<PAGE>
As filed with the Securities and Exchange Commission on June 28, 1996.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-1A
REGISTRATION STATEMENT UNDER THE
SECURITIES ACT OF 1933
[_]
File No. 33-01971
Pre-Effective Amendment No.
--- [_]
[X]
Post-Effective Amendment No. 22
and
REGISTRATION STATEMENT UNDER THE
INVESTMENT COMPANY ACT OF 1940
[_]
File No. 811-04508
[X]^
Amendment No. 22
NUVEEN CALIFORNIA TAX-FREE FUND, INC.
(Exact Name of Registrant as Specified in Charter)
333 West Wacker Drive, Chicago, 60606
Illinois
(Address of Principal Executive (Zip Code)
Offices)
Registrant's Telephone Number, Including Area Code: (312) 917-7700
James J. Wesolowski, Esq.--Vice President 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 pursuant to paragraph (b)
[_] on (date) pursuant to paragraph
[_] (a)(1)
75 days after filing pursuantto para-
[X] graph (a)(2)
on July 1, 1996 pursuant to paragraph (b)
[_] on (date) pursuant to paragraph
[_] (a)(2) ofRule 485.
60 days after filing pursuant to paragraph (a)(1)
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 29, 1996, WAS FILED ON OR ABOUT APRIL 23, 1996.
CALCULATION OF REGISTRATION FEE FOR SHARES OF
CALIFORNIA TAX-FREE MONEY MARKET FUND
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PROPOSED PROPOSED
AMOUNT MAXIMUM MAXIMUM AMOUNT OF
TITLE OF SECURITIES BEING OFFERING PRICE AGGREGATE REGISTRATION
BEING REGISTERED REGISTERED PER UNIT OFFERING PRICE FEE*
- -------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Shares of Common Stock,
$.01 par value........ 397,356,134 $1.00 $397,356,134 $100.00
</TABLE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
*Registrant has elected to calculate its filing fee in the manner described
in Rule 24e-2 under the Investment Company Act of 1940. The total amount of
securities redeemed during the previous fiscal year was $465,570,213. The
total amount of redeemed securities used for reduction pursuant to Rule 24e-
2(a) or Rule 24f-2(c) was $68,504,079. The amount of redeemed securities be-
ing used for reduction of the registration fee in this Amendment is
$397,066,134.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
CONTENTS
OF
POST-EFFECTIVE AMENDMENT NO. 22
TO
REGISTRATION STATEMENT
UNDER THE SECURITIES ACT OF 1933
FILE NO. 33-01971
AND
AMENDMENT NO. 22
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 Plan;
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 Plan; Independent Public
Accountants and Custodian
17 Brokerage Allocation and Other Portfolio Transactions
Practices
18 Capital Stock and Other See "General Information" in the Prospectus
Securities
19 Purchase, Redemption and Additional Information on the Purchase and
Pricing of Securities Redemption of Fund Shares; Distribution and
Service Plan; Net Asset Value
20 Tax Status Tax Matters
21 Underwriters Additional Information on the Purchase and
Redemption of Fund Shares; See "How to Buy
Fund Shares" and "Management of the 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 Objective and
Registrant Policies
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>
[LOGO]
Nuveen Tax-Free
Mutual Funds
Dependable tax-free
income for generations
CALIFORNIA
CALIFORNIA INSURED
[PLACE PHOTO HERE]
PROSPECTUS/JULY 1, 1996
<PAGE>
THE NUVEEN FAMILY OF TAX-FREE MUTUAL FUNDS
Nuveen offers individual investors 16 different long-term
tax-free mutual funds to choose from, including:
NATIONAL LONG-TERM FUNDS
Nuveen Municipal Bond Fund
Nuveen Insured Municipal Bond Fund
STATE LONG-TERM FUNDS
Arizona
Nuveen Arizona Tax-Free Value Fund
California
Nuveen California Tax-Free Value Fund
Nuveen California Insured Tax-Free Value Fund
Florida
Nuveen Florida Tax-Free Value Fund
Maryland
Nuveen Maryland Tax-Free Value Fund
Massachusetts
Nuveen Massachusetts Tax-Free Value Fund
Nuveen Massachusetts Insured Tax-Free Value Fund
Michigan
Nuveen Michigan Tax-Free Value Fund
New Jersey
Nuveen New Jersey Tax-Free Value Fund
New York
Nuveen New York Tax-Free Value Fund
Nuveen New York Insured Tax-Free Value Fund
Ohio
Nuveen Ohio Tax-Free Value Fund
Pennsylvania
Nuveen Pennsylvania Tax-Free Value Fund
Virginia
Nuveen Virginia Tax-Free Value Fund
<PAGE>
NUVEEN TAX-FREE MUTUAL FUNDS PROSPECTUS
JULY 1, 1996
Nuveen California Tax-Free Fund, Inc.
Prospectus
July 1, 1996
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
consisting of three tax-free mutual funds. The two tax-free mutual funds named
above (the "Funds"), each representing a separate portfolio designed to provide
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, 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
investment 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
insurance guaranteeing the 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 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 investment adviser to offer the best values among California Municipal
Obligations of similar credit quality.
Each Fund has adopted a Flexible Pricing Program designed to permit you and
your financial adviser to choose the method of purchasing shares that you
believe is most beneficial given the amount of your purchase and any current
holdings of Fund shares, the length of time you expect to hold your investment,
and other relevant circumstances. The Program features three alternative ways
to purchase Fund shares (Classes A, C and R), each with a different combination
of sales charges, ongoing fees, eligibility requirements, and other features.
See "Flexible Pricing Program," "How to Buy Fund Shares" and "Summary of Fund
Expenses."
This Prospectus contains information you should know before investing in the
Funds. Please retain it for future reference. You can find more detailed
information about the Funds (and Nuveen California Tax-Free Money Market Fund)
in the "Statement of Additional Information" dated July 1, 1996. For a free
copy of this Statement, write to the Funds, c/o John Nuveen & Co. Incorporated,
333 West Wacker Drive, Chicago, IL 60606, or call Nuveen toll-free at
800.621.7227. The Statement has been filed with the Securities and Exchange
Commission and is incorporated by reference into this Prospectus.
Shares of the Funds are not deposits or obligations of, or guaranteed or
endorsed by, any bank and are not federally insured by the Federal Deposit
Insurance Corporation, the Federal Reserve Board, or any other agency. Shares
of the 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 REPRESENTATION TO THE CONTRARY IS
A CRIMINAL OFFENSE.
John Nuveen & Co. Incorporated
For information, call toll-free 800.621.7227
<PAGE>
<TABLE>
<C> <S>
CONTENTS
3 Summary of Fund expenses
5 How to determine if 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?
24 Flexible pricing program
27 How to buy Fund shares
40 Distribution and service plan
41 How to redeem Fund shares
45 Management of the Funds
48 How the Funds show performance
51 Distributions and taxes
55 Net asset value
56 General information
Appendix A--Special state factors and
state tax treatment
Appendix B--Taxable equivalent yield tables
</TABLE>
<PAGE>
SUMMARY OF FUND EXPENSES
NUVEEN TAX-FREE MUTUAL FUNDS PROSPECTUS
JULY 1, 1996
<TABLE>
<CAPTION>
Shareholder transaction
expenses
(as a percent of offering
price) (1) Each fund
----------------------------------------
Class A Class C Class R (2)
<S> <C> <C> <C>
Maximum sales charge imposed on
purchases 4.50%(3) None None
Maximum sales charge imposed on
reinvested dividends None None None
Deferred sales charge None(4) 1.00%(5) None
Redemption fees None None None
Exchange fees None None None
</TABLE>
<TABLE>
<CAPTION>
Annual operating Total
expenses, expenses,
after fee waivers and without fee
expense reimbursements waivers and
(as a percent of Rule Other expense
average daily net Management 12b-1 operating Total reim-
assets) (6) fees fees (7) expenses expenses bursements
- -----------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
CALIFORNIA FUND
Class A .54% .25% .17% .96% 1.00%
Class C .54% 1.00% .17% 1.71% 1.84%
Class R .54% None .17% .71% .71%
CALIFORNIA INSURED FUND
Class A .54% .25% .18% .97% .98%
Class C .54% 1.00% .17% 1.71% 1.74%
Class R .54% None .16% .70% .70%
</TABLE>
(1) Authorized Dealers and other firms may independently charge additional fees
for shareholder transactions or for advisory services; please see their
materials for details.
(2) Class R Shares are available for purchase only under certain limited
circumstances, or by specified investors, as described below under "How to Buy
Fund Shares--Class R Shares."
(3) Reduced sales charges apply to purchases of $50,000 or more. See "How to
Buy Fund Shares--Class A Shares."
(4) Class A purchases at net asset value of $1 million or more may be subject
to a 1% contingent deferred sales charge if redeemed within 18 months of
purchase. See "How to Buy Fund Shares--Class A Shares."
(5) Class C Shares redeemed within one year of purchase are subject to a 1%
contingent deferred sales charge.
(6)In order to prevent total operating expenses (excluding any distribution or
service fees) from exceeding .75 of 1% of the average daily net asset value of
any class of shares of the California Fund, and .975% of 1% of the average
daily net asset value of any class of shares of the Insured California Fund,
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 reimburse additional expenses from time to time, which voluntary
reimbursements may be terminated at any time in its discretion.
(7)Class C Shares are subject to an annual distribution fee of .75 of 1% of
average daily net assets to the sale of Fund shares. Both Class A Shares and
Class C Shares of each Fund are subject to an annual service fee of .25 of 1%
of average daily net assets to compensate Authorized Dealers for ongoing
account services. See "Distribution and Service Plan." Long-term holders of
Class C Shares may pay more in Rule 12b-1 distribution fees than the economic
equivalent of the maximum front-end sales charge permitted under the National
Association of Securities Dealers Rules of Fair Practice.
The purpose of the tables above is to help you understand all
expenses and fees that you would bear directly or indirectly
as a Fund shareholder. The expenses and fees shown are for
the fiscal year ended February 29, 1996.
3
<PAGE>
SUMMARY OF FUND EXPENSES
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 $54 $74 $96 $158
Class C $17** $54 $93 $164
Class R $ 7 $23 $40 $ 88
<CAPTION>
CALIFORNIA
INSURED FUND
<S> <C> <C> <C> <C>
Class A $54 $75 $96 $159
Class C $17** $54 $93 $164
Class R $ 7 $22 $39 $ 87
</TABLE>
*This example does not represent past or future expenses.
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 Expenses remain the same in each of the
periods. The ten-year figure for Class C Shares reflects the
automatic conversion of Class C Shares into Class A Shares
six years after purchase. Based on the foregoing assumptions,
the expenses incurred on an investment in Class C Shares will
exceed the expenses incurred on an investment in Class A
Shares sometime in the sixth year after purchase. You should
also note that Class R Shares are available for purchase only
under certain limited circumstances, or by specified
investors. For additional information about each Fund's fees
and expenses, see "Distribution and Service Plan" and
"Management of the Funds."
**Assumes that shareholder redeemed on the first day of the
second year and the contingent deferred sales charge was not
applicable for any of the periods shown. If the shareholder
had redeemed on the last day of the first year, the expenses
in the first year would be $27 for the California and
California Insured Funds.
4
<PAGE>
NUVEEN TAX-FREE MUTUAL FUNDS PROSPECTUS
HOW TO DETERMINE IF ONE OF THE FUNDS IS RIGHT FOR YOU
JULY 1, 1996
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 enable
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 features and
benefits. You should carefully review the more detailed de-
scription of these features and benefits elsewhere in the
Prospectus to make sure they serve your individual investment
goals.
MONTHLY, DOUBLE TAX-FREE INCOME
Each Fund provides monthly dividends exempt from regular
federal and applicable California personal income taxes for
in-state residents.
DIVERSIFIED, INVESTMENT GRADE QUALITY OR INSURED PORTFOLIO
The California Fund purchases investment grade quality
California Municipal Obligations. The California Insured Fund
purchases California Municipal Obligations which are either
covered by insurance guaranteeing the 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 ensure 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 Obligations of different types and
purposes.
EXPERIENCED MANAGEMENT
Each Fund is managed by Nuveen Advisory Corp. ("Nuveen
Advisory"), a wholly-owned subsidiary of John Nuveen & Co.
Incorporated ("Nuveen"). Founded in 1898, Nuveen is the
oldest and largest investment banking firm in the country
devoted exclusively to tax-exempt securities. Nuveen Advisory
currently manages 74 different tax-free portfolios
representing approximately $30 billion in assets.
5
<PAGE>
VALUE INVESTING
As a guiding policy, Nuveen Advisory's portfolio managers
seek investment grade quality undervalued or underrated
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,
regardless of which direction the market may move. 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.
NUVEEN RESEARCH
Nuveen Advisory's portfolio managers call upon the resources
of Nuveen's Research Department, the largest in the
investment banking industry devoted exclusively to tax-exempt
securities. Nuveen research analysts reviewed in 1995 more
than $100 billion of tax-exempt securities sold in new issue
and secondary markets.
LOW MINIMUMS
You can start earning tax-free income with a low initial
investment of $1,000 in a particular class of a Fund. See
"How to Buy Fund Shares."
FLEXIBILITY IN PURCHASING FUND SHARES
Each Fund has adopted a Flexible Pricing Program which is
designed to permit you and your financial adviser to choose
the method of purchasing shares that you believe is most
beneficial given the amount of your investment and any
current holdings of Fund shares, the length of time you
expect to hold your investment, and other relevant
circumstances. The Program features three alternative ways to
purchase Fund shares (Classes A, C and R), each with a
different combination of sales charges, ongoing fees,
eligibility requirements, and other features. Please refer to
"Flexible Pricing Program," "How to Buy Fund Shares" and "How
to Redeem Fund Shares" for a discussion of the Program's
features and additional information about these three classes
of shares.
AUTOMATIC DEPOSIT PLANS
The Funds offer a number of investment options, including
automatic deposit, direct deposit and payroll deduction, to
help you add to your account on a regular basis.
6
<PAGE>
NUVEEN TAX-FREE MUTUAL FUNDS PROSPECTUS
JULY 1, 1996
AUTOMATIC REINVESTMENT
All monthly dividends or capital gains paid by your Fund on
each class of shares will be reinvested automatically into
additional shares of the same class without a sales charge,
unless you elect to receive them in cash. Separately,
distributions from any Nuveen unit trust (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 PRIVILEGE
Shares of a class of either of the Funds may be quickly and
easily exchanged by telephone, without a sales charge, 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 for the class of shares
you are redeeming. Class C Shares, as well as Class A
purchases of $1 million or more at net asset value, may be
subject to a contingent deferred sales charge ("CDSC") of 1%
upon redemption. Remember that share prices will fluctuate
with market conditions and upon redemption may be worth more
or less than their original cost. See "How to Redeem Fund
Shares."
AUTOMATIC WITHDRAWAL
If you own shares totalling $10,000 or more, you can arrange
to have $50 or more sent to you from your account either
monthly or quarterly.
TELEPHONE REDEMPTIONS
You may establish free telephone redemption privileges for
your account.
RISKS AND SPECIAL CONSIDERATIONS
You should consider certain other factors about the Funds
before investing. As with other bond mutual funds 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, designed to provide the
best results when held for a multi-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, economic or regulatory developments
7
<PAGE>
affecting issuers of California Municipal Obligations. The
Funds also have the ability to engage in certain investment
practices, including the purchase of California Municipal
Obligations that pay interest subject to the federal
alternative minimum tax, the purchase or sale of securities
on a when-issued or delayed delivery basis, the purchase or
sale of municipal lease and installment purchase obligations,
and the purchase or sale of futures or options for hedging
purposes. As described elsewhere in this Prospectus, the
Funds have no present intention of purchasing or selling
futures or options, and may engage in the other investment
practices listed above only under strict limits.
8
<PAGE>
NUVEEN TAX-FREE MUTUAL FUNDS PROSPECTUS
JULY 1, 1996
[THIS PAGE INTENTIONALLY LEFT BLANK]
9
<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 Annual Report to
Shareholders, and should be read in conjunction with the
financial statements and related notes appearing in the
Annual Report. A copy of the Annual Report to
Shareholders which contains additional unaudited
performance information can be obtained without charge
by writing to Nuveen California Tax-Free Fund, Inc.
Selected data for a Class A, Class C and Class R Share
outstanding throughout each period is as follows:
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Income from investment operations Less distributions
---------------------------------------------------------------------
Net
Net asset realized and Dividends
value Net unrealized gain from net Distributions Net asset
beginning investment (loss) from investment from value end of
of period income investments+++ income capital gains period
- --------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
CA
- --------------------------------------------------------------------------------------------------------------
CLASS A
Year ended
2/29/96 $10.100 $.549* $ .473 $(.542) $ -- $10.580
9/6/94 to
2/28/95 10.210 .270* (.031) (.275) (.074) 10.100
CLASS C
Year ended
2/29/96 10.100 .470* .474 (.464) -- 10.580
9/16/94 to
2/28/95 10.040 .218* .139 (.223) (.074) 10.100
CLASS R
Year ended
2/29/96 10.130 .575 .467 (.572) -- 10.600
Year ended 2/28,
1995 10.740 .582 (.531) (.587) (.074) 10.130
1994 10.850 .598 (.054) (.596) (.058) 10.740
1993 10.140 .633 .707 (.626) (.004) 10.850
8 months ended
2/29/92 9.920 .429 .218 (.427) -- 10.140
Year ended 6/30,
1991 9.790 .639 .133 (.642) -- 9.920
1990 9.850 .641 (.058) (.643) -- 9.790
1989 9.240 .649* .610 (.649) -- 9.850
1988 9.280 .647* (.040) (.647) -- 9.240
1987** 9.600 .652* (.320) (.652) -- 9.280
- --------------------------------------------------------------------------------------------------------------
</TABLE>
See notes on page 13
10
<PAGE>
NUVEEN TAX-FREE MUTUAL FUNDS PROSPECTUS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Ratios/Supplemental data
--------------------------------------------------------------------------------
Ratio of Ratio of
Ratio of net investment net investment
expenses to income to Ratio of income to
average average expenses average
Total return Net assets net assets net assets to average net net assets Portfolio
on net asset end of period before before assets after after turnover
value++ (in thousands) reimbursement reimbursement reimbursement* reimbursement* rate
- -------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
- -------------------------------------------------------------------------------------------------
10.36% $ 12,709 1.00% 5.23% .96% 5.27% 36%
2.52 3,146 1.41+ 5.40+ 1.00+ 5.81+ 32
9.53 684 1.84 4.39 1.71 4.52 36
3.71 200 2.41+ 4.37+ 1.75+ 5.03+ 32
10.54 216,390 .71 5.53 .71 5.53 36
.78 208,080 .71 5.83 .71 5.83 32
5.08 218,430 .73 5.47 .73 5.47 19
13.66 183,215 .71 6.05 .71 6.05 5
6.61 133,377 .67+ 6.30+ .67+ 6.30+ --
8.16 107,508 .69 6.48 .69 6.48 15
6.14 78,704 .69 6.51 .69 6.51 8
14.12 52,048 .77 6.77 .75 6.79 22
6.87 29,640 .88 6.91 .70 7.09 48
3.28 19,094 1.19 5.61 .18 6.62 17
- -------------------------------------------------------------------------------------------------
</TABLE>
11
<PAGE>
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Income from investment operations Less distributions
---------------------------------------------------------------------
Net
Net asset realized and Dividends
value Net unrealized gain from net Distributions Net asset
beginning investment (loss) from investment from value end of
of period income investments+++ income capital gains period
- -----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
CA INS
- -----------------------------------------------------------------------------------------------------------------
CLASS A
Year ended
2/29/96 $10.250 $.530* $ .505 $(.525) $ -- $10.760
9/6/94 to
2/28/95 10.220 .255* .068 (.265) (.028) 10.250
CLASS C
Year ended
2/29/96 10.150 .448* .516 (.444) -- 10.670
9/12/94 to
2/28/95 10.060 .210* .123 (.215) (.028) 10.150
CLASS R
Year ended
2/29/96 10.230 .556 .507 (.553) -- 10.740
Year ended 2/28,
1995 10.670 .559 (.412) (.559) (.028) 10.230
1994 10.850 .560 (.101) (.556) (.083) 10.670
1993 10.010 .584 .871 (.579) (.036) 10.850
8 months ended
2/29/92 9.650 .401 .360 (.401) -- 10.010
Year ended 6/30,
1991 9.480 .600 .176 (.606) -- 9.650
1990 9.630 .608 (.151) (.607) -- 9.480
1989 9.020 .607 .610 (.607) -- 9.630
1988 8.980 .600* .040 (.600) -- 9.020
1987** 9.600 .630* (.620) (.630) -- 8.980
- -----------------------------------------------------------------------------------------------------------------
</TABLE>
12
<PAGE>
NUVEEN TAX-FREE MUTUAL FUNDS PROSPECTUS
JULY 1, 1996
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Ratios/Supplemental data
--------------------------------------------------------------------------------
Ratio of Ratio of
Ratio of net investment net investment
expenses to income to Ratio of income to
average average expenses average
Total return Net assets net assets net assets to average net net assets Portfolio
on net asset end of period before before assets after after turnover
value++ (in thousands) reimbursement reimbursement reimbursement* reimbursement* rate
- -------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
- -------------------------------------------------------------------------------------------------
10.32% $ 17,250 .98% 4.99% .97% 5.00% 38%
3.33 4,753 1.24+ 5.26+ 1.05+ 5.45+ 25
9.67 1,040 1.74 4.23 1.71 4.26 38
3.45 222 2.44+ 4.05+ 1.80+ 4.69+ 25
10.63 205,642 .70 5.29 .70 5.29 38
1.68 198,928 .70 5.60 .70 5.60 25
4.27 208,115 .71 5.12 .71 5.12 14
15.05 168,852 .75 5.72 .75 5.72 9
7.99 100,933 .64+ 5.97+ .64+ 5.97+ 7
8.43 74,551 .68 6.26 .68 6.26 29
4.93 50,625 .70 6.36 .70 6.36 13
13.97 35,032 .82 6.52 .82 6.52 23
7.44 22,394 .99 6.60 .82 6.77 31
(.13) 16,192 1.06 5.59 .17 6.48 4
- -------------------------------------------------------------------------------------------------
</TABLE>
*Reflects the waiver of certain management fees and reimbursement of certain
other expenses by the Adviser, if applicable.See Notes to Financial Statements
in Annual Report to Shareholders.
**Shares in the California and California Insured Funds were first offered for
sale on 7/1/86.
+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 Notes to Financial Statements in Annual
Report to Shareholders.
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
--------------------------------------------------------------
<S> <C> <C>
John Nuveen & Co. Fund Sponsor and Sponsors and manages
Incorporated Principal the offering of Fund
("Nuveen") Underwriter shares; 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; Maintains shareholder
Inc. Shareholder accounts, handles
("SSI") Services Agent; share redemptions and
Dividend exchanges and
Paying Agent dividend payments
Chase Manhattan Bank, Custodian Maintains custody of
N.A. ("Chase") the Funds'
investments and
provides certain
accounting services
to the Funds
</TABLE>
14
<PAGE>
WHAT ARE THE FUNDS' INVESTMENT OBJECTIVES AND POLICIES?
NUVEEN TAX-FREE MUTUAL FUNDS PROSPECTUS
JULY 1, 1996
INVESTMENT OBJECTIVE
Each Fund is
designed to The investment objective of each Fund is to provide you with
provide income as high a level of current interest income exempt from both
free from regular federal and applicable California personal income
federal and taxes as is consistent, in the view of the Fund's management,
California with preservation of capital. There can be no assurance that
state personal the investment objective of either Fund will be achieved. The
income taxes investment objective is a fundamental policy of each Fund and
may not be changed without the approval of the holders of a
majority of the shares of that Fund. Other investment
restrictions that may be changed only with shareholder
approval are contained in the Statement of Additional
Information. [/R]
HOW THE FUNDS PURSUE THEIR OBJECTIVE
The Funds seek
Municipal Obligations
considered to
be undervalued
Nuveen Advisory believes that in any market environment there
are quality Municipal Obligations whose current price, yield,
credit quality and future prospects make them seem
underpriced or exceptionally attractive when compared with
other Municipal Obligations in the market. Value investing
for the California Insured Fund will ordinarily involve
purchases of undervalued or underrated uninsured Municipal
Obligations which would then be covered by insurance, or
undervalued insured Municipal Obligations. In selecting
investments for the Funds, Nuveen Advisory will attempt to
identify and purchase those undervalued or underrated
California Municipal Obligations of investment grade quality
that meet the investment 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 position 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 income 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 capital appreciation realized by a Fund will generally
result in the distribution of taxable gains to Fund
shareholders. See "Distributions and Taxes."
Successful value investing depends on identifying and
Thorough purchasing undervalued or underrated securities before the
research can rest of the marketplace finds them. Nuveen Advisory believes
help identify the municipal market provides these opportunities, in part
values because of the relatively large number of issuers of tax-
exempt securities and the relatively small
15
<PAGE>
number of full-time, professional municipal market analysts.
For example, there arecurrently 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.
Each Fund will invest primarily in Municipal Obligations
Which issued within the State of California so that the interest
Municipal income on the Municipal Obligations will be exempt from both
Obligations regular federal and applicable California personal income
are selected taxes. Because of the differences described below in the
as investment policies of each Fund, there will be differences
investments? 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
Fund will seek
to purchase
investment
grade quality
California
Municipal Obligations
The California Fund's investment assets will consist of:
. California Municipal Obligations rated investment grade at
the time of purchase (Baa or BBB or better) by Moody's
Investors Service, Inc. ("Moody's") or Standard and Poor's
Corporation ("S&P");
. unrated California Municipal Obligations of investment
grade quality in the opinion of Nuveen Advisory, with no
fixed percentage limitations on these unrated Municipal
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 outstanding investment
characteristics and in fact have speculative characteristics
as well, while Municipal Obligations rated BBB are regarded
by S&P as having an adequate capacity to pay principal and
interest. The California 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
California Fund intends to emphasize investments in Municipal
Obligations with long-term maturities in order to maintain an
average portfolio maturity of 20-30 years, but the average
maturity may be shortened from time to time depending
16
<PAGE>
NUVEEN TAX-FREE MUTUAL FUNDS PROSPECTUS
JULY 1, 1996
on market conditions in order to help limit the California
Fund's exposure to market risk. As a result, the California
Fund's portfolio at any given time may include both long-term
and intermediate-term Municipal Obligations.
Under ordinary circumstances, the California Fund will invest
substantially all (at least 80%) of its net assets 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.
Under ordinary circumstances, the California Insured Fund
The California will invest (1) substantially all (at least 80%) of its net
Insured Fund assets in California Municipal Obligations which are either
will seek to covered by insurance guaranteeing the timely payment of
purchase principal and interest or backed by an escrow or trust
insured account containing sufficient U.S. Government or U.S.
California Government agency securities to ensure timely payment of
Municipal principal and interest and which meet the investment criteria
Obligations of the California Fund, and (2) not more than 20% of its net
assets in "temporary investments," within the limitations and
for the purposes described below, provided that temporary
investments subject 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 respect to AMT Bonds and the average maturity of its
portfolio.
The foregoing investment policies are fundamental policies of
each Fund and may not be changed without the approval of the
holders of a majority of the shares of that Fund.
Each insured California Municipal Obligation held by the
California California Insured Fund will either be (1) covered by an
Municipal insurance policy applicable to a specific security and
Obligations obtained by the issuer of the security or a third party at
can be insured the time of original issuance ("Original Issue Insurance"),
in one of (2) covered by an insurance policy applicable to a specific
three ways security and obtained by the California Insured 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 Assurance, Inc., and Financial Guaranty
Insurance Company, and may in the future obtain other
policies of Portfolio Insurance depending on the availability
of these policies on terms favorable to the
17
<PAGE>
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 Insurance. 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
Municipal Obligations. See the Statement of Additional
Information for further information about each type of
insurance described above.
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 guaranteed
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"). 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 collateralized
obligations will not constitute more than 20% of the
California Insured Fund's net assets.
One or more policies of Portfolio Insurance may provide the
The California California Insured Fund, pursuant to an irrevocable
Insured Fund commitment of the insurer, with the option to exercise the
may insure right to obtain permanent insurance ("Permanent Insurance")
permanently with respect to a Municipal Obligation that is to be sold by
Municipal the California Insured Fund. The California Insured Fund
Obligations would exercise the right to obtain Permanent Insurance upon
covered by payment of a single, predetermined insurance premium payable
Portfolio from the proceeds of the sale of that Municipal Obligation.
Insurance It is expected that the California Insured Fund will exercise
the right to obtain 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 insurance.
Premiums for a Portfolio Insurance policy are paid by the
California Insured Fund 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 it pays. Depending
18
<PAGE>
NUVEEN TAX-FREE MUTUAL FUNDS PROSPECTUS
JULY 1, 1996
upon the characteristics of the California Municipal
Obligations 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 policies.
Because the majority of California Municipal Obligations in
the California Insured Fund were not covered by policies of
Portfolio Insurance during the fiscal year ended February 29,
1996, total premiums as a percentage of the value of the
California Municipal Obligations held by the California
Insured Fund (.01%) were significantly less than that
estimated rate.
DESCRIPTION OF THE FUNDS' INVESTMENTS
Municipal Obligations
are issued by
states, cities
and local
authorities to
support a
variety of
public
activities
Municipal Obligations, as the term is used in this
Prospectus, are federally tax-exempt debt obligations issued
by states, cities and local authorities and by certain U.S.
possessions or territories to obtain funds for various public
purposes, such as the construction of public facilities, the
payment of general operating expenses and the refunding of
outstanding debts. They may also be issued to obtain funding
for various private activities, including loans to finance
the construction of housing, educational and medical
facilities or privately owned industrial development and
pollution control projects.
The two principal classifications of Municipal Obligations
are general obligation and revenue bonds. GENERAL OBLIGATION
bonds are secured by the issuer's pledge of its full faith,
credit and taxing power for the payment of principal and
interest. REVENUE bonds are payable only from the revenues
derived from a particular facility or class of facilities or,
in some cases, from the proceeds of a special excise or other
specific revenue source. Industrial development and pollution
control bonds are in most cases revenue bonds and do not
generally constitute the pledge of the credit or taxing power
of the issuer of these bonds.
Municipal Obligations may also include participations in
lease obligations or installment purchase contract
obligations (collectively, "lease obligations") of municipal
authorities or entities. Certain "non-appropriation" lease
obligations may present special risks because the
municipality's obligation to make future lease or installment
payments depends on money being appropriated each year for
this purpose. Each Fund will seek to minimize these risks by
not investing more than 10% of its assets in non-
appropriation lease obligations, and by only investing in
those non-appropriation lease obligations that meet certain
criteria of the Fund. See the Statement of Additional
Information for further information about lease obligations.
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 Obligations with the same maturity, coupon and
rating may have different yields, while those having the same
maturity and coupon with different ratings may have the same
yield. The market value of Municipal Obligations will vary
with changes in prevailing interest rate levels and as a
result of changing evaluations of the ability of their
issuers to meet interest and principal payments. Similarly,
the market value and net asset value of shares of the Funds
will change in response to interest rate changes; they will
tend to decrease when interest rates rise and increase when
interest rates fall.
Temporary As described above, each Fund under ordinary circumstances
investments may invest up to 20% of its net assets in "temporary
will be U.S. investments," but may invest without limit in temporary
Government or investments during temporary defensive periods in order to
high quality limit the exposure of its portfolio to market risk from
securities temporary imbalances of supply and demand or other temporary
circumstances affecting the municipal market. Each Fund will
seek to make temporary investments in short-term securities
the interest on which is exempt from regular federal income
tax, but may be subject to California state income tax. If
suitable federally tax-exempt temporary investments are not
available at reasonable prices and yields, a Fund may make
temporary investments in taxable securities whose interest is
subject to both California state and federal income taxes. 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 objective of tax-exempt income to
the extent it invests in taxable temporary investments. See
the Statement of Additional Information for further
information about the temporary investments in which the
Funds may invest. [/R]
SPECIAL FACTORS PERTAINING TO CALIFORNIA MUNICIPAL
OBLIGATIONS
California Municipal Obligations are issued by the State of
California and cities and local authorities in the State of
California, and bear interest that is exempt from
20
<PAGE>
NUVEEN TAX-FREE MUTUAL FUNDS PROSPECTUS
JULY 1, 1996
regular federal and applicable California personal income
taxes, although the interest on these Municipal Obligations
may be subject to the federal alternative minimum tax. The
Funds will invest primarily in California 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 Obligations issued by certain U.S.
possessions or territories, which also bear interest that is
exempt from regular federal as well as applicable California
personal income taxes and are therefore considered to be
California Municipal Obligations for purposes of this
Prospectus.
Because each Fund will concentrate its investment in
California Municipal Obligations, it may be affected by
political, economic or regulatory factors that may impair the
ability of issuers in that state to pay interest on or to
repay the principal of their debt obligations. These special
factors are briefly described in Appendix A to this
Prospectus. See the Statement of Additional Information for
further information about these factors.
CERTAIN INVESTMENT STRATEGIES AND LIMITATIONS
Each Fund will make changes in its investment portfolio from
Portfolio time to time in order to take advantage of opportunities in
trading and the municipal market and to limit exposure to market risk. A
turnover: Fund may engage to a limited extent in short-term trading
consistent with its investment objective, but a Fund will not
Each Fund will trade securities solely to realize a profit. Changes in a
engage in Fund's investments are known as "portfolio turnover." While
short-term each Fund's annual portfolio turnover rate is not expected to
trading only exceed 50%, actual portfolio turnover rates are impossible to
to a limited predict, and may exceed 50% in particular years depending
extent upon market conditions.
A Fund may purchase and sell Municipal Obligations on a when-
When-issued or issued or delayed delivery basis, which calls for the Fund to
delayed make payment or take delivery at a future date, normally 15-
delivery 45 days after the trade date. The commitment to purchase
transactions securities on a when-issued or delayed delivery basis may
involve an element of risk because the value of the
securities is subject to market fluctuation, no interest
accrues to the purchaser prior to settlement of the
transaction, and at the time of delivery the market value may
be less than cost. A Fund commonly engages in when-issued
transactions in order to purchase or sell newly-issued
Municipal Obligations, and may engage in delayed delivery
transactions in order to manage its operations more
effectively. See the Statement of Additional Information for
further information about when-issued and delayed delivery
transactions.
21
<PAGE>
Financial Although the Funds have no present intent to do so, each Fund
Futures and reserves the right to engage in certain hedging transactions
Options involving the use of financial futures contracts, options on
Transactions: financial futures or options based on either an index of
long-term tax-exempt securities or on debt securities whose
The Funds do prices, in the opinion of Nuveen Advisory, correlate with the
not presently prices of the Fund's investments. These hedging transactions
intend to use are designed to limit the risk of fluctuations in the prices
futures or of a Fund's investments. See the Statement of Additional
options Information for further information on futures and options
and associated risks.
Other Each Fund has adopted certain fundamental policies intended
Investment to limit the risk of its investment portfolio. In accordance
Policies and with these policies, each Fund may not:
Restrictions:
. invest more than 5% of its total assets in securities of
Each Fund will any one issuer, except that this limitation shall not apply
take steps to to securities of the U.S. Government, its agencies and
ensure that instrumentalities or to the investment of 25% of the Fund's
its assets are assets;
not . invest more than 5% of its total assets in securities of
concentrated unseasoned issuers which, together with their predecessors,
in just a few have been in operation for less than three years;
holdings [/R] . invest more than 10% of its assets in illiquid municipal
lease obligations and other securities that are
unmarketable, illiquid or not readily marketable
(securities 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 Municipal Obligations
issued by governments or political subdivisions of
governments, and obligations issued or guaranteed by the
U.S. Government, its agencies or instrumentalities;
. borrow money, except from banks for temporary or emergency
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 its total assets,
including the amount borrowed, in order to meet redemption
requests which might otherwise require the untimely
disposition of securities; or
. hold securities of a single bank, including securities
backed by a letter of credit of that bank, if these
holdings would exceed 10% of the total assets of the Fund.
In applying these policies, the "issuer" of a security is
deemed to be the entity whose assets and revenues are
committed to the payment of principal and interest on that
security, provided that the guarantee of an instrument will
generally be considered a separate security.
22
<PAGE>
NUVEEN TAX-FREE MUTUAL FUNDS PROSPECTUS
JULY 1, 1996
Except as specifically noted above or in the Statement of
Additional Information, the Funds' investment policies are
not fundamental and may be changed without shareholder
approval. For a more complete description of investment
restrictions that may be changed without a shareholder vote,
see the Statement of Additional Information.
23
<PAGE>
FLEXIBLE PRICING PROGRAM
Each Fund The Funds have adopted a Flexible Pricing Program that offers
offers various you three alternative ways to purchase Fund shares (Classes
methods of A, C and R), each with a different combination of sales
purchasing charges, ongoing fees, eligibility requirements, and other
shares which features. The Program is designed to permit you and your
are designed financial adviser to choose the method of purchasing shares
to meet your that you believe is most beneficial given the amount of your
individual investment and current holdings of Fund shares, the length of
investment time you expect to hold your investment, and other relevant
needs and circumstances. A summary of the three alternatives is set
preferences forth below:
[/R]
<TABLE>
<CAPTION>
Fund Up-front Contingent deferred Annual 12b-1 Annual 12b-1
shares sales charge sales charge ("CDSC") distribution fee service fee
- ---------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Class A 4.50% (1) None (2) None .25%
Class C None 1.00% (3) .75% .25%
Class R None None None None
</TABLE>
(1) Maximum up-front sales charge, which is reduced for
purchases of $50,000 or more. The up-front sales charge may
be reduced or waived for certain purchases.
(2) Certain Class A purchases at net asset value of $1
million or more may be subject to a 1% CDSC if redeemed
within 18 months of purchase.
(3) The CDSC is applicable to Class C Shares redeemed within
12 months of purchase. Class C Shares convert to Class A
Shares after six years, which reduces the ongoing expenses
borne by an investor.
For more information regarding features of each class, see
"How to Buy Fund Shares," "How to Redeem Fund Shares" and
"Distribution and Service Plan" below.
Which option When you purchase Class A Shares of a Fund, you will normally
is right for pay an up-front sales charge. As a result, you will have less
you? 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 invested at the time of purchase.
However, Class C Shares are subject to an annual distribution
fee which constitutes an asset-based sales charge whose
purpose is the same as an up-front sales charge. Class C
Shares automatically convert to Class A Shares six years
after purchase, which reduces the annual expenses you would
bear. This automatic conversion is designed to ensure that
holders of Class C Shares would pay over the six-year period
a distribution fee that is approximately the economic
equivalent of the one-time, up-front sales charge paid by
holders of Class A Shares on purchases of up to $50,000.
Class C Shares are subject to a CDSC of 1% if redeemed within
12 months of purchase. Class A Shares and Class C Shares are
also subject to annual service fees which are identical in
amount and are used to compensate Authorized Dealers for
providing you with ongoing account services. You may qualify
for a [/R]
24
<PAGE>
NUVEEN TAX-FREE MUTUAL FUNDS PROSPECTUS
JULY 1, 1996
reduced sales charge or a sales charge waiver on a purchase
of Class A Shares, as described 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, but
only under certain circumstances or for certain categories of
investors, as described below under "How to Buy Fund Shares--
Class R Shares."
In deciding whether to purchase Class A Shares, Class C
Shares or Class R Shares 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
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 you will be reinvesting
income or capital gain distributions in additional shares,
whether or not you meet applicable eligibility requirements
or qualify for a sales charge waiver or reduction, and the
relative level of services that your financial adviser may
provide to different classes. Authorized Dealers and other
persons distributing a Fund's shares may receive different
compensation for selling different classes of shares.
Differences Each class of shares of a Fund represents an interest in the
between the same portfolio of investments. Each class of shares of a Fund
classes of is identical in all respects except that each class has its
shares own sales charge structure, each class bears its own class
expenses, including service and distribution fees, and each
class has exclusive voting rights with respect to any
distribution or service plan applicable to its shares. In
addition, the Class C Shares are subject to a conversion
feature and a CDSC of 1% if purchased on or after June 13,
1995 and redeemed within 12 months of purchase, as described
below. As a result of the differences in the expenses borne
by each class of shares, and differences in the purchase and
redemption activity for each class, net income per share,
dividends per share and net asset value per share will vary
among each Fund's classes of shares. [/R]
Dealer
Incentives Upon notice to all Authorized Dealers, Nuveen may reallow to
Authorized Dealers electing to participate up to the full
applicable Class A Share up-front sales charge during periods
and for transactions specified in the notice. The
reallowances made during these periods may be based upon
attainment of minimum sales levels. Further, Nuveen may from
time to time make additional reallowances only to certain
Authorized Dealers who sell or are expected to sell certain
minimum amounts of the Funds or other Nuveen Mutual Funds and
Nuveen UITs during specified time periods. The staff of the
Securities and Exchange Commission takes
25
<PAGE>
the position that dealers who receive 90% or more of the
applicable sales charge may be deemed underwriters under the
Securities Act of 1933, as amended.
Nuveen may also from time to time provide additional
promotional support to certain Authorized Dealers who sell or
are expected to sell certain minimum amounts of Nuveen Mutual
Funds and Nuveen UITs during specified time periods. Such
promotional support may include providing sales literature to
and holding informational or educational programs for the
benefit of such Authorized Dealers' representatives, seminars
for the public, and advertising and sales campaigns.
Specifically, Nuveen offers a program of advertising support
to Authorized Dealers under which Nuveen will pay or
reimburse the Authorized Dealer for up to one-half of
specified media costs incurred in the placement of
advertisements which jointly feature the Authorized Dealer
and Nuveen Funds and Nuveen UITs. Reimbursement to the
Authorized Dealer will be based on the number of its
financial advisers who have sold Nuveen Fund shares and UIT
units during the prior calendar year according to an
established schedule. Any such support would be provided by
Nuveen out of its own assets, and not out of the assets of
the Funds, and will not change the price an investor pays for
shares or the amount that a Fund will receive from such a
sale.
26
<PAGE>
HOW TO BUY FUND SHARES
NUVEEN TAX-FREE MUTUAL FUNDS PROSPECTUS
JULY 1, 1996
CLASS A SHARES
Class A Shares You may purchase Class A Shares of any Fund at a public
are normally offering price equal to the applicable net asset value per
offered at share plus an up-front sales charge imposed at the time of
their net purchase as set forth below. You may qualify for a reduced
asset value sales charge, or the sales charge may be waived in its
plus an up- entirety, as described below under "How the Up-Front Sales
front sales Charge on Class A Shares May Be Reduced or Waived." Class A
charge. Shares are also subject to an annual service fee of .25%. See
"Flexible Pricing Program" and "Distribution and Service
Plan." [/R]
The up-front sales charge schedule for each Fund's Class A
Shares is as follows:
<TABLE>
<CAPTION>
SALES CHARGE AS SALES CHARGE AS REALLOWANCE AS
% OF PUBLIC % OF NET AMOUNT % OF PUBLIC
AMOUNT OF PURCHASE OFFERING PRICE INVESTED OFFERING PRICE
- --------------------------------------------------------------------------------------
<S> <C> <C> <C>
Less than $50,000 4.50% 4.71% 4.00%
$50,000 but less than
$100,000 4.25% 4.44% 3.75%
$100,000 but less than
$250,000 3.50% 3.63% 3.25%
$250,000 but less than
$500,000 2.75% 2.83% 2.50%
$500,000 but less than
$1,000,000 2.00% 2.04% 1.75%
$1,000,000 but less than $2,500,000 0.00% 0.00% 1.00%
$2,500,000 but less than $5,000,000 0.00% 0.00% 0.50%
$5,000,000 and over 0.00% 0.00% 0.25%
</TABLE>
Class A Share Class A Share purchases of $1 million or more will be sold at
purchases of net asset value without an up-front sales charge. Nuveen will
$1 million and pay Authorized Dealers of record on such Class A Share
over may be purchases a commission of up to 1% of the amount of the
effected purchase. The investor agrees to pay to Nuveen a CDSC of 1%
without an of the purchase price or the redemption proceeds, whichever
up-front sales is less, if such shares are redeemed within 18 months of
charge but be purchase. Shares purchased by investors investing $1 million
subject to a or more who have made arrangements with Nuveen and whose
CDSC dealer of record waived the commission will not be subject to
the CDSC. See "How to Redeem Fund Shares--Contingent Deferred
Sales Charge." [/R]
The 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 Pricing
Program--Dealer Incentives" above for more information about
reallowances and other compensation to Authorized Dealers.
27
<PAGE>
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 register as securities dealers in certain states.
HOW THE UP-FRONT SALES CHARGE ON CLASS A SHARES MAY BE
REDUCED OR WAIVED
There are There are several ways to reduce or eliminate the sales
several ways charge:
to reduce or . cumulative discount;
eliminate the . letter of intent;
sales charge
. purchases with monies representing distributions from
Nuveen-sponsored UITs; [/R]
. group purchase programs;
. reinvestment of redemption proceeds from non-affiliated
funds; and
. special sales charge waivers for certain categories of
investors.
Cumulative You may qualify for a reduced sales charge as shown above on
Discount 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
financial adviser must notify Nuveen or SSI of any cumulative
discounts whenever you plan to purchase Class A Shares of a
Fund that you wish to qualify for a reduced sales charge.
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
complete the applicable section of the Application Form or
sign and deliver either to an Authorized Dealer or to SSI a
written Letter of Intent in a form acceptable to Nuveen. A
Letter of Intent states that you intend, but are not
obligated, to purchase over the next 13 months a stated total
amount of Class A Shares that would qualify you for a reduced
sales charge shown above. You may count shares of a Nuveen
Mutual Fund that you already own on which you paid an up-
front sales charge or an ongoing distribution fee and any
Class C Shares of a Nuveen Mutual Fund that you purchase over
the next 13 months towards completion of your investment
program, but you will receive a reduced
28
<PAGE>
NUVEEN TAX-FREE MUTUAL FUNDS PROSPECTUS
JULY 1, 1996
sales charge only on new Class A Shares you purchase with a
sales charge over the 13 months. You cannot count towards
completion of your investment program Class A Shares that you
purchase without a sales charge through investment of
distributions from a Nuveen Mutual Fund or a Nuveen UIT, or
otherwise.
By establishing a Letter of Intent, you agree that your first
purchase of Class A Shares of a Fund following execution of
the Letter of Intent will be at least 5% of the total amount
of your intended purchases. You further agree that shares
representing 5% of the total amount of your intended
purchases will be held in escrow pending completion of these
purchases. All dividends and capital gains distributions on
Class A Shares held in escrow will be credited to your
account. If total purchases, less redemptions, prior to the
expiration of the 13 month period equal or exceed the amount
specified in your Letter of Intent, the Class A Shares held
in escrow will be transferred to your account. If the total
purchases, less redemptions, exceed the amount specified in
your Letter of Intent and thereby qualify for a lower sales
charge than the sales charge specified in your Letter of
Intent, you will receive this lower sales charge
retroactively, and the difference between it and the higher
sales charge paid will be used to purchase additional Class A
Shares on your behalf. If the total purchases, less
redemptions, are less than the amount specified, you must pay
Nuveen an amount equal to the difference between the amounts
paid for these purchases and the amounts which would have
been paid if the higher sales charge had been applied. If you
do not pay the additional amount within 20 days after written
request by Nuveen or your financial adviser, Nuveen will
redeem an appropriate number of your escrowed Class A Shares
to meet the required payment. By establishing a Letter of
Intent, you irrevocably appoint Nuveen as attorney to give
instructions to redeem any or all of your escrowed shares,
with full power of substitution in the premises.
You or your financial adviser must notify Nuveen or SSI when-
ever you make a purchase of Fund shares that you wish to be
covered under the Letter of Intent option.
Reinvestment You may purchase Class A Shares without an up-front sales
of Nuveen Unit charge by reinvestment of distributions from any of the
Trust various unit investment trusts sponsored by Nuveen. There is
Distributions no initial or subsequent minimum investment requirement for
such reinvestment purchases. [/R]
Group Purchase If you are a member of a qualified group, you may purchase
Programs 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
29
<PAGE>
in existence for more than six months, has a purpose other
than investment, has five or more participating members, has
agreed to include Fund sales publications in mailings to
members and has agreed to comply with certain administrative
requirements relating to its group purchases.
Under any group purchase program, the minimum monthly
investment in Class A Shares of any particular Fund or
portfolio by each participant is $25, and the minimum monthly
investment in Class A Shares of any particular Fund or
portfolio for all participants in the program combined is
$1,000. No certificates will be issued for any participant's
account. All dividends and other distributions by 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 application
materials, which the group administrator may obtain from the
group's financial adviser, by checking the applicable box on
the enclosed Application Form or by calling Nuveen toll-free
at 800.621.7227. See the Statement of Additional Information
for more complete information about "qualified groups" and
group purchase programs.
Reinvestment You may also purchase Class A Shares at net asset value
of Redemption without a sales charge if the purchase takes place through a
Proceeds from broker-dealer and represents the reinvestment of the proceeds
Unaffiliated of the redemption of shares of one or more registered
Funds investment companies not affiliated with Nuveen. You must
provide appropriate documentation that the redemption
occurred not more than 60 days prior to the reinvestment of
the proceeds in Class A Shares, and that you either paid an
up-front sales charge or were subject to a contingent
deferred sales charge in respect of the redemption of such
shares of such other investment company. [/R]
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 officers,
directors and retired directors of the Funds; bona fide,
full-time and retired employees of Nuveen or its affiliates,
any parent company of Nuveen, and subsidiaries thereof, or
their immediate family members (as defined below); any person
who, for at least 90 days, has been an officer, director or
bona fide employee of any Authorized Dealer, or their
immediate family members; officers and directors of bank
holding companies that make Fund shares available directly or
through subsidiaries or bank affiliates; bank or broker-
affiliated trust departments; investors who purchase through
broker-dealer sponsored mutual fund purchase programs offered
on a periodic fee, asset-based fee or no transaction
30
<PAGE>
NUVEEN TAX-FREE MUTUAL FUNDS PROSPECTUS
JULY 1, 1996
fee basis; and clients of investment advisers, financial
planners or other financial intermediaries that charge
periodic or asset-based fees for their services. For further
details about these special categories and their eligibility
requirements, please consult your financial adviser or the
Statement of Additional Information, or call Nuveen at
800.621.7227.
Any Class A Shares purchased pursuant to a special sales
charge waiver must be acquired for investment purposes and on
the condition that they will not be transferred or resold
except through redemption by the 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."
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 minimum purchase requirements as established by
the Funds.
In General 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 program as described above. [/R]
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
Class C Shares You may purchase Class C Shares of either Fund at a public
may be offering price equal to the applicable net asset value per
purchased at share without any up-front sales charge. Class C Shares are
their net subject to an annual distribution fee to reimburse Nuveen for
asset value, costs incurred in connection with the sale of Class C shares.
and are Class C Shares are also subject
subject to an
annual
distribution
fee [/R]
31
<PAGE>
to an annual service fee to compensate Authorized Dealers for
providing you with ongoing financial advice and other
services. See "Distribution and Service Plan."
An investor purchasing Class C Shares agrees to pay a CDSC of
1% if Class C Shares are redeemed within 12 months of
purchase. See "How to Redeem Fund Shares." The Class C shares
of the applicable Fund will effectively retain the CDSC: the
Fund will pay the amount of the CDSC to Nuveen, but will be
reimbursed by Nuveen in an equal amount by a reduction in the
distribution fees payable to Nuveen.
Class C Shares will automatically convert to Class A Shares
six years after purchase. All such conversions will be done
at net asset value without the imposition of any sales
charge, fee, or other charge, so that the value of each
shareholder's account immediately before conversion will be
the same as the value of the account immediately after
conversion. Class C Shares acquired through reinvestment of
distributions will convert into Class A Shares based on the
date of the initial purchase to which such shares relate. For
this purpose, Class C Shares acquired through reinvestment of
distributions will be attributed to particular purchases of
Class C Shares in accordance with such procedures as the
Board of Directors may determine from time to time. The
automatic conversion of Class C Shares to Class A Shares six
years after purchase was designed to ensure that holders of
Class C Shares would pay over the six-year period a
distribution fee that is approximately the economic
equivalent of the one-time, up-front sales charge paid by
holders of Class A Shares on purchases of up to $50,000.
Class C Shares that are converted to Class A Shares will no
longer be subject to an annual distribution fee, but they
will remain subject to an annual service fee 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 receive more or fewer Class A Shares than
the number of Class C Shares converted. Any conversion of
Class C Shares into Class A Shares will be subject to the
continuing availability of an opinion of counsel or a private
letter ruling from the Internal Revenue Service to the effect
that the conversion of shares would not constitute a taxable
event under federal income tax law. Conversion of Class C
Shares into Class A Shares might be suspended if such an
opinion or ruling were no longer available.
CLASS R SHARES
If you owned Fund shares as of September 6, 1994, those
Class R Shares shares have been designated as Class R Shares. Purchases of
are offered at additional Class R Shares of either Fund, which will not be
their net subject to any sales charge or any distribution or service
asset value fee, will be limited to the following circumstances. You may
purchase Class R Shares with
32
<PAGE>
NUVEEN TAX-FREE MUTUAL FUNDS PROSPECTUS
JULY 1, 1996
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. You may purchase Class R Shares
if you are making a purchase of $1 million or more of Fund
shares in a single transaction. Finally, you may purchase
Class R Shares if you are within the following specified
categories of investors who are also eligible to purchase
Class A Shares at net asset value without an up-front sales
charge: officers, 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; any person who, for at least
90 days, has been an officer, director or bona fide employee
of any Authorized Dealer, or their immediate family members;
officers and directors of bank holding companies that make
Fund shares available directly or through subsidiaries or
bank affiliates; bank or broker-affiliated trust departments;
investors who purchase through broker-dealer sponsored mutual
fund purchase programs offered on a periodic fee, asset-based
fee or no transaction fee basis; and clients of investment
advisers, financial planners or other financial
intermediaries that charge periodic or asset-based fees for
their services.
If you are eligible to purchase either Class R Shares or
Class A Shares of a Fund without a sales charge at net asset
value, you should be aware of the differences between these
two classes of shares. Class A Shares are subject to an
annual service fee to compensate Authorized Dealers for
providing you with ongoing account services. Class R Shares
are not subject to a service fee and consequently holders of
Class R Shares may not receive the same types or levels of
services from Authorized Dealers. In choosing between Class A
Shares and Class R Shares, you should weigh the benefits of
the services to be provided by Authorized Dealers against the
annual service fee imposed upon the Class A Shares.
INITIAL AND SUBSEQUENT PURCHASES OF SHARES
The Funds You may buy Fund shares through Authorized Dealers or by
offer a number directing your financial adviser to call Nuveen toll-free at
of convenient 800.843.6765. You may pay for your purchase by Federal
ways to Reserve draft or by check made payable to "Nuveen California
purchase [Insured] Tax-Free Value Fund, Class [A], [C], [R],"
shares delivered to the financial adviser through whom the
investment is to be made for forwarding to the Funds'
shareholder services agent, SSI. When making your initial
investment, you must also furnish the information necessary
to establish your Fund account by completing and enclosing
with your payment the attached Application Form. After your
initial investment, you may make subsequent purchases at any
time by forwarding to SSI a check in the [/R]
33
<PAGE>
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 acceptable. You may
also wire Federal Funds directly to SSI, but you may be
charged a fee for this. For instructions on how to make Fund
purchases by wire transfer, call Nuveen toll-free at
800.621.7227, between the hours of 8:30 a.m. and 8:00 p.m.
Eastern Time.
MINIMUM INVESTMENT REQUIREMENTS
Generally, your first purchase of any class of a Fund's
shares must be for $1,000 or more. Additional purchases may
be in amounts of $100 or more. These minimums may be changed
at any time by the 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.
PURCHASE PRICE
The price at which the purchase of Fund shares is effected is
based on the next calculation of the Fund's net asset value
after the order is placed. The Fund's net asset value per
share is determined as of 4:00 p.m. Eastern Time on each day
the New York Stock Exchange is open for business. See "Net
Asset Value," below for a description of how net asset value
is calculated.
SYSTEMATIC INVESTMENT PROGRAMS
The Funds offer you several opportunities to capture the
benefits of "dollar cost averaging" through systematic
investment programs. In a regularly followed dollar cost
averaging program, you would purchase more shares when Fund
share prices are lower and fewer shares when Fund share
prices are higher, so that the average price paid for Fund
shares is less than the average price of the Fund shares over
the same time period. Dollar cost averaging does not assure
profits or protect against losses in a steadily declining
market. Since dollar cost averaging involves continuous
investment regardless of fluctuating price levels, you should
consider your financial ability to continue investing in
declining as well as rising makets before deciding to invest
in this way. The chart below shows the cumulative effect that
compound interest can have on a systematic investment
program.
34
<PAGE>
NUVEEN TAX-FREE MUTUAL FUNDS PROSPECTUS
JULY 1, 1996
The Power of a
Systematic
Investment
Program.
LOGO
Source: Nuveen Marketing Research Department
In the above example, it is assumed that $100 is added to an
investment account every month for 20 years. From the same
$1,000 beginning, the chart shows the amount that would be in
the account after 20 years, assuming no interest and interest
compounded annually at the rates of 4%, 5% and 6%.
This chart is designed to illustrate the effects of compound
interest, and is not intended to predict the results of an
actual investment in a Fund. There are several important
differences between the Funds and the hypothetical investment
program shown. This example assumes no gain or loss in the
net asset value of the investment over the entire 20-year
period, whereas the net asset value of each of the
35
<PAGE>
Funds will rise and fall due to market conditions or other
factors, which could have a significant impact on the total
value of your investment. Similarly, this example shows four
steady interest rates over the entire 20-year period, whereas
the dividend 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 averaging.
THE FUNDS OFFER TWO DIFFERENT TYPES OF SYSTEMATIC INVESTMENT
PROGRAMS:
Automatic
Deposit Plan Once you have established a Fund account 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 terminate your participation at any time
at your discretion. No charge in addition to the applicable
sales charge is made in connection with this Plan, and there
is no cost to the Funds. To obtain an application form for
the Automatic Deposit Plan, check the applicable box on the
enclosed Application Form or call Nuveen toll-free at
800.621.7227.
Payroll Direct
Deposit Plan Once you have established a Fund account in one of the Funds,
you may, with your employer's consent, make regular
investments in Fund shares of $25 or more per pay period by
authorizing your employer to deduct this amount automatically
from your paycheck. There is no obligation to continue
payments and you may terminate your participation at any time
at your discretion. No charge in addition to the applicable
sales charge is made for this Plan, and there is no cost to
the 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.
OTHER SHAREHOLDER PROGRAMS
Exchange You may exchange shares of a class of the Fund for shares of
Privilege the same or equivalent class of another Nuveen Mutual Fund
with reciprocal exchange privileges, at net asset value
without a sales charge, by sending a written request to the
Fund, c/o Shareholder Services, Inc., P.O. Box 5330, Denver,
CO 80217-5330. Similarly, Class A Shares, Class C Shares and
Class R Shares of another Nuveen Mutual Fund purchased
subject to a sales charge may be exchanged for the same class
of shares of the Fund at net asset value without a sales
charge. Exchanges of shares from any Nuveen money market fund
will be made into Class A Shares, Class C Shares, or Class R
Shares of any Fund at the public offering price, which
includes an up-front [/R]
36
<PAGE>
NUVEEN TAX-FREE MUTUAL FUNDS PROSPECTUS
JULY 1, 1996
sales charge in the case of Class A Shares. If, however, a
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 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.
No CDSC will be charged on the exchange of Class C Shares of
any Fund for Class C Shares of any other Nuveen Mutual Fund
or shares of any Nuveen money market fund. The 12 month
holding period for purposes of the CDSC applicable to Class C
Shares will continue to run during any period in which Class
C Shares of the Fund, Class C Shares of any other Nuveen
Mutual Fund or shares of a Nuveen money market fund are held.
The shares to be purchased must be offered in your state of
residence and you must have held the shares you are
exchanging for at least 15 days. The total value of exchanged
shares must at least equal the minimum investment requirement
of the Nuveen Mutual Fund being purchased. For federal income
tax purposes, any exchange constitutes a sale and purchase of
shares and may result in capital gain or loss. Before making
any exchange, you should obtain the Prospectus for the Nuveen
Mutual Fund you are purchasing and read it carefully. If the
registration of the account for the Fund you are purchasing
is not exactly the same as that of the Fund account from
which the exchange is made, written instructions from all
holders of the account from which the exchange is being made
must be received, with signatures guaranteed by a member of
an approved Medallion Guarantee Program or in such other
manner as may be acceptable to the Fund. You may also
exchange shares by telephone if you authorize telephone
exchanges by checking the applicable box on the enclosed
Application Form or by calling Nuveen toll-free at
800.621.7227 to obtain an authorization form. The exchange
privilege may be modified or discontinued by any Fund at any
time upon prior written notice to shareholders of that Fund.
In addition, you may exchange Class R Shares of any Fund for
Class A Shares of the same Fund without a sales charge if the
current net asset value of those Class R Shares is at least
$1,000 or you already own Class A Shares of the Fund.
The exchange privilege is not intended to permit the Funds to
be used as vehicles for short-term trading. Excessive
exchange activity may interfere with portfolio management,
raise expenses, and otherwise have an adverse effect on all
shareholders.
37
<PAGE>
In order to limit excessive exchange activity and in other
circumstances where Fund management believes doing so would
be in the best interest of the Fund, the Funds reserve the
right to revise or terminate the exchange privilege, or limit
the amount or number of exchanges or reject any exchange.
Shareholders would be notified of any such action to the
extent required by law.
Reinstatement
Privilege If you have redeemed Class A Shares of the Fund or Class A
Shares of any other Nuveen Mutual Fund that were subject to a
sales charge or a CDSC, you have up to one year to reinvest
all or part of the full amount of the redemption in the same
class of shares of the Fund at net asset value. This
reinvestment privilege can be exercised only once for any
redemption, and reinvestment will be made at the net asset
value of the appropriate class of Fund shares next calculated
after reinstatement. If you reinstate shares that were
subject to a CDSC, your holding period as of the redemption
date will also be reinstated. The tax consequences of any
capital gain realized on a redemption will not be affected by
reinstatement, but a capital loss may be disallowed in whole
or in part depending on the timing and amount of the
reinvestment.
Fund Direct You can use Fund Direct to link your Fund account to your
account at your bank or other financial institution to enable
you to send money electronically between those accounts to
perform a variety of account transactions. These include
purchases of shares by telephone, investments under Automatic
Deposit Plan, and sending dividends and distributions,
redemption payments or Automatic Withdrawal Plan payments
directly to your bank account. Please refer to the
Application Form for details or call SSI for more
information. [/R]
Fund Direct privileges must be requested via an Application
you obtain by calling 800.621.7227. Fund Direct privileges
will apply to each shareholder listed in the registration on
your account as well as to your Authorized Dealer
representative of record unless and until SSI receives
written instructions terminating or changing those
privileges. After you establish Fund Direct for your account,
any change of bank account information must be made by
signature-guaranteed instructions to SSI signed by all
shareholders who own the account.
Purchases may be made by telephone only after your account
has been established. To purchase shares in amounts up to
$250,000 through a telephone representative, call SSI at
800.621.7227. The purchase payment will be debited from your
bank account.
38
<PAGE>
NUVEEN TAX-FREE MUTUAL FUNDS PROSPECTUS
JULY 1, 1996
FOR MORE INFORMATION ABOUT THESE PURCHASE OPTIONS AND TO
OBTAIN THE APPLICATION FORMS REQUIRED FOR SOME OF THEM, CALL
NUVEEN TOLL-FREE AT 800.621.7227.
ADDITIONAL INFORMATION
If you choose to invest in a Fund, an account will be opened
and maintained for you by SSI, the Funds' shareholder
services agent. Share certificates will be issued to you only
upon written request to SSI, and no certificates will be
issued for fractional shares. 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 held in the name of your financial adviser's firm
can only be made by an order in good form from the financial
adviser acting on your behalf.
Authorized Dealers are encouraged to open single master
accounts. However, some Authorized Dealers may wish to use
SSI's sub-accounting system to minimize their internal
recordkeeping requirements. An Authorized Dealer or other
investor requesting shareholder servicing or accounting other
than the master account or sub-accounting service offered by
SSI will be required to enter into a separate agreement with
another agent for these services for a fee that will depend
upon the level of services to be provided.
Subject to the rules and regulations of the Securities and
Exchange Commission, the Funds reserve the right to suspend
the continuous offering of their shares at any time, but no
suspension shall affect your right of redemption as described
below.
39
<PAGE>
DISTRIBUTION AND SERVICE PLAN
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 distribution 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. The distribution fee primarily reimburses
Nuveen for providing compensation to Authorized Dealers,
including Nuveen, either at the time of sale or on an ongoing
basis. The other expenses for which Nuveen may be reimbursed
include, without limitation, expenses of printing and
distributing prospectuses to persons other than shareholders
of the Fund, expenses of preparing, printing and distributing
advertising and sales literature and reports to shareholders
used in connection with the sale of Class C Shares, certain
other expenses associated with the distribution of Class C
Shares, and any other distribution-related expenses that may
be authorized from time to time by the Board of Directors.
The service fee applicable to Class A Shares and Class C
Shares under each Fund's Plan will be payable to Nuveen, to
be used to compensate Authorized Dealers, including Nuveen,
in connection with the provision of ongoing account services
to shareholders. These services may include establishing and
maintaining shareholder accounts, answering shareholder
inquiries and providing other personal services to
shareholders.
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. 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 applicable to Class C Shares.
40
<PAGE>
HOW TO REDEEM FUND SHARES
NUVEEN TAX-FREE MUTUAL FUNDS PROSPECTUS
JULY 1, 1996
You may require a Fund at any time to redeem for cash your
shares of that Fund. All shares will be redeemed at the net
asset value next computed after instructions and required
documents and certificates, if any, are received in proper
form, as described below. However, with respect to certain
Class A and Class C Shares, as further described below, any
applicable contingent deferred sales charge will be deducted
from the proceeds of the redemption. There is no charge for
redemption of Class R Shares.
Contingent Class A Shares are normally redeemed at net asset value,
Deferred Sales without any CDSC. However, in the case of Class A Shares
Charge purchased at net asset value because the purchase amount
exceeded $1 million, where the Authorized Dealer did not
waive the sales commission, a CDSC of 1% is imposed on any
redemption within 18 months of purchase. See "How to Buy Fund
Shares--Class A Shares." Class C Shares are normally redeemed
at net asset value, without any CDSC, except that a CDSC of
1% is imposed upon redemption of Class C Shares that are
redeemed within 12 months of purchase. See "How to Buy Fund
Shares--Class C Shares." The CDSC will be the lower of (i)
the net asset value of shares at the time of purchase or (ii)
the net asset value of shares at the time of redemption. [/R]
In determining whether a CDSC is payable, a Fund will first
redeem shares not subject to any charge, and then in the
reverse order in which the shares were purchased, except if
another order of redemption would result in a lower charge or
you specify another order. No CDSC is charged on shares
purchased as a result of automatic reinvestment of dividends
or capital gains paid. In addition, no CDSC will be charged
on exchanges of shares into another Nuveen Mutual Fund or
money market fund. Your holding period is calculated on a
monthly basis and begins the first day of the month in which
the order for investment is received. The CDSC is calculated
based on the lower of the redeemed shares' cost or net asset
value at the time of the redemption and is deducted from the
redemption proceeds. Nuveen receives the amount of any CDSC
you pay on Class A Shares. The CDSC may be waived under
certain special circumstances, as described in the Statement
of Additional Information.
THE FUNDS OFFER A VARIETY OF REDEMPTION OPTIONS
By Written
Request You may redeem shares by sending a written request for
redemption directly to the applicable Fund, c/o Shareholder
Services, Inc., P.O. Box 5330, Denver, CO 80217-5330,
accompanied by duly endorsed certificates, if issued.
Requests for redemption and share certificates, if issued,
must be signed by each shareholder, and, if the redemption
proceeds exceed $50,000 or are payable other than to the
shareholder of [/R]
41
<PAGE>
record at the address of record (which address may not have
been changed in the preceding 30 days), the signature must be
guaranteed by a member of an approved Medallion Guarantee
Program or in such other manner as may be acceptable to the
Fund. You will receive 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. For
accounts registered in the name of a broker-dealer, payment
will be forwarded within three business days. 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 redemption and your account
address has not changed within the last 30 days, you can
redeem shares that are held in non-certificate form and that
are worth $50,000 or less by calling Nuveen at 800.621.7227.
While you or anyone authorized by you may make telephone
redemption requests, 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 received
prior to 4:00 p.m. Eastern Time, the redemption check will
normally be mailed the next business day. For requests
received after 4:00 p.m. Eastern Time, the redemption will be
effected at 4:00 p.m. Eastern Time the following business day
and the check will normally be mailed on the second business
day after the request.
By TEL-A-WIRE If you have authorized TEL-A-WIRE redemption or established
or Fund Direct Fund Direct privileges, you can take advantage of the
following expedited redemption procedures to redeem shares
held in non-certificate 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 shares redeemed will earn income
through the day the request is made and the redemption will
be made as of 4:00 p.m. that day. If the redemption request
is received after 4:00 p.m. Eastern Time, the redemption will
be effected at 4:00 p.m. the following business day and the
shares redeemed earn income through that day. Redemption
proceeds will normally be wired on the second business day
following the redemption, but may be delayed 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 ordinarily be wired. The Funds
reserve the right to charge a fee for TEL-A-WIRE. Proceeds of
redemptions through Fund Direct will normally be wired to
your Fund Direct bank account on the second or third business
day after the redemption. [/R]
42
<PAGE>
NUVEEN TAX-FREE MUTUAL FUNDS PROSPECTUS
JULY 1, 1996
Before you may redeem shares by TEL-A-CHECK, TEL-A-WIRE, or
Fund Direct, you must complete the appropriate redemption
authorization section of the enclosed Application Form or the
Fund Direct Application Form and return it to Nuveen or SSI.
If you did not authorize one or more of these redemption
methods when you opened your account, you may obtain a
redemption authorization form by writing the Funds or by
calling Nuveen toll-free at 800.621.7227. Proceeds of share
redemptions made by TEL-A-WIRE will be transferred by Federal
Reserve wire only to the commercial bank account specified by
the shareholder on the application form. You must send a
written request to Nuveen or SSI in order to establish
multiple accounts, or to change the account or accounts
designated to receive redemption proceeds. These requests
must be signed by each account owner with signatures
guaranteed by a member of an approved Medallion Guarantee
Program or in such manner as may be acceptable to the Funds.
Further documentation may be required from corporations,
executors, trustees or personal representatives.
For the convenience of shareholders, the Funds have
authorized Nuveen as their agent to accept orders from
financial advisers by wire or telephone for the redemption of
Fund shares. The redemption price is the net asset value next
determined following receipt of an order placed by the
financial adviser. 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
charge any redemption fees other than the CDSC as described
above. However, your financial adviser may charge you for
serving as agent in the redemption of shares.
The Funds reserve the right to refuse telephone redemptions
and, at their option, may limit the timing, amount or
frequency of these redemptions. Telephone redemption
procedures may be modified or terminated at any time, on 30
days' notice, by the Funds. The Funds, SSI and Nuveen will
not be liable for following telephone instructions reasonably
believed to be genuine. The Funds employ procedures
reasonably designed to confirm that telephone instructions
are genuine. These procedures include recording all telephone
instructions and requiring up to three forms of
identification prior to acting upon a caller's instructions.
If a Fund does not follow reasonable procedures for
protecting shareholders against loss on telephone
transactions, it may be liable for any losses due to
unauthorized or fraudulent telephone instructions.
