NUVEEN MUNICIPAL BOND FUND INC, DEF 14A, 1995-03-21

NUVEEN MUNICIPAL BOND FUND INC
DEF 14A, 1995-03-21

Previous: ZENITH ELECTRONICS CORP, 424B3, 1995-03-21

Next: CENTRAL RESERVE LIFE CORP, 10-K405, 1995-03-21

<PAGE> 1

SCHEDULE 14A
(RULE 14A-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )

Filed by the registrant /X/

Filed by a party other than the registrant / /

Check the appropriate box:

/ / Preliminary proxy statement / / Confidential, for Use of the
Commission Only (as permitted by
Rule 14a-6(e)(2))

/X/ Definitive proxy statement

/X/ Definitive additional materials

/ / Soliciting material pursuant to Rule 14a-11(c) or Rule 14a-12
Nuveen Municipal Bond Fund, Inc.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified in Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)

Payment of filing fee (Check the appropriate box):

/ / $125 per Exchange Act Rule 0-11(c)(1)(ii), 14a-6(i)(1), or 14a-6(j)(2)
or Item 22(a)(2) of Schedule 14A.

/ / $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).

/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and
0-11.

(1) Title of each class of securities to which transaction applies:

- --------------------------------------------------------------------------------

(2) Aggregate number of securities to which transaction applies:

- --------------------------------------------------------------------------------

(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the filing fee
is calculated and state how it was determined):

- --------------------------------------------------------------------------------

(4) Proposed maximum aggregate value of transaction:

- --------------------------------------------------------------------------------

(5) Total fee paid:

- --------------------------------------------------------------------------------

/X/ Fee paid previously with preliminary materials.

- --------------------------------------------------------------------------------

/ / Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number, or
the form or schedule and the date of its filing.

(1) Amount previously paid:

- --------------------------------------------------------------------------------

(2) Form, schedule or registration statement no.:

- --------------------------------------------------------------------------------

(3) Filing party:

- --------------------------------------------------------------------------------

(4) Date filed:

- --------------------------------------------------------------------------------
<PAGE> 2

March 20, 1995

DEAR NUVEEN MUNICIPAL BOND FUND SHAREHOLDER:

We are pleased to invite you to a Special Meeting of Shareholders of Nuveen
Municipal Bond Fund, Inc. The meeting is scheduled for Friday, May 26, 1995, at
10:30 a.m. central time, in the 31st floor conference room of John Nuveen & Co.
Incorporated, 333 West Wacker Drive, Chicago, Illinois.

At this meeting, you will be asked to consider and approve a proposal to
reorganize your Fund as a Massachusetts business trust, which would permit the
Fund to issue multiple classes of shares. Reorganization as a Massachusetts
business trust will reduce the Funds' on-going expenses, and the ability to
offer additional classes of shares will provide alternative ways to purchase
shares that may be better suited to individual needs and preferences.

Your Fund's Board of Directors, which represents you in all matters
concerning the Fund, carefully considered and unanimously approved this
proposal. The proposal is now being submitted to you and your fellow
shareholders for a vote. Your Board strongly recommends that you vote in favor
of this proposal.

The attached Proxy Statement has been prepared to give you information
about this proposal. Whether or not you plan to join us, please complete, sign
and date your proxy ballot and mail it in the enclosed postage-paid envelope.

No matter how large or small your investment in Nuveen Municipal Bond Fund,
Inc., your vote is extremely important. Please mark and return your ballot
today. A prompt response can save your Fund the expense of a follow-up mailing.

Sincerely,

RICHARD J. FRANKE
Chairman of the Board
<PAGE> 3

NUVEEN MUNICIPAL BOND FUND, INC.

333 WEST WACKER DRIVE, CHICAGO, ILLINOIS 60606
TELEPHONE 800-621-7227

NOTICE OF SPECIAL MEETING OF SHAREHOLDERS

MAY 26, 1995
March 20, 1995

TO THE SHAREHOLDERS OF NUVEEN MUNICIPAL BOND FUND, INC.:

Notice is hereby given that a special meeting of the shareholders of Nuveen
Municipal Bond Fund, Inc., a Maryland corporation (the "Fund"), will be held in
the 31st floor conference room of John Nuveen & Co. Incorporated, 333 West
Wacker Drive, Chicago, Illinois, on Friday, May 26, 1995, at 10:30 a.m. to
approve or disapprove the reorganization of the Fund into a Massachusetts
business trust named Nuveen Municipal Bond Fund (the "Trust"), thereby
permitting the issuance of additional classes of shares in connection with the
implementation of a Flexible Sales Charge Program (the "Reorganization"). A vote
in favor of the Reorganization will also be a vote (i) authorizing the temporary
amendment of certain fundamental investment restrictions of the Fund solely to
permit the Reorganization and (ii) authorizing the Fund, as sole shareholder of
the Trust, (a) to elect current Fund directors as trustees of the Trust, (b) to
approve the investment management agreement with the Fund as the investment
management agreement with the Trust, and (c) to select the auditors for the Fund
as the auditors for the Trust.

Shareholders of record at the close of business on March 13, 1995, are
entitled to notice of and to vote at the meeting. Other business properly
brought before the meeting may also be transacted.

YOUR VOTE IS VERY IMPORTANT. IN ORDER TO AVOID DELAY AND TO ASSURE THAT
YOUR SHARES ARE REPRESENTED, IF YOU DO NOT EXPECT TO BE PRESENT IN PERSON AT THE
MEETING, YOU ARE REQUESTED TO FILL IN, SIGN AND MAIL THE ENCLOSED PROXY AS
PROMPTLY AS POSSIBLE. NO POSTAGE IS REQUIRED IF MAILED IN THE UNITED STATES.

JAMES J. WESOLOWSKI
Secretary
MUBF
<PAGE> 4

NUVEEN MUNICIPAL BOND FUND, INC.

333 WEST WACKER DRIVE, CHICAGO, ILLINOIS 60606
TELEPHONE 800-621-7227

PROXY STATEMENT
March 20, 1995

GENERAL INFORMATION

This proxy statement is furnished in connection with the solicitation by
the Board of Directors of Nuveen Municipal Bond Fund, Inc. (the "Fund") of
proxies to be voted at a special meeting of the shareholders of the Fund to be
held on May 26, 1995 (the "Meeting"), and at any and all adjournments thereof.
The cost of preparing, printing and mailing the enclosed proxy, accompanying
notice and proxy statement, and all other costs in connection with the
solicitation of proxies, will be paid by the Fund. Additional solicitation may
be made by letter, telephone or telegraph by officers of the Fund, by officers
or employees of the Fund's principal underwriter, John Nuveen & Co. Incorporated
("Nuveen") or the Fund's investment adviser, Nuveen Advisory Corp., or by
dealers and their representatives. D.F. King & Co., Inc. has been engaged to
assist in the solicitation of proxies for estimated fees and expenses of
$120,000.

Your shares will be voted in accordance with the choice you specify on your
proxy. If no choice is specified, the shares will be voted FOR approval of the
proposed reorganization of the Fund into a Massachusetts business trust, which
would permit the Fund to issue additional classes of shares in connection with
the implementation of a Flexible Sales Charge Program (the "Reorganization").
Shareholders who execute proxies may revoke them at any time before they are
voted by filing with the Fund a written notice of revocation, by delivering a
duly executed proxy bearing a later date, or by attending the Meeting and voting
in person.

A quorum of shareholders is required to take action at the Meeting. A
majority of the shares entitled to vote at the Meeting, represented in person or
by proxy, will constitute a quorum of shareholders at the Meeting. Votes cast by
proxy or in person at the Meeting will be tabulated by the inspectors of
election appointed for the Meeting. The inspectors of election will determine
whether or not a quorum is present at the Meeting. The inspectors of election
will treat abstentions as shares that are present and entitled to vote for
purposes of determining a quorum.

The Reorganization is the only matter scheduled to be voted upon, and
approval will require the affirmative vote of two-thirds of the shares entitled
to be voted at the meeting. For purposes of determining the approval of the
matters submitted to the shareholders for a vote, abstentions will be treated as
shares voted against the Reorganization. Broker non-votes will have the same
effect as a vote against approval of the Reorganization. The details of the
proposal to be voted on by the Fund's shareholders and the vote required for
approval are set forth below.

As of March 13, 1995, there were issued and outstanding 303,117,547 shares
of common stock of the Fund. Those persons who were shareholders of record at
the close of business on March 13, 1995, will be entitled to one vote for each
share held. Shareholders of the Fund may obtain copies of the Fund's most recent
annual report by writing the Fund at 333 West Wacker Drive, Chicago, Illinois
60606, or calling 1-800-621-7227.

This proxy statement is first being mailed to shareholders of the Fund on
or about March 20, 1995.

1
<PAGE> 5

REORGANIZATION OF FUND

On February 14, 1995, the Board of Directors of the Fund unanimously
approved an Agreement and Plan of Reorganization (the "Plan") in the form
attached hereto as Exhibit A. The Plan provides for the reorganization of the
Fund, which is currently a Maryland corporation, into a Massachusetts business
trust named Nuveen Municipal Bond Fund (the "Trust"). After the Reorganization,
the Trust will issue additional classes of shares in connection with
implementation of a Flexible Sales Charge Program.

