<PAGE>
As filed with the Securities and Exchange Commission on June 28, 1996.
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES
ACT OF 1933
[_]
File No. 2-57408
Pre-Effective Amendment No. [_]
---
Post-Effective Amendment No. 33
--- [X]
REGISTRATION STATEMENT UNDER THE INVESTMENT
COMPANY ACT OF 1940
[_]
File No. 811-2692
Amendment No. 24
--- [X]^
NUVEEN MUNICIPAL BOND FUND
(Exact Name of Registrant as Specified in Charter)
333 West Wacker Drive, Chicago, 60606
Illinois
(Address of Principal Executive (Zip Code)
Offices)
Registrant's Telephone Number, Including Area Code: (312) 917-7700
James J. Wesolowski, Esq.--Vice President
333 West Wacker Drive
Chicago, Illinois 60606
(Name and Address of Agent for Service)
It is proposed that this filing will become effective (check appropriate box):
[_]
Immediately upon filing pursuant to paragraph (b), or
[_] 75 days after filing pursuant to para-
graph (a)(2)
[X]
on July 1, 1996 pursuant toparagraph (b), or
on (Date) pursuant to paragraph (a)(1)
[_] of Rule 485
[_]
60 days after filing pursuant to paragraph (a)(1), or
on(Date) pursuant to paragraph (a)(2)
[_]^
PURSUANT TO RULE 24F-2 OF THE INVESTMENT COMPANY ACT OF 1940, REGISTRANT HAS
REGISTERED AN INDEFINITE NUMBER OF SHARES (DESIGNATED AS CLASS A SHARES, CLASS
C SHARES AND CLASS R SHARES). A RULE 24F-2 NOTICE FOR THE REGISTRANT'S FISCAL
YEAR ENDED FEBRUARY 29, 1996, WAS FILED ON OR ABOUT APRIL 23, 1996.
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
<PAGE>
CONTENTS
OF
POST-EFFECTIVE AMENDMENT NO. 33
TO
REGISTRATION STATEMENT
UNDER THE SECURITIES ACT OF 1933
FILE NO. 2-57408
AND
AMENDMENT NO. 24
TO
REGISTRATION STATEMENT
UNDER THE INVESTMENT COMPANY ACT OF 1940
FILE NO. 811-2692
This Registration Statement comprises the following papers and contents:
The Facing Sheet
Cross-Reference Sheet
Part A--The Prospectus
Part B--The Statement of Additional Information
Copy of Annual Report to Shareholders (the financial
statements from which are incorporated by reference into the
Statement of Additional Information)
Part C--Other Information
Signatures
Index to Exhibits
Exhibits
<PAGE>
NUVEEN MUNICIPAL BOND FUND
-----------------
CROSS REFERENCE SHEET
PART A--PROSPECTUS
<TABLE>
<CAPTION>
TEM IN PART AI
OF FORM N-1A PROSPECTUS LOCATION
- -------------- -------------------
<S> <C>
1 Cover Page Cover Page
2 Synopsis Summary of Fund Expenses; How to Determine
If The Fund Is Right For You
3 Condensed Financial Information Financial Highlights
4 General Description of General Information; What Are The Fund's
Registrant Investment Objective and Policies
5 Management of the Fund Summary of Fund Expenses; Who Is
Responsible for the Operation of the Fund;
Management of the Fund; General Information
5A Management's Discussion of Fund Incorporated by Reference to Annual Report
Performance to Shareholders; Distributions and Taxes
6 Capital Stock and Other General Information; Distributions and
Securities Taxes
7 Purchase of Securities Being Flexible Pricing Program; How to Buy Fund
Offered Shares; Distribution and Service Plan;
Management of the Fund; Net Asset Value;
How to Buy Fund Shares
8 Redemption or Repurchase How to Redeem Fund Shares
9 Pending Legal Proceedings Not Applicable
</TABLE>
<PAGE>
PART B--STATEMENT OF ADDITIONAL INFORMATION
<TABLE>
<CAPTION>
TEM IN PART BI LOCATION IN STATEMENT
OF FORM N-1A OF ADDITIONAL INFORMATION
- -------------- -------------------------
<S> <C>
10 Cover Page Cover Page
11 Table of Contents Cover Page
12 General Information and History Not Applicable
13 Investment Objectives and Fundamental Policies and Investment
Policies Portfolio
14 Management of the Fund Management
15 Control Persons and Principal Management
Holders of Securities
16 Investment Advisory and Other Investment Adviser and Investment
Services Management Agreement; Distribution and
Service Plan; Independent Public
Accountants and Custodian
17 Brokerage Allocation and Other Portfolio Transactions
Practices
18 Capital Stock and Other See "General Information" in the Prospectus
Securities
19 Purchase, Redemption and Pricing Additional Information on the Purchase and
of Securities Redemption of Fund Shares; Distribution and
Service Plan; Net Asset Value
20 Tax Status Tax Matters
21 Underwriters Additional Information on the Purchase and
Redemption of Fund Shares; See "How to Buy
Fund Shares" and "Management of the Fund"
in the Prospectus
22 Calculation of Performance Data Performance Information
23 Financial Statements Incorporated by Reference to Annual Report
to Shareholders
</TABLE>
<PAGE>
NUVEEN FAMILY OF TAX-FREE MUTUAL FUNDS
Nuveen offers individual investors 16 different long-term
tax-free mutual funds to choose from, including
NATIONAL LONG-TERM FUNDS
Nuveen Municipal Bond Fund
Nuveen Insured Municipal Bond Fund
STATE LONG-TERM FUNDS
Arizona
Nuveen Arizona Tax-Free Value Fund
California
Nuveen California Tax-Free Value Fund
Nuveen California Insured Tax-Free Value Fund
Florida
Nuveen Florida Tax-Free Value Fund
Maryland
Nuveen Maryland Tax-Free Value Fund
Massachusetts
Nuveen Massachusetts Tax-Free Value Fund
Nuveen Massachusetts Insured Tax-Free Value Fund
Michigan
Nuveen Michigan Tax-Free Value Fund
New Jersey
Nuveen New Jersey Tax-Free Value Fund
New York
Nuveen New York Tax-Free Value Fund
Nuveen New York Insured Tax-Free Value Fund
Ohio
Nuveen Ohio Tax-Free Value Fund
Pennsylvania
Nuveen Pennsylvania Tax-Free Value Fund
Virginia
Nuveen Virginia Tax-Free Value Fund
<PAGE>
NUVEEN MUNICIPAL BOND FUND PROSPECTUS
JULY 1, 1996
Nuveen Municipal Bond Fund
Prospectus
July 1, 1996
Nuveen Municipal Bond Fund (the "Fund") is designed to provide as high a level
of current interest income exempt from regular federal income tax as is
consistent, in the view of the Fund's management, with preservation of capital.
The Fund invests in investment grade quality, long-term Municipal Obligations
judged by the Fund's investment adviser to offer the best values among
Municipal Obligations of similar credit quality.
Each Fund has adopted a Flexible Pricing Program designed to permit you and
your financial adviser to choose the method of purchasing shares that you
believe is most beneficial given the amount of your purchase and any current
holdings of Fund shares, the length of time you expect to hold your investment,
and other relevant circumstances. The Program features three alternative ways
to purchase Fund shares (Classes A, C and R), each with a different combination
of sales charges, ongoing fees, eligibility requirements, and other features.
See "Flexible Pricing Program," "How to Buy Fund Shares" and "Summary of Fund
Expenses."
This Prospectus contains information you should know before investing in the
Fund. Please retain it for future reference. You can find more detailed
information about the Fund in the "Statement of Additional Information" dated
July 1, 1996. For a free copy of this Statement, write to the Fund, c/o John
Nuveen & Co. Incorporated, 333 West Wacker Drive, Chicago, IL 60606, or call
Nuveen toll-free at 800.621.7227. The Statement has been filed with the
Securities and Exchange Commission and is incorporated by reference into this
Prospectus.
Shares of the Fund are not deposits or obligations of, or guaranteed or
endorsed by, any bank and are not federally insured by the Federal Deposit
Insurance Corporation, the Federal Reserve Board, or any other agency. Shares
of the Fund involve investment risks, including possible loss of principal.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS
A CRIMINAL OFFENSE.
John Nuveen & Co. Incorporated
For information, call toll-free 800.621.7227
<PAGE>
<TABLE>
<C> <S>
CONTENTS
3 Summary of Fund expenses
5 How to determine if the Fund is right for you
8 Financial highlights
10 Who is responsible for the operation of the Fund?
11 What are the Fund's investment objective and
policies?
16 Flexible pricing program
19 How to buy Fund shares
32 Distribution and service plan
33 How to redeem Fund shares
37 Management of the Fund
39 How the Fund shows performance
42 Distributions and taxes
46 Net asset value
47 General information
49 Taxable equivalent yield tables
</TABLE>
2
<PAGE>
SUMMARY OF FUND EXPENSES
NUVEEN MUNICIPAL BOND FUND PROSPECTUS
JULY 1, 1996
<TABLE>
<S> <C> <C> <C>
Shareholder transaction
expenses (as a percent of
offering price)(1) Class A Class C Class R(2)
- ------------------------------------------------------------------------------
Maximum sales charge imposed on
purchases 4.50%(3) None None
Maximum sales charge imposed on
reinvested dividends None None None
Deferred sales charge None(4) 1.00%(5) None
Redemption fees None None None
Exchange fees None None None
</TABLE>
<TABLE>
<S> <C> <C> <C>
Annual operating expenses (as a
percent
of average daily net assets) Class A Class C Class R
- ------------------------------------------------------------------------
Management fees .45% .45% .45%
Rule 12b-1 fees(6) .25% 1.00% None
Other operating expenses .13% .13% .14%
Total expenses .83% 1.58% .59%
</TABLE>
(1) Authorized Dealers and other firms may independently charge additional fees
for shareholder transactions or for advisory services; please see their
materials for details.
(2) Class R Shares are available for purchase only under certain limited
circumstances, or by specified investors, as described below under "How to Buy
Fund Shares--Class R Shares."
(3) Reduced sales charges apply to purchases of $50,000 or more. See "How to
Buy Fund Shares--Class A Shares."
(4) Class A purchases at net asset value of $1 million or more may be subject
to a 1% contingent deferred sales charge if redeemed within 18 months of
purchase. See "How to Buy Fund Shares--Class A Shares."
(5) Class C Shares redeemed within one year of purchase are subject to a 1%
contingent deferred sales charge.
(6) Class C Shares are subject to an annual distribution fee of .75 of 1% of
average daily net assets to reimburse Nuveen for costs in connection with the
sale of Fund shares. Both Class A Shares and Class C Shares of each Fund are
subject to an annual service fee of .25 of 1% of average daily net assets to
compensate Authorized Dealers for ongoing account services. See "Distribution
and Service Plan." Long-term holders of Class C Shares may pay more in Rule
12b-1 distribution fees than the economic equivalent of the maximum front-end
sales charge permitted under the National Association of Securities Dealers
Rules of Fair Practice.
The purpose of the tables above is to help you understand all
expenses and fees that you would bear directly or indirectly
as a Fund shareholder. The expenses and fees shown are for
the fiscal year ended February 29, 1996.
3
<PAGE>
EXAMPLE*
You would pay the following expenses on a $1,000 investment
over various time periods, assuming (1) a 5% annual rate of
return and (2) redemption at the end of each time period:
<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
- --------------------------------------------
<S> <C> <C> <C> <C>
Class A $53 $70 $89 $143
Class C $16** $50 $86 $149
Class R $ 6 $19 $33 $ 74
</TABLE>
*This example does not represent past or future expenses.
Actual expenses may be greater or less than those shown.
Moreover, the Fund's actual rate of return may be greater or
less than the hypothetical 5% return shown in this example.
This example assumes that the percentage amounts listed under
Annual Operating Expenses remain the same in each of the
periods. The ten-year figure for Class C Shares reflects the
automatic conversion of Class C Shares into Class A Shares
six years after purchase. Based on the foregoing assumptions,
the expenses incurred on an investment in Class C Shares will
exceed the expenses incurred on an investment in Class A
Shares sometime in the sixth year after purchase. You should
also note that Class R Shares are available for purchase only
under certain limited circumstances, or by specified
investors. For additional information about the Fund's fees
and expenses, see "Distribution and Service Plan" and
"Management of the Fund."
**Assumes that shareholder redeemed on the first day of the
second year and the contingent deferred sales charge was not
applicable for any of the periods shown. If the shareholder
had redeemed on the last day of the first year, the expenses
in the first year would have been $26.
4
<PAGE>
NUVEEN MUNICIPAL BOND FUND PROSPECTUS
HOW TO DETERMINE IF THE FUND IS RIGHT FOR YOU
JULY 1, 1996
There are many reasons why you might invest in the Fund.
These can include:
. lowering the tax burden on your investment income
. earning regular monthly dividends
. seeking to preserve your investment capital
. systematically setting money aside for retirement, college
funding or estate planning purposes
While there can be no assurance that the Fund will enable you
to achieve your individual investment goals, it has been
designed for investors who have these kinds of investment
goals in mind.
In addition, the Fund incorporates the following features and
benefits. You should carefully review the more detailed de-
scription of these features and benefits elsewhere in the
Prospectus to make sure they serve your individual investment
goals.
MONTHLY, TAX-FREE INCOME
The Fund provides monthly dividends exempt from regular
federal income tax.
DIVERSIFIED, INVESTMENT GRADE QUALITY PORTFOLIO
The Fund purchases investment grade quality Municipal
Obligations issued within the 50 states and certain U.S.
possessions or territories. The Fund is diversified and
maintains diversity within its portfolio by selecting
Municipal Obligations of different issuers. The Fund further
enhances its portfolio mix by purchasing Municipal
Obligations of different types and purposes and from
different geographic regions across the country.
EXPERIENCED MANAGEMENT
The Fund is managed by Nuveen Advisory Corp. ("Nuveen
Advisory"), a wholly-owned subsidiary of John Nuveen & Co.
Incorporated ("Nuveen"). Founded in 1898, Nuveen is the
oldest and largest investment banking firm in the country
devoted exclusively to tax-exempt securities. Nuveen Advisory
currently manages 74 different tax-free portfolios
representing approximately $30 billion in assets.
VALUE INVESTING
As a guiding policy, Nuveen Advisory's portfolio managers
seek investment grade quality, undervalued or underrated
Municipal Obligations which offer the best values among
Municipal Obligations of similar credit quality. By selecting
these Municipal Obligations, Nuveen Advisory seeks to
position the Fund better to achieve its investment objective
of as high a level of current interest income exempt from
5
<PAGE>
regular federal income tax as is consistent, in the view of
the Fund's management, with preservation of capital,
regardless of which direction the market may move.
NUVEEN RESEARCH
Nuveen Advisory's portfolio managers call upon the resources
of Nuveen's Research Department, the largest in the investment
banking industry devoted exclusively to tax-exempt securities.
Nuveen research analysts reviewed in 1995 more than $100
billion of tax-exempt securities sold in new issue and
secondary markets.
LOW MINIMUMS
You can start earning tax-free income with a low initial
investment of $1,000 in a particular class. See "How to Buy
Fund Shares."
FLEXIBILITY IN PURCHASING FUND SHARES
Each Fund has adopted a Flexible Pricing Program which is
designed to permit you and your financial adviser to choose
the method of purchasing shares that you believe is most
beneficial given the amount of your investment and any current
holdings of Fund shares, the length of time you expect to hold
your investment, and other relevant circumstances. The Program
features three alternative ways to purchase Fund shares
(Classes A, C and R), each with a different combination of
sales charges, ongoing fees, eligibility requirements, and
other features. Please refer to "Flexible Pricing Program,"
"How to Buy Fund Shares" and "How to Redeem Fund Shares" for a
discussion of the Program's features and additional
information about these three classes of shares.
AUTOMATIC DEPOSIT PLANS
The Fund offers a number of investment options, including
automatic deposit, direct deposit and payroll deduction, to
help you add to your account on a regular basis.
AUTOMATIC REINVESTMENT
All monthly dividends or capital gains paid with respect to
each class of shares will be reinvested automatically into
additional shares of the same class without a sales charge,
unless you elect to receive them in cash. Separately,
distributions from any Nuveen unit trust ("Nuveen UIT") may be
used to buy Class A Shares and, under certain circumstances,
Class R Shares, in either case without a sales charge at net
asset value.
EXCHANGE PRIVILEGE
Shares of a class may be quickly and easily exchanged by
telephone, without a sales charge for shares of the same or
equivalent class of another Nuveen Mutual Fund or
6
<PAGE>
NUVEEN MUNICIPAL BOND FUND PROSPECTUS
JULY 1, 1996
for shares of certain Nuveen money market funds. Class R
Shares of the Fund may be exchanged for Class A Shares of the
Fund at any time, provided that the current net asset value
of those Class R Shares is at least $1,000 or you already own
Class A Shares.
LIQUIDITY
You may redeem all or a portion of your Fund shares on any
business day at net asset value for the class of shares you
are redeeming. Class C Shares, as well as Class A purchases
of $1 million or more at net asset value, may be subject to a
contingent deferred sales charge ("CDSC") of 1% upon
redemption. Remember that share prices will fluctuate with
market conditions and upon redemption may be worth more or
less than their original cost. See "How to Redeem Fund
Shares."
AUTOMATIC WITHDRAWAL
If you own shares totalling $10,000 or more, you can arrange
to have $50 or more sent to you from your account either
monthly or quarterly.
TELEPHONE REDEMPTIONS
You may establish free telephone redemption privileges for
your account.
NO REDEMPTION FEES
There are no fees imposed by the Fund for selling shares when
redeeming all or part of your holdings. However, your
financial adviser may charge you for serving as agent in the
redemption of shares.
RISKS AND SPECIAL CONSIDERATIONS
You should consider certain other factors about the Fund
before investing. As with other bond mutual funds or any
long-term fixed-income investment, the value of the Fund's
portfolio will tend to vary inversely with changes in
prevailing interest rates. Accordingly, the Fund should be
considered a long-term investment, designed to provide the
best results when held for a multi-year period. The Fund may
not be suitable if you have a short-term investment horizon.
The Fund also has the ability to engage in certain investment
practices, including the purchase of Municipal Obligations
that pay interest subject to the federal alternative minimum
tax, the purchase or sale of securities on a when-issued or
delayed delivery basis and the purchase or sale of municipal
lease and installment purchase obligations. The Fund to date
has not invested in Municipal Obligations that pay interest
subject to the federal alternative minimum tax and has no
present intention of doing so. As described elsewhere in this
Prospectus, the Fund may engage in the investment practices
listed above only under strict limits.
7
<PAGE>
FINANCIAL HIGHLIGHTS
The following financial information has been derived from the
Fund's financial statements, which have been audited by Arthur
Andersen LLP, independent public accountants, as indicated in
their report appearing in the Annual Report to Shareholders,
and should be read in conjunction with the financial
statements and related notes appearing in the Annual Report. A
copy of the Annual Report to Shareholders which contains
additional unaudited performance information can be obtained
without charge by writing to the Fund.
Selected data for a Class A Share, Class C Share or Class R
Share outstanding throughout each period is as follows:
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Income from investment operations Less distributions
---------------------------------------------------------------------
Net
Net asset realized and Dividends
value Net unrealized gain from net Distributions Net asset
beginning investment (loss) from investment from value end of
of period income investments** income capital gains period
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
MUNI BOND
- -------------------------------------------------------------------------------------------------------------------
CLASS A
6/13/95 to
2/29/96 $9.150 $.340+ $ .141 $(.324) $(.027) $9.280
CLASS C
6/13/95 to
2/29/96 9.150 .290+ .126 (.279) (.027) 9.260
CLASS R
Year ended
2/29/96 9.000 .506 .313 (.512) (.027) 9.280
Year ended 2/28,
1995 9.280 .515 (.209) (.511) (.075) 9.000
1994 9.450 .519 (.075) (.516) (.098) 9.280
1993 9.080 .555 .414 (.544) (.055) 9.450
5 mos. ended 2/29/92 9.040 .239 .080 (.239) (.040) 9.080
Year ended 9/30,
1991 8.650 .579 .438 (.589) (.038) 9.040
1990 8.730 .596 (.080) (.596) -- 8.650
1989 8.520 .597 .239 (.597) (.029) 8.730
1988 8.020 .596 .536 (.596) (.036) 8.520
1987 8.780 .598 (.614) (.598) (.146) 8.020
1986 7.830 .595 1.162 (.595) (.212) 8.780
1985 7.180 .586 .650 (.586) -- 7.830
- -------------------------------------------------------------------------------------------------------------------
</TABLE>
* Annualized.
** Net of taxes, if applicable. See Notes to Financial Statements in the Annual
Report to Shareholders.
+ Reflects the waiver of certain management fees or reimbursement of certain
other expenses by the Adviser, if applicable. See Notes to FinancialStatements
in the Annual Report to Shareholders.
++ Total Return on Net Asset Value is the combination of reinvested dividend
income, reinvested capital gains distributions, if any, and changes in net
asset value per share.
8
<PAGE>
NUVEEN MUNICIPAL BOND FUND PROSPECTUS
JULY 1, 1996
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Ratios/supplemental data
-----------------------------------------------------------------------------------
Ratio of Ratio of
Ratio of net investment net investment
expenses to income to Ratio of income to
average average expenses average
Total return Net assets net assets net assets to average net net assets Portfolio
on net asset end of period before before assets after after turnover
value++ (in thousands) reimbursement reimbursement reimbursement+ reimbursement+ rate
- ----------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
- ----------------------------------------------------------------------------------------------------
5.33% $ 37,089 .86%* 5.11%* .83%* 5.14%* 17%
4.59 1,915 1.64* 4.33* 1.58* 4.39* 17
9.31 2,878,641 .59 5.53 .59 5.53 17
3.60 2,741,178 .59 5.79 .59 5.79 17
4.79 2,700,007 .62 5.49 .62 5.49 15
11.04 2,371,669 .61 5.95 .61 5.95 14
3.56 1,835,708 .62* 6.24* .62* 6.24* 6
12.15 1,661,420 .60 6.48 .60 6.48 10
6.04 1,323,623 .62 6.78 .62 6.78 8
10.07 1,119,833 .64 6.85 .64 6.85 12
14.50 945,361 .65 7.11 .65 7.11 8
(.39) 764,092 .68 6.85 .68 6.85 16
23.02 668,416 .71 6.95 .71 6.95 39
17.73 459,627 .73 7.68 .73 7.68 28
- ----------------------------------------------------------------------------------------------------
</TABLE>
9
<PAGE>
WHO IS RESPONSIBLE FOR THE OPERATION OF THE FUND?
The following organizations work together to provide the
services and features offered by the Fund:
<TABLE>
<CAPTION>
ORGANIZATION FUNCTION DUTIES
--------------------------------------------------------------
<S> <C> <C>
John Nuveen & Co. Fund Sponsor and Sponsors and manages
Incorporated Principal Fund share offerings;
("Nuveen") Underwriter provides certain
administrative
services
Nuveen Advisory Corp. Investment Adviser Manages the Fund's
("Nuveen Advisory") investment portfolios
and provides day-to-
day administrative
services to the Funds
Shareholder Services, Transfer Agent; Maintains shareholder
Inc. Shareholder accounts, handles
("SSI") Services Agent; share redemptions and
Dividend exchanges and
Paying Agent dividend payments
Chase Manhattan Bank, Custodian Maintains custody of
N.A. ("Chase") the Fund's
investments and
provides certain
accounting services
to the Fund
</TABLE>
10
<PAGE>
WHAT ARE THE FUND'S INVESTMENTOBJECTIVE AND POLICIES?
NUVEEN MUNICIPAL BOND FUND PROSPECTUS
JULY 1, 1996
INVESTMENT OBJECTIVE
The Fund is
designed to The investment objective of the Fund is to provide you with
provide income as high a level of current interest income exempt from
free from regular federal income tax as is consistent, in the view of
federal income the Fund's management, with preservation of capital. There
tax can be no assurance that the investment objective of the Fund
will be achieved. This investment objective is a fundamental
policy of the Fund and may not be changed without the
approval of the holders of a majority of the shares of the
Fund. Other investment restrictions that may be changed only
with shareholder approval are contained in the Statement of
Additional Information.
HOW THE FUND PURSUES ITS OBJECTIVE
The Fund seeks
Municipal Nuveen Advisory believes that in any market environment there
Obligations are quality Municipal Obligations whose current price, yield,
considered to credit quality and future prospects make them seem
be undervalued underpriced or exceptionally attractive when compared with
other Municipal Obligations in the market. In selecting
investments for the Fund, Nuveen Advisory will attempt to
identify and purchase those undervalued or underrated
Municipal Obligations of investment grade quality that offer
the best values among Municipal Obligations of similar credit
quality. By selecting these Municipal Obligations, the Fund
will seek to provide attractive current tax-free income and
to protect the Fund's net asset value in both rising and
declining markets. In this way, regardless of the direction
the market may move, value investing, if successful, will
better position the Fund to achieve its investment objective
of as high a level of current interest income exempt from
regular federal income tax as is consistent, in the view of
the Fund's management, with preservation of capital. Any net
capital appreciation realized by the Fund will generally
result in the distribution of taxable capital gains to Fund
shareholders. See "Distributions and Taxes."
Successful value investing depends on identifying and
Thorough purchasing undervalued or underrated securities before the
research can rest of the marketplace finds them. Nuveen Advisory believes
help identify the municipal market provides these opportunities, in part
values because of the relatively large number of issuers of tax-
exempt securities and the relatively small number of full-
time, professional municipal market analysts. For example,
there are currently about 7,500 common stocks that are
followed by about 23,000 analysts. By contrast, there are
about 60,000 entities that issue tax-exempt securities and
less than 1,000 professional municipal market analysts.
Nuveen and Nuveen Advisory believe that together they employ
the largest number of research analysts in the investment
banking industry devoted exclusively to the
11
<PAGE>
review and surveillance of tax-exempt securities. Their team
of more than 40 individuals has over 350 years of combined
municipal market experience. Nuveen and Nuveen Advisory have
access to information on approximately 60,000 municipal
issuers, and review annually more than $100 billion of tax-
exempt securities sold in new issue and secondary markets.
The Fund will invest primarily in Municipal Obligations
Which issued within the 50 states and certain U.S. possessions or
Municipal territories so that the interest income on the Municipal
Obligations Obligations will be exempt from regular federal income tax,
are selected although this income may be subject to applicable state
as personal income taxes.
investments?
The Fund's investment assets will consist of:
The Fund will . Municipal Obligations rated investment grade at the time of
seek to purchase (Baa or BBB or better by Moody's Investors
purchase Service, Inc. ("Moody's") or Standard and Poor's
investment- Corporation ("S&P"));
grade quality . unrated Municipal Obligations of investment grade quality
Municipal in the opinion of Nuveen Advisory, limited to no more than
Obligations 10% of the Fund's net assets; and
. temporary investments within the limitations and for the
purposes described below.
Municipal Obligations rated Baa are considered by Moody's to
be medium grade obligations which lack outstanding investment
characteristics and in fact have speculative characteristics
as well, while Municipal Obligations rated BBB are regarded
by S&P as having an adequate capacity to pay principal and
interest. Although the Fund to date has not done so and has
no present intention of doing so, the Fund may invest up to
20% of its net assets in Municipal Obligations that pay
interest subject to the federal alternative minimum tax ("AMT
Bonds"). The Fund intends to emphasize investments in
Municipal Obligations with long-term maturities in order to
maintain an average portfolio maturity of 20-30 years, but
the average maturity may be shortened from time to time
depending on market conditions in order to help limit the
Fund's exposure to market risk. As a result, the Fund's
portfolio at any given time may include both long-term and
intermediate-term Municipal Obligations.
Under ordinary circumstances, the Fund will invest
substantially all (at least 80%) of its net assets in
Municipal Obligations, and not more than 20% of its net
assets in "temporary investments," described below, provided
that temporary investments subject to regular federal income
tax and AMT Bonds may not comprise more than 20% of the
Fund's net assets. For defensive purposes, however, in order
to limit the
12
<PAGE>
NUVEEN MUNICIPAL BOND FUND PROSPECTUS
JULY 1, 1996
exposure of its portfolio to market risk from temporary
imbalances of supply and demand or other temporary
circumstances affecting the municipal market, the Fund may
invest without limit in temporary investments. The Fund will
not be in a position to achieve its investment objective of
tax-exempt income to the extent it invests in taxable
temporary investments.
The foregoing investment policies are fundamental policies of
the Fund and may not be changed without the approval of the
holders of a majority of the shares of the Fund.
DESCRIPTION OF THE FUND'S INVESTMENTS
Municipal Obligations
are issued by
states, cities
and local
authorities to
support a
variety of
public
activities
Municipal Obligations, as the term is used in this
Prospectus, are federally tax-exempt debt obligations issued
by states, cities and local authorities and by certain U.S.
possessions or territories to obtain funds for various public
purposes, such as the construction of public facilities, the
payment of general operating expenses and the refunding of
outstanding debts. They may also be issued to obtain funding
for various private activities, including loans to finance
the construction of housing, educational and medical
facilities or privately owned industrial development and
pollution control projects.
The two principal classifications of Municipal Obligations
are general obligation and revenue bonds. GENERAL OBLIGATION
bonds are secured by the issuer's pledge of its full faith,
credit and taxing power for the payment of principal and
interest. REVENUE bonds are payable only from the revenues
derived from a particular facility or class of facilities or,
in some cases, from the proceeds of a special excise or other
specific revenue source. Industrial development and pollution
control bonds are in most cases revenue bonds and do not
generally constitute the pledge of the credit or taxing power
of the issuer of these bonds.
Municipal Obligations may also include participations in
lease obligations or installment purchase contract
obligations (collectively, "lease obligations") of municipal
authorities or entities. Certain "non-appropriation" lease
obligations may present special risks because the
municipality's obligation to make future lease or installment
payments depends on money being appropriated each year for
this purpose. The Fund will seek to minimize these risks by
not investing more than 10% of its assets in non-
appropriation lease obligations, and by only investing in
those non-appropriation lease obligations that meet certain
criteria of the Fund. See the Statement of Additional
Information for further information about lease obligations.
13
<PAGE>
The yields on Municipal Obligations depend on a variety of
factors, including the condition of financial markets in
general and the municipal market in particular, as well as
the size of a particular offering, the maturity of the
obligation and the rating of the issue. Certain Municipal
Obligations may pay variable or floating rates of interest
based upon certain market rates or indexes such as a bank
prime rate or a tax-exempt money market index. The ratings of
Moody's and S&P represent their opinions as to the quality of
the Municipal Obligations that they undertake to rate. It
should be emphasized, however, that ratings are general and
are not absolute standards of quality. Consequently,
Municipal Obligations with the same maturity, coupon and
rating may have different yields, while those having the same
maturity and coupon with different ratings may have the same
yield. The market value of Municipal Obligations will vary
with changes in prevailing interest rate levels and as a
result of changing evaluations of the ability of their
issuers to meet interest and principal payments. Similarly,
the market value and net asset value of shares of the Fund
will change in response to interest rate changes; they will
tend to decrease when interest rates rise and increase when
interest rates fall.
Temporary in- As described above, the Fund under ordinary circumstances may
vest- invest up to 20% of its net assets in "temporary
investments," but may invest without limit in temporary
ments will be investments during temporary defensive periods. The Fund will
U.S. Govern- seek to make temporary investments in short-term securities
ment or high the interest on which is exempt from regular federal income
quality secu- tax, but may be subject to state income tax. If suitable tax-
rities exempt temporary investments are not available at reasonable
prices and yields, the Fund may make temporary investments in
taxable securities. The Fund will invest only in those
taxable temporary investments that are either U.S. Government
securities or are rated within the highest grade by Moody's
or S&P, and mature within one year from the date of purchase
or carry a variable or floating rate of interest. See the
Statement of Additional Information for further information
about the temporary investments in which the Fund may invest.
[/R]
CERTAIN INVESTMENT STRATEGIES AND LIMITATIONS
Portfolio
trading and The Fund will make changes in its investment portfolio from
turnover: The time to time in order to take advantage of opportunities in
Fund will the municipal market and to limit exposure to market risk.
engage in The Fund may engage to a limited extent in short-term trading
short-term consistent with its investment objective, but will not trade
trading only securities solely to realize a profit. Changes in the Fund's
to a limited investments are known as "portfolio turnover." While the
extent Fund's annual portfolio turnover rate is not expected to
exceed 35%, actual portfolio turnover rates are impossible to
predict, and may exceed 35% in particular years depending
upon market conditions. [/R]
14
<PAGE>
NUVEEN MUNICIPAL BOND FUND PROSPECTUS
JULY 1, 1996
When-issued or The Fund may purchase and sell Municipal Obligations on a
delayed when-issued or delayed delivery basis, which calls for the
delivery Fund to make payment or take delivery at a future date,
transactions normally 15-45 days after the trade date. The commitment to
purchase securities on a when-issued or delayed delivery
basis may involve an element of risk because the value of the
securities is subject to market fluctuation, no interest
accrues to the purchaser prior to settlement of the
transaction, and at the time of delivery the market value may
be less than cost. A Fund commonly engages in when-issued
transactions in order to purchase or sell newly-issued
Municipal Obligations, and may engage in delayed delivery
transactions in order to manage its operations more
effectively. See the Statement of Additional Information for
further information about when-issued and delayed delivery
transactions.
The Fund has adopted certain fundamental policies intended to
Other limit the risk of its investment portfolio. In accordance
investment with these policies, the Fund may not:
policies and
restrictions: . invest more than 5% of its total assets in securities of
any one issuer, except that this limitation shall not apply
The Fund will to securities of the U.S. Government, its agencies and
take steps to instrumentalities;
ensure that . invest more than 5% of its total assets in securities of
its assets are unseasoned issuers which, together with their predecessors,
not have been in operation for less than three years;
concentrated . invest more than 10% of its total assets in securities that
in just the Fund is restricted from selling to the public without
registration under the Securities Act of 1933;
a few holdings . hold securities of a single bank, including securities
backed by a letter of credit of that bank, if these
holdings would exceed 10% of the total assets of the Fund.
In applying these policies, the "issuer" of a security is
deemed to be the entity whose assets and revenues are
committed to the payment of principal and interest on that
security, provided that the guarantee of an instrument will
generally be considered a separate security.
Except as specifically noted above or in the Statement of
Additional Information, the Fund's investment policies are
not fundamental and may be changed without shareholder
approval. For a more complete description of investment
restrictions that may be changed without a shareholder vote,
see the Statement of Additional Information.
15
<PAGE>
FLEXIBLE PRICING PROGRAM
The Fund The Fund has adopted a Flexible Pricing Program that offers
offers various you three alternative ways to purchase Fund shares (Classes
methods of A, C and R), each with a different combination of sales
purchasing charges, ongoing fees, eligibility requirements, and other
shares which features. The Program is designed to permit you and your
are designed financial adviser to choose the method of purchasing shares
to meet your that you believe is most beneficial given the amount of your
individual investment and current holdings of Fund shares, the length of
investment time you expect to hold your investment, and other relevant
needs and circumstances. A summary of the three alternatives is set
preferences forth below:
<TABLE>
<CAPTION>
Fund Up-front Contingent deferred Annual 12b-1 Annual 12b-1
shares sales charge sales charge ("CDSC") distribution fee service fee
- -----------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Class A 4.50% (1) None (2) None .25%
Class C None 1.00% (3) .75% .25%
Class R None None None None
</TABLE>
(1) Maximum up-front sales charge, which is reduced for
purchases of $50,000 or more. The up-front sales charge may
be reduced or waived for certain purchases.
(2) Certain Class A purchases at net asset value of $1
million or more may be subject to a 1% CDSC if redeemed
within 18 months of purchase.
(3) The CDSC is applicable to Class C Shares redeemed within
12 months of purchase. Class C Shares convert to Class A
Shares after six years, which reduces the ongoing expenses
borne by an investor.
For more information regarding features of each class, see
"How to Buy Fund Shares," "How to Redeem Fund Shares" and
"Distribution and Service Plan" below.
Which option When you purchase Class A Shares, you will normally pay an
is right for up-front sales charge. As a result, you will have less money
you? invested initially and you will own fewer Class A Shares than
you would in the absence of an up-front sales charge.
Alternatively, when you purchase Class C Shares, you will not
pay an up-front sales charge and all of your monies will be
fully invested at the time of purchase. However, Class C
Shares are subject to an annual distribution fee which
constitutes an asset-based sales charge whose purpose is the
same as an up-front sales charge. Class C Shares
automatically convert to Class A Shares six years after
purchase, which reduces the annual expenses you would bear.
This automatic conversion is designed to ensure that holders
of Class C Shares would pay over the six-year period a
distribution fee that is approximately the economic
equivalent of the one-time, up-front sales charge paid by
holders of Class A Shares on purchases of up to $50,000.
Class C Shares are subject to a CDSC of 1% if redeemed within
12 months of purchase. Class A Shares and Class C Shares are
subject to annual service fees which are identical in amount
and are used to compensate Authorized Dealers for providing
you with ongoing account services. You may qualify for a
reduced sales charge or a sales charge waiver
16
<PAGE>
NUVEEN MUNICIPAL BOND FUND PROSPECTUS
JULY 1, 1996
on a purchase of Class A Shares, as described below under
"How the Sales Charge on Class A Shares May Be Reduced or
Waived." Class R Shares are available for purchase at a price
equal to their net asset value, but only under certain
circumstances or for certain categories of investors, as
described below under "How to Buy Fund Shares--Class R
Shares."
In deciding whether to purchase Class A Shares, Class C
Shares or Class R Shares, you should consider all relevant
factors, including the dollar amount of your purchase, the
length of time you expect to hold the shares and whether a
CDSC would apply, the amount of any applicable up-front sales
charge, the amount of any applicable distribution or service
fee that may be incurred while you own the shares, whether or
not you will be reinvesting income or capital gain
distributions in additional shares, whether or not you meet
applicable eligibility requirements or qualify for a sales
charge waiver or reduction, and the relative level of
services that your financial adviser may provide to different
classes. Authorized Dealers and other persons distributing
the Fund's shares may receive different compensation for
selling different classes of shares.
Differences Each class of shares represents an interest in the same
between the portfolio of investments. Each class of shares is identical
classes of in all respects except that each class has its own sales
shares charge structure, each class bears its own class expenses,
including service and distribution fees, and each class has
exclusive voting rights with respect to any distribution or
service plan applicable to its shares. In addition, the Class
C Shares are subject to a conversion feature and a CDSC of 1%
if redeemed within 12 months of purchase, as described below.
As a result of the differences in the expenses borne by each
class of shares, and differences in the purchase and
redemption activity for each class, net income per share,
dividends per share and net asset value per share will vary
among the Fund's classes of shares.
Dealer
Incentives Upon notice to all Authorized Dealers, Nuveen may reallow to
Authorized Dealers electing to participate up to the full
applicable Class A Share up-front sales charge during periods
and for transactions specified in the notice. The
reallowances made during these periods may be based upon
attainment of minimum sales levels. Further, Nuveen may from
time to time make additional reallowances only to certain
Authorized Dealers who sell or are expected to sell certain
minimum amounts of the Funds or other Nuveen Mutual Funds and
Nuveen UITs during specified time periods. The staff of the
Securities and Exchange Commission takes the position that
dealers who receive 90% or more of the applicable sales
charge may be deemed underwriters under the Securities Act of
1933, as amended.
17
<PAGE>
Nuveen may also from time to time provide additional
promotional support to certain Authorized Dealers who sell or
are expected to sell certain minimum amounts of Nuveen Mutual
Funds and Nuveen UITs during specified time periods. Such
promotional support may include providing sales literature to
and holding informational or educational programs for the
benefit of such Authorized Dealers' representatives, seminars
for the public, and advertising and sales campaigns.
Specifically, Nuveen offers a program of advertising support
to Authorized Dealers under which Nuveen will pay or
reimburse the Authorized Dealer for up to one-half of
specified media costs incurred in the placement of
advertisements which jointly feature the Authorized Dealer
and Nuveen Funds and Nuveen UITs. Reimbursement to the
Authorized Dealer will be based on the number of its
financial advisers who have sold Nuveen Fund shares and UIT
units during the prior calendar year according to an
established schedule. Any such support would be provided by
Nuveen out of its own assets, and not out of the assets of
the Funds, and will not change the price an investor pays for
shares or the amount that a Fund will receive from such a
sale.
18
<PAGE>
HOW TO BUY FUND SHARES
NUVEEN MUNICIPAL BOND FUND PROSPECTUS
JULY 1, 1996
CLASS A SHARES
Class A Shares
are normally You may purchase Class A Shares at a public offering price
offered at equal to the applicable net asset value per share plus an up-
their net front sales charge imposed at the time of purchase as set
asset value forth below. You may qualify for a reduced sales charge, or
plus an up- the sales charge may be waived in its entirety, as described
front sales below under "How the Up-Front Sales Charge on Class A Shares
charge May Be Reduced or Waived." Class A Shares are also subject to
an annual service fee of .25%. See "Flexible Pricing Program"
and "Distribution and Service Plan." [/R]
The up-front sales charge schedule for Class A Shares is as
follows:
<TABLE>
<CAPTION>
SALES CHARGE AS SALES CHARGE AS REALLOWANCE AS
% OF PUBLIC % OF NET AMOUNT % OF PUBLIC
AMOUNT OF PURCHASE OFFERING PRICE INVESTED OFFERING PRICE
- --------------------------------------------------------------------------------------
<S> <C> <C> <C>
Less than $50,000 4.50% 4.71% 4.00%
$50,000 but less than
$100,000 4.25% 4.44% 3.75%
$100,000 but less than
$250,000 3.50% 3.63% 3.25%
$250,000 but less than
$500,000 2.75% 2.83% 2.50%
$500,000 but less than
$1,000,000 2.00% 2.04% 1.75%
$1,000,000 but less than $2,500,000 0.00% 0.00% 1.00%
$2,500,000 but less than $5,000,000 0.00% 0.00% 0.50%
$5,000,000 and over 0.00% 0.00% 0.25%
</TABLE>
Class A Share Class A Share purchases of $1 million or more will be sold at
purchases of net asset value without an up-front sales charge. Nuveen will
$1 million and pay Authorized Dealers of record on such Class A Share
over may be purchases a commission of up to 1% of the amount of the
effected purchase. The investor agrees to pay to Nuveen a CDSC of 1%
without an of the purchase price or the redemption proceeds, whichever
up-front sales is less, if such shares are redeemed within 18 months of
charge but be purchase. Shares purchased by investors investing $1 million
subject to a or more who have made arrangements with Nuveen and whose
CDSC dealer of record waived the commission will not be subject to
the CDSC. See "How to Redeem Fund Shares--Contingent Deferred
Sales Charge." [/R]
The Fund receives the entire net asset value of all Class A
Shares that are sold. Nuveen retains the full applicable
sales charge from which it pays the uniform reallowances
shown above to Authorized Dealers. See "Flexible Pricing
Program--Dealer Incentives" above for more information about
reallowances and other compensation to Authorized Dealers.
19
<PAGE>
Certain commercial banks may make Class A Shares of the Fund
available to their customers on an agency basis. Pursuant to
the agreements between Nuveen and these banks, some or all of
the sales charge paid by a bank customer in connection with a
purchase of Class A Shares may be retained by or paid to the
bank. Certain banks and other financial institutions may be
required to register as securities dealers in certain states.
HOW THE UP-FRONT SALES CHARGE ON CLASS A SHARES MAY BE
REDUCED OR WAIVED
There are There are several ways to reduce or eliminate the up-front
several ways sales charge:
to reduce or . cumulative discount;
eliminate the . letter of intent;
sales charge
. purchases with monies representing distributions from
Nuveen-sponsored UIT's; [/R]
. group purchase programs;
. reinvestment of redemption proceeds from non-affiliated
funds; and
. special sales charge waivers for certain categories of
investors.
You may qualify for a reduced sales charge as shown above on
Cumulative a purchase of Class A Shares if the amount of your purchase,
Discount when added to the value that day of all of your prior
purchases of shares of the Fund or of another Nuveen Mutual
Fund, or units of a Nuveen UIT, on which an up-front sales
charge or ongoing distribution fee is imposed, falls within
the amounts stated in the table. You or your financial
adviser must notify Nuveen or SSI of any cumulative discount
whenever you plan to purchase Class A Shares of the Fund that
you wish to qualify for a reduced sales charge.
Letter of You may qualify for a reduced sales charge on a purchase of
Intent Class A Shares if you plan to purchase Class A Shares of
Nuveen Mutual Funds over the next 13 months and the total
amount of your purchases would, if purchased at one time,
qualify you for one of the reduced sales charges shown above.
In order to take advantage of this option, you must complete
the applicable section of the Application Form or sign and
deliver either to an Authorized Dealer or to SSI a written
Letter of Intent in a form acceptable to Nuveen. A Letter of
Intent states that you intend, but are not obligated, to
purchase over the next 13 months a stated total amount of
Class A Shares that would qualify you for a reduced sales
charge shown above. You may count shares of a Nuveen Mutual
Fund that you already own on which you paid an up-front sales
charge or an ongoing distribution fee and any Class C Shares
of a Nuveen Mutual Fund that you purchase over the next 13
months towards [/R]
20
<PAGE>
NUVEEN MUNICIPAL BOND FUND PROSPECTUS
JULY 1, 1996
completion of your investment program, but you will receive a
reduced sales charge only on new Class A Shares you purchase
with a sales charge over the 13 months. You cannot count
towards completion of your investment program Class A Shares
that you purchase without a sales charge through investment
of distributions from a Nuveen Mutual Fund or a Nuveen UIT,
or otherwise.
By establishing a Letter of Intent, you agree that your first
purchase of Class A Shares following execution of the Letter
of Intent will be at least 5% of the total amount of your
intended purchases. You further agree that shares
representing 5% of the total amount of your intended
purchases will be held in escrow pending completion of these
purchases. All dividends and capital gains distributions on
Class A Shares held in escrow will be credited to your
account. If total purchases, less redemptions, prior to the
expiration of the 13 month period equal or exceed the amount
specified in your Letter of Intent, the Class A Shares held
in escrow will be transferred to your account. If the total
purchases, less redemptions, exceed the amount specified in
your Letter of Intent and thereby qualify for a lower sales
charge than the sales charge specified in your Letter of
Intent, you will receive this lower sales charge
retroactively, and the difference between it and the higher
sales charge paid will be used to purchase additional Class A
Shares on your behalf. If the total purchases, less
redemptions, are less than the amount specified, you must pay
Nuveen an amount equal to the difference between the amounts
paid for these purchases and the amounts which would have
been paid if the higher sales charge had been applied. If you
do not pay the additional amount within 20 days after written
request by Nuveen or your financial adviser, Nuveen will
redeem an appropriate number of your escrowed Class A Shares
to meet the required payment. By establishing a Letter of
Intent, you irrevocably appoint Nuveen as attorney to give
instructions to redeem any or all of your escrowed shares,
with full power of substitution in the premises.
You or your financial adviser must notify Nuveen or SSI
whenever you make a purchase of Fund shares that you wish to
be covered under the Letter of Intent option.
Reinvestment You may purchase Class A Shares without an up-front sales
of Nuveen Unit charge by reinvestment of distributions from any of the
Trust various unit investment trusts sponsored by Nuveen. There is
Distributions no initial or subsequent minimum investment requirement for
such reinvestment purchases.
21
<PAGE>
If you are a member of a qualified group, you may purchase
Group Purchase Class A Shares of the Fund or of another Nuveen Mutual Fund
Programs at the reduced sales charge applicable to the group's
purchases taken as a whole. A "qualified group" is one which
has been in existence for more than six months, has a purpose
other than investment, has five or more participating
members, has agreed to include Fund sales publications in
mailings to members and has agreed to comply with certain
administrative requirements relating to its group purchases.
Under any group purchase program, the minimum monthly
investment in Class A Shares of any particular Fund or
portfolio by each participant is $25, and the minimum monthly
investment in Class A Shares of any particular Fund or
portfolio for all participants in the program combined is
$1,000. No certificates will be issued for any participant's
account. All dividends and other distributions by the Fund
will be reinvested in additional Class A Shares of the Fund.
No participant may utilize a systematic withdrawal program.
To establish a group purchase program, both the group itself
and each participant must fill out special application
materials, which the group administrator may obtain from the
group's financial adviser, by checking the applicable box on
the enclosed Application Form or by calling Nuveen toll-free
at 800-621-7227. See the Statement of Additional Information
for more complete information about "qualified groups" and
group purchase programs.
Reinvestment You may also purchase Class A Shares at net asset value
of Redemption without a sales charge if the purchase takes place through a
Proceeds from broker-dealer and represents the reinvestment of the proceeds
Unaffiliated of the redemption of shares of one or more registered
Funds investment companies not affiliated with Nuveen. You must
provide appropriate documentation that the redemption
occurred not more than 60 days prior to the reinvestment of
the proceeds in Class A Shares, and that you either paid an
up-front sales charge or were subject to a contingent
deferred sales charge in respect of the redemption of such
shares of such other investment company.
Special Sales Class A Shares of the Fund may be purchased at net asset
Charge Waivers value without a sales charge and in any amount by officers,
trustees and retired trustees of the Fund; bona fide, full-
time and retired employees of Nuveen or its affiliates, any
parent company of Nuveen, and subsidiaries thereof, or their
immediate family members (as defined below); any person who,
for at least 90 days, has been an officer, director or bona
fide employee of any Authorized Dealer, or their immediate
family members; officers and directors of bank holding
companies that make Fund shares available directly or
22
<PAGE>
NUVEEN MUNICIPAL BOND FUND PROSPECTUS
JULY 1, 1996
through subsidiaries or bank affiliates; bank or broker-
affiliated trust departments; investors who purchase through
broker-dealer sponsored mutual fund purchase programs offered
on a periodic fee, asset-based fee or no transaction fee
basis; and clients of investment advisers, financial planners
or other financial intermediaries that charge periodic or
asset-based fees for their services. For further details
about these special categories and their eligibility
requirements, please consult your financial adviser or the
Statement of Additional Information, or call Nuveen at
800.621.7227.
Any Class A Shares purchased pursuant to a special sales
charge waiver must be acquired for investment purposes and on
the condition that they will not be transferred or resold
except through redemption by the Fund. You or your financial
adviser must notify Nuveen or SSI whenever you make a
purchase of Class A Shares that you wish to be covered under
these special sales charge waivers. The above categories of
investors are also eligible to purchase Class R Shares, as
described below under "Class R Shares."
Class A Shares may be issued at net asset value without a
sales charge in connection with the acquisition by the Fund
of another investment company. All purchases under the
special sales charge waivers will be subject to minimum
purchase requirements as established by the Fund.
In General In determining the amount of your purchases of Class A Shares
that may qualify for a reduced sales charge, the following
purchases may be combined: (1) all purchases by a trustee or
other fiduciary for a single trust, estate or fiduciary
account; (2) all purchases by individuals and their immediate
family members (i.e., their spouses and their children under
21 years of age); or (3) all purchases made through a group
purchase program as described above.
The reduced sales charge programs may be modified or
discontinued by the Fund at any time upon prior written
notice to shareholders of the Fund.
FOR MORE INFORMATION ABOUT THE PURCHASE OF CLASS A SHARES OR
REDUCED SALES CHARGE PROGRAMS, OR TO OBTAIN THE REQUIRED
APPLICATION FORMS, CALL NUVEEN TOLL-FREE AT 800.621.7227.
23
<PAGE>
CLASS C SHARES
Class C Shares
may be You may purchase Class C Shares at a public offering price
purchased at equal to the applicable net asset value per share without any
their net up-front sales charge. Class C Shares are subject to an
asset value, annual distribution fee to reimburse Nuveen for costs
and are incurred in connection with the sale of Class C Shares. Class
subject to an C Shares are also subject to an annual service fee to
annual compensate Authorized Dealers for providing you with ongoing
distribution financial advice and other services. See "Distribution and
fee Service Plan."
An investor purchasing Class C Shares agrees to pay a CDSC of
1% if Class C Shares are redeemed within 12 months of
purchase. See "How to Redeem Fund Shares." The Class C Shares
of the Fund will effectively retain the CDSC; the Fund will
pay the amount of the CDSC to Nuveen, but will be reimbursed
by Nuveen in an equal amount by a reduction in the
distribution fees payable to Nuveen.
Class C Shares will automatically convert to Class A Shares
six years after purchase. All such conversions will be done
at net asset value without the imposition of any sales
charge, fee, or other charge, so that the value of each
shareholder's account immediately before conversion will be
the same as the value of the account immediately after
conversion. Class C Shares acquired through reinvestment of
distributions will convert into Class A Shares based on the
date of the initial purchase to which such shares relate. For
this purpose, Class C Shares acquired through reinvestment of
distributions will be attributed to particular purchases of
Class C Shares in accordance with such procedures as the
Board of Trustees may determine from time to time. The
automatic conversion of Class C Shares to Class A Shares six
years after purchase was designed to ensure that holders of
Class C Shares would pay over the six-year period a
distribution fee that is approximately the economic
equivalent of the one-time, up-front sales charge paid by
holders of Class A Shares on purchases of up to $50,000.
Class C Shares that are converted to Class A Shares will no
longer be subject to an annual distribution fee, but they
will remain subject to an annual service fee that is
identical in amount for both Class C Shares and Class A
Shares. Since net asset value per share of the Class C Shares
and the Class A Shares may differ at the time of conversion,
a shareholder may receive more or fewer Class A Shares than
the number of Class C Shares converted. Any conversion of
Class C Shares into Class A Shares will be subject to the
continuing availability of an opinion of counsel or a private
letter ruling from the Internal Revenue Service to the effect
that the conversion of shares would not constitute a taxable
event under federal income tax law. Conversion of Class C
Shares into Class A Shares might be suspended if such an
opinion or ruling were no longer available.
24
<PAGE>
NUVEEN MUNICIPAL BOND FUND PROSPECTUS
JULY 1, 1996
CLASS R SHARES
Class R Shares
are offered at If you owned Fund shares as of June 13, 1995, those shares
their net have been designated as Class R Shares. Purchases of
asset value additional Class R Shares, which will not be subject to any
sales charge or any distribution or service fee, will be
limited to the following circumstances. You may purchase
Class R Shares with monies representing distributions from
Nuveen-sponsored UITs if, prior to June 13, 1995, you had
purchased such UITs and elected to reinvest distributions
from such UITs in shares of the Fund. You may also purchase
Class R Shares with monies representing dividends and capital
gain distributions on Class R Shares of the Fund. You may
purchase Class R Shares if you are making a purchase of $1
million or more of Fund shares in a single transaction.
Finally, you may purchase Class R Shares if you are within
the following specified categories of investors who are also
eligible to purchase Class A Shares at net asset value
without an up-front sales charge: officers, trustees and
retired directors and trustees of the Fund or its
predecessor; bona fide, full-time and retired employees of
Nuveen, any parent company of Nuveen, and subsidiaries
thereof, or their immediate family members; any person who,
for at least 90 days, has been an officer, director or bona
fide employee of any Authorized Dealer, or their immediate
family members; officers and directors of bank holding
companies that make Fund shares available directly or through
subsidiaries or bank affiliates; bank or broker-affiliated
trust departments; investors who purchase through broker-
dealer sponsored mutual fund purchase programs offered on a
periodic fee, asset-based fee or no transaction fee basis;
and clients of investment advisers, financial planners or
other financial intermediaries that charge periodic or asset-
based fees for their services.
If you are eligible to purchase either Class R Shares or
Class A Shares without a sales charge at net asset value you
should be aware of the differences between these two classes
of shares. Class A Shares are subject to an annual service
fee to compensate Authorized Dealers for providing you with
ongoing account services. Class R Shares are not subject to a
service fee and consequently holders of Class R Shares may
not receive the same types or levels of services from
Authorized Dealers. In choosing between Class A Shares and
Class R Shares, you should weigh the benefits of the services
to be provided by Authorized Dealers against the annual
service fee imposed upon the Class A Shares.
