<PAGE>
As filed with the Securities and Exchange Commission on June 6, 1995.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-1A
REGISTRATION STATEMENT UNDER THE
SECURITIES ACT OF 1933 [_]
File No. 33-01971
Pre-Effective Amendment No. [_]
---
Post-Effective Amendment No. 20 [X]
and
REGISTRATION STATEMENT UNDER THE
INVESTMENT COMPANY ACT OF 1940 [_]
File No. 811-04508
Amendment No. 20 [X]
NUVEEN CALIFORNIA TAX-FREE FUND, INC.
(Exact Name of Registrant as Specified in Charter)
333 West Wacker Drive, Chicago, Illinois 60606
(Address of Principal Executive Offices) (Zip Code)
Registrant's Telephone Number, Including Area Code: (312) 917-7700
James J. Wesolowski, Esq.--Vice President and Secretary
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 [_] on (date) pursuant to paragraph
pursuant to paragraph (b) (a)(1)
[x] on June 13, 1995 pursuant [_] 75 days after filing pursuant
to paragraph (b) to paragraph (a)(2)
[_] 60 days after filing [_] on (date) pursuant to paragraph
pursuant to paragraph (a)(1) (a)(2) ofRule 485.
If appropriate, check the following box:
[_] This post-effective amendment designates a new effective date for a previ-
ously filed post-effective amendment.
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) OF THE FOLLOWING SERIES: NUVEEN CALIFORNIA TAX-
FREE VALUE FUND AND NUVEEN CALIFORNIA INSURED TAX-FREE VALUE FUND AND AN INDEF-
INITE NUMBER OF SHARES (DESIGNATED AS INSTITUTIONAL SERIES SHARES, SERVICE PLAN
SERIES SHARES AND DISTRIBUTION PLAN SERIES SHARES) OF NUVEEN CALIFORNIA TAX-
FREE MONEY MARKET FUND. A RULE 24F-2 NOTICE FOR THE REGISTRANT'S FISCAL YEAR
ENDED FEBRUARY 28, 1995, WAS FILED ON OR ABOUT APRIL 25, 1995.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
CONTENTS
OF
POST-EFFECTIVE AMENDMENT NO. 20
TO
REGISTRATION STATEMENT
UNDER THE SECURITIES ACT OF 1933
FILE NO. 33-01971
AND
AMENDMENT NO. 20
TO
REGISTRATION STATEMENT
UNDER THE INVESTMENT COMPANY ACT OF 1940
FILE NO. 811-04508
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
Copies of Annual Reports to Shareholders for the Nuveen
California Tax-Free Value Fund and Nuveen California Insured
Tax-Free Value Fund and for Nuveen California Tax-Free Money
Market Fund (the financial statements from which are
incorporated by reference into the Statement of Additional
Information)
Part C-Other Information
Signatures
Index to Exhibits
Exhibits
- --------
*This Registration Statement contains two separate prospectuses of Nuveen
California Tax-Free Fund, Inc. (the "Fund"). The prospectus included herein
relates to the Fund's two tax-free bond portfolios, Nuveen California Tax-
Free Value Fund and Nuveen California Insured Tax-Free Value Fund. A second
prospectus of the Fund relates to the Fund's money market portfolio, Nuveen
California Tax-Free Money Market Fund.
<PAGE>
NUVEEN CALIFORNIA TAX-FREE FUND, INC.
-----------------
CROSS REFERENCE SHEET
PART A--PROSPECTUS FOR NUVEEN CALIFORNIA TAX-FREE VALUE FUND AND
NUVEEN CALIFORNIA INSURED TAX-FREE VALUE FUND
<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 One of the Funds Is Right for You
3 Condensed Financial Information Financial Highlights
4 General Description of General Information; What Are the Funds'
Registrant Investment Objectives and Policies
5 Management of the Fund Summary of Fund Expenses; Who Is
Responsible for the Operation of the Funds;
Management of the Funds; 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 Sales Charge Program; How to Buy
Offered Fund Shares; Distribution and Service
Plans; Management of the Funds; Net Asset
Value
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>
ITEM IN PART B 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 Plans; 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 Additional Information on the Purchase and
Pricing of Securities Redemption of Fund Shares; Distribution and
Service Plans; 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 Funds"
in the Prospectus
22 Calculation of Performance Data Performance Information
23 Financial Statements Incorporated by Reference to Annual Report
to Shareholders
</TABLE>
<PAGE>
NUVEEN CALIFORNIA TAX-FREE FUND, INC.
-----------------
CROSS REFERENCE SHEET
PART A--PROSPECTUS FOR NUVEEN CALIFORNIA TAX-FREE MONEY MARKET FUND
<TABLE>
<CAPTION>
TEM IN PART AI
OF FORM N-1A PROSPECTUS LOCATION
- -------------- -------------------
<S> <C>
1 Cover Page Cover Page
2 Synopsis Fund Expenses; Highlights
3 Condensed Financial Information Financial Highlights
4 General Description of The Fund and Its Investment Objectives;
Registrant Investment Policies of the Fund
5 Management of the Fund Management of the Fund; General Information
6 Capital Stock and Other General Information; Distributions and
Securities Taxes
7 Purchase of Securities Being Management of the Fund; Net Asset Value;
Offered How to Buy Fund Shares
8 Redemption or Repurchase How to Redeem Fund Shares
9 Pending Legal Proceedings Not Applicable
</TABLE>
<PAGE>
PART A--PROSPECTUS
NUVEEN CALIFORNIA TAX-FREE FUND, INC.
333 West Wacker Drive
Chicago, Illinois 60606
<PAGE>
THE NUVEEN FAMILY OF TAX-FREE VALUE FUNDS
Nuveen offers individual investors 16 different long-
term tax-free mutual funds to choose from, including:
NATIONAL LONG- Nuveen Municipal Bond Fund
TERM FUNDS Nuveen Insured Municipal Bond Fund
STATE LONG-TERM Arizona
FUNDS 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 CALIFORNIA TAX-FREE FUND, INC.
Prospectus
June 13, 1995
NUVEEN CALIFORNIA TAX-FREE VALUE FUND
NUVEEN CALIFORNIA INSURED TAX-FREE VALUE FUND
Nuveen California Tax-Free Fund, Inc. is an open-end investment company con-
sisting of three tax-free mutual funds. The two tax-free mutual funds named
above (the "Funds"), each representing a separate portfolio designed to pro-
vide as high a level of current interest income exempt from both regular fed-
eral and applicable California personal income taxes as is consistent, in the
view of the Fund's management, with preservation of capital, are covered by
this Prospectus. The third tax-free mutual fund, Nuveen California Tax-Free
Money Market Fund, is covered by a separate Prospectus.
Nuveen California Tax-Free Value Fund (the "California Fund") invests in in-
vestment grade quality, long-term California Municipal Obligations. Nuveen
California Insured Tax-Free Value Fund (the "California Insured Fund") invests
in long-term California Municipal Obligations which are either covered by in-
surance guaranteeing the timely payment of principal and interest or backed by
an escrow or trust account containing sufficient U.S. Government or U.S. Gov-
ernment agency securities to ensure timely payment of principal and interest.
SEE PAGE 17 FOR FURTHER INFORMATION ABOUT MUNICIPAL BOND INSURANCE. Each Fund
invests in those California Municipal Obligations judged by the Fund's invest-
ment adviser to offer the best values among California Municipal Obligations
of similar credit quality.
Each Fund has adopted a Flexible Sales Charge Program which provides you with
alternative ways of purchasing Fund shares based upon your individual invest-
ment needs and preferences. You may purchase Class A Shares at a price equal
to their net asset value plus an up-front sales charge. 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 designed to compensate secu-
rities dealers over time for the sale of Fund shares. Class C Shares issued on
or after June 13, 1995 are subject to a 1% contingent deferred sales charge
("CDSC") for redemptions within 12 months of purchase. Class C Shares automat-
ically convert to Class A Shares six years after purchase. Both Class A Shares
and Class C Shares are also subject to annual service fees, which are used to
compensate securities dealers for providing you with ongoing account services.
Under the Flexible Sales Charge Program, all Fund shares outstanding as of
September 6, 1994, have been designated as Class R Shares. Class R Shares are
available for purchase at a price equal to their net asset value only under
certain limited circumstances, or by specified investors, as described herein.
See "How to Buy Fund Shares."
This Prospectus contains information you should know before investing in the
Funds. Please retain it for future reference. You can find more detailed in-
formation about the Funds (and Nuveen California Tax-Free Money Market Fund)
in the "Statement of Additional Information" dated June 13, 1995. For a free
copy of this Statement, write to the Funds, c/o John Nuveen & Co. Incorporat-
ed, 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 Com-
mission and is incorporated by reference into this Prospectus.
Shares of the Funds are not deposits or obligations of, or guaranteed or en-
dorsed by, any bank and are not federally insured by the Federal Deposit In-
surance Corporation, the Federal Reserve Board, or any other agency. Shares of
the Funds 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 REPRE-
SENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
JOHN NUVEEN & CO. INCORPORATED
FOR INFORMATION, CALL TOLL-FREE 800-621-7227
<PAGE>
CONTENTS
3 Summary of Fund Expenses
- --------------------------------------------------------------------------------
5 How to Determine if One of the Funds Is Right for You
- --------------------------------------------------------------------------------
10 Financial Highlights
- --------------------------------------------------------------------------------
14 Who Is Responsible for the Operation of the Funds?
- --------------------------------------------------------------------------------
15 What are the Funds' Investment Objectives and Policies?
- --------------------------------------------------------------------------------
23 Flexible Sales Charge Program
- --------------------------------------------------------------------------------
25 How to Buy Fund Shares
- --------------------------------------------------------------------------------
38 Distribution and Service Plans
- --------------------------------------------------------------------------------
39 How to Redeem Fund Shares
- --------------------------------------------------------------------------------
42 Management of the Funds
- --------------------------------------------------------------------------------
45 How the Funds Show Performance
- --------------------------------------------------------------------------------
48 Distributions and Taxes
- --------------------------------------------------------------------------------
52 Net Asset Value
- --------------------------------------------------------------------------------
53 General Information
- --------------------------------------------------------------------------------
Appendix A--Special State Factors and State Tax Treat-
ment
- --------------------------------------------------------------------------------
Appendix B--Taxable Equivalent Yield Tables
- --------------------------------------------------------------------------------
Application
- --------------------------------------------------------------------------------
2
<PAGE>
SUMMARY OF FUND EXPENSES
-
------------------------------------------------------------------------------
<TABLE>
<CAPTION>
EACH FUND
SHAREHOLDER TRANSACTION -----------------------
EXPENSES (AS A PERCENT OF OFFERING PRICE) CLASS A CLASS C CLASS R
----------------------------------------------------------------------------
<S> <C> <C> <C>
Maximum Sales Load Imposed on Purchases 4.50% None None
Maximum Sales Load Imposed on Reinvested Dividends None None None
Deferred Sales Charge (for redemptions within 12
months of purchase) None 1.00% None
Redemption Fees None None None
Exchange Fees None None None
</TABLE>
<TABLE>
<CAPTION>
TOTAL
EXPENSES,
WITHOUT FEE
ANNUAL OPERATING EXPENSES, AFTER FEE WAIVERS RULE OTHER WAIVERS AND
AND EXPENSE REIMBURSEMENTS MANAGEMENT 12B-1 OPERATING TOTAL EXPENSE
(AS A PERCENT OF AVERAGE DAILY NET ASSETS)(1) FEES FEES (2) EXPENSES EXPENSES REIMBURSEMENTS
------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
CALIFORNIA FUND
Class A .13% .25% .62% 1.00% 1.42%
Class C None 1.00% .75% 1.75% 2.42%
Class R .55% None .16% .71% .71%
CALIFORNIA INSURED FUND
Class A .36% .25% .44% 1.05% 1.24%
Class C None 1.00% .80% 1.80% 2.44%
Class R .55% None .15% .70% .70%
</TABLE>
--------
(1) In order to prevent total operating expenses (ex-
cluding any distribution or service fees) from ex-
ceeding .75 of 1% of the average daily net asset
value of any class of shares of a Fund, Nuveen Ad-
visory has agreed to waive all or a portion of its
management fees or reimburse certain expenses of
each Fund. Nuveen Advisory may also voluntarily
agree to reimburse additional expenses from time to
time, which voluntary reimbursements may be termi-
nated at any time in its discretion.
(2) Class C Shares are subject to an annual distribu-
tion fee of .75 of 1% of average daily net assets
to compensate Authorized Dealers over time for 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 as-
sets to compensate Authorized Dealers for ongoing
account services. See "Distribution and Service
Plans." Long-term holders of Class C Shares may pay
more in Rule 12b-1 fees than the economic equiva-
lent of the maximum front-end sales charge permit-
ted under the National Association of Securities
Dealers Rules of Fair Practice.
The purpose of the tables above is to help you under-
stand all expenses and fees that you would bear di-
rectly or indirectly as a Fund shareholder. The ex-
penses and fees shown are for the fiscal year ended
February 28, 1995.
3
<PAGE>
SUMMARY OF FUND EXPENSES (CONTINUED)
-
------------------------------------------------------------------------------
EXAMPLE*
The following example applies to each of the Funds. 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>
CALIFORNIA FUND
Class A $55 $75 $98 $162
Class C $28** $55 $95 $168
Class R $ 7 $23 $40 $ 88
<CAPTION>
CALIFORNIA
INSURED FUND
<S> <C> <C> <C> <C>
Class A $55 $77 $100 $167
Class C $28** $57 $ 97 $174
Class R $ 7 $22 $ 39 $ 87
</TABLE>
--------
*This example does not represent past or future ex-
penses. Actual expenses may be greater or less than
those shown. Moreover, a 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 Ex-
penses 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 assump-
tions, the expenses incurred on an investment in Class
C Shares will exceed the expenses incurred on an in-
vestment 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 each Fund's fees and ex-
penses, see "Distribution and Service Plans" and "Man-
agement of the Funds."
**If shares were purchased before June 13, 1995 or held
longer than 12 months, so that no CDSC is imposed, ex-
penses in the first year would be $18 for the Califor-
nia and California Insured Funds.
4
<PAGE>
HOW TO DETERMINE IF ONE OF THE FUNDS IS RIGHT FOR YOU
------------------------------------------------------------------------------
There are many reasons why you might invest in one of
the Funds.
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 Funds will en-
able you to achieve your individual investment goals,
they have been designed for investors who have these
kinds of investment goals in mind.
In addition, the Funds incorporate the following fea-
tures and benefits. You should carefully review the
more detailed description of these features and bene-
fits elsewhere in the Prospectus to make sure they
serve your individual investment goals.
MONTHLY, DOUBLE Each Fund provides monthly dividends exempt from regu-
TAX-FREE INCOME lar federal and applicable California personal income
taxes for in-state residents.
DIVERSIFIED, The California Fund purchases investment grade quality
INVESTMENT California Municipal Obligations. The California In-
GRADE QUALITY sured Fund purchases California Municipal Obligations
OR INSURED which are either covered by insurance guaranteeing the
PORTFOLIO timely payment of principal and interest or backed by
an escrow or trust account containing sufficient U.S.
Government or U.S. Government agency securities to en-
sure timely payment of principal and interest. Each
Fund is diversified and maintains diversity within its
portfolio by selecting California Municipal Obligations
of different issuers. Each Fund further enhances its
portfolio mix by purchasing California Municipal Obli-
gations of different types and purposes.
EXPERIENCED Each Fund is managed by Nuveen Advisory Corp. ("Nuveen
MANAGEMENT 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 76 different tax-free
portfolios representing approximately $30 billion in
assets.
5
<PAGE>
------------------------------------------------------------------------------
VALUE INVESTING As a guiding policy, Nuveen Advisory's portfolio manag-
ers seek investment grade quality undervalued or under-
rated California Municipal Obligations which offer the
best values among Municipal Obligations of similar
credit quality. By selecting these California Municipal
Obligations, Nuveen Advisory seeks to position each
Fund better to achieve its investment objective of as
high a level of current interest income exempt from
both regular federal and applicable California personal
income taxes as is consistent, in the view of the
Fund's management, with preservation of capital, re-
gardless of which direction the market may move. The
California Insured Fund's policy of investing in in-
sured California Municipal Obligations may limit the
extent to which it will achieve its value investing
strategy.
NUVEEN RESEARCH Nuveen Advisory's portfolio managers call upon the re-
sources of Nuveen's Research Department, the largest in
the investment banking industry devoted exclusively to
tax-exempt securities. Nuveen research analysts re-
viewed in 1994 more than $100 billion of tax-exempt se-
curities sold in new issue and secondary markets.
LOW MINIMUMS You can start earning tax-free income with a low ini-
tial investment of $1,000 in a particular class of a
Fund. See "How to Buy Fund Shares."
FLEXIBLE SALES For many investors, working with a professional finan-
CHARGE PROGRAM cial adviser is an important part of their financial
strategy. Because Nuveen recognizes the value a finan-
cial adviser can provide in developing and implementing
a comprehensive plan for your financial future,
Nuveen's open-end, long-term bond funds ("Nuveen Mutual
Funds") are sold with a sales charge, either at the
time of purchase or over time in the form of a distri-
bution fee. This provides your financial adviser with
compensation for the professional advice and service
you receive in financial planning and investment selec-
tion.
Each Fund has adopted a Flexible Sales Charge Program
which provides you with alternative ways of purchasing
Fund shares based upon your individual investment needs
and preferences. As described below, each Fund offers
Class A Shares, Class C Shares and, under certain lim-
ited circumstances, Class R Shares. In deciding which
class of a Fund's shares to purchase, you should con-
sider 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, and whether or not
6
<PAGE>
------------------------------------------------------------------------------
you will be reinvesting income or capital gain distri-
butions in additional shares. For assistance with this
decision, please refer to the tables under "Summary of
Fund Expenses" on page 3 of this Prospectus which set
forth examples of the expenses applicable to each class
of shares, or consult your financial adviser. The fol-
lowing summary describes the three classes of shares
offered by each Fund:
Class A Shares
. available at net asset value plus an up-front sales
charge
. certain purchasers qualify for a reduction or waiver
of the up-front sales charge
. annual service fee to compensate securities dealers
who have sales agreements with Nuveen ("Authorized
Dealers") for providing you with ongoing account
services
Class C Shares
. available at net asset value without any up-front
sales charge
. annual distribution fee to compensate Authorized
Dealers over time for the sale of Fund shares
. automatic tax-free conversion to Class A Shares six
years after purchase
. annual service fee to compensate Authorized Dealers
for providing you with ongoing account services
. 1% CDSC on shares purchsed on or after June 13, 1995
and redeemed within 12 months of purchase
Class R Shares
. if you owned Fund shares as of September 6, 1994,
those shares have been designated as Class R Shares
. available for purchase under certain limited circum-
stances, or by specified investors, at net asset
value without any sales charge or annual distribution
or service fees
See "Flexible Sales Charge Program" and "How to Buy
Fund Shares" for additional information about the three
classes of shares offered by each Fund.
7
<PAGE>
------------------------------------------------------------------------------
AUTOMATIC The Funds offer a number of investment options, includ-
DEPOSIT PLANS ing automatic deposit, direct deposit and payroll de-
duction, to help you add to your account on a regular
basis.
AUTOMATIC All monthly dividends or capital gains paid by your
REINVESTMENT Fund on each class of shares will be reinvested auto-
matically 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 investment trust (a "Nuveen UIT") may be used to
buy Class A Shares and, under certain circumstances,
Class R Shares of a Fund, in either case without a
sales charge at net asset value.
EXCHANGE Shares of a class of either of the Funds may be quickly
PRIVILEGE and easily exchanged by telephone, without a sales
charge, for shares of the same or equivalent class of
another Nuveen Mutual Fund or for shares of certain
Nuveen money market funds. Class R Shares of a Fund may
be exchanged for Class A Shares of the same 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 of that Fund.
LIQUIDITY
You may redeem all or a portion of your Fund shares on
any business day at the net asset value next computed
for the class of shares you are redeeming. An investor
purchasing Class C Shares on or after June 13, 1995
agrees to pay a CDSC of 1% if Class C Shares are re-
deemed within 12 months of purchase. Each Fund will re-
deem shares at net asset value and deduct any applica-
ble CDSC from the proceeds of the 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 If you own shares totalling $10,000 or more, you can
WITHDRAWAL arrange to have $50 or more sent to you from your ac-
count either monthly or quarterly.
TELEPHONE You may establish free telephone redemption privileges
REDEMPTIONS for your account.
NO REDEMPTION There are no fees imposed by the Funds for selling
FEES 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.
8
<PAGE>
-
------------------------------------------------------------------------------
RISKS AND You should consider certain other factors about the
SPECIAL Funds before investing. As with other bond mutual funds
CONSIDERATIONS or any long-term, fixed income investment, the value of
a Fund's portfolio will tend to vary inversely with
changes in prevailing interest rates. Accordingly, each
Fund should be considered a long-term investment, de-
signed to provide the best results when held for a mul-
ti-year period. A Fund may not be suitable if you have
a short-term investment horizon. Additionally, each
Fund's portfolio may be susceptible to political, eco-
nomic or regulatory developments affecting issuers of
California Municipal Obligations. The Funds also have
the ability to engage in certain investment practices,
including the purchase of California Municipal Obliga-
tions that pay interest subject to the federal alterna-
tive minimum tax, the purchase or sale of securities on
a when-issued or delayed delivery basis, the purchase
or sale of municipal lease and installment purchase ob-
ligations, and the purchase or sale of futures or op-
tions for hedging purposes. As described elsewhere in
this Prospectus, the Funds have no present intention of
purchasing or selling futures or options, and may en-
gage in the other investment practices listed above
only under strict limits.
9
<PAGE>
FINANCIAL HIGHLIGHTS
The following financial information has been de-
rived from Nuveen California Tax-Free Fund, Inc.'s
financial statements, which have been audited by
Arthur Andersen LLP, independent public accoun-
tants, 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 informa-
tion can be obtained without charge by writing to
Nuveen California Tax-Free Fund, Inc.
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Income from investment
operations Less distributions
-------------------------------------------------------------------------
Net realized
Net and unrealized Dividends
asset value Net gain (loss) from net Distributions
beginning investment from investment from
of period income investments+++ income capital gains
- --------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
CA
- --------------------------------------------------------------------------------------------------
Class A
9/7/94 to
2/28/95 $10.210 $.270* $(.031) $(.275) $(.074)
Class C
9/19/94 to 2/28/95 10.040 .218* .139 (.223) (.074)
Class R
Year ended, 2/28/95 10.740 .582 (.531) (.587) (.074)
2/28/94 10.850 .598 (.054) (.596) (.058)
2/28/93 10.140 .633 .707 (.626) (.004)
8 Months ended 2/29/92 9.920 .429 .218 (.427) --
Year ended, 6/30/91 9.790 .639 .133 (.642) --
6/30/90 9.850 .641 (.058) (.643) --
6/30/89 9.240 .649* .610 (.649) --
6/30/88 9.280 .647* (.040) (.647) --
6/30/87** 9.600 .652* (.320) (.652) --
- --------------------------------------------------------------------------------------------------
</TABLE>
See notes on page 12.
10
<PAGE>
FINANCIAL HIGHLIGHTS (CONTINUED)
On September 6, 1994, the Fund commenced selling
Class A and Class C Shares. All Fund shares out-
standing as of September 6, 1994, have been desig-
nated as Class R Shares.
Selected data for a Class A, Class C and Class R
Share outstanding throughout each period is as fol-
lows:
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Ratios/Supplemental data
---------------------------------------------------------------
Net
asset Total return Ratio of net
value on Net assets Ratio of investment income
end of net asset end of period expenses to average to average Portfolio
period value++ (in thousands) net assets net assets turnover rate
- --------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
- --------------------------------------------------------------------------------------------
$10.100 2.52% $ 3,146 1.00%*+ 5.81%*+ 32%
10.100 3.71 200 1.75*+ 5.03*+ 32
10.130 .78 208,080 .71 5.83 32
10.740 5.08 218,430 .73 5.47 19
10.850 13.66 183,215 .71 6.05 5
10.140 6.61 133,377 .67+ 6.30+ --
9.920 8.16 107,508 .69 6.48 15
9.790 6.14 78,704 .69 6.51 8
9.850 14.12 52,048 .75* 6.79* 22
9.240 6.87 29,640 .70* 7.09* 48
9.280 3.28 19,094 .18* 6.62* 17
- --------------------------------------------------------------------------------------------
</TABLE>
11
<PAGE>
FINANCIAL HIGHLIGHTS (CONTINUED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Income from investment
operations Less distributions
-------------------------------------------------------------------
Net realized
Net and unrealized Dividends
asset value Net gain (loss) from net Distributions
beginning investment from investment from
of period income investments+++ income capital gains
- --------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
CA INS
- --------------------------------------------------------------------------------------------
Class A
9/7/94 to
2/28/95 $10.220 $.255* $.068 $(.265) $(.028)
Class C
9/13/94 to 2/28/95 10.060 .210* .123 (.215) (.028)
Class R
Year ended, 2/28/95 10.670 .559 (.412) (.559) (.028)
2/28/94 10.850 .560 (.101) (.556) (.083)
2/28/93 10.010 .584 .871 (.579) (.036)
8 Months ended 2/29/92 9.650 .401 .360 (.401) --
Year ended, 6/30/91 9.480 .600 .176 (.606) --
6/30/90 9.630 .608 (.151) (.607) --
6/30/89 9.020 .607 .610 (.607) --
6/30/88 8.980 .600* .040 (.600) --
6/30/87** 9.600 .630* (.620) (.630) --
- --------------------------------------------------------------------------------------------
</TABLE>
* Reflects the waiver of certain management fees and reimbursement of certain
other expenses by Nuveen Advisory. For additional information about Nuveen
Advisory's fee waivers and expense reimbursement, see note 7 of Notes to
Financial Statements in the Annual Report to Shareholders.
** Shares in the California and California Insured Funds were first offered for
sale on July 1, 1986.
+ Annualized.
++ Total Return on Net Asset Value is the combination of reinvested dividend
income, reinvested capital gain distributions if any, and changes in net asset
value per share.
+++ Net of taxes, if applicable. See note 1 of Notes to Financial Statements in
the Annual Report to Shareholders.
12
<PAGE>
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Ratios/Supplemental data
------------------------------------------------------------------
Net
asset Ratio of net
value Net assets Ratio of investment income Portfolio
end of Total return on end of period expenses to average to average turnover
period net asset value++ (in thousands) net assets net assets rate
- -----------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
- -----------------------------------------------------------------------------------------------
$ 10.250 3.33% $ 4,753 1.05%*+ 5.45%*+ 25%
10.150 3.45 222 1.80*+ 4.69*+ 25
10.230 1.68 198,928 .70 5.60 25
10.670 4.27 208,115 .71 5.12 14
10.850 15.05 168,852 .75 5.72 9
10.010 7.99 100,933 .64+ 5.97+ 7
9.650 8.43 74,551 .68 6.26 29
9.480 4.93 50,625 .70 6.36 13
9.630 13.97 35,032 .82 6.52 23
9.020 7.44 22,394 .82* 6.77* 31
8.980 (.13) 16,192 .17* 6.48* 4
- -----------------------------------------------------------------------------------------------
</TABLE>
13
<PAGE>
WHO IS RESPONSIBLE FOR THE OPERATION OF THE FUNDS?
The following organizations work together to provide the
services and features offered by the Funds:
<TABLE>
<CAPTION>
ORGANIZATION FUNCTION DUTIES
--------------------------------------------------------------------
<C> <C> <S>
John Nuveen & Co. Incor- Fund Sponsor and Prin- Sponsors and manages the
porated cipal offering of Fund shares;
("Nuveen") Underwriter provides certain
administrative services
Nuveen Advisory Corp. Investment Adviser Manages the Funds'
("Nuveen Advisory") investment portfolios
and provides day-to-day
administrative services
to the Funds
Shareholder Services, Transfer Agent; Share- Maintains shareholder
Inc. holder accounts, handles share
("SSI") Services Agent; Divi- redemptions and
dend exchanges and dividend
Paying Agent payments
United States Trust Com- Custodian Maintains custody of the
pany Funds' investments and
of New York ("US Trust") provides certain
accounting services to
the Funds
</TABLE>
The Chase Manhattan Bank, N.A., has agreed to become
successor to U.S. Trust, as Custodian and Fund Accoun-
tant. The succession is presently scheduled for July 2,
1995. No changes in the Funds' administration or in the
amount of fees and expenses paid by the Funds for these
services will result, and no action by shareholders will
be required.
14
<PAGE>
INVESTMENT WHAT ARE THE FUNDS' INVESTMENT OBJECTIVES AND POLICIES?
OBJECTIVES The investment objective of each Fund is to provide you
with as high a level of current interest income exempt
Each Fund is from both regular federal and applicable California per-
designed to sonal income taxes as is consistent, in the view of the
provide income Fund's management, with preservation of capital. This
free from federal investment objective is a fundamental policy of each
and California Fund and may not be changed without the approval of the
state personal holders of a majority of the shares of that Fund. There
income taxes. can be no assurance that the investment objective of ei-
ther Fund will be achieved.
HOW THE FUNDS Value Investing. Nuveen Advisory believes that in any
PURSUE THEIR market environment there are quality Municipal Obliga-
OBJECTIVES tions whose current price, yield, credit quality and fu-
ture prospects make them seem underpriced or exception-
The Funds seek ally attractive when compared with other Municipal Obli-
Municipal gations in the market. Value investing for the Califor-
Obligations nia Insured Fund will ordinarily involve purchases of
considered to be undervalued or underrated uninsured Municipal Obliga-
undervalued. tions which would then be covered by insurance, or un-
dervalued insured Municipal Obligations. In selecting
investments for the Funds, Nuveen Advisory will attempt
to identify and purchase those undervalued or underrated
California Municipal Obligations that meet the invest-
ment criteria of each Fund and that in each case offer
the best values among California Municipal Obligations
of similar credit quality. By selecting these Municipal
Obligations, each 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 posi-
tion each Fund to achieve its investment objective of as
high a level of current interest income exempt from both
regular federal and applicable California personal in-
come taxes as is consistent, in the view of the Fund's
management, with preservation of capital. The California
Insured Fund's policy of investing in insured California
Municipal Obligations may limit the extent to which it
will achieve its value investing strategy. Any net capi-
tal appreciation realized by a Fund will generally re-
sult in the distribution of taxable gains to Fund share-
holders. See "Distributions and Taxes."
Thorough research The Importance of Thorough Research. Successful value
can help identify investing depends on identifying and purchasing under-
values. valued or underrated securities before the rest of the
marketplace finds them. Nuveen Advisory believes the mu-
nicipal market provides these opportunities, in part be-
cause of the relatively large number of issuers of tax-
exempt securities and the relatively small number of
full-time, professional municipal market analysts. For
15
<PAGE>
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
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.
Which Municipal Obligations Are Selected As
Investments? Each Fund will invest primarily in Munici-
pal Obligations issued within the State of California so
that the interest income on the Municipal Obligations
will be exempt from both regular federal and applicable
California personal income taxes. Because of the differ-
ences described below in the investment policies of each
Fund, there will be differences in the yields on each
Fund's classes of shares and in the degree of market and
financial risk to which each Fund is subject.
The California The California Fund's investment assets will consist of:
Fund will seek to
purchase . California Municipal Obligations rated investment
investment grade grade at the time of purchase (Baa or BBB or better)
quality by Moody's Investors Service, Inc. ("Moody's") or
California Standard and Poor's Corporation ("S&P");
Municipal
Obligations. . unrated California Municipal Obligations of investment
grade quality in the opinion of Nuveen Advisory, with
no fixed percentage limitations on these unrated Mu-
nicipal Obligations; 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 out-
standing investment characteristics and in fact have
speculative characteristics as well, while Municipal Ob-
ligations rated BBB are regarded by S&P as having an ad-
equate capacity to pay principal and interest. The Cali-
fornia 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 Cali-
fornia Fund intends to emphasize investments in Munici-
pal 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
16
<PAGE>
depending on market conditions in order to help limit
the California Fund's exposure to market risk. As a re-
sult, the California Fund's portfolio at any given time
may include both long-term and intermediate-term Munici-
pal Obligations.
Under ordinary circumstances, the California Fund will
invest substantially all (at least 80%) of its net as-
sets in California 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 California Fund's net
assets.
The California Under ordinary circumstances, the California Insured
Insured Fund will Fund will invest (1) substantially all (at least 80%) of
seek to purchase its net assets in California Municipal Obligations which
insured are either covered by insurance guaranteeing the timely
California payment of principal and interest or backed by an escrow
Municipal or trust account containing sufficient U.S. Government
Obligations. or U.S. Government agency securities to ensure timely
payment of principal and interest and which meet the in-
vestment criteria of the California Fund, and (2) not
more than 20% of its net assets in "temporary invest-
ments," within the limitations and for the purposes de-
scribed below, provided that temporary investments sub-
ject to regular federal income tax and AMT Bonds may not
comprise more than 20% of the California Insured Fund's
net assets. The California Insured Fund will pursue the
same investment policies as the California Fund with re-
spect to AMT Bonds and the average maturity of its port-
folio.
The foregoing investment policies are fundamental poli-
cies of each Fund and may not be changed without the ap-
proval of the holders of a majority of the shares of
that Fund.
California Each insured California Municipal Obligation held by the
Municipal California Insured Fund will either be (1) covered by an
Obligations can insurance policy applicable to a specific security and
be insured in one obtained by the issuer of the security or a third party
of three ways. at the time of original issuance ("Original Issue Insur-
ance"), (2) covered by an insurance policy applicable to
a specific security and obtained by the California In-
sured Fund or a third party subsequent to the time of
original issuance ("Secondary Market Insurance"), or (3)
covered by a master municipal insurance policy purchased
by the California Insured Fund ("Portfolio Insurance").
The California Insured Fund currently maintains policies
of Portfolio Insurance with MBIA Insurance Corporation,
AMBAC Indemnity Corporation, Financial Security Assur-
ance, Inc., and Financial Guaranty Insurance Company,
and may in the future obtain other policies of Portfolio
Insurance depending on the availability
17
<PAGE>
of these policies on terms favorable to the California
Insured Fund. However, the California Insured Fund may
determine not to obtain these policies and to emphasize
investments in California Municipal Obligations insured
under Original Issue Insurance or Secondary Market In-
surance. In any event, the California Insured Fund will
only obtain policies of Portfolio Insurance issued by
mono-line insurers specializing in insuring municipal
debt, whose claims-paying ability is rated Aaa by
Moody's or AAA by S&P. In determining whether to insure
Municipal Obligations held by the California Insured
Fund, an insurer will apply its own standards, which
correspond generally to the standards it has established
for determining the insurability of new issues of Munic-
ipal Obligations. See the Statement of Additional Infor-
mation for further information about each type of insur-
ance described above.
In addition to insured California Municipal Obligations,
the California Insured Fund may invest in California Mu-
nicipal Obligations that are entitled to the benefit of
an escrow or trust account which contains securities is-
sued or guaranteed by the U.S. Government or U.S. Gov-
ernment agencies, backed by the full faith and credit of
the United States, and sufficient in amount to ensure
the payment of interest and principal on the original
interest payment and maturity dates ("collateralized ob-
ligations"). Collateralized obligations generally will
not be insured and are regarded as having the credit
characteristics of the underlying U.S. Government or
U.S. Government agency securities. Uninsured collateral-
ized obligations will not constitute more than 20% of
the California Insured Fund's net assets.
The California One or more policies of Portfolio Insurance may provide
Insured Fund may the California Insured Fund, pursuant to an irrevocable
insure commitment of the insurer, with the option to exercise
permanently the right to obtain permanent insurance ("Permanent In-
Municipal surance") with respect to a Municipal Obligation that is
Obligations to be sold by the California Insured Fund. The Califor-
covered by nia Insured Fund would exercise the right to obtain Per-
Portfolio manent Insurance upon payment of a single, predetermined
Insurance. insurance premium payable from the proceeds of the sale
of that Municipal Obligation. It is expected that the
California Insured Fund will exercise the right to ob-
tain Permanent Insurance for a Municipal Obligation only
if, in the opinion of Nuveen Advisory, upon exercise the
net proceeds from the sale by the California Insured
Fund of that obligation, as insured, would exceed the
proceeds from the sale of that obligation without insur-
ance.
Premiums for a Portfolio Insurance policy are paid by
the California Insured Fund monthly, and are adjusted
for purchases and sales of California Municipal Obliga-
tions covered by the policy during the month. The
18
<PAGE>
yield on the California Insured Fund is reduced to the
extent of the insurance premiums it pays. Depending upon
the characteristics of the California Municipal Obliga-
tions held by the California Insured Fund, the annual
premium rate for the policies of Portfolio Insurance is
estimated to range from .15% to .30% of the value of the
California Municipal Obligations covered under the poli-
cies. Because the majority of California Municipal Obli-
gations in the California Insured Fund were not covered
by policies of Portfolio Insurance during the fiscal
year ended February 28, 1995, total premiums as a per-
centage of the value of the California Municipal Obliga-
tions held by the California Insured Fund (.01%) were
significantly less than that estimated rate.
DESCRIPTION OF Municipal Obligations. Municipal Obligations, as the
THE FUNDS' term is used in this Prospectus, are federally tax-ex-
INVESTMENTS empt debt obligations issued by states, cities and local
authorities and by certain U.S. possessions or territo-
Municipal ries to obtain funds for various public purposes, such
Obligations as the construction of public facilities, the payment of
are issued by general operating expenses and the refunding of out-
states, cities standing debts. They may also be issued to obtain fund-
and local ing for various private activities, including loans to
authorities to finance the construction of housing, educational and
support a variety medical facilities or privately owned industrial devel-
of public opment and pollution control projects.
activities.
The two principal classifications of Municipal Obliga-
tions 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 facil-
ity 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 gener-
ally 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 obli-
gations (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 in-
stallment payments depends on money being appropriated
each year for this purpose. Each Fund will seek to mini-
mize 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 obliga-
tions that meet certain criteria of the Fund. See the
Statement of Additional Information for further informa-
tion about lease obligations.
19
<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 Obliga-
tions 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 the
Funds will change in response to interest rate changes;
they will tend to decrease when interest rates rise and
increase when interest rates fall.
All temporary Temporary Investments. Each Fund under ordinary circum-
investments will stances may invest up to 20% of its net assets in "tem-
be U.S. porary investments," but may invest without limit in
Government or temporary investments during temporary defensive periods
high quality in order to limit the exposure of its portfolio to mar-
securities. ket risk from temporary imbalances of supply and demand
or other temporary circumstances affecting the municipal
market. Each Fund will seek to make temporary invest-
ments in short-term securities the interest on which is
exempt from regular federal income tax, but may be sub-
ject to California state income tax. If suitable feder-
ally tax-exempt temporary investments are not available
at reasonable prices and yields, a Fund may make tempo-
rary investments in taxable securities whose interest is
subject to both California state and federal income tax-
es. A 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. A Fund
will not be in a position to achieve its investment ob-
jective of tax-exempt income to the extent it invests in
taxable temporary investments. See the Statement of Ad-
ditional Information for further information about the
temporary investments in which the Funds may invest.
20
<PAGE>
SPECIAL FACTORS California Municipal Obligations are issued by the State
PERTAINING TO of California and cities and local authorities in the
CALIFORNIA State of California, and bear interest that is exempt
MUNICIPAL from regular federal and applicable California personal
OBLIGATIONS income taxes, although the interest on these Municipal
Obligations may be subject to the federal alternative
minimum tax. The Funds will invest primarily in Califor-
nia Municipal Obligations that are issued by the State
of California and cities and local authorities in the
State of California, except that the Funds may invest
not more than 10% of their net assets in Municipal Obli-
gations issued by certain U.S. possessions or territo-
ries, which also bear interest that is exempt from regu-
lar federal as well as applicable California personal
income taxes and are therefore considered to be Califor-
nia Municipal Obligations for purposes of this Prospec-
tus.
Because each Fund will concentrate its investment in
California Municipal Obligations, it may be affected by
political, economic or regulatory factors that may im-
pair the ability of issuers in that state to pay inter-
est on or to repay the principal of their debt obliga-
tions. These special factors are briefly described in
Appendix A to this Prospectus. See the Statement of Ad-
ditional Information for further information about these
factors.
CERTAIN Portfolio Trading and Turnover. Each Fund will make
INVESTMENT changes in its investment portfolio from time to time in
STRATEGIES AND order to take advantage of opportunities in the munici-
LIMITATIONS pal market and to limit exposure to market risk. A Fund
may engage to a limited extent in short-term trading
Each Fund will consistent with its investment objective, but a Fund
focus on long- will not trade securities solely to realize a profit.
term investment Changes in a Fund's investments are known as "portfolio
strategies, and turnover." While each Fund's annual portfolio turnover
will engage in rate is not expected to exceed 50%, actual portfolio
short-term turnover rates are impossible to predict, and may exceed
trading only when 50% in particular years depending upon market condi-
consistent with tions.
its stated
investment When-issued or Delayed Delivery Transactions. A Fund may
objective. purchase and sell Municipal Obligations on a when-issued
or delayed delivery basis, which calls for the Fund to
make payment or take delivery at a future date, normally
15-45 days after the trade date. The commitment to pur-
chase 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
21
<PAGE>
delayed delivery transactions in order to manage its op-
erations more effectively. See the Statement of Addi-
tional Information for further information about when-
issued and delayed delivery transactions.
The Funds do not Financial Futures and Options Transactions. Although the
presently intend Funds have no present intent to do so, each Fund re-
to use futures or serves the right to engage in certain hedging transac-
options. tions involving the use of financial futures contracts,
options on financial futures or options based on either
an index of long-term tax-exempt securities or on debt
securities whose prices, in the opinion of Nuveen Advi-
sory, correlate with the prices of the Fund's invest-
ments. These hedging transactions are designed to limit
the risk of fluctuations in the prices of a Fund's in-
vestments. See the Statement of Additional Information
for further information on futures and options and asso-
ciated risks.
Each Fund will Other Investment Policies and Restrictions. Each Fund
take steps to has adopted certain fundamental policies intended to
ensure that its limit the risk of its investment portfolio. In accor-
assets are not dance with these policies, each Fund may not:
concentrated in
just a few . invest more than 5% of its total assets in securities
holdings. of any one issuer, except that this limitation shall
not apply to securities of the U.S. government, its
agencies and instrumentalities or to the investment of
25% of the Fund's assets;
. invest more than 5% of its total assets in securities
of unseasoned issuers which, together with their pred-
ecessors, have been in operation for less than three
years;
. invest more than 10% of its assets in illiquid munici-
pal lease obligations and other securities that are
unmarketable, illiquid or not readily marketable (se-
curities that cannot reasonably be sold within seven
days, including repurchase agreements maturing in more
than seven days);
. invest more than 25% of its total assets in securities
of issuers in any one industry, provided, however,
that such limitation shall not be applicable to Munic-
ipal Obligations issued by governments or political
subdivisions of governments, and obligations issued or
guaranteed by the U.S. Government, its agencies or in-
strumentalities;
. borrow money, except from banks for temporary or emer-
gency purposes and then only in an amount not exceed-
ing (a) 10% of the value of its total assets at the
time of borrowing or (b) one-third of the value of its
total assets, including the amount borrowed, in order
to meet redemption requests which might otherwise re-
quire the untimely disposition of securities; or
22
<PAGE>
. 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 instru-
ment will generally be considered a separate security.
See the Statement of Additional Information for a more
complete description of the fundamental investment poli-
cies summarized above and the Funds' other fundamental
investment policies. Each Fund's fundamental investment
policies may not be changed without the approval of the
Fund's shareholders.
FLEXIBLE SALES CHARGE PROGRAM
Each Fund offers For many investors, working with a professional finan-
various sales cial adviser is an important part of their financial
charge options strategy. Because Nuveen recognizes the value a finan-
designed to meet cial adviser can provide in developing and implementing
your individual a comprehensive plan for your financial future, Nuveen
investment needs Mutual Funds are sold with a sales charge, either at the
and preferences. time of purchase or at the time of redemption (in the
case of Class C Shares purchased on or after June 13,
1995 and redeemed within 12 months of purchase), or over
time in the form of a distribution fee. This provides
your financial adviser with compensation for the profes-
sional advice and service you receive in financial plan-
ning and investment selection.
Each Fund has adopted a Flexible Sales Charge Program
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. 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
designed to compensate Authorized Dealers over time for
the sale of Fund shares and a 1% CDSC if Class C Shares
are purchased on or after June 13, 1995 and redeemed
within 12 months of purchase. See "How to Buy Fund
Shares--Class C Shares" and "How to Redeem Funds
Shares." Class C Shares automatically convert to Class A
Shares six years after purchase. Both Class A Shares and
Class C Shares are also subject to annual service fees,
which are used to compensate Authorized
23
<PAGE>
Dealers for providing you with ongoing account services.
Under the Flexible Sales Charge Program, all Fund shares
outstanding as of September 6, 1994, have been desig-
nated as Class R Shares. Class R Shares are available
for purchase at a price equal to their net asset value
only under certain limited circumstances, or by speci-
fied investors, as described herein. The price at which
the purchase of any Fund's shares is effected is based
on the next calculation of the Fund's net asset value
after the order is placed.
Which Option is
Right For You? When you purchase Class A Shares of a Fund, you will pay
an up-front sales charge. As a result, you will have
less money 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 of a Fund, you will not pay an up-front
sales charge and all of your monies will be fully in-
vested at the time of purchase. However, Class C Shares
are subject to an annual distribution fee to compensate
Authorized Dealers over time for the sale of Fund shares
and a CDSC of 1% if purchased on or after June 13, 1995
and redeemed within 12 months of purchase. Class C
Shares automatically convert to Class A Shares six years
after purchase. 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 A Shares and Class C Shares are
also subject to annual service fees which are identical
in amount and which 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 on a purchase of Class A Shares, as de-
scribed below under "How the Sales Charge on Class A
Shares May Be Reduced or Waived." Under certain limited
circumstances, Class R Shares are available for purchase
at a price equal to their net asset value.
In deciding whether to purchase Class A Shares, Class C
Shares or Class R Shares of a Fund, you should consider
all relevant factors, including the dollar amount of
your purchase, the length of time you expect to hold the
shares, 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, and whether or not you will be reinvesting in-
come or capital gain distributions in additional shares.
For assistance with this decision, please refer to the
tables under "Summary of Fund Expenses" on page 3 of
this Prospectus which set forth examples of the expenses
applicable to each class of shares, or consult your fi-
nancial adviser.
Differences Each class of shares of a Fund represents an interest in
Between the the same portfolio of investments. Each class of shares
Classes of Shares of a Fund is identical in all respects
24
<PAGE>
except that each class bears its own class expenses, in-
cluding administration and distribution expenses, 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 purchased on or
after June 13, 1995 and redeemed within 12 months of
purchase, as described below. As a result of the differ-
ences 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 each 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 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 amend-
ed.
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 pro-
viding 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. 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.
HOW TO BUY FUND SHARES
CLASS A SHARES You may purchase Class A Shares of any Fund at a public
offering price equal to the applicable net asset value
Class A Shares per share plus an up-front sales charge imposed at the
are offered at time of purchase as set forth below. You may qualify for
their net asset a reduced sales charge, or the sales charge may be
value plus an waived in its entirety, as described below under "How
up-front sales the Sales Charge on Class A Shares May Be Reduced or
charge. Waived." Class A Shares are also subject to an annual
service fee to compensate Authorized Dealers for provid-
ing you with ongoing account services. See "Distribution
and Service Plans."
25
<PAGE>
The sales charges for each Fund's Class A Shares are as
follows:
<TABLE>
<CAPTION>
SALES CHARGE SALES CHARGE REALLOWANCE
AS % OF PUBLIC AS % OF NET AS % OF PUBLIC
AMOUNT OF PURCHASE OFFERING PRICE AMOUNT 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 1.00% 1.01% 1.00%
$2,500,000 but less than $5,000,000 0.75% 0.76% 0.75%
$5,000,000 and over 0.50% 0.50% 0.50%
</TABLE>
The Funds receive 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 Sales Charge Program--Dealer Incentives" above
for more information about reallowances and other com-
pensation to Authorized Dealers.
Certain commercial banks may make Class A Shares of the
Funds 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 reg-
ister as Authorized Dealers in certain states.
HOW THE SALES Summary. There are several ways to reduce or eliminate
CHARGE ON CLASS A the sales charge:
SHARES MAY BE
REDUCED OR WAIVED . cumulative discount;
There are several . letter of intent;
ways to reduce or
eliminate the . group purchase programs; and
sales charge.
. special sales charge waivers for certain categories of
investors.
Cumulative Discount. You may qualify for a reduced sales
charge as shown above on a purchase of Class A Shares of
either Fund if the amount of your purchase, when added
to the value that day of all of your prior purchases of
shares of either 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 fi-
nancial adviser must notify Nuveen or SSI of any cumula-
tive discounts whenever you plan to purchase Class A
Shares of a Fund that you wish to qualify for a reduced
sales charge.
26
<PAGE>
Letter of Intent. You may qualify for a reduced sales
charge on a purchase of Class A Shares of either Fund 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 com-
plete 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, over the next 13 months to purchase 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 on-
going distribution fee and any Class C Shares of a
Nuveen Mutual Fund that you purchase over the next 13
months towards 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 distribu-
tions from a Nuveen Mutual Fund or a Nuveen UIT, or oth-
erwise.
By establishing a Letter of Intent, you agree that your
first purchase of Class A Shares of a Fund following ex-
ecution 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 pur-
chases, 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 ad-
ditional 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
27
<PAGE>
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.
Group Purchase Programs. If you are a member of a quali-
fied group, you may purchase Class A Shares of either
Fund or of another Nuveen Mutual Fund 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 mail-
ings to members and has agreed to comply with certain
administrative requirements relating to its group pur-
chases.
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 dis-
tributions by a Fund will be reinvested in additional
Class A Shares of same 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 appli-
cation materials, which the group administrator may ob-
tain 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 State-
ment of Additional Information for more complete infor-
mation about "qualified groups" and group purchase pro-
grams.
Special Sales Charge Waivers. Class A Shares of any Fund
may be purchased at net asset value without a sales
charge and in any amount by the following categories of
investors:
. officers, directors and retired directors of the
Funds;
. bona fide, full-time and retired employees of Nuveen,
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 of-
ficer, director or bona fide employee of any Autho-
rized Dealer, or their immediate family members;
28
<PAGE>
. officers and directors of bank holding companies that
make Fund shares available directly or through subsid-
iaries 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; and
. registered investment advisers, certified financial
planners and registered broker-dealers who in each
case either charge periodic fees to their customers
for financial planning, investment advisory or asset
management services, or provide such services in con-
nection with the establishment of an investment ac-
count for which a comprehensive "wrap fee" charge is
imposed.
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 Funds. You or
your securities representative must notify Nuveen or SSI
whenever you make a purchase of Class A Shares of any
Fund 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 of any
Fund, as described below under "Class R Shares."
You may also purchase Class A Shares of either Fund at
net asset value without a sales charge if the purchase
takes place through a broker-dealer and represents the
reinvestment of the proceeds of the redemption of shares
of one or more registered investment companies not af-
filiated with Nuveen. You must provide appropriate docu-
mentation 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. Finally, Class A Shares
of either Fund may be issued at net asset value without
a sales charge in connection with the acquisition by a
Fund of another investment company. All purchases under
the special sales charge waivers will be subject to min-
imum purchase requirements as established by the Funds.
--------------------------------
In determining the amount of your purchases of Class A
Shares of any Fund 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 pro-
gram as described above.
29
<PAGE>
The reduced sales charge programs may be modified or
discontinued by the Funds at any time upon prior written
notice to shareholders of the Funds.
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.
CLASS C SHARES You may purchase Class C Shares of either Fund at a pub-
lic offering price equal to the applicable net asset
Class C Shares value per share without any up-front sales charge. Class
may be purchased C Shares are subject to an annual distribution fee to
at their net compensate Authorized Dealers over time for the sale of
asset value, and Fund shares. See "Flexible Sales Charge Program--Dealer
are subject to an Incentives" above for more information about Compensa-
annual tion to Authorized Dealers. Class C Shares are also sub-
distribution fee. ject to an annual service fee to compensate Authorized
Dealers for providing you with ongoing financial advice
and other services. See "Distribution and Service
Plans."
An investor purchasing Class C Shares on or after June
13, 1995 agrees to pay a CDSC of 1% if Class C Shares
are redeemed within 12 months of purchase. Each Fund
will redeem shares at net asset value and deduct any ap-
plicable CDSC from the proceeds of the redemption.
The Class C shares of the applicable Fund will effec-
tively 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.
The CDSC will be the lower of (i) the net asset value of
Class C Shares at the time of purchase or (ii) the net
asset value of Class C Shares at the time of redemption
and will be charged for Class C Shares redeemed within
12 months of purchase. No CDSC will be charged on Class
C Shares purchased as a result of automatic reinvestment
of dividends or capital gains paid, or on exchanges for
Class C Shares of another Nuveen Mutual Fund or money
market fund. The CDSC will be calculated as if Class C
Shares not subject to a CDSC are redeemed first, except
if another order of redemption would result in a lower
charge. The CDSC will be waived for redemptions follow-
ing the disability (as determined in writing by the So-
cial Security Administration) or death of the sharehold-
er.
Class C Shares will automatically convert to Class A
Shares six years after purchase. All conversions will be
done at net asset value without the imposition of any
sales load, fee, or other charge, so that the value of
each
30
<PAGE>
shareholder's account immediately before conversion will
be the same as the value of the account immediately af-
ter conversion. Class C Shares acquired through rein-
vestment 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 Directors may determine from time to time. The auto-
matic 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 distribu-
tion fee, but they will remain subject to an annual
service fee which 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 re-
ceive 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 con-
tinuing availability of an opinion of counsel or a pri-
vate letter ruling from the Internal Revenue Service to
the effect that the conversion of shares would not con-
stitute 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.
CLASS R SHARES If you owned Fund shares as of September 6, 1994, those
shares have been designated as Class R Shares. Purchases
Class R Shares of additional Class R Shares of either Fund, which will
are offered at not be subject to any sales charge or any distribution
their net asset or service fee, will be limited to the following circum-
value. stances. You may purchase Class R Shares with monies
representing distributions from Nuveen-sponsored UITs
if, prior to September 6, 1994, you had purchased such
UITs and elected to reinvest distributions from such
UITs in shares of a Fund. You may also purchase Class R
Shares with monies representing dividends and capital
gain distributions on Class R Shares of a Fund. 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, directors and retired directors of the
Funds;
. bona fide, full-time and retired employees of Nuveen,
any parent company of Nuveen, and subsidiaries there-
of, or their immediate family members;
31
<PAGE>
. any person who, for at least 90 days, has been an of-
ficer, director or bona fide employee of any Autho-
rized Dealer, or their immediate family members;
. officers and directors of bank holding companies that
make Fund shares available directly or through subsid-
iaries 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, custodial or similar capacity; and
. registered investment advisers, certified financial
planners and registered broker-dealers who in each
case either charge periodic fees for financial plan-
ning, investment advisory or asset management servic-
es, or provide such services in connection with the
establishment of an investment account for which a
comprehensive "wrap fee" charge is imposed.
Investors who are eligible to purchase either Class R
Shares or Class A Shares of a Fund without a sales
charge at net asset value should be aware of the differ-
ences between these two classes of shares. Class A
Shares are subject to an annual service fee to compen-
sate 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 You may buy Fund shares through Authorized Dealers or by
SUBSEQUENT directing your financial adviser to call Nuveen toll-
PURCHASES OF free at 800-843-6765. You may pay for your purchase by
SHARES Federal Reserve draft or by check made payable to
"Nuveen California [Insured] Tax-Free Value Fund, Class
The Funds offer a [A], [C], [R]," delivered to the financial adviser
number of through whom the investment is to be made for forwarding
convenient ways to the Funds' shareholder services agent, SSI. When mak-
to purchase ing your initial investment, you must also furnish the
shares. 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 California [Insured] Tax-Free Value 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 a
Fund generally will not be accept-
32
<PAGE>
able. 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. Authorized Dealers and
other persons distributing the Funds' shares may receive
different compensation for selling different classes of
shares.
MINIMUM Generally, your first purchase of any class of a Fund's
INVESTMENT shares must be for $1,000 or more. Additional purchases
REQUIREMENTS may be in amounts of $100 or more. These minimums may be
changed at any time by the Funds. There are exceptions
to these minimums for shareholders who qualify under one
or more of the Funds' automatic deposit, group purchase
or reinvestment programs.
SYSTEMATIC The Funds offer you several opportunities to capture the
INVESTMENT benefits of "dollar cost averaging" through systematic
PROGRAMS 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. The chart below
shows the cumulative effect that compound interest can
have on a systematic investment program.
33
<PAGE>
The Power of a
Systematic
Investment
Program.
[GRAPH APPEARS HERE]
<TABLE>
<CAPTION>
TAXABLE
EQUIVALENT 30 YEAR 6 MONTH TAXABLE
DATE BB 20 TREASURY CD MMF
<S> <C> <C> <C> <C>
1/86 12.63% 9.40% 7.54% 7.15%
1/87 10.41% 7.39% 5.60% 5.50%
1/88 12.08% 8.83% 6.75% 6.50%
1/89 11.48% 8.93% 8.12% 8.36%
1/90 11.09% 8.26% 7.62% 7.75%
1/91 11.06% 8.27% 6.75% 6.89%
1/92 10.18% 7.75% 3.72% 4.13%
1/93 9.62% 7.34% 2.87% 2.84%
1/94 8.29% 5.54% 2.72% 2.71%
1/95 10.21% 7.85% 5.43% 5.13%
</TABLE>
--- 6% Compound Interest
--- 5% Compound Interest
--- 4% Compound Interest
--- No Interest
SOURCE: NUVEEN MARKETING RESEARCH DEPARTMENT
In the above example, it is assumed that $100 is added
to an investment account every month for 15 years. From
the same $1,000 beginning, the chart shows the amount
that would be in the account after 15 years, assuming no
interest and interest compounded annually at the rates
of 4%, 5% and 6%.
34
<PAGE>
This chart is designed to illustrate the effects of com-
pound interest, and is not intended to predict the re-
sults of an actual investment in a Fund. There are sev-
eral important differences between the Funds and the hy-
pothetical investment program shown. This example as-
sumes no gain or loss in the net asset value of the in-
vestment over the entire 15-year period, whereas the net
asset value of each of the Funds will rise and fall due
to market conditions or other factors, which could have
a significant impact on the total value of your invest-
ment. Similarly, this example shows four steady interest
rates over the entire 15-year period, whereas the divi-
dend rates of the Funds can be expected to fluctuate
over time. The Funds may provide additional information
to investors and advisers illustrating the benefits of
systematic investment programs and dollar cost averag-
ing.
The Funds offer The Funds offer two different types of systematic in-
automatic deposit vestment programs:
and payroll
deposit plans. Automatic Deposit Plan. Once you have established a
Class A Share account or Class C Share account, or if
you are eligible to purchase additional Class R Shares
in one of the Funds, 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 termi-
nate 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 Funds. To obtain an application form for the Au-
tomatic Deposit Plan, check the applicable box on the
enclosed Application Form or call Nuveen toll-free at
800-621-7227.
Payroll Direct Deposit Plan. Once you have established a
Class A Share or Class C Share account in one of the
Funds, you may, with your employer's consent, make regu-
lar 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 ob-
ligation 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 Funds. 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.
35
<PAGE>
OTHER SHAREHOLDER Exchange Privilege. You may exchange shares of a class
PROGRAMS of either Fund you own for shares of the same or equiva-
lent class of the other Fund or for shares of another
The Funds offer Nuveen Mutual Fund with reciprocal exchange privileges,
no-charge by sending a written request to the Fund, c/o Share-
exchanges with holder Services, Inc., P.O. Box 5330, Denver, CO 80217-
other Nuveen 5330. The shares to be purchased must be offered in your
Mutual Funds. state of residence and you must have held the shares you
are exchanging for at least 15 days. For example, Class
A Shares of a Fund may be exchanged for Class A Shares
of another Nuveen Mutual Fund at net asset value without
a sales charge. Similarly, Class A Shares of another
Nuveen Mutual Fund purchased subject to a sales charge
may be exchanged for Class A Shares of either Fund at
net asset value without a sales charge. Shares of any
Nuveen Mutual Fund purchased through dividend reinvest-
ment or through investment of Nuveen UIT distributions
may be exchanged for shares of a Fund or any other
Nuveen Mutual Fund without a sales charge. Exchanges of
shares from any Nuveen money market fund will be made
into Class A Shares or Class C Shares of either Fund at
the public offering price, which includes an up-front
sales charge in the case of Class A Shares, and will be
subject to an annual distribution fee in the case of
Class C Shares. If, however, a sales charge has previ-
ously been paid on the investment represented by the ex-
changed 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 a Fund may be exchanged
for shares of any Nuveen money market fund that does not
impose a sales charge or have any distribution or serv-
ice fees.
No CDSC will be charged on the exchange of Class C
Shares of a 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 ap-
plicable to Class C Shares will continue to run during
any period in which Class C Shares of a Fund, Class C
Shares of any other Nuveen Mutual Fund or shares of a
Nuveen money market fund are held.
You must exchange shares whose total value at least
equals the minimum investment requirement of the Nuveen
Mutual Fund being purchased. For federal income tax pur-
poses, 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
36
<PAGE>
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 at 800-
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 either
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 that Fund.
Reinstatement Privilege. If you have redeemed Class A
Shares of a Fund or Class A Shares of any other Nuveen
Mutual Fund that were subject to a sales charge, you may
reinvest without any added sales charge up to the full
amount of the redemption in Class A Shares of the Fund
at net asset value at the time of reinvestment. This re-
instatement privilege can be exercised only once for all
or a portion of the Class A Shares you redeemed and must
be exercised within 90 days of the date of the redemp-
tion. As applied to Class C Shares of a Fund or of any
other Nuveen Mutual Fund, this reinstatement privilege,
if exercised within 90 days of the date of the redemp-
tion, will preserve the number of years credited to your
ownership of Class C Shares for purposes of the conver-
sion of these Class C Shares to Class A Shares. Any CDSC
charged if the shares were purchased on or after June
13, 1995 and redeemed within 12 months of purchase will
be refunded if ownership is reinstated within the 90 day
period. The tax consequences of any capital gain real-
ized on a redemption will not be affected by reinstate-
ment, but a capital loss may be disallowed in whole or
in part depending on the timing and amount of the rein-
vestment.
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 If you choose to invest in a Fund, an account will be
INFORMATION opened and maintained for you by SSI, the Funds' share-
holder services agent. Share certificates will be issued
to you only upon written request to SSI, and no certifi-
cates will be issued for fractional shares. Each 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
37
<PAGE>
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 inter-
nal recordkeeping requirements. An Authorized Dealer or
other investor requesting shareholder servicing or ac-
counting 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 ser- vices
to be provided.
Subject to the rules and regulations of the Securities
and Exchange Commission, Nuveen California Tax-Free
Fund, Inc. reserves the right to suspend the continuous
offering of shares of any of its Funds at any time,
but no suspension shall affect your right of redemption
as described below.
DISTRIBUTION AND SERVICE PLANS
Each 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 distribu-
tion or service fees.
The distribution fee applicable to Class C Shares under
each Fund's Plan will be payable to reimburse Nuveen for
services and expenses incurred in connection with the
distribution of Class C Shares. These expenses include
payments to Authorized Dealers, including Nuveen, who
are brokers of record with respect to the Class C
Shares, as well as, 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 litera-
ture and reports to shareholders used in connection with
the sale of Class C Shares, certain other expenses asso-
ciated 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 each Fund's Plan will be payable to Autho-
rized Dealers in connection with the provision of ongo-
ing account services to shareholders. These ser
vices may include establishing and maintaining share-
holder accounts, an-
38
<PAGE>
swering shareholder inquiries and providing other per-
sonal services to shareholders.
Each Fund may spend up to .25 of 1% per year of the av-
erage daily net assets of Class A Shares as a service
fee under the Plan applicable to Class A Shares. Each
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 appli-
cable to Class C Shares.
HOW TO REDEEM FUND SHARES
You may require a Fund at any time to redeem for cash
your shares of that Fund at the net asset value next
computed after instructions and required documents and
certificates, if any, are received in proper form. There
is no charge for the redemption of Class A Shares or
Class R Shares. An investor purchasing Class C Shares on
or after June 13, 1995 agrees to pay a CDSC of 1% of the
lower of (i) the net asset value of Class C Shares at
the time of purchase or (ii) the net asset value of
Class C Shares at the time of redemption, if such Class
C Shares are redeemed within 12 months of purchase. Each
Fund will redeem shares at net asset value and deduct
any applicable CDSC from the proceeds of redemption. No
CDSC will be charged on Class C Shares purchased as a
result of automatic reinvestment of dividends or capital
gains paid. The CDSC will be calculated as if Class C
Shares not subject to a CDSC are redeemed first, except
if another order of redemption would result in a lower
charge. The CDSC will be waived for redemptions follow-
ing the disability (as determined in writing by the So-
cial Security Administration) or death of the sharehold-
er. There is no CDSC on Class C Shares held more than 12
months.
The Funds offer a By Written Request. You may redeem shares by sending a
variety of written request for redemption directly to the applica-
redemption ble Fund, c/o Shareholder Services, Inc., P.O. Box 5330,
options. Denver, CO 80217-5330, accompanied by duly endorsed cer-
tificates, if issued. Requests for redemption and share
certificates, if issued, must be signed by each share-
holder, and, if the redemption proceeds exceed $25,000
or are payable other than to the shareholder of record
at the address of record (which address may not have
been changed in the preceding 60 days), the signature
must be guaranteed by a member of an approved Medallion
Guarantee Program or in such other
39
<PAGE>
manner as may be acceptable to the Fund. You will re-
ceive payment equal to the net asset value per share
next determined after receipt by the Fund of a properly
executed redemption request in proper form. A check for
the redemption proceeds will be mailed to you within
seven days after receipt of your redemption request.
However, if any shares to be redeemed were purchased by
check within 15 days prior to the date the redemption
request is received, a Fund will not mail the redemption
proceeds until the check received for the purchase of
shares has cleared, which may take up to 15 days.
By TEL-A-CHECK. If you have authorized telephone redemp-
tion and your account address has not changed within the
last 60 days, you can redeem shares that are held in
non-certificate form and that are worth $25,000 or less
by calling Nuveen at 800-621-7227. While you or anyone
authorized by you may make telephone redemption re-
quests, redemption checks will be issued only in the
name of the shareholder of record and will be mailed to
the address of record. If your telephone request is re-
ceived prior to 2:00 p.m. eastern time, the shares re-
deemed will earn income through the day the request is
made and the redemption check will be mailed the next
business day. For requests received after 2:00 p.m.
eastern time, the shares redeemed earn income through
the next business day and the check will be mailed on
the second business day after the request.
By TEL-A-WIRE. If you have authorized TEL-A-WIRE redemp-
tion, you can take advantage of the following expedited
redemption procedures to redeem shares held in non-cer-
tificate form that are worth at least $1,000. You may
make TEL-A-WIRE redemption requests by calling Nuveen at
800-621-7227. If a redemption request is received by
4:00 p.m. eastern time, the redemption will be made as
of 4:00 p.m. that day. If the redemption request is re-
ceived after 4:00 p.m. eastern time, the redemption will
be made as of 4:00 p.m. the following business day. Re-
demption proceeds will normally be wired on the second
business day following the redemption, but may be de-
layed one additional business day if the Federal Reserve
Bank of Boston or the Federal Reserve Bank of New York
is closed on the day redemption proceeds would ordinar-
ily be wired. The Funds reserve the right to charge a
fee for TEL-A-WIRE.
Before you may redeem shares by TEL-A-CHECK or TEL-A-
WIRE, you must complete the telephone redemption autho-
rization section of the enclosed Application Form and
return it to Nuveen or SSI. If you did not authorize
telephone redemption when you opened your account, you
may obtain a telephone redemption authorization form by
writing the Funds or by calling Nuveen toll-free at 800-
621-7227. Proceeds of share redemp-
40
<PAGE>
tions made by TEL-A-WIRE will be transferred by Federal
Reserve wire only to the commercial bank account speci-
fied 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 Medal-
lion Guarantee Program or in such manner as may be ac-
ceptable to the Funds. Further documentation may be re-
quired from corporations, executors, trustees or per-
sonal representatives.
For the convenience of shareholders, the Funds have au-
thorized Nuveen as their agent to accept orders from fi-
nancial advisers by wire or telephone for the redemption
of Fund shares. The redemption price is the first net
asset value determined following receipt of an order
placed by the financial adviser. A Fund makes payment
for the redeemed shares to the financial adviser who
placed the order promptly upon presentation of required
documents with signatures guaranteed as described above.
Neither the Funds nor Nuveen charges any redemption
fees. However, your financial adviser may charge you for
serving as agent in the redemption of shares.
The Funds reserve the right to refuse telephone redemp-
tions and, at their option, may limit the timing, amount
or frequency of these redemptions. This procedure may be
modified or terminated at any time, on 30 days' notice,
by the Funds. The Funds, SSI and Nuveen will not be lia-
ble for following telephone instructions reasonably be-
lieved to be genuine. The Funds employ procedures rea-
sonably designed to confirm that telephone instructions
are genuine. These procedures include recording all tel-
ephone instructions and requiring up to three forms of
identification prior to acting upon a caller's instruc-
tions. If a Fund does not follow reasonable procedures
for protecting shareholders against loss on telephone
transactions, it may be liable for any losses due to un-
authorized or fraudulent telephone instructions.
Automatic Withdrawal Plan. If you own Fund shares cur-
rently worth at least $10,000, you may establish an Au-
tomatic Withdrawal Plan by completing an 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.
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.
41
<PAGE>
The purchase of Class A Shares, other than through rein-
vestment, while you are participating in the Automatic
Withdrawal Plan with respect to Class A Shares will usu-
ally 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 pur-
chased on or after June 13, 1995 and held 12 months or
less will result in imposition of the 1% CDSC. Purchase
of new Class C Shares, other than through reinvestment,
while participating in the Automatic Withdrawal Plan may
be disadvantageous because the newly-purchased Class C
Shares will be subject to the 1% CDSC until 12 months
after purchase.
General. Each Fund may suspend the right of redemption
of Fund shares 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 nor-
mally 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 Ex-
change Commission by order may permit for protection of
Fund shareholders.
Each Fund may, from time to time, establish a minimum
total investment for Fund shareholders, and each Fund
reserves the right to redeem your shares if your invest-
ment is less than the minimum after giving you at least
30 days' notice. If any minimum total investment is es-
tablished, 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 a 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 that Fund.
MANAGEMENT OF THE FUNDS
Nuveen Advisory Board of Directors. The management of Nuveen California
has been managing Tax-Free Fund, Inc., including general supervision of
similar tax-free the duties performed for each Fund by Nuveen Advisory
funds since 1976, under the Investment Management Agreement, is the re-
and has sponsibility of its Board of Directors.
approximately $30
billion of assets Investment Adviser. Nuveen Advisory acts as the invest-
under management. ment adviser for and manages the investment and rein-
vestment of the assets of each of the Funds. Its address
is Nuveen Advisory Corp., 333 West Wacker Drive,
42
<PAGE>
Chicago, Illinois 60606. Nuveen Advisory also adminis-
ters the Funds' business affairs, provides office facil-
ities and equipment and certain clerical, bookkeeping
and administrative services, and permits any of its of-
ficers or employees to serve without compensation as di-
rectors or officers of Nuveen California Tax-Free Fund,
Inc. if elected to such positions.
Nuveen Advisory was organized in 1976 and since then has
exclusively engaged in the management of municipal secu-
rities portfolios. It currently serves as investment ad-
viser to 21 open-end municipal securities portfolios
(the "Nuveen Mutual Funds") and 55 exchange-traded mu-
nicipal 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, Chica-
go, Illinois 60606, the oldest and largest investment
banking firm (based on number of employees) specializing
in the underwriting and distribution of tax-exempt secu-
rities. Nuveen, the principal underwriter of the Funds'
shares, is sponsor of the Nuveen Tax-Exempt Unit Trust,
a registered unit investment trust. It is also the prin-
cipal 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 75%
owned by The St. Paul Companies, Inc. ("St. Paul"). St.
Paul is located in St. Paul, Minnesota, and is princi-
pally engaged in providing property-liability insurance
through subsidiaries.
For the services and facilities furnished by Nuveen Ad-
visory, each 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 .5500 of 1%
For the next $125 million .5375 of 1%
For the next $250 million .5250 of 1%
For the next $500 million .5125 of 1%
For the next $1 billion .5000 of 1%
For assets over $2 billion .4750 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
43
<PAGE>
Advisory, each Fund pays all its other costs and ex-
penses and a portion of Nuveen California Tax-Free Fund,
Inc.'s general administrative expenses allocated in pro-
portion to the net assets of each Fund (including the
Nuveen California Tax-Free Money Market Fund). In order
to prevent total operating expenses (excluding any dis-
tribution or service fees) in any fiscal year from ex-
ceeding .75 and .975 of 1% of the average daily net as-
set value of any class of shares of the California Fund
and the Insured California Fund, respectively, Nuveen
Advisory has agreed to waive all or a portion of its
management fees or reimburse certain expenses of each
Fund. Nuveen Advisory may also voluntarily agree to re-
imburse additional expenses from time to time, which re-
imbursements may be terminated at any time in its dis-
cretion. For information regarding the management fees
and total operating expenses of each class of shares of
each of the Funds for the year ended February 28, 1995,
see the table under "Summary of Fund Expenses" on page 3
of this Prospectus.
Portfolio Management. Overall portfolio management
strategy for the Funds is determined by Nuveen Advisory
under the general supervision of Thomas C. Spalding,
Jr., a Vice President of Nuveen Advisory and of the
Funds. Mr. Spalding has been employed by Nuveen since
1976 and by Nuveen Advisory since 1978, and has respon-
sibility with respect to the portfolio management of all
Nuveen open-end and exchange-traded funds managed by
Nuveen Advisory. See the Statement of Additional Infor-
mation for further information about Mr. Spalding.
The day-to-day management of each of the Funds is the
responsibility of Steven J. Krupa, a Vice President of
Nuveen Advisory since October 1990 and portfolio manager
of the Funds since December 1990. Prior to joining
Nuveen Advisory he was a Vice President in Nuveen's Mu-
nicipal Trading department. Mr. Krupa currently manages
nine Nuveen sponsored investment companies. See the
Statement of Additional Information for further informa-
tion about Mr. Krupa.
Consistent with the Funds' investment objectives, the
day-to-day management of each 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 re-
sources of the portfolio managers of the various Nuveen
funds and senior management of Nuveen Advisory. All
portfolio management decisions are subject to weekly re-
view by Nuveen Advisory's management and to quarterly
review by the Board of Directors of Nuveen California
Tax-Free Fund, Inc.
44
<PAGE>
HOW THE FUNDS SHOW PERFORMANCE
The Funds may Each Fund from time to time may quote various perfor-
compare their mance measures in order to illustrate the historical re-
performance with turns available from an investment in the Fund. These
other tax-free performance measures, which are determined for each
and taxable class of shares of a Fund, include:
investments,
often on a Yield Information. YIELD is a standardized measure of
taxable the net investment income earned over a specified 30-day
equivalent basis. period, expressed as a 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 in-
vestment 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 Appen-
dix B for examples of taxable equivalent yields and how
you can use them to compare other investments with in-
vestments in the Funds.
HISTORICAL YIELDS
[GRAPH APPEARS HERE]
<TABLE>
<CAPTION>
YEAR 6% 5% 4% 0%
<S> <C> <C> <C> <C>
0 1,000 1,000 1,000 1,000
1 2,184 2,170 2,156 2,100
2 3,553 3,509 3,466 3,300
3 5,005 4,916 4,829 4,500
4 6,548 6,396 6,248 5,700
5 8,185 7,951 7,725 6,900
6 9,923 9,586 9,262 8,100
7 11,769 11,304 10,862 9,300
8 13,728 13,110 12,526 10,500
9 15,809 15,009 14,259 11,700
10 18,017 17,004 16,062 12,900
11 20,362 19,102 17,939 14,100
12 22,852 21,307 19,892 15,300
13 25,494 23,625 21,925 16,500
14 28,300 26,062 24,040 17,700
15 31,280 28,623 26,242 18,900
</TABLE>
SOURCES: BOND BUYER, BANXQUOTE, IBC/DONOGHUE'S MONEY
FUND REPORT
45
<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 in-
tended to predict the future direction of interest
rates. See the discussion below under the subcaption
"General" for a description of the indices and invest-
ments 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
from yield because it may not reflect amortization of
bond premiums to the extent such premiums arise after
the bonds were purchased.
Total Return Information. AVERAGE ANNUAL TOTAL RETURN
and CUMULATIVE TOTAL RETURN figures for a specified pe-
riod measure both the net investment income generated
by, and the effect of any realized and unrealized appre-
ciation or depreciation of, an investment in a Fund, as-
suming the reinvestment of all dividends and capital
gain distributions. Average annual total return figures
generally are quoted for at least the one-, five- and
ten-year (or life-of-fund, if shorter) periods, and rep-
resent 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 re-
turn that would be generated by a taxable income fund
that produced the same amount of net asset value appre-
ciation or depreciation and after-tax income as a Fund
in each year, assuming a specified tax rate. The taxable
equivalent total return of a Fund will therefore be
higher than its total return over the same period.
From time to time, a Fund may compare its risk-adjusted
performance with other investments that may provide dif-
ferent levels of risk and return. For example, a Fund
may compare its risk level, as measured by the variabil-
ity 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 investment.
A Fund may also compare its TAX-ADJUSTED TOTAL RETURN
with that of other funds or groups of funds. This meas-
ure would take into account the
46
<PAGE>
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.
General. Any given performance quotation or performance
comparison for a 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 informa-
tion concerning the Funds' performance. For information
as to current yield and other performance information
regarding the Funds, call Nuveen toll-free at 800-621-
7227.
A comparison of the current yield or historic perfor-
mance of a Fund to those of other investments is one el-
ement to consider in making an informed investment deci-
sion. Each 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 invest-
ments 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 Funds.
U.S. Government bonds, for example, are long-term
investments backed by the full faith and credit of the
U.S. Government, and bank CDs are generally short-term,
FDIC-insured investments, which pay fixed principal and
interest but are subject to fluctuating rollover rates.
Money market funds are short-term investments with
stable net asset values, fluctuating yields and special
features enhancing liquidity. Additionally, each 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 a
Fund's shares, including data from Lipper Analytical
Services, Inc., Morningstar, Inc. and other industry
publications.
47
<PAGE>
DISTRIBUTIONS AND TAXES
HOW THE FUNDS PAY Each Fund will pay monthly dividends to shareholders at
DIVIDENDS a level rate that reflects the past and projected net
income of the Fund and that results, over time, in the
Each Fund pays distribution of substantially all of the Fund's net in-
monthly come. Net income of each Fund consists of all interest
dividends. income accrued on its portfolio less all expenses of
Nuveen California Tax-Free Fund, Inc. accrued daily that
are applicable to that Fund. To maintain a more stable
monthly distribution, each 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 distribu-
tions, which might otherwise have been reduced by a de-
crease in a Fund's monthly net income due to fluctua-
tions in investment income or expenses. As a result, the
distributions paid by a Fund for any particular monthly
period may be more or less than the amount of net income
actually earned by a Fund during such period. Undistrib-
uted net income is included in a Fund's net asset value
and, correspondingly, distributions from previously un-
distributed net income are deducted from a Fund's net
asset value. It is not expected that this dividend pol-
icy will impact the management of the Fund's portfolios.
Dividends paid by a 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 a Fund's classes of
shares.
Each Fund will declare dividends on the 9th of each
month (or if the 9th is not a business day, on the imme-
diately 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 Directors without prior notice to or ap-
proval by shareholders. Dividends will be paid on the
first business day of the following month and are rein-
vested in additional shares of a 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 un-
less you have elected to receive capital gains distribu-
tions in cash.
TAX MATTERS The following federal and state tax discussion, together
with the additional information on California state
taxes in Appendix A, is intended to provide you with an
overview of the impact on the Funds or their share-
48
<PAGE>
holders of federal as well as state and local income tax
provisions. These tax provisions are subject to change
by legislative or administrative action, and any changes
may be applied retroactively. Because the Funds' taxes
are a complex matter, you should consult your tax ad-
viser for more detailed information concerning the taxa-
tion of the Funds and the federal, state and local tax
consequences to Fund shareholders.
Income dividends Federal Income Tax. Each Fund intends to qualify, as it
are free from has in prior years, under Subchapter M of the Internal
regular federal Revenue Code of 1986, as amended (the "Code"), for tax
income tax. treatment as a regulated investment company. In order to
qualify for treatment as a regulated investment company,
a Fund must satisfy certain requirements relating to the
sources of its income, diversification of its assets and
distribution of its income to shareholders. As a regu-
lated investment company, a 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. Each 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 Ob-
ligations.
Your share of a Fund's taxable income, if any, from in-
come on taxable temporary investments and net short-term
capital gains, will be taxable to you as ordinary in-
come. If a 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 ordinary 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
shares of a Fund. You are required to pay tax on all
taxable distributions even if these distributions are
automatically reinvested in additional Fund shares. Cer-
tain 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 a Fund qualifies as a reg-
ulated 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 (un-
less it is exempt from tax) even though the distribution
represents a return of a portion of the purchase price.
49
<PAGE>
If in any year a Fund should fail to qualify under
Subchapter M for tax treatment as a regulated investment
company, the Fund would incur a regular corporate fed-
eral 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 in-
vestments, such as shares of a Fund. Under Internal Rev-
enue 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 each Fund's shares in-
cludes 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 shares of a Fund immediately prior to or
on the record date of a monthly exempt-interest divi-
dend, you may realize a taxable gain even though a por-
tion 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 gains or loss to shareholders. Any
loss you may realize on the redemption or exchange of
shares of a Fund 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 Funds may invest in private activity bonds, the in-
terest 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 Funds may not be appropriate investments
for you if you are considered either a substantial user
or a related person.
Each Fund may invest up to 20% of its net assets in AMT
Bonds, the interest on which is a specific tax prefer-
ence item for purposes of computing the alternative min-
imum tax on corporations and individuals. If your tax
liability is determined under the alternative minimum
tax, you will
50
<PAGE>
be taxed on your share of a Fund's exempt-interest divi-
dends 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 be-
tween an alternative measure of income ("adjusted cur-
rent earnings") and the amount otherwise determined to
be the alternative minimum taxable income. Interest on
all Municipal Obligations, and therefore all distribu-
tions by the Fund that would otherwise be tax exempt, is
included in calculating a corporation's adjusted current
earnings.
Each Fund is required in certain circumstances to with-
hold 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 identifica-
tion number (in the case of individuals, their social
security number) and certain certifications, or who are
otherwise subject to back-up withholding.
Each January, your Fund will notify you of the amount
and tax status of Fund distributions for the preceding
year.
Dividends are State Income Tax Matters. Under the laws of the State of
free from California, dividends you receive from income earned by
California state a Fund on California Municipal Obligations will be ex-
personal income empt from applicable California personal income tax. The
tax. exemption from California personal income tax applies
whether you receive a Fund's dividends in cash or rein-
vest them in additional shares of the Fund.
See Appendix A to this Prospectus and the Statement of
Additional Information for further information concern-
ing the effect of applicable state personal income taxes
and state corporate income and franchise taxes.
51
<PAGE>
NET ASSET VALUE
Net asset value Net asset value of the shares of a Fund will be deter-
is calculated mined separately for each class of shares. The net asset
daily. value per share of a class of shares will be computed by
dividing the value of a Fund's assets attributable to
the class, less the liabilities attributable to the
class, by the total number of shares of the class out-
standing. The net asset value per share is expected to
vary among a Fund's 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 United States
Trust Company of New York, the Funds' custodian, as of
4:00 p.m. eastern time on each day the New York Stock
Exchange is normally open for trading. In determining
the net asset value, the custodian uses the valuations
of portfolio securities furnished by a pricing service
approved by the Board of Directors. 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
Funds) 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 Nuveen California Tax-Free Fund, Inc.
under the general supervision of its Board of Directors.
52
<PAGE>
GENERAL INFORMATION
If you have any questions about the Funds or other
Nuveen Mutual Funds, call Nuveen toll-free at 800-621-
7227.
