<PAGE>
NUVEEN
Municipal
Bond Funds
April 30, 1998
Annual Report
Dependable, tax-free income
to help you keep more of
what you earn.
[PHOTO APPEARS HERE]
National
National Insured
<PAGE>
Highlights
As of April 30, 1998
For Class A shares on net asset value
Credit Quality Performance Highlights
Nuveen Municipal Bond Fund
[Pie chart appears here]
AAA 40%
AA 35%
A 19%
BBB/NR 6%
. Competitive taxable equivalent yield of 6.28%
for investors in the 31% income tax bracket
. One-year total return of 9.00%
. Paralleled Lipper peer group average
Nuveen Insured Municipal Bond Fund
[Pie chart appears here]
Insured 73%
U.S.
Guaranteed 27%
. Competitive taxable equivalent yield of 5.88%
for investors in the 31% income tax bracket
. One-year total return of 9.05%
. Outperformed Lipper peer group average
Contents
1 Dear Shareholder
3 Municipal Bond Fund Commentary
and Overview
6 Insured Municipal Bond Fund Commentary and Overview
9 Report of Independent
Public Accountants
10 Portfolio of Investments
27 Statement of Net Assets
28 Statement of Operations
29 Statement of Changes in Net Assets
30 Notes to Financial Statements
35 Financial Highlights
40 Building Better Portfolios
41 Fund Information
Is it Time for a Financial Check-Up?
Now is a great time to sit down with your financial adviser and review your
financial plan. How can you make sure that your investment strategy is strong
enough to provide the income you need today and versatile enough to change as
your goals do? Here are some guidelines:
. Make sure you and your adviser understand your current situation. How have
your goals, objectives and risk profile changed? What are your current tax
concerns, interests, lifestyle?
. Revisit your current investment choices. If the value of one portion of your
portfolio has grown substantially, it may be time me to rebalance asset
classes.
. Determine how your asset mix will be implemented. Changing your asset
allocation is generally a gradual process. Make sure you and your adviser
have a clear understanding of each other's responsibilities. Define and
discuss what you want in terms of support from your adviser.
. Keep revisiting your plan. Don't assume that once you've revised your plan
and reallocated your portfolio the process is finished.
It's recommended that you meet at least once a year with your financial
adviser -- and usually more if there have been significant changes in interest
rates, tax laws, retirement plan distributions, lifestyle or health. Even if
things haven't changed, it makes good financial sense to keep in touch with your
adviser.
<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.
I'm pleased to report that over the past 12 months, the Nuveen national
municipal bond funds continued to perform well and meet their objectives of
providing attractive tax-free income and after-tax total returns. As of April
30, 1998, Class A shareholders in the Nuveen Municipal Bond Fund and the Nuveen
Insured Municipal Bond Fund were receiving SEC yields on net asset value of
4.33% and 4.06%, respectively. To match these yields, investors in the 31%
federal income tax bracket would have to earn 6.28% and 5.88% on taxable
alternatives.
The declining interest rate environment over the past year had a significant
impact on the funds' performance. As the chart below illustrates, the yield on
the Bond Buyer 40, an unmanaged index of long-term municipal bonds, fell from
5.89% to 5.39% during the year. The decline reduced the funds' income levels, as
higher-yielding bonds that were called or sold from the portfolio had to be
replaced with bonds paying today's lower interest rates. As a result, the funds'
dividends were reduced slightly to reflect the level of income being earned by
the portfolios.
[Bond Buyer 40 chart appears here]
However, the decline in interest rates also had a positive impact on the funds
because many portfolio holdings appreciated in value during the period. Many of
the bonds in the portfolios have higher coupon rates than are available in
today's market, and the value of those bonds increased as rates trended
downward. The price appreciation resulting from this and other factors led to
the funds' strong total returns over the year.
The Economy in Review
The past 12 months were noteworthy for the ongoing performance of the equity
markets, which continued to exhibit remarkable strength. Fixed-income
investments also enjoyed bullish performance, as declining interest rates and
low inflation provided the ideal backdrop for a bond market rally. Much of the
decline in interest rates resulted from expectations that the financial problems
of Asia would restrain the prices of imported goods and reduce foreign demand
for U.S. products and services, thereby keeping inflation at moderate levels.
These inflation expectations were largely fulfilled, as the Consumer Price Index
rose only 1.4% for the 12 months ended April 1998, remaining at one of its
lowest levels in more than 30 years.
In coming months, we will continue to closely watch several key factors that are
likely to affect the future of the
1
<PAGE>
Nuveen offers an ever-expanding range of products designed to help investors
build a diversified, tax-efficient portfolio.
economy, including demand for goods and services, changes in U.S. production
capacity, the availability of qualified employees, and stability of the money
supply. While it is still too early for the full impact of Asia's financial
difficulties to show up in U.S. economic statistics, the potential long-term
effect of this crisis on American markets is of special concern. We expect that
the development of these factors will continue to influence the tone of the
fixed-income markets during the remainder of the year.
Building Better Portfolios
As economic events unfold, we believe that many investors will find
diversification to be an increasingly important investment strategy. An
appropriately diversified portfolio that is invested in a variety of asset
classes that each react differently to changes in the economic environment can
help cushion your portfolio against risk.
Many investors select Nuveen municipal bond funds because their emphasis on
dependable tax-free income and attractive after-tax returns makes them ideal for
building and maintaining long-term financial security. These funds can work
together with other Nuveen investments to create the foundation of a
diversified, well-balanced portfolio. Recent studies by Nuveen Research have
demonstrated that balanced portfolios combining municipal bonds and stocks
provided superior after-tax returns and lower levels of risk compared with
portfolios of stocks and taxable bonds.
You and your financial adviser may want to consider combining your Nuveen
municipal bond fund with an investment in the new Nuveen European Value Fund, an
equity mutual fund that offers a portfolio of quality European company stocks
for investors seeking long-term growth and international diversification. This
fund is just one of an ever-expanding range of Nuveen products and services
designed to help investors achieve diversification while building a tax-
efficient, risk-sensitive investment portfolio. If you'd like to learn more
about the Nuveen European Value Fund or any of our other investments, contact
your financial adviser or call Nuveen Investor Services for a prospectus at
(800) 621-7227. Please read it carefully before you invest.
When seeking quality investment solutions that withstand the test of time, we
hope that you continue to think of John Nuveen & Co. On behalf of everyone at
Nuveen, I thank you for your continued confidence in us and our family of
investments.
Sincerely,
/s/ Timothy R. Schwertfeger
Timothy R. Schwertfeger
Chairman of the Board
June 15, 1998
2
<PAGE>
Nuveen Municipal Bond Fund
Portfolio Manager's Comments
Portfolio Manager Tom Spalding discusses the Nuveen Municipal Bond Fund
and reviews factors that affected performance over the past year.
Comments cover the one-year period ended April 30, 1998 and all performance
statistics are quoted for Class A shares.
Over the past 12 months, we have enjoyed a bull market in fixed-income
investments, including municipal bonds. As interest rates con continue to drop
and the nation's economy steams ahead, municipal bond new issue and refunding
activity has taken off, totaling $220 billion nationally in 1997 and more than
$68 billion in the first quarter of 1998, up 70% over the same period last year.
This environment afforded numerous opportunities to find value in the essential
services sector, especially among bonds issued by schools, water and sewer
districts, and hospitals. The bull market also brought volatility, as the
continued strength of the economy caused concern that robust growth would be
accompanied by higher inflation. This volatility also provided opportunities as
we took advantage of temporary dips in the market to find value.
As Tim mentioned in his letter to shareholders, the Nuveen Municipal Bond Fund
performed well over the past 12 months, generating a total return on net asset
value of 9.00%, which is equivalent to a taxable return of 11.32% for
shareholders in the 31% federal tax bracket. The total return is in line with
the 9.02% average annual return for the Lipper peer group of national municipal
bond funds. The fund also earned a five-star rating by Morningstar*,
demonstrating its outstanding record of delivering attractive risk-adjusted
total returns.
Fund Structure Contributes to Solid Performance
Since the fund's duration (a measure of price volatility in relation to changes
in interest rates) was shorter than that of the benchmark Lehman Index,
careful security and sector selection allowed the fund to post competitive
returns with lower volatility. Longer duration funds are generally able to
participate more in market rallies and, conversely, suffer more during periods
of rising interest rates. This indicates that our fund management strategies
helped the fund perform in line with its peers without the risk of increased
volatility associated with a longer duration. Some of the strategies that paid
off for the fund during the year emphasized sector allocation, credit quality
and call protection.
Sector Allocation
The fund's two largest sector allocations are utility bonds and health care
bonds, accounting for 25% and 19%, respectively, of the fund's net assets. The
fund established its core position in health care bonds in the mid-1990s, when
uncertainty surrounding industry reform created opportunities for value
investing. At that time, we sought out bonds of fundamentally strong facilities
with competitive positions and healthy financial operations that were being
penalized by the uncertainty surrounding the industry. Since that time, the
health care debate has subsided and many of these bonds have been pre-refunded,
resulting in price stability and dependable income for the portfolio.
We see a similar opportunity in the public utility sector, with the relative
scarcity of new issuance and the restructuring of existing bonds making that
sector more attractive. The nationwide deregulation of the electric utility
sector has also provided numerous opportunities for value investing. We continue
to look for credits that will be dominant after the storm of deregulation has
passed, especially the bonds of those issuers who stand to benefit from
deregulation, including low-cost
3
<PAGE>
providers with fundamentally sound financials and favorable customer bases. We
feel that our investment in this sector will provide the same upside potential
that health care bonds did a few years ago.
Credit Quality
As of April 30, 75% of the portfolio was invested in bonds rated AA or better.
Some of the fund's lower-rated credits have been pre-refunded as issuers took
advantage of lower interest rates. Currently, our preference is to add bonds
that are higher-rated since we believe the market does not offer adequate yield
compensation for the additional credit risk presented by lower-rated bonds.
Call Protection
Finally, the fund benefits from well-diversified call protection that will
heighten, in part, the fund's ability to maintain predictable income for
investors. Staggered call exposure helps protect the fund from reinvestment risk
in the event that interest rates cycle downward.
Strategies for the Future
We continue to manage the fund by focusing on the selection of undervalued
securities that provide both attractive income and the opportunity for price
appreciation relative to the market, consistent with the preservation of
capital.
In the coming months, we will maintain a conservative approach to managing the
fund, maintaining a shorter duration than the market. If the yield curve remains
flat throughout the year, we will continue to seek maturities of less than 25
years, favoring bonds in the 15- to 20-year range. It is our opinion that in the
current environment, long-term yields are not high enough to warrant assuming
the additional interest rate risk associated with longer-maturity bonds.
Similarly, with the difference in the yields of higher- and lower-rated bonds at
such tight levels, we will continue to focus on higher-rated bonds.
* Overall rating within the municipal bond category for Class R shares for the
period ended 4/30/98. 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.
Class R shares of the fund earned five stars for each of the three-, five- and
10-year periods ended 4/30/98. In an investment category, 10% of funds receive
five stars. 1,547 municipal bond funds were rated for the three-year period, 809
for the five-year period and 346 for the 10-year period, each ending 4/30/98.
4
<PAGE>
Nuveen Municipal Bond Fund
Performance Overview
As of April 30, 1998
[BAR CHART APPEARS HERE]
<TABLE>
<CAPTION>
Monthly Tax-Free Dividends (Class A Shares)/1/
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
0.039 0.039 0.039 0.039 0.039 0.039 0.039 0.0375 0.0375 0.0375 0.0375 0.0375
</TABLE>
<TABLE>
<CAPTION>
Portfolio Statistics
Share Class A B C R
- -----------------------------------------------------------
<S> <C> <C> <C> <C>
Inception Date 6/95 2/97 6/95 11/76
Net Asset Value $9.46 $9.46 $9.44 $9.46
Fund Net Assets ($000) $2,924,493
Average Weighted Maturity (Years) 18.69
Average Weighted Duration (Years) 6.81
- -----------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
Annualized Total Return/2/
Share Class A(NAV) A(Offer) B C R
- ---------------------------------------------------------
<S> <C> <C> <C> <C> <C>
1-Year 9.00% 4.43% 8.09% 8.20% 9.09%
5-Year 6.06% 5.16% 5.34% 5.29% 6.31%
10-Year 7.72% 7.26% 7.12% 6.93% 7.98%
- ---------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
Tax-Free Yields
Share Class A(NAV) A(Offer) B C R
- -----------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Distribution Rate 4.76% 4.56% 4.00% 4.19% 4.95%
SEC 30-Day Yield 4.33% 4.15% 3.57% 3.77% 4.53%
Taxable Equivalent Yield/3/ 6.28% 6.01% 5.17% 5.46% 6.57%
- -----------------------------------------------------------------------------
</TABLE>
[GRAPH APPEARS HERE]
<TABLE>
<S> <C> <C> <C>
4/88 10000 10000 9580
4/89 11117 11389 10911
4/90 12841 12850 12311
4/91 13455 13472 12906
4/92 14665 14595 13982
4/93 16057 15677 15019
4/94 16747 16231 15549
4/95 17496 16992 16279
4/96 18940 18117 17356
4/97 22276 21073 20188
4/98 22202 21035 20147
</TABLE>
- -- Lehman Brothers Municipal Bond Index $22,202
- -- Nuveen Municipal Bond Fund (NAV) $21,035
- -- Nuveen Municipal Bond Fund (Offer) $20,147
Past performance is not predictive of future results.
<TABLE>
<CAPTION>
Top 5 Sectors
<S> <C>
Utilities 25%
Health Care 19%
U.S. Guaranteed 11%
Water & Sewer 9%
Tax Obligation (Limited) 8%
</TABLE>
1 The fund also paid shareholders taxable distributions in November of $0.0303
per share.
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 sales charge. Class B shares have a 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 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 Index Comparison shows the change in value of a $10,000 investment in the
Class A shares of the Nuveen fund compared with the Lehman Brothers Municipal
Bond Index. The Lehman Municipal Bond Index is comprised of a broad range of
investment-grade municipal bonds, and does not reflect any initial or ongoing
expenses. The Nuveen fund return depicted in the chart reflects the initial
maximum sales charge applicable to A shares (4.20%) and all ongoing fund
expenses. For periods prior to inception of Class A shares, performance
reflects Class R share performance adjusted for differences in expenses,
which are primarily differences in distribution and service fees.
5
<PAGE>
Nuveen Insured Municipal Bond Fund
Portfolio Manager's Comments
Portfolio Manager Steve Krupa discusses the Nuveen Insured Municipal Bond Fund
and reviews factors that affected performance over the past year.
Comments cover the one-year period ended April 30, 1998 and all performance
statistics are quoted for Class A shares.
Over the past 12 months, we have enjoyed a bull market in fixed-income
investments, including municipal bonds. As interest rates continue to drop and
the nation's economy steams ahead, municipal bond new issue and refunding
activity has taken off, totaling $220 billion nationally in 1997 and more than
$68 billion in the first quarter of 1998, up 70% over the same period last year.
This environment afforded numerous opportunities to find value in the essential
services sector, especially among bonds issued by schools, water and sewer
districts, and hospitals. The bull market also brought volatility, as the
continued strength of the economy caused concern that robust growth would be
accompanied by higher inflation. This volatility also provided opportunities as
we took advantage of temporary dips in the market to find value.
The Nuveen Insured Municipal Bond Fund turned in strong performance over the
past 12 months, beating its Lipper peer average return of 8.46% and ranking 10th
out of 51 insured municipal bond funds. During a period of declining interest
rates and appreciating bond prices, the fund's total return performance of 9.05%
slightly under-performed the benchmark Lehman Index return of 9.67% because the
fund's average duration (a measure of its price volatility in relation to
changes in interest rates) was shorter than that of the Lehman Index. Longer
duration funds are generally able to participate more in market rallies and,
conversely, suffer more during periods of rising interest rates. However, our
other fund management strategies helped the fund perform well without the risk
of increased volatility associated with a longer duration.
Pre-Refunding and High Embedded Yields Keep Trading to a Minimum
As interest rates declined, a record number of bond issuers advance refunded
their debt obligations. These bonds are then secured by U.S. government
securities until the bonds are called. This pre-refunding activity keeps the
credit quality of the portfolio high and the coupon payments stable, but
moderates participation in bond rallies. Whenever possible, we sold pre-refunded
bonds that were expected to be called in the next 18 months and replaced them
with longer-term bonds to help lengthen the duration of the fund.
In addition, we limited bond sales to maximize after-tax total return. Many of
the longer-term bonds with high yields have appreciated in value and would
trigger significant capital gains if they were sold. As a result, we held bonds
with higher embedded yields to protect investors from return-reducing tax
liabilities.
Fund Will Continue to Focus on Boosting Current Yield and Total Return
In the coming months, we plan to increase the amount of AMT bonds in the
portfolio. AMT bonds -- those subject to the alternative minimum tax -- are
issued with higher yields than other types of bonds, helping to support a higher
income.
Another strategy that should help boost the total return for investors will be
the fund's increased exposure to health care bonds. The fund holds a core
position in health care bonds because uncertainty surrounding industry reform
created numerous opportunities for value investing. We seek bonds of
fundamentally strong facilities with competitive positions and healthy financial
operations that are undervalued by the market.
6
<PAGE>
We also see similar opportunity in the public utility sector as deregulation
makes this sector appear undervalued. We continue to look for credits that will
remain dominant after deregulation, emphasizing the bonds of issuers who stand
to benefit from deregulation as low-cost providers with fundamentally sound
financials and favorable customer bases. We feel that this sector will also
provide upside potential.
Additional Strategies for the Future
We continue to manage the fund by focusing on the selection of undervalued
securities that provide both attractive income and the opportunity for price
appreciation relative to the market, consistent with the preservation of
capital.
The primary focus of the fund will continue to be call protection -- helping to
maintain a stable dividend for investors. The fund benefits from well-
diversified call protection that will heighten, in part, the fund's ability to
maintain a dependable income level. Less than 6% of the total portfolio is
subject to call prior to the year 2001. Staggered call exposure helps protect
the fund from reinvestment risk in the event that interest rates cycle downward.
Finally, we'll continue to purchase hospital and public power bonds that Nuveen
Research feels are well positioned in the current deregulation environment.
7
<PAGE>
Nuveen Insured Municipal Bond Fund
Performance Overview
As of April 30, 1998
- -------------------------------------------------
Monthly Tax-Free Dividends (Class A Shares)/1/
- -------------------------------------------------
[GRAPH APPEARS HERE]
M--0.046
J--0.046
J--0.046
A--0.046
S--0.046
O--0.046
N--0.046
D--0.046
J--0.0445
F--0.0445
M--0.0445
A--0.0445
<TABLE>
<CAPTION>
- -------------------------------------------------
Top 5 Sectors
- -------------------------------------------------
<S> <C>
U.S. Guaranteed 27%
.................................................
Health Care 16%
.................................................
Tax Obligation (General) 14%
.................................................
Tax Obligation (Limited) 9%
.................................................
Utilities 9%
- -------------------------------------------------
</TABLE>
1 The fund also paid shareholders taxable distributions in November of $0.0351
per share.
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 sales charge. Class B shares have a 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 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 Index Comparison shows the change in value of a $10,000 investment in the
Class A shares of the Nuveen fund compared with the Lehman Brothers Municipal
Bond Index. The Lehman Municipal Bond Index is comprised of a broad range of
investment-grade municipal bonds, and does not reflect any initial or ongoing
expenses. The Nuveen fund return depicted in the chart reflects the initial
maximum sales charge applicable to A shares (4.20%) and all ongoing fund
expenses. For periods prior to inception of Class A shares, performance
reflects Class R share performance adjusted for differences in expenses,
which are primarily differences in distribution and service fees.
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------
Portfolio Statistics
- ----------------------------------------------------------------------------------------
Share Class A B C R
- ----------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Inception Date 9/94 2/97 9/94 12/86
........................................................................................
Net Asset Value $11.03 $11.03 $10.92 $ 10.98
........................................................................................
Fund Net Assets ($000) $830,557
........................................................................................
Average Weighted Maturity (Years) 19.32
........................................................................................
Average Weighted Duration (Years) 6.56
- ----------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------
Annualized Total Return/2/
- ----------------------------------------------------------------------------------------
Share Class A(NAV) A(Offer) B C R
- ----------------------------------------------------------------------------------------
1-Year 9.05% 4.45% 8.14% 8.39% 9.17%
........................................................................................
5-Year 6.08% 5.17% 5.27% 5.22% 6.25%
........................................................................................
10-Year 8.33% 7.87% 7.69% 7.49% 8.55%
- ----------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------
Tax-Free Yields
- ----------------------------------------------------------------------------------------
Share Class A(NAV) A(Offer) B C R
- ----------------------------------------------------------------------------------------
Distribution Rate 4.84% 4.64% 4.08% 4.29% 5.03%
........................................................................................
SEC 30-Day Yield 4.06% 3.89% 3.31% 3.51% 4.27%
........................................................................................
Taxable Equivalent Yield/3/ 5.88% 5.64% 4.80% 5.09% 6.19%
- ----------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
Index Comparison/4/
Lehman Brothers Nuveen Insured Nuveen Insured
Municipal Bond Municipal Bond Municipal Bond
Index Fund (NAV) Fund (Offer)
<S> <C> <C> <C>
4/88 10000 10000 9580
4/89 11117 11537 11053
4/90 11761 12044 11538
4/91 13455 13748 13171
4/92 14665 15063 14431
4/93 16956 17501 16766
4/94 16559 16842 16135
4/95 18989 19563 18741
4/96 19186 19745 18916
4/97 22276 22374 21434
4/98 22202 22262 21336
</TABLE>
Lehman Brothers Municipal Bond Index $22,202
Nuveen Insured Municipal Bond Fund (NAV) $22,262
Nuveen Insured Municipal Bond Fund (Offer) $21,336
Past performance is not predictive of future results.
8
<PAGE>
Report of Independent Public Accountants
To the Board of Trustees and Shareholders of
Nuveen Flagship Municipal Trust:
We have audited the accompanying statements of net assets, including the
portfolios of investments, of the Nuveen Municipal Bond Fund and Nuveen Insured
Municipal Bond Fund (two of the portfolios constituting the Nuveen Flagship
Municipal Trust (a Massachusetts business trust)), as of April 30, 1998, and the
related statements of operations, statements of changes in net assets and the
financial highlights for the periods indicated thereon. These financial
statements and financial highlights are the responsibility of the Fund's
management. Our responsibility is to express an opinion on these financial
statements and financial highlights based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of securities owned as of April
30, 1998, by correspondence with the custodian and brokers. As to securities
purchased but not received, we requested confirmation from brokers and, when
replies were not received, we carried out alternative auditing procedures. An
audit also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the net assets of the Nuveen
Municipal Bond Fund and Nuveen Insured Municipal Bond Fund of the Nuveen
Flagship Municipal Trust as of April 30, 1998, and the results of their
operations, the changes in their net assets and their financial highlights for
the periods indicated thereon in conformity with generally accepted accounting
principles.
ARTHUR ANDERSEN LLP
Chicago, Illinois
June 18, 1998
9
<PAGE>
Portfolio of Investments
Nuveen Municipal Bond Fund
April 30, 1998
<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 Home Mortgage Bonds, 12/03 at 103 AAA $ 12,525,233
1990 Series A, 5.850%, 6/01/25
- ------------------------------------------------------------------------------------------------------------------------------------
Arizona - 2.8%
7,750,000 Arizona Board of Regents, Arizona State University, System Revenue 7/02 at 101 AA 8,075,733
Refunding Bonds, Series 1992-A, 5.750%, 7/01/12
20,350,000 Salt River Project Agricultural Improvement and Power District, Arizona, 1/02 at 100 AA 20,435,470
Salt River Project Electric System Revenue Bonds, 1992 Series C,
5.500%, 1/01/28
9,145,000 Salt River Project Agricultural Improvement and Power District, Arizona, 1/99 at 100 Aaa 9,145,183
Salt River Project Electric System Revenue Bonds, 1973 Series A,
5.000%, 1/01/10
Salt River Project Agricultural Improvement and Power District, Arizona
Electric System Revenue Refunding Bonds, 1993 Series C:
5,000,000 4.900%, 1/01/08 1/04 at 102 AA 5,067,300
33,820,000 4.750%, 1/01/17 1/04 at 100 AA 31,667,695
7,000,000 The Industrial Development Authority of the City of Scottsdale, Arizona, 9/01 at 102 AAA 7,240,590
Hospital Revenue Refunding Bonds, (Scottsdale Memorial Hospitals),
Series 1996 A, 5.625%, 9/01/12
- ------------------------------------------------------------------------------------------------------------------------------------
Arkansas - 0.5%
11,210,000 Jefferson County, Arkansas, Hospital Refunding Revenue Bonds, Series 7/03 at 102 A 12,025,976
1993, 6.000%, 7/01/06
3,000,000 Jefferson County, Arkansas, Pollution Control Revenue Refunding Bonds 12/02 at 102 BBB- 2,990,700
(Entergy Arkansas, Inc. Project) Series 1997, 5.600%, 10/01/17
- ------------------------------------------------------------------------------------------------------------------------------------
California - 14.8%
21,220,000 California Health Facilities Financing Authority, Insured Health 7/04 at 102 AAA 20,758,253
Facility Refunding Revenue Bonds (Catholic Healthcare West) 1994
Series A, 5.000%, 7/01/14
12,000,000 California Health Facilities Financing Authority Revenue Bonds, 11/08 at 101 AAA 11,336,760
(USCF - Stanford Health Care), 1998 Series B, 5.000%,11/15/28
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 16,047,009
9,500,000 5.750%, 12/01/19 12/03 at 101 1/2 AA 9,819,865
12,250,000 5.500%, 12/01/23 6/03 at 101 1/2 AA 12,363,803
21,000,000 State of California, Department of Water Resources, Central Valley 12/03 at 101 AA 19,466,790
Project, Water System Revenue Bonds, Series M, 4.875%, 12/01/27
12,000,000 State Public Works Board of the State of California, Lease Revenue 11/04 at 102 Aaa 13,932,360
Bonds (Department of Corrections), 1994 Series A, 7.000%, 11/01/19
(Pre-refunded to 11/01/04)
11,500,000 California Statewide Communities Development Authority, Insured Health 10/03 at 102 AAA 11,723,790
Facilities Revenue, Certificates of Participation (UniHealth America),
1993 Series A, 5.500%, 10/01/14
38,795,000 California Statewide Communities Development Authority, Certificates of 7/03 at 102 AA 38,997,122
Participation, St. Joseph Health System Obligated Group, 5.500%,
7/01/23
15,725,000 Central Joint Powers Health Financing Authority, Certificates of 2/03 at 102 Baa1 15,580,487
