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Nuveen Municipal Bond Fund
Supplement to Prospectus dated July 1, 1996
August 26, 1996
The John Nuveen Company, the parent of John Nuveen & Co. Incorporated and Nuveen
Advisory Corp., respectively the distributor and investment adviser of your
Fund, has entered into an agreement pursuant to which Flagship Resources Inc.
will merge its mutual fund business into Nuveen's mutual fund business. Flagship
is a highly regarded mutual fund sponsor and manager based in Dayton, Ohio, that
has specialized, like Nuveen, in municipal bond funds. Flagship has 27 municipal
mutual funds and over $4 billion in assets under management. We plan to merge
Flagship's portfolio management, sales and service operations with Nuveen's
corresponding divisions. This agreement is subject to the approval of the
shareholders of the Flagship Funds.
As part of the consolidation of Flagship into Nuveen, the Board of Trustees of
the Nuveen Mutual Funds has determined that it is in the best interest of Fund
shareholders to combine selected Nuveen and Flagship funds in overlapping state
markets, and to make certain changes to the organization, policies and features
of the Funds, in order to facilitate the creation of a single combined family of
mutual funds. These combinations and changes are scheduled to become effective
early next year. While your Fund is not one of the funds that will be combining,
you will be asked to vote on certain other matters in connection with the
unification of the two fund groups at a shareholder meeting scheduled to be held
November 14, 1996, including changing certain of the Fund's investment policies
to provide greater flexibility and reorganizing your Fund into a Massachusetts
business trust along with other funds. These changes will permit your Fund to
operate in a more efficient manner and enhance your convenience in purchasing
and owning Fund shares. This will all be described in greater detail in the
proxy statement for the shareholder meeting that will be mailed to you in
several weeks.
Also as part of this process, a change in the terms of the Class C Shares is
being proposed for shareholder approval. Currently, Class C Shares bear an
annual service fee of .25% and an annual distribution fee of .75%; and Class C
Shares automatically convert six years after purchase to Class A Shares, which
bear the service fee but not the distribution fee, thus lowering ongoing
expenses. The Board of Trustees has approved a revised distribution plan for
Class C Shares which, subject to shareholder approval, would reduce the annual
service fee to .20% and reduce the annual distribution fee to .55%, while
discontinuing the automatic conversion of Class C Shares to Class A Shares.
These changes would affect both currently existing as well as newly purchased
Class C Shares. Purchasers of Class C Shares should be aware that, if this
proposal receives shareholder approval, their Class C Shares would not convert
automatically into Class A Shares six years after purchase as described in the
Prospectus dated July 1, 1996, while the annual service and distribution fees
would be reduced as described above.