REASONS FOR REORGANIZATION

The Reorganization would allow the Trust to issue multiple classes of
shares with the purpose of providing investors alternative ways of purchasing
Trust Shares better suited to their individual needs and preferences, furnishing
ongoing compensation to financial advisers to enhance the level of service
provided by these advisers to investors, and enhancing the marketability of
Trust Shares to help achieve growth in assets and the resulting benefits of
greater portfolio diversification and operating efficiencies. (See "Procedures
for Reorganization -- Multiple Classes of Shares".)

Another purpose of the Reorganization is to achieve operational economies
that should result in cost savings to the Fund. The Fund was originally
incorporated in Maryland on October 8, 1976. The Board of Directors unanimously
recommended conversion of the Fund to a Massachusetts business trust which will
succeed to the Fund's business. As a Maryland corporation with its principal
business in Illinois, the Fund is registered as a foreign corporation in the
state of Illinois and pays franchise taxes to that state. Such taxes are based
upon the Fund's paid-in-capital, which in turn is dependent upon the number of
outstanding shares. Under the current law, use of a business trust rather than
the corporate form of organization will eliminate most state taxes imposed on
the Fund.

Massachusetts has been chosen for the Trust's domicile because its law with
respect to business trusts is believed to be the most developed of any state,
although it is less developed than Maryland corporation law. The Board of
Directors has determined that Massachusetts law affords additional advantages to
the operation of a mutual fund as compared to those available under Maryland
law.

In addition, the Board of Trustees of the Trust generally will have greater
flexibility in carrying on the business affairs of the Trust than if the Fund
remained a Maryland corporation. Similarly, as a Massachusetts business trust,
the Trust is authorized to issue shares in different series representing
interests in separate portfolios within the Trust. Currently shares of the Trust
are not divided into series and the Board of Trustees does not currently intend
to do so.

PRINCIPAL FEATURES OF REORGANIZATION

The Trust is an open-end diversified management investment company as
defined in the Investment Company Act of 1940 (the "1940 Act") that was
organized for the purpose of succeeding to the business of the Fund. The
Reorganization contemplates that the Fund will transfer all of its assets to the
Trust; the liabilities of the Fund will be assumed by the Trust; and each
shareholder's shares of the Fund will automatically be exchanged for an equal
number of shares (including any fractional share) of the Trust. In connection
with the Reorganization and prior to its completion, one share of the Trust will
be issued to the Fund. (See "Procedures for Reorganization" and "Federal Income
Tax Consequences" below.)

2
<PAGE> 6

PROCEDURES FOR REORGANIZATION

By voting in favor of the Reorganization, shareholders of the Fund will be
authorizing the temporary amendment of certain fundamental investment
restrictions of the Fund that might otherwise be construed as restricting the
Fund's ability to carry out the Reorganization. Likewise, by voting in favor of
the Reorganization, shareholders of the Fund will be authorizing the Fund, as
the sole shareholder of the Trust, to (i) elect current Fund directors as
trustees of the Trust; (ii) approve a new investment management agreement, which
is identical in substance to the existing agreement with the Fund and (iii)
ratify the selection of auditors, each discussed in turn below. If the
shareholders approve the Reorganization, the Fund will transfer all of its
assets to the Trust; the Trust will assume all of the liabilities of the Fund
and issue to each shareholder of the Fund shares of the Trust in a number equal
to the number of shares (including any fractional share) of the Fund then owned
by such shareholder, in exchange for all of the shares of the Fund owned by the
shareholder; the share of the Trust owned by the Fund will be cancelled; and the
Fund will then be dissolved. A shareholder of the Fund will acquire the same pro
rata interest in the Trust as of the effective time of the Reorganization as the
shareholder had in the Fund immediately prior to the Reorganization. The Trust
will operate in the same manner (except for the Flexible Sales Charge Program
described below) and with the same investment objectives and policies as those
of the Fund.

Confirmations of the shares of the Trust received in the Reorganization in
exchange for shares of the Fund will not be issued to shareholders, because the
number of shares held by a shareholder will not be changed by the
Reorganization.

It will not be necessary for a shareholder holding certificates
representing shares of the Fund to exchange those certificates for new
certificates representing shares of the Trust following consummation of the
Reorganization. Certificates for shares of the Fund issued prior to the
Reorganization will represent outstanding shares of the Trust after the
Reorganization. New certificates will not be issued by the Trust after the
Reorganization unless specifically requested in writing. Shares of the Fund not
represented by certificates will automatically be exchanged for the same number
of shares of the Trust.

If approved by shareholders of the Fund, it is expected that the
Reorganization will be made effective at 5:00 p.m., Chicago time, on June 12,
1995, but it may be made effective at a different time. At any time before the
Reorganization is effective, the Trust and the Fund may agree to terminate the
Reorganization, and if the Reorganization has not been made effective by
September 30, 1995, either the Trust or the Fund may terminate the
Reorganization, in either case whether or not it has been approved by the Fund's
shareholders.

CERTAIN COMPARATIVE INFORMATION ON THE FUND AND THE TRUST

As a Massachusetts business trust, the Trust's operations are governed by
its declaration of trust ("Declaration of Trust") and By-laws and by
Massachusetts law, rather than by the Articles of Incorporation, as amended and
restated (the "Articles of Incorporation") and By-laws, as amended (the
"By-laws") of the Fund and Maryland law. Certain differences between the two
forms of organization and governing corporate documents are summarized below.
Shareholders of the Fund entitled to vote at the meeting may obtain copies of
the Declaration of Trust and the Trust's By-laws, and the Fund's Articles of
Incorporation and By-laws, without charge, upon written request to the Secretary
of the Fund. The Trust and the Fund are each subject to the 1940 Act and the
rules and regulations thereunder.

3
<PAGE> 7

Trustees. The affairs of the Trust are managed by a Board of Trustees
rather than a Board of Directors as under Maryland law. Mr. Timothy R.
Schwertfeger, a director of the Fund, is currently the sole trustee of the
Trust. If the Reorganization is approved, each of the directors of the Fund will
be elected as trustees of the Trust.

Shares. The shares of beneficial interest of the Trust (and any series
which may be authorized in the future) are transferable shares, $.10 par value.
The Trust can issue an unlimited number of shares of beneficial interest with
varying par value. Each share of the Trust (or of any series of the Trust)
represents an equal proportionate interest in the assets owned by, and the
liabilities of, the Trust (or of any series of the Trust). As such, each share
of the Trust is entitled to dividends and distributions when and as declared on
shares of the Trust by the Board of Trustees. Under the Articles of
Incorporation of the Fund, the Fund is currently authorized to issue up to
750,000,000 shares of a single class. However, the Fund's Board of Directors,
with or without approval by the shareholders, may amend the Articles of
Incorporation to increase or decrease the number of authorized shares.

Multiple Classes of Shares. The Fund's Articles of Incorporation provide
for the issuance of only one class of shares. All Fund shares are sold at a
public offering price equal to net asset value plus in most cases an up-front
sales charge, as described in the Fund's prospectus.

The Declaration of Trust permits the Trust to issue multiple classes of
shares (the "Flexible Sales Charge Program") for the purposes of providing
investors alternative ways of purchasing Trust shares better suited to their
individual needs and preferences, furnishing ongoing compensation to financial
advisers to enhance the level of service provided by these advisers to
investors, and enhancing the marketability of Trust shares to help achieve
growth in assets and the resulting benefits of greater portfolio diversification
and operating efficiencies. The Fund previously received an order from the
Securities and Exchange Commission (the "SEC") that permits it to issue and sell
an unlimited number of classes of shares and to allocate voting rights thereto
and to impose costs and fees thereon in the manner described above. That order
also applies to the Trust, and the Trust expects to implement the Flexible Sales
Charge Program immediately after consummation of the Reorganization.

The Flexible Sales Charge Program, as is currently contemplated, would
provide investors with the following alternative ways of purchasing Trust
shares:

Class A Shares: The Up-Front Sales Charge Option. Investors will have the
option of purchasing Class A Shares that are subject to an up-front sales charge
and a service plan to be adopted pursuant to Rule 12b-1 under the 1940 Act (a
"Rule 12b-1 Plan") providing for a service fee at an annual rate of up to 0.25%
of average daily net assets of Class A Shares. The sales charge for Class A
Shares may be reduced or eliminated under certain circumstances and for certain
specified categories of investors.

Class C Shares: The Installment Sales Charge Option. Investors will
separately have the option of purchasing Class C Shares that are not subject to
any up-front sales charge, but are subject to a Rule 12b-1 Plan providing for a
distribution fee at an annual rate of up to 0.75%, and a service fee at an
annual rate of up to 0.25%, of average daily net assets of Class C Shares. Class
C Shares may also be subject to a contingent deferred sales charge ("CDSC").
Class C Shares automatically convert to Class A Shares six years after purchase.