INITIAL AND SUBSEQUENT PURCHASES OF SHARES
The Fund
offers a You may buy Fund shares through Authorized Dealers or by
number of directing your financial adviser to call Nuveen toll-free at
convenient 800.843.6765. You may pay for your purchase by Federal
ways to Reserve draft or by check made payable to "Nuveen Municipal
purchase Bond Fund, Class [A], [C], [R]," delivered to the financial
shares adviser through whom the investment
25
<PAGE>
is to be made for forwarding to the Fund's shareholder
services agent, SSI. When making your initial investment, you
must also furnish the information necessary to establish your
Fund account by completing and enclosing with your payment
the attached Application Form. After your initial investment,
you may make subsequent purchases at any time by forwarding
to SSI a check in the amount of your purchase made payable to
"Nuveen Municipal Bond Fund, Class [A], [C], [R]," and
indicating on the check your account number. All payments
must be in U.S. dollars and should be sent directly to SSI at
its address listed on the back cover of this Prospectus. A
check drawn on a foreign bank or payable other than to the
order of the Fund generally will not be acceptable. You may
also wire Federal Funds directly to SSI, but you may be
charged a fee for this. For instructions on how to make Fund
purchases by wire transfer, call Nuveen toll-free at
800.621.7227, between the hours of 8:30 a.m. and 8:00 p.m.
Eastern Time.
MINIMUM INVESTMENT REQUIREMENTS
Generally, your first purchase of any class of the Fund's
shares must be for $1,000 or more. Additional purchases may
be in amounts of $100 or more. These minimums may be changed
at any time by the Fund. There are exceptions to these
minimums for shareholders who qualify under one or more of
the Fund's automatic deposit, group purchase or reinvestment
programs.
PURCHASE PRICE
The price at which the purchase of Fund shares is effected is
based on the next calculation of the Fund's net asset value
after the order is placed. The Fund's net asset value per
share is determined as of 4:00 p.m. Eastern Time on each day
the New York Stock Exchange is open for business. See "Net
Asset Value," below for a description of how net asset value
is calculated.
SYSTEMATIC INVESTMENT PROGRAMS
The Fund offers you several opportunities to capture the
benefits of "dollar cost averaging" through systematic
investment programs. In a regularly followed dollar cost
averaging program, you would purchase more shares when Fund
share prices are lower and fewer shares when Fund share
prices are higher, so that the average price paid for Fund
shares is less than the average price of the Fund shares over
the same time period. Dollar cost averaging does not assure
profits or protect against losses in a steadily declining
market. Since dollar cost averaging involves continuous
investment regardless of fluctuating price levels, you should
consider your financial ability to continue investing in
declining as well as rising markets before deciding to invest
in this way. The chart below shows the cumulative effect that
compound interest can have on a systematic investment
program.
26
<PAGE>
NUVEEN MUNICIPAL BOND FUND PROSPECTUS
JULY 1, 1996
The Power of a
Systematic
Investment
Program
LOGO
SOURCE: NUVEEN MARKETING RESEARCH DEPARTMENT
In the above example, it is assumed that $100 is added to an
investment account every month for 20 years. From the same
$1,000 beginning, the chart shows the amount that would be in
the account after 20 years, assuming no interest and interest
compounded annually at the rates of 4%, 5% and 6%.
This chart is designed to illustrate the effects of compound
interest, and is not intended to predict the results of an
actual investment in the Fund. There are several important
differences between the Fund and the hypothetical investment
program shown. This example assumes no gain or loss in the
net asset value of the
27
<PAGE>
investment over the entire 20-year period, whereas the net
asset value of the Fund will rise and fall due to market
conditions or other factors, which could have a significant
impact on the total value of your investment. Similarly, this
example shows four steady interest rates over the entire 20-
year period, whereas the dividend rate of the Fund can be
expected to fluctuate over time. The Fund may provide
additional information to investors and advisers illustrating
the benefits of systematic investment programs and dollar
cost averaging.
THE FUND OFFERS TWO DIFFERENT TYPES OF SYSTEMATIC INVESTMENT
PROGRAMS:
Automatic
Deposit Plan Once you have established a Fund account, you may make
regular investments in an amount of $25 or more each month by
authorizing SSI to draw preauthorized checks on your bank
account. There is no obligation to continue payments and you
may terminate your participation at any time at your
discretion. No charge in addition to the applicable sales
charge is made in connection with this Plan, and there is no
cost to the Fund. To obtain an application form for the
Automatic Deposit Plan, check the applicable box on the
enclosed Application Form or call Nuveen toll-free at
800.621.7227. [/R]
Payroll Direct Once you have established a Fund account, you may, with your
Deposit Plan employer's consent, make regular investments in Fund shares
of $25 or more per pay period by authorizing your employer to
deduct this amount automatically from your paycheck. There is
no obligation to continue payments and you may terminate your
participation at any time at your discretion. No charge in
addition to the applicable sales charge is made for this
Plan, and there is no cost to the Fund. To obtain an
application form for the Payroll Direct Deposit Plan, check
the applicable box on the enclosed Application Form or call
Nuveen toll-free at 800.621.7227. [/R]
OTHER SHAREHOLDER PROGRAMS
Exchange
Privilege You may exchange shares of a class of the Fund for shares of
the same or equivalent class of another Nuveen Mutual Fund
with reciprocal exchange privileges, at net asset value
without a sales charge, by sending a written request to the
Fund, c/o Shareholder Services, Inc., P.O. Box 5330, Denver,
CO 80217-5330. Similarly, Class A Shares, Class C Shares and
Class R Shares of another Nuveen Mutual Fund may be exchanged
for the same class of shares of the Fund at net asset value
without a sales charge. Exchanges of shares from any Nuveen
money market fund will be made into Class A Shares, Class C
Shares or Class R Shares of the Fund at the public offering
price, which includes an up-front sales charge in the case of
Class A Shares. If, however, a sales charge has previously
been paid on the investment represented [/R]
28
<PAGE>
NUVEEN MUNICIPAL BOND FUND PROSPECTUS
JULY 1, 1996
by the exchanged shares (i.e., the shares to be exchanged
were originally issued in exchange for shares on which a
sales charge was paid), the exchange of shares from a Nuveen
money market fund will be made into Class A Shares at net
asset value without any up-front sales charge. Shares of any
class of the Fund may be exchanged for shares of any Nuveen
money market fund.
No CDSC will be charged on the exchange of Class C Shares of
any Fund for Class C Shares of any other Nuveen Mutual Fund
or shares of any Nuveen money market fund. The 12 month
holding period for purposes of the CDSC applicable to Class C
Shares will continue to run during any period in which Class
C Shares of the Fund, Class C Shares of any other Nuveen
Mutual Fund or shares of a Nuveen money market fund are held.
The shares to be purchased must be offered in your state of
residence and you must have held the shares you are
exchanging for at least 15 days. The total value of exchanged
shares must at least equal the minimum investment requirement
of the Nuveen Mutual Fund being purchased. For federal income
tax purposes, any exchange constitutes a sale and purchase of
shares and may result in capital gain or loss. Before making
any exchange, you should obtain the Prospectus for the Nuveen
Mutual Fund you are purchasing and read it carefully. If the
registration of the account for the Fund you are purchasing
is not exactly the same as that of the fund account from
which the exchange is made, written instructions from all
holders of the account from which the exchange is being made
must be received, with signatures guaranteed by a member of
an approved Medallion Guarantee Program or in such other
manner as may be acceptable to the Fund. You may also
exchange shares by telephone if you authorize telephone
exchanges by checking the applicable box on the enclosed
Application Form or by calling Nuveen toll-free
at800.621.7227 to obtain an authorization form. The exchange
privilege may be modified or discontinued by the Fund at any
time upon prior written notice to shareholders of the Fund.
In addition, you may exchange Class R Shares of the Fund for
Class A Shares of the same Fund without a sales charge if the
current net asset value of those Class R Shares is at least
$1,000 or you already own Class A Shares of the Fund.
The exchange privilege is not intended to permit the Fund to
be used as a vehicle for short-term trading. Excessive
exchange activity may interfere with portfolio management,
raise expenses, and otherwise have an adverse effect on all
shareholders. In order to limit excessive exchange activity
and in other circumstances where Fund
29
<PAGE>
management believes doing so would be in the best interest of
the Fund, the Fund reserves the right to revise or terminate
the exchange privilege, or limit the amount or number of
exchanges or reject any exchange. Shareholders would be
notified of any such action to the extent required by law.
Reinstatement If you have redeemed Class A Shares of the Fund or Class A
Privilege Shares of any other Nuveen Mutual Fund that were subject to a
sales charge or a CDSC, you have up to one year to reinvest
all or part of the full amount of the redemption in the same
class of shares of the Fund at net asset value. This
reinvestment privilege can be exercised only once for any
redemption, and reinvestment will be made at the net asset
value of the appropriate class of Fund shares next calculated
after reinstatement. If you reinstate shares that were
subject to a CDSC, your holding period as of the redemption
date will also be reinstated. The tax consequences of any
capital gain realized on a redemption will not be affected by
reinstatement, but a capital loss may be disallowed in whole
or in part depending on the timing and amount of the
reinvestment. [/R]
Fund Direct You can use Fund Direct to link your Fund account to your
account at your bank or other financial institution to enable
you to send money electronically between those accounts to
perform a variety of account transactions. These include
purchases of shares by telephone, investments under Automatic
Deposit Plan, and sending dividends and distributions,
redemption payments or Automatic Withdrawal Plan payments
directly to your bank account. Please refer to the
Application for details or call SSI for more information.
[/R]
Fund Direct privileges must be requested via a Fund Direct
Application you obtain by calling 800.621.7227. Fund Direct
privileges will apply to each shareholder listed in the
registration on your account as well as to your Authorized
Dealer representative of record unless and until SSI receives
written instructions terminating or changing those
privileges. After you establish Fund Direct for your account,
any change of bank account information must be made by
signature-guaranteed instructions to SSI signed by all
shareholders who own the account.
Purchases may be made by telephone only after your account
has been established. To purchase shares in amounts up to
$250,000 through a telephone representative, call SSI at
800.621.7227. The purchase payment will be debited from your
bank account.
30
<PAGE>
NUVEEN MUNICIPAL BOND FUND PROSPECTUS
JULY 1, 1996
FOR MORE INFORMATION ABOUT THESE PURCHASE OPTIONS AND TO
OBTAIN THE APPLICATION FORMS REQUIRED FOR SOME OF THEM, CALL
NUVEEN TOLL-FREE AT
800.621.7227.
ADDITIONAL INFORMATION
If you choose to invest in the Fund, an account will be
opened and maintained for you by SSI, the Fund's shareholder
services agent. Share certificates will be issued to you only
upon written request to SSI, and no certificates will be
issued for fractional shares. The Fund reserves the right to
reject any purchase order and to waive or increase minimum
investment requirements. A change in registration or transfer
of shares held in the name of your financial adviser's firm
can only be made by an order in good form from the financial
adviser acting on your behalf.
Authorized Dealers are encouraged to open single master
accounts. However, some Authorized Dealers may wish to use
SSI's sub-accounting system to minimize their internal
recordkeeping requirements. An Authorized Dealer or other
investor requesting shareholder servicing or accounting other
than the master account or sub-accounting service offered by
SSI will be required to enter into a separate agreement with
another agent for these services for a fee that will depend
upon the level of services to be provided.
Subject to the rules and regulations of the Securities and
Exchange Commission, the Fund reserves the right to suspend
the continuous offering of its shares at any time, but no
suspension shall affect your right of redemption as described
below.
31
<PAGE>
DISTRIBUTION AND SERVICE PLAN
The Fund has adopted a plan (the "Plan") pursuant to Rule
12b-1 under the Investment Company Act of 1940, which
provides that Class C Shares will be subject to an annual
distribution fee, and that both Class A Shares and Class C
Shares will be subject to an annual service fee. Class R
Shares will not be subject to either distribution or service
fees.
The distribution fee applicable to Class C Shares under the
Plan will be payable to reimburse Nuveen for services and
expenses incurred in connection with the distribution of
Class C Shares. The distribution fee primarily reimburses
Nuveen for providing compensation to Authorized Dealers,
including Nuveen, either at the time of sale or on an ongoing
basis. The other expenses for which Nuveen may be reimbursed
include, without limitation, expenses of printing and
distributing prospectuses to persons other than shareholders
of the Fund, expenses of preparing, printing and distributing
advertising and sales literature and reports to shareholders
used in connection with the sale of Class C Shares, certain
other expenses associated with the distribution of Class C
Shares, and any other distribution-related expenses that may
be authorized from time to time by the Board of Trustees.
The service fee applicable to Class A Shares and Class C
Shares under the Plan will be payable to Nuveen, to be used
to compensate Authorized Dealers, including Nuveen, in
connection with the provision of ongoing account services to
shareholders. These services may include establishing and
maintaining shareholder accounts, answering shareholder
inquiries and providing other personal services to
shareholders.
The Fund may spend up to .25 of 1% per year of the average
daily net assets of Class A Shares as a service fee under the
Plan applicable to Class A Shares. The Fund may spend up to
.75 of 1% per year of the average daily net assets of Class C
Shares less the amount of any CDSC received by Nuveen as to
which no reinstatement privilege has been exercised, as a
distribution fee and up to .25 of 1% per year of the average
daily net assets of Class C Shares as a service fee under the
Plan applicable to Class C Shares.
32
<PAGE>
HOW TO REDEEM FUND SHARES NUVEEN MUNICIPAL BOND FUND PROSPECTUS
JULY 1, 1996
You may require the Fund at any time to redeem for cash your
shares of the Fund. All shares will be redeemed at the net
asset value next computed after instructions and required
documents and certificates, if any, are received in proper
form as described below. However, with respect to certain
Class A and Class C shares, as further described below, any
applicable contingent deferred sales charge will be deducted
from the proceeds of the redemption. There is no charge for
redemption of Class R Shares.
Contingent Class A Shares are normally redeemed at net asset value,
Deferred Sales without any CDSC. However, in the case of Class A Shares
Charge purchased at net asset value because the purchase amount
exceeded $1 million, where the Authorized Dealer did not
waive the sales commission, a CDSC of 1% is imposed on any
redemption within 18 months of purchase. See "How to Buy Fund
Shares--Class A Shares." Class C Shares are normally redeemed
at net asset value, without any CDSC, except that a CDSC of
1% is imposed upon redemption of Class C Shares that are
redeemed within 12 months of purchase. See "How to Buy Fund
Shares--Class C Shares." The CDSC will be based on 1% of the
lower of (i) the net asset value of shares at the time of
purchase or (ii) the net asset value of shares at the time of
redemption.
In determining whether a CDSC is payable, a Fund will first
redeem shares not subject to any charge, and then in the
reverse order in which the shares were purchased, except if
another order of redemption would result in a lower charge or
you specify another order. No CDSC is charged on shares
purchased as a result of automatic reinvestment of dividends
or capital gains paid. In addition, no CDSC will be charged
on exchanges of shares into another Nuveen Mutual Fund or
money market fund. Your holding period is calculated on a
monthly basis and begins the first day of the month in which
the order for investment is received. The CDSC is calculated
based on the lower of the redeemed shares' cost or net asset
value at the time of the redemption and is deducted from the
redemption proceeds. Nuveen receives the amount of any CDSC
you pay on Class A Shares. The CDSC may be waived under
certain special circumstances, as described in the Statement
of Additional Information.
THE FUND OFFERS A VARIETY OF REDEMPTION OPTIONS
By Written
Request You may redeem shares by sending a written request for
redemption directly to the Fund, c/o Shareholder Services,
Inc., P.O. Box 5330, Denver, CO 80217-5330, accompanied by
duly endorsed certificates, if issued. Requests for
redemption and share certificates, if issued, must be signed
by each shareholder and, if the redemption proceeds exceed
$50,000 or are payable other than to the shareholder of
33
<PAGE>
Traded Funds. Over 1,000,000 individuals have invested to
date in Nuveen's tax-exempt funds and trusts. Founded in
1898, Nuveen is a 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 in St.
Paul, Minnesota, and is principally engaged in providing
property-liability insurance through subsidiaries.
For the services and facilities furnished by Nuveen Advi-
sory, the Fund has agreed to pay an annual management fee
as follows:
<TABLE>
<CAPTION>
AVERAGE DAILY NET ASSET
VALUE MANAGEMENT FEE
----------------------------------
<S> <C>
For the first $125 million .5000 of 1%
For the next $125 million .4875 of 1%
For the next $250 million .4750 of 1%
For the next $500 million .4625 of 1%
For the next $1 billion .4500 of 1%
For assets over $2 billion .4250 of 1%
</TABLE>
All fees and expenses are accrued daily and deducted be-
fore payment of dividends to investors. In addition to the
management fee of Nuveen Advisory, the Fund pays all its
other costs and expenses of its operations. Nuveen Advi-
sory has agreed to waive all or a portion of its manage-
ment fee or reimburse certain expenses of the Fund in or-
der to prevent total operating expenses (excluding any
distribution or service fees) in any fiscal year from ex-
ceeding .75 of 1% of the average daily net asset value of
any class of shares of the Fund. For the fiscal year ended
February 28, 1995, the management fee amounted to .45 of
1% of the average daily net assets, and the Fund's total
operating expenses amounted to .59 of 1% of the average
net assets.
Portfolio Management. Overall portfolio management strat-
egy and the day-to-day management of the Fund is the re-
sponsibility of Thomas C. Spalding, Jr., a Vice President
of Nuveen Advisory and of the Fund. Mr. Spalding has
served as the portfolio manager of the Fund since August,
1978. Mr. Spalding has been employed by Nuveen since 1976
and by Nuveen Advisory since 1978 and has responsibility
with respect to the portfolio management of all Nuveen
open-end and exchange-traded funds managed by Nuveen Advi-
sory. See the Statement of Additional Information for fur-
ther information about Mr. Spalding.
Consistent with the Fund's investment objectives, the day-
to-day management of the Fund is characterized by an em-
phasis on value investing, a process that involves the
search for Municipal Obligations with favorable
characteristics that, in Nuveen Advisory's judgment, have
not yet been recognized in the marketplace. The process of
searching for such undervalued or underrated securities is
an ongoing one that draws upon the re sources of the
portfolio managers of the various Nuveen funds and senior
management of Nuveen Advisory. All portfolio management
decisions are
34
<PAGE>
NUVEEN MUNICIPAL BOND FUND PROSPECTUS
JULY 1, 1996
WIRE. Proceeds of redemptions through Fund Direct will
normally be wired to
your Fund Direct bank account on the second or third day
after the redemption.
Before you may redeem shares by TEL-A-CHECK, TEL-A-WIRE or
Fund Direct, you must complete the appropriate authorization
section of the enclosed Application Form or the Fund Direct
Application Form and return it to Nuveen or SSI. If you did
not authorize one or more of these redemption methods when
you opened your account, you may obtain a redemption
authorization form by writing the Fund or by calling Nuveen
toll-free at 800.621.7227. Proceeds of share redemptions made
by TEL-A-WIRE will be transferred by Federal Reserve wire
only to the commercial bank account specified by the
shareholder on the Application Form. You must send a written
request to Nuveen or SSI in order to establish multiple
accounts, or to change the account or accounts designated to
receive redemption proceeds. These requests must be signed by
each account owner with signatures guaranteed by a member of
an approved Medallion Guarantee Program or in such other
manner as may be acceptable to the Fund. Further
documentation may be required from corporations, executors,
trustees or personal representatives.
For the convenience of shareholders, the Fund has authorized
Nuveen as its agent to accept orders from financial advisers
by wire or telephone for the redemption of Fund shares. The
redemption price is the net asset value next determined
following receipt of an order placed by the financial
adviser. The Fund makes payment for the redeemed shares to
the securities representatives who placed the order promptly
upon presentation of required documents with signatures
guaranteed as described above. Neither the Fund nor Nuveen
charge any redemption fees other than the CDSC as described
above. However, your financial adviser may charge you for
serving as agent in the redemption of shares.
The Fund reserves the right to refuse telephone redemptions
and, at its option, may limit the timing, amount or frequency
of these redemptions. Telephone redemption procedures may be
modified or terminated at any time, on 30 days' notice, by
the Fund. The Fund, SSI and Nuveen will not be liable for
following telephone instructions reasonably believed to be
genuine. The Fund employs procedures reasonably designed to
confirm that telephone instructions are genuine. These
procedures include recording all telephone instructions and
requiring up to three forms of identification prior to acting
upon a caller's instructions. If the Fund does not follow
reasonable procedures for protecting shareholders against
loss on telephone transactions, it may be liable for any
losses due to unauthorized or fraudulent telephone
instructions.
35
<PAGE>
Automatic If you own Fund shares currently worth at least $10,000, you
Withdrawal may establish an Automatic Withdrawal Plan by completing an
Plan application form for the Plan. You may obtain an application
form by checking the applicable box on the enclosed
Application Form or by calling Nuveen toll-free at
800.621.7227. [/R]
The Plan permits you to request periodic withdrawals on a
monthly, quarterly, semi-annual or annual basis in an amount
of $50 or more. Depending upon the size of the withdrawals
requested under the Plan and fluctuations in the net asset
value of Fund shares, these withdrawals may reduce or even
exhaust your account.
The purchase of Class A Shares, other than through
reinvestment, while you are participating in the Automatic
Withdrawal Plan with respect to Class A Shares will usually
be disadvantageous because you will be paying a sales charge
on any Class A Shares you purchase at the same time you are
redeeming shares. Similarly, use of the Automatic Withdrawal
Plan for Class C Shares held for less than 12 months or
certain Class A Shares held for less than 18 months may be
disadvantageous because the newly-purchased shares may be
subject to the 1% CDSC.
The Fund may suspend the right of redemption of Fund shares
General or delay payment more than seven days (a) during any period
when the New York Stock Exchange is closed (other than
customary weekend and holiday closings), (b) when trading in
the markets the Fund normally utilizes is restricted, or an
emergency exists as determined by the Securities and Exchange
Commission so that trading of the Fund's investments or
determination of its net asset value is not reasonably
practicable, or (c) for any other periods that the Securities
and Exchange Commission by order may permit for protection of
Fund shareholders.
The Fund may, from time to time, establish a minimum total
investment for Fund shareholders, and the Fund reserves the
right to redeem your shares if your investment is less than
the minimum after giving you at least 30 days' notice. If any
minimum total investment is established, and if your account
is below the minimum, you will be allowed 30 days following
the notice in which to purchase sufficient shares to meet the
minimum. So long as the Fund continues to offer shares at net
asset value to holders of Nuveen UITs who are investing their
Nuveen UIT distributions, no minimum total investment will be
established for the Fund.
36
<PAGE>
MANAGEMENT OF THE FUND
NUVEEN MUNICIPAL BOND FUND PROSPECTUS
JULY 1, 1996
The management of the Fund, including general supervision of
Board of the duties performed for the Fund by Nuveen Advisory under
Trustees the Investment Management Agreement, is the responsibility of
the Fund's Board of Trustees.
Nuveen Advisory acts as the investment adviser for and
Investment manages the investment and reinvestment of the assets of the
Adviser Fund. Its address is Nuveen Advisory Corp., 333 West Wacker
Drive, Chicago, Illinois 60606. Nuveen Advisory also
administers the Fund's business affairs, provides office
facilities and equipment and certain clerical, bookkeeping
and administrative services, and permits any of its officers
or employees to serve without compensation as directors or
officers of the Fund if elected to such positions.
Nuveen Advisory was organized in 1976 and since then has
exclusively engaged in the management of municipal securities
portfolios. It currently serves as investment adviser to 21
open-end municipal securities portfolios (the "Nuveen Mutual
Funds") and 53 exchange-traded municipal securities funds
(the "Nuveen Exchange-Traded Funds"). Each of these invests
substantially all of its assets in investment grade quality,
tax-free municipal securities, and except for money-market
funds, adheres to the value investing strategy described
previously. As of the date of this Prospectus, Nuveen
Advisory manages approximately $30 billion in assets held by
the Nuveen Mutual Funds and the Nuveen Exchange-Traded Funds.
Nuveen Advisory is a wholly-owned subsidiary of John Nuveen &
Co. Incorporated, 333 West Wacker Drive, Chicago, Illinois
60606, the oldest and largest investment banking firm (based
on number of employees) specializing in the underwriting and
distribution of tax-exempt securities. Nuveen, the principal
underwriter of the Fund's shares, is sponsor of the Nuveen
Tax-Exempt Unit Trust, a registered unit investment trust. It
is also the principal underwriter for the Nuveen Mutual
Funds, and served as co-managing underwriter for the shares
of the Nuveen Exchange-Traded Funds. Over 1,000,000
individuals have invested to date in Nuveen's tax-exempt
funds and trusts. Founded in 1898, Nuveen is a subsidiary of
The John Nuveen Company which, in turn, is approximately 80%
owned by The St. Paul Companies, Inc. ("St. Paul"). St. Paul
is located in St. Paul, Minnesota, and is principally engaged
in providing property-liability insurance through
subsidiaries.
37
<PAGE>
For the services and facilities furnished by Nuveen Advisory,
the Fund has agreed to pay an annual management fee as
follows:
<TABLE>
<CAPTION>
AVERAGE DAILY NET ASSET
VALUE MANAGEMENT FEE
- ----------------------------------------------
<S> <C>
For the first $125 million .5000 of 1%
For the next $125 million .4875 of 1%
For the next $250 million .4750 of 1%
For the next $500 million .4625 of 1%
For the next $1 billion .4500 of 1%
For assets over $2 billion .4250 of 1%
</TABLE>
All fees and expenses are accrued daily and deducted before
payment of dividends to investors. In addition to the
management fee of Nuveen Advisory, the Fund pays all its
other costs and expenses of its operations. Nuveen Advisory
has agreed to waive all or a portion of its management fee or
reimburse certain expenses of the Fund in order to prevent
total operating expenses (excluding any distribution or
service fees) in any fiscal year from exceeding .75 of 1% of
the average daily net asset value of any class of shares of
the Fund. For information regarding the management fees and
total operating expenses of each class of shares for the year
ended February 29, 1996, see the table under "Summary of Fund
Expenses" on page 3 of this Prospectus.
Portfolio Overall portfolio management strategy and the day-to-day
Management management of the Fund is the responsibility of Thomas C.
Spalding, Jr., a Vice President of Nuveen Advisory and of the
Fund. Mr. Spalding has served as the portfolio manager of the
Fund since August, 1978. Mr. Spalding has been employed by
Nuveen since 1976 and by Nuveen Advisory since 1978 and has
responsibility with respect to the portfolio management of
all Nuveen open-end and exchange-traded funds managed by
Nuveen Advisory. See the Statement of Additional Information
for further information about Mr. Spalding. [/R]
Consistent with the Fund's investment objectives, the day-to-
day management of the Fund is characterized by an emphasis on
value investing, a process that involves the search for
Municipal Obligations with favorable characteristics that, in
Nuveen Advisory's judgment, have not yet been recognized in
the marketplace. The process of searching for such
undervalued or underrated securities is an ongoing one that
draws upon the resources of the portfolio managers of the
various Nuveen funds and senior management of Nuveen
Advisory. All portfolio management decisions are subject to
weekly review by Nuveen Advisory's management and to
quarterly review by the Fund's Board of Trustees.
38
<PAGE>
HOW THE FUND SHOWS PERFORMANCE
NUVEEN MUNICIPAL BOND FUND PROSPECTUS
JULY 1, 1996
The Fund from time to time may quote various performance
measures in order to illustrate the historical returns
available from an investment in the Fund. These performance
measures, which are determined for each class of shares of
the Fund, include:
YIELD is a standardized measure of the net investment income
Yield earned over a specified 30-day period, expressed as a
Information percentage of the offering price per share at the end of the
period. Yield is an annualized figure, which means that it is
assumed that the same level of net investment income is
generated over a one-year period.
TAXABLE EQUIVALENT YIELD is the yield that a taxable
investment would need to generate in order to equal the yield
on an after-tax basis for an investor in a stated tax
bracket. Taxable equivalent yield will consequently be higher
than its yield. See the chart below and "Taxable Equivalent
Yield Tables" for examples of taxable equivalent yields and
how you can use them to compare other investments with
investments in the Fund.
HISTORICAL YIELDS
LOGO
39
<PAGE>
As this chart shows, interest rates on various long- and
short-term investments will fluctuate over time, and not
always in the same direction or to the same degree. For
convenience, the taxable equivalent yield of the Bond Buyer
20 Index shown here was calculated using a 36% federal income
tax rate. Other federal income tax rates, both higher and
lower, were in existence for all or part of the period shown
in the chart. This chart is not intended to predict the
future direction of interest rates. See the discussion below
under the subcaption "General" for a description of the
indices and investments shown in the chart.
DISTRIBUTION RATE is determined based upon the latest
dividend, annualized, expressed as a percentage of the
offering price per share at the end of the measurement
period. Distribution rate may sometimes be different than
yield because it may not reflect amortization of bond
premiums to the extent such premiums arise after the bonds
were purchased.
AVERAGE ANNUAL TOTAL RETURN and CUMULATIVE TOTAL RETURN
Total return figures for a specified period measure both the net
information investment income generated by, and the effect of any
realized and unrealized appreciation or depreciation of, an
investment in the Fund, assuming the reinvestment of all
dividends and capital gain distributions. Average annual
total return figures generally are quoted for at least one-,
five- and ten-year (or life-of-fund, if shorter) periods and
represent the average annual percentage change over those
periods. Cumulative total return figures are not annualized
and represent the cumulative percentage or dollar value
change over the period specified.
TAXABLE EQUIVALENT TOTAL RETURN represents the total return
that would be generated by a taxable income fund that
produced the same amount of net asset value appreciation or
depreciation and after-tax income as the Fund in each year,
assuming a specified tax rate. The taxable equivalent total
return of the Fund will therefore be higher than its total
return over the same period.
From time to time, the Fund may compare its risk-adjusted
performance with other investments that may provide different
levels of risk and return. For example, the Fund may compare
its risk level, as measured by the variability of its
periodic returns, or its RISK-ADJUSTED TOTAL RETURN, with
those of other funds or groups of funds. Risk-adjusted total
return would be calculated by adjusting each investment's
total return to account for the risk level of the investment.
40
<PAGE>
NUVEEN MUNICIPAL BOND FUND PROSPECTUS
JULY 1, 1996
The Fund may also compare its TAX-ADJUSTED TOTAL RETURN with
that of other funds or groups of funds. This measure would
take into account the tax-exempt nature of exempt-interest
dividends and the payment of income taxes on the Fund's
distributions of net realized capital gains and ordinary
income.
General Any given performance quotation or performance comparison for
the Fund is based on historical earnings and should not be
considered as representative of the performance of the Fund
for any future period. See the Statement of Additional
Information for further information concerning the Fund's
performance. For information as to current yield and other
performance information regarding the Fund, call Nuveen toll-
free at 800.621.7227.
A comparison of the current yield or historic performance of
the Fund to those of other investments is one element to
consider in making an informed investment decision. The Fund
may from time to time in its advertising and sales materials
compare its current yield or total return with the yield or
total return on taxable investments such as corporate or U.S.
Government bonds, bank certificates of deposit (CDs) or money
market funds. These taxable investments have investment
characteristics that differ from those of the Fund.
Additionally, the Fund may compare its current yield or total
return history with a widely-followed, unmanaged municipal
market index such as the Bond Buyer 20 Index, the Merrill
Lynch 500 Municipal Market Index or the Lehman Brothers
Municipal Bond Index. Comparative performance information may
also be used from time to time in advertising or marketing
the Fund's shares, including data from Lipper Analytical
Services, Inc., Morningstar, Inc. and other industry
publications.
41
<PAGE>
DISTRIBUTIONS AND TAXES
HOW THE FUND PAYS DIVIDENDS
The Fund pays The Fund will pay monthly dividends to shareholders at a
monthly level rate that reflects the past and projected net income of
dividends [/R] the Fund and that results, over time, in the distribution of
substantially all of the Fund's net income. Net income of the
Fund consists of all interest income accrued on its portfolio
less all expenses of the Fund accrued daily. To maintain a
more stable monthly distribution, the Fund may from time to
time distribute less than the entire amount of net income
earned in a particular period. This undistributed net income
would be available to supplement future distributions, which
might otherwise have been reduced by a decrease in the Fund's
monthly net income due to fluctuations in investment income
or expenses. As a result, the distributions paid by the Fund
for any particular monthly period may be more or less than
the amount of net income actually earned by the Fund during
such period. Undistributed net income is included in the
Fund's net asset value and, correspondingly, distributions
from previously undistributed net income are deducted from
the Fund's net asset value. It is not expected that this
dividend policy will impact the management of the Fund's
portfolio.
Dividends paid by the Fund with respect to each class of
shares will be calculated in the same manner and at the same
time, and will be paid in the same amount except that
different distribution and service fees and any other expense
relating to a specific class of shares will be borne
exclusively by that class. As a result, dividends per share
will vary among the Fund's classes.
The Fund will declare dividends on the 9th of each month (or
if the 9th is not a business day, on the immediately
preceding business day), payable to shareholders of record as
of the close of business on that day. This distribution
policy is subject to change, however, by the Board of
Trustees of the Fund without prior notice to or approval by
shareholders. Dividends will be paid on the first business
day of the following month and are reinvested in additional
shares of the Fund at net asset value unless you have elected
that your dividends be paid in cash. Net realized capital
gains, if any, will be paid not less frequently than annually
and will be reinvested at net asset value in additional
shares of the Fund unless you have elected to receive capital
gains distributions in cash.
TAX MATTERS
The following federal tax discussion is intended to provide
you with an overview of the impact of federal income tax
provisions on the Fund or its shareholders. These tax
provisions are subject to change by legislative or
administrative action, and any changes may be applied
retroactively. Because the Fund's taxes are a complex
42
<PAGE>
NUVEEN MUNICIPAL BOND FUND PROSPECTUS
JULY 1, 1996
matter, you should consult your tax adviser for more detailed
information concerning the taxation of the Fund and the
federal, state and local tax consequences to Fund
shareholders.
The Fund intends to qualify, as it has in prior years, under
Income Subchapter M of the Internal Revenue Code of 1986, as amended
dividends are (the "Code"), for tax treatment as a regulated investment
free from company. In order to qualify for treatment as a regulated
regular investment company, the Fund must satisfy certain
federal income requirements relating to the sources of its income,
tax diversification of its assets and distribution of its income
to shareholders. As a regulated investment company, the Fund
will not be subject to federal income tax on the portion of
its net investment income and net realized capital gains that
is currently distributed to shareholders. The Fund also
intends to satisfy conditions that will enable it to pay
"exempt-interest dividends" to its shareholders. This means
that you will not be subject to regular federal income tax on
Fund dividends you receive from income on Municipal
Obligations.
Your share of the Fund's taxable income, if any, from income
on taxable temporary investments and net short-term capital
gains, will be taxable to you as ordinary income. If the Fund
purchases a Municipal Obligation at a market discount, any
gain realized by the Fund upon sale or redemption of the
Municipal Obligation will be treated as taxable interest
income to the extent such gain does not exceed the market
discount, and any gain realized in excess of the market
discount will be treated as capital gains. Distributions, if
any, of net long-term capital gains are taxable as long-term
capital gains, regardless of the length of time you have
owned Fund shares. You are required to pay tax on all taxable
distributions even if these distributions are automatically
reinvested in additional Fund shares. Certain distributions
paid by a Fund in January of a given year may be taxable to
shareholders as if received the prior December 31. As long as
the Fund qualifies as a regulated investment company under
the Code, distributions will not qualify for the dividends
received deduction for corporate shareholders. Investors
should consider the tax implications of buying shares
immediately prior to a distribution. Investors who purchase
shares shortly before the record date for a distribution will
pay a per share price that includes the value of the
anticipated distribution and will be taxed on the
distribution (unless it is exempt from tax) even though the
distribution represents a return of a portion of the purchase
price.
43
<PAGE>
If in any year the Fund should fail to qualify under
Subchapter M for tax treatment as a regulated investment
company, the Fund would incur a regular corporate federal
income tax upon its taxable income for that year, and the
entire amount of your distributions would be taxable as
ordinary income.
The Code does not permit you to deduct the interest on
borrowed monies used to purchase or carry tax-free
investments, such as Fund shares. Under Internal Revenue
Service rules, the purchase of Fund shares may be considered
to have been made with borrowed monies even though those
monies are not directly traceable to the purchase of those
shares.
Because the net asset value of the Fund's shares includes net
tax-exempt interest earned by the Fund but not yet declared
as an exempt-interest dividend, each time an exempt-interest
dividend is declared, the net asset value of the Fund's
shares will decrease in an amount equal to the amount of the
dividend. Accordingly, if you redeem Fund shares immediately
prior to or on the record date of a monthly exempt-interest
dividend, you may realize a taxable gain even though a
portion of the redemption proceeds may represent your pro
rata share of undistributed tax-exempt interest earned by the
Fund.
The redemption or exchange of Fund shares normally will
result in capital gain or loss to shareholders. Any loss you
may realize on the redemption or exchange of Fund shares held
for six months or less will be disallowed to the extent of
any distribution of exempt-interest dividends received on
these shares and will be treated as a long-term capital loss
to the extent of any distribution of long-term capital gain
received on these shares.
If you receive social security or railroad retirement
benefits you should note that tax-exempt income is taken into
account in calculating the amount of these benefits that may
be subject to federal income tax.
The Fund may invest in private activity bonds, the interest
on which is not exempt from federal income tax to
"substantial users" of the facilities financed by these bonds
or "related persons" of such substantial users. Therefore,
the Fund may not be an appropriate investment for you if you
are considered either a substantial user or a related person.
44
<PAGE>
NUVEEN MUNICIPAL BOND FUND PROSPECTUS
JULY 1, 1996
The Fund may invest up to 20% of its net assets in AMT Bonds,
the interest on which is a specific tax preference item for
purposes of computing the alternative minimum tax on
corporations and individuals. If your tax liability is
determined under the alternative minimum tax, you will be
taxed on your share of the Fund's exempt-interest dividends
that were paid from income earned on AMT Bonds. In addition,
the alternative minimum taxable income for corporations is
increased by 75% of the difference between an alternative
measure of income ("adjusted current earnings") and the
amount otherwise determined to be alternative minimum taxable
income. Interest on all Municipal Obligations, and therefore
all distributions by the Fund that would otherwise be tax
exempt, is included in calculating a corporation's adjusted
current earnings.
The Fund is required in certain circumstances to withhold 31%
of taxable dividends and certain other payments paid to non-
corporate holders of shares who have not furnished to the
Fund their correct taxpayer identification number (in the
case of individuals, their social security number) and
certain certifications, or who are otherwise subject to back-
up withholding.
Each January, the Fund will notify you of the amount and tax
status of Fund distributions for the preceding year.
45
<PAGE>
NET ASSET VALUE
Net asset value of the shares of the Fund will be determined
Net asset separately for each class of shares. The net asset value per
value is share of a class of shares will be computed by dividing the
calculated value of the Fund's assets attributable to the class, less
daily the liabilities attributable to the class, by the total
number of shares of the class outstanding. The net asset
value per share is expected to vary among Class A Shares,
Class C Shares and Class R Shares, principally due to the
differences in sales charges, distribution and service fees
and other class expenses borne by each class.
Net asset value will be determined by The Chase Manhattan
Bank, N.A., the Fund's custodian, as of 4:00 p.m. Eastern
Time on each day the New York Stock Exchange is normally open
for trading. In determining net asset value, the custodian
uses the valuations of portfolio securities furnished by a
pricing service approved by the Board of Trustees. The
pricing service values portfolio securities at the mean
between the quoted bid and asked prices or the yield
equivalent when quotations are readily available. Securities
for which quotations are not readily available (which are
expected to constitute a majority of the securities held by
the Fund) are valued at fair value as determined by the
pricing service using methods that include consideration of
the following: yields or prices of municipal bonds of
comparable quality, type of issue, coupon, maturity and
rating; indications as to value from securities dealers; and
general market conditions. The pricing service may employ
electronic data processing techniques and/or a matrix system
to determine valuations. The procedures of the pricing
service and its valuations are reviewed by the officers of
the Fund under the general supervision of its Board of
Trustees.
46
<PAGE>
GENERAL INFORMATION NUVEEN MUNICIPAL BOND FUND PROSPECTUS [/R]
JULY 1, 1996
If you have any questions about the Fund or other Nuveen
Mutual Funds, call, Nuveen toll-free at 800.621.7227.
Custodian and The Custodian of the assets of the Fund is The Chase
Transfer and Manhattan Bank, N.A., 770 Broadway, New York, New York 10003.
Shareholder The custodian performs custodial fund accounting and
Services Agent portfolio accounting services. Shareholder Services, Inc.,
P.O. Box 5330, Denver, CO 80217-5330, performs bookkeeping,
data processing and administrative services for the
maintenance of shareholder accounts. [/R]
The Fund is an open-end diversified management investment
Organization company under the Investment Company Act of 1940. The Fund
was originally incorporated in Maryland on October 8, 1976
and reorganized as a Massachusetts business trust on June 12,
1995. The Board of Trustees is authorized to issue an
unlimited number of shares, $.10 par value, divided into
three classes of shares designated as Class A Shares, Class C
Shares and Class R Shares. Each class of shares represents an
interest in the same portfolio of investments of the Fund.
Each class of shares has equal rights as to voting,
redemption, dividends and liquidation, except that each bears
different class expenses, including different distribution
and service fees, and each has exclusive voting rights with
respect to any distribution or service plan applicable to its
shares. There are no conversion, preemptive or other
subscription rights, except that Class C Shares automatically
convert into Class A Shares, as described above. The Board of
Trustees has the right to establish additional series of the
Fund and classes of shares in the future, to change those
series or classes and to determine the preferences, voting
powers, rights and privileges thereof.
The Fund is not required and does not intend to hold annual
meetings of shareholders. Shareholders owning more than 10%
of the outstanding shares of the Fund have the right to call
a special meeting to remove Trustees or for any other
purpose.
47
<PAGE>
The Fund is an entity of the type commonly known as a
"Massachusetts business trust." Under Massachusetts law,
shareholders of such a trust may, under certain
circumstances, be held personally liable as partners for its
obligations. However, the Declaration of Trust contains an
express disclaimer of shareholder liability for acts or
obligations of the Fund and requires that notice of this
disclaimer be given in each agreement, obligation or
instrument entered into or executed by the Fund or the
Trustees. The Declaration of Trust further provides for
indemnification out of the assets and property of the Fund
for all loss and expense of any shareholder held personally
liable for the obligations of the Fund. Thus, the risk of a
shareholder incurring financial loss on account of
shareholder liability is limited to circumstances in which
both inadequate insurance existed and the Fund itself was
unable to meet its obligations. The Fund believes the
likelihood of these circumstances is remote.
48
<PAGE>
TAXABLE EQUIVALENT NUVEEN MUNICIPAL BOND FUND PROSPECTUS [/R]
YIELD TABLES JULY 1, 1996 [/R]
TAXABLE EQUIVALENT YIELD TABLES AND THE EFFECT OF TAXES AND
INTEREST RATES ON INVESTMENTS
The following tables show the combined effects for
individuals of federal, state and local (if applicable)
income taxes on:
. what you would have to earn on a taxable investment to
equal a given tax-free yield; and
. the amount that those subject to a given combined tax rate
would have to put into a tax-free investment in order to
generate the same after-tax income as a taxable investment.
These tables are for illustrative purposes only and are not
intended to predict the actual return you might earn on a
Fund investment. The Fund occasionally may advertise its
performance in similar tables using other current tax rates
than those shown here. The rates used in these tables have
been rounded to the nearest one-half of one percent. They are
based upon published 1996 marginal federal tax rates and do
not take into account changes in tax rates that are proposed
from time to time. A taxpayer's marginal tax rate is affected
by both his taxable income and his adjusted gross income. The
tables assume taxpayers are not subject to any alternative
minimum taxes and deduct any state income taxes paid on their
federal income tax returns. They also reflect the effect of
the current federal tax limitations on itemized deductions
and personal exemptions, which were designed to phase out
certain benefits of these deductions for higher income
taxpayers. These limitations are subject to certain maximums,
which depend on the number of exemptions claimed and the
total amount of the taxpayer's itemized deductions. For
example, the limitation on itemized deductions will not cause
a taxpayer to lose more than 80% of his allowable itemized
deductions, with certain exceptions. The tax rates shown here
may be higher or lower than your actual tax rate.
49
<PAGE>
NUVEEN MUNICIPAL BOND FUND
Marginal tax rates for joint taxpayers with four personal
exemptions
<TABLE>
<CAPTION>
Tax-free yield
------------------------------------------------------------------------
3.50% 4.00% 4.50% 5.00% 5.50% 6.00% 6.50%
------------------------------------------------------------------------
Federal
Federal Adjusted
Taxable Gross
Income Income Federal
(1,000's) (1,000's) Tax Rate Taxable equivalent yield
- ----------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
$ 0 - $ 0 -
40.1 118.0 15.0% 4.12 4.71 5.29 5.88 6.47 7.06 7.65
40.1 -
96.9 0 - 118.0 28.0 4.86 5.56 6.25 6.94 7.64 8.33 9.03
118.0 -
177.0 29.0 4.93 5.63 6.34 7.04 7.75 8.45 9.15
96.9 -
147.7 0 - 118.0 31.0 5.07 5.80 6.52 7.25 7.97 8.70 9.42
118.0 -
177.0 32.0 5.15 5.88 6.62 7.35 8.09 8.82 9.56
177.0 -
299.5 34.5 5.34 6.11 6.87 7.63 8.40 9.16 9.92
147.7 - 118.0 -
263.8 177.0 37.0 5.56 6.35 7.14 7.94 8.73 9.52 10.32
177.0 -
299.5 40.0 5.83 6.67 7.50 8.33 9.17 10.00 10.83
Over 299.5 37.0 5.56 6.35 7.14 7.94 8.73 9.52 10.32
177.0 -
Over 263.8 299.5 44.0 6.25 7.14 8.04 8.93 9.82 10.71 11.61
Over 299.5 41.0 5.93 6.78 7.63 8.47 9.32 10.17 11.02
</TABLE>
Marginal tax rates for single taxpayers with one personal
exemption
<TABLE>
<CAPTION>
Tax-free yield
------------------------------------------------------------------------
3.50% 4.00% 4.50% 5.00% 5.50% 6.00% 6.50%
------------------------------------------------------------------------
Federal
Federal Adjusted
Taxable Gross
Income Income Federal
(1,000's) (1,000's) Tax Rate Taxable equivalent yield
- ----------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
$ 0 - $ 0 -
24.0 118.0 15.0% 4.12 4.71 5.29 5.88 6.47 7.06 7.65
24.0 -
58.2 0 - 118.0 28.0 4.86 5.56 6.25 6.94 7.64 8.33 9.03
58.2 -
121.3 0 - 118.0 31.0 5.07 5.80 6.52 7.25 7.97 8.70 9.42
118.0 -
240.5 32.5 5.19 5.93 6.67 7.41 8.15 8.89 9.63
121.3 - 118.0 -
263.8 240.5 38.0 5.65 6.45 7.26 8.06 8.87 9.68 10.48
Over 240.5 37.0 5.56 6.35 7.14 7.94 8.73 9.52 10.32
Over 263.8 Over 240.5 41.0 5.93 6.78 7.63 8.47 9.32 10.17 11.02
</TABLE>
50
<PAGE>
NUVEEN MUNICIPAL BOND FUND PROSPECTUS
JULY 1, 1996
For an equal after-tax return, your tax-free investment may
be less*
<TABLE>
<CAPTION>
Your tax-free investment may be less*
------------------------------------------------------------------------------------
For an after-tax return
equal to that provided
by a 3.5% 4.0% 4.5% 5.0% 5.5% 6.0% 6.5%
- --------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
$50,000 in a 4% taxable
investment $39,429 $34,500 $30,667 $27,600 $25,091 $23,000 $21,231
$50,000 in a 5% taxable
investment 49,286 43,125 38,333 34,500 31,364 28,750 26,538
$50,000 in a 6% taxable
investment 59,143 51,750 46,000 41,400 37,636 34,500 31,846
$50,000 in a 7% taxable
investment 69,000 60,375 53,667 48,300 43,909 40,250 37,154
$50,000 in a 8% taxable
investment 78,857 69,000 61,333 55,200 50,182 46,000 42,462
</TABLE>
*The dollar amounts in the table reflect a 31.0% federal tax
rate.
For example, $50,000 in a 6% taxable investment earns the
same after-tax return as $41,400 in a 5% tax-free Nuveen
investment.
51
<PAGE>
Nuveen
Tax-Free
Mutual Funds
Application
Form
<TABLE>
<CAPTION>
<S> <C>
Nuveen Tax-Free Mutual Funds Application Form
Note: The application form may not be used for all types of accounts and certain optional
fund services. Please obtain special application materials by checking the boxes in
application item 7 or by calling Nuveen toll-free at 800.621.7227.
1 ACCOUNT REGISTRATION AND INFORMATION
Please check the box that [_] Individual
describes the type of
account you are opening, Last name, first, initial Social security number
and complete all the
information which applies -------------------------------------------------------------------------------------------------
to your account type.
[_] Joint tenant (if any)
Registration for two or more
persons will be as joint tenants Last name, first, initial
with right of survivorship
unless noted otherwise. -------------------------------------------------------------------------------------------------
[_] Gift to a minor
Name of trustee State name under the Uniform Gift to Minors Act
-------------------------------------------------------------------------------------------------
Minor's name (only one minor may be named) Minor's social security number
--------------------------------------------------------------------------------------------------
[_] Trust [_] Custodian [_] Service organization
Trustee's or custodian's name Trust's agreement date (mandatory)
-------------------------------------------------------------------------------------------------
Trust's name Trust's taxpayer I.D. number
-------------------------------------------------------------------------------------------------
2 MAILING ADDRESS
Street address City, state, zip code
--------------------------------------------------------------------------------------------------
Daytime telephone number (include area code) Evening telephone number (include area code)
--------------------------------------------------------------------------------------------------
3 FUND SELECTION
Please indicate in which National Tax-Free Value Funds
Nuveen Fund(s) you would $________[_]A [_] C Municipal Bond Fund ________[_] A [_] C Insured Municipal Bond Fund
like to open an account
by writing the amount and State Tax-Free Value Funds
the class of shares in Free from federal, state and, in some cases, local income taxes for residents of that state
which you would like to
invest ($1,000 minimum $____[_]A [_] C Arizona $____[_]A [_] C California $____[_]A [_] C California Ins.
initial investment per $____[_]A [_] C Florida $____[_]A [_] C Maryland $____[_]A [_] C Massachusetts
class of any fund). $____[_]A [_] C Massachusetts Ins. $____[_]A [_] C Michigan $____[_]A [_] C New Jersey
$____[_]A [_] C New York $____[_]A [_] C New York Ins. $____[_]A [_] C Ohio
State funds may not be $____[_]A [_] C Pennsylvania $____[_]A [_] C Virginia
registered for sale in
all states. [_] Check this box if you qualify for Class R share purchases as described in the Fund
Prospectus. Class R shares are not available unless you meet certain eligibility requirements.
Please enclose a separate check made payable to each fund/class in which you are investing. If
more than one fund is selected, any optional features chosen will apply to all fund accounts. If
you prefer to wire funds to an open account, or need any assistance in completing this form, call
Nuveen toll-free at 1.800.621.7227.
4 DISTRIBUTION OPTIONS
Please check only one. [_] Dividends are to be paid by check [_] Capital gains are to be paid by check
If no box is checked, all distributions from a Fund will be reinvested into the same Fund.
5 INFORMATION ABOUT YOUR FINANCIAL ADVISER
Please supply the name Financial adviser's name Firm name
and address of your
financial adviser so --------------------------------------------------------------------------------------------------
that they will receive
duplicate copies of Street address City, state, zip code
your fund statements.
--------------------------------------------------------------------------------------------------
6 CERTIFICATION AND SIGNATURE(S)
Sign in ink exactly as the I certify that I have power and authority to establish this account and select the options
name (or names) appear requested. I also release the fund(s), Shareholder Services, Inc. (SSI), John Nuveen & Co.
above in section 1, Account Incorporated, United Missouri Bank of Kansas City, N.A., First Interstate Bank of Denver, N.A. and
registration. their agents and representatives from all liability and agree to indemnify each of them from any
and all losses, damages or costs for acting in good faith in accordance with instructions believed
to be genuine. With respect to the options identified on items #8, #9 and #10 of this application,
I understand that the Fund(s), SSI and Nuveen will not be liable for following telephone
instructions reasonably believed to be genuine. I also understand that the Fund(s) employ
procedures reasonably designed to confirm that telephone instructions are genuine and if these
procedures are not followed, the Fund(s) may be liable for any losses due to unauthorized or
fraudulent telephone instructions. I agree that the authorizations herein shall continue until SSI
receives written notice of a change or modification signed by all account owners. I understand
that each account is subject to the terms of the prospectus of the Nuveen fund selected, as
amended from time to time, and subject to acceptance by that fund in Chicago, Illinois and to the
laws of Illinois. All terms shall be binding upon my heirs, representatives and assigns. I certify
that I have received and read the current prospectus for each fund I have selected. Under
penalties of perjury, I certify (1) that the number shown on this Application Form is my correct
Social Security of Taxpayer Identification Number, and (2) that the IRS has not notified me that I
am subject to backup withholding (Line out clause (2) if you are subject to backup withholding.)
Individual's signature Date Joint tenant's signature (if applicable) Date
--------------------------------------------------------------------------------------------------
Custodian/Trustee signature (if applicable)
-----------------------------------------------------
See reverse side for additional optional fund services.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
<S> <C>
Optional Fund Services
7 OPTIONAL FUND SERVICES
Please send me application materials for these optional fund services which are described in the
prospectus:
[_] Automatic Deposit Plan [_] Automatic Withdrawal Plan
[_] Payroll Direct Deposit Plan [_] UIT Reinvestment
[_] Fund Direct
8 TEL-A-WIRE AUTHORIZATION
Select only one of the By electing this option, I authorize SSI and Nuveen to honor telephone instructions to redeem my
following, Option A or B. fund shares (minimum $1,000), subject to the terms and conditions described in the prospectus.
[_] OPTION A
By completing this section, I elect to have all redemption proceeds wired to my personal checking,
NOW or money market account at a commercial bank. (Attach a check marked "void" and complete only
the Option A section.)
Name of bank Bank's street address
--------------------------------------------------------------------------------------------------
Your bank account name Bank's city, state and zip code
--------------------------------------------------------------------------------------------------
Your bank account number Bank's routing code Bank's telephone number (include area code)
--------------------------------------------------------------------------------------------------
[_] OPTION B
By completing this section, I elect to have all redemption proceeds wired in my name to the
commercial bank account of my financial adviser's firm. (A representative of that firm must
complete and sign the second part of the Option B section.)
Name of financial advisor's firm Firm's telephone number (include area code)
--------------------------------------------------------------------------------------------------
Firm's street address Firm's city, state and zip code
--------------------------------------------------------------------------------------------------
Your account name Your account number
--------------------------------------------------------------------------------------------------
Bank's telephone number
This section is to be Name of bank of financial advisor's firm (include area code) Bank's routing code
completed by your financial
adviser if Option B is --------------------------------------------------------------------------------------------------
selected.
Bank's street address Bank's city, state and zip code
--------------------------------------------------------------------------------------------------
Bank's account number Financial adviser's signature Date
--------------------------------------------------------------------------------------------------
9 TEL-A-CHECK AUTHORIZATION
You must check the box [_] I hereby authorize the fund and its agents to honor telephone instructions to redeem shares
to elect this option. worth $50,000 or less from my account and send those proceeds by check payable to me to my address
of record, subject to the terms and conditions described in the prospectus.
10 TELEPHONE EXCHANGE AUTHORIZATION
You must check the box [_] I hereby authorize the fund and its agents to honor telephone instructions to invest
to elect this option. redemption proceeds from the fund into other Nuveen Mutual Funds, subject to the terms and
conditions described in the prospectus.