Participation, Series 1993 (Community Hospitals of Central California),
5.250%, 2/01/13
9,000,000 East Bay Municipal Utility District (Alameda and Contra Costa Counties, 6/03 at 102 AAA 8,619,300
California), Water System Subordinated Revenue Refunding Bonds, Series
1993A, 5.000%, 6/01/21
</TABLE>
10
<PAGE>
<TABLE>
<CAPTION>
Principal Optional Call Market
Amount Description Provisions* Ratings** Value
- --------------------------------------------------------------------------------------------------------------------------------
<C> <S> <C> <C> <C>
California (continued)
Foothill/Eastern Transportation Corridor Agency, Toll Road
Revenue Bonds Series 1995A:
$ 45,000,000 0.000%, 1/01/23 No Opt. Call Baa $ 11,207,250
15,000,000 6.000%, 1/01/34 1/05 at 102 Baa 15,520,800
17,040,000 Los Angeles Convention and Exhibition Center Authority, 8/03 at 102 AAA 17,011,884
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 Los Angeles, 4/02 at 102 Aa 18,872,035
California, Water Works Revenue
Bonds, Issue of 1992, 6.500%, 4/15/32
16,000,000 The City of Los Angeles (California), Refunding, 6/03 at 102 AAA 16,458,720
Series 1993-C, Series 1993-B, 5.700%, 6/01/23
20,670,000 The City of Los Angeles, California, Wastewater 11/03 at 102 AAA 20,258,047
System Revenue Bonds, Series 1993-D,
5.200%, 11/01/21
15,750,000 Los Angeles County, Metropolitan Transportation 7/03 at 102 AA- 16,161,233
Authority, Proposition A, Sales Tax Revenue
Refunding Bonds, Series 1993-A, 5.500%, 7/01/13
17,185,000 Los Angeles County Metropolitan Transit Authority, 7/03 at 102 AAA 15,981,019
Proposition C, Sales Tax Revenue Second Senior
Bonds, Series 1993-B, 4.750%, 7/01/18
8,000,000 Los Angeles County Metropolitan Transit Authority, 7/03 at 102 AAA 7,911,280
Proposition C Sales Tax Revenue Second Senior
Bonds, Series 1993-B, 5.250%, 7/01/23
Los Angeles County Sanitation Districts Financing
Authority, Capital Projects Revenue Bonds,
1993 Series A (Senior Ad Valorem Obligation Bonds):
10,500,000 5.375%, 10/01/13 10/03 at 102 AA 10,702,020
20,750,000 5.000%, 10/01/23 10/03 at 100 AA 19,663,530
31,360,000 Los Angeles County Transportation Commission (California) 7/02 at 102 Aaa 34,844,410
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 California, 7/02 at 102 AA 5,043,800
Water Revenue Bonds, Issue of 1992,
5.500%, 7/01/19
22,220,000 Northern California Power Agency, Hydroelectric Project 7/98 at 102 A- 22,766,612
Number One Revenue Bonds, Refunding
Series E, 7.150%, 7/01/24
17,700,000 Sacramento County Sanitation Districts Financing Authority, 12/03 at 102 AA 16,205,235
1993 Revenue Bonds, 4.750%, 12/01/23
8,050,000 The Regents of the University of California, Refunding 9/02 at 102 A+*** 8,972,208
Revenue Bonds (Multiple Purpose Projects),
Series A, 6.875%, 9/01/16 (Pre-refunded to 9/01/02)
- --------------------------------------------------------------------------------------------------------------------------------
Colorado - 1.2%
27,685,000 Colorado Housing and Finance Authority, Single-Family 11/01 at 102 Aa1 29,294,883
Housing Revenue Refunding Bonds,
1991 Series A, 7.250%, 11/01/31
6,445,000 City and County of Denver, Colorado, Airport System 11/01 at 100 AAA 6,651,111
Revenue Bonds, Series 1996D, 5.875%, 11/15/16
- --------------------------------------------------------------------------------------------------------------------------------
Connecticut - 0.1%
2,970,000 Connecticut Resources Recovery Authority, Bridgeport 1/00 at 100 A 3,011,194
Resco Company, L.P. Project Bonds,
Series B, 8.625%, 1/01/04
- --------------------------------------------------------------------------------------------------------------------------------
Delaware - 0.3%
7,055,000 Delaware River Port Authority Refunding Revenue, 1/99 at 102 AAA 7,350,957
Series 1989, 7.375%, 1/01/07
- --------------------------------------------------------------------------------------------------------------------------------
Florida - 2.1%
31,000,000 Hillsborough County Industrial Development Authority, 5/02 at 103 AA 35,637,910
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 Subordinated 10/99 at 100 Aa2 23,790,750
Revenue Bonds, Series 1989D, 5.000%, 10/01/23
1,350,000 The Elderly Housing Corporation of Sarasota, Inc., 7/98 at 103 N/R 1,395,522
(Elderly Housing Project for the Sarasota
Housing Authority) First Mortgage Revenue Bonds,
Series 1978, 7.500%, 7/01/09
</TABLE>
11
<PAGE>
Portfolio of Investments
Nuveen Municipal Bond Fund (continued)
April 30, 1998
<TABLE>
<CAPTION>
Principal Optional Call Market
Amount Description Provisions* Ratings** Value
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Hawaii - 0.3%
$ 8,000,000 Department of Budget and Finance of the State of Hawaii, Special Purpose 7/01 at 102 AAA $ 8,921,520
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 - 19.2%
16,270,000 City of Chicago, General Obligation Bonds (Emergency Telephone System) 1/03 at 102 AAA 16,525,927
Series 1993, 5.625%, 1/01/23
7,880,000 City of Chicago, General Obligation Bonds, Project Series 1993, 1/04 at 102 AAA 7,784,258
5.250%, 1/01/18
21,995,000 Chicago Metropolitan Housing Development Corporation, Housing Development 7/02 at 102 AA 23,324,818
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, Refunding Series 1993, 1/03 at 101 AAA 7,648,312
5.000%, 1/01/16
18,710,000 City of Chicago (Illinois), Chicago-O'Hare International Airport, General 1/04 at 102 AAA 17,961,787
Airport Second Lien, Revenue Refunding Bonds, 1993 Series C,
5.000%, 1/01/18
61,150,000 City of Chicago (Illinois), Chicago-O'Hare International Airport, General 1/04 at 102 A+ 58,989,571
Airport Revenue Refunding Bonds, 1993 Series A, 5.000%, 1/01/16
22,335,000 City of Chicago, Water Revenue Bonds, Series 1995, 5.000%, 11/01/15 11/06 at 102 AAA 21,601,519
25,380,000 The County of Cook, Illinois, General Obligation Bonds, Series 1993A, 11/03 at 100 AAA 24,116,076
5.000%, 11/15/23
17,300,000 DuPage Water Commission (DuPage, Cook and Will Counties, Illinois) General 3/02 at 100 AAA 17,892,871
Obligation Water Refunding Bonds, Series 1992, 5.750%, 3/01/11
11,350,000 DuPage Water Commission (DuPage, Cook and Will Counties, Illinois) Water 5/03 at 102 Aa1 11,376,332
Refunding Revenue Bonds, Series 1993, 5.250%, 5/01/14
8,500,000 Illinois Development Finance Authority, Revenue and Refunding Bonds, Series 2/00 at 102 Baa2 9,280,895
1990A (Columbus-Cuneo-Cabrini Medical Center), 8.500%, 2/01/15
17,075,000 Illinois Educational Facilities Authority, Revenue Refunding Bonds, The 7/03 at 102 Aa1 17,396,181
University of Chicago, Series 1993B, 5.600%, 7/01/24
55,100,000 Illinois Health Facilities Authority, Revenue Bonds, Series 1994A 8/04 at 102 AA 58,185,600
(Northwestern Memorial Hospital), 6.000%, 8/15/24
6,115,000 Illinois Health Facilities Authority Revenue Refunding Bonds, Series 1993 10/03 at 102 A- 6,159,089
(Illinois Masonic Medical Center), 5.500%, 10/01/19
10,000,000 Illinois Health Facilities Authority, Revenue Bonds, Series 1992 10/02 at 102 AAA 10,721,500
(Highland Park Hospital), 6.200%, 10/01/22
34,120,000 Illinois Health Facilities Authority, Revenue Bonds, Series 1993 (Rush- 11/03 at 102 AAA 34,244,197
Presbyterian-St. Luke's Medical Center Obligated Group), 5.500%, 11/15/25
7,275,000 Illinois Health Facilities Authority, Revenue Bonds, Series 1994 (Southern 3/04 at 102 AAA 7,580,332
Illinois Hospital Services), 5.850%, 3/01/14
15,000,000 Illinois Health Facilities Authority, FHA Insured Mortgage Revenue Bonds, 2/06 at 102 AAA 15,804,450
Series 1996 (Sinai Health System), 6.000%, 2/15/24
15,100,000 State of Illinois, General Obligation Bonds, Series of March 1992 (Full 10/02 at 102 AA 16,318,419
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 15,687,658
5,000,000 5.875%, 6/01/11 6/02 at 102 AA 5,296,650
10,000,000 State of Illinois, General Obligation Bonds, Series of April 1993 (Full 4/03 at 102 AA 10,333,900
Faith & Credit), 5.700%, 04/01/18
14,200,000 State of Illinois, Build Illinois Bonds (Sales Tax Revenue Bonds), Series 6/03 at 102 AAA 14,008,158
S, 5.250%, 6/15/18
15,315,000 State of Illinois, Build Illinois Bonds (Sales Tax Revenue Bonds), Series O, 6/01 at 100 AAA 15,863,890
6.000%, 6/15/18
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 A+ 21,510,400
8,655,000 6.200%, 1/01/16 1/03 at 102 AAA 9,302,048
</TABLE>
12
<PAGE>
<TABLE>
<CAPTION>
Principal Optional Call Market
Amount Description Provisions* Ratings** Value
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Illinois (continued)
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 $ 4,012,597
56,180,000 6.500%, 6/15/27 (Pre-refunded to 6/15/03) 6/03 at 102 Aaa 62,487,890
16,510,000 Metropolitan Pier and Exposition Authority (Illinois), Dedicated State Tax 6/07 at 101 AAA 16,698,709
Revenue Bonds, Series 1997, 5.125%, 6/01/11
5,000,000 Regional Transportation Authority, Cook, DuPage, Kane, Lake, McHenry and 6/03 at 102 AAA 5,401,050
Will Counties, Illinois, General Obligation Refunding Bonds, Series 1993C,
5.800%, 6/1/13 (Pre-refunded to 6/01/03)
1,705,000 The Elderly Housing Corporation of Zion, Illinois, Housing Development 3/05 at 100 A 1,747,983
Revenue Bonds (Dell-Zion Associates Section 8 Assisted Project) Series
1978, 7.750%, 3/1/10
- ------------------------------------------------------------------------------------------------------------------------------------
Indiana - 3.8%
10,835,000 Duneland School Building Corporation, First Mortgage Bonds, Series 1997, 8/07 at 101 AAA 11,016,161
5.450%, 8/01/15
11,590,000 Indiana Health Facility Financing Authority, Hospital Revenue Refunding 9/02 at 102 AAA 12,537,135
Bonds, Series 1992A (Methodist Hospital of Indiana, Inc.), 5.750%, 9/01/11
49,600,000 Indiana Health Facilities Financing Authority, Hospital Revenue Bonds 11/03 at 102 Aa2 50,723,936
(Daughters of Charity) Series 1993, 5.750%, 11/15/22
10,100,000 Indiana State Office Building Commission Correctional Facilities Program, 12/03 at 100 AA- 10,971,428
Revenue Bonds, Series 1991, 6.375%, 7/01/16
2,750,000 The Indianapolis Local Public Improvement Bond Bank, Series 1992 D Bonds, 2/03 at 102 AA 3,031,463
6.750%, 2/1/20
12,500,000 The Indianapolis Local Public Improvement Bond Bank, Series 1993 A Bonds, 1/03 at 102 AAA 13,115,750
6.000%, 1/10/18
8,400,000 Marion County Convention and Recreational Facilities Authority, Excise Taxes 6/08 at 101 AAA 7,944,720
Lease Rental Revenue Subordinate Bonds, Series 1997A, 5.000%, 6/01/27
2,390,000 Southwind Housing, Inc., 7.125%, 11/15/21 No Opt. Call N/R 2,864,487
- ------------------------------------------------------------------------------------------------------------------------------------
Iowa - 0.3%
3,815,000 City of Davenport, Iowa, Hospital Facility Revenue Bonds (Mercy Hospital 7/04 at 100 AAA 4,202,337
Project), Series 1992, 6.625%, 7/01/14
3,250,000 Iowa Housing Finance Authority, Single Family Mortgage Bonds, 1977 Series 8/98 at 100 Aaa 3,259,425
A, 5.875%, 8/01/08
- ------------------------------------------------------------------------------------------------------------------------------------
Kentucky - 3.1%
34,500,000 County of Carroll, Kentucky, Collateralized Pollution Control Revenue Bonds 9/02 at 102 Aa2 38,879,775
(Kentucky Utilities Company Project) 1992 Series A, 7.450%, 9/15/16
2,645,000 Kentucky Housing Corporation, Housing Revenue Bonds (FHA Insured/VA 7/01 at 102 AAA 2,791,718
Guaranteed), 1991 Series A, 7.250%, 1/01/17
17,600,000 Kentucky Housing Corporation, Housing Revenue Bonds, 1993 Series B 1/04 at 102 AAA 18,066,928
(Federally Insured or Guaranteed Mortgage Loans), 5.300%, 7/01/10
14,400,000 Kentucky Housing Corporation, Housing Revenue Bonds, 1993 Series B 1/04 at 102 AAA 14,752,944
(Federally Insured or Guaranteed Mortgage Loans), 5.400%, 7/01/14
16,980,000 The Turnpike Authority of Kentucky, Resource Recovery Road Revenue Refunding 1/99 at 100 A+ 16,981,019
Bonds, 1987 Series A, 5.000%, 7/01/08
- ------------------------------------------------------------------------------------------------------------------------------------
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 13,828,133
10,000,000 5.700%, 11/15/26 2/04 at 102 AA 10,130,200
- ------------------------------------------------------------------------------------------------------------------------------------
Maryland - 0.1%
2,500,000 Community Development Administration, Maryland Department of Housing and 1/07 at 102 Aa2 2,624,100
Community Development, Housing Revenue Bonds, Series 1996 A,
5.875%, 7/01/16
</TABLE>
13
<PAGE>
Portfolio of Investments
Nuveen Municipal Bond Fund (continued)
April 30, 1998
<TABLE>
<CAPTION>
Principal Optional Call Market
Amount Description Provisions* Ratings** Value
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Massachusetts -- 3.1%
$ 15,000,000 Massachusetts Bay Transportation Authority, Certificates 8/00 at 102 AAA $ 16,413,900
of Participation, 1990 Series A,
7.650%, 8/01/15 (Pre-refunded to 8/01/00)
5,170,000 The Commonwealth of Massachusetts, General Obligation No Opt. Call AA- 5,244,862
Refunding Bonds, 1993 Series C,
4.700%, 8/01/02
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 7,029,555
9,605,000 6.000%, 4/01/20 (Pre-refunded to 4/01/00) 4/00 at 100 AAA 9,949,916
Massachusetts Water Resources Authority, General Revenue
Refunding Bonds, 1993 Series B:
14,765,000 5.250%, 3/01/13 3/03 at 102 A 14,772,235
10,795,000 5.000%, 3/01/22 3/03 at 100 A 10,219,087
26,050,000 Massachusetts Water Resources Authority, General Revenue 12/04 at 102 A 25,608,974
Bonds, 1993 Series C,
5.250%, 12/01/20
- ---------------------------------------------------------------------------------------------------------------------------------
Michigan -- 5.0%
15,000,000 School District of the City of Detroit, Wayne County,
Michigan, School Building and Site Improvement Bonds 5/06 at 102 AAA 15,520,050
(Unlimited Tax General Obligation), Series 1996A,
5.700%, 5/01/25
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 19,984,142
59,360,000 5.500%, 8/15/23 8/04 at 102 A 59,273,928
3,000,000 Michigan State Hospital Finance Authority, Hospital Revenue 10/05 at 100 BBB*** 3,550,800
Refunding Bonds (Genesys Health System Obligated Group),
Series 1995A, 7.500%, 10/01/27 (Pre-refunded to 10/01/05)
12,080,000 Michigan State Housing Development Authority, Rental Housing
Revenue Bonds, 1994 Series B, 4/04 at 102 AAA 12,467,406
5.700%, 4/01/12
15,000,000 State of Michigan, State Trunk Line Fund Bonds,
Series 1992A, 5.500%, 10/01/21 10/02 at 100 AA- 15,069,300
16,805,000 Hospital Finance Authority of the City of St. Joseph,
Revenue Refunding Bonds (Mercy Memorial Medical Center 1/04 at 102 AAA 16,575,444
Obligated Group), Series 1993, 5.250%, 1/01/16
5,000,000 Regents of the University of Michigan, Hospital Revenue
Refunding Bonds, Series 1986A, 12/98 at 100 AA 5,009,900
6.625%, 12/01/10
- ---------------------------------------------------------------------------------------------------------------------------------
Minnesota -- 0.4%
2,165,000 Minnesota Housing Finance Agency, Housing Development Bonds, 2/01 at 100 AA 2,193,297
1977 Series A, 6.250%, 2/01/20
8,965,000 Minnesota Housing Finance Agency, Rental Housing Bonds, 2/05 at 102 AAA 9,319,386
1995 Series D, 5.800%, 8/01/11
- ---------------------------------------------------------------------------------------------------------------------------------
Missouri -- 0.8%
6,195,000 Missouri Housing Development Commission, Housing Development 9/04 at 100 AA+ 6,286,190
Bonds, Series B 1979, (Federally Insured Mortgage Bonds),
7.000%, 09/15/22
15,750,000 Health and Educational Facilities Authority of the State of
Missouri, Health Facilities Refunding and Improvement 10/99 at 102 1/2 BBB+ 16,981,808
Revenue Bonds (Heartland Health Systems Project)
8.125%, 10/01/10
- ---------------------------------------------------------------------------------------------------------------------------------
Montana -- 0.2%
5,825,000 Montana Health Facility Authority, Health Care Revenue 6/06 at 102 BBB- 6,155,161
Bonds, Series 1996 (Community Medical Center, Inc.),
6.375%, 6/01/18
- ---------------------------------------------------------------------------------------------------------------------------------
Nebraska -- 1.1%
28,800,000 Consumers Public Power District, Nebraska, Nuclear Facility 6/98 at 100 A+ 28,806,336
Revenue Bonds, 1968 Series, 5.100%, 1/01/03
2,195,000 Hospital Authority No. 1 of Hall County, Nebraska, Hospital 6/98 at 103 AA*** 2,265,833
Facility Revenue Bonds (Lutheran Hospitals and Homes Society
Grand Island Project) Series 1977, 6.750%, 12/01/07
(Pre-refunded to 6/01/98)
- ---------------------------------------------------------------------------------------------------------------------------------
Nevada -- 0.3%
8,630,000 City of Reno, Nevada, Insured Hospital Revenue Bonds 5/03 at 102 AAA 9,040,529
(St. Mary's Regional Medical Center),
Series 1993A, 5.800%, 5/15/13
</TABLE>
14
<PAGE>
<TABLE>
<CAPTION>
Principal Optional Call Market
Amount Description Provisions* Ratings** Value
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
New Hampshire - 0.3%
$ 8,500,000 The Industrial Development Authority of the State of New Hampshire, 12/01 at 103 Ba1 $ 9,166,400
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, Housing Revenue Bonds, 5/02 at 102 A+ 11,576,783
1992 Series A, 6.950%, 11/01/13
- ------------------------------------------------------------------------------------------------------------------------------------
New York - 6.8%
11,190,000 Battery Park City Authority, Senior Revenue Refunding Bonds, Series 11/03 at 102 AA 11,000,553
1993A, 5.000%, 11/01/13
5,000,000 Municipal Assistance Corporation for the City of New York (A Public No Opt. Call AA 5,491,050
Benefit Corporation of the State of New York), Series L Bonds,
6.000%, 7/01/07
2,350,000 The City of New York, General Obligation Bonds, Fiscal 1996 Series C, No Opt. Call A3 2,511,892
6.000%, 8/15/04
8,000,000 The City of New York, General Obligation Bonds, Fiscal 1994 Series D, 8/03 at 101 1/2 A3 8,268,400
5.750%, 8/15/11
8,525,000 The City of New York, General Obligation Bonds, Fiscal 1992 Series C, 8/02 at 101 1/2 AAA 9,394,891
Fixed Rate Bonds, Subseries C-1, 6.625%, 8/01/12 (Pre-refunded to
8/01/02)
The City of New York, General Obligation Bonds, Fiscal 1996 Series G:
7,500,000 5.900%, 2/01/05 No Opt. Call A3 7,961,550
12,655,000 5.750%, 2/01/17 2/06 at 101 1/2 A3 13,044,268
15,620,000 The City of New York, General Obligation Bonds, Fiscal 1997 Series F, 8/06 at 101 1/2 A3 16,538,300
6.000%, 8/01/16
The City of New York, General Obligation Bonds, Fiscal 1995 Series F:
13,850,000 6.625%, 2/15/25 (Pre-refunded to 2/15/05) 2/05 at 101 A3*** 15,609,504
150,000 6.625%, 2/15/25 2/05 at 101 A3 164,768
8,600,000 New York City (New York), Municipal Water Finance Authority, Water and 6/02 at 101 1/2 A2 9,061,132
Sewer System Revenue Bonds, Fiscal 1993 Series A, 6.000%, 6/15/17
8,400,000 Dormitory Authority of the State of New York, Beth Israel Medical Center 11/00 at 102 AAA 8,924,748
Revenue Bonds, Series 1996, 6.000%, 11/01/15
8,000,000 Dormitory Authority of the State of New York, Mental Health Services 2/07 at 102 A- 8,070,560
Facilities Improvement, Revenue Bonds, Series 1997B, 5.500%, 8/15/17
15,000,000 Dormitory Authority of the State of New York, The New York and Presbyterian 2/08 at 101 AAA 13,758,450
Hospital, FHA-Insured Mortgage Hospital Revenue Bonds, Series 1998, 4.750%,
8/01/27
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 17,930,490
3,330,000 8.000%, 11/01/08 11/00 at 102 BBB+ 3,648,315
8,000,000 New York Local Government Assistance Corporation (A Public Benefit 4/02 at 102 AAA 8,911,120
Corporation of the State of New York), Series 1991D Bonds, 7.000%, 4/01/18
11,490,000 State of New York Mortgage Agency, Mortgage Revenue Bonds, Eighth Series A, 10/98 at 100 Aaa 11,777,250
6.875%, 4/01/17
Power Authority of the State of New York, General Purpose Bonds, Series CC:
3,990,000 5.000%, 1/01/08 (Pre-refunded to 1/01/03) 1/03 at 102 Aa2*** 4,166,159
17,270,000 5.250%, 1/01/18 (Pre-refunded to 1/01/03) 1/03 at 102 Aa2*** 18,213,114
5,000,000 Triborough Bridge and Tunnel Authority (New York), General Purpose Revenue 1/04 at 100 Aa3 4,603,700
Bonds, Series 1994A, 4.750%, 1/01/19
- ------------------------------------------------------------------------------------------------------------------------------------
North Carolina - 3.0%
16,750,000 North Carolina Eastern Municipal Power Agency, Power System Revenue Bonds, 1/99 at 100 Baa1 16,909,628
Refunding Series 1989 A, 6.500%, 1/01/24
68,250,000 North Carolina Eastern Municipal Power Agency, Power System Revenue Bonds, 1/03 at 102 Baa1 71,885,678
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 No Opt. Call N/R 60,194
1,195,000 7.750%, 6/01/10 No Opt. Call N/R 1,261,550
</TABLE>
15
<PAGE>
Portfolio of Investments
Nuveen Municipal Bond Fund (continued)
April 30, 1998
<TABLE>
<CAPTION>
Principal Optional Call Market
Amount Description Provisions* Ratings** Value
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Oklahoma - 0.3%
$ 5,375,000 The Comanche County Hospital Authority (Lawton, Oklahoma), Hospital 7/99 at 102 AAA $ 5,732,115
Revenue Bonds, Series 1989, 8.050%, 7/01/16 (Pre-refunded to 7/01/99)
2,970,000 Midwest City Memorial Hospital Authority (Midwest City, Oklahoma) 4/02 at 102 BBB+*** 3,330,855
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 Services, Certificates of 5/07 at 101 AAA 10,431,700
Participation, 1997 Series A, 5.800%, 5/1/24
- ------------------------------------------------------------------------------------------------------------------------------------
Pennsylvania - 2.8%
10,000,000 Lehigh County Industrial Development Authority, Pollution Control Revenue 9/04 at 102 AAA 11,024,100
Refunding Bonds, 1994 Series B (Pennsylvania Power & Light Company
Project), 6.400%, 9/01/29
22,500,000 Pennsylvania Housing Finance Agency, Rental Housing Refunding Bonds, Issue 7/03 at 102 AAA 23,285,250
1993, 5.750%, 7/01/14
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 4,387,331
16,830,000 8.200%, 7/01/24 7/02 at 102 AAA 18,406,298
16,600,000 Pennsylvania Intergovernmental Cooperation Authority, Special Tax Revenue 6/03 at 100 AAA 15,838,392
Refunding Bonds (City of Philadelphia Funding Program), Series of 1993A,
5.000%, 6/15/22
7,000,000 City of Philadelphia, Pennsylvania, Water and Sewer Revenue Bonds, 8/01 at 100 AAA 7,577,360
Sixteenth Series, 7.000%, 8/01/18 (Pre-refunded to 8/01/01)
- ------------------------------------------------------------------------------------------------------------------------------------
Rhode Island - 0.3%
7,595,000 Rhode Island Convention Center Authority, Refunding Revenue Bonds, 1993 5/03 at 100 AAA 7,272,061
Series B, 5.000%, 5/15/20
- ------------------------------------------------------------------------------------------------------------------------------------
Texas - 4.7%
City of Austin, Texas, Water, Sewer and Electric Refunding Revenue
Bonds, Series 1982:
260,000 14.000%, 11/15/01 (Pre-refunded to 5/15/99) 5/99 at 100 AAA 273,793
260,000 14.000%, 11/15/01 (Pre-refunded to 5/15/99) 5/99 at 100 A2*** 301,995
16,450,000 14.000%, 11/15/01 No Opt. Call A2 19,372,672
29,500,000 Brazos River Authority (Texas) Collateralized Revenue Refunding Bonds 8/00 at 102 AAA 30,264,345
(Houston Lighting & Power Company Project) Series 1995, 5.800%, 8/01/15
6,585,000 Crowley Independent School District, Tarrant & Johnson Counties, 8/08 at 100 AAA 7,391,728
Unlimited Tax School Building Bonds, Series 1997, 6.500%, 8/01/23
25,800,000 Harris County, Texas, Toll Road Senior Lien Revenue Refunding Bonds, 8/04 at 102 AAA 26,195,514
Series 1994, 5.300%, 8/15/13
7,000,000 Harris County Health Facilities Development Corporation (Texas), No Opt. Call AAA 7,597,240
Hospital Revenue Bonds (St. Luke's Episcopal Hospital Project),
Series 1991A, 6.750%, 2/15/21
47,245,000 City of San Antonio, Texas, Electric and Gas Systems Revenue Refunding 2/02 at 101 Aa1 45,624,024
Bonds, New Series 1992, 5.000%, 2/01/17
- ------------------------------------------------------------------------------------------------------------------------------------
Utah - 3.5%
Intermountain Power Agency (Utah), Power Supply Revenue Refunding Bonds,
1993 Series A:
6,300,000 5.500%, 7/01/13 7/03 at 102 A+ 6,383,223
25,175,000 5.500%, 7/01/20 7/03 at 102 A+ 25,187,588
47,085,000 5.000%, 7/01/23 7/03 at 100 A+ 44,198,219
2,200,000 Intermountain Power Agency (Utah), Power Supply Revenue Bonds, 1986 7/98 at 100 A+ 2,200,858
Series B, 6.000%, 7/01/15
6,740,000 Intermountain Power Agency (Utah), Power Supply Revenue Bonds, 1986 7/98 at 100 A+ 6,394,845
Series C, 5.000%, 7/01/18
15,100,000 Intermountain Power Agency (Utah), Power Supply Revenue Refunding Bonds, 7/07 at 102 AAA 15,769,685
1997 Series B, 5.750%, 7/01/19
1,490,000 Layton, Utah, Industrial Development Revenue Bonds (C.D.I. Ltd. Project- 6/98 at 100 N/R 1,493,740
K Mart Guaranteed), 8.750%, 6/01/05
</TABLE>
16
<PAGE>
<TABLE>
<CAPTION>
Principal Optional Call Market
Amount Description Provisions* Ratings** Value
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Vermont - 0.1%
$ 215,000 University of Vermont and State Agricultural College, Housing, Dining 7/98 at 101 A+ $ 217,936
and Student Services Facilities System Bonds, Lot 1 Series 1969-A,
6.300%, 7/01/06
- ------------------------------------------------------------------------------------------------------------------------------------
Virginia - 3.9%
690,000 Industrial Development Authority of the City of Chesapeake, Medical 9/98 at 100 N/R 693,090
Facility Insured-Mortgage Revenue Bonds (Medical Facilities of America
XIV Project) Series 1979, 7.500%, 9/01/01
7,750,000 Richmond Metropolitan Authority (Virginia), Expressway Revenue and 7/02 at 102 AAA 8,352,252
Refunding Bonds, Series 1992-B, 6.250%, 7/15/22
50,000,000 Virginia Housing Development Authority, Commonwealth Mortgage Bonds, 1/02 at 102 AA+ 52,340,000
1992 Series A, 7.150%, 1/01/33
3,070,000 Virginia Housing Development Authority, Multi-Family Mortgage Bonds, 5/98 at 101 AA+ 3,107,730
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 AA+ 19,727,765
28,075,000 5.900%, 5/01/14 5/03 at 102 AA+ 29,016,635
- ------------------------------------------------------------------------------------------------------------------------------------
Washington - 6.9%
23,260,000 Public Utility District No. 1 of Chelan County, Rocky Reach Hydro-Electric 1/99 at 100 AA 23,265,581
System Revenue Bonds, Series of 1957, 5.000%, 7/01/13
6,450,000 Public Utility District No. 1 of Chelan County, Rocky Reach Hydro-Electric 1/99 at 100 AA 6,449,420
System Revenue Bonds, Series of 1968, 5.125%, 7/01/23
14,335,000 Public Utility District No. 1 of Douglas County, Washington, Wells 9/98 at 101 A+ 13,032,808
Hydroelectric Revenue Bonds, Series of 1963, 4.000%, 9/01/18
7,250,000 Municipality of Metropolitan Seattle, Sewer Refunding Revenue Bonds, 1/03 at 102 AAA 7,571,827
Series Y, 5.700%, 1/01/12
5,000,000 Washington Public Power Supply System, Nuclear Project No. 1 Refunding No Opt. Call Aa1 6,075,450
Revenue Bonds, Series 1989B, 7.125%, 7/01/16
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 16,420,960
18,500,000 5.750%, 7/01/13 7/03 at 102 Aa1 19,145,650
10,000,000 5.700%, 7/01/17 7/03 at 102 AAA 10,219,000
7,805,000 Washington Public Power Supply System, Nuclear Project No. 1 Refunding No Opt. Call Aa1 9,138,874
Revenue Bonds, Series 1993B, 7.000%, 7/01/09
10,000,000 Washington Public Power Supply System (Bonneville), Nuclear Project 7/03 at 102 Aa1 10,008,000
No. 1 Refunding Revenue Bonds, Series 1993C, 5.375%, 7/01/15
8,835,000 Washington Public Power Supply System, Nuclear Project No. 3 Refunding 7/03 at 102 Aa1 9,058,701
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 9,287,864
51,070,000 5.375%, 7/01/15 7/03 at 102 Aa1 50,530,190
11,545,000 5.500%, 7/01/18 7/03 at 102 Aa1 11,446,867
- ------------------------------------------------------------------------------------------------------------------------------------
Wisconsin - 4.4%
4,500,000 Wisconsin Housing and Economic Development Authority, Insured Mortgage No Opt. Call AA 4,642,200
Revenue Refunding Bonds, 1977 Series A, 5.800%, 6/01/17
8,500,000 Wisconsin Housing and Economic Development Authority, Multi-Family Housing 4/02 at 102 A1 9,123,814
Revenue Bonds, 1992 Series B, 7.050%, 11/01/22
28,200,000 Wisconsin Housing and Economic Development Authority, Housing Revenue 12/03 at 102 A1 28,734,953
Bonds, 1993 Series C, 5.800%, 11/01/13
13,700,000 Wisconsin Health and Educational Facilities Authority, Revenue Bonds, 11/01 at 102 AAA 14,603,651
Series 1991 (Columbia Hospital, Inc.), 6.250%, 11/15/21
</TABLE>
17
<PAGE>
Portfolio of Investments
Nuveen Municipal Bond Fund (continued)
April 30, 1998
<TABLE>
<CAPTION>
Principal Optional Call Market
Amount Description Provisions* Ratings** Value
- ------------------------------------------------------------------------------------------------------------------------------------
<C> <S> <C> <C> <C>
Wisconsin (continued)
$ 9,830,000 Wisconsin Health and Educational Facilities Authority, Health 6/02 at 102 AAA $ 10,522,228
Facilities Refunding Revenue Bonds (SSM Health Care),
Series 1992AA, 6.250%, 6/01/20
3,750,000 Wisconsin Health and Educational Facilities Authority, Revenue 10/04 at 102 AAA 3,957,262
Bonds, Series 1994A (Froedtert Memorial Lutheran
Hospital, Inc.), 5.875%, 10/01/13
6,000,000 Wisconsin Health and Educational Facilities Authority, Revenue 12/02 at 102 AAA 6,322,560
Bonds, Series 1992A (Meriter Hospital, Inc.), 6.000%, 12/01/22
18,500,000 Wisconsin Health and Educational Facilities Authority Revenue 8/03 at 102 AAA 18,018,444
Bonds, Series 1993 (Aurora Health Care Obligated
Group), 5.250%, 8/15/23
32,000,000 Wisconsin Health and Educational Facilities Authority, Revenue 5/06 at 102 AAA 32,908,480
Bonds, Series 1996 (Aurora Medical Group, Inc.
Project), 5.750%, 11/15/25
- ------------------------------------------------------------------------------------------------------------------------------------
$ 2,849,465,000 Total Investments --(cost--$2,654,721,175)--98.5% 2,881,961,684
===============---------------------------------------------------------------------------------------------------------------------
Other Assets Less Liabilities--1.5% 42,530,887
---------------------------------------------------------------------------------------------------------------
Net Assets--100% $ 2,924,492,571
===============================================================================================================
</TABLE>
* Optional Call Provision (not covered by the report of independent public
accountants): Dates (month and year) and prices of the earliest optional
call or redemption. There may be other call provisions at varying prices
at later dates.
** Ratings (not covered by the report of independent public accountants):
Using the higher of Standard & Poor's or Moody's rating.
*** 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.
See accompanying notes to financial statements.
