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NUVEEN LOGO
IMPORTANT VOTING INFORMATION FOR SHAREHOLDERS OF
NUVEEN FLAGSHIP ALABAMA MUNICIPAL BOND FUND AND
NUVEEN FLAGSHIP SOUTH CAROLINA MUNICIPAL BOND FUND
The following is a brief overview of the proposals to be voted upon at the
August 13, 1998 shareholder meeting. It should be read in conjunction with your
fund's proxy statement, which was mailed to you earlier. If you would like
another copy of the proxy statement, please call us at the number listed below.
YOUR VOTE IS VERY IMPORTANT.
If you have not already done so, please fill out and return the enclosed proxy
card in a timely fashion. Thank you for your support of the Nuveen family of
mutual funds.
Q. WHAT ARE SHAREHOLDERS BEING ASKED TO VOTE ON AT THE UPCOMING JOINT SPECIAL
SHAREHOLDER MEETING ON AUGUST 13?
A. The Board of Trustees for the Nuveen Flagship Alabama Municipal Bond Fund
(the "Alabama Fund") and the Nuveen Flagship South Carolina Municipal Bond
Fund (the "South Carolina Fund") has called a Joint Special Shareholder
Meeting for August 13, 1998 at which you will be asked to vote on a
reorganization (the "Reorganization") of your particular fund into the Nuveen
Flagship All-American Municipal Bond Fund (the "All-American Fund").
Q. ARE THERE ANY DIFFERENCES BETWEEN THE FUNDS?
A. The All-American Fund is substantially the same as the Alabama Fund and the
South Carolina Fund in its philosophy, investment objectives and policies and
day-to-day portfolio management except that the All-American Fund invests in
municipal bonds issued nationwide and so does not invest substantially all of
its assets in municipal bonds exempt from both regular federal as well as
Alabama or South Carolina state income tax, respectively. In evaluating the
Reorganization, Alabama Fund and South Carolina Fund shareholders should
consider the impact of losing the exemption from Alabama or South Carolina
state income tax, respectively.
Q. WHAT ADVANTAGES WILL THIS PRODUCE FOR FUND SHAREHOLDERS?
A. We expect the proposed Reorganization to (i) lower gross operating expenses
as a percentage of net assets due to the All-American Fund's larger net
assets and greater economies of scale; (ii) improve portfolio
diversification; and (iii) lower portfolio transaction costs. The Board
believes that these potential benefits, together with the potentially higher
distributions from the All-American Fund should offset the loss of the
exemption of the Alabama Fund's and the South Carolina Fund's dividends from
state income tax.
Q. HAS THE FUND'S BOARD OF TRUSTEES APPROVED THE PROPOSAL?
A. The Board of Trustees for both funds has unanimously agreed that this
Reorganization is in your best interests and recommends that you vote in
favor of it.
Q. WHAT IS THE TIMETABLE FOR THE REORGANIZATION?
A. Effective May 8, 1998, the Alabama Fund and the South Carolina Fund were
closed to new investors; existing investors, however, may continue to make
additional purchases and reinvest dividends. If approved by shareholders on
August 13, 1998, the Reorganization is expected to take effect on August 21,
1998.
Q. WILL I RECEIVE NEW SHARES IN EXCHANGE FOR MY CURRENT SHARES?
A. Yes. Upon approval and completion of the Reorganization, shareholders of the
Alabama Fund and South Carolina Fund will exchange their shares for shares of
the All-American Fund based upon a specified exchange ratio determined by the
ratio of the respective net asset values of the funds. You will receive
All-American Fund shares whose aggregate value at the time of issuance will
equal the aggregate value of your Alabama Fund shares or South Carolina Fund
shares on that date.
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Q. IF I OWN SHARES IN CERTIFICATE FORM, WILL I NEED TO EXCHANGE THEM FOR
CERTIFICATES OF MY NEW FUND?
A. Certificates for All-American Fund shares will not be issued automatically as
part of the Reorganization, although we will send you certificates upon
request. If you currently own Alabama Fund or South Carolina Fund shares in
certificate form, you will need to return these certificates to Nuveen in
order to receive new certificates for your All-American Fund shares.
If you prefer, however, you may exchange your certificates for book entry
shares. These shares are held in a convenient computerized system that
enables shareholders to receive a complete and accurate record of their
holdings without having to worry about the safekeeping of certificates or the
expense involved with replacing a lost or stolen certificate. Just complete
the appropriate section of the Letter of Transmittal requesting book entry
shares. Regardless of the way you choose to hold your shares, certificates
should be returned to the fund's transfer agent by certified mail as soon as
possible.
Q. WILL I HAVE TO PAY ANY FEES OR EXPENSES IN CONNECTION WITH THE
REORGANIZATION?
A. No. All of the funds' expenses associated with each Reorganization will be
borne by the Alabama Fund and the South Carolina Fund, respectively. However,
since Nuveen currently reimburses any additional operating expenses for these
funds, Nuveen will effectively bear the full cost of each Reorganization.
Q. HOW DO MANAGEMENT FEES AND OTHER FUND OPERATING EXPENSES COMPARE BETWEEN THE
TWO FUNDS?
A. Upon approval and completion of the proposed Reorganization, Alabama Fund and
South Carolina Fund shareholders will pay lower management fees as a
percentage of net assets and will also benefit from lower gross fund
operating expenses (before expense waivers/reimbursements) as a percentage of
net assets, reflecting the larger net assets and greater economies of scale
of the All-American Fund. Currently, net fund operating expenses (after
expense waivers/ reimbursements) of the Alabama Fund and the South Carolina
Fund are lower than those of the All-American Fund as a percentage of net
assets, but only because of voluntary expense waivers/reimbursements by
Nuveen. There can be no assurance over time that Nuveen will continue these
waivers/reimbursements for the Alabama Fund or the South Carolina Fund if the
Reorganization is not approved.
Q. WILL THIS REORGANIZATION CREATE A TAXABLE EVENT FOR ME?
A. Each Reorganization is intended to be done on a tax-free basis for federal
income tax purposes. Therefore, you will recognize no gain or loss for
federal income tax purposes as a result of the Reorganization. In addition,
the tax basis and holding period of the All-American Fund shares you receive
will be the same as the tax basis and holding period of your Alabama
Fund/South Carolina Fund shares.
Q. CAN I EXCHANGE OR REDEEM MY ALABAMA FUND OR SOUTH CAROLINA FUND SHARES BEFORE
THE REORGANIZATION TAKES PLACE?
A. Upon approval of the Reorganization, you may exchange your Alabama Fund
shares or South Carolina Fund shares for shares of any other Nuveen Mutual
Fund, or redeem your shares, at any time. If you choose to do so, your
request will be treated as a normal exchange or redemption of shares (subject
to any applicable deferred sales charge) and will be a taxable transaction
for federal income tax purposes.
Q. HOW DO I VOTE MY SHARES?
A. You can vote your shares by completing and signing the enclosed proxy
card(s), and mailing them in the enclosed postage-paid envelope. If you need
any assistance, or have any questions regarding the proposals or how to vote
your shares, please call your financial adviser or Nuveen at (800) 414-7447
weekdays from 7:00 a.m. to 7:00 p.m. Central time.
Q. WILL NUVEEN CONTACT ME?
A. You may receive a call to verify that you received your proxy materials and
to answer any questions you may have about the Reorganization.