11 LETTER OF INTENT
You must complete this [_] By electing this option, I indicate my intention, but am under no obligation, to purchase
section to elect this option. additional Class A shares in the fund(s) and amount(s) indicated over the next 13 months in order
to qualify for reduced sales charges, subject to the terms and conditions described in the
prospectus. I understand that I or my financial adviser must notify Nuveen or SSI when I make a
purchase of fund shares that I wish to be covered under the Letter of Intent option.
I intend to purchase at least:
[_] $50,000 [_] $100,000 [_] $250,000 [_] $500,000 [_] $1,000,000
[_] $2,500,000 [_] $5,000,000 [_] $7,500,000 or more
worth of shares of ______________________________________________ Fund(s) over the next 13 months.
Mail the completed application form to:
Nuveen Tax-Free Mutual Funds
P.O. Box 5330
Denver, Colorado 80217-5330
</TABLE>
<PAGE>
PRINCIPAL UNDERWRITER
John Nuveen & Co. Incorporated
Investment Bankers
333 West Wacker Drive
Chicago, Illinois 60606
312.917.7700
INVESTMENT ADVISER
Nuveen Advisory Corp.
Subsidiary of John Nuveen & Co.
Incorporated
333 West Wacker Drive
Chicago, Illinois 60606
CUSTODIAN
The Chase Manhattan Bank, N.A.
770 Broadway
New York, New York 10003
TRANSFER AND SHAREHOLDER SERVICES
AGENT
Shareholder Services, Inc.
P.O. Box 5330
Denver, Colorado 80217
INDEPENDENT PUBLIC ACCOUNTANTS
FOR THE FUNDS
Arthur Andersen LLP
33 West Monroe Street
Chicago, Illinois 60603
LOGO
Pro-4 6.96
LOGO
John Nuveen & Co. Incorporated
333 West Wacker Drive
Chicago, Illinois 60606-1286
<PAGE>
PART B--STATEMENT OF ADDITIONAL INFORMATION
NUVEEN MUNICIPAL BOND FUND
333 West Wacker Drive
Chicago, Illinois 60606
<PAGE>
Statement of Additional Information
July 1, 1996
Nuveen Municipal Bond Fund
333 West Wacker Drive
Chicago, Illinois 60606
NUVEEN MUNICIPAL BOND FUND
This Statement of Additional Information is not a prospectus. A prospectus may
be obtained from certain securities representatives, banks and other financial
institutions that have entered into sales agreements with John Nuveen & Co. In-
corporated, or from the Fund, c/o John Nuveen & Co. Incorporated, 333 West
Wacker Drive, Chicago, Illinois 60606. This Statement of Additional Information
relates to, and should be read in conjunction with, the Prospectus dated July
1, 1996.
<TABLE>
<S> <C>
Table of Contents Page
- --------------------------------------------------------------------------
Fundamental Policies and Investment Portfolio 2
- --------------------------------------------------------------------------
Management 9
- --------------------------------------------------------------------------
Investment Adviser and Investment Management Agreement 13
- --------------------------------------------------------------------------
Portfolio Transactions 14
- --------------------------------------------------------------------------
Net Asset Value 15
- --------------------------------------------------------------------------
Tax Matters 16
- --------------------------------------------------------------------------
Performance Information 20
- --------------------------------------------------------------------------
Additional Information on the Purchase and Redemption of Fund Shares 25
- --------------------------------------------------------------------------
Distribution and Service Plan 28
- --------------------------------------------------------------------------
Independent Public Accountants and Custodian 29
- --------------------------------------------------------------------------
</TABLE>
The audited financial statements for the fiscal year ended February 29, 1996,
appearing in the Fund's Annual Report are incorporated herein by reference. The
Annual Report accompanies this Statement of Additional Information.
<PAGE>
FUNDAMENTAL POLICIES AND INVESTMENT PORTFOLIO
FUNDAMENTAL POLICIES
The investment objective and certain fundamental investment policies of the
Fund are described in the Prospectus. The Fund, as a fundamental policy, may
not, without the approval of the holders of a majority of the shares of the
Fund:
(1) Invest in securities other than Municipal Obligations and temporary invest-
ments, 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 securities of the United States
Government, its agencies and instrumentalities;
(3) Borrow money, except for temporary or emergency purposes and not for in-
vestment purposes and then only in an amount not exceeding 5% of the value of
the Fund's total assets at the time of borrowing;
(4) Pledge, mortgage or hypothecate its assets, except that, to secure
borrowings permitted by subparagraph (3) above, the Fund may pledge securities
having a market value at the time of pledge not exceeding 10% of the value of
the Fund's total assets;
(5) Issue senior securities as defined in the Investment Company Act of 1940;
(6) Underwrite any issue of securities;
(7) Purchase or sell real estate, but this shall not prevent the Fund from in-
vesting in Municipal Obligations secured by real estate or interests therein;
(8) Purchase or sell commodities or commodities contracts or oil, gas or other
mineral exploration or development programs;
(9) Make loans, other than by entering into repurchase agreements and through
the purchase of Municipal Obligations or temporary investments in accordance
with the Fund's investment objective, policies and limitations;
(10) Make short sales of securities or purchase any securities on margin, ex-
cept for such short-term credits as are necessary for the clearance of transac-
tions;
(11) Write or purchase puts, calls, straddles, spreads or any combination
thereof;
(12) Invest more than 5% of its total assets in securities of unseasoned is-
suers which, together with their predecessors, have been in operation for less
than three years;
(13) Invest more than 10% of its total assets in securities that the Fund is
restricted from selling to the public without registration under the Securities
Act of 1933; or
(14) Purchase or retain the securities of any issuer other than the securities
of the Fund if, to the Fund's knowledge, those trustees of the Fund, or those
officers and directors of Nuveen Advisory Corp. ("Nuveen Advisory"), who indi-
vidually own beneficially more than 1/2 of 1% of the outstanding securities of
such issuer, together own beneficially more than 5% of such outstanding securi-
ties.
2
<PAGE>
For the purpose of applying the limitations set forth in paragraphs (2) and
(12) above, an issuer shall be deemed the sole issuer of a security when its
assets and revenues are separate from other governmental entities and its secu-
rities are backed only by its assets and revenues. Similarly, in the case of a
non-governmental user, such as an industrial corporation or a privately owned
or operated hospital, if the security is backed only by the assets and revenues
of the non-governmental user, then such non-governmental user would be deemed
to be the sole issuer. Where a security is also backed by the enforceable obli-
gation of a superior or unrelated governmental entity or other entity (other
than a bond insurer), it shall also be included in the computation of securi-
ties owned that are issued by such governmental or other entity.
Where a security is guaranteed by a governmental entity or some other facility,
such as a bank guarantee or letter of credit, such a guarantee or letter of
credit would be considered a separate security and would be treated as an issue
of such government, other entity or bank. Where a security is insured by bond
insurance, it shall not be considered a security issued or guaranteed by the
insurer; instead the issuer of such security will be determined in accordance
with the principles set forth above. The foregoing restrictions do not limit
the percentage of the Fund's assets that may be invested in securities insured
by any single insurer. It is a fundamental policy of the Fund, which cannot be
changed without the approval of the holders of a majority of shares, that the
Fund will not hold securities of a single bank, including securities backed by
a letter of credit of such bank, if such holdings would exceed 10% of the total
assets of the Fund.
With respect to temporary investments, in addition to the foregoing limita-
tions, the Fund will not purchase securities (other than securities of the U.S.
Government, its agencies and instrumentalities) if, as a result of such pur-
chase, 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.
The foregoing restrictions and limitations, as well as the Fund's policies as
to ratings of portfolio investments, will apply only at the time of purchase of
securities, and the percentage limitations will not be considered violated un-
less an excess or deficiency occurs or exists immediately after and as a result
of an acquisition of securities, unless otherwise indicated.
The foregoing fundamental investment policies, together with the investment ob-
jective of the Fund, cannot be changed without approval by holders of a "major-
ity of the Fund's outstanding voting shares." As defined in the Investment Com-
pany Act of 1940, this means the vote of (i) 67% or more of the Fund's shares
present at a meeting, if the holders of more than 50% of the Fund's shares are
present or represented by proxy, or (ii) more than 50% of the Fund's shares,
whichever is less.
PORTFOLIO SECURITIES
As described in the Prospectus, the Fund invests primarily in a diversified
portfolio of Municipal Obligations issued within the 50 states and certain U.S.
possessions and territories. In general, Municipal Obligations include debt ob-
ligations issued by states, cities and local authorities to obtain funds for
various public purposes, including construction of a wide range of public fa-
cilities such as airports,
3
<PAGE>
bridges, highways, hospitals, housing, mass transportation, schools, streets
and water and sewer works. Industrial development bonds and pollution control
bonds that are issued by or on behalf of public authorities to finance various
privately-rated facilities are included within the term Municipal Obligations
if the interest paid thereon is exempt from federal income tax.
The investment assets of the Fund will consist of (1) Municipal Obligations
which are rated at the time of purchase within the four highest grades (Baa or
BBB or better) by Moody's Investors Service, Inc. ("Moody's") or Standard and
Poor's Corporation ("S&P"), (2) unrated Municipal Obligations which, in the
opinion of Nuveen Advisory, have credit characteristics equivalent to bonds
rated within the four highest grades by Moody's or S&P, except that the Fund
may not invest more than 10% of its net assets in unrated bonds and (3) tempo-
rary investments as described below, the income from which may be subject to
federal income tax.
As described in the Prospectus, the Fund may invest in Municipal Obligations
that constitute participations in a lease obligation or installment purchase
contract obligation (hereafter collectively called "lease obligations") of a
municipal authority or entity. Although lease obligations do not constitute
general obligations of the municipality for which the municipality's taxing
power is pledged, a lease obligation is ordinarily backed by the
municipality's covenant to budget for, appropriate and make the payments due
under the lease obligation. However, certain lease obligations contain "non-
appropriation" clauses which provide that the municipality has no obligation
to make lease or installment purchase payments in future years unless money is
appropriated for such purpose on a yearly basis. Although nonappropriation
lease obligations are secured by the leased property, disposition of the prop-
erty in the event of foreclosure might prove difficult. The Fund will seek to
minimize the special risks associated with such securities by not investing
more than 10% of its assets in lease obligations that contain non-appropria-
tion clauses, and by only investing in those nonappropriation leases where (1)
the nature of the leased equipment or property is such that its ownership or
use is essential to a governmental function of the municipality, (2) the lease
payments will commence amortization of principal at an early date resulting in
an average life of seven years or less for the lease obligation, (3) appropri-
ate covenants will be obtained from the municipal obligor prohibiting the sub-
stitution or purchase of similar equipment if lease payments are not appropri-
ated, (4) the lease obligor has maintained good market acceptability in the
past, (5) the investment is of a size that will be attractive to institutional
investors, and (6) the underlying leased equipment has elements of portability
and/or use that enhance its marketability in the event foreclosure on the un-
derlying equipment were ever required. Lease obligations provide a premium in-
terest rate which along with regular amortization of the principal may make
them attractive for a portion of the assets of the Fund.
Obligations of issuers of Municipal Obligations are subject to the provisions
of bankruptcy, insolvency and other laws affecting the rights and remedies of
creditors, such as the Federal Bankruptcy Reform Act of 1978. In addition, the
obligations of such issuers may become subject to the laws enacted in the fu-
ture by Congress, state legislatures or referenda extending the time for pay-
ment of principal and/or interest, or imposing other constraints upon enforce-
ment of such obligations or upon municipalities to levy taxes. There is also
the possibility that, as a result of legislation or other conditions, the
power or ability of any issuer to pay, when due, the principal of and interest
on its Municipal Obligations may be materially affected.
4
<PAGE>
PORTFOLIO TRADING AND TURNOVER
The Fund will make changes in its investment portfolio from time to time in
order to take advantage of opportunities in the municipal market and to limit
exposure to market risk. The Fund may also engage to a limited extent in
short-term trading consistent with its investment objective. Securities may be
sold in anticipation of market decline or purchased in anticipation of market
rise and later sold, but the Fund will not engage in trading solely to recog-
nize a gain. In addition, a security may be sold and another of comparable
quality purchased at approximately the same time to take advantage of what
Nuveen Advisory believes to be a temporary disparity in the normal yield rela-
tionship between the two securities. The Fund may make changes in its invest-
ment portfolio in order to limit its exposure to changing market conditions.
Changes in the Fund's investments are known as "portfolio turnover." While it
is impossible to predict future portfolio turnover rates, the Fund's annual
portfolio turnover rate is generally not expected to exceed 35%. However, the
Fund reserves the right to make changes in its investments whenever it deems
such action advisable, and therefore, the Fund's annual portfolio turnover
rate may exceed 35% in particular years depending upon market conditions. The
Fund's portfolio turnover rate for each of the fiscal years ended February 29,
1996, and February 28, 1995 was 17%.
WHEN-ISSUED SECURITIES
As described in the Prospectus, the Fund may purchase and sell Municipal Obli-
gations on a when-issued or delayed delivery basis. When-issued and delayed
delivery transactions arise when securities are purchased or sold with payment
and delivery beyond the regular settlement date. (When-issued transactions
normally settle within 15-45 days.) On such transactions the payment obliga-
tion and the interest rate are fixed at the time the buyer enters into the
commitment. The commitment to purchase securities on a when-issued or delayed
delivery basis may involve an element of risk because the value of the securi-
ties is subject to market fluctuation, no interest accrues to the purchaser
prior to settlement of the transaction, and at the time of delivery the market
value may be less than cost. At the time the Fund makes the commitment to pur-
chase a Municipal Obligation on a when issued or delayed delivery basis, it
will record the transaction and reflect the amount due and the value of the
security in determining its net asset value. Likewise, at the time the Fund
makes the commitment to sell a Municipal Obligation on a delayed delivery ba-
sis, it will record the transaction and include the proceeds to be received in
determining its net asset value; accordingly, any fluctuations in the value of
the Municipal Obligation sold pursuant to a delayed delivery commitment are
ignored in calculating net asset value so long as the commitment remains in
effect. The Fund will maintain designated readily marketable assets at least
equal in value to commitments to purchase when-issued or delayed delivery se-
curities, such assets to be segregated by the Custodian specifically for the
settlement of such commitments. The Fund will only make commitments to pur-
chase Municipal Obligations on a when-issued or delayed delivery basis with
the intention of actually acquiring the securities, but the Fund reserves the
right to sell these securities before the settlement date if it is deemed ad-
visable. If a when-issued security is sold before delivery any gain or loss
would not be tax-exempt. A Fund commonly engages in when-issued transactions
in order to purchase or sell newly-issued Municipal Obligations, and may en-
gage in delayed delivery transactions in order to manage its operations more
effectively.
5
<PAGE>
TEMPORARY INVESTMENTS
The Prospectus discusses briefly the ability of the Fund to invest a portion of
its assets in federally tax-exempt or taxable "temporary investments." Tempo-
rary investments will not exceed 20% of the Fund's assets except when made for
defensive purposes. The Fund will invest only in taxable temporary investments
that are either U.S. Government securities or are rated within the highest
grade by Moody's or S&P, and mature within one year from the date of purchase
or carry a variable or floating rate of interest.
The Fund may invest in the following federally tax-exempt temporary invest-
ments:
Bond Anticipation Notes (BANs) are usually general obligations of state and lo-
cal governmental issuers which are sold to obtain interim financing for pro-
jects that will eventually be funded through the sale of long-term debt obliga-
tions or bonds. The ability of an issuer to meet its obligations on its BANs is
primarily dependent on the issuer's access to the long-term municipal bond mar-
ket and the likelihood that the proceeds of such bond sales will be used to pay
the principal and interest on the BANs.
Tax Anticipation Notes (TANs) are issued by state and local governments to fi-
nance the current operations of such governments. Repayment is generally to be
derived from specific future tax revenues. Tax anticipation notes are usually
general obligations of the issuer. A weakness in an issuer's capacity to raise
taxes due to, among other things, a decline in its tax base or a rise in delin-
quencies, could adversely affect the issuer's ability to meet its obligations
on outstanding TANs.
Revenue Anticipation Notes (RANs) are issued by governments or governmental
bodies with the expectation that future revenues from a designated source will
be used to repay the notes. In general, they also constitute general obliga-
tions of the issuer. A decline in the receipt of projected revenues, such as
anticipated revenues from another level of government, could adversely affect
an issuer's ability to meet its obligations on outstanding RANs. In addition,
the possibility that the revenues would, when received, be used to meet other
obligations could affect the ability of the issuer to pay the principal and in-
terest on RANs.
Construction Loan Notes are issued to provide construction financing for spe-
cific projects. Frequently, these notes are redeemed with funds obtained from
the Federal Housing Administration.
Bank Notes are notes issued by local government bodies and agencies as those
described above to commercial banks as evidence of borrowings. The purposes for
which the notes are issued are varied but they are frequently issued to meet
short-term working capital or capital-project needs. These notes may have risks
similar to the risks associated with TANs and RANs.
Tax-Exempt Commercial Paper (Municipal Paper) represents very short-term
unsecured, negotiable promissory notes, issued by states, municipalities and
their agencies. Payment of principal and interest on issues of municipal paper
may be made from various sources, to the extent the funds are available there-
from. Maturities of municipal paper generally will be shorter than the maturi-
ties of TANs, BANs or RANs. There is a limited secondary market for issues of
municipal paper.
While these various types of notes as a group represent the major portion of
the tax-exempt note market, other types of notes are occasionally available in
the marketplace and the Fund may invest in
6
<PAGE>
such other types of notes to the extent permitted under its investment objec-
tive, policies and limitations. Such notes may be issued for different purposes
and may be secured differently from those mentioned above.
The Fund may also invest in the following taxable temporary investments:
U.S. Government Direct Obligations are issued by the United States Treasury and
include bills, notes and bonds.
- -- Treasury bills are issued with maturities of up to one year. They are issued
in bearer form, are sold on a discount basis and are payable at par value at
maturity.
- -- Treasury notes are longer-term interest-bearing obligations with original
maturities of one to seven years.
- -- Treasury bonds are longer-term interest-bearing obligations with original
maturities from five to thirty years.
U.S. Government Agencies Securities--Certain federal agencies have been estab-
lished as instrumentalities of the United States Government to supervise and
finance certain types of activities. These agencies include, but are not lim-
ited to, the Bank for Cooperatives, Federal Land Banks, Federal Intermediate
Credit Banks, Federal Home Loan Banks, Federal National Mortgage Association,
Government National Mortgage Association, Export-Import Bank of the United
States, and Tennessee Valley Authority. Issues of these agencies, while not di-
rect obligations of the United States Government, are either backed by the full
faith and credit of the United States or are guaranteed by the Treasury or sup-
ported by the issuing agencies' right to borrow from the Treasury. There can be
no assurance that the United States Government itself will pay interest and
principal on securities as to which it is not legally so obligated.
Certificates of Deposit (CDs)--A certificate of deposit is a negotiable inter-
est bearing instrument with a specific maturity. CDs are issued by banks in ex-
change for the deposit of funds and normally can be traded in the secondary
market, prior to maturity. The Fund will only invest in U.S. dollar denominated
CDs issued by U.S. banks with assets of $1 billion or more.
Commercial Paper--Commercial paper is the term used to designate unsecured
short-term promissory notes issued by corporations. Maturities on these issues
vary from a few days to nine months. Commercial paper may be purchased from
U.S. corporations.
Other Corporate Obligations--The Fund may purchase notes, bonds and debentures
issued by corporations if at the time of purchase there is less than one year
remaining until maturity or if they carry a variable or floating rate of inter-
est.
Repurchase Agreements--A repurchase agreement is a contractual agreement
whereby the seller of securities (U.S. Government or Municipal Obligations)
agrees to repurchase the same security at a specified price on a future date
agreed upon by the parties. The agreed upon repurchase price determines the
yield during the Fund's holding period. Repurchase agreements are considered to
be loans collateralized by the underlying security that is the subject of the
repurchase contract. The Fund will only enter into
7
<PAGE>
repurchase agreements with dealers, domestic banks or recognized financial in-
stitutions that in the opinion of Nuveen Advisory present minimal credit risk.
The risk to the Fund is limited to the ability of the issuer to pay the agreed-
upon repurchase price on the delivery date; however, although the value of the
underlying collateral at the time the transaction is entered into always equals
or exceeds the agreed-upon repurchase price, if the value of the collateral de-
clines there is a risk of loss of both principal and interest. In the event of
default, the collateral may be sold but the Fund might incur a loss if the
value of the collateral declines, and might incur disposition costs or experi-
ence delays in connection with liquidating the collateral. In addition, if
bankruptcy proceedings are commenced with respect to the seller of the securi-
ty, realization upon the collateral by the Fund may be delayed or limited.
Nuveen Advisory will monitor the value of collateral at the time the transac-
tion is entered into and at all times subsequent during the term of the repur-
chase agreement in an effort to determine that the value always equals or ex-
ceeds the agreed upon price. In the event the value of the collateral declined
below the repurchase price, Nuveen Advisory will demand additional collateral
from the issuer to increase the value of the collateral to at least that of the
repurchase price. The Fund will not invest more than 10% of its assets in re-
purchase agreements maturing in more than seven days.
RATINGS OF INVESTMENTS
The four highest ratings of Moody's for Municipal Obligations are Aaa, Aa, A
and Baa. Municipal Obligations rated Aaa are judged to be of the "best quali-
ty." The rating of Aa is assigned to Municipal Obligations which are of "high
quality by all standards," but as to which margins of protection or other ele-
ments make long-term risks appear somewhat larger than in Aaa rated Municipal
Obligations. The Aaa and Aa rated Municipal Obligations comprise what are gen-
erally known as "high grade bonds." Municipal Obligations that are rated A by
Moody's possess many favorable investment attributes and are considered upper
medium grade obligations. Factors giving security to principal and interest of
A rated Municipal Obligations are considered adequate, but elements may be
present which suggest a susceptibility to impairment sometime in the future.
Municipal Obligations rated Baa by Moody's are considered medium grade obliga-
tions (i.e., they are neither highly protected nor poorly secured). Such bonds
lack outstanding investment characteristics and in fact have speculative char-
acteristics as well. Moody's bond rating symbols may contain numerical modifi-
ers of a generic rating classification. The modifier 1 indicates that the bond
ranks at the high end of its category; the modifier 2 indicates a mid-range
ranking; and the modifier 3 indicates that the issue ranks in the lower end of
its general rating category.
The four highest ratings of S&P for Municipal Obligations are AAA, AA, A and
BBB. Municipal Obligations rated AAA have an extremely strong capacity to pay
principal and interest. The rating of AA indicates that capacity to pay princi-
pal and interest is very strong and such bonds differ from AAA issues only in
small degree. The category of A describes bonds which have a strong capacity to
pay principal and interest, although such bonds are somewhat more susceptible
to the adverse effects of changes in circumstances and economic conditions. The
BBB rating is the lowest "investment grade" security rating by S&P. Municipal
Obligations rated BBB are regarded as having an adequate capacity to pay prin-
cipal and interest. Whereas such bonds normally exhibit adequate protection pa-
rameters, adverse economic conditions are more likely to lead to a weakened ca-
pacity to pay principal and interest for bonds in this category than for bonds
in the A category.
8
<PAGE>
The "Other Corporate Obligations" category of temporary investments are corpo-
rate (as opposed to municipal) debt obligations rated AAA by S&P or Aaa by
Moody's. Corporate debt obligations rated AAA by S&P have an extremely strong
capacity to pay principal and interest. The Moody's corporate debt rating of
Aaa is comparable to that set forth above for Municipal Obligations.
Subsequent to its purchase by the Fund, an issue may cease to be rated or its
rating may be reduced below the minimum required for purchase. Neither event
requires the elimination of such obligation from the Fund's portfolio, but
Nuveen Advisory will consider such an event in its determination of whether the
Fund should continue to hold such obligation.
MANAGEMENT
The management of the Fund, including general supervision of the duties per-
formed for the Fund under the Investment Management Agreement, is the responsi-
bility of its Board of Trustees. The Trust currently has six trustees, two of
whom are "interested persons" (as the term "interested person" is defined in
the Investment Company Act of 1940) and four of whom are "disinterested per-
sons." The names and business addresses of the trustees and officers of the
Fund and their principal occupations and other affiliations during the past
five years are set forth below, with those trustees who are "interested per-
sons" of the Fund indicated by an asterisk.
<TABLE>
- ------------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
POSITIONS AND
OFFICES WITH PRINCIPAL OCCUPATIONS
NAME AND ADDRESS AGE FUND DURING PAST FIVE YEARS
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Timothy R. 47 Chairman of the Chairman (since July 1, 1996) and Director,
Schwertfeger* Board and formerly Executive Vice President of The
333 West Wacker Trustee John Nuveen Company (since March 1992) and
Drive of John Nuveen & Co. Incorporated; Chairman
Chicago, IL 60606 (since July 1, 1996) and Director (since
October 1, 1992) of Nuveen Advisory Corp.
and Nuveen Institutional Advisory Corp.
- ------------------------------------------------------------------------------------------------------------------------------------
Anthony T. Dean* 51 President and President (since July 1, 1996) and Direc-
333 West Wacker Trustee tor, formerly Executive Vice President of
Drive The John Nuveen Company (since March 1992)
Chicago, IL 60606 and of John Nuveen & Co. Incorporated;
President (since July 1, 1996) and Director
(since October 1, 1992) of Nuveen Advisory
Corp. and Nuveen Institutional Advisory
Corp.
- ------------------------------------------------------------------------------------------------------------------------------------
Lawrence H. Brown 61 Trustee Retired (August 1989) as Senior Vice Presi-
201 Michigan Avenue dent of The Northern Trust Company.
Highwood, IL 60040
- ------------------------------------------------------------------------------------------------------------------------------------
Anne E. Impellizzeri 63 Trustee President and Chief Executive Officer of
3 West 29th Street Blanton-Peale Institute of Religion and
New York, NY 10001 Health (since December 1990); prior there-
to, Vice President of New York City Part-
nership (from 1987 to 1990).
</TABLE>
- --------------------------------------------------------------------------------
9
<PAGE>
<TABLE>
- ------------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
POSITIONS AND
OFFICES WITH PRINCIPAL OCCUPATIONS
NAME AND ADDRESS AGE FUND DURING PAST FIVE YEARS
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Margaret K. Rosen- 69 Trustee Helen Ross Professor of Social Welfare Pol-
heim icy, School of Social Service Administra-
969 East 60th Street tion, University of Chicago.
Chicago, IL 60637
- ------------------------------------------------------------------------------------------------------------------------------------
Peter R. Sawers 63 Trustee Adjunct Professor of Business and Econom-
22 The Landmark ics, University of Dubuque, Iowa; Adjunct
Northfield, IL 60093
Professor, Lake Forest Graduate School of
Management, Lake Forest, Illinois (since
January 1992); prior thereto, Executive Di-
rector, Towers Perrin Australia (management
consultant); Chartered Financial Analyst;
Certified Management Consultant.
- ------------------------------------------------------------------------------------------------------------------------------------
William M. Fitzger- 32 Vice President Vice President of Nuveen Advisory Corp.
ald (since December 1995); Assistant Vice Pres-
333 West Wacker ident of Nuveen Advisory Corp. (from Sep-
Drive tember 1992 to December 1995); prior there-
Chicago, IL 60606 to, Assistant Portfolio Manager of Nuveen
Advisory Corp. (from June 1988 to September
1992).
- ------------------------------------------------------------------------------------------------------------------------------------
Kathleen M. Flanagan 49 Vice President Vice President of John Nuveen & Co. Incor-
333 West Wacker porated.
Drive
Chicago, IL 60606
- ------------------------------------------------------------------------------------------------------------------------------------
J. Thomas Futrell 40 Vice President Vice President of Nuveen Advisory Corp.
333 West Wacker
Drive
Chicago, IL 60606
- ------------------------------------------------------------------------------------------------------------------------------------
Steven J. Krupa 38 Vice President Vice President of Nuveen Advisory Corp.
333 West Wacker
Drive
Chicago, IL 60606
- ------------------------------------------------------------------------------------------------------------------------------------
Anna R. Kucinskis 50 Vice President Vice President of John Nuveen & Co. Incor-
333 West Wacker porated.
Drive
Chicago, IL 60606
- ------------------------------------------------------------------------------------------------------------------------------------
Larry W. Martin 44 Vice President Vice President (since September 1992), As-
333 West Wacker and Assistant sistant Secretary and Assistant General
Drive Secretary Counsel of John Nuveen & Co. Incorporated;
Chicago, IL 60606 Vice President (since May 1993) and Assis-
tant Secretary of Nuveen Advisory Corp;
Vice President (since May 1993) and Assis-
tant Secretary (since January 1992) of
Nuveen Institutional Advisory Corp.; Assis-
tant Secretary of The John Nuveen Company
(since February 1993).
- ------------------------------------------------------------------------------------------------------------------------------------
O. Walter Renfftlen 56 Vice President Vice President and Controller of The John
333 West Wacker and Controller Nuveen Company (since March 1992), John
Drive Nuveen & Co. Incorporated, Nuveen Advisory
Chicago, IL 60606 Corp. and Nuveen Institutional Advisory
Corp.
</TABLE>
- --------------------------------------------------------------------------------
10
<PAGE>
<TABLE>
- ------------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
POSITIONS AND
OFFICES WITH PRINCIPAL OCCUPATIONS
NAME AND ADDRESS AGE FUND DURING PAST FIVE YEARS
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Thomas C. Spalding, 44 Vice President Vice President of Nuveen Advisory Corp. and
Jr. Nuveen Institutional Advisory Corp.; Chart-
333 West Wacker ered Financial Analyst.
Drive
Chicago, IL 60606
- ------------------------------------------------------------------------------------------------------------------------------------
H. William Stabenow 61 Vice President Vice President and Treasurer of The John
333 West Wacker and Treasurer Nuveen Company (since March 1992), John
Drive Nuveen & Co. Incorporated, Nuveen Advisory
Chicago, IL 60606 Corp. and Nuveen Institutional Advisory
Corp, (since January 1992).
- ------------------------------------------------------------------------------------------------------------------------------------
James J. Wesolowski 45 Vice President Vice President, General Counsel and Secre-
333 West Wacker and Secretary tary of The John Nuveen Company (since
Drive March 1992), John Nuveen & Co. Incorporat-
Chicago, IL 60606 ed, Nuveen Advisory Corp. and Nuveen Insti-
tutional Advisory Corp.
- ------------------------------------------------------------------------------------------------------------------------------------
Gifford R. Zimmerman 39 Vice President Vice President (since September 1992), As-
333 West Wacker and Assistant sistant Secretary and Assistant General
Drive Secretary Counsel of John Nuveen & Co. Incorporated;
Chicago, IL 60606 Vice President (since May 1993) and Assis-
tant Secretary of Nuveen Advisory Corp.;
Vice President (since May 1993) and Assis-
tant Secretary (since January 1992) of
Nuveen Institutional Advisory Corp.
</TABLE>
- --------------------------------------------------------------------------------
Timothy R. Schwertfeger and Margaret K. Rosenheim serve as members of the Exec-
utive Committee of the Board of Trustees. The Executive Committee, which meets
between regular meetings of the Board of Trustees, is authorized to exercise
all of the powers of the Board of Trustees.
The trustees of the Fund are also directors or trustees, as the case may be, of
20 other Nuveen open-end fund portfolios and 53 closed-end funds.
The following table sets forth compensation paid by the Fund and its predeces-
sor during the fiscal year ended February 29, 1996 to each of the trustees of
the Fund. The Fund has no retirement or pension plans. The officers and trust-
ees affiliated with Nuveen serve without any compensation from the Fund.
<TABLE>
<CAPTION>
TOTAL COMPENSATION
AGGREGATE FROM FUND
COMPENSATION AND FUND COMPLEX
NAME OF TRUSTEE FROM THE FUND PAID TO TRUSTEES
- --------------------------------------------------------------------------------
<S> <C> <C>
Richard J. Franke*............................. $ 0 $ 0
Timothy R. Schwertfeger........................ 0 0
Lawrence H. Brown.............................. 4,936 55,500
Anne E. Impellizzeri........................... 4,936 63,000
John E. O'Toole................................ 3,392 47,000
Margaret K. Rosenheim.......................... 6,076(1) 62,322(2)
Peter R. Sawers................................ 4,936 55,500
</TABLE>
- --------
*Mr. Franke retired as of June 30, 1996.
(1) Includes $290 in interest earned on deferred compensation from prior years.
(2) Includes $1,572 in interest earned on deferred compensation from prior
years.
11
<PAGE>
Each trustee who is not affiliated with Nuveen or Nuveen Advisory receives a
$45,000 annual retainer for serving as a director or trustee of all funds for
which Nuveen Advisory serves as investment adviser and a $1,000 fee per day
plus expenses for attendance at all meetings held on a day on which a regularly
scheduled Board meeting is held, a $1,000 fee per day plus expenses for atten-
dance in person or a $500 fee per day plus expenses for attendance by telephone
at a meeting held on a day on which no regular Board meeting is held, and a
$250 fee per day plus expenses for attendance in person or by telephone at a
meeting of the Executive Committee held solely to declare dividends. The annual
retainer, fees and expenses are allocated among the funds for which Nuveen Ad-
visory serves as investment adviser on the basis of relative net asset sizes.
The Fund requires no employees other than its officers, all of whom are compen-
sated by Nuveen.
On June 5, 1996 , the officers and trustees of the Fund as a group owned less
than 1% of the outstanding shares of the Fund. The following table sets forth
the percentage ownership of each person, who, as of June 5, 1996, owns of rec-
ord, or is known by Registrant to own of record or beneficially 5% or more of
any class of the Fund's Shares.
<TABLE>
<CAPTION>
PERCENTAGE
OF
NAME OF FUND AND CLASS NAME AND ADDRESS OF OWNER OWNERSHIP
- -----------------------------------------------------------------------------------------
<S> <C> <C>
Nuveen Municipal Bond Oppenheimer & Co., Inc. 9.91%
Fund Class C Shares.... FOD 020-38275-14
P. O. Box 3484
Church Street Station
New York, NY 10008-8484
Kentucky Fried Chicken of Connellsville 7.98
107 S. Connellsville St.
Connellsville, PA 15425
Bill W. Hickey & Erin B. Hickey JT TEN WROS 8.20
20 Bowen St.
Longhoht, CO 80501-5862
Dain Bosworth Inc IBO 6.55
William L Copp
Elise S Copp
TEN COM
2201 3rd Ave. #2704
Seattle 98121
Donaldson Lufkin Jenrette Securities Corporation Inc. 5.15
P. O. Box 2052
Jersey City, NJ 07303-9998
</TABLE>
12
<PAGE>
INVESTMENT ADVISER AND INVESTMENT MANAGEMENT AGREEMENT
Nuveen Advisory Corp. acts as investment adviser for and manages the investment
and reinvestment of the assets of the Fund. Nuveen Advisory also administers
the Fund's business affairs, provides office facilities and equipment and cer-
tain clerical, bookkeeping and administrative services, and permits any of its
officers or employees to serve without compensation as directors or officers of
the Fund if elected to such positions. See "Management of the Fund" in the Pro-
spectus.
Pursuant to an investment management agreement between Nuveen Advisory and the
Fund, the Fund has agreed to pay an annual management fee at the rates set
forth below:
<TABLE>
<CAPTION>
AVERAGE DAILY NET ASSET
VALUE MANAGEMENT FEE
- ------------------------------------------
<S> <C>
For the first $125 million .5000 of 1%
For the next $125 million .4875 of 1%
For the next $250 million .4750 of 1%
For the next $500 million .4625 of 1%
For the next $1 billion .4500 of 1%
For assets over $2 billion .4250 of 1%
</TABLE>
Nuveen Advisory will waive all or a portion of its management fee or reimburse
certain expenses of the Fund in order to prevent total operating expenses (in-
cluding Nuveen Advisory's fee, but excluding interest, taxes, fees incurred in
acquiring and disposing of portfolio securities, any asset-based distribution
or service fees and, to the extent permitted, extraordinary expenses) in any
fiscal year from exceeding .75 of 1% of the average daily net asset value of
any class of shares of the Fund. The net management fee for the fiscal year
ended February 29, 1996 amounted to $12,797,372, after giving effect to fee
waivers and expense reimbursements of $4,313. The net management fees for the
fiscal years ended February 28, 1995 and 1994, amounted to $11,932,164 and
$11,645,399, respectively. As discussed in the Prospectus, subject to the ex-
pense limitations of the Investment Management Agreement, the Fund is responsi-
ble for payment of certain of the costs and expenses of its operations.
Nuveen Advisory is a wholly owned subsidiary of John Nuveen & Co. Incorporated
("Nuveen"), the Fund's principal underwriter. Founded in 1898, Nuveen is the
oldest and largest investment banking firm specializing in the underwriting and
distribution of tax-exempt securities and maintains the largest research de-
partment in the investment banking community devoted exclusively to the analy-
sis of municipal securities. In 1961, Nuveen began sponsoring the Nuveen Tax-
Exempt Unit Trust and since that time has issued more than $36 billion in tax-
exempt unit trusts, including over $12 billion in tax-exempt insured unit
trusts. In addition, Nuveen open-end and closed-end funds held approximately
$31 billion in tax-exempt securities under management as of the date of this
Statement. Over 1,000,000 individuals have invested to date in Nuveen's tax-ex-
empt funds and trusts. Nuveen is a subsidiary of The John Nuveen Company which,
in turn, is approximately 80% owned by The St. Paul Companies, Inc. ("St.
Paul"). St. Paul is located in St. Paul, Minnesota, and is principally engaged
in providing property-liability insurance through subsidiaries.
Nuveen Advisory's portfolio managers call upon the resources of Nuveen's Re-
search Department, the largest in the investment banking industry devoted ex-
clusively to tax-exempt securities. Nuveen's Research Department was selected
in 1994 by Research & Ratings Review, a municipal industry publication,
13
<PAGE>
as one of the leading research teams in the municipal industry, based on an ex-
tensive industry-wide poll of portfolio managers, department heads and bond
buyers. The Nuveen Research Department reviews more than $100 billion in tax-
exempt bonds every year.
The Fund, the other Nuveen Funds, the Adviser, and other related entities have
adopted a code of ethics which essentially prohibits all Nuveen Fund management
personnel, including Nuveen Fund portfolio managers, from engaging in personal
investments which compete or interfere with, or attempt to take advantage of, a
Fund's anticipated or actual portfolio transactions, and is designed to assure
that the interests of Fund shareholders are placed before the interests of
Nuveen personnel in connection with personal investment transactions.
PORTFOLIO TRANSACTIONS
Nuveen Advisory, in effecting purchases and sales of portfolio securities for
the account of the Fund, will place orders in such manner as, in the opinion of
management, will offer the best price and market for the execution of each
transaction. Portfolio securities will normally be purchased directly from an
underwriter or in the over-the-counter market from the principal dealers in
such securities, unless it appears that a better price or execution may be ob-
tained elsewhere. Portfolio securities will not be purchased from Nuveen or its
affiliates except in compliance with the Investment Company Act of 1940.
The Fund since its inception has effected all portfolio transactions on a prin-
cipal (as opposed to an agency) basis and, accordingly, has not paid any bro-
kerage commissions. Purchases from underwriters will include a commission or
concession paid by the issuer to the underwriter, and purchases from dealers
will include the spread between the bid and asked price. Given the best price
and execution obtainable, it will be the practice of the Fund to select dealers
which, in addition, furnish research information (primarily credit analyses of
issuers and general economic reports) and statistical and other services to
Nuveen Advisory. It is not possible to place a dollar value on information and
statistical and other services received from dealers. Since it is only supple-
mentary to Nuveen Advisory's own research efforts, the receipt of research in-
formation is not expected to reduce significantly Nuveen Advisory's expenses.
While Nuveen Advisory will be primarily responsible for the placement of the
business of the Fund, the policies and practices of Nuveen Advisory in this re-
gard must be consistent with the foregoing and will, at all times, be subject
to review by the Board of Trustees.
Nuveen Advisory reserves the right to, and does, manage other investment ac-
counts and investment companies for other clients, which may have investment
objectives similar to the Fund. Subject to applicable laws and regulations,
Nuveen Advisory will attempt to allocate equitably portfolio transactions among
the Fund and the portfolios of its other clients purchasing or selling securi-
ties whenever decisions are made to purchase or sell securities by the Fund and
one or more of such other clients simultaneously. In making such allocations
the main factors to be considered will be the respective investment objectives
of the Fund and such other clients, the relative size of portfolio holdings of
the same or comparable securities, the availability of cash for investment by
the Fund and such other clients, the size of investment commitments generally
held by the Fund and such other clients and opinions of
14
<PAGE>
the persons responsible for recommending investments to the Fund and such other
clients. While this procedure could have a detrimental effect on the price or
amount of the securities available to the Fund from time to time, it is the
opinion of the Board of Trustees that the benefits available from Nuveen
Advisory's organization will outweigh any disadvantage that may arise from ex-
posure to simultaneous transactions.
Under the Investment Company Act of 1940, the Fund may not purchase portfolio
securities from any underwriting syndicate of which Nuveen is a member except
under certain limited conditions set forth in Rule 10f-3. The Rule sets forth
requirements relating to, among other things, the terms of an issue of Munici-
pal Obligations purchased by the Fund, the amount of Municipal Obligations
which may be purchased in any one issue and the assets of the Fund which may be
invested in a particular issue. In addition, purchases of securities made pur-
suant to the terms of the Rule must be approved at least quarterly by the Board
of Trustees, including a majority of the trustees who are not interested per-
sons of the Fund.
NET ASSET VALUE
As stated in the Prospectus, the net asset value of the shares of the Fund will
be determined separately for each class of the Fund's shares by The Chase Man-
hattan Bank, N.A., the Fund's custodian, as of 4:00 p.m. Eastern Time on each
day on which the New York Stock Exchange (the "Exchange") is normally open for
trading. The Exchange is not open for trading on New Year's Day, Washington's
Birthday, Good Friday, Memorial Day, Independence Day, Labor Day, Thanksgiving
Day and Christmas Day. The net asset value per share of a class of shares will
be computed by dividing the value of the Fund's assets attributable to the
class, less the liabilities attributable to the class, by the number of shares
of the class outstanding.
In determining net asset value for the Fund, the Fund's custodian utilizes the
valuations of portfolio securities furnished by a pricing service approved by
the directors. The pricing service values portfolio securities at the mean be-
tween the quoted bid and asked price or the yield equivalent when quotations
are readily available. Securities for which quotations are not readily avail-
able (which constitute a majority of the securities held by the Fund) are val-
ued at fair value as determined by the pricing service using methods which in-
clude consideration of the following: yields or prices of municipal bonds of
comparable quality, type of issue, coupon, maturity and rating; indications as
to value from securities representatives; and general market conditions. The
pricing service may employ electronic data processing techniques and/or a ma-
trix system to determine valuations. The procedures of the pricing service and
its valuations are reviewed by the officers of the Fund under the general su-
pervision of the Board of Trustees.
15
<PAGE>
TAX MATTERS
FEDERAL INCOME TAX MATTERS
The following discussion of federal income tax matters is based upon the advice
of Fried, Frank, Harris, Shriver & Jacobson, Washington, D.C., counsel to the
Fund.
As described in the Prospectus, the Fund intends to qualify under Subchapter M
of the Internal Revenue Code of 1986, as amended (the "Code") for tax treatment
as a regulated investment company. In order to qualify as a regulated invest-
ment company, the Fund must satisfy certain requirements relating to the source
of its income, diversification of its assets, and distributions of its income
to shareholders. First, the Fund must derive at least 90% of its annual gross
income (including tax-exempt interest) from dividends, interest, payments with
respect to securities loans, gains from the sale or other disposition of stock
or securities, foreign currencies or other income (including but not limited to
gains from options and futures) derived with respect to its business of invest-
ing in such stock or securities (the "90% gross income test"). Second, the Fund
must derive less than 30% of its annual gross income from the sale or other
disposition of any of the following which was held for less than three months:
(i) stock or securities and (ii) certain options, futures, or forward contracts
(the "short-short test"). Third, the Fund must diversify its holdings so that,
at the close of each quarter of its taxable year, (i) at least 50% of the value
of its total assets is comprised of cash, cash items, United States Government
securities, securities of other regulated investment companies and other secu-
rities limited in respect of any one issuer to an amount not greater in value
than 5% of the value of a Fund's total assets and to not more than 10% of the
outstanding voting securities of such issuer, and (ii) not more than 25% of the
value of the total assets is invested in the securities of any one issuer
(other than United States Government securities and securities of other regu-
lated investment companies) or two or more issuers controlled by the Fund and
engaged in the same, similar or related trades or businesses.
As a regulated investment company, the Fund will not be subject to federal in-
come tax in any taxable year for which it distributes at least 90% of the sum
of (i) its "investment company taxable income" (which includes dividends, tax-
able interest, taxable original issue discount and market discount income, in-
come from securities lending, net short-term capital gain in excess of long-
term capital loss, and any other taxable income other than "net capital gain"
(as defined below) and is reduced by deductible expenses) and (ii) its "net
tax-exempt interest" (the excess of its gross tax-exempt interest income over
certain disallowed deductions) . The Fund may retain for investment its net
capital gain (which consists of the excess of its net long-term capital gain
over its short-term capital loss). However, if the Fund retains any net capital
gain or any investment company taxable income, it will be subject to tax at
regular corporate rates on the amount retained. If the Fund retains any capital
gain, such Fund may designate the retained amount as undistributed capital
gains in a notice to its shareholders who, if subject to federal income tax on
long-term capital gains, (i) will be required to include in income for federal
income tax purposes, as long-term capital gain, their shares of such undistrib-
uted amount, and (ii) will be entitled to credit their proportionate shares of
the tax paid by the Fund against their federal income tax liabilities if any,
and to claim refunds to the extent the credit exceeds such liabilities. For
federal income tax purposes, the tax basis of shares owned by a shareholder of
the Fund will be increased by an amount equal under current law to 65% of the
amount of undistributed capital gains included in the shareholder's gross in-
come. The Fund intends to distribute at least annually to its shareholders all
or substantially all of its net tax-exempt interest and any investment company
taxable income and net capital gain.
16
<PAGE>
Treasury regulations permit a regulated investment company, in determining its
investment company taxable income and net capital gain, i.e., the excess of net
long-term capital gain over net short-term capital loss for any taxable year,
to elect (unless it has made a taxable year election for excise tax purposes as
discussed below) to treat all or part of any net capital loss, any net long-
term capital loss or any net foreign currency loss incurred after October 31 as
if they had been incurred in the succeeding year.
The Fund also intends to satisfy conditions (including requirements as to the
proportion of its assets invested in Municipal Obligations) that will enable it
to designate distributions from the interest income generated by investments in
Municipal Obligations, which is exempt from regular federal income tax when re-
ceived by the Fund, as exempt-interest dividends. Shareholders receiving ex-
empt-interest dividends will not be subject to regular federal income tax on
the amount of such dividends. Insurance proceeds received by the Fund under any
insurance policies in respect of scheduled interest payments on defaulted Mu-
nicipal Obligations will be excludable from federal gross income under Section
103(a) of the Code. In the case of non-appropriation by a political subdivi-
sion, however, there can be no assurance that payments made by the insurer rep-
resenting interest on "non-appropriation" lease obligations will be excludable
from gross income for federal income tax purposes. See "Fundamental Policies
and Investment Portfolio; Portfolio Securities."
Distributions by the Fund of net interest received from certain taxable tempo-
rary investments (such as certificates of deposit, commercial paper and obliga-
tions of the U.S. Government, its agencies and instrumentalities) and net
short-term capital gains realized by the Fund, if any, will be taxable to
shareholders as ordinary income whether received in cash or additional
shares./1/ If the Fund purchases a Municipal
Obligation at a market discount, any gain realized by the Fund upon sale or re-
demption of the Municipal Obligation will be treated as taxable interest income
to the extent such gain does not exceed the market discount, and any gain real-
ized in excess of the market discount will be treated as capital gains. Any net
long-term capital gains realized by the Fund and distributed to shareholders in
cash or additional shares, will be taxable to shareholders as long-term capital
gains regardless of the length of time investors have owned shares of the Fund.
Distributions by the Fund that do not constitute ordinary income dividends, ex-
empt-interest dividends, or capital gain dividends will be treated as a return
of capital to the extent of (and in reduction of) the shareholder's tax basis
in his or her shares. Any excess will be treated as gain from the sale of his
or her shares, as discussed below.
If the Fund engages in hedging transactions involving financial futures and op-
tions, these transactions will be subject to special tax rules, the effect of
which may be to accelerate income to the Fund, defer the Fund's losses, cause
adjustments in the holding periods of the Fund's securities, convert long-term
capital gains into short-term capital gains and convert short-term capital
losses into long-term capital losses. These rules could therefore affect the
amount, timing and character of distributions to shareholders.
- --------
/1/If the Fund has both tax-exempt and taxable income, it will use the "average
annual" method for determining the designated percentage that is taxable in-
come and designate the use of such method within 60 days after the end of
the Fund's taxable year. Under this method, one designated percentage is ap-
plied uniformly to all distributions made during the Fund's taxable year.
The percentage of income designated as tax-exempt for any particular distri-
bution may be substantially different from the percentage of the Fund's in-
come that was tax-exempt during the period covered by the distribution.
17
<PAGE>
Because the taxable portion of the Fund's investment income consists primarily
of interest, none of its dividends, whether or not treated as exempt-interest
dividends, is expected to qualify under the Internal Revenue Code for the divi-
dends received deductions for corporations.
Prior to purchasing shares in the Fund, the impact of dividends or distribu-
tions which are expected to be or have been declared, but not paid, should be
carefully considered. Any dividend or distribution declared shortly after a
purchase of such shares prior to the record date will have the effect of reduc-
ing the per share net asset value by the per share amount of the dividend or
distribution.
Although dividends generally will be treated as distributed when paid, divi-
dends declared in October, November or December, payable to shareholders of
record on a specified date in one of those months and paid during the following
January, will be treated as having been distributed by the Fund (and received
by the shareholders) on December 31.
The redemption or exchange of the shares of the Fund normally will result in
capital gain or loss to the shareholders. Generally, a shareholder's gain or
loss will be long-term gain or loss if the shares have been held for more than
one year. Present law taxes both long- and short-term capital gains of corpora-
tions at the rates applicable to ordinary income. For non-corporate taxpayers,
however, net capital gains (i.e., the excess of net long-term capital gain over
net short-term capital loss) will be taxed at a maximum marginal rate of 28%,
while short-term capital gains and other ordinary income will be taxed at a
maximum marginal rate of 39.6%. Because of the limitations on itemized deduc-
tions and the deduction for personal exemptions applicable to higher income
taxpayers, the effective tax rate may be higher in certain circumstances.
All or a portion of a sales charge paid in purchasing shares of a Fund cannot
be taken into account for purposes of determining gain or loss on the redemp-
tion or exchange of such shares within 90 days after their purchase to the ex-
tent shares of a Fund or another fund are subsequently acquired without payment
of a sales load pursuant to the reinvestment or exchange privilege. Any disre-
garded portion of such load will result in an increase in the shareholder's tax
basis in the shares subsequently acquired. Moreover, losses recognized by a
shareholder on the redemption or exchange of shares of the Fund held for six
months or less are disallowed to the extent of any distribution of exempt-in-
terest dividends received with respect to such shares and, if not disallowed,
such losses are treated as long-term capital losses to the extent of any dis-
tributions of long-term capital gains made with respect to such shares. In ad-
dition, no loss will be allowed on the redemption or exchange of shares of the
Fund if the shareholder purchases other shares of the Fund (whether through re-
investment of distributions or otherwise) or the Shareholder acquires or enters
into a contract or option to acquire securities that are substantially identi-
cal to shares of the Fund within a period of 61 days beginning 30 days before
and ending 30 days after such redemption or exchange. If disallowed, the loss
will be reflected in an adjustment to the basis of the shares acquired.
It may not be advantageous from a tax perspective for shareholders to redeem or
exchange shares after tax-exempt income has accrued but before the record date
for the exempt-interest dividend representing the distribution of such income.
Because such accrued tax-exempt income is included in the net asset value per
share (which equals the redemption or exchange value), such a redemption could
result in
18
<PAGE>
treatment of the portion of the sales or redemption proceeds equal to the ac-
crued tax-exempt interest as taxable gain (to the extent the redemption or ex-
change price exceeds the shareholder's tax basis in the shares disposed of)
rather than tax-exempt interest.
In order to avoid a 4% federal excise tax, the Fund must distribute or be
deemed to have distributed by December 31 of each calendar year at least 98% of
its taxable ordinary income for such year, at least 98% of the excess of its
realized capital gains over its realized capital losses (generally computed on
the basis of the one-year period ending on October 31 of such year) and 100% of
any taxable ordinary income and the excess of realized capital gains over real-
ized capital losses for the prior year that was not distributed during such
year and on which the Fund paid no federal income tax. For purposes of the ex-
cise tax, a regulated investment company may reduce its capital gain net income
(but not below its net capital gain) by the amount of any net ordinary loss for
the calendar year. The Fund intends to make timely distributions in compliance
with these requirements and consequently it is anticipated that they generally
will not be required to pay the excise tax.
If in any year the Fund should fail to qualify under Subchapter M for tax
treatment as a regulated investment company, the Fund would incur a regular
corporate federal income tax upon its income for that year (other than interest
income from Municipal Obligations), and distributions to its shareholders would
be taxable to shareholders as ordinary dividend income for federal income tax
purposes to the extent of the Fund's available earnings and profits.
Among the requirements that the Fund must meet in order to qualify under
Subchapter M in any year is that less than 30% of its gross income must be de-
rived from the sale or other disposition of securities and certain other assets
held for less than three months.
Because the Fund may invest in private activity bonds, the interest on which is
not federally tax-exempt to persons who are "substantial users" of the facili-
ties financed by such bonds or "related persons" of such "substantial users,"
the Fund may not be an appropriate investment for shareholders who are consid-
ered either a "substantial user" or a "related person" within the meaning of
the Code. For additional information, investors should consult their tax advis-
ers before investing in the Fund.
Federal tax law imposes an alternative minimum tax with respect to both corpo-
rations and individuals. Interest on certain Municipal Obligations, such as
bonds issued to make loans for housing purposes or to private entities (but not
for certain tax-exempt organizations such as universities, and non-profit hos-
pitals) is included as an item of tax preference in determining the amount of a
taxpayer's alternative minimum taxable income. To the extent that the Fund re-
ceives income from Municipal Obligations subject to the alternative minimum
tax, a portion of the dividends paid by it, although otherwise exempt from fed-
eral income tax, will be taxable to shareholders to the extent that their tax
liability is determined under the alternative minimum tax regime. The Fund will
annually supply shareholders with a report indicating the percentage of Fund
income attributable to Municipal Obligations subject to the federal alternative
minimum tax.
In addition, the alternative minimum taxable income for corporations is in-
creased by 75% of the difference between an alternative measure of income ("ad-
justed current earnings") and the amount otherwise
19
<PAGE>
determined to be the alternative minimum taxable income. Interest on all Mu-
nicipal Obligations, and therefore all distributions by the Fund that would
otherwise be tax exempt, is included in calculating a corporation's adjusted
current earnings.
Tax-exempt income, including exempt-interest dividends paid by the Fund, will
be added to the taxable income of individuals receiving social security or
railroad retirement benefits in determining whether a portion of that benefit
will be subject to federal income tax.
The Code provides that interest on indebtedness incurred or continued to pur-
chase or carry shares of the Fund is not deductible. Under rules used by the
IRS for determining when borrowed funds are considered used for the purpose of
purchasing or carrying particular assets, the purchase of shares of the Fund
may be considered to have been made with borrowed funds even though such funds
are not directly traceable to the purchase of shares.
The Fund is required in certain circumstances to withhold 31% of taxable divi-
dends and certain other payments paid to non-corporate holders of shares who
have not furnished to the Fund their correct taxpayer identification number
(in the case of individuals, their social security number) and certain certi-
fications, or who are otherwise subject to back-up withholding.
