<PAGE>
NUVEEN
Municipal
Bond Funds
November 30, 1998
Semiannual Report
Dependable, tax-free income
to help you keep more of
what you earn.
[PHOTO APPEARS HERE]
Georgia
Louisiana
North Carolina
Tennessee
<PAGE>
Highlights
As of November 30, 1998
For Class A shares on net asset value
Credit Quality Performance Highlights
Nuveen Flagship Georgia Municipal Bond Fund
[PIE CHART APPEARS HERE] . One-year total return of 6.86%*
AAA/U.S. Guaranteed 65% . Parallelled Lipper Peer Group average for one-year
AA 6% period
A 22% . 71% of the fund was invested in AA or higher rated
BBB/NR 7% bonds
Nuveen Flagship Louisiana Municipal Bond Fund
[PIE CHART APPEARS HERE] . One-year total return of 7.49%*
AAA/U.S. Guaranteed 70% . Outperformed Lipper Peer Group average for one-year
AA 7% period
A 10% . 77% of the fund was invested in AA or higher rated
BBB/NR 13% bonds
Nuveen Flagship North Carolina Municipal Bond Fund
[PIE CHART APPEARS HERE] . One-year total return of 7.08%*
AAA/U.S. Guaranteed 36% . Outperformed Lipper Peer Group average for one-year
AA 38% period
A 15% . 74% of the fund was invested in AA or higher rated
BBB/NR 11% bonds
Nuveen Flagship Tennessee Municipal Bond Fund
[PIE CHART APPEARS HERE] . One-year total return of 6.96%*
AAA/U.S. Guaranteed 46% . Outperformed Lipper Peer Group average for one-year
AA 30% period
A 15% . 76% of the fund was invested in AA or higher rated
BBB/NR 9% bonds
Contents
1 Dear Shareholder
4 Nuveen Flagship Georgia Municipal Bond Fund Commentary and Overview
6 Nuveen Flagship Louisiana Municipal Bond Fund Commentary and Overview
8 Nuveen Flagship North Carolina Municipal Bond Fund Commentary and Overview
10 Nuveen Flagship Tennessee Municipal Bond Fund Commentary and Overview
12 Portfolio of Investments
30 Statement of Net Assets
32 Statement of Operations
33 Statement of Changes in Net Assets
35 Notes to Financial Statements
40 Financial Highlights
44 Building Better Portfolios
45 Fund Information
*See your fund's performance overview in this report for more information.
<PAGE>
Dear Shareholder
[PHOTO OF TIMOTHY R. SCHWERTFEGER APPEARS HERE]
Timothy R. Schwertfeger
Chairman of the Board
Wealth takes a lifetime to build. Once achieved, it should be preserved.
I'm pleased to report on the performance of your Nuveen Municipal Bond Fund for
the 12 months ended November 30, 1998. Providing a high level of current
interest income exempt from regular federal, state and, in some cases, local
income taxes as is consistent with the preservation of capital remains the
primary investment objective for each of the funds covered in this report. In
each case, we achieved this objective, illustrating once again that Nuveen
Municipal Bond Funds can provide an excellent investment option for income-
oriented investors.
The Year in Review
Over the past year, the markets endured bouts of volatility, as the Asian
financial crisis spilled over into emerging markets and affected economies
around the globe. The Federal Reserve intervened in an attempt to soften the
impact of the financial crises by lowering short-term interest rates in
September by a quarter of a point. Since that time, the Fed has twice again
reduced rates, bringing the federal funds rate to 4.75%. As long-term interest
rates fell to historic lows, investors were reminded of the importance of a well
balanced portfolio and professional management. Despite the market volatility
throughout the year, your Nuveen Municipal Bond Fund continued to provide
attractive current market yields and after-tax total returns. Your fund
represented a bright spot among fixed-income investments. In addition, the funds
have maintained good levels of call protection, which provides a strong
foundation for potentially stable income streams in the future. Looking ahead,
we will continue to focus on new municipal bond issuance while leveraging our
institutional position to buy and sell securities at competitive prices and
identifying undervalued securities through proprietary market research.
1
<PAGE>
Municipal Market Review
Over the past year, declining interest rates drove yields on 30-year Treasuries
to their lowest levels since 1977. With yields on the long Treasury bond pushing
below 5% at times, the yield on the Bond Buyer 40, an unmanaged index of long-
term municipal bonds, fell just 26 basis points -- from 5.36% to 5.10% --
compared with the 99-point drop, to 5.06%, in Treasury yields over the past 12
months. As of November 30, 1998, the ratio of long-term municipal yields to 30-
year Treasury yields stood at 100.8%, compared with the more typical range of
86-87%. Over the past few months, this ratio has climbed as high as 104%. For
investors, this means that long-term municipal bonds currently offer about the
same yield as Treasury bonds with comparable maturities, before taxes are taken
into account. On an after-tax basis, municipal bonds present an even more
attractive investment option relative to Treasuries.
One of the main factors in the steep decline in Treasury yields during the past
year was the strong interest in these investments by international investors. As
the financial turmoil in Asia continued to spread to economies worldwide and the
dollar strengthened against foreign currencies, the demand for U.S. dollar-
denominated Treasury securities increased. In the municipal market, where
foreign demand was limited by an inability of foreign investors to benefit from
the tax advantages of municipals, low interest rates and a strong economy
combined to generate high levels of new issuance and a dramatic increase in the
refinancing of existing bonds. The first eleven months of 1998 saw over $255
billion of municipal issuance, up 28.4% over the same period in 1997. In terms
of total issuance, this put 1998 on
2
<PAGE>
"The key to taking advantage of the exceptional values currently available in
the financial markets is the expertise of a market specialist, such as Nuveen
Investment Advisory Services."
pace to be the second largest year on record.
In addition, the continued strength of the U.S. economy brought about
improvements in the fundamental financial health of many municipalities and
boosted the overall credit quality of municipal bonds. In the third quarter of
1998, upgraded issues by the two major rating agencies outnumbered downgrades by
a margin of 7 to 2.
Nuveen Expertise Is Key
The key to taking advantage of the exceptional values currently available in the
financial markets is the expertise of a market specialist, such as Nuveen
Investment Advisory Services. To this end, Nuveen has assembled the Premier
Advisers/SM/, a growing group of experts that can provide time-tested experience
and insight in a variety of investment categories. In addition to Nuveen
Investment Advisory Services, our Premier Adviser for tax-free investing, you
can rely on our other Premier Advisers for equity investments, including
Institutional Capital Corporation for value investing and Rittenhouse Financial
Services, Inc. for growth investing. For more information about the funds
managed by these Premier Advisers, including charges and expenses, contact your
financial adviser for a prospectus, or call Nuveen at (800) 621-7227. Please
read the prospectus carefully before you invest or send money.
We encourage you to talk with your financial adviser about the ways Nuveen's
expanding selection of investments can assist you in establishing a diversified
portfolio designed to help you build and sustain long-term financial security.
Over the past 100 years, Nuveen has evolved from a company that dealt with only
municipal bonds into a nationally respected firm that handles a variety of
investment options. I look forward to continuing this exciting journey. We are
grateful for the confidence you have shown in us, and we intend to continue
earning your trust in the years ahead.
Sincerely,
/s/ Timothy R. Schwertfeger
- ---------------------------
Timothy R. Schwertfeger
Chairman of the Board
January 15, 1999
3
<PAGE>
Nuveen Flagship Georgia Municipal Bond Fund
Portfolio Manager's Comments
Portfolio Manager Tom O'Shaughnessy discusses the Nuveen Flagship Georgia
Municipal Bond Fund and reviews factors that affected performance over the past
12 months.
Comments cover the 12-month period ended November 30, 1998 and all performance
statistics are quoted for Class A shares.
What is the status of Georgia's economy and its municipal market?
In recent years, Georgia has benefited from steady growth in both the economy
and employment, largely as a result of the state's stable and varied economic
base. The Georgia economy is well-diversified among the trade, service, and
transportation sectors, and less dependent on agriculture than ever before.
Plus, the state has been somewhat insulated from international financial
turmoil, in part because the state's goods and services are consumed primarily
within the U.S.
In addition to economic growth, Georgia's population growth is among the highest
in the U.S., a trend that is expected to continue as Atlanta builds on its
reputation as a source of good jobs for college graduates. That population
growth, combined with the state's healthy economy, low cost of doing business,
availability of land and water, and centralized location, should help Georgia's
economic growth continue to outpace the national average in 1999.
In spite of those strong economic conditions, however, the municipal market in
1998 was dominated by issuance in a very small number of sectors. In fact,
although Georgia ranked 12th among the states in year-to-date municipal issuance
as of November 30, 1998, a large portion of that supply came from the hospital
sector, which made it difficult to maintain a well-diversified portfolio.
How did the Nuveen Flagship Georgia Municipal Bond Fund's underlying portfolio
perform during the past year?
Over the past 12 months, the Nuveen Flagship Georgia Municipal Bond Fund
generated a total return on net asset value of 6.86%, equivalent to a taxable
total return of 9.63% for investors in the combined 35.1% federal and state
income tax bracket. That performance was in line with the 6.89% average annual
total return posted by the Lipper Georgia Municipal Debt Peer Group* of 34
municipal bond funds.
What key strategies were used over the course of the year? Were there any
particular sectors in which Nuveen looked for undervalued securities?
As mentioned earlier, the lopsided, hospital-heavy municipal bond supply in
Georgia this year increased the challenge of keeping the portfolio both well
diversified and fully invested. In response to that challenge, we sought out
selected opportunities in other sectors, including the housing and general
obligation sectors. The portfolio's two largest sector allocations were limited
tax obligation bonds and U.S. Guaranteed securities, which accounted for 23% and
16%, respectively, of the fund's investments, as of November 30, 1998.
Another event of note this year was a slight steepening of the yield curve,
meaning that bonds at the long end of the maturity spectrum began offering more
attractive yields than those with slightly shorter maturities. As a result of
that move, we began finding value among longer-term bonds that offered
attractive levels of income.
Finding bonds with good call protection was also important. Call protection
insulates investors from income erosion, especially in a declining interest rate
environment. Regarding the Georgia fund, less than 10% of the portfolio is
callable prior to 2002.
The fund also maintained its primary focus on high-quality securities, with 71%
of the portfolio invested in bonds rated AAA or AA as of November 30, 1998.
However, when there is ample municipal supply, Nuveen's extensive research
capabilities also make it possible for us to identify lower-rated debt that we
believe offers both strong quality characteristics and the opportunity for
additional yield.
What is your outlook for the Nuveen Flagship Georgia Municipal Bond Fund?
We will continue to manage the fund by seeking out undervalued securities that
provide both attractive income and the opportunity for price appreciation
relative to the market, consistent with the preservation of capital.
Housing bonds will be prime candidates for addition to the portfolio as a way to
increase yield. Single family housing bonds often have higher yields than other
bonds of similar maturities because the housing bonds are subject to early calls
if home owners pre-pay their mortgages. In today's market, however, we view this
prepayment risk as minimal due to the present low level of interest rates.
We also expect to see fewer insured issues coming to market, which should create
more buying opportunities in the months ahead and make the portfolio's current
insured holdings even more attractive.
* The Lipper Peer Group return represents the average annualized return of
the 34 funds in the Lipper Georgia Municipal Debt category. The return
assumes reinvestment of dividends and does not reflect any applicable sales
charges.
4
<PAGE>
Nuveen Flagship Georgia Municipal Bond Fund
Performance Overview
As of November 30, 1998
[BAR CHART APPEARS HERE]
12/97 .047
1/98 .047
2/98 .047
3/98 .047
4/98 .046
5/98 .046
6/98 .046
7/98 .046
8/98 .046
9/98 .046
10/98 .045
11/98 .045
<TABLE>
<CAPTION>
Top 5 Sectors (as a % of total investments)
<S> <C>
Tax Obligation (Limited) 23%
...............................................
U.S. Guaranteed 16%
...............................................
Housing (Multifamily) 12%
...............................................
Health Care 12%
...............................................
Housing (Single Family) 9%
- -----------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
Portfolio Statistics
Share Class A B C R
- -------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Inception Date 3/86 2/97 1/94 2/97
...........................................................................................
Net Asset Value $11.27 $11.29 $11.25 $ 11.23
...........................................................................................
Total Net Assets ($000) $154,929
...........................................................................................
Effective Maturity (Years) 20.94
...........................................................................................
Modified Duration (Years) 7.33
- -------------------------------------------------------------------------------------------
Annualized Total Return/1/
Share Class A(NAV) A(Offer) B C R
- --------------------------------------------------------------------------------------------
1-Year 6.86% 2.34% 6.16% 6.40% 7.12%
............................................................................................
5-Year 6.45% 5.54% 5.83% 5.83% 6.46%
............................................................................................
10-Year 7.80% 7.34% 7.33% 7.20% 7.81%
- --------------------------------------------------------------------------------------------
</TABLE>
1 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.
5
<PAGE>
Nuveen Flagship Louisiana Municipal Bond Fund
Portfolio Manager's Comments
Portfolio Manager Mike Davern discusses the Nuveen Flagship Louisiana Municipal
Bond Fund and reviews factors that affected performance over the past 12 months.
Comments cover the 12-month period ended November 30, 1998 and all performance
statistics are quoted for Class A shares.
What is the status of Louisiana's economy and its municipal market?
The Louisiana economy remains dependent on oil and gas, which, in light of 10
years of declining gas prices, has thwarted any significant growth. However,
technological advances have enhanced drilling and processing efficiency, and the
state has seen gains outside the oil industry, specifically in the agribusiness
and tourism sectors of the economy.
Despite these signs of improvement, Louisiana's economy remains fundamentally
under diversified, which is reflected by a relatively low credit rating
(A2/A-/A). Louisiana's unemployment numbers continue to exceed the national
average, and the state's economy is expected to underperform that of the nation
as a whole unless there is a sustained surge in oil prices.
Largely in response to low interest rates, an expansive national economy and
growing infrastructure and school financing needs, the state's municipal bond
issuance grew dramatically in 1998. In fact, issuance was up 74% over 1997
levels and is expected to remain heavy for some time to come.
How did the Nuveen Flagship Louisiana Municipal Bond Fund's underlying portfolio
perform during the past year?
Over the past 12 months, the Nuveen Flagship Louisiana Municipal Bond Fund
generated a total return on net asset value of 7.49%, equivalent to a taxable
total return of 10.15% for investors in the combined 33.9% federal and state
income tax bracket. That performance exceeded the 6.81% average annual total
return posted by the Lipper Louisiana Municipal Debt Peer Group* of 11 municipal
bond funds.
What key strategies were used over the course of the year? Were there any
particular sectors in which Nuveen looked for undervalued securities?
In general, we spent the recent period further improving the Nuveen Flagship
Louisiana Municipal Bond Fund's portfolio structure by adding high-quality
securities offering good protection against calls, higher coupons and attractive
value relative to the larger market.
We sought out those securities in two ways. First, we looked to make new
purchases in sectors offering bonds that our managers believe were not fully
priced by the market. The fund's two largest sector allocations were healthcare
securities and single family housing bonds, which accounted for 19% and 18%,
respectively, of the fund's investments, as of November 30, 1998. These sectors
not only experienced some of the state's heaviest issuance volume, they
performed well during the period and offered some opportunities to find value.
Second, we took advantage of the slightly wider yield spreads between higher and
lower-rated securities. If a bond has a lower credit rating, it is rewarded with
a higher yield. Conversely, AAA rated securities pay lower interest rates due to
the fact that there is minimal credit risk to the issue.
While searching for investment-grade securities, Nuveen's extensive research
capabilities give us the ability to identify lower-rated debt with minimal risk
that we believe offers both strong quality characteristics and the opportunity
for additional yield. In Louisiana, we found attractive lower-rated bonds in a
number of sectors, and the fund's portfolio continues to be of very high
quality, with 77% of its holdings rated AAA or AA.
Finding bonds with good call protection was also important. Call protection
insulates investors from income erosion, especially in a declining interest rate
environment. Regarding the Louisiana fund, less than 10% of the portfolio is
callable prior to 2002.
What is your outlook for the Nuveen Flagship Louisiana Municipal Bond Fund?
We will continue to manage the fund by seeking out undervalued securities that
provide both attractive income and the opportunity for price appreciation
relative to the market, consistent with the preservation of capital.
Housing bonds will continue to be prime candidates for addition to the portfolio
as a way to increase yield. Single family housing bonds often have higher yields
than other bonds of similar maturities because the housing bonds are subject to
early calls if home owners pre-pay their mortgages. In today's market, however,
we view this prepayment risk as minimal due to the present low level of interest
rates.
We will also continue to work closely with Nuveen's research team to identify
lower rated credits that we believe are of fundamentally high quality, adding
yield to the portfolio without compromising the overall quality of the
portfolio.
* The Lipper Peer Group return represents the average annualized return of
the 11 funds in the Lipper Louisiana Municipal Debt category. The return
assumes reinvestment of dividends and does not reflect any applicable sales
charges.
6
<PAGE>
Nuveen Flagship Louisiana Municipal Bond Fund
Performance Overview
As of November 30, 1998
Monthly Tax-Free Dividends (Class A Shares)/1/
[BAR CHART APPEARS HERE]
12/97 .049
1/98 .049
2/98 .049
3/98 .049
4/98 .048
5/98 .048
6/98 .048
7/98 .048
8/98 .048
9/98 .048
10/98 .047
11/98 .047
Top 5 Sectors (as a % of total invesments)
Health Care 19%
.............................
Housing (Single Family) 18%
.............................
U.S. Guaranteed 11%
.............................
Tax Obligation (General) 11%
.............................
Tax Obligation (Limited) 9%
- -----------------------------
<TABLE>
<CAPTION>
Portfolio Statistics
Share Class A B C R
- ---------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Inception Date 9/89 2/97 2/94 2/97
.......................................................................................
Net Asset Value $11.66 $11.65 $11.65 $ 11.66
.......................................................................................
Total Net Assets ($000) $125,966
.......................................................................................
Effective Maturity (Years) 21.82
.......................................................................................
Modified Duration (Years) 7.89
- ---------------------------------------------------------------------------------------
Annualized Total Return/2/
Share Class A(NAV) A(Offer) B C R
- ---------------------------------------------------------------------------------------
1-Year 7.49% 2.99% 6.72% 6.94% 7.62%
.......................................................................................
5-Year 6.72% 5.81% 6.06% 6.13% 6.80%
.......................................................................................
Since Inception 8.43% 7.93% 7.90% 7.84% 8.47%
- ---------------------------------------------------------------------------------------
</TABLE>
1 The Fund also paid shareholders taxable distributions in December of $0.0387
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.
7
<PAGE>
Nuveen Flagship North Carolina Municipal Bond Fund
Portfolio Manager's Comments
Portfolio Manager Tom O'Shaughnessy discusses the Nuveen Flagship North Carolina
Municipal Bond Fund and reviews factors that affected performance over the past
12 months.
Comments cover the 12-month period ended November 30, 1998 and all performance
statistics are quoted for Class A shares.
What is the status of North Carolina's economy and its municipal market?
While economic sectors that have traditionally been important to North Carolina
have suffered significant job losses--furniture and textiles in particular--the
state's up-and-coming sectors such as high-technology and pharmaceuticals have
helped buffer the economy against those losses. In fact, the state's increased
economic diversification should help it weather a downturn better than it has in
the past.
Overall, the state's economic growth continued in 1998, although it has slowed.
Population and job growth should continue to add some fuel to the economy, as
should advantages like the state's low cost of doing business, its numerous
universities, a strong durable manufacturing sector, and the state's many ports,
which aid international commerce.
In spite of those strong economic conditions, however, the municipal market in
1998 was dominated by issuance in a very small number of sectors. In fact,
although North Carolina ranked 16th among the states in year-to-date issuance as
of November 30, 1998, a preponderance of supply came from the hospital sector,
which made it difficult to identify good values in the market and maintain a
well-diversified portfolio.
How did the Nuveen Flagship North Carolina Municipal Bond Fund's underlying
portfolio perform during the past year?
Over the past 12 months, the Nuveen Flagship North Carolina Municipal Bond Fund
generated a total return on net asset value of 7.08%, equivalent to a taxable
total return of 10.00% for investors in the combined 36.3% federal and state
income tax bracket. That performance exceeded the 6.99% average annual total
return posted by the Lipper North Carolina Municipal Debt Peer Group* of 40
municipal bond funds.
What key strategies were used over the course of the year? Were there any
particular sectors in which Nuveen looked for undervalued securities?