4
<PAGE> 8

Class R Shares: The Net Asset Value Purchase Option. All currently issued
and outstanding shares of the Fund (which will be converted into shares of the
Trust in the Reorganization) will be designated as Class R Shares under the
Flexible Sales Charge Program. Class R Shares will be available for purchase (a)
with monies representing distributions from Nuveen-sponsored unit investment
trusts ("UITs") owned by unitholders who, on or prior to the effective date of
the Reorganization (currently anticipated to be on or about June 12, 1995,
assuming receipt of shareholder approval of the Reorganization, as described
herein), have purchased such UITs and elected to reinvest distributions from
such UITs in additional shares of the Fund, and (b) with monies representing
dividends and capital gain distributions on Class R Shares of the Trust.
Purchases through such reinvestments will not be subject to any sales charge or
any distribution fee or service fee under a Rule 12b-1 Plan or otherwise. Class
R Shares will also be available for purchase by certain specified categories of
investors who would otherwise be eligible to purchase Class A Shares at net
asset value.

Under the Declaration of Trust, the Board of Trustees of the Trust will
also have the authority to create one or more additional classes of shares in
connection with the Flexible Sales Charge Program, the terms of which may differ
from the classes of shares described above. These may include classes subject to
a CDSC, as well as classes subject to combinations of up-front sales charges,
distribution fees and service fees different from those of the Class A Shares,
Class C Shares and Class R Shares. The Trust could, for example, offer a class
or classes of shares, with or without up-front sales charges, that are subject
to a service fee under a plan substantially identical to a Rule 12b-1 Plan. The
Trust could also determine to offer investors a class or classes of shares
subject to a CDSC and distribution and service fees under a Rule 12b-1 Plan or a
non-Rule 12b-1 Plan.

Each class of shares of the Trust created pursuant to the Flexible Sales
Charge Program will represent an interest in the same portfolio of investments
and be identical in all respects except as to: (a) the allocation of expenses
related to the marketing, administration, and distribution of Trust shares to
the particular classes of shares incurring such expenses, (b) the voting rights
related to any Rule 12b-1 Plan or other plan affecting a specific class of
shares, (c) class designations and (d) any conversion features or exchange
privileges applicable to specific classes of shares. Financial advisers and
other persons distributing the Trust's shares may receive different compensation
for selling different classes of shares. As a result of the foregoing, net
income per share, dividends per share and net asset value per share of each
class will be different.

Separate Series of Shares. The Declaration of Trust authorizes the issuance
of shares in different series, and authorizes the Board of Trustees of the
Trust, without further shareholder action, to establish and create additional
series and to designate the rights and preferences of the shareholders of each
of the respective series. Each series would represent interests in a separate
portfolio of securities and other assets, with its own investment objectives and
policies.

All consideration received for the sales of shares of a particular series
of the Trust, all assets in which such consideration is invested, all income,
earnings and profits derived from such investments, and all liabilities incurred
by or for the series, will be allocated to and belong or attach to that series.
Currently shares of the Trust are not divided into series and the Board of
Trustees does not currently intend to do so.

Shareholder Voting Rights. Under the Maryland General Corporation Law (the
"Maryland Code"), a Maryland corporation registered under the 1940 Act is not
required to hold annual meetings unless so required by the 1940 Act. Under
Massachusetts law, the Trust is not required to hold annual shareholder
meetings. Under the Declaration of Trust and the 1940 Act, however, shareholder
meetings are required to be called for

5
<PAGE> 9

various purposes, such as electing or removing trustees of the Trust (although
trustees may be elected to fill vacancies or be removed by the Board of Trustees
without a vote of shareholders, subject to certain restrictions in the 1940
Act), changing fundamental investment policies, approving or disapproving an
investment advisory contract, and ratifying or rejecting a selection of
different auditors. If the Trust establishes series, any matter submitted to a
vote of shareholders would be voted by series unless otherwise required by the
1940 Act or as determined by the Board of Trustees.

The Maryland Code and the By-laws of the Fund provide that a meeting of
shareholders shall be called upon the written request of shareholders
representing 25% of the outstanding shares of the Fund. The Declaration of Trust
provides that a meeting of shareholders shall be called upon the written request
of the holders of at least 10% of the outstanding shares of the Trust, if
shareholders of all series are required to vote in the aggregate, or of any
series, if shareholders of such series are entitled to vote by series.

The Declaration of Trust provides that the trustees shall set in the
By-laws the quorum required for the transaction of business by shareholders,
provided that at least 30% of the shares entitled to be voted on a matter shall
constitute a quorum. Currently a quorum for the Fund is more than 50% of the
shares entitled to be voted. Thus, a meeting of shareholders of the Trust could
take place even if less than a majority of the shares were represented at the
meeting. Some matters under the Declaration of Trust requiring approval by a
majority or greater percentage of the shares entitled to vote would not be
affected by this provision, nor would matters that under the 1940 Act require
the vote of a "majority" of the outstanding shares.

Under the Declaration of Trust, each trustee of the Trust serves until the
next meeting of shareholders, if any, called for the purpose of re-electing
trustees or electing successors to such trustees and until the election and
qualification of his successor, or until he sooner dies, resigns, becomes
incapacitated or is removed for cause by a vote of shareholders of the Trust
holding not less than two-thirds of the shares then outstanding or by a vote of
two-thirds of the trustees then in office. The By-laws of the Fund permit
removal of a director by the holders of a majority of the outstanding shares of
the Fund.

The Declaration of Trust specifically authorizes the Board of Trustees to
terminate the Trust (or any series) by notice to the shareholders without
shareholder approval. The dissolution of the Fund is subject to shareholder
approval under the Maryland Code.

Liability of Shareholders. Under Massachusetts law, shareholders of a
Massachusetts business trust could, under certain circumstances, be held
personally liable for the obligations of the Trust. However, the Declaration of
Trust disclaims shareholder liability for acts or obligations of the Trust, and
requires that notice of such disclaimer be given in each agreement, obligation,
or instrument entered into or executed by the Trust or the trustees. Moreover,
the Declaration of Trust provides for indemnification out of Trust property for
all losses and expenses of any shareholder held personally liable for the
obligations of the Trust. Thus, the risk of a shareholder's incurring financial
loss on account of shareholder liability is considered by the Trust to be
remote, since it is limited to circumstances in which the disclaimer is
inoperative and the Trust itself is unable to meet its obligations. Under the
current form of organization of the Fund as a Maryland corporation, its
shareholders have no personal liability for the Fund's acts or obligations,
except that a shareholder may be liable to the extent that: (1) the purchase
price of his shares has not been received by the Fund in the amount or manner
required by Maryland law; (2) he receives a dividend or distribution made
contrary to Maryland law; or (3) the consideration to him from the Fund upon
redemption of his shares was paid in violation of Maryland law.

6
<PAGE> 10

Liability of Directors and Trustees. Under the Declaration of Trust, the
trustees are personally liable only for willful misfeasance, bad faith or gross
negligence in the performance of their duties or by reason of reckless disregard
of their obligations and duties as trustees and not for errors of judgment or
mistakes of fact or law. Under the Declaration of Trust, trustees and officers
will be indemnified against liabilities and expenses incurred in connection with
the defense or disposition of any proceeding in which they are involved by
reason of their position with the Trust, except that they are not indemnified
against liabilities or expenses arising from conduct adjudicated to constitute
willful misfeasance, bad faith, gross negligence or reckless disregard of their
duties. The Trust may also advance money for these expenses, provided that the
trustee or officer undertakes to repay the Trust if his conduct is later
adjudicated to preclude indemnification and certain other conditions are met.

Maryland law provides that in addition to any other liability imposed by
law, the directors may be liable to the Fund for: (1) voting for or assenting to
the declaration of any dividend or other distribution of assets to shareholders
contrary to Maryland law; (2) voting for or assenting in certain circumstances
to distributions of assets to shareholders during liquidation of the Fund; and
(3) voting for or assenting to a repurchase of the shares of the Fund contrary
to Maryland law. A director is not liable, however, if he acts in good faith, in
a manner he reasonably believes to be in the best interest of the Fund, and with
the care of an ordinarily prudent person. In the event of any litigation against
the directors or officers of the Fund, Maryland law permits the Fund to
indemnify a director or officer for certain expenses only if he acted in good
faith and reasonably believed that his conduct was in the best interest of the
Fund. Maryland law permits the Fund to advance expenses to a director of officer
if the facts then known do not preclude indemnification based on the foregoing
standard and on receipt of an undertaking similar to the undertaking that would
be required by the Trust.

Involuntary Redemption. The Declaration of Trust permits the Board of
Trustees to authorize the Trust to redeem shares in an account if at any time
the shares in the account do not have at least a minimum value set by the Board
of Trustees. The Declaration of Trust also authorizes the Trust to redeem shares
under certain other circumstances as may be specified by the Board of Trustees.
The Trust currently does not intend to redeem shares involuntarily.

The foregoing is only a summary of certain of the differences between (1)
the Trust, its Declaration of Trust and By-laws and Massachusetts law, and (2)
the Fund, its Articles of Incorporation and By-laws and Maryland law. It is not
a complete list of differences. Shareholders may refer to the provisions of the
Articles of Incorporation, as amended and restated, Fund By-laws and Maryland
law, and the Declaration of Trust, Trust By-laws and Massachusetts law for a
more thorough comparison.

