account of each Fund, will place orders in such manner as, in the opinion
of management, will offer the best price and market for the execution of each
transaction. Portfolio securities will normally be purchased directly from an
underwriter or in the over-the-counter market from the principal dealers in
such securities, unless it appears that a better price or execution may be
obtained elsewhere. Portfolio securities will not be purchased from Nuveen or
its affiliates except in compliance with the Investment Company Act of 1940.
S-20
<PAGE>
The Funds expect that all portfolio transactions will be effected on a
principal (as opposed to an agency) basis and, accordingly, do not expect to
pay any brokerage commissions. Purchases from underwriters will include a
commission or concession paid by the issuer to the underwriter, and purchases
from dealers will include the spread between the bid and asked price. Given the
best price and execution obtainable, it will be the practice of the Funds to
select dealers which, in addition, furnish research information (primarily
credit analyses of issuers and general economic reports) and statistical and
other services to Nuveen Advisory. It is not possible to place a dollar value
on information and statistical and other services received from dealers. Since
it is only supplementary to Nuveen Advisory's own research efforts, the receipt
of research information is not expected to reduce significantly Nuveen
Advisory's expenses. While Nuveen Advisory will be primarily responsible for
the placement of the business of the Funds, the policies and practices of
Nuveen Advisory in this regard must be consistent with the foregoing and will,
at all times, be subject to review by the Board of Trustees.
Nuveen Advisory reserves the right to, and does, manage other investment
accounts and investment companies for other clients, which may have investment
objectives similar to the Funds. Subject to applicable laws and regulations,
Nuveen Advisory will attempt to allocate equitably portfolio transactions among
the Funds and the portfolios of its other clients purchasing or selling
securities whenever decisions are made to purchase or sell securities by a Fund
and one or more of such other clients simultaneously. In making such
allocations the main factors to be considered will be the respective investment
objectives of the Fund and such other clients, the relative size of portfolio
holdings of the same or comparable securities, the availability of cash for
investment by the Fund and such other clients, the size of investment
commitments generally held by the Fund and such other clients and opinions of
the persons responsible for recommending investments to the Fund and such other
clients. While this procedure could have a detrimental effect on the price or
amount of the securities available to a Fund from time to time, it is the
opinion of the Board of Trustees that the benefits available from Nuveen
Advisory's organization will outweigh any disadvantage that may arise from
exposure to simultaneous transactions.
Under the Investment Company Act of 1940, the Funds may not purchase
portfolio securities from any underwriting syndicate of which Nuveen is a
member except under certain limited conditions set forth in Rule 10f-3. The
Rule sets forth requirements relating to, among other things, the terms of an
issue of Municipal Obligations purchased by a Fund, the amount of Municipal
Obligations which may be purchased in any one issue and the assets of a Fund
which may be invested in a particular issue. In addition, purchases of
securities made pursuant to the terms of the Rule must be approved at least
quarterly by the Board of Trustees, including a majority of the trustees who
are not interested persons of the Trust.
NET ASSET VALUE
As stated in the Prospectus, the net asset value of the shares of the Funds
will be determined separately for each class of the Funds' shares by The Chase
Manhattan Bank, the Funds' custodian, as of the close of trading (normally 4:00
p.m. Eastern Time) on each day on which the New York Stock Exchange (the
"Exchange") is normally open for trading. The Exchange is not open for trading
on New Year's Day, Washington's Birthday, Good Friday, Memorial Day,
Independence Day, Labor Day, Thanksgiving Day and Christmas Day. The net asset
value per share of a class of shares of a Fund will be computed by dividing the
value of the Fund's assets attributable to the class, less the liabilities
attributable to the class, by the number of shares of the class outstanding.
In determining net asset value for the Funds, each Fund's custodian utilizes
the valuations of portfolio securities furnished by a pricing service approved
by the trustees. Securities for which quotations are not readily available
(which constitute a majority of the securities held by the Funds) are valued at
fair value as determined by the pricing service using methods which include
consideration of the following: yields or prices of municipal bonds of
comparable quality, type of issue, coupon, maturity and rating; indications as
to value from dealers; and general market conditions. The pricing service may
employ electronic data processing techniques and/or a matrix system to
determine valuations. The procedures of the pricing service and its valuations
are reviewed by the officers of the Trust under the general supervision of the
Board of Trustees.
TAX MATTERS
FEDERAL INCOME TAX MATTERS
The following discussion of federal income tax matters is based upon the
advice of Fried, Frank, Harris, Shriver & Jacobson, counsel to the Trust.
Each Fund intends to qualify under Subchapter M of the Internal Revenue Code
of 1986, as amended (the "Code") for tax treatment as a regulated investment
company. In order to qualify as a regulated investment company, a Fund must
satisfy certain requirements relating to the source of its income,
diversification of its assets, and distributions of its income to shareholders.
First, a Fund must derive at least 90% of its annual gross income (including
tax-exempt interest) from dividends, interest, payments with respect to
securities loans, gains from the sale or other disposition of stock or
securities, foreign currencies or other income (including but not limited to
gains from options and futures) derived with respect to its business of
investing in such stock or securities (the "90% gross income test"). Second, a
Fund must derive less than
S-21
<PAGE>
30% of its annual gross income from the sale or other disposition of any of the
following which was held for less than three months: (i) stock or securities
and (ii) certain options, futures, or forward contracts (the "short-short
test"). Third, a Fund must diversify its holdings so that, at the close of each
quarter of its taxable year, (i) at least 50% of the value of its total assets
is comprised of cash, cash items, United States Government securities,
securities of other regulated investment companies and other securities limited
in respect of any one issuer to an amount not greater in value than 5% of the
value of a Fund's total assets and to not more than 10% of the outstanding
voting securities of such issuer, and (ii) not more than 25% of the value of
the total assets is invested in the securities of any one issuer (other than
United States Government securities and securities of other regulated
investment companies) or two or more issuers controlled by a Fund and engaged
in the same, similar or related trades or businesses.
As a regulated investment company, a Fund will not be subject to federal
income tax in any taxable year for which it distributes at least 90% of the sum
of (i) its "investment company taxable income" (which includes dividends,
taxable interest, taxable original issue discount and market discount income,
income from securities lending, net short-term capital gain in excess of long-
term capital loss, and any other taxable income other than "net capital gain"
(as defined below) and is reduced by deductible expenses) and (ii) its net tax-
exempt interest (the excess of its gross tax-exempt interest income over
certain disallowed deductions). A Fund may retain for investment its net
capital gain (which consists of the excess of its net long-term capital gain
over its short-term capital loss). However, if a Fund retains any net capital
gain or any investment company taxable income, it will be subject to tax at
regular corporate rates on the amount retained. If a Fund retains any capital
gain, such Fund may designate the retained amount as undistributed capital
gains in a notice to its shareholders who, if subject to federal income tax on
long-term capital gains, (i) will be required to include in income for federal
income tax purposes, as long-term capital gain, their shares of such
undistributed amount, and (ii) will be entitled to credit their proportionate
shares of the tax paid by such Fund against their federal income tax
liabilities if any, and to claim refunds to the extent the credit exceeds such
liabilities. For federal income tax purposes, the tax basis of shares owned by
a shareholder of the Fund will be increased by an amount equal under current
law to 65% of the amount of undistributed capital gains included in the
shareholder's gross income. Each Fund intends to distribute at least annually
to its shareholders all or substantially all of its net tax-exempt interest and
any investment company taxable income and net capital gain.
Treasury regulations permit a regulated investment company, in determining
its investment company taxable income and net capital gain, i.e., the excess of
net long-term capital gain over net short-term capital loss for any taxable
year, to elect (unless it has made a taxable year election for excise tax
purposes as discussed below) to treat all or part of any net capital loss, any
net long-term capital loss or any net foreign currency loss incurred after
October 31 as if they had been incurred in the succeeding year.
Each Fund also intends to satisfy conditions (including requirements as to
the proportion of its assets invested in Municipal Obligations) that will
enable it to designate distributions from the interest income generated by
investments in Municipal Obligations, which is exempt from regular federal
income tax when received by such Fund, as exempt-interest dividends.
Shareholders receiving exempt-interest dividends will not be subject to regular
federal income tax on the amount of such dividends. Insurance proceeds received
by a Fund under any insurance policies in respect of scheduled interest
payments on defaulted Municipal Obligations will be excludable from federal
gross income under Section 103(a) of the Code. In the case of non-appropriation
by a political subdivision, however, there can be no assurance that payments
made by the insurer representing interest on "non-appropriation" lease
obligations will be excludable from gross income for federal income tax
purposes. See "Investment Policies and Investment Portfolio; Portfolio
Securities."
Distributions by a Fund of net interest received from certain taxable
temporary investments (such as certificates of deposit, commercial paper and
obligations of the U.S. Government, its agencies and instrumentalities) and net
short-term capital gains realized by a Fund, if any, will be taxable to
shareholders as ordinary income whether received in cash or additional shares.
If a Fund purchases a Municipal Obligation at a market discount, any gain
realized by the Fund upon sale or redemption of the Municipal Obligation will
be treated as taxable interest income to the extent such gain does not exceed
the market discount, and any gain realized in excess of the market discount
will be treated as capital gains. Any net long-term capital gains realized by a
Fund and distributed to shareholders in cash or additional shares, will be
taxable to shareholders as long-term capital gains regardless of the length of
time investors have owned shares of a Fund. Distributions by a Fund that do not
constitute ordinary income dividends, exempt-interest dividends, or capital
gain dividends will be treated as a return of capital to the extent of (and in
reduction of) the shareholder's tax basis in his or her shares. Any excess will
be treated as gain from the sale of his or her shares, as discussed below.
If a Fund has both tax-exempt and taxable income, it will use the "average
annual" method for determining the designated percentage that is taxable income
and designate the use of such method within 60 days after the end of the Fund's
taxable year. Under this method, one designated percentage is applied uniformly
to all distributions made during the Fund's taxable year. The percentage of
income designated as tax-exempt for any particular distribution may be
substantially different from the percentage of the Fund's income that was tax-
exempt during the period covered by the distribution.
If a Fund engages in hedging transactions involving financial futures and
options, these transactions will be subject to special tax rules, the effect of
which may be to accelerate income to a Fund, defer a Fund's losses, cause
adjustments in the holding periods of a Fund's securities, convert long-term
capital gains into short-term capital gains and convert short-
S-22
<PAGE>
term capital losses into long-term capital losses. These rules could therefore
affect the amount, timing and character of distributions to shareholders.
Because the taxable portion of a Fund's investment income consists primarily
of interest, none of its dividends, whether or not treated as exempt-interest
dividends, is expected to qualify under the Internal Revenue Code for the
dividends received deductions for corporations.
Prior to purchasing shares in a Fund, the impact of dividends or
distributions which are expected to be or have been declared, but not paid,
should be carefully considered. Any dividend or distribution declared shortly
after a purchase of such shares prior to the record date will have the effect
of reducing the per share net asset value by the per share amount of the
dividend or distribution.
Although dividends generally will be treated as distributed when paid,
dividends declared in October, November or December, payable to shareholders of
record on a specified date in one of those months and paid during the following
January, will be treated as having been distributed by a Fund (and received by
the shareholders) on December 31.
The redemption or exchange of the shares of a Fund normally will result in
capital gain or loss to the shareholders. Generally, a shareholder's gain or
loss will be long-term gain or loss if the shares have been held for more than
one year. Present law taxes both long- and short-term capital gains of
corporations at the rates applicable to ordinary income. For non-corporate
taxpayers, however, net capital gains (i.e., the excess of net long-term
capital gain over net short-term capital loss) will be taxed at a maximum
marginal rate of 28%, while short-term capital gains and other ordinary income
will be taxed at a maximum marginal rate of 39.6%. Because of the limitations
on itemized deductions and the deduction for personal exemptions applicable to
higher income taxpayers, the effective tax rate may be higher in certain
circumstances.
All or a portion of a sales charge paid in purchasing shares of a Fund cannot
be taken into account for purposes of determining gain or loss on the
redemption or exchange of such shares within 90 days after their purchase to
the extent shares of a Fund or another fund are subsequently acquired without
payment of a sales charge pursuant to the reinvestment or exchange privilege.
Any disregarded portion of such charge will result in an increase in the
shareholder's tax basis in the shares subsequently acquired. Moreover, losses
recognized by a shareholder on the redemption or exchange of shares of a Fund
held for six months or less are disallowed to the extent of any distribution of
exempt-interest dividends received with respect to such shares and, if not
disallowed, such losses are treated as long-term capital losses to the extent
of any distributions of long-term capital gains made with respect to such
shares. In addition, no loss will be allowed on the redemption or exchange of
shares of a Fund if the shareholder purchases other shares of such Fund
(whether through reinvestment of distributions or otherwise) or the shareholder
acquires or enters into a contract or option to acquire securities that are
substantially identical to shares of a Fund within a period of 61 days
beginning 30 days before and ending 30 days after such redemption or exchange.
If disallowed, the loss will be reflected in an adjustment to the basis of the
shares acquired.
It may not be advantageous from a tax perspective for shareholders to redeem
or exchange shares after tax-exempt income has accrued but before the record
date for the exempt-interest dividend representing the distribution of such
income. Because such accrued tax-exempt income is included in the net asset
value per share (which equals the redemption or exchange value), such a
redemption could result in treatment of the portion of the sales or redemption
proceeds equal to the accrued tax-exempt interest as taxable gain (to the
extent the redemption or exchange price exceeds the shareholder's tax basis in
the shares disposed of) rather than tax-exempt interest.
In order to avoid a 4% federal excise tax, a Fund must distribute or be
deemed to have distributed by December 31 of each calendar year at least 98% of
its taxable ordinary income for such year, at least 98% of the excess of its
realized capital gains over its realized capital losses (generally computed on
the basis of the one-year period ending on October 31 of such year) and 100% of
any taxable ordinary income and the excess of realized capital gains over
realized capital losses for the prior year that was not distributed during such
year and on which such Fund paid no federal income tax. For purposes of the
excise tax, a regulated investment company may reduce its capital gain net
income (but not below its net capital gain) by the amount of any net ordinary
loss for the calendar year. The Funds intend to make timely distributions in
compliance with these requirements and consequently it is anticipated that they
generally will not be required to pay the excise tax.
If in any year a Fund should fail to qualify under Subchapter M for tax
treatment as a regulated investment company, the Fund would incur a regular
corporate federal income tax upon its income for that year (other than interest
income from Municipal Obligations), and distributions to its shareholders would
be taxable to shareholders as ordinary dividend income for federal income tax
purposes to the extent of the Fund's available earnings and profits.
Among the requirements that a Fund must meet in order to qualify under
Subchapter M in any year is that less than 30% of its gross income must be
derived from the sale or other disposition of securities and certain other
assets held for less than three months.
Because the Funds may invest in private activity bonds, the interest on which
is not federally tax-exempt to persons who are "substantial users" of the
facilities financed by such bonds or "related persons" of such "substantial
users," the Funds may not be an appropriate investment for shareholders who are
considered either a "substantial user" or a "related
S-23
<PAGE>
person" within the meaning of the Code. For additional information, investors
should consult their tax advisers before investing in a Fund.
Federal tax law imposes an alternative minimum tax with respect to both
corporations and individuals. Interest on certain Municipal Obligations, such
as bonds issued to make loans for housing purposes or to private entities (but
not for certain tax-exempt organizations such as universities and non-profit
hospitals), is included as an item of tax preference in determining the amount
of a taxpayer's alternative minimum taxable income. To the extent that a Fund
receives income from Municipal Obligations subject to the alternative minimum
tax, a portion of the dividends paid by it, although otherwise exempt from
federal income tax, will be taxable to shareholders to the extent that their
tax liability is determined under the alternative minimum tax regime. The Funds
will annually supply shareholders with a report indicating the percentage of
Fund income attributable to Municipal Obligations subject to the federal
alternative minimum tax.
In addition, the alternative minimum taxable income for corporations is
increased by 75% of the difference between an alternative measure of income
("adjusted current earnings") and the amount otherwise determined to be the
alternative minimum taxable income. Interest on all Municipal Obligations, and
therefore all distributions by the Funds that would otherwise be tax-exempt, is
included in calculating a corporation's adjusted current earnings.
Tax-exempt income, including exempt-interest dividends paid by a Fund, will
be added to the taxable income of individuals receiving social security or
railroad retirement benefits in determining whether a portion of that benefit
will be subject to federal income tax.
The Code provides that interest on indebtedness incurred or continued to
purchase or carry shares of any Fund is not deductible. Under rules used by the
IRS for determining when borrowed funds are considered used for the purpose of
purchasing or carrying particular assets, the purchase of shares of a Fund may
be considered to have been made with borrowed funds even though such funds are
not directly traceable to the purchase of shares.
The Funds are required in certain circumstances to withhold 31% of taxable
dividends and certain other payments paid to non-corporate holders of shares
who have not furnished to the Funds their correct taxpayer identification
number (in the case of individuals, their social security number) and certain
certifications, or who are otherwise subject to backup withholding.
The foregoing is a general and abbreviated summary of the provisions of the
Code and Treasury Regulations presently in effect as they directly govern the
taxation of the Fund and its shareholders. For complete provisions, reference
should be made to the pertinent Code sections and Treasury Regulations. The
Code and Treasury Regulations are subject to change by legislative or
administrative action, and any such change may be retroactive with respect to
Fund transactions. Shareholders are advised to consult their own tax advisers
for more detailed information concerning the federal taxation of the Funds and
the income tax consequences to their shareholders.
PERFORMANCE INFORMATION
The historical investment performance of the Funds may be shown in the form
of "yield," "taxable equivalent yield," "average annual total return,"
"cumulative total return" and "taxable equivalent total return" figures, each
of which will be calculated separately for each class of shares.
In accordance with a standardized method prescribed by rules of the
Securities and Exchange Commission ("SEC"), yield is computed by dividing the
net investment income per share earned during the specified one month or 30-day
period by the maximum offering price per share on the last day of the period,
according to the following formula:
Yield=2[(a-b +1)/6/ -1]
cd
In the above formula, a = dividends and interest earned during the period; b
= expenses accrued for the period (net of reimbursements); c = the average
daily number of shares outstanding during the period that were entitled to
receive dividends; and d = the maximum offering price per share on the last day
of the period. In the case of Class A shares, the maximum offering price
includes the current maximum front-end sales charge of 4.2% (3.0% for the
Intermediate Municipal Bond Fund and 2.5% for the Limited Term Municipal Bond
Fund).
In computing yield, the Funds follow certain standardized accounting
practices specified by SEC rules. These practices are not necessarily
consistent with those that the Funds use to prepare their annual and interim
financial statements in conformity with generally accepted accounting
principles. Thus, yield may not equal the income paid to shareholders or the
income reported in a Fund's financial statements.
Taxable equivalent yield is computed by dividing that portion of the yield
which is tax-exempt by the remainder of (1 minus the stated federal income tax
rate, taking into account the deductibility of state taxes for federal income
tax purposes) and adding the product to that portion, if any, of the yield that
is not tax exempt.
S-24
<PAGE>
The taxable equivalent yields quoted below are based upon (1) the stated
federal income tax rate and (2) the yields for the 30-day period quoted in the
right hand column.
<TABLE>
<CAPTION>
AS OF APRIL 30, 1997
--------------------------------
FEDERAL TAXABLE
YIELD TAX RATE* EQUIVALENT YIELD
----- --------- ----------------
<S> <C> <C> <C>
Nuveen Municipal Bond Fund
Class A Shares....................... 4.69% 39.6% 7.76%
Class B Shares....................... 4.14% 39.6% 6.85%
Class C Shares....................... 4.34% 39.6% 7.19%
Class R Shares....................... 5.09% 39.6% 8.43%
Nuveen Insured Municipal Bond Fund
Class A Shares....................... 4.57% 39.6% 7.57%
Class B Shares....................... 4.02% 39.6% 6.66%
Class C Shares....................... 4.23% 39.6% 7.00%
Class R Shares....................... 4.97% 39.6% 8.23%
Nuveen Flagship All-American Municipal
Bond Fund
Class A Shares....................... 5.15% 39.6% 8.53%
Class B Shares....................... 4.63% 39.6% 7.67%
Class C Shares....................... 4.83% 39.6% 8.00%
Class R Shares....................... 5.58% 39.6% 9.24%
Nuveen Flagship Intermediate Municipal
Bond Fund
Class A Shares....................... 4.88% 39.6% 8.08%
Class C Shares....................... 4.48% 39.6% 7.42%
Class R Shares....................... 5.24% 39.6% 8.68%
Nuveen Flagship Limited Term Municipal
Bond Fund
Class A Shares....................... 4.31% 39.6% 7.14%
Class C Shares....................... 4.08% 39.6% 6.75%
Class R Shares....................... 4.63% 39.6% 7.67%
</TABLE>
- --------
*These rates do not reflect the current federal tax limitations on itemized
deductions and personal exemptions, which may raise the effective tax rate
and taxable equivalent yield for taxpayers above certain income levels.
For additional information concerning taxable equivalent yields, see the
Taxable Equivalent Yields table in the Prospectus.
The Funds may from time to time in their advertising and sales materials
report a quotation of their current distribution rate. The distribution rate
represents a measure of dividends distributed for a specified period.
Distribution rate is computed by taking the most recent monthly tax-free income
dividend per share, multiplying it by 12 to annualize it, and dividing by the
appropriate price per share (e.g., net asset value for purchases to be made
without a load such as reinvestments from Nuveen UITs, or the maximum public
offering price). The distribution rate differs from yield and total return and
therefore is not intended to be a complete measure of performance. Distribution
rate may sometimes differ from yield because a Fund may be paying out more than
it is earning and because it may not include the effect of amortization of bond
premiums to the extent such premiums arise after the bonds were purchased.
The distribution rates as of the period quoted, based on the maximum public
offering price then in effect for the Funds, and assuming the imposition of the
maximum sales charge for Class A Shares of 4.2% for the Municipal Bond Fund,
the Insured Municipal Bond Fund, and the All-American Fund; the maximum sales
charge for Class A Shares of 3.0% for the Intermediate Municipal Bond Fund; and
the maximum sales charge for Class A Shares of 2.5% for the Limited Term
Municipal Bond Fund, were as follows:
<TABLE>
<CAPTION>
APRIL 30, 1997
DISTRIBUTION RATES
-------------------------------
CLASS A CLASS B CLASS C CLASS R
------- ------- ------- -------
<S> <C> <C> <C> <C>
Nuveen Municipal Bond Fund............... 4.91% 4.39% 4.60% 5.31%
Nuveen Insured Municipal Bond Fund....... 4.96% 4.44% 4.60% 5.37%
Nuveen Flagship All-American Municipal
Bond Fund............................... 5.26% 4.73% 4.95% 5.69%
Nuveen Flagship Intermediate Municipal
Bond Fund............................... 4.76% N/A 4.36% 5.12%
Nuveen Flagship Limited Term Municipal
Bond Fund............................... 4.58% N/A 4.39% 4.91%
</TABLE>
S-25
<PAGE>
Average annual total return quotation is computed in accordance with a
standardized method prescribed by SEC rules. The average annual total return
for a specific period is found by taking a hypothetical, $1,000 investment
("initial investment") in Fund shares on the first day of the period, reducing
the amount to reflect the maximum sales charge, and computing the "redeemable
value" of that investment at the end of the period. The redeemable value is
then divided by the initial investment, and this quotient is taken to the Nth
root (N representing the number of years in the period) and 1 is subtracted
from the result, which is then expressed as a percentage. The calculation
assumes that all income and capital gains distributions have been reinvested in
Fund shares at net asset value on the reinvestment dates during the period.
Total returns for the oldest class of each fund reflect actual performance
for all periods. For other classes, total returns reflect actual performance
for periods since class inception, and the oldest class's performance for
periods prior to inception, adjusted for the differences in sales charges and
fees between the classes.
The inception dates for each class of the Funds' shares are as follows:
<TABLE>
<CAPTION>
INCEPTION DATES
------------------
<S> <C>
Nuveen Municipal Bond Fund
Class A Shares....................................... June 13, 1995
Class B Shares....................................... February 1, 1997
Class C Shares....................................... June 13, 1995
Class R Shares....................................... November 29, 1976
Nuveen Insured Municipal Bond Fund
Class A Shares....................................... September 6, 1994
Class B Shares....................................... February 1, 1997
Class C Shares....................................... September 6, 1994
Class R Shares....................................... December 10, 1986
Nuveen Flagship All-American Municipal Bond Fund
Class A Shares....................................... October 3, 1988
Class B Shares....................................... February 1, 1997
Class C Shares....................................... June 2, 1993
Class R Shares....................................... February 1, 1997
Nuveen Flagship Intermediate Municipal Bond Fund
Class A Shares....................................... September 15, 1992
Class C Shares....................................... December 1, 1995
Class R Shares....................................... February 1, 1997
Nuveen Flagship Limited Term Municipal Bond Fund
Class A Shares....................................... October 19, 1987
Class C Shares....................................... December 1, 1995
Class R Shares....................................... February 1, 1997
</TABLE>
The Nuveen Municipal Bond Fund's average annual return figures, including the
effect of the maximum sales charge for Class A Shares, and applicable CDSC for
Class B shares, for the one-year, five-year and ten-year periods ended April
30, 1997, and for the period from inception through April 30, 1997,
respectively, were as follows:
<TABLE>
<CAPTION>
ANNUAL TOTAL RETURN
---------------------------------------
FROM
ONE YEAR TEN YEARS INCEPTION
ENDED FIVE YEARS ENDED THROUGH
APR. 30, ENDED APR. APR. 30, APR. 30,
1997 30, 1997 1997 1997
-------- ---------- --------- ---------
<S> <C> <C> <C> <C>
Nuveen Municipal Bond Fund
Class A Shares................ 2.38% 5.35% 7.07% 6.71%
Class B Shares................ 2.36% 5.41% 6.93% 6.65%
Class C Shares................ 6.16% 5.49% 6.74% 6.15%
Class R Shares................ 7.25% 6.55% 7.81% 7.21%
</TABLE>
S-26
<PAGE>
The Nuveen Insured Municipal Bond Fund's average annual return figures,
including the effect of the maximum sales charge for Class A Shares, and
applicable CDSC for Class B shares, for the one-year, five-year, and ten-year
periods ended April 30, 1997, and for the period from inception through April
30, 1997, respectively, were as follows:
<TABLE>
<CAPTION>
ANNUAL TOTAL RETURN
----------------------------------------
FROM
ONE YEAR FIVE YEARS TEN YEARS INCEPTION
ENDED ENDED ENDED THROUGH
APRIL 30, APRIL 30, APRIL 30, APRIL 30,
1997 1997 1997 1997
--------- ---------- --------- ---------
<S> <C> <C> <C> <C>
Nuveen Insured Municipal Bond
Fund
Class A Shares.............. 1.66% 6.02% 7.62% 6.96%
Class B Shares.............. 1.57% 6.00% 7.45% 6.82%
Class C Shares.............. 5.49% 6.04% 7.23% 6.55%
Class R Shares.............. 6.46% 7.14% 8.32% 7.65%
</TABLE>
The Nuveen Flagship All-American Municipal Bond Fund's average annual return
figures, including the effect of the maximum sales charge for Class A shares,
and applicable CDSC for Class B shares, for one-year and five-year periods
ended April 30, 1997, and for the period from inception through April 30, 1997,
respectively, were as follows:
<TABLE>
<CAPTION>
ANNUAL TOTAL RETURN
-----------------------------
FROM
ONE YEAR FIVE YEARS INCEPTION
ENDED ENDED THROUGH
APRIL APRIL 30, APRIL 30,
30, 1997 1997 1997
-------- ---------- ---------
<S> <C> <C> <C>
Nuveen Flagship All-American Municipal
Bond Fund
Class A Shares......................... 3.68% 6.96% 8.05%
Class B Shares......................... 3.68% 7.15% 8.04%
Class C Shares......................... 7.64% 7.28% 7.99%
Class R Shares......................... 8.38% 7.91% 8.61%
</TABLE>
The Nuveen Flagship Intermediate Municipal Bond Fund's average annual return
figures, including the effect of the maximum sales charge for Class A Shares
for the one-year period ended April 30, 1997, and for the period from inception
through April 30, 1997, respectively, were as follows:
<TABLE>
<CAPTION>
ANNUAL TOTAL RETURN
-------------------
FROM
ONE YEAR INCEPTION
ENDED THROUGH
APRIL 30, APRIL 30,
1997 1997
--------- ---------
<S> <C> <C>
Nuveen Flagship Intermediate Municipal Bond Fund
Class A Shares..................................... 3.48% 6.18%
Class C Shares..................................... 5.99% 6.29%
Class R Shares..................................... 6.53% 6.85%
</TABLE>
The Nuveen Flagship Limited Term Municipal Bond Fund's average annual return
figures, including the effect of the maximum sales charge for Class A Shares
for the one-year and five-year periods ended April 30, 1997, and for the period
from inception through April 30, 1997, respectively, were as follows:
<TABLE>
<CAPTION>
ANNUAL TOTAL RETURN
-----------------------------
FROM
ONE YEAR FIVE YEARS INCEPTION
ENDED ENDED THROUGH
APRIL APRIL 30, APRIL 30,
30, 1997 1997 1997
-------- ---------- ---------
<S> <C> <C> <C>
Nuveen Flagship Limited-Term Municipal
Bond Fund
Class A Shares......................... 2.18% 5.14% 6.33%
Class C Shares......................... 4.49% 5.34% 6.29%
Class R Shares......................... 4.66% 5.65% 6.60%
</TABLE>
Calculation of cumulative total return is not subject to a prescribed
formula. Cumulative total return for a specific period is calculated by first
taking a hypothetical initial investment in Fund shares on the first day of the
period, deducting (in some cases) the maximum sales charge, and computing the
"redeemable value" of that investment at the end of the period. The cumulative
total return percentage is then determined by subtracting the initial
investment from the redeemable value and dividing the remainder by the initial
investment and expressing the result as a percentage. The calculation assumes
that all income and capital gains distributions by the Fund have been
reinvested at net asset value on the reinvestment dates during the period.
Cumulative total return may also be shown as the increased dollar value of the
hypothetical investment over the period. Cumulative total return calculations
that do not include the effect of the sales charge would be reduced if such
charge were included.
S-27
<PAGE>
The Nuveen Municipal Bond Fund cumulative total return figures, including the
effect of the maximum sales charge for the Class A Shares, and applicable CDSC
for Class B Shares, for the one-year, five-year, and ten year periods ended
April 30, 1997, and for the period since inception through April 30, 1997,
respectively, using the performance of the oldest class for periods prior to
the inception of the newer classes, as described above were as follows:
<TABLE>
<CAPTION>
CUMULATIVE TOTAL RETURN
----------------------------------------
FROM
ONE YEAR FIVE YEARS TEN YEARS INCEPTION
ENDED ENDED ENDED THROUGH
APRIL 30, APRIL 30, APRIL 30, APRIL 30,
1997 1997 1997 1997
--------- ---------- --------- ---------
<S> <C> <C> <C> <C>
Nuveen Municipal Bond Fund
Class A Shares............... 2.38% 29.77% 97.99% 276.63%
Class B Shares............... 2.36% 30.14% 95.39% 271.99%
Class C Shares............... 6.16% 30.64% 91.98% 237.86%
Class R Shares............... 7.25% 37.33% 112.08% 314.01%
</TABLE>
The Nuveen Insured Municipal Bond Fund cumulative total return figures,
including the effect of the maximum sales charge for the Class A Shares, and
applicable CDSC for Class B Shares, for the one-year, five-year, and ten-year
periods ended April 30, 1997, and for the period since inception through April
30, 1997, respectively, using the performance of the oldest class for periods
prior to the inception of the newer classes, as described above were as
follows:
<TABLE>
<CAPTION>
CUMULATIVE TOTAL RETURN
----------------------------------------
FROM
ONE YEAR FIVE YEARS TEN YEARS INCEPTION
ENDED ENDED ENDED THROUGH
APRIL 30, APRIL 30, APRIL 30, APRIL 30,
1997 1997 1977 1997
--------- ---------- --------- ---------
<S> <C> <C> <C> <C>
Nuveen Insured Municipal Bond
Fund
Class A Shares.............. 1.66% 33.97% 108.48% 100.78%
Class B Shares.............. 1.57% 33.80% 105.17% 98.03%
Class C Shares.............. 5.49% 34.06% 100.95% 92.91%
Class R Shares.............. 6.46% 41.19% 122.45% 114.46%
</TABLE>
The Nuveen Flagship All-American Municipal Bond Fund cumulative total return
figures, including the effect of the maximum sales charge for the Class A
Shares, and applicable CDSC for Class B Shares, for the one-year and five-year
periods ended April 30, 1997, and for the period since inception through April
30, 1997, respectively, using the performance of the oldest class for periods
prior to the inception of the newer classes, as described above were as
follows:
<TABLE>
<CAPTION>
CUMULATIVE TOTAL RETURN
------------------------------
FROM
ONE YEAR FIVE YEARS INCEPTION
ENDED ENDED THROUGH
APRIL 30, APRIL 30, APRIL 30,
1997 1997 1997
--------- ---------- ---------
<S> <C> <C> <C>
Nuveen Flagship All-American Municipal
Bond Fund
Class A Shares........................ 3.68% 40.00% 94.22%
Class B Shares........................ 3.68% 41.26% 94.09%
Class C Shares........................ 7.64% 42.08% 93.30%
Class R Shares........................ 8.38% 46.34% 103.03%
</TABLE>
The Nuveen Flagship Intermediate Municipal Bond Fund cumulative total return
figures, including the effect of the maximum sales charge for the Class A
Shares, for the one-year period ended April 30, 1997, and for the period since
inception through April 30, 1997, respectively, using the performance of the
oldest class for periods prior to the inception of the newer classes, as
described above were as follows:
<TABLE>
<CAPTION>
CUMULATIVE
TOTAL RETURN
------------------
FROM
ONE YEAR INCEPTION
ENDED THROUGH
APRIL APRIL 30,
30, 1997 1997
-------- ---------
<S> <C> <C>
Nuveen Flagship Intermediate Municipal Bond Fund
Class A Shares....................................... 3.48% 31.91%
Class C Shares....................................... 5.99% 32.54%
Class R Shares....................................... 6.53% 35.80%
</TABLE>
S-28
<PAGE>
The Nuveen Flagship Limited Term Municipal Bond Fund cumulative total return
figures, including the effect of the maximum sales charge for the Class A
Shares, for the one-year and five-year periods ended April 30, 1997, and for
the period since inception through April 30, 1997, respectively, using the
performance of the oldest class for periods prior to the inception of the newer
classes, as described above were as follows:
<TABLE>
<CAPTION>
CUMULATIVE TOTAL RETURN
------------------------------
FROM
ONE YEAR FIVE YEARS INCEPTION
ENDED ENDED THROUGH
APRIL 30, APRIL 30, APRIL 30,
1997 1997 1997
--------- ---------- ---------
<S> <C> <C> <C>
Nuveen Flagship Limited Term Municipal
Bond Fund
Class A Shares........................ 2.18% 28.50% 79.51%
Class C Shares........................ 4.49% 29.71% 78.80%
Class R Shares........................ 4.66% 31.62% 83.86%
</TABLE>
Calculation of taxable equivalent total return is also not subject to a
prescribed formula. Taxable equivalent total return for a specific period is
calculated by first taking a hypothetical initial investment in Fund shares on
the first day of the period, computing the total return for each calendar year
in the period in the manner described above, and increasing the total return
for each such calendar year by the amount of additional income that a taxable
fund would need to have generated to equal the income on an after-tax basis, at
a specified income tax rate (usually the highest marginal federal tax rate),
calculated as described above under the discussion of "taxable equivalent
yield." The resulting amount for the calendar year is then divided by the
initial investment amount to arrive at a "taxable equivalent total return
factor" for the calendar year. The taxable equivalent total return factors for
all the calendar years are then multiplied together and the result is then
annualized by taking its Nth root (N representing the number of years in the
period) and subtracting 1, which provides a taxable equivalent total return
expressed as a percentage.
Using the 39.6% maximum marginal federal tax rate for 1997, the annual
taxable equivalent total return for the Nuveen Municipal Bond Fund's Class R
Shares for the ten year period ended April 30, 1997, was 12.02%.
Class A Shares of the Funds are sold at net asset value plus a current
maximum sales charge of 4.20% of the offering price (3.0% for the Intermediate
Municipal Bond Fund and 2.5% for the Limited Term Municipal Bond Fund). This
current maximum sales charge will typically be used for purposes of calculating
performance figures. Yield, returns and net asset value of each class of shares
of the Funds will fluctuate. Factors affecting the performance of the Funds
include general market conditions, operating expenses and investment
management. Any additional fees charged by a securities representative or other
financial services firm would reduce returns described in this section. Shares
of the Funds are redeemable at net asset value, which may be more or less than
original cost.
In reports or other communications to shareholders or in advertising and
sales literature, the Funds may also compare their performance with that of:
(1) the Consumer Price Index or various unmanaged bond indexes such as the
Lehman Brothers Municipal Bond Index and the Salomon Brothers High Grade
Corporate Bond Index and (2) other fixed income or municipal bond mutual funds
or mutual fund indexes as reported by Lipper Analytical Services, Inc.
("Lipper"), Morningstar, Inc. ("Morningstar"), Wiesenberger Investment
Companies Service ("Wiesenberger") and CDA Investment Technologies, Inc.
("CDA") or similar independent services which monitor the performance of mutual
funds, or other industry or financial publications such as Barron's, Changing
Times, Forbes and Money Magazine. Performance comparisons by these indexes,
services or publications may rank mutual funds over different periods of time
by means of aggregate, average, year-by-year, or other types of total return
and performance figures. Any given performance quotation or performance
comparison should not be considered as representative of the performance of the
Funds for any future period.
Each Fund may from time to time in its advertising and sales materials
compare its current yield or total return with the yield or total return on
taxable investments such as corporate or U.S. Government bonds, bank
certificates of deposit (CDs) or money market funds. These taxable investments
have investment characteristics that differ from those of the Funds. U.S.
Government bonds, for example, are long-term investments backed by the full
faith and credit of the U.S. Government, and bank CDs are generally short-term,
FDIC-insured investments, which pay fixed principal and interest but are
subject to fluctuating rollover rates. Money market funds are short-term
investments with stable net asset values, fluctuating yields and special
features enhancing liquidity.
There are differences and similarities between the investments which the
Funds may purchase and the investments measured by the indexes and reporting
services which are described herein. The Consumer Price Index is generally
considered to be a measure of inflation. The CDA Mutual Fund-Municipal Bond
Index is a weighted performance average of other mutual funds with a federally
tax-exempt income objective. The Salomon Brothers High Grade Corporate Bond
Index is an unmanaged index that generally represents the performance of high
grade long-term taxable bonds during various market conditions. The Lehman
Brothers Municipal Bond Index is an unmanaged index that generally represents
the performance of high grade intermediate and long-term municipal bonds during
various market conditions. Lipper calculates municipal bond fund averages based
on average maturity and credit quality. Morningstar rates mutual funds by
overall risk-adjusted performance, investment objectives, and assets. Lipper,
Morningstar,
S-29
<PAGE>
Wiesenberger and CDA are widely recognized mutual fund reporting services whose
performance calculations are based upon changes in net asset value with all
dividends reinvested and which do not include the effect of any sales charges.
The market prices and yields of taxable and tax-exempt bonds will fluctuate.
The Funds primarily invest in investment grade Municipal Obligations in
pursuing their objective of as high a level of current interest income which is
exempt from federal and state income tax as is consistent, in the view of the
Funds' management, with preservation of capital.
The Funds may also compare their taxable equivalent total return performance
to the total return performance of taxable income funds such as treasury
securities funds, corporate bond funds (either investment grade or high yield),
or Ginnie Mae funds. These types of funds, because of the character of their
underlying securities, differ from municipal bond funds in several respects.
The susceptibility of the price of treasury bonds to credit risk is far less
than that of municipal bonds, but the price of treasury bonds tends to be
slightly more susceptible to change resulting from changes in market interest
rates. The susceptibility of the price of investment grade corporate bonds and
municipal bonds to market interest rate changes and general credit changes is
similar. High yield bonds are subject to a greater degree of price volatility
than municipal bonds resulting from changes in market interest rates and are
particularly susceptible to volatility from credit changes. Ginnie Mae bonds
are generally subject to less price volatility than municipal bonds from credit
concerns, due primarily to the fact that the timely payment of monthly
installments of principal and interest are backed by the full faith and credit
of the U.S. Government, but Ginnie Mae bonds of equivalent coupon and maturity
are generally more susceptible to price volatility resulting from market
interest rate changes. In addition, the volatility of Ginnie Mae bonds due to
changes in market interest rates may differ from municipal bonds of comparable
coupon and maturity because bonds of the sensitivity of Ginnie Mae prepayment
experience to change in interest rates.
ADDITIONAL INFORMATION ON THE PURCHASE AND
REDEMPTION OF FUND SHARES
As described in the Prospectus, the Funds provide you with alternative ways
of purchasing Fund shares based upon your individual investment needs and
preferences.
Each class of shares of a Fund represents an interest in the same portfolio
of investments. Each class of shares is identical in all respects except that
each class bears its own class expenses, including distribution and
administration expenses, and each class has exclusive voting rights with
respect to any distribution or service plan applicable to its shares. As a
result of the differences in the expenses borne by each class of shares, net
income per share, dividends per share and net asset value per share will vary
among a Fund's classes of shares.
Shareholders of each class will share expenses proportionately for services
that are received equally by all shareholders. A particular class of shares
will bear only those expenses that are directly attributable to that class,
where the type or amount of services received by a class varies from one class
to another. For example, class-specific expenses generally will include
distribution and service fees.
The minimum initial investment is $3,000 per fund share class, and may be
lower for accounts opened through fee-based programs for which the program
sponsor has established a single master account with the fund's transfer agent
and performs all sub-accounting services related to that account.
REDUCTION OR ELIMINATION OF UP-FRONT SALES CHARGE ON CLASS A SHARES
Rights of Accumulation. You may qualify for a reduced sales charge on a
purchase of Class A Shares of any Fund if the amount of your purchase, when
added to the value that day of all of your prior purchases of shares of any
Fund or of another Nuveen Mutual Fund, or units of a Nuveen unit trust, on
which an up-front sales charge or ongoing distribution fee is imposed, or is
normally imposed, falls within the amounts stated in the Class A Sales Charges
and Commissions table in "How to Select a Purchase Option" in the Prospectus.
You or your financial adviser must notify Nuveen or the Fund's transfer agent
of any cumulative discount whenever you plan to purchase Class A Shares of a
Fund that you wish to qualify for a reduced sales charge.
Letter of Intent. You may qualify for a reduced sales charge on a purchase of
Class A Shares of any Fund if you plan to purchase Class A Shares of Nuveen
Mutual Funds over the next 13 months and the total amount of your purchases
would, if purchased at one time, qualify you for one of the reduced sales
charges shown in the Class A Sales Charges and Commissions table in "How to
Select a Purchase Option" in the Prospectus. In order to take advantage of this
option, you must complete the applicable section of the Application Form or
sign and deliver either to an Authorized Dealer or to the Fund's transfer agent
a written Letter of Intent in a form acceptable to Nuveen. A Letter of Intent
states that you intend, but are not obligated, to purchase over the next 13
months a stated total amount of Class A shares that would qualify you for a
reduced sales charge shown above. You may count shares of a Nuveen Mutual Fund
that you already own on which you paid an up-front sales charge or an ongoing
distribution fee and any Class C Shares of a Nuveen Mutual Fund that you
purchase over the next 13 months towards completion of your investment program,
but you will receive a reduced sales charge only on new Class A Shares you
purchase with a sales charge over the 13 months. You cannot count towards
completion of your investment program Class A Shares that you purchase without
a sales charge through investment of distributions from a Nuveen Mutual Fund or
a Nuveen unit trust, or otherwise.
S-30
<PAGE>
By establishing a Letter of Intent, you agree that your first purchase of
Class A Shares of a Fund following execution of the Letter of Intent will be at
least 5% of the total amount of your intended purchases. You further agree that
shares representing 5% of the total amount of your intended purchases will be
held in escrow pending completion of these purchases. All dividends and capital
gains distributions on Class A Shares held in escrow will be credited to your
account. If total purchases, less redemptions, prior to the expiration of the
13 month period equal or exceed the amount specified in your Letter of Intent,
the Class A Shares held in escrow will be transferred to your account. If the
total purchases, less redemptions, exceed the amount specified in your Letter
of Intent and thereby qualify for a lower sales charge than the sales charge
specified in your Letter of Intent, you will receive this lower sales charge
retroactively, and the difference between it and the higher sales charge paid
will be used to purchase additional Class A Shares on your behalf. If the total
purchases, less redemptions, are less than the amount specified, you must pay
Nuveen an amount equal to the difference between the amounts paid for these
purchases and the amounts which would have been paid if the higher sales charge
had been applied. If you do not pay the additional amount within 20 days after
written request by Nuveen or your financial adviser, Nuveen will redeem an
appropriate number of your escrowed Class A Shares to meet the required
payment. By establishing a Letter of Intent, you irrevocably appoint Nuveen as
attorney to give instructions to redeem any or all of your escrowed shares,
with full power of substitution in the premises.
You or your financial adviser must notify Nuveen or the Fund's transfer agent
whenever you make a purchase of Fund shares that you wish to be covered under
the Letter of Intent option.
Reinvestment of Nuveen Unit Trust Distributions. You may purchase Class A
Shares without an up-front sales charge by reinvestment of distributions from
any of the various unit trusts sponsored by Nuveen. There is no initial or
subsequent minimum investment requirement for such reinvestment purchases.
Group Purchase Programs. If you are a member of a qualified group, you may
purchase Class A Shares of any Fund or of another Nuveen Mutual Fund at the
reduced sales charge applicable to the group's purchases taken as a whole. A
"qualified group" is one which has previously been in existence, has a purpose
other than investment, has ten or more participating members, has agreed to
include Fund sales publications in mailings to members and has agreed to comply
with certain administrative requirements relating to its group purchases.
Under any group purchase program, the minimum monthly investment in Class A
Shares of any particular Fund or portfolio by each participant is $50, and the
minimum initial investment in Class A Shares of any particular Fund or
portfolio for each participant in the program combined is $3,000. No
certificate will be issued for any participant's account. All dividends and
other distributions by a Fund will be reinvested in additional Class A Shares
of the same Fund. No participant may utilize a systematic withdrawal program.
To establish a group purchase program, both the group itself and each
participant must fill out special application materials, which the group
administrator may obtain from the group's financial adviser, by calling Nuveen
toll-free at (800) 621-7227.
Reinvestment of Redemption Proceeds from Unaffiliated Funds. You may also
purchase Class A Shares at net asset value without a sales charge if the
purchase takes place through a broker-dealer and represents the reinvestment of
the proceeds of the redemption of shares of one or more registered investment
companies not affiliated with Nuveen. You must provide appropriate
documentation that the redemption occurred not more than one year prior to the
reinvestment of the proceeds in Class A Shares, and that you either paid an up-
front sales charge or were subject to a contingent deferred sales charge in
respect of the redemption of such shares of such other investment company.
Class A Shares of a Fund may be purchased at net asset value without a sales
charge, and Class R Shares may be purchased, by the following categories of
investors:
. officers, trustees and former trustees of the Nuveen and Flagship Funds;
. bona fide, full-time and retired employees of Nuveen, any parent company
of Nuveen, and subsidiaries thereof, or their immediate family members;
. any person who, for at least 90 days, has been an officer, director or
bona fide employee of any Authorized Dealer, or their immediate family
members;
. officers and directors of bank holding companies that make Fund shares
available directly or through subsidiaries or bank affiliates or their
immediate family members;
. bank or broker-affiliated trust departments investing funds over which
they exercise exclusive discretionary investment authority and that are
held in a fiduciary, agency, advisory, custodial or similar capacity;
. investors purchasing on a periodic fee, asset-based fee or no transaction
fee basis through a broker-dealer sponsored mutual fund purchase program;
and
. clients of investment advisers, financial planners or other financial
intermediaries that charge periodic or asset-based fees for their
services.
Holders of Class C Shares acquired on or before January 31, 1997 can convert
those shares to Class A Shares of the same fund at the shareholder's
affirmative request six years after date of purchase. Holders of Class C Shares
must submit
S-31
<PAGE>
their request to the transfer agent no later than the last business day of the
71st month following the month in which they purchased their shares. Holders of
Class C Shares purchased after that date will not have the option to convert
those shares to Class A Shares.
Any Class A Shares purchased pursuant to a special sales charge waiver must
be acquired for investment purposes and on the condition that they will not be
transferred or resold except through redemption by the Funds. You or your
financial adviser must notify Nuveen or the Fund's transfer agent whenever you
make a purchase of Class A Shares of any Fund that you wish to be covered under
these special sales charge waivers.
Class A Shares of any Fund may be issued at net asset value without a sales
charge in connection with the acquisition by a Fund of another investment
company. All purchases under the special sales charge waivers will be subject
to minimum purchase requirements as established by the Funds.
In determining the amount of your purchases of Class A Shares of any Fund
that may qualify for a reduced sales charge, the following purchases may be
combined: (1) all purchases by a trustee or other fiduciary for a single trust,
estate or fiduciary account; (2) all purchases by individuals and their
immediate family members (i.e., their spouses, parents, children, grandparents,
grandchildren parents-in-law, sons-and daughters-in-law, siblings, a sibling's
spouse, and a spouse's siblings); or (3) all purchases made through a group
purchase program as described above.
Class R Share Purchase Eligibility. Class R Shares are available for
purchases of $1 million or more and for purchases using dividends and capital
gains distributions on Class R Shares. Class R Shares also are available for
the following categories of investors:
. officers, trustees and former trustees of the Nuveen and Flagship Funds;
. bona fide, full-time and retired employees of Nuveen, any parent company
of Nuveen, and subsidiaries thereof, or their immediate family members;
. any person who, for at least 90 days, has been an officer, director or
bona fide employee of any Authorized Dealer, or their immediate family
members;
. officers and directors of bank holding companies that make Fund shares
available directly or through subsidiaries or bank affiliates, or their
immediate family members;
. bank or broker-affiliated trust departments investing funds over which
they exercise exclusive discretionary investment authority and that are
held in a fiduciary, agency, advisory, custodial or similar capacity;
. investors purchasing on a periodic fee, asset-based fee or no transaction
fee basis through a broker-dealer sponsored mutual fund purchase program;
. clients of investment advisers, financial planners or other financial
intermediaries that charge periodic or asset-based fees for their
services.
In addition, purchasers of Nuveen unit investment trusts may reinvest their
distributions from such unit investment trusts in Class R Shares, if, before
September 6, 1994, such purchasers had elected to reinvest distributions in
Nuveen Fund shares (before June 13, 1995 for Nuveen Municipal Bond Fund
shares). Shareholders may exchange their Class R Shares of any Nuveen Fund into
Class R Shares of any other Nuveen Fund.
The reduced sales charge programs may be modified or discontinued by the
Funds at any time upon prior written notice to shareholders of the Funds.
For more information about the purchase of Class A Shares or reduced sales
charge programs, or to obtain the required application forms, call Nuveen toll-
free at (800) 621-7227.
REDUCTION OR ELIMINATION OF CONTINGENT DEFERRED SALES CHARGE
Class A Shares are normally redeemed at net asset value, without any
Contingent Deferred Sales Charge ("CDSC"). However, in the case of Class A
Shares purchased at net asset value on or after July 1, 1996 because the
purchase amount exceeded $1 million, where the Authorized Dealer did not waive
the sales commission, a CDSC of 1% is imposed on any redemption within 18
months of purchase. In the case of Class B Shares redeemed within six years of
purchase, a CDSC is imposed, beginning at 5% for redemptions within the first
year, declining to 4% for redemptions within years two and three, and declining
by 1% each year thereafter until disappearing after the sixth year. Class C
Shares are redeemed at net asset value, without any CDSC, except that a CDSC of
1% is imposed upon redemption of Class C Shares that are redeemed within 12
months of purchase.
In determining whether a CDSC is payable, a Fund will first redeem shares not
subject to any charge, or that represent an increase in the value of a Fund
account due to capital appreciation, and then will redeem shares held for the
longest period, unless the shareholder specifies another order. No CDSC is
charged on shares purchased as a result of automatic reinvestment of dividends
or capital gains paid. In addition, no CDSC will be charged on exchanges of
shares into another Nuveen Mutual Fund or Nuveen money market fund. You may not
exchange Class B Shares for shares of a Nuveen money market fund. The holding
period is calculated on a monthly basis and begins the first day of the month
in which the order for investment is received. The CDSC is calculated based on
the lower of the redeemed shares' cost or net asset value at the time of the
redemption and is deducted from the redemption proceeds. Nuveen receives the
amount
S-32
<PAGE>
of any CDSC shareholders pay. If Class A or Class C shares subject to a CDSC
are exchanged for shares of a Nuveen money market fund, the CDSC would be
imposed on the subsequent redemption of those money market fund shares, and the
period during which the shareholder holds the money market fund shares would be
counted in determining the remaining duration of the CDSC. The Fund may elect
not to so count the period during which the shareholder held the money market
fund shares, in which event the amount of any applicable CDSC would be reduced
in accordance with applicable SEC rules by the amount of any 12b-1 plan
payments to which those money market funds shares may be subject.
The CDSC may be waived or reduced under the following six special
circumstances: 1) redemptions within one year following the death or
disability, as defined in Section 72(m)(7) of the Internal Revenue Code of
1986, as amended, of a shareholder; 2) in whole or in part for redemptions of
shares by shareholders with accounts in excess of specified breakpoints that
correspond to the breakpoints under which the up-front sales charge on Class A
Shares is reduced pursuant to Rule 22d-1 under the Act; 3) redemptions of
shares purchased under circumstances or by a category of investors for which
Class A Shares could be purchased at net asset value without a sales charge; 4)
in connection with the exercise of a reinstatement privilege whereby the
proceeds of a redemption of a Fund's shares subject to a sales charge are
reinvested in shares of certain Funds within a specified number of days; 5) in
connection with the exercise of a Fund's right to redeem all shares in an
account that does not maintain a certain minimum balance or that the applicable
board has determined may have material adverse consequences to the shareholders
of such Fund; and 6) redemptions made pursuant to a Fund's automatic withdrawal
plan, up to 12% annually of the original investment amount. If a Fund waives or
reduces the CDSC, such waiver or reduction would be uniformly applied to all
Fund shares in the particular category. In waiving or reducing a CDSC, the
Funds will comply with the requirements of Rule 22d-1 of the Investment Company
Act of 1940, as amended.
GENERAL MATTERS
The Funds may encourage registered representatives and their firms to help
apportion their assets among bonds, stocks and cash, and may seek to
participate in programs that recommend a portion of their assets be invested in
tax-free, fixed income securities.
In addition to the types of compensation to dealers to promote sales of fund
shares that are described in the prospectus, Nuveen may from time to time make
additional reallowances only to certain authorized dealers who sell or are
expected to sell certain minimum amounts of shares of the Nuveen mutual funds
during specified time periods.
To help advisers and investors better understand and most efficiently use the
Fund to reach their investment goals, the Funds may advertise and create
specific investment programs and systems. For example, this may include
information on how to use the Funds to accumulate assets for future education
needs or periodic payments such as insurance premiums. The Funds may produce
software or additional sales literature to promote the advantages of using the
Funds to meet these and other specific investor needs.
Exchanges of shares of a Fund for shares of a Nuveen money market fund may be
made on days when both funds calculate a net asset value and make shares
available for public purchase. Shares of the Nuveen money market funds may be
purchased on days on which the Federal Reserve Bank of Boston is normally open
for business. In addition to the holidays observed by the Fund, the Nuveen
money market funds observe and will not make fund shares available for purchase
on the following holidays: Martin Luther King's Birthday, Columbus Day and
Veterans Day.
In addition, you may exchange Class R Shares of any Fund for Class A Shares
of the same Fund without a sales charge if the current net asset value of those
Class R Shares is at least $3,000 or you already own Class A Shares of that
Fund.
Each Fund may suspend the right of redemption, or delay payment to redeeming
shareholders for more than seven days, when the New York Stock Exchange is
closed (not including customary weekend and holiday closings); when trading in
the markets a Fund normally uses is restricted, or the SEC determines that an
emergency exists so that trading of a Fund's portfolio securities or
determination of a Fund's net assets value is not reasonably practical; or the
SEC by order permits the suspension of the right of redemption or the delay in
payment to redeeming shareholders for more than seven days.
Shares will be registered in the name of the investor or the investor's
financial adviser. A change in registration or transfer of shares held in the
name of a financial adviser may only be made by an order in good form from the
financial adviser acting on the investor's behalf. Share certificates will only
be issued upon written request to the Funds' transfer agent. No share
certificates will be issued for fractional shares.