The foregoing is a general and abbreviated summary of the provisions of the
Code and Treasury Regulations presently in effect as they directly govern the
taxation of the Fund and its shareholders. For complete provisions, reference
should be made to the pertinent Code sections and Treasury Regulations. The
Code and Treasury Regulations are subject to change by legislative or adminis-
trative action, and any such change may be retroactive with respect to Fund
transactions. Shareholders are advised to consult their own tax advisers for
more detailed information concerning the federal taxation of the Fund and the
income tax consequences to its shareholders.
PERFORMANCE INFORMATION
As explained in the Prospectus, the historical investment performance of the
Fund may be shown in the form of "yield," "taxable equivalent yield," "average
annual total return," "cumulative total return" and "taxable equivalent total
return" figures, each of which will be calculated separately for each class of
shares.
In accordance with a standardized method prescribed by rules of the Securities
and Exchange Commission ("SEC"), yield is computed by dividing the net invest-
ment income per share earned during the specified one month or 30-day period
by the maximum offering price per share on the last day of the period, accord-
ing to the following formula:
<TABLE>
<C> <C> <C> <C> <S>
Yield = 2[(a-b+1)/6/-1]
cd
</TABLE>
In the above formula, a = dividends and interest earned during the period; b =
expenses accrued for the period (net of reimbursements); c = the average daily
number of shares outstanding during the period that were entitled to receive
dividends; and d = the maximum offering price per share on the last day of
20
<PAGE>
the period. In the case of Class A shares, the maximum offering price includes
the current maximum sales charge of 4.50%.
In computing yield, the Fund follows certain standardized accounting practices
specified by SEC rules. These practices are not necessarily consistent with
those that the Fund uses to prepare its annual and interim financial statements
in conformity with generally accepted accounting principles. Thus, yield may
not equal the income paid to shareholders or the income reported in the Fund's
financial statements. Yields for Class A Shares, Class C Shares and Class R
Shares for the 30-day period ended February 29, 1996 were 4.48%, 3.94% and
4.93%, respectively.
Taxable equivalent yield is computed by dividing that portion of the yield
which is tax-exempt by 1 minus the stated federal income tax rate and adding
the result to that portion, if any, of the yield that is not tax exempt. Based
upon (1) the 1995 maximum marginal federal income tax rate of 39.6% and (2) the
previously quoted yield for the 30-day period ended February 29, 1996, the tax-
able equivalent yields for Class A Shares, Class C Shares and Class R Shares
for that period were 7.42%, 6.52% and 8.16%, respectively.
For additional information concerning taxable equivalent yields, see the Tax-
able Equivalent Yield Tables in the Prospectus.
The Fund may from time to time in its advertising and sales materials report a
quotation of the current distribution rate. The distribution rate represents a
measure of dividends distributed for a specified period. Distribution rate is
computed by taking the most recent monthly tax-free income dividend per share,
multiplying it by 12 to annualize it, and dividing by the appropriate price per
share (e.g., net asset value for purchases to be made without a load such as
reinvestments from Nuveen UITs, or the maximum public offering price). The dis-
tribution rate differs from yield and total return and therefore is not in-
tended to be a complete measure of performance. Distribution rate may sometimes
be higher than yield because it may not include the effect of amortization of
bond premiums to the extent such premiums arise after the bonds were purchased.
The distribution rates as of February 29, 1996, for Class A Shares, Class C
Shares and Class R Shares were 4.88%, 4.41% and 5.37%, respectively, assuming
the imposition of the maximum sales charge for Class A Shares of 4.50%.
Average annual total return quotation is computed in accordance with a stan-
dardized method prescribed by SEC rules. The average annual total return for a
specific period is found by taking a hypothetical, $1,000 investment ("initial
investment") in Fund shares on the first day of the period, reducing the amount
to reflect the maximum sales charge, and computing the "redeemable value" of
that investment at the end of the period. The redeemable value is then divided
by the initial investment, and this quotient is taken to the Nth root (N repre-
senting the number of years in the period) and 1 is subtracted from the result,
which is then expressed as a percentage. The calculation assumes that all in-
come and capital gains distributions have been reinvested in Fund shares at net
asset value on the reinvestment dates during the period. The Fund's average an-
nual return figures, including the effect of the current maximum sales charge
for Class A Shares, for the one-year, five-year and ten-year periods ended Feb-
ruary 29, 1996, and for the period from inception (on November 29, 1976 with
respect to the Class R Shares
21
<PAGE>
and on June 13, 1995 with respect to the Class A Shares and Class C Shares)
through February 29, 1996, respectively, were as follows:
<TABLE>
<CAPTION>
ANNUAL TOTAL RETURN
-----------------------------------------------------------------------
FROM INCEPTION
ONE YEAR ENDED FIVE YEARS ENDED TEN YEARS ENDED THROUGH
FEBRUARY 29, 1996 FEBRUARY 29, 1996 FEBRUARY 29, 1996 FEBRUARY 29, 1996
- ------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Class A Shares.......... N/A N/A N/A .59%*
Class C Shares.......... N/A N/A N/A 4.59%*
Class R Shares.......... 9.31% 7.68% 7.90% 7.36%
</TABLE>
- --------
*Not annualized because it relates to a period of less than one year.
Calculation of cumulative total return is not subject to a prescribed formula.
Cumulative total return for a specific period is calculated by first taking a
hypothetical initial investment in Fund shares on the first day of the period,
deducting (in some cases) the maximum sales charge, and computing the "redeem-
able value" of that investment at the end of the period. The cumulative total
return percentage is then determined by subtracting the initial investment from
the redeemable value and dividing the remainder by the initial investment and
expressing the result as a percentage. The calculation assumes that all income
and capital gains distributions by the Fund have been reinvested at net asset
value on the reinvestment dates during the period. Cumulative total return may
also be shown as the increased dollar value of the hypothetical investment over
the period. Cumulative total return calculations that do not include the effect
of the sales charge would be reduced if such charge were included. The cumula-
tive total returns, including the effect of the maximum sales charge for Class
A Shares, for the one-year, five-year and ten-year periods ended February 29,
1996, and for the period from inception (on November 29, 1976 with respect to
the Class R Shares and on June 13, 1995 with respect to the Class A Shares and
Class C Shares) through February 29, 1996, respectively, were as follows:
<TABLE>
<CAPTION>
CUMULATIVE TOTAL RETURN
-----------------------------------------------------------------------
FROM INCEPTION
ONE YEAR ENDED FIVE YEARS ENDED TEN YEARS ENDED THROUGH
FEBRUARY 29, 1996 FEBRUARY 29, 1996 FEBRUARY 29, 1996 FEBRUARY 29, 1996
- ------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Class A Shares.......... N/A N/A N/A .59%
Class C Shares.......... N/A N/A N/A 4.59%
Class R Shares.......... 9.31% 44.79% 113.96% 292.69%
</TABLE>
Calculation of taxable equivalent total return is also not subject to a pre-
scribed formula. Taxable equivalent total return for a specific period is cal-
culated by first taking a hypothetical initial investment in Fund shares on the
first day of the period, computing the total return for each calendar year in
the period in the manner described above, and increasing the total return for
each such calendar year by the amount of additional income that a taxable fund
would need to have generated to equal the income on an after-tax basis, at a
specified income tax rate (usually the highest marginal federal tax rate), cal-
culated as described above under the discussion of "taxable equivalent yield."
The resulting amount for the calendar year is then divided by the initial in-
vestment amount to arrive at a "taxable equivalent total return factor" for the
calendar year. The taxable equivalent total return factors for all the calendar
years are then multiplied together and the result is then annualized by taking
its Nth root (N representing the number of years in the period) and subtracting
1, which provides a taxable equivalent total return
22
<PAGE>
expressed as a percentage. Using the 39.6% maximum marginal federal tax rate
for 1996, the annual taxable equivalent total returns for the one-year, five-
year and ten-year periods ended February 29, 1996, were as follows:
<TABLE>
<CAPTION>
ONE YEAR ENDED FIVE YEARS ENDED TEN YEARS ENDED
FEBRUARY 29, 1996 FEBRUARY 29, 1996 FEBRUARY 29, 1996
------------------------------ ------------------------------ ------------------------------
WITH MAXIMUM AT NET WITH MAXIMUM AT NET WITH MAXIMUM AT NET
4.50% SALES CHARGE ASSET VALUE 4.50% SALES CHARGE ASSET VALUE 4.50% SALES CHARGE ASSET VALUE
- ---------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Class A Shares.......... N/A N/A N/A N/A N/A N/A
<CAPTION>
Class C Shares.......... N/A N/A N/A N/A N/A N/A
Class R Shares.......... N/A 13.14% N/A 11.61% N/A 12.18%
</TABLE>
From time to time, the Fund may compare its risk-adjusted performance with
other investments that may provide different levels of risk and return. For ex-
ample, the Fund may compare its risk level, as measured by the variability of
its periodic returns, or its RISK-ADJUSTED TOTAL RETURN, with those of other
funds or groups of funds. Risk-adjusted total return would be calculated by ad-
justing each investment's total return to account for the risk level of the in-
vestment.
The Fund may also compare its TAX-ADJUSTED TOTAL RETURN with that of other
funds or groups of funds. This measure would take into account the tax-exempt
nature of exempt-interest dividends and the payment of income taxes on a fund's
distributions of net realized capital gains and ordinary income.
The risk level for a class of shares of the Fund, and any of the other invest-
ments used for comparison, would be evaluated by measuring the variability of
the investment's return, as indicated by the annualized standard deviation of
the investment's monthly returns over a specified measurement period (e.g.,
three years). An investment with a higher annualized standard deviation of
monthly returns would indicate that a fund had greater price variability, and
therefore greater risk, than an investment with a lower annualized standard de-
viation. The annualized standard deviation of monthly returns for the three
years ended February 29, 1996, for the Class R Shares of the Fund, was 4.07%.
THE RISK-ADJUSTED TOTAL RETURN for a class of shares of the Fund and for other
investments over a specified period would be evaluated by dividing (a) the re-
mainder of the investment's annualized three-year total return minus the
annualized total return of an investment in short-term tax-exempt securities
(essentially a risk-free return) over that period, by (b) the standard devia-
tion of the investment's monthly returns for the period. This ratio is some-
times referred to as the "Sharpe measure" of return. An investment with a
higher Sharpe measure would be regarded as producing a higher return for the
amount of risk assumed during the measurement period than an investment with a
lower Sharpe measure. The Sharpe measure, for the three-year period ended Feb-
ruary 29, 1996, for the Class R Shares of the Fund, was 0.646.
Class A Shares of the Fund are sold at net asset value plus a current maximum
sales charge of 4.50% of the offering price. This current maximum sales charge
will typically be used for purposes of calculating performance figures even
though the maximum sales charge may have been different for portion of the mea-
surement period. Yield, returns and net asset value of each class of shares of
the Fund will fluctuate.
23
<PAGE>
Factors affecting performance include general market conditions, operating ex-
penses and investment management. Any additional fees charged by a securities
representative or other financial services firm would reduce returns described
in this section. Shares of the Fund are redeemable at net asset value, which
may be more or less than original cost.
In reports or other communications to shareholders or in advertising and sales
literature, the Fund may also compare its performance with that of: (1) the
Consumer Price Index or various unmanaged bond indexes such as the Lehman
Brothers Municipal Bond Index and the Salomon Brothers High Grade Corporate
Bond Index and (2) other fixed income or municipal bond mutual funds or mutual
fund indexes as reported by Lipper Analytical Services, Inc. ("Lipper"), Morn-
ingstar, Inc. ("Morningstar"), Wiesenberger Investment Companies Service ("Wie-
senberger") and CDA Investment Technologies, Inc. ("CDA") or similar indepen-
dent services which monitor the performance of mutual funds, or other industry
or financial publications such as Barron's, Changing Times, Forbes and Money
Magazine. Performance comparisons by these indexes, services or publications
may rank mutual funds over different periods of time by means of aggregate, av-
erage, year-by-year, or other types of total return and performance figures.
Any given performance quotation or performance comparison should not be consid-
ered as representative of the performance of the Fund for any future period.
There are differences and similarities between the investments which the Fund
may purchase and the investments measured by the indexes and reporting services
which are described herein. The Consumer Price Index is generally considered to
be a measure of inflation. The CDA Mutual Fund-Municipal Bond Index is a
weighted performance average of other mutual funds with a federally tax-exempt
income objective. The Salomon Brothers High Grade Corporate Bond Index is an
unmanaged index that generally represents the performance of high grade long-
term taxable bonds during various market conditions. The Lehman Brothers Munic-
ipal Bond Index is an unmanaged index that generally represents the performance
of high grade intermediate and long-term municipal bonds during various market
conditions. Lipper, Morningstar, Wiesenberger and CDA are widely recognized mu-
tual fund reporting services whose performance calculations are based upon
changes in net asset value with all dividends reinvested and which do not in-
clude the effect of any sales charges. The market prices and yields of taxable
and tax-exempt bonds will fluctuate. The Fund primarily invests in investment
grade Municipal Obligations in pursuing its objective of as high a level of
current interest income which is exempt from federal income tax as is consis-
tent, in the view of the Fund's management, with preservation of capital.
The Fund may also compare its taxable equivalent total return performance to
the total return performance of taxable income funds such as treasury securi-
ties funds, corporate bond funds (either investment grade or high yield), or
Ginnie Mae funds. These types of funds, because of the character of their un-
derlying securities, differ from municipal bond funds in several respects. The
susceptibility of the price of treasury bonds to credit risk is far less than
that of municipal bonds, but the price of treasury bonds tends to be slightly
more susceptible to change resulting from changes in market interest rates. The
susceptibility of the price of investment grade corporate bonds and municipal
bonds to market interest rate changes and general credit changes is similar.
High yield bonds are subject to a greater degree of price volatility than mu-
nicipal bonds resulting from changes in market interest rates and are particu-
larly susceptible to volatility from credit changes. Ginnie Mae bonds are gen-
erally subject to less price volatility than municipal bonds from credit con-
cerns, due primarily to the fact that the timely
payment of monthly installments of principal and interest are backed by the
full faith and credit of the
24
<PAGE>
U.S. Government, but Ginnie Maes of equivalent coupon and maturity are gener-
ally more susceptible to price volatility resulting from market interest rate
changes. In addition, the volatility of Ginnie Mae bonds due to changes in
market interest rates may differ from municipal bonds of comparable coupon and
maturity because bonds of the sensitivity of Ginnie Mae prepayment experience
to change in interest rates.
ADDITIONAL INFORMATION ON THE PURCHASE AND REDEMPTIONOF FUND SHARES
As described in the Prospectus, the Fund has adopted a Flexible Pricing Pro-
gram which provides you with alternative ways of purchasing Fund shares based
upon your individual investment needs and preferences. You may purchase Class
A Shares at a price equal to their net asset value plus an up-front sales
charge.
For information regarding the up-front sales charge on Class A shares, see the
table under "How to Buy Fund Shares" of the Prospectus. Set forth is an exam-
ple of the method of computing the offering price of the Class A shares of the
Fund. The example assumes a purchase on February 29, 1996 of Class A shares
from the Fund aggregating less than $50,000 subject to the schedule of sales
charges set forth in the Prospectus at a price based upon the net asset value
of the Class A shares.
<TABLE>
<S> <C>
Net Asset Value per share......................................... $9.280
Per Share Sales Charge--4.50% of public offering price (4.71% of
net asset value per share)....................................... $ .437
Per Share Offering Price to the Public............................ $9.717
</TABLE>
You may purchase Class C Shares without any up-front sales charge at a price
equal to their net asset value, but subject to an annual distribution fee de-
signed to compensate Authorized Dealers over time for the sale of Fund shares.
Class C Shares are subject to a 1% contingent deferred sales charge for re-
demptions within 12 months of purchase. Class C Shares automatically convert
to Class A Shares six years after purchase. Both Class A Shares and Class C
Shares are subject to annual service fees, which are used to compensate Autho-
rized Dealers for providing you with ongoing account services. Under the Flex-
ible Sales Charge Program, all Fund shares outstanding as of June 13 1995,
have been designated as Class R Shares. Class R Shares are available for pur-
chase at a price equal to their net asset value only under certain limited
circumstances, or by specified investors, as described herein.
Each class of shares represents an interest in the same portfolio of invest-
ments. Each class of shares is identical in all respects except that each
class bears its own class expenses, including distribution and administration
expenses, and each class has exclusive voting rights with respect to any dis-
tribution or service plan applicable to its shares. In addition, the Class C
Shares are subject to a conversion feature, as described below. As a result of
the differences in the expenses borne by each class of shares, net income per
share, dividends per share and net asset value per share will vary among the
Fund's classes of shares.
Shareholders of each class will shares expenses proportionately for services
that are received equally by all shareholders. A particular class of shares
will bear only those expenses that are directly attributable to that class,
where the type or amount of services received by a class varies from one class
to another. For example, class-specific expenses generally will include dis-
tribution and service fees.
25
<PAGE>
The Fund has special purchase programs under which certain persons may purchase
Class A Shares at reduced sales charges. One such program is available to mem-
bers of a "qualified group." An individual who is a member of a "qualified
group" may purchase Class A Shares of the Fund (or any other Nuveen Fund with
respect to which a sales charge is imposed), at the reduced sales charge appli-
cable to the group taken as whole. A "qualified group" is one which (i) has
been in existence for more than six months; (ii) has a purpose other than in-
vestment; (iii) has five or more participating members; (iv) has agreed to in-
clude sales literature and other materials related to the Fund in publications
and mailings to members; (v) has agreed to have its group administrator submit
a single bulk order and make payment with a single remittance for all invest-
ments in the Fund during each investment period by all participants who choose
to invest in the Fund; and (vi) has agreed to provide the Fund's transfer agent
with appropriate backup data for each participant of the group in a format
fully compatible with the transfer agent's processing system.
The "amount" of a share purchase by a participant in a group purchase program
for purposes of determining the applicable sales charge is (i) the aggregate
value of all shares of the Fund (and all other Nuveen Funds with respect to
which a sales charge is imposed) currently held by participants of the group,
plus (ii) the amount of shares currently being purchased.
Special Sales Charge Waivers. Class A Shares of the Funds may be purchased at
net asset value without a sales charge, and Class R Shares may be purchased, by
the following categories of investors:
. officers, trustees and retired trustees of the Trust;
. bona fide, full-time and retired employees of Nuveen and its affiliates, any
parent company of Nuveen, and subsidiaries thereof, or their immediate fam-
ily members (as defined below);
. any person who, for at least 90 days, has been an officer, director or bona
fide employee of any Authorized Dealer, or their immediate family members;
. officers and directors of bank holding companies that make Fund shares
available directly or through subsidiaries or bank affiliates;
. bank or broker-affiliated trust departments investing funds over which they
exercise exclusive discretionary investment authority and that are held in a
fiduciary, agency, advisory, custodial or similar capacity;
. investors purchasing through a mutual fund purchase program sponsored by a
broker-dealer that offers a selected group of mutual funds either without a
transaction fee or with an asset-based fee or a fixed fee that does not vary
with the amount of the purchase. In order to qualify, such purchase program
must offer a full range of mutual fund related services and shareholder ac-
count servicing capabilities, including establishment and maintenance of
shareholder accounts, addressing investor inquiries regarding account activ-
ity and investment performances, processing of trading and dividend activity
and generation of monthly account statements and year-end tax reporting; and
. registered investment advisers, certified financial planners and registered
broker-dealers who in each case either charge periodic fees to their custom-
ers for financial planning, investment advisory or asset management servic-
es, or provide such services in connection with the establishment of an in-
vestment account for which a comprehensive "wrap fee" charge is imposed.
26
<PAGE>
The Fund may encourage registered representatives and their firms to help ap-
portion their assets among bonds, stocks and cash, and may seek to participate
in programs that recommend a portion of their assets be invested in tax-free,
fixed income securities.
To help advisers and investors better understand and most efficiently use the
Fund to reach their investment goals, the Fund may advertise and create spe-
cific investment programs and systems. For example, this may include informa-
tion on how to use the Fund to accumulate assets for future education needs or
periodic payments such as insurance premiums. The Fund may produce software or
additional sales literature to promote the advantages of using the Fund to
meet these and other specific investor needs.
Exchanges of shares of the Fund for shares of a Nuveen Money Market Fund may
be made on days when both funds calculate a net asset value and make shares
available for public purchase. Shares of the Nuveen Money Market Funds may be
purchased on days on which the Federal Reserve Bank of Boston is normally open
for business. In addition to the holidays observed by the Fund, the Nuveen
money market funds observe and will not make fund shares available for pur-
chase on the following holidays: Martin Luther King's Birthday, Columbus Day
and Veterans Day.
For more information on the procedure for purchasing shares of the Fund and on
the special purchase programs available thereunder, see "How to Buy Fund
Shares" in the Prospectus.
Nuveen serves as the principal underwriter of the shares of the Fund pursuant
to a "best efforts" arrangement as provided by a distribution agreement with
the Nuveen Municipal Bond Fund, Inc., dated January 2, 1990, and assigned to
the Fund effective June 13, 1995 ("Distribution Agreement"). Pursuant to the
Distribution Agreement, the Fund appointed Nuveen to be its agent for the dis-
tribution of the Fund's shares on a continuous offering basis. Nuveen sells
shares to or through brokers, dealers, banks or other qualified financial in-
termediaries (collectively referred to as "Dealers"), or others, in a manner
consistent with the then effective registration statement of the Fund. Pursu-
ant to the Distribution Agreement, Nuveen, at its own expense, finances cer-
tain activities incident to the sale and distribution of the Fund's shares,
including printing and distributing of prospectuses and statements of addi-
tional information to other than existing shareholders, the printing and dis-
tributing of sales literature, advertising and payment of compensation and
giving of concessions to dealers. Nuveen receives for its services the excess,
if any, of the sales price of the Fund's shares sold with an up-front sales
charge less the net asset value of those shares, and reallows a majority or
all of such amounts to the Dealers who sold the shares; Nuveen may act as such
a Dealer. Nuveen also receives compensation pursuant to a distribution plan
adopted by the Fund pursuant to Rule 12b-1 and described herein under "Distri-
bution and Service Plan." Nuveen receives any CDSCs imposed on redemptions of
Class C Shares redeemed within 12 months of purchase, but any such amounts as
to which a reinstatement privilege is not exercised are set off against and
reduce amounts otherwise payable to Nuveen pursuant to the distribution plan.
Nuveen also receives any CDSCs imposed on redemptions of certain Class A
Shares redeemed within 18 months of purchase.
The aggregate amount of underwriting commissions with respect to the sale of
Fund shares and the amount thereof retained by Nuveen for the Fund's fiscal
years ended February 29, 1996, February 28, 1995 and February 28, 1994 were
$1,575, $316; $2,248, $467; and $5,703, $1,093, respectively. All figures are
to the nearest thousand.
27
<PAGE>
DISTRIBUTION AND SERVICE PLAN
The Fund has adopted a plan (the "Plan") pursuant to Rule 12b-1 under the In-
vestment Company Act of 1940, which provides that Class C Shares will be sub-
ject to an annual distribution fee, and that both Class A Shares and Class C
Shares will be subject to an annual service fee. Class R Shares will not be
subject to either distribution or service fees.
The distribution fee applicable to Class C Shares under the Plan will be pay-
able to reimburse Nuveen for services and expenses incurred in connection with
the distribution of Class C Shares. These expenses include payments to Autho-
rized Dealers, including Nuveen, who are brokers of record with respect to the
Class C Shares, as well as, without limitation, expenses of printing and dis-
tributing prospectuses to persons other than shareholders of the Fund, expenses
of preparing, printing and distributing advertising and sales literature and
reports to shareholders used in connection with the sale of Class C Shares,
certain other expenses associated with the distribution of Class C Shares, and
any distribution-related expenses that may be authorized from time to time by
the Board of Directors.
The service fee applicable to Class A Shares and Class C Shares under the Plan
will be payable to Authorized Dealers in connection with the provision of ongo-
ing account services to shareholders. These services may include establishing
and maintaining shareholder accounts, answering shareholder inquiries and pro-
viding other personal services to shareholders.
The Fund may spend up to .25 of 1% per year of the average daily net assets of
Class A Shares as a service fee under the Plan applicable to Class A Shares.
The Fund may spend up to .75 of 1% per year of the average daily net assets of
Class C Shares as a distribution fee and up to .25 of 1% per year of the aver-
age daily net assets of Class C Shares as a service fee under the Plan applica-
ble to Class C Shares. The .75 of 1% distribution fee will be reduced by the
amount of any CDSC imposed on the redemption of Class C Shares within 12 months
of purchase as to which a reinstatement privilege has not been exercised.
For the fiscal year ended February 29, 1996, 100% of service fees and distribu-
tion fees were paid out as compensation to Authorized Dealers. The amount of
compensation paid to Authorized Dealers for the fiscal year ended February 29,
1996 was $43,166.
Under the Plan, the Fund will report quarterly to the Board of Trustees for its
review of all amounts expended per class of shares under the Plan. The Plan may
be terminated at any time with respect to any class of shares, without the pay-
ment of any penalty, by a vote of a majority of the trustees who are not "in-
terested persons" and who have no direct or indirect financial interest in the
Plan or by vote of a majority of the outstanding voting securities of such
class. The Plan may be renewed from year to year if approved by a vote of the
Board of Trustees and a vote of the non-interested directors who have no direct
or indirect financial interest in the Plan cast in person at a meeting called
for the purpose of voting on the Plan. The Plan may be continued only if the
trustees who vote to approve such continuance conclude, in the exercise of rea-
sonable business judgment and in light of their fiduciary duties under applica-
ble law, that there is a reasonable likelihood that the Plan will benefit the
Fund and its shareholders. The Plan may not be amended to increase materially
the cost which a class of shares may
28
<PAGE>
bear under the Plan without the approval of the shareholders of the affected
class, and any other material amendments of the Plan must be approved by the
non-interested directors by a vote cast in person at a meeting called for the
purpose of considering such amendments. During the continuance of the Plan, the
selection and nomination of the non-interested trustees of the Fund will be
committed to the discretion of the non-interested trustees then in office.
INDEPENDENT PUBLIC ACCOUNTANTS AND CUSTODIAN
Arthur Andersen LLP, independent public accountants, 33 W. Monroe Street, Chi-
cago, Illinois 60603 have been selected as auditors for the Fund. In addition
to audit services, Arthur Andersen LLP will provide consultation and assistance
on accounting, internal control, tax and related matters. The
financial statements incorporated by reference elsewhere in this Statement of
Additional Information and the information for 1994 and prior periods set forth
under "Financial Highlights" in the Prospectus have been audited by Arthur An-
dersen LLP as indicated in their report with respect thereto, and are included
in reliance upon the authority of said firm as experts in giving said report.
The custodian of the assets of the Fund is The Chase Manhattan Bank, N.A., 770
Broadway, New York, NY 10003. The custodian performs custodial, fund accounting
and portfolio accounting services.
29
<PAGE>
ANNUAL REPORT TO SHAREHOLDERS
<PAGE>
[NUVEEN LOGO]
Nuveen Tax-Free
Mutual Funds
Dependable tax-free
income for generations
MUNI BOND
INSURED MUNI BOND
ANNUAL REPORT/FEBRUARY 29, 1996
[PHOTO OF COUPLE APPEARS HERE]
<PAGE>
CONTENTS
3 Dear shareholder
5 Answering your questions
9 Fund performance
11 Portfolio of investments
36 Statement of net assets
37 Statement of operations
38 Statement of changes in net assets
39 Notes to financial statements
48 Financial highlights
52 Report of independent public accountants
<PAGE>
Dear
shareholder
[PHOTO OF RICHARD J. FRANKE APPEARS HERE]
"Over time, municipal bonds have proven to be a valuable and dependable
component of successful investment programs."
Since the beginning of the recovery in early 1995, we've enjoyed a welcome
rebound in the bond markets-a sharp contrast to 1994, which was one of the most
volatile periods in bond market history. In fact, 1995 unfolded as one of the
best years for bonds in a decade, as the bond market responded to a climate of
slowing economic growth and diminished inflationary pressure.
The changing profile of the bond markets over the past two years reminds us
that weathering the ups and downs of the markets is a normal part of the
investment process. By maintaining a long-term perspective on your investments,
you can minimize the impact of short-term fluctuations and keep the focus on
achieving your goals. Municipal bond funds continue to play an integral role in
helping investors reach those goals, offering the attractive tax-free income and
solid total returns that they seek.
Over the past year, we have kept our sights focused on successfully meeting
your fund's objectives. As of February 29, 1996, the current annual SEC yields
on offering price for R Shares were 4.93% for the Municipal Bond Fund and 5.00%
for the Insured Municipal Bond Fund. To match these yields, an investor in the
36% federal income tax bracket would have had to earn at least 7.70% and 7.81%,
respectively, on taxable alternatives.
3
<PAGE>
Reflecting the rebound in the bond markets, both of these funds reported gains
in portfolio value since February 28, 1995. The 12-month total returns on net
asset value for R Shares, reflecting portfolio gains plus reinvested dividend
income and capital gains distributions, if any, were 9.31% for the Municipal
Bond Fund and 10.94% for the Insured Municipal Bond Fund. These returns
translate to 12.59% and 14.10%, respectively, on a taxable-equivalent basis.
This strong performance rewarded investors who weathered the volatility of 1994,
and reminds us again of the importance of municipal bonds to a well-rounded,
long-term investment plan.
As some of you may know, on June 30, 1996, I will be retiring as the Chairman
and Chief Executive Officer of John Nuveen & Co. Incorporated, and as Chairman
of the Board of the Nuveen Funds. As I look back over the 41 years I have spent
at Nuveen, I'm proud to have been associated with a firm that holds integrity,
honesty, and value as the cornerstones of its business. I'm confident that these
traditions will continue to be the hallmarks of Nuveen.
Over the past few years, I have been working closely with other Nuveen
managers to ensure that the company and the funds continue to be guided by
strong and talented management following my retirement. Timothy Schwertfeger,
who has been with Nuveen since 1977, will succeed me as Chief Executive Officer
and Chairman of Nuveen. He currently serves as Executive Vice President of
Nuveen and President of the Nuveen Funds. I am very confident in his abilities
and the abilities of the entire Nuveen management team.
The management transition has been well planned, and it will have no effect on
portfolio management or the way dividends are set. Our management team is
committed to continuing Nuveen's successful tradition of value investing and
prudent management, helping our shareholders meet their need for tax-free
investment income with a full range of investment choices.
Our focus will continue to be on building shareholder value, providing
research-oriented management, and maintaining our leadership role in the
municipal bond market. With this focus, we anticipate many more years of
accomplishment for our shareholders and our firm.
I'd like to take this occasion to thank you for selecting Nuveen mutual fund
investments.
Sincerely,
/s/ Richard J. Franke
Richard J. Franke
Chairman of the Board
April 15, 1996
4
<PAGE>
Answering your
questions
Tom Spalding, head of Nuveen's portfolio management team, discusses factors
affecting the municipal market and efforts made to provide value for
shareholders.
How did the investment climate over the past year affect municipal bonds?
In 1995, the combination of slow economic growth and low inflation created the
ideal environment for the bond markets, which responded with a sustained rally.
Citing the lack of significant inflation, the Federal Reserve Board moved to cut
interest rates in July and December 1995, and again at the end of January 1996.
This succession of rate cuts helped to bring down long-term municipal bond
yields by almost 130 basis points over the year and to increase net asset
values. The rebound of the municipal bond market was not as great as that of the
taxable market due to the much-publicized discussion of major tax reform
legislation and concern about its potential impact on tax-free investments. Yet,
in 1995, most Nuveen mutual funds enjoyed taxable-equivalent total returns of
14% or better.
5
<PAGE>
[PHOTO OF TOM SPALDING APPEARS HERE]
Tom Spalding, head of Nuveen's portfolio management team, answers investors'
questions on developments in the municipal market.
What was Nuveen's approach to investing during this period?
During 1995, we continued to pursue our philosophy of value investing, a
disciplined approach designed to deliver above-market performance by emphasizing
securities that offer good intrinsic value and that are underpriced or
undervalued by the market. This approach has been rewarded over the past year,
as we saw many of our portfolio holdings upgraded by the rating agencies,
confirming our Research Department's judgments about credit quality. We also
moved to protect current income by investing more of our portfolio in non-
callable bonds when possible. These bonds are less likely to be redeemed before
maturity so that their yield is assured for the long term in the event of
falling interest rates. As is our policy, we continue to invest only in
investment-grade quality securities.
Has Nuveen made any major investment changes over the past year?
No. In the search for income and total return, our value investing approach
continues to concentrate on individual bonds with current yields, prices, credit
quality, and future prospects that are exceptionally attractive relative to
other bonds in the market. Because attractive issues may appear any time over
the course of the year, we are constantly vigilant for new opportunities, with
the goal of ensuring that the funds are always positioned to meet their
objectives: as high a level of current tax-free income as is consistent with
preservation of capital. This means that our analysts continuously assess
investment
6
<PAGE>
possibilities across the entire spectrum of geographical and sector
opportunities nationwide. Currently, we favor revenue bonds for essential
services, such as those issued by water and sewer facilities and utilities,
especially public power authorities providing electricity at competitive rates.
We have reduced our positions in general obligation bonds issued by counties and
cities, which have suffered financial strains as the result of spending cuts at
the state and federal levels.
What does Nuveen see as the impact of the flat tax proposals on the municipal
market?
Because of the implications for tax-free investments such as municipal bonds and
bond funds, we have been closely monitoring the various flat tax proposals
currently being debated in Congress. While the presidential primaries
spotlighted the debate, it is important to note that none of the proposals
currently under discussion has gained a strong consensus. In addition,
implementation of any measure that manages to pass both houses is at least two
years away. As the election year progresses, focus seems to be shifting from tax
reform to other economic matters. However, the high-profile discussion-and the
attendant concern about the potential impact of tax reform on tax-free
investments-did affect the market for municipal bonds in 1995, causing these
bonds to underperform their taxable counterparts for the year.
7
<PAGE>
Given the low likelihood that the tax preference on municipal bonds will be
eliminated or dramatically reduced in the near future, Nuveen believes that it
is inadvisable to manage our funds toward one specific outcome. Instead, we will
continue to follow our value investing philosophy as the optimal way to pursue
our investors' objectives. In our view, this approach offers investors greater
price stability in the event of volatile markets. Once the tax issue is
resolved, we're confident that municipal bonds-because of their high credit
quality and attractive yields-will continue to hold a strategic place in the
prudent investor's portfolio. We will continue to monitor developments in the
tax debate as well as changes in other economic and political conditions while
keeping our focus on achieving the objectives of your fund.
What is Nuveen's market outlook for 1996?
Although inflation currently remains low and economic growth remains moderate,
we continue to watch these factors for potential changes and impact on the bond
market. During this election year, we are also closely monitoring any changes in
economic and tax policy that may affect the municipal market. The fundamentals
in the long term are sound, with the supply of municipal bonds down from past
years, and with a growing number of individual investors seeking to diversify
their portfolios and to increase their tax-free income.
8
<PAGE>
NUVEEN MUNICIPAL BOND FUND
Muni Bond
INDEX COMPARISON
Comparison of change in value of a $10,000 investment in Nuveen Municipal Bond
Fund R Shares* and Lehman Brothers Municipal Bond Index
[GRAPH APPEARS HERE]
<TABLE>
<CAPTION>
In thousands 2/86 2/87 2/88 2/89 2/90 2/91 2/92 2/93 2/94 2/95 2/96
------ ------ ------ ------ ------ ------ ------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Lehman Brothers
Municipal Bond Index
-Total $21,997 10,000 11,219 11,513 12,227 13,480 14,723 16,194 18,423 19,441 19,808 21,997
Nuveen Municipal Bond Fund
-Total $20,379 9,525 10,674 11,032 11,854 12,976 14,075 15,466 17,173 17,994 18,644 20,380
Past performance is not predictive of future performance
</TABLE>
<TABLE>
<CAPTION>
- -------------------------------------------------------------
ANNUALIZED TOTAL RETURN
- -------------------------------------------------------------
1 year 5 years 10 years
- -------------------------------------------------------------
<S> <C> <C> <C>
R Shares on NAV 9.31% 7.68% 7.90%
A Shares on NAV N/A N/A 5.33%+
A Shares on offering price** N/A N/A 0.59%+
C Shares on NAV N/A N/A 4.59%+
- -------------------------------------------------------------
</TABLE>
The fund's current dividend of 4.15 cents per share for Class R Shares
translated into a distribution yield of 5.37% as of February 29, 1996. The
annual distribution yield is calculated by multiplying the dividend by 12, and
dividing this number by the current offering price. Investors in the 36% federal
income tax bracket would have to earn 8.39% on a taxable investment to match
this tax-free yield.
During the fiscal year, your fund's net asset value (for Class R Shares)
increased by 3.11% from a year ago. The average annual total return on NAV for
this class was 9.31%, which translated into a taxable-equivalent total return of
12.59%.
The fund's Class R Share SEC yield of 4.93% on February 29, 1996, translated
into 7.70% on a taxable-equivalent basis.
* One-year, 5-year and 10-year total return figures for Class R Shares are not
representative for Class A Shares or Class C Shares because they do not take
into account (1) the difference between the maximum front-end sales charge
applicable to Class R Shares (none), Class A Shares (4.50%) and Class C Shares
(none); (2) the .25% annual 12b-1 service fee applicable to Class A and Class C
Shares; (3) the .75% annual 12b-1 distribution fee to be deducted from income
with respect to Class C Shares; and (4) other class-level expenses applicable to
Class A Shares and Class C Shares.
** Maximum public offering price, which includes sales charges, which are
reduced for purchases over $50,000 and waived for reinvestment of dividends.
+ Life of class; Class A Shares and Class C Shares were first issued on June 13,
1995.
The Lehman Municipal Bond Index is comprised of a broad range of investment-
grade municipal bonds, and does not reflect any initial or ongoing expenses. The
Nuveen fund return depicted in the chart reflects the initial maximum sales
charge applicable to R Shares at the time (4.75%) and all ongoing fund expenses.
9
<PAGE>
NUVEEN INSURED
MUNICIPAL BOND FUND
Insured Muni Bond
INDEX COMPARISON
Comparison of change in value of a $10,000 investment in Nuveen Insured
Municipal Bond Fund R Shares* and Lehman Brothers Municipal Bond Index
[GRAPH APPEARS HERE]
<TABLE>
<CAPTION>
In thousands 11/86 11/87 11/88 11/89 11/90 11/91 11/92 11/93 11/94 2/96
------ ------ ------ ------ ------ ------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Lehman Brothers Municipal Bond
Index-Total $20,239 10,000 9,977 11,036 12,251 13,194 14,549 16,008 17,781 16,847 20,239
Nuveen Insured Municipal Bond
Fund-Total $19,688 9,525 9,168 10,497 11,787 12,564 13,911 15,411 17,366 16,028 19,688
Past performance is not predictive of future performance
</TABLE>
<TABLE>
<CAPTION>
- ------------------------------------------------------------------
ANNUALIZED TOTAL RETURN
- ------------------------------------------------------------------
1 year 5 years Since inception
- ------------------------------------------------------------------
<S> <C> <C> <C>
R Shares on NAV 10.94% 8.80% 8.22%
A Shares on NAV 10.90% N/A 9.99%+
A Shares on offering price** 5.91% N/A 6.62%+
C Shares on NAV 9.88% N/A 8.80%+
- ------------------------------------------------------------------
</TABLE>
The fund's current dividend of 4.65 cents per share for Class R Shares
translated into a distribution yield of 5.11% as of February 29, 1996. The
annual distribution yield is calculated by multiplying the dividend by 12, and
dividing this number by the current offering price. Investors in the 36% federal
income tax bracket would have to earn 7.98% on a taxable investment to match
this tax-free yield.
During the fiscal year, your fund's net asset value (for Class R Shares)
increased by 5.20% from a year ago. The average annual total return on NAV for
this class was 10.94%, which translated into a taxable-equivalent total return
of 14.10%.
The fund's Class R Share SEC yield of 5.00% on February 29, 1996, translated
into 7.81% on a taxable-equivalent basis.
* One-year, 5-year and life of fund total return figures for Class R Shares are
not representative for Class A Shares or Class C Shares because they do not take
into account (1) the difference between the maximum front-end sales charge
applicable to Class R Shares (none), Class A Shares (4.50%) and Class C Shares
(none); (2) the .25% annual 12b-1 service fee applicable to Class A and Class C
Shares; (3) the .75% annual 12b-1 distribution fee to be deducted from income
with respect to Class C Shares; and (4) other class-level expenses applicable to
Class A Shares and Class C Shares.
** Maximum public offering price, which includes sales charges, which are
reduced for purchases over $50,000 and waived for reinvestment of dividends.
+ Life of class; Class A Shares and Class C Shares were first issued at
different times after September 6, 1994.
The Lehman Municipal Bond Index is comprised of a broad range of investment-
grade municipal bonds, and does not reflect any initial or ongoing expenses. The
Nuveen fund return depicted in the chart reflects the initial maximum sales
charge applicable to R Shares at the time (4.75%) and all ongoing fund expenses.