As mentioned earlier, the imbalance with hospital-heavy municipal bond supply in
North Carolina this year increased the challenge of keeping the portfolio both
well diversified and fully invested. In response to that challenge, we sought
out selected opportunities in other, less active sectors, including the housing
and general obligation sectors. The portfolio's two largest sector allocations
were healthcare and limited tax obligations, which accounted for 19% and 18%,
respectively, of the fund's investments, as of November 30, 1998.
Another event of note this year was a slight steepening of the yield curve,
meaning that bonds at the long end of the maturity spectrum began offering more
attractive yields than those with slightly shorter maturities. As a result of
that move, we began finding value among longer-term bonds during the period.
Finding bonds with good call protection was also important. Call protection
insulates investors from income erosion, especially in a declining interest rate
environment. Regarding the North Carolina fund, less than 10% of the portfolio
is callable prior to 2002.
The fund also maintained its primary focus on high-quality securities, with 74%
of portfolio invested in bonds rated AAA or AA as of November 30, 1998. However,
Nuveen's extensive research capabilities also make it possible for us to
identify lower-rated debt that we believe offers both strong quality
characteristics and the opportunity for additional yield.
What is your outlook for the Nuveen Flagship North Carolina Municipal Bond Fund?
We will continue to manage the fund by seeking out 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 work to reduce the portfolio's number of holdings
in the overabundant healthcare sector. Housing bonds will be prime candidates to
replace the healthcare bonds and as a way to increase yield. Single family
housing bonds often have higher yields than other bonds of similar maturities
because the housing bonds are subject to early calls if home owners pre-pay
their mortgages. In today's market, however, we view this prepayment risk as
minimal due to the present low level of interest rates.
We also expect to see fewer insured issues coming to market, which should create
more buying opportunities in the months ahead and make the portfolio's current
insured holdings even more attractive.
* The Lipper Peer Group return represents the average annualized return of the
40 funds in the Lipper North Carolina Municipal Debt category. The return
assumes reinvestment of dividends and does not reflect any applicable sales
charges.
8
<PAGE>
Nuveen Flagship North Carolina Municipal Bond Fund
Performance Overview
As of November 30, 1998
Monthly Tax-Free Dividends (Class A Shares)/1/
[BAR CHART APPEARS HERE]
<TABLE>
<CAPTION>
<S> <C>
12/97 .0445
1/98 .0445
2/98 .0445
3/98 .0445
4/98 .0445
5/98 .0445
6/98 .0445
7/98 .0430
8/98 .0430
9/98 .0430
10/98 .0430
11/98 .0430
</TABLE>
Top 5 Sectors (as a % of total invesments)
<TABLE>
<CAPTION>
<S> <C>
Health Care 19%
.................................................
Tax Obligation (Limited) 18%
.................................................
Utilities 17%
.................................................
Housing (Single Family) 13%
.................................................
U.S. Guaranteed 11%
- -------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
Portfolio Statistics
Share Class A B C R
- --------------------------------------------------------------------------
Inception Date 3/86 2/97 10/93 2/97
..........................................................................
Net Asset Value $10.71 $10.71 $10.69 $10.71
..........................................................................
Total Net Assets ($000) $206,471
..........................................................................
Effective Maturity (Years) 20.74
..........................................................................
Modified Duration (Years) 7.46
- --------------------------------------------------------------------------
Annualized Total Return/2/
Share Class A(NAV) A(Offer) B C R
- --------------------------------------------------------------------------
1-Year 7.08% 2.59% 6.19% 6.39% 7.37%
..........................................................................
5-Year 5.58% 4.67% 4.93% 4.97% 5.64%
..........................................................................
10-Year 7.49% 7.03% 7.02% 6.88% 7.52%
- --------------------------------------------------------------------------
</TABLE>
1 The Fund also paid shareholders taxable distributions in December of $0.0023
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.
9
<PAGE>
Nuveen Flagship Tennessee Municipal Bond Fund
Portfolio Manager's Comments
Portfolio Manager Tom O'Shaughnessy discusses the Nuveen Flagship Wisconsin
Municipal Bond Fund and reviews factors that affected performance over the
past 12 months.
Comments cover the 12-month period ended November 30, 1998 and all performance
statistics are quoted for Class A shares.
What is the status of Tennessee's economy and its municipal market?
Although Tennessee's economy is fundamentally sound, its growth is slowing. The
state has increased exposure to national economic cycles, in part because of an
increase in auto and truck manufacturing within its borders, including plants
owned by Nissan, Peterbilt and Saturn. Tennessee has also been hit by losses in
the textile and apparel manufacturing sectors, although growth in the service,
trade, and durable manufacturing sectors has somewhat offset them.
Overall, Tennessee's growth is slower than it was just a few years ago, which
can be attributed in part to global and national economic slowdowns as well as a
tight labor market.
In spite of those strong economic conditions, however, the municipal market in
1998 was dominated by issuance in a very small number of sectors. In fact,
although Tennessee ranked 17th among the states in year-to-date issuance as of
November 30, 1998, a preponderance of supply came from the healthcare sector.
How did the Nuveen Flagship Tennessee Municipal Bond Fund's underlying
portfolio perform during the past year?
Over the past 12 months, the Nuveen Flagship Tennessee Municipal Bond Fund
generated a total return on net asset value of 6.96%, equivalent to a taxable
total return of 9.71% for investors in the combined 35.1% federal and state
income tax bracket. That performance exceeded the 6.82% average annual total
return posted by the Lipper Tennessee Municipal Debt Peer Group* of 18 municipal
bond funds.
What key strategies were used over the course of the year? Were there any
particular sectors in which Nuveen looked for undervalued securities?
As mentioned earlier, the lopsided, hospital-heavy municipal bond supply in
Tennessee this year increased the challenge of keeping the portfolio both well
diversified and fully invested. In response to that challenge, we sought out
selected opportunities in other, less prominent sectors, including single family
housing and utilities.
The portfolio's two largest sector allocations were U.S. Guaranteed bonds and
limited tax obligation securities, which accounted for 16% and 14%,
respectively, of the fund's investments, as of November 30, 1998.
Another event of note this year was a slight steepening of the yield curve,
meaning that bonds at the long end of the maturity spectrum began offering more
attractive yields than those with slightly shorter maturities. As a result of
that move, we began finding value among longer-term bonds during the period.
Finding bonds with good call protection was also important. Call protection
insulates investors from income erosion, especially in a declining interest rate
environment. Regarding the Tennessee fund, less than 10% of the portfolio is
callable prior to 2002.
The fund also maintained its primary focus on high-quality securities, with 76%
of portfolio invested in bonds rated AAA or AA as of November 30, 1998. However,
Nuveen's extensive research capabilities also make it possible for us to
identify lower-rated debt that we believe offers both strong quality
characteristics and the opportunity for additional yield.
What is your outlook for the Nuveen Flagship Tennessee Municipal Bond Fund?
We will continue to manage the fund by seeking out 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 work to reduce the portfolio's number of holdings
in the overabundant healthcare sector. Housing bonds will be prime candidates to
replace the healthcare bonds and as a way to increase yield. Single family
housing bonds often have higher yields than other bonds of similar maturities
because the housing bonds are subject to early calls if home owners pre-pay
their mortgages. In today's market, however, we view this prepayment risk as
minimal due to the present low level of interest rates.
We also expect to see fewer insured issues coming to market, which should create
more buying opportunities in the months ahead and make the portfolio's current
insured holdings even more attractive.
*The Lipper Peer Group return represents the average annualized return of the 18
funds in the Lipper Tennessee Municipal Debt category. The return assumes
reinvestment of dividends and does not reflect any applicable sales charges.
10
<PAGE>
Nuveen Flagship Tennessee Municipal Bond Fund
Performance Overview
As of November 30, 1998
Monthly Tax-Free Dividends (Class A Shares)
[BAR CHART APPEARS HERE]
12/97 .049
1/98 .047
2/98 .047
3/98 .047
4/98 .047
5/98 .047
6/98 .047
7/98 .047
8/98 .047
9/98 .047
10/98 .046
11/98 .046
Top 5 Sectors (as a % of total investments)
U.S. Guaranteed 16%
- -----------------------------
Tax Obligation (Limited) 14%
- -----------------------------
Health Care 12%
- -----------------------------
Housing (Single Family) 11%
- -----------------------------
Utilities 10%
- -----------------------------
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
Portfolio Statistics
Share Class A B C R
- ---------------------------------------------------------------------------------------------
Inception Date 11/87 2/97 10/93 2/97
- ---------------------------------------------------------------------------------------------
Net Asset Value $11.58 $11.59 $11.58 $ 11.57
- ---------------------------------------------------------------------------------------------
Total Net Assets ($000) $323,025
- ---------------------------------------------------------------------------------------------
Effective Maturity (Years) 20.31
- ---------------------------------------------------------------------------------------------
Modified Duration (Years) 7.25
- ---------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
Annualized Total Return/1/
Share Class A(NAV) A(Offer) B C R
- ----------------------------------------------------------------------------------------------
1-Year 6.96% 2.46% 6.27% 6.45% 7.25%
- ----------------------------------------------------------------------------------------------
5-Year 5.82% 4.91% 5.19% 5.23% 5.87%
- ----------------------------------------------------------------------------------------------
10-Year 7.69% 7.23% 7.22% 7.10% 7.72%
- ----------------------------------------------------------------------------------------------
</TABLE>
1 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.
11
<PAGE>
Portfolio of Investments (Unaudited)
Nuveen Flagship Georgia Municipal Bond Fund
November 30, 1998
<TABLE>
<CAPTION>
Principal Optional Call Market
Amount Description Provisions* Ratings** Value
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Consumer Cyclical - 0.4%
$ 500,000 White County, Georgia, Development Authority, Industrial Development
Revenue Refunding, Springs Industries, Inc., 6.850%, 6/01/10 6/02 at 102 BBB+ $ 534,715
- ------------------------------------------------------------------------------------------------------------------------------------
Consumer Staples - 2.1%
1,000,000 Development Authority of Cartersville (Georgia), Water and Wastewater 5/02 at 102 A+ 1,096,570
Facilities Revenue Bonds, Series 1992 (Anheuser-Busch Project),
6.750%, 2/01/12 (Alternative Minimum Tax)
2,000,000 Development Authority of Cartersville (Georgia), Sewage Facilities 5/07 at 101 A+ 2,178,260
Refunding Revenue Bonds (Anheuser-Busch Project), Series 1997,
6.125%, 5/01/27 (Alternative Minimum Tax)
- ------------------------------------------------------------------------------------------------------------------------------------
Education and Civic Organizations - 1.1%
1,000,000 Private Colleges and Universities Authority (Georgia), Revenue Bonds No Opt. Call AAA 1,210,390
(Mercer University Project), Series 1991, 6.500%, 11/01/15
500,000 Private Colleges and Universities (Georgia), Revenue Refunding (Spelman 6/04 at 102 AAA 557,025
College Project), 6.200%, 6/01/14
- ------------------------------------------------------------------------------------------------------------------------------------
Forest and Paper Products - 2.7%
1,500,000 Brunswick and Glynn County (Georgia), Development Authority, Revenue 3/08 at 102 Baa2 1,508,595
Refunding Bonds, Series 1998 (Georgia Pacific Corporation Project),
5.550%, 3/01/26 (Alternative Minimum Tax)
1,000,000 Savannah, Georgia, Economic Development Authority, Pollution Control No Opt. Call A1 1,134,590
Revenue Refunding, Union Camp Corporation Project, 6.150%, 3/01/17
500,000 Wayne County Development Authority, Solid Waste Disposal Revenue Bonds 7/00 at 102 BBB+ 532,965
(ITT Rayonier, Inc. Project), Series 1990, 8.000%, 7/01/15 (Alternative
Minimum Tax)
1,000,000 Wayne County Development Authority, Pollution Control Revenue Refunding 5/03 at 102 BBB+ 1,065,860
(ITT Rayonier Inc. Project), 6.100%, 11/01/07
- ------------------------------------------------------------------------------------------------------------------------------------
Health Care - 11.6%
5,000,000 Baldwin County Hospital Authority (Georgia), Revenue Bonds (Oconee 12/08 at 102 BBB 4,974,150
Regional Medical Center), Series 1998, 5.375%, 12/01/28
3,000,000 Chatham County Hospital Authority (Savannah, Georgia), Hospital Revenue 1/07 at 102 AAA 3,074,250
Refunding and Improvement Bonds (Memorial Medical Center, Inc.), Series
1996A, 5.250%, 1/01/16
500,000 Hospital Authority of Cherokee County, Georgia, Revenue Certificates, 12/00 at 102 AAA 541,065
Tax Exempt Series 1990, 7.250%, 12/01/15
1,000,000 Coffee County Hospital Authority (Georgia), Revenue Anticipation 12/06 at 102 N/R 1,049,280
Certificates (Coffee Regional Medical Center, Inc. Project),
Series 1997A, 6.750%, 12/01/16
Development Authority of the City of Dalton (Georgia), Revenue
Certificates (Hamilton Health Care System), Series 1996:
2,000,000 5.500%, 8/15/26 No Opt. Call AAA 2,175,880
2,000,000 5.250%, 8/15/26 2/07 at 102 AAA 2,021,100
2,000,000 Development Authority of the City of Dalton (Georgia), Revenue 2/08 at 101 Aaa 1,976,960
Certificates (Hamilton Health Care System), Series 1998, 5.000%,
8/15/28
1,000,000 The Hospital Authority of Hall County and the City of Gainesville, 10/05 at 102 AAA 1,102,420
Revenue Anticipation Certificates (Northeast Georgia Healthcare
Project), Series 1995, 6.000%, 10/01/20
1,000,000 Hospital Authority of Gwinnett County, Georgia, Revenue Anticipation 9/07 at 101 AAA 1,010,980
Certificates (Gwinnett Hospital System, Inc. Project), Series 1997A,
5.250%, 9/01/27
</TABLE>
12
<PAGE>
<TABLE>
<CAPTION>
Principal Optional Call Market
Amount Description Provisions* Ratings** Value
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Housing/Multifamily -- 11.9%
$ 1,840,000 Housing Authority of the City of Augusta, Georgia, Mortgage Revenue 5/05 at 102 Aa $ 1,995,517
Refunding Bonds, Series 1995A (FHA Insured Mortgage Loan--River Glen
Apartments Section 8 Assisted Project), 6.500%, 5/01/27
755,000 Housing Authority of Clayton County (Georgia), Multifamily Housing 12/05 at 102 AAA 785,170
Revenue Bonds, Series 1995 (The Advantages Project), 5.700%, 12/01/16
1,000,000 Housing Authority of the County of DeKalb, Georgia, 1/05 at 102 AAA 1,102,500
Multifamily Housing Revenue Bonds (The Lakes at Indian Creek
Apartments Project), Series 1994, 7.150%, 1/01/25 (Alternative
Minimum Tax)
3,470,000 Housing Authority of the County of DeKalb, Georgia, Multifamily Housing 1/06 at 102 A 3,712,761
Revenue Bonds (Regency Woods I and II Project), Senior Series 1996A,
6.500%, 1/01/26
4,000,000 Housing Authority of Fulton County, Georgia, Multifamily Housing Revenue 7/06 at 102 A 4,263,960
Bonds (Concorde Place Apartments Project), Series 1996A, 6.375%, 1/01/27
(Alternative Minimum Tax)
4,715,000 Lawrenceville, Georgia, Housing Authority, Multifamily Revenue, Knollwood 6/07 at 102 AAA 5,214,649
Park Apartments Project, 6.250%, 12/01/29 (Alternative Minimum Tax)
1,300,000 Macon, Georgia, Housing Authority, Mortgage Revenue Refunding, The Vistas, 10/04 at 102 Aaa 1,398,007
Series A, 6.450%, 4/01/26
- ------------------------------------------------------------------------------------------------------------------------------------
Housing/Single Family -- 9.1%
Housing Authority of Fulton County, Georgia, Single Family Mortgage Revenue
Bonds (GNMA Mortgage-Backed Securities Program), Series 1995A:
310,000 6.550%, 3/01/18 (Alternative Minimum Tax) 3/05 at 102 AAA 333,972
105,000 6.600%, 3/01/28 (Alternative Minimum Tax) 3/05 at 102 AAA 111,354
Housing Authority of Fulton County, Georgia, Single Family Mortgage
Revenue Refunding Bonds (GNMA Mortgage-Backed Securities Program),
Series 1996A:
415,000 6.125%, 9/01/18 (Alternative Minimum Tax) 9/06 at 102 AAA 442,075
655,000 6.200%, 9/01/27 (Alternative Minimum Tax) 9/06 at 102 AAA 698,865
Georgia Housing and Finance Authority, Single Family Mortgage Bonds,
1994 Series A (FHA Insured or VA Guaranteed Mortgage Loans):
1,215,000 6.500%, 12/01/17 (Alternative Minimum Tax) 12/04 at 102 AAA 1,305,044
750,000 6.600%, 12/01/23 (Alternative Minimum Tax) 12/04 at 102 AAA 807,630
1,000,000 Georgia Housing and Finance Authority, Single Family Mortgage Bonds, 3/05 at 102 AAA 1,077,770
1995 Series A, Subseries A-2, 6.400%, 12/01/15 (Alternative Minimum Tax)
2,500,000 Georgia Housing and Finance Authority, Single Family Mortgage Bonds, 6/05 at 102 AAA 2,707,025
1995 Series B, Subseries B-2, 6.550%, 12/01/27 (Alternative Minimum Tax)
3,355,000 Georgia Housing and Finance Authority, Single Family Mortgage Bonds, 6/06 at 102 AAA 3,625,782
1996 Series A, Subseries A-2, 6.450%, 12/01/27 (Alternative Minimum Tax)
1,000,000 Georgia Housing and Finance Authority, Single Family Mortgage Bonds, 12/08 at 101 AAA 1,005,060
1998 Series B2, 5.200%, 12/01/26 (Alternative Minimum Tax)
215,000 Georgia Residential Finance Authority, Home Ownership Mortgage Bonds, 12/99 at 103 AA+ 224,456
1989 Series D (Conventional Mortgage Loans), 7.800%, 6/01/21
(Alternative Minimum Tax)
275,000 Georgia Residential Finance Authority, Home Ownership Mortgage Bonds, 12/00 at 103 AA+ 289,982
1990 Series A (FHA Insured or VA Guaranteed Mortgage Loans), 7.750%,
6/01/18 (Alternative Minimum Tax)
1,360,000 Georgia Residential Finance Authority, Home Ownership Mortgage Bonds, 12/01 at 103 AA+ 1,448,781