Automatic
Withdrawal
Plan
If you own Fund shares currently worth at least $10,000, you
may establish an Automatic Withdrawal Plan by completing an
application form for the Plan. You
43
<PAGE>
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.
The purchase of Class A Shares, other than through
reinvestment, while you are participating in the Automatic
Withdrawal Plan with respect to Class A Shares will usually
be disadvantageous because you will be paying a sales charge
on any Class A Shares you purchase at the same time you are
redeeming shares. Similarly, use of the Automatic Withdrawal
Plan for Class C Shares held less than 12 months or certain
Class A Shares held less than 18 months may be
disadvantageous because the newly-purchased shares may be
subject to the 1% CDSC.
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 normally utilizes is restricted, or an
emergency exists as determined by the Securities and Exchange
Commission so that trading of the Fund's investments or
determination of its net asset value is not reasonably
practicable, or (c) for any other periods that the Securities
and Exchange Commission by order may permit for protection of
Fund shareholders.
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 investment is less than
the minimum after giving you at least 30 days' notice. If any
minimum total investment is established, and if your account
is below the minimum, you will be allowed 30 days following
the notice in which to purchase sufficient shares to meet the
minimum. So long as 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.
44
<PAGE>
MANAGEMENT OF THE FUNDS
NUVEEN TAX-FREE MUTUAL FUNDS PROSPECTUS
JULY 1, 1996
Board of The management of Nuveen California Tax-Free Fund, Inc.,
Directors including general supervision of the duties performed for
each Fund by Nuveen Advisory under the Investment Management
Agreement, is the responsibility of its Board of Directors.
Investment Nuveen Advisory acts as the investment adviser for and
Adviser manages the investment and reinvestment of the assets of each
of the Funds. Its address is Nuveen Advisory Corp., 333 West
Wacker Drive, Chicago, Illinois 60606. Nuveen Advisory also
administers the Funds' business affairs, provides office
facilities and equipment and certain clerical, bookkeeping
and administrative services, and permits any of its officers
or employees to serve without compensation as directors or
officers of 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 securities
portfolios. It currently serves as investment adviser to 21
open-end municipal securities portfolios (the "Nuveen Mutual
Funds") and 53 exchange-traded municipal securities funds
(the "Nuveen Exchange-Traded Funds"). Each of these invests
substantially all of its assets in investment grade quality,
tax-free municipal securities, and except for money-market
funds, adheres to the value investing strategy described
previously. As of the date of this Prospectus, Nuveen
Advisory manages approximately $30 billion in assets held by
the Nuveen Mutual Funds and the Nuveen Exchange-Traded Funds.
Nuveen Advisory is a wholly-owned subsidiary of John Nuveen &
Co. Incorporated, 333 West Wacker Drive, Chicago, Illinois
60606, the oldest and largest investment banking firm (based
on number of employees) specializing in the underwriting and
distribution of tax-exempt securities. Nuveen, the principal
underwriter of the Funds' shares, is sponsor of the Nuveen
Tax-Exempt Unit Trust, a registered unit investment trust. It
is also the principal underwriter for the Nuveen Mutual
Funds, and served as co-managing underwriter for the shares
of the Nuveen Exchange-Traded Funds. Over 1,000,000
individuals have invested to date in Nuveen's tax-exempt
funds and trusts. Founded in 1898, Nuveen is a subsidiary of
The John Nuveen Company which, in turn, is approximately 80%
owned by The St. Paul Companies, Inc. ("St. Paul"). St. Paul
is located in St. Paul, Minnesota, and is principally engaged
in providing property-liability insurance through
subsidiaries.
45
<PAGE>
For the services and facilities furnished by Nuveen Advisory,
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 before
payment of dividends to investors. In addition to the
management fee of Nuveen Advisory, each Fund pays all its
other costs and expenses and a portion of Nuveen California
Tax-Free Fund, Inc.'s general administrative expenses
allocated in proportion 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
distribution or service fees) in any fiscal year from
exceeding .75 and .975 of 1% of the average daily net asset
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 reimburse additional expenses from
time to time, which reimbursements may be terminated at any
time in its discretion. 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 29,
1996, see the table under "Summary of Fund Expenses" on page
3 of this Prospectus.
Portfolio Overall portfolio management strategy for the Funds is
Management 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
responsibility with respect to the portfolio management of
all Nuveen open-end and exchange-traded funds managed by
Nuveen Advisory. See the Statement of Additional Information
for further information about Mr. Spalding.
The day-to-day management of each of the Funds is the
responsibility of Steven J. Krupa, a Vice President of Nuveen
Advisory and portfolio manager of the Funds. Mr. Krupa
currently manages eight Nuveen sponsored investment
companies. See the Statement of Additional Information for
further information about Mr. Krupa.
46
<PAGE>
NUVEEN TAX-FREE MUTUAL FUNDS PROSPECTUS
JULY 1, 1996
Consistent with the Funds' investment objective, 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 resources of the portfolio managers of the
various Nuveen funds and senior management of Nuveen
Advisory. All portfolio management decisions are subject to
weekly review by Nuveen Advisory's management and to
quarterly review by the Board of Directors of Nuveen
California Tax-Free Fund, Inc.
47
<PAGE>
HOW THE FUNDS SHOW PERFORMANCE
Each Fund from time to time may quote various performance
measures in order to illustrate the historical returns
available from an investment in the Fund. These performance
measures, which are determined for each class of shares of a
Fund, include:
Yield YIELD is a standardized measure of the net investment income
Information earned over a specified 30-day 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
investment would need to generate in order to equal the yield
on an after-tax basis for an investor in a stated tax
bracket. Taxable equivalent yield will consequently be higher
than its yield. See the chart below and Appendix B for
examples of taxable equivalent yields and how you can use
them to compare other investments with investments in the
Funds.
HISTORICAL YIELDS
LOGO
48
<PAGE>
NUVEEN TAX-FREE MUTUAL FUNDS PROSPECTUS
JULY 1, 1996
As this chart shows, interest rates on various long- and
short-term investments will fluctuate over time, and not
always in the same direction or to the same degree. For
convenience, the taxable equivalent yield of the Bond Buyer
20 Index shown here was calculated using a 36% federal income
tax rate. Other federal income tax rates, both higher and
lower, were in existence for all or part of the period shown
in the chart. This chart is not intended to predict the
future direction of interest rates. See the discussion below
under the subcaption "General" for a description of the
indices and investments shown in the chart.
DISTRIBUTION RATE is determined based upon the latest
dividend, annualized, expressed as a percentage of the
offering price per share at the end of the measurement
period. Distribution rate may sometimes be different 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 period measure both the net
investment income generated by, and the effect of any
realized and unrealized appreciation or depreciation of, an
investment in a Fund, assuming the reinvestment of all
dividends and capital gain distributions. Average annual
total return figures generally are quoted for at least one-,
five- and ten-year (or life-of-fund, if shorter) periods, and
represent the average annual percentage change over those
periods. Cumulative total return figures are not annualized
and represent the cumulative percentage or dollar value
change over the period specified.
TAXABLE EQUIVALENT TOTAL RETURN represents the total return
that would be generated by a taxable income fund that
produced the same amount of net asset value appreciation or
depreciation and after-tax income as 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 different
levels of risk and return. For example, a Fund may compare
its risk level, as measured by the variability of its
periodic returns, or its RISK-ADJUSTED TOTAL RETURN, with
those of other funds or groups of funds. Risk-adjusted total
return would be calculated by adjusting each investment's
total return to account for the risk level of the investment.
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
49
<PAGE>
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 information 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 performance of
a Fund to those of other investments is one element to
consider in making an informed investment decision. 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 investments such as corporate or U.S.
Government bonds, bank certificates of deposit (CDs) or money
market funds. These taxable investments have investment
characteristics that differ from those of the 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.
50
<PAGE>
DISTRIBUTIONS AND TAXES
NUVEEN TAX-FREE MUTUAL FUNDS PROSPECTUS
JULY 1, 1996
HOW THE FUNDS PAY DIVIDENDS
Each Fund will pay monthly dividends to shareholders at a
Each Fund pays level rate that reflects the past and projected net income of
monthly the Fund and that results, over time, in the distribution of
dividends substantially all of the Fund's net income. Net income of
each Fund consists of all interest 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
distributions, which might otherwise have been reduced by a
decrease in a Fund's monthly net income due to fluctuations
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. Undistributed
net income is included in a Fund's net asset value and,
correspondingly, distributions from previously undistributed
net income are deducted from a Fund's net asset value. It is
not expected that this dividend policy 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 immediately
preceding business day), payable to shareholders of record as
of the close of business on that day. This distribution
policy is subject to change, however, by the Board of
Directors without prior notice to or approval by
shareholders. Dividends will be paid on the first business
day of the following month and are reinvested in additional
shares of 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 unless you have elected to receive capital
gains distributions 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 shareholders of federal as
well
51
<PAGE>
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 adviser for more detailed
information concerning the taxation of the Funds and the
federal, state and local tax consequences to Fund
shareholders.
Federal Income Each Fund intends to qualify, as it has in prior years, under
Tax: Subchapter M of the Internal Revenue Code of 1986, as amended
(the "Code"), for tax treatment as a regulated investment
Income company. In order to qualify for treatment as a regulated
dividends are investment company, a Fund must satisfy certain requirements
free from relating to the sources of its income, diversification of its
regular assets and distribution of its income to shareholders. As a
federal income regulated investment company, a Fund will not be subject to
tax 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 Obligations.
Your share of a Fund's taxable income, if any, from income on
taxable temporary investments and net short-term capital
gains, will be taxable to you as ordinary income. If 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. Certain
distributions paid by a Fund in January of a given year may
be taxable to shareholders as if received the prior December
31. As long as a Fund qualifies as a regulated investment
company under the Code, distributions will not qualify for
the dividends received deduction for corporate shareholders.
Investors should consider the tax implications of buying
shares immediately prior to a distribution. Investors who
purchase shares shortly before the record date for a
distribution will pay a per share price that includes the
value of the anticipated distribution and will be taxed on
the distribution (unless it is exempt from tax) even though
the distribution represents a return of a portion of the
purchase price.
52
<PAGE>
NUVEEN TAX-FREE MUTUAL FUNDS PROSPECTUS
JULY 1, 1996
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 federal income tax upon
its taxable income for that year, and the entire amount of
your distributions would be taxable as ordinary income.
The Code does not permit you to deduct the interest on
borrowed monies used to purchase or carry tax-free
investments, such as shares of a Fund. Under Internal Revenue
Service rules, the purchase of Fund shares may be considered
to have been made with borrowed monies even though those
monies are not directly traceable to the purchase of those
shares.
Because the net asset value of each Fund's shares includes
net tax-exempt interest earned by the Fund but not yet
declared as an exempt-interest dividend, each time an exempt-
interest dividend is declared, the net asset value of the
Fund's shares will decrease in an amount equal to the amount
of the dividend. Accordingly, if you redeem shares of a Fund
immediately prior to or on the record date of a monthly
exempt-interest dividend, you may realize a taxable gain even
though a portion of the redemption proceeds may represent
your pro rata share of undistributed tax-exempt interest
earned by the Fund.
The redemption or exchange of Fund shares normally will
result in capital 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 interest
on which is not exempt from federal income tax to
"substantial users" of the facilities financed by these bonds
or "related persons" of such substantial users. Therefore,
the 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 preference
item for purposes of computing the alternative
53
<PAGE>
minimum tax on corporations and individuals. If your tax
liability is determined under the alternative minimum tax,
you will be taxed on your share of a Fund's exempt-interest
dividends that were paid from income earned on AMT Bonds. In
addition, the alternative minimum taxable income for
corporations is increased by 75% of the difference between an
alternative measure of income ("adjusted current earnings")
and the amount otherwise determined to be the 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.
Each Fund is required in certain circumstances to withhold
31% of taxable dividends and certain other payments paid to
non-corporate holders of shares who have not furnished to the
Fund their correct taxpayer identification number (in the
case of individuals, their social security number) and
certain certifications, or who are otherwise subject to back-
up withholding.
Each January, your Fund will notify you of the amount and tax
status of Fund distributions for the preceding year.
State Income Under the laws of the State of California, dividends you
Tax Matters: receive from income earned by a Fund on California Municipal
Obligations will be exempt from applicable California
Dividends are personal income tax. The exemption from California personal
free from income tax applies whether you receive a Fund's dividends in
California cash or reinvest them in additional shares of the Fund.
state personal
income tax
See Appendix A to this Prospectus and the Statement of
Additional Information for further information concerning the
effect of applicable state personal income taxes and state
corporate income and franchise taxes.
54
<PAGE>
NET ASSET VALUE
NUVEEN TAX-FREE MUTUAL FUNDS PROSPECTUS
JULY 1, 1996
Net asset value of the shares of a Fund will be determined
Net asset separately for each class of shares. The net asset value per
value is share of a class of shares will be computed by dividing the
calculated value of a Fund's assets attributable to the class, less the
daily liabilities attributable to the class, by the total number of
shares of the class outstanding. The net asset value per
share is expected to vary among 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 The Chase Manhattan
Bank, N.A., 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.
55
<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 The Custodian of the assets of the Funds is The Chase
Shareholder Manhattan Bank, N.A., 770 Broadway, New York, New York 10003.
Services Agent The custodian performs custodial fund accounting and
portfolio accounting services. Shareholder Services, Inc.,
P.O. Box 5330, Denver, CO 80217-5330, performs bookkeeping,
data processing and administrative services for the
maintenance of shareholder accounts.
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 diversified 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
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, 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, except that each bears different
class expenses, including different distribution and service
fees, and each has exclusive voting rights with respect to
any distribution or service plan applicable to its shares.
There are no conversion, preemptive or other subscription
rights, except that Class C Shares 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 annual
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.
56
<PAGE>
NUVEEN TAX-FREE MUTUAL FUNDS PROSPECTUS
APPENDIX A--SPECIAL STATE FACTORS AND STATE TAX TREATMENT
JULY 1, 1996
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
information was obtained from official statements of issuers
located in California as well as from other publicly
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 information relating to
certain political, economic or regulatory risk factors as
well as information relating to legal 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 governmental entities has
been limited. In recent years California experienced
substantial financial difficulties 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 substantial, broad-based revenue shortfalls which
affected both the State and local governments. California's
economy has been in a steady recovery since the start of
1994, and the State projects that its accumulated budget
deficit will be almost totally repaid by June 30, 1996. Local
governments in California continue to face difficult
financial conditions.
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. Additional
considerations relating to the risks of investing in
California Municipal Obligations are presented in the
Statement of Additional Information.
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
obligation 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 imposing other constraints upon
enforcement 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.
A-1
<PAGE>
DESCRIPTION OF CALIFORNIA STATE TAX TREATMENT
The following California state tax information applicable 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 qualifies as a regulated investment company
for federal income tax purposes under Subchapter M of the
Code and that amounts so designated by each Fund to its
shareholders 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 enable it
to pay dividends that are exempt from California personal
income taxes ("California exempt-interest dividends"), but
not from California franchise tax or California corporate
income tax. The total amount of California 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 California Municipal Obligations. Amounts
paid on defaulted California Municipal Obligations held by
the Funds under policies of insurance issued with respect to
such Municipal 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 purposes,
distributions paid from capital gains are taxable at ordinary
income rates.
A-2
<PAGE>
NUVEEN TAX-FREE MUTUAL FUNDS PROSPECTUS
APPENDIX B--TAXABLE EQUIVALENT YIELD TABLES
JULY 1, 1996
TAXABLE EQUIVALENT YIELD TABLES AND THE EFFECT OF TAXES AND
INTEREST RATES ON INVESTMENTS
The following tables show the combined effects for
individuals of federal and state income taxes on:
.what you would have to earn on a taxable investment to equal
a given tax-free yield; and
. the amount that those subject to a given combined tax rate
would have to put into a tax-free investment in order to
generate the same after-tax income as a taxable investment.
These tables are for illustrative purposes only and are not
intended to predict the actual return you might earn on a
Fund investment. The Funds occasionally may advertise 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 1996 marginal
federal tax rates and marginal state tax rates currently
available and scheduled to be in effect, and do not take into
account changes in tax rates that are proposed from time to
time. A taxpayer's marginal tax rate is affected by both his
taxable income and his adjusted gross income. The table
assumes that federal taxable income is equal to state income
subject to tax, and for cases in which more than one state
rate falls within a federal bracket, the highest state rate
corresponding to the highest income within that federal
bracket is used. The tables assume taxpayers are not subject
to any alternative minimum taxes and deduct any state income
taxes paid on their federal income tax returns. Unless noted
otherwise, the tables do not reflect any local taxes or any
taxes other than personal income taxes. They also reflect the
effect of the current federal tax limitations on itemized
deductions and personal exemptions, which were designed to
phase out certain benefits of these deductions for higher
income taxpayers. These limitations are subject to certain
maximums, which depend on the number of exemptions claimed
and the total amount of the taxpayer's itemized deductions.
For example, the limitation on itemized deductions will not
cause a taxpayer to lose more than 80% of his allowable
itemized deductions, with certain exceptions. The 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.
B-1
<PAGE>
CALIFORNIA FUND
Combined marginal tax rates for joint taxpayers with four
personal exemptions.
<TABLE>
<CAPTION>
Tax-Free Yield
-----------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
3.50% 4.00% 4.50% 5.00% 5.50% 6.00% 6.50%
-----------------------------------------------------------------------------
<CAPTION>
Federal
Federal Adjusted Combined
Taxable Gross State and
Income Income Federal
(1,000's) (1,000's) Tax Rate** Taxable Equivalent Yield
- ---------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
$ 0 - 40.1 $ 0 - 118.0 20.0% 4.38 5.00 5.63 6.25 6.88 7.50 8.13
40.1 - 96.9 0 - 118.0 34.5 5.34 6.11 6.87 7.63 8.40 9.16 9.92
118.0 - 177.0 35.5 5.43 6.20 6.98 7.75 8.53 9.30 10.08
96.9 -
147.7 0 - 118.0 37.5 5.60 6.40 7.20 8.00 8.80 9.60 10.40
118.0 - 177.0 38.5 5.69 6.50 7.32 8.13 8.94 9.76 10.57
177.0 - 219.9 40.5 5.88 6.72 7.56 8.40 9.24 10.08 10.92
147.7 - 263.8 118.0 - 177.0 43.0 6.14 7.02 7.89 8.77 9.65 10.53 11.40
177.0 - 219.9 45.5 6.42 7.34 8.26 9.17 10.09 11.01 11.93
219.9 - 244.9 46.5 6.54 7.48 8.41 9.35 10.28 11.21 12.15
244.9 - 299.5 46.0 6.48 7.41 8.33 9.26 10.19 11.11 12.04
Over 299.5 43.5 6.19 7.08 7.96 8.85 9.73 10.62 11.50
Over 263.8 177.0 - 219.9 49.0 6.86 7.84 8.82 9.80 10.78 11.76 12.75
219.9 - 244.9 50.0 7.00 8.00 9.00 10.00 11.00 12.00 13.00
244.9 - 299.5 49.5 6.93 7.92 8.91 9.90 10.89 11.88 12.87
Over 299.5 46.5 6.54 7.48 8.41 9.35 10.28 11.21 12.15
</TABLE>
B-2
<PAGE>
NUVEEN CALIFORNIA TAX-FREE FUND PROSPECTUS
JULY 1, 1996
Combined marginal tax rates for single taxpayers with one
personal exemption.
<TABLE>
<CAPTION>
Tax-Free Yield
-------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
3.50% 4.00% 4.50% 5.00% 5.50% 6.00% 6.50%
-------------------------------------------------------------------------
<CAPTION>
Federal
Federal Adjusted Combined
Taxable Gross State and
Income Income Federal
(1,000's) (1,000's) Tax Rate** Taxable Equivalent Yield
- -----------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
$ 0 -
$ 0 - 24.0 109.9 20.0% 4.38 5.00 5.63 6.25 6.88 7.50 8.13
24.0 -
58.2 0 - 109.9 34.5 5.34 6.11 6.87 7.63 8.40 9.16 9.92
58.2 - 121.3 0 - 109.9 37.5 5.60 6.40 7.20 8.00 8.80 9.60 10.40
109.9 -
118.0 38.0 5.65 6.45 7.26 8.06 8.87 9.68 10.48
118.0 -
134.9 39.5 5.79 6.61 7.44 8.26 9.09 9.92 10.74
134.9 -
240.5 39.0 5.74 6.56 7.38 8.20 9.02 9.84 10.66
121.3 -
121.3 - 263.8 134.9 44.0 6.25 7.14 8.04 8.93 9.82 10.71 11.61
134.9 -
240.5 44.0 6.25 7.14 8.04 8.93 9.82 10.71 11.61
Over 240.5 43.5 6.19 7.08 7.96 8.85 9.73 10.62 11.50
Over 263.8
Over 263.8 46.5 6.54 7.48 8.41 9.35 10.28 11.21 12.15
</TABLE>
For an equal after-tax return, your tax-free investment may
be less.*
<TABLE>
<CAPTION>
Your tax-free investment may be less*
------------------------------------------------------------------------------------
For an after-tax return
equal to that provided
by a 3.5% 4.0% 4.5% 5.0% 5.5% 6.0% 6.5%
- --------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
$50,000 in a 4% taxable
investment $35,714 $31,250 $27,778 $25,000 $22,727 $20,833 $19,231
$50,000 in a 5% taxable
investment 44,643 39,063 34,722 31,250 28,409 26,042 24,038
$50,000 in a 6% taxable
investment 53,571 46,875 41,667 37,500 34,091 31,250 28,846
$50,000 in a 7% taxable
investment 62,500 54,688 48,611 43,750 39,773 36,458 33,654
$50,000 in a 8% taxable
investment 71,429 62,500 55,556 50,000 45,455 41,667 38,462
</TABLE>
*Dollar amounts in the table reflect a 37.5% combined federal
and state tax rate.
**The State tax brackets are those for 1995. The 1996
brackets will be adjusted to changes in the California
Consumer Price Index. These adjustments have not yet been
released. The table reflects a decrease in state income tax
rates for high income taxpayers which is, under current law,
scheduled to take place beginning in 1996.
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.
B-3
<PAGE>
Nuveen
Tax-Free
Mutual Funds
Application
Form
<TABLE>
<CAPTION>
<S> <C>
Nuveen Tax-Free Mutual Funds Application Form
Note: The application form may not be used for all types of accounts and certain optional
fund services. Please obtain special application materials by checking the boxes in
application item 7 or by calling Nuveen toll-free at 800.621.7227.
1 ACCOUNT REGISTRATION AND INFORMATION
Please check the box that [_] Individual
describes the type of
account you are opening, Last name, first, initial Social security number
and complete all the
information which applies -------------------------------------------------------------------------------------------------
to your account type.
[_] Joint tenant (if any)
Registration for two or more
persons will be as joint tenants Last name, first, initial
with right of survivorship
unless noted otherwise. -------------------------------------------------------------------------------------------------
[_] Gift to a minor
Name of trustee State name under the Uniform Gift to Minors Act
-------------------------------------------------------------------------------------------------
Minor's name (only one minor may be named) Minor's social security number
--------------------------------------------------------------------------------------------------
[_] Trust [_] Custodian [_] Service organization
Trustee's or custodian's name Trust's agreement date (mandatory)
-------------------------------------------------------------------------------------------------
Trust's name Trust's taxpayer I.D. number
-------------------------------------------------------------------------------------------------
2 MAILING ADDRESS
Street address City, state, zip code
--------------------------------------------------------------------------------------------------
Daytime telephone number (include area code) Evening telephone number (include area code)
--------------------------------------------------------------------------------------------------
3 FUND SELECTION
Please indicate in which National Tax-Free Value Funds
Nuveen Fund(s) you would $________[_]A [_] C Municipal Bond Fund ________[_] A [_] C Insured Municipal Bond Fund
like to open an account
by writing the amount and State Tax-Free Value Funds
the class of shares in Free from federal, state and, in some cases, local income taxes for residents of that state
which you would like to
invest ($1,000 minimum $____[_]A [_] C Arizona $____[_]A [_] C California $____[_]A [_] C California Ins.
initial investment per $____[_]A [_] C Florida $____[_]A [_] C Maryland $____[_]A [_] C Massachusetts
class of any fund). $____[_]A [_] C Massachusetts Ins. $____[_]A [_] C Michigan $____[_]A [_] C New Jersey
$____[_]A [_] C New York $____[_]A [_] C New York Ins. $____[_]A [_] C Ohio
State funds may not be $____[_]A [_] C Pennsylvania $____[_]A [_] C Virginia
registered for sale in
all states. [_] Check this box if you qualify for Class R share purchases as described in the Fund
Prospectus. Class R shares are not available unless you meet certain eligibility requirements.
Please enclose a separate check made payable to each fund/class in which you are investing. If
more than one fund is selected, any optional features chosen will apply to all fund accounts. If
you prefer to wire funds to an open account, or need any assistance in completing this form, call
Nuveen toll-free at 1.800.621.7227.
4 DISTRIBUTION OPTIONS
Please check only one. [_] Dividends are to be paid by check [_] Capital gains are to be paid by check
If no box is checked, all distributions from a Fund will be reinvested into the same Fund.
5 INFORMATION ABOUT YOUR FINANCIAL ADVISER
Please supply the name Financial adviser's name Firm name
and address of your
financial adviser so --------------------------------------------------------------------------------------------------
that they will receive
duplicate copies of Street address City, state, zip code
your fund statements.
--------------------------------------------------------------------------------------------------
6 CERTIFICATION AND SIGNATURE(S)
Sign in ink exactly as the I certify that I have power and authority to establish this account and select the options
name (or names) appear requested. I also release the fund(s), Shareholder Services, Inc. (SSI), John Nuveen & Co.
above in section 1, Account Incorporated, United Missouri Bank of Kansas City, N.A., First Interstate Bank of Denver, N.A. and
registration. their agents and representatives from all liability and agree to indemnify each of them from any
and all losses, damages or costs for acting in good faith in accordance with instructions believed
to be genuine. With respect to the options identified on items #8, #9 and #10 of this application,
I understand that the Fund(s), SSI and Nuveen will not be liable for following telephone
instructions reasonably believed to be genuine. I also understand that the Fund(s) employ
procedures reasonably designed to confirm that telephone instructions are genuine and if these
procedures are not followed, the Fund(s) may be liable for any losses due to unauthorized or
fraudulent telephone instructions. I agree that the authorizations herein shall continue until SSI
receives written notice of a change or modification signed by all account owners. I understand
that each account is subject to the terms of the prospectus of the Nuveen fund selected, as
amended from time to time, and subject to acceptance by that fund in Chicago, Illinois and to the
laws of Illinois. All terms shall be binding upon my heirs, representatives and assigns. I certify
that I have received and read the current prospectus for each fund I have selected. Under
penalties of perjury, I certify (1) that the number shown on this Application Form is my correct
Social Security of Taxpayer Identification Number, and (2) that the IRS has not notified me that I
am subject to backup withholding (Line out clause (2) if you are subject to backup withholding.)
Individual's signature Date Joint tenant's signature (if applicable) Date
--------------------------------------------------------------------------------------------------
Custodian/Trustee signature (if applicable)
-----------------------------------------------------
See reverse side for additional optional fund services.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
<S> <C>
Optional Fund Services
7 OPTIONAL FUND SERVICES
Please send me application materials for these optional fund services which are described in the
prospectus:
[_] Automatic Deposit Plan [_] Automatic Withdrawal Plan
[_] Payroll Direct Deposit Plan [_] UIT Reinvestment
[_] Fund Direct
8 TEL-A-WIRE AUTHORIZATION
Select only one of the By electing this option, I authorize SSI and Nuveen to honor telephone instructions to redeem my
following, Option A or B. fund shares (minimum $1,000), subject to the terms and conditions described in the prospectus.
[_] OPTION A
By completing this section, I elect to have all redemption proceeds wired to my personal checking,
NOW or money market account at a commercial bank. (Attach a check marked "void" and complete only
the Option A section.)
Name of bank Bank's street address
--------------------------------------------------------------------------------------------------
Your bank account name Bank's city, state and zip code
--------------------------------------------------------------------------------------------------
Your bank account number Bank's routing code Bank's telephone number (include area code)
--------------------------------------------------------------------------------------------------
[_] OPTION B
By completing this section, I elect to have all redemption proceeds wired in my name to the
commercial bank account of my financial adviser's firm. (A representative of that firm must
complete and sign the second part of the Option B section.)
Name of financial advisor's firm Firm's telephone number (include area code)
--------------------------------------------------------------------------------------------------
Firm's street address Firm's city, state and zip code
--------------------------------------------------------------------------------------------------
Your account name Your account number
--------------------------------------------------------------------------------------------------
Bank's telephone number
This section is to be Name of bank of financial advisor's firm (include area code) Bank's routing code
completed by your financial
adviser if Option B is --------------------------------------------------------------------------------------------------
selected.
Bank's street address Bank's city, state and zip code
--------------------------------------------------------------------------------------------------
Bank's account number Financial adviser's signature Date
--------------------------------------------------------------------------------------------------
9 TEL-A-CHECK AUTHORIZATION
You must check the box [_] I hereby authorize the fund and its agents to honor telephone instructions to redeem shares
to elect this option. worth $50,000 or less from my account and send those proceeds by check payable to me to my address
of record, subject to the terms and conditions described in the prospectus.
10 TELEPHONE EXCHANGE AUTHORIZATION
You must check the box [_] I hereby authorize the fund and its agents to honor telephone instructions to invest
to elect this option. redemption proceeds from the fund into other Nuveen Mutual Funds, subject to the terms and
conditions described in the prospectus.
11 LETTER OF INTENT
You must complete this [_] By electing this option, I indicate my intention, but am under no obligation, to purchase
section to elect this option. additional Class A shares in the fund(s) and amount(s) indicated over the next 13 months in order
to qualify for reduced sales charges, subject to the terms and conditions described in the
prospectus. I understand that I or my financial adviser must notify Nuveen or SSI when I make a
purchase of fund shares that I wish to be covered under the Letter of Intent option.
I intend to purchase at least:
[_] $50,000 [_] $100,000 [_] $250,000 [_] $500,000 [_] $1,000,000
[_] $2,500,000 [_] $5,000,000 [_] $7,500,000 or more
worth of shares of ______________________________________________ Fund(s) over the next 13 months.
Mail the completed application form to:
Nuveen Tax-Free Mutual Funds
P.O. Box 5330
Denver, Colorado 80217-5330
</TABLE>
<PAGE>
PRINCIPAL UNDERWRITER
John Nuveen & Co. Incorporated
Investment Bankers
333 West Wacker Drive
Chicago, Illinois 60606
312.917.7700
INVESTMENT ADVISER
Nuveen Advisory Corp.
Subsidiary of John Nuveen & Co.
Incorporated
333 West Wacker Drive
Chicago, Illinois 60606
CUSTODIAN
The Chase Manhattan Bank, N.A.
770 Broadway
New York, New York 10003
TRANSFER AND SHAREHOLDER SERVICES
AGENT
Shareholder Services, Inc.
P.O. Box 5330
Denver, Colorado 80217
INDEPENDENT PUBLIC ACCOUNTANTS
FOR THE FUNDS
Arthur Andersen LLP
33 West Monroe Street
Chicago, Illinois 60603
LOGO
Pro-3 6.96
LOGO
John Nuveen & Co. Incorporated
333 West Wacker Drive
Chicago, Illinois 60606-1286
<PAGE>
[LOGO]
Nuveen Tax-Free
Money Market Funds
Dependable tax-free
income for generations
CALIFORNIA MONEY MARKET
[PHOTO APPEARS HERE]
Prospectus/July 1, 1996
<PAGE>
NUVEEN TAX-FREE MONEY MARKET FUND PROSPECTUS
JULY 1, 1996
Nuveen California Tax-Free Fund, Inc.
Prospectus
July 1, 1996
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
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 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
income 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
concisely the information about the Fund that a prospective investor should
know before investing in the Fund. A "Statement of Additional Information"
dated July 1, 1996, 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
incorporated by reference into this Prospectus. A copy of this Statement may be
obtained 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.
Government 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
endorsed by, any bank and are not federally insured by the Federal Deposit
Insurance Corporation, the Federal Reserve Board, or any other agency.
The Fund may invest a significant percentage of its assets in the securities
of a single issuer, and, therefore, an investment in the Fund may be riskier
than an investment in other types of money market funds.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS
A CRIMINAL OFFENSE.
John Nuveen & Co. Incorporated
For information, call toll-free 800.621.7227
1
<PAGE>
<TABLE>
<C> <S>
CONTENTS
3 Highlights
6 Fund expenses
8 Financial highlights
10 Yield
12 The Fund and its investment objective and policies
19 Management of the Fund
21 Dividends and taxes
24 Net asset value
25 How to buy Fund shares
31 How to redeem Fund shares
36 General information
37 Taxable equivalent yield tables
</TABLE>
2
<PAGE>
HIGHLIGHTS
NUVEEN TAX-FREE MONEY MARKET FUND PROSPECTUS
JULY 1, 1996
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 offered 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 investment 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 or that the objective of the Fund will be
realized. See "Net Asset Value" on page 24, "The Fund and its
Investment Objective and Policies" on page 12.
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 status when distributed
to the shareholders. See "Dividends and Taxes--Tax Matters"
on page 21.
HOW TO BUY FUND SHARES
Shares of the Money Market Fund may be purchased on days on
which the Federal Reserve Bank of Boston is normally open for
business at the net asset value next determined after an
order is received together with payment in federal funds. The
minimum initial investment for purchases of shares of the
Money Market Fund is $5,000 and subsequent purchases must be
in amounts of $100 or more. See "How to Buy Fund Shares"on
page 25. For further information about the Fund, please call
Nuveen toll-free at 800.621.7227.
3
<PAGE>
HOW TO REDEEM FUND SHARES
Shareholders may redeem shares at net asset value next
computed after receipt of a redemption request in proper form
on any business day. Shareholders may make redemption
requests in writing or, for shareholders of the Distribution
Plan series, by check. Shareholders who have completed and
filed the necessary authorization form may make redemption
requests by telephone with proceeds to be transferred by wire
to a predesignated bank account or by check to the address of
record. A fee may be charged for wire redemption. See "How to
Redeem Fund Shares" on page 31. There is no redemption fee.
DIVIDENDS AND REINVESTMENT
All of the net income of the Fund is declared daily as a
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 21.
INVESTMENT ADVISER AND PRINCIPAL UNDERWRITER
John Nuveen & Co. Incorporated ("Nuveen") will act as
principal underwriter of the Money Market Fund's shares. The
Fund has adopted Distribution and Service Plans under 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 Buy Fund Shares--
Distribution and Service Plan" on page 30. Nuveen Advisory
Corp. ("Nuveen Advisory"), a wholly-owned subsidiary of
Nuveen, will act as the investment adviser for the Fund and
will receive annual fees based upon the average daily net
assets of the Fund. The management fees will be reduced or
Nuveen Advisory 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 19.
4
<PAGE>
NUVEEN TAX-FREE MONEY MARKET FUND PROSPECTUS
JULY 1, 1996
INVESTMENTS
The Fund will invest primarily in California Municipal
Obligations having ratings or other credit and risk
characteristics as described on pages 12-17, 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 present intention to
purchase, taxable "temporary investments," limited to
obligations issued or guaranteed by the full faith and credit
of the United States, or certificates 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 dealers, U.S. banks or other recognized financial
institutions, subject to the specific limitations stated
below. The Fund may from time to time invest a portion of its
assets in debt 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 "The Fund and its
Investment Objective and Policies" on page 12.
The information set forth above should be read in conjunction
with the detailed information set forth elsewhere in this
Prospectus.
5
<PAGE>
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 fiscal year ended
February 29, 1996.
<TABLE>
<CAPTION>
Institutional Distribution Service
Shareholder transaction expenses series Plan series Plan series
- -----------------------------------------------------------------------------
<S> <C> <C> <C>
Sales charges imposed on purchases None None None
Sales charges imposed on reinvested
dividends None None None
Redemption fees None None None
Exchange fees None None None
<CAPTION>
Annual operating expenses (as a
percentage Institutional Distribution Service
of average daily net assets) series Plan series Plan series
- -----------------------------------------------------------------------------
<S> <C> <C> <C>
Management fees .40% .40% .40%
12b-1 Fees (or service fees) None .07% .09%
Other operating expenses, after
expense reimbursements .06% .08% .05%
---- ---- ----
Total expenses, after expense
reimbursements .46% .55% .54%
==== ==== ====
</TABLE>
The purpose of the foregoing tables is to help you understand
all expenses and fees that you would bear directly or
indirectly as an investor in the Money Market Fund.
As discussed under "Management of the Fund" and reflected in
the tables above, the management fee is reduced 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 series. Without expense reimbursements,
for the fiscal year ended February 29, 1996, other operating
expenses would have been .06, .15 and .07 of 1%, and total
expenses would have been .46, .62 and .56 of 1% of the
average 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."
6
<PAGE>
NUVEEN CALIFORNIA TAX-FREE MONEY MARKET FUND PROSPECTUS
JULY 1, 1996
The following example illustrates the expenses that you would
pay 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. 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 $58
Distribution Plan series $ 6 $18 $31 $69
Service Plan series $ 6 $17 $30 $68
</TABLE>
This example should not be considered a representation of
past or future expenses or performance. Actual expenses may
be greater or less than those shown. This example assumes
that the percentage amounts listed under Annual Operating
Expenses remain the same in each of the periods.
7
<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
statements and related notes appearing in the Annual
Report.
Selected data for a common share outstanding throughout
each period is as follows:
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Income from investment
operations Less distributions
---------------------------------------------------------
Net
realized
and Dividends
Net unrealized from
asset value Net gain (loss) net Distributions
beginning investment from investment from
of period income investments income capital gains
- -------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
CA**
- -------------------------------------------------------------------------------------
Year ended
2/29/96
Service Plan series $1.000 $.033* $ -- $(.033) $ --
Distribution Plan se-
ries 1.000 .033* -- (.033) --
Institutional series 1.000 .034 -- (.034) --
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,
1990++ 1.000 .054* -- (.054) --
1989++ 1.000 .056* -- (.056) --
1988++ 1.000 .043* -- (.043) --
1987++ 1.000 .039* -- (.039) --
- -------------------------------------------------------------------------------------
</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 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.
8
<PAGE>
NUVEEN TAX-FREE MONEY MARKET FUND PROSPECTUS
JULY 1, 1996
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Ratios/Supplemental data
-----------------------------------------------------------------------------------------
Ratio of Ratio of
expenses Ratio of net expenses Ratio of net
Total return to average investment income to average investment income
on Net assets net assets to average net assets to average
Net asset value net asset end of period before net assets before after net assets after
end of period value (in thousands) reimbursement reimbursement reimbursement* reimbursement*
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
- -------------------------------------------------------------------------------------------------------------------
$1.000 3.32% $ 70,722 .56% 3.28% .54% 3.30%
1.000 3.31 73,020 .62 3.23 .55 3.30
1.000 3.40 34,392 .46 3.39 .46 3.39
1.000 2.59 41,772 .59 2.15 .55 2.19
1.000 2.60 67,157 .64 2.47 .55 2.56
1.000 2.69 50,772 .47 2.74 .47 2.74
1.000 1.94 415,238 .53 1.94 .53 1.94
1.000 1.92 72,380 .73 1.74 .55 1.92
1.000 2.07 32,299 .41 2.06 .41 2.06
1.000 2.28 469,812 .57 2.24 .55 2.26
1.000 2.29 80,652 .62 2.19 .55 2.26
1.000 2.36 24,156 .47 2.33 .47 2.33
1.000 2.39 478,886 .56+ 3.53+ .55+ 3.54+
1.000 2.39 91,670 .61+ 3.48+ .55+ 3.54+
1.000 2.45 18,334 .45+ 3.64+ .45+ 3.64+
1.000 4.70 431,590 .57 4.65 .55 4.67
1.000 4.70 90,031 .61 4.61 .55 4.67
1.000 4.80 22,342 .45 4.77 .45 4.77
1.000 5.37 452,465 .59 5.34 .55 5.38
1.000 5.62 362,927 .57 5.68 .55 5.70
1.000 4.28 207,897 .59 4.27 .55 4.31
1.000 3.90 284,956 .63 3.79 .50 3.92
- -------------------------------------------------------------------------------------------------------------------
</TABLE>
+ Annualized.
++ Represents combined per share data and ratios for the Service Plan,
Distribution Plan and Institutional series.
9
<PAGE>
YIELD
From time to time, Nuveen California Tax-Free Fund, Inc. may
advertise the "yield," "effective yield" and "taxable
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 similarly 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 basis 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 29, 1996, the
yield, effective yield and taxable equivalent yield (using a
combined federal and California income tax rate of 45.0%) for
the Fund were as follows:
<TABLE>
<CAPTION>
Taxable
Current Effective equivalent
yield yield yield
- ------------------------------------------------------------------------------
<S> <C> <C> <C>
Distribution and Service Plan series 2.85% 2.89% 5.18%
Institutional series 2.94% 2.98% 5.35%
</TABLE>
This Prospectus may be in use for a full year and it can be
expected that during this period there will be material
fluctuations in yield from that quoted above. For information
as to current yields, please call Nuveen at 800.621.7227.
A comparison of tax-exempt and taxable equivalent yields is
one element to consider in making an investment decision.
Nuveen California Tax-Free Fund, Inc. may from time to time
in its advertising and sales materials compare 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 CDs 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,
10
<PAGE>
NUVEEN TAX-FREE MONEY MARKET FUND PROSPECTUS
JULY 1, 1996
and bank CDs and money market accounts are insured by an
agency of the federal government. Bank money market accounts
and money market funds provide stability of principal, but
pay interest at rates that vary with the condition of the
short-term taxable debt market. The investment
characteristics of the Money Market Fund are described more
fully elsewhere in this Prospectus.
Any given performance quotation or performance comparison 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.
11
<PAGE>
THE FUND AND ITS INVESTMENT OBJECTIVE AND POLICIES
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 offered by this
Prospectus. The Money Market Fund has the objective of
providing, through investment in a professionally managed
portfolio of California Municipal Obligations (described
below), as high a level of current interest income exempt
from both federal and California income taxes as is
consistent with its investment policies 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. The Fund values its portfolio securities at
amortized cost and seeks to maintain a constant net asset
value of $1.00 per share. There is risk in all investments
and, therefore, there can be no assurance that the objective
of the Fund will be achieved.
INVESTMENT POLICIES
The Fund will, as a fundamental policy, pursue its investment
objective by investing at least 80% of its investment assets
in California Municipal Obligations except during temporary
defensive periods. The Money Market Fund intends to remain as
fully invested in California Municipal Obligations as is
prudent or practical under 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 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 purchasing unrated Municipal
Obligations than in purchasing comparable but rated Municipal
Obligations. The investment 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
12
<PAGE>
NUVEEN TAX-FREE MONEY MARKET FUND PROSPECTUS [/R]
JULY 1, 1996
February 29, 1996, the average maturity of the Money Market
Fund's portfolio ranged from 13 to 35 days. The Money Market
Fund generally 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
anticipation notes, construction loan notes and bank notes
issued by governmental authorities to commercial banks as
evidence of borrowings. Since these short-term securities
frequently serve as interim financing pending receipt 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 issuer'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 excess of
397 days, upon certain conditions contained in rules and
regulations issued by the SEC under the Investment 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 payment 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.
Because the Fund invests in securities backed by banks and
other financial institutions, changes in the credit quality
of these institutions could cause losses to the Fund and
affect its share 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 ("Approved Banks") approved by
MBIA under its established credit approval standards. Under
the terms of a Commitment, 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
13
<PAGE>
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
Fund's shares, the Fund believes that its ability to obtain
insurance 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 "temporary
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 extraordinary 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 investments with remaining maturities of
397 days or less which, in the opinion of Nuveen Advisory,
are of "high grade" quality.
MUNICIPAL OBLIGATIONS
Municipal Obligations include debt obligations issued by
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 pollution 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 pollution control bonds are in most cases
revenue bonds and do not generally constitute the pledge of
the credit or taxing power of the issuer of such bonds. There
are, of course, variations in the security of Municipal
Obligations, both within a particular classification and
between 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, collection 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.
14
<PAGE>
NUVEEN TAX-FREE MONEY MARKET FUND PROSPECTUS
JULY 1, 1996
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 issues 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 marketplace and the
Money Market Fund may invest in such other types of notes to
the extent permitted under its investment policies and
limitations. Such notes may be issued for different purposes
and with different security than those mentioned above.
The yields on Municipal Obligations are dependent on a
variety of factors, including the condition of the general
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 quality 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. Consequently, Municipal Obligations
with the same maturity, coupon and rating may have different
yields while obligations 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 MUNICIPAL OBLIGATIONS
California Municipal Obligations are issued by the State of
California and cities and local authorities in the 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 interest may be subject to the
Federal alternative minimum tax. The Fund will invest
primarily in California Municipal Obligations that are issued
by the State of California 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
issued 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 Obligations for
purposes of this Prospectus.
15
<PAGE>
Because the Money Market Fund will concentrate its investment
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 obligations. As a result of
"Proposition 13" and other amendments to the California
Constitution and the adoption of other statutes, the taxing
authority of California governmental entities has been
limited. In recent years California experienced substantial
financial difficulties 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 substantial, broad-based revenue shortfalls which
affected both the state and local governments. California's
economy has been in a steady recovery since the start of
1994, and the State projects that its accumulated budget
deficit will be almost totally repaid by June 30, 1996. Local
governments in California continue to face difficult
financial conditions.
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. Additional considerations relating
to the risks of investing in California Municipal Obligations
are presented in the Statement of Additional Information.
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 future by Congress or the California
legislature or by referenda extending the time for payment of
principal and/or interest, or imposing other constraints upon
enforcement 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.
WHEN-ISSUED AND DELAYED DELIVERY TRANSACTIONS
The Money Market Fund may purchase and sell Municipal
Obligations on a when-issued or delayed delivery basis. When-
issued and delayed delivery transactions arise when
securities are purchased or sold with payment and delivery
beyond the regular settlement date. (When-issued transactions
normally settle within 30-45 days.) On such transactions the
payment 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
16
<PAGE>
NUVEEN TAX-FREE MONEY MARKET FUND PROSPECTUS
JULY 1, 1996
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.
CERTAIN FUNDAMENTAL INVESTMENT POLICIES
The Money Market Fund, as a fundamental policy, may not,
without the approval of the holders of a majority of the
outstanding shares of the Fund, (1) 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 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 exceeding 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 Obligations or temporary investments in
accordance with its investment objective, policies and
limitations; (5) invest more than 5% of its total assets in
securities of
unseasoned issuers which, together with their predecessors,
have been in operation for less than three years; (6) invest
more than 10% of its assets in repurchase agreements maturing
in more than seven days, "illiquid" securities (such as non-
negotiable CDs) and securities without readily available
market quotations; or (7) 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 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
guarantee of an instrument will be considered a separate
security (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 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.
17
<PAGE>
Under the Investment Company Act of 1940, the Money Market
Fund may not purchase portfolio securities from any
underwriting syndicate of which Nuveen is a member except
under certain limited conditions set forth in Rule 10f-3.
For a more complete description of the investment
restrictions summarized above and the other investment
restrictions applicable to the Money Market Fund, see the
Statement of Additional Information.
The investment policies of the Fund specifically identified
as fundamental, together with its investment objective,
cannot be changed without approval by holders of a "majority
of the Fund's outstanding voting shares." As defined by the
Investment Company Act of 1940, this means the vote of (i)
67% or more of the shares present at a meeting, if the
holders of more than 50% of the shares are present or
represented by proxy or (ii) more than 50% of the shares,
whichever is less.
18
<PAGE>
MANAGEMENT OF THE FUND
NUVEEN TAX-FREE MONEY MARKET FUND PROSPECTUS
JULY 1, 1996
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 under the
Investment Management Agreement, is the responsibility of its
Board of Directors.
Nuveen Advisory, 333 West Wacker Drive, Chicago, Illinois
60606, acts as the investment adviser for and manages 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, bookkeeping 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 Advisory,
the Money Market 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 $500 mil-
lion .400 of 1%
For the next $500 million .375 of 1%
For assets over $1 bil-
lion .350 of 1%
</TABLE>
All fees and expenses are accrued daily and deducted before
payment of dividends to investors. In addition to the
management fee of Nuveen Advisory, the 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 proportion 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 series and Service Plan
series are the payments made under the Distribution and
Service Plans with respect to those series (see "How to Buy
Fund Shares--Distribution and Service Plan").
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 securities and, to the extent
permitted, extraordinary expenses) of each series in any
fiscal year from exceeding .55 of 1% of
19
<PAGE>
the series' average daily net assets. For the fiscal year
ended February 29, 1996, management fees amounted to .40 of
1% of the average daily net assets of the Fund. For the
fiscal year ended February 29, 1996, net of applicable
expense reimbursements, total expenses amounted to .46, .55
and .54 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 29, 1996, would have been .46, .62 and .56 of 1% of
the average daily net assets of the Institutional series, the
Distribution Plan series and the Service Plan series,
respectively.
Nuveen Advisory was organized in 1976 and since then has
exclusively engaged in the management of municipal securities
portfolios. It currently serves as investment adviser to 21
open-end municipal securities portfolios (the "Nuveen Mutual
Funds") and 53 exchange-traded municipal securities funds
(the "Nuveen Exchange-Traded Funds"). Each of these invests
substantially all of its assets in investment grade quality,
tax-free municipal securities. 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 underwriter 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 principal underwriter for the Nuveen Mutual Funds,
and served as co-managing underwriter for the shares of the
Nuveen Exchange-Traded Funds. Over 1,000,000 individuals have
invested to date in Nuveen's tax-exempt funds and trusts.
Founded in 1898, Nuveen is a subsidiary of The John Nuveen
Company which, in turn, is approximately 80% owned by The St.
Paul Companies, Inc. ("St. Paul"). St. Paul is located in St.
Paul, Minnesota, and is principally engaged in providing
property-liability insurance through subsidiaries.
20
<PAGE>
DIVIDENDS AND TAXES NUVEEN TAX-FREE MONEY MARKET FUND PROSPECTUS [/R]
JULY 1, 1996
DIVIDENDS
All of the net income attributable to the respective series
of the Money Market Fund is declared on each calendar day as
a dividend on shares entitled to such dividend. 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 instruments since the
previous dividend declaration, less estimated expenses
incurred subsequent to the previous declaration. For the
Distribution Plan series and Service Plan series of the Money
Market Fund, expenses will include, among other things,
payments to banks or other organizations and securities
dealers pursuant to Distribution Agreements and Service
Agreements with Nuveen. See "How to Buy Fund Shares--
Distribution and Service Plan" above for additional
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 computation 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. The Fund does not
anticipate realizing any significant long-term capital gains
or losses.
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 regulated investment company,
the Fund will not be subject to federal income tax on the
portion of its net investment income and net realized capital
gains that is currently distributed to shareholders. The Fund
also intends to satisfy conditions 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 diversified 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
21
<PAGE>
exempt-interest dividends"), but not from California
franchise 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
California 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
received, 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 regulated investment company, the Fund would
incur a regular corporate federal income tax upon its taxable
income for that year, and the entire amount of distributions
to shareholders would be taxable to shareholders as ordinary
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 determining when borrowed
funds are considered used for the purpose 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 directly 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 activity
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 appropriate
investment for shareholders who are considered
22
<PAGE>
NUVEEN TAX-FREE MONEY MARKET FUND PROSPECTUS
JULY 1, 1996
either a "substantial 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 includes most industrial and
housing revenue bonds. Shareholders whose tax liability is
determined under the alternative 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
alternative minimum taxable income for corporations is
increased by 75% of the difference between an alternative
measure of income ("adjusted current earnings") and the
amount otherwise determined to be alternative minimum taxable
income. Interest on all Municipal Obligations, and therefore
all distributions by the Fund that would otherwise be tax
exempt, is included in calculating a corporation's adjusted
current earnings.
The Fund is required in certain circumstances to withhold 31%
of taxable dividends and certain other payments paid to non-
corporate holders of shares who have not furnished to the
Fund their correct taxpayer identification number (in the
case of individuals, their social security number) and
certain 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 concerning the taxation of the
Fund and the federal, California and local tax consequences
to its shareholders.
23
<PAGE>
NET ASSET VALUE
Net asset value of shares of the Money Market Fund will be
determined by The Chase Manhattan Bank, N.A., 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 (a "business day") and
as of 12:00 noon Eastern Time 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 computed by
dividing the sum of the value of the portfolio securities
held by the Fund, plus any cash or other assets, 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 interest rates on the market value of the
security. For a more complete description of the amortized
cost valuation 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
a net asset value of $1.00 per share.
24
<PAGE>
HOW TO BUY FUND SHARES NUVEEN TAX-FREE MONEY MARKET FUND PROSPECTUS [/R]
JULY 1, 1996
IN GENERAL
Shares of the Money Market Fund may be purchased by residents
of California on days on which the Federal Reserve Bank of
Boston is normally 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 series:
(i) the "Distribution Plan" series intended for purchase by
or through securities dealers 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 purchase 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 departments, corporations
and investment bankers or advisers. The Distribution Plan was
adopted by the Fund in accordance 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 administrative services. There are no sales charges
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 Service Organizations for services rendered in the
distribution of shares of the Fund or the servicing of
shareholder 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 series. These fees are
described below under the caption "Distribution and Service
Plan" and in the Statement of Additional Information. 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. 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.
25
<PAGE>
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.
The Fund reserves the right to reject purchase orders and to
waive or increase the minimum investment requirements.
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
effective 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 800.858.4084 to
Telephone obtain an account number, control number and instructions.
Information needed to establish the account will be taken
over the telephone. Federal funds should be wired to: [/R]
United Missouri Bank of Kansas City, N.A.
ABA # 101000695
Nuveen California Tax-Free Money Market Fund
Shareholder Account No. (see above)
Shareholder Account Name:
An Application Form should be completed promptly and mailed
to Nuveen California Tax-Free Fund, Inc. Subsequent
investments may be made by following the same telephone order
and wire transfer procedure.
If an order is received by Nuveen by 12:00 noon Eastern Time
(9:00 a.m. Pacific Time), and federal funds are received by
United Missouri Bank of Kansas City, N.A. on the same day by
3:00 p.m. Eastern Time (12:00 noon Pacific Time), the order
is effective that day. If both the order and the federal
funds are not received by 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
26
<PAGE>
NUVEEN TAX-FREE MONEY MARKET FUND PROSPECTUS
JULY 1, 1996
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 receipt, but may take longer.
Fund Direct You can use Fund Direct to link your Fund account to your
account at your bank or other financial institution to enable
you to send money electronically between those accounts to
perform a variety of account transactions. These include
purchases of shares by telephone, investments under Automatic
Deposit Plan, and sending dividends and distributions,
redemption payments or Automatic Withdrawal Plan payments
directly to your bank account. Fund Direct privileges must be
requested via a Fund Direct Application you obtain by calling
800.621.7227. Fund Direct privileges will apply to each
shareholder listed in the registration on your account as
well as to your Authorized Dealer representative of record
unless and until SSI receives written instructions
terminating or charging those privileges. After you establish
Fund Direct for your account, any change of bank account
information must be made by signature-guaranteed instructions
to SSI as described in "How to Redeem Fund Shares." [/R]
Purchases may be made by telephone only after your account
has been established. To purchase shares in amounts up to
$250,000 through a telephone representative, call SSI at
800.621.7227. The purchase payment will be debited from your
bank account.
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.
Purchase
Through a To open an account through a securities dealer, bank or other
Securities Service Organization, investors should send money to that
Dealer or organization for transmission to Nuveen California Tax-Free
Service Fund, Inc. and furnish it with the information required in
Organization 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 distributing 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 Plan."
27
<PAGE>
California resident unitholders of Nuveen Unit Investment
Purchase by Trusts ("UITs") may purchase shares of the Money Market Fund
Reinvestment by automatically reinvesting distributions from their Nuveen
of Nuveen Unit UIT. To obtain information on share purchases through
Investment investment of Nuveen UIT distributions, check the applicable
Trust box on the enclosed Application Form or call Nuveen toll-free
Distributions at 800.237.0910.
COMMENCEMENT OF DIVIDENDS
Shares of the Money Market Fund are deemed to have been
purchased when an order becomes effective and are entitled to
income commencing on the day the order becomes effective.
THE FUND OFFERS TWO DIFFERENT TYPES OF SYSTEMATIC INVESTMENT
Automatic PROGRAMS
Deposit Plan
Once you have established a Fund account, you may make
regular investments in an amount of $25 or more each month by
authorizing Shareholder Services, Inc. ("SSI") to draw
preauthorized checks on your bank account. There is no
obligation to continue payments and you may terminate your
participation at any time at your discretion. No charge is
made in connection with this Plan, and there is no cost to
the Fund. To obtain an application form for the Automatic
Deposit Plan, check the applicable box on the enclosed
Application Form or call Nuveen toll-free at 800.621.7227.
Payroll Direct
Deposit Plan Once you have established a Fund account, you may, with your
employer's consent, make regular investments in Fund shares
of $25 or more per pay period by authorizing your employer to
deduct such amount automatically from your paycheck. There is
no obligation to continue payments and you may terminate your
participation at any time at your discretion. No charge is
made for this service and there is no cost to the Fund. To
obtain an application form for the Payroll Direct Deposit
Plan, check the applicable box on the enclosed Application
Form or call Nuveen toll-free at 800.621.7227.
Exchange OTHER SHAREHOLDER PROGRAMS
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 offered 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
determined net asset value without
28
<PAGE>
NUVEEN TAX-FREE MONEY MARKET FUND PROSPECTUS
JULY 1, 1996 [/R]
any front-end sales charge. Shares of any Nuveen Fund
purchased through dividend reinvestment or through
reinvestment of Nuveen Tax-Exempt Unit Trust distributions
(and any dividends thereon) may be exchanged for shares of
the Fund or any other Nuveen Fund without a front-end sales
charge. Exchanges 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,
Columbus Day and Veterans Day), exchanges of shares of one of
those funds for shares of the Fund may not be effected 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 redemption of shares of the
Nuveen Fund held and purchase of the shares of the other
Nuveen Fund. For federal income 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 registration of the account for the Fund
you are purchasing is not exactly the same as that of the
fund account from which the exchange is made, written
instructions from all holders of the account from which the
exchange is being made must be received, with signatures
guaranteed by a member of an approved Medallion Guarantee
Program or in such other manner as may be acceptable to the
Fund. You may also make exchanges by telephone if a
preauthorized exchange authorization, as provided on the
account Application Form, is on file with Shareholder
Services, Inc., the Fund's shareholder service agent. The
exchange privilege may be modified or discontinued at any
time.
ADDITIONAL INFORMATION
An account will be maintained for each shareholder of record
in the Fund by SSI, the Fund's transfer agent. Share
certificates will be issued only upon written request of the
shareholder to SSI. No certificates are issued for fractional
shares. The Fund reserves the right to reject any purchase
order and to waive or increase minimum investment
requirements.
29
<PAGE>
A change in registration or transfer of shares held in the
name of a broker/dealer can only be effected by an order in
good form from the broker/dealer acting on behalf of the
investor. Broker/dealers are encouraged to open single master
accounts. However, some broker/dealers may wish to use the
shareholder service agent's sub-accounting system to minimize
their internal recordkeeping requirements. A broker/dealer or
other investor 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.
Subject to the rules and regulations of the SEC, the Fund
reserves the right to suspend the continuous offering of its
shares at any time, but such suspension shall not affect the
shareholder's right of redemption as described in "How to
Redeem Fund Shares" below.
DISTRIBUTION AND SERVICE PLAN
The Fund has adopted a Distribution Plan pursuant to Rule
12b-1 under the 1940 Act and a Service Plan (collectively,
the "Plan"), pursuant to which the Distribution 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 accounts, processing purchase and redemption
transactions, arranging for bank wires, performing sub-
accounting, answering shareholder inquiries and such other
services as Nuveen may request. Nuveen will enter into
Distribution or Service Agreements with organizations 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 Plan continues in effect from year to year as long as its
continuance is approved at least annually by a vote of the
Board of Directors and a vote of the non-interested directors
of Nuveen California Tax-Free Fund, Inc. The Plan may not be
amended to increase materially the cost which the
Distribution Plan series or the Service Plan series of the
Money Market Fund may bear for distribution and services,
respectively, without the approval of the non-interested
directors and the shareholders of the affected series of that
Fund. Any other material amendments of the Plan 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
30
<PAGE>
NUVEEN TAX-FREE MONEY MARKET FUND PROSPECTUS
JULY 1, 1996
Prospectus in light of the terms governing their accounts
with securities dealers and Service Organizations,
respectively.
HOW TO REDEEM FUND SHARES
In General Upon receipt of a proper redemption request on a business
day, the Fund will redeem its shares at their next determined
net asset value. You may use the telephone redemption, check
redemption, or the regular redemption procedures discussed
hereafter. The purchase and redemption methods employed will
determine when funds will be available to you. Where the
shares to be redeemed have been purchased by check or through
Fund Direct within 15 days prior to the date the redemption
request is received, the Fund will not send the redemption
proceeds until the check or Fund Direct transfer for the
purchase has cleared, which may take up to 15 days. There is
no delay when the shares being redeemed were purchased by
wiring federal funds. [/R]
Check Shareholders of the Distribution Plan series of the Money
Redemption 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 Missouri Bank of Kansas City, N.A.
(the "Bank") and are subject to the same rules and
regulations that the Bank applies to checking accounts. [/R]
When a Redemption Check is presented, a sufficient number of
full and fractional shares in the shareholder's account will
be redeemed to cover the amount of the Redemption 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
complete the appropriate section of the Application Form and
submit the enclosed signature card.
This check redemption privilege may be modified or terminated
at any time by the Money Market Fund or the Bank. The check
redemption feature does not constitute a bank checking
account.
By Written You may redeem shares by sending a written request for
Request 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 endorsed [/R]
31
<PAGE>
certificates, if issued. Requests for redemption and share
certificates, if issued, must be signed by each shareholder
and, if the redemption proceeds exceed $50,000 or are payable
other than to the shareholder of record at the address of
record (which address may not have been changed in the
preceding 30 days), the signature must be guaranteed by a
member of an approved Medallion Guarantee Program or in such
other manner as may be acceptable to the Fund. Under normal
circumstances payment will be made by check and mailed within
one business day (and in no event more than seven days) after
receipt of a redemption request in proper form.
By TEL-A-CHECK You may redeem shares by TEL-A-CHECK telephone redemptions,
with the redemption proceeds paid by check, by completing the
TEL-A-CHECK authorization section of the enclosed Application
Form and returning it to Nuveen or SSI. If you did not
authorize TEL-A-CHECK when you opened your account, you may
obtain authorization by writing the Fund. The request must be
signed by each account owner with signatures guaranteed by a
member of an approved Medallion Guarantee Program or in such
other manner as may be acceptable to the Fund. If you have
authorized TEL-A-CHECK and your account address has not
changed within the last 30 days, you can redeem shares that
are held in non-certificate form and that are worth $50,000
or less by calling Nuveen at 800.621.7227. While you or
anyone authorized by you may make telephone redemption
requests, 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 received
prior to 4:00 p.m. Eastern Time, the shares to be redeemed
earn income on the day the request is made, and the
redemption will be effected and the redemption check will be
mailed on the following business day. For requests received
after 4:00 p.m. Eastern Time, the shares to be redeemed earn
income through the following business day, and the redemption
is effected and the redemption check will be mailed on the
second business day. [/R]
By TEL-A-WIRE Before you may redeem shares by TEL-A-WIRE telephone
redemptions, with the redemption proceeds paid by Federal
Reserve wire, you must complete the TEL-A-WIRE authorization
section of the enclosed Application Form and return it to
Nuveen or SSI. If you did not authorize TEL-A-WIRE when you
opened your account, you may do so by sending a written
request to the Fund signed by each account owner with
signatures guaranteed by a member of an approved Medallion
Guarantee Program or in such other manner as may be
acceptable to the Fund. [/R]
If you have authorized TEL-A-WIRE redemption, you can take
advantage of the following expedited redemption procedures to
redeem shares held in non-certificate
32
<PAGE>
NUVEEN TAX-FREE MONEY MARKET FUND PROSPECTUS
JULY 1, 1996
form that are worth at least $1,000. You may make TEL-A-WIRE
redemption requests by calling Nuveen at 800.858.4084. If a
redemption request is received by 12:00 noon Eastern Time,
the shares to be redeemed do not earn income on that day, but
the redemption is effected and proceeds are ordinarily wired
on the same day to the commercial bank account designated. If
the redemption request is received after 12:00 noon Eastern
Time, the shares to be redeemed earn income on the day the
request is received, and the redemption is effected and
proceeds are ordinarily wired the next business day.
Redemption proceeds may be delayed one additional business
day if the Federal Reserve Bank of Boston or the Federal
Reserve Bank of New York is closed on the day the redemption
proceeds would ordinarily be wired. The Fund reserves the
right to charge a fee for TEL-A-WIRE.
By Fund Direct Before you may redeem shares by Fund Direct telephone
redemptions, with the redemption proceeds being sent via
automated clearing house wire, you must complete the Fund
Direct Application Form and return it to Nuveen or SSI. If
you did not authorize Fund Direct when you opened your
account, you may obtain an Application Form by calling
800.621.7227. The Fund Direct Application Form must be signed
by each account owner with signatures guaranteed by a member
of an approved Medallion Guarantee Program or in such other
manner as may be acceptable to the Fund. Proceeds of share
redemptions made by Fund Direct will be transferred by
automated clearing house only to the commercial bank account
specified by the shareholder. [/R]
If you have authorized Fund Direct, you can take advantage of
the following expedited redemption procedures to redeem
shares held in non-certificate form. You may make Fund Direct
redemption requests by calling Nuveen at 800.621.7227. If
your telephone request is received prior to 4:00 p.m. Eastern
Time, the shares to be redeemed earn income on the day the
request is made, and the redemption is effected and the funds
will be wired on the following business day. For requests
received after 4:00 p.m. Eastern Time, the shares to be
redeemed earn income through the following business day, the
redemption is effected and the funds will be wired on the
second business day.
How to Change In order to establish multiple accounts, or to change the
Authorized account or accounts designated to receive redemption
Redemption proceeds, a written request specifying the change must be
Instructions sent to Nuveen. This request must be signed by each account
owner with signatures guaranteed by a member of an approved
Medallion Guarantee Program or in such other manner as may be
acceptable to the Fund. Further documentation may be required
from corporations, executors, trustees or personal
representatives. [/R]
33
<PAGE>
The Fund reserves the right to refuse telephone redemptions
and, at its option, may limit the timing, amount or frequency
of these redemptions. Telephone redemption procedures may be
modified or terminated at any time, on 30 days' notice, by
the Fund. The Fund, SSI and Nuveen will not be liable for
following telephone instructions reasonably believed to be
genuine. The Fund employs procedures reasonably designed to
confirm that telephone instructions are genuine. These
procedures include recording all telephone instructions and
requiring up to three forms of identification prior to acting
upon a caller's instructions. If the Fund does not follow
reasonable procedures for protecting shareholders against
loss on telephone transactions, it may be liable for any
losses due to unauthorized or fraudulent telephone
instructions.
Redemption Fund shareholders may also redeem shares through their
Through accounts with Service Organizations in accordance with
Service procedures established by each such Service Organization. The
Organizations Fund has no redemption charge, but Service Organizations may
impose transaction fees or other charges relating to the
redemption of Fund shares. Individual shareholders should
determine from their Service Organizations the procedures and
charges, if any, that govern redemptions. [/R]
Automatic If you own Fund shares currently worth at least $10,000, you
Withdrawal may establish an Automatic Withdrawal Plan by completing an
Plan application form for the Plan. You may obtain an application
form by checking the applicable box on the enclosed
Application Form or by calling Nuveen toll-free at
800.621.6227. The Plan permits you to request periodic
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 [/R]
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 terminated at any time by you or the Fund. To
obtain an application 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 KIND
All redemptions of shares of the Money Market Fund shall 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
34
<PAGE>
NUVEEN TAX-FREE MONEY MARKET FUND PROSPECTUS
JULY 1, 1996
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 redemption 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.
35
<PAGE>
GENERAL INFORMATION
Investor Investor inquiries may be made directly of the Money Market
Inquiries Fund in writing or by calling John Nuveen & Co. Incorporated,
the Money Market Fund's distributor, toll-free at
800.621.7227.
Custodian, The Custodian of the assets of the Fund is The Chase
Shareholder Manhattan Bank, N.A., 770 Broadway. The custodian performs
Services Agent custodial fund accounting and portfolio accounting services.
and Transfer Shareholder Services, Inc., P.O. Box 5330, Denver, Colorado
Agent 80217-5330, is the transfer, shareholder services and
dividend paying agent for the Fund and performs bookkeeping,
data processing and administrative services incident to the
maintenance of shareholder accounts. [/R]
Capital Stock 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
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 consist of three series as follows: 400,000,000
shares of the Institutional series, 1,100,000 shares of the
Service Plan series and 850,000,000 shares of the
Distribution Plan series. The shares of each such series are
identical in all respects except with respect to the
allocation of a portion of the fees paid under the
Distribution and Service Plans and voting rights with respect
thereto. See "How to Buy Fund Shares--Distribution and
Service Plan." Shares of each portfolio class have equal non-
cumulative voting rights and equal rights with respect to
dividends declared 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 California
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. [/R]
36
<PAGE>
NUVEEN CALIFORNIA TAX-FREE MONEY MARKET FUND PROSPECTUS
TAXABLE EQUIVALENT YIELD TABLES
JULY 1, 1996
TAXABLE EQUIVALENT YIELD TABLES AND THE EFFECT OF TAXES AND
INTEREST RATES ON INVESTMENTS
The following tables show the combined effects for
individuals of federal and state income taxes on:
.what you would have to earn on a taxable investment to equal
a given tax-free yield; and
. the amount that those subject to a given combined tax rate
would have to put into a tax-free investment in order to
generate the same after-tax income as a taxable investment.
These tables are for illustrative purposes only and are not
intended to predict the actual return you might earn on a
Fund investment. The Funds occasionally may advertise 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 1996 marginal
federal tax rates and marginal state tax rates currently
available and scheduled to be in effect, and do not take into
account changes in tax rates that are proposed from time to
time. A taxpayer's marginal tax rate is affected by both his
taxable income and his adjusted gross income. The table
assumes that federal taxable income is equal to state income
subject to tax, and for cases in which more than one state
rate falls within a federal bracket, the highest state rate
corresponding to the highest income within that federal
bracket is used. The tables assume taxpayers are not subject
to any alternative minimum taxes and deduct any state income
taxes paid on their federal income tax returns. Unless noted
otherwise, the tables do not reflect any local taxes or any
taxes other than personal income taxes. They also reflect the
effect of the current federal tax limitations on itemized
deductions and personal exemptions, which were designed to
phase out certain benefits of these deductions for higher
income taxpayers. These limitations are subject to certain
maximums, which depend on the number of exemptions claimed
and the total amount of the taxpayer's itemized deductions.
For example, the limitation on itemized deductions will not
cause a taxpayer to lose more than 80% of his allowable
itemized deductions, with certain exceptions. The 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.
37
<PAGE>
Combined marginal tax rates for joint taxpayers with four
personal exemptions.
