<PAGE>
NUVEEN
Municipal
Bond Funds
October 31, 1997
Semiannual Report
Dependable, tax-free income
to help you keep more of
what you earn.
[PHOTO APPEARS HERE]
National
National
Insured
<PAGE>
Contents
1 Dear Shareholder
3 Answering Your Questions
6 Municipal Bond
Performance Overview
8 Insured Municipal Bond
Performance Overview
11 Financial Section
62 Additional Investment Opportunities
63 Fund Information
<PAGE>
[PHOTO OF TIMOTHY R. SCHWERTFEGER APPEARS HERE]
Timothy R. Schwertfeger
Chairman of the Board
Wealth takes a lifetime to build. Once achieved, it should be preserved.
Dear Shareholder
It's a pleasure to report to you on the performance of your Nuveen municipal
bond fund. Over the past 12 months, the funds have performed well, rewarding
investors with dependable tax-free income and attractive returns.
Dividend stability continues to be a hallmark of the Nuveen municipal bond
funds. Both the Nuveen Municipal Bond Fund and the Nuveen Insured Municipal Bond
Fund paid steady dividends throughout the year, including slight increases in
February. As of October 31, 1997 , Class A shareholders in the Municipal Bond
Fund were receiving a yield on net asset value of 4.37%, while Class A
shareholders of the Insured Municipal Bond Fund received 4.17%. To match these
yields, investors in the 31% federal tax bracket would have had to earn 6.33%
and 6.04%, respectively, on taxable alternatives to match the yields of the
Nuveen funds on an after-tax basis.
As 1997 draws to a close, it seems appropriate to take a moment to look back
over what has been an exceptional time for the American economy, the financial
markets--and the investors in those markets. The year has been distinguished by
continued economic strength, the lowest unemployment rates in more than two
decades, and progress on fiscal issues, including a reduction in the federal
deficit. While much of investors' attention has remained focused on the stock
market, the achievements of the bond market should not be overlooked. During
1997, the environment for bond performance has been enhanced by a substantial
decline in interest rates, reflecting investors' confidence that infla-
1
<PAGE>
"The funds have performed well, rewarding investors with dependable tax-free
income and attractive returns."
tion can remain near its current annual rate of 2.2%, one of the lowest levels
for the Consumer Price Index in 30 years.
The events of 1997 have also focused renewed attention on the need for
diversification and asset allocation. Stock market volatility, especially in
late October, provided a vivid illustration of the steadying effect that fixed-
income investments can provide in a well-constructed investment portfolio.
Nuveen mutual funds provide an excellent balance to other stock and bond
investments, and their current yields make them very attractive.
You already know you can rely on Nuveen to provide the tax-advantaged
investments you need to pursue your investment goals. Your financial adviser can
introduce you to a variety of other Nuveen products and services to round out
your investment portfolio, including the Nuveen Growth and Income Stock Fund and
two new balanced stock and bond funds. We have also expanded our private asset
management capabilities through the acquisition of Rittenhouse Financial
Services, a well-respected growth investment manager. We encourage you to talk
with your financial adviser about ways to complement your current Nuveen
investment by taking advantage of these additional products and services.
We at Nuveen remain committed to providing you with quality investment solutions
that withstand the test of time. We thank you for your confidence in us and our
family of investments, and we look forward to our next report to you.
Sincerely,
/s/ Timothy R. Schwertfeger
Timothy R. Schwertfeger
Chairman of the Board
December 15, 1997
2
<PAGE>
Answering Your Questions
Ted Neild, managing director of Nuveen's portfolio management team, talks about
the municipal bond market and offers insights into factors that affected the
performance of th e funds over the past year.
What economic and market factors influenced the performance of municipal bonds
over the past year?
Over the past 12 months, the performance of the municipal bond market was
influenced by three major factors: the continued strength of the U.S. economy,
minimal inflation (both of which are reflected in the steady-to-declining
interest rates evident during the year), and volatility in the equity markets.
During 1997, these factors contributed to a positive environment for fixed-
income investments, including municipal issues.
Between November 1996 and October 1997, the yield on the 30-year Treasury bond
dropped from 6.68% to 6.15%, and the municipal market followed suit, as the
yield on the Bond Buyer 40 declined from 5.80% to 5.40%. The spread between tax-
free municipal bonds and taxable Treasury bonds remained tight, making municipal
bonds very attractive. The strong total returns produced in this environment
were somewhat muted by a heavy supply of newly issued bonds that temporarily
impacted bond prices. The increased supply worked to our advantage, however, as
it expanded opportunities to find value in the marketplace.
How have these funds performed during this period?
The total return on net asset value for Class A shares of the Nuveen Municipal
Bond Fund was 8.04% for the 12 months ended October 31, 1997. This compares with
the one-year average return of 8.12% for the peer group of national municipal
bond funds tracked by Lipper Analytical Services. The Insured Municipal Bond
Fund had a total return of 7.69% for Class A shares, outpacing its Lipper peer
group average for national insured municipal bond funds of 7.38%.
3
<PAGE>
"Looking at the year ahead, we believe the overall market will continue to
strike a good balance between supply and demand."
Over the past year, we have chosen to hold most bonds in these portfolios, with
their emphasis on current income and price stability, rather than sell them and
incur capital gains. In this way, we were able to maintain attractive yields,
reduce price volatility, and limit capital gain distributions to shareholders,
resulting in more tax-efficient funds.
What are your key strategies for the coming year?
We are currently pursuing several strategies aimed at enhancing the structure of
the portfolios. Specifically, we will be focusing on upgrading the call
protection of the funds. By selling bonds with shorter call protection to retail
buyers, we can redeploy assets into the institutional and new issue markets,
extending call protection while supporting the funds' dividend yields. We will
also be exploring opportunities to purchase discount bonds, which offer the
potential for price appreciation as well as longer duration and added income
stability if interest rates continue to decline. As long as credit spreads are
tight, we will continue to take advantage of opportunities to purchase bonds
with high credit quality at yields that are similar to bonds with lower ratings.
During the past year, as the yield differentials between AAA and BBB bonds
narrowed, we were able to buy the more highly rated bonds without sacrificing
much yield, thereby enhancing the credit quality of our portfolios. We believe
that if credit spreads widen again, these high-quality issues will increase in
value relative to lower-rated bonds.
As part of our value investing approach, we will also continue to look for bonds
that offer good long-term value with the potential for appreciating returns. At
Nuveen, our Research Department provides the in-depth expertise and practical
knowledge--backed by a century of experience--that make the difference in
uncovering bonds that perform well throughout market cycles.
We also plan to take advantage of the supply-and-demand opportunities created by
new issues and explore bonds
4
<PAGE>
that may be overlooked in the secondary markets as attention focuses on new
issues. Excess supply, particularly in New York and the Sunbelt states, should
create buying opportunities. In New York, the supply of newly issued bonds rose
36% in the first nine months of 1997, compared with a 17% increase in municipal
supply nationally. Typically, such heavy supply temporarily depresses bond
prices, enabling us to inexpensively purchase longer-term bonds and enhance the
call protection and relative performance of our funds.
What is your outlook for the municipal market?
Looking at the year ahead, we believe the overall market will continue to strike
a good balance between supply and demand. We expect supply to increase as new
issuers enter the market. A continued decline in yields could also cause new
supply to come to market through refunding of current debt. On the demand side,
volatility in the equity markets, plus the potential for a weakening of the
economy, could spark increased interest in bonds of all types.
Over the past year, we have seen the number of advance refundings by bond
issuers rise. If the lower interest rate environment continues, we can expect
more issuers to follow their example. In an advance refunding, the proceeds of a
new bond issue are invested in U.S. government or agency securities, with the
bonds secured by project revenues or general tax receipts. The cash from the
escrow account is used to pay off the debt on the original bond issue. Because
the coupon rate of the original bond is typically higher than that of the new
issue, which is now secured by the federal government and rated AAA, the
refunded bonds will appreciate in value.
Overall, we expect the funds to continue to benefit from tight credit spreads,
as we take advantage of opportunities to enhance the credit quality and
structure of the portfolios.
5
<PAGE>
Nuveen Municipal Bond Fund
Performance Overview
As of October 31, 1997
Morningstar Rating/1/
*****
<TABLE>
<CAPTION>
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) $9.47 $9.47 $9.46 $9.48
................................................................................
CUSIP 67065Q202 67065Q103 67065Q301 67065Q400
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Total Net Assets ($000) $2,931,503
................................................................................
Average Weighted Maturity (Years) 21.00
................................................................................
Average Weighted Duration (Years) 7.19
- --------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
Annualized Total Return/2/
- --------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Share Class A(NAV) A(Offer) B C R
1-Year 8.04% 3.50% 7.39% 7.32% 8.38%
................................................................................
5-Year 6.80% 5.89% 6.08% 6.03% 7.08%
................................................................................
10-Year 8.33% 7.87% 7.74% 7.54% 8.61%
- --------------------------------------------------------------------------------
Tax-Free Yields
- --------------------------------------------------------------------------------
Share Class A(NAV) A(Offer) B C R
Dist Rate 4.94% 4.73% 4.18% 4.44% 5.13%
................................................................................
SEC 30-Day Yld 4.37% 4.19% 3.63% 3.83% 4.57%
................................................................................
Taxable Equiv Yld/3/ 6.33% 6.07% 5.26% 5.55% 6.62%
- --------------------------------------------------------------------------------
</TABLE>
1 Overall rating for Class R shares within the municipal bond category for the
period ended October 31, 1997. Morningstar proprietary ratings reflect
historical risk-adjusted performance and are subject to change every month.
Ratings are calculated from a fund's three-, five- and 10-year average annual
returns in excess of 90-day Treasury bill returns, with appropriate fee
adjustments and a risk factor that reflects fund performance below 90-day
Treasury bill returns. The fund earned five stars for each of the three-,
five-and 10-year periods ended October 31, 1997. In an investment category,
10% of funds receive five stars. For the period ending October 31, 1997, 1,448
municipal bond funds were rated for the three-year period, 676 for the five-
year period, and 329 for the 10-year period.
2 Class R share returns are actual. Class A, B and C share returns are actual
for the period since class inception; returns prior to class inception are
Class R share returns adjusted for differences in sales charges and expenses,
which are primarily differences in distribution and service fees. Class A
shares have a 4.2% maximum up-front sales charge. Class B shares have a
contingent deferred sales charge (CDSC) that begins at 5% for redemptions
during the first year after purchase and declines periodically to 0% over the
following five years, which is not reflected in the return figures. Class B
shares convert automatically to Class A shares eight years after purchase.
Class C shares have a 1% CDSC for redemptions within one year which is not
reflected in the one-year total return.
3 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.
4 The fund paid shareholders a capital gains distribution in November of
$0.0453 per share.
6
<PAGE>
Credit Quality
[PIE GRAPH APPEARS HERE]
AAA/Pre-Refunded 39%
BBB/NR 8%
A 18%
AA 35%
- --------------------------------
Diversification
[PIE GRAPH APPEARS HERE]
Housing 14%
Water & Sewer 10%
Escrowed Bonds 10%
Other 9%
General Obligation 8%
Transportation 6%
Pollution Control 4%
Utilities 22%
Health Care 17%
- --------------------------------
Dividend History (A Shares)/4/
[BAR GRAPH APPEARS HERE]
<TABLE>
<CAPTION>
Ex Div Date Share Dividend
<S> <C>
11/11/1996 12:00:00 AM 0.0455
12/10/1996 12:00:00 AM 0.0455
1/10/1997 12:00:00 AM 0.0455
2/14/1997 12:00:00 AM 0.046
3/10/1997 12:00:00 AM 0.046
4/10/1997 12:00:00 AM 0.046
5/12/1997 12:00:00 AM 0.046
6/10/1997 12:00:00 AM 0.046
7/10/1997 12:00:00 AM 0.046
8/11/1997 12:00:00 AM 0.046
9/10/1997 12:00:00 AM 0.046
10/10/1997 12:00:00 AM 0.046
</TABLE>
7
<PAGE>
Nuveen Insured Municipal Bond
Fund Performance Overview
As of October 31, 1997
<TABLE>
<CAPTION>
Fund Highlights
================================================================================
<S> <C> <C> <C> <C>
Share Class A B C R
Inception Date 9/94 2/97 9/94 12/86
Net Asset Value (NAV) $11.05 $11.05 $10.95 $11.01
CUSIP 67065Q509 67065Q608 67065Q707 67065Q806
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Total Net Assets ($000) $823,102
Average Weighted Maturity (Years) 23.00
Average Weighted Duration (Years) 6.64
- --------------------------------------------------------------------------------
Annualized Total Return/1/
================================================================================
Share Class A(NAV) A(Offer) B C R
1-Year 7.69% 3.16% 6.91% 7.16% 7.91%
5-Year 7.53% 6.61% 6.71% 6.65% 7.73%
10-Year 9.05% 8.58% 8.41% 8.20% 9.29%
- --------------------------------------------------------------------------------
Tax-Free Yields
================================================================================
Share Class A(NAV) A(Offer) B C R
Dist Rate 5.00% 4.79% 4.24% 4.44% 5.18%
SEC 30-Day Yld 4.17% 3.99% 3.42% 3.62% 4.36%
Taxable Equiv Yld/2/ 6.04% 5.78% 4.96% 5.25% 6.32%
- --------------------------------------------------------------------------------
</TABLE>
1 Class R share returns are actual. Class A, B and C share returns are actual
for the period since class inception; returns prior to class inception are
Class R share returns adjusted for differences in sales charges and expenses,
which are primarily differences in distribution and service fees. Class A
shares have a 4.2% maximum up-front sales charge. Class B shares have a
contingent deferred sales charge (CDSC) that begins at 5% for redemptions
during the first year after purchase and declines periodically to 0% over the
following five years, which is not reflected in the return figures. Class B
shares convert automatically to Class A shares eight years after purchase.
Class C shares have a 1% CDSC for redemptions within one year which is not
reflected in the one-year total return.
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 The fund paid shareholders a capital gains distribution in November of
$0.0376 per share.
8
<PAGE>
Credit Quality
[PIE CHART APPEARS HERE]
Insured 76%
Escrowed 24%
- -----------------------------------
Diversification
[PIE CHART APPEARS HERE]
General Obligation 15%
Health Care 17%
Escrowed Bonds 24%
Utilities 3%
Other 4%
Transportion 4%
Lease Rental 5%
Education 6%
Pollution Control 6%
Housing 8%
Water & Sewer 8%
- -----------------------------------
Dividend History (A Shares)/3/
- -----------------------------------
[BAR CHART APPEARS HERE]
<TABLE>
<CAPTION>
Ex Div Date Share Dividend
<S> <C>
11/11/1996 12:00:00 AM 0.0385
12/10/1996 12:00:00 AM 0.0385
1/10/1997 12:00:00 AM 0.0385
2/14/1997 12:00:00 AM 0.039
3/10/1997 12:00:00 AM 0.039
4/10/1997 12:00:00 AM 0.039
5/12/1997 12:00:00 AM 0.039
6/10/1997 12:00:00 AM 0.039
7/10/1997 12:00:00 AM 0.039
8/11/1997 12:00:00 AM 0.039
9/10/1997 12:00:00 AM 0.039
10/10/1997 12:00:00 AM 0.039
</TABLE>
November 1996 October 1997
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
57 Financial Highlights
11
<PAGE>
Portfolio of Investments (Unaudited)
Municipal Bond
<TABLE>
<CAPTION>
Principal Optional Call Market
Amount Description Provisions* Ratings** Value
- ----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Alaska - 0.4%
$12,375,000 Alaska Housing Finance Corporation, Collateralized 12/03 at 102 Aaa $12,477,218
Home Mortgage Bonds, Series A, 5.850%, 6/01/25
- ----------------------------------------------------------------------------------------------------------------
Arizona - 2.6%
7,750,000 Arizona Board of Regents, Arizona State University, 7/02 at 101 AA 8,087,513
System Revenue Refunding Bonds Series 1992-A,
5.70%, 7/01/12
20,350,000 Salt River Project Agricultural Improvement and 1/02 at 100 AA 20,393,346
Power 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 1/98 at 100 AA 9,144,268
Power 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 5,062,100
36,820,000 4.750%, 1/01/17 1/04 at 100 Aa 34,272,792
- ----------------------------------------------------------------------------------------------------------------
Arkansas - 0.5%
1,500,000 Arkansas Development Finance Authority Drivers' 6/07 at 100 Aaa 1,508,850
License Revenue Bonds (Arkansas State Police-
Headquarters and Wireless Data Equipment),
Series 1997, 5.400%, 6/01/18
11,210,000 Jefferson County, Arkansas, Hospital Refunding 7/03 at 102 A 12,017,905
Revenue Bonds, Series 1993, 6.000%, 7/01/06
- ----------------------------------------------------------------------------------------------------------------
California - 14.8%
21,220,000 California Health Facilities Financing Authority, 7/04 at 102 Aaa 20,795,600
Insured Health Facility Refunding Revenue Bonds
(Catholic Healthcare West), 1994 Series A,
5.000%, 7/01/14
38,795,000 California Statewide Communities Development 7/03 at 102 AA 38,528,090
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 11,706,080
Authority, Insured Health Facilities Revenue,
Certificates of Participation (UniHealth America),
1993 Series A, 5.500%, 10/01/14
</TABLE>
12
<PAGE>
<TABLE>
<CAPTION>
Principal Optional Call Market
Amount Description Provisions* Ratings** Value
- ----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
California - continued
$12,000,000 State Public Works Board of the State of California 11/04 at 102 Aaa $14,130,840
Lease Revenue Bonds (Department of Corrections),
1994 Series A (California State of 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 16,061,904
9,500,000 5.750%, 12/01/19 12/03 at 101 1/2 AA 9,749,280
12,250,000 5.500%, 12/01/23 12/03 at 101 1/2 AA 12,249,388
21,000,000 State of California, Department of Water Resources, 12/03 at 101 AA 19,280,940
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 15,321,339
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 8,568,720
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 10,871,100
15,000,000 6.000%, 1/01/34 1/05 at 102 Baa 15,532,950
17,040,000 Los Angeles Convention and Exhibition Center 8/03 at 102 Aaa 17,075,614
Authority, Lease Revenue Bonds, 1993 Refunding
Series A, The City of Los Angeles, California,
5.125%, 8/15/13
17,575,000 Department of Water and Power of the City of 4/02 at 102 Aa 18,875,902
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 16,384,480
System Revenue Bonds, Series 1993-B,
5.700%, 6/01/23
15,615,000 The City of Los Angeles, California, Wastewater 11/03 at 102 Aaa 15,259,290
System Revenue Bonds, Series 1993-D,
5.200%, 11/01/21
</TABLE>
13
<PAGE>
Portfolio of Investments (Unaudited)
Municipal Bond -- continued
<TABLE>
<CAPTION>
Principal Optional Call Market
Amount Description Provisions* Ratings** Value
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
California -- continued
$ 15,000,000 The City of Los Angeles, California, Wastewater 12/00 at 102 Aaa $ 16,453,950
System Revenue Bonds, Series 1991-D,
6.700%, 12/01/21 (Pre-refunded to 12/01/00)
15,750,000 Los Angeles County, Metropolitan Transportation 7/03 at 102 AA- 15,964,830
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 15,923,965
8,000,000 5.250%, 7/01/23 7/03 at 102 Aaa 7,855,520
Los Angeles County Sanitation District's 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 10,570,140
20,750,000 5.000%, 10/01/23 10/03 at 100 Aa 19,625,973
31,360,000 Los Angeles County Transportation Commission 7/02 at 102 Aaa 35,323,904
(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 4,999,600
California, Water Revenue Bonds, Issue of 1992,
5.500%, 7/01/19
22,220,000 Northern California Power Agency, Hydroelectric 7/98 at 102 A- 23,084,358
Project Number One Revenue Bonds, Refunding
Series E, 7/150%, 7/01/24
15,700,000 Sacramento County Sanitation Districts Financing 12/03 at 102 Aa 14,259,839
Authority, 1993 Revenue Bonds, 4.750%, 12/01/23
8,050,000 The Regents of the University of California, 9/02 at 102 A*** 9,112,278
Refunding Revenue Bonds (Multiple Purpose
Projects), Series A, 6.875%, 9/01/16
(Pre-refunded to 9/01/02)
Colorado - 1.1%
- ------------------------------------------------------------------------------------------------------------------------------------
29,175,000 Colorado Housing and Finance Authority, Single- 11/01 at 102 Aa1 31,001,355
Family Housing Revenue Refunding Bonds,
1991 Series A, 7.250%, 11/01/31
</TABLE>
- ---
14
<PAGE>
<TABLE>
<CAPTION>
Principal Optional Call Market
Amount Description Provisions* Ratings** Value
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Connecticut -- 0.1%
$ 2,970,000 Connecticut Resources Recovery Authority, Bridgeport 1/98 at 101 A $ 3,025,747
Resco Company, L.P. Project Bonds, Series B,
8.625%, 1/01/04
- ------------------------------------------------------------------------------------------------------------------------------------
Florida -- 2.5%
4,500,000 Dade County Health Facilities Authority (Florida), 12/99 at 102 Aaa 4,606,560
Hospital Revenue Bonds, Series 1987
(Mount Sinai Medical Center Project),
8.400%, 12/01/07 (Pre-refunded to 12/01/99)
31,000,000 Hillsborough County Industrial Development Authority, 5/02 at 103 AA 35,956,900
Pollution Control Revenue Refunding Bonds
(Tampa Electric Company Project), Series 1992,
8.000%, 5/01/22
25,000,000 Orlando Utilities Commission, Water and Electric 10/99 at 100 Aa 23,746,000
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 8,175,987
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)
1,385,000 The Elderly Housing Corporation of Sarasota, Inc. 1/98 at 103 N/R 1,429,071
(Elderly Housing Project for the Sarasota Housing
Authority), First Mortgage Revenue Bonds, Series 1978,
7.500%, 7/01/09
- ------------------------------------------------------------------------------------------------------------------------------------
Hawaii -- 0.3%
8,000,000 Department of Budget and Finance of the State of 7/01 at 102 Aaa 9,058,320
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 -- 19.4%
8,500,000 Illinois Development Finance Authority, Revenue and 2/00 at 102 Baa2*** 9,442,565
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 Refunding 7/03 at 102 Aa1 17,243,018
Bonds, The University of Chicago, Series 1993B,
5.600%, 7/01/24
</TABLE>
- ----
15
<PAGE>
Portfolio of Investments (Unaudited)
Municipal Bond -- continued
<TABLE>
<CAPTION>
Principal Optional Call Market
Amount Description Provisions* Ratings** Value
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Illinois -- continued
$ 10,000,000 Illinois Health Facilities Authority, Revenue Bonds, 10/02 at 102 Aaa $ 10,592,100
Series 1992 (Highland Park Hospital),
6.200%, 10/01/22
6,115,000 Illinois Health Facilities Authority, Revenue Refunding 10/03 at 102 A- 6,053,239
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 33,829,980
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 7,563,963
Series 1994 (Southern Illinois Hospital Services),
5.850%, 3/01/14
55,100,000 Illinois Health Facilities Authority, Revenue Bonds, 8/04 at 102 AA 57,305,653
Series 1994A (Northwestern Memorial Hospital),
6.000%, 8/15/24
15,000,000 Illinois Health Facilities Authority, FHA Insured 2/06 at 102 Aaa 15,750,300
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 22,450,987
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 14,110,682
Revenue Bonds), Series S, 5.250%, 6/15/18
15,100,000 State of Illinois, General Obligation Bonds, 10/02 at 102 AA 16,434,991
Series of March 1992 (Full Faith and Credit),
6.200%, 10/01/04
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 15,575,705
5,000,000 5.875%, 6/01/11 6/02 at 102 AA 5,248,350
10,000,000 State of Illinois, General Obligation Bonds, 4/03 at 102 AA 10,254,500
Series of April 1993 (Full Faith & 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 21,462,800
8,655,000 6.200%, 1/01/16 1/03 at 102 Aaa 9,272,534
16,270,000 City of Chicago, General Obligation Bonds 1/03 at 102 Aaa 16,464,589
(Emergency Telephone System), Series 1993,
5.625%, 1/01/23
</TABLE>
16
<PAGE>
<TABLE>
<CAPTION>
Principal Optional Call Market
Amount Description Provisions* Ratings** Value
- ----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Illinois - continued
$ 7,880,000 City of Chicago, General Obligation Bonds, Project 1/04 at 102 Aaa $ 7,687,964
Series 1993, 5.250%, 1/01/18
22,085,000 Chicago Metropolitan Housing Development Corporation, 7/02 at 102 AA 23,485,631
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 7,634,134
Refunding Series 1993, 5.000%, 1/01/16
61,150,000 City of Chicago (Illinois), Chicago-O'Hare International 1/04 at 102 A1 58,953,492
Airport, General Airport Revenue Refunding Bonds,
1993 Series A, 5.000%, 1/01/16
18,710,000 City of Chicago (Illinois), Chicago-O'Hare International 1/04 at 102 Aaa 17,973,574
Airport, General Airport Second Lien, Revenue Refunding
Bonds, 1993 Series C, 5.000%, 1/01/18
22,335,000 City of Chicago, Water Revenue Bonds, Series 1995, 11/06 at 102 Aaa 21,589,011
5.000%, 11/01/15
25,380,000 The County of Cook, Illinois, General Obligation Bonds, 11/03 at 100 Aaa 24,002,627
Series 1993A, 5.000%, 11/15/23
17,300,000 DuPage Water Commission (DuPage, Cook and Will 3/02 at 100 Aaa 17,955,324
Counties, Illinois), General Obligation Water Refunding
Bonds, Series 1992, 5.750%, 3/01/11
9,950,000 DuPage Water Commission (DuPage, Cook and Will 5/03 at 102 Aa1 9,956,070
Counties, Illinois), Water Refunding Revenue Bonds,
Series 1993, 5.250%, 5/01/14
Metropolitan Pier and Exposition Authority (Illinois),
McCormick Place Expansion Project Bonds, Series 1992A:
11,305,000 0.000%, 6/15/17 No Opt. Call Aaa 3,966,133
56,180,000 6.500%, 6/15/27 (Pre-refunded to 6/15/03) 6/03 at 102 Aaa 63,070,477
16,510,000 Metropolitan Pier and Exposition Authority (Illinois), 6/07 at 101 Aaa 16,631,349
Dedicated State Tax Revenue Bonds, Series 1997,
5.125%, 6/01/11
5,000,000 Regional Transportation Authority, Cook, DuPage, Kane, 6/03 at 102 Aaa 5,438,300
Lake, McHenry and Will Counties, Illinois, General
Obligation Refunding Bonds, Series 1993C,
5.800%, 6/01/13 (Pre-refunded to 6/01/03)
</TABLE>
17
<PAGE>
<TABLE>
<CAPTION>
Portfolio of Investments (Unaudited)
Municipal Bond -- continued
Principal Optional Call Market
Amount Description Provisions* Ratings** Value
- -----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Illinois - continued
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 No Opt. Call A $ 85,397
1,705,000 7.750%, 3/01/10 3/98 at 102 A 1,747,676
Indiana - 3.5%
49,600,000 Indiana Health Facilities Financing Authority, 11/03 at 102 AA+ 50,395,584
Hospital Revenue Bonds (Daughters of Charity),
Series 1993, 5.750%, 11/15/22
11,590,000 Indiana Health Facility Financing Authority, 9/02 at 102 Aaa 12,621,626
Hospital Revenue Refunding Bonds, Series 1992A
(Methodist Hospital of Indiana, Inc.),
5.750%, 9/01/11
10,100,000 Indiana State Office Building Commission 12/01 at 102 A1 10,822,150
Correctional Facilities Program, Revenue Bonds,
Series 1991, 6/375%, 7/01/16
2,500,000 The Indianapolis Local Public Improvement Bond 2/03 at 102 A+ 2,763,850
Bank, Series 1992 D Bonds, 6.750%, 2/01/20
12,500,000 The Indianapolis Local Public Improvement Bond 1/03 at 102 Aaa 12,978,625
Bank, Series 1993 A Bonds, 6.000%, 1/101/18
10,835,000 Duneland School Building Corporation, First 8/07 at 101 Aaa 10,988,965
Mortgage Bonds, Series 1997, 5.450%, 8/01/15
2,390,000 Southwind Housing, Inc., 7.125%, 11/15/21 No Opt. Call N/R 2,875,051
Iowa - 0.3%
3,250,000 Iowa Housing Finance Authority, Single Family 2/98 at 100 1/2 Aaa 3,274,798
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 4,180,630
Bonds (Mercy Hospital Project), Series 1992,
6.625%, 7/01/14
Kentucky - 2.9%
2,995,000 Kentucky Housing Corporation, Housing Revenue 7/01 at 102 Aaa 3,177,695
Bonds (FHA Insured/VA Guaranteed),
1991 Series A, 7.250%, 1/01/17
</TABLE>
18
<PAGE>
<TABLE>
<CAPTION>
Principal Optional Market
Amount Description Provisions* Ratings** Value
- --------------------------------------------------------------------------------------------------------------------
Kentucky - continued
<C> <S> <C> <C> <C>
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 $17,854,848
14,400,000 5.400%, 7/01/14 1/04 at 102 Aaa 14,559,840
8,980,000 The Turnpike Authority of Kentucky, Resource Recovery 1/98 at 100 A+ 8,980,539
Road Revenue Refunding Bonds, 1987 Series A,
5.000%, 7/01/08
34,500,000 County of Carroll, Kentucky, Collateralized Pollution 9/02 at 102 Aa2 39,108,855
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 13,720,161
10,000,000 5.700%, 11/15/26 2/04 at 102 AA 10,084,100
- --------------------------------------------------------------------------------------------------------------------
Maryland - 0.1%
2,500,000 Community Development Administration, Maryland 1/07 at 102 Aa2 2,604,800
Department of Housing and Community Development,