For more information on the procedure for purchasing shares of a Fund and on
the special purchase programs available thereunder, see "How to Buy Fund
Shares" in the Prospectus.
Nuveen serves as the principal underwriter of the shares of the Funds
pursuant to a "best efforts" arrangement as provided by a distribution
agreement with the Nuveen Flagship Municipal Trust, dated February 1, 1997
("Distribution Agreement"). Pursuant to the Distribution Agreement, the Trust
appointed Nuveen to be its agent for the distribution of the Funds' shares on a
continuous offering basis. Nuveen sells shares to or through brokers, dealers,
banks or other
S-33
<PAGE>
qualified financial intermediaries (collectively referred to as "Dealers"), or
others, in a manner consistent with the then effective registration statement
of the Trust. Pursuant to the Distribution Agreement, Nuveen, at its own
expense, finances certain activities incident to the sale and distribution of
the Funds' shares, including printing and distributing of prospectuses and
statements of additional information to other than existing shareholders, the
printing and distributing of sales literature, advertising and payment of
compensation and giving of concessions to Dealers. Nuveen receives for its
services the excess, if any, of the sales price of the Funds' shares less the
net asset value of those shares, and reallows a majority or all of such amounts
to the Dealers who sold the shares; Nuveen may act as such a Dealer. Nuveen
also receives compensation pursuant to a distribution plan adopted by the Trust
pursuant to Rule 12b-1 and described herein under "Distribution and Service
Plan." Nuveen receives any CDSCs imposed on redemptions of Shares.
The aggregate amounts of underwriting commissions with respect to the sale of
Fund shares and the amount thereof retained by Nuveen (or by Flagship
Financial, Inc., which Nuveen acquired on January 1, 1997), were as follows
(all figures are to the nearest thousand):
<TABLE>
<CAPTION>
YEAR ENDED YEAR ENDED YEAR ENDED
APRIL 30, 1997* FEBRUARY 29, 1996 FEBRUARY 28, 1995
------------------------ ------------------------ ------------------------
AMOUNT OF AMOUNT AMOUNT OF AMOUNT AMOUNT OF AMOUNT
UNDERWRITING RETAINED BY UNDERWRITING RETAINED BY UNDERWRITING RETAINED BY
FUND COMMISSIONS NUVEEN COMMISSIONS NUVEEN COMMISSIONS NUVEEN
- ---- ------------ ----------- ------------ ----------- ------------ -----------
<S> <C> <C> <C> <C> <C> <C>
Nuveen Municipal Bond
Fund................... 967 170 1,575 316 2,248 467
Nuveen Insured Municipal
Bond Fund.............. 687 56 880 97 1,554 296
<CAPTION>
YEAR ENDED YEAR ENDED YEAR ENDED
APRIL 30, 1997** MAY 31, 1996 MAY 31, 1995
------------------------ ------------------------ ------------------------
AMOUNT OF AMOUNT AMOUNT OF AMOUNT AMOUNT OF AMOUNT
UNDERWRITING RETAINED BY UNDERWRITING RETAINED BY UNDERWRITING RETAINED BY
FUND COMMISSIONS FLAGSHIP COMMISSIONS FLAGSHIP COMMISSIONS FLAGSHIP
- ---- ------------ ----------- ------------ ----------- ------------ -----------
<S> <C> <C> <C> <C> <C> <C>
Nuveen Flagship All-
American Municipal Bond
Fund................... 456 61 557 74 763 104
Nuveen Flagship
Intermediate Municipal
Bond Fund.............. 73 16 137 28 171 34
Nuveen Flagship Limited
Term Municipal Bond
Fund................... 332 66 543 108 797 160
</TABLE>
- --------
*For the fourteen-month period ended April 30, 1997.
**For the eleven-month period ended April 30, 1997.
DISTRIBUTION AND SERVICE PLAN
The Funds have adopted a plan (the "Plan") pursuant to Rule 12b-1 under the
Investment Company Act of 1940, which provides that Class B Shares and Class C
Shares will be subject to an annual distribution fee, and that Class A Shares,
Class B Shares and Class C Shares will be subject to an annual service fee.
Class R Shares will not be subject to either distribution or service fees.
The distribution fee applicable to Class B and Class C Shares under each
Fund's Plan will be payable to reimburse Nuveen for services and expenses
incurred in connection with the distribution of Class B and Class C Shares,
respectively. These expenses include payments to Authorized Dealers, including
Nuveen, who are brokers of record with respect to the Class B and Class C
Shares, as well as, without limitation, expenses of printing and distributing
prospectuses to persons other than shareholders of the Fund, expenses of
preparing, printing and distributing advertising and sales literature and
reports to shareholders used in connection with the sale of Class B and Class C
Shares, certain other expenses associated with the distribution of Class B and
Class C Shares, and any distribution-related expenses that may be authorized
from time to time by the Board of Trustees.
The service fee applicable to Class A Shares, Class B Shares and Class C
Shares under each Fund's Plan will be payable to Authorized Dealers in
connection with the provision of ongoing account services to shareholders.
These services may include establishing and maintaining shareholder accounts,
answering shareholder inquiries and providing other personal services to
shareholders.
Each Fund may spend up to .20 of 1% per year of the average daily net assets
of Class A Shares as a service fee under the Plan applicable to Class A Shares.
Each Fund may spend up to .75 of 1% per year of the average daily net assets of
Class B Shares as a distribution fee and up to .20 of 1% per year of the
average daily net assets of Class B Shares as a service fee under the Plan
applicable to Class B Shares. Each Fund may spend up to .55 of 1% per year of
the average daily net assets of Class C Shares as a distribution fee and up to
.20 of 1% per year of the average daily net assets of Class C Shares as a
service fee under the Plan applicable to Class C Shares.
For the fiscal years ended April 30, 1997, 100% of service fees and
distribution fees were paid out as compensation to authorized dealers. Prior to
February 1, 1997, the service fee for the Nuveen Municipal Bond Fund and the
Nuveen Insured Municipal Bond Fund was .25% for both Class A and C Shares and
the distribution fee was .75% for Class C
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<PAGE>
Shares. For the Nuveen Flagship All-American Municipal Bond Fund, the Nuveen
Flagship Intermediate Municipal Bond Fund and the Nuveen Flagship Limited Term
Municipal Bond Fund, the service fee was .20% for all Class C Shares and the
distribution fee was .40% for Class A Shares and .75% for Class C Shares (.50%
for the Limited Term Fund). Thereafter, the service fee for Class A, Class B,
and Class C Shares was .20% and the distribution fee was .75% for Class B
Shares and .55% for Class C Shares (.35% for the Limited Term Fund).
<TABLE>
<CAPTION>
COMPENSATION PAID TO
AUTHORIZED DEALERS FOR
END OF FISCAL 1997
----------------------
<S> <C>
Nuveen Municipal Bond
Fund*
Class A................. $156,403
Class B................. $390
Class C................. $38,967
Nuveen Insured Municipal
Bond Fund*
Class A................. $163,030
Class B................. $735
Class C................. $58,367
Nuveen Flagship All-
American Municipal Bond
Fund**
Class A................. $683,251
Class B................. $660
Class C................. $421,541
Nuveen Flagship
Intermediate Municipal
Bond Fund**
Class A................. $145,606
Class C................. $16,039
Nuveen Flagship Limited
Term Municipal Bond
Fund**
Class A................. $1,482,478
Class C................. $120,039
</TABLE>
- --------
*For the fourteen month period ended April 30, 1997.
**For the eleven month period ended April 30, 1997.
Under each Fund's Plan, the Fund will report quarterly to the Board of
Trustees for its review all amounts expended per class of shares under the
Plan. The Plan may be terminated at any time with respect to any class of
shares, without the payment of any penalty, by a vote of a majority of the
trustees who are not "interested persons" and who have no direct or indirect
financial interest in the Plan or by vote of a majority of the outstanding
voting securities of such class. The Plan may be renewed from year to year if
approved by a vote of the Board of Trustees and a vote of the non-interested
trustees who have no direct or indirect financial interest in the Plan cast in
person at a meeting called for the purpose of voting on the Plan. The Plan may
be continued only if the trustees who vote to approve such continuance
conclude, in the exercise of reasonable business judgment and in light of their
fiduciary duties under applicable law, that there is a reasonable likelihood
that the Plan will benefit the Fund and its shareholders. The Plan may not be
amended to increase materially the cost which a class of shares may bear under
the Plan without the approval of the shareholders of the affected class, and
any other material amendments of the Plan must be approved by the non-
interested trustees by a vote cast in person at a meeting called for the
purpose of considering such amendments. During the continuance of the Plan, the
selection and nomination of the non-interested trustees of the Trust will be
committed to the discretion of the non-interested trustees then in office.
INDEPENDENT PUBLIC ACCOUNTANTS AND CUSTODIAN
Arthur Andersen LLP, independent public accountants, 33 West Monroe Street,
Chicago Illinois 60603 has been selected as auditors for the Nuveen Municipal
Bond Fund and the Nuveen Insured Municipal Bond Fund. Deloitte & Touche LLP,
independent auditors, 1700 Courthouse Plaza N.E., Dayton, Ohio 45402 has been
selected for the Nuveen Flagship All-American Municipal Bond Fund, the Nuveen
Flagship Intermediate Municipal Bond Fund, and the Nuveen Flagship Limited Term
Municipal Bond Fund. In addition to audit services, the auditors will provide
consultation and assistance on accounting, internal control, tax and related
matters. The financial statements incorporated by reference elsewhere in this
Statement of Additional Information and the information for prior periods set
forth under "Financial Highlights" in the Prospectus have been audited by the
respective auditors as indicated in their report with respect thereto, and are
included in reliance upon the authority of that firm in giving that report.
The custodian of the assets of the Funds is The Chase Manhattan Bank, 4 New
York Plaza, New York, New York 10004. The custodian performs custodial, fund
accounting and portfolio accounting services.
FINANCIAL STATEMENTS
The audited financial statements for each Fund's most recent fiscal year
appear in the Funds' Annual Reports. The Annual Reports accompany this
Statement of Additional Information.
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<PAGE>
APPENDIX A
RATINGS OF INVESTMENTS
The four highest ratings of Moody's for Municipal Obligations are Aaa, Aa, A
and Baa. Municipal Obligations rated Aaa are judged to be of the "best
quality." The rating of Aa is assigned to Municipal Obligations which are of
"high quality by all standards," but as to which margins of protection or other
elements make long-term risks appear somewhat greater than in Aaa rated
Municipal Obligations. The Aaa and Aa rated Municipal Obligations comprise what
are generally known as "high grade bonds." Municipal Obligations that are rated
A by Moody's possess many favorable investment attributes and are considered
upper medium grade obligations. Factors giving security to principal and
interest of A rated Municipal Obligations are considered adequate, but elements
may be present, which suggest a susceptibility to impairment sometime in the
future. Municipal Obligations rated Baa by Moody's are considered medium grade
obligations (i.e., they are neither highly protected nor poorly secured). Such
bonds lack outstanding investment characteristics and in fact have speculative
characteristics as well. Moody's bond rating symbols may contain numerical
modifiers of a generic rating classification. The modifier 1 indicates that the
bond ranks at the high end of its category; the modifier 2 indicates a mid-
range ranking; and the modifier 3 indicates that the issue ranks in the lower
end of its general rating category.
The four highest ratings of S&P for Municipal Obligations are AAA, AA, A and
BBB. Municipal Obligations rated AAA have a strong capacity to pay principal
and interest. The rating of AA indicates that capacity to pay principal and
interest is very strong and such bonds differ from AAA issues only in small
degree. The category of A describes bonds which have a strong capacity to pay
principal and interest, although such bonds are somewhat more susceptible to
the adverse effects of changes in circumstances and economic conditions. The
BBB rating is the lowest "investment grade" security rating by S&P. Municipal
Obligations rated BBB are regarded as having an adequate capacity to pay
principal and interest. Whereas such bonds normally exhibit adequate protection
parameters, adverse economic conditions are more likely to lead to a weakened
capacity to pay principal and interest for bonds in this category than for
bonds in the A category.
The four highest ratings of Fitch for Municipal Obligations are AAA, AA, A
and BBB. Municipal Obligations rated AAA are considered to be investment grade
and of the highest credit quality. The obligor has an exceptionally strong
ability to pay interest and repay principal, which is unlikely to be affected
by reasonably foreseeable events. Municipal Obligations rated AA are considered
to be investment grade and of very high quality. The obligor's ability to pay
interest and repay principal is very strong, although not quite as strong as
bonds rated "AAA." Because Municipal Obligations rated in the "AAA" and "AA"
categories are not significantly vulnerable to foreseeable future developments,
short-term debt of these issuers is generally rated "F-1+." Municipal
Obligations rated A are considered to be investment grade and of high credit
quality. The obligor's ability to pay interest and repay principal is
considered to be strong, but may be more vulnerable to adverse changes in
economic conditions and circumstances than bonds with higher ratings. Municipal
Obligations rated BBB are considered to be investment grade and of satisfactory
credit quality. The obligor's ability to pay interest and repay principal is
considered to be adequate. Adverse changes in economic conditions and
circumstances, however, are more likely to have adverse impact on these bonds,
and therefore impair timely payment. The likelihood that the ratings of these
bonds will fall below investment grade is higher than for bonds with higher
ratings.
The "Other Corporate Obligations" category of temporary investments are
corporate (as opposed to municipal) debt obligations rated AAA by S&P or Aaa by
Moody's. Corporate debt obligations rated AAA by S&P have an extremely strong
capacity to pay principal and interest. The Moody's corporate debt rating of
Aaa is comparable to that set forth above for Municipal Obligations.
Subsequent to its purchase by a Fund, an issue may cease to be rated or its
rating may be reduced below the minimum required for purchase by such Fund.
Neither event requires the elimination of such obligation from a Fund's
portfolio, but Nuveen Advisory will consider such an event in its determination
of whether the Fund should continue to hold such obligation.
A-1
<PAGE>
APPENDIX B
DESCRIPTION OF HEDGING TECHNIQUES
Set forth below is additional information regarding the various Funds'
defensive hedging techniques and use of repurchase agreements.
FUTURES AND INDEX TRANSACTIONS
Financial Futures. A financial future is an agreement between two parties to
buy and sell a security for a set price on a future date. They have been
designed by boards of trade which have been designated "contracts markets" by
the Commodity Futures Trading Commission ("CFTC").
The purchase of financial futures is for the purpose of hedging a Fund's
existing or anticipated holdings of long-term debt securities. When a Fund
purchases a financial future, it deposits in cash or securities an "initial
margin" of between 1% and 5% of the contract amount. Thereafter, the Fund's
account is either credited or debited on a daily basis in correlation with the
fluctuation in price of the underlying future or other requirements imposed by
the exchange in order to maintain an orderly market. The Fund must make
additional payments to cover debits to its account and has the right to
withdraw credits in excess of the liquidity, the Fund may close out its
position at any time prior to expiration of the financial future by taking an
opposite position. At closing a final determination of debits and credits is
made, additional cash is paid by or to the Fund to settle the final
determination and the Fund realizes a loss or gain depending on whether on a
net basis it made or received such payments.
The sale of financial futures is for the purpose of hedging a Fund's existing
or anticipated holdings of long-term debt securities. For example, if a Fund
owns long-term bonds and interest rates were expected to increase, it might
sell financial futures. If interest rates did increase, the value of long-term
bonds in the Fund's portfolio would decline, but the value of the Fund's
financial futures would be expected to increase at approximately the same rate
thereby keeping the net asset value of the Fund from declining as much as it
otherwise would have.
Among the risks associated with the use of financial futures by the Funds as
a hedging device, perhaps the most significant is the imperfect correlation
between movements in the price of the financial futures and movements in the
price of the debt securities which are the subject of the hedge.
Thus, if the price of the financial future moves less or more than the price
of the securities which are the subject of the hedge, the hedge will not be
fully effective. To compensate for this imperfect correlation, the Fund may
enter into financial futures in a greater dollar amount than the dollar amount
of the securities being hedged if the historical volatility of the prices of
such securities has been greater than the historical volatility of the
financial futures. Conversely, the Fund may enter into fewer financial futures
if the historical volatility of the price of the securities being hedged is
less than the historical volatility of the financial futures.
The market prices of financial futures may also be affected by factors other
than interest rates. One of these factors is the possibility that rapid changes
in the volume of closing transactions, whether due to volatile markets or
movements by speculators, would temporarily distort the normal relationship
between the markets in the financial future and the chosen debt securities. In
these circumstances as well as in periods of rapid and large price movements.
The Fund might find it difficult or impossible to close out a particular
transaction.
Options on Financial Futures. The Funds may also purchase put or call options
on financial futures which are traded on a U.S. Exchange or board of trade and
enter into closing transactions with respect to such options to terminate an
existing position. Currently, options can be purchased with respect to
financial futures on U.S. Treasury Bonds on The Chicago Board of Trade. The
purchase of put options on financial futures is analogous to the purchase of
put options by a Fund on its portfolio securities to hedge against the risk of
rising interest rates. As with options on debt securities, the holder of an
option may terminate his position by selling an option of the same Fund. There
is no guarantee that such closing transactions can be effected.
INDEX CONTRACTS
Index Futures. A tax-exempt bond index which assigns relative values to the
tax-exempt bonds included in the index is traded on the Chicago Board of Trade.
The index fluctuates with changes in the market values of all tax-exempt bonds
included rather than a single bond. An index future is a bilateral agreement
pursuant to which two parties agree to take or make delivery of an amount of
cash--rather than any security--equal to specified dollar amount times the
difference between the index value at the close of the last trading day of the
contract and the price at which the index future was originally written. Thus,
an index future is similar to traditional financial futures except that
settlement is made in cash.
B-1
<PAGE>
Index Options. The Funds may also purchase put or call options on U.S.
Government or tax-exempt bond index futures and enter into closing transactions
with respect to such options to terminate an existing position. Options on
index futures are similar to options on debt instruments except that an option
on an index future gives the purchaser the right, in return for the premium
paid, to assume a position in an index contract rather than an underlying
security at a specified exercise price at any time during the period of the
option. Upon exercise of the option, the delivery of the futures position by
the writer of the option to the holder of the option will be accompanied by
delivery of the accumulated balance of the writer's futures margin account
which represents the amount by which the market price of the index futures
contract, at exercise, is less than the exercise price of the option on the
index future.
Bond index futures and options transactions would be subject to risks similar
to transactions in financial futures and options thereon as described above. No
series will enter into transactions in index or financial futures or related
options unless and until, in the Adviser's opinion, the market for such
instruments has developed sufficiently.
REPURCHASE AGREEMENTS
A Fund may invest temporarily up to 5% of its assets in repurchase
agreements, which are agreements pursuant to which securities are acquired by
the Fund from a third party with the understanding that they will be
repurchased by the seller at a fixed price on an agreed date. These agreements
may be made with respect to any of the portfolio securities in which the Fund
is authorized to invest. Repurchase agreements may be characterized as loans
secured by the underlying securities. The Fund may enter into repurchase
agreements with (i) member banks of the Federal Reserve System having total
assets in excess of $500 million and (ii) securities dealers, provided that
such banks or dealers meet the creditworthiness standards established by the
Fund's Board of Trustees ("Qualified Institutions"). The Adviser will monitor
the continued creditworthiness of Qualified Institutions, subject to the
oversight of the Fund's board of trustees.
The use of repurchase agreements involves certain risks. For example, if the
seller of securities under a repurchase agreement defaults on its obligation to
repurchase the underlying securities, as a result of its bankruptcy or
otherwise, the Fund will seek to dispose of such securities, which action could
involve costs or delays. If the seller becomes insolvent and subject to
liquidation or reorganization under applicable bankruptcy or other laws, the
Fund's ability to dispose of the underlying securities may be restricted.
Finally, it is possible that the Fund may not be able to substantiate its
interest in the underlying securities. To minimize this risk, the securities
underlying the repurchase agreement will be held by the custodian at all times
in an amount at least equal to the repurchase price, including accrued
interest. If the seller fails to repurchase the securities, the Fund may suffer
a loss to the extent proceeds from the sale of the underlying securities are
less than the repurchase price.
The resale price reflects the purchase price plus an agreed upon market rate
of interest which is unrelated to the coupon rate or date of maturity of the
purchased security. The collateral is marked to market daily. Such agreements
permit the Fund to keep all its assets earning interest while retaining
"overnight" flexibility in pursuit of investments of a longer-term nature.
B-2
<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
<PAGE>
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
<PAGE>
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
<PAGE>
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
<PAGE>
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
<PAGE>
Insured Municipal Bond Fund
Overview
Credit Quality
[PIE CHART APPEARS HERE]
AAA 98.7%
BBB 0.6%
AA 0.7%
- ------------------------------------------------------------------------------
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
<PAGE>
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
<PAGE>
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
<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
$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
<PAGE>
PART C--OTHER INFORMATION
ITEM 24: FINANCIAL STATEMENTS AND EXHIBITS.
(a) Financial statements:
Included in the Prospectus:
Financial Highlights
Included in the Statement of Additional Information through incorporation
by reference to each Fund's most recent Annual and Semi-Annual Reports:
<TABLE>
<C> <S> <C>
Portfolio of Investments
Statement of Net Assets
Statement of Operations
Statement of Changes in Net Assets
Report of Independent Public Accountants
(b) Exhibits:
1(a). Declaration of Trust of Registrant. Filed as Exhibit 1(a) to
Registrant's Registration Statement on Form N-1A (File No.
333-14725) and incorporated herein by reference thereto.
1(b). Amended and Restated Establishment and Designation of Series
of Shares of Beneficial Interest dated October 11, 1996. Filed
as Exhibit 1(b) to Registrant's Registration Statement on Form
N-1A (File No. 333-14725) and incorporated herein by reference
thereto.
1(c). Certificate for the Establishment and Designation of Classes
dated July 10, 1996. Filed as Exhibit 1(c) to Registrant's
Registration Statement on Form N-1A (File No. 333-14725) and
incorporated herein by reference thereto.
1(d). Incumbency Certificate.
2. By-Laws of Registrant. Filed as Exhibit 2 to Registrant's Reg-
istration Statement on Form N-1A (File No. 333-14725) and in-
corporated herein by reference thereto.
3. Not applicable.
4. Specimen certificates of Shares of each Fund. Filed as Exhibit
4 to Registrant's Registration Statement on Form N-1A (File
No. 333-14725) and incorporated herein by reference thereto.
5. Investment Management Agreement between Registrant and Nuveen
Advisory Corp.
5(a). Renewal of Investment Management Agreement dated May 20, 1997.
6. Distribution Agreement between Registrant and John Nuveen &
Co. Incorporated.
7. Not applicable.
8. Custodian Agreement between Registrant and Chase Manhattan
Bank.
9(a). Transfer Agency and Service Agreement between Registrant and
State Street Bank and Trust Company.
9(b). Transfer Agency Agreement between Registrant and Shareholder
Services, Inc.
10. Opinion of Fried, Frank, Harris, Shriver & Jacobson.
11(a). Consent of Arthur Andersen LLP, Independent Public Accoun-
tants.
11(b). Consent of Deloitte & Touche, Independent Public Accountants.
12. Not applicable.
13. Not applicable.
14. Not applicable.
15. Plan of Distribution and Service Pursuant to Rule 12b-1 for
the Class A Shares, Class B Shares and Class C Shares of each
Fund. Filed as Exhibit 15 to Registrant's Registration State-
ment on Form N-1A (File No. 333-14725) and incorporated herein
by reference thereto.
16. Schedule of Computation of Performance Figures.
17. Financial Data Schedule.
18. Multi-Class Plan Adopted Pursuant to Rule 18f-3. Filed as Ex-
hibit 18 to Registrant's Registration Statement on Form N-1A
(File No. 333-14725) and incorporated herein by reference
thereto.
99(a). Original Powers of Attorney for the Trustees authorizing,
among others, Gifford R. Zimmerman and Larry W. Martin to exe-
cute the Registration Statement.
99(b). Certified copy of Resolution of Board of Trustees authorizing
the signing of the names of trustees and officers on the Reg-
istrant's Registration Statement pursuant to power of attor-
ney.
99(c). Code of Ethics and Reporting Requirements.
</TABLE>
C-1
<PAGE>
ITEM 25: PERSONS CONTROLLED BY OR UNDER COMMON CONTROL WITH REGISTRANT
Not applicable.
ITEM 26: NUMBER OF HOLDERS OF SECURITIES
At August 13, 1997:
<TABLE>
<CAPTION>
NUMBER OF
TITLE OF SERIES RECORD HOLDERS
--------------- --------------
Nuveen Municipal Bond Fund
<S> <C>
Class A Shares............................................ 6,064
Class B Shares............................................ 44
Class C Shares............................................ 253
Class R Shares............................................ 82,736
Nuveen Insured Municipal Bond Fund
Class A Shares............................................ 4,181
Class B Shares............................................ 22
Class C Shares............................................ 233
Class R Shares............................................ 22,650
Nuveen Flagship All-American Municipal Bond Fund
Class A Shares............................................ 4,280
Class B Shares............................................ 38
Class C Shares............................................ 952
Class R Shares............................................ 26
Nuveen Flagship Intermediate Municipal Bond Fund
Class A Shares............................................ 1,181
Class C Shares............................................ 46
Class R Shares............................................ 14
Nuveen Flagship Limited Term Municipal Bond Fund
Class A Shares............................................ 11,618
Class C Shares............................................ 259
Class R Shares............................................ 13
</TABLE>
ITEM 27: INDEMNIFICATION
Section 4 of Article XII of Registrant's Amended and Restated Declaration of
Trust provides as follows:
Subject to the exceptions and limitations contained in this Section 4, every
person who is, or has been, a Trustee, officer, employee or agent of the Trust,
including persons who serve at the request of the Trust as directors, trustees,
officers, employees or agents of another organization in which the Trust has an
interest as a shareholder, creditor or otherwise (hereinafter referred to as a
"Covered Person"), shall be indemnified by the Trust to the fullest extent
permitted by law against liability and against all expenses reasonably incurred
or paid by him in connection with any claim, action, suit or proceeding in
which he becomes involved as a party or otherwise by virtue of his being or
having been such a Trustee, director, officer, employee or agent and against
amounts paid or incurred by him in settlement thereof.
No indemnification shall be provided hereunder to a Covered Person:
(a) against any liability to the Trust or its Shareholders by reason of a
final adjudication by the court or other body before which the proceeding
was brought that he engaged in willful misfeasance, bad faith, gross
negligence or reckless disregard of the duties involved in the conduct of
his office;
(b) with respect to any matter as to which he shall have been finally
adjudicated not to have acted in good faith in the reasonable belief that
his action was in the best interests of the Trust; or
(c) in the event of a settlement or other disposition not involving a final
adjudication (as provided in paragraph (a) or (b)) and resulting in a
payment by a Covered Person, unless there has been either a determination
that such Covered Person did not engage in willful misfeasance, bad faith,
gross negligence or reckless disregard of the duties involved in the
conduct of his office by the court or other body approving the settlement
or other disposition or a reasonable determination, based on a review of
readily available facts (as opposed to a full trial-type inquiry), that he
did not engage in such conduct:
(i) by a vote of a majority of the Disinterested Trustees acting on the
matter (provided that a majority of the Disinterested Trustees then in
office act on the matter); or
C-2
<PAGE>
(ii) by written opinion of independent legal counsel.
The rights of indemnification herein provided may be insured against by
policies maintained by the Trust, shall be severable, shall not affect any
other rights to which any Covered Person may now or hereafter be entitled,
shall continue as to a person who has ceased to be such a Covered Person and
shall inure to the benefit of the heirs, executors and administrators of such a
person. Nothing contained herein shall affect any rights to indemnification to
which Trust personnel other than Covered Persons may be entitled by contract or
otherwise under law.
Expenses of preparation and presentation of a defense to any claim, action,
suit or proceeding subject to a claim for indemnification under this Section 4
shall be advanced by the Trust prior to final disposition thereof upon receipt
of an undertaking by or on behalf of the recipient to repay such amount if it
is ultimately determined that he is not entitled to indemnification under this
Section 4, provided that either:
(a) such undertaking is secured by a surety bond or some other appropriate
security or the Trust shall be insured against losses arising out of any
such advances; or
(b) a majority of the Disinterested Trustees acting on the matter (provided
that a majority of the Disinterested Trustees then in office act on the
matter) or independent legal counsel in a written opinion shall determine,
based upon a review of the readily available facts (as opposed to a full
trial-type inquiry), that there is reason to believe that the recipient
ultimately will be found entitled to indemnification.
As used in this Section 4, a "Disinterested Trustee" is one (x) who is not an
Interested Person of the Trust (including, as such Disinterested Trustee,
anyone who has been exempted from being an Interested Person by any rule,
regulation or order of the Commission), and (y) against whom none of such
actions, suits or other proceedings or another action, suit or other proceeding
on the same or similar grounds is then or has been pending.
As used in this Section 4, the words "claim," "action," "suit" or "proceeding"
shall apply to all claims, actions, suits, proceedings (civil, criminal,
administrative or other, including appeals), actual or threatened; and the word
"liability" and "expenses" shall include without limitation, attorneys' fees,
costs, judgments, amounts paid in settlement, fines, penalties and other
liabilities.
----------------
The trustees and officers of the Registrant are covered by an Investment Trust
Errors and Omission policy in the aggregate amount of $20,000,000 (with a
maximum deductible of $500,000) against liability and expenses of claims of
wrongful acts arising out of their position with the Registrant, except for
matters which involved willful acts, bad faith, gross negligence and willful
disregard of duty (i.e., where the insured did not act in good faith for a
purpose he or she reasonably believed to be in the best interest of Registrant
or where he or she shall have had reasonable cause to believe this conduct was
unlawful).
Insofar as indemnification for liabilities arising under the Securities Act of
1933 may be permitted to the officers, trustees or controlling persons of the
Registrant pursuant to the Declaration of Trust of the Registrant or otherwise,
the Registrant has been advised that in the opinion of the Securities and
Exchange Commission such indemnification is against public policy as expressed
in the Act and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
Registrant of expenses incurred or paid by an officer or trustee or controlling
person of the Registrant in the successful defense of any action, suit or
proceeding) is asserted by such officer, trustee or controlling person in
connection with the securities being registered, the Registrant will, unless in
the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question of
whether such indemnification by it is against public policy as expressed in the
Act and will be governed by the final adjudication of such issue.
ITEM 28: BUSINESS AND OTHER CONNECTIONS OF INVESTMENT ADVISER
Nuveen Advisory Corp. serves as investment adviser to the following open-end
management type investment companies: Nuveen Flagship Multistate Trust I,
Nuveen Flagship Multistate Trust II, Nuveen Flagship Multistate Trust III,
Nuveen Flagship Multistate Trust IV, Nuveen Flagship Municipal Trust, Flagship
Admiral Funds Inc., Nuveen California Tax-Free Fund, Inc., Nuveen Tax-Free
Money Market Fund, Inc., Nuveen Tax-Exempt Money Market Fund, Inc., and Nuveen
Tax-Free Reserves, Inc. It also serves as investment adviser to the following
closed-end management type investment companies: Nuveen Municipal Value Fund,
Inc., Nuveen California Municipal Value Fund, Inc., Nuveen New York Municipal
Value Fund, Inc., Nuveen Municipal Income Fund, Inc., Nuveen Premium Income
Municipal Fund, Inc., Nuveen Performance Plus Municipal Fund, Inc., Nuveen
California Performance Plus Municipal Fund, Inc.,
C-3
<PAGE>
Nuveen New York Performance Plus Municipal Fund, Inc., Nuveen Municipal
Advantage Fund, Inc., Nuveen Municipal Market Opportunity Fund, Inc., Nuveen
California Municipal Market Opportunity Fund, Inc., Nuveen Investment Quality
Municipal Fund, Inc., Nuveen California Investment Quality Municipal Fund,
Inc., Nuveen New York Investment Quality Municipal Fund, Inc., Nuveen Insured
Quality Municipal Fund, Inc., Nuveen Florida Investment Quality Municipal Fund,
Nuveen New Jersey Investment Quality Municipal Fund, Inc., Nuveen Pennsylvania
Investment Quality Municipal Fund, Nuveen Select Quality Municipal Fund, Inc.,
Nuveen California Select Quality Municipal Fund, Inc., Nuveen New York Select
Quality Municipal Fund, Inc., Nuveen Quality Income Municipal Fund, Inc.,
Nuveen Insured Municipal Opportunity Fund, Inc., Nuveen Florida Quality Income
Municipal Fund, Nuveen Michigan Quality Income Municipal Fund, Inc., Nuveen
Ohio Quality Income Municipal Fund, Inc., Nuveen Texas Quality Income Municipal
Fund, Nuveen California Quality Income Municipal Fund, Inc., Nuveen New York
Quality Income Municipal Fund, Inc., Nuveen Premier Municipal Income Fund,
Inc., Nuveen Premier Insured Municipal Income Fund, Inc. Nuveen Premium Income
Municipal Fund 2, Inc., Nuveen Insured California Premium Income Municipal
Fund, Inc., Nuveen Insured New York Premium Income Municipal Fund, Inc., Nuveen
Select Maturities Municipal Fund, Nuveen Arizona Premium Income Municipal Fund,
Inc., Nuveen Insured Florida Premium Income Municipal Fund, Nuveen Michigan
Premium Income Municipal Fund, Inc., Nuveen New Jersey Premium Income Municipal
Fund, Inc., Nuveen Premium Income Municipal Fund 4, Inc., Nuveen Insured
California Premium Income Municipal Fund 2, Inc., Nuveen Pennsylvania Premium
Income Municipal Fund 2, Nuveen Maryland Premium Income Municipal Fund, Nuveen
Massachusetts Premium Income Municipal Fund, Nuveen Virginia Premium Income
Municipal Fund, Nuveen Washington Premium Income Municipal Fund, Nuveen
Connecticut Premium Income Municipal Fund, Nuveen Georgia Premium Income
Municipal Fund, Nuveen Missouri Premium Income Municipal Fund, Nuveen North
Carolina Premium Income Municipal Fund, Nuveen California Premium Income
Municipal Fund, and Nuveen Insured Premium Income Municipal Fund 2. Nuveen
Advisory Corp. has no other clients or business at the present time. The
principal business address for all of these investment companies is 333 West
Wacker Drive, Chicago, Illinois 60606.
For a description of other business, profession, vocation or employment of a
substantial nature in which any director or officer, other than Timothy R.
Schwertfeger and Anthony T. Dean, of the investment adviser has engaged during
the last two years for his account or in the capacity of director, officer,
employee, partner or trustee, see the descriptions under "Management" in the
Statement of Additional Information.
Timothy R. Schwertfeger is Chairman and Director of Nuveen Advisory Corp., the
investment adviser. Mr. Schwertfeger has, during the last two years, been
Chairman and formerly Executive Vice President and Director of the John Nuveen
Company, John Nuveen & Co. Incorporated, and Nuveen Institutional Advisory
Corp. Anthony T. Dean is President and Director of Nuveen Advisory Corp., the
investment adviser. Mr. Dean has, during the last two years, been Executive
Vice President and Director of The John Nuveen Company and John Nuveen & Co.
Incorporated; and Director of Nuveen Institutional Advisory Corp.
ITEM 29: PRINCIPAL UNDERWRITERS
(a) John Nuveen & Co., Incorporated ("Nuveen") acts as principal underwriter to
the following open-end management type investment companies: Nuveen Flagship
Multistate Trust I, Nuveen Flagship Multistate Trust II, Nuveen Flagship
Multistate Trust III, Nuveen Flagship Multistate Trust IV, Nuveen Flagship
Municipal Trust, Nuveen California Tax-Free Fund, Inc., Nuveen Tax-Free Money
Market Fund, Inc., Nuveen Tax-Exempt Money Market Fund, Inc., Nuveen Tax-Free
Reserves, Inc., Flagship Admiral Funds Inc., and Nuveen Investment Trust.
Nuveen also acts as depositor and principal underwriter of the Nuveen Tax-Free
Unit Trust and the Nuveen Unit Trust, registered unit investment trusts. Nuveen
has also served or is serving as co-managing underwriter to the following
closed-end management type investment companies: Nuveen Municipal Value Fund,
Inc., Nuveen California Municipal Value Fund, Inc., Nuveen New York Municipal
Value Fund, Inc., Nuveen Municipal Income Fund, Inc., Nuveen Premium Income
Municipal Fund, Inc., Nuveen Performance Plus Municipal Fund, Inc., Nuveen
California Performance Plus Municipal Fund, Inc., Nuveen New York Performance
Plus Municipal Fund, Inc., Nuveen Municipal Advantage Fund, Inc., Nuveen
Municipal Market Opportunity Fund, Inc., Nuveen California Municipal Market
Opportunity Fund, Inc., Nuveen Investment Quality Municipal Fund, Inc., Nuveen
California Investment Quality Municipal Fund, Inc., Nuveen New York Investment
Quality Municipal Fund, Inc., Nuveen Insured Quality Municipal Fund, Inc.,
Nuveen Florida Investment Quality Municipal Fund, Nuveen New Jersey Investment
Quality Municipal Fund, Inc., Nuveen Pennsylvania Investment Quality Municipal
Fund, Nuveen Select Quality Municipal Fund, Inc., Nuveen California Select
Quality Municipal Fund, Inc., Nuveen New York Select Quality Municipal Fund,
Inc., Nuveen Quality Income Municipal Fund, Inc., Nuveen Insured Municipal
Opportunity Fund, Inc., Nuveen Florida Quality Income Municipal Fund, Nuveen
Michigan Quality Income Municipal Fund, Inc., Nuveen Ohio Quality Income
Municipal Fund, Inc., Nuveen Texas Quality Income Municipal Fund, Nuveen
California Quality Income Municipal Fund, Inc., Nuveen New York Quality Income
C-4
<PAGE>
Municipal Fund, Inc., Nuveen Premier Municipal Income Fund, Inc., Nuveen
Premier Insured Municipal Income Fund, Inc., Nuveen Premium Income Municipal
Fund 2, Inc., Nuveen Insured California Premium Income Municipal Fund, Inc.,
Nuveen Insured New York Premium Income Municipal Fund, Inc., Nuveen Select
Maturities Municipal Fund, Nuveen Arizona Premium Income Municipal Fund, Inc.,
Nuveen Insured Florida Premium Income Municipal Fund, Nuveen Michigan Premium
Income Municipal Fund, Inc., Nuveen New Jersey Premium Income Municipal Fund,
Inc., Nuveen Premium Income Municipal Fund 4, Inc., Nuveen Insured California
Premium Income Municipal Fund 2, Inc., Nuveen Pennsylvania Premium Income
Municipal Fund 2, Nuveen Maryland Premium Income Municipal Fund, Nuveen
Massachusetts Premium Income Municipal Fund, Nuveen Virginia Premium Income
Municipal Fund, Nuveen Washington Premium Income Municipal Fund, Nuveen
Connecticut Premium Income Municipal Fund, Nuveen Georgia Premium Income
Municipal Fund, Nuveen Missouri Premium Income Municipal Fund, Nuveen North
Carolina Premium Income Municipal Fund, Nuveen California Premium Income
Municipal Fund, Nuveen Insured Premium Income Municipal Fund 2, Nuveen Select
Tax-Free Income Portfolio, Nuveen Select Tax-Free Income Portfolio 2, Nuveen
Insured California Select Tax-Free Income Portfolio, Nuveen Insured New York
Select Tax-Free Income Portfolio and Nuveen Select Tax-Free Income Portfolio 3.
(b)
<TABLE>
<CAPTION>
NAME AND PRINCIPAL POSITIONS AND OFFICES POSITIONS AND OFFICES
BUSINESS ADDRESS WITH UNDERWRITER WITH REGISTRANT
- --------------------------------------------------------------------------------
<S> <C> <C>
Timothy R. Schwertfeger Chairman of the Board, Chairman of the Board
333 West Wacker Drive Chief Executive Officer and Trustee
Chicago, IL 60606
Anthony T. Dean President President and Trustee
333 West Wacker Drive
Chicago, IL 60606
John P. Amboian Executive Vice President None
333 West Wacker Drive and Chief Financial Officer
Chicago, IL 60606
Bruce P. Bedford Executive Vice President None
333 West Wacker Drive
Chicago, IL 60606
William Adams IV Vice President None
333 West Wacker Drive
Chicago, IL 60606
Richard P. Davis Vice President None
One South Main Street
Dayton, OH 45402
Clifton L. Fenton Vice President None
333 West Wacker Drive
Chicago, IL 60606
Kathleen M. Flanagan Vice President Vice President
333 West Wacker Drive
Chicago, IL 60606
Stephen D. Foy Vice President None
333 West Wacker Drive
Chicago, IL 60606
Robert D. Freeland Vice President None
333 West Wacker Drive
Chicago, IL 60606
Michael G. Gaffney Vice President None
333 West Wacker Drive
Chicago, IL 60606
Anna R. Kucinskis Vice President Vice President
333 West Wacker Drive
Chicago, IL 60606
Robert B. Kuppenheimer Vice President None
333 West Wacker Drive
Chicago, IL 60606
</TABLE>
C-5
<PAGE>
<TABLE>
<CAPTION>
POSITIONS AND
NAME AND PRINCIPAL POSITIONS AND OFFICES OFFICES
BUSINESS ADDRESS WITH UNDERWRITER WITH REGISTRANT
- ------------------------------------------------------------------------------------
<S> <C> <C>
Larry W. Martin Vice President and Vice President and
333 West Wacker Drive Assistant Secretary Assistant Secretary
Chicago, IL 60606
Thomas C. Muntz Vice President None
333 West Wacker Drive
Chicago, IL 60606
O. Walter Renfftlen Vice President Vice President and
333 West Wacker Drive and Controller Controller
Chicago, IL 60606
Stuart W. Rogers Vice President None
333 West Wacker Drive
Chicago, IL 60606
Bradford W. Shaw, Jr. Vice President None
333 West Wacker Drive
Chicago, IL 60606
H. William Stabenow Vice President Vice President and
333 West Wacker Drive and Treasurer Treasurer
Chicago, IL 60606
Paul C. Williams Vice President None
333 West Wacker Drive
Chicago, IL 60606
Gifford R. Zimmerman Vice President Vice President and
333 West Wacker Drive and Assistant Secretary Assistant Secretary
Chicago, IL 60606
</TABLE>
(c) Not applicable.
ITEM 30: LOCATION OF ACCOUNTS AND RECORDS
Nuveen Advisory Corp., 333 West Wacker Drive, Chicago, Illinois 60606,
maintains the Declaration of Trust, By-Laws, minutes of trustees and
shareholder meetings and contracts of the Registrant and all advisory material
of the investment adviser.
The Chase Manhattan Bank, 4 New York Plaza, New York, New York 10004 maintains
all general and subsidiary ledgers, journals, trial balances, records of all
portfolio purchases and sales, and all other required records not maintained by
Nuveen Advisory Corp., Shareholder Services, Inc. or Boston Financial.
Shareholder Services, Inc., P.O. Box 5330, Denver, Colorado 80217-5330 and
Boston Financial Data Services, 225 Franklin Street, Boston, Massachusetts
02106 maintain all the required records in their capacity as transfer, dividend
paying, and shareholder service agents for the Funds.
ITEM 31: MANAGEMENT SERVICES
Not applicable.
ITEM 32: UNDERTAKINGS
(a) Not applicable.
(b) Not applicable.
(c) The Registrant undertakes to furnish each person to whom a prospectus is
delivered with a copy of the Registrant's latest Annual Report to Sharehold-
ers upon request and without charge.
(d) The Registrant agrees to call a meeting of shareholders for the purpose of
voting upon the question of the removal of any trustee or trustees when re-
quested to do so in writing by the record holders of at least 10% of the Reg-
istrant's outstanding shares and to assist the shareholders in communications
with other shareholders as required by section 16(c) of the Act.
C-6
<PAGE>
SIGNATURES
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933 AND THE INVESTMENT
COMPANY ACT OF 1940, THE REGISTRANT CERTIFIES THAT THIS REGISTRATION STATEMENT
MEETS ALL THE REQUIREMENTS FOR EFFECTIVENESS UNDER PARAGRAPH (B) OF RULE 485
UNDER THE SECURITIES ACT OF 1933 AND HAS DULY CAUSED THIS REGISTRATION
STATEMENT TO BE SIGNED ON ITS BEHALF BY THE UNDERSIGNED, THEREUNTO DULY
AUTHORIZED, IN THE CITY OF CHICAGO, AND STATE OF ILLINOIS, ON THE 21ST DAY OF
AUGUST, 1997.
NUVEEN FLAGSHIP MUNICIPAL TRUST
/s/ Gifford R. Zimmerman
-----------------------------------------
Gifford R. Zimmerman, Vice President
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THIS REGISTRATION
STATEMENT HAS BEEN SIGNED BELOW BY THE FOLLOWING PERSONS IN THE CAPACITIES AND
ON THE DATE INDICATED.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<C> <C> <S>
/s/ O. Walter Renfftlen
-------------------------------
O. Walter Renfftlen Vice President and August 21, 1997
Controller (Principal
Financial and
Accounting Officer)
Timothy R. Schwertfeger Chairman of the Board
and Trustee (Principal
Executive Officer)
Anthony T. Dean President and Trustee
Robert P. Bremner Trustee
Lawrence H. Brown Trustee
Anne E. Impellizzeri Trustee
Peter R. Sawers Trustee
William J. Schneider Trustee
Judith M. Stockdale Trustee
</TABLE>
/s/ Gifford R. Zimmerman
By____________________________
Gifford R. Zimmerman
Attorney-in-Fact
AN ORIGINAL POWER OF ATTORNEY AUTHORIZING, AMONG OTHERS, GIFFORD R. ZIMMERMAN
AND LARRY W. MARTIN TO EXECUTE THIS REGISTRATION STATEMENT, AND AMENDMENTS
THERETO, FOR EACH OF THE OFFICERS AND TRUSTEES OF REGISTRANT ON WHOSE BEHALF
THIS REGISTRATION STATEMENT IS FILED, HAS BEEN EXECUTED AND IS AN EXHIBIT TO
THIS REGISTRATION STATEMENT.
August 21, 1997
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
SEQUENTIALLY
EXHIBIT NUMBERED
NUMBER EXHIBIT PAGE
------- ------- ------------
<C> <S> <C>
1(d). Incumbency Certificate.
5. Investment Management Agreement between Registrant
and Nuveen Advisory Corp.
5(a). Renewal of Investment Management Agreement dated May
20, 1997.
6. Distribution Agreement between Registrant and John
Nuveen & Co. Incorporated.
8. Custodian Agreement between Registrant and Chase
Manhattan Bank.
9(a). Transfer Agency and Service Agreement between
Registrant and State Street Bank and Trust Company.
9(b). Transfer Agency Agreement between Registrant and
Shareholder Services, Inc.
10. Opinion of Fried, Frank, Harris, Shriver & Jacobson.
11(a). Consent of Arthur Andersen LLP, Independent Public
Accountants.
11(b). Consent of Deloitte & Touche LLP, Independent
Auditors.
16. Schedule of Computation of Performance Figures.
17. Financial Data Schedule.
99(a). Original Powers of Attorney for the Trustees
authorizing, among others, Gifford R. Zimmerman and
Larry W. Martin to execute the Registration
Statement.
99(b). Certified copy of Resolution of Board of Trustees
authorizing the signing of the names of trustees and
officers on the Registrant's Registration Statement
pursuant to power of attorney.
99(c). Code of Ethics and Reporting Requirements.
</TABLE>
<PAGE>
EXHIBIT 1(d)
INCUMBENCY CERTIFICATE
NUVEEN FLAGSHIP MUNICIPAL TRUST
On May 20, 1997, the Board of Trustees of the above-named Massachusetts business
trust adopted resolutions that increased the size of the Board to nine (9)
members effective July 1, 1997, and appointed the following individual as a
trustee to fill the newly created vacancy:
Judith M. Stockdale
Gaylord and Dorothy Donnelley Foundation
35 East Wacker Drive
Suite 2600
Chicago, Illinois 60601
Mrs. Margaret K. Rosenheim, a trustee of the Fund since its inception, will be
retiring from the Board of Trustees effective July 30, 1997 and, as of that
date, eight (8) trustees shall constitute the Fund's full Board of Trustees.
Effective July 30, 1997, the following individuals shall constitute all of the
Trustees of the Fund:
Timothy R. Schwertfeger
333 West Wacker Drive
Chicago, Illinois 60606
Anthony T. Dean
333 West Wacker Drive
Chicago, Illinois 60606
Peter R. Sawers
22 The Landmark
Northfield, Illinois 60093
Lawrence H. Brown
201 Michigan Avenue
Highwood, Illinois 60040
Anne E. Impellizzeri
3 West 29th Street
New York, New York 10001
<PAGE>
Robert P. Bremner
3725 Huntington Street
Washington, D.C. 20015
William J. Schneider
Senior Partner
Miller-Valentine Group
P.O. Box 744
Dayton, Ohio 45401
Judith M. Stockdale
Gaylord and Dorothy Donnelley Foundation
35 East Wacker Drive
Suite 2600
Chicago, Illinois 60601
NUVEEN FLAGSHIP MUNICIPAL TRUST
/s/ Gifford R. Zimmerman
-------------------------------
By: Gifford R. Zimmerman
Vice President
and Assistant Secretary
<PAGE>
NUVEEN FLAGSHIP MUNICIPAL TRUST
In accordance with Article V, Section 2 of the Declaration of Trust of
Nuveen Flagship Municipal Trust (the "Trust"), effective January 1, 1997, the
size of the Trust's Board of Trustees has been changed to eight (8) in number,
and the following persons constitute all of the Trustees of the Trust:
Robert P. Bremner
3725 Huntington Street, N.W.
Washington, D.C. 20015
Lawrence H. Brown
201 Michigan Avenue
Highwood, Illinois 60040
Anthony T. Dean
333 West Wacker Dr.
Chicago, Illinois 60606
Margaret K. Rosenheim
969 East 60th Street
Chicago, Illinois 60637
Peter R. Sawers
22 The Landmark
Northfield, Illinois 60093
Anne E. Impellizzeri
3 West 29th Street
New York, New York 10001
Timothy R. Schwertfeger
333 West Wacker Drive
Chicago, Illinois 60606
William J. Schneider
4000 Miller-Valentine Court
P.O. Box 744
Dayton, Ohio 45401
NUVEEN FLAGSHIP MUNICIPAL TRUST
/s/ Gifford R. Zimmerman
-------------------------------
By: Gifford R. Zimmerman
Vice President and Assistant
Secretary
<PAGE>
EXHIBIT 5
INVESTMENT MANAGEMENT AGREEMENT
-------------------------------
AGREEMENT made as of the 1st day of February, 1997, by and between NUVEEN
FLAGSHIP MUNICIPAL TRUST, a Massachusetts business trust (the "Fund"), and
NUVEEN ADVISORY CORP., a Delaware corporation (the "Adviser").
W I T N E S S E T H
-------------------
In consideration of the mutual covenants hereinafter contained, it is hereby
agreed by and between the parties hereto as follows:
1. The Fund hereby employs the Adviser to act as the investment adviser for,
and to manage the investment and reinvestment of the assets of each of the
Fund's series as set forth on Exhibit A attached hereto (the "Portfolios") or as
may exist from time to time in accordance with the Fund's investment objective
and policies and limitations relating to such Portfolio, and to administer the
Fund's affairs to the extent requested by and subject to the supervision of the
Board of Trustees of the Fund for the period and upon the terms herein set
forth. The investment of the assets of each Portfolio shall be subject to the
Fund's policies, restrictions and limitations with respect to securities
investments as set forth in the Fund's registration statement on Form N-1A under
the Securities Act of 1933 and the Investment Company Act of 1940 covering the
Fund's Portfolios' shares of beneficial interest, including the Prospectus and
Statement of Additional Information forming a part thereof, all as filed with
the Securities and Exchange Commission and as from time to time amended, and all
applicable laws and the
<PAGE>
regulations of the Securities and Exchange Commission relating to the management
of registered open-end, management investment companies.
The Adviser accepts such employment and agrees during such period to render such
services, to furnish office facilities and equipment and clerical, bookkeeping
and administrative services (other than such services, if any, provided by the
Fund's custodian, transfer agent and shareholder service agent, and the like)
for the Fund, to permit any of its officers of employees to serve without
compensation as trustees or officers of the Fund if elected to such positions,
and to assume the obligations herein set forth for the compensation herein
provided. The Adviser shall, for all purposes herein provided, be deemed to be
an independent contractor and, unless otherwise expressly provided or
authorized, shall have no authority to act for nor represent the Fund in any
way, nor otherwise be deemed an agent of the Fund.
2. For the services and facilities described in Section 1, the Fund will pay to
the Adviser, at the end of each calendar month, an investment management fee
related to each of the Fund's Portfolios. For each Portfolio, calculated
separately, except the Nuveen Flagship Limited Term Municipal Bond Fund, the
fees shall be computed at the rate of:
Rate Net Assets
---- ----------
.5000% For the first $125 million
.4875% For the next $125 million
.4750% For the next $250 million
.4625% For the next $500 million
.4500% For the next $1 billion
.4250% For assets over $2 billion
2
<PAGE>
For Nuveen Flagship Limited Term Municipal Bond Fund, the fees shall be computed
at the rate of:
Rate Net Assets
---- ----------
.4500% For the first $125 million
.4375% For the next $125 million
.4250% For the next $250 million
.4125% For the next $500 million
.4000% For the next $1 billion
.3750% For assets over $2 billion
For the month and year in which this Agreement becomes effective, or terminates,
and for any month and year in which a Portfolio is added or eliminated from the
Fund, there shall be an appropriate proration on the basis of the number of days
that the Agreement shall have been in effect, or the Portfolio shall have
existed, during the month and year, respectively. The services of the Adviser to
the Fund under this Agreement are not to be deemed exclusive, and the Adviser
shall be free to render similar services or other services to others so long as
its services hereunder are not impaired thereby.
3. In addition to the services and facilities described in Section 1, the
Adviser shall assume and pay, but only to the extent hereinafter provided, the
following expenses related to the Nuveen Municipal Bond Fund and Nuveen Insured
Municipal Bond Fund Portfolios only: (x) any expenses for services rendered by a
custodian for the safekeeping of those Portfolio's securities or property, for
keeping its books of account, for calculating the net asset value of the
Portfolios as provided in the Declaration of Trust of the Fund, and any other
charges of the custodian; and (y) the cost and expenses of the Portfolios;
operations, including
3
<PAGE>
compensation of the trustees, transfer, dividend disbursing and shareholder
service agent expenses, legal fees, expenses of independent accountants, costs
of share certificates, expenses of preparing, printing and distributing reports
to shareholders and governmental agencies, and all fees payable to Federal,
State, or other governmental agencies on account of the registration of
securities issued by the Portfolios, filing of corporate documents or otherwise.
Notwithstanding the foregoing, the Adviser shall not be obligated to assume or
pay interest, taxes, fees incurred in acquiring and disposing of portfolio
securities or extraordinary expenses of the Portfolios. The Portfolios shall not
incur any obligation for management or administrative expenses which the
Portfolio intends the Adviser to assume and pay hereunder without first
obtaining the written approval of the Adviser.
The foregoing enumerated expenses for the Nuveen Municipal Bond Fund and
Nuveen Insured Municipal Bond Fund Portfolios are hereby assumed by the Adviser
to the extent they, together with the Adviser's fee payable hereunder (but
excluding interest, taxes, fees incurred in acquiring and disposing of portfolio
securities and extraordinary expenses), exceed during any fiscal year .75 of 1%
of Nuveen Municipal Bond Fund's average net assets for such year, or .975 of 1%
of Nuveen Insured Municipal Bond Fund's average net assets for such year; to the
extent they do not exceed such percentages, such expenses shall be properly
chargeable to those Portfolios. If, at the end of any month, the expenses of the
Portfolios properly chargeable to the income account on a year-to-date basis
shall exceed the appropriate percentage of average net assets, the payment of
the Adviser for that month shall be reduced and, if necessary, the Adviser shall
assume and pay expenses pursuant hereto so that the total
4
<PAGE>
year-to-date net expense will not exceed such percentage. As of the end of the
Portfolios' fiscal year the foregoing computation and assumption of expenses
shall be readjusted, if necessary, so that the expenses assumed and paid by the
Adviser, if any, are such, and the aggregate compensation payable to the Adviser
related to each Portfolio for the year (otherwise equal to the percentage set
forth in Section 2 hereof of the average net asset value as determined and
described herein throughout the fiscal year) is diminished as may be necessary,
so that the total amount of expenses of each Portfolio borne by the Fund shall
not exceed the applicable expense limitation.