10
<PAGE>
PORTFOLIO OF INVESTMENTS NUVEEN TAX-FREE MUTUAL FUNDS ANNUAL REPORT
FEBRUARY 29, 1996
NUVEEN MUNICIPAL BOND FUND
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------------
PRINCIPAL OPT. CALL MARKET
AMOUNT DESCRIPTION PROVISIONS* RATINGS** VALUE
- ----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
ALASKA - 0.9%
Alaska Housing Finance Corporation, Insured
Mortgage Program:
$ 4,085,000 6.375%, 12/01/07 6/96 at 101 Aa $ 4,134,714
3,290,000 7.650%, 12/01/10 12/00 at 102 Aa 3,482,399
10,885,000 7.800%, 12/01/30 12/00 at 102 Aa 11,555,189
Alaska State Housing Finance Corporation:
3,675,000 6.375%, 12/01/12 (Pre-refunded to 12/01/02) 12/02 at 102 Aa 4,028,645
2,250,000 6.600%, 12/01/23 (Pre-refunded to 12/01/02) 12/02 at 102 Aa 2,487,623
- ----------------------------------------------------------------------------------------------------------------------------
ARIZONA - 2.4%
7,750,000 Arizona State University, 5.750%, 7/01/12 7/02 at 101 AA 7,876,713
Salt River Project, Agricultural Improvement
and Power District:
5,000,000 4.900%, 1/01/08 1/04 at 102 Aa 4,966,400
9,145,000 5.000%, 1/01/10 7/96 at 100 Aa 8,917,015
26,200,000 4.750%, 1/01/17 1/04 at 100 Aa 23,643,404
20,350,000 5.500%, 1/01/28 1/02 at 100 Aa 19,681,096
4,570,000 Scottsdale Industrial Development Authority
(Scottsdale Memorial Hospital),
8.500%, 9/01/07 9/97 at 102 Aaa 4,939,987
- ----------------------------------------------------------------------------------------------------------------------------
ARKANSAS - 0.4%
11,210,000 Jefferson County Hospital, 6.000%, 7/01/06 7/03 at 102 A 11,895,716
- ----------------------------------------------------------------------------------------------------------------------------
CALIFORNIA - 15.2%
California Department of Water Resources
(Central Valley Project):
15,515,000 5.700%, 12/01/16 6/03 at 101 1/2 Aa 15,593,040
9,500,000 5.750%, 12/01/19 6/03 at 101 1/2 Aa 9,573,720
12,250,000 5.500%, 12/01/23 12/03 at 101 1/2 Aa 11,934,318
20,000,000 4.875%, 12/01/27 12/03 at 101 Aa 17,736,000
13,025,000 California Health Facilities Financing Authority
(Catholic Healthcare West), 5.000%, 7/01/14 7/04 at 102 Aaa 12,142,426
12,000,000 California State Public Works Board,
Department of Corrections (California State
Prison, Monterey), 7.000%, 11/01/19 11/04 at 102 A 13,532,520
34,795,000 California Statewide Communities Development
Authority (St. Joseph Health System),
5.500%, 7/01/23 7/03 at 102 Aa 33,346,484
California Statewide Communities Development
Authority (Unihealth America):
11,500,000 5.500%, 10/01/14 10/03 at 102 Aaa 11,308,870
20,000,000 5.750%, 10/01/25 10/03 at 102 Aaa 20,050,000
- ----------------------------------------------------------------------------------------------------------------------------
</TABLE>
11
<PAGE>
PORTFOLIO OF INVESTMENTS
NUVEEN MUNICIPAL BOND FUND-CONTINUED
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------------
PRINCIPAL OPT. CALL MARKET
AMOUNT DESCRIPTION PROVISIONS* RATINGS** VALUE
- ----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
CALIFORNIA (CONTINUED)
$ 11,725,000 Central California Joint Powers Health Finance
Authority, Certificates of Participation,
5.250%, 2/01/13 2/03 at 102 A $10,803,532
9,000,000 East Bay Municipal Utility District,
5.000%, 6/01/21 6/03 at 102 Aaa 8,313,930
Foothill/Eastern Transportation Corridor Agency:
45,000,000 0.000%, 1/01/23 No Opt. Call BBB-- 8,147,250
15,000,000 6.000%, 1/01/34 1/05 at 102 BBB-- 14,342,100
9,040,000 Los Angeles Convention and Exhibition
Center Authority, 5.125%, 8/15/13 8/03 at 102 Aaa 8,657,518
Los Angeles Department of Water and Power:
17,575,000 6.500%, 4/15/32 4/02 at 102 Aa 18,800,681
13,100,000 6.125%, 1/15/33 1/03 at 102 Aa 13,682,033
Los Angeles Wastewater System:
7,000,000 5.700%, 6/01/20 6/03 at 102 Aaa 7,001,820
15,615,000 5.200%, 11/01/21 11/03 at 102 Aaa 14,637,501
21,000,000 5.700%, 6/01/23 6/03 at 102 Aaa 21,080,220
Los Angeles County Metropolitan Transit
Authority:
15,750,000 5.500%, 7/01/13 7/03 at 102 AA-- 15,328,530
14,935,000 4.750%, 7/01/18 7/03 at 102 Aaa 13,388,481
8,000,000 5.250%, 7/01/23 7/03 at 102 Aaa 7,530,000
Los Angeles County Sanitation Districts
Financing Authority:
6,500,000 5.375%, 10/01/13 10/03 at 102 Aa 6,340,880
19,500,000 5.000%, 10/01/23 10/03 at 100 Aa 17,700,150
31,360,000 Los Angeles County Transportation Commission,
6.750%, 7/01/19 (Pre-refunded to 7/01/02) 7/02 at 102 Aaa 36,041,107
Metropolitan Water District of Southern California:
4,670,000 5.500%, 1/01/10 7/96 at 101 AA+ 4,725,620
5,000,000 5.500%, 7/01/19 7/02 at 102 Aa 4,874,550
12,750,000 Modesto Irrigation District (Geysers Geothermal
Power Project), Certificates of Participation,
7.250%, 10/01/15 10/96 at 102 A1 13,239,983
22,575,000 Northern California Power Agency,
7.150%, 7/01/24 7/98 at 102 A 24,355,942
12,600,000 Sacramento Sanitation District Finance
Authority, 4.750%, 12/01/23 12/03 at 102 Aa 11,043,270
7,600,000 Santa Clara County (Capital Project No. 1),
Certificates of Participation,
8.000%, 10/01/06 (Pre-refunded to 10/01/96) 10/96 at 102 AAA 7,960,012
8,050,000 University of California, 6.875%, 9/01/16
(Pre-refunded to 9/01/02) 9/02 at 102 A-- 9,302,741
- ----------------------------------------------------------------------------------------------------------------------------
</TABLE>
12
<PAGE>
<TABLE>
<CAPTION>
NUVEEN TAX-FREE MUTUAL FUNDS ANNUAL REPORT
FEBRUARY 29, 1996
- -------------------------------------------------------------------------------------------------------------------------
PRINCIPAL OPT. CALL MARKET
AMOUNT DESCRIPTION PROVISIONS* RATINGS** VALUE
- -------------------------------------------------------------------------------------------------------------------------
<S> <C>
COLORADO - 1.3%
$31,750,000 Colorado Housing Finance Authority,
7.250%, 11/01/31 11/01 at 102 Aa $33,558,798
4,250,000 Denver City and County Airport System,
7.250%, 11/15/25 11/02 at 102 Baa 4,864,508
- -------------------------------------------------------------------------------------------------------------------------
CONNECTICUT - 0.3%
5,745,000 Connecticut Housing Finance Authority,
7.550%, 11/15/08 11/00 at 102 Aa 5,908,847
2,970,000 Connecticut Resources Recovery Authority,
8.625%, 1/01/04 7/96 at 102 A 3,040,092
- -------------------------------------------------------------------------------------------------------------------------
DISTRICT OF COLUMBIA - 0.3%
7,560,000 CHT Housing, Inc., FHA-Insured,
8.500%, 1/01/22 7/96 at 103 N/R 7,813,940
- -------------------------------------------------------------------------------------------------------------------------
FLORIDA - 2.5%
4,500,000 Dade County Health Facilities Authority
(Mt. Sinai Medical Center),
8.400%, 12/01/07 (Pre-refunded to
12/01/99) 12/99 at 102 Aaa 4,951,665
31,000,000 Hillsborough County Industrial Development
Authority, Pollution Control (Tampa Electric),
8.000%, 5/01/22 5/02 at 103 Aa2 36,898,990
7,000,000 Jacksonville Electric Authority (St. John's
River Power Park System), 6.500%, 10/01/14 10/99 at 101 1/2 Aa1 7,455,980
15,000,000 Orlando Utilities Commission, 5.000%, 10/01/23 10/99 at 100 Aa 13,557,450
8,005,000 Pensacola Health Facilities Authority
(Daughters of Charity), 7.750%, 1/01/03
(Pre-refunded to 1/01/98) 1/98 at 101 1/2 Aaa 8,691,189
1,485,000 Sarasota Elderly Housing Corporation,
7.500%, 7/01/09 7/96 at 104 A 1,548,588
- -------------------------------------------------------------------------------------------------------------------------
HAWAII - 0.3%
8,000,000 Hawaii Department of Budget and Finance
(Kapiolani Health Care System),
7.650%, 7/01/19 (Pre-refunded to 7/01/01) 7/01 at 102 Aaa 9,401,600
- -------------------------------------------------------------------------------------------------------------------------
ILLINOIS - 15.9%
8,500,000 Illinois Development Finance Authority
(Columbus-Cuneo-Cabrini Medical Center),
8.500%, 2/01/15 (Pre-refunded to 2/01/00) 2/00 at 102 Baa 9,909,300
8,500,000 Illinois Educational Facilities Authority
(The University of Chicago), 5.600%, 7/01/24 7/03 at 102 Aaa 8,258,430
- -------------------------------------------------------------------------------------------------------------------------
</TABLE>
13
<PAGE>
PORTFOLIO OF INVESTMENTS
NUVEEN MUNICIPAL BOND FUND--CONTINUED
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------
PRINCIPAL OPT. CALL MARKET
AMOUNT DESCRIPTION PROVISIONS* RATINGS** VALUE
- --------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
ILLINOIS (CONTINUED)
Illinois General Obligation:
$ 15,100,000 6.200%, 10/01/04 10/02 at 102 AA- $ 16,637,482
14,750,000 5.875%, 6/01/10 6/02 at 102 AA- 15,146,038
5,000,000 5.875%, 6/01/11 6/02 at 102 AA- 5,114,250
10,000,000 5.700%, 4/01/18 4/03 at 102 AA- 9,845,200
4,770,000 Illinois Health Facilities Authority
(Rush Presbyterian), 6.900%, 10/01/02 4/96 at 100 A1 4,778,204
12,420,000 Illinois Health Facilities Authority
(LaGrange Hospital), 7.625%, 7/01/13
(Pre-refunded to 7/01/96) 7/96 at 102 A 12,833,089
10,000,000 Illinois Health Facilities Authority (Highland
Park Hospital), 6.200%, 10/01/22 10/02 at 102 Aaa 10,470,000
6,115,000 Illinois Health Facilities Authority (Illinois
Masonic Medical Center), 5.500%, 10/01/19 10/03 at 102 A 5,641,026
34,120,000 Illinois Health Facilities Authority,
(Rush-Presbyterian-St. Luke's Medical Center),
5.500%, 11/15/25 11/03 at 102 Aaa 32,791,367
10,425,000 Illinois Independent Higher Education Loan
Authority (Northwestern University),
8.000%, 12/01/07 12/96 at 102 Aa1 10,923,628
Illinois Sales Tax:
21,670,000 6.000%, 6/15/18 6/01 at 100 AAA 21,966,229
14,200,000 5.250%, 6/15/18 6/03 at 102 AAA 13,554,610
Illinois State Toll Highway Authority:
20,000,000 6.450%, 1/01/13 1/03 at 102 A1 20,866,200
8,655,000 6.200%, 1/01/16 1/03 at 102 Aaa 9,120,293
Chicago General Obligation:
5,800,000 5.250%, 1/01/18 1/04 at 102 Aaa 5,507,042
16,270,000 5.625%, 1/01/23 1/03 at 102 Aaa 16,046,938
22,335,000 Chicago Metropolitan Housing Development
Corporation, 6.900%, 7/01/22 7/02 at 102 AA 23,309,029
7,965,000 Chicago Motor Fuel Tax, 5.000%, 1/01/16 1/03 at 101 Aaa 7,391,759
Chicago O'Hare International Airport:
46,750,000 5.000%, 1/01/16 1/04 at 102 A1 44,133,870
18,710,000 5.000%, 1/01/18 1/04 at 102 Aaa 17,160,625
15,905,000 Cook County General Obligation,
5.000%, 11/15/23 11/03 at 100 Aaa 14,454,305
Dupage Water Commission, General Obligation:
39,040,000 7.875%, 3/01/11 (Pre-refunded to 3/01/96) 3/96 at 102 Aaa 39,830,560
16,800,000 5.750%, 3/01/11 3/02 at 100 Aaa 17,042,256
9,500,000 5.250%, 5/01/14 5/03 at 102 Aa 9,362,630
2,000,000 Hazel Crest (South Suburban Hospital),
9.125%, 7/01/17 (Pre-refunded to 7/01/97) 7/97 at 102 AAA 2,183,480
- --------------------------------------------------------------------------------------------------------------
</TABLE>
14
<PAGE>
NUVEEN TAX-FREE MUTUAL FUNDS ANNUAL REPORT
FEBRUARY 29, 1996
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------
PRINCIPAL OPT. CALL MARKET
AMOUNT DESCRIPTION PROVISIONS* RATINGS** VALUE
- -------------------------------------------------------------------------------------------------------------
<C> <S> <C> <C> <C>
ILLINOIS (CONTINUED)
$ 56,180,000 Metropolitan Pier & Exposition Authority
(McCormick Place Expansion Project),
6.500%, 6/15/27 6/03 at 102 A+ $ 58,538,436
Zion Elderly Housing Corporation:
240,000 7.250%, 3/01/98 3/96 at 102 A 244,795
1,705,000 7.750%, 3/01/10 3/96 at 102 A 1,741,555
- -------------------------------------------------------------------------------------------------------------
INDIANA - 2.7%
47,100,000 Indiana Health Facilities Financing Authority
(Daughters of Charity), 5.750%, 11/15/22 11/03 at 102 Aa 45,996,447
10,500,000 Indiana Health Facilities Financing Authority
(Methodist Hospital), 5.750%, 9/01/11 9/02 at 102 Aaa 10,712,100
12,550,000 Indiana Office Building Commission,
8.750%, 7/01/12 (Pre-refunded to 7/01/97) 7/97 at 102 Aaa 13,641,348
2,500,000 Indianapolis Local Public Improvement,
Bond Bank, 6.750%, 2/01/20 2/03 at 102 + 2,712,850
3,135,000 Indianapolis Resource Recovery (Ogden Martin),
7.900%, 12/01/08 12/96 at 103 A 3,307,300
2,470,000 Southwind Housing, Inc., 7.125%, 11/15/21 No Opt. Call AA 3,058,231
- -------------------------------------------------------------------------------------------------------------
IOWA - 0.3%
4,035,000 Iowa Housing Finance Authority,
5.875%, 8/01/08 8/96 at 101 Aa1 4,071,840
3,815,000 Davenport (Mercy Hospital), 6.625%, 7/01/14 7/02 at 102 Aaa 4,222,404
- -------------------------------------------------------------------------------------------------------------
KENTUCKY - 3.2%
Kentucky Housing Corporation:
17,600,000 5.300%, 7/01/10 1/04 at 102 Aaa 17,269,648
14,400,000 5.400%, 7/01/14 1/04 at 102 Aaa 14,087,520
3,925,000 7.250%, 1/01/17 7/01 at 102 Aaa 4,188,250
Kentucky Turnpike Authority:
9,860,000 8.000%, 7/01/03 7/97 at 102 A+ 10,540,636
8,980,000 5.000%, 7/01/08 7/97 at 100 A+ 8,829,316
34,500,000 Carroll County Pollution Control (Kentucky
Utilities Company), 7.450%, 9/15/16 9/02 at 102 Aa2 39,604,275
- -------------------------------------------------------------------------------------------------------------
MAINE - 0.3%
10,000,000 Maine State Housing Authority,
5.700%, 1/15/26 2/04 at 102 AA- 9,719,600
- -------------------------------------------------------------------------------------------------------------
MASSACHUSETTS - 3.3%
15,000,000 Massachusetts Bay Transportation Authority,
Certificates of Participation,
7.650%, 8/01/15 (Pre-refunded to 8/01/00) 8/00 at 102 Aaa 17,330,850
- ------------------------------------------------------------------------------------------------------------
</TABLE>
15
<PAGE>
PORTFOLIO OF INVESTMENTS
NUVEEN MUNICIPAL BOND FUND-CONTINUED
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------
PRINCIPAL OPT. CALL MARKET
AMOUNT DESCRIPTION PROVISIONS* RATINGS** VALUE
- -------------------------------------------------------------------------------------------------------------
<C> <S> <C> <C> <C>
MASSACHUSETTS (CONTINUED)
$ 19,670,000 Massachusetts General Obligation,
4.700%, 8/01/02 No Opt. Call A1 $ 19,990,818
Massachusetts Water Resources Authority:
14,765,000 5.250%, 3/01/13 3/03 at 102 A 14,202,896
6,500,000 7.500%, 4/01/16 (Pre-refunded to 4/01/00) 4/00 at 102 Aaa 7,412,795
9,500,000 6.000%, 4/01/20 4/00 at 100 A 9,538,570
24,650,000 5.250%, 12/01/20 12/04 at 102 A 23,201,320
5,795,000 5.000%, 3/01/22 3/03 at 100 A 5,208,546
- -------------------------------------------------------------------------------------------------------------
MICHIGAN - 4.5%
3,000,000 Michigan Hospital Finance Authority (Genesys
Health System), 7.500%, 10/01/27 10/05 at 100 Baa 3,162,090
Michigan Housing Development Authority:
3,950,000 6.750%, 7/01/05 7/96 at 100 Aa1 3,960,073
12,080,000 5.700%, 4/01/12 4/04 at 102 Aaa 12,208,531
10,000,000 Michigan Housing Development Authority,
Rental Housing, 6.600%, 4/01/12 10/02 at 102 A+ 10,377,100
4,000,000 Michigan State Hospital Finance Authority
(Henry Ford Hospital), 7.500%, 7/01/13
(Pre-refunded to 1/01/97) 1/97 at 102 Aaa 4,217,040
Michigan State Hospital Finance Authority
(The Detroit Medical Center):
19,585,000 5.750%, 8/15/13 8/04 at 102 A 19,069,327
54,000,000 5.500%, 8/15/23 8/04 at 102 A 50,558,040
5,000,000 Detroit Sewage Disposal System, 8.250%, 7/01/05
(Pre-refunded to 7/01/97) 7/97 at 102 A 5,396,900
16,805,000 St. Joseph Hospital Finance Authority (Mercy
Memorial Medical Center Obligated Group),
5.250%, 1/01/16 1/04 at 102 Aaa 15,979,034
5,000,000 University of Michigan Hospital,
6.625%, 12/01/10 12/96 at 100 Aa 5,051,400
- -------------------------------------------------------------------------------------------------------------
MINNESOTA - 0.9%
Minnesota Housing Finance Agency:
8,600,000 5.800%, 8/01/11 2/05 at 102 Aaa 8,703,630
2,520,000 6.250%, 2/01/20 8/96 at 102 A1 2,555,986
14,420,000 Minneapolis Convention Center,
7.750%, 4/01/11 (Pre-refunded to 4/01/96) 4/96 at 102 Aaa 14,763,773
- -------------------------------------------------------------------------------------------------------------
MISSOURI - 0.9%
2,740,000 Missouri Environmental Improvement and
Energy Resource Authority, Pollution Control
(Associated Electric Cooperative, Inc.),
7.900%, 11/15/14 5/96 at 103 Aa3 2,842,147
------------------------------------------------------------------------------------------------------------
</TABLE>
16
<PAGE>
<TABLE>
<CAPTION>
NUVEEN TAX-FREE MUTUAL FUNDS ANNUAL REPORT
FEBRUARY 29, 1996
- ---------------------------------------------------------------------------------------------------------------------------
PRINCIPAL OPT. CALL MARKET
AMOUNT DESCRIPTION PROVISIONS* RATINGS** VALUE
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
MISSOURI (CONTINUED)
$ 15,750,000 Missouri Health and Educational Facilities
Authority (Heartland Health), 8.125%, 10/01/10 10/99 at 102 1/2 BBB+ $ 18,042,413
6,195,000 Missouri Housing Development Commission,
7.000%, 9/15/22 3/96 at 101 3/4 AA+ 6,318,776
- ---------------------------------------------------------------------------------------------------------------------------
NEBRASKA - 1.4%
37,895,000 Consumers Public Power District, 5.100%, 1/01/03 7/96 at 100 A1 37,934,411
2,475,000 Hall County Hospital Authority (Sisters of Charity),
6.750%, 12/01/07 6/96 at 103 Aa 2,549,572
- ---------------------------------------------------------------------------------------------------------------------------
NEVADA - 0.2%
7,130,000 Reno, Insured Hospital Revenue (St. Mary's
Regional Medical Center), 5.800%, 5/15/13 5/03 at 102 Aaa 7,293,634
- ---------------------------------------------------------------------------------------------------------------------------
NEW HAMPSHIRE - 0.3%
8,500,000 New Hampshire Industrial Development
Authority, Pollution Control (Central
Maine Power Company), 7.375%, 5/01/14 12/01 at 103 Baa3 9,093,555
- ---------------------------------------------------------------------------------------------------------------------------
NEW JERSEY - 0.4%
10,750,000 New Jersey Housing and Mortgage Finance
Agency, 6.950%, 11/01/13 5/02 at 102 A+ 11,393,818
- ---------------------------------------------------------------------------------------------------------------------------
NEW YORK - 7.9%
8,000,000 New York Local Government Assistance
Corporation, 7.000%, 4/01/18 (Pre-refunded
to 4/01/02) 4/02 at 102 Aaa 9,260,080
19,490,000 New York State Housing Finance Agency, Health
Facilities (New York City), 8.000%, 11/01/08 11/00 at 102 BBB+ 22,002,066
11,490,000 New York State Mortgage Agency, 6.875%, 4/01/17 10/96 at 102 Aa 11,810,226
10,725,000 Battery Park City Authority, 5.000%, 11/01/13 11/03 at 102 AA 9,866,893
New York Municipal Assistance Corporation:
16,270,000 7.750%, 7/01/06 7/97 at 102 Aa 17,350,653
18,565,000 6.750%, 7/01/06 7/97 at 102 Aa 19,498,820
23,535,000 7.250%, 7/01/08 7/96 at 102 Aa 24,251,170
14,250,000 6.000%, 7/01/08 7/97 at 100 Aa 14,465,318
New York City General Obligation:
16,500,000 4.875%, 10/01/01 No Opt. Call Baa1 16,183,365
2,350,000 6.000%, 8/15/04 No Opt. Call Baa1 2,412,604
7,500,000 5.900%, 2/01/05 No Opt. Call Baa1 7,598,175
5,000,000 8.125%, 11/01/06 (Pre-refunded to 11/01/97) 11/97 at 101 1/2 Aaa 5,437,700
8,000,000 5.750%, 8/15/11 8/03 at 102 Baa1 7,702,640
8,525,000 6.625%, 8/01/12 (Pre-refunded to 8/01/02) 8/02 at 101 1/2 Aaa 9,734,271
12,655,000 5.750%, 2/01/17 2/06 at 101 1/2 Baa1 11,942,270
14,000,000 6.625%, 2/15/25 2/05 at 101 Baa1 14,716,520
- ---------------------------------------------------------------------------------------------------------------------------
</TABLE>
17
<PAGE>
PORTFOLIO OF INVESTMENTS
NUVEEN MUNICIPAL BOND FUND-CONTINUED
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------
PRINCIPAL OPT. CALL MARKET
AMOUNT DESCRIPTION PROVISIONS* RATINGS** VALUE
- -------------------------------------------------------------------------------------------------------------
<C> <S> <C> <C> <C>
NEW YORK (CONTINUED)
New York City Municipal Water Finance
Authority, Water and Sewer System:
$ 8,600,000 6.000%, 6/15/17 6/02 at 101 1/2 A $ 8,764,948
10,000,000 7.750%, 6/15/20 (Pre-refunded to 6/15/01) 6/01 at 101 1/2 Aaa 11,778,600
5,000,000 Triborough Bridge and Tunnel Authority,
General Purpose, 4.750%, 1/01/19 1/04 at 100 Aa 4,512,300
- -------------------------------------------------------------------------------------------------------------
NORTH CAROLINA - 3.0%
North Carolina Eastern Municipal Power Agency:
63,160,000 6.250%, 1/01/12 1/03 at 102 A 64,900,058
17,290,000 8.000%, 1/01/21 (Pre-refunded to 1/01/98) 1/98 at 102 Aaa 18,929,092
5,545,000 North Carolina Municipal Power Agency
No. 1, (Catawba), 7.625%, 1/01/14 1/98 at 102 Aaa 5,973,296
Housing Authority of Wilmington:
165,000 7.750%, 6/01/98 6/96 at 100 AA 171,125
1,195,000 7.750%, 6/01/10 6/96 at 100 AA 1,279,295
- -------------------------------------------------------------------------------------------------------------
OHIO - 0.1%
500,000 Ohio Building Authority (Toledo Center),
9.100%, 10/01/04 4/96 at 103 A1 517,205
- -------------------------------------------------------------------------------------------------------------
OKLAHOMA - 0.2%
5,375,000 Comanche County Hospital Authority,
8.050%, 7/01/16 (Pre-refunded to 7/01/99) 7/99 at 102 AAA 6,137,390
2,970,000 Midwest City Memorial Hospital Authority,
7.375%, 4/01/12 4/02 at 102 BBB+ 3,096,195
- -------------------------------------------------------------------------------------------------------------
PENNSYLVANIA - 4.8%
Pennsylvania Housing Finance Agency:
4,025,000 8.100%, 7/01/13 7/02 at 102 AAA 4,459,338
16,830,000 8.200%, 7/01/24 7/02 at 102 AAA 18,639,730
22,500,000 Pennsylvania Housing Finance Agency, Rental
Housing (FNMA), 5.750%, 7/01/14 7/03 at 102 Aaa 22,610,925
15,000,000 Pennsylvania Intergovernmental Cooperative
Authority (Philadelphia Funding Program),
5.000%, 6/15/22 6/03 at 100 Aaa 13,719,600
5,000,000 Allegheny County Hospital Development
Authority (St. Francis Medical Center),
8.125%, 6/01/13 (Pre-refunded to 6/01/96) 6/96 to 102 Aaa 5,160,150
10,000,000 Lehigh County Industrial Development
Authority, Pollution Control (Pennsylvania
Power and Light Company), 6.400%, 9/01/29 9/04 at 102 Aaa 10,839,700
9,300,000 Philadelphia Airport, 6.200%, 6/15/06 6/96 at 100 A-- 9,305,487
- -------------------------------------------------------------------------------------------------------------
</TABLE>
18
<PAGE>
NUVEEN TAX-FREE MUTUAL FUNDS ANNUAL REPORT
FEBRUARY 29, 1996
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------
PRINCIPAL OPT. CALL MARKET
AMOUNT DESCRIPTION PROVISIONS* RATINGS** VALUE
- -------------------------------------------------------------------------------------------------------------
<C> <S> <C> <C> <C>
PENNSYLVANIA (CONTINUED)
Philadelphia Water and Sewer:
$ 10,000,000 7.500%, 8/01/10 (Pre-refunded to 8/01/01) 8/01 at 102 AAA $ 11,702,000
5,890,000 7.250%, 7/01/14 (Pre-refunded to 7/01/96) 7/96 at 102 AAA 6,026,471
7,000,000 7.000%, 8/01/18 (Pre-refunded to 8/01/01) 8/01 at 100 AAA 7,912,380
28,075,000 Philadelphia Hospitals and Higher Educational
Facilities Authority (Pennsylvania Hospital),
7.250%, 7/01/14 7/96 at 101 A 28,392,809
- -------------------------------------------------------------------------------------------------------------
RHODE ISLAND - 0.2%
7,595,000 Rhode Island Convention Center Authority,
5.000%, 5/15/20 5/03 at 100 Aaa 6,886,994
- -------------------------------------------------------------------------------------------------------------
SOUTH CAROLINA - 0.8%
20,750,000 Piedmont Municipal Power Agency,
7.400%, 1/01/18 1/98 at 102 Aaa 22,274,918
- -------------------------------------------------------------------------------------------------------------
TEXAS - 4.3%
Austin Water, Sewer and Electric:
300,000 14.000%, 11/15/01 (Pre-refunded to 5/15/99) 5/99 at 100 A 387,408
18,415,000 14.000%, 11/15/01 No Opt. Call A 25,251,341
4,000,000 11.000%, 11/15/02 (Pre-refunded to 5/15/97) 5/97 at 100 AAA 4,355,880
28,500,000 Brazos River Authority, 5.800%, 8/01/15 8/00 at 102 Aaa 28,779,585
24,800,000 Harris County Toll Road, 5.300%, 8/15/13 8/04 at 102 Aaa 24,513,064
7,000,000 Harris County Health Facilities Development
Corporation (St. Luke's Episcopal Hospital),
6.750%, 2/15/21 2/01 at 102 Aa 7,531,230
3,345,000 Houston Water and Sewer System, 8.200%, 12/01/15
(Pre-refunded to 12/01/96) 12/96 at 102 AAA 3,532,588
San Antonio Electric and Gas Systems:
5,000,000 8.000%, 2/01/09 (Pre-refunded to 2/01/98) 2/98 at 102 Aaa 5,486,400
3,500,000 8.000%, 2/01/16 (Pre-refunded to 2/01/98) 2/98 at 102 Aaa 3,840,480
16,000,000 San Antonio Electric and Gas System,
5.000%, 2/01/17 2/02 at 101 Aa1 14,704,640
5,615,000 San Antonio Sewer System, 7.900%, 5/01/14
(Pre-refunded to 5/01/97) 5/97 at 101 1/2 Aaa 5,986,769
- -------------------------------------------------------------------------------------------------------------
UTAH - 3.0%
Intermountain Power Agency:
6,300,000 5.500%, 7/01/13 7/03 at 103 Aa 6,254,325
32,080,000 7.875%, 7/01/14 7/96 at 102 Aa 33,168,795
16,260,000 7.200%, 7/01/19 7/97 at 102 Aa 17,152,186
31,990,000 5.000%, 7/01/23 7/03 at 100 Aa 28,559,712
1,730,000 Layton Industrial Development (K-Mart),
8.750%, 6/01/05 6/96 at 100 Baa3 1,615,889
- -------------------------------------------------------------------------------------------------------------
</TABLE>
19
<PAGE>
PORTFOLIO OF INVESTMENTS
NUVEEN MUNICIPAL BOND FUND-CONTINUED
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------------
PRINCIPAL OPT. CALL MARKET
AMOUNT DESCRIPTION PROVISIONS* RATINGS** VALUE
- -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
VERMONT - 0.1%
$ 255,000 University of Vermont, Housing, Dining and
Student Services, 6.300%, 7/01/06 7/96 at 101 A1 $ 258,583
- -------------------------------------------------------------------------------------------------------------------------
VIRGINIA - 3.8%
Virginia Housing Development Authority:
3,275,000 6.700%, 11/01/21 11/96 at 101 AA+ 3,309,027
50,000,000 7.150%, 1/01/33 1/02 at 102 Aa1 52,781,500
Virginia Housing Development Authority,
Multi-Family Housing:
19,080,000 5.550%, 5/01/08 5/03 at 102 AA+ 18,994,903
28,075,000 5.900%, 5/01/14 5/03 at 102 AA+ 27,948,382
6,240,000 Chesapeake Hospital Authority (Chesapeake
General Hospital), 7.625%, 7/01/18
(Pre-refunded to 7/01/98) 7/98 at 102 Aaa 6,887,587
1,035,000 Chesapeake Industrial Development Authority
(Camelot Hall Nursing Home),
7.500%, 9/01/01 No Opt. Call N/R 1,039,016
- -------------------------------------------------------------------------------------------------------------------------
WASHINGTON - 7.0%
Washington Public Power Supply System,
Nuclear Project No. 1:
14,260,000 7.000%, 7/01/07 No Opt. Call Aa 16,383,884
7,805,000 7.000%, 7/01/09 No Opt. Call Aa 8,980,667
18,500,000 5.750%, 7/01/13 7/03 at 102 Aa 18,268,750
10,000,000 5.375%, 7/01/15 7/03 at 102 Aa 9,369,900
5,000,000 7.125%, 7/01/16 No Opt. Call Aa 5,807,700
10,000,000 5.700%, 7/01/17 7/03 at 102 Aaa 9,993,000
Washington Public Power Supply, Nuclear
Project No. 3:
9,180,000 5.300%, 7/01/10 7/03 at 102 Aa 8,904,967
51,070,000 5.375%, 7/01/15 7/03 at 102 Aa 47,635,032
2,095,000 15.000%, 7/01/18 (Pre-refunded to 7/01/96) 7/96 at 103 Aaa 2,238,738
8,835,000 5.700%, 7/01/18 7/03 at 102 Aa 8,568,448
11,545,000 5.500%, 7/01/18 7/03 at 102 Aa 10,899,635
6,635,000 Chelan County Public Utility District No. 1,
5.125%, 7/01/23 7/96 at 100 A1 6,044,286
31,482,000 Chelan County Public Utility District No. 1
(Rocky Reach Hydro-Electric System),
5.000%, 7/01/13 7/96 at 100 A1 30,608,375
6,805,000 Columbia Storage Power Exchange, 3.875%, 4/01/03 4/96 at 100 Aa 6,790,165
15,600,000 Douglas County Public Utility District No. 1
(Wells Hydroelectric), 4.000%, 9/01/18 9/96 at 101 A+ 13,139,256
- -------------------------------------------------------------------------------------------------------------------------
</TABLE>
20
<PAGE>
NUVEEN TAX-FREE MUTUAL FUNDS ANNUAL REPORT
FEBRUARY 29, 1996
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------------
PRINCIPAL OPT. CALL MARKET
AMOUNT DESCRIPTION PROVISIONS* RATINGS** VALUE
- -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
WISCONSIN - 3.7%
$ 13,700,000 Wisconsin Health and Educational Facilities
Authority (Columbia Hospital), 6.250%, 11/15/21 11/01 at 102 Aaa $ 14,385,548
6,000,000 Wisconsin Health and Educational Facilities
Authority (Meriter Health Services),
6.000%, 12/01/22 12/02 at 102 Aaa 6,186,720
13,500,000 Wisconsin Health and Educational Facilities
Authority (Aurora Health Care Obligated Group),
5.250%, 8/15/23 8/03 at 102 Aaa 12,560,940
3,250,000 Wisconsin Health and Educational Facilities
Authority (Froedtert Memorial Lutheran Hospital),
5.875%, 10/01/13 10/04 at 102 Aaa 3,332,225
32,000,000 Wisconsin Health and Educational Facilities
Authority (Aurora Medical Group),
5.750%, 11/15/25 5/06 at 102 Aaa 31,659,520
Wisconsin Housing and Economic
Development Authority:
28,200,000 5.800%, 11/01/13 12/03 at 102 A1 28,073,943
4,500,000 5.800%, 6/01/17 No Opt. Call A 4,719,642
8,500,000 7.050%, 11/01/22 4/02 at 102 A1 9,039,580
- -------------------------------------------------------------------------------------------------------------------------
PUERTO RICO - 0.3%
8,000,000 Puerto Rico Aqueduct and Sewer Authority,
7.875%, 7/01/17 (Pre-refunded to 7/01/98) 7/98 at 102 AAA 8,888,000
- -------------------------------------------------------------------------------------------------------------------------
$2,830,552,000 Total Investments - (Cost $2,668,395,087) - 97.2% 2,835,978,201
================---------------------------------------------------------------------------------------------------------
TEMPORARY INVESTMENTS IN SHORT-TERM
MUNICIPAL SECURITIES - 1.1%
$ 15,000,000 Harris County Health Facilities Development
Corporation (The Methodist Hospital),
Variable Rate Demand Bonds, 3.450%, 12/01/25+ A-1+ 15,000,000
3,400,000 Hillsborough County Industrial Development
Authority (Tampa Electric Company),
Variable Rate Demand Bonds, 3.450%, 9/01/25+ Aa-2 3,400,000
7,200,000 Metropolitan Nashville Airport Authority, Special
Facilities (American Airlines), Variable Rate
Demand Bonds, 3.500%, 10/01/12+ A-1+ 7,200,000
- -------------------------------------------------------------------------------------------------------------------------
</TABLE>
21
<PAGE>
PORTFOLIO OF INVESTMENTS
NUVEEN MUNICIPAL BOND FUND-CONTINUED
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------------
PRINCIPAL OPT. CALL MARKET
AMOUNT DESCRIPTION PROVISIONS* RATINGS** VALUE
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
TEMPORARY INVESTMENTS IN SHORT-TERM
MUNICIPAL SECURITIES (CONTINUED)
$ 2,800,000 Monroe County Economic Development Corporation,
Pollution Control (The Detroit Edison Company),
Variable Rate Demand Bonds, 3.350%, 10/01/24+ VMIG-1 $ 2,800,000
3,200,000 New York City General Obligation, Fiscal 1995B-B6,
Insured, Adjustable Rate Demand Bonds,
3.450%, 8/15/05+ VMIG-1 3,200,000
- -----------------------------------------------------------------------------------------------------------------------------------
$ 31,600,000 Total Temporary Investments - 1.1% 31,600,000
- -----------------------------------------------------------------------------------------------------------------------------------
Other Assets Less Liabilities - 1.7% 50,067,106
- -----------------------------------------------------------------------------------------------------------------------------------
Net Assets - 100% $ 2,917,645,307
===================================================================================================================================
</TABLE>
<TABLE>
- -----------------------------------------------------------------------------------------------------------------------------------
NUMBER MARKET MARKET
STANDARD & POOR'S MOODY'S OF ISSUES VALUE PERCENT
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
SUMMARY OF AAA Aaa 78 $ 934,014,456 32%
RATINGS** AA+, AA, AA-- Aa1, Aa, Aa2, Aa3 74 1,037,562,805 37
PORTFOLIO OF A+ A1 20 333,572,856 12
INVESTMENTS A, A-- A, A2, A3 26 367,144,188 13
(EXCLUDING BBB+, BBB, BBB-- Baa1, Baa, Baa2, Baa3 16 154,830,940 5
TEMPORARY Non-rated Non-rated 2 8,852,956 1
INVESTMENTS):
- ------------------------------------------------------------------------------------------------------------------------------------
TOTAL 216 $ 2,835,978,201 100%
====================================================================================================================================
</TABLE>
* Optional Call Provisions (not covered by the report of independent public
accountants): Dates (month and year) and prices of the earliest optional call or
redemption. There may be other call provisions at varying prices at later dates.
** Ratings (not covered by the report of independent public accountants): Using
the higher of Standard & Poor's or Moody's rating.
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.
22
<PAGE>
NUVEEN TAX-FREE MUTUAL FUNDS ANNUAL REPORT
FEBRUARY 29, 1996
NUVEEN INSURED MUNICIPAL BOND FUND
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
PRINCIPAL OPT. CALL MARKET
AMOUNT DESCRIPTION PROVISIONS* RATINGS** VALUE
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
ALABAMA - 5.5%
$ 2,120,000 Albertville Water Supply Board, 6.700%, 3/01/11 3/02 at 102 Aaa $ 2,354,599
3,500,000 Athens Electric, 6.000%, 6/01/25 6/05 at 102 Aaa 3,649,555
4,795,000 Auburn Government Utility Services Corporation,
Wastewater Treatment, 7.300%, 1/01/21 12/99 at 102 Aaa 5,283,227
1,875,000 Birmingham Special Care Facilities Financing
Authority (Baptist Medical Center),
7.000%, 1/01/21 1/01 at 102 Aaa 2,070,169
Daphne Utilities Board, Water, Gas and Sewer:
1,255,000 7.350%, 6/01/20 (Pre-refunded to 6/01/00) 6/00 at 102 Aaa 1,429,571
1,225,000 7.350%, 6/01/20 6/00 at 102 Aaa 1,377,219
Madison General Obligation:
3,000,000 6.250%, 2/01/19 2/04 at 102 Aaa 3,192,570
5,500,000 6.000%, 4/01/23 4/05 at 102 Aaa 5,751,295
3,000,000 Mobile County General Obligation,
6.700%, 2/01/11 (Pre-refunded to 2/01/00) 2/00 at 102 Aaa 3,321,780
3,000,000 Oneanta Utilities Board, 6.900%, 11/01/24 11/04 at 102 Aaa 3,409,740
Orange Beach Water and Sewer and Fire Authority:
3,000,000 5.375%, 5/15/15 5/05 at 102 Aaa 2,919,180
4,500,000 5.400%, 5/15/20 5/05 at 102 Aaa 4,360,815
West Morgan-East Lawrence Water Authority:
2,200,000 6.800%, 8/15/19 8/04 at 102 Aaa 2,487,166
3,000,000 6.850%, 8/15/25 8/04 at 102 Aaa 3,410,700
- -----------------------------------------------------------------------------------------------------------------------------------
ALASKA - 0.6%
5,000,000 Anchorage General Obligation, 5.600%, 1/01/14 1/04 at 100 Aaa 4,935,800
- -----------------------------------------------------------------------------------------------------------------------------------
ARIZONA - 1.2%
3,180,000 Maricopa County Industrial Development
Authority (Baptist Hospital), 5.500%, 9/01/13 9/05 at 101 Aaa 3,197,490
6,000,000 Tempe Union High School District No. 213,
General Obligation, 6.000%, 7/01/10 7/04 at 101 Aaa 6,412,560
- -----------------------------------------------------------------------------------------------------------------------------------
ARKANSAS - 0.3%
2,000,000 Saline County (Saline Memorial Hospital),
6.000%, 9/01/19 9/05 at 102 AAA 2,062,900
- ------------------------------------------------------------------------------------------------------------------------------------
CALIFORNIA - 9.5%
3,525,000 Brea Public Financing Authority, Tax Allocation,
7.000%, 8/01/15 (Pre-refunded to 8/01/01) 8/01 at 102 Aaa 4,053,433
5,000,000 Brea Redevelopment Agency, Tax Allocation,
5.750%, 8/01/23 8/03 at 102 Aaa 5,037,700
4,150,000 Fairfield Public Finance Authority,
5.500%, 8/01/23 8/03 at 102 Aaa 4,072,022
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
23
<PAGE>
PORTFOLIO OF INVESTMENTS
NUVEEN INSURED MUNICIPAL BOND FUND-CONTINUED
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------
PRINCIPAL OPT. CALL MARKET
AMOUNT DESCRIPTION PROVISIONS* RATINGS** VALUE
- -------------------------------------------------------------------------------------------------------------
<C> <S> <C> <C> <C>
CALIFORNIA (CONTINUED)
$ 2,500,000 Los Angeles Community Redevelopment Agency
(Bunker Hill Project), 5.600%, 12/01/28 12/03 at 102 Aaa $ 2,450,125
14,740,000 Los Angeles Convention and Exhibition Center
Authority, 5.375%, 8/15/18 8/03 at 102 Aaa 14,218,351
4,500,000 M-S-R Public Power Agency, San Juan Project,
6.000%, 7/01/20 7/03 at 102 Aaa 4,687,245
13,750,000 Ontario Redevelopment Financing Authority,
5.800%, 8/01/23 8/03 at 102 Aaa 14,470,638
5,295,000 Riverside County Desert Justice Facility
Corporation, Certificates of Participation,
6.000%, 12/01/12 12/04 at 101 Aaa 5,530,945
2,250,000 Sacramento Municipal Utility District,
Electric System, 6.500%, 9/01/21
(Pre-refunded to 9/01/01) 9/01 at 102 Aaa 2,536,628
7,500,000 San Bernardino, Joint Powers Finance Authority,
Tax Allocation, 5.750%, 10/01/25 10/05 at 102 Aaa 7,483,650
1,750,000 San Bernadino, Certificates of Participation,
5.500%, 8/01/22 8/05 at 102 Aaa 1,705,918
10,000,000 University of California, 6.375%, 9/01/24 9/02 at 102 Aaa 10,696,600
- -------------------------------------------------------------------------------------------------------------
COLORADO - 2.3%
6,000,000 Colorado Health Facilities Authority
(Children's Hospital Association),
5.250%, 10/01/26 10/06 at 101 Aaa 5,714,940
4,000,000 Colorado Springs (Memorial Hospital),
6.000%, 12/15/24 12/05 at 102 Aaa 4,155,640
4,500,000 Denver Board of Water Commissioners,
Certificates of Participation, 6.625%, 11/15/11 11/01 at 101 Aaa 4,952,925
3,500,000 Jefferson County Equipment Lease, Certificates
of Participation, 6.650%, 12/01/08 12/02 at 102 Aaa 3,927,875
- -------------------------------------------------------------------------------------------------------------
DELAWARE - 0.5%
3,600,000 Delaware Economic Development Authority,
Pollution Control (Delmarva Power and
Light Company), 6.750%, 5/01/19 5/02 at 102 Aaa 4,005,144
- -------------------------------------------------------------------------------------------------------------
DISTRICT OF COLUMBIA - 1.1%
District of Columbia General Obligation:
2,500,000 7.500%, 6/01/10 (Pre-refunded to 6/01/00) 6/00 at 102 Aaa 2,862,225
6,000,000 6.100%, 6/01/11 6/04 at 102 Aaa 6,245,280
- -------------------------------------------------------------------------------------------------------------
</TABLE>
24
<PAGE>
<TABLE>
<CAPTION>
NUVEEN TAX-FREE MUTUAL FUNDS ANNUAL REPORT
FEBRUARY 29, 1996
- ---------------------------------------------------------------------------------------------------------------------------
PRINCIPAL OPT. CALL MARKET
AMOUNT DESCRIPTION PROVISIONS* RATINGS** VALUE
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
FLORIDA - 1.5%
Florida Keys Aqueduct Authority:
$ 920,000 6.750%, 9/01/21 (Pre-refunded to 9/01/01) 9/01 at 101 Aaa $ 1,040,603
80,000 6.750%, 9/01/21 9/01 at 101 Aaa 88,391
Brevard County Utility System:
1,520,000 7.375%, 3/01/14 (Pre-refunded to 3/01/98) 3/98 at 102 Aaa 1,656,131
295,000 7.375%, 3/01/14 3/98 at 102 Aaa 317,995
2,750,000 Lakeland (Lakeland Regional Medical
Center), 5.250% 11/15/25 (WI) 11/06 at 102 Aaa 2,624,573
3,500,000 Sarasota County Utility System,
5.250%, 10/01/25 (WI) 10/06 at 102 Aaa 3,360,350
2,405,000 South Broward Hospital District,
7.500%, 5/01/08 5/03 at 102 Aaa 2,852,522
- ---------------------------------------------------------------------------------------------------------------------------
GEORGIA - 2.8%
1,000,000 Georgia Municipal Electric Authority,
6.500%, 1/01/26 1/04 at 102 Aaa 1,086,310
5,000,000 Albany Sewerage System, 6.625%, 7/01/17 7/02 at 102 Aaa 5,548,400
5,000,000 Appling County Development Authority
(Oglethorpe Power Corporation), 7.150%, 1/01/21 1/04 at 101 Aaa 5,718,350
1,000,000 Atlanta Board of Education, Certificates of
Participation, 7.125%, 6/01/12
(Pre-refunded to 6/01/00) 6/00 at 102 Aaa 1,130,410
2,250,000 Chatham County Hospital Authority
(Savannah Memorial Medical Center),
7.000%, 1/01/21 1/01 at 102 Aaa 2,513,115
Marietta Development Authority (Life College):
2,590,000 5.950%, 9/01/19 9/05 at 102 Aaa 2,755,113
3,770,000 6.250%, 9/01/25 9/05 at 102 Aaa 3,869,528
- ---------------------------------------------------------------------------------------------------------------------------
ILLINOIS - 16.3%
Illinois General Obligation:
3,065,000 6.100%, 2/01/19 2/05 at 102 Aaa 3,218,189
5,000,000 5.875%, 8/01/19 8/04 at 102 AA-- 5,054,100
5,545,000 6.100%, 2/01/20 2/05 at 102 Aaa 5,822,139
6,750,000 Illinois Health Facilities Authority
(Methodist Health Services), 8.000%, 8/01/15 2/99 at 103 Aaa 7,568,573
4,500,000 Illinois Health Facilities Authority
(The Children's Memorial Hospital),
5.000%, 8/15/22 8/03 at 102 Aaa 4,074,975
3,000,000 Illinois Health Facilities Authority
(The University of Chicago Hospitals),
6.125%, 8/15/24 8/04 at 102 Aaa 3,134,220
- ---------------------------------------------------------------------------------------------------------------------------
</TABLE>
25
<PAGE>
PORTFOLIO OF INVESTMENTS
NUVEEN INSURED MUNICIPAL BOND FUND--CONTINUED
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------------
PRINCIPAL OPT. CALL MARKET
AMOUNT DESCRIPTION PROVISIONS* RATINGS** VALUE
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
ILLINOIS (CONTINUED)
Illinois Health Facilities Authority (Ingalls Health
System):
$ 7,000,000 6.250%, 5/15/14 5/04 at 102 Aaa $ 7,402,500
2,100,000 7.000%, 1/01/19 (Pre-refunded to 1/01/00) 1/00 at 102 Aaa 2,355,675
4,500,000 6.250%, 5/15/24 5/04 at 102 Aaa 4,712,175
4,000,000 Illinois Health Facilities Authority
(Northwestern Medical Faculty
Foundation), 6.500%, 11/15/15 11/04 at 102 Aaa 4,377,360
Illinois Health Facilities Authority (Community
Provider Pooled Loan):
33,000 7.900%, 8/15/03 (Pre-refunded to 8/15/96) 8/96 at 102 Aaa 34,346
162,000 7.900%, 8/15/03 No Opt. Call Aaa 190,732
1,268,000 7.900%, 8/15/03 8/99 at 100 Aaa 1,297,912
5,000,000 Illinois Participations--Department of Central
Management Services--Public Aid,
5.650%, 7/01/17 7/06 at 102 Aaa 4,953,700
7,705,000 Illinois State Toll Highway Authority,
6.200%, 1/01/16 1/03 at 102 Aaa 8,119,221
1,910,000 Berwyn (MacNeal Memorial Hospital),
5.500%, 6/01/15 6/06 at 102 Aaa 1,866,605
2,500,000 Chicago General Obligation (Central Public
Library Project), 6.850%, 1/01/17
(Pre-refunded to 7/01/02) 7/02 at 101 1/2 Aaa 2,866,875
Chicago General Obligation:
5,000,000 6.250%, 1/01/12 1/02 at 102 Aaa 5,292,800
5,800,000 5.875%, 1/01/22 1/02 at 102 Aaa 5,846,516
1,500,000 Chicago Public Building Commission
(Community College District No. 508),
7.700%, 1/01/08 1/98 at 102 Aaa 1,657,335
23,300,000 Chicago Public Building Commission
(Board of Education), 5.750%, 12/01/18 12/03 at 102 Aaa 23,195,150
6,540,000 Cicero General Obligation, 6.400%, 12/01/14 12/04 at 102 Aaa 6,998,716
Cook County School District No. 25
(Arlington Heights), Certificates of Participation:
1,400,000 5.300%, 5/01/06 No Opt. Call Aaa 1,439,816
4,200,000 5.700%, 5/01/13 5/06 at 102 Aaa 4,245,948
2,500,000 Community College District No. 508, Cook County,
8.750%, 1/01/07 No Opt. Call Aaa 3,302,925
2,370,000 Eastern Illinois University, 6.375%, 4/01/16 4/04 at 102 Aaa 2,533,530
7,570,000 Franklin Park General Obligation, 5.500%, 7/01/22 7/04 at 102 Aaa 7,369,244
4,000,000 Regional Transportation Authority, General
Obligation, 5.850%, 6/01/23 6/03 at 102 Aaa 4,038,000
- ---------------------------------------------------------------------------------------------------------------------------
</TABLE>
26
<PAGE>
<TABLE>
<CAPTION>
NUVEEN TAX-FREE MUTUAL FUNDS ANNUAL REPORT
FEBRUARY 29, 1996
- ---------------------------------------------------------------------------------------------------------------------------
PRINCIPAL OPT. CALL MARKET
AMOUNT DESCRIPTION PROVISIONS* RATINGS** VALUE
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
INDIANA - 5.2%
Indiana Health Facilities Financing Authority
(Community Hospitals Project):
$ 5,000,000 6.400%, 5/01/12 5/02 at 102 Aaa $ 5,331,500
3,000,000 5.600%, 5/15/14 5/06 at 102 Aaa 2,971,020
Indiana Municipal Power Agency,
Power Supply System:
1,000,000 7.100%, 1/01/15 (Pre-refunded to 1/01/00) 1/00 at 102 Aaa 1,121,460
5,000,000 6.125%, 1/01/19 1/03 at 102 Aaa 5,168,250
3,750,000 Indianapolis Gas Utility System, 6.200%, 6/01/23 6/02 at 102 Aaa 3,915,600
5,350,000 Jasper County Pollution Control (Northern Indiana
Public Service Company), 7.100%, 7/01/17 7/01 at 102 Aaa 5,969,851
2,000,000 Lawrence Central High School Building
Corporation, First Mortgage,
7.250%, 7/01/08 (Pre-refunded to 7/01/00) 7/00 at 102 Aaa 2,274,620
3,300,000 Marion County Convention and Recreational
Facilities Authority, 7.000%, 6/01/21
(Pre-refunded to 6/01/01) 6/01 at 102 Aaa 3,771,009
2,250,000 Monroe County Hospital Authority (Bloomington
Hospital), 7.125%, 5/01/11 5/99 at 101 Aaa 2,440,395
1,000,000 Princeton Pollution Control (Public Service
Company of Indiana), 7.375%, 3/15/12 3/00 at 102 Aaa 1,119,730
2,000,000 St. Joseph County Hospital Authority (Memorial
Hospital of South Bend), 7.000%, 8/15/20 8/01 at 102 Aaa 2,225,180
2,190,000 Shelby County Jail Building Corporation, First
Mortgage, 6.500%, 7/15/09 7/02 at 102 Aaa 2,411,321
1,380,000 South Bend Community School Corporation,
Edison School Building Corporation, First
Mortgage, 6.650%, 1/15/14 7/00 at 100 Aaa 1,514,992
2,265,000 Southwest Allen Multi-School Building Corporation,
6.375%, 1/15/09 1/02 at 101 Aaa 2,419,043
- ---------------------------------------------------------------------------------------------------------------------------
KENTUCKY - 0.1%
1,000,000 Louisville and Jefferson County Metropolitan
Sewer District, 7.350%, 5/01/19
(Pre-refunded to 5/01/00) 5/00 at 102 Aaa 1,136,970
- ---------------------------------------------------------------------------------------------------------------------------
LOUISIANA - 2.9%
Louisiana General Obligation:
5,000,000 6.500%, 5/01/09 5/02 at 102 Aaa 5,519,400
2,000,000 6.500%, 5/01/12 5/02 at 102 Aaa 2,199,860
7,000,000 Louisiana Public Facilities Authority
(Southern Baptist Hospital),
6.800%, 5/15/12 (Pre-refunded to 5/15/02) 5/02 at 102 Aaa 8,018,850
- ---------------------------------------------------------------------------------------------------------------------------
</TABLE>
27
<PAGE>
PORTFOLIO OF INVESTMENTS
NUVEEN INSURED MUNICIPAL BOND FUND--CONTINUED
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------------
PRINCIPAL OPT. CALL MARKET
AMOUNT DESCRIPTION PROVISIONS* RATINGS** VALUE
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
LOUISIANA (CONTINUED)
$ 1,635,000 Louisiana Public Facilities Authority
(West Jefferson Medical Center), 7.900%, 12/01/15 12/98 at 102 Aaa $ 1,813,297
Tangipahoa Parish Hospital Service District No. 1:
4,750,000 6.250%, 2/01/24 2/04 at 102 Aaa 5,017,520
1,250,000 6.125%, 2/01/14 2/04 at 102 Aaa 1,315,413
- ---------------------------------------------------------------------------------------------------------------------------
MAINE - 2.1%
Maine Health and Higher Educational Facilities
Authority:
3,175,000 7.000%, 7/01/24 7/04 at 102 Aaa 3,616,230
11,500,000 5.875%, 7/01/25 7/05 at 102 Aaa 11,756,910
Old Orchard Beach General Obligation:
750,000 6.650%, 9/01/09 9/02 at 103 Aaa 842,145
500,000 6.650%, 9/01/10 9/02 at 103 Aaa 560,235
- ---------------------------------------------------------------------------------------------------------------------------
MARYLAND - 0.1%
1,000,000 Morgan State University, Academic and Auxiliary
Fees, 7.000%, 7/01/20 (Pre-refunded to 7/01/00) 7/00 at 102 Aaa 1,127,480
- ---------------------------------------------------------------------------------------------------------------------------
MASSACHUSETTS - 3.8%
1,250,000 Massachusetts Bay Transportation Authority,
Certificates of Participation, 7.650%, 8/01/15
(Pre-refunded to 8/01/00) 8/00 at 102 Aaa 1,444,238
2,000,000 Massachusetts Health and Educational Facilities
Authority (Capital Asset Program),
7.300%, 10/01/18 4/00 at 102 Aaa 2,224,760
3,400,000 Massachusetts Health and Educational Facilities
Authority (New England Medical Center),
6.625%, 7/01/25 7/02 at 102 Aaa 3,770,940
4,000,000 Massachusetts Health and Educational Facilities
Authority (South Shore Hospital),
6.500%, 7/01/22 7/02 at 102 Aaa 4,384,120
1,000,000 Massachusetts Health and Educational Facilities
Authority (Falmouth Hospital),
5.625%, 7/01/11 7/03 at 102 Aaa 1,015,890
2,800,000 Massachusetts Health and Educational Facilities
Authority (Lahey Clinic Medical Center),
5.625%, 7/01/15 7/03 at 102 Aaa 2,770,488
5,875,000 Massachusetts Health and Educational Facilities
Authority (Cape Cod Health System),
5.250%, 11/15/21 11/03 at 102 AAA 5,516,214
4,000,000 Massachusetts Health and Educational Facilities
Authority (Berkshire Health System),
6.000%, 10/01/19 10/05 at 102 Aaa 4,150,400
- ---------------------------------------------------------------------------------------------------------------------------
</TABLE>
28
<PAGE>
<TABLE>
<CAPTION>
NUVEEN TAX-FREE MUTUAL FUNDS ANNUAL REPORT
FEBRUARY 29, 1996
- ---------------------------------------------------------------------------------------------------------------------------
PRINCIPAL OPT. CALL MARKET
AMOUNT DESCRIPTION PROVISIONS* RATINGS** VALUE
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
MASSACHUSETTS (CONTINUED)
$ 3,500,000 Boston City Hospital (FHA-Insured Mortgage),
7.625%, 2/15/21 (Pre-refunded to 8/15/00) 8/00 at 102 Aaa $ 3,997,980
1,150,000 Haverville General Obligation, 7.000%, 6/15/12 6/02 at 102 Aaa 1,295,291
- ---------------------------------------------------------------------------------------------------------------------------
MICHIGAN - 5.8%
2,400,000 Michigan State Hospital Finance Authority
(Henry Ford Health System), 5.750%, 9/01/17 9/02 at 102 Aaa 2,398,512
5,475,000 Michigan State Trunk Line, 5.500%, 10/01/21 10/02 at 100 Aaa 5,382,473
2,000,000 Michigan Strategic Fund (The Detroit Edison
Company), 6.875%, 12/01/21 12/01 at 102 Aaa 2,244,860
12,130,000 Bay City General Obligation, Unlimited Tax,
0.000%, 6/01/21 No Opt. Call Aaa 2,848,488
5,000,000 Caledonia Community Schools General
Obligation, 6.700%, 5/01/22
(Pre-refunded to 5/01/02) 5/02 at 102 Aaa 5,697,600
2,500,000 Chelsea School District, Counties of Washtenaw and
Jackson, General Obligation,
6.000%, 5/01/19 5/05 at 101 Aaa 2,595,175
2,000,000 Detroit Sewage Disposal System,
6.625%, 7/01/21 (Pre-refunded to 7/01/01) 7/01 at 102 Aaa 2,253,500
6,905,000 Detroit Water Supply System, 5.500%, 7/01/25 7/05 at 101 Aaa 6,781,124
8,000,000 Livonia Public School District, General
Obligation, 5.500%, 5/01/21 5/03 at 102 Aaa 7,865,520
3,405,000 Oakland University, 5.750%, 5/15/26 5/05 at 102 Aaa 3,436,905
6,085,000 River Rouge School District, Unlimited Tax,
5.625%, 5/01/22 5/03 at 101 1/2 Aaa 6,059,686
- ---------------------------------------------------------------------------------------------------------------------------
MISSISSIPPI - 0.8%
6,400,000 Medical Center Educational Building Corporation
(University of Mississippi Medical Center Project),
5.900%, 12/01/23 12/04 at 102 Aaa 6,545,152
- ---------------------------------------------------------------------------------------------------------------------------
NEVADA - 0.8%
2,500,000 Churchill County (Western Health Network),
6.000%, 1/01/24 1/04 at 102 Aaa 2,587,075
2,000,000 Clark County Industrial Development (Nevada
Power Company), 7.200%, 10/01/22 10/02 at 102 Aaa 2,273,800
1,160,000 University of Nevada System, 7.125%, 7/01/16
(Pre-refunded to 7/01/00) 7/00 at 102 Aaa 1,313,584
- ---------------------------------------------------------------------------------------------------------------------------
</TABLE>
29
<PAGE>
PORTFOLIO OF INVESTMENTS
NUVEEN INSURED MUNICIPAL BOND FUND--CONTINUED
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------------
PRINCIPAL OPT. CALL MARKET
AMOUNT DESCRIPTION PROVISIONS* RATINGS** VALUE
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
NEW HAMPSHIRE - 0.4%
$ 2,850,000 New Hampshire Higher Education and
Health Facilities Authority, University System
6.250%, 7/01/20 7/02 at 102 Aaa $ 3,019,518
- ---------------------------------------------------------------------------------------------------------------------------
NEW JERSEY - 0.4%
1,480,000 New Jersey Housing and Mortgage Finance Agency,
Home Mortgage Purchase, 8.100%, 10/01/07 4/98 at 103 Aaa 1,573,654
1,955,000 Pennsauken Township Housing Finance
Corporation, 8.000%, 4/01/11 4/05 at 100 Aaa 2,065,712
- ---------------------------------------------------------------------------------------------------------------------------
NEW MEXICO - 1.0%
3,000,000 Albuquerque Hospital System (Presbyterian
Healthcare Services), 6.600%, 8/01/07 8/97 at 102 Aaa 3,167,910
4,445,000 Farmington Pollution Control (Public Service
Company of New Mexico), 6.375%, 12/15/22 12/02 at 102 Aaa 4,777,842
- ---------------------------------------------------------------------------------------------------------------------------
NEW YORK - 12.2%
6,530,000 New York State Medical Care Facilities
Finance Agency, Mental Health Services,
Facilities Improvement, 5.900%, 8/15/22 8/02 at 102 Aaa 6,662,624
3,255,000 New York State Thruway Authority,
5.500%, 1/01/23 1/02 at 100 Aaa 3,189,900
3,000,000 Dormitory Authority of the State of New York
(City University), 5.750%, 7/01/18 No Opt. Call Aaa 3,113,220
8,375,000 Dormitory Authority of the State of New York
(Mount Sinai School of Medicine), 5.000%, 7/01/21 7/04 at 102 Aaa 7,800,140
Metropolitan Transportation Authority, Commuter
Facilities:
4,955,000 6.250%. 7/01/17 7/02 at 102 Aaa 5,273,706
5,000,000 6.375%, 7/01/18 7/04 at 101 1/2 Aaa 5,387,250
6,925,000 6.250%, 7/01/22 7/02 at 102 Aaa 7,332,121
New York City General Obligation:
5,715,000 6.625%, 8/01/12 (Pre-refunded to 8/01/02) 8/02 at 101 1/2 Aaa 6,525,673
285,000 6.625%, 8/01/12 8/02 at 101 1/2 Aaa 315,344
3,010,000 6.000%, 5/15/16 5/03 at 101 1/2 Aaa 3,131,664
3,750,000 7.000%, 2/01/18 2/02 at 101 1/2 Aaa 4,197,750
6,795,000 New York City Health and Hospitals
Corporation, Health System, 5.750%, 2/15/22 2/03 at 102 Aaa 6,781,138
6,330,000 New York City Municipal Water Finance Authority,
6.750%, 6/15/16 6/01 at 101 Aaa 7,016,256
- ---------------------------------------------------------------------------------------------------------------------------
</TABLE>
30
<PAGE>
<TABLE>
<CAPTION>
NUVEEN TAX-FREE MUTUAL FUNDS ANNUAL REPORT
FEBRUARY 29, 1996
- ---------------------------------------------------------------------------------------------------------------------------
PRINCIPAL OPT. CALL MARKET
AMOUNT DESCRIPTION PROVISIONS* RATINGS** VALUE
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
NEW YORK (CONTINUED)
New York City Municipal Water Finance
Authority, Water and Sewer System:
$ 4,155,000 6.750%, 6/15/14 (Pre-refunded to 6/15/99) 6/99 at 101 1/2 Aaa $ 4,562,855
2,025,000 6.750%, 6/15/14 6/99 at 101 1/2 Aaa 2,196,578
4,470,000 5.750%, 6/15/18 6/02 at 101 1/2 Aaa 4,509,157
1,000,000 New York City Transit Authority, Transit
Facilities (Livingston Plaza Project),
7.500%, 1/01/20 (Pre-refunded to 1/01/00) 1/00 at 102 Aaa 1,137,820
3,900,000 New York City Transit Authority, Transit Facilities,
5.400%, 1/01/18 No Opt. Call Aaa 3,872,505
New York City Industrial Development Agency,
Civic Facility (USTA National Tennis Center
Incorporated Project):
3,500,000 6.500%, 11/15/10 11/04 at 102 Aaa 3,884,685
3,000,000 6.600%, 11/15/11 11/04 at 102 Aaa 3,364,140
Triborough Bridge and Tunnel Authority,
Special Obligation:
5,240,000 6.875%, 1/01/15 1/01 at 102 Aaa 5,819,858
3,015,000 5.500%, 1/01/17 1/02 at 100 Aaa 2,961,574
- ---------------------------------------------------------------------------------------------------------------------------
NORTH CAROLINA - 0.4%
3,500,000 Randolph County Certificate of Participation,
5.300%, 6/01/15 6/05 at 102 Aaa 3,394,965
- ---------------------------------------------------------------------------------------------------------------------------
OHIO - 0.5%
1,000,000 Columbus City School District, General Obligation,
Unlimited Tax, 7.000%, 12/01/11 (Pre-refunded
to 12/01/00) 12/00 at 102 Aaa 1,136,820
2,500,000 Dublin City School District, General
Obligation, 6.200%, 12/01/19 12/02 at 102 Aaa 2,656,650
- ---------------------------------------------------------------------------------------------------------------------------
OKLAHOMA - 0.7%
5,000,000 Oklahoma Industries Authority (Baptist
Center-South Oklahoma City Hospital),
6.250%, 8/15/12 8/05 at 102 Aaa 5,383,950
375,000 Muskogee County Home Finance Authority,
Single Family Mortgage, 7.600%, 12/01/10 6/00 at 102 Aaa 397,718
- ---------------------------------------------------------------------------------------------------------------------------
PENNSYLVANIA - 3.1%
3,550,000 Berks County General Obligation,
5.850%, 11/15/18 11/05 at 100 Aaa 3,643,507
- ---------------------------------------------------------------------------------------------------------------------------
</TABLE>
31
<PAGE>
PORTFOLIO OF INVESTMENTS
NUVEEN INSURED MUNICIPAL BOND FUND--CONTINUED
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------------
PRINCIPAL OPT. CALL MARKET
AMOUNT DESCRIPTION PROVISIONS* RATINGS** VALUE
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
PENNSYLVANIA (CONTINUED)
$ 5,000,000 Lehigh County General Purpose Authority
(St. Luke's Hospital of Bethlehem),
6.250%, 7/01/22 7/02 at 102 Aaa $ 5,290,500
3,000,000 North Pennsylvania Water Authority,
7.000%, 11/01/24 (Pre-refunded to 11/01/04) 11/04 at 101 Aaa 3,534,810
7,500,000 Philadelphia Water and Wastewater System,
5.500%, 6/15/14 6/03 at 102 Aaa 7,292,925
3,900,000 Philadelphia Municipal Authority, Justice
Lease, 7.125%, 11/15/18 (Pre-refunded to
11/15/01) 11/01 at 102 Aaa 4,517,799
1,000,000 Washington County Hospital Authority,
Hospital Refunding, 7.150%, 7/01/17 7/00 at 102 Aaa 1,107,460
- ---------------------------------------------------------------------------------------------------------------------------
RHODE ISLAND - 2.7%
Rhode Island Depositors Economic
Protection Corporation, Special Obligation:
7,950,000 6.000%, 8/01/17 8/03 at 102 Aaa 8,188,739
2,250,000 6.625%, 8/01/19 (Pre-refunded to 8/01/02) 8/02 at 102 Aaa 2,564,078
2,500,000 Rhode Island Health and Educational
Building Corporation, Higher
Education, Auxiliary Enterprise,
5.250%, 9/15/23 9/03 at 102 Aaa 2,372,775
4,000,000 Cranston General Obligation, 7.200%, 7/15/11
(Pre-refunded to 7/15/01) 7/01 at 101 1/2 Aaa 4,603,320
3,130,000 Kent County Water Authority, 6.350%, 7/15/14 7/04 at 102 Aaa 3,372,669
1,000,000 Providence Housing Development Corporation,
FHA-Insured (Barbara Jordan Apartments),
6.650%, 7/01/15 7/04 at 102 Aaa 1,060,510
- ---------------------------------------------------------------------------------------------------------------------------
SOUTH CAROLINA - 2.9%
1,000,000 Aiken Water and Sewer System, 7.250%, 1/01/14 1/00 at 102 Aaa 1,111,430
7,000,000 Berkeley County School District, Certificates of
Participation, 5.250%, 2/01/16 2/06 at 101 Aaa 6,703,690
Charleston County Public Facilities Corporation,
Certificates of Participation:
1,500,000 6.875%, 6/01/14 6/04 at 102 Aaa 1,702,125
2,500,000 7.000%, 6/01/19 6/04 at 102 Aaa 2,854,100
7,000,000 5.500%, 12/01/20 6/05 at 101 Aaa 6,828,430
Rock Hill Combined Utility System:
2,000,000 6.375%, 1/01/15 1/01 at 102 Aaa 2,123,800
2,000,000 7.000%, 1/01/20 (Pre-refunded to 1/01/00) 1/00 at 102 Aaa 2,235,880
- ---------------------------------------------------------------------------------------------------------------------------
</TABLE>
32
<PAGE>
<TABLE>
<CAPTION>
NUVEEN TAX-FREE MUTUAL FUNDS ANNUAL REPORT
FEBRUARY 29, 1996
PRINCIPAL OPT. CALL MARKET
AMOUNT DESCRIPTION PROVISIONS* RATINGS** VALUE
- --------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
SOUTH DAKOTA - 0.1%
$ 1,000,000 South Dakota Health and Educational Facilities
Authority (McKennan Hospital), 7.250%, 7/01/15 7/00 at 102 Aaa $ 1,112,170
- --------------------------------------------------------------------------------------------------------------------
TENNESSEE - 0.1%
1,000,000 White House Utility District of Robertson and
Sumner Counties, 6.375%, 1/01/22 1/02 at 102 Aaa 1,073,510
- --------------------------------------------------------------------------------------------------------------------
TEXAS - 4.8%
6,080,000 Texas Health Facilities Development Corporation
(All Saints Episcopal Hospitals of Fort Worth),
6.250%, 8/15/22 8/03 at 102 Aaa 6,475,018
655,000 Texas Housing Agency, Single Family Mortgage,
7.875%, 9/01/17 9/96 at 102 Aa 673,340
10,000,000 Texas Turnpike Authority, 5.250%, 1/01/23 1/06 at 102 Aaa 9,509,500
3,000,000 Bexar County Health Facilities Development
Corporation (Baptist Memorial Hospital
System Project), 6.750%, 8/15/19 8/04 at 102 Aaa 3,379,170
5,000,000 Bexar Metropolitan Water District,
5.000%, 5/01/19 (Pre-refunded to 5/01/15) 5/15 at 100 Aaa 4,711,350
4,575,000 Harris County Toll Road, Senior Lien,
6.500%, 8/15/17 (Pre-refunded to 8/15/02) 8/02 at 102 Aaa 5,184,756
1,000,000 Harris County Hospital District, 7.400%, 2/15/10 No Opt. Call Aaa 1,228,250
500,000 Houston Hotel Occupancy Tax and Parking Facilities,
7.000%, 7/01/15 (Pre-refunded to 7/01/01) 7/01 at 100 Aaa 564,260
825,000 Lower Colorado River Authority, Priority Refunding,
7.000%, 1/01/11 1/01 at 102 Aaa 921,476
1,250,000 Sabine River Authority of Texas, Pollution Control
(Texas Utilities Electric Company),
5.550%, 5/01/22 11/03 at 102 Aaa 1,215,450
5,000,000 Tarrant County Health Facilities Development
Corporation (Fort Worth Osteopathic Hospital),
6.000%, 5/15/21 No Opt. Call Aaa 5,349,000
- --------------------------------------------------------------------------------------------------------------------
UTAH - 1.4%
280,000 Utah Housing Finance Agency, Single Family
Mortgage, 8.375%, 7/01/19 1/09 at 100 AA 293,840
4,500,000 Utah State Building Ownership Authority,
5.750%, 5/15/18 11/05 at 100 Aaa 4,541,220
Provo City Energy System:
2,300,000 5.500%, 11/15/11 5/03 at 102 Aaa 2,325,461
500,000 5.750%, 5/15/14 5/03 at 102 Aaa 507,990
3,500,000 White City Water System, 6.600%, 2/01/25 2/05 at 100 Aaa 3,834,285
- --------------------------------------------------------------------------------------------------------------------
</TABLE>
33
<PAGE>
PORTFOLIO OF INVESTMENTS
NUVEEN INSURED MUNICIPAL BOND FUND-CONTINUED
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------
PRINCIPAL OPT. CALL MARKET
AMOUNT DESCRIPTION PROVISIONS* RATINGS** VALUE
- -------------------------------------------------------------------------------------------------------------
<C> <S> <C> <C> <C>
VIRGINIA - 0.5%
$ 3,000,000 Loudoun County Industrial Development
Authority (Loudoun Hospital Centre),
5.800%, 6/01/26 6/05 at 102 Aaa $ 3,058,080
1,050,000 Roanoke County Water System,
6.000%, 7/01/31 (Pre-refunded to 7/01/01) 7/01 at 100 Aaa 1,135,313
- -------------------------------------------------------------------------------------------------------------
WASHINGTON - 2.3%
6,500,000 Washington Public Power Supply System,
Nuclear Project No. 1, 5.700%, 7/01/17 7/03 at 102 Aaa 6,495,450
5,000,000 Washington Public Power Supply System,
Nuclear Project No. 2, 5.400%, 7/01/05 No Opt. Call Aaa 5,234,800
2,500,000 Washington Public Power Supply System,
Nuclear Project No. 3, 7.250%, 7/01/16
(Pre-refunded to 7/01/99) 7/99 at 102 Aaa 2,792,700
1,500,000 Marysville Water and Sewer System,
7.000%, 12/01/11 (Pre-refunded to 12/01/03) 12/03 at 100 Aaa 1,745,220
2,000,000 Whatcom County School District No. 501,
General Obligation, 6.125%, 12/01/13 12/04 at 100 Aaa 2,100,620
- -------------------------------------------------------------------------------------------------------------
WEST VIRGINIA - 0.1%
1,000,000 West Virginia School Building Authority,
Capital Improvement, 7.250%, 7/01/15
(Pre-refunded to 7/01/00) 7/00 at 102 Aaa 1,137,310
- -------------------------------------------------------------------------------------------------------------
WISCONSIN - 1.5%
7,020,000 Wisconsin Health and Educational Facilities
Authority (Sisters of the Sorrowful
Mother-Ministry Corporation), 6.125%, 8/15/22 2/03 at 102 Aaa 7,299,256
1,000,000 Wisconsin Municipal Insurance Commission,
8.700%, 4/01/07 4/97 at 102 Aaa 1,066,960
2,000,000 Superior Limited Obligation (Detroit Edison
Company), 6.900%, 8/01/21 No Opt. Call Aaa 2,394,800
1,000,000 Three Lakes School District, General Obligation,
6.750%, 4/01/12 (Pre-refunded to 4/01/03) 4/03 at 100 Aaa 1,136,520
- -------------------------------------------------------------------------------------------------------------
WYOMING - 0.3%
2,000,000 University of Wyoming Facilities, 7.100%, 6/01/10 6/00 at 101 Aaa 2,211,210
- -------------------------------------------------------------------------------------------------------------
PUERTO RICO - 0.5%
3,750,000 Commonwealth of Puerto Rico, General Obligation,
6.600%, 7/01/13 (Pre-refunded to 7/01/02) 7/02 at 101 1/2 Aaa 4,266,788
- -------------------------------------------------------------------------------------------------------------
$777,888,000 Total Investments - (Cost $750,787,594) - 99.1% 807,091,061
- -------------------------------------------------------------------------------------------------------------
</TABLE>\
34
<PAGE>
NUVEEN TAX-FREE MUTUAL FUNDS ANNUAL REPORT
FEBRUARY 29, 1996
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------
PRINCIPAL OPT. CALL MARKET
AMOUNT DESCRIPTION PROVISIONS* RATINGS** VALUE
- -------------------------------------------------------------------------------------------------------------
<C> <S> <C> <C> <C>
TEMPORARY INVESTMENTS IN SHORT-TERM
MUNICIPAL SECURITIES - 0.5%
$ 1,700,000 Chicago O'Hare International Airport (American
Airlines), Variable Rate Demand Bonds,
3.450%, 12/01/17+ P-1 $ 1,700,000
2,300,000 Massachusetts Dedicated Income Tax, Variable
Rate Demand Bonds, 3.350%, 12/01/97+ VMIG-1 2,300,000
- -------------------------------------------------------------------------------------------------------------
$ 4,000,000 Total Temporary Investments - 0.5% 4,000,000
============-------------------------------------------------------------------------------------------------
Other Assets Less Liabilities - 0.4% 2,958,926
- -------------------------------------------------------------------------------------------------------------
Net Assets - 100% $814,049,987
=============================================================================================================
</TABLE>
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------
NUMBER MARKET MARKET
STANDARD & POOR'S MOODY'S OF ISSUES VALUE PERCENT
- -------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
SUMMARY OF AAA Aaa 210 $801,069,781 99%
RATINGS** AA+, AA, AA- Aa1, Aa, Aa2, Aa3 3 6,021,280 1
PORTFOLIO OF
INVESTMENTS
(EXCLUDING
TEMPORARY
INVESTMENTS):
- -------------------------------------------------------------------------------------------------------------
TOTAL 213 $807,091,061 100%
=============================================================================================================
</TABLE>
All of the bonds in the portfolio, excluding temporary investments in short-term
municipal securities, are either covered by Original Issue Insurance, Secondary
Market Insurance or Portfolio Insurance, or are backed by an escrow or trust
containing sufficient U.S. Government or U.S. Government agency securities, any
of which ensure the timely payment of principal and interest.