<TABLE>
<CAPTION>
Tax-Free Yield
-----------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
3.50% 4.00% 4.50% 5.00% 5.50% 6.00% 6.50%
-----------------------------------------------------------------------------
<CAPTION>
Federal
Federal Adjusted Combined
Taxable Gross State and
Income Income Federal
(1,000's) (1,000's) Tax Rate** Taxable Equivalent Yield
- ---------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
$ 0 - 40.1 $ 0 - 118.0 20.0% 4.38 5.00 5.63 6.25 6.88 7.50 8.13
40.1 - 96.9 0 - 118.0 34.5 5.34 6.11 6.87 7.63 8.40 9.16 9.92
118.0 - 177.0 35.5 5.43 6.20 6.98 7.75 8.53 9.30 10.08
96.9 -
147.7 0 - 118.0 37.5 5.60 6.40 7.20 8.00 8.80 9.60 10.40
118.0 - 177.0 38.5 5.69 6.50 7.32 8.13 8.94 9.76 10.57
177.0 - 219.9 40.5 5.88 6.72 7.56 8.40 9.24 10.08 10.92
147.7 - 263.8 118.0 - 177.0 43.0 6.14 7.02 7.89 8.77 9.65 10.53 11.40
177.0 - 219.9 45.5 6.42 7.34 8.26 9.17 10.09 11.01 11.93
219.9 - 244.9 46.5 6.54 7.48 8.41 9.35 10.28 11.21 12.15
244.9 - 299.5 46.0 6.48 7.41 8.33 9.26 10.19 11.11 12.04
Over 299.5 43.5 6.19 7.08 7.96 8.85 9.73 10.62 11.50
Over 263.8 177.0 - 219.9 49.0 6.86 7.84 8.82 9.80 10.78 11.76 12.75
219.9 - 244.9 50.0 7.00 8.00 9.00 10.00 11.00 12.00 13.00
244.9 - 299.5 49.5 6.93 7.92 8.91 9.90 10.89 11.88 12.87
Over 299.5 46.5 6.54 7.48 8.41 9.35 10.28 11.21 12.15
</TABLE>
38
<PAGE>
NUVEEN CALIFORNIA TAX-FREE MONEY MARKET FUND PROSPECTUS
JULY 1, 1996
Combined marginal tax rates for single taxpayers with one
personal exemption.
<TABLE>
<CAPTION>
Tax-Free Yield
-------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
3.50% 4.00% 4.50% 5.00% 5.50% 6.00% 6.50%
-------------------------------------------------------------------------
<CAPTION>
Federal
Federal Adjusted Combined
Taxable Gross State and
Income Income Federal
(1,000's) (1,000's) Tax Rate** Taxable Equivalent Yield
- -----------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
$ 0 -
$ 0 - 24.0 109.9 20.0% 4.38 5.00 5.63 6.25 6.88 7.50 8.13
24.0 -
58.2 0 - 109.9 34.5 5.34 6.11 6.87 7.63 8.40 9.16 9.92
58.2 - 121.3 0 - 109.9 37.5 5.60 6.40 7.20 8.00 8.80 9.60 10.40
109.9 -
118.0 38.0 5.65 6.45 7.26 8.06 8.87 9.68 10.48
118.0 -
134.9 39.5 5.79 6.61 7.44 8.26 9.09 9.92 10.74
134.9 -
240.5 39.0 5.74 6.56 7.38 8.20 9.02 9.84 10.66
121.3 -
121.3 - 263.8 134.9 44.0 6.25 7.14 8.04 8.93 9.82 10.71 11.61
134.9 -
240.5 44.0 6.25 7.14 8.04 8.93 9.82 10.71 11.61
Over 240.5 43.5 6.19 7.08 7.96 8.85 9.73 10.62 11.50
Over 263.8
Over 263.8 46.5 6.54 7.48 8.41 9.35 10.28 11.21 12.15
</TABLE>
For an equal after-tax return, your tax-free investment may
be less.*
<TABLE>
<CAPTION>
Your tax-free investment may be less*
------------------------------------------------------------------------------------
For an after-tax return
equal to that provided
by a 3.5% 4.0% 4.5% 5.0% 5.5% 6.0% 6.5%
- --------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
$50,000 in a 4% taxable
investment $35,714 $31,250 $27,778 $25,000 $22,727 $20,833 $19,231
$50,000 in a 5% taxable
investment 44,643 39,063 34,722 31,250 28,409 26,042 24,038
$50,000 in a 6% taxable
investment 53,571 46,875 41,667 37,500 34,091 31,250 28,846
$50,000 in a 7% taxable
investment 62,500 54,688 48,611 43,750 39,773 36,458 33,654
$50,000 in a 8% taxable
investment 71,429 62,500 55,556 50,000 45,455 41,667 38,462
</TABLE>
*Dollar amounts in the table reflect a 37.5% combined federal
and state tax rate.
**The State tax brackets are those for 1995. The 1996
brackets will be adjusted to changes in the California
Consumer Price Index. These adjustments have not yet been
released. The table reflects a decrease in state income tax
rates for high income taxpayers which is, under current law,
scheduled to take place beginning in 1996.
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.
39
<PAGE>
[LOGO OF NUVEEN]
Nuveen Tax-Free Money Market Funds
Application Form
Note: This application form may not be used for all types of accounts and
certain optional fund services. Please obtain special application materials
by checking the boxes in item 7 on the other side of this sheet. If you need
any assistance in completing this form, call Nuveen toll-free at 800.621.7227.
1 ACCOUNT REGISTRATION AND INFORMATION
Please check the box that describes the type of account you are opening, and
complete all the information which applies to your account type.
Note: Registration for two or more persons will be as joint tenants with right
of survivorship unless noted otherwise.
[_] Individual
Last name, first, initial Social security number
[_] Joint tenant (if any)
Last name, first, initial
[_] Gift to a minor
Name of trustee State name under the Uniform Gift to Minors Act
Minor's name (only one minor may be named) Minor's social security number
[_] Trust [_] Custodian
Trustee's or custodian's name Trust's agreement date (mandatory)
Trust's name Trust's taxpayer I.D. number
2 MAILING ADDRESS
Street address City, state, zip code
Daytime telephone number Evening telephone number
(include area code) (include area code)
3 FUND SELECTION
Please indicate in which Nuveen Fund(s) you would like to open an account and
the amount you would like to invest.
State funds may not be registered for sale in all states.
[_] Enclosed is my check in the amount payable to the Fund(s) indicated below.
[_] Funds in the amount listed below were wired to United Missouri Bank of
Kansas City.
Note: Please call Nuveen at 800.858.4084 to obtain an account number before
wiring funds.
Nuveen Money Market Funds
$ Tax-Free Reserves, Inc. (Minimum initial investment $1,000.)
- ----------------
$ California Tax-Free Money Market Fund (Minimum initial
- ----------------investment $5,000.)
$ Massachusetts Tax-Free Money Market Fund (Minimum initial
- ----------------investment $5,000.)
$ New York Tax-Free Money Market Fund (Minimum initial investment
- ----------------$5,000.)
Please enclose a separate check made payable to each fund in which you are
investing. If more than one fund is selected, any optional features chosen will
apply to all fund accounts. If you prefer to wire funds to an open account, or
need any assistance in completing this form, call Nuveen toll-free at
800.858.4084.
4 DISTRIBUTION OPTIONS
If no box is checked, all distributions from a Fund will be reinvested into the
same Fund.
[_] Dividends are to be paid by check.
[_] Capital gains are to be paid by check.
5 INFORMATION ABOUT YOUR FINANCIAL ADVISER
Please supply the name and address of your financial adviser so that they
will receive duplicate copies of your fund statements.
Financial adviser's name Firm name
Street address City, state, zip code
6 CERTIFICATION AND SIGNATURE(S)
Sign in ink exactly as the name (or names) appear above in section 1, Account
registration.
I certify that I have power and authority to establish this account and select
the options requested. I also release the Fund(s), Shareholder Services, Inc.
(SSI), John Nuveen & Co. Incorporated, United Missouri Bank of Kansas City,
N.A., First Interstate Bank of Denver, N.A. and their agents and representatives
from all liability and agree to indemnify each of them from any and all losses,
damages or costs for acting in good faith in accordance with instructions
believed to be genuine. With respect to the options identified on items #8, #9
and #11 of this application, I understand that the Fund(s), SSI and Nuveen will,
not be liable for following telephone instructions reasonably believed to be
genuine. I also understand that the Fund(s) employ procedures reasonably
designed to confirm that telephone instructions are genuine and if these
procedures are not followed, the Fund(s) may be liable for any losses due to
unauthorized or fraudulent telephone instructions. I agree that the
authorizations herein shall continue until SSI receives written notice of a
change or modification signed by all account owners. I understand that each
account is subject to the terms of the prospectus of the Nuveen fund selected,
as amended from time to time, and subject to acceptance by that Fund in Chicago,
Illinois and to the laws of Illinois. All terms shall be binding upon my heirs,
representatives and assigns. I certify that I have received and read the current
prospectus for each Fund I have selected. Under penalties of perjury, I certify
(1) that the number shown on this Application Form is my correct Social Security
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)
See reverse side for additional optional fund services.
Mail this completed application form to:
Nuveen Tax-Free Money Market Funds
P.O. Box 5330
Denver, Colorado 80217-5330
<PAGE>
[LOGO OF NUVEEN]
Nuveen
Tax-Free Money
Market Funds
Application
Form
Optional Fund Services
7 OPTIONAL FUND SERVICES
Please send me application materials for these optional fund services which are
described in the prospectus:
<TABLE>
<CAPTION>
<S> <C> <C>
[_] Automatic Deposit Plan [_] Automatic Withdrawal Plan [_] Fund Direct
[_] Payroll Direct Deposit Plan [_] UIT Reinvestment
</TABLE>
8 TEL-A-WIRE AUTHORIZATION
You can select Option A, Option B or both.
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.
[_] OPTION A
By completing this section, I elect to have redemption proceeds wired to my
personal checking, NOW or money market account at a commercial bank. (Attach a
check marked "void" and complete Option A.)
Name of bank Bank's routing code Bank's telephone number
(include area code)
Bank's street address Bank's city, state and zip code
Your bank account name Your bank account number
[_] OPTION B
By completing this section, I elect to have redemption proceeds wired in my name
to the commercial bank account of my financial adviser's firm. (A representative
of that firm must complete and sign the second part of Option B.)
Name of financial adviser's firm Firm's telephone number (include area code)
Firm's street address Firm's city, state and zip code
Your account name Your account number
If you have selected Option B, this section must be completed by your financial
adviser.
Name of bank of financial adviser's firm Bank's telephone number Routing code
(include area code)
Bank's street address Bank's city, state and zip code
Bank's account number Financial adviser's signature Date
9 TEL-A-CHECK AUTHORIZATION
[_] I hereby authorize the Fund and its agents to honor telephone instructions
to redeem shares worth $50,000 or less from my account and send those proceeds
by check payable to me to my address of record, subject to the terms and
conditions described in the prospectus.
10 CHECK REDEMPTION AUTHORIZATION
You must check the box to elect this option.
[_] 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 below carefully before completing this section
and return the completed signature card with this application form.
Joint accounts.
You must complete this section to elect this option.
[_] Either owner of the fund(s) may sign redemption checks.
[_] All owners of the fund(s) are required to sign redemption checks.
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 payable through the United Missouri Bank of Kansas City, N.A. (the
"Bank").
B. Check forms will not be issued until a completed signature card is received
by the Fund.
C. Checks requiring redemption of shares held for 15 days or less that were
not purchased by "wire transfer" of federal funds or for which there are
insufficient shares to cover payment will not be honored.
D. Unless one signer is authorized on the account application form and
signature card, each check must be signed by all account owners or it will
not be honored. If SSI receives written notice by either owner of a
revocation of the authorization to sign individually, 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.
G. The account owner agrees to examine confirmations and cancelled checks and
to notify SSI of any unauthorized or missing signature or endorsement or
alteration 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.
11 TELEPHONE EXCHANGE AUTHORIZATION
You must check the box to elect this option.
[_] I hereby authorize the fund and its agents to honor telephone instructions
to invest redemption proceeds from the fund into other Nuveen Mutual Funds,
subject to the terms and conditions described in the prospectus.
Mail the completed application form to:
Nuveen Tax-Free Money Market Funds
P.O. Box 5330
Denver, Colorado 80217-5330
- --------------------------------------------------------------------------------
Internal use only
Check writing signature card
Please indicate the Nuveen Fund(s) to the right for which this signature card
applies.
In order to process this card, you must write your account number in the space
provided.
[_] Nuveen Tax-Free Reserves, Inc.
[_] Nuveen California Tax-Free Money Market Fund, Inc.
[_] Nuveen Massachusetts Tax-Free Money Market Fund, Inc.
[_] Nuveen New York Tax-Free Money Market Fund, Inc.
Customer account number
Please print the names of the registered owners or legal representatives and
sign in the space provided below.
[_] Check here if more than one signature will be required on checks.
1. Authorized account signer 2. Authorized account signer
1. Authorized account signature 2. Authorized account signature
<PAGE>
PRINCIPAL UNDERWRITER
John Nuveen & Co. Incorporated
Investment Bankers
333 West Wacker Drive
Chicago, Illinois 60606
312.917.7700
INVESTMENT ADVISER
Nuveen Advisory Corp.
Subsidiary of John Nuveen & Co.
Incorporated
333 West Wacker Drive
Chicago, Illinois 60606
CUSTODIAN
The Chase Manhattan Bank, N.A.
770 Broadway
New York, New York 10003
TRANSFER AND SHAREHOLDER SERVICES
AGENT
Shareholder Services, Inc.
P.O. Box 5330
Denver, Colorado 80217
INDEPENDENT PUBLIC ACCOUNTANTS
FOR THE FUNDS
Arthur Andersen LLP
33 West Monroe Street
Chicago, Illinois 60603
LOGO
MPR-2-6.6
LOGO
John Nuveen & Co. Incorporated
333 West Wacker Drive
Chicago, Illinois 60606-1286
<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
July 1, 1996
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 July 1,
1996 (together, the "Prospectuses").
<TABLE>
<S> <C>
Table of Contents Page
- --------------------------------------------------------------------------
Fundamental Policies and Investment Portfolio 2
- --------------------------------------------------------------------------
Management 33
- --------------------------------------------------------------------------
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 Plan 62
- --------------------------------------------------------------------------
Independent Public Accountants and Custodian 64
- --------------------------------------------------------------------------
</TABLE>
The audited financial statements for the fiscal year ended February 29, 1996,
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 PORTFOLIO
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 invest-
ments, 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 disposition
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 invest-
ments 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 having
a market value at the time of pledge not exceeding 10% of the value of the
Fund's total assets;
(5) Issue senior securities as defined in the Investment Company Act of 1940,
except to the extent such issuance might be involved with respect to borrowings
described under item (3) above or with respect to transactions involving
futures contracts or the writing of options within the limits described 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 un-
less an excess or deficiency occurs or exists immediately after and as a re-
sult of an acquisition of securities, unless otherwise indicated.
The foregoing fundamental investment policies, together with the investment
objective of each Fund, cannot be changed without approval by holders of a
"majority of the Fund's outstanding voting shares." As defined in the Invest-
ment 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
Obligations that constitute participations in a lease obligation or install-
ment purchase contract obligation (hereafter collectively called "lease obli-
gations") of a municipal authority or entity. Although lease obligations do
not consti-
4
<PAGE>
tute general obligations of the municipality for which the municipality's tax-
ing 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-ap-
propriation" clauses which provide that the municipality has no obligation to
make lease or installment purchase payments in future years unless money is ap-
propriated for such purpose on a yearly basis. Although non-appropriation lease
obligations are secured by the leased property, disposition of the property in
the event of foreclosure might prove difficult. These Funds will seek to mini-
mize the special risks associated with such securities by not investing more
than 10% of their 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 municipality, (2) the lease pay-
ments 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 obligor prohibiting the substitu-
tion or purchase of similar equipment if lease payments are not appropriated,
(4) the lease obligor has maintained good market acceptability in the past, (5)
the investment is of a size that will be attractive to institutional investors,
and (6) the underlying leased equipment has elements of portability and/or use
that enhance its marketability in the event foreclosure on the underlying
equipment were ever required. Lease obligations 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 highest
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 Obliga-
tions of investment grade quality in the opinion of Nuveen Advisory, with no
fixed percentage limitations on these unrated California Municipal Obligations
and (3) temporary investments as described below, the income from which may be
subject to California income tax or to both federal and California income tax-
es.
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. Gov-
ernment or U.S. Government agency securities to ensure timely payment of prin-
cipal 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 specific
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 in-
surance policy applicable to a specific security and obtained by the Fund or a
third party subsequent to the time of original issuance ("Secondary Market In-
surance"), or (3) covered by a master municipal insurance
5
<PAGE>
policy purchased by the California Insured Fund ("Portfolio Insurance"). The
California Insured Fund currently maintains a policy of Portfolio Insurance
with MBIA Insurance Corporation, AMBAC Indemnity Corporation, Financial Secu-
rity Assurance, Inc., and Financial Guaranty Insurance Company, and may in the
future obtain other policies of Portfolio Insurance, depending on the avail-
ability of such policies on terms favorable to the Fund. However, the Califor-
nia Insured Fund may determine not to obtain such policies and to emphasize in-
vestments in California Municipal Obligations insured under Original Issue In-
surance or Secondary Market Insurance. In any event, the California 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 In-
sured Fund currently intends to obtain insurance policies only from mono-line
insurers specializing in insuring municipal debt. California Municipal Obliga-
tions covered by Original Issue Insurance or Secondary Market Insurance 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 gener-
ally 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 Municipal Obli-
gations insured under Portfolio Insurance will be based primarily upon the
credit characteristics of the issuers without regard to the insurance feature,
and will generally carry a rating that is below Aaa or AAA. While in the port-
folio of the California Insured Fund, however, a California Municipal Obliga-
tion 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
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
6
<PAGE>
remaining scheduled debt service on the California Municipal Obligations, and
(2) issued under state or local housing finance programs which use the issu-
ance 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 California Municipal Obligations, the insurer shall suc-
ceed to the rights of the California Insured Fund with respect to such pay-
ment.
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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 under any policy of Portfolio
Insurance that the California Insured Fund may purchase. All premiums respect-
ing California Municipal Obligations covered by Original Issue Insurance or
Secondary Market Insurance are paid in advance by the issuer or other party ob-
taining the insurance.
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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.
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.
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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 be-
tween 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 California
Municipal Obligations. Except as described above with respect to securities
covered by Portfolio Insurance that are in default or subject to significant
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 Munici-
pal 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 obtained 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 Market Insurance will
remain in effect as long as California Municipal Obligations covered thereby
are outstanding, such insurance may enhance the marketability of such securi-
ties, even when such securities are in default or in significant risk of de-
fault, but the exact effect, if any, on marketability cannot be estimated. Ac-
cordingly, the California Insured Fund may determine to retain or, alternative-
ly, to sell California Municipal Obligations covered by Original Issue Insur-
ance 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 pol-
icy 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 char-
acteristics of the California Municipal Obligations held by the California In-
sured Fund, the annual premium rate for policies of Portfolio Insurance is es-
timated to range from .15% to .30% of the value of the California Municipal Ob-
ligations covered under the policy. Because the majority of the California Mu-
nicipal Obligations in the California Insured Fund were not covered by policies
of Portfolio Insurance during the fiscal year ended February 29, 1996, total
premiums as a percentage of the value of the California Municipal Obligations
held by the California Insured Fund for such period were .01%.
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, the Territory
of Guam and the Commonwealth of Puerto Rico, with admitted
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assets of approximately $2,440,000,000 (unaudited) and statutory capital of
approximately $1,387,000,000 (unaudited) as of March 31, 1996. Statutory capi-
tal consists of AMBAC Indemnity's policyholders' surplus and statutory contin-
gency reserve. AMBAC Indemnity is a wholly-owned subsidiary of AMBAC, Inc., a
100% publicly-held company. Moody's, S&P and Fitch Investors Service, L.P.
each have assigned a triple-A claims-paying 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 In-
demnity under policy provisions substantially identical to those contained in
its municipal bond insurance policy shall be treated for federal income tax
purposes 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 51.1% owned by U S WEST Capital Corpora-
tion, 8% owned by Fund American Enterprises Holdings, Inc. and 6% 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. Finan-
cial Security is domiciled in the State of New York and is subject to regula-
tion by the State of New York Insurance Department. As of December 31, 1995,
the total policyholders' surplus and contingency reserves and the total un-
earned premium reserve, respectively, of Financial Security and its consoli-
dated subsidiaries were, in accordance with statutory accounting principles,
approximately $644,653,000 (audited) and $376,597,000 (audited), 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 $789,986,000 (audited)
and $330,350,000 (audited). Copies of Financial Security's financial state-
ments may be obtained by writing 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
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liability association. 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 Is-
lands of the United States and the Territory of Guam.
As of December 31, 1994, MBIA had admitted assets of $3.4 billion (audited),
total liabilities of $2.3 billion (audited), and total capital and surplus of
$1.1 billion (audited) determined in accordance with statutory accounting prac-
tices prescribed or permitted by insurance regulatory authorities. As of Decem-
ber 31, 1995, MBIA had admitted assets of $3.8 billion (audited), total liabil-
ities of $2.5 billion (audited), and total capital and surplus of $1.3 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.
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.
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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 by registered or certified mail, by MBIA from the paying agent or the
California 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 nonpay-
ment, 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 suc-
cessor, sufficient for the payment of any such insured amounts which are then
due. Upon presentment and surrender of such Municipal Obligations or present-
ment of such other proof of ownership of the Municipal Obligations, together
with any appropriate 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 Cal-
ifornia Insured Fund in any legal proceeding related to payment of insured
amounts on Municipal Obligations, such instruments being in a form satisfactory
to State Street Bank and Trust Company, N.A., State Street Bank and Trust Com-
pany, 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 le-
gally 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 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 shareholders pursu-
ant to the United States Bankruptcy Code by a trustee in bankruptcy in accor-
dance with a final, nonappealable order of a court having competent jurisdic-
tion.
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
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Trustee the face amount of principal and interest which is then due for payment
but is unpaid 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 principal or interest due for payment and (ii) evidence, including any ap-
propriate instruments of assignment, that all of the rights to payment of such
principal or interest due for payment thereupon shall vest in Financial Guaran-
ty. 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 March 31, 1996, the total
capital and surplus of Financial Guaranty was approximately $1,032,675,000. Fi-
nancial 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).
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; Financial Guaranty also has a AAA rating
from Fitch.
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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.
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
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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.
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
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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 later sold, but a Fund will not engage in
trading solely to recognize a gain. In addition, a security may be sold and an-
other of comparable quality purchased at approximately the same time to take
advantage of what Nuveen Advisory believes to be a temporary disparity in the
normal yield 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 investments are known as "portfolio turnover."
While it is impossible to predict future portfolio turnover rates, each Fund's
annual portfolio turnover rate is generally not expected to exceed 50%. Howev-
er, 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
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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 February 29, 1996 were 36% and 38%, respective-
ly, and for the fiscal year ended February 28, 1995, were 32% and 25%, respec-
tively.
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.
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
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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.
During the early 1990's, California experienced significant financial difficul-
ties, which reduced its credit standing, but the state's finances have improved
since 1994. The ratings of certain related debt of other issuers for which Cal-
ifornia has an outstanding lease purchase, guarantee or other contractual obli-
gation (such as for state-insured hospital bonds) are generally linked directly
to California's rating. Should the financial condition of California deterio-
rate again, its credit ratings could be further reduced, and the market value
and marketability of all outstanding notes and bonds issued by California, its
public authorities or local governments could be adversely affected.
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 more than 32 million represents over
12% of the total United States population and grew by 27% in the 1980s. Total
personal income in the State, at an estimated $703 billion in 1994, accounts
for almost 13% of all personal income in the nation. Total employment is over
14 million, the majority of which is in the service, trade and manufacturing
sectors.
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 has occurred since early 1994. Pre-recession job levels are expected to
be reached in 1996. Unemployment, while remaining higher than the national av-
erage, has come down substantially from its 10% peak in January. Economic indi-
cators show a steady recovery underway in California since the start of 1994.
However, any delay or reversal of the recovery may create new shortfalls in
State revenues.
Constitutional and Statutory 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 were $6.5 billion under the limit for fiscal
year 1995-96.
A 1986 initiative statute, called "Proposition 62," imposed additional limits
on local governments, by requiring either majority or 2/3 voter approval for
any increases in "general taxes" or "special taxes," respectively (other than
property taxes, which are unchangeable). Court decisions had struck down most
20
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of Proposition 62 and many local governments, especially cities, had enacted or
raised local "general taxes" without voter approval. In September, 1995, the
California Supreme Court overruled the prior cases, and upheld the constitu-
tionality of Proposition 62. Many aspects of this decision remain unclear (such
as its impact on charter (home rule) cities, and whether it will have retroac-
tive effect), but its future effect will be to further limit the fiscal flexi-
bility of many local governments.
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 is
not currently possible to determine fully the impact of Article XIIIA or Arti-
cle XIIIB on California Municipal Obligations or on the ability of the State or
local governments to pay debt service on such California Municipal Obligations.
It is not possible, at the present time, to predict the outcome of any pending
litigation with respect to the ultimate scope, impact or constitutionality of
either Article XIIIA or Article XIIIB, or the impact of any such determinations
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 lo-
cal issuers to repay their obligations.
Obligations of the State of California
Under the California Constitution, debt service on outstanding general obliga-
tion bonds is the second charge to the General Fund after support of the public
school system and public institutions of higher education. Total outstanding
general obligation bonds and lease purchase debt of California increased from
$9.4 billion at June 30, 1987 to $23.8 billion at February 1, 1996. In FY 1994-
95, debt service on general obligation bonds and lease purchase debt was ap-
proximately 5.3% of General Fund revenues.
Recent Financial Results
The principal sources of General Fund revenues in 1994-1995 were the California
personal income tax (43% of total revenues), the sales tax (34%), bank and cor-
poration taxes (13%), 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 was budgeted from 1992-93, to 1995-96 because revenues had been reduced
by the recession and an accumulated budget deficit had to be repaid.
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%).
21
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Since the start of the 1990-91 fiscal year, the State has faced adverse eco-
nomic, fiscal, and budget conditions. The economic recession seriously af-
fected State tax revenues. It also caused increased expenditures for health
and welfare 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) growing at rates significantly higher than
the growth rates for the principal revenue sources of the General Fund. These
structural concerns will be exacerbated in coming years by the expected need
to substantially increase capital and operating funds for corrections as a re-
sult of a "Three Strikes" law enacted in 1994.
Recent Budgets. As a result of these factors, among others, from the late
1980's until 1992-93, the State had a period of nearly chronic budget imbal-
ance, with expenditures exceeding revenues in four out of six years, and the
State accumulated and sustained a budget deficit in the budget reserve, the
SFEU approaching $2.8 billion at its peak at June 30, 1993. Starting in the
1990-91 Fiscal Year and for each year thereafter, each budget required
multibillion dollar actions to bring projected revenues and expenditures into
balance and to close large "budget gaps" which were identified. The Legisla-
tive and Governor eventually agreed on a number of different steps to produce
Budget Acts in the Years 1991-92 to 1995-96, including:
. significant cuts in health and welfare program expenditures;
. transfers of program responsibilities and some funding sources from the
State to local governments, coupled with some reduction in mandates on lo-
cal government;
. transfer of about $3.6 billion in annual local property tax revenues from
cities, counties, redevelopment agencies and some other districts to local
school districts, thereby reducing state funding for schools;
. reduction in growth of support for higher education programs, coupled with
increases in student fees;
. revenue increases (particularly in the 1992-92 Fiscal Year budget), most of
which were for a short duration;
. increased reliance on aid from the federal government to offset the costs
of incarcerating, educating and providing health and welfare services to
undocumented aliens (although these efforts have produced much less federal
aid than the State Administration had requested); and
. various one-time adjustment and accounting changes.
Despite these budget actions, the effects of the recession led to large unan-
ticipated deficits in the SFEU, as compared to projected positive balances. By
the start of the 1993-94 Fiscal Year, the accumulated deficit was so large
(almost $2.8 billion) that it was impractical to budget to retire it in one
year, so a two-year program was implemented, using the issuance of revenue an-
ticipation warrants to carry a portion of the deficit over the end of the fis-
cal year. When the economy failed to recover sufficiently in 1993-94, a second
two-year plan was implemented in 1994-95, to carry the final retirement of the
deficit into 1995-96.
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The combination of stringent budget actions cutting State expenditures, and
the turnaround of the economy by late 1993, finally led to the restoration of
positive financial results. While General Fund revenues and expenditures were
essentially equal in FY 1992-93 (following two years of excess expenditures
over revenues), the General Fund had positive operating results in FY 1993-94,
1994-95, and 1995-96 which have reduced the accumulated budget deficit to
about $70 million as of June 30, 1996.
A consequence of the accumulated budget deficits in the early 1990's, together
with other factors such as disbursement of funds to local school districts
"borrowed" from future fiscal years and hence not shown in the annual budget,
was to significantly reduce the State's cash resources available to pay its
ongoing obligations. When the Legislature and the Governor failed to adopt a
budget for the 1992-93 Fiscal Year by July 1, 1992, which would have allowed
the State to carry out its normal annual cash flow borrowing to replenish its
cash reserves, the State Controller was forced to issue approximately $3.8
billion of registered warrants ("IOUs") over a 2-month period to pay a variety
of obligations representing prior years' or continuing appropriations, and
mandates from court orders.
The State's cash condition became so serious that from late spring 1992 until
1995, the State had to rely on issuance of short term notes which matured in a
subsequent fiscal year to finance its ongoing deficit, and pay current obliga-
tions. With the repayment of the last of these deficit notes in April, 1996,
the State does not plan to rely further on external borrowing across fiscal
years, but will continue its normal cash flow borrowings during a fiscal year.
Current Budget. For the first time in four years, the State entered the 1995-
96 fiscal year with strengthening revenues based on an improving economy. The
major feature of the Governor's proposed Budget, a 15% phased cut in personal
income and business taxes, was rejected by the Legislature.
The 1995-96 Budget Act was signed by the Governor on August 3, 1995, 34 days
after the start of the fiscal year. The Budget Act projected General Fund rev-
enues and transfers of $44.1 billion, a 3.5 percent increase from the prior
years. Expenditures were budgeted at $43.4 billion, a 4 percent increase. A
principal feature of the 1995-96 Budget Act, in addition to those noted above
was the first significant increase in per-pupil funding for public schools and
community colleges in four years.
In its regular budget update in May, 1996, the Department of Finance indicated
that, with the strengthening economy, State General Fund revenues for 1995-96
would be about $46.1 billion, some $2 billion higher than originally estimat-
ed. Because of mandated spending for public schools, the failure to receive
expected federal aid for illegal immigrants, and the failure of Congress to
enact welfare reform which the Administration had expected would reduce State
costs, expenditures for 1995-96 were also increased, to about $45.4 billion.
As a result, the Department estimated that the accumulated budget deficit
would be reduced to about $70 million as of June 30, 1996.
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As a result of the improved revenues, that State's cash position has substan-
tially recovered. Only $2 billion of cash flow borrowing was needed during
1995-96, and only about $3 billion is projected for 1996-97, with no external
borrowing over the end of the fiscal year.
The Governor's proposed budget for 1996-97 projects $47.1 billion of revenues
and transfers, and $46.5 billion of expenditures, resulting in a budget reserve
at June 30, 1997 of about $500 million. A number of issues related to the 1996-
97 budget still have to be resolved, including the Governor's tax reduction
proposals, and his proposals for further health and welfare cuts.
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 default.
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. Trial courts have recently entered tentative decisions or injunctions
which would overturn several parts of the state's recent budget compromises.
The matters covered by these lawsuits include a deferral of payments by Cali-
fornia to the Public Employees Retirement System, reductions in welfare pay-
ments and the use of certain cigarette tax funds for health costs. All of these
cases are subject to further proceedings and appeals, and if California eventu-
ally loses, the final remedies may not have to be implemented in one year.
Obligations of Other Issuers
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.
State Assistance. Property tax revenues received by local governments declined
more than 50% following passage of Proposition 13. Subsequently, the California
Legislature enacted measures to provide for the redistribution of the State's
General Fund surplus to local agencies, the reallocation of certain State reve-
nues 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 implementing reductions
in certain aid programs. To reduce State General Fund support for school dis-
tricts, the 1992-93 and 1993-94 Budget Acts caused local governments to trans-
fer $3.9 billion of property tax revenues
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to school districts, representing loss of the post-Proposition 13 "bailout"
aid. Local governments have in return received greater revenues and greater
flexibility to operate health and welfare programs. To the extent the State
should be constrained by its Article XIIIB appropriations limit, or its obliga-
tion to conform to Proposition 98, or other fiscal considerations, the absolute
level, or the rate of growth, of State assistance to local governments may con-
tinue to be reduced. Any such reductions in State aid
could compound the serious fiscal constraints already experienced by many local
governments, particularly counties. At least one rural county (Butte) publicly
announced that it might enter bankruptcy proceedings in August 1990, although
such plans were put off after the Governor approved legislation to provide ad-
ditional funds for the county. Other counties have also indicated that their
budgetary condition is extremely grave. Los Angeles County, the largest in the
State, faced a nominal $1.2 billion gap in its 1995-96 budget, half of which
was in the County health care system. The gaps were closed only with signifi-
cant cuts in services and personnel, particularly in the health care system,
federal aid, and transfer of some funds from other local governments to the
County pursuant to special legislation. The County's debt was downgraded by
Moody's and S&P in the summer of 1995. Orange County, just emerged from Federal
Bandruptcy Court protection in June 1996, has significantly reduced county
services and personnel, and faces strict financial conditions following large
investment fund losses in 1994 which resulted in bankruptcy.
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
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holders, in which the State was a named defendant (on the grounds that it con-
trolled the District's finances). One of the defenses raised in answer to this
lawsuit was the invalidity of the original lease transaction. The trial court
has upheld the validity 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 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. Northern California in 1989 and Southern California in
1994 experienced major earthquakes causing billions of dollars in damages. The
federal government provided more than $13 billion in aid for both earthquakes,
and neither event is expected to have any long-term negative economic impact.
Any California Municipal Obligation in the Fund could be affected by an inter-
ruption of revenues because of
26
<PAGE>
damaged facilities, or, consequently, income tax deductions for casualty losses
or property tax assessment 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 con-
tracts of insurance in the event of widespread losses; or (iii) the federal or
State government to appropriate sufficient funds within their respective budget
limitations.
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 portfolio securities against declines in the value of
such securities, and to hedge against increases in the cost of securities a
Fund intends to purchase. To accomplish such hedging, a Fund may take an in-
vestment 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" or "secured" op-
tions, wherein the securities or cash required to be delivered upon exercise
are held by a Fund, with such cash being maintained in a segregated account.
These requirements and limitations may limit a Fund's ability to engage in
hedging transactions.
27
<PAGE>
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 de-
signed 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 instruments and financial
indexes are traded in securities markets regulated by the Securities and Ex-
change Commission. Although futures contracts and options on specified finan-
cial instruments call for settlement by delivery of the financial 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 settlement 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 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 re-
quirements at a time when it may be disadvantageous to do so. The inability to
close out futures positions
28
<PAGE>
also could have an adverse 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 movements
within a given time frame. To the extent these prices remain stable during the
period in which a futures contract is held by a Fund or moves in a direction
opposite to that anticipated, the Fund may realize a loss on the hedging trans-
action 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 contracts
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 partially 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:
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.
29
<PAGE>
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 obligations of the issuer. A decline in the receipt of pro-
jected revenues, such as anticipated revenues from another level of government,
could adversely affect an issuer's ability to meet its obligations on outstand-
ing 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 interest 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.
- -- 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.
30
<PAGE>
- -- 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 Trea-
sury or supported by the issuing agencies' right to borrow from the Treasury.
There can be no assurance that the United States Government itself will pay in-
terest 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 de-
clines, and might incur disposition costs or experience delays in connection
with liquidating the collateral. In addition, if bankruptcy proceedings are
commenced with respect to the seller of the security, realization upon the col-
lateral 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
31
<PAGE>
value of the collateral to at least that of the repurchase 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 on page 16.
RATINGS OF INVESTMENTS
The four highest ratings of Moody's for Municipal Obligations are Aaa, Aa, A
and Baa. Municipal Obligations rated Aaa are judged to be of the "best quali-
ty." The rating of Aa is assigned to Municipal Obligations which are of "high
quality by all standards," but as to which margins of protection or other ele-
ments make long-term risks appear somewhat larger than in Aaa rated Municipal
Obligations. The Aaa and Aa rated Municipal Obligations comprise what are gen-
erally known as "high grade bonds." Municipal Obligations that are rated A by
Moody's possess many favorable investment attributes and are considered upper
medium grade obligations. Factors giving security to principal and interest of
A rated Municipal Obligations are considered adequate, but elements may be
present, which suggest a susceptibility to impairment sometime in the future.
Municipal Obligations rated Baa by Moody's are considered medium grade obliga-
tions (i.e., they are neither highly protected nor poorly secured). Such bonds
lack outstanding investment characteristics and in fact have speculative char-
acteristics as well. Moody's bond rating symbols may contain numerical modifi-
ers of a generic rating classification. The modifier 1 indicates that the bond
ranks at the high end of its category; the modifier 2 indicates a mid-range
ranking; and the modifier 3 indicates that the issue ranks in the lower end of
its general rating category.
The four highest ratings of S&P for Municipal Obligations are AAA, AA, A and
BBB. Municipal Obligations rated AAA have an extremely strong capacity to pay
principal and interest. The rating of AA indicates that capacity to pay princi-
pal and interest is very strong and such bonds differ from AAA issues only in
small degree. The category of A describes bonds which have a strong capacity to
pay principal and interest, although such bonds are somewhat more susceptible
to the adverse effects of changes in circumstances and economic conditions. The
BBB rating is the lowest "investment grade" security rating by S&P. Municipal
Obligations rated BBB are regarded as having an adequate capacity to pay prin-
cipal and interest. Whereas such bonds normally exhibit adequate protection pa-
rameters, adverse economic conditions are more likely to lead to a weakened ca-
pacity to pay principal and interest for bonds in this category than for bonds
in the A category.
The "Other Corporate Obligations" category of temporary investments are corpo-
rate (as opposed to municipal) debt obligations rated AAA by S&P or Aaa by
Moody's. Corporate debt obligations rated AAA by S&P have an extremely strong
capacity to pay principal and interest. The Moody's corporate debt rating of
Aaa is comparable to that set forth above for Municipal Obligations.
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 obliga-
32
<PAGE>
tions with ample margins of protection. The designation SP-1 indicates a very
strong or strong capacity to pay principal and interest while the designation
SP-2 denotes a satisfactory capacity to pay principal and interest.
The Funds' ability to purchase 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. Issuers rated P-1 have a superior capacity for re-
payment of short-term obligations normally evidenced by the following charac-
teristics: leading market positions in well-established industries; high rates
or return on funds employed; conservative capitalization structures with mod-
erate 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 financial markets and assured sources of al-
ternative liquidity. Issuers rated Prime-2 have a strong capacity for repay-
ment of short-term promissory obligations. The designation A-1 indicates that
the degree of safety regarding timely payment is very strong, while the desig-
nation 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
portfolio, but Nuveen Advisory will consider such an event in its determina-
tion of whether the Fund should continue to hold such obligation.
MANAGEMENT
The management of Nuveen California Tax-Free Fund, Inc., including general su-
pervision of the duties performed for the Funds under the Investment Manage-
ment Agreement, is the responsibility of its directors. Nuveen California Tax-
Free Fund, Inc. currently has six directors, two of whom are "interested per-
sons" (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>
Timothy R. 47 Chairman of the Chairman (since July 1, 1996) and Director,
Schwertfeger* Board and Di- formerly Executive Vice President of The
333 West Wacker rector John Nuveen Company (since March 1992) and
Drive of John Nuveen & Co. Incorporated; Chairman
Chicago, IL 60606 (since July 1, 1996) and Director (since
October 1, 1992) of Nuveen Advisory Corp.
and Nuveen Institutional Advisory Corp.
</TABLE>
- -------------------------------------------------------------------------------
33
<PAGE>
<TABLE>
<CAPTION>
POSITIONS AND
OFFICES WITH PRINCIPAL OCCUPATIONS
NAME AND ADDRESS AGE FUNDS DURING PAST FIVE YEARS
- --------------------------------------------------------------------------------------
<S> <C> <C> <C>
Anthony T. Dean* 51 President and President (since July 1, 1996) and Direc-
333 West Wacker Director tor, formerly Executive Vice President of
Drive The John Nuveen Company (since March 1992)
Chicago, IL 60606 and of John Nuveen & Co. Incorporated;
President (since July 1, 1996) and Director
(since October 1, 1992) of Nuveen Advisory
Corp. and Nuveen Institutional Advisory
Corp.
- --------------------------------------------------------------------------------------
Lawrence H. Brown 61 Director Retired (August 1989) as Senior Vice Presi-
201 Michigan Avenue dent of The Northern Trust Company.
Highwood, IL 60040
- --------------------------------------------------------------------------------------
Anne E. Impellizzeri 63 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- 69 Director Helen Ross Professor of Social Welfare Pol-
heim icy, School of Social Service Administra-
969 East 60th Street tion, University of Chicago.
Chicago, IL 60637
- --------------------------------------------------------------------------------------
Peter R. Sawers 63 Director Adjunct Professor of Business and Econom-
22 The Landmark ics, University of Dubuque, Iowa; Adjunct
Northfield, IL 60093 Professor, Lake Forest Graduate School of
Management, Lake Forest, Illinois (since
January 1992); prior thereto, Executive Di-
rector, Towers Perrin Australia (management
consultant); Chartered Financial Analyst;
Certified Management Consultant.
- --------------------------------------------------------------------------------------
William M. Fitzger- 32 Vice President Vice President of Nuveen Advisory Corp.
ald (since December 1995); Assistant Vice Pres-
33 West Wacker Drive ident of Nuveen Advisory Corp. (from Sep-
Chicago, Illinois tember 1992 to December 1995), prior
60606 thereto Assistant Portfolio Manager of
Nuveen Advisory Corp. (from June 1988 to
September 1992).
- --------------------------------------------------------------------------------------
Kathleen M. Flanagan 49 Vice President Vice President of John Nuveen & Co. Incor-
333 West Wacker porated
Drive
Chicago, IL 60606
- --------------------------------------------------------------------------------------
J. Thomas Futrell 40 Vice President Vice President of Nuveen Advisory Corp.
333 West Wacker
Drive
Chicago, IL 60606
- --------------------------------------------------------------------------------------
Steven J. Krupa 38 Vice President Vice President of Nuveen Advisory Corp.
333 West Wacker
Drive
Chicago, IL 60606
- --------------------------------------------------------------------------------------
Anna R. Kucinskis 50 Vice President Vice President of John Nuveen & Co. Incor-
333 West Wacker porated.
Drive
Chicago, IL 60606
- --------------------------------------------------------------------------------------
</TABLE>
34
<PAGE>
<TABLE>
<CAPTION>
POSITIONS AND
OFFICES WITH PRINCIPAL OCCUPATIONS
NAME AND ADDRESS AGE FUNDS DURING PAST FIVE YEARS
- --------------------------------------------------------------------------------------
<S> <C> <C> <C>
Larry W. Martin 44 Vice President Vice President (since September 1992), As-
333 West Wacker and Assistant sistant Secretary and Assistant General
Drive Secretary Counsel of John Nuveen & Co. Incorporated;
Chicago, IL 60606 Vice President (since May 1993) and Assis-
tant Secretary of Nuveen Advisory Corp;
Vice President (since May 1993) and Assis-
tant Secretary (since January 1992) of
Nuveen Institutional Advisory Corp.; Assis-
tant Secretary of The John Nuveen Company
(since February 1993).
- --------------------------------------------------------------------------------------
O. Walter Renfftlen 56 Vice President Vice President and Controller of The John
333 West Wacker and Controller Nuveen Company (since March 1992), John
Drive Nuveen & Co. Incorporated, Nuveen Advisory
Chicago, IL 60606 Corp. and Nuveen Institutional Advisory
Corp. (since April 1990).
- --------------------------------------------------------------------------------------
Thomas C. Spalding, 44 Vice President Vice President of Nuveen Advisory Corp. and
Jr. Nuveen Institutional Advisory Corp.; Chart-
333 West Wacker ered Financial Analyst.
Drive
Chicago, IL 60606
- --------------------------------------------------------------------------------------
H. William Stabenow 61 Vice President Vice President and Treasurer of The John
333 West Wacker and 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).
- --------------------------------------------------------------------------------------
James J. Wesolowski 45 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 39 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>
- --------------------------------------------------------------------------------
Timothy R. Schwertfeger and Margaret K. Rosenheim serve as members of the Exec-
utive 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
53 Nuveen closed-end funds.
35
<PAGE>
The following table sets forth compensation paid by the Nuveen California Tax-
Free Fund, Inc. during the fiscal year ended February 29, 1996 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............................ 1,551 55,500
Anne E. Impellizzeri......................... 1,551 63,000
John E. O'Toole.............................. 1,235 47,000
Margaret K. Rosenheim........................ 1,894(2) 62,322(3)
Peter R. Sawers.............................. 1,551 55,500
</TABLE>
- --------
*Mr. Franke retired as of June 30, 1996.
(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 53 Nuveen
closed-end funds.
(2) Includes $189 in interest earned on deferred compensation from prior years.
(3) Includes $1,572 in interest earned on deferred compensation from prior
years.
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.
36
<PAGE>
On June 5, 1996, 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
June 5, 1996, 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..................... J. Andrew Kitzman & 6.41%
Hazel Lloyd Kitzman CDTR
UA JUL 02 82
Kitzman Family Trust
10558 Grandview Dr. #4063
La Mesa, CA 91941-6905
California Fund
Class C Shares..................... Paul R. Hoeber 20.88%
611 Bay St., No. 4
San Francisco, CA 94133
NFSC FEBO # OFP-002135 14.11%
Michele Chiapella
103 Northwood Commons
Chico, CA 95926
Thomas K. Larson & 7.35%
Melanie P. Larson
JT Ten WROS NOT TC
142 Via Novella
Aptos, CA 95003-5841
Charlotte N. Feo Tr. 6.98%
UA DEC 06 79
Charlotte N. Feo Family
Trust
530 Galleon Way
Seal Beach, CA 90740-5939
John C. MacGregor-Scott & 6.79%
Ian G. MacGregor-Scott
JT TEN WROS NOT TC
720 W. Camino Real Ave #520
Arcadia, CA 91007-7839
California Fund
Class R Shares..................... Smith Barney Shearson 5.16%
001196D1999
388 Greenwich Street
New York, NY 10013
</TABLE>
37
<PAGE>
<TABLE>
<CAPTION>
PERCENTAGE OF
NAME OF FUND AND CLASS NAME AND ADDRESS OF OWNER OWNERSHIP
- -------------------------------------------------------------------------------
<S> <C> <C>
California Insured Fund
Class C Shares....................... Mildred H. Nachtowski TR 11.29%
UA SEP 14 95
Nachtowski Family Trust
3145 Rita Ct.
Napa, CA 94558-3317
BA Investment Services 8.67%
Inc.
FBO 406912971
185 Berry St.
3rd Floor #2640
San Francisco, CA 94104
NFSC FEBO # 041-626996 8.26%
Fleming Trust
William E. Fleming
U/A 04/20/93
7057 Blackhawk Rd. PO Box
908
Forest Hill, CA 95631
Prudential Securities FBO 6.33%
Alan R. Josefsberg &
Vickie Josefsberg JT TEN
2700 N. Cahuenga Blvd.
East
Unit 1301
Hollywood, CA 90068-2139
Elzie R. Amlin & 5.95%
Annita S. Amlin TR
UA MAR 02 91
Amlin Family Trust
4005 Share Ranch Rd.
Shingle Springs, CA
95682-8020
Janet M. Clarke TR 5.71%
UA MAR 07 95
J. M. Clarke Rev
Intervivos Trust
5 Concord Ct.
Novato, CA 94947-2820
Richard A. Stilz & 5.64%
Lilyanne Stilz
JT TEN WROS NOT TC
20713 Quedo Dr.
Woodland Hills, CA 91364-
3422
California Money Market Fund
Institutional Series................. First Interstate Bank of 20.19%
TX
Attn: Sally Bourdanis
First Interstate Plaza
Investment Operations
LL#788
100 W. Washington St.
Phoenix, AZ 85003-1805
</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
Service Plan Series............... Republic Bank California, N.A. 78.89%
ATTN: Patsy Haynes
445 N. Bedford Dr.
Beverly Hills, CA 90210-4302
California Money Market Fund
Distribution Plan Series.......... First Interstate Bank 89.58%
FBO Westcore
ATTN Fund Accounting
Cash Management Desk
26610 Agoura Rd
Calabasas CA 91302-1954
</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> <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%
California Fund and California Insured Fund:
<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>
39
<PAGE>
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>
MANAGEMENT FEES NET OF EXPENSE FEE WAIVERS AND EXPENSE
REIMBURSEMENT PAID TO NUVEEN REIMBURSEMENTS FOR THE
ADVISORY FOR THE YEAR ENDED YEAR ENDED
-------------------------------- -------------------------
2/28/94 2/28/95 2/29/96 2/28/94 2/28/95 2/29/96
- ------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
California Fund......... $1,130,541 $1,123,360 $1,199,571 $ 0 $ 3,483 $ 3,302
California Insured Fund. 1,053,393 1,073,336 1,156,993 0 2,697 1,695
Money Market Fund....... 2,066,975 836,730 600,017 130,753 122,246 59,354
Total For All Funds..... 4,250,909 3,033,426 2,956,581 130,753 128,426 64,351
</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 spe-
cializing 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 $36 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 $31 billion in tax-exempt securities under
management as of the date of this Statement. Over 1,000,000 individuals have
invested to date in Nuveen's tax-exempt funds and trusts. Nuveen is a subsidi-
ary of The John Nuveen Company which, in turn, is approximately 80% owned by
The St. Paul Companies, Inc. ("St. Paul"). St. Paul is located in St. Paul,
Minnesota, and is principally engaged in providing property-liability insurance
through subsidiaries.
Nuveen Advisory's portfolio managers call upon the resources of Nuveen's Re-
search Department, the largest in the investment banking industry devoted ex-
clusively to tax-exempt securities. Nuveen's Research Department was selected
in 1994 by Research & Ratings Review, a municipal industry publication, as one
of the leading research teams in the municipal industry, based on an extensive
industry-wide poll of portfolio managers, department heads and bond buyers. The
Nuveen Research Department previews more than $100 billion in tax-exempt bonds
every year.
40
<PAGE>
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 advan-
tage of, a Fund's anticipated or actual portfolio transactions, and is designed
to assure that the interest of Fund shareholders are placed before the interest
of Nuveen personnel in connection with personal investment transactions.
PORTFOLIO TRANSACTIONS
Nuveen Advisory, in effecting purchases and sales of portfolio securities for
the account of 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 dealers
will include the spread between the bid and asked price. Given the best price
and execution obtainable, it will be the practice of the Funds to select deal-
ers which, in addition, furnish research information (primarily credit analyses
of issuers and general economic reports) and statistical and other services to
Nuveen Advisory. It is not possible to place a dollar value on information and
statistical and other services received from dealers. Since it is only supple-
mentary to Nuveen Advisory's own research efforts, the receipt of research in-
formation is not expected to reduce significantly Nuveen Advisory's expenses.
While Nuveen Advisory will be primarily responsible for the placement of the
business of the 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 securi-
ties whenever decisions are made to purchase or sell securities by a Fund and
one or more of such other clients simultaneously. In making such allocations
the main factors to be considered will be the respective investment objectives
of the Fund and such other clients, the relative size of portfolio holdings of
the same or comparable securities, the availability of cash for investment by
the Fund and such other
clients, the size of investment commitments generally held by the Fund and such
other clients and
opinions of 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
41
<PAGE>
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
persons 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 The Chase Manhattan
Bank, N.A., the Fund's Custodian. 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 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 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 securities 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 dividing the value of the
Fund's assets attributable to the class, less the liabilities attributable to
the class, by the number of shares of the class outstanding.
In determining net asset value for the 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
majority of the securities held by these Funds) are valued at fair value as
determined 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 may employ electronic data
processing techniques and/or a matrix system to determine valuations. The pro-
cedures 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.
42
<PAGE>
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 397 days or less, and invest only in secu-
rities 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 397 days, upon certain conditions con-
tained in rules and regulations issued by the Securities and Exchange Commis-
sion 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 features, per-
missible 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
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
43
<PAGE>
initiated. In the event the Board of Directors determines that a deviation ex-
ists 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 portfolio instru-
ments prior to maturity to realize capital gains or losses or to shorten aver-
age portfolio maturity; withholding dividends or payment of distributions from
capital or capital gains; redemption of shares in kind; or establishing 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 its 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 federal income
tax in any taxable year for which it distributes at least 90% of the sum of (i)
its "investment company taxable income" (which includes dividends, taxable in-
terest, 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 expenses) and (ii) its "net tax-exempt in-
terest" (the excess of its gross tax-exempt interest income over certain disal-
lowed deductions). 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 invest-
ment company taxable income, it will be subject to tax at regular corporate
rates on the amount retained. If a Fund retains any capital gain, such Fund may
designate the retained
44
<PAGE>
amount as undistributed capital gains in a notice to its shareholders who, if
subject to federal income tax on long-term capital gains, (i) will be required
to include in income for federal income tax purposes, as long-term capital
gain, their shares of such undistributed amount, and (ii) will be entitled to
credit their proportionate shares of the tax paid by such Fund against their
federal income tax liabilities, if any, and to claim refunds to the extent the
credit exceeds such liabilities. For federal income tax purposes, the tax basis
of shares owned by a shareholder of the Fund will be increased by an amount
equal under current law to 65% of the amount of undistributed capital gains in-
cluded in the shareholder's gross income. Each Fund intends to distribute at
least annually to its shareholders all or substantially all of its net tax-ex-
empt 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 investments in
Municipal Obligations, which is exempt from regular federal income tax when re-
ceived by such Fund, as exempt-interest dividends. Shareholders receiving ex-
empt-interest dividends will not be subject to regular federal income tax on
the amount of such dividends. Insurance proceeds received by 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 rep-
resenting interest on "non-appropriation" lease obligations will be excludable
from gross income for federal income tax purposes. See "Fundamental Policies
and Investment Portfolio--Portfolio Securities."
Distributions by each Fund of net interest received from certain taxable tempo-
rary investments (such as certificates of deposit, commercial paper and obliga-
tions 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
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
- --------
/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 in-
come and designate the use of such method within 60 days after the end of
the Fund's taxable year. Under this method, one designated percentage is ap-
plied uniformly to all distributions made during the Fund's taxable year.
The percentage of income designated as tax-exempt for any particular distri-
bution may be substantially different from the percentage of the Fund's in-
come that was tax-exempt during the period covered by the distribution.
45
<PAGE>
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 ex-
cess 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 portion 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 share-
holder on the redemption or exchange of shares of a Fund held for six months or
less are disallowed to the extent of any distribution of exempt-interest divi-
dends received
46
<PAGE>
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 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 determin-
ing ordinary taxable income for the succeeding calendar year). The Funds intend
to make timely distributions in compliance with these requirements and conse-
quently 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 who are
47
<PAGE>
considered either a "substantial user" or a "related person" within the meaning
of the Code. For additional information, investors should consult their tax ad-
visers 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 29, 1996, the yield and effective yield for
the Service and Distribution Plan series of the Money Market Fund were 2.85%
and 2.89%, respectively, and for the Institutional series were 2.94% and 2.98%,
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 45.0%, and (2) the yield for the Money Market
Fund as described above for the seven-day period ended February 29, 1996, the
taxable equivalent yield for the Service and Distribution Plan series of the
Money Market Fund for that period was 5.18% and for the Institutional series
the taxable equivalent yield was 5.35%.
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:
<TABLE>
<C> <C> <C> <C> <S>
Yield = 2[(a-b+1)/6/-1]
</TABLE>
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 29, 1996 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
29, 1996 quoted in the left-hand column.
<TABLE>
<CAPTION>
COMBINED
FEDERAL
AND
STATE TAXABLE
TAX EQUIVALENT
AS OF FEBRUARY 29, 1996 YIELD RATE* YIELD
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
CALIFORNIA FUND
Class A Shares....................................... 4.52% 45.0% 8.22%
Class C Shares....................................... 3.98% 45.0% 7.24%
Class R Shares....................................... 4.99% 45.0% 9.07%
CALIFORNIA INSURED FUND
Class A Shares....................................... 4.46% 45.0% 8.11%
Class C Shares....................................... 3.91% 45.0% 7.11%
Class R Shares....................................... 4.93% 45.0% 8.96%
</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 taking 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 in-
clude the effect of amortization of bond premiums to the extent such premiums
arise after the bonds were purchased. The distribution rates as of February
29, 1996 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........................................ 4.77% 4.25% 5.26%
California Insured Fund................................ 4.69% 4.16% 5.14%
- --------------------------------------------------------------------------------
</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 val-
ue" 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 representing 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 income and capital gains distributions have been reinvested in Fund
shares at net asset value on the reinvestment dates during the period. The av-
erage annual total 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 29, 1996, and for the period from inception (on July 1, 1986,
with respect to the Class R Shares and on or after September 6, 1994 with re-
spect to the Class A Shares and Class C Shares) through February 29, 1996, re-
spectively, were as follows:
<TABLE>
<CAPTION>
ANNUAL TOTAL RETURN
-----------------------------------------------------
FROM INCEPTION
ONE YEAR ENDED FIVE YEARS ENDED THROUGH
FEBRUARY 29, 1996 FEBRUARY 29, 1996 FEBRUARY 29, 1996
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
CALIFORNIA FUND
Class A Shares........... 5.39% N/A 5.36%
Class C Shares........... 9.53% N/A 9.17%
Class R Shares........... 10.54% 7.77% 7.72%
CALIFORNIA INSURED FUND
Class A Shares........... 5.35% N/A 5.89%
Class C Shares........... 9.67% N/A 8.99%
Class R Shares........... 10.63% 8.20% 7.59%
- --------------------------------------------------------------------------------
</TABLE>
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 29, 1996, and for the period from inception (on July 1, 1986
with respect to the Class R Shares and on or after September 6, 1994 with re-
spect to the Class A Shares and Class C Shares) through February 29, 1996, re-
spectively, were as follows:
<TABLE>
<CAPTION>
CUMULATIVE TOTAL RETURN
-----------------------------------------------------
FROM INCEPTION
ONE YEAR ENDED FIVE YEARS ENDED THROUGH
FEBRUARY 29, 1996 FEBRUARY 29, 1996 FEBRUARY 29, 1996
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
CALIFORNIA FUND
Class A Shares........... 5.39% N/A 8.04%
Class C Shares........... 9.53% N/A 13.60%
Class R Shares........... 10.54% 45.38% 105.13%
CALIFORNIA INSURED FUND
Class A Shares........... 5.35% N/A 8.85%
Class C Shares........... 9.67% N/A 13.44%
Class R Shares........... 10.63% 48.34% 102.76%
- --------------------------------------------------------------------------------
</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 1996, the annual taxable equivalent total returns for each Fund's
shares of the California Fund and the California Insured Fund for the one-year
and five-year periods ended February 29, 1996, and for all classes for the pe-
riod from inception (on July 1, 1986 with respect to the Class R
54
<PAGE>
Shares and on or after September 6, 1994 with respect to the Class A Shares and
Class C Shares) through February 29, 1996, respectively, were as follows:
<TABLE>
<CAPTION>
FROM INCEPTION ASSUMED
ONE YEAR ENDED FIVE YEARS ENDED THROUGH FEBRUARY COMBINED
FEBRUARY 29, 1996 FEBRUARY 29, 1996 29, 1996 FEDERAL
------------------- ------------------- ------------------- AND
WITH MAXIMUM AT NET WITH MAXIMUM AT NET WITH MAXIMUM AT NET STATE
4.50% SALES ASSET 4.50% SALES ASSET 4.50% SALES ASSET TAX
CHARGE VALUE CHARGE VALUE CHARGE VALUE RATE*
- ---------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
CALIFORNIA FUND
Class A Shares......... 9.69% 14.96% N/A N/A 9.83% 13.30% 45.0%
Class C Shares......... N/A 13.37% N/A N/A N/A 13.15% 45.0%
Class R Shares......... N/A 15.28% N/A 12.68% N/A 13.00% 45.0%
CALIFORNIA INSURED FUND
Class A Shares......... 9.45% 14.61% N/A N/A 10.18% 13.66% 45.0%
Class C Shares......... N/A 13.31% N/A N/A N/A 12.75% 45.0%
Class R Shares......... N/A 15.16% N/A 12.86% N/A 12.63% 45.0%
</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.
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 annualized standard deviation of
the investment's monthly returns over a specified measurement period (e.g.,
three years). An investment with a higher annualized standard deviation of
monthly returns would indicate that a fund had greater price variability, and
therefore greater risk, than an investment with a lower annualized standard de-
viation. The annualized standard deviation of monthly returns for the three
years ended February 29, 1996, for the Class R Shares of the Funds, were 5.93%
and 6.93% for the California Fund and the California Insured Fund, respective-
ly.
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 three-year total return minus the
annualized total return of an investment in short-term tax-exempt securities
(essentially a risk-free return) over that period, by (b) the annualized stan-
dard deviation of the investment's
monthly returns for the period. This ratio is sometimes 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
55
<PAGE>
amount of risk assumed during the measurement period than an investment with a
lower Sharpe measure. The Sharpe measure for the three year period ended Febru-
ary 29, 1996, for the Class R Shares of each of the Funds, was 0.380 and 0.335
for the California 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 of-
fering price. This current maximum sales charge will typically be used for pur-
poses of calculating performance figures. Yield, returns and net asset value of
each class of shares of the Funds will fluctuate. Factors affecting the perfor-
mance of the Funds include general market conditions, operating expenses and
investment management fees. Any additional fees charged by a securities repre-
sentative or other financial services firm would reduce the returns described
in this section. Fund shares are redeemable at net asset value, which may be
more or less than original cost.
In reports or other communications to shareholders or in advertising and sales
literature, the 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 ("Wie-
senberger") and CDA Investment Technologies, Inc. ("CDA") or similar indepen-
dent services which monitor the performance of mutual funds, or other industry
or financial publications such as Barron's, Changing Times, Forbes and Money
Magazine. Performance comparisons by these indexes, services or publications
may rank mutual funds over different periods of time by means of aggregate, av-
erage, year-by-year, or other types of total return and performance figures.
Any given performance quotation or performance comparison should not be consid-
ered as representative of the performance of the 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 services
which are described herein. The Consumer Price Index is generally considered to
be a measure of inflation. The CDA Mutual Fund-Municipal Bond Index is a
weighted performance average of other mutual funds with a federally tax-exempt
income objective. The Salomon Brothers High Grade Corporate Bond Index is an
unmanaged index that generally represents the performance of high grade long-
term taxable bonds during various market conditions. The Lehman Brothers Munic-
ipal Bond Index is an unmanaged index that generally represents the performance
of high grade intermediate and long-term municipal bonds during various market
conditions. Lipper, Morningstar, Wiesenberger and CDA are widely recognized mu-
tual fund reporting services whose performance calculations are based upon
changes in net asset value with all dividends reinvested and which do not in-
clude the effect of any sales charges. The market prices and yields of taxable
and tax-exempt bonds will fluctuate. The 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 income tax as is
consistent, in the view of the Funds' management, with preservation of capital.
56
<PAGE>
The Funds may also compare their taxable equivalent total return performance to
the total return performance of taxable income funds such as treasury securi-
ties funds, corporate bond funds (either investment grade or high yield), or
Ginnie Mae funds. These types of funds, because of the character of their un-
derlying securities, differ from municipal bond funds in several respects. The
susceptibility of the price of treasury bonds to credit risk is far less than
that of municipal bonds, but the price of treasury bonds tends to be slightly
more susceptible to change resulting from changes in market interest rates. The
susceptibility of the price of investment grade corporate bonds and municipal
bonds to market interest rate changes and general credit changes is similar.
High yield bonds are subject to a greater degree of price volatility than mu-
nicipal bonds resulting from changes in market interest rates and are particu-
larly susceptible to volatility from credit changes. Ginnie Mae bonds are gen-
erally subject to less price volatility than municipal bonds from credit con-
cerns, due primarily to the fact that the timely payment of monthly install-
ments of principal and interest are backed by the full faith and credit of the
U.S. Government, but Ginnie Mae bonds of equivalent coupon and maturity are
generally more susceptible to price volatility resulting from market interest
rate changes. In addition, the volatility of Ginnie Mae bonds due to changes in
market interest rates may differ from municipal bonds of comparable coupon and
maturity because 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 Pricing Pro-
gram which provides you with alternative ways of purchasing Fund shares based
upon your individual investment needs and preferences. You may purchase Class A
Shares at a price equal to their net asset value plus an up-front sales charge.
For information regarding the up-front sales charge on Class A shares, see the
table under "How to Buy Fund Shares" of the Prospectus. Set forth is an 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 29, 1996 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........................................ $10.580
Per Share Sales Charge--4.50% of public offering price (4.71% of
net asset value per share)...................................... $ 0.498
Per Share Offering Price to the Public........................... $11.078
</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 account services.
57
<PAGE>
Under the Flexible Pricing 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 lim-
ited circumstances, or by specified investors, as described herein.
Each class of shares represents an interest in the same portfolio of invest-
ments. Each class of shares is identical in all respects except that each class
bears its own class expenses, including distribution and administration 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.
Shareholders of each class will share expenses proportionately for services
that are received equally by all shareholders. A particular class of shares
will bear only those expenses that are directly attributable to that class,
where the type or amount of services received by a class varies from one class
to another. For example, class-specific expenses generally will include distri-
bution and service fees.
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.
Special Sales Charge Waivers. Class A Shares of the Funds may be purchased at
net asset value without a sales charge, and Class R Shares may be purchased, by
the following categories of investors:
. officers, directors and retired directors of the Fund;
. bona fide, full-time and retired employees of Nuveen or its affiliates, any
parent company of Nuveen, and subsidiaries thereof, or their immediate family
members (as defined below);
. any person who, for at least 90 days, has been an officer, director or bona
fide employee of any Authorized Dealer, or their immediate family members;
58
<PAGE>
. officers and directors of bank holding companies that make Fund shares avail-
able directly or through subsidiaries or bank affiliates;
. bank or broker-affiliated trust departments investing funds over which they
exercise exclusive discretionary investment authority and that are held in a
fiduciary, agency, advisory, custodial or similar capacity;
. investors purchasing through a mutual fund purchase program sponsored by a
broker-dealer that offers a selected group of mutual funds either without a
transaction fee or with an asset-based fee or a fixed fee that does not vary
with the amount of the purchase. In order to qualify, such purchase program
must offer a full range of mutual fund related services and shareholder ac-
count servicing capabilities, including establishment and maintenance of
shareholder accounts, addressing investor inquiries regarding account activ-
ity and investment performances, processing of trading and dividend activity
and generation of monthly account statements and year-end tax reporting; and
. registered investment advisers, certified financial planners and registered
broker-dealers who in each case either charge periodic fees to their custom-
ers for financial planning, investment advisory or asset management services,
or provide such services in connection with the establishment of an invest-
ment account for which a comprehensive "wrap fee" charge is imposed.
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.
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 software 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 avail-
able for public purchase. Shares of the Nuveen money market funds may be pur-
chased 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 purchase on
the following holidays: Martin Luther King's Birthday, Columbus Day and Veter-
ans 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.
59
<PAGE>
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, Washing-
ton's Birthday, Good Friday, Memorial Day, Independence Day, Labor Day, Colum-
bus 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 Plan," the Money Market Fund has adopted Dis-
tribution and Service Plans (the "Plan") with respect to the shares of the Dis-
tribution 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, although
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 directors who
are not interested persons and who have no direct or indirect financial inter-
est in the operation of the Plan. Under the Plan, the Distribution 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 sharehold-
ers of such series and (ii) in the case of the Distribution Plan series, to se-
curities dealers for services rendered in the distribution of the shares of
such series. In each case, such services may include, among other things, es-
tablishing and maintaining shareholder accounts, processing purchase and re-
demption transactions, arranging for bank wires, performing sub-accounting,
answering shareholder inquiries and such other services as Nuveen may request.
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 serviced ac-
counts. 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 or-
ganizations that satisfy certain criteria an additional amount not to exceed
.05 of 1% per year based on average assets of accounts serviced by such organi-
zations. For the fiscal year ended February 29, 1996, the Money Market Fund
paid fees to banks and other organizations under the Service Plan in the amount
of $53,171 the same period, and the Money Market Fund paid fees to securities
dealers under the Distribution Plan in the amount of $49,929.
Under the Plan, 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 Plan. The Plan 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 Plan or by vote of a majority of the outstanding voting securi-
ties of the applicable series of the Money Market Fund. 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 reason
60
<PAGE>
able business judgment and in light of their fiduciary duties under applicable
law, that there is a reasonable likelihood that the Plan will benefit such se-
ries of the Money Market Fund and its shareholders. The Plan may not be amended
to increase materially the cost which the Distribution Plan or the Service Plan
series of the Money Market Fund may bear without the approval of the sharehold-
ers 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
continuance 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-
interested 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 Plan.
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 or
administrative decisions or interpretations of statutes or regulations, could
prevent a bank from continuing to perform all or a part of its shareholder ser-
vicing activities. If a bank were prohibited from so acting, its shareholder
customers would be permitted to remain shareholders of the Funds and alterna-
tive means for continuing the servicing of such shareholders 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, 1995 ("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
61
<PAGE>
compensation pursuant to a distribution plan adopted by the California Fund and
California Insured Fund pursuant to Rule 12b-1 and described herein under "Dis-
tribution 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.
Nuveen also receives any CDSCs imposed on redemptions of certain Class A Shares
redeemed within 18 months of purchase.
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 29, 1996 FEBRUARY 28, 1995 FEBRUARY 28, 1994
------------------------ ------------------------ ------------------------
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......... $221 $33 $370 $60 $ 949 $148
California Insured Fund. 357 56 517 93 1,421 209
Money Market Fund....... -- -- -- -- -- --
</TABLE>
DISTRIBUTION AND SERVICE PLAN
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.
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 Au-
thorized 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 a Fund, ex-
penses 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 provi-
sion of ongoing account services to shareholders. These services may include
establishing and maintaining shareholder accounts, answering shareholder inqui-
ries 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
62
<PAGE>
average daily net assets of Class C Shares as a service fee under the Plan ap-
plicable 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 29, 1996, 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 29, 1996 for each Fund per class of shares was as follows:
<TABLE>
<CAPTION>
COMPENSATION PAID TO
AUTHORIZED DEALERS FOR YEAR
ENDED FEBRUARY 29, 1996
- --------------------------------------------------------------------------------
<S> <C>
CALIFORNIA FUND
Class A............................................ $19,006
Class C............................................ $ 4,155
Class R............................................ N/A
CALIFORNIA INSURED FUND
Class A............................................ $25,512
Class C............................................ $ 6,916
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 directors
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 securi-
ties 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 ex-
ercise of reasonable business judgment and in light of their fiduciary duties
under applicable law, that there is a reasonable likelihood that the Plan will
benefit the Fund and its shareholders. The Plan may not be amended to increase
materially the cost which a class of shares may bear under the Plan without the
approval of the shareholders of the affected class, and any other material
amendments of the Plan must be approved by the non-interested directors by a
vote cast in person at a meeting called for the purpose of considering such
amendments. During the continuance of the Plan, the selection and nomination of
the non-interested directors of the Funds will be committed 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."
63
<PAGE>
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 The Chase Manhattan Bank, N.A. 770
Broadway, New York, NY 10003. The Custodian performs custodial, fund accounting
and portfolio accounting services.