Housing Revenue Bonds, Series 1996A, 5.875%, 7/01/16
- --------------------------------------------------------------------------------------------------------------------
Massachusetts - 3.0%
15,000,000 Massachusetts Bay Transportation Authority, Certificate 8/00 at 102 Aaa 16,657,200
of Participation, 1990 Series A, 7.650%, 8/01/15
(Pre-refunded to 8/01/00)
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 7,131,410
9,605,000 6.000%, 4/01/20 4/00 at 100 A 9,763,867
Massachusetts Water Resources Authority, General
Revenue Refunding Bonds, 1993 Series B:
14,765,000 5.250%, 3/01/13 3/03 at 102 A 14,748,463
10,795,000 5.000%, 3/01/22 3/03 at 100 A 10,171,481
26,050,000 Massachusetts Water Resources Authority, General 12/04 at 102 A 25,402,397
Revenue Bonds, 1993 Series C, 5.250%, 12/01/20
5,170,000 The Commonwealth of Massachusetts, General No Opt. Call A1 5,259,906
Obligation Refunding Bonds, 1993 Series C,
4.700%, 8/01/02
</TABLE>
19
<PAGE>
Portfolio of Investments (Unaudited)
Municipal Bond - continued
<TABLE>
<CAPTION>
Principal Optional Call Market
Amount Description Provisions* Ratings** Value
- --------------------------------------------------------------------------------------------------------------------
<C> <S> <C> <C> <C>
Michigan - 5.4%
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 $19,811,990
59,250,000 5.500%, 8/15/23 8/04 at 102 A 59,082,915
3,000,000 Michigan State Hospital Finance Authority, Hospital 10/05 at 100 BBB 3,394,080
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+ 10,565,200
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 12,346,485
Rental Housing Revenue Bonds, 1994 Series B,
5.700%, 4/01/12
15,000,000 State of Michigan, State Trunk Line and Bonds, 10/02 at 100 AA- 15,018,450
Series 1992A, 5.500%, 10/01/21
15,000,000 School District of the City of Detroit, Wayne County, 5/06 at 102 Aaa 15,441,900
Michigan, School Building and Site Improvement
Bonds (Unlimited Tax General Obligation),
Series 1996A, 5.700%, 5/01/25
16,805,000 Hospital Finance Authority of the City of St. Joseph, 1/04 at 102 Aaa 16,495,116
Revenue Refunding Bonds (Mercy Memorial
Medical Center Obligated Group), Series 1993,
5.250%, 1/01/16
5,000,000 Regents of the University of Michigan, Hospital 12/97 at 100 AA 5,010,900
Revenue Refunding Bonds, Series 1986A,
6.625%, 12/01/10
- --------------------------------------------------------------------------------------------------------------------
Minnesota - 0.4%
2,215,000 Minnesota Housing Finance Agency, Housing 2/98 at 101 AA 2,243,529
Development Bonds, 1977 Series A,
6.250%, 2/01/20
9,250,000 Minnesota Housing Finance Agency, Rental 2/05 at 102 Aaa 9,570,235
Housing Bonds, 1995 Series D (Non-AMT),
5.800%, 8/01/11
</TABLE>
20
<PAGE>
<TABLE>
<CAPTION>
Principal Optional Call Market
Amount Description Provisions* Ratings** Value
- --------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Missouri -- 0.8%
$ 15,750,000 Health and Educational Facilities Authority of 10/99 at 102 1/2 BBB+ $ 17,190,653
the 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 3/98 at 101 1/4 AA+ 6,299,386
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- 6,096,154
Revenue Bonds, Series 1996 (Community Medical
Center, Inc.), 6.375%, 6/01/18
- --------------------------------------------------------------------------------------------------------------------
Nebraska -- 1.2%
33,860,000 Consumers Public Power District, Nebraska, Nuclear 1/98 at 100 A1 33,868,126
Facility Revenue Bonds, 1968 Series,
5.100%, 1/01/03
2,340,000 Hospital Authority No. 1 of Hall County, Nebraska, 12/97 at 103 AA 2,415,348
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 8,970,022
Bonds (St. Mary's Regional Medical Center),
Series 1993A, 5.800%, 5/15/13
- --------------------------------------------------------------------------------------------------------------------
New Hampshire -- 0.3%
8,500,000 The Industrial Development Authority of the State of 12/01 at 103 Ba1 9,219,525
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+ 11,630,855
Housing Revenue Bonds, 1992 Series A,
6.950%, 11/01/13
- --------------------------------------------------------------------------------------------------------------------
New York -- 6.3%
8,400,000 Dormitory Authority of the State of New York, Beth 11/05 at 102 Aaa 8,898,708
Israel Medical Center Revenue Bonds, Series
1996, 6.000%, 11/01/15
</TABLE>
21
<PAGE>
Portfolio of Investments (Unaudited)
Municipal Bond -- continued
<TABLE>
<CAPTION>
Principal Optional Call Market
Amount Description Provisions* Ratings** Value
- --------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
New York -- continued
$ 8,000,000 Dormitory Authority of the State of New York, 2/07 at 102 A- $ 8,012,640
Mental 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 9,028,960
(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 18,230,419
3,330,000 8.000%, 11/01/08 11/00 at 102 BBB+ 3,711,951
Power Authority of the State of New York, General
Purpose Bonds, Series CC:
4,325,000 5.000%, 1/01/08 1/03 at 102 Aa2 4,384,512
16,870,000 5.250%, 1/01/18 1/03 at 102 Aa2 16,682,574
11,490,000 State of New York Mortgage Revenue Bonds, Eighth 4/98 at 101 Aaa 11,627,765
Series A, 6.875%, 4/01/17
11,190,000 Battery Park City Authority, Senior Revenue Refunding 11/03 at 102 AA 10,936,994
Bonds, Series 1993A, 5.000%, 11/01/13
5,000,000 Municipal Assistance Corporation for the City of New No Opt. Call Aa2 5,528,600
York (A Public Benefit Corporation of the State of
New York), Series L Bonds (Issued Pursuant to the
1991 General Bond Resolution), 6.000%, 7/01/07
2,350,000 The City of New York, General Obligation Bonds, No Opt. Call Baa1 2,517,156
Fiscal 1996 Series C, 6.000%, 8/15/04
8,000,000 The City of New York, General Obligation Bonds, 8/03 at 102 Baa1 8,195,840
Fiscal 1994 Series C, 5.750%, 8/15/11
8,525,000 The City of New York, General Obligation Bonds, 8/02 at 101 1/2 Aaa 9,513,048
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 15,507,940
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 7,971,150
12,655,000 5.750%, 2/01/17 2/06 at 101 1/2 Baa1 12,879,247
</TABLE>
22
<PAGE>
<TABLE>
<CAPTION>
Principal Optional Call Market
Amount Description Provisions* Ratings** Value
- --------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
New York -- continued
$ 15,620,000 The City of New York General Obligation Bonds, 8/06 at 101 1/2 Baa1 $ 16,245,893
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 8,941,678
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 4,580,850
General Purpose Revenue Bonds, Series 1994A,
4.750%, 1/01/19
- --------------------------------------------------------------------------------------------------------------------
North Carolina -- 2.5%
68,150,000 North Carolina Eastern Municipal Power Agency, 1/03 at 102 Baa1 71,838,278
Power System Revenue Bonds, Refunding
Series 1993 B, 6.250%, 1/01/12
Housing Authority of the City of Wilmington,
North Carolina, First Mortgage Revenue Bonds,
Series 1979:
60,000 7.750%, 6/01/98 12/97 at 100 N/R 61,856
1,195,000 7.750%, 6/01/10 12/97 at 100 N/R 1,267,823
- --------------------------------------------------------------------------------------------------------------------
Oklahoma -- 0.3%
5,375,000 The Comanche County Hospital Authority (Lawton, 7/99 at 102 AAA 5,823,974
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*** 3,378,375
City, Oklahoma), Hospital Revenue Bonds, Series 1992,
7.375%, 4/01/12 (Pre-refunded to 4/01/02)
- --------------------------------------------------------------------------------------------------------------------
Oregon -- 0.4%
10,000,000 State of Oregon, Department of Administrative 5/07 at 101 Aaa 10,382,400
Services, Certificates of Participation, 1997 Series
A, 5.800%, 5/01/24
- --------------------------------------------------------------------------------------------------------------------
Pennsylvania -- 2.7%
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 4,392,523
16,830,000 8.200%, 7/01/24 7/02 at 102 AAA 18,398,219
</TABLE>
23
<PAGE>
Portfolio of Investments (Unaudited)
Municipal Bond -- continued
<TABLE>
<CAPTION>
Principal Optional Call Market
Amount Description Provisions* Ratings** Value
- --------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Pennsylvania -- continued
$ 22,500,000 Pennsylvania Housing Finance Agency, Rental 7/03 at 102 Aaa $ 22,860,225
Housing Refunding Bonds, Issue 1993,
5.750%, 7/01/14
16,600,000 Pennsylvania Intergovernmental Cooperation 6/03 at 100 Aaa 15,722,026
Authority, Special Tax Revenue Refunding Bonds
(City of Philadelphia Funding Program), Series of
1993A, 5.000%, 6/15/22
10,000,000 Leigh County Industrial Development Authority, 9/04 at 102 Aaa 11,041,900
Pollution Control Revenue Refunding Bonds, 1994
Series B (Pennsylvania Power & Light Company
Project), 6.400%, 9/01/29
7,000,000 City of Philadelphia, Pennsylvania, Water and Sewer 8/01 at 100 AAA 7,681,800
Revenue Bonds, Sixteenth Series,
7.000%, 8/01/18 (Pre-refunded to 8/01/01)
- --------------------------------------------------------------------------------------------------------------------
Rhode Island -- 0.2%
7,595,000 Rhode Island Convention Center Authority, Refunding 5/03 at 100 Aaa 7,210,997
Revenue Bonds, 1993 Series B, 5.000%, 5/15/20
- --------------------------------------------------------------------------------------------------------------------
South Carolina -- 0.7%
20,750,000 Piedmont Municipal Power Agency, Electric Revenue Bonds, 1/98 at 102 Aaa 21,286,388
1998 Refunding Series A, 7.400%, 1/01/18
- --------------------------------------------------------------------------------------------------------------------
Texas -- 5.0%
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*** 335,232
18,415,000 14.000%, 11/15/01 No Opt. Call A 22,503,070
29,500,000 Brazos River Authority (Texas), Collateralized Revenue 8/00 at 102 Aaa 30,227,470
Refunding Bonds (Houston Lighting & Power Company
Project), Series 1995, 5.800%, 8/01/15
6,585,000 Crowley Independent School District, Tarrant & Johnson 8/08 at 100 Aaa 7,340,036
Counties, Unlimited Tax School Building Bonds,
Series 1997, 6.500%, 8/01/23
25,800,000 Harris County, Texas, Toll Road Senior Lien Revenue 8/04 at 102 Aaa 26,152,428
Refunding Bonds, Series 1994, 5.300%, 8/15/13
7,000,000 Harris County Health Facilities Development 2/01 at 102 AAA 7,775,810
Corporation (Texas), Hospital Revenue Bonds (St. Luke's
Episcopal Hospital Project), Series 1991A,
6.750%, 2/15/21
</TABLE>
24
<PAGE>
<TABLE>
<CAPTION>
Principal Optional Call Market
Amount Description Provisions* Ratings** Value
- --------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Texas -- continued
City of San Antonio, Texas, Electric and Gas System
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 $ 5,151,350
3,500,000 8.000%, 2/01/16 (Pre-refunded to 2/01/98) 2/98 at 102 Aaa 3,605,945
44,745,000 City of San Antonio, Texas, Electric and Gas System 2/02 at 101 Aa1 43,501,984
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 6,346,494
25,000,000 5.500%, 7/01/20 7/03 at 102 A1 25,029,000
44,990,000 5.000%, 7/01/23 7/03 at 100 A1 42,147,532
15,000,000 Intermountain Power Agency, Power Supply Revenue 7/07 at 102 Aaa 15,580,500
Refunding Bonds, 1997 Series B, 5.750%, 7/01/19
1,490,000 Layton, Utah, Industrial Development Revenue Bonds 12/97 at 100 Ba3 1,492,295
(C.D.I. Ltd. Project--K Mart Guaranteed),
8.750%, 6/01/05
- --------------------------------------------------------------------------------------------------------------------
Vermont -- 0.1%
215,000 University of Vermont and State Agricultural College, 1/98 at 101 A1 217,928
Housing, Dining and Student Services Facilities
System Bonds, Lot 1 Series 1969-A,
6.300%, 7/01/06
- --------------------------------------------------------------------------------------------------------------------
Virginia -- 3.8%
50,000,000 Virginia Housing Development Authority, 1/02 at 102 Aa1 52,711,500
Commonwealth Mortgage Bonds, 1992 Series A,
7.150%, 1/01/33
3,270,000 Virginia Housing Development Authority, Multi-Family 11/97 at 101 Aa1 3,310,025
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 19,442,902
28,075,000 5.900%, 5/01/14 5/03 at 102 Aa1 28,879,068
6,240,000 Chesapeake Hospital Authority, Virginia, Hospital 7/98 at 102 Aaa 6,516,869
Facility Revenue Bonds (Chesapeake General
Hospital), Series 1988, 7.625%, 7/01/18
(Pre-refunded to 7/01/98)
</TABLE>
25
<PAGE>
Portfolio of Investments (Unaudited)
Municipal Bond -- continued
<TABLE>
<CAPTION>
Principal Optional Call Market
Amount Description Provisions* Ratings** Value
- --------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Virginia -- continued
$ 695,000 Industrial Development Authority of the City of No Opt. Call N/R $ 702,193
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 16,656,393
18,500,000 5.750%, 7/01/13 7/03 at 102 Aa1 19,017,445
10,000,000 5.700%, 7/01/17 7/03 at 102 Aaa 10,164,800
7,805,000 Washington Public Power Supply System, Nuclear No Opt. Call Aa1 9,182,895
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 6,012,600
Project No. 1 Refunding Revenue Bonds,
Series 1989B, 7.125%, 7/01/16
10,000,000 Washington Public Power Supply System, Nuclear 7/03 at 102 Aa1 9,903,600
Project No. 1 Refunding Revenue Bonds,
Series 1993C, 5.375%, 7/01/15
8,835,000 Washington Public Power Supply System, Nuclear 7/03 at 102 Aa1 9,004,367
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 9,292,914
51,070,000 5.375%, 7/01/15 7/03 at 102 Aa1 50,463,799
11,545,000 5.500%, 7/01/18 7/03 at 102 Aa1 11,445,598
6,450,000 Public Utility District No. 1 of Chelan County, Rocky 1/98 at 100 AA 6,450,710
Reach Hydro-Electric System Revenue Bonds,
Series of 1968, 5.125%, 7/01/23
23,617,000 Public Utility District No. 1 of Chelan County, Rocky 1/98 at 100 AA 23,621,250
Reach Hydro-Electric System Revenue Bonds,
Series of 1957, 5.000%, 7/01/13
17,200,000 Public Utility District No. 1 of Douglas County, 3/98 at 101 A+ 15,523,687
Washington, Wells Hydroelectric Revenue Bonds,
Series of 1963, 4.000%, 9/01/18
</TABLE>
26
<PAGE>
<TABLE>
<CAPTION>
Principal Optional Call Market
Amount Description Provisions* Ratings** Value
- ----------------------------------------------------------------------------------------------------------------------------------
<C> <S> <C> <C> <C>
Washington -- continued
$ 7,250,000 Municipality of Metropolitan Seattle, Sewer 1/03 at 102 Aaa $ 7,512,232
Refunding Revenue Bonds, Series Y,
5.700%, 1/01/12
- ----------------------------------------------------------------------------------------------------------------------------------
Wisconsin -- 4.4%
13,700,000 Wisconsin Health and Educational Facilities 11/01 at 102 Aaa 14,579,676
Authority, 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 10,425,795
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 6,219,960
Revenue Bonds, Series 1992A (Meriter Hospital, Inc.),
6.000%, 12/01/22
18,500,000 Wisconsin Health and Educational Facilities Authority 8/03 at 102 Aaa 17,815,684
Revenue Bonds, Series 1993 (Aurora Health Care
Obligated Group), 5.250%, 8/15/23
3,750,000 Wisconsin Health and Educational Facilities 10/04 at 102 Aaa 3,925,874
Authority, 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 32,683,840
Authority, 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 N/R 4,666,410
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 9,047,144
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 28,634,280
Authority, Housing Revenue Bonds, 1993 Series C,
5.800%, 11/01/13
- ----------------------------------------------------------------------------------------------------------------------------------
$2,831,887,000 Total Investments -- (cost $2,639,962,620) -- 97.7% 2,863,523,924
- ----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
27
<PAGE>
<TABLE>
<CAPTION>
Portfolio of Investments (Unaudited)
Municipal Bond -- continued
Principal Optional Call Market
Amount Description Provisions* Ratings** Value
- --------------------------------------------------------------------------------------------------------------------
<C> <S> <C> <C> <C>
TEMPORARY INVESTMENTS IN SHORT-TERM MUNICIPAL SECURITIES -- 1.0%
$ 12,000,000 Burke County Development Authority Pollution VMIG-1 $ 12,000,000
Control Revenue Bonds (Georgia Power Company),
Series 1996, Variable Rate Demand Bonds,
4.000%, 9/01/26+
8,560,000 New York State Energy Research and Development P-1 8,560,000
Authority, Pollution Control (Niagara Mohawk
Power Corporation), Variable Rate Demand Bonds,
4.000%, 3/01/27+
8,000,000 Philadelphia Hospital and Higher Educational VMIG-1 8,000,000
Facilities Authority (The Children's Hospital of
Philadelphia), Variable Rate Demand Bonds,
4.000%, 3/01/27+
- --------------------------------------------------------------------------------------------------------------------
$ 28,560,000 Total Temporary Investments -- 1.0% 28,560,000
- --------------------------------------------------------------------------------------------------------------------
Other Assets Less Liabilities -- 1.3% 39,419,399
-------------------------------------------------------------------------------------------
Net Assets -- 100% $2,931,503,323
===========================================================================================
* Ratings: Using the higher of Standard & Poor's or Moody's rating.
** Optional Call Provisions: Dates (month and year) and prices of the earliest optional call or
redemption. There may be other call provisions at varying prices at later dates.
*** Securities are backed by an escrow or trust containing sufficient U.S. government or U.S.
government agency securities, which ensures the timely payment of principal and interest.
Securities are normally considered to be equivalent to AAA rated securities.
N/R -- Investment is not rated.
+ 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.
</TABLE>
28 See accompanying notes to financial statements.
<PAGE>
<TABLE>
<CAPTION>
Portfolio of Investments (Unaudited) Insured Municipal Bond
Principal Optional Call Market
Amount Description Provisions* Ratings** Value
- --------------------------------------------------------------------------------------------------------------------
Alabama -- 8.2%
<C> <S> <C> <C> <C>
$ 5,600,000 The Alabama Public Health Care Authority, Mortgage 10/06 at 102 Aaa $ 5,915,000
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 2,332,148
(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 3,722,635
Series 1995, 6.000%, 6/01/25
4,615,000 The Governmental Utility Services Corporation of the 12/99 at 102 Aaa 4,987,292
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 2,043,169
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 1,337,002
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 10/05 at 102 Aaa 7,190,843
Huntsville (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 3,266,610
Warrants, Series 1994, 6.250%, 2/01/19
5,500,000 City of Madison (Alabama), General Obligation 4/05 at 102 Aaa 5,849,305
Warrants, Series 1995, 6.000%, 4/01/23
3,000,000 Mobile County, Alabama, General Obligation Tax 2/00 at 102 Aaa 3,224,910
Pledge Warrants, Series 1991,
6.700%, 2/01/11 (Pre-refunded to 2/01/00)
5,580,000 BMC Special Care Facilities Financing Authority 9/07 at 102 Aaa 5,537,983
of the City of Montgomery, Revenue Bonds, Series
1997-C, (Baptist Medical Center), 5.375%, 9/01/22
12,000,000 The Medical Clinic Board of The City of Montgomery, 3/06 at 102 Aaa 12,670,560
Alabama, Health Care Facility Revenue Bonds,
Jackson Hospital and Clinic, Series 1996,
6.000%, 3/01/26
</TABLE>
29
<PAGE>
<TABLE>
<CAPTION>
Portfolio of Investments (Unaudited)
Insured Municipal Bond - continued
Principal Optional Call Market
Amount Description Provisions* Ratings** Value
____________________________________________________________________________________________________________________
<C> <S> <C> <C> <C>
Alabama - continued
The Utilities Board of the City of Oneonta (Alabama),
Utility Revenue Bonds, Series 1994:
$ 2,860,000 6.900%, 11/01/24 (Pre-refunded to 11/01/04) 11/04 at 102 Aaa $ 3,328,010
140,000 6.900%, 11/01/24 11/04 at 102 Aaa 160,125
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 2,538,822
3,000,000 6.850%, 8/15/25 (Pre-refunded to 8/15/04) 8/04 at 102 Aaa 3,470,760
____________________________________________________________________________________________________________________
Alaska - 2.9%
8,565,000 Alaska Housing Finance Corporation, Mortgage 6/06 at 102 Aaa 8,883,789
Revenue Bonds, 1996 Series A, 6.000%, 12/01/15
5,000,000 Alaska Housing Finance Corporation, Mortgage 6/07 at 102 Aaa 5,177,100
Revenue Bonds, 1997 Series A, 6.000%, 6/01/27
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 4,672,935
5,000,000 6.125%, 4/01/27 (Alternative Minimum Tax) 4/07 at 102 Aaa 5,257,750
____________________________________________________________________________________________________________________
Arizona - 2.1%
5,000,000 Navajo County, Arizona, Pollution Control Corporation, 8/03 at 102 Baa1 5,099,550
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 6,467,700
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 5,572,700
Series 1994-A (1996), 6.000%, 7/01/21
(Pre-refunded to 7/01/06)
____________________________________________________________________________________________________________________
California - 9.1%
5,000,000 California Health Facilities Financing Authority, 7/06 at 102 Aaa 5,294,500
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 3,943,136
California), 1991 Tax Allocation Revenue Bonds,
Series A (Redevelopment Project AB),
7.000%, 8/01/15 (Pre-refunded to 8/01/01)
</TABLE>
30
<PAGE>
<TABLE>
<CAPTION>
Principal Optional Call Market
Amount Description Provisions* Ratings** Value
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
California - continued
$ 14,000,000 Los Angeles County Metropolitan Transportation 7/03 at 100 Aaa $ 13,345,640
Authority (California), Proposition A, Sales Tax
Revenue Refunding Bonds, Series 1993-A,
5.000%, 7/01/21
1,000,000 M-S-R Public Power Agency (California), San Juan 7/98 at 100 Aaa 1,004,250
Project Refunding Revenue Bonds, Series H,
5.900%, 7/01/20
13,750,000 Ontario Redevelopment Financing Authority (San 8/03 at 102 Aaa 14,684,450
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 5,660,990
Facility Project), Certificates of Participation,
6.000%, 12/01/12
2,250,000 Sacramento Municipal Utility District, Electric Revenue 9/01 at 102 Aaa 2,481,930
Bonds, 1991 Series Y, 6.500%, 9/01/21
(Pre-refunded to 9/01/01)
17,500,000 San Joaquin Hills Transportation Corridor Agency, Toll 1/07 at 102 Aaa 17,257,625
Road Refunding Revenue Bonds, Series 1997A,
5.250%, 1/15/30
10,000,000 The Regents of the University of California, Revenue 9/02 at 102 Aaa 10,912,100
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 4,883,580
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 3,904,355
Participation, 6.650%, 12/01/08
- ------------------------------------------------------------------------------------------------------------------------------------
Delaware - 0.5%
3,600,000 Delaware Economic Development Authority, Pollution 5/02 at 102 Aaa 3,946,932
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 2,749,625
Obligation Bonds (Series 1990B), 7.500%, 6/01/10
(Pre-refunded to 6/01/00)
</TABLE>
31
<PAGE>
<TABLE>
<CAPTION>
Portfolio of Investments (Unaudited) Insured Municipal Bond - continued
Principal Optional Call Market
Amount Description Provisions Ratings** Value
- --------------------------------------------------------------------------------------------------------------------
<C> <S> <C> <C> <C>
District of Columbia - continued
$ 6,000,000 District of Columbia (Washington, D.C.), General 6/04 at 102 Aaa $ 6,422,880
Obligation Bonds, Series 1994B, 6.100%, 6/01/11
- --------------------------------------------------------------------------------------------------------------------
Florida - 0.2%
80,000 Florida Keys Aqueduct Authority, Water Revenue 9/01 at 101 Aaa 87,030
Refunding Bonds, Series 1991, 6.750%, 9/01/21
920,000 Florida Keys Aqueduct Authority, Water Revenue 9/01 at 101 Aaa 1,012,966
Refunding Bonds, Series 1991, 6.750%, 9/01/21
(Pre-refunded to 9/01/01)
205,000 Brevard County, Florida, Utility Revenue Bonds, 3/98 at 102 Aaa 211,353
Series 1985B, 7.375%, 3/01/14
- -------------------------------------------------------------------------------------------------------------------
Georgia - 2.7%
5,000,000 City of Albany (Georgia), Sewerage System Revenue 7/02 at 102 Aaa 5,580,850
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 5,626,300
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 2,474,618
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 5,035,781
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 3,173,416
Mortgage Revenue Bonds (Life College, Inc.),
Series 1995A and Series 1995B, 5.950%, 9/01/19
- --------------------------------------------------------------------------------------------------------------------
Illinois - 15.2%
1,900,000 Illinois Educational Facilities Authority, Revenue 5/06 at 102 Aaa 2,037,921
Refunding Bonds (Midwestern University),
Series 1966B, 6.250%, 5/15/26
6,595,000 Illinois Health Facilities Authority, Revolving Fund 2/99 at 103 Aaa 7,069,049
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 3,158,880
Series 1994A (The University of Chicago Hospitals
Project), 6.125%, 8/15/24
</TABLE>
32
<PAGE>
<TABLE>
<CAPTION>
Principal Optional Call Market
Amount Description Provisions* Ratings** Value
- --------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Illinois - continued
$ 4,500,000 Illinois Health Facilities Authority, Revenue Bonds, 5/04 at 102 Aaa $ 4,822,335
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 4,418,800
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 7,347,060
(Carle Foundation), Series 1996, 6.000%, 1/01/27
3,500,000 Illinois Health Facilities Authority, Revenue Bonds, 2/08 at 101 Aaa 3,368,155
Series 1997A (Edward Obligated Group), 5.250%,
2/15/27
7,680,000 Illinois Health Facilities Authority, Revenue Bonds, 8/07 at 101 Aaa 7,421,491
Series 1997 (Sherman Health Systems), 5.250%,
8/01/27 (DD)
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 194,911
1,083,000 7.900%, 8/15/03 12/97 at 101 Aaa 1,097,155
5,000,000 State of Illinois General Obligation Bonds, Series of 8/04 at 102 AA 5,205,850
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 3,265,236
5,545,000 6.100%, 2/01/20 2/05 at 102 Aaa 5,907,255
2,500,000 City of Chicago (Illinois), General Obligation 7/02 at 101 1/2 Aaa 2,803,725
Adjustable 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 5,384,050
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 12/07 at 102 Aaa 10,004,672
10,000,000 5.750%, 12/01/27 12/07 at 102 Aaa 10,352,100
16,300,000 Public Building Commission of Chicago (Illinois), 12/03 at 102 Aaa 16,765,528
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 7,305,507
Obligation Corporate Purpose Bonds, Series 1994A,
6.400%, 12/01/14
</TABLE>
33
<PAGE>
Portfolio of Investments (Unaudited)
Insured Municipal Bond - continued
<TABLE>
<CAPTION>
Principal Optional Call Market
Amount Description Provisions* Ratings** Value
- --------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Illinois - continued
$ 7,500,000 The County of Cook, Illinois, General Obligation 11/03 at 100 Aaa $ 7,092,975
Bonds, Series 1993A, 5.000%, 11/15/23
2,500,000 Community College District No. 508, Cook County, No Opt. Call Aaa 3,229,450
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 2,585,504
(Illinois), Eastern Illinois University, Auxiliary
Facilities System Revenue Bonds, Series 1994A,
6.375%, 4/01/16
4,000,000 Regional Transportation Authority, Cook, DuPage, Kane, 6/03 at 102 Aaa 4,360,480
Lake, McHenry and Will Counties, Illinois,
General Obligation Refunding Bonds, Series
1993C, 5.850%, 6/01/23 (Pre-refunded to 6/01/03)
- --------------------------------------------------------------------------------------------------------------------------
Indiana - 6.0%
3,750,000 City of Indianapolis, Indiana, Gas Utility System 6/02 at 102 Aaa 4,030,275
Revenue Bonds, Series 1992 A, 6.200%, 6/01/23
5,000,000 Indiana Health Facility Financing Authority, 5/02 at 102 Aaa 5,411,700
Hospital, Revenue Refunding and Improvement
Bonds, Series 1992 (Community Hospitals
Projects), 6.400%, 5/01/12
Indiana Housing Finance Authority, Single Family
Mortgage Revenue Bonds, 1997 Series B-2:
1,755,000 6.000%, 7/01/16 (Alternative Minimum Tax) 5/07 at 101 1/2 Aaa 1,808,124
10,620,000 6.125%, 1/01/27 (Alternative Minimum Tax) 1/07 at 102 Aaa 10,952,618
5,000,000 Indiana Municipal Power Agency, Power Supply 1/03 at 102 Aaa 5,261,150
System Revenue Bonds, 1993 Series A, 6.125%,
1/01/19
4,950,000 Jasper County, Indiana, Collateralized Pollution 7/01 at 102 Aaa 5,434,209
Refunding Revenue Bonds (Northern Indiana Public
Revenue Service Company Project), Series 1991,
7.100%, 7/01/17
2,000,000 Lawrence Central High School Building Corporation, 7/00 at 102 Aaa 2,195,760
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 3,665,211
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 5/99 at 101 Aaa 2,357,573
Revenue Refunding Bonds, Series 1989
(Bloomington Hospital Project), 7.125%, 5/01/11
</TABLE>
34
<PAGE>
<TABLE>
<CAPTION>
Principal Optional Call Market
Amount Description Provisions* Ratings** Value
- --------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Indiana - continued
$ 1,000,000 City of Princeton, Indiana, Pollution Control Refunding 3/00 at 102 Aaa $ 1,081,690
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), Fixed 8/01 at 102 Aaa 2,193,500
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 2,434,404
Bonds (Shelby County, Indiana), 6.500%, 7/15/09
(Pre-refunded to 7/15/02)
2,265,000 Southwest Allen Multi School Building Corporation, First 1/02 at 101 Aaa 2,440,152
Mortgage Refunding Bonds, Series 1992 B, Fort Wayne,
Indiana, 6.375%, 1/15/09
- --------------------------------------------------------------------------------------------------------------------------
Kentucky - 0.1%
1,000,000 Louisville and Jefferson County Metropolitan Sewer District 5/00 at 102 Aaa 1,096,190
(Commonwealth of Kentucky), Drainage Revenue Bonds,
Series 1989, 7.350%, 5/01/19 (Pre-refunded to 5/01/00)
- --------------------------------------------------------------------------------------------------------------------------
Louisiana - 2.7%
7,000,000 Louisiana Public Facilities Authority, Hospital Revenue 5/02 at 102 Aaa 7,831,460
Refunding Bonds (Southern Baptist Hospital
Project), Series 1992, 6.800%, 5/15/12
(Pre-refunded to 5/15/02)
1,615,000 Louisiana Public Facilities Authority, Fixed Rate Health 12/98 at 102 Aaa 1,707,911
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 5,485,150
2,000,000 6.500%, 5/01/12 5/02 at 102 Aaa 2,194,060