* Optional Call Provisions (not covered by the report of independent public
accountants): Dates (month and year) and prices of the earliest optional call or
redemption. There may be other call provisions at varying prices at later dates.
** Ratings (not covered by the report of independent public accountants): Using
the higher of Standard & Poor's or Moody's rating.
(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 of a specified market index.
See accompanying notes to financial statements.
35
<PAGE>
STATEMENT OF NET ASSETS
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------
MUNI INS. MUNI
BOND BOND
- ----------------------------------------------------------------------------------------------
<S> <C> <C>
ASSETS
Investments in municipal securities, at market value (note 1) $2,835,978,201 $807,091,061
Temporary investments in short-term municipal securities,
at amortized cost (note 1) 31,600,000 4,000,000
Cash 197,730 1,249,406
Receivables:
Interest 42,085,690 10,123,776
Shares sold 328,101 290,007
Investments sold 28,152,000 5,000
Other assets 113,742 35,592
-------------- ------------
Total assets 2,938,455,464 822,794,842
-------------- ------------
LIABILITIES
Payables:
Investments purchased 8,595,574 6,032,048
Shares reacquired 406,847 5,000
Accrued expenses:
Management fees (note 7) 1,054,674 311,384
Other 594,408 151,138
Dividends payable 10,158,654 2,245,285
-------------- ------------
Total liabilities 20,810,157 8,744,855
-------------- ------------
Net assets (note 8) $2,917,645,307 $814,049,987
============== ============
Class A Shares (note 1)
Net assets $ 37,089,044 $ 46,942,915
============== ============
Shares outstanding 3,998,797 4,279,685
============== ============
Net asset value and redemption price per share $ 9.28 $ 10.97
============== ============
Offering price per share (net asset value per share plus
maximum sales charge of 4.50% of offering price) $ 9.72 $ 11.49
============== ============
Class C Shares (note 1)
Net assets $ 1,915,296 $ 5,150,609
============== ============
Shares outstanding 206,744 474,546
============== ============
Net asset value, offering and redemption price per share $ 9.26 $ 10.85
============== ============
Class R Shares (note 1)
Net assets $2,878,640,967 $761,956,463
============== ============
Shares outstanding 310,263,529 69,753,639
============== ============
Net asset value and redemption price per share $ 9.28 $ 10.92
============== ============
- ------------------------------------------------------------------------------------------------
</TABLE>
See accompanying notes to financial statements.
36
<PAGE>
STATEMENT OF OPERATIONS NUVEEN TAX-FREE MUTUAL FUNDS ANNUAL REPORT
Year ended February 29, 1996 FEBRUARY 29, 1996
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------
MUNI INS. MUNI
BOND BOND
- -------------------------------------------------------------------------------------------
<S> <C> <C>
INVESTMENT INCOME
Tax-exempt interest income (note 1) $173,591,010 $47,026,810
------------ -----------
Expenses (note 2):
Management fees (note 7) 12,801,685 3,758,096
12b-1 distribution and service fees (note 1) 43,166 126,369
Shareholders' servicing agent fees and expenses 2,425,718 691,770
Custodians' fees and expenses 313,243 144,251
Directors'/Trustees' fees and expenses (note 7) 27,187 10,438
Professional fees 115,740 67,222
Shareholders reports-printing and mailing expenses 623,740 155,664
Federal and state registration fees 166,260 113,549
Portfolio insurance expenses -- 1,915
Other expenses 166,738 44,998
------------ -----------
Total expenses before expense reimbursement 16,683,477 5,114,272
Expense reimbursement from investment adviser (note 7) (4,313) (1,303)
------------ -----------
Net expenses 16,679,164 5,112,969
------------ -----------
Net investment income 156,911,846 41,913,841
------------ -----------
REALIZED AND UNREALIZED GAIN
FROM INVESTMENTS
Net realized gain from investment transactions, net of taxes,
if applicable (notes 1 and 5) 10,618,706 4,402,500
Net change in unrealized appreciation or depreciation of
investments 84,862,109 36,885,934
------------ -----------
Net gain from investments 95,480,815 41,288,434
------------ -----------
Net increase in net assets from operations $252,392,661 $83,202,275
------------ -----------
- -------------------------------------------------------------------------------------------
</TABLE>
See accompanying notes to financial statements.
37
<PAGE>
<TABLE>
<CAPTION>
STATEMENT OF CHANGES IN NET ASSETS
- ---------------------------------------------------------------------------------------------------------------------------
MUNI BOND INS. MUNI BOND
- ---------------------------------------------------------------------------------------------------------------------------
Year ended Year ended Year ended Year ended
2/29/96 2/28/95 2/29/96 2/28/95
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
OPERATIONS
Net investment income $ 156,911,846 $ 152,460,727 $ 41,913,841 $ 40,930,291
Net realized gain (loss) from investment transactions, net
of taxes, if applicable 10,618,706 9,508,194 4,402,500 (1,781,054)
Net change in unrealized appreciation or depreciation of
investments 84,862,109 (67,140,015) 36,885,934 (25,968,067)
-------------- -------------- ------------- -------------
Net increase in net assets from operations 252,392,661 94,828,906 83,202,275 13,181,170
-------------- -------------- ------------- -------------
DISTRIBUTION TO SHAREHOLDERS (note 1)
From undistributed net invest income:
Class A (707,943) N/A (1,614,782) (204,455)
Class C (30,677) N/A (192,149) (45,156)
Class R (157,137,272) (151,297,051) (40,071,660) (41,157,453)
From accumulated net realized gains from investment
transactions:
Class A (63,661) N/A - (6,709)
Class C (3,523) N/A - (1,121)
Class R (8,354,729) (22,411,997) - (1,157,602)
-------------- -------------- ------------- -------------
Decrease in net assets from distributions to shareholders (166,297,805) (173,709,048) (41,878,591) (42,572,496)
-------------- -------------- ------------- -------------
FUND SHARE TRANSACTIONS (note 3)
Net proceeds from sale of shares:
Class A 93,033,904 N/A 108,423,277 15,273,227
Class C 1,925,249 N/A 7,075,313 4,686,336
Class R 397,491,029 469,226,165 143,237,499 158,370,453
Net asset value of shares issued to shareholders due to
reinvestment of distributions from net investment income
and from net realized gains from investment transactions:
Class A 453,018 N/A 951,544 105,479
Class C 19,887 N/A 161,275 25,888
Class R 123,742,206 141,568,061 26,577,682 28,508,956
-------------- -------------- ------------- -------------
616,665,293 610,794,226 286,426,590 206,970,339
-------------- -------------- ------------- -------------
Cost of shares redeemed:
Class A (56,994,434) N/A (78,678,465) (1,930,617)
Class C (40,390) N/A (6,281,962) (893,066)
Class R (469,258,117) (490,742,684) (183,518,067) (165,891,052)
-------------- -------------- ------------- -------------
(526,292,941) (490,742,684) (268,478,494) (168,714,735)
-------------- -------------- ------------- -------------
Net increase in net assets derived from Fund share
transactions 90,372,352 120,051,542 17,948,096 38,255,604
-------------- -------------- ------------- -------------
Net increase in net assets 176,467,208 41,171,400 59,271,780 8,864,278
Net assets at the beginning of year 2,741,178,099 2,700,006,699 754,778,207 745,913,929
-------------- -------------- ------------- -------------
Net assets at the end of year $2,917,645,307 $2,741,178,099 $ 814,049,987 $ 754,778,207
============== ============== ============= =============
Balance of undistributed net investment income at end of year $ 1,169,597 $ 2,133,643 $ 225,040 $ 189,790
============== ============== ============= =============
- ---------------------------------------------------------------------------------------------------------------------------
</TABLE>
N/A - Muni Bond was not authorized to issue Class "A" Shares or Class "C" Shares
before June 13, 1995.
See accompanying notes to financial statements.
38
<PAGE>
NOTES TO FINANCIAL STATEMENTS NUVEEN TAX-FREE MUTUAL FUNDS ANNUAL REPORT
FEBRUARY 29, 1996
1. GENERAL INFORMATION AND SIGNIFICANT
ACCOUNTING POLICIES
At February 29, 1996, the nationally diversified Funds covered in this report
(the "Funds") are Nuveen Municipal Bond Fund and Nuveen Insured Tax-Free Bond
Fund, Inc. (comprising the Nuveen Insured Municipal Bond Fund). Each Fund
invests primarily in a diversified portfolio of municipal obligations issued by
state and local government authorities.
Municipal Bond was originally incorporated in Maryland on October 8, 1976 and
reorganized as a Massachusetts Business Trust at the close of business on June
12, 1995. Insured Municipal Bond was incorporated in Minnesota on July 11, 1986.
The Funds are registered under the Investment Company Act of 1940 as open-end,
diversified management investment companies.
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
Portfolio securities for which market quotations are readily available are
valued at the mean between the quoted bid and asked prices or the yield
equivalent. Portfolio securities for which market quotations are not readily
available are valued at fair value by consistent application of methods
determined in good faith by the Board of Directors/Trustees. Temporary
investments in securities that have variable rate and demand features qualifying
them as short-term securities are traded and valued at amortized cost.
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 be settled a month or more after the transaction date. Any securities so
purchased are subject to market fluctuation during this period. The Funds have
instructed the custodian to segregate assets in a separate account with a
current value at least equal to the amount of their purchase commitments. At
February 29, 1996, Insured Municipal Bond had purchase commitments of
$6,032,048. Municipal Bond had no such purchase commitments.
39
<PAGE>
NOTES TO FINANCIAL STATEMENTS
Interest income
Interest income is determined on the basis of interest accrued, adjusted for
amortization of premiums and accretion of discounts on long-term debt securities
when required for federal income tax purposes.
Dividends and distributions to shareholders
Net investment income is declared as a dividend monthly and payment is made or
reinvestment is credited to shareholder accounts after month-end. Net realized
gains from securities transactions are distributed to shareholders not less
frequently than annually only to the extent they exceed available capital loss
carryovers. Distributions to shareholders of net investment income and net
realized gains from investment transactions are recorded on the ex-dividend
date. The amount and timing of such 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 result and will be classified as either distributions in
excess of net investment income or distributions in excess of net realized gains
from investment transactions, if applicable.
Federal income taxes
Each Fund is a separate taxpayer for federal income tax purposes and intends to
comply with the requirements of the Internal Revenue Code applicable to
regulated investment companies by distributing all of its net investment income,
in addition to any significant amounts of net realized gains from investments,
to shareholders. The Funds currently consider significant net realized gains as
amounts in excess of $.001 per share. Furthermore, each Fund intends to satisfy
conditions which will enable interest from municipal securities, which is exempt
from regular federal income tax, to retain such tax exempt status when
distributed to the shareholders of the Funds. All income dividends paid during
the year ended February 29, 1996, have been designated Exempt Interest
Dividends.
Insurance
Insured Municipal Bond invests in municipal securities which are either covered
by insurance or backed by an escrow or trust account containing sufficient U.S.
Government or U.S. Government agency securities, both of which ensure the timely
payment of principal and interest. Each insured municipal security is covered by
Original Issue Insurance, Secondary Market Insurance or Portfolio Insurance.
Such insurance does not guarantee the market value of the municipal securities
or the value of the Fund's shares. Original Issued Insurance and Secondary
Market Insurance remain in effect as long as the municipal securities covered
thereby remain outstanding and the insurer remains in business, regardless of
whether the Fund ultimately disposes of such municipal securities. Consequently,
the market value of the municipal securities covered by Original Issue Insurance
or Secondary Market Insurance may reflect value attributable to the insurance.
Portfolio Insurance is effective only
40
<PAGE>
NUVEEN TAX-FREE MUTUAL FUNDS ANNUAL REPORT
FEBRUARY 29, 1996
while the municipal securities are held by the Fund. Accordingly, neither the
prices used in determining the market value of the underlying municipal
securities nor the net asset value of the Fund's shares include value, if any,
attributable to the Portfolio Insurance. Each policy of the Portfolio Insurance
does, however, give the Fund the right to obtain permanent insurance with
respect to the municipal security covered by the Portfolio Insurance policy at
the time of its sale.
Flexible sales charge program
Effective September 6, 1994, for Insured Municipal Bond and June 13, 1995, for
Municipal Bond, both Funds commenced offering Class "A" Shares and Class "C"
Shares. Class "A" Shares incur a front-end sales charge and an annual 12b-1
service fee. Class "C" Shares are sold without a sales charge but incur annual
12b-1 distribution and service fees. Effective June 13, 1995, for both Funds, an
investor purchasing Class "C" Shares agrees to pay a contingent deferred sales
charge ("CDSC") of 1% if Class "C" Shares are redeemed within 12 months of
purchase.
Prior to the offering of Class "A" Shares and Class "C" Shares, the shares
outstanding for both Funds were renamed Class "R" and are not subject to any
12b-1 distribution or service fees. Effective with the offering of the new
classes, Class "R" Shares are generally available only for reinvestment of
dividends by current "R" shareholders and for already established Nuveen Unit
Investment Trust reinvestment accounts.
Derivative financial instruments
In October 1994, the Financial Accounting Standards Board (FASB) issued
Statement of Financial Accounting Standards No. 119 Disclosure about Derivative
Financial Instruments and Fair Value of Financial Instruments which prescribes
disclosure requirements for transactions in certain derivative financial
instruments including future, 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 year ended February 29, 1996,
other than occasional purchases of high quality synthetic money market
securities, if applicable.
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.
41
<PAGE>
NOTES TO FINANCIAL STATEMENTS
2. EXPENSE ALLOCATION
Expenses of the Funds that are not directly attributable to any 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 are recorded to the specific
class. Effective August 1, 1995, the Funds adopted a multiple class plan
pursuant to Rule 18f-3 under the Investment Company Act of 1940 and now
designate class specific expenses to include Rule 12b-1 distribution and service
fees, and other expenses incurred for services received by a class that differ
in either amount or kind. A breakdown of the class specific expenses during the
year ended February 29, 1996, were as follows:
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
MUNI INS. MUNI
BOND BOND
- --------------------------------------------------------------------------------
<S> <C> <C>
12b-1 distribution and service fees:
Class A $ 36,112 $ 82,071
Class C 7,054 44,298
Shareholders' servicing agent fees and expenses:
Class A 729 18,022
Class C 82 1,093
Class R 914,407 247,643
Shareholders' reports--printing and mailing expenses:
Class A 1,275 1,019
Class C 119 66
Class R 374,135 123,497
Federal and state registration fees:
Class A 2,483 3,958
Class C 276 1,109
Class R 89,323 23,054
Professional fees--Class R 46,688 --
- --------------------------------------------------------------------------------
</TABLE>
42
<PAGE>
<TABLE>
<CAPTION>
NUVEEN TAX-FREE MUTUAL FUNDS ANNUAL REPORT
FEBRUARY 29, 1996
3. FUND SHARES
Transactions in shares were as follows:
- ---------------------------------------------------------------------------------------------------------------------------
MUNI BOND INS. MUNI BOND
- ---------------------------------------------------------------------------------------------------------------------------
Year ended Year ended Year ended Year ended
2/29/96 2/28/95 2/29/96 2/28/95
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Shares sold:
Class A 10,085,967 N/A 10,080,588 1,538,119
Class C 208,938 N/A 661,711 474,253
Class R 43,438,989 52,970,376 13,451,112 15,709,700
Shares issued to shareholders due to reinvestment of
distributions from net investment income and from
net realized gains from investment transactions:
Class A 48,593 N/A 88,109 10,686
Class C 2,138 N/A 15,241 2,644
Class R 13,470,516 15,973,465 2,491,979 2,822,384
----------- ----------- ----------- -----------
67,255,141 68,943,841 26,788,740 20,557,786
----------- ----------- ----------- -----------
Shares redeemed:
Class A (6,135,763) N/A (7,244,524) (193,293)
Class C (4,332) N/A (588,441) (90,862)
Class R (51,218,535) (55,355,782) (17,181,722) (16,561,539)
----------- ----------- ----------- -----------
(57,358,630) (55,355,782) (25,014,687) (16,845,694)
----------- ----------- ----------- -----------
Net increase 9,896,511 13,588,059 1,774,053 3,712,092
=========== =========== =========== ===========
- ---------------------------------------------------------------------------------------------------------------------------
</TABLE>
N/A - Muni Bond was not authorized to issue Class "A" Shares or Class "C" Shares
before June 13, 1995.
43
<PAGE>
NOTES TO FINANCIAL STATEMENTS
4. DISTRIBUTIONS TO SHAREHOLDERS
On March 8, 1996, the Funds declared dividend distributions from their ordinary
income which were paid on April 1, 1996, to shareholders of record on March 8,
1996, as follows:
<TABLE>
<CAPTION>
- ----------------------------------------------------------------
MUNI INS. MUNI
BOND BOND
- ----------------------------------------------------------------
<S> <C> <C>
Dividend per share:
Class A $.0395 $.0445
Class C .0340 .0375
Class R .0415 .0465
===== =====
- ----------------------------------------------------------------
</TABLE>
5. SECURITIES TRANSACTIONS
Purchases and sales (including maturities) of investments in municipal
securities and temporary municipal investments for the year ended February 29,
1996, were as follows:
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------
MUNI INS. MUNI
BOND BOND
- ----------------------------------------------------------------------
<S> <C> <C>
PURCHASES
Investments in municipal securities $517,451,834 $227,340,258
Temporary municipal investments 602,095,000 291,525,000
SALES
Investments in municipal securities 475,094,406 208,113,881
Temporary municipal investments 573,195,000 287,525,000
=========== ===========
- ----------------------------------------------------------------------
</TABLE>
At February 29, 1996, the identified cost of investments owned for federal
income tax purposes was the same as the cost for financial reporting purposes
for each Fund.
44
<PAGE>
NUVEEN TAX-FREE MUTUAL FUNDS ANNUAL REPORT
FEBRUARY 29, 1996
6. UNREALIZED APPRECIATION (DEPRECIATION)
Gross unrealized appreciation and gross unrealized depreciation of investments
at February 29, 1996, were as follow:
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------
MUNI INS. MUNI
BOND BOND
- -------------------------------------------------------------------------
<S> <C> <C>
Gross unrealized: $171,847,948 $57,249,197
Appreciation (4,264,834) (945,730)
Depreciation ------------ -----------
Net unrealized appreciation $167,583,114 $56,303,467
============ ===========
-----------------------------------------------------------------------
</TABLE>
7. MANAGEMENT FEE AND OTHER TRANSACTIONS
WITH AFFILIATES
Under the Funds' investment management agreements with Nuveen Advisory Corp.
(the "Adviser"), a wholly owned subsidiary of The John Nuveen Company, each Fund
pays to the Adviser an annual management fee, payable monthly, at the rates set
forth below which are based upon the average daily net asset value of each Fund:
- ----------------------------------------------------------------------
Average daily net asset value Management fee
- ----------------------------------------------------------------------
<TABLE>
<CAPTION>
<S> <C>
For the first $125,000,000 .5 of 1%
For the next $125,000,000 .4875 of 1
For the next $250,000,000 .475 of 1
For the next $500,000,000 .4625 of 1
For the next $1,000,000,000 .45 of 1
For net assets over $2,000,000,000 .425 of 1
- ----------------------------------------------------------------------
</TABLE>
The management fee is reduced by, or the Adviser assumes certain expenses of
each Fund, in an amount necessary to prevent the total expense of each Fund
(including the management fee, but excluding interest, taxes, fees incurred in
acquiring and disposing of portfolio securities, 12b-1 Service and Distribution
fees, if applicable, and to the extent permitted, extraordinary expenses) in any
fiscal year from exceeding .75 of 1% of the average daily net asset value of
Municipal Bond and .975 of 1% of the average daily net asset value of Insured
Municipal Bond. The Adviser may also voluntarily agree to reimburse additional
expenses from time to time, which may be voluntarily terminated at any time at
its discretion.
45
<PAGE>
NOTES TO FINANCIAL STATEMENTS
The management fee compensates the Adviser for overall investment advisory and
administrative services, and general office facilities. The Funds pay no
compensation directly to their directors/trustees who are affiliated with the
Adviser or to its officers, all of whom receive remuneration for their services
to the Funds from the Adviser.
8. COMPOSITION OF NET ASSETS
At February 29, 1996, the Funds had common stock authorized of $.10 par value
per share for Municipal Bond and $.01 par value per share for Insured Municipal
Bond. The composition of net assets as well as the number of authorized shares
is as follows:
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------
MUNI INS. MUNI
BOND BOND
- ------------------------------------------------------------------------------------------------
<S> <C> <C>
Capital paid-in $2,744,976,758 $754,899,010
Balance of undistributed net investment income 1,169,597 225,040
Accumulated net realized gain from investment transactions 3,915,838 2,622,470
Net unrealized appreciation of investments 167,583,114 56,303,467
-------------- ------------
Net assets $2,917,645,307 $814,049,987
============== ============
Authorized Shares:
Class A Unlimited 340,000,000
Class C Unlimited 460,000,000
Class R Unlimited 200,000,000
============== ============
- ------------------------------------------------------------------------------------------------
</TABLE>
46
<PAGE>
NUVEEN TAX-FREE MUTUAL FUNDS ANNUAL REPORT
FEBRUARY 29, 1996
9. INVESTMENT COMPOSITION
Each Fund invests in municipal securities which include general obligation,
escrowed and revenue bonds. At February 29, 1996, the revenue sources by
municipal purpose for these investments, expressed as a percent of total
investments, were as follows:
<TABLE>
<CAPTION>
- ----------------------------------------------
MUNI INS. MUNI
BOND BOND
- ----------------------------------------------
<S> <C> <C>
Revenue Bonds:
Electric Utilities 21% 6%
Health Care Facilities 16 20
Housing Facilities 14 1
Water/Sewer Facilities 8 8
Lease Rental Facilities 2 8
Educational Facilities 1 7
Transportation 6 5
Pollution Control 5 4
Other 8 6
General Obligation Bonds 6 19
Escrowed Bonds 13 16
- ----------------------------------------------
100% 100%
- ----------------------------------------------
</TABLE>
Certain long-term and intermediate-term investments owned by the Funds are
either covered by insurance issued by several private insurers or are backed by
an escrow or trust containing U.S. Government or U.S. Government agency
securities, both of which ensure the timely payment of principal and interest in
the event of default (30% for Municipal Bond and 100% for Insured Municipal
Bond). Such insurance or escrow, however, does not guarantee the market value of
the municipal securities or the value of the Funds' shares.
All of the temporary investments in short-term municipal securities have credit
enhancements (letters of credit, guarantees or insurance) issued by third party
domestic or foreign banks or other institutions.
For additional information regarding each investment security, refer to the
Portfolio of Investments of each Fund.
47
<PAGE>
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
SELECTED DATA FOR A COMMON SHARE OUTSTANDING THROUGHOUT EACH PERIOD IS AS FOLLOWS:
- --------------------------------------------------------------------------------------------------------------------------------
Income from investment operations Less distributions
--------------------------------------------------------------------
Net
realized and Dividends
Net asset Net unrealized gain from net Distribution Net asset
value beginning investment (loss) from investment from value end of
of period income investments** income capital gains period
- --------------------------------------------------------------------------------------------------------------------------------
MUNI BOND
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
CLASS A
6/13/95 to
2/29/96 $9.150 $.340+ $ .141 $(.324) $(.027) $9.280
CLASS C
6/13/95 to
2/29/96 9.150 .290+ .126 (.279) (.027) 9.260
CLASS R
Year ended
2/29/96 9.000 .506 .313 (.512) (.027) 9.280
Year ended 2/28,
1995 9.280 .515 (.209) (.511) (.075) 9.000
1994 9.450 .519 (.075) (.516) (.098) 9.280
1993 9.080 .555 .414 (.544) (.055) 9.450
5 mos. ended
2/29/92 9.040 .239 .080 (.239) (.040) 9.080
Year ended 9/30,
1991 8.650 .579 .438 (.589) (.038) 9.040
1990 8.730 .596 (.080) (.596) - 8.650
1989 8.520 .597 .239 (.597) (.029) 8.730
1988 8.020 .596 .536 (.596) (.036) 8.520
1987 8.780 .598 (.614) (.598) (.146) 8.020
1986 7.830 .595 1.162 (.595) (.212) 8.780
1985 7.180 .586 .650 (.586) - 7.830
- --------------------------------------------------------------------------------------------------------------------------------
</TABLE>
See notes on page 50.
48
<PAGE>
<TABLE>
<CAPTION>
NUVEEN TAX FREE MUTUAL FUNDS ANNUAL REPORT
FEBRUARY 29, 1996
- ----------------------------------------------------------------------------------------------------------------------------
Ratios/Supplemental data
- ----------------------------------------------------------------------------------------------------------------------------
Ratio of Ratio of Ratio of Ratio of
expenses to net investment expenses net investment
Total return Net assets average income to average to average net income to average Portfolio
on net asset end of period net assets before net assets before assets after net assets after turnover
value++ (in thousands) reimbursement reimbursement reimbursement+ reimbursement+ rate
- ----------------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
5.33% $ 37,089 .86%* 5.11%* .83%* 5.14%* 17%
4.59 1,915 1.64* 4.33* 1.58* 4.39* 17
9.31 2,878,641 .59 5.53 .59 5.53 17
3.60 2,741,178 .59 5.79 .59 5.79 17
4.79 2,700,007 .62 5.49 .62 5.49 15
11.04 2,371,669 .61 5.95 .61 5.95 14
3.56 1,835,708 .62* 6.24* .62* 6.24* 6
12.15 1,661,420 .60 6.48 .60 6.48 10
6.04 1,323,623 .62 6.78 .62 6.78 8
10.07 1,119,833 .64 6.85 .64 6.85 12
14.50 945,361 .65 7.11 .65 7.11 8
(.39) 764,092 .68 6.85 .68 6.85 16
23.02 668,416 .71 6.95 .71 6.95 39
17.73 459,627 .73 7.68 .73 7.68 28
- ----------------------------------------------------------------------------------------------------------------------------
</TABLE>
49
<PAGE>
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
SELECTED DATA FOR A COMMON SHARE OUTSTANDING THROUGHOUT EACH PERIOD IS AS FOLLOWS:
- --------------------------------------------------------------------------------------------------------------------------------
Income from investment operations Less distributions
--------------------------------------------------------------------
Net
realized and Dividends
Net asset Net unrealized gain from net Distribution Net asset
value beginning investment (loss) from investment from value end of
of period income investments** income capital gains period
- --------------------------------------------------------------------------------------------------------------------------------
INS. MUNI BOND
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
CLASS A
Year ended
2/29/96 $10.400 $.542+ $ .568 $(.540) $ - $10.970
9/6/94 to
2/28/95 10.310 .264+ .115 (.273) (.016) 10.400
CLASS C
Year ended
2/29/96 10.310 .461 .540 (.461) - 10.850
9/7/94 to
2/28/95 10.290 .227+ .075 (.266) (.016) 10.310
CLASS R
Year ended
2/29/96 10.380 .570 .540 (.570) - 10.920
Year ended 2/28,
1995 10.810 .573 (.407) (.580) (.016) 10.380
1994 10.850 .574 (.012) (.565) (.061) 10.810
1993 10.030 .591 .880 (.589) (.062) 10.850
Year ended
2/29/92 9.690 .612 .425 (.617) (.080) 10.030
Year ended 2/28,
1991 9.520 .617 .198 (.611) (.034) 9.690
1990 9.350 .627 .262 (.630) (.089) 9.520
1989 9.300 .629 .050 (.629) - 9.350
Year ended
2/29/88 9.790 .637+ (.490) (.637) - 9.300
12/10/86 to
2/28/87 9.600 .127+ .190 (.127) - 9.790
- --------------------------------------------------------------------------------------------------------------------------------
</TABLE>
* Annualized.
** Net of taxes, if applicable (see note 1).
+ Reflects the waiver of certain management fees or reimbursement of certain
other expenses by the Adviser, if applicable (see note 7).
++ Total Return on Net Asset Value is the combination of reinvested dividend
income, reinvested capital gains distributions, if any, and changes in stock
price per share.
50
<PAGE>
<TABLE>
<CAPTION>
NUVEEN TAX FREE MUTUAL FUNDS ANNUAL REPORT
FEBRUARY 29, 1996
- ----------------------------------------------------------------------------------------------------------------------------
Ratios/supplemental data
- ----------------------------------------------------------------------------------------------------------------------------
Ratio of Ratio of Ratio of Ratio of
expenses to net investment expenses net investment
Total return Net assets average income to average to average net income to average Portfolio
on net asset end of period net assets before net assets before assets after net assets after turnover
value++ (in thousands) reimbursement reimbursement reimbursement+ reimbursement+ rate
- ----------------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
10.90% $ 46,943 .92% 5.00% .91% 5.01% 27%
3.84 14,097 1.27* 5.28* 1.00* 5.55* 25
9.88 5,151 1.63 4.34 1.63 4.34 27
3.09 3,979 1.75* 4.83* 1.75* 4.83* 25
10.94 761,956 .63 5.33 .63 5.33 27
1.85 736,702 .64 5.67 .64 5.67 25
5.47 745,914 .65 5.21 .65 5.21 11
15.24 567,232 .72 5.68 .72 5.68 20
11.03 306,853 .73 6.12 .73 6.12 45
8.94 178,931 .80 6.45 .80 6.45 53
9.73 111,806 .83 6.49 .83 6.49 78
7.63 66,049 .87 6.83 .87 6.83 106
2.00 41,330 .88 6.65 .60 6.93+ 88
3.31 13,160 3.50* .50* - 4.00* -
- ----------------------------------------------------------------------------------------------------------------------------
</TABLE>
51
<PAGE>
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Board of Directors, Trustees and Shareholders of
Nuveen Municipal Bond Fund
Nuveen Insured Tax-Free Bond Fund, Inc.:
We have audited the accompanying statements of net assets of NUVEEN MUNICIPAL
BOND FUND (a Massachusetts Business Trust), and NUVEEN INSURED TAX-FREE BOND
FUND, INC. (comprising the Nuveen Insured Municipal Bond Fund) (a Minnesota
corporation), including the portfolios of investments, as of February 29, 1996,
and the related statements of operations for the year then ended, the statements
of changes in net assets for each of the two years in the period then ended and
the financial highlights for the periods indicated thereon. These financial
statements and financial highlights are the responsibility of the Fund's
management. Our responsibility is to express an opinion on these financial
statements and financial highlights based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of securities owned as of
February 29, 1996, by correspondence with the custodian and brokers. An audit
also includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the net assets of each of the
respective funds constituting Nuveen Municipal Bond Fund and Nuveen Insured Tax-
Free Bond Fund, Inc. as of February 29, 1996, the results of their operations
for the year then ended, the changes in their net assets for each of the two
years in the period then ended and the financial highlights for the periods
indicated thereon in conformity with generally accepted accounting principles.
ARTHUR ANDERSEN LLP
Chicago, Illinois
April 8, 1996
52
<PAGE>
[PHOTO OF PAINTING APPEARS HERE]
For nearly 100 years, Nuveen has earned its reputation as a tax-free income
specialist by focusing on municipal bonds
Your investment partners
Since 1898, John Nuveen & Co. Incorporated has worked to bring together the
various participants in the municipal bond industry and build strong
partnerships that benefit all concerned. Investors, financial advisers,
municipal officials, investment bankers--Nuveen believes that forging
relationships within these groups based on trust and value is the key to
successful investing.
As the oldest and largest municipal bond specialist in the United States,
Nuveen's investment bankers work with issuers to understand and meet their needs
in structuring and selling their bond issues.
Nuveen also works closely with financial advisers around the country,
including brokerage firms, banks, insurance companies, and independent financial
planners, to bring the benefits of tax-free investing to you. These advisers are
experts at identifying your needs and recommending the best solutions for your
situation. Together we make a powerful team, helping you create a successful
investment plan that meets your needs today and in the future.
[LOGO]
John Nuveen & Co. Incorporated
333 West Wacker Drive
Chicago, Illinois 60606-1286
<PAGE>
PART C--OTHER INFORMATION
NUVEEN MUNICIPAL BOND FUND
333 West Wacker Drive
Chicago, Illinois 60606
<PAGE>
PART C--OTHER INFORMATION
ITEM 24: FINANCIAL STATEMENTS AND EXHIBITS.
(a) Financial statements:
Included in the Prospectus:
Financial Highlights
Included in the Statement of Additional Information through incorporation
by reference to the Registrant's Annual Report to Shareholders:
Portfolio of Investments, February 29, 1996
Statement of Net Assets, February 29, 1996
Statement of Operations, Year Ended February 29, 1996
Statement of Changes in Net Assets, Years Ended February 29, 1996 and
February 28, 1995
Report of Independent Public Accountants, dated April 8, 1996
(b) Exhibits:
1(a).
Declaration of Trust of Registrant. Filed as Exhibit 1(a) to Post-Ef-
fective Amendment No. 30 to Registrant's Registration Statement on
Form N-1A (File No. 2-57408) and incorporated herein by reference
thereto.
1(a)(i).
Establishment and Declaration of Classes.
2. By-Laws of Registrant. Filed as Exhibit 2 to Post-Effective Amendment
No. 30 to Registrant's Registration Statement on Form N-1A (File No.
2-57408) and incorporated herein by reference thereto.
3.
Not applicable.
4(a).
Specimen certificate of Class R Shares of the Fund. Filed as Exhibit
4(a) to Post-Effective Amendment No. 31 to Registrant's Registration
Statement on Form N-1A (File No. 2-57408) and incorporated herein by
reference thereto.
4(b).
Specimen certificate of Class A Shares of the Fund. Filed as Exhibit
4(b) to Post-Effective Amendment No. 31 to Registrant's Registration
Statement on Form N-1A (File No. 2-57408) and incorporated herein by
reference thereto.
4(c).
Specimen certificate of Class C Shares of the Fund. Filed as Exhibit
4(c) to Post-Effective Amendment No. 31 to Registrant's Registration
Statement on Form N-1A (File No. 2-57408) and incorporated herein by
reference thereto.
5.
Investment Management Agreement dated June 13, 1995 between Regis-
trant and Nuveen Advisory Corp.
5(b).
Renewal, dated May 7, 1996, of Investment Management Agreement.
C-1
<PAGE>
6(a).
Distribution Agreement dated June 13, 1995 between Registrant and
John Nuveen & Co. Incorporated.
6(b)(i).
Form of Dealer Distribution Agreement between Registrant's Principal
Underwriter and dealers relating to the sale of Registrant's shares.
Filed as Exhibit 6(b)(i) to Post-Effective Amendment No. 18 to Regis-
trant's Statement on Form N-1A (File No. 2-57408) and is incorporated
herein by reference thereto.
6(b)(ii).
Form of agreement between Registrant's Principal Underwriter and
banks or bank affiliates relating to the sale of Registrant's shares.
Filed as Exhibit 6(b)(ii) to Post-Effective Amendment No. 18 to Reg-
istrant's Registration Statement on Form N-1A (File No. 2-57408) and
is incorporated herein by reference thereto.
6(b)(iii).
Renewal, dated July 27, 1995, of Distribution Agreement.
7. Not applicable.
8(a).
Custody Agreement, dated October 1, 1993, between Registrant and
United States Trust Company of New York. Filed as Exhibit 8(a) to
Post-Effective Amendment No. 29 to Registrant's Registration State-
ment on Form N-1A and is incorporated herein by reference thereto.
8(a)(i).
Assignment, dated June 13, 1995, of Custody Agreement.
8(b).
Letter evidencing assignment of U.S. Trust Company of New York's
rights and responsibilities under the Custody Agreement to The Chase
Manhattan Bank, N.A.
9(a).
Transfer Agency Agreement between Registrant and Shareholder Servic-
es, Inc. Filed as Exhibit 9 to Post-Effective Amendment No. 26 to
Registrant's Registration Statement on Form N-1A (File No. 2-57408)
and is incorporated herein by reference thereto.
9(a)(i).
Assignment, dated June 13, 1995, of Transfer Agency Agreement.
10.
Opinion of Fried, Frank, Harris, Shriver & Jacobson.
11. Consent of Independent Public Accountants.
12. Not applicable.
13. Not applicable.
14. Not applicable.
15.
Plan of Distribution and Service for Class A Shares and Class C
Shares dated June 12, 1995.
15(b).
Renewal, dated July 26, 1995, of Plan of Distribution and Service.
16.
Schedule of Computation of Performance Figures.
17. Financial Data Schedule.
18.
Multiple Class Plan Adopted Pursuant to Rule 18f-3, as amended.
99(a).
Original Powers of Attorney of all of Registrant's Trustees authoriz-
ing, among others, James J. Wesolowski and Gifford R. Zimmerman to
execute the Registration Statement. Filed as Exhibit 99(a) to Post-
Effective Amendment No. 30 to Registrant's Registration Statement on
Form N-1A (File No. 2-57408) and incorporated herein by reference
thereto.
C-2
<PAGE>
99(b).
Code of Ethics and Reporting Requirements. Filed as Exhibit 99(b) to
Post-Effective Amendment No. 30 to Registrant's Registration State-
ment on Form N-1A (File No. 2-57408) and incorporated herein by ref-
erence thereto.
99(c).
Certified copy of resolution of Board of Directors authorizing the
signing of the names of directors and officers on the Registration
Statement pursuant to power of attorney.
ITEM 25: PERSONS CONTROLLED BY OR UNDER COMMON CONTROL WITH REGISTRANT
Not Applicable.
ITEM 26: NUMBER OF HOLDERS OF SECURITIES
At June 5, 1996:
TITLE
OF NUMBER OF
CLASS RECORD HOLDERS
----- --------------
Common
Stock
($.10
par
value)
Class A
Shares. 4,387
Class C
Shares. 187
Class R
Shares. 91,368
ITEM 27: INDEMNIFICATION
Section 4 of Article XII of Registrant's Declaration of Trust provides as fol-
lows:
Subject to the exceptions and limitations contained in this Section 4, every
person who is, or has been, a Trustee, officer, employee or agent of the Trust,
including persons who serve at the request of the Trust as directors, trustees,
officers, employees or agents of another organization in which the Trust has an
interest as a shareholder, creditor or otherwise (hereinafter referred to as a
"Covered Person"), shall be indemnified by the Trust to the fullest extent per-
mitted by law against liability and against all expenses reasonably incurred or
paid by him in connection with any claim, action, suit or proceeding in which
he becomes involved as a party or otherwise by virtue of his being or having
been such a Trustee, director, officer, employee or agent and against amounts
paid or incurred by him in settlement thereof.
No indemnification shall be provided hereunder to a Covered Person:
(a) against any liability to the Trust or its Shareholders by reason of a
final adjudication by the court or other body before which the proceeding
was brought that he engaged in willful misfeasance, bad faith, gross negli-
gence or reckless disregard of the duties involved in the conduct of his
office;
(b) with respect to any matter as to which he shall have been finally adju-
dicated not to have acted in good faith in the reasonable belief that his
action was in the best interest of the Trust; or
(c) in the event of a settlement or other disposition not involving a final
adjudication (as provided in paragraph (a) or (b)) and resulting in a pay-
ment by a Covered Person, unless there has been
C-3
<PAGE>
either a determination that such Covered Person did not engage in willful
misfeasance, bad faith, gross negligence or reckless disregard of the du-
ties involved in the conduct of his office by the court or other body ap-
proving the settlement or other disposition or a reasonable determination,
based on a review of readily available facts (as opposed to a full trial-
type inquiry), that he did not engage in such conduct:
(i) by a vote of a majority of the Disinterested Trustees acting on the
matter (provided that a majority of the Disinterested Trustees then in
office act on the matter); or
(ii) by written opinion of independent legal counsel.
The rights of indemnification herein provided may be insured against by poli-
cies maintained by the Trust, shall be severable, shall not affect any other
rights to which any Covered Person may now or hereafter be entitled, shall con-
tinue as to a person who has ceased to be such a Covered Person and shall inure
to the benefit of the heirs, executors and administrators of such a person.
Nothing contained herein shall affect any rights to indemnification to which
Trust personnel other than Covered Persons may be entitled by contract or oth-
erwise under law.
Expenses of preparation and presentation of a defense to any claim, action,
suit or proceeding subject to a claim for indemnification under this Section 4
shall be advanced by the Trust prior to final disposition thereof upon receipt
of an undertaking by or on behalf of the recipient to repay such amount if it
is ultimately determined that he is not entitled to indemnification under this
Section 4, provided that either:
(a) such undertaking is secured by a surety bond or some other appropriate
security or the Trust shall be insured against losses arising out of any
such advances; or
(b) a majority of the Disinterested Trustees acting on the matter (provided
that a majority of the Disinterested Trustees then in office act on the
matter) or independent legal counsel in a written opinion shall determine,
based upon a review of the readily available facts (as opposed to a full
trial-type inquiry), that there is reason to believe that the recipient ul-
timately will be found entitled to indemnification.
As used in this Section 4, a "Disinterested Trustee" is one (x) who is not an
Interested Person of the Trust (including anyone, as such Disinterested Trust-
ee, who has been exempted from being an Interested Person by any rule, regula-
tion or order of the Commission), and (y) against whom none of such actions,
suits or other proceedings or another action, suit or other proceeding on the
same or similar grounds is then or has been pending.
As used in this Section 4, the words "claim," "action," "suit" or "proceeding"
shall apply to all claims, actions, suits, proceedings (civil, criminal, admin-
istrative or other, including appeals), actual or threatened; and the word "li-
ability" and "expenses" shall include without limitation, attorneys' fees,
costs, judgments, amounts paid in settlement, fines, penalties and other lia-
bilities.
-----------------
The trustees and officers of the Registrant are covered by an Investment Trust
Errors and Omissions policy in the aggregate amount of $60,000,000 (with a max-
imum deductible of $500,000) against
C-4
<PAGE>
liability and expenses of claims of wrongful acts arising out of their posi-
tion with the Registrant (and such other companies), except for matters which
involve willful acts, bad faith, gross negligence and willful disregard of
duty (i.e., where the insured did not act in good faith for a purpose he or
she reasonably believed to be in the best interest of Registrant or where he
or she have had reasonable cause to believe this conduct was unlawful).
Insofar as indemnification for liabilities arising under the Securities Act of
1933 may be permitted to the officers, trustees or controlling persons of the
Registrant pursuant to the Declaration of Trust of the Registrant or other-
wise, the Registrant has been advised that in the opinion of the Securities
and Exchange Commission such indemnification is against public policy as ex-
pressed in the Act and is, therefore, unenforceable. In the event that a claim
for indemnification against such liabilities (other than the payment by the
Registrant of expenses incurred or paid by an officer or director or control-
ling person of the Registrant in the successful defense of any action, suit or
proceeding) is asserted by such officer, director or controlling persons in
connection with the securities being registered, the Registrant will, unless
in the opinion of its counsel the matter has been settled by controlling pre-
cedent, submit to a court of appropriate jurisdiction the question of whether
such indemnification by it is against public policy as expressed in the Act
and will be governed by the final adjudication of such issue.
ITEM 28: BUSINESS AND OTHER CONNECTIONS OF INVESTMENT ADVISER
Nuveen Advisory Corp. serves as investment adviser to the following open-end
management type investment companies: Nuveen Municipal Bond Fund, Nuveen Tax-
Exempt Money Market Fund, Inc., Nuveen Tax-Free Reserves, Inc., Nuveen Cali-
fornia Tax-Free Fund, Inc., Nuveen Tax-Free Bond Fund, Inc., Nuveen Insured
Tax-Free Bond Fund, Inc., Nuveen Tax-Free Money Market Fund, Inc. and Nuveen
Multistate Tax-Free Trust. It also serves as investment adviser to the follow-
ing closed-end management type investment companies: Nuveen Municipal Value
Fund, Inc., Nuveen California Municipal Value Fund, Inc., Nuveen New York Mu-
nicipal Value Fund, Inc., Nuveen Municipal Income Fund, Inc., Nuveen Premium
Income Municipal Fund, Inc., Nuveen Performance Plus Municipal Fund, Inc.,
Nuveen California Performance Plus Municipal Fund, Inc., Nuveen New York Per-
formance Plus Municipal Fund, Inc., Nuveen Municipal Advantage Fund, Inc.,
Nuveen Municipal Market Opportunity Fund, Inc., Nuveen California Municipal
Market Opportunity Fund, Inc., Nuveen
Investment Quality Municipal Fund, Inc., Nuveen California Investment Quality
Municipal Fund, Inc., Nuveen New York Investment Quality Municipal Fund, Inc.;
Nuveen Insured Quality Municipal Fund, Inc., Nuveen Florida Investment Quality
Municipal Fund, Nuveen New Jersey Investment Quality Municipal Fund, Inc.,
Nuveen Pennsylvania Investment Quality Municipal Fund, Nuveen Select Quality
Municipal Fund, Inc., Nuveen California Select Quality Municipal Fund, Inc.,
Nuveen New York Select Quality Municipal Fund, Inc., Nuveen Quality Income Mu-
nicipal Fund, Inc., Nuveen Insured Municipal Opportunity Fund, Inc., Nuveen
Florida Quality Income Municipal Fund, Nuveen Michigan Quality Income Munici-
pal Fund, Inc. Nuveen Ohio Quality Income Municipal Fund, Inc. Nuveen Texas
Quality Income Municipal Fund, Nuveen California Quality Income Municipal
Fund, Inc., Nuveen New York Quality Income Municipal Fund, Inc., Nuveen Pre-
mier Municipal Income Fund, Inc., Nuveen Premier Insured Municipal Income
Fund, Inc., Nuveen Premium Income Municipal Fund 2, Inc., Nuveen Insured Cali-
fornia Premium Income Municipal Fund, Inc. and Nuveen In-
C-5
<PAGE>
sured New York Premium Income Municipal Fund, Inc., Nuveen Select Maturities
Municipal Fund, Nuveen Arizona Premium Income Municipal Fund, Inc., Nuveen In-
sured Florida Premium Income Municipal Fund, Nuveen Michigan Premium Income
Municipal Fund, Inc., Nuveen New Jersey Premium Income Municipal Fund, Inc.,
Nuveen Insured Premium Income Municipal Fund, Inc., Nuveen Premium Income Mu-
nicipal Fund 4, Inc., Nuveen Insured California Premium Income Municipal Fund
2, Inc., Nuveen Insured New York Premium Income Municipal Fund 2, Nuveen Penn-
sylvania Premium Income Municipal Fund 2, Nuveen Maryland Premium In come Mu-
nicipal Fund, Nuveen Massachusetts Premium Income Municipal Fund, Nuveen Vir-
ginia Premium Income Municipal Fund, Nuveen Washington Premium Income Munici-
pal Fund, Nuveen Connecticut Premium Income Municipal Fund, Nuveen Georgia
Premium Income Municipal Fund, Nuveen Missouri Premium Income Municipal Fund,
Nuveen North Carolina Premium Income Municipal Fund, Nuveen California Premium
Income Municipal Fund and Nuveen Insured Premium Income Municipal Fund 2.
Nuveen Advisory Corp. has no other clients or business at the present time.
The principal business address for all of these investment companies is 333
West Wacker Drive, Chicago, Illinois 60606.