The net asset value of each Portfolio shall be calculated as provided in the
Declaration of Trust of the Fund. On each day when net asset value is not
calculated, the net asset value of a share of beneficial interest of a Portfolio
shall be deemed to be the net asset value of such share as of the close of
business on the last day on which such calculation was made for the purpose of
the foregoing computations.
4. Regardless of any of the above provisions, the Adviser guarantees that the
total expenses of each Portfolio in any fiscal year, exclusive of taxes,
interest, brokerage commissions, and extraordinary expenses such as litigation
costs, shall not exceed, and the Adviser undertakes to pay or refund to the
Portfolio any amount up to but not greater than the aggregate fees received by
the Adviser under this Agreement for such fiscal year, the limitation imposed by
any jurisdiction in which the Fund continues to offer and sell shares of the
Portfolio after exceeding such limitation. Except as otherwise agreed to by the
Fund or the Adviser or unless otherwise
5
<PAGE>
required by the law or regulation of any state, any reimbursement by the Adviser
to a Portfolio under this section shall not exceed the management fee payable to
the Adviser by a Portfolio under this Agreement.
5. The Adviser shall arrange for officers or employees of the Adviser to serve,
without compensation from the Fund, as trustees, officers or agents of the Fund,
if duly elected or appointed to such positions, and subject to their individual
consent and to any limitations imposed by law.
6. Subject to applicable statutes and regulations, it is understood that
officers, trustees, or agents of the Fund are, or may be, interested in the
Adviser as officers, directors, agents shareholders or otherwise, and that the
officers, directors, shareholders and agents of the Adviser may be interested in
the Fund otherwise than as trustees, officers or agents.
7. The Adviser shall not be liable for any loss sustained by reason of the
purchase, sale or retention of any security, whether or not such purchase, sale
or retention shall have been based upon the investigation and research made by
any other individual, firm or corporation, if such recommendation shall have
been selected with due care and in good faith, except loss resulting from
willful misfeasance, bad faith, or gross negligence on the part of the Adviser
in the performance of its obligations and duties, or by reason of its reckless
disregard of its obligations and duties under this Agreement.
6
<PAGE>
8. The Adviser currently manages other investment accounts and funds,
including those with investment objectives similar to the Fund, and reserves the
right to manage other such accounts and funds in the future. Securities
considered as investments for a Portfolio of the Fund may also be appropriate
for other Portfolios or for other investment accounts and funds that may be
managed by the Adviser. Subject to applicable laws and regulations, the Adviser
will attempt to allocate equitably portfolio transactions among the Fund's
Portfolios and the portfolios of its other investment accounts and funds
purchasing securities whenever decisions are made to purchase or sell securities
by a Portfolio and another fund's portfolio or one or more of such other
accounts or funds simultaneously. In making such allocations, the main factors
to be considered by the Adviser will be the respective investment objectives of
the Fund Portfolio or Portfolios purchasing such securities and such other
accounts and funds, the relative size of portfolio holdings of the same or
comparable securities, the availability of cash for investment by the Fund
Portfolios and such other accounts and funds, the size of investment commitments
generally held by the Fund Portfolios and such accounts and funds, and the
opinions of the persons responsible for recommending investments to the Fund and
such other accounts and funds.
9. This Agreement shall continue in effect until August 1, 1997, unless and
until terminated by either party as hereinafter provided, and shall continue in
force from year to year thereafter, but only as long as such continuance is
specifically approved, at least annually, in the manner required by the
Investment Company Act of 1940.
7
<PAGE>
This Agreement shall automatically terminate in the event of its assignment, and
may be terminated at any time without the payment of any penalty by the Fund or
by the Adviser upon sixty (60) days' written notice to the other party. The Fund
may effect termination by action of the Board of Trustees, or, with respect to
any Fund Portfolio, by vote of a majority of the outstanding voting securities
of that Portfolio, accompanied by appropriate notice.
This Agreement may be terminated, at any time, without the payment of any
penalty, by the Board of Trustees of the Fund, or, with respect to any Fund
Portfolio, by vote of a majority of the outstanding voting securities of that
Portfolio, in the event that it shall have been established by a court of
competent jurisdiction that the Adviser, or any officer or director of the
Adviser, has taken any action which results in a breach of the covenants of the
Adviser set forth herein.
Termination of this Agreement shall not affect the right of the Adviser to
receive payments on any unpaid balance of the compensation, described in Section
2, earned prior to such termination.
10. If any provision of this Agreement shall be held or made invalid by a court
decision, statute, rule, or otherwise, the remainder shall not be thereby
affected.
8
<PAGE>
11. The Adviser and its affiliates reserve the right to grant, at any time, the
use of the name "Nuveen" or the name "Flagship", or any approximation or
abbreviation thereof, to any other investment company or business enterprise.
Upon termination of this Agreement by either party, or by its terms, the Fund
shall thereafter refrain from using any name of the Fund which includes "Nuveen"
or "Flagship" or any approximation or abbreviation thereof, or is sufficiently
similar to such name as to be likely to cause confusion with such name, and
shall not allude in any public statement or advertisement to the former
association.
12. Any notice under this Agreement shall be in writing, addressed and
delivered or mailed, postage prepaid, to the other party at such address as
such other party may designate for receipt of such notice.
13. The Fund's Declaration of Trust is on file with the Secretary of the
Commonwealth of Massachusetts. This Agreement is executed on behalf of the Fund
by the Fund's officers as officers and not individually and the obligations
imposed upon the Fund by this Agreement are not binding upon any of the Fund's
Trustees, officers or shareholders individually but are binding only upon the
assets and property of the Fund.
9
<PAGE>
IN WITNESS WHEREOF, the Fund and the Adviser have caused this Agreement to
be executed on the day and year above written.
NUVEEN FLAGSHIP MUNICIPAL TRUST
By: /s/ Gifford R. Zimmerman
---------------------------
Vice President
Attest: /s/ Karen L. Healy
---------------------------
Assistant Secretary
NUVEEN ADVISORY CORP.
By: /s/ J. Thomas Futrell
---------------------------
Vice President
Attest: /s/ Larry Martin
---------------------------
Assistant Secretary
10
<PAGE>
Exhibit A
Nuveen Municipal Bond Fund
Nuveen Insured Municipal Bond Fund
Nuveen Flagship All-American Municipal Bond Fund
Nuveen Flagship Limited Term Municipal Bond Fund
Nuveen Flagship Intermediate Municipal Bond Fund
11
<PAGE>
EXHIBIT 5(a)
NUVEEN FLAGSHIP MUNICIPAL TRUST
-------------------------------
RENEWAL OF INVESTMENT MANAGEMENT AGREEMENT
------------------------------------------
This Agreement made this 20th day of May, 1997 by and between Nuveen Flagship
Municipal Trust, a Massachusetts business trust ( the "Fund"), and Nuveen
Advisory Corp., a Delaware corporation (the "Adviser");
WHEREAS, the parties hereto are the contracting parties under that certain
Investment Management Agreement (the "Agreement") pursuant to which the Adviser
furnishes investment management and other services to the Fund; and
WHEREAS, the Agreement terminates August 1, 1997 unless continued in the manner
required by the Investment Company Act of 1940; and
WHEREAS, the Board of Trustees, at a meeting called for the purpose of reviewing
the Agreement, have approved the Agreement and its continuance until August 1,
1998 in the manner required by the Investment Company Act of 1940.
NOW THEREFORE, in consideration of the mutual covenants contained in the
Agreement the parties hereto do hereby continue the Agreement in effect until
August 1, 1998 and ratify and confirm the Agreement in all respects.
NUVEEN FLAGSHIP MUNICIPAL TRUST
By: /s/ Gifford R. Zimmerman
---------------------------------
Vice President
ATTEST:
/s/ Karen L. Healy
- ---------------------------
Assistant Secretary
NUVEEN ADVISORY CORP.
By: /s/ J. Thomas Futrell
---------------------------------
Vice President
ATTEST:
/s/ Larry Martin
- ---------------------------
Assistant Secretary
<PAGE>
EXHIBIT 6
DISTRIBUTION AGREEMENT
----------------------
AGREEMENT made as of the 1st day of February, 1997 between NUVEEN FLAGSHIP
MUNICIPAL TRUST, a business trust organized under the laws of the Commonwealth
of Massachusetts (the "Fund"), and JOHN NUVEEN & CO. INCORPORATED, a Delaware
corporation (the "Underwriter").
WITNESSETH
----------
in consideration of the mutual covenants hereinafter contained, it is
hereby agreed by and between the parties hereto as follows:
1. The Fund hereby appoints the Underwriter its agent for the distribution
of shares of beneficial interest, par value $.01 per share, including such
series or classes of shares as may now or hereafter be authorized (the
"Shares"), in jurisdictions wherein Shares may legally be offered for sale;
provided, however, that the Fund, in its absolute discretion, may: (a) issue or
sell Shares directly to holders of Shares of the Fund upon such terms and
conditions and for such consideration, if any, as it may determine, whether in
connection with the distribution of subscription or purchase rights, the payment
or reinvestment of dividends or distributions, or otherwise; and (b) issue or
sell Shares at net asset value in connection with merger or consolidation with,
or acquisition of the assets of, other investment companies or similar
companies.
2. The Underwriter hereby accepts appointment as agent for the distribution of
the Shares and agrees that it will use its best efforts to sell such part of the
authorized Shares remaining unissued as from time to time shall be effectively
registered under the Securities Act of 1933 ("Securities Act"), at prices
determined as hereinafter provided and on terms hereinafter set forth, all
subject to applicable Federal and State laws and regulations and to the
Declaration of Trust of the Fund.
3. The Fund agrees that it will use its best efforts to keep effectively
registered under the Securities Act for sale, as herein contemplated, such
Shares as the Underwriter shall reasonably request and as the Securities and
Exchange Commission shall permit to be so registered.
4. Notwithstanding any other provision hereof, the Fund may terminate,
suspend, or withdraw the offering of the Shares, or Shares of any series or
class, whenever, in its sole discretion, it deems such action to be desirable.
5. The Underwriter shall sell Shares to, or through, brokers, dealers, banks or
other qualified financial intermediaries (hereinafter referred to as "dealers"),
or others, in such manner not inconsistent with the provisions hereof and the
then effective Registration Statement of the Fund under the Securities Act (and
related Prospectus and Statement of Additional Information) as the Underwriter
may determine from time to time, provided that no dealer, or other person,
shall be appointed nor authorized to act as agent of the Fund without the prior
consent of the Fund. The Underwriter shall have the right to enter into
agreements with brokers, dealers and banks (referred to herein as "dealers") of
its choice for the sale of Shares and fix therein the portion of
<PAGE>
the sales charge which may be allocated to such dealers; provided that the Fund
shall approve the form of such agreements and shall evidence such approval by
filing said form and any amendments thereto as attachments to this Agreement,
which shall be filed as an exhibit to the Fund's currently effective
registration statement under the Securities Act. Shares sold to dealers shall
be for resale by such dealers only at the public offering price(s) set forth in
the Fund's then current Prospectus. The current forms of such agreements are
attached hereto as Exhibits 1, 2 and 3.
6. Shares offered for sale, or sold by the Underwriter, shall be so offered or
sold at a price per Share determined in accordance with the then current
Prospectus relating to the sale of Shares except as departure from such prices
shall be permitted by the rules and regulations of the Securities and Exchange
Commission. Any public offering price shall be the net asset value per Share
plus a sales charge of not more than 4.75% of such public offering price. Shares
may be sold at net asset value without a sales charge to such class or classes
of investors or in such class or classes of transactions as may be permitted
under applicable rules of the Securities and Exchange Commission and as
described in the then current Prospectus of the Fund. The net asset value per
Share of each series or class shall be calculated in accordance with the
Declaration of Trust of the Fund and shall be determined in the manner, and at
the time, set forth in the then current Prospectus of the Fund relating to such
Shares.
7. The price the Fund shall receive for all Shares purchased from the Fund
shall be the net asset value used in determining the public offering price
applicable to the sale of such Shares. The excess, if any, of the sales price
over the net asset value of Shares sold by the Underwriter as agent shall be
retained by the Underwriter as a commission for its services hereunder. Out of
such commission, the Underwriter may allow commissions or concessions to dealers
in such amounts as the Underwriter shall determine from time to time. Except as
may be otherwise determined by the Underwriter and the Fund from time to time,
such commissions or concessions shall be uniform to all dealers.
8. The Underwriter shall issue and deliver, or cause to be issued and
delivered, on behalf of the Fund such confirmations of sales made by it as
agent, pursuant to this Agreement, as may be required. At, or prior to, the
time of issuance of Shares, the Underwriter will pay, or cause to be paid, to
the Fund the amount due the Fund for the sale of such Shares. Certificates
shall be issued, or Shares registered on the transfer books of the Fund, in such
names and denominations as the Underwriter may specify.
9. The Fund will execute any and all documents, and furnish any and all
information, which may be reasonably necessary in connection with the
qualification of the Shares for sale (including the qualification of the Fund as
a dealer, where necessary or advisable) in such states as the Underwriter may
reasonably request (it being understood that the Fund shall not be required,
without its consent, to comply with any requirement which, in its opinion, is
unduly burdensome).
2
<PAGE>
10. The Fund will furnish to the Underwriter, from time to time, such
information with respect to the Fund and the Shares as the Underwriter may
reasonably request for use in connection with the sale of Shares. The
Underwriter agrees that it will not use or distribute, nor will it authorize
dealers or others to use, distribute or disseminate, in connection with the sale
of such Shares, any statements other than those contained in the Fund's current
Prospectus and Statement of Additional Information, except such supplemental
literature or advertising as shall be lawful under Federal and State securities
laws and regulations, and that it will furnish the Fund with copies of all such
material.
11. The Underwriter shall order Shares from the Fund only to the extent that it
shall have received purchase orders therefor. The Underwriter will not make, nor
authorize any dealers or others, to make: (a) any short sale of Shares; or (b)
any sale of Shares to any officer or trustee of the Fund, nor to any officer or
trustee of the Underwriter, or of any corporation or association furnishing
investment advisory, managerial, or supervisory services to the Fund, nor to any
such corporation or association, unless such sales are made in accordance with
the then current Prospectus relating to the sale of such Shares.
12. In selling Shares for the account of the Fund, the Underwriter will in all
respects conform to the requirements of all Federal and State laws and the Rules
of Fair Practice of the National Association of Securities Dealers, Inc.
relating to such sales, and will indemnify and save harmless the Fund from any
damage or expense on account of any wrongful act by the Underwriter or any
employee, representative, or agent of the Underwriter. The Underwriter will
observe and be bound by all the provisions of the Declaration of Trust of the
Fund (and of any fundamental policies adopted by the Fund pursuant to the
Investment Company Act of 1940, notice of which shall have been given by the
Fund to the Underwriter) which at the time in any way require, limit, restrict,
prohibit or otherwise regulate any action on the part of the Underwriter.
13. The Underwriter will require each dealer to conform to the provisions
hereof and of the Registration Statement (and related Prospectus) at the time in
effect under the Securities Act with respect to the public offering price of
the Shares, and neither the Underwriter nor any such dealer shall withhold the
placing of purchase orders so as to make a profit thereby.
14. The Fund will pay, or cause to be paid, expenses (including the fees and
disbursements of its own counsel) of any registration of Shares under the
Securities Act, expenses of qualifying or continuing the qualification of the
Shares for sale and, in connection therewith, of qualifying or continuing the
qualification of the Fund as a dealer or broker under the laws of such states as
may be designated by the Underwriter under the conditions herein specified, and
expenses incident to the issuance of the Shares such as the cost of Share
certificates, issue taxes, and fees of the transfer and shareholder service
agent. The Underwriter will pay, or cause to be paid, all expenses (other than
expenses which any dealer may bear pursuant to any agreement with the
Underwriter) incident to the sale and distribution of the Shares issued or sold
hereunder, including, without limiting the generality of the foregoing, all: (a)
expenses of printing and distributing any Prospectus and Statement of
Additional Information and of preparing, printing
3
<PAGE>
and distributing or disseminating any other literature, advertising and selling
aids in connection with such offering of the Shares for sale (except that such
expenses need not include expenses incurred by the Fund in connection with the
preparation, printing and distribution of any report or other communication to
holders of Shares in their capacity as such), and (b) expenses of advertising in
connection with such offering. No transfer taxes, if any, which may be payable
in connection with the issue or delivery of Shares sold as herein contemplated,
or of the certificates for such Shares, shall be borne by the Fund, and the
Underwriter will indemnify and hold harmless the Fund against liability for all
such transfer taxes.
15. This agreement shall continue in effect until August 1, 1997, unless and
until terminated by either party as hereinafter provided, and will continue from
year to year thereafter, but only so long as such continuance is specifically
approved, at least annually, in the manner required by the Investment Company
Act of 1940. Either party hereto may terminate this agreement on any date by
giving the other party at least six months' prior written notice of such
termination, specifying the date fixed therefor. Without prejudice to any other
remedies of the Fund in any such event, the Fund may terminate this agreement at
any time immediately upon any failure of fulfillment of any of the obligations
of the Underwriter hereunder.
Without prejudice to any other remedies of the Fund in any such event, the Fund
may terminate this Agreement at any time immediately upon any failure of
fulfillment of any of the obligations of the Underwriter hereunder.
16. This agreement shall automatically terminate in the event of its
assignment.
17. Any notice under this agreement shall be in writing, addressed, and
delivered or mailed, postage pre-paid, to the other party at such address as
such other party may designate for the receipt of such notice.
18. The Declaration of Trust of the Fund on file with the Secretary of State of
the Commonwealth of Massachusetts was executed on behalf of the Fund by the
initial trustees of the Fund and not individually, and any obligation of the
Fund shall be binding only upon the assets of the Fund (or applicable series
thereof) and shall not be binding upon any trustee, officer or shareholder of
the Fund. Neither the authorization of any action by the trustees or
shareholders of the Fund nor the execution of this agreement on behalf of the
Fund shall impose any liability upon any Trustee, officer or shareholder of the
Fund.
4
<PAGE>
IN WITNESS WHEREOF, the Fund and the Underwriter have each caused this Agreement
to be executed on its behalf as of the day and year first above written.
NUVEEN FLAGSHIP MUNICIPAL TRUST
By: /s/ Gifford R. Zimmerman
-------------------------------
Vice President
Attest: /s/ Karen L. Healy
-------------------
Assistant Secretary
JOHN NUVEEN & CO. INCORPORATED
By: /s/ Larry Martin
---------------------
Vice President
Attest: /s/ Morrison C. Warren
----------------------
Assistant Secretary
5
<PAGE>
Exhibit 1 NUVEEN
John Nuveen & Co. Incorporated
Investment Bankers
333 West Wacker Drive
Chicago, Illinois 60606-1286
Telephone: 312 917 7700
NUVEEN MUTUAL FUNDS
Dealer Distribution and
Shareholder Servicing Agreement
As principal underwriter of shares of the various Nuveen non-money market open-
end mutual funds, and of the shares of any future such funds (collectively, the
"Funds"), we invite you to join a selling group for the distribution of shares
of common stock of the Funds (the "Shares"). As exclusive agent of the Funds, we
offer to sell you Shares on the following terms:
1. In all sales of Shares to the public you shall act as dealer for your own
account, and in no transaction shall you have any authority to act as agent
for any Fund, for us or for any other member of the Selling Group.
2. Orders received from you shall be accepted by us only at the public offering
price applicable to each order, as established by the then current
Prospectus of the appropriate Fund, subject to the discounts provided in
such Prospectus. Upon receipt from you of any order to purchase Shares, we
shall confirm to you in writing or by wire to be followed by a confirmation
in writing. Additional instructions may be forwarded to you from time to
time. All orders are subject to acceptance or rejection by us in our sole
discretion.
3. You may offer and sell Shares to your customers only at the public offering
price determined in the manner described in the current Prospectus of the
appropriate Fund. Shares will be offered at a public offering price based
upon the net asset value of such Shares plus, with respect to certain
class(es) of Shares, a sales charge from which you shall receive a discount
equal to a percentage of the applicable offering price as provided in the
Prospectus. You may receive a distribution fee and/or a service fee with
respect to certain class(es) of Shares for which such fees are applicable,
as provided in the applicable Prospectus, which distribution fee and/or
service fee shall be payable for such periods and at such intervals as are
from time to time specified by us. Your placement of an order for Shares
after the date of any notice of such amendment shall conclusively evidence
your agreement to be bound thereby.
Reduced sales charges may also be available as a result of a cumulative
discount or pursuant to a letter of intent. Further information as to such
reduced sales charges, if any, is set forth in the appropriate Fund
Prospectus. You agree to advise us promptly as to the amounts of any sales
made by you to the public qualifying for reduced sales charges.
4. By accepting this Agreement, you agree:
a) That you will purchase Shares only from us;
b) That you will purchase Shares from us only to cover purchase orders
already received from your customers, or for your own bona fide
investment; and
c) That you will not withhold placing with us orders received from your
customers so as to profit yourself as a result of such withholding.
d) That, with respect to the sale of Shares of Funds that offer multiple
classes of Shares, you will comply with the terms of the Policies and
Procedures with Respect to Sales of Multiple Classes of Shares, attached
hereto as Exhibit A.
5. We will not accept from you any conditional orders for Shares.
6. Payment for Shares ordered from us shall be in New York clearing house funds
and must be received by the Funds' agent, Shareholder Services, Inc.,
P.O.Box 5330, Denver, Colorado 80217-5330, within three business days after
our acceptance of your order. If such payment is not received, we reserve
the right, without notice, forthwith to cancel the sale or, at our option,
to cause the Fund to redeem the Shares ordered, in which case we may hold
you responsible for any loss, including loss of profit, suffered by us as a
result of your failure to make such payment. If any Shares confirmed to you
under the terms of this agreement are repurchased by the issuing Fund or by
us as agent for the Fund, or are tendered for repurchase, within seven
business days after the date of
6
<PAGE>
our confirmation of the original purchase order, you shall promptly refund
to us the full discount, commission, or other concession, if any, allowed or
paid to you on such Shares.
7. Shares sold hereunder shall be available in book-entry form on the books of
Shareholder Services, Inc. unless other instructions have been given.
8. No person is authorized to make any representations concerning Shares or any
Fund except those contained in the applicable current Prospectus and printed
information subsequently issued by the appropriate Fund or by us as
information supplemental to such Prospectus. You agree that you will not
offer or sell any Shares except under circumstances that will result in
compliance with the applicable Federal and state securities laws and that in
connection with sales and offers to sell Shares you will furnish to each
person to whom any such sale or offer is made a copy of the then current
Prospectus for the appropriate Fund (as then amended or supplemented) and
will not furnish to any persons any information relating to Shares which is
inconsistent in any respect with the information contained in the then
current Prospectus or cause any advertisement to be published in any
newspaper or posted in any public place without our consent and the consent
of the appropriate Fund. You shall be responsible for any required filing of
such advertising.
9. All sales will be made subject to our receipt of Shares from the appropriate
Fund. We reserve the right, in our discretion, without notice, to modify,
suspend or withdraw entirely the offering of any Shares, and upon notice to
change the price, sales charge, or dealer discount or to modify, cancel or
change the terms of this agreement.
10. Your acceptance of this agreement constitutes a representation that you are
a registered securities dealer and a member in good standing of the National
Association of Securities Dealers, Inc. and agree to comply with all
applicable state and Federal laws, rules and regulations applicable to
transactions hereunder and to the Rules of Fair Practice of the National
Association of Securities Dealers, Inc., including specifically Section 26,
Article III thereof. You likewise agree that you will not offer to sell
Shares in any state or other jurisdiction in which they may not lawfully be
offered for sale.
11. You shall provide such office space and equipment, telephone facilities,
personnel and literature distribution as is necessary or appropriate for
providing information and services to your customers. Such services and
assistance may include, but not be limited to, establishment and maintenance
of shareholder accounts and records, processing purchase and redemption
transactions, answering routine inquiries regarding the Funds, and such
other services as may be agreed upon from time to time and as may be
permitted by applicable statute, rule, or regulation. You shall perform
these services in good faith and with reasonable care. You shall immediately
inform the Funds or us of all written complaints received by you from Fund
shareholders relating to the maintenance of their accounts and shall
promptly answer all such complaints.
12. All communications to us should be sent to 333 W. Wacker Drive, Chicago,
Illinois 60606. Any notice to you shall be duly given if mailed or
telegraphed to you at the address specified by you below.
13. This Agreement shall be construed in accordance with the laws of the State
of Illinois. This Agreement is subject to the Prospectuses of the Funds from
time to time in effect, and, in the event of a conflict, the terms of the
Prospectuses shall control. References herein to the "Prospectus" of a Fund
shall mean the prospectus and statement of additional information of such
Fund as from time to time in effect. Any changes, modifications or additions
reflected in any such Prospectus shall be effective on the date of such
Prospectus (or supplement thereto) unless specified otherwise. This
Agreement shall supersede any prior dealer distribution agreement with
respect to the Funds.
John Nuveen & Co. Incorporated
John Nuveen
Authorized Signature
- -------------------------------------------------------------------------------
<PAGE>
We have read the foregoing agreement and accept and agree to the terms and
conditions therein.
<TABLE>
<CAPTION>
<S> <C>
Firm___________________|___|___|___|___|___|___|___|___|___|___|___|___|___|___|___|___|___|___|___|___|___|___|___|___|___|___|___|
Month Day Year
Authorized Signature___|_________________________________________________________________________________________|__|__|__|__|__|__|
Print Name of__________|___|___|___|___|___|___|___|___|___|___|___|___|___|___|___|___|___|___|___|___|___|___|___|___|___|___|___|
Address________________|___|___|___|___|___|___|___|___|___|___|___|___|___|___|___|___|___|___|___|___|___|___|___|___|___|___|___|
City___________________|___|___|___|___|___|___|___|___|___|___|___|___|___|___|___|___|___|___|___|___|__Zip__|___|___|___|___|___|
Tax ID Number__________|___|___|___|___|___|___|___|___|___|___|___|____NASD___|___|___|___|___|___|___|___|___|___|___|___|___|___|
</TABLE>
The above agreement shall be executed in duplicate and both copies returned to
us for signature. We will return a fully executed copy to you for your files.
Please return the completed agreement to:
John Nuveen & Co. Incorporated, 333 West Wacker Drive, Chicago, Illinois 60606-
1286
<PAGE>
Exhibit A to Nuveen Mutual Funds
Dealer Distribution and
Shareholder Servicing Agreement
Policies and Procedures With Respect to
Sales of Multiple Classes of Funds
The Nuveen non-money market open-end mutual funds (the "Funds") have one or more
of the following classes of shares generally available to the public: Class A
Shares, which are normally subject to an up-front sales charge and a service
fee; Class B Shares, which are subject to an asset-based sales charge, a service
fee, and a declining contingent deferred sales charge ("CDSC"); and Class C
Shares, which are subject to an asset-based sales charge, a service fee, and a
12-month CDSC, it is important for an investor to choose the method of
purchasing shares which best suits his or her particular circumstances. To
assist investors in these decisions, John Nuveen & Co. Incorporated, underwriter
for the Nuveen Mutual Funds, has instituted the following policies with respect
to orders for Fund shares. These policies apply to each Authorized Dealer which
distributes Fund shares.
1. Purchase orders for a single purchaser equal to or exceeding $1,000,000
should be placed only for Class A shares, unless such purchase for Class B
or Class C Shares has been reviewed and approved by the Authorized Dealer's
appropriate supervisor.
2. Any purchase order for less than $1,000,000 may be for Class A, Class B or
Class C Shares in light of the relevant facts and circumstances, including:
a) the specific purchase order dollar amount;
b) the length of time the investor expects to hold his or her Shares;
c) whether the investor expects to reinvest dividends; and
d) any other relevant circumstances such as the availability of purchases
under a letter of intent, a combined discount or a cumulative discount,
as described in the Prospectus for the Fund, and any anticipated changes
in the funds net asset value per share.
There are instances when one method of purchasing Shares may be more appropriate
than the other. For example, investors who would qualify for a significant
discount from the maximum sales load on Class A Shares might determine that
payment of such a reduced up-front sales charge is preferable to the payment of
a higher ongoing distribution fee on Class B or Class C Shares. On the other
hand, investors who prefer not to pay an up-front sales charge may wish to defer
the sales charge by purchasing Class B or Class C Shares. Those who plan to
redeem their shares within 5 years might consider Class C Shares, particularly
if they do not expect to reinvest dividends in additional shares. Note that, if
an investor anticipates redeeming Class B Shares within a short period of time
such as one year, that investor may bear higher distribution expenses than if
Class A Shares had been purchased. In addition, investors who intend to hold
their shares for a significantly long time may not wish to bear the higher
ongoing-asset-based sales charges of Class B or Class C Shares, irrespective of
the fact that the CDSC that would apply to a redemption of Class B Shares is
reduced over time and is ultimately eliminated, and that the CDSC that would
apply to a redemption of Class C Shares is relatively short in duration and
small in amount.
Appropriate supervisory personnel within your organization must ensure that all
employees receiving investor inquiries about the purchase of shares of the Funds
advise the investor of the available pricing structures offered by the Funds and
the impact of choosing one method over another, including breakpoints and the
availability of letters of intent, combined purchases and cumulative discounts.
In some instances it may be appropriate for a supervisory person to discuss a
purchase with the investor.
These policies are effective immediately with respect to any order for the
purchase of shares of the Funds.
October 4, 1996
<PAGE>
<TABLE>
<CAPTION>
Exhibit A (Page 2)
- ------------------------------------------------
Nuveen Mutual Funds
----------------------
CUSIP QUOTRON
Number Symbol
- -----------------------------------------------------------------------
<S> <C> <C>
Nuveen Tax-Free Money Market Funds
Nuveen Tax-Exempt Money Market Fund, Inc. 670634104 NUVXX
Nuveen Tax-Free Reserves, Inc. 670639103 NRFXX
Nuveen CA Tax-Free Money Market Fund-
Service Portfolio 67062D303 NCTXX
Distribution Portfolio 67062D402 NCTXX
Institutional Portfolio 67062D501 NCTXX
Nuveen MA Tax-Free Money Market Fund-
Service Portfolio 670637107 NMAXX
Distribution Portfolio 670637206 NMAXX
Institutional Portfolio 670637305 NMAXX
Nuveen NY Tax-Free Money Market Fund-
Service Portfolio 670637404 NTFXX
Distribution Portfolio 670637503 NTFXX
Institutional Portfolio 670637602 NTFXX
- -----------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
A SHARE B SHARE C SHARE R SHARE
--------------------------------------------------------------------------------------
CUSIP Quotron CUSIP Quotron CUSIP Quotron CUSIP Quotron
Number Symbol Number Symbol Number Symbol Number Symbol
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Equity Mutual Funds
Nuveen Growth and Income Stock Fund 67064Y503 # 67064Y602 # 67064Y701 # 67064Y800 #
Nuveen Balanced Stock and Bond Fund 67064Y107 # 67064Y206 # 67064Y305 # 67064Y404 #
Nuveen Balanced Municipal and Stock Fund 67064Y883 # 67064Y875 # 67064Y867 # 67064Y859 #
Nuveen Flagship Utility Fund 33841G108 FUIAX - - 33841G306 FLUCX - -
Golden Rainbow Fund 33841G207 GLRBX - - - - - -
- ----------------------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------------------
Municipal Mutual Funds
Nuveen Municipal Bond Fund, Inc. 67065Q202 NMBAX 67065Q103 # 67065Q301 # 67065Q400 NUVBX
Nuveen Insured Municipal Bond Fund 67065Q509 NMBIX 67065Q608 # 67065Q707 # 67065Q806 NITNX
Nuveen Flagship All-American Tax
Exempt Fund 67065Q889 FLAAX 67065Q871 # 67065Q863 FAACX 67065Q855 #
Nuveen Flagship Limited Term Tax
Exempt Fund 67065Q848 FLTDX - - 67065Q830 FLTCX 67065Q822 #
Nuveen Flagship Intermediate Tax
Exempt Fund 67065Q814 FINTX - - 67065Q798 FINCX 67065Q780 #
Nuveen Flagship AL Municipal Bond Fund 67065P105 FABTX 67065P204 # 67065P303 # 67065P402 #
Nuveen Flagship AZ Municipal Bond Fund 67065L104 FAZTX 67065L203 # 67065L302 FAZCX 67065L401 NMARX
Nuveen CA Municipal Bond Fund 67065N100 NACCX* 67065N209 # 67065N308 # 67065N407 NCSPX
Nuveen CA Insured Municipal Bond Fund 67065N506 NCAIX* 67065N605 # 67065N704 # 67065N803 NCIBX
Nuveen Flagship CO Municipal Bond Fund 67065L609 FCOTX 67065L500 # 67065L807 # 67065L880 #
Nuveen Flagship CT Municipal Bond Fund 67065N886 FCTTX 67065N878 # 67065N860 FCTCX 67065N852 #
Nuveen Flagship FL Municipal Bond Fund 67065L708 FLOTX 67065L658 # 67065L641 NFLCX 67065L872 NMFLX
Nuveen Flagship FL Intermediate Municipal
Bond Fund 67065L864 FIFAX - - 67065L856 FIFCX 67065L849 #
Nuveen Flagship GA Municipal Bond Fund 67065P501 FGATX 67065P600 # 67065P709 FGACX 67065P808 #
Nuveen Flagship KS Municipal Bond Fund 67065R101 FKSTX 67065R200 # 67065R309 # 67065R408 #
Nuveen Flagship KY Municipal Bond Fund 67065R507 FKYTX 67065R606 # 67065R705 FKYCX 67065R804 #
Nuveen Flagship KY Limited Term
Municipal Bond Fund 67065R887 FLKAX - - 67065R879 FLKCX 67065R861 #
Nuveen Flagship LA Municipal Bond Fund 67065P881 FTLAX 67065P873 # 67065P865 FTLCX 67065P857 #
Nuveen MD Municipal Bond Fund 67065L831 NMDAX* 67065L823 # 67065L815 # 67065L799 NMMDX
Nuveen MA Municipal Bond Fund 67065N845 NMAAX* 67065N837 # 67065N829 # 67065N811 NBMAX
Nuveen MA Insured Municipal Bond Fund 67065N795 NMAIX* 67065N787 # 67065N779 # 67065N761 NIMAX
Nuveen Flagship MI Municipal Bond Fund 67065R853 FMITX 67065R846 # 67065R838 FLMCX 67065R820 NMMIX
Nuveen Flagship MO Municipal Bond Fund 67065R812 FMOTX 67065R796 # 67065R788 FMOCX 67065R770 #
- ----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
Effective February 1, 1997
<PAGE>
<TABLE>
<CAPTION>
Exhibit A (Page 3)
- ------------------------------------------------
Nuveen Mutual Funds
A SHARE B SHARE C SHARE R SHARE
--------------------------------------------------------------------------------------
CUSIP Quotron CUSIP Quotron CUSIP Quotron CUSIP Quotron
Number Symbol Number Symbol Number Symbol Number Symbol
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Municipal Mutual Funds (cont.)
Nuveen Flagship NJ Municipal Bond Fund 67065N753 NNJAX 67065N746 # 67065N738 NNJCX 67065N720 NMNJX
Nuveen Flagship NJ Intermediate
Municipal Bond Fund 67065N712 FNJIX - - 67065N696 # 67065N688 #
Nuveen Flagship NM Municipal Bond Fund 67065L781 FNMTX 67065L773 # 67065L765 # 67065L757 #
Nuveen Flagship NY Municipal Bond Fund 67065N670 NNYAX* 67065N662 # 67065N654 NNYCX 67065N647 NTNYX
Nuveen NY Insured Municipal Bond Fund 67065N639 NNYIX* 67065N621 # 67065N613 # 67065N597 NINYX
Nuveen Flagship NC Municipal Bond Fund 67065P840 FLNCX 67065P832 # 67065P824 FCNCX 67065P816 #
Nuveen Flagship OH Municipal Bond Fund 67065R762 FOHTX 67065R754 # 67065R747 FOHCX 67065R739 NXOHX
Nuveen Flagship PA Municipal Bond Fund 67065L740 FPNTX 67065L732 # 67065L724 FPNCX 67065L716 NBPAX
Nuveen Flagship SC Municipal Bond Fund 67065P790 FLSCX 67065P782 # 67065P774 # 67065P766 #
Nuveen Flagship TN Municipal Bond Fund 67065P758 FTNTX 67065P741 # 67065P733 FTNCX 67065P725 #
Nuveen Flagship VA Municipal Bond Fund 67065L690 FVATX 67065L682 # 67065L674 FVACX 67065L666 NMVAX
Nuveen Flagship WI Municipal Bond Fund 67065R721 FWIAX 67065R713 # 67065R697 # 67065R689 #
- ----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
# Will receive a supplemental listing when the number of class shareholder
accounts is 300 or when the class asset base reaches $1 million.
NOTE: A Quotron Symbol requires 1,000 shareholder accounts or $25 million in
assets.
*Denotes supplemental listing only
Effective February 1, 1997
<PAGE>
Exhibit 2 [LOGO OF NUVEEN]
John Nuveen & Co. Incorporated
Investment Bankers
333 West Wacker Drive
Chicago, Illinois 60606-1286
Telephone 312 917 7700
NUVEEN MUTUAL FUNDS
Distribution and Shareholder
Servicing Agreement
(Version for Bank-Affiliated Broker-Dealers)
As principal underwriter of shares of common stock (the "Shares") of the various
Nuveen non-money market open-end mutual funds and any future such funds
(collectively, the "Funds"), we offer to make available Shares for purchase by
your customers on the following terms:
1. In all sales of Shares to the public you shall act as agent for your
customers, and in no transaction shall you have any authority to act as
agent for any Fund or for us. The customers in question are for all purposes
your customers and not customers of John Nuveen & Co. Incorporated. We shall
execute transactions for each of your customers only upon your
authorization, it being understood in all cases that (a) you are acting as
agent for the customer; (b) the transactions are without recourse against
you by the customer; (c) as between you and the customer, the customer will
have full beneficial ownership of the securities; (d) each transaction is
initiated solely upon the order of the customer; and (e) each transaction is
for the account of the customer and not for your account.
2. Orders received from you shall be accepted by us only at the public offering
price applicable to each order, as established by the then current
Prospectus of the appropriate Fund, subject to the discounts provided in
such Prospectus. Upon receipt from you of any order to purchase Shares we
shall confirm to you in writing or by wire to be followed by a confirmation
in writing, and we shall concurrently send to your customer a letter
confirming such order, together with a copy of the appropriate Fund's
current Prospectus. Additional instructions may be forwarded to you from
time to time. All orders are subject to acceptance or rejection by us in our
sole discretion.
3. Members of the general public, including your customers, may purchase Shares
only at the public offering price determined in the manner described in the
current Prospectus of the appropriate Fund. Shares will be offered at a
public offering price based upon the net asset value of such Shares plus,
with respect to certain class(es) of Shares, a sales charge which, together
with the amount of that sales charge to be retained by banks or bank-
affiliated broker-dealers acting as agent for their customers, is set forth
in the Prospectus. You may receive a distribution fee and/or a service fee
with respect to certain class(es) of Shares for which such fees are
applicable, as provided in the applicable Prospectus, which distribution fee
and/or service fee shall be payable for such periods and at such intervals
as are from time to time specified by us. Your placement of an order for
Shares after the date of any notice of such amendment shall conclusively
evidence your agreement to be bound thereby. Reduced sales charges may also
be available as a result of a cumulative discount or pursuant to a letter of
intent. Further information as to such reduced sales charges, if any, is set
forth in the appropriate Fund Prospectus. You agree to advise us promptly as
to the amounts of any sales made by or through you to the public qualifying
for reduced sales charges.
4. By accepting this Agreement, you agree:
a) That you will purchase Shares only from us, and only to cover purchase
orders already received from your customers;
b) That you will not withhold placing with us orders received from your
customers so as to profit yourself as a result of such withholding; and
c) That, with respect to the sale of Shares of Funds that offer multiple
classes of Shares, you will comply with the terms of the Policies and
Procedures with Respect to Sales of Multiple Classes of Shares, attached
hereto as Exhibit A.
5. We will not accept from you any conditional orders for Shares.
<PAGE>
6. Payment for Shares ordered from us shall be in New York clearing house
funds and must be received by the Funds' agent, Shareholder Services, Inc.,
P.O. Box 5330, Denver, Colorado 80217-5330, within three business days
after our acceptance of your order. If such payment is not received, we
reserve the right, without notice, forthwith to cancel the sale or, at our
option, to cause the Fund to redeem the Shares ordered, in which case we
may hold you responsible for any loss, including loss of profit, suffered
by us as result of your or your customer's failure to make such payment. If
any Shares confirmed to you or your customer under the terms of this
agreement are repurchased by the issuing Fund or by us as agent for the
Fund, or are tendered for repurchase, within seven business days after the
date of our confirmation of the original purchase order, you shall promptly
refund to us the full discount, commission, or other concession, if any,
allowed or paid to you on such Shares.
7. Shares sold hereunder shall be available in book-entry form on the books of
Shareholder Services, Inc. unless other instructions have been given.
8. No person is authorized to make any representations concerning Shares or
any Fund except those contained in the applicable current Prospectus and
printed information issued by the appropriate Fund or by us as information
supplemental to such Prospectus. You agree that you will not offer or sell
any Shares except under circumstances that will result in compliance with
the applicable Federal and state securities laws and that in connection
with sales and offers to sell Shares you will furnish to each person to
whom any such sale or offer is made a copy of the then current Prospectus
for the appropriate Fund (as amended or supplemented) and will not furnish
to any persons any information relating to Shares which is inconsistent in
any respect with the information contained in the then current Prospectus
or cause any advertisement to be published in any newspaper or posted in
any public place without our consent and the consent of the appropriate
Fund. You shall be responsible for any required filing of such advertising.
9. All sales will be made subject to our receipt of Shares from the
appropriate Fund. We reserve the right, in our discretion, without notice,
to modify, suspend or withdraw entirely the offering of any Shares, and
upon notice to change the price, sales charge, or dealer discount or to
modify, cancel or change the terms of this agreement.
10. Your acceptance of this agreement constitutes a representation that you are
a registered securities broker-dealer and a member in good standing of the
National Association of Securities Dealers, Inc. and agree to comply with
all state and Federal laws, rules and regulations applicable to
transactions hereunder and with the Rules of Fair Practice of the NASD,
including specifically Section 26 of Article III thereof. You likewise
agree that you will not offer to sell Shares in any state or other
jurisdiction in which they may not lawfully be offered for sale. We agree
to advise you currently of the identity of those states and jurisdictions
in which the Shares may lawfully be offered for sale.
11. You shall provide such office space and equipment, telephone facilities,
personnel and literature distribution as is necessary or appropriate for
providing information and services to your customers. Such services and
assistance may include, but not be limited to, establishment and
maintenance of shareholder accounts and records, processing purchase and
redemption transactions, answering routine inquiries regarding the Funds,
and such other services as may be agreed upon from time to time and as may
be permitted by applicable statute, rule, or regulation. You shall perform
these services in good faith and with reasonable care. You shall
immediately inform the Funds or us of all written complaints received by
you from Fund shareholders relating to the maintenance of their accounts
and shall promptly answer all such complaints.
12. All communications to us should be sent to 333 W. Wacker Drive, Chicago,
Illinois 60606. Any notice to you shall be duly given if mailed or
telegraphed to you at the address specified by you below.
13. This Agreement shall be construed in accordance with the laws of the State
of Illinois. This Agreement is subject to the Prospectuses of the Funds
from time to time in effect, and, in the event of a conflict, the terms of
the Prospectuses shall control. References herein to the "Prospectus" of a
Fund shall mean the prospectus and statement of additional information of
such Fund as from time to time in effect. Any changes, modifications or
additions reflected in any such Prospectus shall be effective on the date
of such Prospectus (or supplement thereto) unless specified otherwise. This
Agreement shall supersede any prior distribution agreement with respect to
the Funds.
John Nuveen & Co. Incorporated
| |
John Nuveen | |
Authorized Signature | |
_______________________________________________________________________________
<PAGE>
We have read the foregoing agreement and accept and agree to the terms and
conditions therein.
Firm | | | | | | | | | | | | | | | |
- --------------------------------------------------------------------------------
Month Day Year
Authorized Signature | | | | | | | | | | | | | | | |
- --------------------------------------------------------------------------------
Print Name of | | | | | | | | | | | | | | | |
- --------------------------------------------------------------------------------
Address | | | | | | | | | | | | | | | |
- --------------------------------------------------------------------------------
City | | | | | | | | | | |Zip | | | | |
- --------------------------------------------------------------------------------
Tax ID Number | | | | | | | | | | NASD | | | | |
- --------------------------------------------------------------------------------
The above agreement should be executed in duplicate and both copies returned to
us for signature. We will return a fully executed copy to you for your files.
Please return the completed agreement to :
John Nuveen & Co. Incorporated, 333 West Wacker Drive, Chicago, Illinois
60606-1286
<PAGE>
Exhibit A to Nuveen Mutual Funds
Dealer Distribution and
Shareholder Servicing Agreement
Policies and Procedures With Respect to
Sales of Multiple Classes of Funds
The Nuveen non-money market open-end mutual funds (the "Funds") have one or more
of the following classes of shares generally available to the public: Class A
Shares, which are normally subject to an up-front sales charge and a service
fee; Class B Shares, which are subject to an asset-based sales charge, a service
fee, and a declining contingent deferred sales charge ("CDSC"); and Class C
Shares, which are subject to an asset-based sales charge, a service fee, and a
12-month CDSC, it is important for an investor to choose the method of
purchasing shares which best suits his or her particular circumstances. To
assist investors in these decisions, John Nuveen & Co. Incorporated, underwriter
for the Nuveen Mutual Funds, has instituted the following policies with respect
to orders for Fund shares. These policies apply to each Authorized Dealer which
distributes Fund shares.
1. Purchase orders for a single purchaser equal to or exceeding $1,000,000
should be placed only for Class A shares, unless such purchase for Class B
or Class C Shares has been reviewed and approved by the Authorized Dealer's
appropriate supervisor.
2. Any purchase order for less than $1,000,000 may be for Class A, Class B or
Class C Shares in light of the relevant facts and circumstances, including:
a) the specific purchase order dollar amount;
b) the length of time the investor expects to hold his or her Shares;
c) whether the investor expects to reinvest dividends; and
d) any other relevant circumstances such as the availability of purchases
under a letter of intent, a combined discount or a cumulative discount,
as described in the Prospectus for the Fund, and any anticipated changes
in the Funds net asset value per share.
There are instances when one method of purchasing Shares may be more appropriate
than the other. For example, investors who would qualify for a significant
discount from the maximum sales load on Class A Shares might determine that
payment of such a reduced up-front sales charge is preferable to the payment of
a higher ongoing distribution fee on Class B or Class C Shares. On the other
hand, investors who prefer not to pay an up-front sales charge may wish to defer
the sales charge by purchasing Class B or Class C Shares. Those who plan to
redeem their shares within 5 years might consider Class C Shares, particularly
if they do not expect to reinvest dividends in additional shares. Note that, if
an investor anticipates redeeming Class B Shares within a short period of time
such as one year, that investor may bear higher distribution expenses than if
Class A Shares had been purchased. In addition, investors who intend to hold
their shares for a significantly long time may not wish to bear the higher
ongoing-asset-based sales charges of Class B or Class C Shares, irrespective of
the fact that the CDSC that would apply to a redemption of Class B shares is
reduced over time and is ultimately eliminated, and that the CDSC that would
apply to a redemption of Class C Shares is relatively short in duration and
small in amount.
Appropriate supervisory personnel within your organization must ensure that all
employees receiving investor inquiries about the purchase of shares of the Funds
advise the investor of the available pricing structures offered by the Funds and
the impact of choosing one method over another, including breakpoints and the
availability of letters of intent, combined purchases and cumulative discounts.
In some instances it may be appropriate for a supervisory person to discuss a
purchase with the investor.
These policies are effective immediately with respect to any order for the
purchase of shares of the Funds.
October 4, 1996
<PAGE>
<TABLE>
<CAPTION>
Exhibit A (Page 2)
- ----------------------------------------------
Nuveen Mutual Funds
--------------------
CUSIP Quotron
Number Symbol
- ------------------------------------------------------------------
Nuveen Tax-Free Money Market Funds
<S> <C> <C>
Nuveen Tax-Exempt Money Market Fund, Inc. 670634104 NUVXX
Nuveen Tax-Free Reserves, Inc. 670639103 NRFXX
Nuveen CA Tax-Free Money Market Fund-
Service Portfolio 67062D303 NCTXX
Distribution Portfolio 67062D402 NCTXX
Institutional Portfolio 67062D501 NCTXX
Nuveen MA Tax-Free Money Market Fund-
Service Portfolio 670637107 NMAXX
Distribution Portfolio 670637206 NMAXX
Institutional Portfolio 670637305 NMAXX
Nuveen NY Tax-Free Money Market Fund-
Service Portfolio 670637404 NTFXX
Distribution Portfolio 670637503 NTFXX
Institutional Portfolio 670637602 NTFXX
- ------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
A SHARE B SHARE C SHARE R SHARE
------------------------------------------------------------------------------
CUSIP Quotron CUSIP Quotron CUSIP Quotron CUSIP Quotron
Number Symbol Number Symbol Number Symbol Number Symbol
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Equity Mutual Funds
Nuveen Growth and Income Stock Fund 67064Y403 # 67064Y602 # 67064Y701 # 67064Y800 #
Nuveen Balanced Stock and Bond Fund 67064Y107 # 67064Y206 # 67064Y305 # 67064Y404 #
Nuveen Balanced Municipal and Stock Fund 67064Y883 # 67064Y875 # 67064Y867 # 67064Y859 #
Nuveen Flagship Utility Fund 33841G108 FUIAX - - 33841G306 FLUCX - -
Golden Rainbow Fund 33841G207 GLRBX - - - - - -
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
Municipal Mutual Funds
Nuveen Municipal Bond Fund, Inc. 67065Q202 NMBAX 67065Q103 # 67065Q301 # 67065Q400 NUVBX
Nuveen Insured Municipal Bond Fund 67065Q509 NMBIX 67065Q608 # 67065Q707 # 67065Q806 NITNX
Nuveen Flagship All-American Tax-Exempt Fund 67065Q889 FLAAX 67065Q871 # 67065Q863 FAACX 67065Q855 #
Nuveen Flagship Limited Term Tax-Exempt Fund 67065Q848 FLTDX - - 67065Q830 FLTCX 67065Q822 #
Nuveen Flagship Intermediate Tax-Exempt Fund 67065Q814 FINTX - - 67065Q798 FINCX 67065Q780 #
Nuveen Flagship AL Municipal Bond Fund 67065P105 FABTX 67065P204 # 67065P303 # 67065P402 #
Nuveen Flagship AZ Municipal Bond Fund 67065L104 FAZTX 67065L203 # 67065L302 FAZCX 67065L401 NMARX
Nuveen CA Municipal Bond Fund 67065N100 NCAAX* 67065N209 # 67065N308 # 67065N407 NCSPX
Nuveen CA Insured Municipal Bond Fund 67065N506 NCAIX* 67065N605 # 67065N704 # 67065N803 NCIBX
Nuveen Flagship CO Municipal Bond Fund 67065L609 FCOTX 67065L500 # 67065L807 # 67065L880 #
Nuveen Flagship CT Municipal Bond Fund 67065N886 FCTTX 67065N878 # 67065N860 FTCTX 67065N852 #
Nuveen Flagship FL Municipal Bond Fund 67065L708 FLOTX 67065L658 # 67065L641 NFLCX 67065L872 NMFLX
Nuveen Flagship FL Intermediate Municipal Bond Fund 67065L864 FIFAX - - 67065L856 FIFCX 67065L849 #
Nuveen Flagship GA Municipal Bond Fund 67065P501 FGATX 67065P600 # 67065P709 FGACX 67065P808 #
Nuveen Flagship KS Municipal Bond Fund 67065R101 FKSTX 67065R200 # 67065R309 # 67065R408 #
Nuveen Flagship KY Municipal Bond Fund 67065R507 FKYTX 67065R606 # 67065R705 FKYCX 67065R804 #
Nuveen Flagship KY Limited Term Municipal Bond Fund 67065R887 FLKAX - - 67065R879 FLKCX 67065R861 #
Nuveen Flagship LA Municipal Bond Fund 67065P881 FTLAX 67065P873 # 67065P865 FTLCX 67065P857 #
Nuveen MD Municipal Bond Fund 67065L831 NMDAX* 67065L823 # 67065L815 # 67065L799 NMMDX
Nuveen MA Municipal Bond Fund 67065N845 NMAAX* 67065N837 # 67065N829 # 67065N811 NBMAX
Nuveen MA Insured Municipal Bond Fund 67065N795 NMAIX* 67065N787 # 67065N779 # 67065N761 NIMAX
Nuveen Flagship MI Municipal Bond Fund 67065R853 FMITX 67065R846 # 67065R838 FLMCX 67065R820 NMMIX
Nuveen Flagship MO Municipal Bond Fund 67065R812 FMOTX 67065R796 # 67065R788 FMOCX 67065R770 #
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
Effective February 1, 1997
<PAGE>
<TABLE>
<CAPTION>
Exhibit A (Page 3)
- -----------------------------
Nuveen Mutual Funds
A SHARE B SHARE C SHARE R SHARE
-------------------------------------------------------------------------------
CUSIP Quotron CUSIP Quotron CUSIP Quotron CUSIP Quotron
Number Symbol Number Symbol Number Symbol Number Symbol
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Municipal Mutual Funds (cont.)
Nuveen Flagship NJ Municipal Bond Fund 67065N753 NNJAX 67065N746 # 67065N738 NNJCX 67065N720 NMNJX
Nuveen Flagship NJ Intermediate Municipal Bond Fund 67056N712 FNJIX - - 67065N696 # 67065N688 #
Nuveen Flagship NM Municipal Bond Fund 67065L781 FNMTX 67065L773 # 67065L765 # 67065L757 #
Nuveen Flagship NY Municipal Bond Fund 67065N670 NNYAX* 67065N662 # 67065N654 NNYCX 67065N647 NTNYX
Nuveen Flagship NY Insured Municipal Bond Fund 67065N639 NNYIX* 67065N621 # 67065N613 # 67065N597 NINYX
Nuveen Flagship NC Municipal Bond Fund 67065P840 FLNCX 67065P832 # 67065P824 FCNCX 67065P816 #
Nuveen flagship OH Municipal Bond Fund 67065R762 FOHTX 67065R754 # 67065R747 FOHCX 67065R739 NXOHX
Nuveen Flagship PA Municipal Bond Fund 67065L740 FPNTX 67065L732 # 67065L724 FPNCX 67065L716 NBPAX
Nuveen Flagship SC Municipal Bond Fund 67065P790 FLSCX 67065P782 # 67065P774 # 67065P766 #
Nuveen Flagship TN Municipal Bond Fund 67065P758 FTNTX 67065P741 # 67065P733 FTNCX 67065P725 #
Nuveen Flagship VA Municipal Bond Fund 67065L690 FVATX 67065L682 # 67065L674 FVACX 67065L666 NMVAX
Nuveen Flagship WI Municipal Bond Fund 67065R721 FWIAX 67065R713 # 67065R697 # 67065R689 #
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
# Will receive a supplemental listing when the number of class shareholder
accounts is 300 or when the class asset base reaches $1 million.
NOTE: A Quotron Symbol requires 1,000 shareholder accounts or $25 million in
assets.
*Denotes supplemental listing only
<PAGE>
Exhibit 3
NUVEEN
John Nuveen & Co. Incorporated
Investment Bankers
333 West Wacker Drive
Chicago, Illinois 60606-1286
Telephone 312 917-7700
NUVEEN MUTUAL FUNDS
Distribution and Shareholder
Servicing Agreement
(Bank Version)
As principal underwriter of shares of common stock (the "Shares") of the various
Nuveen non-money marker open-end mutual funds and any future such funds
(collectively, the "Funds"), we offer to make available Shares for purchase by
your customers on the following terms:
1. In all sales of Shares to the public you shall act as agent for your
customers, and in no transaction shall you have any authority to act as
agent for any Fund or for us. The customers in question are for all
purposes your customers and not customers of John Nuveen & Co.
Incorporated. We shall execute transactions for each of your customers only
upon your authorization, it being understood in all cases that (a) you are
acting as agent for the customer; (b) the transactions are without recourse
against you by the customer; (c) as between you and the customer, the
customer will have full beneficial ownership of the securities; (d) each
transaction is initiated solely upon the order of the customer; and (e)
each transaction is for the account of the customer and not for your
account.
2. Orders received from you shall be accepted by us only at the public
offering price applicable to each order, as established by the then current
Prospectus of the appropriate Fund, subject to the discounts provided in
such Prospectus. Upon receipt from you of any order to purchase Shares we
shall confirm to you in writing or by wire to be followed by a confirmation
in writing, and we shall concurrently send to your customer a letter
confirming such order, together with a copy of the appropriate Fund's
current Prospectus. Additional instructions may be forwarded to you from
time to time. All orders are subject to acceptance or rejection by us in
our sole discretion.