4,750,000 Hospital Service District No. 1 of the Parish of 2/04 at 102 Aaa 5,097,510
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 3,633,153
Authority, Revenue Bonds, Series 1994B, 7.000%
7/01/24
</TABLE>
35
<PAGE>
Portfolio of Investments (Unaudited)
Insured Municipal Bond - continued
<TABLE>
<CAPTION>
Principal Optional Call Market
Amount Description Provisions* Ratings** Value
- --------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Maine - continued
$11,500,000 Maine Health and Higher Educational Facilities 7/05 at 102 Aaa $11,967,705
Authority, Revenue Bonds, Series 1995A, 5.875%,
7/01/25
12,750,000 Maine State Housing Authority, Mortgage Purchase 5/06 at 102 Aaa 13,520,100
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 835,688
500,000 6.650%, 9/01/10 9/02 at 103 Aaa 557,125
- --------------------------------------------------------------------------------------------------------------------------
Maryland - 0.1%
1,000,000 Morgan State University, Maryland, Academic Fees 7/00 at 102 Aaa 1,092,160
and Auxiliary Facilities Fees Revenue Bonds,
1990 Series A, 7.000%, 7/01/20
(Pre-refunded to 7/01/00)
- --------------------------------------------------------------------------------------------------------------------------
Massachusetts - 3.2%
1,250,000 Massachusetts Bay Transportation Authority, 8/00 at 102 Aaa 1,388,100
Certificates of Participation, 1990 Series A,
7.650%, 8/01/15 (Pre-refunded to 8/01/00)
2,000,000 Massachusetts Health and Educational Facilities 4/00 at 102 Aaa 2,182,720
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 3,725,856
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 4,362,640
Authority, Revenue Bonds, South Shore Hospital
Issue, Series D, 6.500%, 7/01/22
5,875,000 Massachusetts Health and Educational Facilities 11/03 at 102 AAA 5,680,244
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 4,210,440
Authority, Revenue Bonds, Berkshire Health Systems
Issue, Series D, 6.000%, 10/01/19
3,500,000 City of Boston, Massachusetts, Revenue Bonds, 8/00 at 102 Aaa 3,883,705
Boston City Hospital (FHA Insured Mortgage),
Series A, 7.625%, 2/15/21 (Pre-refunded to 8/15/00)
</TABLE>
36
<PAGE>
<TABLE>
<CAPTION>
Principal Optional Call Market
Amount Description Provisions* Ratings** Value
- --------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Massachusetts - continued
$ 1,150,000 City of Haverhill, Massachusetts, General Obligation 6/02 at 102 Aaa $1,284,861
Municipal Purpose Loan of 1992, Series A,
7.000%, 6/15/12
- --------------------------------------------------------------------------------------------------------------------------
Michigan - 3.8%
5,000,000 Michigan State Hospital Finance Authority, Hospital 11/06 at 102 Aaa 5,201,500
Revenue Bonds (Sparrow Obligated Group),
Series 1996, 5.900%, 11/15/26
8,280,000 Michigan State Housing Development Authority, 4/07 at 102 Aaa 8,575,762
Rental Housing Revenue Bonds, 1997 Series A,
6.100%, 10/01/33 (Alternative Minimum Tax)
2,000,000 Michigan Strategic Fund Limited Obligation Refunding 12/01 at 102 Aaa 2,195,260
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, No Opt. Call Aaa 3,389,607
1991 General Obligation Unlimited Tax Street
Improvement Bonds, 0.000%, 6/01/21
5,000,000 Caledonia Community Schools, Counties of Kent, 5/02 at 102 Aaa 5,580,800
Allegan 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 2,636,000
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 2,199,940
Revenue Bonds, Series 1991, 6.625%, 7/01/21
(Pre-refunded to 7/01/01)
1,085,000 School District of the City of River Rouge, County of 5/03 at 101 1/2 Aaa 1,109,608
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 6,594,624
(Mississippi), Revenue Bonds, Series 1993
(University of Mississippi Medical Center Project),
5.900%, 12/01/23
</TABLE>
37
<PAGE>
Portfolio of Investments (Unaudited)
Insured Municipal Bond -- continued
<TABLE>
<CAPTION>
Principal Optional Call Market
Amount Description Provisions* Ratings** Value
- ------------------------------------------------------------------------------------------------------------------------------
<C> <S> <C> <C> <C>
Missouri -- 1.0%
$ 7,950,000 St. Louis Municipal Finance Corporation, City Justice 2/06 at 102 Aaa $ 8,434,076
Center, Leasehold Revenue Improvement Bonds,
Series 1996A (City of St. Louis, Missouri, Lessee),
5.950%, 2/15/16
- ------------------------------------------------------------------------------------------------------------------------------
Nebraska -- 0.6%
5,000,000 Nebraska Investment Finance Authority, Health 2/08 at 102 AAA 5,026,200
Facilities Revenue Bonds (Children's Healthcare
Services Obligated Group), Series 1997, 5.500%,
8/15/27 (DD)
- ------------------------------------------------------------------------------------------------------------------------------
Nevada -- 0.6%
2,500,000 County of Churchill, Nevada, Health Care Facilities 1/04 at 102 Aaa 2,614,575
Revenue Bonds (Western Health Network, Inc.),
Series 1994A, 6.000%, 1/01/24
2,000,000 Clark County, Nevada, Industrial Development 10/02 at 102 Aaa 2,244,260
Refunding Revenue Bonds (Nevada Power Company
Project), Series 1992C, 7.200%, 10/01/22
- ------------------------------------------------------------------------------------------------------------------------------
New Hampshire -- 0.4%
2,850,000 New Hampshire Higher Educational and Health Facilities 7/02 at 102 Aaa 3,071,360
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, Home 4/98 at 103 Aaa 1,536,151
Mortgage Purchase Revenue Bonds, 1987 Series B
(Remarketing), 8.100%, 10/01/17
1,820,000 Housing Finance Corporation of the Township of Pennsauken 12/97 at 104 Aaa 1,898,278
(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 2/98 at 102 Aaa 3,078,990
Revenue Bonds, 1992 Series B (Presbyterian
Healthcare Services), 6.600%, 8/01/07
4,445,000 City of Farmington, New Mexico, Pollution Control 12/02 at 102 Aaa 4,867,275
Revenue Refunding Bonds, 1992 Series A
(Public Service Company of New Mexico San Juan and
Four Corners Projects), 6.375%, 12/15/22
</TABLE>
38
<PAGE>
<TABLE>
<CAPTION>
Principal Optional Call Market
Amount Description Provisions* Ratings** Value
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
New York -- 10.4%
Metropolitan Transportation Authority, Commuter Facilities
Revenue Bonds, Series 1992B:
$ 4,955,000 6.250%, 7/01/17 (Pre-refunded to 7/01/02) 7/02 at 102 Aaa $ 5,463,829
6,925,000 6.250%, 7/01/22 (Pre-refunded to 7/01/02) 7/02 at 102 Aaa 7,636,128
5,000,000 Metropolitan Transportation Authority, Commuter 7/04 at 101 1/2 Aaa 5,644,200
Facilities Revenue Bonds, Series 1994A, 6.375%,
7/01/18 (Pre-refunded to 7/01/04)
285,000 The City of New York, General Obligation Bonds, Fiscal 8/02 at 101 1/2 Aaa 314,463
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 6,377,369
1992 Series C, Fixed Rate Bonds, Subseries C-1,
6.625%, 8/01/12 (Pre-refunded to 8/01/02)
3,010,000 The City of New York, General Obligation Bonds, Fiscal 5/03 at 101 1/2 Aaa 3,154,691
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 4,159,800
1992 Series B, 7.000%, 2/01/18
3,320,000 New York City Municipal Water Finance Authority, 6/01 at 101 Aaa 3,607,911
Water and Sewer System Revenue Bonds, Fiscal
1992 Series A, 6.750%, 6/15/16
2,025,000 New York City Municipal Water Finance Authority, 6/99 at 101 1/2 Aaa 2,144,435
Water 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 4,593,372
Water and Sewer System Revenue Bonds, Fiscal
1993 Series A, 5.750%, 6/15/18
19,500,000 The City of New York Municipal Water Finance 6/06 at 101 Aaa 19,506,045
Authority, Water and Sewer System Revenue Bonds,
Series A, 5.375%, 6/15/26
3,010,000 New York City, Municipal Water Finance Authority, 6/01 at 101 Aaa 3,300,164
Water and Sewer Revenue Bonds, Fiscal 1992
Series A, 6.750%, 6/15/16 (Pre-refunded to 6/15/01)
3,900,000 New York City Transit Authority, Transit Facilities No Opt. Call Aaa 3,997,422
Refunding Revenue Bonds, Series 1993 (Livingston
Plaza Project), 5.400%, 1/01/18
</TABLE>
39
<PAGE>
<TABLE>
<CAPTION>
Portfolio of Investments (Unaudited)
Insured Municipal Bond -- continued
Principal Optional Call Market
Amount Description Provisions* Ratings** Value
- --------------------------------------------------------------------------------------------------------------------
<C> <S> <C> <C> <C>
New York -- continued
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 $ 3,939,985
3,000,000 6.600%, 11/15/11 11/04 at 102 Aaa 3,394,980
5,240,000 Triborough Bridge and Tunnel Authority, Special 1/01 at 102 Aaa 5,711,967
Obligation Refunding Bonds, Series 1991B,
6.875%, 1/01/15
3,015,000 Triborough Bridge and Tunnel Authority, Special 1/02 at 100 Aaa 3,035,924
Obligation Bonds, Series 1992, 5.500%, 1/01/17
- --------------------------------------------------------------------------------------------------------------------
Ohio -- 0.5%
1,000,000 Board of Education, City School District of Columbus, 12/00 at 102 Aaa 1,102,480
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)
2,500,000 Dublin City School District, Franklin, Delaware and 12/02 at 102 Aaa 2,762,850
Union Counties, Ohio, Various Purpose School
Building Construction and Improvement Bonds
(General Obligation -- Unlimited Tax), 6.200%,
12/01/19 (Pre-refunded to 12/01/02)
- --------------------------------------------------------------------------------------------------------------------
Oklahoma -- 1.4%
5,000,000 Oklahoma Industries Authority, Health System 8/05 at 102 Aaa 5,459,950
Revenue 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
220,000 Muskogee County Home Finance Authority (Oklahoma), 6/00 at 102 Aaa 231,372
Single Family Mortgage Revenue Refunding Bonds,
Series 1990 A, 7.600%, 12/01/10
5,525,000 Tulsa Metropolitan Utility Authority (Tulsa, 9/05 at 102 Aaa 5,708,927
Oklahoma), 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 3,486,690
Pennsylvania), Water Revenue Bonds, Series of
1994, 7.000%, 11/01/24 (Pre-refunded to 11/01/04)
</TABLE>
40
<PAGE>
<TABLE>
<CAPTION>
Principal Optional Call Market
Amount Description Provisions* Ratings** Value
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Pennsylvania -- continued
$ 3,900,000 The Philadelphia Municipal Authority, Philadelphia, 11/01 at 102 Aaa $ 4,391,010
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 1,084,620
Hospital Revenue Refunding Bonds, Series A of
1990 (The Washington Hospital Project),
7.150%, 7/01/17
- -----------------------------------------------------------------------------------------------------------------------------
Rhode Island -- 2.6%
2,250,000 Rhode Island Depositors Economic Corporation, 8/02 at 102 Aaa 2,514,841
Special Obligation Bonds, 1992 Series A, 6.625%,
8/01/19 (Pre-refunded to 8/01/02)
10,000,000 Rhode Island Clean Water Finance Agency, Wastewater 9/07 at 102 Aaa 10,257,600
Treatment System Revenue Bonds (City of Cranston/
Triton Ocean State LLC Project), Series 1997, 5.800%,
9/01/22 (Alternative Minimum Tax)
4,000,000 City of Cranston, Rhode Island, General Obligation 7/01 at 101 1/2 Aaa 4,464,040
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 3,420,401
Revenue Bonds, 1994 Series A, 6.350%, 7/15/14
1,000,000 Providence Housing Development Corporation, 7/04 at 102 Aaa 1,064,160
Mortgage Revenue Refunding Bonds, Series 1994A
(FHA Insured Mortgage Loan--Barbara Jordan
Apartments Project), (Providence, Rhode Island),
6.650%, 7/01/15
- -----------------------------------------------------------------------------------------------------------------------------
South Carolina -- 3.6%
1,000,000 City of Aiken, South Carolina, Water and Sewer 1/00 at 102 Aaa 1,084,330
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:
70,000 6.875%, 6/01/14 6/04 at 102 Aaa 78,882
115,000 7.000%, 6/01/19 6/04 at 102 Aaa 130,394
</TABLE>
41
<PAGE>
Portfolio of Investments (Unaudited)
Insured Municipal Bond - continued
<TABLE>
<CAPTION>
Principal Optional Call Market
Amount Description Provisions* Ratings** Value
- --------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
South Carolina - continued
Charleston County, South Carolina, Charleston Public
Facilities Corporation, Certificates of Participation,
Series 1994 B:
$1,430,000 6.875%, 6/01/14 (Pre-refunded to 6/01/04) 6/04 at 102 Aaa $1,651,350
2,385,000 7.000%, 6/01/19 (Pre-refunded to 6/01/04) 6/04 at 102 Aaa 2,771,060
5,435,000 Greenville Memorial Auditorium District, Public 3/06 at 102 Aaa 5,609,790
Facilities Corporation, Greenville Memorial
Auditorium District, Taxable Certificates of
Participation (Bi-Lo Center Project), Series 1996C,
5.750%, 3/01/22
15,000,000 Orangburg County, South Carolina, Solid Waste 11/02 at 101 Aaa 15,098,250
Disposal Facilities Revenue Bond (South Carolina
Electric & Gas Company Project), Series 1994,
5.700%, 11/01/24 (Alternative Minimum Tax) (DD)
2,000,000 City of Rock Hill, South Carolina, Combined Utility 1/00 at 102 Aaa 2,158,380
System 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 2,147,200
System Revenue Bonds, Series 1991,
6.375%, 1/01/15
- --------------------------------------------------------------------------------------------------------------------------
South Dakota - 0.1%
1,000,000 South Dakota Health and Educational Facilities 7/00 at 102 Aaa 1,096,540
Authority, 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 6,498,000
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 3,443,760
Corporation, Hospital Revenue Bonds (Baptist
Memorial Hospital System Project), Series 1994,
6.750%, 8/15/19 (Pre-refunded to 8/15/04)
4,575,000 Harris County, Texas, Toll Road Senior Lien Revenue 8/02 at 102 Aaa 5,092,295
Refunding Bonds, Series 1992A, 6.500%, 8/15/17
(Pre-refunded to 8/15/02)
1,000,000 Harris County Hospital District Refunding Revenue No Opt. Call Aaa 1,189,470
Bonds, Texas, Series 1990, 7.400%, 2/15/10
</TABLE>
42
<PAGE>
<TABLE>
<CAPTION>
Principal Optional Call Market
Amount Description Provisions* Ratings** Value
- --------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Texas - continued
$ 500,000 City of Houston, Texas, Senior Lien Hotel Occupancy 7/01 at 100 Aaa $ 547,700
Tax 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 900,273
Revenue Bonds, Series 1991, Series B,
7.000%, 1/01/11
Ratama Development Corporation, Special Facilities
Revenue Bonds (Retama Park Racetrack Project),
Series 1993:
9,715,000 8.750%, 12/15/18 No Opt. Call Aaa 13,927,230
5,405,000 10.000%, 12/15/20 No Opt. Call Aaa 8,721,400
5,000,000 Tarrant County Health Facilities Development No Opt. Call Aaa 5,488,900
Corporation, Hospital Revenue Refunding and
Improvement Bonds (Fort Worth Osteopathic
Hospital, Inc. Project), Series 1993, 6.000%,
5/15/21
- --------------------------------------------------------------------------------------------------------------------------
Utah - 0.9%
3,055,000 State of Utah, State Building Ownership Authority, 11/05 at 100 Aaa 3,143,962
Lease Revenue Bonds (State Facilities Master Lease
Program), Series 1995A, 5.750%, 5/15/18
185,000 Utah Housing Finance Agency, Single Family Mortgage No Opt. Call AA 195,985
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 County, 2/05 at 100 Aaa 3,960,495
Utah, General Obligation Water Bonds, Series 1995,
6.600%, 2/01/25 (Pre-refunded to 2/01/05)
- --------------------------------------------------------------------------------------------------------------------------
Vermont - 1.9%
15,000,000 Vermont Housing Finance Agency, Single Family 6/07 at 101 1/2 Aaa 15,289,200
Housing Bonds, Series 9, 5.900%, 5/01/29
(Alternative Minimum Tax)
- --------------------------------------------------------------------------------------------------------------------------
Washington - 1.0%
5,000,000 Washington Public Power Supply System, Nuclear No Opt. Call Aaa 5,239,200
Project No. 2 Refunding Revenue Bonds,
Series 1993B, 5.400%, 7/01/05
</TABLE>
43
<PAGE>
Portfolio of Investments (Unaudited)
Insured Municipal Bond - continued
<TABLE>
<CAPTION>
Principal Optional Call Market
Amount Description Provisions* Ratings** Value
- --------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Washington - continued
$ 1,000,000 City of Marysville, Washington, Water and Sewer 12/03 at 100 Aaa $ 1,141,120
Revenue Bonds, 1991, 7.000%, 12/01/11
(Pre-refunded to 12/01/03)
2,000,000 Bellingham School District No. 501, Whatcom County, 12/04 at 100 Aaa 2,130,280
Washington, Unlimited Tax General Obligation
Bonds, 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 1,097,880
Improvement Revenue Bonds, Series 1990A,
7.250%, 7/01/15 (Pre-refunded to 7/01/00)
- --------------------------------------------------------------------------------------------------------------------------
Wisconsin - 0.6%
1,000,000 Wisconsin Municipal Insurance Commission, Revenue 4/98 at 101 1/2 Aaa 1,034,240
Bonds, Series 1987, 8.700%, 4/01/07
2,000,000 City of Superior, Wisconsin, Limited Obligation No Opt. Call Aaa 2,435,740
Refunding Revenue Bonds (Midwest Energy
Resources Company Project), Series E-1991
(Collateralized), 6.900%, 8/01/21
1,000,000 School District of Three Lakes, Forest and Oneida 4/03 at 100 Aaa 1,121,580
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 2,152,860
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 4,183,163
Bonds of 1992 (General Obligation Bonds),
6.600%, 7/01/13 (Pre-refunded to 7/01/02)
- --------------------------------------------------------------------------------------------------------------------------
$762,757,000 Total Investments - (cost $745,043,603) - 98.1% 807,549,039
- --------------------------------------------------------------------------------------------------------------------------
</TABLE>
44
<PAGE>
<TABLE>
<CAPTION>
Principal Optional Call Market
Amount Description Provisions* Ratings** Value
- --------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
TEMPORARY INVESTMENTS IN SHORT-TERM MUNICIPAL SECURITIES - 1.1%
$4,900,000 Maricopa County, Arizona Pollution Control Corporation, A-1+ $ 4,900,000
Pollution Control Revenue Refunding Bonds (Arizona Public
Service Company Palo Verde Project), 1994 Series C,
Variable Rate Demand Bonds, 4.000%, 5/01/29/+/
4,300,000 The University Athletic Association, Inc., Capital VMIG-1 4,300,000
Improvement Revenue Bonds, Series 1990, Variable
Rate Demand Bonds, 3.800%, 2/01/20/+/
- --------------------------------------------------------------------------------------------------------------------------
$9,200,000 Total Temporary Investments - 1.1% 9,200,000
-------------------------------------------------------------------------------------------------
Other Assets Less Liabilities - 0.8% 6,352,856
-------------------------------------------------------------------------------------------------
Net Assets - 100% $823,101,895
=================================================================================================
</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.
* Ratings: Using the higher of Standard & Poor's or
Moody's rating.
** Optional Call Provisions: Dates (month and year)
and prices of the earliest optional call or
redemption. There may be other call provisions at
varying prices at later dates.
(DD) Security purchased on a delayed delivery 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 m arket index.
N/R- Investment is not rated.
45
<PAGE>
Statement of Net Assets (Unaudited)
October 31, 1997
<TABLE>
<CAPTION>
Insured
Municipal Bond Municipal Bond
- ------------------------------------------------------------------------------------------------------
<S> <C> <C>
Assets
Investments in municipal securities, at market value (note 1) $2,863,523,924 $807,549,039
Temporary investments in short-term municipal securities,
at amortized cost, which approximates market value (note 1) 28,560,000 9,200,000
Cash -- 699,595
Receivables:
Interest 53,854,735 15,051,712
Shares sold 153,526 211,341
Investments sold 5,120,050 20,746,582
Other assets 718,704 3,640
- ------------------------------------------------------------------------------------------------------
Total assets 2,951,930,939 853,461,909
- ------------------------------------------------------------------------------------------------------
Liabilities
Cash overdraft 7,549,874 --
Payables:
Investments purchased -- 27,091,370
Shares reacquired 1,566,849 530,725
Accrued expenses:
Management fees (note 6) 1,116,018 331,099
12b-1 distribution and service fees (notes 1 and 6) 17,096 18,578
Other 591,019 90,468
Dividends payable 9,586,760 2,297,774
- ------------------------------------------------------------------------------------------------------
Total liabilities 20,427,616 30,360,014
- ------------------------------------------------------------------------------------------------------
Net assets (note 7) $2,931,503,323 $823,101,895
======================================================================================================
Class A Shares (note 1)
Net assets $ 83,643,659 $ 80,102,068
Shares outstanding 8,830,639 7,246,589
Net asset value and redemption price per share $ 9.47 $ 11.05
Offering price per share (net asset value per share plus
maximum sales charge of 4.20% of offering price) $ 9.89 $ 11.53
======================================================================================================
Class B Shares (note 1)
Net assets $ 2,092,996 $ 2,208,501
Shares outstanding 220,984 199,788
Net asset value, offering and redemption price per share $ 9.47 $ 11.05
======================================================================================================
Class C Shares (note 1)
Net assets $ 4,669,316 $ 6,494,238
Shares outstanding 493,573 593,113
Net asset value, offering and redemption price per share $ 9.46 $ 10.95
======================================================================================================
Class R Shares (note 1)
Net assets $2,841,097,352 $734,297,088
Shares outstanding 299,826,858 66,693,318
Net asset value, offering and redemption price per share $ 9.48 $ 11.01
======================================================================================================
</TABLE>
46 See Accompanying notes to financial statements.
<PAGE>
Statement of Operations (Unaudited)
Six months ended October 31, 1997
<TABLE>
<CAPTION>
Insured
Municipal Bond Municipal Bond
- --------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Investment Income
Tax-exempt interest income (note 1) $ 83,364,450 $ 23,732,400
- --------------------------------------------------------------------------------------------------------------------
Expenses
Management fees (note 6) 6,607,916 1,945,741
12b-1 service fees - Class A (notes 1 and 6) 78,040 74,347
12b-1 distribution and service fees - Class B (notes 1 and 6) 6,268 6,370
12b-1 distribution and service fees - Class C (notes 1 and 6) 17,682 23,327
Shareholders' servicing agent fees and expenses 1,328,042 408,453
Custodian's fees and expenses 168,343 68,449
Trustees' fees and expenses (note 6) 28,412 7,898
Professional fees 137,731 52,007
Shareholders' reports - printing and mailing expenses 208,568 91,864
Federal and state registration fees -- 29,130
Portfolio insurance expenses -- 21,317
Other expenses 61,233 18,477
- --------------------------------------------------------------------------------------------------------------------
Total expenses 8,642,235 2,747,380
- --------------------------------------------------------------------------------------------------------------------
Net investment income 74,722,215 20,985,020
- --------------------------------------------------------------------------------------------------------------------
Realized and Unrealized Gain from Investments
Net realized gain from investment transactions (notes 1 and 4) 5,782,964 4,612,764
Net change in unrealized appreciation or depreciation
of investments 97,128,489 24,577,488
- --------------------------------------------------------------------------------------------------------------------
Net gain from investments 102,911,453 29,190,252
- --------------------------------------------------------------------------------------------------------------------
Net increase in net assets from operations $177,633,668 $ 50,175,272
====================================================================================================================
</TABLE>
47 See accompanying notes to financial statements.
<PAGE>
Statement of Changes in Net Assets (Unaudited)
<TABLE>
<CAPTION>
Municipal Bond
-----------------------------------------------------------
Six months ended Two months Year ended
10/31/97 ended 4/30/97 2/28/97
- -------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Operations
Net investment income $ 74,722,215 $ 25,358,832 $ 153,982,497
Net realized gain (loss) from investment transactions (notes 1 and 4) 5,782,964 124,391 13,454,600
Net change in unrealized appreciation or depreciation of investments 97,128,489 (29,401,558) (11,748,742)
- --------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets from operations 177,633,668 (3,918,335) 155,688,355
- --------------------------------------------------------------------------------------------------------------------------------
Distributions to Shareholders (note 1)
From undistributed net investment income:
Class A (1,920,586) (605,734) (2,735,302)
Class B (26,905) (1,502) (45)
Class C (106,287) (38,827) (146,481)
Class R (73,426,506) (24,664,380) (151,041,117)
From accumulated net realized gains
from investment transactions:
Class A - - (304,876)
Class B - - -
Class C - - (19,401)
Class R - - (13,873,562)
- --------------------------------------------------------------------------------------------------------------------------------
Decrease in net assets from distributions to shareholders (75,480,284) (25,310,443) (168,120,784)
- --------------------------------------------------------------------------------------------------------------------------------
Fund Share Transactions (note 2)
Net proceeds from sale of shares 100,171,753 32,164,961 288,845,641
Net proceeds from shares issued to shareholders due
to reinvestment of distributions 58,491,503 19,772,961 133,505,722
- --------------------------------------------------------------------------------------------------------------------------------
158,663,256 51,937,922 422,351,363
- --------------------------------------------------------------------------------------------------------------------------------
Cost of shares redeemed (180,120,277) (63,401,060) (436,065,365)
- --------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets from Fund share transactions (21,457,021) (11,463,138) (13,714,002)
- --------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets 80,696,363 (40,691,916) (26,146,431)
Net assets at the beginning of period 2,850,806,960 2,891,498,876 2,917,645,307
- --------------------------------------------------------------------------------------------------------------------------------
Net assets at the end of period $2,931,503,323 $2,850,806,960 $2,891,498,876
================================================================================================================================
Balance of undistributed net investment income at end of period $ 519,469 $ 1,277,538 $ 1,229,149
================================================================================================================================
</TABLE>
48 See accompanying notes to financial statements
<PAGE>
<TABLE>
<CAPTION>
Insured Municipal Bond
---------------------------------------------------------
Six months ended Two months ended Year ended
10/31/97 4/30/97 2/29/97
- ----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Operations
Net investment income $ 20,985,020 $ 7,018,725 $ 42,143,020
Net realized gain (loss) from investment transactions (notes 1 and 4) 4,612,764 (986,589) (1,089,131)
Net change in unrealized appreciation or depreciation of investments 24,577,488 (10,703,435) (7,672,084)
- ----------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets from operations 50,175,272 (4,671,299) 33,381,805
- ----------------------------------------------------------------------------------------------------------------------------
Distributions to Shareholders (note 1)
From undistributed net investment income:
Class A (1,853,813) (590,571) (2,881,559)
Class B (27,713) (2,670) (832)
Class C (138,438) (41,445) (224,876)
Class R (19,106,084) (6,443,374) (38,675,228)
From accumulated net realized gains
from investment transactions:
Class A -- -- (211,577)
Class B -- -- --
Class C -- -- (17,777)
Class R -- -- (2,484,412)
- ----------------------------------------------------------------------------------------------------------------------------
Decrease in net assets from distributions to shareholders (21,126,048) (7,078,060) (44,496,261)
- ----------------------------------------------------------------------------------------------------------------------------
Fund Share Transactions (note 2)
Net proceeds from sale of shares 36,352,181 7,673,973 84,624,586
Net proceeds from shares issued to shareholders due
to reinvestment of distributions 13,928,048 4,668,785 29,865,624
- ----------------------------------------------------------------------------------------------------------------------------
50,280,229 12,342,758 114,490,210
- ----------------------------------------------------------------------------------------------------------------------------
Cost of shares redeemed (46,243,890) (17,108,094) (110,894,714)
- ----------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets from Fund share transactions 4,036,339 (4,765,336) 3,595,496
- ----------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets 33,085,563 (16,514,695) (7,518,960)
Net assets at the beginning of period 790,016,332 806,531,027 814,049,987
- ----------------------------------------------------------------------------------------------------------------------------
Net assets at the end of period $823,101,895 $790,016,332 $806,531,027
============================================================================================================================
Balance of undistributed net investment income at end of period $ 385,202 $ 526,230 $ 585,565
============================================================================================================================
</TABLE>
49 See accompanying notes to financial statements.
<PAGE>
Notes to Financial Statements (Unaudited)
1. General Information and Significant Accounting Policies
The Nuveen Flagship Municipal Trust (the "Trust") is an open-end diversified
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 ("Nuveen"), 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 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 their when-issued and delayed delivery purchase commitments. At
October 31, 1997, Insured Municipal Bond had outstanding delayed delivery
purchase commitments of $27,091,370. Municipal Bond had no such purchase
commitments.