1991 Series A (FHA Insured or VA Guaranteed Mortgage Loans), 7.250%,
12/01/21 (Alternative Minimum Tax)
55,000 Georgia Residential Finance Authority, Single Family Mortgage Bonds, 12/98 at 103 AA+ 56,775
1988 Series B (FHA Insured or VA Guaranteed Mortgage Loans), 8.000%,
12/01/16
- ------------------------------------------------------------------------------------------------------------------------------------
Tax Obligation/General -- 7.2%
3,810,000 Peach County, Georgia, School District, General Obligation School Bonds, 2/05 at 102 AAA 4,372,889
Series 1994, 6.400%, 2/01/19
4,870,000 Commonwealth of Puerto Rico, Public Improvement Bonds of 1997, 5.375%, 7/07 at 101 1/2 A 5,049,313
7/01/25
1,500,000 Washington County, Georgia, School District, 6.875%, 1/01/14 1/05 at 102 AAA 1,757,100
</TABLE>
13
<PAGE>
Portfolio of Investments (Unaudited)
Nuveen Flagship Georgia Municipal Bond Fund (continued)
November 30, 1998
<TABLE>
<CAPTION>
Principal Optional Call Market
Amount Description Provisions* Ratings** Value
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Tax Obligation/Limited - 21.9%
$ 570,000 Development Authority of Burke County (Georgia), Industrial 2/01 at 102 A $ 613,092
Development Revenue Bonds (Georgia Safe Corporation Project), Series
1991, 7.500%, 2/01/11 (Alternative Minimum Tax)
1,150,000 Burke County Economic Development Authority, Georgia, Revenue Bonds 12/02 at 102 A 1,268,002
(Ritz Instrument Transformers, Inc. Project), Series 1991A, 7.250%,
12/01/11 (Alternative Minimum Tax)
1,750,000 Association County Commissioners of Georgia, Leasing Program (Butts 12/04 at 102 AAA 1,998,325
County, Georgia, Public Purpose Project), Series 1994, Certificates
of Participation, 6.750%, 12/01/14
1,000,000 The Hospital Authority of Clarke County, Georgia, Hospital Revenue 1/07 at 100 AAA 985,850
Certificates (Athens Regional Medical Center Project), Series
1996, 5.000%, 1/01/27
1,215,000 Clayton County Solid Waste Management Authority (Georgia), Revenue 2/02 at 102 AA 1,315,116
Bonds, Series 1992A, 6.500%, 2/01/12
3,000,000 Cobb-Marietta Coliseum and Exhibit Hall Authority (Georgia), Revenue 10/19 at 100 AAA 3,350,400
Refunding Bonds, Series 1993, 5.625%, 10/01/26
1,000,000 Downtown Smyrna Development Authority (Georgia), Revenue Bonds, 2/05 at 102 AAA 1,158,590
Series 1994, 6.600%, 2/01/17
2,765,000 Metropolitan Atlanta Rapid Transit Authority (Georgia), Sales Tax No Opt. Call AA 3,210,414
Revenue Bonds, Refunding Series N, 6.250%, 7/01/18
500,000 Metropolitan Atlanta Rapid Transit Authority (Georgia), Sales Tax No Opt. Call AAA 593,380
Revenue Bonds, Refunding Series P, 6.250%, 7/01/20
Puerto Rico Highway and Transportation Authority, Highway
Revenue Bonds, Series Y of 1996:
2,000,000 5.500%, 7/01/26 7/06 at 101 1/2 A 2,096,280
7,000,000 5.500%, 7/01/36 7/16 at 100 A 7,555,520
125,000 Puerto Rico Infrastructure Finance Authority, Special Tax Revenue 7/00 at 100 BBB+ 127,919
Bonds, Series 1988A, 7.750%, 7/01/08
8,055,000 Upper Oconee Basin Water Authority (Georgia), Revenue Bonds, Series 7/08 at 102 AAA 8,212,314
1997, 5.250%, 7/01/27
1,250,000 Hospital Authority of Ware County (Georgia), Revenue Anticipation 3/02 at 102 AAA 1,369,625
Certificates, Series 1992A (Satilla Park Hospital),6.625%, 3/01/15
- ------------------------------------------------------------------------------------------------------------------------------------
Transportation - 0.7%
1,000,000 City of Atlanta, Georgia, Airport Facilities Revenue Refunding Bonds, 1/07 at 101 AAA 1,063,440
Series 1996, 5.250%, 1/01/10
- ------------------------------------------------------------------------------------------------------------------------------------
U.S. Guaranteed - 15.8%
Chatham County Hospital Authority, Hospital Revenue Bonds (Memorial
Medical Center, Inc.) (Savannah, Georgia), Series 1990A:
100,000 7.000%, 1/01/10 (Pre-refunded to 1/01/01) 1/01 at 102 AAA 108,616
1,130,000 7.000%, 1/0121 (Pre-refunded to 1/01/01)
505,000 Cherokee County Water and Sewerage Authority (Georgia), Revenue No Opt. Call AAA 702,708
Bonds, Series 1985, 9.750%, 8/01/09
3,400,000 Cobb-Marietta Coliseum and Exhibit Hall Authority (Georgia), Revenue 10/01 at 102 AAA 3,746,562
Bonds, Series 1991, 6.750%, 10/01/26 (Pre-refunded to 10/01/01)
500,000 Hospital Authority of Colquitt County, Georgia, Hospital Revenue 3/02 at 102 AAA 554,935
Certificates, Series 1992, 6.700%, 3/01/12 (Pre-refunded to 3/01/02)
1,000,000 City of Conyers (Georgia), Water and Sewerage Revenue Bonds, Series 7/04 at 102 AAA 1,147,650
1994A, 6.600%, 7/01/15
800,000 Downtown Marietta Development Authority (Georgia), Revenue Bonds, 1/02 at 102 Aaa 881,704
Series 1992, 6.600%, 1/01/19 (Pre-refunded to 1/01/02)
Fulco Hospital Authority, Revenue Anticipation Certificates (Georgia
Baptist Health Care System Project), Series 1992A:
3,000,000 6.250%, 9/01/13 (Pre-refunded to 9/01/02) 9/02 at 102 Baa1*** 3,310,590
2,600,000 6.375%, 9/01/22 (Pre-refunded to 9/01/02) 9/02 at 102 Baa1*** 2,880,436
2,250,000 Fulco Hospital Authority, Refunding Revenue Anticipation Certificates 9/02 at 102 Baa1*** 2,492,685
(Georgia Baptist Health Care System Project), Series 1992B, 6.375%,
9/01/22 (Pre-refunded to 9/01/02)
500,000 City of Gainesville, Georgia, Water and Sewer Series 1990 B, 7.200%, 11/00 at 102 AAA 544,755
11/15/10 (Pre-refunded to 11/15/00)
</TABLE>
14
<PAGE>
<TABLE>
<CAPTION>
Principal Optional Call Market
Amount Description Provisions* Ratings** Value
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
U.S. Guaranteed (continued)
$ 1,855,000 Development Authority of the City of Marietta (Georgia), Revenue 12/99 at 102 AAA $ 1,966,170
Bonds (Life College, Inc.), Series 1989, 7.250%, 12/01/19
(Pre-refunded to 12/01/99)
1,200,000 Metropolitan Atlanta Rapid Transit Authority (Georgia), Sales Tax 7/99 at 102 AAA 1,252,284
Revenue Bonds, Series L, 7.200%, 7/01/20 (Pre-refunded to 7/01/99)
1,650,000 Metropolitan Atlanta Rapid Transit Authority (Georgia), Sales Tax 7/04 at 102 AAA 1,923,653
Revenue Bonds, Second Indenture Series, Series 1994A, 6.900%,
7/01/20 (Pre-refunded to 7/01/04)
1,015,000 Peach County, Georgia, School District, General Obligation School 2/05 at 102 AAA 1,159,445
Bonds, Series 1994, 6.300%, 2/01/14 (Pre-refunded to 2/01/05)
500,000 Hospital Authority of Ware County (Georgia), Revenue Anticipation 3/01 at 102 AAA 532,305
Certificates, Series 1991, 7.125%, 3/01/15 (Pre-refunded to 3/01/01)
- ------------------------------------------------------------------------------------------------------------------------------------
Utilities -- 8.3%
1,800,000 Development Authority of Appling County (Georgia), Pollution Control 1/04 at 101 AAA 2,039,040
Revenue Bonds (Oglethorpe Power Corporation Hatch Project), Series 1994,
7.150%, 1/01/21
1,500,000 Municipal Electric Authority of Georgia, General Power Revenue Bonds, 1/15 at 100 A 1,735,950
1992B Series, 6.375%, 1/01/16
Municipal Electric Authority of Georgia, Power Revenue Bonds, Series Z:
1,000,000 5.500%, 1/01/12 1/10 at 100 AAA 1,086,170
1,000,000 5.500%, 1/01/20 No Opt. Call AAA 1,069,670
Development Authority of Monroe County (Georgia), Pollution Control
Revenue Bonds (Oglethorpe Power Corporation Scherer Project), Series 1992A:
500,000 6.750%, 1/01/10 No Opt. Call A 595,155
1,000,000 6.800%, 1/01/12 No Opt. Call A 1,210,160
2,000,000 Municipal Electric Authority of Georgia, Project One Subordinated 1/07 at 101 AAA 2,037,940
Bonds, Series 1997A, 5.125%, 1/01/16
1,250,000 Puerto Rico Electric Power Authority, Power Revenue Bonds, Series T, 7/04 at 100 BBB+ 1,285,900
5.500%, 7/01/20
4,500,000 Puerto Rico Electric Power Authority, Power Revenue Bonds, Series O, No Opt. Call AAA 1,850,085
0.000%, 7/01/17
- ------------------------------------------------------------------------------------------------------------------------------------
Water and Sewer -- 4.0%
City of Brunswick, Georgia, Water and Sewerage Revenue Refunding and
Improvement Bonds, Series 1992:
500,000 6.000%, 10/01/11 No Opt. Call AAA 575,925
400,000 6.100%, 10/01/19 No Opt. Call AAA 467,685
2,000,000 Cherokee County (Georgia), Water and Sewerage Authority, No Opt. Call AAA 2,190,280
Water and Sewerage Revenue Bonds, Refunding and Improvements,
Series 1993, 5.500%, 8/01/23
1,500,000 Henry County, Georgia, and Henry County Water and Sewerage Authority, No Opt. Call AAA 1,763,865
Water and Sewerage Revenue Bonds, Series 1996, 6.150%, 2/01/20
1,000,000 City of Milledgeville (Georgia), Water and Sewerage Revenue and No Opt. Call AAA 1,152,110
Refunding Bonds, Series 1996, 6.000%, 12/01/16
- ------------------------------------------------------------------------------------------------------------------------------------
$141,305,000 Total Investments - (cost $137,505,053) - 96.8% 149,941,553
============------------------------------------------------------------------------------------------------------------------------
Temporary Investments in Short-Term Municipal Securities - 1.4%
$ 2,200,000 Residential Care Facility for the Elderly, Authority of Fulton County A-1+ 2,200,000
============ (Georgia), Variable Rate Demand Refunding Revenue Bonds (Lenbrook Square
Foundation, Inc. Project), Series 1996, 3.250%, 1/01/18+
--------------------------------------------------------------------------------------------------------------------
Other Assets Less Liabilities - 1.8% 2,787,820
--------------------------------------------------------------------------------------------------------------------
Net Assets - 100% $154,929,373
====================================================================================================================
</TABLE>
* Optional Call Provisions: Dates (month and year) and prices of the earliest
optional call or redemption. There may be other call provisions at varying
prices at later dates.
** Ratings: Using the higher of Standard & Poor's or Moody's rating.
*** Securities are backed by an escrow or trust containing sufficient U.S.
government or U.S. government agency securities which ensures the timely
payment of principal and interest. Securities are normally considered to be
equivalent to AAA rated securities.
N/R Investment is not rated.
+ The security has a maturity of more than one year, but has variable rate
and demand features which qualify it as a short-term security. The rate
disclosed is that currently in effect. This rate changes periodically based
on market conditions or a specified market index.
See accompanying notes to financial statements.
15
<PAGE>
Portfolio of Investments (Unaudited)
Nuveen Flagship Louisiana Municipal Bond Fund
November 30, 1998
<TABLE>
<CAPTION>
Principal Optional Call Market
Amount Description Provisions* Ratings** Value
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Basic Materials--1.3%
$ 1,500,000 Parish of St. Charles, State of Louisiana, Pollution Control Revenue 11/02 at 102 BBB $ 1,651,230
Bonds (Union Carbide Corporation), Series 1992, 7.350%, 11/01/22
(Alternative Minimum Tax)
- ----------------------------------------------------------------------------------------------------------------------------------
Education and Civic Organizations--4.8%
750,000 Louisiana Public Facilities Authority, College and University 10/99 at 102 A+ 788,138
Equipment and Capital Facilities Revenue Refunding Bonds (Loyola
University Project), Series 1989A, 7.250%, 10/01/09
380,000 Louisiana Public Facilities Authority, College and University 4/02 at 102 A+ 418,589
Equipment and Capital Facilities Revenue Refunding Bonds (Loyola
University Project), Series 1992, 6.750%, 4/01/10
775,000 Louisiana Public Facilities Authority, Student Loan Revenue Bonds, 9/02 at 102 Aaa 821,291
Series 1992A-2 (Senior), 6.600%, 3/01/03 (Alternative Minimum Tax)
1,000,000 Louisiana Public Facilities Authority, Revenue Bonds (Tulane 12/07 at 102 AAA 1,070,140
University of Louisiana), Series 1997, 5.600%, 12/15/27
1,000,000 Louisiana Public Facilities Authority, Revenue and Refunding Bonds 9/07 at 102 AAA 1,015,940
(Xavier University of Louisiana Project), Series 1997, 5.250%, 9/01/27
1,000,000 Louisiana Public Facilities Authority, Revenue and Refunding Bonds 2/08 at 102 AAA 991,590
(Dillard University Project), Series 1998, 5.000%, 2/01/28
960,000 Board of Supervisors of Louisiana State University and Agricultural 10/08 at 102 AAA 945,638
and Mechanical College, Revenue and Refunding Bonds (University of
New Orleans Project), Series 1998, 5.000%, 10/01/30
- -----------------------------------------------------------------------------------------------------------------------------------
Energy--5.2%
1,000,000 Lake Charles, Louisiana, Harbor and Terminal District, Port 12/02 at 102 BBB 1,095,450
Facilities Refunding Revenue Bonds, Series 1992 (Occidental
Petroleum Corporation Project), 7.200%, 12/01/20
500,000 Louisiana Offshore Terminal Authority, Deepwater Port Refunding 9/01 at 102 A 547,030
Revenue Bonds (LOOP Inc. Project), First Stage Series 1991B,
7.200%, 9/01/08
475,000 Louisiana Offshore Terminal Authority, Deepwater Port Refunding 9/00 at 102 A 511,167
Revenue Bonds (LOOP Inc. Project), First Stage Series E, 7.600%,
9/01/10
1,000,000 Louisiana Offshore Terminal Authority, Deepwater Port Refunding 10/08 at 100 A 1,000,310
Revenue Bonds, Series 1998 (LOOP Inc. Project), 5.200%, 10/01/18
3,150,000 Parish of St. Bernard, State of Louisiana, Exempt Facility Revenue 11/06 at 102 AA 3,422,444
Bonds (Mobil Oil Corporation Project), Series 1996, 5.900%,
11/01/26 (Alternative Minimum Tax)
- -----------------------------------------------------------------------------------------------------------------------------------
Forest and Paper Products--3.9%
1,640,000 Parish of DeSoto, Louisiana, Environmental Improvement Revenue 6/05 at 102 A3 1,798,637
Refunding Bonds, 1995 Series B (International Paper Company Project),
6.550%, 4/01/19 (Alternative Minimum Tax)
3,000,000 Parish of Natchitoches, State of Louisiana, Solid Waste Disposal 12/03 at 102 A- 3,126,510
Revenue Bonds (Willamette Industries Project), Series 1993, 5.875%,
12/01/23 (Alternative Minimum Tax)
- -----------------------------------------------------------------------------------------------------------------------------------
Health Care--19.3%
1,000,000 Jefferson Parish Hospital District No. 1, Parish of Jefferson, State 1/09 at 101 AAA 988,750
of Louisiana, Fixed Rate Hospital Revenue Bonds (West Jefferson Medical
Center), Series 1998A, 5.000%, 1/01/21
1,000,000 Louisiana Public Facilities Authority, Hospital Revenue and Refunding 7/07 at 101 AAA 1,021,380
Bonds (Womans Hospital Foundation Project), Series 1997, 5.375%,
10/01/22
1,000,000 Louisiana Public Facilities Authority, Hospital Revenue Bonds No Opt. Call AAA 1,116,720
(Franciscan Missionaries of Our Lady Health System Project),
Series 1998A, 5.750%, 7/01/25
5,000,000 Louisiana Public Facilities Authority, Hospital Revenue and Refunding 1/08 at 102 BBB+ 4,892,600
Bonds (Lincoln Health System Project), Series 1998, 5.150%, 1/01/19
</TABLE>
16
<PAGE>
<TABLE>
<CAPTION>
Principal Optional Call Market
Amount Description Provisions* Ratings** Value
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Health Care (continued)
$ 1,325,000 Louisiana Public Facilities Authority, Revenue Bonds, Series 1992-B 5/02 at 102 AAA $ 1,445,747
(Alton Ochsner Medical Foundation Project), 6.500%, 5/15/22
3,400,000 Louisiana Public Facilities Authority, Health Facilities Revenue No Opt. Call AA+ 3,414,314
Refunding Bonds (Sisters of Mercy Health System, St. Louis, Inc.),
Series 1993A, 5.000%, 6/01/19
2,500,000 Louisiana Public Facilities Authority, Revenue Bonds (General Health, 11/04 at 102 AAA 2,809,425
Inc. Project), Series 1994, 6.375%, 11/01/24
500,000 Louisiana Public Facilities Authority, Revenue Bonds (Mary Bird Perkins 1/05 at 102 AAA 555,675
Cancer Center Project), Series 1994, 6.200%, 1/01/19
2,180,000 St. Tammany Parish Hospital Service District No. 2, State of Louisiana, 10/04 at 102 AAA 2,435,409
Hospital Revenue Bonds, Series 1994, 6.250%, 10/01/14
885,000 Hospital Service District No. 1 of the Parish of Tangipahoa, State of 2/04 at 102 AAA 979,022
Louisiana, Hospital Revenue Bonds (Series 1994), 6.250%, 2/01/24
4,570,000 Hospital Service District No. 1 of the Parish of Terrebonne, State of 4/08 at 102 AAA 4,678,812
Louisiana, Hospital Revenue and Refunding Bonds (Terrebonne General
Medical Center Project), Series 1998, 5.375%, 4/01/28
- ------------------------------------------------------------------------------------------------------------------------------------
Housing/Multifamily--2.5%
750,000 Lake Charles, Louisiana, Non Profit Housing Development Corporation, No Opt. Call AAA 765,750
Mortgage Revenue Refunding Bonds, Series 1990A (FHA Insured Mortgage
Loan--Section 8 Assisted Chateau Project), 7.875%, 2/15/25
735,000 Louisiana Public Facilities Authority, Revenue Bonds (Walmsley Housing No Opt. Call AAA 798,798
Corporation), Series 1989A, 7.500%, 6/01/21
500,000 Louisiana Public Facilities Authority, Multifamily Housing Revenue 11/01 at 102 AA 540,520
Bonds (VOA National Housing Corporation Projects), Series 1991,
7.750%, 11/01/16
1,000,000 New Orleans (Louisiana), Home Mortgage Authority, Single Family 12/08 at 101 Aaa 1,005,320
Mortgage Revenue Refunding Bonds, Series 1998B-2, 5.200%, 12/01/21
(Alternative Minimum Tax)
- ------------------------------------------------------------------------------------------------------------------------------------
Housing/Single Family--17.4%
1,145,000 East Baton Rouge Mortgage Finance Authority, Single Family Mortgage 8/00 at 102 Aaa 1,197,441
Revenue Bonds (GNMA Mortgage Backed Securities Program),
Series 1990A, 7.875%, 8/01/23 (Alternative Minimum Tax)
2,235,000 East Baton Rouge Mortgage Finance Authority, Single Family Mortgage 10/07 at 102 Aaa 2,348,046
Revenue Refunding Bonds (GNMA and FNMA Mortgage-Backed Securities
Program), Series 1997D, 5.900%, 10/01/30 (Alternative Minimum Tax)
3,000,000 East Baton Rouge Mortgage Finance Authority, Single Family Mortgage 10/08 at 101 Aaa 3,015,600
Revenue Refunding Bonds (GNMA and FNMA Mortgage-Backed Securities
Program), Series 1998C-1 (non-AMT), 5.200%, 10/01/23 (WI)
310,000 Louisiana Housing Finance Agency, Single Family Mortgage Revenue Bonds, 6/05 at 102 Aaa 333,715
Series 1995A-2, 6.550%, 12/01/26 (Alternative Minimum Tax)
Louisiana Housing Finance Agency, Tax Exempt Bonds, Single Family
Mortgage Revenue Bonds, Series 1997B-2:
955,000 5.600%, 6/01/17 (Alternative Minimum Tax) 6/07 at 102 Aaa 988,740
2,390,000 5.750%, 12/01/28 (Alternative Minimum Tax) 6/07 at 102 Aaa 2,475,777
2,505,000 Louisiana Housing Finance Agency, Tax Exempt Bonds, Single Family 12/07 at 102 Aaa 2,598,061
Mortgage Revenue Bonds, Series 1997C-1, 5.750%, 12/01/28 (Alternative
Minimum Tax)
Louisiana Housing Finance Agency, Tax Exempt Bonds, Single Family
Mortgage Revenue Bonds (Home Ownership Program) Series 1998B-2:
1,695,000 5.200%, 12/01/26 12/07 at 101 Aaa 1,710,797
1,500,000 5.250%, 6/01/29 (Alternative Minimum Tax) 12/07 at 101 Aaa 1,513,950
500,000 New Orleans, Louisiana, Home Mortgage Authority, Single Family Mortgage 1/00 at 102 Aaa 518,965