3. Members of the general public, including your customers, may purchase
Shares only at the public offering price determined in the manner described
in the current Prospectus of the appropriate Fund. Shares will be offered
at a public offering price based upon the net asset value of such Shares
plus, with respect to certain class(es) of Shares, a sales charge which,
together with the amount of that sales charge to be retained by banks
acting as agent for their customers, is set forth in the Prospectus. You
may receive a distribution fee and/or a service fee with respect to
certain class(es) for Shares for which such fees are applicable, as
provided in the applicable Prospectus, which distribution fee and/or
service fee shall be payable for such periods and at such intervals as are
from time to time specified by us. Your placement of an order for Shares
after the date of any notice of such amendment shall conclusively evidence
your agreement to be bound thereby. Reduced sales charges may also be
available as a result of a cumulative discount or pursuant to a letter of
intent. Further information as to such reduced sales charges, if any, is
set forth in the appropriate Fund Prospectus. You agree to advise us
promptly as to the amounts of any sales made by or through you to the
public qualifying for reduced sales charges.
4. By accepting this Agreement, you agree:
(a) That you will purchase Shares only from us, and only to cover purchase
orders already received from your customers;
(b) That you will not withhold placing with us orders received from your
customers so as to profit yourself as a result of such withholding;
and
(c) That, with respect to the sale of Shares of Funds that offer multiple
classes of Shares, you will comply with the terms of the Policies and
Procedures with Respect to Sales of Multiple Classes of Shares,
attached hereto as Exhibit A.
5. We will not accept from you any conditional orders for Shares.
<PAGE>
6. Payment for Shares ordered from us shall be in New York clearing house
funds and must be received by the Funds' agent, Shareholder Services, Inc.,
P.O. Box 5330, Denver, Colorado 80217-5330, within three business days
after our acceptance of your order. If such payment is not received, we
reserve the right, without notice, forthwith to cancel the sale or, at our
option, to cause the Fund to redeem the Shares ordered, in which case we
may hold you responsible for any loss, including loss of profit, suffered
by us as result of your or your customer's failure to make such payment. If
any Shares confirmed to you or your customer under the terms of this
agreement are repurchased by the issuing Fund or by us as agent for the
Fund, or are tendered for repurchase, within seven business days after the
date of our confirmation of the original purchase order, you shall promptly
refund to us the full discount, commission, or other concession, if any,
allowed or paid to you on such Shares.
7. Shares sold hereunder shall be available in book-entry form on the books of
Shareholder Services, Inc. unless other instructions have been given.
8. No person is authorized to make any representations concerning Shares or
any Fund except those contained in the applicable current Prospectus and
printed information issued by the appropriate Fund or by us as information
supplemental to such Prospectus. You agree that you will not offer or sell
any Shares except under circumstances that will result in compliance with
the applicable Federal and state securities laws and that in connection
with sales and offers to sell Shares you will furnish to each person to
whom any such sale or offer is made a copy of the then current Prospectus
for the appropriate Fund (as amended or supplemented) and will not furnish
to any persons any information relating to Shares which is inconsistent in
any respect with the information contained in the then current Prospectus
or cause any advertisement to be published in any newspaper or posted in
any public place without our consent and the consent of the appropriate
Fund. You shall be responsible for any required filing of such advertising.
9. All sales will be made subject to our receipt of Shares from the
appropriate Fund. We reserve the right, in our discretion, without notice,
to modify, suspend or withdraw entirely the offering of any Shares, and
upon notice to change the price, sales charge, or dealer discount or to
modify, cancel or change the terms of this agreement.
10. Your acceptance of this agreement constitutes a representation that you are
a bank as defined in Section 3(a)(6) of the Securities Exchange Act of
1934, as amended, and are duly authorized to engage in the transactions to
be performed hereunder. You hereby agree to comply with all applicable
state and Federal laws, rules and regulations applicable to transactions
hereunder. You likewise agree that you will not make Shares available in
any state or other jurisdiction in which they may not lawfully be offered
for sale.
11. You shall provide such office space and equipment, telephone facilities,
personnel and literature distribution as is necessary or appropriate for
providing information and services to your customers. Such services and
assistance may include, but not be limited to, establishment and
maintenance of shareholder accounts and records, processing purchase and
redemption transactions, answering routine inquiries regarding the Funds,
and such other services as may be agreed upon from time to time and as may
be permitted by applicable statute, rule, or regulation. You shall perform
these services in good faith and with reasonable care. You shall
immediately inform the Funds or us of all written complaints received by
you from Fund shareholders relating to the maintenance of their accounts
and shall promptly answer all such complaints.
12. All communications to us should be sent to 333 W. Wacker Drive, Chicago,
Illinois 60606. Any notice to you shall be duly given if mailed or
telegraphed to you at the address specified by you below.
13. This Agreement shall be construed in accordance with the laws of the State
of Illinois. This Agreement is subject to the Prospectuses of the Funds
from time to time in effect, and, in the event of a conflict, the terms of
the Prospectuses shall control. References herein to the "Prospectus" of a
Fund shall mean the prospectus and statement of additional information of
such Fund as from time to time in effect. Any changes, modifications or
additions reflected in any such Prospectus shall be effective on the date
of such Prospectus (or supplement thereto) unless specified otherwise. This
Agreement shall supersede any prior dealer distribution agreement with
respect to the Funds.
John Nuveen & Co. Incorporated
John Nuveen
Authorized Signature
<PAGE>
We have read the foregoing agreement and accept and agree to the terms and
conditions therein.
Firm_____|___|___|___|___|___|___|___|___|___|___|___|___|___|___|___|___|_____|
Month Day Year
Authorized Signature ____________________________________|___|_______|_________|
Print Name of _|___|___|___|___|___|___|___|___|_____|___|___|___|___|___|_____|
Address _|___|___|___|___|___|___|___|___|___|___|___|___|___|___|___|___|_____|
City_|___|___|___|___|___|___|___|___|___|___|___|___|ZIP |__|___|___|___|_____|
Tax ID Number _|___|___|___|___|___|___|___| NASD _|___|___|___|___|___|___|___|
The above agreement should be executed in duplicate and both copies returned to
us for signature. We will return a fully executed copy to you for your files.
Please turn the completed agreement to:
John Nuveen & Co. Incorporated, 333 West Wacker Drive, Chicago, Illinois
60606-1286
<PAGE>
Exhibit A to Nuveen Mutual Funds
Dealer Distribution and
Shareholder Servicing Agreement
Policies and Procedures With Respect to
Sales of Multiple Classes of Funds
The Nuveen non-money market open-end mutual funds (the "Funds") have one or more
of the following classes of shares generally available to the public: Class A
Shares, which are normally subject to an up-front sales charge and a service
fee: Class B Shares, which are subject to an asset-based sales charge, a
service fee, and a declining contingent deferred sales charge ("CDSC"); and
Class C Shares, which are subject to an asset-based sales charge, a service fee,
and a 12-month CDSC, it is important for an investor to choose the method of
purchasing shares which best suits his or her particular circumstances. To
assist investors in these decisions, John Nuveen & Co. Incorporated, underwriter
for the Nuveen Mutual Funds, has instituted the following policies with respect
to orders for Fund shares. These policies apply to each Authorized Dealer which
distributes Fund shares.
1. Purchase orders for a single purchaser equal to or exceeding $1,000,000
should be placed only for Class A shares, unless such purchase for Class B
or Class C Shares has been reviewed and approved by the Authorized Dealer's
appropriate supervisor.
2. Any purchase order for less than $1,000,000 may be for Class A, Class B or
Class C Shares in light of the relevant facts and circumstances, including:
a) the specific purchase order dollar amount;
b) the length of time the investor expects to hold his or her Shares;
c) whether the investor expects to reinvest dividends; and
d) any other relevant circumstances such as the availability of purchases
under a letter of intent, a combined discount or a cumulative discount,
as described in the Prospectus for the Fund, and any anticipated changes
in the funds net asset value per share.
There are instances when one method of purchasing Shares may be more appropriate
than the other. For example, investors who would qualify for a significant
discount from the maximum sales load on Class A Shares might determine that
payment of such a reduced up-front sales charge is preferable to the payment of
a higher ongoing distribution fee on Class B or Class C Shares. On the other
hand, investors who prefer not to pay an up-front sales charge may wish to defer
the sales charge by purchasing Class B or Class C Shares. Those who plan to
redeem their shares within 5 years might consider Class C Shares, particularly
if they do not expect to reinvest dividends in additional shares. Note that, if
an investor anticipates redeeming Class B Shares within a short period of time
such as one year, that investor may bear higher distribution expenses than if
Class A Shares had been purchased. In addition, investors who intend to hold
their shares for a significantly long time may not wish to bear the higher
ongoing-asset-based sales charges of Class B or Class C Shares, irrespective of
the fact that the CDSC that would apply to a redemption of Class B Shares is
reduced over time and is ultimately eliminated, and that the CDSC that would
apply to a redemption of Class C Shares is relatively short in duration and
small in amount.
Appropriate supervisory personnel within your organization must ensure that all
employees receiving investor inquiries about the purchase of shares of the Funds
advise the investor of the available pricing structures offered by the Funds and
the impact of choosing one method over another, including breakpoints and the
availability of letters of intent, combined purchases and cumulative discounts.
In some instances it may be appropriate for a supervisory person to discuss a
purchase with the investor.
These policies are effective immediately with respect to any order for the
purchase of shares of the Funds.
October 4, 1996
<PAGE>
Exhibit A (Page 2)
- ------------------
Nuveen Mutual Funds
<TABLE>
<CAPTION>
-------------------
CUSIP Quotron
Number Symbol
- ---------------------------------------------------------------
<S> <C> <C>
Nuveen Tax-Free Money Market Funds
Nuveen Tax-Exempt Money Market Fund, Inc. 670634104 NUVXX
Nuveen Tax-Free Reserves, Inc. 670639103 NRFXX
Nuveen CA Tax-Free Money Market Fund-
Service Portfolio 67062D303 NCTXX
Distribution Portfolio 67062D402 NCTXX
Institutional Portfolio 67062D501 NCTXX
Nuveen MA Tax-Free Money Market Fund-
Service Portfolio 670637107 NMAXX
Distribution Portfolio 670637206 NMAXX
Institutional Portfolio 670637305 NMAXX
Nuveen NY Tax-Free Money Market Fund-
Service Portfolio 670637404 NTFXX
Distribution Portfolio 670637503 NTFXX
Institutional Portfoflio 670637602 NTFXX
- ---------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
A SHARE B SHARE C SHARE R SHARE
-------------------------------------------------------------------------
CUSIP Quotron CUSIP Quotron CUSIP Quotron CUSIP Quotron
Number Symbol Number Symbol Number Symbol Number Symbol
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Equity Mutual Funds
Nuveen Growth and Income Stock Fund 67064Y503 # 67064Y602 # 67064Y701 # 67064Y800 #
Nuveen Balanced Stock and Bond Fund 67064Y107 # 67064Y206 # 67064Y305 # 67064Y404 #
Nuveen Balanced Municipal and Stock Fund 67064Y883 # 67064Y875 # 67064Y867 # 67064Y859 #
Nuveen Flagship Utility Fund 33841G108 FUIAX - - 33841G306 FLUCX - -
Golden Rainbow Fund 33841G207 GLRBX - - - - - -
- ------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------
Municipal Mutual Funds
Nuveen Municipal Bond Fund, Inc. 67065Q202 NMBAX 67065Q103 # 67065Q301 # 67065Q400 NUVBX
Nuveen Insured Municipal Bond Fund 67065Q509 NMBIX 67065Q608 # 67065Q707 # 67065Q806 NITNX
Nuveen Flagship All-American Tax Exempt Fund 67065Q889 FLAAX 67065Q871 # 67065Q863 FAACX 67065Q855 #
Nuveen Flagship Limited Term Tax Exempt Fund 67065Q848 FLTDX - - 67065Q830 FLTCX 67065Q822 #
Nuveen Flagship Intermediate Tax Exempt Fund 67065Q814 FINTX - - 67065Q798 FINCX 67065Q780 #
Nuveen Flagship AL Municipal Bond Fund 67065P105 FABTX 67065P204 # 67065P303 # 67065P402 #
Nuveen Flagship AZ Municipal Bond Fund 67065L104 FAZTX 67065L203 # 67065L302 FAZCX 67065L401 NMARX
Nuveen CA Municipal Bond Fund 67065N100 NCAAX* 67065N209 # 67065N308 # 67065N407 NCSPX
Nuveen CA Insured Municipal Bond Fund 67065N506 NCAIX* 67065N605 # 67065N704 # 67065N803 NCIBX
Nuveen Flagship CO Municipal Bond Fund 67065L609 FCOTX 67065L500 # 67065L807 # 67065L880 #
Nuveen Flagship CT Municipal Bond Fund 67065N886 FCTTX 67065N878 # 67065N860 FCTCX 67065N852 #
Nuveen Flagship FL Municipal Bond Fund 67065L708 FLOTX 67065L858 # 67065L641 NFLCX 67065L872 NMFLX
Nuveen Flagship FL Intermediate Municipal Bond Fund 67065L864 FIFAX - # 67065L856 FIFCX 67065L849 #
Nuveen Flagship GA Municipal Bond Fund 67065P501 FGATX 67065P600 # 67065P709 FGACX 67065P808 #
Nuveen Flagship KS Municipal Bond Fund 67065R101 FKSTX 67065R200 # 67065R309 # 67065R408 #
Nuveen Flagship KY Municipal Bond Fund 67065R507 FKYTX 67065R606 # 67065R705 FKYCX 67065R804 #
Nuveen Flagship KY Limited Term Municipal Bond Fund 67065R887 FLKAX - # 67065R879 FLKCX 67065R861 #
Nuveen Flagship LA Municipal Bond Fund 67065P881 FTLAX 67065P873 # 67065P865 FTLCX 67065P857 #
Nuveen MO Municipal Bond Fund 67065L831 NMDAX* 67065L823 # 67065L815 # 67065L799 NMMDX
Nuveen MA Municipal Bond Fund 67065N845 NMAAX* 67065N837 # 67065N829 # 67065N811 NBMAX
Nuveen MA Insured Municipal Bond Fund 67065N795 NMAIX* 67065N787 # 67065N779 # 67065N761 NIMAX
Nuveen Flagship MI Municipal Bond Fund 67065R853 FMITX 67065R846 # 67065R838 FLMCX 67065R820 NMMIX
Nuveen Flagship MO Municipal Bond Fund 67065R812 FMOTX 67065R796 # 67065R788 FMOCX 67065R770 #
- ------------------------------------------------------------------------------------------------------------------------------
</TABLE>
Effective February 1, 1997
<PAGE>
<TABLE>
<CAPTION>
Exhibit A (Page 3)
- ------------------------------------------------
Nuveen Mutual Funds
A SHARE B SHARE C SHARE R SHARE
--------------------------------------------------------------------------------------
CUSIP Quotron CUSIP Quotron CUSIP Quotron CUSIP Quotron
Number Symbol Number Symbol Number Symbol Number Symbol
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Municipal Mutual Funds (cont.)
Nuveen Flagship NJ Municipal Bond Fund 67065N753 NNJAX 67065N746 # 67065N738 NNJCX 67065N720 NMNJX
Nuveen Flagship NJ Intermediate
Municipal Bond Fund 67065N712 FNJIX - - 67065N696 # 67065N688 #
Nuveen Flagship NM Municipal Bond Fund 67065L781 FNMTX 67065L773 # 67065L765 # 67065L757 #
Nuveen Flagship NY Municipal Bond Fund 67065N670 NNYAX* 67065N662 # 67065N654 NNYCX 67065N647 NTNYX
Nuveen NY Insured Municipal Bond Fund 67065N639 NNYIX* 67065N621 # 67065N613 # 67065N597 NINYX
Nuveen Flagship NC Municipal Bond Fund 67065P840 FLNCX 67065P832 # 67065P824 FCNCX 67065P816 #
Nuveen Flagship OH Municipal Bond Fund 67065R762 FOHTX 67065R754 # 67065R747 FOHCX 67065R739 NXOHX
Nuveen Flagship PA Municipal Bond Fund 67065L740 FPNTX 67065L732 # 67065L724 FPNCX 67065L716 NBPAX
Nuveen Flagship SC Municipal Bond Fund 67065P790 FLSCX 67065P782 # 67065P774 # 67065P766 #
Nuveen Flagship TN Municipal Bond Fund 67065P758 FTNTX 67065P741 # 67065P733 FTNCX 67065P725 #
Nuveen Flagship VA Municipal Bond Fund 67065L690 FVATX 67065L682 # 67065L674 FVACX 67065L666 NMVAX
Nuveen Flagship WI Municipal Bond Fund 67065R721 FWIAX 67065R713 # 67065R697 # 67065R689 #
- ----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
# Will receive a supplemental listing when the number of class shareholder
accounts is 300 or when the class asset base reaches $1 million.
NOTE: A Quotron Symbol requires 1,000 shareholder accounts or $25 million in
assets.
*Denotes supplemental listing only
Effective February 1, 1997
<PAGE>
CUSTODY AGREEMENT
-----------------
THIS AGREEMENT is made as of the 1st day of February, 1997 by and between
NUVEEN FLAGSHIP MUNICIPAL TRUST (the "Fund"), and THE CHASE MANHATTAN BANK.
WITNESSETH
WHEREAS, the Fund is authorized to issue shares in separate series, with
each such series representing interest in a separate portfolio of securities and
other assets; and
WHEREAS, the Fund intends to initially offer shares in the five series,
Nuveen Municipal Bond Fund, Nuveen Insured Municipal Bond Fund, Nuveen Flagship
All-American Municipal Bond Fund, Nuveen Flagship Limited Term Municipal Bond
Fund and Nuveen Flagship Intermediate Municipal Bond Fund (such series together
with all other series subsequently established by the Fund and made subject to
this Contract in accordance with paragraph 33, being herein referred to as the
"Fund(s)"):
NOW, THEREFORE, in consideration of the premises and mutual covenants
herein contained it is agreed between the parties hereto as follows:
1. Appointment. The Fund hereby appoints The Chase Manhattan Bank to act as
custodian of its portfolio securities, cash and other property on the terms set
forth in this Agreement. The Chase Manhattan Bank accepts such appointment and
agrees to furnish the services herein set forth in return for the compensation
as provided in Section 23 of this Agreement.
2. Delivery of Documents. The Fund has furnished The Chase Manhattan Bank
with copies property certified or authenticated of each of the following:
(a) Resolutions of the Fund's Board of Trustees authorizing the appointment
of The Chase Manhattan Bank as Custodian of the portfolio securities, cash and
other property of the Fund and approving this Agreement;
1
<PAGE>
(b) Incumbency and signature certificates identifying and containing the
signatures of the Fund's officers and/or the persons authorized to sign Proper
Instructions, as hereinafter defined, on behalf of the Fund;
(c) The Fund's Declaration of Trust filed with the State of Massachusetts
and all amendments thereto (such Declaration of Trust as currently in effect and
from time to time, be amended, are herein called the "Declaration");
(d) The Fund's By-Laws and all amendments thereto (such By-Laws, as
currently in effect and as they shall from time to time be amended, are herein
called the "By-Laws"),
(e) Resolutions of the Fund's Board of Trustees appointing the investment
advisor of the Fund and resolutions of the Fund's Board of Trustees and the
Fund's Shareholders approving the proposed Investment Advisory Agreement between
the Fund and the advisor (the "Advisory Agreement");
(f) The Advisory Agreement.
(g) The Fund's Registration Statement on Form N-1A under the 1940 Act and
the Securities Act of 1933, as amended ("the 1933 Act") as filed with the SEC;
and
(h) The Fund's most recent prospectus and statement of additional
information including all amendments and supplements thereto (the "Prospectus").
Upon request the Fund will furnish The Chase Manhattan Bank with copies of
all amendments of or supplements to the foregoing, if any. The Fund will also
furnish The Chase Manhattan Bank upon request with a copy of the opinion of
counsel for the Fund with respect to the validity of the Shares and the status
of such Shares under the 1933 Act filed with the SEC, and any other applicable
federal law or regulation.
2
<PAGE>
3. Definitions.
-----------
(a) "Authorized Person". As used in this Agreement, the term "Authorized
Person" means the Fund's President, Treasurer and any other person, whether or
not any such person is an officer or employee of the Fund, duly authorized by
the Board of Trustees of the Fund to give Proper Instructions on behalf of the
Fund as set forth in resolutions of the Fund's Board of Trustees.
(b) "Book-Entry System". As used in this Agreement, the term "Book-Entry
System" means a book-entry system authorized by the U.S. Department of Treasury,
its successor or successors and its nominee or nominees.
(c) "Proper Instructions". Proper Instructions as used herein means a
writing signed or initialed by two or more persons as the Board of Trustees
shall have from time to time authorized. Each such writing shall set forth the
specific transaction or type of transaction involved, including a specific
statement of the purpose for which such action is requested. Oral instructions
will be considered Proper Instructions if The Chase Manhattan Bank reasonably
believes them to have been given by a person authorized to give such
instructions with respect to the transaction involved. The Fund shall cause all
such oral instructions to be confirmed in writing. Upon receipt of a certificate
of the Secretary or an Assistant Secretary as to the authorization by the Board
of Trustees of the Fund accompanied by a detailed description of procedures
approved by the Board of Trustees, Proper Instructions may include
communications effected directly between electro-mechanical or electronic
devices provided that the Board of Trustees and The Chase Manhattan Bank are
satisfied that such procedures afford adequate safeguards for the Fund's assets.
For purposes of this Section, Proper Instructions shall include instructions
received by The Chase Manhattan Bank pursuant to any three-party agreement which
requires a segregated asset account in accordance with Section 9.
(d) "Property". The term "Property", as used in this Agreement, means:
3
<PAGE>
(i) any and all securities and other property of the Fund which the
Fund may from time to time deposit, or cause to be deposited, with The
Chase Manhattan Bank or which The Chase Manhattan Bank may from time
to time hold for the Fund;
(ii) all income in respect of any such securities or other property;
(iii) all proceeds of the sales of any of such securities or other
properties; and
(iv) all proceeds of the sale of securities issued by the Fund,
which are received by The Chase Manhattan Bank from time to time from
or on behalf of the Fund.
(e) "Securities Depository". As used in this Agreement, the term
"Securities Depository" shall mean The Depository Trust Company, a clearing
agency registered with the SEC or its successor or successors and its nominee or
nominees; and shall also mean any other registered clearing agency, its
successor or successors specifically identified in a certified copy of a
resolution of the Company's Board of Trustees approving deposits by The Chase
Manhattan Bank therein.
4. Delivery and Registration of the Property. The Fund will deliver or
cause to be delivered to The Chase Manhattan Bank all securities and all moneys
owned by it, including payments of interest, principal and capital distributions
and cash received for the issuance of its Shares, at any time during the period
of this Agreement, except for securities and monies to be delivered to any
subcustodian appointed pursuant to Section 7 hereof. The Chase Manhattan Bank
will not be responsible for such securities and such monies until actually
received by it. All securities delivered to The Chase Manhattan Bank or to any
such subcustodian (other than in bearer form) shall be registered in the name of
the Fund or in the name of a nominee of the Fund or in the name of The Chase
Manhattan Bank or any nominee of The Chase Manhattan Bank (with or without
indication of fiduciary
4
<PAGE>
status) or in the name of any subcustodian or any nominee of such subcustodian
appointed pursuant to Paragraph 7 hereof or shall be properly endorsed and in
form for transfer satisfactory to The Chase Manhattan Bank.
5. Voting Rights. With respect to all securities, however registered, it is
understood that the voting and other rights and powers shall be exercised by the
Fund. The Chase Manhattan Bank's only duty shall be to mail for delivery on the
next business day to the Fund any documents received, including proxy statements
and offering circulars, with any proxies for securities registered in a nominee
name executed by such nominee. Where warrants, options, tenders or other
securities have fixed expiration dates, the Fund understands that in order for
The Chase Manhattan Bank to act, The Chase Manhattan Bank must receive the
Fund's instructions at its offices in New York, addressed as The Chase Manhattan
Bank may from time to time request, by no later than noon (NY City time) at
least one business day prior to the last scheduled date to act with respect
thereto (or such earlier date or time as The Chase Manhattan Bank may reasonably
notify the Fund). Absent The Chase Manhattan Bank's timely receipt of such
instructions, such instruments will expire without liability to The Chase
Manhattan Bank.
6. Receipt and Disbursement of Money.
(a) The Chase Manhattan Bank shall open and maintain a custody account for
the Fund, subject only to draft or order by The Chase Manhattan Bank acting
pursuant to the terms of this Agreement, and shall hold in such account, subject
to the provisions hereof, all cash received by it from or for the Fund other
than cash maintained by the Fund in a bank account established and used in
accordance with Rule 17f-3 under the 1940 Act. Funds held by The Chase Manhattan
Bank for the Fund may be deposited by it to its credit at The Chase Manhattan
Bank in the Banking Department of The Chase Manhattan Bank or in such other
banks or trust companies as it may in its discretion deem necessary or
desirable; provided,
5
<PAGE>
however, that every such bank or trust company shall be qualified to act as a
custodian under the 1940 Act, and that each such bank or trust company shall be
approved by vote of a majority of the Board of Trustees of the Fund. Such funds
shall be deposited by The Chase Manhattan Bank in its capacity as Custodian and
shall be withdrawable by The Chase Manhattan Bank only in that capacity.
(b) Upon receipt of Proper Instructions (which may be continuing
instructions as deemed appropriate by the parties) The Chase Manhattan Bank
shall make payments of cash to, or for the account of, the Fund from such cash
only (i) for the purchase of securities, options, futures contracts or options
on futures contracts for the Fund as provided in Section 13 hereof; (ii) in the
case of a purchase of securities effected through a Book-Entry System or
Securities Depository, in accordance with the conditions set forth in Section 8
hereof; (iii) in the case of repurchase agreements entered into between the Fund
and The Chase Manhattan Bank, or another bank, or a broker-dealer which is a
member of The National Association of Securities Dealers, Inc. ("NASD"), either
(a) against delivery of the securities either in certificate form or through an
entry crediting The Chase Manhattan Bank's account at the Federal Reserve Bank
with such securities or (b) against delivery of the receipt evidencing purchase
by the Fund of securities owned by The Chase Manhattan Bank along with written
evidence of the agreement by The Chase Manhattan Bank to repurchase such
securities from the Fund; (iv) for transfer to a time deposit account of the
Fund in any bank, whether domestic or foreign; such transfer may be effected
prior to receipt of a conformation from a broker and/or the applicable bank
pursuant to Proper Instructions from the Fund; (v) for the payment of dividends
or other distributions on shares declared pursuant to the governing documents of
the Fund, or for the payment of interest, taxes, administration, distribution or
advisory fees or expenses which are to be borne by the Fund under the terms of
this Agreement, any Advisory Agreement, or any
6
<PAGE>
administration agreement; (vi) for payments in connection with the conversion,
exchange or surrender of securities owned or subscribed to by the Fund and held
by or to be delivered to The Chase Manhattan Bank; (vii) to a subcustodian
pursuant to Section 7 hereof; (viii) for such common expenses incurred by the
Fund in the ordinary course of its business, including but not limited to
printing and mailing expenses, legal fees, accountants fees, exchange fees; or
(ix) for any other proper purpose, but only upon receipt of, in addition to
Proper Instructions, a certified copy of a resolution of the Board of Trustees
or of the Executive Committee of the Fund signed by an officer of the Fund and
certified by its Secretary or an Assistant Secretary, specifying the amount of
such payment, setting forth the purpose for which such payment is to be made,
declaring such purpose to be a proper purpose, and naming the person or persons
to whom such payment is to be made.
(c) The Chase Manhattan Bank is hereby authorized to endorse and collect
all checks, drafts or other orders for the payment of money received as
custodian for the Fund.
6A. Advances by Custodian. The Custodian may from time to time agree to
advance cash to the Fund, without interest, for the fund's other proper
corporate purposes. If the Custodian advances cash for any purpose, the Fund
shall and hereby does grant to the Custodian a security interest in Fund
securities equal in value to the amount of the cash advance but in no event
shall the value of securities in which a security interest has been granted
exceed 20% of the value of the Fund's total assets at the time of the pledge;
should the Fund fail to repay the Custodian promptly, the Custodian shall be
entitled to utilize available cash and to reasonably dispose of any securities
in which it has a security interest to the extent necessary to obtain
reimbursement.
7
<PAGE>
7. Receipt and Delivery of Securities.
(a) Except as provided by Section 8 hereof, The Chase Manhattan Bank shall
hold and physically segregate all securities and noncash Property received by it
for the Fund. All such securities and non-cash Property are to be held or
disposed of by The Chase Manhattan Bank for the Fund pursuant to the terms of
this Agreement. In the absence of Proper Instructions accompanied by a
certified resolution authorizing the specific transaction by the Fund's Board,
The Chase Manhattan Bank shall have no power or authority to withdraw, deliver,
assign, hypothecate, pledge or otherwise dispose of any such securities and
investments, except in accordance with the express terms provided for in this
Agreement. In no case may any Trustee, officer, employee or agent of the Fund
withdraw any securities. In connection with its duties under this Section 7, The
Chase Manhattan Bank may, at its own expense, enter into subcustodian agreements
with other banks or trust companies for the receipt of certain securities and
cash to be held by The Chase Manhattan Bank for the account of the Fund pursuant
to this Agreement; provided that each such bank or trust company has an
aggregate capital, surplus and undivided profits, as shown by its last published
report, of not less than twenty million dollars ($20,000,000) and that such bank
or trust company agrees with The Chase Manhattan Bank to comply with all
relevant provisions of the 1940 Act and applicable rules and regulations
thereunder. The Chase Manhattan Bank will be liable for acts or omissions of any
subcustodian. The Chase Manhattan Bank shall employ sub-custodians upon receipt
of Proper Instructions, but only in accordance with an applicable vote by the
Board of Trustees of the Fund.
(b) Promptly after the close of business on each day The Chase Manhattan
Bank shall furnish the Fund with confirmations and a summary of all transfers to
or from the account of the Fund during said day. Where securities are
transferred to the account of the Fund established at a Securities Depository or
Book Entry
8
<PAGE>
System pursuant to Section 8 hereof, The Chase Manhattan Bank shall also by
book-entry or otherwise identify as belonging to such Fund the quantity of
securities in a fungible bulk of securities registered in the name of The Chase
Manhattan Bank (or its nominee) or shown in The Chase Manhattan Bank's account
on the books of a Securities Depository or Book-Entry System. At least monthly
and from time to time, The Chase Manhattan Bank shall furnish the Fund with a
detailed statement of the Property held for the Fund under this Agreement.
8. Use of Securities Depository or Book-Entry System. The Fund shall
deliver to The Chase Manhattan Bank a certified resolution of the Board of
Trustees of the Fund approving, authorizing and instructing The Chase Manhattan
Bank on a continuous and ongoing basis until instructed to the contrary by
Proper Instructions actually received by The Chase Manhattan Bank (i) to deposit
in a Securities Depository or Book-Entry System all securities of the Fund
eligible for deposit therein and (ii) to utilize a Securities Depository or
Book-Entry System to the extent possible in connection with the performance of
its duties hereunder, including without limitation settlements of purchases and
sales of securities by the Fund, and deliveries and returns of securities
collateral in connection with borrowings. Without limiting the generality of
such use, it is agreed that the following provisions shall apply thereto:
(a) Securities and any cash of the Fund deposited in a Securities
Depository or Book-Entry System will at all times (1) be represented in an
account of The Chase Manhattan Bank in the Securities Depository or Book-Entry
System (the "Account") and (2) be segregated from any assets and cash controlled
by The Chase Manhattan Bank in other than a fiduciary or custodian capacity but
may be commingled with other assets held in such capacities. The Chase Manhattan
Bank will effect payment for securities and receive and deliver securities in
accordance with accepted industry practices as set forth in (b) below, unless
the Fund has given
9
<PAGE>
The Chase Manhattan Bank Proper Instructions to the contrary. The records of The
Chase Manhattan Bank with respect to securities of the Fund maintained in a
Securities Depository or Book Entry System shall identify by book entry those
securities belonging to the Fund.
(b) The Chase Manhattan Bank shall pay for securities purchased for the
account of the Fund upon (i) receipt of advice from the Securities Depository or
Book Entry System that such securities have been transferred to the Account, and
(ii) the making of an entry on the records of The Chase Manhattan Bank to
reflect such payment and transfer for the account of the Fund. Upon receipt of
Proper Instructions, The Chase Manhattan Bank shall transfer securities sold for
the account of the Fund upon (i) receipt of advice from the Securities
Depository or Book Entry System that payment for such securities has been
transferred to the Account, and (ii) the making of an entry on the records of
The Chase Manhattan Bank to reflect such transfer and payment for the account of
the Fund. Copies of all advices from the Securities Depository or Book Entry
System of transfers of securities for the account of the Fund shall identify the
Fund, be maintained for the Fund by The Chase Manhattan Bank and be provided to
the Fund as its request. Upon request, The Chase Manhattan Bank shall furnish
the Fund confirmation of each transfer to or from the account of the Fund in the
form of a written advice or notice and shall furnish to the Fund copies of daily
transaction sheets reflecting each day's transactions in a Securities Depository
or Book Entry System for the account of the Fund.
(c) The Chase Manhattan Bank shall provide the Fund with any report
obtained by The Chase Manhattan Bank on the Securities Depository or Book Entry
System's accounting system, internal accounting control and procedures for
safeguarding securities deposited in the Securities Depository or Book Entry
System;
10
<PAGE>
(d) All Books and records maintained by The Chase Manhattan Bank which
relate to the Fund participation in a Securities Depository or Book-Entry System
will at all times during The Chase Manhattan Bank's regular business hours be
open to the inspection of the Fund's duly authorized employees or agents, and
the Fund will be furnished with all information in respect of the services
rendered to it as it may require.
(e) Anything to the contrary in this Agreement notwithstanding, The Chase
Manhattan Bank shall be liable to the Fund for any loss or damage to the Fund
resulting from any negligence, misfeasance or misconduct of The Chase Manhattan
Bank or any of its agents or of any of its or their employees in connection with
its or their use of the Securities Depository or Book Entry Systems or from
failure of The Chase Manhattan Bank or any such agent to enforce effectively
such rights as it may have against such Securities Depository or Book Entry
System; at the election of the Fund, it shall be entitled to be subrogated to
the rights of The Chase Manhattan Bank with respect to any claim against the
Securities Depository or Book Entry System or any other person which The Chase
Manhattan Bank may have as a consequence of any such loss or damage if and to
the extent that the Fund has not been made whole for any such loss or damage.
9. Segregated Account. The Chase Manhattan Bank shall upon receipt of
Proper Instructions establish and maintain a segregated account or accounts for
and on behalf of the Fund, into which account or accounts may be transferred
cash and/or securities, including securities maintained in an account by The
Chase Manhattan Bank pursuant to Section 8 hereof, (i) in accordance with the
provisions of any agreement among the Fund, The Chase Manhattan Bank and a
broker dealer registered under the Securities and Exchange Act of 1934 and
member of the NASD (or any futures commission merchant registered under the
Commodity Exchange Act), relating to compliance with the rules of The Options
Clearing
11
<PAGE>
Corporation and of any registered national securities exchange (or the Commodity
Futures Trading Commission or any registered contract market), or of any similar
organization or organizations, regarding escrow or other arrangements in
connection with transactions by the Fund, (ii) for purposes of segregating cash
or government securities in connection with options purchased, sold or written
by the Fund or commodity futures contracts or options thereon purchased or sold
by the Fund, (iii) for the purposes of compliance by the Fund with the
procedures required by Investment Company Act Release No. 10666, or any
subsequent release or releases of the Securities and Exchange Commission
relating to the maintenance of segregated accounts by registered investment
companies and (iv) for other proper corporate purposes, but only, in the case of
clause (iv), upon receipt of, in addition to Proper Instructions, a certified
copy of a resolution of the Board of Trustees or of the Executive Committee
signed by an officer of the Fund and certified by the Secretary or an Assistant
Secretary, setting forth the purpose or purposes of such segregated account and
declaring such purposes to be proper corporate purposes.
10. INSTRUCTIONS CONSISTENT WITH THE DECLARATION, ETC.
(a) Unless otherwise provided in this Agreement, The Chase Manhattan Bank
shall act only upon Proper Instructions. The Chase Manhattan Bank may assume
that any Proper Instructions received hereunder are not in any way inconsistent
with any provision of the Declaration or By-Laws or any vote or resolution of
the Fund's Board of Trustees or any committee thereof. The Chase Manhattan Bank
shall be entitled to rely upon any Proper Instructions actually received by The
Chase Manhattan Bank pursuant to this Agreement. The Fund agrees that The Chase
Manhattan Bank shall incur no liability in acting in good faith upon Proper
Instructions given to The Chase Manhattan Bank, except to the extent such
liability was incurred as a result of The Chase Manhattan Bank's negligence or
willful misconduct. In accord with instructions from the Fund, as
12
<PAGE>
required by accepted industry practice or as The Chase Manhattan Bank may elect
in effecting the execution of Fund instructions, advances of cash or other
Property made by The Chase Manhattan Bank, arising from the purchase, sale,
redemption, transfer or other disposition of Property of the Fund, or in
connection with the disbursement of funds to any party, or in payment of fees,
expenses, claims or liabilities owned to The Chase Manhattan Bank by the Fund,
or to any other party which has secured judgment in a court of law against
the Fund which creates an overdraft in the accounts or over-delivery of
Property, shall be deemed a loan by The Chase Manhattan Bank to the Fund,
payable on demand, bearing interest at such rate customarily charged by The
Chase Manhattan Bank for similar loans.
(b) The Fund agrees that test arrangements, authentication methods or other
security devices to be used with respect to instructions which the Fund may give
by telephone, telex, TWX, facsimile transmission, bank wire or other
teleprocess, or through an electronic instruction system, shall be processed in
accordance with terms and conditions for the use of such arrangements, methods
or devices as The Chase Manhattan Bank may put into effect and modify from time
to time. The Fund shall safeguard any test keys, identification codes or other
security devices which The Chase Manhattan Bank makes available to the Fund and
agrees that the Fund shall be responsible for any loss, liability or damage
incurred by The Chase Manhattan Bank or by the Fund as a result of The Chase
Manhattan Bank's acting in accordance with instructions from any unauthorized
person using the proper security device except to the extent such loss,
liability or damage was incurred as a result of The Chase Manhattan Bank's
negligence or willful misconduct. The Chase Manhattan Bank may electronically
record, but shall not be obligated to so record, any instructions given by
telephone and any other telephone discussions with respect to the Fund. In the
event that the Fund uses The Chase Manhattan Bank's Asset Management system or
any successor electronic
13
<PAGE>
communications or information system, the Fund agrees that The Chase Manhattan
Bank is not responsible for the consequences of the failure of that system to
perform for any reason, beyond the reasonable control of The Chase Manhattan
Bank, or the failure of any communications carrier, utility, or communications
network. In the event that system is inoperable, the Fund agrees that it will
accept the communication of transaction instructions by telephone, facsimile
transmission on equipment compatible to The Chase Manhattan Bank's facsimile
receiving equipment or by letter, at no additional charge to the Fund.
(c) The Chase Manhattan Bank shall transmit promptly to the Fund all
written information (including, without limitation, pendency of calls and
maturities of securities and expirations of rights in connection therewith and
notices of exercise of call and put options written by the Fund and the maturity
of futures contracts purchased or sold by the Fund) received by The Chase
Manhattan Bank from issuers of the securities being held for the Fund. With
respect to tender or exchange offers, The Chase Manhattan Bank shall transmit
promptly by facsimile to the Fund all written information received by The Chase
Manhattan Bank from issuers of the securities whose tender or exchange is sought
and from the party (or his agents) making the tender or exchange offer. If the
Fund desires to take action with respect to any tender offer, exchange offer or
any other similar transaction, the Fund shall notify The Chase Manhattan Bank at
least three business days prior to the date on which The Chase Manhattan Bank is
to take such action or upon the date such notification is first received by the
Fund, if later. If any Property registered in the name of a nominee of The
Chase Manhattan Bank is called for partial redemption by the issuer of such
property, The Chase Manhattan Bank is authorized to allot the called portion to
the respective beneficial holders of the Property in such manner deemed to be
fair and equitable by The Chase Manhattan Bank in its sole discretion.
14
<PAGE>
11. Transactions Not Requiring Instructions. The Chase Manhattan Bank is
authorized to take the following action without Proper Instructions:
(a) Collection of Income and Other Payments. The Chase Manhattan Bank
shall:
(i) collect and receive on a timely basis for the account of the
Fund, all income and other payments and distributions, including
(without limitation) stock dividends, rights, warrants and similar
items, included or to be included in the Property of the Fund, and
promptly advise the Fund of such receipt and shall credit such income,
as collected, to the Fund. From time to time, The Chase Manhattan Bank
may elect, but shall not be obligated, to credit the account with
interest, dividends or principal payments on payable or contractual
settlement date, in anticipation of receiving same from a payor,
central depository, broker or other agent employed by the Fund or The
Chase Manhattan Bank. Any such crediting and posting shall be at the
Fund's sole risk, and The Chase Manhattan Bank shall be authorized to
reverse any such advance posting in the event it does not receive good
funds from any such payor, central depository, broker or agent of the
Customer. The Chase Manhattan Bank agrees to promptly notify the Fund
of the reversal of any such advance posting.
(ii) endorse and deposit for collection in the name of the Fund,
checks, drafts, or other orders for the payment of money on the same
day as received;
(iii) receive and hold for the account of the Fund all
securities received by the Fund as a result of a stock dividend, share
split-up or reorganization, merger, recapitalization, readjustment or
other rearrangement or distribution of rights or similar securities
issued
15
<PAGE>
with respect to any portfolio securities of the Fund held by The Chase
Manhattan Bank hereunder;
(iv) present for payment and collect the amount payable upon all
securities which may mature or be called, redeemed or retired, or
otherwise become payable on the date such securities become payable;
(v) take any action which may be necessary and proper in
connection with the collection and receipt of such income and other
payments and the endorsement for collection of checks, drafts and
other negotiable instruments;
(vi) to effect an exchange of the securities where the par value
is changed, and to surrender securities at maturity or upon an earlier
call for redemption, or when securities otherwise become payable,
against payment therefore in accordance with accepted industry
practice. If any Property registered in the name of a nominee of The
Chase Manhattan Bank is called for partial redemption by the issuer of
such property, The Chase Manhattan Bank is authorized to allot the
called portion to the respective beneficial holders of the Property in
such manner deemed to be fair and equitable by The Chase Manhattan
Bank in its sole discretion.
(b) Miscellaneous Transactions. The Chase Manhattan Bank is authorized to
deliver or cause to be delivered Property against payment or other consideration
or written receipt therefor for examination by a dealer selling for the account
of the Fund in accordance with street delivery custom.
12. Transactions Requiring Instructions. In addition to the actions
requiring Proper Instructions set forth herein, upon receipt of Proper
Instructions and not otherwise, The Chase Manhattan Bank, directly or through
the use of a Securities Depository or Book Entry System, shall:
16
<PAGE>
(a) Execute and deliver to such persons as may be designated in such
Proper Instructions, proxies, consents, authorizations, and any other
instruments whereby the authority of the Fund as owner of any securities may be
exercised;
(b) Deliver any securities held for the Fund against receipt of other
securities or cash issued or paid in connection with the liquidation,
reorganization, refinancing, merger, consolidation or recapitalization of any
issuer of securities or corporation, or the exercise of any conversion
privilege;
(c) Deliver any securities held for the Fund to any protective committee,
reorganization committee or other person in connection with the reorganization,
refinancing, merger, consolidation, recapitalization or sale of assets of any
issues of securities or corporation, against receipt of such certificates of
deposit, interim receipts or other instruments or documents, and cash, if any,
as may be issued to it to evidence such delivery;
(d) Make such transfers or exchanges of the assets of the Fund and take
such other steps as shall be stated in said instructions to be for the purpose
of effectuating any duly authorized plan of liquidation, reorganization,
merger, consolidation or recapitalization of the Fund;
(e) Release securities belonging to the Fund to any bank or trust company
for the purpose of pledge or hypothecation to secure any loan incurred by the
Fund; provided, however, that securities shall be released only upon payment to
The Chase Manhattan Bank of the monies borrowed, or upon receipt of adequate
collateral as agreed upon by the Fund and The Chase Manhattan Bank which may be
in the form of cash or obligations issued by the U.S. government, its agencies
or instrumentalities, except that in the cases where additional collateral is
required to secure a borrowing already made, subject to proper prior
authorization, further securities may be released for that purpose; and pay such
loan upon re-delivery to it
17
<PAGE>
of the securities pledged or hypothecated therefore and upon surrender of the
note or notes evidencing the loan; and
(f) Deliver securities in accordance with the provisions of any agreement
among the Fund, The Chase Manhattan Bank and a broker-dealer registered under
the Securities Exchange Act of 1934 (the "Exchange Act") and a member of The
National Association of Securities Dealers, Inc. ("NASD"), relating to
compliance with the rules of The Options Clearing Corporation and of any
registered national securities exchange, or of any similar organization or
organizations, regarding escrow or other arrangements in connection with
transactions by the Funds;
(g) Deliver securities in accordance with the provisions of any agreement
among the Fund, The Chase Manhattan Bank and a Futures Commission Merchant
registered under the Commodity Exchange Act, relating to compliance with the
rules of the Commodity Futures Trading Commission and/or any Contract Market, or
any similar organization or organizations, regarding account deposits in
connection with transactions by the Fund; and
(h) Deliver securities against payment or other consideration or written
receipt therefore for transfer of securities into the name of the Fund or The
Chase Manhattan Bank or a nominee of either, or for exchange or securities for a
different number of bonds, certificates, or other evidence, representing the
same aggregate face amount or number of units bearing the same interest rate,
maturity date and call provisions, if any; provided that, in any such case, the
new securities are to be delivered to The Chase Manhattan Bank;
(i) Exchange securities in temporary form for securities in definitive
form;
(j) Surrender, in connection with their exercise, warrants, rights or
similar securities, provided that in each case, the new securities and cash, if
any, are to be delivered to The Chase Manhattan Bank;
18
<PAGE>
(k) Deliver securities upon receipt of payment in connection with any
repurchase agreement related to such securities entered into by the Fund;
(l) Deliver securities pursuant to any other proper corporate purpose, but
only upon receipt of, in addition to Proper Instructions, a certified copy of a
resolution of the Board of Trustees or other Executive Committee signed by an
officer of the Funds and certified by the Secretary or an Assistant Secretary,
specifying the securities to be delivered, setting forth the purpose for which
such delivery is to be made, declaring such purpose to be a proper corporate
purpose, and naming the person or persons to whom delivery of such securities
shall be made.
13. Purchase of Securities. Promptly after each purchase of securities,
options, futures contracts or options on futures contracts by the investment
advisor, the Fund shall deliver to The Chase Manhattan Bank (as Custodian)
Proper Instructions specifying with respect to each such purchase: (a) the name
of the issuer and the title of the securities, (b) the number of shares of the
principal amount purchased and accrued interest, if any, (c) the dates of
purchase and settlement, (d) the purchase price per unit, (e) the total amount
payable upon such purchase, (f) the name of the person from whom or the broker
through whom the purchase was made, and (g) the Fund name. The Chase Manhattan
Bank shall upon receipt of securities purchased by or for the Fund registered in
the name of the Fund or in the name of a nominee of The Chase Manhattan Bank or
of the Fund or in proper form for transfer or upon receipt of evidence of title
to options, futures contracts or options on futures contracts purchased by the
Fund, pay out of the moneys held for the account of the Fund the total amount
payable to the person from whom or the broker through whom the purchase was
made, provided that the same conforms to the total amount payable as set forth
in such Proper Instructions. Except as specifically stated otherwise in this
Agreement, in any and every case where payment for purchase of securities for
the account of the Fund is made by
19
<PAGE>
The Chase Manhattan Bank in advance of receipt of the securities purchased in
the absence of specific written instructions from the Fund to so pay in advance,
The Chase Manhattan Bank shall be absolutely liable to the Fund for such
securities to the same extent as if the securities had been received by The
Chase Manhattan Bank.
14. Sale of Securities. Promptly after each sale of securities by the Fund
at the instruction of the investment advisor, the Fund shall deliver to The
Chase Manhattan Bank (as Custodian) Proper Instructions, specifying with respect
to each such sale; (a) the name of the issuer and the title of the security, (b)
the number of shares or principal amount sold, and accrued interest, if any, (c)
the date of sale, (d) the sale price per unit, (e) the total amount payable to
the Fund upon such sale, (f) the name of the broker through whom or the person
to whom the sale was made and (g) the Fund name. The Chase Manhattan Bank shall
deliver the securities upon receipt of the total amount payable to the Fund upon
such sale, provided that the same conforms to the total amount payable as set
forth in such Proper Instructions. Subject to the foregoing. The Chase Manhattan
Bank may accept payment in such form as shall be satisfactory to it, and may
deliver securities and arrange for payment in accordance with the customs
prevailing among dealers in securities.
15. Not In Use.
16. Records. The books and records pertaining to the Fund which are in the
possession of The Chase Manhattan Bank shall be the property of the Fund. Such
books and records shall be prepared and maintained as required by the 1940 Act,
as amended, and other applicable securities laws and rules and regulations. The
Fund, or the Fund's authorized representative, shall have access to such books
and records at all times during The Chase Manhattan Bank's normal business
hours, and such books and records shall be surrendered to the Fund promptly upon
request. Upon reasonable request of the fund, copies of any such books and
records at all times during The Chase Manhattan Bank's normal business hours,
and such books and records shall be surrendered to the Fund promptly upon
request. Upon reasonable request of the Fund, copies of any such books and
records
20
<PAGE>
shall be provided by The Chase Manhattan Bank to the Fund or the Fund's
authorized representative at the Fund's expense.
17. Cooperation with Accountants. The Chase Manhattan Bank shall
cooperate with the Fund's independent certified public accountants and shall
take all reasonable action in the performance of its obligations under this
Agreement to assure that the necessary information is made available to such
accountants for the expression of their unqualified opinion, including but not
limited to the opinion included in the Fund's Form N-1A, Form N-SAR and other
reports to the Securities and Exchange Commission and with respect to any other
requirement of such Commission.
18. Reports to Fund by Independent Public Accountants. The Chase
Manhattan Bank shall provide the Fund, at such times as the Fund may reasonably
require, with reports by independent public accountants on the accounting
system, internal accounting control and procedures for safeguarding securities,
futures contracts and options on futures contracts, including securities
deposited and/or maintained in a Securities Depository or Book Entry System,
relating to the services provided by The Chase Manhattan Bank under this
Contract; such reports, shall be of sufficient scope and in sufficient detail,
as may reasonably be required by the Fund to provide reasonable assurance that
any material inadequacies would be disclosed by such examination, and, if there
are no such inadequacies, the reports shall so state.
19. Confidentiality. The Chase Manhattan Bank agrees on behalf of itself
and its employees to treat confidentially and as the proprietary information of
the Fund all records and other information relative to the Fund and its prior,
present or potential Shareholders and relative to the advisors and its prior,
present or potential customers, and not to use such records and information for
any purpose other than performance of its responsibilities and duties hereunder,
except after
21
<PAGE>
prior notification to and approval in writing by the Fund, which approval
shall not be unreasonably withheld and may not be withheld where The Chase
Manhattan Bank may be exposed to civil or criminal contempt proceedings for
failure to comply, when requested to divulge such information by duly
constituted authorities, or when so requested by the Fund. Nothing contained
herein, however, shall prohibit The Chase Manhattan Bank from advertising or
soliciting the public generally with respect to other products or services,
regardless of whether such advertisement or solicitation may include prior,
present or potential Shareholders of the Fund.
20. Equipment Failures. In the event of equipment failures beyond The
Chase Manhattan Bank's control, The Chase Manhattan Bank shall, at no
additional expense to the Fund, take reasonable steps to minimize service
interruptions but shall not have liability with respect thereto. The Chase
Manhattan Bank shall enter into and shall maintain in effect with appropriate
parties one or more agreements making reasonable provisions for back up
emergency use of electronic data processing equipment to the extent appropriate
equipment is available.
21. Right to Receive Advice.
(a) Advice of Fund. If The Chase Manhattan Bank shall be in doubt as to
any action to be taken or omitted by it, it may request, and shall receive, from
the Fund clarification or advice.
(b) Advice of Counsel. If The Chase Manhattan Bank shall be in doubt as
to any question of law involved in any action to be taken or omitted by The
Chase Manhattan Bank, it may request advice at its own cost from counsel of its
own choosing (who may be counsel for the Fund or The Chase Manhattan Bank, at
the option of The Chase Manhattan Bank).
(c) Conflicting Advice. In case of conflict between directions or advice
received by The Chase Manhattan Bank pursuant to sub-paragraph (a) of this
22
<PAGE>
paragraph and advice received by The Chase Manhattan Bank pursuant to
subparagraph (b) of this paragraph, The Chase Manhattan Bank shall be entitled
to rely on and follow the advice received pursuant to the latter provision
alone.
(d) Protection of The Chase Manhattan Bank. The Chase Manhattan Bank
shall be protected in any action or inaction which it takes or omits to take in
reliance on any directions or advice received pursuant to subparagraphs (a) or
(b) of this section which The Chase Manhattan Bank, after receipt of any such
directions or advice, in good faith believes to be consistent with such
directions or advice. However, nothing in this paragraph shall be construed as
imposing upon The Chase Manhattan Bank any obligation (i) to seek such
directions or advice, or (ii) to act in accordance with such directions or
advice when received, unless, under the terms of another provision of this
Agreement, the same is a condition to The Chase Manhattan Bank's properly taking
or omitting to take such action. Nothing in this subsection shall excuse The
Chase Manhattan Bank when an action or omission on the part of The Chase
Manhattan Bank constitutes willful misfeasance, bad faith, negligence or
reckless disregard by The Chase Manhattan Bank of its duties under this
Agreement.
22. Compliance with Governmental Rules and Regulations. The Fund assumes
full responsibility for insuring that the contents of each Prospectus of the
Fund complies with all applicable requirements of the 1933 Act, the 1940 Act,
and any laws, rules and regulations of governmental authorities having
jurisdiction.
23. Compensation. As compensation for the services rendered by The Chase
Manhattan Bank during the term of this Agreement, the Fund will pay to The Chase
Manhattan Bank, in addition to reimbursement of its out-of-pocket expenses,
monthly fees as outlined in Exhibit A.
24. Indemnification. The Fund, as sole owner of the Property, agrees to
indemnify and hold harmless The Chase Manhattan Bank and its nominees from all
23
<PAGE>
taxes, charges, expenses, assessments, claims, and liabilities (including,
without limitation, liabilities arising under the 1933 Act, the Securities
Exchange Act of 1934, the 1940 Act, and any state and foreign securities and
blue sky laws, all as or to be amended from time to time) and expenses,
including (without limitation) attorney's fees and disbursements (hereafter
"liabilities and expenses"), arising directly or indirectly from any action or
thing which The Chase Manhattan Bank takes or does or omits to take or do (i) at
the request or on the direction of or in reliance on the advice of the Fund, or
(ii) upon Proper Instructions, provided, that neither The Chase Manhattan Bank
nor any of its nominees or sub-custodians shall be indemnified against any
liability to the Fund or to its Shareholders (or any expenses incident to such
liability) arising out of (x) The Chase Manhattan Bank's or such nominee's or
sub-custodian's own willful misfeasance, bad faith, negligence or reckless
disregard of its duties under this Agreement or any agreement between The Chase
Manhattan Bank and any nominee or subcustodian or (y) The Chase Manhattan Bank's
own negligent failure to perform its duties under this Agreement. The Chase
Manhattan Bank similarly agrees to indemnify and hold harmless the Fund from all
liabilities and expenses arising directly or indirectly from The Chase Manhattan
Bank's or such nominee's or sub-custodian's willful misfeasance, bad faith,
negligence or reckless disregard in performing its duties under this agreement.
In the event of any advance of cash for any purpose made by The Chase Manhattan
Bank resulting from orders or Proper Instructions of the Fund, or in the event
that The Chase Manhattan Bank or its nominee or subcustodian shall incur or be
assessed any taxes, charges, expenses, assessments, claims or liabilities in
connection with the performance of this Agreement, except such as may arise from
its or its nominee's or sub-custodian's own negligent action, negligent failure
to act, willful misconduct, or reckless disregard, the Fund shall
24
<PAGE>
promptly reimburse The Chase Manhattan Bank for such advance of cash or such
taxes, charges, expenses, assessments claims or liabilities.