FEDERAL INCOME TAX CONSEQUENCES

It is anticipated that the transactions contemplated by the Plan will be
tax-free for federal income tax purposes. The Fund has received an opinion of
Bell, Boyd & Lloyd, counsel to the Fund, that under the Internal Revenue Code of
1986 the reorganization of the Fund into the Trust pursuant to the Plan will not
give rise to the recognition of income, deductions, gain or loss for federal
income tax purposes to the Fund, the Trust, or the shareholders of the Fund. A
shareholder's adjusted basis for tax purposes in shares of the Trust after the
Reorganization will be the same as the shareholder's adjusted basis for tax
purposes in the shares of the Fund immediately before the Reorganization. The
holding period of the shares of the Trust received by the shareholders of the
Fund will include the holding period of shares of the Fund exchanged therefor,
provided that at the time of the exchange the shares of the Fund were held as
capital assets.

7
<PAGE> 11

TEMPORARY AMENDMENT TO INVESTMENT RESTRICTIONS

By voting in favor of the Reorganization, shareholders of the Fund will be
authorizing the temporary amendment of certain fundamental investment
restrictions of the Fund solely to effect the Reorganization. The following
fundamental investment restrictions of the Fund, which may not be changed
without shareholder approval, might be construed as restricting the Fund's
ability to carry out the Reorganization:

The Fund may not:

(1) invest in securities other than Municipal Obligations and
temporary investments, as those terms are defined in the Prospectus;

(2) invest more than 5% of its total assets in securities of any one
issuer, except that this limitation shall not apply to the securities of
the United States government, its agencies or instrumentalities;

(3) invest more than 5% of its total assets in securities of
unseasoned issuers which, together with their predecessors, have been in
operation for less than three years; or

(4) purchase securities (other than securities of the U.S. government,
its agencies or instrumentalities) if, as a result of such purchase, more
than 25% of the Fund's total assets would be invested in any one industry
nor enter into a repurchase agreement if, as a result thereof, more than
10% of its assets would be subject to repurchase agreements maturing in
more than seven days.

Those restrictions may prohibit the purchase by the Fund of the initial share of
the Trust or the transfer of all the Fund's assets to the Trust as is
contemplated by the Reorganization. Accordingly, a vote for the Reorganization
will be deemed also to be a vote to amend temporarily the Fund's investment
restrictions to the extent necessary to carry out the Reorganization in the
manner described above, by the addition to each of the above restrictions of the
following clause:

"except solely in connection with the transactions contemplated by the
Agreement and Plan of Reorganization of the Fund and Nuveen Municipal Bond
Fund, approved by the Board of Directors of the Fund on February 14, 1995."

That amendment will only be for purposes of completing the Reorganization. The
amendment will not be adopted by the Trust and will have no effect thereafter.

AUTHORIZATION OF FUND TO ELECT CURRENT FUND DIRECTORS AS TRUSTEES OF THE TRUST

By voting in favor of the Reorganization, shareholders of the Fund will be
authorizing the Fund, as the initial sole shareholder of the Trust, to elect as
trustees of the Trust, the individuals named below, all of whom now serve as
directors of the Fund. Mr. Timothy R. Schwertfeger, a director of the Fund, is
currently the sole trustee of the Trust.

The following table shows each director's age, principal occupation and
other business affiliations and the year in which each director was first
elected or appointed a director of the Fund, and the number of shares of

8
<PAGE> 12

Common Stock of the Fund and of all Nuveen funds advised by Nuveen Advisory
Corp. (excluding money market funds) which each director beneficially owned as
of February 28, 1995.

<TABLE>
<CAPTION>
FULL SHARES OF COMMON
STOCK BENEFICIALLY
OWNED
YEAR FIRST FEBRUARY 28, 1995
ELECTED OR ---------------------
APPOINTED A THE ALL NUVEEN
DIRECTORS AGE PRINCIPAL OCCUPATIONS(1) DIRECTOR FUND(2) FUNDS(3)
- ------------------------------ ----------------------------------- ------------ ------- ----------
<S> <C> <C> <C> <C> <C>
*Richard J. Franke 63 Chairman of the Board and Director 1976 4,881 20,578
of the Fund, The John Nuveen Com-
pany (since March 1992), John
Nuveen & Co. Incorporated, Nuveen
Advisory Corp. and Nuveen
Institutional Advisory Corp.
(since April 1990); Certified
Financial Planner.
*Timothy R. Schwertfeger 45 President and Director of the Fund 1994 59,760 (4) 92,641
(since July 1994), Executive Vice
President and Director of The
John Nuveen Company (since March
1992) and John Nuveen & Co.
Incorporated; Director of Nuveen
Advisory Corp. (since October
1992) and Nuveen Institutional
Advisory Corp. (since October
1992).
Lawrence H. Brown 60 Director of the Fund; retired in 1993 1,156 3,421
August 1989 as Senior Vice
President of The Northern Trust
Company.
Anne E. Impellizzeri 62 Director of the Fund; President and 1994 0 2,000
Chief Executive Officer of
Blanton-Peale, Institutes of
Religion and Health (since
December 1990); prior thereto,
Vice President of New York City
Partnership (from 1987 to 1990).
John E. O'Toole 66 Director of the Fund; retired in 1989 0 2,550
January 1994 as President of the
American Association of
Advertising Agencies, Inc.;
retired in December 1985 as
Chairman of the Board of Foote,
Cone & Belding Communications,
Inc.
</TABLE>

9
<PAGE> 13

- ---------------
(*) "Interested person" as defined in the Investment Company Act of 1940 by
reason of being an officer or director of the Fund's investment adviser, Nuveen
Advisory Corp.

(1) The directors of the Fund are directors or trustees, as the case may
be, of 21 Nuveen open-end funds and 55 Nuveen closed-end funds.

(2) No director beneficially owned on February 28, 1995, as much as 1/10 of
1% of the Fund's outstanding Common Stock. The above persons have sole voting
power and sole investment power as to the shares listed, except as described in
notes (4) and (5) below.

(3) The number shown reflects the aggregate number of shares beneficially
owned by the director in all of the Nuveen funds referred to in note (1) above
(excluding money market funds).

(4) These shares of the Fund are owned jointly by Mr. Schwertfeger and his
wife.

(5) Includes 3,568 shares of the Fund which are owned jointly by Mrs.
Rosenheim and her husband.

The Fund has adopted a Directors' Deferred Compensation Plan pursuant to
which a director of the Fund may elect to have all or a portion of the
director's fee deferred. Directors may defer fees for any calendar year by the
execution of a Participation Agreement prior to the beginning of the calendar
year during which the director wishes to begin deferral.

10
<PAGE> 14

The Fund's Board of Directors has an audit committee currently composed of
Lawrence H. Brown, Anne E. Impellizzeri, John E. O'Toole, Margaret K. Rosenheim
and Peter R. Sawers, directors of the Fund who are not "interested persons." The
audit committee reviews the work and any recommendations of the Fund's
independent public accountants. Based on such review, it is authorized to make
recommendations to the Board of Directors. The audit committee held two meetings
during the fiscal year ended February 28, 1995.

Richard J. Franke, Timothy R. Schwertfeger and Margaret K. Rosenheim serve
as members of the executive committee of the Board of Directors. The executive
committee, which meets between regular meetings of the Board of Directors, is
authorized to exercise all of the powers of the Board of Directors. The
executive committee held twelve meetings during the fiscal year ended February
28, 1995.

Nomination of those directors who are not "interested persons" of the Fund
is committed to a nominating committee composed of the directors who are not
"interested persons" of the Fund. It identifies and recommends individuals to be
nominated for election as non-interested directors. The nominating committee
held one meeting during the fiscal year ended February 28, 1995. No policy or
procedure has been established as to the recommendation of director nominees by
shareholders.

If the Reorganization is approved, it is expected that Trust board
committee membership and trustee compensation will be identical to Fund board
committee membership and board compensation.

The Board of Directors held six meetings during the fiscal year ended
February 28, 1995. During the fiscal year ended February 28, 1995, Mr. Franke
attended all of the Fund's Board meetings; however, he attended fewer than 75%
of the executive committee meetings.

The following table sets forth compensation paid by the Fund during the
fiscal year ended February 28, 1995 to each of the directors of the Fund.(1) The
Fund has no retirement or pension plans.

<TABLE>
<CAPTION>
TOTAL COMPENSATION
AGGREGATE FROM FUND AND FUND
COMPENSATION COMPLEX PAID TO
NAME OF PERSON FROM THE FUND DIRECTORS(2)
--------------------------------------- ------------- ------------------
<S> <C> <C>
Richard J. Franke...................... $ 0 0
Timothy R. Schwertfeger................ 0 0
Lawrence H. Brown...................... 4,839 56,500
Anne E. Impellizzeri................... 3,785 48,750
John E. O'Toole........................ 4,839 56,000
Margaret K. Rosenheim.................. 6,509(3) 64,404(4)
Peter R. Sawers........................ 4,839 56,000
</TABLE>

- -------------------------

(1) Interested directors and officers of the Fund receive no compensation from
the Fund.

(2) The directors of the Fund are directors or trustees as the case may be, of
21 Nuveen open-end funds and 55 Nuveen closed-end funds.