For a description of other business, profession, vocation or employment of a
substantial nature in which any director or officer of the investment adviser
has engaged during the last two years for his account or in the capacity of
director, officer, employee, partner or trustee, see the descriptions under
"Management" in the Statement of Additional Information.
ITEM 29: PRINCIPAL UNDERWRITERS
(a) John Nuveen & Co. Incorporated ("Nuveen") acts as principal underwriter to
the following open-end management type investment companies: Nuveen Municipal
Bond Fund, Nuveen Tax-Exempt
Money Market Fund, Inc., Nuveen Tax-Free Reserves, Inc., Nuveen California
Tax-Free Fund, Inc., Nuveen Tax-Free Bond Fund, Inc., Nuveen Insured Tax-Free
Bond Fund, Inc., Nuveen Tax-Free Money Market Fund, Inc. and Nuveen Multistate
Tax-Free Trust. Nuveen also acts as depositor and principal underwriter of the
Nuveen Tax-Exempt Unit Trust, a registered unit investment trust. Nuveen has
served or is serving as a co-managing underwriter of the shares of the follow-
ing closed-end management type investment companies: Nuveen Municipal Value
Fund, Inc., Nuveen California Municipal Value Fund, Inc., Nuveen New York Mu-
nicipal Value Fund, Inc., Nuveen Municipal Income Fund, Inc., Nuveen Premium
Income Municipal Fund, Inc., Nuveen Performance Plus Municipal Fund, Inc.,
Nuveen California Performance Plus Municipal Fund, Inc., Nuveen New York Per-
formance Plus Municipal Fund, Inc., Nuveen Municipal Advantage Fund, Inc.,
Nuveen Municipal Market Opportunity Fund, Inc., Nuveen California Municipal
Market Opportunity Fund, Inc., Nuveen Investment Quality Municipal Fund, Inc.,
Nuveen California Investment Quality Municipal Fund, Inc., Nuveen New York In-
vestment Quality Municipal Fund, Inc., Nuveen Insured Quality Municipal Fund,
Inc., Nuveen Florida Investment Quality Municipal Fund, Nuveen New Jersey In-
vestment Quality Municipal Fund, Inc., Nuveen Pennsylvania Investment Quality
Municipal Fund, Nuveen Select Quality Municipal Fund, Inc., Nuveen California
Select Quality Municipal Fund, Inc., Nuveen New York Select Quality Municipal
Fund, Inc., Nuveen Quality Income Municipal Fund, Inc., Nuveen Insured Munici-
pal Opportunity Fund, Inc., Nuveen Florida Quality Income Municipal Fund,
Nuveen Michigan Quality Income Municipal Fund, Inc., Nuveen Ohio Quality In-
come Municipal Fund, Inc. Nuveen Texas Quality Income Municipal Fund, Nuveen
California Quality Income Municipal Fund,
C-6
<PAGE>
Inc., Nuveen New York Quality Income Municipal Fund, Inc., Nuveen Premier Mu-
nicipal Income Fund, Inc., Nuveen Premier Insured Municipal Income Fund, Inc.,
Nuveen Select Tax-Free Income Portfolio, Nuveen Premium Income Municipal Fund
2, Inc., Nuveen Insured California Premium Income Municipal Fund, Inc., Nuveen
Insured New York Premium Income Municipal Fund, Inc., Nuveen Select Maturities
Municipal Fund, Nuveen Arizona Premium Income Municipal Fund, Inc., Nuveen In-
sured Florida Premium Income Municipal Fund, Nuveen Michigan Premium Income Mu-
nicipal Fund, Inc., Nuveen New Jersey Premium Income Municipal Fund, Inc.,
Nuveen Ohio Premium Income Municipal Fund, Inc., Nuveen Pennsylvania Premium
Income Municipal Fund, Nuveen Texas Premium Income Municipal Fund, Nuveen In-
sured Premium Income Municipal Fund, Inc., Nuveen Premium Income Municipal Fund
4, Inc., Nuveen Insured California Premium Income Municipal Fund 2, Inc.,
Nuveen Pennsylvania Premium Income Municipal Fund 2, Nuveen Maryland Premium
Income Municipal Fund, Nuveen Massachusetts Premium Income Municipal Fund,
Nuveen Virginia Premium Income Municipal Fund, Nuveen Washington Premium Income
Municipal Fund, Nuveen Connecticut Premium Income Municipal Fund, Nuveen Geor-
gia Premium Income Municipal Fund, Nuveen Missouri Premium Income Municipal
Fund, Nuveen North Carolina Premium Income Municipal Fund, Nuveen California
Premium Income Municipal Fund, Nuveen Insured Premium Income Municipal Fund 2,
Nuveen Select Tax-Free Income Portfolio 2, Nuveen Insured California Select
Tax-Free Income Portfolio, Nuveen Insured New York Select Tax-Free Income Port-
folio and Nuveen Select Tax-Free Income Portfolio 3.
(b)
<TABLE>
<CAPTION>
NAME AND PRINCIPAL POSITIONS AND OFFICES POSITIONS AND OFFICES
BUSINESS ADDRESS WITH UNDERWRITER WITH REGISTRANT
- ---------------------------------------------------------------------------
<S> <C> <C>
Timothy R. Schwertfeger Chairman of the Board, Chairman of the Board
333 West Wacker Drive Chief Executive Officer and Trustee
Chicago, IL 60606 and Director
Anthony T. Dean President, Chief Operating President and Director
333 West Wacker Drive Officer and Director
Chicago, IL 60606
John P. Amboian Executive Vice President None
and Chief Financial Officer
William Adams IV Vice President None
333 West Wacker Drive
Chicago, IL 60606
Clifton L. Fenton Vice President None
333 West Wacker Drive
Chicago, Il 60606
Kathleen M. Flanagan Vice President Vice President
333 West Wacker Drive
Chicago, IL 60606
</TABLE>
C-7
<PAGE>
<TABLE>
<CAPTION>
NAME AND PRINCIPAL POSITIONS AND OFFICES POSITIONS AND OFFICES
BUSINESS ADDRESS WITH UNDERWRITER WITH REGISTRANT
- -----------------------------------------------------------------------------
<S> <C> <C>
Stephen D. Foy Vice President None
333 West Wacker Drive
Chicago, IL 60606
Robert D. Freeland Vice President None
333 West Wacker Drive
Chicago, IL 60606
Michael G. Gaffney Vice President None
333 West Wacker Drive
Chicago, IL 60606
Anna R. Kucinskis Vice President Vice President
333 West Wacker Drive
Chicago, IL 60606
Robert B. Kuppenheimer Vice President None
333 West Wacker Drive
Chicago, IL 60606
Larry W. Martin Vice President Vice President and
333 West Wacker Drive and Assistant Secretary Assistant Secretary
Chicago, IL 60606
Thomas C. Muntz Vice President None
333 West Wacker Drive
Chicago, IL 60606
O. Walter Renfftlen Vice President Vice President and Controller
333 West Wacker Drive and Controller
Chicago, IL 60606
Stuart W. Rogers Vice President None
333 West Wacker Drive
Chicago, IL 60606
Bradford W. Shaw, Jr Vice President None
333 West Wacker Drive
Chicago, IL 60606
H. William Stabenow Vice President Vice President and Treasurer
333 West Wacker Drive and Treasurer
Chicago, IL 60606
James J. Wesolowski Vice President, General Vice President and Secretary
333 West Wacker Drive Counsel and Secretary
Chicago, IL 60606
</TABLE>
C-8
<PAGE>
<TABLE>
<CAPTION>
NAME AND PRINCIPAL POSITIONS AND OFFICES POSITIONS AND OFFICES
BUSINESS ADDRESS WITH UNDERWRITER WITH REGISTRANT
- --------------------------------------------------------------------------------
<S> <C> <C>
Paul C. Williams Vice President None
333 West Wacker Drive Chicago, IL
60606
Gifford R. Zimmerman Vice President Vice President and
333 West Wacker Drive Chicago, IL and Assistant Secretary Assistant Secretary
60606
</TABLE>
(c) Not applicable.
ITEM 30: LOCATION OF ACCOUNTS AND RECORDS
Nuveen Advisory Corp., 333 West Wacker Drive, Chicago, Illinois, 60606, main-
tains the Declaration of Trust, By-Laws, minutes of trustees and shareholder
meetings, contracts and all advisory material of the investment adviser.
The Chase Manhattan Bank, N.A., New York, New York 10003, maintains all general
and subsidiary ledgers, journals, trial balances, records of all portfolio pur-
chases and sales, and all other required records not maintained by Nuveen Advi-
sory Corp., or Shareholder Services, Inc.
Shareholder Services, Inc., P.O. Box 5330, Denver, Colorado 80217-5330, main-
tains all the required records in its capacity as transfer, dividend paying,
and shareholder services agent for the Registrant.
ITEM 31: MANAGEMENT SERVICES
Not applicable.
ITEM 32: UNDERTAKINGS
(a) Not applicable.
(b) Not applicable.
(c) The Registrant undertakes to furnish each person to whom a prospectus is
delivered with a copy of the Registrant's latest Annual Report to Share-
holders upon request and without charge.
C-9
<PAGE>
SIGNATURES
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933 AND THE INVESTMENT
COMPANY ACT OF 1940, THE REGISTRANT CERTIFIES THAT IT MEETS ALL OF THE RE-
QUIREMENTS FOR EFFECTIVENESS OF THIS REGISTRATION STATEMENT PURSUANT TO RULE
485(B) UNDER THE SECURITIES ACT OF 1933 AND HAS DULY CAUSED THIS AMENDMENT TO
THE REGISTRATION STATEMENT TO BE SIGNED ON ITS BEHALF BY THE UNDERSIGNED,
THEREUNTO DULY AUTHORIZED, IN THE CITY OF CHICAGO, AND STATE OF ILLINOIS, ON
THE 28TH DAY OF JUNE, 1996.
NUVEEN MUNICIPAL BOND FUND
/s/ Gifford R. Zimmerman
---------------------------------------
Gifford R. Zimmerman, Vice President
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THIS AMENDMENT TO
THE REGISTRATION STATEMENT HAS BEEN SIGNED BELOW BY THE FOLLOWING PERSONS IN
THE CAPACITIES AND ON THE DATE INDICATED.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<S> <C> <C>
/s/ O. Walter Renfftlen
- -------------------------------
O. Walter Renfftlen Vice President and June 28, 1996
Controller (Principal
Financial and
Accounting Officer)
Richard J. Franke Chairman of the Board
and Trustee (Principal /s/ Gifford R.
Executive Officer) Zimmerman
Lawrence H. Brown Trustee
Anne E. Impellizzeri Trustee
Margaret K. Rosenheim Trustee
Peter R. Sawers Trustee
Timothy R. Schwertfeger President and Trustee
By_________________________
Gifford R. Zimmerman
Attorney-in-Fact
June 28, 1996
</TABLE>
AN ORIGINAL POWER OF ATTORNEY AUTHORIZING, AMONG OTHERS, JAMES J. WESOLOWSKI
AND GIFFORD R. ZIMMERMAN TO EXECUTE THIS REGISTRATION STATEMENT, AND AMEND-
MENTS THERETO, FOR EACH OF THE OFFICERS AND TRUSTEES OF REGISTRANT ON WHOSE
BEHALF THIS REGISTRATION STATEMENT IS FILED, HAS BEEN EXECUTED AND FILED WITH
THE SECURITIES AND EXCHANGE COMMISSION.
<PAGE>
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
SEQUENTIALLY
EXHIBIT NUMBERED
NUMBER EXHIBIT PAGE
------- ------- ------------
<C> <S> <C>
1(a)(i). Establishment and Designation of Classes
5. Investment Management Agreement, dated June 13,
1995, between Registrant and Nuveen Advisory Corp.
5(b). Renewal, dated May 7, 1996, of Investment Manage-
ment Agreement
6(a). Distribution Agreement, dated June 13, 1995, be-
tween Registrant and John Nuveen & Co. Incorporated
6(b)(iii). Renewal, dated July 27, 1995, of Distribution
Agreement
8(a)(i). Assignment, dated June 13, 1995, of Custody Agree-
ment
8(b) Letter evidencing assignment of U.S. Trust Company
of New York's rights and responsibilities under
Custody Agreement to The Chase Manhattan Bank, N.A.
9(a)(i). Assignment, dated June 13, 1995, of Transfer Agency
Agreement
10. Opinion of Fried, Frank, Harris, Shriver & Jacobson
11. Consent of Independent Public Accountants
15. Plan of Distribution and Service for Class A Shares
and Class C Shares dated
June 12, 1995
15(b). Renewal, dated July 26, 1995, of Plan of Distribu-
tion and Service
16. Schedule of Computation of Performance Figures
17. Financial Data Schedule
18. Multiple Class Plan Adopted Pursuant to Rule 18f-3,
as amended
99(c). Certified copy of resolution of Board of Directors
authorizing the signing of the names of directors
and officers on the Registration Statement pursuant
to power of attorney
</TABLE>
<PAGE>
EXHIBIT 1(a)(i)
NUVEEN MUNICIPAL BOND FUND
ESTABLISHMENT AND DESIGNATION OF CLASSES
The undersigned, being a majority of the Trustees of Nuveen Municipal Bond
Fund, a Massachusetts business trust (the "Trust"), acting pursuant to Sections
1 and 2 of Article IV of the Declaration of Trust dated March 13, 1995, (the
"Declaration"), do hereby divide the Shares of its series, whether currently
existing or created in the future, into three Classes of Shares effective as of
the commencement of business on June 13, 1995, as follows:
1. The three Classes of Shares are designated "Class A Shares", "Class C
Shares" and "Class R Shares".
2. Class A Shares, Class C Shares and Class R Shares shall be entitled to
all the rights and preferences accorded to Shares under the Declaration.
3. The number of Shares of each Class designated hereby shall be unlimited.
4. The purchase price of Class A Shares, Class C Shares and Class R Shares,
the method of determination of the net asset value of Class A Shares, Class C
Shares and Class R Shares, the price, terms and manner of redemption of Class A
Shares, Class C Shares and Class R Shares, any conversion or exchange feature or
privilege of the Class A Shares, Class C Shares and Class R Shares, and the
relative dividend rights of the holders of Class A Shares, Class C Shares and
Class R Shares shall be established by the Trustees of the Trust in accordance
with the Declaration and shall be set forth in the current prospectus and
statement of additional information of the Trust or any series thereof, as
amended from time to time, contained in the Trust's registration statement under
the Securities Act of 1933, as amended (the "Prospectus").
5. Each of the Class A Shares, Class C Shares and Class R Shares shall bear
the expenses of payments under any distribution and service agreements entered
into by or on behalf of the Trust with respect to that Class, and any other
expenses that are properly allocated to such Class in accordance with the
Investment Company Act of 1940, or any
<PAGE>
-2-
rule or order issued thereunder and applicable to the Trust (the "1940 Act").
6. As to any matter on which shareholders are entitled to vote, Class A
Shares, Class C Shares and Class R Shares of a series shall vote together as a
single class; provided however, that notwithstanding the provisions of Section 4
of Article IX of the Declaration to the contrary, (a) as to any matter with
respect to which a separate vote of any Class is required by the 1940 Act or is
required by a separate agreement applicable to such Class, such requirements as
to a separate vote by the Class shall apply, (b) except as required by (a)
above, to the extent that a matter affects more than one Class and the interests
of two or more Classes in the matter are not materially different, then the
Shares of such Classes whose interests in the matter are not materially
different shall vote together as a single Class, but to the extent that a matter
affects more than one Class and the interests of a Class in the matter are
materially different from that of each other Class, then the Shares of such
Class shall vote as a separate class; and (c) except as required by (a) above or
as otherwise required by the 1940 Act, as to any matter which does not affect
the interests of a particular Class, only the holders of Shares of the one or
more affected Classes shall be entitled to vote.
7. The designation of Class A Shares, Class C Shares and Class R Shares
hereby shall not impair the power of the Trustees from time to time to designate
additional classes of Shares of the Trust.
8. Subject to the applicable provisions of the 1940 Act, the Trustees may
from time to time modify the preferences, voting powers, rights and privileges
of any of the Classes designated hereby without any action or consent of the
Shareholders.
IN WITNESS WHEREOF, the undersigned has executed this certificate this
12th day of June, 1995.
/s/ Richard J. Franke
--------------------------
Trustee
/s/ Lawrence H. Brown
---------------------------
Trustee
/s/ Anne E. Impellizzeri
---------------------------
Trustee
/s/ Margaret K. Rosenheim
---------------------------
Trustee
/s/ Peter R. Sawers
---------------------------
Trustee
/s/ Timothy R. Schwertfeger
---------------------------
Trustee
<PAGE>
EXHIBIT 5
INVESTMENT MANAGEMENT AGREEMENT
-------------------------------
AGREEMENT made this 13th day of June, 1995, by and between NUVEEN MUNICIPAL
BOND FUND, a Massachusetts business trust (the "Fund"), and NUVEEN ADVISORY
CORP., a Delaware corporation (the "Adviser").
W I T N E S S E T H
-------------------
In consideration of the mutual covenants hereinafter contained, it is hereby
agreed by and between the parties hereto as follows:
1. The Fund hereby employs the Adviser to act as the investment adviser for,
and to manage the investment and reinvestment of the assets of the Fund in
accordance with the Fund's investment objective and policies and limitations,
and to administer its affairs to the extent requested by and subject to the
supervision of the Board of Trustees of the Fund for the period and upon the
terms herein set forth. The investment of such assets shall be subject to the
Fund's policies, restrictions and instructions with respect to securities
investments as set forth in the Fund's Registration Statement on Form N-1A under
the Securities Act of 1933 and the Investment Company Act of 1940 covering the
Fund's shares of beneficial interest, including the Prospectus forming a part
thereof, all as filed with the Securities and Exchange Commission and as from
time to time amended, and all applicable laws and the regulations of the
Securities and Exchange Commission relating to the management of registered
open-end, diversified management investment companies.
<PAGE>
The Adviser accepts such employment and agrees during such period to render
such services, to furnish office facilities and equipment and clerical,
bookkeeping and administrative services (other than such services, if any,
provided by the Fund's transfer agent and shareholder service agent) for the
Fund, to permit any of its officers or employees to serve without compensation
as trustees or officers of the Fund if elected to such positions, and to assume
the obligations herein set forth for the compensation herein provided. The
Adviser shall, for all purposes herein provided, be deemed to be an independent
contractor and, unless otherwise expressly provided or authorized, shall have no
authority to act for nor represent the Fund in any way, nor otherwise be deemed
an agent of the Fund.
2. For the services and facilities described in Section 1, the Fund will pay
to the Adviser, at the end of each calendar month, an investment management fee
computed at an annual rate of:
Rate Net Assets
---- ----------
.5000% For the first $125 million
.4875% For the next $125 million
.4750% For the next $250 million
.4625% For the next $500 million
.4500% For the next $1 billion
.4250% On assets of $2 billion and over
For the month and year in which this Agreement becomes effective, or terminates,
there shall be an appropriate proration on the basis of the number of days that
the Agreement shall have been in effect during the month and year, respectively.
The services of the Adviser to the Fund under
<PAGE>
this Agreement are not to be deemed exclusive, and the Adviser shall be free to
render similar services or other services to others so long as its services
hereunder are not impaired thereby.
3. In addition to the services and facilities described in Section 1 the
Adviser shall assume and pay to the extent hereafter provided: (x) any expenses
for services rendered by a custodian for the safekeeping of the Fund's
securities or other property, for keeping its books of account, for calculating
the net asset value of the Fund as provided in the Declaration of Trust of the
Fund, and any other charges of the custodian; and (y) the cost and expenses of
the Fund's operations, including compensation of the trustees, transfer,
dividend disbursing and shareholder service agent expenses, legal fees, expenses
of independent accountants, costs of share certificates, expenses of preparing,
printing and distributing reports to shareholders and governmental agencies, and
all fees payable to Federal, State, or other governmental agencies on account of
the registration of securities issued by the Fund, filing of corporate documents
or otherwise. Notwithstanding the foregoing, the Adviser shall not be obligated
to assume or pay interest, taxes, fees incurred in acquiring and disposing of
portfolio securities or extraordinary expenses of the Fund. The Fund shall not
incur any obligation for management or administrative expenses which the Fund
intends the Adviser to assume and pay hereunder without first obtaining the
written approval of the Adviser.
The Adviser shall arrange for officers or employees of the Adviser to serve,
without compensation from the Fund, as trustees, officers or agents of the Fund,
if duly elected or appointed to such positions, and subject to their individual
consent and to any limitations imposed by law.
<PAGE>
The foregoing enumerated expenses are hereby assumed by the Adviser to the
extent they, together with the Adviser's fee payable hereunder (but excluding
interest, taxes, fees incurred in acquiring and disposing of portfolio
securities and extraordinary expenses), exceed during any fiscal year .75 of 1%
of the Fund's average net assets for such year; to the extent they do not exceed
such percentage, such expenses shall be properly chargeable to the Fund. If, at
the end of any month, the expenses of the Fund properly chargeable to the income
account on a year-to-date basis shall exceed the appropriate percentage of
average net assets, the payment to the Adviser for that month shall be reduced
and, if necessary, the Adviser shall assume and pay expenses pursuant hereto so
that the total year-to-date net expense will not exceed such percentage. As of
the end of the Fund's fiscal year the foregoing computation and assumption of
expenses shall be readjusted, if necessary, so that the expenses assumed and
paid by the Adviser, if any, are such, and the aggregate compensation payable to
the Adviser for the year, (otherwise equal to the percentage set forth in
Section 2 hereof of the average net asset value as determined and described
herein throughout the fiscal year) is diminished as may be necessary, so that
the total amount of expenses borne by the Fund shall not exceed the applicable
expense limitation.
The net asset value of the Fund shall be calculated as provided in the
Declaration of Trust of the Fund. On each day when net asset value is not
calculated, the net asset value of a share of beneficial interest of the Fund
shall be deemed to be the net asset value of such share as of the close of
business on the last day on which such calculation was made for the purpose of
the foregoing computations.
<PAGE>
4. Subject to applicable statutes and regulations, it is understood that
officers, trustees, or agents of the Fund are, or may be, interested in the
Adviser as officers, directors, agents, shareholders or otherwise, and that the
officers, directors, shareholders and agents of the Adviser may be interested in
the Fund otherwise than as trustees, officers or agents.
5. The Adviser shall not be liable for any loss sustained by reason of the
purchase, sale or retention of any security, whether or not such purchase, sale
or retention shall have been based upon the investigation and research made by
any other individual, firm or corporation, if such recommendation shall have
been selected with due care and in good faith, except loss resulting from
willful misfeasance, bad faith, or gross negligence on the part of the Adviser
in the performance of its obligations and duties, or by reason of its reckless
disregard of its obligations and duties under this Agreement.
6. The Adviser reserves the right to manage other investment accounts and
funds, including those with investment objectives similar to the Fund. In the
event that the Adviser manages other investment accounts or funds, securities
considered as investments for the Fund may also be appropriate for such other
investment accounts and funds that may be managed by the Adviser. Subject to
applicable laws and regulations, the Adviser will attempt to allocate equitably
portfolio transactions among the Fund and the portfolios of its other investment
accounts and funds purchasing securities whenever decisions are made to purchase
or sell securities by the Fund and one or more of such other accounts or funds
simultaneously. In making such allocations, the main factors to be considered by
the Adviser will be the respective
<PAGE>
investment objectives of the Fund and such other accounts and funds, the
relative size of portfolio holdings of the same or comparable securities, the
availability of cash for investment by the Fund and such other accounts and
funds, the size of investment commitments generally held by the fund and such
accounts and funds, and the opinions of the persons responsible for recommending
investments to the Fund and such other accounts and funds.
7. This Agreement shall continue in effect until August 1, 1996, unless and
until terminated by either party as hereinafter provided, and shall continue in
force from year to year thereafter, but only as long as such continuance is
specifically approved, at least annually, in the manner required by the
Investment Company Act of 1940.
This Agreement shall automatically terminate in the event of its assignment,
and may be terminated at any time without the payment of any penalty by the Fund
or by the Adviser upon sixty (60) days' written notice to the other party. The
Fund may effect termination by action of the Board of Trustees, or by vote of a
majority of the outstanding shares of beneficial interest of the Fund,
accompanied by appropriate notice.
This Agreement may be terminated, at any time, with the payment of any
penalty, by the Board of Trustees of the Fund, or by vote of a majority of the
outstanding shares of beneficial interest of the Fund, in the event that it
shall have been established by a court of competent jurisdiction that the
Adviser, or any officer or director of the Adviser, has taken any action which
results in a breach of the covenants of the Adviser set forth herein.
<PAGE>
Termination of this Agreement shall not affect the right of the Adviser to
receive payments on any unpaid balance of the compensation, described in
Section 2, earned prior to such termination.
8. If any provision of this Agreement shall be held or made invalid by a
court decision, statute, rule, or otherwise, the remainder shall not be thereby
affected.
9. The Adviser and its affiliates reserve the right to grant, at any time,
the use of the name "Nuveen," or any approximation or abbreviation thereof, to
any other investment company or business enterprise. Upon termination of this
Agreement by either party, or by its terms, the Fund shall thereafter refrain
from using any name of the Fund which includes "Nuveen," or any approximation or
abbreviation thereof, or is sufficiently similar to such name as to be likely to
cause confusion with such name, and shall not allude in any public statement or
advertisement to the former association.
10. Any notice under this Agreement shall be in writing, addressed and
delivered or mailed, postage prepaid, to the other party at such address as such
other party may designate for receipt of such notice.
11. The Declaration of Trust of the Fund on file with the Secretary of State
of the Commonwealth of Massachusetts was executed on behalf of the Fund by the
initial trustee of the Fund and not individually, and any obligation of the Fund
shall be binding only upon the assets
<PAGE>
of the Fund (or applicable series thereof) and shall not be binding upon any
trustee, officer or shareholder of the Fund. Neither the authorization of any
action by the trustees or shareholders of the Fund nor the execution of this
agreement on behalf of the Fund shall impose any liability upon any trustee,
officer or shareholder of the Fund.
IN WITNESS WHEREOF, the Fund and the Adviser have caused this Agreement to
be executed on the day and year above written.
NUVEEN MUNICIPAL BOND FUND
By: /s/ Gifford R. Zimmerman
-------------------------------------
Vice President
Attest: /s/ Karen T. Healy
------------------------
NUVEEN ADVISORY CORP.
By: /s/ James J. Wesolowski
-------------------------------------
Vice President
Attest: /s/ Larry W. Martin
------------------------
<PAGE>
Exhibit 5(b)
NUVEEN MUNICIPAL BOND FUND
RENEWAL OF INVESTMENT MANAGEMENT AGREEMENT
This Agreement made this 7th day of May, 1996 by and between Nuveen Municipal
Bond Fund, a Massachusetts business trust (the "Fund"), and Nuveen Advisory
Corp., a Delaware corporation (the "Adviser");
WHEREAS, the parties hereto are the contracting parties under that certain
Investment Management Agreement (the "Agreement") pursuant to which the Adviser
furnishes investment management and other services to the Fund; and
WHEREAS, the Agreement terminates August 1, 1996 unless continued in the manner
required by the Investment Company Act of 1940; and
WHEREAS, the Board of Directors, at a meeting called for the purpose of
reviewing the Agreement, have approved the Agreement and its continuance until
August 1, 1997 in the manner required by the Investment Company Act of 1940.
NOW THEREFORE, in consideration of the mutual covenants contained in the
Agreement the parties hereto do hereby continue the Agreement in effect until
August 1, 1997 and ratify and confirm the Agreement in all respects.
NUVEEN MUNICIPAL BOND FUND
By: /s/ James J. Wesolowski
_________________________________
Vice President
ATTEST:
/s/ Karen L. Healy
______________________________
Assistant Secretary
NUVEEN ADVISORY CORP.
By: /s/ Gifford R. Zimmerman
_________________________________
Vice President
ATTEST:
/s/ Larry Martin
______________________________
Assistant Secretary
<PAGE>
EXHIBIT 6(a)
DISTRIBUTION AGREEMENT
----------------------
AGREEMENT made as of this 13th day of June 1995, between NUVEEN MUNICIPAL
BOND FUND, a Massachusetts business trust (the "Fund"), and JOHN NUVEEN & CO.
INCORPORATED, a Delaware corporation (the "Underwriter").
W I T N E S S E T H
-------------------
In consideration of the mutual covenants hereinafter contained, it is hereby
agreed by and between the parties hereto as follows:
1. The Fund hereby appoints the Underwriter its agent for the distribution
of shares of beneficial interest, par value $.10 per share, including such Class
or Classes of shares as may now or hereafter be authorized, (the "Shares") in
jurisdictions wherein Shares may legally be offered for sale; provided, however,
that the Fund, in its absolute discretion, may: (a) issue or sell Shares
directly to holders of Shares of the Fund upon such terms and conditions and for
such consideration, if any, as it may determine, whether in connection with the
distribution of subscription or purchase rights, the payment or reinvestment of
dividends or distributions, or otherwise; and (b) issue or sell Shares at net
asset value in connection with merger or consolidation with, or acquisition of
the assets of, other investment companies or similar companies.
2. The Underwriter hereby accepts appointment as agent for the distribution
of the Shares and agrees that it will use its best efforts to sell such part of
the authorized Shares remaining unissued as from time to time shall be
effectively registered under the Securities Act
<PAGE>
of 1933 ("Securities Act"), at prices determined as hereinafter provided and on
terms hereinafter set forth, all subject to applicable Federal and State laws
and regulations and to the Declaration of Trust of the Fund.
3. The Fund agrees that it will use its best efforts to keep effectively
registered under the Securities Act for sale, as herein contemplated, such
Shares as the Underwriter shall reasonably request and as the Securities and
Exchange Commission shall permit to be so registered.
4. Notwithstanding any other provision hereof, the Fund may terminate,
suspend, or withdraw the offering of the Shares, or Shares of any Class,
whenever, in its sole discretion, it deems such action to be desirable.
5. The Underwriter shall sell Shares to, or through, brokers, dealers or
qualified financial intermediaries (hereinafter referred to as "dealers"), or
others, in such manner not inconsistent with the provisions hereof and the then
effective Registration Statement of the Fund under the Securities Act (and
related Prospectus and Statement of Additional Information) as the Underwriter
may determine from time to time, provided that no dealer, or other person, shall
be appointed nor authorized to act as agent of the Fund without the prior
consent of the Fund.
The Underwriter shall have the right to enter into agreements with brokers,
dealers and banks (referred to herein as "dealers") of its choice for the sale
of Shares and fix therein the portion of the sales charge which may be allocated
to such dealers; provided that the Fund shall approve the form of such
agreements and shall evidence such approval by filing said form and any
2
<PAGE>
amendments thereto as exhibits to its currently effective registration statement
under the Securities Act. Shares sold to dealers shall be for resale by such
dealers only at the public offering price(s) set forth in the Fund's then
current prospectus. The current forms of such agreements are attached hereto as
Exhibits 1, 2 and 3.
6. Shares offered for sale, or sold by the Underwriter, shall be so offered
or sold at a price per Share determined in accordance with the then current
Prospectus relating to the sale of Shares except as departure from such prices
shall be permitted by the rules and regulations of the Securities and Exchange
Commission. Any public offering price shall be the net asset value per Share
plus a sales charge of not more than 4.75% of such public offering price. Shares
may be sold at net asset value without a sales charge to such class or classes
of investors or in such class or classes of transactions as may be permitted
under applicable rules of the Securities and Exchange Commission and as
described in the then current Prospectus of the Fund. The net asset value per
Share of each Class shall be computed in accordance with the Declaration of
Trust of the Fund and shall be determined in the manner, and at the time, set
forth in the then current prospectus of the Fund relating to such Shares.
7. The price the Fund shall receive for all Shares purchased from the Fund
shall be the net asset value used in determining the public offering price
applicable to the sale of such Shares. The excess, if any, of the sales price
over the net asset value of Shares sold by the Underwriter as agent shall be
retained by the Underwriter as a commission for its services hereunder. Out of
such commission, the Underwriter may allow commissions or concessions to dealers
in such amounts as the Underwriter shall determine from time to time. Except as
may be
3
<PAGE>
otherwise determined by the Underwriter and the Fund from time to time, such
commissions or concessions shall be uniform to all dealers.
8. The Underwriter shall issue and deliver, or cause to be issued and
delivered, on behalf of the Fund such confirmations of sales made by it as
agent, pursuant to this Agreement, as may be required. At, or prior to, the time
of issuance of Shares, the Underwriter will pay, or cause to be paid, to the
Fund the amount due the Fund for the sale of such Shares. Certificates shall be
issued, or Shares registered on the transfer books of the Fund, in such names
and denominations as the Underwriter may specify.
9. The Fund will execute any and all documents, and furnish any and all
information, which may be reasonably necessary in connection with the
qualification of the Shares for sale (including the qualification of the Fund as
a dealer, where necessary or advisable) in such states as the Underwriter may
reasonably request (it being understood that the Fund shall not be required,
without it consent, to comply with any requirement which, in its opinion, is
unduly burdensome).
10. The Fund will furnish to the Underwriter, from time to time, such
information with respect to the Fund and the Shares as the Underwriter may
reasonably request for use in connection with the sale of Shares. The
Underwriter agrees that it will not use or distribute, nor will it authorize
dealers or others to use, distribute or disseminate, in connection with the sale
of such Shares, any statements other than those contained in the Fund's current
Prospectus and Statement of Additional Information, except such supplemental
literature or advertising as shall
4
<PAGE>
be lawful under Federal and State securities laws and regulations, and that it
will furnish the Fund with copies of all such material.
11. The Underwriter shall order Shares from the Fund only to the extent that
it shall have received purchase orders therefor. The Underwriter will not make,
nor authorize any dealers or others, to make: (a) any short sale of Shares; or
(b) any sale of Shares to any officer or director of the Fund, nor to any
officer or director of the Underwriter, or of any corporation or association
furnishing investment advisory, managerial, or supervisory services to the Fund,
nor to any such corporation or association, unless such sales are made in
accordance with the then current prospectus relating to the sale of such Shares.
12. In selling Shares for the account of the Fund, the Underwriter will in
all respects conform to the requirements of all State and Federal laws and the
Rules of Fair Practice of the National Association of Securities Dealers, Inc.
relating to such sales, and will indemnify and save harmless the Fund from any
damage or expense on account of any wrongful act by the Underwriter or any
employee, representative, or agent of the Underwriter. The Underwriter will
observe and be bound by all the provisions of the Declaration of Trust of the
Fund (and of any fundamental policies adopted by the Fund pursuant to the
Investment Company Act of 1940, notice of which shall have been given by the
Fund to the Underwriter) which at the time in any way require, limit, restrict,
prohibit or otherwise regulate any action on the part of the Underwriter.
13. The Underwriter will require each dealer to conform to the provisions
hereof and of the Registration Statement (and related prospectus) at the time in
effect under the Securities
5
<PAGE>
Act with respect to the public offering price of the Shares, and neither the
Underwriter nor any such dealer shall withhold the placing of purchase orders so
as to make a profit thereby.
14. The Fund will pay, or cause to be paid, expenses (including the fees and
disbursements of its own counsel) of any registration of Shares under the
Securities Act, expenses of qualifying or continuing the qualification of the
Shares for sale and, in connection therewith, of qualifying or continuing the
qualification of the Fund as a dealer or broker under the laws of such states as
may be designated by the Underwriter under the conditions herein specified, and
expenses incident to the issuance of the Shares such as the cost of Share
certificates, issue taxes, and fees of the transfer and shareholder service
agent. The Underwriter will pay, or cause to be paid, all expenses (other than
expenses which any dealer may bear pursuant to any agreement with the
Underwriter) incident to the sale and distribution of the Shares issued or sold
hereunder, including, without limiting the generality of the foregoing, all: (a)
expenses of printing and distributing any Prospectus and Statement of Additional
Information and of preparing, printing and distributing or disseminating any
other literature, advertising and selling aids in connection with such offering
of the Shares for sale (except that such expenses need not include expenses
incurred by the Fund in connection with the preparation, printing and
distribution of any report or other communication to holders of Shares in their
capacity as such), and (b) expenses of advertising in connection with such
offering. No transfer taxes, if any, which may be payable in connection with the
issue or delivery of Shares sold as herein contemplated, or of the certificates
for such Shares, shall be borne by the Fund, and the Underwriter will indemnify
and hold harmless the Fund against liability for all such transfer taxes.
6
<PAGE>
15. This agreement shall continue in effect until May 1, 1990, unless and
until terminated by either party as hereinafter provided, and will continue from
year to year thereafter, but only so long as such continuance is specifically
approved, at least annually, in the manner required by the Investment Company
Act of 1940. Either party hereto may terminate this agreement on any date by
giving the other party at least six month's prior written notice of such
termination, specifying the date fixed therefor.
Without prejudice to any other remedies of the Fund in any such event, the Fund
may terminate this Agreement at any time immediately upon any failure of
fulfillment of any of the obligations of the Underwriter hereunder.
16. This agreement shall automatically terminate in the event of its
assignment.
17. Any notice under this agreement shall be in writing, addressed, and
delivered or mailed, postage pre-paid, to other party at such address as such
other party may designate for the receipt of such notice.
18. The Declaration of Trust of the Fund on file with the Secretary of State
of the Commonwealth of Massachusetts was executed on behalf of the Fund by the
initial trustee of the Fund and not individually, and any obligation of the Fund
shall be binding only upon the assets of the Fund (or applicable series thereof)
and shall not be binding upon any trustee, officer or shareholder of the Fund.
Neither the authorization of any action by the trustees or shareholders of the
Fund nor the execution of this agreement on behalf of the Fund shall impose any
liability upon any trustee, officer or shareholder of the Fund.
7
<PAGE>
IN WITNESS WHEREOF, the Fund and the Underwriters have caused this agreement
to be executed on its behalf as of the day and year first above written.
NUVEEN MUNICIPAL BOND FUND
By: /s/ Gifford R. Zimmerman
-------------------------------------
Vice President
Attest:
/s/ Karen L. Healy
- ------------------------------
Assistant Secretary
JOHN NUVEEN & CO. INCORPORATED
By: /s/ James J. Wesolowski
-------------------------------------
Vice President
Attest:
/s/ Morrison C. Warren
- ------------------------------
Assistant Secretary
8
<PAGE>
Exhibit 6(b)iii
RENEWAL OF DISTRIBUTION AGREEMENT
---------------------------------
This Agreement made this 27th day of July, 1995 by and between Nuveen Municipal
Bond Fund, a Massachusetts business trust (the "Fund"), and John Nuveen & Co.
Incorporated, a Delaware corporation (the "Underwriter");
WHEREAS, the parties hereto are the contracting parties under that certain
Distribution Agreement (the "Agreement") pursuant to which the Underwriter acts
as agent for the distribution of shares of the Fund; and
WHEREAS, the Agreement terminates August 1, 1995 unless continued in the manner
required by the Investment Company Act of 1940;
WHEREAS, the Board of Directors of the Fund, at a meeting called for the purpose
of reviewing the Agreement has approved the Agreement and its continuance until
August 1, 1996 in the manner required by the Investment Company Act of 1940;
NOW THEREFORE, in consideration of the mutual covenants contained in the
Agreement the parties hereto do hereby continue the Agreement in effect until
August 1, 1996 and ratify and confirm the Agreement in all respects.
NUVEEN MUNICIPAL BOND FUND
By: /s/ Larry Martin
-----------------------------------
Vice President
ATTEST:
/s/ Morrison C. Warren
- -----------------------------
Assistant Secretary
JOHN NUVEEN & CO. INCORPORATED
By: /s/ Kenneth C. Dunn
-----------------------------------
Vice President
ATTEST:
/s/ Gifford R. Zimmerman
- -----------------------------
Assistant Secretary
<PAGE>
EXHIBIT 8(a)(i)
Assignment of Custody Agreement
This Assignment is made this 13th day of June, 1995 by and among Nuveen
Municipal Bond Fund, Inc., a Maryland corporation (the "Fund"), Nuveen Municipal
Bond Fund, a Massachusetts business trust (the "Trust") and United States Trust
Company of New York, a New York State chartered bank and trust company ("U.S.
Trust");
WHEREAS, the Fund and U.S. Trust are the contracting parties under that certain
Custody Agreement (the "Agreement") pursuant to which U.S. Trust acts as
custodian for the Fund; and
WHEREAS, the Fund intends to reorganize into the Trust on or about June 12, 1995
(the "Reorganization"); and
WHEREAS, the Board of Directors of the Fund, at a meeting called for the purpose
of approving the Reorganization, so approved the Reorganization; and
WHEREAS, the shareholders of record of the Fund properly approved the
Reorganization at a shareholder meeting called on May 26, 1995; and
WHEREAS, the initial sole trustee of the Trust approved by written consent the
appointment of U.S. Trust to serve as the depository and the custodian of the
assets of the Fund;
NOW THEREFORE, in connection with the mutual covenants contained in the
Agreement, the parties hereto do hereby agree that the Fund's rights and
obligations under the Agreement are assigned to the Trust, as of the
consummation of the Reorganization.
<PAGE>
NUVEEN MUNICIPAL BOND FUND, INC.
By: /s/ Gifford R. Zimmerman
-------------------------------------
ATTEST:
/s/ Karen L. Healy
- ------------------------------
NUVEEN MUNICIPAL BOND FUND
By: /s/ James J. Wesolowski
-------------------------------------
ATTEST:
/s/ Morrison C. Warren
- ------------------------------
UNITED STATES TRUST COMPANY OF
NEW YORK
By: /s/ Andrew Massa
-------------------------------------
ATTEST:
/s/ Julie B. Chase
- ------------------------------
<PAGE>
EXHIBIT 8(B)
The Chase Manhattan Bank, N.A.
770 Broadway
New York, New York 10003-9598
April 18, 1996
Mr. Giff Zimmerman
John Nuveen & Co. Incorporated
333 West Wacker Drive
Chicago, IL 60606
Dear Giff:
On September 2, 1995, The United States Trust Company of New York (UST) was
merged into Chase Manhattan Bank, N.A. (Chase). As a result of this transac-
tion, Chase succeeded by operation of law, all rights and responsibilities of
UST under all Transfer Agency, Custodian and Fund Accounting agreements be-
tween US Trust and John Nuveen & Co.'s managed investment companies.
Sincerely,
/s/ Andrew M. Massa
_______________________________________
Andrew M. Massa
Vice President
1
<PAGE>
EXHIBIT 9(a)(i)
Assignment of Transfer Agency Agreement
This Assignment is made this 13th day of June, 1995 by and among Nuveen
Municipal Bond Fund, Inc., a Maryland corporation (the "Fund"), Nuveen Municipal
Bond Fund, a Massachusetts business trust (the "Trust") and Shareholder
Services, Inc., a Colorado corporation ("SSI");
WHEREAS, the Fund and SSI are the contracting parties under that certain
Transfer Agency Agreement (the "Agreement") pursuant to which SSI acts as
transfer agent and dividend disbursing agent for the Fund; and
WHEREAS, the Fund intends to reorganize into the Trust on or about June 12, 1995
(the "Reorganization"); and
WHEREAS, the Board of Directors of the Fund, at a meeting called for the purpose
of approving the Reorganization, so approved the Reorganization; and
WHEREAS, the shareholders of record of the Fund properly approved the
Reorganization at a shareholder meeting called on May 26, 1995; and
WHEREAS, the initial sole trustee of the Trust approved by written consent the
appointment of SSI to serve as transfer agent and dividend disbursing agent for
the Fund;
NOW THEREFORE, in connection with the mutual covenants contained in the
Agreement, the parties hereto do hereby agree that the Fund's rights and
obligations under the Agreement are assigned to the Trust, as of the
consummation of the Reorganization.
<PAGE>
NUVEEN MUNICIPAL BOND FUND, INC.
By: /s/ Gifford R. Zimmerman
-------------------------------------
ATTEST:
/s/ Karen L. Healy
- ------------------------------
NUVEEN MUNICIPAL BOND FUND
By: /s/ James J. Wesolowski
-------------------------------------
ATTEST:
/s/ Morrison C. Warren
- ------------------------------
SHAREHOLDER SERVICES, INC.
By: /s/ Barbara Hennigar
-------------------------------------
ATTEST:
/s/ Kathyrn L. Kluck
- ------------------------------
<PAGE>
Exhibit 10
June 26, 1996
(202)639-7065
Nuveen Municipal Bond Fund
333 West Wacker Drive
Chicago, Illinois 60606
Re: Registration Statement on Form N-1A under
---------------------------------------------
the Securities Act of 1933 (File No. 2-57408)
---------------------------------------------
Ladies and Gentlemen:
We have acted as counsel for Nuveen Municipal Bond Fund, a
Massachusetts business trust (the "Fund"), in connection with the Fund's
Post-Effective Amendment Number 33 to its Registration Statement on Form N-1A
as proposed to be filed with the Securities and Exchange Commission on June 28,
1996 (the "Amendment") pursuant to Rule 485(b) of the Securities Act of 1933
(the "1933 Act") (as proposed to be amended, the "Registration Statement") with
respect to certain of its Shares of Beneficial Interest, par value $.01 per
share, designated as (i) Class A Common Shares (the "Class A Shares"), (ii)
Class C Common Shares (the "Class C Shares") and (iii) Class R Common Shares
(the "Class R Shares") (such Class A Shares, Class C Shares and Class R Shares
referred to collectively herein as the "Shares"). This opinion is being
delivered to you in connection with the Fund's filing of such Amendment. With
your permission, all assumptions and statements of reliance herein have been
made without any independent investigation or verification on our part except to
the extent otherwise expressly stated, and we express no opinion with respect to
the subject matter or accuracy of such assumptions or items relied upon.
In connection with this opinion, we have reviewed, among other things,
executed copies of the following documents:
(a) a certificate of the Secretary of State of the Commonwealth of
Massachusetts as to the existence of the Fund;
<PAGE>
Nuveen Municipal Bond Fund
June 26, 1996
Page 2
(b) copies, certified by the Secretary of State of the Commonwealth of
Massachusetts, of the Fund's Declaration of Trust and of all
amendments thereto on file in the office of the Secretary of State;
(c) a certificate executed by Karen L. Healy, an Assistant Secretary of
the Fund, certifying as to, and attaching copies of, the Fund's
Declaration of Trust and By-Laws, as amended, and certain votes of
the Trustees of the Fund; and
(d) a printer's proof, dated June 26, 1996, of the Amendment.
In our capacity as counsel to the Fund, we have examined the originals, or
certified, conformed or reproduced copies, of all records, agreements,
instruments and documents as we have deemed relevant or necessary as the basis
for the opinions hereinafter expressed. In all such examinations, we have
assumed the legal capacity of all natural persons executing documents, the
genuineness of all signatures, the authenticity of all original or certified
copies, and the conformity to original or certified copies of all copies
submitted to us as conformed or reproduced copies. As to various questions of
fact relevant to such opinions, we have relied upon, and assume the accuracy of,
certificates and oral or written statements of public officials and officers or
representatives of the Fund. We have assumed that the Amendment, as filed with
the Securities and Exchange Commission, will be in substantially the form of the
printer's proof referred to in paragraph (d) above.
Based upon, and subject to, the limitations set forth herein, we are of the
opinion that the Shares, when issued and sold in accordance with the Fund's
Declaration of Trust and By-Laws, and for the consideration described in the
Registration Statement, will be legally issued, fully paid and non-assessable,
except that, as set forth in the Registration Statement, shareholders of the
Fund may, under certain circumstances, be held personally liable for its
obligations.
The opinion expressed herein is limited to the laws of the Commonwealth of
Massachusetts.
<PAGE>
Nuveen Municipal Bond Fund
June 26, 1996
Page 3
We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement. In giving this consent, we do not admit that we are in
the category of persons whose consent is required under Section 7 of the 1933
Act.
Very truly yours,
FRIED, FRANK, HARRIS, SHRIVER & JACOBSON
By: /s/ Thomas S. Harman
---------------------------------
Thomas S. Harman
<PAGE>
[LETTERHEAD OF ARTHUR ANDERSEN LLP]
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the use of our report
dated April 8, 1996, and to all references to our firm included in or made a
part of this registration statement of Nuveen Municipal Bond Fund.
/s/ ARTHUR ANDERSEN LLP
- --------------------------
ARTHUR ANDERSEN LLP
Chicago, Illinois
June 24, 1996
<PAGE>
EXHIBIT 15
NUVEEN MUNICIPAL BOND FUND
PLAN OF DISTRIBUTION AND SERVICE
PURSUANT TO RULE 12b-1
June 12, 1995
WHEREAS, Nuveen Municipal Bond Fund, a Massachusetts business trust (the "Fund")
engages in business as an open-end management investment company and is
registered under the Investment Company Act of 1940, as amended (The "Act");
WHEREAS, the Fund employs John Nuveen & Co. Incorporated (the "Distributor") as
distributor of the shares of common stock of the Fund (the "Shares") pursuant to
a Distribution Agreement dated as of June 12, 1995;
WHEREAS, the Fund is authorized to issue Shares in three different classes
("Classes"): Class A, Class C and Class R;
WHEREAS, the Fund desires to adopt a Plan of Distribution and Service pursuant
to Rule 12b-1 under the Act ("Rule 12b-1"), and the Board of Trustees of the
Fund has determined that there is a reasonable likelihood that adoption of this
Plan of Distribution and Service will benefit the Fund and its shareholders;
WHEREAS, the Fund, along with several other investment companies for which the
Distributor serves as distributor, has obtained an exemptive order (the "Order")
from the Securities and Exchange Commission (SEC) to enable the various Classes
of Shares to be granted different rights and privileges and to bear different
expenses, and has an effective registration statement on file with the SEC
containing a Prospectus describing such Classes of Shares;
WHEREAS, as described in the Order, the purchase of Class A Shares is generally
subject to an up-front sales charge, not to exceed 4.50% of the purchase price,
and the purchase of Class C Shares will not be subject to an up-front sales
charge, but in lieu thereof the Class C Shares will be subject to an asset-based
distribution fee, as described below;
WHEREAS, Class C Shares redeemed within 12 months of purchase may be subject to
a contingent deferred sales charge ("CDSC"); and
WHEREAS, Shares representing an investment in Class C will automatically
convert to Class A Shares 72 months after investment, as described in the
Prospectus for the Shares;
NOW, THEREFORE, the Fund hereby adopts, and the Distributor hereby agrees to the
terms of, this Plan of Distribution and Service (the "Plan") in accordance with
Rule 12b-1, on the following terms and conditions:
1. (a) The Fund is authorized to compensate the Distributor for services
performed and expenses incurred by the Distributor in connection with the
distribution of shares of Class A and Class C of the Fund and the servicing of
accounts holding such Shares.
<PAGE>
(b) The amount of such compensation paid during any one year shall consist
with respect to Class A Shares of a Service Fee not to exceed .25% of average
daily net assets of the Class A Shares of the Fund; and consist with respect to
Class C Shares of a Service Fee not to exceed .25% of average daily net assets
of the Class C Shares of the Fund, plus a Distribution Fee (in lieu of an up-
front sales charge) not to exceed .75% of average daily net assets of the Class
C Shares of the Fund less the amount of any CDSC received by the Distributor and
for which any applicable reinstatement privilege has expired. Such compensation
shall be calculated and accrued daily and paid quarterly or at such other
intervals as the Board of Trustees may determine.
(c) The Distributor shall pay any Distribution Fees it receives under the
Plan with respect to Class C Shares of the Fund for which a particular
underwriter, dealer, broker, bank or other selling entity (including the
Distributor) having a Dealer Distribution Agreement in effect ("Authorized
Dealer") is the dealer of record to such Authorized Dealers to compensate such
organizations in connection with sales of Shares of Class C of the Fund. The
Distributor may retain any Distribution Fees not so paid. Payments of
Distribution Fees to any Authorized Dealer as of any quarter-end will not exceed
.75% per year based on average net assets of accounts for which such Authorized
Dealer appeared on the records of the Fund and/or its transfer agent as the
dealer of record during the preceding quarter.
(d) The Distributor shall pay any Service Fees it receives under the Plan
with respect to a given Class A or C of the Fund for which a particular
Authorized Dealer (including the Distributor) is the dealer of record to such
Authorized Dealers to compensate such organizations for providing services to
shareholders relating to their investment in such Class, including any or all of
the following activities: maintaining account records for shareholders who
beneficially own Shares; answering inquiries relating to the shareholders'
accounts, the policies of the Fund and the performance of their investment;
providing assistance and handling transmission of funds in connection with
purchase, redemption and exchange orders for Shares; providing assistance in
connection with changing account setups and enrolling in various optional fund
services; producing and disseminating shareholder communications or servicing
materials; the ordinary or capital expenses, such as equipment, rent, fixtures,
salaries, bonuses, reporting and recordkeeping and third party consultancy or
similar expenses, relating to any activity for which payment is authorized by
the Board; and the financing of any other activity for which payment is
authorized by the Board. The Distributor may retain any Service Fees not so
paid. Payments of Service Fees to any organization as of any quarter-end will
not exceed .25% per year based on average net assets of accounts for which such
organization appeared on the records of the Fund and/or its transfer agent as
the organization of record during the preceding quarter.
2. This Plan shall not take effect until the Plan, together with any related
agreement(s), has been approved by votes of a majority of both (a) the Board of
Trustees of the Fund, and (b) those Trustees of the Fund who are not "interested
persons" of the Fund (as defined in the Act) and who have no direct or indirect
financial interest in the operation of the Plan or any agreements related to it
(the "Rule 12b-1 Trustees") cast in person at a meeting (or meetings) called for
the purpose of voting on the Plan and such related Agreement(s).
2
<PAGE>
3. This Plan shall remain in effect until August 1, 1995, and shall continue in
effect thereafter so long as such continuance is specifically approved at least
annually in the manner provided for approval of this Plan in paragraph 2.
4. The Distributor shall provide to the Board of Trustees of the Fund and the
Board shall review, at least quarterly, a written report of distribution- and
service-related activities, Distribution Fees, Service Fees, and the purposes
for which such activities were performed and expenses incurred.
5. This Plan may be terminated at any time by vote of a majority of the Rule
12b-1 Trustees or by vote of a majority (as defined in the Act) of the
outstanding voting Shares of the Fund.
6. This Plan may not be amended to increase materially the amount of
compensation payable by the Fund with respect to Class A or Class C Shares under
paragraph 1 hereof unless such amendment is approved by a vote of at least a
majority (as defined in the Act) of the outstanding voting Shares of that Class
of Shares. No material amendment to the Plan shall be made unless approved in
the manner provided in paragraph 2 hereof.
7. While this Plan is in effect, the selection and nomination of the Trustees
who are not interested persons (as defined in the Act) of the Fund shall be
committed to the discretion of the Trustees who are not such interested persons.
8. The Fund shall preserve copies of this Plan and any related agreements and
all reports made pursuant to paragraph 4 hereof, for a period of not less than
six years from the date of the Plan, any such agreement or any such report, as
the case may be, the first two years in an easily accessible place.
IN WITNESS WHEREOF, the Fund and Distributor have executed this Plan of
Distribution and Servicing as of the day and year first above written.
NUVEEN MUNICIPAL BOND FUND
By: /s/ Gifford R. Zimmerman
-----------------------------
Its Vice President
JOHN NUVEEN & CO. INCORPORATED
By: /s/ James J. Wesolowski
-----------------------------
Its Vice President
<PAGE>
Exhibit 15(b)
NUVEEN MUNICIPAL BOND FUND
RENEWAL OF PLAN OF DISTRIBUTION AND SERVICE PURSUANT TO RULE 12b-1
WHEREAS, Nuveen Municipal Bond Fund (the "Fund"), an open-end investment
management company registered under the Investment Company Act of 1940, as
amended (the "Act") and John Nuveen & Co. Incorporated ("Nuveen"), distributor
of the common shares of the Fund pursuant to a Distribution Agreement between
the Fund and Nuveen, have previously entered into a Plan of Distribution and
Service in accordance with Rule 12b-1 under the Act (the "Plan"); and
WHEREAS, the Plan terminates August 1, 1995 unless continued in the manner
provided for in paragraph 2 of the Plan; and
WHEREAS, the Board of Trustees, at a meeting called in part for the purpose of
reviewing the Plan, have approved the Plan and its continuance until August 1,
1996 in the manner provided for in paragraph 2 of the Plan.