25. Responsibility of The Chase Manhattan Bank. In the performance of its
duties hereunder, The Chase Manhattan Bank shall be obligated to exercise care
and diligence and to act in good faith to insure the accuracy and completeness
of all services performed under this Agreement. The Chase Manhattan Bank shall
be responsible for its own negligent failure or that of any subcustodian it
shall appoint to perform its duties under this Agreement but to the extent that
duties, obligations and responsibilities are not expressly set forth in this
Agreement, The Chase Manhattan Bank shall not be liable for any act or omission
which does not constitute willful misfeasance, bad faith, or negligence on the
part of The Chase Manhattan Bank or such subcustodian or reckless disregard of
such duties, obligations and responsibilities. Without limiting the generality
of the foregoing or of any other provision of this Agreement, The Chase
Manhattan Bank in connection with its duties under this Agreement shall, so long
as and to the extent it is in the exercise of reasonable care, not be under any
duty or obligation to inquire into and shall not be liable for or in respect of
(a) the validity or invalidity or authority or lack thereof of any advice,
direction, notice or other instrument which conforms to the applicable
requirements of this Agreement, if any, and which The Chase Manhattan Bank
believes to be genuine, (b) the validity of the issue of any securities
purchased or sold by the Fund, the legality of the purchase or sale thereof or
the propriety of the amount paid or received therefor, (c) the legality of the
issue or sale of any Shares, or the sufficiency of the amount to be received
therefore, (d) the legality of the redemption of any Shares, or the propriety of
the amount to be paid therefor, (e) the legality of the declaration or payment
of any dividend or distribution on Shares, of (f) delays or errors or loss of
data occurring by reason of circumstances beyond The Chase Manhattan Bank's
control, including acts of civil
25
<PAGE>
or military authority, national emergencies, labor difficulties, fire,
mechanical breakdown (except as provided in Section 20), flood or catastrophe,
acts of God, insurrection, war, riots, or failure of the mail, transportation,
communication or power supply.
26. Collection of Income. The Chase Manhattan Bank shall collect on a
timely basis all income and other payments with respect to registered securities
held hereunder to which the Fund shall be entitled either by law or pursuant to
custom in the securities business, and shall collect on a timely basis all
income and other payments with respect to bearer securities if, on the date of
payment by the issuer, such securities are held by The Chase Manhattan Bank or
its agent thereof and shall credit such income, as collected, to the Fund's
custodian account. Without limiting the generality of the foregoing, The Chase
Manhattan Bank shall detach and present for payment all coupons and other income
items requiring presentation as and when they become due and shall
collect interest when due on securities held hereunder. Income due the Fund on
securities loaned pursuant to the provisions of Section 9 shall be the
responsibility of the Fund. The Chase Manhattan Bank will have no duty or
responsibility in connection therewith, other than to provide the Fund with such
information or data as may be necessary to assist the Fund in arranging for the
timely delivery to the Custodian of the income to which the Fund is properly
entitled.
27. Ownership Certificates for Tax Purposes. The Chase Manhattan Bank
shall execute ownership and other certificates and affidavits for all federal
and state tax purposes in connection with receipt of income or other payments
with respect to securities of the Fund held by it and in connection with
transfers of securities.
26
<PAGE>
28. Effective Period; Termination and Amendment.
-------------------------------------------
This Agreement shall become effective as of its execution, shall continue
in full force and effect until terminated as hereinafter provided, may be
amended at any time by mutual agreement of the parties hereto and may be
terminated by either party by an instrument in writing delivered or mailed,
postage prepaid to the other party, such termination to take effect not sooner
than thirty (30) days after the date of such delivery or mailing; provided,
however that The Chase Manhattan Bank shall not act under Section 8 hereof in
the absence of receipt of an initial certificate of the Secretary or an
Assistant Secretary that the Board of Trustees of the Fund has approved the
initial use of a particular Securities Depository or Book Entry System, as
required by Rule 17f-4 under the Investment Company Act of 1940, as amended;
provided further, however, that the Fund shall not amend or terminate this
Agreement in contravention of any applicable federal or state regulations, or
any provision of the Declaration of Trust, and further provided, that the Fund
may at any time by action of its Board of Trustees (i) substitute another bank
or trust company for The Chase Manhattan Bank by giving notice as described
above to The Chase Manhattan Bank, or (ii) immediately terminate this Agreement
in the event of the appointment of a conservator or receiver for The Chase
Manhattan Bank by the Comptroller of the Currency or upon the happening of a
like event at the direction of an appropriate regulatory agency or court of
competent jurisdiction.
Upon termination of the Agreement, the Fund shall pay to The Chase
Manhattan Bank such compensation as may be due as of the date of such
termination and shall likewise reimburse The Chase Manhattan Bank for its costs,
expenses and disbursements.
27
<PAGE>
29. Successor Custodian
If a successor custodian shall be appointed by the Board of Trustees of the
Fund, The Chase Manhattan Bank shall, upon termination, deliver to such
successor custodian at the office of the custodian, duly endorsed and in the
form for transfer, all securities then held by it hereunder and shall transfer
to an account of the successor custodian all of the Fund's securities held in a
Securities Depository or Book Entry System.
If no such successor custodian shall be appointed, The Chase Manhattan Bank
shall, in like manner, upon receipt of a certified copy of a vote of the Board
of Trustees of the Fund, deliver at the office of the Custodian and transfer
such securities, funds and other properties in accordance with such vote.
In the event that no written order designating a successor custodian or
certified copy of a vote of the Board of Trustees shall have been delivered to
The Chase Manhattan Bank on or before the date when such termination shall
become effective, then The Chase Manhattan Bank shall have the right to deliver
to a bank or trust company, which is a "bank" as defined in the 1940 Act, doing
business in New York, New York, of its own selection, having an aggregate
capital, surplus, and undivided profits, as shown by its last published report,
of not less than $25,000,000, all securities, funds and other properties held by
The Chase Manhattan Bank and all instruments held by The Chase Manhattan
relative thereto and all other property held by it under this Agreement and to
transfer to an account of such successor custodian all of the Fund's securities
held in any Securities Depository or Book Entry System. Thereafter, such bank or
trust company shall be the successor of the Custodian under this Contract.
In the event that securities, funds and other properties remain in the
possession of The Chase Manhattan Bank after the date of termination hereof
owing to failure of the Fund to procure the certified copy of the vote referred
to or of
28
<PAGE>
the Board of Trustees to appoint a successor custodian, The Chase Manhattan Bank
shall be entitled to fair compensation for its services during such period as
The Chase Manhattan Bank retains possession of such securities, funds and other
properties and the provisions of this Contract relating to the duties and
obligations of The Chase Manhattan Bank shall remain in full force and effect.
30. Notices. All notices and other communications (collectively referred
to as "Notice" or "Notices") in this section hereunder shall be in writing and
shall be first sent by telegram, cable, telex, or facsimile sending device and
thereafter by overnight mail for delivery on the next business day. Notices
shall be addressed (a) if to The Chase Manhattan Bank, at The Chase Manhattan
Bank's address, 4 New York Plaza, 3rd Floor, New York, New York, 10004,
facsimile number (212) 623-8997; (b) if to the Fund, at the address of the Fund
Attention: Controller, facsimile number (312) 917-8049; or (c) if to neither of
the foregoing, at such other address as shall have been notified to the sender
of any such Notice or other communication. Notices sent by overnight mail shall
be deemed to have been given the next business day. Notices sent by messenger
shall be deemed to have been given on the day delivered, and notices sent by
confirming telegram, cable, telex or facsimile sending device shall be deemed to
have been given immediately. All postage, cable, telegram, telex and facsimile
sending device charges arising from the sending of a Notice hereunder shall be
paid by the sender.
31. Further Actions. Each party agrees to perform such further acts and
execute such further documents as are necessary to effectuate the purposes
hereof.
32. Amendments. This Agreement or any part hereof may be changed or
waived only by an instrument in writing signed by the party against which
enforcement of such change or waiver is sought.
33. Additional Funds. In the event that the Fund establishes one or more
series of Shares in addition to the Nuveen Municipal Bond Fund, Nuveen Insured
Municipal Bond Fund, Nuveen Flagship All-American Municipal Bond Fund, Nuveen
Flagship Limited Term Municipal Bond Fund and Nuveen Flagship Intermediate
Municipal Bond Fund, with respect to which
29
<PAGE>
it desires to have the Custodian render services as custodian under the terms
hereof, it shall so notify the Custodian in writing, and if the Custodian agrees
in writing to provide such services, such series of Shares shall become a Fund
hereunder.
34. Miscellaneous. This Agreement embodies the entire Agreement and
understanding between the parties hereto, and supersedes all prior agreements
and understandings relating to the subject matter hereof. The captions in this
Agreement are included for convenience of reference only and in no way define or
delimit any of the provisions hereof or otherwise affect their construction or
effect. This Agreement shall be deemed to be a contract made in New York and
governed by New York law. If any provision of this Agreement shall be held or
made invalid by a court decision, statute, rule or otherwise the remainder of
this Agreement shall not be affected thereby. This Agreement shall be binding
upon and shall insure to the benefit of the parties hereto and their respective
successors.
35. Declaration of Trust. The Fund's Declaration of Trust is on file with
the Secretary of the Commonwealth of Massachusetts. This agreement is executed
on behalf of the Fund by the Fund's officers as officers and not individually
and the obligations imposed upon the Fund by this Agreement are not binding upon
any of the Fund's Trustees, officers or shareholders individually but are
binding only upon the assets and property of the Fund.
30
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their officers designated below as of the day and year first above
written.
THE CHASE MANHATTAN BANK
Attest: /s/ Thomas V. DiBella By: /s/ Peter C. Arrighetti
---------------------------- ----------------------------
THOMAS V. DIBELLA PETER C. ARRIGHETTI
VICE PRESIDENT SENIOR VICE PRESIDENT
NUVEEN FLAGSHIP MUNICIPAL
TRUST
Attest: /s/ Gifford R. Zimmerman By: /s/ O. Walter Renfftlen
---------------------------- ----------------------------
GIFFORD R. ZIMMERMAN O. WALTER RENFFTLEN
ASSISTANT GENERAL COUNSEL VICE PRESIDENT &
CONTROLLER
31
<PAGE>
EXHIBIT A
---------
CUSTODY SERVICE FEE
-------------------
Administration and Maintenance Fee
- ----------------------------------
.01375% (1 3/8 Basis Points) on first $10 billion
.00875% (7/8 Basis Point) on second $10 billion
.0075% (3/4 Basis Point) on third $10 billion
.005% (1/2 Basis Point) on remainder
Transaction Fees
- ----------------
$15.00 Per Book Entry Transaction
$25.00 Per Physical Transaction
$35.00 Per Future Contract or Option wire
$8.00 Per outgoing Wire Transfer for ETFs
$5.00 Per incoming and outgoing Wire Transfer
for Open End and Money Market Funds
NOTES:
1. Schedule should be applied to total assets for all Exchange Traded funds,
Open End Load Funds, and Money Market Funds.
2. Add $5.00 per book entry transaction and physical transaction if Custody
inputs trades.
BALANCES
--------
1. During each month, daily net overdrafts are offset by daily net cash
balances dollar for dollar with no penalty or charge for daily net
overdrafts.
2. At the end of each month, the net overdraft for the month incurs an
overdraft charge computed as follows:
The negative net cumulative balance plus 10% reserves multiplied by
the average monthly Fed Funds rate divided by 365 days.
3. Net credit balance at month end carries forward and is eligible for offset
with overdrafts in the next month. The carry forward net credit balance
incurs a 10% reduction. Carry forward balances expire at the end of each
portfolio's fiscal year end for "fully invested funds"; for new funds not
fully invested, the credit balance carries forward until the fund becomes
fully invested. Each series of the Fund will use its best efforts to keep
its cumulative balances at each calendar quarter end below $50 million.
4. Nuveen Institutional Advisory Corp. or Nuveen Advisory Corp. will be
responsible for promptly advising The Chase Manhattan Bank of the date a
new fund becomes fully invested.
5. Effective January 1, 1996, FDIC charges will be no longer applied to the
portfolios.
6. Overdrafts are permissible only as a means of compensating for positive
balances.
7. Due to FDIC capitalization requirements, overdrafts are not permissible on
June 30th and December 31st.
32
<PAGE>
EXHIBIT 8
TABLE OF CONTENTS
Page
----
1. Appointment 1
2. Delivery of Documents 1
3. Definitions 3
4. Delivery and Registrations of the Property 4
5. Voting Rights 5
6. Receipt and Disbursement of Money 5
6A. Advances By Custodian 7
7. Receipt and Delivery of Securities 8
8. Use of Securities Depository or the Book Entry System 9
9. Segregated Account 11
10. Instructions Consistent With The Declaration, etc. 12
11. Transactions Not Requiring Instructions, 15
Collections of Income and Other Payments 15
Miscellaneous Transactions 16
12. Transactions Requiring Instructions 16
13. Purchase of Securities 19
14. Sale of Securities 20
15. Not In Use 20
16. Records 20
17. Cooperation with Accountants 21
18. Reports to Fund Independent Public Accountants 21
19. Confidentiality 21
20. Equipment Failures 22
21. Right to Receive Advice 22
22. Compliance with Governmental Rules and Regulations 23
23. Compensation 23
24. Indemnification 23
25. Responsibility of Chase Manhattan Bank 25
26. Collection of Income 26
27. Ownership Certificates for Tax Purposes 26
28. Effective Period; Terminations and Amendment 27
29. Successor Custodian 28
30. Notices 29
31. Further Actions 29
32. Amendments 29
33. Additional Funds 29
34. Miscellaneous 30
35. Declaration of Trust 30
<PAGE>
EXHIBIT 9(a)
TRANSFER AGENCY AND SERVICE AGREEMENT
between
NUVEEN FLAGSHIP MUNICIPAL TRUST
and
STATE STREET BANK AND TRUST COMPANY
1C-Domestic Trust/Series
<PAGE>
TABLE OF CONTENTS
-----------------
<TABLE>
<CAPTION>
Page
----
<S> <C>
1. Terms of Appointment; Duties of the Bank...................... 1
2. Fees and Expenses............................................. 3
3. Representations and Warranties of the Bank.................... 4
4. Representations and Warranties of the Fund.................... 4
5. Wire Transfer Operating Guidelines............................ 5
6. Data Access and Proprietary Information....................... 6
7. Indemnification............................................... 8
8. Standard of Care.............................................. 9
9. Covenants of the Fund and the Bank............................ 9
10. Termination of Agreement...................................... 10
11. Additional Funds.............................................. 10
12. Assignment.................................................... 10
13. Amendment..................................................... 11
14. Massachusetts Law to Apply.................................... 11
15. Force Majeure................................................. 11
16. Consequential Damages......................................... 11
17. Merger of Agreement........................................... 11
18. Limitations of Liability of the Trustees
or Shareholders............................................... 11
19. Counterparts.................................................. 11
20. Reproduction of Documents..................................... 12
</TABLE>
<PAGE>
TRANSFER AGENCY AND SERVICE AGREEMENT
AGREEMENT made as of the 1st day of February, 1997, by and between NUVEEN
FLAGSHIP MUNICIPAL TRUST, a Massachusetts business trust, having its
principal office and place of business at, 333 Wacker Drive, Chicago,
Illinois 60606 (the "Fund"), and STATE STREET BANK AND TRUST COMPANY, a
Massachusetts trust company having its principal office and place of business at
225 Franklin Street, Boston, Massachusetts 02110 (the "Bank").
WHEREAS, the Fund is authorized to issue shares in separate series, with each
such series representing interests in a separate portfolio of securities and
other assets; and
WHEREAS, the Fund intends to initially offer shares in five series, the
following of which will be covered by this Agreement, Nuveen Flagship All-
American Municipal Bond Fund, Nuveen Flagship Limited Term Municipal Bond Fund,
and Nuveen Flagship Intermediate Municipal Bond Fund (each such series, together
with all other series subsequently established by the Fund and made subject to
this Agreement in accordance with Article 11, being herein referred to as a
"Portfolio", and collectively as the "Portfolios");
WHEREAS, the Fund on behalf of the Portfolios desires to appoint the Bank as its
transfer agent, dividend disbursing agent and agent in connection with certain
other activities, and the Bank desires to accept such appointment;
NOW, THEREFORE, in consideration of the mutual covenants herein contained, the
parties hereto agree as follows:
1. Terms of Appointment; Duties of the Bank
1.1 Subject to the terms and conditions set forth in this Agreement, the Fund,
on behalf of the Portfolios, hereby employs and appoints the Bank to act
as, and the Bank agrees to act as its transfer agent for the Fund's
authorized and issued shares of its beneficial interest, $.01 par value,
("Shares"), dividend disbursing agent and agent in connection with any
accumulation, open-account or similar plans provided to the shareholders of
each of the respective Portfolios of the Fund ("Shareholders") and set out
in the currently effective prospectus and statement of additional
information ("prospectus") of the Fund on behalf of the applicable
Portfolio, including without limitation any periodic investment plan or
periodic withdrawal program.
1.2 The Bank agrees that it will perform the following services:
(a) In accordance with procedures established from time to time by
agreement between the Fund on behalf of each of the Portfolios, as
applicable and the Bank, the Bank shall:
(i) Receive for acceptance, orders for the purchase of Shares, and
promptly
1
<PAGE>
deliver payment and appropriate documentation thereof to the
Custodian of the Fund authorized pursuant to the Declaration of
Trust of the Fund (the "Custodian");
(ii) Pursuant to purchase orders, issue the appropriate number of
Shares and hold such Shares in the appropriate Shareholder
account;
(iii) Receive for acceptance redemption requests and redemption
directions and deliver the appropriate documentation thereof to
the Custodian;
(iv) In respect to the transactions in items (i), (ii) and (iii)
above, the Bank shall execute transactions directly with broker-
dealers authorized by the Fund who shall thereby be deemed to be
acting on behalf of the Fund;
(v) At the appropriate time as and when it receives monies paid to it
by the Custodian with respect to any redemption, pay over or
cause to be paid over in the appropriate manner such monies as
instructed by the redeeming Shareholders;
(vi) Effect transfers of Shares by the registered owners thereof upon
receipt of appropriate instructions;
(vii) Prepare and transmit payments for dividends and distributions
declared by the Fund on behalf of the applicable Portfolio;
(viii) Issue replacement certificates for those certificates alleged to
have been lost, stolen or destroyed upon receipt by the Bank of
indemnification satisfactory to the Bank and protecting the Bank
and the Fund, and the Bank at its option, may issue replacement
certificates in place of mutilated stock certificates upon
presentation thereof and without such indemnity;
(ix) Maintain records of account for and advise the Fund and its
Shareholders as to the foregoing; and
(x) Record the issuance of shares of the Fund and maintain pursuant
to SEC Rule 17Ad-10(e) a record of the total number of shares of
the Fund which are authorized, based upon data provided to it by
the Fund, and issued and outstanding. The Bank shall also provide
the Fund on a regular basis with the total number of shares which
are authorized and issued and outstanding and shall have no
obligation, when recording the issuance of shares, to monitor the
issuance of such shares or to take cognizance of any laws
relating to the issue or sale of such Shares, which functions
shall be the sole responsibility of the Fund.
(b) In addition to and neither in lieu nor in contravention of the
services set forth in the
2
<PAGE>
above paragraph (a), the Bank shall: (i) perform the customary
services of a transfer agent, dividend disbursing agent, custodian of
certain retirement plans and, as relevant, agent in connection with
accumulation, open-account or similar plans (including without
limitation any periodic investment plan or periodic withdrawal
program), including but not limited to: maintaining all Shareholder
accounts, preparing Shareholder meeting lists, mailing proxies,
receiving and tabulating proxies, mailing Shareholder reports and
prospectuses to current Shareholders, withholding taxes on U.S.
resident and non-resident alien accounts, preparing and filing U.S.
Treasury Department Forms 1099 and other appropriate forms required
with respect to dividends and distributions by federal authorities for
all Shareholders, preparing and mailing confirmation forms and
statements of account to Shareholders for all purchases and
redemptions of Shares and other confirmable transactions in
Shareholder accounts, preparing and mailing activity statements for
Shareholders, and providing Shareholder account information and (ii)
provide a system which will enable the Fund to monitor the total
number of Shares sold in each State.
(c) In addition, the Fund shall (i) identify to the Bank in writing those
transactions and assets to be treated as exempt from blue sky
reporting for each State and (ii) verify the establishment of
transactions for each State on the system prior to activation and
thereafter monitor the daily activity for each State. The
responsibility of the Bank for the Fund's blue sky State registration
status is solely limited to the initial establishment of transactions
subject to blue sky compliance by the Fund and the reporting of such
transactions to the Fund as provided above.
(d) Procedures as to who shall provide certain of these services in
Section 1 may be established from time to time by agreement between
the Fund on behalf of each Portfolio and the Bank per the attached
service responsibility schedule. The Bank may at times perform only a
portion of these services and the Fund or its agent may perform these
services on the Fund's behalf.
(e) The Bank shall provide additional services on behalf of the Fund
(i.e., escheatment services) which may be agreed upon in writing
between the Fund and the Bank.
2. Fees and Expenses
2.1 For the performance by the Bank pursuant to this Agreement, the Fund agrees
on behalf of each of the Portfolios to pay the Bank an annual maintenance
fee for each Shareholder account as set out in the initial fee schedule
attached hereto. Such fees and out-of-pocket expenses and advances
identified under Section 2.2 below may be changed from time to time subject
to mutual written agreement between the Fund and the Bank.
2.2 In addition to the fee paid under Section 2.1 above, the Fund agrees on
behalf of each of the Portfolios to reimburse the Bank for out-of-pocket
expenses, including but not limited
3
<PAGE>
to confirmation production, postage, forms, telephone, microfilm,
microfiche, tabulating proxies, records storage, or advances incurred by
the Bank for the items set out in the fee schedule attached hereto. In
addition, any other expenses incurred by the Bank at the request or with
the consent of the Fund, will be reimbursed by the Fund on behalf of the
applicable Portfolio.
2.3 The Fund agrees on behalf of each of the Portfolios to pay all fees and
reimbursable expenses within five days following the receipt of the
respective billing notice. Postage for mailing of dividends, proxies, Fund
reports and other mailings to all shareholder accounts shall be advanced to
the Bank by the Fund at least seven (7) days prior to the mailing date of
such materials.
3. Representations and Warranties of the Bank
The Bank represents and warrants to the Fund that:
3.1 It is a trust company duly organized and existing and in good standing
under the laws of The Commonwealth of Massachusetts.
3.2 It is duly qualified to carry on its business in The Commonwealth of
Massachusetts.
3.3 It is empowered under applicable laws and by its Charter and By-Laws to
enter into and perform this Agreement.
3.4 All requisite corporate proceedings have been taken to authorize it to
enter into and perform this Agreement.
3.5 It has and will continue to have access to the necessary facilities,
equipment and personnel to perform its duties and obligations under this
Agreement.
4. Representations and Warranties of the Fund
The Fund represents and warrants to the Bank that:
4.1 It is a business trust duly organized and existing and in good standing
under the laws of the Commonwealth of Massachusetts.
4.2 It is empowered under applicable laws and by its Declaration of Trust and
By-Laws to enter into and perform this Agreement.
4.3 All corporate proceedings required by said Declaration of Trust and By-Laws
have been taken to authorize it to enter into and perform this Agreement.
4.4 It is an open-end and diversified management investment company registered
under the Investment Company Act of 1940, as amended.
4
<PAGE>
4.5 A registration statement under the Securities Act of 1933, as amended on
behalf of each of the Portfolios is currently effective and will remain
effective, and appropriate state securities law filings have been made and
will continue to be made, with respect to all Shares of the Fund being
offered for sale.
5. Wire Transfer Operating Guidelines/Articles 4A of the Uniform Commercial
Code
5.1 The Bank is authorized to promptly debit the appropriate Fund account(s)
upon the receipt of a payment order in compliance with the selected
security procedure (the "Security Procedure") chosen for funds transfer and
in the amount of money that the Bank has been instructed to transfer. The
Bank shall execute payment orders in compliance with the Security Procedure
and with the Fund instructions on the execution date provided that such
payment order is received by the customary deadline for processing such a
request, unless the payment order specifies a later time. All payment
orders and communications received after this the customary deadline will
be deemed to have been received the next business day.
5.2 The Fund acknowledges that the Security Procedure it has designated on the
Fund Selection Form was selected by the Fund from security procedures
offered by the Bank. The Fund shall restrict access to confidential
information relating to the Security Procedure to authorized persons as
communicated to the Bank in writing. The Fund must notify the Bank
immediately if it has reason to believe unauthorized persons may have
obtained access to such information or of any change in the Fund's
authorized personnel. The Bank shall verify the authenticity of all Fund
instructions according to the Security Procedure.
5.3 The Bank shall process all payment order on the basis of the account number
contained in the payment order. In the event of a discrepancy between any
name indicated on the payment order and the account number, the account
number shall take precedence and govern.
5.4 The Bank reserves the right to decline to process or delay the processing
of a payment order which (a) is in excess of the collected balance in the
account to be charged at the time of the Bank's receipt of such payment
order; (b) if initiating such payment order would cause the Bank, in the
Bank's sole judgement, to exceed any volume, aggregate dollar, network,
time, credit or similar limits which are applicable to the Bank; or (c) if
the Bank, in good faith, is unable to satisfy itself that the transaction
has been properly authorized.
5.5 The Bank shall use reasonable efforts to act on all authorized requests to
cancel or amend payment orders received in compliance with the Security
Procedure provided that such requests are received in a timely manner
affording the Bank reasonable opportunity to act. However, the Bank assumes
no liability if the request for amendment or cancellation cannot be
satisfied.
5
<PAGE>
5.6 The Bank shall assume no responsibility for failure to detect any erroneous
payment order provided that the Bank complies with the payment order
instructions as received and the Bank complies with the Security Procedure.
The Security Procedure is established for the purpose of authenticating
payment orders only and not for the detection of errors in payment orders.
5.7 The Bank shall assume no responsibility for lost interest with respect to
the refundable amount of any unauthorized payment order, unless the Bank
is notified of the unauthorized payment order within thirty (30) days or
notification by the Bank of the acceptance of such payment order. In no
event (including failure to execute a payment order) shall the Bank be
liable for special, indirect or consequential damages, even if advised of
the possibility of such damages.
5.8 When the Fund initiates or receives Automated Clearing House credit and
debit entries pursuant to these guidelines and the rules of the National
Automated Clearing House Association and the New England Clearing House
Association, the Bank will act as an Originating Depository Financial
Institution and/or receiving depository Financial Institution, as the case
may be, with respect to such entries. Credits given by the Bank with
respect to an ACH credit entry are provisional until the Bank receives
final settlement for such entry from the Federal Reserve Bank. If the Bank
does not receive such final settlement, the Fund agrees that the Bank shall
receive a refund of the amount credited to the Fund in connection with such
entry, and the party making payment to the Fund via such entry shall not be
deemed to have paid the amount of the entry.
5.9 Confirmation of Bank's execution of payment orders shall ordinarily be
provided within twenty four (24) hours notice of which may be delivered
through the Bank's proprietary information systems, or by facsimile or
call-back. Fund must report any objections to the execution of an order
within thirty (30) days.
6. Data Access and Proprietary Information
6.1 The Fund acknowledges that the data bases, computer programs, screen
formats, report formats, interactive design techniques, and documentation
manuals furnished to the Fund by the Bank as part of the Fund's ability to
access certain Fund-related data ("Customer Data") maintained by the Bank
on data bases under the control and ownership of the Bank or other third
party ("Data Access Services") constitute copyrighted, trade secret, or
other proprietary information (collectively, "Proprietary Information") of
substantial value to the Bank or other third party. In no event shall
Proprietary Information be deemed Customer Data. The Fund agrees to treat
all Proprietary Information as proprietary to the Bank and further agrees
that it shall not divulge any Proprietary Information to any person or
organization except as may be provided hereunder. Without limiting the
foregoing, the Fund agrees for itself and its employees and agents:
(a) to access Customer Data solely from locations as may be designated in
writing by the Bank and solely in accordance with the Bank's
applicable user documentation;
<PAGE>
(b) to refrain from copying or duplicating in any way the Proprietary
Information;
(c) to refrain from obtaining unauthorized access to any portion of the
Proprietary Information, and if such access is inadvertently obtained,
to inform in a timely manner of such fact and dispose of such
information in accordance with the Bank's instructions;
(d) to refrain from causing or allowing the data acquired hereunder from
being retransmitted to any other computer facility or other location,
except with the prior written consent of the Bank;
(e) that the Fund shall have access only to those authorized transactions
agreed upon by the parties;
(f) to honor all reasonable written requests made by the Bank to protect
at the Bank's expense the rights of the Bank in Proprietary
Information at common law, under federal copyright law and under other
federal or state law.
Each party shall take reasonable efforts to advise its employees of their
obligations pursuant to this Section 6. The obligations of this Section shall
survive any earlier termination of this Agreement.
6.2 If the Fund notifies the Bank that any of the Data Access Services do not
operate in material compliance with the most recently issued user
documentation for such services, the Bank shall endeavor in a timely manner
to correct such failure. Organizations from which the Bank may obtain
certain data included in the Data Access Services are solely responsible
for the contents of such data and the Fund agrees to make no claim against
the Bank arising out of the contents of such third-party data, including,
but not limited to, the accuracy thereof. DATA ACCESS SERVICES AND ALL
COMPUTER PROGRAMS AND SOFTWARE SPECIFICATIONS USED IN CONNECTION THEREWITH
ARE PROVIDED ON AN AS IS, AS AVAILABLE BASIS. THE BANK EXPRESSLY DISCLAIMS
ALL WARRANTIES EXCEPT THOSE EXPRESSLY STATED HEREIN INCLUDING, BUT NOT
LIMITED TO, THE IMPLIED WARRANTIES OF MERCHANTABILITY AND FITNESS FOR A
PARTICULAR PURPOSE.
6.3 If the transactions available to the Fund include the ability to originate
electronic instructions to the Bank in order to (i) effect the transfer or
movement of cash or Shares or (ii) transmit Shareholder information or
other information, then in such event the Bank shall be entitled to rely on
the validity and authenticity of such instruction without undertaking any
further inquiry as long as such instruction is undertaken in conformity
with security procedures established by the Bank from time to time.
7. Indemnification
7.1 The Bank shall not be responsible for, and the Fund shall on behalf of the
applicable Portfolio indemnify and hold the Bank harmless from and against,
any and all losses,
<PAGE>
damages, costs, charges, counsel fees, payments, expenses and liability
arising out of or attributable to:
(a) All actions of the Bank or its agent or subcontractors required to be
taken pursuant to this Agreement, provided that such actions are taken
in good faith and without negligence or willful misconduct.
(b) The Fund's lack of good faith, negligence or willful misconduct which
arise out of the breach of any representation or warranty of the Fund
hereunder.
(c) The reliance on or use by the Bank or its agents or subcontractors of
information, records, documents or services which (i) are received by
the Bank or its agents or subcontractors, and (ii) have been prepared,
maintained or performed by the Fund or any other person or firm on
behalf of the Fund including but not limited to any previous transfer
agent or registrar.
(d) The reliance on, or the carrying out by the Bank or its agents or
subcontractors of any instructions or requests of the Fund on behalf
of the applicable Portfolio.
(e) The offer or sale of Shares in violation of any requirement under the
federal securities laws or regulations or the securities laws or
regulations of any state that such Shares be registered in such state
or in violation of any stop order or other determination or ruling by
any federal agency or any state with respect to the offer or sale of
such Shares in such state.
(f) The negotiations and processing of checks made payable to prospective
or existing Shareholders tendered to the Bank for the purchase of
Shares, such checks are commonly known as "third party checks."
7.2 At any time the Bank may apply to any officer of the Fund for instructions,
and may consult with legal counsel with respect to any matter arising in
connection with the services to be performed by the Bank under this
Agreement, and the Bank and its agents or subcontractors shall not be
liable and shall be indemnified by the Fund on behalf of the applicable
Portfolio for any action taken or omitted by it in reliance upon such
instructions or upon the opinion of such counsel. The Bank, its agents and
subcontractors shall be protected and indemnified in acting upon any paper
or document, reasonably believed to be genuine and to have been signed by
the proper person or persons, or upon any instruction, information, data,
records or documents provided the Bank or its agents or subcontractors by
machine readable input, telex, CRT data entry or other similar means
authorized by the Fund, and shall not be held to have notice of any change
of authority of any person, until receipt of written notice thereof from
the Fund. The Bank, its agents and subcontractors shall also be protected
and indemnified in recognizing stock certificates which are reasonably
believed to bear the proper manual or facsimile signatures of the officers
of the Fund, and the proper countersignature of any former transfer agent
or former registrar, or of a co-transfer agent or co-registrar.
<PAGE>
7.3 In order that the indemnification provisions contained in this Section 7
shall apply, upon the assertion of a claim for which the Fund may be
required to indemnify the Bank, the Bank shall promptly notify the Fund of
such assertion, and shall keep the Fund advised with respect to all
developments concerning such claim. The Fund shall have the option to
participate with the Bank in the defense of such claim or to defend against
said claim in its own name or in the name of the Bank. The Bank shall in no
case confess any claim or make any compromise in any case in which the Fund
may be required to indemnify the Bank except with the Fund's prior written
consent.
8. Standard of Care
8.1 The Bank shall at all times act in good faith and agrees to use its best
efforts within reasonable limits to insure the accuracy of all services
performed under this Agreement, but shall be liable for loss or damage due
to errors only if said errors are caused by its negligence, bad faith, or
willful misconduct or that of its employees and otherwise shall not be held
responsible or liable.
8.2 If the Fund suffers a loss for which the Bank is liable under section 8.1
hereunder the Bank's obligation to the Fund shall include the Fund's
counsel fees and expenses directly arising out of or attributable to such
liability.
9. Covenants of the Fund and the Bank
9.1 The Fund shall on behalf of each of the Portfolios promptly furnish to the
Bank the following:
(a) A certified copy of the resolution of the Board of Trustees of the
Fund authorizing the appointment of the Bank and the execution and
delivery of this Agreement.
(b) A copy of the Declaration of Trust and By-Laws of the Fund and all
amendments thereto.
9.2 The Bank hereby agrees to establish and maintain facilities and procedures
reasonably acceptable to the Fund for safekeeping of stock certificates,
check forms and facsimile signature imprinting devices, if any; and for the
preparation or use, and for keeping account of, such certificates, forms
and devices.
9.3 The Bank shall keep records relating to the services to be performed
hereunder, in the form and manner as it may deem advisable. To the extent
required by Section 31 of the Investment Fund Act of 1940, as amended, and
the Rules thereunder, the Bank agrees that all such records prepared or
maintained by the Bank relating to the services to be performed by the Bank
hereunder are the property of the Fund and will be preserved, maintained
and made available in accordance with such Section and Rules, and will be
surrendered promptly to the Fund on and in accordance with its request.
9
<PAGE>
9.4 The Bank and the Fund agree that all books, records, information and data
pertaining to the business of the other party which are exchanged or
received pursuant to the negotiation or the carrying out of this Agreement
shall remain confidential, and shall not be voluntarily disclosed to any
other person, except as may be required by law.
9.5 In case of any requests or demands for the inspection of the Shareholder
records of the Fund, the Bank will endeavor to notify the Fund and to
secure instructions from an authorized officer of the Fund as to such
inspection. The Bank reserves the right, however, to exhibit the
Shareholder records to any person whenever it is advised by its counsel
that it may be held liable for the failure to exhibit the Shareholder
records to such person.
10. Termination of Agreement
10.1 This Agreement may be terminated by either party upon one hundred twenty
(120) days written notice to the other.
10.2 Should the Fund exercise its right to terminate, all out-of-pocket
expenses associated with the movement of records and material will be
borne by the Fund on behalf of the applicable Portfolio(s). Additionally,
the Bank reserves the right to charge for any other reasonable expenses
associated with such termination and/or a charge equivalent to the average
of three (3) months' fees.
11. Additional Funds
In the event that the Fund establishes one or more series of Shares in
addition to the Portfolio with respect to which it desires to have the
Bank render services as transfer agent under the terms hereof, it shall so
notify the Bank in writing, and if the Bank agrees in writing to provide
such services, such series of Shares shall become a Portfolio hereunder.
12. Assignment
12.1 Except as provided in Section 12.3 below, neither this Agreement nor any
rights or obligations hereunder may be assigned by either party without
the written consent of the other party.
12.2 This Agreement shall inure to the benefit of and be binding upon the
parties and their respective permitted successors and assigns.
12.3 The Bank may, without further consent on the part of the Fund, subcontract
for the performance hereof with (i) Boston Financial Data Services, Inc.,
a Massachusetts corporation ("BFDS") which is duly registered as a
transfer agent pursuant to Section 17A(c)(2) of the Securities Exchange
Act of 1934, as amended ("Section 17A(c)(2)"), (ii) a BFDS subsidiary duly
registered as a transfer agent pursuant to Section 17A(c)(2) or (iii) a
BFDS affiliate; provided, however, that the Bank shall be as fully
responsible to the Fund for the acts and omissions of any subcontractor as
it is for its own acts and omissions.
10
<PAGE>
13. Amendment
This Agreement may be amended or modified by a written agreement executed
by both parties and authorized or approved by a resolution of the Board of
Trustees of the Fund.
14. Massachusetts Law to Apply
This Agreement shall be construed and the provisions thereof interpreted
under and in accordance with the laws of The Commonwealth of
Massachusetts.
15. Force Majeure
In the event either party is unable to perform its obligations under the
terms of this Agreement because of acts of God, strikes, equipment or
transmission failure or damage reasonably beyond its control, or other
causes reasonably beyond its control, such party shall not be liable for
damages to the other for any damages resulting from such failure to
perform or otherwise from such causes.
16. Consequential Damages
Neither party to this Agreement shall be liable to the other party for
consequential damages under any provision of this Agreement or for any
consequential damages arising out of any act or failure to act hereunder.
17. Merger of Agreement
This Agreement constitutes the entire agreement between the parties hereto
and supersedes any prior agreement with respect to the subject matter
hereof whether oral or written.
18. Limitations of Liability of the Trustees and Shareholders
A copy of the Declaration of Trust of the Trust is on file with the
Secretary of The Commonwealth of Massachusetts, and notice is hereby given
that this instrument is executed on behalf of the Trustees of the Trust as
Trustees and not individually and that the obligations of this instrument
are not binding upon any of the Trustees or Shareholders individually but
are binding only upon the assets and property of the Fund.
19. Counterparts
This Agreement may be executed by the parties hereto on any number of
counterparts, and all of said counterparts taken together shall be deemed
to constitute one and the same instrument.
11
<PAGE>
20. Reproduction of Documents
This Agreement and all schedules, exhibits, attachments and amendments
hereto may be reproduced by any photographic, photostatic, microfilm,
micro-card, miniature photographic or other similar process. The parties
hereto each agree that any such reproduction shall be admissible in
evidence as the original itself in any judicial or administrative
proceeding, whether or not the original is in existence and whether or not
such reproduction was made by a party in the regular course of business,
and that any enlargement, facsimile or further reproduction shall likewise
be admissible in evidence
12
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed
in their names and on their behalf by and through their duly authorized
officers, as of the day and year first above written.
NUVEEN FLAGSHIP MUNICIPAL TRUST
By: /s/ Anna Kucinskis
--------------------
ATTEST:
/s/ Gifford R. Zimmerman
- ------------------------
STATE STREET BANK AND TRUST COMPANY
By: /s/ Ronald E. Logue
--------------------------
Executive Vice President
ATTEST:
/s/ Steven Cesso
- ------------------------
13
<PAGE>
STATE STREET BANK & TRUST COMPANY
FUND SERVICE RESPONSIBILITIES*
<TABLE>
<CAPTION>
Service Performed Responsibility
- ----------------- --------------
Bank Fund
---- ----
<S> <C> <C>
1. Receives orders for the purchase of Shares. X X
2. Issue Shares and hold Shares in Shareholders X
accounts.
3. Receive redemption requests. X X
4. Effect transactions 1-3 above directly with X X
broker-dealers.
5. Pay over monies to redeeming Shareholders. X
6. Effect transfers of Shares. X
7. Prepare and transmit dividends and distributions. X
8. Issue Replacement Certificates. X
9. Reporting of abandoned property. X
10. Maintain records of account. X
11. Maintain and keep a current and accurate control X
book for each issue of securities.
12. Mail proxies. X
13. Mail Shareholder reports. X
14. Mail prospectuses to current Shareholders. X X
15. Withhold taxes on U.S. resident and non-resident X
alien accounts.
</TABLE>
14
<PAGE>
<TABLE>
<CAPTION>
Service Performed Responsibility
- ----------------- --------------
Bank Fund
---- ----
<S> <C> <C>
16. Prepare and file U.S. Treasury Department forms. X
17. Prepare and mail account and confirmation X
statements for Shareholders.
18. Provide Shareholder account information. X
19. Blue sky reporting. X
* Such services are more fully described in Section 1.2 (a), (b) and (c) of
the Agreement.
</TABLE>
NUVEEN FLAGSHIP MUNICIPAL TRUST
BY: /s/ Anna Kucinskis
_______________________________
ATTEST:
/s/ Gifford R. Zimmerman
___________________________________
STATE STREET BANK AND TRUST COMPANY
BY: /s/ Ronald E. Logue
_______________________________
Executive Vice President
ATTEST:
/s/ Steven Cesso
____________________________________
15
<PAGE>
STATE STREET BANK AND TRUST COMPANY
Fee Information for Services as
Plan, Transfer and Dividend Disbursing Agent
NUVEEN FLAGSHIP MUNICIPAL TRUST
NUVEEN FLAGSHIP MULTISTATE TRUST I
NUVEEN FLAGSHIP MULTISTATE TRUST II
NUVEEN FLAGSHIP MULTISTATE TRUST III
NUVEEN FLAGSHIP MULTISTATE TRUST IV
General - Fees are based on annual per shareholder account charges for account
maintenance plus out-of-pocket expenses. Annual maintenance charges for various
kinds of mutual funds are given below. There is a minimum charge of $1,000.00
per fund or class of shares. This minimum will be waived for the six-month
period, February 1, 1997 through July 31, 1997.
Annual Maintenance Charges - Fees are billable on a monthly basis at the rate of
1/12 of the annual fee. A charge is made for an account in the month that an
account opens or closes.
Type (A) Fund 0-$75 million in assets $13.50
Type (B) Fund $75-$150 million in assets $15.50
Type (C) Fund Over $150 million in assets $16.50
The per account maintenance fee will be adjusted annually based on each fund's
assets as of the first day of June. Multiple classes of shares will be billed as
a separate Fund.
Other Fees - The following features will each be assessed an additional charge
as an add-on to the annual per account rate if they are present:
12B-1 $ 5.50 per account*
Manually entered share and maintenance transactions $ 1.00 each
Closed Accounts per account, per month $ 0.10
Disaster Recovery/Emergency backup per account
serviced, per year $ 0.25
* This fee will be reduced to $4.50 for the six-month period, February 1, 1997
through July 31, 1997.
Out-of-Pocket Expenses - Out-of-pocket expenses include but are not limited to:
Confirmation statements, postage, forms, ACH, telephone, microfilm, microfiche,
proxy tabulation, checkwriting and other expenses incurred at the specific
direction of the Fund.
<PAGE>
NUVEEN FLAGSHIP MUNICIPAL TRUST STATE STREET BANK AND TRUST CO.
By: /s/ Anna Kucinskis By: /s/ Ronald E. Logue
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Title: Vice President Title: Executive Vice President
---------------------------- -------------------------------
Date: 3/24/97 Date: March 20, 1997
----------------------------- --------------------------------
NUVEEN FLAGSHIP MULTISTATE TRUST I STATE STREET BANK AND TRUST CO.
By: By:
------------------------------- ----------------------------------
Title: Title:
---------------------------- -------------------------------
Date: Date:
----------------------------- --------------------------------
NUVEEN FLAGSHIP MULTISTATE TRUST II STATE STREET BANK AND TRUST CO.
By: By:
------------------------------- ----------------------------------
Title: Title:
---------------------------- -------------------------------
Date: Date:
----------------------------- --------------------------------
NUVEEN FLAGSHIP MULTISTATE TRUST III STATE STREET BANK AND TRUST CO.
By: By:
------------------------------- ----------------------------------
Title: Title:
---------------------------- -------------------------------
Date: Date:
----------------------------- --------------------------------
NUVEEN FLAGSHIP MULTISTATE TRUST IV STATE STREET BANK AND TRUST CO.
By: By:
------------------------------- ----------------------------------
Title: Title:
---------------------------- -------------------------------
Date: Date:
----------------------------- --------------------------------
<PAGE>
EXHIBIT 9(b)
NUVEEN FLAGSHIP MUNICIPAL TRUST
TRANSFER AGENCY AGREEMENT
This agreement is made as of the 31st day of January, 1997, between NUVEEN
FLAGSHIP MUNICIPAL TRUST, a Massachusetts business trust having its principal
office and place of business at 333 West Wacker Drive, Chicago, Illinois 60606,
on behalf of the two series named NUVEEN MUNICIPAL BOND FUND and NUVEEN INSURED
MUNICIPAL BOND FUND (hereinafter referred to as the "Fund"), and SHAREHOLDER
SERVICES, INC., a Colorado corporation having its place of business at 3410
South Galena Street, Denver, Colorado 80231 (hereinafter referred to as the
"Transfer Agent").
In consideration of the mutual promises hereinafter set forth, the parties
hereto covenant and agree as follows:
ARTICLE 1
DEFINITIONS
Whenever used in this Agreement, the following words and phrases shall have
the following meanings:
1.1 "Approved Institution" shall mean a broker-dealer, broker, bank or
other entity named in a Certificate, as hereinafter defined, and having
account(s) in the Trust or the Distributor or an agent it appoints, in each case
acting on behalf of the Fund for the benefit of its clients. From time to time
the Fund may amend a previously delivered Certificate by delivering to the
Transfer Agent a Certificate naming an additional entity as an Approved
Institution or deleting any entity named as an Approved Institution in a
previously delivered Certificate.
1.2 "Business Day" shall mean each day on which the New York Stock
Exchange is open for trading.
1.3 "Certificate" shall mean any notice, instruction, or other instrument
in writing, authorized or required by this Agreement to be given to the Transfer
Agent by the Fund and which is signed by any Officer, as hereinafter defined,
and actually received by the Transfer Agent. "Certificate" shall also include
any notice submitted to the Transfer Agent by electronic or telephone
transmission, reasonably believed by the Transfer Agent to be genuine and to
have been properly made, signed or authorized by an Officer.
1.4 "Computer Tape" shall mean any computer/electromagnetic tape or
transmission transmitted by an Approved Institution, via a remote terminal or
other similar link, into a data processing, storage, or collection system or
similar system (the "System"), located on the Transfer
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Agent's premises. For purposes of Section 5.1, such Computer Tape shall be
deemed to have been furnished at such times as are agreed upon from time to time
by the Transfer Agent and Fund only if the information reflected thereon was
input into the system at such times as are agreed upon from time to time by the
Transfer Agent and the Fund.
1.5 "Custodian" shall mean, with respect to the Fund, Chase Manhattan Bank
of New York as custodian under the terms and conditions of the Custody Agreement
between the Custodian and the Fund, or in any case any successor(s) to such
Custodian performing similar functions for or on behalf of the Fund.
1.6 "Direct Accounts" means accounts registered in the name(s) of
shareholders other than Approved Institutions.
1.7 "Distributor" shall mean John Nuveen & Co. Incorporated (hereinafter
referred to as "Nuveen & Co."), as distributor under the terms and conditions of
the Distributor's Contract between the Fund and Nuveen & Co., wherein Nuveen &
Co. has the exclusive right to sell shares of the Fund to investors against
orders therefor at net asset value, or any successor(s) to Nuveen & Co.
performing a similar function for or on behalf of the Fund.
1.8 "Effective Date" shall mean January 31, 1997 or the date the Fund
begins operations.
1.9 "Series" shall mean each individual portfolio of the Fund covered by
this agreement, if any, each being a separate portfolio of securities and other
assets, interests in which are represented by a separate series of the Fund's
shares, and such terms shall include any other such portfolio that may be
created for which the Transfer Agent agrees to act as transfer agent pursuant to
Article 10 of this Agreement.
1.10 "Officer" shall mean the Fund's Chairman of the Board, President, any
Vice President, Secretary, any Assistant Secretary, Treasurer, any Assistant
Treasurer and any other person duly authorized by the Board of Trustees of the
Fund to execute or give any Certificate on behalf of the Fund and named in the
Certificate annexed hereto as Appendix A, as such Certificate may be amended
from time to time.
1.11 "Prospectus" shall mean the most current Fund prospectus and statement
of additional information relating to the Shares, actually received by the
Transfer Agent from the Fund and shall include to the extent applicable, shares
designated as comprising any and all classes or any series of the Fund.
1.12 "Shares" shall mean full or fractional shares comprising all or any
part of each series representing the beneficial interest in the Fund and shall
include to the extent applicable, shares designated as comprising any and all
classes of any series of the Fund.
ARTICLE 2
APPOINTMENT OF TRANSFER AGENT
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2.1 The Fund hereby constitutes and appoints the Transfer Agent as
transfer agent of the Shares of the Fund and as dividend disbursing agent for
the Fund during the term of this Agreement.
2.2 The Transfer Agent hereby accepts appointment as transfer agent and
dividend disbursing agent and agrees to perform the duties hereinafter set
forth.
2.3 In connection with such appointment, upon or prior to executing this
Agreement, the Fund shall deliver to the Transfer Agent such of the following as
have not already been furnished to the Transfer Agent:
(a) A copy of the Declaration of Trust of the Fund and all amendments
thereto certified by the Secretary of the Fund;
(b) A copy of the By-Laws of the Fund certified by the Secretary of the
Fund;
(c) A copy of resolutions of the Board of Trustees of the Fund, certified
by the Secretary of the Fund, authorizing the execution of this Transfer Agency
Agreement;
(d) A Certificate signed by the Secretary of the Fund specifying the names
and specimen signatures of the Officers of the Fund;
(e) Specimen Share certificates for Shares of each series of the Fund in
the form approved by the Board of Trustees of the Fund, together with a
certificate signed by the Secretary of the Fund as to such approval;
(f) Copies of the most recently filed Post-Effective Amendment to the
Fund's Registration Statement, filed with the Securities and Exchange Commission
under the Securities Act of 1933, as amended, and under the Investment Company
Act of 1940, as amended, together with any applications for exemptive relief
from any of the provisions of such laws filed by the Fund and the record of any
formal action of the Securities and Exchange Commission with respect to all such
applications; and
(g) Opinion of Counsel for the Fund to the effect that (1) beneficial
interest in each Fund is divided into an unlimited number of shares of
beneficial interest, (2) the issue and sale of the Fund's authorized but
unissued Shares have been duly authorized under Massachusetts law, (3) the
outstanding Shares are fully paid and non-assessable and (4) upon the issue and
sale of any authorized and unissued Shares and upon receipt of the authorized
consideration therefor in an amount not less than either the Shares' net asset
value or par value, if any, established and in force at the time of their sale,
the Fund Shares so issued will be validly issued, fully paid and non-assessable.
2.4 The Fund shall either (a) furnish the Transfer Agent with sufficient
supplies of blank share certificates in the form approved from time to time by
the Board of Trustees of the Fund, and from time to time will renew such
supplies upon request of the Transfer Agent, or (b) authorize the Transfer Agent
to itself create laser-printed Share certificates in the form approved by the
Board of Trustees of the Fund. Any such blank Share certificates shall be
properly signed, by facsimile or otherwise, by authorized Officers and, if
required, shall bear the seal of the Fund or a facsimile thereof.
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Notwithstanding the death, resignation or removal of any Officer authorized to
sign such Share certificates, the Transfer Agent may continue to countersign and
issue Share certificates bearing such Officer's signature until otherwise
directed by the Fund. The Fund agrees to indemnify and exonerate, save and hold
the Transfer Agent harmless, from and against any and all claims or demands that
may be asserted against the Transfer Agent with respect to the genuineness of
any Share certificate supplied to the Transfer Agent by the Fund pursuant to
this Agreement.
ARTICLE 3
AUTHORIZATION AND ISSUANCE OF SHARES
3.1 The Transfer Agent shall maintain records of accounts evidencing
ownership of Shares as provided in this Agreement and in the Fund's Prospectus
and, subject to the terms and conditions of this Agreement, when requested shall
countersign, record, issue, and deliver certificates for Shares both upon
original issue and transfer. Evidence of the ownership of Shares shall be
maintained on the Transfer Agent's records in book (uncertificated) form, or, if
requested by an Approved Institution (or the Distributor or its agent acting on
behalf of such Approved Institution) or shareholder, share certificates shall be
issued, subject to the provisions of Article 5 hereof, to evidence the ownership
of Shares.
3.2 Prior to the issuance of any Shares pursuant to Share splits and prior
to any reduction in the number of Shares outstanding, the Fund shall deliver the
following documents to the Transfer Agent:
(a) A copy of the resolution(s) adopted by the Board of Trustees of the
Fund and/or the shareholders of the relevant Fund, certified by the Secretary of
the Fund, authorizing such issuance of additional Shares of such Fund or such
reduction, as the case may be;
(b) In the case of the issuance of Shares, an opinion of counsel for the
Fund with respect to matters set forth in Section 2.3(g) hereof as to such
shares; and
(c) Such additional documents as the Transfer Agent may reasonable
request.
ARTICLE 4
RECAPITALIZATION OR CAPITAL ADJUSTMENT
4.1 In the case of any Share split, recapitalization or other capital
adjustment, the Transfer Agent will, in the case of accounts represented by
uncertificated Shares, cause the account records to be adjusted, as necessary,
to reflect the number of Shares held for the account of each such shareholder as
a result of such adjustment, or, in the case of Shares represented by
certificates, will, if so instructed by the Fund, issue revised Share
certificates in exchange for, or upon transfer of, outstanding Share
certificates in the old form, in either case upon receiving:
(a) A Certificate authorizing the issuance of revised Share certificates
and any other action required to be taken by the Transfer Agent in connection
with any such split, recapitalization or other capital adjustment;
4
<PAGE>
(b) A copy of any amendment to the Declaration of Trust of the Fund,
certified by the Secretary of the Fund, with respect to the adjustment;
(c) Specimen Share certificates in the revised form approved by the Board
of Trustees of the Fund;
(d) An opinion of counsel for the Fund with respect to the matters set
forth in Article 2, Section 2.3(g) hereof as to such Shares; and
(e) Such additional documents as the Transfer Agent may reasonably
request.
4.2. The Fund shall either (a) furnish the Transfer Agent with a sufficient
supply of blank Share certificates in any new form authorized in connection with
any such Share split, recapitalization or other capital adjustment, and from
time to time will replenish such supply upon the request of the Transfer Agent,
or (b) authorize the Transfer Agent to itself create laser-printed Share
certificates in the form approved by the Board of Trustees of the Fund. Any such
blank Share certificates shall be properly signed by authorized Officers and, if
required, shall bear the Fund's seal or facsimile thereof.
ARTICLE 5
ISSUANCE, REDEMPTION, AND TRANSFER OF SHARES
5.1. (a) On each Business Day, the Transfer Agent shall accept, at such
time as are agreed upon from time to time by the Transfer Agent and the Fund,
(i) purchase orders received by the Transfer Agent directly from an Approved
Institution (or the Distributor or its agent acting on behalf of such Approved
Institution) or an individual investor, (ii) redemption requests either received
from a shareholder, whether or not an Approved Institution (or the Distributor
or its agent acting on behalf of such Approved Institution), or contained in a
Certificate, and (iii) requests for exchanges of the Fund's Shares of a given
class for Shares of another fund received from a shareholder, whether or not an
Approved Institution (or the Distributor or its agent acting on behalf of such
Approved Institution), or contained in a Certificate, provided that (1) such
purchase order, exchange request or redemption request, as the case may be, is
in conformity with the Fund's purchase, exchange, and redemption procedures, as
applicable, described in the Prospectus, and (2) if such type of purchase order,
exchange request, or redemption request is not described in the Prospectus in
effect upon the commencement date of the Agreement, the Transfer Agent has
agreed to accept and act as to such order or request. Upon receipt on any
Business Day of any check drawn or endorsed to the Transfer Agent, the Fund or
the Distributor for the purchase of Shares, or any payment made by Automated
Clearing House or Federal Funds wire, the Transfer Agent shall deposit such
check or payment in the bank account established by the Fund or the Distributor
for the collection of such amounts and shall wire such amounts to the Fund's
Custodian on the next Business Day. The Transfer Agent shall have no
responsibility hereunder for the Fund's compliance with states securities
registration laws ("Blue Sky laws") relating to such purchase orders, except to
the extent that the Transfer Agent will maintain records in a manner that will
enable the Fund's to monitor the total number of Shares of the Fund sold in each
state and shall provide the Fund reports as to such sales as specified in
Appendix B to this Agreement.