(3) Includes $270 in interest earned on deferred compensation from prior years.

(4) Includes $1,404 in interest earned on deferred compensation from prior
years.

11
<PAGE> 15

AUTHORIZATION OF THE FUND TO APPROVE MANAGEMENT AGREEMENT

By voting in favor of the Reorganization, shareholders of the Fund will be
authorizing the Fund, in its capacity as initial sole shareholder of the Trust,
to approve the Trust's investment management agreement (the "New Agreement")
between the Trust and Nuveen Advisory Corp. (the "Adviser"), 333 West Wacker
Drive, Chicago, Illinois, who has acted as investment adviser and manager for
the Fund since the Fund's organization in 1976. The Fund's investment management
agreement was last approved by the shareholders of the Fund at a meeting of
shareholders held on April 23, 1992 (the "Current Agreement"). On April 27,
1994, at a meeting called in part for the purpose of considering continuance of
the Current Agreement, the Board of Directors (including a majority of directors
who are not "interested persons" of the Fund or of the Adviser) voted in person
to approve continuance of the Agreement until August 1, 1995.

The terms of the New Agreement are identical to the Current Agreement, as
discussed below, except for the changes necessary to reflect the Trust's status
as a Massachusetts business trust.

If the Reorganization is not approved, the Current Agreement will remain in
effect until August 1, 1995, and may continue in effect from year to year
thereafter if specifically approved at least annually by the directors of the
Fund or by a vote of the majority of the outstanding voting securities. In
either event, the Current Agreement must also be approved by a vote of the
majority of the directors who are not "interested persons" of the Adviser or of
the Fund, cast in person at a meeting called for such purpose. The Current
Agreement may be terminated at any time without penalty, upon 60 days' written
notice, by the Adviser or the Board of Directors of the Fund or by a vote of a
majority of the outstanding voting securities of the Fund, and will terminate in
the event of its assignment. The vote of a majority of the outstanding voting
securities means the vote (i) of 67% or more of the voting securities present at
the meeting if the holders of more than 50% of the outstanding voting securities
are present or represented by proxy, or (ii) of more than 50% of the outstanding
voting securities, whichever is less.

Under the Current Agreement, the Fund has agreed to pay the Adviser an
annual management fee as follows:

<TABLE>
<CAPTION>
AVERAGE DAILY NET ASSET VALUE MANAGEMENT FEE
--------------------------------------------------------------- --------------
<S> <C>
Fee for the first $125 million................................. .5000 of 1%
Fee for the next $125 million.................................. .4875 of 1%
Fee for the next $250 million.................................. .4750 of 1%
Fee for the next $500 million.................................. .4625 of 1%
Fee for the next $1 billion.................................... .4500 of 1%
Fee for assets over $2 billion................................. .4250 of 1%
</TABLE>

The resulting fee rate for the fiscal year ended February 28, 1995 was .45
of 1% of the Fund's assets. For the fiscal year ended February 28, 1995, the
Fund paid aggregate management fees of $11,932,164.

The Current Agreement provides that the Adviser shall act as investment
adviser for the Fund, manage the Fund's investments, administer its business
affairs, provide office facilities and equipment and certain clerical,
bookkeeping and administrative services, and permit any of its officers and
employees to serve with compensation as trustees or officers of the Fund if
elected to such positions. Under the Current Agreement, the Fund agrees to pay
all other costs and expenses of its operations, including the compensation of
its directors (other than those affiliated with Nuveen Advisory), custodian,
transfer, dividend disbursing and

12
<PAGE> 16

service agent expenses, legal fees, expenses of independent accountants, costs
of acquiring and disposing of portfolio securities, expenses of preparing,
printing and distributing reports to stockholders and governmental agencies, and
taxes, if any.

AUTHORIZATION OF THE FUND TO SELECT TRUST AUDITORS

By voting in favor of the Reorganization, shareholders of the Fund will be
authorizing the Fund, in its capacity as initial sole shareholder of the Trust,
to select Arthur Andersen LLP as auditors for the Trust for the fiscal year
ending February 29, 1996. Arthur Andersen LLP has no direct or indirect
financial interest in the Fund or the Trust except as auditors and independent
accountants. A representative of Arthur Andersen LLP is expected to be present
at the Meeting and will be available to respond to any appropriate questions
raised at the Meeting and to make a statement if he wishes.

OTHER MATTERS

THE ADVISER

Nuveen Advisory Corp. is a wholly owned subsidiary of Nuveen, 333 West
Wacker Drive, Chicago, Illinois 60606. Nuveen is a wholly owned subsidiary of
The John Nuveen Company which, in turn, is approximately 75% owned by The St.
Paul Companies, Inc. ("St. Paul"). St. Paul is located at 385 Washington Street,
St. Paul, Minnesota 55102, and is principally engaged in providing
property-liability insurance through subsidiaries. Nuveen has acted as principal
underwriter for the Fund since the Fund's organization and as principal
underwriter pays the distribution expenses of the Fund.

The names, addresses and principal occupations of the principal executive
officer and the directors of Nuveen Advisory Corp. are as follows:

<TABLE>
<CAPTION>
NAME AND ADDRESS PRINCIPAL OCCUPATIONS
------------------------------------------ -----------------------------------
<S> <C>
Richard J. Franke......................... Chairman of the Board and Director,
Chairman of the Board and Director John Nuveen & Co. Incorporated
(Principal Executive Officer)
333 West Wacker Drive
Chicago, Illinois 60606
Donald E. Sveen........................... President and Director,
President and Director John Nuveen & Co. Incorporated
333 West Wacker Drive
Chicago, Illinois 60606
Anthony T. Dean........................... Executive Vice President and
Director Director,
333 West Wacker Drive John Nuveen & Co. Incorporated
Chicago, Illinois 60606
Timothy R. Schwertfeger................... Executive Vice President and
Director Director,
333 West Wacker Drive John Nuveen & Co. Incorporated
Chicago, Illinois 60606
</TABLE>

13
<PAGE> 17

Messrs. Franke and Schwertfeger, current directors of the Fund, are
"interested persons" of Nuveen Advisory Corp. The remaining directors of the
Fund are not "interested persons" of Nuveen Advisory Corp. The other officers of
the Fund who are officers or employees of Nuveen Advisory Corp. are as follows:
J. Thomas Futrell, Vice President of the Fund, is Vice President of Nuveen
Advisory Corp.; Steven J. Krupa, Vice President of the Fund, is Vice President
of Nuveen Advisory Corp.; Larry W. Martin, Vice President and Assistant
Secretary of the Fund, is Vice President and Assistant Secretary of Nuveen
Advisory Corp.; O. Walter Renfftlen, Vice President and Controller of the Fund,
is Vice President and Controller of Nuveen Advisory Corp.; Thomas C. Spalding,
Jr., Vice President of the Fund, is Vice President of Nuveen Advisory Corp.; H.
William Stabenow, Vice President and Treasurer of the Fund, is Vice President
and Treasurer of Nuveen Advisory Corp.; James J. Wesolowski, Vice President and
Secretary of the Fund, is Vice President, General Counsel and Secretary of
Nuveen Advisory Corp.; and Gifford R. Zimmerman, Vice President and Assistant
Secretary of the Fund, is Vice President and Assistant Secretary of Nuveen
Advisory Corp.

The following table sets forth information with respect to each executive
officer of the Fund, other than executive officers who are directors and
included in the table on page 9. Officers of the Fund receive no compensation
from the Fund. The term of office of all officers will expire at the first
meeting of the Board after the Meeting, which is presently scheduled to be held
on July 27, 1995.

<TABLE>
<CAPTION>
POSITIONS AND
NAME AGE OFFICES WITH FUND PRINCIPAL OCCUPATIONS
- ------------------------ --- ----------------- --------------------------------------------
<S> <C> <C> <C>
Kathleen M. Flanagan 47 Vice President Vice President of John Nuveen & Co.
(since 1994) Incorporated.
J. Thomas Futrell 39 Vice President Vice President of Nuveen Advisory Corp.
(since 1991) (since February 1991), prior thereto,
Assistant Vice President of Nuveen
Advisory Corp. (from August 1988 to
February 1991); Chartered Financial
Analyst.
Steven J. Krupa 37 Vice President Vice President of Nuveen Advisory Corp.
(since 1990) (since October 1990), prior thereto, Vice
President of John Nuveen & Co.
Incorporated (from January 1989 to
October 1990).
Anna R. Kucinskis 49 Vice President Vice President of John Nuveen & Co.
(since 1991) Incorporated.
Larry W. Martin 43 Vice President Vice President (since September 1992),
(since 1993) and Assistant Secretary and Assistant General
Assistant Secre- Counsel of John Nuveen & Co.
tary (since 1987) Incorporated; Vice President (since May
1993) and Assistant Secretary of Nuveen
Advisory Corp.; Vice President (since May
1993) and Assistant Secretary (since
January 1992) of Nuveen Institutional
Advisory Corp.; Assistant Secretary
(since February 1993) of The John Nuveen
Company; Managing Director (since January
1995) of Nuveen - Duff and Phelps
Investment Advisors.
</TABLE>