Revenue Bonds, Series 1988-C1, 7.750%, 12/01/22
(Alternative Minimum Tax)
1,000,000 New Orleans, Louisiana, Home Mortgage Authority, Single Family Mortgage 12/06 at 102 Aaa 1,060,700
Revenue Bonds, Series 1996A, 6.100%, 12/01/29
(Alternative Minimum Tax)
</TABLE>
17
<PAGE>
Portfolio of Investments (Unaudited)
Nuveen Flagship Louisiana Municipal Bond Fund (continued)
November 30, 1998
<TABLE>
<CAPTION>
Principal Optional Call Market
Amount Description Provisions* Ratings** Value
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Housing/Single Family (continued)
$ 1,000,000 New Orleans, Louisiana, Home Mortgage Authority, Single Family Mortgage 12/07 at 102 Aaa $1,045,410
Revenue Bonds, Series 1997A, 5.850%, 12/01/30 (Alternative Minimum Tax)
Rapides Finance Authority (Louisiana), Single Family Mortgage Revenue
Refunding Bonds (GNMA and Fannie Mae Mortgage-Backed Securities Program),
Series 1998B:
2,000,000 5.450%, 12/01/30 (Alternative Minimum Tax) 6/08 at 102 Aaa 2,033,600
800,000 5.350%, 6/01/26 6/08 at 102 Aaa 813,504
199,451 St. Bernard Parish, Louisiana, Home Mortgage Authority, Single Family No Opt. Call A1 223,522
Mortgage Revenue Refunding Bonds, 1991 Series A, 8.000%, 3/25/12
76,053 St. Mary, Louisiana, Public Trust Financing Authority, Single Family No Opt. Call Aaa 86,064
Mortgage Revenue Refunding Bonds, Series 1991A, 7.625%, 3/25/12
- ------------------------------------------------------------------------------------------------------------------------------------
Long Term Care - 4.2%
3,000,000 Louisiana Housing Finance Agency, Mortgage Revenue Bonds (GNMA 9/05 at 103 AAA 3,338,100
Collateralized Mortgage Loan - St. Dominic Assisted Care Facility),
Series 1995, 6.950%, 9/01/36
1,740,000 Louisiana Housing Finance Agency, Mortgage Revenue Bonds (GNMA 1/04 at 101 AAA 1,889,449
Collateralized Mortgage Loan Villa Maria Retirement Center Project),
Series 1993, 7.100%, 1/20/35
- ------------------------------------------------------------------------------------------------------------------------------------
Tax Obligation/General - 11.3%
500,000 State of Louisiana, General Obligation Bonds, Series 1993-B, 5.625%, No Opt. Call AAA 552,230
8/01/13
City of New Orleans, Louisiana, General Obligation Refunding Bonds,
Series 1991:
2,000,000 0.000%, 9/01/10 No Opt. Call AAA 1,161,200
5,785,000 0.000%, 9/01/16 No Opt. Call AAA 2,349,751
3,000,000 Parishwide School District of the Parish of Orleans, State of Louisiana, 3/06 at 100 AAA 2,982,060
General Obligation School Bonds, Series 1996, 5.000%, 9/01/20
1,000,000 Parishwide School District of the Parish of Orleans, State of Louisiana, 3/08 at 100 Aaa 1,002,110
General Obligation School Bonds, Series 1998A, 5.125%, 9/01/22
13,875,000 Orleans Parish, Louisiana, School Board Public School Refunding Bonds, No Opt. Call AAA 6,165,356
Series 1991, 0.000%, 2/01/15
- ------------------------------------------------------------------------------------------------------------------------------------
Tax Obligation/Limited - 8.5%
1,000,000 Jefferson Sales Tax District, Parish of Jefferson, State of Louisiana, 12/02 at 100 AAA 1,111,130
Special Sales Tax Revenue Bonds, Series 1991B, 6.750%, 12/01/06
2,000,000 Parish School Board of the Parish of Jefferson, State of Louisiana, No Opt. Call AAA 1,273,660
Sales Tax School Bonds, Refunding, Series 1998, 0.000%, 3/01/09
1,000,000 City of Lafayette, State of Louisiana, Public Improvement Sales Tax 3/07 at 101 AAA 990,430
Bonds, Series 1998A, 5.000%, 5/01/22
1,500,000 Office Facilities Corporation (A Louisiana Non Profit Corporation), 12/01 at 103 BBB+ 1,673,295
Capital Facilities Bonds (Statewide Lease/Purchase Program), Series
1990, 7.750%, 12/01/10
750,000 Puerto Rico Highway and Transportation Authority, Highway Revenue 7/16 at 100 A 809,520
Bonds, Series Y of 1996, 5.500%, 7/01/36
250,000 Puerto Rico Public Buildings Authority, Government Facilities Revenue 7/07 at 101 1/2 A 254,358
Bonds, Series B, Guaranteed by the Commonwealth of Puerto Rico,
5.250%, 7/01/21
1,500,000 Saint John Baptist Parish, Louisiana, Sales Tax District, Refunding 12/99 at 103 Baa 1,589,895
Series ST of 1989, 7.800%, 12/01/14
2,995,000 City of Shreveport, State of Louisiana, Certificates of Indebtedness, 10/09 at 102 AAA 3,010,304
Series 1998-A, 5.000%, 10/01/16
- ------------------------------------------------------------------------------------------------------------------------------------
Transportation - 2.1%
505,000 New Orleans, Louisiana, Aviation Board, Series B-1, 5.450%, 10/01/27 10/07 at 102 AAA 520,599
(Alternative Minimum Tax)
2,100,000 City of Shreveport, State of Louisiana, Airport System Revenue Bonds, 1/08 at 102 AAA 2,131,458
Series 1997A, 5.375%, 1/01/28 (Alternative Minimum Tax)
</TABLE>
18
<PAGE>
<TABLE>
<CAPTION>
Principal Optional Call Market
Amount Description Provisions* Ratings** Value
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
U.S. Guaranteed -- 11.3%
$ 745,000 Louisiana Public Facilities Authority, Hospital Revenue Refunding Bonds No Opt. Call AAA $ 920,068
(Southern Baptist Hospitals, Inc. Project), Series 1986, 8.000%,
5/15/12
1,125,000 Louisiana Public Facilities Authority, Hospital Revenue Bonds (Womans 10/02 at 102 A3*** 1,280,205
Hospital Foundation Project), Series 1992, 7.250%, 10/01/22
(Pre-refunded to 10/01/02)
3,000,000 Louisiana Public Facilities Authority, Hospital Revenue Refunding 10/02 at 102 AAA 3,342,240
(Lafayette General Medical Center Project), 6.500%, 10/01/22
(Pre-refunded to 10/01/02)
1,000,000 Louisiana Public Facilities Authority, Hospital Revenue, Our Lady of the 5/04 at 102 AAA 1,105,940
Lake Regional Medical Center, 5.900%, 12/03/21 (Pre-refunded to
5/28/04)
10,000,000 Louisiana Public Facilities Authority, Series B, 0.000%, 12/01/19 No Opt. Call AAA 3,508,200
2,000,000 City of New Orleans Audubon Park Commission, Aquarium Revenue Bonds, 4/02 at 102 N/R*** 2,293,620
Series 1992, 8.000%, 4/01/12 (Pre-refunded to 4/01/02)
1,400,000 Ouachita Parish, Louisiana, Hospital Service District No. 1 Revenue, 7/01 at 102 A*** 1,554,168
Glenwood Regional Medical Center, 7.500%, 7/01/21 (Pre-refunded to
7/01/01)
250,000 Shreveport, Louisiana, Home Mortgage Authority, Single Family No Opt. Call Aaa 284,820
Mortgage Revenue, Series A, 6.750%, 9/01/10
- -----------------------------------------------------------------------------------------------------------------------------------
Utilities -- 6.3%
3,000,000 Lake Charles, Louisiana, Harbor and Terminal District, Port Facilities 8/02 at 103 A3 3,396,750
Revenue Refunding, Trunkline LNG Company Project, 7.750%, 8/15/22
250,000 Puerto Rico Electric Power Authority, Power Revenue Refunding Bonds, 7/05 at 100 BBB+ 252,830
Series Z, 5.250%, 7/01/21
1,000,000 Saint Charles Parish, Louisiana, Environmental Improvement Revenue, 11/02 at 102 BBB 1,045,270
Louisiana Power and Light Company Project, Series A, 6.200%, 5/01/23
(Alternative Minimum Tax)
1,000,000 Saint Charles Parish, Louisiana, Environmental Improvement Revenue, 11/00 at 102 BBB- 1,036,430
Louisiana Power and Light Company Project, 6.375%, 11/01/25
(Alternative Minimum Tax)
500,000 Saint Charles Parish, Louisiana, Environmental Improvement Revenue, 12/99 at 103 Baa3 531,510
Louisiana Power and Light Company Project, 2nd Series, 8.000%,
12/01/14
1,500,000 St. Charles Parish, Louisiana, Solid Waste Disposal Revenue, Louisiana 12/02 at 102 BBB 1,629,555
Power and Light Company Project, Series A, 7.000%, 12/01/22
(Alternative Minimum Tax)
- -----------------------------------------------------------------------------------------------------------------------------------
Water and Sewer -- 1.3%
1,500,000 Louisiana Public Facilities Authority, Revenue Bonds, Series 1992, 2/03 at 101 AA- 1,636,020
Baton Rouge Water Works Company Project, 6.400%, 2/01/10
(Alternative Minimum Tax)
- -----------------------------------------------------------------------------------------------------------------------------------
$138,555,504 Total Investments -- (cost $115,309,471) -- 99.4% 125,238,769
============-----------------------------------------------------------------------------------------------------------------------
Temporary Investments in Short-Term Municipal Securities -- 0.8%
$ 1,000,000 East Baton Rouge Parish (Exxon), Pollution Control Revenue Refunding, A-1+ 1,000,000
Variable Rate Demand Bonds, 3.250%, 3/01/22
-------------------------------------------------------------------------------------------------------------------
Other Assets Less Liabilities--(0.2)% (272,679)
-------------------------------------------------------------------------------------------------------------------
Net Assets--100% $125,966,090
===================================================================================================================
</TABLE>
* Optional Call Provisions: Dates (month and year) and prices of the earliest
optional call or redemption. There may be other call provisions at varying
prices at later dates.
** Ratings: Using the higher of Standard & Poor's or Moody's rating.
*** Securities are backed by an escrow or trust containing sufficient U.S.
government or U.S. government agency securities which ensures the timely
payment of principal and interest. Securities are normally considered to be
equivalent to AAA rated securities.
N/R Investment is not rated.
(WI) Security purchased on a when-issued basis (note 1).
+ The security has a maturity of more than one year, but has variable rate
and demand features which qualify it as a short-term security. The rate
disclosed is that currently in effect. This rate changes periodically based
on market conditions or a specified market index.
See accompanying notes to financial statements.
19
<PAGE>
Portfolio of Investments (Unaudited)
Nuveen Flagship North Carolina Municipal Bond Fund
November 30, 1998
<TABLE>
<CAPTION>
Principal Optional Call Market
Amount Description Provisions* Ratings** Value
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Education and Civic Organizations--5.6%
North Carolina Educational Facilities Finance Agency, Revenue Bonds
(High Point College Project), Series 1989:
$ 165,000 7.050%, 12/01/05 12/00 at 102 A3 $ 173,606
175,000 7.100%, 12/01/06 12/00 at 102 A3 184,214
4,220,000 North Carolina Educational Facilities Finance Agency, Refunding 10/06 at 102 AA+ 4,260,554
Revenue Bonds (Duke University Project), Series 1996B, 5.000%,
10/01/17
1,250,000 North Carolina Educational Facilities Finance Agency, Revenue Bonds 11/07 at 102 AA 1,263,063
(Wake Forest University), Series 1997, 5.000%, 11/01/17
1,000,000 State of North Carolina, State Education Assistance Authority, 7/05 at 102 A 1,070,700
Guaranteed Student Loan Revenue Bonds, 1995 Series A (Subordinate
Lien), 6.300%, 7/01/15 (Alternative Minimum Tax)
295,000 University of North Carolina at Chapel Hill, Student Fee Revenue 6/01 at 102 AAA 324,181
Bonds, Series 1991 (Student Recreation Center) of the Board of
Governors of the University of North Carolina, 7.000%, 6/01/08
University of North Carolina at Chapel Hill, Utilities System
Revenue Refunding Bonds, Series 1997 of the Board of Governors
of the University of North Carolina:
4,000,000 0.000%, 8/01/15 No Opt. Call AA 1,805,320
4,265,000 0.000%, 8/01/18 No Opt. Call AA 1,623,899
2,750,000 0.000%, 8/01/20 No Opt. Call AA 941,133
- -----------------------------------------------------------------------------------------------------------------------------------
Energy--0.6%
1,100,000 New Hanover County, North Carolina, Industrial Facilities and Pollution 7/02 at 102 BBB 1,178,430
Control Financing Authority, Revenue Refunding Bonds (Occidental
Petroleum Corporation Project), Series 1992, 6.700%, 7/01/19
- -----------------------------------------------------------------------------------------------------------------------------------
Forest and Paper Products--9.0%
1,400,000 The Haywood County Industrial Facilities and Pollution Control 9/05 at 102 Baa1 1,492,554
Financing Authority (North Carolina), Environmental Improvement
Revenue Bonds (Champion International Corporation Project),
Series 1995, 6.250%, 9/01/25 (Alternative Minimum Tax)
4,000,000 The Haywood County Industrial Facilities and Pollution Control 10/03 at 102 Baa1 4,028,880
Financing Authority (North Carolina), Solid Waste Disposal Revenue
Bonds (Champion International Corporation Project), Series 1993,
5.500%, 10/01/18 (Alternative Minimum Tax)
3,100,000 Haywood County Industrial Facilities and Pollution Control Financing 3/06 at 102 Baa1 3,246,816
Authority (North Carolina), Pollution Control Refunding Revenue
Bonds (Champion International Corporation Project), Series 1995,
6.000%, 3/01/20
1,900,000 Martin County, North Carolina, Industrial Facilities and Pollution 9/01 at 103 A 2,079,151
Control Financing Authority, Solid Waste Disposal Revenue Bonds
(Weyerhaeuser Company Project), Series 1991, 7.250%, 9/01/14
(Alternative Minimum Tax)
6,000,000 Martin County, North Carolina, Industrial Facilities and Pollution 5/04 at 102 A 6,633,360
Control Financing Authority, Solid Waste Disposal Revenue Bonds
(Weyerhaeuser Company Project), Series 1994, 6.800%, 5/01/24
(Alternative Minimum Tax)
1,000,000 Martin County, North Carolina, Industrial Facilities and Pollution 11/05 at 102 A 1,055,010
Control Financing Authority, Solid Waste Disposal Revenue Bonds
(Weyerhaeuser Company Project), Series 1995, 6.000%, 11/01/25
(Alternative Minimum Tax)
- -----------------------------------------------------------------------------------------------------------------------------------
Health Care--18.4%
The Charlotte - Mecklenburg Hospital Authority (North Carolina),
Health Care System Revenue Refunding Bonds, Series A:
5,300,000 5.750%, 1/15/21 1/06 at 102 AA 5,678,314
5,500,000 5.875%, 1/15/26 1/06 at 102 AA 5,957,380
</TABLE>
20
<PAGE>
<TABLE>
<CAPTION>
Principal Optional Call Market
Amount Description Provisions* Ratings** Value
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Health Care (continued)
$ 6,000,000 The Charlotte - Mecklenburg Hospital Authority (North Carolina), 1/07 at 102 AA $ 5,951,460
Health Care System Revenue Bonds, Series 1997A, Carolina Healthcare
System, 5.125%, 1/15/22
5,000,000 North Carolina Medical Care Commission, Health Care Facilities 6/08 at 101 AA 4,920,200
Revenue Bonds (Duke University Health System), Series 1998A,
5.000%, 6/01/23
1,000,000 North Carolina Medical Care Commission, Hospital Revenue Bonds 2/02 at 102 Baa3 1,128,250
(Annie Penn Memorial Hospital Project), Series 1991, 7.500%, 8/15/21
4,000,000 North Carolina Medical Care Commission, Hospital Revenue Bonds 12/08 at 101 AA 3,947,720
(Pitt County Memorial Hospital), Series 1998A, 5.000%, 12/01/18
2,000,000 North Carolina Medical Care Commission, Hospital Revenue Bonds 10/08 at 101 AAA 2,006,460
(Mission - St. Josephs Health System), Series 1998, 5.125%,
10/01/28 (WI)
2,500,000 Northern Hospital District, Surry County, North Carolina, Health 10/01 at 102 BBB 2,718,575
Care Facilities Revenue Refunding Bonds, Series 1991, 7.875%,
10/01/21
5,750,000 Board of Governors of The University of North Carolina, University 2/06 at 102 AA 5,801,750
of North Carolina Hospitals at Chapel Hill, Revenue Bonds,
Series 1996, 5.250%, 2/15/26
- ------------------------------------------------------------------------------------------------------------------------------------
Housing/Multifamily--1.0%
1,340,000 Housing Authority of the City of Asheville (North Carolina), 11/07 at 102 AAA 1,402,149
Multifamily Housing Revenue Bonds (GNMA-Collateralized -
Woodridge Apartments), Series 1997, 5.750%, 11/20/29
(Alternative Minimum Tax)
620,000 North Carolina Housing Finance Agency, Multifamily Revenue 7/02 at 102 AA 665,415
Refunding Bonds (1992 Refunding Bond Resolution), Series B,
6.900%, 7/01/24
- ------------------------------------------------------------------------------------------------------------------------------------
Housing/Single Family--13.4%
585,000 North Carolina Housing Finance Agency, Single Family Revenue 3/02 at 100 AA 598,022
Bonds, Series G (1985 Resolution), 7.800%, 3/01/21
755,000 North Carolina Housing Finance Agency, Single Family Revenue 3/01 at 102 AA 802,595
Bonds, Series O (1985 Resolution), 7.600%, 3/01/21
(Alternative Minimum Tax)
North Carolina Housing Finance Agency, Single Family Revenue Bonds,
Series Y (1985 Resolution):
2,000,000 6.300%, 9/01/15 9/04 at 102 AA 2,159,560
1,845,000 6.350%, 3/01/18 9/04 at 102 AA 1,990,976
1,910,000 North Carolina Housing Finance Agency, Single Family Revenue 9/05 at 102 AA 2,053,747
Bonds, Series BB (1985 Resolution), 6.500%, 9/01/26
(Alternative Minimum Tax)
3,500,000 North Carolina Housing Finance Agency, Single Family Revenue Bond, 3/05 at 102 AA 3,712,835
Series DD (1985 Resolution), 6.200%, 9/01/27 (Alternative
Minimum Tax)
4,360,000 North Carolina Housing Finance Agency, Single Family Revenue 3/06 at 102 AA 4,650,202
Bonds, Series LL (1985 Resolution), 6.200%, 3/01/26
(Alternative Minimum Tax)
6,550,000 North Carolina Housing Finance Agency, Single Family Revenue 3/07 at 101 1/2 AA 6,895,120
Bonds, Series RR (1985 Resolution), 5.850%, 9/01/28
(Alternative Minimum Tax)
1,635,000 North Carolina Housing Finance Agency, Single Family Revenue 3/08 at 101 AA 1,650,091
Bonds, Series VV (1985 Resolution), 5.250%, 3/01/17
(Alternative Minimum Tax)
2,500,000 North Carolina Housing Finance Agency, Home Ownership Revenue 7/08 at 101 AA 2,520,075
Bonds, Series 2-A (1998 Trust Agreement), 5.250%, 7/01/26
(Alternative Minimum Tax) (WI)
590,000 Winston Salem, North Carolina, Single Family Mortgage Revenue 9/00 at 102 A1 613,700
Bonds, Series 1990, 8.000%, 9/01/07 (Alternative Minimum Tax)
- ------------------------------------------------------------------------------------------------------------------------------------
Industrial/Other--0.7%
1,400,000 Gaston County, North Carolina Industrial Facilities and Pollution 11/01 at 103 N/R 1,516,368
Control Financing Authority, Industrial Development Revenue Bonds,
Series 1985 (ABB-Combustion Engineering Inc.), 8.850%, 11/01/15
- ------------------------------------------------------------------------------------------------------------------------------------
Tax Obligation/Limited--17.5%
500,000 City of Asheville, North Carolina, Certificates of Participation, 2/02 at 102 A1 543,660
Series 1992, 6.500%, 2/01/08
</TABLE>
21
<PAGE>
Portfolio of Investments (Unaudited)
Nuveen Flagship North Carolina Municipal Bond Fund (continued)
November 30, 1998
<TABLE>
<CAPTION>
Principal Optional Call Market
Amount Description Provisions* Ratings** Value
- ------------------------------------------------------------------------------------------------------------------------------------
<C> <S> <C> <C> <C>
Tax Obligation/Limited (continued)
$ 1,000,000 City of Asheville, North Carolina, Certificates of Participation, Series 6/07 at 101 AAA $ 1,019,700
1997A, 5.125%, 6/01/18
City of Charlotte, North Carolina, General Obligation Water and Sewer
Bonds, Series 1995A:
500,000 5.400%, 4/01/19 4/05 at 102 AAA 528,805
3,445,000 5.400%, 4/01/20 4/05 at 102 AAA 3,635,681