50
<PAGE>
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, if any, are distributed to shareholders not less
frequently than annually. Furthermore, capital gains are distributed only to
the extent they exceed available capital loss carryforwards.
Distributions to shareholders of tax-exempt net investment income, net realized
capital gains and/or market discount are recorded on the ex-dividend date. The
amount and timing of distributions are determined in accordance with federal
income tax regulations, which may differ from generally accepted accounting
principles. Accordingly, temporary over-distributions as a result of these
differences may occur and will be classified as either distributions in excess
of net investment income, distributions in excess of net realized gains and/or
distributions in excess of net ordinary taxable income from investment
transactions, where applicable.
Income Taxes
Each Fund is a separate taxpayer for federal income tax purposes. Each Fund
intends to comply with the requirements of the Internal Revenue Code applicable
to regulated investment companies and to distribute all of its tax-exempt net
investment income, in addition to any significant amounts of net realized
capital gains and/or market discount from investment transactions. The Funds
currently consider significant net realized capital gains and/or market discount
as amounts in excess of $.001 per share. Furthermore, 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 Funds. 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 securities are held by
the Fund. Accordingly, neither the prices 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
51
<PAGE>
Notes to Financial Statements (Unaudited) - continued
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, B, C and R Shares. Class A Shares are sold with a
sales charge and incur an annual 12b-1 service fee. Class A Share purchases of
$1 million or more are sold at net asset value without an up-front sales charge
but may be subject to a 1% contingent deferred sales charge ("CDSC") if
redeemed within 18 months of purchase. Class B Shares are sold without a sales
charge but incur annual 12b-1 distribution and service fees. An investor
purchasing Class B Shares agrees to pay a CDSC of up to 5% depending upon the
length of time the shares are held by the investor (CDSC is reduced to 0% at
the end of six years). Class B Shares convert to Class A Shares eight years
after purchase. Class C Shares are sold without a sales charge but incur annual
12b-1 distribution and service fees. An investor purchasing Class C Shares
agrees to pay a CDSC of 1% if Class C Shares are redeemed within one year of
purchase. Class R Shares are not subject to any sales charge or 12b-1
distribution or service fees. Class R Shares are available 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, option contracts, and other financial instruments with
similar characteristics. Although the Funds are authorized to invest in such
financial instruments, and may do so in the future, they did not make any such
investments during the six months ended October 31, 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>
2. Fund Shares
Transactions in Fund shares were as follows:
Municipal Bond
------------------------------------------------------------------------------------------
Six months ended 10/31/97 Two months ended 4/30/97 Year ended 2/28/97
------------------------------------------------------------------------------------------
Shares Amount Shares Amount Shares Amount
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Shares sold:
Class A 1,648,190 $ 15,432,574 1,026,576 $ 9,412,803 7,913,532 $ 72,392,333
Class B 173,911 1,627,126 46,550 424,404 4,630 43,000
Class C 113,859 1,060,714 52,166 473,637 379,075 3,482,943
Class R 8,769,562 82,051,339 2,404,891 21,854,117 23,272,855 212,927,365
Shares issued to shareholders due to
reinvestment of distributions:
Class A 138,764 1,296,561 43,927 402,112 222,308 2,045,959
Class B 1,406 13,202 32 293 -- --
Class C 9,155 85,311 3,585 32,777 13,729 126,401
Class R 6,112,470 57,096,429 2,112,348 19,337,779 14,285,524 131,333,362
- ----------------------------------------------------------------------------------------------------------------------------------
16,967,317 158,663,256 5,690,075 51,937,922 46,091,653 422,351,363
- ----------------------------------------------------------------------------------------------------------------------------------
Shares redeemed:
Class A (647,690) (6,079,021) (762,269) (6,963,040) (4,751,496) (43,639,384)
Class B (5,545) (52,391) -- -- -- --
Class C (216,003) (2,007,811) (14,973) (135,974) (53,764) (496,539)
Class R (18,364,888) (171,981,054) (6,174,392) (56,302,046) (42,855,041) (391,929,442)
- ----------------------------------------------------------------------------------------------------------------------------------
(19,234,126) (180,120,277) (6,951,634) (63,401,060) (47,660,301) (436,065,365)
- ----------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) (2,266,809) $ (21,457,021) (1,261,559) $(11,463,138) (1,568,648) $(13,714,002)
==================================================================================================================================
</TABLE>
<TABLE>
<CAPTION>
Insured Municipal Bond
------------------------------------------------------------------------------------------
Six months ended 10/31/97 Two months ended 4/30/97 Year ended 2/28/97
------------------------------------------------------------------------------------------
Shares Amount Shares Amount Shares Amount
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Shares Sold
Class A 1,116,549 $ 12,218,745 290,416 $ 3,095,852 2,993,504 $ 32,144,825
Class B 153,150 1,674,816 24,672 264,169 21,053 227,426
Class C 115,572 1,247,652 58,684 618,793 169,708 1,808,841
Class R 1,952,568 21,210,968 348,752 3,695,159 4,720,426 50,443,494
Shares issued to shareholders due to
reinvestment of distributions:
Class A 107,232 1,169,047 34,181 365,671 182,510 1,968,382
Class B 872 9,555 41 439 -- --
Class C 10,164 109,780 3,214 34,077 19,086 203,691
Class R 1,164,487 12,639,666 400,458 4,268,598 2,579,133 27,693,551
- ----------------------------------------------------------------------------------------------------------------------------------
4,620,594 50,280,229 1,160,418 12,342,758 10,685,420 114,490,210
- ----------------------------------------------------------------------------------------------------------------------------------
Shares redeemed:
Class A (474,984) (5,177,320) (135,522) (1,441,615) (1,146,982) (12,317,662)
Class B
Class C (64,175) (693,634) (38,598) (406,595) (155,088) (1,641,544)
Class R (3,707,911) (40,372,936) (1,438,979) (15,259,884) (9,079,255) (96,935,508)
- ----------------------------------------------------------------------------------------------------------------------------------
(4,247,070) (46,243,890) (1,613,099) (17,108,094) (10,381,325) (110,894,714)
- ----------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) 373,524 $ 4,036,339 (452,681) $ (4,765,336) 304,095 $ 3,595,496
==================================================================================================================================
</TABLE>
53
<PAGE>
Notes to Financial Statements (Unaudited) - continued
3. Distributions to Shareholders
On November 7, 1997, the Funds declared dividend distributions from their tax-
exempt net investment income which were paid on December 1, 1997, to
shareholders of record on November 7, 1997, as follows:
Municipal Bond Insured Municipal Bond
- --------------------------------------------------------------------------------
Dividend per share:
Class A $ .0390 $ .0460
Class B .0330 .0390
Class C .0345 .0405
Class R .0405 .0475
================================================================================
4. Securities Transactions
Purchases and sales (including maturities) of investments in municipal
securities and temporary municipal investments for the six months ended October
31, 1997, were as follows:
Municipal Bond Insured Municipal Bond
- --------------------------------------------------------------------------------
Purchases:
Investments in municipal securities $146,601,415 $231,987,601
Temporary municipal investments 167,310,000 134,160,000
Sales:
Investments in municipal securities 203,342,724 233,206,900
Temporary municipal investments 138,750,000 145,460,000
================================================================================
At October 31, 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, the Funds' last fiscal year end, Insured Municipal Bond had
unused capital loss carryforwards 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 carryforwards will expire in the year 2004 and $986,589 of the
carryforwards will expire in the year 2005.
5. Unrealized Appreciation (Depreciation)
Gross unrealized appreciation and gross unrealized depreciation of investments
at October 31, 1997, were as follows:
Municipal Bond Insured Municipal Bond
- --------------------------------------------------------------------------------
Gross unrealized:
appreciation $224,098,067 $62,512,576
depreciation (536,763) (7,140)
- --------------------------------------------------------------------------------
Net unrealized appreciation $223,561,304 $62,505,436
================================================================================
54
<PAGE>
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:
Average daily net asset value Management fee
- --------------------------------------------------------------------------------
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
- --------------------------------------------------------------------------------
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 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 asset value of Municipal Bond and .975 of 1% of the average
daily net asset value of Insured Municipal Bond, excluding any 12b-1 fees
applicable to Class A, B and 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.
During the six months ended October 31, 1997, the Distributor collected sales
charges on purchases of Class A Shares of approximately $348,400 and $256,000
for Municipal Bond and Insured Municipal Bond, respectively, of which
approximately $304,400 and $224,300, 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 six months ended October 31, 1997, the Distributor compensated
authorized dealers directly with approximately $77,900 and $109,500 in
commission advances at the time of purchase for Municipal Bond and Insured
Municipal Bond, respectively. To compensate for commissions advanced to
authorized dealers, all 12b-1 service fees collected on Class B Shares during
the first year following a purchase, all 12b-1 distribution fees on Class B
Shares, and all 12b-1 service and distribution fees on Class C Shares during the
first year following a purchase are retained by the Distributor. During the six
months ended October 31, 1997, the Distributor retained approximately $15,800
and $14,600 in such 12b-1 fees for Municipal Bond and Insured Municipal Bond,
respectively. The remaining 12b-1 fees charged to the Funds were paid to
compensate authorized dealers for providing services to shareholders relating to
their investments. The Distributor also collected and retained approximately
$1,600 and $500 of CDSC on share redemptions for Municipal Bond and Insured
Municipal Bond, respectively, during the six months ended October 31, 1997.
55
<PAGE>
Notes to Financial Statements (Unaudited) - continued
7. Composition of Net Assets
At October 31, 1997, each Fund had an unlimited number of $.01 par value shares
authorized. Net assets consisted of:
Municipal Bond Insured Municipal Bond
- --------------------------------------------------------------------------------
Capital paid-in $2,698,342,665 $ 757,759,542
Balance of undistributed net
investment income 519,469 385,202
Accumulated net realized gain from
investment transactions 9,079,885 2,451,715
Net unrealized appreciation of
investments 223,561,304 62,505,436
- --------------------------------------------------------------------------------
Net assets $2,931,503,323 $ 823,101,895
================================================================================
8. Investment Composition
Each Fund invests in municipal securities which include general obligation,
escrowed and revenue bonds. At October 31, 1997, the revenue sources by
municipal purpose for these investments, expressed as a percent of total
investments, were as follows:
Municipal Bond Insured Municipal Bond
- --------------------------------------------------------------------------------
Revenue Bonds:
Utilities 22% 3%
Health Care Facilities 17 17
Housing Facilities 14 8
Water/Sewer Facilities 10 8
Lease Rental Facilities 2 5
Transportation 6 4
Pollution Control 4 6
Educational Facilities 1 6
Other 6 4
General Obligation Bonds 8 15
Escrowed Bonds 10 24
- --------------------------------------------------------------------------------
100% 100%
================================================================================
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 (33% 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 any of the Funds' shares. 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.
56
<PAGE>
Financial Highlights
57
<PAGE>
<TABLE>
<CAPTION>
Financial Highlights (Unaudited)
Selected data for a share outstanding throughout each period is as follows:
Class (Inception date) Operating performance Less distributions
------------------------- ------------------------
Municipal Bond Net
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 (6/95)
1998 (h) $ 9.14 $ .23 $ .33 $(.23) $ -- $ 9.47 6.22%
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)
1998 (h) 9.15 .19 .33 (.20) -- 9.47 5.73
1997 (g) 9.24 .09 (.11) (.07) -- 9.15 (.25)
1996 (c) 9.23 .03 .01 (.03) -- 9.24 .47
Class C (6/95)
1998 (h) 9.14 .21 .32 (.21) -- 9.46 5.84
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)
1998 (h) 9.15 .24 .33 (.24) -- 9.48 6.32
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
- -------------------------------------------------------------------------------------------------------------------------
* Annualized.
(a) Total returns are calculated on net asset value without any sales charge and are not annualized.
(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.
</TABLE>
58
<PAGE>
<TABLE>
<CAPTION>
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>
$ 83,644 .78% 4.89%* .78%* 4.89%* 5%
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
2,093 1.54* 4.11* 1.54* 4.11* 5
468 1.53* 4.39* 1.53* 4.39* 2
43 1.51* 5.23* 1.51* 5.23* 12
4,669 1.33* 4.35* 1.33* 4.35* 5
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
2,841,097 .58* 5.10* .58* 5.10* 5
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>
(g) For the two months ending April 30.
(h) For the six months ending October 31, 1997.
59
<PAGE>
Financial Highlights (Unaudited) -- continued
<TABLE>
<CAPTION>
Class (Inception date) Operating performance Less distributions
--------------------------- ----------------------
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(a)
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Class A (9/94)
1998 (f) $10.66 $.27 $ .40 $(.28) $ -- $11.05 6.30%
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)
1998 (f) 10.67 .23 .39 (.24) -- 11.05 5.81
1997 (e) 10.82 .09 (.16) (.08) -- 10.67 (.65)
1997 (c) 10.80 .04 .02 (.04) -- 10.82 .55
Class C (9/94)
1998 (f) 10.56 .24 .39 (.24) -- 10.95 6.04
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)
1998 (f) 10.62 .28 .40 (.29) -- 11.01 6.41
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 and are not annualized.
(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.
(f) For the six months ending October 31, 1997.
60
<PAGE>
<TABLE>
<CAPTION>
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>
$ 80,102 .85%* 4.96%* .85%* 4.96%* 29%
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
2,209 1.60* 4.17* 1.60* 4.17* 29
488 1.59* 4.36* 1.59* 4.36* 12
228 1.58* 4.84* 1.58* 4.84* 35
6,494 1.40* 4.41* 1.40* 4.41* 29
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
734,297 .65* 5.16* .65* 5.16* 29
714,622 .64* 5.31* .64* 5.31* 12
732,587 .63 5.31 .63 5.31 35
761,956 .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>
Additional Investment Opportunities
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
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 Fund, contact your financial
adviser. If you would like to add to your current investment on a regular 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 give your investment 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.
62
<PAGE>
Fund Information
Board of Trustees
Robert P. Bremmer
Lawrence H. Brown
Anthony T. Dean
Anne E. Impellizzeri
Peter R. Sawers
William J. Schneider
Timothy R. Schwertfeger
Judith M. Stockdale
Fund Manager
Nuveen Advisory Corp.
333 West Wacker Drive
Chicago, IL 60606
Transfer Agent and
Shareholder Services
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.
Independent Public
Accountants
Arthur Andersen LLP
Chicago, Illinois
63
<PAGE>
Serving Investors
for Generations
[PHOTO OF JOHN NUVEEN, SR. APPEARS HERE]
John Nuveen, Sr.
Since our founding in 1898, John Nuveen & Co. has been synonymous with
investments that withstand the test of time. Today, we offer a broad range of
investments designed for investors whose portfolios are the principal source of
their ongoing financial security. More than 1.3 million investors have trusted
Nuveen to help them maintain the lifestyle they currently enjoy.
The cornerstone of Nuveen's investment philosophy is a commitment to disciplined
long-term investment strategies whose aim is to provide consistent, attractive
performance over time -- with moderated risk. We emphasize quality securities
carefully chosen through in-depth research, and we follow those securities
closely over time to help ensure that they continue to meet our exacting
standards.
Whether your focus is long-term growth, dependable current income or
preservation of capital, Nuveen offers a wide array of equity and fixed-income
mutual funds, unit trusts, exchange-traded funds, individual managed account
services, and cash management products, including many that generate tax-free
income.
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 your invest.
[NUVEEN LOGO]
John Nuveen & Co. Incorporated
333 West Wacker Drive
Chicago, Illinois 60606-1286
(800) 621-7227
www.nuveen.com
<PAGE>
NUVEEN
Municipal
Bond Funds
October 31, 1997
Semiannual Report
Dependable, tax-free income
to help you keep more of
what you earn.
[PHOTO APPEARS HERE]
All-American
Intermediate
Limited Term
<PAGE>
Contents
1 Dear Shareholder
3 Answering Your Questions
6 All-American
Performance Overview
8 Intermediate Performance
Overview
10 Limited Term
Performance Overview
13 Financial Section
66 Additional Investment Opportunities
67 Fund Information
<PAGE>
Dear Shareholder
[PHOTO OF TIMOTHY R. SCHWERTFEGER APPEARS HERE]
Timothy R. Schwertfeger
Chairman of the Board
Wealth takes a lifetime
to build. Once achieved,
it should be preserved.
It's a pleasure to report to you on the performance of your Nuveen municipal
bond fund. Over the past 12 months, the funds have performed exceptionally well,
rewarding investors with dependable tax-free income and attractive returns.
All three funds generated superior total returns and their Class A shares were
ranked in the top ten percent of funds among their peer categories for the
period by Lipper Analytical Services. For the 12 months ended October 31, 1997,
Class A shares of the All-American Fund generated a total return of 10.09%. The
Intermediate Fund returned 9.04% for Class A shares in the same period, and the
Limited Term Fund achieved a 6.36% total return on Class A shares. Investors
also continued to enjoy strong dividends generated by each fund's portfolio of
quality bonds. You will find additional details on the individual performance of
each fund on pages 6-11.
As 1997 draws to a close, it seems appropriate to take a moment to look back
over what has been an exceptional time for the American economy, the financial
markets--and the investors in those markets. The year has been distinguished by
continued economic strength, the lowest unemployment rates in more than two
decades, and progress on fiscal issues, including a reduction in the federal
deficit. While much of investors' attention has remained focused on the stock
market, the achievements of the bond market should not be overlooked.
During 1997, the environment for bond performance was enhanced by a substantial
decline in interest rates, reflecting investors' confidence that inflation can
remain near its
1
<PAGE>
"The funds have performed exceptionally well,
rewarding investors with dependable tax-free income and attractive returns."
current annual rate of 2.2%, one of the lowest levels for the
Consumer Price Index in 30 years.
The events of 1997 have also focused renewed attention on the need for
diversification and asset allocation. Stock market volatility, especially in
late October, provided a vivid illustration of the steadying effect that fixed-
income investments can provide in a well-constructed investment portfolio.
Nuveen mutual funds provide an excellent balance to other stock and bond
investments, and their current yields make them very attractive.
You already know you can rely on Nuveen to provide the tax-advantaged
investments you need to pursue your investment goals. Your financial adviser can
introduce you to a variety of other Nuveen products and services to round out
your investment portfolio, including the Nuveen Growth and Income Stock Fund and
two new balanced stock and bond funds. We have also expanded our private asset
management capabilities through the acquisition of Rittenhouse Financial
Services, a well-respected growth investment manager. We encourage you to talk
with your financial adviser about ways to complement your current Nuveen
investment by taking advantage of these additional products and services.
We at Nuveen remain committed to providing you with quality investment solutions
that withstand the test of time. We thank you for your confidence in us and our
family of investments, and we look forward to our next report to you.
Sincerely,
/s/ Timothy R. Schwertfeger
Timothy R. Schwertfeger
Chairman of the Board
December 15, 1997
2
<PAGE>
Answering Your Questions
Ted Neild, managing director of Nuveen's portfolio management team, talks about
the municipal bond market and offers insights into factors that affected the
performance of the funds over the past year.
What economic and market factors influenced the
performance of municipal bonds over the past year?
Over the past 12 months, the performance of the municipal bond market was
influenced by three major factors: the continued strength of the U.S. economy,
minimal inflation (both of which are reflected in the steady-to-declining
interest rates evident during the year), and volatility in the equity markets.
During 1997, these factors contributed to a positive environment for fixed-
income investments, including municipal issues.
Between November 1996 and October 1997, the yield on the 30-year Treasury bond
dropped from 6.68% to 6.15%, and the municipal market followed suit, as the
yield on the Bond Buyer 40 declined from 5.80% to 5.40%. The spread between tax-
free municipal bonds and taxable Treasury bonds remained tight, making
municipal bonds very attractive. The strong total returns produced in this
environment were somewhat muted by a heavy supply of newly issued bonds that
temporarily impacted bond prices. The increased supply worked to our advantage,
however, as it expanded opportunities to find value in the marketplace.
How have these funds performed during this period?
As Tim mentioned in his letter to shareholders, the funds performed
exceptionally well, achieving excellent total returns and superior performance
in comparison with their peers. The All-American Fund produced a total return of
10.09% on Class A shares, surpassing its Lipper peer group average of 8.12% by
almost 200 basis points. Once again, this fund was one of the top performers in
its category, ranking eighth among the 231 national municipal bond funds in the
grouping. The Intermediate Fund also
3
<PAGE>
"The funds performed exceptionally well, achieving excellent total returns and
superior performance in comparison with their peers."
generated impressive results, with a total return of 9.04% on Class A shares
compared with a peer group average of 6.62%--a 242 basis point difference. It
was the top-performing fund in its category, boasting a number one ranking among
138 intermediate-term municipal bond funds. The Limited Term Fund also achieved
an impressive 6.36% total return on Class A shares compared with the Lipper peer
group average of 5.11%. It was ranked third by Lipper among 33 short-term
municipal bond funds. All three funds were also rated well on a risk-adjusted
basis, as evidenced by the Class A shares' four-star ratings by Morningstar.
What are your key strategies for the coming year?
To sustain such outstanding performance, we take a holistic approach to
portfolio management--assessing all of the factors that determine a fund's
performance and taking advantage of all of them to contribute to total return
and dividend stability. One focus in the coming year will be to maintain good
call protection, which helps sustain the dividend and reduce the volatility of
the funds. The All-American Fund currently has about $50 million invested in
non-callable bonds, which should help ensure the strength of the dividend if
interest rates continue to decline. Non-callable bonds cannot be repaid early by
their issuers, ensuring that if interest rates decline, the portfolio will
continue to receive the same coupon rates on those bonds as it did when rates
were higher.
Although the funds have historically held lower-rated (but still investment-
grade quality) bonds to increase yield to shareholders, we have seen the yield
differentials between AAA and BBB bonds narrow significantly over the past year.
As long as credit spreads are tight, we will plan to take advantage of
opportunities to purchase bonds with high credit quality at yields that are
similar to bonds with lower ratings.
As part of our value investing approach, we will also continue to look for bonds
that offer good long-term value with the potential for appreciating returns. At
Nuveen, our Research Department provides the in-depth
4
<PAGE>
expertise and practical knowledge--backed by a century of experience--that make
the difference in uncovering bonds that perform well throughout market cycles.
Our thorough research helps us find investment-grade quality bonds that offer
the best values--such as bonds from specific regions and sectors that have the
best potential for performance and appreciation. Recently, research helped us
uncover a number of bonds that were eventually pre-refunded by their issuers,
which adds tremendous value to the portfolios. We plan to continue to search for
bonds with advance refunding potential, as well as those with lower (but still
investment-grade quality) credit ratings that we feel are undervalued by the
market as a whole.
What is your outlook for the municipal market?
Looking at the year ahead, we believe the overall market will continue to strike
a good balance between supply and demand. We expect supply to increase as new
issuers continue to enter the market. A continued decline in yields could also
cause new supply to come to market through refunding of current debt. On the
demand side, volatility in the equity markets, plus the potential for a
weakening of the economy, could spark increased interest in bonds of all types.
Overall, we expect the funds to continue to benefit from tight credit spreads,
as we take advantage of opportunities to enhance the credit quality and
structure of the portfolios.
5
<PAGE>
Nuveen Flagship All-American
Municipal Bond Fund
Performance Overview
As of October 31, 1997
Morningstar Rating/1/
****
<TABLE>
<CAPTION>
Fund Highlights
- ---------------------------------------------------------------------------
<S> <C> <C> <C>
Share Class A B C R
Inception Date 10/88 2/97 6/93 2/97
...........................................................................
Net Asset Value (NAV) $11.37 $11.38 $11.36 $11.38
...........................................................................
CUSIP 67065Q889 67065Q871 67065Q863 67065Q855
- ---------------------------------------------------------------------------
- ---------------------------------------------------------------------------
Total Net Assets ($000) $288,471
...........................................................................
Average Weighted Maturity (Years) 22.59
...........................................................................
Average Weighted Duration (Years) 7.57
- ---------------------------------------------------------------------------
Annualized Total Return/2/
- ---------------------------------------------------------------------------
Share Class A(NAV) A(Offer) B C R
1-Year 10.09% 5.46% 9.42% 9.50% 10.35%
...........................................................................
5-Year 8.34% 7.41% 7.74% 7.73% 8.39%
...........................................................................
Since Inception 9.00% 8.48% 8.47% 8.39% 9.03%
- ---------------------------------------------------------------------------
Tax-Free Yields
- ---------------------------------------------------------------------------
Share Class A(NAV) A(Offer) B C R
Dist Rate 5.28% 5.05% 4.53% 4.75% 5.48%
...........................................................................
SEC 30-Day Yld 4.75% 4.55% 4.01% 4.21% 4.95%
...........................................................................
Taxable Equiv Yld/3/ 6.88% 6.59% 5.81% 6.10% 7.17%
- ---------------------------------------------------------------------------
</TABLE>
/1/ Overall rating for Class A shares within the municipal bond category for
the period ended October 31, 1997. Morningstar proprietary ratings reflect
historical risk-adjusted performance and are subject to change every month.
Ratings are calculated from a fund's three-, five- and 10-year average
annual returns in excess of 90-day Treasury bill returns, with appropriate
fee adjustments and a risk factor that reflects fund performance below 90-
day Treasury bill returns. The fund earned five stars for the three-year
period and four stars for the five-year period. In an investment category,
10% of funds receive five stars and 22.5% receive four stars. For the
period ending October 31, 1997, 1,448 municipal bond funds were rated for
the three-year period, 676 for the five-year period, and 329 for the 10-
year period.
/2/ Class A share returns are actual. Class B, C and R share returns are actual
for the period since class inception; returns prior to class inception are
Class A share returns adjusted for differences in sales charges and
expenses, which are primarily differences in distribution and service
fees. Class A shares have a 4.2% maximum up-front sales charge. Class B
shares have a contingent deferred sales charge (CDSC) that begins at 5%
for redemptions during the first year after purchase and declines
periodically to 0% over the following five years, which is not reflected
in the return figures. Class B Shares convert automatically to Class A
Shares eight years after purchase. Class C shares have a 1% CDSC for
redemptions within one year which is not reflected in the one-year total
return.
/3/ 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.
/4/ The fund paid shareholders a capital gains distribution in December of
$0.0591 per share.
6
<PAGE>
Credit Quality
[PIE CHART APPEARS HERE]
AAA/Pre-Refunded 20%
BBB/NR 52%
A 23%
AA 5%
- -----------------------------------------------
Diversification
[PIE CHART APPEARS HERE]
Multi-Family Housing 5%
Education/ Civic Organizations 12%
Health Care 16%
Industrial Revenue 4%
Long-Term Care 9%
Tax Obligation (Limited) 10%
Transportation 16%
U.S. Guaranteed 4%
Utilities 12%
Water & Sewer 4%
Other 8%
- -----------------------------------------------
Dividend History (A Shares)/4/
[BAR CHART APPEARS HERE]
<TABLE>
<CAPTION>
<S> <C>
November 1996 0.0491
December 1996 0.05073
January 1997 0.05087
February 1997 0.0499
March 1997 0.0499
April 1997 0.0499
May 1997 0.0499
June 1997 0.05
July 1997 0.05
August 1997 0.05
September 1997 0.05
October 1997 0.05
</TABLE>
7
<PAGE>
Nuveen Flagship Intermediate
Municipal Bond Fund
Performance Overview
As of October 31, 1997
Morningstar Rating/1/
****
<TABLE>
<CAPTION>
Fund Highlights
- ----------------------------------------------------------------------
<S> <C> <C> <C>
Share Class A C R
Inception Date 9/92 12/95 2/97
......................................................................
Net Asset Value (NAV) $10.91 $10.91 $10.89
......................................................................
CUSIP 67065Q814 67065Q798 67065Q780
- ----------------------------------------------------------------------
- ----------------------------------------------------------------------
Total Net Assets ($000) $43,757
......................................................................
Average Weighted Maturity (Years) 9.20
......................................................................
Average Weighted Duration (Years) 7.08
- ----------------------------------------------------------------------
Annualized Total Return/2/
- ----------------------------------------------------------------------
Share Class A(NAV) A(Offer) C R
1-Year 9.04% 5.77% 8.44% 9.00%
......................................................................
5-Year 7.89% 7.23% 7.30% 7.88%
......................................................................
Since Inception 7.54% 6.90% 6.94% 7.53%
- ----------------------------------------------------------------------
Tax-Free Yields
- ----------------------------------------------------------------------
Share Class A(NAV) A(Offer) C R
Dist Rate 4.73% 4.59% 4.18% 4.90%
......................................................................
SEC 30-Day Yld 4.27% 4.14% 3.72% 4.47%
......................................................................
Taxable Equiv Yld/3/ 6.19% 6.00% 5.39% 6.48%
- ----------------------------------------------------------------------
</TABLE>
/1/ Overall rating for Class A shares within the municipal bond category for
the period ended October 31, 1997. Morningstar proprietary ratings reflect
historical risk-adjusted performance and are subject to change every month.
Ratings are calculated from a fund's three-, five- and 10-year average
annual returns in excess of 90-day Treasury bill returns, with appropriate
fee adjustments and a risk factor that reflects fund performance below 90-
day Treasury bill returns. The fund earned four stars for each of the
three- and five-year periods ended October 31, 1997. In an investment
category, 10% of funds receive five stars and 22.5% receive four stars.
For the period ending October 31, 1997, 1,448 municipal bond funds were
rated for the three-year period, 676 for the five-year period, and 329 for
the 10-year period.
/2/ Class A share returns are actual. Class C and R share returns are actual
for the period since class inception; returns prior to class inception are
Class A share returns adjusted for differences in sales charges and
expenses, which are primarily differences in distribution and service fees.
Class A shares have a 3.0% maximum up-front sales charge. Class C shares
have a 1% contingent deferred sales charge for redemptions within one year
which is not reflected in the one-year total return.
/3/ 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.