14
<PAGE> 18

<TABLE>
<CAPTION>
POSITIONS AND
NAME AGE OFFICES WITH FUND PRINCIPAL OCCUPATIONS
- ------------------------ --- ----------------- --------------------------------------------
<S> <C> <C> <C>
O. Walter Renfftlen 55 Vice President Vice President and Controller of The John
and Controller Nuveen Company (since March 1992), John
(since 1986) Nuveen & Co. Incorporated, Nuveen
Advisory Corp., and Nuveen Institutional
Advisory Corp. (since April 1990).
Thomas C. Spalding, Jr. 43 Vice President Vice President of Nuveen Advisory Corp. and
(since 1986) Nuveen Institutional Advisory Corp.
(since April 1990); Chartered Financial
Analyst.
H. William Stabenow 60 Vice President Vice President and Treasurer of The John
and Treasurer Nuveen Company (since March 1992), John
(since 1988) Nuveen & Co. Incorporated, Nuveen
Advisory Corp. and Nuveen Institutional
Advisory Corp. (since January 1992).
George P. Thermos 63 Vice President Vice President of John Nuveen & Co.
(since 1986) Incorporated.
James J. Wesolowski 44 Vice President Vice President, General Counsel and
and Secretary Secretary of The John Nuveen Company
(since 1988) (since March 1992), John Nuveen & Co.
Incorporated, Nuveen Advisory Corp. and
Nuveen Institutional Advisory Corp.
(since April 1990).
Gifford R. Zimmerman 38 Vice President Vice President (since September 1992),
(since 1993) and Assistant Secretary and Assistant General
Assistant Secre- Counsel of John Nuveen & Co.
tary (since 1988) Incorporated; Vice President (since May
1993) and Assistant Secretary of Nuveen
Advisory Corp.; Vice President (since May
1993) and Assistant Secretary (since
January 1992) of Nuveen Institutional
Advisory Corp.
</TABLE>

On February 28, 1995, directors and executive officers as a group
beneficially owned 112,539 shares of the Fund's Common Stock and 205,341 shares
of all Nuveen funds referred to in note (1) above (excluding money market
funds).

As of March 13, 1995, there were no holders of 5% or more of the shares of
the Fund.

APPRAISAL RIGHTS

Shareholders of the Fund will not have any appraisal rights in connection
with the Reorganization.

EXPENSES

The expenses related to the Reorganization will be borne by the Fund and
assumed by the Trust if the Reorganization is consummated. Those expenses are
expected to be more than offset by savings expected to result in the future from
the Reorganization.

15
<PAGE> 19

REQUIRED VOTE

Approval of the Reorganization requires the affirmative vote of two-thirds
of the shares entitled to be voted at the meeting. If shareholders of the Fund
do not approve the Reorganization, the Fund will continue in business as a
Maryland corporation and will not be authorized to issue multiple classes of
shares.

RECOMMENDATION OF DIRECTORS

The Board of Directors of the Fund has unanimously approved the proposed
Reorganization, including the authorization to issue multiple classes of shares,
and has determined that participation in the Reorganization is in the best
interests of the Fund and its shareholders. THE BOARD OF DIRECTORS RECOMMENDS
THAT SHAREHOLDERS VOTE FOR THE REORGANIZATION.

SHAREHOLDER MEETINGS AND PROPOSALS

Pursuant to the Maryland General Corporation Law, the Articles of
Incorporation and the By-laws of the Fund and to Massachusetts law, the
Declaration of Trust and By-laws of the Trust, neither the Fund nor the Trust is
required to hold an annual meeting. Meetings of the shareholders will be held
when and as determined necessary by the Board of Directors or Trustees, as the
case may be, of the Fund or Trust and in accordance with the 1940 Act. The Fund
currently does not anticipate that it will hold a meeting of shareholders in
1996. A shareholder desiring to submit a proposal for presentation at a meeting
of shareholders should send the proposal to the offices of the Fund, 333 West
Wacker Drive, Chicago, Illinois 60606.

OTHER BUSINESS

Management does not intend to present and does not have reason to believe
that others will present any other items of business at the Meeting. However, if
other matters are properly presented to the Meeting for a vote, the proxies will
be voted upon such matters in accordance with the judgment of the persons acting
under the proxies.

A list of shareholders entitled to be present and to vote at the Meeting
will be available at the offices of the Fund, 333 West Wacker Drive, Chicago,
Illinois, for inspection by any shareholder during regular business hours for
ten days prior to the date of the Meeting.

Failure of a quorum to be present at the Meeting will necessitate
adjournment and will subject the Fund to additional expense. The persons named
in the enclosed proxy may also move for an adjournment of the Meeting to permit
further solicitation of proxies if they determine that adjournment and further
solicitation is reasonable and in the best interests of the shareholders. Under
the Fund's By-laws, an adjournment of a meeting requires the affirmative vote of
a majority of the shares present in person or represented by proxy at the
meeting.

IF YOU CANNOT BE PRESENT IN PERSON, YOU ARE REQUESTED TO FILL IN, SIGN AND
RETURN THE ENCLOSED PROXY PROMPTLY. NO POSTAGE IS REQUIRED IF MAILED IN THE
UNITED STATES.

JAMES J. WESOLOWSKI
Secretary

16
<PAGE> 20

EXHIBIT A

AGREEMENT AND PLAN OF REORGANIZATION

NUVEEN MUNICIPAL BOND FUND, INC.
NUVEEN MUNICIPAL BOND FUND

NUVEEN MUNICIPAL BOND FUND, INC., a Maryland corporation ("NMBF") and
NUVEEN MUNICIPAL BOND FUND, a Massachusetts business trust (the "Trust"), agree
upon the following plan of reorganization:

1. SUCCESSION OF NMBF BY TRUST; DISTRIBUTION OF SHARES OF TRUST. NMBF shall
transfer to the Trust all of the assets of NMBF (including the share(s) of the
Trust owned by NMBF, which shall be canceled), in exchange for which the Trust
shall simultaneously assume all of the liabilities of NMBF, and shall issue
directly to the shareholders of NMBF shares of the Trust in a number equal to
the aggregate number of shares (including fractional shares) of NMBF then
outstanding, in a distribution in which each registered shareholder of NMBF
shall receive shares of the Trust in a number equal to the number of shares
(including any fractional share) of NMBF then owned by the shareholder, in
exchange for and cancellation of the shareholder's shares of NMBF (which series
of actions is referred to hereafter as the "Reorganization").

2. SHAREHOLDER ACCOUNTS; SHARE CERTIFICATES. The distribution to the
shareholders of NMBF shall be accomplished by establishing an account on the
share records of the Trust in the name of each registered shareholder of NMBF,
and crediting that account with a number of shares of the Trust equal to the
number of shares (including any fractional shares) of NMBF owned of record by
the shareholder at the time of the distribution. Outstanding certificates
representing shares of NMBF shall thereafter represent an equal number of shares
of the Trust.

3. DISSOLUTION OF NMBF. Promptly after the closing of Reorganization, NMBF
shall be liquidated and dissolved.

4. CLOSING. The Reorganization shall take place on June 12, 1995 at 5:00
p.m., Chicago time, at the offices of John Nuveen & Co. Incorporated, 333 West
Wacker Drive, Chicago, Illinois, or at such other date, time or place as may be
agreed upon by the parties.

5. CONDITIONS TO CLOSING. The obligations of NMBF and the Trust to
consummate the Reorganization shall be subject to the following conditions:

a. A post-effective amendment to the registration statement on Form
N-1A of NMBF shall have been filed by the Trust with the Securities and
Exchange Commission, by which amendment the Trust shall have assumed the
registration statement as its own, and the registration statement, as so
amended, shall have become effective, and no stop-order suspending the
effectiveness of the registration statement shall have been issued and no
proceedings for that purpose shall have been initiated or threatened by the
SEC (other than any such stop-order, proceeding or threatened proceeding
which shall have been withdrawn or terminated);

A-1
<PAGE> 21

b. The SEC shall not have issued an unfavorable advisory report under
section 25(b) of the Investment Company Act of 1940 nor instituted any
proceeding seeking to enjoin consummation of the Reorganization under
section 25(c) of the Investment Company Act of 1940;

c. NMBF and the Trust shall have received an opinion of Bell, Boyd &
Lloyd, Chicago, Illinois, to the effect that the Reorganization qualifies
as a "reorganization" under section 368 of the Internal Revenue Code of
1986, as amended, and the Reorganization of NMBF into the Trust will not
give rise to the recognition of income, deductions, gain or loss for
federal income tax purposes to NMBF, the Trust, or the shareholders of
NMBF; and

d. The Reorganization has been approved by the shareholders of NMBF.

6. AMENDMENT OR TERMINATION. This agreement may be amended at any time, and
may be terminated at any time before the closing of the Reorganization, either
before or after this agreement and plan of reorganization has been approved by
the shareholders of NMBF, by agreement of NMBF and the Trust, provided that no
amendment shall have a material adverse effect upon the interests of
shareholders of NMBF. In any case, this agreement and plan of reorganization may
be terminated by either NMBF or the Trust if the Reorganization has not occurred
by the close of business on September 30, 1995.