64
<PAGE>
ANNUAL REPORTS TO SHAREHOLDERS
FOR
1. NUVEEN CALIFORNIA TAX-FREE VALUE FUND
NUVEEN CALIFORNIA INSURED TAX-FREE VALUE FUND
(AMONG OTHERS)
AND
2. NUVEEN CALIFORNIA TAX-FREE MONEY MARKET FUND
(AMONG OTHERS)
<PAGE>
Nuveen Tax-Free [PHOTO APPEARS HERE]
Mutual Funds
Dependable tax-free
income for generations
CALIFORNIA
CALIFORNIA INSURED
MASSACHUSETTS
MASSACHUSETTS INSURED
NEW YORK
NEW YORK INSURED
OHIO
ANNUAL REPORT/FEBRUARY 29, 1996
<PAGE>
CONTENTS
3 Dear shareholder
5 Answering your questions
9 Fund performance
16 Report of independent public accountants
17 Portfolio of investments
58 Statement of net assets
60 Statement of operations
62 Statement of changes in net assets
66 Notes to financial statements
82 Financial highlights
<PAGE>
Dear
shareholder
Since the beginning of the recovery in early 1995, we've enjoyed a welcome
rebound in the bond markets--a sharp contrast to 1994, which was one of the most
volatile periods in bond market history. In fact, 1995 unfolded as one of the
best years for bonds in a decade, as the bond market responded to a climate of
slowing economic growth and diminished inflationary pressure.
The changing profile of the bond markets over the past two years reminds us
that weathering the ups and downs of the markets is a normal part of the
investment process. By maintaining a long-term perspective on your investments,
you can minimize the impact of short-term fluctuations and keep the focus on
achieving your goals. Municipal bond funds continue to play an integral role in
helping investors reach those goals, offering the attractive tax-free income and
solid total returns that they seek.
Over the past year, we have kept our sights focused on successfully meeting
your fund's objectives. As of February 29, 1996, the current annual SEC yield on
offering price for R shares for the mutual funds covered in this report ranged
from 4.21% to 4.99%. To match these yields, an investor in the 36% federal
income tax bracket would have had to earn between 6.58% to 7.80% on taxable
alternatives. The effect of state taxes further enhances the after-tax yield
advantage provided by municipal bonds.
[PHOTO OF RICHARD J. FRANKE APPEARS HERE]
"Over time,
municipal bonds
have proven to
be a valuable
and dependable
component of
successful invest-
ment programs."
3
<PAGE>
Reflecting the rebound in the bond markets, each of these funds reported gains
in portfolio value since February 28, 1995. The 12-month total returns on net
asset value for R Shares, reflecting portfolio gains plus reinvested dividend
income and capital gains distributions, if any, ranged from 9.70% to 10.80%,
which translate to 13.66% to 14.81% on a taxable-equivalent basis. This strong
performance rewarded investors who weathered the volatility of 1994, and reminds
us again of the importance of municipal bonds to a well-rounded, long-term
investment plan.
As some of you may know, on June 30, 1996, I will be retiring as the Chairman
and Chief Executive Officer of John Nuveen & Co. Incorporated and as Chairman of
the Board of the Nuveen Funds. As I look back over the 41 years I have spent at
Nuveen, I'm proud to have been associated with a firm that holds integrity,
honesty, and value as the cornerstones of its business. I'm confident that these
traditions will continue to be the hallmarks of Nuveen.
Over the past few years, I have been working closely with other Nuveen
managers to ensure that the company and the funds continue to be guided by
strong and talented management following my retirement. Timothy Schwertfeger,
who has been with Nuveen since 1977, will succeed me as Chief Executive Officer
and Chairman of Nuveen. He currently serves as Executive Vice President of
Nuveen and President of the Nuveen Funds. I am very confident in his abilities
and the abilities of the entire Nuveen management team.
The management transition has been well planned, and it will have no effect on
portfolio management or the way dividends are set. Our management team is
committed to continuing Nuveen's successful tradition of value investing and
prudent management, helping our shareholders meet their need for tax-free
investment income with a full range of investment choices.
Our focus will continue to be on building shareholder value, providing
research-oriented management, and maintaining our leadership role in the
municipal bond market. With this focus, we anticipate many more years of
accomplishment for our shareholders and our firm.
I'd like to take this occasion to thank you for selecting Nuveen mutual fund
investments.
Sincerely,
/s/ Richard J. Franke
Richard J. Franke
Chairman of the Board
April 15, 1996
4
<PAGE>
Answering your
questions
Tom Spalding, head of Nuveen's portfolio management team, discusses factors
affecting the municipal market and efforts made to provide value for
shareholders.
How did the investment climate over the past year affect municipal bonds?
In 1995, the combination of slow economic growth and low inflation created the
ideal environment for the bond markets, which responded with a sustained rally.
Citing the lack of significant inflation, the Federal Reserve Board moved to cut
interest rates in July and December 1995, and again at the end of January 1996.
This succession of rate cuts helped to bring down long-term municipal bond
yields by almost 130 basis points over the year and to increase net asset
values. The rebound of the municipal bond market was not as great as that of the
taxable market due to the much-publicized discussion of major tax reform
legislation and concern about its potential impact on tax-free investments. Yet,
in 1995, most Nuveen mutual funds enjoyed taxable-equivalent total returns of
14% or better.
5
<PAGE>
[PHOTO OF TOM SPALDING APPEARS HERE]
Tom Spalding, head of Nuveen's portfolio management team, answers investors'
questions on developments in the municipal market.
What was Nuveen's approach to investing during this period?
During 1995, we continued to pursue our philosophy of value investing, a
disciplined approach designed to deliver above-market performance by emphasizing
securities that offer good intrinsic value and that are underpriced or
undervalued by the market. This approach has been rewarded over the past year,
as we saw many of our portfolio holdings upgraded by the ratings agencies,
confirming our Research Department's judgments about credit quality. We also
moved to protect current income by investing more of our portfolio in non-
callable bonds when possible. These bonds are less likely to be redeemed before
maturity so that their yield is assured for the long term in the event of
falling interest rates. As is our policy, we continue to invest only in
investment-grade quality securities.
Has Nuveen made any major investment changes over the past year?
No. In the search for income and total return, our value investing approach
continues to concentrate on individual bonds with current yields, prices, credit
quality, and future prospects that are exceptionally attractive relative to
other bonds in the market. Because attractive issues may appear any time over
the course of the year, we are constantly vigilant for new opportunities, with
the goal of ensuring that the funds are always positioned to meet their
objectives: as high a level of current tax-free income as is consistent with
preservation of capital. This means that our analysts continuously assess
investment
6
<PAGE>
possibilities across the entire spectrum of geographical and sector
opportunities nationwide. Currently, we favor revenue bonds for essential
services, such as those issued by water and sewer facilities and utilities,
especially public power authorities providing electricity at competitive rates.
We have reduced our positions in general obligation bonds issued by counties and
cities, which have suffered financial strains as the result of spending cuts at
the state and federal levels.
What does Nuveen see as the impact of the flat tax proposals on the municipal
market?
Because of the implications for tax-free investments such as municipal bonds and
bond funds, we have been closely monitoring the various flat tax proposals
currently being debated in Congress. While the presidential primaries
spotlighted the debate, it is important to note that none of the proposals
currently under discussion has gained a strong consensus. In addition,
implementation of any measure that manages to pass both houses is at least two
years away. As the election year progresses, focus seems to be shifting from tax
reform to other economic matters. However, the high profile discussion--and the
attendant concern about the potential impact of tax reform on tax-free
investments--did affect the market for municipal bonds in 1995, causing these
bonds to underperform their taxable counterparts for the year.
7
<PAGE>
Given the low likelihood that the tax preference on municipal bonds will be
eliminated or dramatically reduced in the near future, Nuveen believes that it
is inadvisable to manage our funds toward one specific outcome. Instead, we will
continue to follow our value investing philosophy as the optimal way to pursue
our investors' objectives. In our view, this approach offers investors greater
price stability in the event of volatile markets. Once the tax issue is
resolved, we're confident that municipal bonds--because of their high credit
quality and attractive yields--will continue to hold a strategic place in the
prudent investor's portfolio. We will continue to monitor developments in the
tax debate as well as changes in other economic and political conditions while
keeping our focus on achieving the objectives of your fund.
What is Nuveen's market outlook for 1996?
Although inflation currently remains low and economic growth remains moderate,
we continue to watch these factors for potential changes and impact on the bond
market. During this election year, we are also closely monitoring any changes in
economic and tax policy that may affect the municipal market. The fundamentals
in the long term are sound, with the supply of municipal bonds down from past
years, and with a growing number of individual investors seeking to diversify
their portfolios and to increase their tax-free income.
8
<PAGE>
NUVEEN CALIFORNIA
TAX-FREE VALUE FUND
California
INDEX COMPARISON
Comparison of change in value of a $10,000 investment in Nuveen California Tax-
Free Value Fund R Shares* and Lehman Brothers Municipal Bond Index
[GRAPH APPEARS HERE]
<TABLE>
<CAPTION>
In thousands 6/86 6/87 6/88 6/89 6/90 6/91 6/92 6/93 6/94 6/95 2/96
------ ------ ------ ------ ------ ------ ------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Tax-Adjusted Lehman Brothers
Municipal Bond Index (reduced
by state tax effects)-Total $21,255 10,000 10,838 11,590 12,849 13,663 14,826 16,500 18,393 18,357 19,898 21,255
Lehman Brothers Municipal Bond
Index-Total $22,127 10,000 10,862 11,668 12,996 13,881 15,131 16,913 18,935 18,968 20,641 22,127
Nuveen CA Tax-Free Value
Fund-Total $19,538 9,525 9,838 10,513 11,998 12,735 13,775 15,317 17,049 16,801 18,155 19,538
Past performance is not predictive of future performance
</TABLE>
<TABLE>
<CAPTION>
- --------------------------------------------------------------------
ANNUALIZED TOTAL RETURN
- --------------------------------------------------------------------
1 year 5 years Since inception+
- --------------------------------------------------------------------
<S> <C> <C> <C>
R Shares on NAV 10.54% 7.77% 7.72%
A Shares on NAV 10.36% N/A 8.69%
A Shares on offering price** 5.39% N/A 5.36%
C Shares on NAV 9.53% N/A 9.17%
- --------------------------------------------------------------------
</TABLE>
The fund's current dividend of 4.65 cents per share for Class R Shares
translated into a distribution yield of 5.26% as of February 29, 1996. The
annual distribution yield is calculated by multiplying the dividend by 12, and
dividing this number by the current offering price. Investors in the 42%
combined state and federal income tax bracket would have to earn 9.07% on a
taxable investment to match this tax-free yield.
The fund's Class R Share SEC yield of 4.99% on February 29, 1996, translated
into 8.60% on a taxable-equivalent basis.
During the fiscal year, your fund's net asset value (for Class R Shares)
increased by 4.64% from a year ago. The average annual total return on NAV for
this class was 10.54%, which translated into a taxable-equivalent total return
of 14.73%.
* One-year, 5-year and life of fund total return figures for Class R Shares are
not representative for Class A Shares or Class C Shares because they do not take
into account (1) the difference between the maximum front-end sales charge
applicable to Class R Shares (none), Class A Shares (4.50%) and Class C Shares
(none); (2) the .25% annual 12b-1 service fee applicable to Class A and Class C
Shares; (3) the .75% annual 12b-1 distribution fee to be deducted from income
with respect to Class C Shares; and (4) other class-level expenses applicable to
Class A Shares and Class C Shares.
** Maximum public offering price, which includes sales charges, which are
reduced for purchases over $50,000 and waived for reinvestment of dividends.
+ Life of class; Class A Shares and Class C Shares were first issued at
different times after September 6, 1994.
The Lehman Municipal Bond Index is comprised of a broad range of investment-
grade municipal bonds, and does not reflect any initial or ongoing expenses. The
Nuveen fund return depicted in the chart reflects the initial maximum sales
charge applicable to R Shares at the time (4.75%) and all ongoing fund expenses.
9
<PAGE>
NUVEEN CALIFORNIA INSURED
TAX-FREE VALUE FUND
California Insured
INDEX COMPARISON
Comparison of change in value of a $10,000 investment in Nuveen California
Insured Tax-Free Value Fund R Shares* and Lehman Brothers Municipal Bond Index
[GRAPH APPEARS HERE]
<TABLE>
<CAPTION>
In thousands 6/86 6/87 6/88 6/89 6/90 6/91 6/92 6/93 6/94 6/95 2/96
------ ------ ------ ------ ------ ------ ------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Tax-Adjusted Lehman Brothers
Municipal Bond Index (reduced
by state tax effects)-Total $21,255 10,000 10,838 11,590 12,849 13,663 14,826 16,500 18,393 18,357 19,898 21,255
Lehman Brothers Municipal Bond
Index-Total $22,127 10,000 10,862 11,668 12,996 13,881 15,131 16,913 18,935 18,968 20,641 22,127
Nuveen CA Insured Tax-Free Value
Fund-Total $19,313 9,525 9,513 10,220 11,648 12,223 13,252 14,929 16,752 16,501 17,911 19,313
Past performance is not predictive of future performance
</TABLE>
<TABLE>
<CAPTION>
- --------------------------------------------------------------------
ANNUALIZED TOTAL RETURN
- --------------------------------------------------------------------
1 year 5 years Since inception+
- --------------------------------------------------------------------
<S> <C> <C> <C>
R Shares on NAV 10.63% 8.20% 7.59%
A Shares on NAV 10.32% N/A 9.24%
A Shares on offering price** 5.35% N/A 5.89%
C Shares on NAV 9.67% N/A 8.99%
- --------------------------------------------------------------------
</TABLE>
The fund's current dividend of 4.60 cents per share for Class R Shares
translated into a distribution yield of 5.14% as of February 29, 1996. The
annual distribution yield is calculated by multiplying the dividend by 12, and
dividing this number by the current offering price. Investors in the 42%
combined state and federal income tax bracket would have to earn 8.86% on a
taxable investment to match this tax-free yield.
The fund's Class R Share SEC yield of 4.93% on February 29, 1996, translated
into 8.50% on a taxable-equivalent basis.
During the fiscal year, your fund's net asset value (for Class R Shares)
increased by 4.99% from a year ago. The average annual total return on NAV for
this class was 10.63%, which translated into a taxable-equivalent total return
of 14.64%.
* One-year, 5-year and life of fund total return figures for Class R Shares are
not representative for Class A Shares or Class C Shares because they do not take
into account (1) the difference between the maximum front-end sales charge
applicable to Class R Shares (none), Class A Shares (4.50%) and Class C Shares
(none); (2) the .25% annual 12b-1 service fee applicable to Class A and Class C
Shares; (3) the .75% annual 12b-1 distribution fee to be deducted from income
with respect to Class C Shares; and (4) other class-level expenses applicable to
Class A Shares and Class C Shares.
** Maximum public offering price, which includes sales charges, which are
reduced for purchases over $50,000 and waived for reinvestment of dividends.
+ Life of class; Class A Shares and Class C Shares were first issued at
different times after September 6, 1994.
The Lehman Municipal Bond Index is comprised of a broad range of investment-
grade municipal bonds, and does not reflect any initial or ongoing expenses. The
Nuveen fund return depicted in the chart reflects the initial maximum sales
charge applicable to R Shares at the time (4.75%) and all ongoing fund expenses.
10
<PAGE>
NUVEEN MASSACHUSETTS
TAX-FREE VALUE FUND
Massachusetts
INDEX COMPARISON
Comparison of change in value of a $10,000 investment in Nuveen Massachusetts
Tax-Free Value Fund R Shares* and Lehman Brothers Municipal Bond Index
[GRAPH APPEARS HERE]
<TABLE>
<CAPTION>
In thousands 11/86 11/87 11/88 11/89 11/90 11/91 11/92 11/93 11/94 2/96
------ ------ ------ ------ ------ ------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Tax-Adjusted Lehman Brothers
Municipal Bond Index (reduced
by state tax effects)-Total $19,316 10,000 9,973 10,980 12,127 12,997 14,247 15,587 17,219 16,236 19,316
Lehman Brothers Municipal Bond
Index-Total $20,239 10,000 9,977 11,036 12,251 13,194 14,549 16,008 17,781 16,847 20,239
Nuveen MA Tax-Free Value
Fund-Total $17,466 9,525 8,745 9,756 10,793 11,355 12,626 13,969 15,603 14,627 17,466
Past performance is not predictive of future performance
</TABLE>
<TABLE>
<CAPTION>
- --------------------------------------------------------------------
ANNUALIZED TOTAL RETURN
- --------------------------------------------------------------------
1 year 5 years Since inception+
- --------------------------------------------------------------------
<S> <C> <C> <C>
R Shares on NAV 9.80% 8.32% 6.82%
A Shares on NAV 9.62% N/A 8.57%
A Shares on offering price** 4.69% N/A 5.25%
C Shares on NAV 8.87% N/A 9.91%
- --------------------------------------------------------------------
</TABLE>
The fund's current dividend of 4.50 cents per share for Class R Shares
translated into a distribution yield of 5.45% as of February 29, 1996. The
annual distribution yield is calculated by multiplying the dividend by 12, and
dividing this number by the current offering price. Investors in the 43.5%
combined state and federal income tax bracket would have to earn 9.65% on a
taxable investment to match this tax-free yield.
The fund's Class R Share SEC yield of 4.61% on February 29, 1996, translated
into 8.16% on a taxable-equivalent basis.
During the fiscal year, your fund's net asset value (for Class R Shares)
increased by 3.88% from a year ago. The average annual total return on NAV for
this class was 9.80%, which translated into a taxable-equivalent total return of
14.31%.
* One-year, 5-year and life of fund total return figures for Class R Shares are
not representative for Class A Shares or Class C Shares because they do not take
into account (1) the difference between the maximum front-end sales charge
applicable to Class R Shares (none), Class A Shares (4.50%) and Class C Shares
(none); (2) the .25% annual 12b-1 service fee applicable to Class A and Class C
Shares; (3) the .75% annual 12b-1 distribution fee to be deducted from income
with respect to Class C Shares; and (4) other class-level expenses applicable to
Class A Shares and Class C Shares.
** Maximum public offering price, which includes sales charges, which are
reduced for purchases over $50,000 and waived for reinvestment of dividends.
+ Life of class; Class A Shares and Class C Shares were first issued at
different times after September 6, 1994.
The Lehman Municipal Bond Index is comprised of a broad range of investment-
grade municipal bonds, and does not reflect any initial or ongoing expenses. The
Nuveen fund return depicted in the chart reflects the initial maximum sales
charge applicable to R Shares at the time (4.75%) and all ongoing fund expenses.
11
<PAGE>
NUVEEN MASSACHUSETTS INSURED
TAX-FREE VALUE FUND
Massachusetts Insured
INDEX COMPARISON
Comparison of change in value of a $10,000 investment in Nuveen Massachusetts
Insured Tax-Free Value Fund R Shares* and Lehman Brothers Municipal Bond Index
[GRAPH APPEARS HERE]
<TABLE>
<CAPTION>
In thousands 11/86 11/87 11/88 11/89 11/90 11/91 11/92 11/93 11/94 2/96
------ ------ ------ ------ ------ ------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Tax-Adjusted Lehman Brothers
Municipal Bond Index (reduced
by state tax effects)-Total $19,316 10,000 9,973 10,980 12,127 12,997 14,247 15,587 17,219 16,236 19,316
Lehman Brothers Municipal Bond
Index-Total $20,239 10,000 9,977 11,036 12,251 13,194 14,549 16,008 17,781 16,847 20,239
Nuveen MA Insured Tax-Free Value
Fund-Total $17,911 9,525 8,940 10,086 11,109 11,793 12,976 14,284 15,940 14,959 17,911
Past performance is not predictive of future performance
</TABLE>
<TABLE>
<CAPTION>
- --------------------------------------------------------------------
ANNUALIZED TOTAL RETURN
- --------------------------------------------------------------------
1 year 5 years Since inception+
- --------------------------------------------------------------------
<S> <C> <C> <C>
R Shares on NAV 9.99% 8.08% 7.11%
A Shares on NAV 9.59% N/A 8.51%
A Shares on offering price** 4.65% N/A 5.19%
C Shares on NAV 8.80% N/A 8.49%
- --------------------------------------------------------------------
</TABLE>
The fund's current dividend of 4.50 cents per share for Class R Shares
translated into a distribution yield of 5.14% as of February 29, 1996. The
annual distribution yield is calculated by multiplying the dividend by 12, and
dividing this number by the current offering price. Investors in the 43.5%
combined state and federal income tax bracket would have to earn 9.10% on a
taxable investment to match this tax-free yield.
The fund's Class R Share SEC yield of 4.21% on February 29, 1996, translated
into 7.45% on a taxable-equivalent basis.
During the fiscal year, your fund's net asset value (for Class R Shares)
increased by 4.37% from a year ago. The average annual total return on NAV for
this class was 9.99%, which translated into a taxable-equivalent total return of
14.24%.
* One-year, 5-year and life of fund total return figures for Class R Shares are
not representative for Class A Shares or Class C Shares because they do not take
into account (1) the difference between the maximum front-end sales charge
applicable to Class R Shares (none), Class A Shares (4.50%) and Class C Shares
(none); (2) the .25% annual 12b-1 service fee applicable to Class A and Class C
Shares; (3) the .75% annual 12b-1 distribution fee to be deducted from income
with respect to Class C Shares; and (4) other class-level expenses applicable to
Class A Shares and Class C Shares.
** Maximum public offering price, which includes sales charges, which are
reduced for purchases over $50,000 and waived for reinvestment of dividends.
+ Life of class; Class A Shares and Class C Shares were first issued at
different times after September 6, 1994.
The Lehman Municipal Bond Index is comprised of a broad range of investment-
grade municipal bonds, and does not reflect any initial or ongoing expenses. The
Nuveen fund return depicted in the chart reflects the initial maximum sales
charge applicable to R Shares at the time (4.75%) and all ongoing fund expenses.
12
<PAGE>
NUVEEN NEW YORK
TAX-FREE VALUE FUND
New York
INDEX COMPARISON
Comparison of change in value of a $10,000 investment in Nuveen New York Tax-
Free Value Fund R Shares* and Lehman Brothers Municipal Bond Index
[GRAPH APPEARS HERE]
<TABLE>
<CAPTION>
In thousands 11/86 11/87 11/88 11/89 11/90 11/91 11/92 11/93 11/94 2/96
------ ------ ------ ------ ------ ------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Tax-Adjusted Lehman Brothers
Municipal Bond Index (reduced
by state tax effects)-Total $19,581 10,000 9,972 10,985 12,143 13,027 14,309 15,687 17,362 16,400 19,581
Lehman Brothers Municipal Bond
Index-Total $20,239 10,000 9,977 11,036 12,251 13,194 14,549 16,008 17,781 16,847 20,239
Nuveen NY Tax-Free Value
Fund-Total $19,096 9,525 9,293 10,427 11,609 12,181 13,617 15,070 16,944 15,747 19,096
Past performance is not predictive of future performance
</TABLE>
<TABLE>
<CAPTION>
- --------------------------------------------------------------------
ANNUALIZED TOTAL RETURN
- --------------------------------------------------------------------
1 year 5 years Since inception+
- --------------------------------------------------------------------
<S> <C> <C> <C>
R Shares on NAV 10.80% 8.97% 7.86%
A Shares on NAV 10.52% N/A 8.58%
A Shares on offering price** 5.55% N/A 5.25%
C Shares on NAV 10.13% N/A 8.86%
- --------------------------------------------------------------------
</TABLE>
The fund's current dividend of 4.85 cents per share for Class R Shares
translated into a distribution yield of 5.47% as of February 29, 1996. The
annual distribution yield is calculated by multiplying the dividend by 12, and
dividing this number by the current offering price. Investors in the 40.5%
combined state and federal income tax bracket would have to earn 9.19% on a
taxable investment to match this tax-free yield.
The fund's Class R Share SEC yield of 4.75% on February 29, 1996, translated
into 7.98% on a taxable-equivalent basis.
During the fiscal year, your fund's net asset value (for Class R Shares)
increased by 4.83% from a year ago. The average annual total return on NAV for
this class was 10.80%, which translated into a taxable-equivalent total return
of 14.81%.
* One-year, 5-year and life of fund total return figures for Class R Shares are
not representative for Class A Shares or Class C Shares because they do not take
into account (1) the difference between the maximum front-end sales charge
applicable to Class R Shares (none), Class A Shares (4.50%) and Class C Shares
(none); (2) the .25% annual 12b-1 service fee applicable to Class A and Class C
Shares; (3) the .75% annual 12b-1 distribution fee to be deducted from income
with respect to Class C Shares; and (4) other class-level expenses applicable to
Class A Shares and Class C Shares.
** Maximum public offering price, which includes sales charges, which are
reduced for purchases over $50,000 and waived for reinvestment of dividends.
+ Life of class; Class A Shares and Class C Shares were first issued at
different times after September 6, 1994.
The Lehman Municipal Bond Index is comprised of a broad range of investment-
grade municipal bonds, and does not reflect any initial or ongoing expenses. The
Nuveen fund return depicted in the chart reflects the initial maximum sales
charge applicable to R Shares at the time (4.75%) and all ongoing fund expenses.
13
<PAGE>
NUVEEN NEW YORK INSURED
TAX-FREE VALUE FUND
New York Insured
INDEX COMPARISON
Comparison of change in value of a $10,000 investment in Nuveen New York Insured
Tax-Free Value Fund R Shares* and Lehman Brothers Municipal Bond Index
[GRAPH APPEARS HERE]
<TABLE>
<CAPTION>
In thousands 11/86 11/87 11/88 11/89 11/90 11/91 11/92 11/93 11/94 2/96
------ ------ ------ ------ ------ ------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Tax-Adjusted Lehman Brothers
Municipal Bond Index (reduced
by state tax effects)-Total $19,581 10,000 9,972 10,985 12,143 13,028 14,311 15,689 17,367 16,405 19,590
Lehman Brothers Municipal Bond
Index-Total $20,239 10,000 9,977 11,036 12,251 13,194 14,549 16,008 17,781 16,847 20,239
Nuveen NY Insured Tax-Free Value
Fund-Total $18,516 9,525 9,025 10,152 11,263 11,888 13,254 14,634 16,468 15,284 18,516
Past performance is not predictive of future performance
</TABLE>
<TABLE>
<CAPTION>
- --------------------------------------------------------------------
ANNUALIZED TOTAL RETURN
- --------------------------------------------------------------------
1 year 5 years Since inception+
- --------------------------------------------------------------------
<S> <C> <C> <C>
R Shares 10.51% 8.70% 7.50%
A Shares 10.19% N/A 8.93%
A Shares on offering price** 5.23% N/A 5.59%
C Shares 9.71% N/A 9.10%
- --------------------------------------------------------------------
</TABLE>
The fund's current dividend of 4.60 cents per share for Class R Shares
translated into a distribution yield of 5.20% as of February 29, 1996. The
annual distribution yield is calculated by multiplying the dividend by 12, and
dividing this number by the current offering price. Investors in the 40.5%
combined state and federal income tax bracket would have to earn 8.74% on a
taxable investment to match this tax-free yield.
The fund's Class R Share SEC yield of 4.39% on February 29, 1996, translated
into 7.38% on a taxable-equivalent basis.
During the fiscal year, your fund's net asset value (for Class R Shares)
increased by 4.53% from a year ago. The average annual total return on NAV for
this class was 10.51%, which translated into a taxable-equivalent total return
of 14.32%.
* One-year, 5-year and life of fund total return figures for Class R Shares are
not representative for Class A Shares or Class C Shares because they do not take
into account (1) the difference between the maximum front-end sales charge
applicable to Class R Shares (none), Class A Shares (4.50%) and Class C Shares
(none); (2) the .25% annual 12b-1 service fee applicable to Class A and Class C
Shares; (3) the .75% annual 12b-1 distribution fee to be deducted from income
with respect to Class C Shares; and (4) other class-level expenses applicable to
Class A Shares and Class C Shares.
** Maximum public offering price, which includes sales charges, which are
reduced for purchases over $50,000 and waived for reinvestment of dividends.
+ Life of class; Class A Shares and Class C Shares were first issued on or after
September 6, 1994.
The Lehman Municipal Bond Index is comprised of a broad range of investment-
grade municipal bonds, and does not reflect any initial or ongoing expenses. The
Nuveen fund return depicted in the chart reflects the initial maximum sales
charge applicable to R Shares at the time (4.75%) and all ongoing fund expenses.
14
<PAGE>
NUVEEN OHIO
TAX-FREE VALUE FUND
Ohio
INDEX COMPARISON
Comparison of change in value of a $10,000 investment in Nuveen Ohio Tax-Free
Value Fund R Shares* and Lehman Brothers Municipal Bond Index
[GRAPH APPEARS HERE]
<TABLE>
<CAPTION>
In thousands 11/86 11/87 11/88 11/89 11/90 11/91 11/92 11/93 11/94 2/96
------ ------ ------ ------ ------ ------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Tax-Adjusted Lehman Brothers
Municipal Bond Index (reduced
by state tax effects)-Total $19,751 10,000 9,974 11,002 12,176 13,076 14,376 15,774 17,475 16,518 19,751
Lehman Brothers Municipal Bond
Index-Total $20,239 10,000 9,977 11,036 12,251 13,194 14,549 16,008 17,781 16,847 20,239
Nuveen OH Tax-Free Value
Fund-Total $18,992 9,525 9,135 10,281 11,615 12,411 13,632 15,035 16,923 15,861 18,992
Past performance is not predictive of future performance
</TABLE>
<TABLE>
<CAPTION>
- -------------------------------------------------------------------
ANNUALIZED TOTAL RETURN
- -------------------------------------------------------------------
1 year 5 years Since inception+
- -------------------------------------------------------------------
<S> <C> <C> <C>
R Shares on NAV 9.70% 8.34% 7.80%
A Shares on NAV 9.44% N/A 8.86%
A Shares on offering price** 4.51% N/A 5.53%
C Shares on NAV 8.55% N/A 8.41%
- -------------------------------------------------------------------
</TABLE>
The fund's current dividend of 4.70 cents per share for Class R Shares
translated into a distribution yield of 5.33% as of February 29, 1996. The
annual distribution yield is calculated by multiplying the dividend by 12, and
dividing this number by the current offering price. Investors in the 41%
combined state and federal income tax bracket would have to earn 9.03% on a
taxable investment to match this tax-free yield.
The fund's Class R Share SEC yield of 4.51% on February 29, 1996, translated
into 7.64% on a taxable-equivalent basis.
During the fiscal year, your fund's net asset value (for Class R Shares)
increased by 3.93% from a year ago. The average annual total return on NAV for
this class was 9.70%, which translated into a taxable-equivalent total return of
13.66%.
* One-year, 5-year and life of fund total return figures for Class R Shares are
not representative for Class A Shares or Class C Shares because they do not take
into account (1) the difference between the maximum front-end sales charge
applicable to Class R Shares (none), Class A Shares (4.50%) and Class C Shares
(none); (2) the .25% annual 12b-1 service fee applicable to Class A and Class C
Shares; (3) the .75% annual 12b-1 distribution fee to be deducted from income
with respect to Class C Shares; and (4) other class-level expenses applicable to
Class A Shares and Class C Shares.
** Maximum public offering price, which includes sales charges, which are
reduced for purchases over $50,000 and waived for reinvestment of dividends.
+ Life of class; Class A Shares and Class C Shares were first issued at
different times after September 6, 1994.
The Lehman Municipal Bond Index is comprised of a broad range of investment-
grade municipal bonds, and does not reflect any initial or ongoing expenses. The
Nuveen fund return depicted in the chart reflects the initial maximum sales
charge applicable to R Shares at the time (4.75%) and all ongoing fund expenses.
15
<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. (comprising the Nuveen California and California Insured
Tax-Free Value Funds) (a Maryland corporation), NUVEEN TAX-FREE BOND FUND, INC.
(comprising the Nuveen Massachusetts, New York and Ohio Tax-Free Value Funds)
and NUVEEN INSURED TAX-FREE BOND FUND, INC. (comprising the Nuveen Massachusetts
and New York Insured Tax-Free Value Funds) (both Minnesota corporations),
including the portfolios of investments, as of February 29, 1996, and the
related statements of operations for the year then ended, the statements of
changes in net assets for each of the two years in the period then ended and the
financial highlights for the periods indicated thereon. These financial
statements and financial highlights are the responsibility of the 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 29, 1996, 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 29, 1996, the results of their operations for the year then ended, the
changes in their net assets for each of the two years in the period then ended,
and the financial highlights for the periods indicated thereon in conformity
with generally accepted accounting principles.
ARTHUR ANDERSEN LLP
Chicago, Illinois
April 8, 1996
16
<PAGE>
<TABLE>
<CAPTION>
PORTFOLIO OF INVESTMENTS NUVEEN TAX-FREE MUTUAL FUNDS ANNUAL REPORT
FEBRUARY 29, 1996
NUVEEN CALIFORNIA TAX-FREE VALUE FUND
- ---------------------------------------------------------------------------------------------------------------------------
PRINCIPAL OPT. CALL MARKET
AMOUNT DESCRIPTION PROVISIONS* RATINGS** VALUE
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
$ 3,150,000 California Educational Facilities Authority
(University of Southern California),
7.200%, 10/01/15 10/97 at 102 Aa $ 3,350,340
California Health Facilities Financing Authority
(Small Facilities Pooled Loan Program):
3,000,000 7.400%, 4/01/14 4/05 at 102 A 3,408,600
3,635,000 7.500%, 4/01/22 4/05 at 102 A 4,155,641
1,700,000 California Health Facilities Authority (Sutter Health
System), 7.00%, 1/01/09 1/99 at 102 A1 1,829,846
2,000,000 California Health Facilities Financing Authority
(Health Dimensions, Inc.), 7.500%, 5/01/15
(Pre-refunded to 5/01/00) 5/00 at 102 Ba 2,291,120
2,000,000 California Health Facilities Financing Authority
(Sisters of Providence), 7.500%, 10/01/10 10/00 at 102 AA- 2,308,540
3,380,000 California Health Facilities Financing Authority
(Kaiser Permanente), 7.000%, 12/01/10 12/00 at 102 Aa3 3,764,036
2,425,000 California Housing Finance Agency, Home
Mortgage, 8.100%, 8/01/16 8/96 at 102 Aa 2,504,104
4,000,000 California Housing Finance Agency,
5.900%, 8/01/17 2/06 at 102 Aaa 4,023,600
California Public Works Board (California State
University Project),
8,470,000 6.700% 10/01/17 10/02 at 102 A 9,278,970
5,000,000 5.500%, 12/01/18 12/03 at 102 A 4,790,000
1,060,000 California State 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 1,143,062
2,250,000 California State Public Works Board (Department of
Corrections-State Prisons-Susanville),
5.375%, 6/01/18 6/02 at 102 A1 2,140,538
2,500,000 California Statewide Communities Development
Corporation (Solheim Lutheran Home),
Certificates of Participation, 6.500%, 11/01/17 11/04 at 102 A 2,598,200
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 3,237,570
1,500,000 ABAG Finance Authority for Nonprofit
Corporations (Channing House), Certificates of
Participation, 7.125%, 1/01/21 1/01 at 102 A 1,626,915
2,035,000 Bella Vista Water District, Certificates of
Participation, 7.375%, 10/01/17 10/01 at 102 Baa 2,168,801
7,000,000 Brea Redevelopment Agency, Tax Allocation,
5.500%, 8/01/17 8/03 at 102 Aaa 6,865,880
- ---------------------------------------------------------------------------------------------------------------------------
</TABLE>
17
<PAGE>
<TABLE>
<CAPTION>
PORTFOLIO OF INVESTMENTS
NUVEEN CALIFORNIA TAX-FREE VALUE FUND--CONTINUED
- ---------------------------------------------------------------------------------------------------------------------------
PRINCIPAL OPT. CALL MARKET
AMOUNT DESCRIPTION PROVISIONS* RATINGS** VALUE
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Carson Redevelopment Agency Tax Allocation:
$ 1,000,000 6.000%, 10/01/13 10/03 at 102 Baa $ 999,400
2,000,000 6.000%, 10/01/16 10/03 at 102 Baa1 1,961,680
2,000,000 Chico Redevelopment Agency, Certificates of
Participation (Sierra Sunrise Lodge),
6.750%, 2/01/21 2/01 at 102 A 2,098,240
6,500,000 Contra Costa County, FHA Insured Mortgage (Cedar
Pointe Apartments), 6.150%, 9/01/25 9/03 at 103 AAA 6,600,425
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 2,347,540
3,200,000 Desert Sands Unified School District Certificates of
Participation, 5.750%, 3/01/20 3/05 at 102 Aaa 3,232,480
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 2,238,308
4,000,000 6.375%, 6/01/21 (Pre-refunded to 12/01/01) 12/01 at 102 Aaa 4,501,200
2,500,000 Fontana Public Financing Authority, Tax Allocation
(North Fontana Redevelopment Project),
7.250%, 9/01/20 9/00 at 102 A 2,694,600
3,000,000 Fresno Health Facilities, Refunding Bonds (Holy
Cross Health Systems Corporation),
5.625%, 12/01/15 12/03 at 102 Aaa 2,978,490
2,475,000 Loma Linda University Medical Center,
6.000%, 12/01/06 12/03 at 102 BBB 2,553,086
5,000,000 Los Angeles Community Redevelopment Agency,
Multi-Family Housing (Angelus Plaza),
7.400%, 6/15/10 6/05 at 105 AAA 5,586,850
3,505,000 Los Angeles Harbor, 7.600%, 10/01/18 10/98 at 102 AAA 3,930,157
255,000 Los Angeles Home Mortgage (GNMA),
8.100%, 5/01/17 No Opt. Call Aaa 273,472
2,400,000 Los Angeles State Building Authority,
7.500%, 3/01/11 (Pre-refunded to 3/01/98) 3/98 at 102 AAA 2,621,184
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 4,895,099
195,000 Los Angeles County, Single Family Mortgage,
(GNMA), 8.000%, 3/01/17 No Opt. Call Aaa 208,001
2,000,000 Los Angeles County Transportation Commission,
Sales Tax, 7.400%, 7/01/15 7/99 at 102 AA- 2,221,160
Los Angeles County Transportation Commission:
2,300,000 6.250%, 7/01/13 7/02 at 102 Aaa 2,449,523
4,445,000 6.000%, 7/01/23 7/02 at 102 Aaa 4,614,221
1,260,000 Marysville Community Development Agency,
Tax Allocation, 7.250%, 3/01/21 3/02 at 102 Baa 1,352,484
- ---------------------------------------------------------------------------------------------------------------------------
</TABLE>
18
<PAGE>
<TABLE>
<CAPTION>
NUVEEN TAX-FREE MUTUAL FUNDS ANNUAL REPORT
FEBRUARY 29, 1996
- ---------------------------------------------------------------------------------------------------------------------------
PRINCIPAL OPT. CALL MARKET
AMOUNT DESCRIPTION PROVISIONS* RATINGS** VALUE
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
$ 740,000 Menlo Park Community Development Agency,
FHA Insured, Multi-Family Housing,
8.250%, 12/01/28 6/97 at 103 Aa $ 784,444
875,000 Monterey Hospital Revenue, 7.375%, 7/01/14 7/96 at 102 A+ 901,556
2,165,000 Napa County, Certificates of Participation,
5.250%, 5/15/13 5/03 at 102 A1 2,059,998
1,500,000 North City West School Facilities Authority,
Community Facilities District No. 1,
7.850%, 9/01/19 (Pre-refunded to 9/01/99) 9/99 at 102 N/R 1,715,385
2,950,000 Northern California Power Agency,
7.150%, 7/01/24 7/98 at 102 A 3,182,726
Northridge Water District, Certificates of
Participation:
1,780,000 5.250%, 2/01/14 2/06 at 102 Aaa 1,709,031
1,105,000 5.250%, 2/01/18 2/06 at 102 Aaa 1,051,783
2,120,000 Ontario Assessment District No. 100C,
Limited Obligation, 8.000%, 9/02/11 3/96 at 103 N/R 2,197,783
3,270,000 Palmdale Elementary School District,
5.400%, 8/01/25 8/05 at 102 Aaa 3,182,953
2,920,000 Rancho Mirage Redevelopment Agency, Tax
Allocation, 5.500%, 4/01/29 4/04 at 102 A 2,658,514
1,450,000 Redding Joint Powers Financing Authority,
6.250%, 6/01/23 6/03 at 102 A 1,439,502
Riverside Multi-Family Housing:
3,285,000 6.500%, 1/01/18 7/02 at 100 AAA 3,377,177
4,005,000 6.500%, 1/01/18 7/02 at 100 AAA 4,117,380
Sacramento Area Flood Control Agency, Capital
Assessment District 2:
3,000,000 5.375%, 10/01/15 10/05 at 102 Aaa 2,948,160
3,000,000 5.375%, 10/01/25 10/05 at 102 Aaa 2,904,930
205,000 Sacramento Municipal Utility District,
Subordinated Electric Revenue,
8.000%, 11/15/10 No Opt. Call Baa1 205,642
4,000,000 Sacramento Municipal Utility District,
7.875%, 8/15/16 (Pre-refunded to 8/15/98) 8/98 at 102 Aaa 4,461,400
2,315,000 Salinas Tax Allocation, 7.400%, 9/02/09 3/96 at 103 N/R 2,407,762
2,080,000 Salinas, (Villa Sierra-GNMA), 6.500%, 7/20/17 7/04 at 102 AAA 2,162,659
4,000,000 San Bernadino, Certificates of Participation,
5.500%, 8/01/15 8/05 at 102 Aaa 3,931,920
10,240,000 San Francisco Airports Commission,
6.100%, 5/01/25 5/04 at 101 Aaa 10,710,733
5,000,000 San Francisco City and County Redevelopment
Financing Authority, Tax Allocation,
5.125%, 8/01/18 8/03 at 103 A 4,535,700
- ---------------------------------------------------------------------------------------------------------------------------
</TABLE>
19
<PAGE>
<TABLE>
<CAPTION>
PORTFOLIO OF INVESTMENTS
NUVEEN CALIFORNIA TAX-FREE VALUE FUND--CONTINUED
- ---------------------------------------------------------------------------------------------------------------------------
PRINCIPAL OPT. CALL MARKET
AMOUNT DESCRIPTION PROVISIONS* RATINGS** VALUE
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
$ 3,070,000 San Leandro, Certificates of Participation,
5.900%, 6/01/13 6/03 at 102 A $ 3,083,784
1,000,000 San Mateo County Board of Education,
Certificates of Participation, 7.100%, 5/01/21 5/99 at 102 A+ 1,063,180
Santa Barbara, Certificates of Participation
(Fact Retirement Services):
1,750,000 5.850%, 8/01/15 8/06 at 102 A 1,738,870
2,975,000 5.750%, 8/01/20 8/06 at 102 A 2,911,841
3,000,000 Santa Cruz Housing Authority, Multi-Family
Housing, FNMA, 7.750%, 7/01/23 7/00 at 102 AAA 3,225,660
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+ 2,283,580
Southern California Public Power Authority:
4,760,000 7.000%, 7/01/22 7/96 at 102 1/2 Aa 4,924,172
740,000 5.500%, 7/01/23 7/96 at 100 Aa 719,058
2,825,000 Stockton Hospitals (St. Joseph Hospital),
6.700%, 6/01/15 12/98 at 100 A 2,912,745
3,000,000 Thousand Oaks Redevelopment Agency,Tax
Allocation, 5.375%, 12/01/25 12/05 at 102 Aaa 2,904,600
1,100,000 Tulare County, Certificates of Participation,
6.875%, 11/15/12 11/02 at 102 Baa1 1,157,519
University of California (UCLA Center Chiller/
Cogeneration), Certificates of Participation:
3,500,000 5.600%, 11/01/20 11/03 at 102 Aa 3,379,530
4,335,000 6.000%, 11/01/21 11/03 at 102 Aa 4,431,886
3,335,000 University of California Research Facilities,
5.800%, 9/01/23 9/01 at 102 A- 3,296,580
4,000,000 Walnut Creek (John Muir Medical Center),
Certificates of Participation, 5.000%, 2/15/16 2/04 at 102 Aaa 3,715,920
- ---------------------------------------------------------------------------------------------------------------------------
$ 218,080,000 Total Investments - (Cost $214,125,831) - 98.5% 226,239,426
==============-------------------------------------------------------------------------------------------------------------
TEMPORARY INVESTMENTS IN SHORT-TERM
MUNICIPAL SECURITIES - 0.2%
$ 400,000 California Pollution Control Finance Authority
============== (Shell Oil Company), Variable Rate Demand
Bonds, 3.150%, 11/01/00+ VMIG-1 400,000
- ---------------------------------------------------------------------------------------------------------------------------
Other Assets Less Liabilities - 1.3% 3,143,863
- ---------------------------------------------------------------------------------------------------------------------------
Net Assets - 100% $ 229,783,289
===========================================================================================================================
</TABLE>
20
<PAGE>
<TABLE>
<CAPTION>
NUVEEN TAX-FREE MUTUAL FUNDS ANNUAL REPORT
FEBRUARY 29, 1996
- ---------------------------------------------------------------------------------------------------------------------------
NUMBER MARKET MARKET
STANDARD & POOR'S MOODY'S OF ISSUES VALUE PERCENT
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
SUMMARY OF AAA Aaa 29 $102,875,637 45%
RATINGS** AA+, AA, AA-- Aa1, Aa, Aa2, Aa3 12 36,519,939 16
PORTFOLIO OF A+ A1 7 11,421,760 5
INVESTMENTS A, A-- A, A2, A3 17 56,411,428 25
(EXCLUDING BBB+, BBB, BBB-- Baa1, Baa, Baa2, Baa3 7 10,398,612 5
TEMPORARY BB+, BB, BB-- Ba1, Ba, Ba2, Ba3 1 2,291,120 1
INVESTMENTS): Non-rated Non-rated 3 6,320,930 3
- ---------------------------------------------------------------------------------------------------------------------------
TOTAL 76 $226,239,426 100%
===========================================================================================================================
</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.
21
<PAGE>
<TABLE>
<CAPTION>
PORTFOLIO OF INVESTMENTS
NUVEEN CALIFORNIA INSURED TAX-FREE VALUE FUND
- ---------------------------------------------------------------------------------------------------------------------------
PRINCIPAL OPT. CALL MARKET
AMOUNT DESCRIPTION PROVISIONS* RATINGS** VALUE
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
$ 1,000,000 California Education Facilities Authority
(Pepperdine University), 7,200%, 11/01/15
(Pre-refunded to 11/01/00) 11/00 at 102 Aaa $ 1,143,840
6,000,000 California Health Facilities Authority (Kaiser
Permanente), 5.450%, 10/01/13 10/01 at 101 Aa3 5,798,880
6,340,000 California Housing Finance Agency,
6.850%, 8/01/23 2/02 at 102 Aaa 6,663,213
240,000 California Public Capital Improvement Finance
Authority (Pooled Projects), 8.100%, 3/01/18 3/98 at 102 Aaa 258,067
5,000,000 California Public Works Board, Department of
Corrections--State Prisons, 7.000%, 9/01/09
(Pre-refunded to 9/01/00) 9/00 at 102 Aaa 5,672,050
8,500,000 California Statewide Community Development
Authority (Sutter Health), 6.125%, 8/15/22 8/02 at 102 Aaa 8,899,245
9,000,000 California Statewide Communities Development
Authority (Sutter Health), Certificates of
Participation, 5.500%, 8/15/13 8/03 at 102 Aaa 8,979,750
1,225,000 Barstow Redevelopment Agency, Tax Allocation,
7.000%, 9/01/14 No Opt. Call Aaa 1,463,005
7,005,000 Big Bear Lake Financing Authority,
6.300%, 8/01/25 8/05 at 102 Aaa 7,488,415
7,000,000 Big Bear Lake Water System, 6.375%, 4/01/22 4/02 at 102 Aaa 7,468,090
3,525,000 Brea Public Financing Authority, Tax Allocation,
7.000%, 8/01/15 (Pre-refunded to 8/01/01) 8/01 at 102 Aaa 4,053,433
2,000,000 Burbank Wastewater System, 5.500%, 6/01/25 6/05 at 102 Aaa 1,961,320
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 3,419,730
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 2,274,900
7,000,000 Chino Unified School District, Certificates of
Participation, 6.125%, 9/01/26 9/05 at 102 Aaa 7,366,310
850,000 Concord Redevelopment Agency, Tax Allocation
(Central Concord Project), 7.875%, 7/01/07 7/98 at 102 Aaa 931,549
500,000 Cotati-Rohnert Park Unified School District,
9.000%, 8/01/06 8/99 at 102 Aaa 579,100
4,050,000 Cucamonga County Water District, Certificates of
Participation, 5.450%, 9/01/23 3/04 at 102 Aaa 3,918,375
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 2,295,700
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 2,248,840
- ---------------------------------------------------------------------------------------------------------------------------
</TABLE>
22
<PAGE>
<TABLE>
<CAPTION>
NUVEEN TAX-FREE MUTUAL FUNDS ANNUAL REPORT
FEBRUARY 29, 1996
- ---------------------------------------------------------------------------------------------------------------------------
PRINCIPAL OPT. CALL MARKET
AMOUNT DESCRIPTION PROVISIONS* RATINGS** VALUE
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
$ 3,865,000 Fallbrook Sanitary District, Certificates
of Participation, 6.600%, 2/01/13 2/01 at 100 Aaa $ 4,158,701
2,500,000 Fontana Public Financing Authority, Tax
Allocation (North Fontana Redevelopment
Project), 7.000%, 9/01/10 9/00 at 102 Aaa 2,781,850
3,000,000 Gilroy Unified School District, Certificates of
Participation, 6.250%, 9/01/12 9/04 at 102 Aaa 3,208,620
7,000,000 Glendale Memorial Hospital and Health Center,
5.600%, 11/15/25 11/05 at 102 AAA 6,778,030
1,000,000 LaQuinta Redevelopment Agency, Tax
Allocation, 7.300%, 9/01/12 No Opt. Call Aaa 1,235,200
5,000,000 Lancaster Redevelopment Agency, Tax
Allocation, 5.800%, 8/01/23 8/03 at 102 Aaa 5,070,350
5,000,000 Los Angeles Community Redevelopment Agency,
Multi-Family Housing (Angelus Plaza),
7.400%, 6/15/10 6/05 at 105 AAA 5,586,850
2,000,000 Los Angeles Convention and Exhibition Center,
Certificates of Participation, 7.000%, 8/15/21
(Pre-refunded to 8/15/00) 8/00 at 102 Aaa 2,266,720
Los Angeles Department of Water and Power:
5,000,000 5.400%, 11/15/31 11/03 at 102 Aa 4,739,000
6,000,000 5.400%, 11/15/31 11/03 at 102 Aaa 5,739,300
260,000 Los Angeles Home Mortgage (GNMA),
8.100%, 5/01/17 No Opt. Call Aaa 278,834
Los Angeles Wastewater System:
800,000 5.700% 6/01/20 6/03 at 102 Aaa 800,208
5,000,000 5.700% 6/01/23 6/03 at 102 Aaa 5,019,100
5,000,000 Los Angeles County Transportation Commission,
6.250%, 7/01/13 7/02 at 102 Aaa 5,325,050
Modesto Irrigation District Financing Authority,
Domestic Water Project:
4,500,000 6.125%, 9/01/19 9/02 at 102 Aaa 4,721,715
5,750,000 5.500%, 9/01/22 9/02 at 100 Aaa 5,636,035
2,500,000 Mt. Diablo Hospital District, 8.000%, 12/01/11
(Pre-refunded to 12/01/00) 12/00 at 102 Aaa 2,957,175
2,000,000 Mt. Diablo Unified School District, Special Tax,
7.050%, 8/01/20 8/00 at 102 Aaa 2,227,960
Napa FHA-Insured (Creekside Apartments):
2,555,000 6.625%, 7/01/24 7/02 at 102 Aaa 2,661,722
2,000,000 6.625%, 7/01/25 7/04 at 101 Aaa 2,091,080
7,040,000 Norwalk Community Facilities Financing
Authority, Tax Allocation, 6.050%, 9/01/25 9/05 at 102 Aaa 7,395,379
2,500,000 Oakland Pension Financing, 7.600%, 8/01/21 8/98 at 102 Aaa 2,730,725
- ---------------------------------------------------------------------------------------------------------------------------
</TABLE>
23
<PAGE>
<TABLE>
<CAPTION>
PORTFOLIO OF INVESTMENTS
NUVEEN CALIFORNIA INSURED TAX-FREE VALUE FUND--CONTINUED
- ---------------------------------------------------------------------------------------------------------------------------
PRINCIPAL OPT. CALL MARKET
AMOUNT DESCRIPTION PROVISIONS* RATINGS** VALUE
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
$ 1,250,000 Palm Desert Redevelopment Agency,
Tax Allocation, 7.400%, 5/01/09 5/97 at 101 Aaa $ 1,306,575
2,000,000 Pittsburgh Redevelopment Agency
(Los Medanos Community Project),
Tax Allocation, 7.150%, 8/01/21 8/01 at 103 Aaa 2,330,180
1,500,000 Port of Oakland, 7.250%, 11/01/16 5/97 at 102 Aaa 1,580,160
1,270,000 Rancho Cucamonga Redevelopment Agency,
Tax Allocation, 7.125%, 9/01/19
(Pre-refunded to 9/01/99) 9/99 at 102 Aaa 1,422,502
Riverside County Desert Justice Facility
Corporation, Certificates of Participation:
3,600,000 6.000%, 12/01/17 12/04 at 101 Aaa 3,738,276
2,500,000 6.250%, 12/01/21 12/04 at 101 Aaa 2,638,875
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 3,382,170
4,240,000 Saddleback Unified School District Public
Financing Authority, 5.650%, 9/01/17 9/05 at 102 Aaa 4,221,683
6,030,000 San Bernardino Certificates of Participation,
5.500%, 8/01/15 8/05 at 102 Aaa 5,927,369
2,500,000 San Bernardino County Transportation
Authority, Sales Tax, 6.000%, 3/01/10 3/02 at 102 Aaa 2,623,775
2,000,000 San Diego Regional Building Authority
(San Miguel Fire Protection District),
7.250%, 1/01/20 (Pre-refunded to 1/01/00) 1/00 at 102 Aaa 2,258,800
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 2,532,443
1,000,000 6.750%, 7/01/24 7/04 at 102 Aaa 1,122,180
2,250,000 San Jose Redevelopment Agency, Tax Allocation,
4.750%, 8/01/24 2/04 at 102 Aaa 1,989,630
2,000,000 San Marcos Public Facilities Authority, Tax
Allocation, 5.500%, 8/01/23 8/03 at 102 Aaa 1,962,420
4,750,000 Southern California Public Power Authority,
5.000%, 7/01/22 7/03 at 100 Aaa 4,350,383
2,000,000 Southern California Rapid Transit Finance
Authority, Certificates of Participation,
7.500%, 7/01/05 1/01 at 102 1/2 Aaa 2,275,880
3,040,000 Sulphur Springs Union School District,
0.000%, 9/01/15 No Opt. Call Aaa 1,021,501
125,000 Thousand Oaks Redevelopment Agency,
Single Family Mortgage, 7.900%, 1/01/16 1/97 at 102 Aaa 129,780
5,250,000 Tracy Area Public Facilities Financing Agency,
5.500%, 10/01/21 (WI) 10/06 at 102 Aaa 5,078,378
- ---------------------------------------------------------------------------------------------------------------------------
$ 211,060,000 Total Investments - (Cost $203,867,092) - 97.4% 218,186,376
==============-------------------------------------------------------------------------------------------------------------
</TABLE>
24
<PAGE>
<TABLE>
<CAPTION>
NUVEEN TAX-FREE MUTUAL FUNDS ANNUAL REPORT
FEBRUARY 29, 1996
- ---------------------------------------------------------------------------------------------------------------------------
PRINCIPAL OPT. CALL MARKET
AMOUNT DESCRIPTION PROVISIONS* RATINGS** VALUE
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
TEMPORARY INVESTMENTS IN SHORT-TERM
MUNICIPAL SECURITIES - 3.5%
$ 1,000,000 California Health Facilities Financing Authority
(St. Joseph Health System), Series A,
Variable Rate Demand Bonds,
3.150%, 7/01/13+ VMIG-1 $ 1,000,000
500,000 California Health Facilities Financing Authority
(St. Joseph Health System) Series B,
Variable Rate Demand Bonds,
3.100%, 7/01/13+ VMIG-1 500,000
700,000 California Health Facilities Financing Authority
(St. Joseph Health System), Series 1991 B,
Variable Rate Demand Bonds,
3.100%, 7/01/09+ VMIG-1 700,000
3,200,000 California Statewide Communities Development
Authority (St. Joseph Health System), Certificates
of Participation, Variable Rate Demand Bonds,
3.100%, 7/01/24+ VMIG-1 3,200,000
California Pollution Control Finance Authority
(Shell Oil Company), Variable Rate
Demand Bonds:
800,000 3.150%, 10/01/07+ VMIG-1 800,000
200,000 3.150%, 10/01/11+ VMIG-1 200,000
1,500,000 Santa Ana Health Facilities Authority
(Town and Country),
Variable Rate Demand Bonds,
3.250%, 10/01/20+ A-1 1,500,000
- ---------------------------------------------------------------------------------------------------------------------------
$ 7,900,000 Total Temporary Investments - 3.5% 7,900,000
==============-------------------------------------------------------------------------------------------------------------
Other Assets Less Liabilities - (0.9)% (2,153,889)
- ---------------------------------------------------------------------------------------------------------------------------
Net Assets - 100% $ 223,932,487
===========================================================================================================================
</TABLE>
25
<PAGE>
<TABLE>
<CAPTION>
PORTFOLIO OF INVESTMENTS
NUVEEN CALIFORNIA INSURED TAX-FREE VALUE FUND--CONTINUED
- ---------------------------------------------------------------------------------------------------------------------------
NUMBER MARKET MARKET
STANDARD & POOR'S MOODY'S OF ISSUES VALUE PERCENT
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
SUMMARY OF AAA Aaa 60 $207,648,496 95%
RATINGS** AA+, AA, AA-- Aa1, Aa, Aa2, Aa3 2 10,537,880 5
PORTFOLIO OF
INVESTMENTS
(EXCLUDING
TEMPORARY
INVESTMENTS):
- ---------------------------------------------------------------------------------------------------------------------------
TOTAL 62 $218,186,376 100%
===========================================================================================================================
</TABLE>
All of the bonds in the portfolio, excluding temporary investments in short-term
municipal securities, are either covered by Original Issue Insurance, Secondary
Market Insurance or Portfolio Insurance, or are backed by an escrow or trust
containing sufficient U.S. Government or U.S. Government agency securities, any
of which ensure the timely payment of principal and interest.
* Optional Call Provisions (not covered by the report of independent public
accountants): Dates (month and year) and prices of the earliest optional call or
redemption. There may be other call provisions at varying prices at later
dates.
** Ratings (not covered by the report of independent public accountants):
Using the higher of Standard & Poor's or Moody's rating. (WI) Security purchased
on a when-issued basis (note 1).
+ The security has a maturity of more than one year, but has variable rate and
demand features which qualify it as a short-term security. The rate disclosed is
that currently in effect. This rate changes periodically based on market
conditions or a specified market index.
See accompanying notes to financial statements.
26
<PAGE>
<TABLE>
<CAPTION>
NUVEEN TAX-FREE MUTUAL FUNDS ANNUAL REPORT
FEBRUARY 29, 1996
NUVEEN MASSACHUSETTS TAX-FREE VALUE FUND
- ---------------------------------------------------------------------------------------------------------------------------
PRINCIPAL OPT. CALL MARKET
AMOUNT DESCRIPTION PROVISIONS* RATINGS** VALUE
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Massachusetts General Obligation,
$ 165,000 7.250%, 3/01/09 (Pre-refunded to 3/01/00) 3/00 at 102 Aaa $ 186,302
715,000 5.500%, 2/01/11 2/03 at 102 A 720,734
Massachusetts Bay Transportation Authority:
250,000 7.750%, 3/01/10 (Pre-refunded to 3/01/98) 3/98 at 102 Aaa 273,940
1,000,000 7.000%, 3/01/11 (Pre-refunded to 3/01/01) 3/01 at 102 Aaa 1,137,570
250,000 Massachusetts Bay Transportation Authority,
Certificates of Participation, 7.800%, 1/15/14 12/06 at 100 BBB 291,145
160,000 Massachusetts Educational Loan Authority,
7.875%, 6/01/03 6/97 at 102 AAA 170,426
1,345,000 Massachusetts Health and Educational Facilities
Authority (Emerson Hospital),
8.000%, 7/01/18 (Pre-refunded to 7/01/00) 7/00 at 102 N/R 1,560,577
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 277,333
350,000 Massachusetts Health and Educational Facilities
Authority (Salem Hospital), 7.250%, 7/01/09
(Pre-refunded to 7/01/97) 7/97 at 100 Aaa 366,951
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 542,560
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 Baa 1,362,393
1,000,000 6.350%, 7/01/22 7/02 at 102 AAA 1,046,960
500,000 Massachusetts Health and Educational Facilities
Authority (Newton-Wellesley Hospital),
8.000%, 7/01/18 7/98 at 102 Aaa 556,050
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 538,510
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+ 836,115
1,000,000 Massachusetts Health and Educational Facilities
Authority (Boston College), 6.625%, 7/01/21 7/01 at 102 Aaa 1,096,280
500,000 Massachusetts Health and Educational Facilities
Authority (Worcester Polytechnic Institute),
6.625%, 9/01/17 9/02 at 102 A+ 541,300
- ---------------------------------------------------------------------------------------------------------------------------
</TABLE>
27
<PAGE>
PORTFOLIO OF INVESTMENTS
NUVEEN MASSACHUSETTS TAX-FREE VALUE FUND-CONTINUED
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------------
PRINCIPAL OPT. CALL MARKET
AMOUNT DESCRIPTION PROVISIONS* RATINGS** VALUE
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
$ 495,000 Massachusetts Health and Educational Facilities
Authority (Brockton Hospital),
8.000%, 7/01/07 7/97 at 102 A $ 521,992
250,000 Massachusetts Health and Educational Facilities
Authority (University Hospital),
7.250%, 7/01/10 7/00 at 102 Aaa 278,668
750,000 Massachusetts Health and Educational Facilities
Authority (New England Medical Center),
6.625%, 7/01/25 7/02 at 102 Aaa 831,825
1,750,000 Massachusetts Health and Educational Facilities
Authority (New England Deaconess Hospital),
6.875%, 4/01/22 4/02 at 102 A 1,849,750
1,000,000 Massachusetts Health and Educational Facilities
Authority (Metrowest Health),
6.500%, 11/15/18 11/02 at 102 A 986,450
885,000 Massachusetts Health and Educational Facilities
Authority (Cable Housing and Health Services),
5.625%, 7/01/13 7/03 at 102 Aaa 893,239
Massachusetts Health and Educational Facilities
Authority (Lahey Clinic Medical Center):
1,000,000 5.625%, 7/01/15 7/03 at 102 Aaa 989,460
2,000,000 5.375%, 7/01/23 7/03 at 102 Aaa 1,911,660
700,000 Massachusetts Health and Educational Facilities
Authority (Daughters of Charity),
6.100%, 7/01/14 7/04 at 102 Aa 719,103
Massachusetts Health and Educational Facilities
Authority (Youville Hospital):
2,500,000 6.000%, 2/15/25 2/04 at 102 Aa 2,534,525
2,000,000 6.000%, 2/15/34 2/04 at 102 Aa 2,012,600
1,950,000 Massachusetts Housing Finance Agency,
Housing Project, 6.375%, 4/01/21 4/03 at 102 A1 1,967,921
Massachusetts Housing Finance Agency,
Residential Development:
1,000,000 6.250%, 11/15/14 11/02 at 102 Aaa 1,026,200
1,000,000 6.875%, 11/15/21 5/02 at 102 Aaa 1,049,350
Massachusetts Housing Finance Agency, Single
Family Housing:
500,000 7.350%, 12/01/16 6/01 at 102 Aa 533,245
1,250,000 7.700%, 6/01/17 6/98 at 102 Aa 1,333,513
1,440,000 Massachusetts Industrial Finance Agency,
Pollution Control (Eastern Edison),
5.875%, 8/01/08 8/03 at 102 Baa2 1,434,154
- ---------------------------------------------------------------------------------------------------------------------------
</TABLE>
28
<PAGE>
<TABLE>
<CAPTION>
NUVEEN TAX-FREE MUTUAL FUNDS ANNUAL REPORT
FEBRUARY 29, 1996
- ---------------------------------------------------------------------------------------------------------------------------
PRINCIPAL OPT. CALL MARKET
AMOUNT DESCRIPTION PROVISIONS* RATINGS** VALUE
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
$ 975,000 Massachusetts Industrial Finance Authority
(Malden Public Library Project),
7.250%, 1/01/15 1/05 at 102 Aaa $ 1,141,550
1,000,000 Massachusetts Industrial Finance Agency
(Semass Project), 9.000%, 7/01/15 7/01 at 103 N/R 1,098,090
250,000 Massachusetts Industrial Finance Agency
(College of the Holy Cross), 6.450%, 1/01/12 1/02 at 102 A1 267,743
475,000 Massachusetts Industrial Finance Agency (Sturdy
Memorial Hospital), 7.900%, 6/01/09 6/99 at 102 BBB+ 513,428
500,000 Massachusetts Industrial Finance Agency
(Springfield College), 7.800%, 10/01/09 10/99 at 103 A 575,375
1,380,000 Massachusetts Industrial Finance Agency
(Merrimack College), 7.125%, 7/01/12 7/02 at 102 BBB- 1,483,845
1,600,000 Massachusetts Industrial Finance Agency
(Phillips Academy), 5.375%, 9/01/23 9/08 at 102 Aa1 1,550,864
500,000 Massachusetts Industrial Finance Agency
(Whitehead Institute for Biomedical Research),
5.125%, 7/01/26 7/03 at 102 Aa 458,355
2,290,000 Massachusetts Industrial Finance Agency
(Lesley College), 6.300%, 7/01/25 7/05 at 102 AAA 2,412,194
1,750,000 Massachusetts Industrial Finance Agency (Harvard
Community Health), 8.125%, 10/01/17 10/98 at 102 A 1,907,605
1,000,000 Massachusetts Municipal Wholesale
Electric Company, 5.000%, 7/01/17 7/04 at 102 Aaa 932,230
Massachusetts Port Authority:
500,000 7.125%, 7/01/12 7/98 at 100 Aa 506,290
635,000 13.000%, 7/01/13 No Opt. Call Aaa 1,099,839
Massachusetts Turnpike Authority:
500,000 5.000%, 1/01/13 1/03 at 100 A1 470,905
1,000,000 5.125%, 1/01/23 1/03 at 102 Aaa 933,710
Attleboro General Obligation:
450,000 6.250%, 1/15/10 1/03 at 102 Baa1 475,362
450,000 6.250%, 1/15/11 1/03 at 102 Baa1 472,131
Barnstable General Obligation:
880,000 5.750%, 9/15/13 9/04 at 102 Aa 904,842
490,000 5.750%, 9/15/14 9/04 at 102 Aa 501,853
Boston General Obligation:
250,000 7.700%, 2/01/09 (Pre-refunded to 2/01/99) 2/99 at 102 A 279,715
1,000,000 6.750%, 7/01/11 7/01 at 102 Aaa 1,132,660
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 1,713,420
Boston Water and Sewer Commission:
180,000 7.875%, 11/01/13 (Pre-refunded to 11/01/96) 11/96 at 102 A 188,901
320,000 7.875%, 11/01/13 11/96 at 102 A 335,120
500,000 7.000%, 11/01/18 (Pre-refunded to 11/01/01) 11/01 at 102 Aaa 575,675
- ---------------------------------------------------------------------------------------------------------------------------
</TABLE>
29
<PAGE>
<TABLE>
<CAPTION>
PORTFOLIO OF INVESTMENTS
NUVEEN MASSACHUSETTS TAX-FREE VALUE FUND--CONTINUED
- ---------------------------------------------------------------------------------------------------------------------------
PRINCIPAL OPT. CALL MARKET
AMOUNT DESCRIPTION PROVISIONS* RATINGS** VALUE
- ---------------------------------------------------------------------------------------------------------------------------
<C> <S> <C> <C> <C>
$ 1,000,000 Boston-Mount Pleasant Housing
Development Corporation, Multi-Family
Housing, 6.750%, 8/01/23 8/02 at 102 AAA $1,042,250
1,000,000 Dartmouth Housing Development Corporation
Multi-Family Housing, 7.375%, 7/01/24 1/98 at 103 AAA 1,043,270
Deerfield General Obligation:
420,000 6.200%, 6/15/09 6/02 at 102 A1 459,136
415,000 6.250%, 6/15/10 6/02 at 102 A1 452,176
525,000 Haverhill General Obligation, 7.500%, 10/15/11 10/01 at 102 Baa 580,099
Holyoke General Obligation:
685,000 8.000%, 6/01/01 No Opt. Call Baa 743,636
250,000 8.150%, 6/15/06 6/02 at 103 Aaa 302,635
750,000 7.000%, 11/01/08 11/02 at 102 Baa 840,615
500,000 7.650%, 8/01/09 8/01 at 102 Baa 560,110
Lowell General Obligation:
545,000 8.300%, 2/15/05 No Opt. Call Baa1 654,164
445,000 8.400%, 1/15/09 (Pre-refunded to 1/15/01) 1/01 at 102 Aaa 531,277
1,000,000 Lynn General Obligation, 7.850%, 1/15/11
(Pre-refunded to 1/15/02) 1/02 at 104 Aaa 1,209,040
500,000 Monson General Obligation School Project,
7.700%, 10/15/10 (Pre-refunded to 10/15/00) 10/00 at 102 Aaa 581,585
Palmer General Obligation:
500,000 7.700%, 10/01/10 (Pre-refunded to 10/01/00) 10/00 at 102 Aaa 581,045
500,000 5.500%, 10/01/10 10/03 at 102 Aaa 512,135
1,130,000 Peabody General Obligation, 6.950%, 8/01/09 8/00 at 100 Aaa 1,245,362
550,000 Quincy Hospital, FHA-Insured, 7.875%, 1/15/16 7/96 at 102 AAA 570,295
250,000 Sandwich General Obligation,
7.100%, 11/01/07 (Pre-refunded to 11/01/98) 11/98 at 102 1/2 Aaa 276,613
1,250,000 Somerville Housing Authority (GNMA),
7.950%, 11/20/30 5/00 at 102 AAA 1,343,074
425,000 South Essex Sewerage District, General
Obligation, 9.000%, 12/01/00 No Opt. Call A 508,622
250,000 Southeastern Massachusetts University
Building Authority, 7.800%, 5/01/16
(Pre-refunded to 5/01/96) 5/96 at 102 A 256,847
1,000,000 Springfield General Obligation, 7.100%, 9/01/11 9/02 at 102 Baa 1,099,700
Taunton General Obligation:
1,465,000 8.000%, 2/01/02 No Opt. Call A 1,727,234
1,005,000 8.000%, 2/01/03 No Opt. Call A 1,204,240
250,000 University of Lowell Building Authority,
7.400%, 11/01/07 11/97 at 102 A 269,634
- ---------------------------------------------------------------------------------------------------------------------------
</TABLE>
30
<PAGE>
<TABLE>
<CAPTION>
NUVEEN TAX-FREE MUTUAL FUNDS ANNUAL REPORT
FEBRUARY 29, 1996
- ---------------------------------------------------------------------------------------------------------------------------
PRINCIPAL OPT. CALL MARKET
AMOUNT DESCRIPTION PROVISIONS* RATINGS** VALUE
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
$ 500,000 University of Massachusetts Building Authority,
7.500%, 5/01/14 5/98 at 102 A $ 546,740
1,000,000 Worcester General Obligation, 6.000%, 8/01/04 8/02 at 102 BBB+ 1,070,840
1,000,000 Puerto Rico Aqueduct and Sewer Authority,
7.875%, 7/01/17 (Pre-refunded to 7/01/98) 7/98 at 102 AAA 1,111,000
2,250,000 Puerto Rico Electric Power Authority,
7.000%, 7/01/21 (Pre-refunded to 7/01/01) 7/01 at 102 Aaa 2,584,394
- ---------------------------------------------------------------------------------------------------------------------------
$ 72,620,000 Total Investments (Cost $72,713,663) - 95.7% 78,218,271
===============------------------------------------------------------------------------------------------------------------
TEMPORARY INVESTMENTS IN SHORT-TERM
MUNICIPAL SECURITIES - 3.2%
$ 2,600,000 Massachusetts Dedicated Income Tax Variable Rate
Demand Bonds, 3.350%, 12/01/97+ VMIG-1 2,600,000
===============------------------------------------------------------------------------------------------------------------
Other Assets Less Liabilities - 1.1% 882,885
- ---------------------------------------------------------------------------------------------------------------------------
Net Assets - 100% $ 81,701,156
===========================================================================================================================
</TABLE>
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------------
NUMBER MARKET MARKET
STANDARD & POOR'S MOODY'S OF ISSUES VALUE PERCENT
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
SUMMARY OF AAA Aaa 39 $35,505,977 46%
RATINGS** AA+, AA, AA-- Aa1, Aa, Aa2, Aa3 10 11,055,190 14
PORTFOLIO OF A+ A1 7 4,995,296 6
INVESTMENTS A, A-- A, A2, A3 15 11,878,959 15
(EXCLUDING BBB+, BBB, BBB-- Baa1, Baa, Baa2, Baa3 14 11,581,622 15
TEMPORARY Non-rated Non-rated 3 3,201,227 4
INVESTMENTS):
- ---------------------------------------------------------------------------------------------------------------------------
TOTAL 88 $78,218,271 100%
===========================================================================================================================
</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.