Custodian and Transfer and Shareholder Services
Agent. The Custodian of the assets of the Funds is
United States Trust Company of New York, 114 West 47th
Street, New York, New York 10036. The Chase Manhattan
Bank, N.A., 1 Chase Manhattan Plaza, New York, NY 10081,
has agreed to become successor to U.S. Trust, as Custo-
dian and Fund Accountant. The succession is presently
scheduled for July 1, 1995. No changes in the Fund's ad-
ministration or in the amount of fees and expenses paid
by the Funds for these services will result, and no ac-
tion by shareholders will be required. The Funds' trans-
fer, shareholder services and dividend paying agent,
Shareholder Services, Inc., P.O. Box 5330, Denver, CO
80217-5330, performs bookkeeping, data processing and
administrative services for the maintenance of share-
holder accounts.
Organization. Nuveen California Tax-Free Fund, Inc. is
an open-end diversified management series investment
company under the Investment Company Act of 1940. Each
Fund constitutes a separate series of Nuveen California
Tax-Free Fund, Inc. and is itself an open-end diversi-
fied management mutual fund. Nuveen California Tax-Free
Fund, Inc. was incorporated in Maryland on October 3,
1985. It is authorized to issue an aggregate of
2,600,000,000 shares of common stock, $.01 par value,
consisting of 125,000,000 shares of the Nuveen Califor-
nia Tax-Free Value Fund, 125,000,000 shares of the
Nuveen California Insured Tax-Free Value Fund and
2,350,000,000 shares of the Nuveen California Tax-Free
Money Market Fund, the latter of which is covered by a
separate Prospectus. The shares of Nuveen California
Tax-Free Value Fund and Nuveen California Insured Tax-
Free Fund are each 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 and has equal rights
as to voting, redemption, dividends and liquidation, ex-
cept 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, ex-
cept that Class C Shares of a Fund automatically convert
into Class A Shares of the same Fund, as described
above.
The Funds are not required and do not intend to hold an-
nual meetings of shareholders. Shareholders owning more
than 10% of the outstanding shares of a Fund have the
right to call a special meeting to remove directors or
for any other purpose.
53
<PAGE>
APPENDIX A--SPECIAL STATE FACTORS AND STATE TAX
TREATMENT
SPECIAL FACTORS PERTAINING TO CALIFORNIA MUNICIPAL
OBLIGATIONS
The following information is a brief summary of special
factors that affect the risk of investing in California
Municipal Obligations issued within that state. This in-
formation was obtained from official statements of is-
suers located in California as well as from other pub-
licly available official documents and statements and is
not intended to be a complete description. The Funds
have not independently verified any of the information
contained in these statements and documents. See the
Statement of Additional Information for further informa-
tion relating to certain political, economic or regula-
tory risk factors as well as information relating to le-
gal proceedings which may adversely affect California's
financial position.
As a result of "Proposition 13" and other amendments to
the California Constitution and the adoption of other
statutes, the taxing authority of California governmen-
tal entities has been limited. In recent years Califor-
nia experienced substantial financial difficulties re-
lated to the severe recession from 1990-93, the worst
since the 1930's, and which hit particularly hard in
Southern California. The recession caused substantial,
broad-based revenue shortfalls. During this period, the
State incurred substantial budget deficits, of which
around $1.8 billion still remained as of June 30, 1994.
The State has cut back assistance to its public authori-
ties and political subdivisions, and further cuts are
likely to occur. These cutbacks could adversely affect
the financial condition of cities, counties and school
districts previously subject to severe fiscal
constraints and facing a fall in their own tax collec-
tions. California's economy has, however, been in a
steady recovery since the start of 1994, and the State
projects that its accumulated budget deficit will be re-
paid by June 30, 1996. The State has for several years
had to rely on short-term external borrowing to meet its
cash requirements, and may have to continue such reli-
ance for some time to come. On July 15, 1994, S&P low-
ered the rating on the State of California's general ob-
ligation bonds from A+ to A and Moody's reduced its rat-
ing from Aa to A1.
On December 6, 1994, Orange County and its pooled in-
vestment funds (the "Pools") filed for protection under
Chapter 9 of the federal Bankruptcy Law, as a result of
investment losses in the Pools, which have been esti-
mated by the County at 23%, or some $1.7 billion. Over
180 government agencies, most but not all located in Or-
ange County, had investments in the Pools. The County
and some of the participating agencies in the Pools have
defaulted on certain of their obligations because of the
bankruptcy, and others may in the future. As of the fis-
cal year end, the
<PAGE>
California Insured Fund owned no uninsured bonds issued
by Orange County or invested in the Pools. The Califor-
nia Fund owned no bonds issued by Orange County, and
owned bonds (comprising 0.7% of the Fund's net assets)
of one issuer that had invested in the Pools; those
bonds are supported by a dedicated stream of incremental
tax revenues and a debt service fund, equal to the maxi-
mum annual debt service, which is held by a trustee and
is not invested in the Pools.
California Municipal Obligations may be subject to
greater price volatility than Municipal Obligations in
general as a result of the effect of supply and demand
for these securities, which in turn could cause greater
volatility in the value of the shares of each Fund. Ad-
ditional considerations relating to the risks of invest-
ing in California Municipal Obligations are presented in
the Statement of Additional Information.
DESCRIPTION OF CALIFORNIA STATE TAX TREATMENT
The following California state tax information applica-
ble to the Funds and their shareholders is based upon
the advice of special state tax counsel, and represents
a summary of certain provisions of California's tax laws
presently in effect. These provisions are subject to
change by legislative or administrative action, which
may be applied retroactively to Fund transactions. The
state tax information below assumes that each Fund qual-
ifies as a regulated investment company for federal in-
come tax purposes under Subchapter M of the Code and
that amounts so designated by each Fund to its share-
holders qualify as "exempt-interest dividends" under
Section 852(b)(5) of the Code. You should consult your
own tax adviser for more detailed information concerning
state taxes to which you may be subject.
Each Fund intends to satisfy conditions which will ena-
ble it to pay dividends that are exempt from California
personal income taxes ("California exempt-interest divi-
dends"), but not from California franchise tax or Cali-
fornia corporate income tax. The total amount of Cali-
fornia exempt-interest dividends paid by any Fund with
respect to any taxable year cannot exceed the amount of
interest received by the Fund during that year on Cali-
fornia Municipal Obligations. Amounts paid on defaulted
California Municipal Obligations held by the Funds under
policies of insurance issued with respect to such Munic-
ipal Obligations will be excludable from gross income
for California income tax purposes if, and to the same
extent as, these amounts would have been so excludable
if paid by the respective issuers of these California
Municipal Obligations. For California income tax purpos-
es, distributions paid from capital gains are taxable at
ordinary income rates.
A-2
<PAGE>
APPENDIX B--TAXABLE EQUIVALENT YIELD TABLES
TAXABLE The following tables show the combined effects for indi-
EQUIVALENT YIELD viduals of federal and state income taxes on:
TABLES AND THE
EFFECT OF TAXES . what you would have to earn on a taxable investment to
AND INTEREST equal a given tax-free yield; and
RATES ON
INVESTMENTS . 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 tax-
able 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 Funds occasionally may adver-
tise their performance in similar tables using other
current combined tax rates than those shown here. The
combined tax rates used in these tables have been
rounded to the nearest one-half of one percent. They are
based upon published 1995 marginal federal tax rates and
marginal state tax rates currently available and sched-
uled to be in effect, and do not take into account
changes in tax rates that are proposed from time to
time. They are calculated using the highest state tax
rate applicable within each federal bracket, and 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 cur-
rent federal tax limitations on itemized deductions and
personal exemptions, which may raise the effective tax
rate and taxable equivalent yield for taxpayers above
certain income levels. The combined tax rates shown here
may be higher or lower than your actual combined tax
rate. A higher combined tax rate would tend to make the
dollar amounts in the third table lower, while a lower
combined tax rate would make the amounts higher. You
should consult your tax adviser to determine your actual
combined tax rate.
<PAGE>
CALIFORNIA
COMBINED MARGINAL
TAX RATES FOR
JOINT TAXPAYERS
WITH FOUR
PERSONAL
EXEMPTIONS
<TABLE>
<CAPTION>
Federal
Federal Adjusted Combined
Taxable Gross State and TAX-FREE YIELD
Income Income Federal 3.50% 4.00% 4.50% 5.00% 5.50% 6.00% 6.50%
(1,000's) (1,000's) Tax Rate TAXABLE EQUIVALENT YIELD
-----------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
$ 0- 39.0 $ 0-114.7 20.0% 4.38 5.00 5.63 6.25 6.88 7.50 8.13
-----------------------------------------------------------------------
39.0- 94.3 0-114.7 34.5 5.34 6.11 6.87 7.63 8.40 9.16 9.92
-----------------------------------------------------------------------
114.7-172.1 35.5 5.43 6.20 6.98 7.75 8.53 9.30 10.08
-----------------------------------------------------------------------
94.3-143.6 0-114.7 37.5 5.60 6.40 7.20 8.00 8.80 9.60 10.40
-----------------------------------------------------------------------
114.7-172.1 38.5 5.69 6.50 7.32 8.13 8.94 9.76 10.57
-----------------------------------------------------------------------
172.1-214.9 40.5 5.88 6.72 7.56 8.40 9.24 10.08 10.92
-----------------------------------------------------------------------
143.6-214.9 114.7-172.1 43.0 6.14 7.02 7.89 8.77 9.65 10.53 11.40
-----------------------------------------------------------------------
172.1-214.9 45.5 6.42 7.34 8.26 9.17 10.09 11.01 11.93
-----------------------------------------------------------------------
214.9-239.9 46.5 6.54 7.48 8.41 9.35 10.28 11.21 12.15
-----------------------------------------------------------------------
239.9-294.6 46.0 6.48 7.41 8.33 9.26 10.19 11.11 12.04
-----------------------------------------------------------------------
Over 294.6 43.5 6.19 7.08 7.96 8.85 9.73 10.62 11.50
-----------------------------------------------------------------------
214.9-256.5 172.1-214.9 46.0 6.48 7.41 8.33 9.26 10.19 11.11 12.04
-----------------------------------------------------------------------
214.9-239.9 47.0 6.60 7.55 8.49 9.43 10.38 11.32 12.26
-----------------------------------------------------------------------
239.9-294.6 46.5 6.54 7.48 8.41 9.35 10.28 11.21 12.15
-----------------------------------------------------------------------
Over 294.6 44.0 6.25 7.14 8.04 8.93 9.82 10.71 11.61
-----------------------------------------------------------------------
256.5-429.9 239.9-294.6 50.0 7.00 8.00 9.00 10.00 11.00 12.00 13.00
-----------------------------------------------------------------------
Over 294.6 47.0 6.60 7.55 8.49 9.43 10.38 11.32 12.26
-----------------------------------------------------------------------
Over 429.9 Over 294.6 47.5 6.67 7.62 8.57 9.52 10.48 11.43 12.38
</TABLE>
B-2
<PAGE>
COMBINED MARGINAL
TAX RATES FOR
SINGLE TAXPAYERS
WITH ONE PERSONAL
EXEMPTION
<TABLE>
<CAPTION>
Federal
Federal Adjusted Combined
Taxable Gross State and TAX-FREE YIELD
Income Income Federal 3.50% 4.00% 4.50% 5.00% 5.50% 6.00% 6.50%
(1,000's) (1,000's) Tax Rate TAXABLE EQUIVALENT YIELD
---------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
$ 0-
23.4 $ 0-107.5 20.0% 4.38 5.00 5.63 6.25 6.88 7.50 8.13
---------------------------------------------------------------------
23.4-
56.6 0-107.5 34.5 5.34 6.11 6.87 7.63 8.40 9.16 9.92
---------------------------------------------------------------------
56.6-
107.5 0-107.5 37.5 5.60 6.40 7.20 8.00 8.80 9.60 10.40
---------------------------------------------------------------------
107.5-114.7 38.0 5.65 6.45 7.26 8.06 8.87 9.68 10.48
---------------------------------------------------------------------
114.7-132.5 39.5 5.79 6.61 7.44 8.26 9.09 9.92 10.74
---------------------------------------------------------------------
132.5-237.2 39.0 5.74 6.56 7.38 8.20 9.02 9.84 10.66
---------------------------------------------------------------------
107.5-
118.0 0-107.5 38.0 5.65 6.45 7.26 8.06 8.87 9.68 10.48
---------------------------------------------------------------------
107.5-114.7 38.5 5.69 6.50 7.32 8.13 8.94 9.76 10.57
---------------------------------------------------------------------
114.7-132.5 40.0 5.83 6.67 7.50 8.33 9.17 10.00 10.83
---------------------------------------------------------------------
132.5-237.2 39.5 5.79 6.61 7.44 8.26 9.09 9.92 10.74
---------------------------------------------------------------------
118.0 -
214.9 114.7-132.5 44.5 6.31 7.21 8.11 9.01 9.91 10.81 11.71
---------------------------------------------------------------------
132.5-237.2 44.5 6.31 7.21 8.11 9.01 9.91 10.81 11.71
---------------------------------------------------------------------
Over 237.2 44.0 6.25 7.14 8.04 8.93 9.82 10.71 11.61
---------------------------------------------------------------------
214.9 -
256.5 132.5-237.2 45.0 6.36 7.27 8.18 9.09 10.00 10.91 11.82
---------------------------------------------------------------------
Over 237.2 44.5 6.31 7.21 8.11 9.01 9.91 10.81 11.71
---------------------------------------------------------------------
Over
256.5 Over 237.2 47.5 6.67 7.62 8.57 9.52 10.48 11.43 12.38
</TABLE>
FOR AN EQUAL AFTER-
TAX RETURN, YOUR
TAX-FREE INVESTMENT
MAY BE LESS*
For example, $50,000
in a 6% taxable
investment earns
the same after-
tax return as
$37,500 in a 5%
tax-free Nuveen
investment.
<TABLE>
<CAPTION>
4.0% 4.5% 5.0% 5.5% 6.0% 6.5%
$50,000 3.5% TAX- TAX- TAX- TAX- TAX- TAX-
INVESTMENT TAX-FREE FREE FREE FREE FREE FREE FREE
--------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
COMPARE
4%
TAXABLE $35,714 $31,250 $27,778 $25,000 $22,727 $20,833 $19,231
--------------------------------------------------------------
COMPARE
5%
TAXABLE $44,643 $39,063 $34,722 $31,250 $28,409 $26,042 $24,038
--------------------------------------------------------------
COMPARE
6%
TAXABLE $53,571 $46,875 $41,667 $37,500 $34,091 $31,250 $28,846
--------------------------------------------------------------
COMPARE
7%
TAXABLE $62,500 $54,688 $48,611 $43,750 $39,773 $36,458 $33,654
--------------------------------------------------------------
COMPARE
8%
TAXABLE $71,429 $62,500 $55,556 $50,000 $45,455 $41,667 $38,462
--------------------------------------------------------------
</TABLE>
*The dollar amounts in the table reflect a 37.5% combined
federal and state tax rate.
B-3
<PAGE>
Nuveen Tax-Free Mutual Funds Application Form
NOTE: THIS APPLICATION FORM MAY NOT BE USED FOR ALL TYPES OF
ACCOUNTS AND CERTAIN OPTIONAL FUND SERVICES. PLEASE OBTAIN SPE-
CIAL APPLICATION MATERIALS BY CHECKING THE BOXES IN APPLICATION
ITEM #7 OR BY CALLING NUVEEN TOLL-FREE AT 800-621-7227.
1 ACCOUNT REGISTRATION
CHECK THE BOX [_] Individual
THAT DESCRIBES
THE TYPE OF
ACCOUNT YOU
ARE OPENING,
AND COMPLETE
ALL THE
INFORMATION
WHICH APPLIES
TO YOUR AC-
COUNT TYPE.
Last Name, First, Initial Social Security Number
----------------------------------------------------------------
[_] Joint Tenant (if any)
Last Name, First, Initial
----------------------------------------------------------------
Registration [_] Gift to a Minor
for two or
more persons
will be as
joint tenants
with right of
survivorship
unless noted
otherwise.
Name of Trustee Minor's Name (only one minor
may be named)
----------------------------------------------------------------
Under the Uniform Gift to Minors Act of [Name of State]
Minor's Social Security Number
----------------------------------------------------------------
[_] Trust[_] Custodian
Trust's Agreement Date (mandatory)
Trustee's or Custodian's Name
----------------------------------------------------------------
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 (in-
clude area code)
----------------------------------------------------------------
3 FUND SELECTION
PLEASE
INDICATE IN
WHICH NUVEEN
FUND(S) YOU
WOULD LIKE
TO OPEN AN
ACCOUNT AND
THE AMOUNT
AND THE
CLASS OF
SHARES IN
WHICH YOU
WOULD LIKE
TO INVEST
($1,000
MINIMUM
INITIAL
INVESTMENT
PER CLASS OF
ANY FUND).
<TABLE>
<CAPTION>
NUVEEN FUND CLASS A SHARES CLASS C SHARES
----------- -------------- --------------
$
<S> <C> <C>
Municipal Bond Fund [_] [_]
Insured Municipal Bond Fund [_] [_]
Arizona Tax-Free Value Fund [_] [_]
California Tax-Free Value Fund [_] [_]
California Insured Tax-Free Value Fund [_] [_]
Florida Tax-Free Value Fund [_] [_]
Maryland Tax-Free Value Fund [_] [_]
Massachusetts Tax-Free Value Fund [_] [_]
Massachusetts Insured Tax-Free Value Fund [_] [_]
Michigan Tax-Free Value Fund [_] [_]
New Jersey Tax-Free Value Fund [_] [_]
New York Tax-Free Value Fund [_] [_]
New York Insured Tax-Free Value Fund [_] [_]
Ohio Tax-Free Value Fund [_] [_]
Pennsylvania Tax-Free Value Fund [_] [_]
Virginia Tax-Free Value Fund [_] [_]
</TABLE>
[_] 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.
NOTE: State funds may not be registered for sale in all states.
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 open an account, or need any as-
sistance in completing this form, call Nuveen toll-free at 800-
621-7227.
4 DISTRIBUTION OPTIONS
IF NO BOX IS [_] Dividends are to be paid by check.
CHECKED, ALL
DISTRIBUTIONS
FROM A FUND
WILL BE
REINVESTED
INTO THE SAME
FUND.
[_] Capital gains are to be paid by check.
5 INFORMATION ABOUT YOUR FINANCIAL ADVISER
PLEASE SUPPLY Financial Adviser's Name Street Address
THE NAME AND
ADDRESS OF
YOUR FINANCIAL
ADVISER SO
THAT THEY WILL
RECEIVE
DUPLICATE
COPIES OF YOUR
FUND
STATEMENTS.
----------------------------------------------------------------
Firm Name City, State, Zip Code
----------------------------------------------------------------
6 SIGNATURE(S)
SIGN IN INK I certify that I have power and authority to establish this ac-
EXACTLY AS count and select the options requested. I also release the
NAME OR NAMES fund(s), Shareholder Services, Inc. (SSI), John Nuveen & Co.
APPEAR ABOVE Incorporated, United Missouri Bank of Kansas City, N.A., First
IN ACCOUNT Interstate Bank of Denver, N.A. and their agents and represent-
REGISTRATION atives from all liability and agree to indemnify each of them
SECTION. 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 ac-
count 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 cer-
tify that I have received and read the current prospectus for
each fund I have selected. Under penalties of perjury, I cer-
tify (1) that the number shown on this Application Form is my
correct Social Security or 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)
Date
BY:
-------------------------------
SEE REVERSE SIDE FOR OPTIONAL FUND SERVICES.
<PAGE>
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
[_] UIT Rein-
vestment
[_] Payroll Direct Deposit Plan
[_] Group Purchase Plans
8 TEL-A-WIRE AUTHORIZATION
By electing this option, I authorize SSI and Nuveen to honor
telephone instructions to redeem my fund shares (minimum
$1,000), subject to the terms and conditions described in the
prospectus.
SELECT ONLY [_] OPTION A
ONE OF THE By completing this section, I elect to have all redemption pro-
FOLLOWING, OP- ceeds wired to my personal checking, NOW or money market ac-
TION A OR B. count 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, Zip Code
----------------------------------------------------------------
Your Bank Account Number
Bank's Routing Code
Bank's Telephone Number (in-
clude area code)
----------------------------------------------------------------
[_] OPTION B
By completing this section, I elect to have all redemption pro-
ceeds wired in my name to the commercial bank account of my fi-
nancial adviser's firm. (A representative of that firm must
complete and sign the second part of the Option B section.)
Name of Financial Adviser's Firm Firm's Street Address
----------------------------------------------------------------
Your Account Name Firm's City, State, Zip Code
----------------------------------------------------------------
Your Account Number Firm's Telephone Number (in-
clude area code)
----------------------------------------------------------------
Name of Bank of Financial Adviser's Firm
Bank's Street Address
TO BE COM-
PLETED BY YOUR
----------------------------------------------------------------
FINANCIAL AD- Name of Branch Bank's Routing Code
VISER IF Bank's City, State, Zip Code
OPTION B
----------------------------------------------------------------
IS SELECTED. Bank's Account Number Financial Adviser's Signature
Date
----------------------------------------------------------------
9 TEL-A-CHECK AUTHORIZATION
CHECK THE BOX [_] I hereby authorize the fund and its agents to honor tele-
TO ELECT THIS phone instructions to redeem shares worth $25,000 or less from
OPTION. my account and send those proceeds by check payable to me to my
address of record, subject to the terms and conditions de-
scribed in the prospectus.
10 TELEPHONE EXCHANGE AUTHORIZATION
CHECK THE BOX [_] I hereby authorize the fund and its agents to honor
TO ELECT THIS telephone instructions to invest redemption proceeds from the
OPTION. fund into other Nuveen Mutual Funds, subject to the terms and
conditions described in the prospectus.
11 LETTER OF INTENT
COMPLETE THIS [_] By electing this option, I indicate my intention, but am
SECTION TO under no obligation, to purchase additional Class A Shares in
ELECT THIS OP- the fund(s) and amount(s) indicated over the next 13 months in
TION. 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 or more
worth of shares of Fund(s) over the next 13 months.
MAIL COMPLETED APPLICATION FORM TO:
NUVEEN TAX-FREE VALUE FUNDS
P.O. BOX 5330
DENVER, CO 80217-5330
<PAGE>
NUVEEN CALIFORNIA TAX-FREE FUND, INC.
Prospectus
June 13, 1995
NUVEEN CALIFORNIA TAX-FREE MONEY MARKET FUND
Nuveen California Tax-Free Fund, Inc. is an open-end, diversified management
investment company presently offering shares in three separate investment port-
folios. Only shares of Nuveen California Tax-Free Money Market Fund (the "Fund"
or the "Money Market Fund") are being offered by this Prospectus. Shares of the
other two portfolios, Nuveen California Tax-Free Value Fund and Nuveen Califor-
nia Insured Tax-Free Value Fund, are offered through a separate Prospectus
which may be obtained by writing to Nuveen California Tax-Free Fund, Inc. or by
calling John Nuveen & Co. Incorporated at the toll-free number provided below.
The Money Market Fund has the objective of providing, through investment in
professionally managed portfolios of California Municipal Obligations, as high
a level of current interest income exempt from both federal and California in-
come taxes as is consistent with its investment policies and with preservation
of capital.
The Money Market Fund invests primarily in high quality short-term California
tax-exempt money market instruments. The Fund seeks to maintain its net asset
value at $1.00 per share. The Fund has adopted plans applicable to shares of
the Fund sold through banks or securities dealers whereby certain of the costs
of administration and/or distribution with respect to such shares will be borne
by the Fund and allocated to the shares that are subject to those plans.
This Prospectus, which should be retained for future reference, sets forth con-
cisely the information about the Fund that a prospective investor should know
before investing in the Fund. A "Statement of Additional Information" dated
June 13, 1995, containing additional information about the Fund (and Nuveen
California Tax-Free Value Fund and Nuveen California Insured Tax-Free Value
Fund) has been filed with the Securities and Exchange Commission and is incor-
porated by reference into this Prospectus. A copy of this Statement may be ob-
tained without charge by writing to Nuveen California Tax-Free Fund, Inc. or by
calling John Nuveen & Co. Incorporated at the toll-free number provided below.
An investment in the Fund is neither insured nor guaranteed by the U.S. Govern-
ment and there can be no assurance that the Fund will be able to maintain a
stable net asset value of $1.00 per share.
Shares of the Fund are not deposits or obligations of, or guaranteed or en-
dorsed by, any bank and are not federally insured by the Federal Deposit Insur-
ance Corporation, the Federal Reserve Board, or any other agency.
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 AC-
CURACY 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>
CONTENTS
<TABLE>
<C> <S>
3 Highlights
- -----------------------------------------------------------
5 Fund Expenses
- -----------------------------------------------------------
7 Financial Highlights
- -----------------------------------------------------------
8 Yield
- -----------------------------------------------------------
9 The Fund and Its Investment Objective
- -----------------------------------------------------------
9 Investment Policies of the Fund
- -----------------------------------------------------------
16 Management of the Fund
- -----------------------------------------------------------
18 Net Asset Value
- -----------------------------------------------------------
18 How to Purchase Fund Shares
- -----------------------------------------------------------
24 How to Redeem Fund Shares
- -----------------------------------------------------------
28 Dividends and Taxes
- -----------------------------------------------------------
31 General Information
- -----------------------------------------------------------
32 Application
- -----------------------------------------------------------
34 Application Instructions
</TABLE>
- --------------------------------------------------------------------------------
2
<PAGE>
HIGHLIGHTS
Nuveen California Tax-Free Fund, Inc. is an open-end,
diversified management investment company that currently
offers shares in three separate investment portfolios.
Only shares of Nuveen California Tax-Free Money Market
Fund (the "Fund" or the "Money Market Fund") are being
offered by this Prospectus. Shares of the other two
portfolios, Nuveen California Tax-Free Value Fund and
Nuveen California Insured Tax-Free Value Fund, are of-
fered through a separate Prospectus.
The Money Market Fund has the objective of providing,
through investment in professionally managed portfolios
of California Municipal Obligations, as high a level of
current interest income exempt both from federal and
California income taxes as is consistent with its in-
vestment policies and with preservation of capital. The
Money Market Fund invests primarily in high quality
short-term California tax-exempt instruments and seeks
to maintain a net asset value of $1.00 per share. There
is no guarantee that this value will be maintained. See
"Net Asset Value" on page 18, "The Fund and its Invest-
ment Objective" on page 9, and "Investment Policies of
the Fund" on page 9.
The Fund intends to qualify, as it has in prior years,
for tax treatment as a regulated investment company and
to satisfy conditions that will enable interest income
that is exempt from federal and California income taxes
in the hands of the Fund to retain such tax-exempt sta-
tus when distributed to the shareholders. See "Dividends
and Taxes--Tax Matters" on page 28.
HOW TO PURCHASE Shares of the Money Market Fund may be purchased on days
FUND SHARES on which the Federal Reserve Bank of Boston is normally
open for business at the net asset value next determined
after receipt of an order and receipt of payment in fed-
eral funds. The minimum initial investment for purchases
of shares of the Money Market Fund is $5,000 and subse-
quent purchases must be in amounts of $100 or more. See
"How to Purchase Fund Shares"on page 18. For further in-
formation about the Fund, please call Nuveen toll-free
at 800-621-7227.
HOW TO REDEEM Shareholders may redeem shares at net asset value next
FUND SHARES computed after receipt of a redemption request in proper
form. Shareholders may make redemption requests in writ-
ing or, for shareholders of the Distribution Plan se-
ries, by check. Shareholders who have completed and
filed the necessary authorization form may make redemp-
tion requests by telephone with proceeds to be trans-
ferred by wire to a predesignated bank account
3
<PAGE>
or by check to the address of record. A fee may be
charged for wire redemption. See "How to Redeem Fund
Shares" on page 24. There is no redemption fee.
DIVIDENDS AND All of the net income of the Fund is declared daily as a
REINVESTMENT dividend on shares entitled to such dividend. The Fund
will distribute its dividends monthly. Distributions
will be made in the form of additional shares of the
Fund or, at the option of the shareholder, in cash. See
"Dividends and Taxes" on page 28.
INVESTMENT John Nuveen & Co. Incorporated ("Nuveen") will act as
ADVISER AND principal underwriter of the Money Market Fund's shares.
PRINCIPAL The Fund has adopted Distribution and Service Plans un-
UNDERWRITER der which qualifying organizations may be paid a fee for
servicing shareholder accounts. A portion of the fees
paid under these Plans is charged to the Distribution
Plan and Service Plan series of shares of the Fund. See
"How to Purchase Fund Shares--Distribution and Service
Plans" on page 22. Nuveen Advisory Corp. ("Nuveen Advi-
sory"), a wholly-owned subsidiary of Nuveen, will act as
the investment adviser for the Fund and will receive an-
nual fees based upon the average daily net assets of the
Fund. The management fees will be reduced or Nuveen Ad-
visory will assume certain expenses in amounts necessary
to prevent the total expenses of each series of the Fund
(excluding interest, taxes, fees incurred in acquiring
and disposing of portfolio securities and, to the extent
permitted, extraordinary expenses) in any fiscal year
from exceeding .55 of 1% of its average daily net asset
value. See "Management of the Fund" on page 16.
INVESTMENTS The Fund will invest primarily in California Municipal
Obligations having ratings or other credit and risk
characteristics as described on pages 9-14, the income
on which is exempt from federal and California income
taxes. In addition, as described below, the Fund may
purchase, but to date has not purchased and has no pres-
ent intention to purchase, taxable "temporary invest-
ments," limited to obligations issued or guaranteed by
the full faith and credit of the United States, or cer-
tificates of deposit issued by U.S. banks with assets of
at least $1 billion, or "high grade" commercial paper or
corporate notes, bonds or debentures, with a remaining
maturity of 397 days or less, or repurchase agreements
in respect of any of the foregoing with selected deal-
ers, U.S. banks or other recognized financial institu-
tions, subject to the specific limitations stated below.
The Fund may from time to time invest a portion of its
assets in debt
4
<PAGE>
obligations which are not rated, and in variable rate or
floating rate obligations. Investors are urged to read
the descriptions of these investments and practices set
forth in this Prospectus. See "Investment Policies of
the Fund" on page 9.
The information set forth above should be read in con-
junction with the detailed information set forth else-
where in this Prospectus.
FUND EXPENSES
The following tables illustrate all expenses and fees
that a shareholder of a series of the Money Market Fund
will incur. The expenses and fees shown are for the fis-
cal year ended February 28, 1995.
<TABLE>
<CAPTION>
SHAREHOLDER TRANSACTION INSTITUTIONAL DISTRIBUTION SERVICE
EXPENSES SERIES PLAN SERIES PLAN SERIES
-----------------------------------------------------------
<S> <C> <C> <C>
Sales Load Imposed on Pur-
chases...................... None None None
Sales Load Imposed on Rein-
vested Dividends............ None None None
Redemption Fees............. None None None
Exchange Fees............... None None None
<CAPTION>
ANNUAL OPERATING EXPENSES
(AS A PERCENTAGE OF AVERAGE
DAILY NET ASSETS)
-----------------------------------------------------------
<S> <C> <C> <C>
Management Fees............. .40% .40% .40%
12b-1 Fees (or Service
Fees)....................... None .09% .12%
Other Operating Expenses,
After Expense Reimburse- .07% .06% .03%
ments...................... ---- ---- ----
Total Expenses, After .47% .55% .55%
Expense Reimbursements...... ==== ==== ====
</TABLE>
The purpose of the foregoing tables is to help you un-
derstand all expenses and fees that you would bear di-
rectly or indirectly as an investor in the Money Market
Fund.
As discussed under "Management of the Fund" and re-
flected in the tables above, the management fee is re-
duced or Nuveen Advisory assumes certain expenses so as
to prevent the total expenses of each series of the
Money Market Fund in any fiscal year from exceeding .55
of 1% of the average daily net asset value of the se-
ries. Without expense reimbursements, for the fiscal
year ended February 28, 1995, other operating expenses
would have been .07, .15 and .08 of 1%, and total ex-
penses would have been .47, .64 and .60 of 1% of the av-
erage daily net assets of the Institutional series, the
Distribution Plan series and the Service Plan series,
respectively, of the Money Market Fund. See "Management
of the Fund."
5
<PAGE>
The following example illustrates the expenses that you
would pay on a $1,000 investment over various time peri-
ods assuming (1) a 5% annual rate of return and (2) re-
demption at the end of each time period. As noted in the
table above, the Fund charges no redemption fees of any
kind.
<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
-----------------------------------------------------------
<S> <C> <C> <C> <C>
Institutional Series............... $ 5 $15 $26 $59
Distribution and Service Plan Se-
ries............................... $ 6 $18 $31 $69
</TABLE>
This example should not be considered a representation
of past or future expenses or performance. Actual ex-
penses may be greater or less than those shown. This ex-
ample assumes that the percentage amounts listed under
Annual Operating Expenses remain the same in each of the
periods.
6
<PAGE>
FINANCIAL HIGHLIGHTS
The following financial information has been derived
from Nuveen California Tax-Free Fund, Inc.'s financial
statements, which have been audited by Arthur Andersen
LLP, independent public accountants, as indicated in
their report appearing in the Fund's Annual Report, and
should be read in conjunction with the financial state-
ments and related notes appearing in the Annual Report.
Selected data for a share of common stock of the Money
Market Fund outstanding throughout each period is as
follows:**
<TABLE>
<CAPTION>
INCOME FROM
INVESTMENT OPERATIONS LESS DISTRIBUTIONS
----------------------- ------------------------
NET
REALIZED TOTAL
AND NET RETURN
NET ASSET UNREALIZED DIVIDENDS DISTRIBUTIONS ASSET ON
VALUE NET GAIN (LOSS) FROM NET FROM VALUE NET
BEGINNING INVESTMENT FROM INVESTMENT CAPITAL END OF ASSET
OF PERIOD INCOME INVESTMENTS INCOME GAINS PERIOD VALUE
- ---------------------------------------------------------------------------------------------------
<CAPTION>
RATIOS/SUPPLEMENTAL DATA
----------------------------------
RATIO OF
RATIO OF NET
EXPENSES INVESTMENT
TO INCOME TO
NET ASSETS AVERAGE AVERAGE
END OF PERIOD NET NET
(IN THOUSANDS) ASSETS ASSETS
- ---------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Year Ended 2/28/95
Service Plan Series $1.000 $.026* $-- $(.026) $-- $1.000 2.59%
Distribution Plan Series 1.000 .026* -- (.026) -- 1.000 2.60
Institutional Series 1.000 .027 -- (.027) -- 1.000 2.69
Year Ended 2/28/94
Service Plan Series 1.000 .019 -- (.019) -- 1.000 1.94
Distribution Plan Series 1.000 .019* -- (.019) -- 1.000 1.92
Institutional Series 1.000 .021 -- (.021) -- 1.000 2.07
Year Ended 2/28/93
Service Plan Series 1.000 .023* -- (.023) -- 1.000 2.28
Distribution Plan Series 1.000 .023* -- (.023) -- 1.000 2.29
Institutional Series 1.000 .024 -- (.024) -- 1.000 2.36
8 Months Ended 2/29/92
Service Plan Series 1.000 .024* -- (.024) -- 1.000 2.39
Distribution Plan Series 1.000 .024* -- (.024) -- 1.000 2.39
Institutional Series 1.000 .025 -- (.025) -- 1.000 2.45
Year Ended 6/30/91
Service Plan Series 1.000 .047* -- (.047) -- 1.000 4.70
Distribution Plan Series 1.000 .047* -- (.047) -- 1.000 4.70
Institutional Series 1.000 .048 -- (.048) -- 1.000 4.80
Year Ended 6/30,
1990++ 1.000 .054* -- (.054) -- 1.000 5.37
1989++ 1.000 .056* -- (.056) -- 1.000 5.62
1988++ 1.000 .043* -- (.043) -- 1.000 4.28
1987++ 1.000 .039* -- (.039) -- 1.000 3.90
3/27/86 to 6/30/86++ 1.000 .011* -- (.011) -- 1.000 1.10
- ---------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Year Ended 2/28/95
Service Plan Series $41,772 .55%* 2.19%*
Distribution Plan Series 67,157 .55* 2.56*
Institutional Series 50,772 .47 2.74
Year Ended 2/28/94
Service Plan Series 415,238 .53 1.94
Distribution Plan Series 72,380 .55* 1.92*
Institutional Series 32,299 .41 2.06
Year Ended 2/28/93
Service Plan Series 469,812 .55* 2.26*
Distribution Plan Series 80,652 .55* 2.26*
Institutional Series 24,156 .47 2.33
8 Months Ended 2/29/92
Service Plan Series 478,886 .55*+ 3.54*+
Distribution Plan Series 91,670 .55*+ 3.54*+
Institutional Series 18,334 .45+ 3.64+
Year Ended 6/30/91
Service Plan Series 431,590 .55* 4.67*
Distribution Plan Series 90,031 .55* 4.67*
Institutional Series 22,342 .45 4.77
Year Ended 6/30,
1990++ 452,465 .55* 5.38*
1989++ 362,927 .55* 5.70*
1988++ 207,897 .55* 4.31*
1987++ 284,956 .50* 3.92*
3/27/86 to 6/30/86++ 80,871 .05*+ 4.16*+
- ---------------------------------------------------------------------------------------------------
</TABLE>
*Reflects the waiver of certain management fees and reimbursement of certain
other expenses by Nuveen Advisory. For additional information about Nuveen
Advisory's fee waivers and expense reimbursements, see note 4 to Notes to
Financial Statements in the Annual Report to Shareholders.
**Effective for fiscal year ending June 30, 1991, Nuveen California Tax-Free
Fund, Inc. has presented the above per share data by series.
+Annualized.
++Represents combined per share data and ratios for the Service Plan,
Distribution Plan and Institutional series.
7
<PAGE>
YIELD
From time to time, Nuveen California Tax-Free Fund, Inc.
may advertise the "yield," "effective yield" and "tax-
able equivalent yield" of the various series of its
Money Market Fund. The "yield" of a series refers to the
rate of income generated by an investment in the series
over a specified seven-day period, expressed as an
annualized figure. "Effective yield" is calculated simi-
larly except that, when annualized, the income earned by
the investment is assumed to be reinvested. Due to this
compounding effect, the effective yield will be slightly
higher than the yield. "Taxable equivalent yield" is the
yield that a taxable investment would need to generate
in order to equal the series' yield on an after-tax ba-
sis for an investor in a stated tax bracket (often the
bracket with the highest marginal tax rate). A taxable
equivalent yield quotation for a given series will be
higher than the yield or the effective yield quotations
for the series. The yield figures for the various series
of the Money Market Fund will fluctuate over time.
Based on the seven-day period ended February 28, 1995,
the yield, effective yield and taxable equivalent yield
(using a combined federal and California income tax rate
of 46.0%) for the Fund were as follows:
<TABLE>
<CAPTION>
TAXABLE
CURRENT EFFECTIVE EQUIVALENT
YIELD YIELD YIELD
------------------------------------------------------------
<S> <C> <C> <C>
Distribution and Service Plan Series... 3.51% 3.57% 6.50%
Institutional Series................... 3.51% 3.58% 6.50%
</TABLE>
A comparison of tax-exempt and taxable equivalent yields
is one element to consider in making an investment deci-
sion. Nuveen California Tax-Free Fund, Inc. may from
time to time in its advertising and sales materials com-
pare the then current yield or total return as of the
most recent quarter of the Money Market Fund with the
yield or total return on taxable investments such as
corporate or U.S. Government bonds, bank CD's and money
market accounts or money market funds, each of which has
investment characteristics that may differ from those of
the Fund. U.S. Government bonds, for example, are backed
by the full faith and credit of the U.S. Government, and
bank CD's and money market accounts are insured by an
agency of the federal government. Bank money market ac-
counts and money market funds provide stability of prin-
cipal, but pay interest at rates that vary with the con-
dition of the short-term taxable debt market. The in-
vestment characteristics of the Money Market Fund are
described more fully elsewhere in this Prospectus.
8
<PAGE>
Any given performance quotation or performance compari-
son for the Money Market Fund is based on historical
earnings and should not be considered as representative
of the performance of the Fund for any future period.
Additional information concerning the Fund's performance
appears in the Statement of Additional Information. For
information as to current yield and other performance
information regarding the Money Market Fund, call 800-
621-7227.
THE FUND AND ITS INVESTMENT OBJECTIVE
Nuveen California Tax-Free Fund, Inc. is an open-end,
diversified management investment company that currently
offers shares in three separate investment portfolios,
only one of which, the Money Market Fund, is being of-
fered by this Prospectus. The Money Market Fund has the
objective of providing, through investment in a profes-
sionally managed portfolio of California Municipal Obli-
gations (described below), as high a level of current
interest income exempt from both federal and California
income taxes as is consistent with its investment poli-
cies and with preservation of capital. The Money Market
Fund's 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.
There is risk in all investments and, therefore, there
can be no assurance that the objective of the Fund will
be achieved.
INVESTMENT POLICIES OF THE FUND
The Fund will, as a fundamental policy, pursue its in-
vestment objective by investing at least 80% of its in-
vestment assets in California Municipal Obligations ex-
cept during temporary defensive periods. The Money Mar-
ket Fund intends to remain as fully invested in Califor-
nia Municipal Obligations as is prudent or practical un-
der the circumstances.
The Money Market Fund's investment assets will consist
primarily of short-term California Municipal Obligations
which at the time of purchase are eligible for purchase
by money market funds under applicable guidelines of the
Securities and Exchange Commission ("SEC"), and are: (1)
rated within the two highest long-term grades by Moody's
Investors Service, Inc. ("Moody's")--Aaa or Aa, or by
Standard & Poor's Corporation ("S&P")--AAA or AA, or, in
the case of municipal notes, rated MIG-1, MIG-2, VMIG-1
or VMIG-2 by Moody's or SP-1 or SP-2 by S&P, or, in the
case of municipal commercial paper, rated Prime-1 or
9
<PAGE>
Prime-2 by Moody's or A-1 or A-2 by S&P; (2) unrated but
which, in the opinion of Nuveen Advisory, have credit
characteristics equivalent to the foregoing and are
deemed to be of "high quality" by Nuveen Advisory. To
the extent that unrated Municipal Obligations may be
less liquid, there may be somewhat greater risk in pur-
chasing unrated Municipal Obligations than in purchasing
comparable but rated Municipal Obligations. The invest-
ment portfolio of the Money Market Fund will be limited
to obligations maturing within 397 days from the date of
acquisition or which have variable or floating rates of
interest, and the Fund will maintain a dollar-weighted
average portfolio maturity of not more than 90 days.
During the fiscal year ended February 28, 1995, the av-
erage maturity of the Money Market Fund's portfolio
ranged from 27 to 75 days. The Money Market Fund gener-
ally intends to hold securities to maturity rather than
to engage in portfolio trading. However, reflecting the
short-term maturities of the investments of the Fund,
the annual portfolio turnover rate will be relatively
high.
The types of short-term California Municipal Obligations
in which the Money Market Fund may invest include bond
anticipation notes, tax anticipation notes, revenue an-
ticipation notes, construction loan notes and bank notes
issued by governmental authorities to commercial banks
as evidence of borrowings. Since these short-term secu-
rities frequently serve as interim financing pending re-
ceipt of anticipated funds from the issuance of long-
term bonds, tax collections, or other anticipated future
revenues, a weakness in an issuer's ability to obtain
such funds as anticipated could adversely affect the is-
suer's ability to meet its obligations on these short-
term securities.
The Fund may also invest in variable and floating rate
instruments even if they carry stated maturities in ex-
cess of 397 days, upon certain conditions contained in
rules and regulations issued by the SEC under the In-
vestment Company Act of 1940, but will do so only if
they carry demand features that meet the conditions of
applicable SEC rules and permit the Fund to redeem upon
specified notice at par. The Fund's right to obtain pay-
ment at par on a demand instrument upon demand could be
affected by events occurring between the date the Fund
elects to redeem the instrument and the date redemption
proceeds are due which affect the ability of the issuer
to pay the instrument at par value.
The Money Market Fund may obtain standby commitments
with respect to Municipal Obligations it purchases. Un-
der a standby commitment (often referred to as a put),
the party issuing the commitment agrees in a writing de-
livered to the Fund to purchase at the Fund's option the
Muni-
10
<PAGE>
cipal Obligation at an agree-upon price on certain dates
or within a specific period. The Fund intends to acquire
standby commitments if needed to facilitate portfolio
liquidity and to help maintain a constant net asset
value of $1.00 per share. A standby commitment would not
be exercised if the market value of the underlying secu-
rity exceeded the exercise price.
The Fund has obtained commitments (each, a "Commitment")
from MBIA Insurance Corporation ("MBIA") with respect to
certain designated bonds held by the Fund for which
credit support is furnished by one of the banks ("Ap-
proved Banks") approved by MBIA under its established
credit approval standards. Under the terms of a Commit-
ment, if the Fund were to determine that certain adverse
circumstances relating to the financial condition of the
Approved Bank had occurred, the Fund could cause MBIA to
issue a "while-in-fund" insurance policy covering the
underlying bonds; after time and subject to further
terms and conditions, the Fund could obtain from MBIA an
"insured-to-maturity" insurance policy as to the covered
bonds. Each type of insurance policy would insure pay-
ment of interest on the bonds and payment of principal
at maturity. Although such insurance would not guarantee
the market value of the bonds or the value of the Fund's
shares, the Fund believes that its ability to obtain in-
surance for such bonds under such adverse circumstances
will enable the Fund to hold or dispose of such bonds at
a price at or near their par value.
The Money Market Fund may purchase but to date has not
purchased and has no present intention to purchase "tem-
porary investments," the income from which is subject to
California income tax or to both federal and California
income taxes. Under ordinary circumstances, the Fund may
not invest more than 20% of its investment assets in
such temporary investments. However, during extraordi-
nary circumstances the Fund may, for defensive purposes,
invest more than 20% of its net assets in such temporary
investments. The Fund may only invest in temporary in-
vestments with remaining maturities of 397 days or less
which, in the opinion of Nuveen Advisory, are of "high
grade" quality.
The SEC has proposed amendments to Rule 2a-7 under the
Investment Company Act of 1940 that would, among other
things, further limit the types of securities eligible
for purchase by tax-exempt money market funds. If these
amendments are adopted, the Fund will make any necessary
adjustments to its portfolio to ensure compliance with
Rule 2a-7.
The foregoing restrictions and other limitations dis-
cussed herein will apply only at the time of purchase of
securities and will not be considered
11
<PAGE>
violated unless an excess or deficiency occurs or exists
immediately after and as a result of an acquisition of
securities.
MUNICIPAL Municipal Obligations include debt obligations issued by
OBLIGATIONS states, cities and local authorities to obtain funds for
various public purposes, such as airports, highways,
housing, hospitals, mass transportation, water and sewer
works, and include industrial development bonds and pol-
lution control bonds. 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 pol-
lution 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 such bonds. There are, of
course, variations in the security of Municipal Obliga-
tions, both within a particular classification and be-
tween classifications, depending on numerous factors.
Notes are short-term instruments with a maturity of two
years or less. Most notes are general obligations of the
issuer and are sold in anticipation of a bond sale, col-
lection of taxes or receipt of other revenues. Payment
of these notes is primarily dependent upon the issuer's
receipt of the anticipated revenues. Other notes include
construction loan notes issued to provide construction
financing for specific projects and bank notes issued by
local governmental bodies and agencies to commercial
banks as evidence of borrowings.
Municipal Obligations also include very short-term
unsecured, negotiable promissory notes, issued by
states, municipalities, and their agencies which are
known as "tax-exempt commercial paper" or "municipal
commercial paper." Payment of principal and interest on
issues of municipal commercial paper may be made from
various sources, to the extent the funds are available
therefrom. There is a limited secondary market for is-
sues of municipal commercial 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 market-
place and the Money Market Fund may invest in such other
types of notes to the extent permitted under its invest-
ment policies and limitations. Such notes may be issued
for different purposes and with different security than
those mentioned above.
12
<PAGE>
The yields on Municipal Obligations are dependent on a
variety of factors, including the condition of the gen-
eral money market and the Municipal Obligation market,
the size of a particular offering, the maturity of the
obligation and the rating of the issue. The ratings of
Moody's and S&P represent their opinions as to the qual-
ity of the Municipal Obligations which they undertake to
rate. It should be emphasized, however, that ratings are
general and are not absolute standards of quality. Con-
sequently, Municipal Obligations with the same maturity,
coupon and rating may have different yields while obli-
gations of the same maturity and coupon with different
ratings may have the same yield. The market value of
outstanding 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.
CALIFORNIA California Municipal Obligations are issued by the State
MUNICIPAL of California and cities and local authorities in the
OBLIGATIONS State of California, and bear interest that, in the
opinion of bond counsel to the issuer, is exempt from
federal and California income taxes, although such in-
terest may be subject to the Federal alternative minimum
tax. The Fund will invest primarily in California Munic-
ipal Obligations that are issued by the State of Cali-
fornia and cities and local authorities in the State of
California, except that the Fund may invest not more
than 10% of its net assets in Municipal Obligations is-
sued by United States possessions or territories, which
also bear interest that is exempt from regular Federal
as well as California individual income taxes and are
therefore considered to be California Municipal Obliga-
tions for purposes of this Prospectus.
Because the Money Market Fund will concentrate its in-
vestment in California Municipal Obligations, it may be
affected by political, economic or regulatory factors
that may impair the ability of California issuers to pay
interest on or to repay the principal of their debt ob-
ligations. As a result of "Proposition 13" and other
amendments to the California Constitution and the adop-
tion of other statutes, the taxing authority of Califor-
nia governmental entities has been limited. In recent
years California experienced substantial financial dif-
ficulties related to the severe recession from 1990-93,
the worst since the 1930's, and which hit particularly
hard in Southern California. The recession caused sub-
stantial, broad-based revenue shortfalls. During this
period, the State incurred substantial budget deficits,
of which around $1.8 billion still remained as of June
30, 1994. The State has cut back assistance to its pub-
lic authorities and political subdivisions, and further
cuts are likely to occur. These cutbacks could adversely
affect the financial condition of cities, counties and
school districts previously subject to severe fiscal
constraints and facing a fall in
13
<PAGE>
their own tax collections. California's economy has,
however, been in a steady recovery since the start of
1994, and the State projects that its accumulated budget
deficit will be repaid by June 30, 1996. The State has
for several years had to rely on short-term external
borrowing to meet its cash requirements, and may have to
continue such reliance for some time to come.
On December 6, 1994, Orange County and its pooled in-
vestment funds (the "Pools") filed for protection under
Chapter 9 of the federal Bankruptcy Law, as a result of
investment losses in the Pools, which have been esti-
mated by the County at 23%, or some $1.7 billion. Over
180 government agencies, most but not all located in Or-
ange County, had investments in the Pools. The County
and some of the participating agencies in the Pools have
defaulted on certain of their obligations because of the
bankruptcy, and others may in the future. The Fund does
not own any securities of Orange County or of any par-
ticipants in the Pools.
In July, 1994 both S&P and Moody's lowered their ratings
on the State of California's general obligation bonds to
A and A1, respectively. Municipal Obligations may be
subject to greater price volatility than Municipal Obli-
gations in general as a result of the effect of supply
and demand for these securities, which in turn could
cause greater volatility in the value of the shares of
each Fund. Additional considerations relating to the
risks of investing in California Municipal Obligations
are presented in the Statement of Additional Informa-
tion.
Obligations of issuers of Municipal Obligations are sub-
ject to the provisions of bankruptcy, insolvency and
other laws affecting the rights and remedies of credi-
tors, 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 future by Congress or
the California legislature or by referenda extending the
time for payment of principal and/or interest, or impos-
ing other constraints upon enforcement of such obliga-
tions 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 Mu-
nicipal Obligations may be materially affected.
WHEN-ISSUED AND The Money Market Fund may purchase and sell Municipal
DELAYED DELIVERY Obligations on a when-issued or delayed delivery basis.
TRANSACTIONS When-issued and delayed delivery transactions arise when
securities are purchased or sold with payment and deliv-
ery beyond the regular settlement date. (When-issued
transactions normally settle within 30-45 days.) On such
transactions the pay-
14
<PAGE>
ment obligation and the interest rate are fixed at the
time the buyer enters into the commitment to purchase.
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 de-
livery the market value may be less than cost.
CERTAIN The Money Market Fund, as a fundamental policy, may not,
FUNDAMENTAL without the approval of the holders of a majority of the
INVESTMENT outstanding shares of the Fund, (1) invest more than 5%
POLICIES of its total assets in securities of any one issuer, ex-
cept that this limitation shall not apply to securities
of the United States government, its agencies and in-
strumentalities or to the investment of 25% of the
Fund's assets; (2) borrow money, except from banks for
temporary or emergency purposes and then only in an
amount not exceeding (a) 10% of the value of the Fund's
total assets at the time of borrowing or (b) one-third
of the value of the Fund's total assets including the
amount borrowed, in order to meet redemption requests
which might otherwise require the untimely disposition
of securities; (3) pledge, mortgage or hypothecate its
assets, except that, to secure permitted borrowings for
temporary or emergency purposes it may pledge securities
having a market value at the time of the pledge not ex-
ceeding 10% of the value of the Fund's total assets; (4)
make loans, other than by entering into repurchase
agreements and through the purchase of Municipal Obliga-
tions or temporary investments in accordance with its
investment objective, policies and limitations; (5) in-
vest more than 5% of its total assets in securities of
unseasoned issuers which, together with their predeces-
sors, have been in operation for less than three years;
(6) invest more than 10% of its assets in repurchase
agreements maturing in more than seven days, "illiquid"
securities (such as non-negotiable CD's) and securities
without readily available market quotations; or (7) in-
vest more than 25% of its total assets in securities of
issuers in any one industry, provided, however, that
such limitation shall not be applicable to municipal
bonds issued by governments or political subdivisions of
governments, and obligations issued or guaranteed by the
U.S. Government, its agencies or instrumentalities. For
purposes of the foregoing sentence, the "issuer" of a
security shall be deemed to be the entity whose assets
and revenues are committed to the payment of principal
and interest on such security, provided that the guaran-
tee of an instrument will be considered a separate secu-
rity (subject to certain exclusions allowed under the
Investment Company Act of 1940). It is a fundamental
policy of the Fund, which cannot be changed without the
approval of the holders of a majority of shares of the
Fund, that the Fund will not hold securities of a single
15
<PAGE>
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.
Under the Investment Company Act of 1940, the Money Mar-
ket Fund may not purchase portfolio securities from any
underwriting syndicate of which Nuveen is a member ex-
cept under certain limited conditions set forth in Rule
10f-3.
For a more complete description of the investment re-
strictions summarized above and the other investment re-
strictions applicable to the Money Market Fund, see the
Statement of Additional Information.
MANAGEMENT OF THE FUND
The management of Nuveen California Tax-Free Fund, Inc.,
including general supervision of the duties performed
for the Money Market Fund by the investment adviser un-
der the Investment Management Agreement, is the respon-
sibility of its Board of Directors.
Nuveen Advisory, 333 West Wacker Drive, Chicago, Illi-
nois 60606, acts as the investment adviser for and man-
ages the investment and reinvestment of the assets of
the Money Market Fund, as well as the assets of the
other portfolios of Nuveen California Tax-Free Fund,
Inc. Nuveen Advisory also administers Nuveen California
Tax-Free Fund, Inc.'s business affairs, provides office
facilities and equipment and certain clerical, bookkeep-
ing and administrative services, and permits any of its
officers or employees to serve without compensation as
directors or officers of Nuveen California Tax-Free
Fund, Inc. if elected to such positions.
For the services and facilities furnished by Nuveen Ad-
visory, the Money Market Fund has agreed to pay an an-
nual management fee as follows:
<TABLE>
<CAPTION>
AVERAGE DAILY NET ASSET VALUE MANAGEMENT FEE
------------------------------------------------------------
<S> <C>
For the first $500 million........................... .400 of 1%
For the next $500 million............................ .375 of 1%
For assets over $1 billion........................... .350 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 Money Market
Fund pays all other costs and expenses of its operations
and a portion of Nuveen California Tax-Free Fund, Inc.'s
general administrative expenses allocated in the propor-
tion its net assets bear to the total net assets of each
portfolio. Included in the expenses paid by the Money
Market Fund and allocated to the Distribution Plan se-
ries and
16
<PAGE>
Service Plan series are the payments made under the Dis-
tribution and Service Plans with respect to those series
(see "How to Purchase Fund Shares--Distribution Plan,
Service Plan and Institutional Series").
The management fees will be reduced or Nuveen Advisory
will assume certain expenses of each series of the Money
Market Fund in amounts necessary to prevent the total
expenses (including Nuveen Advisory's management fees
and share of payments of each of the Distribution Plan
series and Service Plan series under the Distribution
and Service Plans, but excluding interest, taxes, fees
incurred in acquiring and disposing of portfolio securi-
ties and, to the extent permitted, extraordinary ex-
penses) of each series in any fiscal year from exceeding
.55 of 1% of the series' average daily net assets. For
the fiscal year ended February 28, 1995, management fees
amounted to .40 of 1% of the average daily net assets of
the Fund. For the fiscal year ended February 28, 1995,
net of applicable expense reimbursements, total expenses
amounted to .47, .55 and .55 of 1% of the average daily
net assets of the Institutional series, the Distribution
Plan series and the Service Plan series, respectively.
Without expense reimbursements, total expenses for the
fiscal year ended February 28, 1995, would have been
.47, .64 and .60 of 1% of the average daily net assets
of the Institutional series, the Distribution Plan se-
ries and the Service Plan series, respectively.
Nuveen Advisory was organized in 1976 and since then has
exclusively engaged in the management of municipal secu-
rities portfolios. It currently serves as investment ad-
viser to 21 open-end municipal securities portfolios
(the "Nuveen Mutual Funds") and 55 exchange-traded mu-
nicipal securities funds (the "Nuveen Exchange-Traded
Funds"). Each of these invests substantially all of its
assets in investment grade quality, tax-free municipal
securities. 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 ("Nuveen"), 333 West Wacker
Drive, Chicago, Illinois 60606, an investment banking
firm specializing in the underwriting and distribution
of tax-exempt securities. Nuveen, the principal under-
writer of the shares of Nuveen California Tax-Free Fund,
Inc., is sponsor of the Nuveen Tax-Exempt Unit Trust, a
registered unit investment trust. It is also the princi-
pal 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 approxi-
17
<PAGE>
mately 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.
NET ASSET VALUE
Net asset value of shares of the Money Market Fund will
be determined by United States Trust Company of New
York, the custodian of Nuveen California Tax-Free Fund,
Inc., as of 12:00 noon eastern time on each day on which
the Federal Reserve Bank of Boston is normally open for
business and on any other day during which there is a
sufficient degree of trading in the portfolio securities
held by the Fund such that the current net asset value
of the Fund's shares might be materially affected by
changes in the value of the securities held by the Fund.
The net asset value per share of the Fund will be com-
puted by dividing the sum of the value of the portfolio
securities held by the Fund, plus any cash or other as-
sets, less liabilities, by the total number of shares of
the Fund outstanding at such time.
The Money Market Fund will seek to maintain a net asset
value of $1.00 per share. In this connection, the Fund
values its portfolio securities on the basis of their
amortized cost. This method values a security at its
cost on the date of purchase and thereafter assumes a
constant amortization to maturity of any discount or
premium, regardless of the impact of fluctuating inter-
est rates on the market value of the security. For a
more complete description of the amortized cost valua-
tion method and its effect on existing and prospective
shareholders of the Money Market Fund, see the Statement
of Additional Information. There can be no assurance
that the Fund will be able at all times to maintain the
net asset value of $1.00 per share.
HOW TO PURCHASE FUND SHARES
IN GENERAL Shares of the Money Market Fund may be purchased on days
on which the Federal Reserve Bank of Boston is open for
business at the net asset value which is next computed
after receipt of an order in proper form and receipt of
payment in federal funds.
Shares of the Money Market Fund are issued in three se-
ries: (i) the "Distribution Plan" series intended for
purchase by or through securities dealers
18
<PAGE>
that have entered into Distribution Agreements with
Nuveen with respect to the distribution of shares of the
Fund pursuant to a Distribution Plan adopted by the
Fund, (ii) the "Service Plan" series intended for pur-
chase by or through banks and other organizations
("Service Organizations") that have agreed to perform
services for their customers who are shareholders of
this series of the Fund pursuant to a Service Plan
adopted by the Fund and (iii) the "Institutional" series
intended for purchase by trustees, bank trust depart-
ments, corporations and investment bankers or advisers.
The Distribution Plan was adopted by the Fund in accor-
dance with Rule 12b-1 under the 1940 Act which permits
an investment company to bear distribution expenses (as
that term is construed by the Securities and Exchange
Commission) in connection with certain services provided
by securities dealers. The Service Plan, although not a
Rule 12b-1 plan, is a comparable agreement entered into
with Service Organizations who provide certain adminis-
trative services. There is no sales load on purchases of
shares of any of the three series of the Fund. Under the
Distribution Plan and the Service Plan, the Distribution
Plan series and the Service Plan series of shares of the
Fund and Nuveen pay fees to securities dealers and Serv-
ice Organizations for services rendered in the distribu-
tion of shares of the Fund or the servicing of share-
holder accounts. Payment of these fees by the Service
Plan series and the Distribution Plan series will
ordinarily result in a lower yield on shares of these
series as compared with shares of the Institutional se-
ries. These fees are described below under the caption
"Distribution and Service Plans." Nuveen may, in its
discretion and from its own resources, pay to organiza-
tions that satisfy certain criteria an additional amount
not to exceed .05 of 1% per year based on average assets
of accounts serviced by such organizations. Shares of
the Service Plan series and the Distribution Plan series
enjoy certain exclusive voting rights on matters related
to the payment of fees by these two series. Except for
the payment of these fees and the special voting rights
related thereto, shares of each of the three series of
the Money Market Fund are identical.
Purchases of shares of the Money Market Fund by Federal
Reserve wire are recommended. However, purchases may
also be made by bank wire, Federal Reserve draft or
check. The minimum initial investment in the Fund is
$5,000, and subsequent investments must be in amounts of
$100 or more.
In order to maximize the earnings on its assets, the
Money Market Fund strives to be invested as completely
as practicable. The Fund is normally required to make
settlement in federal funds for securities purchased.
Accordingly, orders for shares of the Fund may be made
and become effec-
19
<PAGE>
tive on days on which the Federal Reserve Bank of Boston
is normally open for business, as follows:
Purchase By To open an account, call Nuveen toll-free at 800-858-
Telephone 4084 to obtain an account number, control number and in-
structions. Information needed to establish the account
will be taken over the telephone. An application form
should be completed promptly and mailed to Nuveen Cali-
fornia Tax-Free Fund, Inc. Federal funds should be wired
to:
United Missouri Bank of Kansas City, N.A.
ABA # 101000695
Nuveen California Tax-Free Fund, Inc.--
Nuveen California Tax-Free Money Market Fund
Account No. _________________________________ (see above)
Account Name:____________________________________________
If an order is received by Nuveen by 12:00 noon eastern
time (9:00 a.m. pacific time), and federal funds are re-
ceived by United Missouri Bank of Kansas City, N.A. on
the same day by 3:00 p.m. eastern time (12:00 noon pa-
cific time), the order is effective that day. If either
the order or federal funds are received after the times
specified above, the order will become effective the
following business day.
Purchase by Mail To open an account, complete the application form and
mail it with a check or Federal Reserve draft to Nuveen
California Tax-Free Money Market Fund, P.O. Box 5330,
Denver, Colorado 80217-5330. Subsequent investments may
be made by mailing a check with the investor's account
number to the above address. The order becomes effective
as soon as the check or draft is converted to federal
funds. This usually occurs one business day after re-
ceipt, but may take longer.
Purchase Through To open an account through a securities dealer, bank or
a Securities other Service Organization, investors should send money
Dealer or Service to that organization for transmission to Nuveen Califor-
Organization nia Tax-Free Fund, Inc. and furnish it with the informa-
tion required in the application form. The Money Market
Fund has Distribution and Service Plans pursuant to
which payments are made, in the case of the Distribution
Plan series to dealers who provide assistance in dis-
tributing shares of such series of the Fund, and in the
case of the Service Plan series to Service Organizations
who provide assistance in servicing shareholder accounts
of such series. See "Distribution and Service Plans."
20
<PAGE>
Purchase By California resident unitholders of Nuveen Unit Invest-
Reinvestment of ment Trusts ("UITs") may purchase shares of the Money
Nuveen Unit Market Fund by automatically reinvesting distributions
Investment Trust from their Nuveen UIT. To obtain information on share
Distributions purchases through investment of Nuveen UIT distribu-
tions, check the applicable box on the enclosed Applica-
tion Form or call Nuveen toll-free at 800-237-0910.
COMMENCEMENT OF Shares of the Money Market Fund are deemed to have been
DIVIDENDS purchased when an order becomes effective and are enti-
tled to income commencing on the day the order becomes
effective.
OTHER SHAREHOLDER Automatic Deposit Plan. Once you have established a Fund
OPTIONS account, you may make regular investments in your Fund
in an amount of $25 or more each month by authorizing
Shareholder Services, Inc. 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 is made in connection
with this Plan, and there is no cost to the Fund. To ob-
tain 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.
Payroll Direct Deposit Plan. Once you have established
an account with the Fund, you may, with your employer's
permission, make regular investments in Fund shares of
$25 or more per pay period by authorizing your employer
to deduct such amount from your paycheck. There is no
obligation to continue payments and participation may be
terminated at any time at your discretion. No charge is
made for this service and there is no cost to the Fund.
To obtain an application form for the Payroll Direct De-
posit Plan, check the applicable box on the enclosed Ap-
plication Form or call Nuveen toll-free at 800-621-7227.
Exchange Privilege. You may exchange shares of the Fund
for shares of any other open-end management investment
company with reciprocal exchange privileges advised by
Nuveen Advisory (the "Nuveen Funds"), provided that the
Nuveen Fund into which shares are to be exchanged is of-
fered in your state of residence and that the shares to
be exchanged have been held by you for a period of at
least 15 days. Shares of Nuveen Funds purchased subject
to a front-end sales charge may be exchanged for shares
of the Funds or any other Nuveen Fund at the next deter-
mined net asset value without any front-end sales
charge. Shares of any Nuveen Fund purchased through div-
idend reinvestment or through reinvestment of Nuveen
Tax-Exempt Unit Trust distributions (and any dividends
21
<PAGE>
thereon) may be exchanged for shares of the Funds or any
other Nuveen Fund without a front-end sales charge. Ex-
changes of shares with respect to which no front-end
sales charge has been paid will be made at the public
offering price, which may include a front-end sales
charge, unless a front-end sales charge has previously
been paid on the investment represented by the exchanged
shares (i.e., the shares to be exchanged were originally
issued in exchange for shares on which a front-end sales
charge was paid), in which case the exchange will be
made at net asset value. Because certain other Nuveen
funds may determine net asset value and therefore honor
purchase or redemption requests on days when the Fund
does not (generally, Martin Luther King's Birthday, Co-
lumbus Day and Veterans Day), exchanges of shares of one
of those funds for shares of the Fund may not be ef-
fected on such days.
The total value of shares being exchanged must at least
equal the minimum investment requirement of the Nuveen
Fund into which they are being exchanged. Exchanges are
made based on the relative dollar values of the shares
involved in the exchange, and will be effected by re-
demption of shares of the Nuveen Fund held and purchase
of the shares of the other Nuveen Fund. For federal in-
come tax purposes, any such exchange constitutes a sale
and purchase of shares and may result in capital gain or
loss. Before exercising any exchange, you should obtain
the Prospectus for the Nuveen Fund into which shares are
to be exchanged and read it carefully. If the registra-
tion 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 make exchanges by telephone if a pre-
authorized exchange authorization, as provided on the
account Application Form, is on file with Shareholder
Services, Inc., Nuveen Tax-Free Money Market Fund's
shareholder service agent. The exchange privilege may be
modified or discontinued at any time upon prior written
notice to Fund shareholders.
DISTRIBUTION AND The Fund has adopted a Distribution Plan pursuant to
SERVICE PLANS Rule 12b-1 under the 1940 Act and a Service Plan (col-
lectively, the "Plans"), pursuant to which the Distribu-
tion Plan series and the Service Plan series of the Fund
and Nuveen pay fees to securities dealers and Service
Organizations for services rendered in the distribution
of shares of the Fund or the servicing of shareholder
accounts. These services may include, among other
things, establishing and maintaining shareholder ac-
counts, processing purchase and redemption transactions,
arranging for bank wires, performing
22
<PAGE>
sub-accounting, answering shareholder inquiries and such
other services as Nuveen may request. Nuveen will enter
into Distribution or Service Agreements with organiza-
tions who render such services. Service payments to such
organizations in amounts of up to .25 of 1% per year of
average assets of serviced accounts will be paid in part
by the respective series of each Fund and in part by
Nuveen.
The Plans continue in effect from year to year as long
as their continuance is approved at least annually by a
vote of the Board of Directors and a vote of the non-in-
terested directors of Nuveen California Tax-Free Fund,
Inc. The Plans may not be amended to increase materially
the cost which the Distribution Plan series or the Serv-
ice Plan series of the Money Market Fund may bear for
distribution and services, respectively, without the ap-
proval of the non-interested directors and the share-
holders of the affected series of that Fund. Any other
material amendments of the Plans must be approved by the
non-interested directors. Beneficial owners of shares of
the Distribution Plan series and the Service Plan series
should read this Prospectus in light of the terms gov-
erning their accounts with securities dealers and Serv-
ice Organizations, respectively.
ADDITIONAL An account will be maintained for each shareholder of
INFORMATION record of the Money Market Fund by Shareholder Services,
Inc. The Fund's Share certificates will be issued only
upon written request of the shareholder to Shareholder
Services, Inc. No certificates are issued for fractional
shares. The Fund reserves the right to reject any pur-
chase order and to waive or increase minimum investment
requirements.
Institutions are encouraged to open single master ac-
counts, and may wish to use the shareholder service
agent's sub-accounting system to minimize their internal
recordkeeping requirements. An institution or other in-
vestor requesting shareholder servicing or accounting
other than the master account or sub-accounting service
offered by the Fund will be required to enter into a
separate agreement with the agent for these services for
a fee to be determined in accordance with the level of
services to be furnished. To assist those institutions
performing their own sub-accounting, same day informa-
tion as to the Fund's daily per share income to seven
decimal places and the one-day yield to four decimal
places are normally available by 12:30 p.m. pacific
time.
Banks and other organizations through which investors
may purchase shares of the Fund may impose charges in
connection with purchase orders. Investors should con-
tact their institutions directly to determine what
charges, if any, may be imposed.
23
<PAGE>
Subject to the rules and regulations of the SEC, the
Money Market Fund reserves the right to suspend the con-
tinuous offering of its shares at any time, but such
suspension shall not affect the shareholder's right of
redemption as described below.
HOW TO REDEEM FUND SHARES
IN GENERAL You may require the Money Market Fund to redeem for cash
your shares of the Fund at the net asset value next com-
puted after instructions and required documents and cer-
tificates, if any, are received in proper form. There is
no charge for the redemption of shares. Nuveen Califor-
nia Tax-Free Fund, Inc. reserves the right not to honor
redemption requests where shares of the Fund have been
purchased by check within 15 days prior to the date the
redemption request is received.
TELEPHONE Redemption requests by wire with respect to shares of
REDEMPTION the Money Market Fund held in non-certificate form may
be made by calling Nuveen at 800-858-4084. If a redemp-
tion request with respect to such shares is received by
Nuveen by 12:00 noon eastern time (9:00 a.m. pacific
time), the shares to be redeemed do not earn income on
the day the request is received, but proceeds are ordi-
narily wired on the same day. If the redemption request
is received by Nuveen after 12:00 noon eastern time
(9:00 a.m. pacific time) and prior to 4:00 p.m. eastern
time (1:00 p.m. pacific time), the shares to be redeemed
earn income on the day the request is received and pro-
ceeds are ordinarily wired the next business day. The
wiring of redemption proceeds may be delayed one addi-
tional business day if the Federal Reserve Bank of Bos-
ton or the Federal Reserve Bank of New York is closed on
the day redemption proceeds would ordinarily be wired
under the foregoing procedures. Proceeds of telephone
redemptions by wire will be transferred by Federal Re-
serve wire only to the commercial bank account specified
by the shareholder on the application form.
Telephone redemptions payable by check permit sharehold-
ers whose account address has not changed within the
last sixty days to redeem shares worth $25,000 or less
by calling the Transfer Agent of Nuveen California Tax-
Free Fund, Inc. Telephone requests can be made by the
shareholder or any person. Redemption checks will be is-
sued only in the name of the shareholder of record and
will be mailed to the address of record. If the tele-
phone request is received prior to 2:00 p.m. eastern
time, the shares to be redeemed earn income on the day
the request is made and the redemption check will be
mailed the next business day. For requests re-
24
<PAGE>
ceived after 2:00 p.m. eastern time, the shares to be
redeemed earn income through the next business day and
the check will be mailed on the second business day.
Shareholders redeeming by telephone must first have com-
pleted an authorization form and returned the form to
Nuveen. Telephone redemptions by wire are limited to re-
demptions of $1,000 or more. Nuveen California Tax-Free
Fund, Inc. reserves the right to charge a fee of approx-
imately $5 for the cost of wire transferred redemptions
of less than $5,000. The amount and terms of this fee
are subject to change. Shares for which stock certifi-
cates have been issued will not be available for redemp-
tion by telephone.
In order to establish multiple accounts, or to change
the account or accounts designated to receive wire re-
demption proceeds, or the address of record for the re-
ceipt of telephone redemption by check proceeds, a writ-
ten request must be sent to Nuveen. This request must be
signed by each shareholder with each signature guaran-
teed by a member of an approved Medallion Guarantee Pro-
gram, or in such other manner as may be acceptable to
the Fund. Further documentation may be required from
corporations, executors, trustees or personal represent-
atives.
The Fund reserves the right to refuse telephone redemp-
tions and, at its option, may limit the timing, amount
or frequency of these redemptions. This procedure may be
modified or terminated at any time, on 30 days' notice,
by the Fund. The Fund, Shareholder Services, Inc. and
Nuveen will not be liable for following telephone in-
structions reasonably believed to be genuine. The Fund
employs procedures reasonably designed to confirm that
telephone instructions are genuine. These procedures in-
clude 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 tele-
phone instructions.
CHECK REDEMPTION Shareholders of the Distribution Plan series of the
Money Market Fund may request that the Fund provide them
with drafts ("Redemption Checks") drawn on the Fund's
account. These Redemption Checks may be made payable to
the order of any person in an amount of $500 or more,
and dividends are earned until the Redemption Check
clears. Redemption Checks clear through the United Mis-
souri Bank of Kansas City, N.A. (the "Bank") and are
subject to the same rules and regulations that the Bank
applies to checking accounts.
25
<PAGE>
When a Redemption Check is presented, a sufficient num-
ber of full and fractional shares in the shareholder's
account will be redeemed to cover the amount of the Re-
demption Check. Shares for which stock certificates have
been issued will not be available for redemption by the
use of Redemption Checks. There must be sufficient
shares in the shareholder's account to cover the amount
of each Redemption Check written or the check will be
returned. Checks should not be used to close an account.
Shareholders wishing to use Redemption Checks must com-
plete the appropriate section of the application form
and submit the enclosed signature card.
This check redemption privilege may be modified or ter-
minated at any time by the Money Market Fund or the
Bank. The Check redemption feature does not constitute a
bank checking account.
WRITTEN You may redeem shares by sending a written request for
REDEMPTION redemption directly to the Nuveen California Tax-Free
Money Market Fund, c/o Shareholder Services, Inc., P.O.
Box 5330, Denver, CO 80217-5330, accompanied by duly en-
dorsed certificates, if issued. Requests for redemption
and share certificates, if issued, must be signed by
each shareholder and, if the redemption proceeds exceed
$25,000 or are payable other than to the shareholder of
record at the address of record (which address may not
have been changed in the preceding 60 days), the signa-
ture must be guaranteed by a member of an approved Me-
dallion Guarantee Program or in such other manner as may
be acceptable to the Fund. Payment for shares redeemed
will normally be made within seven days after receipt of
a properly executed redemption request in proper form.
REDEMPTION Shareholders of the Money Market Fund's Service Plan se-
THROUGH SERVICE ries may also redeem shares of such series through their
ORGANIZATIONS accounts with Service Organizations in accordance with
procedures established by each such Service Organiza-
tion. The Fund has no redemption charge, but Service Or-
ganizations may impose transaction fees or other charges
relating to the redemption of Fund shares. Individual
shareholders should determine from their Service Organi-
zations the procedures and charges, if any, that govern
redemptions.
AUTOMATIC If you own Fund shares currently worth at least $10,000,
WITHDRAWAL PLAN you may establish an Automatic Withdrawal Plan by com-
pleting an 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
26
<PAGE>
at 800-621-6227. The Plan permits you to request peri-
odic withdrawals on a monthly, quarterly, semi-annual or
annual basis in an amount of $50 or more. All shares of
the Fund you own will be accumulated in the Plan, with a
sufficient number of shares being redeemed periodically
to meet the requested withdrawal payments. Depending
upon the size of the payments requested under the Plan,
redemptions for the purpose of making such payments may
reduce or even exhaust your account. Withdrawals under
this Plan should not, therefore, be considered a yield
on investment. An Automatic Withdrawal Plan may be ter-
minated at any time by you or the Fund. To obtain an ap-
plication form for the Automatic Withdrawal Plan, check
the applicable box of the enclosed Application Form or
call Nuveen toll-free at 800-621-6227.
REDEMPTION IN All redemptions of shares of the Money Market Fund shall
KIND be made in cash, except that the commitment to redeem
shares in cash extends only to redemption requests made
by each shareholder of the Fund during any 90 day period
of up to the lesser of $250,000 or 1% of the net asset
value of the Fund at the beginning of such period. This
commitment is irrevocable without the prior approval of
the SEC and is a fundamental policy of the Fund that may
not be changed without shareholder approval. In the case
of redemption requests by shareholders of the Fund in
excess of such amounts, the Board of Directors reserves
the right to have the Fund make payment in whole or in
part in securities or other assets of the Fund in case
of an emergency or any time a cash distribution would
impair the liquidity of the Fund to the detriment of the
existing shareholders. In this event, the securities
would be valued in the same manner as the securities of
the Money Market Fund are valued. If the recipient were
to sell such securities, he or she would incur brokerage
charges.
OTHER PRACTICES The Money Market Fund may suspend the right of redemp-
tion 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 SEC so that disposal of the Fund's investments or
determination of its net asset value is not reasonably
practicable, or (c) for such other periods as the SEC by
order may permit for protection of the shareholders of
the Fund.
27
<PAGE>
DIVIDENDS AND TAXES
DIVIDENDS All of the net income attributable to the respective se-
ries of the Money Market Fund is declared on each calen-
dar day as a dividend on shares entitled to such divi-
dend. Net income of each series consists of all interest
income accrued and discount earned on portfolio assets
(adjusted for amortization of premium on securities when
required for federal income tax purposes), plus or minus
any realized short-term gains or losses on portfolio in-
struments since the previous dividend declaration, less
estimated expenses incurred subsequent to the previous
declaration. For the Distribution Plan series and Serv-
ice Plan series of the Money Market Fund, expenses will
include, among other things, payments to banks or other
organizations and securities dealers pursuant to Distri-
bution Agreements and Service Agreements with Nuveen.
See "How to Purchase Fund Shares--Distribution Plan,
Service Plan and Institutional Series" above for addi-
tional information on these expenses. It is not expected
that realized or unrealized gains or losses on portfolio
instruments will be a meaningful factor in the computa-
tion of the net income of the Fund. Dividends are paid
monthly and are reinvested in additional shares of the
series of the Fund on which the dividends are declared
at net asset value or, at the shareholder's option, paid
in cash. Net realized long-term capital gains, if any,
will be paid not less frequently than annually within 30
days of the end of the fiscal year of Nuveen California
Tax-Free Fund, Inc. and reinvested in additional shares
of the series of the Fund on which such gains are paid
at net asset value unless the shareholder has elected to
receive capital gains in cash.
TAX MATTERS The Money Market Fund intends to qualify, as it has in
prior years, 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
for treatment as a regulated investment company, the
Fund must satisfy certain requirements relating to the
sources of its income, diversification of its assets and
distribution of its income to shareholders. As a regu-
lated investment company, the Fund will not be subject
to federal income tax on the portion of its net invest-
ment income and net realized capital gains that is cur-
rently distributed to shareholders. Each Fund also in-
tends to satisfy conditions which will enable interest
from Municipal Obligations that is exempt from federal
income tax in the hands of the Fund, to retain such tax-
exempt status when distributed to the shareholders of
the Fund. The Fund also intends to qualify as a diversi-
fied management company under the California Revenue and
Taxation Code, and intends to satisfy conditions which
will enable it to pay dividends that are exempt from
California personal income taxes ("California ex-
28
<PAGE>
empt-interest dividends"), but not from California fran-
chise tax or California corporate income tax. The total
amount of California exempt-interest dividends paid by
the Fund with respect to any taxable year cannot exceed
the amount of interest received by the Fund during such
year on obligations, interest on which is exempt from
California personal income tax. The Fund will not be
subject to California franchise or corporate income tax.
Individual shareholders of the portfolios of Nuveen Cal-
ifornia Tax-Free Fund, Inc. will therefore not incur any
federal or California personal income taxes on interest
income derived from California Municipal Obligations,
whether such dividends are taken in cash or reinvested
in additional shares of a portfolio.
Distributions by the Money Market Fund of net income re-
ceived, if any, from taxable temporary investments and
net short-term capital gains, if any, realized by the
Fund will be taxable to shareholders as ordinary income.
As long as the Fund qualifies as a regulated investment
company under the Code, distributions to shareholders
will not qualify for the dividends received deduction
for corporations. If in any year the Fund should fail to
qualify under Subchapter M for tax treatment as a regu-
lated investment company, the Fund would incur a regular
corporate federal income tax upon its taxable income for
that year, and the entire amount of distributions to
shareholders would be taxable to shareholders as ordi-
nary income.
The Code provides that interest on indebtedness incurred
or continued to purchase or carry tax-free investments,
such as shares of the Fund, is not deductible. Under
rules used by the Internal Revenue Service for determin-
ing when borrowed funds are considered used for the pur-
pose of purchasing or carrying particular assets, the
purchase of shares may be considered to have been made
with borrowed funds even though such funds are not di-
rectly traceable to the purchase of shares. Similarly,
under California law interest on indebtedness incurred
or continued by a shareholder in connection with the
purchase of shares of the Fund will not be deductible
for California personal income tax purposes.
Tax-exempt income is taken into account in calculating
the amount of
social security and railroad retirement benefits that
may be subject to federal income tax.
Because the Money Market Fund may invest in private ac-
tivity bonds, the interest on which is not federally
tax-exempt to persons who are "substantial users" of the
facilities financed by such bonds or "related persons"
of such "substantial users," the Fund may not be an ap-
propriate investment
29
<PAGE>
for shareholders who are considered either a "substan-
tial user" or a "related person" thereof. Such persons
should consult their tax advisers before investing in
the Fund.
Although the Money Market Fund to date has not done so
and has no present intention of doing so, the Fund may
also invest in private activity bonds the interest on
which is a specific item of tax preference for purposes
of computing the alternative minimum tax on corporations
and individuals. This type of private activity bond in-
cludes most industrial and housing revenue bonds. Share-
holders whose tax liability is determined under the al-
ternative minimum tax will be taxed on their share of
the Fund's exempt-interest dividends that were paid from
income earned on these bonds. In addition, the alterna-
tive minimum taxable income for corporations is in-
creased 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 with-
hold 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 identifica-
tion number (in the case of individuals, their social
security number) and certain certificates, 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 and
California income tax provisions presently in effect as
they directly govern the taxation of the Money Market
Fund or its shareholders. These provisions are subject
to change by legislative or administrative 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 concern-
ing the taxation of the Fund and the federal, California
and local tax consequences to its shareholders.