18
<PAGE>
<TABLE>
<CAPTION>
Portfolio of Investments
Nuveen Insured Municipal Bond Fund
April 30, 1998
Principal Optional Call Market
Amount Description Provisions* Ratings** Value
- ---------------------------------------------------------------------------------------------------------------------------------
<C> <S> <C> <C> <C>
Alabama -- 8.1%
$ 5,600,000 The Alabama Public Health Care Authority, Mortgage Revenue 10/06 at 102 AAA $ 5,925,696
Bonds, Series 1996, 6.000%, 10/01/25
2,120,000 The Water Supply Board of the City of Albertville (Alabama) 3/02 at 102 AAA 2,308,023
Water Revenue Bonds, Series 1992, 6.700%, 3/01/11
3,500,000 City of Athens, Alabama, Electric Revenue Warrants, Series 6/05 at 102 AAA 3,721,375
1995, 6.000%, 6/01/25
4,405,000 The Governmental Utility Services Corporation of the City of 12/99 at 102 AAA 4,705,333
Auburn, Floating/Fixed Rate Wastewater Treatment Revenue
Bonds, Series 1984, 7.300%, 1/01/12
1,875,000 The Special Care Facilities Financing Authority of the City 1/01 at 102 AAA 1,965,694
of Birmingham, Baptist Medical Centers 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), Water, 6/00 at 102 AAA 1,319,105
Gas and Sewer Revenue Refunding Bonds, Series 1990B,
7.350%, 6/01/20
6,750,000 The Public Building Authority of the City of Huntsville 10/05 at 102 AAA 7,163,303
(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 3,264,990
Warrants, Series 1994, 6.250%, 2/01/19
5,500,000 City of Madison (Alabama), General Obligation Warrants, 4/05 at 102 AAA 5,842,815
Series 1995, 6.000%, 4/01/23
3,000,000 Mobile County, Alabama, General Obligation Tax Pledge 2/00 at 102 AAA 3,191,070
Warrants, Series 1991, 6.700%, 2/01/11 (Pre-refunded to
2/01/00)
5,580,000 BMC Special Care Facilities Financing Authority of the City 9/07 at 102 AAA 5,560,805
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, Alabama, 3/06 at 102 AAA 12,693,000
Health Care Facility Revenue Bonds, Jackson Hospital &
Clinic, Series 1996, 6.000%, 3/01/26
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 3,295,378
140,000 6.900%, 11/01/24 11/04 at 102 AAA 158,903
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 2,515,612
3,000,000 6.850%, 8/15/25 (Pre-refunded to 8/15/04) 8/04 at 102 AAA 3,437,820
- ---------------------------------------------------------------------------------------------------------------------------------
Alaska -- 2.9%
Alaska Industrial Development and Export Authority, Revolving
Fund Bonds, Series 1997A:
4,500,000 5.900%, 4/01/17 4/07 at 102 AAA 4,722,570
5,000,000 6.125%, 4/01/27 4/07 at 102 AAA 5,359,850
8,565,000 Alaska Housing Finance Corporation, Mortgage Revenue Bonds, 6/06 at 102 AAA 9,028,281
1996 Series A, 6.000%, 12/01/15
5,000,000 Alaska Housing Finance Corporation, Mortgage Revenue Bonds, 6/07 at 102 AAA 5,226,300
1997 Series A, 6.000%, 6/01/27
- ---------------------------------------------------------------------------------------------------------------------------------
Arizona -- 2.1%
5,000,000 Navajo County, Arizona, Pollution Control Corporation, 8/03 at 102 A- 5,129,000
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 County, 7/04 at 101 AAA 6,461,460
Arizona, School Improvement and Refunding Bonds, Series
1994, 6.000%, 7/01/10
5,000,000 City of Tucson, Arizona, Water System Revenue Bonds, Series 7/08 at 100 AAA 5,533,350
1994-A, 6.000%, 7/01/21
</TABLE>
19
<PAGE>
<TABLE>
<CAPTION>
Portfolio of Investments
Nuveen Insured Municipal Bond Fund (continued)
April 30, 1998
Principal Optional Call Market
Amount Description Provisions* Ratings** Value
- --------------------------------------------------------------------------------------------------------------------------------
California -- 8.9% <C> <C> <C>
<C> <S>
$ 3,525,000 Brea Public Financing Authority (Orange County, California), 8/01 at 102 AAA $ 3,886,277
1991 Tax Allocation Revenue Bonds, Series A (Redevelopment
Project AB), 7.000%, 8/1/15 (Pre-refunded to 8/01/01)
5,000,000 California Health Facilities Financing Authority, Insured 7/06 at 102 AAA 5,300,250
Health Facility Refunding Revenue Bonds (Catholic
Healthcare West), 1996 Series A, 6.000%, 7/01/25
8,000,000 Culver City Unified School District, (Los Angeles County, 2/08 at 101 AAA 7,679,920
California), General Obligation Bonds, Election of 1996,
Series 1998, 5.125%, 8/01/37
1,000,000 M-S-R Public Power Agency (California), San Juan Project 7/98 at 100 AAA 1,003,010
Refunding Revenue Bonds, Series H, 5.900%, 7/01/20
13,750,000 Ontario Redevelopment Financing Authority (San Bernardino 8/03 at 102 AAA 14,547,088
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 Facility 12/04 at 101 AAA 5,679,364
Project) Certificates of Participation, 6.000%, 12/01/12
(Pre-refunded to 12/04/04)
2,250,000 Sacramento Municipal Utility District (California), Electric 9/01 at 102 AAA 2,451,870
Revenue Bonds, 1991 Series Y, 6.500%, 9/01/21 (Pre-refunded
to 9/01/01)
2,435,000 County of San Diego, California, Certificates of 8/08 at 102 AAA 2,304,216
Participation, Sharp Healthcare Obligated Group, 5.000%,
8/15/28 (DD)
17,500,000 San Joaquin Hills Transportation Corridor Agency Toll Road 1/07 at 102 AAA 17,206,525
Refunding Revenue Bonds, Series 1997A, 5.250%, 1/15/30
3,000,000 Santa Clara County Financing Authority, Lease Revenue Bonds, 11/07 at 102 AAA 2,873,190
(VMC Facility Replacement Project, 1994 Series A, 5.000%,
11/15/22
10,000,000 The Regents of the University of California, Revenue Bonds 9/02 at 102 AAA 10,996,000
(Multiple Purpose Projects), Series D, 6.375%, 9/01/24
(Pre-refunded to 9/01/02)
- --------------------------------------------------------------------------------------------------------------------------------
Colorado -- 1.0%
4,500,000 Board of Water Commissioners, City and County of Denver, 11/01 at 101 AAA 4,835,925
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 3,873,590
Participation, 6.650%, 12/01/08
- --------------------------------------------------------------------------------------------------------------------------------
Delaware -- 0.5%
3,600,000 Delaware Economic Development Authority, Pollution Control 5/02 at 102 AAA 3,915,216
Refunding Revenue Bonds (Delmarva Power & Light Company
Project) Series 1992 Series B, 6.750%, 5/01/19
- --------------------------------------------------------------------------------------------------------------------------------
Florida -- 0.1%
920,000 Florida Keys Aqueduct Authority, Water Revenue Refunding 9/01 at 101 AAA 999,810
Bonds, Series 1991, 6.750%, 9/01/21 (Pre-refunded to
9/01/01)
80,000 Florida Keys Aqueduct Authority, Water Revenue, 6.750%, 9/01 at 101 AAA 86,124
9/01/21
- --------------------------------------------------------------------------------------------------------------------------------
Georgia -- 2.8%
5,000,000 City of Albany (Georgia), Sewerage System Revenue Bonds, 7/02 at 102 AAA 5,517,750
Series 1992, 6.625%, 7/01/17 (Pre-refunded to 7/01/02)
5,000,000 Development Authority of Appling County (Georgia), Pollution 1/04 at 101 AAA 5,583,300
Control Revenue Bonds (Oglethorpe Power Corporation Hatch
Project), Series 1994, 7.150%, 1/01/21
2,250,000 Chatham County Hospital Authority, Hospital Revenue Bonds 1/01 at 101 AAA 2,444,940
(Memorial Medical Center, Inc.) (Savannah, Georgia), Series
1990A, 7.000%, 1/01/21 (Pre-refunded to 1/01/01)
3,020,000 Development Authority of the City of Marietta, First Mortgage 9/05 at 102 AAA 3,190,177
Revenue Bonds (Life College, Inc.), Series 1995A and Series
1995B, 5.950%, 9/01/19
6,180,000 Marietta Development Authority (Life College), 6.250%, 9/05 at 102 AAA 6,775,072
9/01/25
</TABLE>
20
<PAGE>
<TABLE>
<CAPTION>
Principal Optional Call Market
Amount Description Provisions* Ratings** Value
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Illinois--14.9%
$ 2,500,000 City of Chicago (Illinois), General Obligation Adjustable 7/02 at 101 1/2 AAA $ 2,768,850
Rate Bonds, Central Public Library Project, Series C
of 1988, 6.850%, 1/01/17 (Pre-refunded to 7/01/02)
5,000,000 City of Chicago, General Obligation Bonds, Project Series A 1/02 at 102 AAA 5,381,000
of 1992, 6.250%, 1/01/12 (Pre-refunded to 1/01/02)
Chicago School Reform Board of Trustees of the Board of
Education of the City of Chicago, Illinois, Unlimited Tax
General Obligation Bonds, Series 19:
9,590,000 5.800%, 12/01/17 12/07 at 102 AAA 10,070,267
10,000,000 5.750%, 12/01/27 12/07 at 102 AAA 10,411,800
10,000,000 5.250%, 12/01/30 12/07 at 102 AAA 9,681,400
12,800,000 Public Building Commission of Chicago (Illinois), Building
Revenue Bonds, Series A of 1993, 12/03 at 102 AAA 13,252,224
5.750%, 12/01/18
6,540,000 Town of Cicero, Cook County, Illinois, General Obligation
Corporate Purpose Bonds, Series 1994A, 12/04 at 102 AAA 7,208,519
6.400%, 12/01/14
7,500,000 The County of Cook, Illinois, General Obligation Bonds, 11/03 at 100 AAA 7,126,500
Series 1993A, 5.000%, 11/15/23
2,500,000 Community College District No. 508, Cook County, Illinois,
Certificates of Participation, No Opt. Call AAA 3,191,700
8.750%, 1/01/07
2,370,000 Board of Governors of State Colleges and Universities
(Illinois), Eastern Illinois University, 4/04 at 102 AAA 2,591,168
Auxiliary Facilities System Revenue Bonds, Series 1994A,
6.375%, 4/01/16
1,900,000 Illinois Educational Facilities Authority, Revenue Refunding 5/06 at 102 AAA 2,064,008
Bonds, (Midwestern University), Series 1966B, 6.250%, 5/15/26
6,595,000 Illinois Health Facilities Authority, Revolving Fund Pooled 2/99 at 103 AAA 6,967,354
Financing Program, Methodist Health Services Corporation,
Peoria, 8.000%, 8/01/15
4,500,000 Illinois Health Facilities Authority, Revenue Bonds, Series 5/04 at 102 AAA 4,874,040
1994 (Ingalls Health System Project), 6.250%, 5/15/24
3,000,000 Illinois Health Facilities Authority, Revenue Bonds, Series 8/04 at 102 AAA 3,209,730
1994A (The University of Chicago Hospitals Project),
6.125%, 8/15/24
4,000,000 Illinois Health Facilities Authority, Health Care Facilities 11/04 at 102 AAA 4,512,360
Revenue Bonds, Series 1995, (Northwestern Medical Faculty
Foundation, Inc.), 6.500%, 11/15/15 (Pre-refunded to 11/15/04)
7,000,000 Illinois Health Facilities Authority, Revenue Bonds, 1/06 at 102 AAA 7,371,840
(Carle Foundation), Series 1996, 6.000%, 1/01/27
169,000 Illinois Health Facilities Authority, Revenue (Community 1/06 at 102 AAA 192,746
Provider Pooled Loan Program), 7.900%, 8/15/03
1,003,000 Illinois Health Facilities Authority, Revenue Bonds Series 5/98 at 101 AAA 1,016,109
1988-B, (Community Provider Pooled Loan Program),
7.900%, 8/15/03
5,000,000 State of Illinois, General Obligation Bonds, Series of August 8/04 at 102 AA 5,257,900
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 3,275,136
5,545,000 6.100%, 2/01/20 2/05 at 102 AAA 5,925,165
4,000,000 Regional Transportation Authority, Cook, DuPage, Kane, Lake, 6/03 at 102 AAA 4,329,880
McHenry and Will Counties, Illinois, General Obligation
Refunding Bonds, Series 1993C, 5.850%, 6/01/23
(Pre-refunded to 6/01/03)
2,850,000 Village of Woodridge, Dupage, Will and Cook Counties, Illinois 12/07 at 105 AAA 2,880,581
Multifamity Revenue Refunding Bonds, (GNMA Collateralized
Mortgage Loan, Hawthorn Ridge Apartments), 5.650%, 12/20/32
- ------------------------------------------------------------------------------------------------------------------------------------
Indiana--7.4%
5,000,000 Indiana Health Facility Financing Authority, Hospital Revenue 5/02 at 102 AAA 5,360,100
Refunding and Improvement Bonds, Series 1992 (Community
Hospitals Projects), 6.400%, 5/01/12
5,000,000 Indiana Municipal Power Agency, Power Supply System Revenue 1/03 at 102 AAA 5,332,250
Bonds, 1993 Series A, 6.125%, 1/01/19
Indiana Housing Finance Authority, Single Family Mortgage
Revenue Bonds, 1997 Series B-2:
1,755,000 6.000%, 7/01/16 1/07 at 101 1/2 Aaa 1,826,393
10,620,000 6.125%, 1/01/27 1/07 at 102 Aaa 11,071,031
3,750,000 City of Indianapolis, Indiana, Gas Utility System Revenue Bonds,
Series 1992 A, 6.200%, 6/01/23 6/02 at 102 AAA 4,014,413
</TABLE>
21
<PAGE>
Portfolio of Investments
Nuveen Insured Municipal Bond Fund (continued)
April 30, 1998
<TABLE>
<CAPTION>
Principal Optional Call Market
Amount Description Provisions* Ratings** Value
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Indiana (continued)
$ 4,950,000 Jasper County, Indiana, Collateralized Pollution Control Refunding Revenue
Bonds (Northern Indiana Public Service Company Project), Series 1991,
7.100%, 7/01/17 7/01 at 102 AAA $ 5,376,492
2,000,000 Lawrence Central High School Building Corporation, Marion County,
Indiana, First Mortgage Bonds, Series 1990, 7.250%, 7/01/08
(Pre-refunded to 7/01/00) 7/00 at 102 AAA 2,166,180
3,300,000 Marion County Convention and Recreational Facilities Authority (Indiana),
Excise Taxes Lease Rental Revenue Bonds, Series 1991B, 7.000%, 6/01/21
(Pre-refunded to 6/01/01) 6/01 at 102 AAA 3,617,889
13,000,000 Marion County Convention and Recreational Facilities Authority, Excise Taxes
Lease Rental Revenue Subordinate Bonds, Series 1997A, 5.000%, 6/01/27 6/08 at 101 AAA 12,295,400
2,250,000 Hospital Authority of Monroe County, Hospital Revenue Refunding Bonds,
Series 1989 (Bloomington Hospital Project), 7.125%, 5/01/11 5/99 at 101 AAA 2,332,778
1,000,000 City of Princeton, Indiana, Pollution Control Refunding Revenue Bonds,
1990 Series (Public Service Company of Indiana, Inc. Project C),
7.375%, 3/15/12 3/00 at 102 AAA 1,067,970
2,000,000 Hospital Authority of St. Joseph County (Indiana), Fixed Rate Hospital
Revenue Refunding Bonds, Series 1991A (Memorial Hospital of South Bend
Project), 7.000%, 8/15/20 (Pre-refunded to 8/15/01) 8/01 at 102 AAA 2,199,020
2,190,000 Shelby County Jail Building Corporation, First Mortgage Bonds (Shelby
County, Indiana), 6.500%, 7/15/09 (Pre-refunded to 7/15/02) 7/02 at 102 AAA 2,407,796
2,265,000 Southwest Allen Multi School Bldg. Corp., First Mortgage Refunding Bonds,
Series 1992 B, Fort Wayne, Indiana, 6.375%, 1/15/09 1/02 at 101 AAA 2,424,773
- ------------------------------------------------------------------------------------------------------------------------------------
Louisiana - 2.7%
7,000,000 Louisiana Public Facilities Authority, Hospital Revenue Refunding Bonds
(Southern Baptist Hospital Project), Series 1992, 6.800%, 5/15/12
(Pre-refunded to 5/15/02) 5/02 at 102 AAA 7,755,370
1,595,000 Louisiana Public Facilities Authority, Fixed Rate Health and Education
Capital Facilities Revenue Bonds (West Jefferson Medical Center),
Series 1985D, 7.900%, 12/01/15 12/98 at 102 AAA 1,659,948
State of Louisiana General Obligation Bonds, Series 1992-A:
5,000,000 6.500%, 5/01/09 5/02 at 102 AAA 5,482,550
2,000,000 6.500%, 5/01/12 (Pre-refunded to 5/01/02) 5/02 at 102 AAA 2,193,020
4,750,000 Hospital Service District No. 1 of the Parish of Tangipahoa, State of
Louisiana, Hospital Revenue Bonds (Series 1994), 6.250%, 2/01/24 2/04 at 102 AAA 5,144,535
- ------------------------------------------------------------------------------------------------------------------------------------
Maine - 3.7%
3,175,000 Maine Health and Higher Educational Facilities Authority, Revenue Bonds,
Series 1994B, 7.000%, 7/01/24 7/04 at 102 AAA 3,604,070
11,500,000 Maine Health and Higher Educational Facilities Authority, Revenue Bonds,
Series 1995A, 5.875%, 7/01/25 7/05 at 102 AAA 12,067,985
12,750,000 Maine State Housing Authority, Mortgage Purchase Bonds, 1996 Series B-2,
6.450%, 11/15/26 5/06 at 102 AAA 13,664,558
Old Orchard Beach, General Obligation:
750,000 6.650%, 9/01/09 9/02 at 103 AAA 833,168
500,000 6.650%, 9/01/10 9/02 at 103 AAA 551,675
- ------------------------------------------------------------------------------------------------------------------------------------
Massachusetts - 3.2%
3,500,000 City of Boston, Massachusetts, Revenue Bonds, Boston City Hospital (FHA
Insured Mortgage), Series A, 7.625%, 2/15/21 (Pre-refunded to 8/15/00) 8/00 at 102 Aaa 3,822,000
1,150,000 City of Haverhill, Massachusetts, General Obligation Municipal Purpose
Loan of 1992, Series A, 7.000%, 6/15/12 (Pre-refunded to 6/15/02) 6/02 at 102 AAA 1,283,538
1,250,000 Massachusetts Bay Transportation Authority, Certificates of
Participation, 1990 Series A, 7.650%, 8/01/15 (Pre-refunded to 8/01/00) 8/00 at 102 AAA 1,367,825
2,000,000 Massachusetts Health and Educational Facilities Authority, Revenue Bonds,
Capital Asset Program Issue, Series F, 7.300%, 10/01/18 (Pre-refunded
to 4/01/00) 4/00 at 102 AAA 2,154,080
3,400,000 Massachusetts Health and Educational Facilities Authority, Revenue Bonds,
New England Medical Center Hospitals Issue, Series F, 6.625%, 7/01/25 7/02 at 102 AAA 3,696,888
</TABLE>
22
<PAGE>
<TABLE>
<CAPTION>
Principal Optional Call Market
Amount Description Provisions* Ratings** Value
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Massachusetts (continued)
$ 4,000,000 Massachusetts Health and Educational Facilities Authority, 7/02 at 102 AAA $ 4,330,560
Revenue Bonds, South Shore Hospital Issue, Series D,
6.500%, 7/01/22
5,875,000 Massachusetts Health and Educational Facilities Authority, 11/03 at 102 AAA 5,742,871
Revenue Bonds, Cape Cod Health Systems, Inc. Issue,
Series A, 5.250%, 11/15/21
4,000,000 Massachusetts Health and Educational Facilities Authority, 10/05 at 102 AAA 4,229,640
Revenue Bonds, Berkshire Health Systems Issue, Series D,
6.000%, 10/01/19
- --------------------------------------------------------------------------------------------------------------------------------
Michigan -- 5.0%
12,130,000 City of Bay City, County of Bay, State of Michigan, 1991 No Opt. Call AAA 3,519,641
General Obligation Unlimited Tax Street Improvement Bonds,
0.000%, 6/01/21
5,000,000 Caledonia Community Schools, Counties of Kent, Allegan and 5/02 at 102 AAA 5,518,950
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 Jackson, 5/05 at 101 AAA 2,639,625
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 Revenue Bonds, 7/01 at 102 AAA 2,175,260
Series 1991, 6.625%, 7/01/21 (Pre-refunded to 7/01/01)
4,750,000 City of Detroit, Michigan, Sewage Disposal System Revenue Refunding 7/05 at 100 AAA 4,525,990
Bonds, Series 1995-B, 5.000%, 7/01/25
5,000,000 Michigan State Hospital Finance Authority, Hospital Revenue Bonds 11/06 at 102 AAA 5,227,450
(Sparrow Obligated Group), Series 1996, 5.900%, 11/15/26
8,280,000 Michigan State Housing Development Authority, Rental Housing Revenue 4/07 at 102 AAA 8,704,184
Bonds, 1997 Series A, 6.100%, 10/01/33
2,000,000 Michigan Strategic Fund Limited Obligation Refunding Revenue Bonds 12/01 at 102 AAA 2,173,700
(The Detroit Edison Company Pollution Control Bonds Project),
Series 1991DD, 6.875%, 12/01/21
Petoskey Hospital Finance Authority, Limited Obligation Revenue and
Refunding Bonds (Northern Michigan Hospitals Obligated Group),
Series 1998:
3,000,000 5.000%, 11/15/18 5/08 at 102 AAA 2,873,610
3,270,000 5.000%, 11/15/27 5/08 at 102 AAA 3,077,888
1,085,000 School District of the City of River Rouge, County of Wayne, 5/03 at 101 1/2 AAA 1,109,564
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 (Mississippi), 12/04 at 102 AAA 7,006,784
Revenue Bonds, Series 1993 (University of Mississippi Medical
Center Project), 5.900%, 12/01/23 (Pre-refunded to 12/01/04)
- --------------------------------------------------------------------------------------------------------------------------------
Missouri -- 1.3%
2,000,000 The Industrial Development Authority of St. Charles County, 4/08 at 102 AAA 1,991,040
Missouri Multifamily Housing Revenue Bonds (Ashwood
Apartments Project), Series 1998A, 5.600% 4/01/30 (DD)
7,950,000 St. Louis Municipal Finance Corporation, City Justice Center, 2/06 at 102 AAA 8,485,274
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 Facilities Revenue 2/08 at 102 AAA 5,068,900
Bonds (Childrens Healthcare Services Obligated Group),
Series 1997, 5.500%, 8/15/27
- --------------------------------------------------------------------------------------------------------------------------------
Nevada -- 0.6%
2,500,000 County of Churchill, Nevada, Health Care Facilities Revenue Bonds 1/04 at 102 AAA 2,629,800
(Western Health Network, Inc.), Series 1994A, 6.000%, 1/01/24
2,000,000 Clark County, Nevada, Industrial Development Refunding Revenue Bonds 10/02 at 102 AAA 2,223,120
(Nevada Power Company Project) Series 1992C, 7.200%, 10/01/22
</TABLE>
23
<PAGE>
Portfolio of Investments
Nuveen Insured Municipal Bond Fund (continued)
April 30, 1998
<TABLE>
<CAPTION>
Principal Optional Call Market
Amount Description Provisions* Ratings** Value
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
New Hampshire - 0.4%
$ 2,850,000 New Hampshire Higher Educational and Health Facilities Authority, 7/02 at 102 AAA $ 3,064,491
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 Mortgage Purchase 5/98 at 103 AAA 1,526,798
Revenue Bonds, 1987 Series B, 8.100%, 10/01/17
1,745,000 Housing Finance Corporation of the Township of Pennsauken (Pennsauken, 5/98 at 104 AAA 1,811,345
New Jersey), Section 8 Assisted Housing Revenue Bonds,
1979 Series A, 8.000%, 4/01/11
- ------------------------------------------------------------------------------------------------------------------------------------
New Mexico - 0.9%
3,000,000 City of Albuquerque, New Mexico, Hospital System Revenue Bonds, 8/98 at 101 AAA 3,048,420
1992 Series B (Presbyterian Healthcare Services) 6.600%, 8/01/07
4,445,000 City of Farmington, New Mexico, Pollution Control Revenue Refunding 12/02 at 102 AAA 4,826,559
Bonds, 1992 Series A (Public Service Company of New Mexico, San Juan
and Four Corners Projects), 6.375%, 12/15/22
- ------------------------------------------------------------------------------------------------------------------------------------
New York - 9.7%
Metropolitan Transportation Authority (New York), 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 5,403,873
6,925,000 6.250%, 7/01/22 (Pre-refunded to 7/01/02) 7/02 at 102 AAA 7,552,336
5,000,000 Metropolitan Transportation Authority, Commuter Facilities Revenue Bonds, 7/04 at 101 1/2 AAA 5,584,000
Series 1994A, 6.375%, 7/01/18 (Pre-refunded to 7/01/04)
5,925,000 The City of New York, General Obligation Bonds, Fiscal 1992 Series C, 8/02 at 101 1/2 AAA 6,529,587
Fixed Rate Bonds, Subseries C-1, 6.625%, 8/01/12 (Pre-refunded to 8/01/02)
75,000 The City of New York, General Obligation Bonds, Fiscal 1992 Series C, 8/02 at 101 1/2 AAA 81,696
6.625%, 8/01/12
3,010,000 The City of New York, General Obligation Bonds, Fiscal 1993 Series E, 5/03 at 101 1/2 AAA 3,205,530
6.000%, 5/15/16
3,750,000 The City of New York, General Obligation Bonds, Fiscal 1992 Series B, 2/02 at 101 1/2 AAA 4,099,950
7.000%, 2/01/2018
19,500,000 The City of New York Municipal Water Finance Authority, 6/06 at 101 AAA 19,547,580
Water and Sewer System Revenue Bonds, Series A, 5.375%, 6/15/26
New York City, Municipal Water Finance Authority,
Water and Sewer Revenue Bonds, Fiscal 1992 Series A:
3,010,000 6.750%, 6/15/16 (Pre-refunded to 6/15/01) 6/01 at 101 AAA 3,258,746
3,320,000 6.750%, 6/15/16 6/01 at 101 AAA 3,561,165
4,470,000 New York City Municipal Water Finance Authority, Water and Sewer 6/02 at 101 1/2 AAA 4,616,169
System Revenue Bonds, Fiscal 1993 Series A, 5.750%, 6/15/18
3,900,000 New York City Transit Authority, Transit Facilities Refunding No Opt. Call AAA 4,005,729
Revenue Bonds, Series 1993 (Livingston Plaza Project),
5.400%, 1/01/18
New York City Industrial Development Agency, Civic Facility Revenue Bonds
(USTA National Tennis Center Incorporated Project):
3,500,000 6.500%, 11/15/10 11/04 at 102 AAA 3,907,050
3,000,000 6.600%, 11/15/11 11/04 at 102 AAA 3,360,210
5,240,000 Triborough Bridge and Tunnel Authority, Special Obligation Refunding Bonds, 1/01 at 102 AAA 5,638,240
Series 1991B, 6.875%, 1/01/15
- ------------------------------------------------------------------------------------------------------------------------------------
Ohio - 0.3%
2,500,000 Dublin City School District, Franklin, Delaware and Union Counties, Ohio, 12/02 at 102 AAA 2,733,200
Various Purpose School Building Construction and Improvement Bonds
(General Obligation), 6.200%, 12/01/19
(Pre-refunded to 12/01/02)
- ------------------------------------------------------------------------------------------------------------------------------------
Oklahoma - 0.7%
220,000 Muskogee County Home Finance Authority (Oklahoma) Single Family Mortgage 6/00 at 102 AAA 230,245
Revenue Refunding Bonds, Series 1990 A, 7.600%, 12/01/10
5,000,000 Oklahoma Industries Authority, Health System Revenue Bonds 8/05 at 102 AAA 5,502,200
(Obligated Group consisting of Baptist Medical Center of Oklahoma, Inc.,
and South Oklahoma City Hospital Corporation), 6.250%, 8/15/12
</TABLE>
24
<PAGE>
<TABLE>
<CAPTION>
Principal Optional Call Market
Amount Description Provisions* Ratings** Value
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Pennsylvania - 1.1%
$ 3,000,000 North Penn Water Authority (Montgomery County, Pennsylvania), Water 11/04 at 101 AAA $ 3,449,490
Revenue Bonds, Series of 1994, 7.000%, 11/01/24 (Pre-refunded to
11/01/04)
3,900,000 The Philadelphia Municipal Authority, Philadelphia, Pennsylvania, 11/01 at 102 AAA 4,331,496
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), Hospital Revenue 7/00 at 102 AAA 1,072,700
Refunding Bonds, Series A of 1990 (The Washington Hospital Project),
7.150%, 7/1/17
- ------------------------------------------------------------------------------------------------------------------------------------
Puerto Rico - 0.5%
3,750,000 Commonwealth of Puerto Rico, Public Improvement Bonds of 1992 (General 7/02 at 101 1/2 AAA 4,125,113
Obligation Bonds), 6.600%, 7/01/13 (Pre-refunded to 7/01/02)
- ------------------------------------------------------------------------------------------------------------------------------------
Rhode Island - 2.6%
4,000,000 City of Cranston, Rhode Island, General Obligation Bonds, 7.200%, 7/01 at 101 1/2 AAA 4,401,880
7/15/11 (Pre-refunded to 7/15/01)
3,130,000 Kent County Water Authority (Rhode Island), General Revenue Bonds, 7/04 at 102 AAA 3,433,798
1994 Series A, 6.350%, 7/15/14
1,000,000 Providence Housing Development Corporation, Mortgage Revenue Refunding 7/04 at 102 AAA 1,075,870
Bonds, Series 1994A, 6.650%, 7/01/15
2,250,000 Rhode Island Depositors Economic Corporation, Special Obligation Bonds, 8/02 at 102 AAA 2,486,205
1992 Series A, 6.625%, 8/01/19 (Pre-refunded to 8/01/02)
10,000,000 Rhode Island Clean Water Finance Agency, Wastewater Treatment System 9/07 at 102 AAA 10,352,200
Revenue Bonds, (City of Cranston Ocean State LLC Project) Series 1997,
5.800%, 9/01/22
- ------------------------------------------------------------------------------------------------------------------------------------
South Carolina - 3.3%
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 1,636,978
70,000 6.875%, 6/01/14 6/04 at 102 AAA 78,317
2,385,000 7.000%, 6/01/19 (Pre-refunded to 6/01/04) 6/04 at 102 AAA 2,744,586
115,000 7.000%, 6/01/19 6/04 at 102 AAA 129,413
5,435,000 Greenville Memorial Auditorium District, Public Facilities Corporation, 3/06 at 102 AAA 5,637,019
Greenville Memorial Auditorium District, Taxable Certificates of
Participation, 5.750%, 3/01/22
15,000,000 Orangeburg County, South Carolina, Solid Waste Disposal Facilities 11/02 at 101 AAA 15,293,400
Revenue Bond, (South Carolina Electric & Gas Company Project), Series
1994, 5.700%, 11/01/24
2,000,000 City of Rock Hill, South Carolina, Combined Utility System Revenue Bonds, 1/01 at 102 AAA 2,127,140
Series 1991, 6.375%, 1/01/15
- ------------------------------------------------------------------------------------------------------------------------------------
Texas - 6.2%
3,000,000 Bexar County (Texas), Health Facilities Development Corporation, Hospital 8/04 at 102 AAA 3,414,030
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 Refunding Bonds, 8/02 at 102 AAA 5,036,343
Series 1992A, 6.500%, 8/15/17 (Pre-refunded to 8/15/02)
1,000,000 Harris County Hospital District Refunding Revenue Bonds, Texas, Series No Opt. Call AAA 1,196,610
1990, 7.400%, 2/15/10
500,000 City of Houston, Texas, Senior Lien Hotel Occupancy Tax and Parking 7/01 at 100 N/R*** 540,255
Facilities, Series 1985 A, 7.000%, 7/01/15 (Pre-refunded to 7/01/01)
825,000 Lower Colorado River Authority, Priority Refunding Revenue Bonds, Series 1/01 at 102 AAA 890,266
1991, Series B, 7.000%, 1/01/11
Retama Development Corporation, Special Facilities Revenue Bonds,
(Retama Park Racetrack Project) Series 1993:
9,715,000 8.750%, 12/15/18 No Opt. Call AAA 14,109,580
5,405,000 10.000%, 12/15/20 No Opt. Call AAA 8,836,958
5,000,000 Tarrant County Health Facilities Development Corporation, Hospital No Opt. Call AAA 5,497,700
Revenue Refunding and Improvement Bonds (Fort Worth Osteopathic
Hospital, Inc. Project), Series 1993, 6.000%, 5/15/21
</TABLE>
25
<PAGE>
Portfolio of Investments
Nuveen Insured Municipal Bond Fund (continued)
April 30, 1998
<TABLE>
<CAPTION>
Principal Optional Call Market
Amount Description Provisions* Ratings** Value
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Texas (continued)
$ 6,080,000 Texas Health Facilities Development Corporation, Hospital Revenue 8/03 at 102 AAA $ 6,587,680
Bonds (All Saints Episcopal Hospitals of Fort Worth Project),
Series 1993B, 6.250%, 8/15/22
5,115,000 Texas Department Of Housing And Community Affairs, Single Family 9/07 at 102 AAA 5,264,460
Mortgage Revenue Bonds, 1997 Series A, Teams Structure,
5.800%, 9/01/29
- ------------------------------------------------------------------------------------------------------------------------------------
Utah -- 0.9%
3,055,000 State of Utah, State Building Ownership Authority, Lease Revenue 11/05 at 100 AAA 3,162,504
Bonds (State Facilities Master Lease Program), Series 1995A,
5.750%, 5/15/18
140,000 Utah Housing Finance Agency, Single Family Mortgage Senior Bonds, No Opt. Call AAA 148,538
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, Utah, 2/05 at 100 AAA 3,926,860
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 Housing Bonds, 6/07 at 101 1/2 AAA 15,567,900
Series 9, 5.900%, 5/01/29
- ------------------------------------------------------------------------------------------------------------------------------------
Washington -- 1.0%
1,000,000 City of Marysville, Washington, Water and Sewer Revenue Bonds, 12/03 at 100 AAA 1,127,220
Series 1991 7.000%, 12/01/11 (Pre-refunded to 12/01/03)
5,000,000 Washington Public Power Supply System, Nuclear Project No. 2 No Opt. Call AAA 5,226,050
Refunding Revenue Bonds, Series 1993B, 5.400%, 7/01/05
2,000,000 Bellingham School District No. 501, Whatcom County, Washington, 12/04 at 100 AAA 2,161,500
Unlimited Tax General Obligation Bonds, Series 1994,
6.125%, 12/01/13
- ------------------------------------------------------------------------------------------------------------------------------------
Washington D.C. -- 1.1%
2,500,000 District of Columbia (Washington, D.C.), General Obligation Bonds, 6/00 at 102 AAA 2,712,624
Series 1990B) 7.500%, .6/01/10 (Pre-refunded to 6/01/00)
6,000,000 District of Columbia (Washington, D.C.) General Obligation Bonds, 6/04 at 102 AAA 6,549,660
Series 1994B, 6.100%, 6/01/11
- ------------------------------------------------------------------------------------------------------------------------------------
Wisconsin -- 0.4%
2,000,000 City of Superior, Wisconsin, Limited Obligation Refunding Revenue No Opt. Call AAA 2,428,000
Bonds (Midwest Energy Resources Company Project), Series E-1991,
6.900%, 8/01/21
1,000,000 Three Lakes School District General Obligation, 6.750%, 4/01/12 4/03 at 100 AAA 1,106,380
(Pre-refunded to 4/01/03)
- ------------------------------------------------------------------------------------------------------------------------------------
Wyoming -- 0.3%
2,000,000 The Trustees of the University of Wyoming, Facilities Revenue Bonds, 6/00 at 101 AAA 2,126,200
Series 1991, 7.100%, 6/01/10
- ------------------------------------------------------------------------------------------------------------------------------------
$ 772,887,000 Total Investments -- (cost $755,378,043) -- 98.3% 816,355,212
=============-----------------------------------------------------------------------------------------------------------------------
Other Assets Less Liabilities -- 1.7% 14,201,336
-----------------------------------------------------------------------------------------------------------------
Net Assets -- 100% $830,556,548
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
* Optional Call Provisions (not covered by the report of independent public
accountants): Dates (month and year) and prices of the earliest optional
call or redemption. There may be other call provisions at varying prices at
later dates.
** Ratings (not covered by the report of independent public accountants):
Using the higher of Standard & Poor's or Moody's rating.
*** 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.
(DD) Security purchased on a delayed delivery basis (note 1).
N/R Investment is not rated.
See accompanying notes to financial statements.
26
<PAGE>
Statement of Net Assets
April 30, 1998
<TABLE>
<CAPTION>
Insured
Municipal Bond Municipal Bond
- -------------------------------------------------------------------------------------------------------
<S> <C> <C>
Assets
Investments in municipal securities, at market value (note 1) $2,881,961,684 $816,355,212
Cash -- 8,207,219
Receivables:
Interest 53,346,124 15,802,946
Investments sold 2,053,523 --
Shares sold 7,721,213 345,016
Other assets 625,439 13,135
- -------------------------------------------------------------------------------------------------------
Total assets 2,945,707,983 840,723,528
- -------------------------------------------------------------------------------------------------------
Liabilities
Cash overdraft 8,331,912 --
Payables:
Investments purchased -- 7,213,764
Shares redeemed 2,362,458 338,300
Accrued expenses:
Management fees (note 6) 1,091,007 328,079
12b-1 distribution and service fees (notes 1 and 6) 20,567 23,187
Other 253,517 17,241
Dividends payable 9,155,951 2,246,409
- -------------------------------------------------------------------------------------------------------
Total liabilities 21,215,412 10,166,980
- -------------------------------------------------------------------------------------------------------
Net assets (note 7) $2,924,492,571 $830,556,548
=======================================================================================================
Class A Shares (note 1)
Net assets $ 97,028,957 $ 90,459,270
Shares outstanding 10,259,878 8,202,981
Net asset value and redemption price per share $ 9.46 $ 11.03
Offering price per share (net asset value per share plus
maximum sales charge of 4.20% of offering price) $ 9.87 $ 11.51
=======================================================================================================
Class B Shares (note 1)
Net assets $ 4,136,389 $ 4,992,139
Shares outstanding 437,368 452,650
Net asset value, offering and redemption price per share $ 9.46 $ 11.03
=======================================================================================================
Class C Shares (note 1)
Net assets $ 4,885,554 $ 8,036,759
Shares outstanding 517,330 735,744
Net asset value, offering and redemption price per share $ 9.44 $ 10.92
=======================================================================================================
Class R Shares (note 1)
Net assets $2,818,441,671 $727,068,380
Shares outstanding 297,869,252 66,189,488
Net asset value, offering and redemption price per share $ 9.46 $ 10.98
=======================================================================================================
</TABLE>
See accompanying notes to financial statements.
27
<PAGE>
Statement of Operations
Year Ended April 30, 1998
<TABLE>
<CAPTION>
Insured
Municipal Bond Municipal Bond
- --------------------------------------------------------------------------------------------------------------
Investment Income (note 1) $165,513,628 $47,569,459
- --------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Expenses
Management fees (note 6) 13,208,603 3,921,179
12b-1 service fees - Class A (notes 1 and 6) 168,211 159,932
12b-1 distribution and service fees - Class B (notes 1 and 6) 20,535 24,096
12b-1 distribution and service fees - Class C (notes 1 and 6) 35,175 50,525
Shareholders' servicing agent fees and expenses 2,663,348 813,658
Custodian's fees and expenses 326,102 134,255
Trustees' fees and expenses (note 6) 62,390 17,730
Professional fees 357,897 100,708
Shareholders' reports - printing and mailing expenses 835,966 337,974
Federal and state registration fees -- 19,455
Portfolio insurance expense -- 29,555
Other expenses 134,832 41,837
- --------------------------------------------------------------------------------------------------------------
Total expenses 17,813,059 5,650,904
- --------------------------------------------------------------------------------------------------------------
Net investment income 147,700,569 41,918,555
- --------------------------------------------------------------------------------------------------------------
Realized and Unrealized Gain from Investments
Net realized gain from investment transactions (notes 1 and 4) 7,384,205 6,786,199
Net change in unrealized appreciation or depreciation of investments 100,807,694 23,049,222
- --------------------------------------------------------------------------------------------------------------
Net gain from investments 108,191,899 29,835,421
- --------------------------------------------------------------------------------------------------------------
Net increase in net assets from operations $255,892,468 $71,753,976
==============================================================================================================
</TABLE>
See accompanying notes to financial statements.
28
<PAGE>
Statement of Changes in Net Assets
<TABLE>
<CAPTION>
Municipal Bond Insured Municipal Bond
----------------------------------------------- -------------------------------------------
Year Ended Two Months Ended Year Ended Year Ended Two Months Ended Year Ended
4/30/98 4/30/97 2/28/97 4/30/98 4/30/97 2/28/97
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Operations
Net investment income $ 147,700,569 $ 25,358,832 $ 153,982,497 $ 41,918,555 $ 7,018,725 $ 42,143,020
Net realized gain (loss) from
investment transactions (notes 1 and 4) 7,384,205 124,391 13,454,600 6,786,199 (986,589) (1,089,131)
Net change in unrealized appreciation
or depreciation of investments 100,807,694 (29,401,558) (11,748,742) 23,049,222 (10,703,435) (7,672,084)
- ------------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in
net assets from operations 255,892,468 (3,918,335) 155,688,355 71,753,976 (4,671,299) 33,381,805
- ------------------------------------------------------------------------------------------------------------------------------------
Distributions to Shareholders (note 1)
From undistributed net investment income:
Class A (4,066,811) (605,734) (2,735,302) (3,941,471) (590,571) (2,881,559)
Class B (85,661) (1,502) (45) (102,807) (2,670) (832)
Class C (205,194) (38,827) (146,481) (294,623) (41,445) (224,876)
Class R (144,088,029) (24,664,380) (151,041,117) (37,785,864) (6,443,374) (38,675,228)
From accumulated net realized gains from
investment transactions:
Class A (268,871) -- (304,876) (249,043) -- (211,577)
Class B (6,710) -- -- (6,889) -- --
Class C (15,012) -- (19,401) (20,375) -- (17,777)
Class R (9,099,862) -- (13,873,562) (2,288,357) -- (2,484,412)
- ------------------------------------------------------------------------------------------------------------------------------------
Decrease in net assets from
distributions to shareholders (157,836,150) (25,310,443) (168,120,784) (44,689,429) (7,078,060) (44,496,261)
- ------------------------------------------------------------------------------------------------------------------------------------
Fund Share Transactions (note 2)
Net proceeds from sale of shares 188,619,020 32,164,961 288,845,641 75,516,982 7,673,973 84,624,586
Net proceeds from shares issued
to shareholders due to reinvestment
of distributions 123,635,013 19,772,961 133,505,722 30,119,890 4,668,785 29,865,624
- ------------------------------------------------------------------------------------------------------------------------------------
312,254,033 51,937,922 422,351,363 105,636,872 12,342,758 114,490,210
- ------------------------------------------------------------------------------------------------------------------------------------
Cost of shares redeemed (336,624,740) (63,401,060) (436,065,365) (92,161,203) (17,108,094) (110,894,714)
- ------------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets
from Fund share transactions (24,370,707) (11,463,138) (13,714,002) 13,475,669 (4,765,336) 3,595,496
- ------------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets 73,685,611 (40,691,916) (26,146,431) 40,540,216 (16,514,695) (7,518,960)
Net assets at the beginning of period 2,850,806,960 2,891,498,876 2,917,645,307 790,016,332 806,531,027 814,049,987
- ------------------------------------------------------------------------------------------------------------------------------------
Net assets at the end of period $2,924,492,571 $2,850,806,960 $2,891,498,876 $830,556,548 $790,016,332 $806,531,027
====================================================================================================================================
Balance of undistributed net investment
income at the end of period $ 532,412 $ 1,277,538 $ 1,229,149 $ 320,020 $ 526,230 $ 585,565
====================================================================================================================================
</TABLE>
See accompanying notes to financial statements.
29
<PAGE>
Notes to Financial Statements
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 the when-issued and delayed delivery purchase
commitments. At April 30, 1998, Insured Municipal Bond had outstanding delayed
delivery purchase commitments of $4,314,278. Municipal Bond had no such
outstanding purchase commitments.
Investment 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 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.
30
<PAGE>
Federal Income Taxes
Each Fund is a separate taxpayer for federal income tax purposes. Each Fund
intends to comply with the requirements of the Internal Revenue Code applicable
to regulated investment companies and to distribute all of its tax-exempt net
investment income, in addition to any significant amounts of net realized
capital gains and/or market discount 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.
All monthly tax-exempt income dividends paid during the fiscal year ended April
30, 1998, have been designated Exempt Interest Dividends. Net realized capital
gain and market discount distributions are subject to federal taxation.
Insurance
Insured Municipal Bond invests in municipal securities which are either covered
by insurance or backed by an escrow or trust account containing sufficient U.S.
government or U.S. government agency securities, both of which ensure the timely
payment of principal and interest. Each insured municipal security is covered by
Original Issue Insurance, Secondary Market Insurance or Portfolio Insurance.
Such insurance does not guarantee the market value of the municipal securities
or the value of the Fund's shares. Original Issue Insurance and Secondary
Market Insurance remain in effect as long as the municipal securities covered
thereby remain outstanding and the insurer remains in business, regardless of
whether the Fund ultimately disposes of such municipal securities. Consequently,
the market value of the municipal securities covered by Original Issue
Insurance or Secondary Market Insurance may reflect value attributable to the
insurance. Portfolio Insurance is effective only while the municipal 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 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 fiscal year ended April 30, 1998.