8
<PAGE>
Credit Quality
[PIE CHART APPEARS HERE]
AAA 36%
BBB/NR 34%
A 18%
AA 12%
- ---------------------------------------------
Diversification
[PIE CHART APPEARS HERE]
Education/Civic Organizations 5%
Health Care 26%
Industrial Revenue 4%
Long-Term Care 4%
Tax Obligation(G.O.) 8%
Tax Obligation (Limited) 17%
Transportation 13%
Utilities 10%
Water & Sewer 9%
Other 4%
- ---------------------------------------------
Dividend History (A Shares)
[BAR CHART APPEARS HERE]
<TABLE>
<CAPTION>
<S> <C>
November 1996 0.04213
December 1996 0.04354
January 1997 0.04365
February 1997 0.0428
March 1997 0.0428
April 1997 0.0428
May 1997 0.0428
June 1997 0.043
July 1997 0.043
August 1997 0.043
September 1997 0.043
October 1997 0.043
</TABLE>
9
<PAGE>
Nuveen Flagship Limited Term Municipal Bond Fund Performance Overview
As of October 31, 1997
Morningstar Rating/1/
[4 STARS]
Fund Highlights
- -----------------------------------------------------------
Share Class A C R
Inception Date 10/87 12/95 2/97
...........................................................
Net Asset Value (NAV) $10.85 $10.84 $10.83
...........................................................
CUSIP 67065Q848 67065Q830 67065Q822
- -----------------------------------------------------------
- -----------------------------------------------------------
Total Net Assets ($000) $461,508
...........................................................
Average Weighted Maturity (Years) 5.79
...........................................................
Average Weighted Duration (Years) 4.77
- -----------------------------------------------------------
Annualized Total Return/2/
- -----------------------------------------------------------
Share Class A(NAV) A(Offer) C R
1-Year 6.36% 3.70% 6.03% 6.32%
...........................................................
5-Year 5.72% 5.19% 5.38% 5.71%
...........................................................
10-Year 6.78% 6.51% 6.45% 6.78%
- -----------------------------------------------------------
Tax-Free Yields
- -----------------------------------------------------------
Share Class A(NAV) A(Offer) C R
Dist Rate 4.70% 4.58% 4.37% 4.88%
...........................................................
SEC 30-Day Yld 3.95% 3.85% 3.61% 4.16%
...........................................................
Taxable Equiv Yld/3/ 5.72% 5.58% 5.23% 6.03%
- -----------------------------------------------------------
1 Overall rating for Class A shares within the municipal bond category for the
period ended October 31, 1997. Morningstar proprietary ratings reflect
historical risk-adjusted performance and are subject to change every month.
Ratings are calculated from a fund's three-, five- and 10-year average annual
returns in excess of 90-day Treasury bill returns, with appropriate fee
adjustments and a risk factor that reflects fund performance below 90-day
Treasury bill returns. The fund earned three stars for the three-year period,
and four stars for each of the five- and 10-year periods ended October 31,
1997. In an investment category, 10% of funds receive five stars, 22.5%
receive four stars, and 35% receive three stars. For the period ending
October 31, 1997, 1,448 municipal bond funds were rated for the three-year
period, 676 for the five-year period, and 329 for the 10-year period.
2 Class A share returns are actual. Class C and R share returns are actual for
the period since class inception; returns prior to class inception are Class
A share returns adjusted for differences in sales charges and expenses, which
are primarily differences in distribution and service fees. Class A shares
have a 2.50% maximum up-front sales charge. Class C shares have a 1%
contingent deferred sales charge for redemptions within one year which is
not reflected in the one-year total return.
3 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.
10
<PAGE>
Credit Quality
[PIE CHART APPEARS HERE]
AAA/Pre-Refunded 40%
BBB/NR 32%
A 22%
AA 6%
- --------------------------------------------------------------------------------
Diversification
[PIE CHART APPEARS HERE]
Forest/Paper Products 18%
Education/Civic Organizations 15%
Utilities 12%
Tax Obligation (Limited) 11%
Transportation 10%
Tax Obligation (G.O.) 9%
Multi-Family Housing 6%
Industrial (Other) 4%
Long-Term Care 4%
U.S. Guaranteed 4%
Water & Sewer 4%
Other 3%
- --------------------------------------------------------------------------------
Dividend History (A Shares)
[BAR CHART APPEARS HERE]
November 1996 0.04082
December 1996 0.04218
January 1997 0.0423
February 1997 0.0415
March 1997 0.0415
April 1997 0.0415
May 1997 0.0415
June 1997 0.0425
July 1997 0.0425
August 1997 0.0425
September 1997 0.0425
October 1997 0.0425
11
<PAGE>
[PHOTO APPEARS HERE]
Financial Section
Contents
14 Portfolio of Investments
46 Statement of Net Assets
47 Statement of Operations
48 Statement of Changes in Net Assets
51 Notes to Financial Statements
60 Financial Highlights
13
<PAGE>
Portfolio of Investments (Unaudited)
Nuveen Flagship All-American
<TABLE>
<CAPTION>
Principal Optional Call Market
Amount Description Provisions* Ratings** Value
- --------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
California -- 10.9%
$ 5,000,000 California Health Facilities Financing Authority, 7/07 at 102 AAA $ 5,078,700
Pomona Valley Hospital, Series A, 5.625%, 7/01/19
2,000,000 California Pollution Control Financing Authority, No Opt. Call A 2,157,680
Pollution Control Revenue, San Diego Gas &
Electric, Series A, 5.900%, 6/01/14
5,000,000 California Statewide Communities Development Authority, 10/07 at 102 Baa3 5,004,000
Lease Revenue, Special Facilities, United Airlines,
Series A, 5.700%, 10/01/33
8,000,000 Contra Costa California Home Mortgage Finance Authority, No Opt. Call AAA 2,767,120
Home Mortgage Revenue, 0.00%, 9/01/17
2,000,000 Foothill/Eastern Transportation Corridor Agency, No Opt. Call Baa 1,404,840
California Tollway Road Revenue, Senior Lien, Series A,
0.000%, 1/01/05
7,000,000 Long Beach Aquarium of the Pacific, Series A, 7/05 at 102 BBB 7,186,690
6.125%, 7/01/23
4,000,000 Los Angeles California Regional Apartments Improvement 5/06 at 102 BBB- 4,313,520
Corporation, Lease Revenue, Facilities Sublease,
International Airport, 6.350%, 11/01/02
Sacramento, California, Cogeneration Authority,
Cogeneration Project Revenue, Procter & Gamble Project:
500,000 6.200%, 7/1/06 7/05 at 102 BBB- 544,675
1,000,000 6.500%, 7/01/21 7/05 at 102 BBB- 1,078,000
2,000,000 Taft, California, Public Financing Authority, Lease 1/07 at 101 BBB+ 2,075,480
Revenue, Community Correctional Facility Project,
Series A, 6.050%, 1/01/17
- --------------------------------------------------------------------------------------------------------------------------
Colorado -- 6.0%
6,000,000 Arapahoe County, Colorado, Capital Improvement Tollroad No Opt. Call Baa 4,222,740
Fund, Highway Revenue, Series C, 0.000%, 8/31/05
2,000,000 Arapahoe County, Colorado, Capital Improvement Tollroad 8/05 at 103 Baa*** 2,364,840
Fund, Highway Revenue, 470 Project Series B,
6.950%, 8/31/20 (Pre-refunded to 8/31/05)
11,800,000 Colorado Health Facilities Authority, Retirement No Opt. Call Aaa 3,133,254
Facilities Revenue, Liberty Heights, Series A,
0.000%, 7/15/22
5,000,000 Denver, Colorado, City & County Airport, Series E, 11/07 at 101 AAA 4,930,050
5.250%, 11/15/23
</TABLE>
14
<PAGE>
<TABLE>
<CAPTION>
Principal Optional Call Market
Amount Description Provisions* Ratings** Value
- --------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Colorado -- continued
$ 2,500,000 Hyland Hills Metropolitan Park & Recreation District, 12/06 at 101 N/R $ 2,689,500
Colorado Special Revenue, Refunding &
Improvement, Series A, 6.750%, 12/15/15
- --------------------------------------------------------------------------------------------------------------------------
Connecticut -- 0.8%
2,000,000 Connecticut State Health & Educational Facilities 11/04 at 102 AAA 2,288,240
Authority, Nursing Home Program, Ahf/Hartford,
7.125%, 11/01/14
- --------------------------------------------------------------------------------------------------------------------------
Delaware -- 0.6%
1,750,000 Delaware State Economic Development Authority, 5/07 at 102 BBB 1,802,553
Revenue Refunding, 1st Mortgage, Peninsula Utd,
Series A, 6.300%, 5/01/22
- --------------------------------------------------------------------------------------------------------------------------
District of Columbia -- 0.5%
1,480,000 District of Columbia, Georgetown University, Series B, 4/99 at 102 A+ 1,560,955
7.150%, 4/01/21
- --------------------------------------------------------------------------------------------------------------------------
Florida -- 2.7%
1,000,000 Lady Lake Florida Industrial Development, Sunbelt 7/00 at 102 N/R*** 1,154,850
Utilities Inc. Project 9.625%, 7/01/15
(Pre-refunded to 7/01/00)
1,965,000 Nassau County, Florida, Inter Care Facilities, Amelia 1/03 at 103 N/R 2,288,243
Island Properties Project, A, 9.750%, 1/01/23
1,750,000 Polk County, Florida, Industrial Development Authority, 12/06 at 102 A1 1,803,305
Solid Waste Disposal Facility Revenue, Tampa Electric
Company Project, 5.850%, 12/01/30
1,965,000 Sanford, Florida Airport Authority, Industrial 5/06 at 102 N/R 2,054,899
Development Revenue, 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 655,926
Revenue, 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 2,085,280
Refunding, Series C, 5.700%, 1/01/19
1,000,000 Municipal Electric Authority, Georgia Special Obligation, No Opt. Call A+ 1,139,320
Fifth Crossover Series, Project One, 6.500%, 1/01/17
</TABLE>
15
<PAGE>
Portfolio of Investments (Unaudited)
Nuveen Flagship All-American - continued
<TABLE>
<CAPTION>
Principal Optional Call Market
Amount Description Provisions* Ratings** Value
- --------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Illinois -- 9.0%
$ 1,750,000 Chicago Illinois Gas Supply Revenue, Peoples Gas Light 5/00 at 102 AA- $ 1,926,523
& Coke Company, Series A, 8.100%, 5/01/20
1,000,000 Chicago Illinois Gas Supply Revenue Refunding, 6/05 at 102 AA- 1,057,150
Peoples Gas & Light, Series A, 6.100%, 6/01/25
2,000,000 Illinois Development Finance Authority, Presbyterian 9/06 at 102 AA- 2,151,100
Home Lake, Series B, 6.300%, 9/01/22
4,000,000 Illinois Educational Facilities Authority, Columbia 12/04 at 100 BBB 4,272,920
College Revenue Refunding, 6.875%, 12/01/17
3,750,000 Illinois Educational Facilities Authority, Loyola 7/01 at 102 A+*** 4,178,513
University Chicago Revenue Refunding, Series A,
7.125%, 7/01/21 (Pre-refunded to 7/01/01)
2,000,000 Illinois Health Facilities Authority, Revenue Refunding, 8/06 at 102 N/R 2,121,080
Fairview Obligation Group, Series A, 7.125%, 8/15/17
6,000,000 Illinois Health Facilities Authority, Revenue Refunding, 2/07 at 102 A- 6,019,200
Sarah Bush Lincoln Health Center, Series B,
5.750%, 2/15/22
4,000,000 Illinois Health Facilities Authority, Victory Health 8/07 at 101 A- 4,025,160
Services, Series A, 5.750%, 8/15/27 (WI)
145,000 Illinois Health Facilities Authority, Westlake 1/99 at 102 BBB+ 151,577
Community Hospital, 7.875%, 1/01/13
- --------------------------------------------------------------------------------------------------------------------------
Indiana -- 6.5%
1,000,000 Fishers Indiana Economic Development, First Mortgage, 9/98 at 102 N/R 1,040,940
United Student Fund Inc., 8.375%, 9/01/14
1,750,000 Indiana Health Facility Financing Authority, Hospital 8/00 at 102 N/R*** 1,967,770
Revenue, Hancock Memorial Hospital Project,
8.300%, 8/15/20 (Pre-refunded to 8/15/00)
4,000,000 Indiana University, Student Fee, Series K, Revenue No Opt. Call AAA 1,956,280
Refunding, 0.000%, 8/01/11
2,000,000 Indianapolis, Indiana, Airport Authority, Special 7/04 at 102 BBB 2,246,040
Facilities, Federal Express Corporation Project,
7.100%, 1/15/17
4,000,000 Indianapolis, Indiana, Airport Authority, Special 11/05 at 102 Baa2 4,266,840
Facility, United Airlines Project, Series A,
6.500%, 11/15/31
5,450,000 Indianapolis, Indiana, Economic Development, Senior, 7/06 at 102 A 5,666,202
Willowbrook Apartments Project, Series A,
6.500%, 7/01/26
</TABLE>
16
<PAGE>
<TABLE>
<CAPTION>
Principal Optional Call Market
Amount Description Provisions* Ratings** Value
- --------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Indiana -- continued
$ 500,000 Monroe County, Indiana, Hospital Authority, Hospital 5/02 at 101 AAA $ 553,945
Revenue, Bloomington Hospital Project,
6.700%, 5/01/12
1,000,000 Rockport, Indiana, Pollution Control Revenue Refunding, 3/01 at 102 Baa2 1,092,390
Indiana & Michigan Power, Series B, 7.600%, 3/01/16
- --------------------------------------------------------------------------------------------------------------------------
Kentucky -- 7.9%
5,000,000 Ashland, Kentucky, Sewer & Solid Waste, Ashland Inc. 2/05 at 102 Baa1 5,608,050
Project, 7.125%, 2/01/22
5,000,000 Henderson County, Kentucky, Solid Waste Disposal 3/05 at 102 Baa2 5,525,450
Revenue, Macmillan Bloedel Project, 7.000%, 3/01/25
4,500,000 Jefferson County, Kentucky, Capital Projects Corporation No Opt. Call A+ 2,085,075
Revenue, Municipal Refunding Lease, Series A,
0.000%, 8/15/12
5,000,000 Louisville & Jefferson County, Kentucky, Metropolitan 11/04 at 102 AAA 5,783,100
Sewer District, Sewer & Drain System Revenue
Refunding, Series A, 6.750%, 5/15/25
3,500,000 Pendleton County, Kentucky, Lease Revenue, Kentucky 3/03 at 102 A 3,699,920
Association Counties Leasing Tollroad Program,
Series A, 6.500%, 3/01/19
- --------------------------------------------------------------------------------------------------------------------------
Louisiana -- 1.9%
3,250,000 Louisiana Public Facilities Authority, Revenue Refunding, 9/07 at 102 AAA 3,187,340
Xavier, University of Louisiana Project, 5.250%, 9/01/27
2,000,000 New Orleans, Louisiana, Audubon Park Commission, 4/02 at 102 N/R 2,207,620
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- 2,185,840
Solid Waste Disposal Revenue, Limited Obligation,
Wheelabrator Water Projects, 6.450%, 12/01/16
- --------------------------------------------------------------------------------------------------------------------------
Massachusetts -- 3.9%
1,000,000 Massachusetts Bay Transportation Authority, 3/07 at 101 AA- 950,800
Massachusetts, General Transportation System,
Series C, 5.000%, 3/01/24
3,000,000 Massachusetts State Housing Finance Agency, 4/03 at 102 A+ 3,168,660
Housing Projects, Refunding, Series A,
6.300%, 10/01/13
</TABLE>
17
<PAGE>
Portfolio of Investments (Unaudited)
Nuveen Flagship All-American - continued
<TABLE>
<CAPTION>
Principal Optional Call Market
Amount Description Provisions* Ratings** Value
- --------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Massachusetts -- continued
$ 4,900,000 Massachusetts State Health & Educational Facilities 12/05 at 102 A1 $ 5,224,233
Authority, Dana Farber Cancer Project, Series G-1,
6.250%, 12/01/22
2,000,000 Massachusetts State Port Authority, Series B, 7/07 at 101 AA- 1,960,600
5.375%, 7/01/27
- --------------------------------------------------------------------------------------------------------------------------
Michigan -- 2.0%
3,315,000 Detroit/Wayne County Michigan Stadium Authority, 2/07 at 102 AAA 3,270,811
5.250%, 2/01/27
2,000,000 Pontiac Michigan Hospital Finance Authority, 8/03 at 102 BBB- 2,010,960
Hospital Revenue Refunding, Nomc Obligation Group,
6.000%, 8/01/13
420,000 Western Townships Michigan Utilities Authority, 1/99 at 102 BBB+ 446,397
Sewer Disposal System, 8.200%, 1/01/18
- --------------------------------------------------------------------------------------------------------------------------
Mississippi -- 0.7%
2,000,000 Claiborne County, Mississippi, Pollution Control 5/00 at 102 BBB- 2,118,340
Revenue Refunding, System Energy Resources Inc.,
7.300%, 5/01/25
- --------------------------------------------------------------------------------------------------------------------------
New Hampshire -- 0.5%
700,000 New Hampshire Higher Educational & Health Facilities 7/99 at 100 A 702,471
Authority, Revenue Refunding Hospital, Catholic
Medical Center, 6.000%, 7/01/17
600,000 New Hampshire Higher Educational & Health Facilities 1/01 at 102 A 646,662
Authority, St. Joseph Hospital, 7.500%, 1/01/16
- --------------------------------------------------------------------------------------------------------------------------
New Jersey -- 1.6%
425,000 Essex County, New Jersey, Improvement Authority, 4/04 at 102 BBB+ 456,684
Lease Newark, 6.600%, 4/01/14
2,400,000 New Jersey Economic Development Authority, 6/02 at 102 N/R 2,634,672
Electric Energy Facility Revenue, Vineland
Cogeneration L.P. Project, 7.875%, 6/01/19
1,375,000 New Jersey Economic Development Authority, 5/05 at 102 AAA 1,465,406
Educational Testing Service, Series B, 6.125%, 5/15/15
- --------------------------------------------------------------------------------------------------------------------------
New York -- 12.4%
1,900,000 New York City, Series B, Fiscal 92, 7.500%, 2/01/09 2/02 at 101 1/2 BBB+ 2,136,170
685,000 New York, New York, Series D, 7.500%, 2/01/17 2/02 at 101 1/2 Aaa 780,838
(Pre-refunded to 2/01/02)
</TABLE>
18
<PAGE>
<TABLE>
<CAPTION>
Principal Optional Call Market
Amount Description Provisions* Ratings** Value
- --------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
New York -- continued
$ 750,000 New York, New York, Series D, 7.500%, 2/01/18 2/02 at 101 1/2 Aaa $ 854,933
(Pre-refunded to 2/01/02)
3,000,000 New York, New York, Series I, 6.250%, 4/15/27 4/07 at 101 BBB+ 3,182,040
1,750,000 New York City Housing Development Corporation, 6/01 at 102 AAA 1,867,373
Multi-Unit Mortgage Refunding, Series A,
7.350%, 6/01/19
1,480,000 New York State Dormitory Authority, City University No Opt. Call Baa1 1,551,469
System, 2nd General, Series A, 5.750%, 7/01/18
2,500,000 New York State Dormitory Authority, Department 7/05 at 102 BBB+ 2,788,400
of Health, Roswell Park Cancer, 6.625%, 7/01/24
3,000,000 New York State Housing Finance Agency, Service 9/05 at 102 BBB+ 3,257,040
Contract Obligation Revenue, Series A, 6.375%, 9/15/15
1,590,000 New York State Mortgage Agency, Homeowner 4/01 at 102 Aa2 1,689,009
Mortgage, Series Uu, 7.750%, 10/01/23
5,500,000 New York State Urban Development Corporation, No Opt. Call BBB+ 5,712,740
Revenue Refunding, State Facilities, 5.700%, 4/01/20
1,500,000 New York State Urban Development Corporation, No Opt. Call BBB+ 1,531,665
Revenue Refunding, Project Center For Industrial
Innovation, 5.500%, 1/01/13
2,125,000 New York State Urban Development Corporation, No Opt. Call BBB+ 2,154,134
Revenue Refunding, University Facility Grant,
5.500%, 1/01/19
7,500,000 Port Authority New York & New Jersey, Special Obligation 10/06 at 102 N/R 8,179,050
Revenue, 5th Installment, Special Project,
6.750%, 10/01/19
- --------------------------------------------------------------------------------------------------------------------------
North Carolina -- 1.0%
1,400,000 Martin County, North Carolina, Industrial Facilities 11/05 at 102 A 1,452,206
& Pollution Control Financing Authority, Solid Waste,
Weyerhaeuser Company Project, 6.000%, 11/01/25
1,299,276 Woodfin Treatment Facility Inc., North Carolina, 12/03 at 102 N/R 1,350,688
Certificates of Participation, 6.750%, 12/01/13
- --------------------------------------------------------------------------------------------------------------------------
North Dakota -- 0.2%
515,000 North Dakota State Housing Finance Agency, 7/99 at 103 Aa2 537,938
Single Family Mortgage Revenue, Series B,
8.000%, 7/01/13
</TABLE>
19
<PAGE>
Portolio of Investments (Unaudited)
Nuveen Flagship All-American -- continued
<TABLE>
<CAPTION>
Principal Optional Call Market
Amount Description Provisions* Ratings** Value
- --------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Ohio -- 8.7%
$ 1,400,000 Cleveland, Ohio, Public Power System Improvement, 11/01 at 102 AAA $ 1,555,708
1st Mortgage, Series A, 7.000%, 11/15/17
1,350,000 Columbiana County, Ohio, County Jail Facility, 12/04 at 102 AA 1,507,019
6.700%, 12/01/24
1,000,000 Cuyahoga County, Ohio, Health Care Facilities, 6/00 at 100 N/R 1,083,520
Altenheim Project, 9.280%, 6/01/15
3,000,000 Cuyahoga County, Ohio, Hospital, Meridia Health 8/05 at 102 A1 3,182,250
System, 6.250%, 8/15/24
1,000,000 Cuyahoga County, Ohio, Hospital, Health Cleveland, 2/03 at 102 A1 1,070,250
Fairview General Hospital & Lutheran Medical Center,
6.300%, 8/15/15
2,350,000 Garfield Heights, Ohio, Hospital, Revenue Refunding & 11/02 at 102 A 2,545,074
Improvement, Marymont Hospital Project, Series A,
6.700%, 11/15/15
1,500,000 Lucas County, Ohio, Hospital, Flower Memorial Hospital, 12/01 at 102 BBB+*** 1,741,650
Series A, 8.125%, 12/01/11 (Pre-refunded to 12/01/01)
3,500,000 Miami County, Ohio, Hospital Facilities, Revenue 5/06 at 102 BBB 3,676,645
Refunding & 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+ 2,893,000
Refunding, Dayton Power & Light Company Project,
6.100%, 9/01/30
1,750,000 Ohio State Higher Educational Facility Commission, 12/03 at 102 AAA 1,959,353
University Dayton Project, 6.600%, 12/01/17
3,500,000 Shelby County, Ohio, Hospital Facilities Revenue 9/02 at 102 BBB 3,868,515
Refunding & Improvement, Memorial Hospital
Association, 7.700%, 9/01/18
- --------------------------------------------------------------------------------------------------------------------------
Oklahoma -- 1.0%
2,750,000 Tulsa, Oklahoma, Municipal Airport Tollroad, Revenue 6/05 at 102 Baa2 2,922,948
Refunding, American Airlines Project, 6.250%, 6/01/20
- --------------------------------------------------------------------------------------------------------------------------
Pennsylvania -- 4.7%
2,500,000 Allegheny County, Pennsylvania, Higher Education 2/06 at 102 Baa2 2,612,750
Building Authority, Robert Morris College, Series A,
6.400%, 2/15/14
1,500,000 Clarion County, Pennsylvania, Hospital Authority, 7/99 at 102 N/R 1,625,445
Hospital Revenue Refunding, Clarion Hospital Project,
8.100%, 7/01/12
</TABLE>
20
<PAGE>
<TABLE>
<CAPTION>
Principal Optional Call Market
Amount Description Provisions* Ratings** Value
- --------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Pennsylvania -- continued
$ 1,000,000 Delaware County, Pennsylvania, Industrial Development 4/01 at 102 AAA $ 1,101,540
Authority, Pollution Control Revenue, Philadelphia
Electric Company Project, 7.375%, 4/01/21
500,000 Falls Township, Pennsylvania, Hospital Authority, 8/02 at 102 AAA 545,010
Hospital 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 1,081,600
College Revenue, Saint Vincent College Project,
6.750%, 5/01/24
1,700,000 Philadelphia, Pennsylvania, Gas Works, Fourteenth 7/03 at 102 Baa1 1,801,677
Series A, Revenue Refunding, 6.375%, 7/01/26
4,500,000 Philadelphia, Pennsylvania, Hospitals & Higher Education 11/03 at 102 A- 4,862,925
Facilities Authority, Hospital Revenue Refunding,
Temple University Hospital, Series A, 6.625%, 11/15/23
- --------------------------------------------------------------------------------------------------------------------------
Rhode Island -- 0.6%
1,600,000 Rhode Island Housing & Mortgage Finance Corporation, 10/00 at 102 AA+ 1,691,280
Homeownership Opportunity, Series 3A,
7.850%, 10/01/16
- --------------------------------------------------------------------------------------------------------------------------
South Carolina -- 2.7%
1,975,000 Berkeley County, South Carolina, School District, 2/04 at 102 AAA 2,126,917
Certificates of Participation, Berkeley School Facilities
Group, Inc., 6.300%, 2/01/16
1,770,000 Georgetown County, South Carolina, Water & Sewer 6/05 at 102 N/R 1,786,196
District Revenue Refunding & Improvement,
6.500%, 6/01/25
1,000,000 South Carolina State Housing Finance & Development 6/05 at 102 BBB+ 1,059,330
Authority, Multifamily Revenue, Hunting Ridge
Apartments, 6.750%, 6/01/25
1,000,000 South Carolina State Housing Finance & Development 11/05 at 102 AA- 1,026,030
Authority, Multifamily Revenue Refunding, Runaway
Bay Apartments Project, 6.125%, 12/01/15
1,750,000 York County, South Carolina, Water & Sewer, 12/03 at 102 N/R 1,764,070
6.500%, 12/01/25
</TABLE>
21
<PAGE>
Portfolio of Investments (Unaudited)
Nuveen Flagship All-American -- continued
<TABLE>
<CAPTION>
Principal Optional Call Market
Amount Description Provisions* Ratings** Value
- --------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Tennessee -- 2.0%
$ 1,070,000 Shelby County, Tennessee, Health Educational & Housing 8/07 at 105 N/R $ 1,308,192
Facilities Board, Open Arms Development Centers,
Series A, 9.750%, 8/01/19
1,085,000 Shelby County, Tennessee, Health Educational & Housing 8/07 at 105 N/R 1,326,531
Facilities Board, Open Arms Development Centers,
Series C, 9.750%, 8/01/19
1,380,000 South Fulton, Tennessee, Industrial Development Board, 10/05 at 102 A3 1,471,162
Industrial Development Revenue, Tyson Foods Inc.
Project, 6.350%, 10/01/15
1,500,000 Wilson County, Tennessee, Certificates of Participation, 6/04 at 102 A 1,590,375
Educational Facilities, 6.250%, 6/30/15
- --------------------------------------------------------------------------------------------------------------------------
Texas -- 5.2%
7,000,000 Alliance Airport Authority, Texas, Special Facilities 4/06 at 102 BBB 7,457,520
Revenue, Federal Express Corporation Project,
6.375%, 4/01/21
2,000,000 Dallas/Fort Worth, Texas, International Airport Facility, 11/02 at 102 Baa2 2,226,280
Improvement Corporation Revenue, American Airlines,
Inc., 7.250%, 11/01/30
2,000,000 North Central, Texas, Health Facility Development 2/06 at 102 BBB 2,100,600
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+ 3,148,688
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+ 2,294,780
Refunding, Laidlaw Inc. Project, Series A,
7.500%, 2/01/10
- --------------------------------------------------------------------------------------------------------------------------
Virginia -- 1.2%
2,000,000 Hanover County, Virginia, Industrial Development No Opt. Call AAA 2,292,400
Authority, Hospital Revenue, Memorial Regional
Medical Center Project, 6.375%, 8/15/18
1,250,000 Southeastern Public Service Authority, Virginia, Senior, 7/03 at 102 A- 1,285,412
Regional Solid Waste System, 6.000%, 7/01/13
</TABLE>
22
<PAGE>
<TABLE>
<CAPTION>
Principal Optional Call Market
Amount Description Provisions* Ratings** Value
- --------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
West Virginia -- 0.2%
$ 500,000 Mason County, West Virginia, Pollution Control, 1/00 at 102 Baa1 $ 531,110
Appalachian Power Company, Series G,
7.400%, 1/01/14
- --------------------------------------------------------------------------------------------------------------------------
Wisconsin -- 0.3%
840,000 Fall Creek, Wisconsin, Municipal Nursing Home Mortgage, 7/99 at 100 N/R 885,570
9.875%, 7/01/19
- --------------------------------------------------------------------------------------------------------------------------
$287,744,276 Total Investments -- (cost $261,089,803) -- 98.4% 283,852,396
===============-----------------------------------------------------------------------------------------------------------
Other Assets Less Liabilities -- 1.6% 4,618,254
-------------------------------------------------------------------------------------------------------
Net Assets -- 100% $288,470,650
=======================================================================================================
</TABLE>
* Optional Call Provisions: Dates (month and year) and prices of the
earliest optional call or redemption. There may be other call provisions
at varying prices at later dates.
** Ratings: Using the higher of Standard & Poor's or Moody's rating.
*** Securities are backed by an escrow or trust containing sufficient U.S.
government or U.S. government agency securities, which ensures the timely
payment of principal and interest. Securities are normally considered to
be equivalent to AAA rated securities.
N/R -- Investment is not rated.
(WI) Security purchased on a when-issued basis (see note 1 of the Notes to
Financial Statements).