30
<PAGE>
GENERAL INFORMATION
Investor Inquiries. Investor inquiries may be made di-
rectly of the Money Market Fund in writing or by calling
John Nuveen & Co. Incorporated, the Money Market Fund's
distributor, toll-free at 800-621-7227.
Custodian, Shareholder Services Agent and Transfer
Agent. The Custodian of the assets of the Money Market
Fund is United States Trust Company of New York, 114
West 47th Street, New York, New York 10036. The Chase
Manhattan Bank, N.A., 1 Chase Manhattan Plaza, New York,
NY 10081, has agreed to become successor to U.S. Trust,
as Custodian and Fund Accountant. The succession is
presently scheduled for July 1, 1995. No changes in the
Fund's administration or in the amount of fees and ex-
penses paid by the Funds for these services will result,
and no action by shareholders will be required. Share-
holder Services, Inc., P.O. Box 5330, Denver, Colorado
80217-5330, is the transfer, shareholder services and
dividend paying agent for the Fund and performs book-
keeping, data processing and administrative services in-
cident to the maintenance of shareholder accounts.
Capital Stock. Nuveen California Tax-Free Fund, Inc. was
incorporated in Maryland on October 3, 1985. It is au-
thorized to issue an aggregate of 2,600,000,000 shares
of common stock, $.01 par value, consisting of
125,000,000 shares of the Nuveen California Tax-Free
Value Fund, 125,000,000 shares of the Nuveen California
Insured Tax-Free Value Fund and 2,350,000,000 shares of
the Nuveen California Tax-Free Money Market Fund. Shares
of the Nuveen California Tax-Free Money Market Fund con-
sist of three series as follows: 400,000,000 shares of
the Institutional series, 1,100,000 shares of the Serv-
ice Plan series and 850,000,000 shares of the Distribu-
tion Plan series. The shares of each such series are
identical in all respects except with respect to the al-
location of a portion of the fees paid under the Distri-
bution and Service Plans and voting rights with respect
thereto. See "How to Purchase Fund Shares--Distribution
Plan, Service Plan and Institutional Series." Shares of
each portfolio class have equal non-cumulative voting
rights and equal rights with respect to dividends de-
clared by such portfolio class and the assets of such
portfolio class upon liquidation, except for the special
voting rights of holders of those series of Nuveen Cali-
fornia Tax-Free Money Market Fund that are subject to
Distribution or Service Plans. In addition, only shares
of a particular portfolio class are entitled to vote on
matters concerning solely that portfolio class. Shares
are fully paid and nonassessable when issued and have no
pre-emptive, conversion or exchange rights.
31
<PAGE>
Nuveen California Tax-Free Fund, Inc.--
Nuveen California Tax-Free Money Market Fund
APPLICATION FORM
Mail completed Application Form to: If you prefer to wire funds to open an
Nuveen California Tax-Free Fund, Inc. account, or need any assistance in com-
P.O. Box 5330 pleting this form, call Nuveen toll-
Denver, CO 80217-5330 free 800-621-7227.
- --------------------------------------------------------------------------------
1. ACCOUNT REGISTRATION Print neatly or type.
[_] Individual[_] Joint[_] Custodian
[_] Gift to a Minor Under Uniform
Gift to Minors Act of (State) ________________________________________________
[_] Trust dated______________________________, 19_______________________________
Individual or Joint Account
Last Name, First, Initial
------------------------------------------------------------------------------
Social Security Number
----
------------------------------------------------------------------------------
Joint Tenant (if any)
------------------------------------------------------------------------------
Custodian, Gift to a Minor, or Trust Account
Custodian's Name, or Name of Trustee
------------------------------------------------------------------------------
Trust's Taxpayer I.D. No.
--
------------------------------------------------------------------------------
Minor's Name (only one for a Gift), or Name of Trust
------------------------------------------------------------------------------
Minor's Social Security No.
----
------------------------------------------------------------------------------
Mailing Address and Telephone Number
Street Address
------------------------------------------------------------------------------
City State Zip Code
------------------------------------------------------------------------------
Telephone Number (include Area Code)
( )
------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
2. DISTRIBUTIONS
[_] Pay monthly dividends by check
[_] Pay capital gains distributions by check
3. NAME AND ADDRESS OF SECURITIES REPRESENTATIVE
Name of Securities Representative
------------------------------------------------------------------------------
Firm Name
------------------------------------------------------------------------------
Street Address
------------------------------------------------------------------------------
City State Zip Code
------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
4. INITIAL INVESTMENT
(Minimum initial investment is $5,000.)
[_] Enclosed is my check in the amount of $ made payable to Nuveen
California Tax-Free Fund, Inc.
[_] Funds in the amount of $ were wired to United Missouri Bank of
Kansas City for my account No. in the Fund. (Please call Nuveen
at 800-858-4084 to obtain an account number before wiring funds.)
- --------------------------------------------------------------------------------
5. SIGNATURE(S) Sign exactly as name or names appear above in Section 1,
Account Registration. Sign in blue or black ink.
I certify that I have received and read the current Fund prospectus. Under
penalties of perjury, I certify (1) that the number shown on this Application
Form is my correct Social Security or Taxpayer Identification Number, and (2)
that the IRS has not notified me that I am presently subject to backup
withholding. (Line out clause (2) if you are subject to backup withholding.)
Individual or Joint Account Signature(s):
Individual Date
------------------------------------------------------------------------------
Joint Tenant (if applicable) Date
------------------------------------------------------------------------------
Custodian or Trustee Signature:
BY: Date
------------------------------------------------------------------------------
See reverse side for Optional Fund Services.
32
<PAGE>
OPTIONAL FUND SERVICES
6. OPTIONAL FUND SERVICES
Please send me application materials for these optional fund services
described in the prospectus.
[_Automatic]Deposit Plan
[_Automatic]Withdrawal
Plan
[_Payroll]Direct Deposit Plan
[_UIT]Reinvestment
- --------------------------------------------------------------------------------
7. TELEPHONE REDEMPTION BY WIRE AUTHORIZATION Select only one of the following,
either Option A or B.
[_] OPTION A Wire proceeds to my personal commercial bank account. Attach a
voided check and complete only the section below.
Your Bank Account Name
------------------------------------------------------------------------------
Your Bank Account Number Bank's Routing Code
------------------------------------------------------------------------------
Name of Bank
------------------------------------------------------------------------------
Bank's Street Address
------------------------------------------------------------------------------
City State Zip Code
------------------------------------------------------------------------------
Bank's Telephone Number (include Area Code)
( )
------------------------------------------------------------------------------
[_] OPTION B Wire proceeds to my securities representative firm's commercial
bank account.
Your Account Name
------------------------------------------------------------------------------
Your Account Number
------------------------------------------------------------------------------
Name of Securities Representative
------------------------------------------------------------------------------
Firm's Street Address
------------------------------------------------------------------------------
City State Zip Code
------------------------------------------------------------------------------
Firm's Telephone Number (include Area Code)
( )
------------------------------------------------------------------------------
To be completed by the securities representative if Option B above is
selected.
Name of Bank of Securities Representative Firm
------------------------------------------------------------------------------
Name of Branch Bank's Routing Code
------------------------------------------------------------------------------
Bank's Account Number
------------------------------------------------------------------------------
Bank's Street Address
------------------------------------------------------------------------------
City State Zip Code
------------------------------------------------------------------------------
Securities Representative's Signature Date
------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
8. TELEPHONE REDEMPTION BY CHECK AUTHORIZATION
[_] I hereby authorize the Fund and its agents to honor telephone instructions
from me or any person to redeem shares worth $25,000 or less from my account
and send those proceeds by check payable to me at my address of record,
subject to the terms and conditions in the prospectus and the Instructions and
Explanations section for this option.
- --------------------------------------------------------------------------------
9. CHECK REDEMPTION AUTHORIZATION
[_] By checking this box, you authorize drafts drawn on the Fund to be honored
and the redemption of a sufficient number of Fund shares to pay such draft.
Read the Instructions and Explanation carefully before completing this section
and return the completed signature card with this application form.
[_] either owner
Joint Accounts: are required to sign redemption checks.
or
Check
[_] all owners
whether
- --------------------------------------------------------------------------------
10. TELEPHONE EXCHANGE AUTHORIZATION
Check the box below to elect this option.
[_] I hereby authorize telephone exchanges from the Fund into other Nuveen
open-end mutual funds subject to the terms and conditions in the Fund
prospectus and the Instructions and Explanations section for this option.
- --------------------------------------------------------------------------------
33
<PAGE>
APPLICATION FORM--INSTRUCTIONS AND EXPLANATIONS
1 ACCOUNT Check the box that describes the type of account you are
REGISTRATION opening, and complete all required information which ap-
plies to your account type. This information will be
used to establish your account; therefore, provide the
requested information precisely as you wish it to appear
on our records. Registration for two or more persons
will be as joint tenants with right of survivorship un-
less noted otherwise. In the case of a Gift to a Minor
account, you may only indicate one minor's name and So-
cial Security Number. For a Custodian or Trust account,
provide the Taxpayer Identification or Social Security
Number of the appropriate entity.
2 DISTRIBUTIONS Since open-end mutual funds pay monthly dividends, you
have a choice of reinvesting dividend payments into ad-
ditional shares, or you may receive monthly checks. In-
dicate how you want the monthly dividends from the Fund
distributed. If no choice is indicated, dividends will
be reinvested automatically into additional shares. Al-
so, capital gains distributions, if any, will be rein-
vested automatically in additional shares unless you
elect to receive them by check.
3 NAME AND We urge you to supply the name and address of your secu-
ADDRESS OF rities representative. By providing this information,
SECURITIES your securities representative will receive duplicate
REPRESENTATIVE copies of your Fund statements, and therefore may be ap-
prised of the status of your investments.
4 INITIAL Minimum initial investment is $5,000. Enclose a check
INVESTMENT with your completed, signed application. Your check
should be in the amount specified and made payable to
the Fund named.
You may also arrange to invest in the Fund through your
securities representative. (See the Fund prospectus un-
der "How to Purchase Fund Shares" for more complete in-
formation.)
If you are opening an account to automatically reinvest
the distributions of your Nuveen Tax Exempt Unit Trust
holdings and do not wish to make a direct investment at
this time, leave this section blank.
5 SIGNATURE(S) This application must be signed by all registered ac-
count owners exactly as names appear in Section 1, under
Account Registration, except if the account is regis-
tered as a Custodian, Gift to a Minor, or Trust account.
In
34
<PAGE>
APPLICATION FORM--INSTRUCTIONS AND EXPLANATIONS [CONTINUED]
such cases, the appropriate person (e.g., trustee, cus-
todian) should sign the Application Form.
By signing the Application Form you certify that you
have power and authority to establish this account and
select the privileges requested. You also release Nuveen
California Tax-Free Fund, Inc., Shareholder Services,
Inc. ("SSI"), John Nuveen & Co. Incorporated, United
Missouri Bank of Kansas City, N.A. and their agents and
representatives from all liability and agree to indem-
nify each of them from any and all losses, damages or
costs for acting in good faith in accordance with in-
structions believed to be genuine. With respect to the
actions identified on items #7, #8 and #10 of this ap-
plication, you understand that the Fund, SSI and Nuveen
will not be liable for following telephone instructions
reasonably believed to be genuine. You also understand
that the Fund employs procedures reasonably designed to
confirm that telephone instructions are genuine, and, if
these procedures are not followed, the Fund may be lia-
ble for any losses due to unauthorized or fraudulent
telephone instructions. You agree that the authorization
herein shall continue until SSI receives written notice
of a change or modification signed by all owners. This
account is subject to the terms of the Fund's prospec-
tus, as amended from time to time, and subject to ac-
ceptance by the Fund in Chicago, Illinois, and to the
laws of Illinois. All terms shall be binding upon the
heirs, representatives and assigns of the account own-
ers.
6 OPTIONAL FUND Read prospectus for a description of these optional fund
SERVICES services.
7 TELEPHONE The telephone redemption option gives you quick and con-
REDEMPTION BY venient access to your money. By electing this option,
WIRE you are authorizing Shareholder Services, Inc. ("SSI"),
AUTHORIZATION and John Nuveen & Co. Incorporated to honor telephone,
telegraphic or other instructions, without signature
guarantee, from any person for the redemption of shares
of the Fund (minimum $1,000), provided that proceeds are
transmitted to either your personal checking, NOW or
money market account at a commercial bank, or in your
name to the commercial bank account of your securities
representative firm.
Option A. By checking this box and completing the re-
quested information, you elect to have all redemption
proceeds wired to your personal checking, NOW or money
market account at a commercial bank. Attach a check
marked void.
35
<PAGE>
Option B. By checking this box and completing the re-
quested information, you elect to have all redemption
proceeds wired in your name to your broker/investment
adviser firm's commercial bank account. A representative
of that firm must complete and sign the second part of
subsection B.
8 TELEPHONE By electing this option, you are authorizing Shareholder
REDEMPTION BY Services, Inc. and John Nuveen & Co. Incorporated to
CHECK honor telephone requests from any person for redemption
AUTHORIZATION of Fund shares in the amount of $25,000 or less, pro-
vided that a check in the amount of such proceeds is
made payable to you and sent to your address of record,
which address has been the address of record for the
prior 60 days.
9 CHECK Redemption Checks--The following terms and conditions
REDEMPTION apply to the Redemption Check privilege:
AUTHORIZATION
A. Checks must be on forms provided by the Fund and for
a minimum of $500 or they will not be honored. Checks
are authorizations to redeem Fund shares and are pay-
able through the United Missouri Bank of Kansas City,
N.A. (the "Bank").
B. Check forms will not be issued until a completed sig-
nature card is received by the Fund.
C. Checks requiring redemption of shares held for 15
days or less that were not purchased by "wire trans-
fer" of federal funds or for which there are insuffi-
cient shares to cover payment will not be honored.
D. Unless one signer is authorized on the Account Appli-
cation form and signature card, each check must be
signed by all account owners or it will not be hon-
ored. If SSI receives written notice by either owner
of a revocation of the authorization to sign individ-
ually, all account owners will be required to sign
Redemption Checks. Checks must be signed exactly as
registered.
E. The privilege is subject to the Fund's and the Bank's
rules and regulations, and applicable governmental
regulations, as amended from time to time.
F. The Fund may refuse to honor checks and may refuse to
effect redemptions to pay checks whenever the right
of redemption has been suspended or postponed, or
whenever the account is otherwise impaired.
36
<PAGE>
APPLICATION FORM--INSTRUCTIONS AND EXPLANATIONS [CONTINUED]
G. The account owner agrees to examine confirmations and
cancelled checks and to notify SSI of any unautho-
rized or missing signature or endorsement or altera-
tion on the check or error on the confirmation within
30 days after mailing to owner. Failure to do so
shall preclude any claim against the Fund, the Bank,
SSI or their representatives and agents by reason of
any unauthorized or missing signature or endorsement,
alteration, error or forgery of any kind.
10 TELEPHONE By electing this option, you are authorizing SSI and
EXCHANGE John Nuveen & Co. Incorporated to honor telephone re-
AUTHORIZATION quests from any person for the redemption of Fund
shares, provided that the proceeds of such redemption
are used to purchase shares of another Nuveen open-end
mutual fund and such shares are registered exactly the
same as this account.
37
<PAGE>
Principal Underwriter Investment Adviser Transfer and Shareholder
John Nuveen & Co. Incorporated
Nuveen Advisory Corp., Services Agent
Subsidiary of Shareholders Services,
Chicago: Inc.
John Nuveen & Co. Incorporated
333 West Wacker Drive 333 West Wacker Drive P.O. Box 5330
Chicago, Illinois 60606 Chicago, Illinois 60606 Denver, Colorado 80217-
312.917.7700 5330
Custodian
New York: United States Trust Independent Public
10 East 50th Street Company of New York Accountants for the Fund
New York, New York 10022 114 West 47th Street Arthur Andersen LLP
212.207.2000 New York, New York 10036 33 West Monroe Street
Chicago, Illinois 60603
38
<PAGE>
PART B--STATEMENT OF ADDITIONAL INFORMATION
NUVEEN CALIFORNIA TAX-FREE FUND, INC.
333 West Wacker Drive
Chicago, Illinois 60606
<PAGE>
Statement of Additional Information
June 13, 1995
Nuveen California Tax-Free Fund, Inc.
333 West Wacker Drive
Chicago, Illinois 60606
NUVEEN CALIFORNIA TAX-FREE VALUE FUND
NUVEEN CALIFORNIA INSURED TAX-FREE VALUE FUND
NUVEEN CALIFORNIA TAX-FREE MONEY MARKET FUND
This Statement of Additional Information relates to the three portfolios of
Nuveen California Tax-Free Fund, Inc.: Nuveen California Tax-Free Value Fund
(the "California Fund"), Nuveen California Insured Tax-Free Value Fund (the
"California Insured Fund") and Nuveen California Tax-Free Money Market Fund
(the "Money Market Fund") (together, the "Funds"). This Statement of Additional
Information is not a prospectus. A prospectus relating to the California Fund
and the California Insured Fund, and a separate prospectus relating to the
Money Market Fund may be obtained from certain securities representatives,
banks and other financial institutions that have entered into sales agreements
with John Nuveen & Co. Incorporated, or from the Funds, 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
two separate prospectuses referred to above, both of which are dated June 13,
1995 (together, the "Prospectuses").
<TABLE>
<S> <C>
Table of Contents Page
- --------------------------------------------------------------------------
Fundamental Policies and Investment Fund 2
- --------------------------------------------------------------------------
Management 34
- --------------------------------------------------------------------------
Investment Adviser and Investment Management Agreement 39
- --------------------------------------------------------------------------
Portfolio Transactions 41
- --------------------------------------------------------------------------
Net Asset Value 42
- --------------------------------------------------------------------------
Tax Matters 44
- --------------------------------------------------------------------------
Performance Information 50
- --------------------------------------------------------------------------
Additional Information on the Purchase and Redemption of Fund Shares 57
- --------------------------------------------------------------------------
Distribution and Service Plans 61
- --------------------------------------------------------------------------
Independent Public Accountants and Custodian 63
- --------------------------------------------------------------------------
</TABLE>
The audited financial statements for the fiscal year ended February 28, 1995,
appearing in the Annual Report of Nuveen California Tax-Free Fund, Inc. are in-
corporated herein by reference. The Annual Report accompanies this Statement of
Additional Information.
<PAGE>
FUNDAMENTAL POLICIES AND INVESTMENT FUND
FUNDAMENTAL POLICIES
The investment objective and certain fundamental investment policies of each
Fund are described in the Prospectuses. Each of the Funds, as a fundamental
policy, may not, without the approval of the holders of a majority of the
shares of that Fund:
(1) Invest in securities other than Municipal Obligations and temporary in-
vestments, as those terms are defined in the Prospectuses, and in the case of
the Money Market Fund, it may also invest in standby commitments with respect
to Municipal Obligations purchased by the Money Market Fund;
(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 or to the investment of 25% of
such Fund's assets;
(3) Borrow money, except from banks for temporary or emergency purposes and
not for investment purposes and then only in an amount not exceeding (a) 10%
of the value of its total assets at the time of borrowing or (b) one-third of
the value of the Fund's total assets including the amount borrowed, in order
to meet redemption requests which might otherwise require the untimely dispo-
sition of securities. While any such borrowings exceed 5% of such Fund's total
assets, no additional purchases of investment securities will be made by such
Fund. If due to market fluctuations or other reasons, the value of the Fund's
assets falls below 300% of its borrowings, the Fund will reduce its borrowings
within 3 business days. To do this, the Fund may have to sell a portion of its
investments at a time when it may be disadvantageous to do so;
(4) Pledge, mortgage or hypothecate its assets, except that, to secure
borrowings permitted by subparagraph (3) above, it may pledge securities hav-
ing 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,
except to the extent such issuance might be involved with respect to
borrowings described under item (3) above or with respect to transactions in-
volving futures contracts or the writing of options within the limits de-
scribed in the Prospectuses and this Statement of Additional Information;
(6) Underwrite any issue of securities, except to the extent that the purchase
of Municipal Obligations in accordance with its investment objective, policies
and limitations, may be deemed to be an underwriting;
(7) Purchase or sell real estate, but this shall not prevent any Fund from in-
vesting in Municipal Obligations secured by real estate or interests therein
or foreclosing upon and selling such security;
(8) Purchase or sell commodities or commodities contracts or oil, gas or other
mineral exploration or development programs, except for transactions involving
futures contracts within the limits described in the Prospectuses and this
Statement of Additional Information;
(9) Make loans, other than by entering into repurchase agreements and through
the purchase of Municipal Obligations or temporary investments in accordance
with its investment objective, policies and limitations;
2
<PAGE>
(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 put or call options, except to the extent that the pur-
chase of a stand-by commitment may be considered the purchase of a put, and ex-
cept for transactions involving options within the limits described in the Pro-
spectuses and this Statement of Additional Information;
(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 25% of its total assets in securities of issuers in any
one industry; provided, however, that such limitations shall not be applicable
to Municipal Obligations issued by governments or political subdivisions of
governments, and obligations issued or guaranteed by the U.S. Government, its
agencies or instrumentalities;
(14) Invest more than 10% of its total assets in repurchase agreements maturing
in more than seven days, "illiquid" securities (such as non-negotiable CDs) and
securities without readily available market quotations;
(15) Purchase or retain the securities of any issuer other than the securities
of the Fund if, to the Fund's knowledge, those directors of Nuveen California
Tax-Free Fund, Inc., or those officers and directors of Nuveen Advisory Corp.
("Nuveen Advisory") who individually own beneficially more than 1/2 of 1% of
the outstanding securities of such issuer, together own beneficially more than
5% of such outstanding securities.
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 a Fund's assets that may be invested in securities insured by
any single insurer. It is a fundamental policy of each Fund, which cannot be
changed without the approval of the holders of a majority of shares of such
Fund, that a Fund will not hold securities of a single bank, including securi-
ties backed by a letter of credit of such bank, if such holdings would exceed
10% of the total assets of such Fund.
3
<PAGE>
The foregoing restrictions and limitations, as well as the Funds' policies as
to ratings of fund investments, will apply only at the time of purchase of se-
curities, and the percentage limitations will not be considered violated unless
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 each Fund, cannot be changed without approval by holders of a "ma-
jority of the Fund's outstanding voting shares." As defined in the Investment
Company 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.
Nuveen California Tax-Free Fund, Inc. is a series company under SEC Rule 18f-2
and each Fund is a separate series issuing its own shares. Certain matters un-
der the Investment Company Act of 1940 which must be submitted to a vote of the
holders of the outstanding voting securities of a series company shall not be
deemed to have been effectively acted upon unless approved by the holders of a
majority of the outstanding voting securities of each series affected by such
matter.
PORTFOLIO SECURITIES
As described in the Prospectuses, each Fund invests primarily in a diversified
fund of California Municipal Obligations, except that each Fund may not invest
more than 10% of its net assets in California Municipal Obligations issued
within certain U.S. possessions or territories. In general, Municipal Obliga-
tions include debt obligations issued by states, cities and local authorities
to obtain funds for various public purposes, including construction of a wide
range of public facilities such as airports, bridges, highways, hospitals,
housing, mass transportation, schools, streets and water and sewer works. In-
dustrial 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. California Municipal Obligations in which each
Fund will primarily invest are issued by the State of California and cities and
local authorities in that state, and bear interest that, in the opinion of bond
counsel to the issuer, is exempt from federal and California personal income
taxes.
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.
The California Fund and the California Insured Fund may invest in Municipal Ob-
ligations that constitute participations in a lease obligation or installment
purchase contract obligation (hereafter collectively called "lease obliga-
tions") of a municipal authority or entity. Although lease obligations do not
4
<PAGE>
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 un-
less money is appropriated for such purpose on a yearly basis. Although non-
appropriation lease obligations are secured by the leased property, disposi-
tion of the property in the event of foreclosure might prove difficult. These
Funds 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-appropriation 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 municipal-
ity, (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) appropriate covenants will be obtained from the municipal ob-
ligor prohibiting the substitution or purchase of similar equipment if lease
payments are not appropriated, (4) the lease obligor has maintained good mar-
ket 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 underlying equipment were ever required. Lease obli-
gations provide a premium interest rate which along with regular amortization
of the principal may make them attractive for a portion of the assets of the
California Fund or the California Insured Fund.
The following is a more complete description of certain California Municipal
Obligations in which the Funds may invest.
California Fund
The California Fund's investment assets will consist of (1) California Munici-
pal Obligations which are rated at the time of purchase within the four high-
est grades (Baa or BBB or better) by Moody's Investors Service, Inc.
("Moody's") or Standard & Poor's Corporation ("S&P"), (2) unrated California
Municipal Obligations of investment grade quality in the opinion of Nuveen Ad-
visory, with no fixed percentage limitations on these unrated California Mu-
nicipal Obligations and (3) temporary investments as described below, the in-
come from which may be subject to California income tax or to both federal and
California income taxes.
California Insured Fund
The California Insured Fund will, under normal circumstances, invest substan-
tially all (at least 80%) of its assets in California Municipal Obligations
which meet the investment criteria of the California Fund and are either cov-
ered by insurance guaranteeing the timely payment of principal and interest
thereon or backed by an escrow or trust account containing sufficient U.S.
Government or U.S. Government agency securities to ensure timely payment of
principal and interest.
Each insured California Municipal Obligation held by the California Insured
Fund will either be (1) covered by an insurance policy applicable to a spe-
cific security and obtained by the issuer of the security or a third party at
the time of original issuance ("Original Issue Insurance"), (2) covered by an
insurance policy applicable to a specific security and obtained by the Fund or
a third party subsequent
5
<PAGE>
to the time of original issuance ("Secondary Market Insurance"), or (3) covered
by a master municipal insurance policy purchased by the California Insured Fund
("Portfolio Insurance"). The California Insured Fund currently maintains a pol-
icy of Portfolio Insurance with MBIA Insurance Corporation, AMBAC Indemnity
Corporation, Financial Security Assurance, Inc., and Financial Guaranty Insur-
ance Company, and may in the future obtain other policies of Fund Insurance,
depending on the availability of such policies on terms favorable to the Fund.
However, the California Insured Fund may determine not to obtain such policies
and to emphasize investments in California Municipal Obligations insured under
Original Issue Insurance or Secondary Market Insurance. In any event, the Cali-
fornia Insured Fund will only obtain policies of Portfolio Insurance issued by
insurers whose claims-paying ability is rated Aaa by Moody's or AAA by S&P. The
California Insured Fund currently intends to obtain insurance policies only
from mono-line insurers specializing in insuring municipal debt. California Mu-
nicipal Obligations covered by Original Issue Insurance or Secondary Market In-
surance are themselves typically assigned a rating of Aaa or AAA, as the case
may be, by virtue of the Aaa or AAA claims-paying ability of the insurer and
would generally be assigned a lower rating if the rating were based primarily
upon the credit characteristics of the issuer without regard to the insurance
feature. By way of contrast, the ratings, if any, assigned to California Munic-
ipal Obligations insured under Portfolio Insurance will be based primarily upon
the credit characteristics of the issuers without regard to the insurance fea-
ture, and will generally carry a rating that is below Aaa or AAA. While in the
portfolio of the California Insured Fund, however, a California Municipal Obli-
gation backed by Portfolio Insurance will effectively be of the same quality as
a Municipal Obligation issued by an issuer of comparable credit characteristics
that is backed by Original Issue Insurance or Secondary Market Insurance.
The California Insured Fund's policy of investing in California Municipal Obli-
gations insured by insurers whose claims-paying ability is rated Aaa or AAA
will apply only at the time of the purchase of a security, and the California
Insured Fund will not be required to dispose of securities in the event Moody's
or S&P, as the case may be, downgrades its assessment of the claims-paying
ability of a particular insurer or the credit characteristics of a particular
issuer. In this connection, it should be noted that in the event Moody's or S&P
or both should downgrade its assessment of the claims-paying ability of a par-
ticular insurer, it could also be expected to downgrade the ratings assigned to
California Municipal Obligations insured under Original Issue Insurance or Sec-
ondary Market Insurance issued by such insurer, and California Municipal Obli-
gations insured under Portfolio Insurance issued by such insurer would also be
of reduced quality in the portfolio of the California Insured Fund. Moody's and
S&P continually assess the claims-paying ability of insurers and the credit
characteristics of issuers, and there can be no assurance that they will not
downgrade their assessments subsequent to the time the California Insured Fund
purchases securities.
In addition to insured California Municipal Obligations, the California Insured
Fund may invest in California Municipal Obligations that are entitled to the
benefit of an escrow or trust account which contains securities issued or guar-
anteed by the U.S. Government or U.S. Government agencies, backed by the full
faith and credit of the United States, and sufficient in amount to ensure the
payment of interest and principal on the original interest payment and maturity
dates ("collateralized obligations"). These collateralized obligations gener-
ally will not be insured and will include, but are not limited to, California
Municipal Obligations that have been (1) advance refunded where the proceeds of
6
<PAGE>
the refunding have been used to purchase U.S. Government or U.S. Government
agency securities that are placed in escrow and whose interest or maturing
principal payments, or both, are sufficient to cover the remaining scheduled
debt service on the California Municipal Obligations, and (2) issued under
state or local housing finance programs which use the issuance proceeds to
fund mortgages that are then exchanged for U.S. Government or U.S. Government
agency securities and deposited with a trustee as security for the California
Municipal Obligations. These collateralized obligations are normally regarded
as having the credit characteristics of the underlying U.S. Government or U.S.
Government agency securities. Collateralized obligations will not constitute
more than 20% of each Fund's assets.
Each insured California Municipal Obligation in which the California Insured
Fund invests will be covered by Original Issue Insurance, Secondary Market In-
surance or Portfolio Insurance. There is no limitation on the percentage of
the Fund's assets that may be invested in Municipal Obligations insured by any
given insurer.
Original Issue Insurance. Original Issue Insurance is purchased with respect
to a particular issue of Municipal Obligations by the issuer thereof or a
third party in conjunction with the original issuance of such California Mu-
nicipal Obligations. Under such insurance, the insurer unconditionally guaran-
tees to the holder of the California Municipal Obligation the timely payment
of principal and interest on such obligation when and as such payments shall
become due but shall not be paid by the issuer, except that in the event of
any acceleration of the due date of the principal by reason of mandatory or
optional redemption (other than acceleration by reason of a mandatory sinking
fund payment), default or otherwise, the payments guaranteed may be made in
such amounts and at such times as payments of principal would have been due
had there not been such acceleration. The insurer is responsible for such pay-
ments less any amounts received by the holder from any trustee for the Cali-
fornia Municipal Obligation issuers or from any other source. Original Issue
Insurance does not guarantee payment on an accelerated basis, the payment of
any redemption premium (except with respect to certain premium payments in the
case of certain small issue industrial development and pollution control Cali-
fornia Municipal Obligations), the value of the shares of the California In-
sured Fund, the market value of California Municipal Obligations, or payments
of any tender purchase price upon the tender of the California Municipal Obli-
gations. Original Issue Insurance also does not insure against nonpayment of
principal of or interest on California Municipal Obligations resulting from
the insolvency, negligence or any other act or omission of the trustee or
other paying agent for such obligations.
In the event that interest on or principal of a California Municipal Obliga-
tion covered by insurance is due for payment but is unpaid by the issuer
thereof, the applicable insurer will make payments to its fiscal agent (the
"Fiscal Agent") equal to such unpaid amounts of principal and interest not
later than one business day after the insurer has been notified that such non-
payment has occurred (but not earlier than the date such payment is due). The
Fiscal Agent will disburse to the California Insured Fund the amount of prin-
cipal and interest which is then due for payment but is unpaid upon receipt by
the Fiscal Agent of (i) evidence of the California Insured Fund's right to re-
ceive payment of such principal and interest and (ii) evidence, including any
appropriate instruments of assignment, that all of the rights to payment of
such principal or interest then due for payment shall thereupon vest in the
insurer. Upon payment by the insurer of any principal or interest payments
with respect to any Califor-
7
<PAGE>
nia Municipal Obligations, the insurer shall succeed to the rights of the Cali-
fornia Insured Fund with respect to such payment.
Original Issue Insurance remains in effect as long as the California Municipal
Obligations covered thereby remain outstanding and the insurer remains in busi-
ness, regardless of whether the California Insured Fund ultimately disposes of
such California Municipal Obligations. Consequently, Original Issue Insurance
may be considered to represent an element of market value with respect to the
California Municipal Obligations so insured, but the exact effect, if any, of
this insurance on such market value cannot be estimated.
Secondary Market Insurance. Subsequent to the time of original issuance of a
California Municipal Obligation, the California Insured Fund or a third party
may, upon the payment of a single premium, purchase insurance on such Califor-
nia Municipal Obligation. Secondary Market Insurance generally provides the
same type of coverage as is provided by Original Issue Insurance and remains in
effect as long as the California Municipal Obligations covered thereby remain
outstanding, the holder of such Municipal Obligation does not voluntarily re-
linquish the Secondary Market Insurance and the insurer remains in business,
regardless of whether the California Insured Fund ultimately disposes of such
California Municipal Obligations.
One of the purposes of acquiring Secondary Market Insurance with respect to a
particular California Municipal Obligation would be to enable the California
Insured Fund to enhance the value of such California Municipal Obligation. The
California Insured Fund, for example, might seek to purchase a particular Cali-
fornia Municipal Obligation and obtain Secondary Market Insurance with respect
thereto if, in the opinion of Nuveen Advisory, the market value of such Cali-
fornia Municipal Obligation, as insured, would exceed the current value of the
California Municipal Obligation without insurance plus the cost of the Second-
ary Market Insurance. Similarly, if the California Insured Fund owns but wishes
to sell a California Municipal Obligation that is then covered by Portfolio In-
surance, the California Insured Fund might seek to obtain Secondary Market In-
surance with respect thereto if, in the opinion of Nuveen Advisory, the net
proceeds of a sale by the California Insured Fund of such obligation, as in-
sured, would exceed the current value of such obligation plus the cost of the
Secondary Market Insurance.
Portfolio Insurance. Portfolio Insurance guarantees the payment of principal
and interest on specified eligible California Municipal Obligations purchased
by the California Insured Fund. Except as described below, Portfolio Insurance
generally provides the same type of coverage as is provided by Original Issue
Insurance or Secondary Market Insurance. California Municipal Obligations in-
sured under one Portfolio Insurance policy would generally not be insured under
any other policy purchased by the California Insured Fund. A California Munici-
pal Obligation is eligible for coverage under a policy if it meets certain re-
quirements of the insurer. Portfolio Insurance is intended to reduce financial
risk, but the cost thereof and compliance with investment restrictions imposed
under the policy will reduce the yield to shareholders of the California In-
sured Fund.
If a California Municipal Obligation is already covered by Original Issue In-
surance or Secondary Market Insurance, then such California Municipal Obliga-
tion is not required to be additionally insured
8
<PAGE>
under any policy of Portfolio Insurance that the California Insured Fund may
purchase. All premiums respecting California Municipal Obligations covered by
Original Issue Insurance or Secondary Market Insurance are paid in advance by
the issuer or other party obtaining the insurance.
Portfolio Insurance policies are effective only as to California Municipal Ob-
ligations owned by and held by the California Insured Fund, and do not cover
California Municipal Obligations for which the contract for purchase fails. A
"when-issued" California Municipal Obligation will be covered under a Portfo-
lio Insurance policy upon the settlement date of the issue of such "when-is-
sued" Municipal Obligation. In determining whether to insure California Munic-
ipal Obligations held by the California Insured Fund, an insurer will apply
its own standards, which correspond generally to the standards it has estab-
lished for determining the insurability of new issues of California Municipal
Obligations. See "Original Issue Insurance" above.
Each Portfolio Insurance policy will be noncancellable and will remain in ef-
fect so long as the California Insured Fund is in existence, the California
Municipal Obligations covered by the policy continue to be held by the Funds,
and the Funds pay the premiums for the policy. Each insurer will generally re-
serve the right at any time upon 90 days' written notice to the California In-
sured Fund to refuse to insure any additional securities purchased by the Cal-
ifornia Insured Fund after the effective date of such notice. The Board of Di-
rectors will generally reserve the right to terminate each policy upon seven
days' written notice to an insurer if it determines that the cost of such pol-
icy is not reasonable in relation to the value of the insurance to the Cali-
fornia Insured Fund.
Each Portfolio Insurance policy will terminate as to any California Municipal
Obligation that has been redeemed from or sold by the California Insured Fund
on the date of such redemption or the settlement date of such sale, and an in-
surer shall not have any liability thereafter under a policy as to any such
California Municipal Obligation, except that if the date of such redemption or
the settlement date of such sale occurs after a record date and before the re-
lated payment date with respect to any such California Municipal Obligation,
the policy will terminate as to such California Municipal Obligation on the
business day immediately following such payment date. Each policy will termi-
nate as to all California Municipal Obligations covered thereby on the date on
which the last of the covered California Municipal Obligations mature, are re-
deemed or are sold by the California Insured Fund.
One or more policies of Portfolio Insurance may provide the California Insured
Fund, pursuant to an irrevocable commitment of the insurer, with the option to
exercise the right to obtain permanent insurance ("Permanent Insurance") with
respect to a California Municipal Obligation that is to be sold by the Cali-
fornia Insured Fund. The California Insured Fund would exercise the right to
obtain Permanent Insurance upon payment of a single, predetermined insurance
premium payable from the proceeds of the sale of a California Municipal Obli-
gation. It is expected that the California Insured Fund will exercise the
right to obtain Permanent Insurance for a California Municipal Obligation only
if, in the opinion of Nuveen Advisory, upon such exercise the net proceeds
from the sale by California Insured Fund of such obligation, as insured, would
exceed the proceeds from the sale of such obligation without insurance.
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<PAGE>
The Permanent Insurance premium with respect to each such obligation is deter-
mined based upon the insurability of each such obligation as of the date of
purchase by the California Insured Fund and will not be increased or decreased
for any change in the creditworthiness of such obligation unless such obliga-
tion is in default as to payment of principal or interest, or both. In such
event, the Permanent Insurance premium shall be subject to an increase prede-
termined at the date of purchase by the California Insured Fund.
The California Insured Fund generally intends to retain any insured securities
covered by Portfolio Insurance that are in default or in significant risk of
default and to place a value on the insurance, which ordinarily will be the
difference between the market value of the defaulted security and the market
value of similar securities of minimum investment grade (i.e., rated BBB) that
are not in default. In certain circumstances, however, Nuveen Advisory may de-
termine that an alternative value for the insurance, such as the difference
between the market value of the defaulted security and either its par value or
the market value of securities of a similar nature that are not in default or
in significant risk of default, is more appropriate. To the extent that the
California Insured Fund holds such defaulted securities, it may be limited in
its ability to manage its investment portfolio and to purchase other Califor-
nia Municipal Obligations. Except as described above with respect to securi-
ties covered by Portfolio Insurance that are in default or subject to signifi-
cant risk of default, the California Insured Fund will not place any value on
the insurance in valuing the California Municipal Obligations that it holds.
Because each Portfolio Insurance policy will terminate as to California Munic-
ipal Obligations sold by the California Insured Fund on the date of sale, in
which event the insurer will be liable only for those payments of principal
and interest that are then due and owing (unless Permanent Insurance is ob-
tained by the California Insured Fund), the provision for this insurance will
not enhance the marketability of securities held by the California Insured
Fund, whether or not the securities are in default or in significant risk of
default. On the other hand, since Original Issue Insurance and Secondary Mar-
ket Insurance will remain in effect as long as California Municipal Obliga-
tions covered thereby are outstanding, such insurance may enhance the market-
ability of such securities, even when such securities are in default or in
significant risk of default, but the exact effect, if any, on marketability
cannot be estimated. Accordingly, the California Insured Fund may determine to
retain or, alternatively, to sell California Municipal Obligations covered by
Original Issue Insurance or Secondary Market Insurance that are in default or
in significant risk of default.
Premiums for a Portfolio Insurance policy are paid monthly, and are adjusted
for purchases and sales of California Municipal Obligations covered by the
policy during the month. The yield on the California Insured Fund is reduced
to the extent of the insurance premiums allocated to it. Depending upon the
characteristics of the California Municipal Obligations held by the California
Insured Fund, the annual premium rate for policies of Portfolio Insurance is
estimated to range from .15% to .30% of the value of the California Municipal
Obligations covered under the policy. Because the majority of the California
Municipal Obligations in the California Insured Fund were not covered by poli-
cies of Portfolio Insurance during the fiscal year ended February 28, 1995,
total premiums as a percentage of the value of the California Municipal Obli-
gations held by the California Insured Fund for such period were .01%.
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Set forth below is information about the various municipal bond insurers with
whom the California Insured Fund currently maintains policies of Portfolio In-
surance.
AMBAC INDEMNITY CORPORATION ("AMBAC INDEMNITY")
AMBAC Indemnity is a Wisconsin-domiciled stock insurance corporation regulated
by the Office of the Commissioner of Insurance of the State of Wisconsin and
licensed to do business in 50 states, the District of Columbia and the Common-
wealth of Puerto Rico, with admitted assets of approximately $2,145,000,000
(unaudited) and statutory capital of approximately $1,218,000,000 (unaudited)
as of December 31, 1994. Statutory capital consists of AMBAC Indemnity's poli-
cyholders' surplus and statutory contingency reserve. AMBAC Indemnity is a
wholly-owned subsidiary of AMBAC, Inc., a 100% publicly-held company. Moody's,
S&P and Fitch Investors Service, Inc. each have assigned a triple-A claims-pay-
ing ability rating to AMBAC Indemnity.
AMBAC Indemnity has obtained a ruling from the Internal Revenue Service to the
effect that the insuring of an obligation by AMBAC Indemnity will not affect
the treatment for federal income tax purposes of interest on such obligation
and that insurance proceeds representing maturing interest paid by AMBAC Indem-
nity under policy provisions substantially identical to those contained in its
municipal bond insurance policy shall be treated for federal income tax pur-
poses in the same manner as if such payments were made by the issuer of the
bonds.
Copies of AMBAC Indemnity's financial statements prepared in accordance with
statutory accounting standards are available from AMBAC Indemnity. The address
of AMBAC Indemnity's administrative offices and its telephone number are One
State Street Plaza, 17th Floor, New York, New York 10004 and (212) 668-0340.
FINANCIAL SECURITY ASSURANCE INC. ("FINANCIAL SECURITY")
Financial Security is a monoline insurance company incorporated under the laws
of the State of New York. Financial Security is licensed, directly or through
its subsidiaries, to engage in the financial guaranty insurance business in all
50 states, the District of Columbia, Puerto Rico and the United Kingdom.
Financial Security is approximately 61.1% owned by U S WEST Capital Corpora-
tion, 9.5% owned by Fund American Enterprises Holdings, Inc. and 7.4% owned by
The Tokio Marine and Fire Insurance Co. Ltd. ("Tokio Marine"). No shareholder
is obligated to pay any debts of or any claims against Financial Security. Fi-
nancial Security is domiciled in the State of New York and is subject to regu-
lation by the State of New York Insurance Department. As of March 31, 1995, the
total policyholders' surplus and contingency reserves and the total unearned
premium reserve, respectively, of Financial Security and its consolidated sub-
sidiaries were, in accordance with statutory accounting principles, approxi-
mately $469,190,000 (unaudited) and $248,929,000 (unaudited), and the total
shareholders' equity and the total unearned premium reserve, respectively, of
Financial Security and its consolidated subsidiaries were, in accordance with
generally accepted accounting principles, approximately $557,421,000 (unau-
dited) and $217,048,000 (unaudited). Copies of Financial Security's financial
statements may be obtained by writing
11
<PAGE>
to Financial Security at 350 Park Avenue, New York, New York 10022, Attention:
Communications Department, Financial Security's telephone number is (212) 826-
0100.
MBIA INSURANCE CORPORATION ("MBIA")
MBIA, formerly known as Municipal Bond Investors Assurance Corporation, is the
principal operating subsidiary of MBIA Inc., A New York Stock Exchange listed
company. MBIA Inc. is not obligated to pay the debts of or claims against MBIA.
MBIA is a limited liability corporation rather than a several liability associ-
ation. MBIA is domiciled in the State of New York and licensed to do business
to all 50 states, the District of Columbia, the Commonwealth of Puerto Rico,
the Commonwealth of the Northern Mariana Islands, the Virgin Islands of the
United States and the Territory of Guam.
As of December 31, 1993, MBIA had admitted assets of $3.1 billion (audited),
total liabilities of $2.1 billion (audited), and total capital and surplus of
$978 million (audited) determined in accordance with statutory accounting prac-
tices prescribed or permitted by insurance regulatory authorities. As of Decem-
ber 31, 1994, MBIA had admitted assets of $3.4 billion (audited), total liabil-
ities of $2.3 billion (audited), and total capital and surplus of $1.1 billion
(audited), determined in accordance with statutory accounting practices pre-
scribed or permitted by insurance regulatory authorities. Copies of MBIA's year
end financial statements prepared in accordance with statutory accounting prac-
tices are available from MBIA. The address of MBIA is 113 King Street, Armonk,
New York 10504.
MBIA's policy unconditionally and irrevocably guarantees to the California In-
sured Fund the full and complete payment required to be made by or on behalf of
the issuer to the applicable paying agent or its successor of an amount equal
to (i) the principal of (either at the stated maturity or by advancement of ma-
turity pursuant to a mandatory sinking fund payment) and interest on, the Mu-
nicipal Obligations as such payments shall become due but shall not be so paid
(except that in the event of any acceleration of the due date of such principal
by reason of mandatory or optional redemption or acceleration resulting from
default or otherwise, other than any advancement of maturity pursuant to a man-
datory sinking fund payment, the payments guaranteed by MBIA's policy shall be
made in such amounts and at such times as such payments of principal would have
been due had there not been any such acceleration) and (ii) the reimbursement
of any such payment which is subsequently recovered from the Fund of the Munic-
ipal Obligations pursuant to a final judgment by a court of competent jurisdic-
tion that such payment constitutes an avoidable preference to the California
Insured Fund within the meaning of any applicable bankruptcy law (a "Prefer-
ence").
MBIA's policy does not insure against loss of any prepayment premium which may
at any time be payable with respect to any Municipal Obligation. MBIA's policy
does not, under any circumstance, insure against loss relating to: (i) optional
or mandatory redemptions (other than mandatory sinking fund redemptions); (ii)
any payments to be made on an accelerated basis; (iii) payments of the purchase
price of Municipal Obligations upon tender thereof; or (iv) any Preference re-
lating to (i) through (iii) above. MBIA's policy also does not insure against
nonpayment of principal of or interest on the Municipal Obligations resulting
from the insolvency, negligence or any other act or omission of any paying
agent for the Municipal Obligations.
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<PAGE>
With respect to small issue industrial development bonds and pollution control
revenue bonds covered by the policy, MBIA guarantees the full and complete pay-
ments required to be made by or on behalf of an issuer of such bonds if there
occurs pursuant to the terms of the bonds an event which results in the loss of
the tax-exempt status of interest on such bonds, including principal, interest
or premium payments payable thereon, if any, as and when required to be made by
or on behalf of the issuer pursuant to the terms of such bonds.
Upon receipt of telephonic or telegraphic notice, such notice subsequently con-
firmed in writing by registered or certified mail, or upon receipt of written
notice registered or certified mail, by MBIA from the paying agent or the Cali-
fornia Insured Fund that a required payment of any insured amount which is then
due, that such required payment has not been made, MBIA on the due date of such
payment or within one business day after receipt of notice of such nonpayment,
whichever is later, will make a deposit of funds, in an account with State
Street Bank and Trust Company, N.A., in New York, New York, or its successor,
sufficient for the payment of any such insured amounts which are then due. Upon
presentment and surrender of such Municipal Obligations or presentment of such
other proof of ownership of the Municipal Obligations, together with any appro-
priate instruments of assignment to evidence the assignment of the insured
amounts due on the Municipal Obligations as are paid by MBIA, and appropriate
instruments to effect the appointment of MBIA as agent for the California In-
sured Fund in any legal proceeding related to payment of insured amounts on Mu-
nicipal Obligations, such instruments being in a form satisfactory to State
Street Bank and Trust Company, N.A., State Street Bank and Trust Company, N.A.
shall disburse to the California Insured Fund or the paying agent payment of
the insured amounts due on such Municipal Obligations, less any amount held by
the paying agent for the payment of such insured amounts and legally available
therefor.
FINANCIAL GUARANTY INSURANCE COMPANY, DOING BUSINESS IN CALFORNIA AS FGIC
INSURANCE COMPANY ("FINANCIAL GUARANTY")
The Portfolio Insurance Policy is non-cancellable except for failure to pay the
premium. The premium rate for each purchase of a security covered by the Port-
folio Insurance Policy is fixed for the life of the Insured Bond. The insurance
premiums are payable monthly by the California Insured Fund and are adjusted
for purchases, sales and payments prior to maturity of Insured Bonds during the
month. In the event of a sale of any Insured Bond by the California Insured
Fund or payment thereof prior to maturity, the Portfolio Insurance Policy ter-
minates as to such Insured Bond.
Under the provisions of the Portfolio Insurance Policy, Financial Guaranty un-
conditionally and irrevocably agrees to pay to State Street Bank and Trust Com-
pany, or its successor, as its agent (the "Fiscal Agent"), that portion of the
principal of and interest on the Insured Bonds which shall become due for pay-
ment but shall be unpaid by reason of nonpayment by the issuer of the Insured
Bonds. The term "due for payment" means, when referring to the principal of an
Insured Bond, its stated maturity date or the date on which it shall have been
called for mandatory sinking fund redemption and does not refer to any earlier
date on which payment is due by reason of call for redemption (other than by
mandatory sinking fund redemption), acceleration or other advancement of matu-
rity and means, when referring to interest on an Insured Bond, the stated date
for payment of interest. In addition, the Portfolio Insurance Policy covers
nonpayment by the issuer that results from any payment of principal
13
<PAGE>
or interest made by such issuer on the Insured Bond to the California Insured
Fund which has been recovered from the California Insured Fund or its share-
holders pursuant to the United States Bankruptcy Code by a trustee in bank-
ruptcy in accordance with a final, nonappealable order of a court having compe-
tent jurisdiction.
Financial Guaranty will make such payments to the Fiscal Agent on the date such
principal or interest becomes due for payment or on the business day next fol-
lowing the day on which Financial Guaranty shall have received notice of non-
payment, whichever is later. The Fiscal Agent will disburse to the Trustee the
face amount of principal and interest which is then due for payment but is un-
paid by reason of nonpayment by the issuer, but only upon receipt by the Fiscal
Agent of (i) evidence of the Trustee's right to receive payment of the princi-
pal or interest due for payment and (ii) evidence, including any appropriate
instruments of assignment, that all of the rights to payment of such principal
or interest due for payment thereupon shall vest in Financial Guaranty. Upon
such disbursement, Financial Guaranty shall become the owner of the Insured
Bond, appurtenant coupon or right to payment of principal or interest on such
Insured Bond and shall be fully subrogated to all of the Trustee's rights
thereunder, including the right to payment, thereof.
In determining whether to insure municipal securities held in the California
Insured Fund, Financial Guaranty will apply its own standards which are not
necessarily the same as the criteria used in regard to the selection of securi-
ties by the California Insured Fund.
Certain of the municipal securities insured under the Portfolio Insurance Pol-
icy may also be insured under an insurance policy obtained by the issuer of
such municipal securities. The premium for any insurance policy or policies ob-
tained by an issuer or Insured Bonds has been paid in advance by such issuer
and any such policy or policies are non-cancellable and will continue in force
so long as the Insured Bonds so insured are outstanding. Financial Guaranty has
also agree, if requested by the California Insured Fund on or before the fifth
day preceding the 1st day of any month, to insure to maturity Insured Bonds
sold by the Trustee during the month immediately following such request of the
California Insured Fund. The premium for any such insurance to maturity pro-
vided by Financial Guaranty is paid by the California Insured Fund and any such
insurance is non-cancellable and will continue in force so long as the Bonds so
insured are outstanding.
Financial Guaranty is a wholly-owned subsidiary of FGIC Corporation (the "Cor-
poration"), a Delaware holding company. The Corporation is a subsidiary of Gen-
eral Electric Capital Corporation. Financial Guaranty is a monoline financial
guaranty insurer domiciled in the State of New York and subject to regulation
by the State of New York Insurance Department. As of December 31, 1994, the to-
tal capital and surplus of Financial Guaranty was approximately $893,700,000.
Financial Guaranty prepares financial statements on the basis of generally ac-
cepted accounting principles. Copies of such financial statements may be ob-
tained by writing to Financial Guaranty at 115 Broadway, New York, New York
10006, Attention: Communications Department (telephone number: (212) 312-3000)
or to the New York State Insurance Department at 160 West Broadway, 18th Floor,
New York, New York 10013, Attention: Property Companies Bureau (telephone num-
ber: (212) 602-0389).
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<PAGE>
The policies of insurance obtained by the California Insured Fund from Finan-
cial Guaranty and the negotiations in respect thereof represent the only rela-
tionship between Financial Guaranty and the California Insured Fund. Otherwise
neither Financial Guaranty nor its parent, FGIC Corporation, or any affiliate
thereof has any significant relationship, direct or indirect, with the Califor-
nia Insured Fund or the Board of Directors.
The above municipal bond insurers have insurance claims-paying ability ratings
of AAA from S&P and Aaa from Moody's.
An S&P insurance claims-paying ability rating is an assessment of an operating
insurance company's financial capacity to meet obligations under an insurance
policy in accordance with its terms. An insurer with an insurance claims-paying
ability rating of AAA has the highest rating assigned by S&P. Capacity to honor
insurance contracts is adjudged by S&P to be extremely strong and highly likely
to remain so over a long period of time. A Moody's insurance claims-paying
ability rating is an opinion of the ability of an insurance company to repay
punctually senior policyholder obligations and claims. An insurer with an in-
surance claims-paying ability rating of Aaa is adjudged by Moody's to be of the
best quality. In the opinion of Moody's, the policy obligations of an insurance
company with an insurance claims-paying ability rating of Aaa carry the small-
est degree of credit risk and, while the financial strength of these companies
is likely to change, such changes as can be visualized are most unlikely to im-
pair the company's fundamentally strong position.
An insurance claims-paying ability rating by S&P or Moody's does not constitute
an opinion on any specific contract in that such an opinion can only be ren-
dered upon the review of the specific insurance contract. Furthermore, an in-
surance claims-paying ability rating does not take into account deductibles,
surrender or cancellation penalties or the timeliness of payment, nor does it
address the ability of a company to meet nonpolicy obligations (i.e., debt con-
tracts).
The assignment of ratings by S&P or Moody's to debt issues that are fully or
partially supported by insurance policies, contracts or guarantees is a sepa-
rate process from the determination of claims-paying ability ratings. The like-
lihood of a timely flow of funds from the insurer to the trustee for the bond-
holders is a key element in the rating determination for such debt issues.
S&P's and Moody's ratings are not recommendations to buy, sell or hold the Mu-
nicipal Obligations insured by policies issued by AMBAC Indemnity, Financial
Security, MBIA or Financial Guaranty and such ratings may be subject to revi-
sion or withdrawal at any time by the rating agencies. Any downward revision or
withdrawal of either or both ratings may have an adverse effect on the market
price of the Municipal Obligations insured by policies issued by AMBAC Indemni-
ty, Financial Security, MBIA or Financial Guaranty.
S&P's ratings of AMBAC Indemnity, Financial Security, MBIA and Financial Guar-
anty should be evaluated independently of Moody's ratings. Any further explana-
tion as to the significance of the ratings may be obtained only from the appli-
cable rating agency.
15
<PAGE>
Money Market Fund
The various securities in which the Money Market Fund intends to invest are de-
scribed in the Money Market Fund Prospectus. The following is a more complete
description of certain short-term California Municipal Obligations in which the
Money Market Fund may invest:
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. TANs 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 delinquencies, could ad-
versely 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 governmental bodies and agencies such as
those described above to commercial banks as evidence of borrowings. The pur-
poses 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.
Variable and Floating Rate Instruments-Certain Municipal Obligations, certain
instruments issued, guaranteed or sponsored by the U.S. Government or its agen-
cies, and certain debt instruments issued by domestic banks or corporations,
may carry variable or floating rates of interest. Such instruments bear inter-
est at rates which are not fixed, but which vary with changes in specified mar-
ket rates or indices, such as a bank prime rate or a tax-exempt money market
index. Variable rate notes are adjusted to current interest rate levels at cer-
tain specified times, such as every 30 days, as set forth in the instrument. A
floating rate note adjusts automatically whenever there is a change in its base
interest rate adjustor, e.g., a change in the prime lending rate on specified
interest rate indices. Typically such instruments carry demand features permit-
ting the Money Market Fund to redeem at par upon specified notice.
16
<PAGE>
The Money Market Fund's right to obtain payment at par on a demand instrument
upon demand could be affected by events occurring between the date the Money
Market Fund elects to redeem the instrument and the date redemption proceeds
are due which affect the ability of the issuer to pay the instrument at par
value. The Adviser will monitor on an ongoing basis the pricing, quality and
liquidity of such instruments and will similarly monitor the ability of an is-
suer of a demand instrument, including those supported by bank letters of
credit or guarantees, to pay principal and interest on demand. Although the ul-
timate maturity of such variable rate obligations may exceed 397 days, the
Money Market Fund will treat the maturity of each variable rate demand obliga-
tion, for purposes of computing its dollar weighted average fund maturity, as
the longer of (i) the notice period required before the Money Market Fund is
entitled to payment of the principal amount through demand, or (ii) the period
remaining until the next interest rate adjustment.
The Money Market Fund may also obtain standby commitments with respect to Mu-
nicipal Obligations. Under a standby commitment (often referred to as a put),
the party issuing the commitment agrees to purchase at the Money Market Fund's
option the Municipal Obligation at an agreed-upon price on certain dates or
within a specific period. Since the value of a standby commitment depends in
part upon the ability of the issuing party to meet its purchase obligations
thereunder, the Money Market Fund will enter into standby commitments only with
parties which have been evaluated by Nuveen Advisory and, in the opinion of
Nuveen Advisory, present minimal credit risks.
The amount payable to the Money Market Fund upon its exercise of a standby com-
mitment would be (1) the acquisition cost of the Municipal Obligations (exclud-
ing any accrued interest that the Money Market Fund paid on acquisition), less
any amortized market premium or plus any amortized market or original issue
discount during the period the Money Market Fund owned the security, plus (2)
all interest accrued on the security since the last interest payment date dur-
ing the period the security was owned by the Money Market Fund. The Money Mar-
ket Fund's right to exercise standby commitments held by it will be uncondi-
tional and unqualified. The acquisition of a standby commitment will not affect
the valuation of the underlying security, which will continue to be valued in
accordance with the amortized cost method. The standby commitment itself will
be valued at zero in determining net asset value. The Money Market Fund may
purchase standby commitments for cash or pay a higher price for fund securities
which are acquired subject to such a commitment (thus reducing the yield to ma-
turity otherwise available for the same securities). The maturity of a Munici-
pal Obligation purchased by the Money Market Fund will not be considered short-
ened by any standby commitment to which such security is subject. Although the
Money Market Fund's rights under a standby commitment would not be transfer-
able, the Money Market Fund could sell Municipal Obligations which were subject
to a standby commitment to a third party at any time.
PORTFOLIO TRADING AND TURNOVER (CALIFORNIA FUND AND CALIFORNIA INSURED FUND
ONLY)
The California Fund and the California Insured Fund will make changes in their
investment portfolios from time to time in order to take advantage of opportu-
nities in the municipal market and to limit exposure to market risk. Each Fund
may also engage to a limited extent in short-term trading consistent with its
investment objective, but a Fund will not trade securities solely to realize a
profit. Securities may be sold in anticipation of market decline or purchased
in anticipation of market rise and
17
<PAGE>
later sold, but a Fund will not engage in trading solely to recognize 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 be-
lieves to be a temporary disparity in the normal yield relationship between the
two securities. A Fund may make changes in its investment portfolio in order to
limit its exposure to changing market conditions. Changes in a Fund's invest-
ments are known as "portfolio turnover." While it is impossible to predict fu-
ture portfolio turnover rates, each Fund's annual portfolio turnover rate is
generally not expected to exceed 50%. However, each Fund reserves the right to
make changes in its investments whenever it deems such action advisable, and
therefore, a Fund's annual portfolio turnover rate may exceed 50% in particular
years depending upon market conditions. The portfolio turnover rates for the
California Fund and the California Insured Fund for the fiscal year ended Feb-
ruary 28, 1995 were 32% and 25%, respectively, and for the fiscal year ended
February 28, 1994, were 19% and 14%, respectively.
WHEN-ISSUED SECURITIES
As described in the Prospectuses, each Fund may purchase and sell Municipal Ob-
ligations 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 nor-
mally settle within 15-45 days.) On such transactions the payment obligation
and the interest rate are fixed at the time the buyer enters into the commit-
ment. The commitment to purchase securities on a when-issued or delayed deliv-
ery 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. At the time a Fund makes the commitment to purchase a Munic-
ipal 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 deter-
mining its net asset value. Likewise, at the time a Fund makes the commitment
to sell a Municipal Obligation on a delayed delivery basis, it will record the
transaction and include the proceeds to be received in determining its net as-
set value; accordingly, any fluctuations in the value of the Municipal Obliga-
tion sold pursuant to a delayed delivery commitment are ignored in calculating
net asset value so long as the commitment remains in effect. Each Fund will
maintain designated readily marketable assets at least equal in value to com-
mitments to purchase when-issued or delayed delivery securities, such assets to
be segregated by the Custodian specifically for the settlement of such commit-
ments. A Fund will only make commitments to purchase Municipal Obligations on a
when-issued or delayed delivery basis with the intention of actually acquiring
the securities, but each Fund reserves the right to sell these securities be-
fore the settlement date if it is deemed advisable. If a when-issued security
is sold before delivery any gain or loss would not be tax-exempt. A Fund com-
monly 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.
SPECIAL CONSIDERATIONS RELATING TO CALIFORNIA MUNICIPAL OBLIGATIONS
As described above, except to the extent the Funds invest in temporary invest-
ments, the Funds will invest substantially all of their assets in California
Municipal Obligations. The Funds are therefore susceptible to political, eco-
nomic or regulatory factors affecting issuers of California Municipal Obliga-
tions.
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These include the possible adverse effects of certain California constitutional
amendments, legislative measures, voter initiatives and other matters that are
described below. The following information provides only a brief summary of the
complex factors affecting the financial situation in California (the "State")
and is derived from sources that are generally available to investors and is
believed to be accurate. No independent verification has been made of the accu-
racy or completeness of any of the following information. It is based in part
on information obtained from various State and local agencies in California or
contained in Official Statements for various California Municipal Obligations.
There can be no assurance that current or future statewide or regional economic
difficulties, and the resulting impact on State or local governmental finances
generally, will not adversely affect the market value of California Municipal
Obligations held in the portfolios of the Funds or the ability of particular
obligors to make timely payments of debt service on (or relating to) those ob-
ligations.
Economic Overview
California's economy is the largest among the 50 states and one of the largest
in the world. The State's population of almost 32 million represents over 12%
of the total United States population and grew by 27% in the 1980s. Total per-
sonal income in the State, at an estimated $683 billion in 1993, accounts for
almost 13% of all personal income in the nation. Total employment is almost 14
million, the majority of which is in the service, trade and manufacturing sec-
tors.
From mid-1990 to late 1993, the State suffered a recession with the worst eco-
nomic, fiscal and budget conditions since the 1930s. Construction, manufactur-
ing (especially aerospace), and financial services, among others, were all se-
verely affected, particularly in Southern California. Job losses were the worst
of any post-war recession. Employment levels stabilized by late 1993 and steady
growth occurred in 1994 and is expected in 1995, but pre-recession job levels
are not expected to be reached for several more years. Unemployment, while re-
maining higher than the national average, has come down about 3% in 1994. Eco-
nomic indicators show a steady recovery underway in California since the start
of 1994. However, any delay or reversal of the recovery will exacerbate
shortfalls in State revenues.
Constitutional Limitations on Taxes and Appropriations
Limitation on Taxes. Certain California Municipal Obligations may be obliga-
tions of issuers which rely in whole or in part, directly or indirectly, on ad
valorem property taxes as a source of revenue. The taxing powers of California
local governments and districts are limited by Article XIIIA of the California
Constitution, enacted by the voters in 1978 and commonly known as "Proposition
13." Briefly, Article XIIIA limits to 1% of full cash value the rate of ad va-
lorem property taxes on real property and generally restricts the reassessment
of property to 2% per year, except upon new construction or change of ownership
(subject to a number of exemptions). Taxing entities may, however, raise ad va-
lorem taxes above the 1% limit to pay debt service on voter-approved bonded
indebtedness.
Under Article XIIIA, the basic 1% ad valorem tax levy is applied against the
assessed value of property as of the owner's date of acquisition (or as of
March 1, 1975, if acquired earlier), subject to certain adjustments. This sys-
tem has resulted in widely varying amounts of tax on similarly situated proper-
ties. Several lawsuits have been filed challenging the acquisition-based as-
sessment system of Proposition 13, and on June 18, 1992 the U.S. Supreme Court
announced a decision upholding Proposition 13.
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Article XIIIA prohibits local governments from raising revenues through ad va-
lorem property taxes above the 1% limit; it also requires voters of any gov-
ernmental unit to give two-thirds approval to levy any "special tax." Court
decisions, however, allowed a non-voter approved levy of "general taxes" which
were not dedicated to a specific use. In response to these decisions, the vot-
ers of the State in 1986 adopted an initiative statute which imposed signifi-
cant new limits on the ability of local entities to raise or levy general tax-
es, except by receiving majority local voter approval. Significant elements of
this initiative, "Proposition 62," have been overturned in recent court cases.
An initiative proposed to re-enact the provisions of Proposition 62 as a con-
stitutional amendment was defeated by the voters in November 1990, but such a
proposal may be renewed in the future.
Appropriations Limits. The State and its local governments are subject to an
annual "appropriations limit" imposed by Article XIIIB of the California Con-
stitution, enacted by the voters in 1979 and significantly amended by Proposi-
tions 98 and 111 in 1988 and 1990, respectively. Article XIIIB prohibits the
State or any covered local government from spending "appropriations subject to
limitation" in excess of the appropriations limit imposed. "Appropriations
subject to limitation" are authorizations to spend "proceeds of taxes," which
consist of tax revenues and certain other funds, including proceeds from regu-
latory licenses, user charges or other fees, to the extent that such proceeds
exceed the cost of providing the product or service, but "proceeds of taxes"
exclude most State subventions to local governments. No limit is imposed on
appropriations of funds which are not "proceeds of taxes," such as reasonable
user charges or fees, and certain other non-tax funds, including bond pro-
ceeds.
Among the expenditures not included in the Article XIIIB appropriations limit
are (1) the debt service cost of bonds issued or authorized prior to January
1, 1979, or subsequently authorized by the voters, (2) appropriations arising
from certain emergencies declared by the Governor, (3) appropriations for cer-
tain capital outlay projects, (4) appropriations by the State of post-1989 in-
creases in gasoline taxes and vehicle weight fees, and (5) appropriations made
in certain cases of emergency.
The appropriations limit for each year is adjusted annually to reflect changes
in cost of living and population, and any transfers of service responsibili-
ties between government units. The definitions for such adjustments were lib-
eralized in 1990 to follow more closely growth in the State's economy.
"Excess" revenues are measured over a two year cycle. Local governments must
return any excess to taxpayers by rate reductions. The State must refund 50%
of any excess, with the other 50% paid to schools and community colleges. With
more liberal annual adjustment factors since 1988, and depressed revenues
since 1990 because of the recession, few governments are currently operating
near their spending limits, but this condition may change over time. Local
governments may by voter approval exceed their spending limits for up to four
years. During fiscal year 1986-87, State receipts from proceeds of taxes ex-
ceeded its appropriations limit by $1.1 billion, which was returned to taxpay-
ers. Since that year, appropriations subject to limitation have been under the
State limit. State appropriations are expected to be $3.7 billion under the
limit for fiscal year 1993-94.
Because of the complex nature of Articles XIIIA and XIIIB of the California
Constitution, the ambiguities and possible inconsistencies in their terms, and
the impossibility of predicting future appropriations or changes in population
and cost of living, and the probability of continuing legal challenges, it
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is not currently possible to determine fully the impact of Article XIIIA or Ar-
ticle XIIIB on California Municipal Obligations or on the ability of the State
or local governments to pay debt service on such California Municipal Obliga-
tions. It is not possible, at the present time, to predict the outcome of any
pending litigation with respect to the ultimate scope, impact or constitution-
ality of either Article XIIIA or Article XIIIB, or the impact of any such de-
terminations upon State agencies or local governments, or upon their ability to
pay debt service on their obligations. Future initiatives or legislative
changes in laws or the California Constitution may also affect the ability of
the State or local issuers to repay their obligations.
Obligations of the State of California
As of March 1, 1995, the State had approximately $18.9 billion of general obli-
gation bonds outstanding, and $3.7 billion remained authorized but unissued. In
addition, at June 30, 1994, the State had lease-purchase obligations, payable
from the State's General Fund, of approximately $5.1 billion. Of the State's
outstanding general obligation debt, 26% is presently self-liquidating (for
which program revenues are anticipated to be sufficient to reimburse the Gen-
eral Fund for debt service payments). Five general obligation bond proposi-
tions, totalling $6.9 billion, were rejected by the voters on the June and No-
vember 1994 ballots. In fiscal year 1993-94, debt service on general obligation
bonds and lease-purchase debt was approximately 5.2% of General Fund revenues.
The State has paid the principal of and interest on its general obligation
bonds, lease-purchase debt and short-term obligations when due.
Recent Financial Results
The principal sources of General Fund revenues in 1993-1994 were the California
personal income tax (44% of total revenues), the sales tax (35%), bank and cor-
poration taxes (12%), and the gross premium tax on insurance (3%). The State
maintains a Special Fund for Economic Uncertainties (the "Economic Uncertain-
ties Fund"), derived from General Fund revenues, as a reserve to meet cash
needs of the General Fund, but which is required to be replenished as soon as
sufficient revenues are available. Year-end balances in the Economic Uncertain-
ties Fund are included for financial reporting purposes in the General Fund
balance. In most recent years, the State has budgeted to maintain the Economic
Uncertainties Fund at around 3% of General Fund expenditures but essentially no
reserve has been budgeted in 1992-93, 1993-94 or 1994-95 because revenues have
been reduced by the recession.
General. Throughout the 1980's, State spending increased rapidly as the State
population and economy also grew rapidly, including increased spending for many
assistance programs to local governments, which were constrained by Proposition
13 and other laws. The largest State program is assistance to local public
school districts. In 1988, an initiative (Proposition 98) was enacted which
(subject to suspension by a two-thirds vote of the Legislature and the Gover-
nor) guarantees local school districts and community college districts a mini-
mum share of State General Fund revenues (currently about 35%).
Since the start of the 1990-91 fiscal year, the State has faced adverse econom-
ic, fiscal, and budget conditions. The economic recession seriously affected
State tax revenues. It also caused increased expenditures for health and wel-
fare programs. The State is also facing a structural imbalance in its budget
with the largest programs supported by the General Fund (education, health,
welfare and corrections)
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growing at rates significantly higher than the growth rates for the principal
revenue sources of the General Fund. As a result, the State entered a period of
budget imbalance, with expenditures exceeding revenues for four of the five
completed fiscal years through 1991-92.
As the State fell into a deep recession in the summer of 1990, the State budget
fell sharply out of balance in the 1990-91 and 1991-92 fiscal years, despite
significant expenditure cuts and tax increases. The State had accumulated a
$2.8 billion budget deficit by June 30, 1992. This deficit also severely re-
duced the State's cash resources, so that it had to rely on external borrowing
in the short-term markets to meet its cash needs.
With the failure to enact a budget by July 1, 1992, the State had no legal au-
thority to pay many of its vendors until the budget was passed; nevertheless,
certain obligations (such as debt service, school apportionments, welfare pay-
ments, and employee salaries) were payable because of continuing or special ap-
propriations, or court orders. However, the State Controller did not have
enough cash to pay as they came due all of these ongoing obligations, as well
as valid obligations incurred in the prior fiscal year.
Starting on July 1, 1992, the Controller was required to issue "registered war-
rants" in lieu of normal warrants backed by cash to pay many State obligations.
Available cash was used to pay constitutionally mandated and priority obliga-
tions. Between July 1 and September 3, 1992, the Controller issued an aggregate
of approximately $3.8 billion of registered warrants all of which were called
for redemption by September 4, 1992 following enactment of the 1992-93 Budget
Act and issuance by the State of $3.3 billion of Interim Notes.
The 1992-93 Budget Act, when finally adopted, was projected to eliminate the
State's accumulated deficit, with additional expenditure cuts and a $1.3 bil-
lion transfer of State education funding costs to local governments by shifting
local property taxes to school districts. However, as the recession continued
longer and deeper than expected, revenues once again were far below projec-
tions, and only reached a level just equal to the amount of expenditures. Thus,
the State continued to carry its $2.8 billion budget deficit at June 30, 1993.
The 1993-94 Budget Act was similar to the prior year, in reliance on expendi-
ture cuts and an additional $2.6 billion transfer of costs to local government,
particularly counties. A major feature of the budget was a two-year plan to
eliminate the accumulated deficit by borrowing into the 1994-95 fiscal year.
With the recession still continuing longer than expected, the Department of Fi-
nance projected that in the 1993-94 Fiscal Year, the General Fund had $800 mil-
lion less revenue and $800 million higher expenditures than budgeted. As a re-
sult revenues only exceeded expenditures by about $500 million. This was the
first operating surplus in four years. The accumulated budget deficit was re-
duced to about $1.8 billion as of June 30, 1994.
The 1994-95 Budget Act was passed on July 8, 1994, and provides for an esti-
mated $41.9 billion of General Fund revenues, and $40.9 billion of expendi-
tures. The budget assumed receipt of about $750 million of new federal assis-
tance for the costs of incarceration, and health and welfare costs for undocu-
mented immigrants. Other major components of the budget include further reduc-
tions in health and
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welfare costs, some additional transfers of funds from local government, and a
plan to defer retirement of $1 billion of the accumulated budget deficit to the
1995-96 fiscal year. The federal government has apparently budgeted only $33
million of the expected immigration aid. However, this shortfall is expected to
be almost fully offset by higher than projected revenues, and lower than pro-
jected caseload growth, as the economy improves.
Because of the accumulated budget deficit over the past several years, the pay-
ment of certain unbudgeted expenditures to schools to maintain constant per-pu-
pil aid levels, and a reduction of the level of available internal borrowing,
the State's cash resources have been significantly depleted. This has required
the State to rely on a series of external borrowings for the past several years
to pay its normal expenses, including borrowings which have gone past the end
of the fiscal year. In February, 1994, the State borrowed $3.2 billion, matur-
ing by December, 1994. In July, 1994, the State borrowed a total of $7.0 bil-
lion to meet its cash flow requirements for the 1994-95 fiscal year, and to
fund a part of its deficit into the 1995-96 fiscal year. A total of $4.0 bil-
lion of this borrowing matures in April, 1996. In order to assure repayment of
this borrowing, the State enacted legislation (the "Trigger Law") which can
lead to automatic, across-the-board cuts in General Fund expenditures in either
the 1994-95 or 1995-96 fiscal years if cash flow projections made at certain
times during those years show deterioration from the projections made in July
1994 when the borrowings were made. On November 15, 1994, the State Controller
as part of the Trigger Law reported that the cash position of the General Fund
on June 30, 1995 would be about $580 million better than earlier projected, so
no automatic budget adjustments were required in 1994-95. The Controller's re-
port showed that loss of federal funds was offset by higher revenues, lower ex-
penditures, and certain other increases in cash resources.
The proposed Governor's Budget for the 1995-96 Fiscal Year projects General
Fund revenues of $42.5 billion and expenditures of $41.7 billion. The Gover-
nor's Budget projects that all the accumulated budget deficits will be repaid
by June 30, 1996, with a small balance ($92 million) in the Special Fund for
Economic Uncertainties, the budget reserve. The proposed budget assumes receipt
of about $830 million of new federal aid for undocumented aliens' costs, and
also assumes success in certain ongoing litigation concerning previous budget
actions. The Governor has proposed a 15% cut in personal income and corporate
taxes, to be phased in over three years starting in 1996.
Orange County. On December 6, 1994, Orange County, California (the "County"),
together with its pooled investment funds (the "Pools") filed for protection
under Chapter 9 of the federal Bankruptcy Code, after reports that the Pools
had suffered significant market losses in their investments causing a liquidity
crisis for the Pools and the County. More than 180 other public entities, most
but not all located in the County, were also depositors in the Pools. As of
mid-January, 1995, the County estimated the Pools' loss at about $1.7 billion,
or 23% of its initial deposits of around $7.5 billion. Many of the entities
which kept monies in the Pools, including the County, are facing cash flow dif-
ficulties because of the bankruptcy filing and may be required to reduce pro-
grams or capital projects. The County and some of these entities have, and oth-
ers may in the future, default in payment of their obligations. Moody's and S&P
have suspended, reduced to below investment grade levels, or placed on "Credit
Watch" various securities of the County and the entities participating in the
Pools. As of the fiscal year end, the California Insured Fund owned no unin-
sured bonds issued by Orange County or
23
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invested in the Pools. The California Fund owned no bonds issued by Orange
County, and owned bonds (comprising 0.7% of the Fund's net assets) of one is-
suer that had invested in the Pools; those bonds are supported by a dedicated
stream of incremental tax revenues and a debt service fund, equal to the maxi-
mum annual debt service, which is held by a trustee and is not invested in the
Pools. The Money Market Fund does not own any securities of Orange County or
of any participants in the Pools.
The State of California has no present obligation with respect to any obliga-
tions or securities of the County or any of the other participating entities.
However, the State may be obligated to intervene to ensure that school dis-
tricts have sufficient funds to operate, or to maintain certain county-admin-
istered State programs.
The State's severe financial difficulties for the current and upcoming budget
years will result in continued pressure upon almost all local governments,
particularly school districts and counties which depend on State aid. Despite
efforts in recent years to increase taxes and reduce governmental expendi-
tures, there can be no assurance that the State will not face budget gaps in
the future.
Bond Rating
State general obligation bonds are currently rated A1 by Moody's and A by S&P.
Both of these ratings have been reduced in several stages from AAA levels
which the state held until late 1991.
There can be no assurance that such ratings will be maintained in the future.
It should be noted that the creditworthiness of obligations issued by local
California issuers may be unrelated to the creditworthiness of obligations is-
sued by the State of California, and that there is no obligation on the part
of the State to make payment on such local obligations in the event of de-
fault.
Legal Proceedings
The State is involved in certain legal proceedings (described in the State's
recent financial statements) that, if decided against the State, may require
the State to make significant future expenditures or may substantially impair
revenues.
Obligations of Other Issuers
State Assistance. Property tax revenues received by local governments declined
more than 50% following passage of Proposition 13. Subsequently, the Califor-
nia Legislature enacted measures to provide for the redistribution of the
State's General Fund surplus to local agencies, the reallocation of certain
State revenues to local agencies and the assumption of certain governmental
functions by the State to assist municipal issuers to raise revenues. Total
local assistance from the State's General Fund was budgeted at approximately
75% of General Fund expenditures in recent years, including the effect of im-
plementing reductions in certain aid programs. To reduce State General Fund
support for school districts, the 1992-93 and 1993-94 Budget Acts caused local
governments to transfer $3.9 billion of property tax revenues to school dis-
tricts, representing loss of the post-Proposition 13 "bailout" aid. Local gov-
ernments have in return received greater revenues and greater flexibility to
operate health and welfare programs. To the extent the State should be con-
strained by its Article XIIIB appropriations limit, or its obligation to con-
form to Proposition 98, or other fiscal considerations, the absolute level, or
the rate of growth, of State assistance to local governments may continue to
be reduced. Any such reductions in
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State aid could compound the serious fiscal constraints already experienced by
many local governments, particularly counties. The Richmond Unified School Dis-
trict (Contra Costa County) entered bankruptcy proceedings in May 1991 but the
proceedings have been dismissed.
Assessment Bonds. California Municipal Obligations which are assessment bonds
may be adversely affected by a general decline in real estate values or a slow-
down in real estate sales activity. In many cases, such bonds are secured by
land which is undeveloped at the time of issuance but anticipated to be devel-
oped within a few years after issuance. In the event of such reduction or slow-
down, such development may not occur or may be delayed, thereby increasing the
risk of a default on the bonds. Because the special assessments or taxes secur-
ing these bonds are not the personal liability of the owners of the property
assessed, the lien on the property is the only security for the bonds. More-
over, in most cases the issuer of these bonds is not required to make payments
on the bonds in the event of delinquency in the payment of assessments or tax-
es, except from amounts, if any, in a reserve fund established for the bonds.
California Long Term Lease Obligations. Certain California long-term lease ob-
ligations, though typically payable from the general fund of the municipality,
are subject to "abatement" in the event the facility being leased is unavaila-
ble for beneficial use and occupancy by the municipality during the term of the
lease. Abatement is not a default, and there may be no remedies available to
the holders of the certificates evidencing the lease obligation in the event
abatement occurs. The most common cases of abatement are failure to complete
construction of the facility before the end of the period during which lease
payments have been capitalized and uninsured casualty losses to the facility
(e.g., due to earthquake). In the event abatement occurs with respect to a
lease obligation, lease payments may be interrupted (if all available insurance
proceeds and reserves are exhausted) and the certificates may not be paid when
due.
Several years ago the Richmond Unified School District (the "District") entered
into a lease transaction in which certain existing properties of the District
were sold and leased back in order to obtain funds to cover operating deficits.
Following a fiscal crisis in which the District's finances were taken over by a
State receiver (including a brief period under bankruptcy court protection),
the District failed to make rental payments on this lease, resulting in a law-
suit by the Trustee for the Certificate of Participation holders, in which the
State was a named defendant (on the grounds that it controlled the District's
finances). One of the defenses raised in answer to this lawsuit was the inva-
lidity of the original lease transaction. The trial court has upheld the valid-
ity of the District's lease, and the case has been settled. Any judgment in any
future case against the position asserted by the Trustee in the Richmond case
may have adverse implications for lease transactions of a similar nature by
other California entities.
Other Issuers of California Municipal Obligations
There are a number of state agencies, instrumentalities and political subdivi-
sions of the State that issue Municipal Obligations, some of which may be con-
duit revenue obligations payable from payments from private borrowers. These
entities are subject to various economic risks and uncertainties, and the
credit quality of the securities issued by them may vary considerably from the
credit quality of obligations backed by the full faith and credit of the State.
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Other Considerations
The repayment of industrial development securities secured by real property may
be affected by California laws limiting foreclosure rights of creditors. Secu-
rities backed by healthcare and hospital revenues may be affected by changes in
State regulations governing cost reimbursements to health care providers under
Medi-Cal (the State's Medicaid program), including risks related to the policy
of awarding exclusive contracts to certain hospitals.
Limitations on ad valorem property taxes may particularly affect "tax alloca-
tion" bonds issued by California redevelopment agencies. Such bonds are secured
solely by the increase in assessed valuation of a redevelopment project area
after the start of redevelopment activity. In the event that assessed values in
the redevelopment project decline (e.g., because of a major natural disaster
such as an earthquake), the tax increment revenue may be insufficient to make
principal and interest payments on these bonds. Both Moody's and S&P suspended
ratings on California tax allocation bonds after the enactment of Articles
XIIIA and XIIIB, and only resumed such ratings on a selective basis.
Proposition 87, approved by California voters in 1988, requires that all reve-
nues produced by a tax rate increase go directly to the taxing entity which in-
creased such tax rate to repay that entity's general obligation indebtedness.
As a result, redevelopment agencies (which, typically, are the issuers of tax
allocation securities) no longer receive an increase in tax increment when
taxes on property in the project area are increased to repay voter-approved
bonded indebtedness.
The effect of these various constitutional and statutory changes upon the abil-
ity of California municipal securities issuers to pay interest and principal on
their obligations remains unclear. Furthermore, other measures affecting the
taxing or spending authority of California or its political subdivisions may be
approved or enacted in the future. Legislation has been or may be introduced
which would modify existing taxes or other revenue-raising measures or which
either would further limit or, alternatively, would increase the abilities of
state and local governments to impose new taxes or increase existing taxes. It
is not possible, at present, to predict the extent to which any such legisla-
tion will be enacted. Nor is it possible, at present, to determine the impact
of any such legislation on California Municipal Obligations in which the Fund
may invest, future allocations of state revenues to local governments or the
abilities of state or local governments to pay the interest on, or repay the
principal of, such California Municipal Obligations.