5
<PAGE>
(b) On each Business Day, the Transfer Agent shall also accept, at
such times as are agreed upon from time to time by the Transfer Agent and the
Fund, a Computer Tape consistent in all respects with the Transfer Agent's tape
layout package, as amended from time to time, which is believed by the Transfer
Agent to be furnished by or on behalf of any Approved Institution, setting forth
data as to purchases, redemptions and exchanges of Shares irrespective of
whether payment of the purchase price accompanies such computer tape. The
Transfer Agent may rely on the data on such Computer Tapes as accurate, and
shall not be responsible hereunder for errors in such Computer Tapes furnished
to it hereunder, unless caused by the Transfer Agent's own negligence, bad faith
or willful misconduct.
(c) On each Business Day, the Fund shall provide or cause to be
provided to the Transfer Agent, at such time as the parties hereto shall agree,
the net asset value per share for the Fund and such other information as the
Transfer Agent may reasonably request.
5.2 On the Business Day following each Business Day, at such time as the
Transfer Agent and the Fund shall agree, an authorized employee of the Transfer
Agent shall confirm the following information by summary sheet transmitted by
electronic or other electromagnetic means to an authorized employee or agent of
the Fund (or by such other form as shall be agreed upon from time to time by the
Fund and the Transfer Agent):
(a) The total dollar amount to be applied toward the purchase of
Shares of the Fund and the number of Shares of the Fund purchased on such prior
Business Day, computed by aggregating the amounts so specified in (i) the
purchase orders received by the Transfer Agent on such prior Business Day from
individual investors and (ii) all Computer Tapes described in Section 5.1 (b)
timely received by the Transfer Agent with respect to such prior Business Day;
(b) The total dollar value and number of Shares of the Fund redeemed
on such prior Business Day, computed by aggregating the amounts so specified in
(i) the redemption requests received by the Transfer Agent directly on the
preceding Business Day from shareholders, and (ii) all Computer Tapes described
in Section 5.1(b) relating to such prior Business Day; and
(c) The total dollar value and number of Shares of the Fund to be
exchanged for Shares of another fund and the number of Shares of such other fund
to be issued in such exchanges on such prior Business Day, and the total dollar
value and number of shares of the Fund to be issued in exchange for shares of
another fund on such prior business day (if not included in 5.2(a) above)
computed by aggregating the amounts represented by any exchange requests
received directly by the Transfer Agent from shareholders and the amounts
specified in all Computer Tapes described in Section 5.1(b) relating to such
prior Business Day.
5.3 Following each Business Day, the Transfer Agent will (on a day on
which banks in Denver, Colorado, Chicago, Illinois and New York, New York are
open for business but in any event on or prior to the Fifth Business Day
following such Business Day) advise the Distributor of the amount of cash
necessary to be wired to the Custodian, representing purchased orders for
appropriate Fund's Shares received by the Transfer Agent as to such Business
Day, as set forth in Section 5.1 above. As to each Business Day, the Transfer
Agent will advise the Fund of the amount of cash representing exchange orders
received by the Transfer Agent as to such Business Day, such advice to be given
on the next Business Day.
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5.4. As to each Business Day, the Transfer Agent shall issue to, and
redeem from, the accounts specified in a purchase order, redemption request, or
exchange request received by the Transfer Agent in proper form in accordance
with the Prospectus and, when required by the Prospectus, properly endorsed by
the record owner thereof with the record owner's or owners' signature(s)
guaranteed by a U.S. commercial bank or U.S. trust company, a member of a
national securities exchange, a foreign bank with a U.S. correspondent bank or a
federally-chartered savings and loan association, or shall issue to, and/or
redeem from, the accounts specified in a Computer Tape received by the Transfer
Agent from an Approved Institution, the appropriate number of full and
fractional Shares based on the net asset value per Share of the relevant series
of the relevant Funds specified in an advice received as to such Business Day
from the Fund. Notwithstanding the foregoing, if a redemption specified in a
redemption request received directly by the Transfer Agent or in a Computer Tape
is for a dollar value of Shares in excess of the dollar value of uncertificated
Shares in the specified account plus the dollar value of certificated Shares in
the specified account for which the Transfer Agent has received the tender of a
Share certificate or certificates in proper form as described above, the
Transfer Agent shall not effect such redemption in whole or part. In such case
involving a Computer Tape, the Transfer Agent shall orally or by electronic or
other electromagnetic means advise both the Fund and the Approved Institution
(or the Distributor or its agent if acting on behalf of such Approved
Institution) which supplied such Computer Tape of such discrepancy. In such case
involving a direct shareholder, the Transfer Agent shall, within five (5)
business days, notify such shareholder directly, orally or in writing.
5.5. The Transfer Agent shall, as of each Business Day specified in a
Certificate described in Section 6.1, issue Shares of the Fund, based on the net
asset value per Share of the Fund specified in an advice received from the Fund
to such Business Day, in connection with a reinvestment of a dividend or
distribution on Shares of the Fund.
5.6. On each Business Day, the Transfer Agent shall advise the Fund by
computer/electromagnetic tape specifying, with respect to the immediately
preceding Business Day: the total number of Shares of the Fund (including
fractional Shares) issued and outstanding at the opening of business on such
day; the total number of Shares of the Fund sold on such day, pursuant to
Section 5.2; the total number of Shares of the Fund redeemed or exchanged on
such day; the total number of Shares of the Fund, if any, sold on such day
pursuant to preceding Section 5.4, and the total number of Shares of the Fund
issued and outstanding at the close of business on such day. Unless the Fund or
its agent shall advise the Transfer Agent of any error in the information
contained in such computer/electromagnetic tape (the "Initial Tape") prior to
the transmission of the next computer/electromagnetic tape by the Transfer
Agent, the Transfer Agent shall be deemed to have fulfilled its responsibilities
hereunder with respect to the accuracy of the data on subsequent
computer/electromagnetic tapes submitted to the Fund that are based, in whole or
in part upon any inaccurate data from the Initial Tape.
5.7. In connection with each purchase, exchange and redemption of Shares
other than pursuant to a Computer Tape submitted by an Approved Institution (or
by the Distributor or its agent acting on behalf of such Approved Institution),
the Transfer Agent shall send to the shareholder such statements as are
described in the Prospectus or as otherwise reasonably instructed in writing by
the Funds. If the Prospectus indicates that certificates for Shares are
available, and if specifically requested in writing by any shareholder, or if
otherwise required hereunder, the Transfer Agent will countersign, issue and
mail
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<PAGE>
to such shareholder, at the address set forth in the records of the Transfer
Agent, a Share certificate for any full Shares requested.
5.8. In computing the redemption proceeds to be paid to any shareholder or
to an account for an Approved Institution, the Transfer Agent shall first
compute the amount of any withholding for federal income taxes for which the
Transfer Agent has the responsibility under this Agreement to calculate such
withholding, in such manner as the Fund and the Transfer Agent shall agree from
time to time in conformity with instructions provided by the Fund to the
Transfer Agent. The Transfer Agent shall also compute any withholding for
federal income taxes for which the Transfer Agent has such responsibility at the
time of any exchange of a Fund's shares for another fund's shares. In the case
of a redemption of Shares directly by a shareholder of record and not by means
of a Computer Tape submitted by an Approved Institution (or by the Distributor
or its agent acting on behalf of such Approved Institution), upon deposit of
moneys in a redemption account by the relevant Custodian against which the
Transfer Agent is authorized by the Fund to draw checks in connection with a
redemption of Shares of the Fund, the Transfer Agent shall cancel the redeemed
Shares and after making appropriate deduction for any withholding of taxes
required of it by this Agreement or applicable law, make payment of (i) the
redemption proceeds to the order of the shareholder, and (ii) any tax withheld
to the Internal Revenue Service, in accordance with the Fund's redemption and
payment procedures described in the Prospectus or as otherwise reasonably
described in a written instruction from the Fund. In the case of an exchange of
Shares directly by a shareholder of record and not by means of a Computer Tape
submitted by an Approved Institution (or the Distributor or its agent acting on
behalf of such Approved Institution), upon deposit of moneys in an account by
the relevant Custodian against which the Transfer Agent is authorized by the
Fund to draw checks in connection with an exchange of Shares of a fund, the
Transfer Agent shall cancel the exchanged Shares, and withhold and pay taxes
required under this Agreement and applicable law. In the case of a redemption of
Shares pursuant to a Computer Tape, the Transfer Agent shall, on the next
Business Day, send the Fund a Computer Tape setting forth the amount of
redemption proceeds due each Approved Institution. If such Approved Institution
(or the Distributor or its agent acting on behalf of such Approved Institution)
has previously furnished the Transfer Agent withholding instructions with
respect to such redemption or any exchange of Shares pursuant to a Computer
Tape, the Transfer Agent shall include in the Computer Tape furnished to the
Fund information as to the amount of such withholding.
5.9. The Transfer Agent shall not be required to issue Shares of any fund
(other than with respect to the reinvestment of dividends or distributions on
shares owned by an existing shareholder if so stated in the Certificate) after
it has received a Certificate stating that the sale of Shares of that fund has
been suspended or discontinued.
5.10. The Transfer Agent shall not be responsible for any payment of any
original issue or other taxes required to be paid by the Fund in connection with
the issuance of any Shares.
5.11. The Transfer Agent shall not be responsible for issuing or effecting
any "stop transfer" or other similar order or restrictions on any Shares held in
the name of an Approved Institution. In the case of Shares registered in the
name of a shareholder other than an Approved Institution as to which a "stop
transfer" or other similar order or restriction applies, the Transfer Agent will
adhere to the terms of such stop transfer or similar order, except that it may
rely on a Certificate to effect a redemption, exchange or transfer of such
Shares, notwithstanding such stop order or restriction.
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<PAGE>
5.12. The Transfer Agent shall accept (a) a Computer Tape which is
furnished by or on behalf of any Approved Institution (or the Distributor or its
agent acting on behalf of such Approved Institution) and represented to be
instructions with respect to the transfer of Shares from one account of such
Approved Institution to another such account, and (b) as to Shares standing
directly in the name of a shareholder other than an Approved Institution,
transfer instructions in proper form in accordance with the Fund's Prospectus
and the Transfer Agent's rules described herein, and shall effect the transfer
specified in said Computer Tape or transfer instructions, provided any necessary
documents or Share certificates have been tendered to the Transfer Agent.
5.13. (a) Except as otherwise provided in sub-paragraph (b) of this
Section 5.13 and in Section 5.14, Shares will be transferred, exchanged or
redeemed other than pursuant to Computer Tapes from an Approved Institution (or
the Distributor on its agent acting on behalf of such Approved Institution) upon
presentation to the Transfer Agent of endorsed Share certificates or, in the
case of uncertificated Shares, instructions endorsed in proper form in
accordance with the Prospectus as stated in Section 5.4, accompanied by such
documents as the Transfer Agent reasonably deems necessary to evidence the
authority of the person making such transfer, exchange or redemption, and
bearing satisfactory evidence of the payment of transfer taxes. In the case of
small estates, where no administration is contemplated, the Transfer Agent may,
when furnished with an appropriate small estates affidavit under applicable law
or with a surety bond, and without further approval of the Fund, transfer or
redeem Shares registered in the name of a decedent if the current market value
of the Shares being redeemed or transferred does not exceed such amount as may
from time to time be prescribed by the applicable state statutes and
regulations. The Transfer Agent reserves the right to refuse to transfer,
exchange or redeem Shares until it is reasonably satisfied that the endorsement
on the Share certificate or instructions is valid and genuine, and for that
purpose it will require, unless otherwise instructed by an Officer, a signature
guarantee as stated in Section 5.4 of this Agreement. The Transfer Agent also
reserves the right to refuse to transfer, exchange or redeem Shares until it is
reasonably satisfied that the requested transfer, exchange or redemption is
legally authorized, or until it is reasonably satisfied that there is no basis
to any claims adverse to such transfer, exchange or redemption. The Transfer
Agent may, in effecting transfers, exchanges and redemptions of Shares, rely
upon those provisions of the Uniform Act for the simplification of Fiduciary
Security Transfers or the Uniform Commercial Code, as the same may be amended
from time to time, applicable to the transfer of securities.
(b) Notwithstanding the foregoing or any other provision contained
in this Agreement to the contrary, the Transfer Agent shall be fully protected
by the Fund in requiring any instructions, documents, assurances, endorsements
or guarantees, including, without limitation, any signature guarantees,
in connection with a redemption, exchange or transfer of Shares whenever the
Transfer Agent reasonably believes that requiring the same would be consistent
with the transfer, exchange and redemption procedures described in the
Prospectus, or in any instructions or certificates provided to the Transfer
Agent by the Fund.
5.14. Notwithstanding any provision contained in this Agreement to the
contrary, the Transfer Agent shall not be expected to require, as a condition to
any transfer, redemption or exchange of any Shares pursuant to a Computer Tape,
any documents, including, without limitation, any documents of the kind
described in Section 5.13(a) to evidence the authority of the person requesting
the transfer, exchange or redemption and/or payment of any transfer taxes, and
shall be fully protected in acting in accordance with the applicable provisions
of this Agreement.
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5.15. Nothing contained in this Agreement shall constitute any agreement
or representation by the Transfer Agent to permit, or to agree to permit, any
Approved Institution to input information into the System, although the Transfer
Agent may, with the Fund's written permission, permit access to the System by an
Approved Institution to retrieve data or information as to such Approved
Institution's accounts.
ARTICLE 6
DIVIDENDS AND DISTRIBUTIONS
6.1. The Fund shall furnish to the Transfer Agent a Certificate either (i)
setting forth with respect to each series of the Fund the date of the
declaration of a dividend or distribution, the date of accrual or payment
thereof, as the case may be, the record date of which shareholders entitled to
payment or accrual, as the case may be, shall be determined, the amount per
Share of such dividend or distribution for each series of the Fund, the payment
date on which all previously accrued and unpaid dividends are to be paid, and
the total amount, if any, payable by the Transfer Agent with respect to such
dividend or distribution on such payment date, or (ii) stating that the
declaration of dividends and distributions shall be on a daily or other periodic
basis and containing information of the type set forth in subsection (i) hereof.
6.2. Upon the payment date specified in the relevant Certificate, the
Transfer Agent shall, in the case of a cash dividend or distribution, advise the
Fund (by telephone or other electronic transmission) of the amount of cash
necessary to make the payment of the dividend or distribution to the
shareholders of record as of such payment date, including the amounts to be paid
to Approved Institutions. The Fund shall be responsible for having the
appropriate Custodian transfer a sufficient amount of cash to a dividend
disbursement account maintained by the Fund for the relevant Series against
which the Transfer Agent shall cause checks, ACH or federal funds wire payment
to be drawn to the order of such shareholders or Approved Institutions in
payment of the dividend. The Transfer Agent shall not be liable for any improper
payments made in accordance with a Certificate described in Section 6.1. If the
Transfer Agent shall not receive from the appropriate Custodian sufficient cash
to make payments of any cash dividend or distribution to shareholders of the
Fund as of the record date, the Transfer Agent shall, upon notifying the Fund,
withhold payment to all shareholders of record as of the record date until
sufficient cash is provided to the Transfer Agent unless otherwise instructed by
the Fund by a Certificate and acceptable to the Transfer Agent. In the case of
dividends or distributions reinvested in additional Shares of a series of the
Fund, the Transfer Agent shall follow the procedures set forth in Section 5.5.
6.3. The Transfer Agent shall in no way be responsible for the
determination of the rate or form of dividends or capital gain distributions due
shareholders.
6.4. The Transfer Agent shall, upon request of the Fund, file such
appropriate information returns concerning the payment of dividends and capital
gain distributions and redemptions with the proper Federal, state and local
authorities as are required by law to be filed by the Fund but shall in no way
be responsible for the collection or withholding of taxes due on such dividends
or distributions or on redemption proceeds due shareholders, except and only
to the extent required of it by applicable law for accounts of shareholders
other than Approved Institutions. If any amount is to be withheld from any
10
<PAGE>
dividend or distribution paid to, or exchange or redemption proceeds or other
cash distribution from, the account of an Approved Institution, such Approved
Institution (or the Distributor or its agent acting on behalf of such Approved
Institution) may advise the Transfer Agent of the amount to be withheld
therefrom, and if such advice is provided in a timely manner to the Transfer
Agent, the Transfer Agent will provide a separate check for such amount to the
Approved Institution, which shall be responsible for the proper application of
such withheld amounts.
ARTICLE 7
CONCERNING THE FUND
7.1. The Fund shall promptly deliver to the Transfer Agent written notice
of any change in the Officers authorized to sign or give Share certificates or
Certificates, together with a specimen signature of each new Officer.
7.2. It shall be the sole responsibility of the Fund to deliver to the
Transfer Agent in a timely manner the Fund's currently effective Prospectus,
copies of any exemptive relief obtained by the Fund under applicable securities
laws and copies of any amendments to the Fund; Declaration of Trust, By-Laws and
any other documents to be furnished by the Fund under this Agreement to enable
the Transfer Agent to carry out its duties hereunder, and, for purposes of this
Agreement, the Transfer Agent shall not be deemed to have notice of any
information contained in such Prospectus, exemptive relief or other document
until it is actually received by the Transfer Agent.
7.3. The Transfer Agent has been advised by the Fund and agrees that the
Fund's Declaration of Trust is on file with the Secretary of State of the
Commonwealth of Massachusetts and that this Agreement has been executed by the
officers of the Fund, as officers and not individually. The obligations of the
Agreement are not binding upon the Trustees, officers or shareholders of the
Fund individually but are binding only upon the assets and property of the Fund
or a particular series of Shares. The Transfer Agent agrees to look only to the
assets of the Fund or a particular series of Shares for payment under such
Agreement and that the shareholders, Trustees and officers shall not be liable
therefore.
ARTICLE 8
CONCERNING THE TRANSFER AGENT
8.1. Subject to the standard of care set forth in Section 8.4, the Transfer
Agent shall not be liable and shall be fully protected in acting upon any
Computer Tape, Certificate, oral instructions, writing or document reasonably
believed by it to be genuine and to have been signed (in the case of written
instructions or documents) or made by the proper person or persons and shall not
be held to have any notice of any change of authority of any person until
receipt of written notice thereof from the Fund or such person. Subject to the
standard of care set forth in Section 8.4, the Transfer Agent shall be similarly
protected in processing Share certificates which it reasonably believes to bear
the proper manual or facsimile signatures of the Officers of the Fund and the
proper countersignature of the Transfer Agent or any prior transfer agent.
11
<PAGE>
8.2. The Transfer Agent covenants that it shall carry out its
responsibilities under this Agreement in accordance and compliance with the
provisions of applicable laws and regulations governing its operation as a
transfer agent.
8.3. The Transfer Agent shall keep and maintain on behalf of the Fund such
records which the Fund or the Transfer Agent is, or may be, required to keep and
maintain pursuant to any applicable statutes, rules and regulations, including
without limitation Rule 31a-1 under the Investment Company Act of 1940, relating
to the maintenance of records in connection with the services to be provided
hereunder. The Transfer Agent agrees to make such records available for
inspection by the Trust at reasonable times and otherwise to keep confidential
all records and other information relative to the Fund and its shareholders,
except when the Transfer Agent reasonably believes it has been requested to
divulge such information by duly-constituted authorities or court process, or
requested by a shareholder with respect to information concerning an account as
to which such shareholder has either a legal or beneficial interest or when
requested by the Fund, the shareholder, or the dealer of record as to such
account.
8.4. (a) The Transfer Agent shall not be liable for any loss or damage,
including, without limitation, attorneys' fees, expenses and court costs,
resulting from the Transfer Agent's actions or omissions to act under or in
connection with this Agreement and its duties and responsibilities hereunder,
except for any loss or damage arising out of its own failure to act in good
faith, or its negligence or willful misfeasance.
(b) The Transfer Agent shall, provided such coverage is readily
available to the Transfer Agent at reasonable rates and upon reasonable terms
and conditions, maintain an insurance policy or surety bond, in the face amount
of $10 million per covered transaction against losses suffered by the Transfer
Agent in excess of the policy deductibles arising from errors or omission on the
part of the Transfer Agent in carrying out its responsibilities under this
Agreement and other agreements. The Transfer Agent shall upon request, furnish
promptly to the Fund copies of all insurance policies maintained pursuant to
this Section 8.4(b) that have not previously been furnished to the Fund.
(c) Any costs or losses incurred by the Fund for the processing of
any purchase, redemption, exchange or other share transactions at a price per
share other than the price per share applicable to the effective date of the
transaction (the foregoing being generally referred to herein as "as of"
transactions) will be handled in the following manner:
1. For each calendar year, if all "as of" transactions for the year
resulting from the actions or inactions of the Transfer Agent,
taken in the aggregate, result in a net loss to the Fund ("net
loss"), Transfer Agent will reimburse the Fund for such net loss,
except to the extent that such net loss may be offset by
application of a "net benefit" to the Fund carried over from prior
calendar years pursuant to sub-paragraph 2 immediately below.
2. For each calendar year, if all "as of" transactions for the year
resulting from the actions or inactions of the Transfer Agent,
taken in the aggregate, result in a net benefit to the Fund ("net
benefit"), the Fund shall not reimburse the Transfer Agent for the
amount of such net benefit; however, any "net benefit" for any
calendar year may be used to offset, in whole or in part, any "net
loss" suffered by the Fund in any future calendar year so as to
reduce the amount by which the
12
<PAGE>
Transfer Agent shall be required to reimburse the Fund for such
"net loss" in such year pursuant to sub-paragraph 1 immediately
above.
3. Any "net loss" for which the Transfer Agent reimburses the Fund in
any calendar year shall not be carried over into future years so
as to offset any "net benefit" in such future years.
8.5 The Fund shall indemnify and exonerate, save and hold harmless the
Transfer Agent and its officers, directors, employees and agents (hereinafter
the Transfer Agent and such persons are referred to as "Indemnitees") from and
against any and all liabilities or losses arising from claims or demands
(whether with or without basis in fact or law), and from any and all expenses
(including, without limitation, reasonable attorney's fees, expenses and court
costs associated with defending against such claims and demands,) of any nature
which any Indemnitee may sustain or incur or which may be asserted against any
Indemnitee by any person arising out of or in any manner related to any action
taken or omitted to be taken by the Transfer Agent in good faith and without
negligence or willful misconduct in reasonable reliance upon (i) any provision
of this Agreement; (ii) the Prospectus; (iii) any instruction or order
including, without limitation, any Computer Tape reasonably believed by the
Transfer Agent to have been received from an Approved Institution (or the
Distributor or its agent acting on behalf of such Approved Institution); (iv)
any instrument or order reasonably believed by the Transfer Agent to be genuine
and to be signed, countersigned or executed by any duly authorized Officer, (v)
any Certificate or other instructions of an Officer, (vi) any opinion of legal
counsel for the Fund; (vii) any records or data supplied by the Fund's prior
transfer agent; or (viii) any order of any court, arbitration panel or other
judicial entity.
8.6 At any time the Transfer Agent may apply to an Officer of the Fund for
written instructions with respect to any matters arising in connection with the
Transfer Agent's duties and obligations under this Agreement, and the Transfer
Agent shall not be liable for any action taken or omitted by it in good faith
and without negligence or willful misconduct in accordance with such written
instructions. The Transfer Agent may consult with counsel to the Fund, at the
expense of the Fund and shall be fully protected with respect to anything done
or omitted by it in good faith and without negligence or willful misfeasance in
accordance with the advice or opinion of counsel to the Fund. Such application
by the Transfer Agent for written instructions from an Officer of the Fund may,
at the option of the Transfer Agent, set forth in writing any action proposed to
be taken or omitted by the Transfer Agent with respect to its duties or
obligations under this Agreement and the date on and/or after which such action
shall be taken, and the Transfer Agent shall not be liable (other than for its
bad faith, negligence or willful misfeasance) for any action taken or omitted in
accordance with a proposal included in any such application on or after the date
specified therein unless, prior to taking or omitting any such action, the
Transfer Agent has received written instructions in response to such application
specifying the action to be taken or omitted.
8.7 Any report, confirmation or other document furnished to the Fund or to
an Approved Institution as part of the Transfer Agent's responsibilities under
this Agreement shall be deemed final and conclusive on the 8th Business Day
after such report, confirmation or document has been furnished to the Fund or
Approved Institution, as the case may be, and the Transfer Agent shall not be
liable to the Fund or such Approved Institution under this Agreement as to any
error or omission in such report, confirmation or document that is not reported
to the Transfer Agent within such 7-day period.
13
<PAGE>
8.8. The Transfer Agent shall deliver Share certificates by courier or by
certified or registered mail to the shareholder's address in the records of the
Transfer Agent. The Transfer Agent shall advise the Fund of any Share
certificates returned as undeliverable after being transmitted by courier or
mailed as herein provided for.
8.9. The Transfer Agent may issue new Share certificates in place of Share
certificates represented to have been lost, stolen, or destroyed upon receiving
instructions satisfactory to the Transfer Agent. If the Transfer Agent receives
written notification from the owner of the lost, destroyed, or stolen Share
certificate within a reasonable time after the owner has notice of such loss,
destruction or theft, the Transfer Agent shall issue a replacement Share
certificate upon receipt of an affidavit or affidavits of loss or nonreceipt
and an indemnity agreement executed by the registered owner or his legal
representative, and supported (a) in the case of a certificate having a value at
the time of replacement of less than $100, by a fixed penalty surety bond for
twice the then-current market value of Shares represented by said certificate
and (b) in the case of a certificate having a value at time of replacement of
$100 or more, by an open penalty bond, in form satisfactory to the Transfer
Agent or (c) by such other documentation or reasonable assurances in a
particular case as may be set forth in a Certificate. If the Fund receives such
written notification from the owner of the lost, destroyed or stolen Share
certificate within a reasonable time after the owner has notice of it, the Fund
shall promptly notify the Transfer Agent. The Transfer Agent may issue new Share
certificates in exchange for, and upon surrender of, mutilated Share
certificates.
8.10. The Transfer Agent will supply shareholder lists to the Fund from
time to time upon receiving a request therefor from an Officer of the Fund.
8.11. At the request of an Officer, the Transfer Agent will address and
mail such appropriate notices to shareholders as to the Fund may direct, at the
Fund's expense.
8.12. Notwithstanding any of the foregoing provisions of this Agreement,
the Transfer Agent shall be under no duty or obligation to inquire into, and
shall not be liable for:
(a) The legality of the issue or sale of any Shares, the sufficiency
of the amount to be received therefor, or the authority of an Approved
Institution or of the Fund, as the case may be, to request such sale or
issuance;
(b) The legality of a transfer, exchange or of a redemption of any
Shares by an Approved Institution, the propriety of the amount to be paid
therefor, or the authority of an Approved Institution to request such transfer,
exchange or redemption;
(c) The legality of the declaration of any dividend or capital gains
distribution by the Fund, or the legality of the issue of any Shares in payment
of any Share dividend or distribution; or
(d) The legality of any recapitalization or readjustment of the
Shares.
8.13. The Transfer Agent shall be entitled to receive, and the Fund hereby
agrees to pay to the Transfer Agent for its performance hereunder, including its
performance of the duties and functions set forth in Appendix B hereto, (i) its
reasonable out-of-pocket expenses (including without limitation legal
14
<PAGE>
expenses, court costs, and attorney's fees associated with litigation or
arbitration) incurred in connection with this Agreement and its performance
hereunder and (ii) such compensation as is specified in Appendix C hereto as
such fees may be amended from time to time by agreement in writing by the
Transfer Agent and the Fund.
8.14. The Transfer Agent shall have no duties or responsibilities
whatsoever except such duties and responsibilities as are specifically set forth
in this Agreement, and no covenant or obligation shall be implied in this
Agreement against the Transfer Agent.
8.15. The Transfer Agent shall indemnify and exonerate, save and hold
harmless the Fund, and its officers, directors, employee and agents, from and
against any and all liabilities or losses arising from claims and demands
(whether with or without basis in fact or law), and from any and all expenses
(including, without limitation, reasonable attorney's fees, expenses and court
costs), of any nature which the Fund or any officer, director, employee or agent
may sustain or incur or which may be asserted against them by any person arising
out of or in any manner related to the Transfer Agent's failure to comply with
the terms of this Agreement or which arise out of the Transfer Agent's
negligence or willful misconduct provided, however, that the Transfer Agent
shall not indemnify and exonerate, save and hold harmless, the Fund, its
officers, directors, employees, and agents for anything arising out of or in any
manner related to the Fund's failure to comply with the terms of this Agreement
or which arises out of the Fund's, or any officer's, director's, employee's or
agent's (other than the Transfer Agent) negligence or willful misconduct or the
Transfer Agent's reliance on information or instructions received from, or
issued on behalf of, the Fund.
ARTICLE 9
TERMINATION
9.1. The initial term of this Agreement shall commence on the Effective
Date and shall continue through June 30, 1997 (the "Initial Term") unless
earlier terminated pursuant to Section 9.2. Therefore, unless earlier terminated
by either party at the end of the Initial Term upon at least 90 days' prior
written notice, this Agreement shall continue from day to day thereafter (such
period shall be referred to as the "Renewal Term"), until either of the parties
hereto terminates this Agreement by giving at least 6 months' prior written
notice to the other party, whereupon this Agreement shall terminate
automatically upon the expiration of the 6-month period specified in the written
notice. In the event such notice of termination is given by the Fund, it shall
be accompanied by a copy of a resolution of the Board of Trustees of the Fund,
certified by the Secretary or any Assistant Secretary, electing to terminate
this Agreement. In the event such notice is given by the Transfer Agent, the
Fund shall, on or before the termination date, deliver to the Transfer Agent a
copy of a resolution of its Board of Trustees certified by the Secretary or any
Assistant Secretary designating a successor transfer agent or transfer agents.
In the absence of such designation by the Fund, the Transfer Agent may designate
a successor transfer agent. If the Fund fails to designate a successor transfer
agent, the Fund shall, upon the date specified for termination of this Agreement
and delivery of the records maintained hereunder, be deemed to be its own
transfer agent and the Transfer Agent shall thereby be relieved of all duties
and responsibilities pursuant to this Agreement.
15
<PAGE>
9.2 Notwithstanding Section 9.1 hereof, this Agreement may be terminated
at any time by the Fund upon not less than 60 days' written notice from the Fund
to the Transfer Agent notifying the Transfer Agent: (i) if a majority of the
Trustees who are not "interested persons" (as that term is defined in the
Investment Company Act of 1940) upon completion of the procedures set forth
below have reasonably made a specific finding that the Transfer Agent has failed
on a continuing basis to perform its duties pursuant to this Agreement in a
satisfactory manner consistent with then current industry standards and
practices or (ii) if there is instituted or pending an action or proceeding by
or before any court or governmental, administrative or regulatory agency against
or involving the parties hereto, their affiliates, the Trustees of the Fund or
any of them and challenging the making of this Agreement or alleging that any
material term of the Agreement is contrary to law or any governmental agency has
threatened in writing to commence such an action or proceeding. Prior to any
termination pursuant to clause (i), the Board of Trustees of the Fund shall
provide the Transfer Agent with a written statement of the specific aspects of
the Transfer Agent's performance of its duties that are unsatisfactory, the
specific incident or incidents giving rise to the Board of Trustees' conclusion
and any written material that the Board of Trustees' relied upon in making such
a determination. The Transfer Agent shall have 30 days to respond to such
written statement. If no response is made, or if, after reasonable consideration
of the response of the Transfer Agent, such response is unsatisfactory to the
Board of Trustees, then the Board of Trustees of the Fund may terminate the
Agreement pursuant to clause (i) thereof. For purposes of making a finding as
contemplated by clause (i) above, the Transfer Agent shall be, absent unusual
circumstances, conclusively presumed to have failed on a continuing basis to
perform its duties pursuant to this Agreement in a satisfactory manner
consistent with the industry standards and practices prevailing on the date of
this Agreement if any of the following should occur:
(1) The Transfer Agent through its fault is unable (more than once in
a twelve-month period) to process daily activity for any two successive Business
Days and to confirm information generated by such activity by the fourth
Business Day following the later of such two Business Days. (For example,
assuming no holidays, daily activity on a Monday and Tuesday is not confirmed by
the following Monday.)
(2) The Transfer Agent through its fault is unable (more than two
times in any twelve-month period) to provide system access to personnel of an
Approved Institution for six hours between 9:00 a.m. and 5:00 p.m. Chicago time
on three successive Business Days.
(3) The Transfer Agent through its fault is unable (more than twice
in any one year) to create and mail dividend checks within four Business Days
after the Fund's payable date (assuming that the required information has been
furnished to the Transfer Agent on the record date).
(4) The Transfer Agent through its fault is unable to instruct
various financial institutions on daily money movements from and to the Funds'
Custodians for two successive Business Days by the Fourth Business Day following
the later of such two Business Days. (For this purpose, instructions based on
reasonable estimates are treated as fulfilling the Transfer Agent's obligations
hereunder.)
(5) The Transfer Agent through its fault is unable (more than twice
in any twelve-month period) to transmit dividend activity to an Approved
Institution within five Business Days from the relevant Fund's payable date.
16
<PAGE>
For purposes of the foregoing, an event described in any of the foregoing
clauses 1 through 5 shall be deemed not to have occurred if the Transfer Agent's
inability to perform is a result, directly or indirectly of faulty or inadequate
performance by service provider including, but not limited to, telephone
companies, pricing services, Nuveen & Co., Approved Institutions, and banks
other than the Transfer Agent and its agents and employees or a result, directly
or indirectly, of other events out of the Transfer Agent's reasonable control.
Also for the purposes of the foregoing, if the Transfer Agent processes
transactions or instructions (as the case may be) as required hereunder within
the time periods indicated but more than 10% of the transactions, checks or
instructions, as the case may be, are inaccurate in any material respect, and
are not corrected within the requisite time then the Transfer Agent shall be
deemed to have been unable to perform the relevant service within the requisite
time.
9.3. In the event of termination of this Agreement, the Transfer Agent
will facilitate transfer of the records maintained by it hereunder and cooperate
with such successor transfer agent as may be designated pursuant to the
provisions of Section 9.1 hereof with respect to delivery of such records and
assumption by such successor transfer agent of its duties. In the event the Fund
or the Transfer Agent terminates the Transfer Agency Agreement at any time, the
Fund shall be responsible for the payment of fees and expenses of the Transfer
Agent relating to the conversion to the new Transfer Agent.
ARTICLE 10
ADDITIONAL SERIES
10.1. In the event that the Fund establishes one or more Series in
addition to the Series named herein with respect to which it desires to have the
Transfer Agent render services as transfer agent under the terms hereof, it
shall so notify the Transfer Agent in writing at least 60 days in advance of the
sale of Shares of such Series and shall deliver to the Transfer Agent the
documents listed in Section 2.3 with respect to such Series. Unless the Transfer
Agent declines in writing within a reasonable time to provide such services, the
Shares of such Series shall be subject to this Agreement.
ARTICLE 11
MISCELLANEOUS
11.1. The Fund agrees that prior to effecting any change in the Prospectus
which would increase or alter the duties and obligations of the Transfer Agent
hereunder, it shall advise the Transfer Agent of such proposed change at least
30 days prior to the intended date of the same, and shall proceed with such
change only if it shall have received the written consent of the Transfer Agent
hereto, and shall have received and agreed to the schedule of charges, if any,
specified by the Transfer Agent necessary to effect such change.
11.2. Any notice or other instrument in writing, authorized or required by
this Agreement to be given to the Fund shall be sufficiently given if addressed
to the Fund and mailed or delivered to it at its
17
<PAGE>
office at 333 West Wacker Drive, Chicago, Illinois 60606, Attention: Mr. Stuart
Rogers, or at such other place as the Fund may from time to time designate in
writing.
11.3. Any notice or other instrument in writing, authorized or required by
this Agreement to be given to the Transfer Agent shall be sufficiently given if
addressed to the Transfer Agent, Attention: President, mailed or delivered to it
at its office at 3410 South Galena Street, Denver, Colorado 80231, with a copy
to be sent to Andrew J. Donohue at Oppenheimer Funds, Inc. Two World Trade
Center, New York, NY 10048 or at such other place as the Transfer Agent may from
time to time designate in writing.
11.4. This Agreement may not be amended or modified in any manner except
by a written agreement executed by both parties.
11.5. This Agreement shall extend to and shall be binding upon the parties
hereto, and their respective successors and assigns; provided, however, that
this Agreement shall not be assignable by the Fund or the Transfer Agent without
the written consent of the other party. A change of ownership of the Transfer
Agent as a result of an internal reorganization of the Transfer Agent, its
parent corporation or affiliates shall not be deemed to be an "assignment"
hereunder. A change in "control" (as defined under the Investment Company Act of
1940) of the Transfer Agent's parent corporation shall not be deemed an
"assignment" hereunder. A sale of a controlling interest in the capital stock or
of all or substantially all of the assets of the Transfer Agent to a third party
unaffiliated with the Transfer Agent or its parent corporation shall be deemed
to be an "assignment" hereunder.
11.6. This Agreement shall be governed by and construed in accordance with
the laws of the State of Colorado applicable to agreements to be wholly
performed in that state.
11.7. This Agreement may be executed in any number of counterparts each of
which shall be deemed to be an original; but such counterparts shall, together,
constitute only one instrument.
11.8. The provisions of this Agreement are intended to benefit only the
Transfer Agent and the Fund, and no rights shall be granted to any other person
by virtue of this Agreement.
11.9. Neither the Fund nor the Transfer Agent will be liable or
responsible hereunder for delays or errors by reason of circumstances reasonably
beyond its control, including, without limitation, acts of civil or military
authority, national emergencies, labor difficulties, fire, mechanical breakdown,
flood, catastrophe, acts of God, insurrection, war, riots, or failure of
transportation, communication or power supply.
11.10. The Fund shall establish and maintain such bank accounts, with such
bank or banks as are selected by the Fund, as are necessary so that the Transfer
Agent may perform the services to be provided hereunder. To the extent that
performance of such services shall require the Transfer Agent directly to
disburse amounts for payments of dividends, redemption proceeds or other
purposes, the Fund shall provide such bank or banks with all instructions and
authorizations necessary to evidence the Transfer Agent's authority to effect
such transactions.
18
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their respective officers, thereunto duly authorized, as of the day
and year first above written.
Attest: NUVEEN FLAGSHIP MUNICIPAL TRUST
/s/ Gifford R. Zimmerman,
VP and Assistant Secretary By: /s/ Anna Kucinskis, VP
- ---------------------------------- -----------------------------------
Name Title Name Title
Attest: SHAREHOLDER SERVICES, INC.
/s/ Kathryn L. Kluck, AVP By: /s/ Virginia A. Klein
- ---------------------------------- -----------------------------------
Name Title Virginia A. Klein, Senior Vice
President
19
<PAGE>
NUVEEN FLAGSHIP MUNICIPAL TRUST
TRANSFER AGENCY AGREEMENT
Appendix A
Officer's Certificate
I, _______________________, the Secretary of Nuveen Flagship Municipal
Trust, a Massachusetts business trust (the "Fund"), do hereby certify that:
The following individuals have been duly authorized by the Trustees of the
Fund in conformity with the Fund's Declaration of Trust and By-Laws to execute
any Certificate, instruction, notice or other instrument, including an amendment
to Appendix B to this Agreement, or to give oral instructions on behalf of the
Fund, and the signatures set forth opposite their respective names are their
true and correct signatures.
<TABLE>
<CAPTION>
Name Title Signature
- ---- ----- ---------
<S> <C> <C>
- ------------------------ Chairman ------------------------------
- ------------------------ President ------------------------------
- ------------------------ Secretary ------------------------------
- ------------------------ Trustee ------------------------------
- ------------------------ Vice President ------------------------------
- ------------------------ --------------- ------------------------------
- ------------------------ --------------- ------------------------------
- ------------------------ --------------- ------------------------------
- ------------------------ --------------- ------------------------------
- ------------------------ --------------- ------------------------------
- ------------------------ --------------- ------------------------------
- ------------------------ --------------- ------------------------------
</TABLE>
------------------------------, Secretary
Name
20
<PAGE>
NUVEEN FLAGSHIP MUNICIPAL TRUST
TRANSFER AGENCY AGREEMENT
Appendix B
Transfer Agent Services
<TABLE>
<CAPTION>
Service: SSI Will:
- ------- ---------
<S> <C>
New Account Set-Ups Process new sales applications. Place telephone calls to
account representatives as needed to clarify instructions
for new account set-ups.
Purchases - New and Subsequent Process mailed-in, lockbox, bank wire, list billing, ACH,
and telephone payments as received. Coordinate and balance
UIT reinvestment payments.
Transfers Negotiate and process all transfer requests.
Exchanges - Mail and Telephone Negotiate and process exchange requests. Record telephone
exchange requests.
Redemptions - Mail and Telephone Negotiate and process mailed in, ACH and telephone
redemption requests. Record telephone redemption requests.
Wire Order Purchases and Redemptions Process wire order purchases and redemptions for designated
settlement period accepted on recorded telephone lines and via
NSCC FUND/SERV. Process purchases and redemptions for same day
wire settlement.
Account Maintenance Process all written and telephone maintenance. For address
(Address Changes, Dividend Option changes, prepare and mail a notice of the address change to
Changes, Name Changes, Broker or the former address.
Dealer Changes, etc.)
Certificate Issuances Issue certificates as requested by shareholders.
Telephone Services Provide efficient handling of all incoming shareholder and
broker/dealer telephone calls. Make outgoing clarification
calls/coordination with Chase on UIT/ETF consolidations.
Provide timely problem resolution for all servicing calls.
Provide automated trend reporting.
</TABLE>
1
<PAGE>
<TABLE>
<CAPTION>
Service: SSI Will:
- ------- --------
<S> <C>
Correspondence with Shareholders Respond to all shareholder and broker/
and Broker/Dealers dealer written inquiries. Document all
correspondence affecting shareholder
accounts on the Shareholder Accounting
System.
Shareholder Confirms Prepare and mail confirmations of daily
(Daily/Monthly/Quarterly/Annual) account activity. Prepare and mail
monthly, quarterly, and annual
confirmations as directed by the fund.
Dealer Confirms Prepare and mail weekly dealer
confirmations listing activity on client
accounts as directed by the Fund.
Distribution Disbursements Prepare and mail cash distribution
checks. Process reinvested distributions.
Commission Statements Provide bimonthly commission statements
listing each purchase and the portion of
the sales charge paid to the
broker/dealer.
Commission Checks Provide bimonthly commission checks to
broker/dealers.
Daily Transmission of Reports Transmit daily transaction activity
reports, balancing reports, and sales
information via telephone lines to a
printer at Nuveen.
Fund Summary Sheets Prepare daily reports that summarize by
type of transaction all capital stock
activity for each fund. Transmit/download
wire/capital stock activity information
to Chase.
Sales Reporting Provide daily, weekly, monthly,
quarterly, and annual reports of sales
information.
12b-1 Reporting Complete 12b-1 processing including
calculating the 12b-1 payment amounts and
sending checks to the broker/dealer home
offices. Provide a listing broken down by
sales representative within each branch.
Invalid Taxpayer Identification Mail Forms W-9 as required to validate
Number Solicitation and Backup taxpayer identification numbers;
Withholding institute backup withholding as required
by IRS regulations, and timely send all
notices.
Regulatory Reporting Compute, prepare, and mail all necessary
reports to shareholders, federal, and/or
state authorities (Forms 1099-DIV,
1099-B, and 1042S).
</TABLE>
2
<PAGE>
<TABLE>
<CAPTION>
Service: SSI Will:
- ------- --------
<S> <C>
Front-End Imaging of Documents Front-end Image all incoming documents.
Cost Basis Reporting Provide cost basis information as
available to shareholders annually for
use in determining capital gains and
losses.
Blue Sky Reporting Provide monthly report of purchases and
redemptions by state.
Financial Reporting Mailings Provide mail handling for 2 financial
reports per fund per year to Nuveen
shareholders.
Prospectus Mailings Provide mail handling for 1 prospectus
per fund per year to Nuveen shareholders.
Proxy Solicitation and Tabulation Perform 1 proxy solicitation and
tabulation per fund per year.
Networking Accounts Provide transmission and appropriate
services for each network level.
Cash Availability Transmit mutual fund activity to
designated entity on a daily basis for
cash availability purposes.
Commission/12b-1 Balancing Provide balancing reports for commission
and 12b-1 payments.
</TABLE>
3
<PAGE>
NUVEEN FLAGSHIP MUNICIPAL TRUST
TRANSFER AGENCY AGREEMENT
Appendix C
Fee Schedule
The Transfer Agent will provide the transfer agent services listed on
Appendix B for the Fund at the rates set forth below:
Annual Transfer Agent Fees:
Annual-Per-Account Fees*
First 150,000 Accounts** $ 19.25 per account
Next 100,000 Accounts** $ 18.75 per account
Next 50,000 Accounts** $ 18.25 per account
Over 300,000 Accounts** $ 17.75 per account
Out-Of-Pocket-Expenses:
Out-of-pocket expenses may be incurred by either the Fund or the Transfer
Agent and are not included in the annual Transfer Agent Fees. Those
out-of-pocket expenses directly incurred by the Transfer Agent will be billed to
the Fund on a monthly basis. These out-of-pocket expenses include, but are not
limited to, the printing of forms, envelopes, postage and proxy solicitation
fees for the shareholder mailings, costs of abandoned property reports or
searches for missing or inactive shareholders, equipment and system access
costs, microfilm, telephone line and usage charges, overnight express mail
charges, check signature plates and stamps, and programmer/analyst and testing
technician time beyond that agreed to in writing. Bank charges and earnings
credit will be billed directly to the Fund by United Missouri Bank (or other
banks). The Transfer Agent may require the prior payment of anticipated
out-of-pocket expenses, from time to time.
- ---------------
* Payable on a monthly basis for each non-retirement plan account in existence
at the end of the month. Retirement Plan accounts may be subject to a separate
fee schedule to be negotiated.
** The determination of the number of accounts for purposes of determining the
per account fee shall be based on all Nuveen Funds using the same fee schedule
and shall be allocated on a Fund by Fund basis in a manner determined by the
Transfer Agent based on the number of accounts in each fund.
These fees are valid until June 30, 1997, after which they are subject to
change, from time to time.
The Transfer Agent shall, from time to time, but no more frequently than
monthly, send an invoice to the Fund itemizing the compensation and expense
reimbursement. The Fund shall pay such invoice (except to the extent that the
amount thereof is in dispute) by wire not later than 30 days after receipt of
the invoice.
4
<PAGE>
Exhibit 10
August 21, 1997
Nuveen Flagship Municipal Trust
333 West Wacker Drive
Chicago, Illinois 60606
RE: Registration Statement on Form N-1A
Under the Securities Act of 1933
(File No. 333-14725)
-----------------------------------
Ladies and Gentlemen:
We have acted as counsel for Nuveen Flagship Municipal Trust, a
Massachusetts voluntary association (commonly known as a business trust) (the
"Trust"), in connection with the above-referenced Registration Statement on Form
N-1A (as amended, the "Registration Statement") which relates to the Class A
Shares, Class B Shares, Class C Shares and Class R Shares, par value $.01 per
share, of each of the following series of the Trust: Nuveen Municipal Bond Fund,
Nuveen Insured Municipal Bond Fund, and Nuveen Flagship All-American Municipal
Bond Fund, and the Class A Shares, Class C Shares and Class R Shares, par value
$.01 per share (collectively, the "Shares"), of the Nuveen Flagship Intermediate
Municipal Bond Fund and of the Nuveen Flagship Limited Term Municipal Bond Fund
(collectively, the "Series"). This opinion is being delivered to you in
connection with the Trust's filing of Post-Effective Amendment No. 1 to the
Registration Statement (the "Amendment") to be filed with the Securities and
Exchange Commission on or about August 21, 1997 pursuant to Rule 485(b) of the
Securities Act of 1933 (the "1933 Act"). With your permission, all assumptions
and statements of reliance herein have been made without any independent
investigation or verification on our part except to the extent otherwise
expressly stated, and we express no opinion with respect to the subject matter
or accuracy of such assumptions or items relied upon.
In connection with this opinion, we have reviewed, among other things,
executed copies of the following documents:
(a) a certificate of the Secretary of State of the Commonwealth of
Massachusetts as to the existence of the Trust;
(b) copies, certified by the Secretary of State of the Commonwealth of
Massachusetts, of the Trust's Declaration of Trust and of all
amendments thereto on file with the office of the Secretary of State
(the "Charter");
<PAGE>
Nuveen Flagship Municipal Trust
August 21, 1997
Page 2
(c) a certificate executed by Karen L. Healy, an Assistant Secretary of
the Trust, certifying as to, and attaching copies of, the Charter and
the By-Laws (the "By-Laws"), and certain resolutions adopted by the
Board of Trustees of the Trust authorizing the issuance of the Shares;
and
(d) a printer's proof, dated August 18, 1997, of the Amendment.
In our capacity as counsel to the Trust, we have examined the originals, or
certified, conformed or reproduced copies, of all records, agreements,
instruments and documents as we have deemed relevant or necessary as the basis
for the opinions hereinafter expressed. In all such examinations, we have
assumed the legal capacity of all natural persons executing documents, the
genuineness of all signatures, the authenticity of all original or certified
copies, and the conformity to original or certified copies of all copies
submitted to us as conformed or reproduced copies. As to various questions of
fact relevant to such opinion, we have relied upon, and assume the accuracy of,
certificates and oral or written statements of public officials and officers or
representatives of the Trust. We have assumed that the Registration Statement,
as filed with the Securities and Exchange Commission, will be in substantially
the form of the printer's proof referred to in paragraph (d) above.
Based upon, and subject to, the limitations set forth herein, we are of the
opinion that the Shares, when issued and sold in accordance with the Trust's
Charter and By-Laws, and for the consideration described in the Registration
Statement, will be legally issued, fully paid and non-assessable, except that,
as set forth in the Registration Statement, shareholders of the Trust may, under
certain circumstances, be held personally liable for its obligations.
The opinion expressed herein is limited to the laws of the Commonwealth of
Massachusetts.
We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement. In giving this consent, we do not admit that we are in
the category of persons whose consent is required under Section 7 of the 1933
Act.
Very truly yours,
FRIED, FRANK, HARRIS, SHRIVER & JACOBSON
By: /s/ Thomas S. Harman
-------------------------------------
Thomas S. Harman
<PAGE>
Exhibit 11(a)
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the use of our report
dated June 11, 1997, and to all references to our Firm included in or made a
part of this registration statement of Nuveen Flagship Municipal Trust
(comprising the Nuveen Municipal Bond Fund and the Nuveen Insured Municipal Bond
Fund).
ARTHUR ANDERSEN LLP
Chicago, Illinois
August 14, 1997
<PAGE>
EXHIBIT 11(b)
INDEPENDENT AUDITORS' CONSENT
We consent to the use in this Post-Effective Amendment No. 1 to Registration
Statement under the Securities Act of 1933, filed under Registration Statement
No. 333-14725, of our report dated June 13, 1997, relating to the Nuveen
Flagship Multistate Trust, including the Nuveen Flagship All-American Municipal
Bond Fund, the Nuveen Flagship Intermediate Municipal Bond Fund, and the Nuveen
Flagship Limited Term Municipal Bond Fund and to the references to us under the
headings "Financial Highlights" and "Independent Public Accountants and
Custodian" in such Registration Statement.
DELOITTE & TOUCHE LLP
Dayton, OH
August 19, 1997
<PAGE>
EXHIBIT 16
SCHEDULE OF COMPUTATION OF PERFORMANCE FIGURES*
I. YIELD
A. Yield Formula
Yield is computed according the following formula:
6
YIELD = 2 [ ( A - B + 1) - 1]
-----
CD
Where:
A = dividends and interest(degrees) earned during the period.
B = expenses accrued for the period (net of reimbursements).
C = the average daily number of shares outstanding during the period
that were entitled to receive dividends.
D = the maximum offering price per share on the last day of the period.
- --------
*The maximum sales charge in effect during the periods shown was 4.20%.
(degrees)Interest earned on tax-exempt obligations is determined as follows:
A. In the case of a tax-exempt obligation (1) with a current market premium
or (2) issued at a discount where the current market discount is less
than the then-remaining portion of the original issue discount, it is
necessary to first compute the yield to maturity (YTM). The YTM is then
divided by 360 and the quotient is multiplied by the market value of the
obligation (plus accrued interest).
B. In the case of a tax-exempt obligation issued at a discount where the
current market discount is in excess of the then-remaining portion of the
original issue discount, the adjusted original issue discount basis of
the obligation (plus accrued interest) is used in lieu of the market
value of the obligation (plus accrued interest) in computing the yield to
maturity (YTM). The YTM is then divided by 360 and the quotient is multi-
plied by the adjusted original issue basis of the obligation (plus ac-
crued interest).
C. In the case of a tax-exempt obligation issued without original issue
discount and having a current market discount, the coupon rate of inter-
est is used in lieu of the yield to maturity. The coupon rate is then di-
vided by 360 and the quotient is multiplied by the par value of the obli-
gation.