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.
31
<PAGE>
Notes to Financial Statements (continued)
2. Fund Shares
Transactions in Fund shares were as follows:
<TABLE>
<CAPTION>
Municipal Bond
-------------------------------------------------------------------------------------
Year Ended Two Months Ended Year Ended
4/30/98 4/30/97 2/28/97
-------------------------------------------------------------------------------------
Shares Amount Shares Amount Shares Amount
- ----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Shares sold:
Class A 3,610,340 $ 34,138,865 1,026,576 $ 9,412,803 7,913,532 $ 72,392,333
Class B 425,808 4,027,584 46,550 424,404 4,630 43,000
Class C 198,476 1,867,171 52,166 473,637 379,075 3,482,943
Class R 15,747,999 148,585,400 2,404,891 21,854,117 23,272,855 212,927,365
Shares issued to shareholders due to
reinvestment of distributions:
Class A 314,639 2,970,090 43,927 402,112 222,308 2,045,959
Class B 5,660 53,689 32 293 -- --
Class C 18,178 171,005 3,585 32,777 13,729 126,401
Class R 12,768,468 120,440,229 2,112,348 19,337,779 14,285,524 131,333,362
- ----------------------------------------------------------------------------------------------------------------------------
33,089,568 312,254,033 5,690,075 51,937,922 46,091,653 422,351,363
- ----------------------------------------------------------------------------------------------------------------------------
Shares redeemed:
Class A (1,356,476) (12,834,251) (762,269) (6,963,040) (4,751,496) (43,639,384)
Class B (45,312) (430,447) -- -- -- --
Class C (285,886) (2,670,807) (14,973) (135,974) (53,764) (496,539)
Class R (33,956,929) (320,689,235) (6,174,392) (56,302,046) (42,855,041) (391,929,442)
- ----------------------------------------------------------------------------------------------------------------------------
(35,644,603) (336,624,740) (6,951,634) (63,401,060) (47,660,301) (436,065,365)
- ----------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) (2,555,035) $ (24,370,707) (1,261,559) $(11,463,138) (1,568,648) $ (13,714,002)
============================================================================================================================
<CAPTION>
Insured Municipal Bond
-------------------------------------------------------------------------------------
Year Ended Two Months Ended Year Ended
4/30/98 4/30/97 2/28/97
-------------------------------------------------------------------------------------
Shares Amount Shares Amount Shares Amount
- ----------------------------------------------------------------------------------------------------------------------------
Shares sold:
Class A 2,354,322 $ 26,011,707 290,416 $ 3,095,852 2,993,504 $ 32,144,825
Class B 407,571 4,505,416 24,672 264,169 21,053 227,426
Class C 311,528 3,417,614 58,684 618,793 169,708 1,808,841
Class R 3,788,731 41,582,245 348,752 3,695,159 4,720,426 50,443,494
Shares issued to shareholders due to
reinvestment of distributions:
Class A 242,808 2,675,963 34,181 365,671 182,510 1,968,382
Class B 5,134 56,987 41 439 -- --
Class C 22,045 240,583 3,214 34,077 19,086 203,691
Class R 2,475,051 27,146,357 400,458 4,268,598 2,579,133 27,693,551
- ----------------------------------------------------------------------------------------------------------------------------
9,607,190 105,636,872 1,160,418 12,342,758 10,685,420 114,490,210
- ----------------------------------------------------------------------------------------------------------------------------
Shares redeemed:
Class A (891,941) (9,818,160) (135,522) (1,441,615) (1,146,982) (12,317,662)
Class B (5,821) (65,030) -- -- -- --
Class C (129,381) (1,413,103) (38,598) (406,595) (155,088) (1,641,544)
Class R (7,358,468) (80,864,910) (1,438,979) (15,259,884) (9,079,255) (96,935,508)
- ----------------------------------------------------------------------------------------------------------------------------
(8,385,611) (92,161,203) (1,613,099) (17,108,094) (10,381,325) (110,894,714)
- ----------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) 1,221,579 $ 13,475,669 (452,681) $ (4,765,336) 304,095 $ 3,595,496
============================================================================================================================
</TABLE>
32
<PAGE>
3. Distributions to Shareholders
On May 8, 1998, the Funds declared dividend distributions from their tax-exempt
net investment income which were paid on June 1, 1998, to shareholders of
record on May 8, 1998, as follows:
<TABLE>
<CAPTION>
Insured
Municipal Bond Municipal Bond
- -------------------------------------------------------------------------------
<S> <C> <C>
Dividend per share:
Class A $ .0375 $ .0445
Class B .0315 .0375
Class C .0330 .0390
Class R .0390 .0460
===============================================================================
</TABLE>
4. Securities Transactions
Purchases and sales (including maturities) of investments in municipal
securities and temporary municipal investments for the fiscal year ended April
30, 1998, were as follows:
<TABLE>
<CAPTION>
Insured
Municipal Bond Municipal Bond
- --------------------------------------------------------------------------------
<S> <C> <C>
Purchases:
Investments in municipal securities $ 296,289,928 $ 332,662,243
Temporary municipal investments 282,310,000 185,160,000
Sales:
Investments in municipal securities 338,802,326 325,772,128
Temporary municipal investments 282,310,000 205,660,000
================================================================================
</TABLE>
At April 30, 1998, the identified cost of investments owned for federal income
tax purposes was the same as the cost for financial reporting purposes for each
Fund.
5. Unrealized Appreciation (Depreciation)
Gross unrealized appreciation and gross unrealized depreciation of investments
at April 30, 1998, were as follows:
<TABLE>
<CAPTION>
Insured
Municipal Bond Municipal Bond
- --------------------------------------------------------------------------------
<S> <C> <C>
Gross unrealized:
appreciation $ 228,842,882 $ 61,116,168
depreciation (1,602,373) (138,999)
- --------------------------------------------------------------------------------
Net unrealized appreciation $ 227,240,509 $ 60,977,169
================================================================================
</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>
Average Daily Net Asset Value Management Fee
- --------------------------------------------------------------------------------
<S> <C>
For the first $125 million .5000 of 1%
For the next $125 million .4875 of 1
For the next $250 million .4750 of 1
For the next $500 million .4625 of 1
For the next $1 billion .4500 of 1
For net assets over $2 billion .4250 of 1
================================================================================
</TABLE>
The management fee compensates the Adviser for overall investment advisory and
administrative services, and general office facilities. The Trust pays no
compensation directly to those of 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 or its affiliates.
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.
33
<PAGE>
Notes to Financial Statements (continued)
During the fiscal year ended April 30, 1998, the Distributor collected sales
charges on purchases of Class A Shares of approximately $737,900 and $563,000
for Municipal Bond and Insured Municipal Bond, respectively, of which
approximately $640,000 and $476,800, 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 fiscal year ended April 30, 1998, the Distributor compensated
authorized dealers directly with approximately $175,700 and $259,800 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
fiscal year ended April 30, 1998, the Distributor retained approximately $36,900
and $42,700 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 retained approximately $8,700 and $5,900 of
CDSC on share redemptions for Municipal Bond and Insured Municipal Bond,
respectively, during the fiscal year ended April 30, 1998.
7. Composition of Net Assets
At April 30, 1998, the Funds had an unlimited number of $.01 par value per
shares authorized. Net assets consisted of:
<TABLE>
<CAPTION>
Insured
Municipal Bond Municipal Bond
- ---------------------------------------------------------------------------------------------
<S> <C> <C>
Capital paid-in $2,695,428,979 $767,208,238
Balance of undistributed net investment income 532,412 320,020
Accumulated net realized gain from investment transactions 1,290,671 2,051,121
Net unrealized appreciation of investments 227,240,509 60,977,169
- ---------------------------------------------------------------------------------------------
Net assets $2,924,492,571 $830,556,548
=============================================================================================
</TABLE>
8. Investment Composition
At April 30, 1998, revenue sources by municipal purpose, expressed as a percent
of total investments, were as follows:
<TABLE>
<CAPTION>
Insured
Municipal Bond Municipal Bond
- ---------------------------------------------------------------------------------------------
<S> <C> <C>
Education and Civic Organizations -% 5%
Health Care 19 16
Housing/Multifamily 7 2
Housing/Single family 6 8
Tax Obligation/General 7 14
Tax Obligation/Limited 8 9
Transportation 7 2
U.S. Guaranteed 11 27
Utilities 25 9
Water and Sewer 9 7
Other 1 1
- ---------------------------------------------------------------------------------------------
100% 100%
=============================================================================================
</TABLE>
Certain long-term and intermediate-term investments owned by the Funds are
either covered by insurance issued by several private insurers or are backed by
an escrow or trust containing U.S. government or U.S. government agency
securities, either of which ensure the timely payment of principal and interest
in the event of default (29% for Municipal Bond and 100% for Insured Municipal
Bond). Such insurance or escrow, however, does not guarantee the market value
of the municipal securities or the value of the Funds' shares (see note 1).
For additional information regarding each investment security, refer to the
Portfolio of Investments of each Fund.
34
<PAGE>
Financial Highlights
35
<PAGE>
Financial Highlights
Selected data for a share outstanding throughout each period is as
follows:
<TABLE>
<CAPTION>
Class (Inception Date)
Investment Operations Less Distributions
--------------------------------- ----------------------------
MUNICIPAL BOND
Net
Beginning Realized/ Ending
Net Net Unrealized Net Net
Year Ended Asset Investment Investment Investment Capital Asset Total
April 30, Value Income (a) Gain (Loss) Total Income Gains Total Value Return (b)
- -----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Class A (6/95)
1998 $9.14 $.46 $.35 $ .81 $(.46) $(.03) $(.49) $9.46 9.00%
1997 (c) 9.24 .08 (.10) (.02) (.08) -- (.08) 9.14 (.23)
1997 (d) 9.28 .48 -- .48 (.47) (.05) (.52) 9.24 5.26
1996 (e) 9.15 .34 .14 .48 (.32) (.03) (.35) 9.28 5.33
Class B (2/97)
1998 9.15 .38 .35 .73 (.39) (.03) (.42) 9.46 8.09
1997 (c) 9.24 .09 (.11) (.02) (.07) -- (.07) 9.15 (.25)
1997 (e) 9.23 .03 .01 .04 (.03) -- (.03) 9.24 .47
Class C (6/95)
1998 9.14 .40 .34 .74 (.41) (.03) (.44) 9.44 8.20
1997 (c) 9.23 .07 (.09) (.02) (.07) -- (.07) 9.14 (.21)
1997 (d) 9.26 .42 -- .42 (.40) (.05) (.45) 9.23 4.64
1996 (e) 9.15 .29 .13 .42 (.28) (.03) (.31) 9.26 4.59
Class R (11/76)
1998 9.15 .48 .34 .82 (.48) (.03) (.51) 9.46 9.09
1997 (c) 9.24 .08 (.09) (.01) (.08) -- (.08) 9.15 (.09)
1997 (d) 9.28 .49 .01 .50 (.49) (.05) (.54) 9.24 5.53
1996 (d) 9.00 .51 .31 .82 (.51) (.03) (.54) 9.28 9.31
1995 (d) 9.28 .52 (.21) .31 (.51) (.08) (.59) 9.00 3.60
1994 (d) 9.45 .52 (.07) .45 (.52) (.10) (.62) 9.28 4.79
=================================================================================================================
</TABLE>
* Annualized.
(a) After waiver of certain management fees or reimbursement of
expenses, if applicable, by Nuveen Advisory.
(b) Total returns are calculated on net asset value without any sales
charge and are not annualized.
(c) For the two months ended April 30.
(d) For the fiscal year ended February 28/29.
(e) From commencement of class operations as noted through February
28/29.
36
<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
Before Before After After Portfolio
Ending Net Reimburse- Reimburse- Reimburse- Reimburse- Turnover
Assets (000) ment ment ment(a) ment(a) Rate
- ----------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
$ 97,029 .80% 4.83% .80% 4.83% 10%
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
4,136 1.56 4.05 1.56 4.05 10
468 1.53* 4.39* 1.53* 4.39* 2
43 1.51* 5.23* 1.51* 5.23* 12
4,886 1.35 4.29 1.35 4.29 10
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
2,818,442 .60 5.04 .60 5.04 10
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
============================================================================
</TABLE>
37
<PAGE>
Financial Highlights (continued)
Selected data for a share outstanding throughout each period is as
follows:
Class (Inception Date)
<TABLE>
<CAPTION>
Investment Operations Less Distributions
---------------------------------- -----------------------------
INSURED MUNICIPAL BOND
Net
Beginning Realized/ Ending
Net Net Unrealized Net Net
Year Ended Asset Investment Investment Investment Capital Asset Total
April 30, Value Income (a) Gain (Loss) Total Income Gains Total Value Return (b)
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Class A (9/94)
1998 $10.66 $.54 $ .41 $ .95 $(.55) $(.03) $(.58) $11.03 9.05%
1997 (c) 10.82 .09 (.16) (.07) (.09) -- (.09) 10.66 (.63)
1997 (d) 10.97 .56 (.13) .43 (.54) (.04) (.58) 10.82 4.04
1996 (d) 10.40 .54 .57 1.11 (.54) -- (.54) 10.97 10.90
1995 (e) 10.31 .26 .12 .38 (.27) (.02) (.29) 10.40 3.84
Class B (2/97)
1998 10.67 .46 .39 .85 (.46) (.03) (.49) 11.03 8.14
1997 (c) 10.82 .09 (.16) (.07) (.08) -- (.08) 10.67 (.65)
1997 (e) 10.80 .04 .02 .06 (.04) -- (.04) 10.82 .55
Class C (9/94)
1998 10.56 .48 .39 .87 (.48) (.03) (.51) 10.92 8.39
1997 (c) 10.72 .08 (.16) (.08) (.08) -- (.08) 10.56 (.73)
1997 (d) 10.85 .46 (.09) .37 (.46) (.04) (.50) 10.72 3.48
1996 (d) 10.31 .46 .54 1.00 (.46) -- (.46) 10.85 9.88
1995 (e) 10.29 .23 .08 .31 (.27) (.02) (.29) 10.31 3.09
Class R (12/86)
1998 10.62 .56 .39 .95 (.56) (.03) (.59) 10.98 9.17
1997 (c) 10.78 .09 (.15) (.06) (.10) -- (.10) 10.62 (.60)
1997 (d) 10.92 .57 (.11) .46 (.56) (.04) (.60) 10.78 4.38
1996 (d) 10.38 .57 .54 1.11 (.57) -- (.57) 10.92 10.94
1995 (d) 10.81 .57 (.40) .17 (.58) (.02) (.60) 10.38 1.85
1994 (d) 10.85 .57 .02 .59 (.57) (.06) (.63) 10.81 5.47
===================================================================================================================
</TABLE>
* Annualized.
(a) After waiver of certain management fees or reimbursement of
expenses, if applicable, by Nuveen Advisory.
(b) Total returns are calculated on net asset value without any sales
charge and are not annualized.
(c) For the two months ended April 30.
(d) For the fiscal year ended February 28/29.
(e) From commencement of class operations as noted through February 28.
38
<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
Before Before After After Portfolio
Ending Net Reimburse- Reimburse- Reimburse- Reimburse- Turnover
Assets (000) ment ment ment(a) ment(a) Rate
- -----------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
$ 90,459 .86% 4.91% .86% 4.91% 40%
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
4,992 1.61 4.14 1.61 4.14 40
488 1.59* 4.36* 1.59* 4.36* 12
228 1.58* 4.84* 1.58* 4.84* 35
8,037 1.41 4.36 1.41 4.36 40
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
727,068 .66 5.12 .66 5.12 40
714,622 .64* 5.31* .64* 5.31* 12
732,587 .63 5.31 .63 5.31 35
761,936 .63 5.33 .63 5.33 27
736,702 .64 5.67 .64 5.67 25
745,914 .65 5.21 .65 5.21 11
=============================================================================
</TABLE>
39
<PAGE>
Building Better Portfolios with Nuveen
Nuveen Family
of Mutual Funds
Nuveen offers a variety of funds designed to help you reach your financial
goals.
Growth Funds
Nuveen Rittenhouse
Growth Fund
Growth and
Income Funds
European Value Fund
Growth and
Income Stock Fund
Balanced Municipal
and Stock Fund
Balanced Stock
and Bond Fund
Municipal
Bond Funds
National Funds
Long-Term
Insured
Intermediate-Term
Limited Term
State Funds
Alabama
Arizona
California
Colorado
Connecticut
Florida
Georgia
Kansas
Kentucky
Louisiana
Maryland
Massachusetts
Michigan
Missouri
New Jersey
New Mexico
New York
North Carolina
Ohio
Pennsylvania
South Carolina
Tennessee
Virginia
Wisconsin
Reducing the impact of taxes and moderating risk are important goals for many
risk-sensitive investors seeking to build better portfolios. For these
investors, a tax-efficient, risk-resistant investment portfolio often forms the
foundation of a carefully crafted financial plan for building and sustaining
wealth. Nuveen is committed to providing investors and their financial advisers
with a range of products and investment tools to help build better portfolios.
Mutual Funds
Nuveen Mutual Funds offer investors access to the Nuveen family of Premier
Advisers/SM/, including Nuveen Advisory Corp., Institutional Capital Corp. and
Rittenhouse Financial Services. Our equity, balanced and income funds seek to
provide consistent performance, time-tested strategies to reduce risk and
experienced, professional management.
Private Asset Management
Rittenhouse Financial Services and Nuveen Asset Management offer comprehensive,
customized investment management solutions to investors with assets of $250,000
or more to invest. A range of actively managed growth, balanced and municipal
income-oriented portfolios are available, all based upon a disciplined
investment philosophy.
Unit Trusts
Nuveen Unit Trusts are fixed portfolios of quality securities that are a
convenient, attractive alternative to purchasing individual securities. They
provide low-cost diversification to reduce risk, experienced, professional
security selection and surveillance and daily liquidity at that day's net asset
value for quick access to your assets.
Exchange-Traded Funds
Nuveen Exchange-Traded Funds offer investors actively managed portfolios of
investment-grade quality municipal bonds. The fund shares are listed and traded
on the New York and American stock exchanges. Exchange-traded funds provide the
investment convenience, price visibility and liquidity of common stocks.
MuniPreferred/R/
Nuveen MuniPreferred offers investors a AAA-rated investment with an attractive
tax-free yield for the cash reserves portion of an investment portfolio.
MuniPreferred shares are backed 2-to-1 by the long-term portfolios of Nuveen
dual-class exchange-traded funds and are available for national as well as a
wide variety of state-specific portfolios.
40
<PAGE>
Fund Information
Board of Trustees
Robert P. Bremner
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
41
<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 risk-sensitive individuals seeking to build and sustain
wealth. In fact, 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 focused on providing 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 ensure that they continue to meet our exacting standards.
Whether your focus is long-term growth, dependable current income or sustaining
accumulated wealth, Nuveen offers a wide variety of products and services to
help meet your unique circumstances and financial planning needs. Our equity,
balanced, and income funds, along with our unit trusts and private asset
management, can form the foundation of a tax-efficient and risk-resistant
portfolio.
Talk with your financial adviser to learn more about how Nuveen investment
products and services can help you build and sustain your long-term financial
security. Or call us at (800) 621-7227 for more information, including a
prospectus where applicable. Please read that information carefully before you
invest.
1898
NUVEEN 1998
OUR SECOND CENTURY
helping investors sustain the wealth of a lifetime./TM/
John Nuveen & Co. Incorporated
333 West Wacker Drive
Chicago, IL 60606-1286
www.nuveen.com VAN-N1-4.98
<PAGE>
NUVEEN
Municipal Bond Funds
April 30, 1998
Annual Report
Dependable, tax-free income to help you keep more of what you earn.
All-American
Intermediate
Limited Term
[PHOTO APPEARS HERE]
<PAGE>
Highlights
As of April 30, 1998
For Class A shares on net asset value
* Overall rating within the municipal bond category for Class A shares for the
period ended 4/30/98. 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.
Class A shares of all three funds earned four stars for each of the three- and
five-year periods ended 4/30/98, and for the 10-year period for the Limited
Term fund. In an investment category, 10% of funds receive five stars and
22.5% receive four stars. 1,547 municipal bond funds were rated for the three-
year period, 809 for the five-year period, and 346 for the 10-year period,
each ended 4/30/98.
Credit Quality Performance Highlights
Nuveen Flagship All-American Municipal Bond Fund
[PIE CHART APPEARS HERE]
<TABLE>
<S> <C>
AAA 29%
AA 6%
A 21%
BBB/NR 44%
</TABLE>
. **** Four-star rating by Morningstar*
. Outperformed Lehman Municipal Bond Index and Lipper peer group
average by more than 100 basis points
. Ranked in the top 10% of national municipal bond funds by
Lipper
Nuveen Flagship Intermediate Municipal Bond Fund
[PIE CHART APPEARS HERE]
<TABLE>
<S> <C>
AAA 31%
AA 11%
A 23%
BBB/NR 35%
</TABLE>
. **** Four-star rating by Morningstar*
. Outperformed Lehman 7-Year Municipal Bond Index and
Lipper peer group average by more than 100 basis points
. Ranked in the top 5% of national intermediate-term
municipal bond funds by Lipper
Nuveen Flagship Limited Term Municipal Bond Fund
[PIE CHART APPEARS HERE]
<TABLE>
<S> <C>
AAA 36%
AA 6%
A 26%
BBB/NR 32%
</TABLE>
. **** Four-star rating by Morningstar*
. Paralleled Lehman 5-Year Municipal Bond Index and outperformed
Lipper peer group average by more than 100 basis points
. Ranked in the top 10% of national short-intermediate municipal
bond funds by Lipper
<TABLE>
<CAPTION>
Contents
<C> <S>
1 Dear Shareholder
3 All-American Commentary and Overview
6 Intermediate Commentary and Overview
9 Limited Term Commentary and Overview
12 Portfolio of Investments
33 Statement of Net Assets
34 Statement of Operations
35 Statement of Changes in Net Assets
36 Notes to Financial Statements
42 Financial Highlights
48 Report of Independent Public Accountants
49 Building Better Portfolios
</TABLE>
Is it Time for a Financial Check-Up?
Now is a great time to sit down with your financial adviser and review your
financial plan. How can you make sure that your investment strategy is strong
enough to provide the income you need today and versatile enough to change as
your goals do? Here are some guidelines:
. Make sure you and your adviser understand your current situation. How have
your goals, objectives and risk profile changed? What are your current tax
concerns, interests, lifestyle?
. Revisit your current investment choices. If the value of one portion of your
portfolio has grown substantially, it may be time to rebalance asset classes.
. Determine how your asset mix will be implemented. Changing your asset
allocation is generally a gradual process. Make sure you and your adviser have
a clear understanding of each other's responsibilities. Define and discuss
what you want in terms of support from your adviser.
. Keep revisiting your plan. Don't assume that once you've revised your plan and
reallocated your portfolio the process is finished.
It's recommended that you meet at least once a year with your financial adviser-
and usually more if there have been significant changes in interest rates, tax
laws, retirement plan distributions, lifestyle or health.
Even if things haven't changed, it makes good financial sense to keep in touch
with your adviser.
<PAGE>
Dear Shareholder
[TIMOTHY R. SCHWERTFEGER PHOTO APPEARS HERE]
Timothy R. Schwertfeger
Chairman of the Board
Wealth takes a lifetime to build. Once achieved, it should be preserved.
I'm pleased to report that over the past 12 months, the Nuveen national
municipal bond funds continued to perform well and meet their objectives of
providing attractive tax-free income and after-tax performance. Once again, all
three funds generated competitive yields and were ranked in the top 10 percent
of their respective Lipper peer groups based on their outstanding total returns.
Each fund also received a four-star rating by Morningstar, demonstrating strong
risk-adjusted performance in addition to the superior overall performance
recognized by Lipper.
The declining interest rate environment over the past year had a significant
impact on the funds' performance. As the chart below illustrates, the yield on
the Bond Buyer 40, an unmanaged index of long-term municipal bonds, fell from
5.89% to 5.39% during the year. The decline reduced the income levels of the
All-American and Intermediate funds, as higher-yielding bonds that were called
or sold from the portfolios had to be replaced with bonds paying today's lower
interest rates. As a result, the dividends for these funds were reduced to
reflect the levels of income being earned by the portfolios. The Limited Term
fund's income was not impacted during the period because its low turnover and
good call protection supported the dividend through the low interest rate
environment. In addition, the accumulation of income from higher-yielding bonds
purchased over the past couple of years allowed us to increase its dividend
during the period.
[Bond Buyer 40 Chart Appears Here]
The decline in interest rates also led to many portfolio holdings appreciating
in value during the year. Many of the bonds in the portfolios have higher coupon
rates than are available in today's market, and the value of those bonds
increased as rates trended downward. The price appreciation resulting from this
and other factors led to the fund's outstanding total returns over the year.
The Economy in Review
The past 12 months were noteworthy for the ongoing performance of the equity
markets, which continued to exhibit remarkable strength. Fixed-income
investments also enjoyed bullish performance, as declining interest rates and
low inflation provided the ideal backdrop for a bond market rally. Much of the
decline in interest rates resulted from expectations that the financial problems
of Asia would restrain the prices of imported goods and reduce foreign demand
for U.S. products and services, thereby keeping inflation at moderate levels.
These inflation expectations were largely fulfilled, as the Consumer Price Index
1
<PAGE>
Nuveen offers an ever-expanding range of products designed to help investors
build a diversified, tax-efficient portfolio.
rose only 1.4% for the 12 months ended April 1998, remaining at one of its
lowest levels in more than 30 years.
In coming months, we will continue to closely watch several key factors that are
likely to affect the future of the economy, including demand for goods and
services, changes in U.S. production capacity, the availability of qualified
employees, and stability of the money supply. While it is still too early for
the full impact of Asia's financial difficulties to show up in U.S. economic
statistics, the potential long-term effect of this crisis on American markets is
of special concern. We expect that the development of these factors will
continue to influence the tone of the fixed-income markets during the remainder
of the year.
Building Better Portfolios
As economic events unfold, we believe that many investors will find
diversification to be an increasingly important investment strategy. An
appropriately diversified portfolio that is invested in a variety of asset
classes that each react differently to changes in the economic environment can
help cushion your portfolio against risk.
Many investors select Nuveen municipal bond funds because their emphasis on
dependable tax-free income and attractive after-tax returns makes them ideal for
building and maintaining long-term financial security. These funds can work
together with other Nuveen investments to create the foundation of a
diversified, well-balanced portfolio. Recent studies by Nuveen Research have
demonstrated that balanced portfolios combining municipal bonds and stocks
provided superior after-tax returns and lower levels of risk compared with
blends of stocks and taxable bonds.
You and your financial adviser may want to consider combining your Nuveen
municipal bond fund with an investment in the new Nuveen European Value Fund, an
equity mutual fund that offers a portfolio of quality European company stocks
for investors seeking long-term growth and international diversification. This
fund is just one of an ever-expanding range of Nuveen products and services
designed to help investors achieve diversification while building a tax-
efficient, risk-sensitive investment portfolio. If you'd like to learn more
about the Nuveen European Value Fund or any of our other investments, contact
your financial adviser or call Nuveen Investor Services for a prospectus at
(800) 621-7227. Please read it carefully before you invest.
When seeking quality investment solutions that withstand the test of time, we
hope that you continue to think of John Nuveen & Co. On behalf of everyone at
Nuveen, I thank you for your continued confidence in us and our family of
investments.
Sincerely,
/s/ Tim R. Schwertfeger
Timothy R. Schwertfeger
Chairman of the Board
June 15, 1998
2
<PAGE>
Nuveen Flagship All-American Municipal Bond Fund
Portfolio Manager's Comments
Rick Huber, portfolio manager of the All-American fund, talks about the
municipal market over the past year and the performance of the fund.
Comments cover the one-year period ended April 30, 1998 and all
performance statistics are quoted for Class A shares on net asset value.
The Year in Review
Over the past 12 months, we have enjoyed a bull market in fixed-income
investments, including municipal bonds. Bond prices rose as interest rates
continued to drop and inflation remained at 30-year lows. However, the
performance of the municipal market was moderated by the effect of heavy supply,
as the lower rate environment stimulated a substantial increase in new issuance
as well as the refinancing of existing bonds. The first quarter of 1998 saw $68
billion of new municipal issuance, up 70% from the same period in 1997.
The flood of new issues continued in recent weeks with May's long-awaited sale
of the first segment of Long Island (New York) Power Authority's $7 billion
offering, the largest issuance in municipal bond history. The publicity
surrounding this issue brought an unusual level of attention to the municipal
market and may stimulate additional interest in municipal bonds.
Investment Objective
The All-American fund is a long-term municipal bond fund that seeks to provide a
high level of current income consistent with capital preservation. The fund
invests in a nationally diversified portfolio of investment-grade quality
municipal bonds with an average maturity of 15-30 years. Nuveen follows a
disciplined investment process and tax-conscious portfolio management strategies
that emphasize competitive tax-free income and attractive after-tax total
returns over time.
Fund Performance
Once again, the All-American fund was an exceptional performer by every measure.
Its 10.32% total return outperformed the Lehman Brothers Municipal Bond Index
return by more than 100 basis points, as well as its Lipper peer group average
return of 9.02%. The fund was ranked in the top 10 percent of national municipal
bond funds by Lipper (16th of the 237 funds in the grouping), and earned a four-
star rating by Morningstar. The fund's distribution yield of 5.19% is one of the
most competitive dividend rates in its category (SEC yield was 4.52% for the
same period). Shareholders in the 31% federal income tax bracket would have had
to earn at least 7.52% on a comparable taxable investment to equal the All-
American fund's distribution yield on a taxable equivalent basis (or 6.55% to
equal the SEC yield).
Income Levels
The fund has performed well during this period of declining interest rates,
although its dividend had to be reduced in January to compensate for the lower
levels of income produced when cash inflows and proceeds from called and sold
bonds were used to purchase bonds paying today's lower rates. However, the fund
continues to pay competitive dividend rates because our in-depth research allows
us to find those higher-yielding and undervalued bonds that perform well
throughout market cycles.
Price Appreciation
Our careful research also helped us purchase bonds that appreciated in value due
to credit upgrades and pre-refundings. Over the past year, a large percentage of
the bonds in the portfolio were pre-refunded by their issuers. In a pre-
refunding, bonds are essentially paid off by their issuer and backed by U.S.
Treasury securities until they can be called from the portfolio. The pre-
refunding increases the credit quality of the bond significantly, and it
appreciates in value as a result. This price appreciation accounts for a large
percentage of the growth in total return over the past year. Other
3
<PAGE>
bonds in the portfolio increased in value because their credit ratings were
upgraded during the year. Credit upgrades were common throughout 1997 and the
first quarter of 1998 as the financial conditions of many municipalities
improved with the booming economy.
Strategies Over the Past Year
Maintaining the income level of the fund has been a priority over the past year.
To meet our goal of sustaining a competitive dividend, one focus has been on
call protection, which helps reduce the volatility of the income stream by
ensuring that only a small percentage of bonds could be called away from the
portfolio at any one time. In our efforts to improve the call protection of the
fund, we searched for bonds that have attractive call features or are not
callable at all. This ensures that if interest rates remain steady or continue
to drop, the higher-paying bonds in the portfolio will not be called away
immediately and will remain in the portfolio generating competitive income
levels unless we choose to sell them.
Another strategy over the past year was to purchase shorter-duration bonds with
maturities of 15-20 years. We felt that this was an excellent area of value in
the municipal bond market because these bonds offered attractive income levels
compared to their historical levels of volatility. Duration is a measure of
price volatility in relation to changes in interest rates. Longer-duration
bonds, which tend to be more volatile, offered little incremental yield for
taking on the additional interest rate risk they carry. Also, with shorter-
duration bonds, the fund should be less affected by interest rate movements.
Although it would be less affected by a market downturn, the shorter-duration
fund will also be less able to participate in a market rally.
We also increased our holdings of health care bonds during the year, reflecting
the value opportunities we saw in this sector, particularly in hospital and
long-term care bonds. Health care bonds now represent 17% of the portfolio, the
fund's largest holding. When we purchased these bonds, they offered good yields
and the potential for price appreciation. Since that time, many of these bonds
have been pre-refunded or have increased in value due to other factors such as
credit upgrades.
Outlook for the Future
In the coming months, we plan to manage the fund more conservatively, and will
work toward a shorter duration.
In addition, we plan to reposition the credit quality of the fund during the
next year. Currently, the fund is heavily weighted in the lower categories of
investment-grade quality bonds, with 44% in BBB and non-rated bonds. However, we
plan to replace many of these lower-rated bonds with bonds that have higher
credit ratings. At present, credit spreads remain tight, meaning that the
difference in yields between higher-rated and lower-rated bonds is unusually
small. By purchasing higher-rated bonds, we will increase the credit quality of
the fund with little impact on the fund's income levels. We anticipate that
credit spreads will widen again and that the higher-rated bonds will increase in
value as a result. Higher-rated bonds will also help us position the fund more
conservatively since they are less subject to market fluctuations.
4
<PAGE>
Nuveen Flagship All-American Municipal Bond Fund
Performance Overview
As of April 30, 1998
[BAR GRAPH OF MONTHLY TAX-FREE DIVIDENDS (CLASS A SHARES) GOES HERE]
<TABLE>
<CAPTION>
<S> <C>
M 0.04990
J 0.05020
J 0.05020
A 0.05020
S 0.05020
O 0.05020
N 0.05020
D 0.05020
J 0.04900
F 0.04900
M 0.04900
A 0.04900
</TABLE>
<TABLE>
<CAPTION>
=======================================
Top 5 Sectors
=======================================
<S> <C>
Health Care 17%
- ---------------------------------------
Transportation 14%
- ---------------------------------------
Utilities 13%
- ---------------------------------------
U.S. Guaranteed 11%
- ---------------------------------------
Education and Civic Organizations 10%
=======================================
</TABLE>
1 The fund also paid shareholders taxable distributions in December of $0.0914
per share.
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 sales charge. Class B shares have a 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 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 Index Comparison shows the change in value of a $10,000 investment in the
Class A shares of the Nuveen fund compared with the Lehman Brothers Municipal
Bond Index. The Lehman Municipal Bond Index is comprised of a broad range of
investment-grade municipal bonds, and does not reflect any initial or ongoing
expenses. The Nuveen fund return depicted in the chart reflects the initial
maximum sales charge applicable to A shares (4.20%) and all ongoing fund
expenses.
<TABLE>
<CAPTION>
=============================================================================
Portfolio Statistics
=============================================================================
Share Class A B C R
=============================================================================
<S> <C> <C> <C> <C> <C>
Inception Date 10/88 2/97 6/93 2/97
- -----------------------------------------------------------------------------
Net Asset Value $11.32 $11.33 $11.31 $ 11.32
- -----------------------------------------------------------------------------
Fund Net Assets ($000) $312,244
- -----------------------------------------------------------------------------
Average Weighted Maturity (Years) 21.61
- -----------------------------------------------------------------------------
Average Weighted Duration (Years) 7.60
=============================================================================
=============================================================================
Annualized Total Return/2/
=============================================================================
Share Class A(NAV) A(Offer) B C R
=============================================================================
1-Year 10.32% 5.67% 9.51% 9.75% 10.45%
- -----------------------------------------------------------------------------
5-Year 6.95% 6.04% 6.33% 6.35% 7.00%
- -----------------------------------------------------------------------------
Since Inception 8.77% 8.29% 8.28% 8.17% 8.80%
=============================================================================
=============================================================================
Tax-Free Yields
=============================================================================
Share Class A(NAV) A(Offer) B C R
=============================================================================
Distribution Rate 5.19% 4.97% 4.45% 4.67% 5.41%
- -----------------------------------------------------------------------------
SEC 30-Day Yield 4.52% 4.33% 3.77% 3.97% 4.73%
- -----------------------------------------------------------------------------
Taxable Equivalent Yield/3/ 6.55% 6.28% 5.46% 5.75% 6.86%
=============================================================================
</TABLE>
[GRAPH OF INDEX COMPARISON/4/ GOES HERE]
<TABLE>
<CAPTION>
<S> <C> <C> <C>
9/88 10000 10000 9580
4/89 10176 10063 9640
4/90 11331 11307 10832
4/91 12381 12233 11719
4/92 13739 13876 13293
4/93 15322 15795 15131
4/94 16180 16764 16060
4/95 18002 18496 17719
4/96 18561 19173 18367
4/97 19414 20072 19229
4/98 21398 22367 21427
</TABLE>
|||| Lehman Brothers Municipal Bond Index $21,398
|||| Nuveen Flagship All-American Municipal Bond Fund (NAV) $22,367
|||| Nuveen Flagship All-American Municipal Bond Fund (Offer) $21,427
Past performance is not predictive of future results.