Substantially all of California is within an active geologic region subject to
major seismic activity. Any California Municipal Obligation in the Fund could
be affected by an interruption of revenues because of damaged facilities, or,
consequently, income tax deductions for casualty losses or property tax assess-
ment reductions. Compensatory financial assistance could be constrained by the
inability of (i) an issuer to have obtained earthquake insurance coverage at
reasonable rates; (ii) an insurer to perform on its contracts of insurance in
the event of widespread losses; or (iii) the federal or State government to ap-
propriate sufficient funds within their respective budget limitations.
On January 17,1994, a major earthquake with an estimated magnitude of 6.8 on
the Richter scale struck the Los Angeles area, causing significant property
damage to public and private facilities, presently estimated at $15-20 billion.
While over $9.5 billion of Federal aid, and a projected $1 billion or
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more of State aid, plus insurance proceeds, will reimburse much of that loss,
there will be some ultimate loss of wealth and income in the region, in addi-
tion to costs of the disruption caused by the event. Short-term economic pro-
jections are generally neutral, as the infusion of aid restored billions of
dollars to the local economy within a few months. Although the earthquake will
hinder recovery from the recession in Southern California, already hard-hit,
its long-term impact is not expected to be material in the context of the over-
all wealth of the region. Almost five years after the event, there are few re-
maining effects of the 1989 Loma Prieta earthquake in northern California
(which, however, caused less severe damage than Northridge).
CONSIDERATIONS RELATING TO FINANCIAL FUTURES AND OPTION CONTRACTS (CALIFORNIA
FUND AND CALIFORNIA INSURED FUND ONLY)
The California Fund and the California Insured Fund may purchase and sell fi-
nancial futures contracts, options on financial futures or related options for
the purpose of hedging its portfolio securities against declines in the value
of such securities, and to hedge against increases in the cost of securities
the Fund intends to purchase. To accomplish such hedging, a Fund may take an
investment position in a futures contract or in an option which is expected to
move in the opposite direction from the position being hedged. Futures or op-
tions utilized for hedging purposes would either be based on an index of long-
term Municipal Obligations (i.e., those with remaining maturities averaging 20-
30 years) or relate to debt securities whose prices are anticipated by Nuveen
Advisory to correlate with the prices of the Municipal Obligations owned by a
Fund. The sale of financial futures or the purchase of put options on financial
futures or on debt securities or indexes is a means of hedging against the risk
that the value of securities owned by a Fund may decline on account of an in-
crease in interest rates, and the purchase of financial futures or of call op-
tions on financial futures or on debt securities or indexes is a means of hedg-
ing against increases in the cost of the securities a Fund intends to purchase
as a result of a decline in interest rates. Writing a call option on a futures
contract or on debt securities or indexes may serve as a hedge against a modest
decline in prices of Municipal Obligations held in a Fund's portfolio, and
writing a put option on a futures contract or on debt securities or indexes may
serve as a partial hedge against an increase in the value of Municipal Obliga-
tions a Fund intends to acquire. The writing of such options provides a hedge
to the extent of the premium received in the writing transaction. Regulations
of the Commodity Futures Trading Commission ("CFTC") applicable to the Funds
require that transactions in futures and options on futures be engaged in only
for bona-fide hedging purposes, and that no such transactions may be entered
into by a Fund if the aggregate initial margin deposits and premiums paid by
that Fund exceeds 5% of the market value of the Fund's assets. A Fund will not
purchase futures unless it has segregated cash, government securities or high
grade liquid debt equal to the contract price of the futures less any margin on
deposit, or unless the long futures position is covered by the sale of a put
option. A Fund will not sell futures unless the Fund owns the instruments un-
derlying the futures or owns options on such instruments or owns a portfolio
whose market price may be expected to move in tandem with the market price of
the instruments or index underlying the futures. In addition, each Fund is sub-
ject to the tax requirement that less than 30% of its gross income may be de-
rived from the sale or disposition of securities held for less than three
months. With respect to its engaging in transactions involving the purchase or
writing of put and call options on debt securities or indexes, a Fund will not
purchase such options if more than 5% of its assets would be invested in the
premiums for such options, and it will only write "covered"
27
<PAGE>
or "secured" options, wherein the securities or cash required to be delivered
upon exercise are held by a Fund, with such cash being maintained in a segre-
gated account. These requirements and limitations may limit a Fund's ability to
engage in hedging transactions.
Description of Financial Futures and Options. A futures contract is a contract
between a seller and a buyer for the sale and purchase of specified property at
a specified future date for a specified price. An option is a contract that
gives the holder of the option the right, but not the obligation, to buy (in
the case of a call option) specified property from, or to sell (in the case of
a put option) specified property to, the writer of the option for a specified
price during a specified period prior to the option's expiration. Financial
futures contracts and options cover specified debt securities (such as U.S.
Treasury securities) or indexes designed to correlate with price movements in
certain categories of debt securities. At least one exchange trades futures
contracts on an index designed to correlate with the long-term municipal bond
market. Financial futures contracts and options on financial futures contracts
are traded on exchanges regulated by the CFTC. Options on certain financial in-
struments and financial indexes are traded in securities markets regulated by
the Securities and Exchange Commission. Although futures contracts and options
on specified financial instruments call for settlement by delivery of the fi-
nancial instruments covered by the contracts, in most cases positions in these
contracts are closed out in cash by entering into offsetting, liquidating or
closing transactions. Index futures and options are designed for cash settle-
ment only.
Risks of Futures and Options Transactions. There are risks associated with the
use of futures contracts and options for hedging purposes. Investment in
futures contracts and options involves the risk of imperfect correlation be-
tween movements in the price of the futures contract and options and the price
of the security being hedged. The hedge will not be fully effective where there
is imperfect correlation between the movements in the two financial instru-
ments. For example, if the price of the futures contract moves more than the
price of the hedged security, a Fund will experience either a loss or gain on
the future which is not completely offset by movements in the price of the
hedged securities. Further, even where perfect correlation between the price
movements does occur, a Fund will sustain a loss at least equal to the commis-
sions on the financial futures transaction. To compensate for imperfect correc-
tions, the Funds may purchase or sell futures contracts in a greater dollar
amount than the hedged securities if the volatility of the hedged securities is
historically greater than the volatility of the futures contracts. Conversely,
the Funds may purchase or sell fewer futures contracts if the volatility of the
price of the hedged securities is historically less than that of the futures
contracts.
Because of low initial margin deposits made upon the opening of a futures posi-
tion, futures transactions involve substantial leverage. As a result, rela-
tively small movements in the price of the futures contract can result in sub-
stantial unrealized gains or losses. Because the Funds will engage in the pur-
chase and sale of financial futures contracts solely for hedging purposes, how-
ever, any losses incurred in connection therewith should, if the hedging strat-
egy is successful, be offset in whole or in part by increases in the value of
securities held by the Funds or decreases in the price of securities the Funds
intend to acquire.
The Funds expect to liquidate a majority of the financial futures contracts
they enter into through offsetting transactions on the applicable contract mar-
ket. There can be no assurance, however, that a
28
<PAGE>
liquid secondary market will exist for any particular futures contract at any
specific time. Thus, it may not be possible to close a futures position. In
the event of adverse price movements, the Funds would continue to be required
to make daily cash payments of variation margin. In such situations, if a Fund
has sufficient cash, it may be required to sell portfolio securities to meet
daily variation margin requirements at a time when it may be disadvantageous
to do so. The inability to close out futures positions also could have an ad-
verse impact on a Fund's ability to hedge its portfolio effectively and may
expose the Fund to risk of loss. The Funds will enter into a futures position
only if, in the judgment of Nuveen Advisory, there appears to be an actively
traded secondary market for such futures contracts.
The liquidity of a secondary market in a futures contract may be adversely af-
fected by "daily price fluctuation limits" established by commodity exchanges
which limit the amount of fluctuation in a futures contract price during a
single trading day. Once the daily limit has been reached in the contract, no
trades may be entered into at a price beyond the limit, thus preventing the
liquidation of open futures positions. Prices have in the past moved the daily
limit on a number of consecutive trading days.
The successful use of transactions in futures also depends on the ability of
Nuveen Advisory to forecast the direction and extent of interest rate move-
ments within a given time frame. To the extent these prices remain stable dur-
ing the period in which a futures contract is held by a Fund or moves in a di-
rection opposite to that anticipated, the Fund may realize a loss on the hedg-
ing transaction which is not fully or partially offset by an increase in the
value of portfolio securities. As a result, the Fund's total return for such
period may be less than if it had not engaged in the hedging transaction.
The ability of each of the Funds to engage in transactions in futures con-
tracts may be limited by the tax requirement that it have less than 30% of its
gross income derived from the sale or other disposition of stock or securities
held for less than three months. Gain from transactions in futures contracts
will be taxable to the Fund's shareholders partially as short-term and par-
tially as long-term capital gain.
TEMPORARY INVESTMENTS
The Prospectuses discuss briefly the ability of each Fund to invest a portion
of its assets in federally tax-exempt or taxable "temporary investments." Tem-
porary investments will not exceed 20% of any Fund's assets except when made
for defensive purposes. The California Fund and the California Insured Fund
will invest only in taxable temporary investments that are either U.S. Govern-
ment securities or are rated within the highest grade by Moody's or S&P, and
mature within 397 days from the date of purchase or carry a variable or float-
ing rate of interest. The Money Market Fund will invest only in temporary in-
vestments with remaining maturities of 397 days or less which, in the opinion
of Nuveen Advisory, are of "high grade" quality.
Subject to the foregoing limitations, the Funds may invest in the following
federally tax-exempt temporary investments:
29
<PAGE>
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 each Fund may invest in such other types of notes to the
extent permitted under its investment objective, policies and limitations. Such
notes may be issued for different purposes and may be secured differently from
those mentioned above.
The Funds 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.
30
<PAGE>
- -- 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 Funds will only invest in U.S. dollar denomi-
nated 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 Funds may purchase notes, bonds and debentures
issued by corporations if at the time of purchase there is less than 397 days
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 a 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 Funds will only enter into repurchase agreements with
dealers, domestic banks or recognized financial institutions that in the opin-
ion of Nuveen Advisory present minimal credit risk. The risk to the Funds 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 declines there is a risk of loss of both principal and interest.
In the event of default, the collateral may be sold but the Funds might incur a
loss if the value of the collateral declines, and might incur disposition costs
or experience
31
<PAGE>
delays in connection with liquidating the collateral. In addition, if bank-
ruptcy proceedings are commenced with respect to the seller of the security,
realization upon the collateral by the Funds may be delayed or limited. Nuveen
Advisory will monitor the value of collateral at the time the transaction is
entered into and at all times subsequent during the term of the repurchase
agreement in an effort to determine that the value always equals or exceeds 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 repur-
chase price. A Fund will not invest more than 10% of its assets in repurchase
agreements maturing in more than seven days.
Variable and Floating Rate Investments--See the description under "Fundamental
Policies and Investment Portfolio--Portfolio Securities--Money Market Fund."
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 a strong capacity to pay principal
and interest. The rating of AA indicates that capacity to pay principal and in-
terest is very strong and such bonds differ from AAA issues only in small de-
gree. 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.
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
32
<PAGE>
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.
The two highest ratings of Moody's and S&P for federally tax-exempt short-term
loans and notes are MIG-1 and MIG-2, or VMIG-1 or VMIG-2 in the case of vari-
able rate instruments, and SP-1 and SP-2, respectively. Obligations designated
MIG-1 or VMIG-1 are the best quality, enjoying strong protection from estab-
lished cash flows of funds for their servicing or from established and broad-
based access to the market for refinancing, or both. Obligations designated as
MIG-2 or VMIG-2 are high quality obligations with ample margins of protection.
The designation SP-1 indicates a very strong or strong capacity to pay princi-
pal and interest while the designation SP-2 denotes a satisfactory capacity to
pay principal and interest.
Commercial paper of tax-exempt and corporate issuers is limited to commercial
paper rated Prime-1 or Prime-2 by Moody's or A-1 or A-2 by S&P. The rating
Prime-1 (P-1) is the highest commercial paper rating assigned by Moody's. Is-
suers rated P-1 have a superior capacity for repayment of short-term obliga-
tions normally evidenced by the following characteristics: leading market posi-
tions in well-established industries; high rates or return on funds employed;
conservative capitalization structures with moderate reliance on debt and ample
asset protection; broad margins in earnings coverage of fixed financial charges
and high internal cash generation; well-established access to a range of finan-
cial markets and assured sources of alternative liquidity. Issuers rated Prime-
2 have a strong capacity for repayment of short-term promissory obligations.
The designation A-1 indicates that the degree of safety regarding timely pay-
ment is very strong, while the designation A-2 denotes a strong capacity for
timely repayment.
Subsequent to its purchase by a Fund, an issue may cease to be rated or its
rating may be reduced below the minimum required for purchase by such Fund.
Neither event requires the elimination of such obligation from the Fund's port-
folio, but Nuveen Advisory will consider such an event in its determination of
whether the Fund should continue to hold such obligation.
33
<PAGE>
MANAGEMENT
The management of Nuveen California Tax-Free Fund, Inc., including general su-
pervision of the duties performed for the Funds under the Investment Management
Agreement, is the responsibility of its directors. The number of directors of
the Nuveen California Tax-Free Fund, Inc. is fixed at seven. Due to the recent
death of one of the directors, John E. O'Toole, there is a vacancy on the
board, so that currently there are six directors, two of whom are "interested
persons" (as the term "interested persons" is defined in the Investment Company
Act of 1940) and four of whom are "disinterested persons." The names and busi-
ness addresses of the directors and officers of Nuveen California Tax-Free
Fund, Inc. and their principal occupations and other affiliations during the
past five years are set forth below, with those directors who are "interested
persons" indicated by an asterisk.
<TABLE>
- -------------------------------------------------------------------------------------
<CAPTION>
POSITIONS AND
OFFICES WITH PRINCIPAL OCCUPATIONS
NAME AND ADDRESS AGE FUNDS DURING PAST FIVE YEARS
- -------------------------------------------------------------------------------------
<C> <C> <C> <S>
Richard J. Franke* 63 Chairman of the Chairman of the Board, Director and for-
333 West Wacker Board and Di- merly President of John Nuveen & Co. In-
Drive rector corporated; Chairman of the Board and Di-
Chicago, IL 60606 rector, formerly President, of Nuveen Ad-
visory Corp.; Chairman of the Board and
Director of Nuveen Institutional Advisory
Corp. (since April 1990); Certified Finan-
cial Planner.
- -------------------------------------------------------------------------------------
Timothy R. 46 President and Executive Vice President and Director of
Schwertfeger* Director The John Nuveen Company (since March 1992)
333 West Wacker and John Nuveen & Co. Incorporated; Direc-
Drive tor of Nuveen Advisory Corp. (since 1992)
Chicago, IL 60606 and Nuveen Institutional Advisory Corp.
(since 1992).
- -------------------------------------------------------------------------------------
Lawrence H. Brown 60 Director Retired (August 1989) as Senior Vice Pres-
201 Michigan Avenue ident of The Northern Trust Company.
Highwood, IL 60040
- -------------------------------------------------------------------------------------
Anne E. Impellizzeri 62 Director President and Chief Executive Officer of
3 West 29th Street Blanton-Peale, Institutes 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).
- -------------------------------------------------------------------------------------
Margaret K. Rosen- 68 Director Helen Ross Professor of Social Welfare
heim Policy, School of Social Service Adminis-
969 East 60th Street tration, University of Chicago.
Chicago, IL 60637
</TABLE>
- --------------------------------------------------------------------------------
34
<PAGE>
<TABLE>
<CAPTION>
POSITIONS AND
OFFICES WITH PRINCIPAL OCCUPATIONS
NAME AND ADDRESS AGE FUNDS DURING PAST FIVE YEARS
- --------------------------------------------------------------------------------------
<S> <C> <C> <C>
Peter R. Sawers 62 Director Adjunct Professor of Business and Econom-
22 The Landmark ics, University of Dubuque, Iowa (since
Northfield, IL 60093 January 1991); Adjunct Professor, Lake For-
est Graduate School of Management, Lake
Forest, Illinois (since January 1992);
prior thereto, Executive Director, Towers
Perrin Australia (management consultant);
Chartered Financial Analyst; Certified Man-
agement Consultant.
- --------------------------------------------------------------------------------------
Kathleen M. Flanagan 48 Vice President Vice President of John Nuveen & Co. Incor-
333 West Wacker porated
Drive
Chicago, IL 60606
- --------------------------------------------------------------------------------------
J. Thomas Futrell 39 Vice President Vice President of Nuveen Advisory Corp.
333 West Wacker (since February 1991); prior thereto, As-
Drive sistant Vice President of Nuveen Advisory
Chicago, IL 60606 Corp. (from August 1988 to February 1991);
Chartered Financial Analyst.
- --------------------------------------------------------------------------------------
Steven J. Krupa 37 Vice President Vice President of Nuveen Advisory Corp.
333 West Wacker (since October 1990); prior thereto, Vice
Drive President of John Nuveen & Co. Incorporated
Chicago, IL 60606 (from January 1989 to October 1990).
- --------------------------------------------------------------------------------------
Anna R. Kucinskis 44 Vice President Vice President of John Nuveen & Co. Incor-
333 West Wacker porated.
Drive
Chicago, IL 60606
- --------------------------------------------------------------------------------------
Larry W. Martin 43 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 55 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. (since April 1990).
- --------------------------------------------------------------------------------------
Thomas C. Spalding, 43 Vice President Vice President of Nuveen Advisory Corp. and
Jr. Nuveen Institutional Advisory Corp. (since
333 West Wacker April 1990); Chartered Financial Analyst.
Drive
Chicago, IL 60606
- --------------------------------------------------------------------------------------
H. William Stabenow 60 Vice President Vice President and Treasurer of The John
333 West Wacker and Nuveen Company (since March 1992), John
Drive Treasurer Nuveen & Co. Incorporated, Nuveen Advisory
Chicago, IL 60606 Corp. and Nuveen Institutional Advisory
Corp, (since January 1992).
</TABLE>
- --------------------------------------------------------------------------------
35
<PAGE>
<TABLE>
<CAPTION>
POSITIONS AND
OFFICES WITH PRINCIPAL OCCUPATIONS
NAME AND ADDRESS AGE FUNDS DURING PAST FIVE YEARS
- --------------------------------------------------------------------------------------
<S> <C> <C> <C>
George P. Thermos 63 Vice President Vice President of John Nuveen & Co. Incor-
333 West Wacker porated.
Drive
Chicago, IL 60606
- --------------------------------------------------------------------------------------
James J. Wesolowski 44 Vice President Vice President, General Counsel and Secre-
333 West Wacker and tary of The John Nuveen Company (since
Drive Secretary March 1992), John Nuveen & Co. Incorporat-
Chicago, IL 60606 ed, Nuveen Advisory Corp. and Nuveen Insti-
tutional Advisory Corp. (since April 1990).
- --------------------------------------------------------------------------------------
Gifford R. Zimmerman 38 Vice President Vice President (since September 1992), As-
333 West Wacker and sistant Secretary and Assistant General
Drive Assistant Sec- Counsel of John Nuveen & Co. Incorporated;
Chicago, IL 60606 retary 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>
- --------------------------------------------------------------------------------
Richard J. Franke, Timothy R. Schwertfeger and Margaret K. Rosenheim serve as
members of the Executive Committee of the Board of Directors. The Executive
Committee, which meets between regular meetings of the Board of Directors, is
authorized to exercise all of the powers of the Board of Directors.
The directors of Nuveen California Tax-Free Fund, Inc. are also directors or
trustees, as the case may be, of 18 other Nuveen open-end fund portfolios and
55 Nuveen closed-end funds.
The following table sets forth compensation paid by the Nuveen California Tax-
Free Fund, Inc. during the fiscal year ended February 28, 1995 to each of the
directors. The Nuveen California Tax-Free Fund, Inc. has no retirement or pen-
sion plans. The officers and directors affiliated with Nuveen serve without any
compensation from the Nuveen California Tax-Free Fund, Inc.
<TABLE>
<CAPTION>
TOTAL COMPENSATION
AGGREGATE FROM THE FUND
COMPENSATION AND FUND COMPLEX
NAME OF DIRECTOR FROM THE FUND PAID TO DIRECTORS(1)
- --------------------------------------------------------------------------------
<S> <C> <C>
Richard J. Franke............................ $ 0 $ 0
Timothy R. Schwertfeger...................... 0 0
Lawrence H. Brown............................ 1,655 56,500
Anne E. Impellizzeri......................... 1,220 48,750
Margaret K. Rosenheim........................ 2,161(2) 64,404(3)
Peter R. Sawers.............................. 1,655 56,000
</TABLE>
- --------
(1) The directors of the Nuveen California Tax-Free Fund, Inc. are directors or
trustees, as the case may be, of 21 Nuveen open-end funds and 55 Nuveen
closed-end funds.
(2) Includes $270 in interest earned on deferred compensation from prior years.
(3) Includes $1,404 in interest earned on deferred compensation from prior
years.
36
<PAGE>
Each director 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 retain-
er, fees and expenses are allocated among the funds for which Nuveen Advisory
serves as investment adviser on the basis of relative net asset sizes. Nuveen
California Tax-Free Fund, Inc. requires no employees other than its officers,
all of whom are compensated by Nuveen.
On May 25, 1995, the officers and directors of Nuveen California Tax-Free Fund,
Inc. as a group owned less than 1% of the outstanding shares of each Fund. The
following table sets forth the percentage ownership of each person who, as of
May 25, 1995, owned of record or was known by Nuveen California Tax-Free Fund,
Inc. to own of record or beneficially 5% or more of any class of shares of a
Fund.
<TABLE>
<CAPTION>
PERCENTAGE OF
NAME OF FUND AND CLASS NAME AND ADDRESS OF OWNER OWNERSHIP
- --------------------------------------------------------------------------------
<S> <C> <C>
California Fund
Class A Shares............... Smith Barney, Inc. 5.47%
6823000449
388 Greenwich Street
New York, NY 10013-2375
California Fund
Class C Shares............... NFSC FEBO # OFP-002135 23.91%
Michele Chiapella
103 Northwood Commons
Chico, CA 95926
Thomas K. Larson & 15.87%
Melanie P. Larson
JT Ten WROS NOT TC
142 Via Novella
Aptos, CA 95003-5841
Charlotte N. Feo Tr. 15.81%
UA DEC 06 79
Charlotte N. Feo Family Trust
530 Galleon Way
Seal Beach, CA 90740-5939
Paul R. Hoeber 15.59%
611 Bay St., No. 4
San Francisco, CA 94133
Walter A. P. & Jeanette K. Zane TRS 6.66%
UA SEP 19 89
Walter Ah Pan Zane & Jeanette
Kwai Jin Zane Living Trust
1744 Frosbisher Way
San Jose, CA 95124-1723
Dale Wendall Harding TR 5.54%
UA APR 18 88
Harding Family Trust
627 Calle Miguel
San Clemente, CA 92672-2119
</TABLE>
37
<PAGE>
<TABLE>
<CAPTION>
PERCENTAGE OF
NAME OF FUND AND CLASS NAME AND ADDRESS OF OWNER OWNERSHIP
- --------------------------------------------------------------------------------
<S> <C> <C>
PaineWebber for the Benefit of 5.03%
Vincent J. Lombardo
Sarah M. Lombardo
866 Birdhaven Ct.
Lafayette, CA 94549-5129
California Insured Fund
Class A Shares................ Donaldson Lufkin Jenrette 6.29%
Securities Corporation, Inc.
P.O. Box 2052
Jersey City, NJ 07303-9998
California Insured Fund
Class C Shares................ Catherine B. Adrian TR 17.10%
UA AUG 02 94
Adrian Family Trust
534 S. Hickory St.
Escondido, CA 92025-4332
George C. Johnson & 13.03%
Paul S. Johnson
JT TEN WROS NOT TC
2108 Knolls Drive
Santa Rosa, CA 95405
Toni L. Kelly 11.20%
P.O. Box 9049
South Lake Tahoe, CA 96158-2049
PaineWebber for the Benefit of 10.98%
Tom Coultas
2015 Buckingham Place
Glendale, CA 91206-1402
PaineWebber for the Benefit of 9.13%
Nancy C. Adams & John Adams Jtwros
481 S. Country Hill Rd.
Anaheim, CA 92808-1353
Norma Rae Sorianello & 7.11%
F. Dante Sorianello &
Parris V. Sorianello
JT TEN WROS NOT TC
5102 Quakertown Ave.
Woodland Hills, CA 91364-3537
Frank O. Frisk Jr. 6.73%
3963 Evadale Dr.
Los Angeles, CA 90031-1415
</TABLE>
38
<PAGE>
<TABLE>
<CAPTION>
PERCENTAGE OF
NAME OF FUND AND CLASS NAME AND ADDRESS OF OWNER OWNERSHIP
- --------------------------------------------------------------------------------
<S> <C> <C>
California Money Market Fund
Institutional Series.............. First Interstate Bank 91.89%
FBO WESTCORE
ATTN: Mutual Funds A88-4
Cash Management Desk
26610 Agoura Rd.
Calabasas, CA 91302-1954
California Money Market Fund
Distribution Plan Series.......... First Interstate Bank 17.52%
ATTN: Fund Accounting
P.O. Box 9800
Calabasas, CA 91372-0800
Andrew D. Geller & 6.30%
Eileen B. Geller Trs.
UA SEP 02 87
The Geller Family Trust
5297 Woodbine St.
Los Angeles, CA 90064-4836
California Money Market Fund
Service Plan Series............... Republic Bank California, N.A. 63.20%
ATTN: Patsy Haynes
445 N. Bedford Dr.
Beverly Hills, CA 90210-4302
Homco & Co. 8.82%
5 Danielson Trust Company
525 B St., Fl. 16
San Diego, CA 92101-4403
</TABLE>
INVESTMENT ADVISER AND INVESTMENT MANAGEMENT AGREEMENT
Nuveen Advisory Corp. acts as investment adviser for and manages the investment
and reinvestment of the assets of each of the Funds. Nuveen Advisory also ad-
ministers Nuveen California Tax-Free Fund Inc.'s business affairs, provides of-
fice facilities and equipment and certain clerical, bookkeeping and administra-
tive services, and permits any of its officers or employees to serve without
compensation as trustees or officers of the Funds if elected to such positions.
See "Management of the Funds" in the Prospectuses.
Pursuant to an investment management agreement between Nuveen Advisory and
Nuveen California Tax-Free Fund, Inc., the Funds have agreed to pay annual man-
agement fees at the rates set forth below:
California Money Market Fund:
<TABLE>
<CAPTION>
AVERAGE DAILY NET ASSET
VALUE MANAGEMENT FEES
- -------------------------------------------
<S> <C>
For the first $500 million .400 of 1%
For the next $500 million .375 of 1%
For assets over $1 billion .350 of 1%
</TABLE>
39
<PAGE>
California Fund and California Insured Fund:
<TABLE>
<CAPTION>
AVERAGE DAILY NET ASSET
VALUE MANAGEMENT FEES
- -------------------------------------------
<S> <C> <C>
For the first $125 million .5500 of 1%
For the next $125 million .5375 of 1%
For the next $250 million .5250 of 1%
For the next $500 million .5125 of 1%
For the next $1 billion .5000 of 1%
For assets over $2 billion .4750 of 1%
</TABLE>
Nuveen Advisory will waive all or a portion of its management fee or reimburse
certain expenses of each Fund in order to prevent total operating expenses of
(including Nuveen Advisory's management 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 California Fund, .975 of 1% of the
average daily net asset value of any class of shares of the California Insured
Fund and .55 of 1% of the average daily net asset value of the Money Market
Fund. Nuveen Advisory may also voluntarily agree to reimburse additional ex-
penses from time to time, which voluntary reimbursements may be terminated at
any time in its discretion. For the last three fiscal years, the Funds paid
net management fees to Nuveen Advisory as follows:
<TABLE>
<CAPTION>
NET MANAGEMENT FEES FEE WAIVERS AND EXPENSE
PAID TO NUVEEN ADVISORY FOR REIMBURSEMENTS FOR THE
THE YEAR ENDED FEBRUARY 28, YEAR ENDED FEBRUARY 28,
-------------------------------- --------------------------
1993 1994 1995 1993 1994 1995
- -------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
California Fund......... $ 836,742 $1,130,541 $1,123,360 $ 0 $ 0 $ 3,483
California Insured Fund. 707,035 1,053,393 1,073,336 0 0 2,697
Money Market Fund....... 2,198,590 2,066,975 836,730 139,854 130,753 122,246
Total For All Funds..... 3,742,367 4,250,909 3,033,426 139,854 130,753 128,426
</TABLE>
As discussed in the Prospectuses, in addition to the management fees of Nuveen
Advisory, each Fund pays all other costs and expenses of its operations and a
portion of the general administrative expenses of Nuveen California Tax-Free
Fund, Inc. allocated in proportion to the net assets of each Fund.
Nuveen Advisory is a wholly owned subsidiary of John Nuveen & Co. Incorporated
("Nuveen"), the principal underwriter for Nuveen California Tax-Free Fund,
Inc. 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 department in the investment banking community
devoted exclusively to the analysis of municipal securities. In 1961, Nuveen
began sponsoring the Nuveen Tax-Exempt Unit Trust and since that time has is-
sued more than $34 billion in tax-exempt unit trusts, including over $12 bil-
lion in tax-exempt insured unit trusts. In addition, Nuveen open-end and
closed-end funds held approximately $30 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-exempt funds and trusts. Nuveen is a subsidi-
ary 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.
40
<PAGE>
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, as one
of the top four research teams in the municipal industry, based on an exten-
sive industry-wide poll of more than 1,000 portfolio managers, department
heads and bond buyers. The Nuveen Research Department previews more than $100
billion in tax-exempt bonds every year.
The Funds, the other Nuveen funds, Nuveen Advisory, and other related entities
have adopted a code of ethics which essentially prohibits all Nuveen fund man-
agement personnel, including Nuveen fund portfolio managers, from engaging in
personal investments which compete or interfere with, or attempt to take ad-
vantage of, a Fund's anticipated or actual portfolio transactions, and is de-
signed to assure that the interest of Fund shareholders are placed before the
interest of Nuveen personnel in connection with personal investment transac-
tions.
PORTFOLIO TRANSACTIONS
Nuveen Advisory, in effecting purchases and sales of portfolio securities for
the account of each 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 Funds expect that all portfolio transactions will be effected on a princi-
pal (as opposed to an agency) basis and, accordingly, do not expect to pay any
brokerage commissions. Purchases from underwriters will include a commission
or concession paid by the issuer to the underwriter, and purchases from deal-
ers will include the spread between the bid and asked price. Given the best
price and execution obtainable, it will be the practice of the Funds 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 in-
formation and statistical and other services received from dealers. Since it
is only supplementary to Nuveen Advisory's own research efforts, the receipt
of research information 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 Funds, the policies and practices of
Nuveen Advisory in this regard must be consistent with the foregoing and will,
at all times, be subject to review by the Board of Directors.
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 Funds. Subject to applicable laws and regulations,
Nuveen Advisory will attempt to allocate equitably portfolio transactions
among the Funds and the portfolios of its other clients purchasing or selling
securities whenever decisions are made to purchase or sell securities by a
Fund and one or more of such other clients simultaneously. In making such al-
locations 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
41
<PAGE>
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 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 a Fund from time to time, it
is the opinion of the Board of Directors that the benefits available from
Nuveen Advisory's organization will outweigh any disadvantage that may arise
from exposure to simultaneous transactions.
Under the Investment Company Act of 1940, the Funds 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 a Fund, the amount of Municipal Obligations which
may be purchased in any one issue and the assets of a Fund which may be in-
vested in a particular issue. In addition, purchases of securities made pursu-
ant to the terms of the Rule must be approved at least quarterly by the Board
of Directors, including a majority of the directors who are not interested per-
sons of the Funds.
NET ASSET VALUE
As stated in the Prospectuses, the net asset value of the shares of each Fund
will be determined separately for each class of shares by United States Trust
Company of New York, the custodian of Nuveen California Tax-Free Fund, Inc. In
the case of the California Fund and the California Insured Fund, net asset
value will be determined 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. In the
case of the Money Market Fund, net asset value will be determined as of 12:00
noon eastern time (9:00 a.m. pacific time) on each day on which the Federal Re-
serve Bank of Boston is normally open for business and on any other day during
which there is a sufficient degree of trading in the portfolio securities held
by the Money Market Fund that the current net asset value of the Money Market
Fund's shares might be materially affected by changes in the value of the secu-
rities held by the Money Market Fund. 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 Federal Reserve Bank of
Boston is also not open for business on these days (except for Good Friday) as
well as Martin Luther King's Birthday, Columbus Day and Veterans Day. The net
asset value per share of a class of shares of a Fund will be computed by divid-
ing the value of the Fund's assets attributable to the class, less the liabili-
ties attributable to the class, by the number of shares of the class outstand-
ing.
In determining net asset value for the California Fund and the California In-
sured Fund, the Funds' custodian utilizes the valuations of portfolio securi-
ties furnished by a pricing service approved by the directors. The pricing
service values portfolio securities at the mean between the quoted bid and
asked price or the yield equivalent when quotations are readily available. Se-
curities for which quotations are not readily available (which constitute a ma-
jority of the securities held by these Funds) are valued at fair value as de-
termined by the pricing service using methods which 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 dealers;
and general market conditions. The pricing service
42
<PAGE>
may employ electronic data processing techniques and/or a matrix system to de-
termine valuations. The procedures of the pricing service and its valuations
are reviewed by the officers of Nuveen California Tax-Free Fund, Inc. under the
general supervision of the Board of Directors.
The Money Market Fund seeks to maintain a net asset value of $1.00 per share.
In this connection, the Money Market Fund values its portfolio securities at
their amortized cost, as permitted under the rules and regulations of the Secu-
rities and Exchange Commission under the Investment Company Act of 1940. This
method does not take into account unrealized securities gains or losses. It in-
volves valuing an instrument at its cost on the date of purchase and thereafter
assuming a constant amortization to maturity of any discount or premium. While
this method provides certainty in valuation, it may result in periods during
which the value of an investment, as determined by amortized cost, is higher or
lower than the price the Money Market Fund would receive if it sold the instru-
ment. During periods of declining interest rates, the daily yield on shares
held by the Money Market Fund may tend to be higher than a like computation
made by a fund with identical investments utilizing a method of valuation based
upon market prices and estimates of market prices for all of its fund instru-
ments. Thus, if the use of the amortized cost method by the Money Market Fund
resulted in a lower aggregate portfolio value on a particular day, a prospec-
tive investor in the Money Market Fund would be able to obtain a somewhat
higher yield than would result from an investment in a fund utilizing solely
market values, and existing investors in the Money Market Fund would receive
less investment income. The converse would apply in a period of rising interest
rates.
The Money Market Fund, as a condition to the use of amortized cost and the
maintenance of its per share net asset value of $1.00, must maintain a dollar-
weighted average portfolio maturity of 90 days or less, only purchase instru-
ments having remaining maturities of thirteen months or less, and invest only
in securities determined to be of high quality with minimal credit risks. The
Money Market Fund may invest in variable and floating rate instruments even if
they carry stated maturities in excess of thirteen months, upon certain condi-
tions contained in rules and regulations issued by the Securities and Exchange
Commission under the Investment Company Act of 1940, but will do so only if
there is a secondary market for such instruments or if they carry demand fea-
tures, permissible under rules of the Securities and Exchange Commission for
money market funds, to redeem upon specified notice at par, or both.
The Board of Directors, pursuant to the requirements of the rule permitting am-
ortized cost valuation, has established procedures designed to stabilize, to
the extent reasonably possible, the Money Market Fund's price per share as com-
puted for the purpose of sales and redemptions at $1.00. Such procedures will
include review of the holdings of the Money Market Fund by the Board of Direc-
tors, at such intervals as it may deem appropriate, to determine whether the
net asset value calculated by using available market quotations or market
equivalents deviates from $1.00 per share based on amortized cost. Market quo-
tations and market equivalents used in such review may be obtained from a pric-
ing agent approved by the Board of Directors. The Board has selected Nuveen Ad-
visory to act as pricing agent, but in the future may select an independent
pricing service to perform this function. In serving as pricing agent, Nuveen
Advisory will follow guidelines adopted by the Board, and the Board will moni-
tor Nuveen Advisory to see that the guidelines are followed. The pricing agent
will value the Money Market Fund's investments based on similar methods used in
connection with the valuation of
43
<PAGE>
the securities in the California Fund and the California Insured Fund. The ex-
tent of any deviation between the Money Market Fund's net asset value based on
the pricing agent's market valuation and $1.00 per share based on amortized
cost will be examined by the Board of Directors. If such deviation were to ex-
ceed 1/2 of 1%, the Board of Directors would promptly consider what action, if
any, would be initiated. In the event the Board of Directors determines that a
deviation exists which may result in material dilution or other unfair results
to investors or existing shareholders, it has agreed to take such corrective
action as it regards as necessary and appropriate, including the sale of port-
folio instruments prior to maturity to realize capital gains or losses or to
shorten average portfolio maturity; withholding dividends or payment of distri-
butions from capital or capital gains; redemption of shares in kind; or estab-
lishing a net asset value per share by using available market quotations.
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
Funds.
As described in the Prospectus, each Fund intends to qualify, as it has in
prior years, 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 investment company, a Fund must satisfy certain
requirements relating to the source of its income, diversification of its as-
sets, and distributions of its income to shareholders. First, a Fund must de-
rive 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) de-
rived with respect to its business of investing in such stock or securities
(the "90% gross income test"). Second, a 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 then three months: (i) stock or securities and (ii)
certain options, futures, or forward contracts (the "short-short test"). Third,
a 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 reg-
ulated investment companies and other securities 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 secu-
rities and securities of other regulated investment companies) or two or more
issuers controlled by a Fund and engaged in the same, similar or related trades
or businesses.
As a regulated investment company, a fund will not be subject to U.S. federal
income tax in any taxable year for which it distributes at least 90% of its
"investment company taxable income" (which includes dividends, taxable inter-
est, taxable original issue discount and market discount income, income 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
44
<PAGE>
expenses) and at least 90% of the excess of its gross tax-exempt interest in-
come over certain disallowed deductions ("net tax-exempt interest"). A 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 a Fund retains any net capital gain or any investment company taxable in-
come, it will be subject to tax at regular corporate rates on the amount re-
tained. If a Fund retains any capital gain, such Fund may designate the re-
tained amount as undistributed capital gains in a notice to its shareholders
who, if subject to U.S. federal income tax purposes on long-term capital
gains, (i) will be required to include in income for federal income tax pur-
poses, as long-term capital gain, their shares of such undistributed amount,
and (ii) will be entitled to credit their proportionate shares of the tax paid
by such Fund against their U.S. federal income tax liabilities, if any, and to
claim refunds to the extent the credit exceeds such liabilities. For U.S. fed-
eral 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. Each 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.
Treasury regulations permit a regulated investment company, in determining its
investment 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.
Each 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 invest-
ments in Municipal Obligations, which are exempt from federal income tax when
received by such Fund, as exempt-interest dividends. Shareholders receiving
exempt-interest dividends will not be subject to regular federal income tax on
the amount of such dividends. Insurance proceeds received by a 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
representing interest on "non-appropriation" lease obligations will be exclud-
able from gross income for federal income tax purposes. See "Fundamental Poli-
cies and Investment Portfolio--Portfolio Securities."
Distributions by each Fund of net interest received from certain taxable tem-
porary investments (such as certificates of deposit, commercial paper and ob-
ligations of the United States Government, its agencies and instrumentalities)
and net short-term capital gains realized by a Fund, if any, will be taxable
to shareholders as ordinary income whether received in cash or additional
shares./1/ If a Fund purchases a Municipal Obligation at a market discount,
any gain realized by the Fund upon sale or redemption of
- --------
/1/If a Fund has both tax-exempt and taxable income, it will use the "average
annual" method for determining the designated percentage that is taxable
income 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
applied uniformly to all distributions made during the Fund's taxable year.
The percentage of income designated as tax-exempt for any particular dis-
tribution may be substantially different from the percentage of the Fund's
income that was tax-exempt during the period covered by the distribution.
45
<PAGE>
the Municipal Obligation will be treated as a 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. Any net long-
term capital gains realized by a Fund and distributed to shareholders in cash
or in additional shares will be taxable to shareholders as long-term capital
gains regardless of the
length of time investors have owned shares of a Fund. Distributions by a Fund
that do not constitute ordinary income dividends, exempt-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 any of the Funds engages in hedging transactions involving financial futures
and options, these transactions will be subject to special tax rules, the ef-
fect of which may be to accelerate income to a Fund, defer a Fund's losses,
cause adjustments in the holding periods of a 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.
Because the taxable portion of each 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 one of the Funds, the impact of dividends or dis-
tributions 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 shares prior to the record date will have the effect of reducing
the per share net asset value by the per share amount of the dividend or dis-
tribution.
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 each Fund (and received
by the shareholders) on December 31.
The redemption or exchange of the shares of a Fund normally will result in cap-
ital 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 corporations
at the rates applicable to ordinary income. For non-corporate taxpayers, howev-
er, 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 deductions and
the deduction for personal exemptions applicable to higher income taxpayers,
the effective rate of tax may be higher in certain circumstances. All or a por-
tion of a sales load paid in purchasing shares of a Fund cannot be taken into
account for purposes of determining gain or loss on the redemption or exchange
of such shares within 90 days after their purchase to the extent shares of a
Fund or another fund are subsequently acquired without payment of a sales load
pursuant to the reinvestment or exchange privilege. Any disregarded 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
46
<PAGE>
redemption or exchange of shares of a Fund held for six months or less are dis-
allowed to the extent of any distribution of exempt-interest 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 distributions of long-term capi-
tal gain made with respect to such shares. In addition, no loss will be allowed
on the redemption or exchange of shares of a Fund if the shareholder purchases
other shares of such Fund (whether through reinvestment of distributions or
otherwise) or the shareholder acquires or enters into a contract or option to
acquire securities that are substantially identical to shares of a Fund within
a period of 61 days beginning 30 days before and ending 30 days after such re-
demption or exchange. If disallowed, the loss will be reflected in an adjust-
ment 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 treatment of the portion of the sales or redemption proceeds equal to
the accrued tax-exempt interest as taxable gain (to the extent the redemption
or exchange price exceeds the shareholder's tax basis in the shares disposed
of) rather then tax-exempt interest.
In order to avoid a 4% federal excise tax, each 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 period year that was not distributed during such
year and on which such Fund paid no federal income tax. For purposes of the ex-
cise tax, a regulated investment company may (i) 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 in determining the amount of ordinary taxable income
for the current calendar year (and, instead, include such gains and losses in
determining ordinary taxable income for the succeeding calendar year). The
Funds intend 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 a Fund should fail to qualify under Subchapter M for tax treat-
ment as a regulated investment company, the Fund would incur a regular corpo-
rate federal income tax upon its income for that year (other than interest in-
come from Municipal Obligations) and distributions to its shareholders would be
taxable to shareholders as ordinary dividend income for federal income tax pur-
poses to the extent of the Fund's available earnings and profits.
Among the requirements that a 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 Funds may invest in private activity bonds, the interest on which
is not federally tax-exempt to persons who are "substantial users" of the fa-
cilities financed by such bonds or "related persons" of such "substantial us-
ers," the Funds may not be an appropriate investment for shareholders
47
<PAGE>
who are considered either a "substantial user" or a "related person" within the
meaning of the Code. For additional information, investors should consult their
tax advisers before investing in one of the Funds.
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 hospi-
tals), is included as an item of tax preference in determining the amount of a
taxpayer's alternative minimum taxable income. To the extent that a 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 Funds
will annually supply shareholders with a report indicating the percentage of
the 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 determined to be the alter-
native minimum taxable income. Interest on all Municipal Obligations, and
therefore all distributions by the Funds 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 any 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 a 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 Funds are required in certain circumstances to withhold 31% of taxable div-
idends and certain other payments paid to non-corporate holders of shares who
have not furnished to the Funds their correct taxpayer identification number
(in the case of individuals, their social security number) and certain certifi-
cations, 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 Funds and their shareholders. For complete provisions, refer-
ence should be made to the pertinent Code sections and Treasury Regulations.
The Code and Treasury Regulations are subject to change by legislative or ad-
ministrative 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 Funds and
the income tax consequences to their shareholders.
48
<PAGE>
CALIFORNIA STATE AND LOCAL TAX MATTERS
The following is based upon the advice of Orrick, Herrington & Sutcliffe, spe-
cial California counsel to the Funds, and assumes that each Fund will be quali-
fied as a regulated investment company under Subchapter M of the Code and will
be qualified thereunder to pay exempt interest dividends.
Individual shareholders of each Fund who are subject to California personal in-
come taxation will not be required to include in their California gross income
that portion of their federally tax-exempt dividends which the Fund clearly and
accurately identifies as directly attributable to interest earned on obliga-
tions, the interest on which is exempt from California personal income tax,
provided that at least 50 percent of the value of the Fund's total assets con-
sists of obligations the interest on which is exempt from California personal
income taxation. Distributions to individual shareholders derived from interest
on Municipal Obligations issued by governmental authorities in states other
than California, short-term capital gains and other taxable income will be
taxed as dividends for purposes of California personal income taxation. Each
Fund's long-term capital gains for federal income tax purposes will be taxed as
long-term capital gains to individual shareholders of the Fund for purposes of
California personal income taxation. Gain or loss, if any, resulting from an
exchange or redemption of shares will be recognized in the year of the exchange
or redemption. Present California law taxes both long-term and short-term capi-
tal gains at the rates applicable to ordinary income. Interest on indebtedness
incurred or continued by a shareholder in connection with the purchase of
shares of a Fund will not be deductible for California personal income tax pur-
poses. California has an alternative minimum tax similar to the federal alter-
native minimum tax described above. However, the California alternative minimum
tax does not include interest from private activity bonds as an item of tax
preference.
Generally corporate shareholders of the Fund subject to the California fran-
chise tax will be required to include any gain on an exchange or redemption of
shares and all distributions of exempt-interest, capital gains and other tax-
able income, if any, as income subject to such tax.
A Fund will not be subject to California franchise or corporate income tax on
interest income or net capital gain distributed to the shareholders.
Shares of a Fund will be exempt from local property taxes in California.
The foregoing is a general, abbreviated summary of certain of the provisions of
the California Revenue and Taxation Code presently in effect as it directly
governs the taxation of shareholders of a Fund. These provisions are subject to
change by legislative or administrative action, and any such change may be ret-
roactive with respect to Fund transactions. Shareholders are advised to consult
with their own tax advisers for more detailed information concerning California
tax matters.
49
<PAGE>
PERFORMANCE INFORMATION
MONEY MARKET FUND
As explained in the Money Market Fund Prospectus, the historical performance of
a series of the Money Market Portfolio may be expressed in terms of "yield,"
"effective yield" or "taxable equivalent yield." Each series' yield is computed
in accordance with a standard method prescribed by rules of the Securities and
Exchange Commission. Under that method, current yield is based on a seven-day
period and is computed as follows: the series' net investment income per share
for the period is divided by the price per share (expected to remain constant
at $1.00) at the beginning of the period, the result (the "base period return")
is divided by seven and multiplied by 365, and the resulting figure is carried
to the nearest hundredth of one percent. For the purpose of this calculation,
the series' net investment income per share includes its accrued interest in-
come plus or minus amortized purchase discount or premium less accrued ex-
penses, but does not include realized capital gains or losses or unrealized ap-
preciation or depreciation of investments.
A series' effective yield is calculated by taking the base period return (com-
puted as described above) and calculating the effect of assumed compounding.
The formula for effective yield is: (base period return +1) 365/7 -1. Based on
the seven-day period ended February 28, 1995, the yield and effective yield for
the Service and Distribution Plan series of the Money Market Fund were 3.51%
and 3.57%, respectively, and for the Institutional series were 3.51% and 3.58%,
respectively.
A series' taxable equivalent yield is computed by dividing that portion of the
series' yield which is tax-exempt by 1 minus the stated combined federal and
state income tax rate and adding the result to that portion, if any, of the
yield of the series that is not tax-exempt. Based upon (1) a combined 1995 fed-
eral and California income tax of 46.0%, and (2) the yield for the Money Market
Fund as described above for the seven-day period ended February 28, 1995, the
taxable equivalent yield for the Service Plan series, the Distribution Plan se-
ries and for the Institutional series of the Money Market Fund for that period
was 6.50%.
Each series' yield will fluctuate, and the publication of annualized yield quo-
tations is not a representation of what an investment in the series will actu-
ally yield for any given future period. Actual yields will depend not only on
changes in interest rates on money market instruments during the period in
question, but also on such matters as the expenses attributable to the series.
50
<PAGE>
The following table shows the effects for individuals of federal income taxes
on the amount that those subject to a given tax rate would have to put into a
tax-free investment in order to generate the same after-tax income as a taxable
investment.*
Read down to find the amount of a tax-free investment at the specified rate
that would provide the same after-tax income as a $50,000 taxable invest-
ment at the stated taxable rate.
<TABLE>
<CAPTION>
3.00% 3.50 % 4.00% 4.50% 5.00% 5.50 % 6.00% 6.50%
1.50% 2.00% 2.50% TAX- TAX- TAX- TAX- TAX- TAX- TAX- TAX-
TAXABLE TAX-FREE TAX-FREE TAX-FREE FREE FREE FREE FREE FREE FREE FREE FREE
- ------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
2.00% $ 46,000 $ 34,500 $ 27,600 $23,000 $19,714 $17,250 $15,333 $13,800 $12,545 $11,500 $10,615
- ------------------------------------------------------------------------------------------------------
2.50% $ 57,500 $ 43,125 $ 34,500 $28,750 $24,643 $21,563 $19,167 $17,250 $15,682 $14,375 $13,269
- ------------------------------------------------------------------------------------------------------
3.00% $ 69,000 $ 51,750 $ 41,400 $34,500 $29,571 $25,875 $23,000 $20,700 $18,818 $17,250 $15,923
- ------------------------------------------------------------------------------------------------------
3.50% $ 80,500 $ 60,375 $ 48,300 $40,250 $34,500 $30,188 $26,833 $24,150 $21,955 $20,125 $18,262
- ------------------------------------------------------------------------------------------------------
4.00% $ 92,000 $ 69,000 $ 55,200 $46,000 $39,429 $34,500 $30,667 $27,600 $25,091 $23,000 $21,231
- ------------------------------------------------------------------------------------------------------
4.50% $103,500 $ 77,625 $ 62,100 $51,750 $44,357 $38,813 $34,500 $31,050 $28,227 $25,875 $23,884
- ------------------------------------------------------------------------------------------------------
5.00% $115,000 $ 86,250 $ 69,000 $57,500 $49,286 $43,125 $38,333 $34,500 $31,364 $28,750 $26,538
- ------------------------------------------------------------------------------------------------------
5.50% $126,500 $ 94,875 $ 75,900 $63,250 $54,214 $47,437 $42,167 $37,950 $34,500 $31,625 $29,192
- ------------------------------------------------------------------------------------------------------
6.00% $138,000 $103,500 $ 82,800 $69,000 $59,143 $51,750 $46,000 $41,400 $37,636 $34,500 $31,846
- ------------------------------------------------------------------------------------------------------
6.50% $149,500 $112,125 $ 89,700 $74,750 $64,071 $56,062 $49,833 $44,850 $40,773 $37,375 $34,500
- ------------------------------------------------------------------------------------------------------
7.00% $161,000 $120,750 $ 96,600 $80,500 $69,000 $60,375 $53,667 $48,300 $43,909 $40,250 $37,154
- ------------------------------------------------------------------------------------------------------
7.50% $172,500 $129,375 $103,500 $86,250 $73,929 $64,688 $57,500 $51,750 $47,045 $43,125 $39,808
- ------------------------------------------------------------------------------------------------------
8.00% $184,000 $138,000 $110,400 $92,000 $78,857 $69,000 $61,333 $55,200 $50,182 $46,000 $42,462
- ------------------------------------------------------------------------------------------------------
</TABLE>
*The dollar amounts in the table reflect a 31% federal income tax rate.
This table is for illustrative purposes only and is not intended to predict the
actual return you might earn on your investment. The Money Market Fund occa-
sionally may advertise its performance in similar tables using a different cur-
rent tax rate than that shown here. The tax rate shown here may be higher or
lower than your actual tax rate; a higher tax rate would tend to make the dol-
lar amounts in the table lower, while a lower tax rate would make the amounts
higher. You should consult your tax adviser to determine your actual tax rate.
CALIFORNIA FUND AND CALIFORNIA INSURED FUND
As explained in the Prospectus for the California Fund and the California In-
sured Fund, the historical investment performance of the Funds 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 of a Fund.
51
<PAGE>
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, according
to the following formula:
Yield = 2{(a-b +1)/6/-1}
---
cd
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 the
period. In the cases of Class A Shares, the maximum offering price includes the
current maximum sales charge of 4.50%.
In computing their yield, the Funds follow certain standardized accounting
practices specified by SEC rules. These practices are not necessarily consis-
tent with those that the Funds use to prepare their annual and interim finan-
cial statements in conformity with generally accepted accounting principles.
Thus, yield may not equal the income paid to shareholders or the income re-
ported in the Fund's financial statements. Yield for each class of shares of
each Fund as of February 28, 1995 are set forth below.
Taxable equivalent yield is computed by dividing that portion of the yield
which is tax-exempt by the remainder of (1 minus the stated combined federal
and state income tax rate, taking into account the deductibility of state in-
come taxes for federal income tax purposes) and adding the product to that por-
tion, if any, of the yield that is not tax exempt. The taxable equivalent
yields quoted below are based upon (1) the stated combined federal and Califor-
nia income tax rates and (2) the yields for the 30-day period ended February
28, 1995 quoted in the left-hand column.
<TABLE>
<CAPTION>
COMBINED
FEDERAL
AND
STATE TAXABLE
TAX EQUIVALENT
AS OF FEBRUARY 28, 1995 YIELD RATE* YIELD
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
CALIFORNIA FUND
Class A Shares....................................... 5.20% 46.0% 9.63%
Class C Shares....................................... 4.71% 46.0% 8.72%
Class R Shares....................................... 5.77% 46.0% 10.69%
CALIFORNIA INSURED FUND
Class A Shares....................................... 4.91% 46.0% 9.09%
Class C Shares....................................... 4.40% 46.0% 8.15%
Class R Shares....................................... 5.46% 46.0% 10.11%
</TABLE>
- --------
*The combined tax rates used in the table represents the highest or one of the
highest combined tax rates applicable to state taxpayers, rounded to the near-
est .5%; these rates do not reflect the current federal tax limitations on
itemized deductions and personal exemptions, which may raise the effective tax
rate and taxable equivalent yield for taxpayers above certain income levels.
For additional information concerning tax-exempt yields, see the Taxable Equiv-
alent Yield Tables in the Prospectus.
52
<PAGE>
The California and California Insured Funds may from time to time in their
sales materials report a quotation of the current distribution rate. The dis-
tribution rate represents a measure of dividends distributed for a specified
period. Distribution rate is computed by dividing the most recent monthly tax-
free income dividend per share, multiplying it by 12 to annualize it, and di-
viding 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 maxi-
mum public offering price). The distribution rate differs from yield and total
return and therefore is not intended 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 28, 1995
based on the maximum public offering price then in effect for the California
and California Insured Funds were as follows:
<TABLE>
<CAPTION>
DISTRIBUTION RATES
------------------------
CLASS A* CLASS C CLASS R
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
California Fund........................................ 5.22% 4.75% 5.75%
California Insured Fund................................ 4.98% 4.49% 5.51%
- --------------------------------------------------------------------------------
</TABLE>
*Assumes 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 average annual to-
tal return figures, including the effect of the current maximum sales charge
for the Class A Shares, for the one-year and five-year periods ended February
28, 1995, and for the period from inception (on July 1, 1986, with respect to
the Class R Shares and on September 6, 1994 with respect to the Class A Shares
and Class C Shares) through February 28, 1995, respectively, were as follows:
<TABLE>
<CAPTION>
ANNUAL TOTAL RETURN
-----------------------------------------------------
FROM INCEPTION
ONE YEAR ENDED FIVE YEARS ENDED THROUGH
FEBRUARY 28, 1995 FEBRUARY 28, 1995 FEBRUARY 28, 1995
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
CALIFORNIA FUND
Class A Shares........... N/A N/A -2.10%*
Class C Shares........... N/A N/A 3.71%*
Class R Shares........... .78% 7.38% 7.40%
CALIFORNIA INSURED FUND
Class A Shares........... N/A N/A -1.32%*
Class C Shares........... N/A N/A 3.45%*
Class R Shares........... 1.68% 7.85% 7.24%
- --------------------------------------------------------------------------------
</TABLE>
*Not annualized because it relates to period of less than one year.
53
<PAGE>
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 cumulative total return figures, including the effect of the current maxi-
mum sales charge for the Class A Shares, for the one-year and five-years peri-
ods ended February 28, 1995, and for the period from inception (on July 1, 1986
with respect to the Class R Shares and on September 6, 1994 with respect to the
Class A Shares and Class C Shares) through February 28, 1995, respectively,
were as follows:
<TABLE>
<CAPTION>
CUMULATIVE TOTAL RETURN
-----------------------------------------------------
FROM INCEPTION
ONE YEAR ENDED FIVE YEARS ENDED THROUGH
FEBRUARY 28, 1995 FEBRUARY 28, 1995 FEBRUARY 28, 1995
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
CALIFORNIA FUND
Class A Shares........... N/A N/A -2.10%
Class C Shares........... N/A N/A 3.71%
Class R Shares........... .78% 42.76% 85.58%
CALIFORNIA INSURED FUND
Class A Shares........... N/A N/A -1.32%
Class C Shares........... N/A N/A 3.45%
Class R Shares........... 1.68% 45.93% 83.29%
- --------------------------------------------------------------------------------
</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 or combined
federal and state tax rate), calculated as described above under the discussion
of "taxable equivalent yield." The resulting amount for the calendar year is
then divided by the initial investment amount to arrive at a "taxable equiva-
lent 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 to-
tal return expressed as a percentage. Using the 39.6% maximum marginal federal
tax rate for 1995, and assuming that no front-end sales charge is imposed, the
annualized taxable equivalent total returns for the Class R Shares of the Cali-
fornia Fund and the California Insured Fund for the one-year and five-year pe-
riods ended February 28, 1995, and for all classes for the period from incep-
tion (on July 1, 1986 with respect to the Class R Shares and on
54
<PAGE>
September 6, 1994 with respect to the Class A Shares and Class C Shares)
through February 28, 1995, respectively, were as follows:
<TABLE>
<CAPTION>
FROM INCEPTION
ONE YEAR ENDED FIVE YEARS ENDED THROUGH FEBRUARY
FEBRUARY 28, 1995 FEBRUARY 28, 1995 28, 1995
------------------ ------------------- -------------------- ASSUMED
AT COMBINED
WITH MAXIMUM NET WITH MAXIMUM AT NET WITH MAXIMUM AT NET FEDERAL
4.50% SALES ASSET 4.50% SALES ASSET 4.50% SALES ASSET AND STATE
CHARGE VALUE CHARGE VALUE CHARGE VALUE TAX RATE*
- -----------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
CALIFORNIA FUND
Class A Shares......... N/A N/A N/A N/A .13%+ 4.85%+ 46.0%
Class C Shares......... N/A N/A N/A N/A N/A 5.63%+ 46.0%
Class R Shares......... N/A 5.58% N/A 12.67% N/A 12.96% 46.0%
CALIFORNIA INSURED FUND
Class A Shares......... N/A N/A N/A N/A .81%+ 5.56%+ 46.0%
Class C Shares......... N/A N/A N/A N/A N/A 5.29%+ 46.0%
Class R Shares......... N/A 6.25% N/A 12.88% N/A 12.55% 46.0%
</TABLE>
- --------
*The combined tax rates in the table do not reflect the current federal tax
limitations on itemized deductions and personal exemptions, which may raise the
effective tax rate and taxable equivalent yield for taxpayers above certain in-
come levels.
+Not annualized because it relates to period of less than one year.
From time to time, a Fund may compare its risk-adjusted performance with other
investments that may provide different levels of risk and return. For example,
a Fund may compare its risk level, as measured by the variability of its peri-
odic 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.
A 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 dis-
tributions of net realized capital gains and ordinary income.
The risk level for a class of shares of a 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 standard deviation of the invest-
ment's monthly returns over a specified measurement period (e.g., two years).
An investment with a higher standard deviation of monthly returns would indi-
cate that a fund had greater price variability, and therefore greater risk,
than an investment with a lower standard deviation. The standard deviation of
monthly returns for the three years ended February 28, 1995, for the Class R
Shares of the Funds, were 1.83% and 2.15% for the California Fund and the Cali-
fornia Insured Fund, respectively.
The RISK-ADJUSTED TOTAL RETURN for a class of shares of a Fund and for other
investments over a specified period would be evaluated by dividing (a) the re-
mainder of the investment's annualized two-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
55
<PAGE>
measure. The Sharpe measure for the three year period ended February 28, 1995,
for the Class R Shares of each of the Funds, was 1.313 and 1.325 for the Cali-
fornia Fund and the California Insured Fund, respectively.
Each Fund's performance figures are based upon historical results and are not
necessarily representative of future performance. Class A Shares of a 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. Yield, returns and net asset
value of each class of shares of the Funds will fluctuate. Factors affecting
the performance of the Funds include general market conditions, operating ex-
penses and investment management fees. Any additional fees charged by a secu-
rities representative or other financial services firm would reduce the re-
turns described in this section. Fund shares are redeemable at net asset val-
ue, which may be more or less than original cost.
In reports or other communications to shareholders or in advertising and sales
literature, the Funds may also compare their 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
("Wiesenberger") and CDA Investment Technologies, Inc. ("CDA") or similar in-
dependent services which monitor the performance of mutual funds, or other in-
dustry or financial publications such as Barron's, Changing Times, Forbes and
Money Magazine. Performance comparisons by these indexes, services or publica-
tions may rank mutual funds over different periods of time by means of aggre-
gate, average, year-by-year, or other types of total return and performance
figures. Any given performance quotation or performance comparison should not
be considered as representative of the performance of the Funds for any future
period.
There are differences and similarities between the investments which the Funds
may purchase and the investments measured by the indexes and reporting serv-
ices which are described herein. The Consumer Price Index is generally consid-
ered 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-ex-
empt 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
Municipal Bond Index is an unmanaged index that generally represents the per-
formance of high grade intermediate and long-term municipal bonds during vari-
ous market conditions. Lipper, Morningstar, Wiesenberger and CDA are widely
recognized mutual fund reporting services whose performance calculations are
based upon changes in net asset value with all dividends reinvested and which
do not include the effect of any sales charges. The market prices and yields
of taxable and tax-exempt bonds will fluctuate. The Funds primarily invest in
investment grade Municipal Obligations in pursuing their objective of as high
a level of current interest income which is exempt from federal and state in-
come tax as is consistent, in the view of the Funds' management, with preser-
vation of capital.
The Funds may also compare their taxable equivalent total return performance
to the total return performance of taxable income funds such as treasury secu-
rities funds, corporate bond funds (either
56
<PAGE>
investment grade or high yield), or Ginnie Mae funds. These types of funds, be-
cause of the character of their underlying 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 municipal bonds resulting from changes in mar-
ket interest rates and are particularly susceptible to volatility from credit
changes. Ginnie Mae bonds are generally subject to less price volatility than
municipal bonds from credit concerns, 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 U.S. Government, but Ginnie Mae bonds of equiva-
lent coupon and maturity are generally more susceptible to price volatility re-
sulting from market interest rate changes. In addition, the volatility of
Ginnie Mae bonds due to changes in market interest rates may differ from munic-
ipal bonds of comparable coupon and maturity because of the sensitivity of
Ginnie Mae prepayment experience to change in interest rates.
ADDITIONAL INFORMATION ON THE PURCHASE AND REDEMPTION OF FUND SHARES
CALIFORNIA FUND AND CALIFORNIA INSURED FUND
As described in the Prospectus, each Fund has adopted a Flexible Sales Charge
Program 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 example
of the method of computing the offering price of the Class A shares of each of
the Funds. The example assumes a purchase on February 28, 1995 of Class A
shares from the California 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........................................ $10.100
Per Share Sales Charge--4.50% of public offering price (4.71% of
net asset value per share)...................................... $ .476
Per Share Offering Price to the Public........................... $10.576
</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 contingent deferred sales charge for redemption
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 Authorized Dealers
for providing you with ongoing financial advice and other services.
57
<PAGE>
Under the Flexible Sales Charge Program, all Fund shares outstanding as of Sep-
tember 6, 1994, have been designated as Class R Shares. Class R Shares are
available for purchase 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 administration and distribution ex-
penses, and each class has exclusive voting rights with respect to any distri-
bution 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.
The expenses to be borne by specific classes of shares may include (i) transfer
agency fees attributable to a specific class of shares, (ii) printing and post-
age expenses related to preparing and distributing materials such as share-
holder reports, prospectuses and proxy statements to current shareholders of a
specific class of shares, (iii) Securities and Exchange Commission ("SEC") and
state securities registration fees incurred by a specific class of shares, (iv)
the expense of administrative personnel and services required to support the
shareholders of a specific class of shares, (v) litigation or other legal ex-
penses relating to a specific class of shares, (vi) directors' fees or expenses
incurred as a result of issues relating to a specific class of shares, (vii)
accounting expenses relating to a specific class of shares and (viii) any addi-
tional incremental expenses subsequently identified and determined to be prop-
erly allocated to one or more classes of shares that shall be approved by the
SEC pursuant to an amended exemptive order.
The California Fund and the California Insured Fund each have special purchase
programs under which certain persons may purchase Class A Shares at reduced
sales charges. One such program is available to members of a "qualified group."
An individual who is a member of a "qualified group" may purchase Class A
Shares of a Fund (or any other Nuveen Fund with respect to which a sales charge
is imposed), at the reduced sales charge applicable to the group taken as a
whole. A "qualified group" is one which (i) has been in existence for more than
six months; (ii) has a purpose other than investment; (iii) has five or more
participating members; (iv) has agreed to include 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 pay-
ment with a single remittance for all investments in the Fund during each in-
vestment 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 trans-
fer agent's processing system.
The "amount" of a share purchased 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.
Each 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.
58
<PAGE>
To help advisers and investors better understand and most efficiently use the
Funds to reach their investment goals, the Funds may advertise and create spe-
cific investment programs and systems. For example, this may include informa-
tion on how to use the Funds to accumulate assets for future education needs
or periodic payments such as insurance premiums. The Funds may produce soft-
ware or additional sales literature to promote the advantages of using the
Funds to meet these and other specific investor needs.
Exchange of shares of a 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 Funds and
on the special purchase programs available thereunder, see "How to Buy Fund
Shares" in the Prospectus.
MONEY MARKET FUND
Shares of the Money Market Fund may be purchased at the net asset value which
is next computed after receipt of an order and receipt of payment in federal
funds. Shares of the Money Market Fund are issued in three series: (i) the
Service Plan series, (ii) the Distribution Plan series, and (iii) the Institu-
tional series. There is no sales charge on purchases of shares of any series
of the Money Market Fund.
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. The Nuveen money
market funds observe and will not make fund shares available for purchase on
the following holidays: New Year's Day, Martin Luther King's Birthday, Wash-
ington's Birthday, Good Friday, Memorial Day, Independence Day, Labor Day, Co-
lumbus Day, Veterans Day, Thanksgiving Day and Christmas Day.
As discussed in the Money Market Fund Prospectus under "How to Purchase Fund
Shares--Distribution and Service Plans," the Money Market Fund has adopted
Distribution and Service Plans (the "Plans") with respect to the shares of the
Distribution Plan series and the Service Plan series. The Distribution Plan
was adopted pursuant to Rule 12b-1 of the 1940 Act while the Service Plan, al-
though containing comparable terms, is not a Rule 12b-1 plan. The Plans were
adopted by a vote of the Board of Directors, including a majority of the di-
rectors who are not interested persons and who have no direct or indirect fi-
nancial interest in the operation of the Plans. Under the Plans, the Distribu-
tion Plan series and the Service Plan series of the Money Market Fund and
Nuveen pay fees (i) in the case of the Service Plan series, to banks and other
organizations described in the Money Market Fund Prospectus for the servicing
of accounts of shareholders of such series and (ii) in the case of the Distri-
bution Plan series, to securities dealers for services rendered in the distri-
bution of the shares of such series. In each case, such services may include,
among other things, establishing and maintaining shareholder accounts,
processing purchase and redemption transactions, arranging for bank wires,
performing sub-accounting, answering shareholder inquiries and such other
services as Nuveen may re-
59
<PAGE>
quest. Payments to such securities dealers and banks or other organizations
will be at the rate of .25 of 1% per year of the daily average assets of serv-
iced accounts. Such amounts will be paid one-half by the Service Plan series
and the Distribution Plan series of the Money Market Fund and one-half by
Nuveen. In addition, Nuveen may, in its discretion and from its own resources,
pay to organizations that satisfy certain criteria an additional amount not to
exceed .05 of 1% per year based on average assets of accounts serviced by such
organizations. For the fiscal year ended February 28, 1995, the Money Market
Fund paid fees to banks and other organizations under the Service Plan in the
amount of $142,699. For the same period, the Money Market Fund paid fees to se-
curities dealers under the Distribution Plan in the amount of $62,026.
Under the Plans, the Controller of Nuveen California Tax-Free Fund, Inc. will
report quarterly to the Board of Directors for its review of amounts expended
for services rendered under the Plans. The Plans may be terminated at any time,
without the payment of any penalty, by a vote of a majority of the directors
who are not "interested persons" and who have no direct or indirect financial
interest in the Plans or by vote of a majority of the outstanding voting secu-
rities of the applicable series of the Money Market Fund. The Plans may be re-
newed from year to year if approved by a vote of the Board of Directors and a
vote of the non-interested directors who have no direct or indirect financial
interest in the Plans cast in person at a meeting called for the purpose of
voting on the Plans. The Plans may be continued only if the directors who vote
to approve such continuance conclude, in the exercise of reasonable business
judgment and in light of their fiduciary duties under applicable law, that
there is a reasonable likelihood that the Plans will benefit such series of the
Money Market Fund and its shareholders. The Plans may not be amended to in-
crease materially the cost which the Distribution Plans or the Service Plan se-
ries of the Money Market Fund may bear without the approval of the shareholders
of the affected series of that Fund. Any other material amendments of the Plans
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 con-
tinuance of the Plan, as required by the Rule, the selection and nomination of
the non-interested directors will be committed to the discretion of the non-in-
terested directors then in office.
Neither any director nor any "interested" person of Nuveen California Tax-Free
Fund, Inc., has any direct or indirect financial interest in the Plans.
Shareholders should note that when a Fund dividend check has been returned to
the sender by the post office after repeated mailings, the shareholder account
will thereafter be registered for automatic reinvestment of dividends and thus
the dividend check and future dividend checks will be reinvested in additional
Fund shares. Shareholders are reminded that they need to advise the Funds
promptly in writing of any change in address.
The Glass-Steagall Act and other applicable laws, among other things, may limit
banks from engaging in the business of underwriting, selling or distributing
securities. Since the only functions of banks who may be engaged as Service Or-
ganizations is to perform administrative shareholder servicing functions,
Nuveen California Tax-Free Fund, Inc. believes that such laws should not pre-
clude a bank from acting as a Service Organization. However, future changes in
either federal or state statutes or regulations relating to the permissible ac-
tivities of banks and their subsidiaries or affiliates, as well as judicial
60
<PAGE>
or administrative decisions or interpretations of statutes or regulations,
could prevent a bank from continuing to perform all or a part of its share-
holder servicing activities. If a bank were prohibited from so acting, its
shareholder customers would be permitted to remain shareholders of the Money
Market Fund and alternative means for continuing the servicing of such share-
holders would be sought.
Nuveen serves as the principal underwriter of the shares of each of the Funds
pursuant to a "best efforts" arrangement as provided by a distribution agree-
ment with the Nuveen California Tax-Free Fund, Inc., dated January 2, 1990 and
last renewed on July 29, 1994 ("Distribution Agreement"). Pursuant to the Dis-
tribution Agreement, the Nuveen California Tax-Free Fund, Inc. appointed Nuveen
to be its agent for the distribution of the Funds' shares on a continuous of-
fering basis. Nuveen sells shares to or through brokers, dealers, banks or
other qualified financial intermediaries (collectively referred to as "Deal-
ers"), or others, in a manner consistent with the then effective registration
statement of the Nuveen California Tax-Free Fund, Inc. Pursuant to the Distri-
bution Agreement, Nuveen, at its own expense, finances certain activities inci-
dent to the sale and distribution of the Funds' shares, including printing and
distributing of prospectuses and statements of additional information to other
than existing shareholders, the printing and distributing 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
Funds' shares 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 California Fund and California Insured Fund pursuant to
Rule 12b-1 and described herein under "Distribution and Service Plans." 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.
The following table sets forth the aggregate amount of underwriting commissions
with respect to the sale of Fund shares and the amount thereof retained by
Nuveen for each of the Funds for the last three fiscal years. All figures are
to the nearest thousand.
<TABLE>
<CAPTION>
YEAR ENDED YEAR ENDED YEAR ENDED
FEBRUARY 28, 1995 FEBRUARY 28, 1994 FEBRUARY 28, 1993
------------------------ ------------------------ ------------------------
AMOUNT OF AMOUNT AMOUNT OF AMOUNT AMOUNT OF AMOUNT
UNDERWRITING RETAINED BY UNDERWRITING RETAINED BY UNDERWRITING RETAINED BY
FUND COMMISSIONS NUVEEN COMMISSIONS NUVEEN COMMISSIONS NUVEEN
- ----------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
California Fund......... $370 $60 $ 949 $148 $ 774 $126
California Insured Fund. 517 93 1,421 209 1,613 170
Money Market Fund....... -- -- -- -- -- --
</TABLE>
DISTRIBUTION AND SERVICE PLANS
CALIFORNIA FUND AND CALIFORNIA INSURED FUND
The California Fund and California Insured Fund each have 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 serv-
ice fee. Class R Shares will not be subject to either distribution or service
fees.
61
<PAGE>
The distribution fee applicable to Class C Shares under each Fund's Plan will
be payable to reimburse Nuveen for services and expenses incurred in connec-
tion with the distribution of Class C Shares. These expenses include payments
to Authorized Dealers, including Nuveen, who are brokers of record with re-
spect to the Class C Shares, as well as, without limitation, expenses of
printing and distributing prospectuses to persons other than shareholders of a
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 each
Fund's Plan will be payable to Authorized Dealers in connection with the pro-
vision of ongoing account services to shareholders. These services may include
establishing and maintaining shareholder accounts, answering shareholder in-
quiries and providing other personal services to shareholders.
Each 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 average daily net assets of Class C Shares as a service fee under the Plan
applicable 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 exer-
cised. For the fiscal year ended February 28, 1995, 100% of service fees and
distribution fees were paid out as compensation to Authorized Dealers. The
amount of compensation paid to Authorized Dealers for the fiscal year ended
February 28, 1995 for each Fund per class of shares was as follows:
<TABLE>
<CAPTION>
COMPENSATION PAID TO
AUTHORIZED DEALERS FOR YEAR
ENDED FEBRUARY 28, 1995
- --------------------------------------------------------------------------------
<S> <C>
CALIFORNIA FUND
Class A............................................ $1,868
Class C............................................ $ 565
Class R............................................ N/A
CALIFORNIA INSURED FUND
Class A............................................ $2,924
Class C............................................ $ 771
Class R............................................ N/A
- --------------------------------------------------------------------------------
</TABLE>
Under each Fund's Plan, the Fund will report quarterly to the Board of Direc-
tors 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 payment of any penalty, by a vote of a majority of the di-
rectors who are not "interested 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 Directors 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 directors who vote to approve such continuance
conclude, in the exercise of reasonable business judgment and in light of
62
<PAGE>
their fiduciary duties under applicable law, that there is a reasonable likeli-
hood 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 bear un-
der 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-in-
terested 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 selec-
tion and nomination of the non-interested directors of the Funds will be com-
mitted to the discretion of the non-interested directors then in office.
MONEY MARKET FUND
See discussion of Distribution and Service Plans of the Money Market Fund "Ad-
ditional Information on the Purchase and Redemption of Fund Shares--Money Mar-
ket Fund."
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 Funds. In addition
to audit services, Arthur Andersen LLP will provide consultation and assistance
on accounting, internal control, tax and related matters. The financial state-
ments incorporated by reference elsewhere in this Statement of Additional In-
formation and the information set forth under "Financial Highlights" in each
Prospectus have been audited by Arthur Andersen LLP as indicated in their re-
port with respect thereto, and are included in reliance upon the authority of
said firm as experts in given said report.
The custodian of the assets of the Funds is United States Trust Company of New
York, 114 West 47th Street, New York, NY 10036. The custodian performs custodi-
al, fund accounting and portfolio accounting services. The Chase Manhattan
Bank, N.A., 1 Chase Manhattan Plaza, New York, NY 10081 has agreed to become
successor to U.S. Trust, as custodian and Fund accountant. The succession is
presently scheduled for July 1, 1995. No changes in the Funds' administration
or in the amount of fees and expenses paid by the Funds for those services will
result, and no action by shareholders will be required.
63
<PAGE>
[NUVEEN LOGO APPEARS HERE]
Nuveen Tax-Free
Mutual Funds
Dependable tax-free
income for generations
NUVEEN CALIFORNIA
TAX-FREE VALUE FUND
NUVEEN CALIFORNIA INSURED
TAX-FREE VALUE FUND
NUVEEN MASSACHUSETTS
TAX-FREE VALUE FUND
NUVEEN MASSACHUSETTS INSURED
TAX-FREE VALUE FUND
NUVEEN NEW YORK
TAX-FREE VALUE FUND
NUVEEN NEW YORK INSURED
TAX-FREE VALUE FUND
NUVEEN OHIO
TAX-FREE VALUE FUND
[PHOTO OF COUPLE APPEARS HERE]
ANNUAL REPORT/FEBRUARY 28, 1995
<PAGE>
CONTENTS
3 Dear shareholder
5 Answering your questions
9 Fund performance
16 Portfolio of investments
54 Statement of net assets
56 Statement of operations
58 Statement of changes in net assets
62 Notes to financial statements
76 Financial highlights
<PAGE>
Dear
shareholder
[PHOTO OF RICHARD J. FRANKE APPEARS HERE]
"Providing secure
income remains
our top priority"
The 12 months ended February 28, 1995, were one of the most difficult periods
the bond markets have experienced in decades. The Federal Reserve Board raised
interest rates seven times since the beginning of 1994 to fend off future
inflation. As a result, the prices of all bonds and bond funds declined.
The unusually high volatility of the past year has brought home a basic fact
about bonds: interest rates are subject to change, and sometimes the changes can
have marked effects on net asset values of bonds and bond funds.
At Nuveen, we believe that the best approach to tax-free investing in such
tumultuous times is to focus on quality and income dependability. By this
standard, in one of the most challenging periods the municipal market has seen
in years, your Fund continued to meet its objectives relatively well, providing
an attractive level of tax-free income while holding portfolio values in line
with or better than the market as a whole.
Looking first at income, at fiscal year end current yields on net asset values
for the Class R Shares of the funds covered in this report ranged from 5.34% to
5.77% on February 28. To equal these yields, an investor in the 36% federal
income tax bracket would need to earn at least 8.34% on taxable alternatives.
This yield is difficult to achieve on taxable investments of comparable credit
quality.
3
<PAGE>
Your Fund also maintained its value relatively well during the past year.
While the net asset values of the Class R Shares of the funds in this report
registered declines ranging from 3.73% to 5.68%, the Bond Buyer 40 index-a
measure of the value of newly issued municipal bonds-declined by even more,
slipping 8.5% over the past 12 months. And 30-year Treasury bonds declined by
10.0% during the year.
In this context, we believe that your Fund met the demands of the past year's
market well. And when we take a long-range view of the municipal market, we
believe the outlook for your Fund is positively supported by several
considerations.
First, from November of 1994 through February of 1995, municipal bond yields
declined by nearly a full percent and bond prices started to gain ground. This
development suggests that the underlying inflationary pressures that drove
interest rates higher and bond prices lower may be moderating.
Second, and as we have noted in past reports, the municipal market's supply
and demand fundamentals continue to be sound. To put these trends in
perspective, in 1994, the supply of new municipal bonds declined by
approximately 40% from 1993; and market projections for new issue volume in 1995
are down more than 20% from last year's already low level.
Once investors perceive that the interest rate environment has stabilized,
demand for municipal investments, which has been subdued over the last 12 months
as a result of the market's extraordinary volatility, should resume its long-
term upward trend.
At Nuveen we are taking steps to increase the value our funds provide to
shareholders-steps reflected in last year's introduction of two new share
classes with different sales charge structures and service fees. These new share
classes, designated A Shares and C Shares, give you and your investment adviser
added flexibility in designing a tax-free investment program that meets your
requirements. In addition, these classes also encourage fund growth, which
offsets redemptions and protects portfolio integrity.
We appreciate your trust in our family of funds, and we look forward to
helping you meet your tax-free investment objectives in the future.
Sincerely,
[SIGNATURE OF RICHARD J. FRANKE]
Richard J. Franke
Chairman of the Board
April 17, 1995
<PAGE>
Answering your
questions
We spoke recently with Tom
Spalding, head of Nuveen's portfo-
lio management team, and
asked him about developments in
the municipal market and the
outlook for Nuveen's Tax-Free
Mutual Funds.
Why did my Fund's
net asset value decline
over the past year?
The past 12 months have been a difficult period for all fixed-income investors.
The Federal Reserve raised interest rates seven times from February 1994 through
February 1995, and its actions drove the prices of all bonds and bond funds
lower. Of course, changing interest rates are a fact of life for fixed-income
investments. The important point is that shareholders in these funds were less
affected by rising interest rates than the market overall. In fact, the net
asset values of the funds covered in this report declined less than 6.0% while
the municipal market overall, as measured by the Bond Buyer 40 index, was down
8.5% and as measured by the Lehman Brothers Municipal Bond index, was off 3.97%.
The Bond Buyer 40 index reflects price movements of newly issued long-term
municipal bonds.
5
<PAGE>
[PHOTO OF TOM SPALDING APPEARS HERE] Tom Spalding, head
of Nuveen's portfolio
management team,
answers investors'
questions on develop-
ments in the
municipal market.
While the Lehman Brothers Municipal Bond index reflects the broader
municipal market.
This is one result of our conservative, value-oriented approach to investing;
our funds tend to hold their value better than the market as a whole when
interest rates are rising.
What steps did you
take to moderate
the impact of rising
interest rates
on the value of the
funds' portfolios?
As value investors, we don't manage our portfolios to any specific interest rate
environment. We feel that it's impossible to predict changes in the economy or
interest rates with any degree of accuracy. We try to buy bonds that will
perform well in any interest rate environment, focusing closely on relative
values in the market.
Because of that approach, we didn't need to make major changes in our
portfolios as interest rates rose. For a number of technical reasons, above all
the compression of yields between higher-rated and lower-rated issues that had
been taking place for some time-the best values, in our view, were to be found
in conservative bonds. For some time, we had been concentrating on higher-rated
bonds with maturities in the 15-to-20 year range, as well as bonds priced at
premiums to their par values and pre-refunded issues. We also benefited from an
increase in assets in many of our funds, driven by both higher demand for tax-
free investments and
6
<PAGE>
Nuveen's reinvestment programs. As a result, we weren't under pressure to sell
into difficult markets to meet redemptions.
A record amount of
municipal bonds were
called in 1993-1994.
How did these bond
calls affect my income
and the net asset
value of my shares?
In general, bond calls can mean some reduction in income for investors in both
individual bonds and bond funds, because bonds issued when interest rates were
higher need to be replaced with today's lower-yielding bonds. On the other hand,
the fact that your fund's portfolio contained callable bonds provided an
important NAV benefit. Callable bonds with higher-than-market coupons are priced
at premiums to their par value or call price. Callable, high-coupon long-term
bonds, sometimes called "cushion bonds," tend to experience the lower price
volatility of intermediate-term or even shorter-term bonds when rates are low
but rising, as was the case in early 1994. As we saw last year, the premium
coupons of these bonds essentially act as a "cushion" that softens the effect of
rising interest rates.