NOW THEREFORE, the parties hereto do hereby continue the Plan in effect until
August 1, 1996 and ratify and confirm the Plan in all respects.
Dated as of July 26, 1995
NUVEEN MUNICIPAL BOND FUND
By: /s/ Gifford R. Zimmerman
_________________________________
Vice President
JOHN NUVEEN & CO. INCORPORATED
By: /s/ James J. Wesolowski
_________________________________
Vice President
<PAGE>
EXHIBIT 16
SCHEDULE OF COMPUTATION OF PERFORMANCE FIGURES
I. YIELD
A. Yield Formula
Yield is computed according to the following formula:
A - B /6/
Yield = 2 [(----- +1) - 1]
CD
Where:
A = dividends and interest* earned during the period.
B = expenses accrued for the period (net of reimbursements).
C = the average daily number of shares outstanding during the period
that were entitled to receive dividends.
D = the maximum offering price per share on the last day of the
period.
B. Yield Calculation
The following is the 30-day yield as of February 29, 1996 for the Class A
Shares:
[$166,099.53 - $24,546.29] /6/
Yield = 2 [(-------------------------- + 1) -1]
[$3,939,268.81 X $9.72]
= 4.48%
The following is the 30-day yield as of February 29, 1996 for the Class C
Shares:
[$8,572.00 - $2,425.94] /6/
Yield = 2 [(-------------------------- + 1) -1]
[$202,456.31 X $9.26]
= 3.94%
The following is the 30-day yield as of February 29, 1996 for the Class R
Shares:
[$13,128,608.86 - $1,378,076.33] /6/
Yield = 2 [(------------------------------ + 1) -1]
[$311,265,443.52 X $9.28]
= 4.93%
- ----------
*The maximum sales charge in effect during the periods shown was 4.50%.
Interest earned on tax-exempt obligations is determined as follows:
A. In the case of a tax-exempt obligation (1) with a current market premium
or (2) issued at a discount where the current market discount is less
than the then-remaining portions of the
1
<PAGE>
original issue discount, it is necessary to first compute the yield to
maturity (YTM). The YTM is then divided by 360 and the quotient is multi-
plied by the market value of the obligation (plus accrued interest).
B. In the case of a tax-exempt obligation issued at a discount where the
current market discount is in excess of the then-remaining portion of
the original issue discount, the adjusted original issue discount basis
of the obligation (plus accrued interest) is used in lieu of the market
value of the obligation (plus accrued interest) in computing the yield
to maturity (YTM). The YTM is then divided by 360 and the quotient is
multiplied by the adjusted original issue basis of the obligation (plus
accrued interest).
C. In the case of a tax-exempt obligation issued without original issue
discount and having a current market discount, the coupon rate of inter-
est is used in lieu of the yield to maturity. The coupon rate is then
divided by 360 and the quotient is multiplied by the par value of the
obligation.
II. TAXABLE EQUIVALENT YIELD
A. Taxable Equivalent Yield Formula
The Taxable Equivalent Yield Formula is as follows:
Tax Exempt Yield
Taxable Equivalent Yield = -----------------------------
(1 - Federal income tax yield)
B. Taxable Equivalent Yield Calculation
Based on a 1996 maximum federal income tax rate of 39.6%, the Taxable Equiva-
lent Yield for the Class A Shares, Class C Shares and Class R Shares for the
30-day period ended February 29, 1996 is as follows:
<TABLE>
<CAPTION>
CLASS A SHARES CLASS C SHARES CLASS R SHARES
-------------- -------------- --------------
<S> <C> <C>
4.48% 3.94% 4.93%
------- = 7.42% ------- = 6.52% ------- 8.16%
1 - .396 1 - .396 1 - .396
</TABLE>
III. DISTRIBUTION RATE
A. Distribution Rate Formula
The formula for calculation of distribution rate is as follows:
Distribution Rate = 12 X most recent tax-exempt income dividend per
share
share price
2
<PAGE>
B. Distribution Rate Calculation
The following are the distribution rates for Class A Shares, Class C Shares
and Class R Shares as of February 29, 1996, including the maximum sales charge
for Class A Shares:
<TABLE>
<CAPTION>
CLASS A SHARES CLASS C SHARES CLASS R SHARES
-------------- -------------- --------------
<S> <C> <C>
12 X $.0395 12 X $.0340 12 X $.0415
------------ = 4.88% -------------- = 4.41% ----------- = 5.37%
$9.72 $9.26 $9.28
</TABLE>
IV. AVERAGE ANNUAL TOTAL RETURN
A. Average Annual Total Return Formula
Average Annual Total Return is computed according to the following formula:
T = ERV /1//N -1
-----------
P
Where:
T = average annual total return.
P = a hypothetical initial payment of $1,000.
N = number of years.
ERV = ending redeemable value of a hypothetical $1,000 payment made
at the beginning of the 1, 5 or 10-year (or fractional portion
thereof) periods at the end of such 1, 5 or 10-year (or frac-
tional portion thereof) periods.
B. Calculations
The following are the average annual total returns for Class R Shares for the
1-year, 5-year and 10-year periods ended February 29, 1996:
$1,093.10 /1///1/ -1 = 9.31%
A. 1 year ended February 29, 1996 =
( )
-------
$1000
$1,447.90 /1///5/ -1 = 7.68%
B. 5 years ended February 29, 1996 =
( )
-------
$1000
$2,139.60
/1///1//0/ -1 = 7.90%
C. 10 years ended February 29, 1996 =
(------- )
$1000
3
<PAGE>
V. CUMULATIVE TOTAL RETURN
A. Cumulative Total Return Formula
Cumulative Total Return is computed according to the following formula:
ERV - P
T = --------
P
Where:
T =cumulative total return.
P =a hypothetical initial payment of $1,000.
ERV = ending redeemable value of a hypothetical $1,000 payment made
at the inception of the Fund or at the first day of a speci-
fied 1-year, 5-year or 10-year period.
B. Cumulative Total Return Calculation
The following are the cumulative total returns for the Class R Shares for the
1-year, 5-year and 10-year periods ending February 29, 1996:
$1,093.10 -
$1000
1 year Ended February 29, 1996 =
(--------------- )
= 9.31%
$1000 ----
----
$1,447.90 -
$1000 = 44.79%
5 years Ended February 29, 1996 =
(---------------- ) -----
$1000 -----
$2,139.60 -
$1000 = 113.96%
10 years Ended February 29, 1996 =
( )
--------------- ------
$1000 ------
VI. TAXABLE EQUIVALENT TOTAL RETURN
A. Taxable Equivalent Total Return Formula
The Fund's taxable equivalent total return for a specific period is calcu-
lated by first taking a hypothetical initial investment in the Fund's shares on
the first day of the period, computing the Fund's total return for each calen-
dar year in the period according to the above formula, and increasing the total
return for each such calendar year by the amount of additional income that a
taxable fund would need to have generated to equal the income of the Fund on an
after-tax basis, at a specified tax rate (usually the highest marginal federal
tax rate), calculated pursuant to the formula presented above under "taxable
equivalent yield." The resulting amount for the calendar year is then divided
by the initial investment amount to arrive at a "taxable equivalent total re-
turn factor" for the calendar year. The taxable equivalent total return factors
for all the calendar years in the period are then multiplied together and the
result is then annualized by taking its Nth root (N representing the number of
years in the period) and subtracting 1, which provides a taxable equivalent to-
tal return expressed as a percentage.
4
<PAGE>
B. Taxable Equivalent Total Return Calculations
The taxable equivalent total return calculations for the Class R Shares for
the one year, five year and ten year periods ending February 29, 1996 are set
forth on the following pages. The calculations present the Fund's taxable
equivalent total return at the Fund's net asset value. Each set of calculations
assumes a 39.6% federal income tax rate based on 1996 rates.
FUND NAME: NUVEEN MUNI BOND FUND CLASS R
(SINCE 02/28/86)
<TABLE>
<CAPTION>
NAV INCOM TOTAL PERIOD
PER PER CAP FROM FROM DOLLAR TO DATE TAX ENDING ENDING REINV
PER DATE SHARE SHARE GAINS INCOME GAINS DISTR T-E INC SAVINGS SHARES WEALTH NAV
- -------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
02/28/86 8.91 .04915 1,122 10,000
03/31/86 8.91 .04851 54.444 54.444 54.444 1,128 10,054
04/30/86 8.88 .04969 56.072 56.072 110.517 1,135 10,077
05/31/86 8.66 .04973 56.432 56.432 166.948 1,141 9,883
06/30/86 8.59 .05079 57.965 57.965 224.914 1,148 9,862
07/31/86 8.74 .05128 58.871 58.871 283.785 1,155 10,093
08/30/86 9.06 .05215 60.221 60.221 344.005 1,161 10,522
09/30/86 8.78 .05184 .2120 60.207 246.218 306.425 404.213 1,196 10,504
10/31/86 8.90 .05043 60.330 60.330 464.542 1,203 10,707
11/30/86 9.03 .05032 60.539 60.539 525.082 1,210 10,924
12/31/86 8.96 .05003 60.526 60.526 585.607 1,217 10,900
01/31/87 9.08 .05027 61.156 61.156 646.763 1,223 11,107
02/28/87 9.11 .05066 61.971 61.971 708.734 464.6 1,281 11,671
03/31/87 9.01 .04934 63.209 63.209 63.209 1,288 11,606
04/30/87 8.55 .04985 64.212 64.212 127.421 1,296 11,078
05/31/87 8.36 .04950 64.133 64.133 191.554 1,303 10,895
06/30/87 8.51 .04968 64.747 64.747 256.301 1,311 11,156
07/31/87 8.52 .04963 65.060 65.060 321.361 1,319 11,234
08/31/87 8.53 .04913 64.779 64.779 386.140 1,326 11,312
09/30/87 8.02 .04985 .1465 66.107 194.277 260.385 452.247 1,359 10,896
10/31/87 8.00 .04951 67.264 67.264 519.511 1,367 10,936
11/30/87 8.20 .04960 67.803 67.803 587.314 1,375 11,277
12/31/87 8.38 .04900 67.388 67.388 654.703 1,383 11,592
01/31/88 8.57 .04949 68.460 68.460 723.163 1,391 11,923
02/29/88 8.62 .04972 69.175 69.175 792.338 519.4 1,460 12,582
03/31/88 8.42 .04969 72.527 72.527 72.527 1,468 12,362
04/30/88 8.40 .04953 72.720 72.720 145.247 1,477 12,406
05/31/88 8.39 .04979 73.533 73.533 218.780 1,486 12,464
06/30/88 8.47 .04989 74.118 74.118 292.897 1,494 12,657
07/31/88 8.48 .04977 74.375 74.375 367.272 1,503 12,747
08/31/88 8.45 .05000 75.157 75.157 442.430 1,512 12,777
09/30/88 8.52 .05036 .0360 76.146 54.433 130.580 518.576 1,527 13,013
10/31/88 8.65 .04966 75.849 75.849 594.425 1,536 13,288
11/30/88 8.54 .04997 76.761 76.761 671.185 1,545 13,195
12/31/88 8.59 .04949 76.468 76.468 747.653 1,554 13,349
01/31/89 8.75 .04982 77.421 77.421 825.075 1,563 13,675
02/28/89 8.60 .05035 78.691 78.691 903.765 592.5 1,641 14,112
03/31/89 8.53 .04987 81.833 81.833 81.833 1,651 14,079
04/30/89 8.74 .04975 82.113 82.113 163.946 1,660 14,508
05/31/89 8.86 .04919 81.651 81.651 245.597 1,669 14,788
06/30/89 8.89 .04932 82.321 82.321 327.918 1,678 14,921
07/31/89 8.94 .05008 84.054 84.054 411.972 1,688 15,089
08/31/89 8.83 .05007 84.508 84.508 496.479 1,697 14,988
09/30/89 8.73 .04950 .0290 84.019 49.223 133.243 580.498 1,713 14,951
10/31/89 8.78 .04972 85.151 85.151 665.650 1,722 15,122
</TABLE>
5
<PAGE>
<TABLE>
<CAPTION>
NAV INCOM TOTAL PERIOD
PER PER CAP FROM FROM DOLLAR TO DATE TAX ENDING ENDING REINV
PER DATE SHARE SHARE GAINS INCOME GAINS DISTR T-E INC SAVINGS SHARES WEALTH NAV
- ---------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
11/30/89 8.84 .04969 85.582 85.582 751.232 1,732 15,311
12/31/89 8.87 .04953 85.786 85.786 837.018 1,742 15,449
01/31/90 8.76 .04970 85.561 86.561 923.579 1,752 15,344 8.76
02/28/90 8.77 .04970 87.052 87.052 1010.631 662.6 1,837 16,111 8.77
03/31/90 8.74 .04970 91.300 91.300 91.300 1,847 16,147 8.74
04/30/90 8.63 .04970 91.820 91.820 183.120 1,858 16,036 8.63
05/31/90 8.76 .04970 92.348 92.348 275.469 1,869 16,369 8.78
06/30/90 8.79 .04970 92.871 92.871 368.340 1,879 16,518 8.80
07/31/90 8.84 .04970 93.396 93.396 461.736 1,890 16,705 8.85
08/31/90 8.68 .04970 93.920 93.920 555.656 1,901 16,497 8.69
09/30/90 8.65 .04970 94.457 94.457 650.113 1,911 16,534 8.67
10/31/90 8.70 .04970 94.999 94.999 745.112 1,922 16,724 8.72
11/30/90 8.80 .04970 95.540 95.540 840.652 1,933 17,012 8.82
12/31/90 8.77 .04970 .0384 96.079 74.234 170.312 936.731 1,953 17,124 8.77
01/31/91 8.84 .04970 97.044 97.044 1033.775 1,964 17,358 8.87
02/28/91 8.85 .04970 97.588 97.588 1131.362 741.7 2,058 18,217 8.85
03/31/91 8.83 .04870 100.243 100.243 100.243 2,070 18,276 8.83
04/30/91 8.90 .04870 100.796 110.796 201.038 2,081 18,521 8.91
05/31/91 8.94 .04870 101.347 101.347 302.385 2,092 18,706 8.93
06/30/91 8.89 .04870 101.899 101.899 404.284 2,104 18,703 8.89
07/31/91 8.95 .04870 102.457 102.457 506.742 2,115 18,932 8.95
08/31/91 8.99 .04870 103.015 103.015 609.757 2,127 19,120 8.99
09/30/91 9.04 .04870 103.573 103.573 713.330 2,138 19,329 9.04
10/31/91 9.07 .04770 101.993 101.993 815.323 2,149 19,495 9.08
11/30/91 9.04 .04770 102.529 102.529 917.851 2,161 19,534 9.04
12/31/91 9.11 .04770 .0398 103.070 85.999 189.069 1020.921 2,182 19,874 9.11
01/31/92 9.09 .04770 104.060 104.060 1124.980 2,193 19,934 9.09
02/29/92 9.08 .04770 104.606 104.606 1229.586 806.1 2,293 20,823 9.08
03/31/92 9.05 .04770 109.390 109.390 109.390 2,305 20,864 9.06
04/30/92 9.09 .04700 108.352 108.352 217.742 2,317 21,064 9.10
05/31/92 9.13 .04700 108.912 108.912 326.654 2,329 21,266 9.13
06/30/92 9.22 .04700 109.473 109.473 436.127 2,341 21,585 9.23
07/31/92 9.39 .04700 110.030 110.030 546.157 2,353 22,093 9.37
08/31/92 9.27 .04400 103.523 103.523 649.680 2,364 21,914 9.28
09/30/92 9.28 .04400 104.014 104.014 753.695 2,375 22,041 9.29
10/31/92 9.10 .04400 .0519 104.507 123.271 227.778 858.201 2,400 21,842 9.10
11/30/92 9.22 .04400 105.608 105.608 963.810 2,412 22,235 9.22
12/31/92 9.25 .04400 .0030 106.112 7.235 113.347 1069.922 2,424 22,421 9.25
01/31/93 9.29 .04400 106.651 106.651 1176.574 2,435 22,625 9.29
02/28/93 9.45 .04400 107.157 107.157 1283.730 841.6 2,536 23,963 9.46
03/31/93 9.37 .04400 111.574 111.574 111.574 2,548 23,872 9.37
04/30/93 9.41 .04300 109.550 109.550 221.124 2,559 24,083 9.42
05/31/93 9.40 .04300 110.050 110.050 331.174 2,571 24,167 9.41
06/30/93 9.46 .04300 110.553 110.553 441.727 2,583 24,432 9.47
07/31/93 9.43 .04300 111.055 111.055 552.782 2,594 24,466 9.44
08/31/93 9.52 .04300 111.561 111.561 664.343 2,606 24,811 9.52
09/30/93 9.53 .04300 112.065 112.065 776.408 2,618 24,949 9.53
10/31/93 9.43 .04300 .0812 112.570 212.575 325.145 888.978 2,652 25,012 9.43
11/30/93 9.36 .04300 114.053 114.053 1003.031 2,665 24,940 9.37
12/31/93 9.41 .04300 .0166 114.576 44.232 158.808 1117.607 2,681 25,232 9.41
01/31/94 9.45 .04300 115.302 115.302 1232.909 2,694 25,455 9.45
02/28/94 9.28 .04200 113.133 113.133 1346.043 882.5 2,801 25,993 9.27
03/31/94 8.99 .04200 117.640 117.640 117.640 2,814 25,299 8.90
04/30/94 9.00 .04200 118.195 118.195 235.835 2,827 25,446 8.98
05/31/94 9.03 .04200 118.748 118.748 354.583 2,840 25,650 9.02
06/30/94 8.96 .04200 119.301 119.301 473.883 2,854 25,570 8.97
07/31/94 9.03 .04200 119.859 119.859 593.742 2,867 25,889 9.04
08/31/94 9.01 .04300 123.283 123.283 717.026 2,881 25,955 9.02
09/30/94 8.89 .04300 123.871 123.871 840.897 2,895 25,733 8.89
10/31/94 8.70 .04300 .0492 124.470 142.417 266.887 965.367 2,925 25,451 8.67
11/30/94 8.53 .04300 125.794 125.794 1091.160 2,940 25,079 8.56
</TABLE>
6
<PAGE>
<TABLE>
<CAPTION>
NAV INCOM TOTAL PERIOD
PER PER FROM DOLLAR TO DATE TAX ENDING ENDING REINV
PER DATE SHARE SHARE CAP GAINS FROM INCOME GAINS DISTR T-E INC SAVINGS SHARES WEALTH NAV
- ----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
12/31/94 8.65 .04300 .0259 126.426 76.149 202.575 1217.586 2,964 25,635 8.65
01/31/95 8.81 .04300 127.433 127.433 1345.019 2,978 26,236 8.85
0 02/28/95 9.00 .04300 128.052 128.052 1473.071 965.7 3,099 27,895 9.03
1 03/31/95 9.01 .04300 133.276 133.276 133.276 3,114 28,059 9.03
2 04/30/95 8.99 .04300 133.911 133.911 267.186 3,129 28,131 8.99
3 05/31/95 9.21 .04300 134.551 134.551 401.738 3,144 28,954 9.21
4 06/30/95 9.08 .04300 135.179 135.179 536.917 3,159 28,680 9.08
5 07/31/95 9.08 .04300 135.819 135.819 672.736 3,174 28,816 9.06
6 08/31/95 9.12 .04300 136.464 136.464 809.200 3,188 29,079 9.16
7 09/30/95 9.13 .04300 137.105 137.105 946.305 3,203 29,247 9.17
8 10/31/95 9.23 .04300 137.748 137.748 1084.052 3,218 29,705 9.26
9 11/30/95 9.33 .04300 .0272 138.387 87.538 225.925 1222.440 3,242 30,252 9.36
10 12/31/95 9.40 .04150 134.561 134.561 1357.001 3,257 30,614 9.40
11 01/31/96 9.38 .04150 135.156 135.156 1492.157 3,271 30,684 9.38
12 02/29/96 9.28 .04150 135.753 135.753 1627.910 1,067.3 3,401 31,560 9.33
TAX RATE 39.60%
LOAD 0.00%
PAST YEAR: TOTAL RETURN 13.14%
10.0014 YEARS: TOTAL RETURN 215.60%
ANNUALIZED 12.18%
</TABLE>
FUND NAME: NUVEEN MUNI BOND FUND CLASS R
(SINCE 02/28/91)
<TABLE>
<CAPTION>
NAV INCOM TOTAL PERIOD
PER PER CAP FROM FROM DOLLAR TO DATE TAX ENDING ENDING REINV
PER DATE SHARE SHARE GAINS INCOME GAINS DISTR T-E INC SAVINGS SHARES WEALTH NAV
- ------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
02/28/91 8.85 .04970 1,130 10,000 8.85
03/31/91 8.83 .04870 55.028 55.028 55.028 1,136 10,032 8.83
04/30/91 8.90 .04870 55.332 55.332 110.360 1,142 10,167 8.91
05/31/91 8.94 .04870 55.634 55.634 165.994 1,149 10,269 8.93
06/30/91 8.89 .04870 55.938 55.938 221.932 1,155 10,267 8.89
07/31/91 8.95 .04870 56.244 56.244 278.176 1,161 10,393 8.95
08/31/91 8.99 .04870 56.550 56.550 334.726 1,167 10,496 8.99
09/30/91 9.04 .04870 56.856 56.856 391.582 1,174 10,611 9.04
10/31/91 9.07 .04770 55.989 55.989 447.571 1,180 10,702 9.08
11/30/91 9.04 .04770 56.283 56.283 503.854 1,186 10,723 9.04
12/31/91 9.11 .04770 .0398 56.580 47.209 103.789 560.434 1,198 10,910 9.11
01/31/92 9.09 .04770 57.123 57.123 617.558 1,204 10,943 9.09
02/29/92 9.08 .04770 57.423 57.423 674.981 442.5 1,259 11,431 9.08
03/31/92 9.05 .04770 60.050 60.050 60.050 1,266 11,453 9.06
04/30/92 9.09 .04700 59.480 59.480 119.530 1,272 11,563 9.10
05/31/92 9.13 .04700 59.787 59.787 179.317 1,279 11,674 9.13
06/30/92 9.22 .04700 60.095 60.095 239.412 1,285 11,849 9.23
07/31/92 9.39 .04700 60.401 60.401 299.813 1,292 12,128 9.37
08/31/92 9.27 .04400 56.829 56.829 356.642 1,298 12,030 9.28
09/30/92 9.28 .04400 57.099 57.099 413.740 1,304 12,100 9.29
10/31/92 9.10 .04400 .0519 57.369 67.669 125.039 471.110 1,318 11,990 9.10
11/30/92 9.22 .04400 57.974 57.974 529.083 1,324 12,206 9.22
12/31/92 9.25 .04400 .0030 58.250 3.972 62.222 587.333 1,331 12,308 9.25
01/31/93 9.29 .04400 58.546 58.546 645.880 1,337 12,420 9.29
02/28/93 9.45 .04400 58.824 58.824 704.703 462.0 1,392 13,154 9.46
03/31/93 9.37 .04400 61.248 61.248 61.248 1,399 13,104 9.37
04/30/93 9.41 .04300 60.137 60.137 121.386 1,405 13,220 9.42
05/31/93 9.40 .04300 60.412 60.412 181.798 1,411 13,267 9.41
06/30/93 9.46 .04300 60.688 60.688 242.486 1,418 13,412 9.47
07/31/93 9.43 .04300 60.964 60.964 303.450 1,424 13,430 9.44
</TABLE>
7
<PAGE>
<TABLE>
<CAPTION>
NAV INCOM TOTAL PERIOD
PER PER FROM DOLLAR TO DATE TAX ENDING ENDING REINV
PER DATE SHARE SHARE CAP GAINS FROM INCOME GAINS DISTR T-E INC SAVINGS SHARES WEALTH NAV
- ---------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
08/31/93 9.52 .04300 61.241 61.241 364.691 1,431 13,620 9.52
09/30/93 9.53 .04300 61.518 61.518 426.209 1,437 13,696 9.53
10/31/93 9.43 .04300 .0812 61.795 116.693 178.488 488.004 1,456 13,730 9.43
11/30/93 9.36 .04300 62.609 62.609 350.614 1,463 13,691 9.37
12/31/93 9.41 .04300 .0166 62.897 24.281 87.178 613.510 1,472 13,851 9.41
01/31/94 9.45 .04300 63.295 63.295 676.805 1,479 13,973 9.45
02/28/94 9.28 .04200 62.104 62.104 738.910 484.4 1,538 14,269 9.27
03/31/94 8.99 .04200 64.578 64.578 64.578 1,545 13,888 8.90
04/30/94 9.00 .04200 64.883 64.883 129.461 1,552 13,969 8.98
05/31/94 9.03 .04200 65.187 65.187 194.648 1,559 14,080 9.02
06/30/94 8.96 .04200 65.490 65.490 260.138 1,567 14,037 8.97
07/31/94 9.03 .04200 65.797 65.797 325.935 1,574 14,212 9.04
08/31/94 9.01 .04300 67.676 67.676 393.611 1,581 14,248 9.02
09/30/94 8.89 .04300 67.999 67.999 461.610 1,589 14,126 8.89
10/31/94 8.70 .04300 .0492 68.328 78.180 146.508 529.938 1,606 14,971 8.67
11/30/94 8.53 .04300 69.054 69.054 598.992 1,614 13,767 8.56
12/31/94 8.65 .04300 .0259 69.401 41.802 111.204 668.394 1,627 14,072 8.65
01/31/95 8.81 .04300 69.954 69.954 738.348 1,635 14,402 8.85
0 02/28/95 9.00 .04300 70.294 70.294 808.642 530.1 1,701 15,313 9.03
1 03/31/95 9.01 .04300 73.162 73.162 73.162 1,710 15,403 9.03
2 04/30/95 8.99 .04300 73.510 73.510 146.672 1,718 15,442 8.99
3 05/31/95 9.21 .04300 73.862 73.862 220.534 1,726 15,894 9.21
4 06/30/95 9.08 .04300 74.207 74.207 294.740 1,734 15,744 9.08
5 07/31/95 9.08 .04300 74.558 74.558 369.298 1,742 15,819 9.06
6 08/31/95 9.12 .04300 74.912 74.912 444.210 1,750 15,963 9.16
7 09/30/95 9.13 .04300 75.264 75.264 519.474 1,759 16,055 9.17
8 10/31/95 9.23 .04300 75.616 75.616 595.090 1,767 16,307 9.26
9 11/30/95 9.33 .04300 .0272 65.968 48.054 124.022 671.058 1,780 16,607 9.36
10 12/31/95 9.40 .04150 73.867 73.867 744.925 1,788 16,805 9.40
11 01/31/96 9.33 .04150 74.194 74.194 819.119 1,796 16,844 9.38
12 02/29/96 9.28 .04150 74.522 74.522 893.641 585.9 1,867 17,325 9.33
TAX RATE 39.60%
LOAD 0.00%
PAST YEAR: TOTAL RETURN 13.14%
5.0021 YEARS: TOTAL RETURN 73.25%
ANNUALIZED 11.61%
</TABLE>
8
<PAGE>
FUND NAME: NUVEEN MUNI BOND FUND CLASS R
(SINCE 02/28/95)
<TABLE>
<CAPTION>
NAV INCOM TOTAL PERIOD
PER PER FROM DOLLAR TO DATE TAX ENDING ENDING REINV
PER DATE SHARE SHARE CAP GAINS FROM INCOME GAINS DISTR T-E INC SAVINGS SHARES WEALTH NAV
- -------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
0 02/28/95 9.00 .04300 1,111 10,000 9.03
1 03/31/95 9.01 .04300 47.778 47.778 47.778 1,116 10,059 9.03
2 04/30/95 8.99 .04300 48.005 48.005 95.783 1,122 10,084 8.99
3 05/31/95 9.21 .04300 48.235 48.235 144.018 1,127 10,379 9.21
4 06/30/95 9.08 .04300 48.460 48.460 192.478 1,132 10,281 9.08
5 07/31/95 9.08 .04300 48.690 48.690 241.168 1,138 10,330 9.06
6 08/31/95 9.12 .04300 48.921 48.921 290.088 1,143 10,424 9.16
7 09/30/95 9.13 .04300 49.150 49.150 339.239 1,148 10,485 9.17
8 10/31/95 9.23 .04300 49.381 49.381 388.620 1,154 10,649 9.26
9 11/30/95 9.33 .04300 .0272 49.610 31.381 80.991 438.230 1,162 10,845 9.36
10 12/31/95 9.40 .04150 48.239 48.239 486.468 1,168 10,975 9.40
11 01/31/96 9.38 .04150 48.452 48.452 534.920 1,173 11,000 9.38
12 02/29/96 9.28 .04150 48.666 48.666 583.586 382.6 1,219 11,314 9.33
TAX RATE 39.60%
LOAD 0.00%
PAST YEAR: TOTAL RETURN 13.14%
1.0021 Years: TOTAL RETURN 13.14%
ANNUALIZED 13.11%
</TABLE>
9
<PAGE>
VII. MEASUREMENT OF RISK
The annualized standard deviation of monthly returns over the three years
ended February 29, 1996, was calculated as follows:
--------------------------------------------------
---
annualized
standard S((Total return in month X) - (Average X [/R]12
[/R] monthly total return))/2/ [/R]
-------------------------------------------------
deviation
(s) =
number of months (36)
[/R]
10
<PAGE>
The calculation of annualized standard deviation for the Class R shares of
the Fund for the three years ended February 29, 1996 was as follows:
<TABLE>
<CAPTION>
MONTHLY (TOTAL RETURN IN MONTH X) -
DATE TOTAL RETURNS (AVERAGE MONTHLY TOTAL RETURN)/2/
- ---- ------------- ---------------------------------
<S> <C> <C>
Mar-93.......................... -0.38% 0.7320%
Apr-93.......................... 0.89% 0.1718%
May-93.......................... 0.35% 0.0158%
Jun-93.......................... 1.10% 0.3899%
Jul-93.......................... 0.14% 0.1126%
Aug-93.......................... 1.41% 0.8732%
Sep-93.......................... 0.56% 0.0071%
Oct-93.......................... 0.25% 0.0509%
Nov-93.......................... -0.29% 0.5861%
Dec-93.......................... 1.17% 0.4823%
Jan-94.......................... 0.88% 0.1636%
Feb-94.......................... -1.35% 3.3327%
Mar-94.......................... -2.67% 9.8945%
Apr-94.......................... 0.58% 0.0109%
May-94.......................... 0.80% 0.1053%
Jun-94.......................... -0.31% 0.6171%
Jul-94.......................... 1.25% 0.5998%
Aug-94.......................... 0.25% 0.0509%
Sep-94.......................... -0.85% 1.7571%
Oct-94.......................... -1.10% 2.4824%
Nov-94.......................... -1.46% 3.7464%
Dec-94.......................... 2.21% 3.0083%
Jan-95.......................... 2.34% 3.4762%
Feb-95.......................... 2.64% 4.6848%
Mar-95.......................... 0.59% 0.0131%
Apr-95.......................... 0.26% 0.0465%
May-95.......................... 2.93% 6.0243%
Jun-95.......................... -0.94% 2.0038%
Jul-95.......................... 0.47% 0.0000%
Aug-95.......................... 0.91% 0.1887%
Sep-95.......................... 0.58% 0.0109%
Oct-95.......................... 1.56% 1.1760%
Nov-95.......................... 1.55% 1.1544%
Dec-95.......................... 1.20% 0.5248%
Jan-96.......................... 0.23% 0.0603%
Feb-96.......................... -0.63% 1.2223%
Average monthly total return.... 0.48%
Sum of Column C................. 49.7765%
Number of months................ 36
</TABLE>
--------- --
Annualized Std. Dev. = ^^
(49.7765%/36) X ^ ^
12 = 4.07%
11
<PAGE>
VIII. RISK-ADJUSTED TOTAL RETURN
The risk-adjusted total return for the Class R Shares of the Fund over the
three years ended February 29, 1996, was calculated as follows:
Annualized total return of Fund - average
total return of
Risk-Adjusted Total Return
=
Ponder Varifact Municipal Variable Rate Demand
Bond Index
------------------------------------------------
Annualized standard deviation of return (s)
5.77% -
3.139%
--------------
=
4.07%
= 0.646
12
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<LEGEND>
This schedule contains Summary Financial Information extracted from the Form
N-SAR and the financial statements and its qualified in its entirety by
references to such documents.
</LEGEND>
<SERIES>
<NUMBER> 002
<NAME> MUNI BOND CLASS A
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> FEB-29-1996
<PERIOD-START> MAR-01-1995
<PERIOD-END> FEB-29-1996
<INVESTMENTS-AT-COST> 2699995
<INVESTMENTS-AT-VALUE> 2867578
<RECEIVABLES> 70566
<ASSETS-OTHER> 311
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 2938455
<PAYABLE-FOR-SECURITIES> 8596
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 12214
<TOTAL-LIABILITIES> 20810
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 2744977
<SHARES-COMMON-STOCK> 3999
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 1170
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 3916
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 167583
<NET-ASSETS> 37089
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 173591
<OTHER-INCOME> 0
<EXPENSES-NET> 16679
<NET-INVESTMENT-INCOME> 156912
<REALIZED-GAINS-CURRENT> 10619
<APPREC-INCREASE-CURRENT> 84862
<NET-CHANGE-FROM-OPS> 252393
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 708
<DISTRIBUTIONS-OF-GAINS> 64
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 10086
<NUMBER-OF-SHARES-REDEEMED> 6136
<SHARES-REINVESTED> 49
<NET-CHANGE-IN-ASSETS> 176467
<ACCUMULATED-NII-PRIOR> 2134
<ACCUMULATED-GAINS-PRIOR> 1974
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 12802
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 16683
<AVERAGE-NET-ASSETS> 14447
<PER-SHARE-NAV-BEGIN> 9.150
<PER-SHARE-NII> .340
<PER-SHARE-GAIN-APPREC> .141
<PER-SHARE-DIVIDEND> .324
<PER-SHARE-DISTRIBUTIONS> .027
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 9.280
<EXPENSE-RATIO> .83
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<LEGEND>
This schedule contains Summary Financial Information extracted from the Form
N-SAR and the financial statements and its qualified in its entirety by
references to such documents.
</LEGEND>
<SERIES>
<NUMBER> 003
<NAME> MUNI BOND CLASS C
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> FEB-29-1996
<PERIOD-START> MAR-01-1995
<PERIOD-END> FEB-29-1996
<INVESTMENTS-AT-COST> 2699995
<INVESTMENTS-AT-VALUE> 2867578
<RECEIVABLES> 70566
<ASSETS-OTHER> 311
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 2938455
<PAYABLE-FOR-SECURITIES> 8596
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 12214
<TOTAL-LIABILITIES> 20810
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 2744977
<SHARES-COMMON-STOCK> 207
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 1170
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 3916
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 167583
<NET-ASSETS> 1915
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 173591
<OTHER-INCOME> 0
<EXPENSES-NET> 16679
<NET-INVESTMENT-INCOME> 156912
<REALIZED-GAINS-CURRENT> 10619
<APPREC-INCREASE-CURRENT> 84862
<NET-CHANGE-FROM-OPS> 252393
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 31
<DISTRIBUTIONS-OF-GAINS> 4
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 209
<NUMBER-OF-SHARES-REDEEMED> 4
<SHARES-REINVESTED> 2
<NET-CHANGE-IN-ASSETS> 176467
<ACCUMULATED-NII-PRIOR> 2134
<ACCUMULATED-GAINS-PRIOR> 1974
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 12802
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 16683
<AVERAGE-NET-ASSETS> 705
<PER-SHARE-NAV-BEGIN> 9.150
<PER-SHARE-NII> .290
<PER-SHARE-GAIN-APPREC> .126
<PER-SHARE-DIVIDEND> .279
<PER-SHARE-DISTRIBUTIONS> .027
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 9.260
<EXPENSE-RATIO> 1.58
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<LEGEND>
This schedule contains Summary Financial Information extracted from the Form
N-SAR and the financial statements and its qualified in its entirety by
references to such documents.
</LEGEND>
<SERIES>
<NUMBER> 001
<NAME> MUNI BOND CLASS R
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> FEB-29-1996
<PERIOD-START> MAR-01-1995
<PERIOD-END> FEB-29-1996
<INVESTMENTS-AT-COST> 2699995
<INVESTMENTS-AT-VALUE> 2867578
<RECEIVABLES> 70566
<ASSETS-OTHER> 311
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 2938455
<PAYABLE-FOR-SECURITIES> 8596
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 12214
<TOTAL-LIABILITIES> 20810
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 2744977
<SHARES-COMMON-STOCK> 310264
<SHARES-COMMON-PRIOR> 304573
<ACCUMULATED-NII-CURRENT> 1170
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 3916
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 167583
<NET-ASSETS> 2878641
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 173591
<OTHER-INCOME> 0
<EXPENSES-NET> 16679
<NET-INVESTMENT-INCOME> 156912
<REALIZED-GAINS-CURRENT> 10619
<APPREC-INCREASE-CURRENT> 84862
<NET-CHANGE-FROM-OPS> 252393
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 157137
<DISTRIBUTIONS-OF-GAINS> 8355
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 43439
<NUMBER-OF-SHARES-REDEEMED> 51219
<SHARES-REINVESTED> 13471
<NET-CHANGE-IN-ASSETS> 176467
<ACCUMULATED-NII-PRIOR> 2134
<ACCUMULATED-GAINS-PRIOR> 1974
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 12802
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 16683
<AVERAGE-NET-ASSETS> 2824339
<PER-SHARE-NAV-BEGIN> 9.000
<PER-SHARE-NII> .506
<PER-SHARE-GAIN-APPREC> .313
<PER-SHARE-DIVIDEND> .512
<PER-SHARE-DISTRIBUTIONS> .027
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 9.280
<EXPENSE-RATIO> .59
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<LEGEND>
This schedule contains Summary Financial Information extracted from the Form
N-SAR and the financial statements and is qualified in its entirety by
references to such documents.
</LEGEND>
<SERIES>
<NUMBER> 012
<NAME> NUVEEN INSURED MUNICIPAL BOND FUND NATIONAL CLASS A
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> FEB-29-1996
<PERIOD-START> MAR-01-1995
<PERIOD-END> FEB-29-1996
<INVESTMENTS-AT-COST> 754788
<INVESTMENTS-AT-VALUE> 811091
<RECEIVABLES> 10419
<ASSETS-OTHER> 1285
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 822795
<PAYABLE-FOR-SECURITIES> 6032
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 2713
<TOTAL-LIABILITIES> 8745
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 754899
<SHARES-COMMON-STOCK> 4280
<SHARES-COMMON-PRIOR> 1356
<ACCUMULATED-NII-CURRENT> 225
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 2622
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 56303
<NET-ASSETS> 46943
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 47027
<OTHER-INCOME> 0
<EXPENSES-NET> 5113
<NET-INVESTMENT-INCOME> 41914
<REALIZED-GAINS-CURRENT> 4403
<APPREC-INCREASE-CURRENT> 36886
<NET-CHANGE-FROM-OPS> 83202
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 1615
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 10081
<NUMBER-OF-SHARES-REDEEMED> 7245
<SHARES-REINVESTED> 88
<NET-CHANGE-IN-ASSETS> 59272
<ACCUMULATED-NII-PRIOR> 190
<ACCUMULATED-GAINS-PRIOR> (1781)
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 3758
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 5114
<AVERAGE-NET-ASSETS> 28993
<PER-SHARE-NAV-BEGIN> 10.40
<PER-SHARE-NII> .542
<PER-SHARE-GAIN-APPREC> .568
<PER-SHARE-DIVIDEND> .540
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 10.97
<EXPENSE-RATIO> .91
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<LEGEND>
This schedule contains Summary Financial Information extracted from the Form
N-SAR and the financial statements and is qualified in its entirety by
references to such documents.
</LEGEND>
<SERIES>
<NUMBER> 013
<NAME> NUVEEN INSURED MUNICIPAL BOND FUND NATIONAL CLASS C
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> FEB-29-1996
<PERIOD-START> MAR-01-1995
<PERIOD-END> FEB-29-1996
<INVESTMENTS-AT-COST> 754788
<INVESTMENTS-AT-VALUE> 811091
<RECEIVABLES> 10419
<ASSETS-OTHER> 1285
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 822795
<PAYABLE-FOR-SECURITIES> 6032
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 2713
<TOTAL-LIABILITIES> 8745
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 754899
<SHARES-COMMON-STOCK> 475
<SHARES-COMMON-PRIOR> 386
<ACCUMULATED-NII-CURRENT> 225
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 2622
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 56303
<NET-ASSETS> 5151
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 47027
<OTHER-INCOME> 0
<EXPENSES-NET> 5113
<NET-INVESTMENT-INCOME> 41914
<REALIZED-GAINS-CURRENT> 4403
<APPREC-INCREASE-CURRENT> 36886
<NET-CHANGE-FROM-OPS> 83202
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 192
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 662
<NUMBER-OF-SHARES-REDEEMED> 588
<SHARES-REINVESTED> 15
<NET-CHANGE-IN-ASSETS> 59272
<ACCUMULATED-NII-PRIOR> 190
<ACCUMULATED-GAINS-PRIOR> (1781)
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 3758
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 5114
<AVERAGE-NET-ASSETS> 4028
<PER-SHARE-NAV-BEGIN> 10.31
<PER-SHARE-NII> .461
<PER-SHARE-GAIN-APPREC> .540
<PER-SHARE-DIVIDEND> .461
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 10.85
<EXPENSE-RATIO> 1.63
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<LEGEND>
This schedule contains Summary Financial Information extracted from the Form
N-SAR and the financial statements and is qualified in its entirety by
references to such documents.
</LEGEND>
<SERIES>
<NUMBER> 011
<NAME> NUVEEN INSURED MUNICIPAL BOND FUND NATIONAL CLASS R
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> FEB-29-1996
<PERIOD-START> MAR-01-1995
<PERIOD-END> FEB-29-1996
<INVESTMENTS-AT-COST> 754788
<INVESTMENTS-AT-VALUE> 811091
<RECEIVABLES> 10419
<ASSETS-OTHER> 1285
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 822795
<PAYABLE-FOR-SECURITIES> 6032
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 2713
<TOTAL-LIABILITIES> 8745
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 754899
<SHARES-COMMON-STOCK> 69754
<SHARES-COMMON-PRIOR> 70992
<ACCUMULATED-NII-CURRENT> 225
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 2622
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 56303
<NET-ASSETS> 761956
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 47027
<OTHER-INCOME> 0
<EXPENSES-NET> 5113
<NET-INVESTMENT-INCOME> 41914
<REALIZED-GAINS-CURRENT> 4403
<APPREC-INCREASE-CURRENT> 36886
<NET-CHANGE-FROM-OPS> 83202
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 40072
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 13451
<NUMBER-OF-SHARES-REDEEMED> 17182
<SHARES-REINVESTED> 2492
<NET-CHANGE-IN-ASSETS> 59272
<ACCUMULATED-NII-PRIOR> 190
<ACCUMULATED-GAINS-PRIOR> (1781)
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 3758
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 5114
<AVERAGE-NET-ASSETS> 690549
<PER-SHARE-NAV-BEGIN> 10.38
<PER-SHARE-NII> .570
<PER-SHARE-GAIN-APPREC> .540
<PER-SHARE-DIVIDEND> .570
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 10.92
<EXPENSE-RATIO> .63
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<PAGE>
EXHIBIT 18
NUVEEN MUNICIPAL BOND FUND
NUVEEN MULTISTATE TAX-FREE TRUST
NUVEEN INSURED TAX-FREE BOND FUND, INC.
NUVEEN TAX-FREE BOND FUND, INC.
NUVEEN CALIFORNIA TAX-FREE FUND, INC.
Multiple Class Plan
Adopted Pursuant to Rule 18f-3
WHEREAS, Nuveen Municipal Bond Fund, a Massachusetts business trust, Nuveen
Multistate Tax-Free Trust, a Massachusetts business trust, Nuveen Insured Tax-
Free Bond Fund, Inc., a Minnesota corporation, Nuveen Tax-Free Bond Fund, Inc.,
a Minnesota corporation, and Nuveen California Tax-Free Fund, Inc., a Maryland
corporation (each a "Fund" and collectively the "Funds"), each engage in
business as an open-end management investment company and are each registered as
such under the Investment Company Act of 1940, as amended (the "Act");
WHEREAS, each Fund is authorized to and does issue shares of common stock
or shares of beneficial interest in separate series, with the shares
representing the interests in a separate portfolio of securities and other
assets (each Fund's series relating to long-term securities together with all
other such series subsequently established by a Fund being referred to herein
individually as a "Series" and collectively as the "Series");
WHEREAS, each Fund is authorized to and has divided the shares of each
Series into three classes, designated as Class A Shares, Class C Shares and
Class R Shares; and
WHEREAS, the Board of each Fund as a whole, and the Trustees or Directors,
as applicable, who are not interested persons of each such Fund (as defined in
the Act) (the "Non-Interested Members"), after having been furnished and having
evaluated information reasonably necessary to evaluate this Multiple Class Plan
(the "Plan"), have determined in the exercise of their reasonable business
judgment that the Plan is in the best interests of each class of each Series
individually, and each Series and the Fund as a whole.
WHEREAS, each Fund adopted this Plan in accordance with Rule 18f-3 under
the Act, effective August 1, 1995.
WHEREAS, each Fund's Board, as a whole, and the Non-Interested Members,
approved certain pricing enhancements that required amendments to this Plan.
NOW, THEREFORE, each Fund hereby adopts this amended Plan, effective July
1, 1996, in accordance with Rule 18f-3 under the Act:
1. Class Differences. Each class of shares of a Series shall represent
interests in the same portfolio of investments of that Series and, except as
otherwise set forth in this Plan, shall differ solely with respect to: (i)
distribution, service and other charges and expenses as provided for in
<PAGE>
Sections 2 and 3 of this Plan; (ii) the exclusive right of each class of shares
to vote on matters submitted to shareholders that relate solely to that class or
for which the interests of one class differ from the interests of another class
or classes; (iii) such differences relating to eligible investors as may be set
forth in the prospectus and statement of additional information of each Series,
as the same may be amended or supplemented from time to time (each a
"Prospectus" and "SAI" and collectively, the "Prospectus" and "SAI"); (iv) the
designation of each class of shares; and (v) conversion features.
2. DISTRIBUTION AND SERVICE ARRANGEMENTS; CONVERSION FEATURES. Class A
Shares, Class C Shares and Class R Shares of each Fund shall differ in the
manner in which such shares are distributed and in the services provided to
shareholders of each such class as follows:
a) Class A Shares:
(i) Class A Shares shall be sold at net asset value subject to
a front-end sales charge set forth in the Prospectus and
SAI;
(ii) Class A Shares shall be subject to an annual service fee
("Service Fee") pursuant to a Plan of Distribution and
Service Pursuant to Rule 12b-1 (the "12b-1 Plan") not to
exceed 0.25 of 1% of the average daily net assets of the
Series allocable to Class A Shares, which, as set forth in
the Prospectus, SAI and the 12b-1 Plan, may be used to
compensate certain authorized dealers for providing
ongoing account services to shareholders; and
(iii) Class A Shares shall not be subject to a Distribution Fee
(as hereinafter defined); and
(iv) As described in the Prospectus and SAI, certain Class A
shares redeemed within 18 months of purchase shall be
subject to a contingent deferred sales charge ("CDSC") of
1% of the lower of (a) the net asset value of Class A
Shares at the time of purchase or (b) the net asset value
of Class A Shares at the time of redemption, as set forth
in the Prospectus and SAI.
b) Class C Shares:
(i) Class C Shares shall be sold at net asset value without a
front-end sales charge;
(ii) Class C Shares shall be subject to a Service Fee pursuant
to the 12b-1 Plan not to exceed 0.25 of 1% of average
daily net assets of the Series allocable to Class C
Shares, which, as set forth in the Prospectus, SAI and the
12b-1 Plan, may be used to compensate certain authorized
dealers for providing ongoing account services to
shareholders;
2
<PAGE>
(iii) Class C Shares shall be subject to an annual distribution
fee ("Distribution Fee") pursuant to the 12b-1 Plan not to
exceed 0.75 of 1% of average daily net assets of the
Series allocable to Class C Shares less the amount of any
CDSC received by John Nuveen & Co. Incorporated, the
Funds' distributor, and for which any applicable
reinstatement period, as set forth in the Prospectus and
SAI, has expired, which, as set forth in the Prospectus,
SAI and the 12b-1 Plan, will be used to compensate certain
authorized dealers over time for the sale of Class C
Shares;
(iv) Class C Shares redeemed within 12 months of purchase shall
be subject to a CDSC of 1% of the lower of (a) the net
asset value of Class C Shares at the time of purchase or
(b) the net asset value of Class C Shares at the time of
redemption, as set forth in the Prospectus and SAI; and
(v) Class C Shares will automatically convert to Class A
Shares six years after purchase, as set forth in the
Prospectus and SAI.
c) Class R Shares:
(i) Class R Shares shall be sold at net asset value without a
front-end sales charge;
(ii) Class R Shares shall not be subject to a Service Fee; and
(iii) Class R Shares shall not be subject to a Distribution
Fee.
3. ALLOCATION OF INCOME, EXPENSES, GAINS AND LOSSES. a) Investment
Income, and Realized and Unrealized Gains and Losses. The daily investment
income, and realized and unrealized gains and losses, of a Series will be of
allocated to each class of shares based on each class' relative percentage of
the total value of shares outstanding of the Series at the beginning of the day,
after such net assets are adjusted for the prior day's capital share
transactions.
b) Series Level Expenses. Expenses that are attributable to a
Series, but not a particular class thereof ("Series level expenses"), will be
allocated to each class of shares based on each class' relative percentage of
the total value of shares outstanding of the Series at the beginning of the day,
after such net assets are adjusted for the prior day's capital share
transactions. Series level expenses include fees for services that are received
equally by the classes under the same fee arrangement. All expenses attributable
to a Series that are not "class level expenses" (as defined below) shall be
Series level expenses, including but not limited to transfer agency fees and
expenses, share registration expenses, and shareholder reporting expenses.
c) Class Level Expenses. Expenses that are directly attributable
to a particular class of shares, including the expenses relating to the
distribution of a class' shares, or to services provided to the shareholders of
a class, as set forth in Section 2 of this Plan, will be incurred by that
3
<PAGE>
class of shares. Class level expenses include expenses for services that are
unique to a class of shares in either form or amount. "Class level expenses"
shall include, but not be limited to, 12b-1 Service Fees, 12b-1 Distribution
Fees, expenses associated with the addition of share classes to a fund (to the
extent that the expenses were not fully accrued prior to the issuance of the new
classes of shares), expenses of administrative personnel and services required
to support the shareholders of a specific class, litigation or other legal
expenses relating to a specific class of shares, directors' fees or expenses
incurred as a result of issues relating to a specific class of shares, and
accounting expenses relating to a specific class of shares.
d) Fee Waivers and Expense Reimbursements. On a daily basis, if the
Series level expenses and the class level expenses (not including 12b-1 plan
payments) exceed the daily expense cap for the Series, an appropriate
waiver/reimbursement will be made to the Series. The amount of such
reimbursement to each class will be in an amount such that the expenses of the
class with the highest expense ratio (excluding Service Fees and Distribution
Fees) will be equal to the daily expense cap after reimbursement. The expense
reimbursement will be allocated to each class of shares based on each class'
relative percentage of the total value of shares outstanding of the Series at
the beginning of the day, after such net assets are adjusted for the prior day's
capital share transactions.
4. Exchange Privilege. Shares of a class of a Series may be exchanged
only for shares of the same class of another Series, except as otherwise set
forth in the Prospectus and SAI.
5. Term and Termination. a) The Series. This Plan shall become effective
with respect to each Series on August 1, 1995, and shall continue in effect with
respect to such Class A, Class C and Class R Shares of each such Series until
terminated in accordance with the provisions of Section 5(c) hereof.
b) Additional Series or Classes. This Plan shall become effective with
respect to any class of shares of a Series other than Class A, Class C or Class
R and with respect to each additional Series or class thereof established by a
Fund after the date hereof and made subject to this Plan upon commencement of
the initial public offering thereof (provided that the Plan has previously been
approved with respect to such additional Series or class by votes of a majority
of both (i) the members of the Board of a Fund, as a whole, and (ii) the
Non-Interested Members, cast at a meeting held before the initial public
offering of such additional Series or classes thereof), and shall continue in
effect with respect to each such additional Series or class until terminated in
accordance with provisions of Section 5(c) hereof. An addendum setting forth
such specific and different terms of such additional series or classes shall be
attached to or made part of this Plan.
c) Termination. This Plan may be terminated at any time with respect
to any Fund or any Series or class thereof, as the case may be, by vote of a
majority of both the members of the Board of a Fund, as a whole, and the
Non-Interested Members. The Plan may remain in effect with respect to a
particular Fund or any Series or class thereof even if it has been terminated in
accordance with this Section 5(c) with respect to any other Fund or Series or
class thereof.
4
<PAGE>
6. Subsequent Funds. The parties hereto intend that any open-end
investment company established subsequent to the date set forth below for which
Nuveen Advisory Corp. acts as investment adviser (each a "Future Fund"), will be
covered by the terms and conditions of this Plan, provided that the Board of
such Future Fund as a whole, and the Non-Interested Members of such Future Fund,
after having been furnished and having evaluated information reasonably
necessary to evaluate the Plan, have determined in the exercise of their
reasonable business judgment that the Plan is in the best interests of each
class of each Series of such Future Fund individually, and each Series of such
Future Fund and such Future Fund as a whole.
7. Amendments. a) General. Except as set forth below, any material
amendment to this Plan affecting a Fund or Series or class thereof shall require
the affirmative vote of a majority of both the members of the Board of that
Fund, as a whole, and the Non-Interested Members that the amendment is in the
best interests of each class of each Series individually and each Series as a
whole.
b) Future Funds. Any amendment to the Plan solely for the purpose of
adding a Future Fund as a party hereto in accordance with Section 6, will not
require any action by the Boards of the Funds.
Dated: April 23, 1996
5
<PAGE>
Exhibit 99(c)
Certified Resolution
The undersigned, James J. Wesolowski, hereby certifies, on behalf of Nuveen
Municipal Bond Fund (the "Fund"), (1) that he is the duly elected, qualified and
acting Secretary of the Fund, and that as such Secretary he has custody of its
corporate books and records, (2) that attached to this Certificate is a true and
correct copy of a resolution duly adopted by the Board of Directors of the Fund
at a meeting held on January 21, 1996, and (3) that said resolution has not been
amended or rescinded and remains in full force and effect.
June 10, 1996
/s/ James J. Wesolowski
-----------------------------------
James J. Wesolowski, Secretary
<PAGE>
FURTHER RESOLVED, that each member of the Board and officer of the Fund who may
be required to execute the Registration Statement on Form N-1A, or any amendment
or amendments thereto, be, and each of them hereby is, authorized to execute a
power of attorney appointing Richard J. Franke, Timothy R. Schwertfeger, James
J. Wesolowski, Larry W. Martin, Gifford R. Zimmerman, and Thomas S. Harman, and
each of them, his true and lawful attorneys-in-fact and agents, with full power
of substitution and resubstitution, for him and in his name, place and stead, in
any and all capacities, to sign the Registration Statement and any and all
amendments thereto and to file the same, with all exhibits thereto, and other
documents in connection therewith, with the Securities and Exchange Commission,
granting unto said attorneys-in-fact and agents, and each of them, full power
and authority to do and perform each and every act and thing requisite or
necessary to be done in and about the premises, as fully to all intents and
purposes as he might or could do in person, and ratifying and confirming all
that said attorneys-in-fact and agents or any of them, or their or his
substitute or substitutes, may lawfully do or cause to be done by virtue
thereof.