5
<PAGE>
Nuveen Flagship Intermediate Municipal Bond Fund
Portfolio Manager's Comments
Paul Brennan, portfolio manager of the Intermediate fund, talks about the
municipal market over the past year and the performance of the fund.
Comments cover the one-year period ended April 30, 1998 and all
performance statistics are quoted for Class A shares on net asset value.
The Year in Review
Over the past 12 months, we have enjoyed a bull market in fixed-income
investments, including municipal bonds. Bond prices rose as interest rates
continued to drop and inflation remained at 30-year lows. However, the
performance of the municipal market was moderated by the effect of heavy supply,
as the lower rate environment stimulated a substantial increase in new issuance
as well as the refinancing of existing bonds. The first quarter of 1998 saw $68
billion of new municipal issuance, up 70% from the same period in 1997.
The flood of new issues continued in recent weeks with May's long-awaited sale
of the first segment of Long Island (New York) Power Authority's $7 billion
offering, the largest issuance in municipal bond history. The publicity
surrounding this issue brought an unusual level of attention to the municipal
market and may stimulate additional interest in municipal bonds.
Investment Objective
The Intermediate fund is an intermediate-term municipal bond fund that seeks a
balance of current income and capital preservation potential. The fund invests
in a nationally diversified portfolio of investment-grade municipal bonds with
an average maturity of 5-10 years. Nuveen follows a disciplined investment
process and tax-conscious portfolio management strategies that emphasize
competitive tax-free income and attractive after-tax total returns over time.
Fund Performance
The fund performed exceptionally well compared with its benchmark and peer
group. Its total return of 8.97% outperformed the Lehman 7-Year Municipal Bond
Index return of 7.84%, and surpassed its Lipper peer group average by almost 200
basis points. The fund was ranked in the top five percent of national
intermediate municipal bond funds by Lipper (fifth of the 139 funds in the
grouping) and received a four-star rating by Morningstar.
Although the fund posted these outstanding results for the year, it experienced
a dividend reduction in April as a result of the declining interest rate
environment. As interest rates fell over the past year, we had to replace bonds
that were called or sold with bonds paying today's lower interest rates. With
its resulting lower income levels, the fund's dividend was adjusted to align
with its income rate.
Strategies Over the Past Year
Maturity and Duration
We achieved this outstanding performance by purchasing securities at the longer
end of the intermediate-term maturity spectrum and were rewarded as interest
rates dropped and these bonds outperformed shorter maturity bonds on a relative
scale. The fund maintained a significantly longer duration than its benchmark
and peer group (6.79 average weighted duration compared with 5.42 for the Lehman
7-Year Index), which was an important factor in performance. Duration is a
measure of the fund's price volatility in relation to changes in interest rates.
With a longer duration, the Intermediate fund was better able to participate in
this year's market rally. However, it would also have been more adversely
affected had the bond market experienced a downturn.
6
<PAGE>
Call Protection
During the year, we structured the fund to maintain superior call protection by
purchasing bonds with favorable call provisions as well as those that are not
callable at all. This ensures that if interest rates remain steady or continue
to drop, the higher-paying bonds in the portfolio will not be called away
immediately and will remain in the portfolio generating competitive income
levels unless we choose to sell them. Call protection helps ensure a more stable
dividend and also helped the fund outperform its peers as interest rates fell
and many similar funds experienced bond calls that adversely affected their
income levels.
Undervalued Securities
By leveraging Nuveen's award-winning research department, we were able to find
undervalued bonds that also contributed to the fund's strong performance. For
example, many of the bonds in the portfolio were pre-refunded during the year.
In a pre-refunding, bonds are essentially paid off by their issuer and backed by
U.S. Treasury securities until they can be called from the portfolio. The pre-
refunding increases the credit quality of the bond significantly, and it
appreciates in value as a result. This price appreciation accounted for a
significant percentage of the fund's total return over the past year.
Research also helped us maintain a competitive dividend during the year by
allowing us to find lower-rated, higher-yielding bonds. The incremental yield
offered by these higher-yielding bonds contributed to the fund's strong
dividend. We also took advantage of Nuveen's research team to find undervalued
securities in the health care sector. The fund has a relatively heavy weighting
in this sector, which offers competitive yields and good potential for price
appreciation.
Outlook for the Future
In the coming months, we will continue to utilize the same strategies that led
to such strong performance for the fund over the last year. Since income is a
top objective of the fund, we will work toward maintaining superior call
protection and helping ensure the strength of the dividend. In addition, we will
continue to maintain a relatively long duration compared with the benchmark
Lehman 7-Year Index. This means more volatility for the fund should interest
rates fluctuate, but also will ensure that the fund is able to maximize its
participation in any potential market rallies.
7
<PAGE>
Nuveen Flagship Intermediate Municipal Bond Fund
Performance Overview
As of April 30, 1998
Monthly Tax-Free Dividends (Class A Shares)/1/
[BAR CHART APPEARS HERE]
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
0.04280 0.04300 0.04300 0.04300 0.04300 0.04300 0.04300 0.04300 0.04300 0.04300 0.04300 0.04200
M J J A S O N D J F M A
</TABLE>
<TABLE>
<CAPTION>
Portfolio Statistics
Share Class A C R
- --------------------------------------------------------------------------------------
<S> <C> <C> <C>
Inception Date 9/92 12/95 2/97
Net Asset Value $10.88 $10.89 $ 10.86
Fund Net Assets ($000) $46,474
Average Weighted Maturity (Years) 8.69
Average Weighted Duration (Years) 6.79
- --------------------------------------------------------------------------------------
Annualized Total Return/2/
Share Class A(NAV) A(Offer) C R
- --------------------------------------------------------------------------------------
1-Year 8.97% 5.74% 8.47% 9.17%
5-Year 6.24% 5.59% 5.67% 6.25%
Since Inception 7.25% 6.67% 6.67% 7.26%
- --------------------------------------------------------------------------------------
Tax-Free Yields
Share Class A(NAV) A(Offer) C R
- --------------------------------------------------------------------------------------
Distribution Rate 4.63% 4.49% 4.08% 4.81%
SEC 30-Day Yield 4.02% 3.90% 3.47% 4.23%
Taxable Equivalent Yield/3/ 5.83% 5.65% 5.03% 6.13%
- --------------------------------------------------------------------------------------
</TABLE>
Index Comparison/4/
[GRAPH APPEARS HERE]
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
9/92 10000 9700 10000 10000
4/93 10798 10474 10679 10574
4/94 11253 10915 10979 10890
4/95 11789 11436 11805 11582
4/96 12792 12409 12851 12515
4/97 13516 13111 13520 13094
4/98 14818 14374 14841 14195
</TABLE>
Lehman Brothers 7-Year Municipal Bond Index $14,195
Lehman Brothers 10-Year Municipal Bond Index $14,841
Nuveen Flagship Intermediate Municipal Bond Fund (NAV) $14,818
Nuveen Flagship Intermediate Municipal Bond Fund (Offer) $14,374
Past performance is not predictive of future results.
<TABLE>
<CAPTION>
Top 5 Sectors
- ---------------------------------------------
<S> <C>
Health Care 25%
Tax Obligation (Limited) 14%
Transportation 12%
Utilities 9%
Education and Civic Organizations 9%
- ---------------------------------------------
</TABLE>
1 The fund also paid taxable distributions to shareholders in December of
$0.0034 per share.
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 sales charge. 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 Index Comparison shows the change in value of a $10,000 investment in
Class A shares of the Nuveen fund compared with the Lehman Brothers 7-Year
and 10-Year Municipal Bond Indexes. In the past, the fund's performance was
compared against the Lehman 10-Year Municipal Bond Index. Begining this year,
we will compare the fund's performance with the Lehman 7-Year Municipal Bond
Index because that index better corresponds to the fund's investment
policies, which require that the fund maintain a weighted average portfolio
maturity of 5-10 years. The Lehman Municipal Bond Indexes are comprised of a
broad range of investment-grade municipal bonds, and do not reflect any
initial or ongoing expenses. The Nuveen fund return depicted in the chart
reflects the initial maximum sales charge applicable to A shares (3.0%) and
all ongoing fund expenses.
8
<PAGE>
Nuveen Flagship Limited Term Municipal Bond Fund
Portfolio Manager's Comments
Rick Huber, portfolio manager of the Limited Term fund, talks about the
municipal market over the past year and the performance of the fund.
Comments cover the one-year period ended April 30, 1998 and all
performance statistics are quoted for Class A shares on net asset value.
The Year in Review
Over the past 12 months, we have enjoyed a bull market in fixed-income
investments, including municipal bonds. Bond prices rose as interest rates
continued to drop and inflation remained at 30-year lows. However, the
performance of the municipal market was moderated by the effect of heavy supply,
as the lower rate environment stimulated a substantial increase in new issuance
as well as the refinancing of existing bonds. The first quarter of 1998 saw $68
billion of new municipal issuance, up 70% from the same period in 1997.
The flood of new issues continued in recent weeks with May's long-awaited sale
of the first segment of Long Island (New York) Power Authority's $7 billion
offering, the largest issuance in municipal bond history. The publicity
surrounding this issue brought an unusual level of attention to the municipal
market and may stimulate additional interest in municipal bonds.
Investment Objective
The Limited Term fund is a short/intermediate-term municipal bond fund that
seeks current income consistent with a high level of capital preservation. The
fund invests in a nationally diversified portfolio of investment-grade municipal
bonds with an average maturity of one to seven years. Nuveen follows a
disciplined investment process and tax-conscious portfolio management strategies
that emphasize competitive tax-free income and attractive after-tax total
returns over time.
Fund Performance
The Limited Term fund performed well, generating a competitive dividend and
total return compared with its peers. The fund's total return of 6.67%
outperformed its Lipper peer group of national short/intermediate-term municipal
bond funds by 138 basis points and was ranked second of the 34 funds in the
grouping for the year. The fund essentially paralleled the unmanaged Lehman
Brothers 5-Year Municipal Bond Index return of 6.73% and was given a four-star
rating by Morningstar. During a period when many municipal bond funds
experienced dividend reductions due to the lower interest rate environment, the
dividend for the Limited Term fund actually increased during the period. Through
foresight and strategic management, we structured the fund so that we locked in
good yields and a relatively high income stream that could support the dividend
through this lower interest rate environment.
Although the Limited Term fund is a relatively conservative municipal bond fund
when compared with the other longer-term Nuveen funds in this report, its strong
performance was achieved through a more aggressive management strategy than most
shorter-term municipal bond funds undertake. It has a relatively heavy weighting
in higher-yielding BBB and non-rated bonds and maintains a longer duration than
many short-term funds.
Duration is a measure of the price volatility of the fund in relation to a
change in interest rates. Longer duration funds are better able to participate
in a market rally, but will suffer more in a down market. Although the fund is
subject to more volatility than its peers with shorter maturities and durations,
it provides an excellent opportunity for more conservative investors who want to
invest in the municipal bond market for the shorter-term with less price
volatility and greater income stability than can be found with longer-term
funds.
9
<PAGE>
Strategies Over the Past Year
During the past year, our research-intensive bond selection process allowed us
to find opportunities throughout the country to enhance the yield and
performance potential of the fund. We found value in a range of maturities,
regions and sectors, including the health care industry. The portfolio was
heavily weighted in health care securities because the tremendous amount of
issuance in that sector forced issuers to offer attractive yields. The fund also
benefited as health care bonds, particularly those issued by long-term care
providers, appreciated in value during the year. However, we feel that we have
maximized our opportunities in the health care sector for now, so we will be
looking for ways to diversify the fund more in other sectors of the municipal
market in the coming months.
Outlook for the Future
During the coming year, we plan to take a more conservative approach to managing
the fund, including repositioning its credit quality. Currently, the fund is
heavily weighted in the lower categories of investment-grade quality bonds, with
32% in BBB and non-rated bonds. However, we plan to replace many of these lower-
rated bonds with bonds that have higher credit ratings. At present, credit
spreads remain tight, meaning that the difference in yields between higher-rated
and lower-rated bonds is unusually small. By purchasing higher-rated bonds, we
will increase the credit quality of the fund without significantly impacting
current income levels. We anticipate that credit spreads will widen again and
that the higher-rated bonds will increase in value as a result. Higher-rated
bonds will help us position the fund more conservatively since they are less
subject to market fluctuations.
10
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
Nuveen Flagship Limited Term Municipal Bond Fund
Performance Overview
As of April 30, 1998
Portfolio Statistics
Share Class A C R
Inception Date 10/87 12/95 2/97
Net Asset Value $10.80 $10.79 $ 10.78
Fund Net Assets ($000) $472,787
Average Weighted Maturity (Years) 5.53
Average Weighted Duration (Years) 4.42
Annualized Total Return/1/
Share Class A(NAV) A(Offer) C R
1-Year 6.67% 4.03% 6.33% 6.87%
5-Year 4.94% 4.40% 4.59% 4.95%
10-Year 6.50% 6.23% 6.17% 6.50%
Tax-Free Yields
Share Class A(NAV) A(Offer) C R
Distribution Rate 4.72% 4.60% 4.39% 4.95%
SEC 30-Day Yield 3.76% 3.66% 3.41% 3.96%
Taxable Equivalent Yield/2/ 5.45% 5.30% 4.94% 5.74%
</TABLE>
Index Comparison/3/
4/88 10000 10000 9750 10000
4/89 10215 10284 10027 10324
4/90 11197 11273 10992 11430
4/91 11812 11678 11386 12040
4/92 12450 12271 11964 12794
4/93 14598 14358 13999 15294
4/94 15150 14960 14586 16138
4/95 15952 15656 15665 17039
4/96 16898 16387 15978 18232
4/97 18214 17691 17249 20047
4/98 19311 18769 18308 21711
- -- Lehman Brother 5-year Municipal Bond Index $19,311
- -- Lehman Brother 10-year Municipal Bond Index $21,711
- -- Nuveen Flagship Limited Term Municipal Bond Fund (NAV) $18,769
- -- Nuveen Flagship Limited Term Municipal Bond Fund (Offer) $18,308
Monthly Tax-Free Dividends (Class A Shares)
0.04150 M
0.04250 J
0.04250 J
0.04250 A
0.04250 S
0.04250 O
0.04250 N
0.04250 D
0.04250 J
0.04250 F
0.04250 M
0.04250 A
Top 5 Sectors
Health Care 23%
Utiities 14%
Education and Civic Organizations 12%
Tax Obligation (General) 10%
Tax Obligation (Limited) 9%
1 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
2.5% maximum sales charge. 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 Index Comparison shows the change in value of a $10,000 investment in the
Class A shares of the Nuveen fund compared with the Lehman Brothers 5-Year and
10-Year Municipal Bond Indexes. In the past, the fund's performance was compared
against the Lehman 10-Year Municipal Bond Index. Begining this year, we will
compare the fund's performance with the Lehman 5-Year Municipal Bond Index,
which can now be used as a 10-year comparison and better corresponds to the
fund's investment policies. The Lehman Municipal Bond Indexes are comprised of a
broad range of investment-grade municipal bonds, and do not reflect any initial
or ongoing expenses. The Nuveen fund return depicted in the chart reflects the
initial maximum sales charge applicable to A shares (2.5%) and all ongoing fund
expenses.
11
<PAGE>
Portfolio of Investments
Nuveen Flagship All-American Municipal Bond Fund
April 30, 1998
<TABLE>
<CAPTION>
Principal Optional Call Market
Amount Description Provisions* Ratings** Value
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Alaska - 1.5%
$ 5,000,000 Alaska Industrial Development and Export Authority, Revolving Fund 4/08 at 101 AAA $4,805,100
Refunding Bonds, Series 1998A, 5.250%, 4/01/23 (DD)
- ------------------------------------------------------------------------------------------------------------------------------------
California - 10.2%
5,000,000 California Health Facilities Financing Authority, Insured Refunding 7/07 at 102 AAA 5,114,100
Revenue Bonds (Pomona Valley Hospital Medical Center), 1997 Series A,
5.625%, 7/01/19
2,000,000 California Pollution Control Financing Authority, Pollution Control No Opt. Call A 2,160,320
Refunding Revenue Bonds (San Diego Gas and Electric Company), 1996
Series A, 5.900%, 6/01/14
5,000,000 California Statewide Communities Development Authority, Special 10/07 at 102 Baa3 5,043,600
Facilities Lease Revenue Bonds, 1997 Series A, 5.700%, 10/01/33
8,000,000 Contra Costa Home Mortgage Finance Authority, California, 1984 Home No Opt. Call AAA 2,899,600
Mortgage Revenue Bonds, 0.000%, 9/01/17
2,000,000 Foothill/Eastern Transportation Corridor Agency, Toll Road Revenue No Opt. Call Baa 1,432,680
Bonds, Series 1995A, 0.000%, 1/01/05
7,000,000 Long Beach Aquarium of the Pacific, Revenue Bonds (Aquarium of the 7/05 at 102 BBB 7,239,820
Pacific Project), 1995 Series A, 6.125%, 7/01/23
4,000,000 Regional Airports Improvement Corporation, Facilities Sublease 5/06 at 102 BBB- 4,344,480
Refunding Revenue Bonds, Issue of 1996, Delta Air Lines, Inc.
(Los Angeles International Airport), 6.350%, 11/01/25
Sacramento Cogeneration Authority, Cogeneration Project Revenue Bonds
(Procter & Gamble Project), 1995 Series:
500,000 6.200%, 7/01/06 7/05 at 102 BBB- 542,585
1,000,000 6.500%, 7/01/21 7/05 at 102 BBB- 1,086,330
2,000,000 Taft Public Financing Authority, Lease Revenue Bonds, 1997 Series A 1/07 at 101 BBB+ 2,093,000
(Community Correctional Facility Acquisition Project), 6.050%, 1/01/17
- ------------------------------------------------------------------------------------------------------------------------------------
Colorado - 5.6%
E-470 Public Highway Authority, Capital Improvement Trust Fund, Highway
Revenue Bonds, Senior Bonds:
6,000,000 0.000%, 8/31/05 No Opt. Call Aaa 4,275,360
2,000,000 6.950%, 8/31/20 (Pre-refunded to 8/31/05) 8/05 at 103 Aaa 2,348,940
11,800,000 Colorado Health Facilities Authority, Retirement Facilities (Liberty No Opt. Call Aaa 3,120,982
Heights), 0.000%, 7/15/22
5,000,000 City and County of Denver, Colorado, Airport System Revenue Bonds, 11/07 at 101 AAA 4,930,650
Series 1997E, 5.250%, 11/15/23
2,500,000 Hyland Hills Park and Recreation District, Adams County, Colorado 12/06 at 101 N/R 2,698,475
Special Revenue Refunding and Improvement Bonds, Series 1996A, 6.750%,
12/15/15
- ------------------------------------------------------------------------------------------------------------------------------------
Connecticut - 1.8%
2,000,000 State of Connecticut Health and Educational Facilities Authority, Revenue 11/04 at 102 AAA 2,270,860
Bonds, Nursing Home Program Issue, Series 1994, AHF/Hartford, Inc.
Project, 7.125%, 11/01/14
3,305,000 State of Connecticut Health and Educational Facilities Authority, No Opt. Call AAA 3,455,609
Revenue Bonds, Trinity College Issue, Series F, 5.500%, 7/01/21
- ------------------------------------------------------------------------------------------------------------------------------------
Delaware - 0.6%
1,750,000 Delaware Economic Development Authority, First Mortgage Revenue Bonds 5/07 at 102 BBB 1,833,493
(Peninsula United Methodist Homes, Inc. Issue), Series 1997A, 6.300%,
5/01/22
</TABLE>
12
<PAGE>
<TABLE>
<CAPTION>
Principal Optional Call Market
Amount Description Provisions* Ratings** Value
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Florida - 2.6%
$ 1,000,000 Town of Lady Lake, Florida, Industrial Development Revenue Bonds 7/00 at 102 N/R *** $1,129,900
(Sunbelt Utilities, Inc. Project), Series 1990, 9.625%, 7/01/15
(Pre-refunded to 7/01/00)
1,955,000 Nassau County, Florida (GF/Amelia Island Properties, Inc. 1/03 at 103 N/R 2,271,690
Project), ICF/MR Revenue Bonds, Series 1993A, 9.750%, 1/01/23
1,750,000 Polk County Industrial Development Authority (Florida), Solid 12/06 at 102 A1+ 1,818,495
Waste Disposal Facility Revenue Bonds (Tampa Electric Company Project),
Series 1996, 5.850%, 12/01/30
1,965,000 Sanford Florida Airport Authority, Industrial Development Revenue, 5/06 at 102 N/R 2,104,142
Central Florida Terminals, Inc. Project, Series A, 7.500%, 5/01/10
645,000 Sanford Airport Authority (Florida), Industrial Development 5/07 at 102 N/R 676,779
Revenue Bonds (Central Florida Terminals Inc. Project), Series 1997C,
7.500%, 5/01/21
- ------------------------------------------------------------------------------------------------------------------------------------
Georgia - 1.7%
2,000,000 Brunswick and Glynn County (Georgia) Development Authority, 3/08 at 102 Baa2 1,983,020
Revenue Refunding Bonds, Series 1998 (Georgia Pacific Corporation Project),
5.550%, 3/01/26
2,000,000 Municipal Electric Authority of Georgia, General Power Revenue Bonds, No Opt. Call A 2,089,300
1993C Series, 5.700%, 1/01/19
1,000,000 Municipal Electric Authority of Georgia, Project One Special No Opt. Call A+ 1,135,920
Obligation Bonds, Fifth Crossover Series, 6.500%, 1/01/17
- ------------------------------------------------------------------------------------------------------------------------------------
Illinois - 8.4%
1,750,000 City of Chicago, Illinois, Gas Supply Revenue Bonds, 1990 Series A 5/00 at 102 AA- 1,904,210
(The Peoples Gas, Light and Coke Company Project), 8.100%, 5/01/20
1,000,000 City of Chicago, Illinois, Gas Supply Refunding Revenue Bonds, 6/05 at 102 AA- 1,062,970
1995 Series A (The Peoples Gas, Light and Coke Company Project), 6.100%,
6/01/25
2,000,000 Illinois Development Finance Authority (The Presbyterian Home, 9/06 at 102 AA- 2,181,720
Lake Forest Place Project), Revenue Bonds, Series 1996 B, 6.300%, 9/01/22
4,000,000 Illinois Educational Facilities Authority, Revenue Refunding Bonds 12/04 at 100 BBB 4,388,040
(Columbia College), Series 1992, 6.875%, 12/01/17
3,750,000 Illinois Educational Facilities Authority, Revenue Refunding Bonds, 7/01 at 102 A+ *** 4,121,888
Loyola University of Chicago, Series 1991-A, 7.125%, 7/01/21 (Pre-refunded
to 7/01/01)
2,000,000 Illinois Health Facilities Authority, Revenue Refunding Bonds, 8/06 at 102 N/R 2,220,240
Series 1995A (Fairview Obligated Group), 7.125%, 8/15/17
6,000,000 Illinois Health Facilities Authority, Revenue Refunding Bonds, 2/07 at 102 A- 6,076,440
Series 1996B (Sarah Bush Lincoln Health Center), 5.750%, 2/15/22
4,000,000 Illinois Health Facilities Authority, Revenue Bonds (Victory Health 8/07 at 101 A- 4,053,880
Service), Series 1997A, 5.750%, 8/15/27
145,000 Illinois Health Facilities Authority, Revenue Bonds, Series 1989 1/99 at 102 BBB+ 150,413
(Westlake Community Hospital), 7.875%, 1/01/13
- ------------------------------------------------------------------------------------------------------------------------------------
Indiana - 6.0%
1,000,000 Town of Fishers, Indiana, Economic Development First Mortgage 9/98 at 102 N/R 1,028,990
Revenue Bonds (United Student Aid Funds, Inc. Project), Series 1989,
8.375%, 9/01/14
1,750,000 Indiana Health Facility Financing Authority, Hospital Revenue 8/00 at 102 N/R *** 1,935,553
Bonds, Series 1990 (Hancock Memorial Hospital Project), 8.300%, 8/15/20
(Pre-refunded to 8/15/00)
4,000,000 The Trustees of Indiana University, Indiana University Student Fee No Opt. Call AAA 2,025,800
Bonds, Series K, 0.000%, 8/01/11
2,000,000 Indianapolis Airport Authority, Special Facilities Revenue Bonds, 7/04 at 102 BBB 2,239,620
Series 1994 (Federal Express Corporation Project), 7.100%, 1/15/17
4,000,000 Indianapolis Airport Authority, Specialty Facility Revenue Bonds, 11/05 at 102 Baa2 4,310,680
Series 1995A (United Airlines, Inc., Indianapolis Maintenance Center
Project), 6.500%, 11/15/31
</TABLE>
13
<PAGE>
Portfolio of Investments
Nuveen Flagship All-American Municipal Bond Fund (continued)
April 30, 1998
<TABLE>
<CAPTION>
Principal Optional Call Market
Amount Description Provisions* Ratings** Value
- ---------------------------------------------------------------------------------------------------------------------------
Indiana (continued)
<S> <C> <C> <C> <C>
$5,450,000 City of Indianapolis, Indiana, Economic Development Revenue Bonds 7/06 at 102 A $5,679,881
(Willowbrook Apartments Project), Senior Series 1996A, 6.500%,
7/01/26
500,000 Hospital Authority of Monroe County (Indiana), Hospital Revenue 5/02 at 101 AAA 547,680
Bonds, Series 1992 (Bloomington Hospital Project), 6.700%, 5/01/12
(Pre-refunded to 5/01/02)
1,000,000 Rockport Pollution Control (Indiana Michigan Power Company), 7.600%, 3/01 at 102 Baa2 1,085,380
3/01/16
- ---------------------------------------------------------------------------------------------------------------------------
Kentucky - 7.9%
5,000,000 City of Ashland, Kentucky, Sewage and Solid Waste Revenue Bonds, 2/05 at 102 Baa1 5,642,950
Series 1995 (Ashland Inc. Project), 7.125%, 2/01/22
5,000,000 County of Henderson, Kentucky, Solid Waste Disposal Revenue Bonds 3/05 at 102 Baa2 5,457,500
(MacMillan Bloedel Project), Series 1995, 7.000%, 3/01/25
4,500,000 Jefferson County, Kentucky, Capital Projects Corporation, Lease No Opt. Call A+ 2,145,645
Revenue Bonds, Series 1992A, 0.000%, 8/15/12
2,000,000 Kentucky Economic Development Finance Authority, Hospital System 4/08 at 102 BBB 2,038,540
Refunding and Improvement Revenue Bonds, Series 1997
(Appalachian Regional Healthcare, Inc. Project), 5.875%, 10/01/22
5,000,000 Louisville and Jefferson County Metropolitan Sewer District 11/04 at 102 AAA 5,729,050
(Commonwealth of Kentucky), Sewer and Drainage System Revenue
Bonds, Series 1994A, 6.750%, 5/15/25
3,500,000 Pendleton County, Kentucky, County Lease Revenue Bonds, Kentucky 3/03 at 102 A 3,711,120
Associated Counties Leasing Trust Program, Series 1993-A,
6.500%, 3/01/19
- ---------------------------------------------------------------------------------------------------------------------------
Louisiana - 0.7%
2,000,000 City of New Orleans, Audubon Park Commission, Aquarium Revenue 4/02 at 102 N/R *** 2,287,520
Bonds, Series 1992, 8.000%, 4/01/12 (Pre-refunded to 4/01/02)
- ---------------------------------------------------------------------------------------------------------------------------
Maryland - 0.7%
2,000,000 Maryland Energy Financing Administration, Limited Obligation Solid 12/06 at 102 A- 2,183,880
Waste Disposal Revenue Bonds (Wheelabrator Water Technologies,
Baltimore L.L.C. Projects), 1996 Series, 6.450%, 12/01/16
- ---------------------------------------------------------------------------------------------------------------------------
Massachusetts - 2.3%
4,900,000 Massachusetts Health and Educational Facilities Authority, Revenue 12/05 at 102 A1 5,304,544
Bonds, Dana-Farber Cancer Institute Issue, Series G-1, 6.250%,
12/01/22
2,000,000 Massachusetts Port Authority, Revenue Bonds, Series 1997-B, 5.375%, 7/07 at 101 AA- 1,969,440
7/01/27
- ---------------------------------------------------------------------------------------------------------------------------
Michigan - 2.4%
3,315,000 Detroit/Wayne County Stadium Authority (State of Michigan), 2/07 at 102 AAA 3,266,336
Building Authority (Stadium) Bonds, Series 1997
(Wayne County Limited Tax General Obligation), 5.250%,
2/01/27
2,000,000 Michigan State Hospital Finance Authority, Hospital Revenue and 10/08 at 102 BBB 1,957,900
Refunding Bonds (Genesys Regional Medical Center Obligated Group),
Series 1998A, 5.500%, 10/01/18
2,000,000 Pontiac, Michigan Hospital Finance Authority, Hospital Revenue 8/03 at 102 BBB- 2,033,840
Refunding, Nomc Obligation Group, 6.000%, 8/01/13
420,000 Western Townships Utilities Authority, Sewage Disposal System Bonds, 1/99 at 102 BBB+ 438,934
Series 1989, 8.200%, 1/01/18
- ---------------------------------------------------------------------------------------------------------------------------
Mississippi - 0.7%
2,000,000 Claiborne County, Mississippi, Pollution Control Revenue Refunding 5/00 at 102 BBB- 2,111,780
Bonds (System Energy Resources, Inc. Project), Series 1995, 7.300%,
5/01/25
- ---------------------------------------------------------------------------------------------------------------------------
New Hampshire - 1.9%
700,000 New Hampshire Higher Educational and Health Facilities Authority, 7/99 at 100 A 707,686
Hospital Revenue Bonds, Catholic Medical Center Issue, Series 1989,
6.000%, 7/01/17
</TABLE>
14
<PAGE>
<TABLE>
<CAPTION>
Principal Optional Call Market
Amount Description Provisions* Ratings** Value
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
New Hampshire (continued)
$ 600,000 New Hampshire Higher Educational And Health Facilities 1/01 at 102 A $ 647,664
Authority, Hospital Revenue Bonds, St. Joseph Hospital Issue,
Series 1991, 7.500%, 1/01/16
425,000 The Essex County Improvement Authority (Essex County, New 4/04 at 102 BBB+ 461,006
Jersey), City of Newark, General Obligation Lease Revenue Bonds,
Series 1994, 6.600%, 4/01/14
2,400,000 New Jersey Economic Development Authority, Electric Energy 6/02 at 102 N/R 2,630,016
Facility Revenue Bonds (Vineland Cogeneration Limited Partnership
Project), Series 1992, 7.875%, 6/01/19
1,375,000 New Jersey Economic Development Authority, Insured Revenue 5/05 at 102 AAA 1,495,533
Bonds (Educational Testing Service Issue), Series 1995B,
6.125%, 5/15/15
- ---------------------------------------------------------------------------------------------------------------------------------
New York -- 11.5%
1,900,000 The City of New York, New York, General Obligation Bonds, 2/02 at 101 1/2 A3 2,105,523
Fiscal 1992 Series B, 7.500%, 2/01/09
The City of New York (New York), General Obligation Bonds,
Fiscal 1992, Series D:
685,000 7.500%, 2/01/17 (Pre-refunded to 2/01/02) 2/02 at 101 1/2 Aaa 769,371
750,000 7.500%, 2/01/18 (Pre-refunded to 2/01/02) 2/02 at 101 1/2 Aaa 842,378
3,000,000 The City of New York (New York), General Obligation Bonds, 4/07 at 101 A3 3,213,210
Fiscal 1997 Series I, 6.250%, 4/15/27
1,750,000 New York City Housing Development Corporation, Multi-Unit 6/01 at 102 AAA 1,867,145
Mortgage Refunding Bonds (FHA Insured Mortgage Loans),
1991 Series A, 7.350%, 6/01/19
1,480,000 Dormitory Authority of the State of New York, City University No Opt. Call BBB+ 1,561,785
System Consolidated Second General Resolution Revenue Bonds,
Series 1993A, 5.750%, 7/01/18
2,500,000 Dormitory Authority of the State of New York, Department of 7/05 at 102 BBB+ *** 2,849,500
Health of the State of New York, Revenue Bonds, Series 1995,
6.625%, 7/01/24 (Pre-refunded to 7/01/05)
3,000,000 New York State Housing Finance Agency, Service Contract 9/05 at 102 BBB+ 3,269,970
Obligation Revenue Bonds, 1995 Series A, 6.375%, 9/15/15
1,590,000 State of New York Mortgage Agency, Homeowner Mortgage Revenue 4/01 at 102 Aa2 1,687,515
Bonds, 1991 Series UU, 7.750%, 10/01/23
5,500,000 New York State Urban Development Corporation, State Facilities No Opt. Call BBB+ 5,746,455
Revenue Bonds, 1995 Refunding Series, 5.700%, 4/01/20
1,500,000 New York State Urban Development Corporation, Project Revenue No Opt. Call BBB+ 1,533,285
Bonds (Center for Industrial Innovation), 1995 Refunding Series,
5.500%, 1/01/13
2,125,000 New York State Urban Development Corporation, Project Revenue No Opt. Call BBB+ 2,175,129
Bonds (University Facilities Grants), 1995 Refunding Series,
5.500%, 1/01/19
7,500,000 The Port Authority of New York and New Jersey, Special Project 10/06 at 102 N/R 8,219,625
Bonds, Series 4, KIAC Partners Project, 6.750%, 10/01/19
- ---------------------------------------------------------------------------------------------------------------------------------
North Carolina -- 0.9%
1,400,000 Martin County Industrial Facilities and Pollution Control 11/05 at 102 A 1,457,582
Financing Authority (North Carolina), Solid Waste Disposal
Revenue Bonds, Series 1995 (Weyerhaeuser Company Project),
6.000%, 11/01/25
1,299,276 Woodfin Treatment Facility, Inc. (North Carolina), 12/03 at 102 N/R 1,357,067
Proportionate Interest Certificates, 6.750%, 12/01/13
- ---------------------------------------------------------------------------------------------------------------------------------
North Dakota -- 0.2%
490,000 North Dakota Housing Finance Agency, Single Family Mortgage 7/99 at 103 Aa2 511,663
Program Bonds, 1989 Series B, 8.000%, 7/01/13
</TABLE>
15
<PAGE>
Portfolio of Investments
Nuveen Flagship All-American Municipal Bond Fund (continued)
April 30, 1998
<TABLE>
<CAPTION>
Principal Optional Call Market
Amount Description Provisions* Ratings** Value
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Ohio - 8.7%
$ 2,000,000 City of Cleveland, Ohio, Airport System Revenue Bonds, 1/08 at 101 AAA $ 1,914,480
Series 1997A, 5.125%, 1/01/27
1,400,000 Cleveland Public Power System, 7.000%, 11/15/17 11/01 at 102 AAA 1,533,420
1,350,000 County of Columbiana, Ohio, County Jail Facilities Construction 12/04 at 102 AA 1,545,656
Bonds (General Obligation - Unlimited Tax), 6.700%, 12/01/24
1,000,000 County of Cuyahoga, Ohio, Health Care Facilities Revenue Bonds, 6/00 at 100 N/R 1,081,860
Series 1990 (Altenheim Project), 9.280%, 6/01/15
3,000,000 County of Cuyahoga, Ohio, Hospital Revenue Bonds (Meridia Health 8/05 at 102 AAA 3,369,390
System), Series 1995, 6.250%, 8/15/24 (Pre-refunded to 8/15/05)
1,000,000 County of Cuyahoga, Ohio, Hospital Facilities Revenue Bonds, 2/03 at 102 A1 1,073,140
Series 1993, Health Cleveland, Inc. (Fairview General Hospital
Project), 6.300%, 8/15/15
2,350,000 City of Garfield Heights, Ohio, Hospital Improvement and Refunding 11/02 at 102 A 2,548,011
Revenue Bonds, Series 1992B (Marymount Hospital Project),
6.700%, 11/15/15
1,500,000 County of Lucas, Ohio, Hospital Facilities Revenue Bonds, Series 12/01 at 102 N/R *** 1,710,960
1991 (Flower Memorial Hospital), 8.125%, 12/01/11
(Pre-refunded to 12/01/01)
3,500,000 County of Miami, Ohio, Hospital Facilities Revenue Refunding and 5/06 at 102 BBB 3,715,740
Improvement Bonds, Series 1996A (Upper Valley Medical Center),
6.375%, 5/15/26
2,750,000 State of Ohio, Ohio Air Quality Development Authority, Air Quality 9/05 at 102 A+ 2,928,888
Development Revenue Refunding Bonds, 1995 Series (The Dayton Power
and Light Company Project), 6.100%, 9/01/30
1,750,000 State of Ohio (Ohio Higher Educational Facility Commission), 12/03 at 102 AAA 1,940,435
Higher Educational Facility Mortgage Revenue Bonds (University of
Dayton 1992 Project), 6.600%, 12/01/17
3,500,000 County of Shelby, Ohio, Hospital Facilities Revenue Refunding and 9/02 at 102 BBB 3,907,365
Improvement Bonds, Series 1992 (The Shelby County Memorial Hospital
Association), 7.700%, 9/01/18
- -----------------------------------------------------------------------------------------------------------------------------------
Oklahoma - 0.9%
2,750,000 Trustees of the Tulsa Municipal Airport Trust, Revenue Bonds, 6/05 at 102 Baa2 2,907,878
Series 1995 (American Airlines), 6.250%, 6/01/20
- -----------------------------------------------------------------------------------------------------------------------------------
Pennsylvania - 4.4%
2,500,000 Allegeheny County Higher Education Building Authority 2/06 at 102 Baa3 2,658,600
(Commonwealth of Pennsylvania), College Revenue Bonds, Series A
of 1996 (Robert Morris College), 6.400%, 2/15/14
1,500,000 Clarion County Hospital Authority, Hospital Revenue Refunding Bonds, 7/99 at 102 N/R 1,599,615
Series 1989 (Clarion Hospital Project), 8.100%, 7/01/12
1,000,000 Delaware County Industrial Development Authority, Pollution Control 4/01 at 102 AAA 1,088,730
Revenue Refunding Bonds, 1991 Series A (Philadelphia Electric
Company Project), 7.375%, 4/01/21
500,000 Falls Township Hospital Authority, Refunding Revenue Bonds, 8/02 at 102 AAA 548,360
The Delaware Valley Medical Center Project (FHA Insured Mortgage),
Series 1992, 7.000%, 8/01/22
1,000,000 Latrobe Industrial Development Authority (Commonwealth of 5/04 at 102 Baa1 1,081,350
Pennsylvania) College Revenue Bonds (Saint Vincent College Project),
Series 1994, 6.750%, 5/01/24
1,700,000 City of Philadelphia, Pennsylvania, Gas Works Revenue Bonds, 7/03 at 102 Baa1 1,814,648
Fourteenth Series, 6.375%, 7/01/26
4,500,000 The Hospitals and Higher Education Facilities Authority of 11/03 at 102 A- 4,857,075
Philadelphia, Hospital Revenue Bonds, Series A of 1993 (Temple
University Hospital), 6.625%, 11/15/23
- -----------------------------------------------------------------------------------------------------------------------------------
Rhode Island - 0.5%
1,600,000 Rhode Island Housing and Mortgage Finance Corporation, Homeownership 10/00 at 102 AA+ 1,690,768
Opportunity Bonds, Series 3-A, 7.850%, 10/01/16
</TABLE>
16
<PAGE>
<TABLE>
<CAPTION>
Principal Optional Call Market
Amount Description Provisions* Ratings** Value
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
South Carolina - 2.6%
$ 1,975,000 Berkeley County School District, Certificates of Participation, 2/04 at 102 AAA $ 2,149,156
6.300%, 2/01/16
1,770,000 Georgetown County Water and Sewer District, Water and Sewer System 6/05 at 102 N/R 1,996,383
Revenue Refunding and Improvement Bonds, Junior Lien Series 1995,
6.500%, 6/01/25
1,000,000 South Carolina Housing Finance and Development Authority, Multifamily 6/05 at 102 BBB+ 1,062,790
Housing Mortgage Revenue Bonds (United Dominion-Hunting Ridge
Apartments Project), Series 1995, 6.750%, 6/01/25
1,000,000 South Carolina Housing Finance and Development Authority, Multifamily 11/05 at 102 AA- 1,029,510
Housing Revenue Refunding Bonds (Runaway Bay Apartments Project),
Series 1995, 6.125%, 12/01/15
1,750,000 York County, South Carolina, Water and Sewer System Revenue Bonds, 12/03 at 102 N/R 1,772,820
Series 1995, 6.500%, 12/01/25
- -----------------------------------------------------------------------------------------------------------------------------------
South Dakota - 0.8%
2,500,000 Education Loans Incorporated (South Dakota), Tax Exempt Fixed Rate 6/08 at 102 A2 2,450,525
Student Loan Asset-Backed Callable Notes, Subordinate Series
1998-1K, 5.600%, 6/01/20
- -----------------------------------------------------------------------------------------------------------------------------------
Tennessee - 2.8%
2,985,000 The Health and Educational Facilities Board of the Metropolitan 2/08 at 102 AA 2,976,941
Government of Nashville and Davidson County, Tennessee, Multi-Modal
Interchangeable Rate, Health Facility Revenue Bonds, 5.500%, 5/01/23
2,155,000 The Health and Educational Housing Facility Board of the County of 8/07 at 105 N/R 2,637,138
Shelby, Tennessee, ICF/MR Revenue Bonds (Open Arms Developmental
Centers), Series 1992A, 9.750%, 8/01/19
1,380,000 South Fulton Tennessee, Inc. Industrial Development Board, Industrial 10/05 at 102 A3 1,488,620
Development Revenue, Tyson Foods Inc., Project, 6.350%, 10/01/15
1,500,000 Wilson County, Tennessee, Certificates of Participation (Wilson 6/04 at 102 A 1,605,555
County Educational Facilities Corporation), Series 1994,
6.250%, 6/30/15
- -----------------------------------------------------------------------------------------------------------------------------------
Texas - 7.8%
7,000,000 Alliance Airport Authority, Special Facilities Revenue Bonds, Series 4/06 at 102 BBB 7,474,110
1996 (Federal Express Corporation Project), 6.375%, 4/01/21
7,000,000 Brazos River Authority, Pollution Control Revenue Refunding Bonds 5/08 at 102 AAA 6,925,310
(Texas Utilities Electric Company Project), Series 1998A, 5.550%,
5/01/33 (WI)
2,000,000 Dallas-Fort Worth International Airport Facility Improvement 11/02 at 102 Baa2 2,212,320
Corporation, American Airlines, Inc. Revenue Bonds, Series 1992,
7.250%, 11/01/30
2,500,000 Lower Neches Valley Authority, Industrial Development Corporation, 3/08 at 101 AA 2,506,250
Refunding Revenue Bonds, Series 1998 (Mobil Oil Refining Corporation
Project), 5.550%, 3/01/33
2,000,000 North Central Texas Health Facilities Development Corporation, Health 2/06 at 102 BBB 2,129,360
Facilities Development Revenue Bonds (C.C. Young Memorial Home
Project), Series 1996, 6.375%, 2/15/20
2,895,000 Port of Bay City Authority of Matagorda County, Texas, Revenue Bonds 5/06 at 102 A+ 3,133,577
(Hoechst Celanese Corporation Project), Series 1996, 6.500%, 5/01/26
- -----------------------------------------------------------------------------------------------------------------------------------
Utah - 0.7%
2,000,000 Carbon County, Utah, Solid Waste Disposal Refunding Revenue Bonds 2/05 at 102 BBB+ 2,306,139
(Laidlaw Inc./ECDC Environmental, L.C. Project), 1995 Series A,
7.500%, 2/01/10
- -----------------------------------------------------------------------------------------------------------------------------------
Virginia - 1.2%
2,000,000 Industrial Development Authority of the County of Hanover, Hospital No Opt. Call AAA 2,302,139
Revenue Bonds, Series 1995 (Memorial Regional Medical Center Project
at Hanover Medical Park), 6.375%, 8/15/18
1,250,000 Southeastern Public Service Authority of Virginia, Senior Revenue 7/03 at 102 A- 1,288,749
Bonds, Series 1993 (Regional Solid Waste System), 6.000%, 7/01/13
</TABLE>
17
<PAGE>
Portfolio of Investments
Nuveen Flagship All-American Municipal Bond Fund (continued)
April 30, 1998
<TABLE>
<CAPTION>
Principal Optional Call Market
Amount Description Provisions* Ratings** Value
- ------------------------------------------------------------------------------------------------------------------------------------
Washington D.C. - 0.5%
<S> <C> <C> <C> <C>
$ 1,480,000 District of Columbia, University Revenue Bonds (Georgetown 4/99 at 102 A+ $1,546,836
University Issue), Series 1990B, 7.150%, 4/01/21
- ------------------------------------------------------------------------------------------------------------------------------------
West Virginia - 0.2%
500,000 Mason County, West Virginia, Pollution Control Revenue Bonds 1/00 at 102 Baa1 527,364
(Appalachian Power Company Project), Series G, 7.400%, 1/01/14
- ------------------------------------------------------------------------------------------------------------------------------------
Wisconsin - 0.3%
840,000 Village of Fall Creek, Wisconsin Municipal Nursing Home Mortgage 7/99 at 100 N/R 873,338
Revenue Bonds, Series 1989, 9.875%, 7/01/19
- ------------------------------------------------------------------------------------------------------------------------------------
$311,749,276 Total Investments - (cost $285,702,426) - 99.0% 309,218,001
============------------------------------------------------------------------------------------------------------------------------
Other Assets Less Liabilities - 1.0% 3,026,220
--------------------------------------------------------------------------------------------------------------------
Net Assets - 100.0% $312,244,221
====================================================================================================================
</TABLE>
* Optional Call Provisions (not covered by the report of independent
public accountants): Dates (month and year) and prices of the
earliest optional call or redemption. There may be other call
provisions at varying prices at later dates.