Of course, we manage all of our portfolios with calls in mind. As part of our
basic management process we continually evaluate opportunities to sell bonds
approaching their call dates and to reinvest the proceeds in bonds we think have
high potential to provide above-market returns.
7
<PAGE>
A number of fund
managers have
encountered problems
recently related to
the use of derivative
securities. Do you use
derivatives in your
portfolios?
Over the last year, participants in the financial services industry, including
securities dealers, underwriters and investment advisers, received much
attention in the press relating to the use of certain types of derivative
financial instruments in the management of portfolios, including those of mutual
funds. There are many different types of derivative investments available in the
market today, including those derivatives whose market values respond to
interest rate changes with greater volatility than do others. In general,
derivatives used to speculate on the future course of interest rates pose the
greatest risk, while derivatives used for hedging purposes present less risk
and, if used properly, can often reduce risk. Synthetic money market securities
generally present no greater risk to investors than ordinary money market
securities.
Although the Funds are authorized to invest in such financial instruments, and
may do so in the future, they did not make any such investments during the
fiscal year ended February 28, 1995, other than occasional purchases of high
quality synthetic money market securities, which were held temporarily pending
the reinvestment in long-term portfolio securities.
8
<PAGE>
NUVEEN CALIFORNIA
TAX-FREE VALUE FUND
California
INDEX COMPARISON
Nuveen California Tax-Free Value Fund R Shares*
and Lehman Brothers Municipal Bond Index Comparison
of Change in Value of a $10,000 Investment
[GRAPH APPEARS HERE]
COMPARISON OF NUVEEN CALIFORNIA TAX-FREE VALUE R SHARES*
AND LEHMAN BROTHERS MUNICIPAL BOND INDEX
<TABLE>
<CAPTION> TAX-ADJUSTED LEHMAN
BROTHERS MUNICIPAL
Measurement Period BOND INDEX (REDUCED LEHMAN BROTHERS NUVEEN CALIFORNIA
(Fiscal Year Covered) BY STATE TAX EFFECTS) MUNICIPAL BOND INDEX TAX-FREE VALUE FUND
- --------------------- --------------------- -------------------- -------------------
<S> <C> <C> <C>
Measurement Pt-
6/86 $10,000 $10,000 $ 9,525
FYE 8/86 $10,512 $10,512 $ 9,829
FYE 2/87 $11,260 $11,285 $10,614
FYE 8/87 $10,974 $10,998 $ 9,918
FYE 2/88 $11,504 $11,580 $10,531
FYE 8/88 $11,676 $11,754 $10,604
FYE 2/89 $12,160 $12,299 $11,271
FYE 8/89 $12,896 $13,043 $12,043
FYE 2/90 $13,347 $13,559 $12,382
FYE 8/90 $13,662 $13,880 $12,626
FYE 2/91 $14,511 $14,810 $13,441
FYE 8/91 $15,205 $15,518 $14,105
FYE 2/92 $15,891 $16,290 $14,685
FYE 8/92 $16,829 $17,251 $15,618
FYE 2/93 $18,001 $18,532 $16,690
FYE 8/93 $18,800 $19,354 $17,457
FYE 2/94 $18,927 $19,556 $17,539
FYE 8/94 $18,759 $19,382 $17,148
FYE 2/95 $19,208 $19,925 $17,676
</TABLE>
==== Lehman Brothers Municipal Bond Index -- Total $19,925
==== Tax-adjusted Lehman Brother's Municipal Bond Index
(reduced by state tax effects) -- Total $19,208
==== Nuveen California Tax-Free Value Fund -- Total $17,676
($18,557 at NAV)
Past performance is not predictive of future performance
<TABLE>
<CAPTION>
- --------------------------------------------------------------
ANNUALIZED TOTAL RETURN
- --------------------------------------------------------------
1 year Since Inception
- --------------------------------------------------------------
<S> <C> <C>
R shares on NAV .78% 7.40%
A shares on NAV 2.52%+
A shares on offering price** -2.10%+
C shares on NAV 3.71%+
- --------------------------------------------------------------
</TABLE>
Shareholders enjoyed a stable dividend for five months followed by a modest
reduction to 4.85 cents per share in August as called bonds were replaced at
lower rates. During the year, the Fund paid dividends totaling 58.70 cents per
share.
As yield differentials between higher and lower-rated bonds and longer-
and shorter- maturities narrowed, the Fund's manager focused attention on
higher-quality bonds with maturities in the 15-to-20 year range, as well
as on pre-refunded bonds.
Essential-purpose issues and tax-allocated bonds supported by strong revenue
streams were also emphasized. We continue to be selective about housing and
healthcare revenue issues and some new types of California bonds, such as
certificates of participation.
* 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; not annualized. 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 table reflects the initial maximum sales
charge applicable to R Shares at the time (4.75%) and all ongoing fund expenses.
9
<PAGE>
NUVEEN CALIFORNIA INSURED
TAX-FREE VALUE FUND
California Insured
INDEX COMPARISON
Nuveen California Ins. Tax-Free Value Fund R Shares* and Lehman Brothers
Municipal Bond Index Comparison of Change in Value of a $10,000 Investment
[GRAPH APPEARS HERE]
COMPARISON OF NUVEEN CALIFORNIA INS. TAX-FREE VALUE FUND R SHARES
AND LEHMAN BROTHERS MUNICIPAL BOND INDEX
<TABLE>
<CAPTION>
TAX-ADJUSTED LEHMAN
BROTHERS MUNICIPAL
Measurement Period BOND INDEX (REDUCED LEHMAN BROTHERS NUVEEN CALIFORNIA INS.
(Fiscal Year Covered) BY STATE TAX EFFECTS) MUNICIPAL BOND INDEX TAX-FREE VALUE FUND
- --------------------- --------------------- -------------------- ----------------------
<S> <C> <C> <C>
Measurement Pt-
6/86 $10,000 $10,000 $ 9,525
FYE 8/86 $10,512 $10,512 $ 9,763
FYE 2/87 $11,260 $11,285 $10,392
FYE 8/87 $10,974 $10,998 $ 9,662
FYE 2/88 $11,504 $11,580 $10,310
FYE 8/88 $11,676 $11,754 $10,289
FYE 2/89 $12,160 $12,299 $10,940
FYE 8/89 $12,896 $13,043 $11,613
FYE 2/90 $13,347 $13,559 $11,964
FYE 8/90 $13,662 $13,880 $12,158
FYE 2/91 $14,511 $14,810 $13,021
FYE 8/91 $15,205 $15,518 $13,627
FYE 2/92 $15,891 $16,290 $14,313
FYE 8/92 $16,829 $17,251 $15,174
FYE 2/93 $18,001 $18,532 $16,468
FYE 8/93 $18,800 $19,354 $17,194
FYE 2/94 $18,927 $19,556 $17,171
FYE 8/94 $18,759 $19,382 $16,884
FYE 2/95 $19,208 $19,925 $17,459
</TABLE>
Lehman Brothers Municipal Bond Index -- Total $19,925
Tax-adjusted Lehman Brother's Municipal Bond Index
(reduced by state tax effects) -- Total $19,208
==== Nuveen California Insured Tax-Free Value Fund -- Total $17,459
($18,329 at NAV)
Past performance is not predictive of future performance
<TABLE>
<CAPTION>
- -----------------------------------------------------------------
ANNUALIZED TOTAL RETURN
- -----------------------------------------------------------------
1 year Since Inception
- -----------------------------------------------------------------
<S> <C> <C>
R shares on NAV 1.68% 7.24%
A shares on NAV 3.33%+
A shares on offering price** -1.32%+
C shares on NAV 3.45%+
- -----------------------------------------------------------------
</TABLE>
Shareholders enjoyed two dividend increases during the period, bringing the
Fund's monthly dividend from 4.55 cents to 4.70 cents per share on
February 28, 1995. During the year, the Fund paid dividends totaling 55.85 cents
per share.
As interest rates rose and yield differentials between bonds of different
quality ratings and maturities continued to compress, the Fund's manager focused
on higher-quality bonds with maturities in the 15-to-20 year range. Otherwise,
reflecting the insured nature of the bonds in the portfolio, the basic
composition of the portfolio was little changed during the year.
* 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; not annualized. 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 table reflects the initial maximum sales
charge applicable to R Shares at the time (4.75%) and all ongoing fund expenses.
10
<PAGE>
NUVEEN MASSACHUSETTS
TAX-FREE VALUE FUND
Massachusetts
INDEX COMPARISON
Nuveen Massachusetts Tax-Free Value Fund R Shares* and Lehman Brothers Municipal
Bond Index Comparison of Change in Value of a $10,000 Investment
[GRAPH APPEARS HERE]
COMPARISON OF NUVEEN MASSACHUSETTS TAX-FREE VALUE R SHARES*
AND LEHMAN BROTHERS MUNICIPAL BOND INDEX
<TABLE>
<CAPTION> TAX-ADJUSTED LEHMAN
BROTHERS MUNICIPAL
Measurement Period BOND INDEX (REDUCED LEHMAN BROTHERS NUVEEN MASSACHUSETTS
(Fiscal Year Covered) BY STATE TAX EFFECTS) MUNICIPAL BOND INDEX TAX-FREE VALUE FUND
- --------------------- --------------------- -------------------- --------------------
<S> <C> <C> <C>
Measurement Pt-
11/86 $10,000 $10,000 $ 9,525
FYE 2/87 $10,313 $10,322 $ 9,623
FYE 8/87 $10,050 $10,060 $ 8,912
FYE 2/88 $10,533 $10,593 $ 9,327
FYE 8/88 $10,691 $10,751 $ 9,483
FYE 2/89 $11,130 $11,250 $ 9,980
FYE 8/89 $11,804 $11,931 $10,557
FYE 2/90 $12,211 $12,403 $10,838
FYE 8/90 $12,500 $12,696 $10,987
FYE 2/91 $13,260 $13,546 $11,714
FYE 8/91 $13,894 $14,194 $12,318
FYE 2/92 $14,502 $14,900 $12,934
FYE 8/92 $15,358 $15,779 $13,765
FYE 2/93 $16,412 $16,951 $14,773
FYE 8/93 $17,140 $17,703 $15,504
FYE 2/94 $17,234 $17,888 $15,653
FYE 8/94 $17,081 $17,729 $15,432
FYE 2/95 $17,473 $18,225 $15,910
</TABLE>
==== Lehman Brothers Municipal Bond Index -- Total $18,225
==== Adjusted Lehman Brother's Municipal Bond Index
(reduced by state tax effects) -- Total $17,473
==== Nuveen Massachusetts Tax-Free Value Fund -- Total $15,910
($16,703 at NAV)
Past performance is not predictive of future performance
<TABLE>
<CAPTION>
- -----------------------------------------------------------------
ANNUALIZED TOTAL RETURN
- -----------------------------------------------------------------
1 year Since Inception
- -----------------------------------------------------------------
<S> <C> <C>
R shares on NAV 1.64% 6.42%
A shares on NAV 3.05%+
A shares on offering price** -1.59%+
C shares on NAV 4.86%+
- -----------------------------------------------------------------
</TABLE>
Shareholders enjoyed two dividend increases during the period, bringing the
Fund's monthly dividend from 4.40 cents to 4.55 cents per share on February 28,
1995. During the year, the Fund paid dividends totaling 53.80 cents per share.
As interest rates rose and yield differentials between bonds of different
quality ratings and maturities continued to compress, the Fund's manager focused
on higher-quality bonds with maturities in the 15-to-20 year range.
The improved economic and financial condition of the Commonwealth gave a boost
to the value of the bonds in the Fund's portfolio.
* 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; not annualized. 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 table reflects the initial maximum sales
charge applicable to R Shares at the time (4.75%) and all ongoing fund expenses.
11
<PAGE>
NUVEEN MASSACHUSETTS INSURED
TAX-FREE VALUE FUND
Massachusetts Insured
INDEX COMPARISON
Nuveen Mass. Ins. Tax-Free Value Fund R Shares* and Lehman Brothers Municipal
Bond Index Comparison of Change in Value of a $10,000 Investment
[GRAPH APPEARS HERE]
COMPARISON OF NUVEEN MASS. INS. TAX FREE VALUE FUND R
AND LEHMAN BROTHERS MUNICIPAL BOND INDEX
<TABLE>
<CAPTION>
TAX-ADJUSTED LEHMAN
BROTHERS MUNICIPAL
Measurement Period BOND INDEX (REDUCED LEHMAN BROTHERS NUVEEN MASSACHUSETTS
(Fiscal Year Covered) BY STATE TAX EFFECTS) MUNICIPAL BOND INDEX INS. TAX-FREE VALUE FUND
- --------------------- ------------------- -------------------- ------------------------
<S> <C> <C> <C>
Measurement Pt-
11/86 $10,000 $10,000 $ 9,525
FYE 2/87 $10,313 $10,322 $ 9,596
FYE 8/87 $10,050 $10,060 $ 9,133
FYE 2/88 $10,533 $10,593 $ 9,706
FYE 8/88 $10,691 $10,751 $ 9,794
FYE 2/89 $11,130 $11,250 $10,273
FYE 8/89 $11,804 $11,931 $10,869
FYE 2/90 $12,211 $12,403 $11,148
FYE 8/90 $12,500 $12,696 $11,335
FYE 2/91 $13,260 $13,546 $12,145
FYE 8/91 $13,894 $14,194 $12,687
FYE 2/92 $14,502 $14,900 $13,308
FYE 8/92 $15,358 $15,779 $14,162
FYE 2/93 $16,412 $16,951 $15,209
FYE 8/93 $17,140 $17,703 $15,906
FYE 2/94 $17,234 $17,888 $16,003
FYE 8/94 $17,081 $17,729 $15,769
FYE 2/95 $17,473 $18,225 $16,287
</TABLE>
Lehman Brothers Municipal Bond Index -- Total $18,225
Adjusted Lehman Brother's Municipal Bond Index
(reduced by state tax effects) -- Total $17,473
==== Nuveen Massachusetts Ins. Tax-Free Value Fund -- Total $16,287
($17,099 at NAV)
Past performance is not predictive of future performance
<TABLE>
<CAPTION>
- -----------------------------------------------------------------
ANNUALIZED TOTAL RETURN
- -----------------------------------------------------------------
1 year Since Inception
- -----------------------------------------------------------------
<S> <C> <C>
R shares on NAV 1.77% 6.72%
A shares on NAV 2.99%+
A shares on offering price** -1.64%+
C shares on NAV 3.52%+
- -----------------------------------------------------------------
</TABLE>
Shareholders enjoyed a dividend increase during the period, bringing the Fund's
monthly dividend from 4.45 cents to 4.60 cents per share on February 28, 1995.
During the year, the Fund paid dividends totaling 54.90 cents per share.
Reflecting the insured nature of the bonds in the portfolio, the basic
composition of the portfolio was little changed during the year. The Fund's
manager continued to concentrate more attention on longer-maturity bonds than
would be the case in an uninsured portfolio. This approach combines an
attractive level of after-tax income with the greater credit protection inherent
in insured bonds under all types of market conditions.
* 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; not annualized. 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 table reflects the initial maximum sales
charge applicable to R Shares at the time (4.75%) and all ongoing fund expenses.
12
<PAGE>
NUVEEN NEW YORK
TAX-FREE VALUE FUND
New York
INDEX COMPARISON
Nuveen New York Tax-Free Value Fund R Shares* and Lehman Brothers Municipal Bond
Index Comparison of Change in Value of a $10,000 Investment
[GRAPH APPEARS HERE]
COMPARISON OF NUVEEN NEW YORK TAX-FREE VALUE FUND R
AND LEHMAN BROTHERS MUNICIPAL BOND INDEX
<TABLE>
<CAPTION>
TAX-ADJUSTED LEHMAN
BROTHERS MUNICIPAL
Measurement Period BOND INDEX (REDUCED LEHMAN BROTHERS NUVEEN NEW YORK
(Fiscal Year Covered) BY STATE TAX EFFECTS) MUNICIPAL BOND INDEX TAX-FREE VALUE FUND
- --------------------- ------------------- -------------------- -------------------
<S> <C> <C> <C>
Measurement Pt-
11/86 $10,000 $10,000 $ 9,525
FYE 2/87 $10,309 $10,322 $ 9,956
FYE 8/87 $10,047 $10,060 $ 9,377
FYE 2/88 $10,536 $10,593 $10,064
FYE 8/88 $10,694 $10,751 $10,094
FYE 2/89 $11,142 $11,250 $10,721
FYE 8/89 $11,817 $11,931 $11,358
FYE 2/90 $12,237 $12,403 $11,630
FYE 8/90 $12,526 $12,696 $11,861
FYE 2/91 $13,314 $13,546 $12,426
FYE 8/91 $13,951 $14,194 $13,264
FYE 2/92 $14,591 $14,900 $13,917
FYE 8/92 $15,452 $15,779 $14,897
FYE 2/93 $16,543 $16,951 $15,975
FYE 8/93 $17,277 $17,703 $16,819
FYE 2/94 $17,402 $17,888 $17,109
FYE 8/94 $17,248 $17,729 $16,789
FYE 2/95 $17,675 $18,225 $17,237
</TABLE>
Lehman Brothers Municipal Bond Index -- Total $18,225
Adjusted Lehman Brother's Municipal Bond Index
(reduced by state tax effects) -- Total $17,675
==== Nuveen New York Tax-Free Value Fund -- Total $17,237
($18,096 at NAV)
Past performance is not predictive of future performance
<TABLE>
<CAPTION>
- -----------------------------------------------------------------
ANNUALIZED TOTAL RETURN
- -----------------------------------------------------------------
1 year Since Inception
- -----------------------------------------------------------------
<S> <C> <C>
R shares on NAV .75% 7.46%
A shares on NAV 2.21%+
A shares on offering price** -2.39%+
C shares on NAV 2.80%+
- -----------------------------------------------------------------
</TABLE>
Shareholders enjoyed a dividend increase during the period, bringing the Fund's
monthly dividend from 4.75 cents to 4.85 cents per share on February 28, 1995.
During the year, the Fund paid dividends totaling 57.30 cents per share.
As interest rates rose, the Fund's manager concentrated on bonds maturing in
the 15-to-20 year range, believing that longer-term bonds were relatively
overvalued. The manager also focused on bonds trading at a premium to their par
values, which helped cushion the portfolio against interest-rates.
Reflecting Nuveen's value investing approach and research strengths, emphasis
continued on bonds with call provisions, which are difficult for less
experienced investors to value accurately and tend to trade at attractive
prices.
* 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; not annualized. 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 table reflects the initial maximum sales
charge applicable to R Shares at the time (4.75%) and all ongoing fund expenses.
13
<PAGE>
NUVEEN NEW YORK INSURED
TAX-FREE VALUE FUND
New York Insured
INDEX COMPARISON
Nuveen New York Ins. Tax-Free Value Fund R Shares* and Lehman Brothers Municipal
Bond Index Comparison of Change in Value of a $10,000 Investment
[GRAPH APPEARS HERE]
COMPARISON OF NUVEEN NEW YORK INS. TAX-FREE VALUE FUND R
AND LEHMAN BROTHERS MUNICIPAL BOND INDEX
<TABLE>
<CAPTION>
TAX-ADJUSTED LEHMAN
BROTHERS MUNICIPAL
Measurement Period BOND INDEX (REDUCED LEHMAN BROTHERS NUVEEN NEW YORK INS.
(Fiscal Year Covered) BY STATE TAX EFFECTS) MUNICIPAL BOND INDEX TAX-FREE VALUE FUND
- --------------------- --------------------- -------------------- --------------------
<S> <C> <C> <C>
Measurement Pt-
11/86 $10,000 $10,000 $ 9,525
FYE 2/87 $10,309 $10,322 $ 9,883
FYE 8/87 $10,047 $10,060 $ 9,189
FYE 2/88 $10,536 $10,593 $ 9,799
FYE 8/88 $10,694 $10,751 $ 9,831
FYE 2/89 $11,143 $11,250 $10,424
FYE 8/89 $11,817 $11,931 $11,037
FYE 2/90 $12,238 $12,403 $11,335
FYE 8/90 $12,527 $12,696 $11,505
FYE 2/91 $13,316 $13,546 $12,199
FYE 8/91 $13,953 $14,194 $12,969
FYE 2/92 $14,594 $14,900 $13,620
FYE 8/92 $15,454 $15,779 $14,450
FYE 2/93 $16,547 $16,951 $15,658
FYE 8/93 $17,281 $17,703 $16,495
FYE 2/94 $17,408 $17,888 $16,530
FYE 8/94 $17,253 $17,729 $16,219
FYE 2/95 $17,682 $18,225 $16,757
</TABLE>
Lehman Brothers Municipal Bond Index -- Total $18,225
Adjusted Lehman Brother's Municipal Bond Index
(reduced by state tax effects) -- Total $17,682
==== Nuveen New York Insured Tax-Free Value Fund -- Total $16,757
($17,592 at NAV)
Past performance is not predictive of future performance
<TABLE>
<CAPTION>
- -----------------------------------------------------------------
ANNUALIZED TOTAL RETURN
- -----------------------------------------------------------------
1 year Since Inception
- -----------------------------------------------------------------
<S> <C> <C>
R shares on NAV 1.37% 7.09%
A shares on NAV 3.01%+
A shares on offering price** -1.62%+
C shares on NAV 3.53%+
- -----------------------------------------------------------------
</TABLE>
Shareholders enjoyed a dividend increase during the period bringing the Fund's
monthly dividend from 4.60 cents to 4.65 cents per share on February 28, 1995.
During the year, the Fund paid dividends totaling 55.45 cents per share.
As interest rates rose during the year, the Fund's manager reduced the
duration of the portfolio--a technical measure of a fund's sensitivity to
interest-rate changes--focusing more attention on bonds with maturities in the
long-intermediate (15-to-20 year) range.
Reflecting the insured nature of the bonds in the portfolio, the basic
composition of the portfolio was little changed during the year. This approach
combines an attractive level of after-tax income with the greater credit
protection inherent in insured bonds under all types of market conditions.
* 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; not annualized. 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 table reflects the initial maximum sales
charge applicable to R Shares at the time (4.75%) and all ongoing fund expenses.
14
<PAGE>
NUVEEN OHIO
TAX-FREE VALUE FUND
Ohio
INDEX COMPARISON
Nuveen Ohio Tax-Free Value Fund R Shares* and Lehman Brothers Municipal Bond
Index Comparison of Change in Value of a $10,000 Investment
<TABLE>
<CAPTION>
TAX-ADJUSTED LEHMAN
BROTHERS MUNICIPAL
Measurement Period BOND INDEX (REDUCED LEHMAN BROTHERS NUVEEN OHIO
(Fiscal Year Covered) BY STATE TAX EFFECTS) MUNICIPAL BOND INDEX TAX-FREE VALUE FUND
- --------------------- -------------------- -------------------- -------------------
<S> <C> <C> <C>
Measurement Pt-
11/86 $10,000 $10,000 $ 9,525
FYE 2/87 $10,316 $10,322 $ 9,736
FYE 8/87 $10,053 $10,060 $ 9,209
FYE 2/88 $10,556 $10,593 $ 9,886
FYE 2/89 $11,130 $11,250 $10,273
FYE 8/88 $10,714 $10,751 $ 9,971
FYE 2/89 $11,177 $11,250 $10,612
FYE 8/89 $11,854 $11,931 $11,282
FYE 2/90 $12,287 $12,403 $11,686
FYE 8/90 $12,578 $12,696 $11,938
FYE 2/91 $13,382 $13,546 $12,724
FYE 8/91 $14,022 $14,194 $13,348
FYE 2/92 $14,678 $14,900 $14,023
FYE 8/92 $15,544 $15,779 $14,874
FYE 2/93 $16,655 $16,951 $15,970
FYE 8/93 $17,395 $17,703 $16,819
FYE 2/94 $17,534 $17,888 $16,976
FYE 8/94 $17,378 $17,729 $16,700
FYE 2/95 $17,823 $18,225 $17,314
</TABLE>
==== Lehman Brothers Municipal Bond Index -- Total $18,225
==== Adjusted Lehman Brother's Municipal Bond Index
(reduced by state tax effects) -- Total $17,823
==== Nuveen Ohio Tax-Free Value Fund -- Total $17,314
($18,177 at NAV)
Past performance is not predictive of future performance
<TABLE>
<CAPTION>
- -----------------------------------------------------------------
ANNUALIZED TOTAL RETURN
- -----------------------------------------------------------------
1 year Since Inception
- -----------------------------------------------------------------
<S> <C> <C>
R shares on NAV 1.99% 7.52%
A shares on NAV 3.63%+
A shares on offering price** -1.03%+
C shares on NAV 3.63%+
- -----------------------------------------------------------------
</TABLE>
Shareholders enjoyed a dividend increase during the period, bringing the Fund's
monthly dividend from 4.70 cents to 4.75 cents on February 28, 1995. For the
year, the Fund's monthly dividends totaled 56.90 cents per share.
As interest rates rose during the year, the Fund's manager shortened the
maturity of the portfolio somewhat, focusing on bonds maturing in 15-to-20
years. Significant holdings of pre-refunded bonds also helped moderate the
impact of interest-rate changes on the portfolio's net asset value.
The managers placed more emphasis on general obligation bonds and bonds issued
to support the state's healthcare system. The fund continues to emphasize
education issues supporting state colleges and universities, and transportation
issues.
* 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; not annualized. 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 table reflects the initial maximum sales
charge applicable to R Shares at the time (4.75%) and all ongoing fund expenses.
15
<PAGE>
PORTFOLIO OF INVESTMENTS
NUVEEN CALIFORNIA TAX-FREE VALUE FUND
<TABLE>
<CAPTION>
PRINCIPAL OPT. CALL
AMOUNT DESCRIPTION PROVISIONS* RATINGS** MARKET VALUE
- -------------------------------------------------------------------------------
<C> <S> <C> <C> <C>
$ 3,150,000 California Educational
Facilities Authority
(University of Southern
California),
7.200%, 10/01/15 10/97 at 102 AA $ 3,322,022
California General
Obligation:
3,000,000 6.250%, 9/01/12 No Opt. Call A1 3,077,280
5,000,000 5.750%, 3/01/23 3/04 at 102 A1 4,690,100
California Health
Facilities Authority
(Small Facilities Pooled
Loan Program):
3,000,000 7.400%, 4/01/14 4/05 at 102 A 3,182,100
3,635,000 7.500%, 4/01/22 4/05 at 102 A 3,832,926
1,700,000 California Health
Facilities Authority
(Sutter Health System),
7.000%, 1/01/09 1/99 at 102 A1 1,738,080
2,000,000 California Health
Facilities Financing
Authority (Health
Dimensions, Inc.), 7.500%,
5/01/15 5/00 at 102 Baa1 2,057,620
2,000,000 California Health
Facilities Financing
Authority (Sisters of
Providence), 7.500%,
10/01/10 10/00 at 102 AA- 2,130,960
4,380,000 California Health
Facilities Authority
(Kaiser Permanente),
7.000%, 12/01/10 12/00 at 102 Aa2 4,557,127
65,000 California Housing Finance
Agency, Insured Housing,
8.450%, 2/01/04 2/00 at 100 Aaa 68,175
2,425,000 California Housing Finance
Agency, Home Mortgage,
8.100%, 8/01/16 8/96 at 102 Aa 2,528,814
8,470,000 California Public Works
Board
(California State
University Project),
6.700%, 10/01/17 10/02 at 102 A- 8,643,296
1,000,000 California Public Works
Board, High Technology
Facilities Lease (The
Regents of the University
of California-San Diego
Facility), 7.375%, 4/01/06 No Opt. Call A1 1,104,150
2,500,000 California Statewide
Communities Development
Corporation (Solheim
Lutheran Home),
Certificates of
Participation, 6.500%,
11/01/17 11/04 at 102 A 2,450,350
3,000,000 California Statewide
Communities Development
Authority (St. Joseph
Health System),
Certificates of
Participation, 6.500%,
7/01/15 7/04 at 102 AA 3,025,980
1,500,000 ABAG Finance Authority for
Nonprofit Corporations
(Channing House),
Certificates of
Participation, 7.125%,
1/01/21 1/01 at 102 A 1,546,485
6,400,000 Alameda County,
Certificates of
Participation, 6.000%,
6/01/22 6/02 at 102 A+ 6,086,848
Arcadia (Methodist Hospital
of Southern California):
1,000,000 6.500%, 11/15/12 11/02 at 102 A 1,005,590
1,500,000 6.625%, 11/15/22 11/02 at 102 A 1,470,900
2,035,000 Bella Vista Water District,
Certificates of
Participation, 7.375%,
10/01/17 10/01 at 102 Baa 2,109,685
</TABLE>
16
<PAGE>
NUVEEN TAX-FREE VALUE FUNDS ANNUAL REPORTFEBRUARY 28, 1995
<TABLE>
<CAPTION>
PRINCIPAL OPT. CALL
AMOUNT DESCRIPTION PROVISIONS* RATINGS** MARKET VALUE
- -------------------------------------------------------------------------------
<C> <S> <C> <C> <C>
Carson Redevelopment
Agency, Tax Allocation:
$ 1,000,000 6.000%, 10/01/13 10/03 at 102 BBB $ 924,130
2,000,000 6.000%, 10/01/16 10/03 at 102 Baa1 1,822,180
2,000,000 Chico Redevelopment Agency
(Sierra Sunrise Lodge),
Certificates of
Participation,
6.750%, 2/01/21 2/01 at 102 A 2,009,580
2,835,000 Chico (Walker Senior
Housing Corporation),
5.700%, 11/01/23 11/03 at 102 A 2,459,391
6,500,000 Contra Costa County, FHA-
Insured (Cedar Pointe
Apartments), 6.150%,
9/01/25 9/03 at 103 AAA 6,304,350
2,000,000 Desert Hospital District,
Certificates of
Participation,
8.100%, 7/01/20 (Pre-
refunded to 7/01/00) 7/00 at 102 AAA 2,315,980
East Bay Municipal Utility
District, Water System:
1,950,000 7.500%, 6/01/18 (Pre-
refunded to 6/01/00) 6/00 at 102 Aaa 2,200,907
4,000,000 6.000%, 6/01/20 6/02 at 102 AA- 3,935,680
4,000,000 6.375%, 6/01/21 (Pre-
refunded to 12/01/01) 12/01 at 102 Aaa 4,349,800
2,500,000 Fontana Public Financing
Authority, Tax Allocation
(North Fontana
Redevelopment Project),
7.250%, 9/01/20 9/00 at 102 A 2,584,525
1,475,000 LaQuinta Redevelopment
Agency, Tax Allocation,
8.000%, 9/01/12 (Pre-
refunded to 9/01/98) 9/98 at 102 Baa1 1,653,283
2,475,000 Loma Linda University
Medical Center,
6.000%, 12/01/06 12/03 at 102 BBB 2,349,691
4,000,000 Los Angeles Convention and
Exhibition Center
Authority, 5.375%, 8/15/18 8/03 at 102 Aaa 3,645,160
2,505,000 Los Angeles Harbor, 7.600%,
10/01/18 No Opt. Call AAA 2,815,269
280,000 Los Angeles Home Mortgage
(GNMA), 8.100%, 5/01/17 No Opt. Call Aaa 338,974
2,400,000 Los Angeles State Building
Authority, 7.500%, 3/01/11
(Pre-refunded to 3/01/98) 3/98 at 102 AAA 2,620,416
5,000,000 Los Angeles Wastewater
System, 5.700%, 6/01/23 6/03 at 102 Aaa 4,738,000
3,350,000 Los Angeles County
Metropolitan
Transportation Authority,
5.000%, 7/01/21 7/03 at 100 Aaa 2,858,053
4,595,000 Los Angeles County Public
Works Finance Authority
(Los Angeles County
Regional Park and Open
Space), 6.125%, 10/01/10 10/04 at 102 AA 4,665,166
195,000 Los Angeles County, Single
Family Mortgage (GNMA),
8.000%, 3/01/17 No Opt. Call Aaa 220,299
2,000,000 Los Angeles County
Transportation Commission,
Sales Tax, 7.400%, 7/01/15 7/99 at 102 AA- 2,125,280
1,260,000 Marysville Community
Development Agency,
Tax Allocation, 7.250%,
3/01/21 3/02 at 102 Baa 1,300,282
740,000 Menlo Park Community
Development Agency, FHA-
Insured, Multi-Family
Housing,
8.250%, 12/01/28 6/97 at 103 Aa 790,712
</TABLE>
17
<PAGE>
PORTFOLIO OF INVESTMENTS
NUVEEN CALIFORNIA TAX-FREE VALUE FUND--CONTINUED
<TABLE>
<CAPTION>
PRINCIPAL OPT. CALL
AMOUNT DESCRIPTION PROVISIONS* RATINGS** MARKET VALUE
- -------------------------------------------------------------------------------
<C> <S> <C> <C> <C>
$ 895,000 Monterey Community
Hospital, 7.375%,
7/01/14 7/96 at 102 A+ $ 936,528
2,165,000 Napa County,
Certificates of
Participation,
5.250%, 5/15/13 5/03 at 102 A1 1,939,970
1,500,000 North City West School
Facilities Authority,
Community Facilities
District No. 1,
7.850%, 9/01/19 9/99 at 102 N/R 1,534,350
Northern California
Power Agency:
1,430,000 7.000%, 7/01/10 7/95 at 100 A- 1,443,499
2,970,000 7.150%, 7/01/24 7/98 at 102 A- 3,049,151
2,120,000 Ontario, Assessment
District No. 100C,
Limited Obligation,
8.000%, 9/02/11 No Opt. Call N/R 2,185,572
2,920,000 Rancho Mirage
Redevelopment Agency,
Tax Allocation, 5.500%,
4/01/29 4/04 at 102 A 2,486,322
1,470,000 Redding Joint Powers
Financing Authority,
6.250%, 6/01/23 6/03 at 102 A 1,424,386
7,290,000 Riverside Multi-Family
Housing,
6.500%, 1/01/18 7/02 at 100 AAA 7,365,306
205,000 Sacramento Municipal
Utility District,
Subordinated Electric,
8.000%, 11/15/10 3/95 at 100 Baa1 205,517
4,000,000 Sacramento Municipal
Utility District,
7.875%, 8/15/16 (Pre-
refunded to 8/15/98) 8/98 at 102 Aaa 4,453,280
2,335,000 Salinas Tax Allocation,
7.400%, 9/02/09 9/95 at 103 N/R 2,406,848
2,080,000 Salinas, GNMA (Villa
Sierra),
6.500%, 7/20/17 7/04 at 102 AAA 2,121,746
5,000,000 San Bernardino Single
Family (GNMA), 7.500%,
5/01/23 No Opt. Call Aaa 5,852,550
2,000,000 San Bernardino (West
Valley Detention
Center), Certificates
of Participation,
7.700%, 11/01/18 (Pre-
refunded to 11/01/98) 11/98 at 102 Aaa 2,225,240
5,000,000 San Francisco City and
County Redevelopment
Financing Authority,
Tax Allocation,
5.125%, 8/01/18 8/03 at 103 A 4,231,350
3,070,000 San Leandro,
Certificates of
Participation,
5.900%, 6/01/13 6/03 at 102 A 2,950,393
1,000,000 San Mateo County Board
of Education,
Certificates of
Participation, 7.100%,
5/01/21 5/99 at 102 A+ 1,033,570
1,420,000 Santa Ana Community
Redevelopment,
7.500%, 9/01/16 9/99 at 102 BBB+ 1,405,019
3,000,000 Santa Cruz Housing
Authority, Multi-Family
Housing (GNMA), 7.750%,
7/01/23 7/00 at 102 AAA 3,220,440
2,000,000 Sonoma County Office of
Education,
Certificates of
Participation,
7.375%, 7/01/20 (Pre-
refunded to 7/01/00) 7/00 at 102 A+ 2,247,780
Southern California
Public Power Authority:
4,760,000 7.000%, 7/01/22 7/96 at 102 1/2 AA 4,937,358
740,000 5.500%, 7/01/23 7/96 at 100 AA 670,277
</TABLE>
18
<PAGE>
NUVEEN TAX-FREE VALUE FUNDS ANNUAL REPORTFEBRUARY 28, 1995
<TABLE>
<CAPTION>
PRINCIPAL OPT. CALL
AMOUNT DESCRIPTION PROVISIONS* RATINGS** MARKET VALUE
- -------------------------------------------------------------------------------
<C> <S> <C> <C> <C>
$ 2,825,000 Stockton Hospitals (St.
Joseph Hospital),
6.700%, 6/01/15 3/95 at 106 A- $ 2,829,238
2,330,000 Torrance Hospitals
(Little Company of Mary
Hospital), 6.875%,
7/01/15 7/02 at 102 A 2,364,134
1,100,000 Tulare County,
Certificates of
Participation, 6.875%,
11/15/12 11/02 at 102 N/R 1,125,156
University of California
(UCLA Central
Chiller/Cogeneration):
3,500,000 5.600%, 11/01/20 11/03 at 102 Aa 3,152,974
4,335,000 6.000%, 11/01/21 11/03 at 102 Aa 4,119,333
3,335,000 University of California
Research Facilities,
5.800%, 9/01/23 9/01 at 102 A- 3,057,927
3,420,000 Upland (San Antonio
Community Hospital),
Certificates of
Participation, 5.000%,
1/01/18 1/04 at 102 A 2,691,026
10,000,000 Walnut Creek (John Muir
Medical Center),
Certificates of
Participation, 5.000%,
2/15/16 2/04 at 102 Aaa 8,750,900
- -------------------------------------------------------------------------------
$207,035,000 Total Investments - (cost
$202,079,336) - 97.5% 206,072,736
- -------------------------------------------------------------------------------
- -------------------
-----------
Other Assets Less
Liabilities - 2.5% 5,352,799
- -------------------------------------------------------------------------------
Net Assets - 100% $211,425,535
</TABLE>
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
NUMBER
STANDARD & POOR'S MOODY'S OF ISSUES MARKET VALUE PERCENT
- --------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
SUMMARY OF AAA Aaa 19 $ 66,464,845 32%
RATINGS** AA+, AA, AA- Aa1, Aa, Aa2, Aa3 13 39,961,683 19
PORTFOLIO OF A+ A1 9 22,854,306 11
INVESTMENTS: A, A- A, A2, A3 20 55,712,569 27
BBB+, BBB, BBB- Baa1, Baa, Baa2, Baa3 9 13,827,407 7
Non-rated Non-rated 4 7,251,926 4
- --------------------------------------------------------------------------------------
TOTAL 74 $206,072,736 100%
</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.
See accompanying notes to financial statements.
19
<PAGE>
PORTFOLIO OF INVESTMENTS
NUVEEN CALIFORNIA INSURED TAX-FREE VALUE FUND
<TABLE>
<CAPTION>
PRINCIPAL OPT. CALL
AMOUNT DESCRIPTION PROVISIONS* RATINGS** MARKET VALUE
- -------------------------------------------------------------------------------
<C> <S> <C> <C> <C>
$ 1,000,000 California Educational
Facilities Authority,
Pepperdine University,
7.200%, 11/01/15 (Pre-
refunded to 11/01/00) 11/00 at 102 Aaa $ 1,120,960
5,000,000 California General
Obligation, 5.125%,
10/01/17 10/03 at 102 Aaa 4,400,600
California Health
Facilities Authority
(Kaiser Permanente):
6,000,000 5.450%, 10/01/13 10/01 at 101 Aa2 5,457,780
2,650,000 5.550%, 8/15/25 2/02 at 101 Aaa 2,398,621
5,000,000 California Health
Facilities Financing
Authority (San Diego
Hospital Association),
6.125%, 8/01/22 8/02 at 102 Aaa 5,008,550
6,340,000 California Housing Finance
Agency, 6.850%, 8/01/23 2/02 at 102 Aaa 6,548,649
240,000 California Public Capital
Improvement Finance
Authority (Pooled
Projects), 8.100%, 3/01/18 3/98 at 102 Aaa 259,200
California Public School
District, Finance
Authority (Rescue Union):
1,115,000 6.250%, 9/01/15 9/04 at 102 Aaa 1,136,062
500,000 6.250%, 9/01/20 9/04 at 102 Aaa 505,100
California Public Works
Board, Department of
Corrections (State
Prisons):
5,000,000 7.000%, 9/01/09 (Pre-
refunded to 9/01/00) 9/00 at 102 Aaa 5,544,800
5,250,000 5.750%, 9/01/21 9/01 at 100 Aaa 4,993,433
8,500,000 California Statewide
Community Development
Authority (Sutter Health),
6.125%, 8/15/22 8/02 at 102 Aaa 8,514,790
5,000,000 Alameda County (Santa Rita
Jail Project),
Certificates of
Participation,
5.700%, 12/01/14 12/03 at 102 Aaa 4,755,100
1,225,000 Barstow Redevelopment
Agency, Tax Allocation,
7.000%, 9/01/14 No Opt. Call Aaa 1,392,249
7,000,000 Big Bear Lake Water System,
6.375%, 4/01/22 4/02 at 102 Aaa 7,147,000
Brea Public Financing
Authority, Tax Allocation:
3,525,000 7.000%, 8/01/15 (Pre-
refunded to 8/01/01) 8/01 at 102 Aaa 3,936,755
1,475,000 7.000%, 8/01/15 8/01 at 102 Aaa 1,576,362
3,000,000 Calaveras County Water
District,
Certificates of
Participation,
6.900%, 5/01/16 (Pre-
refunded to 5/01/01) 5/01 at 102 Aaa 3,311,490
2,000,000 Castaic Lake Water Agency,
Certificates of
Participation,
7.125%, 8/01/16 (Pre-
refunded to 8/01/00) 8/00 at 102 Aaa 2,228,220
850,000 Concord Redevelopment
Agency, Tax Allocation,
Central Concord Project,
7.875%, 7/01/07 7/98 at 102 Aaa 935,629
500,000 Cotati-Rohnert Park Unified
School District, 9.000%,
8/01/06 8/99 at 102 Aaa 580,235
4,050,000 Cucamonga County Water
District, Certificates of
Participation,
5.450%, 9/01/23 3/04 at 102 Aaa 3,670,961
2,000,000 East Bay Municipal Utility
District, Water System,
7.500%, 6/01/18 (Pre-
refunded to 6/01/00) 6/00 at 102 Aaa 2,257,340
</TABLE>
20
<PAGE>
NUVEEN TAX-FREE VALUE FUNDS ANNUAL REPORT
FEBRUARY 28, 1995
<TABLE>
<CAPTION>
PRINCIPAL OPT. CALL
AMOUNT DESCRIPTION PROVISIONS* RATINGS** MARKET VALUE
- -------------------------------------------------------------------------------
<C> <S> <C> <C> <C>
$ 2,000,000 Eastern Municipal Water
District, Water and Sewer,
Certificates of
Participation,
6.500%, 7/01/20 (Pre-
refunded to 7/01/01) 7/01 at 102 Aaa $ 2,181,260
3,865,000 Fallbrook Sanitary
District, Certificates of
Participation, 6.600%,
2/01/13 2/01 at 100 Aaa 3,963,480
2,500,000 Fontana Public Financing
Authority, Tax Allocation
(North Fontana
Redevelopment Project),
7.000%, 9/01/10 9/00 at 102 Aaa 2,653,975
6,220,000 Fresno Water System,
5.300%, 6/01/20 6/03 at 101 Aaa 5,604,592
3,000,000 Gilroy Unified School
District, Certificates of
Participation,
6.250%, 9/01/12 9/04 at 102 Aaa 3,079,230
1,000,000 LaQuinta Redevelopment
Agency, Tax Allocation,
7.300%, 9/01/12 No Opt. Call Aaa 1,165,990
5,000,000 Lancaster Redevelopment
Agency, Tax Allocation,
5.800%, 8/01/23 8/03 at 102 Aaa 4,791,850
2,000,000 Los Angeles Convention and
Exhibition Center
Authority, Certificates of
Participation,
7.000%, 8/15/21 (Pre-
refunded to 8/15/00) 8/00 at 102 Aaa 2,217,640
Los Angeles Convention and
Exhibition Center
Authority:
5,500,000 5.375%, 8/15/18 8/03 at 102 Aaa 5,012,095
3,000,000 5.125%, 8/15/21 8/03 at 102 Aaa 2,607,570
285,000 Los Angeles Home Mortgage
(GNMA),
8.100%, 5/01/17 No Opt. Call Aaa 345,027
5,000,000 Los Angeles County
Transportation Commission,
6.250%, 7/01/13 7/02 at 102 Aaa 5,098,600
2,000,000 Marysville (Fremont-Rideout
Health Group), 6.300%,
1/01/22 1/02 at 102 Aaa 2,023,160
1,000,000 Modesto (Golf Course
Project), Certificates of
Participation,
7.300%, 11/01/20 (Pre-
refunded to 11/01/98) 11/98 at 102 Aaa 1,100,010
Modesto Irrigation District
Financing Authority,
Domestic Water Project:
4,500,000 6.125%, 9/01/19 9/02 at 102 Aaa 4,517,640
5,000,000 5.500%, 9/01/22 9/02 at 100 Aaa 4,571,350
2,500,000 Mt. Diablo Hospital
District,
8.000%, 12/01/11 (Pre-
refunded to 12/01/00) 12/00 at 102 Aaa 2,905,850
2,000,000 Mt. Diablo Unified School
District, Special Tax,
7.050%, 8/01/20 8/00 at 102 Aaa 2,145,120
Napa FHA-Insured (Creekside
Apartments):
2,555,000 6.625%, 7/01/24 7/02 at 102 Aaa 2,524,417
2,000,000 6.625%, 7/01/25 7/04 at 101 Aaa 2,048,620
2,500,000 Oakland Pension Financing,
7.600%, 8/01/21 8/98 at 102 Aaa 2,725,350
4,000,000 Orange County Certificates
of Participation, 5.500%,
6/01/19 6/02 at 100 Aaa 3,622,800
1,250,000 Palm Desert Redevelopment
Agency,
Tax Allocation Project,
7.400%, 5/01/09 5/97 at 101 Aaa 1,318,488
</TABLE>
21
<PAGE>
PORTFOLIO OF INVESTMENTS
NUVEEN CALIFORNIA INSURED TAX-FREE VALUE FUND--CONTINUED
<TABLE>
<CAPTION>
PRINCIPAL OPT. CALL
AMOUNT DESCRIPTION PROVISIONS* RATINGS** MARKET VALUE
- -------------------------------------------------------------------------------
<C> <S> <C> <C> <C>
$ 2,000,000 Pittsburg Redevelopment
Agency (Los Medanos
Community Project), Tax
Allocation,
7.150%, 8/01/21 8/01 at 103 Aaa $ 2,269,080
1,500,000 Port of Oakland, 7.250%,
11/01/16 5/97 at 102 Aaa 1,578,975
Rancho Cucamonga
Redevelopment Agency:
1,270,000 7.125%, 9/01/19 (Pre-
refunded to 9/01/99) 9/99 at 102 Aaa 1,400,759
1,230,000 7.125%, 9/01/19 9/99 at 102 Aaa 1,317,908
5,000,000 5.500%, 9/01/23 3/04 at 102 Aaa 4,596,800
5,000,000 5.000%, 4/01/24 4/04 at 102 Aaa 4,231,150
Riverside County Desert
Justice Facility
Corporation,
Certificates of
Participation:
3,600,000 6.000%, 12/01/17 12/04 at 101 Aaa 3,551,256
2,500,000 6.250%, 12/01/21 12/04 at 101 Aaa 2,524,050
3,000,000 Sacramento Municipal
Utility District,
Electric System,
6.500%, 9/01/21 (Pre-
refunded to 9/01/01) 9/01 at 102 Aaa 3,275,100
4,150,000 Sacramento County
Airport System,
5.750%, 7/01/24 7/02 at 100 Aaa 3,930,673
2,500,000 San Bernardino County
Transportation
Authority, Sales Tax,
6.000%, 3/01/10 3/02 at 102 Aaa 2,531,175
2,000,000 San Diego Regional
Building Authority,
Lease Revenue (San
Miguel Fire Protection
District),
7.250%, 1/01/20 (Pre-
refunded to 1/01/00) 1/00 at 102 Aaa 2,220,860
San Francisco City and
County Redevelopment
Agency (George R.
Moscone Convention
Center):
2,250,000 6.800%, 7/01/19 7/04 at 102 Aaa 2,386,800
1,000,000 6.750%, 7/01/24 7/04 at 102 Aaa 1,056,740
2,250,000 San Jose Redevelopment
Agency, Tax Allocation,
4.750%, 8/01/24 2/04 at 102 Aaa 1,816,088
4,000,000 San Marcos Public
Facilities Authority,
Tax Allocation, 5.500%,
8/01/23 8/03 at 102 Aaa 3,632,720
6,750,000 Southern California
Public Power Authority,
5.000%, 7/01/22 7/03 at 100 Aaa 5,743,912
2,000,000 Southern California
Rapid Transit Finance
Authority, Certificates
of Participation,
7.500%, 7/01/05 1/01 at 102 1/2 Aaa 2,230,540
3,040,000 Sulphur Springs Union
School District,
0.000%, 9/01/15 No Opt. Call Aaa 862,144
</TABLE>
22
<PAGE>
NUVEEN TAX-FREE VALUE FUNDS ANNUAL REPORT
FEBRUARY 28, 1995
<TABLE>
<CAPTION>
PRINCIPAL OPT. CALL
AMOUNT DESCRIPTION PROVISIONS* RATINGS** MARKET VALUE
- -------------------------------------------------------------------------------
<C> <S> <C> <C> <C>
$ 2,230,000 Temecula Valley Unified
School District,
General Obligation:
6.000%, 9/01/12 9/02 at 102 Aaa $ 2,241,195
135,000 Thousand Oaks Redevelopment
Agency,
Single Family Mortgage,
7.900%, 1/01/16 1/97 at 102 Aaa 141,236
- -------------------------------------------------------------------------------
$203,300,000 Total Investments - (cost
$194,580,364) - 97.8% 199,443,161
- -------------------------------------------------------------------------------
- -------------------
TEMPORARY INVESTMENTS IN
SHORT-TERM MUNICIPAL
SECURITIES - 0.8%
$ 1,700,000 California Health Facilities
Financing Authority
(St. Joseph Health System),
Series A, Variable Rate
Demand Bonds, 3.700%,
7/01/13+ VMIG-1 1,700,000
- -------------------
- -------------------------------------------------------------------------------
Other Assets Less
Liabilities - 1.4% 2,759,909
- -------------------------------------------------------------------------------
Net Assets - 100% $203,903,070
</TABLE>
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
NUMBER
STANDARD & POOR'S MOODY'S OF ISSUES MARKET VALUE PERCENT
- -----------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
SUMMARY OF AAA Aaa 66 $193,985,381 97%
RATINGS** AA+, AA, AA- Aa1, Aa, Aa2, Aa3 1 5,457,780 3
PORTFOLIO OF
INVESTMENTS
(EXCLUDING
TEMPORARY
INVESTMENTS):
- -----------------------------------------------------------------------------------
TOTAL 67 $199,443,161 100%
</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 to 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.
+ 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.
23
<PAGE>
PORTFOLIO OF INVESTMENTS
NUVEEN MASSACHUSETTS TAX-FREE VALUE FUND
<TABLE>
<CAPTION>
PRINCIPAL OPT. CALL MARKET
AMOUNT DESCRIPTION PROVISIONS* RATINGS** VALUE
- -------------------------------------------------------------------------------
<C> <S> <C> <C> <C>
Massachusetts General
Obligation:
$ 165,000 7.250%, 3/01/09 (Pre-
refunded to 3/01/00) 3/00 at 102 Aaa $ 182,759
715,000 5.500%, 2/01/11 2/03 at 102 A 680,022
Massachusetts Bay
Transportation Authority,
General Transportation
System:
250,000 7.750%, 3/01/10 (Pre-
refunded to 3/01/98) 3/98 at 102 Aaa 273,878
1,000,000 7.000%, 3/01/11 (Pre-
refunded to 3/01/01) 3/01 at 102 Aaa 1,106,550
2,000,000 5.500%, 3/01/22 3/03 at 102 Aaa 1,849,520
250,000 Massachusetts Bay
Transportation Authority,
Certificates of
Participation, 7.800%,
1/15/14 12/06 at 100 BBB 278,015
170,000 Massachusetts Educational
Loan Authority,
7.875%, 6/01/03 6/97 at 102 AAA 180,628
1,360,000 Massachusetts Health and
Educational Facilities
Authority (Emerson
Hospital), 8.000%,
7/01/18 7/00 at 102 Baa1 1,428,884
250,000 Massachusetts Health and
Educational Facilities
Authority (Mount Auburn
Hospital),
7.875%, 7/01/18 (Pre-
refunded to 7/01/98) 7/98 at 102 Aaa 276,733
350,000 Massachusetts Health and
Educational Facilities
Authority (Salem
Hospital), 7.250%,
7/01/09 7/97 at 100 Aaa 364,732
500,000 Massachusetts Health and
Educational Facilities
Authority (Cardinal
Cushing General
Hospital), 8.875%,
7/01/18 7/99 at 102 1/2 N/R 522,705
Massachusetts Health and
Educational Facilities
Authority (Suffolk
University):
1,180,000 8.125%, 7/01/20 (Pre-
refunded to 7/01/00) 7/00 at 101 1/2 BBB 1,357,873
1,000,000 6.350%, 7/01/22 7/02 at 102 AAA 1,007,590
500,000 Massachusetts Health and
Educational Facilities
Authority (Newton-
Wellesley Hospital),
8.000%, 7/01/18 7/98 at 102 Aaa 548,540
500,000 Massachusetts Health and
Educational Facilities
Authority, FHA-Insured
(St. Elizabeth's Hospital
of Boston),
7.750%, 8/01/27 (Pre-
refunded to 8/01/97) 8/97 at 102 Aaa 542,510
750,000 Massachusetts Health and
Educational Facilities
Authority (Baystate
Medical Center),
7.500%, 7/01/20 (Pre-
refunded to 7/01/99) 7/99 at 102 A+ 833,775
1,000,000 Massachusetts Health and
Educational Facilities
Authority (Boston
College),
6.625%, 7/01/21 7/01 at 102 Aaa 1,038,450
500,000 Massachusetts Health and
Educational Facilities
Authority (Worcester
Polytechnic Institute),
6.625%, 9/01/17 9/02 at 102 A+ 512,925
495,000 Massachusetts Health and
Educational Facilities
Authority (Brockton
Hospital), 8.000%,
7/01/07 7/97 at 102 A 537,347
250,000 Massachusetts Health and
Educational Facilities
Authority (University
Hospital), 7.250%,
7/01/10 7/00 at 102 Aaa 270,703
</TABLE>
24
<PAGE>
NUVEEN TAX-FREE VALUE FUNDS ANNUAL REPORT
FEBRUARY 28, 1995
<TABLE>
<CAPTION>
PRINCIPAL OPT. CALL MARKET
AMOUNT DESCRIPTION PROVISIONS* RATINGS** VALUE
- -------------------------------------------------------------------------------
<C> <S> <C> <C> <C>
$ 750,000 Massachusetts Health and
Educational Facilities
Authority (New England
Medical Center), 6.625%,
7/01/25 7/02 at 102 Aaa $ 773,333
1,750,000 Massachusetts Health and
Educational Facilities
Authority (New England
Deaconess Hospital), 6.875%,
4/01/22 4/02 at 102 A 1,764,525
1,000,000 Massachusetts Health and
Educational Facilities
Authority (Metrowest
Health), 6.500%, 11/15/18 11/02 at 102 A 919,740
1,000,000 Massachusetts Health and
Educational Facilities
Authority (Cable Housing and
Health Services), 5.625%,
7/01/13 7/03 at 102 Aaa 948,960
Massachusetts Health and
Educational Facilities
Authority (Lahey Clinic
Medical Center):
1,000,000 5.625%, 7/01/15 7/03 at 102 Aaa 944,970
2,000,000 5.375%, 7/01/23 7/03 at 102 Aaa 1,793,060
Massachusetts Health and
Educational Facilities
Authority (Youville
Hospital):
2,500,000 6.000%, 2/15/25 2/04 at 102 Aa 2,357,825
2,000,000 6.000%, 2/15/34 2/04 at 102 Aa 1,850,880
2,000,000 Massachusetts Housing Finance
Agency,
Housing Project,
6.375%, 4/01/21 4/03 at 102 A1 1,996,060
Massachusetts Housing Finance
Agency,
Residential Development:
1,000,000 6.250%, 11/15/14 11/02 at 102 Aaa 997,630
1,000,000 6.875%, 11/15/21 5/02 at 102 Aaa 1,038,180
Massachusetts Housing Finance
Agency, Single Family
Housing:
500,000 7.350%, 12/01/16 6/01 at 102 Aa 529,045
1,250,000 7.700%, 6/01/17 6/98 at 102 Aa 1,325,650
1,440,000 Massachusetts Industrial
Finance Agency, Pollution
Control (Eastern Edison),
5.875%, 8/01/08 8/03 at 102 Baa2 1,346,659
1,000,000 Massachusetts Industrial
Finance Agency
(Malden Public Library
Project),
7.250%, 1/01/15 1/05 to 102 Aaa 1,099,030
250,000 Massachusetts Industrial
Finance Agency
(College of the Holy Cross),
6.450%, 1/01/12 1/02 at 102 A1 257,605
500,000 Massachusetts Industrial
Finance Agency
(Sturdy Memorial Hospital),
7.900%, 6/01/09 6/99 at 102 BBB+ 522,150
500,000 Massachusetts Industrial
Finance Agency (Springfield
College), 7.800%, 10/01/09 10/99 at 103 A 568,060
1,480,000 Massachusetts Industrial
Finance Agency (Merrimack
College), 7.125%, 7/01/12 7/02 at 102 BBB- 1,527,108
1,600,000 Massachusetts Industrial
Finance Agency
(Phillips Academy), 5.375%,
9/01/23 9/08 at 102 Aa1 1,448,096
</TABLE>
25
<PAGE>
PORTFOLIO OF INVESTMENTS
NUVEEN MASSACHUSETTS TAX-FREE VALUE FUND--CONTINUED
<TABLE>
<CAPTION>
PRINCIPAL OPT. CALL MARKET
AMOUNT DESCRIPTION PROVISIONS* RATINGS** VALUE
- -------------------------------------------------------------------------------
<C> <S> <C> <C> <C>
$ 500,000 Massachusetts Industrial
Finance Agency
(Whitehead Institute for
Biomedical Research),
5.125%, 7/01/26 7/03 at 102 Aa $ 403,925
1,000,000 Massachusetts Municipal
Wholesale Electric Company,
5.000%, 7/01/17 7/04 at 102 Aaa 857,990
Massachusetts Port Authority:
500,000 7.125%, 7/01/12 7/98 at 100 AA 507,575
635,000 13.000%, 7/01/13 No Opt. Call Aaa 1,094,727
Massachusetts Turnpike
Authority:
500,000 5.000%, 1/01/13 1/03 at 100 A1 445,145
500,000 5.000%, 1/01/20 1/03 at 100 A1 428,355
1,000,000 5.125%, 1/01/23 1/03 at 102 Aaa 864,110
1,500,000 Massachusetts Water Pollution
Abatement, 5.100%, 8/01/08 No Opt. Call Aa 1,402,920
Attleboro General Obligation:
450,000 6.250%, 1/15/10 1/03 at 102 Baa1 450,945
450,000 6.250%, 1/15/11 1/03 at 102 Baa1 450,288
Barnstable General
Obligation:
880,000 5.750%, 9/15/13 9/04 at 102 Aa 847,924
490,000 5.750%, 9/15/14 9/04 at 102 Aa 469,204
Boston General Obligation:
250,000 7.700%, 2/01/09 (Pre-refunded
to 2/01/99) 2/99 at 102 A 277,608
1,000,000 6.750%, 7/01/11 7/01 at 102 Aaa 1,098,310
1,500,000 Boston City Hospital, FHA-
Insured Mortgage, 7.625%,
2/15/21 (Pre-refunded to
8/15/00) 8/00 at 102 Aaa 1,693,695
Boston Water and Sewer
Commission:
180,000 7.875%, 11/01/13 (Pre-
refunded to 11/01/96) 11/96 at 102 A- 192,776
320,000 7.875%, 11/01/13 11/96 at 102 A- 340,304
500,000 7.000%, 11/01/18 (Pre-
refunded to 11/01/01) 11/01 at 102 Aaa 557,860
1,000,000 Boston-Mount Pleasant Housing
Development Corporation,
Multi-Family Housing,
6.750%, 8/01/23 8/02 at 102 AAA 1,022,990
1,000,000 Dartmouth Housing Development
Corporation, Multi-Family
Housing, 7.375%, 7/01/24 1/98 at 103 AAA 1,043,810
Deerfield General Obligation:
420,000 6.200%, 6/15/09 6/02 at 102 A1 445,171
415,000 6.250%, 6/15/10 6/02 at 102 A1 439,045
635,000 Haverhill General Obligation,
7.500%, 10/15/11 10/01 at 102 BBB 676,802
Holyoke General Obligation:
775,000 8.000%, 6/01/01 No Opt. Call Baa 821,523
250,000 8.150%, 6/15/06 6/02 at 103 Aaa 296,735
750,000 7.000%, 11/01/08 11/02 at 102 Baa 795,315
500,000 7.650%, 8/01/09 8/01 at 102 Baa 540,510
Lowell General Obligation:
545,000 8.300%, 2/15/05 No Opt. Call Baa1 617,730
445,000 8.400%, 1/15/09 (Pre-refunded
to 1/15/01) 1/01 at 102 Aaa 524,384
</TABLE>
26
<PAGE>
NUVEEN TAX-FREE VALUE FUNDS ANNUAL REPORT
FEBRUARY 28, 1995
<TABLE>
<CAPTION>
PRINCIPAL OPT. CALL MARKET
AMOUNT DESCRIPTION PROVISIONS* RATINGS** VALUE
- -------------------------------------------------------------------------------
<C> <S> <C> <C> <C>
$ 1,000,000 Lynn General Obligation,
7.850%, 1/15/11 (Pre-
refunded to 1/15/02) 1/02 at 104 Aaa $ 1,174,520
500,000 Monson General Obligation
School Project, 7.700%,
10/15/10 (Pre-refunded
to 10/15/00) 10/00 at 102 Aaa 568,570
Palmer General
Obligation:
500,000 7.700%, 10/01/10 (Pre-
refunded to 10/01/00) 10/00 at 102 Aaa 568,755
500,000 5.500%, 10/01/10 10/03 at 102 Aaa 483,220
1,130,000 Peabody General
Obligation, 6.950%,
8/01/09 8/00 at 100 Aaa 1,211,304
550,000 Quincy Hospital, FHA-
Insured, 7.875%, 1/15/16 7/96 at 102 AAA 583,924
250,000 Sandwich General
Obligation,
7.100%, 11/01/07 (Pre-
refunded to 11/01/98) 11/98 at 102 1/2 Aaa 273,500
1,250,000 Somerville Housing
Authority (GNMA),
7.950%, 11/20/30 5/00 at 102 AAA 1,331,488
425,000 South Essex Sewerage
District, General
Obligation, 9.000%,
12/01/00 No Opt. Call A 504,654
250,000 Southeastern
Massachusetts University
Building Authority,
7.800%, 5/01/16 (Pre-
refunded to 5/01/96) 5/96 at 102 A 263,378
1,000,000 Springfield General
Obligation, 7.100%,
9/01/11 9/02 at 102 Baa 1,031,330
Taunton General
Obligation:
1,465,000 8.000% 2/01/02 No Opt. Call A 1,660,841
1,005,000 8.000% 2/01/03 No Opt. Call A 1,148,614
250,000 University of Lowell
Building Authority,
7.400%, 11/01/07 11/97 at 102 A 266,994
500,000 University of
Massachusetts Building
Authority, 7.500%,
5/01/14 5/98 at 102 A 536,524
1,000,000 Worcester General
Obligation, 6.000%,
8/01/04 8/02 at 102 BBB+ 1,002,980
1,000,000 Puerto Rico Aqueduct and
Sewer Authority, 7.875%,
7/01/17 7/98 at 102 A 1,096,530
- -------------------------------------------------------------------------------
$69,170,000 Total Investments - (Cost
$68,863,593) - 97.7% 71,117,507
- -------------------------------------------------------------------------------
- -------------------
TEMPORARY INVESTMENTS IN
SHORT-TERM MUNICIPAL
SECURITIES - 1.1%
$ 500,000 Massachusetts Dedicated
Income Tax, Variable
Rate Demand Bonds,
3.650%, 12/01/97+ VMIG-1 500,000
300,000 Massachusetts Dedicated
Income Tax, Series
1990E, Variable Rate
Demand Bonds,
3.650%, 12/01/97+ VMIG-1 300,000
- -------------------------------------------------------------------------------
$ 800,000 Total Temporary
Investments - 1.1% 800,000
- -------------------------------------------------------------------------------
- -------------------
Other Assets Less
Liabilities - 1.2% 864,837
- -------------------------------------------------------------------------------
Net Assets - 100% $72,782,344
</TABLE>
- --------------------------------------------------------------------------------
27
<PAGE>
PORTFOLIO OF INVESTMENTS
NUVEEN MASSACHUSETTS TAX-FREE VALUE FUND--CONTINUED
<TABLE>
<CAPTION>
NUMBER MARKET MARKET
STANDARD & POOR'S MOODY'S OF ISSUES VALUE PERCENT
- --------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
SUMMARY OF AAA Aaa 37 $30,487,648 43%
RATINGS** AA+, AA, AA- Aa1, Aa, Aa2, Aa3 10 11,143,044 16
PORTFOLIO OF A+ A1 8 5,358,081 7
INVESTMENTS A, A- A, A2, A3 15 10,757,917 15
(EXCLUDING BBB+, BBB, BBB- Baa1, Baa, Baa2, Baa3 15 12,848,112 18
TEMPORARY Non-rated Non-rated 1 522,705 1
INVESTMENTS):
- --------------------------------------------------------------------------------------
TOTAL 86 $71,117,507 100%
</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.
28
<PAGE>
NUVEEN TAX-FREE VALUE FUNDS ANNUAL REPORT
FEBRUARY 28, 1995
NUVEEN MASSACHUSETTS INSURED TAX-FREE VALUE FUND
<TABLE>
<CAPTION>
PRINCIPAL OPT. CALL MARKET
AMOUNT DESCRIPTION PROVISIONS* RATINGS** VALUE
- -------------------------------------------------------------------------------
<C> <S> <C> <C> <C>
Massachusetts General
Obligation:
$ 500,000 6.500%, 6/01/08 6/02 at 101 Aaa $ 524,950
250,000 7.250%, 3/01/09 (Pre-refunded
to 3/01/00) 3/00 at 102 Aaa 277,028
1,200,000 6.000%, 6/01/13 6/02 at 100 Aaa 1,206,864
Massachusetts Bay
Transportation Authority,
General Transportation
System:
250,000 7.250%, 3/01/03 3/00 at 102 Aaa 276,440
250,000 7.100%, 3/01/13 (Pre-refunded
to 3/01/99) 3/99 at 102 Aaa 273,053
1,000,000 5.750%, 3/01/22 3/02 at 100 Aaa 952,660
250,000 Massachusetts Bay
Transportation Authority,
Certificates of
Participation, 7.650%,
8/01/15 8/00 at 102 Aaa 275,650
750,000 Massachusetts College
Building Authority,
7.250%, 5/01/16 5/96 at 102 Aaa 786,278
450,000 Massachusetts Health and
Educational Facilities
Authority (St. Luke's
Hospital of New Bedford),
7.750%, 7/01/13 (Pre-
refunded to 7/01/97) 7/97 at 102 Aaa 486,873
300,000 Massachusetts Health and
Educational Facilities
Authority (Mount Auburn
Hospital),
7.875%, 7/01/18 (Pre-
refunded to 7/01/98) 7/98 at 102 Aaa 332,079
Massachusetts Health and
Educational Facilities
Authority (South Shore
Hospital):
200,000 8.125%, 7/01/17 (Pre-refunded
to 7/01/97) 7/97 at 102 Aaa 218,168
250,000 7.500%, 7/01/20 (Pre-refunded
to 7/01/00) 7/00 at 102 Aaa 280,793
1,000,000 6.500%, 7/01/22 7/02 at 102 Aaa 1,018,790
800,000 Massachusetts Health and
Educational Facilities
Authority (Berkshire Health
Systems), 7.600%, 10/01/14 10/98 at 102 Aaa 858,784
750,000 Massachusetts Health and
Educational Facilities
Authority (Salem Hospital),
7.250%, 7/01/09 7/97 at 100 Aaa 781,568
250,000 Massachusetts Health and
Educational Facilities
Authority (Capital Asset
Program), 7.200%, 7/01/09 7/99 at 102 Aaa 267,238
500,000 Massachusetts Health and
Educational Facilities
Authority (University
Hospital), 7.250%, 7/01/19 7/00 at 102 Aaa 539,010
250,000 Massachusetts Health and
Educational Facilities
Authority (Newton-Wellesley
Hospital),
8.000%, 7/01/18 7/98 at 102 Aaa 274,270
Massachusetts Health and
Educational Facilities
Authority (Northeastern
University):
250,000 7.600%, 10/01/10 10/98 at 102 Aaa 272,020
1,600,000 6.550%, 10/01/22 10/02 at 100 Aaa 1,659,808
500,000 Massachusetts Health and
Educational Facilities
Authority (Baystate Medical
Center),
7.500%, 7/01/20 (Pre-
refunded to 7/01/99) 7/99 at 102 A+ 555,850
</TABLE>
29
<PAGE>
PORTFOLIO OF INVESTMENTS
NUVEEN MASSACHUSETTS INSURED TAX-FREE VALUE FUND--CONTINUED
<TABLE>
<CAPTION>
PRINCIPAL OPT. CALL MARKET
AMOUNT DESCRIPTION PROVISIONS* RATINGS** VALUE
- -------------------------------------------------------------------------------
<C> <S> <C> <C> <C>
$ 500,000 Massachusetts Health and
Educational Facilities
Authority (Stonehill
College),
7.700%, 7/01/20 (Pre-
refunded to 7/01/00) 7/00 at 102 Aaa $ 566,450
1,000,000 Massachusetts Health and
Educational Facilities
Authority (Boston College),
6.625%, 7/01/21 7/01 at 102 Aaa 1,038,450
500,000 Massachusetts Health and
Educational Facilities
Authority (Berklee College
of Music),
6.875%, 10/01/21 10/01 at 102 Aaa 526,940
1,000,000 Massachusetts Health and
Educational Facilities
Authority (Brigham and
Women's Hospital),
6.750%, 7/01/24 7/01 at 102 Aa 1,013,220
250,000 Massachusetts Health and
Educational Facilities
Authority (Beverly
Hospital),
7.300%, 7/01/19 (Pre-
refunded to 7/01/99) 7/99 at 102 Aaa 275,688
1,500,000 Massachusetts Health and
Educational Facilities
Authority (New England
Medical Center), 6.625%,
7/01/25 7/02 at 102 Aaa 1,546,664
1,450,000 Massachusetts Health and
Educational Facilities
Authority (Boston
University), 6.000%,
10/01/22 10/02 at 100 Aaa 1,438,299
2,000,000 Massachusetts Health and
Educational Facilities
Authority (Bentley College),
6.125%, 7/01/17 7/02 at 102 Aaa 2,006,140
Massachusetts Health and
Educational Facilities
Authority (Lahey Clinic
Medical Center):
750,000 7.600%, 7/01/08 (Pre-refunded
to 7/01/98) 7/98 at 102 Aaa 823,920
2,000,000 5.625%, 7/01/15 7/03 at 102 Aaa 1,889,940
2,500,000 5.375%, 7/01/23 7/03 at 102 Aaa 2,241,325
355,000 Massachusetts Housing Finance
Agency,
7.600%, 12/01/16 12/99 at 103 Aaa 379,470
Massachusetts Housing Finance
Agency, Single Family
Housing:
500,000 7.350%, 12/01/16 6/01 at 102 Aa 529,045
250,000 7.700%, 6/01/17 6/98 at 102 Aa 265,130
1,630,000 Massachusetts Industrial
Finance Agency (Malden
Public Library Project),
7.250%, 1/01/15 1/05 at 102 Aaa 1,791,419
500,000 Massachusetts Industrial
Finance Agency
(Brandeis University),
6.800%, 10/01/19 10/99 at 102 Aaa 521,200
200,000 Massachusetts Industrial
Finance Agency (Harvard
Community Health Plan),
7.750%, 10/01/08 10/98 at 102 Aaa 218,860
250,000 Massachusetts Industrial
Finance Agency
(Milton Academy),
7.250%, 9/01/19 (Pre-
refunded to 9/01/99) 9/99 at 102 Aaa 276,668
375,000 Massachusetts Industrial
Finance Agency
(Museum of Science),
7.300%, 11/01/09 (Pre-
refunded to 11/01/99) 11/99 at 102 Aaa 416,809
</TABLE>
30
<PAGE>
NUVEEN TAX-FREE VALUE FUNDS ANNUAL REPORT
FEBRUARY 28, 1995
<TABLE>
<CAPTION>
PRINCIPAL OPT. CALL MARKET
AMOUNT DESCRIPTION PROVISIONS* RATINGS** VALUE
- -------------------------------------------------------------------------------
<C> <S> <C> <C> <C>
$ 1,000,000 Massachusetts Industrial
Finance Agency (Mount
Holyoke College), 6.300%,
7/01/13 7/01 at 102 Aaa $ 1,021,990
2,000,000 Massachusetts Municipal
Wholesale Electric Company,
5.000%, 7/01/10 7/03 at 102 Aaa 1,802,940
1,000,000 Massachusetts Port Authority,
13.000%, 7/01/13 No Opt. Call Aaa 1,723,980
1,000,000 Massachusetts Turnpike
Authority,
5.125%, 1/01/23 1/03 at 102 Aaa 864,110
1,000,000 Boston General Obligation,
6.750%, 7/01/11 7/01 at 102 Aaa 1,098,310
500,000 Boston City Hospital (FHA-
Insured),
7.625%, 2/15/21 (Pre-
refunded to 8/15/00) 8/00 at 102 Aaa 564,565
Boston Water and Sewer
Commission:
500,000 7.250%, 11/01/06 11/98 at 100 Aaa 532,975
500,000 7.000%, 11/01/18 (Pre-
refunded to 11/01/01) 11/01 at 102 Aaa 557,860
500,000 Fall River General
Obligation, 7.200%, 6/01/10 6/01 at 102 Aaa 543,230
250,000 Groveland Unlimited Tax,
6.900%, 6/15/07 6/01 at 102 Aaa 268,480
1,000,000 Haverhill General Obligation,
6.700%, 9/01/10 9/01 at 102 Aaa 1,056,330
250,000 Holyoke General Obligation,
8.150%, 6/15/06 6/02 at 103 Aaa 296,735
450,000 Leominster General
Obligation, 7.500%, 4/01/09 4/00 at 102 Aaa 493,551
1,625,000 Lowell General Obligation,
5.600%, 11/01/12 11/03 at 102 Aaa 1,549,503
1,025,000 Lynn General Obligation,
6.750%, 1/15/02 No Opt. Call Aaa 1,102,951
250,000 Lynn Water and Sewer
Commission,
7.250%, 12/01/10 (Pre-
refunded to 12/01/00) 12/00 at 102 Aaa 279,710
1,000,000 Mansfield General Obligation,
6.700%, 1/15/11 1/02 at 102 Aaa 1,056,010
250,000 Methuen General Obligation,
7.400%, 5/15/04 5/00 at 102 Aaa 276,698
500,000 Monson General Obligation
School Project, 7.700%,
10/15/10 (Pre-refunded to
10/15/00) 10/00 at 102 Aaa 568,570
1,500,000 Monson General Obligation,
5.500%, 10/15/10 No Opt. Call Aaa 1,454,040
300,000 North Andover General
Obligation,
7.400%, 9/15/10 9/00 at 103 Aaa 328,281
North Middlesex Regional
School District, General
Obligation:
270,000 7.200%, 6/15/08 6/00 at 103 Aaa 294,146
245,000 7.200%, 6/15/09 6/00 at 103 Aaa 266,438
250,000 Northampton General
Obligation,
5.300%, 3/01/10 3/03 at 102 Aaa 237,103
190,000 Northfield General
Obligation, 6.350%, 10/15/09 10/01 at 102 Aaa 197,423
Palmer General Obligation:
270,000 7.300%, 3/01/10 (Pre-refunded
to 3/01/00) 3/00 at 102 Aaa 299,840
250,000 7.700%, 10/01/10 (Pre-
refunded to 10/01/00) 10/00 at 102 Aaa 284,378
1,000,000 5.500%, 10/01/10 10/03 at 102 Aaa 966,440
440,000 Quaboag Regional School
District, General
Obligation, 6.250%, 6/15/08 6/02 at 102 Aaa 457,552
Salem General Obligation:
500,000 6.800%, 8/15/09 8/01 at 102 Aaa 534,430
900,000 6.000%, 7/15/10 7/02 at 102 Aaa 906,984
</TABLE>
31
<PAGE>
PORTFOLIO OF INVESTMENTS
NUVEEN MASSACHUSETTS INSURED TAX-FREE VALUE FUND--CONTINUED
<TABLE>
<CAPTION>
PRINCIPAL OPT. CALL MARKET
AMOUNT DESCRIPTION PROVISIONS* RATINGS** VALUE
- -------------------------------------------------------------------------------
<C> <S> <C> <C> <C>
$ 250,000 Sandwich General
Obligation,
7.100%, 11/01/07 (Pre-
refunded to 11/01/98) 11/98 at 102 1/2 Aaa $ 273,500
Southern Berkshire
Regional School
District, General
Obligation:
515,000 7.500%, 4/15/07 (Pre-
refunded to 4/15/02) 4/02 at 102 Aaa 587,275
1,145,000 7.000%, 4/15/11 4/02 at 102 Aaa 1,235,249
250,000 Springfield General
Obligation, 7.000%,
11/01/07 11/98 at 103 Aaa 270,360
220,000 Taunton General
Obligation, 6.800%,
9/01/09 9/01 at 103 Aaa 236,581
455,000 Wareham School Project,
General Obligation,
7.050%, 1/15/07 1/01 at 103 Aaa 494,853
250,000 Westfield General
Obligation,
7.100%, 12/15/08 (Pre-
refunded to 12/15/00) 12/00 at 102 Aaa 277,995
215,000 Whately General
Obligation, 6.350%,
1/15/09 1/02 at 102 Aaa 225,264
1,210,000 Winchendon General
Obligation, 6.050%,
3/15/10 3/03 at 102 Aaa 1,228,136
160,000 Worcester General
Obligation, 6.900%,
5/15/07 5/02 at 102 Aaa 174,332
- -------------------------------------------------------------------------------
$54,445,000 Total Investments - (Cost
$54,505,119) - 95.5% 56,772,909
- -------------------------------------------------------------------------------
- -------------------
-----------
TEMPORARY INVESTMENTS IN
SHORT-TERM MUNICIPAL
SECURITIES - 2.9%
$ 1,400,000 Massachusetts Dedicated
Income Tax, Variable
Rate Demand Bonds,
3.650%, 12/01/97+ VMIG-1 1,400,000
300,000 Massachusetts Dedicated
Income Tax, Series
1990E, Variable Rate
Demand Bonds,
3.650%, 12/01/97+ VMIG-1 300,000
- -------------------------------------------------------------------------------
$ 1,700,000 Total Temporary
Investments - 2.9% 1,700,000
- -------------------------------------------------------------------------------
- -------------------
Other Assets Less
Liabilities - 1.6% 958,167
- -------------------------------------------------------------------------------
Net Assets - 100% $59,431,076
</TABLE>
- --------------------------------------------------------------------------------
32
<PAGE>
NUVEEN TAX-FREE VALUE FUNDS ANNUAL REPORT
FEBRUARY 28, 1995
<TABLE>
<CAPTION>
NUMBER MARKET MARKET
STANDARD & POOR'S MOODY'S OF ISSUES VALUE PERCENT
- ----------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
SUMMARY OF AAA Aaa 77 $54,409,664 96%
RATINGS** AA+, AA, AA- Aa1, Aa, Aa2, Aa3 3 1,807,395 3
PORTFOLIO OF A+ A1 1 555,850 1
INVESTMENTS
(EXCLUDING
TEMPORARY
INVESTMENTS):
- ----------------------------------------------------------------------------------
TOTAL 81 $56,772,909 100%
</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 to 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.
+ 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.
33
<PAGE>
PORTFOLIO OF INVESTMENTS
NUVEEN NEW YORK TAX-FREE VALUE FUND
<TABLE>
<CAPTION>
PRINCIPAL OPT. CALL
AMOUNT DESCRIPTION PROVISIONS* RATINGS** MARKET VALUE
- -------------------------------------------------------------------------------
<C> <S> <C> <C> <C>
$ 1,900,000 New York State Local
Government Assistance
Corporation,
6.250%, 4/01/21 4/02 at 102 A $ 1,901,159
500,000 New York State
(Commissioner of Office of
Mental Health),
Certificates of
Participation,
8.300%, 9/01/12 9/97 at 102 Baa1 529,870
200,000 New York State Housing
Finance Agency, State
University Construction,
8.000%, 5/01/11 No Opt. Call Aaa 241,484
1,650,000 New York State Housing
Finance Agency, Insured
Multi-Family Mortgage,
6.950%, 8/15/12 8/02 at 102 AA 1,737,533
2,000,000 New York State Housing
Finance Agency, Health
Facilities (New York
City), 8.000%, 11/01/08 11/00 at 102 BBB+ 2,212,220
New York State Housing
Finance Agency, Service
Contract Obligation:
2,500,000 6.125%, 3/15/20 9/03 at 102 Baa1 2,411,625
1,650,000 5.500%, 9/15/22 9/03 at 102 Baa1 1,441,556
1,000,000 New York State Medical Care
Facilities Finance Agency,
Hospital and Nursing Home,
Insured Mortgage (St.