31
<PAGE>
PORTFOLIO OF INVESTMENTS
NUVEEN MASSACHUSETTS INSURED TAX-FREE VALUE FUND
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------------
PRINCIPAL OPT. CALL MARKET
AMOUNT DESCRIPTION PROVISIONS* RATINGS** VALUE
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Massachusetts General Obligation:
$ 500,000 6.500%, 6/01/08 6/02 at 101 Aaa $ 548,990
250,000 7.250%, 3/01/09 (Pre-refunded to 3/01/00) 3/00 at 102 Aaa 282,275
1,200,000 6.000%, 6/01/13 6/02 at 100 Aaa 1,237,356
Massachusetts Bay Transportation Authority,
General Transportation System:
250,000 7.250%, 3/01/03 3/00 at 102 Aaa 278,590
250,000 7.100%, 3/01/13 (Pre-refunded to 3/01/99) 3/99 at 102 Aaa 276,333
1,000,000 5.750%, 3/01/22 3/02 at 100 Aaa 1,004,780
250,000 Massachusetts Bay Transportation Authority,
Certificates of Participation, 7.650%, 8/01/15
(Pre-refunded to 8/01/00) 8/00 at 102 Aaa 288,848
750,000 Massachusetts College Building Authority,
7.250%, 5/01/16 5/96 at 102 Aaa 769,958
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 483,300
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 215,772
250,000 7.500%, 7/01/20 (Pre-refunded to 7/01/00) 7/00 at 102 Aaa 286,783
1,000,000 6.500%, 7/01/22 7/02 at 102 Aaa 1,096,030
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 332,799
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 827,423
1,700,000 5.625%, 7/01/15 7/03 at 102 Aaa 1,682,082
2,500,000 5.375%, 7/01/23 7/03 at 102 Aaa 2,389,575
800,000 Massachusetts Health and Educational Facilities
Authority (Berkshire Health Systems),
7.600%, 10/01/14 (Pre-refunded to 10/01/98) 10/98 at 102 Aaa 889,392
750,000 Massachusetts Health and Educational Facilities
Authority (Salem Hospital), 7.250%, 7/01/09
(Pre-refunded to 7/01/97) 7/97 at 100 Aaa 786,323
250,000 Massachusetts Health and Educational Facilities
Authority (Capital Asset Program),
7.200%, 7/01/09 7/99 at 102 Aaa 274,795
500,000 Massachusetts Health and Educational Facilities
Authority (University Hospital), 7.250%, 7/01/19 7/00 at 102 Aaa 556,920
250,000 Massachusetts Health and Educational Facilities
Authority (Newton-Wellesley Hospital),
8.000%, 7/01/18 7/98 at 102 Aaa 278,025
- ---------------------------------------------------------------------------------------------------------------------------
</TABLE>
32
<PAGE>
<TABLE>
<CAPTION>
NUVEEN TAX-FREE MUTUAL FUNDS ANNUAL REPORT
FEBRUARY 29, 1996
- ---------------------------------------------------------------------------------------------------------------------------
PRINCIPAL OPT. CALL MARKET
AMOUNT DESCRIPTION PROVISIONS* RATINGS** VALUE
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Massachusetts Health and Educational Facilities
Authority (Northeastern University):
$ 250,000 7.600%, 10/01/10 10/98 at 102 Aaa $ 274,570
1,600,000 6.550%, 10/01/22 10/02 at 102 Aaa 1,762,208
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+ 557,410
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 577,495
1,000,000 Massachusetts Health and Educational Facilities
Authority (Boston College), 6.625%, 7/01/21 7/01 at 102 Aaa 1,096,280
500,000 Massachusetts Health and Educational Facilities
Authority (Berklee College of Music),
6.875%, 10/01/21 10/01 at 102 Aaa 559,940
1,000,000 Massachusetts Health and Educational Facilities
Authority (Brigham and Women's Hospital),
6.750%, 7/01/24 7/01 at 102 Aa 1,053,890
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 279,658
1,500,000 Massachusetts Health and Educational Facilities
Authority (New England Medical Center),
6.625%, 7/01/25 7/02 at 102 Aaa 1,663,650
1,450,000 Massachusetts Health and Educational Facilities
Authority (Boston University), 6.000%, 10/01/22 10/02 at 100 Aaa 1,494,776
2,000,000 Massachusetts Health and Educational Facilities
Authority (Bentley College), 6.125%, 7/01/17 7/02 at 102 Aaa 2,096,840
350,000 Massachusetts Housing Finance Agency,
7.600%, 12/01/16 12/99 at 103 Aaa 372,257
Massachusetts Housing Finance Agency, Single
Family Housing:
500,000 7.350%, 12/01/16 6/01 at 102 Aa 533,245
250,000 7.700%, 6/01/17 6/98 at 102 Aa 266,703
1,590,000 Massachusetts Industrial Finance Authority (Malden
Public Library Project), 7.250%, 1/01/15 1/05 at 102 Aaa 1,861,604
500,000 Massachusetts Industrial Finance Agency,
(Brandeis University), 6.800%, 10/01/19 10/99 at 102 Aaa 548,405
200,000 Massachusetts Industrial Finance Agency
(Harvard Community Health Plan),
7.750%, 10/01/08 10/98 at 102 Aaa 219,918
250,000 Massachusetts Industrial Finance Agency,
(Milton Academy), 7.250%, 9/01/19
(Pre-refunded to 9/01/99) 9/99 at 102 Aaa 280,420
- ---------------------------------------------------------------------------------------------------------------------------
</TABLE>
33
<PAGE>
PORTFOLIO OF INVESTMENTS
NUVEEN MASSACHUSETTS INSURED TAX-FREE VALUE FUND-CONTINUED
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------------
PRINCIPAL OPT. CALL MARKET
AMOUNT DESCRIPTION PROVISIONS* RATINGS** VALUE
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
$ 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 $ 422,918
1,000,000 Massachusetts Industrial Finance Agency
(Mount Holyoke College), 6.300%, 7/01/13 7/01 at 102 Aaa 1,065,590
420,000 Massachusetts Industrial Finance Agency
(Babson College), 5.800%, 10/01/10 10/05 at 102 Aaa 441,521
2,000,000 Massachusetts Municipal Wholesale Electric
Company, 5.000%, 7/01/10 7/03 at 102 Aaa 1,937,200
1,000,000 Massachusetts Port Authority, 13.000%, 7/01/13 No Opt. Call Aaa 1,732,030
1,000,000 Massachusetts Turnpike Authority, 5.125%, 1/01/23 1/03 at 102 Aaa 933,710
1,000,000 Boston General Obligation, 6.750%, 7/01/11 7/01 at 102 Aaa 1,132,660
500,000 Boston City Hospital (FHA-Insured Mortgage),
7.625%, 2/15/21 (Pre-refunded to 8/15/00) 8/00 at 102 Aaa 571,140
Boston Water and Sewer Commission:
500,000 7.250%, 11/01/06 11/98 at 100 Aaa 537,015
500,000 7.000%, 11/01/18 (Pre-refunded to 11/01/01) 11/01 at 102 Aaa 575,675
500,000 Fall River General Obligation, 7.200%, 6/01/10 6/01 at 102 Aaa 566,775
250,000 Town of Groveland Unlimited Tax, 6.900%, 6/15/07 6/01 at 102 Aaa 280,090
1,000,000 Haverhill General Obligation, 6.700%, 9/01/10 9/01 at 102 Aaa 1,107,140
250,000 Holyoke General Obligation, 8.150%, 6/15/06 6/02 at 103 Aaa 302,635
450,000 Leominster General Obligation, 7.500%, 4/01/09 4/00 at 102 Aaa 513,194
2,625,000 Lowell General Obligation, 5.600%, 11/01/12 11/03 at 102 Aaa 2,652,116
1,025,000 Lynn General Obligation, 6.750%, 1/15/02 No Opt. Call Aaa 1,146,534
250,000 Lynn Water and Sewer Commission,
7.250%, 12/01/10 (Pre-refunded to 12/01/00) 12/00 at 102 Aaa 286,875
1,000,000 Mansfield General Obligation, 6.700%, 1/15/11 1/02 at 102 Aaa 1,108,920
250,000 Methuen General Obligation, 7.400%, 5/15/04 5/00 at 102 Aaa 281,088
500,000 Monson General Obligation School Project,
7.700%, 10/15/10 (Pre-refunded to 10/15/00) 10/00 at 102 Aaa 581,585
1,500,000 Monson General Obligation, 5.500%, 10/15/10 No Opt. Call Aaa 1,557,300
300,000 North Andover General Obligation, 7.400%, 9/15/10 9/00 at 103 Aaa 342,006
North Middlesex Region School District,
General Obligation:
270,000 7.200%, 6/15/08 6/00 at 103 Aaa 304,223
245,000 7.200%, 6/15/09 6/00 at 103 Aaa 276,054
250,000 Northampton General Obligation, 5.300%, 3/01/10 3/03 at 102 Aaa 250,475
190,000 Northfield General Obligation, 6.350%, 10/15/09 10/01 at 102 Aaa 204,389
Palmer General Obligation:
270,000 7.300%, 3/01/10 (Pre-refunded to 3/01/00) 3/00 at 102 Aaa 305,348
250,000 7.700%, 10/01/10 (Pre-refunded to 10/01/00) 10/00 at 102 Aaa 290,523
1,000,000 5.500%, 10/01/10 10/03 at 102 Aaa 1,024,270
440,000 Quaboag Regional School District, General
Obligation, 6.250%, 6/15/08 6/02 at 102 Aaa 475,424
- ---------------------------------------------------------------------------------------------------------------------------
</TABLE>
34
<PAGE>
<TABLE>
<CAPTION>
NUVEEN TAX-FREE MUTUAL FUNDS ANNUAL REPORT
FEBRUARY 29, 1996
- ---------------------------------------------------------------------------------------------------------------------------
PRINCIPAL OPT. CALL MARKET
AMOUNT DESCRIPTION PROVISIONS* RATINGS** VALUE
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Salem General Obligation:
$ 500,000 6.800%, 8/15/09 8/01 at 102 Aaa $ 555,885
900,000 6.000%, 7/15/10 7/02 at 102 Aaa 954,288
250,000 Sandwich General Obligation, 7.100%, 11/01/07
(Pre-refunded to 11/01/98) 11/98 at 102 1/2 Aaa 276,613
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 608,400
1,145,000 7.000%, 4/15/11 4/02 at 102 Aaa 1,319,326
250,000 Springfield Geneal Obligation, 7.000%, 11/01/07 11/98 at 103 Aaa 273,643
220,000 Taunton General Obligation, 6.800%, 9/01/09 9/01 at 103 Aaa 246,435
455,000 Wareham School Project General Obligation,
7.050%, 1/15/07 1/01 at 103 Aaa 513,148
250,000 Westfield General Obligation, 7.100%, 12/15/08
(Pre-refunded to 12/15/00) 12/00 at 102 Aaa 285,497
215,000 Whately General Obligation, 6.350%, 1/15/09 1/02 at 102 Aaa 232,540
1,210,000 Winchendon General Obligation, 6.050%, 3/15/10 3/03 at 102 Aaa 1,296,500
160,000 Worcester General Obligation, 6.900% 5/15/07 5/02 at 102 Aaa 184,150
1,000,000 Puerto Rico Commonwealth, General Obligation,
5.750%, 7/01/24 7/05 at 101 1/2 Aaa 1,016,160
2,290,000 Puerto Rico Industrial Medical and Environmental
Authority, 6.250%, 7/01/16 1/05 at 102 Aaa 2,460,580
- ---------------------------------------------------------------------------------------------------------------------------
$ 58,810,000 Total Investments - (Cost $58,764,889) - 96.4% 63,715,206
==============-------------------------------------------------------------------------------------------------------------
TEMPORARY INVESTMENTS IN SHORT-
TERM MUNICIPAL SECURITIES - 2.3%
$ 1,200,000 Massachusetts Dedicated Income Tax, Variable
Rate Demand Bonds, 3.350%, 12/01/97+ VMIG-1 1,200,000
300,000 Massachusetts Industrial Finance Agency (Showa
Women's Institute Boston), Variable Rate
Demand Bonds, 3.600%, 3/15/04+ VMIG-1 300,000
- ---------------------------------------------------------------------------------------------------------------------------
$ 1,500,000 Total Temporary Investments - 2.3% 1,500,000
==============-------------------------------------------------------------------------------------------------------------
Other Assets Less Liabilities - 1.3% 884,502
- ---------------------------------------------------------------------------------------------------------------------------
Net Assets - 100% $ 66,099,708
===========================================================================================================================
</TABLE>
35
<PAGE>
<TABLE>
<CAPTION>
PORTFOLIO OF INVESTMENTS
NUVEEN MASSACHUSETTS INSURED TAX-FREE VALUE FUND--CONTINUED
- ---------------------------------------------------------------------------------------------------------------------------
NUMBER MARKET MARKET
STANDARD & POOR'S MOODY'S OF ISSUES VALUE PERCENT
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
SUMMARY OF AAA Aaa 80 $61,303,958 96%
RATINGS** AA+, AA, AA-- Aa1, Aa, Aa2, Aa3 3 1,853,838 3
PORTFOLIO OF A+ A1 1 557,410 1
INVESTMENTS
(EXCLUDING
TEMPORARY
INVESTMENTS):
- ---------------------------------------------------------------------------------------------------------------------------
TOTAL 84 $63,715,206 100%
===========================================================================================================================
</TABLE>
All of the bonds in the portfolio, exluding temporary investments in short-term
municipal securities, are either covered by Original Issue Insurance,
Secondary Market Insurance or Portfolio Insurance, or are backed by an escrow or
trust containing sufficient U.S. Government or U.S. Government
agency securities, any of which ensure the timely payment of principal and
interest.
* Optional Call Provisions (not covered by the report of independent public
accountants): Dates (month and year) and prices of the earliest optional
call or redemption. There may be other call provisions at varying prices at
later dates.
** Ratings (not covered by the report of independent public accountants): Using
the higher of Standard & Poor's or Moody's rating.
+ 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.
36
<PAGE>
<TABLE>
<CAPTION>
PORTFOLIO OF INVESTMENTS NUVEEN TAX-FREE MUTUAL FUNDS ANNUAL REPORT
FEBRUARY 29, 1996
NUVEEN NEW YORK TAX-FREE VALUE FUND
- ---------------------------------------------------------------------------------------------------------------------------
PRINCIPAL OPT. CALL MARKET
AMOUNT DESCRIPTION PROVISIONS* RATINGS** VALUE
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
$ 4,000,000 New York Local Government Assistance Corporation,
5.500%, 4/01/21 4/03 at 102 A $ 3,844,720
500,000 New York State (Commissioner of Office of Mental
Health), Certificates of Participation,
8.300%, 9/01/12 9/97 at 102 Baal 536,065
3,000,000 New York State Energy Research and Development
Authority, 6.100%, 8/15/20 7/05 at 102 A1 3,106,530
1,545,000 New York State Environmental Facilities Corporation
(State Park Infrastructure), 5.750%, 3/15/13 3/03 at 101 Baal 1,535,823
3,000,000 New York State General Obligation,
5.625%, 10/01/20 10/05 at 101 A 3,004,890
200,000 New York State Housing Finance Agency, State
University Construction, 8.000%, 5/01/11 No Opt. Calls Aaa 255,060
1,650,000 New York State Housing Finance Agency, Insured
Multi-Family Mortgage Housing,
6.950%, 8/15/12 8/02 at 102 Aa 1,770,104
2,000,000 New York State Housing Finance Agency, Health
Facilities (New York City), 8.000%, 11/01/08 11/00 at 102 BBB+ 2,257,780
New York State Housing Finance Agency, Service
Contract Obligation:
500,000 6.125%, 3/15/20 9/03 at 102 Baal 511,215
3,750,000 5.500%, 9/15/22 9/03 at 102 Baal 3,528,450
3,000,000 6.500%, 3/15/25 9/05 at 102 Baal 3,170,940
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 1,065,830
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 1,085,396
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 1,083,640
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 1,111,020
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 1,381,725
- ---------------------------------------------------------------------------------------------------------------------------
</TABLE>
37
<PAGE>
PORTFOLIO OF INVESTMENTS
NUVEEN NEW YORK TAX-FREE VALUE FUND-CONTINUED
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------------
PRINCIPAL OPT. CALL MARKET
AMOUNT DESCRIPTION PROVISIONS* RATINGS** VALUE
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
$ 2,250,000 New York State Medical Care Facilities Finance
Agency, Hospital and Nursing Home
(Columbia-Presbyterian),
8.000%, 2/15/25 (Pre-refunded to 8/15/97) 8/97 at 102 Aaa $ 2,430,315
New York State Medical Care Facilities Finance
Agency, Hospital and Nursing Home
(Mental Health Services):
1,460,000 7.500%, 2/15/21 2/01 at 102 AAA 1,696,038
2,000,000 5.500%, 8/15/21 2/02 at 100 AAA 1,947,860
1,500,000 6.500%, 8/15/24 8/04 at 102 Baal 1,583,250
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 2,087,460
1,520,000 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 1,662,698
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 2,581,475
1,250,000 New York State Medical Care Facilities Finance
Agency, Hospital and Nursing Home
(New York Downtown Hospital),
6.700%, 2/15/12 2/05 at 102 Baa 1,298,638
2,480,000 New York State Medical Care Facilities Finance
Agency, Hospital and Nursing Home,
6.400%, 8/15/14 8/04 at 102 AAA 2,622,327
New York State Medical Care Facilities Finance
Agency, Hospital and Nursing Home, FHA-
Insured New York Hospital:
1,000,000 6.750%, 8/15/14 2/05 at 102 Aaa 1,125,190
1,000,000 6.800%, 8/15/24 2/05 at 102 Aaa 1,134,930
New York State Medical Care Facilities Finance
Agency, Hospital and Nursing Home
(Brookdale Hospital Medical Center):
1,000,000 6.400%, 2/15/01 No Opt. Call Baa 1,035,520
2,700,000 6.800%, 8/15/12 2/05 at 102 Baa 2,826,306
1,000,000 New York State Medical Care Facilities Finance
Agency, Hospital and Nursing Home
(Health Care Center),
6.375%, 11/15/19 11/05 at 102 Aa 1,048,710
380,000 New York State Mortgage Agency,
8.100%, 10/01/17 4/98 at 102 Aa 404,768
- ---------------------------------------------------------------------------------------------------------------------------
</TABLE>
38
<PAGE>
<TABLE>
<CAPTION>
NUVEEN TAX-FREE MUTUAL FUNDS ANNUAL REPORT
FEBRUARY 29, 1996
- ---------------------------------------------------------------------------------------------------------------------------
PRINCIPAL OPT. CALL MARKET
AMOUNT DESCRIPTION PROVISIONS* RATINGS** VALUE
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
$ 1,000,000 New York State Urban Development Corporation,
6.750%, 1/01/26 1/02 at 102 Aaa $ 1,106,060
1,100,000 New York State Urban Development Corporation
(Syracuse University Center for Science and
Technology), 7.875%, 1/01/17
(Pre-refunded to 1/01/98) 1/98 at 102 Baal 1,200,573
New York State Urban Development Corporation,
Correctional Capitol Facilities:
1,000,000 5.625%, 1/01/07 1/03 at 102 Baal 1,002,330
2,490,000 5.750%, 1/01/13 1/03 at 102 Baal 2,421,799
1,250,000 5.500%, 1/01/15 1/03 at 102 Baal 1,195,538
1,000,000 7.500%, 1/01/20 (Pre-refunded to 1/01/00) 1/00 at 102 AAA 1,137,820
2,000,000 New York State Urban Development Corporation
(Clarkson Center for Advanced Materials
Processing), 7.800%, 1/01/20 (Pre-refunded to
1/01/01) 1/01 at 102 Baal 2,335,260
2,900,000 New York State Urban Development Corporation,
State Facilities, 7.500%, 4/01/20 (Pre-refunded
to 4/01/01) 4/01 at 102 Aaa 3,378,268
1,000,000 New York State Urban Development Corporation
(Cornell Center for Theory and Simulation),
6.00%, 1/01/14 1/03 at 102 Baa 1,005,010
2,615,000 New York State Urban Development Corporation
(Pine Barrens), 5.375%, 4/01/17 4/05 at 102 Baal 2,391,574
2,100,000 Babylon Industrial Development Agency,
Resource Recovery, 8.500%, 1/01/19 7/98 at 103 Baal 2,376,927
1,000,000 Batavia Housing Authority, FHA-Insured
(Washington Towers), 6.500%, 1/01/23 7/01 at 102 Aaa 1,025,060
1,000,000 Brookhaven Industrial Development Agency, Civic
Facility (Dowling College/National Aviation
Center), 6.750%, 3/01/23 3/03 at 102 BBB 1,041,710
2,000,000 New York State, Certificates of Participation
(John Jay College of Criminal Justice),
6.000%, 8/15/06 No Opt. Call Baal 2,077,080
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 536,535
Dormitory Authority of the State of New York
(City University):
1,500,000 5.750%, 7/01/07 No Opt. Call Baal 1,522,980
750,000 7.500%, 7/01/10 No Opt. Call Baal 886,005
2,225,000 5.750%, 7/01/12 No Opt. Call Baal 2,244,780
1,500,000 5.500%, 7/01/12 7/03 at 102 Baal 1,440,540
500,000 8.200%, 7/01/13 7/98 at 102 Baal 553,735
1,000,000 7.625%, 7/01/20 7/00 at 102 AAA 1,154,640
- ---------------------------------------------------------------------------------------------------------------------------
</TABLE>
39
<PAGE>
PORTFOLIO OF INVESTMENTS
NUVEEN NEW YORK TAX-FREE VALUE FUND-CONTINUED
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------------
PRINCIPAL OPT. CALL MARKET
AMOUNT DESCRIPTION PROVISIONS* ATINGS** VALUE
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
$ 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 $ 819,203
1,985,000 Dormitory Authority of the State of New York
(United Health Services), 7.350%, 8/01/29 2/00 at 102 AAA 2,165,159
3,500,000 Dormitory Authority of the State of New York
(Nursing Homes), 5.750%, 7/01/17 7/05 at 102 Aa3 3,438,505
Dormitory Authority of the State of New York
(State University):
2,000,000 7.400%, 5/15/01 5/00 at 102 Baal 2,187,740
2,000,000 5.500%, 5/15/08 No Opt. Call Baal 1,998,060
1,125,000 5.250%, 5/15/09 No Opt. Call Baal 1,086,446
2,000,000 5.500%, 5/15/13 No Opt. Call Baal 1,964,900
2,250,000 Dormitory Authority of the State of New York,
Judicial Facilities (Suffolk County),
9.500%, 4/15/14 4/96 at 116 3/32 Baa1 2,625,480
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 1,337,353
4,000,000 Dormitory Authority of the State of New
York, Court Facilities, 5.625%, 5/15/13 5/03 at 101 1/2 Baal 3,835,840
2,195,000 Dormitory Authority of the State of New York
(Upstate Community Colleges),
6.500%, 7/01/07 No Opt. Call Baal 2,362,786
2,470,000 Dutchess County Industrial Development
Authority, Civic Facilities (Bard College),
7.000%, 11/01/17 11/03 at 102 A 2,643,369
1,000,000 Franklin County Industrial Development Agency
(County Correctional Facility),
6.750%, 11/01/12 11/02 at 102 BBB 1,068,490
750,000 Hempstead Industrial Development Authority,
Civic Facility (United Cerebral Palsy Association
of Nassau County) 7.500%, 10/01/09 10/99 at 102 Aa2 797,168
2,500,000 Housing New York Corporation, 5.00%, 11/01/13 11/03 at 102 AA 2,298,650
1,000,000 Metropolitan Transportation Authority,
Commuter Facilities, 6.250%, 7/01/17 7/02 at 102 Aaa 1,064,320
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 1,149,720
1,025,000 Metropolitan Transportation Authority, Transit
Facilities, 6.500%, 7/01/18 7/02 at 102 Aaa 1,130,503
1,055,000 Monroe County Water Authority, Water System,
6.000%, 8/01/17 8/02 at 102 AA 1,076,944
- ---------------------------------------------------------------------------------------------------------------------------
</TABLE>
40
<PAGE>
<TABLE>
<CAPTION>
NUVEEN TAX-FREE MUTUAL FUNDS ANNUAL REPORT
FEBRUARY 29, 1996
- ---------------------------------------------------------------------------------------------------------------------------
PRINCIPAL OPT. CALL MARKET
AMOUNT DESCRIPTION PROVISIONS* RATINGS** VALUE
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
New York City General Obligation:
$ 2,500,000 7.000%, 8/01/04 No Opt. Call Baal $ 2,732,325
2,000,000 7.500%, 2/01/06 2/02 at 101 1/2 Baal 2,236,000
45,000 6.625%, 8/01/13 8/02 at 101 1/2 Aaa 49,738
2,500,000 6.000%, 2/15/20 2/05 at 101 Baal 2,424,300
New York City Housing Development Corporation,
Multi-Family Mortgage (FHA Insured):
2,000,000 6.550%, 10/01/15 4/03 at 102 AAA 2,093,180
2,500,000 5.850%, 5/01/26 5/03 at 102 AA 2,492,724
1,000,000 New York City Housing Development Corporation,
Multi-Unit Mortgage (FHA Insured),
7.350%, 6/01/19 6/01 at 102 AAA 1,073,680
New York City Municipal Water Finance Authority,
Water and Sewer System:
3,000,000 5.375%, 6/15/19 6/04 at 101 AAA 2,899,230
1,500,000 7.750%, 6/15/20 (Pre-refunded to 6/15/01) 6/01 at 101 1/2 Aaa 1,766,790
2,000,000 5.500%, 6/15/20 6/02 at 100 A 1,910,880
3,500,000 New York City Industrial Development Agency,
Civic Facility (The Lighthouse Project),
6.500%, 7/01/22 7/02 at 102 Aa2 3,642,240
New York City Industrial Development Agency
(College of New Rochelle):
1,000,000 6.200%, 9/01/10 9/05 at 102 Baa 1,010,320
1,000,000 6.300%, 9/01/15 9/05 at 102 Baa 1,006,090
2,405,000 Newark-Wayne Community Hospital,
7.600%, 9/01/15 9/03 at 102 N/R 2,429,242
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 1,157,040
South Orangetown Central School District, General
Obligation:
390,000 6.875%, 10/01/08 No Opt. Call A 454,697
390,000 6.875%, 10/01/09 No Opt. Call A 454,939
3,015,000 Suffolk County Industrial Development Agency
(Dowling College Civic Facility), 6.625%, 6/01/24 6/04 at 102 BBB 3,191,769
2,000,000 34th Street Partnership Business Improvement
District, Capital Improvement,
5.500%, 1/01/23 1/03 at 102 A1 1,904,340
Triborough Bridge and Tunnel Authority:
2,000,000 7.100%, 1/01/10 1/01 at 102 A1 2,214,880
2,000,000 7.100%, 1/01/10 1/01 at 102 Aaa 2,242,460
2,100,000 UFA Development Corporation, FHA-Insured
(Loretto-Utica Project), 5.950%, 7/01/35 7/04 at 102 Aa 2,105,418
- ---------------------------------------------------------------------------------------------------------------------------
</TABLE>
41
<PAGE>
<TABLE>
<CAPTION>
PORTFOLIO OF INVESTMENTS
NUVEEN NEW YORK TAX-FREE VALUE FUND--CONTINUED
- ---------------------------------------------------------------------------------------------------------------------------
PRINCIPAL OPT. CALL MARKET
AMOUNT DESCRIPTION PROVISIONS* RATINGS** VALUE
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
$ 2,000,000 Westchester County Industrial Development Agency,
Civic Facility (Jewish Board of Family and
Children Services), 6.750%, 12/15/12 12/02 at 102 BBB- $ 2,066,620
- ---------------------------------------------------------------------------------------------------------------------------
$ 158,685,000 Total Investments - (Cost $156,315,155) - 96.6% 165,378,435
==============-------------------------------------------------------------------------------------------------------------
TEMPORARY INVESTMENTS IN SHORT-TERM
MUNICIPAL SECURITIES - 2.2%
New York City General Obligation,
Variable Rate Demand Bonds:
$ 900,000 3.450%, 8/15/05+ VMIG-1 900,000
800,000 3.400%, 8/15/20+ VMIG-1 800,000
1,500,000 3.300%, 8/01/22+ VMIG-1 1,500,000
600,000 3.450%, 8/15/22+ VMIG-1 600,000
- ---------------------------------------------------------------------------------------------------------------------------
$ 3,800,000 Total Temporary Investments - 2.2% 3,800,000
==============-------------------------------------------------------------------------------------------------------------
Other Assets Less Liabilities - 1.2% 1,974,808
- ---------------------------------------------------------------------------------------------------------------------------
Net Assets - 100% $ 171,153,243
===========================================================================================================================
</TABLE>
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------------
NUMBER MARKET MARKET
STANDARD & POOR'S MOODY'S OF ISSUES VALUE PERCENT
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
SUMMARY OF AAA Aaa 31 $ 46,979,690 28%
RATINGS** AA+, AA, AA-- Aa1, Aa, Aa2, Aa3 11 20,158,871 12
PORTFOLIO OF A+ A1 4 8,563,103 5
INVESTMENTS A, A-- A, A2, A3 7 13,470,535 8
(EXCLUDING BBB+, BBB, BBB-- Baa1, Baa, Baa2, Baa3 40 73,776,994 45
TEMPORARY Non-rated Non-rated 1 2,429,242 2
INVESTMENTS):
- ---------------------------------------------------------------------------------------------------------------------------
TOTAL 94 $165,378,435 100%
===========================================================================================================================
</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.
42
<PAGE>
<TABLE>
<CAPTION>
NUVEEN TAX-FREE MUTUAL FUNDS ANNUAL REPORT
FEBRUARY 29, 1996
NUVEEN NEW YORK INSURED TAX-FREE VALUE FUND
- ---------------------------------------------------------------------------------------------------------------------------
PRINCIPAL OPT. CALL MARKET
AMOUNT DESCRIPTION PROVISIONS* RATINGS** VALUE
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
$ 8,000,000 New York State Energy Research and Development
Authority (The Brooklyn Union Gas Company),
5.500%, 1/01/21 1/06 at 102 Aaa $ 7,866,400
2,500,000 New York State Energy Research and Development
Authority, Pollution Control (Central Hudson Gas
& Electric Corporation), 7.375%, 10/01/14 10/99 at 103 Aaa 2,802,650
1,450,000 New York State Environmental Facilities Corporation,
Water Pollution Control, Pooled Loan,
7.200%, 3/15/11 6/00 at 102 Aaa 1,614,343
2,200,000 New York State Housing Finance Agency, Multi-
Family Housing, 7.450%, 11/01/28 11/99 at 102 Aaa 2,338,886
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 1,085,396
895,000 New York State Medical Care Facilities Finance
Agency, Hospital and Nursing Home
(St. Francis Hospital), 7.625%, 11/01/21 11/98 at 102 Aaa 984,187
4,765,000 New York State Medical Care Facilities Finance
Agency, Hospital and Nursing Home
(Bronx Lebanon), 7.100%, 2/15/27 2/97 at 102 Aaa 4,969,371
2,000,000 New York State Medical Care Facilities
Agency, Hospital and Nursing Home, FHA-
Insured, 7.350%, 2/15/29 8/99 at 102 Aa 2,167,280
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 1,658,070
New York State Medical Care Facilities Finance
Agency, Hospital and Nursing Home,
FHA-Insured (Montefiore Medical Center):
1,500,000 7.250%, 2/15/24 2/99 at 102 Aa 1,621,800
2,000,000 7.250%, 2/15/24 2/99 at 102 Aaa 2,167,600
1,300,000 New York State Medical Care Facilities Finance
Agency, Hospital and Nursing Home
(St. Luke's-Roosevelt Hospital Center),
7.450%, 2/15/29 (Pre-refunded to 2/15/00) 2/00 at 102 Aaa 1,478,815
1,865,000 New York State Medical Care Facilities Finance
Agency, Long-Term Health Care (Capital
Guaranty Insured Program), 6.450%, 11/01/14 5/02 at 102 Aaa 2,001,966
3,200,000 New York State Medical Care Facilities Finance
Agency, Hospital and Nursing Home
(North Shore University Hospital),
7.200%, 11/01/20 11/00 at 102 Aaa 3,581,184
- ---------------------------------------------------------------------------------------------------------------------------
</TABLE>
43
<PAGE>
PORTFOLIO OF INVESTMENTS
NUVEEN NEW YORK INSURED TAX-FREE VALUE FUND--CONTINUED
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------------
PRINCIPAL OPT. CALL MARKET
AMOUNT DESCRIPTION PROVISIONS* RATINGS** VALUE
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
$ 1,670,000 New York State Medical Care Facilities Finance
Agency, Hospital and Nursing Home
(Our Lady of Victory),
6.625%, 11/01/16 11/01 at 102 Aaa $ 1,842,962
New York State Medical Care Facilities Finance
Agency, Hospital and Nursing Home
(Sisters of Charity of Buffalo):
500,000 6.600%, 11/01/10 11/01 at 102 Aaa 552,220
1,550,000 6.625%, 11/01/18 11/01 at 102 Aaa 1,710,534
1,000,000 New York State Medical Care Facilities Finance
Agency, Hospital and Nursing Home
(Aurelia Osborn Fox Memorial Hospital),
6.500%, 11/01/19 11/01 at 102 Aaa 1,097,430
3,000,000 New York State Medical Care Facilities Finance
Agency, Hospital and Nursing Home
(South Nassau Communities Hospital),
6.125%, 11/01/11 11/02 at 102 Aaa 3,162,570
New York State Medical Care Facilities Finance
Agency, Mental Health Services, Facilities
Improvement Revenue:
1,415,000 5.750%, 2/15/14 8/03 at 102 Aaa 1,426,773
4,000,000 5.375%, 2/15/14 2/04 at 102 Aaa 3,905,400
3,250,000 5.700%, 8/15/14 2/03 at 102 Aaa 3,265,080
6,150,000 6.375%, 8/15/17 12/02 at 102 Aaa 6,556,208
2,815,000 6.250%, 8/15/18 2/02 at 102 Aaa 2,974,611
2,500,000 New York State Medical Care Facilities Finance
Agency, Hospital and Nursing Home
(St. Mary's Hospital--Rochester Project),
6.200%, 11/01/14 11/03 at 102 Aaa 2,649,900
7,000,000 New York State Medical Care Facilities Finance
Agency, Hospital and Nursing Home,
FHA-Insured, 6.800%, 8/15/24 2/05 at 102 Aaa 7,944,510
New York State Medical Care Facilities Finance
Agency, Hospital and Nursing Home
(Montefiore Medical Center):
3,390,000 5.750%, 2/15/15 2/05 at 102 Aaa 3,413,188
4,175,000 5.750%, 2/15/25 2/05 at 102 Aaa 4,179,927
New York State Mortgage Agency:
225,000 8.375%, 10/01/17 1/98 at 102 Aa 239,810
390,000 8.100%, 10/01/17 4/98 at 102 Aa 415,420
3,500,000 New York State Mortgage Agency, Homeowner
Mortgage, 5.650%, 4/01/15 10/03 at 102 Aaa 3,520,370
New York State Thruway Authority:
2,000,000 5.750%, 4/01/13 4/04 at 102 Aaa 2,054,580
7,300,000 5.750%, 1/01/19 1/02 at 102 Aaa 7,342,778
3,950,000 5.500%, 1/01/23 1/02 at 100 Aaa 3,871,000
- ---------------------------------------------------------------------------------------------------------------------------
</TABLE>
44
<PAGE>
<TABLE>
<CAPTION>
NUVEEN TAX-FREE MUTUAL FUNDS ANNUAL REPORT
FEBRUARY 29, 1996
- ---------------------------------------------------------------------------------------------------------------------------
PRINCIPAL OPT. CALL MARKET
AMOUNT DESCRIPTION PROVISIONS* RATINGS** VALUE
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
New York State Urban Development Corporation:
$ 3,850,000 6.700%, 1/01/12 1/02 at 102 Aaa $ 4,256,945
9,650,000 6.750%, 1/01/26 1/02 at 102 Aaa 10,673,479
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 1,693,530
1,000,000 5.250%, 1/01/14 No Opt. Call Aaa 982,320
575,000 7.000%, 1/01/17 (Pre-refunded to 1/01/00) 1/00 at 102 Aaa 644,127
2,000,000 7.500%, 1/01/20 (Pre-refunded to 1/01/00) 1/00 at 102 Aaa 2,275,640
2,000,000 Power Authority of the State of New York, General
Purpose, 6.500%, 1/01/19 1/02 at 102 Aaa 2,194,520
280,000 Albany Municipal Water Finance Authority,
Water and Sewer System, 7.500%, 12/01/17 12/98 at 102 Aaa 308,350
1,795,000 Albany Municipal Water Finance Authority
5.500%, 12/01/22 12/03 at 102 Aaa 1,763,982
1,250,000 Broome County, Certificates of Participation,
5.250%, 4/01/22 4/04 at 102 Aaa 1,179,688
2,250,000 Buffalo and Fort Erie Public Bridge Authority,
5.750%, 1/01/25 1/05 at 101 Aaa 2,279,700
1,000,000 Buffalo General Obligation, 6.150%, 2/01/04 1/01 at 101 Aaa 1,077,130
8,385,000 Buffalo Municipal Water Finance Authority,
Water System, 5.750%, 7/01/19 7/03 at 102 Aaa 8,441,431
2,000,000 Buffalo Sewer Authority, Sewer System,
5.000%, 7/01/12 7/03 at 100 Aaa 1,898,120
Camden Central School District,
General Obligation:
500,000 7.100%, 6/15/07 No Opt. Call Aaa 602,965
600,000 7.100%, 6/15/08 No Opt. Call Aaa 727,914
600,000 7.100%, 6/15/09 No Opt. Call Aaa 728,772
275,000 7.100%, 6/15/10 No Opt. Call Aaa 333,614
1,560,000 Dormitory Authority of the State of New York,
College and University (Pooled Capital Program),
7.800%, 12/01/05 12/98 at 102 Aaa 1,711,850
1,490,000 Dormitory Authority of the State of New York
(United Health Services), 7.350%, 8/01/29 2/00 at 102 AAA 1,625,232
1,490,000 Dormitory Authority of the State of New York
(Iona College), 7.625%, 7/01/09 7/98 at 102 Aaa 1,626,499
1,200,000 Dormitory Authority of the State of New York,
Educational Facilities (State University),
7.250%, 5/15/15 (Pre-refunded to 5/15/00) 5/00 at 102 Aaa 1,363,956
1,000,000 Dormitory Authority of the State of New York
(United Cerebral Palsey Association of
Westchester County), 6.200%, 7/01/12 7/02 at 102 Aaa 1,056,150
- ---------------------------------------------------------------------------------------------------------------------------
</TABLE>
45
<PAGE>
PORTFOLIO OF INVESTMENTS
NUVEEN NEW YORK INSURED TAX-FREE VALUE FUND--CONTINUED
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------------
PRINCIPAL OPT. CALL MARKET
AMOUNT DESCRIPTION PROVISIONS* RATINGS** VALUE
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
$ 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 $ 1,149,720
Dormitory Authority of the State of New
York (City University System):
2,500,000 7.000%, 7/01/14 7/00 at 102 Aaa 2,772,850
1,000,000 6.500%, 7/01/14 7/96 at 100 Aaa 1,010,850
1,800,000 5.750%, 7/01/18 No Opt. Call Aaa 1,867,932
6,295,000 7.500%, 7/01/20 (Pre-refunded to 7/01/00) 7/00 at 102 Aaa 7,237,487
2,500,000 Dormitory Authority of the State of New
York (Cooper Union), 7.200%, 7/01/20 7/01 at 102 Aaa 2,835,325
Dormitory Authority of the State of New York,
Educational Facilities (State University):
2,500,000 5.250%, 5/15/15 No Opt. Call Aaa 2,447,975
1,200,000 7.000%, 5/15/18 (Pre-refunded to 5/15/00) 5/00 at 102 Aaa 1,352,472
2,000,000 6.500%, 5/15/19 (Pre-refunded to 5/15/00) 5/00 at 100 Aaa 2,182,140
5,000,000 Dormitory Authority of the State of New York,
(New York University), 6.250%, 7/01/09 7/01 at 102 Aaa 5,394,250
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 1,137,910
4,640,000 Dormitory Authority of the State of New York,
(Mount Sinai School of Medicine),
5.000%, 7/01/21 7/04 at 102 Aaa 4,321,510
1,500,000 Dormitory Authority of the State of New York
(Sarah Lawrence College), 6.000%, 7/01/24 7/05 at 102 Aaa 1,568,325
2,000,000 Dormitory Authority of the State of New York
(Ellis Hospital), 5.600%, 8/01/25 8/05 at 102 Aaa 1,961,740
2,015,000 Dormitory Authority of the State of New York
(St. Vincents Hospital and Medical Center),
5.800%, 8/01/25 8/05 at 102 Aaa 2,049,416
1,000,000 Erie County Water Authority, Water Works,
6.750%, 12/01/14 12/09 at 100 Aaa 1,141,190
Glen Cove General Obligation:
445,000 5.500%, 6/15/09 No Opt. Call Aaa 466,605
455,000 5.600%, 6/15/10 No Opt. Call Aaa 478,942
470,000 5.625%, 6/15/11 No Opt. Call Aaa 488,838
500,000 Greece Central School District, General
Obligation, 6.000%, 6/15/09 No Opt. Call Aaa 551,420
Half Moon General Obligation:
385,000 6.500%, 6/01/09 No Opt. Call Aaa 445,114
395,000 6.500%, 6/01/10 No Opt. Call Aaa 455,072
395,000 6.500%, 6/01/11 No Opt. Call Aaa 453,326
- ---------------------------------------------------------------------------------------------------------------------------
</TABLE>
46
<PAGE>
<TABLE>
<CAPTION>
NUVEEN TAX-FREE MUTUAL FUNDS ANNUAL REPORT
FEBRUARY 29, 1996
- ---------------------------------------------------------------------------------------------------------------------------
PRINCIPAL OPT. CALL MARKET
AMOUNT DESCRIPTION PROVISIONS* RATINGS** VALUE
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
$ 600,000 Jamesville-Dewitt Central School District,
General Obligation, 5.750%, 6/15/04 No Opt. Call Aaa $ 652,914
1,000,000 Metropolitan Transportation Authority, Transit
Facilities Service Contract, 7.500%, 7/01/17 7/98 at 102 Aaa 1,089,560
10,340,000 Metropolitan Transportation Authority, Transit
Facilities 6.500%, 7/01/18 7/02 at 102 Aaa 11,404,296
Middle Country Central School District at
Centereach (Town of Brookhaven),
General Obligation:
475,000 6.900%, 12/15/07 No Opt. Call Aaa 568,988
475,000 6.900%, 12/15/08 No Opt. Call Aaa 571,781
Monroe County General Obligation:
375,000 6.500%, 6/01/15 6/01 at 102 Aaa 410,756
375,000 6.500%, 6/01/16 6/01 at 102 Aaa 411,491
350,000 6.500%, 6/01/17 6/01 at 102 Aaa 384,059
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 4,228,918
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 1,130,310
500,000 6.200%, 2/15/15 No Opt. Call Aaa 551,180
1,035,000 6.200%, 2/15/16 No Opt. Call Aaa 1,144,110
1,000,000 7.250%, 2/15/17 (Pre-refunded to 2/15/00) 2/00 at 102 Aaa 1,130,310
1,500,000 Nassau County General Obligation,
5.700%, 8/01/13 8/04 at 103 Aaa 1,566,060
4,840,000 Nassau County Industrial Development Agency,
Civic Facilities (Hofstra University Project),
6.750%, 8/01/11 8/01 at 102 Aaa 5,369,109
1,020,000 New Rochelle General Obligation,
6.200%, 8/15/22 8/04 at 102 Aaa 1,089,166
New York City General Obligation:
500,000 8.250%, 11/01/02 (Pre-refunded to 11/01/97) 11/97 at 101 1/2 Aaa 544,775
3,000,000 6.250%, 8/01/10 (Pre-refunded to 8/01/02) 8/02 at 101 1/2 Aaa 3,355,770
1,000,000 6.250%, 8/01/10 8/02 at 101 1/2 Aaa 1,067,160
3,520,000 5.750%, 5/15/12 5/03 at 101 1/2 Aaa 3,622,326
75,000 6.625%, 8/01/12 8/02 at 101 1/2 Aaa 82,985
2,600,000 6.000%, 8/01/12 8/02 at 101 1/2 Aaa 2,721,342
1,300,000 7.000%, 10/01/15 No Opt. Call Aaa 1,405,859
2,000,000 7.000%, 10/01/16 10/99 at 100 Aaa 2,411,520
1,025,000 7.000%, 10/01/17 No Opt. Call Aaa 1,108,466
310,000 7.000%, 10/01/18 No Opt. Call Aaa 335,243
1,000,000 5.375%, 10/01/20 10/03 at 101 1/2 Aaa 957,880
1,000,000 New York City Educational Construction Fund
5.625%, 4/01/13 4/04 at 101 1/2 Aaa 1,016,100
</TABLE>
47
<PAGE>
<TABLE>
<CAPTION>
PORTFOLIO OF INVESTMENTS
NUVEEN NEW YORK INSURED TAX-FREE VALUE FUND--CONTINUED
- ---------------------------------------------------------------------------------------------------------------------------
PRINCIPAL OPT. CALL MARKET
AMOUNT DESCRIPTION PROVISIONS* RATINGS** VALUE
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
New York City Health and Hospitals Corporation:
$ 2,500,000 5.625%, 2/15/13 2/03 at 102 Aaa $ 2,522,700
11,980,000 5.750%, 2/15/22 2/03 at 102 Aaa 11,955,561
5,000,000 New York City Housing Development Corporation
Pass-Through Certificates, Multi-Family Housing,
FHA Insured 6.500%, 2/20/19 7/97 at 105 Aaa 5,984,600
1,000,000 New York City Housing Development Corporation
Multi-Family, FHA Insured, 5.850%, 5/01/26 5/03 at 102 Aaa 1,004,840
3,250,000 New York City Municipal Water Financing,
6.750%, 6/15/16 6/01 at 101 Aaa 3,601,890
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 1,134,550
6,765,000 5.750%, 6/15/18 6/02 at 101 1/2 Aaa 6,824,261
2,525,000 5.375%, 6/15/19 6/04 at 101 Aaa 2,440,185
4,650,000 5.500%, 6/15/20 6/02 at 100 Aaa 4,560,999
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 1,137,820
8,725,000 5.250%, 1/01/20 1/03 at 100 Aaa 8,188,849
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 2,502,940
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 1,080,530
1,000,000 New York City Industrial Development Agency
(New School for Social Research),
5.750%, 9/01/15 9/05 at 102 Aaa 1,016,410
1,590,000 Niagara Falls General Obligation,
6.900%, 3/01/21 3/04 at 102 Aaa 1,807,019
5,725,000 Niagara Falls Bridge Commission, Toll Bridge
System Revenue, 6,125%, 10/01/19
(Pre-refunded to 10/01/02) 10/02 at 102 Aaa 6,398,203
North Hempstead General Obligation:
1,500,000 6.375%, 4/01/09 No Opt. Call Aaa 1,709,490
425,000 6.800%, 6/01/10 (Pre-refunded to 6/01/00) 6/00 at 102 Aaa 476,153
425,000 6.800%, 6/01/11 (Pre-refunded to 6/01/00) 6/00 at 102 Aaa 476,153
1,505,000 6.400%, 4/01/14 No Opt. Call Aaa 1,702,622
North Hempstead Solid Waste Management
Authority:
2,175,000 5.000%, 2/01/07 2/04 at 102 Aaa 2,192,705
1,825,000 5.000%, 2/01/12 2/04 at 102 Aaa 1,748,551
- ---------------------------------------------------------------------------------------------------------------------------
</TABLE>
48
<PAGE>
<TABLE>
<CAPTION>
NUVEEN TAX-FREE MUTUAL FUNDS ANNUAL REPORT
FEBRUARY 29, 1996
- ---------------------------------------------------------------------------------------------------------------------------
PRINCIPAL OPT. CALL MARKET
AMOUNT DESCRIPTION PROVISIONS* RATINGS** VALUE
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Nyack Union Free School District:
$ 625,000 6.500%, 4/01/12 4/02 at 102 Aaa $ 686,544
625,000 6.500%, 4/01/13 4/02 at 102 Aaa 686,894
625,000 6.500%, 4/01/14 4/02 at 102 Aaa 688,288
Rensselaer County General Obligation:
960,000 6.700%, 2/15/13 No Opt. Call Aaa 1,126,339
960,000 6.700%, 2/15/14 No Opt. Call Aaa 1,126,138
960,000 6.700%, 2/15/15 No Opt. Call Aaa 1,125,226
Rondout Valley Central School District,
General Obligation:
550,000 6.800%, 6/15/06 No Opt. Call Aaa 649,033
550,000 6.850%, 6/15/07 No Opt. Call Aaa 652,933
550,000 6.850%, 6/15/08 No Opt. Call Aaa 656,288
550,000 6.850%, 6/15/09 No Opt. Call Aaa 656,508
550,000 6.850%, 6/15/10 No Opt. Call Aaa 655,171
Suffolk County General Obligation:
1,000,000 6.900%, 4/01/01 4/00 at 102 Aaa 1,120,510
1,895,000 5.250%, 7/15/09 7/02 at 102 Aaa 1,913,419
600,000 6.150%, 5/01/10 5/03 at 102 Aaa 641,418
1,890,000 5.300%, 7/15/10 7/02 at 102 Aaa 1,901,699
1,630,000 5.400%, 4/01/11 4/02 at 102 Aaa 1,642,763
1,860,000 5.400%, 7/15/11 7/02 at 102 Aaa 1,874,954
1,000,000 5.400%, 7/15/12 7/02 at 102 Aaa 1,005,890
630,000 5.400%, 4/01/14 4/02 at 102 Aaa 628,595
625,000 5.400%, 4/01/15 4/02 at 102 Aaa 619,894
1,000,000 Suffolk County Industrial Development Agency,
Southwest Sewer System, 4.750%, 2/01/09 2/04 at 101 Aaa 963,010
Suffolk County Water Authority, Water System:
1,800,000 5.100%, 6/01/11 No Opt. Call Aaa 1,774,530
2,565,000 5.625%, 6/01/16 6/02 at 102 Aaa 2,558,613
3,700,000 5.000%, 6/01/17 6/03 at 102 Aaa 3,458,501
Triborough Bridge and Tunnel Authority, General
Purpose Revenue:
2,750,000 6.500%, 1/01/19 1/02 at 101 1/2 Aaa 3,007,095
2,000,000 7.000%, 1/01/20 (Pre-refunded to 1/01/01) 1/01 at 102 Aaa 2,273,580
1,175,000 7.000%, 1/01/21 (Pre-refunded to 1/01/01) 1/01 at 101 1/2 Aaa 1,330,934
8,650,000 Triborough Bridge and Tunnel Authority, Special
Obligation, 6.875%, 1/01/15 1/01 at 102 Aaa 9,607,205
1,750,000 Yonkers General Obligation, 7.375%, 12/01/09
(Pre-refunded to 12/01/00) 12/00 at 102 Aaa 2,022,405
- ---------------------------------------------------------------------------------------------------------------------------
$ 338,925,000 Total Investments - (Cost $333,979,266) - 97.3% 359,533,384
==============-------------------------------------------------------------------------------------------------------------
</TABLE>
49
<PAGE>
<TABLE>
<CAPTION>
PORTFOLIO OF INVESTMENTS
NUVEEN NEW YORK INSURED TAX-FREE VALUE FUND--CONTINUED
- --------------------------------------------------------------------------------------------------------------------------
PRINCIPAL OPT. CALL MARKET
AMOUNT DESCRIPTION PROVISIONS* RATINGS** VALUE
- --------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
TEMPORARY INVESTMENTS IN SHORT-TERM
MUNICIPAL SECURITIES - 1.9%
$ 3,500,000 New York City General Obligation Fiscal
1995B-B6 Insured, Adjustable Rate,
3.450%, 8/15/05+ VMIG-1 $ 3,500,000
1,500,000 New York City General Obligation, Variable Rate
Demand Bonds, 3.300%, 8/01/22+ VMIG-1 1,500,000
200,000 New York City General Obligation Bonds,
Adjustable Rate, 3.450%, 8/15/22+ VMIG-1 200,000
1,800,000 Port Authority of New York and New
Jersey, Versatile Structure Obligations,
3.050%, 5/01/19+ A-1+ 1,800,000
- ---------------------------------------------------------------------------------------------------------------------------
$ 7,000,000 Total Temporary Investments - 1.9% 7,000,000
==============-------------------------------------------------------------------------------------------------------------
Other Assets Less Liabilities - 0.8% 2,930,866
- ---------------------------------------------------------------------------------------------------------------------------
Net Assets - 100% $ 369,464,250
===========================================================================================================================
- ---------------------------------------------------------------------------------------------------------------------------
NUMBER MARKET MARKET
STANDARD & POOR'S MOODY'S OF ISSUES VALUE PERCENT
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
SUMMARY OF AAA Aaa 155 $355,089,074 99%
RATINGS** AA+, AA, AA-- Aa1, Aa, Aa2, Aa3 4 4,444,310 1
PORTFOLIO OF
INVESTMENTS
(EXCLUDING
TEMPORARY
INVESTMENTS):
- ---------------------------------------------------------------------------------------------------------------------------
TOTAL 159 $359,533,384 100%
===========================================================================================================================
</TABLE>
All of the bonds in the portfolio, excluding temporary investments in short-term
municipal securities, are either covered by Original Issue Insurance, Secondary
Market Insurance or Portfolio Insurance, or are backed by an escrow or trust
containing sufficient U.S. Government or U.S. Government agency securities, any
of which ensure the timely payment of principal and interest.
* Optional call provisions (not covered by the report of independent public
accountants): Dates (month and year) and prices of the earliest optional call or
redemption. There may be other call provisions at varying prices at later dates
** Ratings (not covered by the report of independent public accountants): Using
the higher of Standard & Poor's or Moody's rating.
+ 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.
50
<PAGE>
<TABLE>
<CAPTION>
NUVEEN TAX-FREE MUTUAL FUNDS ANNUAL REPORT
FEBRUARY 29, 1996
NUVEEN OHIO TAX-FREE VALUE FUND
- ---------------------------------------------------------------------------------------------------------------------------
PRINCIPAL OPT. CALL MARKET
AMOUNT DESCRIPTION PROVISIONS* RATINGS** VALUE
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <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 $ 2,233,060
750,000 7.625%, 7/01/23 7/99 at 102 Baa3 803,318
3,000,000 5.625%, 11/15/29 11/03 at 102 Aaa 2,977,290
1,750,000 Ohio Air Quality Development Authority,
Pollution Control (Columbus Southern
Power Company), 6.375%, 12/01/20 12/02 at 102 Aaa 1,882,650
1,000,000 Ohio Air Quality Development Authority,
Pollution Control (Ohio Power Company),
7.400%, 8/01/09 8/99 at 102 Baa1 1,060,600
2,000,000 Ohio Air Quality Development Authority,
Pollution Control (Cleveland Electric
Illuminating Company), 8.000%, 12/01/13 6/02 at 103 Aaa 2,399,380
1,000,000 Ohio Building Authority (State Correctional
Facilities), 7.125%, 9/01/09 9/96 at 102 A1 1,033,980
1,250,000 Ohio Capital Corporation for Housing, Multi-
Family Housing, 7.600%, 11/01/23 11/97 at 105 AAA 1,333,663
Ohio General Obligation:
1,475,000 6.650%, 8/01/05 No Opt. Call Aa 1,710,764
1,000,000 6.000%, 8/01/10 No Opt. Call Aa 1,090,530
250,000 Ohio Higher Educational Facility Commission
(Ohio Dominican College), 8.500%, 12/01/07
(Pre-refunded to 12/01/97) 12/97 at 102 N/R 274,655
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 442,048
1,000,000 Ohio Higher Educational Facility Commission
(Ohio Wesleyan University), 7.650%, 11/15/07 11/97 at 102 Aaa 1,085,360
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 1,119,240
1,750,000 Ohio Higher Educational Facility Commission
(University of Dayton), 5.800%, 12/01/19 12/04 at 102 Aaa 1,784,195
Ohio Housing Finance Agency, Single Family
Mortgage (GNMA):
695,000 7.500%, 9/01/13 9/00 at 102 AAA 742,295
850,000 7.400%, 9/01/15 3/00 at 102 AAA 906,168
350,000 7.050%, 9/01/16 9/01 at 102 Aaa 372,918
2,500,000 Ohio Turnpike Commission, 5.750%, 2/15/24 2/04 at 102 AA-- 2,557,975
1,750,000 Ohio Water Development Authority
(Dayton Power and Light Company),
6.400%, 8/15/27 8/02 at 102 AA-- 1,877,575
100,000 Ohio IOOF Home (FHA-Insured), 8.150%, 8/01/02 8/97 at 103 AAA 107,156
--------------------------------------------------------------------------------------------------------------------------
</TABLE>
51
<PAGE>
PORTFOLIO OF INVESTMENTS
NUVEEN OHIO TAX-FREE VALUE FUND--CONTINUED
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------------
PRINCIPAL OPT. CALL MARKET
AMOUNT DESCRIPTION PROVISIONS* RATINGS** VALUE
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Adams County/Ohio Valley School District,
General Obligation:
$ 2,000,000 7.000%, 12/01/15 No Opt. Call Aaa $ 2,397,860
3,865,000 5.250%, 12/01/21 12/05 at 102 Aaa 3,719,560
3,955,000 Akron General Obligation, Limited Tax,
6.750%, 12/01/14 12/04 at 102 Aaa 4,496,400
1,500,000 Akron Waterworks System, 6.550%, 3/01/12
(Pre-refunded to 3/01/01) 3/01 at 102 Aaa 1,676,235
3,350,000 Anthony Wayne Local School District, General
Obligation, 5.750%, 12/01/24 12/05 at 101 Aaa 3,393,919
1,000,000 Aurora City School District, General Obligation,
5.800%, 12/01/16 12/05 at 102 Aaa 1,025,190
1,475,000 Bedford Hospital (Community Hospital),
8.500%, 5/15/09 (Pre-refunded to 5/15/00) 5/00 at 102 N/R 1,667,960
Bellefontaine Sewer System:
1,000,000 6.800%, 12/01/07 12/02 at 101 Baa1 1,072,040
1,000,000 6.900%, 12/01/11 12/02 at 101 Baa1 1,072,360
2,500,000 Buckeye Valley Local School District, General
Obligation, 6.850%, 12/01/15 No Opt. Call Aaa 2,955,350
1,250,000 Butler County Hospital Facilities (Fort Hamilton-
Hughes Memorial Hospital), 7.500%, 1/01/10 1/02 at 102 Baa 1,340,863
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 1,158,100
1,000,000 Centerville General Obligation, 5.625%, 12/01/26 12/05 at 101 Aaa 1,001,610
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 1,136,400
Clermont County Sewer System Revenue:
2,000,000 7.375%, 12/01/20 (Pre-refunded to 12/01/00) 12/00 at 102 Aaa 2,305,680
1,000,000 7.100%, 12/01/21 (Pre-refunded to 12/01/01) 12/01 at 102 Aaa 1,158,100
1,000,000 Clermont County Waterworks System,
6.625%, 12/01/13 (Pre-refunded to 12/01/01) 12/01 at 102 Aaa 1,134,100
2,000,000 Cleveland City School District, General Obligation,
Unlimited Tax, 5.875%, 12/01/11 12/02 at 102 Aaa 2,078,820
1,500,000 Cleveland Public Power System,
7.000%, 11/15/24 11/04 at 102 Aaa 1,728,555
Cleveland Waterworks Mortgage:
1,000,000 6.500%, 1/01/11 1/02 at 102 Aaa 1,100,490
1,750,000 6.500%, 1/01/21 (Pre-refunded to 1/01/02) 1/02 at 102 Aaa 1,966,370
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 1,119,690
- ---------------------------------------------------------------------------------------------------------------------------
</TABLE>
52
<PAGE>
<TABLE>
<CAPTION>
NUVEEN TAX-FREE MUTUAL FUNDS ANNUAL REPORT
FEBRUARY 29, 1996
- ---------------------------------------------------------------------------------------------------------------------------
PRINCIPAL OPT. CALL MARKET
AMOUNT DESCRIPTION PROVISIONS* RATINGS** VALUE
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
$ 1,500,000 Columbus General Obligation, Unlimited Tax,
6.500%, 1/01/10 1/02 at 102 Aaa $ 1,625,145
2,050,000 Columbus General Obligation, 5.250%, 9/15/18 9/03 at 102 Aaa 2,006,212
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 1,722,885
1,000,000 Cuyahoga County General Obligation,
5.250%, 10/01/13 No Opt. Call AA 983,610
1,000,000 Cuyahoga County General Obligation, Public
Improvements, 5.250%, 11/15/15 11/05 at 102 Aa 972,990
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 1,448,888
2,750,000 Cuyahoga County Hospital (Meridia Health
System), 7.250%, 8/15/19 8/00 at 102 A1 2,993,155
2,000,000 Dayton Airport Refunding Bonds (James
M. Cox-Dayton International Airport),
5.250%, 12/01/15 12/05 at 101 Aaa 1,934,200
750,000 Defiance Waterworks System, General Obligation,
Unlimited Tax, 6.200%, 12/01/20 12/04 at 102 Aaa 806,955
1,110,000 Fairborn General Obligation, Limited Tax,
7.000%, 10/01/11 10/02 at 102 Aaa 1,265,777
2,790,000 Franklin County Limited Tax, 5.375%, 12/01/20 12/08 at 102 Aaa 2,806,712
Franklin County, Hospital Facilities (Ohio
Presbyterian Retirement Services):
1,350,000 8.750%, 7/01/21 7/01 at 103 N/R 1,448,064
1,500,000 6.500%, 7/01/23 7/03 at 102 N/R 1,423,830
500,000 Franklin County, Refunding and Improvement
Bonds (Riverside Hospital), 7.250%, 5/15/20 5/00 at 102 Aaa 555,865
705,000 Franklin County, FHA Insured (Worthington
Village Nursing Home), 7.000%, 8/01/16 8/00 at 102 N/R 732,107
1,000,000 Franklin County, Hospital Facilities
(Riverside United Methodist Hospital),
5.750%, 5/15/20 5/03 at 102 Aa 983,860
1,000,000 Franklin County, (OCLC Online Computer
Library Center Project), 7.200%, 7/15/06 7/01 at 100 N/R 1,079,340
250,000 Fremont Sewerage System, 8.100%, 12/01/07
(Pre-refunded to 12/01/97) 12/97 at 102 A-- 272,973
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 1,138,440
3,000,000 Garfield Heights (Marymount Hospital),
6.650%, 11/15/11 11/02 at 102 A 3,156,420
- ---------------------------------------------------------------------------------------------------------------------------
</TABLE>
53
<PAGE>
PORTFOLIO OF INVESTMENTS
NUVEEN OHIO TAX-FREE VALUE FUND-CONTINUED
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------------
PRINCIPAL OPT. CALL MARKET
AMOUNT DESCRIPTION PROVISIONS* RATINGS** VALUE
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
$ 1,000,000 Geauga County General Obligation,
5.625%, 12/01/15 12/05 at 102 Aa $ 1,009,330
Grandview Heights City School District, General
Obligation:
2,000,000 6.100%, 12/01/19 12/05 at 101 AA 2,102,060
1,020,000 5.550%, 12/01/19 No Opt. Call AA 1,036,820
250,000 Grandview Heights, Library Building Mortgage,
8.250%, 12/01/07 (Pre-refunded to 12/01/97) 12/97 at 102 N/R 273,918
1,000,000 Greenville Wastewater System, 6.350%, 12/01/17 10/02 at 102 Aaa 1,074,990
1,495,000 Hamilton County, FHA-Insured (Judson Care
Center), 7.800%, 8/01/19 8/00 at 101 5/16 A+ 1,615,168
400,000 Hubbard Sewer System, 8.800%, 11/15/17 5/98 at 102 N/R 437,992
1,000,000 Indian Lake Local School District,
General Obligation, 5.375%, 12/01/23 12/06 at 101 Aaa 975,970
1,000,000 Indian Valley Local School District, General
Obligation, 5.750%, 12/01/19 12/05 at 102 Aaa 1,018,300
1,000,000 Kent State University, General Receipts,
6.500%, 5/01/22 5/02 at 102 Aaa 1,101,050
1,000,000 Kettering City School District, General Obligation,
Unlimited Tax, 5.300%, 12/01/14 12/05 at 101 Aaa 978,410
3,630,000 Kings Local School District, General Obligation,
5.500%, 12/01/21 12/05 at 100 Aaa 3,602,485
500,000 Kirtland Local School District, General Obligation,
Unlimited Tax, 7.500%, 12/01/09 12/99 at 102 A1 552,840
1,500,000 Lakewood General Obligation, 6.500%, 12/01/12 12/02 at 102 Aa 1,657,650
1,000,000 Lakota Local School District, General Obligation,
Unlimited Tax, 6.125%, 12/01/17 12/05 at 100 Aaa 1,054,710
500,000 Lorain General Obligation, 5.650%, 12/01/15 12/05 at 102 Aaa 509,725
1,500,000 Lorain Hospital (Lakeland Community Hospital),
6.500%, 11/15/12 11/02 at 102 A1 1,558,890
500,000 Lorain Sewer System, 8.750%, 4/01/11 4/98 at 102 BBB-- 557,500
1,000,000 Lucas County General Obligation, Limited Tax,
6.650%, 12/01/12 12/02 at 102 A 1,046,070
1,500,000 Lucas County General Obligation,
5.400%, 12/01/15 12/05 at 102 Aaa 1,473,945
1,000,000 Mahoning County General Obligation,
Limited Tax, 7.200%, 12/01/09 12/99 at 102 Aaa 1,109,720
2,000,000 Mahoning County, Hospital Improvement
(St. Elizabeth Hospital Medical Center),
7.375%, 12/01/09 6/96 at 102 A1 2,052,260
2,355,000 Mahoning County, Hospital Improvement
(YHA Inc. Project), 7.000%, 10/15/14 10/00 at 102 Aaa 2,616,264
1,000,000 Marion County (United Church Homes, Inc. Project),
6.375%, 11/15/10 11/03 at 102 BBB-- 1,008,520
- ---------------------------------------------------------------------------------------------------------------------------
</TABLE>
54
<PAGE>
<TABLE>
<CAPTION>
NUVEEN TAX-FREE MUTUAL FUNDS ANNUAL REPORT
FEBRUARY 29, 1996
- ---------------------------------------------------------------------------------------------------------------------------
PRINCIPAL OPT. CALL MARKET
AMOUNT DESCRIPTION PROVISIONS* RATINGS** VALUE
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Marion County, Health Facilities (United Church
Homes, Inc.):
$ 1,150,000 8.875%, 12/01/12 (Pre-refunded to 12/01/99) 12/99 at 103 N/R $ 1,358,622
750,000 6.300%, 11/15/15 11/03 at 102 BBB-- 724,095
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 1,145,360
1,250,000 Marysville Water System, 7.050%, 12/01/21 2/01 at 101 Aaa 1,434,675
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 1,133,490
1,000,000 Montgomery County Water (Greater Moraine-Beaver
Creek Sewer District), 6.250%, 11/15/17 11/02 at 102 Aaa 1,067,300
3,000,000 Mount Vernon (Knox Community Hospital),
7.875%, 6/01/12 6/96 at 103 N/R 3,099,690
2,265,000 Napolean (Luthern Orphan's and Old Folks Home
Project), 6.875%, 8/01/23 9/04 at 102 Aa 2,449,915
1,000,000 North Olmstead, General Obligation, Limited Tax,
6.250%, 12/15/12 12/02 at 102 Aaa 1,080,350
1,000,000 Northeast Ohio Regional Sewer District, Wastewater
Improvement, 5.600%, 11/15/16 11/05 at 101 Aaa 1,001,180
500,000 Ottawa County General Obligation,
5.750%, 12/01/14 12/05 at 102 Aaa 512,630
1,000,000 Parma General Obligation, Limited Tax,
7.600%, 12/01/11 12/00 at 102 A 1,158,680
1,750,000 Pickerington Local School District, General
Obligation, Unlimited Tax, 6.750%, 12/01/16 12/01 at 102 A 1,875,808
1,000,000 Revere Local School District, General Obligation,
Unlimited Tax, 6.000%, 12/01/16 12/03 at 102 Aaa 1,044,560
1,500,000 Reynoldsburg City School District, General
Obligation, Unlimited Tax, 6.550%, 12/01/17 12/02 at 102 Aaa 1,661,925
1,200,000 Ridgemont Local School District, General
Obligation, Unlimited Tax, 7.250%, 12/01/14 12/02 at 102 N/R 1,286,472
735,000 Salem Sewer System, 7.500%, 11/01/11
(Pre-refunded to 11/01/96) 11/96 at 102 N/R 769,176
1,000,000 Springfield City School District, General Obligation,
Unlimited Tax, 6.600%, 12/01/12 12/01 at 102 Aaa 1,109,790
2,340,000 Stow General Obligation, 6.200%, 12/01/20 12/05 at 102 A1 2,464,651
3,080,000 Sylvania City School District, General Obligation,
5.750%, 12/01/22 12/05 at 101 Aaa 3,120,379
1,070,000 Trumbull County General Obligation,
7.000%, 12/01/04 No Opt. Call Aaa 1,260,449
1,000,000 Trumbull County Hospital (Trumbull Memorial
Hospital), 6.900%, 11/15/12 11/01 at 102 Aaa 1,120,840
- ---------------------------------------------------------------------------------------------------------------------------
</TABLE>
55
<PAGE>
PORTFOLIO OF INVESTMENTS
NUVEEN OHIO TAX-FREE VALUE FUND--CONTINUED
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------------
PRINCIPAL OPT. CALL MARKET
AMOUNT DESCRIPTION PROVISIONS* RATINGS** VALUE
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
$ 750,000 Tuscarawas County, Hospital Facilities (Union
Hospital), 6.500%, 10/01/21 10/03 at 102 Baa $ 727,688
University of Cincinnati, General Receipts:
1,000,000 7.300%, 6/01/09 (Pre-refunded to 6/01/99) 6/99 at 100 AA-- 1,098,110
1,000,000 6.300%, 6/01/12 12/02 at 102 AA-- 1,077,520
1,600,000 5.500%, 6/01/15 6/05 at 101 AA-- 1,587,648
1,500,000 University of Toledo, General Receipts,
5.350%, 6/01/25 6/04 at 102 Aaa 1,430,670
2,650,000 Walnut Township Local School District, General
Obligation, 6.200%, 12/01/20 No Opt. Call Aaa 2,950,961
1,950,000 Warren County, Hospital Facilities, Otterbein Home
Project, 7.200%, 7/01/11 7/01 at 102 Aa1 2,125,363
Warren General Obligation, Limited Tax:
1,500,000 7.750%, 11/01/10 (Pre-refunded to 11/01/00) 11/00 at 102 BBB+ 1,756,740
250,000 8.625%, 11/15/13 (Pre-refunded to 11/15/98) 11/98 at 102 BBB+ 284,936
2,500,000 Washington Water System, 5.375%, 12/01/19 12/03 at 101 Aaa 2,408,900
750,000 West Geauga Local School District, General
Obligation, Unlimited Tax, 5.950%, 11/01/12 11/04 at 102 Aaa 786,480
500,000 Wooster City School District, General Obligation,
Unlimited Tax, 6.500%, 12/01/17 12/02 at 102 Aaa 552,243
3,000,000 Puerto Rico Electric Power Authority,
5.500%, 7/01/25 7/05 at 100 A-- 2,879,670
- ---------------------------------------------------------------------------------------------------------------------------
$ 168,710,000 Total Investments - (Cost $167,189,364) - 98.7% 179,829,453
===========================================================================================================================
TEMPORARY INVESTMENTS IN SHORT-TERM
MUNICIPAL SECURITIES - 0.4%
$ 500,000 Cuyahoga County, University Hospital of
Cleveland, Variable Rate Demand Bonds,
3.400%, 1/01/16+ VMIG-1 500,000
300,000 Ohio Air Quality Development Authority
(The Cincinnati Gas and Electric Company),
Variable Rate Demand Bonds, 3.450%, 9/01/30+ VMIG-1 300,000
- ---------------------------------------------------------------------------------------------------------------------------
$ 800,000 Total Temporary Investments - 0.4% 800,000
==============-------------------------------------------------------------------------------------------------------------
Other Assets Less Liabilities - 0.9% 1,530,461
- ---------------------------------------------------------------------------------------------------------------------------
Net Assets - 100% $ 182,159,914
===========================================================================================================================
</TABLE>
56
<PAGE>
<TABLE>
<CAPTION>
NUVEEN TAX-FREE MUTUAL FUNDS ANNUAL REPORT
FEBRUARY 29, 1996
- ---------------------------------------------------------------------------------------------------------------------------
NUMBER MARKET MARKET
STANDARD & POOR'S MOODY'S OF ISSUES VALUE PERCENT
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
SUMMARY OF AAA Aaa 66 $103,834,421 58%
RATINGS** AA+, AA, AA-- Aa1, Aa, Aa2, Aa3 16 24,321,720 13
PORTFOLIO OF A+ A1 9 14,858,272 8
INVESTMENTS A, A-- A, A2, A3 7 10,831,669 6
(EXCLUDING BBB+, BBB, BBB-- Baa1, Baa, Baa2, Baa3 11 10,408,660 6
TEMPORARY Non-rated Non-rated 13 15,574,711 9
INVESTMENTS):
- ---------------------------------------------------------------------------------------------------------------------------
TOTAL 122 $179,829,453 100%
===========================================================================================================================
</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.