** Ratings (not covered by the report of independent public
accountants): Using the higher of Standard & Poor's or Moody's
rating.
*** 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.
(DD) Security purchased on a delayed delivery basis (note 1).
(WI) Security purchased on a when-issued basis (note 1).
N/R Investment is not rated.
See accompanying notes to financial statements.
18
<PAGE>
Portfolio of Investments
Nuveen Flagship Intermediate Municipal Bond Fund
April 30, 1998
<TABLE>
<CAPTION>
Principal Optional Call Market
Amount Description Provisions* Ratings** Value
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Arizona - 1.2%
$ 520,000 The Industrial Development Authority of the County of Pima, Single 5/07 at 102 AAA $ 538,918
Family Mortgage Revenue Refunding Bonds, Series 1997B, 5.850%, 5/01/09
- -----------------------------------------------------------------------------------------------------------------------------------
California - 2.3%
1,000,000 Sacramento Cogeneration Authority Cogeneration Project Revenue Bonds 7/05 at 102 BBB- 1,085,170
(Procter & Gamble Project), 1995 Series, 6.200%, 7/01/06
- -----------------------------------------------------------------------------------------------------------------------------------
Colorado - 8.9%
2,300,000 E-470 Public Highway Authority, Capital Improvement Trust Fund 8/05 at 95 29/32 Aaa 1,572,027
Highway Revenue Bonds, Senior Bonds, 0.000%, 8/31/06
(Pre-refunded to 8/31/05)
500,000 Colorado Health Facilities Authority Revenue Bonds, Series 1995 12/05 at 102 A- 540,545
(Covenant Retirement Communities Inc.), 6.200%, 12/01/07
1,000,000 City and County of Denver, Colorado, Airport System Revenue Bonds, 11/05 at 102 AAA 1,044,820
Series 1996B, 5.400%, 11/15/06
900,000 Eagle County Air Terminal Corporation, Airport Terminal Project No Opt. Call N/R 956,727
Revenue Bonds, Series 1996, 6.750%, 5/01/06
- -----------------------------------------------------------------------------------------------------------------------------------
Connecticut - 0.7%
335,000 Eastern Connecticut Resource Recovery Authority, Solid Waste 1/03 at 102 BBB 338,554
Revenue Bonds (Wheelabrator Lisbon Project), Series 1993A,
5.150%, 1/01/05
- -----------------------------------------------------------------------------------------------------------------------------------
Delaware - 1.1%
500,000 Delaware Economic Development Authority, First Mortgage Revenue 5/07 at 102 BBB 527,055
Bonds (Peninsula United Methodist Homes, Inc. Issue), Series 1997A,
6.100%, 5/01/10
- -----------------------------------------------------------------------------------------------------------------------------------
Florida - 5.5%
275,000 State of Florida, Full Faith and Credit, Broward County Expressway No Opt. Call AA+ 388,933
Authority Bonds, Series of 1984, 9.875%, 7/01/09
1,000,000 Palm Beach County, Florida School Board, Certificates of No Opt. Call AAA 1,075,620
Participation, Series A, 5.800%, 8/01/04
1,000,000 Sanford, Florida, Airport Authority Industrial Development No Opt. Call N/R 1,066,450
Revenue, Central Florida Terminals Inc. Project, Series A,
7.500%, 5/01/06
- -----------------------------------------------------------------------------------------------------------------------------------
Illinois - 5.6%
1,000,000 Illinois Health Facilities Authority Revenue Bonds, Series 1996 No Opt. Call A- 1,068,230
(Mercy Hospital and Medical Center Project) 6.000%, 1/01/06
Illinois Health Facilities Authority Revenue Bonds, Series 1998
(Centegra Health System):
500,000 5.500%, 9/01/09 9/08 at 101 A- 513,765
500,000 5.500%, 9/01/10 9/08 at 101 A- 511,435
500,000 Illinois Health Facilities Authority Revenue Bonds (Victory Health 8/07 at 101 A- 524,710
Service), Series 1997A, 5.750%, 8/15/08
- -----------------------------------------------------------------------------------------------------------------------------------
Indiana - 2.2%
500,000 Indiana Bond Bank Special Program Bonds, Series 1997 B 2/07 at 102 AA- 530,405
(Hendricks County Redevelopment Authority, Pittboro Project),
5.750%, 2/01/08
500,000 Indiana Health Facility Financing Authority, Variable Rate No Opt. Call AA+ 504,895
Hospital Revenue Bonds (Charity Obligated Group - Daughters of
Charity National Health System), Series 1997D, 5.000%, 11/01/26
</TABLE>
19
<PAGE>
Portfolio of Investments
Nuveen Flagship Intermediate Municipal Bond Fund (continued)
April 30, 1998
<TABLE>
<CAPTION>
Principal Optional Call Market
Amount Description Provisions* Ratings** Value
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Kansas - 1.0%
$ 420,000 Lenexa, Kansas, Multifamily Housing Revenue Refunding, Barrington Park 2/03 at 102 AA $ 441,668
Apartments Project, Series 1993A, 6.200%, 2/01/08
- -----------------------------------------------------------------------------------------------------------------------------------
Kentucky - 5.0%
1,165,000 Kentucky Infrastructure Authority, Governmental Agencies Program Revenue 8/05 at 102 A 1,236,764
Refunding Bonds, 1995 Series H, 5.600%, 8/01/06
1,000,000 McCracken County, Kentucky, Hospital Revenue Refunding, Mercy Health No Opt. Call AAA 1,088,750
System, Series A, 6.100%, 11/01/04
- -----------------------------------------------------------------------------------------------------------------------------------
Louisiana - 0.6%
265,000 Louisiana Public Facilities Authority, Student Loan Revenue Bonds, 9/02 at 102 Aaa 280,775
6.600%, 3/01/03
- -----------------------------------------------------------------------------------------------------------------------------------
Maryland - 1.1%
500,000 Maryland Health and Higher Educational Facilities Authority, Refunding 1/07 at 102 A- 528,635
Revenue Bonds, Pickersgill Issue, Series 1997A, 5.750%, 1/01/08
- -----------------------------------------------------------------------------------------------------------------------------------
Massachusetts - 5.3%
Massachusetts Health and Educational Facilities Authority, Revenue
Bonds, Dana-Farber Cancer Institute Issue, Series G-1:
500,000 6.500%, 12/01/05 No Opt. Call A1 556,005
750,000 6.500%, 12/01/06 12/05 at 102 A1 848,970
1,000,000 Massachusetts Water Pollution Abatement Trust, Water Pollution 2/04 at 102 AA+ 1,064,350
Abatement Revenue Bonds (SESD Loan Program), 1994 Series A,
5.700%, 2/01/05
- -----------------------------------------------------------------------------------------------------------------------------------
Michigan - 8.7%
750,000 Michigan Municipal Bond Authority, State Revolving Fund No Opt. Call AA+ 853,275
Revenue Bonds, Series 1994, 7.000%, 10/01/04
1,000,000 Michigan State Hospital Finance Authority, Hospital Revenue No Opt. Call BBB 1,068,000
Refunding Bonds (Gratiot Community Hospital, Alma, Michigan),
Series 1995, 6.100%, 10/01/07
1,000,000 Michigan State Hospital Finance Authority, Hospital Revenue and No Opt. Call BBB 1,022,240
Refunding Bonds (Genesys Regional Medical Center Obligated
Group), Series 1998A, 5.500%, 10/01/08
1,000,000 County of Monroe, Michigan, Pollution Control Revenue Bonds No Opt. Call AAA 1,095,510
(The Detroit Edison Company Project), Series A-1994,
6.350%, 12/01/04
- -----------------------------------------------------------------------------------------------------------------------------------
Missouri - 1.5%
300,000 Missouri State Health & Educational Facilities Authority, Health 2/07 at 102 N/R 309,912
Facilities Revenue Refunding, Lutheran Senior Services, 5.550%,
2/01/09
350,000 The Industrial Development Authority of the City of St. Louis, Missouri, 12/02 at 102 N/R 379,992
Industrial Revenue Refunding Bonds (Kiel Center Multipurpose Arena
Project), Series 1992, 7.625%, 12/01/09
- -----------------------------------------------------------------------------------------------------------------------------------
Nebraska - 2.1%
1,000,000 Energy America Natural Gas Revenue Note (Metropolitan Utility District No Opt. Call N/R 979,460
Project), Series 1997B, 5.700%, 7/01/08
- -----------------------------------------------------------------------------------------------------------------------------------
New Jersey - 1.1%
500,000 New Jersey Economic Development Authority, Insured Revenue Bonds No Opt. Call AAA 525,570
(Educational Testing Service Issue), Series 1995B, 5.500%, 5/15/05
- -----------------------------------------------------------------------------------------------------------------------------------
New Mexico - 0.2%
80,000 New Mexico Educational Assistance Foundation Student Loan Revenue, No Opt. Call Aaa 84,947
Senior Series One, 6.300%, 12/01/02
</TABLE>
20
<PAGE>
<TABLE>
<CAPTION>
Principal Optional Call Market
Amount Description Provisions* Ratings** Value
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
New York - 13.2%
$ 500,000 Albany Housing Authority, City of Albany, New York, Limited Obligation 10/05 at 102 Baa1 $ 516,260
Bonds, Series 1995, 5.700%, 10/01/06
200,000 The City of New York, General Obligation Bonds, Fiscal 1996 Series G, No Opt. Call A3 211,104
5.750%, 2/01/06
500,000 The City of New York, General Obligation Bonds, Fiscal 1997 Series B, 8/06 at 101 A3 528,380
5.700%, 8/15/07
35,000 The City of New York, General Obligation Bonds, Fiscal 1993 Series F, 2/05 at 101 A3*** 38,940
6.375%, 2/15/06 (Pre-refunded to 2/15/05)
665,000 The City of New York, General Obligation Bonds, Fiscal 1995 Series F, 2/05 at 101 A3 728,641
6.375%, 2/15/06
1,000,000 Dormitory Authority of the State of New York, Mental Health Services 2/07 at 102 A- 1,078,600
Facilities Improvement Revenue Bonds, Series 1997A, 6.000%, 2/15/08
750,000 New York State Housing Finance Agency, Health Facilities Revenue No Opt. Call BBB+ 795,923
Refunding Bonds (New York City), 1996 Series A, 6.000%, 5/01/06
1,000,000 The Port Authority of New York and New Jersey, Special Project Bonds, No Opt. Call N/R 1,124,730
Series 4, KIAC Partners Project, 7.000%, 10/01/07
1,000,000 The Port Authority of New York and New Jersey, Special Project Bonds, No Opt. Call AAA 1,122,140
Series 6, JFK International Air Terminal LLC Project, 6.250%, 12/01/10
- -----------------------------------------------------------------------------------------------------------------------------------
Ohio - 10.7%
Cleveland-Cuyahoga County Port Authority, Subordinate Refunding Revenue
Bonds, Series 1997 (Rock and Roll Hall of Fame and Museum Project):
360,000 5.750%, 12/01/07 No Opt. Call N/R 381,190
425,000 5.850%, 12/01/08 No Opt. Call N/R 453,675
1,000,000 County of Franklin, Ohio, Hospital Refunding and Improvement Revenue 11/06 at 101 Aa 1,062,580
Bonds, 1996 Series A (The Childrens Hospital Project), 5.550%, 11/01/07
1,000,000 County of Hamilton, Ohio, Hospital Facilities Revenue Bonds, Series No Opt. Call AAA 1,042,230
1993 (Childrens Hospital Medical Center), 5.200%, 5/15/09
900,000 Miami County, Ohio, Hospital Facilities Revenue Refunding & No Opt. Call BBB 966,051
Improvement, Upper Valley Medical Center, Series C, 6.000%, 5/15/06
1,000,000 State of Ohio (Ohio Public Facilities Commission), Higher Education No Opt. Call AAA 1,073,290
Capital Facilities Bonds, Series II-1994B, 5.750%, 11/01/04
- -----------------------------------------------------------------------------------------------------------------------------------
Pennsylvania - 5.3%
Pennsylvania Higher Educational Facilities Authority (Commonwealth of
Pennsylvania), Geneva College Revenue Bonds, Series of 1998:
470,000 4.900%, 4/01/07 No Opt. Call BBB- 460,741
495,000 4.950%, 4/01/08 No Opt. Call BBB- 484,580
500,000 City of Philadelphia, Pennsylvania Gas Works Revenue Bonds, Fourteenth No Opt. Call Baa1 544,225
Series, 7.000%, 7/01/02
1,500,000 Municipal Authority of Westmoreland County (Westmoreland County, No Opt. Call AAA 961,845
Pennsylvania), Municipal Service Revenue Bonds, Series of 1995A,
0.000%, 8/15/07
- -----------------------------------------------------------------------------------------------------------------------------------
South Carolina - 0.5%
230,000 City of Myrtle Beach, South Carolina, Myrtle Beach Public Facilities No Opt. Call A3 242,599
Corporation, Certificates of Participation (City of Myrtle Beach
Convention Center Project), Series 1992, 6.750%, 7/01/02
- -----------------------------------------------------------------------------------------------------------------------------------
South Dakota - 1.2%
550,000 Student Loan Finance Corporation (South Dakota), Student Loan Revenue No Opt. Call A+ 569,151
Bonds, Series 1994A, 5.850%, 8/01/00
- -----------------------------------------------------------------------------------------------------------------------------------
Tennessee - 3.3%
500,000 City of Clarksville, Tennessee, Hospital Revenue Refunding and No Opt. Call Baa1 525,740
Improvement Bonds, Series 1993 (Clarksville Memorial Hospital
Project), 6.000%, 7/01/03
</TABLE>
21
<PAGE>
Portfolio of Investments
Nuveen Flagship Intermediate Municipal Bond Fund (continued)
April 30, 1998
<TABLE>
<CAPTION>
Principal Optional Call Market
Amount Description Provisions* Ratings** Value
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Tennessee (continued)
$ 500,000 Memphis-Shelby County Airport Authority, Special Facilities Revenue No Opt. Call BBB $ 500,955
Refunding Bonds, Series 1997 (Federal Express Corporation),
5.350%, 9/01/12
500,000 The Industrial Development Board of the Metropolitan Government of No Opt. Call BBB+ 522,180
Nashville and Davidson County, Industrial Development Revenue
Refunding and Improvement Bonds (Osco Treatment), 6.000%, 5/01/03
- -----------------------------------------------------------------------------------------------------------------------------------
Texas - 5.8%
345,000 Brazos Higher Education Authority, Inc., Student Loan Revenue No Opt. Call Aaa 365,076
Refunding Bonds, Series 1993A-1, 6.200%, 12/01/02
3,000,000 Goose Creek Consolidated Independent School District, Texas, No Opt. Call AAA 1,768,050
Unlimited Tax Refunding Bonds, Series 1993, 0.000%, 2/15/09
535,000 Texas Department of Housing and Community Affairs, Multifamily No Opt. Call A 560,904
Housing Revenue Bonds (NHP-Foundation - Asmara Project) Series
1996A, 5.800%, 1/01/06
- -----------------------------------------------------------------------------------------------------------------------------------
Utah - 0.6%
290,000 Salt Lake County, Utah, College Revenue Bonds (Westminster College 10/07 at 101 BBB 283,065
of Salt Lake City Project), Series 1997, 5.200%, 10/01/09
- -----------------------------------------------------------------------------------------------------------------------------------
Washington D.C. - 0.5%
205,000 District of Columbia, University Revenue Bonds (American University 10/06 at 101 AAA 212,610
Issue), Series 1996, 5.375%, 10/01/08
- -----------------------------------------------------------------------------------------------------------------------------------
Wisconsin - 1.6%
750,000 Wisconsin Health and Educational Facilities Authority, Revenue 10/07 at 101 BBB 732,757
Bonds, Series 1998 (Carroll College, Inc. Project),
5.000%, 10/01/09
- -----------------------------------------------------------------------------------------------------------------------------------
Wyoming - 0.5%
200,000 State of Wyoming, Farm Loan Board, Capital Facilities Refunding 10/02 at 102 AA- 216,014
Revenue Bonds, Series 1992, 6.100%, 10/01/06
- -----------------------------------------------------------------------------------------------------------------------------------
$45,315,000 Total Investments - (cost $42,614,695) - 97.3% 45,227,308
=========== ------------------------------------------------------------------------------------------------------------------
Other Assets Less Liabilities - 2.7% 1,247,112
------------------------------------------------------------------------------------------------------------------
Net Assets - 100% $46,474,420
==================================================================================================================
</TABLE>
* Optional Call Provisions (not covered by the report of independent public
accountants): Dates (month and year) and prices of the earliest optional
call or redemption. There may be other call provisions at varying prices at
later dates.
** Ratings (not covered by the report of independent public accountants): Using
the higher of Standard & Poor's or Moody's rating.
***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.
See accompanying notes to financial statements.
22
<PAGE>
Portfolio of Investments
Nuveen Flagship Limited Term Municipal Bond Fund
April 30, 1998
<TABLE>
<CAPTION>
Principal Optional Call Market
Amount Description Provisions* Ratings** Value
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Alaska - 0.5%
$ 945,000 Alaska Industrial Development and Export Authority Revolving Fund Bonds, No Opt. Call A2 $ 959,884
Series 1992A, 5.700%, 4/01/99
1,250,000 Alaska Student Loan Corporation Student Loan Revenue Bonds, 1997 Series A, No Opt. Call AAA 1,269,863
5.200%, 7/01/06
- -----------------------------------------------------------------------------------------------------------------------------------
Arizona - 0.5%
250,000 Arizona Educational Loan Marketing Corporation, Educational Loan Revenue No Opt. Call Aa 263,310
Bonds, 6.125%, 9/01/02
2,000,000 City of Tucson, Arizona, General Obligation Refunding Bonds, Series No Opt. Call AAA 2,103,600
1995, 5.375%, 7/01/05
- -----------------------------------------------------------------------------------------------------------------------------------
California - 3.1%
4,380,000 Central Joint Powers Health Financing Authority, Certificates of No Opt. Call Baa1 4,475,528
Participation, Series 1993 (Community Hospitals of Central California),
5.250%, 2/01/04
1,250,000 Long Beach Aquarium of the Pacific Revenue Bonds (Aquarium of the Pacific No Opt. Call BBB 1,312,713
Project) 1995 Series A, 5.750%, 7/01/05
Sacramento Cogeneration Authority Cogeneration Project Revenue Bonds
(Procter & Gamble Project), 1995 Series:
1,000,000 5.900%, 7/01/02 No Opt. Call BBB- 1,048,350
500,000 6.000%, 7/01/03 No Opt. Call BBB- 530,430
500,000 7.000%, 7/01/04 No Opt. Call BBB- 558,375
4,800,000 Southern California Public Power Authority, Power Project Revenue Bonds, No Opt. Call AAA 5,113,728
1996 Subordinate Refunding, Series A (Palo Verde Project), 5.500%,
7/01/05
1,500,000 Taft Public Financing Authority, Lease Revenue Bonds, 1997 Series A No Opt. Call BBB+ 1,561,725
(Community Correctional Facility Acquisition Project), 5.500%, 1/01/06
- -----------------------------------------------------------------------------------------------------------------------------------
Colorado - 5.0%
9,000,000 E-470 Public Highway Authority, Capital Improvement Trust Fund, 8/05 at 95 29/32 Aaa 6,151,410
Highway Revenue Bonds, Senior Bonds, 0.000%, 8/31/06 (Pre-refunded to
8/31/05)
City of Arvada, Colorado, Limited Sales and Use Tax Revenue Bonds,
Series 1991:
500,000 6.200%, 6/01/98 No Opt. Call N/R 500,940
500,000 6.300%, 6/01/99 No Opt. Call N/R 512,860
400,000 6.400%, 6/01/00 No Opt. Call N/R 417,888
2,815,000 Colorado Health Facilities Authority Revenue Bonds, Series 1995 No Opt. Call A- 2,938,128
(Covenant Retirement Communities Inc.), 5.650%,12/01/04
Colorado Housing and Finance Authority, Single-Family Housing Revenue
Refunding Bonds, 1991 Series A:
1,515,000 0.000%, 11/01/01 No Opt. Call Aa1 1,245,754
3,515,000 0.000%, 11/01/02 No Opt. Call Aa1 2,715,408
6,475,000 City and County of Denver, Colorado, Airport System Revenue Bonds, No Opt. Call AAA 6,900,796
Series 1996 B, 5.750%, 11/15/04
1,400,000 Eagle County, Air Terminal Corporation, Airport Terminal Project Revenue No Opt. Call N/R 1,488,242
Bonds, Series 1996, 6.750%, 5/01/06
500,000 Hyland Hills Park and Recreation District, Adams County, Colorado Special No Opt. Call N/R 513,800
Revenue Refunding and Improvement Bonds, Series 1996A, 5.400%, 12/15/00
200,000 University of Colorado, Certificates of Participation, Series D, Colorado 12/98 at 102 A2*** 207,700
Association of School Boards (Lease Purchase Finance Program), 7.100%,
12/01/00 (Pre-refunded to 12/01/98)
- -----------------------------------------------------------------------------------------------------------------------------------
Connecticut - 3.2%
City of Bridgeport, Connecticut, General Obligation Refunding Bonds,
1996 Series A:
4,650,000 5.250%, 9/01/04 No Opt. Call AAA 4,853,159
1,000,000 6.000%, 9/01/05 No Opt. Call AAA 1,088,860
</TABLE>
23
<PAGE>
Portfolio of Investments
Nuveen Flagship Limited Term Municipal Bond Fund (continued)
April 30, 1998
<TABLE>
<CAPTION>
Principal Optional Call Market
Amount Description Provisions* Ratings** Value
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Connecticut (continued)
$2,800,000 State of Connecticut Health and Educational Facilities Authority, No Opt. Call BBB- $2,909,620
Revenue Bonds, Quinnipiac College Issue, Series D,
5.625%, 7/01/03
1,000,000 State of Connecticut Health and Educational Facilities Authority No Opt. Call BBB 993,430
Revenue Bonds Hospital for Special Care Issue, Series B,
5.125%, 7/01/07
Connecticut Development Authority, First Mortgage Gross Revenue
Health Care Project Refunding Bonds (Church Homes, Inc.,
Congregational Avery Heights Project), 1997 Series:
780,000 5.100%, 4/01/04 No Opt. Call BBB 789,298
1,100,000 5.200%, 4/01/05 No Opt. Call BBB 1,114,938
1,135,000 5.300%, 4/01/06 No Opt. Call BBB 1,152,910
820,000 City of New Haven, Connecticut, General Obligation Bonds, No Opt. Call AAA 908,002
Issue of 1992, 9.250%, 3/01/02
City of New Haven, Connecticut, General Obligation Bonds,
Series 1992B:
285,000 5.900%, 12/01/98 No Opt. Call AAA 288,483
340,000 5.900%, 12/01/98 No Opt. Call Baa1 343,910
650,000 Town of Stratford, Connecticut General Obligation Bonds, No Opt. Call N/R 666,276
6.900%, 3/01/99
- -----------------------------------------------------------------------------------------------------------------------------------
Florida -- 2.0%
1,000,000 Dade County, Florida, Aviation Revenue Bonds (Series U), No Opt. Call Aa3 1,010,460
6.400%, 10/01/98
450,000 North Springs Improvement District (Broward County, Florida), Water No Opt. Call N/R 473,639
and Sewer Revenue Bonds, Series 1991, 7.900%, 10/01/01
4,940,000 Housing Finance Authority of Polk County (Florida), Multifamily 7/05 at 101 AAA 5,122,237
Housing Revenue Bonds (Winter Oaks Apartments Project),
Series 1997A, 5.250%, 7/01/22
2,625,000 Sanford, Florida, Airport Authority Industrial Development Revenue, No Opt. Call N/R 2,757,851
Central Florida Terminals Inc. Project A, 7.300%, 5/01/04
- -----------------------------------------------------------------------------------------------------------------------------------
Georgia -- 0.7%
3,000,000 City of Atlanta, Georgia, Airport Facilities Revenue Refunding Bonds, No Opt. Call AAA 3,360,510
Series 1996, 6.500%, 1/01/06
- -----------------------------------------------------------------------------------------------------------------------------------
Illinois -- 3.0%
360,000 DeKalb, Illinois, Home Rule Units Single Family Mortgage Revenue Bonds No Opt. Call Aaa 368,402
(GNMA Mortgage-Backed Securities Program), Series 1991 A,
6.700%, 12/01/99
970,000 Illinois Health Facilities Authority Revenue, Refunding, Galesburg No Opt. Call AA 992,562
Cottage Hospital, 5.400%, 5/01/00
1,500,000 Illinois Health Facilities Authority Revenue Refunding Bonds (Sarah No Opt. Call A- 1,556,610
Bush Lincoln Health Center), Series 1996B, 5.500%, 2/15/06
Illinois Health Facilities Authority Revenue Bonds (Victory Health
Service), Series 1997A:
945,000 5.000%, 8/15/05 No Opt. Call A- 950,377
995,000 5.000%, 8/15/06 No Opt. Call A- 995,259
1,045,000 5.750%, 8/15/07 No Opt. Call A- 1,098,232
605,000 5.750%, 8/15/08 8/07 at 101 A- 634,899
1,550,000 Illinois Health Facilities Authority, Revenue Bonds, ServantCor, 8/99 at 102 N/R*** 1,647,619
Series 1989B, 7.500%, 8/15/01 (Pre-refunded to 8/15/99)
325,000 Illinois Health Facilities Authority Revenue Bonds, The Carle No Opt. Call AAA 331,107
Foundations, Series 1989C, 6.700%, 1/01/99
735,000 Illinois Health Facilities Authority Revenue Bonds, Series 1996 No Opt. Call A- 760,512
(Mercy Hospital and Medical Center Project), 5.600%, 1/01/02
3,000,000 State of Illinois, General Obligation Bonds, Series of March 1992 10/02 at 102 AA 3,242,070
(Full Faith and Credit), 6.200%, 10/01/04
1,530,000 Village of Romeoville, Will County, Illinois, General Obligation No Opt. Call N/R 1,593,709
Working Cash Bonds, Series 1991F, 7.850%, 1/01/01
</TABLE>
24
<PAGE>
<TABLE>
<CAPTION>
Principal Optional Call Market
Amount Description Provisions* Ratings** Value
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Indiana - 0.8%
Indiana Bond Bank Special Program Bonds, Series 1997 B (Hendricks County
Redevelopment Authority, Pittboro Project):
$ 1,525,000 5.250%, 2/01/03 No Opt. Call AA- $1,567,761
1,075,000 5.400%, 2/01/04 No Opt. Call AA- 1,115,485
1,250,000 Valparaiso Multi-School Building Corporation (Porter County, Indiana),
First Mortgage Bonds, Series 1992, 6.100%, 7/01/01 No Opt. Call AAA 1,316,809
- -----------------------------------------------------------------------------------------------------------------------------------
Iowa - 0.5%
Iowa Student Loan Liquidity Corporation, Iowa Partnership Loan Revenue
Bonds, 1992 Series:
600,000 5.850%, 7/01/99 No Opt. Call A 610,728
325,000 6.000%, 7/01/00 No Opt. Call A 333,726
600,000 6.100%, 7/01/01 No Opt. Call A 621,420
650,000 6.200%, 7/01/02 No Opt. Call A 680,316
- -----------------------------------------------------------------------------------------------------------------------------------
Kentucky - 8.5%
3,180,000 County of Christian, Kentucky, Hospital Revenue and Refunding Bonds, No Opt. Call A- 3,325,453
Series 1997A, Jennie Stuart Medical Center, 5.500%, 7/01/06
City of Jeffersontown, Kentucky, Public Projects Refunding and
Improvements, Certificates of Participation:
235,000 4.650%, 11/01/02 No Opt. Call A 237,691
520,000 4.750%, 11/01/03 No Opt. Call A 528,554
Kenton County, Water District No. 1, Water District Revenue Bonds,
Series 1995B:
475,000 5.600%, 2/01/03 No Opt. Call AAA 500,151
500,000 5.600%, 2/01/05 No Opt. Call AAA 531,385
Kentucky Development Finance Authority, Sisters of Charity of Nazareth
Health Corporation, Revenue Refunding Bonds, Series 1991:
1,280,000 5.750%, 11/01/98 No Opt. Call A+ 1,291,558
1,330,000 6.000%, 11/01/01 No Opt. Call A+ 1,397,418
2,720,000 6.600%, 11/01/06 11/01 at 102 A+ 2,942,387
Kentucky Economic Development Finance Authority, Hospital System
Refunding and Improvement Revenue Bonds, Series 1997 (Appalachian
Regional Healthcare, Inc. Project):
2,540,000 5.200%, 10/01/04 No Opt. Call BBB 2,559,177
2,670,000 5.300%, 10/01/05 No Opt. Call BBB 2,692,668
1,315,000 5.400%, 10/01/06 No Opt. Call BBB 1,330,898
1,460,000 Kentucky Higher Education Student Loan Corporation, Insured Student No Opt. Call Aaa 1,583,195
Loan Revenue Bonds, 1991 Series B, 6.800%, 6/01/03
180,000 Kentucky Infrastructure Authority Revenue Refunding, Wastewater Revolving No Opt. Call A 186,831
Fund Program, Series C, 5.300%, 6/01/03
Kentucky Infrastructure Authority, Governmental Agencies Program Revenue
Refunding Bonds, 1995 Series H:
1,945,000 5.300%, 8/01/03 No Opt. Call A 2,020,622
675,000 5.400%, 8/01/04 No Opt. Call A 707,738
1,000,000 5.500%, 8/01/05 No Opt. Call A 1,054,890
1,000,000 The Turnpike Authority of Kentucky, Resource Recovery Road Revenue No Opt. Call A+ 1,298,200
Refunding Bonds, 1985 Series A, 9.625%, 7/01/05
Regional Airport Authority of Louisville and Jefferson County, Kentucky,
Airport System Revenue Bonds, 1997 Series A:
1,375,000 5.750%, 7/01/00 No Opt. Call AAA 1,418,230
455,000 5.750%, 7/01/01 No Opt. Call AAA 473,296
1,535,000 5.750%, 7/01/02 No Opt. Call AAA 1,609,770
3,225,000 Mount Sterling, Kentucky, Lease Revenue Bonds (Kentucky League of Cities No Opt. Call Aa 3,370,190
Funding Program), Series 1993A, 5.625%, 3/01/03
10,800,000 City of Owensboro, Kentucky, Electric Light and Power System Revenue Bonds, No Opt. Call AAA 8,396,352
Series 1993A, 0.000%, 1/01/04
270,000 County of Warren, Kentucky, Hospital Revenue Bonds, Series 1998 (Bowling 4/08 at 101 AAA 275,473
Green-Warren County Community Hospital Corporation), 5.000%, 4/01/06
</TABLE>
25
<PAGE>
Portfolio of Investments
Nuveen Flagship Limited Term Municipal Bond Fund (continued)
April 30, 1998
<TABLE>
<CAPTION>
Principal Optional Call Market
Amount Description Provisions* Ratings** Value
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Louisiana - 2.9%
$6,000,000 Parish of East Baton Rouge, State of Louisiana, Pollution Control No Opt. Call A+ $6,225,780
Refunding Revenue Bonds (Hoechst Celanese Corporation Project),
Series 1993, 5.400%, 12/01/02
1,215,000 Louisiana Public Facilities Authority, Hospital Revenue Bonds (Our No Opt. Call AAA 1,230,382
Lady of Lourdes Regional Medical Center Project), Series 1992,
4.900%, 2/01/00
1,170,000 Louisiana Public Facilities Authority, Hospital Revenue Bonds (Womans No Opt. Call A3 1,237,100
Hospital Foundation Project), Series 1992, 6.750%, 10/01/02
2,500,000 Louisiana Offshore Terminal Authority, Deepwater Port Refunding No Opt. Call A 2,639,475
Revenue Bonds (LOOP INC. Project) First Stage, Series 1992B, 6.100%,
9/01/02
Office Facilities Corporation, A Louisiana Not-for-Profit Corporation,
Capital Facilities, Series 1990:
400,000 7.250%, 12/01/99 No Opt. Call BBB+ 419,184
770,000 7.350%, 12/01/00 No Opt. Call BBB+ 826,487
Ouachita Parish, Louisiana, Hospital Service District No. 1 Revenue,
Glenwood Regional Medical Center:
440,000 7.000%, 7/01/98 No Opt. Call A 442,143
425,000 7.000%, 7/01/99 No Opt. Call A 439,616
300,000 7.250%, 7/01/00 No Opt. Call A 318,600
- -----------------------------------------------------------------------------------------------------------------------------------
Maine - 0.4%
1,615,000 Maine Educational Loan Marketing Corporation, Series 1992, Student 5/02 at 101 A 1,710,107
Loan Revenue Refunding Bonds, Subordinate Series 1, 6.600%, 5/01/05
- -----------------------------------------------------------------------------------------------------------------------------------
Maryland - 1.3%
Maryland Energy Financing Administration Limited Obligation Solid Waste
Disposal Revenue Bonds (Wheelabrator Water Technologies Baltimore L.L.C.