Vincent's Hospital),
8.000%, 2/15/27 (Pre-
refunded to 8/15/97) 8/97 at 102 Aaa 1,091,530
995,000 New York State Medical Care
Facilities Finance Agency,
Hospital and Nursing Home,
Insured Mortgage (Albany
Medical Center),
8.000%, 2/15/28 8/98 at 102 AAA 1,093,077
1,000,000 New York State Medical Care
Facilities Finance Agency,
Hospital and Nursing Home
(FHA-Insured),
7.350%, 2/15/29 8/99 at 102 AA 1,080,070
1,000,000 New York State Medical Care
Facilities Finance Agency,
Hospital and Nursing Home,
FHA-Insured (Buffalo
General Hospital),
7.700%, 2/15/22 (Pre-
refunded to 8/15/98) 8/98 at 102 AAA 1,107,800
1,250,000 New York State Medical Care
Facilities Finance Agency,
Hospital and Nursing Home,
FHA-Insured (Catholic
Medical Center),
8.300%, 2/15/22 (Pre-
refunded to 2/15/98) 2/98 at 102 AAA 1,390,113
2,250,000 New York State Medical Care
Facilities Finance Agency
(Columbia-Presbyterian),
8.000%, 2/15/25 (Pre-
refunded to 8/15/97) 8/97 at 102 Aaa 2,461,455
2,000,000 New York State Medical Care
Facilities Finance Agency,
Hospital and Nursing Home
(FHA-Insured),
6.200%, 8/15/22 8/02 at 102 AAA 1,994,700
New York State Medical Care
Facilities Finance Agency,
Hospital and Nursing Home,
FHA-Insured (Mt. Sinai
Hospital):
3,780,000 6.250%, 8/15/12 8/02 at 102 AAA 3,831,030
2,295,000 5.750%, 8/15/19 8/02 at 102 AAA 2,179,562
</TABLE>
34
<PAGE>
NUVEEN TAX-FREE VALUE FUNDS ANNUAL REPORT
FEBRUARY 28, 1995
<TABLE>
<CAPTION>
PRINCIPAL OPT. CALL
AMOUNT DESCRIPTION PROVISIONS* RATINGS** MARKET VALUE
- -------------------------------------------------------------------------------
<C> <S> <C> <C> <C>
$ 1,570,000 New York State Medical Care
Facilities Finance Agency,
Hospital and Nursing Home,
FHA-Insured (Bayley
Seton/St. Joseph's
Hospital), 6.450%, 2/15/09 2/03 at 102 AAA $ 1,624,730
New York State Medical Care
Facilities Finance Agency
(Mental Health Services):
680,000 7.875%, 8/15/15 (Pre-
refunded to 8/15/98) 8/98 at 102 AAA 756,364
320,000 7.875%, 8/15/15 8/98 at 102 Baa1 342,058
1,460,000 7.500%, 2/15/21 (Pre-
refunded to 2/15/01) 2/01 at 102 Aaa 1,648,544
1,795,000 5.250%, 8/15/23 8/03 at 102 Baa1 1,501,607
1,500,000 6.500%, 8/15/24 8/04 at 102 Baa1 1,507,155
500,000 New York State Medical Care
Facilities Finance Agency
(Central Suffolk
Hospital),
6.125%, 11/01/16 11/03 at 102 BBB 437,445
3,000,000 New York State Medical Care
Facilities Finance Agency,
Hospital Insured Mortgage,
5.500%, 8/15/24 2/04 at 102 AAA 2,687,550
2,500,000 New York State Medical Care
Facilities Finance Agency,
Hospital and Nursing Home,
FHA-Insured (St. Vincent's
Medical Center), 6.200%,
2/15/21 2/04 at 102 AAA 2,493,500
New York State Medical Care
Facilities Finance Agency
(Hospital and Nursing
Home):
2,500,000 6.400%, 8/15/14 8/04 at 102 AAA 2,586,150
955,000 6.000%, 8/15/14 8/04 at 102 AAA 951,715
New York State Medical Care
Facilities Finance Agency,
New York Hospital, FHA-
Insured:
1,000,000 6.750%, 8/15/14 2/05 at 102 Aaa 1,057,210
1,000,000 6.800%, 8/15/24 2/05 at 102 Aaa 1,056,180
380,000 New York State Mortgage
Agency,
8.100%, 10/01/17 4/98 at 102 Aa 404,742
3,000,000 New York State Thruway
Authority,
6.000%, 1/01/25 1/05 at 102 Aaa 2,974,980
300,000 New York State Urban
Development Corporation
(Center for Industrial
Innovation),
7.000%, 1/01/13 1/96 at 102 Baa1 305,349
1,000,000 New York State Urban
Development Corporation,
6.750%, 1/01/26 1/02 at 102 Aaa 1,046,580
1,100,000 New York State Urban
Development Corporation
(Syracuse University
Center for Science and
Technology), 7.875%,
1/01/17 1/98 at 102 Baa1 1,164,504
New York State Urban
Development Corporation,
Correctional Capital
Facilities:
1,250,000 5.500%, 1/01/15 1/03 at 102 Baa1 1,114,175
2,500,000 5.500%, 1/01/16 1/04 at 102 Baa1 2,232,225
1,000,000 7.500%, 1/01/20 (Pre-
refunded to 1/01/00) 1/00 at 102 Aaa 1,118,760
</TABLE>
35
<PAGE>
PORTFOLIO OF INVESTMENTS
NUVEEN NEW YORK TAX-FREE VALUE FUND--CONTINUED
<TABLE>
<CAPTION>
PRINCIPAL OPT. CALL
AMOUNT DESCRIPTION PROVISIONS* RATINGS** MARKET VALUE
- -------------------------------------------------------------------------------
<C> <S> <C> <C> <C>
$ 2,000,000 New York State Urban
Development Corporation
(Clarkson Center for
Advanced Materials
Processing), 7.800%,
1/01/20 1/01 at 102 Baa1 $ 2,172,320
2,900,000 New York State Urban
Development
Corporation, State
Facilities, 7.500%
4/01/20 4/01 at 102 Baa1 3,105,697
1,000,000 New York State Urban
Development Corporation
(Cornell Center for
Theory and Simulation),
6.000%, 1/01/14 1/03 at 102 BBB 958,570
2,100,000 Babylon Industrial
Development Agency,
Resource Recovery,
8.500%, 1/01/19 7/98 at 103 Baa1 2,276,904
1,000,000 Batavia Housing
Authority, FHA-Insured
(Washington Towers),
6.500%, 1/01/23 7/01 at 102 Aaa 988,400
5,925,000 Battery Park City
Authority, Junior
Revenue, 5.800%,
11/01/22 11/03 at 102 A 5,359,874
1,000,000 Battery Park City
Authority,
7.700%, 5/01/15 (Pre-
refunded to 5/01/99) 5/99 at 102 Aaa 1,116,770
1,000,000 Brookhaven Industrial
Development Agency,
Civic Facility (Dowling
College/National
Aviation Center),
6.750%, 3/01/23 3/03 at 102 BBB 986,380
375,000 Buffalo General
Obligation,
8.100%, 2/01/14 (Pre-
refunded to 2/01/96) 2/96 at 101 N/R 390,675
500,000 Dormitory Authority of
the State of New York
(Long Island Jewish
Medical Center), FHA-
Insured, 7.750%,
8/15/27 2/98 at 102 AAA 537,315
Dormitory Authority of
the State of New York
(City University):
1,500,000 5.750%, 7/01/07 No Opt. Call Baa1 1,447,230
750,000 7.500%, 7/01/10 No Opt. Call Baa1 840,758
500,000 8.200%, 7/01/13 7/98 at 102 Baa1 555,465
1,000,000 7.625%, 7/01/20 (Pre-
refunded to 7/01/00) 7/00 at 102 Aaa 1,135,980
750,000 Dormitory Authority of
the State of New York,
GNMA (Park Ridge
Housing, Inc.),
7.850%, 2/01/29 2/99 at 102 AAA 811,088
1,985,000 Dormitory Authority of
the State of New York
(United Health
Services), 7.350%,
8/01/29 2/00 at 102 Aaa 2,115,950
2,250,000 Dormitory Authority of
the State of New York,
Judicial Facilities
Lease (Suffolk County),
9.500%, 4/15/14 4/95 at 116 1/2 Baa1 2,625,930
Dormitory Authority of
the State of New York
(State University):
2,000,000 7.400%, 5/15/01 5/00 at 102 Baa1 2,165,700
1,125,000 5.250%, 5/15/09 No Opt. Call Baa1 1,016,989
2,000,000 5.500%, 5/15/13 No Opt. Call Baa1 1,823,840
2,000,000 6.375%, 5/15/14 5/03 at 102 Baa1 1,998,640
</TABLE>
36
<PAGE>
NUVEEN TAX-FREE VALUE FUNDS ANNUAL REPORT
FEBRUARY 28, 1995
<TABLE>
<CAPTION>
PRINCIPAL OPT. CALL
AMOUNT DESCRIPTION PROVISIONS* RATINGS** MARKET VALUE
- ------------------------------------------------------------------------------
<C> <S> <C> <C> <C>
$ 1,375,000 Dormitory Authority of
the State of New York
(University of
Rochester, Strong
Memorial Hospital),
5.500%, 7/01/21 7/04 at 102 A1 $ 1,187,120
Dormitory Authority of
the State of New York,
Court Facilities:
1,000,000 5.375%, 5/15/16 5/03 at 101 1/2 Baa1 874,490
5,960,000 5.700%, 5/15/22 5/03 at 101 1/2 Baa1 5,382,416
2,470,000 Dutchess County
Industrial Development
Authority, Civic
Facilities (Bard
College), 7.000%,
11/01/17 11/03 at 102 A 2,519,869
1,000,000 Franklin County
Industrial Development
Agency (County
Correctional
Facility), 6.750%,
11/01/12 11/02 at 102 BBB 1,017,620
800,000 Hempstead Industrial
Development Authority,
Civic Facility (United
Cerebral Palsy
Association of Nassau
County), 7.500%,
10/01/09 10/99 at 102 Aa2 834,008
Metropolitan
Transportation
Authority, Commuter
Facilities:
2,000,000 5.625%, 7/01/16 7/03 at 102 Baa1 1,786,620
1,000,000 6.250%, 7/01/17 7/02 at 102 Aaa 1,014,720
1,000,000 Metropolitan
Transportation
Authority, Commuter
Facilities Service
Contract,
7.500%, 7/01/16 (Pre-
refunded to 7/01/00) 7/00 at 102 Aaa 1,130,190
Metropolitan
Transportation
Authority, Transit
Facilities:
1,025,000 6.500%, 7/01/18 7/02 at 102 Aaa 1,059,655
3,095,000 4.750%, 7/01/19 7/03 at 100 Baa1 2,405,774
Monroe County Water
Authority, Water
System:
510,000 5.250%, 8/01/13 8/03 at 101 AA 466,609
1,900,000 5.250%, 8/01/16 8/03 at 101 AA 1,708,214
1,055,000 6.000%, 8/01/17 8/02 at 102 AA 1,019,647
New York City General
Obligation:
2,500,000 7.000%, 8/01/04 No Opt. Call A- 2,608,750
2,000,000 7.500%, 2/01/06 2/02 at 101 1/2 A- 2,125,760
45,000 6.625%, 8/01/13 8/02 at 101 1/2 Aaa 47,231
2,000,000 7.000%, 2/01/21 2/02 at 101 1/2 Aaa 2,124,740
2,500,000 New York City
Educational
Construction Fund,
5.625%, 4/01/13 4/04 at 101 1/2 Aaa 2,397,200
New York City Housing
Development
Corporation, Multi-
Family Mortgage (FHA-
Insured):
2,000,000 6.550%, 10/01/15 4/03 at 102 AAA 2,030,800
2,500,000 5.850%, 5/01/26 5/03 at 102 AA 2,318,200
1,000,000 New York City Housing
Development
Corporation, Multi-
Unit Mortgage (FHA-
Insured),
7.350%, 6/01/19 6/01 at 102 AAA 1,061,380
</TABLE>
37
<PAGE>
PORTFOLIO OF INVESTMENTS
NUVEEN NEW YORK TAX-FREE VALUE FUND--CONTINUED
<TABLE>
<CAPTION>
PRINCIPAL OPT. CALL
AMOUNT DESCRIPTION PROVISIONS* RATINGS** MARKET VALUE
- -------------------------------------------------------------------------------
<C> <S> <C> <C> <C>
New York City Municipal
Water Finance
Authority, Water and
Sewer System:
$ 500,000 7.375%, 6/15/09 (Pre-
refunded to 6/15/99) 6/99 at 101 1/2 AAA $ 551,830
1,000,000 5.375%, 6/15/19 6/04 at 101 Aaa 913,360
290,000 7.750%, 6/15/20 (Pre-
refunded to 6/15/00) 6/00 at 100 Aaa 301,818
1,500,000 6.600%, 6/15/20 (Pre-
refunded to 6/15/01) 6/01 at 101 1/2 Aaa 1,730,655
210,000 6.000%, 6/15/20 6/00 at 100 Aaa 205,960
1,000,000 New York City Industrial
Development Agency,
Civic Facility, The
American Society for
Prevention of Cruelty
to Animals,
7.700%, 10/15/19 10/99 at 102 Aa3 1,039,720
3,500,000 New York City Industrial
Development Agency,
Civic Facility (The
Lighthouse Project),
6.500%, 7/01/22 7/02 at 102 Aa2 3,499,580
2,440,000 Newark-Wayne Community
Hospital,
7.600%, 9/01/15 9/03 at 102 N/R 2,494,827
Newburgh General
Obligation:
435,000 5.875%, 6/15/10 6/02 at 102 A1 431,707
435,000 5.875%, 6/15/11 6/02 at 102 A1 430,237
1,000,000 Orangetown Housing
Authority, Housing
Facilities (Orangetown
Guaranty),
7.600%, 4/01/30 (Pre-
refunded to 10/01/00) 10/00 at 102 A 1,138,990
South Orangetown Central
School District,
General Obligation:
390,000 6.875%, 10/01/08 No Opt. Call A 430,186
390,000 6.875%, 10/01/09 No Opt. Call A 428,843
3,015,000 Suffolk County
Industrial Development
Agency (Dowling College
Civic Facility),
6.625%, 6/01/24 6/04 at 102 BBB 3,039,571
1,000,000 34th Street Partnership
Business Improvement
District, Capital
Improvement, 5.500%,
1/01/23 1/03 at 102 A1 878,930
Triborough Bridge and
Tunnel Authority:
2,000,000 7.100%, 1/01/10 1/01 at 102 A1 2,122,960
2,000,000 7.100%, 1/01/10 1/01 at 102 Aaa 2,176,480
1,800,000 UFA Development
Corporation, FHA-
Insured (Loretto-Utica
Project), 5.950%,
7/01/35 7/04 at 102 Aa 1,607,885
2,000,000 Westchester County
Industrial Development
Agency, Civic Facility
(Jewish Board of Family
and Children's
Services), 6.750%,
12/15/12 12/02 at 102 BBB- 1,997,660
- -------------------------------------------------------------------------------
$152,580,000 Total Investments -
(cost $149,284,352) -
100.0% $152,688,994
- -------------------------------------------------------------------------------
</TABLE>
38
<PAGE>
NUVEEN TAX-FREE VALUE FUNDS ANNUAL REPORT
FEBRUARY 28, 1995
<TABLE>
<CAPTION>
PRINCIPAL OPT. CALL
AMOUNT DESCRIPTION PROVISIONS* RATINGS** MARKET VALUE
- ------------------------------------------------------------------------------
<C> <S> <C> <C> <C>
TEMPORARY INVESTMENTS IN
SHORT-TERM MUNICIPAL
SECURITIES - 0.8%
$ 500,000 New York City General
Obligation, Variable Rate
Demand Bonds, 3.600%,
8/01/21+ VMIG-1 $ 500,000
700,000 Dormitory Authority of the
State of New York
(St. Francis Center at
the Knolls, Inc.),
Variable Rate Demand
Bonds, 3.600%, 7/01/23+ VMIG-1 700,000
- ------------------------------------------------------------------------------
$ 1,200,000 Total Temporary
Investments - 0.8% 1,200,000
- ------------------------------------------------------------------------------
- -------------------
Other Assets Less
Liabilities - (0.8%) (1,160,315)
- ------------------------------------------------------------------------------
Net Assets - 100% $152,728,679
</TABLE>
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
NUMBER OF
STANDARD & POOR'S MOODY'S ISSUES MARKET VALUE PERCENT
- ---------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
SUMMARY OF AAA Aaa 41 $ 58,844,536 39%
RATINGS** AA+, AA, AA- Aa1, Aa, Aa2, Aa3 11 15,716,208 10
PORTFOLIO OF A+ A1 5 5,050,954 3
INVESTMENTS A, A- A, A2, A3 8 16,513,431 11
(EXCLUDING BBB+, BBB, BBB- Baa1, Baa, Baa2, Baa3 32 53,678,363 35
TEMPORARY Non-rated Non-rated 2 2,885,502 2
INVESTMENTS):
- ---------------------------------------------------------------------------------------
TOTAL 99 $152,688,994 100%
</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.
39
<PAGE>
PORTFOLIO OF INVESTMENTS
NUVEEN NEW YORK INSURED TAX-FREE VALUE FUND
<TABLE>
<CAPTION>
PRINCIPAL OPT. CALL
AMOUNT DESCRIPTION PROVISIONS* RATINGS** MARKET VALUE
- -------------------------------------------------------------------------------
<C> <S> <C> <C> <C>
$ 2,500,000 New York State Energy
Research and Development
Authority, Pollution
Control (Central Hudson
Gas and Electric
Corporation), 7.375%,
10/01/14 10/99 at 103 Aaa $ 2,715,275
5,500,000 New York State Energy
Research and Development
Authority, Electric
Facilities (Consolidated
Edison Company), 5.250%,
8/15/20 10/03 at 102 Aaa 4,912,380
1,450,000 New York State
Environmental Facilities
Corporation, Water
Pollution Control, Pooled
Loan, 7.200%, 3/15/11 6/00 at 102 Aaa 1,559,388
2,220,000 New York State Housing
Finance Agency,
Multi-Family Housing,
7.450%, 11/01/28 11/99 at 102 Aaa 2,343,499
995,000 New York State Medical Care
Facilities Finance Agency,
Hospital and Nursing Home,
Insured Mortgage (Albany
Medical Center),
8.000%, 2/15/28 8/98 at 102 AAA 1,093,077
895,000 New York State Medical Care
Facilities Finance Agency
(St. Francis Hospital),
7.625%, 11/01/21 11/98 at 102 Aaa 973,313
4,765,000 New York State Medical Care
Facilities Finance Agency,
Secured Hospital (Bronx
Lebanon), 7.100%, 2/15/27 2/97 at 102 Aaa 4,960,699
2,000,000 New York State Medical Care
Facilities Finance Agency,
Hospital and Nursing Home,
FHA-Insured, 7.350%,
2/15/29 8/99 at 102 AA 2,160,140
1,500,000 New York State Medical Care
Facilities Finance Agency,
Hospital and Nursing Home,
FHA-Insured (Catholic
Medical Center),
8.300%, 2/15/22 (Pre-
refunded to 2/15/98) 2/98 at 102 AAA 1,668,135
New York State Medical Care
Facilities Finance Agency,
FHA-Insured (Montefiore
Medical Center)
1,500,000 7.250%, 2/15/24 2/99 at 102 AA 1,579,725
2,000,000 7.250%, 2/15/24 2/99 at 102 Aaa 2,141,280
6,600,000 New York State Medical Care
Facilities Finance Agency
(St. Luke's-Roosevelt
Hospital Center), 7.450%,
2/15/29 (Pre-refunded to
2/15/00) 2/00 at 102 Aaa 7,365,996
3,200,000 New York State Medical Care
Facilities Finance Agency,
Mortgage Project (North
Shore University
Hospital), 7.200%,
11/01/20 11/00 at 102 Aaa 3,427,776
1,670,000 New York State Medical Care
Facilities Finance Agency
(Our Lady of Victory),
6.625%, 11/01/16 11/01 at 102 Aaa 1,728,183
New York State Medical Care
Facilities Finance Agency
(Sisters of Charity of
Buffalo):
500,000 6.600%, 11/01/10 11/01 at 102 Aaa 525,175
1,550,000 6.625%, 11/01/18 11/01 at 102 Aaa 1,599,802
1,000,000 New York State Medical Care
Facilities Finance Agency
(Aurelia Osborn Fox
Memorial Hospital),
6.500%, 11/01/19 11/01 at 102 Aaa 1,021,120
</TABLE>
40
<PAGE>
NUVEEN TAX-FREE VALUE FUNDS ANNUAL REPORT
FEBRUARY 28, 1995
<TABLE>
<CAPTION>
PRINCIPAL OPT. CALL
AMOUNT DESCRIPTION PROVISIONS* RATINGS** MARKET VALUE
- -------------------------------------------------------------------------------
<C> <S> <C> <C> <C>
$ 3,000,000 New York State Medical Care
Facilities Finance Agency
(South Nassau Communities
Hospital), 6.125%,
11/01/11 11/02 at 102 Aaa $ 3,037,890
New York State Medical Care
Facilities Finance Agency,
Mental Health Services,
Facilities Improvement
Revenue:
1,500,000 5.750%, 2/15/14 8/03 at 102 Aaa 1,444,680
3,250,000 5.700%, 8/15/14 2/03 at 102 Aaa 3,127,995
6,150,000 6.375%, 8/15/17 12/02 at 102 Aaa 6,265,251
2,890,000 6.250%, 8/15/18 2/02 at 102 Aaa 2,909,594
1,100,000 5.500%, 8/15/21 2/02 at 100 Aaa 1,019,249
2,500,000 New York State Medical Care
Facilities Finance Agency
(St. Mary's Hospital
Rochester Project),
6.200%, 11/01/14 11/03 at 102 Aaa 2,532,825
7,000,000 New York State Medical Care
Facilities Finance Agency,
New York Hospital, FHA-
Insured, 6.800%, 8/15/24 2/05 at 102 Aaa 7,393,260
New York State Mortgage
Agency:
225,000 8.375%, 10/01/17 1/98 at 102 Aa 238,448
390,000 8.100%, 10/01/17 4/98 at 102 Aa 415,393
3,500,000 New York State Mortgage
Agency, Homeowner
Mortgage, 5.650%, 4/01/15 10/03 at 102 Aaa 3,257,555
New York State Thruway
Authority:
7,300,000 5.750%, 1/01/19 1/02 at 102 Aaa 7,006,905
3,950,000 5.500%, 1/01/23 1/02 at 100 Aaa 3,643,915
5,000,000 6.000%, 1/01/25 1/05 at 102 Aaa 4,958,300
New York State Urban
Development Corporation:
3,850,000 6.700%, 1/01/12 1/02 at 102 Aaa 4,056,707
9,650,000 6.750%, 1/01/26 1/02 at 102 Aaa 10,099,497
New York State Urban
Development Corporation,
Correctional Facilities:
1,500,000 7.250%, 1/01/14 (Pre-
refunded to 1/01/00) 1/00 at 102 Aaa 1,665,645
3,000,000 5.250%, 1/01/14 No Opt. Call Aaa 2,757,360
575,000 7.000%, 1/01/17 (Pre-
refunded to 1/01/00) 1/00 at 102 Aaa 632,126
9,200,000 5.250%, 1/01/18 1/03 at 102 Aaa 8,262,980
2,000,000 7.500%, 1/01/20 (Pre-
refunded to 1/01/00) 1/00 at 102 Aaa 2,237,520
2,000,000 New York State Power
Authority, General
Purpose, 6.500%, 1/01/19 1/02 at 102 Aaa 2,059,340
Albany Municipal Water
Finance Authority, Water
and Sewer System:
720,000 7.500%, 12/01/17 (Pre-
refunded to 12/01/98) 12/98 at 102 Aaa 795,211
280,000 7.500%, 12/01/17 12/98 at 102 Aaa 305,410
1,000,000 Buffalo General Obligation,
6.150%, 2/01/04 1/01 at 101 Aaa 1,045,870
8,385,000 Buffalo Municipal Water
Finance Authority, Water
System, 5.750%, 7/01/19 7/03 at 102 Aaa 8,035,010
</TABLE>
41
<PAGE>
PORTFOLIO OF INVESTMENTS
NUVEEN NEW YORK INSURED TAX-FREE VALUE FUND--CONTINUED
<TABLE>
<CAPTION>
PRINCIPAL OPT. CALL
AMOUNT DESCRIPTION PROVISIONS* RATINGS** MARKET VALUE
- -------------------------------------------------------------------------------
<C> <S> <C> <C> <C>
Camden Central School
District, General
Obligation:
$ 500,000 7.100%, 6/15/07 No Opt. Call Aaa $ 574,145
600,000 7.100%, 6/15/08 No Opt. Call Aaa 689,022
600,000 7.100%, 6/15/09 No Opt. Call Aaa 688,956
275,000 7.100%, 6/15/10 No Opt. Call Aaa 315,139
1,690,000 Dormitory Authority of the
State of New York, College
and University (Pooled
Capital Program), 7.800%,
12/01/05 12/98 at 102 Aaa 1,858,611
1,490,000 Dormitory Authority of the
State of New York (United
Health Services), 7.350%,
8/01/29 2/00 at 102 AAA 1,588,295
1,490,000 Dormitory Authority of the
State of New York (Iona
College), 7.625%, 7/01/09 7/98 at 102 Aaa 1,625,441
1,000,000 Dormitory Authority of the
State of New York (United
Cerebral Palsy Association
of Westchester County),
6.200%, 7/01/12 7/02 at 102 Aaa 1,024,820
1,000,000 Dormitory Authority of the
State of New York
(Manhattanville College),
7.500%, 7/01/22 (Pre-
refunded to 7/01/00) 7/00 at 102 Aaa 1,130,190
Dormitory Authority of the
State of New York (City
University System):
2,500,000 7.000%, 7/01/14 7/00 at 102 Aaa 2,663,175
1,000,000 6.500%, 7/01/14 7/96 at 100 Aaa 1,007,780
1,800,000 5.750%, 7/01/18 No Opt. Call Aaa 1,743,696
6,295,000 7.500%, 7/01/20 (Pre-
refunded to 7/01/00) 7/00 at 102 Aaa 7,114,546
2,500,000 Dormitory Authority of the
State of New York (Cooper
Union), 7.200%, 7/01/20 7/01 at 102 Aaa 2,690,400
Dormitory Authority of the
State of New York,
Educational Facilities
(State University):
1,200,000 7.250%, 5/15/15 (Pre-
refunded to 5/15/00) 5/00 at 102 Aaa 1,339,824
2,500,000 5.250%, 5/15/15 No Opt. Call Aaa 2,292,800
1,200,000 7.000%, 5/15/18 (Pre-
refunded to 5/15/00) 5/00 at 102 Aaa 1,319,820
2,000,000 6.500%, 5/15/19 5/00 at 100 Aaa 2,126,580
1,000,000 6.000%, 5/15/22 5/03 at 102 Aaa 989,310
5,000,000 Dormitory Authority of the
State of New York (New
York University), 6.250%,
7/01/09 7/01 at 102 Aaa 5,173,350
1,000,000 Dormitory Authority of the
State of New York (Fordham
University),
7.200%, 7/01/15 (Pre-
refunded to 7/01/00) 7/00 at 102 Aaa 1,116,290
5,000,000 Dormitory Authority of the
State of New York (Mount
Sinai School of Medicine),
5.000%, 7/01/21 7/04 at 102 Aaa 4,318,200
1,000,000 Erie County Water
Authority, Water Works
System, 6.750%, 12/01/14 No Opt. Call Aaa 1,105,730
500,000 Greece Central School
District, General
Obligation, 6.000%,
6/15/09 No Opt. Call Aaa 523,465
</TABLE>
42
<PAGE>
NUVEEN TAX-FREE VALUE FUNDS ANNUAL REPORT
FEBRUARY 28, 1995
<TABLE>
<CAPTION>
PRINCIPAL OPT. CALL
AMOUNT DESCRIPTION PROVISIONS* RATINGS** MARKET VALUE
- -------------------------------------------------------------------------------
<C> <S> <C> <C> <C>
Half Moon General
Obligation:
$ 385,000 6.500%, 6/01/09 No Opt. Call Aaa $ 419,869
395,000 6.500%, 6/01/10 No Opt. Call Aaa 428,982
395,000 6.500%, 6/01/11 No Opt. Call Aaa 429,037
600,000 Jamesville-Dewitt
Central School
District,
General Obligation,
5.750%, 6/15/04 No Opt. Call Aaa 620,454
1,425,000 Metropolitan
Transportation
Authority,
Commuter Facilities,
5.500%, 7/01/17 7/02 at 100 Aaa 1,334,498
1,000,000 Metropolitan
Transportation
Authority, Transit
Facilities Service
Contract, 7.500%,
7/01/17 7/98 at 102 Aaa 1,081,970
Metropolitan
Transportation
Authority, Transit
Facilities:
2,000,000 6.000%, 7/01/16 7/02 at 101 1/2 Aaa 1,999,800
10,340,000 6.500%, 7/01/18 7/02 at 102 Aaa 10,689,595
Middle Country Central
School District at
Centereach (Town of
Brookhaven), General
Obligation:
475,000 6.900%, 12/15/07 No Opt. Call Aaa 537,814
475,000 6.900%, 12/15/08 No Opt. Call Aaa 536,194
Monroe County General
Obligation:
375,000 6.500%, 6/01/15 6/01 at 102 Aaa 392,603
375,000 6.500%, 6/01/16 6/01 at 102 Aaa 392,201
350,000 6.500%, 6/01/17 6/01 at 102 Aaa 365,306
3,725,000 Montgomery, Otsego,
Schoharie County Solid
Waste Management
Authority,
Solid Waste System,
7.250%, 1/01/14 (Pre-
refunded to 1/01/00) 1/00 at 103 Aaa 4,147,713
Mount Sinai Union Free
School District,
General Obligation:
1,000,000 7.250%, 2/15/15 (Pre-
refunded to 2/15/00) 2/00 at 102 Aaa 1,106,460
500,000 6.200%, 2/15/15 No Opt. Call Aaa 525,275
1,035,000 6.200%, 2/15/16 No Opt. Call Aaa 1,091,283
1,000,000 7.250%, 2/15/17 (Pre-
refunded to 2/15/00) 2/00 at 102 Aaa 1,106,460
1,500,000 Nassau County General
Obligation,
5.700%, 8/01/13 8/04 at 103 Aaa 1,469,775
4,840,000 Nassau County Industrial
Development Agency,
Civic Facilities
(Hofstra University
Project), 6.750%,
8/01/11 8/01 at 102 Aaa 5,109,733
1,020,000 New Rochelle General
Obligation,
6.200%, 8/15/22 8/04 at 102 Aaa 1,042,644
</TABLE>
43
<PAGE>
PORTFOLIO OF INVESTMENTS
NUVEEN NEW YORK INSURED TAX-FREE VALUE FUND--CONTINUED
<TABLE>
<CAPTION>
PRINCIPAL OPT. CALL
AMOUNT DESCRIPTION PROVISIONS* RATINGS** MARKET VALUE
- --------------------------------------------------------------------------------
<C> <S> <C> <C> <C>
New York City General
Obligation:
$ 500,000 8.250%, 11/01/02 11/97 at 101 1/2 Aaa $ 546,600
4,000,000 6.250%, 8/01/10 (Pre-
refunded to 8/01/02) 8/02 at 101 1/2 Aaa 4,294,200
1,000,000 6.250%, 8/01/10 8/02 at 101 1/2 Aaa 1,030,800
3,520,000 5.750%, 5/15/12 5/03 at 101 1/2 Aaa 3,396,694
75,000 6.625%, 8/01/12 8/02 at 101 1/2 Aaa 78,662
2,600,000 6.000%, 8/01/12 8/02 at 101 1/2 Aaa 2,618,434
1,300,000 7.000%, 10/01/15 No Opt. Call Aaa 1,347,190
2,000,000 7.000%, 10/01/16 No Opt. Call Aaa 2,131,800
1,025,000 7.000%, 10/01/17 No Opt. Call Aaa 1,062,208
310,000 7.000%, 10/01/18 No Opt. Call Aaa 321,504
1,000,000 5.375%, 10/01/20 10/03 at 101 1/2 Aaa 898,290
1,000,000 5.375%, 10/01/21 10/03 at 101 1/2 Aaa 896,690
1,000,000 New York City
Educational
Construction Fund,
5.625%, 4/01/13 4/04 at 101 1/2 Aaa 958,880
11,980,000 New York City Health and
Hospitals Corporation,
5.750%, 2/15/22 2/03 at 102 Aaa 11,382,797
5,000,000 New York City Housing
Development
Corporation, Pass-
Through Certificates,
Multi-Family Housing,
6.500%, 2/20/19 7/97 at 105 Aaa 5,779,050
New York City Municipal
Water Finance
Authority, Water and
Sewer System:
1,000,000 7.250%, 6/15/15 (Pre-
refunded to 6/15/00) 6/00 at 101 1/2 Aaa 1,114,030
3,250,000 6.750%, 6/15/16 6/01 at 101 Aaa 3,412,930
9,265,000 5.750%, 6/15/18 6/02 at 101 1/2 Aaa 8,908,020
1,525,000 5.375%, 6/15/19 6/04 at 101 Aaa 1,392,874
585,000 6.000%, 6/15/20 (Pre-
refunded to 6/15/00) 6/00 at 100 Aaa 608,839
415,000 6.000%, 6/15/20 6/00 at 100 Aaa 407,015
New York City Transit
Authority, Transit
Facilities (Livingston
Plaza Project):
1,000,000 7.500%, 1/01/20 (Pre-
refunded to 1/01/00) 1/00 at 102 Aaa 1,123,360
12,225,000 5.250%, 1/01/20 1/03 at 100 Aaa 10,761,668
1,500,000 6.000%, 1/01/21 1/00 at 100 Aaa 1,470,900
2,200,000 New York City Trust for
Cultural Resources
(American Museum of
Natural History),
6.900%, 4/01/21 (Pre-
refunded to 4/01/01) 4/01 at 102 Aaa 2,441,032
1,000,000 New York City Industrial
Development Agency,
Civic Facility (USTA
National Tennis Center
Incorporated Project),
6.375%, 11/15/14 11/04 at 102 Aaa 1,025,180
1,590,000 Niagara Falls General
Obligation, 6.900%,
3/01/21 3/04 at 102 Aaa 1,700,108
5,725,000 Niagara Falls Bridge
Commission,
Toll Bridge System,
6.125%, 10/01/19 (Pre-
refunded to 10/01/02) 10/02 at 102 Aaa 6,138,345
</TABLE>
44
<PAGE>
NUVEEN TAX-FREE VALUE FUNDS ANNUAL REPORT
FEBRUARY 28, 1995
<TABLE>
<CAPTION>
PRINCIPAL OPT. CALL
AMOUNT DESCRIPTION PROVISIONS* RATINGS** MARKET VALUE
- -------------------------------------------------------------------------------
<C> <S> <C> <C> <C>
North Hempstead General
Obligation:
$ 1,500,000 6.375%, 4/01/09 No Opt. Call Aaa $ 1,601,580
425,000 6.800%, 6/01/10 (Pre-
refunded to 6/01/00) 6/00 at 102 Aaa 464,228
425,000 6.800%, 6/01/11 (Pre-
refunded to 6/01/00) 6/00 at 102 Aaa 464,228
1,505,000 6.400%, 4/01/14 No Opt. Call Aaa 1,622,842
North Hempstead Solid Waste
Management Authority:
2,175,000 5.000%, 2/01/07 2/04 at 102 Aaa 2,046,240
2,825,000 5.000%, 2/01/12 2/04 at 102 Aaa 2,527,132
Nyack Union Free School
District:
625,000 6.500%, 4/01/12 4/02 at 102 Aaa 656,881
625,000 6.500%, 4/01/13 4/02 at 102 Aaa 655,531
625,000 6.500%, 4/01/14 4/02 at 102 Aaa 654,181
Rensselaer County General
Obligation:
960,000 6.700%, 2/15/13 No Opt. Call Aaa 1,075,123
960,000 6.700%, 2/15/14 No Opt. Call Aaa 1,071,562
960,000 6.700%, 2/15/15 No Opt. Call Aaa 1,074,778
Rondout Valley Central
School District, General
Obligation:
550,000 6.800%, 6/15/06 No Opt. Call Aaa 616,902
550,000 6.850%, 6/15/07 No Opt. Call Aaa 618,288
550,000 6.850%, 6/15/08 No Opt. Call Aaa 618,211
550,000 6.850%, 6/15/09 No Opt. Call Aaa 618,706
550,000 6.850%, 6/15/10 No Opt. Call Aaa 618,448
Suffolk County General
Obligation:
1,000,000 6.900%, 4/01/01 4/00 at 102 Aaa 1,094,060
1,895,000 5.250%, 7/15/09 7/02 at 102 Aaa 1,787,080
600,000 6.150%, 5/01/10 5/03 at 102 Aaa 616,002
1,890,000 5.300%, 7/15/10 7/02 at 102 Aaa 1,783,536
1,630,000 5.400%, 4/01/11 4/02 at 102 Aaa 1,552,461
1,860,000 5.400%, 7/15/11 7/02 at 102 Aaa 1,757,440
1,000,000 5.400%, 7/15/12 7/02 at 102 Aaa 940,850
630,000 5.400%, 4/01/14 4/02 at 102 Aaa 593,473
625,000 5.400%, 4/01/15 4/02 at 102 Aaa 576,038
560,000 5.000%, 10/15/16 10/03 at 102 Aaa 487,105
Suffolk County Water
Authority:
1,800,000 5.100%, 6/01/11 No Opt. Call Aaa 1,643,562
1,500,000 7,125%, 6/01/15 (Pre-
refunded to 6/01/99) 6/99 at 102 Aaa 1,647,480
2,565,000 5.625%, 6/01/16 6/02 at 102 Aaa 2,447,061
3,700,000 5.000%, 6/01/17 6/03 at 102 Aaa 3,256,629
</TABLE>
45
<PAGE>
PORTFOLIO OF INVESTMENTS
NUVEEN NEW YORK INSURED TAX-FREE VALUE FUND--CONTINUED
<TABLE>
<CAPTION>
PRINCIPAL OPT. CALL
AMOUNT DESCRIPTION PROVISIONS* RATINGS** MARKET VALUE
- -------------------------------------------------------------------------------
<C> <S> <C> <C> <C>
Triborough Bridge and
Tunnel Authority,
General Purpose:
$ 1,000,000 6.500%, 1/01/15 (Pre-
refunded to 1/01/99) 1/99 at 101 1/2 Aaa $ 1,066,330
2,750,000 6.500%, 1/01/19 1/02 at 101 1/2 Aaa 2,837,284
2,000,000 7.000%, 1/01/20 (Pre-
refunded to 1/01/01) 1/01 at 102 Aaa 2,221,660
1,175,000 7.000%, 1/01/21 (Pre-
refunded to 1/01/01) 1/01 at 101 1/2 Aaa 1,300,842
1,500,000 6.000%, 1/01/22 (Pre-
refunded to 1/01/01) 1/01 at 100 Aaa 1,565,414
Triborough Bridge and
Tunnel Authority,
Special Obligation:
8,650,000 6.875%, 1/01/15 1/01 at 102 Aaa 9,205,935
3,700,000 6.000%, 1/01/19 1/01 at 100 Aaa 3,701,442
1,750,000 Yonkers General
Obligation,
7.375%, 12/01/09 (Pre-
refunded to 12/01/00) 12/00 at 102 Aaa 1,970,150
- -------------------------------------------------------------------------------
$343,840,000 Total Investments -
(cost $339,542,219) -
99.0% 349,130,945
- -------------------------------------------------------------------------------
- -------------------
TEMPORARY INVESTMENTS IN
SHORT-TERM MUNICIPAL
SECURITIES - 0.4%
$ 1,400,000 New York City General
Obligation, Variable
Rate
- -------------------
Demand Bonds, 3.950%,
2/01/22+ VMIG-1 1,400,000
- -------------------------------------------------------------------------------
Other Assets Less
Liabilities - 0.6% 2,133,191
- -------------------------------------------------------------------------------
Net Assets - 100% $352,664,136
</TABLE>
- --------------------------------------------------------------------------------
46
<PAGE>
NUVEEN TAX-FREE VALUE FUNDS ANNUAL REPORT
FEBRUARY 28, 1995
<TABLE>
<CAPTION>
NUMBER MARKET
STANDARD & POOR'S MOODY'S OF ISSUES MARKET VALUE PERCENT
- -----------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
SUMMARY OF AAA Aaa 151 $344,737,239 99%
RATINGS** AA+, AA, AA- Aa1, Aa, Aa2, Aa3 4 4,393,706 1
PORTFOLIO OF
INVESTMENTS
(EXCLUDING
TEMPORARY
INVESTMENTS):
- -----------------------------------------------------------------------------------
TOTAL 155 $349,130,945 100%
</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 to 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.
+ 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.
47
<PAGE>
PORTFOLIO OF INVESTMENTS
NUVEEN OHIO TAX-FREE VALUE FUND
<TABLE>
<CAPTION>
PRINCIPAL OPT. CALL
AMOUNT DESCRIPTION PROVISIONS* RATINGS** MARKET VALUE
- ------------------------------------------------------------------------------
<C> <S> <C> <C> <C>
Ohio Air Quality
Development Authority,
Pollution Control (Ohio
Edison Company):
$ 2,000,000 7.450%, 3/01/16 3/00 at 102 Aaa $ 2,172,600
750,000 7.625%, 7/01/23 7/99 at 102 Baa3 762,848
5,650,000 5.625%, 11/15/29 11/03 at 102 Aaa 5,279,417
1,750,000 Ohio Air Quality
Development Authority,
Pollution Control
(Columbus Southern Power
Company), 6.375%,
12/01/20 12/02 at 102 Aaa 1,801,643
1,000,000 Ohio Air Quality
Development Authority,
Pollution Control (Ohio
Power Company), 7.400%,
8/01/09 8/99 at 102 Baa1 1,035,460
2,000,000 Ohio Air Quality
Development Authority,
Pollution Control
(Cleveland Electric
Illuminating Company),
8.000%, 12/01/13 6/02 at 103 Aaa 2,303,460
Ohio Building Authority
(State Correctional
Facilities):
1,000,000 7.125%, 9/01/09 9/96 at 102 A1 1,045,630
1,000,000 5.500%, 10/01/12 10/03 at 102 A1 938,830
660,000 Ohio Building Authority
(Juvenile Correctional
Building), 6.600%,
10/01/14 10/04 at 102 Aaa 699,481
1,250,000 Ohio Capital Corporation
for Housing,
Multi-Family Housing,
7.600%, 11/01/23 11/97 at 105 AAA 1,330,338
1,935,000 Ohio General Obligation,
6.000%, 8/01/10 No Opt. Call AA 1,983,917
250,000 Ohio Higher Educational
Facility Commission (Ohio
Dominican College),
8.500%, 12/01/07 12/97 at 102 N/R 281,455
400,000 Ohio Higher Educational
Facility Commission (John
Carroll University),
9.250%, 10/01/07 (Pre-
refunded to 10/01/97) 10/97 at 102 A 450,356
1,000,000 Ohio Higher Educational
Facility Commission (Ohio
Wesleyan University),
7.650%, 11/15/07 11/97 at 102 Aaa 1,078,550
1,000,000 Ohio Higher Educational
Facility Commission (Ohio
Northern University),
7.300%, 5/15/10 (Pre-
refunded to 5/15/00) 5/00 at 100 Aaa 1,098,060
1,000,000 Ohio Higher Educational
Facility Commission
(Kenyon College), 5.375%,
12/01/16 12/03 at 102 A+ 897,680
1,500,000 Ohio Higher Educational
Facility Commission
(University of Dayton),
5.800%, 12/01/19 12/04 at 102 Aaa 1,472,775
Ohio Housing Finance
Agency, Single Family
Mortgage (GNMA):
765,000 7.500%, 9/01/13 9/00 at 102 AAA 818,030
990,000 7.400%, 9/01/15 3/00 at 102 AAA 1,044,054
370,000 7.050%, 9/01/16 9/01 at 102 Aaa 388,304
2,500,000 Ohio Turnpike Commission,
5.750%, 2/15/24 2/04 at 102 AA- 2,398,000
3,000,000 Ohio Water Development
Authority (Dayton Power
and Light Company),
6.400%, 8/15/27 8/02 at 102 AA- 3,044,490
</TABLE>
48
<PAGE>
NUVEEN TAX-FREE VALUE FUNDS ANNUAL REPORT
FEBRUARY 28, 1995
<TABLE>
<CAPTION>
PRINCIPAL OPT. CALL
AMOUNT DESCRIPTION PROVISIONS* RATINGS** MARKET VALUE
- -------------------------------------------------------------------------------
<C> <S> <C> <C> <C>
$ 3,000,000 Ohio Water Development
Authority, Pollution
Control (Ohio Edison
Company),
5.950%, 5/15/29 11/03 at 102 Baa2 $ 2,561,700
155,000 Ohio IOOF Home (FHA-
Insured),
8.150%, 8/01/02 8/97 at 103 AAA 168,161
3,955,000 Akron General Obligation,
Limited Tax,
6.750%, 12/01/14 12/04 at 102 Aaa 4,250,597
1,500,000 Akron Waterworks System,
6.550%, 3/01/12 3/01 at 102 Aaa 1,568,310
500,000 Anthony Wayne Local School
District, General
Obligation, Unlimited Tax,
7.750%, 11/01/13 (Pre-
refunded to 11/01/99) 11/99 at 102 A 563,905
1,525,000 Bedford Hospital (Community
Hospital),
8.500%, 5/15/09 5/00 at 102 N/R 1,793,980
Bellefontaine Sewer System:
1,000,000 6.800%, 12/01/07 12/02 at 101 Baa1 1,048,900
1,000,000 6.900%, 12/01/11 12/02 at 101 Baa1 1,043,200
250,000 Bucyrus Sewer System,
8.500%, 12/01/12 (Pre-
refunded to 12/01/97) 12/97 at 103 N/R 280,528
1,250,000 Butler County Hospital
Facilities (Fort Hamilton-
Hughes Memorial Hospital),
7.500%, 1/01/10 1/02 at 102 BBB- 1,279,600
1,000,000 Canal Winchester Local
School District, General
Obligation, Unlimited Tax,
7.100%, 12/01/13 (Pre-
refunded to 12/01/01) 12/01 at 102 Aaa 1,122,350
1,000,000 Clermont County, Road
Improvement, Limited Tax,
7.125%, 9/01/11 (Pre-
refunded to 9/01/00) 9/00 at 102 Aaa 1,109,800
Clermont County Sewer
System:
2,000,000 7.375%, 12/01/20 (Pre-
refunded to 12/01/00) 12/00 at 102 Aaa 2,250,000
1,000,000 7.100%, 12/01/21 (Pre-
refunded to 12/01/01) 12/01 at 102 Aaa 1,118,701
2,500,000 5.200%, 12/01/21 12/03 at 102 Aaa 2,250,250
Clermont County Waterworks
System:
1,000,000 6.625%, 12/01/13 (Pre-
refunded to 12/01/01) 12/01 at 102 Aaa 1,093,760
3,000,000 5.800%, 12/01/18 12/03 at 102 Aaa 2,950,320
1,345,000 Cleveland City School
District, 7.000%, 4/15/95 No Opt. Call N/R 1,342,902
2,000,000 Cleveland City School
District, General
Obligation, Unlimited Tax,
5.875%, 12/01/11 12/02 at 102 Aaa 2,019,740
1,500,000 Cleveland Public Power
System, 7.000%, 11/15/24 11/04 at 102 Aaa 1,644,570
Cleveland Waterworks:
1,000,000 6.500%, 1/01/11 1/02 at 102 Aaa 1,048,490
1,550,000 6.250%, 1/01/15 1/02 at 102 Aaa 1,582,519
1,750,000 6.500%, 1/01/21 (Pre-
refunded to 1/01/02) 1/02 at 102 Aaa 1,898,768
1,000,000 Coldwater Exempted Village
School District, Unlimited
Tax,
7.000%, 12/01/13 (Pre-
refunded to 12/01/99) 12/99 at 102 Aaa 1,098,570
1,000,000 Columbus General
Obligation, Unlimited Tax,
6.500%, 1/01/10 1/02 at 102 Aa1 1,047,790
2,050,000 Columbus General
Obligation, 5.250%,
9/15/18 9/03 at 102 Aa1 1,827,801
</TABLE>
49
<PAGE>
PORTFOLIO OF INVESTMENTS
NUVEEN OHIO TAX-FREE VALUE FUND--CONTINUED
<TABLE>
<CAPTION>
PRINCIPAL OPT. CALL
AMOUNT DESCRIPTION PROVISIONS* RATINGS** MARKET VALUE
- --------------------------------------------------------------------------------
<C> <S> <C> <C> <C>
$ 500,000 Columbus City School
District, General
Obligation, Unlimited
Tax,
6.650%, 12/01/12 (Pre-
refunded to 12/01/02) 12/02 at 102 Aaa $ 552,125
1,500,000 Cuyahoga County, General
Obligation,
Unlimited Tax,
7.000%, 10/01/13 (Pre-
refunded to 10/01/01) 10/01 at 102 N/R 1,672,125
1,000,000 Cuyahoga County, General
Obligation,
5.250%, 10/01/13 No Opt. Call A1 889,880
1,250,000 Cuyahoga County,
Hospital Improvement
(Deaconess Hospital),
7.450%, 10/01/18 (Pre-
refunded to 10/01/00) 10/00 at 103 A1 1,417,925
2,750,000 Cuyahoga County,
Hospital Improvement
(Meridia Health
System), 7.250%,
8/15/19 8/00 at 102 A1 2,886,895
750,000 Defiance Waterworks
System, General
Obligation, Unlimited
Tax, 6.200%, 12/01/20 12/04 at 102 Aaa 767,520
1,000,000 Edgewood City School
District, General
Obligation, Unlimited
Tax, 6.850%, 12/01/15 12/01 at 102 Aaa 1,066,940
1,000,000 Fairborn General
Obligation, Limited
Tax,
7.000%, 10/01/11 10/02 at 102 Aaa 1,095,440
Franklin County Hospital
Facilities
(Ohio Presbyterian
Retirement Services):
1,350,000 8.750%, 7/01/21 7/01 at 103 N/R 1,407,375
1,500,000 6.500%, 7/01/23 7/03 at 102 N/R 1,334,190
720,000 Franklin County, FHA-
Insured (Worthington
Village Nursing Home),
7.000%, 8/01/16 8/00 at 102 N/R 722,894
2,000,000 Franklin County,
Hospital Facilities
(Riverside United
Methodist Hospital),
5.750%, 5/15/20 5/03 at 102 Aa 1,833,460
1,000,000 Franklin County (Online
Computer Library Center
Project), 7.200%,
7/15/06 7/01 at 100 N/R 1,055,970
250,000 Fremont Sewerage System,
8.100%, 12/01/07 (Pre-
refunded to 12/01/97) 12/97 at 102 A- 274,888
1,000,000 Gahanna-Jefferson School
District,
General Obligation,
Unlimited Tax,
7.125%, 12/01/14 (Pre-
refunded to 12/01/00) 12/00 at 102 A1 1,111,620
3,000,000 Garfield Heights
Hospital (Marymount
Hospital), 6.650%,
11/15/11 11/02 at 102 A 3,066,300
250,000 Grandview Heights,
Library Building
Mortgage,
8.250%, 12/01/07 (Pre-
refunded to 12/01/97) 12/97 at 102 N/R 276,735
1,250,000 Green Local School
District, General
Obligation, Unlimited
Tax, 5.900%, 12/01/19 12/04 at 102 Aaa 1,245,025
1,000,000 Greene County Sewer
System, 5.500%,
12/01/18 12/03 at 102 Aaa 949,130
1,000,000 Greenville Wastewater
System, 6.350%,
12/01/17 10/02 at 102 Aaa 1,036,660
1,750,000 Hamilton County,
Hospital Facilities
(Bethesda Hospital),
6.250%, 1/01/12 1/03 at 102 A1 1,731,870
2,500,000 Hamilton Electric
System, 6.300%,
10/15/25 10/02 at 102 Aaa 2,566,900
1,495,000 Hamilton County, FHA-
Insured
(Judson Care Center),
7.800%, 8/01/19 8/00 at 101 5/16 A+ 1,601,399
</TABLE>
50
<PAGE>
NUVEEN TAX-FREE VALUE FUNDS ANNUAL REPORT
FEBRUARY 28, 1995
<TABLE>
<CAPTION>
PRINCIPAL OPT. CALL
AMOUNT DESCRIPTION PROVISIONS* RATINGS** MARKET VALUE
- -------------------------------------------------------------------------------
<C> <S> <C> <C> <C>
$ 500,000 Hamilton County Sewer
System (Metropolitan Sewer
District of Greater
Cincinnati),
5.250%, 12/01/16 12/03 at 100 Aaa $ 463,295
400,000 Hubbard Sewer System,
8.800%, 11/15/17 5/98 at 102 N/R 448,212
1,500,000 Hudson Local School
District,
General Obligation,
Unlimited Tax,
5.600%, 12/15/14 12/03 at 102 Aaa 1,451,100
1,000,000 Kent State University,
General Receipts,
6.500%, 5/01/22 5/02 at 102 Aaa 1,039,780
1,000,000 Kettering City School
District, General
Obligation, Unlimited Tax,
5.300%, 12/01/14 12/05 at 101 Aaa 933,200
500,000 Kirtland Local School
District, General
Obligation, Unlimited Tax,
7.500%, 12/01/09 12/99 at 102 A1 550,800
1,000,000 Lakota Local School
District, General
Obligation, Unlimited Tax,
6.125%, 12/01/17 12/05 at 100 Aaa 1,012,850
1,000,000 Lorain County Hospital
(Humility of Mary Health
Care System), 5.900%,
12/15/08 6/03 at 102 A1 972,340
1,500,000 Lorain Hospital (Lakeland
Community Hospital),
6.500%, 11/15/12 11/02 at 102 A+ 1,490,460
500,000 Lorain Sewer System,
8.750%, 4/01/11 4/98 at 102 BBB- 561,180
1,980,000 Lucas County Airport
Housing Development
Corporation, (Greenview
Gardens),
5.750%, 12/01/15 12/03 at 102 Aa 1,828,787
1,000,000 Lucas County General
Obligation, Limited Tax,
6.650%, 12/01/12 12/02 at 102 Baa1 1,030,240
1,000,000 Mahoning County General
Obligation,
Limited Tax, 7.200%,
12/01/09 12/99 at 102 Aaa 1,083,030
1,700,000 Mahoning County, Hospital
Improvement
(St. Elizabeth Hospital
Medical Center),
7.375%, 12/01/09 6/96 at 102 A1 1,766,606
2,355,000 Mahoning County, Hospital
Improvement
(YHA Inc. Project),
7.000%, 10/15/14 10/00 at 102 Aaa 2,518,319
Marion County (United
Church Homes, Inc.)
1,000,000 6.375%, 11/15/10 11/03 at 102 BBB- 929,630
1,150,000 8.875%, 12/01/12 (Pre-
refunded to 12/01/99) 12/99 at 103 N/R 1,362,681
750,000 Marion County, Health Care
Facilities (United Church
Homes Project), 6.300%,
11/15/15 11/03 at 102 BBB- 658,845
1,000,000 Marysville Exempted Village
School District, General
Obligation, Unlimited Tax,
7.200%, 12/01/10 (Pre-
refunded to 12/01/00) 12/00 at 102 Aaa 1,116,370
1,250,000 Marysville Water System,
7.050%, 12/01/21 12/01 at 101 Aaa 1,391,325
1,250,000 Maumee Hospital Facilities
(St. Luke's Hospital),
5.800%, 12/01/14 12/04 at 102 Aaa 1,238,263
1,000,000 Mentor Village Exempted
School District,
General Obligation,
Unlimited Tax,
7.400%, 12/01/11 (Pre-
refunded to 12/01/02) 12/02 at 100 Aaa 1,113,060
</TABLE>
51
<PAGE>
PORTFOLIO OF INVESTMENTS
NUVEEN OHIO TAX-FREE VALUE FUND--CONTINUED
<TABLE>
<CAPTION>
PRINCIPAL OPT. CALL MARKET
AMOUNT DESCRIPTION PROVISIONS* RATINGS** VALUE
- -------------------------------------------------------------------------------
<C> <S> <C> <C> <C>
$ 1,000,000 Montgomery County Water
(Greater
Moraine--Beavercreek Sewer
District),
6.250%, 11/15/17 11/02 at 102 Aaa $ 1,026,230
2,300,000 Napolean (Lutheran Orphan's
and Old Folks Home
Project), 6.875%, 08/01/23 9/04 at 102 Aa 2,372,864
1,000,000 North Olmstead, General
Obligation, Limited Tax,
6.250%, 12/15/12 12/02 at 102 Aaa 1,038,460
2,250,000 Oxford Water Supply System,
6.000%, 12/01/14 12/02 at 102 Aaa 2,270,408
1,000,000 Parma General Obligation,
Limited Tax,
7.600%, 12/01/11 12/00 at 102 A 1,129,670
1,750,000 Pickerington Local School
District, General
Obligation, Unlimited Tax,
6.750%, 12/01/16 12/01 at 102 A 1,818,863
1,000,000 Revere Local School
District, General
Obligation, Unlimited Tax,
6.000%, 12/01/16 12/03 at 102 Aaa 1,008,560
1,500,000 Reynoldsburg City School
District, General
Obligation, Unlimited Tax,
6.550%, 12/01/17 12/02 at 102 Aaa 1,578,195
1,200,000 Ridgemont Local School
District, General
Obligation, Unlimited Tax,
7.250%, 12/01/14 12/02 at 102 N/R 1,250,904
735,000 Salem Sewer System Mortgage,
7.500%, 11/01/11 (Pre-
refunded to 11/01/96) 11/96 at 102 N/R 782,223
1,000,000 Springfield City School
District, General
Obligation, Unlimited Tax,
6.600%, 12/01/12 12/01 at 102 Aaa 1,052,810
1,500,000 Steubenville City School
District, General
Obligation, Unlimited Tax,
6.200%, 12/01/17 12/03 at 102 Aaa 1,530,494
Toledo General Obligation,
Limited Tax:
1,000,000 6.500%, 12/01/11 12/02 at 102 Aaa 1,058,360
1,500,000 6.100%, 12/01/14 12/04 at 102 Aaa 1,526,280
1,000,000 Trumbull County Hospital
(Trumbull Memorial
Hospital), 6.900%, 11/15/12 11/01 at 102 Aaa 1,069,000
750,000 Tuscarawas County, Hospital
Facilities (Union
Hospital), 6.500%, 10/01/21 10/03 at 102 Baa 676,724
University of Cincinnati,
General Receipts:
1,000,000 7.300%, 6/01/09 (Pre-
refunded to 6/01/99) 6/99 at 100 AA- 1,087,130
1,000,000 6.300%, 6/01/12 12/02 at 102 AA- 1,032,230
3,250,000 University of Toledo,
General Receipts,
5.900%, 6/01/20 12/02 at 102 Aaa 3,236,934
1,950,000 Warren County, Hospital
Facilities, Otterbein Home
Project, 7.200%, 7/01/11 7/01 at 102 Aa1 2,063,510
Warren General Obligation,
Limited Tax:
1,500,000 7.750%, 11/01/10 (Pre-
refunded to 11/01/00) 11/00 at 102 BBB+ 1,710,524
250,000 8.625%, 11/15/13 (Pre-
refunded to 11/15/98) 11/98 at 102 BBB+ 285,417
1,000,000 Warren General Obligation,
5.200%, 11/15/13 11/03 at 102 Aaa 928,710
2,500,000 Washington Water System,
5.375%, 12/01/19 12/03 at 101 Aaa 2,326,950
750,000 West Geauga Local School
District, General
Obligation, 5.950%,
11/01/12 11/04 at 102 Aaa 760,004
</TABLE>
52
<PAGE>
NUVEEN TAX-FREE VALUE FUNDS ANNUAL REPORT
FEBRUARY 28, 1995
<TABLE>
<CAPTION>
PRINCIPAL OPT. CALL
AMOUNT DESCRIPTION PROVISIONS* RATINGS** MARKET VALUE
- -------------------------------------------------------------------------------
<C> <S> <C> <C> <C>
$ 500,000 Wooster City School
District, General
Obligation, Unlimited Tax,
6.500%, 12/01/17 12/02 at 102 Aaa $ 524,224
1,000,000 Worthington City School
District, General
Obligation, Unlimited Tax,
6.375%, 12/01/12 6/02 at 102 Aaa 1,039,900
- -------------------------------------------------------------------------------
$159,935,000 Total Investments - (cost
$157,373,625) - 97.9% 163,999,807
- -------------------------------------------------------------------------------
- -------------------
-----------
TEMPORARY INVESTMENTS IN
SHORT-TERM MUNICIPAL
SECURITIES - 0.5%
$ 800,000 Cuyahoga County, University
Hospital of
- -------------------
Cleveland, Series 1985,
Variable Rate Demand
Bonds, 3.750%, 1/01/16+ VMIG-1 800,000
- -------------------------------------------------------------------------------
-----------
Other Assets Less
Liabilities - 1.6% 2,652,545
- -------------------------------------------------------------------------------
Net Assets - 100% $167,452,352
</TABLE>
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
NUMBER MARKET
STANDARD & POOR'S MOODY'S OF ISSUES MARKET VALUE PERCENT
- ---------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
SUMMARY OF AAA Aaa 63 $ 91,277,469 56%
RATINGS** AA+, AA, AA- Aa1, Aa, Aa2, Aa3 11 20,519,979 13
PORTFOLIO OF A+ A1 13 17,301,935 11
INVESTMENTS A, A- A, A2, A3 6 7,303,982 4
(EXCLUDING BBB+, BBB, BBB- Baa1, Baa, Baa2, Baa3 13 13,584,268 8
TEMPORARY Non-rated Non-rated 14 14,012,174 8
INVESTMENTS):
- ---------------------------------------------------------------------------------------
TOTAL 120 $163,999,807 100%
</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.
53
<PAGE>
STATEMENT OF NET ASSETS
<TABLE>
<CAPTION>
CA CA INS MA MA INS
- ------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
ASSETS
Investments in municipal
securities, at market
value
(note 1) $206,072,736 $199,443,161 $71,117,507 $56,772,909
Temporary investments in
short-term municipal
securities, at amortized
cost (note 1) -- 1,700,000 800,000 1,700,000
Cash 2,149,535 7,685 103,690 189,333
Receivables:
Interest 3,932,758 3,306,810 1,033,508 946,488
Shares sold 16,975 38,500 30,000 52,156
Investments sold -- 105,000 -- --
Other assets 3,031 5,158 1,896 4,279
------------ ------------ ----------- -----------
Total assets 212,175,035 204,606,314 73,086,601 59,665,165
------------ ------------ ----------- -----------
LIABILITIES
Payables:
Investments purchased -- -- -- --
Shares reacquired 5,020 31,053 14,971 3,019
Accrued expenses:
Management fees (note 7) 87,392 84,240 30,412 24,672
Other 34,730 32,092 10,500 21,558
Dividends payable 622,358 555,859 248,374 184,840
------------ ------------ ----------- -----------
Total liabilities 749,500 703,244 304,257 234,089
------------ ------------ ----------- -----------
Net assets (note 8) $211,425,535 $203,903,070 $72,782,344 $59,431,076
------------ ------------ ----------- -----------
Class A Shares (note 1)
Net assets $ 3,146,425 $ 4,753,008 $ 1,066,757 $ 1,955,900
------------ ------------ ----------- -----------
Shares outstanding 311,523 463,657 111,546 194,413
------------ ------------ ----------- -----------
Net asset value and
redemption price per
share $ 10.10 $ 10.25 $ 9.56 $ 10.06
------------ ------------ ----------- -----------
Offering price per share
(net asset value per
share plus maximum sales
charge of 4.50% of
offering price) $ 10.58 $ 10.73 $ 10.01 $ 10.53
------------ ------------ ----------- -----------
Class C Shares (note 1)
Net assets $ 199,538 $ 222,103 $ 147,370 $ 337,710
------------ ------------ ----------- -----------
Shares outstanding 19,751 21,888 15,494 33,649
------------ ------------ ----------- -----------
Net asset value, offering
and redemption price per
share $ 10.10 $ 10.15 $ 9.51 $ 10.04
------------ ------------ ----------- -----------
Class R Shares (note 1)
Net assets $208,079,572 $198,927,959 $71,568,217 $57,137,466
------------ ------------ ----------- -----------
Shares outstanding 20,535,712 19,444,138 7,501,744 5,677,858
------------ ------------ ----------- -----------
Net asset value and
redemption price per
share $ 10.13 $ 10.23 $ 9.54 $ 10.06
------------ ------------ ----------- -----------
</TABLE>
See accompanying notes to financial statements.
54
<PAGE>
NUVEEN TAX-FREE VALUE FUNDS ANNUAL REPORT
FEBRUARY 28, 1995
<TABLE>
<CAPTION>
NY NY INS OH
- ------------------------------------------------------------------------------
<S> <C> <C> <C>
ASSETS
Investments in municipal securities,
at market value
(note 1) $152,688,994 $349,130,945 $163,999,807
Temporary investments in short-term
municipal securities, at amortized
cost (note 1) 1,200,000 1,400,000 800,000
Cash 47,260 220,409 249,554
Receivables:
Interest 2,084,928 4,022,876 2,748,292
Shares sold 123,122 104,110 215,153
Investments sold 1,132,900 -- 90,000
Other assets 3,468 8,183 --
------------ ------------ ------------
Total assets 157,280,672 354,886,523 168,102,806
------------ ------------ ------------
LIABILITIES
Payables:
Investments purchased 3,793,781 618,454 --
Shares reacquired 117,206 158,220 10,379
Accrued expenses:
Management fees (note 7) 65,073 143,921 69,294
Other 22,714 82,173 28,089
Dividends payable 553,219 1,219,619 542,692
------------ ------------ ------------
Total liabilities 4,551,993 2,222,387 650,454
------------ ------------ ------------
Net assets (note 8) $152,728,679 $352,664,136 $167,452,352
------------ ------------ ------------
Class A Shares (note 1)
Net assets $ 3,188,706 $ 7,258,035 $ 4,320,297
------------ ------------ ------------
Shares outstanding 315,095 715,369 423,747
------------ ------------ ------------
Net asset value and redemption price
per share $ 10.12 $ 10.15 $ 10.20
------------ ------------ ------------
Offering price per share (net asset
value per share plus maximum sales
charge of 4.50% of offering price) $ 10.60 $ 10.63 $ 10.68
------------ ------------ ------------
Class C Shares (note 1)
Net assets $ 85,620 $ 285,193 $ 901,268
------------ ------------ ------------
Shares outstanding 8,473 28,182 88,730
------------ ------------ ------------
Net asset value, offering and
redemption price per share $ 10.11 $ 10.12 $ 10.16
------------ ------------ ------------
Class R Shares (note 1)
Net assets $149,454,353 $345,120,908 $162,230,787
------------ ------------ ------------
Shares outstanding 14,719,933 34,002,394 15,934,225
------------ ------------ ------------
Net asset value and redemption price
per share $ 10.15 $ 10.15 $ 10.18
------------ ------------ ------------
</TABLE>
See accompanying notes to financial statements.
55
<PAGE>
STATEMENT OF OPERATIONS
Year Ended February 28, 1995
<TABLE>
<CAPTION>
CA CA INS MA MA INS
- ------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
INVESTMENT INCOME
Interest income (note 1) $13,532,042 $12,414,386 $4,596,224 $3,551,606
Taxable market discount -- -- -- --
----------- ----------- ---------- ----------
Total income 13,532,042 12,414,386 4,596,224 3,551,606
----------- ----------- ---------- ----------
Expenses (note 2):
Management fees (note 7) 1,126,843 1,076,033 387,713 309,389
12b-1 distribution and
service fees (note 1) 2,433 3,695 967 2,229
Shareholders' servicing
agent fees and expenses 155,589 131,486 70,791 54,804
Custodian's fees and
expenses 66,016 54,195 42,031 35,294
Directors' fees and
expenses (note 7) 2,482 3,374 1,407 1,386
Professional fees 13,199 20,755 11,408 5,701
Shareholders' reports--
printing and mailing
expenses 100,917 68,543 27,276 28,438
Federal and state
registration fees 3,064 3,868 2,450 2,397
Portfolio insurance
expense -- 10,812 -- 3,796
Other expenses 8,300 5,729 3,046 2,715
----------- ----------- ---------- ----------
Total expenses before
expense reimbursement 1,478,843 1,378,490 547,089 446,149
Expense reimbursement
from investment adviser
(note 7) (3,483) (2,697) (17,319) (1,148)
----------- ----------- ---------- ----------
Net expenses 1,475,360 1,375,793 529,770 445,001
----------- ----------- ---------- ----------
Net investment income 12,056,682 11,038,593 4,066,454 3,106,605
----------- ----------- ---------- ----------
REALIZED AND UNREALIZED
GAIN (LOSS) FROM
INVESTMENTS
Net realized gain (loss)
from investment
transactions, net of
taxes, if applicable
(notes 1 and 5) (2,621,487) (1,106,384) (558,617) (212,554)
Net change in unrealized
appreciation or
depreciation of
investments (8,272,724) (6,870,030) (2,393,115) (1,878,784)
----------- ----------- ---------- ----------
Net gain (loss) from
investments (10,894,211) (7,976,414) (2,951,732) (2,091,338)
----------- ----------- ---------- ----------
Net increase in net
assets from operations $ 1,162,471 $ 3,062,179 $1,114,722 $1,015,267
----------- ----------- ---------- ----------
</TABLE>
See accompanying notes to financial statements.
56
<PAGE>
NUVEEN TAX-FREE VALUE FUNDS ANNUAL REPORT
FEBRUARY 28, 1995
<TABLE>
<CAPTION>
NY NY INS OH
- -------------------------------------------------------------------------------
<S> <C> <C> <C>
INVESTMENT INCOME
Interest income (note 1) $ 9,417,010 $ 22,226,034 $10,312,482
Taxable market discount 1,937 -- --
----------- ------------ -----------
Total income 9,418,947 22,226,034 10,312,482
----------- ------------ -----------
Expenses (note 2):
Management fees (note 7) 791,403 1,923,239 876,933
12b-1 distribution and service fees
(note 1) 1,772 5,343 4,595
Shareholders' servicing agent fees
and expenses 132,988 212,430 148,751
Custodian's fees and expenses 40,781 64,409 55,091
Directors' fees and expenses (note
7) 1,166 3,756 5,000
Professional fees 6,862 19,020 9,012
Shareholders' reports--printing and
mailing expenses 78,983 79,576 62,516
Federal and state registration fees 6,690 3,324 2,865
Portfolio insurance expense -- 16,881 --
Other expenses 6,363 12,389 8,830
----------- ------------ -----------
Total expenses before expense
reimbursement 1,067,008 2,340,367 1,173,593
Expense reimbursement from
investment adviser (note 7) (4,556) (1,767) (3,524)
----------- ------------ -----------
Net expenses 1,062,452 2,338,600 1,170,069
----------- ------------ -----------
Net investment income 8,356,495 19,887,434 9,142,413
----------- ------------ -----------
REALIZED AND UNREALIZED GAIN (LOSS)
FROM INVESTMENTS
Net realized gain (loss) from
investment transactions, net
of taxes, if applicable (notes 1
and 5) (1,122,982) 691,691 (967,375)
Net change in unrealized
appreciation or depreciation of
investments (6,026,320) (17,661,749) (5,055,416)
----------- ------------ -----------
Net gain (loss) from investments (7,149,302) (16,970,058) (6,022,791)
----------- ------------ -----------
Net increase in net assets from
operations $ 1,207,193 $ 2,917,376 $ 3,119,622
----------- ------------ -----------
</TABLE>
57
<PAGE>
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
CA CA INS
---------------------------------------------
Year ended Year ended Year ended Year ended
2/28/95 2/28/94 2/28/95 2/28/94
- -----------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
OPERATIONS
Net investment income $ 12,056,682 $ 11,312,317 $ 11,038,593 $ 9,871,976
Net realized gain (loss)
from investment
transactions, net of
taxes, if applicable (2,621,487) 2,689,891 (1,106,384) 2,016,944
Net change in unrealized
appreciation or
depreciation of
investments (8,272,724) (3,820,153) (6,870,030) (4,135,051)
------------ ------------ ------------ ------------
Net increase in net
assets from operations 1,162,471 10,182,055 3,062,179 7,753,869
------------ ------------ ------------ ------------
DISTRIBUTIONS TO
SHAREHOLDERS (note 1)
From undistributed net
investment income:
Class A (40,773) -- (59,786) --
Class C (2,883) -- (4,199) --
Class R (12,099,560) (11,249,792) (10,954,036) (9,798,122)
From accumulated net
realized gains from
investment
transactions:
Class A (6,186) -- (2,542) --
Class C (231) -- (317) --
Class R (1,542,643) (1,138,428) (545,843) (1,503,962)
In excess of accumulated
net realized gains from
investment
transactions:
Class A -- -- -- --
Class C -- -- -- --
Class R -- -- -- --
------------ ------------ ------------ ------------
Decrease in net assets
from distributions to
shareholders (13,692,276) (12,388,220) (11,566,723) (11,302,084)
------------ ------------ ------------ ------------
FUND SHARE TRANSACTIONS
(note 3)
Net proceeds from sales
of shares:
Class A 3,153,792 -- 4,571,343 --
Class C 189,814 -- 277,611 --
Class R 24,628,063 61,356,606 21,455,944 60,508,374
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 17,920 -- 24,201 --
Class C 1,844 -- 1,935 --
Class R 8,806,336 7,917,196 7,133,691 7,133,168
------------ ------------ ------------ ------------
36,797,769 69,273,802 33,464,725 67,641,542
------------ ------------ ------------ ------------
Cost of shares redeemed:
Class A (117,370) -- (71,333) --
Class C (1,036) -- (68,234) --
Class R (31,154,367) (31,852,039) (29,032,260) (24,830,822)
------------ ------------ ------------ ------------
(31,272,773) (31,852,039) (29,171,827) (24,830,822)
------------ ------------ ------------ ------------
Net increase (decrease)
in net assets derived
from Fund share
transactions 5,524,996 37,421,763 4,292,898 42,810,720
------------ ------------ ------------ ------------
Net increase (decrease)
in net assets (7,004,809) 35,215,598 (4,211,646) 39,262,505
Net assets at beginning
of year 218,430,344 183,214,746 208,114,716 168,852,211
------------ ------------ ------------ ------------
Net assets at end of
year $211,425,535 $218,430,344 $203,903,070 $208,114,716
------------ ------------ ------------ ------------
Balance of undistributed
net investment income
at end of year $ 65,047 $ 151,581 $ 66,680 $ 46,108
------------ ------------ ------------ ------------
</TABLE>
See accompanying notes to financial statements.
58
<PAGE>
NUVEEN TAX-FREE VALUE FUNDS ANNUAL REPORT
FEBRUARY 28, 1995
<TABLE>
<CAPTION>
MA MA INS
-----------------------------------------
Year ended Year ended Year ended Year ended
2/28/95 2/28/94 2/28/95 2/28/94
- -------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
OPERATIONS
Net investment income $ 4,066,454 $ 3,501,487 $ 3,106,605 $ 2,733,596
Net realized gain (loss)
from investment
transactions, net of
taxes, if applicable (558,617) 28,787 (212,554) 48,780
Net change in unrealized
appreciation or
depreciation of
investments (2,393,115) 123,932 (1,878,784) (56,500)
----------- ----------- ----------- -----------
Net increase in net
assets from operations 1,114,722 3,654,206 1,015,267 2,725,876
----------- ----------- ----------- -----------
DISTRIBUTIONS TO
SHAREHOLDERS (note 1)
From undistributed net
investment income:
Class A (16,122) -- (22,806) --
Class C (1,197) -- (5,217) --
Class R (4,021,155) (3,482,145) (3,099,363) (2,676,524)
From accumulated net
realized gains from
investment
transactions:
Class A -- -- -- --
Class C -- -- -- --
Class R -- (68,840) -- --
In excess of accumulated
net realized gains from
investment
transactions:
Class A -- -- -- --
Class C -- -- -- --
Class R -- -- -- --
----------- ----------- ----------- -----------
Decrease in net assets
from distributions to
shareholders (4,038,474) (3,550,985) (3,127,386) (2,676,524)
----------- ----------- ----------- -----------
FUND SHARE TRANSACTIONS
(note 3)
Net proceeds from sale
of shares:
Class A 1,057,696 -- 1,906,377 --
Class C 144,012 -- 324,825 --
Class R 10,510,784 23,323,692 7,040,265 16,098,587
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 8,778 -- 11,338 --
Class C 594 -- 2,330 --
Class R 2,815,745 2,445,494 2,160,636 1,853,467
----------- ----------- ----------- -----------
14,537,609 25,769,186 11,445,771 17,952,054
----------- ----------- ----------- -----------
Cost of shares redeemed:
Class A (32,507) -- (37,958) --
Class C -- -- -- --
Class R (10,741,355) (7,160,909) (8,119,665) (6,844,378)
----------- ----------- ----------- -----------
(10,773,862) (7,160,909) (8,157,623) (6,844,378)
----------- ----------- ----------- -----------
Net increase (decrease)
in net assets derived
from Fund share
transactions 3,763,747 18,608,277 3,288,148 11,107,676
----------- ----------- ----------- -----------
Net increase (decrease)
in net assets 839,995 18,711,498 1,176,029 11,157,028
Net assets at beginning
of year 71,942,349 53,230,851 58,255,047 47,098,019
----------- ----------- ----------- -----------
Net assets at end of
year $72,782,344 $71,942,349 $59,431,076 $58,255,047
----------- ----------- ----------- -----------
Balance of undistributed
net investment income
at end of year $ 56,272 $ 28,292 $ 27,522 $ 48,303
----------- ----------- ----------- -----------
</TABLE>
See accompanying notes to financial statements.
59
<PAGE>
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
NY NY INS
---------------------------------------------
Year ended Year ended Year ended Year ended
2/28/95 2/28/94 2/28/95 2/28/94
- -----------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
OPERATIONS
Net investment income $ 8,356,495 $ 6,821,122 $ 19,887,434 $ 18,541,555
Net realized gain (loss)
from investment
transactions, net of
taxes, if applicable (1,122,982) 1,226,611 691,691 1,554,828
Net change in unrealized
appreciation or
depreciation of
investments (6,026,320) 391,832 (17,661,749) (1,038,061)
------------ ------------ ------------ ------------
Net increase in net
assets from operations 1,207,193 8,439,565 2,917,376 19,058,322
------------ ------------ ------------ ------------
DISTRIBUTIONS TO
SHAREHOLDERS (note 1)
From undistributed net
investment income:
Class A (35,341) -- (93,178) --
Class C (818) -- (3,586) --
Class R (8,216,539) (6,838,081) (19,795,360) (18,272,088)
From accumulated net
realized gains from
investment
transactions:
Class A (2,464) -- (11,988) --
Class C (28) -- (504) --
Class R (697,769) (609,643) (1,367,629) (1,127,645)
In excess of accumulated
net realized gains from
investment
transactions:
Class A -- -- (483) --
Class C -- -- (20) --
Class R -- -- (55,065) --
------------ ------------ ------------ ------------
Decrease in net assets
from distributions to
shareholders (8,952,959) (7,447,724) (21,327,813) (19,399,733)
------------ ------------ ------------ ------------
FUND SHARE TRANSACTIONS
(note 3)
Net proceeds from sale
of shares:
Class A 3,107,225 -- 7,035,288 --
Class C 81,795 -- 271,337 --
Class R 26,513,287 44,875,936 34,286,843 97,500,068
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 18,206 -- 61,394 --
Class C 417 -- 1,940 --
Class R 6,975,322 5,757,792 16,604,261 14,633,903
------------ ------------ ------------ ------------
36,696,252 50,633,728 58,261,063 112,133,971
------------ ------------ ------------ ------------
Cost of shares redeemed:
Class A (51,915) -- (99,736) --
Class C -- -- -- --
Class R (22,466,951) (12,474,166) (75,263,107) (38,492,791)
------------ ------------ ------------ ------------
(22,518,866) (12,474,166) (75,362,843) (38,492,791)
------------ ------------ ------------ ------------
Net increase (decrease)
in net assets derived
from Fund share
transactions 14,177,386 38,159,562 (17,101,780) 73,641,180
------------ ------------ ------------ ------------
Net increase (decrease)
in net assets 6,431,620 39,151,403 (35,512,217) 73,299,769
Net assets at beginning
of year 146,297,059 107,145,656 388,176,353 314,876,584
------------ ------------ ------------ ------------
Net assets at end of
year $152,728,679 $146,297,059 $352,664,136 $388,176,353
------------ ------------ ------------ ------------
Balance of undistributed
net investment income
at end of year $ 104,821 $ 1,024 $ 263,489 $ 268,179
------------ ------------ ------------ ------------
</TABLE>
See accompanying notes to financial statements.
60
<PAGE>
NUVEEN TAX-FREE VALUE FUNDS ANNUAL REPORT
FEBRUARY 28, 1995
<TABLE>
<CAPTION>
OH
---------------------------------
Year ended Year ended
2/28/95 2/28/94
- -------------------------------------------------------------------------------
<S> <C> <C>
OPERATIONS
Net investment income $ 9,142,413 $ 8,098,952
Net realized gain (loss) from investment
transactions, net of taxes, if applicable (967,375) 1,194,910
Net change in unrealized appreciation or
depreciation of investments (5,055,416) (333,655)
------------ ------------
Net increase in net assets from operations 3,119,622 8,960,207
------------ ------------
DISTRIBUTIONS TO SHAREHOLDERS(note 1)
From undistributed net investment income:
Class A (58,833) --
Class C (9,333) --
Class R (9,076,904) (8,011,756)
From accumulated net realized gains from
investment transactions:
Class A (4,637) --
Class C (879) --
Class R (652,495) (902,046)
In excess of accumulated net realized gains from
investment transactions:
Class A -- --
Class C -- --
Class R -- --
------------ ------------
Decrease in net assets from distributions to
shareholders (9,803,081) (8,913,802)
------------ ------------
FUND SHARE TRANSACTIONS (note 3)
Net proceeds from sale of shares:
Class A 4,240,889 --
Class C 871,689 --
Class R 15,813,517 39,536,568
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 28,946 --
Class C 6,902 --
Class R 6,935,311 6,410,290
------------ ------------
27,897,254 45,946,858
------------ ------------
Cost of shares redeemed:
Class A (115,343) --
Class C (3,158) --
Class R (21,090,544) (12,342,805)
------------ ------------
(21,209,045) (12,342,805)
------------ ------------
Net increase (decrease) in net assets derived
from Fund share transactions 6,688,209 33,604,053
------------ ------------
Net increase (decrease) in net assets 4,750 33,650,458
Net assets at beginning of year 167,447,602 133,797,144
------------ ------------
Net assets at end of year $167,452,352 $167,447,602
------------ ------------
Balance of undistributed net investment income
at end of year $ 108,632 $ 111,289
------------ ------------
</TABLE>
See accompanying notes to financial statements.
61
<PAGE>
NOTES TO FINANCIAL STATEMENTS
1. GENERAL INFORMATION AND SIGNIFICANT
ACCOUNTING POLICIES
At February 28, 1995, the state Funds (the "Funds") covered
in this report are Nuveen California Tax-Free Fund, Inc.
(comprised of the Nuveen California and California Insured
Tax-Free Value Funds), Nuveen Tax-Free Bond Fund, Inc.
(comprised of the Nuveen Massachusetts, New York and Ohio
Tax-Free Value Funds) and Nuveen Insured Tax-Free Bond Fund,
Inc. (comprised of the Nuveen Massachusetts and New York
Insured Tax-Free Value Funds).
Additional state Funds covering other states may be
established in the future. Each Fund invests primarily in a
diversified portfolio of municipal obligations issued by
state and local government authorities in a single state.
Each Fund issues shares of each of its classes at a price
equal to net asset value of such class plus the appropriate
front-end sales charge, if any.
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 each Fund 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. 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 its purchase
commitments. At February 28, 1995, there were no such
purchase commitments in any of the Funds.
62
<PAGE>
NUVEEN TAX-FREE VALUE FUNDS ANNUAL REPORT
FEBRUARY 28, 1995
Interest Income Interest income is determined on the basis of interest
accrued, adjusted for amortization of premiums or 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 investment
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 accumulated
net realized gains from investment transactions, if
applicable.
Income Tax 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. Futhermore, each Fund intends to satisfy
conditions which will enable interest from municipal
securities, which is exempt from regular federal and
designated state income taxes, to retain such tax exempt
status when distributed to the shareholders of the Funds. All
income dividends paid during the fiscal year ended February
28, 1995, have been designated Exempt Interest Dividends.
63
<PAGE>
NOTES TO FINANCIAL STATEMENTS
Insurance The California Insured, Massachusetts Insured, and New York
Insured Tax-Free Value Funds invest in municipal securities
which are covered by insurance guaranteeing the timely
payment of principal and interest thereon or backed by an
escrow or trust account containing sufficient U.S. Government
or U.S. Government agency securities to 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 Funds' shares. Original Issue Insurance and
Secondary Market Insurance remain in effect as long as the
municipal securities covered thereby remain outstanding and
the insurer remains in business, regardless of whether the
Funds ultimately dispose of such municipal securities.
Consequently, the market value of the municipal securities
covered by Original Issue Insurance or Secondary Market
Insurance may reflect value attributable to the insurance.
Portfolio Insurance is effective only while the municipal
securities are held by the Funds. Accordingly, neither the
prices used in determining the market value of the underlying
municipal securities nor the net asset value of the Funds'
shares include value, if any, attributable to the Portfolio
Insurance. Each policy of the Portfolio Insurance does,
however, give the Funds 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, each Fund 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.
Prior to the offering of Class "A" and Class "C" Shares, the
shares outstanding 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 will generally
be available only for reinvestment of dividends by current
"R" shareholders and for already established Nuveen Unit
Investment Trust reinvestment accounts.