23 See accompanying notes to financial statements.
<PAGE>
<TABLE>
<CAPTION>
Portfolio of Investments (Unaudited)
Nuveen Flagship Intermediate
Principal Optional Call Market
Amount Description Provisions* Ratings** Value
- -------------------------------------------------------------------------------------------------------------------------------
<C> <S> <C> <C> <C>
Arizona -- 1.2%
$ 525,000 Pima County, Arizona, Industrial Development Authority, 5/07 at 102 AAA $ 541,548
Single Family Mortgage, Revenue Refunding, Series B,
5.850%, 5/01/09
- -------------------------------------------------------------------------------------------------------------------------------
California -- 2.5%
1,000,000 Sacramento, California, Cogeneration Authority, 7/05 at 102 BBB- 1,089,350
Cogeneration Project Revenue, Procter & Gamble Project,
6.200%, 7/01/06
- -------------------------------------------------------------------------------------------------------------------------------
Colorado -- 9.6%
2,300,000 Arapahoe County, Colorado, Capital Improvement 8/05 at 95 30/32 Aaa 1,540,839
Tollroad Fund, Highway Revenue, 470 Series C,
0.000%, 8/31/06 (Pre-refunded to 8/31/05)
500,000 Colorado Health Facilities Authority, Covenant 12/05 at 102 A- 541,070
Retirement Communities Project, 6.200%, 12/01/07
1,000,000 Denver, Colorado, City & County Airport, 11/05 at 102 AAA 1,049,170
Series B, 5.400%, 11/15/06
1,000,000 Eagle County, Colorado, Air Term Corporation, No Opt. Call N/R 1,057,690
Airport Terminal Project, 6.750%, 5/01/06
- -------------------------------------------------------------------------------------------------------------------------------
Connecticut -- 0.8%
335,000 Eastern Connecticut Resource Recovery Authority, Solid 1/03 at 102 A- 341,469
Waste Revenue, Wheelabrator Lisbon Project, Series A,
5.150%, 1/01/05
- -------------------------------------------------------------------------------------------------------------------------------
Delaware -- 1.2%
500,000 Delaware State Economic Development Authority, 5/07 at 102 BBB 528,815
Revenue Refunding, 1st Mortgage, Peninsula Ltd.,
Series A, 6.100%, 5/01/10
- -------------------------------------------------------------------------------------------------------------------------------
District of Columbia -- 0.5%
205,000 District of Columbia, American University, 10/06 at 101 AAA 213,060
5.375%, 10/01/08
- -------------------------------------------------------------------------------------------------------------------------------
Florida -- 5.8%
275,000 Florida State, Broward County Expressway Authority, No Opt. Call AA+ 395,139
9.875%, 7/01/09
1,000,000 Palm Beach County, Florida, School Board, Certificates of No Opt. Call AAA 1,082,130
Participation, Series A, 5.800%, 8/01/04
</TABLE>
24
<PAGE>
<TABLE>
<CAPTION>
Principal Optional Call Market
Amount Description Provisions* Ratings** Value
- --------------------------------------------------------------------------------------------------------------------------------
<C> <S> <C> <C> <C>
Florida -- continued
$1,000,000 Sanford, Florida, Airport Authority, Industrial Development No Opt. Call N/R $1,047,390
Revenue, Central Florida Terminals Inc. Project,
Series A, 7.500%, 5/01/06
- -------------------------------------------------------------------------------------------------------------------------------
Illinois -- 3.6%
1,000,000 Illinois Health Facilities Authority, Mercy Hospital & No Opt. Call A- 1,066,990
Medical Center, 6.000%, 1/01/06
500,000 Illinois Health Facilities Authority, Victory Health 8/07 at 101 A- 524,765
Services, Series A, 5.750%, 8/15/08 (WI)
- -------------------------------------------------------------------------------------------------------------------------------
Indiana -- 2.3%
500,000 Indiana Bond, Special Program, Hendricks Redevelopment, 2/07 at 102 AA- 529,130
Series B, 5.750%, 2/01/08
500,000 Indiana Health Facility Financing Authority, Hospital No Opt. Call AA+ 499,220
Revenue, Charity Obligation Group, Series D,
5.000%, 11/02/26
- -------------------------------------------------------------------------------------------------------------------------------
Kansas -- 1.0%
420,000 Lenexa, Kansas, Multifamily Housing, Revenue Refunding, 2/03 at 102 AA 440,664
Barrington Park Apartments Project, Series A,
6.200%, 2/01/08
- -------------------------------------------------------------------------------------------------------------------------------
Kentucky -- 5.3%
1,165,000 Kentucky Infrastructure Authority, Revenue Refunding, 8/05 at 102 A 1,242,869
Governmental Agencies Program, Series H,
5.600%, 8/01/06
1,000,000 McCracken County, Kentucky, Hospital, Revenue Refunding, No Opt. Call AAA 1,093,290
Mercy Health System, Series A, 6.100%, 11/01/04
- -------------------------------------------------------------------------------------------------------------------------------
Louisiana -- 0.6%
265,000 Louisiana Public Facilities Authority, Revenue Refunding, 9/02 at 102 Aaa 280,357
Student Loan, Senior, Series A-2, 6.600%, 3/01/03
- -------------------------------------------------------------------------------------------------------------------------------
Maryland -- 1.2%
500,000 Maryland State Health & Higher Educational Facilities 1/07 at 102 A- 530,180
Authority, Revenue Refunding, Pickersgill Issue,
Series A, 5.750%, 1/01/08
- -------------------------------------------------------------------------------------------------------------------------------
Massachusetts -- 5.6%
Massachusetts State Health & Educational Facilities
Authority, Dana Farber Cancer Project, Series G-1:
500,000 6.500%, 12/01/05 No Opt. Call A1 559,030
750,000 6.500%, 12/01/06 12/05 at 102 A1 846,473
</TABLE>
25
<PAGE>
Portfolio of Investments (Unaudited)
Nuveen Flagship Intermediate - continued
<TABLE>
<CAPTION>
Principal Optional Call Market
Amount Description Provisions* Ratings** Value
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Massachusetts - continued
$1,000,000 Massachusetts State Water Pollution, Tollroad 2/04 at 102 AA+ $1,069,630
Water Pollution Abatement, Loan Program,
Series A, 5.700%, 2/01/05
- ------------------------------------------------------------------------------------------------------------------------------
Michigan - 8.7%
750,000 Michigan Municipal Bond Authority, State Revolving No Opt. Call AA+ 867,345
Fund, 7.000%, 10/01/04
750,000 Michigan State Hospital Finance Authority, Revenue 8/04 at 102 AAA 769,710
Refunding Hospital, Detroit Medical Center, Series B,
5.100%, 8/15/07
1,000,000 Michigan State Hospital Finance Authority, Revenue No Opt. Call BBB 1,052,840
Refunding Hospital, Gratiot Community Hospital,
6.100%, 10/01/07
1,000,000 Monroe County, Michigan, Pollution Control, No Opt. Call AAA 1,105,040
Detroit Edison Company Project, Series A,
6.350%, 12/01/04
- ------------------------------------------------------------------------------------------------------------------------------
Missouri - 3.9%
1,000,000 Branson, Missouri, Tax Increment Allocation, No Opt. Call N/R 1,020,010
Branson Meadows Project, Series A, 6.400%, 11/01/05
300,000 Missouri State Health & Educational Facilities Authority, 2/07 at 102 N/R 307,266
Health Facilities, Revenue Refunding, Lutheran Senior
Services, 5.550%, 2/01/09
350,000 St. Louis County, Missouri, Industrial Development 12/02 at 102 N/R 379,376
Authority, Revenue Refunding, Kiel Center
Multi-purpose Arena, 7.625%, 12/01/09
- ------------------------------------------------------------------------------------------------------------------------------
New Jersey - 1.2%
500,000 New Jersey Economic Development Authority, No Opt. Call AAA 527,730
Educational Testing Service, Series B, 5.500%, 5/15/05
- ------------------------------------------------------------------------------------------------------------------------------
New Mexico - 0.2%
80,000 New Mexico Educational Assistance Foundation, Student No Opt. Call Aaa 83,755
Loan, Senior Series One-A, 6.300%, 12/01/02
- ------------------------------------------------------------------------------------------------------------------------------
New York - 14.1%
500,000 Albany, New York, Housing Authority, Limited Obligation, 10/05 at 102 Baa1 512,790
Refunding, 5.700%, 10/01/06
700,000 New York City, Series F, 6.375%, 2/15/06 2/05 at 101 BBB+ 764,799
200,000 New York City, Series G, 5.750%, 2/01/06 No Opt. Call BBB+ 210,574
</TABLE>
26
<PAGE>
<TABLE>
<CAPTION>
Principal Optional Call Market
Amount Description Provisions* Ratings** Value
- ------------------------------------------------------------------------------------------------------------------------------
New York - continued
<S> <C> <C> <C> <C>
$ 500,000 New York, New York, Series B, 5.700%, 8/15/07 8/06 at 101 1/2 BBB+ $ 526,395
1,000,000 New York State Dormitory Authority, Mental 2/07 at 102 A- 1,086,720
Health Services Facilities, Series A, 6.000%, 2/15/08
750,000 New York State Housing Finance Agency, Revenue No Opt. Call BBB+ 799,815
Refunding, Health Facilities, New York City, Series A,
6.000%, 5/01/06
1,000,000 Port Authority of New York & New Jersey, Special No Opt. Call N/R 1,126,880
Obligation Revenue, 3rd Installment, Special Project,
7.000%, 10/01/07
1,000,000 Port Authority of New York & New Jersey, Special No Opt. Call AAA 1,125,090
Obligation Revenue, Special Project, JFK International
Air Terminal 6, 1st Installment, 6.250%, 12/01/10
- ------------------------------------------------------------------------------------------------------------------------------
Ohio - 11.4%
Cleveland, Cuyahoga County, Ohio, Port Authority,
Revenue Refunding, Rock & Roll Hall of Fame:
360,000 5.750%, 12/01/07 No Opt. Call N/R 379,994
425,000 5.850%, 12/01/08 No Opt. Call N/R 450,900
1,000,000 Franklin County, Ohio, Hospital, Revenue Refunding & 11/06 at 101 Aa 1,072,570
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 1,040,500
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 953,820
Refunding & Improvement, Upper Valley Medical
Center, Series C, 6.000%, 5/15/06
1,000,000 Ohio State Public Facilities Commission, Higher Education No Opt. Call AAA 1,079,950
Capital Facilities, Series Ii-B, 5.750%, 11/01/04
- ------------------------------------------------------------------------------------------------------------------------------
Pennsylvania - 5.8%
1,010,000 Lehigh County, Pennsylvania, General Purpose Authority, 7/05 at 102 AAA 1,063,459
Revenue Refunding Hospital, Lehigh Valley Hospital Inc.,
Series A, 5.400%, 7/01/06
500,000 Philadelphia, Pennsylvania, Gas Works, Fourteenth No Opt. Call Baa1 549,620
Series A, Revenue Refunding, 7.000%, 7/01/02
1,500,000 Westmoreland County, Pennsylvania, Municipal No Opt. Call AAA 941,040
Authority, Municipal Service Revenue Refunding,
Series A, 0.000%, 8/15/07
</TABLE>
27
<PAGE>
Portfolio of Investments (Unaudited)
Nuveen Flagship Intermediate - continued
<TABLE>
<CAPTION>
Principal Optional Call Market
Amount Description Provisions* Ratings** Value
--------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
South Carolina - 0.6%
$230,000 Myrtle Beach, South Carolina, Certificates of Participation, No Opt. Call BBB+ $ 244,975
Myrtle Beach Convention Center Project, 6.750%, 7/01/02
--------------------------------------------------------------------------------------------------------------------------------
South Dakota - 1.3%
550,000 South Dakota Student Loan Finance Corporation, Student No Opt. Call A+ 566,022
Loan Revenue Refunding, Series A, 5.850%, 8/01/00
--------------------------------------------------------------------------------------------------------------------------------
Tennessee - 3.6%
500,000 Clarksville, Tennessee, Hospital, Revenue Refunding & No Opt. Call Baa1 524,620
Improvement, Clarksville Memorial Project,
6.000%, 7/01/03
500,000 Memphis, Shelby County, Tennessee, Airport Authority, No Opt. Call BBB 515,335
Special Facilities & Project Revenue Refunding,
Federal Express Corporation, 5.350%, 9/01/12
500,000 Metro Government Nashville & Davidson County, No Opt. Call BBB+ 521,665
Tennessee, Industrial Development Board, Revenue
Refunding & Improvement, Osco Treatment Inc.,
6.000%, 5/01/03
--------------------------------------------------------------------------------------------------------------------------------
Texas - 6.2%
400,000 Brazos, Texas, Higher Education Authority, Student Loan No Opt. Call Aaa 422,852
Revenue Refunding, Series A-1, 6.200%, 12/01/02
3,000,000 Goose Creek, Texas, Independent School District, No Opt. Call AAA 1,714,140
0.000%, 2/15/09
535,000 Texas State Department, Housing & Community Affairs, No Opt. Call A 560,080
Multifamily Housing, NHP Foundation, Asmara
Project, Series A, 5.800%, 1/01/06
--------------------------------------------------------------------------------------------------------------------------------
Utah - 0.7%
290,000 Salt Lake County, Utah, Westminster College Project, 10/07 at 101 BBB 289,020
5.200%, 10/01/09
</TABLE>
28
<PAGE>
<TABLE>
<CAPTION>
Principal Optional Call Market
Amount Description Provisions* Ratings** Value
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Wyoming - 0.5%
$ 200,000 Wyoming State Farm Loan Board, Capital Facilities, 10/02 at 102 AA- $ 215,888
Revenue Refunding, 6.100%, 10/01/06
- -----------------------------------------------------------------------------------------------------------------------------------
$43,520,000 Total Investments - (cost $40,594,853) - 99.4% 43,482,853
===========------------------------------------------------------------------------------------------------------------------------
Other Assets Less Liabilities - 0.6% 274,518
-------------------------------------------------------------------------------------------------------------------
Net Assets - 100% $43,757,371
===================================================================================================================
</TABLE>
* Optional Call Provisions: Dates (month and year) and
prices of the earliest optional call or redemption. There
may be other call provisions at varying prices at later
dates.
** Ratings: Using the higher of Standard & Poor's or Moody's
rating.
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 of Investments (Unaudited)
Nuveen Flagship Limited Term
<TABLE>
<CAPTION>
Principal Optional Call Market
Amount Description Provisions* Ratings** Value
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Alaska - 0.8%
$ 945,000 Alaska Industrial Development & Exposition Authority, No Opt. Call A2 $ 965,374
Revolving Fund, Series A, 5.700%, 4/01/99
Alaska Student Loan Corporation, Student Loan Revenue,
Series A:
1,250,000 5.200%, 7/01/06 No Opt. Call AAA 1,282,800
1,500,000 5.250%, 7/01/07 No Opt. Call AAA 1,542,840
- -----------------------------------------------------------------------------------------------------------------------------------
Arizona - 0.5%
250,000 Arizona Educational Loan Marketing Corporation, No Opt. Call Aa 264,505
Educational Loan Revenue, Senior Series,
6.125%, 9/01/02
2,000,000 Tucson, Arizona, Refunding, 5.375%, 7/01/05 No Opt. Call AAA 2,116,260
- -----------------------------------------------------------------------------------------------------------------------------------
California - 2.2%
1,250,000 Long Beach Aquarium of the Pacific, California, No Opt. Call BBB 1,313,875
Series A, 5.750%, 7/01/05
Sacramento, California, Cogeneration Authority,
Cogeneration Project Revenue, Procter & Gamble Project:
1,000,000 5.900%, 7/01/02 No Opt. Call BBB- 1,057,840
500,000 6.000%, 7/01/03 No Opt. Call BBB- 534,275
500,000 7.000%, 7/01/04 No Opt. Call BBB- 564,210
4,800,000 Southern California Public Power Authority, No Opt. Call AAA 5,167,632
Power Project Revenue Refunding, Palo Verde
Project, Series A, 5.500%, 7/01/05
1,500,000 Taft, California, Public Financing Authority, Lease No Opt. Call BBB+ 1,560,885
Revenue, Community Correctional Facility Project,
Series A, 5.500%, 1/01/06
- -----------------------------------------------------------------------------------------------------------------------------------
Colorado - 5.7%
9,000,000 Arapahoe County, Colorado, Capital Improvement 8/05 at 95 30/32 Baa*** 6,029,370
Tollroad Fund, Highway Revenue, 470 Series C,
0.000%, 8/31/06 (Pre-refunded to 8/31/05)
Arvada, Colorado, Limited Sales & Use Tax:
500,000 6.200%, 6/01/98 No Opt. Call N/R 506,820
500,000 6.300%, 6/01/99 No Opt. Call N/R 517,570
400,000 6.400%, 6/01/00 No Opt. Call N/R 422,064
3,135,000 Colorado Health Facilities Authority, Covenant No Opt. Call A- 3,261,779
Retirement Communities Project, 5.650%, 12/01/04
</TABLE>
30
<PAGE>
<TABLE>
<CAPTION>
Principal Optional Call Market
Amount Description Provisions* Ratings** Value
- ---------------------------------------------------------------------------------------------------------------------------------
<C> <S> <C> <C> <C>
Colorado -- continued
Colorado Housing Finance Authority, Single Family
Housing, Series A:
$ 1,515,000 0.000%, 11/01/01 No Opt. Call Aa1 $ 1,217,772
3,515,000 0.000%, 11/01/02 No Opt. Call Aa1 2,655,829
1,880,000 Colorado Student Obligation Bond Authority, 12/97 at 100 A 1,884,324
Student Loan Revenue, Series A, 6.625%, 6/01/99
6,475,000 Denver, Colorado, City & County Airport, No Opt. Call AAA 6,924,300
Series B, 5.750%, 11/15/04
415,000 Denver Colorado City & County Industrial Development, No Opt. Call A- 418,880
University of Denver Project, 6.800%, 3/01/98
1,600,000 Eagle County, Colorado, Air Term Corporation, No Opt. Call N/R 1,692,304
Airport Terminal Project, 6.750%, 5/01/06
500,000 Hyland Hills Metropolitan Park & Recreation District, No Opt. Call N/R 516,250
Special Revenue Refunding & Improvement,
A, 5.400%, 12/15/00
200,000 University of Colorado, Certificates of Participation, 12/98 at 102 A2*** 210,596
Series D, Colorado Association of School Boards,
Lease Purchase Finance Program, 7.100%, 12/01/00
(Pre-refunded to 12/01/98)
- ---------------------------------------------------------------------------------------------------------------------------------
Connecticut -- 3.3%
Bridgeport, Connecticut, Series A:
4,650,000 5.250%, 9/01/04 No Opt. Call AAA 4,864,040
1,000,000 6.000%, 9/01/05 No Opt. Call AAA 1,095,960
2,800,000 Connecticut State Health & Educational No Opt. Call BBB- 2,914,632
Facilities Authority, Quinnipiac College,
Series D, Revenue Refunding, 5.625%, 7/01/03
Connecticut State Development Authority, First Mortgage
Gross Revenue Health Care Project, Refunding,
Church Homes Inc.:
780,000 5.100%, 4/01/04 No Opt. Call BBB 785,694
1,100,000 5.200%, 4/01/05 No Opt. Call BBB 1,111,748
1,135,000 5.300%, 4/01/06 No Opt. Call BBB 1,150,708
1,025,000 New Haven, Connecticut, Series A. 9.250%, 3/01/02 No Opt. Call AAA 1,159,572
New Haven, Connecticut, Series B:
285,000 5.900%, 12/01/98 No Opt. Call AAA 291,163
340,000 5.900%, 12/01/98 No Opt. Call Baa1 346,542
Stratford, Connecticut:
610,000 6.750%, 3/01/98 No Opt. Call N/R 615,856
650,000 6.900%, 3/01/99 No Opt. Call N/R 674,765
</TABLE>
31
<PAGE>
Portfolio of Investments (Unaudited)
Nuveen Flagship Limited Term -- continued
<TABLE>
<CAPTION>
Principal Optional Call Merket
Amount Description Provisions* Ratings** Value
- --------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
District of Columbia -- 0.1%
$ 500,000 District of Columbia Redevelopment Land Agency, No Opt. Call Baa $ 505,330
Washington, D.C. Sports Arena, Special Tax Revenue,
5.300%, 11/01/99
- --------------------------------------------------------------------------------------------------------------------
Florida -- 2.0%
1,000,000 Dade County, Florida, Aviation Revenue, No Opt. Call Aa3 1,022,880
Series U, 6.400%, 10/01/98
450,000 North Springs Improvement District, Florida No Opt. Call N/R 477,248
Water & Sewer Revenue, 7.900%, 10/01/01
4,940,000 Polk County, Florida, Housing Finance Authority, 7/05 at 101 AAA 5,071,108
Multifamily Housing, Revenue Refunding, Winter Oaks
Apartments Project, Series A, 5.250%, 7/01/22
2,625,000 Sanford, Florida, Airport Authority, Industrial No Opt. Call N/R 2,722,545
Development Revenue, Central Florida Terminals Inc.
Project, A, 7.300%, 5/01/04
- --------------------------------------------------------------------------------------------------------------------
Georgia -- 0.7%
3,000,000 Atlanta, Georgia, Airport Facilities, Revenue No Opt. Call AAA 3,397,290
Refunding, 6.500%, 1/01/06
- --------------------------------------------------------------------------------------------------------------------
Illinois -- 3.2%
430,000 DeKalb, Illinois, Single Family Mortgage, Senior No Opt. Call Aaa 442,547
Series A, 6.700%, 12/01/99
970,000 Illinois Health Facilities Authority, Revenue No Opt. Call AA 995,317
Refunding, Galesburg Cottage Hospital, 5.400%,
5/01/00
1,500,000 Illinois Health Facilities Authority, Revenue No Opt. Call A- 1,552,320
Refunding, Sarah Bush Lincoln Health Center,
Series B, 5.500%, 2/15/06
895,000 Illinois Health Facilities Authority, Mercy Hospital No Opt. Call A- 928,867
& Medical Center, 5.600% 1/01/02
Illinois Health Facilities Authority, Victory Health
Services, Series A:
945,000 5.000%, 8/15/05 (WI) No Opt. Call A- 949,470
995,000 5.000%, 8/15/06 (WI) No Opt. Call A- 994,572
1,045,000 5.750%, 8/15/07 (WI) No Opt. Call A- 1,100,448
605,000 5.750%, 8/15/08 (WI) 8/07 at 101 A- 634,966
1,550,000 Illinois Health Facilities Authority, Servantor 8/99 at 102 N/R*** 1,669,397
Series B, 7.500%, 8/15/01 (Pre-refunded to 8/15/99)
</TABLE>
32
<PAGE>
<TABLE>
<CAPTION>
Principal Optional Call Market
Amount Description Provisions* Rating** Value
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Illinois -- continued
$ 325,000 Illinois Health Facilities Authority, No Opt. Call AAA $ 335,114
Carle Foundation, Series C, 6.700%, 1/01/99
3,000,000 Illinois State Refunding, 6.200%, 10/01/04 10/02 at 102 AA 3,265,230
1,975,000 Romeoville, Illinois, Refunding, Alternate Revenue
Source, Series B, 7.850%, 1/01/01 No Opt. Call N/R 2,073,197
- -----------------------------------------------------------------------------------------------------------------------------------
Indiana -- 3.4%
Indiana Bond Special Program, Hendricks
Redevelopment, Series B:
1,525,000 5.250%, 2/01/03 No Opt. Call AA- 1,568,859
1,075,000 5.400%, 2/01/04 No Opt. Call AA- 1,113,786
4,500,000 Indiana Health Facility Financing Authority, No Opt. Call AA+ 4,492,980
Hospital Revenue, Charity Obligation Group,
Series D, 5.000%, 11/02/26
Indianapolis, Indiana, Economic Development, Multifamily
Housing Mortgage Revenue, Castle Dore Project, Series A:
160,000 5.125%, 10/01/02 12/97 at 100 N/R 160,104
330,000 5.125%, 10/01/07 12/97 at 100 N/R 330,142
435,000 5.125%, 10/01/12 12/97 at 100 N/R 435,283
590,000 5.125%, 10/01/17 12/97 at 100 N/R 590,254
5,620,000 5.125%, 4/01/37 12/97 at 100 N/R 5,623,653
1,250,000 Valparaiso, Indiana, Multi School Building No Opt. Call AAA 1,330,533
Corporation, First Mortgage Refunding,
6.100%, 7/01/01
- -----------------------------------------------------------------------------------------------------------------------------------
Iowa -- 0.9%
1,775,000 Iowa State, Certificates of Participation, Series A, No Opt. Call AAA 1,830,132
6.000%, 7/01/99
Iowa Student Loan Liquidity Corporation, Student Loan
Revenue, Iowa Partnership:
600,000 5.850%, 7/01/99 No Opt. Call A 612,486
325,000 6.000%, 7/01/00 No Opt. Call A 338,094
600,000 6.100%, 7/01/01 No Opt. Call A 621,510
650,000 6.200%, 7/01/02 No Opt. Call A 678,893
- -----------------------------------------------------------------------------------------------------------------------------------
Kentucky -- 7.7%
3,180,000 Christian County, Kentucky, Hospital, Revenue No Opt. Call A- 3,337,251
Refunding, Jennie Stuart Medical Center,
A, 5.500%, 7/01/06
415,000 Jefferson County, Kentucky, Health Facilities, No Opt. Call AAA 414,398
Revenue Refunding, Alliant Health System Inc.,
4.700%, 10/01/07
</TABLE>
33
<PAGE>
<TABLE>
<CAPTION>
Portfolio of Investments (Unaudited)
Nuveen Flagship Limited Term - continued
Principal Optional Call Market
Amount Description Provisions* Ratings** Value
- --------------------------------------------------------------------------------------------------------------------
<C> <S> <C> <C> <C>
Kentucky -- continued
Jeffersontown, Kentucky, Certificates of Participation,
Refunding & Improvement, Kentucky Public Projects:
$ 235,000 4.650%, 11/01/02 No Opt. Call A $ 238,983
520,000 4.750%, 11/01/03 No Opt. Call A 530,332
Kenton County, Kentucky, Water District No. 001,
Waterworks Revenue, Series B:
475,000 5.600%, 2/01/03 No Opt. Call AAA 503,253
400,000 5.600%, 2/01/04 No Opt. Call AAA 425,500
500,000 5.600%, 2/01/05 No Opt. Call AAA 533,985
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+ 1,301,158
1,330,000 6.000%, 11/01/01 No Opt. Call A+ 1,408,829
2,720,000 6.600%, 11/01/06 11/01 at 102 A+ 2,951,635
1,460,000 Kentucky Higher Education Student Loan Corporation, No Opt. Call Aaa 1,615,373
Insured Student Loan Revenue, 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 187,664
220,000 5.400%, 6/01/04 No Opt. Call A 230,782
200,000 5.500%, 6/01/05 No Opt. Call A 211,274
Kentucky Infrastructure Authority, Revenue Refunding,
Governmental Agencies Program, Series H:
1,945,000 5.300%, 8/01/03 No Opt. Call A 2,029,938
675,000 5.400%, 8/01/04 No Opt. Call A 708,777
1,000,000 5.500%, 8/01/05 No Opt. Call A 1,057,370
500,000 Kentucky State Property & Buildings Commission, No Opt. Call A+ 547,460
Revenue Refunding, Project No. 59, 6.000%, 11/01/05
1,000,000 Kentucky State Turnpike Authority, Resource Recovery No Opt. Call A+ 1,310,690
Road Revenue, 0.000%, 7/01/05
Louisville & Jefferson County, Kentucky, Regional Airport
Authority, Airport System Revenue Refunding, Series A:
1,375,000 5.750%, 7/01/00 No Opt. Call AAA 1,429,024
455,000 5.750%, 7/01/01 No Opt. Call AAA 476,267
1,535,000 5.750%, 7/01/02 No Opt. Call AAA 1,621,129
1,030,000 Louisville & Jefferson County, Kentucky, Regional No Opt. Call AAA 1,047,211
Airport Authority, Airport System Revenue, Series A,
Louisville International Airport, 4.900%, 7/01/04
</TABLE>
34
<PAGE>
<TABLE>
<CAPTION>
Principal Optional Call Market
Amount Description Provisions* Ratings** Value
- --------------------------------------------------------------------------------------------------------------------
<C> <S> <C> <C> <C>
Kentucky -- continued
$ 3,225,000 Mount Sterling, Kentucky, Lease, Kentucky
League Cities Funding, Series A, 5.625%, 3/01/03 No Opt. Call Aa $ 3,377,220
10,800,000 Owensboro, Kentucky, Electric Light & Power, No Opt. Call AAA 8,223,012
Series A, 0.000%, 1/01/04
- --------------------------------------------------------------------------------------------------------------------
Louisiana -- 3.3%
6,000,000 East Baton Rouge Parish, Louisiana, Industrial No Opt. Call A+ 6,315,900
Pollution & Pollution Control, Revenue Refunding,
Hoechst Celanese Corporation Project, 5.400%, 12/01/02
1,215,000 Louisiana Public Facilities Authority, Hospital No Opt. Call AAA 1,234,574
Revenue, Our Lady of Lourdes Regional Medical,
4.900%, 2/01/00
1,170,000 Louisiana Public Facilities Authority, Hospital No Opt. Call A3 1,297,401
Revenue, Women's Hospital Foundation Project,
6.750%, 10/01/02
Louisiana State Offshore Term Authority, Deepwater Port,
Revenue Refunding, 1st Stage Series B, Loop Inc.:
2,500,000 6.100%, 9/01/02 No Opt. Call A 2,653,450
1,000,000 6.250%, 9/01/04 No Opt. Call A 1,079,020
Office Facilities Corporation, A Louisiana Non-Profit
Corporation, Capital Facilities:
400,000 7.250%, 12/01/99 No Opt. Call BBB+ 424,584
770,000 7.350%, 12/01/00 No Opt. Call BBB+ 836,821
Ouachita Parish Louisiana, Hospital Service, District No. 1
Revenue, Glenwood Regional Medical Center:
440,000 7.000%, 7/01/98 No Opt. Call A 448,950
425,000 7.000%, 7/01/99 No Opt. Call A 444,801
300,000 7.250%, 7/01/00 No Opt. Call A 322,872
- --------------------------------------------------------------------------------------------------------------------
Maine -- 0.5%
260,000 Maine Educational Loan Marketing Corporation, No Opt. Call A 260,000
Student Loan, Revenue Refunding, Series 1991,
6.500%, 11/01/97
2,060,000 Maine Educational Loan Marketing Corporation, 5/02 at 101 A 2,192,458
Student Loan, Revenue Refunding, Series A,
6.600%, 5/01/05
- --------------------------------------------------------------------------------------------------------------------
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- 2,386,590
1,000,000 5.850%, 12/01/05 No Opt. Call A- 1,061,710
</TABLE>
35
<PAGE>
Portfolio of Investments (Unaudited)
Nuveen Flagship Limited Term -- continued
<TABLE>
<CAPTION>
Principal Optional Call Market
Amount Description Provisions* Ratings** Value
- --------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Maryland -- continued
$ 2,400,000 Northeast Maryland Waste Disposal Authority, No Opt. Call AAA $ 2,737,584
Resource Recovery, Revenue Refunding, Southwest
Resource Recovery Facility, 7.150%, 1/01/04
- --------------------------------------------------------------------------------------------------------------------
Massachusetts -- 5.3%
265,000 Brockton, Massachusetts, 5.350%, 6/15/00 No Opt. Call A- 272,049
Massachusetts Education Loan Authority, Education
Loan, Revenue Refunding, Issue E, Series B:
1,000,000 5.500%, 7/01/01 No Opt. Call AAA 1,043,000
3,075,000 5.700%, 7/01/04 No Opt. Call AAA 3,281,640
Massachusetts Educational Financing Authority,
Education Loan, Revenue Refunding, Issue E:
1,970,000 5.250%, 7/01/06 No Opt. Call AAA 2,034,242
2,775,000 5.350%, 7/01/07 7/06 at 102 AAA 2,884,141
2,635,000 Massachusetts Municipal Wholesale Electric Company, No Opt. Call AAA 2,780,531
Power Supply System, Series A, Revenue Refunding,
6.300%, 7/01/00
3,800,000 Massachusetts Municipal Wholesale Electric Company, No Opt. Call AAA 4,009,874
Power Supply System, Revenue Refunding, Series B,
6.300%, 7/01/00
1,000,000 Massachusetts State, Refunding, Series A, 6.100%, No Opt. Call AA- 1,035,770
8/01/99
1,000,000 Massachusetts State Convention Center Authority,
Refunding, Hynes Convention Center, 5.900%, 9/01/98 No Opt. Call A1 1,017,150
New Bedford, Massachusetts:
600,000 5.250%, 3/01/00 No Opt. Call Baa3 611,556
600,000 5.400%, 3/01/01 No Opt. Call Baa3 617,064
600,000 5.500%, 3/01/02 No Opt. Call Baa3 621,672
2,500,000 New England Education Loan Marketing Corporation, No Opt. Call A1 2,563,975
Massachusetts, Refunding, Student Loan, Series F,
5.625%, 7/01/04
415,000 Springfield, Massachusetts, Refunding, Series A, No Opt. Call A- 426,350
5.800%, 9/01/99
Springfield, Massachusetts, School Project Loan,
Series B:
815,000 5.800%, 9/01/99 No Opt. Call Baa3 835,840
250,000 6.100%, 9/01/02 No Opt. Call Baa3 266,180
- --------------------------------------------------------------------------------------------------------------------
Michigan -- 6.1%
3,315,000 Detroit, Michigan, Economic Development Corporation, No Opt. Call AAA 3,476,474
Resource Recovery, Series A, 6.350%, 5/01/00
</TABLE>
36
<PAGE>
<TABLE>
<CAPTION>
Principal Optional Call Market
Amount Description Provisions* Ratings** Value
- --------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Michigan -- continued
$ 3,000,000 Greater Detroit Resource Recovery Authority, Revenue No Opt. Call AAA $ 3,177,060
Refunding, Series A, 5.500%, 12/13/04
705,000 Madison Heights, Michigan, Tax Increment Finance No Opt. Call N/R 751,283
Authority, 8.500%, 3/15/01
900,000 Michigan Higher Education Student Loan Authority, No Opt. Call AAA 934,389
Series Xii, E, 6.375%, 10/01/00
2,000,000 Michigan Higher Education Student Loan Authority, No Opt. Call Aa1 2,041,120
Revenue Refunding, Senior Series XV, A, 5.400%,
9/01/00
2,700,000 Michigan State Hospital Finance Authority, Revenue No Opt. Call AAA 2,786,400
Refunding, St. John, Series A, 5.400%, 5/15/00
3,075,000 Michigan State Hospital Finance Authority, Revenue No Opt. Call BBB 3,152,336
Refunding Hospital, Gratiot Community Hospital,
5.300%, 10/01/01
1,000,000 Michigan State Hospital Finance Authority, Revenue No Opt. Call AA- 1,089,250
Refunding, Mercy Health Services, Series T, 6.000%,
8/15/06
Michigan State Housing Development Authority,
Rental Housing Revenue, Series B:
3,085,000 5.450%, 4/01/05 No Opt. Call AAA 3,174,064
3,325,000 5.450%, 10/01/05 6/05 at 102 AAA 3,426,280
4,095,000 Pontiac, Michigan, Hospital Finance Authority, 8/00 at 100 BBB- 4,162,731
Hospital Revenue Refunding, Nomc Obligation Group,
5.800%, 8/01/03
- --------------------------------------------------------------------------------------------------------------------
Mississippi -- 0.6%
Mississippi Hospital Equipment & Facilities Authority,
Revenue Refunding, Mississippi Baptist Medical
Center:
1,690,000 5.350%, 5/01/03 No Opt. Call AAA 1,765,154
1,000,000 5.400%, 5/01/04 No Opt. Call AAA 1,048,510
- --------------------------------------------------------------------------------------------------------------------
Missouri -- 1.1%
Branson, Missouri, Tax Increment Allocation,
Branson Meadows Project, Series A:
1,430,000 5.850%, 11/01/01 No Opt. Call N/R 1,430,014
810,000 6.400%, 11/01/05 No Opt. Call N/R 826,208
</TABLE>
37
<PAGE>
Portfolio of Investments (Unaudited)
Nuveen Flagship Limited Term -- continued
<TABLE>
<CAPTION>
Principal Optional Call Market
Amount Description Provisions* Ratings** Value
- --------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Missouri -- continued
Missouri State Health & Educational Facilities
Authority, Health Facilities, Revenue Refunding,
Lutheran Senior Services, 5.200%, 2/01/04:
$ 500,000 5.200%, 2/01/04 No Opt. Call N/R $ 506,210
600,000 5.300%, 2/01/05 No Opt. Call N/R 613,530
600,000 5.400%, 2/01/06 No Opt. Call N/R 612,150
700,000 5.500%, 2/01/07 No Opt. Call N/R 718,046
510,000 St. Louis, Missouri, Regional Convention and Sports No Opt. Call N/R 536,540
Complex Authority, Series C, 7.750%, 8/15/01
- --------------------------------------------------------------------------------------------------------------------
New Hampshire -- 0.8%
505,000 New Hampshire Higher Educational & Health Facilities No Opt. Call A 544,592
Authority, St. Joseph Hospital, 7.250%, 1/01/01
New Hampshire State Housing Finance Authority,
Single Family Residential Mortgage, Series D:
270,000 6.050%, 1/01/98 No Opt. Call Aa 270,753
340,000 6.200%, 1/01/99 No Opt. Call Aa 346,174
335,000 6.350%, 1/01/00 No Opt. Call Aa 345,650
340,000 6.450%, 1/01/01 No Opt. Call Aa 354,749
New Hampshire State Housing Finance Authority,
Refunding, Multi-Family Housing, Series 1:
865,000 6.300%, 1/01/98 No Opt. Call A1 867,500
890,000 6.300%, 7/01/98 No Opt. Call A1 900,573
- --------------------------------------------------------------------------------------------------------------------
New Jersey -- 4.6%
2,730,000 New Jersey Economic Development Authority, Electric No Opt. Call N/R 2,792,189
Energy Facility Revenue, Vineland Cogeneration
L.P. Project, 6.750%, 6/01/99
New Jersey Health Care Facilities Financing Authority,
Bayonne Hospital Obligation Group Issue,
Revenue Refunding:
860,000 5.750%, 7/01/00 No Opt. Call AAA 895,226
1,000,000 5.800%, 7/01/01 No Opt. Call AAA 1,054,480
790,000 5.900%, 7/01/02 No Opt. Call AAA 843,570
4,300,000 New Jersey Economic Development Authority, No Opt. Call AAA 4,538,478
Educational Testing Service, Series B, 5.500%,
5/15/05
</TABLE>
38
<PAGE>
<TABLE>
<CAPTION>
Principal Optional Call Market
Amount Description Provisions* Rating** Value
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
New Jersey -- continued
New Jersey State Educational Facilities Authority,
Stevens Institute of Technology, Series A:
$ 1,155,000 6.000%, 7/01/99 No Opt. Call A- $ 1,191,152
1,275,000 6.100%, 7/01/00 No Opt. Call A- 1,333,625
995,000 6.200%, 7/01/01 No Opt. Call A- 1,055,834
1,165,000 6.300%, 7/01/02 No Opt. Call A- 1,254,076
New Jersey State Educational Facilities Authority,
Higher Educational, St. Peters College Series B:
295,000 6.100%, 7/01/00 No Opt. Call BBB+ 308,414
355,000 6.200%, 7/01/01 No Opt. Call BBB+ 376,456
4,995,000 New Jersey Wastewater Treatment, Tollroad Loan, No Opt. Call AAA 5,555,239
Revenue Refunding, Series C, 6.250%, 5/15/05
- -----------------------------------------------------------------------------------------------------------------------------------
New York -- 16.6%
Albany, New York, Housing Authority, Limited
Obligation, Refunding:
500,000 5.100%, 10/01/01 No Opt. Call Baa1 508,075
700,000 5.250%, 10/01/02 No Opt. Call Baa1 713,622
750,000 5.400%, 10/01/03 No Opt. Call Baa1 767,363
750,000 5.500%, 10/01/04 No Opt. Call Baa1 764,858
1,000,000 5.600%, 10/01/05 No Opt. Call Baa1 1,022,710
500,000 5.700%, 10/01/06 10/05 at 102 Baa1 512,790
700,000 5.850%, 10/01/07 10/05 at 102 Baa1 714,476
Jamestown, New York, Series A:
150,000 7.000%, 3/15/04 No Opt. Call Baa2 169,458
750,000 7.000%, 3/15/05 No Opt. Call Baa2 855,128
1,000,000 Metropolitan Transportation Authority, New York No Opt. Call BBB+ 1,088,910
Service Contract, Transit Facilities, Series N,
Refunding, 6.625%, 7/01/02
1,280,000 New York City, Series A, 8.250%, 11/01/99 No Opt. Call Aaa 1,387,136
1,000,000 New York City, Refunding, Series E, 6.500%, 2/15/04 No Opt. Call BBB+ 1,093,520
New York City, Series F:
860,000 8.000%, 11/15/97 No Opt. Call AAA 861,410
140,000 8.000%, 11/15/97 No Opt. Call BBB+ 140,220
New York City, Series G:
3,000,000 5.700%, 2/01/03 No Opt. Call BBB+ 3,143,580
500,000 5.750%, 2/01/06 No Opt. Call BBB+ 526,435
3,000,000 New York, New York, Refunding, Series H, No Opt. Call BBB+ 3,109,500
5.400%, 8/01/04
</TABLE>
39
<PAGE>
<TABLE>
<CAPTION>
Portfolio of Investments (Unaudited)
Nuveen Flagship Limited Term - continued
Principal Optional Call Market
Amount Description Provisions* Ratings** Value
- --------------------------------------------------------------------------------------------------------------------
<C> <S> <C> <C> <C>
New York -- continued
New York, New York, Series F:
$ 2,395,000 6.100%, 2/15/02 No Opt. Call Aaa $ 2,567,344
1,605,000 6.100%, 2/15/02 No Opt. Call BBB+ 1,700,177
5,000,000 New York, New York, Series I, 5.625%, 4/15/05 No Opt. Call BBB+ 5,236,700
New York State Dormitory Authority, State University
Educational Facilities, Series A:
1,000,000 7.400%, 5/15/01 5/00 at 102 A- 1,091,360
6,500,000 5.250%, 5/15/01 No Opt. Call A- 6,701,695
770,000 7.000%, 5/15/02 (Pre-refunded to 5/15/99) 5/99 at 102 A-*** 819,511
230,000 7.000%, 5/15/02 5/99 at 102 A- 243,933
4,155,000 New York State Dormitory Authority, City University, No Opt. Call BBB+ 4,328,554
Series U, Revenue Refunding, 5.875%, 7/01/00
2,900,000 New York State Dormitory Authority, Revenue No Opt. Call BBB+ 3,134,349
Refunding, Department of Health, 6.750%, 7/01/01
2,000,000 New York State Dormitory Authority, Revenue No Opt. Call A- 2,226,940
Refunding, State University Educational Facilities,
Series A, 6.500%, 5/15/05
New York State Dormitory Authority, Revenue Refunding,
Nyack Hospital:
1,000,000 5.500%, 7/01/00 No Opt. Call Baa 1,018,880
1,000,000 6.000%, 7/01/06 No Opt. Call Baa 1,063,410
3,315,000 New York State Dormitory Authority, Revenue No Opt. Call BBB+ 3,560,907
Refunding, City University System, 3rd General
Resource, Series 2, 6.000%, 7/01/04
5,000,000 New York State Housing Finance Agency, Revenue No Opt. Call BBB+ 5,317,150
Refunding, Health Facilities, New York City, Series A,
5.875%, 5/01/04
New York State Medical Care Facilities Finance Agency,
Revenue Refunding, Mental Health Services Facilities,
Series A:
4,000,000 8.150%, 2/15/98 12/97 at 102 A- 4,046,800
615,000 8.250%, 2/15/99 12/97 at 102 A- 629,379
New York State Urban Development Corporation, Revenue
Refunding, Project Center For Industrial Innovation:
2,405,000 5.300%, 1/01/04 No Opt. Call BBB+ 2,482,609
1,265,000 6.250%, 1/01/05 No Opt. Call BBB+ 1,375,814
</TABLE>
40
<PAGE>
<TABLE>
<CAPTION>
Principal Optional Call Market
Amount Description Provisions* Ratings** Value
- --------------------------------------------------------------------------------------------------------------------
<C> <S> <C> <C> <C>
New York -- continued
New York State Urban Development Corporation,
Correctional Facilities, Series G:
$ 700,000 7.000%, 1/01/98 No Opt. Call BBB+ $ 703,633
695,000 6.500%, 1/01/99 No Opt. Call BBB+ 715,176
1,000,000 5.250%, 1/01/02 No Opt. Call BBB+ 1,028,530
Onondaga County, New York, Resource Recovery Agency,
Development Costs:
570,000 5.900%, 5/01/98 No Opt. Call Baa1 572,314
480,000 6.100%, 5/01/99 No Opt. Call Baa1 487,699
630,000 6.200%, 5/01/00 No Opt. Call Baa1 645,971
3,700,000 Port Authority of New York & New Jersey, Special No Opt. Call N/R 4,169,456
Obligation Revenue, 3rd Installment, Special Project:
7.000%, 10/01/07
3,035,000 Port Authority of New York & New Jersey, Special No Opt. Call AAA 3,317,923
Obligation Revenue, Special Project, JFK International
Air Terminal 6, 1st Installment, 6.000%, 12/01/05
- --------------------------------------------------------------------------------------------------------------------
North Carolina -- 1.3%
5,475,000 North Carolina Municipal Power Agency, No. 1 Catawba 1/03 at 102 A- 5,844,782
Electric, Revenue Refunding, 6.000%, 1/01/05
- --------------------------------------------------------------------------------------------------------------------
Ohio -- 6.0%
Barberton, Ohio, Hospital Facilities, Barberton
Citizens Hospital Company Project:
500,000 6.250%, 1/01/99 No Opt. Call A 513,205
750,000 6.400%, 1/01/00 No Opt. Call A 785,445
500,000 6.550%, 1/01/01 No Opt. Call A 534,540
Cambridge, Ohio, Hospital Improvement, Revenue
Refunding, Guernsey Memorial Hospital:
545,000 7.500%, 12/01/98 No Opt. Call BBB 563,922
595,000 7.650%, 12/01/99 No Opt. Call BBB 633,431
640,000 7.750%, 12/01/00 No Opt. Call BBB 699,034
680,000 7.850%, 12/01/01 No Opt. Call BBB 761,117
Cleveland, Cuyahoga County, Ohio, Port Authority, Revenue
Refunding, Rock & Roll Hall Fame:
850,000 5.000%, 12/01/01 No Opt. Call N/R 865,980
1,000,000 5.100%, 12/01/02 No Opt. Call N/R 1,022,850
750,000 5.350%, 12/01/04 No Opt. Call N/R 774,945
335,000 5.600%, 12/01/06 No Opt. Call N/R 349,763
260,000 Cuyahoga County, Ohio, Health Care Facilities, No Opt. Call N/R 275,176
Altenheim Project, 8.750%, 6/01/99
</TABLE>
41
<PAGE>
Portfolio of Investments (Unaudited)
Nuveen Flagship Limited Term -- continued
<TABLE>
<CAPTION>
Principal Optional Call Market
Amount Description Provisions* Ratings** Value
- --------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Ohio -- continued
Cuyahoga County, Ohio, Hospital, Meridia Health System:
$ 500,000 5.750%, 8/15/00 No Opt. Call A1 $ 519,960
795,000 5.850%, 8/15/01 No Opt. Call A1 837,890
735,000 Cuyahoga County, Ohio, Hospital, Meridia No Opt. Call A1 783,819
Health System, 5.950%, 8/15/02
45,000 East Cleveland, Ohio, Local Government Fund, No Opt. Call N/R 45,121
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 1,113,774
1,175,000 6.100%, 1/01/99 No Opt. Call A 1,201,943
700,000 Lucas County, Ohio, Flower Memorial Hospital, No Opt. Call BBB+ 724,010
Series A, 7.200%, 12/01/98
Lucas County, Ohio, Hospital, Flower Memorial Hospital:
685,000 5.500%, 12/01/99 No Opt. Call BBB+ 705,523
370,000 5.800%, 12/01/01 No Opt. Call BBB+ 391,775
790,000 5.900%, 12/01/02 No Opt. Call BBB+ 846,951
435,000 6.000%, 12/01/03 No Opt. Call BBB+ 471,897
5,195,000 Lucas County, Ohio, Hospital, Revenue Refunding, No Opt. Call AAA 5,697,305
Promedica Healthcare Obligation, 6.000%, 11/15/05
1,000,000 Miami County, Ohio, Hospital Facilities, Revenue No Opt. Call BBB 1,059,800
Refunding & Improvement, Upper Valley Medical
Center, C, 6.000%, 5/15/06
1,040,000 Ohio State Economic Development, Superior 6/98 at 102 A- 1,077,804
Forge & Steel Corporation, 2, 7.250%, 6/01/01
3,825,000 Ohio State Special Obligation, Elementary & Secondary No Opt. Call AAA 4,061,806
Capital Facilities, A, 5.700%, 6/01/02
225,000 Shelby County, Ohio, Hospital Facilities, Revenue No Opt. Call BBB 228,940
Refunding & Improvement, Memorial Hospital
Association, 6.100%, 6/01/98
- --------------------------------------------------------------------------------------------------------------------
Oklahoma -- 0.7%
3,120,000 Oklahoma State Industrial Authority, Hospital, No Opt. Call BBB 3,146,270
Deaconess Health Care, Series A, 5.250%, 10/01/07
- --------------------------------------------------------------------------------------------------------------------
Pennsylvania -- 10.5%
Allegheny County, Pennsylvania, Airport, Revenue
Refunding, Pittsburgh International Airport, Series A:
5,000,000 5.500%, 1/01/05 No Opt. Call AAA 5,268,650
5,000,000 5.750%, 1/01/06 No Opt. Call AAA 5,362,800
</TABLE>
42
<PAGE>
<TABLE>
<CAPTION>
Principal Optional Call Market
Amount Description Provisions* Ratings** Value
- --------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Pennsylvania -- continued
Allegheny County, Pennsylvania, Hospital Development
Authority, St. Margaret Memorial Hospital:
$ 400,000 6.600%, 10/01/98 No Opt. Call BBB+ $ 409,720
400,000 6.700%, 10/01/99 No Opt. Call BBB+ 419,604
400,000 6.800%, 10/01/00 No Opt. Call BBB+ 429,104
147,000 Allegheny County, Pennsylvania, Industrial No Opt. Call N/R 149,076
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 4,225,440
Development Authority, Revenue Refunding, Resource
Recovery Facility, Series A, 6.000%, 1/01/03
1,500,000 Monroeville, Pennsylvania, Hospital Authority, No Opt. Call A3 1,571,235
Hospital Revenue Refunding, Forbes Health System,
5.750%, 10/01/05
655,000 Montgomery County, Pennsylvania, Higher Education & No Opt. Call BBB+ 685,634
Health Authority, Pottstown Memorial Medical Center
Project, 7.000%, 11/15/99
2,500,000 Pennsylvania Intergovernmental Coop Authority, No Opt. Call AAA 2,623,800
Special Tax Revenue, City Of Philadelphia Funding
Program, 6.000%, 6/15/00
Philadelphia, Pennsylvania, Gas Works,
Fourteenth Series A, Revenue Refunding:
3,600,000 5.600%, 7/01/99 No Opt. Call Baa1 3,678,336
3,425,000 5.700%, 7/01/00 No Opt. Call Baa1 3,536,518
1,390,000 Philadelphia, Pennsylvania, Hospitals & Higher No Opt. Call BBB+ 1,414,742
Education Facilities Authority, Revenue Refunding,
Philadelphia MR Project, 5.300%, 8/01/99
Philadelphia, Pennsylvania, School District, Series A:
1,080,000 6.050%, 5/15/99 No Opt. Call AAA 1,114,096
3,990,000 5.450%, 7/01/04 No Opt. Call AAA 4,203,625
5,000,000 Philadelphia, Pennsylvania, Water & Wastewater, No Opt. Call AAA 5,155,050
5.150%, 6/15/04
Philadelphia, Pennsylvania, Hospitals & Higher
Education Facilities Authority, Hospital Revenue
Refunding, Pennsylvania Hospital:
3,490,000 5.850%, 7/01/02 No Opt. Call BBB+ 3,657,660
2,020,000 6.050%, 7/01/04 No Opt. Call BBB+ 2,128,878
2,000,000 6.150%, 7/01/05 No Opt. Call BBB+ 2,125,840
</TABLE>
43
<PAGE>
Portfolio of Investments (Unaudited)
Nuveen Flagship Limited Term -- continued
<TABLE>
<CAPTION>
Principal Optional Call Market
Amount Description Provisions* Ratings** Value
- --------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Rhode Island -- 0.9%
$ 4,035,000 Rhode Island Housing & Mortgage Finance Corporation, No Opt. Call AAA $ 4,146,285
Multifamily Housing, Series A, Refunding, 5.350%,
7/01/03
- --------------------------------------------------------------------------------------------------------------------
Tennessee -- 0.7%
3,250,000 Metro Government, Nashville & Davidson County, No Opt. Call BBB+ 3,390,823
Tennessee, Industrial Development Board, Revenue
Refunding & Improvement, Osco Treatment Inc.,
6.000%, 5/01/03
- --------------------------------------------------------------------------------------------------------------------
Texas -- 2.3%
1,575,000 Anderson County, Texas, Revenue Refunding, Coffield No Opt. Call AAA 1,617,588
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 1,795,654
1,235,000 6.050%, 12/01/01 No Opt. Call Aaa 1,290,870
1,325,000 North Central, Texas, Health Facility Development 2/01 at 100 BBB 1,380,636
Corporation, Revenue Refunding, C C Young Memorial
Home Project, 5.700%, 2/15/03
1,000,000 Panhandle, Plains, Texas, Higher Education No Opt. Call A 1,031,490
Authority, Student Loan, Revenue Refunding, Series
E, 5.550%, 3/01/05
1,000,000 Pasadena, Texas, Industrial Development Corporation, 4/98 at 100 A 1,008,960
Economic Development Revenue, University Space,
Lunar & Planetary Project, 7.050%, 10/01/01
Texas State Higher Education Coordinating Board,
College Student Loan Revenue, Senior Lien:
640,000 6.900%, 4/01/99 No Opt. Call A 657,850
620,000 7.000%, 4/01/00 No Opt. Call A 649,083
1,290,000 7.100%, 4/01/01 No Opt. Call A 1,373,423
- --------------------------------------------------------------------------------------------------------------------
Vermont -- 0.9%
Vermont State Student Assistance Corporation,
Education Loan Revenue, Finance Program, Series A:
2,000,000 5.800%, 12/15/99 No Opt. Call AAA 2,062,980
1,000,000 5.900%, 12/15/00 No Opt. Call AAA 1,044,150
1,000,000 6.050%, 12/15/01 No Opt. Call AAA 1,039,370
</TABLE>
44
<PAGE>
<TABLE>
<CAPTION>
Principal Optional Call Market
Amount Description Provisions* Ratings** Value
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Virginia -- 1.4%
$ 2,850,000 Newport News, Virginia, Redevelopment & Housing 5/05 at 102 AAA $ 2,982,752
Authority Multifamily Housing, Revenue Refunding,
Fredericksburg, Oxford Project, A, 5.550%, 5/01/27
3,000,000 Virginia State Public Building Authority, Building 8/04 at 101 AA*** 3,336,690
Revenue, Series A, 6.250%, 8/01/15 (Pre-refunded to
8/01/04)
- -------------------------------------------------------------------------------------------------------------------
Washington -- 1.1%
1,670,000 Washington State Health Care Facilities Authority, No Opt. Call AAA 1,790,723
Children's Hospital & Medical Center, 6.000%,
10/01/02
3,000,000 Washington State Public Power Supply System, No Opt. Call Aa1 3,199,230
Nuclear Project No. 1, Revenue Refunding, Series A,
5.700%, 7/01/06
- -------------------------------------------------------------------------------------------------------------------
Wisconsin -- 0.5%
Wisconsin State Health & Educational Facilities
Authority, Revenue, Refunding, Lutheran Hospital,
Louisiana Crosse Inc., Series A:
1,100,000 5.200%, 2/15/00 No Opt. Call AAA 1,123,935
1,155,000 5.300%, 2/15/01 No Opt. Call AAA 1,192,145
- -------------------------------------------------------------------------------------------------------------------
$434,007,000 Total Investments - (cost $429,519,351) - 97.0% 447,654,960
=====================----------------------------------------------------------------------------------------------
Other Assets Less Liabilities - 3.0% 13,852,909
-------------------------------------------------------------------------------------------
Net Assets - 100% $461,507,869
===========================================================================================
* Optional Call Provisions: Dates (month and year) and prices of the earliest optional
call or redemption. There may be other call provisions at varying prices at later
dates.
** Ratings: Using the higher of Standard & Poor's or Moody's rating.
*** Securities are backed by an escrow or trust containing sufficient U.S. government or
U.S. government agency securities, which ensures the timely payment of principal and
interest. Securities are normally considered to be equivalent to AAA rated securities.
N/R -- Investment is not rated
(WI) Securities purchased on a when-issued basis (see note 1 of the Notes to Financial
Statements).