Projects) 1996 Series:
2,280,000 5.650%, 12/01/03 No Opt. Call A- 2,388,300
1,000,000 5.850%, 12/01/05 No Opt. Call A- 1,064,420
2,400,000 Northeast Maryland Waste Disposal Authority, Resource Recovery Revenue No Opt. Call AAA 2,705,856
Refunding Bonds (Southwest Resource Recovery Facility), Series 1993,
7.150%, 1/01/04
- -----------------------------------------------------------------------------------------------------------------------------------
Massachusetts - 5.0%
265,000 City of Brockton, Massachusetts, General Obligation Bonds, 5.350%, 6/15/00 No Opt. Call A- 270,682
Massachusetts Educational Financing Authority, Education Loan Revenue
Bonds, Issue E, Series 1995:
875,000 5.500%, 7/01/01 No Opt. Call AAA 895,073
2,680,000 5.700%, 7/01/04 No Opt. Call AAA 2,788,996
Massachusetts Educational Financing Authority, Education Loan Revenue
Bonds, Issue E, Series 1997B:
1,970,000 5.250%, 7/01/06 No Opt. Call AAA 2,031,208
2,775,000 5.350%, 7/01/07 7/06 at 102 AAA 2,875,483
Massachusetts Municipal Wholesale Electric Company, Power Supply System
Revenue Bonds, 1992 Series A:
2,635,000 6.300%, 7/01/00 No Opt. Call Aaa 2,751,204
3,800,000 6.300%, 7/01/00 No Opt. Call AAA 3,967,580
1,000,000 The Commonwealth of Massachusetts, General Obligation Refunding Bonds, No Opt. Call AA- 1,027,290
Series 1992A, 6.100%, 8/01/99
1,000,000 Massachusetts Convention Center Authority, Hynes Convention Center No Opt. Call Aa3 1,006,680
Refunding Bonds, Series 1992, 5.900%, 9/01/98
City of New Bedford, Massachusetts, General Obligation Landfill Closure
Bonds, Series 1993:
600,000 5.250%, 3/01/00 No Opt. Call Baa3 610,242
600,000 5.400%, 3/01/01 No Opt. Call Baa3 614,304
600,000 5.500%, 3/01/02 No Opt. Call Baa3 619,542
2,500,000 The New England Education Loan Marketing Corporation, Student Loan No Opt. Call A1 2,592,625
Refunding Bonds, 1993 Series E, 5.625%, 7/01/04
415,000 City of Springfield, Massachusetts, General Obligation Refunding No Opt. Call A 424,126
Bonds, Series 1992A, 5.800%, 9/01/99
City of Springfield, Massachusetts, General Obligation School Project
Loan, Act of 1948 Bonds, Series B:
815,000 5.800%, 9/01/99 No Opt. Call Baa3 831,854
250,000 6.100%, 9/01/02 No Opt. Call Baa3 264,470
</TABLE>
26
<PAGE>
<TABLE>
<CAPTION>
Principal Optional Call Market
Amount Description Provisions* Ratings** Value
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Michigan - 6.3%
$3,315,000 The Economic Development Corporation of the City of Detroit, Resource No Opt. Call AAA $3,446,274
Recovery Revenue Bonds, Series 1991A, 6.350%, 5/01/00
3,000,000 Greater Detroit Resource Recovery Authority, Michigan, Resource No Opt. Call AAA 3,166,410
Revenue Refunding Bonds, Series 1996-A, 5.500%, 12/13/04
650,000 City of Madison Heights Tax Increment Finance Authority, Michigan, No Opt. Call N/R 695,045
Revenue Bonds Series 1991, 8.500%, 3/15/01
900,000 Michigan Higher Education Student Loan Authority, Student Loan No Opt. Call AAA 934,785
Revenue Bonds, Series XII-E, 6.375%, 10/01/00
2,000,000 Michigan Higher Education Student Loan Authority, Alternative Minimum No Opt. Call Aa1 2,041,140
Tax, 5.400%, 9/01/00
2,700,000 Michigan State Hospital Finance Authority (Michigan), Hospital No Opt. Call AAA 2,768,067
Revenue Refunding Bonds (St. John Hospital), Series 1993A, 5.400%,
5/15/00
3,075,000 Michigan State Hospital Finance Authority, Hospital Revenue Refunding No Opt. Call BBB 3,136,408
Bonds (Gratiot Community Hospital, Alma, Michigan), Series 1995,
5.300%, 10/01/01
1,000,000 Michigan State Hospital Finance Authority, Revenue Refunding Bonds No Opt. Call AA- 1,083,700
(Mercy Health Services Obligated Group), 1997 Series T, 6.000%, 8/15/06
1,505,000 Michigan State Hospital Finance Authority, Hospital Revenue and No Opt. Call BBB 1,538,471
Refunding Bonds (Genesys Regional Medical Center Obligated Group),
Series 1998A, 5.500%, 10/01/08
Michigan State Housing Development Authority, Rental Housing Revenue Bonds,
1995 Series B:
3,085,000 5.450%, 4/01/05 No Opt. Call AAA 3,224,103
3,325,000 5.450%, 10/01/05 6/05 at 102 AAA 3,484,002
4,095,000 Pontiac, Michigan, Hospital Finance Authority, Hospital Revenue 8/00 at 100 BBB- 4,175,385
Refunding, NOMC Obligation Group, 5.800%, 8/01/03
- -----------------------------------------------------------------------------------------------------------------------------------
Mississippi - 0.6%
Mississippi Hospital Equipment and Facilities Authority, Revenue Refunding
Bonds, Series 1995 (Mississippi Baptist Medical Center):
1,690,000 5.350%, 5/01/03 No Opt. Call AAA 1,756,552
1,000,000 5.400%, 5/01/04 No Opt. Call AAA 1,046,350
- -----------------------------------------------------------------------------------------------------------------------------------
Missouri - 0.6%
Missouri State Health & Educational Facilities Authority, Health
Facilities Revenue Refunding, Lutheran Senior Services:
500,000 5.200%, 2/01/04 No Opt. Call N/R 508,030
600,000 5.300%, 2/01/05 No Opt. Call N/R 614,478
600,000 5.400%, 2/01/06 No Opt. Call N/R 612,708
700,000 5.500%, 2/01/07 No Opt. Call N/R 718,270
510,000 The City of St. Louis, Missouri Regional Convention and Sports No Opt. Call N/R 532,848
Complex Authority Convention and Sports Facility Project Bonds,
Series C of 1991, 7.750%, 8/15/01
- -----------------------------------------------------------------------------------------------------------------------------------
Nebraska - 1.0%
5,000,000 Energy America, Natural Gas Revenue Bonds (Nebraska Public Gas Agency No Opt. Call N/R 4,901,400
Project), Series 1998B, 5.450%, 4/15/08
- -----------------------------------------------------------------------------------------------------------------------------------
New Hampshire - 0.5%
505,000 New Hampshire Higher Educational And Health Facilities Authority, No Opt. Call A 537,886
Hospital Revenue Bonds, St. Joseph Hospital Issue, Series 1991,
7.250%, 1/01/01
New Hampshire Housing Finance Authority, Single Family Residential
Mortgage Bonds, 1991 Series D:
330,000 6.200%, 1/01/99 No Opt. Call Aa 333,584
325,000 6.350%, 1/01/00 No Opt. Call Aa 333,346
325,000 6.450%, 1/01/01 No Opt. Call Aa 337,188
890,000 New Hampshire Housing Finance Authority, Multi-Family Housing No Opt. Call A1 892,706
Revenue Refunding Bonds, 1991 Series 1, 6.300%, 7/01/98
</TABLE>
27
<PAGE>
Portfolio of Investments
Nuveen Flagship Limited Term Municipal Bond Fund (continued)
April 30, 1998
<TABLE>
<CAPTION>
Principal Optional Call Market
Amount Description Provisions* Ratings** Value
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
New Jersey - 6.4%
$2,730,000 New Jersey Economic Development Authority Electric Energy Facility No Opt. Call N/R $2,776,328
Revenue Bonds (Vineland Cogeneration Limited Partnership Project),
Series 1992, 6.750%, 6/01/99
New Jersey Health Care Facilities Financing Authority, Revenue and
Refunding Bonds, Capital Health System Obligated Group, Series 1997:
1,745,000 4.700%, 7/01/04 No Opt. Call A- 1,737,601
1,885,000 5.000%, 7/01/05 No Opt. Call A- 1,898,987
1,665,000 5.000%, 7/01/06 No Opt. Call A- 1,668,763
1,620,000 5.000%, 7/01/07 No Opt. Call A- 1,616,938
New Jersey Health Care Facilities Financing Authority, Bayonne Hospital
Obligated Group, Revenue Bonds, Series 1994:
860,000 5.750%, 7/01/00 No Opt. Call AAA 888,639
1,000,000 5.800%, 7/01/01 No Opt. Call AAA 1,044,812
790,000 5.900%, 7/01/02 No Opt. Call AAA 834,860
New Jersey Economic Development Authority, First Mortgage Revenue Bonds
(Franciscan Oaks Project), Series 1997:
1,420,000 5.300%, 10/01/05 No Opt. Call N/R 1,432,056
830,000 5.400%, 10/01/06 No Opt. Call N/R 840,035
4,300,000 New Jersey Economic Development Authority, Insured Revenue Bonds No Opt. Call AAA 4,519,902
(Educational Testing Service Issue), Series 1995B, 5.500%, 5/15/05
New Jersey Educational Facilities Authority, Stevens Institute of
Technology Issue Revenue Bonds, 1992 Series A:
1,155,000 6.000%, 7/01/99 No Opt. Call A- 1,181,657
1,275,000 6.100%, 7/01/00 No Opt. Call A- 1,322,902
995,000 6.200%, 7/01/01 No Opt. Call A- 1,046,919
1,165,000 6.300%, 7/01/02 No Opt. Call A- 1,243,509
New Jersey Higher Educational Facilities Authority, Higher Educational
Facilities Revenue Bonds, Saint Peters College, Issue 1992 Series B:
295,000 6.100%, 7/01/00 No Opt. Call BBB 305,959
355,000 6.200%, 7/01/01 No Opt. Call BBB 373,417
4,995,000 New Jersey Wastewater Treatment Trust, Wastewater Treatment Insured No Opt. Call AAA 5,511,083
Refunding Bonds, Series 1996C, 6.250%, 5/15/05
- -----------------------------------------------------------------------------------------------------------------------------------
New York - 16.7%
Albany Housing Authority, City of Albany, New York, Limited Obligation
Bonds, Series 1995:
500,000 5.100%, 10/01/01 No Opt. Call Baa1 508,930
700,000 5.250%, 10/01/02 No Opt. Call Baa1 715,316
750,000 5.400%, 10/01/03 No Opt. Call Baa1 771,113
750,000 5.500%, 10/01/04 No Opt. Call Baa1 770,963
1,000,000 5.600%, 10/01/05 No Opt. Call Baa1 1,029,590
500,000 5.700%, 10/01/06 10/05 at 102 Baa1 516,260
700,000 5.850%, 10/01/07 10/05 at 102 Baa1 718,872
City of Jamestown, Chautauqua County, New York, Public Improvement
(Serial) Bonds, 1991 Series A:
150,000 7.000%, 3/15/04 No Opt. Call Baa2 167,726
750,000 7.000%, 3/15/05 No Opt. Call Baa2 846,765
1,000,000 Metropolitan Transportation Authority (New York), Transit Facilities No Opt. Call BBB+ 1,075,170
Service Contract Bonds, Series N, 6.625%, 7/01/02
1,280,000 The City of New York (New York), General Obligation Bonds, Fiscal 5/98 at 101 1/2 Aaa 1,361,805
1988 Series A, 8.250%, 11/01/99
2,750,000 New York City General Obligation Bonds, Fiscal 1991 Series B, No Opt. Call A3 3,351,205
8.250%, 6/01/06
1,000,000 The City of New York, General Obligation Bonds, Fiscal 1996 Series E, No Opt. Call A3 1,089,200
6.500%, 2/15/04
The City of New York, General Obligation Bonds, Fiscal 1996 Series G:
3,000,000 5.700%, 2/01/03 No Opt. Call A3 3,139,590
500,000 5.750%, 2/01/06 No Opt. Call A3 527,760
3,000,000 The City of New York, General Obligation Bonds, Fiscal 1997 Series H, No Opt. Call A3 3,109,110
5.400%, 8/01/04
4,000,000 The City of New York, General Obligation Bonds, Fiscal 1995 Series F, No Opt. Call Aaa 4,254,160
6.100%, 2/15/02
</TABLE>
28
<PAGE>
<TABLE>
<CAPTION>
Principal Optional Call Market
Amount Description Provisions* Ratings** Value
- ---------------------------------------------------------------------------------------------------------------------------------
New York (continued)
<C> <S> <C> <C> <C>
The City of New York, General Obligation Bonds, Fiscal 1997
Series I:
$ 5,000,000 5.625%, 4/15/05 No Opt. Call A3 $5,235,450
5,000,000 6.000%, 4/15/09 4/07 at 101 A3 5,378,250
1,000,000 Dormitory Authority of the State of New York, State University 5/00 at 102 A-- 1,075,980
Educational Facilities Revenue Bonds, Series 1990A, 7.400%,
5/15/01
4,155,000 Dormitory Authority of the State of New York, Revenue Bonds, No Opt. Call BBB+ 4,286,298
City University Issue, Series U, 5.875%, 7/01/00
2,900,000 Dormitory Authority of the State of New York, Department of No Opt. Call BBB+ 3,088,732
Health of the State of New York, Refunding Bonds, 1990 Issue,
6.750%, 7/01/01
Dormitory Authority of the State of New York, State University
Educational Facilities Revenue Bonds, Series 1995A:
6,500,000 5.250%, 5/15/01 No Opt. Call A-- 6,660,225
2,000,000 6.500%, 5/15/05 No Opt. Call A-- 2,211,760
1,000,000 Dormitory Authority of the State of New York, State University 5/99 at 102 A--*** 1,051,020
Educational Facilities, Revenue Bonds, Series 1989A, 7.000%,
5/15/02 (Pre-refunded to 5/15/99)
Dormitory Authority of the State of New York, NYACK Hospital,
Revenue Bonds, Series 1996:
1,000,000 5.500%, 7/01/00 No Opt. Call Baa 1,015,730
1,000,000 6.000%, 7/01/06 No Opt. Call Baa 1,061,840
3,315,000 Dormitory Authority of the State of New York City, University No Opt. Call BBB+ 3,525,005
System Revenue Bonds, 1996 Series 2, 6.000%, 7/01/04
5,000,000 New York State Housing Finance Agency, Health Facilities No Opt. Call BBB+ 5,277,450
Revenue Bonds, (New York City), 1996 Series A Refunding,
5.875%, 5/01/04
615,000 New York State Medical Care Facilities Finance Agency, Mental 6/98 at 102 A-- 629,336
Health Services, Facilities Improvement Revenue Bonds, Series
1987A, 8.250%, 2/15/99
New York State Urban Development Corporation, Project Revenue
Bonds (Center for Industrial Innovation), 1995 Refunding
Series:
2,405,000 5.300%, 1/01/04 No Opt. Call BBB+ 2,463,898
1,265,000 6.250%, 1/01/05 No Opt. Call BBB+ 1,361,064
695,000 New York State Urban Development Corporation, Correctional No Opt. Call BBB+ 706,912
Facilities Revenue Bonds, Series G, 6.500%, 1/01/99
1,000,000 New York State Urban Development Corporation, Correctional No Opt. Call BBB+ 1,021,650
Capital Facilities Revenue Bonds, 1993 Refunding Series,
5.250%, 1/01/02
Onondaga County, Resource Recovery Agency, System Revenue
Bonds (Development Costs-1992 Series):
570,000 5.900%, 5/01/98 No Opt. Call Baa1 570,011
480,000 6.100%, 5/01/99 No Opt. Call Baa1 485,678
630,000 6.200%, 5/01/00 No Opt. Call Baa1 644,156
3,700,000 The Port Authority of New York and New Jersey, Special Project No Opt. Call N/R 4,161,501
Bonds, Series 4, KIAC Partners Project, 7.000%, 10/01/07
3,035,000 The Port Authority of New York and New Jersey, Special Project No Opt. Call AAA 3,289,212
Bonds, Series 6, JFK International Air Terminal LLC Project,
6.000%, 12/01/05
- ---------------------------------------------------------------------------------------------------------------------------------
North Carolina -- 1.2%
5,475,000 North Carolina Municipal Power Agency Number 1, Catawba 1/03 at 102 A-- 5,820,035
Electric Revenue Bonds, Series 1992, 6.000%, 1/01/05
- ---------------------------------------------------------------------------------------------------------------------------------
Ohio -- 7.2%
City of Barberton, Ohio, Hospital Facilities Revenue Bonds,
Series 1992 (The Barberton Citizens Hospital Company Project):
500,000 6.250%, 1/01/99 No Opt. Call A 508,005
750,000 6.400%, 1/01/00 No Opt. Call A 778,185
500,000 6.550%, 1/01/01 No Opt. Call A 528,500
</TABLE>
29
<PAGE>
Portfolio of Investments
Nuveen Flagship Limited Term Municipal Bond Fund (continued)
April 30, 1998
<TABLE>
<CAPTION>
Principal Optional Call Market
Amount Description Provisions* Ratings** Value
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Ohio (continued)
City of Cambridge, Ohio, Hospital Revenue Refunding Bonds, Series 1991,
(Guernsey Memorial Hospital Project):
$ 545,000 7.500%, 12/01/98 No Opt. Call BBB $ 555,922
595,000 7.650%, 12/01/99 No Opt. Call BBB 625,678
640,000 7.750%, 12/01/00 No Opt. Call BBB 691,021
680,000 7.850%, 12/01/01 No Opt. Call BBB 750,910
Cleveland-Cuyahoga County Port Authority Subordinate Refunding Revenue
Bonds, Series 1997 (Rock and Roll Hall of Fame and Museum Project):
850,000 5.000%, 12/01/01 No Opt. Call N/R 863,617
1,000,000 5.100%, 12/01/02 No Opt. Call N/R 1,020,010
750,000 5.350%, 12/01/04 No Opt. Call N/R 774,735
335,000 5.600%, 12/01/06 No Opt. Call N/R 350,782
260,000 County of Cuyahoga, Ohio, Health Care Facilities Revenue Bonds, Series No Opt. Call N/R 270,795
1990 (Altenheim Project), 8.750%, 6/01/99
County of Cuyahoga, Ohio, Hospital Revenue Bonds (Meridia Health System),
Series 1995:
500,000 5.750%, 8/15/00 No Opt. Call AAA 518,035
795,000 5.850%, 8/15/01 No Opt. Call AAA 834,003
735,000 5.950%, 8/15/02 No Opt. Call AAA 781,209
1,175,000 County of Erie, Ohio Hospital Improvement and Refunding Revenue Bonds, No Opt. Call A 1,191,991
Series 1992 (Firelands Community Hospital Project), 6.100%, 1/01/99
County of Lucas, Ohio, Hospital Facilities Revenue Bonds, Series 1991
(Flower Memorial Hospital):
700,000 7.200%, 12/01/98 No Opt. Call N/R 713,615
685,000 5.500%, 12/01/99 No Opt. Call N/R 701,282
County of Lucas, Ohio, Hospital Facilities Revenue Bonds, Series 1993
(Flower Hospital):
370,000 5.800%, 12/01/01 No Opt. Call N/R 387,682
790,000 5.900%, 12/01/02 No Opt. Call N/R 837,250
435,000 6.000%, 12/01/03 No Opt. Call N/R 467,003
5,195,000 County of Lucas, Ohio, Hospital Revenue Refunding Bonds, Series 1996 No Opt. Call AAA 5,650,498
(ProMedica Healthcare Obligated Group), 6.000%, 11/15/05
1,000,000 Miami County Ohio Hospital Facilities Revenue, Refunding & Improvement, No Opt. Call BBB 1,073,390
Upper Valley Medical Center, Series C, 6.000%, 5/15/06
1,040,000 State of Ohio, State Economic Development Revenue Bonds (Ohio 6/98 at 102 A- 1,063,348
Enterprise Bond Fund), Series 1991-2 and Series 1991-3 (Superior Forge
& Steel Corporation), 7.250%, 6/01/01
3,825,000 State of Ohio, Elementary and Secondary Education Capital Facilities No Opt. Call AAA 4,023,556
Bonds, Series 1995A, 5.700%, 6/01/02
County of Sandusky, Ohio, Hospital Facilities Revenue Refunding Bonds
Series 1998 (Memorial Hospital):
910,000 4.500%, 1/01/01 No Opt. Call BBB- 903,967
1,030,000 4.600%, 1/01/02 No Opt. Call BBB- 1,021,544
1,375,000 4.700%, 1/01/03 No Opt. Call BBB- 1,362,034
1,460,000 4.800%, 1/01/04 No Opt. Call BBB- 1,445,999
1,030,000 4.900%, 1/01/05 No Opt. Call BBB- 1,019,607
830,000 5.000%, 1/01/06 No Opt. Call BBB- 821,360
500,000 5.050%, 1/01/07 No Opt. Call BBB- 493,925
750,000 5.100%, 1/01/09 1/08 at 102 BBB- 733,478
225,000 County of Shelby, Ohio, Hospital Facilities Revenue Refunding and No Opt. Call BBB 226,604
Improvement Bonds, Series 1992 (The Shelby County Memorial Hospital
Association), 6.100%, 9/01/98
- -----------------------------------------------------------------------------------------------------------------------------------
Oklahoma - 0.7%
3,120,000 Oklahoma Industries Authority, Hospital Revenue Bonds (Deaconess Health No Opt. Call BBB 3,161,527
Care Corporation Project), Series 1997A, 5.250%, 10/01/07
- -----------------------------------------------------------------------------------------------------------------------------------
Pennsylvania - 9.9%
5,000,000 County of Allegheny, Pennsylvania, Airport Revenue Refunding Bonds, No Opt. Call AAA 5,235,150
Series 1997A (Pittsburgh International Airport), 5.500%, 1/01/05
</TABLE>
30
<PAGE>
<TABLE>
<CAPTION>
Principal Optional Call Market
Amount Description Provisions* Ratings** Value
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Pennsylvania (continued)
Allegheny County Hospital Development Authority (Allegheny County,
Pennsylvania) Hospital Revenue Bonds, Series 1991 A, St. Margaret
Memorial Hospital):
$ 400,000 6.600%, 10/01/98 No Opt. Call BBB+ $ 404,584
400,000 6.700%, 10/01/99 No Opt. Call BBB+ 415,360
400,000 6.800%, 10/01/00 No Opt. Call BBB+ 424,108
3,830,000 Delaware County Authority (Pennsylvania), Health Facilities Revenue 11/05 at 100 BBB+*** 4,169,606
Bonds, Series 1993A (Mercy Health Corporation of Southeastern
Pennsylvania Obligated Group), 6.000%, 11/15/07 (Pre-refunded to
11/15/05)
4,000,000 Delaware County Industrial Development Authority (Pennsylvania) No Opt. Call A 4,216,280
Refunding Revenue Bonds, Series A 1997 (Resource Recovery Facility),
6.000%, 1/01/03
1,500,000 Monroeville, Pennsylvania Hospital Authority, Hospital Revenue No Opt. Call A- 1,585,605
Refunding, Forbes Health System, 5.750%, 10/01/05
655,000 Montgomery County Higher Education and Health Authority (Pennsylvania) No Opt. Call BBB+ 680,597
Hospital Facilities Revenue Bonds Series of 1991 (Pottstown Memorial
Medical Center Project), 7.000%, 11/15/99
2,500,000 Pennsylvania Intergovernmental Cooperation Authority, Special Tax No Opt. Call AAA 2,597,075
Revenue Bonds (City of Philadelphia Funding Program), Series of
1992, 6.000%, 6/15/00
City of Philadelphia, Pennsylvania Gas Works Revenue Bonds, Fourteenth
Series:
3,600,000 5.600%, 7/01/99 No Opt. Call Baa1 3,662,460
3,425,000 5.700%, 7/01/00 No Opt. Call Baa1 3,521,654
1,390,000 Philadelphia Hospital and Higher Educational Facilities Authority of No Opt. Call BBB+ 1,410,516
Philadelphia, Revenue Refunding Bonds, Series of 1992
(Philadelphia MR Project), 5.300%, 8/01/99
3,990,000 The School District of Philadelphia, Pennsylvania, General Obligation No Opt. Call AAA 4,185,390
Bonds, Series A of 1994, 5.450%, 7/01/04
1,080,000 The School District of Philadelphia, Pennsylvania, General Obligation No Opt. Call AAA 1,104,678
Bonds, Series A of 1992, 6.050%, 5/15/99
5,000,000 City of Philadelphia, Pennsylvania, Water and Wastewater Revenue No Opt. Call AAA 5,155,550
Bonds, Series 1993, 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+ 3,638,779
2,020,000 6.050%, 7/01/04 No Opt. Call BBB+ 2,131,787
2,000,000 6.150%, 7/01/05 No Opt. Call BBB+ 2,127,700
- -----------------------------------------------------------------------------------------------------------------------------------
Rhode Island - 0.9%
4,035,000 Rhode Island Housing and Mortgage Finance Corporation, Multi-Family No Opt. Call AAA 4,169,366
Housing Bonds, 1995 Series A, 5.350%, 7/01/03
- -----------------------------------------------------------------------------------------------------------------------------------
Tennessee - 1.2%
The Health and Educational Facilities Board of the Metropolitan
Government of Nashville and Davidson County, Tennessee, Revenue R
Refunding Bonds, Series 1998:
400,000 5.150%, 7/01/05 7/03 at 102 N/R 394,788
400,000 5.250%, 7/01/06 7/03 at 102 N/R 395,267
500,000 5.300%, 7/01/07 7/03 at 102 N/R 493,540
500,000 5.350%, 7/01/08 7/03 at 102 N/R 493,030
500,000 5.400%, 7/01/09 7/03 at 102 N/R 496,734
3,250,000 The Industrial Development Board of the Metropolitan Government of No Opt. Call N/R 3,394,170
Nashville and Davidson County (Tennessee), Industrial Development
Revenue Refunding and Improvement Bonds (Osco Treatment), 6.000%,
5/01/03
- -----------------------------------------------------------------------------------------------------------------------------------
Texas - 2.5%
1,575,000 Anderson County, Texas, Refunding Revenue Bonds (Coffield Prison Farm No Opt. Call AAA 1,608,610
Project), Series 1992 Supported by a Lease with the Texas Department
of Criminal Justice, 5.300%, 3/15/00
Brazos Higher Education Authority, Inc., Student Loan Revenue Refunding
Bonds, Series 1993A-1:
1,510,000 5.900%, 12/01/00 No Opt. Call Aaa 1,562,940
1,075,000 6.050%, 12/01/01 No Opt. Call Aaa 1,123,632
</TABLE>
31
<PAGE>
Portfolio of Investments
Nuveen Flagship Limited Term Municipal Bond Fund (continued)
April 30, 1998
<TABLE>
<CAPTION>
Principal Optional Call Market
Amount Description Provisions* Ratings** Value
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Texas (continued)
$ 1,325,000 North Central Texas Health Facilities Development Corporation, Health 2/01 at 100 BBB $ 1,378,847
Facilities Development Revenue Bonds (C.C. Young Memorial Home
Project), Series 1996, 5.700%, 2/15/03
1,000,000 The City of Pasadena (Texas) Industrial Development Corporation, 10/98 at 100 A 1,009,440
Economic Development Revenue Bonds Series 1991 (Universities
Space Research Association Lunar and Planetary Institute
Project), 7.050%, 10/01/01
The State of Texas, Texas College Student Loan Senior Lien Revenue
Bonds, Series 1991:
590,000 6.900%, 4/01/99 No Opt. Call A 603,321
565,000 7.000%, 4/01/00 No Opt. Call A 587,610
1,190,000 7.100%, 4/01/01 No Opt. Call A 1,256,865
Tyler Health Facilities Development Corporation, Hospital Revenue Bonds
(Mother Frances Hospital Regional Health Care Center Project), Series
1997A:
1,650,000 5.125%, 7/01/05 7/02 at 100 Baa2 1,651,715
1,100,000 5.200%, 7/01/06 7/02 at 100 Baa2 1,100,527
- ------------------------------------------------------------------------------------------------------------------------------------
Vermont - 0.4%
Vermont Student Assistance Corporation Education Loan Finance Program
Revenue Bonds 1992 Series A-3:
1,000,000 5.900%, 12/15/00 No Opt. Call AAA 1,031,790
1,000,000 6.050%, 12/15/01 No Opt. Call AAA 1,040,600
- ------------------------------------------------------------------------------------------------------------------------------------
Virginia - 1.3%
2,850,000 Newport News Redevelopment and Housing Authority, Multifamily Housing 5/05 at 102 AAA 2,992,015
Revenue Bonds (Fredericksburg-Oxford Project), Series 1997A, 5.550%,
5/01/27
3,000,000 Virginia Public Building Authority, State Building Revenue Bonds, 8/04 at 101 AA*** 3,308,430
Series 1994A, 6.250%, 8/01/15 (Pre-refunded to 8/01/04)
- ------------------------------------------------------------------------------------------------------------------------------------
Washington - 1.0%
1,670,000 Washington Health Care Facilities Authority, Revenue Bonds, Series 1992 No Opt. Call AAA 1,773,440
(The Childrens Hospital and Medical Center, Seattle), 6.000%, 10/01/02
3,000,000 Washington Public Power Supply System, Nuclear Project No. 1 Refunding No Opt. Call Aa1 3,175,290
Revenue Bonds, Series 1993A, 5.700%, 7/01/06
- ------------------------------------------------------------------------------------------------------------------------------------
Washington, D.C. - 0.1%
500,000 District of Columbia Redevelopment Land Agency (Washington, D.C.), No Opt. Call Baa 504,320
Sports Arena Special Tax Revenue Bonds (Series 1996), 5.300%, 11/01/99
- ------------------------------------------------------------------------------------------------------------------------------------
West Virginia - 1.9%
7,000,000 The County Commission of Pleasants County, West Virginia, Pollution No Opt. Call A 6,898,290
Control Revenue Bonds (West Penn Power Company Pleasants Station
Project), 1998 Series D, 4.700%, 11/01/07
2,000,000 West Virginia Public Energy Authority, Energy Revenue Bonds (Morgantown 1/06 at 102 AA+ 2,008,360
Energy Associates Project), 1990 Series A, 5.050%, 7/01/08
- ------------------------------------------------------------------------------------------------------------------------------------
Wisconsin - 0.5%
Wisconsin Health and Educational Facilities Authority, Revenue Bonds,
Series 1993A (Lutheran Hospital-La Crosse, Inc.):
1,100,000 5.200%, 2/15/00 No Opt. Call AAA 1,119,393
1,155,000 5.300%, 2/15/01 No Opt. Call AAA 1,185,457
- ------------------------------------------------------------------------------------------------------------------------------------
$452,110,000 Total Investments - (cost $449,002,163) - 98.3% 464,606,518
============------------------------------------------------------------------------------------------------------------------------
Other Assets Less Liabilities - 1.7% 8,179,990
---------------------------------------------------------------------------------------------------------------------
Net Assets - 100% $472,786,508
=====================================================================================================================
</TABLE>
* Optional Call Provisions (not covered by the report of independent public
accountants): Dates (month and year) and prices of the earliest optional
call or redemption. There may be other call provisions at varying prices at
later dates.