1
<PAGE>
B. Yield Calculations
1. Municipal Bond Fund
The following is the 30-day yield as of April 30, 1997, for the Class A
Shares of the Fund:
[$ 326,562.80 - $44,265.91] 6
Yield = 2[ ( ---------------------------- + 1 ) - 1 ]
[ 7,649,835.24 X $ 9.54]
= 4.69%
The following is the 30-day yield as of April 30, 1997, for the Class B
Shares of the Fund:
[$ 1,653.69 - $440.65] 6
Yield = 2[ ( ---------------------------- + 1 ) - 1 ]
[ 38,721.12 X $ 9.15]
= 4.14%
The following is a 30-day yield as of April 30, 1997, for the Class C Shares
of the Fund:
[$ 24,169.63 - $5,597.35] 6
Yield = 2[ ( ------------------------- + 1 ) - 1 ]
[ 566,506.46 X $ 9.14]
= 4.34%
The following is a 30-day yield as of April 30, 1997, for the Class R Shares
of the Fund:
[$ 12,982,007.28 - $1,306,371.20] 6
Yield = 2[ ( --------------------------------- + 1 ) - 1 ]
[ 303,990,832.74 X $ 9.15]
= 5.09%
2. Insured Municipal Bond Fund
The following is a 30-day yield as of April 30, 1997, for the Class A Shares
of the Fund:
[$ 319,787.15 - $47,953.38] 6
Yield = 2[ ( ---------------------------- + 1 ) - 1 ]
[ 6,471,648.45 X $ 11.13]
= 4.57%
The following is the 30-day yield as of April 30, 1997, for the Class B
Shares of the Fund:
[$ 1,895.18 - $534.44] 6
Yield = 2[ ( ------------------------- + 1 ) - 1 ]
[ 38,338.95 X $ 10.67]
= 4.02%
The following is a 30-day yield as of April 30, 1997, for the Class C Shares
of the Fund:
[$ 25,598.96 - $6,317.60] 6
Yield = 2[ ( ------------------------- + 1 ) - 1 ]
[ 522,925.66 X $ 10.56]
= 4.23%
The following is a 30-day yield as of April 30, 1997, for the Class R Shares
of the Fund:
[$ 3,325,538.05 - $381,574.94] 6
Yield = 2[ ( ------------------------------ + 1) - 1 ]
[ 67,574,114.05 - $ 10.62]
= 4.97%
2
<PAGE>
3. All-American Municipal Bond Fund
The following is a 30-day yield as of April 30, 1997, for the Class A Shares
of the Fund:
[$ 1,108,780.62 - $144,576.72] 6
Yield = 2[ ( ------------------------------ + 1 ) - 1 ]
[ 19,951,864.51 X $ 11.38]
= 5.15%
The following is the 30-day yield as of April 30, 1997, for the Class B
Shares of the Fund:
[$ 2,421.45 - $606.27] 6
Yield = 2[ ( ------------------------- + 1 ) - 1 ]
[ 43,536.88 X $ 10.91]
= 4.63%
The following is a 30-day yield as of April 30, 1997, for the Class C Shares
of the Fund:
[$ 279,224.46 - $60,979.62] 6
Yield = 2[ ( ---------------------------- + 1 ) - 1 ]
[ 5,027,828.85 X $ 10.89]
= 4.83%
The following is the 30-day yield as of April 30, 1997, for the Class R
Shares of the Fund:
[$ 886.98 - $87.30] 6
Yield = 2[ ( ---------------------------- + 1 ) - 1 ]
[ 15,956.93 X $ 10.91]
= 5.58%
4. Intermediate Municipal Bond Fund
The following is a 30-day yield as of April 30, 1997, for the Class A Shares
of the Fund:
[$ 192,341.39 - $20,339.61] 6
Yield = 2[ ( ---------------------------- + 1 ) - 1 ]
[ 3,956,887.17 X $ 10.79]
= 4.88%
The following is a 30-day yield as of April 30, 1997, for the Class C Shares
of the Fund:
[$ 11,619.82 - $ 2,354.80] 6
Yield = 2[ ( -------------------------- + 1 ) - 1 ]
[ 239,003.19 X $ 10.47]
= 4.48%
The following is the 30-day yield as of April 30, 1997, for the Class R
Shares of the Fund:
[$ 2,217.48 - $156.33] 6
Yield = 2[ ( ---------------------------- + 1 ) - 1 ]
[ 45,697.24 X $ 10.45]
= 5.24%
5. Limited Term Municipal Bond Fund
The following is a 30-day yield as of April 30, 1997, for the Class A Shares
of the Fund:
[$ 1,835,319.55 - $264,077.57] 6
Yield = 2[ ( ------------------------------ + 1 ) - 1 ]
[ 40,522,282.52 X $ 10.88]
= 4.31%
The following is a 30-day yield as of April 30, 1997, for the Class C Shares
of the Fund:
[$ 100,592.90 - $21,237.23] 6
Yield = 2[ ( ---------------------------- + 1 ) - 1 ]
[ 2,222,243.63 X $ 10.60]
= 4.08%
3
<PAGE>
The following is the 30-day yield as of April 30, 1997, for the Class R
Shares of the Fund:
[$ 170.72 - $18.06] 6
Yield = 2 [ ( ---------------------------- + 1 ) - 1 ]
[ 3,774.17 X $ 10.59]
= 4.63%
II. TAXABLE EQUIVALENT YIELD
A. Taxable Equivalent Yield Formula
The Taxable Equivalent Yield Formula is as follows:
Tax Exempt Yield
Taxable Equivalent Yield = ------------------------------------------------
(1 - combined federal and state income tax rate)
Municipal Trust
B. Taxable Equivalent Yield Calculation
Based on combined federal and state income tax rates of 39.6% for Municipal
Bond, Insured Municipal Bond, All-American Municipal Bond, Intermediate Munici-
pal Bond, and Limited Term Municipal Bond, the Taxable Equivalent Yields for
the Class A Shares, Class B Shares, Class C Shares and Class R Shares, where
applicable, for the 30-day period ended April 30, 1997, where applicable, are
as follows:
<TABLE>
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Class A Shares Class B Shares Class C Shares Class R Shares
---------------- ---------------- ---------------- ----------------
4.69% 4.14% 4.34% 5.09%
________ ________ ________ ________
Municipal Bond Fund: 1 - .396 = 7.76% 1 - .396 = 6.85% 1 - .396 = 7.19% 1 - .396 = 8.43%
4.57% 4.02% 4.23% 4.97%
Insured Municipal Bond ________ ________ ________ ________
Fund: 1 - .396 = 7.57% 1 - .396 = 6.66% 1 - .396 = 7.00% 1 - .396 = 8.23%
5.15% 4.63% 4.83% 5.58%
All-American Municipal ________ ________ ________ ________
Bond Fund: 1 - .396 = 8.53% 1 - .396 = 7.67% 1 - .396 = 8.00% 1 - .396 = 9.24%
4.88% N/A 4.48% 5.24%
Intermediate Municipal ________ ________ ________ ________
Bond Fund: 1 - .396 = 8.08% N//A = N/A 1 - .396 = 7.42% 1 - .396 = 8.68%
4.31% N/A 4.08% 4.63%
Limited Term Municipal ________ ________ ________ ________
Bond Fund: 1 - .396 = 7.14% N/A = N/A 1 - .396 = 6.75% 1 - .396 = 7.67%
</TABLE>
III. DISTRIBUTION RATE
A. Distribution Rate Formula
The formula for calculation of distribution rate is as follows:
Distribution Rate = 12 X most recent tax-exempt income dividend per share
-----------------------------------------------------
share price
4
<PAGE>
B. Distribution Rate Calculations
1. Municipal Bond Fund:
The following is the distribution rate as of April 30, 1997, based on the max-
imum public offering price for the Municipal Bond Fund:
Class A Distribution Rate = 12 X $.0390
-----------
$9.54
= 4.91%
Class B Distribution Rate = 12 X $.0335
-----------
$9.15
= 4.39%
Class C Distribution Rate = 12 X $.0350
-----------
$9.14
= 4.60%
Class R Distribution Rate = 12 X $.0405
-----------
$9.15
= 5.31%
2. Insured Municipal Bond Fund:
The following is the distribution rate as of April 30, 1997, based on the max-
imum public offering price for the Insured Municipal Bond Fund:
Class A Distribution Rate = 12 X $.0460
-----------
$11.13
= 4.96%
Class B Distribution Rate = 12 X $.0395
-----------
$10.67
= 4.44%
Class C Distribution Rate = 12 X $.0405
-----------
$10.56
= 4.60%
Class R Distribution Rate = 12 X $.0475
-----------
$10.62
= 5.37%
3. All-American Municipal Bond Fund:
The following is the distribution rate as of April 30, 1997, based on the max-
imum public offering price for the All-American Municipal Bond Fund:
Class A Distribution Rate = 12 X $.0499
-----------
$11.38
= 5.26%
Class B Distribution Rate = 12 X $.0430
-----------
$10.91
= 4.73%
Class C Distribution Rate = 12 X $.0449
-----------
$10.89
= 4.95%
Class R Distribution Rate = 12 X $.0517
-----------
$10.91
= 5.69%
5
<PAGE>
4. Intermediate Municipal Bond Fund:
The following is the distribution rate as of April 30, 1997, based on the
maximum public offering price for the Intermediate Municipal Bond Fund:
Class A Distribution Rate = 12 X $.0428
-----------
$10.79
= 4.76%
Class C Distribution Rate = 12 X $.0380
-----------
$10.47
= 4.36%
Class R Distribution Rate = 12 X $.0446
-----------
$10.45
= 5.12%
5. Limited Term Municipal Bond Fund:
The following is the distribution rate as of April 30, 1997, based on the
maximum public offering price for the Limited Term Municipal Bond Fund:
Class A Distribution Rate = 12 X $.0415
-----------
$10.88
= 4.58%
Class C Distribution Rate = 12 X $.0388
-----------
$10.60
= 4.39%
Class R Distribution Rate = 12 X $.0433
-----------
$10.59
= 4.91%
IV. AVERAGE ANNUAL TOTAL RETURN
A. Average Annual Total Return Formula
Average Annual Total Return is computed according to the following formula:
ERV /1/N/
T = --- -1
P
Where: T = average annual total return.
P = a hypothetical initial payment of $1,000.
N = number of years.
ERV = ending redeemable value of a hypothetical $1,000 payment made at the
beginning of the 1, 5 or 10-year (or fractional portion thereof) pe-
riods at the end of such 1, 5 or 10-year (or fractional portion
thereof) periods.
B. Average Annual Total Return Calculations
The following are the average annual total returns for Class A, B, C and R
Shares of the Funds for the period from inception and the 1, 5 and 10-year pe-
riods ended April 30, 1997, including the current maximum sales charge. For
the Municipal Bond Fund and the Insured Municipal Bond Fund, Class A, B and C
performance reflects actual performance since inception, and Class R perfor-
mance for periods prior to inception, adjusted for the differences in sales
charges and (in the case of Classes B and C) fees between the classes. For the
All-American Fund, Class B, C and R performance reflects actual performance
since inception, and Class A performance for periods prior to inception, ad-
justed for the differences in sales charges and fees between the classes. For
the Intermediate Municipal Bond Fund and the Limited Term Municipal Bond Fund,
Class C and R performance reflects actual performance since inception, and
Class A performance for periods prior to inception, adjusted for the differ-
ences in sales charges and (in the case of Class C) fees between the classes.
6
<PAGE>
ANNUALIZED CLASS A TOTAL RETURNS including current maximum sales charges of
4.20%:
1. Municipal Bond Fund:
/1/1/
$1,024
A. 1 year ended April 30, 1997 = ( ------- ) -1 = 2.38%
$1,000 ----
----
/1/5/
$1,298
B. 5 years ended April 30, 1997 = ( ------- ) -1 = 5.35%
$1,000 ----
----
/1/10/
$1,980
C. 10 years ended April 30, 1997 = ( ------- ) -1 = 7.07%
$1,000 ----
----
/1/20.416/
$3,766
D. Inception through April 30, 1997 = ( ------- ) -1 = 6.71%
$1,000 ----
----
2. Insured Municipal Bond Fund:
/1/1/
$1,017
A. 1 year ended April 30, 1997 = ( ------- ) -1 = 1.66%
$1,000 ----
----
/1/5/
$1,340
B. 5 years ended April 30, 1997 = ( ------- ) -1 = 6.02%
$1,000 ----
----
/1/10/
$2,085
C. 10 years ended April 30, 1997 = ( ------- ) -1 = 7.62%
$1,000 ----
----
/1/10.355/
$2,008
D. Inception through April 30, 1997 = ( ------- ) -1 = 6.96%
$1,000 ----
----
3. All-American Municipal Bond Fund:
/1/1/
$1,037
A. 1 year ended April 30, 1997 = ( ------- ) -1 = 3.68%
$1,000 ----
----
/1/5/
$1,400
B. 5 years ended April 30, 1997 = ( ------- ) -1 = 6.96%
$1,000 ----
----
/1/8.572/
$1,942
C. Inception through April 30, 1997 = ( ------- ) -1 = 8.05%
$1,000 ----
----
4. Intermediate Municipal Bond Fund:
/1/1/
$1,035
A. 1 year ended April 30, 1997 = ( ------- ) -1 = 3.48%
$1,000 ----
----
/1/4.621/
$1,319
B. Inception through April 30, 1997 = ( ------- ) -1 = 6.18%
$1,000 ----
----
5. Limited Term Municipal Bond Fund:
/1/1/
$1,022
A. 1 year ended April 30, 1997 = ( ------- ) -1 = 2.18%
$1,000 ----
----
/1/5.000/
$1,285
B. 5 years ended April 30, 1997 = ( ------- ) -1 = 5.14%
$1,000 ----
----
/1/9.530/
$1,795
C. Inception through April 30, 1997 = ( ------- ) -1 = 6.33%
$1,000 ----
----
7
<PAGE>
ANNUALIZED CLASS B TOTAL RETURNS:
1. Municipal Bond Fund:
/1/1/
$1,024
A. 1 year ended April 30, 1997 = ( ------- ) -1 = 2.36%
$1,000 ----
----
/1/5/
$1,301
B. 5 years ended April 30, 1997 = ( ------- ) -1 = 5.41%
$1,000 ----
----
/1/10/
$1,954
C. 10 years ended April 30, 1997 = ( ------- ) -1 = 6.93%
$1,000 ----
----
/1/20.416/
$3,720
D. Inception through April 30, 1997 = ( ------- ) -1 = 6.65%
$1,000 ----
----
2. Insured Municipal Bond Fund:
/1/1/
$1,016
A. 1 year ended April 30, 1997 = ( ------- ) -1 = 1.57%
$1,000 ----
----
/1/5/
$1,338
B. 5 years ended April 30, 1997 = ( ------- ) -1 = 6.00%
$1,000 ----
----
/1/10/
$2,052
C. 10 years ended April 30, 1997 = ( ------- ) -1 = 7.45%
$1,000 ----
----
/1/10.355/
$1,980
D. Inception through April 30, 1997 = ( ------- ) -1 = 6.82%
$1,000 ----
----
3. All-American Municipal Bond Fund:
/1/1/
$1,037
A. 1 year ended April 30, 1997 = ( ------- ) -1 = 3.68%
$1,000 ----
----
/1/5/
$1,413
B. 5 years ended April 30, 1997 = ( ------- ) -1 = 7.15%
$1,000 ----
----
/1/8.572/
$1,941
C. Inception through April 30, 1997 = ( ------- ) -1 = 8.04%
$1,000 ----
----
ANNUALIZED CLASS C TOTAL RETURNS:
1. Municipal Bond Fund:
/1/1/
$1,062
A. 1 year ended April 30, 1997 = ( ------- ) -1 = 6.16%
$1,000 ----
----
/1/5/
$1,306
B. 5 years ended April 30, 1997 = ( ------- ) -1 = 5.49%
$1,000 ----
----
/1/10/
$1,920
C. 10 years ended April 30, 1997 = ( ------- ) -1 = 6.74%
$1,000 ----
----
/1/20.416/
$3,379
D. Inception through April 30, 1997 = ( ------- ) -1 = 6.15%
$1,000 ----
----
8
<PAGE>
2. Insured Municipal Bond Fund:
/1/1/
$1,055
A. 1 year ended April 30, 1997 = ( ------- ) -1 = 5.49%
$1,000 ----
----
/1/5/
$1,341
B. 5 years ended April 30, 1997 = ( ------- ) -1 = 6.04%
$1,000 ----
----
/1/10/
$2,010
C. 10 years ended April 30, 1997 = ( ------- ) -1 = 7.23%
$1,000 ----
----
/1/10.355/
$1,929
D. Inception through April 30, 1997 = ( ------- ) -1 = 6.55%
$1,000 ----
----
3. All-American Municipal Bond Fund:
/1/1/
$1,076
A. 1 year ended April 30, 1997 = ( ------- ) -1 = 7.64%
$1,000 ----
----
/1/5/
$1,421
B. 5 years ended April 30, 1997 = ( ------- ) -1 = 7.28%
$1,000 ----
----
/1/8.572/
$1,933
C. Inception through April 30, 1997 = ( ------- ) -1 = 7.99%
$1,000 ----
----
4. Intermediate Municipal Bond Fund:
/1/1/
$1,060
A. 1 year ended April 30, 1997 = ( ------- ) -1 = 5.99%
$1,000 ----
----
/1/4.621/
$1,325
B. Inception through April 30, 1997 = ( ------- ) -1 = 6.29%
$1,000 ----
----
5. Limited Term Municipal Bond Fund:
/1/1/
$1,045
A. 1 year ended April 30, 1997 = ( ------- ) -1 = 4.49%
$1,000 ----
----
/1/5.000/
$1,297
B. 5 years ended April 30, 1997 = ( ------- ) -1 = 5.34%
$1,000 ----
----
/1/9.530/
$1,788
C. Inception through April 30, 1997 = ( ------- ) -1 = 6.29%
$1,000 ----
----
ANNUALIZED CLASS R TOTAL RETURNS:
1. Municipal Bond Fund:
/1/1/
$1,073
A. 1 year ended April 30, 1997 = ( ------- ) -1 = 7.25%
$1,000 ----
----
/1/5/
$1,373
B. 5 years ended April 30, 1997 = ( ------- ) -1 = 6.55%
$1,000 ----
----
/1/10/
$2,121
C. 10 years ended April 30, 1997 = ( ------- ) -1 = 7.81%
$1,000 ----
----
/1/20.416/
$4,140
D. Inception through April 30, 1997 = ( ------- ) -1 = 7.21%
$1,000 ----
----
9
<PAGE>
2. Insured Municipal Bond Fund:
/1/1/
$1,065
A. 1 year ended April 30, 1997 = ( ------- ) -1 = 6.46%
$1,000 ----
----
/1/5/
$1,412
B. 5 years ended April 30, 1997 = ( ------- ) -1 = 7.14%
$1,000 ----
----
/1/10/
$2,224
C. 10 years ended April 30, 1997 = ( ------- ) -1 = 8.32%
$1,000 ----
----
/1/10.355/
$2,145
D. Inception through April 30, 1997 = ( ------- ) -1 = 7.65%
$1,000 ----
----
3. All-American Municipal Bond Fund:
/1/1/
$1,084
A. 1 year ended April 30, 1997 = ( ------- ) -1 = 8.38%
$1,000 ----
----
/1/5/
$1,463
B. 5 years ended April 30, 1997 = ( ------- ) -1 = 7.91%
$1,000 ----
----
/1/8.572/
$2,030
C. Inception through April 30, 1997 = ( ------- ) -1 = 8.61%
$1,000 ----
----
4. Intermediate Municipal Bond Fund:
/1/1/
$1,065
A. 1 year ended April 30, 1997 = ( ------- ) -1 = 6.53%
$1,000 ----
----
/1/4.621/
$1,358
B. Inception through April 30, 1997 = ( ------- ) -1 = 6.85%
$1,000 ----
----
5. Limited Term Municipal Bond Fund:
/1/1/
$1,047
A. 1 year ended April 30, 1997 = ( ------- ) -1 = 4.66%
$1,000 ----
----
/1/5.000/
$1,316
B. 5 years ended April 30, 1997 = ( ------- ) -1 = 5.65%
$1,000 ----
----
/1/9.530/
$1,839
C. Inception through April 30, 1997 = ( ------- ) -1 = 6.60%
$1,000 ----
----
V. CUMULATIVE TOTAL RETURN
A. Cumulative Total Return Formula
Cumulative Total Return is computed according to the following formula:
ERV - P
T = -------
P
Where: T = cumulative total return.
P = a hypothetical initial payment of $1,000.
ERV = ending redeemable value of a hypothetical $1,000 payment made at the
inception of the Fund or at the first day of a specified 1-year, 5-
year or 10-year period.
B. Cumulative Total Return Calculation
The following are the cumulative total returns for the Class A, B C and R
Shares of the Funds for the periods from inception and for the one, five and
10-year period ended April 30, 1997 assuming no imposition of sales charges.
For the Municipal Bond Fund and the Insured Municipal Bond Fund, Class A, B and
C performance reflects actual performance since inception, and Class R perfor-
mance for periods prior to inception, adjusted for the differences in fees be-
tween the classes. For the All-American Fund, Class B, C and R performance re-
flects actual performance since inception, and Class A performance for periods
prior to inception, adjusted for the differences in fees between the classes.
For the Intermediate Municipal Bond Fund and the Limited Term Municipal Bond
Fund, Class C and R performance reflects actual performance since inception,
and Class A performance for periods prior to inception, adjusted for the dif-
ferences in fees between the classes.
10
<PAGE>
CUMULATIVE CLASS A TOTAL RETURNS including current maximum sales charge of
4.20%:
1. Municipal Bond Fund:
$1,024 - $1,000
A. 1 year ended April 30, 1997 = ( --------------- ) = 2.38%
$1,000 =====
$1,298 - $1,000
B. 5 years ended April 30, 1997 = ( --------------- ) = 29.77%
$1,000 ======
$1,980 - $1,000
C. 10 years ended April 30, 1997 = ( --------------- ) = 97.99%
$1,000 ======
$3,766 - $1,000
D. Inception through April 30, 1997 = ( --------------- ) = 276.63%
$1,000 =======
2. Insured Municipal Bond Fund:
$1,017 - $1,000
A. 1 year ended April 30, 1997 = ( --------------- ) = 1.66%
$1,000 =====
$1,340 - $1,00
B. 5 years ended April 30, 1997 = ( --------------- ) = 33.97%
$1,000 ======
$2,085 - $1,000
C. 10 years ended April 30, 1997 = ( --------------- ) = 108.48%
$1,000 =======
$2,008 - $1,000
D. Inception through April 30, 1997 = ( --------------- ) = 100.78%
$1,000 =======
3. All-American Municipal Bond Fund:
$1,037 - $1,000
A. 1 year ended April 30, 1997 = ( --------------- ) = 3.68%
$1,000 =====
$1,400 - $1,000
B. 5 years ended April 30, 1997 = ( --------------- ) = 40.00%
$1,000 ======
$1,942 - $1,000
C. Inception through April 30, 1997 = ( --------------- ) = 94.22%
$1,000 ======
4. Intermediate Municipal Bond Fund:
$1,035 - $1,000
A. 1 year ended April 30, 1997 = ( --------------- ) = 3.48%
$1,000 =====
$1,319 - $1,000
B. Inception through April 30, 1997 = ( --------------- ) = 31.91%
$1,000 ======
5. Limited Term Municipal Bond Fund:
$1,022 - $1,000
A. 1 year ended April 30, 1997 = ( --------------- ) = 2.18%
$1,000 =====
$1,285 - $1,000
B. 5 years ended April 30, 1997 = ( --------------- ) = 28.50%
$1,000 ======
$1,795 - $1,000
C. Inception through April 30, 1997 = ( --------------- ) = 79.51%
$1,000 ======
11
<PAGE>
CUMULATIVE CLASS B TOTAL RETURNS:
1. Municipal Bond Fund:
$1,024 - $1,000
A. 1 year ended April 30, 1997 = ( --------------- ) = 2.36%
$1,000 =====
$1,301 - $1,000
B. 5 years ended April 30, 1997 = ( --------------- ) = 30.14%
$1,000 ======
$1,954 - $1,000
C. 10 years ended April 30, 1997 = ( --------------- ) = 95.39%
$1,000 ======
$3,720 - $1,000
D. Inception through April 30, 1997 = ( --------------- ) = 271.99%
$1,000 =======
2. Insured Municipal Bond Fund:
$1,016 - $1,000
A. 1 year ended April 30, 1997 = ( --------------- ) = 1.57%
$1,000 =====
$1,338 - $1,000
B. 5 years ended April 30, 1997 = ( --------------- ) = 33.80%
$1,000 ======
$2,052 - $1,000
C. 10 years ended = ( --------------- ) = 105.17%
$1,000 =======
$1,980 - $1,000
D. Inception through April 30, 1997 = ( --------------- ) = 98.03%
$1,000 ======
3. All-American Municipal Bond Fund:
$1,037 - $1,000
A. 1 year ended April 30, 1997 = ( --------------- ) = 3.68%
$1,000 =====
$1,413 - $1,000
B. 5 years ended April 30, 1997 = ( --------------- ) = 41.26%
$1,000 ======
$1,941 - $1,000
C. Inception through April 30, 1997 = ( --------------- ) = 94.09%
$1,000 ======
CUMULATIVE CLASS C TOTAL RETURNS:
1. Municipal Bond Fund:
$1,062 - $1,000
A. 1 year ended April 30, 1997 = ( --------------- ) = 6.16%
$1,000 =====
$1,306 - $1,000
B. 5 years ended April 30, 1997 = ( --------------- ) = 30.64%
$1,000 ======
$1,920 - $1,000
C. 10 years ended April 30, 1997 = ( --------------- ) = 91.98%
$1,000 ======
$3,379 - $1,000
D. Inception through April 30, 1997 = ( --------------- ) = 237.86%
$1,000 =======
2. Insured Municipal Bond Fund:
$1,055 - $1,000
A. 1 year ended April 30, 1997 = ( --------------- ) = 5.49%
$1,000 =====
$1,341 - $1,000
B. 5 years ended April 30, 1997 = ( --------------- ) = 34.06%
$1,000 ======
$2,010 - $1,000
C. 10 years ended April 30, 1997 = ( --------------- ) =100.95%
$1,000 =======
$1,929 - $1,000
D. Inception through April 30, 1997 = ( --------------- ) = 92.91%
$1,000 ======
12
<PAGE>
3. All-American Municipal Bond Fund:
$1,076 - $1,000
A. 1 year ended April 30, 1997 = ( --------------- ) = 7.64%
$1,000 =====
$1,421 - $1,000
B. 5 years ended April 30, 1997 = ( --------------- ) = 42.08%
$1,000 ======
$1,933 - $1,000
C. Inception through April 30, 1997 = ( --------------- ) = 93.30%
$1,000 ======
4. Intermediate Municipal Bond Fund:
$1,060 - $1,000
A. 1 year ended April 30, 1997 = ( --------------- ) = 5.99%
$1,000 =====
$1,325 - $1,000
B. Inception through April 30, 1997 = ( --------------- ) = 32.54%
$1,000 ======
5. Limited Term Municipal Bond Fund:
$1,045 - $1,000
A. 1 year ended April 30, 1997 = ( --------------- ) = 4.49%
$1,000 =====
$1,297 - $1,000
B. 5 years ended April 30, 1997 = ( --------------- ) = 29.71%
$1,000 ======
$1,788 - $1,000
C. Inception through April 30, 1997 = ( --------------- ) = 78.80%
$1,000 ======
CUMULATIVE CLASS R TOTAL RETURNS:
1. Municipal Bond Fund:
$1,073 - $1,000
A. 1 year ended April 30, 1997 = ( --------------- ) = 7.25%
$1,000 =====
$1,373 - $1,000
B. 5 years ended April 30, 1997 = ( --------------- ) = 37.33%
$1,000 ======
$2,121 - $1,000
C. 10 years ended April 30, 1997 = ( --------------- ) = 112.08%
$1,000 =======
$4,140 - $1,000
D. Inception through April 30, 1997 = ( --------------- ) = 314.01%
$1,000 =======
2. Insured Municipal Bond Fund:
$1,065 - $1,000
A. 1 year ended April 30, 1997 = ( --------------- ) = 6.46%
$1,000 =====
$1,412 - $1,000
B. 5 years ended April 30, 1997 = ( --------------- ) = 41.19%
$1,000 ======
$2,224 - $1,000
C. 10 years ended April 30, 1997 = ( --------------- ) = 122.45%
$1,000 =======
$2,145 - $1,000
D. Inception through April 30, 1997 = ( --------------- ) = 114.46%
$1,000 =======
3. All-American Municipal Bond Fund:
$1,084 - $1,000
A. 1 year ended April 30, 1997 = ( --------------- ) = 8.38%
$1,000 =====
$1,463 - $1,000
B. 5 years ended April 30, 1997 = ( --------------- ) = 46.34%
$1,000 ======
$2,030 - $1,000
C. Inception through April 30, 1997 = ( --------------- ) = 103.03%
$1,000 =======
13
<PAGE>
4. Intermediate Municipal Bond Fund:
$1,065 - $1,000
A. 1 year ended April 30, 1997 = ( --------------- ) = 6.53%
$1,000 =====
$1,358 - $1,000
B. Inception through April 30, 1997 = ( --------------- ) = 35.80%
$1,000 ======
5. Limited Term Municipal Bond Fund:
$1,047 - $1,000
A. 1 year ended April 30, 1997 = ( --------------- ) = 4.66%
$1,000 =====
$1,316 - $1,000
B. 5 years ended April 30, 1997 = ( --------------- ) = 31.62%
$1,000 ======
$1,839 - $1,000
C. Inception through April 30, 1997 = ( --------------- = 83.86%
$1,000 ======
VI. TAXABLE EQUIVALENT TOTAL RETURN
A. Taxable Equivalent Total Return Formula
Each Fund's ratable equivalent total return for a specific period is calcu-
lated by first taking a hypothetical initial investment in the Fund's shares on
the first day of the period, computing the Fund's total return for each fiscal
year in the period according to the above formula, and increasing the total re-
turn for each such fiscal year by the amount of additional income that a tax-
able fund would need to have generated to equal the income of the Fund on an
after-tax basis, at a specified tax rate (usually the highest marginal federal
or combined federal and state tax rate), calculated pursuant to the formula
presented above under "taxable equivalent yield." The resulting amount for the
fiscal year is then divided by the initial investment amount to arrive at a
"taxable equivalent total return factor" for the fiscal year. The taxable
equivalent total return factors for all the fiscal years in the period are then
multiplied together and the result is then annualized by taking its Nth root (N
representing the number of years in the period) and subtracting 1, which pro-
vides a taxable equivalent total return expressed as a percentage.
B. Taxable Equivalent Total Return Calculations
The taxable equivalent total return calculations for the Class R Shares of
the Municipal Bond Fund for the 10-year period ended April 30, 1997 are set
forth on the following pages assuming a federal income tax rate of 39.6% based
on 1997 rates.
14
<PAGE>
Fund Name: Nuveen Muni Bond Fund Class R
Since 04/30/87
<TABLE>
<CAPTION>
TOTAL PERIOD
NAV INCOME CAP FROM FROM DOLLAR TO DATE TAX ENDING ENDING REINV
PER DATE PER SHARE PER SHARE GAINS INCOME GAINS DIST. T-E INC. SAVINGS SHARES WEALTH NAV
- -------- --------- --------- ----- ------ ----- ------ -------- ------- ------ ------ -----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
4/30/87 8.55 1,170 $10,000.00
5/31/87 8.36 0.0495 $ 57.895 $ 57.895 $ 57.895 1,177 $ 9,835.67 8.36
6/30/87 8.51 0.0497 $ 58.449 $ 58.449 $ 116.344 1,183 $10,070.60 8.51
7/31/87 8.52 0.0496 $ 58.731 $ 58.731 $ 175.075 1,190 $10,141.16 8.52
8/31/87 8.53 0.0491 $ 58.478 $ 58.478 $ 233.554 1,197 $10,211.55 8.53
9/30/87 8.02 0.0499 0.1465 $ 59.677 $175.380 $235.057 $ 293.231 1,226 $ 9,836.06 8.02
10/31/87 8.00 0.0495 $ 60.721 $ 60.721 $ 353.952 1,234 $ 9,872.26 8.00
11/30/87 8.20 0.0496 $ 61.208 $ 61.208 $ 415.160 1,241 $10,180.27 8.20
12/31/87 8.38 0.0490 $ 60.833 $ 60.833 $ 475.993 1,249 $10,464.57 8.38
1/31/88 8.57 0.0495 $ 61.801 $ 61.801 $ 537.794 1,256 $10,763.64 8.57
2/29/88 8.62 0.0497 $ 62.447 $ 62.447 $ 600.241 1,263 $10,888.88 8.62
3/31/88 8.42 0.0497 $ 62.769 $ 62.769 $ 663.010 1,271 $10,699.01 8.42
4/30/88 8.40 0.0495 $ 62.936 $ 62.936 $ 725.946 $476.0 1,335 $11,212.48 8.40
5/31/88 8.39 0.0498 $ 66.461 $ 66.461 $ 66.461 1,343 $11,265.60 8.39
6/30/88 8.47 0.0499 $ 66.989 $ 66.989 $ 133.450 1,351 $11,440.01 8.47
7/31/88 8.48 0.0498 $ 67.222 $ 67.222 $ 200.672 1,359 $11,520.73 8.48
8/31/88 8.45 0.0500 $ 67.929 $ 67.929 $ 268.601 1,367 $11,547.91 8.45
9/30/88 8.52 0.0504 0.0360 $ 68.823 $ 49.198 $118.021 $ 337.424 1,380 $11,761.59 8.52
10/31/88 8.65 0.0497 $ 68.554 $ 68.554 $ 405.978 1,388 $12,009.60 8.65
11/30/88 8.54 0.0500 $ 69.378 $ 69.378 $ 475.356 1,397 $11,926.26 8.54
12/31/88 8.59 0.0495 $ 69.114 $ 69.114 $ 544.469 1,405 $12,065.20 8.59
1/31/89 8.75 0.0498 $ 69.975 $ 69.975 $ 614.445 1,413 $12,359.90 8.75
2/28/89 8.60 0.0504 $ 71.122 $ 71.122 $ 685.567 1,421 $12,219.14 8.60
3/31/89 8.53 0.0499 $ 70.857 $ 70.857 $ 756.424 1,429 $12,190.54 8.53
4/30/89 8.74 0.0498 $ 71.100 $ 71.100 $ 827.523 $542.5 1,499 $13,104.31 8.74
5/31/89 8.86 0.0492 $ 73.753 $ 73.753 $ 73.753 1,508 $13,357.98 8.86
6/30/89 8.89 0.0493 $ 74.358 $ 74.358 $ 148.111 1,516 $13,477.57 8.89
7/31/89 8.94 0.0501 $ 75.923 $ 75.923 $ 224.035 1,525 $13,629.30 8.94
8/31/89 8.83 0.0501 $ 76.333 $ 76.333 $ 300.368 1,533 $13,537.93 8.83
9/30/89 8.73 0.0495 0.0290 $ 75.892 $ 44.462 $120.354 $ 376.260 1,547 $13,504.97 8.73
10/31/89 8.78 0.0497 $ 76.915 $ 76.915 $ 453.175 1,556 $13,659.23 8.78
11/30/89 8.84 0.0497 $ 77.304 $ 77.304 $ 530.479 1,564 $13,829.88 8.84
12/31/89 8.87 0.0495 $ 77.488 $ 77.488 $ 607.967 1,573 $13,954.30 8.87
1/31/90 8.76 0.0497 $ 78.188 $ 78.188 $ 686.155 1,582 $13,859.44 8.76
2/28/90 8.77 0.0497 $ 78.632 $ 78.632 $ 764.786 1,591 $13,953.89 8.77
3/31/90 8.74 0.0497 $ 79.077 $ 79.077 $ 843.864 1,600 $13,985.23 8.74
4/30/90 8.63 0.0497 $ 79.527 $ 79.527 $ 923.391 $605.4 1,680 $14,494.15 8.63
5/31/90 8.76 0.0497 $ 83.472 $ 83.472 $ 83.472 1,689 $14,795.76 8.78
6/30/90 8.79 0.0497 $ 83.944 $ 83.944 $ 167.416 1,699 $14,930.28 8.80
7/31/90 8.84 0.0497 $ 84.418 $ 84.418 $ 251.834 1,708 $15,099.53 8.85
8/31/90 8.68 0.0497 $ 84.892 $ 84.892 $ 336.726 1,718 $14,911.03 8.69
9/30/90 8.65 0.0497 $ 85.378 $ 85.378 $ 422.103 1,728 $14,944.68 8.67
10/31/90 8.70 0.0497 $ 85.867 $ 85.867 $ 507.971 1,738 $15,116.73 8.72
11/30/90 8.80 0.0497 $ 86.357 $ 86.357 $ 594.327 1,747 $15,376.65 8.82
12/31/90 8.77 0.0497 0.0384 $ 86.843 $67.098 $153.941 $ 681.170 1,765 $15,478.17 8.77
1/31/91 8.84 0.0497 $ 87.716 $ 87.716 $ 768.886 1,775 $15,689.13 8.87
2/28/91 8.85 0.0497 $ 88.207 $ 88.207 $ 857.093 1,785 $15,795.09 8.85
3/31/91 8.83 0.0487 $ 86.918 $ 86.918 $ 944.010 1,795 $15,846.31 8.83
4/30/91 8.90 0.0487 $ 87.397 $ 87.397 $1,031.407 $676.2 1,880 $16,734.69 8.91
5/31/91 8.94 0.0487 $ 91.571 $ 91.571 $ 91.571 1,891 $16.901.58 8.93
6/30/91 8.89 0.0487 $ 92.070 $ 92.070 $ 183.641 1,901 $16,899.12 8.89
7/31/91 8.95 0.0487 $ 92.574 $ 92.574 $ 276.215 1,911 $17,105.75 8.95
8/31/91 8.99 0.0487 $ 93.078 $ 93.078 $ 369.294 1,922 $17,275.28 8.99
9/30/91 9.04 0.0487 $ 93.582 $ 93.582 $ 462.876 1,932 $17,464.94 9.04
10/31/91 9.07 0.0477 $ 92.155 $ 92.155 $ 555.031 1,942 $17,614.95 9.08
11/30/91 9.04 0.0477 $ 92.639 $ 92.639 $ 647.669 1,952 $17,649.33 9.04
12/31/91 9.11 0.0477 0.0398 $ 93.128 $ 77.704 $170.831 $ 740.797 1,971 $17,956.83 9.11
1/31/92 9.09 0.0477 $ 94.022 $ 94.022 $ 834.819 1,981 $18,011.43 9.09
2/29/92 9.08 0.0477 $ 94.515 $ 94.515 $ 929.334 1,992 $18,086.13 9.08
3/31/92 9.05 0.0477 $ 95.012 $ 95.012 $1,024.346 2,002 $18,121.28 9.06
4/30/92 9.09 0.0470 $ 94.110 $ 94.110 $1,118.457 $733.3 2,093 $19,027.87 9.10
5/31/92 9.13 0.0470 $ 98.384 $ 98.384 $ 98.384 2,104 $19,209.98 9.13
6/30/92 9.22 0.0470 $ 98.890 $ 98.890 $ 197.274 2,115 $19,498.13 9.23
7/31/92 9.39 0.0470 $ 99.394 $ 99.394 $ 296.668 2,125 $19,957.24 9.37
</TABLE>
15
<PAGE>
<TABLE>
<CAPTION>
TOTAL PERIOD
NAV INCOME CAP FROM FROM DOLLAR TO DATE TAX ENDING ENDING REINV
PER DATE PER SHARE PER SHARE GAINS INCOME GAINS DIST. T-E INC. SAVINGS SHARES WEALTH NAV
- -------- --------- --------- ----- ------ ----- ------ -------- ------- ------ ------ -----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
8/31/92 9.27 0.0440 $ 93.516 $ 93.516 $ 390.185 2,135 $19,795.61 9.28
9/30/92 9.28 0.0440 $ 93.960 $ 93.960 $ 484.144 2,146 $19,910.83 9.29
10/31/92 9.10 0.0440 0.0519 $ 94.405 $111.355 $205.760 $ 578.549 2,168 $19,730.39 9.10
11/30/92 9.22 0.0440 $ 95.400 $ 95.400 $ 673.949 2,179 $20,085.97 9.22
12/31/92 9.25 0.0440 0.0030 $ 95.855 $ 6.536 $102.391 $ 769.804 2,190 $20,253.71 9.25
1/31/93 9.29 0.0440 $ 96.342 $ 96.342 $ 866.146 2,200 $20,437.64 9.29
2/28/93 9.45 0.0440 $ 96.798 $ 96.798 $ 962.944 2,210 $20,886.33 9.46
3/31/93 9.37 0.0440 $ 97.249 $ 97.249 $1,060.193 2,221 $20,806.76 9.37
4/30/93 9.41 0.0430 $ 95.485 $ 95.485 $1,155.677 $ 757.7 2,311 $21,747.86 9.42
5/31/93 9.40 0.0430 $ 99.379 $ 99.379 $ 99.379 2,322 $21,824.02 9.41
6/30/93 9.46 0.0430 $ 99.833 $ 99.833 $ 199.212 2,332 $22,063.05 9.47
7/31/93 9.43 0.0430 $ 100.287 $100.287 $ 299.499 2,343 $22,093.26 9.44
8/31/93 9.52 0.0430 $ 100.743 $100.743 $ 400.242 2,353 $22,404.87 9.52
9/30/93 9.53 0.0430 $ 101.198 $101.198 $ 501.441 2,364 $22,529.60 9.53
10/31/93 9.43 0.0430 0.0812 $ 101.655 $191.963 $293.618 $ 603.096 2,395 $22,586.81 9.43
11/30/93 9.36 0.0430 $ 102.994 $102.994 $ 706.090 2,406 $22,522.03 9.37
12/31/93 9.41 0.0430 0.0166 $ 103.467 $ 39.943 $143.409 $ 809.556 2,421 $22,785.75 9.41
1/31/94 9.45 0.0430 $ 104.122 $104.122 $ 913.678 2,432 $22,986.73 9.45
2/28/94 9.28 0.0420 $ 102.163 $102.163 $1,015.842 2,443 $22,675.48 9.27
3/31/94 8.99 0.0420 $ 102.626 $102.626 $1,118.468 2,455 $22,070.54 8.90
4/30/94 9.00 0.0420 $ 103.110 $103.110 $1,221.578 $ 800.9 2,556 $23,001.11 8.98
5/31/94 9.03 0.0420 $ 107.339 $107.339 $ 107.339 2,568 $23,185.24 9.02
6/30/94 8.96 0.0420 $ 107.838 $107.838 $ 215.177 2,580 $23,113.23 8.97
7/31/94 9.03 0.0420 $ 108.343 $108.343 $ 323.520 2,592 $23,402.03 9.04
8/31/94 9.01 0.0430 $ 111.438 $111.438 $ 434.958 2,604 $23,461.51 9.02
9/30/94 8.89 0.0430 $ 111.969 $111.969 $ 546.928 2,617 $23,261.00 8.89
10/31/94 8.70 0.0430 0.0492 $ 112.511 $128.734 $241.245 $ 659.439 2,644 $23,005.94 8.67
11/30/94 8.53 0.0430 $ 113.708 $113.708 $ 773.146 2,658 $22,669.71 8.56
12/31/94 8.65 0.0430 0.0259 $ 114.279 $ 68.833 $183.112 $ 887.425 2,679 $23,171.74 8.65
1/31/95 8.81 0.0430 $ 115.189 $115.189 $1,002.614 2,692 $23,715.02 8.85
2/28/95 9.00 0.0430 $ 115.749 $115.749 $1,118.363 2,705 $24,341.83 9.03
3/31/95 9.01 0.0430 $ 116.300 $116.300 $1,234.663 2,718 $24,484.92 9.03
4/30/95 8.99 0.0430 $ 116.854 $116.854 $1,351.516 $ 886.1 2,829 $25,433.51 8.99
5/31/95 9.21 0.0430 $ 121.651 $121.651 $ 121.651 2,842 $26,177.57 9.21
6/30/95 9.08 0.0430 $ 122.219 $122.219 $ 243.870 2,856 $25,930.29 9.08
7/31/95 9.08 0.0430 $ 122.798 $122.798 $ 366.667 2,869 $26,053.35 9.06
8/31/95 9.12 0.0430 $ 123.380 $123.380 $ 490.048 2,883 $26,290.97 9.16
9/30/95 9.13 0.0430 $ 123.960 $123.960 $ 614.007 2,896 $26,443.21 9.17
10/31/95 9.23 0.0430 $ 124.541 $124.541 $ 738.548 2,910 $26,856.98 9.26
11/30/95 9.33 0.0430 0.0272 $ 125.119 $ 79.145 $204.264 $ 863.667 2,932 $27,351.57 9.36
12/31/95 9.40 0.0415 $ 121.660 $121.660 $ 985.328 2,945 $27,678.44 9.40
1/31/95 9.38 0.0415 $ 122.197 $122.197 $1,107.525 2,958 $27,741.74 9.38
2/29/96 9.28 0.0415 $ 122.738 $122.738 $1,230.263 2,971 $27,568.07 9.33
3/31/96 9.12 0.0415 $ 123.284 $123.284 $1,353.547 2,984 $27,215.91 9.13
4/30/96 9.04 0.0415 $ 123.844 $123.844 $1,477.391 $ 968.6 3,105 $28,068.43 9.05
5/31/96 9.02 0.0415 $ 128.854 $128.854 $ 128.854 3,119 $28,135.33 9.01
6/30/96 9.07 0.0415 $ 129.447 $129.447 $ 258.301 3,133 $28,420.74 9.07
7/31/96 9.13 0.0405 $ 126.906 $126.906 $ 385.208 3,147 $28,735.10 9.17
8/31/96 9.08 0.0405 $ 127.467 $127.467 $ 512.674 3,161 $28,705.34 9.07
9/30/96 9.22 0.0405 $ 128.036 $128.036 $ 640.710 3,175 $29,275.69 9.24
10/31/96 9.26 0.0405 $ 128.597 $128.597 $ 769.307 3,189 $29,531.02 9.28
11/30/96 9.34 0.0405 0.0453 $ 129.158 $144.466 $273.624 $ 898.466 3,218 $30,059.77 9.34
12/31/96 9.25 0.0405 $ 130.345 $130.345 $1,028.811 3,232 $29,900.46 9.25
1/31/97 9.20 0.0405 $ 130.916 $130.916 $1,159.726 3,247 $29,869.47 9.22
2/28/97 9.24 0.0405 $ 131.491 $131.491 $1,291.217 3,261 $30,131.11 9.22
3/31/97 9.09 0.0405 $ 132.068 $132.068 $1,423.285 3,276 $29,776.45 9.09
4/30/97 9.15 0.0405 $ 132.667 $132.667 $1,555.952 $1,020.1 3,402 $31,124.53 9.16
Tax Rate 39.60%
Load 0.00%
Past Year: Total Return 10.88%
10.0014 Years: Total Re-
turn 211.25%
Annualized 12.02%
</TABLE>
16
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<LEGEND>
This schedule contains Summary Financial Information extracted from the Form
N-SAR and the financial statements and is qualified in its entirety by
references to such documents.
</LEGEND>
<SERIES>
<NUMBER> 011
<NAME> MUNICIPAL BOND CLASS A
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> APR-30-1997
<PERIOD-START> FEB-01-1997
<PERIOD-END> APR-30-1997
<INVESTMENTS-AT-COST> 2692148
<INVESTMENTS-AT-VALUE> 2818580
<RECEIVABLES> 65775
<ASSETS-OTHER> 640
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 2884995
<PAYABLE-FOR-SECURITIES> 11310
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 22878
<TOTAL-LIABILITIES> 34188
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 2719800
<SHARES-COMMON-STOCK> 7691
<SHARES-COMMON-PRIOR> 7235
<ACCUMULATED-NII-CURRENT> 1278
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 3297
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 126433
<NET-ASSETS> 2850807
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 42245
<OTHER-INCOME> 0
<EXPENSES-NET> 4040
<NET-INVESTMENT-INCOME> 38205
<REALIZED-GAINS-CURRENT> 340
<APPREC-INCREASE-CURRENT> (15324)
<NET-CHANGE-FROM-OPS> 23221
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 909
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 1843
<NUMBER-OF-SHARES-REDEEMED> (1451)
<SHARES-REINVESTED> 64
<NET-CHANGE-IN-ASSETS> (40692)
<ACCUMULATED-NII-PRIOR> 1229
<ACCUMULATED-GAINS-PRIOR> 3173
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 3152
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 4040
<AVERAGE-NET-ASSETS> 69836
<PER-SHARE-NAV-BEGIN> 9.19
<PER-SHARE-NII> 0.118
<PER-SHARE-GAIN-APPREC> (0.051)
<PER-SHARE-DIVIDEND> (0.117)
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 9.14
<EXPENSE-RATIO> 0.772
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<LEGEND>
This schedule contains Summary Financial Information extracted from the Form
N-SAR and the financial statements and is qualified in its entirety by
references to such documents.
</LEGEND>
<SERIES>
<NUMBER> 012
<NAME> MUNICIPAL BOND CLASS B
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> APR-30-1997
<PERIOD-START> FEB-01-1997
<PERIOD-END> APR-30-1997
<INVESTMENTS-AT-COST> 2692148
<INVESTMENTS-AT-VALUE> 2818580
<RECEIVABLES> 65775
<ASSETS-OTHER> 640
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 2884995
<PAYABLE-FOR-SECURITIES> 11310
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 22878
<TOTAL-LIABILITIES> 34188
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 2719800
<SHARES-COMMON-STOCK> 51
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 1278
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 3297
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 126433
<NET-ASSETS> 2850807
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 42245
<OTHER-INCOME> 0
<EXPENSES-NET> 4040
<NET-INVESTMENT-INCOME> 38205
<REALIZED-GAINS-CURRENT> 340
<APPREC-INCREASE-CURRENT> (15324)
<NET-CHANGE-FROM-OPS> 23221
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 2
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 51
<NUMBER-OF-SHARES-REDEEMED> 0
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> (40692)
<ACCUMULATED-NII-PRIOR> 1229
<ACCUMULATED-GAINS-PRIOR> 3173
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 3152
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 4040
<AVERAGE-NET-ASSETS> 180
<PER-SHARE-NAV-BEGIN> 9.23
<PER-SHARE-NII> 0.092
<PER-SHARE-GAIN-APPREC> (0.071)
<PER-SHARE-DIVIDEND> (0.101)
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 9.15
<EXPENSE-RATIO> 1.525
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<LEGEND>
This schedule contains Summary Financial Information extracted from the Form
N-SAR and the financial statements and is qualified in its entirety by
references to such documents.
</LEGEND>
<SERIES>
<NUMBER> 013
<NAME> MUNICIPAL BOND CLASS C
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> APR-30-1997
<PERIOD-START> FEB-01-1997
<PERIOD-END> APR-30-1997
<INVESTMENTS-AT-COST> 2692148
<INVESTMENTS-AT-VALUE> 2818580
<RECEIVABLES> 65775
<ASSETS-OTHER> 640
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 2884995
<PAYABLE-FOR-SECURITIES> 11310
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 22878
<TOTAL-LIABILITIES> 34188
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 2719800
<SHARES-COMMON-STOCK> 587
<SHARES-COMMON-PRIOR> 506
<ACCUMULATED-NII-CURRENT> 1278
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 3297
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 126433
<NET-ASSETS> 2850807
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 42245
<OTHER-INCOME> 0
<EXPENSES-NET> 4040
<NET-INVESTMENT-INCOME> 38205
<REALIZED-GAINS-CURRENT> 340
<APPREC-INCREASE-CURRENT> (15324)
<NET-CHANGE-FROM-OPS> 23221
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 58
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 96
<NUMBER-OF-SHARES-REDEEMED> (21)
<SHARES-REINVESTED> 5
<NET-CHANGE-IN-ASSETS> (40692)
<ACCUMULATED-NII-PRIOR> 1229
<ACCUMULATED-GAINS-PRIOR> 3173
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 3152
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 4040
<AVERAGE-NET-ASSETS> 5030
<PER-SHARE-NAV-BEGIN> 9.19
<PER-SHARE-NII> 0.105
<PER-SHARE-GAIN-APPREC> (0.050)
<PER-SHARE-DIVIDEND> (0.105)
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 9.14
<EXPENSE-RATIO> 1.323
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<LEGEND>
This schedule contains Summary Financial Information extracted from the Form
N-SAR and the financial statements and is qualified in its entirety by
references to such documents.
</LEGEND>
<SERIES>
<NUMBER> 014
<NAME> MUNICIPAL BOND CLASS R
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> APR-30-1997
<PERIOD-START> FEB-01-1997
<PERIOD-END> APR-30-1997
<INVESTMENTS-AT-COST> 2692148
<INVESTMENTS-AT-VALUE> 2818580
<RECEIVABLES> 65775
<ASSETS-OTHER> 640
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 2884995
<PAYABLE-FOR-SECURITIES> 11310
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 22878
<TOTAL-LIABILITIES> 34188
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 2719800
<SHARES-COMMON-STOCK> 303310
<SHARES-COMMON-PRIOR> 305510
<ACCUMULATED-NII-CURRENT> 1278
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 3297
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 126433
<NET-ASSETS> 2850807
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 42245
<OTHER-INCOME> 0
<EXPENSES-NET> 4040
<NET-INVESTMENT-INCOME> 38205
<REALIZED-GAINS-CURRENT> 340
<APPREC-INCREASE-CURRENT> (15324)
<NET-CHANGE-FROM-OPS> 23221
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 37026
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 3694
<NUMBER-OF-SHARES-REDEEMED> (9059)
<SHARES-REINVESTED> 3165
<NET-CHANGE-IN-ASSETS> (40692)
<ACCUMULATED-NII-PRIOR> 1229
<ACCUMULATED-GAINS-PRIOR> 3173
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 3152
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 4040
<AVERAGE-NET-ASSETS> 2793944
<PER-SHARE-NAV-BEGIN> 9.2
<PER-SHARE-NII> 0.122
<PER-SHARE-GAIN-APPREC> (0.050)
<PER-SHARE-DIVIDEND> (0.122)
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 9.15
<EXPENSE-RATIO> 0.571
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<LEGEND>
This schedule contains Summary Financial Information extracted from the Form
N-SAR and the financial statements and is qualified in its entirety by
references to such documents.
</LEGEND>
<SERIES>
<NUMBER> 021
<NAME> NATIONAL INSURED CLASS A
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> APR-30-1997
<PERIOD-START> FEB-01-1997
<PERIOD-END> APR-30-1997
<INVESTMENTS-AT-COST> 762011
<INVESTMENTS-AT-VALUE> 799938
<RECEIVABLES> 14445
<ASSETS-OTHER> 189
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 814572
<PAYABLE-FOR-SECURITIES> 19041
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 5515
<TOTAL-LIABILITIES> 24556
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 753733
<SHARES-COMMON-STOCK> 6498
<SHARES-COMMON-PRIOR> 6211
<ACCUMULATED-NII-CURRENT> 526
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> (2171)
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 37928
<NET-ASSETS> 790016
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 11835
<OTHER-INCOME> 0
<EXPENSES-NET> 1282
<NET-INVESTMENT-INCOME> 10553
<REALIZED-GAINS-CURRENT> (985)
<APPREC-INCREASE-CURRENT> (6618)
<NET-CHANGE-FROM-OPS> 2950
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 878
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 470
<NUMBER-OF-SHARES-REDEEMED> (234)
<SHARES-REINVESTED> 51
<NET-CHANGE-IN-ASSETS> 11663
<ACCUMULATED-NII-PRIOR> 586
<ACCUMULATED-GAINS-PRIOR> (1180)
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 927
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 1282
<AVERAGE-NET-ASSETS> 68299
<PER-SHARE-NAV-BEGIN> 10.77
<PER-SHARE-NII> 0.137
<PER-SHARE-GAIN-APPREC> (0.109)
<PER-SHARE-DIVIDEND> (0.138)
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 10.66
<EXPENSE-RATIO> 0.836
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<LEGEND>
This schedule contains Summary Financial Information extracted from the Form
N-SAR and the financial statements and is qualified in its entirety by
references to such documents.
</LEGEND>
<SERIES>
<NUMBER> 022
<NAME> NATIONAL INSURED CLASS B
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> APR-30-1997
<PERIOD-START> FEB-01-1997
<PERIOD-END> APR-30-1997
<INVESTMENTS-AT-COST> 762011
<INVESTMENTS-AT-VALUE> 799938
<RECEIVABLES> 14445
<ASSETS-OTHER> 189
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 814572
<PAYABLE-FOR-SECURITIES> 19041
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 5515
<TOTAL-LIABILITIES> 24556
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 753733
<SHARES-COMMON-STOCK> 46
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 526
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> (2171)
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 37928
<NET-ASSETS> 790016
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 11835
<OTHER-INCOME> 0
<EXPENSES-NET> 1282
<NET-INVESTMENT-INCOME> 10553
<REALIZED-GAINS-CURRENT> (985)
<APPREC-INCREASE-CURRENT> (6618)
<NET-CHANGE-FROM-OPS> 2950
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 4
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 46
<NUMBER-OF-SHARES-REDEEMED> 0
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 11663
<ACCUMULATED-NII-PRIOR> 586
<ACCUMULATED-GAINS-PRIOR> (1180)
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 927
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 1282
<AVERAGE-NET-ASSETS> 332
<PER-SHARE-NAV-BEGIN> 10.80
<PER-SHARE-NII> 0.111
<PER-SHARE-GAIN-APPREC> (0.122)
<PER-SHARE-DIVIDEND> (0.119)
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 10.67
<EXPENSE-RATIO> 1.589
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<LEGEND>
This schedule contains Summary Financial Information extracted from the Form
N-SAR and the financial statements and is qualified in its entirety by
references to such documents.
</LEGEND>
<SERIES>
<NUMBER> 023
<NAME> NATIONAL INSURED CLASS C
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> APR-30-1997
<PERIOD-START> FEB-01-1997
<PERIOD-END> APR-30-1997
<INVESTMENTS-AT-COST> 762011
<INVESTMENTS-AT-VALUE> 799938
<RECEIVABLES> 14445
<ASSETS-OTHER> 189
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 814572
<PAYABLE-FOR-SECURITIES> 19041
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 5515
<TOTAL-LIABILITIES> 24556
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 753733
<SHARES-COMMON-STOCK> 532
<SHARES-COMMON-PRIOR> 508
<ACCUMULATED-NII-CURRENT> 526
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> (2171)
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 37928
<NET-ASSETS> 790016
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 11835
<OTHER-INCOME> 0
<EXPENSES-NET> 1282
<NET-INVESTMENT-INCOME> 10553
<REALIZED-GAINS-CURRENT> (985)
<APPREC-INCREASE-CURRENT> (6618)
<NET-CHANGE-FROM-OPS> 2950
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 62
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 64
<NUMBER-OF-SHARES-REDEEMED> (45)
<SHARES-REINVESTED> 5
<NET-CHANGE-IN-ASSETS> 11663
<ACCUMULATED-NII-PRIOR> 586
<ACCUMULATED-GAINS-PRIOR> (1180)
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 927
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 1282
<AVERAGE-NET-ASSETS> 5470
<PER-SHARE-NAV-BEGIN> 10.66
<PER-SHARE-NII> 0.121
<PER-SHARE-GAIN-APPREC> (0.099)
<PER-SHARE-DIVIDEND> (0.122)
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 10.56
<EXPENSE-RATIO> 1.387
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<LEGEND>
This schedule contains Summary Financial Information extracted from the Form
N-SAR and the financial statements and is qualified in its entirety by
references to such documents.