57
<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) $226,239,426 $218,186,376 $ 78,218,271 $ 63,715,206
Temporary investments in short-term municipal securities,
at amortized cost (note 1) 400,000 7,900,000 2,600,000 1,500,000
Cash - 401,476 114,539 119,718
Receivables:
Interest 3,966,815 3,247,317 1,092,435 1,001,565
Shares sold 23,967 144,099 37,818 11,460
Investments sold - - - -
Other assets 12,536 9,831 4,176 2,806
------------ ------------ ------------ ------------
Total assets 230,642,744 229,889,099 82,067,239 66,350,755
------------ ------------ ------------ ------------
LIABILITIES
Payables:
Investments purchased - 5,215,642 - -
Shares reacquired 40,000 56,538 24,922 -
Cash overdraft 68,006 - - -
Accrued expenses:
Management fees (note 7) 100,051 97,484 35,880 29,076
Other 52,068 50,374 43,994 25,856
Dividends payable 599,330 536,574 261,287 196,115
------------ ------------ ------------ ------------
Total liabilities 859,455 5,956,612 366,083 251,047
------------ ------------ ------------ ------------
Net assets (note 8) $229,783,289 $223,932,487 $ 81,701,156 $ 66,099,708
============ ============ ============ ============
Class A Shares (note 1)
Net Assets $ 12,709,245 $ 17,250,452 $ 4,289,634 $ 5,290,906
============ ============ ============ ============
Shares outstanding 1,201,563 1,603,198 431,437 504,138
============ ============ ============ ============
Net asset value and redemption price per share $ 10.58 $ 10.76 $ 9.94 $ 10.49
============ ============ ============ ============
Offering price per share (net asset value per share plus
maximum sales charge of 4.50% of offering price) $ 11.08 $ 11.27 $ 10.41 $ 10.98
============ ============ ============ ============
Class C Shares (note 1)
Net Assets $ 684,050 $ 1,040,354 $ 638,184 $ 706,398
============ ============ ============ ============
Shares outstanding 64,678 97,466 64,525 67,455
============ ============ ============ ============
Net asset value, offering and redemption price per share $ 10.58 $ 10.67 $ 9.89 $ 10.47
============ ============ ============ ============
Class R Shares (note 1)
Net Assets $216,389,994 $205,641,681 $ 76,773,338 $ 60,102,404
============ ============ ============ ============
Shares outstanding 20,411,745 19,147,536 7,743,405 5,724,133
============ ============ ============ ============
Net asset value and redemption price per share $ 10.60 $ 10.74 $ 9.91 $ 10.50
============ ============ ============ ============
- ---------------------------------------------------------------------------------------------------------------------------
</TABLE>
See accompanying notes to financial statements.
58
<PAGE>
<TABLE>
<CAPTION>
NUVEEN TAX-FREE MUTUAL FUNDS ANNUAL REPORT
FEBRUARY 29, 1996
- ------------------------------------------------------------------------------------------------------------
NY NY INS OH
- ------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
ASSETS
Investments in municipal securities, at market value (note 1) $165,378,435 $359,533,384 $179,829,453
Temporary investments in short-term municipal securities,
at amortized cost (note 1) 3,800,000 7,000,000 800,000
Cash 112,018 221,918 141,353
Receivables:
Interest 2,344,826 4,042,665 2,940,082
Shares sold 195,831 53,593 24,037
Investments sold - - 115,000
Other assets 5,854 23,239 7,506
------------ ------------ ------------
Total assets 171,836,964 370,874,799 183,857,431
------------ ------------ ------------
LIABILITIES
Payables:
Investments purchased - - 993,430
Shares reacquired 2,756 45,457 701
Cash overdraft - - -
Accrued expenses:
Management fees (note 7) 74,192 158,596 79,739
Other 68,252 90,386 75,057
Dividends payable 538,521 1,116,110 548,590
------------ ------------ ------------
Total liabilities 683,721 1,410,549 1,697,517
------------ ------------ ------------
Net assets (note 8) $171,153,243 $369,464,250 $182,159,914
============ ============ ============
Class A Shares (note 1)
Net Assets $ 15,731,737 $ 24,746,961 $ 12,904,370
============ ============ ============
Shares outstanding 1,483,039 2,332,442 1,217,784
============ ============ ============
Net asset value and redemption price per share $ 10.61 $ 10.61 $ 10.60
============ ============ ============
Offering price per share (net asset value per share plus
maximum sales charge of 4.50% of offering price) $ 11.11 $ 11.11 $ 11.10
============ ============ ============
Class C Shares (note 1)
Net Assets $ 645,881 $ 1,369,280 $ 2,163,317
============ ============ ============
Shares outstanding 60,727 129,089 205,074
============ ============ ============
Net asset value, offering and redemption price per share $ 10.64 $ 10.61 $ 10.55
============ ============ ============
Class R Shares (note 1)
Net Assets $154,775,625 $343,348,009 $167,092,227
============ ============ ============
Shares outstanding 14,548,997 32,374,299 15,788,804
============ ============ ============
Net asset value and redemption price per share $ 10.64 $ 10.61 $ 10.58
============ ============ ============
- ------------------------------------------------------------------------------------------------------------
</TABLE>
See accompanying notes to financial statements.
59
<PAGE>
<TABLE>
<CAPTION>
STATEMENT OF OPERATIONS
Year ended February 29, 1996
- ---------------------------------------------------------------------------------------------------------------------------
CA CA INS MA MA INS
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
INVESTMENT INCOME
Tax-exempt interest income (note 1) $ 13,781,032 $ 12,733,263 $ 4,837,922 $ 3,805,611
------------ ------------ ------------ ------------
Expenses (note 2):
Management fees (note 7) 1,202,873 1,158,688 426,738 347,740
12b-1 distribution and service fees (note 1) 23,161 32,428 9,341 14,370
Shareholders' servicing agent fees and expenses 151,174 130,018 73,530 56,187
Custodian's fees and expenses 85,828 68,050 51,005 49,007
Directors' fees and expenses (note 7) 4,158 3,876 2,710 1,955
Professional fees 28,924 30,203 16,976 13,484
Shareholders' reports - printing and mailing expenses 76,149 70,338 56,416 31,903
Federal and state registration fees 3,918 2,763 9,534 1,469
Portfolio insurance expense - 17,622 - 4,854
Other expenses 9,757 14,743 4,937 7,918
------------ ------------ ------------ ------------
Total expenses before expense reimbursement 1,585,942 1,528,729 651,187 528,887
Expense reimbursement from investment adviser (note 7) (3,302) (1,695) (59,879) (788)
------------ ------------ ------------ ------------
Net expenses 1,582,640 1,527,034 591,308 528,099
------------ ------------ ------------ ------------
Net investment income 12,198,392 11,206,229 4,246,614 3,277,512
------------ ------------ ------------ ------------
REALIZED AND UNREALIZED GAIN (LOSS)
FROM INVESTMENTS
Net realized gain (loss) from investment transactions, net
of taxes, if applicable (notes 1 and 5) 1,855,177 764,418 (217,900) 12,456
Net change in unrealized appreciation or depreciation of
investments 8,120,195 9,456,488 3,250,694 2,682,527
------------ ------------ ------------ ------------
Net gain from investments 9,975,372 10,220,906 3,032,794 2,694,983
------------ ------------ ------------ ------------
Net increase in net assets from operations $ 22,173,764 $ 21,427,135 $ 7,279,408 $ 5,972,495
============ ============ ============ ============
- ---------------------------------------------------------------------------------------------------------------------------
</TABLE>
See accompanying notes to financial statements.
60
<PAGE>
<TABLE>
<CAPTION>
NUVEEN TAX-FREE MUTUAL FUNDS ANNUAL REPORT
FEBRUARY 29, 1996
- ------------------------------------------------------------------------------------------------------------
NY NY INS OH
- ------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
INVESTMENT INCOME
Tax-exempt interest income (note 1) $ 10,173,134 $ 21,352,872 $ 10,738,180
------------ ------------ ------------
Expenses (note 2):
Management fees (note 7) 882,509 1,940,010 956,869
12b-1 distribution and service fees (note 1) 30,739 51,219 35,618
Shareholders' servicing agent fees and expenses 143,133 214,972 172,725
Custodian's fees and expenses 58,808 71,270 56,916
Directors' fees and expenses (note 7) 1,440 6,208 1,008
Professional fees 24,971 37,406 25,755
Shareholders' reports - printing and mailing expenses 99,517 102,967 105,217
Federal and state registration fees 2,874 7,586 3,245
Portfolio insurance expenses - 7,559 -
Other expenses 8,233 18,530 8,030
------------ ------------ ------------
Total expenses before expense reimbursement 1,252,224 2,457,727 1,365,383
Expense reimbursement from investment adviser (note 7) (29,700) - (42,592)
------------ ------------ ------------
Net expenses 1,222,524 2,457,727 1,322,791
------------ ------------ ------------
Net investment income 8,950,610 18,895,145 9,415,389
------------ ------------ ------------
REALIZED AND UNREALIZED GAIN (LOSS)
FROM INVESTMENTS
Net realized gain (loss) from investment transactions,
net of taxes, if applicable (notes 1 and 5) 1,772,126 973,136 730,235
Net change in unrealized appreciation or depreciation of
investments 5,658,638 15,965,392 6,013,907
------------ ------------ ------------
Net gain from investments 7,430,764 16,938,528 6,744,142
------------ ------------ ------------
Net increase in net assets from operations $ 16,381,374 $ 35,833,673 $16,159,531
============ ============ ===========
- ------------------------------------------------------------------------------------------------------------
</TABLE>
See accompanying notes to financial statements.
61
<PAGE>
<TABLE>
<CAPTION>
STATEMENT OF CHANGES IN NET ASSETS
- ----------------------------------------------------------------------------------------------------------------------------
CA CA INS
- ---------------------------------------------------------------------------------------------------------------------------
Year ended Year ended Year ended Year ended
2/29/96 2/28/95 2/29/96 2/28/95
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
OPERATIONS
Net investment income $ 12,198,392 $ 12,056,682 $ 11,206,229 $ 11,038,593
Net realized gain (loss) from investment transactions,
net of taxes, if applicable 1,855,177 (2,621,487) 764,418 (1,106,384)
Net change in unrealized appreciation or depreciation
of investments 8,120,195 (8,272,724) 9,456,488 (6,870,030)
------------ ------------ ------------ ------------
Net increase in net assets from operations 22,173,764 1,162,471 21,427,135 3,062,179
------------ ------------ ------------ ------------
DISTRIBUTIONS TO SHAREHOLDERS (note 1)
From net investment income:
Class A (388,705) (40,773) (496,274) (59,786)
Class C (18,278) (2,883) (28,991) (4,199)
Class R (11,713,501) (12,099,560) (10,613,497) (10,954,036)
From accumulated net realized gains from investment
transactions:
Class A - (6,186) - (2,542)
Class C - (231) - (317)
Class R - (1,542,643) - (545,843)
In excess of net realized gains from investment
transactions:
Class A - - - -
Class C - - - -
Class R - - - -
------------ ------------ ------------ ------------
Decrease in net assets from distributions to shareholders (12,120,484) (13,692,276) (11,138,762) (11,566,723)
------------ ------------ ------------ ------------
FUND SHARE TRANSACTIONS (note 3)
Net proceeds from sale of shares:
Class A 9,631,213 3,153,792 12,814,061 4,571,343
Class C 518,671 189,814 927,664 277,611
Class R 22,522,458 24,628,063 12,331,198 21,455,944
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 173,826 17,920 248,069 24,201
Class C 13,296 1,844 16,740 1,935
Class R 7,264,916 8,806,336 6,444,797 7,133,691
------------ ------------ ------------ ------------
40,124,380 36,797,769 32,782,529 33,464,725
------------ ------------ ------------ ------------
Cost of shares redeemed:
Class A (567,970) (117,370) (1,021,240) (71,333)
Class C (64,962) (1,036) (167,154) (68,234)
Class R (31,186,974) (31,154,367) (21,853,091) (29,032,260)
------------ ------------ ------------ ------------
(31,819,906) (31,272,773) (23,041,485) (29,171,827)
------------ ------------ ------------ ------------
Net increase (decrease) in net assets derived from Fund
share transactions 8,304,474 5,524,996 9,741,044 4,292,898
------------ ------------ ------------ ------------
Net increase (decrease) in net assets 18,357,754 (7,004,809) 20,029,417 (4,211,646)
Net assets at the beginning of year 211,425,535 218,430,344 203,903,070 208,114,716
------------ ------------ ------------ ------------
Net assets at the end of year $229,783,289 $211,425,535 $223,932,487 $203,903,070
============ ============ ============ ============
Balance of undistributed net investment income at end of year $ 142,955 $ 65,047 $ 134,147 $ 66,680
============ ============ ============ ============
- ---------------------------------------------------------------------------------------------------------------------------
</TABLE>
See accompanying notes to financial statements.
62
<PAGE>
<TABLE>
<CAPTION>
NUVEEN TAX-FREE MUTUAL FUNDS ANNUAL REPORT
FEBRUARY 29, 1996
- ----------------------------------------------------------------------------------------------------------------------------
MA MA INS
- ---------------------------------------------------------------------------------------------------------------------------
Year ended Year ended Year ended Year ended
2/29/96 2/28/95 2/29/96 2/28/95
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
OPERATIONS
Net investment income $ 4,246,614 $ 4,066,454 $ 3,277,512 $ 3,106,605
Net realized gain (loss) from investment transactions,
net of taxes, if applicable (217,900) (558,617) 12,456 (212,554)
Net change in unrealized appreciation or depreciation
of investments 3,250,694 (2,393,115) 2,682,527 (1,878,784)
----------- ------------ ----------- -----------
Net increase in net assets from operations 7,279,408 1,114,722 5,972,495 1,015,267
----------- ------------ ----------- -----------
DISTRIBUTIONS TO SHAREHOLDERS (note 1)
From net investment income:
Class A (139,213) (16,122) (174,644) (22,806)
Class C (11,360) (1,197) (22,692) (5,217)
Class R (4,149,329) (4,021,155) (3,106,193) (3,099,363)
From accumulated net realized gains from investment
transactions:
Class A - - - -
Class C - - - -
Class R - - - -
In excess of net realized gains from investment
transactions:
Class A - - - -
Class C - - - -
Class R - - - -
----------- ------------ ----------- -----------
Decrease in net assets from distributions to shareholders (4,299,902) (4,038,474) (3,303,529) (3,127,386)
----------- ------------ ----------- -----------
FUND SHARE TRANSACTIONS (note 3)
Net proceeds from sale of shares:
Class A 3,487,963 1,057,696 3,509,564 1,906,377
Class C 510,754 144,012 359,914 324,825
Class R 7,760,983 10,510,784 3,473,819 7,040,265
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 75,540 8,778 104,279 11,338
Class C 7,603 594 20,520 2,330
Class R 2,962,447 2,815,745 2,184,979 2,160,636
----------- ------------ ----------- -----------
14,805,290 14,537,609 9,653,075 11,445,771
----------- ------------ ----------- -----------
Cost of shares redeemed:
Class A (436,265) (32,507) (415,735) (37,958)
Class C (33,924) - (32,222) -
Class R (8,395,795) (10,741,355) (5,205,452) (8,119,665)
----------- ------------ ----------- -----------
(8,865,984) (10,773,862) (5,653,409) (8,157,623)
----------- ------------ ----------- -----------
Net increase (decrease) in net assets derived from Fund
share transactions 5,939,306 3,763,747 3,999,666 3,288,148
----------- ------------ ----------- -----------
Net increase (decrease) in net assets 8,918,812 839,995 6,668,632 1,176,029
Net assets at the beginning of year 72,782,344 71,942,349 59,431,076 58,255,047
----------- ------------ ----------- -----------
Net assets at the end of year $81,701,156 $ 72,782,344 $66,099,708 $59,431,076
=========== ============ =========== ===========
Balance of undistributed net investment income at end of year $ 2,984 $ 56,272 $ 1,505 $ 27,522
=========== ============ =========== ===========
- ---------------------------------------------------------------------------------------------------------------------------
</TABLE>
See accompanying notes to financial statements.
63
<PAGE>
<TABLE>
<CAPTION>
STATEMENT OF CHANGES IN NET ASSETS
- ---------------------------------------------------------------------------------------------------------------------------
NY NY INS
- ---------------------------------------------------------------------------------------------------------------------------
Year ended Year ended Year ended Year ended
2/29/96 2/28/95 2/29/96 2/28/95
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
OPERATIONS
Net investment income $ 8,950,610 $ 8,356,495 $ 18,895,145 $ 19,887,434
Net realized gain (loss) from investment transactions,
net of taxes, if applicable 1,772,126 (1,122,982) 973,136 691,691
Net change in unrealized appreciation or depreciation of
investments 5,658,638 (6,026,320) 15,965,392 (17,661,749)
------------ ------------ ------------ ------------
Net increase from net assets from operations 16,381,374 1,207,193 35,833,673 2,917,376
------------ ------------ ------------ ------------
DISTRIBUTION TO SHAREHOLDERS (note 1)
From net investment income:
Class A (551,771) (35,341) (834,291) (93,178)
Class C (18,002) (818) (36,998) (3,586)
Class R (8,358,840) (8,216,539) (18,227,897) (19,795,360)
From accumulated net realized gains from investment
transactions:
Class A - (2,464) (51,671) (11,988)
Class C - (28) (2,889) (504)
Class R - (697,769) (861,604) (1,367,629)
In excess of net realized gains from investment
transactions:
Class A - - (4,745) (483)
Class C - - (265) (20)
Class R - - (79,130) (55,065)
------------ ------------ ------------ ------------
Decrease in net assets from distributions to shareholders (8,928,613) (8,952,959) (20,099,490) (21,327,813)
------------ ------------ ------------ ------------
FUND SHARE TRANSACTIONS (note 3)
Net proceeds from sale of shares:
Class A 13,070,637 3,107,225 18,519,780 7,035,288
Class C 556,433 81,795 1,180,461 271,337
Class R 12,367,225 26,513,287 13,478,031 34,286,843
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 358,186 18,206 621,995 61,394
Class C 12,262 417 23,992 1,940
Class R 6,297,279 6,975,322 14,466,972 16,604,261
------------ ------------ ------------ ------------
32,662,022 36,696,252 48,291,231 58,261,063
------------ ------------ ------------ ------------
Cost of shares redeemed:
Class A (1,336,675) (51,915) (2,316,785) (99,736)
Class C (23,961) - (153,831) -
Class R (20,329,583) (22,466,951) (44,754,684) (75,263,107)
------------ ------------ ------------ ------------
(21,690,219) (22,518,866) (47,225,300) (75,362,843)
------------ ------------ ------------ ------------
Net increase (decrease) in net assets derived from Fund
share transactions 10,971,803 14,177,386 1,065,931 (17,101,780)
------------ ------------ ------------ ------------
Net increase (decrease) in net assets 18,424,564 6,431,620 16,800,114 (35,512,217)
Net assets at the beginning of year 152,728,679 146,297,059 352,664,136 388,176,353
------------ ------------ ------------ ------------
Net assets at the end of year $171,153,243 $152,728,679 $369,464,250 $352,664,136
============ ============ ============ ============
Balance of undistributed net investment income at end of year $ 126,818 $ 104,821 $ 59,448 $ 263,489
============ ============ ============ ============
- ---------------------------------------------------------------------------------------------------------------------------
</TABLE>
See accompanying notes to financial statements.
64
<PAGE>
<TABLE>
<CAPTION>
NUVEEN TAX-FREE MUTUAL FUNDS ANNUAL REPORT
FEBRUARY 29, 1996
- ---------------------------------------------------------------------------------------------
OH
- ---------------------------------------------------------------------------------------------
Year ended Year ended
2/29/96 2/28/95
- ---------------------------------------------------------------------------------------------
<S> <C> <C>
OPERATIONS
Net investment income $ 9,415,389 $ 9,142,413
Net realized gain (loss) from investment transactions,
net of taxes, if applicable 730,235 (967,375)
Net change in unrealized appreciation or depreciation
of investments 6,013,907 (5,055,416)
------------ ------------
Net increase in net assets from operations 16,159,531 3,119,622
------------ ------------
DISTRIBUTION TO SHAREHOLDERS (note 1)
From net investment income:
Class A (435,348) (58,833)
Class C (62,605) (9,333)
Class R (8,957,352) (9,076,904)
From accumulated net realized gains from investment
transactions:
Class A - (4,637)
Class C - (879)
Class R - (652,495)
In excess of net realized gains from investment
transactions:
Class A - -
Class C - -
Class R - -
------------ ------------
Decrease in net assets from distributions to shareholders (9,455,305) (9,803,081)
------------ ------------
FUND SHARE TRANSACTIONS (note 3)
Net proceeds from sale of shares:
Class A 8,850,862 4,240,889
Class C 1,260,641 871,689
Class R 10,592,955 15,813,517
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 253,231 28,946
Class C 49,706 6,902
Class R 6,293,847 6,935,311
------------ ------------
27,301,242 27,897,254
------------ ------------
Cost of shares redeemed:
Class A (809,723) (115,343)
Class C (95,567) (3,158)
Class R (18,392,616) (21,090,544)
------------ ------------
(19,297,906) (21,209,045)
------------ ------------
Net increase (decrease) in net assets derived from Fund
share transactions 8,003,336 6,688,209
------------ ------------
Net increase (decrease) in net assets 14,707,562 4,750
Net assets at the beginning of year 167,452,352 167,447,602
------------ ------------
Net assets at the end of year $182,159,914 $167,452,352
============ ============
Balance of undistributed net investment income at end of year $ 68,716 $ 108,632
============ ============
- ---------------------------------------------------------------------------------------------
</TABLE>
See accompanying notes to financial statements.
65
<PAGE>
NOTES TO FINANCIAL STATEMENTS
1. GENERAL INFORMATION AND SIGNIFICANT
ACCOUNTING POLICIES
At February 29, 1996, the state Funds (the "Funds") covered in this report are
Nuveen California Tax-Free Fund, Inc. (comprising the Nuveen California and
California Insured Tax-Free Value Funds), Nuveen Tax-Free Bond Fund, Inc.
(comprising the Nuveen Massachusetts, New York and Ohio Tax-Free Value Funds)
and Nuveen Insured Tax-Free Bond Fund, Inc. (comprising 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.
The Funds are registered under the Investment Company Act of 1940 as open-end,
diversified management investment companies.
The following is a summary of significant accounting policies followed by the
Funds in the preparation of their financial statements in accordance with
generally accepted accounting principles.
Securities valuation
Portfolio securities for which market quotations are readily available are
valued at the mean between the quoted bid and asked prices or the yield
equivalent. Portfolio securities for which market quotations are not readily
available are valued at fair value by consistent application of methods
determined in good faith by the Board of Directors. 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 using the specific identification
method. Securities purchased 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 fluctuations during this period. The Funds have instructed
the custodian to segregate assets in a separate account with a current value at
least equal to the amount of their purchase commitments. At February 29, 1996,
such purchase commitments in California Insured amount to $5,215,642. There were
no such purchase commitments in any of the other Funds.
66
<PAGE>
NUVEEN TAX-FREE MUTUAL FUNDS ANNUAL REPORT
FEBRUARY 29, 1996
Interest income
Interest income is determined on the basis of interest accrued, adjusted for
amortization of premiums and accretion of discounts on long-term debt securities
when required for federal income tax purposes.
Dividends and distribution 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 extent they exceed available capital loss
carryovers.
Distributions to shareholders of net investment income and net realized gains
from investment transactions are recorded on the ex-dividend date. The amount
and timing of such distributions are determined in accordance with federal
income tax regulations, which may differ from generally accepted accounting
principles. Accordingly, temporary over-distributions as a result of these
differences may result and will be classified as either distributions in excess
of net investment income or distributions in excess of net realized gains from
investment transactions, if applicable.
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. 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, to retain such tax
exempt status when distributed to the shareholders of the Funds. All income
dividends paid during the year ended February 29, 1996, have been designated
Exempt Interest Dividends.
Insurance
The California Insured, Massachusetts Insured and New York Insured Tax-Free
Value Funds invest in municipal securities which are either covered by insurance
or backed by an escrow or trust account containing sufficient U.S. Government or
U.S. Government agency securities, both of which ensure the timely payment of
principal and interest. Each insured municipal security is covered by Original
Issue Insurance, Secondary Market Insurance or Portfolio Insurance. Such
insurance does not guarantee the market value of the municipal securities or the
value of the 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
67
<PAGE>
NOTES TO FINANCIAL STATEMENTS
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. Effective June 13, 1995, an investor
purchasing Class "C" Shares agrees to pay a contingent deferred sales charge
("CDSC") of 1% if Class "C" Shares are redeemed within 12 months of purchase.
Prior to the offering of Class "A" 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.
Derivative financial instruments
In October 1994, the Financial Accounting Standards Board (FASB) issued
Statement of Financial Accounting Standards No. 119 Disclosure about Derivative
Financial Instruments and Fair Value of Financial Instruments which prescribes
disclosure requirements for transactions in certain derivative financial
instruments including future, forward, swap, and option contracts, and other
financial instruments with similar characteristics. Although the Funds are
authorized to invest in such financial instruments, and may do so in the future,
they did not make any such investments during the year ended February 29, 1996,
other than occasional purchases of high quality synthetic money market
securities, if applicable.
Use of estimates
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities at the date of the
financial statements and the reported amounts of increases and decreases in net
assets from operations during the reporting period.
68
<PAGE>
NUVEEN TAX-FREE MUTUAL FUNDS ANNUAL REPORT
FEBRUARY 29, 1996
2. EXPENSE ALLOCATION
Expenses of the Funds that are not directly attributable to any class of shares
are prorated among the classes based on the relative net assets of each class.
Expenses directly attributable to a class of shares are recorded to the specific
class. Effective August 1, 1995, the Funds adopted a multiple class plan
pursuant to Rule 18f-3 under the investment Company Act of 1940 and now
designate class specific expenses to include Rule 12b-1 distribution and service
fees, and other expenses incurred for services received by a class that differ
in either amount or kind. A breakdown of the class specific expenses is as
follows:
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------
CA CA INS MA MA INS
- --------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
12b-1 distribution and service fees (for the year ended
February 29, 1996):
Class A $19,006 $25,512 $ 6,732 $ 8,932
Class C 4,155 6,916 2,609 5,438
Shareholders' servicing agent fees and expenses
(for the five month period ended July 31, 1995):
Class A 3,235 4,044 2,378 2,346
Class C 205 227 209 215
Class R 62,876 57,527 29,261 19,878
Shareholders' reports-printing and mailing expenses
(for the five month period ended July 31, 1995):
Class A 1,525 1,808 988 520
Class C 201 190 23 44
Class R 40,490 36,738 37,136 33,910
Federal and state registration fees (for the five month period
ended July 31, 1995):
Class A 985 950 1,207 471
Class C 290 20 1,050 106
Class R 459 48 4,457 633
- --------------------------------------------------------------------------------------------------------
</TABLE>
69
<PAGE>
NOTES TO FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------
NY NY INS OH
- ----------------------------------------------------------------------------------------------
<S> <C> <C> <C>
12b-1 distribution and service fees (for the year ended
February 29, 1996):
Class A $26,638 $42,326 $21,336
Class C 4,101 8,893 14,282
Shareholders' servicing agent fees and expenses (for the
five month period ended July 31, 1995):
Class A 5,805 5,554 4,802
Class C 925 288 564
Class R 56,825 89,427 67,199
Shareholders' reports-printing and mailing expenses (for
the five month period ended July 31, 1995):
Class A 1,599 1,436 2,069
Class C 91 110 240
Class R 65,948 59,582 75,389
Federal and state registration fees (for the five month period
ended July 31, 1995):
Class A 821 1,324 1,207
Class C 194 27 207
Class R 448 525 456
- ----------------------------------------------------------------------------------------------
</TABLE>
70
<PAGE>
<TABLE>
<CAPTION>
NUVEEN TAX-FREE MUTUAL FUNDS ANNUAL REPORT
FEBRUARY 29, 1996
3. FUND SHARES
Transactions in shares were as follows:
- --------------------------------------------------------------------------------------------------------------------------
CA CA INS
- --------------------------------------------------------------------------------------------------------------------------
Year ended Year ended Year ended Year ended
2/29/96 2/28/95 2/29/96 2/28/95
- --------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Shares sold:
Class A $ 927,895 $ 321,777 $ 1,211,972 $ 468,407
Class C 50,026 19,666 89,705 28,545
Class R 2,165,620 2,433,649 1,177,751 2,136,079
Shares issued to shareholders due to reinvestment of
distributions from net investment income and from net
realized gains from investment transactions:
Class A 16,682 1,856 23,441 2,486
Class C 1,279 191 1,594 201
Class R 700,563 884,995 614,344 714,801
------------ ----------- ---------- ---------
3,862,065 3,662,134 3,118,807 3,350,519
------------ ----------- ---------- ----------
Shares redeemed:
Class A (54,537) (12,110) (95,872) (7,236)
Class C (6,378) (106) (15,721) (6,858)
Class R (2,990,150) (3,116,035) (2,088,697) (2,915,964)
------------ ----------- ---------- ----------
(3,051,065) (3,128,251) (2,200,290) (2,930,058)
------------ ----------- ---------- ----------
Net increase (decrease) 811,000 533,883 918,517 420,461
============ =========== ========== ==========
- --------------------------------------------------------------------------------------------------------------------------
</TABLE>
71
<PAGE>
<TABLE>
<CAPTION>
NOTES TO FINANCIAL STATEMENTS
- ---------------------------------------------------------------------------------------------------------------------------
MA MA INS
- ---------------------------------------------------------------------------------------------------------------------------
Year ended Year ended Year ended Year ended
2/29/96 2/28/95 2/29/96 2/28/95
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Shares sold:
Class A 356,285 114,157 339,891 197,250
Class C 51,779 15,429 34,914 33,405
Class R 795,556 1,117,491 337,797 702,214
Shares issued to shareholders due to reinvestment of
distributions from net investment income and from net
realized gains from investment transactions:
Class A 7,663 956 10,031 1,171
Class C 775 65 1,987 244
Class R 303,251 277,942 211,766 225,446
------------ ------------ ------------ ------------
1,515,309 1,526,040 936,386 1,159,730
------------ ------------ ------------ ------------
Shares redeemed:
Class A (44,057) (3,567) (40,197) (4,008)
Class C (3,523) - (3,095) -
Class R (857,146) (1,130,507) (503,288) (823,516)
------------ ------------ ------------ ------------
(904,726) (1,134,074) (546,580) (827,524)
------------ ------------ ------------ ------------
Net increase (decrease) 610,583 391,966 389,806 332,206
============ ============ ============ ============
- ---------------------------------------------------------------------------------------------------------------------------
</TABLE>
72
<PAGE>
<TABLE>
<CAPTION>
NUVEEN TAX-FREE MUTUAL FUNDS ANNUAL REPORT
FEBRUARY 29, 1996
- ---------------------------------------------------------------------------------------------------------------------------
NY NY INS
- ---------------------------------------------------------------------------------------------------------------------------
Year ended Year ended Year ended Year ended
2/29/96 2/28/95 2/29/96 2/28/95
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Shares sold:
Class A 1,261,309 318,594 1,778,309 719,364
Class C 53,367 8,430 113,081 27,982
Class R 1,182,028 2,613,112 1,291,786 3,411,938
Shares issued to shareholders due to reinvestment of
distributions from net investment income and from net
realized gains from investment transactions:
Class A 34,236 1,882 59,314 6,336
Class C 1,167 43 2,279 200
Class R 603,620 701,622 1,387,801 1,652,628
------------ ------------ ------------ ------------
3,135,727 3,643,683 4,632,570 5,818,448
------------ ------------ ------------ ------------
Shares redeemed:
Class A (127,601) (5,381) (220,550) (10,331)
Class C (2,280) - (14,453) -
Class R (1,956,584) (2,245,562) (4,307,682) (7,580,245)
------------ ------------ ------------ ------------
(2,086,465) (2,250,943) (4,542,685) (7,590,576)
------------ ------------ ------------ ------------
Net increase (decrease) 1,049,262 1,392,740 89,885 (1,772,128)
============ ============ ============ ============
- ---------------------------------------------------------------------------------------------------------------------------
</TABLE>
73
<PAGE>
<TABLE>
<CAPTION>
NOTES TO FINANCIAL STATEMENTS
- ---------------------------------------------------------------------------------------------
OH
- ---------------------------------------------------------------------------------------------
Year ended Year ended
2/29/96 2/28/95
- ---------------------------------------------------------------------------------------------
<S> <C> <C>
Shares sold:
Class A 846,644 432,196
Class C 120,707 88,344
Class R 1,015,491 1,586,702
Shares issued to shareholders due to reinvestment of
distributions from net investment income and from net
realized gains from investment transactions:
Class A 24,156 2,972
Class C 4,767 711
Class R 604,197 696,759
------------ ------------
2,615,962 2,807,684
------------ ------------
Shares redeemed:
Class A (76,763) (11,421)
Class C (9,130) (325)
Class R (1,765,109) (2,131,282)
------------ ------------
(1,851,002) (2,143,028)
------------ ------------
Net increase (decrease) 764,960 664,656
============ ============
- ---------------------------------------------------------------------------------------------
</TABLE>
74
<PAGE>
NUVEEN TAX-FREE MUTUAL FUNDS ANNUAL REPORT
FEBRUARY 29, 1996
4. DISTRIBUTIONS TO SHAREHOLDERS
On March 8, 1996, the Funds declared dividend distributions from their ordinary
income which were paid on April 1, 1996, to shareholders of record on March 8,
1996, as follows:
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------------
CA CA INS MA MA INS
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Dividend per share:
Class A $ .0440 $ .0440 $ .0420 $ .0430
Class C .0375 .0370 .0360 .0365
Class R .0465 .0460 .0440 .0450
============ ============ ============ ============
- ---------------------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------
NY NY INS OH
- ------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Dividend per share:
Class A $ .0460 $ .0440 $ .0450
Class C .0395 .0375 .0380
Class R .0485 .0460 .0470
============ ============ ============
- ------------------------------------------------------------------------------------------------------------
</TABLE>
5. SECURITIES TRANSACTIONS
Purchases and sales (including maturities) of investments in municipal
securities and temporary municipal investments for the year ended February 29,
1996, were as follows:
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------------
CA CA INS MA MA INS
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
PURCHASES
Investments in municipal securities $ 86,931,529 $ 88,694,265 $ 8,378,588 $ 4,607,844
Temporary municipal investments 97,900,000 84,425,000 20,800,000 16,400,000
SALES
Investments in municipal securities 76,815,188 80,308,313 4,213,420 327,390
Temporary municipal investments 97,500,000 78,225,000 19,000,000 16,600,000
============ ============ ============ ============
- ---------------------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------
NY NY INS OH
- ------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
PURCHASES
Investments in municipal securities $ 78,935,027 $ 58,943,158 $ 65,139,819
Temporary municipal investments 30,250,000 39,200,000 27,400,000
SALES
Investments in municipal securities 73,742,136 65,415,317 55,993,586
Temporary municipal investments 27,650,000 33,600,000 27,400,000
============ ============ ============
- ------------------------------------------------------------------------------------------------------------
</TABLE>
75
<PAGE>
NOTES TO FINANCIAL STATEMENTS
At February 29, 1996, the cost of investments for federal income tax purposes
was the same as the cost for financial reporting purposes for each Fund.
At February 29, 1996, the Funds had unused capital loss carryforwards available
for federal income tax purposes to be applied against future capital gains, if
any. If not applied, the carryovers will expire as follows:
<TABLE>
<CAPTION>
- -----------------------------------------------------------------
CA CA INS MA MA INS
- -----------------------------------------------------------------
<S> <C> <C> <C> <C>
Expiration year:
1997 $ - $ - $ - $ 47,237
1999 - - - 18,885
2003 518,192 220,919 275,030 172,689
2004 247,114 121,012 507,247 39,865
-------- -------- -------- --------
Total $765,306 $341,931 $782,277 $278,676
======== ======== ======== ========
- -----------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
- -----------------------------
OH
- -----------------------------
<S> <C>
Expiration year:
1997 $ -
1999 -
2003 -
2004 237,140
--------
Total $237,140
========
- -----------------------------
</TABLE>
76
<PAGE>
NUVEEN TAX-FREE MUTUAL FUNDS ANNUAL REPORT
FEBRUARY 29, 1996
6. UNREALIZED APPRECIATION (DEPRECIATION)
Gross unrealized appreciation and gross unrealized depreciation of investments
at February 29, 1996, were as follows:
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------
CA CA INS MA MA INS
<S> <C> <C> <C> <C>
- -------------------------------------------------------------------------------
Gross unrealized:
Appreciation $12,556,045 $14,643,216 $ 5,577,358 $5,000,960
Depreciation (442,450) (323,932) (72,750) (50,643)
----------- ----------- ----------- ----------
Net unrealized appreciation $12,113,595 $14,319,284 $ 5,504,608 $4,950,317
=========== =========== =========== ==========
- -------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
- -------------------------------------------------------------------
NY NY INS OH
- -------------------------------------------------------------------
<S> <C> <C> <C>
Gross unrealized:
Appreciation $ 9,487,337 $26,164,455 $12,797,421
Depreciation (424,057) (610,337) (157,332)
----------- ----------- -----------
Net unrealized appreciation $ 9,063,280 $25,554,118 $12,640,089
=========== =========== ===========
- -------------------------------------------------------------------
</TABLE>
77
<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 and .975 of 1% of the
average daily net asset value of the California Insured, Massachusetts Insured
and New York Insured Tax-Free Value Funds. The Adviser may also voluntarily
agree to reimburse additional expenses from time to time, which may be
voluntarily terminated at any time at its discretion.
The management fee referred to above 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.
78
<PAGE>
NUVEEN TAX-FREE MUTUAL FUNDS ANNUAL REPORT
FEBRUARY 29, 1996
8. COMPOSITION OF NET ASSETS
At February 29, 1996, each Fund 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 $218,292,045 $209,820,987 $ 76,982,089 $ 61,426,562
Balance of undistributed net investment income 142,955 134,147 2,984 1,505
Accumulated net realized gain (loss) from investment
transactions (765,306) (341,931) (788,525) (278,676)
Distributions in excess of net realized gains from investment
transactions - - - -
Net unrealized appreciation of investments 12,113,595 14,319,284 5,504,608 4,950,317
------------ ------------ ------------ ------------
Net assets $229,783,289 $223,932,487 $ 81,701,156 $ 66,099,708
============ ============ ============ ============
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 $161,313,710 $343,934,825 $169,688,249
Balance of undistributed net investment income 126,818 59,448 68,716
Accumulated net realized gain (loss) from investment
transactions 649,435 - (237,140)
Distributions in excess of net realized gains from investment
transactions - (84,141) -
Net unrealized appreciation of investments 9,063,280 25,554,118 12,640,089
------------ ------------ ------------
Net assets $171,153,243 $369,464,250 $182,159,914
============ ============ ============
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>
79
<PAGE>
NOTES TO FINANCIAL STATEMENTS
9. INVESTMENT COMPOSITION
Each Fund invests in municipal securities which include general obligation,
escrowed and revenue bonds. At February 29, 1996, the revenue sources by
municipal purpose for these investments, expressed as a percent of total
investments, were as follows:
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------------
CA CA INS MA MA INS
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Revenue Bonds:
Health Care Facilities 19% 14% 16% 18%
Housing Facilities 14 8 19 2
Lease Rental Facilities 8 14 - -
Educational Facilities 13 - 13 15
Water/Sewer Facilities 2 13 1 1
Transportation 5 1 2 1
Electric Utilities 2 7 1 3
Pollution Control - - 2 -
Other 25 26 1 1
General Obligation Bonds - 2 23 40
Escrowed Bonds 12 15 22 19
--- --- --- ---
100% 100% 100% 100%
=== === === ===
- ---------------------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------
NY NY INS OH
- --------------------------------------------------------------------------------------------------------------
Revenue Bonds:
Health Care Facilities 4% 10% 15%
Housing Facilities 17 16 5
Lease Rental Facilities 19 1 1
Educational Facilities 16 9 4
Water/Sewer Facilities 4 11 6
Transportation 1 10 2
Electric Utilities - 1 3
Pollution Control 5 3 7
Other 9 4 1
General Obligation Bonds 12 19 41
Escrowed Bonds 13 16 15
--- --- ---
100% 100% 100%
=== === ===
- --------------------------------------------------------------------------------------------------------------
</TABLE>
80
<PAGE>
NUVEEN TAX-FREE MUTUAL FUNDS ANNUAL REPORT
FEBRUARY 29, 1996
Certain long-term and intermediate-term investments owned by the Funds are
either covered by insurance issued by several private insurers or are backed by
an escrow or trust containing U.S. Government or U.S. Government agency
securities, both of which ensure the timely payment of principal and interest in
the event of default (39% for California, 100% for California Insured, 43% for
Massachusetts, 100% for Massachusetts Insured, 22% for New York, 100% for New
York Insured and 59% for Ohio). Such insurance, however, does not guarantee the
market value of the municipal securities or the value of the Fund's 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.
81
<PAGE>
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
SELECTED DATA FOR A COMMON SHARE OUTSTANDING THROUGHOUT EACH PERIOD IS AS FOLLOWS:
- --------------------------------------------------------------------------------------------------------------------------------
Income from investment operations Less distributions
--------------------------------------------------------------------
Net
realized and Dividends
Net asset Net unrealized gain from net Distribution Net asset
value beginning investment (loss) from investment from value end of
of period income investments+++ income capital gains period
- --------------------------------------------------------------------------------------------------------------------------------
CA
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
CLASS A
Year ended
2/29/96 $10.100 $.549* $ .473 $(.542) $ - $10.580
9/6/94 to
2/28/95 10.210 .270* (.031) (.275) (.074) 10.100
CLASS C
Year ended
2/29/96 10.100 .470* .474 (.464) - 10.580
9/16/94 to
2/28/95 10.040 .218* .139 (.223) (.074) 10.100
CLASS R
Year ended
2/29/96 10.130 .575 .467 (.572) - 10.600
Year ended 2/28,
1995 10.740 .582 (.531) (.587) (.074) 10.130
1994 10.850 .598 (.054) (.596) (.058) 10.740
1993 10.140 .633 .707 (.626) (.004) 10.850
8 months ended
2/29/92 9.920 .429 .218 (.427) - 10.140
Year ended 6/30,
1991 9.790 .639 .133 (.642) - 9.920
1990 9.850 .641 (.058) (.643) - 9.790
1989 9.240 .649* .610 (.649) - 9.850
1988 9.280 .647* (.040) (.647) - 9.240
1987** 9.600 .652* (.320) (.652) - 9.280
- --------------------------------------------------------------------------------------------------------------------------------
</TABLE>
See notes on page 94.
82
<PAGE>
<TABLE>
<CAPTION>
NUVEEN TAX FREE MUTUAL FUNDS ANNUAL REPORT
FEBRUARY 29, 1996
- ----------------------------------------------------------------------------------------------------------------------------
Ratios/Supplemental data
- ----------------------------------------------------------------------------------------------------------------------------
Ratio of Ratio of Ratio of Ratio of
expenses to net investment expenses net investment
Total return Net assets average income to average to average net income to average Portfolio
on net asset end of period net assets before net assets before assets after net assets after turnover
value++ (in thousands) reimbursement reimbursement reimbursement* reimbursement* rate
- ----------------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
10.36% $ 12,709 1.00% 5.23% .96% 5.27% 36%
2.52 3,146 1.41+ 5.40+ 1.00+ 5.81+ 32
9.53 684 1.84 4.39 1.71 4.52 36
3.71 200 2.41+ 4.37+ 1.75+ 5.03+ 32
10.54 216,390 .71 5.53 .71 5.53 36
0.78 208,080 .71 5.83 .71 5.83 32
5.08 218,430 .73 5.47 .73 5.47 19
13.66 183,215 .71 6.05 .71 6.05 5
6.61 133,377 .67+ 6.30+ .67+ 6.30+ -
8.16 107,508 .69 6.48 .69 6.48 15
6.14 78,704 .69 6.51 .69 6.51 8
14.12 52,048 .77 6.77 .75 6.79 22
6.87 29,640 .88 6.91 .70 7.09 48
3.28 19,094 1.19 5.61 .18 6.62 17
- ----------------------------------------------------------------------------------------------------------------------------
</TABLE>
83
<PAGE>
FINANCIAL HIGHLIGHTS
SELECTED DATA FOR A COMMON SHARE OUTSTANDING
THROUGHOUT EACH PERIOD IS AS FOLLOWS:
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
Income from investment operations Less distributions
--------------------------------- -----------------------------
Net
realized and Dividends
Net asset Net unrealized gain from net Distributions Net asset
value beginning investment (loss) from investment from value end of
of period income investments+++ income capital gains period
<S> <C> <C> <C> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------------------------------------
CA INS
- ------------------------------------------------------------------------------------------------------------------------------------
CLASS A
Year ended
2/29/96 $10.250 $.530* $.505 $(.525) $ -- $10.760
9/6/94 to
2/28/95 10.220 .255* .068 (.265) (.028) 10.250
CLASS C
Year ended
2/29/96 10.150 .448* .516 (.444) -- 10.670
9/12/94 to
2/28/95 10.060 .210* .123 (.215) (.028) 10.150
CLASS R
Year ended
2/29/96 10.230 .556 .507 (.553) -- 10.740
Year ended 2/28,
1995 10.670 .559 (.412) (.559) (.028) 10.230
1994 10.850 .560 (.101) (.556) (.083) 10.670
1993 10.010 .584 .871 (.579) (.036) 10.850
8 months ended
2/29/92 9.650 .401 .360 (.401) -- 10.010
Year ended 6/30,
1991 9.480 .600 .176 (.606) -- 9.650
1990 9.630 .608 (.151) (.607) -- 9.480
1989 9.020 .607 .610 (.607) -- 9.630
1988 8.980 .600* .040 (.600) -- 9.020
1987** 9.600 .630* (.620) (.630) -- 8.980
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
See notes on page 94.
84
<PAGE>
<TABLE>
<CAPTION>
NUVEEN TAX-FREE MUTUAL FUNDS ANNUAL REPORT
FEBRUARY 29, 1996
- ------------------------------------------------------------------------------------------------------------------------------------
Ratios/Supplemental data
--------------------------------------------------------------------------------------------------------------------
Ratio of Ratio of Ratio of Ratio of
expenses to net investment expenses net investment
Total return Net assets average income to average to average net income to average Portfolio
on net asset end of period net assets before net assets before assets after net assets after turnover
value++ (in thousands) reimbursement reimbursement reimbursement* reimbursement* rate
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------------------------------------
10.32% $ 17,250 .98% 4.99% .97% 5.00% 38%
3.33 4,753 1.24+ 5.26+ 1.05+ 5.45+ 25
9.67 1,040 1.74 4.23 1.71 4.26 38
3.45 222 2.44+ 4.05+ 1.80+ 4.69+ 25
10.63 205,642 .70 5.29 .70 5.29 38
1.68 198,928 .70 5.60 .70 5.60 25
4.27 208,115 .71 5.12 .71 5.12 14
15.05 168,852 .75 5.72 .75 5.72 9
7.99 100,933 .64+ 5.97+ .64+ 5.97+ 7
8.43 74,551 .68 6.26 .68 6.26 29
4.93 50,625 .70 6.36 .70 6.36 13
13.97 35,032 .82 6.52 .82 6.52 23
7.44 22,394 .99 6.60 .82 6.77 31
(.13) 16,192 1.06 5.59 .17 6.48 4
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
85
<PAGE>
FINANCIAL HIGHLIGHTS
SELECTED DATA FOR A COMMON SHARE OUTSTANDING
THROUGHOUT EACH PERIOD IS AS FOLLOWS:
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
Income from investment operations Less distributions
--------------------------------- -----------------------------
Net
realized and Dividends
Net asset Net unrealized gain from net Distributions Net asset
value beginning investment (loss) from investment from value end of
of period income investments+++ income capital gains period
<S> <C> <C> <C> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------------------------------------
MA
- ------------------------------------------------------------------------------------------------------------------------------------
CLASS A
Year ended
2/29/96 $9.560 $.513* $.388 $(.521) $ -- $9.940
9/6/94 to
2/28/95 9.540 .254* .025 (.259) -- 9.560
CLASS C
Year ended
2/29/96 9.510 .437* .392 (.449) -- 9.890
10/5/94 to
2/28/95 9.280 .188* .254 (.212) -- 9.510
CLASS R
Year ended
2/29/96 9.540 .537* .378 (.545) -- 9.910
Year ended 2/28,
1995 9.940 .541* (.403) (.538) -- 9.540
1994 9.910 .543* .038 (.541) (.010) 9.940
1993 9.210 .563* .704 (.563) (.004) 9.910
3 months ended
2/29/92 9.130 .146 .077 (.143) -- 9.210
Year ended 11/30,
1991 8.760 .577* .375 (.582) -- 9.130
1990 8.900 .587* (.144) (.583) -- 8.760
1989 8.600 .587* .300 (.587) -- 8.900
1988 8.250 .581* .350 (.581) -- 8.600
12/10/86 to
11/30/87 9.600 .577* (1.350) (.577) -- 8.250
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
See notes on page 94.
86
<PAGE>
<TABLE>
<CAPTION>
NUVEEN TAX-FREE MUTUAL FUNDS ANNUAL REPORT
FEBRUARY 29, 1996
- ------------------------------------------------------------------------------------------------------------------------------------
Ratios/Supplemental data
--------------------------------------------------------------------------------------------------------------------
Ratio of Ratio of Ratio of Ratio of
expenses to net investment expenses net investment
Total return Net assets average income to average to average net income to average Portfolio
on net asset end of period net assets before net assets before assets after net assets after turnover
value++ (in thousands) reimbursement reimbursement reimbursement* reimbursement* rate
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------------------------------------
9.62% $ 4,290 1.17% 5.04% 1.00% 5.21% 6%
3.05 1,067 1.87+ 4.88+ 1.00+ 5.75+ 17
8.87 638 2.24 3.96 1.75 4.45 6
4.86 147 3.40+ 3.46+ 1.75+ 5.11+ 17
9.80 76,773 .82 5.42 .75 5.49 6
1.64 71,568 .77 5.75 .75 5.77 17
5.96 71,942 .81 5.32 .75 5.38 3
14.21 53,231 .87 5.79 .75 5.91 5
2.44 34,470 .71+ 6.31+ .71+ 6.31+ 5
11.19 31,150 .77 6.37 .75 6.39 19
5.21 20,829 .85 6.58 .75 6.68 23
10.62 15,513 1.09 6.30 .75 6.64 31
11.56 9,485 1.24 6.25 .75 6.74 55
(8.19) 5,681 1.54+ 5.30+ .37+ 6.47+ 34
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
87
<PAGE>
FINANCIAL HIGHLIGHTS
SELECTED DATA FOR A COMMON SHARE OUTSTANDING
THROUGHOUT EACH PERIOD IS AS FOLLOWS:
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
Income from investment operations Less distributions
--------------------------------- -----------------------------
Net
realized and Dividends
Net asset Net unrealized gain from net Distributions Net asset
value beginning investment (loss) from investment from value end of
of period income investments+++ income capital gains period
<S> <C> <C> <C> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------------------------------------
MA INS
- ------------------------------------------------------------------------------------------------------------------------------------
CLASS A
Year ended
2/29/96 $10.060 $.512* $.433 $(.515) $ -- $10.490
9/6/94 to
2/28/95 10.030 .249* .039 (.258) -- 10.060
CLASS C
Year ended
2/29/96 10.040 .434 .435 (.439) -- 10.470
9/14/94 to
2/28/95 9.910 .202* .137 (.209) -- 10.040
CLASS R
Year ended
2/29/96 10.060 .538 .445 (.543) -- 10.500
Year ended 2/28,
1995 10.450 .545 (.386) (.549) -- 10.060
1994 10.440 .537 -- (.527) -- 10.450
1993 9.650 .551 .784 (.545) -- 10.440
Year ended
2/29/92 9.360 .570 .301 (.581) -- 9.650
Year ended 2/28,
1991 9.140 .568 .219 (.567) -- 9.360
1990 8.960 .571* .178 (.569) -- 9.140
1989 9.030 .576* (.070) (.576) -- 8.960
Year ended
2/29/88 9.540 .582* (.510) (.582) -- 9.030
12/10/86 to
2/28/87 9.600 .131* (.060) (.131) -- 9.540
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
See notes on page 94.
88
<PAGE>
<TABLE>
<CAPTION>
NUVEEN TAX-FREE MUTUAL FUNDS ANNUAL REPORT
FEBRUARY 29, 1996
- ------------------------------------------------------------------------------------------------------------------------------------
Ratios/Supplemental data
--------------------------------------------------------------------------------------------------------------------
Ratio of Ratio of Ratio of Ratio of
expenses to net investment expenses net investment
Total return Net assets average income to average to average net income to average Portfolio
on net asset end of period net assets before net assets before assets after net assets after turnover
value++ (in thousands) reimbursement reimbursement reimbursement* reimbursement* rate
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------------------------------------
9.59% $ 5,291 1.09% 4.92% 1.07% 4.94% 1%
2.99 1,956 1.36+ 5.13+ 1.15+ 5.34+ 10
8.80 706 1.81 4.20 1.81 4.20 1
3.52 338 2.07+ 4.41+ 1.90+ 4.58+ 10
9.99 60,102 .81 5.21 .81 5.21 1
1.77 57,137 .79 5.54 .79 5.54 10
5.22 58,255 .84 5.09 .84 5.09 3
14.28 47,098 .86 5.47 .86 5.47 2
9.57 28,189 .72 5.93 .72 5.93 5
8.95 15,625 .85 6.19 .85 6.19 6
8.52 8,649 1.20 5.94 .97 6.17 15
5.84 5,404 1.87 5.54 .97 6.44 41
1.14 4,895 1.75 5.37 .59 6.53 42
.75 2,312 5.18+ .64+ -- 5.82+ --
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
89
<PAGE>
FINANCIAL HIGHLIGHTS
SELECTED DATA FOR A COMMON SHARE OUTSTANDING
THROUGHOUT EACH PERIOD IS AS FOLLOWS:
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
Income from investment operations Less distributions
--------------------------------- -----------------------------
Net
realized and Dividends
Net asset Net unrealized gain from net Distributions Net asset
value beginning investment (loss) from investment from value end of
of period income investments+++ income capital gains period
<S> <C> <C> <C> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------------------------------------
NY
- ------------------------------------------------------------------------------------------------------------------------------------
CLASS A
Year ended
2/29/96 $10.120 $.555* $.487 $(.552) $ -- $10.610
9/6/94 to
2/28/95 10.230 .277* (.067) (.273) (.047) 10.120
CLASS C
Year ended
2/29/96 10.110 .478* .528 (.476) -- 10.640
9/13/94 to
2/28/95 10.110 .231* .038 (.222) (.047) 10.110
CLASS R
Year ended
2/29/96 10.150 .582* .490 (.582) -- 10.640
Year ended 2/28,
1995 10.720 .579 (.529) (.573) (.047) 10.150
1994 10.610 .578* 161 (.580) (.049) 10.720
1993 9.880 .603* .806 (.598) (.081) 10.610
3 months ended
2/29/92 9.820 .163 .053 (.156) -- 9.880
Year ended 11/30,
1991 9.380 .629* .441 (.630) -- 9.820
1990 9.560 .631* (.181) (.630) -- 9.380
1989 9.180 .633* .380 (.633) -- 9.560
1988 8.760 .625* .420 (.625) -- 9.180
12/10/86 to
11/30/87 9.600 .612* (.840) (.612) -- 8.760
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
See notes on page 94.
90
<PAGE>
<TABLE>
<CAPTION>
NUVEEN TAX-FREE MUTUAL FUNDS ANNUAL REPORT
FEBRUARY 29, 1996
- ------------------------------------------------------------------------------------------------------------------------------------
Ratios/Supplemental data
--------------------------------------------------------------------------------------------------------------------
Ratio of Ratio of Ratio of Ratio of
expenses to net investment expenses net investment
Total return Net assets average income to average to average net income to average Portfolio
on net asset end of period net assets before net assets before assets after net assets after turnover
value++ (in thousands) reimbursement reimbursement reimbursement* reimbursement* rate
<S> <C> <C> <C> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
10.52% $15,732 1.02% 5.28% .99% 5.31% 47%
2.21 3,189 1.56+ 5.31+ 1.00+ 5.87+ 29
10.13 646 1.99 4.29 1.73 4.55 47
2.80 86 7.97+ (1.06)+ 1.75+ 5.16+ 29
10.80 154,776 .76 5.55 .74 5.57 47
75 149,454 .74 5.79 .74 5.79 29
7.10 146,297 .78 5.30 .75 5.33 15
14.79 107,146 .84 5.75 .75 5.84 12
2.21 66,491 .75+ 6.27+ .75+ 6.27+ 16
11.79 59,351 .79 6.46 .75 6.50 19
4.92 44,347 .81 6.59 .75 6.65 51
11.34 29,040 .98 6.40 .75 6.63 85
12.20 14,975 1.09 6.55 .75 6.89 71
(2.44) 8,239 1.38+ 5.45+ .37+ 6.46+ 20
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
91
<PAGE>
FINANCIAL HIGHLIGHTS
SELECTED DATA FOR A COMMON SHARE OUTSTANDING
THROUGHOUT EACH PERIOD IS AS FOLLOWS:
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
Income from investment operations Less distributions
--------------------------------- -----------------------------
Net
realized and Dividends
Net asset Net unrealized gain from net Distributions Net asset
value beginning investment (loss) from investment from value end of
of period income investments+++ income capital gains period
<S> <C> <C> <C> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------------------------------------
NY INS
- ------------------------------------------------------------------------------------------------------------------------------------
CLASS A
Year ended
2/29/96 $10.150 $.521 $.492 $(.524) $(.029)*** $10.610
9/6/94 to
2/28/95 10.160 .253* .037 (.260) (.40)*** 10.150
CLASS C
Year ended
2/29/96 10.120 .442 .524 (.447) (.029)*** 10.610
9/13/94 to
2/28/95 10.030 .207* .133 (.210) (.040)*** 10.120
CLASS R
Year ended
2/29/96 10.150 .548 .495 (.554) (.029)*** 10.610
Year ended 2/28,
1995 10.630 .555 (.440) (.555) (.040)*** 10.150
1994 10.620 .550 .035 (.543) (.032) 10.630
1993 9.780 .566 .849 (.562) (.013) 10.620
Year ended
2/29/92 9.320 .590 .467 (.597) -- 9.780
Year ended 2/28,
1991 9.250 .598 .068 (.596) -- 9.320
1990 9.060 .596 .190 (.596) -- 9.250
1989 9.100 .593* (.040) (.593) -- 9.060
Year ended
2/29/88 9.830 .606* (.730) (.606) -- 9.100
12/10/86 to
2/28/87 9.600 .130* .230 (.130) -- 9.830
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
See notes on page 94.
92
<PAGE>
Your
investment
partners
Since 1898, John Nuveen & Co. Incorporated has worked to bring together the
various participants in the municipal bond industry and build strong
partnerships that benefit all concerned. Investors, financial advisers,
municipal officials, investment bankers--Nuveen believes that forging
relationships within these groups based on trust and value is the key to
successful investing.
As the oldest and largest municipal bond specialist in the United States,
Nuveen's investment bankers work with issuers to understand and meet their needs
in structuring and selling their bond issues.
Nuveen also works closely with financial advisers around the country,
including brokerage firms, banks, insurance companies, and independent
financial planners, to bring the benefits of tax-free investing to you. These
advisers are experts at identifying your needs and recommending the best
solutions for your situation. Together we make a powerful team, helping you
create a successful investment plan that meets your needs today and in the
future.
[PHOTO OF PAINTING APPEARS HERE]
For nearly 100 years,
Nuveen has earned its
reputation as a tax-free income
specialist by focusing on
municipal bonds
[LOGO]
John Nuveen & Co. Incorporated
333 West Wacker Drive
Chicago, Illinois 60606-1286
[RECYCLING LOGO]
<PAGE>
[NUVEEN LOGO]
Nuveen Tax-Free
Money Market Funds
Dependable tax-free
income for generations
TAX-FREE RESERVES
CALIFORNIA
MASSACHUSETTS
NEW YORK
[PHOTO OF COUPLE APPEARS HERE]
ANNUAL REPORT/FEBRUARY 29, 1996
<PAGE>
CONTENTS
3 Dear shareholder
5 Answering your questions
7 Fund performance
9 Report of independent public accountants
10 Portfolio of investments
23 Statement of net assets
24 Statement of operations
28 Statement of changes in net assets
35 Notes to financial statements
40 Financial highlights
<PAGE>
Dear
shareholder
[PHOTO OF RICHARD J. FRANKE APPEARS HERE]
After rising steeply throughout 1994, short-term interest rates fell in 1995.
Following an unprecedented series of seven rate increases between February 1994
and February 1995, the Fed responded to a climate of slowing economic growth and
diminished inflationary pressure by cutting rates three times over the past ten
months, the first reductions in nearly three years.
During market fluctuations such as these, Nuveen money market funds continue
to play an integral role in helping you reach your investment goals by offering
you an attractive level of tax-free current income, daily liquidity, and
diversification.
Overall, money market fund yields are lower than last year's rates due to the
effects of the Fed's actions. As of February 29, 1996, the seven-day annualized
yield for the money market funds covered in this report ranged from 2.75% to
2.87%. To match these yields, an investor in the 36% federal income tax bracket
would have had to earn at least 4.30% on taxable alternatives. For the state
money market funds, the addition of state taxes to the equation increases the
advantages provided by tax-free municipal bonds, raising the required taxable-
equivalent yield to a range of 4.62% to 4.95%.
As some of you may know, on June 30, 1996, I will be retiring as the Chairman
and Chief Executive Officer of John Nuveen & Co.
"Nuveen money
market funds
continue to play
an integral role in
helping you reach
your investment goals."
3
<PAGE>
Incorporated and as Chairman of the board of the Nuveen Funds. As I look back
over the 41 years I have spent at Nuveen, I'm proud to have been associated with
a firm that holds integrity, honesty, and value as the cornerstones of its
business. I'm confident that these traditions will continue to be the hallmarks
of Nuveen.
Over the past few years, I have been working closely with other Nuveen
managers to ensure that the company and the funds continue to be guided by
strong and talented management following my retirement. Timothy Schwertfeger,
who has been with Nuveen since 1977, has been named my successor as Chief
Executive Officer and Chairman of Nuveen. He currently serves as executive vice
president of Nuveen and president of the Nuveen Funds. I am very confident in
his abilities and the abilities of the entire Nuveen management team.
The transition in management has been well planned, and it will have no effect
on the way your funds are managed. Our management team is committed to
continuing Nuveen's successful tradition of prudent management, helping our
shareholders meet their need for tax-free investment income with a full range of
investment choices.
Our commitment to the municipal marketplace remains as strong as ever. Our
focus will continue to be on providing research-oriented management and
maintaining our leadership role in the municipal bond market. We anticipate many
more years of progress and accomplishment for our shareholders and our firm.
I'd like to take this occasion to thank you for selecting Nuveen Tax-Free
Money Market Fund investments. We appreciate your investment in Nuveen and we
look forward to reporting continued success in the years ahead.
Sincerely,
/s/ Richard J. Franke
Richard J. Franke
Chairman of the Board
April 15, 1996
4
<PAGE>
Answering your
questions
Tom Spalding, head of Nuveen's portfolio management team, discusses factors
affecting Nuveen's Tax-Free Money Market Funds and the outlook for 1996.
How did the
investment climate
over the past year
affect these funds?
In 1995, the combination of slow economic growth and low inflation created the
ideal environment for the Federal Reserve Board to cut interest rates. In July
and December 1995 and again at the end of January 1996, a succession of short-
term rate cuts contributed to the decline of municipal bond yields. Yet, as of
February 29, 1996, Nuveen money market funds continued to enjoy annualized
taxable-equivalent yields of 4.30% or better.
What are some of
the advantages of
investing in short-
term funds?
Money market fund investors receive attractive tax-free income compared with
other short-term vehicles, along with share price stability, daily liquidity,
and investment convenience. When combined with the flexibility of checkwriting
access to funds, money market funds remain a valuable and convenient investment
alternative.
5
<PAGE>
[PHOTO OF PAINTING APPEARS HERE]
Tom Spalding, head of Nuveen's portfolio management team, answers investors'
questions on developments in the municipal market.
What is Nuveen's
market outlook
for 1996?
Although inflation currently remains low and economic growth is moderating, we
continue to watch these factors for potential changes and impact on the bond
markets. During this election year, we are also closely monitoring any changes
in economic policy that may affect the municipal market. A combination of
various factors-such as cutbacks in federal spending, consumer confidence
levels, and concerns about corporate earnings projections-could keep the economy
growing at a slow pace throughout the year.
6
<PAGE>
NUVEEN TAX-FREE
RESERVES, INC.
Tax-Free Reserves
Shareholders continued to enjoy attractive tax-free dividends over the past 12
months, even as interest rates fell from levels of a year ago. On a
taxable-equivalent basis, the fund's current 7-day yield on net asset value was
4.30% on February 29, 1996.
[CHART APPEARS HERE]
<TABLE>
<CAPTION>
<S> <C>
3/95................................. 3.25
5/95................................. 3.66
7/95................................. 3.01
9/95................................. 3.21
11/95................................ 3.25
1/96................................. 2.87
</TABLE>
<TABLE>
<CAPTION>
- --------------------------------------------
FUND HIGHLIGHTS 2/29/96
- --------------------------------------------
<S> <C>
Current 7-day SEC yield on NAV 2.75%
Taxable-equivalent yield on NAV* 4.30%
Federal tax rate 36.0%
Total net assets ($000) 339,662
- --------------------------------------------
</TABLE>
*An investor subject to the indicated 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 continued to enjoy attractive tax-free dividends over the past 12
months, even as interest rates fell from levels of a year ago. On a
taxable-equivalent basis, the fund's current 7-day yield on net asset value was
4.95% on February 29, 1996.
[CHART APPEARS HERE]
<TABLE>
<CAPTION>
<S> <C>
3/95................................. 3.31
5/95................................. 3.78
7/95................................. 2.98
9/95................................. 3.32
11/95................................ 3.29
1/96................................. 2.89
</TABLE>
<TABLE>
<CAPTION>
- --------------------------------------------
FUND HIGHLIGHTS 2/29/96
- --------------------------------------------
<S> <C>
Current 7-day SEC yield on NAV 2.87%
Taxable-equivalent yield on NAV* 4.95%
Combined state and federal tax rate 42.0%
Total net assets ($000) 178,134
- --------------------------------------------
</TABLE>
*An investor subject to the indicated 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 continued to enjoy attractive tax-free dividends over the past 12
months, even as interest rates fell from levels of a year ago. On a
taxable-equivalent basis, the fund's current 7-day yield on net asset value was
4.90% on February 29, 1996.
[CHART APPEARS HERE]
<TABLE>
<CAPTION>
<S> <C>
3/95................................. 3.16
5/95................................. 3.62
7/95................................. 2.98
9/95................................. 3.11
11/95................................ 3.12
1/96................................. 2.84
</TABLE>
<TABLE>
<CAPTION>
- --------------------------------------------
FUND HIGHLIGHTS 2/29/96
- --------------------------------------------
<S> <C>
Current 7-day SEC yield on NAV 2.77%
Taxable-equivalent yield on NAV* 4.90%
Federal tax rate 43.5%
Total net assets ($000) 68,080
- --------------------------------------------
</TABLE>
*An investor subject to the indicated 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 continued to enjoy attractive tax-free dividends over the past 12
months, even as interest rates fell from levels of a year ago. On a
taxable-equivalent basis, the fund's current 7-day yield on net asset value was
4.62% on February 29, 1996.