</TABLE>
45 See accompanying notes to financial statements.
<PAGE>
<TABLE>
<CAPTION>
Statement of Net Assets (Unaudited)
Nuveen Flagship Nuveen Flagship Nuveen Flagship
All-American Intermediate Limited Term
- --------------------------------------------------------------------------------------------------------------------
<C> <S> <S> <S>
Assets
Investments in municipal securities, at market value (note 1) $ 283,852,396 $ 43,482,853 $ 447,654,960
Cash 28,122 312,697 804,590
Receivables:
Interest 4,872,958 767,949 7,561,794
Shares sold 598,444 73 403,643
Investments sold 4,821,858 -- 11,331,055
Other assets 5,081 10,742 16,058
- --------------------------------------------------------------------------------------------------------------------
Total assets 294,178,859 44,574,314 467,772,100
- --------------------------------------------------------------------------------------------------------------------
Liabilities
Payables:
Investments purchased 3,964,563 520,885 3,663,061
Shares redeemed 265,392 50,381 477,856
Accrued expenses:
Management fees (note 6) 119,735 18,592 170,603
12b-1 distribution and service fees (notes 1 and 6) 77,239 8,620 86,653
Other 38,453 45,954 62,602
Dividends payable 1,242,827 172,511 1,803,456
- --------------------------------------------------------------------------------------------------------------------
Total liabilities 5,708,209 816,943 6,264,231
- --------------------------------------------------------------------------------------------------------------------
Net assets (note 7) $ 288,470,650 $ 43,757,371 $ 461,507,869
- --------------------------------------------------------------------------------------------------------------------
Class A Shares (note 1)
Net assets $ 223,200,106 $ 40,503,534 $ 433,436,074
Shares outstanding 19,627,912 3,713,199 39,949,933
Net asset value and redemption price per share $ 11.37 $ 10.91 $ 10.85
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) $ 11.87 $ 11.25 $ 11.13
- --------------------------------------------------------------------------------------------------------------------
Class B Shares (note 1)
Net assets $ 3,090,110 N/A N/A
Shares outstanding 271,586 N/A N/A
Net asset value, offering and redemption price per share $ 11.38 N/A N/A
- --------------------------------------------------------------------------------------------------------------------
Class C Shares (note 1)
Net assets $ 58,492,759 $ 2,710,855 $ 27,911,122
Shares outstanding 5,148,136 248,370 2,574,593
Net asset value, offering and redemption price per share $ 11.36 $ 10.91 $ 10.84
- --------------------------------------------------------------------------------------------------------------------
Class R Shares (note 1)
Net assets $ 3,687,675 $ 542,982 $ 160,673
Shares outstanding 324,188 49,857 14,833
Net asset value, offering and redemption price per share $ 11.38 $ 10.89 $ 10.83
- --------------------------------------------------------------------------------------------------------------------
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>
46
<PAGE>
<TABLE>
<CAPTION>
Statement of Operations (Unaudited)
Six months ended
October 31, 1997
Nuveen Fagship Nuveen Flagship Nuveen Flagship
All-American Intermediate Limited Term
- --------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Investment income
Tax-exempt interest income (note 1) $ 8,690,481 $ 1,258,333 $ 12,670,963
- --------------------------------------------------------------------------------------------------------------------
Expenses
Management fees (note 6) 695,189 112,074 1,003,446
12b-1 service fees-Class A (notes 1 and 6) 219,298 41,562 435,051
12b-1 distribution and service fees-Class B (notes 1 and 6) 10,239 N/A N/A
12b-1 distribution and service fees-Class C (notes 1 and 6) 217,409 10,308 71,331
Shareholders' servicing agent fees and expenses 65,680 16,429 78,363
Custodian's fees and expenses 32,149 24,961 48,049
Trustees' fees and expenses (note 6) 2,618 449 4,650
Professional fees 10,470 4,939 18,259
Shareholders' reports - printing and mailing expenses 35,240 7,954 53,410
Federal and state registration fees 2,724 22,038 20,313
Other expenses 4,524 876 8,806
- --------------------------------------------------------------------------------------------------------------------
Total expenses before expense reimbursement 1,295,540 241,590 1,741,678
Expense reimbursement (note 6) -- (67,243) --
- --------------------------------------------------------------------------------------------------------------------
Net expenses 1,295,540 174,347 1,741,678
- --------------------------------------------------------------------------------------------------------------------
Net investment income 7,394,941 1,083,986 10,929,285
- --------------------------------------------------------------------------------------------------------------------
Realized and Unrealized Gain from Investments
Net realized gain from investment transactions (notes 1 and 4) 1,385,066 296,058 835,192
Net change in unrealized appreciation or depreciation of
investments 10,337,787 1,509,853 9,334,934
- --------------------------------------------------------------------------------------------------------------------
Net gain from investments 11,722,853 1,805,911 10,170,126
- --------------------------------------------------------------------------------------------------------------------
Net increase in net assets from operations $ 19,117,794 $ 2,889,897 $ 21,099,411
====================================================================================================================
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>
47
<PAGE>
Statement of Changes in Net Assets (Unaudited)
<TABLE>
<CAPTION>
Nuveen Flagship Nuveen Flagship Flagship
All-American All-American* All-American
---------------------------------------------------------
Six months ended 11 months ended Year ended
10/31/97 4/30/97 5/31/96
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Operations
Net investment income $ 7,394,941 $ 13,301,910 $ 13,630,068
Net realized gain from investment transactions (notes 1 and 4) 1,385,066 2,249,650 4,802,765
Net change in unrealized appreciation or depreciation of investments 10,337,787 4,859,517 (8,074,381)
- ----------------------------------------------------------------------------------------------------------------------------------
Net increase in net assets from operations 19,117,794 20,411,077 10,358,452
- ----------------------------------------------------------------------------------------------------------------------------------
Distributions to Shareholders (note 1)
From undistributed net investment income:
Class A (5,839,558) (10,934,899) (11,330,827)
Class B (48,848) (3,405) N/A
Class C (1,387,346) (2,349,107) (2,350,784)
Class R (95,721) (1,421) N/A
From accumulated net realized gains from investment transactions:
Class A - (1,174,852) -
Class B - - N/A
Class C - (285,764) -
Class R - - N/A
- ----------------------------------------------------------------------------------------------------------------------------------
Decrease in net assets from distributions to shareholders (7,371,473) (14,749,448) (13,681,611)
- ----------------------------------------------------------------------------------------------------------------------------------
Fund Share Transactions (note 2)
Net proceeds from sale of shares 28,485,102 45,105,197 64,410,375
Net proceeds from shares issued to shareholders due to
reinvestment of distributions 3,252,852 6,771,634 7,107,483
- ----------------------------------------------------------------------------------------------------------------------------------
31,737,954 51,876,831 71,517,858
- ----------------------------------------------------------------------------------------------------------------------------------
Cost of shares redeemed (27,332,846) (40,524,782) (43,626,650)
- ----------------------------------------------------------------------------------------------------------------------------------
Net increase in net assets from Fund share transactions 4,405,108 11,352,049 27,891,208
- ----------------------------------------------------------------------------------------------------------------------------------
Net increase in net assets 16,151,429 17,013,678 24,568,049
Net assets at the beginning of period 272,319,221 255,305,543 230,737,494
- ----------------------------------------------------------------------------------------------------------------------------------
Net assets at the end of period $288,470,650 $272,319,221 $255,305,543
==================================================================================================================================
Balance of undistributed net investment income at end of period $ 36,546 $ 13,078 $ -
==================================================================================================================================
</TABLE>
* Information represents eight months of Flagship All-American
and three months of Nuveen Flagship All-American
(see note 1 of the Notes to Financial Statements).
N/A-Flagship All-American was not authorized to issue Class B
or Class R Shares.
48 See accompanying notes to financial statements.
<PAGE>
Statement of Changes in Net Assets (Unaudited) -- continued
<TABLE>
<CAPTION>
Nuveen Flagship Nuveen Flagship Flagship
Intermediate Intermediate* Intermediate
----------------------------------------------------------
Six months ended 11 months ended Year ended
10/31/97 4/30/97 5/31/96
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Operations
Net investment income $ 1,083,986 $ 2,147,178 $ 2,231,236
Net realized gain from investment transactions (notes 1 and 4) 296,058 147,832 1,178,381
Net change in unrealized appreciation or depreciation of investments 1,509,853 801,793 (1,349,675)
- --------------------------------------------------------------------------------------------------------------------------------
Net increase in net assets from operations 2,889,897 3,096,803 2,059,942
- --------------------------------------------------------------------------------------------------------------------------------
Distributions to Shareholders (note 1)
From undistributed net investment income:
Class A (990,610) (2,059,165) (2,230,105)
Class C** (57,706) (74,318) (15,633)
Class R (12,780) (4,137) N/A
From accumulated net realized gains from investment transactions:
Class A - - -
Class C** - - -
Class R - - N/A
- --------------------------------------------------------------------------------------------------------------------------------
Decrease in net assets from distributions to shareholders (1,061,096) (2,137,620) (2,245,738)
- --------------------------------------------------------------------------------------------------------------------------------
Fund Share Transactions (note 2)
Net proceeds from sale of shares 2,354,856 7,641,512 16,566,991
Net proceeds from shares issued to shareholders due to
reinvestment of distributions 513,310 1,250,991 1,433,834
- --------------------------------------------------------------------------------------------------------------------------------
2,868,166 8,892,503 18,000,825
- --------------------------------------------------------------------------------------------------------------------------------
Cost of shares redeemed (4,855,081) (13,864,964) (11,954,767)
- --------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets from Fund share transactions (1,986,915) (4,972,461) 6,046,058
- --------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets (158,114) (4,013,278) 5,860,262
Net assets at the beginning of period 43,915,485 47,928,763 42,068,501
- --------------------------------------------------------------------------------------------------------------------------------
Net assets at the end of period $ 43,757,371 $ 43,915,485 $ 47,928,763
================================================================================================================================
Balance of undistributed net investment income at end of period $ 32,448 $ 9,558 $ -
================================================================================================================================
</TABLE>
* Information represents eight months of Flagship
Intermediate and three months of Nuveen Flagship
Intermediate (see note 1 of the Notes to Financial
Statements).
** Class C Shares commenced operations on December 1, 1995.
N/A - Flagship Intermediate was not authorized to issue Class
R Shares.
49 See accompanying notes to financial statements.
<PAGE>
Statement of Changes in Net Assets (Unaudited) -- continued
<TABLE>
<CAPTION>
Nuveen Flagship Nuveen Flagship Flagship
Limited Term Limited Term* Limited Term
-------------------------------------------------
Six months ended 11 months ended Year ended
10/31/97 4/30/97 5/31/96
- ------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Operations
Net investment income $ 10,929,285 $ 21,032,242 $ 25,355,276
Net realized gain from investment transactions (notes 1 and 4) 835,192 1,658,088 1,123,864
Net change in unrealized appreciation or depreciation of investments 9,334,934 116,950 (5,083,239)
- ------------------------------------------------------------------------------------------------------------------------
Net increase in net assets from operations 21,099,411 22,807,280 21,395,901
- ------------------------------------------------------------------------------------------------------------------------
Distributions to Shareholders (note 1)
From undistributed net investment income:
Class A (10,194,606) (19,952,270) (24,835,168)
Class C** (561,663) (809,432) (175,819)
Class R (2,424) (286) N/A
From accumulated net realized gains from investment transactions:
Class A -- -- --
Class C** -- -- --
Class R -- -- N/A
- ------------------------------------------------------------------------------------------------------------------------
Decrease in net assets from distributions to shareholders (10,758,693) (20,761,988) (25,010,987)
- ------------------------------------------------------------------------------------------------------------------------
Fund Share Transactions (note 2)
Net proceeds from sale of shares 43,662,840 55,204,267 90,170,813
Net proceeds from shares issued to shareholders due to
reinvestment of distributions 5,700,094 12,418,014 16,369,864
- ------------------------------------------------------------------------------------------------------------------------
49,362,934 67,622,281 106,540,677
- ------------------------------------------------------------------------------------------------------------------------
Cost of shares redeemed (47,187,596) (125,247,208) (167,550,003)
- ------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets from Fund share transactions 2,175,338 (57,624,927) (61,009,326)
- ------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets 12,516,056 (55,579,635) (64,624,412)
Net assets at the beginning of period 448,991,813 504,571,448 569,195,860
- ------------------------------------------------------------------------------------------------------------------------
Net assets at the end of period $461,507,869 $ 448,991,813 $ 504,571,448
========================================================================================================================
Balance of undistributed net investment income at end of period $ 1,185,392 $ 1,014,800 $ 744,546
========================================================================================================================
</TABLE>
* Information represents eight months of Flagship Limited Term and three
months of Nuveen Flagship Limited Term (see note 1 of the Notes to
Financial Statements).
** Class C Shares commenced operations on December 1, 1995.
N/A - Flagship Limited Term was not authorized to issue Class R Shares.
See accompanying notes to financial statements.
50
<PAGE>
Notes to Financial Statements (Unaudited)
1. General Information and Significant Accounting Policies
The Nuveen Flagship Municipal Trust (the "Trust") is an open-end diversified
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 ("Nuveen"), 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, Flagship All-American Tax
Exempt Fund ("Flagship All-American"), Flagship Intermediate Tax Exempt Fund
("Flagship Intermediate") and 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 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 their when-issued and delayed delivery purchase commitments. At
October 31, 1997, Nuveen Flagship
51
<PAGE>
Notes to Financial Statements (Unaudited) -- continued
All-American, Nuveen Flagship Intermediate and Nuveen Flagship Limited Term had
outstanding when-issued purchase commitments of $3,964,563, $520,885 and
$3,663,061, 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 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, if any, are distributed to shareholders not less
frequently than annually. Furthermore, capital gains are distributed only to the
extent they exceed available capital loss carryforwards.
Distributions to shareholders of tax-exempt net investment income, net realized
capital gains and/or market discount are recorded on the ex-dividend date. The
amount and timing of distributions are determined in accordance with federal
income tax regulations, which may differ from generally accepted accounting
principles. Accordingly, temporary over-distributions as a result of these
differences may occur and will be classified as either distributions in excess
of net investment income, distributions in excess of net realized gains and/or
distributions in excess of net ordinary taxable income from investment
transactions, where applicable.
Income Taxes
Each Fund is a separate taxpayer for federal income tax purposes. Each Fund
intends to comply with the requirements of the Internal Revenue Code applicable
to regulated investment companies and to distribute all of its tax-exempt net
investment income, in addition to any significant amounts of net realized
capital gains and/or market discount from investment transactions. The Funds
currently consider significant net realized capital gains and/or market
discount as amounts in excess of $.001 per share. Furthermore, 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 Funds. Net realized capital
gain and market discount distributions are subject to federal taxation.
Flexible Sales Charge Program
Each Fund offers Class A, C and R Shares. Nuveen Flagship All-American also
offers Class B Shares. Class A Shares are sold with a sales charge and incur an
annual 12b-1 service fee. Class A Share purchases of $1 million or more are sold
at net asset value without an up-front sales charge but may be subject to a 1%
contingent deferred sales charge ("CDSC") if redeemed within 18 months of
purchase. Class B Shares are sold without a sales charge but incur annual 12b-1
distribution and service fees. An investor purchasing Class B Shares agrees to
pay a CDSC of up to 5% depending upon the length of time the shares are held by
the investor (CDSC is reduced to 0% at the end of six years). Class B Shares
convert to Class A Shares eight years after purchase. Class C Shares are sold
without a sales charge but incur annual 12b-1 distribution and service fees. An
investor purchasing Class C Shares agrees to pay a CDSC of 1% if Class C Shares
are redeemed within one year of purchase. Class R Shares are
52
<PAGE>
not subject to any sales charge 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, option contracts, and other financial instruments with
similar characteristics. Although the Funds are authorized to invest in such
financial instruments, and may do so in the future, they did not make any such
investments during the six months ended October 31, 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.
53
<PAGE>
Notes to Financial Statements (Unaudited) - continued
2. Fund Shares
Transactions in Fund shares were as follows:
<TABLE>
<CAPTION>
Nuveen Flagship Nuveen Flagship Flagship
All-American All-American* All-American
- ------------------------------------------------------------------------------------------------------------------------------------
Six months ended 10/31/97 11 months ended 4/30/97 Year ended 5/31/96
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Shares Amount Shares Amount Shares Amount
Shares sold:
Class A 1,464,202 $ 16,445,041 2,917,181 $ 31,668,207 4,757,928 $51,859,159
Class B 204,587 2,281,858 65,162 712,816 N/A N/A
Class C 566,759 6,319,900 1,153,656 12,540,237 1,153,142 12,551,216
Class R 313,784 3,438,303 16,754 183,937 N/A N/A
Shares issued to shareholders due to
reinvestment of distributions:
Class A 227,190 2,541,136 514,027 5,592,134 529,263 5,744,859
Class B 1,813 20,348 24 265 N/A N/A
Class C 54,636 612,135 108,469 1,178,627 125,662 1,362,624
Class R 7,067 79,233 56 608 N/A N/A
- ------------------------------------------------------------------------------------------------------------------------------------
2,840,038 31,737,954 4,775,329 51,876,831 6,565,995 71,517,858
- ------------------------------------------------------------------------------------------------------------------------------------
Shares redeemed:
Class A (1,931,022) (21,482,418) (3,061,374) (33,300,392) (2,979,351) (32,444,225)
Class B -- -- -- -- N/A N/A
Class C (508,734) (5,699,945) (665,228) (7,224,390) (1,035,684) (11,182,425)
Class R (13,473) (150,483) -- -- N/A N/A
- ------------------------------------------------------------------------------------------------------------------------------------
(2,453,229) (27,332,846) (3,726,602) (40,524,782) (4,015,035) (43,626,650)
- ------------------------------------------------------------------------------------------------------------------------------------
Net increase 386,809 $ 4,405,108 1,048,727 $ 11,352,049 2,550,960 $27,891,208
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
* Information represents eight months of Flagship All-American
and three months of Nuveen Flagship All-American (see note 1).
N/A--Flagship All-American was not authorized to issue Class B
or Class R Shares.
54
<PAGE>
<TABLE>
<CAPTION>
Nuveen Flagship Nuveen Flagship Nuveen Flagship
Intermediate Intermediate * Intermediate
-------------------------------------------------------------------------------------
Six months ended 10/31/97 11 months ended 4/30/97 Year ended 5/31/96
-------------------------------------------------------------------------------------
Shares Amount Shares Amount Shares Amount
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Shares sold:
Class A 160,891 $ 1,720,725 539,437 $ 5,639,771 1,461,305 $ 15,332,025
Class C ** 54,243 581,547 145,976 1,523,605 117,137 1,234,966
Class R 4,884 52,584 44,829 478,136 N/A N/A
Shares issued to shareholders
due to reinvestment of distributions:
Class A 44,962 482,931 118,796 1,215,858 136,334 1,423,816
Class C ** 2,609 28,137 3,777 34,796 957 10,018
Class R 209 2,242 32 337 N/A N/A
- -----------------------------------------------------------------------------------------------------------------------------------
267,798 2,868,166 852,847 8,892,503 1,715,733 18,000,825
- -----------------------------------------------------------------------------------------------------------------------------------
Shares redeemed:
Class A (400,340) (4,305,060) (1,302,182) (13,627,224) (1,134,391) (11,928,052)
Class C ** (51,023) (548,963) (22,717) (237,740) (2,589) (26,715)
Class R (97) (1,058) -- -- N/A N/A
- -----------------------------------------------------------------------------------------------------------------------------------
(451,460) (4,855,081) (1,324,899) (13,864,964) (1,136,980) (11,954,767)
- -----------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) (183,662) $(1,986,915) (472,052) $ (4,972,461) 578,753 $ 6,046,058
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
* Information represents eight months of Flagship Intermediate and three
months of Nuveen Flagship Intermediate (see note 1).
** Class C Shares commenced operations on December 1, 1995.
N/A--Flagship Intermediate was not authorized to issue Class R Shares.
55
<PAGE>
Notes to Financial Statements (Unaudited) -- continued
<TABLE>
<CAPTION>
Nuveen Flagship Nuveen Flagship Nuveen Flagship
Limited Term Limited Term * Limited Term
-------------------------------------------------------------------------------------------
Six months ended 10/31/97 11 months ended 4/30/97 Year ended 5/31/96
-------------------------------------------------------------------------------------------
Shares Amount Shares Amount Shares Amount
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Shares sold:
Class A 3,299,409 $ 35,517,912 4,064,504 $ 43,309,184 6,914,835 $ 74,019,115
Class C ** 745,502 8,027,803 1,111,314 11,854,862 1,505,009 16,151,698
Class R 10,878 117,125 3,763 40,221 N/A N/A
Shares issued to shareholders due to
reinvestment of distributions:
Class A 501,357 5,396,992 1,125,302 11,989,359 1,522,705 16,288,950
Class C ** 27,942 301,164 40,213 428,533 7,584 80,914
Class R 181 1,938 11 122 N/A N/A
- ------------------------------------------------------------------------------------------------------------------------------------
4,585,269 49,362,934 6,345,107 67,622,281 9,950,133 106,540,677
- ------------------------------------------------------------------------------------------------------------------------------------
Shares redeemed:
Class A (3,960,839) (42,651,238) (11,367,265) (121,107,007) (15,607,722) (166,978,057)
Class C ** (420,798) (4,536,358) (388,996) (4,140,201) (53,177) (571,946)
Class R -- -- -- -- N/A N/A
- ------------------------------------------------------------------------------------------------------------------------------------
(4,381,637) (47,187,596) (11,756,261) (125,247,208) (15,660,899) (167,550,003)
- ------------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) 203,632 $ 2,175,338 (5,411,154) $ (57,624,927) (5,710,766) $ (61,009,326)
====================================================================================================================================
</TABLE>
* Information represents eight months of Flagship Limited Term and three
months of Nuveen Flagship Limited Term (see note 1).
** Class C Shares commenced operations on December 1, 1995.
N/A--Flagship Limited Term was not authorized to issue Class R Shares.
3. Distributions to Shareholders
On November 7, 1997, the Funds declared dividend distributions from their
tax-exempt net investment income which were paid on December 1, 1997, to
shareholders of record on November 7, 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 $ .0500 $ .0430 $ .0425
Class B .0430 N/A N/A
Class C .0450 .0380 .0395
Class R .0520 .0445 .0440
- -----------------------------------------------------------------------
</TABLE>
N/A--Nuveen Flagship Intermediate and Nuveen Flagship Limited Term are not
authorized to issue Class B Shares.
56
<PAGE>
4. Securities Transactions
Purchases and sales (including maturities) of investments in municipal
securities and temporary municipal investments for the six months ended October
31, 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 $ 35,587,922 $ 3,639,596 $ 62,754,277
Temporary municipal investments 19,300,000 3,000,000 21,500,000
Sales:
Investments in municipal securities 32,679,320 7,597,750 75,310,135
Temporary municipal investments 19,300,000 3,000,000 21,500,000
- --------------------------------------------------------------------------------------------------------------------
</TABLE>
At October 31, 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, the Funds' last fiscal year end, 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
carryforwards will expire in the year 2003.
5. Unrealized Appreciation (Depreciation)
Gross unrealized appreciation and gross unrealized depreciation of investments
at October 31, 1997, were as follows:
<TABLE>
<CAPTION>
Nuveen Flagship Nuveen Flagship Nuveen Flagship
All-American Intermediate Limited Term
- --------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Gross unrealized:
appreciation $ 22,762,593 $ 2,888,780 $ 18,142,629
depreciation -- (780) (7,020)
- --------------------------------------------------------------------------------------------------------------------
Net unrealized appreciation $ 22,762,593 $ 2,888,000 $ 18,135,609
- --------------------------------------------------------------------------------------------------------------------
</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:
<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
- --------------------------------------------------------------------------------------------------------------------
</TABLE>
57
<PAGE>
<TABLE>
<CAPTION>
Notes to Financial Statements (Unaudited) - continued
<S> <C>
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>
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 Adviser may voluntarily reimburse expenses from time to time, which may be
terminated at any time at its discretion.
During the six months ended October 31, 1997, the Distributor collected sales
charges on purchases of Class A Shares of approximately $272,500, $32,300 and
$200,300 for Nuveen Flagship All-American, Nuveen Flagship Intermediate and
Nuveen Flagship Limited Term, respectively, of which approximately $249,500,
$26,300 and $184,500, 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 six months ended October 31, 1997, the Distributor compensated
authorized dealers directly with approximately $187,600, $5,900 and $236,100 in
commission advances at the time of purchase for Nuveen Flagship All-American,
Nuveen Flagship Intermediate and Nuveen Flagship Limited Term, respectively. To
compensate for commissions advanced to authorized dealers, all 12b-1 service
fees collected on Class B Shares for Nuveen Flagship All-American during the
first year following a purchase, all 12b-1 distribution fees on Class B Shares
for Nuveen Flagship All-American, 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 six months ended October 31, 1997, the Distributor
retained approximately $69,500, $5,200 and $31,300 in such 12b-1 fees for Nuveen
Flagship All-American, Nuveen Flagship Intermediate and Nuveen Flagship Limited
Term, respectively. The remaining 12b-1 fees charged to the Funds were paid to
compensate authorized dealers for providing services to shareholders relating to
their investments. The Distributor also collected and retained approximately
$3,800, $3,200 and $25,100 of CDSC on share redemptions for Nuveen Flagship All-
American, Nuveen Flagship Intermediate and Nuveen Flagship Limited Term,
respectively, during the six months ended October 31, 1997.
58
<PAGE>
7. Composition of Net Assets
At October 31, 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 $ 263,355,154 $ 40,841,554 $ 446,544,115
Balance of undistributed net investment income 36,546 32,448 1,185,392
Accumulated net realized gain (loss) from
investment transactions 2,316,357 (4,631) (4,357,247)
Net unrealized appreciation of investments 22,762,593 2,888,000 18,135,609
- --------------------------------------------------------------------------------------------------------------------
Net assets $ 288,470,650 $ 43,757,371 $ 461,507,869
====================================================================================================================
</TABLE>
8. Investment Composition
Each Fund invests in municipal securities which include general obligation,
escrowed and revenue bonds. At October 31, 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>
Education and Civic Organizations 12% 5% 15%
Forest and Paper Products 2 -- 18
Health Care 16 26 --
Housing Multifamily 5 2 6
Industrial Other 4 4 4
Long Term Care 9 4 4
Tax Obligation General 2 8 9
Tax Obligation Limited 10 17 11
Transportation 16 13 10
US Guaranteed 4 -- 4
Utilities 12 10 12
Water and Sewer 4 9 4
Other 4 2 3
- --------------------------------------------------------------------------------------------------------------------
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, 30% for Nuveen
Flagship Intermediate and 38% 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.
59
<PAGE>
Financial Highlights -- (Unaudited)
<TABLE>
<CAPTION>
Selected data for a common share outstanding throughout each period is as follows:
Class (Inception date) Operating performance Less distributions
--------------------- ------------------
Net
NUVEEN FLAGSHIP 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)
1998 (g) $ 10.90 $ .30 $ .47 $(.30) $ -- $ 11.37 7.13%
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)
1998 (g) 10.91 .26 .47 (.26) -- 11.38 6.72
1997 (d) 10.98 .12 (.06) (.13) -- 10.91 .54
Class C (6/93)
1998 (g) 10.89 .27 .47 (.27) -- 11.36 6.85
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 (c) 11.09 .57 (.32) (.57) (.17)+++ 10.60 2.16+
Class R (2/97)
1998 (g) 10.91 .31 .47 (.31) -- 11.38 7.23
1997 (d) 10.99 .15 (.07) (.16) -- 10.91 .69
- -----------------------------------------------------------------------------------------------------------------------------
</TABLE>
+ Annualized.
++ Information included prior to the 11 months 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 and are not annualized except where noted.
(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.
(g) For the six months ending October 31, 1997.
60
<PAGE>
<TABLE>
<CAPTION>
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>
$223,200 .80%+ 5.35%+ .80%+ 5.35%+ 12%
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
3,090 1.55+ 4.56+ 1.55+ 4.56+ 12
711 1.55+ 4.83+ 1.55+ 4.83+ 39
58,493 1.35+ 4.80+ 1.35+ 4.80+ 12
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
3,688 .60+ 5.53+ .60+ 5.53+ 12
183 .61+ 5.95+ .61+ 5.95+ 39
- --------------------------------------------------------------------------------
</TABLE>
61
<PAGE>
Financial Highlights (Unaudited) -- continued
<TABLE>
<CAPTION>
Class (Inception date) Operating performance Less distributions
-------------------------- --------------------------
Net
NUVEEN FLAGSHIP INTERMEDIATE++ 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 (9/92)
1998 (g) $10.47 $.26 $ .44 $(.26) $ -- $10.91 6.72%
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)
1998 (g) 10.47 .23 .44 (.23) -- 10.91 6.42
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)
1998 (g) 10.45 .27 .44 (.27) -- 10.89 6.82
1997 (d) 10.60 .13 (.15) (.13) -- 10.45 (.15)
- ----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
+ Annualized.
++ Information included prior to the 11 months ending April 30, 1997,
reflects the financial highlights of Flagship Intermediate.
+++ The amount shown includes a distribution in excess of capital
gains of $.01 per share.
(a) Total returns are calculated on net asset value without any sales
charge and are not annualized except where noted.
(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.
(g) For the six months ending October 31, 1997.
62
<PAGE>
Ratios/Supplemental data
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
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>
$40,504 1.05%+ 4.57%+ .75%+ 4.87%+ 8%
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
2,711 1.60+ 4.02+ 1.30+ 4.32+ 8
2,540 1.71+ 3.90+ 1.23+ 4.38+ 26
1,187 1.73+ 3.68+ 1.13+ 4.28+ 81
543 .85+ 4.76+ .55+ 5.06+ 8
469 .82+ 4.98+ .40+ 5.40+ 26
-------------------------------------------------------------------------------------------------------------
</TABLE>
63
<PAGE>
Financial Highlights (Unaudited) -- continued
<TABLE>
<CAPTION>
Class (Inception date) Operating performance Less distributions
--------------------------- ------------------------
Net
NUVEEN FLAGSHIP LIMITED TERM++ 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 (10/87)
1998 (g) $10.61 $.26 $ .23 $(.25) $ -- $10.85 4.69%
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)
1998 (g) 10.60 .24 .24 (.24) -- 10.84 4.53
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)
1998 (g) 10.59 .27 .23 (.26) -- 10.83 4.79
1997 (d) 10.73 .12 (.13) (.13) -- 10.59 (.09)
- ----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
+ Annualized.
++ Information included prior to the 11 months 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 and are not annualized except where noted.
(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.
(g) For the six months ending October 31, 1997.
64
<PAGE>
<TABLE>
<CAPTION>
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>
$433,436 .74%+ 4.76%+ .74%+ 4.76%+ 14%
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
27,911 1.09+ 4.41+ 1.09+ 4.41+ 14
23,551 1.12+ 4.43+ 1.11+ 4.44+ 29
15,415 1.43+ 3.93+ 1.19+ 4.17+ 39
161 .53+ 4.93+ .53+ 4.93+ 14
40 .55+ 5.07+ .55+ 5.07+ 29
- -------------------------------------------------------------------------------------------------------------
</TABLE>
65
<PAGE>
Additional Investment Opportunities
To purchase additional shares of your Nuveen Fund, contact your financial
adviser. If you would like to add to your current investment on a regular 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 give your investment the added
growth potential of long-term compounding.
For more information on any of these service options, call your adviser, or
Nuveen at (800) 225-8530.
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
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
66
<PAGE>
Fund Information
Board of Trustees
Robert P. Bremmer
Lawrence H. Brown
Anthony T. Dean
Anne E. Impellizzeri
Peter R. Sawers
William J. Schneider
Timothy R. Schwertfeger
Judith M. Stockdale
Fund Manager
Nuveen Advisory Corp.
333 West Wacker Drive
Chicago, IL 60606
Transfer Agent and Shareholder Services
Boston Financial Data Service
P.O. Box 8509
Boston, MA 02266-8509
(800) 225-8530
Legal Counsel
Fried, Frank, Harris,
Shriver & Jacobson
Washington, D.C.
Independent Public Accountants
Arthur Andersen LLP
Chicago, Illinois
67
<PAGE>
Serving Investors
for Generations
[PHOTO OF JOHN NUVEEN, SR. APPEARS HERE]
John Nuveen, Sr.
Since our founding in 1898, John Nuveen & Co. has been synonymous with
investments that withstand the test of time. Today, we offer a broad range of
investments designed for investors whose portfolios are the principal source of
their ongoing financial security. More than 1.3 million investors have trusted
Nuveen to help them maintain the lifestyle they currently enjoy.
The cornerstone of Nuveen's investment philosophy is a commitment to disciplined
long-term investment strategies whose aim is to provide consistent, attractive
performance over time - with moderated risk. We emphasize quality securities
carefully chosen through in-depth research, and we follow those securities
closely over time to help ensure that they continue to meet our exacting
standards.
Whether your focus is long-term growth, dependable current income or
preservation of capital, Nuveen offers a wide array of equity and fixed-income
mutual funds, unit trusts, exchange-traded funds, individual managed account
services, and cash management products, including many that generate tax-free
income.
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) 225-8530 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) 225-8530
www.nuveen.com