</LEGEND>
<SERIES>
<NUMBER> 024
<NAME> NATIONAL INSURED CLASS R
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> APR-30-1997
<PERIOD-START> FEB-01-1997
<PERIOD-END> APR-30-1997
<INVESTMENTS-AT-COST> 762011
<INVESTMENTS-AT-VALUE> 799938
<RECEIVABLES> 14445
<ASSETS-OTHER> 189
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 814572
<PAYABLE-FOR-SECURITIES> 19041
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 5515
<TOTAL-LIABILITIES> 24556
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 753733
<SHARES-COMMON-STOCK> 67284
<SHARES-COMMON-PRIOR> 68136
<ACCUMULATED-NII-CURRENT> 526
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> (2171)
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 37928
<NET-ASSETS> 790016
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 11835
<OTHER-INCOME> 0
<EXPENSES-NET> 1282
<NET-INVESTMENT-INCOME> 10553
<REALIZED-GAINS-CURRENT> (985)
<APPREC-INCREASE-CURRENT> (6618)
<NET-CHANGE-FROM-OPS> 2950
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 9673
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 664
<NUMBER-OF-SHARES-REDEEMED> (2116)
<SHARES-REINVESTED> 600
<NET-CHANGE-IN-ASSETS> 11663
<ACCUMULATED-NII-PRIOR> 586
<ACCUMULATED-GAINS-PRIOR> (1180)
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 927
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 1282
<AVERAGE-NET-ASSETS> 724603
<PER-SHARE-NAV-BEGIN> 10.72
<PER-SHARE-NII> 0.142
<PER-SHARE-GAIN-APPREC> (0.099)
<PER-SHARE-DIVIDEND> (0.143)
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 10.62
<EXPENSE-RATIO> 0.636
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<LEGEND>
This schedule contains Summary Financial Information extracted from the Form
N-SAR and the financial statements and is qualified in its entirety by
references to such documents.
</LEGEND>
<SERIES>
<NUMBER> 031
<NAME> ALL AMERICAN CLASS A
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> APR-30-1997
<PERIOD-START> FEB-01-1997
<PERIOD-END> APR-30-1997
<INVESTMENTS-AT-COST> 256401
<INVESTMENTS-AT-VALUE> 268826
<RECEIVABLES> 11461
<ASSETS-OTHER> 8
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 280295
<PAYABLE-FOR-SECURITIES> 4841
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 3135
<TOTAL-LIABILITIES> 7976
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 258950
<SHARES-COMMON-STOCK> 19868
<SHARES-COMMON-PRIOR> 19974
<ACCUMULATED-NII-CURRENT> 13
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 931
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 12425
<NET-ASSETS> 272319
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 4329
<OTHER-INCOME> 0
<EXPENSES-NET> 610
<NET-INVESTMENT-INCOME> 3719
<REALIZED-GAINS-CURRENT> (150)
<APPREC-INCREASE-CURRENT> (953)
<NET-CHANGE-FROM-OPS> 2616
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 2993
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 668
<NUMBER-OF-SHARES-REDEEMED> (863)
<SHARES-REINVESTED> 88
<NET-CHANGE-IN-ASSETS> 850
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 155
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 327
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 610
<AVERAGE-NET-ASSETS> 218055
<PER-SHARE-NAV-BEGIN> 10.940
<PER-SHARE-NII> .152
<PER-SHARE-GAIN-APPREC> (.042)
<PER-SHARE-DIVIDEND> (0.150)
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 10.900
<EXPENSE-RATIO> .810
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<LEGEND>
This schedule contains Summary Financial Information extracted from the Form
N-SAR and the financial statements and is qualified in its entirety by
references to such documents.
</LEGEND>
<SERIES>
<NUMBER> 032
<NAME> ALL AMERICAN CLASS B
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> APR-30-1997
<PERIOD-START> FEB-01-1997
<PERIOD-END> APR-30-1997
<INVESTMENTS-AT-COST> 256401
<INVESTMENTS-AT-VALUE> 268826
<RECEIVABLES> 11461
<ASSETS-OTHER> 8
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 280295
<PAYABLE-FOR-SECURITIES> 4841
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 3135
<TOTAL-LIABILITIES> 7976
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 258950
<SHARES-COMMON-STOCK> 65
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 13
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 931
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 12425
<NET-ASSETS> 272319
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 4329
<OTHER-INCOME> 0
<EXPENSES-NET> 610
<NET-INVESTMENT-INCOME> 3719
<REALIZED-GAINS-CURRENT> (150)
<APPREC-INCREASE-CURRENT> (953)
<NET-CHANGE-FROM-OPS> 2616
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 3
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 65
<NUMBER-OF-SHARES-REDEEMED> 0
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 850
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 155
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 327
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 610
<AVERAGE-NET-ASSETS> 298
<PER-SHARE-NAV-BEGIN> 10.980
<PER-SHARE-NII> .123
<PER-SHARE-GAIN-APPREC> (.064)
<PER-SHARE-DIVIDEND> (.129)
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 10.910
<EXPENSE-RATIO> 1.563
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<LEGEND>
This schedule contains Summary Financial Information extracted from the Form
N-SAR and the financial statements and is qualified in its entirety by
references to such documents.
</LEGEND>
<SERIES>
<NUMBER> 033
<NAME> ALL AMERICAN CLASS C
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> APR-30-1997
<PERIOD-START> FEB-01-1997
<PERIOD-END> APR-30-1997
<INVESTMENTS-AT-COST> 256401
<INVESTMENTS-AT-VALUE> 268826
<RECEIVABLES> 11461
<ASSETS-OTHER> 8
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 280295
<PAYABLE-FOR-SECURITIES> 4841
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 3135
<TOTAL-LIABILITIES> 7976
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 258950
<SHARES-COMMON-STOCK> 5035
<SHARES-COMMON-PRIOR> 4838
<ACCUMULATED-NII-CURRENT> 13
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 931
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 12425
<NET-ASSETS> 272319
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 4329
<OTHER-INCOME> 0
<EXPENSES-NET> 610
<NET-INVESTMENT-INCOME> 3719
<REALIZED-GAINS-CURRENT> (150)
<APPREC-INCREASE-CURRENT> (953)
<NET-CHANGE-FROM-OPS> 2616
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 665
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 365
<NUMBER-OF-SHARES-REDEEMED> (181)
<SHARES-REINVESTED> 13
<NET-CHANGE-IN-ASSETS> 850
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 155
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 327
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 610
<AVERAGE-NET-ASSETS> 53930
<PER-SHARE-NAV-BEGIN> 10.930
<PER-SHARE-NII> .137
<PER-SHARE-GAIN-APPREC> (0.042)
<PER-SHARE-DIVIDEND> (0.135)
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 10.890
<EXPENSE-RATIO> 1.360
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<LEGEND>
This schedule contains Summary Financial Information extracted from the Form
N-SAR and the financial statements and is qualified in its entirety by
references to such documents.
</LEGEND>
<SERIES>
<NUMBER> 034
<NAME> ALL AMERICAN CLASS R
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> APR-30-1997
<PERIOD-START> FEB-01-1997
<PERIOD-END> APR-30-1997
<INVESTMENTS-AT-COST> 256401
<INVESTMENTS-AT-VALUE> 268826
<RECEIVABLES> 11461
<ASSETS-OTHER> 8
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 280295
<PAYABLE-FOR-SECURITIES> 4841
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 3135
<TOTAL-LIABILITIES> 7976
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 258950
<SHARES-COMMON-STOCK> 17
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 13
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 931
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 12425
<NET-ASSETS> 272319
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 4329
<OTHER-INCOME> 0
<EXPENSES-NET> 610
<NET-INVESTMENT-INCOME> 3719
<REALIZED-GAINS-CURRENT> (150)
<APPREC-INCREASE-CURRENT> (953)
<NET-CHANGE-FROM-OPS> 2616
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 1
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 17
<NUMBER-OF-SHARES-REDEEMED> 0
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 850
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 155
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 327
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 610
<AVERAGE-NET-ASSETS> 218055
<PER-SHARE-NAV-BEGIN> 10.990
<PER-SHARE-NII> .149
<PER-SHARE-GAIN-APPREC> (.074)
<PER-SHARE-DIVIDEND> (0.155)
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 10.910
<EXPENSE-RATIO> 0.612
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<LEGEND>
This schedule contains Summary Financial Information extracted from the Form
N-SAR and the financial statements and is qualified in its entirety by
references to such documents.
</LEGEND>
<SERIES>
<NUMBER> 051
<NAME> INTERMEDIATE CLASS A
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> APR-30-1997
<PERIOD-START> FEB-01-1997
<PERIOD-END> APR-30-1997
<INVESTMENTS-AT-COST> 44140
<INVESTMENTS-AT-VALUE> 45518
<RECEIVABLES> 1043
<ASSETS-OTHER> 2
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 46536
<PAYABLE-FOR-SECURITIES> 1562
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 1086
<TOTAL-LIABILITIES> 2648
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 42828
<SHARES-COMMON-STOCK> 3908
<SHARES-COMMON-PRIOR> 4174
<ACCUMULATED-NII-CURRENT> 10
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> (301)
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 1378
<NET-ASSETS> 43915
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 640
<OTHER-INCOME> 0
<EXPENSES-NET> 69
<NET-INVESTMENT-INCOME> 571
<REALIZED-GAINS-CURRENT> 62
<APPREC-INCREASE-CURRENT> (465)
<NET-CHANGE-FROM-OPS> 168
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 522
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 109
<NUMBER-OF-SHARES-REDEEMED> (397)
<SHARES-REINVESTED> 22
<NET-CHANGE-IN-ASSETS> (2470)
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> (392)
<OVERDISTRIB-NII-PRIOR> (2)
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 55
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 115
<AVERAGE-NET-ASSETS> 42646
<PER-SHARE-NAV-BEGIN> 10.56
<PER-SHARE-NII> .133
<PER-SHARE-GAIN-APPREC> (0.095)
<PER-SHARE-DIVIDEND> (.128)
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 10.47
<EXPENSE-RATIO> 0.60
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<LEGEND>
This schedule contains Summary Financial Information extracted from the Form
N-SAR and the financial statements and is qualified in its entirety by
references to such documents.
</LEGEND>
<SERIES>
<NUMBER> 052
<NAME> INTERMEDIATE CLASS C
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> APR-30-1997
<PERIOD-START> FEB-01-1997
<PERIOD-END> APR-30-1997
<INVESTMENTS-AT-COST> 44140
<INVESTMENTS-AT-VALUE> 45518
<RECEIVABLES> 1043
<ASSETS-OTHER> 2
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 46536
<PAYABLE-FOR-SECURITIES> 1562
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 1086
<TOTAL-LIABILITIES> 2648
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 42828
<SHARES-COMMON-STOCK> 243
<SHARES-COMMON-PRIOR> 220
<ACCUMULATED-NII-CURRENT> 10
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> (301)
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 1378
<NET-ASSETS> 43915
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 640
<OTHER-INCOME> 0
<EXPENSES-NET> 69
<NET-INVESTMENT-INCOME> 571
<REALIZED-GAINS-CURRENT> 62
<APPREC-INCREASE-CURRENT> (465)
<NET-CHANGE-FROM-OPS> 168
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 21
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 26
<NUMBER-OF-SHARES-REDEEMED> (4)
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> (2470)
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> (392)
<OVERDISTRIB-NII-PRIOR> (2)
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 55
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 115
<AVERAGE-NET-ASSETS> 2435
<PER-SHARE-NAV-BEGIN> 10.56
<PER-SHARE-NII> .119
<PER-SHARE-GAIN-APPREC> (.095)
<PER-SHARE-DIVIDEND> (.114)
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 10.47
<EXPENSE-RATIO> 1.151
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<LEGEND>
This schedule contains Summary Financial Information extracted from the Form
N-SAR and the financial statements and is qualified in its entirety by
references to such documents.
</LEGEND>
<SERIES>
<NUMBER> 053
<NAME> INTERMEDIATE CLASS R
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> APR-30-1997
<PERIOD-START> FEB-01-1997
<PERIOD-END> APR-30-1997
<INVESTMENTS-AT-COST> 44140
<INVESTMENTS-AT-VALUE> 45518
<RECEIVABLES> 1043
<ASSETS-OTHER> 2
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 46536
<PAYABLE-FOR-SECURITIES> 1562
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 1086
<TOTAL-LIABILITIES> 2648
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 42828
<SHARES-COMMON-STOCK> 45
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 10
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> (301)
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 1378
<NET-ASSETS> 43915
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 640
<OTHER-INCOME> 0
<EXPENSES-NET> 69
<NET-INVESTMENT-INCOME> 571
<REALIZED-GAINS-CURRENT> 62
<APPREC-INCREASE-CURRENT> (465)
<NET-CHANGE-FROM-OPS> 168
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 4
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 45
<NUMBER-OF-SHARES-REDEEMED> 0
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> (2470)
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> (392)
<OVERDISTRIB-NII-PRIOR> (2)
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 55
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 115
<AVERAGE-NET-ASSETS> 402
<PER-SHARE-NAV-BEGIN> 10.60
<PER-SHARE-NII> .144
<PER-SHARE-GAIN-APPREC> (.160)
<PER-SHARE-DIVIDEND> (.134)
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 10.45
<EXPENSE-RATIO> 0.40
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<LEGEND>
This schedule contains Summary Financial Information extracted from the Form
N-SAR and the financial statements and is qualified in its entirety by
references to such documents.
</LEGEND>
<SERIES>
<NUMBER> 041
<NAME> LIMITED TERM CLASS A
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> APR-30-1997
<PERIOD-START> FEB-01-1997
<PERIOD-END> APR-30-1997
<INVESTMENTS-AT-COST> 440735
<INVESTMENTS-AT-VALUE> 449536
<RECEIVABLES> 8591
<ASSETS-OTHER> 1088
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 459215
<PAYABLE-FOR-SECURITIES> 6825
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 3398
<TOTAL-LIABILITIES> 10223
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 444374
<SHARES-COMMON-STOCK> 40110
<SHARES-COMMON-PRIOR> 42738
<ACCUMULATED-NII-CURRENT> 1015
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> (5198)
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 8801
<NET-ASSETS> 448992
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 6456
<OTHER-INCOME> 0
<EXPENSES-NET> 868
<NET-INVESTMENT-INCOME> 5588
<REALIZED-GAINS-CURRENT> 73
<APPREC-INCREASE-CURRENT> (4462)
<NET-CHANGE-FROM-OPS> 1199
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 5164
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 885
<NUMBER-OF-SHARES-REDEEMED> (3733)
<SHARES-REINVESTED> 220
<NET-CHANGE-IN-ASSETS> (31018)
<ACCUMULATED-NII-PRIOR> 745
<ACCUMULATED-GAINS-PRIOR> (6852)
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 493
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 868
<AVERAGE-NET-ASSETS> 441680
<PER-SHARE-NAV-BEGIN> 10.7
<PER-SHARE-NII> 0.129
<PER-SHARE-GAIN-APPREC> (0.094)
<PER-SHARE-DIVIDEND> (0.125)
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 10.61
<EXPENSE-RATIO> 0.747
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<LEGEND>
This schedule contains Summary Financial Information extracted from the Form
N-SAR and the financial statements and is qualified in its entirety by
references to such documents.
</LEGEND>
<SERIES>
<NUMBER> 042
<NAME> LIMITED TERM CLASS C
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> APR-30-1997
<PERIOD-START> FEB-01-1997
<PERIOD-END> APR-30-1997
<INVESTMENTS-AT-COST> 440735
<INVESTMENTS-AT-VALUE> 449536
<RECEIVABLES> 8591
<ASSETS-OTHER> 1088
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 459215
<PAYABLE-FOR-SECURITIES> 6825
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 3398
<TOTAL-LIABILITIES> 10223
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 444374
<SHARES-COMMON-STOCK> 2222
<SHARES-COMMON-PRIOR> 2106
<ACCUMULATED-NII-CURRENT> 1015
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> (5198)
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 8801
<NET-ASSETS> 448992
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 6456
<OTHER-INCOME> 0
<EXPENSES-NET> 868
<NET-INVESTMENT-INCOME> 5588
<REALIZED-GAINS-CURRENT> 73
<APPREC-INCREASE-CURRENT> (4462)
<NET-CHANGE-FROM-OPS> 1199
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 259
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 380
<NUMBER-OF-SHARES-REDEEMED> (270)
<SHARES-REINVESTED> 6
<NET-CHANGE-IN-ASSETS> (31018)
<ACCUMULATED-NII-PRIOR> 745
<ACCUMULATED-GAINS-PRIOR> (6852)
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 493
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 868
<AVERAGE-NET-ASSETS> 23531
<PER-SHARE-NAV-BEGIN> 10.7
<PER-SHARE-NII> 0.120
<PER-SHARE-GAIN-APPREC> (0.104)
<PER-SHARE-DIVIDEND> (0.116)
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 10.60
<EXPENSE-RATIO> 1.098
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<LEGEND>
This schedule contains Summary Financial Information extracted from the Form
N-SAR and the financial statements and is qualified in its entirety by
references to such documents.
</LEGEND>
<SERIES>
<NUMBER> 043
<NAME> LIMITED TERM CLASS R
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> APR-30-1997
<PERIOD-START> FEB-01-1997
<PERIOD-END> APR-30-1997
<INVESTMENTS-AT-COST> 440735
<INVESTMENTS-AT-VALUE> 449536
<RECEIVABLES> 8591
<ASSETS-OTHER> 1088
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 459215
<PAYABLE-FOR-SECURITIES> 6825
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 3398
<TOTAL-LIABILITIES> 10223
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 444374
<SHARES-COMMON-STOCK> 4
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 1015
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> (5198)
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 8801
<NET-ASSETS> 448992
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 6456
<OTHER-INCOME> 0
<EXPENSES-NET> 868
<NET-INVESTMENT-INCOME> 5588
<REALIZED-GAINS-CURRENT> 73
<APPREC-INCREASE-CURRENT> (4462)
<NET-CHANGE-FROM-OPS> 1199
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 4
<NUMBER-OF-SHARES-REDEEMED> 0
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> (31018)
<ACCUMULATED-NII-PRIOR> 745
<ACCUMULATED-GAINS-PRIOR> (6852)
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 493
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 868
<AVERAGE-NET-ASSETS> 30
<PER-SHARE-NAV-BEGIN> 10.73
<PER-SHARE-NII> 0.124
<PER-SHARE-GAIN-APPREC> (0.134)
<PER-SHARE-DIVIDEND> (0.13)
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 10.59
<EXPENSE-RATIO> 0.55
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<PAGE>
EXHIBIT 99(a)
NUVEEN FLAGSHIP MUNICIPAL TRUST
-------------
POWER OF ATTORNEY
-------------
KNOW ALL MEN BY THESE PRESENTS, that the undersigned, a trustee of the above
referenced organization, hereby constitutes and appoints TIMOTHY R.
SCHWERTFEGER, ANTHONY T. DEAN, BRUCE P. BEDFORD, LARRY W. MARTIN, GIFFORD R.
ZIMMERMAN, AND THOMAS S. HARMAN each of them (with full power to each of them to
act alone) his true and lawful attorney-in-fact and agent, for him on his
behalf and in his name, place and stead, in any and all capacities, to sign,
execute and affix his seal thereto and file one or more Registration Statements
on Form N-1A, under the Securities Act of 1933, as amended, and the Investment
Company Act of 1940, as amended, including any amendment or amendments thereto,
with all exhibits, and any and all other documents required to be filed with any
regulatory authority, federal or state, relating to the reorganization, without
limitation, granting unto said attorneys, and each of them, full power and
authority to do and perform each and every act and thing requisite and necessary
to be done in order to effectuate the same as fully to all intents and purposes
as he might or could do if personally present, hereby ratifying and confirming
all that said attorneys-in-fact and agents, or any of them, may lawfully do or
cause to be done by virtue hereof.
IN WITNESS WHEREOF, the undersigned trustee of the above-referenced organization
has hereunto set his hand this 30th day of January, 1997.
/s/ Timothy R. Schwertfeger
----------------------------------------
STATE OF ILLINOIS )
) SS
COUNTY OF COOK )
On this 30th day of January, 1997, personally appeared before me, a Notary
Public in and for said County and State, the person named above who is known to
me to be the person whose name and signature is affixed to the foregoing Power
of Attorney and who acknowledged the same to be his voluntary act and deed for
the intent and purposes therein set forth.
- --------------------------------
"OFFICIAL SEAL"
VIRGINIA L. CORCORAN
Notary Public, State of Illinois
My Commission Expires 10/26/97
- --------------------------------
/s/ Virginia L. Corcoran
----------------------------------------
My Commission Expires: 10/26/97
<PAGE>
NUVEEN FLAGSHIP MUNICIPAL TRUST
-------------
POWER OF ATTORNEY
-------------
KNOW ALL MEN BY THESE PRESENTS, that the undersigned, a trustee of the above
referenced organization, hereby constitutes and appoints TIMOTHY R.
SCHWERTFEGER, ANTHONY T. DEAN, BRUCE P. BEDFORD, LARRY W. MARTIN, GIFFORD R.
ZIMMERMAN, AND THOMAS S. HARMAN each of them (with full power to each of them to
act alone) his true and lawful attorney-in-fact and agent, for him on his
behalf and in his name, place and stead, in any and all capacities, to sign,
execute and affix his seal thereto and file one or more Registration Statements
on Form N-1A, under the Securities Act of 1933, as amended, and the Investment
Company Act of 1940, as amended, including any amendment or amendments thereto,
with all exhibits, and any and all other documents required to be filed with any
regulatory authority, federal or state, relating to the reorganization, without
limitation, granting unto said attorneys, and each of them, full power and
authority to do and perform each and every act and thing requisite and necessary
to be done in order to effectuate the same as fully to all intents and purposes
as he might or could do if personally present, hereby ratifying and confirming
all that said attorneys-in-fact and agents, or any of them, may lawfully do or
cause to be done by virtue hereof.
IN WITNESS WHEREOF, the undersigned trustee of the above-referenced organization
has hereunto set his hand this 30th day of January, 1997.
/s/ Anthony T. Dean
----------------------------------------
STATE OF ILLINOIS )
) SS
COUNTY OF COOK )
On this 30th day of January, 1997, personally appeared before me, a Notary
Public in and for said County and State, the person named above who is known to
me to be the person whose name and signature is affixed to the foregoing Power
of Attorney and who acknowledged the same to be his voluntary act and deed for
the intent and purposes therein set forth.
- --------------------------------
"OFFICIAL SEAL"
VIRGINIA L. CORCORAN
Notary Public, State of Illinois
My Commission Expires 10/26/97
- --------------------------------
/s/ Virginia L. Corcoran
----------------------------------------
My Commission Expires: 10/26/97
<PAGE>
NUVEEN FLAGSHIP MUNICIPAL TRUST
-------------
POWER OF ATTORNEY
-------------
KNOW ALL MEN BY THESE PRESENTS, that the undersigned, a trustee of the above
referenced organization, hereby constitutes and appoints TIMOTHY R.
SCHWERTFEGER, ANTHONY T. DEAN, BRUCE P. BEDFORD, LARRY W. MARTIN, GIFFORD R.
ZIMMERMAN, AND THOMAS S. HARMAN each of them (with full power to each of them to
act alone) his true and lawful attorney-in-fact and agent, for him on his
behalf and in his name, place and stead, in any and all capacities, to sign,
execute and affix his seal thereto and file one or more Registration Statements
on Form N-1A, under the Securities Act of 1933, as amended, and the Investment
Company Act of 1940, as amended, including any amendment or amendments thereto,
with all exhibits, and any and all other documents required to be filed with any
regulatory authority, federal or state, relating to the reorganization, without
limitation, granting unto said attorneys, and each of them, full power and
authority to do and perform each and every act and thing requisite and necessary
to be done in order to effectuate the same as fully to all intents and purposes
as he might or could do if personally present, hereby ratifying and confirming
all that said attorneys-in-fact and agents, or any of them, may lawfully do or
cause to be done by virtue hereof.
IN WITNESS WHEREOF, the undersigned trustee of the above-referenced organization
has hereunto set his hand this 30th day of January, 1997.
/s/ Lawrence H. Brown
----------------------------------------
STATE OF ILLINOIS )
) SS
COUNTY OF COOK )
On this 30th day of January, 1997, personally appeared before me, a Notary
Public in and for said County and State, the person named above who is known to
me to be the person whose name and signature is affixed to the foregoing Power
of Attorney and who acknowledged the same to be his voluntary act and deed for
the intent and purposes therein set forth.
- --------------------------------
"OFFICIAL SEAL"
VIRGINIA L. CORCORAN
Notary Public, State of Illinois
My Commission Expires 10/26/97
- --------------------------------
/s/ Virginia L. Corcoran
----------------------------------------
My Commission Expires: 10/26/97
<PAGE>
NUVEEN FLAGSHIP MUNICIPAL TRUST
-------------
POWER OF ATTORNEY
-------------
KNOW ALL MEN BY THESE PRESENTS, that the undersigned, a trustee of the above
referenced organization, hereby constitutes and appoints TIMOTHY R.
SCHWERTFEGER, ANTHONY T. DEAN, BRUCE P. BEDFORD, LARRY W. MARTIN, GIFFORD R.
ZIMMERMAN, AND THOMAS S. HARMAN each of them (with full power to each of them to
act alone) her true and lawful attorney-in-fact and agent, for her on her
behalf and in her name, place and stead, in any and all capacities, to sign,
execute and affix her seal thereto and file one or more Registration Statements
on Form N-1A, under the Securities Act of 1933, as amended, and the Investment
Company Act of 1940, as amended, including any amendment or amendments thereto,
with all exhibits, and any and all other documents required to be filed with any
regulatory authority, federal or state, relating to the reorganization, without
limitation, granting unto said attorneys, and each of them, full power and
authority to do and perform each and every act and thing requisite and necessary
to be done in order to effectuate the same as fully to all intents and purposes
as she might or could do if personally present, hereby ratifying and confirming
all that said attorneys-in-fact and agents, or any of them, may lawfully do or
cause to be done by virtue hereof.
IN WITNESS WHEREOF, the undersigned trustee of the above-referenced organization
has hereunto set her hand this 30th day of January, 1997.
/s/ Anne E. Impellizzeri
----------------------------------------
STATE OF ILLINOIS )
) SS
COUNTY OF COOK )
On this 30th day of January, 1997, personally appeared before me, a Notary
Public in and for said County and State, the person named above who is known to
me to be the person whose name and signature is affixed to the foregoing Power
of Attorney and who acknowledged the same to be her voluntary act and deed for
the intent and purposes therein set forth.
- --------------------------------
"OFFICIAL SEAL"
VIRGINIA L. CORCORAN
Notary Public, State of Illinois
My Commission Expires 10/26/97
- --------------------------------
/s/ Virginia L. Corcoran
----------------------------------------
My Commission Expires: 10/26/97
<PAGE>
NUVEEN FLAGSHIP MUNICIPAL TRUST
-------------
POWER OF ATTORNEY
-------------
KNOW ALL MEN BY THESE PRESENTS, that the undersigned, a trustee of the above
referenced organization, hereby constitutes and appoints TIMOTHY R.
SCHWERTFEGER, ANTHONY T. DEAN, BRUCE P. BEDFORD, LARRY W. MARTIN, GIFFORD R.
ZIMMERMAN, AND THOMAS S. HARMAN each of them (with full power to each of them to
act alone) her true and lawful attorney-in-fact and agent, for her on her
behalf and in her name, place and stead, in any and all capacities, to sign,
execute and affix her seal thereto and file one or more Registration Statements
on Form N-1A, under the Securities Act of 1933, as amended, and the Investment
Company Act of 1940, as amended, including any amendment or amendments thereto,
with all exhibits, and any and all other documents required to be filed with any
regulatory authority, federal or state, relating to the reorganization, without
limitation, granting unto said attorneys, and each of them, full power and
authority to do and perform each and every act and thing requisite and necessary
to be done in order to effectuate the same as fully to all intents and purposes
as she might or could do if personally present, hereby ratifying and confirming
all that said attorneys-in-fact and agents, or any of them, may lawfully do or
cause to be done by virtue hereof.
IN WITNESS WHEREOF, the undersigned trustee of the above-referenced organization
has hereunto set her hand this 30th day of January, 1997.
/s/ Margaret K. Rosenheim
----------------------------------------
STATE OF ILLINOIS )
) SS
COUNTY OF COOK )
On this 30th day of January, 1997, personally appeared before me, a Notary
Public in and for said County and State, the person named above who is known to
me to be the person whose name and signature is affixed to the foregoing Power
of Attorney and who acknowledged the same to be her voluntary act and deed for
the intent and purposes therein set forth.
- --------------------------------
"OFFICIAL SEAL"
VIRGINIA L. CORCORAN
Notary Public, State of Illinois
My Commission Expires 10/26/97
- --------------------------------
/s/ Virginia L. Corcoran
----------------------------------------
My Commission Expires: 10/26/97
<PAGE>
NUVEEN FLAGSHIP MUNICIPAL TRUST
-------------
POWER OF ATTORNEY
-------------
KNOW ALL MEN BY THESE PRESENTS, that the undersigned, a trustee of the above
referenced organization, hereby constitutes and appoints TIMOTHY R.
SCHWERTFEGER, ANTHONY T. DEAN, BRUCE P. BEDFORD, LARRY W. MARTIN, GIFFORD R.
ZIMMERMAN, AND THOMAS S. HARMAN each of them (with full power to each of them to
act alone) his true and lawful attorney-in-fact and agent, for him on his
behalf and in his name, place and stead, in any and all capacities, to sign,
execute and affix his seal thereto and file one or more Registration Statements
on Form N-1A, under the Securities Act of 1933, as amended, and the Investment
Company Act of 1940, as amended, including any amendment or amendments thereto,
with all exhibits, and any and all other documents required to be filed with any
regulatory authority, federal or state, relating to the reorganization, without
limitation, granting unto said attorneys, and each of them, full power and
authority to do and perform each and every act and thing requisite and necessary
to be done in order to effectuate the same as fully to all intents and purposes
as he might or could do if personally present, hereby ratifying and confirming
all that said attorneys-in-fact and agents, or any of them, may lawfully do or
cause to be done by virtue hereof.
IN WITNESS WHEREOF, the undersigned trustee of the above-referenced organization
has hereunto set his hand this 30th day of January, 1997.
/s/ Peter R. Sawers
----------------------------------------
STATE OF ILLINOIS )
) SS
COUNTY OF COOK )
On this 30th day of January, 1997, personally appeared before me, a Notary
Public in and for said County and State, the person named above who is known to
me to be the person whose name and signature is affixed to the foregoing Power
of Attorney and who acknowledged the same to be his voluntary act and deed for
the intent and purposes therein set forth.
- --------------------------------
"OFFICIAL SEAL"
VIRGINIA L. CORCORAN
Notary Public, State of Illinois
My Commission Expires 10/26/97
- --------------------------------
/s/ Virginia L. Corcoran
----------------------------------------
My Commission Expires: 10/26/97
<PAGE>
NUVEEN FLAGSHIP MUNICIPAL TRUST
-------------
POWER OF ATTORNEY
-------------
KNOW ALL MEN BY THESE PRESENTS, that the undersigned, a trustee of the above
referenced organization, hereby constitutes and appoints TIMOTHY R.
SCHWERTFEGER, ANTHONY T. DEAN, BRUCE P. BEDFORD, LARRY W. MARTIN, GIFFORD R.
ZIMMERMAN, AND THOMAS S. HARMAN each of them (with full power to each of them to
act alone) his true and lawful attorney-in-fact and agent, for him on his
behalf and in his name, place and stead, in any and all capacities, to sign,
execute and affix his seal thereto and file one or more Registration Statements
on Form N-1A, under the Securities Act of 1933, as amended, and the Investment
Company Act of 1940, as amended, including any amendment or amendments thereto,
with all exhibits, and any and all other documents required to be filed with any
regulatory authority, federal or state, relating to the reorganization, without
limitation, granting unto said attorneys, and each of them, full power and
authority to do and perform each and every act and thing requisite and necessary
to be done in order to effectuate the same as fully to all intents and purposes
as he might or could do if personally present, hereby ratifying and confirming
all that said attorneys-in-fact and agents, or any of them, may lawfully do or
cause to be done by virtue hereof.
IN WITNESS WHEREOF, the undersigned trustee of the above-referenced organization
has hereunto set his hand this 30th day of January, 1997.
/s/ Robert P. Bremner
----------------------------------------
STATE OF ILLINOIS )
) SS
COUNTY OF COOK )
On this 30th day of January, 1997, personally appeared before me, a Notary
Public in and for said County and State, the person named above who is known to
me to be the person whose name and signature is affixed to the foregoing Power
of Attorney and who acknowledged the same to be his voluntary act and deed for
the intent and purposes therein set forth.
- --------------------------------
"OFFICIAL SEAL"
VIRGINIA L. CORCORAN
Notary Public, State of Illinois
My Commission Expires 10/26/97
- --------------------------------
/s/ Virginia L. Corcoran
----------------------------------------
My Commission Expires: 10/26/97
<PAGE>
NUVEEN FLAGSHIP MUNICIPAL TRUST
-------------
POWER OF ATTORNEY
-------------
KNOW ALL MEN BY THESE PRESENTS, that the undersigned, a trustee of the above
referenced organization, hereby constitutes and appoints TIMOTHY R.
SCHWERTFEGER, ANTHONY T. DEAN, BRUCE P. BEDFORD, LARRY W. MARTIN, GIFFORD R.
ZIMMERMAN, AND THOMAS S. HARMAN each of them (with full power to each of them to
act alone) his true and lawful attorney-in-fact and agent, for him on his
behalf and in his name, place and stead, in any and all capacities, to sign,
execute and affix his seal thereto and file one or more Registration Statements
on Form N-1A, under the Securities Act of 1933, as amended, and the Investment
Company Act of 1940, as amended, including any amendment or amendments thereto,
with all exhibits, and any and all other documents required to be filed with any
regulatory authority, federal or state, relating to the reorganization, without
limitation, granting unto said attorneys, and each of them, full power and
authority to do and perform each and every act and thing requisite and necessary
to be done in order to effectuate the same as fully to all intents and purposes
as he might or could do if personally present, hereby ratifying and confirming
all that said attorneys-in-fact and agents, or any of them, may lawfully do or
cause to be done by virtue hereof.
IN WITNESS WHEREOF, the undersigned trustee of the above-referenced organization
has hereunto set his hand this 30th day of January, 1997.
/s/ William J. Schneider
----------------------------------------
STATE OF ILLINOIS )
) SS
COUNTY OF COOK )
On this 30th day of January, 1997, personally appeared before me, a Notary
Public in and for said County and State, the person named above who is known to
me to be the person whose name and signature is affixed to the foregoing Power
of Attorney and who acknowledged the same to be his voluntary act and deed for
the intent and purposes therein set forth.
- --------------------------------
"OFFICIAL SEAL"
VIRGINIA L. CORCORAN
Notary Public, State of Illinois
My Commission Expires 10/26/97
- --------------------------------
/s/ Virginia L. Corcoran
----------------------------------------
My Commission Expires: 10/26/97
<PAGE>
NUVEEN FLAGSHIP MUNICIPAL TRUST
---------------
POWER OF ATTORNEY
---------------
KNOW ALL MEN BY THESE PRESENTS, that the undersigned, a trustee of the above
referenced organization, hereby constitutes and appoints TIMOTHY R.
SCHWERTFEGER, ANTHONY T. DEAN, BRUCE P. BEDFORD, LARRY W. MARTIN, GIFFORD R.
ZIMMERMAN, AND THOMAS S. HARMAN each of them (with full power to each of them to
act alone) his true and lawful attorney-in-fact and agent, for him on his behalf
and in his name, place and stead, in any and all capacities, to sign, execute
and affix his seal thereto and file one or more Registration Statements on Form
N-1A, under the Securities Act of 1933, as amended, and the Investment Company
Act of 1940, as amended, including any amendment or amendments thereto, with all
exhibits, and any and all other documents required to be filed with any
regulatory authority, federal or state, without limitation, granting unto said
attorneys, and each of them, full power and authority to do and perform each and
every act and thing requisite and necessary to be done in order to effectuate
the same as fully to all intents and purposes as he might or could do if
personally present, hereby ratifying and confirming all that said attorneys-in-
fact and agents, or any of them, may lawfully do or cause to be done by virtue
hereof.
IN WITNESS WHEREOF, the undersigned trustee of the above-referenced organization
has hereunto set his hand this 1st day of July, 1997.
/s/ Judith M. Stockdale
------------------------------
STATE OF ILLINOIS )
)SS
COUNTY OF COOK )
On this 1st day of July, 1997, personally appeared before me, a Notary Public in
and for said County and State, the person named above who is known to me to be
the person whose name and signature is affixed to the foregoing Power of
Attorney and who acknowledged the same to be his voluntary act and deed for the
intent and purposes therein set forth.
- --------------------------------
"OFFICIAL SEAL"
VIRGINIA L. CORCORAN
Notary Public, State of Illinois
My Commission Expires 10/26/97
- --------------------------------
/s/ Virginia L. Corcoran
------------------------------
My Commission Expires: 10/26/97
<PAGE>
EXHIBIT 99(b)
Certified Resolution
The undersigned, Gifford R. Zimmerman, hereby certifies, on behalf of Nuveen
Flagship Municipal Trust (the "Fund"), (1) that he is the duly elected,
qualified and acting Assistant Secretary of the Fund, and that as such Assistant
Secretary he has custody of its corporate books and records, (2) that attached
to this Certificate is a true and correct copy of a resolution duly adopted by
the Board of Trustees of the Fund at a meeting held on January 30, 1997, and (3)
that said resolution has not been amended or rescinded and remains in full force
and effect.
July 15, 1997
/s/ Gifford R. Zimmerman
-----------------------------------------
Gifford R. Zimmerman, Assistant Secretary
<PAGE>
FURTHER RESOLVED, that each member of the Board and officer of the Fund who may
be required to execute the registration statement on Form N-1A, or any amendment
or amendments thereto, be, and each of them hereby is, authorized to execute a
power of attorney appointing Timothy R. Schwertfeger, Anthony T. Dean, Bruce P.
Bedford, Larry W. Martin, Gifford R. Zimmerman, and Thomas S. Harman, and each
of them, his true and lawful attorneys-in-fact and agents, with full power of
substitution and resubstitution, for him and in his name, place and stead, in
any and all capacities, to sign the registration statement, and any and all
amendments thereto, and to file the same, with all exhibits thereto, and other
documents in connection therewith, with the Securities and Exchange Commission,
granting unto said attorneys-in-fact and agents, and each of them, full power
and authority to do and perform each and every act and thing requisite or
necessary to be done, as fully to all intents and purposes as he might or could
do in person, and ratifying and confirming all that said attorneys-in-fact and
agents or any of them, or their or his substitute or substitutes, may lawfully
do or cause to be done by virtue thereof.
<PAGE>
EXHIBIT 99(c)
NUVEEN UNIT TRUSTS
NUVEEN MUTUAL FUNDS
NUVEEN EXCHANGE-TRADED FUNDS
NUVEEN ADVISORY CORP.
NUVEEN INSTITUTIONAL ADVISORY CORP.
NUVEEN ASSET MANAGEMENT INC.
JOHN NUVEEN & CO. INCORPORATED
----------------------------
Standards and Procedures
Regarding
Conflicts of Interest
----------------------------
Code of Ethics
And
Reporting Requirements
The Securities and Exchange Commission, in Investment Company Act Release No.
11421, has adopted Rule 17j-1 "to provide guidance to investment companies as to
the minimum standards of conduct appropriate for persons who have access to
information regarding the purchase and sale of portfolio securities by
investment companies." The Rule requires registered investment companies, their
investment advisers and their principal underwriters to adopt codes of ethics
and reporting requirements to guard against violations of the standards set
forth in the Rule and the principles provided below and to establish guidelines
for the conduct of persons who (1) may obtain material non-public information
concerning securities held by or considered for purchase or sale by any series
of the Nuveen Unit Trusts (the "Trusts") or by any of the Nuveen-sponsored
registered management investment companies (the "Funds") or non-management
investment company clients ("Clients") to which Nuveen Advisory Corp., Nuveen
Asset Management Inc. or Nuveen Institutional Advisory Corp. act as investment
advisers or (2) may make any recommendation or participate in the determination
of which recommendation shall be made concerning the purchase or sale of any
securities by a Trust, Fund or Client. The equity Funds advised pursuant to
subadvisory agreements with non-controlled advisers ("Subadvised Funds")
acknowledge that, in lieu of being subject to this Code of Ethics, all employees
and other persons affiliated with such subadvisers shall be subject to the
subadviser's Code of Ethics. In addition, due to limited access to information
regarding the subadvisers' portfolio activities concerning equity securities,
Nuveen personnel who are access persons of the Subadvised Funds shall not be
required to preclear any transactions solely for being access persons of such
Funds. This Code of Ethics (the "Code") consists of six sections--1. Statement
of General Principles; 2. Definitions; 3. Exempted Transactions; 4.
Prohibitions; 5. Reporting Requirements; and 6. Sanctions.
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I. Statement of General Principles
The Code is based upon the principle that the officers, directors and
employees of a Fund, Nuveen Advisory Corp., Nuveen Institutional Advisory
Corp., Nuveen Asset Management Inc. and John Nuveen & Co. Incorporated owe
a fiduciary duty to, among others, the unitholders and shareholders of the
Trusts and Funds and the Clients, to conduct their personal securities
transactions in a manner which does not interfere with Trust, Fund or
Client portfolio transactions or otherwise take unfair advantage of their
relationship to the Trusts, Funds or Clients. In accordance with this
general principle, persons covered by the Code must: (1) place the
interests of unitholders and shareholders of the Trusts and Funds and the
Clients first; (2) execute personal securities transactions in compliance
with the Code; (3) avoid any actual or potential conflict of interest and
any abuse of their positions of trust and responsibility; and (4) not take
inappropriate advantage of their positions. It bears emphasis that
technical compliance with the Code's procedures will not automatically
insulate from scrutiny trades which show a pattern of abuse of the
individual's fiduciary duties to the Trust, Fund or Client. In addition, a
violation of the general principles of the Code may constitute a punishable
violation.
II. Definitions
As used herein:
(1) "Access person" shall mean:
(a) Any director, officer or advisory person of any Fund or Trust or
of Nuveen Advisory Corp., Nuveen Institutional Advisory Corp. or
Nuveen Asset Management Inc.
(b) Any director or officer of John Nuveen & Co. Incorporated who in
the ordinary course of his business makes, participates in or
obtains information regarding the purchase or sale of securities
for the Funds, Trusts or Clients or whose functions or duties as
part of the ordinary course of his business relate to the making
of any recommendation to such Fund, Trust or Client regarding the
purchase or sale of securities.
A list of access persons of all entities other than the Flagship
Utility Income Fund ("Utility Fund") is attached as Exhibit A. A list
of persons deemed to be access persons of the Utility Fund is attached
as Exhibit B ("Utility Fund Access Persons").
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For purposes of this section "advisory person" shall mean:
(a) Any employee of a Fund, of Nuveen Advisory Corp., of Nuveen
Institutional Advisory Corp., of Nuveen Asset Management Inc. or of
John Nuveen & Co. Incorporated who, in connection with his or her
regular functions or duties, makes, participates in, or obtains
information, regarding the purchase or sale of a security by a Trust,
Fund or Client or whose functions relate to the making of any
recommendations with respect to such purchases or sales; and
(b) Any director or officer of John Nuveen & Co. Incorporated who obtains
information concerning recommendations made to such Trust, Fund or
Client with respect to the purchase or sale of a security.
(2) A security is "being considered for purchase or sale" when a
recommendation to purchase or sell a security has been made and
communicated and, with respect to the person making the recommendation,
when such person considers making such recommendation.
(3) Beneficial ownership shall be interpreted in accordance with the definition
set forth in Rule 16a-1(a)(2) under the Securities Exchange Act of 1934.
Section 16a-1(a)(2) specifies that a person will be deemed to be the
"beneficial owner" of securities that such individual, directly or
indirectly, through any contract, arrangement, understanding, relationship
or otherwise has or shares in the opportunity to profit or share in any
profit derived from a transaction in the subject security. In addition, a
person will be deemed to be the beneficial owner of securities:
(a) held by members of such person's immediate family sharing the same
household;
(b) held by a general or limited partnership for which such person is a
general partner;
(c) held in a trust:
(i) of which such person is trustee and the trustee or members of
his or her immediate family have a pecuniary interest in the
trust;
(ii) in which such person has a vested beneficial interest or shares
in investment control with the trustee;
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4
(iii) of which such person is settlor and which the settlor has
the power to revoke the trust without consent of the
beneficiaries; or
(iv) certain other trusts as set forth in Rule 16a-1(a)(2)
under the Securities Exchange Act of 1934.
A person will not be deemed to be the beneficial owner of
securities held in the portfolio of a registered investment
company solely by reason of his or her ownership of shares or
units of such registered investment company.
(4) "Security" shall mean any stock, bond, debenture, evidence of
indebtedness or in general any other instrument defined to be a
security in Section 2(a)(36) of the Investment Company Act of 1940
except that it shall not include securities issued by the Government
of the United States, short term debt securities which are "government
securities" within the meaning of Section 2(a)(16) of the Investment
Company Act of 1940, bankers' acceptances, bank certificates of
deposit, commercial paper and shares of registered open-end
investment companies.
(5) "Purchase of sale of a security" shall include any transaction in
which a beneficial interest in a security is acquired or disposed of,
including but not limited to the writing of an option to purchase or
sell a security or the cancellation of a good-until-canceled order.
(6) "Control" shall have the same meaning as set forth in Section 2(a) (9)
of the Investment Company Act of 1940.
(7) "Investment personnel" shall mean any employee of Nuveen Advisory
Corp., Nuveen Institutional Advisory Corp., Nuveen Asset Management
Inc. or John Nuveen and Co. Incorporated who acts as a portfolio
manager or as an analyst or trader who provides information or advice
to the portfolio manager or who helps execute the portfolio manager's
decisions. A list of investment personnel of all entities other than
the Utility Fund is included in Exhibit A. A list of persons deemed to
be investment personnel of the Utility Fund is included in Exhibit B.
Investment personnel are also access persons by definition.
(8) "Portfolio manager" shall mean any employee of Nuveen Advisory Corp.,
Nuveen Institutional Advisory Corp., Nuveen Asset Management Inc. or
John Nuveen & Co. Incorporated who is entrusted with the direct
responsibility and authority to make investment decisions affecting a
Trust, Fund or Client. A list of portfolio managers of all entities
other than the Utility Fund is included in Exhibit A. A list
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5
of persons deemed to be portfolio managers of the Utility Fund is
included in Exhibit B. Portfolio managers are also investment
personnel and access persons by definition.
(9) "Utility Fund Eligible Securities" shall include preferred and common
stock of companies in the public utilities industry, such as companies
principally engaged in the production, transmission or distribution of
electric energy, gas, water, or communications services or in solid
waste disposal.
III. Exempted Transactions
The prohibitions of Section IV of this Code shall not apply to:
(1) Purchases or sales affecting any account over which the party involved
has no direct or indirect influence or control;
(2) Purchases or sales which are non-volitional on the part of either the
party involved or a Trust, Fund or Client;
(3) Purchases which are part of an automatic dividend reinvestment plan.
(4) Purchases effected upon the exercise or rights issued by an issuer pro
rata to all holders of a class of its securities, to the extent such
rights were acquired from such issuer, and sales of such rights so
acquired.
IV. Prohibitions
(1) Unless such transaction is exempted above or is previously cleared in
the manner described in paragraph (9) below, no access person shall
purchase or sell the following securities for his or her own account
or for any account in which he or she has any beneficial ownership:
(a) securities offered in a private placement;
(b) shares of The John Nuveen Company;
(c) municipal securities (other than variable rate securities with
reset periods of 6 months or less);
(d) shares of a Nuveen-sponsored exchange-traded fund (excluding
preferred shares of those funds); or
(e) Utility fund Eligible Securities (for Utility Fund Access Persons
only).
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6
The purchase of securities identified in paragraph (1)(a) by
investment personnel must also comply with paragraph (4) below.
Directors of the Funds who are not "interested persons" of the Funds
are not subject to the prohibition of subparagraph (a) above and are
only subject to subparagraphs (c) and (e) to the extent such
director purchases or sells a security that he knows, or reasonably
should have known, is being considered for purchase or sale by a
Trust, Fund or Client. Individuals who are only non-interested
directors of the Nuveen open-end Funds shall not be subject to the
prohibition of subparagraph (d) above.
(2) No portfolio manager shall execute a securities transaction on a day
during which a Trust, Fund or Client that is managed or surveyed by
the company he is employed by has a pending "buy" or "sell" order in
that same security until that order is executed or withdrawn.
However, this prohibition shall not apply to securities transactions
involving a security held by a Fund and invested and managed under a
subadvisory agreement unless the portfolio manager knows, or
reasonably should have known, that the Fund has a pending "buy" or
"sell" order involving such security. No other access person shall
execute a securities transaction on a day during which a Trust, Fund
or Client has a pending "buy" or "sell" order in that same security
until that order is executed or withdrawn if that person knows, or
reasonably should have known, an order is pending. In addition, only
Utility Fund Access Persons shall be subject to the restrictions
imposed by this paragraph for securities held or considered for
purchase by Utility Fund. Trades made in violation of this
prohibition shall be unwound or, if that is impractical, any profits
realized must be disgorged to a charitable organization.
(3) Investment personnel shall not purchase any securities in an initial
public offering other than an offering of securities issued by
municipal or United States government entities.
(4) Unless such transaction is previously approved in the manner
described in paragraph (10) below and the criteria set forth in that
paragraph are followed, investment personnel shall not purchase any
security in a private placement.
(5) Investment personnel shall not profit in the purchase and sale, or
sale and purchase, of the same (or equivalent) security within 60
calendar days if such security is a municipal security or shares
issued by a Nuveen-sponsored exchange-traded fund. In addition,
Utility Fund investment personnel shall not profit in such purchases
or sales or sales and purchases of the same (or equivalent) security
within 60 calendar days is such security is a Utility Fund Eligible
Security. Trades made in violation of this prohibition shall be
unwound or, if that is impractical, any profits realized must be
disgorged to a charitable organization.
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7
(6) Investment personnel shall not accept any gift or other thing of
material value from any person or entity that does business with or
on behalf of a Trust, Fund or Client. For purposes of this
prohibition the term "material value" shall have the same meaning
expressed in Rule 2830 of the National Association of Securities
Dealers, Inc.'s Conduct Rules.
(7) Unless such service is previously cleared in the manner described in
paragraph (11) below and the criteria set forth in that paragraph are
followed, investment personnel shall not serve as board members or
other decision-makers for entities that issue municipal securities.
In addition, Utility Fund investment personnel shall not serve as a
board member or decision-maker for a company that issues Utility Fund
Eligible Securities without preclearance.
(8) No portfolio manager of a Trust, Fund or Client shall purchase or
sell any security within seven calendar days before or after the
Trust, Fund or Client he surveys or manages trades or considers to
purchase or sell such security. This prohibition shall not apply to
securities invested and managed under a subadvisory agreement. Trades
made in violation of this prohibition should be unwound or, if that
is impractical, any profits realized must be disgorged to a
charitable organization.
(9) An access person may request clearance of a transaction otherwise
prohibited by paragraph (1) above prior to the placement of any order
in connection therewith by submitting a written or oral request for
clearance to the General Counsel of John Nuveen & Co. Incorporated or
his designee. Unless specifically exempted herein, no such
transaction may be effected without the prior clearance of the
transaction. Clearance may be reflected in a written or an electronic
report. Clearance shall be valid for three business days. Clearance
shall not be granted for municipal security limit orders.
(10) Investment personnel may request approval of a transaction otherwise
prohibited by paragraph (4) above prior to the placement of any order
in connection therewith by submitting a written request for approval
to the General Counsel of John Nuveen & Co. Incorporated or his
designee. Unless specifically exempted herein, no such transaction
may be effected without the prior clearance of the transaction.
Clearance may be reflected in a written or an electronic report. Any
approval shall be valid for three business days. Transactions may be
approved only if the party clearing the transaction takes into
account, among other factors, whether the investment opportunity
should be reserved for a Trust, Fund or Client and whether the
opportunity is being offered to an individual by virtue of his or her
position. In addition, investment personnel who receive authorization
to purchase securities in
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8
a private placement have an affirmative duty to disclose that
position to the General Counsel or his designee if he or she plays
a role in a Trust's, Fund's or Client's subsequent investment
decision regarding the same issuer. Once such disclosure is made,
the General Counsel or his designee shall assemble a commission of
investment personnel with no personal interest in the issuer
involved to independently review the Trust's, Fund's or Client's
investment decision.
(11) Investment personnel may request clearance of service otherwise
prohibited by paragraph (7) above, prior to acceptance of any such
position, by submitting a written request for clearance to the
General Counsel of John Nuveen & Co. Incorporated or his designee.
Such request shall state the position sought, the reason service is
desired and any possible conflicts of interest known at the time of
the request. No such position may be accepted without prior
clearance. Clearance may be reflected in a written or an electronic
report. Service may be cleared only if the party clearing the
transaction determines that service in that capacity would not be
inconsistent with the interests of the Trusts, Funds or Clients.
In addition, investment personnel who receive authorization to
serve in such a capacity must be isolated through "Chinese Wall"
procedures from those making investment decisions regarding
securities issued by the entity involved.
V. Reporting Requirements
(1) Every access person (other than directors of a Fund who are not
"interested persons" of such Fund) shall report to the Legal
Department of John Nuveen & Co. Incorporated details of each
transaction by reason of which he or she acquires any direct or
indirect beneficial ownership of any security (as defined in
Section II herein). Notwithstanding the foregoing, an access person
need not make a report pursuant hereto where such report would
duplicate information recorded pursuant to Rules 204-2(a)(12) or
204-2(a)(13) under the Investment Advisers Act of 1940. In addition
to the reporting requirement expressed above, access persons (other
than directors who are not "interested persons") shall authorize
the Legal Department to direct their broker or brokers to supply to
the Legal Department, on a timely basis, duplicate copies of
confirmations of all securities transactions and copies of periodic
statements for all securities accounts involving securities in
which such access person acquires or disposes of direct or indirect
beneficial ownership. Such duplicate confirmations and periodic
statements received during the prescribed period shall satisfy the
reporting requirements set forth in this paragraph. Also, trades
executed through Nuveen or in an account in which Nuveen is the
broker of record shall be deemed to have been reported for purposes
of this paragraph. Notwithstanding the provisions of this
paragraph, a report shall
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9
not be required for purchases and sales in any account over which
the party involved does not have direct or indirect influence or
control.
(2) Every director of a Fund who is not an "interested person" of such
Fund shall be required to report the details of each transaction
with respect to which such director knew or, in the ordinary course
of fulfilling his or her official duties as a director of the Fund,
should have known that during the 15 day period immediately
preceding or after the date of the transaction in a security by the
director such security is or was purchased or sold by the Fund or
such purchase or sale by the Fund is or was considered by the Fund
or its investment adviser.
(3) Every report required to be made pursuant to paragraphs 1 and 2 of
this Section (other than duplicate copies of confirmations and
periodic statements) shall be made not later than 10 days after the
end of the calendar quarter in which the transaction to which the
report relates was effected, and shall contain the following
information:
(a) the date of the transaction, the title and the number of
shares, or principal amount of each security involved;
(b) the nature of the transaction (i.e., purchase, sale or any
other type of acquisition or disposition);
(c) the price at which the transaction was effected; and
(d) the name of the broker, dealer or bank with or through whom
the transaction was effected.
Any such report may contain a statement that the report shall not be
construed as an admission by the person making such report that he
or she has or disposed of any direct or indirect beneficial
ownership in the security to which the report relates.
(4) The reporting requirements established pursuant to paragraphs 1 and
2 of this Section (other than duplicate copies of confirmations and
periodic statements) shall apply only to transactions by an access
person in securities in which such access person has, or by reason
of such transaction acquires or disposes of, any direct or indirect
beneficial ownership in the security.
(5) Investment personnel shall disclose to the General Counsel of John
Nuveen & Co. Incorporated all personal securities holdings within 10
days of commencement of employment as an investment person and shall
continue to disclose such holdings on an annual basis.
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VI. Sanctions
Upon discovery of a violation of this Code, including either
violations of the enumerated provisions or the general principles
provided, any Fund, Nuveen Advisory Corp., Nuveen Institutional
Advisory Corp., Nuveen Asset Management Inc. or John Nuveen & Co.
Incorporated may impose such sanctions as it deems appropriate,
including, inter alia, a letter of censure or suspension or
termination of the employment of the violator. All material violations
of this Code and any sanctions imposed with respect thereto shall be
reported periodically to the board of directors of the management
investment company with respect to securities of which the violation
occurred, or to the Executive Committee of John Nuveen & Co.
Incorporated if the violation was with respect to securities of any
series of the Nuveen Unit Trusts, or to the board of directors of
Nuveen Institutional Advisory Corp., Nuveen Asset Management Inc. or
Nuveen Advisory Corp. with respect to securities of non-management
investment company clients advised by these entities.
Revised December 31, 1996