4,000,000 Cumberland County Finance Corporation, North Carolina, Installment Payment 12/08 at 102 AAA 3,933,640
Revenue Bonds (Public Building and Equipment Projects), Series 1998,
4.750%, 12/01/17
600,000 City of Durham, North Carolina, Certificates of Participation, Series 1995, 6/05 at 102 AA 648,120
5.800%, 6/01/15
County of Harnett, North Carolina, Certificates of Participation, Series
1994 (Harnett County Projects):
1,000,000 6.200%, 12/01/06 12/04 at 102 AAA 1,128,130
1,750,000 6.200%, 12/01/09 12/04 at 102 AAA 1,979,250
500,000 6.400%, 12/01/14 12/04 at 102 AAA 566,050
County of Pitt, North Carolina, Certificates of Participation (Pitt County
Public Facilities Project), Series 1997A:
1,250,000 5.550%, 4/01/12 4/07 at 102 AAA 1,358,938
1,000,000 5.850%, 4/01/17 4/07 at 102 AAA 1,096,650
10,000,000 Puerto Rico Highway and Transportation Authority, Highway Revenue Bonds, 7/16 at 100 A 10,793,600
Series Y of 1996, 5.500%, 7/01/36
555,000 Puerto Rico Infrastructure Finance Authority, Special Tax Revenue Bonds, 7/00 at 100 BBB+ 567,959
Series 1988A, 7.750%, 7/01/08
1,750,000 Puerto Rico Infrastructure Financing Authority, Special Tax Revenue Bonds, 1/08 at 101 AAA 1,755,093
Series 1997A, 5.000%, 7/01/28
1,000,000 Puerto Rico Public Buildings Authority, Revenue Refunding Bonds, Series L, No Opt. Call A 1,084,960
Guaranteed by the Commonwealth of Puerto Rico, 5.500%, 7/01/21
Town of Ramseur, North Carolina, General Obligation Water Refunding
Bonds, Series 1997:
120,000 5.750%, 6/01/18 6/07 at 102 N/R 126,678
125,000 5.750%, 6/01/19 6/07 at 102 N/R 131,248
125,000 5.750%, 6/01/20 6/07 at 102 N/R 130,895
130,000 5.750%, 6/01/21 6/07 at 102 N/R 135,912
105,000 5.750%, 6/01/22 6/07 at 102 N/R 109,701
715,000 County of Stokes, North Carolina, Certificates of Participation, 3/01 at 102 AAA 777,470
Series 1991, 7.000%, 3/01/06
1,410,000 County of Union, North Carolina, Certificates of Participation, 4/03 at 102 AAA 1,554,751
Series 1992, 6.375%, 4/01/12
2,375,000 City of Winston - Salem, North Carolina, Special Obligation Bonds 4/05 at 102 AA 2,485,461
(Solid Waste Management Project), Series 1995, 5.500%, 4/01/16
- ------------------------------------------------------------------------------------------------------------------------------------
U.S. Guaranteed--10.4%
140,000 Asheville, North Carolina, Housing Development Corporation, First Lien 11/09 at 100 N/R*** 186,777
Revenue Bonds, Series 1980, 10.500%, 5/01/11 (Pre-refunded to 11/01/09)
1,500,000 County of Buncombe, North Carolina, Certificates of Participation (1992 12/02 at 102 Aa3*** 1,686,855
Buncombe County Project), 6.625%, 12/01/10 (Pre-refunded to 12/01/02)
1,900,000 Craven Regional Medical Authority (North Carolina), Insured Health Care 10/00 at 102 AAA 2,061,462
Facilities Revenue Bonds, Series 1990, 7.200%, 10/01/19
(Pre-refunded to 10/01/00)
705,000 City of Durham, North Carolina, Certificates of Participation (1990 9/00 at 102 Aa*** 763,515
Financing Project), 7.250%, 9/01/10 (Pre-refunded to 9/01/00)
1,000,000 City of Durham, North Carolina, Certificates of Participation, Series 12/01 at 102 Aa3*** 1,106,170
1991, 6.750%, 12/01/11 (Pre-refunded to 12/01/01)
2,055,000 North Carolina Medical Care Commission, Health Care Facilities Revenue 10/99 at 102 AAA 2,173,861
Bonds (Stanly Memorial Hospital Project), Series 1989, 7.800%, 10/01/19
(Pre-refunded to 10/01/99)
North Carolina Eastern Municipal Power Agency, Power System Revenue Bonds,
Refunding Series 1989A:
690,000 7.500%, 1/01/21 (Pre-refunded to 1/01/99) 1/99 at 102 Aaa 706,332
500,000 7.250%, 1/01/23 (Pre-refunded to 1/01/99) 1/99 at 102 Aaa 511,730
995,000 North Carolina Eastern Municipal Power Agency, Power System Revenue No Opt. Call AAA 1,198,517
Refunding Bonds, Series 1991A, 6.500%, 1/01/18
</TABLE>
22
<PAGE>
<TABLE>
<CAPTION>
Principal Optional Call Market
Amount Description Provisions* Ratings** Value
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
U.S. Guaranteed (continued)
$ 75,000 North Carolina Medical Care Commission, Hospital Revenue Bonds No Opt. Call AAA $ 87,610
(Memorial Mission Hospital Project), Series A, 7.625%, 10/01/08
North Carolina Medical Care Commission, Hospital Revenue Bonds
(Halifax Memorial Hospital Project), Series 1992:
1,275,000 6.750%, 8/15/14 (Pre-refunded to 8/15/02) 8/02 at 102 Baa1*** 1,426,279
1,000,000 6.750%, 8/15/24 (Pre-refunded to 8/15/02) 8/02 at 102 Baa1*** 1,118,650
2,200,000 North Carolina Medical Care Commission, Hospital Revenue Bonds 10/99 at 102 Aaa 2,326,346
(Roanoke, Chowan Hospital Project), Series 1989, 7.750%,
10/01/19 (Pre-refunded to 10/01/99)
600,000 North Carolina Medical Care Commission, Hospital Revenue Bonds 10/99 at 102 N/R*** 634,962
(Transylvania Community Hospital Project), Series 1989, 8.000%,
10/01/19 (Pre-refunded to 10/01/99)
3,400,000 North Carolina Medical Care Commission, Hospital Revenue Bonds 10/00 at 102 AA*** 3,740,306
(Community General Hospital of Thomasville), Series 1990, 8.100%,
10/01/15 (Pre-refunded to 10/01/00)
700,000 County of Pender, North Carolina, Certificates of Participation, 6/01 at 102 Baa1*** 780,871
Series 1991, 7.700%, 6/01/11 (Pre-refunded to 6/01/01)
1,000,000 County of Pitt, North Carolina, Certificates of Participation, 4/00 at 102 AAA 1,064,380
6.900%, 4/01/08 (Pre-refunded to 4/01/00)
- -----------------------------------------------------------------------------------------------------------------------------------
Utilities - 16.7%
Coastal Regional Solid Waste Management Authority (North Carolina),
Solid Waste System Revenue Bonds, Series 1992:
1,000,000 6.300%, 6/01/04 6/02 at 102 A 1,087,530
1,000,000 6.500%, 6/01/08 6/02 at 102 A 1,084,660
1,000,000 City of Concord, North Carolina, Utilities Systems Revenue Bonds, 12/05 at 102 AAA 1,055,550
Series 1995, 5.500%, 12/01/19
3,000,000 City of Concord, North Carolina, Utilities Systems Revenue Refunding 12/08 at 101 AAA 3,033,780
Bonds, Series 1998B, 5.000%, 12/01/17
City of Fayetteville, North Carolina, Public Works Commission Revenue
Bonds, Series 1995A:
1,845,000 5.250%, 3/01/16 3/05 at 102 AAA 1,904,058
1,000,000 5.375%, 3/01/20 3/05 at 102 AAA 1,033,560
5,900,000 City of Fayetteville, North Carolina, Public Works Commission Revenue 3/07 at 101 AAA 5,936,934
Bonds, Series 1997, 5.125%, 3/01/24
1,500,000 City of Gastonia, North Carolina, Combined Utilities System Revenue 5/08 at 102 AAA 1,497,405
Bonds, Series 1998, 4.750%, 5/01/15
2,000,000 City of Gastonia, North Carolina, Combined Utilities System Revenue 5/08 at 102 AAA 1,952,660
Bonds, Series 1994, 4.750%, 5/01/19
2,000,000 City of Greenville, North Carolina, Greenville Utilities Commission 9/04 at 102 A+ 2,171,280
Combined Enterprise System Revenue Bonds, Series 1994, 6.000%, 9/01/16
5,300,000 North Carolina Eastern Municipal Power Agency, Power System Revenue No Opt. Call AAA 6,056,522
Bonds, Refunding Series 1993B, 6.000%, 1/01/18
5,250,000 Puerto Rico Electric Power Authority, Power Revenue Bonds, Series DD, 7/08 at 101 BBB+ 5,189,783
5.000%, 7/01/28
870,000 City of Shelby, North Carolina, Combined Enterprise System Revenue 5/05 at 102 A 905,313
Bonds, Series 1995A, 5.500%, 5/01/17
1,470,000 City of Shelby, North Carolina, Combined Enterprise System Revenue 5/05 at 102 A 1,529,667
Refunding Bonds, Series 1995B, 5.500%, 5/01/17
- -----------------------------------------------------------------------------------------------------------------------------------
Water and Sewer - 6.2%
2,000,000 City of Asheville, North Carolina, Water System Revenue Bonds, Series 8/06 at 102 AAA 2,153,360
1996, 5.700%, 8/01/25
1,000,000 County of Dare, North Carolina, Utilities System Revenue Bonds, Series 6/08 at 102 AAA 969,090
1998A, 4.750%, 6/01/24 (WI)
3,400,000 City of Greensboro, North Carolina, Combined Enterprise System Revenue 6/05 at 102 AA- 3,543,616
Bonds, Series 1995A, 5.375%, 6/01/19
3,000,000 County of Union, North Carolina, Enterprise Systems Revenue Bonds, 6/06 at 102 AAA 3,176,340
Series 1996, 5.500%, 6/01/17
</TABLE>
23
<PAGE>
Portfolio of Investments (Unaudited)
Nuveen Flagship North Carolina Municipal Bond Fund (continued)
November 30, 1998
<TABLE>
<CAPTION>
Principal Optional Call Market
Amount Description Provisions* Ratings** Value
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Water and Sewer (continued)
City of Winston - Salem, North Carolina, Water and Sewer System Revenue
Bonds, Series 1995B:
$ 750,000 5.600%, 6/01/14 6/05 at 102 AA+ $ 797,138
1,500,000 5.700%, 6/01/17 6/05 at 102 AA+ 1,602,525
475,348 Woodfin Treatment Facility, Inc. (North Carolina), Proportionate No Opt. Call N/R 481,388
Interest Certificates, 5.500%, 12/01/03
- -----------------------------------------------------------------------------------------------------------------------------------
$202,210,348 Total Investments (cost $191,557,731) - 99.5% 205,530,969
============-----------------------------------------------------------------------------------------------------------------------
Temporary Investments in Short-Term Municipal Securities 1.7%
1,000,000 Puerto Rico Highway and Transportation Authority, Transportation Revenue VMIG-1 1,000,000
Bonds (Series A), Variable Rate Demand Bonds, 2.750%, 7/01/20/+/
2,600,000 Raleigh - Durham Airport Authority, Special Facility Refunding Revenue A-1+ 2,600,000
Bonds (American Airlines Project), Series 1995B, Variable Rate Demand
Bonds, 3.350%, 11/01/05/+/
- -----------------------------------------------------------------------------------------------------------------------------------
$ 3,600,000 Total Temporary Investments - 1.7% 3,600,000
============-----------------------------------------------------------------------------------------------------------------------
Other Assets Less Liabilities - (1.2)% (2,659,780)
-------------------------------------------------------------------------------------------------------------------
Net Assets - 100% $206,471,189
===================================================================================================================
</TABLE>
* Optional Call Provisions: Dates (month and year) and prices of the earliest
optional call or redemption. There may be other call provisions at varying
prices at later dates.
** Ratings: Using the higher of Standard & Poor's or Moody's rating.
*** Securities are backed by an escrow or trust containing sufficient U.S.
government or U.S. government agency securities which ensures the timely
payment of principal and interest. Securities are normally considered to be
equivalent to AAA rated securities.
N/R Investment is not rated.
(WI) Security purchased on a when-issued basis (note 1).
+ The security has a maturity of more than one year, but has variable rate
and demand features which qualify it as a short-term security. The rate
disclosed is that currently in effect. This rate changes periodically based
on market conditions or a specified market index.
See accompanying notes to financial statements.
24
<PAGE>
Portfolio of Investments (Unaudited)
Nuveen Flagship Tennessee Municipal Bond Fund
November 30, 1998
<TABLE>
<CAPTION>
Principal Optional Call Market
Amount Description Provisions* Ratings** Value
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Basic Materials - 5.2%
$ 3,000,000 Industrial Development Board of the City of Chattanooga (Tennessee), 7/03 at 103 AA- $ 3,296,310
Pollution Control Revenue Bonds, Series 1982 A (E.I. du Pont de
Nemours and Company), 6.350%, 7/01/22
12,000,000 The Industrial Development Board of Humphreys County, Tennessee, Solid 5/04 at 102 AA- 13,392,840
Waste Disposal Facility Bonds (E.I. du Pont de Nemours and Company
Project), 6.700%, 5/01/24 (Alternative Minimum Tax)
- ------------------------------------------------------------------------------------------------------------------------------------
Consumer Cyclical - 2.4%
7,000,000 The Industrial Development Board of Maury County, Tennessee, Multi-Modal 9/04 at 102 A 7,644,280
Interchangeable Rate Pollution Control Refunding Revenue Bonds (Saturn
Corporation Project), Series 1994, 6.500%, 9/01/24
- ------------------------------------------------------------------------------------------------------------------------------------
Consumer Staples - 0.5%
250,000 Memphis, Shelby County, Tennessee, Industrial Development Board, No Opt. Call A1 278,280
Industrial Development Revenue Bonds (Colonial Baking Company
Memphis Project), Series 1981, 9.500%, 4/01/01
1,245,000 Industrial Development Board of the City of South Fulton, Tennessee, 10/05 at 102 A3 1,356,701
Inc., Industrial Development Revenue Bonds (Tyson Foods, Inc.
Project), Series 1995, 6.400%, 10/01/20 (Alternative Minimum Tax)
- ------------------------------------------------------------------------------------------------------------------------------------
Education and Civic Organizations - 1.9%
3,705,000 Tennessee State School Bond Authority, Higher Educational 5/02 at 101 1/2 AAA 4,054,122
Facilities Bonds, 1992 Series A, 6.250%, 5/01/22
2,000,000 Tennessee State School Bond Authority, Higher Educational 5/06 at 102 AA+ 2,144,580
Facilities Bonds, 1996 Series C, 5.700%, 5/01/20
- ------------------------------------------------------------------------------------------------------------------------------------
Forest and Paper Products - 4.8%
6,750,000 The Industrial Development Board of Loudon County (Tennessee), 2/03 at 102 AA 7,270,695
Solid Waste Disposal Revenue Bonds (Kimberly-Clark Corporation
Project), Series 1993, 6.200%, 2/01/23 (Alternative Minimum Tax)
2,500,000 The Industrial Development Board of the County of McMinn (Tennessee), 3/01 at 102 Baa1 2,701,975
Pollution Control Facilities Revenue Bonds, Series 1991 (Calhoun
Newsprint Company Project - Bowater Incorporated Obligor) (The
Construction Bonds), 7.625%, 3/01/16 (Alternative Minimum Tax)
4,950,000 The Industrial Development Board of the County of McMinn (Tennessee), 12/02 at 102 Baa1 5,487,867
Solid Waste Recycling Facilities Revenue Bonds, Series 1992 (Calhoun
Newsprint Company Project - Bowater Incorporated Obligor), 7.400%,
12/01/22 (Alternative Minimum Tax)
- ------------------------------------------------------------------------------------------------------------------------------------
Health Care - 11.9%
4,000,000 The Health, Educational and Housing Facility Board, The City of 6/08 at 101 A- 3,957,960
Chattanooga, Tennessee, Hospital Improvement and Refunding Revenue
Bonds, Series 1998 (Siskin Hospital for Physical Rehabilitation,
Inc. Project), 5.250%, 6/01/28
1,550,000 The Industrial Development Board of the City of Cookeville, Tennessee, 12/03 at 102 A 1,665,987
Hospital Refunding Revenue Bonds, Series 1993 (Cookeville General
Hospital Project), 5.750%, 10/01/10
7,350,000 The City of Jackson, Tennessee, Hospital Revenue Refunding and 4/05 at 102 AAA 7,795,704
Improvement Bonds, Series 1995 (Jackson - Madison County General
Hospital Project), 5.625%, 4/01/15
2,090,000 The Health and Educational Facilities Board of the City of Johnson 7/01 at 102 AAA 2,271,015
City, Tennessee, Hospital Revenue Refunding and Improvement Bonds,
Series 1991 (Johnson City Medical Center Hospital), 6.750%, 7/01/16
5,000,000 The Health and Educational Facilities Board of the City of Johnson 1/09 at 101 AAA 5,028,700
City, Tennessee, Hospital Revenue Refunding and Improvement Bonds,
Series 1998C (Johnson City Medical Center Hospital), 5.250%, 7/01/28
(WI)
135,000 The Health, Educational and Housing Facilities Board of the County of 1/00 at 100 AAA 136,886
Knox (Tennessee), Hospital Revenue Bonds, Series 1988 (Fort Sanders
Regional Medical Center), 8.000%, 1/01/08
</TABLE>
25
<PAGE>
Portfolio of Investments (Unaudited)
Nuveen Flagship Tennessee Municipal Bond Fund (continued)
November 30, 1998
<TABLE>
<CAPTION>
Principal Optional Call Market
Amount Description Provisions* Ratings** Value
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Health Care (continued)
The Health, Educational and Housing Facilities Board of the County
of Knox, (Tennessee), Hospital Revenue Bonds, Series 1993A (Fort
Sanders Alliance Obligated Group):
$ 1,000,000 6.250%, 1/01/13 No Opt. Call AAA $ 1,161,140
3,000,000 5.250%, 1/01/15 No Opt. Call AAA 3,162,060
1,250,000 The Health and Educational Facilities Board of the Metropolitan 11/05 at 102 AAA 1,341,725
Government of Nashville and Davidson County, Tennessee, Hospital
Revenue Bonds, Series 1995 (Adventist Health System/Sunbelt
Obligated Group), 5.750%, 11/15/25
2,395,000 The Health and Educational Facilities Board of the Metropolitan 11/01 at 102 AAA 2,640,751
Government of Nashville and Davidson County, Tennessee, Hospital
Revenue Bonds Series 1991 (Adventist Health System/Sunbelt, Inc.),
7.000%, 11/15/16
4,000,000 The Health, Educational and Housing Facility Board of the County of 8/05 at 102 AAA 4,091,120
Shelby, Tennessee, Hospital Revenue Refunding (Methodist Health
System Inc.), 5.250%, 8/01/15
2,450,000 The Health, Educational and Housing Facility Board of the County of 4/08 at 101 AAA 2,455,096
Shelby, Tennessee, Hospital Revenue Bonds Series 1998 (Methodist
Healthcare), 5.000%, 4/01/18
2,500,000 The Health, Educational and Housing Facility Board of the County of 11/04 at 102 A 2,853,325
Sumner, Tennessee, Revenue Refunding (Sumner Regional Health
System Inc.), Series 1994, 7.500%, 11/01/14
- -----------------------------------------------------------------------------------------------------------------------------------
Housing/Multifamily - 1.8%
1,200,000 The Health, Educational and Housing Facility Board of the City of 7/03 at 102 Aaa 1,261,872
Chattanooga, Tennessee, Multifamily Mortgage Revenue Refunding
Bonds, Series 1993A (Windridge Apartments FHA Insured Mortgage),
5.950%, 7/01/14
3,500,000 The Industrial Development Board of the City of Franklin (Tennessee), 10/06 at 102 AAA 3,715,950
Multifamily Housing Revenue Refunding Bonds (The Landings Apartments
Project), Senior Series 1996A, 6.000%, 10/01/26
745,000 Metropolitan Government of Nashville and Davidson County Tennessee 6/02 at 103 AAA 808,369
Health and Education Facilities Board Revenue, Herman Street,
7.250%, 6/01/32
- -----------------------------------------------------------------------------------------------------------------------------------
Housing/Single Family - 10.9%
260,000 County of Hamilton, Tennessee, Single Family Mortgage Revenue Bonds 9/00 at 102 AAA 272,737
(Home Purchase and Rehabilitation Program), Series 1990, 8.000%,
9/01/23 (Alternative Minimum Tax)
6,000,000 Tennessee Housing Development Agency, Homeownership Program, Issue 4A, 7/06 at 102 AA 6,478,980
6.375%, 7/01/22 (Alternative Minimum Tax)
990,000 Tennessee Housing Development Agency, Homeownership Program, Issue 3, 7/07 at 102 AA 1,045,955
5.850%, 7/01/17 (Alternative Minimum Tax)
805,000 Tennessee Housing Development Agency, Homeownership Program, Series P, 7/00 at 103 AA 843,334
7.700%, 7/01/16
120,000 Tennessee Housing Development Agency, Homeownership Program, Issue U, 7/01 at 102 Aa2 126,818
7.400%, 7/01/16
3,900,000 Tennessee Housing Development Agency, Homeownership Program, 7.375%, 7/01 at 102 Aa2 4,112,550
7/01/23 (Alternative Minimum Tax)