64
<PAGE>
NUVEEN TAX-FREE VALUE FUNDS ANNUAL REPORT
FEBRUARY 28, 1995
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 futures, forward,
swap, and option contracts, and other financial instruments
with similar characteristics. Although the Funds are
authorized to invest in such financial instruments, and may
do so in the future, they did not make any such investments
during the fiscal year ended February 28, 1995, other than
occasional purchases of high quality synthetic money market
securities which were held temporarily pending the re-
investment in long-term portfolio securities.
65
<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. A breakdown of the class level expenses, as
well as the total fund level expenses, for the year ended
February 28, 1995, are as follows:
<TABLE>
<CAPTION>
CA CA INS MA MA INS
- -------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
CLASS A
12b-1 service fees $ 1,868 $ 2,924 $ 752 $ 1,152
Shareholder servicing agent fees
and expenses 1,657 1,862 1,105 833
Shareholder reports-printing and
mailing expenses 1,549 1,664 1,404 923
Federal and state registration
fees 1,107 1,100 456 393
---------- ---------- -------- --------
Total class level expenses 6,181 7,550 3,717 3,301
Total fund level expenses 4,387 6,922 1,895 2,958
---------- ---------- -------- --------
Total expenses before expense
reimbursement 10,568 14,472 5,612 6,259
Less: Expense reimbursement from
investment adviser (3,104) (2,202) (2,612) (959)
---------- ---------- -------- --------
Net expenses--Class A $ 7,464 $ 12,270 $ 3,000 $ 5,300
---------- ---------- -------- --------
CLASS C
12b-1 service fees $ 141 $ 193 $ 54 $ 269
12b-1 distribution fees 424 578 161 808
Shareholder servicing agent fees
and expenses 120 305 126 77
Shareholder reports-printing and
mailing expenses 155 263 183 109
Federal and state registration
fees 195 88 71 280
---------- ---------- -------- --------
Total class level expenses 1,035 1,427 595 1,543
Total fund level expenses 331 457 135 693
---------- ---------- -------- --------
Total expenses before expense
reimbursement 1,366 1,884 730 2,236
Less: Expense reimbursement from
investment adviser (379) (495) (355) (189)
---------- ---------- -------- --------
Net expenses--Class C $ 987 $ 1,389 $ 375 $ 2,047
---------- ---------- -------- --------
CLASS R
Shareholder servicing agent fees
and expenses $ 153,812 $ 129,319 $ 69,560 $ 53,894
Shareholder reports-printing and
mailing expenses 99,213 66,616 25,689 27,406
Federal and state registration
fees 1,762 2,680 1,923 1,724
---------- ---------- -------- --------
Total class level expenses 254,787 198,615 97,172 83,024
Total fund level expenses 1,212,122 1,163,519 443,575 354,630
---------- ---------- -------- --------
Total expenses before expense
reimbursement 1,466,909 1,362,134 540,747 437,654
Less: Expense reimbursement from
investment adviser -- -- (14,352) --
---------- ---------- -------- --------
Net expenses--Class R $1,466,909 $1,362,134 $526,395 $437,654
---------- ---------- -------- --------
Net expenses--Fund $1,475,360 $1,375,793 $529,770 $445,001
---------- ---------- -------- --------
</TABLE>
66
<PAGE>
NUVEEN TAX-FREE VALUE FUNDS ANNUAL REPORT
FEBRUARY 28, 1995
<TABLE>
<CAPTION>
NY NY INS OH
- -------------------------------------------------------------------------------
<S> <C> <C> <C>
CLASS A
12b-1 service fees $ 1,620 $ 4,578 $ 2,727
Shareholder servicing agent fees and ex-
penses 1,706 2,053 1,914
Shareholder reports-printing and mailing
expenses 1,831 1,322 1,844
Federal and state registration fees 1,021 2,331 953
---------- ---------- ----------
Total class level expenses 6,178 10,284 7,438
Total fund level expenses 3,906 10,329 6,353
---------- ---------- ----------
Total expenses before expense reimburse-
ment 10,084 20,613 13,791
Less: Expense reimbursement from invest-
ment adviser (3,607) (1,368) (2,887)
---------- ---------- ----------
Net expenses--Class A $ 6,477 $ 19,245 $ 10,904
---------- ---------- ----------
CLASS C
12b-1 service fees $ 38 $ 191 $ 467
12b-1 distribution fees 114 574 1,401
Shareholder servicing agent fees and ex-
penses 137 75 352
Shareholder reports-printing and mailing
expenses 276 170 379
Federal and state registration fees 558 328 187
---------- ---------- ----------
Total class level expenses 1,123 1,338 2,786
Total fund level expenses 92 440 1,123
---------- ---------- ----------
Total expenses before expense reimburse-
ment 1,215 1,778 3,909
Less: Expense reimbursement from invest-
ment adviser (949) (399) (637)
---------- ---------- ----------
Net expenses--Class C $ 266 $ 1,379 $ 3,272
---------- ---------- ----------
CLASS R
Shareholder servicing agent fees and ex-
penses $ 131,145 $ 210,302 $ 146,485
Shareholder reports-printing and mailing
expenses 76,876 78,084 60,293
Federal and state registration fees 5,111 665 1,725
---------- ---------- ----------
Total class level expenses 213,132 289,051 208,503
Total fund level expenses 842,577 2,028,925 947,390
---------- ---------- ----------
Total expenses before expense reimburse-
ment 1,055,709 2,317,976 1,155,893
Less: Expense reimbursement from invest-
ment adviser -- -- --
---------- ---------- ----------
Net expenses--Class R $1,055,709 $2,317,976 $1,155,893
---------- ---------- ----------
Net expenses--Fund $1,062,452 $2,338,600 $1,170,069
---------- ---------- ----------
</TABLE>
67
<PAGE>
NOTES TO FINANCIAL STATEMENTS
3. FUND SHARES
Transactions in shares were as follows:
<TABLE>
<CAPTION>
CA CA INS
----------------------------------------
Year ended Year ended Year ended Year ended
2/28/95 2/28/94 2/28/95 2/28/94
- ------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Shares sold:
Class A 321,777 -- 468,407 --
Class C 19,666 -- 28,545 --
Class R 2,433,649 5,633,912 2,136,079 5,576,658
Shares issued to sharehold-
ers due to reinvestment of
distributions from net in-
vestment income and from
net realized gains from
investment transactions:
Class A 1,856 -- 2,486 --
Class C 191 -- 201 --
Class R 884,995 723,974 714,801 652,939
---------- ---------- ---------- ----------
3,662,134 6,357,886 3,350,519 6,229,597
---------- ---------- ---------- ----------
Shares redeemed:
Class A (12,110) -- (7,236) --
Class C (106) -- (6,858) --
Class R (3,116,035) (2,918,057) (2,915,964) (2,286,892)
---------- ---------- ---------- ----------
(3,128,251) (2,918,057) (2,930,058) (2,286,892)
---------- ---------- ---------- ----------
Net increase (decrease) 533,883 3,439,829 420,461 3,942,705
---------- ---------- ---------- ----------
</TABLE>
<TABLE>
<CAPTION>
MA MA INS
-----------------------------------------
Year ended Year ended Year ended Year ended
2/28/95 2/28/94 2/28/95 2/28/94
- -------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Shares sold:
Class A 114,157 -- 197,250 --
Class C 15,429 -- 33,405 --
Class R 1,117,491 2,335,758 702,214 1,534,832
Shares issued to shareholders
due to reinvestment of
distributions from net in-
vestment income and from net
realized gains from invest-
ment transactions:
Class A 956 -- 1,171 --
Class C 65 -- 244 --
Class R 277,942 242,886 225,446 175,622
---------- --------- --------- ---------
1,526,040 2,578,644 1,159,730 1,710,454
---------- --------- --------- ---------
Shares redeemed:
Class A (3,567) -- (4,008) --
Class C -- -- -- --
Class R (1,130,507) (712,480) (823,516) (649,891)
---------- --------- --------- ---------
(1,134,074) (712,480) (827,524) (649,891)
---------- --------- --------- ---------
Net increase (decrease) 391,966 1,866,164 332,206 1,060,563
---------- --------- --------- ---------
</TABLE>
68
<PAGE>
NUVEEN TAX-FREE VALUE FUNDS ANNUAL REPORT
FEBRUARY 28, 1995
<TABLE>
<CAPTION>
NY NY INS
----------------------------------------
Year ended Year ended Year ended Year ended
2/28/95 2/28/94 2/28/95 2/28/94
- ------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Shares sold:
Class A 318,594 -- 719,364 --
Class C 8,430 -- 27,982 --
Class R 2,613,112 3,833,510 3,411,938 9,088,885
Shares issued to sharehold-
ers due to reinvestment of
distributions from net in-
vestment income and from
net realized gains from
investment transactions:
Class A 1,882 -- 6,336 --
Class C 43 -- 200 --
Class R 701,622 874,183 1,652,628 1,356,500
---------- ---------- ---------- ----------
3,643,683 4,707,693 5,818,448 10,445,385
---------- ---------- ---------- ----------
Shares redeemed:
Class A (5,381) -- (10,331) --
Class C -- -- -- --
Class R (2,245,562) (1,159,235) (7,580,245) (3,579,980)
---------- ---------- ---------- ----------
(2,250,943) (1,159,235) (7,590,576) (3,579,980)
---------- ---------- ---------- ----------
Net increase (decrease) 1,392,740 3,548,458 (1,772,128) 6,865,405
---------- ---------- ---------- ----------
</TABLE>
<TABLE>
<CAPTION>
OH
---------------------------------
Year ended Year ended
2/28/95 2/28/94
- -------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Shares sold:
Class A 432,196 --
Class C 88,344 --
Class R 1,586,702 3,690,169
Shares issued to shareholders due to reinvestment of
distributions from net investment income and from net realized gains from investment
transactions:
Class A 2,972 --
Class C 711 --
Class R 696,759 595,538
---------- ---------- --- ---
2,807,684 4,285,707
---------- ----------
Shares redeemed:
Class A (11,421) --
Class C (325) --
Class R (2,131,282) (1,147,522)
---------- ---------- --- ---
(2,143,028) (1,147,522)
---------- ---------- --- ---
Net increase (decrease) 664,656 3,138,185
---------- ---------- --- ---
</TABLE>
69
<PAGE>
NOTES TO FINANCIAL STATEMENTS
4. DISTRIBUTIONS TO SHAREHOLDERS
On March 9, 1995, the Funds declared dividend distributions
from their ordinary income which were paid on April 3, 1995,
to shareholders of record on March 10, 1995, as follows:
<TABLE>
<CAPTION>
CA CA INS MA MA INS
- --------------------------------------------------
<S> <C> <C> <C> <C>
Dividend per share:
Class A $.0460 $.0445 $.0435 $.0430
Class C .0395 .0380 .0375 .0370
Class R .0485 .0470 .0455 .0460
------ ------ ------ ------
</TABLE>
<TABLE>
<CAPTION>
NY NY INS OH
- -------------------------------------------
<S> <C> <C> <C>
Dividend per share:
Class A $.0460 $.0435 $.0455
Class C .0400 .0370 .0390
Class R .0485 .0465 .0475
------ ------ ------
</TABLE>
5. SECURITIES TRANSACTIONS
Purchases and sales (including maturities) of investments in
municipal securities and temporary municipal investments for
the year ended February 28, 1995, were as follows:
<TABLE>
<CAPTION>
CA CA INS MA MA INS
- -------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
PURCHASES
Investments in municipal se-
curities $68,894,120 $50,451,137 $13,363,407 $ 5,335,294
Temporary municipal invest-
ments 43,200,000 30,180,000 6,800,000 10,500,000
SALES
Investments in municipal se-
curities 66,559,948 48,631,129 11,517,581 5,226,905
Temporary municipal invest-
ments 43,200,000 28,480,000 6,000,000 8,800,000
----------- ----------- ----------- -----------
</TABLE>
<TABLE>
<CAPTION>
NY NY INS OH
- --------------------------------------------------------------------------
<S> <C> <C> <C>
PURCHASES
Investments in municipal securities $58,175,026 $39,924,207 $49,521,108
Temporary municipal investments 26,200,000 38,100,000 19,500,000
SALES
Investments in municipal securities 40,595,994 58,979,554 44,955,689
Temporary municipal investments 30,000,000 41,900,000 20,000,000
----------- ----------- -----------
</TABLE>
70
<PAGE>
NUVEEN TAX-FREE VALUE FUNDS ANNUAL REPORT
FEBRUARY 28, 1995
At February 28, 1995, the cost of investments for federal
income tax purposes was the same as the cost for financial
reporting purposes for each Fund.
At February 28, 1995, the following Funds had unused capital
loss carryovers available for federal income tax purposes to
be applied against future security gains, if any. If not
applied, the carryovers will expire as follows:
<TABLE>
<CAPTION>
CA CA INS MA MA INS
- ---------------------------------------------------------------
<S> <C> <C> <C> <C>
Expiration year:
1996 $ -- $ -- $ -- $ 6,372
1997 -- -- -- 72,205
2003 2,620,483 1,106,349 557,301 212,554
---------- ---------- ---------- ----------
Total $2,620,483 $1,106,349 $ 557,301 $ 291,131
---------- ---------- ---------- ----------
</TABLE>
<TABLE>
<CAPTION>
NY OH
- -----------------------------------------
<S> <C> <C>
Expiration year:
1996 $ -- $ --
1997 -- --
2003 1,122,982 967,375
---------- ----------
Total $1,122,982 $ 967,375
---------- ----------
</TABLE>
6. UNREALIZED APPRECIATION (DEPRECIATION)
Gross unrealized appreciation and gross unrealized
depreciation of investments at February 28, 1995, were as
follows:
<TABLE>
<CAPTION>
CA CA INS MA MA INS
- ------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Gross unrealized:
Appreciation $7,199,506 $8,299,708 $3,099,613 $2,768,020
Depreciation (3,206,106) (3,436,911) (845,699) (500,230)
---------- ---------- ---------- ----------
Net unrealized appreciation $3,993,400 $4,862,797 $2,253,914 $2,267,790
---------- ---------- ---------- ----------
</TABLE>
<TABLE>
<CAPTION>
NY NY INS OH
- -------------------------------------------------------------------
<S> <C> <C> <C>
Gross unrealized:
Appreciation $5,757,794 $14,819,638 $8,159,973
Depreciation (2,353,152) (5,230,912) (1,533,791)
---------- ----------- ----------
Net unrealized appreciation $3,404,642 $ 9,588,726 $6,626,182
---------- ----------- ----------
</TABLE>
71
<PAGE>
NOTES TO FINANCIAL STATEMENTS
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:
<TABLE>
<CAPTION>
AVERAGE DAILY NET ASSET VALUE MANAGEMENT FEE
- ----------------------------------------------------
<S> <C>
For the first $125,000,000 .55 of 1%
For the next $125,000,000 .5375 of 1
For the next $250,000,000 .525 of 1
For the next $500,000,000 .5125 of 1
For the next $1,000,000,000 .5 of 1
For net assets over $2,000,000,000 .475 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 expenses 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, and to the extent permitted,
extraordinary expenses) in any fiscal year from exceeding .75
of 1% of the average daily net asset value of the California,
Massachusetts, New York and Ohio Tax-Free Value Funds, .80 of
1% of the average daily net asset value of the California
Insured and New York Insured Tax-Free Value Funds, and .90 of
1%
of the average daily net asset value of the Massachusetts
Insured Tax-Free Value Fund.
The management fee referred to above compensates the Adviser
for overall investment advisory and administrative services,
and general office facilities. The Funds pays no compensation
directly to their directors who are affiliated with the
Adviser or to its officers, all of whom receive remuneration
for their services to the Funds from the Adviser.
72
<PAGE>
NUVEEN TAX-FREE VALUE FUNDS ANNUAL REPORT
FEBRUARY 28, 1995
8. COMPOSITION OF NET ASSETS
At February 28, 1995, the Funds had common stock authorized
at $.01 par value per share. The composition of net assets as
well as the number of authorized shares were as follows:
<TABLE>
<CAPTION>
CA CA INS MA MA INS
- ---------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Capital paid-in $209,987,571 $200,079,942 $71,029,459 $57,426,895
Balance of undistributed
net investment income 65,047 66,680 56,272 27,522
Undistributed net real-
ized gain (loss) from
investment
transactions, net of
taxes, if applicable (2,620,483) (1,106,349) (557,301) (291,131)
Distributions in excess
of accumulated net re-
alized gains from in-
vestment transactions -- -- -- --
Net unrealized apprecia-
tion (depreciation) of
investments 3,993,400 4,862,797 2,253,914 2,267,790
------------ ------------ ----------- -----------
Net assets $211,425,535 $203,903,070 $72,782,344 $59,431,076
------------ ------------ ----------- -----------
Authorized shares:
Class A 40,000,000 40,000,000 200,000,000 200,000,000
Class C 45,000,000 45,000,000 260,000,000 240,000,000
Class R 40,000,000 40,000,000 40,000,000 60,000,000
------------ ------------ ----------- -----------
</TABLE>
<TABLE>
<CAPTION>
NY NY INS OH
- -------------------------------------------------------------------------------
<S> <C> <C> <C>
Capital paid-in $150,342,198 $342,867,489 $161,684,913
Balance of undistributed net in-
vestment income 104,821 263,489 108,632
Undistributed net realized gain
(loss) from investment
transactions, net of taxes, if
applicable (1,122,982) -- (967,375)
Distributions in excess of accumu-
lated net realized gains from in-
vestment transactions -- (55,568) --
Net unrealized appreciation (de-
preciation) of investments 3,404,642 9,588,726 6,626,182
------------ ------------ ------------
Net assets $152,728,679 $352,664,136 $167,452,352
------------ ------------ ------------
Authorized shares:
Class A 200,000,000 200,000,000 200,000,000
Class C 220,000,000 200,000,000 220,000,000
Class R 80,000,000 100,000,000 80,000,000
------------ ------------ ------------
</TABLE>
73
<PAGE>
NOTES TO FINANCIAL STATEMENTS
9. INVESTMENT COMPOSITION
Each Fund invests in municipal securities which include
general obligation, escrowed and revenue bonds. At February
28, 1995, the revenue sources by municipal purpose for these
investments, expressed as a percent of total investments,
were as follows:
<TABLE>
<CAPTION>
CA CA INS MA MA INS
- ---------------------------------------------------
<S> <C> <C> <C> <C>
Revenue bonds:
Health care facilities 25% 11% 16% 18%
Housing facilities 9 6 20 2
Lease rental facilities 13 20 -- 1
Educational facilities 7 -- 11 15
Water/Sewer facilities 5 13 4 1
Transportation -- 3 4 1
Pollution control -- -- 2 --
Electric utilities 2 3 1 3
Other 18 22 -- 1
General obligation bonds 6 5 26 40
Escrowed bonds 15 17 16 18
- ---------------------------------------------------
100% 100% 100% 100%
--- --- --- ---
</TABLE>
<TABLE>
<CAPTION>
NY NY INS OH
- --------------------------------------------
<S> <C> <C> <C>
Revenue bonds:
Health care facilities 3% 9% 18%
Housing facilities 24 12 6
Lease rental facilities 23 4 1
Educational facilities 11 8 5
Water/Sewer facilities 3 9 13
Transportation 3 13 1
Pollution control 4 2 12
Electric utilities -- 1 3
Other 8 6 1
General obligation bonds 10 17 25
Escrowed bonds 11 19 15
- --------------------------------------------
100% 100% 100%
--- --- ---
</TABLE>
74
<PAGE>
NUVEEN TAX-FREE VALUE FUNDS ANNUAL REPORT
FEBRUARY 28, 1995
Certain long-term and intermediate-term investments owned by
the Funds are covered by insurance issued by several private
insurers or are backed by an escrow or trust containing U.S.
Government or U.S. Government agency securities, either of
which ensure the timely payment of principal and interest in
the event of default (25% for California, 100% for California
Insured, 37% for Massachusetts, 100% for Massachusetts
Insured, 22% for New York, 100% for New York Insured and 60%
for Ohio). Such insurance, 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.
75
<PAGE>
FINANCIAL HIGHLIGHTS
SELECTED DATA FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD IS AS FOLLOWS:
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Income from investment
operations Less distributions
---------------------------------------------------------------------
Net realized
Net asset and unrealized Dividends
value Net gain (loss) from net Distributions
beginning investment from investment from
of period income investments+++ income capital gains
- ----------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
CA
- ----------------------------------------------------------------------------------------------
Class A
9/7/94 to 2/28/95 $10.210 $.270* $(.031) $(.275) $(.074)
Class C
9/19/94 to 2/28/95 10.040 .218* .139 (.223) (.074)
Class R
Year ended, 2/28/95 10.740 .582 (.531) (.587) (.074)
2/28/94 10.850 .598 (.054) (.596) (.058)
2/28/93 10.140 .633 .707 (.626) (.004)
8 months ended 2/29/92 9.920 .429 .218 (.427) --
Year ended 6/30/91 9.790 .639 .133 (.642) --
6/30/90 9.850 .641 (.058) (.643) --
6/30/89 9.240 .649* .610 (.649) --
6/30/88 9.280 .647* (.040) (.647) --
6/30/87** 9.600 .652* (.320) (.652) --
- ----------------------------------------------------------------------------------------------
CA INS
- ----------------------------------------------------------------------------------------------
Class A
9/7/94 to 2/28/95 10.220 .255* .068 (.265) (.028)
Class C
9/13/94 to 2/28/95 10.060 .210* .123 (.215) (.028)
Class R
Year ended, 2/28/95 10.670 .559 (.412) (.559) (.028)
2/28/94 10.850 .560 (.101) (.556) (.083)
2/28/93 10.010 .584 .871 (.579) (.036)
8 months ended 2/29/92 9.650 .401 .360 (.401) --
Year ended 6/30/91 9.480 .600 .176 (.606) --
6/30/90 9.630 .608 (.151) (.607) --
6/30/89 9.020 .607 .610 (.607) --
6/30/88 8.980 .600* .040 (.600) --
6/30/87** 9.600 .630* (.620) (.630) --
- ----------------------------------------------------------------------------------------------
</TABLE>
See notes on page 82.
76
<PAGE>
NUVEEN TAX-FREE VALUE FUNDS ANNUAL REPORT
FEBRUARY 28, 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Ratios/Supplemental data
----------------------------------------------------------------
Net
asset Total return Ratio of net
value on Net assets Ratio of investment income
end of net asset end of period expenses to average to average Portfolio
period value++ (in thousands) net assets net assets turnover rate
- --------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
- --------------------------------------------------------------------------------------------
$10.100 2.52% $ 3,146 1.00%+* 5.81%+* 32%
10.100 3.71 200 1.75+* 5.03+* 32
10.130 .78 208,080 .71 5.83 32
10.740 5.08 218,430 .73 5.47 19
10.850 13.66 183,215 .71 6.05 5
10.140 6.61 133,377 .67+ 6.30+ --
9.920 8.16 107,508 .69 6.48 15
9.790 6.14 78,704 .69 6.51 8
9.850 14.12 52,048 .75* 6.79* 22
9.240 6.87 29,640 .70* 7.09* 48
9.280 3.28 19,094 .18* 6.62* 17
- --------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------
10.250 3.33 4,753 1.05+* 5.45+* 25
10.150 3.45 222 1.80+* 4.69+* 25
10.230 1.68 198,928 .70 5.60 25
10.670 4.27 208,115 .71 5.12 14
10.850 15.05 168,852 .75 5.72 9
10.010 7.99 100,933 .64+ 5.97+ 7
9.650 8.43 74,551 .68 6.26 29
9.480 4.93 50,625 .70 6.36 13
9.630 13.97 35,032 .82 6.52 23
9.020 7.44 22,394 .82* 6.77* 31
8.980 (.13) 16,192 .17* 6.48* 4
- --------------------------------------------------------------------------------------------
</TABLE>
77
<PAGE>
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Income from investment
operations Less distributions
------------------------------------------------------------------------
Net realized
Net asset and unrealized Dividends
value Net gain (loss) from net Distributions
beginning investment from investment from
of period income investments+++ income capital gains
- -------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
MA
- -------------------------------------------------------------------------------------------------
Class A
9/7/94 to 2/28/95 $ 9.540 $.254* $ .025 $(.259) $ --
Class C
10/6/94 to 2/28/95 9.280 .188* .254 (.212) --
Class R
Year ended,
2/28/95 9.940 .541* (.403) (.538) --
2/28/94 9.910 .543* .038 (.541) (.010)
2/28/93 9.210 .563* .704 (.563) (.004)
3 months ended 2/29/92 9.130 .146 .077 (.143) --
Year ended,
11/30/91 8.760 .577* .375 (.582) --
11/30/90 8.900 .587* (.144) (.583) --
11/30/89 8.600 .587* .300 (.587) --
11/30/88 8.250 .581* .350 (.581) --
12/10/86 to 11/30/87 9.600 .577* (1.350) (.577) --
- -------------------------------------------------------------------------------------------------
MA INS
- -------------------------------------------------------------------------------------------------
Class A
9/7/94 to 1/31/95 10.030 .249* .039 (.258) --
Class C
9/15/94 to 1/31/95 9.910 .202* .137 (.209) --
Class R
Year ended,
2/28/95 10.450 .545 (.386) (.549) --
2/28/94 10.440 .537 -- (.527) --
2/28/93 9.650 .551 .784 (.545) --
2/29/92 9.360 .570 .301 (.581) --
2/28/91 9.140 .568 .219 (.567) --
2/28/90 8.960 .571* .178 (.569) --
2/28/89 9.030 .576* (.070) (.576) --
2/29/88 9.540 .582* (.510) (.582) --
12/10/86 to 2/28/87 9.600 .131* (.060) (.131) --
- -------------------------------------------------------------------------------------------------
</TABLE>
See notes on page 82.
78
<PAGE>
NUVEEN TAX-FREE VALUE FUNDS ANNUAL REPORT
FEBRUARY 28, 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Ratios/Supplemental data
----------------------------------------------------------------
Net
asset Total return Ratio of net
value on Net assets Ratio of investment income
end of net asset end of period expenses to average to average Portfolio
period value++ (in thousands) net assets net assets turnover rate
- --------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
- --------------------------------------------------------------------------------------------
$ 9.560 3.05% $ 1,067 1.00%*+ 5.75%*+ 17%
9.510 4.86 147 1.75*+ 5.11*+ 17
9.540 1.64 71,568 .75* 5.77* 17
9.940 5.96 71,942 .75* 5.38* 3
9.910 14.21 53,231 .75* 5.91* 5
9.210 2.44 34,470 .71+ 6.31+ 5
9.130 11.19 31,150 .75* 6.39* 19
8.760 5.21 20,829 .75* 6.68* 23
8.900 10.62 15,513 .75* 6.64* 31
8.600 11.56 9,485 .75* 6.74* 55
8.250 (8.19) 5,681 .37*+ 6.47*+ 34
- --------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------
10.060 2.99 1,956 1.15*+ 5.34*+ 10
10.040 3.52 338 1.90*+ 4.58*+ 10
10.060 1.77 57,137 .79 5.54 10
10.450 5.22 58,255 .84 5.09 3
10.440 14.28 47,098 .86 5.47 2
9.650 9.57 28,189 .72 5.93 5
9.360 8.95 15,625 .85 6.19 6
9.140 8.52 8,649 .97* 6.17* 15
8.960 5.84 5,404 .97* 6.44* 41
9.030 1.14 4,895 .59* 6.53* 42
9.540 .75 2,312 --*+ 5.82*+ --
- --------------------------------------------------------------------------------------------
</TABLE>
79
<PAGE>
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Income from investment
operations Less distributions
----------------------------------------------------------------
Net realized
and
Net asset unrealized Dividends
value Net gain (loss) from net Distributions
beginning investment from investment from
of period income+++ investments income capital gains
- -----------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
NY
- -----------------------------------------------------------------------------------------
Class A
9/7/94 to 2/28/95 $10.230 $.277* $(.067) $(.273) $(.047)
Class C
9/14/94 to 2/28/95 10.110 .231* .038 (.222) (.047)
Class R
Year ended,
2/28/95 10.720 .579 (.529) (.573) (.047)
2/28/94 10.610 .578* .161 (.580) (.049)
2/28/93 9.880 .603* .806 (.598) (.081)
3 months ended 2/29/92 9.820 .163 .053 (.156) --
Year ended,
11/30/91 9.380 .629* .441 (.630) --
11/30/90 9.560 .631* (.181) (.630) --
11/30/89 9.180 .633* .380 (.633) --
11/30/88 8.760 .625* .420 (.625) --
12/10/86 to 11/30/87 9.600 .612* (.840) (.612) --
- -----------------------------------------------------------------------------------------
NY INS
- -----------------------------------------------------------------------------------------
Class A
9/7/94 to 1/31/95 10.160 .253* .037 (.260) (.040)***
Class C
9/14/94 to 1/31/95 10.030 .207* .133 (.210) (.040)***
Class R
Year ended,
2/28/95 10.630 .555 (.440) (.555) (.040)***
2/28/94 10.620 .550 .035 (.543) (.032)
2/28/93 9.780 .566 .849 (.562) (.013)
2/29/92 9.320 .590 .467 (.597) --
2/28/91 9.250 .598 .068 (.596) --
2/28/90 9.060 .596 .190 (.596) --
2/29/89 9.100 .593* (.040) (.593) --
2/29/88 9.830 .606* (.730) (.606) --
12/10/86 to
2/28/87 9.600 .130* .230 (.130) --
- -----------------------------------------------------------------------------------------
</TABLE>
See notes on page 82.
80
<PAGE>
NUVEEN TAX-FREE VALUE FUNDS ANNUAL REPORT
FEBRUARY 28, 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Ratios/Supplemental data
----------------------------------------------------------------
Net
asset Total return Ratio of net
value on Net assets Ratio of investment income
end of net asset end of period expenses to average to average Portfolio
period value++ (in thousands) net assets net assets turnover rate
- --------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
- --------------------------------------------------------------------------------------------
$10.120 2.21% $ 3,189 1.00%*+ $5.87%*+ 29%
10.110 2.80 86 1.75*+ 5.16*+ 29
10.150 .75 149,454 .74 5.79 29
10.720 7.10 146,297 .75* 5.33* 15
10.610 14.79 107,146 .75* 5.84* 12
9.880 2.21 66,491 .75+ 6.27+ 16
9.820 11.79 59,351 .75* 6.50* 19
9.380 4.92 44,347 .75* 6.65* 51
9.560 11.34 29,040 .75* 6.63* 85
9.180 12.20 14,975 .75* 6.89* 71
8.760 (2.44) 8,239 .37*+ 6.46*+ 20
- --------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------
10.150 3.01 7,258 1.05*+ 5.41*+ 11
10.120 3.53 285 1.80*+ 4.65*+ 11
10.150 1.37 345,121 .65 5.57 11
10.630 5.57 388,176 .68 5.11 5
10.620 14.96 314,877 .73 5.56 6
9.780 11.66 167,048 .69 6.08 4
9.320 7.61 80,484 .73 6.46 13
9.250 8.75 40,372 .85 6.35 30
9.060 6.37 20,206 .97* 6.58* 62
9.100 (.85) 14,078 .61* 6.73* 36
9.830 3.76 5,177 -- 4.97*+ --
- --------------------------------------------------------------------------------------------
</TABLE>
81
<PAGE>
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Income from investment
operations Less distributions
---------------------------------------------------------------------
Net realized
Net asset and unrealized Dividends
value Net gain (loss) from net Distributions
beginning investment from investment from
of period income investments+++ income capital gains
- ----------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
OH
- ----------------------------------------------------------------------------------------------
Class A
9/7/94 to 2/28/95 $10.160 $.266 $ .087 $(.272) $(.041)
Class C
9/16/94 to 2/28/95 10.070 .219* .133 (.221) (.041)
Class R
Year ended,
2/28/95 10.610 .568 (.388) (.569) (.041)
2/28/94 10.580 .570* .087 (.565) (.062)
2/28/93 9.870 .595* .728 (.589) (.024)
3 months ended 2/29/92 9.770 .154 .126 (.153) (.027)
Year ended,
11/30/91 9.530 .619 .287 (.624) (.042)
11/30/90 9.550 .624 .003 (.624) (.023)
11/30/89 9.040 .629* .510 (.629) --
11/30/88 8.610 .626* .430 (.626) --
12/10/86 to 11/30/87 9.600 .600* (.990) (.600) --
- ----------------------------------------------------------------------------------------------
</TABLE>
* Reflects the waiver of certain management fees and reimbursement of certain
other expenses by the Adviser. See note 7 of Notes to Financial Statements.
** Shares in the California and California Insured Funds were first offered for
sale on July 1, 1986.
*** The amounts shown include distributions in excess of capital gains of
$.0015 per share.
+ Annualized.
++ Total Return on Net Asset Value is the combination of reinvested dividend
income, reinvested capital gain distributions if any, and changes in net asset
value per share.
+++ Net of taxes, if applicable. See note 1 of Notes to Financial Statements.
82
<PAGE>
NUVEEN TAX-FREE VALUE FUNDS ANNUAL REPORT
FEBRUARY 28, 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Ratios/Supplemental data
----------------------------------------------------------------
Net
asset Total return Ratio of net
value on Net assets Ratio of investment income
end of net asset end of period expenses to average to average Portfolio
period value++ (in thousands) net assets net assets turnover rate
- --------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
- --------------------------------------------------------------------------------------------
$10.200 3.63% 4,320 1.00%+* 5.67%+* 28%
10.160 3.63 901 1.75+* 4.92+* 28
10.180 1.99 162,231 .73 5.70 28
10.610 6.30 167,448 .75* 5.28* 9
10.580 13.88 133,797 .75* 5.86* 13
9.870 2.87 90,121 .70+ 6.16+ 3
9.770 9.84 81,649 .71 6.37 16
9.530 6.86 56,887 .74 6.61 38
9.550 12.97 37,714 .75* 6.66* 66
9.040 12.56 20,144 .75* 6.94* 55
8.610 (4.10) 9,135 .39+* 6.53+* 26
- --------------------------------------------------------------------------------------------
</TABLE>
83
<PAGE>
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Board of Directors and Shareholders of
Nuveen California Tax-Free Fund, Inc.
Nuveen Tax-Free Bond Fund, Inc.
Nuveen Insured Tax-Free Bond Fund, Inc.:
We have audited the accompanying statements of net assets of
NUVEEN CALIFORNIA TAX-FREE FUND, INC. (comprised of the
Nuveen California and California Insured Tax-Free Value
Funds) (a Maryland corporation), NUVEEN TAX-FREE BOND FUND,
INC. (comprised of the Nuveen Massachusetts, New York and
Ohio Tax-Free Value Funds) and NUVEEN INSURED TAX-FREE BOND
FUND, INC, (comprised of the Nuveen Massachusetts and New
York Insured Tax-Free Value Funds) (both Minnesota
corporations), including the portfolios of investments, as of
February 28, 1995, 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 Funds' 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 28, 1995, by correspondence with the custodian and
brokers. As to securities purchased but not received, we
requested confirmation from brokers and, when replies were
not received, we carried out other alternative auditing
procedures. An audit also includes assessing the accounting
principles used and significant estimates made by management,
as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable
basis for our opinion.
In our opinion, the financial statements and financial
highlights referred to above present fairly, in all material
respects, the net assets of each of the respective funds
constituting the Nuveen California Tax-Free Fund, Inc.,
Nuveen Tax-Free Bond Fund, Inc. and Nuveen Insured Tax-Free
Bond Fund, Inc. as of February 28, 1995, 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 3, 1995
84
<PAGE>
The
human bond
[PHOTO OF BOOK APPEARS HERE]
At John Nuveen & Co.
Incorporated, where our
tax-free municipal bonds have
helped people live their
dreams for nearly 100 years,
we still believe our strongest
bond is human.(TM)
For almost a century, John Nuveen & Company has concentrated its resources and
expertise on one area: municipal bonds. We are the oldest and largest investment
banking firm specializing exclusively in municipal securities, and we strive to
be the best.
We maintain a sharp focus on the needs of prudent investors and their
families, offer investments of quality, and then work to make them better by
seeking out opportunity. We hold to a dedicated belief in the importance of
research. And we sustain a commitment to sound financial management through
value investing.
Our hope is that by providing quality investments we may foster opportunity
for our investors. Through careful research, attention to detail, and our
philosophy of managing for long-term value, we hope to provide our shareholders
with the attractive level of income they need to achieve their personal goals
and aspirations.
These are the things that matter most, and it's why we say that, at Nuveen,
our strongest bond is human.
[LOGO OF JOHN NUVEEN]
John Nuveen & Co. Incorporated
333 West Wacker Drive
Chicago, Illinois 60606-1286
<PAGE>
[NUVEEN LOGO APPEARS HERE]
Nuveen Tax-Free
Money Market Funds
Dependable tax-free
income for generations
NUVEEN TAX-FREE RESERVES, INC.
NUVEEN CALIFORNIA TAX-FREE
MONEY MARKET FUND
NUVEEN MASSACHUSETTS TAX-FREE
MONEY MARKET FUND
NUVEEN NEW YORK TAX-FREE
MONEY MARKET FUND
[PHOTO OF COUPLE APPEARS HERE]
ANNUAL REPORT/FEBRUARY 28, 1995
<PAGE>
CONTENTS
3 Dear shareholder
5 Answering your questions
7 Fund performance
9 Portfolio of investments
21 Statement of net assets
22 Statement of operations
26 Statement of changes in net assets
33 Notes to financial statements
38 Financial highlights
46 Report of independent auditors
<PAGE>
Dear
shareholder
[PHOTO OF RICHARD J. FRANKE APPEARS HERE]
"Providing secure
income remains
our top priority"
The objective of the Nuveen Tax-Free Money Market Funds is to provide as high a
level of current tax-free income as is consistent with stability of principal
and the maintenance of liquidity. It is a pleasure to report that for the year
ended February 28, 1995, Nuveen's Tax-Free Money Market Funds met their
objectives, providing yields that compared favorably with those available from
both tax-exempt and taxable short-term alternatives.
The 7-day annualized yield for the funds covered in this report ranged from
3.33% to 3.51% on February 28. To equal these yields, an investor in the 36%
federal income tax bracket would need to earn at least 5.20% on taxable
alternatives.
Since February 1994, the Federal Reserve Board raised interest rates seven
times to fend off future inflation. As a result, the funds' yields increased
more than 70% over the course of the year. In this environment, we continue to
look for opportunities to capture attractive yields in different market sectors
and over many types of municipal securities, including tax-free variable rate
demand notes, tax and revenue anticipation notes, commercial paper, and selected
certificates of participation. The benefits of this type of diversification
combine with share
3
<PAGE>
price stability, daily liquidity, and investment convenience to make Nuveen Tax-
Free Money Market Funds some of the best vehicles conservative, tax-conscious
investors can find for their short-term funds.
Our approach to investing has provided more than one million Nuveen investors
with the tax-free income they need to help realize their dreams and goals and to
improve the quality of their lives year after year. We are confident that it
will continue to do so in the future.
We appreciate your trust in our family of funds, and we look forward to helping
you meet your tax-free investment objectives in the future.
Sincerely,
[SIGNATURE OF RICHARD J. FRANKE]
Richard J. Franke
Chairman of the Board
April 17, 1995
4
<PAGE>
Answering your
questions
We spoke recently with Tom
Spalding, head of Nuveen's portfo-
lio management team, and asked
him about developments in the
municipal market and the outlook
for Nuveen's tax-free funds.
How did the Federal
Reserve Board's moves
to raise short-term
interest rates affect
the performance of
the funds?
The Fed's moves certainly affected our money market funds' performance over the
past year. Yields have moved up significantly, which is good news for income-
oriented investors.
By raising short-term interest rates aggressively in recent months, the
Federal Reserve has demonstrated its commitment to fighting inflation, which
should be good news for all municipal investors. As long as inflation-the
primary factor affecting investment values-remains under control, the
fundamentals for strong municipal performance are in place.
5
<PAGE>
[PHOTO OF TOM SPALDING APPEARS HERE]
Tom Spalding, head
of Nuveen's portfolio
management team,
answers investors'
questions on develop-
ments in the
municipal market.
A number of fund
managers have
encountered problems
recently related to
the use of derivative
securities. Do you use
derivatives in your
portfolios?
Over the last year, participants in the financial services industry, including
securities dealers, underwriters and investment advisers, received much
attention in the press relating to the use of certain types of derivative
financial instruments in the management of portfolios, including those of mutual
funds. There are many different types of derivative investments available in the
market today, including those derivatives whose market values respond to
interest rate changes with greater volatility than do others. In general,
derivatives used to speculate on the future course of interest rates pose the
greatest risk, while derivatives used for hedging purposes present less risk
and, if used properly, can often reduce the probability of loss (while
sacrificing upside potential). Synthetic money market securities generally
present no greater risk to investors than ordinary money market securities.
Although the Funds are authorized to invest in such financial instruments, and
may do so in the future, they did not make any such investments during the
fiscal year ended February 28, 1995, other than a limited amount of synthetic
money market securities.
6
<PAGE>
NUVEEN TAX-FREE
RESERVES, INC.
Tax-Free Reserves
Shareholders in this Fund enjoyed attractive tax-free dividends over the past 12
months. During the fiscal year, the Fund's 7-day annualized yield rose from
1.88% to 3.37%.
[BAR GRAPH APPEARS HERE]
Tax Free Reserves
Year to Date
Summary
Fiscal 1995
Date Dividend
- -----------------
3/94 .0015
4/94 .0015
5/94 .0019
6/94 .0017
7/94 .0017
8/94 .0020
9/94 .0021
10/94 .0021
11/94 .0023
12/94 .0028
1/95 .0025
2/95 .0025
FUND HIGHLIGHTS 2/28/95
Current 7-day SEC yield on NAV 3.37%
Taxable-equivalent yield on NAV* 5.27%
Federal tax rate 36.0%
Total net assets ($000) $351,606
The dividend history used in this chart constitutes past performance and does
not necessarily predict the future dividends of the Fund.
*An investor subject to the indicated federal income tax rate would need to
receive this return from a fully taxable investment to equal the stated 7-day
annualized yield on NAV.
NUVEEN CALIFORNIA TAX-FREE
MONEY MARKET FUND
California
Shareholders in this Fund enjoyed attractive tax-free dividends over the past 12
months. During the fiscal year, the Fund's 7-day annualized yield rose from
2.01% to 3.51%.
[BAR GRAPH APPEARS HERE]
California Money Market
Year to Date
Summary
Fiscal 1995
Date Dividend
- -----------------
3/94 $0.0016
4/94 $0.0016
5/94 $0.0020
6/94 $0.0018
7/94 $0.0019
8/94 $0.0021
9/94 $0.0022
10/94 $0.0022
11/94 $0.0024
12/94 $0.0031
1/95 $0.0027
2/95 $0.0026
FUND HIGHLIGHTS 2/28/95
Current 7-day SEC yield on NAV 3.51%
Taxable-equivalent yield on NAV* 6.10%
Combined state and federal tax rate 42.5%
Total net assets ($000) $159,701
The dividend history used in this chart constitutes past performance and does
not necessarily predict the future dividends of the Fund.
* An investor subject to the indicated state and federal income tax rate would
need to receive this return from a fully taxable investment to equal the stated
7-day annualized yield on NAV.
7
<PAGE>
NUVEEN MASSACHUSETTS TAX-FREE
MONEY MARKET FUND
Massachusetts
Shareholders in this Fund enjoyed attractive tax-free dividends over the past 12
months. During the fiscal year, the Fund's 7-day annualized yield rose from
1.85% to 3.36%.
[BAR GRAPH APPEARS HERE]
Massachusetts Money Market
Year-to Date Summary
Fiscal 1995
Date Dividend
- -----------------
3/94 $0.0015
4/94 $0.0016
5/94 $0.0020
6/94 $0.0018
7/94 $0.0017
8/94 $0.0021
9/94 $0.0022
10/94 $0.0022
11/94 $0.0024
12/94 $0.0029
1/95 $0.0025
2/95 $0.0025
FUND HIGHLIGHTS 2/28/95
Current 7-day SEC yield on NAV 3.36%
Taxable-equivalent yield on NAV* 5.95%
Combined state and federal tax rate 43.5%
Total net assets ($000) $53,004
The dividend history used in this chart constitutes past performance and does
not necessarily predict the future dividends of the Fund.
*An investor subject to the indicated state and federal income tax rate would
need to receive this return from a fully taxable investment to equal the stated
7-day annualized yield on NAV.
NUVEEN NEW YORK TAX-FREE
MONEY MARKET FUND
New York
Shareholders in this Fund enjoyed attractive tax-free dividends over the past 12
months. During the fiscal year, the Fund's 7-day annualized yield rose from
1.77% to 3.33%.
[BAR GRAPH APPEARS HERE]
New York Money Market
Year to Date
Summary
Fiscal 1995
Date Dividend
- -----------------
3/94 $0.0013
4/94 $0.0015
5/94 $0.0018
6/94 $0.0015
7/94 $0.0015
8/94 $0.0019
9/94 $0.0021
10/94 $0.0021
11/94 $0.0023
12/94 $0.0028
1/95 $0.0023
2/95 $0.0025
FUND HIGHLIGHTS 2/28/95
Current 7-day SEC yield on NAV 3.33%
Taxable-equivalent yield on NAV* 5.89%
Combined state and federal tax rate 43.5%
Total net assets ($000) $30,454
The dividend history used in this chart constitutes past performance and does
not necessarily predict the future dividends of the Fund.
* An investor subject to the indicated state and federal income tax rate would
need to receive this return from a fully taxable investment to equal the stated
7-day annualized yield on NAV.
8
<PAGE>
NUVEEN TAX-FREE MONEY MARKET FUNDS ANNUAL REPORT
PORTFOLIO OF INVESTMENTS
FEBRUARY 28, 1995
NUVEEN TAX-FREE RESERVES, INC.
<TABLE>
<CAPTION>
PRINCIPAL AMORTIZED
AMOUNT DESCRIPTION RATINGS* COST
- -------------------------------------------------------------------------------
<C> <S> <C> <C>
ALABAMA - 2.0%
$ 7,215,000 Anniston Industrial Development Board
(Union Foundry Company), Variable Rate
Demand Bonds, 4.200%, 6/01/05+ VMIG-1 $ 7,215,000
- -------------------------------------------------------------------------------
ARIZONA - 3.9%
4,000,000 Coconino County School District No. 1
(Flagstaff Unified School District-
Series 1994B), Tax Anticipation Notes,
5.000%, 7/28/95 SP-1+ 4,011,973
6,700,000 Maricopa County Pollution Control
Corporation (Arizona Public Service
Company, Palo Verde Project), Variable
Rate Demand Bonds, 3.900%, 5/01/29+ P-1 6,700,000
2,900,000 Mesa, Arizona Municipal Development
Corporation, Special Tax Bonds, Series
1985, Commercial Paper, 4.100%, 4/03/95 VMIG-1 2,900,000
- -------------------------------------------------------------------------------
ARKANSAS - 4.0%
3,100,000 Arkansas Hospital Equipment Finance
Authority (Washington Regional Medical
Center), Variable Rate Demand Bonds,
4.350%, 10/01/98+ VMIG-1 3,100,000
11,000,000 University of Arkansas--Board of Trustees
(UAMS Campus-Series 1994), Variable Rate
Demand Bonds, 4.100%, 12/01/19+ VMIG-1 11,000,000
- -------------------------------------------------------------------------------
CALIFORNIA - 3.1%
5,800,000 California Health Facilities Financing
Authority (St. Francis Memorial
Hospital), Series 1993B, Variable Rate
Demand Bonds,
3.750%, 11/01/19+ P-1 5,800,000
5,000,000 Kings County Board of Education, 1994-95,
Tax Anticipation Notes, 4.250%, 7/28/95 SP-1+ 5,008,818
- -------------------------------------------------------------------------------
DELAWARE - 1.6%
5,600,000 Delaware Economic Development Authority,
Industrial Development (Noramco of
Delaware, Inc.), Series 1984, Variable
Rate Demand Bonds, 4.500%, 12/01/14+ N/R 5,600,000
- -------------------------------------------------------------------------------
DISTRICT OF COLUMBIA - 0.8%
3,000,000 District of Columbia General Obligation,
General Fund Recovery, Variable Rate
Demand Bonds, 4.500%, 6/01/03+ A-1+ 3,000,000
- -------------------------------------------------------------------------------
FLORIDA - 3.9%
7,500,000 Dade County Water and Sewer System,
Series 1994, Variable Rate Demand Bonds,
3.950%, 10/05/22+ VMIG-1 7,500,000
3,000,000 Hialeah Hospital Refunding, Series 1989
(Hialeah Hospital Inc.), Variable Rate
Demand Bonds, 4.350%, 2/01/14+ VMIG-1 3,000,000
3,100,000 Pasco Multi-Family Housing, Carlton Arms
of Magnolia Valley, Series 1985,
Variable Rate Demand Bonds, 4.250%,
12/01/07+ VMIG-1 3,100,000
</TABLE>
9
<PAGE>
PORTFOLIO OF INVESTMENTS
NUVEEN TAX-FREE RESERVES, INC.--CONTINUED
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT DESCRIPTION RATINGS* AMORTIZED COST
- -------------------------------------------------------------------------------
<C> <S> <C> <C>
GEORGIA - 5.6%
$ 6,500,000 Burke County Development Authority,
Pollution Control (Oglethorpe Power
Company), Adjustable Tender Bonds,
4.050%, 4/06/95 VMIG-1 $ 6,500,000
6,200,000 Fulton County Hospital Authority,
Anticipation Certificates,
Commercial Paper, 3.900%, 3/02/95 VMIG-1 6,200,000
7,000,000 Fulton County, Georgia Hospital
Authority, Anticipation Certificates
(St. Joseph's Hospital of Atlanta
Project), Commercial Paper, 4.125%,
5/31/95 VMIG-1 7,000,000
- -------------------------------------------------------------------------------
HAWAII - 1.2%
4,200,000 Hawaii Department of Budget and
Finance, Special Purpose (Adventist
Health System), Variable Rate Demand
Bonds, 4.150%, 9/01/99+ A-1 4,200,000
- -------------------------------------------------------------------------------
ILLINOIS - 12.2%
10,000,000 Illinois Development Finance
Authority (Chicago Symphony
Orchestra Project), Variable Rate
Demand Bonds, 4.100%, 12/01/28+ VMIG-1 10,000,000
4,985,000 Illinois Educational Facilities
Authority, The Art Institute of
Chicago, Series 1987, Variable Rate
Demand Bonds, 4.150%, 3/01/27+ MIG-1 4,985,000
11,400,000 Illinois Health Facilities Authority
(Victory Health Services Project),
Series 1991, 4.150%, 12/01/11
(Optional Put 3/29/95) VMIG-1 11,400,000
2,500,000 Chicago O'Hare International Airport
(American Airlines), Variable Rate
Demand Bonds, 3.950%, 12/01/17+ VMIG-1 2,500,000
Decatur Water Bonds (New South Water
Treatment), Series 1985, Commercial
Paper:
2,200,000 3.800%, 3/03/95 VMIG-1 2,200,000
3,300,000 4.150%, 4/04/95 VMIG-1 3,300,000
4,000,000 4.350%, 5/08/95 VMIG-1 4,000,000
4,600,000 4.125%, 5/11/95 VMIG-1 4,600,000
- -------------------------------------------------------------------------------
INDIANA - 3.3%
6,000,000 Indianapolis Economic Development
(Yellow Freight System),
5.500%, 1/15/10 (Mandatory Put
1/15/96) N/R 6,000,000
5,500,000 Fort Wayne Economic Development
(Georgetown Place Venture Project),
Variable Rate Demand Bonds, 4.000%,
12/01/15+ A-1+ 5,500,000
- -------------------------------------------------------------------------------
IOWA - 2.2%
2,500,000 Iowa School Corporation, Warrant
Certificates, Series A 1994,
Municipal Note, 4.250%, 7/17/95 MIG-1 2,505,917
2,900,000 Eddyville Pollution Control
(Heartland Lysine Inc.), Variable
Rate Demand Bonds, 4.600%, 11/01/03+ N/R 2,900,000
2,200,000 Mount Vernon Private College (Cornell
College Project), Series 1985,
Variable Rate Demand Bonds, 4.300%,
10/01/15+ VMIG-1 2,200,000
</TABLE>
10
<PAGE>
NUVEEN TAX-FREE MONEY MARKET FUNDS ANNUAL REPORT
FEBRUARY 28, 1995
<TABLE>
<CAPTION>
PRINCIPAL AMORTIZED
AMOUNT DESCRIPTION RATINGS* COST
- -------------------------------------------------------------------------------
<C> <S> <C> <C>
KENTUCKY - 6.8%
$ 9,005,000 Hancock County Industrial Development
(Southwire Company Project), Variable
Rate Demand Bonds, 4.250%, 7/01/10+ N/R $ 9,005,000
14,800,000 Perry County Health Care System
(Appalachian Regional Hospital, Inc.
Project), Series 1984, Variable Rate
Demand Bonds,
4.150%, 8/01/14+ VMIG-1 14,800,000
- -------------------------------------------------------------------------------
LOUISIANA - 3.6%
6,000,000 Louisiana Offshore Terminal Authority,
Variable Rate Demand Bonds, 3.900%,
9/01/06+ A-1+ 6,000,000
6,500,000 Louisiana Recovery District, Sales Tax,
Variable Rate Demand Bonds, 3.750%,
7/01/98+ VMIG-1 6,500,000
- -------------------------------------------------------------------------------
MASSACHUSETTS - 4.5%
2,300,000 Massachusetts Bay Transportation
Authority, Series A, Commercial Paper,
3.700%, 3/08/95 A-1+ 2,300,000
3,000,000 Massachusetts Dedicated Income Tax,
Variable Rate Demand Bonds, 3.650%,
6/01/95 VMIG-1 3,000,000
4,000,000 Massachusetts Health and Educational
Facilities Authority (Harvard
University), Variable Rate Demand Bonds,
3.750%, 2/01/16+ VMIG-1 4,000,000
1,000,000 Massachusetts Health and Educational
Facilities Authority (M.I.T. Project),
Variable Rate Demand Bonds, 3.850%,
7/01/21+ VMIG-1 1,000,000
2,400,000 Massachusetts Industrial Finance Agency
(Nova Realty Trust 1994 Refunding),
Variable Rate Demand Bonds, 4.100%,
12/01/02+ P-1 2,400,000
3,000,000 Massachusetts General Obligation Notes,
1994, Series A,
5.000%, 6/15/95 MIG-1 3,006,794
- -------------------------------------------------------------------------------
MICHIGAN - 4.6%
7,100,000 Michigan Job Development Authority,
Limited Obligation (Frankenmuth Bavarian
Inn), Variable Rate Demand Bonds,
4.300%, 9/01/15+ A-1 7,100,000
7,500,000 Detroit City School District, Wayne
County State School Aid Notes (Limited
Tax, General Obligation), Series 1994,
5.000%, 5/01/95 SP-1+ 7,512,887
1,650,000 Warren Economic Development Corporation,
Limited Obligation (The Prince Company--
Michigan Division), Variable Rate Demand
Bonds, 4.400%, 11/01/99+ P-1 1,650,000
- -------------------------------------------------------------------------------
MINNESOTA - 4.4%
6,410,000 Bloomington Commercial Development (94th
Street Associates), Variable Rate Demand
Bonds, 4.150%, 12/01/15+ A-1+ 6,410,000
6,430,000 Bloomington Commercial Development (James
Avenue Associates Project), Variable
Rate Demand Bonds, 4.150%, 12/01/15+ A-1+ 6,430,000
2,600,000 St. Paul Housing and Redevelopment
Authority, District Heating, Variable
Rate Demand Bonds, 4.250%, 12/01/12+ A-1 2,600,000
</TABLE>
11
<PAGE>
PORTFOLIO OF INVESTMENTS
NUVEEN TAX-FREE RESERVES, INC.--CONTINUED
<TABLE>
<CAPTION>
PRINCIPAL AMORTIZED
AMOUNT DESCRIPTION RATINGS* COST
- -------------------------------------------------------------------------------
<C> <S> <C> <C>
MISSOURI - 0.8%
$ 2,840,000 Independence Industrial Development
Authority, Industrial Revenue Bonds,
Series 1994 (Resthaven Project),
Variable Rate Demand Bonds, 4.150%,
2/01/25+ A-1+ $ 2,840,000
- -------------------------------------------------------------------------------
NEW HAMPSHIRE - 0.8%
2,900,000 Merrimack County Tax Anticipation Notes,
5.240%, 12/29/95 N/R 2,911,123
- -------------------------------------------------------------------------------
NEW YORK - 3.1%
New York City General Obligation,
Variable Rate Demand Bonds:
7,000,000 3.950%, 2/01/20+ VMIG-1 7,000,000
2,700,000 3.950%, 2/01/21+ VMIG-1 2,700,000
1,100,000 3.950%, 2/01/22+ VMIG-1 1,100,000
- -------------------------------------------------------------------------------
NORTH CAROLINA - 1.4%
5,100,000 North Carolina Medical Care Commission,
Hospital Pooled Financing, Variable Rate
Demand Bonds, 3.900%, 10/01/13+ VMIG-1 5,100,000
- -------------------------------------------------------------------------------
OHIO - 7.9%
9,600,000 Centerville Health Care (Bethany Lutheran
Village), Variable Rate Demand Bonds,
4.000%, 5/01/08+ VMIG-1 9,600,000
3,500,000 Centerville Health Care (Bethany Lutheran
Village Continuing Care Facilities
Expansion Project), Variable Rate Demand
Bonds,
4.000%, 11/01/13+ VMIG-1 3,500,000
3,000,000 Cincinnati and Hamilton County Port
Authority (Kenwood Office Associates),
Variable Rate Demand Bonds, 3.900%,
9/01/25+ A-1 3,000,000
2,795,000 Clermont County Economic Development
(Clermont Hills County Project),
Commercial Paper, 4.100%, 5/01/95 N/R 2,795,000
2,700,000 Cuyahoga County--University Hospital of
Cleveland, Series 1985, Variable Rate
Demand Bonds, 3.750%, 1/01/16+ VMIG-1 2,700,000
3,900,000 Franklin County Hospital Facilities
(Traditions at Mill Run), Floating Rate
Demand Bonds, 4.350%, 11/01/14+ N/R 3,900,000
2,200,000 Franklin County (Rickenbacker Holdings,
Inc. Project), Variable Rate Demand
Bonds, 4.200%, 12/01/10+ N/R 2,200,000
- -------------------------------------------------------------------------------
PENNSYLVANIA - 1.6%
3,000,000 Pennsylvania Tax Anticipation Notes,
First Series of 1994-1995, 4.750%,
6/30/95 MIG-1 3,007,246
1,100,000 Chartiers Valley Industrial and
Commercial Development Authority
(Universal Auto), Variable Rate Demand
Bonds, 4.140%, 8/01/00+ N/R 1,100,000
1,400,000 Delaware County Industrial Development
Authority, Airport Facility (UPS),
Variable Rate Demand Bonds, 3.750%,
12/01/15+ A-1+ 1,400,000
</TABLE>
12
<PAGE>
NUVEEN TAX-FREE MONEY MARKET FUNDS ANNUAL REPORT
FEBRUARY 28, 1995
<TABLE>
<CAPTION>
PRINCIPAL AMORTIZED
AMOUNT DESCRIPTION RATINGS* COST
- -------------------------------------------------------------------------------
<C> <S> <C> <C>
TENNESSEE - 1.7%
$ 6,100,000 Roane County Industrial Development Board
(Fortofil Fiber), Variable Rate Demand
Bonds, 4.000%, 12/15/12+ N/R $ 6,100,000
- -------------------------------------------------------------------------------
TEXAS - 4.6%
4,000,000 Texas Tax Anticipation Notes, 5.000%,
8/31/95 MIG-1 4,016,516
4,500,000 Angelina and Neches River Authority,
Industrial Development Corp., Solid
Waste (Teec Int. Temple Inland), Series
1984E, Variable Rate Demand Bonds,
3.900%, 5/01/14+ VMIG-1 4,500,000
4,800,000 Lufkin Health Facilities Development
Corporation (Memorial Medical Center of
East Texas), Variable Rate Demand Bonds,
4.300%, 1/01/18+ A-1 4,800,000
3,000,000 Plano Health Facilities Development
Corporation, Children's and Presbyterian
Health Care, Commercial Paper, 3.700%,
3/01/95 VMIG-1 3,000,000
- -------------------------------------------------------------------------------
UTAH - 2.2%
Emery County Pollution Control, Refunding
Bonds (Pacificorp Project), Series 1991,
Commercial Paper:
4,100,000 3.750%, 3/07/95 A-1+ 4,100,000
3,700,000 3.750%, 3/13/95 A-1+ 3,700,000
- -------------------------------------------------------------------------------
VIRGINIA - 1.7%
2,600,000 Norfolk Industrial Development Authority
(Norfolk, Virginia Beach, Portsmouth),
Industrial Development Bonds, Variable
Rate Demand Bonds, 5.850%, 11/01/04+ N/R 2,600,000
3,300,000 Richmond Industrial Development Authority
(Richmond MSA), Variable Rate Demand
Bonds, 5.850%, 11/01/04+ N/R 3,300,000
- -------------------------------------------------------------------------------
WASHINGTON - 5.2%
5,500,000 Washington Health Care Facilities
Authority (Adventist Health System
West/Walla Walla General), Variable Rate
Demand Bonds, 4.390%, 9/01/09+ A-1 5,500,000
3,300,000 Washington Housing Finance Commission
(Crista Ministries Project), Series
1991B, Variable Rate Demand Bonds,
4.150%, 7/01/11+ VMIG-1 3,300,000
5,415,000 Washington Housing Finance Commission
(YMCA of Greater Seattle Program),
Variable Rate Demand Bonds, 3.950%,
7/01/11+ VMIG-1 5,415,000
4,040,000 Yakima County Public Corporation (Jeld-
Wen Inc.), Variable Rate Demand Bonds,
4.150%, 5/01/01+ VMIG-1 4,040,000
- -------------------------------------------------------------------------------
WISCONSIN - 1.6%
5,500,000 Milwaukee Housing Authority (Yankee Hill
Apartments), Variable Rate Demand Bonds,
3.850%, 12/01/09+ A-1 5,500,000
</TABLE>
13
<PAGE>
PORTFOLIO OF INVESTMENTS
NUVEEN TAX-FREE RESERVES, INC.--CONTINUED
<TABLE>
<CAPTION>
PRINCIPAL AMORTIZED
AMOUNT DESCRIPTION RATINGS* COST
- -----------------------------------------------------------------------------
<C> <S> <C> <C>
WYOMING - 0.3%
$ 1,200,000 Sweetwater County Pollution Control
(Pacificorp), Variable Rate Demand
Bonds, 3.850%, 12/01/14+ A-1+ $ 1,200,000
- -----------------------------------------------------------------------------
$353,485,000 Total Investments - 100.6% 353,566,274
- -------------------
------------------------------------------------------------------
Other Assets Less Liabilities - (0.6)% (1,959,877)
- -----------------------------------------------------------------------------
Net Assets - 100% $351,606,397
</TABLE>
- --------------------------------------------------------------------------------
* 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.
14
<PAGE>
NUVEEN MONEY MARKET VALUE FUNDS ANNUAL REPORT
FEBRUARY 28, 1995
NUVEEN CALIFORNIA MONEY MARKET FUND
<TABLE>
<CAPTION>
PRINCIPAL AMORTIZED
AMOUNT DESCRIPTION RATINGS* COST
- -------------------------------------------------------------------------------
<C> <S> <C> <C>
$ 3,000,000 California Health Facilities Authority
(St. Joseph Health System), Series A,
Variable Rate Demand Bonds, 3.700%,
7/01/13+ VMIG-1 $ 3,000,000
2,900,000 California Health Facilities Authority,
Pooled Loan Program, Variable Rate
Demand Bonds, 4.050%, 6/01/07+ VMIG-1 2,900,000
6,000,000 California Health Facilities Authority
(St. Francis Memorial Hospital), Series
1993B, Variable Rate Demand Bonds,
3.750%, 11/01/19+ P-1 6,000,000
8,000,000 California Pollution Control Finance
Authority (Pacific Gas and Electric),
Series D 1988, Commercial Paper, 4.050%,
4/11/95 A-1 8,000,000
California Pollution Control Finance
Authority (Shell Oil Company), Variable
Rate Demand Bonds:
4,000,000 3.700%, 11/01/00+ VMIG-1 4,000,000
1,000,000 3.700%, 10/01/11+ VMIG-1 1,000,000
4,000,000 California Pollution Control Finance
Authority, Pollution Control (Exxon
Project), Variable Rate Demand Bonds,
3.800%, 12/01/12+ A-1+ 4,000,000
3,000,000 California School Cash Reserve Program
Authority, 1994 Pool Bonds, Series A
Notes, 4.500%, 7/05/95 MIG-1 3,007,478
6,000,000 California 1994-1995 Anticipation
Floating Index Notes, Series B, Variable
Rate Demand Bonds, 4.140%, 6/28/95 MIG-1 6,000,000
5,500,000 California Statewide Community
Development Authority, Certificates of
Participation, Series 1993, Variable
Rate Demand Bonds,
3.600%, 12/01/18+ A-1+ 5,500,000
3,000,000 Hayward Housing Authority (Huntwood
Terrace), Multi-Family Mortgage, Series
1993A, Variable Rate Demand Bonds,
4.150%, 3/01/27+ A-1 3,000,000
5,000,000 Kern Community College District,
Certificates of Participation, Series
1995, Variable Rate Demand Bonds,
4.300%, 1/01/25+ A-1 5,000,000
3,000,000 Kings County Board of Education, 1994-
1995, Tax Anticipation Notes, 4.250%,
7/28/95 SP-1+ 3,005,291
3,000,000 Long Beach, 1994-1995 Tax Anticipation
Notes, 4.750%, 9/20/95 MIG-1 3,010,407
3,000,000 Los Angeles County, 1994-1995 Tax
Anticipation Notes,
4.500%, 6/30/95 MIG-1 3,006,201
6,000,000 Los Angeles County Metropolitan
Transportation Authority, Commercial
Paper, 4.300%, 4/11/95 P-1 6,000,000
7,400,000 Oakland Capital Improvement Project,
Certificates of Participation, Variable
Rate Demand Bonds, 4.400%, 12/01/15+ N/R 7,400,000
4,900,000 Orange County Apartment Development
(Monarch Bay Apartments Project),
Variable Rate Demand Bonds, 5.300%,
10/01/07+ A-1+ 4,900,000
3,800,000 Orange County (Robinson Ranch Apartments
Project), Variable Rate Demand Bonds,
5.250%, 11/01/08+ VMIG-1 3,800,000
5,000,000 Orange County Apartment Development
(Niguel Summit), Variable Rate Demand
Bonds, 4.250%, 11/01/09+ VMIG-1 5,000,000
3,000,000 Riverside County, Tax Anticipation Notes,
4.250%, 6/30/95 MIG-1 3,006,233
3,000,000 Riverside County School Financing
Authority, School Districts Anticipation
Notes, Series 1994-1995, 4.500%, 7/07/95 MIG-1 3,006,563
5,000,000 Sacramento Municipal Utility District,
Series G, Commercial Paper, 4.200%,
3/09/95 P-1 5,000,000
</TABLE>
15
<PAGE>
PORTFOLIO OF INVESTMENTS
NUVEEN CALIFORNIA MONEY MARKET FUND--CONTINUED
<TABLE>
<CAPTION>
PRINCIPAL AMORTIZED
AMOUNT DESCRIPTION RATINGS* COST
- -------------------------------------------------------------------------------
<C> <S> <C> <C>
$ 5,000,000 Sacramento County Certificates of
Participation (Administration and
Courthouse Project), Variable Rate
Demand Bonds,
3.700%, 6/01/20+ VMIG-1 $ 5,000,000
5,000,000 San Bernardino County Transportation
Authority, Limited Tax Bonds, Series
1994A, Variable Rate Demand Bonds,
4.100%, 3/01/10+ VMIG-1 5,000,000
3,000,000 San Diego Housing Authority, Multi-Family
Housing, Series 1993-A (Carmel Del Mar
Apartments), Variable Rate Demand Bonds,
4.000%, 12/01/15+ A-1 3,000,000
5,300,000 San Diego County Regional Transportation
Commission, Second Senior Tax, Series
1994, Variable Rate Demand Bonds,
3.900%, 4/01/08+ VMIG-1 5,300,000
7,000,000 San Francisco City and County Housing
(Bayside Village), Variable Rate Demand
Bonds, 3.900%, 12/01/05+ VMIG-1 7,000,000
7,000,000 San Dimas Industrial Development Bonds
(Bausch and Lomb Incorporated), Variable
Rate Demand Bonds, 5.150%, 12/01/15+ N/R 7,000,000
5,300,000 Santa Ana Health Facilities Authority
(Town and Country), Variable Rate Demand
Bonds, 3.600%, 10/01/20+ A-1 5,300,000
2,700,000 Santa Clara County Transit District,
Refunding Equipment Trust Certificates,
Variable Rate Demand Bonds, 3.850%,
6/01/15+ VMIG-1 2,700,000
6,400,000 Torrance Hospital (Little Company of Mary
Hospital--Torrance Memorial Hospital),
Variable Rate Demand Bonds,
4.150%, 2/01/22+ A-1 6,400,000
7,000,000 Vista Community Development Commission,
Bond Anticipation Notes, Series 1992,
Commercial Paper, 4.500%, 11/01/95 A-1 7,000,000
- -------------------------------------------------------------------------------
$152,200,000 Total Investments - 95.3% 152,242,173
- -------------------
--------------------------------------------------------------------
Other Assets Less Liabilities - 4.7% 7,459,313
- -------------------------------------------------------------------------------
Net Assets - 100% $159,701,486
</TABLE>
- --------------------------------------------------------------------------------
* 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.
16
<PAGE>
NUVEEN TAX-FREE MONEY MARKET FUNDS ANNUAL REPORT
FEBRUARY 28, 1995
NUVEEN MASSACHUSETTS MONEY MARKET FUND
<TABLE>
<CAPTION>
PRINCIPAL AMORTIZED
AMOUNT DESCRIPTION RATINGS* COST
- -------------------------------------------------------------------------------
<C> <S> <C> <C>
Massachusetts Bay Transportation Authority,
Commercial Paper,
Series A:
$ 2,400,000 3.700%, 3/01/95 A-1+ $ 2,400,000
2,600,000 3.700%, 3/08/95 A-1+ 2,600,000
2,000,000 Massachusetts General Obligation Notes,
1994 Series A,
5.000%, 6/15/95 MIG-1 2,004,644
1,490,000 Massachusetts Health and Educational
Facilities Authority (Newbury College),
Variable Rate Demand Bonds, 3.900%,
11/01/18+ N/R 1,490,000
Massachusetts Health and Educational
Facilities Authority (Capital Asset
Program), Variable Rate Demand Bonds:
1,900,000 3.900%, 1/01/35+ VMIG-1 1,900,000
1,400,000 3.800%, 1/01/35+ VMIG-1 1,400,000
1,500,000 Massachusetts Health and Educational
Facilities Authority (Brigham and Women's
Hospital), Variable Rate Demand Bonds,
3.700%, 7/01/17+ VMIG-1 1,500,000
1,500,000 Massachusetts Industrial Finance Agency
(Jencoat/Levy Realty Trust), Variable Rate
Demand Bonds, 4.660%, 10/06/99+ N/R 1,500,000
1,000,000 Massachusetts Industrial Finance Agency
(Nova Realty Trust 1994 Refunding),
Variable Rate Demand Bonds, 4.100%,
12/01/02+ P-1 1,000,000
1,000,000 Massachusetts Industrial Finance Agency,
Pollution Control (New England Power
Company), Commercial Paper, 4.150%,
5/05/95 P-1 1,000,000
3,000,000 Massachusetts Industrial Finance Agency,
Pollution Control (New England Power
Company), Commercial Paper, 3.850%,
3/06/95 P-1 3,000,000
2,100,000 Massachusetts Industrial Finance Agency
(Holyoke Water Power Company Project),
Variable Rate Demand Bonds, 3.750%,
5/01/22+ VMIG-1 2,100,000
1,000,000 Massachusetts Industrial Finance Agency,
Resource Recovery (Ogden Haverhill),
Variable Rate Demand Bonds, 3.700%,
12/01/06+ VMIG-1 1,000,000
1,900,000 Massachusetts Industrial Finance Agency
(Williston Northampton School Issue),
Series A, Variable Rate Demand Bonds,
3.900%, 4/01/10+ N/R 1,900,000
2,000,000 Massachusetts Industrial Finance Agency
(WGBH Educational Foundation Project),
Variable Rate Demand Bonds,
4.200%, 10/01/09+ VMIG-1 2,000,000
1,000,000 Massachusetts Industrial Finance Agency
(New England Deaconess Association
Project), Series 1993B, Variable Rate
Demand Bonds, 3.700%, 4/01/23+ MIG-1 1,000,000
1,500,000 Massachusetts Housing Finance Authority,
Single Family Housing, Series 35, Variable
Rate Demand Bonds, 3.750%, 6/01/17+ VMIG-1 1,500,000
1,000,000 Boston General Obligation, Tax Anticipation
Notes, 5.000%, 8/01/95 Aaa 1,004,061
665,000 Boston Water and Sewer Commission, Series
1985A, Variable Rate Demand Bonds, 4.000%,
11/01/14+ VMIG-1 665,000
500,000 Boston Water and Sewer Commission, 1994
Series A, General Revenue Bonds (Senior
Series), Variable Rate Demand Bonds,
3.650%, 11/01/24+ VMIG-1 500,000
800,000 Holyoke Pollution Control (Holyoke Water
Power Company Project), Series 1988,
Variable Rate Demand Bonds, 3.750%,
11/01/13+ A-1+ 800,000
</TABLE>
17
<PAGE>
PORTFOLIO OF INVESTMENTS
NUVEEN MASSACHUSETTS MONEY MARKET FUND--CONTINUED
<TABLE>
<CAPTION>
PRINCIPAL AMORTIZED
AMOUNT DESCRIPTION RATINGS* VALUE
- -------------------------------------------------------------------------------
<C> <S> <C> <C>
$ 1,950,000 Hopkinton Bond Anticipation Notes, 4.000%,
7/06/95 N/R $ 1,952,471
1,300,000 New Bedford Industrial Development (Cliftex
Corporation), Series 1989, Variable Rate
Demand Bonds, 4.660%, 10/01/97+ N/R 1,300,000
625,000 Newton General Obligation, Limited Tax
Anticipation Notes, Series 1994, 5.200%,
4/15/95 Aaa 626,467
2,000,000 Pioneer Valley Transit Authority,
Anticipation Notes,
4.100%, 8/11/95 N/R 2,002,149
1,500,000 Reading Anticipation Notes, 4.020%, 7/14/95 N/R 1,500,211
1,000,000 Sudbury Anticipation Notes, 3.570%, 3/28/95 N/R 1,000,028
960,000 Waltham Anticipation Notes, 4.000%, 8/25/95 N/R 960,595
2,900,000 Woods Hole, Martha's Vineyard and Nantucket
Steamship Authority, Anticipation Notes,
4.000%, 4/28/95 N/R 2,900,359
3,200,000 Puerto Rico Highway/Transportation
Authority, Series X, Variable Rate Demand
Bonds, 3.500%, 7/01/99+ VMIG-1 3,200,000
3,300,000 Puerto Rico Industrial Medical Educational
and Environmental Authority (Inter-
American University of Puerto Rico),
Commercial Paper, 3.700%, 4/04/95 VMIG-1 3,300,000
700,000 Puerto Rico Industrial Medical Educational
and Environmental Authority (Ana G. Mendez
Educational Foundation), Commercial Paper,
3.750%, 4/10/95 A-1+ 700,000
- -------------------------------------------------------------------------------
$51,690,000 Total Investments - 97.6% 51,705,985
- -------------------------------------------------------------------------------
- -------------------
Other Assets Less Liabilities - 2.4% 1,298,307
- -------------------------------------------------------------------------------
Net Assets - 100% $53,004,292
</TABLE>
- --------------------------------------------------------------------------------
* 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.
18
<PAGE>
NUVEEN TAX-FREE MONEY MARKET FUNDS ANNUAL REPORT
FEBRUARY 28, 1995
NUVEEN NEW YORK MONEY MARKET FUND
<TABLE>
<CAPTION>
PRINCIPAL AMORTIZED
AMOUNT DESCRIPTION RATINGS* COST
- ------------------------------------------------------------------------------
<C> <S> <C> <C>
$ 1,500,000 New York State Energy Research and
Development Authority (Niagara Power
Corporation), Variable Rate Demand Bonds,
4.100%, 7/01/15+ A-1+ $ 1,500,000
1,000,000 New York State Energy Research and
Development Authority (Central Hudson Gas
and Electric), Variable Rate Demand
Bonds,
3.750%, 11/01/20+ VMIG-1 1,000,000
400,000 New York State Energy Research and
Development Authority, Pollution Control
(New York State Electric and Gas Corp.),
Series 1994C, Commercial Paper, 3.875%,
4/06/95 VMIG-1 400,000
1,000,000 New York State Energy Research and
Development Authority (New York State
Electric and Gas Company), 1985 Series D,
Commercial Paper, 4.000%, 4/07/95 A-1+ 1,000,000
2,000,000 New York State Housing Finance Agency
(Normandie Court), Variable Rate Demand
Bonds, 3.900%, 5/15/15+ VMIG-1 2,000,000
195,000 New York State Job Development Authority,
Series 1984E, Variable Rate Demand Bonds,
3.800%, 3/01/99+ MIG-1 195,000
260,000 New York State Job Development Authority,
Series 1984C, Variable Rate Demand Bonds,
3.800%, 3/01/99+ MIG-1 260,000
1,300,000 New York State Local Government Assistance
Corporation,
Series 1994B, Variable Rate Demand Bonds,
3.750%, 4/01/23+ VMIG-1 1,300,000
800,000 New York State Medical Care Facilities
Finance Agency (Lenox Hill Hospital),
Variable Rate Demand Bonds, 3.800%,
11/01/08+ VMIG-1 800,000
1,700,000 New York State Medical Care Facilities
Finance Agency (Children's Hospital of
Buffalo), Variable Rate Demand Bonds,
4.000%, 11/01/05+ VMIG-1 1,700,000
1,000,000 Dormitory Authority of the State of New
York, Oxford University Press (Letter of
Credit Secured), Series 1993, Variable
Rate Demand Bonds, 3.950%, 7/01/23+ VMIG-1 1,000,000
700,000 Dormitory Authority of the State of New
York (Sloan-Kettering Cancer Center),
Commercial Paper, 4.200%, 4/03/95 P-1 700,000
600,000 Dormitory Authority of the State of New
York (Sloan-Kettering Cancer Center),
Series 1989C, Commercial Paper, 4.000%,
4/04/95 P-1 600,000
500,000 Dormitory Authority of the State of New
York, Commercial Paper, 4.200%, 5/12/95 P-1 500,000
1,000,000 Erie County Anticipation Notes 1994,
4.750%, 8/15/95 MIG-1 1,003,300
1,000,000 Erie County Water Authority, Variable Rate
Demand Bonds, Water Works System, 3.750%,
12/01/16+ VMIG-1 1,000,000
1,000,000 Hastings-on-Hudson Union Free School
District, Anticipation (Renewal) Notes,
4.490%, 7/26/95 N/R 1,000,755
500,000 Ithaca City School District, Anticipation
Notes, 4.500%, 6/29/95 N/R 500,397
1,000,000 Monroe County Bond Anticipation Notes,
Series C, Unlimited Tax General
Obligation, 5.000%, 6/09/95 N/R 1,001,539
200,000 New York City General Obligation, Variable
Rate Demand Bonds, 3.950%, 2/01/21+ VMIG-1 200,000
</TABLE>
19
<PAGE>
PORTFOLIO OF INVESTMENTS
NUVEEN NEW YORK MONEY MARKET FUND--CONTINUED
<TABLE>
<CAPTION>
PRINCIPAL AMORTIZED
AMOUNT DESCRIPTION RATINGS* COST
- -------------------------------------------------------------------------------
<C> <S> <C> <C>
$ 900,000 New York City General Obligation, 1994 B-4,
Variable Rate Demand Bonds, 4.000%,
8/15/22+ VMIG-1 $ 900,000
300,000 New York City Housing Development
Corporation (Columbus Gardens Project),
Variable Rate Demand Bonds, 3.900%,
2/01/07+ A-1 300,000
800,000 New York City Industrial Development Agency
(LaGuardia Associates Project), Variable
Rate Demand Bonds, 3.800%, 12/01/15+ A-1 800,000
1,000,000 New York City Municipal Water Finance
Authority, Variable Rate Demand Bonds,
3.900%, 6/15/22+ VMIG-1 1,000,000
300,000 New York City Municipal Water Finance
Authority, Commercial Paper, 3.550%,
3/02/95 SP-1+ 300,000
1,500,000 New York City Housing Development
Corporation (Upper Fifth Avenue Project),
Variable Rate Demand Bonds, 3.750%,
1/01/16+ VMIG-1 1,500,000
1,000,000 New York City Housing Development, Variable
Rate Demand Bonds, 3.800%, 8/01/15+ VMIG-1 1,000,000
700,000 New York City Trust for Cultural Resources
(Guggenheim Foundation), Variable Rate
Demand Bonds, 3.600%, 12/01/15+ VMIG-1 700,000
975,000 St. Lawrence County Industrial Development
Agency, Pollution Control (Reynolds
Metals), Variable Rate Demand Bonds,
3.900%, 12/01/07+ P-1 975,000
1,000,000 Suffolk County, Tax Anticipation Notes,
1994 (RA Series II),
4.500%, 9/14/95 MIG-1 1,002,173
800,000 Syracuse Industrial Development Agency,
Civic Facility (Syracuse University),
Variable Rate Demand Bonds, 3.600%,
3/01/23+ SP-1+ 800,000
1,300,000 Triborough Bridge and Tunnel Authority,
Special Obligation, Variable Rate Demand
Bonds, Series 1994 (1994 Resolution),
3.750%, 1/01/24+ MIG-1 1,300,000
1,300,000 Yonkers Industrial Development Agency,
Series 1989, Civic Facility, Variable Rate
Demand Bonds, 3.950%, 7/01/19+ VMIG-1 1,300,000
700,000 Yonkers Industrial Development Agency,
Civic Facility, Variable Rate Demand
Bonds, 3.950%, 7/01/21+ VMIG-1 700,000
- -------------------------------------------------------------------------------
$30,230,000 Total Investments - 99.3% 30,238,164
- -------------------------------------------------------------------------------
- -------------------
Other Assets Less Liabilities - 0.7% 216,248
- -------------------------------------------------------------------------------
Net Assets - 100% $30,454,412
- -------------------------------------------------------------------------------
</TABLE>
* 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.
20
<PAGE>
NUVEEN TAX-FREE MONEY MARKET FUNDS ANNUAL REPORT
STATEMENT OF NET ASSETS
FEBRUARY 28, 1995
<TABLE>
<CAPTION>
RESERVES CA MA NY
- -------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
ASSETS
Investments in short-term
municipal securities, at
amortized cost (note 1) $353,566,274 $152,242,173 $51,705,985 $30,238,164
Cash 2,564,607 1,890,126 156,904 105,894
Receivables:
Interest 1,952,900 1,321,573 357,437 155,401
Investments sold 215,000 4,800,000 1,000,000 45,000
Other assets 16,636 16,836 11,419 7,920
------------ ------------ ----------- -----------
Total assets 358,315,417 160,270,708 53,231,745 30,552,379
------------ ------------ ----------- -----------
LIABILITIES
Payable for investments
purchased 5,500,000 -- -- --
Accrued expenses:
Management fees (note 4) 132,043 47,935 18,678 9,479
Other 212,629 110,148 57,749 12,078
Dividends payable 864,348 411,139 151,026 76,410
------------ ------------ ----------- -----------
Total liabilities 6,709,020 569,222 227,453 97,967
------------ ------------ ----------- -----------
Net assets applicable to
shares outstanding
(note 3) $351,606,397 $159,701,486 $53,004,292 $30,454,412
------------ ------------ ----------- -----------
Shares outstanding:
Service Plan series -- 41,771,918 27,731,552 640,073
Distribution Plan series -- 67,157,179 24,237,180 29,797,672
Institutional series -- 50,772,389 1,035,560 16,667
------------ ------------ ----------- -----------
Total shares outstanding 351,606,397 159,701,486 53,004,292 30,454,412
------------ ------------ ----------- -----------
Net asset value, offering
and redemption price per
share (net assets divided
by shares outstanding) $ 1.00 $ 1.00 $ 1.00 $ 1.00
------------ ------------ ----------- -----------
</TABLE>
See accompanying notes to financial statements.