** Ratings (not covered by the report of independent public accountants):
Using the higher of Standard & Poor's or Moody's rating.
*** 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.
See accompanying notes to financial statements.
32
<PAGE>
Statement of Net Assets
April 30, 1998
<TABLE>
<CAPTION>
All-American Intermediate Limited Term
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Assets
Investments in municipal securities, at market value (note 1) $309,218,001 $45,227,308 $464,606,518
Cash 2,903,973 256,854 2,321,947
Receivables:
Interest 5,079,934 739,142 7,730,276
Investments sold 7,567,300 105,000 685,000
Shares sold 1,337,403 368,915 411,531
Other assets 91,562 2,341 27,772
- ---------------------------------------------------------------------------------------------------------------------------
Total assets 326,198,173 46,699,560 475,783,044
- ---------------------------------------------------------------------------------------------------------------------------
Liabilities
Payables:
Investments purchased 11,918,204 -- --
Shares redeemed 471,618 20,200 810,216
Accrued expenses:
Management fees (note 6) 126,218 14,084 171,127
12b-1 distribution and service fees (notes 1 and 6) 84,077 9,125 88,227
Other 41,749 5,404 51,269
Dividends payable 1,312,086 176,327 1,875,697
- ---------------------------------------------------------------------------------------------------------------------------
Total liabilities 13,953,952 225,140 2,996,536
- ---------------------------------------------------------------------------------------------------------------------------
Net assets (note 7) $312,244,221 $46,474,420 $472,786,508
===========================================================================================================================
Class A Shares (note 1)
Net assets $236,690,772 $42,338,909 $438,133,771
Shares outstanding 20,903,984 3,891,691 40,572,636
Net asset value and redemption price per share $ 11.32 $ 10.88 $ 10.80
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) $ 11.82 $ 11.22 $ 11.08
===========================================================================================================================
Class B Shares (note 1)
Net assets $ 8,706,484 N/A N/A
Shares outstanding 768,605 N/A N/A
Net asset value, offering and redemption price per share $ 11.33 N/A N/A
===========================================================================================================================
Class C Shares (note 1)
Net assets $ 62,336,486 $ 3,533,134 $ 33,951,550
Shares outstanding 5,511,780 324,552 3,146,798
Net asset value, offering and redemption price per share $ 11.31 $ 10.89 $ 10.79
===========================================================================================================================
Class R Shares (note 1)
Net assets $ 4,510,479 $ 602,377 $ 701,187
Shares outstanding 398,294 55,451 65,020
Net asset value, offering and redemption price per share $ 11.32 $ 10.86 $ 10.78
===========================================================================================================================
N/A--Intermediate and Limited Term are not authorized to issue Class B Shares.
</TABLE>
See accompanying notes to financial statements.
33
<PAGE>
Statement of Operations
Year Ended April 30, 1998
<TABLE>
<CAPTION>
All-American Intermediate Limited Term
- ----------------------------------------------------------------------------------------------------------------------------
Investment Income (note 1) $17,694,074 $2,482,982 $25,361,069
============================================================================================================================
<S> <C> <C> <C>
Expenses
Management fees (note 6) 1,429,247 223,656 2,018,209
12b-1 service fees--Class A (notes 1 and 6) 448,070 82,472 870,789
12b-1 distribution and service fees--Class B (notes 1 and 6) 37,097 N/A N/A
12b-1 distribution and service fees--Class C (notes 1 and 6) 444,993 22,125 155,040
Shareholders' servicing agent fees and expenses 139,272 34,462 274,935
Custodian's fees and expenses 67,246 51,207 99,449
Trustees' fees and expenses (note 6) 5,300 1,360 4,911
Professional fees 20,664 11,355 45,965
Shareholders' reports--printing and mailing expenses 66,543 19,864 128,808
Federal and state registration fees 29,586 30,624 24,948
Other expenses 13,950 598 26,306
- ----------------------------------------------------------------------------------------------------------------------------
Total expenses before expense reimbursement 2,701,968 477,723 3,649,360
Expense reimbursement (note 6) -- (109,859) --
- ----------------------------------------------------------------------------------------------------------------------------
Net expenses 2,701,968 367,864 3,649,360
- ----------------------------------------------------------------------------------------------------------------------------
Net investment income 14,992,106 2,115,118 21,711,709
- ----------------------------------------------------------------------------------------------------------------------------
Realized and Unrealized Gain from Investments
Net realized gain from investment transactions (notes 1 and 4) 1,444,589 445,080 1,183,699
Net change in unrealized appreciation or depreciation of investments 11,090,769 1,234,467 6,803,680
- ----------------------------------------------------------------------------------------------------------------------------
Net gain from investments 12,535,358 1,679,547 7,987,379
- ----------------------------------------------------------------------------------------------------------------------------
Net increase in net assets from operations $27,527,464 $3,794,665 $29,699,088
============================================================================================================================
N/A--Intermediate and Limited Term are not authorized to issue Class B Shares.
See accompanying notes to financial statements.
</TABLE>
34
<PAGE>
Statement of Changes in Net Assets
<TABLE>
<CAPTION>
All-American Intermediate Limited Term
------------------------------ ------------------------------ -----------------------------
Year Ended 11 Months Ended Year Ended 11 Months Ended Year Ended 11 Months Ended
4/30/98 4/30/97* 4/30/98 4/30/97** 4/30/98 4/30/97***
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Operations
Net investment income $ 14,992,106 $ 13,301,910 $ 2,115,118 $ 2,147,178 $ 21,711,709 $ 21,032,242
Net realized gain from
investment transactions
(notes 1 and 4) 1,444,589 2,249,650 445,080 147,832 1,183,699 1,658,088
Net change in unrealized
appreciation
or depreciation of
investments 11,090,769 4,859,517 1,234,467 801,793 6,803,680 116,950
- -----------------------------------------------------------------------------------------------------------------------------------
Net increase in net assets
from operations 27,527,464 20,411,077 3,794,665 3,096,803 29,699,088 22,807,280
- -----------------------------------------------------------------------------------------------------------------------------------
Distributions to
Shareholders (note 1)
From undistributed net
investment income:
Class A (11,812,757) (10,934,899) (1,964,556) (2,059,165) (20,496,170) (19,952,270)
Class B (172,772) (3,405) N/A N/A N/A N/A
Class C (2,809,735) (2,349,107) (122,737) (74,318) (1,226,668) (809,432)
Class R (207,336) (1,421) (26,788) (4,137) (12,840) (286)
From accumulated net
realized gains
from investment
transactions:
Class A (1,796,387) (1,174,852) (1,421) - - -
Class B (34,421) - N/A N/A N/A N/A
Class C (476,161) (285,764) (104) - - -
Class R (30,203) - (19) - - -
- ------------------------------------------------------------------------------------------------------------------------------------
Decrease in net assets
from distributions to
shareholders (17,339,772) (14,749,448) (2,115,625) (2,137,620) (21,735,678) (20,761,988)
- ------------------------------------------------------------------------------------------------------------------------------------
Fund Share Transactions
(note 2)
Net proceeds from sale of
shares 76,968,241 45,105,197 8,010,746 7,641,512 102,797,645 55,204,267
Net proceeds from shares
issued to shareholders
due to reinvestment of
distributions 9,893,852 6,771,634 1,256,923 1,250,991 13,729,912 12,418,014
- ------------------------------------------------------------------------------------------------------------------------------------
86,862,093 51,876,831 9,267,669 8,892,503 116,527,557 67,622,281
- ------------------------------------------------------------------------------------------------------------------------------------
Cost of shares redeemed (57,124,785) (40,524,782) (8,387,774) (13,864,964) (100,696,272) (125,247,208)
- ------------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in
net assets from Fund share
transactions 29,737,308 11,352,049 879,895 (4,972,461) 15,831,285 (57,624,927)
- ------------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in
net assets 39,925,000 17,013,678 2,558,935 (4,013,278) 23,794,695 (55,579,635)
Net assets at the
beginning of year 272,319,221 255,305,543 43,915,485 47,928,763 448,991,813 504,571,448
- ------------------------------------------------------------------------------------------------------------------------------------
Net assets at the end of
year $312,244,221 $272,319,221 $46,474,420 $ 43,915,485 $ 472,786,508 $ 448,991,813
====================================================================================================================================
Balance of undistributed
net investment income at
the end of year $ 2,584 $ 13,078 $ 10,595 $ 9,558 $ 990,831 $ 1,014,800
====================================================================================================================================
</TABLE>
* Information represents eight months of Flagship All-American and
three months of All-American (see note 1).
** Information represents eight months of Flagship Intermediate and three
months of Intermediate (see note 1).
*** Information represents eight months of Flagship Limited Term and three
months of Limited Term (see note 1).
N/A - Intermediate and Limited Term are not authorized to issue Class B Shares.
See accompanying notes to financial statements.
35
<PAGE>
Notes to Financial Statements
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 ("All-American"), the Nuveen Flagship Intermediate Municipal Bond Fund
("Intermediate") and the Nuveen Flagship Limited Term Municipal Bond Fund
("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 the when-issued and delayed delivery purchase commitments. At
April 30, 1998, All-American had outstanding when-issued and delayed delivery
purchase commitments of $11,918,204. Intermediate and Limited Term had no such
outstanding purchase commitments.
Investment 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.
36
<PAGE>
Federal Income Taxes
Each Fund is a separate taxpayer for federal income tax purposes. Each Fund
intends to comply with the requirements of the Internal Revenue Code applicable
to regulated investment companies and to distribute all of its tax-exempt net
investment income, in addition to any significant amounts of net realized
capital gains and/or market discount from investment transactions. The Funds
currently consider significant net realized capital gains and/or market discount
as amounts in excess of $.001 per share. Furthermore, each Fund intends to
satisfy conditions which will enable interest from municipal securities, which
is exempt from regular federal income tax, to retain such tax-exempt status when
distributed to the shareholders of the Funds. All monthly tax-exempt income
dividends paid during the fiscal year ended April 30, 1998, have been designated
Exempt Interest Dividends. Net realized capital gain and market discount
distributions are subject to federal taxation.
Flexible Sales Charge Program
Each Fund offers Class A, C and R Shares. 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 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 fiscal year ended April 30, 1998.
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.
37
<PAGE>
Notes to Financial Statements (continued)
<TABLE>
<CAPTION>
2. Fund Shares
Transactions in Fund shares were as follows:
All-American
---------------------------------------------------------
Year Ended 11 Months Ended
4/30/98 4/30/97*
---------------------------------------------------------
Shares Amount Shares Amount
- --------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Shares sold:
Class A 4,008,652 $ 45,606,077 2,917,181 $ 31,668,207
Class B 700,155 7,946,597 65,162 712,816
Class C 1,301,462 14,740,803 1,153,656 12,540,237
Class R 771,291 8,674,764 16,754 183,937
Shares issued to shareholders due
to reinvestment of distributions:
Class A 660,598 7,458,579 514,027 5,592,134
Class B 9,097 103,693 24 265
Class C 188,101 2,120,043 108,469 1,178,627
Class R 18,643 211,537 56 608
- --------------------------------------------------------------------------------------------------------
7,657,999 86,862,093 4,775,329 51,876,831
- --------------------------------------------------------------------------------------------------------
Shares redeemed:
Class A (3,632,808) (40,915,436) (3,061,374) (33,300,392)
Class B (5,833) (66,678) -- --
Class C (1,013,258) (11,466,412) (665,228) (7,224,390)
Class R (408,450) (4,676,259) -- --
- --------------------------------------------------------------------------------------------------------
(5,060,349) (57,124,785) (3,726,602) (40,524,782)
- --------------------------------------------------------------------------------------------------------
Net increase 2,597,650 $ 29,737,308 1,048,727 $ 11,352,049
========================================================================================================
*Information represents eight months of Flagship All-American and three
months of All-American (see note 1).
Intermediate
-----------------------------------------------------
Year Ended 11 Months Ended
4/30/98 4/30/97*
-----------------------------------------------------
Shares Amount Shares Amount
- --------------------------------------------------------------------------------------------------------
Shares sold:
Class A 554,517 $ 6,064,556 539,437 $ 5,639,771
Class C 167,492 1,829,477 145,976 1,523,605
Class R 10,730 116,713 44,829 478,136
Shares issued to shareholders due
to reinvestment of distributions:
Class A 107,654 1,165,426 118,796 1,215,858
Class C 7,941 86,053 3,777 34,796
Class R 500 5,444 32 337
- --------------------------------------------------------------------------------------------------------
848,834 9,267,669 852,847 8,892,503
- --------------------------------------------------------------------------------------------------------
Shares redeemed:
Class A (678,166) (7,363,971) (1,302,182) (13,627,224)
Class C (93,422) (1,016,745) (22,717) (237,740)
Class R (640) (7,058) -- --
- --------------------------------------------------------------------------------------------------------
(772,228) (8,387,774) (1,324,899) (13,864,964)
- --------------------------------------------------------------------------------------------------------
Net increase (decrease) 76,606 $ 879,895 (472,052) $ (4,972,461)
=========================================================================================================
*Information represents eight months of Flagship Intermediate and three
months of Intermediate (see note 1).
</TABLE>
38
<PAGE>
<TABLE>
Limited Term
--------------------------------------------------------
Year Ended 11 Months Ended
4/30/98 4/30/97*
--------------------------------------------------------
Shares Amount Shares Amount
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Shares sold:
Class A 7,703,171 $ 83,615,063 4,064,504 $ 43,309,184
Class C 1,703,471 18,465,192 1,111,314 11,854,862
Class R 65,900 717,390 3,763 40,221
Shares issued to shareholders due to reinvestment of distributions:
Class A 1,182,240 12,786,447 1,125,302 11,989,359
Class C 86,601 936,081 40,213 428,533
Class R 680 7,384 11 122
- ---------------------------------------------------------------------------------------------------------------------------------
10,742,063 116,527,557 6,345,107 67,622,281
- ---------------------------------------------------------------------------------------------------------------------------------
Shares redeemed:
Class A (8,422,781) (91,261,871) (11,367,265) (121,107,007)
Class C (865,221) (9,376,253) (388,996) (4,140,201)
Class R (5,334) (58,148) -- --
- ---------------------------------------------------------------------------------------------------------------------------------
(9,293,336) (100,696,272) (11,756,261) (125,247,208)
- ---------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) 1,448,727 $ 15,831,285 (5,411,154) $ (57,624,927)
=================================================================================================================================
</TABLE>
*Information represents eight months of Flagship Limited Term and three
months of Limited Term (see note 1).
3. Distributions to Shareholders
On May 8, 1998, the Funds declared dividend distributions from their tax-exempt
net investment income which were paid on June 1, 1998, to shareholders of record
on May 8, 1998, as follows:
<TABLE>
<CAPTION>
All-American Intermediate Limited Term
- ---------------------------------------------------------------------------------------------------------------------------------
Dividend per share:
<S> <C> <C> <C>
Class A $.0490 $.0420 $.0425
Class B .0420 N/A N/A
Class C .0440 .0370 .0395
Class R .0510 .0435 .0445
=================================================================================================================================
</TABLE>
N/A-Intermediate and Limited Term are not authorized to issue Class B Shares.
4. Securities Transactions
Purchases and sales (including maturities) of investments in municipal
securities and temporary municipal investments for the fiscal year ended
April 30, 1998, were as follows:
<TABLE>
<CAPTION>
All-American Intermediate Limited Term
- --------------------------------------------------------------------------------
Purchases:
<S> <C> <C> <C>
Investments in municipal securities $84,058,362 $ 8,718,382 $143,131,970
Temporary municipal investments 40,550,000 5,200,000 35,300,000
Sales:
Investments in municipal securities 57,040,922 10,910,056 136,821,408
Temporary municipal investments 40,550,000 5,200,000 35,300,000
================================================================================
</TABLE>
At April 30, 1998, 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, 1998, Limited Term had an unused capital loss carryforward of
$3,968,888, available for federal income tax purposes to be applied against
future capital gains, if any. If not applied, the carryforward will expire in
the year 2003.
39
<PAGE>
Notes to Financial Statements (continued)
5. Unrealized Appreciation (Depreciation)
Gross unrealized appreciation and gross unrealized depreciation of investments
at April 30, 1998, were as follows:
<TABLE>
<CAPTION>
All-American Intermediate Limited Term
- ---------------------------------------------------------------------------
Gross unrealized:
<S> <C> <C> <C>
appreciation $23,793,953 $2,689,514 $16,196,241
depreciation (278,378) (76,901) (591,886)
- ---------------------------------------------------------------------------
Net unrealized appreciation $23,515,575 $2,612,613 $15,604,355
===========================================================================
</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>
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
==============================================================================
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 those of 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 or its affiliates.
The Adviser may voluntarily reimburse expenses from time to time, which may be
terminated at any time at its discretion.
During the fiscal year ended April 30, 1998, the Distributor collected sales
charges on purchases of Class A Shares of approximately $585,700, $91,500 and
$367,200 for All-American, Intermediate and Limited Term, respectively, of which
approximately $529,400, $76,400 and $357,500, 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 fiscal year ended April 30, 1998, the Distributor compensated
authorized dealers directly with approximately $547,800, $17,700 and $593,100 in
commission advances at the time of purchase for All-American, Intermediate and
Limited Term, respectively. To compensate for commissions advanced to authorized
dealers, all 12b-1 service fees collected on Class B Shares for All-American
during the first year following a purchase, all 12b-1 distribution fees on Class
B Shares for 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 fiscal year ended April 30, 1998, the Distributor
retained approximately $154,900, $9,600 and $78,600 in such 12b-1 fees for All-
American, Intermediate and 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 $23,400, $6,600 and $80,800 of CDSC on
share redemptions for All-American, Intermediate and Limited Term, respectively,
during the fiscal year ended April 30, 1998.
40
<PAGE>
7. Composition of Net Assets
At April 30, 1998, each Fund had an unlimited number of $.01 par value shares
authorized. Net assets consisted of:
<TABLE>
<CAPTION>
All-American Intermediate Limited Term
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Capital paid-in $288,687,354 $43,708,365 $460,205,454
Balance of undistributed net investment income 2,584 10,595 990,831
Accumulated net realized gain (loss) from investment transactions 38,708 142,847 (4,014,132)
Net unrealized appreciation of investments 23,515,575 2,612,613 15,604,355
- -------------------------------------------------------------------------------------------------------------------
Net assets $312,244,221 $46,474,420 $472,786,508
===================================================================================================================
</TABLE>
8. Investment Composition
At April 30, 1998, the revenue sources by municipal purpose, expressed as a
percent of total investments, were as follows:
<TABLE>
<CAPTION>
All-American Intermediate Limited Term
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
Education and Civic Organizations 10% 9% 12%
Energy 3 2 2
Forest and Paper Products 3 -- --
Health Care 17 25 23
Housing/Multifamily 3 2 4
Industrial 3 1 2
Long Term Care 6 4 4
Tax Obligation/General 2 8 10
Tax Obligation/Limited 9 14 9
Transportation 14 12 7
U.S.Guaranteed 11 6 8
Utilities 13 9 14
Water and Sewer 3 7 3
Other 3 1 2
- --------------------------------------------------------------------------------
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 (24% for All-American, 24% for Intermediate and 34% for
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.
41
<PAGE>
Financial Highlights
Selected data for a share outstanding throughout each period is
as follows:
<TABLE>
<CAPTION>
Class (Inception Date)
Investment Operations Less Distributions
------------------------------------- ---------------------------------
ALL AMERICAN Net
Beginning Realized/ Ending
Net Net Unrealized Net Net
Year Ended Asset Investment Investment Investment Capital Asset Total
April 30, Value Income (a) Gain (Loss) Total Income Gains Total Value Return
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Class A (10/88)
1998 $10.90 $.60 $ .51 $1.11 $(.60) $(.09) $(.69) $11.32 10.32%
1997 (c) 10.67 .55 .29 .84 (.55) (.06) (.61) 10.90 8.02
1996 (d) 10.79 .61 (.12) .49 (.61) -- (.61) 10.67 4.64
1995 (d) 10.61 .63 .18 .81 (.63) -- (.63) 10.79 8.01
1994 (d) 11.07 .65 (.30) .35 (.65) (.16)+++ (.81) 10.61 2.99
Class B (2/97)
1998 10.91 .51 .51 1.02 (.51) (.09) (.60) 11.33 9.51
1997 (e) 10.98 .12 (.06) .06 (.13) -- (.13) 10.91 .54
Class C (6/93)
1998 10.89 .53 .52 1.05 (.54) (.09) (.63) 11.31 9.75
1997 (c) 10.66 .50 .29 .79 (.50) (.06) (.56) 10.89 7.48
1996 (d) 10.78 .55 (.12) .43 (.55) -- (.55) 10.66 4.07
1995 (d) 10.60 .57 .18 .75 (.57) -- (.57) 10.78 7.42
1994 (f) 11.09 .57 (.32) .25 (.57) (.17)+++ (.74) 10.60 2.16+
Class R (2/97)
1998 10.91 .61 .51 1.12 (.62) (.09) (.71) 11.32 10.45
1997 (e) 10.99 .15 (.07) .08 (.16) -- (.16) 10.91 .69
===================================================================================================================================
</TABLE>
+ Annualized.
++ Information included prior to the 11 months ended 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) After waiver of certain management fees or reimbursement of expenses, if
applicable, by Nuveen Advisory or its predecessor Flagship Financial.
(b) Total returns are calculated on net asset value without any sales charge
and are not annualized except where noted.
(c) For the 11 months ended April 30.
(d) For the year ended May 31.
(e) From commencement of class operations as noted through April 30.
(f) From commencement of class operations as noted through May 31.
42
<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
Before Before After After Portfolio
Ending Net Reimburse- Reimburse- Reimburse- Reimburse- Turnover
Assets (000) ment ment ment (a) ment (a) Rate
- -------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
$236,691 .81% 5.27% .81% 5.27% 20%
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
8,706 1.56 4.47 1.56 4.47 20
711 1.55+ 4.83+ 1.55+ 4.83+ 39
62,336 1.36 4.72 1.36 4.72 20
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
4,510 .61 5.42 .61 5.42 20
183 .61+ 5.95+ .61+ 5.95+ 39
===========================================================================================
</TABLE>
43
<PAGE>
Financial Highlights (continued)
Selected data for a share outstanding throughout each period is as follows:
<TABLE>
<CAPTION>
Class (Inception Date)
Investment Operations Less Distributions
-------------------------------------- ------------------------------
INTERMEDIATE++ Net
Beginning Realized/ Ending
Net Net Unrealized Net Net
Year Ended Asset Investment Investment Investment Capital Asset Total
April 30, Value Income (a) Gain (Loss) Total Income Gains Total Value Return (b)
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Class A (9/92)
1998 $10.47 $.52 $ .41 $ .93 $(.52) $ -- $(.52) $10.88 8.97%
1997 (c) 10.27 .47 .20 .67 (.47) -- (.47) 10.47 6.64
1996 (d) 10.29 .51 (.02) .49 (.51) -- (.51) 10.27 4.84
1995 (d) 10.16 .51 .13 .64 (.51) -- (.51) 10.29 6.63
1994 (d) 10.35 .52 (.13) .39 (.52) (.06)+++ (.58) 10.16 3.72
Class C (12/95)
1998 10.47 .46 .42 .88 (.46) -- (.46) 10.89 8.47
1997 (c) 10.28 .44 .17 .61 (.42) -- (.42) 10.47 6.00
1996 (f) 10.57 .23 (.30) (.07) (.22) -- (.22) 10.28 (1.78)+
Class R (2/97)
1998 10.45 .54 .41 .95 (.54) -- (.54) 10.86 9.17
1997 (e) 10.60 .13 (.15) (.02) (.13) -- (.13) 10.45 (.15)
==================================================================================================================================
</TABLE>
+ Annualized.
++ Information included prior to the 11 months ended 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) After waiver of certain management fees or reimbursement of expenses, if
applicable, by Nuveen Advisory or its predecessor Flagship Financial.
(b) Total returns are calculated on net asset value without any sales charge
and are not annualized except where noted.
(c) For the 11 months ended April 30.
(d) For the year ended May 31.
(e) From commencement of class operations as noted through April 30.
(f) From commencement of class operations as noted through May 31.
44
<PAGE>
<TABLE>
<CAPTION>
Ratios/Supplemental Data
- -------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
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
Before Before After After Portfolio
Ending Net Reimburse- Reimburse- Reimburse- Reimburse- Turnover
Assets (000) ment ment ment (a) ment (a) Rate
- -------------------------------------------------------------------------------
$ 42,339 1.03% 4.52% .79% 4.76% 20%
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
3,533 1.58 3.96 1.34 4.20 20
2,540 1.71+ 3.90+ 1.23+ 4.38+ 26
1,187 1.73+ 3.68+ 1.13+ 4.28+ 81
602 .83 4.71 .59 4.95 20
469 .82+ 4.98+ .40+ 5.40+ 26
===============================================================================
</TABLE>
45
<PAGE>
Financial Highlights (continued)
Selected data for a share outstanding throughout each period is
as follows:
<TABLE>
<CAPTION>
Class (Inception Date)
Investment Operations Less Distributions
------------------------------------- ---------------------------------
LIMITED TERM++ Net
Beginning Realized/ Ending
Net Net Unrealized Net Net
Year Ended Asset Investment Investment Investment Capital Asset Total
April 30, Value Income (a) Gain (Loss) Total Income Gains Total Value Return(b)
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Class A (10/87)
1998 $10.61 $.51 $ .19 $ .70 $(.51) $ -- $(.51) $10.80 6.67%
1997 (c) 10.57 .46 .04 .50 (.46) -- (.46) 10.61 4.78
1996 (d) 10.65 .51 (.09) .42 (.50) -- (.50) 10.57 4.03
1995 (d) 10.60 .51 .04 .55 (.50) -- (.50) 10.65 5.41
1994 (d) 10.74 .52 (.13) .39 (.52) (.01) (.53) 10.60 3.58
Class C (12/95)
1998 10.60 .47 .19 .66 (.47) -- (.47) 10.79 6.33
1997 (c) 10.56 .44 .03 .47 (.43) -- (.43) 10.60 4.49
1996 (f) 10.76 .22 (.19) .03 (.23) -- (.23) 10.56 .46+
Class R (2/97)
1998 10.59 .53 .19 .72 (.53) -- (.53) 10.78 6.87
1997 (e) 10.73 .12 (.13) (.01) (.13) -- (.13) 10.59 (.09)
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
+ Annualized.
++ Information included prior to the 11 months ended April 30, 1997, reflects
the financial highlights of Flagship Limited Term.
(a) After waiver of certain management fees or reimbursement of expenses, if
applicable, by Nuveen Advisory or its predecessor Flagship Financial.
(b) Total returns are calculated on net asset value without any sales charge
and are not annualized except where noted.
(c) For the 11 months ended April 30.
(d) For the year ended May 31.
(e) From commencement of class operations as noted through April 30.
(f) From commencement of class operations as noted through May 31.
46
<PAGE>
<TABLE>
<CAPTION>
Ratios/Supplemental Data
- ----------------------------------------------------------------------------------------------------------
Ratio of Ratio of Net Ratio of Ratio of
Expenses to Investment Income Expenses to Net Investment
Average Net to Average Net Average Net Income to Average Portfolio
Ending Net Assets Before Assets Before Assets After Net Assets After Turnover
Assets (000) Reimbursement Reimbursement Reimbursement (a) Reimbursement (a) Rate
- ----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
$438,134 .77% 4.70% .77% 4.70% 30%
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
33,952 1.12 4.35 1.12 4.35 30
23,551 1.12+ 4.43+ 1.11+ 4.44+ 29
15,415 1.43+ 3.93+ 1.19+ 4.17+ 39
701 .59 4.86 .59 4.86 30
40 .55+ 5.07+ .55+ 5.07+ 29
==========================================================================================================
</TABLE>
47
<PAGE>
Report of Independent Public Accountants
To the Board of Trustees and Shareholders of
Nuveen Flagship Municipal Trust:
We have audited the accompanying statements of net assets, including the
portfolios of investments, of Nuveen Flagship All-American Municipal Bond Fund,
Nuveen Flagship Intermediate Municipal Bond Fund, and Nuveen Flagship Limited
Term Municipal Bond Fund (collectively, the "Funds") (three of the portfolios
constituting the Nuveen Flagship Municipal Trust (a Massachusetts business
trust)), as of April 30, 1998, the related statements of operations, statements
of changes in net assets and the financial highlights for the year then ended.
These financial statements and financial highlights are the responsibility of
the Funds' management. Our responsibility is to express an opinion on these
financial statements and financial highlights based on our audits. The financial
statements and financial highlights for the Funds for the years ended April 30,
1997 and prior were audited by other auditors whose report dated June 13, 1997,
expressed an unqualified opinion on those financial statements and financial
highlights.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of securities owned as of April
30, 1998, by correspondence with the custodian and brokers. As to securities
purchased but not received, we requested confirmation from brokers and, when
replies were not received, we carried out alternative auditing procedures. An
audit also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the net assets of the Nuveen
Flagship All-American Municipal Bond Fund, Nuveen Flagship Intermediate
Municipal Bond Fund, and Nuveen Flagship Limited Term Municipal Bond Fund of the
Nuveen Flagship Municipal Trust as of April 30, 1998, and the results of their
operations, the changes in their net assets, and the financial highlights for
the year then ended, in conformity with generally accepted accounting
principles.
ARTHUR ANDERSEN LLP
Chicago, Illinois
June 18, 1998
48
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Building Better Portfolios with Nuveen
Nuveen Family of Mutual Funds
Nuveen offers a variety of funds designed to help you reach your
financial goals.
Growth Funds
Nuveen Rittenhouse Growth Fund
Growth and Income Funds
European Value Fund
Growth and Income Stock Fund
Balanced Municipal and Stock Fund
Balanced Stock and Bond Fund
Municipal Bond Funds
National Funds
Long-Term
Insured
Intermediate-Term
Limited Term
State Funds
Alabama
Arizona
California
Colorado
Connecticut
Florida
Georgia
Kansas
Kentucky
Louisiana
Maryland
Massachusetts
Michigan
Missouri
New Jersey
New Mexico
New York
North Carolina
Ohio
Pennsylvania
South Carolina
Tennessee
Virginia
Wisconsin
Reducing the impact of taxes and moderating risk are important goals for many
risk-sensitive investors seeking to build better portfolios. For these
investors, a tax-efficient, risk-resistant investment portfolio often forms the
foundation of a carefully crafted financial plan for building and sustaining
wealth. Nuveen is committed to providing investors and their financial advisers
with a range of products and investment tools to help build better portfolios.
Mutual Funds
Nuveen Mutual Funds offer investors access to the Nuveen family of Premier
Advisers/SM/, including Nuveen Advisory Corp., Institutional Capital Corp. and
Rittenhouse Financial Services. Our equity, balanced and income funds seek to
provide consistent performance, time-tested strategies to reduce risk and
experienced, professional management.
Private Asset Management
Rittenhouse Financial Services and Nuveen Asset Management offer comprehensive,
customized investment management solutions to investors with assets of $250,000
or more to invest. A range of actively managed growth, balanced and municipal
income-oriented portfolios are available, all based upon a disciplined
investment philosophy.
Unit Trusts
Nuveen Unit Trusts are fixed portfolios of quality securities that are a
convenient, attractive alternative to purchasing individual securities. They
provide low-cost diversification to reduce risk, experienced, professional
security selection and surveillance and daily liquidity at that day's net asset
value for quick access to your assets.
Exchange-Traded Funds
Nuveen Exchange-Traded Funds offer investors actively managed portfolios of
investment-grade quality municipal bonds. The fund shares are listed and traded
on the New York and American stock exchanges. Exchange-traded funds provide the
investment convenience, price visibility and liquidity of common stocks.
MuniPreferred(R)
Nuveen MuniPreferred offers investors a AAA-rated investment with an attractive
tax-free yield for the cash reserves portion of an investment portfolio.
MuniPreferred shares are backed 2-to-1 by the long-term portfolios of Nuveen
dual-class exchange-traded funds and are available for national as well as a
wide variety of state-specific portfolios.
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Serving Investors for Generations
[JOHN NUVEEN, SR. PHOTO 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 risk-sensitive individuals seeking to build and sustain
wealth. In fact, 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 focused on providing 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 ensure that they continue to meet our exacting standards.
Whether your focus is long-term growth, dependable current income or sustaining
accumulated wealth, Nuveen offers a wide variety of products and services to
help meet your unique circumstances and financial planning needs. Our equity,
balanced, and income funds, along with our unit trusts and private asset
management, can form the foundation of a tax-efficient and risk-resistant
portfolio.
Talk with your financial adviser to learn more about how Nuveen investment
products and services can help you build and sustain your long-term financial
security. Or call us at (800) 225-8530 for more information, including a
prospectus where applicable. Please read that information carefully before you
invest.
1898
NUVEEN 1998
OUR SECOND CENTURY
helping investors sustain the wealth of a lifetime.(TM)
John Nuveen & Co. Incorporated
333 West Wacker Drive
Chicago, IL 60606-1286
www.nuveen.com
VAN-N2-4.98