2,695,000 Tennessee Housing Development Agency, Homeownership Program, Issue WR, 7/02 at 102 AA 2,867,237
6.800%, 7/01/17
190,000 Tennessee Housing Development Agency, Homeownership Program, Issue XR, 7/02 at 102 AA 201,322
6.875%, 7/01/22 (Alternative Minimum Tax)
10,145,000 Tennessee Housing Development Agency Homeownership Program, Issue 1/09 at 101 AA 10,301,233
1998-2, 5.375%, 7/01/29 (Alternative Minimum Tax)
7,700,000 Tennessee Housing Development Agency, Homeownership Program, Issue 1/09 at 101 AA 7,831,593
1996-5B (Remarketing), 5.375%, 7/01/23 (Alternative Minimum Tax)
1,000,000 Tennessee Housing Development Agency, Mortgage Finance Program Bonds, 7/04 at 102 A+ 1,080,760
1994 Series A, 6.900%, 7/01/25 (Alternative Minimum Tax)
</TABLE>
26
<PAGE>
<TABLE>
<CAPTION>
Principal Optional Call Market
Amount Description Provisions* Ratings** Value
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Long Term Care -- 2.4%
$ 2,985,000 The Health and Educational Facilities Board of the Metropolitan 2/08 at 102 AA $ 3,123,056
Government of Nashville and Davidson County, Tennessee, Multi-Modal
Interchangeable Rate Health Facility Revenue Bonds (Richland
Place, Inc. Project), Series 1993, 5.500%, 5/01/23
4,700,000 The Health and Educational Facilities Board of the Metropolitan 7/08 at 102 N/R 4,671,424
Government of Nashville and Davidson County, Tennessee, Revenue
Refunding Bonds, Series 1998 (The Blakford at Green Hills), 5.650%, 7/01/24
- ------------------------------------------------------------------------------------------------------------------------------------
Tax Obligation/General -- 6.4%
Hamilton County, Tennessee, General Obligation Bonds, Series 1995:
1,490,000 6.250%, 2/01/20 2/05 at 102 Aa2 1,696,246
2,025,000 6.300%, 2/01/25 2/05 at 102 Aa2 2,310,788
2,705,000 Knox County, Tennessee, General Obligation Public Improvement Bonds, 4/06 at 101 AA 2,824,886
Series 1998, 5.250%, 4/01/13
4,000,000 Metropolitan Government of Nashville and Davidson County, Tennessee, 5/07 at 102 AA 4,006,320
Refunding, Series 1997, 5.125%, 5/15/25
8,000,000 The Metropolitan Government of Nashville and Davidson County, 5/06 at 101 AA 8,744,960
Tennessee, General Obligation Public Improvement Bonds,
Series 1996, 5.875%, 5/15/21
1,000,000 Shelby County, Tennessee, General Obligation Refunding Bonds, 1995 4/05 at 101 AA+ 1,064,060
Series A, 5.625%, 4/01/14
- ------------------------------------------------------------------------------------------------------------------------------------
Tax Obligation/Limited -- 14.2%
3,500,000 The Industrial Development Board of the City of Fayetteville and 5/08 at 100 Aaa 3,587,220
Lincoln County, Tennessee, Hospital Facility Lease Revenue and
Tax Bonds, Series 1998, 5.300%, 5/01/28
Metropolitan Government of Nashville and Davidson County, Tennessee,
Health and Educational Facilities Board Revenue Refunding and Improvement,
Meharry Medical College:
1,000,000 5.000%, 12/01/24 12/17 at 100 AAA 1,152,610
4,000,000 5.000%, 12/01/24 6/09 at 100 AAA 3,974,080
5,000,000 Metropolitan Government of Nashville and Davidson County, Tennessee, 7/06 at 101 AAA 5,375,650
Sports Authority Revenue, Public Improvement Stadium Project, 5.750%,
7/01/26
6,275,000 Puerto Rico Highway and Transportation Authority, Highway Revenue 7/16 at 100 A 6,772,984
Bonds, Series Y of 1996, 5.500%, 7/01/36
500,000 Puerto Rico Highway and Transportation Authority, Highway Revenue No Opt. Call AAA 550,260
Bonds, (Series W), 5.500%, 7/01/15
13,300,000 Puerto Rico Public Buildings Authority, Revenue Refunding Bonds, No Opt. Call A 14,429,968
Series L, Guaranteed by the Commonwealth of Puerto Rico, 5.500%,
7/01/21
2,500,000 Tennessee State Local Development Authority, State Loan Program, 3/01 at 102 AA- 2,724,975
Series A, 7.000%, 3/01/21
2,660,000 Tennessee State Local Development Authority, Community Provider Loan 10/02 at 102 A 2,948,982
Program, 7.000%, 10/01/21
Wilson County, Tennessee, Series 1994 Certificates of Participation
(Wilson County Educational Facilities Corporation):
1,500,000 6.125%, 6/30/10 6/04 at 102 A 1,640,160
1,500,000 6.250%, 6/30/15 6/04 at 102 A 1,638,030
1,000,000 Wilson County, Tennessee, Certificates of Participation, Series 1998, 3/08 at 102 AAA 1,020,920
School Facilities Lease Agreement with Wilson County Educational
Facilities Development Corporation, 5.250%, 3/30/18
- ------------------------------------------------------------------------------------------------------------------------------------
Transportation -- 4.8%
5,545,000 Memphis-Shelby County Airport Authority (Tennessee), Special Facilities 9/01 at 103 BBB 6,129,554
Revenue Bonds, Series 1984 (Federal Express Corporation), 7.875%, 9/01/09
4,100,000 Memphis-Shelby County Airport Authority (Tennessee), Special Facilities 9/02 at 102 BBB 4,441,284
Revenue Refunding Bonds, Series 1992 (Federal Express Corporation),
6.750%, 9/01/12
Metropolitan Nashville Airport Authority (Tennessee), Airport Improvement
Revenue Bonds, Refunding Series 1991C:
145,000 6.625%, 7/01/07 7/01 at 102 AAA 157,624
4,385,000 6.600%, 7/01/15 7/01 at 102 AAA 4,754,436
</TABLE>
27
<PAGE>
Portfolio of Investments (Unaudited)
Nuveen Flagship Tennessee Municipal Bond Fund (continued)
November 30, 1998
<TABLE>
<CAPTION>
Principal Optional Call Market
Amount Description Provisions* Ratings** Value
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
U.S. Guaranteed - 15.7%
$ 1,000,000 City of Chattanooga, Tennessee, General Obligation Bonds, Series 1990, 5/00 at 102 AA*** $ 1,071,680
Various Purpose, 7.250%, 5/01/12 (Pre-refunded to 5/01/00)
1,930,000 The Health, Educational and Housing Facility Board of the City of 9/01 at 102 AAA 2,113,813
Chattanooga, Tennessee, Hospital Revenue Bonds, Series 1991A (Memorial
Hospital Project), 6.600%, 9/01/12 (Pre-refunded to 9/01/01)
City of Clarksville, Tennessee, Hospital Revenue Refunding and
Improvement Bonds, Series 1993 (Clarksville Memorial Hospital Project):
1,000,000 6.250%, 7/01/08 (Pre-refunded to 7/01/03) 7/03 at 102 Baa1*** 1,114,750
1,775,000 6.250%, 7/01/13 (Pre-refunded to 7/01/03) 7/03 at 102 Baa1*** 1,978,681
1,250,000 6.375%, 7/01/18 (Pre-refunded to 7/01/03) 7/03 at 102 Baa1*** 1,399,938
1,125,000 Eastside Utility District of Hamilton County, Tennessee, Water 11/01 at 102 A*** 1,242,866
System Revenue Bonds, Series 1992, 6.750%, 11/01/11 (Pre-refunded
to 11/01/01)
1,455,000 Gladeville Utility District of Wilson County, Tennessee, Waterworks 10/00 at 100 AAA 1,557,083
Revenue Bonds, Series 1990, 7.400%, 10/01/10 (Pre-refunded to
10/01/00)
5,000,000 City of Johnson City, Tennessee, School Sales Tax Revenue and 5/06 at 100 AAA 5,846,850
Unlimited Tax Bonds, Series 1994, 6.700%, 5/01/21 (Pre-refunded
to 5/01/06)
3,000,000 The Health, Educational and Housing Facilities Board of the County 9/99 at 102 AAA 3,158,340
of Knox (Tennessee), Hospital Facilities Revenue Bonds, Series
1989 A (Mercy Health System, Province of Cincinnati), 7.600%,
9/01/19 (Pre-refunded to 9/01/99)
3,065,000 The Health, Educational and Housing Facilities Board of the County of 1/00 at 102 AAA 3,244,211
Knox (Tennessee), Hospital Revenue Bonds, Series 1990C (Fort Sanders
Alliance Obligated Group), 7.000%, 1/01/15 (Pre-refunded to 1/01/00)
41,570,000 Metropolitan Government of Nashville and Davidson County, Tennessee, No Opt. Call Aaa 12,810,627
Health and Educational Facilities Board, Volunteer Healthcare, 0.000%,
6/01/21
1,200,000 Metropolitan Government of Nashville and Davidson County, Tennessee, 10/07 at 105 N/R*** 1,625,556
Health and Educational Facilities Board Revenue, Mur. Ci Homes
Inc. Project, Series A, 9.000%, 10/01/22 (Pre-refunded to 10/01/07)
2,500,000 The Public Building Authority of the City of Mt. Juliet, Tennessee, 2/04 at 110 AAA 3,157,725
Revenue Bonds (Utility District Loan Program), Series B, The Madison
Suburban Utility District, 7.800%, 2/01/19 (Pre-refunded to 2/01/04)
1,500,000 Northeast Knox, Tennessee, Utility District Water Revenue, 7.000%, 1/01/20 1/00 at 102 AAA 1,588,545
(Pre-refunded to 1/01/00)
4,000,000 The Health, Educational and Housing Facilities Board of the County 2/00 at 102 AAA 4,259,600
of Sullivan, Tennessee, Hospital Revenue Bonds, Series 1990 (Holston
Valley Health Care, Inc.), 7.250%, 2/15/20 (Pre-refunded to 2/15/00)
125,000 Tennessee State School Bond Authority, Higher Educational Facilities 5/99 at 102 AA+*** 129,501
Bonds, 1989 Series, 7.000%, 5/01/20 (Pre-refunded to 5/01/99)
2,300,000 The White House Utility District of Robertson and Sumner Counties, 1/02 at 102 AAA 2,519,926
Tennessee, Water Revenue Refunding and Improvement Bonds, Series 1992B,
6.375%, 1/01/22 (Pre-refunded to 1/01/02)
1,950,000 Wilson County, Tennessee, Water and Wastewater Authority, Waterworks 3/99 at 102 N/R*** 2,011,759
Revenue Refunding and Improvement, 8.000%, 3/01/14 (Pre-refunded to
3/01/99)
- -----------------------------------------------------------------------------------------------------------------------------------
Utilities - 10.3%
1,520,000 City of Clarksville, Tennessee, Water, Sewer and Gas Revenue Refunding No Opt. Call AAA 658,707
and Improvement Bonds, Series 1992, 0.000%, 2/01/16
2,160,000 City of Dickson, Tennessee, Electric System Revenue Bonds, Series 1996, 9/08 at 102 AAA 2,305,454
5.500%, 9/01/16
The City of Jackson, Tennessee, Electric System Revenue Bonds, Series E:
315,000 6.300%, 8/01/09 8/00 at 102 A1 333,872
335,000 6.300%, 8/01/10 8/00 at 102 A1 355,070
355,000 6.300%, 8/01/11 8/00 at 102 A1 372,466
380,000 6.300%, 8/01/12 8/00 at 102 A1 402,029
3,000,000 The City of Jackson, Tennessee, Gas System Revenue Bonds, Series 4/07 at 100 AAA 3,006,960
1997, 5.000%, 4/15/18
</TABLE>
28
<PAGE>
<TABLE>
<CAPTION>
Principal Optional Call Market
Amount Description Provisions* Ratings** Value
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Utilities (continued)
$ 4,475,000 Lawrenceburg, Tennessee, Electric Revenue, 5.500%, 7/01/26 7/09 at 100 AAA $ 4,749,586
16,300,000 Metropolitan Government of Nashville and Davidson County, Tennessee, No Opt. Call AAA 9,031,871
Electric Revenue, Series A, 0.000%, 5/15/12
The Metropolitan Government of Nashville and Davidson County, Tennessee,
Electric System Revenue Bonds, 1998 Series A:
11,000,000 0.000%, 5/15/19 No Opt. Call AAA 3,941,630
4,000,000 5.200%, 5/15/23 5/08 at 102 AA 4,077,800
1,000,000 The Middle Tennessee Utility District of Cannon, Cumberland, Dekalb, 10/02 at 102 AAA 1,107,540
Putnam, Rhea, Rutherford, Smith, Warren, White and Wilson Counties,
Tennessee, Gas System Revenue Bonds, Series 1992, 6.250%, 10/01/12
1,020,000 The Public Building Authority of The City of Mt. Juliet, Tennessee, 2/99 at 102 AAA 1,047,438
Revenue Bonds (Utility District Loan Program), Series D, Cumberland
Utility District (Hermitage), 7.550%, 2/01/19
2,000,000 Puerto Rico Electric Power Authority, Power Revenue Refunding Bonds, 7/08 at 101 BBB+ 1,929,580
Series EE, 4.750%, 7/01/24
- ------------------------------------------------------------------------------------------------------------------------------------
Water and Sewer - 6.6%
8,000,000 Harpeth Valley Utilities District Of Davidson and Williamson Counties, 9/08 at 100 AAA 8,014,720
Tennessee, Utilities Improvement Revenue Bonds, Series 1998, 5.000%,
9/01/28
5,445,000 City of Knoxville, Tennessee, Waste Water System Refunding and 4/07 at 101 AA 5,444,618
Improvement Bonds, Series 1998, 5.125%, 4/01/23
3,000,000 Madison Suburban Utility District, Water Revenue Refunding Bonds, 2/08 at 100 AAA 3,007,440
5.000%, 2/01/19
1,000,000 Milcrofton, Tennessee, Utility District Waterworks Revenue Refunding, 2/06 at 102 N/R 1,042,490
Junior Lien, 6.000%, 2/01/24
1,100,000 Rutherford County, Tennessee, Utility District Waterworks, Revenue 2/08 at 100 Aaa 1,124,420
Refunding and Improvement, Series A, 5.250%, 2/01/27
1,100,000 White House Utility District, Tennessee, Robertson and Sumner Counties 1/07 at 100 Aaa 1,139,215
Waterworks System Revenue Refunding, Series B, 5.300%, 1/01/15
1,500,000 Wilson County, Tennessee, Water and Wastewater Authority, Waterworks 3/08 at 102 Baa1 1,675,770
Revenue Refunding and Improvement, 6.000%, 3/01/14
- ------------------------------------------------------------------------------------------------------------------------------------
$347,935,000 Total Investments (cost $296,876,041) - 99.8% 322,478,433
============------------------------------------------------------------------------------------------------------------------------
Other Assets Less Liabilities - 0.2% 546,905
--------------------------------------------------------------------------------------------------------------------
Net Assets - 100% $323,025,338
--------------------------------------------------------------------------------------------------------------------
</TABLE>
* Optional Call Provisions: Dates (month and year) and prices of the earliest
optional call or redemption. There may be other call provisions at varying
prices at later dates.
** Ratings: Using the higher of Standard & Poor's or Moody's rating.
*** Securities are backed by an escrow or trust containing sufficient U.S.
government or U.S. government agency securities which ensures the timely
payment of principal and interest. Securities are normally considered to be
equivalent to AAA rated securities.
N/R Investment is not rated.
(WI) Security purchased on a when-issued basis (note 1).
See accompanying notes to financial statements.
29
<PAGE>
Statement of Net Assets (Unaudited)
November 30, 1998
<TABLE>
Georgia Louisiana
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Assets
Investments in municipal securities, at market value (note 1) $149,941,553 $125,238,769
Temporary investments in short-term municipal securities, at amortized cost,
which approximates market value (note 1) 2,200,000 1,000,000
Cash -- 983,275
Receivables:
Interest 3,062,750 1,850,210
Investments sold 830,850 205,000
Shares sold 47,480 38,319
Other assets 112,966 97,358
- ----------------------------------------------------------------------------------------------------------------------------------
Total assets 156,195,599 129,412,931
- ----------------------------------------------------------------------------------------------------------------------------------
Liabilities
Cash overdraft 850,288 --
Payables:
Investments purchased -- 3,000,867
Shares redeemed 70,065 155,257
Accrued expenses:
Management fees (note 6) 52,871 46,136
12b-1 distribution and service fees (notes 1 and 6) 39,084 35,822
Other 23,610 27,079
Dividends payable 230,308 181,680
- ----------------------------------------------------------------------------------------------------------------------------------
Total liabilities 1,266,226 3,446,841
- ----------------------------------------------------------------------------------------------------------------------------------
Net assets (note 7) $154,929,373 $125,966,090
- ----------------------------------------------------------------------------------------------------------------------------------
Class A Shares (note 1)
Net assets $125,539,359 $ 93,062,204
Shares outstanding 11,135,737 7,982,733
Net asset value and redemption price per share $ 11.27 $ 11.66
Offering price per share (net asset value per share plus maximum sales charge of 4.20% of offering
price) $ 11.76 $ 12.17
- ----------------------------------------------------------------------------------------------------------------------------------
Class B Shares (note 1)
Net assets $ 7,468,110 $ 13,232,528
Shares outstanding 661,729 1,135,393
Net asset value, offering and redemption price per share $ 11.29 $ 11.65
- ----------------------------------------------------------------------------------------------------------------------------------
Class C Shares (note 1)
Net assets $ 21,666,472 $ 17,107,468
Shares outstanding 1,925,567 1,468,976
Net asset value, offering and redemption price per share $ 11.25 $ 11.65
- ----------------------------------------------------------------------------------------------------------------------------------
Class R Shares (note 1)
Net assets $ 255,432 $ 2,563,890
Shares outstanding 22,742 219,876
Net asset value, offering and redemption price per share $ 11.23 $ 11.66
- ----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
30 See accompanying notes to financial statements.
<PAGE>
<TABLE>
<CAPTION>
North Carolina Tennessee
- --------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Assets
Investments in municipal securities, at market value (note 1) $205,530,969 $322,478,433
Temporary investments in short-term municipal securities, at amortized cost,
which approximates market value (note 1) 3,600,000 --
Cash 62,714 732,476
Receivables:
Interest 3,264,802 4,570,607
Investments sold -- 1,020,000
Shares sold 27,000 124,082
Other assets 233,897 186,524
- --------------------------------------------------------------------------------------------------------------------------
Total assets 212,719,382 329,112,122
- --------------------------------------------------------------------------------------------------------------------------
Liabilities
Cash overdraft -- --
Payables:
Investments purchased 5,463,428 5,001,458
Shares redeemed 113,291 279,436
Accrued expenses:
Management fees (note 6) 92,243 142,686
12b-1 distribution and service fees (notes 1 and 6) 42,852 69,648
Other 130,372 38,950
Dividends payable 406,007 554,606
- --------------------------------------------------------------------------------------------------------------------------
Total liabilities 6,248,193 6,086,784
- --------------------------------------------------------------------------------------------------------------------------
Net assets (note 7) $206,471,189 $323,025,338
==========================================================================================================================
Class A Shares (note 1)
Net assets $186,603,044 $288,186,106
Shares outstanding 17,430,125 24,885,829
Net asset value and redemption price per share $ 10.71 $ 11.58
Offering price per share (net asset value per share plus maximum sales charge of 4.20%
of offering price) $ 11.18 $ 12.09
==========================================================================================================================
Class B Shares (note 1)
Net assets $ 7,046,583 $ 10,329,006
Shares outstanding 657,744 891,405
Net asset value, offering and redemption price per share $ 10.71 $ 11.59
==========================================================================================================================
Class C Shares (note 1)
Net assets $ 11,523,180 $ 23,955,778
Shares outstanding 1,077,941 2,069,081
Net asset value, offering and redemption price per share $ 10.69 $ 11.58
==========================================================================================================================
Class R Shares (note 1)
Net assets $ 1,298,382 $ 554,448
Shares outstanding 121,260 47,941
Net asset value, offering and redemption price per share $ 10.71 $ 11.57
==========================================================================================================================
</TABLE>
See accompanying notes to financial statements.