21
<PAGE>
STATEMENT OF OPERATIONS
Year ended February 28, 1995
<TABLE>
<CAPTION>
RESERVES
- -------------------------------------------------------
<S> <C>
INVESTMENT INCOME
Interest income (note 1) $11,501,656
-----------
Expenses:
Management fees (note 4) 1,804,298
12b-1 expense (note 4) 209,800
Shareholders' servicing agent fees and
expenses 555,046
Custodian's fees and expenses 79,594
Directors' fees and expenses (note 4) 4,567
Professional fees 19,724
Shareholders' reports--printing and
mailing expenses 78,982
Federal and state registration fees 59,459
Other expenses 29,474
-----------
Total expenses before expense
reimbursement 2,840,944
Expense reimbursement from investment
adviser (note 4) (134,463)
-----------
Net expenses 2,706,481
-----------
Net investment income 8,795,175
Net gain (loss) from investment
transactions --
-----------
Net increase in net assets from
operations $ 8,795,175
-----------
</TABLE>
See accompanying notes to financial statements.
22
<PAGE>
NUVEEN MONEY MARKET VALUE FUNDS ANNUAL REPORT
FEBRUARY 28, 1995
<TABLE>
<CAPTION>
CALIFORNIA MONEY MARKET
-----------------------------------------
Service Distribution Institutional
Plan series Plan series series Total
- -------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
INVESTMENT INCOME
Interest income (note 1) $3,280,577 $2,204,557 $1,598,756 $7,083,890
---------- ---------- ---------- ----------
Expenses:
Management fees (note
4) 477,352 282,337 199,287 958,976
12b-1 expense (note 4) 142,699 62,026 -- 204,725
Shareholders' servicing
agent fees and
expenses 5,676 41,107 428 47,211
Custodian's fees and
expenses 71,107 30,696 24,347 126,150
Directors' fees and
expenses (note 4) 925 1,229 807 2,961
Professional fees 6,187 5,399 4,356 15,942
Shareholders' reports--
printing and mailing
expenses 4,621 26,914 96 31,631
Federal and state
registration fees -- -- -- --
Other expenses 2,160 3,611 3,335 9,106
---------- ---------- ---------- ----------
Total expenses before
expense reimbursement 710,727 453,319 232,656 1,396,702
Expense reimbursement
from investment
adviser (note 4) (58,837) (63,409) -- (122,246)
---------- ---------- ---------- ----------
Net expenses 651,890 389,910 232,656 1,274,456
---------- ---------- ---------- ----------
Net investment income 2,628,687 1,814,647 1,366,100 5,809,434
Net gain (loss) from
investment transactions (11,576) (4,489) (2,299) (18,364)
---------- ---------- ---------- ----------
Net increase in net
assets from operations $2,617,111 $1,810,158 $1,363,801 $5,791,070
---------- ---------- ---------- ----------
</TABLE>
See accompanying notes to financial statements.
23
<PAGE>
STATEMENT OF OPERATIONS
Year ended February 28, 1995
<TABLE>
<CAPTION>
MASSACHUSETTS MONEY MARKET
-----------------------------------------
Service Distribution Institutional
Plan series Plan series series Total
- -------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
INVESTMENT INCOME
Interest income (note 1) $1,226,072 $850,576 $119,585 $2,196,233
---------- -------- -------- ----------
Expenses:
Management fees (note
4) 158,079 109,619 15,413 283,111
12b-1 expense (note 4) 46,919 22,886 -- 69,805
Shareholders' servicing
agent fees and
expenses 612 28,337 135 29,084
Custodian's fees and
expenses 24,311 15,504 1,394 41,209
Directors' fees and
expenses (note 4) 901 599 75 1,575
Professional fees 6,927 5,570 611 13,108
Shareholders' reports--
printing and mailing
expenses 2,378 39,650 196 42,224
Federal and state
registration fees 853 588 108 1,549
Other expenses 931 623 63 1,617
---------- -------- -------- ----------
Total expenses before
expense reimbursement 241,911 223,376 17,995 483,282
Expense reimbursement
from investment
adviser (note 4) (23,741) (72,562) -- (96,303)
---------- -------- -------- ----------
Net expenses 218,170 150,814 17,995 386,979
---------- -------- -------- ----------
Net investment income 1,007,902 699,762 101,590 1,809,254
Net gain (loss) from
investment transactions (1,430) (1,013) (60) (2,503)
---------- -------- -------- ----------
Net increase in net
assets from operations $1,006,472 $698,749 $101,530 $1,806,751
---------- -------- -------- ----------
</TABLE>
See accompanying notes to financial statements.
24
<PAGE>
NUVEEN TAX-FREE MONEY MARKET FUNDS ANNUAL REPORT FEBRUARY 28, 1995
<TABLE>
<CAPTION>
NEW YORK MONEY MARKET
-----------------------------------------
Service Distribution Institutional
Plan series Plan series series Total
- -------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
INVESTMENT INCOME
Interest income (note 1) $20,960 $852,805 $473 $874,238
------- -------- ---- --------
Expenses:
Management fees (note 4) 2,864 116,536 64 119,464
12b-1 expense (note 4) 266 12,446 -- 12,712
Shareholders' servicing
agent fees and expenses 1,601 31,442 32 33,075
Custodian's fees and
expenses 817 34,316 227 35,360
Directors' fees and
expenses (note 4) 57 1,798 1 1,856
Professional fees 338 10,923 6 11,267
Shareholders' reports--
printing and mailing
expenses 856 20,472 5 21,333
Federal and state
registration fees -- -- -- --
Other expenses 24 989 10 1,023
------- -------- ---- --------
Total expenses before
expense reimbursement 6,823 228,922 345 236,090
Expense reimbursement from
investment adviser (note
4) (2,920) (68,631) (257) (71,808)
------- -------- ---- --------
Net expenses 3,903 160,291 88 164,282
------- -------- ---- --------
Net investment income 17,057 692,514 385 709,956
Net gain (loss) from
investment transactions -- -- -- --
------- -------- ---- --------
Net increase in net assets
from operations $17,057 $692,514 $385 $709,956
------- -------- ---- --------
</TABLE>
See accompanying notes to financial statements.
25
<PAGE>
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
RESERVES
---------------------------------
Year ended Year ended
2/28/95 2/28/94
- -------------------------------------------------------------------------------
<S> <C> <C>
OPERATIONS
Net investment income $ 8,795,175 $ 7,830,250
Net realized gain (loss) from investment
transactions -- --
------------ ------------
Net increase in net assets from operations 8,795,175 7,830,250
------------ ------------
DISTRIBUTIONS TO SHAREHOLDERS (note 1) (8,795,175) (7,830,250)
------------ ------------
COMMON SHARE TRANSACTIONS (at constant net asset
value of $1 per share) (note 1)
Net proceeds from sales of shares 657,011,312 766,196,962
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 7,787,100 6,943,302
------------ ------------
664,798,412 773,140,264
Cost of shares redeemed (717,393,211) (819,685,408)
------------ ------------
Net increase (decrease) in net assets derived
from Common share transactions (52,594,799) (46,545,144)
Net assets at the beginning of year 404,201,196 450,746,340
------------ ------------
Net assets at the end of year $351,606,397 $404,201,196
------------ ------------
</TABLE>
See accompanying notes to financial statements.
26
<PAGE>
NUVEEN TAX-FREE MONEY MARKET FUNDS ANNUAL REPORT
FEBRUARY 28, 1995
<TABLE>
----------------------------------------------
<CAPTION>
CALIFORNIA MONEY MARKET
----------------------------------------------
Year ended February 28, 1995
----------------------------------------------
Service Distribution Institutional
Plan series Plan series series Total
- ------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
OPERATIONS
Net investment income $ 2,628,687 $ 1,814,647 $ 1,366,100 $ 5,809,434
Net realized gain (loss)
from investment
transactions (11,576) (4,489) (2,299) (18,364)
------------ ------------ ------------ ------------
Net increase in net
assets from operations 2,617,111 1,810,158 1,363,801 5,791,070
------------ ------------ ------------ ------------
DISTRIBUTIONS TO
SHAREHOLDERS (note 1) (2,617,111) (1,810,158) (1,363,801) (5,791,070)
------------ ------------ ------------ ------------
COMMON SHARE
TRANSACTIONS (at
constant net asset
value of $1 per share)
(note 1)
Net proceeds from sale
of shares 208,318,412 113,315,156 247,997,081 569,630,649
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 2,983,786 1,322,451 7,041 4,313,278
------------ ------------ ------------ ------------
211,302,198 114,637,607 248,004,122 573,943,927
Cost of shares redeemed (584,768,062) (119,860,860) (229,530,966) (934,159,888)
------------ ------------ ------------ ------------
Net increase (decrease)
in net assets derived
from Common share
transactions (373,465,864) (5,223,253) 18,473,156 (360,215,961)
Net assets at the
beginning of year 415,237,782 72,380,432 32,299,233 519,917,447
------------ ------------ ------------ ------------
Net assets at the end of
year $ 41,771,918 $ 67,157,179 $ 50,772,389 $159,701,486
------------ ------------ ------------ ------------
</TABLE>
See accompanying notes to financial statements.
27
<PAGE>
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
CALIFORNIA MONEY MARKET
----------------------------------------------
Year ended February 28, 1994
----------------------------------------------
Service Distribution Institutional
Plan series Plan series series Total
- ------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
OPERATIONS
Net investment income $ 8,697,661 $ 1,401,096 $ 708,239 $ 10,806,996
Net realized gain (loss)
from investment
transactions 993 161 76 1,230
------------ ------------ ------------ ------------
Net increase in net
assets from operations 8,698,654 1,401,257 708,315 10,808,226
------------ ------------ ------------ ------------
DISTRIBUTIONS TO
SHAREHOLDERS (note 1) (8,698,654) (1,401,257) (708,315) (10,808,226)
------------ ------------ ------------ ------------
COMMON SHARE
TRANSACTIONS (at
constant net asset
value of $1 per share)
(note 1)
Net proceeds from sale
of shares 593,317,833 109,131,190 231,831,775 934,280,798
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 8,711,394 1,055,257 7,218 9,773,869
------------ ------------ ------------ ------------
602,029,227 110,186,447 231,838,993 944,054,667
Cost of shares redeemed (656,603,608) (118,457,991) (223,695,990) (998,757,589)
------------ ------------ ------------ ------------
Net increase (decrease)
in net assets derived
from Common share
transactions (54,574,381) (8,271,544) 8,143,003 (54,702,922)
Net assets at the
beginning of year 469,812,163 80,651,976 24,156,230 574,620,369
------------ ------------ ------------ ------------
Net assets at the end of
year $415,237,782 $72,380,432 $32,299,233 $519,917,447
------------ ------------ ------------ ------------
</TABLE>
See accompanying notes to financial statements.
28
<PAGE>
NUVEEN TAX-FREE MONEY MARKET FUNDS ANNUAL REPORT
FEBRUARY 28, 1995
<TABLE>
<CAPTION>
MASSACHUSETTS MONEY MARKET
---------------------------------------------
Year ended February 28, 1995
---------------------------------------------
Service Distribution Institutional
Plan series Plan series series Total
- -----------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
OPERATIONS
Net investment income $ 1,007,902 $ 699,762 $ 101,590 $ 1,809,254
Net realized gain (loss)
from investment
transactions (1,430) (1,013) (60) (2,503)
------------ ----------- ----------- ------------
Net increase in net
assets from operations 1,006,472 698,749 101,530 1,806,751
------------ ----------- ----------- ------------
DISTRIBUTIONS TO
SHAREHOLDERS (note 1) (1,006,472) (698,749) (101,530) (1,806,751)
------------ ----------- ----------- ------------
COMMON SHARE
TRANSACTIONS (at
constant net asset
value of $1 per share)
(note 1)
Net proceeds from sale
of shares 126,292,160 26,877,207 10,226,869 163,396,236
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 982,397 655,827 5,596 1,643,820
------------ ----------- ----------- ------------
127,274,557 27,533,034 10,232,465 165,040,056
Cost of shares redeemed (138,119,127) (31,068,859) (12,602,539) (181,790,525)
------------ ----------- ----------- ------------
Net increase (decrease)
in net assets derived
from Common share
transactions (10,844,570) (3,535,825) (2,370,074) (16,750,469)
Net assets at the
beginning of year 38,576,122 27,773,005 3,405,634 69,754,761
------------ ----------- ----------- ------------
Net assets at the end of
year $ 27,731,552 $24,237,180 $ 1,035,560 $ 53,004,292
------------ ----------- ----------- ------------
</TABLE>
See accompanying notes to financial statements.
29
<PAGE>
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
MASSACHUSETTS MONEY MARKET
---------------------------------------------
Year ended February 28, 1994
---------------------------------------------
Service Distribution Institutional
Plan series Plan series series Total
- -----------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
OPERATIONS
Net investment income $ 814,885 $ 495,675 $ 78,218 $ 1,388,778
Net realized gain (loss)
from investment
transactions 15 9 2 26
------------ ----------- ---------- ------------
Net increase in net
assets from operations 814,900 495,684 78,220 1,388,804
------------ ----------- ---------- ------------
DISTRIBUTIONS TO SHARE-
HOLDERS (note 1) (814,900) (495,684) (78,220) (1,388,804)
------------ ----------- ---------- ------------
COMMON SHARE TRANSAC-
TIONS (at constant net
asset value of $1 per
share) (note 1)
Net proceeds from sale
of shares 176,973,990 29,011,727 5,412,804 211,398,521
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 806,029 486,759 -- 1,292,788
------------ ----------- ---------- ------------
177,780,019 29,498,486 5,412,804 212,691,309
Cost of shares redeemed (179,417,504) (29,718,817) (7,332,647) (216,468,968)
------------ ----------- ---------- ------------
Net increase (decrease)
in net assets derived
from Common share
transactions (1,637,485) (220,331) (1,919,843) (3,777,659)
Net assets at the
beginning of year 40,213,607 27,993,336 5,325,477 73,532,420
------------ ----------- ---------- ------------
Net assets at the end of
year $ 38,576,122 $27,773,005 $3,405,634 $ 69,754,761
------------ ----------- ---------- ------------
</TABLE>
See accompanying notes to financial statements.
30
<PAGE>
NUVEEN TAX-FREE MONEY MARKET FUNDS ANNUAL REPORT
FEBRUARY 28, 1995
<TABLE>
<CAPTION>
NEW YORK MONEY MARKET
-------------------------------------------
Year ended February 28, 1995
-------------------------------------------
Service Distribution Institutional
Plan series Plan series series Total
- ---------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
OPERATIONS
Net investment income $ 17,057 $ 692,514 $ 385 $ 709,956
Net realized gain (loss)
from investment
transactions -- -- -- --
---------- ----------- ------- -----------
Net increase in net
assets from operations 17,057 692,514 385 709,956
---------- ----------- ------- -----------
DISTRIBUTIONS TO
SHAREHOLDERS (note 1) (17,057) (692,514) (385) (709,956)
---------- ----------- ------- -----------
COMMON SHARE
TRANSACTIONS (at
constant net asset
value of $1 per share)
(note 1)
Net proceeds from sale
of shares 1,126,675 16,626,815 -- 17,753,490
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 15,591 626,707 -- 642,298
---------- ----------- ------- -----------
1,142,266 17,253,522 -- 18,395,788
Cost of shares redeemed (1,058,955) (15,341,900) -- (16,400,855)
---------- ----------- ------- -----------
Net increase (decrease)
in net assets derived
from Common share
transactions 83,311 1,911,622 -- 1,994,933
Net assets at the
beginning of year 556,762 27,886,050 16,667 28,459,479
---------- ----------- ------- -----------
Net assets at the end of
year $ 640,073 $29,797,672 $16,667 $30,454,412
---------- ----------- ------- -----------
</TABLE>
See accompanying notes to financial statements.
31
<PAGE>
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
NEW YORK MONEY MARKET
------------------------------------------
Year ended February 28, 1994
------------------------------------------
Service Distribution Institutional
Plan series Plan series series Total
- --------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
OPERATIONS
Net investment income $ 7,985 $ 503,453 $ 273 $ 511,711
Net realized gain (loss)
from investment
transactions -- -- -- --
-------- ----------- ------- -----------
Net increase in net
assets from operations 7,985 503,453 273 511,711
-------- ----------- ------- -----------
DISTRIBUTIONS TO
SHAREHOLDERS (note 1) (7,985) (503,453) (273) (511,711)
-------- ----------- ------- -----------
COMMON SHARE
TRANSACTIONS (at
constant net asset
value of $1 per share)
(note 1)
Net proceeds from sales
of shares 837,650 17,150,608 -- 17,988,258
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 7,546 483,621 -- 491,167
-------- ----------- ------- -----------
845,196 17,634,229 -- 18,479,425
Cost of shares redeemed (817,370) (24,575,123) -- (25,392,493)
-------- ----------- ------- -----------
Net increase (decrease)
in net assets derived
from Common share
transactions 27,826 (6,940,894) -- (6,913,068)
Net assets at the
beginning of year 528,936 34,826,944 16,667 35,372,547
-------- ----------- ------- -----------
Net assets at the end of
year $556,762 $27,886,050 $16,667 $28,459,479
-------- ----------- ------- -----------
</TABLE>
See accompanying notes to financial statements.
32
<PAGE>
NUVEEN TAX-FREE MONEY MARKET FUNDS ANNUAL REPORT
NOTES TO FINANCIAL STATEMENTS
FEBRUARY 28, 1995
1. GENERAL INFORMATION AND SIGNIFICANT ACCOUNTING POLICIES
At February 28, 1995, the money market Funds (the "Funds")
covered in this report are Nuveen Tax-Free Reserves, Inc., a
nationally diversified Fund, Nuveen California Tax-Free Fund,
Inc. (comprised of the Nuveen California Tax-Free Money
Market Fund) and Nuveen Tax-Free Money Market Fund, Inc.
(comprised of the Nuveen Massachusetts and New York Tax-Free
Money Market Funds).
The Funds are registered under the Investment Company Act of
1940 as open-end, diversified management investment
companies.
Each Fund invests in tax-exempt money market instruments.
Shares of the state Funds are issued in three series: (1) the
"Service Plan" series intended for purchase by or through
banks and other organizations who have agreed to perform
certain services for their customers who are shareholders of
this series of the Fund, (2) the "Distribution Plan" series
intended for purchase by or through securities dealers who
have agreed to perform distribution and administrative
services for their customers who are shareholders of this
series of the Fund and (3) the "Institutional" series
intended for purchase by trustees, bank trust departments and
investment bankers or advisers.
Each Fund issues its own shares, at net asset value which
the Fund will seek to maintain at $1.00 per share without
sales charge.
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 Investments in each of the Funds consist of short-term
Valuation municipal securities maturing within one year from the date
of acquisition. Securities with a maturity of more than one
year in all cases have variable rate and demand features
qualifying them as short-term securities and are traded and
valued at amortized costs. On a dollar-weighted basis, the
average maturity of all such securities must be 90 days or
less (at February 28, 1995, the dollar-weighted average life
was 29 days for Reserves, 36 days for California Money
Market, 41 days for Massachusetts Money Market and 30 days
for New York Money Market).
Securities Securities transactions are recorded on a trade date basis.
Transactions 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.
The 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
33
<PAGE>
NOTES TO FINANCIAL STATEMENTS
to the amount of their purchase commitments. At February 28,
1995, there were no such purchase commitments in any of the
Funds.
Interest Income Interest income is determined on the basis of interest
accrued, adjusted for premium amortized and discount earned.
Dividends and Net investment income, adjusted for realized short-term gains
Distributions and losses on investment transactions, is declared as a
to Shareholders dividend to shareholders of record as of the close of each
business day and payment is made or reinvestment is credited
to shareholder accounts after month-end.
Federal Income Each Fund is a separate taxpayer for federal income tax
Taxes purposes and intends to comply with the requirements of the
Internal Revenue Code applicable to regulated investment
companies by distributing all of its income to shareholders.
Therefore, no federal income tax provision is required.
Furthermore, each Fund intends to satisfy conditions which
will enable interest from municipal securities, which is
exempt from regular federal and designated state income taxes
for the California, Massachusetts and New York Money Market
Funds, to retain such tax-exempt status when distributed to
the shareholders of the Funds. All income dividends paid
during the year ended February 28, 1995, have been designated
Exempt Interest Dividends.
Insurance The Funds have obtained commitments (each, a "Commitment")
Commitments from Municipal Bond Investors Assurance Corporation ("MBIA")
with respect to certain designated bonds held by the Funds
for which credit support is furnished by banks ("Approved
Banks") approved by MBIA under its established credit
approval standards. Under the terms of a Commitment, if a
Fund were to determine that certain adverse circumstances
relating to the financial condition of an Approved Bank had
occurred, the Fund could cause MBIA to issue a "while-in-
fund" insurance policy covering the underlying bonds; after
time and subject to further terms and conditions, the Fund
could obtain from MBIA an "insured-to-maturity" insurance
policy as to the covered bonds. Each type of insurance policy
would insure payment of interest on the bonds and payment of
principal at maturity. Although such insurance would not
guarantee the market value of the bonds or the value of the
Funds' shares, the Funds believe that their ability to obtain
insurance for such bonds under such adverse circumstances
will enable the Funds to hold or dispose of such bonds at a
price at or near their par value.
34
<PAGE>
NUVEEN TAX-FREE MONEY MARKET FUNDS ANNUAL REPORT
FEBRUARY 28, 1995
Derivative In October 1994, the Financial Accounting Standards Board
Financial (FASB) issued Statement of Financial Accounting Standards No.
Instruments 119 Disclosure about Derivative Financial Instruments and
Fair Value of Financial Instruments which prescribes
disclosure requirements for transactions in certain
derivative financial instruments including futures, forward,
swap, and option contracts, and other financial instruments
with similar characteristics. Although the Funds are
authorized to invest in such financial instruments, and may
do so in the future, they did not make any such investments
during the fiscal year ended February 28, 1995, other than
occasional purchases of high quality synthetic money market
securities.
2. SECURITIES TRANSACTIONS
Purchases and sales (including maturities) of investment
securities during the year ended February 28, 1995, were as
follows:
<TABLE>
<CAPTION>
RESERVES CA MA NY
- --------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Purchases $847,362,455 $518,839,920 $213,588,033 $37,825,720
Sales and maturities 894,725,000 881,582,950 230,435,040 35,805,000
------------ ------------ ------------ -----------
</TABLE>
At February 28, 1995, the cost of investments owned for
federal income tax purposes was the same as the cost for
financial reporting purposes for all Funds.
3. COMPOSITION OF NET ASSETS
At February 28, 1995, the Funds had common stock authorized
at $.01 par value per share. The composition of net assets as
well as the number of authorized shares were as follows:
<TABLE>
<CAPTION>
RESERVES CA MA NY
- ---------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Capital paid in:
Service Plan series $ -- $ 41,771,918 $ 27,731,552 $ 640,073
Distribution Plan se-
ries -- 67,157,179 24,237,180 29,797,672
Institutional series -- 50,772,389 1,035,560 16,667
------------- ------------- ------------- -------------
Total $ 351,606,397 $ 159,701,486 $ 53,004,292 $ 30,454,412
------------- ------------- ------------- -------------
Authorized shares 2,000,000,000 2,350,000,000 2,500,000,000 2,500,000,000
------------- ------------- ------------- -------------
</TABLE>
35
<PAGE>
NOTES TO FINANCIAL STATEMENTS
4. 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:
<TABLE>
<CAPTION>
MANAGEMENT FEES
- -------------------------------------------------------------------
AVERAGE DAILY NET ASSET VALUE RESERVES CA, MA, NY
- -------------------------------------------------------------------
<S> <C> <C>
For the first $500,000,000 .5 of 1% .4 of 1%
For the next $500,000,000 .475 of 1 .375 of 1
For net assets over $1,000,000,000 .45 of 1 .35 of 1
</TABLE>
Also, pursuant to a distribution agreement with the Funds,
Nuveen is the distributor or principal underwriter of Fund
shares and pays sales and promotion expenses in connection
with the offering of Fund shares. The Funds have adopted a
Distribution Plan pursuant to Rule 12b-1 of the Investment
Company Act of 1940 and a Service Plan pursuant to which the
Funds and Nuveen pay, in equal amounts, fees to securities
dealers and service organizations for services rendered in
the distribution of shares of the Funds or the servicing of
shareholder accounts. For Reserves, total service payments to
such securities dealers and organizations on an annualized
basis range from .1 of 1% to .2 of 1% of the average daily
net asset value of serviced accounts up to $10 million and .3
of 1% for such assets over $10 million. For the California,
Massachusetts and New York Money Market Funds, total service
payments to such securities dealers and organizations are .25
of 1% per year of the average daily net asset value of
serviced accounts.
The management fee referred to above is reduced by, or the
Adviser assumes certain expenses of each Fund, in an amount
necessary to prevent the total expenses of each Fund
(including the management fee and each Fund's share of
service payments under the Distribution and Service Plans,
but excluding interest, taxes, fees incurred in acquiring and
disposing of portfolio securities and, to the extent
permitted, extraordinary expenses) in any fiscal year from
exceeding .75 of 1% of the average daily net asset value of
Reserves, and .55 of 1% of the average daily net asset value
of the California, Massachusetts and New York Money Market
Funds.
36
<PAGE>
NUVEEN TAX-FREE MONEY MARKET FUNDS ANNUAL REPORT
FEBRUARY 28, 1995
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 who are affiliated with the Adviser or to
their officers, all of whom receive remuneration for their
services to the Funds from the Adviser.
5. INVESTMENT COMPOSITION
Each Fund invests in municipal securities which include
general obligation, escrowed and revenue bonds. At February
28, 1995, the revenue sources by municipal purpose for these
investments, expressed as a percent of total investments,
were as follows:
<TABLE>
<CAPTION>
RESERVES CA MA NY
- --------------------------------------------------------
<S> <C> <C> <C> <C>
Revenue bonds:
Pollution control facilities 27% 16% 23% 30%
Health care facilities 28 15 11 13
Housing facilities 4 18 3 16
Lease rental facilities 2 17 -- --
Educational facilities 7 -- 14 4
Water/Sewer facilities 6 -- 2 8
Transportation 3 -- -- 4
Electric facilities -- 3 -- --
Other revenue 9 17 10 8
General obligation bonds 14 14 37 17
- --------------------------------------------------------
100% 100% 100% 100%
--- --- --- ---
</TABLE>
In addition, certain 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 (91% for
Reserves, 83% for California, 68% for Massachusetts and 87%
for New York).
For additional information regarding each investment
security, refer to the Portfolio of Investments.
37
<PAGE>
FINANCIAL HIGHLIGHTS
SELECTED DATA FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD IS AS FOLLOWS:
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Income from investment
operations Less distributions
--------------------------------------------------------------------
Net realized
and
Net asset unrealized Dividends
value Net gain (loss) from net Distributions
beginning investment from investment from
of period income investments income capital gains
- ---------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
RESERVES
- ---------------------------------------------------------------------------------------------
Year ended
2/28/95 $1.000 $.025* $-- $(.025) $--
2/28/94 1.000 .018* -- (.018) --
2/28/93 1.000 .023 -- (.023) --
5 months ended 2/29/92 1.000 .015 -- (.015) --
Year ended
9/30/91 1.000 .046 -- (.046) --
9/30/90 1.000 .055 -- (.055) --
9/30/89 1.000 .057 -- (.057) --
9/30/88 1.000 .045 -- (.045) --
9/30/87 1.000 .039 -- (.039) --
9/30/86 1.000 .045* -- (.045) --
9/30/85 1.000 .050* -- (.050) --
- ---------------------------------------------------------------------------------------------
</TABLE>
See notes on page 44.
38
<PAGE>
NUVEEN TAX-FREE MONEY MARKET FUNDS ANNUAL REPORT
FEBRUARY 28, 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Ratios/Supplemental data
-------------------------------------------
Net
asset Total return Ratio of net
value on Net assets Ratio of investment income
end of net asset end of period expenses to average to average
period value (in thousands) net assets net assets
- --------------------------------------------------------------------------
<S> <C> <C> <C> <C>
- --------------------------------------------------------------------------
$1.000 2.46% $351,606 .75%* 2.43%*
1.000 1.84 404,201 .75* 1.83*
1.000 2.34 450,746 .74 2.35
1.000 1.45 477,127 .75+ 3.48+
1.000 4.57 451,808 .72 4.56
1.000 5.45 430,206 .73 5.45
1.000 5.70 390,258 .72 5.69
1.000 4.52 409,653 .73 4.52
1.000 3.88 361,044 .73 3.85
1.000 4.46 272,677 .75* 4.39*
1.000 4.98 141,762 .75* 4.90*
- --------------------------------------------------------------------------
</TABLE>
39
<PAGE>
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Income from investment
operations Less distributions
--------------------------------------------------------
Net
realized
and
Net asset unrealized Dividends
value Net gain (loss) from net Distributions
beginning investment from investment from
of period income investments income capital gains
- -------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
CA**
- -------------------------------------------------------------------------------------
Year ended
2/28/95
Service Plan series $1.000 $.026* $-- $(.026) $--
Distribution Plan se-
ries 1.000 .026* -- (.026) --
Institutional series 1.000 .027 -- (.027) --
Year ended
2/28/94
Service Plan series 1.000 .019 -- (.019) --
Distribution Plan se-
ries 1.000 .019* -- (.019) --
Institutional series 1.000 .021 -- (.021) --
Year ended
2/28/93
Service Plan series 1.000 .023* -- (.023) --
Distribution Plan se-
ries 1.000 .023* -- (.023) --
Institutional series 1.000 .024 -- (.024) --
8 months ended
2/29/92
Service Plan series 1.000 .024* -- (.024) --
Distribution Plan se-
ries 1.000 .024* -- (.024) --
Institutional series 1.000 .025 -- (.025) --
Year ended
6/30/91
Service Plan series 1.000 .047* -- (.047) --
Distribution Plan se-
ries 1.000 .047* -- (.047) --
Institutional series 1.000 .048 -- (.048) --
Year ended
6/30/90++ 1.000 .054* -- (.054) --
6/30/89++ 1.000 .056* -- (.056) --
6/30/88++ 1.000 .043* -- (.043) --
6/30/87++ 1.000 .039* -- (.039) --
3/27/86 to
6/30/86++ 1.000 .011* -- (.011) --
- -------------------------------------------------------------------------------------
</TABLE>
See notes on page 44.
40
<PAGE>
NUVEEN TAX-FREE MONEY MARKET FUNDS ANNUAL REPORT
FEBRUARY 28, 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Ratios/Supplemental data
----------------------------------------------
Net asset Total return Ratio of net
value on Net assets Ratio of investment income
end of net asset end of period expenses to average to average
period value (in thousands) net assets net assets
- -----------------------------------------------------------------------------
<S> <C> <C> <C> <C>
- -----------------------------------------------------------------------------
$1.000 2.59% $ 41,772 .55%* 2.19%*
1.000 2.60 67,157 .55* 2.56*
1.000 2.69 50,772 .47 2.74
1.000 1.94 415,238 .53 1.94
1.000 1.92 72,380 .55* 1.92*
1.000 2.07 32,299 .41 2.06
1.000 2.28 469,812 .55* 2.26*
1.000 2.29 80,652 .55* 2.26*
1.000 2.36 24,156 .47 2.33
1.000 2.39 478,886 .55*+ 3.54*+
1.000 2.39 91,670 .55*+ 3.54*+
1.000 2.45 18,334 .45+ 3.64+
1.000 4.70 431,590 .55* 4.67*
1.000 4.70 90,031 .55* 4.67*
1.000 4.80 22,342 .45 4.77
1.000 5.37 452,465 .55* 5.38*
1.000 5.62 362,927 .55* 5.70*
1.000 4.28 207,897 .55* 4.31*
1.000 3.90 284,956 .50* 3.92*
1.000 1.10 80,871 .05*+ 4.16*+
- -----------------------------------------------------------------------------
</TABLE>
41
<PAGE>
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Income from investment
operations Less distributions
--------------------------------------------------------
Net
realized
and
Net asset unrealized Dividends
value Net gain (loss) from net Distributions
beginning investment from investment from
of period income investments income capital gains
- -------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
MA***
- -------------------------------------------------------------------------------------
Year ended
2/28/95
Service Plan series $1.000 $.025* $-- $(.025) $--
Distribution Plan se-
ries 1.000 .025* -- (.025) --
Institutional series 1.000 .026 -- (.026) --
Year ended
2/28/94
Service Plan series 1.000 .018* -- (.018) --
Distribution Plan se-
ries 1.000 .017* -- (.017) --
Institutional series 1.000 .018 -- (.018) --
Year ended
2/28/93
Service Plan series 1.000 .023* -- (.023) --
Distribution Plan se-
ries 1.000 .023* -- (.023) --
Institutional series 1.000 .023* -- (.023) --
10 months ended
2/29/92
Service Plan series 1.000 .032* -- (.032) --
Distribution Plan se-
ries 1.000 .032* -- (.032) --
Institutional series 1.000 .032 -- (.032) --
Year ended
4/30/91
Service Plan series 1.000 .053* -- (.053) --
Distribution Plan se-
ries 1.000 .053* -- (.053) --
Institutional series 1.000 .053* -- (.053) --
Year ended
4/30/90++ 1.000 .057* -- (.057) --
4/30/89++ 1.000 .050* -- (.050) --
4/30/88++ 1.000 .043* -- (.043) --
12/10/86 to
4/30/87++ 1.000 .016* -- (.016) --
- -------------------------------------------------------------------------------------
</TABLE>
See notes on page 44.
42
<PAGE>
NUVEEN TAX-FREE MONEY MARKET FUNDS ANNUAL REPORT
FEBRUARY 28, 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Ratios/Supplemental data
-------------------------------------------
Net
asset Total return Ratio of net
value on Net assets Ratio of investment income
end of net asset end of period expenses to average to average
period value (in thousands) net assets net assets
- --------------------------------------------------------------------------
<S> <C> <C> <C> <C>
- --------------------------------------------------------------------------
$1.000 2.53% $27,732 .55%* 2.55%*
1.000 2.53 24,237 .55* 2.55*
1.000 2.61 1,036 .47 2.63
1.000 1.77 38,576 .52* 1.91*
1.000 1.74 27,773 .55* 1.88*
1.000 1.80 3,406 .49 1.93
1.000 2.33 40,214 .55* 2.34*
1.000 2.33 27,993 .55* 2.34*
1.000 2.34 5,325 .55* 2.34*
1.000 3.22 61,476 .55*+ 3.80*+
1.000 3.22 34,509 .55*+ 3.80*+
1.000 3.24 8,917 .53+ 3.82+
1.000 5.30 37,979 .55* 5.25*
1.000 5.30 33,809 .55* 5.25*
1.000 5.30 14,973 .54* 5.26*
1.000 5.70 53,631 .55* 5.67*
1.000 5.00 31,319 .55* 5.18*
1.000 4.29 35,614 .48* 4.30*
1.000 1.60 12,371 .06*+ 4.36*+
- --------------------------------------------------------------------------
</TABLE>
43
<PAGE>
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Income from investment
operations Less distributions
-------------------------------------------------------
Net
realized
and
Net asset unrealized Dividends
value Net gain (loss) from net Distributions
beginning investment from investment from
of period income investments income capital gains
- ------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
NY***
- ------------------------------------------------------------------------------------
Year ended
2/28/95
Service Plan series $1.000 $.024* $-- $(.024) $--
Distribution Plan
series 1.000 .024* -- (.024) --
Institutional series 1.000 .023* -- (.023) --
Year ended
2/28/94
Service Plan series 1.000 .015* -- (.015) --
Distribution Plan
series 1.000 .015* -- (.015) --
Institutional series 1.000 .015* -- (.015) --
Year ended
2/28/93
Service Plan series 1.000 .020* -- (.020) --
Distribution Plan
series 1.000 .020* -- (.020) --
Institutional series 1.000 .020* -- (.020) --
10 months ended
2/29/92
Service Plan series 1.000 .029* -- (.029) --
Distribution Plan
series 1.000 .029* -- (.029) --
Institutional series 1.000 .030* -- (.030) --
Year ended
4/30/91
Service Plan series 1.000 .047* -- (.047) --
Distribution Plan
series 1.000 .047* -- (.047) --
Institutional series 1.000 .047* -- (.047) --
Year ended --
4/30/90++ 1.000 .054* -- (.054) --
4/30/89++ 1.000 .050* -- (.050) --
4/30/88++ 1.000 .041* -- (.041) --
12/10/86 to
4/30/87++ 1.000 .015* -- (.015) --
- ------------------------------------------------------------------------------------
</TABLE>
* Reflects the waiver of certain management fees and reimbursement of certain
other expenses by the Adviser. See note 4 of Notes to Financial Statements.
** Effective for the fiscal year ending June 30, 1991, and thereafter, the Fund
has presented the above per share data by series.
*** Effective for the fiscal year ending April 30, 1991, and thereafter, the
Fund has presented the above per share data by series.
+ Annualized.
++ Represents combined per share data and ratios for the Service Plan,
Distribution Plan and Institutional series.
44
<PAGE>
NUVEEN TAX-FREE MONEY MARKET FUNDS ANNUAL REPORT
FEBRUARY 28, 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Ratios/Supplemental data
--------------------------------------------
Net
asset Total return Ratio of net
value on Net assets Ratio of investment income
end of net asset end of period expenses to average to average
period value (in thousands) net assets net assets
- ---------------------------------------------------------------------------
<S> <C> <C> <C> <C>
- ---------------------------------------------------------------------------
$1.000 2.36% $ 640 .55%* 2.38%*
1.000 2.37 29,798 .55* 2.38*
1.000 2.28 17 .55* 2.38*
1.000 1.51 557 .55* 1.63*
1.000 1.51 27,886 .55* 1.63*
1.000 1.51 17 .55* 1.63*
1.000 2.02 529 .55* 2.04*
1.000 2.02 34,827 .55* 2.04*
1.000 2.02 17 .55* 2.19*
1.000 2.94 1,934 .55*+ 3.51*+
1.000 2.94 45,259 .55*+ 3.51*+
1.000 2.97 17 .55*+ 3.51*+
1.000 4.73 1,653 .55* 4.72*
1.000 4.73 41,446 .55* 4.72*
1.000 4.73 17 .55* 4.72*
1.000 5.36 41,602 .55* 5.34*
1.000 4.95 30,262 .55* 5.05*
1.000 4.10 17,016 .50* 4.07*
1.000 1.50 4,134 .05*+ 4.20*+
- ---------------------------------------------------------------------------
</TABLE>
45
<PAGE>
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Board of Directors and Shareholders of
Nuveen Tax-Free Reserves,
Nuveen California Tax-Free Fund, Inc.,
Nuveen Tax-Free Money Market Fund, Inc.:
We have audited the accompanying statements of net assets of
NUVEEN TAX-FREE RESERVES (a Maryland corporation), NUVEEN
CALIFORNIA TAX-FREE FUND, INC. (comprised of Nuveen
California Tax-Free Money Market Fund) (a Maryland
corporation) and NUVEEN TAX-FREE MONEY MARKET FUND, INC.
(comprised of Nuveen Massachusetts and New York Tax-Free
Money Market Funds) (a Minnesota corporation), including the
portfolios of investments, as of February 28, 1995, 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 Funds'
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 28, 1995, by correspondence with the custodian and
brokers. As to securities purchased but not received, we
requested confirmation from brokers and, when replies were
not received, we carried out other alternative auditing
procedures. An audit also includes assessing the accounting
principles used and significant estimates made by management,
as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable
basis for our opinion.
In our opinion, the financial statements and financial
highlights referred to above present fairly, in all material
respects, the net assets of each of the respective funds
constituting Nuveen Tax-Free Reserves, Nuveen California Tax-
Free Fund, Inc. and Nuveen Tax-Free Money Market Fund, Inc.
as of February 28, 1995, 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 3, 1995
46
<PAGE>
The
human bond
[PHOTO OF BOOK APPEARS HERE]
At John Nuveen & Co.
Incorporated, where our
tax-free municipal bonds have
helped people live their
dreams for nearly 100
years, we still believe our strongest
bond is human./TM/
For almost a century, John Nuveen & Company has concentrated its resources and
expertise on one area: municipal bonds. We are the oldest and largest investment
banking firm specializing exclusively in municipal securities, and we strive to
be the best.
We maintain a sharp focus on the needs of prudent investors and their
families, offer investments of quality, and then work to make them better by
seeking out opportunity. We hold to a dedicated belief in the importance of
research. And we sustain a commitment to sound financial management through
value investing.
Our hope is that by providing quality investments we may foster opportunity
for our investors. Through careful research, attention to detail, and our
philosophy of managing for long-term value, we hope to provide our shareholders
with the attractive level of income they need to achieve their personal goals
and aspirations.
These are the things that matter most, and it's why we say that, at Nuveen, our
strongest bond is human.
[LOGO OF NUVEEN]
John Nuveen & Co. Incorporated
333 West Wacker Drive
Chicago, Illinois 60606-1286
<PAGE>
PART C--OTHER INFORMATION
NUVEEN CALIFORNIA TAX-FREE FUND, INC.
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 for the Nuveen California Tax-Free Value Fund
and the Nuveen California Insured Tax-Free Value Fund:
Financial Highlights
Included in the Prospectus for the Nuveen California Tax-Free Money Market
Fund:
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 28, 1995
Statement of Net Assets, February 28, 1995
Statement of Operations, Year Ended February 28, 1995
Statement of Changes in Net Assets, Years Ended February 28, 1995, and
February 28, 1994
Report of Independent Public Accountants dated April 3, 1995
(b) Exhibits:
<TABLE>
<C> <S>
1. Articles of Incorporation of Registrant, as amended and
supplemented. Filed as Exhibit 1 to Post-Effective Amendment No. 19
to Registrant's Registration Statement on Form N-1A (File No. 33-
01971) and incorporated by reference thereto.
2. By-Laws of Registrant, as amended. Filed as Exhibit 2 to Post-
Effective Amendment No. 13 to Registrant's Registration Statement on
Form N-1A (File No. 33-01971) and incorporated herein by reference
thereto.
3. Not applicable.
4(a). Specimen certificates of Class R Shares of Nuveen California Tax-
Free Value Fund and Nuveen California Insured Tax-Free Value Fund.
Filed as Exhibit 4(a) to Post-Effective Amendment No. 18 to
Registrant's Registration Statement on Form N-1A (File No. 33-01971)
and incorporated herein by reference thereto.
4(b). Specimen certificates of Class A Shares of Nuveen California Tax-
Free Value Fund and Nuveen California Insured Tax-Free Value Fund.
Filed as Exhibit 4(b) to Post-Effective Amendment No. 18 to
Registrant's Registration Statement on Form N-1A (File No. 33-01971)
and incorporated herein by reference thereto.
</TABLE>
C-1
<PAGE>
<TABLE>
<C> <S>
4(c). Specimen certificates of Class C Shares of Nuveen California Tax-
Free Value Fund and Nuveen California Insured Tax-Free Value Fund.
Filed as Exhibit 4(c) to Post-Effective Amendment No. 18 to
Registrant's Registration Statement on Form N-1A (File No. 33-01971)
and incorporated herein by reference thereto.
5(a). Investment Management Agreement between Registrant and Nuveen
Advisory Corp., dated April 27, 1992. Filed as Exhibit 5(a) to Post-
Effective Amendment No. 12 to Registrant's Registration Statement on
Form N-1A (File No. 33-01971) and incorporated herein by reference
thereto.
5(b). Amendment and Renewal of Investment Management Agreement between
Registrant and Nuveen Advisory Corp., dated April 21, 1993. Filed as
Exhibit 5(b) to Post-Effective Amendment No. 15 to Registrant's
Registration Statement on Form N-1A (File No. 33-01971) and
incorporated herein by reference thereto.
5(c). Renewal, dated July 14, 1994, of Investment Management Agreement.
Filed as Exhibit 5(b) to Post-Effective Amendment No. 17 to
Registrant's Registration Statement on Form N-1A (File No. 33-01971)
and incorporated herein by reference thereto.
6(a). Distribution Agreement dated as of January 2, 1990 between
Registrant and John Nuveen & Co. Incorporated. Filed as Exhibit 6 to
Post-Effective Amendment No. 7 to Registrant's Registration
Statement on Form N-1A (File No. 33-01971) and incorporated herein
by reference thereto.
6(b). Renewal, dated July 29, 1994, of Distribution Agreement. Filed as
Exhibit 6(b) to Post-Effective Amendment No. 17 to Registrant's
Registration Statement on Form N-1A (File No. 33-01971) and
incorporated herein by reference thereto.
7. Not applicable.
8. Custody Agreement, dated October 1, 1993, between Registrant and
United States Trust Company of New York. Filed as Exhibit 8 to Post-
Effective Amendment No. 15 to Registrant's Registration Statement on
Form N-1A (File No. 33-01971) and incorporated herein by reference
thereto.
9(a). Transfer Agency Agreement between Registrant and Shareholder
Services, Inc., dated December 19, 1994. Filed as Exhibit 9(a) to
Post-Effective Amendment No. 19 to Registrant's Registration
Statement on Form N-1A (File No. 33-01971) and incorporated herein
by reference thereto.
9(b). Service Plan and related form of Service Agreement adopted with
respect to shares of the Registrant's Money Market Portfolio Class--
Service Plan Series. Filed as Exhibit 9(b) to Pre-Effective
Amendment No. 1 to Registrant's Registration Statement on Form N-1A
(File No. 33-01971) and incorporated herein by reference thereto.
9(c). Service Agreement, as amended, relating to the Service Plan and
adopted with respect to shares of the Registrant's Service Plan
Series. Filed as Exhibit 9(c) to Post-Effective Amendment No. 11 to
Registrant's Registration Statement on Form N-1A (File No. 33-01971)
and incorporated herein by reference thereto.
</TABLE>
C-2
<PAGE>
<TABLE>
<C> <S>
10(a). Opinion of Fried, Frank, Harris, Shriver & Jacobson, dated May 31,
1995.
10(b). Opinion of Venable, Baejter and Howard, LLP, dated May 31, 1995.
11. Consent of Independent Public Accountants.
12. Not applicable.
13. Subscription Agreement of Nuveen Advisory Corp., dated November 29,
1985. Filed as Exhibit 13 to Registrant's Registration Statement on
Form N-1A (File
No. 33-01971) and incorporated herein by reference thereto.
14. Not applicable.
15(a). Distribution Plan and related form of Service Agreement adopted
under Rule 12b-1 with respect to shares of the Registrant's Money
Market Portfolio Class--Distribution Plan Series. Filed as Exhibit
15 to Pre-Effective Amendment No. 1 to Registrant's Registration
Statement on Form N-1A (File No. 33-01971) and incorporated herein
by reference thereto.
15(b). Distribution and Service Agreement, as amended, relating to the
Distribution Plan and adopted with respect to shares of the
Registrant's Distribution Plan Series. Filed as Exhibit 15(b) to
Post-Effective Amendment No. 3 to Registrant's Registration
Statement on Form N-1A (File No. 33-01971) and incorporated herein
by reference thereto.
15(c). Plan of Distribution and Service Pursuant to Rule 12b-1 for the
Class A Shares and Class C Shares of Nuveen California Tax-Free
Value Fund and Nuveen California Insured Tax-Free Value Fund, dated
September 6, 1994.
16. Schedule of Computation of Performance Figures. Filed as Exhibit 16
to Post-Effective Amendment No. 19 to Registrants's Registration
Statement on Form N-1A (File No. 33-01971) and incorporated by
reference thereto.
17. Financial Data Schedule.
18. Not applicable.
99(a). Municipal Bond Guaranty Master Managed Fund Insurance Policies
issued to the Registrant by Municipal Bond Investors Assurance
Corporation. Filed as Exhibit 16(a) to Post-Effective Amendment No.
2 to the Registrant's Registration Statement on Form N-1A (File No.
33-01971) and incorporated herein by reference thereto.
99(b). Insurance Agreement between Registrant and Municipal Bond Investors
Assurance Corporation. Filed as Exhibit 16(b) to Post-Effective
Amendment No. 2 to the Registrant's Registration Statement on Form
N-1A (File No. 33-01971) and incorporated herein by reference
thereto.
99(c). Mutual Fund Insurance Policy issued to the Registrant by AMBAC
Insurance Corporation. Filed as Exhibit 17(c) to Post-Effective
Amendment No. 13 to Registrant's Registration Statement on Form N-1A
(File No. 33-01971) and incorporated herein by reference thereto.
</TABLE>
C-3
<PAGE>
<TABLE>
<C> <S>
99(d). Financial Guaranty Insurance Policy issued to the Registrant by
Financial Security Assurance Inc. Filed as Exhibit 17(d) to Post-
Effective Amendment No. 13 to Registrant's Registration Statement on
Form N-1A (File No. 33-01971) and incorporated herein by reference
thereto.
99(e). Municipal Bond Mutual Fund Portfolio Insurance Policy issued to the
California Insured Fund by Financial Guaranty Insurance Company
("FGIC") and Mutual Fund Agreement between Registrant and FGIC.
Filed as Exhibit 17(e) to Post-Effective Amendment No. 13 to
Registrant's Registration Statement on Form N-1A (File No. 33-01971)
and incorporated herein by reference thereto.
99(f). Agreement for a Money Market Fund Insurance Program. Filed as
Exhibit 19 to Post-Effective Amendment No. 15 to Registrant's
Registration Statement on Form N-1A (File No. 33-01971) and
incorporated herein by reference thereto.
99(g). 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. Filed as Exhibit 99(g) to
Post-Effective Amendment No. 19 to Registrant's Registration
Statement on Form N-1A (File No. 33-01971) and incorporated herein
by reference thereto.
99(h). Original Powers of Attorney authorizing, among others, James J.
Wesolowski and Gifford R. Zimmerman to execute the Registration
Statement on behalf of all of the Registrant's Directors. Filed as
Exhibit 99(h) to Post-Effective Amendment No. 19 to Registrant's
Registration Statement on Form N-1A (File No. 33-01971) and
incorporated herein by reference thereto.
99(i). Code of Ethics and Reporting Requirements. Filed as Exhibit 99(i) to
Post-Effective Amendment No. 19 to Registrant's Registration
Statement on Form N-1A (File No. 33-01971) and incorporated herein
by reference thereto.
</TABLE>
ITEM 25: PERSONS CONTROLLED BY OR UNDER COMMON CONTROL WITH REGISTRANT
Not Applicable.
C-4
<PAGE>
ITEM 26: NUMBER OF HOLDERS OF SECURITIES
At April 17, 1995:
<TABLE>
<CAPTION>
NUMBER OF
TITLE OF SERIES RECORD HOLDERS
--------------- --------------
<S> <C>
Nuveen California Tax-Free Value Fund,
Class A Shares........................................... 353
Class C Shares........................................... 17
Class R Shares........................................... 5,824
Nuveen California Insured Tax-Free Value Fund,
Class A Shares........................................... 383
Class C Shares........................................... 24
Class R Shares........................................... 5,109
Nuveen California Tax-Free Money Market Fund,
Institutional Series..................................... 9
Distribution Plan Series................................. 1,415
Service Plan Series...................................... 179
</TABLE>
ITEM 27: INDEMNIFICATION
Article NINTH of the Registrant's Articles of Incorporation provides as fol-
lows:
NINTH: To the maximum extent permitted by the General Corporation Law of
the State of Maryland, as from time to time amended, the Corporation shall
indemnify its currently acting and its former directors, officers, employ-
ees and agents, and those persons who, at the request of the Corporation
serve or have served another corporation, partnership, joint venture, trust
or other enterprise in one or more such capacities. The indemnification
provided for herein shall not be deemed exclusive of any other rights to
which those seeking indemnification may otherwise be entitled.
Expenses (including attorneys' fees) incurred in defending a civil or crim-
inal action, suit or proceeding (including costs connected with the prepa-
ration of a settlement) may be paid by the Corporation in advance of the
final disposition of such action, suit or proceeding, if authorized by the
Board of Directors in the specific case, upon receipt of an undertaking by
or on behalf of the director, officer, employee or agent to repay that
amount of the advance which exceeds the amount which it is ultimately de-
termined that he is entitled to receive from the Corporation by reason of
indemnification as authorized herein; provided, however, that prior to mak-
ing any such advance at least one of the following conditions shall have
been met: (1) the indemnitee shall provide a security for his undertaking,
(2) the Corporation shall be insured against losses arising by reason of
any lawful advances, or (3) a majority of a quorum of the disinterested,
non-party directors of the Corporation, or an independent legal counsel in
a written opinion, shall determine, based on a review of readily available
facts, that there is reason to believe that the indemnitee ultimately will
be found entitled to indemnification.
Nothing in these Articles of Incorporation or in the By-Laws shall be
deemed to protect or provide indemnification to any director or officer of
the Corporation against any liability to the
C-5
<PAGE>
Corporation or to its security holders to which he would otherwise be sub-
ject by reason of willful misfeasance, bad faith, gross negligence or reck-
less disregard of the duties involved in the conduct of his office ("disa-
bling conduct"), and the Corporation shall not indemnify any of its offi-
cers or directors against any liability to the Corporation or to its secu-
rity holders unless a determination shall have been made in the manner pro-
vided hereafter that such liability has not arisen from such officer's or
director's disabling conduct. A determination that an officer or director
is entitled to indemnification shall have been properly made if its is
based upon (1) a final decision on the merits by a court or other body be-
fore whom the proceeding was brought that the person to be indemnified
("indemnitee") was not liable by reason of disabling conduct or, (2) in the
absence of such a decision, a reasonable determination, based upon a review
of the facts, that the indemnitee was not liable by reason of disabling
conduct, by (a) the vote of a majority of a quorum of directors who are
neither "interested persons" of the Corporation as defined in the Invest-
ment Company Act of 1940 nor parties to the proceeding, or (b) an indepen-
dent legal counsel in a written opinion.
The directors and officers of the Registrant are covered by an Investment Trust
Errors and Omission policy in the aggregate amount of $20,000,000 (with a maxi-
mum deductible of $500,000) against liability and expenses of claims of wrong-
ful acts arising out of their position with the Registrant, 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 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, directors or controlling persons of the
Registrant pursuant to the Articles of Incorporation of the Registrant or oth-
erwise, 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 prece-
dent, 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, Inc., Nuveen
Tax-Exempt Money Market Fund, Inc., Nuveen Tax-Free Reserves, Inc., Nuveen Cal-
ifornia 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 Mu-
C-6
<PAGE>
nicipal Value Fund, Inc., Nuveen New York Municipal Value Fund, Inc., Nuveen
Municipal Income Fund, Inc., Nuveen California Municipal Income Fund, Inc.,
Nuveen New York 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 Performance Plus Munic-
ipal Fund, Inc., Nuveen Municipal Advantage Fund, Inc., Nuveen Municipal Mar-
ket 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 Qual-
ity 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 Municipal Op-
portunity Fund, Inc., Nuveen Florida Quality Income Municipal Fund, Nuveen
Michigan Quality Income Municipal Fund, Inc., Nuveen Ohio Quality Income Mu-
nicipal Fund, Inc., Nuveen Texas Quality Income Municipal Fund, Nuveen Cali-
fornia Quality Income Municipal Fund, Inc., Nuveen New York Quality Income Mu-
nicipal Fund, Inc., Nuveen Premier Municipal Income Fund, Inc., Nuveen Premier
Insured Municipal Income Fund, Inc., 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
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 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 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 Mu-
nicipal Fund 2. Nuveen Advisory Corp. has no other clients or business at the
present time. The principal business address for all these investment compa-
nies 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, other than Donald E.
Sveen and Anthony T. Dean, of the investment adviser has engaged during the
last two years for his account or in the capacity of director, officer, em-
ployee, partner or trustee, see the descriptions under "Management" in the
Statement of Additional Information.
Donald E. Sveen is President and Director, formerly Executive Vice President,
of Nuveen Advisory Corp., the investment adviser. Mr. Sveen has, during the
last two years, been President, Director and formerly Executive Vice President
of John Nuveen & Co. Incorporated; and President and Director of Nuveen Insti-
tutional Advisory Corp. Anthony T. Dean is Director of Nuveen Advisory Corp.,
the investment adviser. Mr. Dean has, during the last two years, been Execu-
tive Vice President and Direc-
C-7
<PAGE>
tor of John Nuveen Company and John Nuveen & Co. Incorporated; and Director of
Nuveen Institutional Advisory Corp.
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, Inc., 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 also has served or is serving as co-
managing underwriter of the shares of the following closed-end management type
investment companies: Nuveen Municipal Value Fund, Inc., Nuveen California Mu-
nicipal Value Fund, Inc., Nuveen New York Municipal Value Fund, Inc., Nuveen
Municipal Income Fund, Inc., Nuveen California Municipal Income Fund, Inc.,
Nuveen New York 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 Performance Plus Munic-
ipal Fund, Inc., Nuveen Municipal Advantage Fund, Inc., Nuveen Municipal Mar-
ket 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 Qual-
ity 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 Municipal Op-
portunity Fund, Inc., Nuveen Florida Quality Income Municipal Fund, Nuveen
Michigan Quality Income Municipal Fund, Inc., Nuveen Ohio Quality Income Mu-
nicipal Fund, Inc., Nuveen Texas Quality Income Municipal Fund, Nuveen Cali-
fornia Quality Income Municipal Fund, Inc., Nuveen New York Quality Income Mu-
nicipal Fund, Inc., Nuveen Premier Municipal 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 Pre-
mium Income Municipal Fund, Inc., Nuveen Insured New York Premium Income Mu-
nicipal Fund, Inc., Nuveen Select Maturities Municipal Fund, Nuveen Arizona
Premium Income Municipal Fund, Inc., Nuveen Insured Florida Premium Income Mu-
nicipal Fund, Nuveen Michigan Premium Income Municipal Fund, Inc., Nuveen New
Jersey Premium Income Municipal Fund, Inc., Nuveen Insured Premium Income Mu-
nicipal Fund, Inc., Nuveen Premium Income Municipal Fund 4, Inc., Nuveen In-
sured 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 Pre-
mium Income Municipal Fund, Nuveen Washington Premium Income Municipal Fund,
Nuveen Connecticut Premium Income Municipal Fund, Nuveen Georgia Premium In-
come 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,
C-8
<PAGE>
Nuveen Insured California Select Tax-Free Income Portfolio, Nuveen Insured New
York Select Tax-Free Income Portfolio and Nuveen Select Tax-Free Income Portfo-
lio 3.
(b)
<TABLE>
<CAPTION>
NAME AND PRINCIPAL POSITIONS AND OFFICES POSITIONS AND OFFICES
BUSINESS ADDRESS WITH UNDERWRITER WITH REGISTRANT
- ---------------------------------------------------------------------------------
<S> <C> <C>
Richard J. Franke Chairman of the Board, Chairman of the Board
333 West Wacker Drive Chief Executive Officer and Director
Chicago, Illinois 60606 and Director
Donald E. Sveen President, Chief None
333 West Wacker Drive Operating Officer and
Chicago, Illinois 60606 Director
Anthony T. Dean Executive Vice President None
333 West Wacker Drive and Director
Chicago, Illinois 60606
Timothy R. Schwertfeger Executive Vice President President and Director
333 West Wacker Drive and Director
Chicago, Illinois 60606
William Adams IV Vice President None
333 West Wacker Drive
Chicago, Illinois 60606
Kathleen M. Flanagan Vice President Vice President
333 West Wacker Drive
Chicago, Illinois 60606
Stephen D. Foy Vice President None
333 West Wacker Drive
Chicago, Illinois 60606
Robert D. Freeland Vice President None
333 West Wacker Drive
Chicago, Illinois 60606
Michael G. Gaffney Vice President None
333 West Wacker Drive
Chicago, Illinois 60606
James W. Gratehouse Vice President None
333 West Wacker Drive
Chicago, Illinois 60606
Paul E. Greenawalt Vice President None
333 West Wacker Drive
Chicago, Illinois 60606
</TABLE>
C-9
<PAGE>
<TABLE>
<CAPTION>
POSITIONS AND
NAME AND PRINCIPAL POSITIONS AND OFFICES OFFICES
BUSINESS ADDRESS WITH UNDERWRITER WITH REGISTRANT
- -------------------------------------------------------------------------------
<S> <C> <C>
Anna R. Kucinskis Vice President Vice President
333 West Wacker Drive
Chicago, Illinois 60606
Robert B. Kuppenheimer Vice President None
333 West Wacker Drive
Chicago, Illinois 60606
Larry W. Martin Vice President and Vice President and
333 West Wacker Drive Assistant Secretary Assistant Secretary
Chicago, Illinois 60606
Thomas C. Muntz Vice President None
333 West Wacker Drive
Chicago, Illinois 60606
O. Walter Renfftlen Vice President Vice President and
333 West Wacker Drive and Controller Controller
Chicago, Illinois 60606
Stuart W. Rogers Vice President None
333 West Wacker Drive
Chicago, Illinois 60606
Bradford W. Shaw, Jr. Vice President None
333 West Wacker Drive Chicago, Illi-
nois 60606
H. William Stabenow Vice President Vice President and
333 West Wacker Drive and Treasurer Treasurer
Chicago, Illinois 60606
George P. Thermos Vice President Vice President
333 West Wacker Drive Chicago, Illi-
nois 60606
James J. Wesolowski Vice President, Vice President and
333 West Wacker Drive General Counsel Secretary
Chicago, Illinois 60606 and Secretary
Paul C. Williams Vice President None
333 West Wacker Drive
Chicago, Illinois 60606
Gifford R. Zimmerman Vice President and Vice President and
333 West Wacker Drive Assistant Secretary Assistant Secretary
Chicago, Illinois 60606
</TABLE>
C-10
<PAGE>
(c) Not applicable.
ITEM 30: LOCATION OF ACCOUNTS AND RECORDS
Nuveen Advisory Corp., 333 West Wacker Drive, Chicago, Illinois, 60606, main-
tains Articles of Incorporation, By-Laws, minutes of directors and shareholder
meetings, contracts and all advisory material of the investment adviser.
United States Trust Company of New York, 114 West 47th Street, New York, New
York 10036, maintains all general and subsidiary ledgers, journals, trial bal-
ances, records of all portfolio purchases and sales, and all other required
records not maintained by Nuveen Advisory 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-11
<PAGE>
SIGNATURES
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933 AND THE INVESTMENT
COMPANY ACT OF 1940, THE REGISTRANT CERTIFIES THAT THIS REGISTRATION STATEMENT
MEETS ALL THE REQUIREMENTS FOR EFFECTIVENESS UNDER PARAGRAPH (B) OF RULE 485 OF
THE SECURITIES ACT OF 1933 AND HAS DULY CAUSED THIS 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 6TH DAY OF JUNE, 1995.
NUVEEN CALIFORNIA TAX-FREE FUND, INC.
/s/ Gifford R. Zimmerman
-------------------------------------------
Gifford R. Zimmerman, Vice President
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THIS 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 6, 1995
Controller (Principal
Financial and
Accounting Officer)
Richard J. Franke Chairman of the Board
and Director (Principal /s/ Gifford R. Zimmerman
Executive Officer) By _________________________
Lawrence H. Brown Director Gifford R. Zimmerman
Anne E. Impellizzeri Director Attorney-in-Fact
Margaret K. Rosenheim Director
Peter R. Sawers Director June 6, 1995
Timothy R. Schwertfeger President and Director
</TABLE>
AN ORIGINAL POWER OF ATTORNEY AUTHORIZING, AMONG OTHERS, JAMES J. WESOLOWSKI
AND GIFFORD R. ZIMMERMAN TO EXECUTE THIS REGISTRATION STATEMENT, AND AMENDMENTS
THERETO, FOR EACH OF THE OFFICERS AND DIRECTORS OF REGISTRANT ON WHOSE BEHALF
THIS REGISTRATION STATEMENT IS FILED, HAS BEEN EXECUTED AND FILED WITH THE SE-
CURITIES AND EXCHANGE COMMISSION.
<PAGE>
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
SEQUENTIALLY
EXHIBIT NUMBERED
NUMBER EXHIBIT PAGE
------- ------- ------------
<C> <S> <C>
10(a). Opinion of Fried, Frank, Harris, Shriver & Jacobson,
dated May 31, 1995.
10(b). Opinion of Venable, Baejter and Howard, LLP, dated May
31, 1995.
11. Consent of Independent Public Accountants.
15(c). Plan of Distribution and Service Pursuant to Rule 12b-
1 for the Class A Shares and Class C Shares of Nuveen
California Tax-Free Value Fund and Nuveen California
Insured Tax-Free Value Fund, dated September 6, 1994.
17. Financial Data Schedule.
</TABLE>
<PAGE>
[LETTERHEAD OF FRIED, FRANK, HARRIS, SHRIVER AND JACOBSON]
Exhibit 10(a)
May 31, 1995
(202) 639-7065
Nuveen California Tax-Free Fund, Inc.
333 West Wacker Drive
Chicago, Illinois 60606
RE: Registration Statement on Form N-1A
Under the Securities Act of 1933
(File No. 33-01971)
-----------------------------------
Ladies and Gentlemen:
We have acted as counsel to Nuveen California Tax-Free Fund, Inc., a Maryland
corporation (the "Fund"), in connection with the above-referenced Registration
Statement on Form N-1A (as amended, the "Registration Statement") which relates
to the Fund's Nuveen California Tax-Free Value Fund, Series A Shares; Nuveen
California Tax-Free Value Fund, Series C Shares; Nuveen California Tax-Free
Value Fund, Series R Shares; Nuveen California Insured Tax-Free Value Fund,
Series A Shares; Nuveen California Insured Tax-Free Value Fund, Series C Shares;
Nuveen California Insured Tax-Free Value Fund, Series R Shares; Nuveen
California Tax-Free Money Market Fund, Service Plan Series Shares; Nuveen
California Tax-Free Money Market Fund, Distribution Plan Series Shares; and
Nuveen California Tax-Free Money Market Fund, Institutional Series Shares, par
value $.01 (collectively, the "Shares"). This opinion is being delivered to you
in connection with the Fund's filing of Post-Effective Amendment No. 20 to the
Registration Statement (the "Amendment") with the Securities and Exchange
Commission pursuant to Rule 485(b) of the Securities Act of 1933 (the "1933
Act"). 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 Maryland State Department of Assessments and
Taxation (the "Department") as to the existence and good standing of the
Fund;
(b) copies, certified by the Department, of the Fund's Charter, and of all
amendments and all supplements thereto (the "Charter");
<PAGE>
Nuveen California Tax-Free Fund, Inc.
May 31, 1995
Page 2
(c) a certificate executed by Karen L. Healy, the Assistant Secretary of the
Fund, certifying as to, and attaching copies of, the Fund's Charter,
By-Laws, as amended (the "By-Laws"), and certain resolutions adopted by
the Board of Directors of the Fund authorizing the issuance of the
Shares; and
(d) a printer's proof, dated May 31, 1995, 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 opinion 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
opinion, 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
Charter and for the consideration described in the Registration Statement, will
be legally issued, fully paid and nonassessable under the laws of the State of
Maryland.
The opinion expressed herein is limited to the laws of the State of
Maryland. As to matters of Maryland law covered thereby, we have relied solely
upon the opinion of Venable, Baetjer and Howard, LLP, addressed to us and
dated May 31, 1995.
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 VENABLE, BAETJER AND HOWARD, LLP]
Exhibit 10(b)
May 31, 1995
Fried, Frank, Harris, Shriver & Jacobson
1001 Pennsylvania Avenue, N.W.
Suite 800
Washington, DC 20004-2505
Re: Nuveen California Tax-Free Fund, Inc.
-------------------------------------
Ladies and Gentlemen:
We have acted as special Maryland counsel to Nuveen California Tax-
Free Fund, Inc., a Maryland corporation (the "Company"), in connection with the
issuance of shares (the "Shares") of its common stock, par value $.01 per share,
classified as Nuveen California Tax-Free Value Fund, Series A Shares, Nuveen
California Tax-Free Value Fund, Series C Shares, Nuveen California Tax-Free
Value Fund, Series R Shares, Nuveen California Insured Tax-Free Value Fund,
Series A Shares, Nuveen California Insured Tax-Free Value Fund, Series C Shares,
Nuveen California Insured Tax-Free Value Fund, Series R Shares, Nuveen
California Tax-Free Money Market Fund, Service Plan Series Shares, Nuveen
California Tax-Free Money Market Fund, Distribution Plan Series Shares, and
Nuveen California Tax-Free Money Market Fund, Institutional Series Shares.
We have examined the Company's Charter and Bylaws and the prospectus
with respect to the Shares included in Post-Effective Amendment No. 20 to the
Company's Registration Statement on Form N-1A, File Nos. 33-01971 and 811-04508
(the "Registration Statement"), substantially in the form in which it is to
become effective (the "Prospectus"). We have further examined and relied upon a
certificate of the Maryland State Department of Assessments and Taxation to the
effect that the Company is duly incorporated and existing under the laws of the
State of Maryland and is in good standing and duly authorized to transact
business in the State of Maryland.
<PAGE>
Fried, Frank, Harris, Shriver & Jacobson
May 31, 1995
Page 2
We have also examined and relied upon such corporate records of the Company
and other documents and certificates with respect to factual matters as we have
deemed necessary to render the opinion expressed herein. We have assumed,
without independent verification, the genuineness of all signatures, the
authenticity of all documents submitted to us as originals, and the conformity
with originals of all documents submitted to us as copies.
Based on such examination, we are of the opinion that:
1. The Company is validly existing as a corporation in good standing
under the laws of the State of Maryland.
2. The Shares to be offered for sale pursuant to the Prospectus are,
to the extent of the number of Shares of each class authorized to
be issued by the Company in its Charter, duly authorized, and,
when sold, issued and paid for as contemplated by the Prospectus,
such shares will have been validly and legally issued and will be
fully paid and nonassessable.
This letter expresses our opinion with respect to the Maryland General
Corporation Law governing matters such as the authorization and issuance of
stock. It does not extend to the securities or "blue sky" laws of Maryland to
federal securities laws or to other laws.
You may rely upon this opinion in rendering your opinion to the Company to
be filed with Post-Effective Amendment No. 19 to the Registration Statement. We
consent to the filing of this opinion as an exhibit to the Registration
Statement.
Very truly yours,
/s/ Venable, Baetjer and Howard
<PAGE>
Exhibit 11
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
-----------------------------------------
As independent public accountants, we hereby consent to the use of our report
dated April 3, 1995, and to all references to our firm included in or made a
part of this registration statement of Nuveen California Tax-Free Fund, Inc.
ARTHUR ANDERSEN LLP
Chicago, Illinois,
May 31, 1995
<PAGE>
EXHIBIT 15(c)
NUVEEN CALIFORNIA TAX-FREE FUND, INC.
PLAN OF DISTRIBUTION AND SERVICE
PURSUANT TO RULE 12b-1
September 6, 1994
WHEREAS, Nuveen California Tax-Free Fund, Inc. (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 currently has three series with shares outstanding: the Nuveen
California Tax-Free Value Fund, the Nuveen California Insured Tax-Free Value
Fund, and the Nuveen California Tax-Free Money Market Fund;
WHEREAS, the Fund, on behalf of the Nuveen California Tax-Free Value Fund and
the Nuveen California Insured Tax-Free Value Fund series (the "Series"), employs
John Nuveen & Co. Incorporated (the "Distributor") as distributor of the shares
of common stock of each of the Series (the "Shares") pursuant to a
Distribution Agreement dated as of September 6, 1994;
WHEREAS, the Series are authorized to issue Shares in three different classes
("Classes"): Class A, Class C and Class R;
WHEREAS, the Fund, on behalf of each Series, desires to adopt a Plan of
Distribution and Service pursuant to Rule 12b-1 under the Act ("Rule 12b-1"),
and the Board of Directors of the Fund has determined that there is a reasonable
likelihood that adoption of this Plan of Distribution and Service will benefit
each Series and the 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; and
WHEREAS, Shares representing an investment in Class C will automatically convert
to Class A Shares 72 months after the investment, as described in the Prospectus
for the Shares;
NOW, THEREFORE, the Fund, on behalf of each Series, 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:
<PAGE>
1. (a) The Fund, on behalf of the Series, 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 each Series
and the servicing of accounts holding such Shares.
(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 Series; 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 Series, 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 Series. Such compensation shall be calculated and accrued
daily and paid quarterly or at such other intervals as the Board of Directors
may determine.
(c) The Distributor shall pay any Distribution Fees it receives under the
Plan with respect to Class C Shares of a particular Series 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 that Series. 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 a particular Series 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 and Series,
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 Series 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 Distribution
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
Directors of the Fund, and (b) those Directors 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 Directors") 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 Directors 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 Directors or by vote of a majority (as defined in the Act) of the
outstanding voting Shares of a Series.
6. This Plan may not be amended to increase materially the amount of
compensation payable by a Series 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 of the Series. 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 Directors
who are not interested persons (as defined in the Act) of the Fund shall be
committed to the discretion of the Directors 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 CALIFORNIA TAX-FREE FUND, INC.
By: /s/ Larry Martin
---------------------------
Its Vice President
JOHN NUVEEN & CO. INCORPORATED
By: /s/ James J. Wesolowski
----------------------------
Its Vice President
3
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<LEGEND> THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
FORM N-SAR AND THE FINANCIAL STATEMENT AND IS QUALIFIED IN ITS ENTIRETY BY
REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<SERIES>
<NUMBER> 011
<NAME> NUVEEN CAL MM SERVICE
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> FEB-28-1995
<PERIOD-START> MAR-01-1994
<PERIOD-END> FEB-28-1995
<INVESTMENTS-AT-COST> 152242
<INVESTMENTS-AT-VALUE> 152174
<RECEIVABLES> 6122
<ASSETS-OTHER> 1907
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 160271
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 570
<TOTAL-LIABILITIES> 570
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 41772
<SHARES-COMMON-STOCK> 41772
<SHARES-COMMON-PRIOR> 415238
<ACCUMULATED-NII-CURRENT> 2875
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> (12)
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 0
<NET-ASSETS> 41772
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 3527
<OTHER-INCOME> 0
<EXPENSES-NET> 652
<NET-INVESTMENT-INCOME> 2875
<REALIZED-GAINS-CURRENT> (12)
<APPREC-INCREASE-CURRENT> 0
<NET-CHANGE-FROM-OPS> 2863
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 2863
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 208318
<NUMBER-OF-SHARES-REDEEMED> 584768
<SHARES-REINVESTED> 2984
<NET-CHANGE-IN-ASSETS> (373466)
<ACCUMULATED-NII-PRIOR> 8698
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 477
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 711
<AVERAGE-NET-ASSETS> 119419
<PER-SHARE-NAV-BEGIN> 1.0
<PER-SHARE-NII> .024
<PER-SHARE-GAIN-APPREC> .0
<PER-SHARE-DIVIDEND> (.024)
<PER-SHARE-DISTRIBUTIONS> .0
<RETURNS-OF-CAPITAL> .0
<PER-SHARE-NAV-END> 1.0
<EXPENSE-RATIO> .55
<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 STATEMENT AND IS QUALIFIED IN ITS ENTIRETY BY
REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<SERIES>
<NUMBER> 012
<NAME> NUVEEN CAL MM DISTRIBUTION
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> FEB-28-1995
<PERIOD-START> MAR-01-1994
<PERIOD-END> FEB-28-1995
<INVESTMENTS-AT-COST> 152242
<INVESTMENTS-AT-VALUE> 152174
<RECEIVABLES> 6122
<ASSETS-OTHER> 1907
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 160271
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 570
<TOTAL-LIABILITIES> 570
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 67157
<SHARES-COMMON-STOCK> 67157
<SHARES-COMMON-PRIOR> 72380
<ACCUMULATED-NII-CURRENT> 2086
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> (5)
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 0
<NET-ASSETS> 67157
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 2086
<OTHER-INCOME> 0
<EXPENSES-NET> 390
<NET-INVESTMENT-INCOME> 1696
<REALIZED-GAINS-CURRENT> (5)
<APPREC-INCREASE-CURRENT> 0
<NET-CHANGE-FROM-OPS> 1691
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 1691
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 113315
<NUMBER-OF-SHARES-REDEEMED> 119861
<SHARES-REINVESTED> 1323
<NET-CHANGE-IN-ASSETS> (5223)
<ACCUMULATED-NII-PRIOR> 1401
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 282
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 453
<AVERAGE-NET-ASSETS> 70616
<PER-SHARE-NAV-BEGIN> 1.0
<PER-SHARE-NII> .024
<PER-SHARE-GAIN-APPREC> 0
<PER-SHARE-DIVIDEND> (.024)
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 1.0
<EXPENSE-RATIO> .55
<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
REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<SERIES>
<NUMBER> 013
<NAME> NUVEEN CAL MM INSTITUTIONAL
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> FEB-28-1995
<PERIOD-START> MAR-01-1994
<PERIOD-END> FEB-28-1995
<INVESTMENTS-AT-COST> 152242
<INVESTMENTS-AT-VALUE> 152174
<RECEIVABLES> 6122
<ASSETS-OTHER> 1907
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 160271
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 569
<TOTAL-LIABILITIES> 569
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 50772
<SHARES-COMMON-STOCK> 50772
<SHARES-COMMON-PRIOR> 32299
<ACCUMULATED-NII-CURRENT> 1472
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> (2)
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 0
<NET-ASSETS> 50772
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 1472
<OTHER-INCOME> 0
<EXPENSES-NET> 233
<NET-INVESTMENT-INCOME> 1239
<REALIZED-GAINS-CURRENT> (2)
<APPREC-INCREASE-CURRENT> 0
<NET-CHANGE-FROM-OPS> 1237
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 1237
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 247997
<NUMBER-OF-SHARES-REDEEMED> 229531
<SHARES-REINVESTED> 7
<NET-CHANGE-IN-ASSETS> 18473
<ACCUMULATED-NII-PRIOR> 708
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 64
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 233
<AVERAGE-NET-ASSETS> 49829
<PER-SHARE-NAV-BEGIN> 1.0
<PER-SHARE-NII> .025
<PER-SHARE-GAIN-APPREC> 0
<PER-SHARE-DIVIDEND> (.025)
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 1.0
<EXPENSE-RATIO> .48
<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
REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<SERIES>
<NUMBER> 021
<NAME> NUVEEN CAL SPECIAL CLASS R
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> FEB-28-1995
<PERIOD-START> MAR-01-1994
<PERIOD-END> FEB-28-1995
<INVESTMENTS-AT-COST> 202079
<INVESTMENTS-AT-VALUE> 206073
<RECEIVABLES> 3950
<ASSETS-OTHER> 2150
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 212175
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 749
<TOTAL-LIABILITIES> 749
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 209988
<SHARES-COMMON-STOCK> 20536
<SHARES-COMMON-PRIOR> 20333
<ACCUMULATED-NII-CURRENT> 65
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> (2620)
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 3993
<NET-ASSETS> 208080
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 13532
<OTHER-INCOME> 0
<EXPENSES-NET> 1475
<NET-INVESTMENT-INCOME> 12057
<REALIZED-GAINS-CURRENT> (2621)
<APPREC-INCREASE-CURRENT> (8274)
<NET-CHANGE-FROM-OPS> 1162
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 12100
<DISTRIBUTIONS-OF-GAINS> 1543
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 2434
<NUMBER-OF-SHARES-REDEEMED> 3116
<SHARES-REINVESTED> 885
<NET-CHANGE-IN-ASSETS> (7005)
<ACCUMULATED-NII-PRIOR> 152
<ACCUMULATED-GAINS-PRIOR> 1552
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 1127
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 1479
<AVERAGE-NET-ASSETS> 205875
<PER-SHARE-NAV-BEGIN> 10.74
<PER-SHARE-NII> .582
<PER-SHARE-GAIN-APPREC> (.531)
<PER-SHARE-DIVIDEND> (.587)
<PER-SHARE-DISTRIBUTIONS> (.074)
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 10.13
<EXPENSE-RATIO> .71
<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
REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<SERIES>
<NUMBER> 022
<NAME> NUVEEN CAL SPECIAL CLASS A
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> FEB-28-1995
<PERIOD-START> MAR-01-1994
<PERIOD-END> FEB-28-1995
<INVESTMENTS-AT-COST> 202079
<INVESTMENTS-AT-VALUE> 206073
<RECEIVABLES> 3950
<ASSETS-OTHER> 2152
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 212175
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 749
<TOTAL-LIABILITIES> 749
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 209988
<SHARES-COMMON-STOCK> 312
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 65
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> (2620)
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 3993
<NET-ASSETS> 3146
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 13532
<OTHER-INCOME> 0
<EXPENSES-NET> 1475
<NET-INVESTMENT-INCOME> 12057
<REALIZED-GAINS-CURRENT> (2621)
<APPREC-INCREASE-CURRENT> (8274)
<NET-CHANGE-FROM-OPS> 1162
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 41
<DISTRIBUTIONS-OF-GAINS> 6
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 322
<NUMBER-OF-SHARES-REDEEMED> 12
<SHARES-REINVESTED> 2
<NET-CHANGE-IN-ASSETS> (7005)
<ACCUMULATED-NII-PRIOR> 152
<ACCUMULATED-GAINS-PRIOR> 1552
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 1127
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 1479
<AVERAGE-NET-ASSETS> 1559
<PER-SHARE-NAV-BEGIN> 10.21
<PER-SHARE-NII> .270
<PER-SHARE-GAIN-APPREC> (.031)
<PER-SHARE-DIVIDEND> (.275)
<PER-SHARE-DISTRIBUTIONS> (.074)
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 10.10
<EXPENSE-RATIO> 1.00
<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 STATEMENT AND IS QUALIFIED IN ITS ENTIRETY BY
REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<SERIES>
<NUMBER> 023
<NAME> NUVEEN CAL SPECIAL CLASS C
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> FEB-28-1995
<PERIOD-START> MAR-01-1994
<PERIOD-END> FEB-28-1995
<INVESTMENTS-AT-COST> 202079
<INVESTMENTS-AT-VALUE> 206073
<RECEIVABLES> 3950
<ASSETS-OTHER> 2152
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 212175
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 749
<TOTAL-LIABILITIES> 749
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 209988
<SHARES-COMMON-STOCK> 20
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 65
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> (2620)
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 3993
<NET-ASSETS> 200
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 13532
<OTHER-INCOME> 0
<EXPENSES-NET> 1475
<NET-INVESTMENT-INCOME> 12057
<REALIZED-GAINS-CURRENT> (2621)
<APPREC-INCREASE-CURRENT> (8274)
<NET-CHANGE-FROM-OPS> 1162
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 3
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 20
<NUMBER-OF-SHARES-REDEEMED> 0
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> (7005)
<ACCUMULATED-NII-PRIOR> 152
<ACCUMULATED-GAINS-PRIOR> 1552
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 1127
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 1479
<AVERAGE-NET-ASSETS> 127
<PER-SHARE-NAV-BEGIN> 10.04
<PER-SHARE-NII> .218
<PER-SHARE-GAIN-APPREC> .139
<PER-SHARE-DIVIDEND> (.223)
<PER-SHARE-DISTRIBUTIONS> (.074)
<RETURNS-OF-CAPITAL> .0
<PER-SHARE-NAV-END> 10.10
<EXPENSE-RATIO> 1.75
<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 STATEMENT AND IS QUALIFIED IN ITS ENTIRETY BY
REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<SERIES>
<NUMBER> 031
<NAME> NUVEEN CAL INSURED CLASS R
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> FEB-28-1995
<PERIOD-START> MAR-01-1994
<PERIOD-END> FEB-28-1995
<INVESTMENTS-AT-COST> 196280
<INVESTMENTS-AT-VALUE> 201143
<RECEIVABLES> 3450
<ASSETS-OTHER> 13
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 204606
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 703
<TOTAL-LIABILITIES> 703
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 200080
<SHARES-COMMON-STOCK> 19444
<SHARES-COMMON-PRIOR> 19509
<ACCUMULATED-NII-CURRENT> 67
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> (1106)
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 4863
<NET-ASSETS> 198930
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 12414
<OTHER-INCOME> 0
<EXPENSES-NET> 1375
<NET-INVESTMENT-INCOME> 11039
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