7. DECLARATION OF TRUST. A copy of the Trust's agreement and declaration of
trust is on file with the Secretary of the Commonwealth of Massachusetts, and
notice is hereby given that this agreement is executed on behalf of the trustees
of the Trust as the trustees of the Trust and not individually and that the
obligations under this instrument are not binding upon any of the trustees,
officers or shareholders of the Trust individually, but binding only upon the
assets and property of the Trust.

8. FURTHER ACTIONS OR ASSURANCES. At any time after the closing of the
Reorganization, NMBF acting through its officers, or if then dissolved through
its last officers, shall execute and deliver to the Trust such additional
instruments of transfer or other written assurances as the Trust may reasonably
request in order to vest in the Trust title to the assets transferred by NMBF
under this agreement.

A-2
<PAGE> 22

9. GOVERNING LAW. This agreement shall be construed in accordance with
applicable federal law and the laws of the state of Illinois, except as to the
provisions of section 7 hereof which shall be construed in accordance with the
laws of the Commonwealth of Massachusetts.

<TABLE>
<S> <C>
Dated , 1995

NUVEEN MUNICIPAL BOND FUND, INC.
By
-----------------------------------------
[title]
---------------------------------

ATTEST:
- --------------------------------------------
Secretary

NUVEEN MUNICIPAL BOND FUND
By
-----------------------------------------
[title]
---------------------------------

ATTEST:
- --------------------------------------------
Secretary
</TABLE>

A-3
<PAGE> 23

O-5

- --------------------------------------------------------------------------------

NUVEEN MUNICIPAL BOND FUND, INC.

PROXY SOLICITED BY BOARD OF DIRECTORS

FOR A MEETING OF SHAREHOLDERS TO BE HELD ON MAY 26, 1995

The undersigned hereby appoints Richard J. Franke, Timothy R.
Schwertfeger and James J. Wesolowski, and each of them, with full
power of substitution, proxies for the undersigned to represent and
vote the shares of the undersigned at the Meeting of
P
Shareholders of Nuveen Municipal Bond Fund, Inc. to be held on May
26, 1995, or any adjournment or adjournments thereof:

YOU ARE ENCOURAGED TO SPECIFY YOUR CHOICE BY MARKING THE APPROPRIATE
BOX BELOW. YOUR VOTE WILL BE CAST ACCORDING TO YOUR
R
MARKED CHOICE. IF YOU DO NOT MARK A BOX, YOUR PROXY WILL BE VOTED IN
ACCORDANCE WITH THE BOARD OF DIRECTORS' RECOMMENDATION. THE PROXIES
CANNOT VOTE YOUR SHARES UNLESS YOU SIGN AND RETURN THIS CARD.
O
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR":
1) APPROVAL OF THE REORGANIZATION OF THE FUND AS A MASSACHUSETTS
BUSINESS TRUST, THEREBY PERMITTING THE ISSUANCE OF ADDITIONAL
X CLASSES OF SHARES IN CONNECTION WITH THE IMPLEMENTATION OF
A FLEXIBLE SALES CHARGE PROGRAM. FOR / / AGAINST / / ABSTAIN / /
2) In their discretion, the Proxies are authorized to vote upon such
other business as may properly come before the meeting.
Y NOTE: PLEASE SIGN EXACTLY AS YOUR NAME APPEARS ON THIS PROXY. If
signing for estates, trusts or corporations, title or capacity should
be stated. If shares are held jointly, each holder should sign.

Dated: , 1995
Month Day

Signature(s)

Signature(s) 95MUBF 05/26/95
- --------------------------------------------------------------------------------
<PAGE> 24

- --------------------------------------------------------------------------------

(THIS SIDE IS INTENTIONALLY LEFT BLANK)
- --------------------------------------------------------------------------------

<PAGE> 1

[NUVEEN LETTERHEAD]

EXHIBIT 99

March 17, 1995

Dear Valued Adviser,

At the February 14, 1995 Board of Directors meeting of the Nuveen Municipal
Bond Fund (NMBF), the Directors voted to recommend to shareholders that the
fund reorganize as a Massachusetts Business Trust, which would have the effect
of permitting the issuance of multiple classes of shares.

This reorganization and issuance of multiple classes of shares will allow the
Fund to compensate financial advisers on an ongoing basis through 12b-1 fees to
help offset the ongoing costs of servicing these accounts. This is the same
Flexible Pricing Program currently in place for all other Nuveen tax-free
mutual funds. In addition, the reorganization also should allow the Fund to
manage its affairs more efficiently, thereby lowering operating costs and
raising net earnings.

All shareholders of record as of March 13, 1995, will soon be receiving a proxy
and response card to request their vote on this issue.

Last year, NMBF shareholders were asked to vote on this Flexible Pricing
Program. More than 90% of those who responded voted in favor of the Program.
However, the Fund requires a two-thirds majority of all shareholders (voting
and non-voting) in order to implement the changes and did not reach this
threshold.

The opportunity to increase your flexibility to serve your clients, more
closely match your compensation to your services and reduce expenses are all
powerful arguments to vote in favor of this proposal. A NON-VOTE IS THE SAME
AS A NO VOTE! I hope we can count on your support in helping to ensure that
all your eligible shareholders sign and return their proxies.

You will find a Q&A enclosed to help you in answering investor questions. As
always please feel free to contact me, or your local Nuveen representative if
we can assist you in any way.

Thank you in advance for your support in encouraging your shareholders to vote
and thereby helping keep down the costs to the Fund.

Sincerely,

[SIG]

Robert B. Kuppenheimer
Vice President and National Sales Manager

<PAGE> 2

[NUVEEN LETTERHEAD]

March 17, 1995

Mr./Ms. NAC Member
Company XYZ
1234 Main Street
Anytown, IL 99999

Dear NAC Member:

All shareholders of record as of March 13, 1995, will soon be receiving a
proxy and response card to request their vote on this issue.

You will find a Q&A enclosed to help you in answering investor questions. As
always please feel free to contact me, or your local Nuveen representative if
we can assist you in any way.

Thank you in advance for your support in encouraging your shareholders to vote
and thereby helping keep down the costs to the Fund.

Sincerely,

[SIG]

Jane Alexander
Assistant Vice President

<PAGE> 3

NUVEEN MUNICIPAL BOND FUND
SPECIAL SHAREHOLDER'S MEETING

QUESTIONS AND ANSWERS
MARCH, 1995

Why is the Nuveen Municipal Bond Fund holding a special shareholder's meeting?

The Fund's Board of Directors is asking shareholders to meet and vote
on a proposal to reorganize the Fund into a Massachusetts business
trust, which will facilitate implementation of a Flexible Sales Charge
Program.

This proposal already has been studied and approved by the Fund's
Board. It has to be approved by shareholders before it can go into
effect.

Who is eligible to vote?

All NMBF shareholders of record as of the close of business on March
13, 1995, are eligible to vote. Fund shareholders who purchase shares
between the record date and the date of the meeting may not vote.
Shareholders as of the record date who sell their shares before the
meeting can and are encouraged to vote.

All eligible shareholders are encouraged to mark, sign and return
their proxy cards before the May 26 shareholder's meeting.

What, exactly, are shareholders being asked to approve?

Shareholders are being asked to approve a reorganization of the Fund's
formal structure, changing it from a Maryland corporation into a
Massachusetts business trust. Reorganization will permit the Fund to
adopt a Flexible Sales Charge Program that would allow the fund to
issue "A" shares (front-end load) and "C" shares (level-load),
bringing NMBF into line with all of Nuveen's other long-term tax-free
funds.

<PAGE> 4

Why should shareholders approve the proposed changes?

Permitting the Fund to adopt a Flexible Sales Charge Program will give
all current and future shareholders more options in how they pay for
the services of their investment advisers in connection with fund
share purchases. Over the past several years, sales of funds with
flexible pricing structures show clearly that investors appreciate the
ability to match their sales charge payments more closely to the time
horizon and size of their investments.

The reorganization as a Massachusetts business trust also should allow
the Fund to manage its affairs more efficiently, thereby lowering
operating costs and raising net earnings.

The reorganization will not change in the way the Fund is managed or
its investment objectives.

How will the proposed changes affect existing shareholders?

The Flexible Sales Charge Program would not affect currently
outstanding shares, which will be known as "R" shares. All existing
dividend reinvestment programs will continue unaffected and
uninterrupted.

Shareholders looking to purchase additional shares with fresh funds
will have increased flexibility in matching applicable sales charge
payment structures with the size and time horizon of their
investments.

The operating efficiencies resulting from the reorganization into a
Massachusetts Business Trust should lower the Fund's total expenses
and increase the Fund's net earnings.

How will these changes affect new purchases?

Assuming these changes are approved, existing shareholders and new
investors will be able to purchase either "A" or "C" shares. Like our
other funds, "A" shares are likely to be more attractive for those
investing large amounts or with long investment horizons, while "C"
shares may make more sense for those investing smaller amounts or with
shorter time horizons.

As with our other funds, "R" shares generally will not be available
for new money purchases.

<PAGE> 5

How will reinvestment work?

As with our other multi-class funds, dividend and capital gains used
for automatic reinvestment will be invested in the same class of
shares as the shares generating the dividend. For example, "A" shares
reinvest into "A" shares, "C shares into "C" shares and "R" shares
into "R" shares.