31
<PAGE>
Statement of Operations (Unaudited)
Six Months Ended November 30, 1998
<TABLE>
<CAPTION>
Georgia Louisiana North Carolina Tennessee
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Investment Income (note 1) $4,145,403 $3,362,379 $5,644,113 $ 8,908,730
- -----------------------------------------------------------------------------------------------------------------------------------
Expenses
Management fees (note 6) 408,736 327,204 557,030 854,631
12b-1 service fees--Class A (notes 1 and 6) 123,169 90,854 187,824 285,095
12b-1 distribution and service fees--Class B (notes 1 and 6) 26,453 53,655 26,268 39,548
12b-1 distribution and service fees--Class C (notes 1 and 6) 75,691 57,994 36,888 84,949
Shareholders' servicing agent fees and expenses 42,982 18,284 27,414 59,391
Custodian's fees and expenses 15,044 21,914 16,442 45,698
Trustees' fees and expenses (note 6) 1,253 1,706 1,832 3,719
Professional fees 10,096 8,112 15,294 8,956
Shareholders' reports--printing and mailing expenses 27,061 23,437 62,606 40,563
Federal and state registration fees 447 4,534 906 3,514
Other expenses 4,174 3,150 6,399 9,229
- -----------------------------------------------------------------------------------------------------------------------------------
Total expenses before expense reimbursement 735,106 610,844 938,903 1,435,293
Expense reimbursement (note 6) (124,871) (72,427) -- --
- -----------------------------------------------------------------------------------------------------------------------------------
Net expenses 610,235 538,417 938,903 1,435,293
- -----------------------------------------------------------------------------------------------------------------------------------
Net investment income 3,535,168 2,823,962 4,705,210 7,473,437
- -----------------------------------------------------------------------------------------------------------------------------------
Realized and Unrealized Gain from Investments
Net realized gain from investment transactions (notes 1 and 4) 1,026,282 482,063 234,405 496,012
Net change in unrealized appreciation or depreciation of investments 180,411 617,226 1,641,125 3,035,794
- -----------------------------------------------------------------------------------------------------------------------------------
Net gain from investments 1,206,693 1,099,289 1,875,530 3,531,806
- -----------------------------------------------------------------------------------------------------------------------------------
Net increase in net assets from operations $4,741,861 $3,923,251 $6,580,740 $11,005,243
===================================================================================================================================
</TABLE>
See accompanying notes to financial statements.
32
<PAGE>
Statement of Changes in Net Assets (Unaudited)
<TABLE>
<CAPTION>
Georgia Louisiana
-------------------------------- -------------------------------
Six Months Ended Year Ended Six Months Ended Year Ended
11/30/98 5/31/98 11/30/98 5/31/98
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Operations
Net investment income $ 3,535,168 $ 6,768,866 $ 2,823,962 $ 4,905,021
Net realized gain from investment transactions (notes 1 and 4) 1,026,282 1,432,222 482,063 141,609
Net change in unrealized appreciation or depreciation of
investments 180,411 5,917,362 617,226 3,885,856
- -----------------------------------------------------------------------------------------------------------------------------------
Net increase in net assets from operations 4,741,861 14,118,450 3,923,251 8,932,486
- -----------------------------------------------------------------------------------------------------------------------------------
Distributions to Shareholders (note 1)
From undistributed net investment income:
Class A (3,001,734) (5,990,008) (2,235,718) (4,236,624)
Class B (112,289) (64,796) (232,133) (179,990)
Class C (437,559) (704,588) (339,147) (486,474)
Class R (6,393) (8,432) (32,764) (844)
From accumulated net realized gains from investment transactions:
Class A -- -- -- (274,625)
Class B -- -- -- (13,410)
Class C -- -- -- (36,540)
Class R -- -- -- (77)
- -----------------------------------------------------------------------------------------------------------------------------------
Decrease in net assets from distributions to shareholders (3,557,975) (6,767,824) (2,839,762) (5,228,584)
- -----------------------------------------------------------------------------------------------------------------------------------
Fund Share Transactions (note 2)
Net proceeds from sale of shares 15,914,807 23,251,629 18,723,105 30,672,632
Net proceeds from shares issued to shareholders due to
reinvestment of distributions 1,483,521 4,132,821 1,282,606 3,175,043
- -----------------------------------------------------------------------------------------------------------------------------------
17,398,328 27,384,450 20,005,711 33,847,675
- -----------------------------------------------------------------------------------------------------------------------------------
Cost of shares redeemed (6,731,252) (15,113,415) (6,975,285) (10,292,295)
- -----------------------------------------------------------------------------------------------------------------------------------
Net increase in net assets from Fund share transactions 10,667,076 12,271,035 13,030,426 23,555,380
- -----------------------------------------------------------------------------------------------------------------------------------
Net increase in net assets 11,850,962 19,621,661 14,113,915 27,259,282
Net assets at the beginning of period 143,078,411 123,456,750 111,852,175 84,592,893
- -----------------------------------------------------------------------------------------------------------------------------------
Net assets at the end of period $154,929,373 $143,078,411 $125,966,090 $111,852,175
===================================================================================================================================
Balance of undistributed (over-distributed) net investment
income at end of period $ (21,719) $ 1,088 $ (14,512) $ 1,288
===================================================================================================================================
</TABLE>
33 See accompanying notes to financial statements.
<PAGE>
Statement of Changes in Net Assets (Unaudited)(continued)
<TABLE>
<CAPTION>
North Carolina Tennessee
------------------------------- -------------------------------
Six Months Ended Year Ended Six Months Ended Year Ended
11/30/98 5/31/98 11/30/98 5/31/98
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Operations
Net investment income $ 4,705,210 $ 9,818,009 $ 7,473,437 $ 14,669,556
Net realized gain from investment transactions (notes 1 and 4) 234,405 2,602,198 496,012 1,206,421
Net change in unrealized appreciation or depreciation of
investments 1,641,125 3,819,600 3,035,794 8,713,135
- ----------------------------------------------------------------------------------------------------------------------------------
Net increase in net assets from operations 6,580,740 16,239,807 11,005,243 24,589,112
- ----------------------------------------------------------------------------------------------------------------------------------
Distributions to Shareholders (note 1)
From undistributed net investment income:
Class A (4,568,521) (9,438,035) (6,919,591) (13,691,307)
Class B (111,524) (56,790) (169,319) (105,904)
Class C (210,791) (342,967) (484,716) (783,552)
Class R (28,798) (34,750) (13,785) (18,350)
From accumulated net realized gains from investment
transactions:
Class A -- (28,220) -- --
Class B -- (137) -- --
Class C -- (1,157) -- --
Class R -- (109) -- --
- ----------------------------------------------------------------------------------------------------------------------------------
Decrease in net assets from distributions to shareholders (4,919,634) (9,902,165) (7,587,411) (14,599,113)
- ----------------------------------------------------------------------------------------------------------------------------------
Fund Share Transactions (note 2)
Net proceeds from sale of shares 13,758,990 18,647,466 23,785,051 41,278,818
Net proceeds from shares issued to shareholders due to
reinvestment of distributions 2,466,462 5,610,070 3,329,449 7,905,778
- ----------------------------------------------------------------------------------------------------------------------------------
16,225,452 24,257,536 27,114,500 49,184,596
- ----------------------------------------------------------------------------------------------------------------------------------
Cost of shares redeemed (10,502,917) (20,843,771) (12,720,082) (27,270,877)
- ----------------------------------------------------------------------------------------------------------------------------------
Net increase in net assets from Fund share transactions 5,722,535 3,413,765 14,394,418 21,913,719
- ----------------------------------------------------------------------------------------------------------------------------------
Net increase in net assets 7,383,641 9,751,407 17,812,250 31,903,718
Net assets at the beginning of period 199,087,548 189,336,141 305,213,088 273,309,370
- ----------------------------------------------------------------------------------------------------------------------------------
Net assets at the end of period $206,471,189 $199,087,548 $323,025,338 $305,213,088
- ----------------------------------------------------------------------------------------------------------------------------------
Balance of undistributed (over-distributed) net investment income
at end of period $ (184,865) $ 29,559 $ (40,096) $ 73,878
- ----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
34 See accompanying notes to financial statements.
<PAGE>
Notes to Financial Statements (Unaudited)
1. General Information and Significant Accounting Policies
The Nuveen Flagship Multistate Trust III (the "Trust") is an open-end investment
company registered under the Investment Company Act of 1940, as amended. The
Trust comprises the Nuveen Flagship Georgia Municipal Bond Fund ("Georgia"), the
Nuveen Flagship Louisiana Municipal Bond Fund ("Louisiana"), the Nuveen Flagship
North Carolina Municipal Bond Fund ("North Carolina"), and the Nuveen Flagship
Tennessee Municipal Bond Fund ("Tennessee") (collectively, the "Funds"). The
Trust was organized as a Massachusetts business trust on July 1, 1996.
The Funds seek 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
November 30, 1998, Louisiana, North Carolina and Tennessee had outstanding when-
issued purchase committments of $3,000,867, $5,463,428 and $5,001,458,
respectively. Georgia 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.
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, the Funds intend to
satisfy conditions which will enable interest from municipal securities, which
is exempt from regular federal and designated state income taxes, to retain such
tax-exempt status when distributed to the shareholders of the Funds. Net
realized capital gain and market discount distributions are subject to federal
taxation.
35
<PAGE>
Notes to Financial Statements (Unaudited) (continued)
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 and option contracts, and other financial instruments
with similar characteristics. Although the Funds are authorized to invest in
such financial instruments, and may do so in the future, they did not make any
such investments during the six months ended November 30, 1998.
Expense Allocation
Expenses of the Funds 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. Actual results may differ
from those estimates.
2. Fund Shares
Transactions in Fund shares were as follows:
<TABLE>
<CAPTION>
Georgia
---------------------------------------------------
Six Months Ended Year Ended
11/30/98 5/31/98
---------------------------------------------------
Shares Amount Shares Amount
- --------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Shares sold:
Class A 679,460 $ 7,603,040 999,370 $ 11,052,211
Class B 346,442 3,883,859 326,545 3,623,322
Class C 395,814 4,425,600 754,384 8,321,447
Class R 208 2,308 23,229 254,649
Shares issued to shareholders due to reinvestment of distributions:
Class A 110,724 1,242,721 332,037 3,634,474
Class B 5,715 64,123 2,642 29,369
Class C 15,223 170,430 42,144 461,364
Class R 558 6,247 689 7,614
- --------------------------------------------------------------------------------------------------------------------------
1,554,144 17,398,328 2,481,040 27,384,450
- --------------------------------------------------------------------------------------------------------------------------
Shares redeemed:
Class A (431,113) (4,821,000) (1,106,180) (12,206,698)
Class B (4,628) (51,648) (25,707) (286,183)
Class C (166,545) (1,858,496) (234,595) (2,575,425)
Class R (10) (108) (4,054) (45,109)
- --------------------------------------------------------------------------------------------------------------------------
(602,296) (6,731,252) (1,370,536) (15,113,415)
- --------------------------------------------------------------------------------------------------------------------------
Net increase 951,848 $10,667,076 1,110,504 $ 12,271,035
==========================================================================================================================
</TABLE>
36
<PAGE>
<TABLE>
<CAPTION>
Louisiana
--------------------------------------------------
Six Months Ended Year Ended
11/30/98 5/31/98
--------------------------------------------------
Shares Amount Shares Amount
- ----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Shares sold:
Class A 699,033 $ 8,138,074 1,434,264 $ 16,414,741
Class B 359,403 4,167,350 695,080 7,947,255
Class C 338,193 3,919,171 551,499 6,283,912
Class R 215,574 2,498,510 2,348 26,724
Shares issued to shareholders due to reinvestment of distributions:
Class A 84,886 985,199 240,527 2,733,739
Class B 15,831 183,065 6,824 78,150
Class C 7,956 92,232 31,852 362,355
Class R 1,889 22,110 70 799
- ----------------------------------------------------------------------------------------------------------------------------
1,722,765 20,005,711 2,962,464 33,847,675
- ----------------------------------------------------------------------------------------------------------------------------
Shares redeemed:
Class A (519,557) (6,023,290) (808,970) (9,237,098)
Class B (19,300) (223,301) (5,147) (58,547)
Class C (62,862) (728,587) (87,146) (996,590)
Class R (9) (107) (5) (60)
- ----------------------------------------------------------------------------------------------------------------------------
(601,728) (6,975,285) (901,268) (10,292,295)
- ----------------------------------------------------------------------------------------------------------------------------
Net increase 1,121,037 $ 13,030,426 2,061,196 $ 23,555,380
============================================================================================================================
<CAPTION>
North Carolina
--------------------------------------------------
Six Months Ended Year Ended
11/30/98 5/31/98
--------------------------------------------------
Shares Amount Shares Amount
- ----------------------------------------------------------------------------------------------------------------------------
Shares sold:
Class A 599,934 $ 6,386,163 1,219,335 $ 12,822,305
Class B 333,758 3,558,987 313,974 3,317,845
Class C 312,215 3,323,391 192,020 2,022,009
Class R 46,166 490,449 46,162 485,307
Shares issued to shareholders due to reinvestment of distributions:
Class A 214,686 2,290,070 506,157 5,310,271
Class B 4,790 51,162 2,287 24,150
Class C 9,927 105,783 24,082 252,068
Class R 1,821 19,447 2,244 23,581
- ----------------------------------------------------------------------------------------------------------------------------
1,523,297 16,225,452 2,306,261 24,257,536
- ----------------------------------------------------------------------------------------------------------------------------
Shares redeemed:
Class A (933,872) (9,934,418) (1,846,947) (19,438,714)
Class B (20,555) (219,280) (2,877) (30,241)
Class C (26,273) (278,752) (122,639) (1,290,365)
Class R (6,555) (70,467) (7,984) (84,451)
- ----------------------------------------------------------------------------------------------------------------------------
(987,255) (10,502,917) (1,980,447) (20,843,771)
- ----------------------------------------------------------------------------------------------------------------------------
Net increase 536,042 $ 5,722,535 325,814 $ 3,413,765
============================================================================================================================
</TABLE>
37
<PAGE>
<TABLE>
<CAPTION>
Notes to Financial Statements (Unaudited) (continued)
Tennessee
--------------------------------------------------------
Six Months Ended Year Ended
11/30/98 5/31/98
--------------------------------------------------------
Shares Amount Shares Amount
<S> <C> <C> <C> <C>
- -------------------------------------------------------------------------------------------------------------------------------
Shares sold:
Class A 1,342,391 $ 15,434,518 2,614,021 $ 29,710,291
Class B 397,600 4,574,150 456,706 5,193,888
Class C 328,004 3,768,029 538,381 6,116,529
Class R 727 8,354 22,800 258,110
Shares issued to shareholders due to reinvestment of distributions:
Class A 263,856 3,037,418 641,169 7,255,500
Class B 7,526 86,757 3,774 42,976
Class C 16,865 194,060 52,336 590,588
Class R 975 11,214 1,474 16,714
- -------------------------------------------------------------------------------------------------------------------------------
2,357,944 27,114,500 4,330,661 49,184,596
- -------------------------------------------------------------------------------------------------------------------------------
Shares redeemed:
Class A (1,006,789) (11,586,128) (2,250,196) (25,540,334)
Class B (17,429) (200,628) (5,300) (59,853)
Class C (80,861) (928,487) (147,264) (1,670,240)
Class R (419) (4,839) (39) (450)
- -------------------------------------------------------------------------------------------------------------------------------
(1,105,498) (12,720,082) (2,402,799) (27,270,877)
- -------------------------------------------------------------------------------------------------------------------------------
Net increase 1,252,446 $ 14,394,418 1,927,862 $ 21,913,719
===============================================================================================================================
3. Distributions to Shareholders
The Funds declared dividend distributions from their tax-exempt net investment income which were paid on December 21, 1998, to
shareholders of record on December 9, 1998, as follows:
North
Georgia Louisiana Carolina Tennessee
- -------------------------------------------------------------------------------------------------------------------------------
Dividend per share:
Class A $.0450 $.0470 $.0430 $.0460
Class B .0380 .0400 .0360 .0390
Class C .0400 .0420 .0380 .0405
Class R .0470 .0490 .0445 .0480
===============================================================================================================================
The following Funds also declared taxable distributions, which include capital gains and/or market discount, which were paid on
December 7, 1998, to shareholders of record on December 2, 1998, as follows:
North
Louisiana Carolina
- -------------------------------------------------------------------------------------------------------------------------------
Taxable distributions per share: $ .0409 $ .0920
===============================================================================================================================
4. Securities Transactions
Purchases and sales (including maturities) of investments in municipal securities and temporary municipal investments for the six
months ended November 30, 1998, were as follows:
North
Georgia Louisiana Carolina Tennessee
- -------------------------------------------------------------------------------------------------------------------------------
Purchases:
Investments in municipal securities $20,049,787 $22,496,444 $21,565,303 $50,121,392
Temporary municipal investments 18,000,000 3,600,000 45,200,000 30,600,000
Sales:
Investments in municipal securities 13,994,035 10,660,180 11,706,900 37,407,653
Temporary municipal investments 15,800,000 3,500,000 41,600,000 30,600,000
===============================================================================================================================
At November 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 May 31, 1998, the Funds' last fiscal year end, the following Funds had unused capital loss carryforwards available for federal
income tax purposes to be applied against future capital gains, if any. If not applied, the carryforwards will expire as follows:
</TABLE>
38
<PAGE>
<TABLE>
<CAPTION>
Georgia Tennessee
- --------------------------------------------------------------------------------
<S> <C> <C>
Expiration Year:
2002 $ 506,838 $ --
2003 503,259 2,790,147
- --------------------------------------------------------------------------------
Total $1,010,097 $2,790,147
================================================================================
</TABLE>
5. Unrealized Appreciation (Depreciation)
Gross unrealized appreciation and gross unrealized depreciation of investments
at November 30, 1998, were as follows:
<TABLE>
<CAPTION>
North
Georgia Louisiana Carolina Tennessee
- --------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Gross unrealized:
appreciation $12,442,021 $9,944,455 $14,043,358 $25,619,929
depreciation (5,521) (15,157) (70,120) (17,537)
- --------------------------------------------------------------------------------------------------------------
Net unrealized appreciation $12,436,500 $9,929,298 $13,973,238 $25,602,392
==============================================================================================================
</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 .5500 of 1%
For the next $125 million .5375 of 1
For the next $250 million .5250 of 1
For the next $500 million .5125 of 1
For the next $1 billion .5000 of 1
For net assets over $2 billion .4750 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 six months ended November 30, 1998, the Distributor collected sales
charges on purchases of Class A Shares of which the majority were paid out as
concessions to authorized dealers. The Distributor also received 12b-1 service
fees on Class A Shares, substantially all of which were paid to compensate
authorized dealers for providing services to shareholders relating to their
investments.
During the six months ended November 30, 1998, the Distributor compensated
authorized dealers with approximately $194,700, $249,500, $184,600 and $271,500
in commission advances at the time of purchase for Georgia, Louisiana, North
Carolina and Tennessee, respectively. To compensate for commissions advanced to
authorized dealers, all 12b-1 service fees collected on Class B Shares during
the first year following a purchase, all 12b-1 distribution fees on Class B
Shares, and all 12b-1 service and distribution fees on Class C Shares during the
first year following a purchase are retained by the distributor. During the six
months ended November 30, 1998, the distributor retained approximately $61,500,
$79,600, $40,300 and $70,300 in such 12b-1 fees for Georgia, Louisiana, North
Carolina and Tennessee, 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 $6,700, $7,600, $5,300 and $10,800 of CDSC on share redemptions
for Georgia, Louisiana, North Carolina and Tennessee, respectively, during the
six months ended November 30, 1998.