[CHART APPEARS HERE]
<TABLE>
<CAPTION>
<S> <C>
3/95................................. 3.19
5/95................................. 3.67
7/95................................. 2.87
9/95................................. 3.17
11/95................................ 3.23
1/96................................. 3.18
</TABLE>
<TABLE>
<CAPTION>
- --------------------------------------------
FUND HIGHLIGHTS 2/29/96
- --------------------------------------------
<S> <C>
Current 7-day SEC yield on NAV 2.75%
Taxable-equivalent yield on NAV* 4.62%
Combined state and federal tax rate 40.5%
Total net assets ($000) 32,203
- --------------------------------------------
</TABLE>
*An investor subject to the indicated 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>
REPORT OF INDEPENDENT
PUBLIC ACCOUNTANTS
NUVEEN TAX-FREE MONEY MARKET FUNDS ANNUAL REPORT
FEBRUARY 29, 1996
To the Board of Directors and Shareholders of
Nuveen Tax-Free Reserves, Inc.
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, INC. (a Maryland Corporation), NUVEEN CALIFORNIA TAX-FREE FUND, INC.
(comprising the Nuveen California Tax-Free Money Market Fund) (a Maryland
Corporation) and NUVEEN TAX-FREE MONEY MARKET FUND, INC. (comprising the Nuveen
Massachusetts and New York Tax-Free Money Market Funds) (a Minnesota
Corporation), including the portfolios of investments, as of February 29, 1996,
and the related statements of operations for the year then ended, the statements
of changes in net assets for each of the two years in the period then ended and
the financial highlights for the periods indicated thereon. These financial
statements and financial highlights are the responsibility of the 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 29, 1996, 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, Inc., Nuveen California
Tax-Free Fund, Inc. and Nuveen Tax-Free Money Market Fund, Inc. as of February
29, 1996, the results of their operations for the year then ended, the changes
in their net assets for each of the two years in the period then ended, and the
financial highlights for the periods indicated thereon in conformity with
generally accepted accounting principles.
ARTHUR ANDERSEN LLP
Chicago, Illinois,
April 8, 1996
9
<PAGE>
PORTFOLIO OF INVESTMENTS
NUVEEN TAX-FREE RESERVES, INC.
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------
PRINCIPAL AMORTIZED
AMOUNT DESCRIPTION RATINGS* COST
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
ALABAMA - 6.2%
$ 7,215,000 Anniston Industrial Development Board (Union Foundry Company),
Variable Rate Demand Bonds, 3.400%, 6/01/05+ VMIG-1 $ 7,215,000
13,800,000 Birmingham Medical Clinic Board (University of Alabama Health
Services Foundation), Variable Rate Demand Bonds,
3.550%, 12/01/26+ A-1+ 13,800,000
- -----------------------------------------------------------------------------------------------------------------------
ARIZONA - 6.7%
10,000,000 Apache County Industrial Development, Pollution Control (Tucson
Electric), Variable Rate Demand Bonds, 3.450%, 10/01/21+ VMIG-1 10,000,000
7,600,000 Mesa Municipal Development Corporation, Special Tax, Series 1985,
Commercial Paper, 3.250%, 5/31/96 VMIG-1 7,600,000
5,000,000 Mesa Municipal Development Corporation, Special Tax, Series 1995,
Commercial Paper, 3.200%, 4/29/96 VMIG-1 5,000,000
- -----------------------------------------------------------------------------------------------------------------------
ARKANSAS - 2.8%
2,400,000 Arkansas Hospital Equipment Finance Authority (Washington Regional
Medical Center), Variable Rate Demand Bonds, 3.350%, 10/01/98+ VMIG-1 2,400,000
7,000,000 University of Arkansas-Board of Trustees (UAMS Campus-Series 1994),
Variable Rate Demand Bonds, 3.400%, 12/01/19+ VMIG-1 7,000,000
- -----------------------------------------------------------------------------------------------------------------------
CALIFORNIA - 2.1%
5,000,000 California School Cash Reserve Program, Series 1995 Notes,
4.750%, 7/03/96 MIG-1 5,016,318
2,000,000 Orange County Apartment Development (Monarch Bay Apartments
Project), Variable Rate Demand Bonds, 3.450%, 10/01/07+ A-1 2,000,000
- -----------------------------------------------------------------------------------------------------------------------
DELAWARE - 3.4%
11,682,500 New Castle County Economic Development, Revenue Refunding
(Henderson/McGuire Partners Project), Series 1994, Variable
Rate Demand Bonds, 3.450%, 8/15/20+ A-1 11,682,500
- -----------------------------------------------------------------------------------------------------------------------
DISTRICT OF COLUMBIA - 3.6%
9,000,000 District of Columbia General Obligation, General Fund Recovery,
Variable Rate Demand Bonds, 3.550%, 6/01/03+ A-1+ 9,000,000
3,210,000 District of Columbia (American University Project), Variable Rate
Demand Bonds, 3.300%, 10/01/15+ VMIG-1 3,210,000
- -----------------------------------------------------------------------------------------------------------------------
FLORIDA - 4.5%
4,210,000 Florida Municipal Power Agency, Initial Pooled Loan Program, Series
1995A, Commercial Paper, 3.150%, 5/24/96 A-1 4,210,000
3,100,000 Pasco Multi-Family Housing, Carlton Arms of Magnolia Valley,
Series 1985, Variable Rate Demand Bonds, 3.400%, 12/01/07+ VMIG-1 3,100,000
- -----------------------------------------------------------------------------------------------------------------------
</TABLE>
10
<PAGE>
<TABLE>
<CAPTION>
NUVEEN TAX-FREE MONEY MARKET FUNDS ANNUAL REPORT
FEBRUARY 29, 1996
- -----------------------------------------------------------------------------------------------------------------------------------
PRINCIPAL AMORTIZED
AMOUNT DESCRIPTION RATINGS* COST
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
FLORIDA (CONTINUED)
$ 4,800,000 Sarasota County Public Hospital District (Sarasota Memorial Hospital), A-1 $ 4,800,000
Commercial Paper, 3.300%, 7/30/96
3,300,000 Sunshine State Governmental Financing Commission, Commercial
Paper, 3.200%, 5/14/96 VMIG-1 3,300,000
- -----------------------------------------------------------------------------------------------------------------------------------
GEORGIA - 3.9%
3,400,000 Georgia Municipal Gas Authority (Transco Portfolio Project),
Commercial Paper, 3.250%, 5/24/96 VMIG-1 3,400,000
10,000,000 Fulco Hospital Authority, Revenue Anticipation Certificates (St. Joseph's
Hospital of Atlanta Project), Commercial Paper, 3.300%, 4/09/96 VMIG-1 10,000,000
- -----------------------------------------------------------------------------------------------------------------------------------
HAWAII - 1.0%
3,400,000 Hawaii Department of Budget and Finance, Special Purpose (Adventist
Health System), Variable Rate Demand Bonds, 3.550%, 9/01/99+ A-1 3,400,000
- -----------------------------------------------------------------------------------------------------------------------------------
ILLINOIS - 15.6%
9,200,000 Illinois Development Finance Authority, Pollution Control
(Diamond-Star Motors Corporation), Variable Rate Demand Bonds,
3.550%, 12/01/08+ P-1 9,200,000
6,000,000 Illinois Educational Facilities Authority, Shedd Aquarium Society,
Series 1987B, Commercial Paper, 3.350%, 5/08/96 VMIG-1 6,000,000
3,300,000 Illinois Health Facilities Authority (Condell Memorial Hospital),
Variable Rate Demand Bonds, 3.600%, 11/01/05+ VMIG-1 3,300,000
5,000,000 Illinois Health Facilities Authority (Victory Health Services Project),
Series 1991, Commercial Paper, 3.200%, 3/20/96 VMIG-1 5,000,000
3,100,000 Chicago General Obligation Tender Notes, Series 1995-A, 3.750%,
10/31/96 (Mandatory put 5/01/96) VMIG-1 3,100,000
3,800,000 Chicago General Obligation, Variable Rate Demand Bonds,
3.900%, 1/01/10+ VMIG-1 3,800,000
12,700,000 Chicago O'Hare International Airport (American Airlines), Variable
Rate Demand Bonds, 3.550%, 12/01/17+ P-1 12,700,000
5,700,000 Decatur Water Bonds (New South Water Treatment), Series 1985,
Commercial Paper, 3.500%, 4/08/96 VMIG-1 5,700,000
4,300,000 Decatur Water Bonds (South Water Treatment), Series 1985,
Commercial Paper, 3.300%, 4/11/96 VMIG-1 4,300,000
- -----------------------------------------------------------------------------------------------------------------------------------
INDIANA - 2.5%
6,000,000 Indianapolis Economic Development (Yellow Freight), Commercial
Paper, 4.500%, 1/15/97 N/R 6,000,000
2,500,000 Indianapolis Economic Development (Children's Museum of
Indianapolis), Series 1995, Variable Rate Demand Bonds,
3.350%, 10/01/25+ A-1+ 2,500,000
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
11
<PAGE>
PORTFOLIO OF INVESTMENTS
NUVEEN TAX-FREE RESERVES, INC.--CONTINUED
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------
PRINCIPAL AMORTIZED
AMOUNT DESCRIPTION RATINGS* COST
<C> <S> <C> <C>
- --------------------------------------------------------------------------------------------------------
IOWA - 2.1%
$ 4,250,000 Iowa School Corporation, Warrant Certificates, Series 1995-96A,
Municipal Note, 4.750%, 6/28/96 MIG-1 $ 4,261,967
2,900,000 Eddyville Pollution Control Heartland Lysine Inc., Variable Rate
Demand Bonds, 3.700%, 11/01/03+ N/R 2,900,000
- --------------------------------------------------------------------------------------------------------
KENTUCKY - 2.7%
9,005,000 Hancock County Industrial Development (Southwire Company Project),
Variable Rate Demand Bonds, 3.800%, 7/01/10+ N/R 9,005,000
- --------------------------------------------------------------------------------------------------------
LOUISIANA - 3.8%
13,000,000 Louisiana Recovery District, Sales Tax, Variable Rate Demand Bonds,
3.500%, 7/01/98+ VMIG-1 13,000,000
- --------------------------------------------------------------------------------------------------------
MASSACHUSETTS - 1.2%
4,200,000 Massachusetts Industrial Finance Agency (Showa Women's Institute/
Boston), Variable Rate Demand Bonds, 3.600%, 3/15/04+ VMIG-1 4,200,000
- --------------------------------------------------------------------------------------------------------
MICHIGAN - 2.5%
7,100,000 Michigan Job Development Authority, Limited Obligation
(Frankenmuth Bavarian Inn), Variable Rate Demand Bonds,
3.625%, 8/15/15+ A-1 7,100,000
1,370,000 Warren Economic Development Corporation, Limited Obligation
(The Prince Company--Michigan Division), Variable Rate Demand
Bonds, 3.600%, 11/01/99+ P-1 1,370,000
- --------------------------------------------------------------------------------------------------------
MINNESOTA - 2.6%
6,330,000 Bloomington Commercial Development (James Avenue Associates
Project), Variable Rate Demand Bonds, 3.400%, 12/01/15+ A-1+ 6,330,000
2,500,000 St. Paul Housing and Redevelopment Authority, District Heating,
Variable Rate Demand Bonds, 3.900%, 12/01/12+ A-1 2,500,000
- --------------------------------------------------------------------------------------------------------
MISSISSIPPI - 1.8%
6,200,000 Lawrence County Pollution Control (Georgia-Pacific Corp. Project),
Series 1995, Variable Rate Demand Bonds, 3.275%, 12/01/00+ Aa-3 6,200,000
- --------------------------------------------------------------------------------------------------------
MISSOURI - 2.7%
3,600,000 Missouri Environmental Improvement and Energy Resources Authority,
Pollution Control, Series 1985A (Union Electric Company),
Commercial Paper, 3.250%, 4/04/96 VMIG-1 3,600,000
5,600,000 Missouri Environmental Improvement and Energy Resources Authority,
Pollution Control (Union Electric Company), Commercial Paper,
3.200%, 5/09/96 VMIG-1 5,600,000
- --------------------------------------------------------------------------------------------------------
</TABLE>
12
<PAGE>
NUVEEN TAX-FREE MONEY MARKET FUNDS ANNUAL REPORT
FEBRUARY 29, 1996
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------
PRINCIPAL AMORTIZED
AMOUNT DESCRIPTION RATINGS* COST
- --------------------------------------------------------------------------------------------------------
<C> <S> <C> <C>
NEVADA - 2.1%
$ 7,000,000 Clark County Industrial Development, Refunding Bonds (Nevada Power
Company Project), Series 1995 C, Variable Rate Demand Bonds,
3.300%, 10/01/30+ A-1+ $ 7,000,000
- --------------------------------------------------------------------------------------------------------
NORTH CAROLINA - 3.5%
2,400,000 Wake County Industrial Facilities and Pollution Control Financing
Authority, Series 1990B, Commercial Paper, 3.400%, 4/10/96 P-1 2,400,000
6,630,000 Wake County Industrial Facilities and Pollution Control Financing
Authority, Series 1990A, Commercial Paper, 3.350%, 4/30/96 P-1 6,630,000
3,000,000 Wake County Industrial Facilities and Pollution Control Financing
Authority, Variable Rate Demand Bonds, 3.600%, 10/01/15+ VMIG-1 3,000,000
- --------------------------------------------------------------------------------------------------------
OHIO - 11.1%
9,200,000 Centerville Health Care (Bethany Lutheran Village Continuing Care
Facilities Expansion Project), Variable Rate Demand Bonds,
3.350%, 5/01/08+ VMIG-1 9,200,000
6,900,000 Cincinnati and Hamilton County Port Authority (Kenwood Office
Associates), Variable Rate Demand Bonds, 3.600%, 9/01/25+ A-1 6,900,000
3,795,000 Franklin County Hospital Facilities (Traditions at Mill Run),
Floating Rate Demand Bonds, 3.450%, 11/01/14+ N/R 3,795,000
2,080,000 Hamilton County Healthcare Revenue Bonds, Series 1995 (Community
Limited Care Dialysis Center Project), Variable Rate Demand
Bonds, 3.400%, 9/01/05+ N/R 2,080,000
8,300,000 Montgomery County (Miami Valley Hospital), Series C, Commercial
Paper, 3.800%, 4/04/96 VMIG-1 8,300,000
7,500,000 Summit County, Twinsburg City School District, Unlimited Tax,
General Obligation Improvement Notes, 4.500%, 6/06/96 N/R 7,513,769
- --------------------------------------------------------------------------------------------------------
TENNESSEE - 3.0%
6,900,000 Clarksville Public Building Authority, Pooled Financing,
Series 1994, Variable Rate Demand Bonds, 3.400%, 6/01/24+ A-1 6,900,000
3,000,000 Montgomery County Public Building Authority, Pooled Financing,
Series 1995, Variable Rate Demand Bonds, 3.400%, 3/01/25+ A-1 3,000,000
- --------------------------------------------------------------------------------------------------------
VIRGINIA - 2.7%
3,000,000 Albemarle County Industrial Development Authority (The University
of Virginia Health Services Foundation), Series 1996, Variable
Rate Demand Bonds, 3.350%, 2/01/26+ A-1 3,000,000
2,600,000 Norfolk Industrial Development Authority (Norfolk, Virginia Beach,
Portsmouth), Industrial Development, Variable Rate Demand Bonds,
5.363%, 11/01/04+ N/R 2,600,000
3,300,000 Richmond Industrial Development Authority (Richmond MSA),
Variable Rate Demand Bonds, 5.363%, 11/01/04+ N/R 3,300,000
- --------------------------------------------------------------------------------------------------------
</TABLE>
13
<PAGE>
PORTFOLIO OF INVESTMENTS
NUVEEN TAX-FREE RESERVES, INC.--CONTINUED
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------
PRINCIPAL AMORTIZED
AMOUNT DESCRIPTION RATINGS* COST
<C> <S> <C> <C>
- ----------------------------------------------------------------------------------------------------------
WASHINGTON - 3.9%
$ 5,300,000 Washington Health Care Facilities Authority (Adventist Health
System West/Walla Walla General), Variable Rate Demand Bonds,
3.450%, 9/01/09+ A-1 $ 5,300,000
3,300,000 Washington Housing Finance Commission (Crista Ministries Project),
Series 1991B, Variable Rate Demand Bonds, 3.400%, 7/01/11+ VMIG-1 3,300,000
4,700,000 Washington Public Power Supply System (Nuclear Project 3), Revenue
Refunding, Series 1993-3A2, Variable Rate Demand Bonds,
3.200%, 7/01/18+ VMIG-1 4,700,000
- ----------------------------------------------------------------------------------------------------------
WISCONSIN - 0.8%
2,800,000 Wisconsin Health and Educational Facilities Authority (Alexian
Village of Milwaukee), Series 1988A, Commercial Paper,
3.350%, 4/10/96 VMIG-1 2,800,000
- ----------------------------------------------------------------------------------------------------------
$335,477,500 Total Investments - 98.8% 335,519,554
============----------------------------------------------------------------------------------------------
Other Assets Less Liabilities - 1.2% 4,142,910
- ----------------------------------------------------------------------------------------------------------
Net Assets - 100% $339,662,464
==========================================================================================================
</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 TAX-FREE MONEY MARKET FUNDS ANNUAL REPORT
FEBRUARY 29, 1996
NUVEEN CALIFORNIA TAX-FREE MONEY MARKET FUND
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
PRINCIPAL AMORTIZED
AMOUNT DESCRIPTION RATINGS* COST
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
$ 5,000,000 California Health Facilities Authority (Catholic Healthcare West), Series
1995B, Variable Rate Demand Bonds, 3.000%, 7/01/05+ VMIG-1 $ 5,000,000
2,600,000 California Health Facilities Authority (St. Joseph Health System), Series
1985-A, Variable Rate Demand Bonds, 3.150%, 7/01/13+ VMIG-1 2,600,000
2,000,000 California Health Facilities Authority (Sutter Health), Series 1990B,
Variable Rate Demand Bonds, 3.300%, 3/01/20+ VMIG-1 2,000,000
2,400,000 California Health Facilities Authority (St. Joseph Health System),
Series 1991-B, Variable Rate Demand Bonds, 3.100%, 7/01/09+ VMIG-1 2,400,000
7,000,000 California Pollution Control Finance Authority (Pacific Gas and Electric),
Series D 1988, Commercial Paper, 3.300%, 3/14/96 A-1 7,000,000
7,500,000 California Pollution Control Finance Authority (Shell Oil Company),
Variable Rate Demand Bonds, 3.150%, 10/01/11+ VMIG-1 7,500,000
3,000,000 California School Cash Reserve Program, Series 1995 Notes,
4.750%, 7/03/96 MIG-1 3,009,790
4,780,000 California State Revenue Anticipation Warrants, 1994 Series C,
5.750%, 4/25/96 Aaa 4,793,887
5,610,000 California Statewide Community Development Authority, Certificates of
Participation, Series 1993, Variable Rate Demand Bonds, 3.250%, 12/01/18+ A-1+ 5,610,000
3,250,000 Chico Multi-Family Housing (Sycamore Glen Project), Series 1995,
Variable Rate Demand Bonds, 3.550%, 4/07/14+ N/R 3,250,000
4,500,000 Contra Costa Multi-Family Mortgage Revenue Refunding (Delta Square
Project), Series 1990A,Variable Rate Demand Bonds, 3.150%, 8/01/07+ VMIG-1 4,500,000
5,000,000 Eastern Municipal Water District, Water and Sewer Revenue, Series 1993B,
Variable Rate Demand Bonds, 3.000%, 7/01/20+ VMIG-1 5,000,000
4,900,000 Grand Terrace Redevelopment Agency, Multi-Family Housing (Mount
Vernon Villas Project), Variable Rate Demand Bonds, 3.350%, 12/01/11+ A-1 4,900,000
3,000,000 Hayward Housing Authority, Multi-Family Mortgage, Revenue
Refunding, Series 1993A (Huntwood Terrace), Variable Rate Demand
Bonds, 3.600%, 3/01/27+ A-1 3,000,000
4,000,000 Hillsborough Certificates of Participation, Water and Sewer System
Project, Series 1995A, Variable Rate Demand Bonds, 3.750%, 6/01/15+ A-1 4,000,000
9,000,000 Kern Community College District, Certificates of Participation, Series
1995, Variable Rate Demand Bonds, 3.550%, 1/01/25+ A-2 9,000,000
8,000,000 Los Angeles County Metropolitan Transportation Authority, Second
Subordinate Sales Tax Revenue, Commercial Paper, 3.100%, 4/10/96 A-1 8,000,000
8,400,000 Monterey County Financing Authority (Reclamation and Distribution
Project), Series 1995A, Variable Rate Demand Bonds, 3.450%, 9/01/36+ VMIG-1 8,400,000
7,200,000 Oakland Certificates of Participation, Capital Improvement
Project, Variable Rate Demand Bonds, 3.400%, 12/01/15+ N/R 7,200,000
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
15
<PAGE>
PORTFOLIO OF INVESTMENTS
NUVEEN CALIFORNIA TAX-FREE MONEY MARKET FUND-CONTINUED
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
PRINCIPAL AMORTIZED
AMOUNT DESCRIPTION RATINGS* COST
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
$ 7,900,000 Orange County Apartment Development (Monarch Bay Apartments
Project), Variable Rate Demand Bonds, 3.450%, 10/01/07+ A-1 $ 7,900,000
3,800,000 Orange County Apartment Development (Robinson Ranch Apartments
Project), Variable Rate Demand Bonds, 3.450%, 11/01/08+ VMIG-1 3,800,000
5,000,000 Orange County Apartment Development (Niguel Summit), Variable
Rate Demand Bonds, 3.200%, 11/01/09+ VMIG-1 5,000,000
7,000,000 Sacramento Municipal Utility District, Series I, Commercial Paper,
2.950%, 5/24/96 A-1+ 7,000,000
1,200,000 San Bernardino Multi-Family Housing (Castle Park Apartments),
Variable Rate Demand Bonds, 3.650%, 11/01/05+ VMIG-1 1,200,000
2,200,000 San Diego County Rincon Del Diablo Municipal Water District, Rincon
Public Facilities Corporation, Commercial Paper, 3.750%, 5/01/96 VMIG-1 2,200,000
3,000,000 San Diego Housing Authority, Multi-Family Housing, Revenue Refunding,
Series 1993-A (Carmel Del Mar Apartments), Variable
Rate Demand Bonds, 3.150%, 12/01/15+ A-1+ 3,000,000
7,000,000 San Dimas Industrial Development (Bausch & Lomb Incorporated),
Variable Rate Demand Bonds, 3.750%, 12/01/15+ N/R 7,000,000
7,600,000 Santa Ana Health Facilities Authority (Town & Country), Variable Rate
Demand Bonds, 3.250%, 10/01/20+ A-1 7,600,000
4,000,000 Santa Clara County Transit District Refunding Equipment, Trust
Certificates, Variable Rate Demand Bonds, 3.200%, 6/01/15+ VMIG-1 4,000,000
6,000,000 Santa Paula Public Financing Authority, Series 1996, Water System
Acquisition Project, Variable Rate Demand Bonds, 3.700%, 2/01/26+ A-1 6,000,000
5,000,000 Solano County Tax and Revenue Anticipation Notes, Series 1995-96,
4.500%, 11/01/96 MIG-1 5,020,958
4,000,000 Southeast Resource Recovery Facilities Authority, Series 1995A, Variable
Rate Demand Bonds, 3.300%, 12/01/18+ A-1 4,000,000
6,400,000 Torrance Hospital (Little Company of Mary Hospital-Torrance
Memorial Hospital), Variable Rate Demand Bonds, 3.900%, 2/01/22+ A-2 6,400,000
2,640,000 Vista Multi-Family Housing (Shadowridge Apartments), Variable Rate
Demand Bonds, 3.050%, 5/01/05+ A-1+ 2,640,000
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
16
<PAGE>
NUVEEN TAX-FREE MONEY MARKET FUNDS ANNUAL REPORT
FEBRUARY 29, 1996
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
PRINCIPAL AMORTIZED
AMOUNT DESCRIPTION RATINGS* COST
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
$ 4,500,000 Visalia Public Finance Authority, Certificates of Participation, 1991
Convention Center Expansion Project, Variable Rate Demand
Bonds, 3.350%, 12/01/16+ VMIG-1 $ 4,500,000
3,000,000 Washington Township Hospital District, 1984 Issue A, Variable Rate
Demand Bonds, 3.450%, 1/01/16+ VMIG-1 3,000,000
- ------------------------------------------------------------------------------------------------------------------------------------
$ 177,380,000 Total Investments - 99.6% 177,424,635
- ------------------------------------------------------------------------------------------------------------------------------------
Other Assets Less Liabilities - 0.4% 709,596
- ------------------------------------------------------------------------------------------------------------------------------------
Net Assets - 100% $ 178,134,231
- ------------------------------------------------------------------------------------------------------------------------------------
</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.
17
<PAGE>
PORTFOLIO OF INVESTMENTS
NUVEEN MASSACHUSETTS TAX-FREE MONEY MARKET FUND
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
PRINCIPAL AMORTIZED
AMOUNT DESCRIPTION RATINGS* COST
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
$ 2,000,000 Massachusetts Municipal Wholesale Electric Company, Series 1994,
Variable Rate Demand Bonds, 3.050%, 7/01/19+ A-1+ $ 2,000,000
2,200,000 Massachusetts General Obligation Notes, Series 1995A,
4.250%, 6/12/96 MIG-1 2,203,888
1,000,000 Massachusetts Dedicated Income Tax, Series 1990E, Variable Rate
Demand Bonds, 3.350%, 12/01/97+ VMIG-1 1,000,000
3,500,000 Massachusetts Health and Educational Facilities Authority (Fallon
Health Care), Variable Rate Demand Bonds, 3.400%, 4/14/98+ A-1+ 3,500,000
1,420,000 Massachusetts Health and Educational Facilities Authority (Newbury
College), Variable Rate Demand Bonds, 3.100%, 11/01/18+ N/R 1,420,000
700,000 Massachusetts Health and Educational Facilities Authority (Capital Asset
Program), Variable Rate Demand Bonds, 3.700%, 1/01/35+ VMIG-1 700,000
3,500,000 Massachusetts Health and Educational Facilities Authority (Harvard
University), Variable Rate Demand Bonds, 2.800%, 8/01/17+ VMIG-1 3,500,000
2,500,000 Massachusetts Health and Educational Facilities Authority (Brigham
and Women's Hospital), Variable Rate Demand Bonds, 3.500%, 7/01/17+ VMIG-1 2,500,000
1,000,000 Massachusetts Health and Educational Facilities Authority (M.I.T.
Project), Variable Rate Demand Bonds, 2.800%, 7/01/21+ VMIG-1 1,000,000
2,000,000 Massachusetts Health and Educational Facilities Authority (Wellesley
College), Series E, Variable Rate Demand Bonds, 2.700%, 7/01/22+ VMIG-1 2,000,000
800,000 Massachusetts Housing Finance Agency, Multi-Family Revenue Refunding
Bonds, Series 1995A, Variable Rate Demand Bonds, 3.300%, 12/01/25+ VMIG-1 800,000
1,145,000 Massachusetts Industrial Finance Agency (Jencoat/Levy Realty Trust),
Variable Rate Demand Bonds, 4.075%, 10/06/99+ N/R 1,145,000
1,000,000 Massachusetts Industrial Finance Agency (Nova Realty Trust 1994
Refunding), Variable Rate Demand Bonds, 3.150%, 12/01/02+ P-1 1,000,000
2,600,000 Massachusetts Industrial Finance Agency (Manhasset Bay Associates,
1985 Cambridge Issue), Variable Rate Demand Bonds, 3.300%, 10/01/10+ Aa-3 2,600,000
2,300,000 Massachusetts Industrial Finance Agency (Holyoke Water Power Company
Project), Variable Rate Demand Bonds, 2.950%, 5/01/22+ VMIG-1 2,300,000
2,000,000 Massachusetts Health and Educational Facilities Authority (Community
Health Center Capital Fund), Variable Rate Demand Bonds, 3.250%,
3/01/15+ A-2 2,000,000
2,200,000 Massachusetts Industrial Finance Agency, Pollution Control (New
England Power Company Project), Variable Rate DemandBonds, 3.350%,
3/01/18+ A-1 2,200,000
3,400,000 Massachusetts Port Authority, Multimodal Series 1995A, Variable Rate
Demand Bonds, 3.350%, 7/01/15+ VMIG-1 3,400,000
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
18
<PAGE>
NUVEEN TAX-FREE MONEY MARKET FUNDS ANNUAL REPORT
FEBRUARY 29, 1996
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------------------
PRINCIPAL AMORTIZED
AMOUNT DESCRIPTION RATINGS* COST
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
$1,900,000 Massachusetts Industrial Finance Agency (WGBH Educational
Foundation Project), Adjustable Rate Bonds, 3.150%, 10/01/09+ VMIG-1 $1,900,000
1,500,000 Massachusetts Industrial Finance Agency (The Williston Northampton
School), Variable Rate Demand Bonds, 3.050%, 4/01/24+ N/R 1,500,000
3,400,000 Massachusetts Industrial Finance Agency (Showa Women's Institute/
Boston), Variable Rate Demand Bonds, 3.600%, 3/15/04+ VMIG-1 3,400,000
1,000,000 Massachusetts Industrial Finance Agency (Emerson College), Series 1995,
Variable Rate Demand Bonds, 3.400%, 1/01/15+ N/R 1,000,000
2,500,000 Massachusetts Industrial Finance Agency (Edgewood Retirement
Community Project), Series 1995C, Variable Rate Demand Bonds,
3.300%, 11/15/25+ VMIG-1 2,500,000
1,000,000 Massachusetts Industrial Finance Agency (Lower Mills Associates LP),
3.400%, 12/01/20+ N/R 1,000,000
3,000,000 Massachusetts Water Resources Authority, Series 1994, Commercial
Paper, 3.300%, 3/29/96 A-1+ 3,000,000
1,500,000 Boston Water and Sewer Commission, Series 1994A, General Revenue
Senior Series, Variable Rate Demand Bonds, 2.900%, 11/01/24+ VMIG-1 1,500,000
600,000 Brookline General Obligation Notes, Unlimited Tax,
4.650%, 2/15/97 (WI) Aaa 608,298
550,000 Cape Cod Regional Transit Authority, Revenue Anticipation Notes,
Unlimited Tax, 4.100%, 7/05/96 N/R 550,811
1,160,000 Franklin General Obligation Notes, Unlimited Tax, 4.500%, 11/15/96 Aaa 1,165,582
2,600,000 Lincoln Bond Anticipation Notes, Unlimited Tax, 4.000%, 7/05/96 Aa-1 2,602,984
1,000,000 Medford Bond Anticipation Notes, 4.100%, 5/15/96 N/R 1,000,696
1,950,000 Mendon Upton Regional School District, Bond Anticipation Notes,
Unlimited Tax, 3.430%, 2/28/97 (WI) N/R 1,952,418
2,986,000 Merrimac Valley Regional Transit Authority, Revenue Anticipation Notes,
Unlimited Tax, 3.880%, 4/26/96 N/R 2,987,460
900,000 New Bedford Industrial Development (Cliftex Corporation), Series 1989,
Variable Rate Demand Bonds, 4.075%, 10/01/97+ N/R 900,000
2,500,000 Salem Massachusetts Bond Anticipation Notes, 4.000%, 7/01/96 A-1 2,503,050
800,000 Shrewsbury General Obligation Notes, Series 1996, 3.500%, 2/01/97 Aaa 801,776
2,000,000 West Bridgewater Bond Anticipation Notes, Unlimited Tax,
4.000%, 7/24/96 N/R 2,004,933
378,000 West Tisbury General Obligation Notes, Unlimited Tax,
4.900%, 1/01/97 Aaa 381,061
610,000 Westfield General Obligation Notes, Series 1995, 5.800%, 11/15/96 Aaa 618,594
- ---------------------------------------------------------------------------------------------------------------------------------
</TABLE>
19
<PAGE>
PORTFOLIO OF INVESTMENTS
NUVEEN MASSACHUSETTS TAX-FREE MONEY MARKET FUND-CONTINUED
<TABLE>
<CAPTION>
PRINCIPAL AMORTIZED
AMOUNT DESCRIPTION RATINGS* COST
<S> <C> <C> <C>
$ 1,000,000 Puerto Rico Industrial Medical Educational and Environmental
- ----------- Authority (Ana G. Mendez Educational Foundation, FEAGM Project),
Variable Rate Demand Bonds, 3.350%, 12/01/15+ A-1+ $ 1,000,000
---------------------------------------------------------------------------------------------
$70,099,000 Total Investments - 103.0% 70,146,551
=========== ---------------------------------------------------------------------------------------------
Other Assets Less Liabilities - (3.0)% (2,066,551)
---------------------------------------------------------------------------------------------
Net Assets - 100% $68,080,000
=============================================================================================
</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.
(WI) Security purchased on a when=issued basis (note 1).
See accompanying notes to financial statements.
20
<PAGE>
NUVEEN TAX-FREE MONEY MARKET FUNDS ANNUAL REPORT
FEBRUARY 29, 1996
NUVEEN NEW YORK TAX-FREE MONEY MARKET FUND
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------
PRINCIPAL AMORTIZED
AMOUNT DESCRIPTION RATINGS* COST
- ----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
$1,400,000 New York City Fiscal 94 Series A-10, Variable Rate Demand Bonds,
3.450%, 8/01/16+ VMIG-1 $1,400,000
300,000 New York City Housing Development Corporation (Columbus Gardens
Project), Variable Rate Demand Bonds, 3.150%, 2/01/07+ A-1 300,000
1,000,000 New York City Industrial Development Agency (LaGuardia Associates
Project), Variable Rate Demand Bonds, 3.150%, 12/01/15+ A-1 1,000,000
1,100,000 New York City Trust for Cultural Resources (Guggenheim Foundation),
Variable Rate Demand Bonds, 3.400%, 12/01/15+ VMIG-1 1,100,000
1,300,000 New York City Trust For Cultural Resources, Series 1985 (Carnegie
Hall), Variable Rate Demand Bonds, 3.200%, 12/01/15+ VMIG-1 1,300,000
500,000 Dormitory Authority of the State of New York, Second Short-Term
Revenue Notes, 1989 Series A, Commercial Paper, 3.650%, 3/12/96 A-1 500,000
800,000 Dormitory Authority of the State of New York (St. Francis Center at the
Knolls, Inc.), Variable Rate Demand Bonds, 3.300%, 7/01/23+ VMIG-1 800,000
1,300,000 Dormitory Authority of the State of New York (Oxford University Press),
Series 1993, Variable Rate Demand Bonds, 3.250%, 7/01/23+ VMIG-1 1,300,000
1,400,000 Dormitory Authority of the State of New York (Beverwyck Inc), Series
1995, Variable Rate Demand Bonds, 3.050%, 7/01/25+ VMIG-1 1,400,000
1,400,000 New York State Energy Research and Development Authority, Pollution
Control (Central Hudson Gas and Electric Corporation), Variable Rate
Demand Bonds, 3.050%, 11/01/20+ A-1+ 1,400,000
1,400,000 New York State Energy Research and Development Authority, Pollution
Control (Niagara Mohawk Corporation), Variable Rate Demand Bonds,
3.850%, 3/01/27+ N/R 1,400,000
1,100,000 New York State Environmental Facilities Corporation (General Electric
Company), Commercial Paper, 3.450%, 3/12/96 A-1+ 1,100,000
1,400,000 New York State Housing Finance Agency (Normandie Court), Variable
Rate Demand Bonds, 3.100%, 5/15/15+ VMIG-1 1,400,000
900,000 New York State Housing Finance Agency (Mt. Sinai School of Medicine),
Series 1984-A, Variable Rate Demand Bonds, 3.150%, 11/01/14+ VMIG-1 900,000
885,000 New York State Job Development Authority, Series 1984E, Variable Rate
Demand Bonds, 3.650%, 3/01/99+ MIG-1 885,000
1,400,000 New York Local Government Assistance Corporation, Series 1995E,
Variable Rate Demand Bonds, 3.150%, 4/01/25+ VMIG-1 1,400,000
1,300,000 New York State Medical Care Facilities Finance Agency (Lenox Hill
Hospital), Variable Rate Demand Bonds, 3.100%, 11/01/08+ VMIG-1 1,300,000
1,300,000 New York State Medical Care Facilities Finance Agency (Children's
Hospital of Buffalo), Variable Rate Demand Bonds, 3.100%, 11/01/05+ VMIG-1 1,300,000
900,000 New York State Thruway Authority, Variable Rate Demand Bonds,
3.350%, 1/01/24+ VMIG-1 900,000
1,223,387 Babylon Bond Anticipation Notes, 1995 Series A, 3.850%, 10/30/96 N/R 1,226,724
1,000,000 Buffalo Revenue Anticipation Notes, 4.200%, 7/16/96 VMIG-1 1,002,938
1,400,000 Chautauqua County General Obligation, Tax Anticipation Notes,
4.000%, 12/20/96 N/R 1,407,672
- ----------------------------------------------------------------------------------------------------------------
</TABLE>
21
<PAGE>
PORTFOLIO OF INVESTMENTS
NUVEEN NEW YORK TAX-FREE MONEY MARKET FUND-CONTINUED
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------
PRINCIPAL AMORTIZED
AMOUNT DESCRIPTION RATINGS* COST
- ----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
$ 1,000,000 Guilderland Industrial Development Agency (Northeastern Industrial
Park), Series 1993A, Variable Rate Demand Bonds,
3.150%, 12/01/08+ P-1 $1,000,000
1,400,000 Monroe County Revenue Anticipation Notes, 1995 General Obligation,
4.500%, 3/14/96 AA 1,400,368
1,200,000 Nassau County Industrial Development Agency (Cold Spring Harbor),
Variable Rate Demand Bonds, 3.450%, 7/01/19+ A-1+ 1,200,000
900,000 Suffolk County Industrial Development Agency (Phototronics
Corporate Facility), Variable Rate Demand Bonds, 3.300%, 1/01/98+ VMIG-1 900,000
1,400,000 Triborough Bridge and Tunnel Authority, Special Obligation, Series 1994,
Variable Rate Demand Bonds, 3.250%, 1/01/24+ MIG-1 1,400,000
1,300,000 Yonkers Industrial Development Agency (Civic Facility), Series 1989,
Variable Rate Demand Bonds, 3.450%, 7/01/19+ VMIG-1 1,300,000
- ----------------------------------------------------------------------------------------------------------------
$31,908,387 Total Investments - 99.1% 31,922,702
===========-----------------------------------------------------------------------------------------------------
Other Assets Less Liabilities - 0.9% 279,872
- ----------------------------------------------------------------------------------------------------------------
Net Assets - 100% $32,202,574
================================================================================================================
</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.
22
<PAGE>
STATEMENT OF NET ASSETS NUVEEN TAX-FREE MONEY MARKET FUNDS ANNUAL REPORT
FEBRUARY 29, 1996
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------
RESERVES CA MA NY
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
ASSETS
Investments in short-term municipal securities,
at amortized cost (note 1) $335,519,554 $177,424,635 $70,146,551 $31,922,702
Cash 3,847,244 312,071 220,655 137,606
Receivables:
Interest 1,304,883 827,401 474,222 135,425
Investments sold -- 100,000 -- 115,000
Other assets 39,995 24,066 12,555 9,974
------------ ------------ ----------- -----------
Total assets 340,711,676 178,688,173 70,853,983 32,320,707
------------ ------------ ----------- -----------
LIABILITIES
Payable for investments purchased -- -- 2,561,026 --
Accrued expenses:
Management fees (note 4) 135,475 58,287 22,560 10,068
Other 170,749 77,370 32,017 38,066
Dividends payable 742,988 418,285 158,380 69,999
------------ ------------ ----------- -----------
Total liabilities 1,049,212 553,942 2,773,983 118,133
------------ ------------ ----------- -----------
Net assets applicable to shares outstanding (note 3) $339,662,464 $178,134,231 $68,080,000 $32,202,574
============ ============ =========== ===========
Shares outstanding:
Service Plan series -- 70,721,933 38,250,579 554,459
Distribution Plan series -- 73,020,093 26,279,242 31,631,448
Institutional series -- 34,392,205 3,550,179 16,667
------------ ------------ ----------- -----------
Total shares outstanding 339,662,464 178,134,231 68,080,000 32,202,574
============ ============ =========== ===========
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.
23
<PAGE>
STATEMENT OF OPERATIONS
Year ended February 29, 1996
<TABLE>
<CAPTION>
RESERVES
<S> <C>
INVESTMENT INCOME
Tax-exempt interest income (note 1) $13,393,726
-----------
Expenses:
Management fees (note 4) 1,685,865
12b-1 expense (note 4) 145,504
Shareholders' servicing agent fees and expenses 461,510
Custodian's fees and expenses 98,054
Directors' fees and expenses (note 4) 4,173
Professional fees 22,196
Shareholders' reports-printing and mailing expenses 181,747
Federal and state registration fees 15,054
Other expenses 34,254
-----------
Total expenses before expense reimbursement 2,648,357
Expense reimbursement from investment adviser (note 4) (119,509)
-----------
Net expenses 2,528,848
-----------
Net investment income 10,864,878
Net gain (loss) from investment transactions -
-----------
Net increase in net assets from operations $10,864,878
===========
</TABLE>
See accompanying notes to financial statements.
24
<PAGE>
NUVEEN TAX-FREE MONEY MARKET FUNDS ANNUAL REPORT
FEBRUARY 29, 1996
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------------
CALIFORNIA MONEY MARKET
-----------------------------------------------------------------------
Service Distribution Institutional
Plan series Plan series series Total
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
INVESTMENT INCOME
Tax-exempt interest income (note 1) $ 2,249,638 $ 2,663,057 $ 1,426,639 $ 6,339,334
------------ ------------- ------------- -------------
Expenses:
Management fees (note 4) 234,499 276,546 148,326 659,371
12b-1 expense (note 4) 53,171 49,929 - 103,100
Shareholders' servicing agent fees and expenses 4,707 41,838 350 46,895
Custodian's fees and expenses 18,090 23,545 13,076 54,711
Directors' fees and expenses (note 4) 1,164 1,459 832 3,455
Professional fees 6,555 7,421 3,939 17,915
Shareholders' reports--printing and mailing expenses 3,829 21,456 200 25,485
Federal and state registration fees 1,504 538 - 2,042
Other expenses 4,140 5,218 3,945 13,303
------------ ------------- ------------- -------------
Total expenses before expense reimbursement 327,659 427,950 170,668 926,277
Expense reimbursement from investment adviser (note 4) (11,469) (47,885) - (59,354)
------------ ------------- ------------- -------------
Net expenses 316,190 380,065 170,668 866,923
------------ ------------- ------------- -------------
Net investment income 1,933,448 2,282,992 1,255,971 5,472,411
Net gain (loss) from investment transactions - - - -
------------ ------------- ------------- -------------
Net increase in net assets from operations $ 1,933,448 $ 2,282,992 $ 1,255,971 $ 5,472,411
------------ ------------- ------------- -------------
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
See accompanying notes to financial statements.
25
<PAGE>
STATEMENT OF OPERATIONS
Year ended February 29, 1996
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
MASSACHUSETTS MONEY MARKET
------------------------------------------------------------------------
Service Distribution Institutional
Plan series Plan series Series Total
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
INVESTMENT INCOME
Tax-exempt interest income (note 1) $ 1,139,943 $ 904,774 $ 124,483 $ 2,169,200
------------ ---------- ----------- -------------
Expenses:
Management fees (note 4) 123,420 97,516 13,492 234,428
12b-1 expense (note 4) 30,649 21,424 - 52,073
Shareholders' servicing agent fees and expenses 801 32,367 747 33,915
Custodian's fees and expenses 22,234 22,962 2,566 47,762
Directors' fees and expenses (note 4) 1,237 1,029 137 2,403
Professional fees 8,515 6,795 1,010 16,320
Shareholders' reports--printing and mailing expenses 261 18,368 277 18,906
Federal and state regulation fees 3,358 1,165 626 5,149
Other expenses 3,824 2,433 415 6,672
------------ ---------- ----------- -------------
Total expenses before expense reimbursement 194,299 204,059 19,270 417,628
Expense reimbursement from investment adviser (note 4) (24,442) (70,083) (919) (95,444)
------------ ---------- ----------- -------------
Net expenses 169,857 133,976 18,351 322,184
------------ ---------- ----------- -------------
Net investment income 970,086 770,798 106,132 1,847,016
Net gain (loss) from investment transactions - - - -
------------ ---------- ----------- -------------
Net increase in net assets from operations $ 970,086 $ 770,798 $ 106,132 $ 1,847,016
============ ========== =========== =============
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
See accompanying notes to financial statements.
26
<PAGE>
NUVEEN TAX-FREE MONEY MARKET FUNDS ANNUAL REPORT
FEBRUARY 29, 1996
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
NEW YORK MONEY MARKET
----------------------------------------------------------------------
Service Distribution Institutional
Plan series Plan series series Total
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
INVESTMENT INCOME
Tax-exempt interest income (note 1) $ 18,844 $ 1,135,683 $ 624 $ 1,155,151
------------ ------------ ------------ ------------
Expenses:
Management fees (note 4) 2,014 121,439 66 123,519
12b-1 expense (note 4) 299 13,414 - 13,713
Shareholders' servicing agent fees and expenses 1,141 29,335 22 30,498
Custodian's fees and expenses 933 57,461 32 58,426
Directors' fees and expenses (note 4) 7 371 - 378
Professional fees 263 16,033 9 16,305
Shareholders' reports--printing and mailing expenses 2,679 43,448 73 46,200
Federal and state registration fees 2,293 631 26 2,950
Other expenses 58 3,145 1 3,204
------------ ------------ ------------ ------------
Total expenses before expense reimbursement 9,687 285,277 229 295,193
Expense reimbursement from investment adviser (note 4) (6,908) (118,284) (138) (125,330)
------------ ------------ ------------ ------------
Net expenses 2,779 166,993 91 169,863
------------ ------------ ------------ ------------
Net investment income 16,065 968,690 533 985,288
Net gain (loss) from investment transactions - - - -
------------ ------------ ------------ ------------
Net increase in net assets from operations $ 16,065 $ 968,690 $ 533 $ 985,288
------------ ------------ ------------ ------------
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
See accompanying notes to financial statements.
27
<PAGE>
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
RESERVES
------------- -------------
Year ended Year ended
2/29/96 2/28/95
------------- -------------
<S> <C> <C>
OPERATIONS
Net investment income $ 10,864,878 $ 8,795,175
Net realized gain (loss) from investment transactions -- --
------------- -------------
Net increase in net assets from operations 10,864,878 8,795,175
------------- -------------
DISTRIBUTIONS TO SHAREHOLDERS (note 1) (10,864,878) (8,795,175)
------------- -------------
COMMON SHARE TRANSACTIONS
(at constant net asset value of $1 per share) (note 1)
Net proceeds from sale of shares 808,776,352 657,011,312
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 10,240,006 7,787,100
------------- -------------
819,016,358 664,798,412
Cost of shares redeemed (830,960,291) (717,393,211)
------------- -------------
Net increase (decrease) in net assets derived from
Common share transactions (11,943,933) (52,594,799)
Net assets at the beginning of year 351,606,397 404,201,196
------------- -------------
Net assets at the end of year $ 339,662,464 $ 351,606,397
============= =============
</TABLE>
See accompanying notes to financial statements.
28
<PAGE>
NUVEEN TAX-FREE MONEY MARKET FUNDS ANNUAL REPORT
FEBRUARY 29, 1996
<TABLE>
<CAPTION>
CALIFORNIA MONEY MARKET
--------------------------------------------------------------
Year ended February 29, 1996
--------------------------------------------------------------
Service Distribution Institutional
Plan series Plan series series Total
<S> <C> <C> <C> <C>
- -------------------------------------------------------------------------------------------------------------------------
OPERATIONS
Net investment income.................................... $ 1,933,448 $ 2,282,992 $ 1,255,971 $ 5,472,411
Net realized gain (loss) from investment transactions.... -- -- -- --
------------- ------------- ------------- -------------
Net increase in net assets from operations.............. 1,933,448 2,282,992 1,255,971 5,472,411
------------- ------------- ------------- -------------
DISTRIBUTIONS TO SHAREHOLDERS (note 1)................... (1,933,448) (2,282,992) (1,255,971) (5,472,411)
------------- ------------- ------------- -------------
COMMON SHARE TRANSACTIONS
(at constant net asset value of $1 per share) (note 1)
Net proceeds from sale of shares......................... 137,297,132 130,907,267 212,399,556 480,603,955
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............................................ 1,633,671 1,762,239 3,093 3,399,003
------------- ------------- ------------- -------------
138,930,803 132,669,506 212,402,649 484,002,958
Cost of shares redeemed (109,980,788) (126,806,592) (228,782,833) (465,570,213)
------------- ------------- ------------- -------------
Net increase (decrease) in net assets derived from
Common share transactions........................... 28,950,015 5,862,914 (16,380,184) 18,432,745
Net assets at the beginning of year...................... 41,771,918 67,157,179 50,772,389 159,701,486
------------- ------------- ------------- -------------
Net assets at the end of year............................ $ 70,721,933 $ 73,020,093 $ 34,392,205 $ 178,134,231
============= ============= ============= =============
</TABLE>
See accompanying notes to financial statements.
29
<PAGE>
STATEMENT OF CHANGES IN NET ASSETS
<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.
30
<PAGE>
NUVEEN TAX-FREE MONEY MARKET FUNDS ANNUAL REPORT
FEBRUARY 29, 1996
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
MASSACHUSETTS MONEY MARKET
---------------------------------------------------------------------
Year ended February 29, 1996
---------------------------------------------------------------------
Service Distribution Institutional
Plan series Plan series series Total
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
OPERATIONS
Net investment income $ 970,086 $ 770,798 $ 106,132 $ 1,847,016
Net realized gain (loss) from investment transactions - - - -
------------ ------------ ------------ ------------
Net increase in net assets from operations 970,086 770,798 106,132 1,847,016
------------ ------------ ------------ ------------
DISTRIBUTIONS TO SHAREHOLDERS (note 1) (970,086) (770,798) (106,132) (1,847,016)
------------ ------------ ------------ ------------
COMMON SHARE TRANSACTIONS
(at constant net asset value of $1 per share) (note 1)
Net proceeds from sale of shares 77,847,781 24,524,563 16,474,350 118,846,694
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 960,638 758,160 46,176 1,764,974
------------ ------------ ------------ ------------
78,808,419 25,282,723 16,520,526 120,611,668
Cost of shares redeemed (68,289,392) (23,240,661) (14,005,907) (105,535,960)
------------ ------------ ------------ ------------
Net increase (decrease) in net assets derived from
Common share transactions 10,519,027 2,042,062 2,514,619 15,075,708
Net assets at the beginning of year 27,731,552 24,237,180 1,035,560 53,004,292
------------ ------------ ------------ ------------
Net assets at the end of year $ 38,250,579 $ 26,279,242 $ 3,550,179 $ 68,080,000
============ ============ ============ ============
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
See accompanying notes to financial statements.
31
<PAGE>
STATEMENT OF CHANGES IN NET ASSETS
<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.
32
<PAGE>
NUVEEN TAX-FREE MONEY MARKET FUNDS ANNUAL REPORT
FEBRUARY 29, 1996
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
NEW YORK MONEY MARKET
---------------------------------------------------------------------
Year ended February 29, 1996
---------------------------------------------------------------------
Service Distribution Institutional
Plan series Plan series series Total
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
OPERATIONS
Net investment income $ 16,065 $ 968,690 $ 533 $ 985,288
Net realized gain (loss) from investment transactions - - - -
--------- ------------ -------- ------------
Net increase in net assets from operations 16,065 968,690 533 985,288
--------- ------------ -------- ------------
DISTRIBUTIONS TO SHAREHOLDERS (note 1) (16,065) (968,690) (533) (985,288)
--------- ------------ -------- ------------
COMMON SHARE TRANSACTIONS
(at constant net asset value of $1 per share) (note 1)
Net proceeds from sale of shares 364,272 36,230,907 - 36,595,179
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 13,053 942,307 - 955,360
--------- ------------ -------- ------------
377,325 37,173,214 - 37,550,539
Cost of shares redeemed (462,939) (35,339,438) - (35,802,377)
--------- ------------ -------- ------------
Net increase (decrease) in net assets derived from
Common share transactions (85,614) 1,833,776 - 1,748,162
Net assets at the beginning of year 640,073 29,797,672 16,667 30,454,412
--------- ------------ -------- ------------
Net assets at the end of year $ 554,459 $ 31,631,448 $ 16,667 $ 32,202,574
========= ============ ======== ============
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
See accompanying notes to financial statements.
33
<PAGE>
STATEMENT OF CHANGES IN NET ASSETS
<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.
34
<PAGE>
NOTES TO FINANCIAL STATEMENTS
NUVEEN TAX-FREE MONEY MARKET FUNDS ANNUAL REPORT
FEBRUARY 29, 1996
1. GENERAL INFORMATION AND SIGNIFICANT
ACCOUNTING POLICIES
At February 29, 1996, 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. (comprising the Nuveen California Tax-Free Money
Market Fund) and Nuveen Tax-Free Money Market Fund, Inc. (comprising the Nuveen
Massachusetts and New York Tax-Free Money Market Funds).
The Funds are registered under the Investment Company Act of 1940 as an 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 who do not perform additional
distribution and administrative services.
Each Fund issues its own shares, at net asset value which the Fund will seek to
maintain at $1.00 per share without a 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 valuation
Investments in each of the Funds consist of short-term 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 cost. On a dollar-weighted basis, the average maturity of all such
securities must be 90 days or less (at February 29, 1996, the dollar-weighted
average life was 33 days for Reserves, 22 days for California Money Market, 53
days for Massachusetts Money Market and 32 days for New York Money Market).
35
<PAGE>
NOTES TO FINANCIAL STATEMENTS
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. 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 to the amount of its purchase commitments. At
February 29, 1996, the Massachusetts Money Market had purchase commitments of
$2,561,026. There were no such purchase commitments in any of the other Funds.
Interest income
Interest income is determined on the basis of interest accrued, adjusted for
amortization of premiums and accretion of discounts.
Dividends and distributions to shareholders
Net investment income, adjusted for realized short-term gains and losses on
investment transactions, is declared as a 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.
Income taxes
Each Fund is a separate taxpayer for federal income tax purposes and intends to
comply with the requirements of the Internal Revenue Code applicable to
regulated investment companies by distributing all of its net investment income,
including any net realized gains from investments, 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 income tax 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 29, 1996, have been designated
Exempt Interest Dividends.
Insurance commitments
The Funds have obtained commitments (each a "Commitment") 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 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 payment of interest on the bonds
36
<PAGE>
NUVEEN TAX-FREE MONEY MARKET FUNDS ANNUAL REPORT
FEBRUARY 29, 1996
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.
Derivative financial instruments
In October 1994, the Financial Accounting Standards Board (FASB) issued
Statement of Financial Accounting Standards No. 119 Disclosure about Derivative
Financial Instruments and Fair Value of Financial Instruments which prescribes
disclosure requirements for transactions in certain derivative financial
instruments including future, forward, swap, and option contracts, and other
financial instruments with similar characteristics. Although the Funds are
authorized to invest in such financial instruments, and may do so in the future,
they did not make any such investments during the year ended February 29, 1996,
other than occasional purchases of high quality synthetic money market
securities, if applicable.
Use of estimates
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities at the date of the
financial statements and the reported amounts of increases and decreases in net
assets from operations during the reporting period.
2. SECURITIES TRANSACTIONS
Purchases and sales (including maturities) of investment securities during the
year ended February 29, 1996, were as follows:
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------
RESERVES CA MA NY
- --------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Purchases............. $1,299,772,860 $483,700,236 $235,091,836 $106,630,911
Sales and Maturities.. 1,317,652,500 458,401,000 216,602,000 104,915,000
- --------------------------------------------------------------------------------------
</TABLE>
At February 29, 1996, the cost of investments owned for federal income tax
purposes was the same as the cost for financial reporting purposes for all
Funds.
37
<PAGE>
NOTES TO FINANCIAL STATEMENTS
3. COMPOSITION OF NET ASSETS
At February 29, 1996, 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 $ -- $ 70,721,933 $ 38,250,579 $ 554,459
Distribution Plan series -- 73,020,093 26,279,242 31,631,448
Institutional series -- 34,392,205 3,550,179 16,667
-------------- -------------- -------------- --------------
Net assets $ 339,662,464 $ 178,134,231 $ 68,080,000 $ 32,202,574
============== ============== ============== ==============
Authorized shares 2,000,000,000 2,350,000,000 2,500,000,000 2,500,000,000
============== ============== ============== ==============
</TABLE>
[CAPTION]
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 Distributor Plan series and the Service
Plan series 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.
38
<PAGE>
NUVEEN TAX-FREE MONEY MARKET FUNDS ANNUAL REPORT
FEBRUARY 29, 1996
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.
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 and
revenue bonds. At February 29, 1996, the revenue sources by municipal purpose
for these investments, expressed as a percent of total investments, were as
follows:
<TABLE>
<CAPTION>
- -----------------------------------------------------------
RESERVES CA MA NY
- -----------------------------------------------------------
<S> <C> <C> <C> <C>
Revenue Bonds:
Pollution Control Facilities 36% 12% 12% 27%
Health Care Facilities 23 20 21 15
Housing Facilities 6 22 3 8
Water/Sewer Facilities 3 14 6 --
Educational Facilities 4 -- 14 2
Lease Rental Facilities -- 12 -- --
Electric Utilities 2 4 10 --
Transportation 2 -- 5 3
Other 13 9 -- 22
General Obligation Bonds 11 7 29 23
--- --- --- ---
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 (95% for Reserves,
100% for California, 62% for Massachusetts and 84% for New York).
For additional information regarding each investment security, refer to the
Portfolio of Investments.
39
<PAGE>
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
SELECTED DATA FOR A COMMON SHARE OUTSTANDING THROUGHOUT EACH PERIOD IS AS FOLLOWS:
- --------------------------------------------------------------------------------------------------------------------------------
Income from investment operations Less distributions
--------------------------------------------------------------------
Net
realized and Dividends
Net asset Net unrealized gain from net Distribution Net asset
value beginning investment (loss) from investment from value end of
of period income investments income capital gains period
- --------------------------------------------------------------------------------------------------------------------------------
RESERVES
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Year ended 2/29
1996 $1.000 $.032* $ - $(.032) $ - $1.000
Year ended 2/28,
1995 1.000 .025* - (.025) - 1.000
1994 1.000 .018* - (.018) - 1.000
1993 1.000 .023 - (.023) - 1.000
5 months ended
2/29/92 1.000 015 - (.015) - 1.000
Year ended 9/30,
1991 1.000 .046 - (.046) - 1.000
1990 1.000 .055 - (.055) - 1.000
1989 1.000 .057 - (.057) - 1.000
Year ended 2/29
1988 1.000 .045 - (.045) - 1.000
Year ended 2/28,
1987 1.000 .039 - (.039) - 1.000
1986 1.000 .045* - (.045) - 1.000
- -------------------------------------------------------------------------------------------------------------------------------
</TABLE>
See notes on page 46.
40
<PAGE>
<TABLE>
<CAPTION>
NUVEEN TAX-FREE MUTUAL FUNDS ANNUAL REPORT
FEBRUARY 29, 1996
- ---------------------------------------------------------------------------------------------------------------
Ratios/Supplemental data
- ---------------------------------------------------------------------------------------------------------------
Ratio of Ratio of Ratio of Ratio of
expenses to net investment expenses net investment
Total return Net assets average income to average to average net income to average
on net asset end of period net assets before net assets before assets after net assets after
value (in thousands) reimbursement reimbursement reimbursement* reimbursement*
- ---------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
3.23% $339,662 .79% 3.18% .75% 3.22%
2.46 351,606 .78 2.40 .75 2.43
1.84 404,201 .80 1.78 .75 1.83
2.34 450,746 .74 2.35 .74 2.35
1.45 477,127 .75+ 3.48+ .75+ 3.48+
4.57 451,808 .72 4.56 .72 4.56
5.45 430,206 .73 5.45 .73 5.45
5.70 390,258 .72 5.69 .72 5.69
4.52 409,653 .73 4.52 .73 4.52
3.88 361,044 .73 3.85 .73 3.85
4.46 272,677 .80 4.34 .75 4.39
- ---------------------------------------------------------------------------------------------------------------
</TABLE>
41
<PAGE>
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
SELECTED DATA FOR A COMMON SHARE OUTSTANDING THROUGHOUT EACH PERIOD IS AS FOLLOWS:
- ---------------------------------------------------------------------------------------------------------------------------
Income from investment operations Less distributions
- ---------------------------------------------------------------------------------------------------------------------------
Net
Net realized and
asset value Net unrealized Dividends from Distributions
beginning investment gain (loss) from net investment from
of period income investments income capital gains
- ---------------------------------------------------------------------------------------------------------------------------
CA**
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Year ended
2/29/96
Service Plan series $1.000 $.033* $ - $(.033) $ -
Distribution Plan series 1.000 .033* - (.033) -
Institutional series 1.000 .034 - (.034) -
Year ended
2/28/95
Service Plan series 1.000 .026* - (.026) -
Distribution Plan series 1.000 .026* - (.026) -
Institutional series 1.000 .027 - (.027) -
Year ended
2/28/94
Service Plan series 1.000 .019 - (.019) -
Distribution Plan series 1.000 .019* - (.019) -
Institutional series 1.000 .021 - (.021) -
Year ended
2/28/93
Service Plan series 1.000 .023* - (.023) -
Distribution Plan series 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 series 1.000 .024* - (.024) -
Institutional series 1.000 .025 - (.025) -
Year ended
6/30/91
Service Plan series 1.000 .047* - (.047) -
Distribution Plan series 1.000 .047* - (.047) -
Institutional series 1.000 .048 - (.048) -
Year ended 6/30,
1990++ 1.000 .054* - (.054) -
1989++ 1.000 .056* - (.056) -
1988++ 1.000 .043* - (.043) -
1987++ 1.000 .039* - (.039) -
- ---------------------------------------------------------------------------------------------------------------------------
</TABLE>
See notes on page 46
42
<PAGE>
NUVEEN TAX-FREE MONEY MARKET FUNDS ANNUAL REPORT
FEBRUARY 29, 1996
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------------
Ratios/Supplemental data
- ---------------------------------------------------------------------------------------------------------------------------
Ratio of net
Ratio of investment Ratio Ratio of net
expenses to income to of expenses investment income
Net assets average net average net to average to average
Net asset value Total return on end of period assets before assets before net assets after net assets after
end of period net asset value (in thousands) reimbursement reimbursement reimbursement* reimbursement*
- ---------------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
$ 1.000 3.32% $ 70,722 .56% 3.28% .54% 3.30%
1.000 3.31 73,020 .62 3.23 .55 3.30
1.000 3.40 34,392 .46 3.39 .46 3.39
1.000 2.59 41,772 .59 2.15 .55 2.19
1.000 2.60 67,157 .64 2.47 .55 2.56
1.000 2.69 50,772 .47 2.74 .47 2.74
1.000 1.94 415,238 .53 1.94 .53 1.94
1.000 1.92 72,380 .73 1.74 .55 1.92
1.000 2.07 32,299 .41 2.06 .41 2.06
1.000 2.28 469,812 .57 2.24 .55 2.26
1.000 2.29 80,652 .62 2.19 .55 2.26
1.000 2.36 24,156 .47 2.33 .47 2.33
1.000 2.39 478,886 .56+ 3.53+ .55+ 3.54+
1.000 2.39 91,670 .61+ 3.48+ .55+ 3.54+
1.000 2.45 18,334 .45+ 3.64+ .45+ 3.64+
1.000 4.70 431,590 .57 4.65 .55 4.67
1.000 4.70 90,031 .61 4.61 .55 4.67
1.000 4.80 22,342 .45 4.77 .45 4.77
1.000 5.37 452,465 .59 5.34 .55 5.38
1.000 5.62 362,927 .57 5.68 .55 5.70
1.000 4.28 207,897 .59 4.27 .55 4.31
1.000 3.90 284,956 .63 3.79 .50 3.92
- ---------------------------------------------------------------------------------------------------------------------------
</TABLE>
43
<PAGE>
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
SELECTED DATA FOR A COMMON SHARE OUTSTANDING THROUGHOUT EACH PERIOD IS AS FOLLOWS:
- ---------------------------------------------------------------------------------------------------------------
Income from investment operations Less distributions
--------------------------------------------------------------------
Net
Net realized and Dividends
asset value Net unrealized gain from net Distribution
beginning investment (loss) from investment from
of period income investments income capital gains
- ---------------------------------------------------------------------------------------------------------------
MA***
- ---------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Year ended
2/29/96
Service Plan series $1.000 $.032* $-- $(.032) $--
Distribution Plan series 1.000 .032* -- (.032) --
Institutional series 1.000 .032* -- (.032) --
Year ended
2/28/95
Service Plan series 1.000 .025* -- (.025) --
Distribution Plan series 1.000 .025* -- (.025) --
Institutional series 1.000 .026 -- (.026) --
Year ended
2/28/94
Service Plan series 1.000 .018* -- (.018) --
Distribution Plan series 1.000 .017* -- (.017) --
Institutional series 1.000 .018 -- (.018) --
Year ended
2/28/94
Service Plan series 1.000 .023* -- (.023) --
Distribution Plan series 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 series 1.000 .032* -- (.032) --
Institutional series 1.000 .032 -- (.032) --
Year ended
4/30/91
Service Plan series 1.000 .053* -- (.053) --
Distribution Plan series 1.000 .053* -- (.053) --
Institutional series 1.000 .053 -- (.053) --
Year ended 4/30,
1990++ 1.000 .057* -- (.057) --
1989++ 1.000 .050* -- (.050) --
1988++ 1.000 .043* -- (.043) --
12/10/86 to
4/30/87++ 1.000 .016* -- (.016) --
- ---------------------------------------------------------------------------------------------------------------
</TABLE>
See notes on page 46.
44
<PAGE>
<TABLE>
<CAPTION>
NUVEEN TAX-FREE MONEY MARKET FUNDS ANNUAL REPORT
FEBRUARY 29, 1996
- -------------------------------------------------------------------------------------------------------------------------------
Ratios/Supplemental data
-------------------------------------------------------------------------------------------------------------------
Ratio of Ratio of Ratio of Ratio of
expenses to net investment expenses net investment
Net asset Total return Net assets average income to average to average net income to average
value end of on net asset end of period net assets before net assets before assets after net assets after
period value (in thousands) reimbursement reimbursement reimbursement* reimbursement*
- -------------------------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
$1.000 3.17% $38,251 .63% 3.06% .55% 3.14%
1.000 3.17 26,279 .84 2.87 .55 3.16
1.000 3.18 3,550 .57 3.12 .54 3.15
1.000 2.53 27,732 .61 2.49 .55 2.55
1.000 2.53 24,237 .82 2.28 .55 2.55
1.000 2.61 1,036 .47 2.63 .47 2.63
1.000 1.77 38,576 .55 1.88 .52 1.91
1.000 1.74 27,773 .76 1.67 .55 1.88
1.000 1.80 3,406 .49 1.93 .49 1.93
1.000 2.33 40,214 .73 2.16 .55 2.34
1.000 2.33 27,993 .82 2.07 .55 2.34
1.000 2.34 5,325 .58 2.31 .55 2.34
1.000 3.22 61,476 .62+ 3.73+ .55+ 3.80+
1.000 3.22 34,509 .72+ 3.63+ .55+ 3.80+
1.000 3.24 8,917 .53+ 3.82+ .53+ 3.82+
1.000 5.30 37,979 .68 5.12 .55 5.25
1.000 5.30 33,809 .76 5.04 .55 5.25
1.000 5.30 14,973 .54 5.26 .54 5.26
1.000 5.70 53,631 .74 5.48 .55 5.67
1.000 5.00 31,319 .76 4.97 .55 5.18
1.000 4.29 35,614 .75 4.03 .48 4.30
1.000 1.60 12,371 3.02+ 1.40+ .06+ 4.36+
- -------------------------------------------------------------------------------------------------------------------------------
</TABLE>
45
<PAGE>
FINANCIAL HIGHLIGHTS
SELECTED DATA FOR A COMMON SHARE OUTSTANDING THROUGHOUT EACH PERIOD IS AS
FOLLOWS:
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
Income from investment operations Less distributions
--------------------------------- ---------------------------------
Net
Net realized and
asset value Net unrealized Dividends from Distributions
beginning investment gain (loss) from net investment from
of period income investments income capital gains
- ----------------------------------------------------------------------------------------------------------------------------------
NY***
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Year ended
2/29/96
Service Plan series $1.000 $.032* $ - $(.032) $ -
Distribution Plan series 1.000 .032* - (.032) -
Institutional series 1.000 .032* - (.032) -
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,
1990++ 1.000 .054* - (.054) -
1989++ 1.000 .050* - (.050) -
1988++ 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, if applicable (note 4).
** Effective for the fiscal year ended June 30, 1991, and thereafter, the Fund
has presented the above per share data by series.
*** Effective for the fiscal year ended 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.
46
<PAGE>
NUVEEN TAX-FREE MONEY MARKET FUNDS ANNUAL REPORT
FEBRUARY 29, 1996
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------------------
Ratios/Supplemental data
- ----------------------------------------------------------------------------------------------------------------------------------
Ratio of Ratio of net Ratio of Ratio of net
expences investment income expences investment income
Net assets to average to average to average to average
Net asset value Total return on end of period net assets before net assets before net assets after net assets after
end of period net asset value (in thousands) reimbursement reimbursement reimbursement* reimbursement*
- ----------------------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------------------
<C> <C> <C> <C> <C> <C> <C>
$1.000 3.20% $ 554 1.92% 1.82% .55% 3.19%
1.000 3.20 31,631 .94 2.80 .55 3.19
1.000 3.20 17 1.38 2.37 .55 3.20
1.000 2.36 640 .95 1.98 .55 2.38
1.000 2.37 29,798 .79 2.14 .55 2.38
1.000 2.28 17 2.14 .79 .55 2.38
1.000 1.51 557 1.49 .69 .55 1.63
1.000 1.51 27,886 .78 1.40 .55 1.63
1.000 1.51 17 4.60 (2.42) .55 1.63
1.000 2.02 529 1.17 1.42 .55 2.04
1.000 2.02 34,827 .78 1.81 .55 2.04
1.000 2.02 17 19.33 (16.59) .55 2.19
1.000 2.94 1,934 .87+ 3.19+ .55+ 3.51+
1.000 2.94 45,259 .71+ 3.35+ .55+ 3.51+
1.000 2.97 17 11.89+ (7.83)+ .55+ 3.51+
1.000 4.73 1,653 .88 4.39 .55 4.72
1.000 4.73 41,446 .69 4.58 .55 4.72
1.000 4.73 17 .62 4.65 .55 4.72
1.000 5.36 41,602 .71 5.18 .55 5.34
1.000 4.95 30,262 .86 4.74 .55 5.05
1.000 4.10 17,016 1.03 3.54 .50 4.07
1.000 1.50 4,134 4.20+ .05+ .05+ 4.20+
- ----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
47
<PAGE>
[PHOTO OF PAINTING APPEARS HERE]
Your
investment
partners
Since 1898, John Nuveen & Co. Incorporated has worked to bring together the
various participants in the municipal bond industry and build strong
partnerships that benefit all concerned. Investors, financial advisers,
municipal officials, investment bankers-Nuveen believes that forging
relationships within these groups based on trust and value is the key to
successful investing.