What percentage of shareholders are required to approve these changes?

Holders of two-thirds of all NMBF shares outstanding as of the record
date must vote in favor of the proposed changes for them to be
approved. Therefore, an abstention is the same as a "no" vote. This
is why it is important for all shareholders to mark, sign and return
their proxies.

When would these changes become effective?

The current timetable would implement the changes effective June 12,
assuming they were approved at the May 26 meeting. The effective date
may be changed as we get closer to the time of implementation.

What communications are planned to advisers and investors?

For investment advisers:
- special notices in the MAR and APR Updates
- a mailing to NACs, former NACs and known NMBF producers during
the week of 3/13 will outline the reasons for the vote, the
calendar of events, the communications investors will receive
and notice of D. F. King's solicitation
- Nuveen sales support reps will call to key advisers
- channel managers and wholesalers will contact key influencers
and home offices administrators

For investors:
- proxy mailing week of 3/20
- D. F. King follow-up calls to large shareholders
- possible follow-up mailing to large shareholders

<PAGE> 6

How does this proposal differ from the one submitted to NMBF shareholders last
year?

The proposed authorization of a Flexible Sales Charge Program is
essentially the same. In addition, the Fund would be reorganized into
a Massachusetts business trust. More than 90% of the shareholders who
voted last year approved the proposed authorization of the Flexible
Sales Charge Program, but not enough shareholders voted to achieve the
two-thirds requirement.

Who should be contacted with questions or for additional information?

Financial advisers seeking further information should call SSI at
1-800-621-7227 or contact Nuveen Sales support through their local
Nuveen office. Shareholders with questions should contact SSI
1-800-621-7227.

<PAGE> 7

NUVEEN MUNICIPAL BOND FUND, INC.
Issuance of Multi-Class Shares
'Courtesy Call' Phone Script
FOR INTERNAL USE ONLY

PURPOSE OF CALL: INFORM THE SHAREHOLDER THAT A PROXY STATEMENT IS IN THE MAIL
REVIEW THE STATEMENT, CONTACT FINANCIAL ADVISOR IF THERE ARE ANY QUESTIONS,
SEND IN THE STATEMENT BEFORE MAY 26, 1995.

Good Morning/Afternoon, Mr./Ms. Shareholder. My name is
______________________. I am calling on behalf of Nuveen Municipal Bond Fund,
Inc. regarding the upcoming shareholder meeting to be held on May 26, 1995.

I am calling to inform you that proxy materials were recently mailed to your
attention. You should receive the information shortly.

Upon receipt of the materials, please review the information and return the
enclosed proxy card before May 26, 1995.

We will call you back within the next few days to answer any questions you may
have. In the meantime, please contact your financial advisor, or Nuveen at
1-800-621-7227.

Once again, please note that the proxy card must be returned before May 26,
1995.

Thank you for your time.

<PAGE> 8

NUVEEN MUNICIPAL BOND FUND, INC.
Issuance of Multi-Class Shares
'Proxy Call' Phone Script
FOR INTERNAL USE ONLY

PURPOSE OF CALL: CONFIRM THAT THE SHAREHOLDER RECEIVED THE PROXY INFORMATION,
MENTION THE STRONG RECOMMENDATION OF THE BOARD OF DIRECTORS TO VOTE FOR THE
REORGANIZATION, DIRECT SHAREHOLDERS TO CONTACT THEIR FINANCIAL ADVISOR FOR
ADDITIONAL QUESTIONS, AND TO SEND IN THE STATEMENT BEFORE MAY 26, 1995.

1. Good Morning/Afternoon, Mr./Ms. Shareholder. My name is
______________________. I am calling on behalf of Nuveen Municipal Bond
Fund, Inc. regarding the upcoming shareholder meeting to be held on May 26,
1995.

2. I would like to confirm that you have received the proxy materials that
were recently mailed to you. Have you received the material? {IF YES,
CONTINUE TO SECTION 4, IF NO, GO TO SECTION 3}

3. I will re-send the materials to you today. Let me verify your address as
it appears in our records. {CONFIRM ADDRESS INFORMATION}. We will call
you back again within the next few days to confirm your receipt of the
information, and to answer any questions you may have. In the mean time,
please contact your financial advisor, or Nuveen at 1-800-621-7227.
Once again, please note that the proxy card must be returned before May 26,
1995. Thank you for your time.

4. Let me highlight the issues you are being asked to vote on. As mentioned
in the proxy materials you received , shareholders will be asked to vote on
a proposed reorganization of the Fund which would include the authorization
to issue multiple classes of shares.

5. Do you have any questions about the material you received? {IF YES, AND
QUESTION IS READILY ANSWERABLE BY REFERENCING THE HELP TEXT, ANSWER
QUESTION, IF UNSURE ABOUT THE QUESTION, TRANSFER CALLER TO SSI - TRANSFER
NUMBER IS 1-800-621-7227} {IF NO, GOTO SECTION 6}

6. Please note that the board of directors of the Fund has unanimously
approved the proposed reorganization, and has determined that
participation in the reorganization is in the best interest of the Fund
and its shareholders.

7. If you have any additional questions, please contact your financial advisor
or Nuveen at (1-800-621-7227).

8. Once again, the proxy card must be returned before May 26, 1995. Feel free
to FAX the card back at 303-743-1199.

9. Thank you for your time.

<PAGE> 9

NUVEEN MUNICIPAL BOND FUND, INC.
Issuance of Multi-Class Shares
NACs, NMBF Sellers, and BORs Phone Script
FOR INTERNAL USE ONLY

PURPOSE OF CALL: INFORM BROKERS -- NACS, NMBF SELLERS, AND TOP BORS -- THAT
NMBF SHAREHOLDERS WILL BE ASKED TO VOTE ON THE PROPOSED REORGANIZATION OF THE
FUND, WHICH WOULD INCLUDE THE AUTHORIZATION TO ISSUE MULTIPLE CLASSES OF
SHARES, AND THAT SHAREHOLDERS HAVE BEEN ENCOURAGED TO TALK TO THEIR FINANCIAL
ADVISORS IF THEY HAVE QUESTIONS.

1. Good Morning/Afternoon, Mr./Ms. Financial Advisor. My name is
______________________. I am calling from John Nuveen and Co.,
Incorporated. on behalf of Nuveen Municipal Bond Fund, Inc. regarding the
upcoming shareholder meeting on May 26, 1995.

2. I would like to inform you that we have sent all of your registered Nuveen
Municipal Bond Fund clients proxy information related to the May 26th
shareholder meeting.

3. Shareholders will be asked to vote on a proposed reorganization of the Fund
which would include the authorization to issue multiple classes of shares.
Shareholders have also been made aware that the board of directors of the
Fund has unanimously approved the proposed reorganization, and has
determined that participation in the reorganization is in the best interest
of the Fund and its shareholders.

4. Please note that we have strongly encouraged shareholders to talk to you
about the proposed reorganization.

5. When speaking to shareholders of the Fund, please remind them that the
proxy card must be returned before May 26, 1995. If you have any
questions, please contact Nuveen at (1-800-621-7227)

6. Thank you for your time.

<PAGE> 10

NUVEEN MUNICIPAL BOND FUND, INC.
Issuance of Multi-Class Shares
Last Chance for all Shareholders Who Haven't Responded
FOR INTERNAL USE ONLY

PURPOSE OF CALL: CONTACT THOSE SHAREHOLDERS WHO RECEIVED THE SECOND MAILING OF
PROXY INFORMATION, AND INDICATE THAT THEIR VOTE MUST BE RECEIVED BEFORE MAY
26, 1995.

2. I would like to confirm that you have received the proxy materials that
were mailed to you. Have you received the material? {IF YES, CONTINUE TO
SECTION 4, IF NO, GO TO SECTION 3}

3. I will re-send the materials to you today. Let me verify your address as
it appears in our records. {CONFIRM ADDRESS INFORMATION}. Once you
receive the materials, and have had a chance to review the information,
please return the enclosed proxy card AS SOON AS POSSIBLE via the express
mail envelope included in your materials, or by fax -- 303-743-1199.
Please contact your financial advisor, or Nuveen at 1-800-621-7227 if you
have any questions. The proxy card must be returned before May 26, 1995.
Thank you for your time.

4. Do you have any questions about the material you received? {IF YES, AND
QUESTION IS READILY ANSWERABLE BY REFERENCING THE HELP TEXT, ANSWER
QUESTION, IF UNSURE ABOUT THE QUESTION, TRANSFER CALLER TO SSI} {IF NO,
GOTO SECTION 5}

5. Please return the proxy card immediately -- there are only X days left
before all votes are due. For your convenience, you may either fax the
card back to us at 303-743-1199, or you may use the enclosed express mail
envelope (detailed instructions on how to arrange for express mail pick-up
have been included in your information, if you do not have that
information, I will be happy to go over the instructions with you now).

6. If you have any additional questions, please contact your financial advisor
or Nuveen at 1-800-621-7227.

7. Once again, the proxy card must be returned before May 26, 1995. Feel free
to FAX the card 303-743-1199.

8. Thank you for your time.