7. Composition of Net Assets
At November 30, 1998, the Funds had an unlimited number of $.01 par value shares
authorized. Net assets consisted of:
<TABLE>
<CAPTION>
North
Georgia Louisiana Carolina Tennessee
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Capital paid-in $142,664,134 $115,628,307 $190,936,096 $299,753,983
Balance of undistributed (over-distributed) net
investment income (21,719) (14,512) (184,865) (40,096)
Accumulated net realized gain (loss)
from investment transactions (149,542) 422,997 1,746,720 (2,290,941)
Net unrealized appreciation of investments 12,436,500 9,929,298 13,973,238 25,602,392
- -------------------------------------------------------------------------------------------------------------------
Net assets $154,929,373 $125,966,090 $206,471,189 $323,025,338
===================================================================================================================
</TABLE>
39
<PAGE>
Financial Highlights (Unaudited)
Selected data for a share outstanding throughout each period is as follows:
Class (Inception Date)
<TABLE>
<CAPTION>
Investment Operations Less Distributions
------------------------------ -------------------------
GEORGIA** Net
Realized/
Unrealized
Beginning Net Invest- Net Ending
Net Invest- ment Invest- Net
Year Ended Asset ment Gain ment Capital Asset Total
May 31, Value Income(a) (Loss) Total Income Gain Total Value Return (b)
- ----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Class A (3/86)
1999 (d) $11.19 $.27 $ .08 $ .35 $(.27) $ -- $(.27) $11.27 3.20%
1998 10.57 .56 .62 1.18 (.56) -- (.56) 11.19 11.37
1997 10.20 .57 .37 .94 (.57) -- (.57) 10.57 9.39
1996 10.46 .57 (.25) .32 (.58) -- (.58) 10.20 3.05
1995 10.23 .58 .23 .81 (.58) -- (.58) 10.46 8.31
1994 10.62 .59 (.39) .20 (.59) -- (.59) 10.23 1.83
Class B (2/97)
1999 (d) 11.20 .23 .09 .32 (.23) -- (.23) 11.29 2.90
1998 10.57 .48 .63 1.11 (.48) -- (.48) 11.20 10.66
1997 (c) 10.66 .14 (.11) .03 (.12) -- (.12) 10.57 .31
Class C (1/94)
1999 (d) 11.17 .24 .08 .32 (.24) -- (.24) 11.25 2.93
1998 10.55 .50 .62 1.12 (.50) -- (.50) 11.17 10.79
1997 10.18 .51 .37 .88 (.51) -- (.51) 10.55 8.80
1996 10.44 .51 (.25) .26 (.52) -- (.52) 10.18 2.48
1995 10.21 .52 .23 .75 (.52) -- (.52) 10.44 7.72
1994 (c) 10.91 .19 (.69) (.50) (.20) -- (.20) 10.21 (10.96)*
Class R (2/97)
1999 (d) 11.15 .28 .09 .37 (.29) -- (.29) 11.23 3.32
1998 10.57 .58 .59 1.17 (.59) -- (.59) 11.15 11.23
1997 (c) 10.65 .18 (.06) .12 (.20) -- (.20) 10.57 1.11
==========================================================================================================
</TABLE>
<TABLE>
<CAPTION>
Ratios/Supplemental Data
--------------------------------------------------------------------------------
Ratio Ratio
of Net of Net
Ratio of Investment Ratio of Investment
Expenses Income Expenses Income
to Average to Average to Average to Average
Ending Net Assets Net Assets Net Assets Net Assets
Net Before Before After After Portfolio
Year Ended Assets Reimburse- Reimburse- Reimburse- Reimburse- Turnover
May 31, (000) ment ment ment(a) ment(a) Rate
- ----------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Class A (3/86)
1999 (d) $125,539 .88%* 4.68%* .72%* 4.84%* 10%
1998 120,545 .87 4.88 .66 5.09 25
1997 111,518 1.02 5.20 .78 5.44 39
1996 107,862 1.08 5.18 .80 5.46 59
1995 113,354 1.09 5.53 .83 5.79 40
1994 123,068 1.06 5.11 .70 5.47 39
Class B (2/97)
1999 (d) 7,468 1.64* 3.92* 1.47* 4.09* 10
1998 3,518 1.62 4.08 1.38 4.32 25
1997 (c) 113 1.63* 4.49* 1.32* 4.80* 39
Class C (1/94)
1999 (d) 21,666 1.43* 4.13* 1.27* 4.29* 10
1998 18,770 1.42 4.33 1.21 4.54 25
1997 11,803 1.56 4.63 1.32 4.87 39
1996 9,433 1.63 4.61 1.34 4.90 59
1995 6,973 1.64 4.92 1.38 5.18 40
1994 (c) 4,348 1.60* 4.22* 1.27* 4.55* 39
Class R (2/97)
1999 (d) 255 .68* 4.88* .52* 5.04* 10
1998 245 .67 5.04 .45 5.26 25
1997 (c) 22 .68* 5.41* .38* 5.71* 39
============================================================================================
</TABLE>
* Annualized.
** Information included prior to the fiscal year ended May 31, 1997, reflects
the financial highlights of Flagship Georgia.
(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) From commencement of class operations as noted.
(d) For the six months ended November 30, 1998.
40
<PAGE>
<TABLE>
<CAPTION>
Selected data for a share outstanding throughout each period is as follows:
Class (Inception Date)
Investment Operations Less Distributions
------------------------------ -------------------------
LOUISIANA** Net
Realized/
Unrealized
Beginning Net Invest- Net Ending
Net Invest- ment Invest- Net
Year Ended Asset ment Gain ment Capital Asset Total
May 31, Value Income(a) (Loss) Total Income Gain Total Value Return (b)
- ----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Class A (9/89)
1999 (d) $11.55 $.28 $ .12 $ .40 $(.29) $ -- $(.29) $11.66 3.46%
1998 11.10 .59 .49 1.08 (.59) (.04) (.63) 11.55 9.88
1997 10.71 .59 .39 .98 (.59) -- (.59) 11.10 9.37
1996 10.80 .59 (.08) .51 (.60) -- (.60) 10.71 4.77
1995 10.48 .60 .32 .92 (.60) -- (.60) 10.80 9.20
1994 10.93 .61 (.40) .21 (.62) (.04)+ (.66) 10.48 1.77
Class B (2/97)
1999 (d) 11.55 .24 .10 .34 (.24) -- (.24) 11.65 3.00
1998 11.09 .50 .50 1.00 (.50) (.04) (.54) 11.55 9.18
1997 (c) 11.10 .16 -- .16 (.17) -- (.17) 11.09 1.44
Class C (2/94)
1999 (d) 11.54 .25 .12 .37 (.26) -- (.26) 11.65 3.20
1998 11.09 .52 .50 1.02 (.53) (.04) (.57) 11.54 9.32
1997 10.70 .53 .39 .92 (.53) -- (.53) 11.09 8.78
1996 10.80 .53 (.09) .44 (.54) -- (.54) 10.70 4.12
1995 10.48 .54 .32 .86 (.54) -- (.54) 10.80 8.59
1994 (c) 11.29 .16 (.81) (.65) (.16) -- (.16) 10.48 (17.21)*
Class R (2/97)
1999 (d) 11.55 .30 .11 .41 (.30) -- (.30) 11.66 3.57
1998 11.09 .61 .50 1.11 (.61) (.04) (.65) 11.55 10.21
1997 (c) 11.17 .15 (.08) .07 (.15) -- (.15) 11.09 .67
==========================================================================================================
</TABLE>
<TABLE>
<CAPTION>
Ratios/Supplemental Data
--------------------------------------------------------------------------------
Ratio Ratio
of Net of Net
Ratio of Investment Ratio of Investment
Expenses Income Expenses Income
to Average to Average to Average to Average
Ending Net Assets Net Assets Net Assets Net Assets
Net Before Before After After Portfolio
Year Ended Assets Reimburse- Reimburse- Reimburse- Reimburse- Turnover
May 31, (000) ment ment ment(a) ment(a) Rate
- ----------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Class A (9/89)
1999 (d) $93,062 .89%* 4.76%* .76%* 4.89%* 9%
1998 89,143 .88 5.00 .75 5.13 15
1997 76,030 1.03 5.14 .79 5.38 25
1996 72,005 1.09 5.17 .80 5.46 26
1995 68,145 1.18 5.45 .83 5.80 44
1994 66,281 1.12 5.10 .66 5.56 22
Class B (2/97)
1999 (d) 13,233 1.64* 4.01* 1.52* 4.13* 9
1998 8,999 1.62 4.21 1.45 4.38 15
1997 (c) 917 1.65* 4.50* 1.46* 4.69* 25
Class C (2/94)
1999 (d) 17,107 1.44* 4.20* 1.31* 4.33* 9
1998 13,682 1.42 4.45 1.29 4.58 15
1997 7,645 1.57 4.59 1.33 4.83 25
1996 5,658 1.64 4.58 1.35 4.87 26
1995 3,220 1.73 4.85 1.37 5.21 44
1994 (c) 1,501 1.68* 4.34* 1.23* 4.79* 22
Class R (2/97)
1999 (d) 2,564 .67* 4.91* .57* 5.01* 9
1998 28 .67 5.17 .52 5.32 15
1997 (c) -- .08* 5.27* .04* 5.31* 25
==============================================================================================
</TABLE>
* Annualized.
** Information included prior to the fiscal year ended May 31,
1997, reflects the financial highlights of Flagship Loulsiana.
+ 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) From commencement of class operations as noted.
(d) For the six months ended November 30, 1998.
41
<PAGE>
Financial Highlights (Unaudited) (continued)
Selected data for a share outstanding throughout each period is as follows:
Class (Inception Date)
<TABLE>
<CAPTION>
Investment Operations Less Distributions
----------------------------- -------------------------
NORTH CAROLINA** Net
Realized/
Unrealized
Beginning Net Invest- Net Ending
Net Invest- ment Invest- Net
Year Ended Asset ment Gain ment Capital Asset Total
May 31, Value Income(a) (Loss) Total Income Gain Total Value Return (b)
- ----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Class A (3/86)
1999 (d) $10.62 $.25 $ .10 $ .35 $(.26) $ -- $(.26) $10.71 3.32%
1998 10.28 .53 .34 .87 (.53) -- (.53) 10.62 8.69
1997 10.05 .54 .23 .77 (.54) -- (.54) 10.28 7.79
1996 10.23 .55 (.18) .37 (.55) -- (.55) 10.05 3.67
1995 10.08 .57 .15 .72 (.57) -- (.57) 10.23 7.45
1994 10.51 .57 (.42) .15 (.58) -- (.58) 10.08 1.30
Class B (2/97)
1999 (d) 10.62 .21 .10 .31 (.22) -- (.22) 10.71 2.94*
1998 10.28 .45 .35 .80 (.46) -- (.46) 10.62 7.89
1997 (c) 10.33 .12 (.06) .06 (.11) -- (.11) 10.28 .64
Class C (10/93)
1999 (d) 10.60 .22 .10 .32 (.23) -- (.23) 10.69 3.04
1998 10.26 .47 .34 .81 (.47) -- (.47) 10.60 8.09
1997 10.03 .48 .23 .71 (.48) -- (.48) 10.26 7.20
1996 10.22 .49 (.18) .31 (.50) -- (.50) 10.03 3.01
1995 10.06 .51 .16 .67 (.51) -- (.51) 10.22 6.97
1994 (c) 10.84 .32 (.78) (.46) (.32) -- (.32) 10.06 (6.26)*
Class R (2/97)
1999 (d) 10.62 .26 .10 .36 (.27) -- (.27) 10.71 3.41*
1998 10.28 .55 .34 .89 (.55) -- (.55) 10.62 8.88
1997 (c) 10.27 .18 .01 .19 (.18) -- (.18) 10.28 1.92
==========================================================================================================
</TABLE>
<TABLE>
<CAPTION>
Ratios/Supplemental Data
--------------------------------------------------------------------------------
Ratio Ratio
of Net of Net
Ratio of Investment Ratio of Investment
Expenses Income Expenses Income
to Average to Average to Average to Average
Ending Net Assets Net Assets Net Assets Net Assets
Net Before Before After After Portfolio
Year Ended Assets Reimburse- Reimburse- Reimburse- Reimburse- Turnover
May 31, (000) ment ment ment(a) ment(a) Rate
- ----------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Class A (3/86)
1999 (d) $186,603 .87%* 4.65%* .87%* 4.65%* 6%
1998 186,340 .86 5.06 .86 5.06 29
1997 181,595 1.00 5.24 .93 5.31 23
1996 185,016 1.03 5.19 .90 5.32 54
1995 191,850 1.06 5.58 .91 5.73 35
1994 196,087 1.04 5.26 .89 5.41 21
Class B (2/97)
1999 (d) 7,047 1.63* 3.90* 1.63* 3.90* 6
1998 3,609 1.61 4.23 1.61 4.23 29
1997 (c) 271 1.62* 4.60* 1.62* 4.60* 23
Class C (10/93)
1999 (d) 11,523 1.43* 4.11* 1.43* 4.11* 6
1998 8,291 1.41 4.50 1.41 4.50 29
1997 7,065 1.54 4.70 1.48 4.76 23
1996 6,589 1.58 4.64 1.45 4.77 54
1995 6,049 1.61 4.98 1.46 5.13 35
1994 (c) 4,161 1.79* 4.35* 1.49* 4.65* 21
Class R (2/97)
1999 (d) 1,298 .67* 4.85* .67* 4.85* 6
1998 848 .66 5.24 .66 5.24 29
1997 (c) 405 .66* 5.57* .66* 5.57* 23
==============================================================================================
</TABLE>
* Annualized.
** Information included prior to the fiscal year ended May 31, 1997, reflects
the financial highlights of Flagship North Carolina.
(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) From commencement of class operations as noted.
(d) For the six months ended November 30, 1998.
42
<PAGE>
Selected data for a share outstanding throughout each period is as follows:
Class (Inception Date)
<TABLE>
<CAPTION>
Investment Operations Less Distributions
----------------------------- -------------------------
TENNESSEE** Net
Realized/
Unrealized
Beginning Net Invest- Net Ending
Net Invest- ment Invest- Net
Year Ended Asset ment Gain ment Capital Asset Total
May 31, Value Income(a) (Loss) Total Income Gain Total Value Return (b)
- ----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Class A (11/87)
1999 (d) $11.46 $.28 $ .12 $ .40 $(.28) $ -- $(.28) $11.58 3.53%
1998 11.06 .58 .40 .98 (.58) -- (.58) 11.46 9.01
1997 10.83 .59 .23 .82 (.59) -- (.59) 11.06 7.71
1996 11.01 .59 (.18) .41 (.59) -- (.59) 10.83 3.78
1995 10.78 .60 .23 .83 (.60) -- (.60) 11.01 8.04
1994 11.23 .61 (.43) .18 (.61) (.02) (.63) 10.78 1.55
Class B (2/97)
1999 (d) 11.46 .23 .14 .37 (.24) -- (.24) 11.59 3.24
1998 11.06 .49 .40 .89 (.49) -- (.49) 11.46 8.21
1997 (c) 11.14 .14 (.09) .05 (.13) -- (.13) 11.06 .42
Class C (10/93)
1999 (d) 11.45 .24 .14 .38 (.25) -- (.25) 11.58 3.32
1998 11.05 .52 .39 .91 (.51) -- (.51) 11.45 8.39
1997 10.82 .53 .23 .76 (.53) -- (.53) 11.05 7.12
1996 11.00 .53 (.18) .35 (.53) -- (.53) 10.82 3.22
1995 10.78 .54 .22 .76 (.54) -- (.54) 11.00 7.35
1994 (c) 11.61 .35 (.83) (.48) (.34) (.01) (.35) 10.78 (5.92)*
Class R (2/97)
1999 (d) 11.44 .29 .13 .42 (.29) -- (.29) 11.57 3.71
1998 11.04 .60 .40 1.00 (.60) -- (.60) 11.44 9.20
1997 (c) 11.09 .20 (.05) .15 (.20) -- (.20) 11.04 1.40
==========================================================================================================
</TABLE>
<TABLE>
<CAPTION>
Ratios/Supplemental Data
--------------------------------------------------------------------------------
Ratio Ratio
of Net of Net
Ratio of Investment Ratio of Investment
Expenses Income Expenses Income
to Average to Average to Average to Average
Ending Net Assets Net Assets Net Assets Net Assets
Net Before Before After After Portfolio
Year Ended Assets Reimburse- Reimburse- Reimburse- Reimburse- Turnover
May 31, (000) ment ment ment(a) ment(a) Rate
- ---------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Class A (11/87)
1999 (d) $288,186 .85%* 4.78%* .85%* 4.78%* 12%
1998 278,232 .84 5.09 .82 5.11 15
1997 257,475 .97 5.23 .85 5.35 23
1996 250,886 1.01 5.17 .88 5.30 38
1995 241,778 1.07 5.46 .89 5.64 23
1994 236,230 1.02 5.16 .76 5.42 17
Class B (2/97)
1999 (d) 10,329 1.60* 4.03* 1.60* 4.03* 12
1998 5,775 1.59 4.30 1.58 4.31 15
1997 (c) 537 1.60* 4.49* 1.37* 4.72* 23
Class C (10/93)
1999 (d) 23,956 1.40* 4.23* 1.40* 4.23* 12
1998 20,673 1.39 4.53 1.37 4.55 15
1997 15,049 1.53 4.67 1.40 4.80 23
1996 15,483 1.56 4.62 1.43 4.75 38
1995 12,494 1.62 4.90 1.44 5.08 23
1994 (c) 10,652 1.63* 4.40* 1.23* 4.80* 17
Class R (2/97)
1999 (d) 554 .65* 4.98* .65* 4.98* 12
1998 534 .64 5.27 .62 5.29 15
1997 (c) 248 .66* 5.55* .46* 5.75* 23
=============================================================================================
</TABLE>
* Annualized.
** Information included prior to the fiscal year ended May 31, 1997, reflects
the financial highlights of Flagship Tennessee.
(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) From commencement of class operations as noted.
(d) For the six months ended November 30, 1998.
43
<PAGE>
Building a Better Portfolio
Can Make You a Successful Investor
Nuveen Family
of Mutual Funds
Nuveen offers a variety of funds designed to help you reach your financial
goals.
Growth
Nuveen Rittenhouse Growth Fund
Growth and Income
European Value Fund
Growth and Income Stock Fund
Balanced Stock and Bond Fund
Balanced Municipal and Stock Fund
Tax-Free Income
National Funds
Long-Term
Insured
Intermediate-Term
Limited-Term
State Funds
Arizona
California
Colorado
Connecticut
Florida
Georgia
Kansas
Kentucky
Louisiana
Maryland
Massachusetts
Michigan
Missouri
New Jersey
New Mexico
New York
North Carolina
Ohio
Pennsylvania
Tennessee
Virginia
Wisconsin
Successful investors know that a well-diversified portfolio -- one that balances
different types of investments, levels of risk and tax management -- can be the
foundation for building and sustaining wealth. That's why Nuveen offers you and
your financial adviser a wide range of quality investments that can help you
build a better portfolio in the pursuit of your financial goals.
Mutual Funds
Nuveen offers a family of equity, balanced and municipal bond funds featuring
Premier Advisers/SM/ including Institutional Capital Corporation, Rittenhouse
Financial Services, and Nuveen Advisory Corp. Each brings a specialized
expertise in a particular investment style or asset class, time-tested
investment strategies and a focus on consistent, long-term performance. With
Nuveen's Premier Adviser funds, you have all the advantages of a family of funds
plus the benefits of specialized investment expertise.
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.
Defined Portfolios
Nuveen Defined Portfolios are fixed portfolios of quality securities that are a
convenient, attractive alternative to purchasing individual securities. They
provide low-cost diversification to reduce risk, while also offering
experienced, professional security selection and surveillance. In addition,
Nuveen Defined Portfolios provide 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.
44
<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
The Chase Manhattan Bank
4 New York Plaza
New York, NY 10004-2413
(800) 257-8787
Legal Counsel
Morgan, Lewis & Bockius LLP
Washington, D.C.
Independent Public Accountants
Arthur Andersen LLP
Chicago, IL
45
<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
quality investments designed for individuals seeking to build and sustain
wealth. In fact, more than 1.3 million investors have trusted Nuveen to help
them pursue their financial goals.
The cornerstone of Nuveen's investment philosophy is a commitment to disciplined
long-term investment strategies focused on providing consistent, attractive
performance over time. 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 investments and services to
help meet your unique circumstances and financial planning needs. Our equity,
balanced, and tax-free income funds, along with our defined portfolios and
private asset management, can help you build a better, well-diversified
portfolio.
Talk with your financial adviser to learn more about how Nuveen investment
products and services can help you. Or call us at (800) 257-8787 for more
information, including a prospectus where applicable. Please read that
information carefully before investing.
1898
NUVEEN
1998
OUR SECOND CENTURY
helping investors sustain the wealth of a lifetime./SM/
John Nuveen & Co. Incorporated
333 West Wacker Drive
Chicago, IL 60606-1286
www.nuveen.com