As the oldest and largest municipal bond specialist in the United States,
Nuveen's investment bankers work with issuers to understand and meet their needs
in structuring and selling their bond issues.
Nuveen also works closely with financial advisers around the country,
including brokerage firms, banks, insurance companies, and independent financial
planners, to bring the benefits of tax-free investing to you. These advisers are
experts at identifying your needs and recommending the best solutions for your
situation. Together we make a powerful team, helping you create a successful
investment plan that meets your needs today and in the future.
For nearly 100 years,
Nuveen has earned its
reputation as a tax-free income
specialist by focusing on
municipal bonds
[NUVEEN LOGO]
John Nuveen & Co. Incorporated
333 West Wacker Drive
Chicago, Illinois 60606-1286
OEF3-APR96
<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 29, 1996
Statement of Net Assets, February 29, 1996
Statement of Operations, Year Ended February 29, 1996
Statement of Changes in Net Assets, Years Ended February 29, 1996, and
February 28, 1995
Report of Independent Public Accountants dated April 8, 1996
(b) Exhibits:
<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 May 7, 1996, of Investment Management Agreement.
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 27, 1995, of Distribution Agreement.
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.
8(b). Letter evidencing assignment of U.S. Trust Company of New York's rights and re-
sponsibilities under the Custody Agreement to The Chase Manhattan Bank, N.A.
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.
10. Opinion of Fried, Frank, Harris, Shriver & Jacobson.
</TABLE>
C-2
<PAGE>
<TABLE>
<C> <S>
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. Filed as
Exhibit 15(c) to Post-Effective Amendment No. 20 to Registrant's Registration
Statement on Form N-1A (File No. 33-01971) and incorporated herein by reference
thereto.
15(d). Renewal, dated July 26, 1995, of Plan of Distribution and Service Pursuant to
Rule 12b-1.
16. Schedule of Computation of Performance Figures.
17. Financial Data Schedule.
18. Multiple Class Plan Adopted Pursuant to Rule 18f-3, as amended.
99(a). 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.
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.
</TABLE>
C-3
<PAGE>
<TABLE>
<S> <C>
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.
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.
ITEM 26: NUMBER OF HOLDERS OF SECURITIES
At May 31, 1996:
<TABLE>
<CAPTION>
NUMBER OF
TITLE OF SERIES RECORD HOLDERS
--------------- --------------
<S> <C>
Nuveen California Tax-Free Value Fund,
Class A Shares........................................... 699
Class C Shares........................................... 40
Class R Shares........................................... 5,353
Nuveen California Insured Tax-Free Value Fund,
Class A Shares........................................... 899
Class C Shares........................................... 50
Class R Shares........................................... 4,775
Nuveen California Tax-Free Money Market Fund,
Institutional Series..................................... 9
Distribution Plan Series................................. 1,319
Service Plan Series...................................... 126
</TABLE>
C-4
<PAGE>
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 Corporation or to its security
holders to which he would otherwise be subject by reason of willful misfea-
sance, bad faith, gross negligence or reckless disregard of the duties in-
volved in the conduct of his office ("disabling conduct"), and the Corpora-
tion shall not indemnify any of its officers or directors against any lia-
bility to the Corporation or to its security holders unless a determination
shall have been made in the manner provided hereafter that such liability
has not arisen from such officer's or director's disabling conduct. A de-
termination 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 before 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 reason-
able 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 major-
ity of a quorum of directors who are neither "interested persons" of the
Corporation as defined in the Investment Company Act of 1940 nor parties to
the proceeding, or (b) an independent 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 $60,000,000 (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).
C-5
<PAGE>
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, Nuveen Tax-
Exempt Money Market Fund, Inc., Nuveen Tax-Free Reserves, Inc., Nuveen Califor-
nia Tax-Free Fund, Inc., Nuveen Tax-Free Bond Fund, Inc., Nuveen Insured Tax-
Free Bond Fund, Inc., Nuveen Tax-Free Money Market Fund, Inc. and Nuveen
Multistate Tax-Free Trust. It also serves as investment adviser to the follow-
ing closed-end management type investment companies: Nuveen Municipal Value
Fund, Inc., Nuveen California Municipal Value Fund, Inc., Nuveen New York Mu-
nicipal Value Fund, Inc., Nuveen Municipal Income Fund, Inc., Nuveen Premium
Income Municipal Fund, Inc., Nuveen Performance Plus Municipal Fund, Inc.,
Nuveen California Performance Plus Municipal Fund, Inc., Nuveen New York Per-
formance Plus Municipal Fund, Inc., Nuveen Municipal Advantage Fund, Inc.,
Nuveen Municipal Market Opportunity Fund, Inc., Nuveen California Municipal
Market Opportunity Fund, Inc., Nuveen Investment Quality Municipal Fund, Inc.,
Nuveen California Investment Quality Municipal Fund, Inc., Nuveen New York In-
vestment Quality Municipal Fund, Inc., Nuveen Insured Quality Municipal Fund,
Inc., Nuveen Florida Investment Quality Municipal Fund, Nuveen New Jersey In-
vestment Quality Municipal Fund, Inc., Nuveen Pennsylvania Investment Quality
Municipal Fund, Nuveen Select Quality Municipal Fund, Inc., Nuveen California
Select Quality Municipal Fund, Inc., Nuveen New York Select Quality Municipal
Fund, Inc., Nuveen Quality Income Municipal Fund, Inc., Nuveen Insured Munici-
pal Opportunity Fund, Inc., Nuveen Florida Quality Income Municipal Fund,
Nuveen Michigan Quality Income Municipal Fund, Inc., Nuveen Ohio Quality Income
Municipal 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 In-
sured New York Premium Income Municipal Fund, Inc., Nuveen Select Maturities
Municipal Fund, Nuveen Arizona Premium Income Municipal Fund, Inc., Nuveen In-
sured Florida Premium Income Municipal Fund, Nuveen Michigan Premium Income Mu-
nicipal 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 Wash
C-6
<PAGE>
ington Premium Income Municipal Fund, Nuveen Connecticut Premium Income Munic-
ipal Fund, Nuveen Georgia Premium Income Municipal Fund, Nuveen Missouri Pre-
mium Income Municipal Fund, Nuveen North Carolina Premium Income Municipal
Fund, Nuveen California Premium Income Municipal Fund and Nuveen Insured Pre-
mium Income Municipal Fund 2. Nuveen Advisory Corp. has no other clients or
business at the present time. The principal business address for all these in-
vestment companies is 333 West Wacker Drive, Chicago, Illinois 60606.
For a description of other business, profession, vocation or employment of a
substantial nature in which any director or officer of the investment adviser
has engaged during the last two years for his account or in the capacity of
director, officer, employee, partner or trustee, see the descriptions under
"Management" in the Statement of Additional Information.
ITEM 29: PRINCIPAL UNDERWRITERS
(a) John Nuveen & Co. Incorporated (Nuveen) acts as principal underwriter to
the following open-end management type investment companies: Nuveen Municipal
Bond Fund, Nuveen Tax-Exempt Money Market Fund, Inc., Nuveen Tax-Free Re-
serves, 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 Premium Income Municipal Fund, Inc.,
Nuveen Performance Plus Municipal Fund, Inc., Nuveen California Performance
Plus Municipal Fund, Inc., Nuveen New York Performance Plus Municipal Fund,
Inc., Nuveen Municipal Advantage Fund, Inc., Nuveen Municipal Market Opportu-
nity 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 In-
vestment Quality Municipal Fund, Nuveen New Jersey Investment Quality Munici-
pal Fund, Inc., Nuveen Pennsylvania Investment Quality Municipal Fund, Nuveen
Select Quality Municipal Fund, Inc., Nuveen California Select Quality Munici-
pal Fund, Inc., Nuveen New York Select Quality Municipal Fund, Inc., Nuveen
Quality Income Municipal Fund, Inc., Nuveen Insured Municipal Opportunity
Fund, Inc., Nuveen Florida Quality Income Municipal Fund, Nuveen Michigan
Quality Income Municipal Fund, Inc., Nuveen Ohio Quality Income Municipal
Fund, Inc., Nuveen Texas Quality Income Municipal Fund, Nuveen California
Quality Income Municipal Fund, Inc., Nuveen New York Quality Income Municipal
Fund, Inc., Nuveen 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 Premium In-
come 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 Insured 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 Municipal Fund 4, Inc., Nuveen Insured Cali-
fornia Premium Income Municipal Fund
C-7
<PAGE>
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, Nuveen Insured Premium Income Municipal Fund 2,
Nuveen Select Tax-Free Income Portfolio 2, Nuveen Insured California Select
Tax-Free Income Portfolio, Nuveen Insured New York Select Tax-Free Income Port-
folio and Nuveen Select Tax-Free Income Portfolio 3.
(b)
<TABLE>
<CAPTION>
NAME AND PRINCIPAL POSITIONS AND OFFICES POSITIONS AND OFFICES
BUSINESS ADDRESS WITH UNDERWRITER WITH REGISTRANT
- ------------------------------------------------------------------------------
<S> <C> <C>
Timothy R. Schwertfeger Chairman of the Board, Chairman of the Board
333 West Wacker Drive Chief Executive Officer and Director
Chicago, Illinois 60606 and Director
Anthony T. Dean Executive Vice President None
333 West Wacker Drive and Director
Chicago, Illinois 60606
John P. Amboian Executive Vice President President and Director
333 West Wacker Drive and Chief Financial Officer
Chicago, IL 60606
William Adams IV Vice President None
333 West Wacker Drive
Chicago, Illinois 60606
Clifton L. Fenton Vice President None
333 West Wacker Drive
Chicago, IL 60606
Kathleen M. Flanagan Vice President Vice President
333 West Wacker Drive
Chicago, Illinois 60606
</TABLE>
C-8
<PAGE>
<TABLE>
<CAPTION>
POSITIONS AND
NAME AND PRINCIPAL POSITIONS AND OFFICES OFFICES
BUSINESS ADDRESS WITH UNDERWRITER WITH REGISTRANT
- -------------------------------------------------------------------------------
<S> <C> <C>
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
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
</TABLE>
C-9
<PAGE>
<TABLE>
<CAPTION>
POSITIONS AND
NAME AND PRINCIPAL POSITIONS AND OFFICES OFFICES
BUSINESS ADDRESS WITH UNDERWRITER WITH REGISTRANT
- ------------------------------------------------------------------------------------
<S> <C> <C>
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) 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.
The Chase Manhattan Bank, N.A., 770 Broadway, New York, New York 10003, main-
tains all general and subsidiary ledgers, journals, trial balances, records of
all portfolio purchases and sales, and all other required records not main-
tained 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-10
<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 28TH DAY OF JUNE, 1996.
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 28, 1996
Controller (Principal
Financial and
Accounting Officer)
Richard J. Franke Chairman of the Board
and Director (Principal
Executive Officer)
Lawrence H. Brown Director
Anne E. Impellizzeri Director
Margaret K. Rosenheim Director
Peter R. Sawers Director
Timothy R. Schwertfeger President and Director
/s/ Gifford R. Zimmerman
By ________________________
Gifford R. Zimmerman
Attorney-in-Fact
June 28, 1996
</TABLE>[/R]
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 IS INCORPORATED BY
REFERENCE TO THIS REGISTRATION STATEMENT.
<PAGE>
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
SEQUENTIALLY
EXHIBIT NUMBERED
NUMBER EXHIBIT PAGE
------- ------- ------------
<C> <S> <C>
5(c). Renewal, dated May 7, 1996, of Investment Management
Agreement.
6(b). Renewal, dated July 27, 1995, of Distribution Agree-
ment.
8(b). Letter evidencing assignment of U.S. Trust Company of
New York's rights and responsibilities under the Cus-
tody Agreement to The Chase Manhattan Bank, N.A.
10. Opinion of Fried, Frank, Harris, Shriver & Jacobson.
11. Consent of Independent Public Accountants.
15(d). Renewal, dated July 26, 1995, of Plan of Distribution
and Service Pursuant to Rule 12b-1.
16. Schedule of Computation of Performance figures.
17. Financial Data Schedule.
18. Multiple Class Plan Adopted Pursuant to Rule 18f-3,
as amended.
99(g). Certified copy of resolution of Board of Directors
authorizing the signing of the names of directors and
officers on the Registrant's Registration Statement
pursuant to power of attorney.
</TABLE>
<PAGE>
Exhibit 5(c)
NUVEEN CALIFORNIA TAX-FREE FUND, INC.
RENEWAL OF INVESTMENT MANAGEMENT AGREEMENT
------------------------------------------
This Agreement made this 7th day of May, 1996 by and between Nuveen California
Tax-Free Fund, Inc., a Maryland corporation (the "Fund"), and Nuveen Advisory
Corp., a Delaware corporation (the "Adviser");
WHEREAS, the parties hereto are the contracting parties under that certain
Investment Management Agreement (the "Agreement") pursuant to which the Adviser
furnishes investment management and other services to the Fund; and
WHEREAS, the Agreement terminates August 1, 1996 unless continued in the manner
required by the Investment Company Act of 1940; and
WHEREAS, the Board of Directors, at a meeting called for the purpose of
reviewing the Agreement, have approved the Agreement and its continuance until
August 1, 1997 in the manner required by the Investment Company Act of 1940.
NOW THEREFORE, in consideration of the mutual covenants contained in the
Agreement the parties hereto do hereby continue the Agreement in effect until
August 1, 1997 and ratify and confirm the Agreement in all respects.
NUVEEN CALIFORNIA TAX-FREE FUND, INC.
By: /s/ James J. Wesolowski
---------------------------------
Vice President
ATTEST:
/s/ Karen L. Healy
- ----------------------------------
Assistant Secretary
NUVEEN ADVISORY CORP.
By: /s/ Gifford R. Zimmerman
---------------------------------
Vice President
ATTEST:
/s/ Larry Martin
- ----------------------------------
Assistant Secretary
<PAGE>
Exhibit 6(b)
Renewal of Distribution Agreement
---------------------------------
This Agreement made this 27th day of July, 1995 by and between Nuveen California
Tax-Free Fund, Inc., a Maryland corporation (the "Fund"), and John Nuveen & Co.
Incorporated, a Delaware corporation (the "Underwriter");
WHEREAS, the parties hereto are the contracting parties under that certain
Distribution Agreement (the "Agreement") pursuant to which the Underwriter acts
as agent for the distribution of shares of the Fund; and
WHEREAS, the Agreement terminates August 1, 1995 unless continued in the manner
required by the Investment Company Act of 1940; and
WHEREAS, the Board of Directors of the Fund, at a meeting called for the purpose
of reviewing the Agreement has approved the Agreement and its continuance until
August 1, 1996 in the manner required by the Investment Company Act of 1940;
NOW THEREFORE, in consideration of the mutual covenants contained in the
Agreement the parties hereto do hereby continue the Agreement in effect until
August 1, 1996 and ratify and confirm the Agreement in all respects.
NUVEEN CALIFORNIA TAX-FREE FUND, INC.
By: /s/ Larry Martin
---------------------------------
Vice President
ATTEST:
/s/ Morrison C. Warren
- --------------------------------
Assistant Secretary
JOHN NUVEEN & CO. INCORPORATED
By: /s/ Kenneth C. Dunn
---------------------------------
Vice President
ATTEST:
/s/ Gifford R. Zimmerman
- --------------------------------
Assistant Secretary
<PAGE>
EXHIBIT 8(B)
The Chase Manhattan Bank, N.A.
770 Broadway
New York, New York 10003-9598
April 18, 1996
Mr. Giff Zimmerman
John Nuveen & Co. Incorporated
333 West Wacker Drive
Chicago, IL 60606
Dear Giff:
On September 2, 1995, The United States Trust Company of New York (UST) was
merged into Chase Manhattan Bank, N.A. (Chase). As a result of this transac-
tion, Chase succeeded by operation of law, all rights and responsibilities of
UST under all Transfer Agency, Custodian and Fund Accounting agreements be-
tween US Trust and John Nuveen & Co.'s managed investment companies.
Sincerely,
/s/ Andrew M. Massa
_______________________________________
Andrew M. Massa
Vice President
1
<PAGE>
Exhibit 10
June 26, 1996
(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, 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. 22 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 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 Articles of
Incorporation and of all amendments and all supplements thereto (the
"Articles of Incorporation");
<PAGE>
Nuveen California Tax-Free Fund, Inc.
June 26, 1996
Page 2
(c) a certificate executed by Karen L. Healy, an Assistant Secretary of
the Fund, certifying as to the Fund's Articles of Incorporation and
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 June 26, 1996, of the Amendment.
In our capacity as counsel to the Fund, we have examined the originals, or
certified, conformed or reproduced copies, of all records, agreements,
instruments and documents as we have deemed relevant or necessary as the basis
for the 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
Articles of Incorporation and for the consideration described in the
Registration Statement, will be legally issued, fully paid and nonassessable.
The opinion expressed herein is limited to the laws of the State of
Maryland.
We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement. In giving this consent, we do not admit that we are in
the category of persons whose consent is required under Section 7 of the 1933
Act.
Very truly yours,
FRIED, FRANK, HARRIS, SHRIVER & JACOBSON
By: /s/ Thomas S. Harman
_____________________________
Thomas S. Harman
<PAGE>
[LETTERHEAD OF ARTHUR ANDERSEN LLP]
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the use of our report
dated April 8, 1996, and to all references to our firm included in or made a
part of this registration statement of Nuveen California Tax-Free Fund, Inc.
/s/ ARTHUR ANDERSEN LLP
- --------------------------
ARTHUR ANDERSEN LLP
Chicago, Illinois
June 24, 1996
<PAGE>
Exhibit 15(d)
NUVEEN CALIFORNIA TAX-FREE FUND, INC.
-------------------------------------
Nuveen California Tax-Free Value Fund
Nuveen California Insured Tax-Free Value Fund
RENEWAL OF PLAN OF DISTRIBUTION AND SERVICE PURSUANT TO RULE 12b-1
------------------------------------------------------------------
WHEREAS, Nuveen California Tax-Free Fund, Inc. (the "Fund"), an open-end
investment management company registered under the Investment Company Act of
1940, as amended (the "Act") and John Nuveen & Co. Incorporated ("Nuveen"),
distributor of the common shares of the Fund pursuant to a Distribution
Agreement between the Fund and Nuveen, have previously entered into a Plan of
Distribution and Service in accordance with Rule 12b-1 under the Act (the
"Plan"); and
WHEREAS, the Plan terminates August 1, 1995 unless continued in the manner
provided for in paragraph 2 of the Plan; and
WHEREAS, the Board of Trustees, at a meeting called in part for the purpose of
reviewing the Plan, have approved the Plan and its continuance until August 1,
1996 in the manner provided for in paragraph 2 of the Plan.
NOW THEREFORE, the parties hereto do hereby continue the Plan in effect until
August 1, 1996 and ratify and confirm the Plan in all respects.
Dated as of July 26, 1995
NUVEEN CALIFORNIA TAX-FREE FUND, INC.
By: /s/ Gifford R. Zimmerman
---------------------------------
Vice President
JOHN NUVEEN & CO., INCORPORATED
By: /s/ James J. Wesolowski
---------------------------------
Vice President
<PAGE>
EXHIBIT 16
SCHEDULE OF COMPUTATION OF PERFORMANCE FIGURES*
I. YIELD
A. CALIFORNIA TAX-FREE MONEY MARKET FUND
I. Current Yield
a. Current Yield is calculated as follows:
i.
Net investment income per share for the seven-
day period
------------------------------------------------- = Base Period Return
Value of account at beginning of seven-day pe-
riod
ii. Base Period Return X 365/7 = Current Yield
b. Calculation of Current Yield for the seven-day period ended February 29,
1996:
Service Plan Series: 365
.0005469 --
( ------- X 7
= 2.85%
1.00 -----
)
( 365
.0005469 X --
= 2.85% [/R]
Distribution Plan Series: -------
7
1.00
)
Institutional Series: 365
.0005641 --
( ------- X 7
= 2.94%
1.00
)
II. Effective Yield
a. Effective Yield is calculated as follows:
(Base Period Return + 1) 365/7 - 1 = Effective Yield
b. Calculation of Effective Yield for seven-day period ended February 29,
1996:
Service Plan Series: 365/7
.0005469
-------
[ ( 1.00 + 1]
) - 1 =
2.89%
365/7
Distribution Plan Series: .0005469
[ (------- + 1]
1.00 - 1 =
2.89%
)
365/7
Institutional Series: .0005641
[ (------- + 1]
1.00 - 1 =
2.98%
)
III. Taxable Equivalent Yield
a. The Taxable Equivalent Yield formula is as follows:
Tax Exempt Yield
-----------------------
(1 - combined Federal
and state income tax
rate
)
- --------
* The maximum sales charge in effect during the periods shown was 4.50%.
1
<PAGE>
b. Based on the maximum combined Federal and California income tax rate of
46.0%, the Taxable Equivalent Yield for the seven-day period ended February
29, 1996, is as follows:
2.85%
-------
= 5.18%
Distribution and Service Plan Series:
1 - .45
2.94%
-------
= 5.35%
Institutional Series: [/R]
1 - .45
B. CALIFORNIA FUND AND CALIFORNIA INSURED FUND
I.Yield
a. Yield is computed according the following formula
6 -1 ]
YIELD = 2 A - B
Where:A = dividends and interest * earned during the period.
[ ( -----
CD +1 )
B = expenses accrued for the period (net of reimbursements).
C = the average daily number of shares outstanding during the period
that were entitled to receive dividends.
D = the maximum offering price per share on the last day of the period.
- --------
The maximum sales charge in effect during the periods shown was 4.50%.
* Interest earned on tax-exempt obligations is determined as follows:
A. In the case of a tax-exempt obligation (1) with a current market premium or
(2) issued at a discount where the current market discount is less than the
then-remaining portion of the original issue discount, it is necessary to
first compute the yield to maturity (YTM). The YTM is then divided by 360
and the quotient is multiplied by the market value of the obligation (plus
accrued interest).
B. In the case of a tax-exempt obligation issued at a discount where the cur-
rent market discount is in excess of the then-remaining portion of the orig-
inal issue discount, the adjusted original issue discount basis of the obli-
gation (plus accrued interest) is used in lieu of the market value of the
obligation (plus accrued interest) in computing the yield to maturity (YTM).
The YTM is then divided by 360 and the quotient is multiplied by the ad-
justed original issue basis of the obligation (plus accrued interest).
C. In the case of a tax-exempt obligation issued without original issue dis-
count and having a current market discount, the coupon rate of interest is
used in lieu of the yield to maturity. The coupon rate is then divided by
360 and the quotient is multiplied by the par value of the obligation.
2
<PAGE>
b. Yield Calculations
1. California Fund
The following is the 30-day yield as of February 29, 1996 for the Class A
Shares of the California Fund:
/6/
[ $57,518.11 - -1 ]
Yield = 2 ( $9,512.67 +1
-------------------- ) = 4.52%
1,160,037.47 X
$11.08 [/R]
The following is the 30-day yield as of February 29, 1996 for the Class C
Shares of the California Fund:
/6/
Yield = 2[ ( $2,801.23 - -1 ]
$833.84
----------------- +1
= 3.98%
)
56,501.54 X
$10.58 [/R]
The following is the 30-day yield as of February 29, 1996, for the Class R
Shares of the California Fund:
/6/
[ ( $1,017,376.20 - -1 ]
Yield = 2 $123,382.47 +1
------------------------ ) = 4.99%
20,472,128.80 X $10.60
[/R]
2. California Insured Fund
The following is the 30-day yield as of February 29, 1996 for the Class A
Shares of the California Insured Fund:
/6/
Yield = 2[ ( $75,804.14 - -1 ]
$12,639.92
-------------------- +1
= 4.46%
)
1,522,211.33 X
$11.27 [/R]
The following is the 30-day yield as of February 29, 1996 for the Class C
Shares of the California Insured Fund:
/6/
[ ( $4,645.79 - -1 ]
Yield = 2 $1,399.33 +1
------------------ ) = 3.91%
94,032.17 X
$10.67 [/R]
The following is the 30-day yield as of February 29, 1996 for the Class R
Shares of the California Insured Fund:
/6/
Yield = 2[ ( $952,621.90 - -1 ]
$116,150.93
---------------------- +1
) = 4.93%
19,164,712.21 X
$10.74 [/R]
3
<PAGE>
II. Taxable Equivalent Yield Calculation
The Taxable Equivalent Yields for the Bond Funds are computed according to
the formula set forth previously in (A)III(a). The calculations are as follows:
Class A Class C Class R
Shares Shares Shares
California Fund= 4.52% 3.98% 4.99%
= 8.22% = 7.24% [/R] = 9.07% [/R]
------ ---- ------ ---- ------ ----
----
----
----
1 - 1 - 1 -
.45 .45 .45
4.46% 3.91% 4.93%
[/R] [/R]
California Insured Fund=
= 8.11% = 7.11% [/R] = 8.96% [/R]
------ ---- ------ ---- ------ ----
----
----
----
1 - 1 - 1 -
.45 .45 .45
[/R] [/R]
II. AVERAGE ANNUAL TOTAL RETURN
A. Formula
ERV /1//N -1
T = ---
P
Where:T = average annual total return
P = a hypothetical initial payment of $1,000
N = number of years
ERV = ending redeemable value of a hypothetical $1,000 payment made at
the beginning of the 1, 5 or 10-year (or fractional portion there-
of) periods at the end of such 1, 5 or 10-year (or fractional por-
tion thereof) periods.
B. Average Annual Total Return Calculations
The following are the average annual total returns for Class A Shares of the
Funds for the one-year period ended February 29, 1996, and for the period from
inception through February 29, 1996, including the current maximum sales
charge:
1. California Fund:
/1///1/
$1,053.90
[/R]
A. 1 year ended February 29, 1996
=
-1 = 5.39%
----
------- ----
( ) [/R]
$1000
$1,080.40 /1///1/./4//8//1//2/
[/R]
C. Inception through February 29, 1996
=
( ) [/R] -1 = 5.36% [/R]
-------
-----
-----
$1000
2. California Insured Fund:
$1,053.50 /1///1/
[/R]
A. 1 year ended February 29, 1996
=
------- -1 = 5.35%
( ) [/R] -----
-----
$1000
$1,088.50 /1///1/./4//8//1//2/
[/R]
C. Inception through February 29, 1996
=
------- -1 = 5.89%
( ) [/R] -----
-----
$1000
[/R]
4
<PAGE>
The following are the average annual total returns for Class C Shares of the
Funds for the one-year period ended February 29, 1996, and for the period from
inception through February 29, 1996, assuming no imposition of sales charges:
1. California Fund:
$1,095.30 /1///1/
[/R]
A. 1 year ended February 29, 1996
=
------- -1 = 9.53%
( ) [/R] -----
-----
$1000
$1,136.00 /1///1/./4//5//3//8/
[/R]
C. Inception through February 29, 1996
=
------- -1 = 9.17%
( ) [/R] -----
-----
$1000
2. California Insured Fund:
/1///1/
$1,096.70
[/R]
A. 1 year ended February 29, 1996
=
-1 = 9.67%
( [/R] ) [/R] ----
------- ----
$1000
$1,134.40 /1///1/./4//6//4//8/
[/R]
C. Inception through February 29, 1996
=
------- -1 = 8.99%
( ) [/R] -----
-----
$1000
The following are the average annual total returns for Class R Shares of the
Funds for the one-year and five-year periods ended February 29, 1996, and for
the period from inception through February 29, 1996, assuming no imposition of
sales charges:
1. California Fund:
$1,105.40 /1///1/
[/R]
A. 1 year ended February 29, 1996
=
------- -1 = 10.54%
------
( ) [/R] ------
$1000
/1///5/
$1,453.80
[/R]
B. 5 years ended February 29, 1996
=
-1 = 7.77%
-----
( ) [/R]
------- -----
$1000
$2,051.30 /1///9/./6//6//4//6/
[/R]
C. Inception through February 29, 1996
=
------- -1 = 7.72%
-----
( ) [/R] -----
$1000
2. California Insured Fund:
$1,106.30 /1///1/
[/R]
A. 1 year ended February 29, 1996
=
------- -1 = 10.63%
------
( ) [/R] ------
$1000
$1,483.40 /1///5/
[/R]
B. 5 years ended February 29, 1996
=
------- -1 = 8.20%
-----
( ) [/R] -----
$1000
$2,027.60 /1///9/./6//6//4//6/
[/R]
C. Inception through February 29, 1996
=
( ) [/R] -1 = 7.59% [/R]
-------
-----
-----
$1000
[/R]
5
<PAGE>
III. DISTRIBUTION RATE
A. Distribution Rate Formula
The formula for calculation of distribution rate is as follows:
Distribution Rate = 12 X most recent tax-exempt income dividend per share
share price
B. Distribution Rate Calculations
1. California Fund
The following is the distribution rate as of February 29, 1996, based on max-
imum public offering price for the California Fund:
California
Class A Distribution Rate = 12 X $.0440
$11.08
=
4.77%
Class C Distribution Rate = 12 X $.0370
$10.58
=
4.25%
Class R Distribution Rate = 12 X $.0465
$10.60
=
5.26%
2. California Insured Fund
The following is the distribution rate as of February 29, 1996, based on max-
imum public offering price for the California Insured Fund:
California Insured
Class A Distribution Rate = 12 X $.0440
$11.27
=
4.69%
6
<PAGE>
Class C Distribution Rate = 12 X $.0370
$10.67
=
4.16%
Class R Distribution Rate = 12 X $.0460
$10.74
=
5.14%
IV. CUMULATIVE TOTAL RETURN
A. Formula
ERV - P
T = --------
P
Where: T = cumulative total return
P = a hypothetical initial payment of $1,000
ERV = ending redeemable value of a hypothetical $1,000 payment made at
the inception of the fund.
B. Cumulative Total Return Calculation
The following are the cumulative total returns for the Class A Shares of the
Funds for the period from inception and for the one-year period ended February
29, 1996, including the current maximum sales charge:
1. California Fund:
$1,053.90 - $1000
A. 1 year ended February 29, 1996
= = 5.39% [/R]
---------------- ----
----
(
)
$1000 [/R]
$1,080.40 - $1000
----------------
C. Inception through February 29, 1996
= = 8.04% [/R]
----
$1000 ----
( ) [/R]
2. California Insured Fund:
$1,053.50 - $1000
----------------
A. 1 year ended February 29, 1996
= = 5.35% [/R]
----
$1000 ----
( ) [/R]
$1,088.50 - $1000
C. Inception through February 29, 1996
= = 8.85% [/R]
---------------- ----
----
(
)
$1000 [/R]
The following are the cumulative total returns for Class C Shares of the
Funds for the period from inception and for the one-year period ended February
29, 1996, assuming no imposition of sales charges:
1. California Fund:
$1,095.30 - $1000
----------------
A. 1 year ended February 29, 1996
= = 9.53% [/R]
----
$1000 ----
( ) [/R]
$1,136.00 - $1000
C. Inception through February 29, 1996
= = 13.60% [/R]
---------------- ------
------
$1000
( ) [/R]
7
<PAGE>
2. California Insured Fund:
$1,096.70 - $1000
----------------
A. 1 year ended February 29, 1996
= = 9.67% [/R]
------
$1000 ------
( ) [/R]
$1,134.41 - $1000
----------------
C. Inception through February 29, 1996
= = 13.44% [/R]
------
$1000 ------
( ) [/R]
The following are the cumulative total returns for Class R Shares of the
Funds for the period from inception and for the one-year and five-year periods
ended February 29, 1996, assuming no imposition of sales charges:
1. California Fund:
$1,105.40 - $1000
A. 1 year ended February 29, 1996
= = 10.54% [/R]
---------------- ----
----
(
)
$1000 [/R]
$1,453.80 - $1000
----------------
B. 5 years ended February 29, 1996
= = 45.38% [/R]
------
$1000 ------
( ) [/R]
$2,051.30 - $1000
C. Inception through February 29, 1996
= = 105.13% [/R]
---------------- ------
------
(
)
$1000 [/R]
2. California Insured Fund:
$1,106.30 - $1000
----------------
A. 1 year ended February 29, 1996
= = 10.63% [/R]
------
$1000 ------
( ) [/R]
$1,483.40 - $1000
----------------
B. 5 years ended February 29, 1996
= = 48.34% [/R]
------
$1000 ------
( ) [/R]
$2,027.60 - $1000
C. Inception through February 29, 1996
= = 102.76% [/R]
---------------- -------
-------
(
)
$1000 [/R]
V. TAXABLE EQUIVALENT TOTAL RETURN
A. TAXABLE EQUIVALENT TOTAL RETURN FORMULA
Each Bond Fund's taxable equivalent total return for a specific period is
calculated by first taking a hypothetical initial investment in the Fund's
shares on the first day of the period, computing the Fund's total return for
each calendar year in the period according to the above formula, and increasing
the total return for each such calendar year by the amount of additional income
that a taxable fund would need to have generated to equal the income of the
Fund on an after-tax basis, at a specified tax rate (usually the highest mar-
ginal federal or combined federal and state tax rate), calculated pursuant to
the formula presented above under "taxable equivalent yield." The resulting
amount for the calendar year is then divided by the initial investment amount
to arrive at a "taxable equivalent total return factor" for the calendar year.
The taxable equivalent total return factors for all the calendar years in the
period are then multiplied together and the result is then annualized by taking
its Nth root (N representing the number of years in the period) and subtracting
l, which provides a taxable equivalent total return expressed as a percentage.
8
<PAGE>
B. TAXABLE EQUIVALENT TOTAL RETURN CALCULATIONS
The taxable equivalent total return calculations for the Class A Shares of
the California Fund for the one year period ended February 29, 1996, and the
period from inception through February 29, 1996, are set forth on the following
pages. One set of calculations presents the Fund's taxable equivalent total re-
turn with the maximum 4.50% sales charge and the other set of calculations pre-
sents the taxable equivalent total return at the Fund's net asset value.
FUND NAME: NUVEEN CA TAX-FREE VALUE CLASS A
(SINCE 02/28/95)
<TABLE>
<CAPTION>
NAV INCOM TOTAL PERIOD
PER PER FROM DOLLAR TO DATE TAX ENDING ENDING REINV
PER DATE SHARE SHARE CAP GAINS FROM INCOME GAINS DISTR T-E INC SAVINGS SHARES WEALTH NAV
- ------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
0 02/28/95 10.10 .04600 946 10,000 10.15
1 03/31/95 10.13 .04600 43.495 43.495 43.495 950 9,622 10.15
2 04/30/95 10.10 .04600 43.692 43.692 87.187 954 9,637 10.09
3 05/31/95 10.37 .04600 43.891 43.891 131.079 958 9,939 10.37
4 06/30/95 10.19 .04550 43.607 43.607 174.685 963 9,810 10.19
5 07/31/95 10.17 .04550 43.802 43.802 218.487 967 9,834 10.15
6 08/31/95 10.25 .04550 43.998 43.998 262.485 971 9,955 10.30
7 09/30/95 10.28 .04550 44.192 44.192 306.677 976 10,029 10.33
8 10/31/95 10.43 .04500 43.899 43.899 350.576 980 10,219 10.47
9 11/30/95 10.59 .04500 44.088 44.088 394.664 984 10,419 10.62
10 12/31/95 10.69 .04400 43.291 43.291 437.955 988 10,561 10.69
11 01/31/96 10.66 .04400 43.469 43.469 481.424 992 10,575 10.67
12 02/29/96 10.58 .04400 43.648 43.648 525.072 429.6 1,037 10,969 10.63
TAX RATE 45.00%
LOAD 4.50%
1.0021 YEARS: TOTAL RETURN 9.69%
ANNUALIZED 9.67%
</TABLE>
FUND NAME: NUVEEN CA TAX-FREE VALUE CLASS A
(SINCE 02/28/95)
<TABLE>
<CAPTION>
NAV INCOM TOTAL PERIOD
PER PER FROM DOLLAR TO DATE TAX ENDING ENDING REINV
PER DATE SHARE SHARE CAP GAINS FROM INCOME GAINS DISTR T-E INC SAVINGS SHARES WEALTH NAV
- ------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
0 02/28/95 10.10 .04600 990 10,000 10.15
1 03/31/95 10.13 .04600 45.545 45.545 45.545 995 10,075 10.15
2 04/30/95 10.10 .04600 45.751 45.751 91.296 999 10,091 10.09
3 05/31/95 10.37 .04600 45.960 45.960 137.255 1,004 10,407 10.37
4 06/30/95 10.19 .04550 45.662 45.662 182.917 1,008 10,272 10.19
5 07/31/95 10.17 .04550 45.866 45.866 228.782 1,013 10,298 10.15
6 08/31/95 10.25 .04550 46.071 46.071 274.853 1,017 10,425 10.30
7 09/30/95 10.28 .04550 46.275 46.275 321.128 1,022 10,501 10.33
8 10/31/95 10.43 .04500 45.968 45.968 367.096 1,026 10,700 10.47
9 11/30/95 10.59 .04500 46.165 46.165 413.261 1,030 10,910 10.62
10 12/31/95 10.69 .04400 45.331 45.331 458.592 1,034 11,059 10.69
11 01/31/96 10.66 .04400 45.517 45.517 504.109 1,039 11,073 10.67
12 02/29/96 10.58 .04400 45.705 45.705 549.814 449.8 1,086 11,486 10.63
TAX RATE 45.00%
LOAD 0.00%
PAST YEAR: TOTAL RETURN 14.86%
1.0021 YEARS: TOTAL RETURN 14.86%
ANNUALIZED 14.82%
</TABLE>
9
<PAGE>
FUND NAME: NUVEEN CA TAX-FREE VALUE CLASS A
(SINCE 09/06/94)
<TABLE>
<CAPTION>
NAV INCOM TOTAL PERIOD
PER PER FROM DOLLAR TO DATE TAX ENDING ENDING REINV
PER DATE SHARE SHARE CAP GAINS FROM INCOME GAINS DISTR T-E INC SAVINGS SHARES WEALTH NAV
- --------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
09/06/94 10.21 935 10,000
09/30/94 9.97 .04550 42.559 42.559 42.559 940 9,368 9.97
10/31/94 9.66 .04550 .0740 42.753 69.532 112.285 85.312 951 9,189 9.63
11/30/94 9.39 .04550 43.284 43.284 128.595 956 8,976 9.44
12/31/94 9.59 .04600 43.970 43.970 172.565 960 9,211 9.59
01/31/95 9.83 .04600 44.181 44.181 216.746 965 9,485 9.88
0 02/28/95 10.10 .04600 44.387 44.387 261.133 213.6 990 10,004 10.15
1 03/31/95 10.13 .04600 45.561 45.561 45.561 995 10,079 10.15
2 04/30/95 10.10 .04600 45.767 45.767 91.328 999 10,095 10.09
3 05/31/95 10.37 .04600 45.976 45.976 137.304 1,004 10,411 10.37
4 06/30/95 10.19 .04550 45.678 45.678 182.982 1,008 10,276 10.19
5 07/31/95 10.17 .04550 45.882 45.882 228.864 1,013 10,301 10.15
6 08/31/95 10.25 .04550 46.088 46.088 274.952 1,017 10,428 10.30
7 09/30/95 10.28 .04550 46.291 46.291 321.243 1,022 10,505 10.33
8 10/31/95 10.43 .04500 45.984 45.984 367.228 1,026 10,704 10.47
9 11/30/95 10.59 .04500 46.182 46.182 413.410 1,031 10,914 10.62
10 12/31/95 10.69 .04400 45.347 45.347 458.757 1,035 11,063 10.69
11 01/31/96 10.66 .04400 45.534 45.534 504.290 1,039 11,077 10.67
12 02/29/96 10.58 .04400 45.721 45.721 550.011 450.0 1,086 11,490 10.63
TAX RATE 45.00%
LOAD 4.50%
1.4812 YEARS: TOTAL RETURN 14.90%
ANNUALIZED 9.83%
</TABLE>
FUND NAME: NUVEEN CA TAX-FREE VALUE CLASS A
(SINCE 09/06/94)
<TABLE>
<CAPTION>
NAV INCOM TOTAL PERIOD
PER PER FROM DOLLAR TO DATE TAX ENDING ENDING REINV
PER DATE SHARE SHARE CAP GAINS FROM INCOME GAINS DISTR T-E INC SAVINGS SHARES WEALTH NAV
- --------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
09/06/94 10.21 979 10,000
09/30/94 9.97 .04550 44.564 44.564 44.564 984 9,810 9.97
10/31/94 9.66 .04550 .0740 44.768 72.809 117.576 89.332 996 9,622 9.63
11/30/94 9.39 .04550 45.323 45.323 134.655 1,001 9,399 9.44
12/31/94 9.59 .04600 46.042 46.042 180.697 1,006 9,645 9.59
01/31/95 9.83 .04600 46.263 46.263 226.960 1,010 9,932 9.88
0 02/28/95 10.10 .04600 46.478 46.478 273.438 223.7 1,037 10,475 10.15
1 03/31/95 10.13 .04600 47.708 47.708 47.708 1,042 10,554 10.15
2 04/30/95 10.10 .04600 47.924 47.924 95.632 1,047 10,570 10.09
3 05/31/95 10.37 .04600 48.142 48.142 143.774 1,051 10,901 10.37
4 06/30/95 10.19 .04550 47.830 47.830 191.605 1,056 10,760 10.19
5 07/31/95 10.17 .04550 48.044 48.044 239.649 1,061 10,787 10.15
6 08/31/95 10.25 .04550 48.259 48.259 287.908 1,065 10,920 10.30
7 09/30/95 10.28 .04550 48.473 48.473 336.381 1,070 11,000 10.33
8 10/31/95 10.43 .04500 48.151 48.151 384.532 1,075 11,208 10.47
9 11/30/95 10.59 .04500 48.358 48.358 432.890 1,079 11,428 10.62
10 12/31/95 10.69 .04400 47.484 47.484 480.373 1,084 11,584 10.69
11 01/31/96 10.66 .04400 47.679 47.679 528.052 1,088 11,599 10.67
12 02/29/96 10.58 .04400 47.876 47.876 575.928 471.2 1,137 12,031 10.63
TAX RATE 45.00%
LOAD 0.00%
PAST YEAR: TOTAL RETURN 14.86%
1.4812 YEARS: TOTAL RETURN 20.31%
ANNUALIZED 13.30%
</TABLE>
10
<PAGE>
VI. MEASUREMENT OF RISK
The annualized standard deviation of monthly returns over the three years
ended February 29, 1996, was calculated as follows:
--------------------------------------------------- ---
annualized
standard [S((Total return in month X) - (Average monthly total
return))/2/]
---------------------------------------------------
eviationd
(s)=
number of months (36) [/R]
X
12
The calculation of annualized standard deviation for Class R Shares of the
California Fund for the three years ended February 29, 1996 was as follows:
<TABLE>
<CAPTION>
MONTHLY (TOTAL RETURN IN MONTH X) -
CALIFORNIA FUND TOTAL RETURNS (AVERAGE MONTHLY TOTAL RETURN)/2/
- --------------- ------------- ---------------------------------
<S> <C> <C>
Mar-93.......................... -1.00% 2.1114%
Apr-93.......................... 1.02% 0.3214%
May-93.......................... 0.65% 0.0388%
Jun-93.......................... 1.48% 1.0546%
Jul-93.......................... 0.09% 0.1318%
Aug-93.......................... 2.30% 3.4112%
Sep-93.......................... 1.17% 0.5140%
Oct-93.......................... 0.17% 0.0801%
Nov-93.......................... -1.00% 2.1114%
Dec-93.......................... 1.55% 1.2033%
Jan-94.......................... 1.18% 0.5284%
Feb-94.......................... -2.53% 8.8986%
Mar-94.......................... -4.66% 26.1433%
Apr-94.......................... -0.50% 0.9083%
May-94.......................... 1.58% 1.2700%
Jun-94.......................... -0.59% 1.0880%
Jul-94.......................... 1.98% 2.3316%
Aug-94.......................... 0.08% 0.1392%
Sep-94.......................... -1.48% 3.7367%
Oct-94.......................... -1.87% 5.3966%
Nov-94.......................... -2.29% 7.5244%
Dec-94.......................... 2.64% 4.7827%
Jan-95.......................... 3.00% 6.4869%
Feb-95.......................... 3.23% 7.7114%
Mar-95.......................... 0.77% 0.1005%
Apr-95.......................... 0.18% 0.0746%
May-95.......................... 3.14% 7.2197%
Jun-95.......................... -1.37% 3.3235%
Jul-95.......................... 0.37% 0.0069%
Aug-95.......................... 1.15% 0.4857%
</TABLE>
11
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<LEGEND>
This schedule contains Summary Financial Information extracted from the Form
N-SAR and the financial statements and is qualified in its entirety by
references to such documents.
</LEGEND>
<SERIES>
<NUMBER> 022
<NAME> NUVEEN CAL SPECIAL CLASS A
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> FEB-29-1996
<PERIOD-START> MAR-01-1995
<PERIOD-END> FEB-29-1996
<INVESTMENTS-AT-COST> 214526
<INVESTMENTS-AT-VALUE> 226639
<RECEIVABLES> 3991
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<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 230643
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<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 859
<TOTAL-LIABILITIES> 859
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 218292
<SHARES-COMMON-STOCK> 1202
<SHARES-COMMON-PRIOR> 312
<ACCUMULATED-NII-CURRENT> 143
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> (765)
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 12114
<NET-ASSETS> 12709
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 13781
<OTHER-INCOME> 0
<EXPENSES-NET> 1583
<NET-INVESTMENT-INCOME> 12198
<REALIZED-GAINS-CURRENT> 1855
<APPREC-INCREASE-CURRENT> 8120
<NET-CHANGE-FROM-OPS> 22174
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 389
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 928
<NUMBER-OF-SHARES-REDEEMED> 55
<SHARES-REINVESTED> 17
<NET-CHANGE-IN-ASSETS> 18358
<ACCUMULATED-NII-PRIOR> 65
<ACCUMULATED-GAINS-PRIOR> (2620)
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 1203
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 1586
<AVERAGE-NET-ASSETS> 7604
<PER-SHARE-NAV-BEGIN> 10.10
<PER-SHARE-NII> .549
<PER-SHARE-GAIN-APPREC> .473
<PER-SHARE-DIVIDEND> .542
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 10.58
<EXPENSE-RATIO> .96
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<LEGEND>
This schedule contains Summary Financial Information extracted from the Form
N-SAR and the financial statements and is qualified in its entirety by
references to such documents.
</LEGEND>
<SERIES>
<NUMBER> 023
<NAME> NUVEEN CAL SPECIAL CLASS C
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> FEB-29-1996
<PERIOD-START> MAR-01-1995
<PERIOD-END> FEB-29-1996
<INVESTMENTS-AT-COST> 214526
<INVESTMENTS-AT-VALUE> 226639
<RECEIVABLES> 3991
<ASSETS-OTHER> 13
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 230643
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 859
<TOTAL-LIABILITIES> 859
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 218292
<SHARES-COMMON-STOCK> 65
<SHARES-COMMON-PRIOR> 20
<ACCUMULATED-NII-CURRENT> 143
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> (765)
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 12114
<NET-ASSETS> 684
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 13781
<OTHER-INCOME> 0
<EXPENSES-NET> 1583
<NET-INVESTMENT-INCOME> 12198
<REALIZED-GAINS-CURRENT> 1855
<APPREC-INCREASE-CURRENT> 8120
<NET-CHANGE-FROM-OPS> 22174
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 18
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 50
<NUMBER-OF-SHARES-REDEEMED> 6
<SHARES-REINVESTED> 1
<NET-CHANGE-IN-ASSETS> 18358
<ACCUMULATED-NII-PRIOR> 65
<ACCUMULATED-GAINS-PRIOR> (2620)
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 1203
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 1586
<AVERAGE-NET-ASSETS> 416
<PER-SHARE-NAV-BEGIN> 10.10
<PER-SHARE-NII> .470
<PER-SHARE-GAIN-APPREC> .474
<PER-SHARE-DIVIDEND> .464
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 10.58
<EXPENSE-RATIO> 1.71
<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
references to such documents.
</LEGEND>
<SERIES>
<NUMBER> 021
<NAME> NUVEEN CAL SPECIAL CLASS R
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> FEB-29-1996
<PERIOD-START> MAR-01-1995
<PERIOD-END> FEB-29-1996
<INVESTMENTS-AT-COST> 214526
<INVESTMENTS-AT-VALUE> 226639
<RECEIVABLES> 3991
<ASSETS-OTHER> 13
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 230643
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 859
<TOTAL-LIABILITIES> 859
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 218292
<SHARES-COMMON-STOCK> 20412
<SHARES-COMMON-PRIOR> 20536
<ACCUMULATED-NII-CURRENT> 143
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> (765)
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 12114
<NET-ASSETS> 216390
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 13781
<OTHER-INCOME> 0
<EXPENSES-NET> 1583
<NET-INVESTMENT-INCOME> 12198
<REALIZED-GAINS-CURRENT> 1855
<APPREC-INCREASE-CURRENT> 8120
<NET-CHANGE-FROM-OPS> 22174
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 11714
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 2166
<NUMBER-OF-SHARES-REDEEMED> 2990
<SHARES-REINVESTED> 701
<NET-CHANGE-IN-ASSETS> 18358
<ACCUMULATED-NII-PRIOR> 65
<ACCUMULATED-GAINS-PRIOR> (2620)
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 1203
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 1586
<AVERAGE-NET-ASSETS> 212889
<PER-SHARE-NAV-BEGIN> 10.13
<PER-SHARE-NII> .575
<PER-SHARE-GAIN-APPREC> .467
<PER-SHARE-DIVIDEND> .572
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 10.60
<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
references to such documents.
</LEGEND>
<SERIES>
<NUMBER> 032
<NAME> NUVEEN CAL INSURED CLASS A
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> FEB-29-1996
<PERIOD-START> MAR-01-1995
<PERIOD-END> FEB-29-1996
<INVESTMENTS-AT-COST> 211767
<INVESTMENTS-AT-VALUE> 226086
<RECEIVABLES> 3391
<ASSETS-OTHER> 412
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 229889
<PAYABLE-FOR-SECURITIES> 5216
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 741
<TOTAL-LIABILITIES> 5957
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 209821
<SHARES-COMMON-STOCK> 1603
<SHARES-COMMON-PRIOR> 464
<ACCUMULATED-NII-CURRENT> 134
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> (342)
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 14319
<NET-ASSETS> 17250
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 12733
<OTHER-INCOME> 0
<EXPENSES-NET> 1527
<NET-INVESTMENT-INCOME> 11206
<REALIZED-GAINS-CURRENT> 764
<APPREC-INCREASE-CURRENT> 9457
<NET-CHANGE-FROM-OPS> 21427
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 496
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 1212
<NUMBER-OF-SHARES-REDEEMED> 96
<SHARES-REINVESTED> 23
<NET-CHANGE-IN-ASSETS> 20029
<ACCUMULATED-NII-PRIOR> 67
<ACCUMULATED-GAINS-PRIOR> (1106)
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 1159
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 1529
<AVERAGE-NET-ASSETS> 10206
<PER-SHARE-NAV-BEGIN> 10.25
<PER-SHARE-NII> .530
<PER-SHARE-GAIN-APPREC> .505
<PER-SHARE-DIVIDEND> .525
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 10.76
<EXPENSE-RATIO> 0.97
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<LEGEND>
This schedule contains Summary Financial Information extracted from the Form
N-SAR and the financial statements and is qualified in its entirety by
references to such documents.
</LEGEND>
<SERIES>
<NUMBER> 033
<NAME> NUVEEN CAL INSURED CLASS C
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> FEB-29-1996
<PERIOD-START> MAR-01-1995
<PERIOD-END> FEB-29-1996
<INVESTMENTS-AT-COST> 211767
<INVESTMENTS-AT-VALUE> 226086
<RECEIVABLES> 3391
<ASSETS-OTHER> 412
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 229889
<PAYABLE-FOR-SECURITIES> 5216
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 741
<TOTAL-LIABILITIES> 5957
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 209821
<SHARES-COMMON-STOCK> 97
<SHARES-COMMON-PRIOR> 22
<ACCUMULATED-NII-CURRENT> 134
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> (342)
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 14319
<NET-ASSETS> 1040
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 12733
<OTHER-INCOME> 0
<EXPENSES-NET> 1527
<NET-INVESTMENT-INCOME> 11206
<REALIZED-GAINS-CURRENT> 764
<APPREC-INCREASE-CURRENT> 9457
<NET-CHANGE-FROM-OPS> 21427
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 29
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 90
<NUMBER-OF-SHARES-REDEEMED> 16
<SHARES-REINVESTED> 2
<NET-CHANGE-IN-ASSETS> 20029
<ACCUMULATED-NII-PRIOR> 67
<ACCUMULATED-GAINS-PRIOR> (1106)
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 1159
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 1529
<AVERAGE-NET-ASSETS> 692
<PER-SHARE-NAV-BEGIN> 10.15
<PER-SHARE-NII> .448
<PER-SHARE-GAIN-APPREC> .516
<PER-SHARE-DIVIDEND> .444
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 10.67
<EXPENSE-RATIO> 1.71
<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
references to such documents.
</LEGEND>
<SERIES>
<NUMBER> 031
<NAME> NUVEEN CAL INSURED CLASS R
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> FEB-29-1996
<PERIOD-START> MAR-01-1995
<PERIOD-END> FEB-29-1996
<INVESTMENTS-AT-COST> 211767
<INVESTMENTS-AT-VALUE> 226086
<RECEIVABLES> 3391
<ASSETS-OTHER> 412
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 229889
<PAYABLE-FOR-SECURITIES> 5216
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 741
<TOTAL-LIABILITIES> 5957
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 209821
<SHARES-COMMON-STOCK> 19148
<SHARES-COMMON-PRIOR> 19444
<ACCUMULATED-NII-CURRENT> 134
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> (342)
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 14319
<NET-ASSETS> 205642
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 12733
<OTHER-INCOME> 0
<EXPENSES-NET> 1527
<NET-INVESTMENT-INCOME> 11206
<REALIZED-GAINS-CURRENT> 764
<APPREC-INCREASE-CURRENT> 9457
<NET-CHANGE-FROM-OPS> 21427
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 10613
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 1178
<NUMBER-OF-SHARES-REDEEMED> 2089
<SHARES-REINVESTED> 614
<NET-CHANGE-IN-ASSETS> 20029
<ACCUMULATED-NII-PRIOR> 67
<ACCUMULATED-GAINS-PRIOR> (1106)
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 1159
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 1529
<AVERAGE-NET-ASSETS> 201781
<PER-SHARE-NAV-BEGIN> 10.23
<PER-SHARE-NII> .556
<PER-SHARE-GAIN-APPREC> .507
<PER-SHARE-DIVIDEND> .553
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 10.74
<EXPENSE-RATIO> 0.70
<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 statments and is qualified in its entirety by refernces
to such documents.
</LEGEND>
<SERIES>
<NUMBER> 011
<NAME> CALIFORNIA MONEY MARKET-SERVICE
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> FEB-29-1996
<PERIOD-START> MAR-01-1995
<PERIOD-END> FEB-29-1996
<INVESTMENTS-AT-COST> 177425
<INVESTMENTS-AT-VALUE> 177425
<RECEIVABLES> 927
<ASSETS-OTHER> 336
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 178688
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 554
<TOTAL-LIABILITIES> 554
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 0
<SHARES-COMMON-STOCK> 70722
<SHARES-COMMON-PRIOR> 41772
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 0
<NET-ASSETS> 70722
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 2250
<OTHER-INCOME> 0
<EXPENSES-NET> 316
<NET-INVESTMENT-INCOME> 1933
<REALIZED-GAINS-CURRENT> 0
<APPREC-INCREASE-CURRENT> 0
<NET-CHANGE-FROM-OPS> 1933
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 1933
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 137297
<NUMBER-OF-SHARES-REDEEMED> 109981
<SHARES-REINVESTED> 1634
<NET-CHANGE-IN-ASSETS> 28950
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 234
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 328
<AVERAGE-NET-ASSETS> 58631
<PER-SHARE-NAV-BEGIN> 1
<PER-SHARE-NII> .033
<PER-SHARE-GAIN-APPREC> 0
<PER-SHARE-DIVIDEND> .033
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 1
<EXPENSE-RATIO> .54
<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 statments and is qualified in its entirety by refernces
to such documents.
</LEGEND>
<SERIES>
<NUMBER> 012
<NAME> CALIFORNIA MONEY MARKET-DISTRIBUTION
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> FEB-29-1996
<PERIOD-START> MAR-01-1995
<PERIOD-END> FEB-29-1996
<INVESTMENTS-AT-COST> 177425
<INVESTMENTS-AT-VALUE> 177425
<RECEIVABLES> 927
<ASSETS-OTHER> 336
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 178688
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 554
<TOTAL-LIABILITIES> 554
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 0
<SHARES-COMMON-STOCK> 73020
<SHARES-COMMON-PRIOR> 67157
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 0
<NET-ASSETS> 73020
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 2663
<OTHER-INCOME> 0
<EXPENSES-NET> 380
<NET-INVESTMENT-INCOME> 2283
<REALIZED-GAINS-CURRENT> 0
<APPREC-INCREASE-CURRENT> 0
<NET-CHANGE-FROM-OPS> 2283
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 2283
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 130907
<NUMBER-OF-SHARES-REDEEMED> 126807
<SHARES-REINVESTED> 1762
<NET-CHANGE-IN-ASSETS> 5863
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 277
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 428
<AVERAGE-NET-ASSETS> 69152
<PER-SHARE-NAV-BEGIN> 1
<PER-SHARE-NII> .033
<PER-SHARE-GAIN-APPREC> 0
<PER-SHARE-DIVIDEND> .033
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 1
<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 statments and is qualified in its entirety by references
to such documents.
</LEGEND>
<SERIES>
<NUMBER> 013
<NAME> CALIFORNIA MONEY MARKET-INSTITUTIONAL
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> FEB-29-1996
<PERIOD-START> MAR-01-1995
<PERIOD-END> FEB-29-1996
<INVESTMENTS-AT-COST> 177425
<INVESTMENTS-AT-VALUE> 177425
<RECEIVABLES> 927
<ASSETS-OTHER> 336
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 178688
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 554
<TOTAL-LIABILITIES> 554
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 0
<SHARES-COMMON-STOCK> 34392
<SHARES-COMMON-PRIOR> 50772
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 0
<NET-ASSETS> 34392
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 1427
<OTHER-INCOME> 0
<EXPENSES-NET> 171
<NET-INVESTMENT-INCOME> 1256
<REALIZED-GAINS-CURRENT> 0
<APPREC-INCREASE-CURRENT> 0
<NET-CHANGE-FROM-OPS> 1256
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 1256
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 212400
<NUMBER-OF-SHARES-REDEEMED> 228783
<SHARES-REINVESTED> 3
<NET-CHANGE-IN-ASSETS> (16380)
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 148
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 171
<AVERAGE-NET-ASSETS> 37047
<PER-SHARE-NAV-BEGIN> 1
<PER-SHARE-NII> .034
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<PAGE>
EXHIBIT 18
NUVEEN MUNICIPAL BOND FUND
NUVEEN MULTISTATE TAX-FREE TRUST
NUVEEN INSURED TAX-FREE BOND FUND, INC.
NUVEEN TAX-FREE BOND FUND, INC.
NUVEEN CALIFORNIA TAX-FREE FUND, INC.
Multiple Class Plan
Adopted Pursuant to Rule 18f-3
WHEREAS, Nuveen Municipal Bond Fund, a Massachusetts business trust, Nuveen
Multistate Tax-Free Trust, a Massachusetts business trust, Nuveen Insured Tax-
Free Bond Fund, Inc., a Minnesota corporation, Nuveen Tax-Free Bond Fund, Inc.,
a Minnesota corporation, and Nuveen California Tax-Free Fund, Inc., a Maryland
corporation (each a "Fund" and collectively the "Funds"), each engage in
business as an open-end management investment company and are each registered as
such under the Investment Company Act of 1940, as amended (the "Act");
WHEREAS, each Fund is authorized to and does issue shares of common stock
or shares of beneficial interest in separate series, with the shares
representing the interests in a separate portfolio of securities and other
assets (each Fund's series relating to long-term securities together with all
other such series subsequently established by a Fund being referred to herein
individually as a "Series" and collectively as the "Series");
WHEREAS, each Fund is authorized to and has divided the shares of each
Series into three classes, designated as Class A Shares, Class C Shares and
Class R Shares; and
WHEREAS, the Board of each Fund as a whole, and the Trustees or Directors,
as applicable, who are not interested persons of each such Fund (as defined in
the Act) (the "Non-Interested Members"), after having been furnished and having
evaluated information reasonably necessary to evaluate this Multiple Class Plan
(the "Plan"), have determined in the exercise of their reasonable business
judgment that the Plan is in the best interests of each class of each Series
individually, and each Series and the Fund as a whole.
WHEREAS, each Fund adopted this Plan in accordance with Rule 18f-3 under
the Act, effective August 1, 1995.
WHEREAS, each Fund's Board, as a whole, and the Non-Interested Members,
approved certain pricing enhancements that required amendments to this Plan.
NOW, THEREFORE, each Fund hereby adopts this amended Plan, effective July
1, 1996, in accordance with Rule 18f-3 under the Act:
1. Class Differences. Each class of shares of a Series shall represent
interests in the same portfolio of investments of that Series and, except as
otherwise set forth in this Plan, shall differ solely with respect to: (i)
distribution, service and other charges and expenses as provided for in
<PAGE>
Sections 2 and 3 of this Plan; (ii) the exclusive right of each class of shares
to vote on matters submitted to shareholders that relate solely to that class or
for which the interests of one class differ from the interests of another class
or classes; (iii) such differences relating to eligible investors as may be set
forth in the prospectus and statement of additional information of each Series,
as the same may be amended or supplemented from time to time (each a
"Prospectus" and "SAI" and collectively, the "Prospectus" and "SAI"); (iv) the
designation of each class of shares; and (v) conversion features.
2. DISTRIBUTION AND SERVICE ARRANGEMENTS; CONVERSION FEATURES. Class A
Shares, Class C Shares and Class R Shares of each Fund shall differ in the
manner in which such shares are distributed and in the services provided to
shareholders of each such class as follows:
a) Class A Shares:
(i) Class A Shares shall be sold at net asset value subject to
a front-end sales charge set forth in the Prospectus and
SAI;
(ii) Class A Shares shall be subject to an annual service fee
("Service Fee") pursuant to a Plan of Distribution and
Service Pursuant to Rule 12b-1 (the "12b-1 Plan") not to
exceed 0.25 of 1% of the average daily net assets of the
Series allocable to Class A Shares, which, as set forth in
the Prospectus, SAI and the 12b-1 Plan, may be used to
compensate certain authorized dealers for providing
ongoing account services to shareholders; and
(iii) Class A Shares shall not be subject to a Distribution Fee
(as hereinafter defined); and
(iv) As described in the Prospectus and SAI, certain Class A
shares redeemed within 18 months of purchase shall be
subject to a contingent deferred sales charge ("CDSC") of
1% of the lower of (a) the net asset value of Class A
Shares at the time of purchase or (b) the net asset value
of Class A Shares at the time of redemption, as set forth
in the Prospectus and SAI.
b) Class C Shares:
(i) Class C Shares shall be sold at net asset value without a
front-end sales charge;
(ii) Class C Shares shall be subject to a Service Fee pursuant
to the 12b-1 Plan not to exceed 0.25 of 1% of average
daily net assets of the Series allocable to Class C
Shares, which, as set forth in the Prospectus, SAI and the
12b-1 Plan, may be used to compensate certain authorized
dealers for providing ongoing account services to
shareholders;
2
<PAGE>
(iii) Class C Shares shall be subject to an annual distribution
fee ("Distribution Fee") pursuant to the 12b-1 Plan not to
exceed 0.75 of 1% of average daily net assets of the
Series allocable to Class C Shares less the amount of any
CDSC received by John Nuveen & Co. Incorporated, the
Funds' distributor, and for which any applicable
reinstatement period, as set forth in the Prospectus and
SAI, has expired, which, as set forth in the Prospectus,
SAI and the 12b-1 Plan, will be used to compensate certain
authorized dealers over time for the sale of Class C
Shares;
(iv) Class C Shares redeemed within 12 months of purchase shall
be subject to a CDSC of 1% of the lower of (a) the net
asset value of Class C Shares at the time of purchase or
(b) the net asset value of Class C Shares at the time of
redemption, as set forth in the Prospectus and SAI; and
(v) Class C Shares will automatically convert to Class A
Shares six years after purchase, as set forth in the
Prospectus and SAI.
c) Class R Shares:
(i) Class R Shares shall be sold at net asset value without a
front-end sales charge;
(ii) Class R Shares shall not be subject to a Service Fee; and
(iii) Class R Shares shall not be subject to a Distribution
Fee.
3. ALLOCATION OF INCOME, EXPENSES, GAINS AND LOSSES. a) Investment
Income, and Realized and Unrealized Gains and Losses. The daily investment
income, and realized and unrealized gains and losses, of a Series will be of
allocated to each class of shares based on each class' relative percentage of
the total value of shares outstanding of the Series at the beginning of the day,
after such net assets are adjusted for the prior day's capital share
transactions.
b) Series Level Expenses. Expenses that are attributable to a
Series, but not a particular class thereof ("Series level expenses"), will be
allocated to each class of shares based on each class' relative percentage of
the total value of shares outstanding of the Series at the beginning of the day,
after such net assets are adjusted for the prior day's capital share
transactions. Series level expenses include fees for services that are received
equally by the classes under the same fee arrangement. All expenses attributable
to a Series that are not "class level expenses" (as defined below) shall be
Series level expenses, including but not limited to transfer agency fees and
expenses, share registration expenses, and shareholder reporting expenses.
c) Class Level Expenses. Expenses that are directly attributable
to a particular class of shares, including the expenses relating to the
distribution of a class' shares, or to services provided to the shareholders of
a class, as set forth in Section 2 of this Plan, will be incurred by that
3
<PAGE>
class of shares. Class level expenses include expenses for services that are
unique to a class of shares in either form or amount. "Class level expenses"
shall include, but not be limited to, 12b-1 Service Fees, 12b-1 Distribution
Fees, expenses associated with the addition of share classes to a fund (to the
extent that the expenses were not fully accrued prior to the issuance of the new
classes of shares), expenses of administrative personnel and services required
to support the shareholders of a specific class, litigation or other legal
expenses relating to a specific class of shares, directors' fees or expenses
incurred as a result of issues relating to a specific class of shares, and
accounting expenses relating to a specific class of shares.
d) Fee Waivers and Expense Reimbursements. On a daily basis, if the
Series level expenses and the class level expenses (not including 12b-1 plan
payments) exceed the daily expense cap for the Series, an appropriate
waiver/reimbursement will be made to the Series. The amount of such
reimbursement to each class will be in an amount such that the expenses of the
class with the highest expense ratio (excluding Service Fees and Distribution
Fees) will be equal to the daily expense cap after reimbursement. The expense
reimbursement will be allocated to each class of shares based on each class'
relative percentage of the total value of shares outstanding of the Series at
the beginning of the day, after such net assets are adjusted for the prior day's
capital share transactions.
4. Exchange Privilege. Shares of a class of a Series may be exchanged
only for shares of the same class of another Series, except as otherwise set
forth in the Prospectus and SAI.
5. Term and Termination. a) The Series. This Plan shall become effective
with respect to each Series on August 1, 1995, and shall continue in effect with
respect to such Class A, Class C and Class R Shares of each such Series until
terminated in accordance with the provisions of Section 5(c) hereof.
b) Additional Series or Classes. This Plan shall become effective with
respect to any class of shares of a Series other than Class A, Class C or Class
R and with respect to each additional Series or class thereof established by a
Fund after the date hereof and made subject to this Plan upon commencement of
the initial public offering thereof (provided that the Plan has previously been
approved with respect to such additional Series or class by votes of a majority
of both (i) the members of the Board of a Fund, as a whole, and (ii) the
Non-Interested Members, cast at a meeting held before the initial public
offering of such additional Series or classes thereof), and shall continue in
effect with respect to each such additional Series or class until terminated in
accordance with provisions of Section 5(c) hereof. An addendum setting forth
such specific and different terms of such additional series or classes shall be
attached to or made part of this Plan.
c) Termination. This Plan may be terminated at any time with respect
to any Fund or any Series or class thereof, as the case may be, by vote of a
majority of both the members of the Board of a Fund, as a whole, and the
Non-Interested Members. The Plan may remain in effect with respect to a
particular Fund or any Series or class thereof even if it has been terminated in
accordance with this Section 5(c) with respect to any other Fund or Series or
class thereof.
4
<PAGE>
6. Subsequent Funds. The parties hereto intend that any open-end
investment company established subsequent to the date set forth below for which
Nuveen Advisory Corp. acts as investment adviser (each a "Future Fund"), will be
covered by the terms and conditions of this Plan, provided that the Board of
such Future Fund as a whole, and the Non-Interested Members of such Future Fund,
after having been furnished and having evaluated information reasonably
necessary to evaluate the Plan, have determined in the exercise of their
reasonable business judgment that the Plan is in the best interests of each
class of each Series of such Future Fund individually, and each Series of such
Future Fund and such Future Fund as a whole.
7. Amendments. a) General. Except as set forth below, any material
amendment to this Plan affecting a Fund or Series or class thereof shall require
the affirmative vote of a majority of both the members of the Board of that
Fund, as a whole, and the Non-Interested Members that the amendment is in the
best interests of each class of each Series individually and each Series as a
whole.
b) Future Funds. Any amendment to the Plan solely for the purpose of
adding a Future Fund as a party hereto in accordance with Section 6, will not
require any action by the Boards of the Funds.
Dated: April 23, 1996
5
<PAGE>
Exhibit 99(g)
Certified Resolution
--------------------
The undersigned, James J. Wesolowski, hereby certifies, on behalf of Nuveen
California Tax-Free Fund, Inc. (the "Fund"), (1) that he is the duly elected,
qualified and acting Secretary of the Fund, and that as such Secretary he has
custody of its corporate books and records, (2) that attached to this
Certificate is a true and correct copy of a resolution duly adopted by the Board
of Trustees of the Fund at a meeting held on January 21, 1996, and (3) that said
resolution has not been amended or rescinded and remains in full force and
effect.
June 10, 1996
/s/ James J. Wesolowski
--------------------------------
James J. Wesolowski, Secretary
<PAGE>
FURTHER RESOLVED, that each member of the Board and officer of the Fund who may
be required to execute the Registration Statement on Form N-1A, or any amendment
or amendments thereto, be, and each of them hereby is, authorized to execute a
power of attorney appointing Richard J. Franke, Timothy R. Schwertfeger, James
J. Wesolowski, Larry W. Martin, Gifford R. Zimmerman, and Thomas S. Harman, and
each of them, his true and lawful attorneys-in-fact and agents, with full power
of substitution and resubstitution, for him and in his name, place and stead, in
any and all capacities, to sign the Registration Statement and any and all
amendments thereto and to file the same, with all exhibits thereto, and other
documents in connection therewith, with the Securities and Exchange Commission,
granting unto said attorneys-in-fact and agents, and each of them, full power
and authority to do and perform each and every act and thing requisite or
necessary to be done in and about the premises, as fully to all intents and
purposes as he might or could do in person, and ratifying and confirming all
that said attorneys-in-fact and agents or any of them, or their or his
substitute or substitutes, may lawfully do or cause to be done by virtue
thereof.
